Industrial Relations And Labour Laws, 6th - S.c. Srivastava (1).pdf

INDUSTRIAL RELATIONS AND LABOUR LAWS

INDUSTRIAL RELATIONS AND LABOUR LAWS

Suresh C Srivastava

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ISBN: 978-93-259-5540-0 Vikas® is the registered trademark of Vikas Publishing House Pvt Ltd First Published in 1982 Sixth Edition: 2012 Copyright © S C Srivastava, 2012 All rights reserved. No part of this publication which is material protected by this copyright notice may be reproduced or transmitted or utilized or stored in any form or by any means now known or hereinafter invented, electronic, digital or mechanical, including photocopying, scanning, recording or by any information storage or retrieval system, without prior written permission from the publisher. Information contained in this book has been published by VIKAS® Publishing House Pvt Ltd and has been obtained by its Authors from sources believed to be reliable and are correct to the best of their knowledge. However , the Publisher and its Authors shall in no event be liable for any errors, omissions or damages arising out of use of this information and specifcally disclaim any implied warranties or merchantability or fitness for any particular use. Disputes if any are subject to Delhi Jurisdiction only.

This book is dedicated to the memory of my Grand Uncle and Grandfather, Late Mr Jai Mangal Prasad Late Dr Mata Prasad My Parents, Late Mrs and Dr S R Varma My respected teacher, Late Professor Anandjee whose blessings inspire me This book is also dedicated to my wife, Late Mrs Vinodini Kumari

PREFACE TO THE SIXTH EDITION Labour law seeks to regulate relations between an employer or a class of employers and their workmen. The reach of this law is so wide that it touches the lives of millions of men and women who constitute the labour force. However, it is unfortunate that barring a few statutes such as the Minimum Wages Act, 1948 and the recently enacted Unorganized Workers Social Security Act, 2008, most labour laws are, in effect, not applicable to unorganized labour which constitutes about 93 per cent of the entire labour force. Further, most labour legislation is more than 6 decades old. It is felt that our labour laws are over-protective, overreactive, fragmented, outdated and irrelevant and have created hurdles in achieving economic targets, particularly given the global competition and economic recession. The emergence of globalization, liberalization and privatization has further brought new challenges. There is therefore, mounting pressure to reform labour laws. In view of this, the First and Second National Commissions on Labour and the National Labour Law Association made a series of recommendations to remove the irritants and stumbling blocks but barring some legislative amendments in recent years, no major reforms have been undertaken to give legislative shape to the recommendations of the Commissions. Since the fifth edition of this book was brought out, much water has flown under the bridge in the area of labour laws and industrial relations. In the legislative sphere, the most notable development was the amendment in the Industrial Disputes Act, 1947 in 2010. The Amended Act has (i) expanded the definition of ‘appropriate government’ under Section 2(a); (ii) raised the wage ceiling of a supervisor from ₹1,600 to ₹10,000 per month under Section 2(s); (iii) provided direct access to the workman to labour court/tribunal in cases of disputes arising out of Section 2A; (iv) expanded the scope of qualifications of presiding officers of labour courts or tribunals under Sections 7 and 7A; (v) provided for grievance redressal machinery in every industrial establishment employing 20 or more workmen for the resolution of disputes arising out of individual grievances; (vi) empowered the labour court/tribunal to execute awards/settlements/orders. Apart from the above, a survey of judgements delivered by the Supreme

Court and high courts reveals that there has been a marked shift in the approach of the Indian judiciary in the area of discipline and disciplinary procedure. Further, new norms have been evolved to determine whether a person is a workman. Moreover, post 2005, the Supreme Court has generally held that relief by way of reinstatement with back wages is not automatic even if termination of an employee is found to be illegal or in contravention of the prescribed procedure and in such cases, compensation in lieu of reinstatement may be appropriate. However, in two cases reported in 2010, the Supreme Court felt that the approach of the courts must be compatible with the constitutional philosophy of which the Directive Principles of State Policy constitute an integral part and justice due to the workman should not be denied by entertaining spurious and untenable grounds put forward by the employer (public or private). Whatever may be the justification for the aforesaid line of approach, the law has become uncertain on this issue. Further, the requirement of notice for strike/lock-out in public utility services under Section 22 received a new interpretation in 2008, which appears to be contrary to the legislative scheme and has added to uncertainty on this subject. Moreover, in 2006 the Supreme Court has held that daily/casual/temporary/contract workers employed in public employment could not claim regularization but in 2010–2011, it laid down that this principle did not apply in labour disputes. In fact courts even refused to apply this principle where the plea that the affected worker was not employed in public employment through the proper selection procedure, was not taken before the tribunal. In view of the above, a need was felt to bring out the sixth edition of this book. This edition has not only been extensively revised and updated to cater to the needs of labour lawyers, managers, public administrators and labour tribunals, but has also widened the scope and dimensions of the book. Thus, Chapter 1 now includes judicial legislation on labour law, review of labour laws and labour reforms along with a look at the International Labour Organization and its influence on Indian labour laws. Chapter 2 (a new chapter) provides an overview of industrial relations. Chapter 3 includes a new section on regulation of daily/casual/contract/temporary workers. Chapter 4 now includes the objectives, composition and functioning of employers’ organizations. Chapter 15 includes a new section on current approaches of the Supreme Court on interpretation of Section 2(s). Chapter 21 which is now titled ‘Management of Discipline’ also includes the procedure for conducting a domestic inquiry and precautions to be taken by disciplinary authority in awarding punishment. The book has been divided into five parts. Part I provides the contextual and constitutional framework of labour law. Part II briefly sketches the trade union movement and employers’ organizations and also examines the laws

relating to trade unions, collective bargaining, unfair labour practices and victimization. Part III deals with regulation of industrial disputes including the arena of interaction and participants. It also provides the framework of persuasive, coercive and voluntary processes for settlement of industrial disputes and governmental power under the Industrial Disputes Act. This part examines the laws relating to instruments of economic coercion, which has brought within its fold strikes, picketing, gherao and lockouts. It also examines the laws regulating management of discipline and the management’s prerogative during pendency of proceedings and change in conditions of service. Moreover, it examines laws relating to lay-off, retrenchment, transfer and closure. Part IV deals with standing orders in the light of statutory provisions and judicial decisions. Part V seeks to delineate the functioning of workers’ participation in management. It is hoped that the book will receive appreciation from lawyers, managers, officials of the labour department, labour judiciary and students. At the end, I wish to place on record my gratitude for the support and encouragement received from my daughters Reena, Rachna and Simmi and sons-in-law Manoj Khare and Sumit Sahay. I cherish the love and affection received from my granddaughters Eesha, Somya, Shivika and Sanvi. I also wish to express my sincere thanks to M/s Vikas Publishing House, New Delhi for their keen interest and skilled editorial inputs for the publication of the present edition of the book.

Suresh C Srivastava

CONTENTS PREFACE LIST OF Cases PART I INDUSTRIAL RELATIONS AND LABOUR LAWS

CHAPTER 1 Introduction to Labour Law Approach to Labour Law Basis of Labour Law Social Justice and Labour Law Public Interest Litigation for Enforcement of Labour Laws International Labour Organization and its Influence on Indian Labour Laws Review of Labour Law by the First National Commission on Labour Review of Labour Law by the Second National Commission on Labour Approaches of Indian Judiciary and Judicial Legislation on Industrial Relations Labour Reforms: Review of Labour Law CHAPTER 2 Industrial Relations: An Overview The Contextual Framework Dimensions of the Problems of Industrial Relations Industrial Unrest and Work-Stoppages Unemployment and Underemployment as Barriers to Improving Industrial Relations Other Difficulties in Healthy Growth of Industrial Relations through Labour Law Policy Scope and Concept of Industrial Relations Industrial Relations vis-a-vis Human Relations Management

Objectives of Industrial Relations Role of the State in Industrial Relations Changing Dimensions of Industrial Relations in India Impact of Globalization and the WTO Regime on Industrial Relations Five-year Plans and Industrial Relations CHAPTER 3 Constitutional Framework on Industrial Relations Constitutional Perspective Constitutional Amendments on Right to Free and Compulsory Education Contribution of Indian Judiciary in Evolution of Industrial Jurisprudence Through Constitutional Interpretation Sexual Harassment of Women at Workplace and the Constitution Constitutional Validity of Service Contracts and Standing Orders Regulation of Daily Wager/Casual Workers or Contract Labour/Temporary Workers in Public Employment PART II TRADE UNIONS AND LAW

CHAPTER 4

Trade Unions of Workers and Employers’ Organizations: A Contextual and Historical Analysis Need to Form Trade Unions Right to Form Trade Unions History of the Trade Union Movement in India Existing Strength of Central Trade Unions Current Issues Closed Shop/Union Shop Employers’ Organizations

CHAPTER 5

Judicial Delineation of Statutory Definition of Trade Union and Trade Dispute The Definition Members of Trade Unions Trade or Industry Objectives of Trade Unions

Trade Dispute CHAPTER 6 Registration of Trade Unions Legal Status of Registered Trade Unions Compulsory Versus Voluntary Registration Appointment of the Registrar Mode of Registration Powers of the Registrar No Power of the Registrar to Verify Membership of Trade Unions Power to Conduct Election No Power to Hold Inquiry No Power to Decide Rival Claims No Power to Decide Regarding Admission of Membership Duties of the Registrar Certificate of Registration: A Conclusive Evidence Minimum Requirement for Membership of a Trade Union Cancellation and Deregistration of A registered Trade Union Appeal The Result of Deregistration Re-registration Registered Office Change of Name, Structure and Dissolution Submission of Returns Penalties and Procedure CHAPTER 7 Members, Office Holders and Outsiders in Trade Unions Some Disturbing Aspects of Outsiders in the Union Rights of Minors to Membership of Trade Unions Outsiders in the Union Executive and the Law Disqualification of Office-Bearers Ceiling on Holding Offices in Trade Unions Tenure of Elected-Bearers/Members of Executive

Rights And Duties of Office-Bearers and Members Transfer of Office-Bearers of Trade Union Inter-Union and Intra-Union Rivalries CHAPTER 8 Trade Union Finances and Funds Factual Review Membership Subscription: Law’s Response General Fund: Purposes for Which it May be Spent Political Fund: Nature and Effect of Non-Contribution CHAPTER 9 Privileges of Registered Trade Unions Immunity from Criminal Conspiracy Immunity From Civil Actions Enforceability of Agreements Termination at the Instance of Union CHAPTER 10 Recognition of Trade Unions The Need For Recognition of Trade Unions Recognition of Trade Unions In Retrospect Law and Practice Relating to Recognition of Trade Unions CHAPTER 11 Collective Bargaining The Perspective ILO Principles on the Right to Collective Bargaining Concept and Meaning of Collective Bargaining Prerequisites for Collective Bargaining Advantages and Disadvantages of Collective Bargaining Collective Bargaining in India CHAPTER 12 Unfair Labour Practices and Victimizations Unfair Labour Practices on the Part of Employers under the Trade Unions (Amendment) Act, 1947 Unfair Labour Practices on The Part of Trade Unions under the Trade Unions (Amendment) Act, 1947 Judicial Delineation of ‘Unfair Labour Practice’

Code of Discipline in Industry Response of The [First] National Commission on Labour Unfair Labour Practices on the Part of Employers and Trade Unions of Employers under The Industrial Disputes (Amendment) Act, 1982 Unfair Labour Practices on the Part of Workmen and Trade Unions of Workmen under The Industrial Disputes (Amendment) Act, 1982 Proof of Unfair Labour Practice Victimization Scope of Interference by Industrial Tribunal PART III INDUSTRIAL DISPUTES ACT, 1947

CHAPTER 13 Industrial Disputes Act: A Contextual Framework Object of the Act Scheme of the Act Industrial Disputes (Amendment) Act 1982 and 1984 Trade Unions and The Industrial Disputes (Amendment) Bill, 1988 Industrial Disputes (Amendment) Act, 2010 Scope of the Act Interpretation of Industrial Relations Law No Jurisdiction of Civil Court in Industrial Dispute CHAPTER 14 Concept and Scope of Individual and Industrial Disputes Industrial Dispute Individual Dispute Legislative Response : Insertion of Section 2A No Time Limit Prescribed Recommendation of The [Second] National Commission on Labour Remedy to Individual Workman under Section 2A Prior to 2010 Amendment Amendment of Section 2A by the Industrial Disputes (Amendment) Act, 2010 CHAPTER 15 Arena of Interaction and Participants in Industrial Disputes

Industry Bangalore Water Supply and Sewerage Board Case Response of the (First) National Commission on Labour Parliament’s Disapproval of Judicial Response Current Confusion Re-examination of the Decision in Bangalore Case CHAPTER 16 Workmen Definition Tests for Determination of Supervisory Capacity Specific Cases Current Approach of the Supreme Court on the Interpretation of Section 2(S) Recommendations of the (Second) National Commission on Labour Employer CHAPTER 17 Settlement of Industrial Disputes Works Committee Grievance Settlement Authorities Court of Inquiry Voluntary Arbitration Processes Involved in Reference of Dispute to Voluntary Labour Arbitrator Adjudication Award Non-Statutory Machinery and its Working CHAPTER 18 Powers of the Appropriate Government Government’s Power of Reference Power of the Government to Withdraw and Transfer Certain Proceedings Government’s Power to Refer any Question for Interpretation of the Award Power to Make Rules Delegation of Power Power to Amend Schedules

Power of the Government to Exempt CHAPTER 19 Instruments of Economic Coercion Strike Picketing Gherao Bandh Lockout Right to Strike Right to Lockout Regulation of Strikes and Lockouts Illegal Strikes and Lockouts Sanctions and Criminal Proceedings Justification of Strike and Lockout Dismissal Of Strikers Wages For Strike and Lockout Period CHAPTER 20 Lay-off, Retrenchment, Transfer and Closure Lay-Off Retrenchment Transfer and Closure of the Undertaking: Prevention and Regulation CHAPTER 21 Management of Discipline and Disciplinary Procedure Regulation of Management’s Prerogative of Disciplinary Action: The Context Meaning and Scope of Misconduct Nature and Concept of Dismissal and Discharge Discharge Simpliciter or Dismissal in Disguise: Courts’ Power to Lift the Veil Domestic Inquiry Right to be Defended by a Lawyer in Domestic Inquiry Right of Representation in Disciplinary Proceedings through Co-employees Applicability of the Evidence Act

Domestic Inquiry Pending Criminal Proceedings Can Departmental Proceedings be Continued against the Delinquent in Case of his Acquittal by Criminal Court Effect of Delay in Conduct of Inquiry Power to Conduct Inquiry Afresh Non-Supply of Inquiry Report Domestic Inquiry Found Defective—Date of its Effect Power of Labour Courts, Tribunals and National Tribunals to Give Appropriate Relief in Case of Discharge or Dismissal of Workman Discriminatory Treatment Relief to Wrongfully Dismissed Workmen CHAPTER 22 Management’s Prerogative During the Pendency of Proceedings and Notice of Change Section – I Legislative Development and the Present Legislation Object of Section 33 Requirements under Section 33 Scope of Inquiry under Section 33 Alteration in the Conditions of Service Misconduct not Connected with Pending Dispute: Section 33(2)(B) Protection of Union Official under Section 33 Section 33-A: The Remedy to an Aggrieved Workman Section – II Change In Conditions of Services: Notice of Change PART IV STANDING ORDERS

CHAPTER 23 Contextual Frame-Work of the Industrial Employment (Standing Orders) Act, 1946 Constitutional Validity of Automatic Termination of Service under Standing Orders

CHAPTER 24 Scope and Coverage of the Industrial Employment (Standing Orders) Act, 1946

Coverage of the Act Workers Covered Employer under the Act CHAPTER 25 Concept and Nature of Standing Orders The Concept of Standing Orders II. Nature of the Standing Orders CHAPTER 26 Certification Process—Its Operation and Binding Effect Submission of Draft Standing Orders by Employers Conditions for Certification of Standing Orders Procedure for Certification of Standing Orders Certifying Officers: Their Appointment, Jurisdiction, Powers and Duties Appeals Against Certification Date of Operation of Standing Orders or Amendments Binding Nature and Effect of Certified Standing Orders Posting of Standing Orders CHAPTER 27 Modification and Temporary Application of Model Standing Orders Modification of Standing Orders Temporary Application of Model Standing Orders CHAPTER 28 Interpretation and Enforcement of Standing Orders Interpretation of Standing Orders Penalties and Procedure Remedies for Enforcement of Rights and Liabilities Created under the IESOA Inspection Machinery CHAPTER 29 Role of Government under the IESOA Concept of the ‘Appropriate Government’ Delegation of Power Power of the Government to Make Rules Time-Limit for Completion of Domestic Inquiry

Payment of Subsistence Allowance PART V WORKERS’ PARTICIPATION IN MANAGEMENT

CHAPTER 30 Workers’ Participation in Management Introduction Constitutional Commitment Concept and Scope Statutory and Non-Statutory Schemes Making Workers Shareholders Representation of Workers on Board of Directors Workers’ Participation in Winding up Operation Workers’ Right to Run Sick Industries Participation of Workers in the Management Bill, 1990 Steps Taken During 1996–97 An Evaluation

LIST OF CASES A A C C Rajanka Lime Stone Quarries Mazdoor Union v. Registrar of Trade Unions, AIR 1958 Pat. 475, 92 A C Mukerjee v. Union of India, (1972) 2 LLJ 1978 (Calcutta), 132 A G Kher v. Atlas Copco (India) Ltd, (1992) 1LLJ 423, 127 A G Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503 (Allahabad), 687 A L Kalra v. Project & Equipment Corporation of India, 1984 LIC 961 (SC), 581 A L P Hindustan Zinc Ltd v. H Z Workers’ Union, (1988) Lab. IC 1361, 295 A M Sainalabdeen Musaliar v. District Collector, (1994) Lab. IC 57, 321 A P Electrical Equipment Corporation v. Its Staff Union (1986) Lab. IC 1851, 438, 454 A Rodrick v. K C Thapar, (1963) 1 LLJ 248 (SC), 563 A Sundarambal v. Government of Goa, Daman and Diu, (1988) 4 SCC 42: 2012 LLR 26, 214, 267 A V Nachane v. Union of India AIR 1982 SC 1126: (1982) 25CF 1246 (1982) 1 SCC 205, 497 Abdul Khalil St. Bharu v. Commission of Labour, Nagpur, 1997 Lab. IC 122 (Bom), 202 Abdul Rahiman Haji v. Abdul Rahiman 1980 Lab. IC 910, 389 Abdul Salem v. State of Tamil Nadu, (1973) 43 FJR 180 (Madras), 375 Abdul Wahab Shaikh Lai Bhai v. G E Patankar, (1980) Lab. IC 623 (Bombay), 230 Addl. Chancellor, Farmers Service Cooperative Bank v. Labour Court, (1996) LLR 654 (Kerala), 313, 314, 598 Administrator, Union Territory of Dadra and Nagar Haveli v. Gulabhia M Lad, 2010 (125) FLR 880 (SC), 582 Aeron Steel Rolling Mills v. State of Punjab, (1959) 1 LLJ 73 (Punjab), 392 Aftab-e-jadid, Urdu Daily Newspapers v. Bhopal Shramjivi Patrakar Sangh, (1985) 1 LLJ 272, 301 Agra Electric Supply Co. v. Aladin, (1969) 2 LLJ 540 544 (SC): AIR 1970 SC 5 13, 340, 665, 692 Agriculture Produce Market Committee v. Ashok Harikuni, AIR 2000 SC 3116: (2000) 2 LLJ 1382, 211 Ahmedabad Mfg. & Calico Ptg. Co. v. Ramtahel, AIR 1972 SC 1598, 351 Ahmedabad Pvt. Primary Teachers Association v. Administrative officer, (2004) 1 SCC 755, 262 Ahmedabad Textile Industry Research Association v. State of Bombay and Others, AIR 1978 SC 548, 591, 215 Ahmedabad Textile Industry Research Association v. State of Bombay, (1960) 2 LLJ 720

(SC), 125, 215, 216 Air Corporation Employees’ Union v. D V Vyas, (1962) 1 LLJ 31 (Bombay), 302 Air Gases Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503, 505 (Allahabad), 688 Air India Cabin Crew Association v. Union of India, (2012) 1 SCC 619, 257 Air India Corporation Bombay v. V A Rehellow, (1972) 1 LLJ 501, 627, 652 Air India Statutory Corporation v. United Labour Union, (1997) 9 SCC 377, 368 Ajanta Industries v. Central Board of Direct Taxes, AIR 1976 SC 437, 389 Ajit Kumar Nag v. General Manager (PJ) Indian Oil Corporation Ltd, (2005) 7 SCC 764, 587 Akhil Raj Rajya Hand Pump Mistries Sangthan v. State of Rajasthan, (1994) Lab. IC 345, 230 Akhil Ranjan Das Gupta v. State of Assam, (1965) 2 LLJ 614, 680 Alexandra Jute Mills Ltd v. Their Workmen, (1950) ILLJ 1261, 158, 186 Alien Macgregor Smith Forge v. First Industrial Tribunal, (1963) 1 LLJ 556 (Calcutta), 213 Aligarh Muslim University v. Mansoor Ali Khan JT 2000 (7) SC 529: 2000) 5 SCC 65, 51, 611 All India Bank Employees Association v. National Industrial Tribunal, (1961) I LLJ 375: AIR 1962 SC 171, 57, 132, 423, 431 All India Bombay Tyres International Employees’ Federation v. C B Dinagre (1993) Lab. IC 817, 281 All India Radio v. Santosh Kumar and Another, (2003) LLR 9, 238 All India Reserve Bank Employees’ Association v. Reserve Bank of India, AIR 1966 SC 305: (1965) 2 LIJ 178, 189, 190, 250 Allahabad District Cooperative Bank Ltd v. Vidhya Varidh Mishra, (2004) 6 SCC 482, 587 Allen Berry & Co. Ltd v. Their Workmen, (1951) 1 LLJ 228 (LAT), 327 Alloy Steel Project Company v. Their Workmen, (1971) 1 LLJ (SC), 483 Alumina Mazdoor Sangh v. Ratna Construction Co. and Others (2003) LLR 382, 506 Amal Kumar Parial v. Union of India, (1989) ATC 679, 581 Amalendu Gupta v. LIC, (1982) 2 LLJ 332 (Calcutta), 424, 470 Amar Jyoti School v. Govt. of NCT, (2009) 122 FLR 354, 261 Amar Singh v. State of Rajasthan, AIR 1955 SC 504, 348 Ambabai Manjunath Amin v. P L Majumdar, (1987) 1 LLJ 36 (Bombay), 336 Ambica Mills Ltd v. Second Labour Court, (1967) 2 LLJ 800 (Gujarat), 338 Ambika Jute Mills v. Their Workers, (1954) 1 LLJ 835 (IT), 459, 460 Ambika Singh v. U P State Sugar Corpn. Ltd (1991) I LLN 490, 498 Ameteep Machine Tools v. Labour Court, (1980) 2 LLJ 453 (SC), 319 Amulya Ratan Mukkerjee v. Deputy Chief Mechanical Engineer, Eastern Railways, AIR 1961 Cal 40, 572 Anakapalla Cooperative Agricultural & Industrial Society v. Its Workmen (1962) 2 LLJ 621 (SC, 253, 270, 538 Anameinuger Development Corporation Ltd v. Second Industrial Tribunal, (1986) Lab. IC 1741, 253 Anand Bazar Patrika (Pvt.) Ltd v. Its Workmen, (1969) 2 LLJ 670 (SC), 250 Anand Bihar v. Rajasthan State Road Transport Corporation, Jaipur (1991) Lab. IC 494, 503

Ananda Bazar Patrika v. Their Employees, 1963 2 LLJ 429, 165 Anandam v. Tamil Nadu Electricity Board, 1997 LLR 247, 590 Anando Chandra Swam v. State of Orissa, (1973) 1 LLJ 508 (Orissa), 229 Ananthanarayanan v. S R, (1956) 1 LLJ 29 (Madras), 572 Andhra Pradesh Electrical Equipment Corporation, Hyderabad v. Andhra Pradesh Electrical Equipment Corporation Staff Union 1986 Lab. IC 1851 (AP), 423 Andhra Scientific Co. Ltd v. A Sheshagiri Rao, AIR (1967) SC 408: 1959) 2 LLJ 551, 349, 563, 638 Anil Bapurao Kanase v. Krishnq Sahkari Sakkar Karkhana Ltd (1998) I LLJ 343, 502 Anil Giluker v. Bilaspur—Raipur Gramin Bank, 2011 LLR 1121 (SC), 573, 582 Anil Kumar Chakraborty v. Saraswatipur Tea Co. Ltd, (1982) 2 SCC 328; 1982 SCC (L&S) 249; AIR 1982 SC 1062, 628 Anil Sood v. S K Sarvaria, (1997) LLR. 386, 342 Ankulaiah v. DG, P&T, SLJ (1986) CAT 407, 580 Annamalai Timber Trust Ltd (1950) LLJ 994 (IT), 473, 535 Anoop Sharma v. Executive Engineer Public Health Division, Panipat 2010 (4) SCALE 203, 53, 505, 508, 523 Antony v. Kumaran, (1979) 1 LLJ 606, 545 AP SRTC v. Raghuda Siva Sankar Prasad, (2007) 1 SCC 222; (2007) 1 SCC (L&S) 151; AIR 2007 SC 152, 628 Apparel Export Promotion Council v. A K Chopra, JT 1999 (1) SC 61: (1999) 1 SCC 759, 47 APSWL Co-operative Society Ltd v. Labour Court, 1987 Lab. LC 642 at 649 (SC), 41 Arun Mathur v. Labour Court 1993 1 C.L.R. 467, 497 Aruna Mills Company Ltd v. Textile Labour Association, (1951) 1LLJ 647, 486 Ashok Kumar Sharma v. Oberoi Flight Services (2010) 1 SCC 142, 633 Ashok Leyland Ltd v. State of Tamil Nadu, (2004) 3 SCC 1, 339 Ashok Leyland Ltd, Madras v. Presiding Officer, Second Additional Labour Court, Madras 2003 LLR 784, 699 Ashok Textile Pvt. Ltd v. Their Employees, 461, 469 Assam Chah Karmachari Sanagha v. Dimakuchi Tea Estate, AIR (1958) SC 353, 186 Assam Oil Co. Ltd v. Its Workmen, (1960) 1 LLJ 587, 560, 561, 563, 591 Associated Cement Co. Ltd v. Cement Staff Union 2010 LLR 162, 16, 660 Associated Cement Co. Ltd v. T C Srivastava (1984) 2 LLJ 105, 702 Associated Cement Co. Ltd v. Their Workmen, (1952) 2 LLJ 255 (IT): AIR 1970 SC 177, 196, 460, 461, 483 Associated Cement v. P D Vyas, AIR (1960) SC 665, 685 Associated Electrical Industries (India) Private Ltd v. The Workmen, (1961) 2 LLJ 123 (SC), 392 Association Cement Co. Ltd, v. Their Workmen, (1953) 2 LLJ 369, 328 Association of Engineering Workers v. Dockyard Labours, (1992) 1 Lab. IC 214, 97, 520 Athani Municipality v. Labour Court, AIR 1969 SC 1335, 335 Atherton West & Co. Ltd v. Suti Mill Mazdoor Union, AIR 1953 SC 241, 638 Atlas Cycle Industries Ltd v. State of Punjab, (1962) 1 LLJ 536 (Punjab), 394 Atlas Cycle Industries v. P V Thukral (1971) Lab. IC203, 205 (Punjab and Haryana), 201 Authority of India19 and Ajay Hasia v. Khalid Muzib Sehravardi, (1981) 1 SCC 722, 369

Automative Manufacturing Ltd v. Member, Industrial Court 1993 Lab. IC 534, 710 Automobile Products of India Ltd v. Rukmaji Bala. AIR (1955) SC 258, 637, 655 Avon Services (Production Agencies) Pvt. Ltd v. Industrial Tribunal, (1979) 1 LLJ 1 (SC), 376, 388, 384, 543 Avtar Singh Anand v. Krishna, (1969) 2 LLJ 524 (Delhi), 545

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Fraser and Ross v. District Labour Officer, (1966) 2 LLJ 682 (Madras), 213

G G B Pant University of Agricultrue & Technology v. State of U.P. (2000) SCC, 268 G C Kanungo v. State of Orissa, AIR 1995 SC 1655, 341 G C Sharma Sons v. R K Baveja, (1972) 2 LLJ 475 (Delhi), 229 G M Security Paper Mills v. R S Sharma, (1986) Lab. IC 667, 670 (SC), 294 G Mathu Krishnan v. New Horizon Sugar Mills Pvt. Ltd, (1980) Lab. IC 475, 388 G R S M (W) Co. Ltd v. District Collector 1982 Lab. IC 367, 424 G S Dhara Singh v. E K Thomas, AIR 1988 SC 1829, 115 G S Ramaswamy v. The Inspector General of Police, Mysore AIR 1966 SC 175, 533 G T Lad v. Chemicals and Fibres India Ltd, (1979) 1 LLJ 260, 643 Gammon India Ltd v. Niranjan Dass (1984) 4 SCC 509: 1984 SCC (L&S) 144, 505 Gandharba Bhagi v. Steel Authority of’India, (1987) Lab. IC 1226 (Orissa), 377 Gandhinagar Motor Transport Society v. Bombay State, AIR 1954 Bombay 202, 349 Ganga Kisan Sahkari Chini Mills Ltd Jaivir Singh, 2007 LLR 260, 514 Ganges Jute Manufacturing Company Ltd v. Their Employees, (1950) LLJ 10, 415 Gauri Shankar Chatterjee v. Taxmaco Ltd, (2002) Lab IC 2467, 381 General Labour Union (Red Flag) v. B V Charvan, (1985) 1 LLJ 82, 420 General Manager (Operations), State Bank of India v. State Bank of India Staff Union (1998) LLR 402, 658 General Manager (P), Punjab and Sind Bank v. Daya Singh 2010 LLR 1029, 617 General Manager (USD), Bengal Nagpur Cotton Mills v. Bharat Lai, 2011 (10) SCALE 478, 247 General Manager Telecom v. A Sriniwasa & Others, 1998 (78) FLR 143 (SC), 234 General Manager, B S N L v. Mahesh Chand, 2008 LLR 435, 514 General Manager, Haryana Roadways, v. Rudhan Singh (2005) LLR 849, 510 General Manager, Telecom v. S Srinivasa Rao, AIR 1998 SCC 657, 235 General Secretary, M.P.K.M. Panchayat (HMS) v. Western Coalfield Ltd, (1999) I LLJ 772, 502 General Secretary, Rourkela Shramik Sangh v. Rourkela Mazdoor Subha, 1991 Lab. IC 1270 (SC), 358 Ghaziabad Development Authoirty & Anr. v. Ashok Kumar (2008) 4 SSC 261, 525 Glaxo Lab (India) Ltd v. PO, Labour Court, AIR 1984 SC 505, 581 Goa Sampling Employees’ Association v. G S Company of India P. Ltd, 1985 Lab. IC 666, 366 Goenka Mica Syndicate v. Mohd. Yasin, (1954) 1 LLJ 507 (IT), 28 Gokul Chand Dwarka Das Morarka v. King., 75 I.A. 30, 458 Goodlass Wall Co. v. Amir Ahmad Bakoor Khan, (1954) 2 LLJ 573; (1956) 1 LLJ 468 (LAT), 406 Gopalji Jha Shastri v. State of Bihar, (1983) 2 LLJ 22 (SC), 228 Gorden Woodroff Leather Manufacturing Co. Ltd Workers’ Union v. Their Management, (1949) LLJ 45 (IT), 328 Government of India, Second Five-Year Plan (1956) 49, 353

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H H B Khaitan v. State of Maharashtra.187 (1987) Lab. IC 836 (Bom), 455 H D Singh v. R B I 1985 Lab. IC 1733 (SC), 511 H M T Karmika Sangh v. Labour Commissioner, (1985) Lab IC 633, 89 H P Minerals and Industrial Development Corporation Employees Union v. State of H P (1996) 7 SCC 139, 497 H R Adyanthaya v. Sandoz (India) Ltd, (1994) 4 SCC 164, 249, 257, 260, H S Rajashekara v. State Bank of Mysore, (2012) 1 SCC 285, 510, 515 Hall & Anderson Ltd v. S K Neogi, (1954) 1 LLJ 628 (Calcutta), 321 Hanuman Jute Mills v. Their Workmen, (1953) 2 LLJ 684 (LAT), 460 Harendranath Bose v. Second Industrial Tribunal, (1958) 2 LLJ, 1987, 362 Hari Nagar Cane Farm v. State of Bihar, AIR 1978 SC 548, 211 Hari Prasad Shivshankar Shukla v. Divalkar (A D), AIR 1957 SC 121, 490 Hari Shankar Jain v. Executive Engineer Rural Electricity Division, (1977) 2 LLJ 429 (Allahabad), 671, 674 Hari Singh v. I.T. cum-L.C. Rohtak, (1993) II LLN 244, 497 Hari Vishnu Kamath v. Ahmad Ishaq, AIR 1955 SC 223, 351 Hariba v. K S R T Corporation, (1983) 2 LLJ 76 (Karnataka), 228 Harihar Bahinipati v. State of Orissa, (1965) 1 LLJ 501 (Orissa), 217 Harijinder Singh v. Punjab State Warehousing Corpn, (2010)3 SCC 192. para 19, 6, 13, 53, 523, 530 Harinarayan Srivastava v. United Commercial Bank, 1997 LLR 497 (SC), 583

Hariprasad Shivashankar Shukla v. AD Divalkar AIR 1957 SC 121, 495, 504 Harish Chandra v. The Colli, AIR 1957 SC 444, 352 Harjinder Singh v. State of Haryana, (1992) (1) PLR 186 (P & H), 230 Harjinder Singh v. State of Punjab (2010) 3 SSC 192, 532, 534 Harmohinder Singh v. Kharga Canteen, Ambala Cantt 2001 LLR 849 (SC): (1997) 2 LLN 1007 (SC), 51, 660 Haryana Financial Corp. v. Kailash Chandra Ahuja JT 2008 (8) SC 70, 593 Haryana State Co-op. Supply Marketing Federation v Sanjay (2009) LLR 1014: (2009) 14 SCC 43, 511 Haryana State Electricity Development Corporation Ltd v. Mamni (2006) 9 SCC 434, 632 Haryana State F C C W Stores Ltd v. Ram Niwas (2002) Lab IC 2624, 499 Haryana Urban Development Authority v. Devi Dayal, 2002 Lab. IC 1090, 230 Haryana Urban Development Authority v. Om Pal (2007) 5 SCC 742, 511 Haryana Woollen Development Corporation v. PO I.T cum LC, (1993) 2 LLJ 318, 230 Hathi Singh Mfg Co. Ltd v. Union of India (1960) 3 SCR 528, 541, 547 Heavy Engineering Mazdoor Union v. State of Bihar, (1969) 2 LLJ 549, 365, 367 Herbert Sons Ltd v. Workman, (1977) Lab IC 162 (SC), 295 Highway Group of Estates v. Industrial Tribunal, (1978) 2 LLJ 251 (IT), 460, 470 Himachal Pradesh State Electricity Board v. Laxmi Devi, 2011 LLR 52 (H.P.), 261 Himmat Lal v. State of M.P., AIR 1954 SC 1403, 350 Hind Construction and Engineering Co. Lt (1965) 1 LLJ 462, 624 Hind Construction and Engineering Co. Ltd v. Their Workmen, AIR 1965 SC 917: (1965) 1 LLJ 462, 166, 648 Hindustan Aeronautics Ltd v. Hindustan Aero Canteen K Sangh, (2003) 1 LLJ 494 (SC), 381 Hindustan Aeronautics Ltd v. Workmen1, (1975) 4 SCC 679, 367 Hindustan Antibiotics v. Workmen AIR 1967 SC 948, 340 Hindustan Construction Co. Ltd v. All India Hindustan Construction Workers Union, (1974) 2 LLJ 212 (Kerala), 302 National Project Construction Corporation Ltd v. Their Workmen, 1970 Lab. IC 907 (Patna), 302 Hindustan Construction Co. v. All India Hindustan Construction Workers Union, (1974) 2 LLJ 212 (Kerala), 350 Hindustan General Electric Corporation Ltd v. Bishwanath Prasad (1971) 2 LLJ 340, 647 Hindustan Lever Ltd v. Ram Mohan Ray, (1973) 4 SCC 141, 658 Hindustan Lever Ltd v. The Management (1984) 2 LLJ 388, 316 Hindustan Levers Ltd v. B N Dongre, (1995) Lab IC. 113(SC), 349 Hindustan Ltd v. Chief Commissioner, (1957) 2 LLJ 466, 197 Hindustan Motors Ltd v. Tapan Kumar Bhattacharya (2002) 6 SCC 41, 269 Hindustan Paper Corpn. v. Purnendu Chkrobarty 1997 2 LLN 1007 (SC), 667 Hindustan Paper Corporation v. Purnendu Chakrobarty, (2001) LLR 155 (SC), 51 Hindustan Steel Ltd v. Presiding Officer, Labour Court, AIR 1977 SC 31, 495 Hindustan Steel Ltd v. State of Orissa, AIR 1973 SC 31, 494 Hindustan Steel v. A K Roy (1970) 1 LLJ 228, 632 Hindustan Steel Works Construction Ltd v. Hindustan Steel Works Construction Ltd Employees Union, 2005 LLR 1025, 660

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J J F B & P Works (P) Ltd v. B Sharma, (1977) 1 LLJ 306 (Patna), 333

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V V A Chedda v. Bambai Mazdoor Union, (1973) Lab. IC 697 (Bombay), 288 V Ganesan v. State of India285 (1981) 1 LLJ 64, 470 V K Sharma v. Govt. of NCT, 2008 LLR 521, 257 V K Verma v. Hindustan Machine Tools Ltd, (1999) LLR 370 (P & H), 650 V Ramachandran v. Indian Bank (1979) 1 LLJ 122, 470 V S Kamath v. State of Karnataka, 1988 (2) SLJ 241, 573 V Veerarajan v. Government of Tamil Nadu, AIR 1987 SC 494, 391 Valsad Jilla Sahkor Bank Ltd v. D K Patil, 1991 Lab. IC 655, 671 Varada Rao v. State of Karnataka, (1986)11 CLR 277 (SC), 108 Varadraja Motor Services v. Its Workmen, (1953) 1 LLJ 226, 629 Vasudeo Ambre v. State of Maharashtra, (1988) Lab. IC 554 (Bombay), 228 Ved Prakash Gupta v. M/s Delton Cable India Ltd 1982 Lab IC 1790(SC), 613 Veerappa v. Raman, AIR (1952) SC 192, 350 Veerarajan v. Government of Tamil Nadu, AIR 1987 SC 695, 377 Veerarnani v. Madurai District Cooperative Supply and Marketing Society Ltd., (1983) 2 LLJ 88 (Madras), 265

Vegoils Pvt. Ltd v. Workmen, (1972) 2 LLJ 567 (SC), 246 Vellanikara and Thuttil Rubber Estate v. Its Employees (1959), 113, 459, 467 Venkatramana v. State of Mysore, AIR 1965 SC 255 at 262, 352 Vermula Thimmappa v. Addl. Distt. Magistrate, AIR 1955 NUC Andhra Pradesh 4458, 389 Viakuntam Estate v. Arbitrator, (1968) 1 LLJ 79 (Madras), 303 Vijaya Bank v. Shyamal Kumar Lodh 2010 (6) SCALE 300, 337, 711 Vimal Kishore Malhotra v. State of Uttar Pradesh, AIR 1956 Alld. 56, 409 Vimal Kumar Jain v. Labour Court, Knapur, AIR (1988) SC 384, 268 Virendra Bhandari v. Rajasthan State Road Corporation (2002) 9 SCC 104, 382 Viriji Bhai Laxman Bhai v. New Commercial Mfg. Co., (1958) ICR Bombay, 1153, 461, 468 Virudhachalam P v. Mgmt of Lotus Mills, (1998) 1 LLJ 389 (SC): AIR 1998 SC 554, 292 Visalakshmi Mills Ltd v. Labour Court, (1962) 2 LLJ 93, 197 Vishaka v. Union of India, 1997 LLR 991 (SC), 45 Vishakapatnam Dock Labour Board v. Stevedores’ Association, Vishakapatnam, (1970) 1 LLJ 46 (SC), 229 Vishveswaraya Iron and Steel Ltd v. M Chandrappa, (1994 (84) FJR 46) (Kant), 344 Vishwamitra Press, 1954 2 LLJ 53 (Adj), 629 Viveka Nand Sethi v. Chairman J & K Bank Ltd, 2005 LLR 641, 348 Viveka Nanda Sethi v. Chairman, J&K Bank, 2005 LLR 641 (SC), 611

W Warayam Singh v. Amar Nath, AIR 1954 SC 2 1, 351 Warning Coop. Agriculture Services Society Ltd v. State of Punjab and Others, (1987) Lab & IC 359 (P&H), 342 UPSRTC Kanpur v. State of UP. & Ors.(1996) (1) LLJ 31, 342 Wenger & Co. Ltd v. Their Workmen, (1963) 2 LLJ 403 (SC), 329, 330 West Bengal State Electricity Board v. Desh Bandhu Ghosh, (1985) 3 SCC 116, 48 Western India Automobile Association Ltd v. Industrial Tribunal, (1949) LLJ 245 (FC), 78, 183, 269 Western India Match Co. Ltd v. Western India Match Co. Workers Union, (1970) 2 LLJ 256 (SC), 384, 385 Western India Match Co. v. Western India Match Co. Workers Union, AIR 1970 SC 1205: AIR 1973 SC 2650, 198, 257, 384, 679, 687 William Fredric De Pennmg v. Therd Industrial Tribunal, AIR 1959 Cal 749, 230 Workers of Industry Colliery v. Industry Colliery, (1953) 1 LLJ 190, 194 (SC), 327 Working Journalists of the Hindu v. The Hindu (1961) 1 LLJ 288 (SC), 119, 421 Workman of Oswal Weaving Factory v. State of Punjab, (1967) 1 LLJ 557 (Punjab), 375 Workman v. Dharam Pal Prem Chand, (1965) 1 LLJ 668 (SC), 119 Workmen Employed under IT Shramik Sena v. M/S Raptakos Brett & Co. Ltd, 2008 LLR 520 (SC), 344, 346 Workmen of American Express International Banking Corporation v. Management of the American Express International Banking Corporation 1986 Lab. IC 98, 511 Workmen of Balmadies Estate v. Management, Balmadies Estate 2008 LLR 231, 585 Workmen of Buckingham & Carnatic Mills v. State of Tamil Nadu, (1982) 2 LLJ 90, 283, 578

Workmen of Dahingeapur Tea Estate, AIR 1958 SC 1026, 188 Workmen of Dalmia Cement (Bharat) Ltd v. State of Madras, (1969) 1 LLJ 499 (Madras), 376 Workmen of Dewan Tea Estate v. Their Management, AIR 1964 SC 1458, 476, 678 Workmen of Dharampal Prem Chand v. M/s Dharampal Prem Chand, AIR 1966 SC 182, 193, 196 Workmen of Dikmakuchi Tea Estate v. Management of Dimakuchi Tea Estate, (1959) 1 LLJ 500 (SC), 180, 189, 190 Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate (1958) 1 LLJ 500 (SC), 263, 421 Workmen of Edward Keventers (P) Ltd v. Delhi Administration, ILR (1969) Delhi 767, 453 Workmen of Firestone Tyre and Rubber Co. v. Management (1973) 3 SCR 587, 648 Workmen of Firestone Tyre and Rubber Company of India (P) Ltd. v. Firestone Tyre and Rubber Company of India (P) Ltd, (1973) 1 LLJ 278; AIR 1973 SC 1273, 596 Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd, (1984) 4 SCC 392 (SC), 181 Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd, (1999) 1 LLJ 449, 263, 347 Workmen of Indian Express Ltd v. Management of Indian Express Ltd, (1970) 2 LLJ 132 (SC): (1984) 4 SCC 392 (SC), 181, 194, 196 Workmen of Industry Colliery v. Industry Colliery, (1953) 1 LLJ 190 (SC), 286 Workmen of J and P Coats (India) Pvt. Ltd v. State of Kerala, (1977) 2, LLJ 534 (Kerala), 375 Workmen of M/s Baikuntha Nath Debasthan Trust v. State of West Bengal, (1990) 2 Lab. IC 1586, 229 Workmen of M/s Williamson Magor and Co. Ltd, v. M/s Williamson, Magor and Co., Ltd, (1982) 1 LLJ 33, (SC), 164 Workmen of Macforline and Co. v. Fifth I T, (1964) 2 LLJ 556 (Calcutta), 253 Workmen of Meenakshi Mills Ltd v. Meenakshi Mills (1992) 2 LLJ 295, 519 Workmen of Motipur Sugar Factory Private Ltd v. Motipur Sugar Private Ltd, (1965) 2 LLJ 162, 169, 561 Workmen of New Eqerton Woollen Mills v. State of Punjab, (1967) 2 LLJ 686 (Haryana and Punjab), 392 Workmen of Rohtak General Transport Co. v. Rohtak General Transport Co., (1962) 1 LLJ 654 (SC), 119 Workmen of Sri Ranga Vilas Motors (P) Ltd v. Sri Ranga Vilas Motor (P) Ltd (1970) 2 LLJ 177, 365 Workmen of Straw Board Manufacturing Co. Ltd v. M/s Straw Board Manufacturing Co. Ltd, AIR (1974) SC 1132, 542 Workmen of Subong Tea Estate v. Management of Subong Tea Estate, (1964) 1 LLJ 333 (SC), 516, 523, 537 Workmen of Sudder Office v. Management, (1971) 2 LLJ 620 (SC), 568, 569, 570 Workmen of Sudder Workshop of Jorhaut Tea Co. v. Management, (1980) Lab. 1C 742 (SC), 529 Workmen of Sur Iron & Steel Co. v. Sur Iron & Steel Co., (1971) 1 LLJ 570 (SC), 658 Workmen of Syndicate Bank v. Government of India (1985) 1 LLJ 93 at 94 (SC), 377 Workmen of the Food Corporation of India v. M/s Food Corporation of India, (1965) 2 LLJ

4 (SC), 243 Workmen of Williamson Magor & Co. Ltd v. Williamson Magor & Co. Ltd, (1982) 1 LLJ 33 (SC), 312 Workmen v. Balmadies Estates (2008) 1 SCC 115 Workmen v. Firestone Tyre and Rubber Co. (1976) I LJ 493 (SC), 474, 477 Workmen v. Greaves Cotton Ltd, (1971) 2 LLJ 479 (SC), 190 Workmen v. M/s Dharampal Prem Chand, AIR 1966 SC 182, 196 Workmen v. Management of Indian Standard Institution, (1976) 1 LLJ 33 (SC), 216 Workmen v. Rohtak General Transport Company, 1962 1 LLJ 634 (SC), 196

X X R B Kaimal v. Director of Postal Services op. cit. Bhaskaran v. SDO, (1982) 2 LLJ 248 (SC), 227

Y Yad Ram v. B N Singh, (1974) 2 LLJ 306 (Delhi), 333 Yadeshwar Kumar v. M S Bennet Coleman, 2007 LLC 1138, 257 Yasin v. Town Area Committee, (1952) SCR 572, 348

Z Zaverbhai v. State of Bombay, AIR 1954 SC 752, 41

PART I INDUSTRIAL RELATIONS AND LABOUR LAWS

CHAPTER

1 Introduction to Labour Law Over the years, labour laws have undergone change with regard to their object and scope. Early labour legislations were enacted to safeguard the interest of employers. They were governed by the doctrine of laissez faire. Modern labour legislation, on the other hand, aims to protect workers against exploitation by employers. The advent of doctrine of welfare state is based on the notion of progressive social philosophy which has rendered the old doctrine of laissez faire obsolete. The theory of ‘hire and fire’ as well as the theory of ‘supply and demand’ which found free scope under the old doctrine of laissez faire no longer hold good.

I. APPROACH TO LABOUR LAW Labour law seeks to regulate the relations between an employer or a class of employers and their employees. The reach of this law is so wide that it touches the lives of far more people. Indeed, it covers millions of working men and women as compared to any other branch of law. It is this aspect which makes it most fascinating of all branches of law and, therefore, the study of this subject is of enormous dimension and of ever changing facets. There has been a remarkable change in the approach to labour law and industrial relations since World War II. Philadelphia Charter adopted in 1944 provided that ‘labour is not a commodity’ and that ‘poverty anywhere is a danger to prosperity everywhere’. W Friedmann and others who have tried to analyse the essential characteristics of legal development in this branch of law

consider it to be a ‘social duty’ on the part of employer as the main bedrock on which this law is built. This is exemplified by the very approach of law makers to the construction of a wage packet of the working men and women, wage fixation and condition of service. The Indian Constitution lays down broad guidelines to be followed by the state. The Supreme Court in D N Banerji v. P R Mukherjee1, stated that the law as developed after the Second World War, particularly in a welfare state, has reversed the theories of Sir Henry Maine and now society progresses form contract to status and has witnessed considerable legislation laying down conditions of service and also ensuring payment of minimum wages by laws.

II. BASIS OF LABOUR LAW Otto Kahn-Freund in his book Labour and the Law makes the following propositions: (i)

The system of collective bargaining rests on a balance of the collective forces of management and organized labour. The contribution which the courts have made to the orderly development of collective labour relations has been infinistesimal. (ii) Collective bargaining is a process by which the terms of employment and conditions of service are determined by agreement between management and the union. In effect, ‘It is a business deal (which) determines the price of labour services and terms and conditions of labour's employment.’ (iii) The law governing labour relations is one of the central branches of law according to which a very large majority of people earn their living. Nonetheless, law is a secondary force in human relations, especially in labour relations. (iv) Law is a technique for regulation of social power. This is as true of labour law as it is for other aspects of any legal system. Labour law also seeks to lay down minimum standard of employment. It lays down norms by which basic conditions of labour are fulfilled such as maximum working hours, minimum safety conditions, minimum provisions for holidays and leave, protection for women and children from arduous labour, prohibition of children below certain age from employment, provisions for minimum standards of separation benefits and certain provision for old age.

III. SOCIAL JUSTICE AND LABOUR LAW The development of industrial law during the last decade and several decisions of the Supreme Court while dealing with industrial relations have emphasized the relevance, validity and significance of the doctrine of social justice. The concept of social justice is not narrow or one-sided or pedantic. Its sweep is comprehensive. It is founded on the basic ideal of socio-economic equality and its aim is to assist the removal of socio-economic disparities. Nevertheless, in dealing with industrial relations, it does not adopt a doctrinaire approach and refuses to yield blindly to abstract notions, but adopts a realistic and pragmatic approach. It therefore, endeavours to resolve the competing claims of employees by finding a solution which is just, fair and reasonable to both parties with the object of establishing harmonious relations between labour and management.2

A. Concept of Social Justice It is difficult to precisely define the meaning of social justice. It is a vague term. Indeed, in Muir Mills Case3, Justice Bhagwati felt that social justice is a very vague and indeterminate expression and that no clear cut definition can be laid down which may cover all situations. He, however, observed that ‘without embarking upon a discussion as to the exact connotation of the expression ‘Social Justice’, we may only observe that the concept of social justice does not emanate from the fanciful notions of any adjudicator, but must be founded on a more solid foundation.’

B. Social Justice and the Constitution of India The Constitution of India in the Preamble resolved to secure to all its citizens : Justice—social, economic and political. Therefore, the concept of social justice is not foreign to legal order. Social justice is the primary objective of the state as envisaged in our Constitution. Social justice is one of the aspirations of the Indian Constitution. In order to secure to all citizens social justice, the Indian Constitution guarantees several fundamental rights.

C. Application of Concept of Social Justice in Industrial Adjudication The application of the concept of social justice in the adjudication of industrial disputes is now well settled. However, there is a word of caution. Its application

may vary according to the individual presiding officer's view, which may be fanciful. Thus in Punjab National Bank v. Ram Kanwar4, the Supreme Court observed that social justice does not mean that reason and fairness must always yield to convenience of a party. The Court held that such one-sided or partial view is next of kin to caprice or humour. Social justice need not always be in favour of workers—there may be cases, whereby their own conduct or on account of clear or unambigous provisions in a statute, they may not be entitled to relief. In such cases, grant of relief would not be just or fair. The Supreme Court has applied the principles of social justice while upholding the workman’s right to equal pay for equal work, reinstatement in service in case of wrongful discharge or dismissal, payment of wages to temporary or daily rated employees at the rate payable to permanent employees and regularization and confirmation of casual and daily wages employees. The Court has also elevated the right to work, right to equal pay for equal work and right to get minimum wages as fundamental rights. These pronouncements of the Court are directed to secure the goal of social justice which has now attained the status of basic feature of industrial adjudication. A survey of decided cases reveals that courts have generally applied the doctrine of social justice in interpreting labour laws. However, there has been a conflict of opinion in the high courts and even in the Supreme Court on the question of application of the concept of social justice. In Central India Spinning and Weaving and Manufacturing Co case5, Justice Modholkar speaking for the Bombay High Court held that the concept of social justice ought not to be imported in interpreting the Industrial Disputes Act or other similar Acts. The same learned judge speaking for Supreme Court in Rai Sahab Ram Kanwar's Case6 held that tribunal has no jurisdiction to decide on the basis of its own concept of social justice. However, Justice Gajendragadkjar in J K Cotton & Spinning and Weawing Mills Case7 rejected the argument that the concept of social justice is irrelevant. He added that ‘the concept of social justice has now become such an integral part of industrial law that no one can suggest that industrial adjudication can or should ignore the claims of social justice in dealing with industrial disputes.’ He observed: The concept of social justice is not narrow, or one-sided, or pedantic, and not confined to industrial adjudication alone. Its sweep is comprehensive. It is founded on the basic ideal of socio-economic equality and its aim is to assist the removal of socio-economic disparities and inequalities; nevertheless, in

dealing with industrial matters, it does not adopt a doctrinaire approach and refuses to yield blindly to abstract notions, but adopts a realistic and pragmatic approach. It, therefore, endeavours to resolve the competiting claim of employers and employees by finding a solution which is just and fair to both parties with the object of establishing harmony between capital and labour, and good relationship. The ultimate object of industrial adjudication is to help the growth and progress of national economy, and it is with that ultimate object in view that industrial disputes are settled by industrial adjudication on principles of fair play and justice. In Harijinder Singh v. Punjab State Warehousing Corpn8, the Supreme Court has elaborately discussed the concept of social justice and its application. The Court observed: The preamble and various articles contained in Part IV of the Constitution promote social justice so that life of every individual becomes meaningful and he is able to live with human dignity. The concept of social justice engrafted in the Constitution consists of diverse principles essentially for the orderly growth and development of the personality of every citizen. Social justice is thus an integral part of justice in the generic sense. Justice is the genus, of which social justice is one species. Social justice is a dynamic device to mitigate the sufferings of the poor, weak, dalits, tribals and deprived sections of society and to elevate them to the level of equality to live a life with dignity of person. In other words, the aim of social justice is to attain substantial degree of social, economic and political equality, which is the legitimate expectation of every section of society. In a developing society like ours which is full of unbridgeable and ever-widening gaps of inequality in status and of opportunity, law is a catalyst to reach the ladder of justice. The philosophy of welfare state and social justice is amply reflected in large number of judgments of this Court, various high courts, national and state industrial tribunals involving interpretation of the provisions of the Industrial Disputes Act, Indian Factories Act, Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, Workmen's

Compensation Act, the Employees Insurance Act, the Employees Provident Fund and Miscellaneous Provisions Act and the Shops and Commercial Establishments Act enacted by different states. In Ramon Services (P) Ltd v. Subhash Kapoor,9 Justice R P Sethi, observed: ‘after independence, the concept of social justice has become a part of our legal system. This concepts gives meaning and significance to the democratic ways of life and of making the life dynamic. The concept of welfare State would remain in oblivion unless social justice is dispensed. Dispensation of social justice and achieving the goals set forth in the Constitution are not possible without the active, concerted and dynamic efforts made by the persons concerned with the justice dispensation system.’ In LIC of India v. Consumer Education and Research Centre,10 Justice K Ramaswamy observed that social justice is a device to ensure life to be meaningful and liveable with human dignity. The State is obliged to provide to workmen facilities to reach minimum standard of health, economic security and civilized living. The principle laid down by this law requires courts to ensure that a workman who has not been found guilty cannot be deprived of what he is entitled to get. Obviously, when a workman has been illegally deprived of his device then that is misconduct on the part of the employer and employer cannot possibly be permitted to deprive a person of what is due to him.

IV. PUBLIC INTEREST LITIGATION FOR ENFORCEMENT OF LABOUR LAWS The Supreme Court in S P Gupta v. Union of India, popularly known as the Transfer of Judges case11 formulated the doctrine of public interest litigation in the following words: Where a legal wrong or a legal injury is caused to a person or to a determinate class of persons by reason of violation of any constitutional or legal right or any burden is imposed in contravention of any constitutional or legal provision without authority of law or any such legal wrong or legal injury or illegal burden is threatened and such person or determinate class of persons is by reason of poverty, helplessness or disability or economically disadvantaged position, unable to approach the

court for relief, any member of the public can maintain an application for an appropriate direction or writ or order. The Court found the view that public interest litigations unnecessarily clog the dockets of the court and add to the already staggering arrears of cases pending for years and should be discouraged, to be a totally perverse one smacking of an elitist and status quo approach. On the contrary, the Court found that the doors of courts were open for vindicating the right of the rich and wellto-do, for the landlord and the gentry, for the wealthy and the affluent and held that those who have decried public interest litigation did not seem to realize that courts were not meant only for the business magnet and the industrial tycoon, but they existed also for the poor and the downtrodden. The Court accordingly treated the letter written to a judge to be a writ petition.

V. INTERNATIONAL LABOUR ORGANIZATION AND ITS INFLUENCE ON INDIAN LABOUR LAWS The International Labour Organization (ILO) has played a key role in promoting international labour standards. It was set up in 1919 under the Treaty of Versailles. India is a founder member of ILO. There are certain fundamental principles of the ILO that were laid down at the time of its inception. These principles are known as the Charter of Freedom of Labour. The main principles of ILO are as follows: • Labour is not a commodity. • Freedom of expression and of association are essential to sustained progress. • Poverty anywhere constitutes danger to prosperity everywhere. • The war against want requires to be carried on with unrelenting vigour within each nation and by continuance and concerted international effort in which the representatives of workers and employers, enjoying equal status with those of the governments, join with them in free discussion and democratic decision with a view to promotion of common welfare. The aforesaid principles were modified at the 26th session of ILO held in Philadelphia in 1944. It also adopted a Declaration that concerns with the aims and purposes of the organization. This Declaration is known as the Philadelphia

Charter. By 2008, ILO had adopted 190 conventions and 198 recommendations. India had ratified 42 of the 190 conventions and one protocol. The Constitution of India and labour legislation uphold all the fundamental principles envisaged in the 8 core international labour standards. It ratified 4 of the 8 core conventions of ILO. With regard to the others, India seeks to proceed with progressive implementation of the concerned standards and leave the formal ratification for consideration at a later stage when it becomes practicable. The ILO has influenced labour legislation in India. Most labour legislation has been enacted in conformity with ILO conventions. Today, the ILO stands as one of the specialized agencies of the United Nations with longer history than any of its sister organizations.

A Structure and Activities The ILO is a tripartite organization consisting of representatives of governments, employers and workers of the member-countries. There is parity of representation as between government and non-government groups and also between employers’ and workers’ groups. The structure of the organization has helped in welding together employers and workers in various countries (including India) into independent organizations. In our country, for a long time now the representatives of employers and workers have secured, through their respective constituencies, elective posts on the Governing Body of the ILO. The ILO operates through its (i) Governing Body; (ii) International Labour Office; and (iii) the International Labour Conference, which meets once a year to review the international labour scene.

B. Making of International Labour Standard The annual conference sets normative standards on important matters such as regulation of hours of work and weekly rest in industry, equal remuneration for equal work, abolition of forced labour, discrimination in employment, protection of workmen against sickness, disease and work-injury, regulation of minimum wages, prohibition of night work for women and young persons, recognition of the principle of freedom of association, organization of vocational and technical education, and many areas concerning labour management relations. The standards are evolved after a full debate in the Conference. Usually the standards are accepted after discussions in the Conference over two successive years. Agreed standards on a specified subject are then converted into an international

instrument, a ‘Convention’ or a ‘Recommendation’, each having a different degree of compulsion. A ‘Convention’ is binding on the member-state which ratifies it; a ‘Recommendation’ is intended as a guideline for national action.12

C. ILO Declaration on Fundamental Principles and Rights at Work The ILO declaration on Fundamental Principles and Rights at Work, adopted by the International Labour Conference in June 1998, declares inter alia that all member states, whether they have ratified the relevant conventions or not, have an obligation to respect, promote and realize the principles concerning the fundamental rights which are the subject of those conventions, namely: (a) freedom of association and the effective recognition of the right to collective bargaining; (b) elimination of all forms of forced or compulsory labour; (c) effective abolition of child labour; and elimination of discrimination in respect of employment and occupation.13 The primary goal of the ILO today is to promote opportunities for women and men to obtain decent and productive work in conditions of freedom, equity, security and human dignity. The goal is not just the creation of jobs but the creation of jobs of acceptable quality.14 The Government of India has ratified Convention 122 on Employment and Social Policy in 1998. Article 1 of the Convention lays down: 1. With a view to stimulating economic growth and development, raising levels of living, meeting manpower requirements, and overcoming unemployment and under employment, each member shall declare and pursue, as a major goal, an active policy designed to promote full, productive and freely chosen employment. 2. The said policy shall aim at ensuring that: (a) There is work for all who are available for and seeking work; (b) Such work is as productive as possible; (c) There is freedom of choice of employment and fullest possible opportunity for each worker to qualify for, and to use skill and the endowments in a job for which he is well suited, irrespective of race, colour, sex, religion, political opinion, national extraction or social origin. (d)

3.

The said policy shall take due account of the state and the level of economic development and mutual relationships between employment objectives and other economic and social objectives, and shall be pursued by methods that are appropriate to national conditions and practices.15 The aforesaid convention was ratified by India at a time when unemployment levels were high. One, therefore, has to presume that the government is now committed to pursue an active policy designed to promote full, productive and freely chosen employment.16 From the commitments of the Government of India, it can be deduced that the following rights of workers have been recognized as inalienable and must, therefore, accrue to every worker under any system of labour laws and labour policy. These are: (a) Right to work of one's choice (b) Right against discrimination (c) Prohibition of child labour (d) Just and humane conditions of work (e) Right to social security (f) Protection of wages including right to guaranteed wages (g) Right to redressal of grievances (h) Right to organize and form trade unions and right to collective bargaining (i) Right to participation in management

VI. REVIEW OF LABOUR LAW BY THE FIRST NATIONAL COMMISSION ON LABOUR An important development in the arena of labour law and policy was setting up of the (first) National Commission on Labour in December, 1966 by the Government of India. The Commission was asked to undertake a comprehensive review of labour law. The Commission investigated the problems relating to labour and formulated a policy for the future. In the sphere of industrial relations, the Commission made the following recommendations:17 (i) Any sudden change replacing adjudication by a system of collective bargaining is neither called for nor practicable. The process has to be gradual. A beginning has to be made in the move towards collective

bargaining by declaring that it will acquire primacy in the procedure for settling industrial disputes. Conditions have to be created for promotion of collective bargaining. The most important among them is statutory recognition of a representative union as the sole bargaining agent. The place which strikes/lock-outs should have in the overall scheme of industrial relations needs to be defined; collective bargaining cannot exist without the right to strike/lockout. (ii) With the growth of collective bargaining and the general acceptance of recognition of representative unions and improved management attitudes, the ground will be cleared, at least to some extent, for wider acceptance of voluntary arbitration. (iii) It would be desirable to make recognition compulsory under a central law in all undertakings employing 100 or more workers or where the capital invested is above a stipulated size. A trade union seeking recognition as a bargaining agent from an individual employer should have a membership of at least 30 per cent of workers in the establishment. The minimum membership should be 25 per cent if recognition is sought for an industry in a local area. The proposed National/State Industrial Relations Commission will have the power to decide the representative character of a union, either by examination of membership records, or if it considers necessary, by holding an election by secret ballot open to all employees. (iv) The present arrangement for appointing ad hoc industrial tribunals should be discontinued. An Industrial Relations Commission (IRC) on a permanent basis should be set up at the centre and one in each state for settling ‘interest’ disputes. The IRC will be an authority independent of the executive. The main functions of the National/States IRCs will be (a) adjudication in industrial disputes; (b) conciliation; and (c) certification of unions as representative unions. (v) In essential industries/services, when collective bargaining fails and when the parties to the dispute do not agree to arbitration, the IRC shall adjudicate upon the dispute and its award shall be final and binding. It is unfortunate that most of the above recommendations have not been implemented.

VII. REVIEW OF LABOUR LAW BY THE SECOND NATIONAL COMMISSION ON LABOUR

The poor conditions of unorganized labour and the defective labour laws continued to engage public attention. On 11 January 1999, the Government of India announced its decision to set up the second National Commission on Labour to make suggestions to rationalize laws for workers in the organized sector and recommend an ‘umbrella’ law to protect labour in unorganized employments. The Commission was asked to take into account the emerging economic environment involving rapid technological changes, requiring response in terms of change in methods, timing and conditions of work, in industry, trade and services, globalization of economy, besides desirability to bring the existing laws in tune with further labour market needs and demands.18 While making a study, the Commission was also required to examine the minimum level of labour protection and welfare measures and the basic institutional framework for ensuring the same in the manner which is most conducive to a flexible labour market and adjustments necessary for furthering technological changes and economic growth. The (second) National Commission on Labour, which submitted its report to the Government of India on 29 June 2002, has made wide ranging recommendations on various facets of labour, viz., review of laws, social security, women and child labour, skill development, labour administration, unorganized sector, etc. Some of the significant recommendations are as under: (i) Existing set of labour laws should be broadly grouped into four or five sets of laws pertaining to: (i) industrial relations; (ii) wages; (iii) social security; (iv) safety; and (v) welfare and working conditions. The Commission is of the view that the coverage as well as the definition of the term ‘worker’ should be the same in all groups of laws, subject to the stipulation that social security benefits must be available to all employees including administrative, managerial, supervisory and others excluded from the category of workmen and those not treated as workmen. (ii) There is no need for different definitions of the term ‘appropriate government’. There must be a single definition of the term, applicable to all labour laws. The Central Government should be the ‘appropriate government’ in respect of Central Government establishments, railways, posts, telecommunications, major ports, light-houses, Food Corporation of India, Central Warehousing Corporation, banks (other than cooperative banks), insurance and financial institutions, mines, stock exchanges, shipping, security, printing presses, air transport industry, petroleum industry, atomic energy, space, broadcasting and television, defence establishments, cantonment boards, central social security institutions and

institutions such as those belonging to CSIR, ICAR, ICMR, NCERT and in respect of industrial disputes between the contractor and the contract labour engaged in these enterprises/establishments. In respect of all others, the concerned state government/union territory administrations should be the appropriate government. In case of dispute, the matter will be determined by the proposed National Labour Relations Commission. (iii) Central laws relating to the subject of labour relations are currently the Industrial Disputes Act, 1947, the Trade Unions Act, 1926 and the Industrial Employment (Standing Orders) Act, 1946. Mention must also be made of the Sales Promotion Employees (Conditions of Service) Act, 1976 and other specific acts governing industrial relations in particular trades or employments. There are state level legislations too on the subject. The provisions of all these laws be judiciously consolidated into a single law called the Labour Management Relation law or the law on Labour Management Relations. (iv) One of the most important steps that one needs to take in rationalizing and simplifying the existing labour laws is in the area of simple common definitions of terms that are in constant use; such terms include ‘worker’, ‘wages’ and ‘establishment’. By making the law applicable to an establishment employing 20 or more workers, irrespective of the nature of the activity in which the establishment is engaged, we have avoided the need to define ‘industry’. After examining all aspects of the question, we have come to the conclusion that persons engaged in domestic service are better covered under the proposed type of umbrella legislation, particularly in regard to wages, hours of work, working conditions, safety and social security. (v) In the case of socially essential services like water supply, medical services, sanitation, electricity and transport, when there is a dispute between employers and employees in an enterprise, and when the dispute is not settled through mutual negotiations, there may be a strike ballot as in other enterprises, and if the strike ballot shows that 51 per cent of workers are in favour of a strike, it should be taken that the strike has taken place, and the dispute must forthwith be referred to compulsory arbitration (by arbitrators from the panel of the Labour Relations Commission [LRC], or arbitrators agreed to by both sides).

VIII. APPROACHES OF INDIAN JUDICIARY AND

JUDICIAL LEGISLATION ON INDUSTRIAL RELATIONS A. Current Approaches of Indian Judiciary A survey of decided cases of the Supreme Court and high courts reveals a marked shift in their approaches to deal with labour issues. While prior to the 21st Century and more particularly between 1970 and 1990, the interests of workers were given prime consideration in dealing with labour cases; after 1990 and to be more specific, at the beginning of the 21st Century, the change in economic policy and globalization have influenced the decision makers. This shift in the approach of Indian judiciary may be seen in the judgments in the area of discipline and disciplinary procedure, voluntary and compulsory retirement, service contract and standing orders, compliance of natural justice, bandhs, demonstrations, retrenchment and on management’s prerogative during the pendency of proceedings before a labour tribunal. The courts evolved new norms to determine whether a person is a workman or not, and they have even exploded the judicial myth on the interpretation of the word ‘industry’ and workman. The Supreme Court felt that this was necessary in order to strike a balance between the earlier approach in the realm of industrial relations wherein only the interests of the workmen were focused on, and the current emphasis on ensuring fast industrial growth in the country. In several decisions, the Court noticed how discipline at the workplace/industrial undertaking received a setback. In view of the change in the economic policy of the country, the Court felt that it might not now be proper to allow employees to break discipline with impunity because we are governed by the rule of law. All action therefore, must be taken in accordance with the law. The aforesaid line of approach received a jolt in two decisions reported in 2010–2011. The Court19 noticed that ‘there had been a visible shift in the courts’ approach in dealing with cases involving the interpretation of social welfare legislations. According to the Court, globalization and liberalization are the raison d'être of the judicial process, and an impression has been created that the constitutional courts are no longer sympathetic towards the plight of industrial and unorganized workers. It was felt that in large number of cases, relief has been denied to the employees falling in the category of workmen, who are illegally retrenched from service by creating by-lanes and side-lanes in the jurisprudence developed by this Court in three decades. It added that the plea

raised by the public employer in such cases is that the initial employment/engagement of the workman/employee was contrary to some or the other statute or that reinstatement of the workman will put unbearable burden on the financial health of the establishment. It was also felt that the courts have readily accepted such plea unmindful of the accountability of the wrong doer and indirectly punished the tiny beneficiary of the wrong ignoring the fact that he may have continued in the employment for years together and that micro wages earned by him may be the only source of his livelihood.’ It was further felt that if a man is deprived of his livelihood, he is deprived of all his fundamental and constitutional rights and for him the goal of social and economic justice, equality of status and of opportunity, the freedoms enshrined in the Constitution remain illusory. Therefore, the approach of the courts must be compatible with the constitutional philosophy of which the directive principles of State policy constitute an integral part and justice due to the workman should not be denied by entertaining the specious and untenable grounds put forward by the employer—public or private.20 In 2011, the Supreme Court also deprecated the new technique of subterfuge adopted by some employers in recent years in order to deny the right of workmen under various labour statutes by showing that the concerned workmen are not their employees but are the employees/workmen of a contractor, or that they are merely daily wagers or short term or casual employees when in fact, they are doing the work of regular employees.21 The Court therefore, disapproved and even condemned such practices. It felt that globalization/liberalization cannot be at the cost of exploitation of workers22.

B. Judicial Legislation on Industrial Relations The Indian judiciary has made significant contribution in not only evolving new industrial jurisprudence but has also brought the following judicial legislations in the process of interpretation. 1. Regulation of management’s power to dismiss workers by laying down various norms 2. Termination of service after giving 3 months’ notice or wages in lieu thereof without assigning any reason—illegal 3. Automatic termination of service for absence for specific period under standing orders without following the principles of natural justice—not proper 4. Wages for the period of strike/lock-out under certain circumstances

5.

Widened scope of retrenchment

6. 7.

Evolved triple test for determining the scope of industry Sexual harassment of women at work place by laying down law and procedure Representative union—to be determined by secret ballot (Food Corporation of India case) Absorption of contract labour—when contract is sham Closure of industries due to (i) Environmental pollution and (ii) Hazardous nature Justified and unjustified strikes and lock-outs Denial of minimum wages to be forced labour Child labour—abolition and social security scheme Bonded labour—rehabilitation, identification, abolition–enforcement Workers' participation in management (i) Winding up and (ii) Running sick industry Profit sharing–bonus — linked with productivity Rules of natural justice to be followed in domestic inquiry Enforcing code of discipline

8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

IX. LABOUR REFORMS: REVIEW OF LABOUR LAW Labour law, which seeks to regulate the relations between employers and their workmen, does not address several problems. Even though labour laws have been amended during the last few years, but it cannot be denied that they have become obsolete. Indeed, they suffer from various defects and shortcomings.

Thus, most labour legislations are not applicable to unorganized labour, which constitutes about 93 per cent of the labour force. Further, most labour legislation is more than five decades old. It is felt that our labour laws are overprotective, over reactive, fragmented, outdated and irrelevant and as such have created hurdles in achieving the target of fair labour practices. The emergence of globalization, liberalization and privatization has brought new challenges. There is therefore, mounting pressure to reform labour laws. In view of this, the second National Commission on Labour had, in its report, made some headway in removing the irritants and stumbling blocks. However, it is unfortunate that no positive steps have so far been taken to give legislative shape to the recommendations of the Commission. It is often contended by employers that labour laws place unreasonable restrictions on them to hire workmen and terminate their services and inhibit them in meeting global competition. They also claim that this deters them from opening of new businesses and discourages employment intensity. On the other hand, workers' organizations have opposed the dilution of job security provisions in the law since they feel that it would encourage exploitation of workers and deterioration in the quality of employment. Whatever may be the justification of managements and trade unions, there is a need to re-look at the existing provisions in view of the interests of workers and also the recent developments. The key areas of labour law reforms are as under: 1. Multiplicity of labour laws and the need for fewer labour legislations if not a single labour code There are about 165 legislations—both central and state to deal with labour. These are the most voluminous in the world. More laws mean less implementation if the inspection and enforcement machinery is limited. The first National Commission on Labour and National Labour Law Association favoured single labour code and even prepared a draft labour code. The second National Commission on Labour grouped the entire labour law into four or five categories. Be that as it may, it is better to have fewer labour laws, if not a single labour code and better enforcement. 2. Law relating to multiple definitions of same/similar terms under labour legislation to be eliminated (i) The Industrial Disputes Act, 1947 defines ‘workman’, the Factories Act defines ‘worker’ and the Employees' State Insurance Act, 1948 defines ‘employee’ in different ways. This creates confusion. In

3.

4.

5.

6.

7.

order to bring uniformity, the term ‘worker’ should be uniformly adopted and defined as suggested by the second National Commission on Labour in all labour legislation. (ii) The expression ‘appropriate government’ has been differently defined in various labour legislations. In order to reduce conflict and bring uniformity, there should be a single definition. The 2010 amendment in the IDA has however, provided a guideline. (iii) The term ‘wage’ has been defined differently under the Minimum Wages Act, 1948, Payment of Wages Act, 1936, Payment of Gratuity Act, 1972 and the Industrial Disputes Act, 1947. A need has therefore, been felt to provide a single definition. Law relating to arena of interaction—vague The definition of ‘industry’ under the Industrial Disputes Act, 1947 and ‘establishment’ under the Industrial Employment (Standing Orders) Act, 1946, despite the judicial interpretation, is still unsettled and needs to be simplified. Law relating to salary limit—obsolete The salary limit provided under various labour legislations has become obsolete. Thus, the wage limit under the Payment of Wages Act, 1936 has now been fixed at ₹6,500 per month. Likewise, the 2010 amendment in the Industrial Disputes Act fixes the wage limit for workers doing supervisory work at ₹10,000 per month. On the contrary, there is no wage limit for persons doing technical/skilled work. Thus, even persons like a pilot drawing several lakhs per month would be a workman under the Industrial Disputes Act, but a supervisor drawing ₹10,000 or more per month would not be a workman. This is an area which requires review. Number of persons employed The minimum number of persons prescribed under various labour legislations including social security and minimum standard legislations need to be reviewed. Simplify and rationalize labour The substantive law and procedures prescribed under various labour legislations should be simplified and rationalized. Laws regulating strikes and lockouts These need to be reviewed as under: (i)

Minimum period of notice must be prescribed for strikes/lockouts

8.

in non-public utility services. (ii) Secret ballot method for resorting to strikes may be considered. (iii) Penalties prescribed for illegal strikes/lockouts should be deterrent in nature. (iv) Just like go-slow, stay-in-strike should be treated as a serious misconduct. Notice of change under Section 9A of the Industrial Disputes Act, 1947 This needs to be reviewed, particularly where the employers expands the business or increases the strength of labour. (i)

Notice of Change—Mere Display of Notice not Sufficient In Management of Salem District Co-operative Milk Producers' Union Ltd v. Industrial Tribunal,23 the Madras High Court held that mere display of the notice on the notice board will not be sufficient. The notice must be in terms of the provisions of the Industrial Disputes Act and the Tamil Nadu Industrial Disputes Rules which, inter alia, stipulate that it must be exhibited in Tamil. (ii) Recovery of Payments towards Inadmissible Allowances and Incentives In Jossie v. Flag Officer Commanding-in-Chief,24 the Kerala High Court held that recovery of payment made towards inadmissible allowance made by mistake is not violation of Section 9A of Industrial Disputes Act, 1947. (iii) Transfer of Employees In Associated Cement Co. Ltd v. Cement Staff Union,25 the Bombay High Court held that transfer of an employee being an incident of service, there is no question of the order of transfer not being in violation of Section 9A of the Industrial Disputes Act, 1947. 9. Government's permission for retrenchment, lay-off and closure of enterprises The crucial issue is (i) whether the management employing 100 workers or more should seek prior approval of the appropriate government before lay-off, retrenchment or closure, and (ii) whether the existing limit of 100 workers should be raised to 300. 10. Problems of enforcement and compliance of labour laws The existing labour legislation does not fully address the problems of

enforcement. This is more evident in the unorganized sector. Quite apart from this, the enforcement process has failed to meet the intent of legislature. The penal provisions, particularly in case of illegal strikes/lockouts have remained only on paper. It is felt that it is better not to have a law which is respected more in breach than in its observance. It is further felt that so long as the cost of violation is less or negligible than the cost of compliance, the provisions of labour laws would remain on paper. 11. Recognition of trade unions A crucial issue in labour laws relates to recognition os trade unions. This is so because there is no provision in any central labour legislation for the recognition of trade unions by the employer. The basic issue is about the mode of determining the bargaining agent. The Federation of Trade Unions is divided over the issue of whether verification or secret ballot method should be adopted. No doubt, several legislative attempts have been made but till date, (except in some states) there is no central legislation to deal with recognition of trade unions. 12. National minimum wage The first National Commission on Labour recommended that national wage is not necessary because of wide variations due to socio-economic and demographic conditions not only in various states but also at the regional and district levels within the states. However, there is a need to examine whether there should be a national minimum wage for all scheduled employment. 13. Other areas for reform (i) Social security for unorganized workers, particularly health, maternity benefits, disablement benefits and old age benefits even after the enactment of the Unorganized Worker’s Social Security Act, 2008. (ii) Contract labour (iii) Inter-state migrant workmen (iv) Child labour (v) Minimum standards of employment for all workers (vi) Application and extension of Equal Remuneration Act, 1976

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

AIR 1953 SC 58. See J K Cotton Spining & Weaving Mills v. Labour Appellate Tribunal, AIR 1964 SC 737. AIR 1995 SC 170. (1957) ILLJ 542. Central India Spg. Wvg & Mfg Co. Ltd v. Industrial Court, (1959) ILLJ 468. (1963) 2 LLJ 65. AIR 1964 SC 737. (2010) 3 SCC 192. para 19. (2000) 1 SCC 118. (1995) 5 SCC 482. AIR 1982 SC 149. See Govt. of India, Report of the First National Commission on Labour (1968), 473. Govt. of India, Report of the Second National Commission on Labour (2002), 35. Ibid. Govt. of India, Report of the Second National Commission on Labour (2002), 35. Ibid. Govt. of India, Report of the Second National Commission on Labour (2002), 35. See Hindustan Times, January 12, 1999, New Delhi. Harjinder Singh v. Punjab State Warehousing Corporation, (2010) 3 SCC 192. Ibid. Bhilwara Dugdh Utpadak Sahkari S Ltd v. Vinod Kumar Sharma, 2011 LLR 1079 (SC). Ibid. 2010 LLR 435. 2011 LLR 1168. 2010 LLR 162.

CHAPTER

2 Industrial Relations: An Overview I. THE CONTEXTUAL FRAMEWORK Industrial relations is a dynamic socio-economic process. It is a ‘designation of a whole field of relationships that exist because of the necessary collaboration of men and women in the employment processes of industry’.1 It is not the cause but an effect of social, political and economic forces.2 It has two faces like a coin—cooperation and conflict.3 The relationship, to use Hegal’s expression, undergoes change from thesis to antithesis and then to synthesis. Thus, the relationship starting with cooperation soon changes into conflict and after its resolution, again changes into cooperation.4 This changing process becomes a continuous feature in an industrial system. The relationship between labour and management is based on mutual adjustment of interests and goals.5 It depends upon economic, social and psychological satisfaction of the parties. Higher the satisfaction, healthier the relationship. In practice it is, however, found that labour and capital constantly strive to maximize their pretended values by applying resources to institutions. In this effort they are influenced by and are influencing others. Both of them try to augment their respective income and improve their power position. The major issues involved in the industrial relations process are terms of employment such as wages, dearness allowances, bonus, fringe benefits, working conditions, leave, working hours, health, safety and welfare, nonemployment, job security, personnel issues such as discipline, promotional opportunities and recognition of trade unions. However, in view of sharply

divided and vociferously pressed rival claims, the objectives of labour and management are not amenable to easy reconciliation. This is all the more so because the resources are limited. Be that as it may, the means adopted to achieve the objectives which vary from simple negotiation to economic warfare adversely affect the community's interest in maintaining an uninterrupted and high level of production. Further, in a country like India where labour is neither adequately nor properly organized, unqualified acceptance of the doctrine of ‘free enterprise’, particularly between labour and management, strengthens the bargaining position of the already powerful management. It is apparent that the State, with its ever-increasing emphasis on welfare aspect of a governmental activity, cannot remain a silent and helpless spectator in the economic warfare. The legislative task of balancing the conflicting interest in the arena of labour-management relations proves to be an extremely difficult one, in view of mutually conflicting interests of labour and management. The substantive issues of industrial relations are of perennial nature and thus, there can never be a ‘solution for all times to come.’6 There can only be broad norms and guidelines as criteria in dealing with issues of industrial relations.7 The law plays an important role in shaping the structure of industrial relations.8 It represents the foundation from which the present system and procedure flows to deal with the problems of industrial relations.9

II. DIMENSIONS OF THE PROBLEMS OF INDUSTRIAL RELATIONS India is primarily an agricultural country. As per the Census of India, 2001, the total employment in both organized and unorganized sector in the country was of the order of 40.22 crore. Out of this, about 2.65 crore were in the organized sector and the balance 37.57 crore in the unorganized sector.10 Out of 37.57 crore workers in the unorganized sector, 23.7 crore workers were employed in agriculture sector, 1.7 crore in construction, 4.1 crore in manufacturing activities and 3.7 crore each in trade and transport, communication and services. The workers in the unorganized sector fall in various categories but a large number of them are home-based workers engaged in occupations like beedi rolling, agarbatti making, pappad making, tailoring, zari and embroidery work. However, the largest chunk of unorganized labour, namely, 60 per cent being agricultural workers and cultivators including small and marginal farmers, who are badly in need of legal/social protection, have been left out. Be that as it may,

the importance of industry cannot be minimized. Said J L Nehru: The alternative (to industrialization) is to remain backward, underdeveloped, poverty-stricken and a weak country. We cannot even retain our freedom without industrial growth.11 According to a survey conducted by the National Sample Survey Organization in the year 2004–2005, out of 45.9 crore which constitute the total labour force, 43.3 crore persons are engaged in unorganized labour which constitutes 93 per cent of work force. They are denied job security, social security and other benefits. Most of the labour force, particularly in the unorganized sector, is unskilled, underemployed, self-employed, casual and unprotected. Rural development is essential for upgrading the living conditions of the overwhelming majority of people and providing minimal economic sustenance to the poverty-stricken sections of the community. But, industrial development is necessary for affluence and for bringing the benefit of scientific and technological progress to all sections of the community. Out of the total of 40.22 crore in terms of 2001 census and 45.9 crore in terms of estimate of National Sample Survey 2004–2005, 12.7 crore were cultivators, 10.6 crore were agricultural labourers, 1.6 crore were in household industries and 15.1 crore were other workers. Most labour legislation is not applicable to them. However, an important recent initiative taken by the Ministry of Labour and Employment to safeguard the interest of unorganized workers has been the enactment of the Unorganized Workers’ Social Security Act, 2008. The Act provides for constitution of National Social Security Board which will recommend formulation of social security schemes for unorganized workers from time to time. Accordingly, the National Board was constituted in 2009 which recommended that the social security schemes viz; Swavalamban Yojna, Rashtriya Swasthya Bima Yojana (RSBY) providing for health insurance, Janashree Bima Yojana (JBY) providing death and disability cover and Indira Gandhi National Old Age Pension Scheme (IGNOAPS) providing for old age pension which may be extended to building and other construction workers, MNREGA workers, Asha workers, Anganwadi workers and helpers, porters/coolies/gangmen and casual and daily wagers.

III. INDUSTRIAL UNREST AND WORK-STOPPAGES The importance of sustained industrial production underlines the need of

avoiding work-stoppages and loss of production. The economics of workstoppages may be recapitulated. Between 1921 and 2010, India lost about 8.62 million12 man-days in work-stoppages caused by industrial disputes between workmen and employers. The alarming magnitude of the statistical data is even more awe-inspiring considering that in the 2001 census, 402.3 million workers were at a standstill for about 5 days. If one were to add the secondary and tertiary effects of work stoppages, the figures would be gigantic. Thus, it is said that India loses the highest number of man-days and has the highest rate of absenteeism. Period-wise details given in Table 2.1 below: Table 2.1: Number of Workers and Man-days Lost

Source. The estimate is based on data given in Appendix II of V B Kaushik, Indian Trade Unions: A Survey, (1966) p. 322, for the period 1921–46, Table XXV of Indian Labour Year Book, 1950–51, for the period 1947–50, Table 10.1 of the Indian Labour Statistics, for the period 1951–60, Indian Labour Statistics, 1976, p. 277, for the period 1960–89, Handbook of Labour Statistics of 1992 and Annual Report 1998–99, 2004–05 of the Ministry of Labour, Govt. of India (1999) 27, Indian Labour Year Book, 2007 (2009) Indian Labour Journal (March, 2011) p. 933, Labour Law Reporter, p. 357.

IV. UNEMPLOYMENT AND UNDEREMPLOYMENT AS BARRIERS TO IMPROVING INDUSTRIAL RELATIONS Unemployment and underemployment are the most important economic evils in a welfare state. India is no exception. In India, one-sixth of the total population of the country is either unemployed or chronically underemployed. As per the Government of India report,13 upto the end of June, 2009, 1.07 lakh pensons had

been placed on employment exchange. The total number of jobseekers by June, 2009 were about 2 lakh.14 These are the phenomena of Indian industries that have affected to a considerable extent the standard of living and have also created disparity in the working class. They have hampered the growth of the labour movement and trade unions. Political parties may take advantage of the unemployed millions and divert them from the search for gainful employment towards unproductive political actions. Further, underutilization of human resources in the agricultural sector is likely to divert agriculturist section of jobseekers to industrial sectors. Unemployment poses a serious threat to development programmes. Government planners should be sensitive to the present problem of unemployment. Labour law can be modelled or remodelled to implement law, policies and programmes to provide relief to unemployed.

V. OTHER DIFFICULTIES IN HEALTHY GROWTH OF INDUSTRIAL RELATIONS THROUGH LABOUR LAW POLICY 1.

Low wages: Discontent amongst industrial workers revolves round the question of wages. Low wages figure prominently both in industrial and agricultural sectors. 2. Ignorance and illiteracy: Another malady of Indian workers is illiteracy. Out of 2.81 million workers employed in tea plantations, mines, jute, cotton textiles, iron, and steel, 2.08 million15 workers are illiterate. The workers do not fully realize the social and economic implications of the modern industrial system and evils arising therefrom and, therefore, are less likely to insist on reforms. Lack of education among industrial workers has also given rise to the evolution of outside leadership. Access to regular employment is mainly limited to better educated workforce. Only 4 per cent of illiterate workforce has access to regular employment. In contrast, approximately 40 per cent of them are casual labourers. Only 9 per cent workers with primary education have access to regular employment while an overwhelming 35 per cent of them are casual labourers.16 The table below tabulates the percentage distribution of workers with different levels of education by employment status in 2004–05. Table 2.2: Education Levels of Workers

Source: Unit level data of NSSO, Employment & Unemployment Survey, 2004–05

Similarly, workers with higher educational achievements are likely to get higher wages as compared to those who are less educated. Again, as in case of access to regular employment, wages increase significantly only after certain thresholds of educational status (say secondary level) are reached both in rural as well as urban areas. In rural and urban areas, there is not much difference in wages of illiterates and of those up to primary level of education. Even middle level of education brings marginal difference in daily earnings. Wages increase significantly only after minimum secondary level of education.17 3. Heterogeneity: Another characteristic of Indian labour is its heterogeneity. India is ‘a vast country where customs and traditions differ considerably from one part to another. There are distinctions based on caste, creed and religion and provincial jealousy (where residents of one state look down upon residents of another state). In spite of the provisions in the Constitution that there would be no distinction on the basis of caste, creed, etc., there is no denying that these vices are widely prevalent.18 The effect of this is that workers do not unite for better conditions inter se and for reform. 4. Absenteeism: Absenteeism has been a cause of great concern in most of the organizations in India. There is no hard and fast rule to deal with this problem. Industry-wise and state-wise, absenteeism rate, i.e., percentage of man-days lost due to absence to the number of man-days scheduled to work were 10.01 and 8.96 respectively during 2004.19 However, it is certain that it requires a great deal of expertise to effectively bring down the cases of absenteeism. Disciplining is, of course, the last resort to curb and control absenteeism but now with advancement of behavioural science, some psychological

5.

methods have also proved to be very useful which is known as human relations approach. Women workers: Employment of women in industrial establishments is common in almost all countries—developed and developing. India is no exception. Special provisions of labour law exist to deal with the special problems of women workers employed in factories, mines, plantations and other industrial establishments. Women constitute a significant part of the work force in India. According to 2001 census, the total number of women in the country was 494.82 million out of the total population of 1,025.25 million. This means women accounted for 48.26 per cent of the total population. Employment of women in the organized sector (both public and private as on 31 March 2006 was 5.12 million which constituted 19 per cent of the total organized sector employment in the country).20 According to 2001 census, out of 127.73 million cultivators, only 41.89 million constituted female cultivators. Out of the agricultural labourers of 106.77 million in the same year, women agricultural labourers constituted 49.44 million. In case of agricultural labourers, there is parity between men and women.21 Table 2.3: Demographic Profile of Indian Workman

Source: Govt. of India, Indian Labour Year Book 2007 (2009) p 10

The employment of women workers in modern industrial system has given rise to several problems. First, a set of major social evils involved in the employment of women is widespread disorganization of family life. The lack of domestic care of the development of a child’s personality may continue even in his adult life. The increasing number of juvenile delinquents, stillborn children, abortions, morbidity of women, abnormal pregnancies and premature births are clear reflections of employment of women.22 ‘Second, the economic problem involved in industrial employment of women is in no way less significant. The inadequacy of family income and the desire to supplement the meagre family income23 compels women workers to work in industry. But employment in such an establishment does not provide them adequate wages. They are generally placed either in lower jobs or in traditional jobs which carry lower salaries and are not generally given higher posts. Third, ‘equal pay for equal work’ for both men and women has not been fully implemented and despite legislation, there is disparity of pay between men and women. Fourth, the employment of women in industry creates a variety of other problems such as hours of work (particularly during night), overtime, health, safety, welfare and maternity leave. Fifth, the legal protection afforded to women workers is also inadequate and involves problems of inadequate inspecting staff. Sixth, working women face the problem of sexual harassment for which norms have been laid down by the Supreme Court for prevention and regulation.24 6. Child labour: Another major problem of industrial relations is that of child labour. It is a common and serious problem for the country. It ultimately affects the personality and creativity of children. Data regarding the extent of employment of child labour are inadequate. According to the 2001 census, the estimated figure of working children was 12.6 million.25 This figure rose to 17.02 million according to the estimates of the 43rd National Sample Survey conducted in 1987–88. However, the incidence of child labour in India has declined from around 5 per cent in 1993–94 is

approximately 3 per cent in 2004–05.26 The evil of employment of children in agricultural and industrial sectors in India is a product of economic, social and, among others, inadequate legislative measures. Social evils involved in the employment of children are widespread illiteracy resulting in lack of development of child’s personality which may continue even in his adult life and negligence and indifference of the society towards the question of child labour.27 There is also lack of proper appreciation on the part of parents as to how continuance of child education would benefit his employment prospects and improve the standard of living.28 The economic problems involved in the employment of children are in no way less significant. Poverty resulting in inadequate family income and the desire to supplement it compels children to work. Indeed, the parents of low income groups like artisans cannot afford to educate their wards even if education is free. For them, an uneducated child is an asset; desire to be educated becomes a double liability because of: (a) loss of earning if the child does not work; and (b) expenditure on education, howsoever, small.29 Thus, the economic evils have not only deprived children at work from education but also led to high infant mortality, morbidity and malnutrition, particularly in weaker sections of the society in urban areas. The indifference of legislators to provide adequate legislation to regulate employment of children has failed to minimize the growth of child labour. The socio-legal problems involved in the employment of children in agriculture and industries are: (a) is it feasible to abolish child labour particularly of those: (i) who are orphans, destitutes, neglected, and abandoned children; (ii) children who have to work for livelihood; (iii) children belonging to migrant families; and (iv) handicapped children? If not, what should be done mediately and immediately (b) Should child labour be banned in hazardous employment? If so, what are the alternatives? (c) What should be the minimum age for different kinds of employment? (d) What should be the duration of their work including rest interval? Is it desirable to adjust the working hours in such a manner as to provide for schooling of children? (e) What privileges should be afforded to them in matters of leave and holidays? (f) What protection should be afforded to them in matters of health, safety and welfare? The legislature has met the first problem by providing certain minimum standards of age, physical fitness30 and sometimes educational attainments. The second problem has also been dealt with by the legislature by prohibiting

employment in certain establishments or part of establishments.31 The third problem has been met by prohibiting employment of women and children in certain dangerous work.32 The rest of the problems have been met by the legislature by imposing various restrictions on the conditions of work such as limited hours of work, provisions for holidays, rest intervals, leave, health, safety and welfare amenities. India has been following a proactive policy in the matter of tackling the problem of child labour by undertaking constitutional, statutory and developmental measures that are required for its elimination. The recently enacted Right of Children to Free and Compulsory Education Act, which came into effect from 1 April, 2011 is a major initiative taken by the government in this direction. Steps have been initiated to realign National Child Labour Policy with the provisions of the Right to Education Act. Under the National Child Labour Policy, 100 National Child Labour Projects (NCLPs) are in operation for rehabilitation of about 2.11 lakh working children. A major activity undertaken under the NCLP is the establishment of special schools to provide non-formal education,33 vocational training, supplementary nutrition, stipend, health care, etc., to children withdrawn from employment. So far, 1.87 lakh children from special schools of NCLPs have been mainstreamed into formal education system. The target is to eliminate child labour in a sequential manner, beginning with its elimination from hazardous occupations through a determined move towards its complete elimination from other occupations. Besides, a large number of NGOs are working for elimination of child labour under the grant-inaid scheme.34 Apart from continuing the existing 100 NCLPs during the Tenth Plan, government has approved setting up of additional 150 NCLPs in child labour endemic districts during the 10th Plan. The expanded scheme in additional 50 districts has already been launched in January, 2004 and states have been asked to set up NCLPs in these identified 50 districts. In the remaining 100 districts, the scheme would be launched after additional 100 districts are identified on the basis of the 2001 census report which is in process. Government has also launched the INDOUS (INDUS) Child Labour Project on 16 February 2004 during the visit of Mr Arnold Levine, Deputy Undersecretary, US Department of Labour and Mr Kari Tapiola, Executive Director, International Labour Organization to India.35

VI. SCOPE AND CONCEPT OF INDUSTRIAL

RELATIONS Industrial relations deal with the relationship between labour and management, and their organization. The concept of ‘industrial relations’ is very broad and includes in its fold all the relationships in modern industrial society which arise out of employee-employer exchanges and also the role of the state in these relations. Explaining the concept of industrial relations, R A Lester observed: It involves attempt to workable solutions between conflicting objectives and values—between incentive and economic security, between discipline and industrial democracy, between authority and freedom and between bargaining and cooperation. According to the Encyclopedia Britannica, ‘the concept of industrial relations has been extended to denote the relations of the state with employers, workers and their organizations’. The International Labour Organization (ILO), while dealing with industrial relations, states that they deal with either the relationship between the State and employers and workers’ organization or between the occupational organizations themselves. The significance of industrial relations is aptly described by the (First) National Commission on Labour (1969) as follows: A quest for industrial harmony is indispensable when a country plans to make economic progress. Economic progress is bound up with industrial harmony for the simple reason that industrial harmony leads to more cooperation between employers and employees which results in more productivity and thereby contributes to all-round prosperity of the country. Healthy industrial relations on which industrial harmony depends cannot, therefore, be regarded as a matter in which employers and employees are concerned. It is of vital significance for the community as a whole. The scope of industrial relations varies from time to time and place to place. According to Professor Richardson, the scope of industrial relations includes: ‘How people get on together at their work, what difficulties arise between them, how their relations including wages and working conditions are regulated, and what organizations are set up for the protection of different interests.’

VII. INDUSTRIAL RELATIONS VIS-A-VIS HUMAN RELATIONS MANAGEMENT Industrial relations are basically a problem of human relations, and are influenced, if not conditioned, by all the complex circumstances that affect the latter. While the apparent causes of good or bad labour management relations may not be difficult to classify, the real causes underlying outward and visible signs, over which there is seldom any unanimity, have their roots in historical, political, socio-economic factors and depend upon attitudes of workers and employers. Many times, work-stoppages which can be apparently ascribed to some simple demand, namely, economic or personnel, are found, on a deeper examination, to have complex roots in the social and cultural attitudes of the worker involved. At times, though strikes take place because of certain economic demands, harmonious relations are not necessarily restored even after the monetary benefits demanded are granted to workers. On the contrary, it is also possible that even without the apparent demand being satisfied or conceded, good relations are restored once the deeper cause, be it political, social or economic is properly tackled. A change in the leadership in the workers' union or a change in the management may radically alter the basic relationship between the management and the workers. As such, a particular state of industrial relations cannot be viewed in isolation from the political, social and economic characteristics obtaining therein nor the remedies to correct certain situations developed without giving due consideration to such factors.36

VIII. OBJECTIVES OF INDUSTRIAL RELATIONS It is difficult to precisely lay down the objectives of industrial relations. However, various authors on the subject attempted to highlight the main objectives of industrial relations. Nair and Nair citing Kirkaldy (1947), state that there are four objectives for industrial relations: (i) To improve economic conditions of workers; (ii) For state control on industries for regulating production and promoting harmonious industrial relations; (iii) For socialization or rationalization of industries by making state itself a major employer;

(iv)

For vesting of the proprietary interest of the workers in the industries in which they are employed. The objectives of industrial relations require examinations of following key features: (i) Employer to individual employee relationships: This relates to management’s policies and practices that ultimately affect the productivity and well-being of their employees as individuals. With a view to optimizing the interests of the employer and those of employees, necessary steps need be taken which may cover wages and salary administration, career prospects inclusive of planning and promotion, retirement and medical benefits, discipline and redressal of grievances, training and development, counselling, workers’ compensation and other related issues such as insurance. (ii) Management relations with trade union or group of workers: It covers rights and practices, regulated by law or legal machinery. It relates to: (a) Collective agreements (b) Settlement of industrial disputes (c) Management’s rights (d) Formation and recognition of unions as representative body of workers Another focus of labour management relations are health, safety and welfare of workers. (iii) Industrial peace and productivity: One of the most important object of industrial relations is to maintain industrial peace and harmony and, thereby, increase productivity. It depends on the quality of unionmanagement relations at workplaces.

IX. ROLE OF THE STATE IN INDUSTRIAL RELATIONS In the sphere of industrial relations, the state cannot remain a silent spectator. It has to play a persuasive and sometimes coercive role in regulating industrial relations in so far as they concern collective bargaining and the consequent direct action which either party may resort to for the realization of its claims. The state's anxiety about work stoppages arises because of two factors: (i) the impact on the community by way of inconveniences inflicted by interruption in

supply of essential goods/services; and (ii) social cost to the parties themselves in the form of loss of wages/production. It has, therefore, a special interest in the methods chosen by the parties for regulation of their mutual relations. For instance, adoption of collective bargaining will require well-organized unions and employers’ associations. The state, when it moves towards this goal, takes upon itself the task of formulating rules for maintenance of discipline, social justice, labour welfare and peace and harmony. It may intervene through conciliation process or compulsory adjudications. In the process, it will have to define permissible area of intervention. As a corollary to its role in maintaining peace, the state has provided for conciliation and adjudication machinery to settle industrial disputes under the Industrial Disputes Act, 1947. This can be best performed either by creating conditions in which adjudication would succeed in preference to strife or by compelling the parties to accept direct intervention of the state in public interest. In either case, better results are achieved where the existence of the third party is not overtly felt. Quite apart from the above roles played by the state, there are others which have a special significance in our context. The first is that of the state as an employer, which has two aspects, i.e., direct employment of labour by the state and employment in industrial corporations constituted by the state. Handling of industrial relations in the case of its own employees, to whom all legislation framed for industry is applicable, falls in this category. This function of the state as an employer has been there over a very long period; it has been there even prior to Independence. To this was added another when, as a matter of policy, it was decided to operate a mixed economy wherein industries were to be run by both private entrepreneurs and the state. The role of the state in these matters has been watched with great interest in recent years. The policy statements in this regard show that as an employer, the state binds itself to the rules which it frames for private employers. Where standards of good employment are disparate, the state seeks to set standards with a view to influencing employers in the private sector. While this is the policy, in practice, it so happens that there is a fair amount of interaction between what the employers do for their employees in the two sectors. And this interaction is influenced by the new consciousness among the workers and ease of communication within the working class.

X. CHANGING DIMENSIONS OF INDUSTRIAL

RELATIONS IN INDIA Globalization, liberalization and privatization have brought new market imperatives. The traditional industrialization system is under unprecedented pressure because it is unable to meet this situation. It is felt that a market determined industrial relations may meet the challenges of the market. Some of the key features are given below: (i)

(ii)

(iii) (iv) (v) (vi)

(vii)

(viii)

The institution of trade union is becoming weaker. Employers, despite the provisions of unfair labour practice under the Industrial Disputes Act, 1947, are discouraging the formation of unions and promoting nonunionism. In IT, SEZ and several private industries, there are hardly any trade unions. The institution of collective bargaining is being decentralized and replaced by unit bargaining, individual bargaining, commercial bargaining and collaborative bargaining. Disinvestment/privatization and VRS are almost accepted facts of industrial relations. Changing pattern of compensation/rewards management—fixed/assured time rate wages are replaced by variable/performance-based wages. Social security and employment guarantee schemes are being provided for unorganized/agricultural workers. Pro-labour attitude of government is being diluted. This is evident from the shift in government’s attitude of non-interference and liberally granting permission to lay-off, retrench or close the undertaking under Chapter V-B. The establishment of ‘special economic zones’ is another area which shows the attitude of the government towards emerging business scenario. The attitude of judiciary is also changing. The recent judgements of the Supreme Court on contract labour, discipline and disciplinary action, absenteeism and strikes show that it looks at the problem from the viewpoint of economic reforms and global competition.

XI. IMPACT OF GLOBALIZATION AND THE WTO REGIME ON INDUSTRIAL RELATIONS

1.

2.

3.

4.

5.

The first casualty of globalization is the number of workers employed. Due to global competition, most industries want to reduce costs and be competitive. They have introduced plans like Voluntary Retirement Scheme (VRS) as well as retrenchment and closures both in the organized and the unorganized sectors. For instance, nationalized banks have introduced VRS for their staff and so far, about 99,000 workers have opted for retirement under this scheme. Some employers are offering lower wages to the workforce as a condition for the reopening of closed industries. Faced with the problems of unemployment, workmen are frequently accepting such offers. Under the WTO regime, labour economic policies seem to be resulting in the closure or disappearance of many Indian companies, especially, those engaged in consumer goods. The attitude of the government, particularly of the Central Government, towards workers and employers seems to have undergone a change. Now, permissions for closure or retrenchment are more easily granted. The closure of industrial units and cases of bankruptcy are normal features in developing countries all over the world (including India). With their limited resources, they are unable to provide alternative employment opportunities. Industrial sickness and its resultant consequences have to be handled carefully to see that its adverse impacts falls least on workers and on society. The major issue that emerges is how the industrial units which are sick or closed under liquidation, or due to world wide economic crisis need to be dealt with in India, particularly the displaced workers and locked assets of these units.

XII. FIVE-YEAR PLANS AND INDUSTRIAL RELATIONS Immediately after India became a Sovereign Democratic Republic, the concept of planned economic development through planning was accepted and the Planning Commission was set up in March 1950. The advent of the era of planning brought in its wake a set of new problems as well as popular expectation.37 Eleven plans have been completed and the eleventh is continuing. The 11 successive plans laid down certain basic concepts and principles

regarding: (i) workers' right of association and organization (ii) the machinery and procedure for settlement of disputes and (iii) the implementation of awards and agreements. The plans have had two distinctive objectives in regard to industrial relations: (i) the avoidance of industrial disputes and creation of machinery for settlement of industrial disputes and (ii) the creation of necessary atmosphere for the development of labour management co-operation and harmonious relations through the adoption of suitable institutional frame-work.38 The First Five-Year Plan (1951–52—1955–56) paid considerable attention to labour problems including strikes and lockouts, as well as popular expectation of the working class. The Plan recognized workers’ right to strike and observed: In an economy organized on the basis of competition, private monopoly or private profits, the workers' right to have recourse to peaceful direct action for the defence of their rights and the improvement of their conditions cannot be denied and should not be curtailed unduly.39 But, in any emergency and in the case of services essential to the safety and well-being of the community, recourse to a strike or lockout may be suspended or withheld on the condition that in all such cases, provision is made for just settlement of the parties' claim.40 Reiterating the aforesaid line of thinking, the planners observed: Experience of many years have demonstrated that in majority of labour struggles, owing to ignorance and mistakes of the workers and their organizational and bargaining weaknesses, they have failed to gain their ends irrespective of the merits of the disputes.41 While accepting the wisdom of holding the balance fairly between capital and labour, the planners conceded that the employer usually possesses superior strength which may become a source of injustice and oppression unless he is imbibed with high sense of fairness and uses his advantage with scrupulous regard to the rights and interests of others. It, accordingly, pleaded for intervention to strike the balance: The community has, therefore, to intervene for redressing the balance in favour of the weaker party to assure just treatment for all concerned. Legal provisions relating to trade unions and

industrial disputes have to be framed and interpreted in relation of these objectives.42 The Second Five-Year Plan envisaged a marked shift in industrial relations policy consequent on the acceptance of the socialistic pattern of society and the goal of planning. The plan stated that greater stress should be laid on the creation of industrial democracy in which a worker should realize that he is a part and parcel of the industrial apparatus that is to usher in socialistic pattern of society. The planners emphasized mutual negotiations as an effective mode of settling industrial disputes. Among the other recommendations in the plan were demarcation of functions between works committee and increased association of labour unions with management and provision for recognition of trade unions. Keeping in mind the desirability of having one union to one industry, the plan also suggested that the number of outsiders who could serve as union officebearers be further restricted. Thus, the plan pleaded for maintenance of industrial peace by preventing strikes and lockouts. The Third Five-Year Plan did not suggest any major change in policy. It placed emphasis on collective bargaining and on mutual agreements for industrial relations as well as workers' well-being. It also emphasized the economic and social aspects of industrial peace and elaborated the concept that workers and management were partners in a joint endeavour to achieve common ends. The voluntary arrangement agreed to in Second Plan was strengthened by the Industrial Truce Resolution, 1962. The Fourth Five-Year Plan also stressed on the need for more effective implementation of labour administration for better enforcement of labour laws. The Fifth Five-Year Plan highlighted that inadequacies of management and bad industrial relations are among the most important factors for delay and inefficiency in implementation of projects and for under-utilization of capacity. It accordingly pleaded: It is imperative to bring about a marked improvement in the operational efficiency of the public sector as also of the private sector. Important suggestions given in the Fifth Plan are as follows: Some unification of the trade union movement is necessary even for smooth functioning of modern capitalist society, let alone for building a socialist society. Only through this way can industrial relations be put on an orderly basis, through collective

bargaining and other devices. Among the other suggestions of the Fifth Five-Year Plan were professionalization of management and active association of the working class. The Sixth Five-Year Plan did not introduce any major change in the industrial relations policy. However, there are two aspects which received the planners’ attention. First, it stressed the need for simplification of procedure for settlement of industrial disputes in order to ensure ‘quick justice’ to workers and a feeling of certainty among employers. Second, it emphasized the need for increasing the number of existing labour courts and tribunals for speedy settlement of industrial disputes. However, the nature and design of the new machinery has not been spelt out. Realizing the importance of the system of industrial relations machinery, the Sixth Plan pleaded that the industrial relations machinery should be strengthened both in Centre and states for anticipating labour problems and taking preventive measure to avert work-stoppages.43 The Seventh Five-Year Plan laid considerable emphasis on measures designed to improve labour management relations without which the realization of developmental objectives of the plan would be difficult. Viewed from this perspective, increases in industrial production and productivity are attainable only in an atmosphere free from industrial conflicts of any kind.44 For this discipline and motivation for work, harmonious industrial relations, participation of workers and healthy working climate are sine quo non. The plan highlighted the need for creating harmonious industrial relations by adopting several measures such as: (i) there should be proper management of industrial relations; (ii) there should be identification of responsibilities of the unions and the employers; and (iii) inter-union and intra-union rivalries should be avoided. Further, the plan suggested that some policy for tackling industrial sickness in future has to be evolved while protecting the interest of labour. Moreover, the plan laid emphasis on upgradation of technology, modernization of equipment, better utilization of assets and promotion of efficiency.45 The Eighth Five-Year Plan paid considerable attention to the working conditions, welfare and social security measures and enforcement of labour laws for unorganized labour, women and child labour. The plan stated that emphasis should be laid ‘on skill formation and development, strengthening and modernization of employment, service, promotion of industrial and mines safety, workers' education, promotion of self-employment, enforcement of labour laws, promotion of a healthy industrial relations situation and encouragement of workers' participation in management.’46 The Ninth Five-Year Plan stressed on the need to create conditions for

improvement of labour productivity and provisions for social security to supplement the operation of the labour market. The resources would be directed through plan programmes towards skill formation and development, exchange of information on job opportunities, monitoring of working conditions, creation of industrial harmony through an infrastructure for healthy industrial relations and insurance against disease and unemployment for the workers and their families. The plan envisages that the trade unions will contribute to promoting changes in the work culture. The plan also stated that action will be taken to: (a) identify the laws which are no longer needed and repeal them; (b) identify the laws which are in harmony with the concept of economic liberalization and need no change; (c) amend the laws which require change; and (d) revise the rules, regulations, orders and notifications. Further under the plan, efforts would be made to extend the coverage of the National Social Assistance Programme comprising old age pension, maternity benefit and family benefit for girl child, casual and selfemployed workers and informal sector both in rural and urban areas.47 In the Tenth Five Year plan (2002–2007), the salient feature of the labour department was to ensure payment of minimum wages to the workers engaged in agricultural and unorganized sectors. The labour department also proposed to play a major role in improving industrial peace and harmony among the working class and to maintain harmonious relation between the employer and the employee. The working condition and safety of the workers engaged in the organized sector of the economy is looked after by the Directorate of Factories. The changing scenario of globalization involves greater emphasis on strengthening of conciliation and adjudication machinery to cope with the increasing numbers of industrial disputes. The conciliation machinery of the department is conscious of its challenging role in resolving labour disputes. Some of the measures taken by the department are as under: (1) Effective enforcement of the Minimum Wages Act, Contract Labour (Regulation and Abolition) Act, Child Labour (Regulation and Prohibition) Act and Equal Remuneration Act which were specially designed to protect unorganized workers and women; (2) Rehabilitation of migrant, orphan and homeless labour and child labour in core carpet zones; (3) Identification and rehabilitation of bonded labour; (4) Setting up of a Centre for Productivity and Industrial Management in UP; (5) Setting up of legal cells at regional offices at Allahabad, Lucknow and

Ghaziabad; (6) Creating awareness amongst the workers and involving them in fruitful occupation; (7) Greater emphasis on safer working conditions of industrial workers and strengthening of Boiler Directorate; (8) Creation of labour court and industrial tribunal; (9) Establishment of Fast Track Court and (10) Labour statistics, training and establishment of data bank. The Eleventh Five Year Plan (2007–2012), emphasized the need to supplement employment generating sector such as medium and small industries and services by targeted livelihood support programmes aimed at increasing production and income of the poor in several low-income occupations. The plan laid emphasis on generating adequate number of productive employment opportunities. The planners asserted that rapid growth focussed on labour-intensive industries and small and medium enterprises will create employment opportunities in manufacturing and service sector. The ability to create jobs will be enhanced by greater labour flexibility which may require some change in labour. While they conceded that ‘hire and fire’ approach may not be desirable but felt that there is a need to create greater flexibility. While dealing with skill development, the Eleventh Plan reiterated that specific programme for development of skills at all levels will form part of the plan. While dealing with welfare provisions, the plan stated that while in the short run, access to basic facilities such as health, education, clean drinking water, etc., would be provided but in the long run, stress would be laid on the welfare of workers. The planners emphasized that the broad vision of the Eleventh Plan would be rapid growth that reduces poverty and creates employment opportunities, recognition of women's agency, good governances, access to essential services in health and education specially for poor; equality of opportunities, empowerment through education, skill development, employment opportunities under the Mahatma Gandhi National Rural Employment Guarantee Act and environment sustainability.

Approaches to the Twelfth Five-Year Plan (2012–2017) As the country moves to adopt the 12th Five-Year Plan, macro-economic balance with environmental sustainability, water and energy management along with

urbanization among others, are the key challenges before the government. The approach paper suggests that the main focus will be on inclusive growth. The Plan is expected to encourage agriculture, education, health and social welfare. It is also expected to create employment through developing India's manufacturing sector.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Dale Younder, Personnel Management and Industrial Relations (Englewood Cliffs, New Jersey: Prentice Hall Inc., 1965). R C Goyal, ‘Determinants of Industrial Relations’, Indian Journal of Labour Economics, XII, 78. Id. at 91. Ibid. Ibid. See Report of the Study Group on Industrial Relations (Western Region), National Commission on Labour (1969). 26. Ibid. O P Thakkar, ‘Determinants of Industrial Relations’, Indian Journal of Labour Economics, XII 102. See supra note 6 at 34. Government of India, Ministry of Labour Annual Report 2007 (2009) 2. Report of the All Indian Congress Committee at Avadi (January, 1955). See Government of India, Indian Labour Journal (2010) 808. Government of India, Ministry of Labour & Employment, Annual Report 2009–2010 (2010) 221. Ibid. Ashok Mehta, Dynamics of the Labour Movement, Presidential Address delivered at IX Annual Conference of the Indian Society of Labour Economics (Varanasi, 1965). Government of India, Ministry of Labour & Employment, Annual Report to the People on Employment (2010) 19. Ibid. Mathur and Mathur, Trade Union Movement of India (1962), 82. Government of India, Ministry of Labour Year Book 2007 (2009). Government of India, Indian Labour Year Book, 2008 (2010) 2. Government of India, Indian Labour Year Book, 2007 (2009) 10. Mathur and Mathur, Op cit. 72. Ibid. See chapter 3 section IV infra.

25 Government of India, Ministry of Labour, Indian Labour Year Book 2007 (2009) 4. 26 Government of India, Ministry of Labour & Employment, Annual Report to the People on

Employment (2010) 21. 27 See Child Labour in India (Ed. M K Pandia), 1979, 54. 28 Child Labour in India (Ed. M K Pandia) 1979, 54. 29 See Government of India, Report of the National Commission on Labour, 1969, 386. 30 Child Labour (Regulation and Abolition) Act, 1986. 31 See for instance the Factories Act, 1948, Mines Act, 1952, Plantation Workers Act, 1951. 32 Ibid. 33 Govt. of India, Ministry of Labour, Annual Report 2003–2004, (2004) 3. 34 Ibid. 35 Govt. of India, Ministry of Labour, Annual Report 2003–2004, (2004) 3. 36 Government of India, Report of the First Study Group of Industrial Relations in Eastern

India, National Commission on Labour (1968). 37 Government of India, Report of the Committee on Labour Welfare, (1969), 15. 38 Government of India, Report of the Study Group on Industrial Relations (Northern

Region), (1968), 15. 39 Government of India, First Five-Year Plan 1951, 570, 572–573. 40 Ibid. 41 First Five-Year Plan (1951). 42 Ibid. 43 B R Patil, ‘Labour Relations—A Need Based System’, Economic Times, September 26,

1981, 5. 44 Government of India, Annual Report 1985–86 (1986), 8. 45 Government of India, Seventh Five-Year Plan 1985–90, (Vol. 20) (1985), 119. 46 Government of India, Eighth Five-Year Plan 1992–97, (Vol. 27) (1992), 154. 47 Government of India, Ninth Five-Year Plan 1997–2002, (Vol. 2), 390, 392 and 397.

CHAPTER

3 Constitutional Framework on Industrial Relations I. CONSTITUTIONAL PERSPECTIVE A. The Preamble The people of India resolved on 26 November, 19491, to constitute their country into a Sovereign, Socialist, Secular Democratic2 Republic and to secure to all its citizens : Justice; social, economic and political; Liberty of thought, expression, belief, faith and worship; Equality of status and opportunity and to promote among them all; Fraternity assuring the dignity of the individual and the unity and integrity of the Nation.

B. Directive Principles of State Policy The Preamble has been amplified and elaborated in the Constitution, particularly in ‘Directive Principles of State Policy’. The State has been directed to promote the welfare of the people by securing and protecting as effectively as it may, a social order in which justice, social, economic and political shall inform all institutions of national life.3 Further, the state has been directed to secure, inter alia, (a) adequate means of livelihood;4 (b) proper distribution of ownership and

control of the material resources of the community so that it may subserve the common need;5 (c) prevention of the concentration of wealth and means of production; (d) equal pay for equal work for men and women;6 (e) the health and strength of workers;7 (f) right to work, to education and to public assistance in cases of undeserved want;8 (g) just and humane conditions of work and for maternity relief;9 (h) living wage and decent standard of life of labourers;10 (i) participation of workers in the management of undertakings or industrial establishments by suitable legislation or otherwise11 and (j) higher level of nutrition and standard of living and improving public health.12 These provisions spell out the socio-economic objectives of the national policy to be realized by legislation. These are the directives13 to the legislature and executive organs of the State which are committed to make, interpret and enforce law.

C. Constitutional Guarantee The labour policy is, however, not unqualified. It is subject to various limitations. The Indian Constitution imposes an express limitation on it. Labour legislation, therefore, should not be inconsistent with or in derogation of the fundamental rights. It is to the extent of such inconsistency void.14 Further, the rights are enforceable by the courts under Articles 32 and 22615 and cannot be denied in case of violation of fundamental rights.16 Fundamental rights are enumerated in Part III of the Constitution. The whole object of Part III is to provide protection for the freedom and rights mentioned therein against arbitrary action by the State.17 Of particular relevance is Article 14 which provides that ‘the State shall not deny to any person equality before the law or equal protection of the laws within the territory of India’.18 In addition to this, Article 16 guarantees equality of opportunity in matters of public employment. Further Article 19, inter alia, guarantees ‘the right to freedom of speech and expression,’19 to assemble peacefully and without arms;20 to form associations or unions,21 to acquire, hold and dispose of property22 and to practise any profession, or to carry on any occupations, trade or business.23These constitutional guarantees are of great practical significance in the area of labour management relations. Equal protection constitutes a limitation on the legislative power to select or decide which business or industry must achieve minimial standards. The right to carry on trade, profession or business limits the burden which the legislation may place on business in the interest of workers. The freedom of speech,

assembly, association and unionization protect workers in their efforts to achieve their objectives through self organizing, picketing or striking. Article 21 provides protection of life and personal liberty. It provides that no person shall be deprived of his life or personal liberty except according to procedure established by law. Article 23 prohibits traffic in human beings and forced labour. It says (i) Traffic in human beings and begar and other similar forms of forced labour are prohibited and any contravention of this provision shall be an offence punishable in accordance with law. Life, in Article 21, has been interpreted by the Supreme Court as including livelihood and the Court has held in several cases that any employment below minimum wage levels is impremissible as it amounts to forced labour as understood in Article 23. Holding a person in bondage is a constitutional crime. Article 24 places a ban on employment below the age of 14 in any factory, mine or in any other hazardous employment. A survey of decided cases reveals that the vires of the Industrial Disputes Act, 1947 has been challenged time and again on the ground of infringement of fundamental rights guaranteed under Articles 14 and 19 before the high courts and the Supreme Court. In Niemla Textile Finishing Mills Ltd v. Industrial Tribunal, Punjab24, the Supreme Court observed that neither the Industrial Disputes Act nor any provision thereof is void as infringing the fundamental rights guaranteed by Article 14 or 19. Thus, it has now been settled that the provisions of Industrial Disputes Act are not violative of the fundamental rights guaranteed under the Constitution.

D. Distribution of Law-making Power Distribution of power imposes another limitation on the overriding labour policy. It will be observed that the power to make laws for the whole or any part of the territory of India25 is vested in the Parliament.26 This power extends only to such subjects of legislations as are enumerated in Union List27 and Concurrent List28 of the Seventh Schedule of the Constitution. Further, the Parliament has been empowered to make laws on any of the matters of the State List under the following conditions. First, if the Council of States declares by resolution supported by not less than two-third of the members present and voting that it is necessary or expedient in the national interest that the Parliament should make laws in respect to any matter enumerated in the State List specified in the resolution, it shall be lawful for the Parliament to make laws on such matters. The resolution will remain in force for the period of one year unless relaxed.29Second, the Parliament is empowered to legislate on any matter

enumerated in the State List while proclamation of emergency is in operation.30 Third, the Parliament is empowered to legislate for two or more states by their consent. Such a legislation shall apply to such states and any other state by which it is adopted afterwards by resolution passed in this behalf by each of the houses of state legislature.31 The Parliament has also been given power to legislate on such matters as are not enumerated in the Seventh Schedule.32 Quite apart from this, fundamental rights33 and freedom of inter-state trade and commerce34 impose express limitation on the legislative power. The power to make laws for the whole or any part of the state is vested in the state legislature, which may make laws on such subjects as are enumerated in the State List35 and Concurrent List of the Seventh Schedule of the Constitution. But, where laws made by the state legislature on matters enumerated in the Concurrent List are inconsistent with a central act on the same matter, the state laws will be inoperative to the extent of inconsistency.36 There is, however, one exception to it, namely, if a law made by the state legislature is inconsistent with the Union law, state law will prevail over the Union law, if the same has been referred for the consideration of the President and it has received his assent.37 State legislations too are subject to limitations like those imposed by fundamental rights and freedom of inter-state trade and commerce. The main topics directly affecting labour relations are included in each of the following lists: Union List: List I Item 13: Participation in international conferences, associations and other bodies and implementation of decisions made there at Item 55: Regulation of labour and safety in mines and oilfields Item 61: Industrial disputes concerning union employees Item 94: Inquiries, surveys and statistics for the purposes of any of the matters in the list Concurrent List: List III Item 20: Economic and social planning Item 22: Trade unions; industrial and labour disputes Item 23: Social security and social insurance; employment and unemployment Item 24: Welfare of labour including conditions of work, provident

fund, employers’ liability, workmen’s compensation, invalid and old age pensions and maternity benefits Item 25: Vocational and technical training of labour Item 36: Factories Item 37: Boilers Item 45: Inquiries and statistics for the purposes of any of the matters specified in List II or List III State List: List II Item 9: Relief for disabled and unemployable In addition to the aforesaid items, there are several other items. A perusal of the items mentioned in the lists of the Seventh Schedule reveals that the Parliament has been vested with wide powers in labour matters. However, it ’may sometimes happen that in the course of making a law, one may incidentally touch upon subject assigned to the other. This incidental encroachment, however, is not considered bad, for the reason that the entries in the lists have to be widely construed and some amount of overlapping could not altogether be avoided. If the legislation is in pith and substance on a matter assigned to one legislative body, an incidental encroachment into the territory of the other could be considered permissible. Pith and substance and incidental encroachment are the doctrines evolved by courts to ensure that the federal machinery could function without serious friction.’38 There ‘is however, no provision in the Constitution which lays down that a Bill which has been assented to by the President would be ineffective as an Act if there was no compelling necessity for the Governor to reserve it for the assent of the President. There might be a genuine doubt about the applicability of any of the provisions of the Constitution which required the assent of the President to be given to it in order that it might be effective as an Act. If the Governor in exercise of his discretion decided to reserve the Bill for consideration of the President to avoid any future complication, that could not be put forward as a proof of the existence of repugnancy between the Parliamentary enactment and the Bill which had been reserved for the assent of the President.’39 The Supreme Court in a catena of cases40 laid down the following tests for repugnancy: (i) whether there is direct conflict between the two propositions? (ii) whether Parliament intended to lay down an exhaustive code in respect of the subject matter replacing the Act of the State Legislature?, and

(iii) whether the law made by the Parliament and the law made by the state legislature occupy the same field?41

II. CONSTITUTIONAL AMENDMENTS ON RIGHT TO FREE AND COMPULSORY EDUCATION With a view to making right to free and compulsory education a fundamental right, the Constitution (Eighty-third Amendment) Bill, 1997 was introduced in Parliament to insert a new article, namely, Article 21A conferring on all children in the age group of 6 to 14 years the right to free and compulsory education. The said bill was scrutinized by the Parliamentary Standing Committee on Human Resource Development and the subject was also dealt with in its 165th Report by the Law Commission of India. After taking into consideration the report of the Law Commission of India and the recommendations of the Standing Committee of Parliament, the following amendments have been made in the Constitution of India through Constitution (Eighty-sixth Amendment) Act, 2002 which received the assent of the President on 21 December 2002. The amended act inserted new Article 21A: Right of Education in the Constitution which reads as under: The State shall provide free and compulsory education to all children of the age of six to fourteen years in such manner as the State may, by law, determine. It also substituted Article 45 which provides: The State shall endeavour to provide early childhood care and education for all children until they complete the age of six years. Quite apart from the above constitutional right, the Right of Children to Free and Compulsory Education Act, 2009, which came into force with effect from 1 April 2011, provides that every child in the age group of 6 to 14 years will be provided free and compulsory education.

III. CONTRIBUTION OF INDIAN JUDICIARY IN EVOLUTION OF INDUSTRIAL JURISPRUDENCE THROUGH CONSTITUTIONAL INTERPRETATION

Indian judiciary has played significant role in the evolution of industrial jurisprudence. It has not only made a distinct contribution to laws relating to industrial relations, social security and minimum standards of employment but has innovated new methods and devised new strategies for the purpose of providing access to justice to weaker sections of society who are denied their basic rights and to whom freedom and liberty have no meaning. Indeed, the court assumed the role of protectionist of the weaker by becoming the court for the poor and struggling masses of the country. Further, the courts at times played a role of legislators where law is silent or vague. Indeed, a number of legislation and legislative amendments have been made in response to the call by the judiciary. A creative role played by Indian judiciary for weaker sections of society is best depicted in People’s Union for Democratic Rights v. Union of India42. In an epoch making judgement, the Supreme Court has not only made a distinct contribution to labour law but has displayed the creative role to protect the interests of weaker sections of society. Further, the Court has given a new dimension to several areas such as minimum wages, employment of children, enforcement of labour laws and public interest litigation. The Court has also enlarged the contours of fundamental right to equality, life and liberty, prohibition of traffic in human beings and forced labour and prohibition of employment of child labour provided in the Constitution. The case arose out of the denial of minimum wages to workmen engaged in various Asiad projects and non-enforcement of the Minimum Wages Act, 1948, Equal Remuneration Act, 1976, Employment of Children Act, 1938, Contract Labour (Regulation and Abolition), Act, 1970 and the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979. However, the Court’s attention was drawn not by the aggrieved workers but by a public-spirited organization by means of a letter addressed to Justice Bhagwati of the Supreme Court. The letter was based on a report made by three social scientists after personal investigation and study. For the purpose of analysis, the Court’s decision may be considered under the following heads:

Area of Conflict The court was directly called upon to decide, inter alia, the following main issues: (i) Is a writ petition under Article 32 of the Constitution maintainable for

mere violation of labour laws and not for breaches of any fundamental right? (ii) What is the true scope and meaning of the expression ‘traffic in human beings and begar and other similar forms of forced labour’ in Article 23 of the constitution? (iii) Whether there was any violation of the Equal Remuneration Act, 1976, the Contract Labour (Regulation and Abolition) Act, 1970, the Minimum Wages Act, 1948 and the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act 1979 ? The Supreme Court through Justice Bhagwati answered all the aforesaid questions in the affirmative.

Maintainability of the Writ Petition for Violation of Labour Legislation under Article 32 As regards the first and third issues, the Court accepted the contention that the writ petition under Article 32 of the Constitution could not be maintained unless there was a violation of fundamental rights. Consequently, it examined whether there was any violation of fundamental rights in this petition and observed: The complaint of violation of Article 24 based on the averment that children below the age of 14 years are employed in the construction work of the Asiad projects is clearly a complaint of violation of a fundamental right. So also when the petitioners allege non-observance of the provisions of the Equal Remuneration Act, 1976, it is in effect and substance a complaint of breach of the principle of equality before the law enshrined in Article 14…. Then there is the complaint of nonobservance of provisions of the Contract Labour (Regulation and Abolition) Act, 1970 and the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 and this is also in our opinion a complaint relating to violation of Article 21.43 Now, the rights and benefits conferred on the workmen employed by a contractor under the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 and the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 are clearly intended to ensure basic human

dignity to the workmen and if the workmen are deprived of any of these rights and benefits to which they are entitled under the provisions of these two pieces of social welfare legislation, that would clearly be a violation of Article 21 of the Constitution of India. The Delhi Administration and Delhi Development Authority which, as principal employers, are made statutorily responsible for securing such rights and benefits to the workmen. That leaves for consideration the complaint in regard to non-payment of minimum wages to the workmen under the Minimum Wages Act, 1948. We are of the view that this complaint is also one relating to breach of a fundamental right… it is the fundamental right enshrined in Article 23 which is violated by non-payment of the minimum wages to the workmen.44

Prohibition of Traffic in Human Beings and Forced Labour As regards the second issue, the court pointed out that Article 23 was ‘designed to protect the individual not only against the State but also against any other person indulging in any such practice.’ It imposes prohibition on traffic in human beings and begar and other similar forms of forced labour. Explaining the scope of the expression ‘traffic in human beings and begar and other similar form of forced labour’ the court observed: What Article 23 prohibits is ‘forced labour’ that is labour or service which a person is forced to provide and ‘force’ which would make such labour or service ‘forced labour’ may arise in several ways. It may be physical force which may compel a person to provide labour or service to another or it may be force exerted through a legal provision such as a provision for imprisonment or fine in case the employee fails to provide labour or service or it may even be compulsion arising from hunger and poverty, want and destitution… The word ‘force’ must, therefore, be construed to include not only physical or legal force but also force arising from the compulsion of economic circumstances which leaves no choice or alternatives to a person in want and compels him to provide labour or service even though the remuneration received for it is less than the minimum wage.

The court added: [W]here a person provides labour or service to another for remuneration which is less than the minimum wage, the labour or service provided by him clearly falls within the scope and ambit of the words ‘forced labour’ under Art. 23. Such a person would be entitled to come to the Court for enforcement of his fundamental right under Art. 23 by asking the Court to direct payment of the minimum wage to him so that the labour or service provided by him ceases to be ‘forced labour’ and the breach of Art. 23 is remedied.45

Enforcement of Fundamental Rights Before we proceed to discuss the third issue, it is necessary to examine the approach of the courts towards the enforcement of fundamental rights. The Supreme Court observed that there are certain fundamental rights conferred by the Constitution which are enforceable against the whole world and they are to be found, inter alia in Articles 17, 23 and 24.46 Whenever a fundamental right in Articles 17, 20 or 24 which is enforceable against private individuals is violated, it is the constitutional obligation of the State to take necessary steps for the purpose of interdicting such violation and ensuring observance of the fundamental right by the private individual who is transgressing the same. Of course, the person whose fundamental right is violated can always approach the court for its enforcement but that cannot absolve the State from its constitutional obligation to see that there is no violation of the fundamental right of such person, particularly when he belongs to the weaker sections of community and is unable to wage a legal battle against a strong and powerful opponent who is exploiting him.

Violation of Labour Law As to the third issue, the Court pointed out that admittedly there were certain violations committed by the contractors and for those violations, prosecution was launched against them but remarked that no violation of any of the labour laws should be allowed to go unpunished. The Union of India also conceded that ₹1 per worker per day was deducted by the jamadars from the wages payable to the workers with the result that the workers did not get the minimum wage of ₹9.25 per day but stated that proceedings have been taken for the purpose of recovering the amount of shortfall in the minimum wage from the contractors. In

view of this, the Court directed that whenever any construction work is being carried out either departmentally or through contractors, the government or any other governmental authority including a public sector corporation which is carrying out such work, must take great care to see that the provisions of the labour laws are strictly observed and they should not wait for any complaint to be received from the workmen in regard to non-observance of any such provisions before proceeding to take action against the erring officers or contractors. Instead, they should institute an effective system of periodic inspections coupled with occasional surprise checks by the higher officers in order to ensure that there are no violations of the provisions of labour laws and the workmen are not denied the rights and benefits to which they are entitled and where such violations are found, immediate action should be taken against defaulting officers or contractors. However, it is unfortunate that these directives only remain on paper and do not appear to have been followed in the Commonwealth Games.

IV. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE AND THE CONSTITUTION The three-judge bench of the Supreme Court in an epoch-making judgement in Vishaka v. Union of India47 made a significant contribution by evolving the code against sexual harassment. While emphasizing the need to have guidelines, the Supreme Court observed: The primary responsibility for ensuring such safety and dignity through suitable legislation, and the creation of a mechanism for its enforcement is of the legislature and the executive. When, however, instances of sexual harassment resulting in violation of fundamental rights of women workers under Articles 14, 19 and 21 are brought before us for redress under Article 32, an effective redressal requires that some guidelines should be laid down for the protection of these rights to fill the legislative vacuum.

Guidelines and Norms The Supreme Court laid down the following guidelines and norms to be strictly observed at all work places for the preservation and enforcement of the right to

gender equality of working women. These directions according to the Court would be binding and enforceable in law until suitable legislation is enacted to occupy the field. However, these guidelines will not prejudice any rights available under the Protection of Human Rights Act, 1993. 1. Duty of the Employer or Other Responsible Persons in Workplaces and Other Institutions: It shall now be the duty of the employer or other responsible persons in workplaces or other institutions to take necessary steps to prevent the commission of acts of sexual harassment, deter the commission of acts of sexual harassment and provide the procedure for (i) resolution (ii) settlement and (iii) prosecution of acts of sexual harassment. 2. Preventive Steps: All employers or persons incharge of workplace, whether in public or private sector, should take appropriate steps to prevent sexual harassment. They are further required to take the following steps: (i) Express prohibition of sexual harassment as defined above at the workplace should be notified, published and circulated in appropriate ways; (ii) The rules/regulations of the government and public sector bodies relating to conduct and discipline should include rules/regulations prohibiting sexual harassment and provide for appropriate penalties in such rules against the offender; (iii) As regards private employers, steps should be taken to include the aforesaid prohibitions in the Standing Orders under the Industrial Employment (Standing Orders) Act, 1946; and (iv) Appropriate work conditions should be provided in respect of work, leisure, health and hygiene to further ensure that there is no hostile environment towards women at workplaces and no woman employee should have reasonable grounds to believe that she is disadvantaged in connection with her employment. 3. Disciplinary Action: When the conduct of the accused amounts to misconduct in employment under the relevant service rules, the employer should initiate disciplinary action in accordance with the rules. 4. Complaint Mechanism: Employer is required to create an appropriate complaint mechanism in his organization for redressal of the complaint made by the victim whether or not the conduct of the accused constitutes an offence under law or a breach of service. Such complaint mechanism should ensure time-bound disposal of all complaints. 5. Complaint Committee

(a) Design of Complaint Mechanism: The complaint mechanism should be adequate to provide assistance where it is necessary to have a complaint committee, a special counsellor or other support service (including maintenance of confidentiality). (b) Composition of Complaint Committee: The composition of complaint committee shall be as under: (i) (ii)

It shall be headed by a woman; Not less than half of the members of the committee should be women; (iii) The committee should involve a third party, either an NGO or another body familiar with the issues of sexual harassment, in order to prevent the possibility of any undue pressures or influence from senior levels. (c) Annual Report: The complaint committee of the concerned government department shall prepare an annual report of its activities during the previous year. Such a report should also state complaints and action taken by them. The committee shall forward a copy thereof to the head of the organization concerned who shall forward the same to the government department concerned with its comments. (d) Compliance Report: The employer and the person incharge is also required to report: (i) On compliance with the aforesaid guidelines; (ii) Compliance on the reports of the complaint committee; (iii) Such report must be sent to the concerned government department. 6. Workers’ Initiative: In order to prevent and control sexual harassment at workplace, employers should be allowed to raise these issues: (i) at workers’ meeting; and (ii) in other appropriate forums. The issues of sexual harassment should be affirmatively discussed in employer-employee meetings. 7. Awareness: In order to create awareness about the right of female employees in regard to sexual harassment, the employer should take the following steps: (i) prominently notify the guidelines in a suitable manner; and (ii) enact appropriate legislation on the subject that should be suitably notified and displayed. 8. Third Party Harassment: Where sexual harassment occurs as a result of an act or omission by: (i) any third party or (ii) outsider, the employer and persons

incharge are required to take necessary and reasonable steps to assist the affected person—(a) in terms of support and (b) take preventive action. 9. Steps to be Taken by the Government: The Central and state governments are required to: (i) (ii)

take suitable measures (including legislation) ensure that the guidelines are observed by the employers in private sector Two years later, in Apparel Export Promotion Council v. A K Chopra48, the Supreme Court was invited to decide the following issues: 1. Does an action of the superior against a female employee which is against moral sanctions and does not withstand the test of decency and modesty, not amount to sexual harassment? 2. Is physical contact with the female employee an essential ingredient of such a charge? 3. Does the allegation that the superior ‘tried to molest’ a female employee at the ‘place of work’ not constitute an act unbecoming of good conduct and behaviour expected from the superior? As regards the first issue the Supreme Court ruled that ‘each incident of sexual harassment at the place of work results in violation of the fundamental right to gender equality and the right to life and liberty—the two most precious fundamental rights guaranteed by the Constitution of India’. The Supreme Court answered the second issue in negative and held that it was erroneous to hold that since the respondent had not ‘actually molested’ Miss X and that he had only ‘tried to molest’ her and had ‘not managed’ to make physical contact with her, the punishment of removal from service was not justified. On the third issue the Supreme Court held that the act of the respondent was unbecoming of good conduct and behaviour expected from a superior officer and amounted to sexual harassment. The Court ruled that: (i) sexual harassment covers any action or gesture which, whether directly or by implication, aims at or has the tendency to outrage the modesty of a female employee; (ii) for an offending action to be outrageous, actual molestation or touch by the offender is not necessary; (iii) objectionable overtures with sexual overtones are enough; and (iv) physical contact is not necessary.

V. CONSTITUTIONAL VALIDITY OF SERVICE CONTRACTS AND STANDING ORDERS The law of employer-employee relationship is governed primarily by service rules and regulations, standing orders or contract of employment. The service rules and regulations empower the employer to terminate the service of an employee by giving 3 months’ notice on either side or by making payment in lieu of notice, without assigning any reason and without providing any hearing opportunity to the employee before passing the order of termination of service. Standing orders of a company certified under the Industrial Employment (Standing Orders) Act, 1946 also contain a clause stipulating abandonment of service by a workman on remaining absent for 7/8 consecutive days. Further, such clause is also contained in the model standing orders of a company.

Validity of Service Rules and Regulations The validity of service rules and regulations has been challenged in a catena of cases before the Supreme Court. The courts have held such rules and regulations were arbitrary, discriminatory and inconsistent with public policy. Likewise, the provisions of automatic termination of services in the standing orders have been held to be violative of principles of natural justice. Some other courts have even held that such termination of service amounted to ‘retrenchment’ under the Industrial Disputes Act, 1947. The Supreme Court in West Bengal State Electricity Board v. Desh Bandhu Ghosh49 held that any provision in the regulation enabling the management to terminate the services of a permanent employee by giving 3 months’ notice or pay in lieu thereof, would be held as violative of Article 14 of the Constitution. Such a regulation was held to be capable of vicious discrimination and was also held to be naked ‘hire and fire’ rule. Again in O P Bhandari v. Indian Tourism Development Corporation 50 Ltd , the Supreme Court held that Rule 31 (v) of the Indian Tourism Development Corporation (Conduct, Discipline and Appeal) Rules, 1978, which provided that the service of a permanent employee could be terminated by giving him 90 days’ notice or pay in lieu thereof, would be violative of Articles 14 and 16 of the Constitution. The aforesaid view was reiterated in Central Inland Water Transport Corporation Ltd v. Brojo Nath Ganguly.51 Here, the Supreme Court has

displayed creative role to protect the interest of employees. Here, Rule 9(1) of the Central Inland Water Transport Corporation Ltd Service Discipline and Appeal Rules, 1979 provided that service of a permanent employee could be terminated by giving ‘3 months’ notice in writing on either side’. The Court while dealing with the validity of Rule 9 ruled: (i) Rule 9 was arbitrary and discriminatory and, therefore, violative of Article 14 of the Constitution. (ii) The rule was inconsistent with public policy and consequently invalid under Section 23 of the Contract Act, 1872. (iii) The termination of service of a permanent employee in terms of Rule 9 is both arbitrary and unreasonable, ignores Audi Alterem Partem Rule and is violative of Article 14 of the Constitution. The whole case law was reviewed by the Constitution bench in Delhi Transport Corporation v. DTC Majdoor Congress52 and except the then Chief Justice, Sabya Sachi Mukharji, who dissented, the other four judges reiterated the earlier view. They affirmed the decision in Central Inland Water Transport Corporation Ltd’s case. The Court, by a majority held that the service rules and regulations which empowered the authority to terminate the services of permanent employees by issuing notice or terminating their service by making payment in lieu of notice, without assigning any reason and without providing any hearing opportunity to the employees before passing the impugned order was arbitrary, uncanalized, unrestricted and violative of the principles of natural justice as also Article 14 of the Constitution. The Court (in its majority judgement) ruled that (i) Regulation 9 (b) of the Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952 suffered from the vice of arbitrariness as there was no guidance in the Regulations or in the Act as to when or in which cases and circumstances, this power of giving notice or pay in lieu of notice can be exercised. (ii) Regulation 9 (b) was void under Section 23 of the Contract Act as being opposed to public policy. In K C Sharma v. Delhi Stock Exchange53, Delhi Stock Exchange (management) terminated the services of the general manager, an employee after giving 3 months’ notice as per the terms of the appointment. The employee challenged the order of termination of service in a writ petition before the Delhi High Court. The Delhi High Court held that the termination of services of the employee (appellant) was illegal and mala fide. It, therefore, directed reinstatement with continuity in service. Thereupon the respondent, Delhi Stock Exchange challenged this order in the division bench of the High Court. The division bench held that (i) Delhi Stock Exchange was a ‘State’ within the

meaning of Article 12 of the Constitution (ii) Appellant was a permanent employee and therefore his termination as per clause (4) of the letter of appointment was ultra vires (iii) On one hand, the appellant had made serious allegations on the member directors of the Stock Exchange including president, vice-president and other senior members, while on the other, there were serious allegation against him of using his office for unauthorizedly making correspondence with authorities. Such allegations and counter-allegations are of serious nature and there was bad blood between the parties. In view of this, the division bench held that it would not be advisable to direct reinstatement irrespective of the fact that loss of confidence had not been pleaded or proved. The Court, therefore, directed the appellant be paid ₹1.2 lakh as compensation in lieu of reinstatement. Thereupon, the appellant filed an appeal before the Supreme Court. The Supreme Court held that: (i) the termination of service of the appellant under clause of letter of appointment was illegal and the removal was both malafide and unjustified (ii) the totality of the circumstances of the case render it improper and unjust to direct the relief of reinstatement with full back wages. It, however, raised the compensation from ₹1.2 lakh to ₹1.5 lakh. It is submitted that the court has opened the scope of granting compensation in lieu of reinstatement even where the plea of loss of confidence is not pleaded. Be that as it may, it causes loss to the stock market. In such a situation, the court could have fixed the accountability when there were allegations against high officials.

Validity of Certified Standing Orders We now turn to examine whether stipulation in the certified standing orders for automatic termination of services for overstaying the leave would be bad. In D K Yadav v. J M A Industries Ltd54, the Supreme Court has laid down that where the rule provided that the service of an employee who overstays the leave would be treated to have been automatically terminated, it would be bad as violative of Articles 14, 16 and 21 of the Constitution. It further held that if any action was taken on the basis of such a rule without giving any opportunity of hearing to the employee, it would be wholly unjust, arbitrary and unfair. The Court emphasized that principles of natural justice would have to be read into the provision relating to automatic termination of services. In Uptron India Ltd55 case, the Supreme Court was also invited to consider whether Clause 17 (g) of the certified standing orders providing that ‘the services of a workman are liable to automatic termination if he overstays on leave without permission for more than 7 days was bad and violative of the

principles of natural justice. The Court answered the question in the affirmative and observed: We are of the positive opinion that any clause in the certified standing orders providing for automatic termination of service of a permanent employee, not directly related to ‘production’ in a factory or industrial establishment, would be bad if it does not purport to provide an opportunity of hearing to the employee whose services are treated to have come to an end automatically. However, earlier in Hindustan Paper Corpn. v. Purnendu Chakrobarty, the Supreme Court has held that an employee absenting from duty without prior sanction for about 6 months by sending applications for leave on medical ground but not supporting with medical certificates will be deemed to have lost the lien on the job when he has failed to avail the opportunity in replying in half-hearted way and not reporting for duty. The pendulum swung in other direction in some of the later cases. In Syndicate Bank v. General Secretary, Syndicate Bank Staff Association56, the Supreme Court also ruled that: (i) Where an employee is absent beyond the prescribed period, for which leave of any kind cannot be granted, he should be treated to have resigned and he ceases to be in service. In such a case, there is no need to hold an inquiry or to give any notice, as it would amount to useless formalities. (ii) Undue reliance on the principle of natural justice leads to miscarriage of justice. (iii) The principles of natural justice and duty to act in a just, fair and reasonable manner have to be read in certified standing order/statutory rules. The employee had unauthorizedly absented himself from work for a period exceeding the period of prescribed limit. He was sent a notice by registered post calling him to report for duty, failing which he would have been deemed to have retired. The notice came with the endorsement ‘refusal to accept’. The Supreme Court held that as the employee refused to accept the notice, service of notice upon him was complete and in such a case, removal from service without holding inquiry was fully justified. In Aligarh Muslim University v. Mansoor Ali Khan,57 the Supreme

Court considered a large number of its earlier judgements and held that, where an employee is unauthorizedly absent for which leave of any kind cannot be granted, only one conclusion is possible and holding inquiry may not be necessary. The Court also held that mere violation of principles of natural justice does not entitle one to any relief unless the affected party satisfies the Court that non-observance thereof has prejudiced his cause. In Punjab and Sind Bank v. Sakattar Singh58, it has been held that the termination of a bank employee absenting for 190 days without holding an inquiry will not be violative of principles of natural justice. Earlier, in Hindustan Paper Corporation v. Purnendu Chakrobarty59, the Supreme Court held that where an employee absented from duty without prior sanction for about 6 months by sending applications for leave on medical ground but not supporting them with medical certificates, it would be deemed that the employee had lost the lien on the job, particularly when he had failed to avail the opportunity in replying in half-hearted way and not reporting for duty. We now turn to examine the decisions where it has been held that compliance of natural justice is not necessary. Thus in Harmohinder Singh v. Kharga Canteen, Ambala Cantt60, it was held that the principles of natural justice are not applicable where the termination takes place on the expiry of the contract of service. In Uptron India Ltd v. Shammi Bhan61, the Supreme Court also held that the principle of natural justice is not applicable where the termination takes place on the expiry of the contract. Likewise compliance of principles of natural justice is not necessary where the services of employees are terminated who procured appointment on the basis of forged documents. In Umesh Kumar Singh v. State of Bihar and62 the Supreme Court held that if a person gets appointment on the basis of forged and fabricated letter of appointment, then services of such person can be terminated without initiating any full fledged departmental proceedings and the same will not amount to violation of principles of natural justice. The Court also held that when appointment is made illegally, irregularly and in violation of Article 16 of the Constitution of India, then such appointment can be terminated without initiating full-fledged departmental proceeding. Such termination of services will not amount to violation of principles of natural justice.

Application of Labour Laws to Minority Educational Institutions.

CMCH Employees Union v. CM Cottage, Vellore Association63 raises an important issue, namely, whether Sections 9-A, 10, 11-A, 12 and 33 of the Industrial Disputes Act, 1947 were applicable to educational institutions established and administered by minorities and protected by Article 30 (1)64 of the Constitution. The Supreme Court answered the question in affirmative and observed: If a dispute is raised by an employee against the management of a minority educational institutions such dispute will have necessarily to be resolved by providing appropriate machinery for that purpose. Laws are now passed by all the civilized countries providing for such a machinery. The Act with which we are concerned in this case is an Act which has been brought into force for resolving such industrial disputes. Sections 10, 11A, 12 and 33 of the Act cannot, therefore, be construed as interfering with the right guaranteed under Article 30(1) of the Constitution. Similarly, Section 9A of the Act, which requires the management to issue a notice in accordance with the said provision in order to make changes in the conditions of service which may include changes in the hours of work, leave rules, introduction of new rules of discipline, etc., cannot be considered as violative of the right guaranteed under Article 30(1) of the Constitution.

VII REGULATION OF DAILY WAGER/CASUAL WORKERS OR CONTRACT LABOUR/TEMPORARY WORKERS IN PUBLIC EMPLOYMENT In Secretary, State of Karnataka v. Umadevi65 a Constitution bench of the Supreme Court ruled: Those who are working on daily wages formed a class by themselves, they cannot claim that they are discriminated as against those who have been regularly recruited on the basis of the relevant rules. No right can be founded on an employment on daily wages to claim that such employee should be treated on a par with a regularly recruited candidate, and made permanent in employment, even assuming that the principle could be invoked for claiming equal wages for equal work. There is no fundamental right in those who have been employed on

daily wages or temporarily or on contractual basis, to claim that they have a right to be absorbed in service. As has been held by this Court, they cannot be said to be holder of a post, since, a regular appointment could be made only by making appointments consistent with the requirements of Articles 14 and 16 of the Constitution. The right to be treated equally with the other employees employed on daily wages, cannot be extended to a claim for equal treatment with those who were regularly employed. That would be treating unequals as equals. It cannot also be relied on to claim a right to be absorbed in service even though they have never been selected in terms of the relevant recruitment rules. The aforesaid view was reiterated in State of Karnataka v. Ganapathi Chaya Nayak66, Union of India and Another v. Kartick Chandra Mondal, Satya Prakash and Others v. State of Bihar67 and Rameshwar Dayal v. Indian Railway Construction Company Limited68. In Union of India v. Vartak Labour Union69, the court reiterated its earlier view but recommended: Where members of the respondent union have been employed in terms of the regulations and have been consistently engaged in service for the past 30 to 40 years, of course with short breaks, we feel, the Union of India would consider enacting an appropriate regulation/scheme for absorption and regularization of the services of the causal workers engaged by the BRO for execution of its on-going projects.

Non-application of Umadevi’s principle In some of the recent cases70, the Supreme Court has held that the aforesaid principle would not be applicable even in public employment unless the management takes a stand before the labour court in its objections that the post on which the workman was working was not sanctioned or that his engagement was contrary to statutory rules or that he was employed elsewhere or that there was no vacancy. In the absence of any pleadings, evidence of findings on any of these aspects, principles laid down in Umadevi would not apply. Thus, the aforesaid plea must be taken before the labour court even if the workers are actually working in public employment.

Non-application of Umadevi in cases under Sections 11A and 25F of IDA In Krishna Singh v. Executive Engineer, Haryana State Agricultural

Marketing Board71 the Supreme Court pointed out that the decision of this Court in Secretary, State of Karnataka v. Umadevi72 relates to regularization in public employment and has no relevance to an award for reinstatement of a discharged workman passed by the labour court under Section 11A of the Industrial Disputes Act without any direction for regularization of his services. Again, in Anoop Sharma v. Executive Engineer, Public Health Division, Panipat73, the Supreme Court deprecated the tendency of the high courts to apply Umadevi and other cases while dealing with the validity of the award of labour courts by the management. The Court held that none of these decisions have any application to the interpretation of Section 25F/25N of the IDA and employer's obligation to comply with the conditions enumerated in these sections.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

16 17 18 19 20 21

Inserted by the Constitution (42nd Amendment) Act 1976, Section 2. The Preamble of the Indian Constitution. Article 38. Article 39 (a). Article 39 (b). Article 39 (d). Article 39 (c). Article 41. Article 42. Article 43. Article 43A (42nd Amendment Act), 1976. Article 47. See Part IV of the Constitution. Article 13. Article 32 guarantees the right to move the Supreme Court for appropriate relief by writs. In addition to this, Article 226 empowers the High Courts to issue appropriate writs for enforcement of the provisions of Part III of the Constitution. State of Bombay v. United Motors, (1953) SCJ 373. Ibid. State of West Bengal v. Sobodh Gopal, AIR 1964 SC 587. Article 19 (1) (a). Article 19 (1) (b). Article 19 (1) (c).

22 Article 19 (1) (f). 23 Article 19 (1) (g). 24 (1957) 1 LLJ 460 (SC). 25 Article 245 (2). 26 Article 245 (1). 27 Union List contains 97 items of legislation, e.g., Defence, Foreign Affairs, Railways,

28 29 30 31 32 33 34 35 36 37 38 39 40

41 42 43

44 45 46 47 48 49 50 51 52

Airways, Post and Telegraph, Currency Coinage and Legal Tender, Trade and Commerce with other countries, Banking, Insurance, Income tax, Duties of Customs including Export Duty. Concurrent List contains 47 items of legislation. Article 249. Article 250. Article 252. Article 249. Part III of the Constitution. Part XIII of the Constitution. State List contains 66 items of legislation. Article 254 (1). Article 254 (2). APSWL Co-operative Society Ltd v. Labour Court, 1987 Lab. LC 642 at 649 (SC). Ibid. Zaverbhai v. State of Bombay, AIR 1954 SC 752, Tike Ramji v. State of UP, AIR (1956) SC 676. Deep Chand v. State of UP, AIR 1959 SC 648, Karunandh v. Union of India, AIR 1979 SC 878 and Hoechst Pharmaceuticals v. State of Bihar, AIR 1983 SC 1019. 1987 Lab. LC 642. (1982) 2 LLJ 454. See Hussainera Khatoona v. State of Bihar, (1978) I SCC 238; Sunil Batra v. Delhi Administration, (1978) 4 SCC 494: See also AIR 1980 SC 1979; Khatri v. State of Bihar, (1981) I SCC 635; S P Gupta v. Union of India, AIR 1982 SC 149. (1982) 2 LLJ 454. (1982) 2 LLJ 454 at 464–65. Id. at 470–71. 1997 LLR 991 (SC). JT 1999 (1) SC 61: (1999) 1 SCC 759. (1985) 3 SCC 116. (1986) 4 SCC 337. (1986) 2 LLJ 171. (1985) 3 SCC 116.

53 2005 LLR 417 (SC). 54 AIR 1987 SC 2408. 55 Uptron India Ltd. v. Shammi Bhan, AIR 1991 SC 101. 56 (1993) 3 SCC 259. 57 (2000) 5 SCC 65. 58 JT 2000 (7) SC 529. 59 (2001) LLR 155 (SC). 60 (1997) 2 LLN 1007 (SC). 61 (2000) LLR (SC) 849. 62 (1998) 6 SCC 538. 63 (2001) LLR 585. 64 1988 Lab. IC 225. 65 2006 (109) FLR 826 (SC). 66 (2010) 3 SCC 115. 67 2010 (125) FLR 517 (SC). 68 2011 (128) FLR 60 (SC). 69 2011 (129) FLR 500 (SC). 70 Harjinder Singh v. Punjab State Warehousing Corporation, (2010) 3 SCC 192, Ramesh

Kumar v. State of Haryana, (2010) 2 SCC 543. 71 Krishna Singh v. Executive Engineer, Haryana State Agricultural Marketing Board,

Rohtak, 2010 (2) SCALE 848. See also Anoop Sharma v. Executive Engineer, PHD, 2010 (4) SCALE 203. 72 2006 (109) FLR 826 (SC). 73 2010 (4) SCALE 203.

PART II TRADE UNIONS AND LAW

CHAPTER

4 Trade Unions of Workers and Employers’ Organizations: A Contextual and Historical Analysis I. NEED TO FORM TRADE UNIONS Trade union is an outcome of the factory system. It is based on labour philosophy—‘united we stand, divided we fall.’ Industrial revolution in India has changed the traditional outlook in the labour management relationship. With the introduction of the modern factory system, personal relationship between employer and employee disappeared and has given rise to many social and economic evils which made it imperative on the part of the workers to devise an effective means to contact employers and to bargain with them. Formation of trade unions has provided an ideal solution.

II. RIGHT TO FORM TRADE UNIONS Article 19(1)(c) of the Indian Constitution guarantees that all citizens shall have a right to form associations or unions. This right includes not only the right to form trade unions but also the right to continue as members of the trade unions1. It also includes the right to refuse to be a member of an association, the right to not be compelled to join an association and the right to not be compelled to

withdraw from an association.2 However, this right is not absolute. Clause 4 of Article 19 empowers the State to make any law in the interest of the sovereignty and integrity of India or public order or ‘morality’ and place reasonable restrictions on the exercise of the above right.

III. HISTORY OF THE TRADE UNION MOVEMENT IN INDIA The labour movement in India is over 15 decades old, and it may be traced from 1860s.3 Early years of the movement were generally led by philanthropists and social reformers, who organized workers and protected them against inhuman working conditions. The early years of labour movement were often full of difficulties. Strike committees emerged which called themselves trade unions and demanded the privileges of trade unions without any means of discharging responsibilities thereof.4 The position of trade unions has considerably improved since then. The number of trade unions have gone up and their membership and funds have increased. The development during the span of about 151 years may be considered broadly under the following six periods: (i) pre–1918; (ii) 1918– 24; (iii) 1925–34; (iv) 1935–38; (v) 1939–46; and (vi) 1947 and since. The principal purpose of this section is to trace the origin and development of trade union movement in India. In this process, an effort will be made to state the characteristics of labour movement and the factors which were responsible for the growth of trade union movement during the specified period.

A. Pre-1918 Period The earliest sign of labour agitation in India was a movement in Bengal in 1860 led by Dinbandhu Mitra, a dramatist and social reformer of Bengal followed by some journalists to protest against the hardships of the cultivators and also the plantation workers. The government thereupon appointed an Indigo Commission. The report of the commission reflected upon the gross cruelties perpetrated by foreign planters with the aid and under the protection of laws framed by the British Government specially for this purpose.5 Thereafter, the system of indigo cultivation was abolished due to discovery of synthetic process. In 18756 Sarobji Shapuri in Bombay protested against poor working conditions of workers at that time.7 The deplorable conditions of workers were brought to the notice of the Secretary of State for India. The first Factory

Commission was, therefore, appointed in 1875 and as a result, the Factories Act, 1881 was enacted. This Act was, however, inadequate to meet the evil of child labour. Moreover, no provision was made to regulate the working conditions of women workers. This gave rise to great disappointment among workers. Thereupon, another Factory Commission was appointed in 1884. In the same year, Mr N M Lokhande organized the conference of Bombay factory workers and drew up a memorandum signed by 5,300 workers demanding a complete day of rest on Sunday, half-an-hour recess, working hours between 6.30 a.m. to sunset, the payment of wages not later than 15th of the month, and compensation for injuries.8 In 1889, in Bombay, workers of spinning and weaving mills demanded Sunday as holiday, regularity in the payment of wages and adequate compensation in case of accident.9 Inspite of these agitations, no material change could be brought and, therefore, another representation was made to the government in 1890. The stand of 1884 was also reiterated and the petition this time was signed by 17,000 workers. The same year, the Bombay Mill Hands Association, the first labour association was organized10 with Mr Lokhande as its President. It started a labour journal (Dinbandhu) in order to propagate effective views of their own. In the very same year, Bombay Mill Hands Association placed its demand before the Factory Labour Commission (1890), with Mr Bangalee, the great philanthropist as a member. The Commission gave due consideration to the demands of labour. Several labour associations were formed after 1890. For instance, the Amalgamated Society of Railway Servants in India and Burma was formed in April 1897 and registered under the Indian Companies Act,11 the Printers Union, Calcutta was formed in 1905, the Bombay Postal Union was formed in 1907, the Kamgar Hityardhak Sabha and Service League were formed in 1910. The post-1890 period was also important for the reason that several strikes occurred during this period. Instances, may be cited of two strikes which occurred in Bombay in 1894. The first big strike of mill operators of Ahmedabad occurred in the first week of February, 1895. The Ahmedabad Mill Owners Association decided to substitute a fortnightly wage system for a weekly one which was in force ever since 1896. This forced over 8,000 weavers to leave work. However, the strike was unsuccessful.12 There were also strikes in jute industries in Calcutta in 1896.13 In 1897, after a plague epidemic, the mill workers in Bombay went on strike for payment of daily wages instead of monthly payment of wages.14 In 1903, the employees of press and machine section of Madras

Government went on strike against overtime work without payment. The strike prolonged for six months and after great hardship and starvation, workers returned to work. Two years later in 1905, the workers of the Government of India Press, Calcutta, launched a strike over the question of (i) non-payment for Sunday and gazetted holidays; (ii) imposition of irregular fines; (iii) low rate of overtime pay; and (iv) the refusal of authorities to grant leave on medical certificate.15 The strike continued for over a month. The workers returned on fulfilment of certain demands. In December 1907, the workers of Eastern Railway Workshop at Samastipur went on strike on the issue of increment of wages. They went back to work after six days when they were granted extra allowance owing to famine conditions prevailing at that time in the region. In the same year, the Bombay Postal Union and Indian Telegraph Association called a strike. In 1908, workers of textile operators in Bombay struck work in sympathy with Shri Bal Gangadhar Tilak who was imprisoned for sedition. The workers in Bombay went on strike in 1910 demanding reduction in working hours. As a result of this agitation, the Government of India set up a commission to enquire into the desirability of reducing the working hours. On the basis of the recommendation, the working hours were reduced to 12 hours a day. Similar strikes continued from year to year particularly in Bengal and Bombay demanding an increase in wages. Certain broad features of the labour movement during the period of 1860– 1917 may be briefly noted: First, the movement was led by philanthropists and social reformers and not by workers. Second, there was no trade unions in the modern sense. According to the report on the working of the Factories Act at Bombay, in 1892, the Bombay Mill Hands Association was not to be classified as a genuine trade union. The following excerpts of the report are pertinent: The Bombay Mill Hands have no organized trade unions. It should be explained that although Mr N M Lokhande, who served on the last Factory Commission, described himself as President of the Bombay Mill Hands Association, that Association has no existence as an organized body, having no roll of membership, no funds and no rules. I understand that Mr Lakhonde simply acts as volunteer adviser to any mill hand who may come to him.16 But, the trade unions existed as early as 1897. For instance, the

Amalgamated Society of Railway Servants of India and Burma and other unions were formed in April 1897. Third, the associations mainly relied on petitions, memoranda and other constitutional means for placing their demands which were mainly confined to factory legislation, e.g., hours of work, health, wages for overstay, leave, holidays and such other matters. Fourth, the early movement was confined to revolt against conditions of child labour and women workers employed in various industries. Fifth, there was absence of strike as a means of getting grievances redressed. The association of workers worked with the cooperation of management and government officials and some of them considered it their duty ‘to avoid strikes upon the part of its members by every possible and lawful means’17 Sixth, strike during this period was considered to be a problem of law and order, instances are not lacking where police acted upon strikers by using force and framed false charges against them.18

B. 1918–1924 The period 1918–1924 can perhaps be best described as the era of formation of modern trade unionism. This period witnessed the formation of a large number of trade unions. Important among these were Madras Labour Union, Ahmedabad Textile Labour Association, Indian Seamen’s Union, Calcutta Clerks’s Union and All India Postal and RMS Association. One of the significant features of this period was that the All India Trade Union Congress was formed in 1920. The growth of trade unions was accompanied by a large number of strikes. The deteriorating economic conditions of workers resulted in strikes. The wages of workers were increased but it could not keep pace with the soaring prices of commodities. Further, there was a shortage of labour in some industries due to influenza epidemic.19 Several factors were responsible for formation and growth of trade unions: First, the economic conditions of workers played an important role in the formation of trade unions. The demand for Indian goods increased enormously for two reasons: (i) The shortage of shipping facilities led to restricted imports of several commodities for which India was dependent on foreign countries; (ii) There was great demand for Indian goods from allies and neutral countries. For these reasons the prices of Indian commodities, viz., salt, cotton, cloth, kerosene, rose high. Naturally, the cost of living steadily increased. The employer earned

huge profits. The wages of workers were increased but not in pace with the soaring prices of commodities. This resulted in further deterioration of conditions of workers. Further, there was shortage of labour in some industrial centres due to epidemic of influenza.20 These reasons led to the formation of trade unions to improve their bargaining positions. Second, the political conditions prevailing in the country also helped the growth of the labour movement. The struggle for independence started during this period and political leaders asserted that organized labour would be an asset to the cause. The labour unions were also in need of some help. The political leaders took lead and helped in the growth of trade unions. Third, the workers’ revolution in Russia which established the first workers’ State in the world had its own influence on the growth of trade union movement. Fourth, was the worldwide unrest in the post-war period. The war awakened in the minds of industrial workers. Fifth, was the setting up of the International Labour Organization in 1919 of which India was the founder member. The constitution of ILO required one representative from the governments of member states. The government, without consulting the unions, appointed Shri N M Joshi as its representative. This propelled the workers to organize. As a result, AITUC was formed in 1920. This gave an opportunity to send members for ILO conferences and also brought a change in government attitude while dealing with labour problems.

C. 1925–1934 This period witnessed a split in AITUC into leftist and rightist wings. Later in 1929, a wing of AITUC, namely, the All India Trade Union Federation was formed. The main cause behind Communist influence was the economic hardship of workers. This period also showed remarkable decrease in the intensity of industrial conflict. At least two factors were responsible for it. First, the Trade Disputes Act was passed in 1929 prohibiting strikes and lockouts. Second, the failure of strikes and lockouts resulted in industrial strife. Another significant feature of this period was the passing of the Trade Unions Act, 1926 and the Trade Disputes Act, 1929. The former Act provides for registration of trade unions and affords legal protection to intervene in trade disputes. The latter Act provided for ad hoc conciliation board and court of inquiry for settlement of trade disputes. The Act, as already observed, prohibited strikes and lockouts in public utility services and general strikes affecting

community as a whole.

D. 1935–1938 During this period, unity was forged among trade unions. This led to a revival of trade union activity. In 1935, the All India Red Trade Union Congress merged itself with the AITUC. Again, in 1938, an agreement was arrived at between All India National Trade Union Federation and AITUC and consequently, NTUC affiliated itself with AITUC.21 Several factors led to this revival of trade unionism. First, the change in political set up in the country was responsible for the change. It is significant that Congress Party which formed its government in 1937 in several provinces tried to strengthen the trade union movement and to improve the conditions of labour. Second, the working class was also awakened to their rights and they, therefore, wanted to have better terms and conditions of service. Third, management also changed its attitude towards trade unions. The year 1938 saw the most important state enactment, viz., the Bombay Industrial Disputes Act, 1938. The significant features of the Act were: ‘(a) compulsory recognition of unions by the employer; (b) giving the right to workers to get their case represented either through a representative union or where no representative union in the industry/centre/unit existed, through elected representatives of workers or through the government labour officer; (c) certification of standing orders which would define with sufficient precision the conditions of employment and make them known to workmen; (d) the setting up of an industrial court, with original as well us appellate jurisdiction to which parties could go for arbitration in case their attempts to settle matters between themselves or through conciliation did not bear fruit; and (e) prohibition of strikes and lockouts under certain conditions.’22 The scope of the Act was limited to certain industries in the province.

E. 1939–1946 World War II, like World War I, brought chaos in industrial relations. Several reasons may be accounted for the industrial unrest and increased trade union activity. First, the rise in prices far outpaced the increase in wages. Second, there was a split in AITUC due to nationalist movement. Third, the post-World War II period witnessed retrenchment and, therefore, the problem of unemployment. During this period, the membership of registered trade unions increased from 667 in 1939–40 to 1087 in 1945–46. Further, the number of

women workers in the registered trade unions increased from 18,612 in 1939–40 to 38,570 in 1945–46. Moreover, the period witnessed a large number of strikes. During the emergency, the Defence of India Rules, 1942 remained in force. Rule 81 A of the Rules empowered the government—(i) to require employers to observe such terms and conditions of employment in their establishments as may be specified; (ii) to refer any dispute to conciliation or adjudication; (iii) to enforce the decisions of the adjudicators; and (iv) to make general or special orders to prohibit strikes or lockouts in connection with any trade dispute unless reasonable notice had been given. These provisions thus permitted the government to use coercive processes for the settlement of ‘trade disputes’ and to place further restrictions on the right to use instruments of economic coercion. In 1946, another enactment of great significance in labour relations, namely, the Industrial Employment (Standing Orders) Act, 1946 was passed with a view to bring uniformity in the condition of employment of workmen in industrial establishments and thereby to minimize industrial conflicts.23 The Act makes it compulsory for employers engaging 100 or more workmen ‘to define with sufficient precision the conditions of employment’ and to make those conditions known to workmen.24 Another important enactment at state level was the Bombay Industrial Relations Act, 1946. The Act made elaborate provisions for the recognition of trade unions and rights thereof.

F. 1947 and Since With Independence, the trade union movement in India got diversified on political considerations. The labour leaders associated with the National Congress Party formed the Indian National Trade Union Congress in 1947. The aim of the INTUC was ‘to establish an order of society which is free from hinderances in the way of an all-round development of its individual members, which fosters the growth of human personality in all its aspects and goes to the utmost limit in progressively eliminating social, political or economic activity and organization of society and the anti-social concentration of power in any form. In 1948, the Socialist Party formed an organization known as Hind Mazdoor Sabha. The aims and objects of the Sabha were to: (i) promote the economic, political, social and cultural interest of the Indian working class; (ii) guide and coordinate the activities of affiliated organizations and assist them in

their work; (iii) watch, safeguard and promote the interests, rights and privileges of workers in all matters relating to their employment; (iv) promote the formation of federation of unions from the same industry or occupation; (v) secure and maintain for the workers freedom of association, freedom of speech, freedom of assembly, freedom of press, right of work or maintenance; right of social security and right to strike; (vi) organize and promote the establishment of a democratic socialist society in India; (vii) promote the formation of cooperative societies and to foster workers’ education; (viii) cooperate with other organizations in the country and outside having similar aims and objectives’.25 A year later in 1949, another organization, namely, the United Trade Union Congress was formed. The aims and objects of the United Trade Union Congress as given in its constitution were: (i) establishment of socialist society in India; (ii) establishment of a workers and peasants state in India; (iii) nationalization and socialization of the means of production; (iv) safeguarding and promoting the interests, rights and privileges of the workers in all matters, social, cultural, economic and political; (v) securing and maintaining for the workers’ freedom of speech, freedom of press, freedom of association, freedom of assembly, right to strike, right to work or maintenance and the right to social security; and (vi) bringing about unity in the trade union movement.26 The same year also witnessed the passing of the Industrial Disputes Act, 1947 and the Trade Unions (Amendment) Act, 1947. The former Act introduced the adjudication system on an all India level. It prohibits strikes and lockouts without giving 14 days’ prior notice and during the pendency of conciliation proceeding before a conciliation officer in public utility services. In public and non-public utility services, it prohibits strikes and lockouts during the pendency of proceedings before board of conciliation, labour court, tribunal, national tribunal and arbitration (when a notice is given under Section 10-A of the Act). The Act further prohibits strikes and lockouts during the operation of settlement or award in respect of any matter covered under settlement or award. The latter Act brought several changes of great significance. It provided for recognition of trade unions and penalties for unfair labour practices by employers and unions. But the Act has not yet been enforced. Again in 1950, the Trade Unions’ Bill was introduced in the Parliament providing for registration and recognition of trade unions and penalties for certain unfair labour practices. On dissolution of the Parliament, the bill lapsed and has since not been brought forward by government before the Parliament. Political involvement continued even after 1950. In addition to four major all India organizations discussed above, three unattached unions dominated by

one or the other political parties were formed. For instance on 23 July 1954, a federation namely, Bharatiya Mazdoor Sangh (BMS) was formed in Bhopal by Jan Sangh Party, presently known as Bhartiya Janta Party. The main object of BMS is to check the increasing influence of the Communist unions in the industry and cooperate with non-Communist unions in their just cause. A year later, Hind Mazdoor Panchayat, a new trade union organization by Sanyukt Socialist Party and Indian Federation of Independent Trade Unions which have no affiliation with any political party, were formed. The period also saw amendments in the Trade Unions Act in 1960. The amended Act brought four new provisions: (i) minimum membership subscription was incorporated; (ii) the registrar of trade unions was empowered to inspect account books, register, certificate of registration and other documents connected with the return submitted by them under the Trade Unions Act; (iii) government was empowered to appoint additional and deputy registrar with such powers and functions as it deemed fit; (iv) fate of the application for registration where applicants (not exceeding half of them) ceased to be members or disassociated themselves from the application was statutorily decided. Some independent trade unions met at Patna on 21 March 1964 and decided to form the All India Independent Trade Union Congress, but this effort to unite the unaffiliated unions did not continue for a longer period and met an early death. The Act was once again amended in 1964. It made two changes: (i) it disqualified persons convicted by the court of an offence involving moral turpitude from becoming office-bearers or members of the executive of a registered trade union; and (ii) it required for submission of annual returns by registered trade unions on a calendar year basis. 1970 witnessed another split at the national level in the AITUC. The decision of Communist group, which decided not to remain within the AITUC resulted in the formation of a separate organization, namely, Centre of Indian Trade Union by the Marxist Communists. A further split took place in 1970–72. During the period, there was a split in the United Trade Union Congress and another organization namely, the United Trade Union Congress Lenin Sarani was formed.

G. The Unity Move In 1972, a new experiment was made when three central trade union organizations, namely, the HMS, the INTUC and the AITUC, in the meeting held on 21 May 1972 at New Delhi agreed to establish a National Council of

Central Trade Unions for the purpose of promoting understanding, cooperation and coordination in the activities of the central trade unions, to defend the interests of the working class and the trade union movement, and help towards the development of the national economy on a democratic, self-reliant and nonmonopoly basis, to overcome trade union rivalry and bring about trade union unity for common objectives and action. However, this organization could not survive for a longer period and met an early death. The year also witnessed the emergence of the Trade Union SEWA by leading workers in Ahmedabad. Ms Ela Bhatt has been instrumental for the same. In September 1977, an All India Convention of Central Organization of Trade Unions including CITU, BMS, HMS, HMP and the TUCC was called which demanded time-bound programmes ensuring reduction in wage disparity, national wage and price policy and need-based wages for industrial and agricultural workers. In 1981, once again unity was shown by the trade unions in the protest against the promulgation of the Essential Services Maintenance Ordinance, 1981 and also the Bill in that regard in the Parliament. A year later in 1982, the Trade Unions (Amendment) Bill, was introduced in Lok Sabha. The Bill proposed to make the following amendments in the Act, namely: (i) To reduce multiplicity of unions, it proposed to change the existing provision of enabling any seven workmen to form a trade union by providing for a minimum qualifying membership of 10 per cent of workmen (subject to a minimum of ten) employed in the establishment or industry where the trade union is proposed to function or 100 workmen, whichever is less, for the registration of trade unions; (ii) There is at present no machinery or procedure for resolution of trade union disputes arising from inter-union and intra-union rivalries. It proposed to define the expression ‘trade union dispute’ and to make provision for resolving such disputes through voluntary arbitration, or by empowering the appropriate government and the parties to the dispute to refer it to the registrar of trade unions for adjudication; (iii) The Act does not lay down any time-limit for registration of trade unions. It proposed to provide for a period of 60 days for the registration of trade unions by the registrar after all the formalities have been completed by trade unions. It also proposed to provide that a trade union whose certificate of registration has been cancelled would be eligible for reregistration only after the expiry of a period of 6 months from the date of cancellation of registration, subject to certain conditions being fulfilled by

the trade union; (iv) Under the existing provisions of the Act, 50 per cent of the office bearers in the executive of a registered trade union shall be persons actually engaged or employed in an industry with which the trade union is connected. It proposed to enhance this limit to 75 per cent so as to promote development of internal leadership; (v) It proposed to empower the registrar of trade unions to verify the membership of registered unions and connected matters and report the matter to the state and Central Governments; (vi) Penalties specified in the Act for the contravention of its provisions were proposed to be enhanced.27 In order to reduce multiplicity in trade union, strengthening their bargaining power and to provide check-off facilities to trade union, the Bill seeks to provide that in relation to a trade union of workmen engaged or employed in an establishment or in a class of industry in a local area and where the number of such workmen are more than 100, the minimum membership for the registration of such trade union shall be 10 per cent of such workmen. Such unions shall be eligible for registration only if they meet this minimum test of strength. From this it follows that the setting up of bargaining councils (which will be able to negotiate on all matters of interest to workmen with employers) will to some degree bring confidence and strength. The limitations placed upon the leadership of trade unions by restricting the number of non-workmen as office-bearers of a trade union to two and the provision that a person can become an office-bearer or a member of an executive of not more than seven registered trade unions will go a long way in developing internal leadership in trade unions. The Bill also provides for the constitution of a bargaining council for a three year term to negotiate and settle industrial disputes with the employer. The check-off system would be normally adopted for verification of the strength of trade unions in an industrial establishment, though the Bill provides for the holding of a secret ballot in certain exceptional circumstances.28 While the unit-level bargaining council will be set up by the employers, the appropriate government will be empowered to set up such councils at industry level. All the registered trade unions will be represented on the bargaining councils in proportion to their relative strength, but any union with a strength of not less than 40 per cent of the total membership of the workmen in an industrial establishment will be recognized as the ‘principal agent’. If there is no trade union having members among the workmen employed in an industrial establishment, a workmen’s council will be set up in such a manner as may be

prescribed. The Central Government will also be empowered to constitute such bargaining councils at the national level. However, the aforesaid Bill lapsed. Six years later, the Trade Unions and the Industrial Disputes (Amendment) Bill, 1988 was introduced in the Rajya Sabha on 13 May 1988 but it has not yet received the colour of an Act. The Government of India had in 1997, approved certain amendments to the Trade Unions Act, 1926. The objective of these amendments is to ensure organized growth of trade unions and reduce multiplicity of trade unions. The Trade Union Amendment Bill, 1997 was to be introduced in the Rajya Sabha in the winter session of the Parliament in the year 1997, but due to various reasons, it was not introduced.29 During 1999, a consensus emerged among the leading trade union federations like the BMS, AITUC, CITU and INTUC on protection to domestic industry, strengthening the public sector units by way of revival and induction of professionals in the management and amendment of labour laws and inclusion of rural and unorganized labour in the social safety net.30 The year 2001 witnessed several amendments of much relevance, in the Trade Unions Act, 1926. However, this amendment came into force w.e.f. 9 January 2002. During 2009, the Workmen’s Compensation Act, 192 was amended on the recommendation of the (Second) National Commission on Labour. Another development in this year was the enactment of the Unorganized Workers’ Social Security Act, 2008 which came into force with effect from 16 May 2009. A year later, the Employees’ State Insurance Act, 1948 was amended by the Employees’ State Insurance (Amendment) Act, 2010. Moreover, the Payment of Gratuity Act, 1972 was amended by the Payment of Gratuity (Amendment) Act, 2010 and the Plantation Labour Act, 1951 by the Plantation Labour (Amendment) Act, 2010. Another major legislative development was the amendment in the Industrial Disputes Act, 1947 by the Industrial Disputes (Amendment) Act, 2010 which came into force with effect from 19 August 2010. During 2009, a consensus emerged among major central trade unions including BMS, INTUC, AITUC, HMS, CITU, AIUTUC, TUCC, AICCTU and UTUC which had organized the National Convention of Workers in Delhi on 14 September 2009 and decided to launch joint action programme on price rise, labour law violations, job losses, creation of National Social Security Fund for Unorganized Workers and against disinvestment of profit-making PSUs. The National Convention was followed by All India Protest Day on 28 October 2009.

The trade unions also met the Prime Minister on 17 September 2009 and urged upon him to address the above main concerns of the working people effectively. As a follow up, central trade unions staged massive dharna before Parliament on 16 December 2009 as a protest against government inaction to control price rise, check labour law violations, non-creation of National Fund for Unorganized Workers Social Security, loss of jobs in the name of recession and disinvestment of profit-making public sector undertakings. Similar joint dharnas have been staged all over the country in state capitals and industrial centres. The trade unions being dissatisfied with the attitude of the government in not taking any appropriate steps to meet the five demands, the workers went on Satyagraha/Jail bharo on 4 March 2010 all over the country, for the aforesaid demands. On 28 February 2012, a national strike was called by 11 central trade union organizations (including AITUC, BMS, CITU, HMS, INTUC, AITUC, TUCI and NLO) supported by about 5,000 other smaller trade unions for their 10-point charter of demand which included rising unemployment, labour right violations, mass contractualization, price rise particularly of essential commodities, universalization of social security, etc. It was not only successful in bringing together the much-divided trade union movement but was also able to convey its seriousness over the issues facing the working class.

H. A Broad Survey A survey of the development of trade unions in India shows that most of the unions are affiliated with either of the four central trade union federations, viz., the Indian National Trade Union Congress, All India Trade Union Congress, Hind Mazdoor Sabha and United Trade Union Congress. Besides these, some trade unions are affiliated with seven other trade union federations, viz., Bhartiya Mazdoor Sangh, Hind Mazdoor Panchayat, Centre of Indian Trade Union, National Federation of Independent Trade Unions, National Labour Organization, Trade Union Coordination Committee and United Trade Union Congress (Lenin Sarani). These trade union organizations have been patronized by different political parties in the country. Further, a survey of trade unions in India reveals that over the years, the trade union movement has undergone significant development. Both workers and non-workers have been involved. The beginnings of the movement were the outcome of the efforts made by certain social reformers and labour leaders. ‘The early … trade union movement (was) often full of difficulties. Strike committees called themselves trade unions and demanded the privileges of trade unions, without any means of discharging the responsibilities thereof.’31 The position has considerably changed since then.

The number of unions has gone up and membership and funds of trade unions have increased.

IV. EXISTING STRENGTH OF CENTRAL TRADE UNIONS As per the report of the Ministry of Labour, Government of India, the strength of central trade unions as per the verification of membership of trade unions as on 31 December 2002 was as follows: (i) BMS (ii) INTUC (iii) AITUC (iv) HMS (v) CITU (vi) UTUCLS (vii) UTUC (viii) AICCTU (ix) TUCC (x) SEWA (xi) LPF (xii) NIFTU CDHN

– – – – – – – – – – – –

6215797 3954012 3442239 33384.91 2678473 13,73268 606935 639962 732760 688140 6115 06 569599

Source: Govt. of India; Ministry of Labour and Employment, Order No L–52025/20/2003–1R (IMP–1) dated 11.1.2008

V. CURRENT ISSUES The (Second) National Commission on Labour in its report of 2002 gave the following account on the development of trade union movement. (i) The trade union movement in India has now come to be characterized by multiplicity of unions, fragmentation, politicization, and a reaction that shows a desire to stay away from politically-oriented central federation of trade unions and struggles for cooperation and joint action. (ii) One sees an increase in the number of registered unions in the years

(iii)

(iv)

(v)

(vi)

(vii)

from 1983 to 1994. But one also sees a reduction in the average membership per union and in the number of unions submitting returns. There are other unions that have founded into bodies relating to certain industries or employment, but have kept out of the main central trade union federations. This includes National Alliance of Construction Workers, National Fish Workers’ Federation, National Alliance of Street Vendors, etc. We must also make specific mention of the emergence of the trade union—SEWA group of organization. It did not confine itself to the traditional method of presenting demands and resorting to industrial action in pursuit of them. It took up the work of organizing the women workers who were engaged in unorganized sector of employment, combining other constructive activities like marketing, the provision of micro-credit, banking, training and representing the views and interests of workers. There is yet another development on the trade union scene which relates to the increasing tendency on the part of trade unions to get together in ad hoc struggle committees to launch struggles, or to support a struggle that one of them has launched. Another new feature is the readiness and the determination of central trade unions to escalate the objective to matters of government policy like, disinvestment, privatization, etc. Instances of such action were witnessed in the strike on BALCO privatization, the Rajasthan agitation by the government servants and the strikes by electricity workers in U P, government employees in Kerala, and so on. A grave threat to the authentic trade union movement seems to be emerging from the underworld. There are also reports of some cases where such unions have succeeded through other means. Many questions arise. The primary question perhaps is: what are the methods or abnormal methods that these new ‘leaders’ employ, and how can the authentic trade unions, the management and industry as a whole be protected from the inroads and tactics of these interlopers from the underworld. The use of terror in any form will only nullify democratic rights by creating an atmosphere in which people are forced to act or not to act merely to protect their skin. It has therefore, become necessary to protect the workers as well as managements from such forces.

(viii)

There are trade union leaders who ask for abolition of contract labour but ultimately relent if the contract assignment is given to them or their benami agents. This makes a mockery of the trade union movement and brings down the trade union leaders in the esteem of employees.

(ix)

Another practice that undermines respect is that of permitting permanent workers to get their jobs done through proxy workers or letting others work in their place, and taking a cut form the wages of their proxies. Similar is the effect of so-called unions that take up the grievances of workers and charge a commission on the monetary gains they may secure. There is also a tendency to convert unions into closed shops.

(x)

VI. CLOSED SHOP/UNION SHOP The trade unions get greater strength and security if they have a contract over the supply of labour at pre-entry or at least post-entry level in the industry. In order to appreciate the feasibility of adopting such a system in India, it is necessary to examine the concept of closed shop and union shop. Lord Denning defines ‘closed shop’ as: A factory or workshop or firm in which all the workmen are members of trade union; it is closed to everyone except the members. Any newcomer who comes to work must join the union. If the newcomer refuses to do so, the union members will insist on his dismissal. They tell the employer, sack him or we will go on strike. The employer gives in. He dismisses the man, or the man gives in and joins the union.32 The First National Commission on Labour explains ‘closed shop’ as an agreement with the employer or at least his acquiesce to recruit only trade union members. On the other hand ‘union shop’ is one ‘by which new entrants to employment, if they are not union members, they must join the union within a specified period.’33 Unlike the industrially advanced countries like USA or UK, closed shop or union shop has not gained momentum in India. The committee appointed by the Government of Bihar in 1956 strongly opposed the system of closed shop on

the ground that ‘the right of the citizens to seek and get employment is one of the fundamental rights guaranteed under the Constitution and any interference with that right in the shape of prior membership of a trade union would impose an unreasonable restriction on the right to work.’ The same line of approach was adopted by the First National Commission on Labour. According to the Commission, closed shop is neither practicable nor desirable. Indeed it is against the fundamental right of association guaranteed under Article 19 (1) (c) of the Constitution.34

VII. EMPLOYERS’ ORGANIZATIONS A. Need to Form Employers’ Organizations We have seen in previous section that a workers’ get together for joint action through a trade union, meets the employer on equal terms. Like-wise, employers organize themselves in furtherance of common objectives of evolving common attitudes to labour or approaches to national policies, as also for standardization of wages and other conditions of employment in an industry within a local area35. The following are the main objectives: (i) to promote collective bargaining at different levels; (ii) to develop healthy and stable industrial relations; (iii) to bring a unified employers’ viewpoint on various issues of industrial relations; and (iv) to represent employers’ organization in the meetings of ILC and SLC boards in conformity with tripartite approach to labour matters.36

B. Origin and Growth The origin, growth and development of employers’ organizations have three distinct phases :(i) the period prior to 1930; (ii) the period between 1931 to 1946; and (iii) the post-Independence period. Each phase reveals its own structural and functional characteristics; in each period the organizations had to undergo changes because of contemporary economic, social and political developments. These changes have been more rapid in some than in others. The periods referred to also coincided with important developments in the labour field, and these have had a great impact on the pattern and development of employers' organization as also on their functioning37.

1. Pre-1930 period: This period was characterized mainly by the formation of associations of merchants in the form of chambers of commerce. During the latter half of the last century, industrial associations also came into being with the aim of protecting the commercial interest of their members and securing concessions from the government. Regional associations at important centres of industrial activity developed, but again with a different focus for action. The Bombay Mill-Owners Association, the Bengal Mill-Owners' Association, the Ahmedabad Mill-Owners' Association are instances in point38. 2. 1931–1946: Organizing chambers of commerce and industrial associations for dealing with a variety of problems connected with industry was the rule prior to 1930. Some of these chambers dealt with labour matters too.39 The All-India Organization of Industrial Employers (AIOIE)40 and the Employers' Federation of India (EFI) came into existence in 1933 to comprehend and deal with problems of industrial labour in a concerted manner. The All-India Manufacturers’ Organization (AIMO) was formed in 1941. The setting up of these organizations was again, as in the case of workers unions, in response to the need then felt for representation on international conferences and legislative bodies.41 3. Post-Independence period—The period since Independence witnessed the growth of planning, expansion of industrial activity, extension of the democratic apparatus, passing of several labour laws and a growing trade union movement, all of which acted as a spur for the strengthening and expansion of employers’ organizations. Experience of working together convinced employers of the advantage of united action. Employers' organizations grew in strength mainly to meet the requirements of individual employers for advice on labour matters. In some cases, they built up their strength to match that of organized labour; in others, it was the other way round. At present, employers’ organizations are organized at three levels namely: (a) employers operating through their local organizations or otherwise; (b) industrial associations which cut across state boundaries; and (c) federations which comprise representatives both of industries and centres. Of the three, the local organizations which operate mainly through the chambers of commerce cover all industries in an area; their activities in the labour field are comparatively less extensive. This period witnessed significant developments and several employers’ organizations and federations were set up. However, multiplicity of organizations at the national level has not been a problem with employers' interest at tripartite forums. This has, for all practical purposes, been effectively

secured by the main employers' organizations coming together under the CIE. But the AIMO is outside the CIE. The First National Commission on Labour felt that it will be desirable that CIE brings this organization also within its fold. Some organizations at the industry level and the Employers' Federation of India at the national level, originally registered under the Companies Act, are now registered under the Trade Unions Act, 1926, while many are still outside its purview.

C Role and Functions of Employers’ Organizations The main role and functions of an employers’ organization is to protect and promote the interest of its members. The membership of employers’ organizations is basically composed of corporations/employers. All enterprises have to meet the test of economic viability. For a proper appraisal of the role and functions of an organization, this aspect cannot be ignored. Thus, its activities are designed and directed in such a manner that their members stand to gain. Also the organizations have to work on a broader plane; labour problems are only a part of their overall responsibilities. Economic, commercial and fiscal matters and policies are equally or even more important for them. The organizations represent their members’ view in formulation of government's policies, rules and regulations and in giving advice to members on the interpretations and extent of applicability of agreements arrived at various bipartite and tripartite bodies and on Acts and regulations which come into force. Labour departments/advisory services, which have come in vogue in many employers' organizations to advise and assist members have been the direct consequence of the recognition of these functions.42 Employers’ organizations find it necessary to have legislative support for realization of their objectives. The pursuit of their activities leads to their involvement in politics or to their developing lobbies without directly aligning themselves with any political party. There is evidence on record to show that individual employers and not the employers' organizations have used these avenues to the extent necessary although providing finances to political parties or sponsoring candidates are not unknown to the organizations or industrial associations—national or local. Political activity by employers' associations may be as inimical to peace in industry as that by workers' associations, particularly when we are envisaging employers’ organizations to include both public and private sector units. This should be eschewed. It is thus, that they will be able to establish rapport between the two sectors and work exclusively in the interest of industry rather than in the sectional interests of one or the other form of

ownership.43 The pursuit of economic gains by employers’ organizations does not mean that they should not recognize social responsibilities. With planned economic development and increasing democratization of the institutional framework of society, there is active consultation by the state with all organizations, including those of employers, for formulation, inter alia, of economic, educational, social and labour policies. Employers’ organizations are, therefore, expected to take a stand consistent with the social and economic objectives of the community/country as a whole and be active in promoting policies and measures that are not contrary to the general interest of the community. Along with their gains, they should keep in view the needs of the developing economy, the requirements of planned growth, importance of maintenance of peace in industry and the desirability of an equitable distribution of national wealth. There can, however, be differences as in the case of trade unions, as to the priority between the interest of the community and the employers.44

D. Employers’ Federations 1. Employers’ Federation of India: The principal objects for which the EFI has been established are embodied in its constitution. These are : (i) to promote and protect the legitimate interests of employers engaged in industry, trade and commerce; (ii) to maintain harmonious relations between management and labour and to initiate and support all well-considered schemes that would increase productivity and at the same time, give labour a fair share of the increased return; (iii) to collect and disseminate information affecting employers and to advise members on their employer–employee relations and other ancillary problems. These objects lie within the field of ‘industrial relations’. Although consideration of broad economic problems is not altogether excluded, the EFI does not generally comment on commercial questions of customs, taxation and the like which lie in the sphere of the Associated Chambers of Commerce and Industry.45 2. The All India Organization of Employers : The objects of the AIOE inter alia include: (i) To take all steps which may be necessary for promoting, supporting or

opposing legislative and other measures affecting or likely to affect directly or indirectly, industries in general, or particular industries; (ii) To nominate delegates and advisors, etc., to represent the employers at the International Labour Conference, United Nations Organization, International Chamber of Commerce and other conferences and committees affecting the interests of trade, commerce and industries, whether as employers or otherwise; (iii) To promote and support all well-considered schemes for the general uplift of labour and to take all possible steps to establish harmonious relations between capital and labour".46 3. The All India Manufacturers’ Organization: The objectives of the AIMO are : (i) To help in bringing about rapid industrialization of the country through sound and progressive economic policies; (ii) To help in increasing the aggregate wealth of India; (iii) To raise the standard of living of the people of India by utilizing to the fullest possible extent all the available national resources and talent in the country; and (iv) To play a positive role in relieving the pressure of population on land. The industrial relations functions of the AIMO are similar to those of the EFI and AIOE. All these federations function through their regional offices. 4. Council of Indian Employers: The Council of Indian Employers founded in 1956 is responsible for choosing delegates to represent Indian employers in international conferences/committees. It is this Council which is a member of the International Organization of Employers at Brussels in place of the AIOE and the EFI. The period since Independence is thus particularly important because of the joint approach by employers to deal with labour problems, informally in the first half and somewhat more formally in the second. Building up of adequate specialized advisory services in labour matters and training of management and personnel officers at various levels have been the result of this joint approach, although a beginning in this direction had been made earlier by individual industrial associations.47 5. Federation of Indian Chambers of Commerce and Industry (FICCI): FICCI was established in 1927. It is the largest and oldest apex business organization in India with a nationwide membership of over 1,500 corporates and 500 chambers of commerce. Its activities are representative, legislative and promotional. The Federation is represented in various advisory committees appointed by the

government. It also provides training programmes and organizes seminars and conferences. It works with the government on policy issues and on enhancing efficiency, competitiveness and expanding opportunities for industry. 6. The Associated Chamber of Commerce and Industry of India (ASSOCHAM): The membership of ASSOCHAM is confined to local chambers of commerce. It provides advisory service on labour matters. It has been given representation on many consultative bodies set up by the government. 7. Standing Conference of Public Enterprises (SCOPE): It is one of the three constituents of the Council of Indian Employers and is a member of the International Organization of Employers. It represents employers at various tripartite forums and committees. It has representations on the boards of Central Provident Fund, the Employees' State Insurance Board, National Apprentices Board, National Workers’ Education Board, National Productivity Council and many other committees/boards. It also represents employers at ILO conferences. The main tasks of SCOPE are both internal and external to the public sector. Internally, it endeavours to assist the public sector in such ways so as to improve its performance. Externally it seeks to provide required information and assist the public sector to improve its performance and advise the community and the government in order to help public sector in its role.

1 2 3

Coimbatore Periyar Districts Dravida, Panjalal Thozhilalar Munnetra Sangam v. National Textile Corporation Limited, 2011 LLR 1076 (HC Madras). See All India Bank Employees‘ Association v. National Industrial Tribunal, AIR 1962 SC 171: Damyanti v. Union of India, AIR 1971 SC 966. N M Joshi, The Trade Union Movement in India (1927), 8 and R F Rustomji, The Law of Industrial Disputes in India (Law Publishing House, 1961), XCIV: (contd.) Most of the writers on the subject trace the history of labour movement in India since 1875 or even later. See for instance, S D Punekar, Trade Unionism in India, Ahmad Mukhtar, Trade Unionism and Labour Disputes in India, Longmans Green and Co. Ltd (1935); Shiva Rao, State in Relation to Labour in India. Chapter VI; R K Das. The Labour Movement in India, Berlin de Gruyter (1923) 65; A S Mathur; and J S Mathur; Trade Union Movement in India, Allahabad, Chaitanya Publishing House, (1962) 12, 14; V V Giri, Labour Problems in Indian Industry, Bombay, Asia Publishing House (1959), 1; C A Myres, Industrial Relations in India, Bombay, Asia Publishing House (1958) 100; C B Kumar. The Development of Industrial Relations in India, Bombay, Orient Longman, (1961), 87; N F Duftry, Industrial Relations in India, Bombay, Allied Publishers Private Ltd, (1964); T N Bhagoliwal, Economics of Labour and Social Welfare, Agra, Sahitya Bhawan (1966), Chapter VI; Indian Law Institute, Labour Law and Labour Relations,

4

5 6 7 8

9 10

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Rev S C Srivastava, New Delhi, (2007). The period between 1875–1917 has been described as the social welfare period of early trade union movement by Dr S D Punekar. Dr R K Das has divided the period of 1875– 1917 into two sections. The first period between 1875–1891, according to him, was devoted mainly to the regulation of women and child labour in Indian factories. In the second period (1891–1917), very little was done except placing memoranda before commissions and committees. R F Rustomji, op. cit., XCLIV. The deplorable condition of workers were brought to the notice of the Secretary of State for India and the first Factory Commission was set up in 1875. V V Giri, Labour Problems in Indian Industry, Bombay, Asia Publishing House, (1959), 1. R K Das, The Labour Movement in India, Berline de Gruyer (1923) 9; Ahmad Mukhtar, Trade Unionism and Labour Disputes in India, Bombay, Longmans Green and Co. Ltd, (1935), 11; C B Kumar, op. cit., 87. Ahmad Mukhtar, op. cit. 11. The Bombay Mill Hands Association cannot, however, be classified as a genuine trade union. The workers did not have any effective organization of their own. The Bombay Mill Hands Association has no existence as an organized body, having no roll of membership, no funds and no rules. (See Report on the Working of Factories Act in Bombay, 1892). Ahmad Mukhtar, op. cit., 13. Annual Provincial Factory Report for Bombay for the year 1895, 5–6. G Ramanujam, Story of Indian Labour. Gopal Ghosh, Indian Trade Union Movement. Ahmad Mukhtar, op. cit., 4. Report on the Working of Factories Act at Bombay, (1892), 15. S D Punekar, op. cit., 59. See AITUC Report of the First Session held at Bombay, (1920), 12. Shiv Rao, op. cit. Shiv Rao, The Industrial Workers in India, 19. For instance see National Federation of AITUC. See Government of India, Report of the National Commission on Labour, New Delhi. (1969), 319. S S Rly Co. v. Workers Union, AIR 1969 SC 513. Preamble of the Industrial Employment (Standing Orders) Act, 1946. Constitution of the Hind Mazdoor Sabha. Constitution of UTUC. See ‘Statement of Objects and Reasons’ appended to the Bill. Ibid.

29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

Government of India, Ministry of Labour, Annual Report 1997–98. 31. See Economic Times, New Delhi, February 14, 1999. See the Report of the Bombay Industrial Disputes Committee, 1922. Lord Denning, The Closing Chapter (1983), 197. Government of India, Report of the (First) National Commission on Labour (1969), 293. Government of India, Report of the (First) National Commission on Labour (1969) 298. N H Tata ‘Why Employers’ Organization? In Pursuit of Industrial Harmony—An Employer‘s perspective’, Bombay, National Institute of Labour Management (1975) 122. Ibid Ibid. Ibid. The role played by employers’ organization has been described in the Report of the Royal Commission on Labour. 316–17. This organization has since changed its name. It is now called All India Organization of Employers. Ibid. See Govt of India, Report of the [First] National Labour Commission (1969) 299. Ibid. Ibid. Supra note 41. Ibid. Ibid.

CHAPTER

5 Judicial Delineation of Statutory Definition of Trade Union and Trade Dispute I. THE DEFINITION Until 1926, no legislative attempt was made in India to delineate the contours of the expression ’trade union‘ or any of its synonyms. In 1926, Section 2(h) of the Trade Unions Act, 1926, inter alia, defines a ’Trade Union‘ to mean: Any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more trade unions. The dimensions of the aforesaid definition determine the permissible area of trade union activities. An analysis of the above definition reveals that a trade union: (i) must be a combination; (ii) such a combination should be either temporary or permanent; and (iii) should include any federation of two or more trade unions. Further, the definition recognizes that the objectives under its constitution are one or more of the following: (a) to regulate the relations: (i) between workmen and employers; (ii) among workmen; or (iii) among

employers; (b) to impose restrictive conditions on the conduct of any trade or business. But it shall not affect: (i) an agreement between parties as to their own business; (ii) agreement as to employment; (iii) agreement in consideration of sale of the goodwill of a business or profession, trade or handicraft.1 A delineation of the nature of trade unions requires description of: (1) the person who can become member of a trade union; (2) the place in relation to which trade unions are formed; and (3) the objectives of trade union. Let us now examine each of them.

II. MEMBERS OF TRADE UNIONS The Trade Unions Act, 1926, does not specifically provide persons who may be a member of a trade union2. However, the regulations framed under the Trade Unions Act, 19263 make it clear that the trade union may either be formed by workmen or employers. Section 2(h) of the Act and other provisions also confirm this view. It is therefore, necessary to delineate the contours of the expression ‘workmen’ and ‘employers’.

A. Workmen In the traditional sense4, trade union is used to denote the union of workmen. Further, the workmen constitute the major part of a trade union. It is, therefore, necessary to ascertain its meaning. The term ’workmen’ has not been independently defined in the Trade Unions Act. But in the definition of the term ’trade dispute’ in Section 2(g), the definition of the term ’workmen‘ is found which says: All persons employed in the trade or industry whether or not in the employment of the employer with whom the trade disputes arise. Broadly speaking, workmen must be: (a) persons; (b) employed; (c) in any trade or industry; (d) to do work. The definition of the term ’workmen‘ however raises various problems: First, whether the persons other than those who are employed to do any skilled or unskilled, manual, supervisory, technical or clerical work may be covered within the meaning of the word ’workmen‘? Second, whether the ’workmen‘ may be persons: (a) who are subjected to Army, Air Force or Navy Act; or (b) who are employed in the police service or as officers or other employees of a

prison; or (c) who are employed mainly in a managerial or administrative capacity or exercise functions mainly of managerial ’nature’? Third, whether the gratuitous workers may indulge in trade unions? Fourth, whether there should be a contract of employment between ’employers‘ and ’workmen‘? Fifth, whether there is any age restriction for becoming a member of a trade union? Sixth, whether badli workers are workmen? Seventh, can the dismissed, discharged or retrenched worker become member of a trade union? Let us turn to examine these issues. As to the first, it is significant to note that the term ’workmen‘ as defined in the Trade Unions Act, 1926 has a wide coverage and is not merely confined to only those persons who are employed to do any manual, skilled, unskilled, supervisory, technical, operational or clerical work. In other words, all persons employed to do any kind of work may be covered within the definition of ’workmen‘ provided they are employed in any trade or industry. The second problem may conveniently be divided in two categories. The employees of the first category, namely: (i) those who are subject to the Army, Air Force and Navy Act or (ii) those who are employed in the police service or as officers or other employees of a prison are not covered within the meaning of the term ’workmen‘ because they are not employed in the trade or industry. The employees of the second category, namely: (i) those who are employed mainly in the managerial or administrative capacity; or (ii) those who are employed in the supervisory capacity exercising functions mainly of managerial nature may conveniently be brought within the preview of ’workmen‘ provided they are employed in any ’trade‘ or ’industry‘. As to the third problem, it may be said that the definition of ’workmen‘ covers even gratuitous workers. It may, therefore, be possible for them under the Trade Unions Act, 1926 to be members of a trade union. The fourth problem requires careful scrutiny. According to the definition, it is not necessary that there should be a contract of employment between the ’employer’‘ and ’workmen‘. Indeed, the courts emphasize that an ’employee‘ does not cease to be an ’employee‘ merely because he is employed through intermediaries. Section 21 A (1) (i) of the Trade Unions Act, 1926 sheds sufficient light on the fifth problem. It, inter alia, provides that a person who has attained the age of 15 years, may be a member of registered trade unions unless the rules of trade unions provide otherwise. But a person who has not attained the age of 18 years can neither be an office-bearer of any such trade union nor can he be chosen a member of the executive of the unions.5

Formation of Trade Union by Badli Workers As to the sixth problem, the Andhra Pradesh High Court in Panyam Cement Employees Union v. Commr. of Labour6 held that badli workmen are ’workmen‘ and, therefore, if management disapproves of a trade union of badli workers or discourages badli workers to join a trade union or denies voting right to badli workers, the same would amount to unfair labour practice. The last problem requires due consideration. The definition unlike the Industrial Disputes Act, 1947, does not specifically include the dismissed, discharged or retrenched workers in its fold. Indeed, the use of the expression ’employed in the trade or industry‘ occurring in Section 2(g) of the Act and the expression ’union of workers engaged in industry occurring in Form A of the Central Trade Unions Regulation, 1938, make it highly doubtful whether the dismissed, discharged or retrenched workmen may be covered in the definition of ’workmen‘. It has been observed7 that the definition brings under the term ’trade union‘ not only combination of workmen, but also combination of employers such as employers‘ federation (or union of employers) or a combination of employers in any industry, imposing restrictions on the members in respect of prices to be charged from the customers, since one of the principal objects of the latter is to regulate the relations between employers. The Trade Unions Act, 1926, therefore, applies to employers‘ federation as it does to unions of workmen. It is, therefore, essential to know its coverage. The Trade Unions Act, 1926, does not define the term ’employer‘. However, Section 2(g) of the Industrial Disputes Act, 1947, defines an ’employer‘ to mean: (i) in relation to an industry carried on by or under the authority of any department of the Central Government or a state government, the authority prescribed in this behalf, or where no authority is prescribed, the head of the department; (ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority. In Western India Automobile Association Ltd v. Industrial Tribunal,8 the Federal Court held that statutory definition is not exhaustive. Observed Justice Mahajan: In relation to (industries carried on by government or local authorities only) a definition has been given of the term ’employer‘ … No attempt, however, was made to define the term ’employer‘ generally or in relation to other persons carrying on industries or running undertakings. The proposition

has since been not challenged though, paradoxically, the provisions of the Industrial Disputes Act, 1947, have never been invoked to the industrial disputes arising in ’an industry carried on by or under the authority of any department of the Central or a State Government.‘ An ’employer‘ does not cease to be an ’employer‘ merely because instead of employing workmen himself, he authorizes his agent or servant to employ them.9 However, in view of the provisions of Section 18 of the Industrial Disputes Act, 1947, the coverage of the expression ’employer‘ has been extended to include his heirs, successors and assignees.

Formation of a Trade Union by Supervisors and Managers Can the supervisory officers and managers form a trade union under the Trade Unions Act? This question arose in Government Tool Room and Training Centre’s Supervisors and Officers Association v. Assistant Labour Commissioner.10 In order to deal with the issue, the court referred to the provisions of Section 2(g) of the Trade Unions Act which defines trade dispute to mean any dispute between employers and workmen or between workmen and workmen, or between employers and employers which is connected with the employment or non-employment or the terms of employment or the conditions of labour, of any person and ’workmen‘ means all persons employed in trade or industry whether or not in the employment of the employer with whom the trade dispute arises. It also referred to the provisions of Section 2(h) of the Trade Unions Act which defines ’trade union‘ to mean any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between the workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business and includes any federation of two or more trade unions. While interpreting the scope of the aforesaid two definitions, the Karnataka High Court observed that the word ’workmen‘ under the Trade Unions Act includes all persons employed in a trade or industry. It is not a restricted definition as in any other enactment of labour laws. When the Act itself provides for wider definition and for a wider meaning, the court cannot narrow it down by its decision. That would be against the very object of the Trade Unions Act itself. The court added that it is a well-settled principle of law that two conditions are necessary for interpreting an earlier enactment in the

light of the provisions of a later Act. They are: (i) the two Acts of the legislature must be in, pari materia, that is to say that they form a system or code of legislature; and (ii) the provisions in the earlier Act are ambiguous.

III. TRADE OR INDUSTRY After having discussed as to who may become the members of a trade union, it is necessary to determine the area in which the trade unions operate. The arena of interaction of trade union is ’trade or industry‘. The Trade Unions Act, 1926, however, does not spell out either the term ’trade‘ or ’industry‘. A question, therefore, arises whether the Trade Unions Act, 1926 is in pari materia with the Industrial Disputes Act, 1947. The Madras High Court11 has answered it in negative12 because in its view, a comprehensive meaning of the term ’industry‘ was considered by the legislature in regard to the Industrial Disputes Act. On the other hand, the Andhra Pradesh13 and Karnataka14 High Courts have taken the view that two enactments are in pari materia and that the expression ’trade or industry‘ in Section 2(g) of the Trade Unions Act carries the same meaning as the word ’industry‘ in Section 2 (j) of the Industrial Disputes Act. There is, however, no decision of the Supreme Court on this point. Section 2 (j) of the Industrial Disputes Act, 1947, however, defines the term, ’Industry‘ to mean: any business, trade, undertaking, manufacture or calling of employers and includes any calling services, employment, handicraft, or industrial occupation or avocation of workmen. The words used in the above definition are of very ’wide import‘. It will be observed that the word ’industry‘ is wide enough to include ’trade‘ in its ambit. It will be further noticed that the definition is in two parts. The first part defines ’industry‘ with reference to employers and the other part defines it with reference to workers. The words occurring in the definition are vague and have given rise to several disputes. Courts and tribunals have, therefore, been called upon to interpret and apply the key expression on innumerable occasions. An analysis of judicial response relating to the Trade Unions Act, 1926, reveals that the several organizations such as Employees‘ State Insurance Corporation,15 Provident Fund Organization,16 Fire Brigade Service,17 Devasthanam,18 CMT Institute19 have been held to be trade or industry under Section 2(j) of the Industrial Disputes Act, 1947 and the Trade Unions Act, 1926.

On the other hand, persons employed in the following are not employed in ’industry‘, e. g., Raj Bhawan,20 educational institutions run by Ramakrishna Mission,21 Pasteur Institute of Southern India and the Council of Scientific and Industrial Research,22 sovereign or legal functions23 of the state and a temple managed by trustee of a Devaswom governed by the Hindu Religious and Charitable Endowment Act, 1951.24

IV. OBJECTIVES OF TRADE UNIONS The Trade Unions Act, 1926 prescribes the primary objectives of a trade union. The objectives are one or more of the following: (a) to regulate the relations: (i) between employers; (ii) among workmen; or (iii) between employers and workmen. (b) to impose restrictive conditions on the conduct of any trade or business. The objectives for which the trade union is formed must comply with the aforesaid primary objects. In other words, the primary objects of trade unions determine whether the union is a trade union under the Act. The statutory provisions ’for only primary objectives in the Act, however, suggests that there may be some objectives other than the primary objectives of trade unions. These objectives may be broadly categorized as follows: (i) economic objectives; (ii) political objectives; and (iii) social and welfare objectives. This view is fortified by the provisions of section 15 of the Act.

V. TRADE DISPUTE ‘Trade dispute’ is defined in Section 2(g) of the Trade Unions Act, 1926 to mean: any dispute between employers and workmen, or between workmen and workmen, or between employers and employers which is connected with the employment or non-employment, or the terms of employment or the conditions of labour, of any person, and ’workmen‘ means all persons employed in trade or industry whether or not in the employment of the employer with whom the trade dispute arises: Reading the definitions of ’trade union‘ and ’trade dispute‘ it is evident that any dispute, inter alia, between the employer and workmen

connected with the employment or non-employment, terms of employment or conditions of labour of any person would be a trade dispute and the term ’workman‘ includes all persons employed in the trade or industry. Any dispute between badli workers and the management is also a trade dispute. It is for this reason that when there was a settlement between the Mazdoor Union and Panyam Cement Co. in June, 2000, both the parties agreed on certain terms regarding assured employment to badli workers. In that view of the matter, badli workers cannot be excluded from participating in the election to recognize the majority trade union. Any other interpretation would lead to badli workers to lurch in helpless state of suspended animation.25

1 2 3 4

5 6 7 8 9 10 11 12

13 14 15

See proviso to Section 2(h) of the Trade Unions Act, 1926. Out of 402.3 million workers in terms of 2001 census, only 8.93 million were members of reporting registered trade unions during 2006. See for instance, Entry 4 of Form A; Application for registration of trade union prescribed under the Central Trade Unions Regulations, 1938. According to Sydney and Beatrice Webb in History of Trade Unions, ’a Trade Union is a continuous association of wage earners for the purpose of maintaining the conditions of their lives.‘ See Section 21 A. (2004) 1 LLJ 915. Radkhakishan Jaikishan Ginning and Pressing Factory v Jimnadas Nursery Ginning and Pressing Co. Ltd, AIR 1940 Nagpur, 228. Western India Automobile Association Ltd v. Industrial Tribunal, (1949) LLJ 245 (FC). Purushottam Pottery Works, (1958) 2 LLJ 523 (IT); Bombay Dock Labour Board and the Stevedores, (1953) 2 LLJ 200 (IT). (2002) Lab. IC 103. Rangaswami v. Registrar of Trade Unions, AIR 1962 Madras 231. ’I am very doubtful whether at all it could be said that the Industrial Disputes Act and the Trade Unions Act form as it were, a system or code of legislation so that either could be read together as pari materia, that is, as forming one system and interpreting one in the another. See supra note 11. T T Devasthanam v. Commissioner of Labour, (1979) 1 LLJ 448. C M T Institute v. Assistant Labour Commissioner, (1979) 1 LLJ 192. Registrar of Trade Unions v. Mihir Kumar Gooha, AIR 1963, Cal 56. In this case a question arose whether employees of Employees‘ State Insurance Corporation could form

16

17

18 19

a ’trade union‘ under the Trade Unions Act. The Registrar on an application made by the employees for registration first registered it but later cancelled its registration. Against the latter order of cancellation, an appeal was filed before the appellate court. The court set aside the order of the registrar cancelling the certificate of registration. Against this decision they preferred a Letters Patent Appeal before the division bench of the Calcutta High Court. The Division Bench, upholding the order of the single judge, observed: In my opinion, this test may well be applied to the expression industry as also ’trade‘ or ’business‘ as used in the Trade Unions Act. In this Act also, profit motive is not essential and providing of amenities or services to the community or a substantial portion of it would be sufficient to satisfy the test. The fact that such services are to be rendered by a statutory corporation makes no difference. The fact that a large number of employees are employed by an employer, to render services for particular class of persons in an organized manner is quite sufficient to bring the corporation within the mischief of the Act. The employees of such a corporation are, ’workmen‘ as defined in Section 2 (g) of the Trade Unions Act and are entitled to form a trade union and get it registered. The Court added the learned judge below had come to the right conclusion and rightly set aside the order of cancellation passed by the registrar of trade unions. Registrar of Trade Unions v. M Mariswami, (1973) 2 LLJ 256. In this case, the employees of the Provident Fund Organization made an application to the registrar of trade unions for the registration of its trade union called the Mysore State Provident Fund Employees Union under the Trade Unions Act, 1926. The registrar of trade unions first issued a certificate of registration but later, after issuing a show cause notice, withdrew its registration certificate. On appeal, the district court allowed the appeal and set aside the order of the registrar. In a revision petition against the order of the district court, the High Court observed: … As the activity of the Provident Fund Organization is ’industry‘, the members of the union, who are its employees have to be regarded as workmen. As the union was formed primarily for the purpose of regulating the relations between the workmen and its employer, it is a trade union as defined in Section 2(h) of the Act. Registrar of Trade Unions v. Fire Service Workers Union (1963) 1 LLJ 167. In this case, the employees of the Fire Brigade Services formed a union and applied for its registration to the registrar of trade unions. The registrar first registered the union but later cancelled the certificate of registration after giving the notice. Against this order, the union filed an appeal to the High Court. The High Court held that employees employed in Fire Brigade Services were employed in ’trade or industry‘ and were entitled to be registered under the Trade Unions Act, 1926. T T Devasthanam v. Commissioner of Labour, (1979) 1 LLJ 192. The Karnataka High Court in C M T Institute v. Assistant Labour Commissioner, (1979) 1 LLJ 192 applied and extended the definition of ’industry‘ under the Industrial Disputes Act, 1947 in interpreting the word ’trade or industry‘ occurring in section 2(g) of the Trade Unions Act, 1926. The Court also pointed out that there was no difference between the meaning of the word ’industry‘ as defined in section 2(j) of the Industrial Disputes Act and the word ’trade or industry‘ as used under section 2(g) of the Trade Unions Act. The Court also held that the word ’trade or industry‘, even without elaborate definition of

20

21

22 23 24 25

the word ’industry‘ under the Industrial Disputes Act, was sufficiently wide enough to bring the Society of Central Machine Tool Institute within the definition of ’trade or industry‘ notwithstanding the fact that it had no profit motive. Rangaswami v. Registrar of Trade Unions, AIR 1962 Madras 231. In this case it was held that persons employed in Raj Bhawan for domestic and other duties could not form trade union on the ground that workers were not employed in trade or industry carried on by the employer. The services rendered by them were purely of a personal nature. A union of such workers was not, therefore, entitled for registration under the Trade Unions Act, 1926. N Karappann v. Additional Registrar of Trade Unions, (1976). Lab. IC 1388, 1389–90. But in Bangalore Water Supply and Sewerage Board v. A Rajappa, AIR 1976 SC 548, the Supreme Court held that Research Institute, irrespective of profit motive, was an ’industry‘. Ibid. Bangalore Water Supply and Sewerage Board v. Rajappa, AIR 1978 SC 548. Cherinjumpatty Tharipuratty v. State of Kerala, (2005) 1 LLJ 32. Panyan Cement Employees Union v. Commissioner of Labour, Hyderabad, (2004) 1 LLJ 915.

CHAPTER

6 Registration of Trade Unions The Trade Unions Act, 1926, was enacted with a view to encourage the formation of permanent and stable trade unions and to protect their members from certain civil and criminal liabilities. The registration of a trade union is, however, not conclusive proof of its existence.1 The Societies Registration Act, 19602, Co-operative Societies Act, 19123 and the Companies Act, 19564 do not apply to trade unions and registration thereof under any of these Acts is void ab initio.5

I. LEGAL STATUS OF REGISTERED TRADE UNIONS Every registered trade union is a body corporate by the name under which it is registered and ‘shall have perpetual succession and a common seal6 with a power to sue and to be sued.’7 It is, however, not a statutory body. It is not created by statute or incorporated in accordance with the provisions of a statute. In other words, a registered trade union is neither an instrumentality nor an agency of the state discharging public functions or public duties.8 A registered trade union is an entity distinct from the members of which the trade union is composed. It has a power to contract and to hold property—both moveable and immovable and to sue and be sued by the name in which it is registered. It can institute a suit in forma pauperis within the meaning of Order XXXIII Rule 1 of the Civil Procedure Code.9 However, by mere registration of a trade union under the Trade Unions Act, the trade union does not become an authority under Article 12 of the Constitution of India. It continues to remain just a private body

and all disputes relating to election of such a private body cannot be canvassed or challenged in a writ petition.10

II. COMPULSORY VERSUS VOLUNTARY REGISTRATION Under the Act, the registration of trade union is not compulsory but is merely voluntary. The question of voluntary registration is, however, debatable. Two conflicting views are discernible: (i) Compulsory registration would prove burdensome and expensive. It is felt that the present legal position should continue. The provisions of the Trade Union Act, 1926 itself affords legal status and protection to trade union members which will encourage trade unions to get themselves registered; (ii) The registration of trade unions should be made compulsory because all the unions shall be governed by the provisions of the Act and the rules framed thereunder in a similar manner. This view was also shared by the National Commission of Labour. The Commission is of the view that the registration of trade unions should be made compulsory ‘because it will bring the application of same standards of obligation to all unions’.11 The second view seems to be better. It will not only bring the application of uniform standards and obligation to all unions, but would prevent ‘fraud, embezzlement or deception practised upon members by unscrupulous persons.’ Further, it will result in qualitative improvement of their organization and functioning. Moreover, it will strengthen the trade union movement. This should however, be done in stages. To begin with, it would be better if registration of trade unions is made compulsory for the purposes of their recognition.

III. APPOINTMENT OF THE REGISTRAR Section 3 empowers the appropriate government12 to appoint a person to be the Registrar13 of Trade Unions. The appropriate government is also empowered to appoint as many additional and deputy registrars of trade unions as they think fit. Such persons will function under the superintendence and direction of the Registrar. He exercises such powers and functions of Registrar with local limit as may be specified. Where, however, additional or deputy registrar exercises the powers and functions of Registrar in the area within which a registered office of the trade union is situated, he shall be deemed to be Registrar.

IV. MODE OF REGISTRATION A. Who may Apply: Minimum Membership of Trade Unions 1. Legislative Response: Under section 4(1): Any seven or more members of a trade union may by subscribing their names to the rules of trade union and by otherwise complying with the provisions of this Act with respect to registration, apply for registration of the trade union under this Act. Provided that no trade union of workmen shall be registered unless at least 10 per cent or 100 of the workmen, whichever is less, engaged or employed in the establishment or industry with which it is connected are the members of such trade union on the date of making application for registration: Provided further that no trade union of workmen shall be registered unless it has on the date of making application not less than seven persons as its members, who are workmen engaged or employed in the establishment or industry with which it is connected.14 Where an application has been made under sub-section (1) for the registration of a trade union, such application shall not be deemed to have become invalid merely by reason of the fact that, at any time after the date of the application, but before the registration of the trade union, some of the applicants, but not exceeding half of the total number of persons who made the application, have ceased to be members of the trade union or have given notice in writing to the Registrar dissociating themselves from the application.15 The Supreme Court in Tirumala Tirupati Devasthanam v. Commissioner of Labour16 held that any group of employees may be registered as a trade union under the Act for the purpose of regulating the relations between them and their employer or between themselves. The Court added: It would be apparent from this definition that any group of employees which comes together primarily for the purpose of regulating the relations between them and their employer or between them and other workmen may be registered as a trade union under the Act. It cannot be disputed that the relationship between the appellant and the workmen in question is that of employer and employee. The registration of the association of the said workmen as a trade union under the Act has nothing to do with whether the said wings of the appellant are an ‘industry’

or not. We are, therefore, of the view that the High Court went into the said issue, although the same has not arisen before it. Since the findings recorded by the High Court on the said issue, are not germane to the question that falls for consideration before us, we express no opinion on the same and leave the question open. Earlier in Registrar of Trade Unions in Mysore v. M Mariswamy17, the employees of the Provident Fund Organization got themselves registered under the Trade Unions Act, 1926. This registration was subsequently withdrawn by the department resulting in litigation which ultimately reached the Karnataka High Court. It was held by the court that from the definition of the expression ‘trade union’, it could be a combination either of workmen or of employees or of both, provided it is formed primarily for one of the purposes mentioned in clause (h) of Section 2 of the Act. It is, therefore, possible to have a trade union consisting only of employers. The emphasis in Section 2(h) is on the purpose for which the union is formed and not so much on the persons who constitute the union. The court accordingly directed the registrar to register the petitioner who fulfils all other legal requirements in terms of the Trade Unions Act, 1926. It is submitted that under the Trade Unions Act, 1926, both employers and workers can get themselves registered. Indeed both Section 2(g) and 2(h) refer to the employer. One may wish to add that the attention of the court was not drawn to this aspect. 2. Registration of Trade Unions in Unorganized Sector: The (Second) National Commission on Labour has recommended that trade unions of workers in the unorganized sector should be registered even where there is no employer– employee relationship or such relationship is not clear.

B. Whom to Apply? Section 5 requires that every application for registration must be sent to the Registrar of Trade Unions.

C. Form for the Application Section 5 requires that every application for registration made to the Registrar must be in Form ‘A’. Further, every application must be accompanied with a statement of the following particulars, namely: (a) the names, occupations and addresses of the members making the application. However, in the case of a trade union of workmen, the names, occupations, and addresses of the place of

work of the members of the trade union making the application.18 (b) the name of the trade union and the address of its head offices and (c) the title, names, ages, addresses and occupations of the office bearers of the trade union. Moreover, every application must be accompanied by a copy of rules. Such rules must comply with the items mentioned under Section 6 of the Act. Furthermore, the trade union of more than one year standing applying for registration is required to submit a general statement of its assets and liabilities in the prescribed manner to the Registrar.19 Moreover, a trade union (which had previously been registered by the registrar in any state) applying for registration is required to submit with its application a copy of certificate of registration granted to it and copies of entries to it to the Registrar of Trade Unions for the state.20

D. Rules of a Trade Union Section 6 provides that no union can be registered unless its constitution provides for the following items, namely: (a) the name of the trade union; (b) the objects for which the trade union has been established; (c) the whole of the purposes for which the general funds of a trade union shall be applicable, all of which purposes shall be purposes to which such funds are lawfully applicable under this Act; (d) the maintenance of a list of the members of the trade union and adequate facilities for the inspection thereof by the office-bearers and members of the trade union; (e) the admission of ordinary members who shall be persons actually engaged or employed in a trade or industry with which the trade union is connected and also the admission of the number of honorary or temporary members as office-bearers, required under Section 22 to form the executive of the trade union; (ee) the payment of a minimum subscription by members of the trade union which shall not be less than: (i) one rupee per annum for rural workers; (ii) three rupees per annum for workers in other unorganized sectors; and (iii) twelve rupees per annum for workers in any other case. (f) the conditions under which any member shall be entitled to any benefit assured by the rules and under which any fine or forfeiture may be

imposed on the members; (g) the manner in which the rules shall be amended, varied or rescinded; (h) the manner in which the members of the executive and the other officebearers of the trade union shall be appointed and removed; (hh) the duration of period being not more than three years, for which the members of the executive and other office-bearers of the trade union shall be elected; (i) the safe custody of the funds of the trade union, and annual audit, in such a manner as may be prescribed, of the accounts thereof, and adequate facilities for the inspection of the account books by the office-bearers and members of the trade union; and (j) the manner in which the trade union may be dissolved.

a. Nature and Scope of Rules The existence of the aforesaid matters in the rules is a condition-precedent for the registration of the union. But, the fact that section 6 provides that no union can be registered unless its rule provides for these matters does not necessarily mean that rules relating to matters contained in section 6 acquire a statutory force. They have only contractual force.21 Thus, the rules framed by trade unions under section 6 of the Trade Unions Act, 1926 are rules meant for internal administration and, therefore, cannot create any statutory obligation upon the labour commissioner. It is like bye-laws of a cooperative society or rules framed by a society for securing registration under the Societies Registration Act, 1860.

b. Amendment in Rules of the Trade Union when not Valid In B S V Hemantha Rao v. Deputy Registrar, Trade Union22, the Hyderabad Allwyn Workers’ Union amended its rules appointing its president to act as election officer and empowering him to nominate all office-bearers, whereas this power is vested with the general body of the trade union. Even though such amendments were registered by the Registrar of Trade Union, the Court held the amendments were contrary to the letter and spirit of the trade union and such a procedure allowing the president to nominate office bearers amounts to allowing a person to act as a judge in his own cause. Accordingly, it was held invalid.

c. Scope of Section 6(e) In Bokajan Cement Corpn. Employees' Union v. Cement Corpn. of India

Ltd23, a question arose whether on ceasing to be an employee, one would lose his right to continue as a member of the trade union. A single judge of the Guwahati High Court answered the question in negative. But a division bench of the High Court reversed the findings of the single judge on appeal. It was held that the right to continue as a member of the trade union continues only so long as an employee is actually employed. Thereupon, the union filed an appeal before the Supreme Court. The Court held that Section 6(e) only provides for admission of membership of those who are actually engaged or employed in industry as ordinary members so as to entitle a trade union to seek registration under the Act and not for automatic cessation of membership. It does not provide that on cessation of employment, an employee would cease to be a member.

V. POWERS OF THE REGISTRAR Section 7 empowers the Registrar of Trade Unions to make further enquiries on receipt of an application for registration to satisfy himself that the application complies with the provisions of Section 5 or that the trade union is entitled for registration under Section 6.24 Such enquiries can be made only from the application and not from any other source.25 Further, the Registrar may require the trade union to change its name if the name of the trade union is identical or resembling with any other existing trade union.26 However, he has no power to declare the election of the office-bearer of a trade union unconstitutional. Further, whenever there is a dispute between the groups of office-bearers, each claiming itself to be a valid executive, such dispute is very much falling within the jurisdiction of the competent court of law, and the Registrar of Trade Unions has no power or jurisdiction to decide the issue.27 But where the petitioner himself called for an inquiry with regard to the election of new office-bearers of a union and submits to the jurisdiction of Registrar of Trade Unions, he is stopped from challenging the jurisdiction of the Registrar if the result of the inquiry happened to be against him.28

VI. NO POWER OF THE REGISTRAR TO VERIFY MEMBERSHIP OF TRADE UNIONS Under the Trade Unions Act 1926, the Registrar has no power to verify

membership of registered trade unions. However, Section 28A of the Trade Unions (Amendment) Bill, 1982, empowers the Registrar to verify the membership of registered trade unions and matters connected therewith and, for this purpose, Registrar shall follow such procedure as may be prescribed by regulation.

VII. POWER TO CONDUCT ELECTION The Registrar of Trade Unions is the authority charged with the duty of administration of the provisions of the Act. The Registrar is empowered under Section 28 to ascertain who are the elected office-bearers in order to register their names. However, in making such inquiry, the Registrar does not perform any quasi-judicial functions; but only administrative functions. He has no authority to ask any party to lead evidence and to give opportunity to the other party to cross-examine any witness. Under this concept of a limited administrative inquiry, the dispute as raised by the rival parties cannot be set at rest.29 In Ranipet Greaves Employees’ Union v. Commissioner of Labour30, the union requested the labour commissioner to conduct the election of the union as per settlement arrived at under section 12 (3) of the Industrial Disputes Act. The labour commissioner rejected such a request. On a writ petition the Madras High Court held that the labour commissioner committed an error in rejecting such a request. It accordingly directed the labour commissioner to conduct the union election to elect the representative body which could get recognition from the management and the right to negotiate with it. Earlier in H M T Karmika Sangh v. Labour Commissioner31, the Court held that if a trade union makes a request to appoint an officer of labour department as returning officer, as he considers that it is expedient to do so, he could do so and there is nothing in the Act or rules which prevents him from doing so. However, the order of the High Court in designation to the general manager to hold election of the trade union was wrong. Instead, the Court ordered that the election should be held under the supervision of the Registrar of Trade Union or his nominee.32 In IFFCO Phulpur Karmchari Sangh v. Registrar, Trade Union Kanpur,33 the Allahabad High Court held that Section 28 (3) of the Trade Unions Act, 1926 read with Regulation 17A does not contemplate holding of any elaborate inquiry such as one required in judicial or quasi-judicial

proceedings. All that the Registrar is required to do is to hold a summary inquiry for satisfying himself before making any change in the register regarding office bearers whether the elections have been held in accordance with the rules of the trade union. In K V Sridharan and Others v. S Sundermoorthy34, the Madras High Court held that all disputes relating to holding of election of such incorporated bodies, which are nothing but private bodies, cannot be challenged before the writ court. If there are disputes between the parties over such election, those disputes can be challenged, if so advised, before the appropriate civil court. Since the writ petition itself is not maintainable, this Court held that no order can be passed in the writ petition on the dispute relating to the election of such trade union. It may be noted that these private bodies are not enforcing any statutory direction by filing such writ petitions inasmuch in the State of Tamil Nadu, there is no law relating to grant of recognition to a trade union, nor is there any law relating to holding of election of such trade unions. These matters are covered by general law and as such, the disputes in this regard should be settled by civil court.

VIII. NO POWER TO HOLD INQUIRY In IFFCO Phulpur Karmchari Sangh v. Registrar, Trade Union Kanpur,35 the Allahabad High Court held that Section 28 (3) of the Trade Unions Act, 1926 read with Regulation 17A does not contemplate holding of any elaborate inquiry such as one required in judicial or quasi-judicial proceedings. All that the Registrar is required to do is to hold a summary inquiry for satisfying himself before making any change in the register regarding office bearers whether the elections have been held in accordance with the rules of the trade union.

IX. NO POWER TO DECIDE RIVAL CLAIMS In Rattan Kumar Dey v. Union of India36, the Guwahati High Court held that under Section 28 of the Trade Unions Act, 1926, the Registrar of Trade Unions has no power or authority to decide a dispute between the rival office-bearers of the union. However, Registrar of Trade Unions under Section 28(4) has the power to make inquiries and give his own conclusion in regard to maintenance of the office-bearers of the union.

In Ram Das Tigga v. State of Jharkhand37, the Jharkhand High Court held that the Registrar of Trade Union cannot resolve the dispute pertaining to election of rival office-bearers of union. Such dispute can only be decided by civil court of competent jurisdiction. In Kovai Periyar Maavatta Dravida Panchalai Thozhilalar Munnetra Sangam, Coimbatore v. Commissioner of Labour (Registrar of Trade Unions), Chennai38, the Madras High Court held that Section 28 of the Trade Unions Act does not confer any quasi-judicial power to decide the dispute between the rival claimants and even if any decision is taken, such a decision does not have any binding force and the dispute between the rival claimants in a union can be decided by a civil court. In Roadways Mazdoor Sabha, UP v. State of UP39, the Allahabad High Court held that the Registrar has got only limited power to make the necessary entry in his records. Under Section 28 of the Trade Unions Act, he can record the changes in the office bearers made by the trade union during the year to which general statements were filed. Thus, he has no power to adjudicate as to which one of the rival claims is correct.

X. NO POWER TO DECIDE REGARDING ADMISSION OF MEMBERSHIP In Borosil Glass Works Ltd Employees Union v. D D Bombode,40 the Supreme Court interpreted Section 28 (1-A) of the Trade Unions Act. In this case, certain workers made a joint application for membership of the appellant union which is a registered and recognized trade union. However, no action was taken because the application was not in accordance with the procedure laid down by the appellant union thereon. The employees were asked by the union to apply individually in the prescribed form and make payment of requisite fee and membership subscription. Aggrieved by this, employees filed a complaint before the Registrar of Trade Unions. Thereupon, the Registrar of Trade Unions under Section 10(b) of the Trade Unions Act issued a notice to the appellant union threatening to cancel its registration pursuant to a complaint filed by these employees under Section 28(1-A). The union then represented its case before the Registrar. The Registrar of Trade Unions found that the complainants were not members of the appellant union for six months prior to the date of the application which was a necessary condition under Section 28(1-A). Therefore, no certificate under that section could be granted to them, permitting them to

refer the dispute to the industrial tribunal. Aggreived by the decision of the Registrar, these employees filed a writ petition in the Bombay High Court seeking direction to the Registrar of Trade Unions to issue a consent certificate. The High Court ruled that even a person who has applied to become a member is covered by Section 28(1-A) of the Trade Unions Act and accordingly, directed the Registrar of Trade Unions to issue a consent certificate to these employees to enable them to refer the dispute to the industrial tribunal. This order of the High Court was challenged by the union before the Supreme Court under Article 136 of the Constitution. The Supreme Court found the interpretation given by the High Court to Section 28(1-A) of the Act to be too wide. According to the court, the said provision is to be interpreted to ensure that internal disputes in trade unions get decided expeditiously but it can be only invoked by a person who has been a member of such registered trade union for a period of not less than six months. The court observed that words ‘where there is a dispute on whether or not any person is an office-bearer or a member of a registered trade union’ have to be read along with the words ‘any member of such registered trade union for a period of less than six months’. A person whose application for membership has not been considered or allowed would not have been a member for six months. The Court held that the dispute between persons who are not members and the union would not be covered by Section 28(1-A). Indeed, a dispute between a person who is not yet a member and a union would not be an internal dispute of the union. The Court added that under Section 28(1-A), the jurisdiction of the civil court is barred only in respect of the matters which have been referred to an industrial court under Section 28(1-A). But, if a dispute does not fall under Section 28(1-A), then that dispute can be taken to civil court. Further, in a case like the present one where the dispute is whether a person should or should not be admitted, is not a dispute falling under Section 28(1-A) and, therefore, it is open to such person to approach a civil court for resolution thereof. However, if the law permits, they may also raise an industrial dispute before the industrial court in this behalf. The Court, accordingly, set aside the judgement of the High Court.

XI. DUTIES OF THE REGISTRAR Section 8 lays down the duties of the Registrar in matters of registration of trade union. It provides that as soon as the Registrar is satisfied that the trade union

has complied with all the requirements of this Act in regard to registration, he shall register the trade union by entering in a register, to be maintained in such form as may be prescribed, the particulars relating to the trade union contained in the statement accompanying the application for registration. This shows that where the definitions under Section 2(g) and 2(h) are themselves inapplicable to the so called union, the Registrar has every power to refuse the registrations.41 Section 8 raises several questions: (i) whether it is obligatory upon the Registrar to register a trade union within a reasonable time where it has complied with all the requirements of the Act? (ii) what is the scope of inquiry under this section? (iii) whether Section 8 contravenes the fundamental right under Article 19(1) (c) of the Constitution? (iv) whether the Registrar can refuse to register more than one union in one plant/industry? Let us turn to examine these questions.

A. Time-Limit for Registration The Trade Unions Act does not prescribe any time-limit for the grant or refusal of registration. It only imposes a statutory duty upon the Registrar to register a trade union if he is satisfied that the requirements of the statute have been complied with. The absence of any provision regarding the time-limit for grant or refusal raises a question whether the court can interfere in regard to the time taken by the Registrar in granting or refusing registration of trade union. The decision in ACC Rajanka Lime Stone Quarries Mazdoor Union v. Registrar of Trade Unions, Government of Bihar42 has a direct bearing on this question. In this case the union sent an application on 31 July 1957 for registration to the Registrar of Trade Unions in the prescribed manner together with the constitution and rules of the said union which was received by the latter on 3 August 1957. But no action was apparently taken under Sections 7 and 8 on the application for over 3 months. The union sent many reminders but they remained unreplied. Under the circumstances, the union filed a writ petition before the Patna High Court, praying that the Registrar of Trade Unions be directed to perform his statutory duty of registering or refusing to register the trade union under the Act. The High Court of Patna held that Section 8 imposes the statutory duty upon the Registrar to register a trade union on being satisfied that it had complied with the requirements of the Act. The court accordingly held that there was a case for issuance of writ in the nature of mandamus under Article 226 of the Constitution. The court directed the Registrar of Trade Unions to perform the statutory duty imposed upon him under Sections 7 and 8 and to deal with the application of the trade union according to law at an early date. It is submitted that time limit should be prescribed for the grant or refusal

of registration by the Registrar. The National Commission on Labour has suggested 30 days excluding the time which the union takes in answering queries from the Registrar. This view is likely to give some scope to the Registrar to make vexatious inquiries simply to gain time. Indeed, Section 23 of the Industrial Relations Bill, 2978 prescribed 60 days’ time from the date of the receipt of the application by the Registrar either in granting or refusing to grant registration to trade union and communicating the order to the applicant. Where, however, the Registrar refuses to grant registration to a trade union, he is under an obligation to state reasons for refusing to grant registration. The Trade Unions (Amendment) Bill, 1982 has provided for insertion of the words ‘within a period of 60 days from the date of such compliance’ after the words ‘Register the Trade Unions’ in Section 8 of the Trade Union Act, 1926.

B. Scope of Inquiry Under Section 8 The second problem also requires careful scrutiny. Three pronouncements of Indian judiciary in regard to the scope of inquiry of Section 8 deserve to be mentioned. Inland Steam Navigation Workers’ Union43 decided an important point, namely, the scope of inquiry with reference to the application for registration of trade unions. In this case, an application made by the Inland Steam Navigation Worker’s Union for its registration was rejected by the Registrar of Trade Unions on the ground that the union was for all practical purposes the same union which has been registered and, therefore, be declared unlawful under Section 16 of the Criminal Law (Amendment) Act, 1908. Against this finding, the appeal was preferred before the Calcutta High Court under Section 11 of the Trade Unions Act, 1926. Chief Justice Derbyshire, in the course of the judgement observed: In my view, the Registrar in taking up that attitude is wrong. The functions of the Registrar are laid down in Section 8…The new union may or may not be a continuation of the other union or its successor. Whether the new union is or is not the same as the old union, depends on evidence. He added: In my view, the duties of the Registrar were to examine the application and to look at the objects for which the union was formed. If those objects were objects set out in the Act, and if

those objects did not go outside the objects prescribed in the Act and if all the requirements of the Act, and the regulations made thereunder had been complied with, it was his duty, in my view, to register the union.44 R K Workmen’s Union v. Registrar of Trade Unions,45 raised an important problem as to whether the Registrar of Trade Union is under an obligation to hear the then-existing unions in the field before making the order under Section 8. The High Court of Calcutta answered the question in negative and observed: Once, therefore, the Registrar is satisfied that the requirements of the statute have been complied with, it is obligatory upon him to enter in a register the applicant-union and he has no obligation to hear the existing unions in the field before making the order under Section 8. The Court added: In fact, the statute does not deal with the matter of registration from the standpoint of any existing union at all. It is significant to note that though Section 11 (1) provides a statutory appeal from an order of refusal to register a union, there is no provision for an appeal or other remedy against an order granting registration. The aforesaid decisions suggest that the only duty of the Registrar is to examine the application for registration with reference to the provisions of Sections 2(h), 4 to 7 and 15.46 If the Registrar is satisfied that statutory requirements have been complied, he is bound to register the trade union within a reasonable time. He is under no obligation to hear the existing trade unions before making the registration under Section 8. ONGC Workmen’s Association v. State of West Bengal47 delineated the nature and scope of inquiry under Section 8. The Calcutta High Court held that any order passed under Section 8 by the Registrar must be administrative in nature. The Court also held that the Registrar is not deemed to be a quasi-judicial authority to decide any disputed question of fact or law. He has no authority to ask for any of the parties to lead evidence and to give opportunity to the other party to cross examine any witness. Thus, the scope of inquiry under Section 8 is very limited.

C. Constitutional Problems in Section 8 Kesoram Rangan Workmen’s Union v. Registrar of Trade Union48 is an important case on this problem. The Registrar of Trade Unions failed to offer any opportunity to an existing trade union while registering a new union under Section 8. The question arose whether Section 8 imposed any unreasonable restriction on the fundamental right by not offering a right of hearing to an existing union. The question was answered in negative by the Calcutta High Court. In the course of judgement, the Court observed that the freedom guaranteed under Article 19 (1) (c) of the Constitution belongs to all workmen, so that every workman has the freedom to form a union of his own choice and to refuse to become a member of any union which he does not like.49 The Court, therefore, concluded that ‘no union can claim a monopoly or a right to complain if some other union is brought into existence by other workmen’.

D. Registration of One Union in One Industry It has been seen elsewhere that the Trade Unions Act, 1926, provides that as soon as the Registrar is satisfied that the trade union has complied with all the requirements in regard to registration, he shall register the trade union. From this it is clear that the Act does not empower the Registrar to refuse registration of trade union in cases where one or more unions are already in existence in the plant/industry. A question, therefore, arises, whether it is in the interest of trade unions to empower the Registrar to refuse to register a trade union on the above ground. Two views are discernible: (i) The Registrar of Trade Unions should be empowered to refuse to register more than one union in one plant or industry. The reason in that the multiplicity of unions leads to rivalry among trade unions. This view, is however, open to several objections. First, this may run contrary to Article 19(1)(c) of the Constitution. Second, the problem of multiplicity of trade unions may be resolved to a great extent by providing recognition to a representative union. (ii) The Registrar of Trade Unions should not be given the power to refuse to register more than one union because the refusal may infringe Article 19(1)(c) of the Constitution. The other reason is that recognition of the majority union will, to a great extent, meet this problem. The second view seems to be a better one.

XII. CERTIFICATE OF REGISTRATION: A CONCLUSIVE EVIDENCE The certificate of registration issued by Registrar shall be in the prescribed form, i.e., in Form C of Schedule III and is conclusive evidence to show that the trade union has been duly registered under the Act.50 This finality is only for the purposes of the Act and cannot in any way affect the powers of the High Court under Article 226 of the Constitution as the provisions of the statute are always subjected to the jurisdiction of the Constitution.51

XIII. MINIMUM REQUIREMENT FOR MEMBERSHIP OF A TRADE UNION Section 9-A provides that a registered trade union of workmen shall, at all times, continue to have not less than 10 per cent or 100 of the workmen, whichever is less, subject to a minimum of seven, engaged or employed in an establishment or industry with which it is connected, as its members.52

XIV. CANCELLATION AND DEREGISTRATION OF A REGISTERED TRADE UNION A. Grounds for Cancellation of Registration The registration of a trade union may be cancelled by the Registrar on any one of the following grounds: (i) that the certificate under Section 9 had been obtained by fraud or mistake; (ii) that the trade union had ceased to exist; (iii) that the trade union had ‘wilfully’ contravened any provision of the Act even after notice from the Registrar53; (iv) that a trade union allowed any rule to continue in force which was inconsistent with any provisions of the Act; (v) that the trade union had rescinded any rule providing for any material provision which was required by Section 6; (vi) if the Registrar is satisfied that a registered trade union of workmen ceases to have the requisite number of members. However, not less than two months’ previous notice in writing specifying the ground on which it is proposed to withdraw or cancel the certificate shall be given by the Registrar to the trade union before the certificate is withdrawn or cancelled otherwise than on

the application of the trade union.54 The grounds for cancellation of registration are open to several objections: First, the term ‘wilful’ is vague. In practice, it is found that trade unions do not submit their annual return. The section, however, requires that the default has to be ‘wilful’. To establish a wilful default to the satisfaction of a court is difficult. In view of this, the (First) National Commission on Labour recommended that where the union failed to submit the annual return, its registration should be cancelled irrespective of whether the default is ‘wilful’ or otherwise. This recommendation should be implemented. Second, it is doubtful whether the materially defective return should be treated as ‘return’ under Section 10. In view of the prevailing ambiguity, the National Commission on Labour suggested that ‘materially defective return’ should amount to a default and the union should be under an obligation to rectify mistakes within the prescribed period failing which the Registrar should be deemed not to have received the return.55 The Registrar is not competent to cancel the registration of a trade union, without, in the first instance, giving to the trade union concerned two months’ previous notice in writing, specifying the grounds on which he proposes to withdraw or cancel the certificate and giving an opportunity to the trade unions to show cause against proposed action.56 However, unlike Section 26(3) of the Industrial Relations Bill, 1978, there is no provision that ‘while cancelling the certificate of registration of a trade union, the Registrar shall record the reasons of doing so and communicate the same in writing to the trade union concerned.’ Once the Registrar cancels or withdraws the registration of a trade union, he has no power to quash that order. Further, he has no power to review it. Moreover, he has no power to withdraw it because of subsequent events.57

B. Powers of the High Court in Respect of Cancellation of Registration The Bombay High Court held that the High Court may exercise its powers under Article 226 of the Constitution where the cancellation of the registration of the trade union had been effected improperly.58 Again, the Gujarat High Court quashed the orders of Registrar where no show cause notice was given before cancellation of registration as required under Section 10(b).59

C. Powers of the Registrar in Respect of Deregistration The Registrar is empowered to cancel or withdraw certificate of registration on

the application of the trade union. He is required to: (i) give an opportunity to trade unions except in case of applications of the concerned trade union; (ii) satisfy himself that any one of the grounds of cancellation of registration of such trade union exists; and (iii) make such order which he deems necessary. The power of cancellation of registration of trade unions also confers an in-built power to withdraw the order of cancellation. Thus, the Registrar is also empowered to withdraw the order of cancellation on realization of mistake and on such order, the cancellation becomes non-est.60

XV. APPEAL The Act61 confers right of appeal on persons aggrieved against an order of the Registrar (i) refusing to register a trade union; or (ii) withdrawing the certificate issued after registration; or (iii) cancelling the certificate of registration. The Act does not, however, define the word ‘person’. In the absence of any definition, Section 3 (42) of the General Clauses Act may be taken into account for the purposes of the definition of the term. Thus, the ‘person’ includes a legal person like a trade union.62 In an appeal by a trade union, whose certificate of registration is cancelled, no other trade union has a right to be impleaded as a party.63

A. Appellate Forum The appeal may be filed (a) where the head office of the trade union is situated within the limits of a presidency town to the High Court; (aa) where the head office is situated in an area falling within the jurisdiction of a labour court or an industrial tribunal, to that court or tribunal, as the case may be; or (b) where the head office is situated in any other area to such court, not inferior to the court of an additional or assistant judge of a principal civil court of original jurisdiction, as the appropriate government may appoint in this behalf for the area. The expression ‘High Court’ in Clause (a) above refers to the original side of the High Court and not to the appellate side. Further, the expression ‘Presidency Town’ in Clause (a) refers to the towns where the High Court has original civil jurisdiction. And Section 3(44) of the General Clauses Act (Act X of 1897) defines ‘Presidency Town’ to mean the total limits for the time being or the ordinary original civil jurisdiction of the High Court of Judicature at Calcutta, Madras or Bombay as the case may be.64 In cases where high courts

are situated outside the presidency town, the high courts have no jurisdiction to entertain appeals under Section 11 (1) (b). In regard to such areas, any court not inferior to the court of an additional/assistant judge of the principal civil court of original jurisdiction, as the appropriate government may appoint in this behalf for that area, shall have jurisdictions.65

B. Powers of The Appellate Court66 The appellate court may either: (i) dismiss the appeal; or (ii) pass an order directing the Registrar to register trade unions and to issue a certificate of registration under Section 9; or (iii) set aside the order for withdrawal or cancellation of the certificate as the case may be. The Registrar is under an obligation to comply with such orders of the appellate authority.

C. Procedure to be Adopted by the Appellate Court67 The appellate court shall, as far as practicable, follow the same procedure and have the same powers in respect of the appeal as vested in the civil court while trying a suit under the Code of Civil Procedure, 1908. Further, it may also determine from whom the whole or any part of the costs of appeal shall be recovered. Such costs shall be recovered as if they had been awarded in a civil suit under the code.

D. Second Appeal The Act68 also confers a right of second appeal on persons whose appeals under Section 11(1) (b) have been dismissed. Such an appeal shall be filed in the high court, and the high court for the purposes of such an appeal has all the powers of the appellate court. However, no second appeal shall lie where the high court hears an appeal under Section 11(1) (a).

E. Time for Making an Appeal The appeal under Section 11 must be filed within such time as may be prescribed under the rules for the purpose.

XVI. THE RESULT OF DEREGISTRATION A trade union whose certificate of registration has been withdrawn or cancelled,

loses its status as a legal entity under the Act. Upon the cancellation of certificate of registration, the trade union and its members cease to enjoy the privileges of a registered trade union.

XVII. RE-REGISTRATION There is no provision in the Act for re-registration of a trade union whose registration has been cancelled. The National Commission on Labour, therefore, recommended that the Trade Union Act should provide that any application for re-registration from a union, (the registration of which has been cancelled) should not be entertained within six months of the date of cancellation of registrations.69 Perhaps in view of this recommendation, the Industrial Relations Bill, 197870 and the Trade Unions (Amendment) Bill, 198271 have provided for re-registration of a trade union.

XVIII. REGISTERED OFFICE Section 2(a) defines ‘registered office’ to mean the ‘office of a trade union which is registered under the Act as the head office thereof.’ And, Section 12 requires that all communications and notices to a registered trade union may be addressed to its registered office. Further, notice of any change in the address of the head office shall be given within 14 days of such change to the Registrar in writing, and the changed address shall be recorded in the register referred to in Section 8.

XIX. CHANGE OF NAME, STRUCTURE AND DISSOLUTION A. Change of Name A registered trade union with the consent of not less than two-third of the total number of the members may change its name.72 Notice of the change of name signed by seven members and the secretary of the trade union changing its name must be sent to the Registrar.73 The Registrar, before approving the change of name, has to ascertain that the new name is not identical with that of any existing

trade union known to him, or so nearly resembling such name as to deceive the public or member.74 If otherwise, he shall refuse to register the change of name. On the contrary, if he is satisfied that the provisions of the Act have been complied with in respect of changing the name, he shall register the change of name in the register maintained for this purpose.75 The change in the name of registered trade union neither affects its rights nor obligations nor does it render defective any legal proceedings by or against the trade union and any legal proceedings which might have commenced or continued by its new name.76

B. Amalgamation of Trade Unions Any two or more registered trade unions may become amalgamated together as one trade union with or without dissolution or division of funds of such trade unions. This can be done only if: (i) 50 per cent of the members of each and every trade union entitled to vote record their votes; (ii) the votes in favour of amalgamation is not less than 60 per cent,77 (iii) notice in writing of amalgamation signed by seven members and the secretary of each and every registered trade union (which is party to amalgamation) accompanied by such statement as may be prescribed, is sent to the Registrar of Trade Unions.78 If the aforesaid requirements are fulfilled, the Registrar after satisfying himself that the provisions of the Act in respect of amalgamation have been complied with and that the trade union formed thereby is entitled to registration, he shall register the trade union in the prescribed manner.79 The amalgamation shall be effective from the date of such registration. The amalgamation shall not prejudice any right of such trade unions who are parties to it or any right of a creditor or any of them.80

C. Dissolution of Trade Unions When a registered trade union is dissolved, notice of the dissolution signed by the secretary and seven members must be sent within 14 days of dissolution to the Registrar of Trade Unions.81 The notice must be in the prescribed form. The Registrar after satisfying himself that the dissolution has been effected in accordance with the provisions of the Act makes the entry in the register maintained by him.82 Where the rules of trade union contain no provision for the distribution of funds on dissolution, the Registrar shall divide the funds in proportion to the amounts contributed by the members by way of subscription during their memberships.83

XX. SUBMISSION OF RETURNS Registered trade unions are required under Section 28: (1) to submit annual returns in the prescribed form to the Registrar along with an audited statement of income and expenditure during each year of all receipts and expenditure during the year ending on the 31 st day of December, next preceding such prescribed date; and of the assets and liabilities of trade union existing on 31st December84 (2) The general statement should be accompanied by the statements, (i) showing any change of office bearers made during the year to which general statement refers; and (ii) a copy of rules of the trade union corrected upto the date of despatch thereof to the Registrar85 (3) Every alteration made in the rules of trade union shall be sent within 15 days of the alterations.86 (4) The Registrar or any other duly authorized officer is empowered to inspect and require production of the certificate of registration, account books, registers and other documents relating to trade unions for examining the returns submitted by them.87 A statement of change of office-bearers under Section 28(2) has to accompany a general statement as required under Section 28(1). Even if general statement cannot be prepared under Section 28(1), statement under Section 28(2) can still be re-prepared.88

XXI. PENALTIES AND PROCEDURE A. Failure to Submit Return In case of failure to submit returns or statements required under Section 28: (i) every office-bearer; (ii) other persons bound by the rules of the trade union to give or send the same; or (iii) if there is no such office-bearer or person, every member of the executive of the trade union shall be punishable with fine not exceeding ₹5. But if the contravention is continued after conviction, a further fine not exceeding ₹5 for each week during which the default was made shall be imposed.89 However, the aggregate fine shall not exceed ₹50.90 The Act provides more deterrent punishment with a fine which may extend upto ₹500 upon persons wilfully making, or causing to be made any false entry in, or any omission from the general statement required by Section 28, or in or from any copy of rules or of alterations of rules or document sent to the Registrar under that section.91

B. Penalties for Supplying False Information Regarding Trade Unions Quite apart from penalties mentioned earlier, if any person with intent to deceive or with like intent gives: (i) to any member of a registered trade union; or (ii) to any prospective member of such union, any document purporting to be a copy of rules of a trade union or any alteration of such rules which he knows or has reason to believe that it is not a correct copy, or (iii) gives a copy of any rules of any unregistered trade union to any person on the pretence that such rules are the rules of a registered trade union shall be punishable with a fine which may extend to ₹200.92

C. Cognizance of the Offence Only a presidency magistrate or magistrate of the first class can try any offence mentioned in Sections 31 and 32 of the Act93. Similarly, no court shall take cognizance of any offence unless: (i) a complaint has been made by the Registrar; or (ii) with his previous sanction by any person; or (iii) in the case of any offence under Section 32 by the person to whom such copy has been given;94 (iv) the complaint is made within six months of the date on which the offence is alleged to have been committed.

1

Kandan Textile Ltd v. Industrial Tribunal, AIR 1951 Mad. 661. XXI of 1860. 3 11 of 1912. 4 1 of 1956. 5 Section 14. 6 Section 13. 7 Radhakishan Jaikishan Ginning and Pressing Factory v. Jamnadas Nursery Ginning and Pressing Company Ltd, AIR 1940 Nagpur 228. 8 Chemosyn Pvt. Ltd v. Kerala Medical and Sales Representative’s Association 1988 Lab. IC 115. 9 East Indian Coal Co. Ltd v. East Indian Coal Co. Ltd Workers' Union, AIR. 1961 Pat 51. 10 K V Sridharan v. S Sundarmoorthy, 2009 LLR414. 11 Govt. of India, Report of the National Commission on Labour (1969) 295. 12 Under Section 2 of the Trade Unions Act, 1926, the Central Government is the appropriate 2

13

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

30 31 32 33 34 35 36 37 38

government in relation to trade unions whose objects are not confined to one state. The state government is the appropriate government in relation to other trade unions. However, in practice, the Act is implemented by the state government. The powers of the Central Government were delegated to the state governments. Section 2(f) defines ‘Registrar’ to mean: (i) a Registrar of Trade Unions appointed by the appropriate government under Section 3, and includes any additional or deputy registrar of trade unions and (ii) in relation to any trade union, the Registrar appointed for the State in which the head or registered office, as the case may be, of the trade union is situated. Section 4(1). Section 4(2). (1995) Supp (3) SCC 653. (1974) Lab IC 695. Ins. by Act No. 31 of 2001 w.e.f. 9-1-2002. Trade Unions Act, 1926, Section 5(2). Central Trade Union Regulation, 1938, Rule 7. Tirlok Nath v. All India Postal Workers Union, AIR 1957 All. 234. (1988) 1 LLJ 83 (AP). (2004) 1 LLJ 197. Trade Unions Act, 1926, Section 7. Kondalnao v. Registrar of Trade Unions, (1952) 1 LLJ. Notes of cases, 15. Trade Unions Act, 1926, Section 7(2). Ratan Kumar Dey v. Union of India, (1991) 2 LLN 506 (Gau.) (DB). R Tanji v. Registrar of Trade Unions, Bihar, AIR 1962 Pat. 338. North Eastern Railway Employees’ Union v. Registrar of Trade Unions, 1975 Lab. IC 860 (Allahabad); Mukund Ram Tanti v. Registrar of Trade Unions AIR 1962 Pat. 338, ONGC Workmen’s Association v. State of West Bengal, 1988 Lab. IC 555 (Calcutta). (2004) 2 LLJ 622. (1985) Lab IC 633. North Eastern Railway Employees’ Union v. Addl. District Judge, (1989) Lab IC 44 (SC). See also, Indian Explosive Workers Union v. State of Bihar (1992) 1 LLJ 578. 1991 Lab. IC 531. 2009 LLR 414. 1991 Lab. IC 531. 1991 (2) LLN 506; See also North-Eastern Railway Employees’ Union, Gorakhpur v. The Registrar of Trade Unions, U P, Kanpur 1975 Lab. IC 860. (2004) LLR 936. (2004) 1 LLJ 6. Similar view has been expressed in R Murugesan v. Union Territory of Pondicherry, (1976) 1 LLJ 435 (Mad.). Fateh Singh v. Rashtriya Mill Mazdoor Sangh,

39 40 41 42 43 44 45 46 47 48

49 50 51 52

53 54

55

56 57 58 59 60

1994 I LLJ 294 (Raj.), and Bokaro Steel Workers Union and Another v. State of Bihar, 2000 I LLJ 117 (Pat). (2011)1LLJ 239. (2001) 1 SCC 350. Tamil Nadu Union v. Registrar of Trade Unions, AIR 1962 Mad. 234. ACC Rajanka Lime Stone Quarries Mazdoor Union v. Registrar of Trade Unions, AIR 1958 Pat. 475. AIR 1963 Cal 57. R K Workmen's Union v. Registrar of Trade Unions, (1968) 1 LLJ 335 (Calcutta). (1968) I LLJ 335 at 337. This duty is, of course, subject to the powers of Registrar laid down in Section 7. ONGC Workmen’s Association v. State of West Bengal, (1988) Lab. IC 555 at 560. Kesoram Rangan Workmen’s Union v. Registrar of Trade Unions, (1968) 1 LLJ 335, 337. See also Survapal v. Uttar Pradesh Government, AIR 1951 Allahabad 674–698; and O K Ghosh v. E X Joseph, (1962) 2 LLJ 615. Kesoram Rangan Workmen’s Union v. Registrar of Trade Unions, (1968) 1 LLJ 335 (Calcutta). Section 9. Inserted by Act No. 31 of 2001 w.e.f. 9-1-2002. Cancellation of registration is illegal on basis of reply by one of disputed members and no finding as to wilful disobedience of Section 10. [See Ceramic Workers Progressive Union v. Addl. Registrar, (1994) Lab. IC NOC 66.] New Section 9A inserted by Act No. 31 or 2001 w.e.f. 9-1-2002. The Trade Union (Amendment) Bill, 1982, provides for insertion of new clause (c) after the proviso to Section 10, namely: if the Registrar is satisfied that the Trade Union has called for, or participated in, any illegal strike. Explanation— For the purposes of this section, ‘illegal strike’ has the meaning assigned to it in Section 24 of the Industrial Disputes Act, 1947. See also Government of India, Report of the National Commission on Labour (1969) 296. Section 10; See also Mysore Iron and Steel Works v. Commissioner of Labour and Registrar of Trade Unions, (1972) Lab. IC 799. See also Tata Electric Companies Officer Guild v. Registrar of Trade Unions, (1993) Lab. IC 1849. Tamil Nadu Government Press Workers Sangam v. First Trade Union Addl. Registrar (Deputy Commissioner of Labour I), (2004) 1 LLJ 274. Mukund Iron Steel Works Ltd v. V V Deshpande, (1986) Lab. IC 1612 (Bombay). Ibid. Gujarat Rajya Kamdar Sabha v. Registrar under the Trade Unions Act, (1999) LLR 285 Association of Engineering Workers v. Dockyard Labours, (1992) 1 Lab. IC 214. Section 11.

61 62 63 64 65 66 67 68 69

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71 72 73 74 75 76 77 78 79 80 81 82 83 84 85

Mysore Iron and Steel Works Labourers' Association v. Commissioner of Labour and Registrar Trade Unions, (1972) Lab. IC 779 KSEB v. KSEB Trade Union, (1987) 2 LLN 560. Tamil Nadu Non-gazetted Government Officers Union, Madras v. Registrar of Trade Unions, Madras, AIR 1959 Madras 55. Tamil Nadu Non-gazetted Government Officers Union, Madras v. Registrar of Trade Unions, Madras, AIR (1959) Madras 55. Section 11(2). Section 11(3). Section 11(4). Govt. of India, Report of the National Commission on Labour, (1969) 297. Section 28 of the Industrial Relations Bill, 1978, (since lapsed owing to the dissolution of the Lok Sabha), provided the following for re-registration of trade union: A trade union whose certificate of registration has been cancelled may apply for reregistration after the expiry of a period of six months from the date of the last cancellation of the certificate of registration. The Trade Union (Amendment) Bill, 1982, provides for insertion of new Section 11A in the Act to read as follows: A trade union whose certificate of registration has been cancelled may apply for reregistration to the Registrar after the expiry of a period of six months from the date of such cancellation: Provided that where such cancellation is on the ground that such trade union has failed to comply with any of the requirements provided by or under this Act, it shall not be reregistered until it has complied with such requirement. Section 23. Ibid. Section 25(1). Section 25(2). Section 25(3). Section 26. Section 24. Section 25(1). Section 25(3). Section 26. Section 27(1). Mysore Iron and Steel Works v. Commissioner of Labour and Registrar of Trade Unions, (1972) Lab. IC 799. Section 27(2). Sub-section (1). Sub-section (2).

86 87 88 89 90 91 92 93 94

Sub-section (3). Sub-section (4). Sagdish Bharti v. Union of India, 1969 Lab. IC 205 (Allahabad). Section 31(1). Provision to Section 31(1). Section 31(2). Section 32. Section 31(1). Section 32(2).

CHAPTER

7 Members, Office Holders and Outsiders in Trade Unions I. SOME DISTURBING ASPECTS OF OUTSIDERS IN THE UNION One of the significant features of Indian trade union movement is outside leadership. The early trade union movement was led by philanthropists and social reformers. Said the Royal Commission on Labour in India: At present, the union depends for their leaders mainly on social workers, lawyers and other professionals and public men. A few of these have interested themselves in the movement in order to secure private and personal ends. The majority, however, are motivated by an earnest desire to assist labour.1 Since independence, many of them have identified themselves completely with labour some others have engaged entirely in political activities; still others continue to work both in political and labour fields. Several factors have been responsible for outside interference in the executive of trade unions. First, the majority of workers are illiterate. Second, fear of victimization and of being summarily dismissed by management were further responsible for outside interference in the trade union movement. Third, the financial weakness of trade unions and absence of full-time trade union workers have given the opportunity to outsiders to interfere in trade unions’

administration and in their executive.

II. RIGHTS OF MINORS TO MEMBERSHIP OF TRADE UNIONS Section 21 provides that any person who has attained the age of 15 years may be a member of a registered trade union subject to any rules of the trade union to the contrary, and may, subject as aforesaid, enjoy all the rights of a member and execute all instruments and give all acquittances necessary to be executed or given under the rules.

III. OUTSIDERS IN THE UNION EXECUTIVE AND THE LAW Section 22 of the Trade Unions Act, 1926, provides: Proportion of office-bearers to be connected with the industry: (1) Not less than one half of the total number of the office-bearers of every registered trade union in an unorganized sector shall be persons actually engaged or employed in an industry with which the trade union is connected: (1) Provided that the appropriate government may, by special or general order, declare that the provision of this Section shall not apply to any trade union or class of trade unions specified in the order. Explanation: For the purposes of this section, ‘unorganized sector’ means any sector which the appropriate government may, by notification in the official gazette declare. (2) Save as otherwise provided in sub-section (1), all office-bearers of a registered trade union, except not more than one-third of the total number of the office-bearers or five, whichever is less, shall be persons actually engaged or employed in the establishment or industry with which the trade union is connected. Explanation: For the purpose of this sub-section, an employee who has retired or has been retrenched shall not be construed as an outsider for the purpose of holding an office in a trade union. (3) No member of the council of ministers or a person holding an office of profit (not being an engagement or employment in an establishment or

industry with which the trade union is connected), in the Union or a state, shall be a member of the executive or other office-bearer of a registered trade union. The aforesaid provisions which permit non-employees to be an officebearer of a registered trade union raises various problems: (a) What is meant by the ‘outsider’? (i) Whether an ex-worker or a worker whose services had been terminated by the employer may be treated as an outsider? (ii) Whether a full-time employee of a trade union should be treated as an outsider? (b) Whether there should be a legal ban on non-employees holding positions in the executive of the union? Does it affect Article 19 of the Constitution? (c) Whether the present limit of non-employees in the executive of a trade union be curtailed? (iii) Whether union leaders should be debarred from holding offices in more than a specified number of unions? Let us discuss these questions.

A. Concept of Outsider The explanation of sub-section 2 of Section 22 provides that for the purposes of this subsection, an employee who has retired or has been retrenched shall not be construed as outsider for the purpose of holding an office in a trade union. The Supreme Court in Bokajan Cement Corporation Employees' Union v. Cement Corporation of India Ltd2 held that an employee would not cease to be a member of a trade union on termination of his employment because there is no provision in the Act or the constitution of trade union providing for automatic cessation of employment. A question therefore arises whether an employee whose services are terminated or who has retired would be an outsider. The question can only be answered in affirmative because it is not desirable to permit dismissed workers in the executive of a trade union.

B. Entry of Outsiders in the Executive of Trade Unions As the law stands today, there is no bar to having outsiders such as lawyers, politicians, social workers etc., in the executive of trade unions. Conflicting views have, however, been expressed in regard to the question of banning outsiders in the executive of trade unions. Managements do not favour outside entry in the executives of trade unions. Workers, on the contrary, are of the view that devoted leaders, even if they are outsiders, should be permitted to be office-

bearers of trade unions. They are of the view that management or any outside agency should not interfere in their affairs. If they decide to allow outsiders in the trade union's executive, they should be permitted to do so. However, subsection 3 of Section 22 debars (i) a member of the council of ministers or (ii) a person holding an office of profit, other than those engaged or employed in an establishment or industry with which the trade union is connected, in the Union or state to be a member of the executive or office-bearer of a registered trade union. (iii) From the above it appears that a member of the Parliament or state legislature or ex-member of the council of ministers may become a member or executive or other office-bearer of a registered trade union.

C. Number of Outsiders in the Executive of Trade Unions The Trade Unions Act now places the limit of 50 per cent in case of unorganized sector. However, all office-bearers of a registered trade union except not more than one-third of the total number of office-bearers or 5, whichever is less shall be persons actually engaged or employed in the establishment or industry with which the trade union is connected.

IV. DISQUALIFICATION OF OFFICE-BEARERS The following persons are not eligible to be appointed as office-bearers or members of the executive of a registered trade union if (i) he has not attained the age of 18 years; (ii) he has been convicted by a court in India of any offence involving moral turpitude and sentenced to imprisonment, unless a period of five years has elapsed since his release.3 Section 21A(2) gives retrospective effect to the application of the aforesaid clause. It provides that any member of the executive or other office-bearer of a registered trade union who, before the commencement of the (Indian) Trade Unions (Amendment) Act, 1964 has been convicted of any offence involving moral turpitude and sentenced to imprisonment shall on the date of such commencement cease to be a member or office-bearer unless a period of five years has elapsed since his release before that date.

In R Murugesan v. Union Territory of Pondicherry,4 the Madras High Court held that where a dispute arises as to who are validly and legally elected office-bearers of a trade union, the Registrar is under an obligation to decide the question so that he can record the name in his register. For this purpose, the scope of enquiry is limited. Otherwise, the registrar will be in an enviable position of having to record two sets of office bearers of the same trade unions without having any power to decide as to which of them will be recognized for the purpose of administration of the Act.5

V. CEILING ON HOLDING OFFICES IN TRADE UNIONS Another problem of great practical significance is whether union leaders should be debarred from holding office in more than a specified number of unions. The first National Commission on Labour is of the view that there should not be any legal ban on leaders from holding the executive post of more than one union. The view is, however, open to criticism. In order to attract only devoted and hard-working leaders in trade unions, it is necessary to place some limit on the union leaders from holding office of more than a specified number of unions. It is significant to note that Section 33 (iii) of the Industrial Relations Bill, 1978, provided that a person shall be disqualified for being chosen an office-bearer of a registered trade union if he is already office-bearer of not less than four trade unions. This will ensure the entry of only devoted and interested persons in the trade union’s executive. Be that as it may, the (Second) National Commission on Labour in its report to the Government of India submitted on 29 June 2002, inter alia recommended that a ceiling on the total number of trade unions of which an 'outsider' can be a member of executive bodies is needed.

VI. TENURE OF ELECTED OFFICEBEARERS/MEMBERS OF EXECUTIVE Section 6(hh) of the Trade Unions Act 1926 provides that the members of the executive and other office-bearers of a trade union shall be elected for a period of not more than 3 years.

VII. RIGHTS AND DUTIES OF OFFICE-BEARERS AND MEMBERS An office-bearer or member shall be entitled to inspect: (i) the account-books; and (ii) list of members6 at such time as may be provided for in the rules of the trade union. Further, a member not under 15 has a right to execute all instruments and give all acquittance necessary to be executed or given under the rules.7 The scope of the legal rights and privileges was delineated in Secretary of Tamil Nadu Electricity Board Accounts Subordinate Union v. Tamil Nadu Electricity Board.8 In this case, two workmen of the Tamil Nadu Electricity Board were allowed to do the full-time union work. However, the board refused to extend this facility after about 4 years. On a dispute being raised, the government referred it to the labour court for adjudication. The labour court held that this was a mere concession granted to the office-bearers of the union and was not a part of service condition. Aggrieved by this order, the trade unions preferred a writ petition before the Madras High Court. Three issues were raised, namely: (i) Whether the workman had a legal right to do trade union activity without attending to office duties? (ii) Whether the withdrawal of permission to do trade union work on full-time basis would affect the service conditions? and (iii) Whether it is a privilege within the meaning of Item 8 of Schedule IV of the Act? The court answered all the issues in the negative and observed: It is true that trade unionism (has been) recognized all over the world but that does not mean that an office-bearer or any trade union can claim, as a right, to do trade union activities during office hours. In a poor country like India, tax payers pay money not for the purpose of encouraging trade unionism, but in the fond and reverend hope that every person who is entrusted with the task of doing service will do his service. Whether he actually does service or not, there can be a fond expectation of the same. To allow one to claim as of right to do trade union activity without attending to office duties, would in my opinion be an anachronism since it will amount to fleecing the tax payer in order to encourage trade union activities. That is not the purpose for which the workman was appointed by the Electricity Board. The Court further stated: [We] are totally unable to appreciate the argument of the

petitioner that merely because the recognition of trade union is a part of the service condition, it must necessarily follow that a right to represent or espouse the cause of workmen during office hours is a necessary concomitant. If this kind of trade unionism is allowed to flourish in our country, I could say ‘Woe to our country and poor tax payers.’ For my part, not that one should be against trade unionism, which is welcome because it is that which brings about solidarity among workers, the crucial question is, can a right be claimed to active trade unionism during office hours? The answer should be an emphatic ‘no’. Again in Indian Bank Employees Union v. Indian Bank9, it was held that a trade union worker cannot enjoy the luxury of getting salary and not doing the assigned work. In other words, the indulgence of trade union activity cannot be at the cost of the work for which they are paid their emoluments by the employer. In Burn & Co. v. Their workmen10, the Court held that the office-bearers are not immune from punishment for remaining absent from their duty. Likewise, office-bearers of a trade union are not immune from disciplinary action.11 Moreover, office-bearers of a trade union cannot claim immunity from transfer.12 Again, in Usha Breco Mazdoor Sangh v. M/s Usha Breco Ltd13, it was held : 1. Whereas the management cannot resort to victimization and unfair labour practice so as to get rid of the union leaders, the union leaders in turn are bound to maintain discipline; 2. A union leader does not enjoy immunity from being proceeded against in a case of misconduct. 3. Assault and intimidation are penal offences. A workman indulging in commission of a criminal offence should not be spared only because he happens to be a union leader. It is submitted that the Court, while recognizing the need of a healthy trade union, cautioned that it should not be at the cost of the tax payer. This appears to be a very healthy approach and would bring discipline in the industry.

VIII. TRANSFER OF OFFICE-BEARERS OF TRADE UNION

It has now been held in a series of cases of the Supreme Court and high courts that : (i) The power of the employer to transfer its employees (including the officebearers of trade union is a general conditions of service of the employee and that such transfers are to be effected for administration convenience of the board and the court does not sit in appeal nor calls for details of administrative exigencies); (ii) The employee under transfer cannot claim any immunity from transfer merely by reason of his being office bearer of the trade union; (iii) The fact that the office bearer of the trade union organized protests and agitations is not a ground from which intention to victimize the petitioner (office bearer of trade union) can be inferred. (iv) Only in cases where the order of transfer is found to be mala fide or colourable exercise of power, would the order become illegal; (v) Transferring an employee because he is troublesome/trouble-maker would be in the interest of administration and such transfers cannot be characterized as punishment.14 In Singapore Airlines Ltd v. Mr Rodrigntin15, the plaintiff joined the Singapore Airlines Ltd as clerk at Mumbai on 5 January 1987. As per item 6 of the appointment letter, the airlines was empowered to transfer the plaintiff at any time at any SAL station all over India at its discretion. However, according to the plaintiff, the airlines had not transferred any employees from Mumbai to elsewhere. The plaintiff was carrying on trade union activities for more than 10 years and he was also elected as president of the union. According to the plaintiff, as the defendant wanted to prohibit him from participating in trade union activities and charter of demands made by the union, the airlines transferred the plaintiff to Jalandhar. The airlines issued transfer order on 9 July 2007 and asked him to join within 15 days. According to the plaintiff, the transfer was mala fide and not in accordance with model standing orders. According to the airlines, it transferred the plaintiff because it wanted to concentrate on its business at Jalandhar and since the plaintiff was experienced in marketing for over 10 years; it decided to transfer him from Mumbai to Jalandhar. Upholding the validity of the order of transfer, the Bombay High Court ruled: 1. Merely that the employee is president of the union, the transfer would not be mala fide. 2. Transfer cannot be stalled merely because he is an office-bearer of the

union; 3.

Had there been mala fide intention of the management, transfer of the employee who has been an active worker of the union for the last 10 years would have been made earlier also; 4. It is an individual dispute and not an industrial dispute. The union has not passed any resolution supporting the case of the employee. It did not espouse or take up or support his case. Hence, civil court has no jurisdiction; 5. Inconvenience to the employee is not relevant to stay the transfer; 6. In matter of transfer, employee who has been served with the transfer order must first report to the place where he is transferred and, thereafter make a representation or file legal proceedings; The Court, accordingly, set aside the order of the trial Judge that the transfer was mala fide and not in accordance with terms of contract.

IX. INTER-UNION AND INTRA-UNION RIVALRIES Since independence, inter-union and intra-union rivalries, primarily based on political considerations, leading to disputes between rival sets of office-bearers of trade unions, have become sharper. However, except non-statutory Code of Discipline evolved in 1958 which has failed to achieve the desired result, there is at present no legal machinery or procedure for resolution of inter-union disputes in the Trade Unions Act. To fill this gap, the Trade Unions (Amendment) Bill, 1982, provides for such machinery. Section 2(i) of the Bill defines ‘trade union dispute’ to mean any dispute: (a) between one trade union and another; or (b) between one or more members or office-bearers of a trade union and the trade union (whether also with any of the other members or office-bearers of the trade union or not) relating to its registration, administration or management of its affairs, including the appointment of the members of the executive or other office-bearers of the trade union, the validity of any such appointment, the area of operation of the trade union, verification of membership and any other matter arising out of the rules of the trade union, but excluding matters involving determination of issues as to the title to, or ownership of, any building or other property or any funds.

And, Section 28B permits the parties to a trade union dispute to refer such dispute for arbitration. Such arbitration agreement must be in the prescribed form and signed by the parties in the manner prescribed by regulation. Further, Section 28C empowers the Registrar to follow such procedure as he thinks fit in adjudging the disputes referred to him. The procedure that may be followed by the Registrar will be subject to such regulation as may be made in this regard. Any person aggrieved by the award of the Registrar in a reference may appeal to the court within such period as may be prescribed by regulation. The Bill also permits the parties to trade union disputes to apply jointly or separately in the manner prescribed by regulation for adjudication of disputes to the Registrar.

1 2 3

4 5 6 7 8 9 10 11 12 13 14

15

Government of India, Report of the Royal Commission in India (1931) 328. 2004 1 LLJ 197. Section 21A(i) of the Trade Unions (Amendment) Bill, 1982 provides for insertion of a new clause viz., ‘(iii) he has been convicted of any offence under the Industrial Disputes Act, 1947.’ (1976) 2 LLJ 435. Sanjeeva Reddi v. Registrar of Trade Unions, (1969) 1 LLJ 11 and Mukund Ram Tanti v. Registrar of Trade Unions, (1963) 1 LLJ 60. Section 20. Section 21. (1984) 2 LLJ. 478. (1994) 2 LLJ 497. (1959) I LLJ 458. (1991) LLR 456. TNEB Engineers Sangam v. Tamil Nadu Electricity Board, (1996) LLR 942 (Mad). 2008 LLR 619. Varada Rao v. State of Karnataka, (1986)11 CLR 277 (SC); N K Singh v. Union of India, (1995) 1 LLJ 854 (SC); TNEB Engineering Sangram v. Tamilnadu Electricity Board, AIR 1966 SC 1685. (2004) ILLJ 197 (SC).

CHAPTER

8 Trade Union Finances and Funds I. FACTUAL REVIEW The weakness of a trade union is also determined by its financial status. It is, therefore necessary to know the income and expenditure of workers’ and employers’ unions from 1996 to 2005. Table 8.1: Income and Expenditure of Registered Workers’ and Employers’ Trade Unions Submitting Returns for the Years 1991 to 2005

Source: Government of India, Ministry of Labour, Indian Labour Year Book, 2007 (2009), 90.

From Table 8.1, it is evident that during 2005, income as well expenditure of workers’ unions, as compared to previous years, have witnessed considerable increase. In case of employers’ unions, both income and expenditure of unions submitting returns registered a decrease during the period under reference. But the average income of trade unions is inadequate looking at the size of the unions. Several factors accounted for low average income of trade unions: First, the strength of union members is inadequate due to small size of unions and irregularity in payment of membership subscription. Second, workers are apathetic towards trade unions and do not want to give their hard-earned money. Third, unions are also interested in boosting up their membership figures and, therefore, do not insist on regular payment.1 Fourth, lack of full-time trade

union staff may be responsible for irregularity in collection of membership subscription.

II. MEMBERSHIP SUBSCRIPTION: LAW’S RESPONSE A. Rate of Subscription of Union Members Section 6 (ee) of the Trade Unions Act, 1926, provides that the payment of minimum subscription by members shall not be less than: (i) one rupee per annum for rural workers; (ii) three rupees per annum for workers in other unorganized sectors; and (iii) twelve rupees per annum for workers in other cases. The aforesaid clause provides minimum membership fee. The basic difficulty of trade unions is about the realization of monthly subscription from its members. The subscription is not regularly paid and accumulation of ‘arrears pertaining to several years are not uncommon’. Equally common is the practice of collecting subscription from those who want to avail themselves of the privileges of being a trade union member.2 These irregularities can be eradicated by providing a machinery for regular realization of dues. Further, the aforesaid rate of subscription is inadequate and creates a hurdle in effective functioning of unions.

B. Right of Members to Subscribe The members of trade unions are members under Section 6(e) of the Trade Unions Act, 1926. The payment of subscription by members to the trade union has been made compulsory under Section 6(ee) of the Act. The trade unions cannot refuse to receive subscription from its members.3 The same has been declared as a right of members.4

C. Realization of Union Subscription and Check-off In India, the Trade Unions Act, 1926 does not provide for check-off facilities. The check-off system is a system under which the employer regularly deducts membership subscription from the wages of employees and hands over the amount to the union. This system is in vogue in USA and UK and is enforced through a clause in the collective bargaining agreement and is made legally permissible.5 Obviously, the collection is made by the union concerned from the

members. This is a lacuna in the law. To fill this gap, the (First) National Commission on Labour recommended that the right to demand check-off facilities should vest with the union and if such a demand is made by a recognized union, it should be made incumbent on the management to accept it. In this direction, an attempt was made by the Trade Unions (Amendment) Bill, 1969. The Bill empowered the employer to deduct the subscriptions from the pay of employees for handing over the same to the appropriate union.

D. Deduction of Subscription Under Payment of Wages Act, 1936 Section 7(2)(kkk) of the Payment of Wages Act, 1936 permits deduction of subscriptions from willing members of the trade union and employer is bound to deduct and remit the same into the account of the trade union. Thus, Section 7(2) (kkk) provides: 7. Deductions which may be made from wages. (2) Deductions from the wages of an employed person shall be made only in accordance with the provisions of this Act, and may be of the following kinds only, namely, (kkk) deductions made with the written authorization of the employed person, for payment of fees payable by him for membership of any trade union registered under the Trade Unions Act, 1926 (16 of 1926). Thus, there is a statutory duty/obligation on the part of the employer to deduct subscription payable by the members of registered trade unions, who have given consent/authorization in writing. Refusal by the employer to deduct and remit the amount to the account of the registered trade union is a statutory violation and the same amounts to defeating the object of forming trade unions.6

E Check-off: Judicial Response Judicial policy to strengthen the hands of trade unions by allowing union subscription to be deducted by employer is evident from the judgement in Balmer Lawrie Workers’ Union v. Balmer Lawrie & Co. Ltd.7 The Supreme Court examined the validity of a clause of settlement between employer and a representative union which authorized the employer to deduct 15 per cent of gross arrears payable to workmen towards union fund. Upholding the validity of the clause, the Court observed:8 It is well known that no deduction could be made from the

wages and salary payable to a workman governed by the Payment of Wages Act unless authorized by that Act. A settlement arrived at on consent of parties can be however, permitted as it is the outcome of understanding between the parties even though such deduction may not be authorized or legally permissible under the Payment of Wages Act …. Such deductions can neither be said to be compulsory exaction nor tax. Therefore such a provision of deduction at a certain rate as agreed between the parties for payment to the union, the same being with the consent and as part of overall settlement would neither be improper nor impermissible nor illegal. The Court therefore, rejected the contention that by permitting deductions towards union fund of one union, the management discriminated between union and union, and between members of the union and non-members and thereby violated Article 14 of the Constitution. The division bench of the Madras High Court in State Bank Staff Union v. State Bank of India9 held that the plea of the recognized trade union that it should alone be given the check-off facility cannot be accepted because: (i) check-off facility granted to the recognized trade union under the code of discipline was not statutory in character; (ii) There was nothing in the code to indicate that such a facility must be given only to the recognized trade unions. The aforesaid view as reiterated in Coimbatore Periyar District Dravida Panjalal Thozhilalar Muneetra Sangam v. National Textile Corporation Ltd.10 In this case, the Madras High Court held that management was not justified in refusing to deduct and remit subscriptions to the account of the registered trade unions, a practice which has been in vogue for the past 25 years, merely on the ground that the said trade unions were not recognized unions for the purposes of negotiations. In Rashtriya Colliery Mazdoor v South Eastern Coalfields Ltd.11, the Madhya Pradesh High Court upheld the order of withdrawal of check-off facility to the petitioner on the ground that it is not affiliated to one of the recognized central trade union organizations which are in turn recognized under the Code of Discipline as being the representative union under industrial relations prevalent in the SECL. The Court also held that it is a policy matter of the petitioner and since a policy decision is taken and code of conduct has been evolved by the process of joint consultative machinery, the same is beyond the scope of judicial review.

III. GENERAL FUND: PURPOSES FOR WHICH IT MAY BE SPENT Section 15 of the Trade Unions Act, 1926, lays down the purposes for which general fund of a registered trade union can be utilized namely: (a) the payment of salaries, allowances and expenses to office-bearers of the trade union; (b) the payment of expenses for the administration of the trade union, including audit of the accounts of general funds of the trade union; (c) the prosecution or defence of any legal proceeding to which the trade union or any member thereof is a party, when such prosecution or defence is undertaken for the purpose of securing or protecting any rights of the trade union as such or any rights arising out of the relations of any member with his employer or with a person whom the member employs; (d) the conduct of trade disputes on behalf of the trade union or any member thereof; (e) the compensation to members for loss arising out of trade disputes; (f) the allowances to members or their dependants on account of death, old age, sickness, accidents or unemployment of such members; (g) the issue of, or the undertaking of liability under, policies of assurance on the lives of members, or under policies insuring members against sickness, accident or unemployment; (h) the provision of educational, social or religious benefits for members (including the payment of expenses of funeral or religious ceremonies for deceased member) or for the dependants of members; (i) the upkeep of a periodical published mainly for the purpose of discussing questions affecting employers or workmen as such; (j) the payment, in furtherance of any of the objects on which the general funds of the trade union may be spent, for contributions to any cause intended to benefit workmen in general, provided that the expenditure in respect of such contributions in any financial year shall not at any time during that year be in excess of one-fourth of the combined total of the gross income, which has upto that time accrued to the general funds of the trade union during that year and of the balance at the credit of those funds at the commencement of that year; and

(k) subject to any conditions contained in the notification, any other object notified by the appropriate government in the official gazette.

Refund of Subscription In G S Dhara Singh v. E K Thomas12, the Supreme Court held that any amount received from or on behalf of members by trade union, is liable to be refunded to the members on resignation from the trade union.

IV. POLITICAL FUND As mentioned earlier, trade unions have political affiliation and they are often compelled to plunge in political sphere in order to show their strength. Law, therefore, cannot keep itself away from realities. It is in view of this that Section 16 of the Act permits a registered trade union to raise a separate political fund for its members in furtherance of the objectives mentioned in Section 16 (2), namely; (a) the payment of any expenses incurred, either directly or indirectly, by a candidate or prospective candidate for election as a member of any legislative body constituted under the Constitution or of any local authority, before, during, or after the election in connection with his candidature or election; or (b) the holding of any meeting or the distribution of any literature or documents in support of any such candidate or prospective candidate; or (c) the maintenance of any person who is a member of any legislative body constituted under the Constitution or for any local authority; or (d) the registration of electors or the selection of a candidate for any legislative body constituted under the Constitution or for any local authority; or (e) the holding of political meetings of any kind, or the distribution of political literature or political documents of any kind. Of these, clause (c) requires further examination. This clause which confers a right upon a trade union to spend as much as it likes for the maintenance of the member has been criticized13 on the ground that: (i) it violates the fundamental right to equality as guaranteed by the Indian Constitution (ii) it results in improper influence on the members thereby

interfering with the freedom of speech amounting to breach of privilege (iii) it encourages the growth of puppet legislators who can get double maintenance (iv) such a provision has great potential for corrupting our parliamentary system and (v) a new line of lobbying pattern emerges.14

Nature and Effect of Non-contribution Contribution to the political funds of the trade union is merely voluntary and not compulsory. Thus, no member who does not contribute to the fund shall be under any disability or disadvantage except in respect of management and control of such funds. Further, a non-contributory member cannot be excluded from the benefits of the trade union. Moreover, no condition can be imposed for the admission to membership of the union.15 While dealing with the provisions of separate political fund, the [second] National Commission on Labour in its report felt that it may be allowed to continue and appropriately included it in the proposed integrated law. However, care must be taken to ensure that the general funds of trade unions are not used for political purposes.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

S C Pant, Indian Labour Problem (1964), p 101. Ibid. Coimbatore Periyar Districts Dravida, Panjalal Thozhilalar Munnetra Sangam v. National Textile Corporation Limited, 2011 LLR 1076 (HC Madras). M T Chandrasennan v. N Sukumaran, AIR 1974 SC 1789. See Government of India, Paper of the National Commission on Labour, (1969), 294. See infra note 10. (1985) Lab. IC 242. Id. at 253 (emphasis added). 1991 Lab. IC 197. (2011) 4 LLJ 857. 2009 Lab IC 2836. AIR 1988 SC 1829. See Shashi K Sharma, Maintenance Clause as per Section 45 16(2) (c) of the Trade Unions Act, 1926, 22 JILJ 282 (1980). Ibid. Section 16(3).

CHAPTER

9 Privileges of Registered Trade Unions Let us turn to consider the immunity afforded to the members and office-bearers of registered trade unions from civil and criminal conspiracies and restraint of trade under the Trade Unions Act. Until 1926, unions or workers indulging in strike and causing financial loss to management were liable for illegal conspiracies. For instance, in Buckingham and Carnatic Mills, the unions were held liable for illegal conspiracies and employers were awarded damages.

I. IMMUNITY FROM CRIMINAL CONSPIRACY A. Only a Fraction of Labour Force Protected Section 17 of the Trade Unions Act, 1926, (hereinafter referred to as TUA) seeks to insulate trade union activity from liability for criminal conspiracy: No office-bearer or member of a registered trade union shall be liable for punishment under sub-section (2) of Section 120 B of the Indian Penal Code in respect of any agreement made between the members for the purpose of furthering any such object of the trade union as is specified in Section 15, unless the agreement is an agreement to commit an offence. The immunity is, however, available only: (i) to office-bearers and members of registered trade unions; (ii) for agreement between the members;

(iii) such agreement that may further any such trade union object as is specified in Section 15 of the Act; and (iv) such agreements is not to commit an offence. The first of these limitations confines the protection to a only members and office-bearers of a trade union. Table 9.1 tabulates the position of registered trade unions. Table 9.1: Number of Registered Unions (Workers’ and Employers’) and Membership of Unions Submitting Returns for the Years 1991 to 2006

Source: Government of India, Indian Labour Year Book. 2008 (2010) 85.

B. Immunity Jeopardizes Community’s Interests As to the second limitation, the most significant provision is Section 15 which relates to the conduct of trade disputes on behalf of the trade union or any

member thereof. The key expression ‘trade dispute’ is defined in Section 2 (g) of the Act to mean: any dispute between employers and workmen or between workmen and workmen or between employers and employers which is connected with employment or non-employment, or the terms of employment or the conditions of labour, of any person. The words used in this definition differ from the definition of ‘industrial dispute’ in the Industrial Disputes Act, 1947 (hereinafter referred to as IDA) in two minor respects (i) whereas the Trade Unions Act uses the word ‘trade’ or ‘industry’, the Industrial Disputes Act uses the legislatively defined word ‘industry’; and (ii) the definition of ‘trade dispute’ omits the words ‘or difference’ which occur in the definition of ‘industrial dispute.’ We believe that despite these differences, the definition of ‘trade dispute’ as such, is pari materia with the definition of ‘industrial dispute’ and generally the controlling judicial decisions1 while interpreting the latter definition also delineate the contours of the former definition. An effective difference between the respective coverages of the definition of ‘trade dispute’ and ‘industrial dispute’ arises because of the definition of ‘workmen’ in the TUA. The aforesaid Section 2(g) of TUA further states that ‘workmen’ means: all persons employed in trade or industry whether or not in the employment of the employer with whom the trade dispute arises (emphasis added). It will be noticed that on the one hand, the italicized words in the aforesaid definition did not occur in the corresponding definition of ‘workman’ in the IDA. On the other hand, a whole series of qualifying words used in the definition of ‘workman’ in the IDA are conspicuous by their absence from the corresponding definition in the TUA. Under Section 2(s) of IDA: workman means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or

retrenchment has led to that dispute, but does not include any such person: (i) who is subject to the Army Act, 1950, or the Air Force Act, 1950 or the Navy Act, 1957; or (ii) who is employed in the police service or as an officer or employee of a prison; or (iii) who is employed mainly in a managerial or administrative capacity; or (iv) who, being employed in a supervisory capacity, draws wages exceeding one thousand and six hundred rupees per mensem or exercises, either by the nature of duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature. The Trade Unions Act, 1926 has the potential2 to cover a much larger number of persons than the Industrial Disputes Act, 1947. Thus, Section 17 of the TUA grants immunity from liability for criminal conspiracy to persons in whose industrial dispute the government cannot intervene, whether by way of conciliation or adjudication, and in the absence of the possibility of such intervention, the provisions of the IDA regulating the use of instruments of economic coercion do not apply.

C. Nature of the Immunity The last of the limitations on the scope of the immunity granted by Section 17 of the TUA raises an issue relating to the very nature of the immunity. Section 120A of the Indian Penal Code (hereinafter referred to as IPC) defines criminal conspiracy to mean: (i) an agreement between two or more persons to commit an offence, i.e., in, general,3 an act which is punishable under IPC or any other law for the time being in force; and (ii) an overt act done in pursuance of an agreement between two or more persons to do an illegal act or to do a legal act by illegal means. The IPC defines the word ‘illegal’ to include, inter alia: … everything which is prohibited by law, or which furnishes ground for a civil action.4 Since workman’s use of instruments of economic coercion in an industrial dispute involves breach of contract and injury to the property right of the employer, both the acts are actionable, and amount to an illegal act within the meaning of Section 120A read with Section 43 of the IPC. But under Section 17, breach of contract and injury to employer’s

property cease to be actionable and, therefore, do not amount to criminal conspiracy as defined in Section 120-A read with Section 43 of the IPC. A question therefore, arises as to what is the criminal liability in respect of which Section 17 of the TUA grants immunity. In considering the matter, it is relevant to note that Section 17 does not grant charter of liberty to commit an offence, which is punishable with death, life imprisonment or rigorous imprisonment for a term of two years or more.5 In fact, the last words of the Section 17 of the TUA indicate that it does not insulate agreement to commit any offence whatsoever. Perhaps the immunity is confined to an agreement between two or more persons to do, or cause to be done, acts which are prohibited by law but which neither amount to an offence nor furnish grounds for civil action. Breach of contract does give rise to a civil cause of action. Therefore, under Section 43 of the IPC, an agreement to commit breach of contract through withdrawal of labour as an instrument of economic coercion in an industrial dispute is a criminal conspiracy. Further, so long as any law declares withdrawal of labour in breach of contract to be an offence, if a member of the consenting party takes any step to encourage, abet, instigate, persuade, incite or in any manner act in furtherance of the objective, criminal conspiracy would have been committed. Finally, since criminal conspiracy is a substantive offence punishable under Section 120B of the Indian Penal Code, it is doubtful if Section 17 grants immunity at all. The word ‘illegal’ is applicable to everything which is an offence or which is prohibited by law, or which furnishes ground for a civil action, and a person is said to be ‘legally’ bound to do, whatever it is illegal in him to omit. Reading Section 18 of the Trade Unions Act with Section 43 of the Indian Penal Code, it would appear that withdrawal of labour as an instrument of economic coercion in an industrial dispute in breach of contract is not illegal. Accordingly, an agreement between two or more workmen, members of a registered trade union to withdraw labour as an instrument of economic coercion in an industrial dispute is not an agreement ‘to do or cause to be done an illegal act’ and amounts to a criminal conspiracy within the meaning of Section 120-A of the IPC. Accordingly, withdrawal of labour in breach of contract does not give rise to a cause of action in civil courts.

D. Judicial Response The Calcutta High Court in Jay Engineering Works Ltd v. Staff6 while interpreting the provisions of Section 17 observed: No protection is available to members of a trade union for any

agreement to commit an offence … When a group of workers, large or small, combine to do an act for the purpose of one common aim or object, it must be held that there is an agreement among the workers to do the act and if the act committed is an offence, it must similarly be held that there is an agreement to commit an offence.

II. IMMUNITY FROM CIVIL ACTIONS Section 18 of the Trade Unions Act, 1926, grants immunity to registered trade unions from civil suits.7 (i) No suit or other legal proceeding shall be maintainable in any civil court against any registered trade union or any office-bearer or member thereof in respect of any act done in contemplation or furtherance of a trade dispute to which a member of the trade union is a party on the ground that such act induces some other person to break a contract of employment, or that it is in interference with the trade, business or employment of some other person or with the right of some other person to dispose of his capital or his labour as he wills. (ii) A registered trade union shall not be liable in any suit or other legal proceeding in any civil court in respect of any tortuous act done in contemplation or furtherance of a trade dispute by an agent of the trade union if it is proved that such person acted without the knowledge of, or contrary to express instructions given by the executive of the trade unions. The above section does not afford immunity to the members or officebearers of a trade union for an act of deliberate trespass.8 The immunity also cannot be availed of by them for unlawful or tortuous act.9 Further, such immunity is denied if they indulge in an illegal strike or gherao. Moreover, the immunities enjoyed by the union do not impose any public duty on the part of the union.’10 The section, however, raises various problems.11 First, like immunity from criminal conspiracy, immunity from civil action is also confined to members of the registered trade unions. We have already seen that such protection was limited to 10.6 per cent of the labour force in 2005. Second, it does not afford adequate protection from civil liabilities. For, it

is arguable whether it gives protection and, if so, to what extent in excess of the aforementioned Section 17 of the Trade Unions Act. A suit or proceeding may not be maintainable for a number of reasons. Does it necessarily follow that the conduct does not ‘furnish ground for civil action’ within the meaning of Section 43 of the Indian Penal Code? Third, the expression ‘in contemplation or furtherance of a trade dispute to which a member of the trade union is a party’ is obviously narrower than the ambit of protection under the said Section 17. Fourth, Section 18 helped in maintenance of union funds, howsoever meagre. The real significance is in rejecting the application of the common law doctrines of restraint of trade and criminal conspiracy in so far as they encroach on the field of labour management relations. Together with Section 17, it provides a great impetus for, and facilitates the active participation of ‘outside leaders’ in the trade union movement. In Rohtas Industries Staff Union v. State of Bihar12, certain workmen went on an illegal and unjustified strike at the instance of the union. A question arose whether the employers had any right of civil action for damages against the strikers. The arbitrator held that the workers who participated in an illegal and unjustified strike, were jointly and severally liable to pay damages. On a writ petition, the Patna High Court quashed the award of the arbitrator and held that employers had no right of civil action for damages against the employees participating in an illegal strike within the meaning of Section 24 of the Industrial Disputes Act, 1947. From this decision, it is evident that Section 18 grants civil immunity in case of strike by the members of the trade union. On appeal, the Supreme Court affirmed the judgement of the High Court on the ground that the claim for compensation and the award thereof in arbitration proceedings were invalid and such compensation for loss of business was not a dispute or difference between the employers and the workmen which was connected with the employment or non-employment or terms of employment or with the condition of labour of any person. The Supreme Court did not decide the question as to whether the Patna High Court was right in relying on Section 18 of the Act to rebuff the claim for compensation because the Supreme Court did not wish to rest its judgement on that ground. In Jay Engineering Works v. Staff13, the full bench of the Calcutta High Court was invited to consider the question whether the protection under Sections 17 and 18 of the Trade Unions Act can be availed of where workers resort to gherao. Chief Justice Sinha explaining the scope and ambit of protection observed:

The net result of the decision set out above is that Sections 17 and 18 of the Indian Trade Unions Act grant certain exemption to members of a trade union but there is no exemption against either an agreement to commit an offence or intimidation, molestation or violence, where they amount to an offence. Members of a trade union may resort to a peaceful strike, that is to say, cessation of work with the common object of enforcing their claims. Such strikes must be peaceful and not violent and there is no exemption where an offence is committed. Therefore, a concerted movement by workmen by gathering together either outside the industrial establishment or inside, within the working hours is permissible when it is peaceful and does not violate the provisions of law. But when such a gathering is unlawful or commits an offence then the exemption is lost. Thus, where it resorts to unlawful confinement of persons or criminal trespass or where it becomes violent and indulges in criminal force or criminal assault or mischief to person or property or molestation or intimidation, the exemption can no longer be claimed. The Calcutta High Court once again in Reserve Bank of India v. Ashis14 held that in order to secure immunity from civil liability under Section 18, inducement or procurement in breach of employment in furtherance of trade dispute must be by lawful means and not by means which would be illegal or wrong under any other provisions of the law. The Madras High Court in Sri Ram Vilas Service Ltd v. Simpson Group Company Union15 held that it was not within the purview of the High Court to prevent or interfere with the legitimate rights of the labour to pursue their agitation by means of a strike so long as it did not indulge in unlawful and tortuous acts. In Federation of Western India Cine Employees v. Filmalaya Pvt. Ltd16, a question arose whether an injunction can be issued restraining the trade union, its members or agents from acting upon the direction issued by the union, namely, not to report at the studio? The Bombay High Court answered it in the negative because such act was protected by Section 18 of the Trade Unions Act, 1926. In this case, there was a dispute between Filmalaya Pvt. Ltd, a private limited company and the workers (represented through federation of affiliated unions) regarding employment, non-employment, status of 19 employees and alleged illegal termination of services of certain workers. The federation of the concerned affiliated union issued a letter on 3 May 1980 addressed to various

bodies and associations of cine artists, technicians and workers requiring them to issue instructions directing their members not to report for shooting work at the studio of Filmalaya Pvt. Ltd. The net effect of that letter was that the business of the company came to a standstill. The company, therefore, filed a suit against the employees mainly for an injunction restraining them from acting upon the directive of the federation. The civil court came to the conclusion that there was no trade dispute pending between the parties and hence, Section 18 had no application to the fact. It also issued a notice of motion in absolute in terms of prayer. The High Court observed that the directions amount to intimidation or coercion and, therefore, are not protected by Section 18. The court added that the act in contemplation or in furtherance of trade dispute, which induces breach of contract of other employees causes interference with the trade, business or employment of some other person, fell within the ambit and scope of Section 18. However, the inducement or interference must be by lawful means. In other words, Section 18 does not give protection to trade union from acts of violence.17 The court accordingly held that the union was entitled to carry out its legitimate trade union activities peacefully and, therefore, slogans or demonstrations per se could not be termed as unlawful and hence, a blanket injunction could not be granted in that behalf. The court however, cautioned that this was not to say that the trade union was also protected from its violent activities; activities which were normally termed as violent could not be regarded as trade union activities of a union. In Usha Breco Mazdoor Sangh v. Management of M/s Usha Breco 18 Ltd. , the Supreme Court ruled: (i) A workman indulging in commission of a criminal offence should not be spared only because he happens to be a union leader; (ii) A union leader does not enjoy immunity from being proceeded with in case of misconduct. Again, in Indian Bank v. Federation of Indian Bank Employees’ Union19, the Indian Bank sought an interim injunction against the employees’ unions restraining them from holding meetings, demonstrations, etc., within a radius of 50 metres of the central office or any of the branches of the bank. A question arose whether the bank was entitled to an interim injunction against its own employees? The Madras High Court held that an interim injunction would virtually prevent the exercise of statutory rights conferred on unions to hold demonstrations and meetings within the scope of the Trade Unions Act and, therefore, no injunction could be issued. The court, however, added that if any act is committed resulting in unlawful activities, and constitutes cognizable

offences under the Indian Penal Code, or other special enactments like the Banking Regulations Act, 1949, etc., the immunity available under the Trade Unions Act, 1926, would not be available. In Ahmedabad Textile Research Association v. ATlRA Employees 20 Union , a division bench of the Gujarat High Court held that it is not within the purview of the civil court to prevent or interfere with the legitimate rights of the workmen to pursue their demands by means of strike or agitation or other lawful activities so long as they do not indulge in acts unlawful, tortuous and violent. The court further held that any agitation by the workmen must be peaceful and not violent. Any concerned movement by workmen to achieve their objectives is certainly permissible even inside the industrial establishment. In Orchid Employees Union v. Orchid Chemicals & Pharmaceuticals 21 Ltd , the Supreme Court held that although the trade union and its members were restrained to assemble within 100 meters of the boundary of the factory premises of the respondent company and raise slogans or obstruct the ingress and egress of the vehicles carrying raw materials and finished products, staff bus and other vehicles into factory premises, and obstruct the loyal workers, foreign customers and other visitors from entering into the respondent company and getting out of the same till the disposal of the suit or the conciliation proceedings, whichever is earlier. It was, however, observed that the above interim injunctions will not in any way interfere with the present appellants' rights to strike or peaceful picketing. Under the Trade Unions Act, 1926, the members of the union are certainly not permitted to involve themselves in violent activities. In such circumstances, giving police protection to factory by this court in exercising its jurisdiction under Article 226 of the Constitution of India is not unknown22. In Mining and Allied Machinery Corporation Ltd, (by its law officer and constituted attorney N X Mandal) v. Superintendent of Police, St. Thomas Mount, Madras,23 it was held that a negative approach of lawful agitation by the working class cannot be justified by resorting to law and order problem in the industrial sector, which is as follows: Strikes, lock-outs, satyagrahas and demonstrations are nothing new in our country. Promotion of social justice over the past few decades was to a considerable extent, due to militant and agitational approach of the workmen and not, to any appreciable degree, due to condescension by the management. It is but true that in the process of securing to the workmen more amenities and privileges and better condition of service, the industrial

tribunals, labour courts, and the courts of this country have played a vital role. A negative approach to lawful agitation by the working class to secure higher wages and better living conditions cannot be justified by resort to the plea of maintaining law and order in the industrial sector. The jurisdiction of this court in granting a writ of mandamus by directing the police to give protection to the management to carry on lawful trade was again reiterated by the division bench of Kerala High Court in Midland Rubber & Produce Co. Ltd, Cochin v. Superintendent of Police, Pathanamthitta and Others,24 wherein Justic A R Lakshmanan, while presiding over the bench, held as follows : …Just as the workers are entitled to protection of their legal rights by courts of law, the employers are also equally entitled to protection of their fundamental right to carry on their lawful trade or business. In our opinion, it is not open to the respondents—unions to take the law in their own hands and obstruct the permanent workers of the appellant from discharging their duties or prevent the appellant from doing the rain guarding work. Sufficient safeguards are provided under the Industrial Disputes Act to prevent exploitation of workers by employers. It is strange to find that one set of workers claimed the right to get employment on the basis of some practice and preventing the employer from engaging labour of their choice. If the claim of the labour is allowed, then a day will come when a citizen of this country has to seek his employment in his own village, taluk or district. Such a claim would run counter to the rights guaranteed under the Constitution of India. therefore the right now claimed by the respondents on the basis of some practice cannot be countenanced at all. The court added that Section 18(1) of the Trade Unions Act, 1926 certainly prohibits the employer from breaking the contract of employment and gives immunity to an office bearer in respect of the act done by him. When the employer attempts to divide the striking workers, which is not lawful, it is certainly open to the union and its members to approach the inspector of factories or raise an industrial dispute by treating the same as unfair labour practice, and the immunity granted under section 18(1) of the Act cannot mean to say that the union must be permitted to achieve its object by resorting to the

methods which are not permitted in law. In M/s Avtec Limited, Power Products Division Poonapally, Hosur v. Superintendent of Police, Krishnagiri District,25 the Madras High Court held that even thought Section 18 prohibits the employers from giving immunity to office bearer in respect of the act done by him but when there is violation of any law by the employer, it is open to the office-bearer of the union to approach the appropriate authority under the Factories Act, 1948 or to initiate proceedings for unfair labour practice. The court clarified that the immunity under Section 18(1) of the Trade Unions Act cannot mean that the union must be permitted to achieve its object by resorting to methods which are not permitted by law. The Court also held that even if it is presumed that the strike resorted to by members of the union is valid in law, it does not mean that the union and its members can indulge in any violent activity. If there is any breach of contract by the employer, the appropriate provisions are available to be invoked under Industrial Disputes Act but not to increase pressure on employer by violent means.

III. ENFORCEABILITY OF AGREEMENTS Section 19 grants protection to the agreement (between the members of a registered trade union) whose objects are in restraint of trade26 notwithstanding anything contained in any other law for the time being in force declaring such agreement to be void or voidable. However, this provision shall not enable any civil court to ‘entertain any legal proceedings instituted for the express purpose of enforcing or recovering damages for the breach of any agreement concerning the conditions on which any member of trade union shall or shall not’ (i) sell their goods; (ii) transact business; (iii) work; (iv) employ; or (v) be employed. The Act, however, like a ‘closed shop’ agreement, does not provide for enforceability of an agreement between the management and workers trade union.27 The net effect of the section is to validate agreement which is invalid being in restraint of trade under Section 27 read with Sections 23 and 24 of the Contract Act, 1872.

IV. TERMINATION AT THE INSTANCE OF UNION A trade union or a large number of employees cannot dictate to the employer to

dispense with the services of an employee if they do not like or approve the presence of certain workman in the factory. Thus, in A G Kher v. Atlas Copco (India) Ltd28, the management terminated the services of an employee because the union and majority of workmen did not like the shape of her nose or the colour of her hair and insisted that her services be terminated. The management defended the order of termination on the ground that the other workmen and the union had boycotted her and situation had gone to such a stage that the work of the factory was likely to be affected. While rejecting the plea of the management, the Bombay High Court held that (i) the contention is anamolous because the employer has no grievance against the petitioner and still the employee has been cast off to the wolves. (ii) there cannot be any justification for the order of dismissal of an employee merely because the other employees did not like the shape of the nose of the employee or the colour of her hair, (iii) the employee cannot be removed from service by stroke of pen because a large number of other employees do not approve of the presence of the employee in the factory premises, (iv) if such grounds are allowed for termination of services of an employee, it will open a floodgate of abuse and it would amount to closedshop policy.29

1

2 3

4 5

Newspapers Ltd v. Industrial Tribunal, (1995) 2 LLJ 1 (SC); Working Journalists of the Hindu v. The Hindu, (1961) 2 LLJ 188 (SC); Indian Cable Co. Ltd v. Its Workmen, (1962) 1 LLJ 409 (SC); Workmen of Rohtak General Transport Co. v. Rohtak General Transport Co., (1962) 1 LLJ 654 (SC): Workman v. Dharam Pal Prem Chand, (1965) 1 LLJ 668 (SC). Actually, because of the requirement of registration, the effective difference may be less. Section 40 of IPC defines the word ‘offence’ to mean ‘except in the chapters and sections mentioned in clauses 2 and 3 of this section the word’ offence ‘denotes a thing made punishable by this Code’. In Chapter IV, Chapter V-A and in the following sections namely, Sections 64, 65, 66, 67, 71, 109, 110, 112, 114, 115, 116, 117, 187, 194, 195, 203, 211, 213, 214, 221, 222, 223, 224, 225, 327, 328, 329, 330, 331, 347, 348, 388, 389, and 445, the word ‘offence’ denotes a thing punishable under this Code, or under any special or local law as hereinafter defined. And in Sections 141, 176, 177, 201, 202, 212, 216, and 441, the word ‘offence’ has the same meaning when the thing punishable under the special or local law is punishable under such law with imprisonment for a term of six months or upwards, whether with or without fine. Section 43. Section 17 does not refer to clause (1) of Section 120B of the Indian Penal Code.

6

AIR 1968 Cal. 407. Since Section 18 of the Trade Unions Act, 1926 is based upon English law, it is useful to note the developments in the United Kingdom. Until 1906, wilful interference with the business of employer, e. g., strikes causing financial loss to management was actionable in England and until 1926 in India. In Quinn v. Leathern [1901]. A.C. 495 unions were held liable for illegal conspiracies. Dissatisfaction in England with Taff Value Co. v. Amalgamated Society of Railway Servants [1901]. A.C. 406, decision led to the enactment of the Trade Disputes Act, 1906, which gave legislative disapproval to judicial decision, [see Bertram F Willcox and Others (Ed.). Labour Law and Labour Relation, Indian Law Institute, 43. (1967)] Section 3 of the English Trade Disputes Act, 1906 exempted trade unions from the liability in tort for an act done by a person in contemplation or furtherance of a trade dispute if: (i) it induces a breach of contract of employment; or (ii) it interferes with the trade, business or employment or right to dispose of his capital or his labour as he wills. The scope of immunity afforded in Section 3 was delineated by the House of Lords in Rookes v. Barnard, All E.R. 1964 367. In this case a worker (who resigned from membership of the union) was dismissed by the corporation in consequence of a threat by fellow workers (union members) to strike in breach of a no-strike clause in their service agreement. He brought an action for damages against union officials for tort of intimation. The Court awarded him damages of £7,500. Justice Sach, held that the threat to strike in breach of the agreement was an unlawful act constituting intimidation, and actionable as tort as it had harmed the plaintiff. The Court accordingly held that the defendants were not protected under Section 3. The Court of Appeal revised the findings and held that although the tort of intimidation existed, it did not cover the case of threat to breach of contract. The House of Lords reversed the findings of the Court of Appeal and held that a threat by persons that contracts of employment would he be broken unless the employer conceded their demands was a threat to do something unlawful and constituted the tort of intimidation. Consequently, the person concerned when sued for damages for civil conspiracy could not rely on the protection afforded by the 1906 Act. This decision was nullified by the Trade Disputes Act, 1965. ‘Then followed the decisions in J T Stratford & Sons Ltd, v. Lindley [1965] A.C. 269; Emerald Construction Co. Ltd v. Lowthian & Others [1966] IWLR. 691. Torquay Hotel Co. Ltd v. Cousins & Others [1969] 2 Ch. 106 and Ford Motor Co. Ltd v. Amalgamated Union of Engineering and Foundary Workers [1969] 2 All. ER 481 which did not totally free the industrial relations from the operation of law efforts and the Trade Disputes Act of 1906 was found to be inadequate. Parliament passed the Industrial Relations Act, 1971 to alleviate the position of labour to some extent. This Act was repealed by the Trade Unions and Labour Relations Act, 1974 which was amended in 1976.’ [See E S Vankataramiah. ‘A Brief History of the Liability of a Participant in a Strike in England,’ 23 JILI (1981), 331. 8 Dalmia Cement Ltd v. Naraindas Anandjee Bechar, AIR 1939 Sind 256. 9 Shri Ram Vilas Service Ltd v. Simpson and Group Companies Workers Union, (1979) 2 LLJ 284 (Madras). 10 See Chemosyn Pvt. Ltd v. Kerala Medical and Representatives Association, (1988) Lab. IC 115. 7

11 12 13 14 15 16 17

18 19 20 21 22 23 24 25 26

27 28 29

Anandjee, ‘Impact of Labour Laws on Trade Union Movement,’ a paper read at the All India Labour Economic Conference. Rohtas Industries Staff Union v. State of Bihar, AIR 1963 Patna 170; On appeal AIR 1979 SC 425. Joy Engineering Works v. Staff, AIR 1968 Cal. 407. Reserve Bank of India v. Ashis, 73 CWN 388, (1969). Sri Ram Vilas Service Ltd v. Simpson & Group Company Union, (1979) 2 LLJ 284 (Madras). (1981) 1 LLJ 123. See Jay Engineering Works v. Stage of West Bengal, AIR 1963 Cal. 407; Railway Board, New Delhi v. Niranjan Singh, (1969) 2 LLJ 743; M P Collieries Workers Federation v. United Colliers, (1972) Madh. Pr LJ 79; Sri Rama Vilas Service Ltd v. Simpson & Group Companies Workers Union, (1979) 2 LLJ 284. 2008 LLR 619. (1982) 1 LLJ 123. (1993) Guj. LH 783. 2008 LLR 519. K C P Ltd v. Inspector of Police, Tiruvottiyur, 1993 ILLJ 365. (1987) 2. LLN 294. (1999) 1. LLJ 385. 2009 LLR 62. Section 27 of Indian Contract Act dealing with agreement in restrain of trade reads: Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. Exception 1: One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein; provided that such limits appear to the Court reasonable, regard being had to the nature of the business. Tulsidas Paul v. Second Labour Court, AIR 1963 Calcutta 624. (1992) 1 LLJ 423. For details see chapter 4 Section VI closed shop/union shop.

CHAPTER

10 Recognition of Trade Unions I. THE NEED FOR RECOGNITION OF TRADE UNIONS Recognition of trade unions is the backbone of collective bargaining. It has been debated time and again. But, in spite of the government’s stated policy to encourage trade unions, there is no enforced central legislation on the subject. There are, however, voluntary codes of discipline and legislation in some states. In the absence of any central legislation, management in several states (except where legislation on recognition is in force) have refused to recognize trade unions mainly on five grounds: (i) most of the office-bearers of the union were outsiders,1 (ii) the trade union keeps outsiders disapproved by management — particularly politicians and ex-employees,2 (iii) the union consists of only small number of employees, (iv) there were many rival unions in existence, (v) the trade union was not registered under the Trade Unions Act, 1926.3 However, none of these objections are maintainable because to accept the same would amount to interference in the functioning of the trade unions. Be that as it may, the refusal by employers to recognize or bargain with unions has been a major obstacle to the healthy growth of trade unions and collective bargaining.4

II. RECOGNITION OF TRADE UNIONS IN RETROSPECT

The recognition of trade unions is said to have originated in relation to the government with its servants. Prior to 1933, government servants were prohibited from submitting collective memorials and petitions. When conceded, this right was granted only to combinations which conformed to certain rules. Unions which conformed to these rules were ordinarily granted ‘formal recognition’ and were allowed to conduct negotiation with government on behalf of their members.

A. Appointment of the Royal Commission Problems relating to recognition of trade unions attracted the attention of the Royal Commission on Labour in 1929. It made a comprehensive survey of almost all the problems relating to labour (including recognition of trade unions) and recommended that the ‘Government should take the lead, in case of its industrial employees, in making recognition of union easy and in encouraging them to secure recognition.’

B. Legislative Action on the Royal Commission’s Recommendation Legislative attempt was, however, not made until 1943 for compulsory recognition of trade unions by employers when the Indian Trade Unions (Amendment) Bill, 1943, was placed before the Central Legislative Assembly. The bill was opposed by the management and, therefore, it could not be passed. The bill was revised in the light of discussion made in the assembly and a new bill, namely, the Indian Trade Unions (Amendment) Bill, was introduced three years later in 1946 in the Central Legislative Assembly. This bill was referred to the Select Committee which suggested certain amendments. The bill was passed in November 1947 and received the assent of the Governor General on 20 December 1947. But the Trade Unions (Amendment) Act was never brought into force. Subsequently in 1950, Trade Unions Bill also incorporated provisions for recognition of trade unions. The bill was moved in the legislature but it could not be made into an Act.

C. International Labour Organization Convention At an international level, the concern felt by the International Labour Organization for evolving an international instrument for recognition of trade unions resulted in ILO Convention No. 87 on ‘Freedom of Association and Protection of the Right to Organize’ in 1948 and Convention No. 98 concerning

the right to organize and bargain collectively in 1949. The former states: Workers and employers, without distinction whatsoever, shall have the right to establish and, subject only to the rules of the organization concerned, to join organization of their own choosing without previous authorization. The convention empowers the workers' organization to frame their constitution, to elect representatives and among others to organize their activities. To establish and join federations, Article 8 of the Convention requires that workers and employers and their respective organizations, like all other, shall respect the law of the land. The law of the land shall not be such as to impair nor shall it be so applied as to impair, the guarantees provided for in the constitution. The latter confers protection to workers against acts of anti-union discrimination in respect of their employment. The protection is, directed in respect to acts calculated to: (a) make the employment of a worker subject to the condition that he shall not join a union or shall relinquish trade union membership; and (b) cause the dismissal of, or otherwise prejudice a worker by reason of union membership or because of his participation in union activities outside working hours.

D. Plans and Recognition of Trade Unions Immediately after India became a sovereign democratic republic, the Trade Unions Bill, 1950, concerning the recognition of trade unions through planning was accepted and a Planning Commission was constituted.5 In the evolution of labour policy during the plan, recognition of trade union has been accorded due importance by the planners. Thus, the Second Five-Year Plan (1956–61) paid considerable attention to the problems of recognition of trade unions. In view of the fact that ‘recognition has strengthened the trade union movement in some states‘ the plan recommended that ‘some statutory provisions for securing recognition should be made, where such recognition does not exist at present. In doing so, the importance of one union for one industry in a local area requires to be kept in view’. The Third Five Year Plan (1961–66) envisaged a marked shift in the policy of recognition of trade unions. It was stated in the plan that ‘the basis for recognition of unions, adopted as a part of the Code of Discipline will pave the way for the growth of strong and healthy trade unionism in the country. A union can claim recognition if it has a continuing membership of at least 15 per cent of the workers in the establishment over a period of 6 months and will

be entitled to be recognized as a representative union for an industry or a local area, if it has membership of at least 25 per cent of workers. Where there are several unions in an industry or establishment, the union with the largest membership will be recognized. Once a union has been recognized, there should be no change in its position for a period of 2 years, if it has been adhering to the Code of Discipline.’

E. First National Commission on Labour Another landmark in the recognition of trade unions was reached with the appointment of the National Commission on Labour in 1966. The Commission recommended, inter alia, for statutory recognition of trade unions but no concrete legislative action was taken till 1978.

F. Industrial Relations Bill, 1978 In 1978, the Industrial Relations Bill, inter alia, incorporated the provisions for recognition of trade unions. But the bill which was introduced in Lok Sabha in August 1978, lapsed after the dissolution of the sixth Lok Sabha on 30 August 1978.

G. The Hospital and other Institutions (Settlement of Disputes) Bill, 1982 The bill provides for the recognition of trade unions of workmen. A trade union will not be considered for recognition with respect to an establishment for the purposes of legislation unless it is registered under the Trade Unions Act and each of its office-bearers is a workman in such establishment or any other establishment. In order to be entitled for recognition, such a trade union must have the support of the majority of workmen in the establishment. The representatives of workmen on the Grievance Settlement Committee, Local Consultative Council and Consultative Council would be nominees of recognized trade unions. To sum up, the existing arrangement for the recognition of trade unions reveals that no legislative step at central level has been effectively introduced and enforced for recognition of trade unions. The voluntary arrangement for recognition of trade unions as we shall presently see, has failed to deliver the goods for want of adequate implementation machinery.

III. LAW AND PRACTICE RELATING TO RECOGNITION OF TRADE UNIONS A. Constitution and Recognition of Trade Unions Is the right to grant recognition to trade unions a fundamental right within the meaning of Article 19 (1) (c) of the Constitution? This has been answered in negative6 because the right to form an association does not carry with it the concomitant right7 that the association should be recognized by the employers. Hence, neither withdrawal of recondition8 of the union nor the discontinuance of recognition9 infringes on the fundamental rights guaranteed under Article 19(1) (c) of the Constitution.

B. Legislative Measures In some industrially advanced countries such as the United States of America, Canada, Columbia and Bahrain, collective bargaining and voluntary arbitration have developed considerably and statutory provisions have been made for determining the representative character of trade unions.

1. Trade Unions Act, 1926 The Trade Unions Act does not make any provision for recognition of such a union. Any recognition of union, even if it is a union relating to the employees of the Central Government, is governed by some departmental circulars. Those circulars are administrative in nature and not statutory. Therefore, those circulars also cannot be enforced in a writ petition.10

2. Trade Unions (Amendment) Act, 1947 In India, it has been observed earlier, that there is no central enactment governing recognition of ‘trade unions’. The Trade Unions (Amendment) Act, 1947, however, provided for recognition of unions: (i) by agreements; and (ii) by order of the court on satisfying the conditions laid down in relevant sections of the act. But the Act, as stated earlier, has not been enforced. a. Machinery for Determination of Representative Unions: Section 28E of the Trade Unions (Amendment) Act, 1947, empowers the labour court to grant recognition where a registered trade union having applied for recognition to an employer fails to obtain the same within a period of 3

b.

months. Conditions for Recognition. Section 25D provides that a trade union shall not be entitled for recognition by order of a labour court under Section 25E unless it fulfils the following conditions, namely: (a) that all its ordinary members are workmen employed in the same industry or in industries closely allied to or connected with another; (b) that it is representative of all the workmen employed by the employer in that industry or those industries; (c) that its rules do not provide for the exclusion from membership of any class of workmen referred to in clause (b); (d) that its rules provide for the procedure for declaring a strike; (e) that its rules provide that a meeting of its executive shall be held at least once in every 6 months; (f) that it is a registered trade union and that it has complied with all provisions of this Act.

The aforesaid provisions of the Act raise various problems: (i) Can an employer voluntarily recognize a union which is not registered under the Act and which is in fact a majority union? (ii) Can an employer be compelled to recognize more than one union? Notwithstanding the relative importance of these questions and rather unsatisfactory answer that we get from the statute, the significance of Trade Unions (Amendment) Act, 1947, must not be overlooked. But, even this could not be put into force. c. Rights of Recognized Trade Unions: The recognized trade unions have been conferred the right to negotiate with employers in respect of matters connected with employment, non-employment, the terms of employment or the conditions of labour of all or any of its members, and the employer is under an obligation to receive and send replies to letters sent by the executive and grant interviews to them regarding such matters. d. Withdrawal of Recognition of Trade Unions: Under Section 28G of the Trade Unions (Amendment) Act, 1947, the Registrar or the employer is entitled to apply to the labour court in writing for the withdrawal of recognition on any one of the following grounds: (a) that the executive or the members of the trade union have committed any unfair practice set out in Section 28 J within 3 months prior to the date of the application;

(b) that the trade union has failed to submit any return referred to in Section 281; (c) that the trade union has ceased to be representative of the workmen referred to in Clause (b) of Section 28 D. On receipt of the application, the labour court is required to serve a show cause notice in the prescribed manner on the trade union as to why its recognition should not be withdrawn. If the court is satisfied that trade union did not satisfy conditions for the grant of recognition, it shall make an order declaring the withdrawal of recognition. The aforesaid provisions raise a question as to whether recognition of trade union can be withdrawn on the ground that recognized trade union has lost its status as a representative union. e. Re-recognition of Trade Unions: Section 28H of the Trade Unions (Amendment) Act, 1947, permits the registered trade union whose recognition is withdrawn under subsection (3) of Section 28G to make an application for re-recognition after 6 months from the date of withdrawal of recognition.

3. The Trade Unions Bill, 1950 In 1950, the Trade Unions Bill, 1950 was introduced in the Parliament. The bill was primarily a consolidating measure, but there were some new provisions which were added namely: (a) A trade union of civil servants shall not be entitled to recognition by the appropriate government if it does not consist wholly of civil servants or if such union is affiliated to a federation of trade unions to which a trade union consisting of members other than civil servants is affiliated. (b) A trade union shall not be entitled to recognition by an employer in relation to any hospital or educational institution by order of a labour court if it does not consist wholly of employees of any hospital or educational institutions, as the case may be. (c) A trade union consisting partly of supervisor and partly of other employees, or partly of watch and ward staff and partly of other employees shall not be entitled to recognition by an employer by order of a labour court. The bill also provided for recognition of trade unions where application

for recognition was made by more than one union. The trade union having the largest membership gets preference over others. The recognized unions are given rights such as collecting subscriptions, holding meetings on employer’s premises and of collective bargaining. The labour court is empowered under the bill to order for recognition of unions. The bill could not, however, be brought in the form of the Act because of opposition by several quarters. The bill lapsed on the dissolution of the legislature.

4. State Legislation In some states, there are legislations on the recognition of trade unions. These legislations may be briefly discussed: (a) Maharashtra: The Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practice Act, 1972, provides for the recognition of trade unions for facilitating collective bargaining for certain undertakings and confers certain rights and obligations upon recognized trade unions and also confers certain powers on unrecognized trade unions.11 The Act is applicable in every undertaking employing 50 or more employees on any day of the preceding 12 months.12 The application of the Act can be extended by the state government even in undertakings employing less than 50 employees.13 In order to be registered as recognized trade union (i) the trade union must have a total membership of 30 per cent in the said undertaking; (ii) it must be in existence for the last 6 months; and (iii) it must make an application in the prescribed form to the industrial court.14 When such an application is made and is found to be in order, a notice shall be issued and after considering the objections and holding enquiries, if any, the union would be recognized and a certificate would be issued. On the contrary, if a counter claim is put forward by any other union and it is found that union has the largest number of employees employed in the undertaking, and if that other union also fulfils the requirements which the applicant-union also fulfils for being recognized, then the industrial court is empowered to grant recognition and issue a certificate not to the applicant union but to the other union which has the largest number of employees employed in the undertaking.15 (b) C P and Berar: The C P and Berar Act, 1947 lays down the following conditions for recognition of unions: (i) The membership of union is open to all employees irrespective of caste, creed or colour;

(ii) The union has for the whole of the period of 6 months next preceding the date of application, membership of not less than between 15 and 20 per cent as the state government may prescribe for that local area of the employees employed in the industry in that area; (iii) The constitution of the union shall be such as may be provided under this Act. (c) Madhya Pradesh: The Madhya Pradesh Industrial Relations Act, 1960, provides that a union for the purpose of recognition shall have ‘not less than 25 per cent of the total number of employees employed in the industry in such local area’.

C. Tribunal’s Response The attempt of the union to bring the question of its recognition by management within the purview of ‘industrial dispute’ proved futile. The industrial tribunal has consistently rejected the union’s claim for its recognition by the management on the grounds that: (i) the refusal to recognize the union was not an ‘industrial dispute’ within the meaning of the Industrial Disputes Act, 1947,16 (ii) the specific remedy was provided in the Trade Unions (Amendment) Act, 1947, (unenforced); and (iii) the tribunal cannot take the task which the labour courts are required to perform.17

D. Non-statutory Code of Discipline in Industry To fill the lacuna in the Central Law, the 16th Session of the Indian Labour Conference provides for the recognition of trade unions. It lays down the following criteria for their recognition: 1. Where there is more than one union, a union claiming recognition should have been functioning for at least one year after registration. Where there is only one union, this condition would not apply; 2. The membership of the union should cover at least 15 per cent of the workers in the establishment concerned. Membership would be counted only of those who had paid their subscription for at least 3 months during the period of 6 months immediately preceding the reckoning; 3. A union may claim to be recognized as a representative union for an industry in a local area if it has a membership of at least 25 per cent of the workers of that industry in that area;

4. 5.

When a union has been recognized, there should be no change in its position for a period of 2 years;

Where there are several unions in an industry or establishment, the one with the largest membership should be recognized. 6. A representative union for an industry in an area should have the right to represent the workers in all the establishments in the industry, but if a union of workers in a particular establishment has membership of 50 per cent or more of the workers of that establishment, it should have the right to deal with matters of purely local interest such as, for instance, the handling of grievances pertaining to its own members. All other workers who are not members of that union might either operate through the representative union for industry or seek redress directly. 7. In the case of trade union federations which are not affiliated to any of the four central organizations of labour, the question of recognition would have to be dealt with separately. 8. Only unions which observed the Code of Discipline would be entitled to recognition. The code, however, has not been effectively implemented and it is respected more in its breach than in its observance. The failure of enforcement machinery of the code is revealed by the fact that during 1960–70,10,402 cases of breach of Code of Discipline were reported. In addition to this, there are numerous unreported cases as well. The Central Implementation and Evaluation Division has done much work in this regard. The division secured recognition to 24 unions during 1968–70.18 Faced with the problem of infringement of the Code of Discipline, the committee took certain decisions: (1) When a union is recommended for recognition by the implementation machinery after proper verification of its membership, the employer should recognize it within a month. If he fails to do so, he should be considered responsible for infringement of the Code of Discipline and action should be taken against him by the central organization concerned; (2) A union which is not affiliated to any of the four central organizations of workers should wait for a period of one year after it has accepted the Code of Discipline before its claim for recognition can be considered; (3) When the breach of the code by a union has been established by the appropriate implementation machinery, it would be open to the employer concerned to derecognize the union.

However, the question of recognition of the union by the employer raises various doubts: (i) whether the gap in law will be filled by the provisions of the code? (ii) whether the provisions of the code particularly regarding the recognitions of the union can effectively be implemented? (iii) whether the provisions of code have also been adopted by such organizations and unions which are not affiliated to central federation? The division bench of the Madras High Court in Tamil Nadu Electricity Board v. Tamil Nadu Electricity Board Accounts and Executive Staff Union19 gave a helping hand in strengthening provisions for recognition of trade union under the voluntary Code of Discipline. In this case, the name of the petitioner was changed from Tamil Nadu Electricity Subordinates Union to Tamil Nadu Electricity Board Accounts and Executive Staff Union. Originally, the membership was open to all workmen who were engaged in clerical, accounting and other work. The coverage was extended to employees covered under Section 2 (i) of the Industrial Employment (Standing Orders) Act, 1946. This change was communicated to the management with a request to accord recognition to the changed name of the trade union but the management withdrew recognition without giving a notice on the ground that the recognition granted to it was for clerical workmen and not to workmen covered by Section 2 (i). Aggrieved by this order, the union preferred a writ petition in the Madras High Court; single judge of the High Court allowed the petition. It was submitted by the management that the writ petition was not maintainable because recognition was not granted under any statute. Rejecting the contention, Chief Justice Ismail, observed: [T]he Code of Discipline in industry does contemplate recognition and that it was only under that Code that recognition was applied for and granted. It is not disputed that the grant of recognition confers a status on a body like the respondent union to represent the workers in a particular category with reference to their service conditions, with the management; in other words, it becomes a bargaining agent on behalf of the group of workers with reference to which it was recognized. Withdrawal of that status or recognition will certainly bring about adverse consequences on a body like the respondent union, and with reference to such adverse consequences, even an order of withdrawal like the one made by the appellant if it is illegal or is in violation of principles of natural justice, certainly a body like the respondent union can approach this court under Art. 226 of

the Constitution. Therefore we reject the contention of the learned counsel for the appellant that the writ petition was not maintainable. It is thus evident that courts may interfere under Article 226 of the Constitution even where the recognition granted by the employer under the nonstatutory Code of Discipline is withdrawn on flimsy grounds or erroneous basis or in violation of the principles of natural justice. Do principles of natural justice apply in the de-recognition of a trade union recognized under the Code of Discipline by the management? This issue was raised in Secretary, Meters Staff Association v. Union Electrical Industries Ltd.20 Here, the staff association was recognized by a government company wholly owned and controlled by the government under the Code of Discipline. After some time, the recognition enjoyed by the association was withdrawn. Thereupon, the association filed a writ petition before the Kerala High Court. The questions arose: (i) whether the discretion exercised by the management to derecognize the association could be interfered with under Article 226? and (ii) whether the management is bound to apply the principles of natural justice in derecognizing a union? While dealing with these questions, the court observed: Recognition certainly confers a status on the union to represent the workers and as a bargaining agent, unions have come to enjoy various facilities by virtue of such status. De-recognition involves deprivation of such status, right and facilities. It certainly involves serious adverse consequences. No doubt the decision to derecognize a particular union can be regarded as an administrative decision or order. Nevertheless, since it involves serious adverse consequences to the union and the employees organized under the union, their right to hearing before the decision is taken has certainly to be recognized, as part of the principle of fair play in action. If the decision is taken without giving a hearing to the union, it has to be regarded as violative of principles of natural justice and must be treated as void.21 In the absence of any statutory recognition of trade unions, the question has arisen whether a civil suit is maintainable on an action by a trade union under the voluntary Code of Discipline? This issue was answered in the negative in T C C Thozhilali Union v. TCC Ltd.22 In this case, the management and workers represented by six unions arrived at a settlement over the then existing differences and drew up a memorandum of settlement. The settlement inter alia,

provided that the management recognized all the six unions as the collective bargaining agents of the workmen. The settlement was operative for 4 years and was to be governed by the Code of Discipline. When the period of 4 years was about to expire, the company refused to allow the plaintiffs union to enter into a ‘Long Term Settlement’. The union then filed a civil suit praying that the management be restrained from entering into any settlement or agreement with other unions. The trial court dismissed the suit. The lower appellate court, on appeal by the union upheld the findings of the court below. The union thereupon filed a second appeal before the Kerala High Court which observed: The position, therefore, is—(i) ‘recognition dispute’ is an industrial dispute; (ii) recognition is a matter of volition on the part of the employer; (iii) a trade union has neither common law right nor statutory right which enables and entitles it to compel an employer to give recognition to it as the bargaining agent of its members; and (iv) since it has no such common law right, a ‘recognition disputed’, cannot be said to be one emanating from, and emerging out of, any right under the general common law; and, therefore (v) principle No. 2, stated by the Supreme Court in the Premier Automobiles case is not attracted to a ‘recognition dispute’, no matter that a trade union has no such right under any statute either. The court held that the lower courts rightly held that the suit brought by the union in respect of the ‘recognition dispute’ could not be entertained by a civil court.

E. Claim of Trade Union for Recognition Based on Circulars —Not Maintainable In K V Sridharan v. S Sundaramoorthy23, the division bench of the Madras High Court held that the Trade Unions Act, 1926 does not make any provision for recognition of a union based on circular. Any recognition of union, if it is a union relating to the employees of the Central Government, is governed by some departmental circulars. These circulars are administrative in nature and not statutory. Therefore, these circulars cannot be enforced in a writ petition. The aforesaid view was reiterated in Port and Dock Labour Union affiliated to Bharatiya Mazdoor Sangh v. Union of India24. In this case, the petitioner-trade union sought a declaration by Chennai Port Trust that it was a

recognized trade union entitled to statutory benefits under a circular issued by the government. The Madras High Court rejected the claim and held that in the absence of any law relating to trade union recognition in the state of Tamil Nadu, the claims of the union can be based only upon the circulars and various communications issued by the ministry. In fact, as per the communication issued by the registry, pending finalization of policy by the ministry, the first seven unions alone have to be recognized and as rightly held by the Port Trust, those seven unions even as per the check-off verification conducted during 2010, are having more membership than the petitioner union.

F. Secret Ballot Method for Determining the Representation Character of Trade Union In Food Corporation of India Staff Union v. Foods Corporation of India25, the Food Corporation of India (FCI) and the union representing the workmen agreed to follow the secret ballot method for determining the representative character of the trade union. They approached the Supreme Court to lay down as to how the method of secret ballot should be tailored to yield the correct result. Keeping in view the importance of the matter, the Court issued notice to all the major all India trade union organizations on this aspect. Pursuant to this notice, some trade union organizations appeared and were heard by the Court. The Supreme Court, after perusing various documents and records, directed that the following norms and procedure shall be followed for assessing the representative character of the trade unions by the secret ballot system: (i)

(ii)

(iii) (iv)

As agreed to by the parties, the relative strength of all the eligible unions by way of secret ballot be determined under the overall supervision of the Chief Labour Commissioner (Central) (CLC). The CLC will notify the returning officer who shall conduct the election with the assistance of the FCI. The returning officer shall be an officer of the Ministry of Labour, Government of India. The CLC shall fix the month of election while the actual date/dates of election shall be fixed by the returning officer. The returning officer shall require the FCI to furnish sufficient number of copies of the lists of all the employees/workers (Categories III and IV) governed by the FCI (Staff) Regulations, 1971 borne on the rolls of the FCI as on the date indicated by the CLC. The list shall be prepared in the proforma prescribed by the CLC. The said list shall constitute the voters list.

(v)

(vi)

(vii)

(viii)

(ix)

(x)

The FCI shall display the voters list on the notice board and other conspicuous places and shall also supply copies thereof to each of the unions for raising objections, if any. The unions will file the objection to the returning officer within the stipulated period and the decision of the returning officer shall be final. The FCI shall make necessary arrangement to: (a) give wide publicity to the date/dates of election by informing the unions and by affixing notices on the notice boards and also at other conspicuous places for the information of all the workers; (b) print requisite number of ballot papers in the proforma prescribed by the CLC incorporating therein the names of all the participating unions in an alphabetical order after different symbols of respective unions; (c) the ballot papers would be prepared in the proforma prescribed by the CLC in Hindi/English and the regional language concerned; (d) set up requisite number of polling stations and booths near the premises where the workers normally work; and (e) provide ballot boxes with requisite stationary, boards, sealing wax, etc. The returning officer shall nominate a presiding officer for each of the polling stations/booths with requisite number of polling assistants to conduct the election in an impartial manner. The presiding officers and the polling assistants may be selected by the returning officer from amongst the officers of the FCI. The election schedule indicating the nominators, scrutiny of nomination papers, withdrawal of nomination, polling, counting of votes and the declaration of results shall be prepared and notified by the returning officer in consultation with the FCI. The election schedule shall be notified by the returning officer well in advance and at least one month's time shall be allowed to the contesting unions for canvassing before the date of filing the nominations. To be eligible for participating in the election, the unions must have valid registration under the Trade Unions Act, 1926 for one year with an existing valid registration on the first day of filing of nomination. The presiding officer shall allow only one representative to be present

(xi)

(xii)

(xiii)

(xiv)

(xv)

(xvi)

at each polling station/booth as observer. At the time of polling, the polling assistant will first score out the name of the employee/workman who comes for voting, from the master copy of the voters list and advice him thereafter to procure the secret ballot paper from the presiding officer. The presiding officer will hand over the ballot paper to the workman/employee concerned after affixing his signatures thereon. The signatures of the workman/employee casting the vote shall also be obtained on the counterfoil of the ballot paper. He will ensure that the ballot paper is put inside the box in his presence after the voter is allowed to mark on the symbol of the candidate with the inked rubber stamp in camera. No employee/workman shall be allowed to cast his vote unless he produces his valid identity card before the presiding officer concerned. In the event of non-production of identity card due to any reason, the voter may bring in an authorization letter from his controlling officer certifying that the voter is the bona fide employee of the FCI. After the close of the polling, the presiding officer shall furnish detailed ballot paper account in the proform prescribed by the CLC indicating total ballot papers received, ballot papers used, unused ballot papers available, etc., to the returning officer. After the close of the polling, the ballot boxes will be opened and counted by the returning officer or his representative in the presence of the representatives of each of the unions. All votes which are marked more than once, spoiled, cancelled or damaged, etc., will not be taken into account. The contesting unions through their representatives present at the counting place may be allowed to file applications for re-counting of votes to the returning officer. The request would be considered by the returning officer and in a given case, if he is satisfied that there is reason to do so, he may permit re-counting. However, no application for re-counting shall be entertained after the results of the poll are declared. The result of voting shall be compiled on the basis of valid votes polled in favour of each union in the proforma prescribed by the CLC and signatures obtained thereon from the representatives of all the unions concerned as a proof of counting having been done in their presence.

(xvii)

(xviii)

(xix)

After declaring the result on the basis of the votes polled in favour of each union by the returning officer, he will send a report of his findings to the CLC. The union/unions obtaining the highest number of votes in the process of election shall be given recognition by the FCI for a period of 5 years from the date of the conferment of the recognition. It would be open to the contesting unions to object to the result of the election or any illegality or material irregularity which might have been committed during the election. Before the returning officer such objection can only be raised after the election is over. The objection shall be heard by the CLC and disposed of within 30 days of the filing of the same. The decision of the CLC shall be final, subject to challenge before a competent court, if permitted under law.

The Court also held that it would be open to the CLC to deal with any situation not covered by the procedure detailed above. He may do so in consultation with the returning officer and the FCI. The Court accordingly directed the CLC and the FCI to hold election in accordance with the procedure prescribed by this order on the date specified therein.

G. Method of Recognizing a Trade Union In M R P Workers Union v. Govt of Tamil Nadu26, it was held in the absence of specific statutory provisions in the Trade Unions Act, 1926 for recognition of trade union as representative body of workmen in the industry, the same would be determined by state government and labour commissioner. On receipt of such an application, the concerned labour commissioner will issue notice to the two unions, within 2 weeks from the date of receipt of the application, calling upon them to submit their membership registers and the necessary supportive documents under the Code of Discipline within 2 weeks from the date of receipt of the notice by them. The notice will call upon them to produce their records as per the Code of Discipline during the period of 6 months prior to the date of notice. The labour commissioner shall thereafter proceed to decide as to which union is the representative union of the workmen: The Court observed that we cannot permit the management to say that: The union which shows larger membership at the end of the exercise will not be recognized by the management. Recognition is for the purpose of representing the causes of the workmen in

various forum before the management and various authorities under the labour law. It is not a determination available for the sole satisfaction of the management. It is a factual determination and the determination leads to a status. The union which establishes larger membership at the end of the aforesaid exercise, shall be recognized as the representative union. In Petrolium Employee's Union v. Chief Labour Commissioner27, the Court ruled that once a trade union has given its consent for verification of membership by secret ballot, it is estopped from challenging the same in a writ petition.

H. Rights of Unrecognized Unions The management is obliged to hear a trade union registered though not recognized and resolve its dispute as far as possible without resorting to conciliation or adjudication processes. Though the management is not obliged to recognize a trade union but at the same time, it cannot refuse to hear grievances voiced by it in respect of service conditions or its members. There is no provision in the Industrial Disputes Act or Trade Unions Act prohibiting the management from negotiating, discussing or entering into settlement with an unrecognized union. It is only in case where the demands of unrecognized union are already seized of by the recognized union, such demand would not be maintainable. Direction can be given to management falling under Article 12 of the Constitution.28 The Supreme Court, in Chairman, State Bank of India v. All Orissa State Bank Officers Association29 delineated the rights of recognized and unrecognized trade unions, while interpreting the provision of Rule 24 of the verification of membership and recognition of Trade Union Rules, 1974 framed by the state of Orissa which is as follows: 22(a) Rights of Unrecognized Union—to meet and discuss with the employer or any person appointed by him in that behalf the grievances of any individual member relating to his service conditions. 22(b) To appear on behalf of its members employed in the establishment in any domestic or departmental enquiry held by the employer and before the conciliation officer/labour court/industrial tribunal or arbitrator.

While interpreting the aforesaid clause, the Court held that an unrecognized trade union unlike ‘recognized trade union’ has (i) no right to participate in the discussions/negotiations regarding general issues affecting all workmen/employees; and (ii) settlement, if any, arrived at as a result of such discussion/negotiations is not binding on all workmen/employees. But it has (i) the right to meet and discuss with the management/employer about the grievances of any individual member relating to his service conditions; and (ii) to represent an individual member in domestic inquiry or departmental inquiry and proceedings before the conciliation officer and adjudicator. The Court gave two reasons in support of its conclusion: (i) the right of the citizens of this country to form an association or union is recognized under Article 19(1) (c) of the Constitution; (ii) for the sake of industrial peace and proper administration of the industry, it is necessary for the management to seek cooperation of the entire work force. The Court added that the very fact that certain rights are vested in a nonrecognized union shows that the Trade Unions Act, 1926 and the rules framed thereunder acknowledge the existence of a non-recognized union. Such a union is not a superfluous entity and it has relevance in specific matters relating to administration of the establishment. Thus, the management/employer cannot outrightly refuse to have any discussion with a non-recognized union in matters relating to service conditions of individual members and other matters incidental thereto.

I. Response of the First National Commission on Labour (a) Scheme for recognition: The First National Commission on Labour has recommended compulsory recognition of trade unions by the employers under the central legislation in industrial undertakings employing 100 or more workers or where the capital invested is above the stipulated size. In order to claim recognition by the individual employer, the union must have the total membership of 30 per cent of the plant or establishment. The industry-wise union in local area may, however, be recognized if the minimum membership is 25 per cent. The commission has recommended that where recognition is sought by more than one union, the larger union should be recognized. But the commission was in favour of recognition of industry-wise union over plant or unit union. The commission’s recommendations are open to several objections: First, recognition of either industry-wise union or unit-wise union may lead to industrial unrest and rivalry. Second, the two alternative choices given to Industrial

Relations Commission may also lead to confusion and thus, no uniform method may be followed. It may, in effect, affect industrial peace and harmony. (b) Mode of determination of representative character. The National Commission on Labour has suggested alternative methods, namely, ‘verification’ and ‘ballot’. It suggested that the proposed Industrial Relations Commission should be empowered to decide the representative character of union either by examination of membership or holding an election through secret ballot of all employees. The alternative choice given by the National Commission may also lead to confusion and thus no uniform method may be followed. It may, in effect, also affect industrial peace and harmony. Out of the two methods, the secret ballot method is a democratic method and is more acceptable for a welfare society like ours. (c) Machinery for determination of representative character: The National Commission recommended that the Industrial Relations Commission at centre and states (as proposed by the commission) should be empowered to issue certificates to unions as representatives for collective bargaining. (d) Right of recognized trade unions: The National Commission on Labour recommended that the recognized trade unions should be given certain rights and privileges such as: (i) right of sole representation; (ii) entering into collective agreement on terms of employment and conditions of service; (iii) collection of membership subscription within the premises of the undertaking, the right to check-off; (iv) holding discussion with departmental representatives of its workers–members within factory premises; (v) inspecting by prior agreement the place of work of any of its members; and (vi) nominating its representatives on works/grievance committees and other bipartite committees. As regards the rights of unrecognized trade unions, the commission suggested that they should enjoy the right to represent individual grievances relating to termination of service and other conditions of service. The proposed rights of recognized trade unions suggested by the National Commission on Labour has been subject of criticism by AITUC and other organizations. According to them, the proposed rights are inadequate. They suggested that more rights should be conferred upon the recognized trade unions.

J. Trade Unions and Industrial Disputes (Amendment) Bill, 1988.

The bill seeks to provide for the constitution of a bargaining council to negotiate and settle industrial disputes with the employer. Thus, under Chapter II-D, every employer is required to establish a bargaining council for the industrial establishment for which he is the employer consisting of representatives of all the trade unions having membership among the workmen employed in the establishment, not being trade unions fenced on the basis of craft or occupation; each trade union being called a bargaining agent. Where there are more than one trade unions having members among the workmen employed in an industrial establishment, the representation of all such trade unions on the bargaining council shall be in proportion to the number of the members in that establishment as determined under the Trade Unions Act, 1926. The trade union with the highest membership of workmen employed in that establishment and having in no case, less than 40 per cent of the total membership among the workmen shall be known as the principal bargaining agent. Where there is only one trade union having members among the workmen employed in an industrial establishment, that trade union shall be the bargaining council for that establishment and such bargaining council shall also act as the sole bargaining agent. The chairman of the bargaining council shall be a person chosen by the principal or sole bargaining agent from amongst its representatives. However, if there is no trade union having membership of at least 40 per cent of the total membership of the trade unions of workmen in an industrial establishment, the one with the highest membership among the workmen employed in the establishment shall have the right to nominate one of its representatives as the chairman of the bargaining council. If there is no trade union having members among the workmen employed in an industrial establishment, a workmen’s council shall be established by the employer in the prescribed manner and such workmen’s council shall be the bargaining council for that establishment. The state government is empowered to establish a bargaining council in a class of industry in a local area in respect of which it is the appropriate government on the basis of the relative strength of the trade unions of workmen concerned as determined under the provisions of the Trade Unions Act, 1926, in such manner as may be prescribed. Similarly the Central Government may establish a bargaining council in respect of an industrial undertaking or a class of industry in respect of which it is

the appropriate government on the basis of the relative strength of the trade unions of workmen concerned as determined under the provisions of the State Trade Unions Act in the prescribed manner. The Central Government is also empowered to set up, in consultation with the state government concerned, a council at the national level to be called the National Bargaining Council in respect of a class of industry or a group of central public sector undertakings in relations to which the appropriate government is the state government. The National Bargaining Council shall comprise representatives of the Central Government, the state government concerned, employers or trade unions of employers and trade unions of workmen, being represented in proportion to their relative strength of membership as determined under the provisions of the Trade Unions Act, 1926. Every bargaining council establishment under Section 9, other than a national bargaining council establishment shall be registered with the labour court in such manner as may be prescribed. The term of office of bargaining council registered under this chapter shall be 3 years. A registered bargaining council shall, subject to the provisions of this Act be entitled: (a) to raise industrial disputes with the employer or employers; (b) to settle industrial disputes with the employer or employers; (c) to sign on behalf of the workmen the documents settling industrial disputes; (d) to represent the workmen in any industrial dispute; and (e) to exercise such other powers as may be prescribed. Where a labour court finds a bargaining agent guilty of indulging in all or any of the unfair labour practices listed at item No. 1 (illegal strike), item No. 5 (in so far as it relates to go slow) and item No. 8 (violence) of Part II of the Fifth Schedule, it may disqualify such bargaining agent to function for such period as may be determined by it.

K. Response of the Second National Commission on Labour The (Second) National Commission on Labour which submitted its report to the Government of India on 29 June 2002 has recommend that the negotiating agent should be selected for recognition on the basis of the check off system. A union with 66 per cent membership be entitled to be accepted as the single negotiating agent, and if no union has 66 per cent support, then unions that have the support

of more than 25 per cent should be given proportionate representation on the negotiating college. The commission also suggested that recognition once granted, should be valid for a period of 4 years, to be coterminus with the period of settlement. The individual workers’ authorization for check off should also be coterminus with the tenure of recognition of the negotiating agent or college.

L. An Appraisal A central law on recognition of trade union is the need of the hour. It should provide for the compulsory recognition of trade unions. It is necessary in the interest of both trade unions and employers. It will also facilitate the settlement of disputes and will make such settlements more enduring. It will also, in effect, prevent the number of disputes which arise from inter-union rivalry. Indeed, it will impose a legal obligation upon the disinterested and adamant employers to recognize a representative trade union for the purposes of collective bargaining. This will also bring into application uniform standards for all trade unions seeking recognition.

1 2 3 4 5 6

7

8 9 10 11 12 13 14

Paramount Films India Ltd v. Their Workmen, (1950) LLJ 690. Report of the Royal Commission on Labour, (1931) 325. Id. at 326. Suresh C Srivastava, 'Trade Unionism in India", Review of Contemporary Law, Brussels and Paris, (1970), 83. Govt. of India, Report of the Committee on Labour Welfare (1969), 15. A C Mukerjee v. Union of India, (1972) 2 LLJ 1978 (Calcutta); M A David v. KSE Board, (1973) 2 LLJ 466, (Kerala) 1973; Tamil Nadu Electricity Board Accounts Executive Staff Union v. Tamil Nadu Electricity Board, Madras, (1980) 2 LLJ 246. All India Bank Employees Association v. National Industrial Tribunal, (1961) I LLJ 375; Raghubir Dayal Jai Prakash v. Union of India, AIR 1962 SC 363; DAV College Jullunder v. State of Punjab, AIR 1971 SC 1737. M A David v. KSE Board, op. cit., supra note 6. Tamil Nadu Electricity Board, op. cit., supra note 6. K V Sridharan v. S Sundamoorthy, 2009 LLR 414. See the Preamble of the Act. Section 10(1). Proviso to Section 10(1). Section 11.

15 Pfizer Employees' Union v. Mazdoor Congress, (1980) 1 LLJ 65 (Bombay). 16 Premier Automobiles Ltd. v. K S Wadke, (1975) 2 LLJ, 445; TCC Thozhilali Union v.

17 18 19 20 21 22 23 24 25 26 27 28 29

TCC Ltd, (1982) 1 LLJ 425; Premier Construction Co. Ltd v. Their Workmen, (1949) ICR 708, Beedi Factory v. Their Employees, (1950) LIJ 207; Nellimarla Jute Mills Co. Ltd v. Their Staff, (1950) LLJ 394. Ibid. Government of India, Annual Report of the Ministry of Labour and Employment of Relevant Years. 1981 Lab. IC 1138. (1984) 2 LLJ 446. Id. at 449. TCC Thozhilali Union v. TCC Ltd, (1982) 1LLJ 425 at 428–29. (2009) 3 MLJ 1320. (2012) 1 LLJ 650. 1995 Supp (1) SCC 678 (SC). (2009) 4 LLJ 685. 2010 LLR 214. See Indian Airlines Ltd case, 1997 FLR 489. 2000 Lab. I.C. 2153.

CHAPTER

11 Collective Bargaining I. THE PERSPECTIVE In the era of laissez faire, employers enjoyed unfettered right to hire and fire. They had vastly superior bargaining power and were in a position to dominate over workmen in every conceivable way. They naturally preferred to settle terms and conditions of employment of workmen and abhored statutory regulation thereof unless, of course, it was to their advantage. However, this tendency brought to the surface the potentialities of collective bargaining. The only way to improve the situation was to do away with the domination of any one class over another. The emergence of legal recognition of united power is based upon the strong bargaining power of management as against weak and unorganized workmen. Collective bargaining ‘is the foundation of this movement and it is in the interest of labour that statutory recognition has been accorded to trade unions, and their capacity to represent workmen, who are members of such bodies. But, of course, there are limits to this doctrine, for otherwise, it may become tyranny, stifling the freedom of an individual worker. It is not the law that every workmen must necessarily be a member of the trade union, and that outside its fold, he cannot exercise any volition or choice in matters affecting his welfare… The representative powers of organization of labour, with regard to enactments, such as the Industrial Disputes Act, will have to be interpreted in the light of the individual freedoms guaranteed in the Constitution and not as though such freedoms did not independently exist, as far as organized labour is concerned.’1

The system of collective bargaining as a method of settlement of industrial disputes has been adopted in industrially advanced countries like the United States of America and United Kingdom and has also recently been adopted in some Asian and African countries. India, which has adopted compulsory adjudication system, has also accepted in principle the system of collective bargaining but has hardly taken any steps, legislative or otherwise, to apply it in practice.

II. ILO PRINCIPLES ON THE RIGHT TO COLLECTIVE BARGAINING The standards and principles emerging from the ILOs conventions, recommendations and other instruments on the right to collective bargaining, and the principles set forth by the Committee and the Freedom of Association may be summarized as follows : a. The right to collective bargaining is a fundamental right endorsed by the members of the ILO in joining the organization, under which they have an obligation to respect, to promote and to realize, in good faith (ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up) the right to collective bargaining. b. Collective bargaining is a right of employers and their organizations, on the one hand, and organizations of workers, on the other hand (first-level trade unions, federations and confederations); only in the absence of these latter organizations, may representatives of the workers concerned conclude collective agreements. c. The right to collective bargaining should be recognized throughout the private and public sectors and it is only the armed forces, the police and public servants engaged in the administration of the state who may be excluded from the exercise thereof (Convention No. 98).

III. CONCEPT AND MEANING OF COLLECTIVE BARGAINING The expression ‘collective bargaining’ was coined by Sydney and Beatrice.2 This was widely accepted in the United States of America.

The meaning of the expression ‘collective bargaining’ has been the subject matter of controversy and it is defined in a variety of ways. Harbison defines ‘collective bargaining’ as: a process of accommodation between two institutions which have both common and conflicting interests.3 In 1960, in the manual published by the International Labour Office, ‘collective bargaining’ has been defined as: negotiations about working conditions and terms of employment between an employer, a group of employers or one or more employers' organization on the one hand, and one or more representative workers organizations on the other, with a view to reaching agreement.4 Golden, however, treats collective bargaining: as a measure to distribute equitably the benefits derived from industry among all the participants including the employees, the unions, the management, the customers, the suppliers and the public.5 The aforesaid definitions of collective bargaining indicate that there is no unanimity among the authors regarding the meaning of collective bargaining. Be that as it may, collective bargaining is a process by which the terms of employment and conditions of service are determined by agreement between management and the union. In effect, ‘it is a business deal (which) determines the price of labour services and the terms and conditions of labour's employment.’6 The Supreme Court in Karnal Leather Karmachari Sangathan v. Liberty Footwear Co.7 defines collective bargaining as: A technique by which disputes as to conditions of employment are resolved amicably, by agreement, rather than by coercion. The dispute is settled peacefully and voluntarily, although reluctantly, between labour and management. An analysis of ‘collective bargaining’ requires the description of: (i) parties to collective bargaining; (ii) subject-matter of collective bargaining; and (iii) objects of collective bargaining. Let us discuss them.

A. Parties to Collective Bargaining Collective bargaining involves two parties, namely, management represented

either alone or through employers' association or federation of employers on the one hand and workers represented either through a union or workers' federation, on the other hand. The latter, where provisions exist under law are known as bargaining agents. These two parties are directly involved in the process of collective bargaining. It has, however been debated time and again that a representative of the public should also be included to represent the interests of public at the bargaining table, but has not yet been used much.8

B. Subject Matter of Collective Bargaining The International Labour Organization has divided the subject matter of collective bargaining into two categories: (i)

Those which set out standards of employment which are directly applicable to relations between an individual employer and worker; (ii) Those which regulate the relations between the parties to the agreement themselves and have no bearing on individual relations between employers and workers. The first category includes subjects like wages, working hours (including overtime), holidays with pay and period of notice for termination of contract. The second category, according to ILO, includes eight items viz., (i) provisions for enforcement of collective bargaining; (ii) methods of settling individual dispute; (iii) collective disputes including grievance procedure and reference to conciliation and arbitration; (iv) recognition of a union as bargaining agent for the workers; (v) giving of preference in recruitment to union members seeking employment; (vi) duration of the agreement; (vii) undertaking not to resort to strike or lockout during the period; and (viii) procedures for negotiation of new agreements.9

C. Objectives of Collective Bargaining The International Confederation of Free Trade Union called collective bargaining ‘A Workers’s Bill of Rights’. It enumerated the following objects of the union in collective bargaining: 1. to establish and build union recognition as an authority in the work place; 2. to raise workers' standard of living and win a better share in company's profits; 3. to express in practical terms the workers' desire to be treated with due respect and to achieve democratic participation in decisions affecting

their working conditions; 4.

to establish orderly practices for sharing in these decisions and to settle disputes which may arise in day-to-day life of the company; 5. to achieve broad general objectives such as defending and promoting the workers' interests throughout the country.10 The ILO also states that: In collective bargaining, the object is to reach agreement on wages and other conditions of employment about which the parties begin with divergent viewpoints but try to reach a compromise. When a bargain is reached, the terms of the agreement are put into effect.11 Thus, it is evident that the prime object of collective bargaining is to resolve the differences between the parties in respect of employment, nonemployment, terms of employment and conditions of service of the members of the union.

D. Duration of Collective Bargaining The duration of collective bargaining agreements vary from agreement to agreement. There is a general tendency on the part of the union to have the contract of short duration, but management on the other hand prefers agreements of long duration: In the United States, many of the contracts are for a period of one to three or more years, with options to renew. In the United Kingdom, ‘open end’ contracts which can be renegotiated on notice at any time, are the rule. In the Scandinavian countries, one-year contracts with renewal clauses are usual.12

IV. PREREQUISITES FOR COLLECTIVE BARGAINING A. Freedom of Association In order to achieve collective bargaining, it is essential to ensure that the denial of such freedom negates collective bargaining. In this respect, it is significant to note that the International Labour Organization adopted the ‘Convention No. 87 concerning freedom of association and protection of the right to organize’ which

seeks to provide for freedom of association. India has, however, not formally ratified this convention perhaps due to administrative and constitutional problems. However, Article 19(1) (c) of the Constitution of India guarantees ‘the right to form associations or unions’. Earlier the Trade Unions Act, 1926 impliedly concedes the freedom of association by conferring certain rights, duties and immunities upon members of registered trade unions. However, there is a need to ratify the ILO Convention.

B. Strong and Stable Trade Unions For the success of collective bargaining, it is also essential that there should be strong, independent, democratic and well organized trade unions. Unorganized labour is the hurdle in its success. In India, however, the unions are generally weak. Rivalry on the basis of caste, creed, religion is another characteristic of Indian trade unions which comes in the way of successful collective bargaining. Further, division on the basis of political ideologies further retards the growth of trade unions. Moreover, most of the workers are illiterate. Lastly, the financial position of trade unions is weak and some of them are even unable to maintain a proper office.

C. Recognition of Trade Unions Recognition of trade unions as bargaining agents is the backbone of collective bargaining. We have already discussed the problems relating to recognition of trade unions in the previous chapter.

D. Willingness to Give and Take The mutual trust and appreciation of the viewpoints of the management and union is also essential. Said the ILO: The fact of entering into negotiations implies that the differences between two parties can be adjusted by compromise and concession in the expectation that agreement can be reached. Obviously, if one or both sides merely make demands when they meet, there can be no negotiation or agreement.13

E. Absence of Unfair Labour Practices or Victimizations Statutory provisions for unfair labour practice or victimization are another prerequisite of collective bargaining. We will discuss in Chapter 12 unfair labour

practices and victimizations.

V. ADVANTAGES AND DISADVANTAGES OF COLLECTIVE BARGAINING A. Advantages of Collective Bargaining Collective bargaining has been preferred over compulsory adjudication system for several reasons; (i) it is a system based on bipartite agreements and as such is superior to any arrangement involving third party intervention in matters which essentially concern employers and workers;14 (ii) it is a quick and efficient method of settlement of industrial disputes and avoids delay and unnecessary litigation;15 (iii) it is a democratic method of settlement of industrial disputes.16

B. Disadvantages of Collective Bargaining According to Willcox, it has two vital defects: One of these defects is that there are situations in which a serious strike and a prolonged strike simply cannot be tolerated.17 The second great flaw in collective bargaining as a solver of labour disputes is the lack of representation of the public interest at the bargaining table. Whether prices can be raised without affecting the ability to sell goods or services, unions and companies are in a position to agree on wage increase that will cause higher prices; then the consumer must shoulder the full burden of their agreement.18

VI. COLLECTIVE BARGAINING IN INDIA Collective bargaining as a method of settlement of industrial disputes is comparatively a recent development. However, it has been debated ever since the days of the Royal Commission of Labour. The planners paid considerable attention to the adoption of the system of collective bargaining to solve labour disputes in India.

A. Plans and Collective Bargaining

The First Five-Year Plan recognized the workers' right of association, organization and collective bargaining as a fundamental basis of peaceful industrial relations. It added that, ‘collective bargaining can derive reality only from the organized strength of workers and a genuine desire on the part of the employer to cooperate with their representatives.’ It pointed out that the endeavour of the state had been to encourage collective bargaining and mutual settlement of industrial disputes in order to minimize governmental intervention in labour management relations. The Second Five-Year Plan, 1956 recognized the need for mutual settlement for resolution of industrial disputes: For the development of an undertaking or an industry, industrial peace is indispensable. Obviously, this can best be achieved by the parties themselves. Labour legislation… can only provide a suitable frame-work in which employers and workers can function. The best solution to the common problems, however, can be found by mutual agreement.19 Another step in building strong unions is to recognize them as representative unions under certain conditions. The Third Five-Year Plan encouraged voluntary arbitration and pleaded for its adoption in place of compulsory adjudication: Ways will be found for increasing the application of the principle of voluntary arbitration… The same protection should be extended to proceedings in this case as is now applicable to compulsory adjudication… Employers should show much greater readiness to submit disputes to arbitration than they have done hitherto. This has to be the normal practice in preference to a recourse to adjudication as an important obligation adopted by the parties under the Code. The Fourth Five-Year Plan stressed that ‘greater emphasis should be placed on collective bargaining and on strengthening the trade union movement for securing better labour-management relations, supported by recourse in large measures to voluntary arbitration.’20

B. Response of the [First] National Commission on Labour The National Commission on Labour which was appointed by the Government

of India in 1966 made comprehensive investigation of almost all the problems relating to labour. It also made a series of recommendations to promote collective bargaining. Important among them are: We have to evolve satisfactory arrangements for union recognition by statute as also to create conditions in which such arrangements have a chance to succeed. Apart from this, we have to indicate the place which strike/lockout will have in the scheme we propose. Collective bargaining cannot exist without the right to strike/lockout.21 Earlier it observed: Collective bargaining as it has developed in the West may not be quite suitable for India, it cannot appropriately co-exist with the concept of a planned economy where certain specified production targets have to be fulfilled. Though we are not convinced that collective bargaining is antithetical to consumer interests even in a sheltered market, we envisage that in a democratic system, pressure on government to intervene or not to intervene in a dispute may be powerful. It may hardly be able to resist such pressures and the best way to meet them will be to evolve a regulatory procedure in which the State can be seen in the public eye to absolve itself of possible charges of political intervention. The requirements of national policy make it imperative that state regulation will have to co-exist with collective bargaining. At the same time, there are dangers in maintaining status quo. There is a case for shift in emphasis and this shift will have to be in the direction of an increasing greater scope for, and reliance on, collective bargaining. But, any sudden change replacing adjudication by a system of collective bargaining would neither be called for nor practicable. The process has to be gradual. A beginning has to be made in the move towards collective bargaining by declaring that it will acquire primacy in the procedure for settling industrial disputes.

C. Factors Affecting Successful Collective Bargaining in India Labour laws have effected the formation of trade unions in two ways. First, it

has weakened the protest movement. Second, it has failed to give adequate protection to the members of a union for their trade union activities. History of trade union movement in different countries of the world shows that economic dependence on industrial employment, oppressive conditions of work in industrial undertakings, economic exploitation of workers and impersonal handling of their personal problems have generally built up the protest movement and the urge to form unions to combat the management's superior powers. However, in India, minimum standard statutes like Factories Act, 1948, Mines Act, 1952, Minimum Wages Act, 1948, Payment of Wages Act, 1936, Payment of Bonus Act, 1965 and Social Security Statutes like Employees' State Insurance Act, 1948, Workmen's Compensations Act, 1923, Employees' Provident Fund and Miscellaneous Provisions Act, 1952, and Payment of Gratuity Act, 1972, which are not only far in advance of the level dictated by the strength of workers but also of those dictated by the significant protest movement. Moreover, institutions such as a works committees and adjudication system, have in general, tended to minimize the value of trade unions. Further, the institution of standing orders, the procedure for their certification and the provisions regarding the adjudication, disputes relating to their interpretation and application mitigate against the necessity of forming trade unions. Members of trade unions need as much protection from the common law doctrines of criminal conspiracy and restraint of trade as from employers' wrath. However, it has to be noted that the Trade Unions (Amendment) Act, 1947, which prohibited certain forms of unfair practices on the part of management, have not yet been enforced. Even the protections granted against common law doctrine of criminal conspiracy, civil conspiracy and restraint of trade under Sections 17, 18 and 19 of the Trade Unions Act are hardly sufficient. If the expression ‘unless the agreement is an agreement to commit an offence’ renders Section 17 almost meaningless. The expression ‘on the ground only’ severely curtails the benevolent aspect of Section 18. Further, law relating to labour management relations and adjudication system prevalent in our country reveals that the labour law had not been to a great extent responsive to the bargaining power of Indian workers. Thus, the Industrial Disputes Act, 1947, restricts the striking power of Indian workers. It regulates the use of instruments of economic coercion. Of course, Article 19 (1) (c) of the Constitution guarantees ‘the right to form associations or unions’ but after the Supreme Court decision in All India Bank Employees case22 that the

Article merely guarantees the ‘right to form associations or unions’ and, in particular does not guarantee the right to strike, the usefulness of the Article is extremely limited. Moreover, Section 7 of the Criminal Law (Amendment) Act, 1932, renders it impossible for the workers to indulge in several kinds of labour activities. It, adversely affects the workmen's right to picket. It prohibits obstruction of access and intimidation of persons or employees or loitering at places of residence or business with the intent of deterring others from entering or approaching or dealing at such place. The Bombay High Court in Damodar Ganesh v. State23 has, however, held that Section 7 prohibits even peaceful picketing. It has, therefore, severely affected the bargaining power of trade unions. Moreover, the surplus labour market (which exists in India) affects the bargaining power of Indian labour. It will be observed that ‘the backlog of unemployed which stood at 3 million at the commencement of the First Five Year Plan, was estimated to be above 10 million in 1968. This is in spite of 31 million jobs created during the first three plans which is almost equivalent to the size of the entire economically active population of a number of countries like West Germany, United Kingdom, and Pakistan.’24 In addition, about 18 to 19 million job opportunities were created during the Fourth Five-Year Plan.25 They further estimated that even if the entire plan projects were successfully implemented, over 4 million would represent the backlog at the end of the Fourth Five-Year Plan.26 Further, the absence of any statutory provisions at central level for the recognition of a representative trade union by an employer also affects the bargaining power of trade unions. Again, the right of unions has jeopardized the striking power of unions. Moreover, the government's unfettered discretion in referring a dispute for adjudication and for issuing of prohibitory order under Section 10 of Industrial Disputes Act has adversely affected the labour's interests. Labour laws have also not given any special status to a trade union. Section 36 of the Industrial Disputes Act, 1947, enables a worker, if he so desires, to be represented by a union, but it does not enable a union to represent its members. Indeed, apart from the general law of agency, a union cannot bind by its decision, its own member, far less the non-union member in the establishment.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

25 26

Tamil Nadu Electricity Workers Federation v. Madras Electricity Board, AIR 1965 Mad. 111. Sydney and Beatrice, Industrial Democracy, (1897). F H Harbison, Goals and Strategy in Collective Bargaining, (Harper and Bros, 1951). International Labour Office, Collective Bargaining (A Worker’s Education Manual), Geneva (1960), 3. C S Golden, Causes of Industrial Peace under Collective Bargaining, USA, the National Planning Association, 1949. James J Healy (Ed.), Creative Collective Bargaining, Prentice Hall, 1965, 9. 1990 Lab IC 301 (SC). Bartram F Willlcox, ‘A Sketch of the Federal Law of Labour in the United States’ Aligarh Law Journal, (1965) 39. Id. at 46. Referred in Mary Sur, Collective Bargaining (1965), 4. International Labour Office, Collective Bargaining (A Workers' Education Manual), Geneva (1960), 5. Mary Sur, supra note 10, 34. ILO Collective Bargaining, A Worker's Education Manual, Geneva, (1960) 128. Government of India, Report of the National Commission on Labour (1969), 325. Bartram F Willcox and other (Ed.) Labour Law and Labour Relations: Cases and Materials (1967), 29. Ibid., Bartram F Willcox : op. cit. Ibid., Id at 37. Government of India, Second Five-Year Plan (1956), 574. Government of India, Fourth Five-Year Plan: A Draft Outline (1966), 387. Government of India, Report of the National Commission on Labour (1969), 327. (1962) SCR 17 1. Damodar Ganesh v. State, (1961) 2 LLJ 385. The statement was made by Shri Jaisukh Lal Hathi, Union Minister of Labour and Employment and Rehabilitation in a broadcast on ‘employment’ dated 17 January, 1968. See Northern India Patrikla, dated 19 January, 1968. Government of India, Fourth Five-Year Plan: A Draft Outline, 108. Ibid.

CHAPTER

12 Unfair Labour Practices and Victimizations I. UNFAIR LABOUR PRACTICES ON THE PART OF EMPLOYERS UNDER THE TRADE UNIONS (AMENDMENT) ACT, 1947 The expression ‘unfair labour practices’ has not been exhaustively defined in any of the enforced legislative enactments in India. However, Section 28 (k) of the Trade Unions (Amendment) Act, 1947 enumerated the following to be an unfair labour practice on the part of the employer: (a) to interfere with, restrain, or coerce his workmen in the exercise of their rights to organize, form, join or assist a trade union and to engage in concerted activities for the purpose of mutual aid or protection; (b) to interfere with the formation or administration of any trade union or to contribute financial or other support to it; (c) to discharge, or otherwise discriminate against any officer of a recognized trade union because of his being such officer; (d) to discharge, or otherwise discriminate against any workman because he has made allegations or given evidence in any inquiry or proceeding relating to any matter such as is referred to in sub-section (i) of Section 28 F;

(e) to fail to comply with the provisions of Section 28 F.

II. UNFAIR LABOUR PRACTICES ON THE PART OF TRADE UNIONS UNDER THE TRADE UNIONS (AMENDMENT) ACT, 1947 Section 28 J of the Trade Unions (Amendment) Act, 1947, (which is unenforced) dealt with unfair labour practices by trade unions: (a) for a majority of the members of the trade union to take part in an irregular strike; (b) for the executive of the trade union to advise or actively support or instigate an irregular strike; (c) for an officer of the trade union not to submit any return required by or under this Act containing false statements.

III. JUDICIAL DELINEATION OF ‘UNFAIR LABOUR PRACTICE’ In the absence of any enforced statutory definition, the courts have tried to fill this gap. The judicial interpretation of the expression ‘unfair labour practice’ has given rise to two main views, viz., the narrow and the extensive.

A. Narrow View Some of the early adjudicators confined the expression ‘unfair labour practice’ to trade union activity. In other words, ‘no trade union activity, no unfair labour practice.’ This view was evidently supported by the provisions of Section 28 K of the Trade Unions (Amendment) Act, 1947. However, later decision makers refused to accept the narrow interpretation on at least two grounds. First, if unfair labour practice is confined merely to trade union activities, then the worker who is not the member of any union and as such, having no trade union activities will not be entitled to any relief under the Industrial Disputes Act, 1947 when he is discharged. The result will be that either the employer would try to engage non-union men or that non-union men will be forced indirectly to join a union. This will be in the words of the tribunal, an interference with the natural

rights of workmen. Second, the narrow interpretation limits the scope of tribunal's jurisdiction to intervene only in cases where the management has dismissed or discharged workmen for trade union activities.

B. Extensive View A few of the earlier decisions and later decisions generally emphasize extensive view. For instance, Shri A G Gupta in Alexandra Jute Mills Ltd v. Their Workmen1 illustrated unfair labour practice: any order made in bad faith with an ulterior motive arbitrarily or with harshness is an instance of unfair labour practice. There are other illustrations, e.g., hasty action of company without giving the employee any notice or holding an inquiry provided that the refusal by an employer to permit his workmen to engage in trade union activities during their hours of work shall not be deemed to be unfair practice on his part. And Section 32A of the Trade Unions (Amendment) Act, 1947 prescribed the penalty for committing unfair labour practices. Thus it provides that ‘(1) any employer who commits any unfair practice set out in Section 28 K shall be punishable with fine which may extend to ₹1,000. (2) Where a criminal court imposes a fine, or confirms in appeal, revision or otherwise a sentence of fine imposed on an employer for committing an unfair labour practice set out in clause (c) or clause (d) of Section 28 K, it may when passing judgement, order the whole or any part of the fine to be applied in the payment to any person as compensation for lessor injury caused by the unfair practice.’

IV. CODE OF DISCIPLINE IN INDUSTRY The Code of Discipline, 1958 contains a list of unfair labour practices to be avoided by unions and management: (1) Management agrees… not to support or encourage any unfair labour practice such as: (a) interference with the rights of employees to enrol or continue as union members; (b) discrimination, restraint or coercion against any employee because of recognized activity of trade unions; and (c) victimization of any employee and abuse of authority in any form.

(2) Unions agree to discourage unfair labour practices such as: (a) (b) (c) (d) (e)

negligence of duty; careless operation; damages to property; interference with or disturbance to normal work; and insubordination.

V. RESPONSE OF THE [FIRST] NATIONAL COMMISSION ON LABOUR The [First] National Commission on Labour has also recommended that the law should enumerate various unfair labour practices on the part of employers and on the part of workers‘ unions; and provide for suitable penalties for committing such practices. Complaints relating to unfair labour practices will be dealt with by the labour courts. They shall have the power to impose suitable punishments/penalties which may extend to de-recognition in case of unions and heavy fine in case of an employer found guilty of such practices.2

VI. UNFAIR LABOUR PRACTICES ON THE PART OF EMPLOYERS AND TRADE UNIONS OF EMPLOYERS UNDER THE INDUSTRIAL DISPUTES (AMENDMENT) ACT, 1982 Section 2 (ra) read with the Fifth Schedule of Industrial Disputes (Amendment) Act, 1982 defines and enumerates unfair labour practices on the part of employers to mean: 1. To interfere with, restrain from, or coerce, workmen in the exercise of their right to organize, form, join or assist a trade union or to engage in concerted activities for the purposes of collective bargaining or mutual aid or protection, that is to say: (a) threatening workmen with discharge or dismissal, if they join a trade union; (b) threatening a lockout or closure, if a union is organized;

2.

3. 4.

5.

(c) granting wage increase to workmen at crucial periods of trade union organization, with a view to undermining the efforts of the trade union organization. To dominate, interfere with or contribute support, financial or otherwise, to any trade union, that is to say: (a) an employer taking an active interest in organizing a trade union of his workmen; and (b) an employer showing partiality or granting favour to one of several trade unions attempting to organize his workmen or to its members, where such a trade union is not a recognized trade union. To establish employer-sponsored trade unions of workmen. To encourage or discourage membership in any trade union by discriminating against any workman, that is to say: (a) discharging or punishing a workman, because he urged other workmen to join or organize a trade union; (b) discharging or dismissing a workman for taking part in any strike (not being a strike which is deemed to be an illegal strike under this Act); (c) changing seniority rating of workmen because of trade union activities; (d) refusing to promote workmen to higher posts on account of their trade union activities; (e) giving unmerited promotions to certain workmen with a view to creating discord amongst other workmen, or to undermine the strength of their trade union; (f) discharging office-bearers or active members of the trade union on account of their trade union activities. To discharge or dismiss workmen (a) by way of victimization; (b) not in good faith but in the colourable exercise of the employer's rights; (c) by falsely implicating a workman in a criminal case on false evidence or on concocted evidence; (d) for patently false reasons;

(e) on untrue or trumped up allegations of absence without leave:

6. 7. 8. 9. 10.

11.

12. 13. 14. 15. 16.

(f) in utter disregard of the principles of natural justice in the conduct of domestic inquiry or with undue haste; (g) for misconduct of a minor or technical character, without having any regard to the nature of the particular misconduct or the past record or service of the workman, thereby leading to a disproportionate punishment. To abolish the work of a regular nature being done by workmen, and to give such work to contractors as a measure for breaking a strike. To transfer a workman mala fide from the one place to another, under the guise of following management policy. To insist upon individual workmen, who are on a legal strike, to sign a good conduct bond, as a pre-condition to allowing them to resume work. To show favouritism or partiality to one set of workers regardless of merit. To employ workmen as ‘badlis’, casuals or temporaries and to continue them as such for years, with the object of depriving them of the status and privileges of permanent workmen. To discharge or discriminate against any workman for filing charges or testifying against an employer in any inquiry or proceeding relating to any industrial dispute. To recruit workmen during a strike which is not an illegal strike. Failure to implement award, settlement or agreement. To indulge in acts of force or violence. To refuse to bargain collectively, in good faith with the recognized trade unions. Proposing or continuing a lockout deemed to be illegal under this Act.

And Section 25 T of the Act prohibits employers (whether registered under the Trade Unions Act, 1926 or not) to commit any of the aforesaid unfair labour practices. Violation of the provision is punishable with imprisonment for a term which may extend to 6 months or with fine which may extend to ₹1,000 or with both. A perusal of item 7 of the Fifth Schedule read with Section 25 T of the Act reveals that there is a statutory prohibition engrafted in the Industrial Disputes Act prohibiting transfer of a workman mala fide from one place to

another under the guise of management policy. Thus, a valued right has been created by the statute in favour of the workman from being subjected to by his employer to transfers mala fide under the guise of following the management policy. This is a right which has been created by the Industrial Disputes Act in favour of the workmen restricting the unfettered right of the management in the matter of effecting transfers of his employees. The obligation not to transfer a workman mala fide from one place to another under the guise of management policy was not recognized under common law. That right it now created by the statute.3 The remedy has been provided in Section 10 of the Act. There are several conditions which are to be satisfied for invoking the remedy provided under Section 10 of the Act. When the statute prescribes a remedy and also prescribes the conditions for availing of that remedy, if the conditions for invoking the remedy cannot be complied with, it does not mean that the statute has not provided the remedy.4 Thus, the right as well as the remedy have been provided by the Industrial Disputes Act in the matter of transfer by the management. In such a case, the jurisdiction of the civil court is by necessary implication barred.5 From the above, it is clear that (i) management is not expected to interfere with the rights of the workmen to organize themselves into a trade union. (ii) The management is also not supposed to dominate, interfere with or support, financial or otherwise, to any trade union. (iii) The management is not expected to establish employer-sponsored trade unions of workmen, and it is also not supposed to encourage or discourage membership to any union by taking the various steps which are mentioned above, clearly speaks of a recognized trade union. (iv) To refuse to bargain collectively even in good faith with a recognized trade union is an unfair labour practice.6 Discouragement of Badli workmen to join a trade union—an unfair labour practice. In Panyam Cement Employees Union affiliated to INTUC, Kurnool District v. Commissioner of Labour, Hyderabad7, the High Court of Andhra Pradesh held that a reading of clause 4 of Part 1 of the Fifth Schedule reveals that any action on the part of the employer/workmen to discourage a workman from participating in a trade union activity is unfair labour practice. Badli workmen are workmen and, therefore, if any employer disapproves of a ‘trade union of badli workers’ or discourages badli workers to join a trade union or denies voting right to badli workers, the same would amount to unfair labour practice. Temporary appointment for successive fixed tenure with artificial breaks—an unfair labour practice. The Supreme Court in Regional Manager,

SBI v. Raja Ram8 ruled that when an employee is appointed temporarily for successive fixed tenures with artificial breaks in between so as to deny the employee the right to claim permanent appointment, such action would be an unfair labour practice within the meaning of the phrase in Section 2(ra) of the Act. Section 2(ra) says that unfair labour practice means any of the practices specified in the Fifth Schedule the Act. The Fifth Schedule to the Act contains a list of unfair labour practices which have been classified under two heads, namely: (I) on the part of the employer and trade unions of employers; and (II) on the part of the workmen and trade unions of workmen. The principle that we have referred to earlier finds place in Item 10 of Part I under which: ‘to employ workmen as ‘badlis’, casuals or temporaries and to continue them as such for years, with the object of depriving them of the status and privileges of permanent workmen,’ is an unfair labour practice. In other words, before an action can be termed as an unfair labour practice, it would be necessary for the labour court to come to the conclusion that the badlis, casuals and temporary workmen had been continued for years as badlis, casuals or temporary workmen, with the object of depriving them of the status and privileges of permanent workmen. To this has been added the judicial gloss that artificial breaks in the service of such workmen would not allow the employer to avoid a charge of unfair labour practice. However, it is the continuity of service of workmen over a period of years which is frowned upon. Besides, it needs to be emphasized that for the practice to amount to unfair labour practice, it must be found that the workmen had been retained on a casual or temporary basis with the object of depriving the workmen of the status and privileges of a permanent workman. The aforesaid view was reiterated in Krishna Lal v. General Manager, Haryana Roadways, Rohtak9. The Punjab and Haryana High Court held that where the services of a workman are terminated before the expiry of 240 days in order to give artificial break for a few days and after some time, he is again reemployed, it amounts to unfair labour practice under Section 2(ra) of the Industrial Disputes Act, 1947. Contravention of Model Standing Orders — an unfair labour practice. In R P Sawant v. Bajaj Auto Ltd.10, the Bombay High Court held that the contravention of the Model Standing Order is an unfair labour practice within

meaning of item 9 of Schedule IV in respect of which industrial court was competent to grant relief to the complainants.

VII. UNFAIR LABOUR PRACTICES ON THE PART OF WORKMEN AND TRADE UNIONS OF WORKMEN UNDER THE INDUSTRIAL DISPUTES (AMENDMENT) ACT, 1982 Section 2 (va) read with the Fifth Schedule of the Amendment Act also enumerates the following unfair labour practices on the part of workmen and their trade unions: 1. To advice or actively support or instigate any strike deemed to be illegal under this Act. 2. To advice workmen in the exercise of their right to self-organization or to join a trade union or refrain from joining any trade union, that is to say: (a) for a trade union or its members to picket in such a manner that nonstriking workmen are physically debarred from entering the work places; (b) to indulge in acts of force or violence or to hold out threats of intimidation in connection with a strike against non-striking workmen or against managerial staff. 3. For a recognized union to refuse to bargain collectively in good faith with the employer. 4. To indulge in coercive activities against certification of a bargaining representative. 5. To stage, encourage or instigate such forms of coercive actions as wilful ‘go slow’, squatting on the work premises after working hours or ‘gherao’ of any of the members of the management or other staff. 6. To stage demonstrations at the residences of the employers or the managerial staff members. 7. To incite or indulge in wilful damage to employer's property connected with the industry. 8. To indulge in acts of force or violence or to hold out threats of intimidation against any workman with a view to prevent him from

attending work. The commission of aforesaid unfair labour practices are prohibited under Section 25 T and whosoever commits any such unfair labour practice is punishable under Section 25 U of the Industrial Disputes (Amendment) Act, 1982 with imprisonment which may extend to 6 months or with fine which may extend to ₹1,000 or with both.

Proof of Unfair Labour Practice The charge of unfair labour practice should be specifically levelled so that the employer is able to meet it. It should also be proven by clear evidence. It is undoubtedly correct that sometimes, the facts may speak for themselves and it may be possible to infer that the employer was acting unfairly but there should be some evidence which should indicate an improper motive so as to enable the court to arrive at a finding of unfair labour practice.11

VIII. VICTIMIZATION Victimization and unfair labour practice are ‘like twins who cling together’. According to some, unfair labour practice can stand by itself, but victimization must always keep company with unfair labour practice. For instance, where the employer interferes with employees' right to self organization or with the formation of any labour organization, or where the employer bangs the door on any settlement by negotiation, there may be unfair labour practice. In such cases, no punishment need be inflicted on any employee. It cannot be said that there is any victimization. Thus, separate existence of unfair labour practice is conceivable. ‘In other words, the dividing line between victimization and unfair labour practice is very thin and what is unfair labour practice may also be a victimization and vice versa.’12 Like unfair labour practice, the word ‘victimization’ has not been defined either in the Trade Unions Act, 1926 or in the Industrial Disputes Act, 1947. The Supreme Court in Bharat Bank Ltd v. Employees of Bharat Bank Ltd13, has, however, defined the word ‘victimization’ to mean: a certain person has become a victim, in other words, that he has been unjustly dealt with. The aforesaid meaning was followed in Bharat Iron Works v.

Bhagubhai Balubhai Patel14, wherein the Supreme Court observed that a person is victimized, if he is subjected to persecution, prosecution or punishment for no real fault or guilt of his own, in the manner, as it were a sacrificial victim. The Supreme Court said that victimization may partake various types. For example, pressurizing an employee to leave the union or union activities, treating an employee unequally or in an obviously discriminatory manner for the sole reason of his connection with union or his particular union activity; inflicting a grossly monstrous punishment which no rational person would impose upon an employee and the like. The Supreme Court in Workmen of M/s Williamson Magor and Co. Ltd v. M/s Williamson Magor and Co. Ltd,15 accepted the normal meaning of ‘victimization’, namely, being the victim of unfair and arbitrary action, and held that there was ‘victimization of the superseded workmen. The tendency of the Court to safeguard the interest of workmen, is also evident from the observation of the Court, that whenever, the word ‘victimization’ can be interpreted in two different ways, the interpretation which is in favour of the labour should be accepted as they are the poorer section of the people compared to that of management.16 Justice Dhawan in L H Sugar Factories & Oil Mills (P) Ltd,17 expressed the view that what are unfair labour practices or victimizations is a question of fact to be decided by the tribunal upon the circumstance of each case. However, from the mere fact that the concerned workmen were office-bearers of the union, it cannot be inferred that the company was actuated by any improper motive to victimize them when the charge of misconduct was proved against them.18 Ludig Teller has enumerated and given seven instances where the employees may be held guilty of unfair labour practice. These are, for instance, sit down strikes, to compel members to join the union, strikes in violation of collective bargaining agreement, strike during ‘cooling-off’, obstruction of lawful works, the commission of misdemeanours in connection with labour disputes, unlawful picketing, etc. In RBS Jain Rubber Mills19, the tribunal listed the following as outward manifestation to be taken into account for victimization or unfair labour practice: 1. Discrimination between workers 2. Singling out union leaders or members 3. Anti-union statement made at the time of discharge or shortly prior thereto 4. Relative significance of the alleged infraction 5. Whether others ever committed the same infraction without similarly

being punished to the extent of discharge 6.

7. 8. 9.

Failure without explanation to introduce specific evidence in support of a general accusation or reason for discharge or to call witnesses who have personal knowledge of the basis of denial Failure of the employer to hold an investigation Failure to afford an employee the opportunity to defend himself Uneven application of the company’s rule

A. Proof of Victimization Victimization ‘is a serious charge by an employee against an employer, and, therefore, it must be properly and adequately pleaded, giving all particulars upon which the charge is based, to enable the employer to fully meet them. The charge must not be vague or indefinite, being as it is an amalgamation of facts as inferences and attitudes. The fact that there is a union espousing the cause of the employees in legitimate trade union activity and an employee is a member or active office-bearer thereof, is per se no crucial instance.’20

B. Burden of Proof The onus of establishing a plea of victimization will be upon the person pleading it. Since a charge of victimization is a serious matter reflecting to a degree, upon the subjective attitude of the employer evidenced by acts and conduct, these have to be established by safe and sure evidence. Mere allegations, vague suggestions and insinuations are not enough. All particulars of the charge brought out, if believed, must be weighed by the tribunal and a conclusion should be reached on a totality of the evidence produced.21 Again, victimization must be directly connected with the activities of the concerned employee inevitably leading to the penal action without the necessary proof of a valid charge against him… A proved misconduct is antithesis of victimization as understood in industrial relations.22

IX. SCOPE OF INTERFERENCE BY INDUSTRIAL TRIBUNAL It was established in Indian Iron and Steel Co. v. Their Workmen23 that

industrial tribunal can interfere, inter alia, in management’s order when there is victimization or unfair labour practice. Again, in Ananda Bazar Patrika v. Their Employees24, the Supreme Court dealt with the extent of jurisdiction of a labour court or an industrial tribunal and observed as follows: If on the one hand, in terminating the services of the employee, the management has acted maliciously or vindictively or has been actuated by a desire to punish the employee for his trade union activities, the tribunal would be entitled to give adequate protection to the employees by ordering his reinstatement, or directing in his favour the payment of compensation. But if the inquiry has been proper and the conduct of the management in dismissing the employee is not mala fade, then the tribunal cannot interfere with the conclusions of the inquiry officer, or with the orders passed by the management after accepting the said conclusions. In Bengal Bhatdee Coal Co. v. Singh25, the Supreme Court ruled: [T]here is no doubt that though in a case of proved misconduct, normally the imposition of a penalty may be within the discretion of management, there may be cases where the punishment of dismissal for the misconduct proved may be so unconscionable or so grossly out of proportion to the nature of offence that the tribunal may be able to draw an inference of victimization merely from the punishment inflicted. The Supreme Court in Hind Construction and Engineering Co. Ltd v. Their Workmen26 has put the position of law as follows: It is now settled law that the tribunal is not to examine the finding or the quantum of punishment because the whole of the dispute is not really open before the tribunal as it is ordinarily before a court of appeal. The tribunal's powers have been stated by this court in a large number of cases and it has been ruled that the tribunal can only interfere if the conduct of the employer shows lack of bona fides or victimization of employee or employees or unfair labour practices. The tribunal may, in a strong case, interfere with a basic error on a point of fact or a perverse finding, but it cannot substitute its own appraisal of the evidence for that of the officer conducting the domestic inquiry though it may interfere where the principles of natural justice or fair play have not been followed or where the inquiry is so

perverted in its procedure as to amount to no inquiry at all. In respect of punishment it has been ruled that the award of punishment for misconduct under the Standing Orders, if any, is a matter for the management to decide and if there is any justification for the punishment imposed, the tribunal should not interfere. The tribunal is not required to consider the propriety or adequacy of the punishment or whether it is excessive or too severe. But where the punishment and the past record are such, as no reasonable employer would ever impose in like circumstances, the tribunal may treat the imposition of such punishment as itself showing victimization or unfair labour practice.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Alexandra Jute Mills Ltd v. Their Workmen, (1950) I LLJ 1261. Government of India, Report of the National Commission on Labour (1969) 336. Kerala Rubber and Reclaims Ltd v. P A Sunny, (1989) Lab. IC 964 at 967 (Kerala). Id. at 968. Id. at 969. MRF United Workers Union Rep. by its General Secretary v. Government of Tamil Nadu, 2010 LLR 165 (HC Madras). (2004) I LLJ 915. (2005) I LLJ 12 at 14–15. 2011 LLR 359. 2001 LLR 935. Gurdaspur Central Co-operative Bank Ltd v. Labour Court, (1999) Lab. IC 192. Everyday Flash Light Co. v. Labour Court, (1962) 2 LLJ 204 (Allahabad). Bharat Bank Ltd v. Employees of Bharat Bank Ltd (1950) LLJ 921. Bharat Iron Works v. Bhagubhai Balubhai Patel AIR 1976 SC 98. Workmen of M/s Williamson Magor and Co. Ltd, v. M/s Williamson, Magor and Co., Ltd, (1982) 1 LLJ 33 (SC). Id. at 38. LH Sugar Factories & Oil Mills (P) Ltd v. State of UP, (1961) 1 LLJ 686. Brown Co. Ltd v. Their Workmen, (1959) 1 LLJ 450. RBS Jain Rubber Mills‘ (1968) 1 LLJ vii (Journal Section). Bharat Iron Works v. Bhagubhai, AIR 1976 SC 98. Id. at 102.

22 Ibid. 23 Indian Iron and Steel Co. v. Their Workmen, AIR 1958 SC 130. 24 Ananda Bazar Patrika v. Their Employees, 1963 2 LLJ 429. 25 Bengal Bhatdee Coal Co. v. Singh, (1962–63) 24 FJR 406. 26 Hind Construction and Engineering Co. Ltd v. Their Workmen, AIR 1965 SC 917:

(1965) 1 LLJ 462.

PART III INDUSTRIAL DISPUTES ACT, 1947

CHAPTER

13 Industrial Disputes Act: A Contextual Framework One of the most striking trends is the progressively increasing government intervention in labour management relations. The Employers’ and Workmen’s Disputes Act, 1860, provided for speedy and summary disposal by magistrates of disputes concerning wages of workmen employed in railways, canals and other public works. Like some of the earlier regulations of the East India Company, it was concerned with specific industries and with only those disputes that gave rise to a cause of action in civil courts. The government had no active role to play. Provisions making breach of contract a criminal offence undoubtedly affected the workers' right to strike but the statute did not directly seek to regulate the use of instruments of economic coercion. The Trade Disputes Act, 1929, provided for the constitution of two ad hoc bodies, viz., the Court of Inquiry and the Board of Conciliation to inquire into and promote the resolution of ‘trade disputes’. The expression ‘trade dispute’ meant ‘any dispute or difference between employers and workmen or between workmen and workmen, which is connected with the employment or with the conditions of labour of any person’ and was neither confined to disputes in any particular trade or industry, nor to justifiable causes. Further, the statute regulated strikes and lockouts by declaring them illegal if their object was ‘other than the furtherance of a trade dispute within the trade or industry in which the participants were engaged; or if they were designed or calculated to inflict severe, general or prolonged hardship upon the community and thereby to compel the government to take or abstain from taking any particular course of action’ or if they were undertaken in the public utility services without giving prescribed notices. Under

the Act, the government could, therefore, intervene in labour management relations for the first time and use persuasive processes for the settlement of ‘trade disputes.’ The restrictions on the right to strike and lockout, particularly, the uncertainty inherent in the phrase ‘severe, general or prolonged hardship upon the community,’ were, of course, detrimental to the free use of instruments of economic coercion. Rule 81 A of the Defence of India Rules, 1942, empowered the government to (1) require employers to observe such terms and conditions of employment in their establishments as may be specified (2) refer any dispute for conciliation or adjudication (3) enforce the decisions of the adjudicators and (4) make general or special order to prohibit strikes or lockouts in connection with any trade dispute unless reasonable notice had been given. These provisions, thus, permitted the government to use coercive processes for the settlement of ‘trade disputes’ and to place further restrictions on the right to use instruments of economic coercion. The Industrial Disputes Act, 1947, put the wartime emergency provisions in a permanent peacetime legislation.

I. OBJECT OF THE ACT The object of the Industrial Disputes Act, 1947 was contained in the statement of Objects and Reasons: Experience of the working of Trade Disputes Act, 1929, has revealed that its main defect is that while restraints have been imposed on the rights of strikes and lockouts in public utility services, no provisions have been made to render the settlement of an industrial dispute, either by reference to a board of conciliation or to a court conclusive and binding on the parties to the dispute. This defect was overcome during the war by empowering under Rule 81A of the Defence of India Rules, the Central Government to refer industrial disputes to adjudicators and to enforce their awards. Rule 81A which was to lapse on the 1st of October, 1946 is being kept in force by the Emergency Powers (Continuance) Ordinance, 1946, for a further period of six months and as industrial unrest, in checking which this Rule has proved useful, is gaining momentum due to stress of postwar industrial readjustment, the need of permanent legislation in replacement of this rule is self-evident. This bill embodies the essential principles of Rule 81A, which have proved generally

acceptable to both employers and workmen retaining in tact for the most part, the provisions of the Trade Disputes Act, 1929. However, adjudication proceedings under the Industrial Disputes Act, 1947, (hereinafter referred to IDA) are not confined to ‘public utility services’ or to such employment as ‘is essential for securing the defence of British India, the public safety, the maintenance of public order, the efficient prosecution of war, or for maintaining supplies or services necessary to the life of the community’ but may be invoked in any ‘industrial dispute.’ Further, though the obnoxious provisions of Section 16 of the Trade Disputes Act, 1929, has been omitted, Section 23 of the IDA prohibits strikes and lockout ‘(a) during the pendency of conciliation proceedings before a board and 7 days after the conclusion of such proceedings (b) during the pendency of any adjudication proceedings and (c) during any period in which a settlement or award is in operation, in respect of any matter covered by the settlement or award.’ Where a strike or lockout has commenced before reference of the dispute to a board of conciliation or adjudicating body, the government may prohibit the continuance of such strike or lockout. The amendments further widened the scope of governmental intervention. The Supreme Court in Dimakuchi Tea Estate Karmchari Sangh v. Dimakuchi Tea Estate,1 summed up the principal objects of the Act as follows: (i) promotion of measures for securing and preserving amity and good relations between the employers and workmen; (ii) investigation and settlement of industrial disputes, between employers and employers, employers and workmen or workmen and workmen, with a right of representation by registered trade union or a federation of trade unions or an association of employers or a federation of association of employers; (iii) prevention of illegal strikes and lockouts; (iv) relief to workmen in the matter of layoff and retrenchment; and (v) collective bargaining. In Life Insurance Corporation of India v. D J Bahadur2, Justice V R Krishna Iyer speaking for the Supreme Court has observed that ‘the Industrial Disputes Act is a benign measure which seeks to pre-empt industrial tensions, provide the mechanics of dispute resolution and set up the necessary infrastructure so that the energies of partners in production may not be dissipated in counter-productive battles and assurance of industrial justice may create a climate of goodwill.’

The Supreme Court in Rajasthan State Road Transport Corporation3 observed that the object of the Industrial Disputes Act, as its preamble indicates, is to make provision for the investigation and settlement of industrial disputes which means adjudication of such disputes also. The Act envisages collective bargaining, contracts between union representing the workmen and the management, a matter which is outside the realm of the common law or the Indian law of contact. The Act also provided for the constitution of various committees and conferred extensive powers on different kinds of authorities in the matter of settlement of adjudication of industrial disputes. It also provide remedies under Sections 10, 12, 18, 19 and 31(2), 33(1)(a), 33C(1) and 33C(2).

II. SCHEME OF THE ACT The long title shows that the object of the Act is ‘to make provision for investigation and settlement of industrial disputes and for certain other purposes.’ The preamble states the same object and Section 2 of the Act which contains the definitions states that unless there is anything repugnant in the subject or context, certain expressions will have certain meanings. Chapter II refers to the authorities set up under the Act, such as, works committees, conciliation officers, boards of conciliation, courts of enquiry and industrial tribunals. The primary duty of a works committee is to promote measures for securing and preserving amity and good relations between employers and workmen and to that end, to comment upon their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters. Conciliation officers are charged with the duties of mediating in, and promoting the settlement of industrial disputes. A board of conciliation may also be constituted for the same purpose, namely, for promoting the settlement of an industrial dispute. A court of enquiry may be appointed for inquiring into any matter which appears to be connected with or relevant to an industrial dispute. Section 7 empowers the appropriate government to constitute one or more tribunals for the adjudication of industrial disputes in accordance with the provisions of the Act. Chapter III contains provisions relating to the reference of industrial disputes to the board of conciliation, court of inquiry or labour court, tribunal or national tribunal. Under Section 10 (1) (c), where an appropriate government is of the opinion that any industrial dispute exists or is apprehended, it may, at any time, by order in writing, refer the dispute or any matter appearing to be connected with or relevant to the dispute to a tribunal for adjudication.

Chapter IV of the Act deals with procedure, powers and duties of the authorities set up under the Act. Where an industrial dispute has been referred to a tribunal for adjudication, Section 15 requires that the tribunal shall hold its proceedings expeditiously and shall, as soon as practicable on the conclusion thereof, submit its award to the appropriate government. Section 17 lays down, inter alia, that the award of a tribunal shall, within a period of one month from the date of its receipt by the appropriate government, be published in such manner as it thinks fit. Section 17A lays down that the award of a tribunal shall become enforceable on the expiry of 30 days from the date of its publication. Section 17 also contains certain other provisions which empower the appropriate government to modify or reject the award. Section 18 relates to awards. Section 19 lays down the period of operation of settlements and awards and states, inter alia, that an award shall, subject to the provisions of the section, remain in operation for a period of one year. Chapter V of the Act deals with strikes and lockouts. Chapter VA and VB deal with layoff, retrenchment, closure and transfer. Chapter VI prescribes penalties and Chapter VII deals with miscellaneous matters. It is important to note that though in the definition of ‘lockout’ under Section 2(l) and ‘strike’ under Section 2(q) and further in Section 22, the expression ‘any person’ has been used; in Section 22 (2) and Section 23 which also deal with ‘lockout’ and ‘strike’, the word ‘workman’ has been used. Section 33 provides that during the pendency of any conciliation proceedings or any proceedings before a tribunal, the conditions of service, etc., shall not be changed. Section 33A, however, uses the word ‘employee’ but read with Section 33, the word ‘employee’ must mean a workman. Section 36 deals with representation of parties. Sub-section (3) of Section 36 states that no party to a dispute shall be entitled to be represented by a legal practitioner in any conciliation proceedings under the Act or in any proceedings before a court. Sub-section (4) states that in any proceedings before a tribunal, a party to a dispute may be represented by a legal practitioner with the consent of the parties to the proceeding and with the leave of the tribunal. The analysis of the aforesaid provisions shows that the Industrial Disputes Act enables the State to compel the parties to resort to industrial arbitration and for that purpose, different forums have been set up for the resolution of such disputes. The Act is intended to be a self-contained one and it seeks to achieve social justice on the basis of collective bargaining. The scheme of the Act shows that it attains a settlement of all industrial disputes arising between labour and management by peaceful methods through the machinery of conciliation and

arbitration and if necessary, by approaching the tribunal constituted under the Act.

III. INDUSTRIAL DISPUTES (AMENDMENT) ACT 1982 AND 1984 The Industrial Disputes Act, 1947 has undergone several amendments since 1947. Thus, the Industrial Disputes (Amendment) Act, 1982 made the following amendments: (i) (ii)

Amended the definition of ‘appropriate government’ Amended the definition of industry and thereby curtailed the scope of ‘industry’ as laid down by the Supreme Court in Bangalore Water Supply & Sewerage Board v. A Rajappa (iii) Inserted new clause (cc) defining ‘closure’ (iv) Inserted new clauses, namely, Section 2 (ka) and 2(kka) (defining ‘industrial establishment or undertaking’ and ‘Khadi’ respectively (v) Inserted new Sections 2 (qq), 2 (ra) and 2 (rb) defining ‘trade union’, ‘unfair labour practice’ and ‘village industries’. Further, Fifth Schedule was added enumerating unfair labour practice (vi) Inserted Chapter VC dealing with prohibition of unfair labour practice and penalty thereof (vii) Inserted Chapter II B which provides for grievance settlement authorities and reference of certain individual disputes to such authorities (viii) Extended the special provisions relating to layoff, retrenchment and closure in establishments employing not less than 100 workmen. It also inserted procedure for closing an undertaking and penalty for violation therefor. Two years later, the Industrial Disputes (Amendment) Act, 1984, was introduced which inter alia, seeks to make the following amendments in the Act. (i) It excludes from the definition of ‘retrenchment’ as contained in the Act ‘termination of the service of a workman as a result of the non-renewal of the contract of employment on its expiry and on the termination of such contract in accordance with the provisions thereof’. (ii) Following the decision of the Supreme Court in the Excel Wear case (AIR 1979 SC 25), some high courts declared invalid the special

provisions relating to layoff and retrenchment contained in the Act which applied to establishments employing 300 or more workmen. It redrafted these provisions on the same lines as in the amended provision relating to closure, which was inserted by the Industrial Disputes (Amendment) Act, 1982, (46 of 1982), after taking into consideration the observations of the Supreme Court in the said case.

IV. TRADE UNIONS AND THE INDUSTRIAL DISPUTES (AMENDMENT) BILL, 1988 Four years later, the aforesaid Bill sought to undertake comprehensive amendments to the Trade Unions Act, 1926 and the Industrial Disputes Act, 1947 with the intention of promoting healthy industrial relations, effective bargaining councils at unit, industry or national levels and, finally, expeditious settlement of industrial disputes through a system of industrial relations commissions (with labour courts working under them) from whose decisions appeals would lie only to the Supreme Court. The Bill proposed to set up IRCs both at the Centre and in the states. These will comprise both judicial and nonjudicial members, the latter being drawn from among persons having eminence in the fields of industry, labour or management. The IRCs will be high-powered tribunals under Article 323B of the Constitution and appeals against their orders or awards will be only to the Supreme Court. These commissions will have jurisdiction in respect of adjudication and will hear appeals against the order of the labour courts including those relating to registration of bargaining councils. It is not, however, proposed to entrust them with conciliation functions which have been traditionally performed by the appropriate government. The Bill makes a specific provision for bipartite negotiations. The Bill also lays stress on the need to exhaust all modes of settlement like bipartite discussions, conciliation, voluntary arbitration, etc., before resort to direct action. Even for the last resort, i.e., strike or lockout, the conditions prescribed must be met, by either party contemplating it, with corresponding penalties for resorting to such extreme steps in contravention of the law. In order to provide quick relief and cut down delays, it is proposed to provide that a workman or a trade union of which he is a member, can refer an individual dispute directly to a labour court.

V. INDUSTRIAL DISPUTES (AMENDMENT) ACT, 2010 The statement of Objects and Reasons appended to the Bill seeks to lay down the following objectives and salient features of the amendment: 1. The Industrial Disputes Act, 1947 had been amended from time to time in the light of experience gained in its actual working, case laws and industrial relations policy of the government. 2. At present the workman, whose services have been discharged, dismissed, retrenched, or otherwise terminated under Section 2A of the Act, is unable to approach the labour court or tribunal in the absence of a reference of industrial dispute by the appropriate government to the labour court or tribunal. This causes delay and untold suffering to the workmen. The Industrial Disputes (Amendment) Act, 1982 provided for an in-house Grievance Settlement Authority for the settlement of industrial disputes connected with an individual workman employed in the industrial establishment, but it does not permit the workman to approach labour court or tribunal until such dispute has been decided by the grievance settlement authority. The labour courts and tribunals have no power under the Act to enforce the awards published by the appropriate government. 3. In view of the above, it is considered necessary to provide for workman a direct access to labour court or tribunal in case disputes arising due to discharge, dismissal, retrenchment or termination of service of workman. It is also proposed to establish a grievance redressal machinery as an inhouse mechanism in an industrial establishment with 20 or more workmen without affecting the right of workman to raise an industrial dispute on the same matter under the provisions of the Act. 4. Accordingly, the Industrial Disputes (Amendment) Bill, 2009, inter alia, seeks to provide for: (i) amendment of the term ‘appropriate government’ defined under section 2(a) of the Act to amplify the existing definition; (ii) enhancement of wage ceiling of a workman from ₹1,600 per month to ₹10,000 per month under Section 2(s) of the Act; (iii) direct access for the workman to the labour court or tribunal in case of disputes arising out of Section 2A of the Act; (iv) expanding the scope of qualifications of presiding officers of

(v)

(vi)

labour court or tribunals under Sections 7 and 7A of the Act; establishment of grievance redressal machinery in every industrial establishment employing 20 or more workmen for the resolution of disputes arising out of individual grievances; empowering the labour court or tribunal to execute the awards, orders or settlements arrived at by labour court or tribunal.

VI. SCOPE OF THE ACT The Act extends to the whole of India, the original Act came into force on the first day of April, 1947.

VII. INTERPRETATION OF INDUSTRIAL RELATIONS LAW The Supreme Court in Bharat Singh v. Management of New Delhi Tuberculosis Centre, New Delhi4 held that in interpretation of the welfare statutes: ‘the courts have steered clear of the rigid stand of looking into the words of the section alone but have attempted to make the object of the enactment effective and to render its benefits to the persons in whose favour it is made’. Again, in Smt. Dhanalakshmi v. Reserve Bank of India5, the division bench of the Karnataka High Court observed: Liberal and not strict rule of construction is required to be followed while dealing with welfare statutes. Semantic luxuries should not be permitted to be misplaced in the interpretation of bread and butter statutes. As consistently held by the courts, welfare statutes must, of necessity, receive a broad interpretation. It should not be lost sight of so that the welfare statutes in a welfare state are enacted with the object of promoting general welfare, which should not be dipped in the ocean of wrangles of technicalities.

VIII. NO JURISDICTION OF CIVIL COURT IN INDUSTRIAL DISPUTE

Premier Automobiles Limited v. Kamalakar Shantaram Wadke6 is a leading authority on jurisdiction of civil courts in industrial disputes. The three-judge bench of the Supreme Court held that (i) If the dispute is not an industrial dispute, nor does it relate to enforcement of any other right under the Act, the remedy lies only in the civil court. (ii) If the dispute is an industrial dispute arising out of a right or liability under the general or common law and not under the IDA, 1947, the jurisdiction of the civil court is alternative, leaving it to the election of the suitor concerned to choose his remedy for the relief which is competent to be granted in a particular remedy. (iii) If the industrial dispute relates to the enforcement of a right or an obligation created under the industrial Disputes Act, then the only remedy available to the suitor tis to get an adjudication under the Industrial Disputes act. (iv) If the right which is sought to be enforced is a right created under the Industrial Disputes Act, such as Chapter VA, then the remedy for its enforcement is either Section 33C or raising of an industrial dispute as the case may be. Cases of industrial disputes, by and large, are invariably bound to be covered by principle (iii) stated above. Again a three-judge bench of the Supreme Court in Rajasthan State Road Transport Corporation v. Krishna Kant7 held that: (i) ‘Where the dispute arises from general law of contract, i.e., where reliefs are claimed on the basis of the general law of contract, a suit filed in civil court cannot be said to be not maintainable, even though such a dispute may also constitute an ‘industrial dispute’ within the meaning of Section 2(k) or Section 2A of the Industrial Disputes Act, 1947. (ii) Where, however, the dispute involves recognition, observance or enforcement of any of the rights or obligations created by the Industrial Disputes Act, the only remedy is to approach the forums created by the said Act. (iii) Similarly, where the dispute involves the recognition, observance or enforcement of rights and obligations created by enactment, like Industrial Employment (Standing Orders) Act, 1946—which can be called "sister enactments" to Industrial Disputes Act and which do not provide a forum for resolution of such disputes, the only remedy shall be to approach the forums created by the Industrial Disputes Act provided they constitute industrial disputes within the meaning of Section 2(k) and Section 2A of Industrial Disputes Act or where such enactment says that such dispute shall be either treated as an industrial dispute or says that it shall be adjudicated by any of the forums created by the Industrial Disputes Act. Otherwise, recourse to civil court is open.

In Rajasthan State Road Transport Corporation v. Zakir Hussain8, the Supreme Court held that the employees of the corporation were not civil servants and they were not entitled to protection of Article 311(2) of the Constitution. While dealing with the question of jurisdiction of civil courts in matters of industrial disputes, the Court applied the principles enunciated in Rajasthan State Road Transport Corporation v. Krishna Kant (supra) and held that the respondent ought to have approached the remedies provided under the IDA and civil court has no jurisdiction to entertain and try the suit. A three-judge bench of the Supreme Court in Rajasthan SRTC v. Khadarmal9 again considered the question regarding jurisdiction of the civil court in the matter of termination of service of a probationer following its earlier judgements in Rajasthan SRTC v. Zakir Hussain (supra) and Rajasthan SRTC v. Krishna Kant (supra), held that as the civil court had no jurisdiction, the decrees which were passed have no force of law. It appears that in Rajasthan SRTC v. Bal Mukund Bairwa10, a two-judge bench of the Supreme Court noticed some conflict in the decisions in Krishna Kant and Khadarmal and accordingly, referred the matter to a larger bench. A three-judge bench of the Supreme Court in Rajasthan State Road Transport Corporation v. Bal Mukund Bairwa11 revisited the issue with regard to jurisdiction of the civil court to entertain suits questioning the orders of termination and held that if an employee intends to enforce his constitutional rights or a right under a statutory regulation, the civil court will have necessary jurisdiction to try a suit. If however, he claims his right and corresponding obligations only in terms of the provisions of the Industrial Disputes Act or the sister laws so called, the civil court will have none. The Court also held that it would not be correct to contend that only because the employee concerned is also a workman under the Industrial Disputes Act, 1947, or the conditions of his service are otherwise governed by the standing orders certified under the Industrial Employment (Standing Orders) Act, 1946, ipso facto the civil court will have no jurisdiction. The aforesaid matter was again considered by the Supreme Court in Rajasthan SRTC v. Mohar Singh12. The Court held that if the infringement of the standing orders or other provisions of the Industrial Disputes Act are alleged, the civil court’s jurisdiction may be held to be barred but if the suit is based on the violation of principles of common law or constitutional provisions or on other grounds, the civil court’s jurisdiction may not be held to be barred. If no right is claimed under a special statute in terms whereof the jurisdiction of the civil court is barred, the civil court will have jurisdiction.

In RSRTC v Deen Dayal Sharma13, the respondent who had hardly served for 3 months as a conductor was dismissed by the Rajasthan State Road Transport Corporation for not issuing tickets to six passengers. He then filed a civil suit. The trial judge dismissed the petition. The first and second appeals filed against the said order were also dismissed. The respondent then filed an appeal before the Supreme Court. He asserted that the departmental inquiry as contemplated under the standing orders ought to have been held before issuing the order of dismissal and in absence thereof such order was liable to be quashed. However, the Supreme Court held that such right, if available, could have been enforced by the respondent only by raising an industrial dispute and not in a civil suit. In such circumstances, it held that civil court had no jurisdiction to entertain and try the suit filed by the respondent.

1 2 3 4 5 6 7 8 9 10 11 12 13

AIR 1958 SC 358. AIR 1980 SC 2181. 2005 LLR 1044. 1986 Lab. IC 850 : AIR 1986 SC 842. 1999 Lab. IC 286 (Karnataka). (1976) 1 SCC 496. (1995) 5 SCC 75: 1995 LLR 481 (SC). (2005) 7 SCC 447. (2006) 1 SCC 59. (2007) 14 SCC 41. (2009) 4 SCC 299. (2008) 5 SCC 542. (2010) 5 SCALE 1.

CHAPTER

14 Concept and Scope of Individual and Industrial Disputes I. INDUSTRIAL DISPUTE Section 2 (k) of the Industrial Disputes Act, 1947, defines ‘industrial dispute’1 to mean: Any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is connected with the employment or nonemployment or the terms of employment or with the conditions of labour, of any person. The dimensions of the aforesaid definition determine the permissible area of both community intervention in industrial relations as well as labour activity. Stated broadly, the definition of ‘industrial dispute’ contains two limitations. (i) The adjective ‘industrial’ relates to the disputes of an industry as defined in the Act, and (ii) it expressly states that not all sorts of dispute and differences but only those which bear upon the relationship of employers and workmen regarding employment, non-employment, terms of employment and conditions of labour are contemplated.2 Broadly speaking, the definition of ‘industrial dispute’ may be analysed under four heads: (i) Factum of industrial dispute;

(ii) Parties to the dispute; (iii) Subject matter of the dispute;3 and (iv) Origin of the dispute.

A. Factum of Industrial Dispute The existence of a dispute or difference is the key to the expression ‘industrial dispute’. The expression ‘dispute or difference’ connotes a real and substantial difference having some element of persistency and continuity till resolved, and likely, if not adjusted, to endanger the industrial peace of the undertaking or the community.4 When the parties are at variance, and the dispute or difference is connected with the employment, or non-employment or the terms of employment or with the conditions of labour, there comes into existence an industrial dispute.5 But there is divergence of opinion among the courts on the issue whether a mere demand to the appropriate government or to the conciliation officer without a dispute being raised by the workmen with the employer regarding such demand can become an industrial dispute. The Supreme Court in Sindhu Resettlement Corporation Ltd v. Industrial Tribunal6 answered it in negative. Observed Justice Bhagwati: If no dispute at all was raised by the (workmen) with the management, any request sent by them to the government would only be a demand by them and not an industrial dispute between them and their employer. An industrial dispute, as defined, must be a dispute between employers and employers, employers and workmen and workmen and workmen. A mere demand to a government, without a dispute being raised by the workmen with their employer, cannot become an industrial dispute.7 The aforesaid view does not appear to be in conformity with the earlier decision of the Supreme Court in Bombay Union of Journalists v. The Hindu8 wherein it was held that industrial dispute must be in existence or apprehended on the date of reference. The net effect of the principle is that even if the demand was not made earlier before the management and rejected by them and is raised at the time of reference or during conciliation proceedings, the dispute may be an ‘industrial dispute’. The aforesaid view in the Hindu (Supra) appears to have been followed in Shambhu Nath Goel v. Bank of Baroda.9 An employee of the Bank of Baroda was dismissed from service after an inquiry in which the employee

appeared and claimed reinstatement. Further, when the union approached the conciliation officer, the management resisted the claim for reinstatement. Thereafter, the employee preferred an appeal to the competent authority. Before the tribunal, the management raised the preliminary objection that the employee had not made a demand. The tribunal accepted the claim of the management and held that the reference was incompetent. Thereafter, the employee preferred an appeal before the Supreme Court. The question arose whether the government’s reference was proper and in accordance with the provisions of the Act. The Court observed: … to read into the definition the requirement of written demand for bringing into existence an industrial dispute would be tantamount to rewriting the section. The Court added: Undoubtedly, it is for the government to be satisfied about the existence of the dispute and the government does appear to be satisfied. However, it would be open to the party impugning the reference that there was no material before the government, and it would be open to the tribunal to examine the question, but that does not mean that it can sit in appeal over the decision of the government. In Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd,10 the Government of Maharashtra referred a dispute between Hindustan Lever Ltd and its workmen for adjudication to the industrial tribunal, Maharashtra. A preliminary objection was raised by the employers that reference was incompetent because the dispute raised by workmen and referred by the government to the industrial tribunal was not an ‘industrial dispute’ because if the demand as raised is conceded, it would be tantamount to allowing the workmen to decide the strength of the work force required in various grades and it is well-settled that determining and deciding the strength of work force required in an industry is a management function. The industrial tribunal held that the dispute was not an ‘industrial dispute’. On appeal, the Supreme Court set aside the award and remitted the matter for disposing of the reference on merits and observed: The expression ‘industrial dispute’ has been so widely defined as not to leave anything out of its comprehension and purview involving the area of conflict that may develop between the

employer and the workmen and in respect of which a compulsory adjudication may not be available. This is recognized to be the width and comprehension of the expression. Be that as it may, the full bench of the Himachal Pradesh High Court in M/s Village Papers Pvt. Ltd v. State of Himachal Pradesh11 has summarized the views expressed by the Supreme Court and high courts on the aforesaid subject as follows: 1. A mere demand made to the government cannot become an industrial dispute without it being raised by the workmen with their employer. 2. If such a demand is made to the government, it can be forwarded to the management and if rejected, becomes an industrial dispute. 3. Though it is apparent that for a dispute to exist, there must be a demand by the workmen or the employer. This demand need not be in writing, unless the matter pertains to a public utility service, in view of the provisions of Section 22 of the Industrial Disputes Act, 1947. 4. The demand need not be sent directly to the employer nor it is essential for it to be made expressly. It can be even implied or constructive, e.g., by way of filing an appeal or refusal of an opportunity to work when demanded by the workmen. A demand can be made through the conciliation officer, who can forward it to the management and seek its reaction. If the reaction is in negative and not forthcoming and the parties remain at loggerheads, a dispute exists and a reference can be made. 5. Whether a dispute exists has to be decided in each case and is dependent on the facts and circumstances of that case. The crucial time for this examination is the date of making the reference; material which comes into existence after the reference has been made is not relevant. 6. Only that dispute which exists or is apprehended can be referred. If there is a different kind of demand made before the management and the reference pertains to some other demand, then the reference is incompetent, e.g., reference pertains to reinstatement whereas the demand pertains to retrenchment compensation. 7. The jurisdiction of the labour court/industrial tribunal is limited to the points specifically referred and matters incidental thereto. Since the scope of its jurisdiction and power is circumscribed by the order of reference, it is not permissible for it to go beyond the terms of reference. 8. Thus, if a reference is made without any demand having been made on the

employer either expressly or impliedly, there is no occasion for the employer to point out the nature of the dispute so as to facilitate the government for making an appropriate reference of the dispute.

B. Parties to the Industrial Dispute In order to fall within the definition of an ‘industrial dispute’, the dispute must be between: (i) employers, or (ii) employers and workmen, or (iii) workmen and workmen. Besides interpreting the key words, namely ‘employer’ and ‘workman’, which are statutorily defined and will be discussed in another section, tribunals and courts have indulged in judicial legislation. Trade unions as such are not mentioned in the definition of ‘industrial dispute’ because they act on behalf of the workmen and, therefore, when a trade union raises a dispute, the workmen are deemed to be parties to the dispute.12 However, the parties to the industrial dispute do not include disputes (i) between government and an industrial establishment or (ii) between workmen and nonworkmen.13 The words ‘employers and employers’ which did not occur in the Trade Disputes Act, 1929, were inserted in the Industrial Disputes Act, 1947, in order to give the definition of ‘industrial dispute’ a wide coverage. The disputes between employers and employers may arise in respect of wage matters in an area where labour is scarce or disputes of similar character. The words ‘workmen and workmen’ occur in Section 2 (k) to include the disputes between them either directly or through their trade unions. Such a dispute may be demarcation dispute, inter-union dispute, etc. Inter-union dispute has, however, not been held to be an ‘industrial dispute’.14 The aforesaid three expressions, namely, between employers and employers or between employers and workmen, or between workmen and workmen read with Section 13 (2) of the General Clauses Act, 1897 lead us to make the following categorizations: (i) Where both parties include more than one person: employers and employers, employers and workmen, workmen and workmen. (ii) Where only one of the parties includes more than one person: employer and employers, employer and workman, employers and workman, workmen and workman. (iii) Where both the parties are in singular: employer and employer, employer and workman, workman and workman.

(iv)

Where both the parties as in category (i) include more than one person, the dispute would be a collective dispute. Further, where one of the parties include more than one person, it may be categorized as ‘collective dispute’. However, doubts have been expressed whether the dispute between ‘employers and workman’ would be a ‘collective dispute’. Moreover, where both the parties as in category (ii) above are composed of single individuals, the case falls into the category of ‘individual dispute’.

C. Subject Matter of Industrial Dispute In order to be an ‘industrial dispute’, the dispute must be: …connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person. In practice, however, it is exceedingly difficult to draw a line between various expressions used to indicate the subject-matter of industrial dispute. Generally speaking, the expressions used in Section 2(k) are of wide amplitude and have been put in juxtaposition to make the definition thoroughly comprehensive.15 Thus, the phrase ‘conditions of labour’ is wide enough to include ‘terms of employment’ as well as matters connected with unemployment. Similarly, the expression ‘terms of employment’ includes certain matters relating to ‘employment or non-employment’. It is however, doubtful if the legislature intended any water-tight compartmentalization. The words ‘in connection with’ widen the scope of ‘industrial disputes’ and do not restrict it by any means. The legislature used these phrases in the definition of ‘industrial dispute’ so that all aspects of labour problems may be resolved through the industrial relations machinery provided under the Industrial Disputes Act, 1947. Any attempt to draw a rigid line would limit, or at least create an impression of limiting the scope of ‘industrial dispute’ which, it must be emphasized, deals not only with the disputes between employers and workmen but also between ‘employers and employers’ and between ‘workmen and workmen’. However, since every expression used by the legislature indicates certain meaning and idea, it is necessary to examine them. ‘Employment’ brings in the contract of service between the employer and the employed.16 The concept of employment involves three ingredients: (i) employer, (ii) employee and (iii) the contract of employment. The employer is one who employs, i.e., one who engages the services of other persons. The employee is one who works on hire basis. The employment is the contract of

service between the employer whereunder the employee agrees to serve the employer, subject to his control or supervisions. ‘Unemployment’ is the opposite of ‘employment’ and would mean that disputes of workmen which arise out of service with their employers are within the ambit of the definition. It is the positive or negative act of the employer that leads to employment or unemployment. It may relate to an existing fact of unemployment or a contemplated unemployment. Four illustrations were cited by the Federal Court in Western Indian Automobiles Association v. Industrial Tribunal17 in support of the aforesaid explanations. Of them, two are in respect of ‘employment and two are in respect of unemployment.’ A dispute is as to ‘employment’ or connected with or arising out of employment if: (i) An employer has already employed a person and a trade union says ‘please do not employ him’. (ii) An employer gives notice to a union saying that he wishes to employ two particular persons. The union says ‘no’. A matter raises a dispute as to unemployment or contemplated unemployment if: (i) An employer may dismiss a man, or decline to employ him. (ii) An employer contemplates turning out those who are already in his employment. The failure to employ or the refusal to employ are actions on the part of employer which would be covered by the expression ‘employment or unemployment’. Accordingly, the expression ‘unemployment’ is sufficiently elastic to include all cases of (i) termination of service either voluntary or by act of parties (as employer or workmen). The instances of this kind are dismissal,18 discharge, retrenchment19, compulsory retirement,20 etc. It also includes temporary unemployment, e.g., suspension, layoff, compulsory leave, lockout, strike, etc. Further, it would include within its scope the words arising out of unemployment, e.g., reinstatement,21 re-employment, compensation and back wages for wrongful termination of service. The expression ‘terms of employment’ and ‘conditions of labour’ indicate the kind of conflict between those engaged in industry on the opposite but cooperative sides.22 These words connote dispute to be the share in which the receipts in a commercial venture shall be divided. The expression ‘terms of employment’ generally covers basic wages, dearness allowance and other allowances, wages on promotion, wages on demotion, wages on transfer out of town, wages for over-time work, wages for work on holiday, payment of wages, recovery of wages, bonus, retiral benefits,

e.g., pension, provident fund, gratuity, pension, etc. The expression ‘conditions of labour’ is much wider in scope and refers to the conditions of service under which they work and the amenities provided or to be provided to them. This expression may include hours of work, holidays, leave, health, safety and welfare of labour. Quite apart from those matters which have been said to be covered in the subject-matter of industrial dispute, an analysis of decided cases reveals that following matters have also been included in the definitions: (i) alteration of conditions of service of employees23 (ii) demand for modification of standing orders24 (iii) disputes regarding contract labour25 (iv) dispute on lockout in disguise of closure26 (v) dispute of workmen whose cases are left unsettled27 (vi) transfer of workman from one place to another28. In Workmen of Hindustan Levers Ltd v. Hindustan Levers Ltd29, a question arose whether a demand for confirmation in the promoted post would be a dispute connected with the terms of employment or the conditions of labour within the meaning of Section 2 (k). The Supreme Court answered the question in the affirmative and observed: In respect of the classification, a dispute can conceivably arise between the employer and the workman because failure of the employer to carry out the statutory obligation would enable the workman to question his action which will bring into existence a dispute. It would become an industrial dispute because it would be connected with the conditions of employment. It becomes a condition of employment because necessary conditions of service have to be statutorily prescribed, one such being classification of the workmen was to confirm employees employed in an acting capacity in a grade, it would unquestionably be an industrial dispute. However, dispute between two unions regarding membership of the union is not an ‘industrial dispute.’30 In Cipla Limited v. Maharashtra General Kamgar Union,31 the Supreme Court held that, if the employees are working under a contract covered by the Contract Labour (Regulation and Abolition) Act, then the labour court or the industrial tribunals have no jurisdiction to decide the question of abolition of contract labour as it falls within the province of an appropriate government to abolish the same. But if the workmen claim that they have been directly employed by the company but the contract itself is a camouflage and, therefore,

needs to be adjudicated, is a matter which can be adjudicated by the appropriate industrial tribunal or labour court under the Industrial Disputes Act, 1947.

D. Origin of Industrial Dispute The scope of the expression ‘any person’ occurring in the last part of the definition of ‘industrial dispute’ has been a subject matter of controversy. The question has arisen in several cases before the high courts and also before the Supreme Court as to what exactly is the scope of the expression ‘any person’ as contemplated in Section 2 (k). If construed literally, it may mean and include both natural as well as artificial persons. On the contrary, if interpreted narrowly, the expression ‘of any person’ may be equated with ‘workman’. How and where to draw a line is not easy to answer. An analysis of the decided cases of tribunals and courts reveals that prior to the Supreme Court decision in Dimakuchi Tea Estate (supra), there was no unanimity of opinion with regards to the scope of the expression ‘any person’. Three views were discernible. (i) The first view emphasized the literal meaning and held that employment or non-employment or terms of employment or conditions of labour of any person whether that person is a workman or not and whether that person was a sweeper in a director’s bungalow could form the subject matter of industrial dispute.32 According to them, if ‘the intention of the Legislature was to restrict the scope of the expression of industrial dispute as a dispute between employers and workmen relating to the terms of employment of workmen alone, there was no need to use the wider expression of ‘any person’.33 (ii) The second view equated the word ‘person’ with that of ‘workman’. According to the supporters of this line of view, unless the ‘person’ was a ‘workman’ within the meaning of Section 2(s) of the Industrial Disputes Act, 1947, a dispute concerning him could not be an ‘industrial dispute’ under Section 2(k).34 (iii) The third view adopted a middle course, namely that ‘concerned person’ need not necessarily be a ‘workman’ within the meaning of the Act; it was enough if the present workmen of the employer were interested in such a person and the employer had the capacity to grant the requested demand. The supporters of this view emphasized that merely because such a dispute would become an ‘industrial dispute’, it did not follow that the demand would be accepted. The construction of the word ‘any person’ came up for consideration before the Supreme Court in Assam Chah Karamchari Sangha v. Dimakuchi

Tea Estate.35 There, Mr Banerjee was appointed by the tea estate as an assistant medical officer, on three months’ probation. After 3 months, his services were terminated by the management after paying him one month’s salary in lieu of notice. The legality of the termination of service was questioned and the cause of the assistant medical officer was espoused by the workers’ union of tea estate. The government of Assam referred the dispute to the industrial tribunal about his reinstatement. The management raised a preliminary objection that the assistant medical officer was not a ‘workman’ and hence the industrial tribunal had no jurisdiction to adjudicate the question of reinstatement. The tribunal upheld the management’s plea. On appeal before the Supreme Court, a question arose whether the workmen of the tea estate can raise an industrial dispute regarding the termination of service of an assistant medical officer (who was not a workman of the Tea Estate. Justice S K Das, who wrote the majority judgement for the Court, while explaining the expression ‘any person’ in the definition clause held that it cannot mean anybody and everybody in this world. The expression according to his Lordship means: … a person in whose employment, or non-employment, or terms of employment or conditions of labour the workmen as a class have a direct or substantial interest with whom they have under the scheme of the Act, a community of interest. Our reason for so holding is not merely that the Act makes a distinction between workmen and non-workmen, but because a dispute to be a real dispute must be one in which the parties to the dispute have a direct or substantial interest. Can it be said that workmen as a class are directly or substantially interested in the employment, non-employment, terms of employment or conditions of labour of persons who belong to the supervisory staff and are, under the provisions of the Act, non-workmen and for whose representation the Act makes no particular provision? We venture to think that the answer must be in the negative. He further pointed out that though a dispute concerning a person who is not a ‘workman’ may be an ‘industrial dispute’ within the meaning of Section 2(k), having regard to the scheme, object and the provisions of the Industrial Disputes Act, 1947 the expression ‘any person’ in the definition clause must be read subject to two crucial limitations and qualification, namely: (i) the dispute must be a real dispute between the parties to the dispute (as indicated in the first two parts of the definition clause) so as to be capable of

settlement or adjudication by one party to the dispute giving necessary relief to the other, and (ii) the persons regarding whom the dispute is raised must be one in whose employment, non-employment, terms of employment or conditions of labour (as the case may be) the parties to the dispute have direct or substantial interest. He then observed: In the absence of such interest, the dispute cannot be said to be a real dispute between the parties. Where the workmen raise a dispute as against their employer, the person regarding whose employment, non-employment, terms of employment or conditions of labour the dispute is raised need not be the ‘workmen’ but workmen as a class have a direct or substantial interest. The Court in its majority judgement accordingly held that the medical officer was not a ‘workman’ because he could not be held to have any community of interest with the other members of the union to justify the industrial dispute being raised with regard to his unemployment. The aforesaid majority view was reaffirmed by the larger bench of the Supreme Court in Workmen of Dahingeapar Tea Estate v. Dahingeapar Tea Estate36 and was reiterated in Kays Construction Co. Ltd v. Its Workmen.37 In the former case, a tea estate was sold as a going concern and the purchaser continued to employ the labour and some other members of the staff of the vendor. Under the agreement of sale, an option was given to the purchaser to continue to employ the members of the staff. It also made the vendor liable for the claims made by the members of the staff not retained in service by the purchaser. The claims of the members of the staff not retained in service by the vendee tea estate was raised by the workmen of the vendee tea estate. A question arose whether the dispute raised by such workmen regarding the employment of rest of the staff was an ‘industrial dispute.’ Justice S K Das (who wrote the majority view in Dimakuchi Tea Estate supra) delivering the judgement for the Court applied the test laid down in Dimakuchi case and held that such a dispute was an ‘industrial dispute’. In the latter case, the business of M/s Kays Construction Co. was taken over by a private company called M/s Kays Construction Co. (Pvt) Ltd. The successor company had the proprietor, his wife and manager of the vendor company as its directors. The transferee employer refused to employ certain workmen of the transferrer employer. The workmen of the transferee employer raised a dispute regarding the erstwhile co-employees of

the transferrer employer. It was held that a dispute which validly gave rise to a reference under the Industrial Disputes Act need not necessarily be a dispute directly between an employer and his workmen. The Court further held that the definition of the expression ‘industrial dispute’ was wide enough to cover a dispute raised by the workmen in regard to the non-employment of others who may not be the workmen at the material time. The application and interpretation of ‘any person’ again came up for consideration of the Supreme Court in Standard Vacuum Refining Co. of India Ltd v. Their Workmen.38 In this case, regular workmen of the company raised an industrial dispute relating to contract labour. The dispute was that the workers of the contractor (who in effect were doing the work of the company) unlike regular workmen of the company, were getting low wages and were not provided any security of tenure. The regular workmen who raised their dispute, therefore, wanted that the contract system should be abolished and the contractors be considered as workmen of the company. Following Dimakuchi Tea Estate (supra), the Supreme Court held that the dispute was an ‘industrial dispute’ because: (i) the regular workmen of the company had a community of interest with the contractor’s workers (who were, in effect, working for the same employer), (ii) the workmen had substantial interest in the subject-matter of the dispute of contractor’s workers in the sense that the class to which they belong (namely workmen) was substantially affected thereby and (iii) the company could give relief in the matter. Again in Bombay Union of Journalists v. The Hindu39, the cause of a working journalist was taken up by a trade union of his profession, but not by other journalists under the employment of that particular branch office of the Hindu, in which he was employed. The Supreme Court, while determining the scope of ‘any person’ demonstrated how the test of ‘direct and substantial control’ could be applied. Justice Shah observed: The principle that the persons who seek to support the cause of a workman must themselves be directly and substantially interested in the dispute in our view applied to this class of cases also; persons who are not employees of the same employer cannot be regarded as so interested that by their support they may convert an individual dispute into an industrial dispute. This application of the test only confirms the fears expressed by Justice Sarkar of the Supreme Court in his dissenting judgement in Dimakuchi Tea Estate case.40 Adverting later to the fact that the Act is dealing with a new

concept, that of relations between employer and employee or between capital and labour—he sounded a warning to bear in mind that the concept is undergoing a ‘fast change’ from day-to-day. He observed: The numerous and radical amendments made in the Act since it came on the statute book not so long ago, testify to the fastchanging nature of the concept. Bearing all these things in mind, I find it almost impossible to define adequately or with any usefulness an interest which will serve the purposes of the Act. I feel that an attempt to do so will introduce a rigidity which will work harm and no good. Nor does it, to my mind, in any manner help to define such interest by calling it direct and substantial. He added: It is enough to assume that as normal men, workmen would not raise a dispute or threaten industrial peace on account of it unless they are interested in it … It is not a condition of an industrial dispute that workmen must be interested in it and no question of interest falls for decision by a court if it can be called upon to decide whether a dispute is an industrial dispute or not. In All India Reserve Bank Employees’ Association v. Reserve Bank of India41 the Court coined a new phrase ‘vitally interested’ to determine the scope of ‘any person’ in Section 2(k). In this case, a question arose whether the ‘workmen’ belonging to class III (who drew less than ₹500 per month) of the Reserve Bank of India were entitled to raise the dispute in respect of Class II employees who were doing supervisory nature of duties and drawing more than ₹500 per month and were excluded from the ambit of ‘workmen’. The Supreme Court, after referring to the first excerpt (cited earlier by the author) in Diniakuchi Tea Estate supra, added: It may, however, be said that if the dispute regarding employment, non-employment, terms of employment or conditions of labour of non-workmen in which workmen are themselves vitally interested, the workmen may be able to raise an industrial dispute. Workmen can, for example, raise a dispute that a class of employees not within the definition of workmen should be recruited by promotion from workmen. The workmen can also raise a dispute about the terms of the their own

employment though incidentally the terms of employment of those who are not workmen is involved. But workmen cannot take up a dispute in respect of a class of employees who are not workmen and (in whom workmen) have no direct interest of their own. What direct interest suffices, is a question of fact but it must be a real and positive interest and not fanciful or remote. The Court also rejected the management’s contention that the tribunal had no jurisdiction to adjudicate in respect of the dispute between it and those of its employees who fell within the purview of ‘workmen’. Observed Justice Hidayatullah: It follows, therefore, that the national tribunal was in error is not considering the claims of Class II employees whether at the instance of members drawing less than ₹500 as wages or at the instance of those lower down in the scale of wages in excess of ₹500 per month at any stage were not within the jurisdiction of tribunal or that government could not make a reference in such a contingency. The aforesaid issue once again came up for consideration in Workmen v. Greaves Cotton Ltd42 in which it was held : It would, therefore, appear that the consistent view of this court is that non-workmen as well as workmen can raise a dispute in respect of matter affecting their employment, conditions of service, etc., where they have a community of interest, provided they are direct and not remote. It is submitted that the aforesaid observation does not correctly reflect the law stated in earlier decisions of the Supreme Court. In none of the aforesaid decisions of the Supreme Court, is it stated that non-workmen can raise a dispute in respect of matters affecting their employment, unemployment, terms of employment or conditions of labour where they have community of interest. Greaves Cotton Ltd, poses a question as to what would happen if none at all or all the ‘workmen’ have become non-workmen either during the pendency or at the time or adjudication. Does the dispute survive? The Court answered it in negative. Observed Justice Jagamohan Reddy: … if there are no workmen of the category with respect to whom the dispute has been referred, the tribunal cannot be called upon

to prescribe a wage structure for non-existing workmen, nor does it have the jurisdiction to do so.43 We are inclined to agree with the aforesaid view. It may, however, be added that the ‘direct or substantial interest’ test to limit the horizons of the expression ‘any person’, has not been uniformly applied. While the workman has been said to be substantially interested in the subject matter of contractor’s employees44, he is not held to be so interested in case of ‘doctors’45 or ‘supervisors’46 who were not ‘workmen’ but employees of the same employer. Again the ‘workmen of the transferee company are said to have a direct or substantial interest in the dispute of unemployment by the transferee employer of the erstwhile co-employees of the transferor employer.47 Quite apart from this, the application of the aforesaid test is not in conformity with the statement that ‘persons who are not employees of the same employer cannot be regarded as so interested, that by their support they may convert an individual dispute into an industrial dispute’.48 In Bongaigaon Refinery & Petrochemicals Ltd v. Samijuddin Ahmed,49 a question arose whether a person who had been issued an offer of appointment which was withdrawn before he could join on knowing that he had suppressed material facts and who raised a dispute about his non-employment could fall within the meaning of ‘any person’ under Section 2(k) of the Industrial Disputes Act. The Court answered the question in negative and held that the reference of the dispute under Section 10 of the Act was wholly unwarranted and uncalled for. The present case did not satisfy the test laid down in Dimakuchi Tea Estate so as to warrant the validity of the reference being upheld. It rejected the contention of the respondent that his case fell within the meaning of ‘any person’ even if he was not a ‘workman’ stricto sensu and held that ‘any person’ cannot be read without limitation. In a case where employer-employee relationship never existed and can never possibly exist cannot be the subject matter of dispute between employer and workmen. Accordingly, the Court set aside the judgement of the division bench of the High Court and restored the judgement of the single judge of the High Court.

II. INDIVIDUAL DISPUTE A. Judicial Legislation Is a dispute between an individual workman and his employer an ‘industrial

dispute’ under Section 2 (k) of IDA? This question has evoked considerable conflict of opinion. Prior to the Supreme Court decision in Central Provinces Transport Services v. Raghunath Gopal Patwardhan50 disclosed three different views as to the meaning of the expression ‘industrial dispute’. They are (i) a dispute between an employer and single workman cannot be an ‘industrial dispute’51 (ii) it can be an industrial dispute52 and (iii) it cannot per se be an industrial dispute but may become one if taken up by a trade union or a number of workmen.53 In Central Provinces Transport Services Ltd v. Raghunath Gopal Patwardhan54, though the question which directly arose, was whether a dismissed worker was an employee within the meaning of Section 2 (10) of the Central Provinces and Brar Industrial Disputes Settlement Act, 1947, the Supreme Court considered the scope of ‘industrial dispute’ as defined in Section 2(k) of the Industrial Disputes Act. The Court, after referring to the divergent opinions expressed by tribunals and courts as to its applicability in the case of a dispute between employer and a single workman, observed: The preponderance of judicial opinions is clearly in favour of the last of the three views stated above, and there is considerable reason behind it. Notwithstanding that the language of Section (2) (k) is wide enough to cover a dispute between an employer and single employee, the scheme of the Industrial Disputes Act does appear to contemplate that the machinery provided therein should be set in motion, to settle only disputes which involve the rights of workmen as a class and that a dispute touching the individual rights of a workman was not intended to be the subject of an adjudication under the Act, when the same has not been taken up by the union or a number of workmen. Although the question did not arise directly, the Supreme Court in D N Banerjee v. P R Mukherjee55 discussed the scope of ‘industrial dispute’ (in the context of individual dispute) and observed that the words: Convey the meaning to the ordinary mind that the dispute must be such as would affect large groups of workmen and employers ranged on opposite sides… But at the same time, having regard to the modern conditions of society where capital and labour have organized themselves into groups for the purpose of fighting their disputes and settling them on the basis of the

theory that union is strength, and collective bargaining has come to stay, a single employee’s case might develop into an industrial dispute, when as often happens, it is taken up by the trade union of which he is a member and there is concerted demand by the employees for redress. The aforesaid issue figured directly in Newspapers Ltd v. State Industrial Tribunal56. In this case, Tajammal Hussain, a linotypist was dismissed by the Newspapers Ltd on the ground of incompetence. His case was neither taken up by the union of workers of the establishment nor by any union of allied or similar trade. His case was, however, taken up by the U P Working Journalists Union, with which the employee had no concern. The government referred the dispute to the industrial tribunal for adjudication. The tribunal ordered reinstatement. The appellate tribunal and the High Court, successively affirmed. Thereupon, the management preferred an appeal to the Supreme Court. Justice Kapoor who delivered the judgement for the Court made the following significant observation: The case of respondent No. 3 was not taken up by union of the workers of the appellant company nor by any of unions of workmen employed in similar or allied trades but the U P Journalists Union, Lucknow, with which respondent No. 3 had no connection, took the matter to the Conciliation Board, Allahabad. The Court accordingly held that Tajammal Hussain could not be termed as workmen (in the plural) nor could U P Working Journalists Union be called ‘his union’ nor is there any indication that the individual dispute had been transformed into ‘industrial dispute’. Bombay Union of Journalists v. The Hindu,57 however, has tried to further curtail the scope of ‘industrial dispute.’ In this case, the dispute of the workman was taken up by the Bombay Union of Journalists of which union the workman was a member. The Bombay Union of Journalists was a union not of employees of one establishment but of employees of the entire industry of journalism in Bombay. None of the employees of the Hindu were its members. The industrial tribunal, on these facts, held that the dispute was merely an ‘individual dispute’ and not an ‘industrial dispute’. The Supreme Court affirmed the decision. Justice Shah who delivered the judgement for the Court observed: The dispute, in the present case, is prima facie an ‘individual

dispute.’ In order that it may become an industrial dispute, it had to be established that it had been taken up by the union of the employees of the ‘The Hindu’ Bombay or by an appreciable number of employees of the ‘The Hindu’ Bombay. Justice Shah rationalized his decision on the basis of an earlier decision of the Supreme Court and observed: In Workmen of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea Estate, this Court held by a majority that the two tests of an industrial dispute as defined by Section 2(k) of the Industrial Disputes Act, 1947, must, therefore be: (1) the dispute must be a real dispute capable of being settled by relief given by one party to the other, and, (2) the person in respect of whom the dispute is raised must be one in whose employment, non-employment, terms of employment, or conditions of labour (as the case may be), the parties to the dispute have a direct or substantial interest and this must depend on facts and circumstances of each particular case. In that case, certain employees sought to raise a dispute about a person who was not a workman. In the present case, members of the union who were not workmen of the employer against whom the dispute was sought to be raised, seek by supporting the dispute to convert what is prima facie an individual dispute into an industrial dispute. The principle that the persons who seek to support the cause of the workmen must themselves be directly and substantially interested in the dispute, in our view, applies to this class of cases also: persons who are not employees of the same employer cannot be regarded as so interested, that by their support they may convert an individual dispute into an industrial dispute. The mere support to his cause by the Bombay Union of Journalists cannot, therefore, assist the claim of Salivateeswaran so as to convert it into an industrial dispute. The aforesaid requirements resulted in curtailing the growth of industrywide unions and runs counter to the decision in Newspaper Ltd supra. However, the Supreme Court in Workmen of Dharampal Prem Chand v. M/s Dharampal Prem Chand58 relaxed the requirement that only the union of the employees of the same employer against whom demands are made, can raise an industrial dispute59. Thus the Court, by distinguishing process impliedly overruled the

decision in Bombay Union of Journalists v. The Hindu supra. The firm dismissed its 18 workmen. The Mercantile Employees Association (which was the employees’ union) of which the dismissed workmen were members took up the cause of these dismissed workmen. A contention was raised that besides the 18 dismissed workmen, no other workman of the employer was the member of the said association and as such the association was not authorized to raise an industrial dispute. Rejecting the contention, the Supreme Court observed: … It is conceivable that the workmen of an establishment have no union of their own, and some or all of them join the union of another establishment belonging to the same industry. In such a case, if such a union takes up the cause of the workmen working in an establishment which has no union of its own, it would be unreasonable to hold that the dispute does not become an industrial dispute because the union which sponsored it is not the union exclusively of the workmen working in the establishment concerned… In some cases, the union of workmen working in the one industry may be competent to raise a dispute about the wrongful dismissal of an employee engaged in an establishment belonging to the same industry where workmen in such an establishment have no union of their own and an appreciable number of such workmen had joined such other union before their dismissal. Earlier, the Court observed: It is well known that in dealing with industrial disputes, industrial adjudication is generally reluctant to lay down any hard and fast rule or adopt any test of general or universal application. The approach of industrial adjudication in dealing with industrial disputes had necessarily to be pragmatic, and the tests which it applied and the considerations on which it relied would vary from case to case and would not admit any rigid or inflexible formula… The object of trade union movement is to encourage the formation of larger and bigger unions on healthy and proper trade union lines, and this object would be frustrated if industrial adjudication were to adopt the rigid rule that before any dispute about wrongful dismissal can be validly referred under Section 10 (1) of the Act, it should receive the support of the union consisting exclusively of the workmen working in the

establishment concerned. The question again came up for consideration in Workmen of Indian Express Ltd v. Management of Indian Express Ltd.60 In this case, a question arose whether the cause of two workmen in a particular establishment in an industry could be sponsored by Delhi Union of Working Journalists, which was not a union of workmen of the establishment but a union in similar or allied trade. Dealing with the contention, the Supreme Court observed: … where the workmen of an establishment have no union of their own and some or all of them have joined a union of another establishment belonging to the same industry, if such a union takes up the cause of the workmen working in an establishment which has no union of its own, the dispute would become an industrial one if such a union can claim a representative character in a way that its support would make the dispute an industrial dispute. Another principle laid down by the Supreme Court in M/s Western India Match Co. Ltd v. Western India Match Company Workers’ Union61 is that the parties to the reference being the employer and his employees, the test must necessarily be whether the dispute referred to adjudication is one in which the workman and substantial section of those who have a direct and substantial interest even though such a dispute relates to a single workman. The Supreme Court held that an ‘individual dispute’ may be converted into an industrial dispute by the workmen espousing it on the ground that they have community of interest and are directly or substantially interested in the employment, nonemployment or conditions of work of the concerned workmen. In J H Yadav v. M/S Forbes Gokak62, the appellant who was employed by the respondent, claimed promotion as a clerk. When this was not granted, the appellant raised an industrial dispute. The tribunal held that in view of the evidence given by the general secretary and the documents produced, it was clear that the appellant's cause had been espoused by the union which was one of the unions of the respondent employer. On the merits, the tribunal accepted the appellant's contentions that employees who were junior to him have been promoted as clerks. The award of the industrial tribunal was challenged by the respondent by way of a writ petition. A single judge dismissed the writ petition. The respondent being aggrieved, filed a writ appeal before the High Court. The High Court, while construing Section 2(k) of the Industrial Disputes Act, 1947, came to the conclusion that (i) an individual dispute is not an industrial dispute

unless it directly and substantially affects the interest of other workmen, (ii) an individual dispute should be taken up by a union which has representative character or by a substantial number of employees before it can be converted into an industrial dispute neither of which had happened in the present case, (iii) there was nothing on record to show that the appellant was a member of the union or that the dispute has been espoused by the union by passing any resolution in that regard. On appeal, the Supreme Court held that in the present case, it was not questioned that the appellant was a member of the Gokak Mills Staff Union. Nor was any issue raised that the union was not of the respondent establishment. The objection as noted in the issues framed by the industrial tribunal was that the union was not the majority union. The Court in view of its earlier decision in Dharam Pal's case, held that the objection was rightly rejected by the tribunal and wrongly accepted by the High Court. The aforesaid decisions indicate that individual dispute per se is not ‘industrial dispute’ unless it is espoused by: (i) trade union or (ii) appreciable number of workmen. It is, therefore, necessary to examine the aforesaid requirement in details. 1. Requirement of Appreciable Number: It has been seen that courts insist that in order to convert an individual dispute into ‘industrial dispute’, the dispute must be espoused by ‘appreciable number’ either of the entire labour force in the establishment or at least in a particular section thereof to which the dispute relates. But courts at the same time have admitted that the expression ‘appreciable number’ does not necessarily mean majority of workmen in the establishment or, indeed, even in the section in which the aggrieved workman was employed. But then, they have also declined to categorically delineate the limits of that illusive requirement. Thus, the task of defining the expression has been left for case to case determination. Thus in Workmen v. M/s Dharampal Prem Chand63, out of 45 employees, 18 were dismissed. There was no union of workmen. It was held that they could raise a dispute by themselves. In Workmen of Indian Express Newspaper v. Management64, 31 out of the total 68 working journalists of the union in the establishment espousing the cause met the requirement of ‘appreciable number’. It was also held that even if the number of working journalists was taken to be 131, the representation of 25 per cent could be an ‘appreciable number’. Similarly, in Workmen v. Rohtak General Transport Company65, five out of 22 workmen sponsoring the union were held to be ‘appreciable number’. But, in State of Punjab v. Gondhara Transport (P) Ltd66, espousal of dispute by five out of 60 workmen of the establishment was held not

to be an ‘appreciable number.’ From these decisions, it is evident that there is no uniformity as to what amounts to ‘appreciable number’. 2. Requirement of Dispute Being Sponsored by Trade Unions: Notwithstanding the decision in Bombay Union of Journalists v. The Hindu67 the Supreme Court has held that in order to convert an individual dispute into ‘industrial dispute’, it must be taken up by a union of workers of the establishment and where there is no such union, it may be sponsored by any of the unions of workmen employed in similar or allied trades.68 The union of the plant may even be a minority union.69 Further, the sponsoring union need not be a registered or a recognized trade union.70 The aforesaid principle was laid down in Newspapers Ltd v. U P State Industrial Tribunal71 and State of Bombay v. Kripa Shankar Jaiswal.72 In the former case, the cause of certain retrenched workmen was espoused by an unregistered body known as Leader Press Karamchari Sangh. The government referred the dispute to the industrial tribunal for adjudication. The tribunal directed the employer to reinstate the said workmen. On dismissal of the writ petition, the management filed an appeal wherein it was contended before the Supreme Court that the association which sponsored the cause of the concerned workmen was an unregistered body and, therefore, the reference was invalid. Rejecting the contention Justice Gajendragadkar, speaking for the Court held, that ‘it is not necessary that a registered body should sponsor a workman’s case to make it an industrial dispute. Once it is shown that a body of workmen, either acting through their union or otherwise, had sponsored a workman’s case, it becomes an industrial dispute.’ In the latter case, the respondent was prosecuted under Section 29 for not carrying out the terms of settlement arrived at, between him and Mankatha Distillery Panchayta Union. The defence was that the union was neither a registered nor a recognized union. The Patna High Court held that lack of registration or recognition of trade union incapacitated the union from raising an industrial dispute, and consequently there could not be a valid settlement arrived at in the course of conciliation proceedings. The respondent was accordingly acquitted. The Supreme Court, however, took the contrary view: It would be an erroneous view if it were said that for a dispute to constitute an industrial dispute, it is a requisite condition that it should be sponsored by a recognized union or that all the workmen of an industrial establishment should be parties to it. A dispute becomes an industrial dispute even where it is sponsored

by a union which is not registered as in the instant case or where the dispute raised is by some of the workmen because in either case, the matter falls within Section 18 (3) (a) and 18 (d) of the Act. The aforesaid view was reaffirmed in Pradip Lamp Works v. Its Workmen.73 From the aforesaid decision, it is evident that the sponsoring union may be (i) unregistered (ii) unrecognized or (iii) minority. This view is valid because Trade Unions Act, 1926 does not provide either for compulsory registration of trade union or for recognition of trade union. This view would require consideration when the provisions for compulsory recognition of trade union would be incorporated under the Trade Unions Act. There is yet another issue, namely, whether formal authorization of a trade union to sponsor the cause of aggrieved workmen is necessary. The high courts are divided on the issue whether the burden of proof lies upon the union to prove that it had the authority to represent the cause of individual workmen so as to convert an individual dispute into an industrial dispute. The Madras74, Andhra Pradesh75, Mysore76, Calcutta77, Madras78, Patna, Kerala and Bombay High Courts have taken the view that when a dispute of a workman or workmen is espoused by a union and its authority is challenged by the employer, it must be proved by the union concerned, by appropriate resolution being passed by the general body of the union or otherwise that it had the authority to take up the cause of aggrieved workmen.79 On the other hand, the Punjab High Court took the opposite view, namely, there must be a presumption that when the union takes up the cause of the aggrieved workmen, it has the support of the members of the union and then it is for the company to prove that facts are otherwise and that the members of the union are not behind it in the action. The Supreme Court in Bombay Union of Journalists v. The Hindu80 seems to be inclined to affirm the former view of majority of the high courts when it said that ‘apart from the statement that 225 members of the union requested its secretary to take up the cause of Salivateeswaran, there was nothing to show that the union as such had passed any resolution or authorized its secretary to take up Salivateeswaran’s cause and to raise an industrial dispute thereon’. It is submitted that the Punjab High Court’s view seems to be more convincing. To this it may be added that the Court may well look into the constitution of the union to ascertain whether the president/secretary had the authority to do what they have done.

It has also been held that the registration of trade union concerned under the Trade Unions Act is not conclusive proof of its real existence or the authority to represent the workmen on reference before the tribunal. Furthermore, negotiations by some officials of the union with the workmen for conciliation by executing certain documents on behalf of the workmen prior to the reference are no conclusive proof of the authority of the union to represent the cause of aggrieved workmen.81 3. Effect of Subsequent Withdrawal of Support by Workmen: It has now been settled through the Supreme Court decision82 that subsequent withdrawal of support by the workmen of a cause previously espoused by them would not take away the jurisdiction of an industrial tribunal. Likewise, if the dispute was in its inception an individual dispute and continued to be such till the date of reference by the government, it would not be converted into an industrial dispute by support subsequent to the reference even if workmen are interested in the dispute. This principle is also applicable in subsequent withdrawal of the case by a union. Thus, it has been held that the dispute with regard to the dismissal does not cease to be an industrial dispute after the union ceased to sponsor his case because if there was an industrial dispute at the time of reference, it would not cease to be one merely because the claim of some of the dismissed employees was settled by mutual agreement.83 4. Form of Espousal: The Supreme Court in J H Yadav v. M/S Forbes 84 Gokak held that as far as espousal is concerned, there is no particular form prescribed to effect such espousal. But there is no doubt that the union must normally express itself in the form of a resolution which should be proved if it is in issue. However, proof of support by the union may also be available aliunde. It would depend upon the facts of each case. 5. Time for the Espousal of the Dispute: In Western India Match Co. v. Workers’ Union85, the Supreme Court held that the test is whether the dispute referred to adjudication is one in which the workmen or a substantial section of them have a direct and substantial interest even though it relates to a single workman. Such an interest on the part of workman must exist on the date of reference and not necessarily on the date on which the cause occurs, as otherwise an individual dispute cannot become an industrial dispute. 6. Institution of Legal Proceedings by Legal Heir of Deceased Workman: In Smt. Anjilamma v. Labour Court86, the Andhra Pradesh High Court held that the legal heirs of deceased workmen have locus standi to pursue a dispute against dismissal of deceased workmen either by continuing the

pending proceedings or by instituting fresh proceedings. 7. Industrial Dispute Survives even after Death of Workman: The Supreme Court in Rameshwar Manjihi v. Sangramgarh Colliery87 held that industrial dispute survives even after the death of workmen and the maxim actio personalis moritur cum persona does not apply. Accordingly, the proceedings before the tribunal may be continued by the legal heir/representative of the deceased workmen. 8. An Appraisal: A survey of the aforesaid decisions indicates that the following tests have been applied by the Court in determining as to when an individual dispute would be converted into an ‘industrial dispute’. (a) If the cause of aggrieved workmen is taken up by appreciable number of workmen or the union of workmen (either registered or not or whether recognized or unrecognized or whether majority or minority union) or in the absence of any union of workmen by union of similar or allied trade and there is a concerted demand by the workmen for redress. (b) If the workmen espousing it have a community of interest and are directly or substantially interested in the employment, non-employment, terms of employment or conditions of labour of the concerned workman/workmen. (c) If such an interest on the part of workman or substantial number of workmen exists on the date of reference and need not necessarily exist on the date on which the cause occurs. (d) A dispute would not cease to be an ‘industrial dispute’ on subsequent support or withdrawal of a cause of individual dispute previously espoused by a workmen or union. The net effect of the aforesaid decisions is that an individual worker, unsupported by ‘appreciable number’ of workmen or the union, has no remedy under the Industrial Disputes Act, 1947, particularly when no dispute is pending before authorities under the Industrial Disputes Act, 1947.

III. LEGISLATIVE RESPONSE : INSERTION OF SECTION 2A In the preceding section, it has been seen that before the introduction of Section 2A as a result of judicial legislation, an individual workman who was discharged, dismissed, retrenched or whose service was otherwise terminated or

who had been transferred, suspended or was subject to any other punishment, had no remedy under the Industrial Disputes Act, unless his case was sponsored by his fellow workmen or by a trade union. In such a situation, he had been left with no alternative but to approach the civil court and involve himself in lengthy and expensive civil remedy. Section 2A of the Industrial Disputes (Amendment) Act, 1965 attempts to mitigate some of the hardships caused as a result of judicial pronouncements.88 Section 2A came into force on 1 December 1965. Section 2A provides: where an employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, any dispute or difference between an individual workman and his employer connected with, or arising out of such discharge, dismissal, retrenchment or termination shall be deemed to be an ‘‘industrial dispute’ notwithstanding that no other workman nor any union of workmen is a party to the dispute. The net effect of Section 2A is that by legislative action, such a dispute is deemed to be an industrial dispute even where it is not espoused by a trade union or appreciable number of workmen.89 Thus, the result of insertion of Section 2A was that, what was not an ‘industrial dispute’ as per the interpretation of the Supreme Court, would be deemed to be an ‘industrial dispute’. But there is a difference between an individual dispute which is deemed to be an industrial dispute under Section 2A of the Industrial Disputes Act, 1947 on one hand and an industrial dispute espoused by the union in terms of Section 2(1) of the said 1947 Act. An individual dispute which is deemed to be an industrial dispute under Section 2A concerns discharge, dismissal, retrenchment or termination whereas an industrial dispute under Section 2(k) covers a wider field. It includes even the question of status. This aspect is relevant for the purposes of deciding this case90. In Radhey Shyam v. State of Haryana91, it has been held after considering various judgments of the Supreme Court that Section 2A contemplates nothing more than to declare an individual dispute to be an industrial dispute. It does not amend the definition of industrial dispute set out in Section 2(k) of the Industrial Disputes Act, 1947. Section 2A does not cover every type of dispute between an individual workman and his employer. Section 2A enables the individual worker to raise an industrial dispute, notwithstanding that no other workmen or union is a party to the dispute. It applies only to disputes relating to discharge, dismissal, retrenchment or termination of service of an individual workman. It does not cover other kinds of disputes such as bonus, wages, leave facilities, etc.92 and does not apply in case of dispute arising from the transfer or promotion or the

refusal or failure to promote the employee or any punishment (excluding dismissal, discharge, retrenchment or other termination of service) imposed on such employee or dispute or difference as to money due to such employee from the employer or as to any amount at which a benefit, which is capable of being computed in terms of money, is to be computed. Thus, in cases not covered by Section 2A, the principle laid down by the Supreme Court as to when individual dispute becomes ‘industrial dispute’ is still applicable and thereby causes hardship to the individual workman. This is not a very happy situation. It is, therefore, necessary that the scope of the application of Section 2A should be enlarged so as to include certain other causes stated above within its purview. It may be relevant to note that Section 2 (15) of the Industrial Relations Bill, 1978, which defines ‘individual dispute’, has widened the coverage of ‘individual dispute’, by bringing within its ambit additional causes of dispute relating to transfer, promotion and computation of money due. However, the Bill, we have stated elsewhere, lapsed after the dissolution of the Parliament. The aforesaid section raised four important issues: (i) What is the significance of the word ‘deemed’ in Section 2A? (ii) What is the significance of the expression ‘connected with or arising out of’ in Section 2A? (iii) Is Section 2A a constitutionally valid provision? (iv) Can a retrospective effect be given to Section 2A? These questions have been the subject matter of judicial controversy. 1. Significance of the Word ‘Deemed’: It has now been established through the Supreme Court decision in Chemicals and Fibres of India Ltd v. D S Bhoir93 and Rustom and Hornsby (P) Ltd v. T B Kadam that ‘Section 2A is, in effect, a definition section. It provides, in effect that what would not be an industrial dispute’ as defined in Section 2(k) and as interpreted by the Supreme Court as to what would be deemed to be an ‘industrial dispute’ in certain specified cases. The Court further said that the definition could as well have made part of clause (k) of Section 2 instead of being put as a separate section. 2. Scope of the Expression ‘Connected with, or Arising out of Discharge, Dismissal, Retrenchment or Termination’: Section 2A is not limited to bare discharge dismissal, retrenchment or termination of the service of an individual workman but any dispute or difference between the workmen and his employer ‘connected with’ or arising out of discharge, dismissal, retrenchment or termination will be deemed to be an industrial dispute,94 A thing is said to arise out of another when there is close nexus between the two and one thing flows out of another as a consequence.95

In J N K Pradhan v. Industrial Tribunal, the Court was called upon to decide whether the claim for gratuity was connected with or arose out of discharge, dismissal, retrenchment or termination of service. The Court, however, observed that whether he would be entitled for gratuity under the Orissa Shops and Commercial Establishment Act is not for us to decide at this stage. This is a matter for the tribunal to determine on examining the merits of the dispute. 3. Constitutionality of Section 2A: After the insertion of Section 2A in the Industrial Disputes Act, 1947, through 1965 Amendment, the management challenged the constitutional validity of the section. They argued that (i) the Parliament had no power to convert an ‘individual dispute’ into an ‘industrial dispute’, (ii) the 1965 Amendment by which Section 2A was inserted was repugnant to the legislative scheme of the IDA and (iii) Section 2A should be struck down as it was violative of Article 14 of the Constitution. While Delhi,96 Punjab and Haryana,97 Madras98 and Mysore High Courts99 upheld the constitutionality of Section 2A, Calcutta High Court100 declared the provision to be ultra vires the Constitution. The obiter of the Supreme Court101 decision, however, indicates that it upheld the validity of Section 2A. Let us now turn to examine the judicial approach to this issue. 4. No Retrospective Effect: The Supreme Court in Rustom and Hornsby (P) Ltd v. T B Kadam102 held that Section 2A provides in effect that what would not be an industrial dispute as defined in Section 2(k) as interpreted by this Court could be deemed to be an industrial dispute in certain circumstances. There is, therefore, no question of giving retrospective effect to that section in making the reference which resulted in the award under consideration. When the section uses words where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, it does not deal with the question as to when that was done. The Court therefore ruled that if ‘there was an industrial dispute or an industrial dispute was apprehended, even though the facts giving rise to that dispute might have arisen before the reference was made, the reference would still be valid.’

IV. NO TIME LIMIT PRESCRIBED In Abdul Khalil St. Bharu v. Commission of Labour, Nagpur,103 a workman was dismissed after a departmental inquiry on 5 February 1986. The first and

second appeals dated 19 December 86 and 9 January 1988 respectively were dismissed. An application was made under Section 2A on 29 August 1989. It was communicated to the applicant that as the application was made after two and a half years, hence closed on 16 October 1988. A writ petition was filed in 1990 in the High Court of Bombay. The Court held that (i) there is no time limit prescribed under Section 2A or section 12, (ii) the application cannot be said to be stale or grossly belated, (iii) closing of the proceedings cannot be sustained and (iv) conciliation officer is duty bound under Section 12 to proceed for the purpose of bringing settlement and if his efforts fail, then he is required to submit failure report.

V. RECOMMENDATION OF THE [SECOND] NATIONAL COMMISSION ON LABOUR The [Second] National Commission on Labour has recommended that all matters pertaining to individual workers, be it termination of employment or transfer or any other matter be determined by recourse to the grievance redressal committee, conciliation and arbitration/adjudication by the labour court. Section 2A of the Industrial Disputes Act, 1947 may be amended. Individual disputes may be taken up by the affected workers themselves or by TU’s and the collective disputes by the negotiating agent or an authorized representative of the negotiating college for resolution. A union which does not have at least 10 per cent members amongst the employees in an establishment should have no locus standi in that establishment. A union which has at least 10 per cent members amongst the employees in a unit should only have the right to represent individual workers in various matters such as conciliation, arbitration or adjudication and a provision in this regard may be made in Section 36 of the Industrial Disputes Act. The appropriate government may also approach the Labour Relations Commission on any individual or collective dispute in any establishment. All disputes, claims or complaints under the law on labour relations should be raised within one year of the occurrence of the cause of action.

VI. REMEDY TO INDIVIDUAL WORKMAN UNDER SECTION 2A PRIOR TO 2010 AMENDMENT

As observed in previous editions of this book and even in the first edition (1984), even assuming that the scope of Section 2A (prior to 2010) is adequate, it did not confer any right on the individual workman to raise disputes connected with discharge, dismissal, retrenchment or otherwise termination of service. The Act, however, conferred such rights upon the appropriate government alone and in the exercise of this discretion, the appropriate government may or may not refer such a dispute for adjudication. This power was likely to be abused. In view of this, it was felt that aggrieved individual workman as in case of Section 33A should be allowed to move directly to the labour court, tribunal or national tribunal. Our view is fortified by the view expressed by the Supreme Court which emphasized the need to amend Section 2A making it possible for an individual workman to seek redress in an appropriate forum regarding illegal termination of service which may take the form of dismissal, discharge, retrenchment, etc., or modification of punishment imposed in domestic inquiry. An amendment of the Central Act introducing such provisions will make the law simpler and will also reduce the delay in adjudication of industrial disputes104. This, along with the recommendations of the Second National Commission on Labour, led to the amendment of Section 2A in 2010.

VII. AMENDMENT OF SECTION 2A BY THE INDUSTRIAL DISPUTES (AMENDMENT) ACT, 2010 The Industrial Disputes (Amendment) Act, 2010105 has inserted new clauses (2) and (3) in Section 2A which are as follows: ‘(2) Notwithstanding anything contained in section 10, any such workman as is specified in sub-section (1) may make an application direct to the labour court or tribunal for adjudication of the dispute referred to therein after the expiry of 45 days from the date he has made the application to the conciliation officer of the appropriate government for conciliation of the dispute, and in receipt of such application the labour court or tribunal shall have powers and jurisdiction to adjudicate upon the dispute, as if it were a dispute referred to it by the appropriate government in accordance with the provisions of this Act and all the provisions of this Act shall apply in relation to such adjudication as they apply in relation to an industrial dispute referred to it by the appropriate

government. (3) The application referred to in sub-section (2) shall be made to the labour court or tribunal before the expiry of 3 years from the date of discharge, dismissal, retrenchment or otherwise termination of service as specified in sub-section (1).’ An analysis of the aforesaid amended provision reveals that a workman aggrieved by the order of dismissal, discharge, retrenchment or otherwise termination of service may directly make an application to the labour court or tribunal for adjudication of the dispute and the aforesaid labour court/tribunal is empowered to adjudicate such dispute as it were referred to it by the appropriate government. But, the two conditions must be satisfied before such application can be entertained: (i) Such application must be made after the expiry of 45 days from the date the aggrieved workman made the application to the conciliation officer of the appropriate government for conciliation of the dispute (ii) Such application must be made before the expiry of 3 years from the date of discharge, dismissal, retrenchment or otherwise termination of service.

1

The definition of ‘industrial dispute’ is taken from an (English) Act 1906 (6 Edw VII C47) and slightly modified. The definition ran: any dispute between employers and workmen which is connected with the employment or non-employment or the terms of employment or with the conditions of labour of any person. The definition only adds to the list of disputes ‘one between employers’. [See Madras Gymkhana Club Employees' Union v. Gymkhana Club, (1967) 2 LLJ 720, 729 (SC)]. Prior to 1947 the Trade Dispute Act, 1929, used the expression ‘trade dispute’. Section 2(j) of the Trade Dispute Act, 1929 defined ‘trade dispute’ to mean: any dispute or difference between employers and workmen and workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour of any person, which was borrowed from Section 8 of the (English) Industrial Courts Act, 1919. The scope of Section 2 (j) attracted the attention of the Royal Commission of Labour. The Commission suggested widening the coverage of the definition. The Trade Disputes (Amendment) Act, 1938, accordingly amended the definition of ‘trade dispute’ under the Trade Disputes Act, 1929 to include disputes between employers and employees, and at the same time provided for the omission of the following words ‘occurring between an employer and any of his workmen’ from Section 3 of the Trade Disputes Act, 1929.

The amended definition of ‘trade dispute’ was incorporated in the Industrial Disputes Act, 1947. 2 3 4 5 6 7

Madras Gymkhana Club Employees' Union v. Gymkhana Club, op. cit. 720–28. Workmen of Dikmakuchi Tea Estate v. Management of Dimakuchi Tea Estate, (1959) 1 LLJ 500 (SC). Sambhu Nath Goyal v. Bank of Baroda, (1978) 2 SCC. 353. (1978) 2 SCC. 353. Sindhu Resettlement Corporation Ltd v. Industrial Tribunal, (1968) LLJ 834. Id. at 839. The aforesaid view was followed in Fedders Lloyd Corporation (Pvt.) Ltd v. Lieutenant Governor, (1970) Lab. IC 421. In this case, Justice Deshpande speaking for the division bench of the Delhi High Court observed: a demand by the workmen must be raised first on the management and rejected by them before industrial dispute can be said to arise and exist and that the making of such a demand to the conciliation officer and its communication by him to the management, who rejected the demand is not sufficient to constitute an industrial dispute.

8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Bombay Union of Journalists v. The Hindu. AIR 1963 SC 318: In T K Padamanabha Menon v. P V Kora, (1968) Lab. IC, 1134, the Kerala High Court held that no specific demand by the workmen was necessary to bring into existence an ‘industrial dispute’. Shambhu Nath Goyal v. Bank of Baroda, (1978) 2 SCC 353. (1984) 4 SCC 392 (SC). (1993) Lab. IC 99 at 102–03. Bangalore W C and Mills Co. v. Their Workmen, (1968) 1 LLJ 514 at 518. Madras Gymkhana Club Employees Union v. Madras Gymkhana Club, (1967) 2 LLJ 720. Conway v. Wade, (1909) AC 506, 517. There is no decided case in India on this subject. Western India Automobiles Association v. Industrial Tribunal, (1949) LLJ 245 (FC). Shankar Balaji Waje v. State of Maharashtra, (1961) 1 LLJ 119 (SC). Western Indian Automobiles Association v. Industrial Tribunal, (1949) LLJ 245. Ibid. See also Sindhu Resettlement Corporation Ltd v. LT., (1965) 2 LLJ 270 (Gujarat). M/s Altherton West and Co. Ltd v. Jute Mill Mazdoor Union, AIR 1953 SC 24. F L Corporation (P) Ltd v. Union of India, AIR 1970 Delhi, 60, 66. Bilash Chander v. Balmer Lawrie and Co. Ltd, AIR 1953 Calcutta 613. Indian Paper Pulb Co. Ltd v. Their Workmen, AIR 1949 FC 148; See also Madras Gymkhana Club, (1967) 2 LLJ 720. Cooperative Central Bank Ltd v. Addl LT, AIR 1970 SC 245. Shahadara (Delhi) Saharanpur Light Rly. Co. v. S S Railway Workers, AIR 1960 SC 945.

25 26 27 28 29 30 31 32

33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

Standard Vacuum Refining Co. of India Ltd v. Workmen, AIR 1960 SC 945. Express Newspapers (P) Ltd v. Workmen, AIR 1963 SC 569. Bata Shoe Co. v. D N Ganguly, AIR 1961 SC 1158. Kerala Rubber and Reclaims Ltd v. P A Sunny, (1989) Lab. IC 964 (Kerala). 1984 Lab. IC 1573 (SC). Tamil Nadu National Engineering Employees Union v: T I Cycles of India Ltd, (1994) Lab. IC NOC 21. (2001) 3 SCC 101. Kanpur Woolen Mills v. Kanpur Mazdoor Congress, (1950) LLJ 61. 1. (IC); Alexandra Jute Mills Ltd v. Their Workmen, (1950) LLJ 1262; (IT), Lister Antiseptic and Dressing Co. Ltd v. Their Employees, (1951) 2 LLJ 791 (IT); Delhi Administration v. Edward Keventer Ltd, (1978) 2 LLJ 209. Kanpur Woolen Mills, v. Kanpur Mazdoor Congress, (1950) LLJ 611. United Commercial Bank Ltd v. Kedar Nath Gupta, (1952) 1 LLJ 782; Mahahoob Sahi Kalbarga Mills Co. Ltd v. Their Employees, (1959) 2 LLJ 196. Assam Chah Karmachari Sanagha v. Dimakuchi Tea Estate, AIR (1958) SC 353. Workmen of Dahingeapur Tea Estate, AIR 1958 SC 1026. Kays Construction Co. Ltd v. Its Workmen, AIR 1959 SC 208. Standard Vacuum Refining Co. of India Ltd v. Their Workmen, AIR 1960 SC 948; Bombay Union of Journalists v. The Hindu, (1994) 2 LLJ 600. Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318. Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate, (1959) ILLJ 500. All India Reserve Bank Employees' Association v. Reserve Bank of India, AIR 1966 SC 305. Workmen v. Greaves Cotton Ltd, (1971) 2 LLJ 479 (SC). Workmen v. Greaves Cotton Ltd, (1970) 2 LLJ 479 at 490. Standard Vacuum Refining Co. v. Their Workmen, AIR 1960 SC 948. Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate, (1959) 1 LLJ 500. All India Reserve Bank Employees’ Association v. Reserve Bank of India, AIR 1966 SC 305 at 308. Workmen of Dimakuchi Tea Estate, (1959) 1 LJJ 500; Kays Construction Co. (P) Ltd v. Its Workmen, AIR 1959 SC 208. Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318. (2001) 9 SCC 557. Central Provinces Transport Services v. Raghunath Gopal Patwardhan, (1957) 1 LLJ 27 (SC). Kandan Textiles Ltd v. Industrial Tribunal, 875; United Commercial Bank Ltd v.

52

53 54 55 56 57 58 59

60 61 62 63 64 65 66 67 68

69 70

71

Commissioner of Labour, (1951) 1 LIJ 1 (SC). Swadeshi Cotton Mills Co. v. Ramzani, (1953) 1 LLJ 277 (LAT); Newspapers Ltd v. State Industrial Tribunal, (1954) 2 LLJ 263 (Allahabad), reversed in appeal, (1957) 2 LLJ 1 (SC). New India Assurance Co. Ltd v. Central Government Industrial Tribunal, (1954) 2 LLJ 21 (Patna); J Chowdhary v. M N Banerjee, 56 CWN 256 (1951). Central Provinces Transport Services Ltd v. Raghunath Gopal Patwardhan, (1957) 1 LLJ 27. D N Banerjee v. P R Mukhejee, (1953) 1 LLJ 195 (SC). Newspapers Ltd. v. State Industrial Tribunal, (1957) 2 LLJ 1 (SC). Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318. Workmen of Dharampal Prem Chand v. M/s Dharmpal Prem Chand, AIR 1966 SC 182. Commenting on the principles laid down in Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318, the Supreme Court in M/S Dharampal Prem Chand, op. cit. observed: In our opinion, the observation (made in The Hindu)... should not be read as laying down any hard and fast rule in the matter. Take for instance, the case of an employer who employs 20 workmen, and assume that these workmen have not formed any union. If the employer illegally dismisses all the workmen employed by him, it cannot be suggested that the dispute raised by employees would not become an industrial dispute because there was no union to support them and the dismissed employees themselves cannot convert their individual dispute, op. cit., 182–86. Workmen of Indian Express Ltd v. Management of Indian Express Ltd, (1970) 2 LLJ 132 (SC). M/s Western India Match Co. Ltd v. Western India Match Company Workers' Union, (1970) 2 LLJ 256 (SC). 2005 LLR 314. Workmen v. M/s Dharampal Prem Chand, AIR 1966 SC 182. Workmen of Indian Express Newspaper v. Management, 1970 2 LLJ 132, 137. Workmen v. Rohtak General Transport Company, 1962 1 LLJ 634 (SC). State of Punjab v. Gondhara Transport Co., AIR 1975 SC 53 1. Bombay Union of Journalists v. The Hindu, AIR, 1963 SC 318. See also Deepak Puri v. Fifth Industrial Tribunal, 1986 Lab. IC. Newspapers Ltd v. State Industrial Tribunal, AIR 1960, SC 1328; Workmen of Dharampal Prem Chand v. M/s Dharampal Prem Chand, AIR 1966 SC 182; Workmen of Indian Express Newspaper v. Management (1970) 2 LLJ 132. Associated Cement Co. v. Workmen, AIR 1970 SC 177; Pradip Lamp Works v. Workmen, (1970) 1 LLJ 507 (SC). Newspapers Ltd v. U P State Industrial Tribunal, AIR 1960 SC 1328; State of Bombay v. Kripa Shankar Jaiswal, AIR 1961 SC 304; Pradip Lamp Works v. Its Workmen, (1970) 1 LLJ 507. Newspapers Ltd v. U P State Industrial Tribunal AIR 1960 SC 1328.

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75 76 77 78 79 80 81 82 83 84 85 86 87 88

89 90 91 92 93 94 95 96 97

State of Bombay v. Kripa Shankar Jaiswal, AIR 1961 SC 304. Pradip Lamp Works v. Its Workmen, (1970) 1 LLJ 507. Kandan Textiles Ltd v. Industrial Tribunal, 875; Sri Ram Vilas Service Ltd v. State of Madras (1956) 1 LLJ, 198; Murgan Transport v. Its Workers, (1960) 1 LLJ 349; Murugalli Estate v. Industrial Tribunal, (1964) 2 LLJ 164. Shri Kripa Printing Press v. Labour Court, (1960) 1 LLJ 53. P M Murugappa Mudaliar Rathina Mudaliar & Sons v. Raji Mudaliar, (1965) 1 LLJ 489. Deepok Industrial Ltd v. State of West Bengal, (1975) 1 LLJ 293 at 294-98. Visalakshmi Mills Ltd v. Labour Court, (1962) 2 LLJ 93. Hindustan Ltd v. Chief Commissioner, (1957) 2 LLJ 466. Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318. Deepak Industrial Ltd v. State of West Bengal, (1975) 1 LLJ 293 at 294–98. Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318. Binny Ltd. v. Workmen, AIR 1972 SC 1975. (2005) LLR 314. Western India Match Co. v. Workers Union, (1970) 2 LLJ 256 (SC). (1995) Lab. IC 2784 (AP). AIR 1994 SC 1176. In the Statement of Objects and Reasons of the Bill which resulted in the enactment of Section 2A it was stated: In construing the scope of industrial dispute, courts have taken the view that a dispute between an employer and individual workman cannot per se be an industrial dispute but it may become one if it is taken up by a union or a number of workmen making a common cause with the aggrieved individual workman. In view of this, cases of individual dismissals and discharges cannot be taken up for conciliation or arbitration or referred to adjudication under the Industrial Disputes Act, unless they are sponsored by union or a number of workmen. It is now proposed to make the machinery under the Act available in such cases. Rustaom and Hornsby (P) Ltd v. T B Kadam, (1975) 2 LLJ 352 at 355 (SC). Bharat Heavy Electricals Ltd v. Anil and others, 2007 LLR 201. (1998) 2 LLJ 1217. 2007 LLR 201. Chemicals and Fibres of India Ltd. v. D S Bhoir, (1975) 2LLJ 168 (SC). J N L Pradhan v. Industrial Tribunal, (1977) 1 LLJ 36 (Orissa). Machinnon Machenzie and Co. v. L M Lassk, (1970) 1 LLJ 16 (SC). Toshniwal Brothers (Pvt.) Ltd v. Labour Court, (1969) FJR 19 352. Fedders Lloyd Corporation (P) Ltd v. Lt Governor, Delhi, (1970). Lab. IC 421 (Delhi). Atlas Cycle Industries v. P V Thukral (1971) Lab. IC203, 205 (Punjab and Haryana).

98 99 100 101 102 103 104 105

T V S Iyengar and Sons (P) Ltd v. State of Madras, (1970) Lab. IC 203 (Madras). P Janardhana Shetty v. Union of India, (1970) 2 LLJ 738 (Mysore). Jute and Jute Goods Buffer Stock Association v. Second Industrial Tribunal, Matter No. 654 of 1970 decided by the Calcutta High Court on 28 July, 1971. Rustom and Hornsby (P) Ltd v. T B Kadam, (1975) 2 LLJ 352. Rustom and Hornsby (P) Ltd v. T B Kadam, (1975) 2 LLJ 352. 1997 Lab. IC 122 (Bom); see also M/s John and Mani Agencies v. Labour Court Madras, (1991) Lab. IC 306 (Madras). Krishna Distt Cooperative Marketing Society Ltd v. N V Purnachandra Rao, (1987) Lab. IC 1651 (SC). It came into force with effect from 19 August 2010.

CHAPTER

15 Arena of Interaction and Participants in Industrial Disputes I. INDUSTRY Section 2 (j) of the Industrial Disputes Act, 1947 defines ‘industry’ to mean: any business, trade, undertaking, manufacture or calling of employers. It also specifically states that the expression ‘industry’ includes: any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. The aforesaid words are of wide import and transgress the popular meaning of the word.1

A. Municipalities and Municipal Corporations The Supreme Court was called upon to interpret the word ‘industry’ for the first time in D N Banerji v. P R Mukherjee2 (hereinafter referred to as Budge Budge Municipality case). A head clerk and a sanitary inspector of the Budge Budge Municipality were dismissed on certain charges by the municipality. The dispute relating to the validity of dismissal was referred by state of West Bengal to the industrial tribunal for adjudication, which directed the reinstatement of those persons. Against this order, the municipality filed a writ petition under Articles 226 and 227 of the Constitution before the Calcutta High Court, but the petition was dismissed. Aggrieved by this order, the municipality filed an appeal before the Supreme Court. Two questions were raised before the Court: (i) that there

being no industrial dispute, the reference to the tribunal was bad, and (ii) that the Industrial Disputes Act was not applicable to the municipality as it was not an industry. While dealing with these questions, Justice Chandersekhara Aiyar observed: It is obvious that the limited concept of what an industry meant in early times must now yield place to enormously wider concept so as to take in various and varied forms of industry, though the word ‘undertaking’ in the definition of ‘industry’ is wedged in between business and trade on the one hand and manufacture on the other and though therefore it might mean only a business or trade, still it must be remembered that if there were so, there was no need to use the word separately from business or trade. The wider import is attracted even more clearly when we look at the latter part of the definition which refers to ‘calling, service, employment, or industrial occupation or avocation of workmen’. Undertaking in the first part of the definition and industrial occupation or avocation in the second part obviously mean much more than what is ordinarily understood by trade or business. The definition was apparently intended to include within its scope what might not strictly be called a trade or business venture. The Court in the course of its judgement referred to the following observations made by Justice Isaecs and Justice Rich, in Federated Municipal and Shire Council Employees’ Union of Australia v. Lord Mayor, Alderman, Councillors and Citizens of the Melbourne Corporation:3 Industrial disputes occur when, in relation to operations in which capital and labour are contributed in cooperation for the satisfaction of human wants and desires, those engaged in cooperation dispute as to the basis to be observed, by the parties engaged, respecting either in share of the product or any other terms and conditions of their cooperation. The Supreme Court accordingly dismissed the appeal filed by the municipality. The aforesaid decision was followed in Baroda Borough Municipality v. Its Workmen.4 The employees working in the electricity department of the municipality demanded, inter alia, bonus which was refused by the

management. On reference of the dispute by the appropriate government, the tribunal held that employees were not entitled to bonus because the municipality was not a profit-oriented concern. On appeal, the labour appellate tribunal reversed the decision of the tribunal on the ground that the municipality was an ‘industry’. Aggrieved by this finding, the municipality filed an appeal to the Supreme Court. The Court following the decision in D N Banerjee v. P R Mukherjee affirmed the findings of labour appellate tribunal and held that the undertaking was an ‘industry’ and that could be regarded as analogous to the carrying on of a trade or business. This was followed by Corporation of City of Nagpur v. Its Employees5 in which the Supreme Court emphasized the inclusive character of the definition of ‘industry’. It drew a distinction between (a) regal and (b) municipal function of the corporation, the latter being ‘analogous to business or trade’. In this case, a dispute arose between the corporation and its employees regarding wage scale, etc. The government of Madhya Pradesh referred the dispute under Section 39 of the C.P. and Brar Industrial Disputes Settlement Act, 1947 to the state industrial court. The corporation questioned the jurisdiction of the industrial court, inter alia, on the ground that the corporation was not an industry but the tribunal overruled the objection and held that the corporation was an ‘industry’ and that the further question whether any department of the corporation was industry or not, would be decided on evidence. The corporation, after unsuccessfully moving the Bombay High Court on a writ petition under Article 226, appealed to the Supreme Court. The Supreme Court was called upon to decide whether and to what extent various activities carried on by the corporation of the city of Nagpur were ‘industry’ within the meaning of Section 2 (4) of Central Province and Brar Industrial Disputes Settlement Act, 1947.6 The Court summed up its conclusions in the following words: (1) The definition of ‘industry’ in the Act is very comprehensive. It is in two parts: one part defines it from the standpoint of the employer and the other from the standpoint of the employee. If an activity falls under either part of the definition, it will be an industry within the meaning of the Act. (2) The history of industrial disputes and legislation recognizes the basic concept that the activity shall be an organized one and not that which pertains to private or personal employment. (3) The regal functions described as primary and inalienable functions of State though statutorily delegated to a corporation are necessarily excluded from the purview of the definition.

Such regal functions shall be confined to legislative power, administration of law and judicial power. (4) If a service rendered by an individual or a private person would be an industry, it would equally be an industry in the hands of a corporation. (5) If a service rendered by a corporation is an industry, the employees in the departments connected with that service whether financial, administrative or executive, would be entitled to the benefits of the Act. (6) If a department of a municipality discharges many functions, some pertaining to industry as defined in the Act and other non-industrial activities, the predominant functions of the department shall be the criterion for the purposes of the Act. The Court also ruled that neither investment of capital nor profit motive was sine qua non for determining whether an activity was an ‘industry’ or not. The Court accordingly held that several departments of a municipal corporation, namely: (i) tax department, (ii) fire brigade department, (iii) public conveyance department, (iv) lighting department, (v) water works department, (vi) city engineering department, (vii) enforcement (encroachment) department, (viii) sewerage department, (ix) public gardens department, (x) public works department, (xi) assessment department, (xii) estate department, (xiii) education department, (xiv) printing press department, (xv) building department and (xvi) general administration department were not discharging sovereign or regal function and were, therefore, included within the definition of industry. The Court, however, held that departments pertaining to (i) assessment and levy of house tax, (ii) assessment and levy of octroi, (iii) removal of encroachment and pulling down of dilapidated houses, (iv) maintenance of cattle ponds and (v) prevention and control of food adulteration were outside the purview of Section 2 (4). The decision in this case and also in D N Banerjee v. P R Mukherjee (supra) found the approval of the seven-judges bench of the Supreme Court in Bangalore Water Supply and Sewerage Board v. Rajappa7. This view was reaffirmed in Samishta Dube v. City Board, Etawah,8 (I). The Court held that the general administration department was an ‘industry’. Even though it is well established in a catena of cases decided by the Supreme Court that municipality is an industry under 2(j) of the Industrial Disputes Act, 1947, yet an attempt was made in Parmanand v. Nagar Palika, Dehradun9 to reopen the position and re-examine the decisions of the Supreme Court in view of inclusion of municipalities in the Constitution. It was urged that

municipality should not be held to be an industry under Section 2(j) of the Industrial Disputes Act, 1947 after (i) it became creature of the Constitution (ii) it has been elevated to the status of State and (iii) it is carrying on certain governmental functions. The Court rejected the contention by holding that inclusion of municipalities in the Constitution by itself would not dilute the effect of its decision in Corpn. of the City of Nagpur v. Employees and Bangalore Water Supply and Sewerage Board v. A Rajappa wherein the Supreme Court held that municipality is an industry under the Industrial Disputes Act.

B. Hospitals and Pharmacies We now come to State of Bombay v. Hospital Mazdoor Sabha10 which constitutes a landmark in labour law. In this case, the Supreme Court not only declined to adopt the expression ‘analogous to carrying out of a trade or business’, but coined a new expression ‘systematically’ organized in a business or trade like manner. In this case, J J Group of Hospitals run by the State of Bombay retrenched two of its ward servants. Against this order, the aggrieved workers moved the Bombay High Court for the issuance of writ of mandamus directing their reinstatement. The management, i.e., the State of Bombay contended that the hospital being not an ‘industry’, the Industrial Disputes Act, 1947 was not applicable. The Bombay High Court held that the hospital was an ‘industry’. Aggrieved by this finding, the State of Bombay filed an appeal before the Supreme Court. One of the main issues before the Supreme Court was whether in running the hospitals, the State was carrying on an activity of an ‘industry’. The Court answered it in the affirmative and observed: We have yet to decide which are the attributes whose presence makes an activity an undertaking within Section (j), on the ground that it is analogous to trade or business. It is difficult to state these possible attributes definitely or exhaustively as a working principle but it may be stated that an activity systematically or habitually undertaken 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 with the help of employees is an undertaking. Such an activity generally involves the cooperation of the employer and the employees and its object is the satisfaction of material human needs. It must be organized or arranged in manner in which trade or business is generally organized or arranged. It must not be casual nor must

it be for oneself nor for pleasure. Thus, the manner in which the activity in question is organized or arranged, the condition of the cooperation between employer and the employee necessary for its success and its object to render material service to the community can be regarded as some of the features which are distinctive of activities to which Section 2 (j) applies. Judged by this test, there would be no difficulty in holding that the State is carrying on an undertaking when it runs the group of hospitals in question. However, a larger bench of the Supreme Court in Management of Safdarjang Hospital v. Kuldip Singh Sethi11 disapproved of the aforesaid decision, by holding that a hospital which was run and administered by the government was a part of its sovereign functions and it was outside the scope of ‘industry’ and thereby unduly curtailed the scope of the term ‘industry’. In this case, three appeals were heard together. In the first appeal, a dispute arose between the management of Safdarjang Hospital—a government owned and run hospital and its employees for the computation of amount of salary due to workers consequent upon change in the grade. Thereupon, the employees made an application to the labour court under Section 33 C (2) of the Industrial Disputes Act for the recovery of money due from the employer. The labour court directed the hospital to pay the money due to them. It is against this finding of the labour court that an appeal was filed. In the second appeal, a dispute arose between the Tuberculosis Association of India (a research and training institution) and its employees relating to pay scales and other facilities of the employees. The government referred the dispute to the tribunal. The tribunal held that ‘neither the research carried out nor the training imparted nor the existence of Tuberculosis Association of India with which the hospital is affiliated, makes any difference and the hospital is an industry within the meaning of the Act.’ Against this order, the appeal was filed to the Supreme Court. In the third appeal, the management of Kurji Holy Family Hospital, Patna (a wholly charitable hospital maintaining some paid beds) took disciplinary action against two of its employees. The dispute was referred by the state of Bihar to the labour court under Section 10 of the Act. The management raised the preliminary objection that they were not engaged in ‘industry’ and consequently, labour court had no jurisdiction. Against this, a writ petition was filed to the Patna High Court which held that it was an ‘industry’. It was against this decision that an appeal was filed to the Supreme Court.

The common question involved in all the three appeals was whether the activities carried on by these hospitals were ‘industry’? The Court formulated the following test to determine whether or not an activity is an ‘industry’: (i) It is not necessary to view the definition in two parts. The definition read as a whole denotes a collective enterprise in which employers and employees are associated. It does not exist either by the employers alone or by employees alone. It exists only when there is a relationship between employers and employees, the former engaged in business, trade, undertaking, manufacture or calling of employers and the latter engaged in any calling, service, employment, handicraft, or industrial occupation or avocation. (ii) The word ‘industry’ (in the definition of ‘workmen’) must take its colour from the definition of industry and discloses that a workman is to be regarded as one employed in an ‘industry’ if he is following one of the vocations mentioned in conjunction with his employers. (iii) In the collocation of the terms and their definitions, these terms have a definite economic content of a particular type and on the authorities of this Court have been uniformly accepted as excluding professions and are only concerned with the production, distribution and consumption of wealth and the production and availability of material services. Industry has thus been accepted to mean only trade, business, manufacture, or undertaking analogous to trade or business for the production of material goods or wealth and material services. (iv) Material services are not services which depend wholly or largely upon the contribution of professional knowledge, skill or dexterity for the production of result. Such services are services no doubt but not material services. Material services involve an activity carried on through cooperation between employers and employees to provide the community with the use of something such as electric power, water, transportation, mail delivery and the emphasis is upon the productivity of a service organized as an industry and commercially valuable. It is the commercial character of the activity and the production of something of benefit to particular individuals rendered by all services which is described as the production of material services. In the light of aforesaid test, the court concluded that the Hospital Mazdoor Sabha wrongly held: (i) that ‘the second part of the definition contained an extension of the first part by including other items of industry’ (ii) that economic activity was not an essential part of the concept of industry (iii)

that an economic activity could not exist without the presence of capital or profit-making or both (iv) that the test namely, ‘can such activity be carried on by private individuals or group of individuals’ applied to the facts of the case. The aforesaid principle was reiterated in Management of Hospital, Orissa v. Their Workmen.12 In this case, a dispute arose regarding the conditions of service of employees employed in hospitals, sanatorium and infectious wards owned and run by the government. The government of Orissa made three references to the tribunal for adjudication. The tribunal in all three cases held that the activities of the hospitals, sanatorium and infectious wards were ‘industry’. Against this finding, the management of the hospitals preferred an appeal before the Supreme Court. The question arose whether the aforesaid activities run by the government were ‘industry’. The Supreme Court, following the decision in Safdarjang Hospital case held that the aforesaid activities were not ‘industry’ because it was being run as a part of the functions of the government and were being run as a department. It further held that the ‘mere fact that payment was accepted in respect of some beds… could not… (lead) to the inference that the hospitals (were) run as a business in a commercial way. Primarily, the hospitals (were) meant as free service by the government to the patient, without any profit motive.’ The principle enunciated in Safdarjang Hospital supra was once again followed and applied by the Supreme Court in Dhanrajgiri Hospital v. Workmen.13 The hospital run by a charitable trust was engaged in imparting training in general nursing and midwifery. There were good number of trainees in general nursing and midwifery. There were also good number of trainee beds in the hospital meant for their practical training. The hospital was not distinct or separate from training nurses. The patients were charged according to their financial conditions and there was no regular charge fixed for a patient. On these facts, the Supreme Court held that the hospital was not engaged in any ‘industry’ under the IDA. The law laid down in the aforesaid decision is no longer applicable in view of the Supreme Court decision in Bangalore Water Supply and Sewerage Board case wherein the Court overruled these decisions and rehabilitated Hospital Mazdoor Sabha case.

C. Agricultural Operation In Hari Nagar Cane Farm v. State of Bihar,14 a question arose whether the agricultural operation carried on by the two companies constituted an ‘industry’. Both the companies were not only involved in agricultural operation, but were

also registered under the Indian Companies Act. While the former was formed to produce sugarcane, wheat, paddy and other articles for sale, the latter was involved in the production of sugar for its own consumption. On a dispute having arisen between the workers and companies, the state of Bihar made a reference to the industrial tribunal. The companies questioned the jurisdiction of state of Bihar to make a reference in a writ petition under Article 226 of the Constitution before the Patna High Court on the ground that the agricultural operation carried on by them did not constitute an ‘industry’. The High Court dismissed the petition and held that the activity carried on by them was an ‘industry’ and therefore, the reference was valid. It is against this order of the High Court that the companies filed an appeal to the Supreme Court. The Court on the facts held that ‘when a company if formed for the purpose of carrying on an agricultural operation, it was carrying on trade or business’ under Section 2(j). The Court, however, declined to decide the larger issue as to whether all agricultural operations connected with it were included in ‘industry’. In Bangalore Water Supply and Sewerage Board v. Rajappa15, the sevenjudges bench of the Supreme Court appears to have re-affirmed the principles laid down in Hari Nagar Cane Sugar Farm case. From the Bangalore decision it is evident that the Supreme Court is inclined to treat organized agricultural operation with the cooperation of capital and labour for the production and distribution of goods and services calculated to satisfy human wants and wishes to be an ‘industry’. But, the small and unorganized agricultural operations have been excluded from the purview of the Industrial Disputes Act, 1947.

D. Agriculture Produce Market Committee In Agriculture Produce Market Committee v. Ashok Harikuni,16 the Supreme Court was called upon to determine whether the Agriculture Produce Market Committee was exercising sovereign function in order to exclude it from the purview of ‘industry’ under the Industrial Disputes Act, 1947. The Court observed that even if a statute confers on any statutory body, any function which could be construed to be ‘sovereign’ in nature that, would not mean every other function under the same statue to be also sovereign. The Court should examine the statute to sever one from other by comprehensively examining various provisions of that statute. In interpreting any statute to find if it is ‘industry’ or not, the Court has to find its pith and substance. The Industrial Disputes Act, 1947 is enacted to maintain harmony between employer and employee which brings peace and amity in its functioning. This peace and amity should be the objective in the functioning of all enterprises. This is to the benefit of both the

employer and employee. Misuse of rights and obligations by either or stretching it beyond permissible limits have to be dealt with within the framework of the law but endeavour should not be, in all circumstances, to exclude any enterprise from its ambit. That is why courts have been defining ‘industry’ in the widest permissible limits and ‘sovereign’ functioning within its limited orbit. It has been held that the Agriculture Produce Market Committee is trading in agriculture produce and is an ‘industry’ under the Industrial Disputes Act.

E. Professional Activities Are the professional activities like solicitors’ firms, architects’ offices, medical polyclinics and surgeries, firms of chartered accountants, etc., industries under Section 2 (j)? This question formed the subject matter of controversy. In National Union of Commercial Employees v. M R Mehar17, certain employees, namely, clerks, typists, stenographers, accountants and menial servants of a solicitor firm M/s Peeira Fazalbhoy and Co. demanded bonus. The management rejected the demand. Thereupon the state of Bombay referred the dispute to the industrial tribunal for adjudication. The management successfully questioned the jurisdiction of the tribunal on the ground that the firm was not an ‘industry’. Thereupon, the employees, after unsuccessfully moving the High Court for the issuance of appropriate writ under Articles 226 and 227 of the Constitution, appealed to the Supreme Court. The question arose whether the solicitor firm was carrying on as ‘industry’? The Court held that the firm was only a ’liberal profession’ like that of attorney and was not an ‘industry’ because (i) there was no ‘direct or immediate’ cooperation, between solicitor and his employees to the professional service which the solicitor rendered to his client and (ii) services rendered by a person involved in a liberal profession required special or peculiar intellectual and educational equipment18 and were not ‘material’. The aforesaid principle was extended and applied in relation to employees employed in a bar association canteen in Bar Association Canteen v. Chief Commissioner, Delhi.19 In this case, the association ran a canteen on no profit, no loss basis, for the benefit of its members and their guests. A dispute arose between the management of the bar association and the employees employed in the canteen regarding terms of employment. On reference, the tribunal held that the activity was covered under ‘industry’. Against this finding, a writ petition was preferred in the Punjab High Court. The High Court held that the activity of the members of the bar association in rendering advice to the client and appearing for them in cases were not ‘industry’. Extending it a little further, the Court added that if the bar association employed workmen for supplying

drinking water or assisting the members in taking out books from the bookracks, the dispute between such workmen and the bar association was not an industrial dispute20. Extending it again, the Court added that the activity in serving the food or snacks to the guest was merely incidental and was, therefore, not an ‘industry’.21 The aforesaid decision was overruled in Bangalore Water Supply and Sewerage Board case. The Court disapproved the view because in its view, a solicitor’s firm or a lawyer’s firm becomes successful not merely by the talent of a single lawyer but by the cooperative operations of several specialists, juniors and seniors. Likewise, the ancillary services of competent stenographers, paralegal supportive services are equally important, the same test is applied to other professions. The conclusion is inevitable that in the success of the institution, every professional unit has an institutional goodwill and reputation, it comes not merely from the professional or specialist but from all those whose excellence in their respective parts makes for the total proficiency.

F. Chartered Accountant’s Firm The high courts were divided on the issue whether a chartered accountant’s firm was carrying on an ‘industry’. The Calcutta High Court in Rabindranath Sen v. First Industrial Tribunal22 and Alien Macgregor Smith Forge v. First Industrial Tribunal23 held that chartered accountant’s firm auditing and making representation in courts in taxation and secretarial work with the assistance of subordinate staff was an ‘industry’ because (i) there was cooperation of labour and capital in the auditing work and (ii) it was organized in a business–like manner. But in Ram Krishna Ayyar Vaidyanathan v. Fifth Industrial Tribunal24, the Calcutta High Court distinguished Rabindranath Sen and held that the chartered accountant’s firm was not an ‘industry’ because there was (i) liberal profession, (ii) no essential cooperation between the firm and audit clerks and (iii) no commodity produced by the firm. The High Courts of Bombay,25 Kerala26 and Madras27 also held that a chartered accountant’s firm was not engaged in ‘industry’ because (i) it was a learned or liberal profession, (ii) there was no capital investment and (iii) there was no direct or essential cooperation.

G. Educational Institutions We now turn to examine whether an educational institution is an ‘industry’. In order to examine this issue, it would be relevant to note that education is a mission and vocation, rather than a profession or business.28

Corporation of City of Nagpur v. Its Employees29 is our starting point. In this case, the Supreme Court held that the educational institutions run by municipality/corporation was a service rendered by the department and so the subordinate menial employees of the department came under the definition of ‘workman’ and were entitled to the benefits of the Act. However, the pendulum swung back in curtailing the scope and coverage of ‘industry’ in University of Delhi v. Ram Nath30 where the University was plying buses for the convenience of female students attending one of its constituent colleges since 1948. They had decided in 1961 to discontinue the amenity from the next academic session, as it resulted in losses. In pursuance of this decision, they terminated the service of two bus drivers on payment of one month’s salary in advance in lieu of notice. The drivers demanded retrenchment compensation alleging that they were workmen. The university declined. Thereupon, they filed an application to the labour court under Section 33C(2) for recovery of the compensation. The university raised a preliminary objection that the labour court had no jurisdiction because the university was not an ‘industry’. The labour court overruled the objection and directed the university to pay the compensation. Against this award of the labour court, the university filed an appeal to the Supreme Court. The Supreme Court held that the drivers employed by the university were not employed in ‘industry’ because: (i) predominant function of the university was to impart education; (ii) teachers were not workmen and (iii) others (persons other than teachers) were insignificant in number and did minor and insignificant work. The seven-judges bench of the Supreme Court in Bangalore Water Supply v. Rajappa overruled this decision and reaffirmed the decision in Corporation of Nagpur case that educational institution was industry. Justice Krishna Iyer laid down the following test to determine whether an activity is an ‘industry’. The test is not the predominant number of employees entitled to enjoy the benefits of the Act. The true test is the predominant nature of the activity. In the case of the university or an educational institution, the nature of the activity, is, ex hypothesis, education which is a service to the community. Ergo, the university is an industry. His Lordship added: … there are a number of other activities of the university administration, demonstrably industrial which are severable although ancillary to the main cultural enterprise. For instance, a university may have a large printing press as a separate but

considerable establishment. It may have a large fleet of transport buses with an army of running staff. It may have a tremendous administrative strength of officers and clerical cadres. It may have karamcharis of various hues. And observed: It would be strange, indeed, if a university has 50 transport buses, with drivers, conductors, cleaners and workshop technicians. How are they to be denied the benefits of the Act, especially when their work is separable from academic teaching merely because the buses are owned by the same corporate personality? In A Sundarambal v. Government of Goa, Daman and Diu31, the Supreme Court held that educational institutions are covered by the definition of ‘industry’ under the Industrial Disputes Act, 1947.

H. Clubs Are clubs industries? This question formed the subject matter of judicial interpretation in a number of decided cases. Madras Gymkhana Club Employees’ Union v. Gymkhana Club32 is a leading case on this. The Madras Gymkhana Club—a members’ club, was engaged on a vast scale in multifarious activities and for facilities of accommodation, catering, sale of alcoholic and non-alcoholic beverages, games, etc., and the club organized parties at which guests were freely entertained and the club had established arrangements with other clubs. It had a membership of 1,200 with almost 800 active members. It employed 194 employees. The club owned both movable and immovable properties with several of its wage bills falling in between ₹1 and 2 lakh. A dispute arose between the management of Madras Gymkhana Club and its workmen regarding the payment of bonus for the year 1962. The government referred the dispute to the industrial tribunal for adjudication. The tribunal held that Madras Gymkhana Club was not an industry and was, therefore, not liable to pay bonus to its workmen. Against this order, the aggrieved workmen filed an appeal before the Supreme Court. On these facts a question arose for determination before the Supreme Court—whether a club was an ‘industry’. The Court limited the scope of ‘industry in four different ways: (i) the Court held that the cardinal test was to find out whether there was an industry according to the denotation of the words in the first part of the definition. The second part of the

definition did not enlarge the meaning of the expression ‘industry’ in the sense that standing alone, it could not define ‘industry’, (ii) although the Court observed that the second part of the definition of industry gave no extended connotation, yet the manner in which it interpreted the second part limited the meaning of the first part, because according to the Court, unless the parts of the definition were independently fulfilled, there could not be an ‘industry’, (iii) the emphasis on the production and distribution of material goods, i.e., ‘wealth’ indicated that the Court was giving an economic content to the first part of the definition of ‘industry’ and (iv) the Court defined the word ‘undertaking’ as ‘any business or any work or project which one engages in or attempts as an enterprise analogous to business or trade’ and which results, ‘in material goods or material services’. In Bangalore Water Supply and Sewerage Board case, the Supreme Court overruled the aforesaid decision. The Court disapproved of the reasoning of Madras Gymkhana that it was not an ‘industry’ because the club belonged to members only. The aforesaid view was followed in Cricket Club of India v. Bombay Labour Union.33 The club was incorporated with a view to encouraging and promoting various games and sports and to conduct sports and matches, particularly of cricket. It carried on various activities of the club like recreation and entertainment, catering to members and their guests and sometimes to spectators. Among other facilities, the club provided for residence. The club also made investments in immovable property. It had a membership of 4,800 and employed 397 persons. On these facts a question arose whether the activities carried on by the club were ‘industry’. The Court observed that (i) it was a members’34 club without any shareholders and was of the nature of a selfservicing institution organized by the club for its members and it was wrong to equate it with the activity of a hotel, (ii) the opening of club stall to general public to buy snacks, etc., on few occasions in a year could not be held to be an ‘undertaking of the nature of business or trade’, (iii) income from the rent of the building did not accrue with aid and cooperation of employees, (iv) club’s income from the stadium was not of the nature of ‘industry’. It, accordingly, held that club was not an ‘industry’ under Section 2(j). This decision was overruled in Bangalore Water Supply and Sewerage Board (Supra).

I. Commercial Institutions In Ahmedabad Textile Industry Research Association v. State of Bombay and Others35, the Supreme Court adopted the working principle formulated in Hospital Mazdoor Sabha supra. Here the question arose whether an association

for research maintained by the textile industry and employing technical or other staff fell within the definition of ‘industry’. In this case, the association was founded with the object of establishing a textile research institute for carrying on research and other scientific work in connection with textile trade and industry, and other trades and industries allied therewith or necessary thereto. The research was conducted with a view to finding greater efficiency, rationalization and reduction of costs, research into conditions of work, time and motion studies, fatigue and rest pauses, standardization of methods or work, condition of factories and diseases and accidents arising out of employment in textile mills. The Court analysed the activity of the research association and found that the undertaking as a whole is in the nature of business or trade organized with the object of discovering ways and means by which the member mills may obtain large profits in connection with their industries.36 The Court accordingly held that the nature of activity carried on by the research association fell within the definition of the word ‘industry’. In Federation of Indian Chamber of Commerce and Industry v. Their Workmen37, the federation carried on systematic activity to assist its members and other businessmen and industrialists and even non-members as for instance, in giving them the right to subscribe to their bulletin; in taking up their cases involving their business and in obtaining concession and facilities for them from the government and to provide for arbitration in respect of disputes arising in the course of trade, industry or transport. On these facts the question arose whether the federation was engaged in an industry. Speaking for the Supreme Court, Justice Jagmohan Reddy observed: In our view, the linchpin of the definition of industry is to ascertain the systematic activity which the organization is discharging namely, whether it partakes the nature of a business or trade or is an undertaking or manufacture or calling of employers. If it is that and there is cooperation of the employer and the employees resulting in the production of the material services, it is an industry notwithstanding that its objects are charitable or that it does not make profits or even where profits are made, they are not distributed among the members.38 The Court accordingly held that the activities carried on by the federation where business activities and material services were rendered to businessmen, traders and industrialists who were members of the federation. The aforesaid view was reiterated in Workmen v. Management of ISI.39

The institution prepared and published (whether new or revised) Indian standards in different subjects and sold them. The institution also acted as a sole selling agent for sale of overseas standards on commission basis and derived a large income. Further, the institution carried on the activity of certification of ‘standard mark’. The institution had several laboratories and also a library. For the aforesaid purpose, the management employed considerable number of workmen. These workmen made certain demands which resulted in industrial dispute which was referred to the industrial tribunal for adjudication. The management questioned the jurisdiction of tribunal on the ground that the workmen were not employed in an ‘industry’. The objection was upheld by the tribunal. Thereupon, the workmen filed an appeal to the Supreme Court. Justice Bhagwati (with whom Justice Goswami agreed), who wrote the majority judgement for the Court, held that the Indian Standard Institution was an ‘industry’. His Lordship gave the following reasons in support of his conclusion: (i) The activities of the institution are carried on in a systematic manner and are organized or arranged in a manner in which trade or business is ordinarily organized or arranged. The institution derives large income from its activities. (ii) The object of the activities of the institution is to render material services to a part of the community, namely, manufacturers, distributors and consumers. (iii) There is also cooperation between the management of the institution and the employees who associate together for rendering these material services. But, Justice Alagiriswami in his dissenting opinion held that undertaking run in public interest of the country as a whole without profit motive and engaged in activities in the form of social service or intended to benefit the general public was not an ‘industry’.

J. Private or Domestic Servants In Corporation of the City of Nagpur v. Its Employees40, the Supreme Court held that domestic or personal service rendered by servants was outside the ambit of the Industrial Disputes Act because they were not employed in the ‘industry’ which on its part was based on the principle that there was no ‘organized activity’. In State of Bombay v. Hospital Mazdoor Sabha41, the Supreme Court excluded domestic services from the scope of ‘industry’ on the ground that there was no systematic and habitually undertaken activity in which employers and employees cooperate to produce material goods or material

services which is organized or arranged in business or trade like manner. But, in Madras Gymkhana Club Employees’ Union v. Madras Gymkhana Club42, the Supreme Court excluded domestic services from the scope of ‘industry’ on the ground that the work done by them was not in pursuit of ‘trade, business, undertaking, manufacture or calling of employers’.

K. Religious Institutions The high courts are divided on the issue whether certain departments of religious institutions were carrying on the ‘industry’. While the High Court in Travancore Devaswom Board v. State of Kerala43 held that Maramat department of the Devaswom Board constituted under Travancore Cochin High Religious Institutions Act, 1950 was carrying on an ‘industry’ under Section 2(j) because: (i) construction of buildings for various purposes was undertaken, (ii) there was cooperation between labour and capital and (iii) the work had been undertaken by private persons. The Orissa High Court in Harihar Bahinipati v. State of Orissa44 held that maintenance of law and order in Shri Jagannath Temple, Puri was outside the ambit of ‘industry’ because there was (i) no cooperation of capital and labour, (ii) no material service was rendered, (iii) primary function was spiritual and not secular, and (iv) no material human needs were met. But the Punjab and Haryana High Court in Shiromani Gurudwara Prabandhak Committee, Patiala v. Presiding Officer, Labour Court, Patiala45 held that Gurudwara Prabandhak Committee distributing Karah-prasad was opening up free kitchen, i.e., langar would not come within the purview of ‘industry’. Neither is it a commercial organization nor is it running any business, but discharging purely religious functions. In Cheirinjumpatty Thampuratty v. State of Kerala46, the Kerala High Court held that Devaswom (temple) governed by the Religious and Charitable Endowments Act, 1951 was not an ‘industry’ under Section 2(j) of the Act. Earlier, in Pappammal Annachatrum v. Labour Court47’, a division bench of the Madras High Court ruled that the activity of providing assistance in the form of boarding and lodging to students in educational institutions which constituted the main activity of the endowment was not covered by ‘industry’ under Section 2(j) because it was serving the cause of education. In Indravadan N Adhvaryu v. Laxminarayan Dev Trust through Chief Executive Kothari48, the Gujarat High Court held that the trust of a temple which is not involved in any business or undertaking or manufacturing activity would not fall within the definition of ‘industry’.

L. Charitable Institutions In Bombay Pinjrapole v. The Workmen49, the Supreme Court was called upon to decide as to whether the Bombay Pinjrapole was an ‘industry’. In this case, Pinjrapole was originally stated as a charitable institution solely devoted to the welfare of the sick and disabled animals. Subsequently, the institution had substantially altered its complexion and a dairy farm was set up. The ‘value of milk supplied to the sick and infirm cattle’ was negligible as compared to that sold in the market, both in terms of persons employed and also in terms of money. A dispute arose between the Bombay Pinjrapole and its workmen over the question of revision of wage scale and other service conditions. On reference, the tribunal held that activities of the Pinjrapole constituted an ‘industry’. The Pinjrapole, after unsuccessfully moving to the Bombay High Court, filed an appeal to the Supreme Court. The Supreme Court also held that the Pinjrapole was running an ‘industry’ and the ‘mere fact, that the Pinjrapole never purchase … cows and stud bulls except once makes no difference to the question as to whether their activity of maintaining cows and bulls could only be considered as investment. In Bangalore Water Supply and Sewerage Board case50, the Supreme Court approved the holding in the case not because Pinjrapoles had commercial motives, but despite compassionate objectives, they share business-like operations. Justice Krishna Iyer classified enterprise into three categories: The first is one where the enterprise, like any other, yields profits but they are siphoned off for altruistic objects. The second is one where the institution makes no profit but hires the services of employees as in other like businesses but the goods and services which are the output, are made available at low or no cost, to the indigent needy who are priced out of the market. The third is where the establishment is oriented on a humane mission fulfilled by men who work, not because they are paid wages, but because they share the passion for the cause and derive job satisfaction from their contribution. The first and second are industries, the third not.

M. Cooperative Societies Cooperative Societies ordinarily cannot fall outside Section 2(j). After all, the society, a legal person, is the employer. The members and/or others are employees and the activity partakes of the nature of trade. Merely because

cooperative enterprises deserve state encouragement, the definition can not be distorted. Even if the society is run by the members only, the entity (save where they are few and self serving) is an ‘industry’ because the member-workers are paid wages and there can be dispute about rates and different scales of wages among the different categories, i. e., workers and workers or between workers and employer. These societies—credit societies, marketing cooperatives, producers or consumers’ societies of apex societies are industries.51

N. National/State Highways In Bangalore Water Supply Board’s case, the Supreme Court held that the establishment, construction and maintenance of national and state highways is an essential governmental function. It is in no way even remotely analogous to trade or business and therefore, cannot fall within the ambit of ‘industry’. But in Executive Engineer, National Highways v. Industrial Tribunal, Bhubaneshwar,52 a division bench of High Court of Orissa held that ‘National highways division of the works department of government is an industry within Section 2(j) of Industrial Disputes Act, 1947, as toll taxes are collected over the bridges constructed by the highways division. In other words, the functions of the national highways division of the works department of government are nonsovereign in nature, therefore it is an ‘industry.’

O. Zila Sainik Board The division bench of the Punjab and Haryana High Court in State of Punjab v. Kidar Nath53 rejected the argument that the zila sainik board is not an ‘industry’ because it neither undertakes any commercial activity akin to trade or business nor any profit is earned by it. The Court accordingly held that zila sainik board was an ‘industry’.

P. Apartment Owners’ Housing Society In Management of Som Vihar Apartment Owners Housing Maintenance Society Ltd v. Workmen C/o Indian Engg. & General Management54, a dispute arose between the owners’ of the apartments and its employees engaged to maintain cleanliness and other services in the apartments regarding dearness allowance, house rent allowance, conveyance allowance and uniforms. The government of Delhi referred the dispute to the industrial tribunal for adjudication. The question to be decided was whether owners’ housing maintenance society is an ‘industry’ within the meaning of Section 2(j) of the ID

Act? The court held that society was an ‘industry’. Aggrieved by this order, the society filed an appeal before the Supreme Court. The Court following its earlier decision in Bangalore Water Supply and Sewerage Board, answered the question in negative. The Court held that the society constituted for the purpose of its members could not be treated as ‘industry’. The aforesaid view was reiterated in Md. Manjur v. Shyam Kunj Occupants’ Society.55

Q. Dock Labour Board In Vishakapatnam Dock Labour Board v. Stevedores’ Association, Vishakapatnam56, a question arose whether the Vishakapatnam Dock Labour Board—a statutory board, was an ‘industry’ under Section 2 (j) of the Industrial Disputes Act, 1947? Applying the test laid down in Madras Gymkhana Club Union v. Gymkhana Club57, the Supreme Court held that the board functioning under the Dock Workers (Regulation of Employment) Act, 1948, and the scheme framed thereunder was not carrying of ‘industry’ so as to attract the provisions of the Industrial Disputes Act, 1947.

R. An Appraisal Thus, it is evident that judicial response in the aforesaid cases reveals conflicting view. In the Budge Budge Municipality,58 Hospital Mazdoor Sabha,59 Corporation of City of Nagpur60, Ahmedabad Textile Industry Research Association61 and even in Fazalbhoys62 case, the Supreme Court specifically held63 that the second part of the definition was added to the area covered by the first part of the definition. But, in Madras Gymkhana Club64, the Supreme Court rendered the second part superfluous,65 whereas in Safdarjang Hospital case, the Supreme Court used the second part actually limiting the scope of even the first part.’66 Again the word ‘undertaking’ has received conflicting interpretations. In Budge Badge Municipality case, the Supreme Court declined to imbue it with the characteristics of business, trade or manufacture.67 But with a view to avoid a formulation in terms wider than that was strictly necessary for the disposal of case, the Court itself concluded that activities ‘analogous to the carrying out of a trade or business’, as the situation in that case was within the ambit of the expression ‘undertaking’.68 In Hospital Mazdoor Sabha, the Supreme Court not only declined to adopt the rule of construction noscitur a sociis69 but even in

formulation of working principle. It refrained from using the expression ‘analogous to the carrying out of a trade or business’ but coined the phrase ‘organized or arranged’.70 Nevertheless, in Madras Gymkhana Club case, the Supreme Court read the aforesaid observations and expression ‘undertakings’ so that the employer’s activity must not only be analogous to carrying out a ‘trade or business’ but must also be organized as business or trade is ordinarily organized.

S. Bangalore Water Supply and Sewerage Board Case: 1. An Epoch-making Judgement These conflicting opinions of the Supreme Court during the last 25 years left the coverage of the expression ‘industry’ more uncertain and vague. This state of affairs led to the constitution of seven members bench71 of Supreme Court in Bangalore Water Supply and Sewerage Board v. Rajappa72 to enter into a detailed examination of earlier decisions with a view to find out a rationale basis for determining whether activities like clubs, educational institutions, research institutes, cooperatives, charitable projects and other ventures including domestic servants and governmental functions fall within or outside the scope of the statutory expression ‘industry’. The majority opinion not only answered it in affirmative but exploded the judicial myth. The Court, while restoring its ruling in Budge Budge Municipality Corporation of City of Nagpur and Hospital Mazdoor Sabha (supra), overruled its decisions in Safdarjang Hospital, National Union of Commercial Employees, Delhi University, Gymkhana Club and Dhanarajgiri Hospital (supra) cases. However, in a partially dissenting opinion, Justices Jaswant Singh and Tulzapurkar (though they agreed in the conclusion) were not in favour of giving such a wide coverage to the term ‘industry’. Indeed, both majority and minority decisions expressed the view that the matter should be clarified by the legislature by a suitable amendment. For the purposes of analysis, the majority judgement may conveniently be considered under three headings, viz., areas of conflict, interpretation of ‘industry’, and formulation of tests for determining the scope of the term ‘industry’. 1. Area of Conflict. The Supreme Court itself itemized the area of conflict namely: (i) (a) Are establishments run without profit–motive, industries? (b) Are charitable institutions industries?

(c)

Do undertakings governed by a no-profit-no-loss rule, statutorily or otherwise fastened, fall within the definition in Section 2 (j)? (d) Do clubs or other organizations (like the YMCA), whose general emphasis is not on profit-making but fellowship and self-service fit into the definitional circle? (e) To go to the core of the matter, is it an inalienable ingredient of ‘industry’ that it should be plied with a commercial object? (ii) (a) Should cooperation between employer and employee be direct in so far as it related to the basic service or essential manufacture which is the output of the undertaking? (b) Could a lawyer’s chamber or chartered accountant’s office, a doctor’s clinic or other liberal professions, occupations or calling be designated an industry? (c) Would a university or college or school or research institute be called an industry? (iii) (a) Is the inclusive part of the definition in Section 2 (j) relevant to the determination of an industry? If so, what impact does it make on the categories? (b) Do domestic services—who slave without respite become ‘industries’ by this extended sense? (iv) Are governmental functions, stricto sensu, industrial and if not, what is the extent of the immunity of instrumentalities of government? (v) What rational criterion exists for a cutback on the dynamic potential and semantic sweep of the definition, implicit in the industrial law of a progressive society geared to greater industrialization and consequent concern for regulating relations and investigating disputes between employers and employees as industrial processes and relations become more complex and sophisticated and workmen become more rightconscious? (vi) As the provision now stands, it is scientific to define ‘industry’ based on the nature—the dominant nature of the activity, i.e., on the terms of the work, remuneration and conditions of service which bond the two wings together into an employer-employee complex?73 Did these issues figure in the judgement? 2. Interpretation of the Word ‘Industry’. In order to answer these issues, Justice Krishna Iyer considered the word ‘industry’ in the light of historical perspective, objects and reasons, international thoughts, popular undertaking, contextual connotation and suggestive subject-matters, dictionary meaning and

social perspective in Part IV of the Constitution. In this perspective, Justice Krishna Iyer interpreted the word ‘undertaking’ as follows: The expression ‘undertaking’ cannot be torn off the words whose company it keeps. If birds of a feather flock together and nositur a sociis is commonsense guide to construction, ‘undertaking’, must be read down to confirm to the restrictive characteristic shared by the society of words before and after. Nobody will torture ‘undertaking’ in Section 2(j) to mean meditation or Mushaira which are spiritual and aesthetic undertakings. Wide meanings must fall in line and discordance must be excluded from a sound system.74 The aforesaid principle was also applied in interpreting the expressions ‘service’, ‘calling’ and the ‘like’. Further, the word ‘trade’, according to Justice Iyer, embraced ‘functions of local authorities and even profession’. The term ‘manufacture’ received the attention of Chief Justice Beg who explained it to mean: … a process of manufacture in which the employers may be engaged. He, however, pointed out that the term ‘employer’ necessarily postulated employees, without whom there could be no employer. Chief Justice Beg also emphasized the inclusive character of second part of the definition which: Makes the concept more nebulous as it obviously extends the definition to any calling, service, employment, handicraft or industrial occupation or avocation of workmen. The aforesaid interpretation given by Chief Justice Beg is in conformity with the legislative intent of Section 2 (j) of the Industrial Disputes Act. 3. Formulation of Test. Justice Krishna Iyer, after review of Supreme Court decisions, laid down the following tests for determining the scope of the term ‘industry’: (a) Where (i) systematic activity, (ii) organized by cooperation between employer and employee (the direct and substantial element is chimerical), (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss, e.g., making on a large scale prasad or food), prima facie, there is an ‘industry’ in that enterprise. (b) Absence of profit motive or gainful objective is irrelevant, be the venture

in 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 employer-employee relations. (d) If the organization is a trade or business, it does not cease to be one because of philanthropy animating the undertaking although Section 2(j) uses the words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself. Nevertheless, Justice Krishna Iyer pointed out that although Section 2(j) used words of widest amplitude in its two limbs, their meaning could not be magnified to overreach itself and observed: Undertaking must suffer a contextual and associational shrinkage as explained in Banerji (supra) and in this judgement, so also, service, calling and the like. This yields the inference that all organized activities possessing the triple elements in 3 (a) (supra), although not trade or business, may still be ‘industry’ provided the nature of the activity, viz., the employeremployees basis bears resemblance to what we find in trade or business. This takes into the fold ‘industry’, undertaking, calling and services ventures ‘analogous to the carrying on the business’. All features, other than the methodology of carrying on the activities, viz., in organizing the cooperation between employer and employees, may be dissimilar. It does not matter, if on the employment terms there is analogy.75 However, where a complex group of activities were involved, he adopted the ‘dominant nature test’ enunciated in Corporation of City of Nagpur and explained: Where a complex of activities, some of which qualify for exemption, others not, involves employees of the total undertaking, some of whom are not ‘workmen’ as in the University of Delhi case (supra) or some departments are not productive of goods and services if isolated, even then, the predominant nature of the services in the integrated nature of the departments as explained in the Corporation of Nagpur (supra), will be the true test. The whole undertaking will be ‘industry’ although those who are not ‘workmen’ by definition may not benefit by the status.

Applying the aforesaid tests in specific cases, the Court held that activities such as clubs,76 educational institutions,77 research institutes, charitable institutions,78 cooperative societies79, hospitals and local bodies80 and kindred ventures (which fulfilled the triple test laid down in this case) fell within the purview of ‘industry’. A wide amplitude has been given to the term ‘industry’ in six different ways: First, The Court held that a single lawyer, a rural medical practitioner or urban doctor with an assistant and/or menial servant were not running an industry because there was nothing like organized labour in such employment. The image of industry or even quasi-industry was one of plurality of workmen, not an isolated or single assistant or attendant. The category was more or less like personal avocation for livelihood taking some paid or part-time work from another. Second, he held that charitable institutions (where the establishment was oriented and a human mission fulfilled by men who worked not because they were paid wages, but because they shared the passion for the cause and derived job satisfaction from their contribution), were not industries. Third, he held that self-serving members’ clubs were not industry because in such a club, the dynamic aspect was self-service. He accordingly held that in such an institution, a part-time sweeper or scavenger or multi-purpose attendant would not be considered to be employed in any industry because this marginal element would not transform a little association into an ‘industry’. Fourth, he held that restricted category of cooperatives, even gurukulas and little research laboratories were not industry if no employee were hired without destroying the non-employee character of the unit. Fifth, he excluded regal and sovereign functions (described as ‘the primary and alienable function of a constitutional government’) from the purview of industry. Sixth, he also excluded constitutional and competently enacted legislative provisions from the ambit of ‘industry’. Accordingly, he held that petty handicraftsmen, domestic servants, cobblers, cycle repairers, butchers, bakers, candle-stick makers, the single lawyer, rural medical practitioner, urban doctor, rural engineer with or without a little assistance or menial servants, self-service members’ club and charitable institutions oriented on human mission were outside the purview of ‘industry’. We are in basic agreement with the aforesaid line of approach. However, the exclusion of certain categories of employers from the ambit of the expression ‘industry’ needs consideration. First, Justice Krishna Iyer has excluded ‘a single lawyer, a rural medical practitioner, urban doctor and a rural engineer with a little assistance or menial

servant’ from the purview of the word ‘industry’ on the ground that: … there is nothing like organized labour in such employment. The image of industry or even quasi-industry is one of a plurality of workmen, not an isolated or single little assistant or attendant. The latter category is more or less like personal avocation for livelihood taking some paid or part-time work from another. The whole purpose of the Industrial Disputes Act is to focus on resolution of industrial disputes and regulation of industrial relations and not to meddle with every little carpenter in a village or blacksmith in a town who sits with his son or assistant to work for the customers who trek in. The ordinal spectacle of a cobbler and his assistant or a cycle repairer with a helper, we come across in the pavements of cities and towns, repels the idea of industry and industrial disputes.81 It is difficult to agree with this line of reasoning. It will be appreciated that a solicitor, a doctor or an engineer may himself carry on his entire professional work; or he may, with other experts in the same profession, organize a firm or nursing home to carry on the work in an institutionalized manner. While we cannot distinguish in law relating to labour management relations a solicitors’ firm, or nursing home from a single solicitor, engineer or doctor conducting his work with the aid of personnel employed by him, there is vital difference between these cases and the case of a single solicitor, doctor, engineer, etc. conducting his entire professional work himself.82 It is respectfully submitted that unless a person employs another or is employed by another, the question of his being an ‘employer’ or a ‘workman’ within the meaning of the Industrial Disputes Act, 1947 does not arise. Since a solicitor, doctor, engineer and the like acting individually and rendering all service by himself is neither an employer nor workman, he cannot be a participant in an ‘industrial dispute’. On the other hand, a single solicitor, doctor or engineer employing personnel to assist him in his work is as much an ‘employer’ as a firm/nursing home employing such personnel and if the employed personnel are ‘workmen’ within the meaning of the IDA, an ‘industrial dispute’ between them and their employer may well arise. Second, Justice Krishna Iyer, like Justice Subba Rao,83 also excluded small professional, handicraftsman, butcher, baker, candle-stick maker and domestic servant from the purview of the definition of ‘industry’ on the ground

that ‘there was nothing like organized activity in such employment.’ It is submitted that the grounds did not emanate from the words used in the definition of industry though the interpretation did limit the amplitude of the words used therein. Section 2(s) of the IDA defines ‘workman’ to mean inter alia, ‘any person employed in any industry’. Obviously, the expression ‘industry’ in this section is used in the same sense as in Section 2(j) because if a person is employed in an activity which is not ‘industry’, he cannot be a workman. However, it cannot be said that domestic servants are not engaged in ‘any calling, service, employment, handicraft, industrial occupation or avocation’. They cannot, therefore, be excluded on the ground of absence of industry. Here, we would like to emphasize that merely because the activity is held to be an ‘industry’, the IDA does not become applicable. There must also be disputes between employers and employers, workmen and workmen or workmen and employers. Further, barring cases falling under Chapters V-A and V-B, there must also be, an ‘industry dispute’. It is these requirements which ensure that the IDA deals with disputants who are ‘employers’ and ‘workmen’. It is significant to note that Chief Justice Beg who concurred with Justice Krishna Iyer in case under review, expressly held that: … the second part, relating to workman, must necessarily indicate something, which … may include an ‘industry’ consisting of individual handicraft or workmen only.84 The aforesaid observation cuts the line of thinking followed by Justice Krishna Iyer. Third, the exclusion of ‘regal or sovereign functions of the State’ leaves much to be desired. We on our part, find it difficult to accept the decision as correctly interpreting the legislative intent. Our difficulty primarily arises from the definition of ‘workman’. Omitting words and expressions that are not germane to the present discussion, Section 2 (s) of IDA reads: Workman means any person… employed in any industry… but does not include any such person: (i) who is subject to Army Act, 1950, or the Air Force Act, 1950 or the Navy (Discipline) Act 1934, or (ii) who is employed in police service or as an officer or other employee of a prison… If the expression ‘industry’ did not include ‘regal or sovereign functions of State’, strictly understood or ‘government function’, why did the legislature write exclusory clauses (i) and (ii). The argument that it did so ex abundanti

cantela is self-defeating because the question then will arise as to why make an exception in regard only to some and not in regard to all persons engaged in ‘regal or sovereign functions of State’? After all army, air force, navy, police and prison do not exhaust the category of ‘regal and sovereign functions of State’. On the other hand, if ‘regal and sovereign functions of the State’ are included within the definition of ‘industry’, the exclusory provisions make sense. Fourth, the Court has also excluded ‘stray wage earning employees’ or marginally employed on regular basis for hire, scavengers, servants, auditors or accountants employed on wages in charitable institutions (which were oriented on a human mission fulfilled by men who work not because they are paid wages but because they share the passion for the cause and derive job satisfaction from their contribution) from the purview of ‘industry’ because: (i) … the substantive nature of the work, as distinguished from trivial terms, is rendered by voluntary wagesless sishyas. (ii) in the crucial, substantial and substantive aspect of institutional life, the nature of the relations between the participants is non-industrial … (iii) We must look at the predominant character of office institution and the nature of the relations resulting in the production of goods and services.85 Are these relevant factors? Are the problems of labour management relations resolved because the substantive nature of work is rendered by voluntary wagesless sishyas? Are the economic needs of the excluded categories of employees satisfied by the fact that substantive nature of work is rendered by voluntary wageless sishyas. These and other problems involved hereunder would be discussed under three heads. (I) In the law relating to labour management relations, we are essentially concerned with the relationship between the employer and the employees: in particular, we are not concerned with the relationship of the employer with the outside world. Further, an employee is vitally concerned with his own employment, non-employment, terms of employment or conditions of service and his interest is not affected by the nature of service which the employer renders to the outside world (whether such services be spiritual, pious, philanthropic or even professional or because the substantive nature of work is rendered by voluntary wageless sishyas). Under the circumstances, it is difficult to ignore the factual existence of employer-employee relationship even on the ground that substantive nature of work is rendered by voluntary wageless sishyas. (II) The decision brought back the ruling in Delhi University case where it was held that the employment of subordinate staff who came within the

expression ‘workmen’ did not affect the issue as they not only comprise ‘very minor and insignificant number of persons’ but also, played, ‘such a minor, subordinate and insignificant part’ that it would be unreasonable to allow this work to lend its industrial colour to the principal activity of the university which is imparting education. It suffices to mention that the Supreme Court in the case under review overruled Delhi University case. (III) It appears that Justice Krishna Iyer who had earlier at one place held that: The test is not the predominant number of employees entitled to enjoy the benefit of the Act. In fact, the Court applied that test of ‘predominant number’ while excluding these categories of workers. He, however, asserted that the test which he was applying was predominant character of the institution. The fact that majority of persons engaged in the aforesaid charitable institution are wageless sishyas, we submit, is no ground for denying the protection of the IDA to those, even stray wageearning employees who are otherwise covered by the provisions of IDA.

T. Application of the Bangalore Water Supply Case The net effect of the decision of the Bangalore Water Supply & Sewerage Board (supra) was that several activities/establishments such as research and development organizations,86 public utility services such as post and telegraph,87 telephones88, charitable and social organizations, Tirumala Tirupati Devesthanam,89 Bihar Relief Committee of a humanitarian,90 Government Security Paper Mills,91 Hindustani Dawakhana,92 public service commissions,93 construction and maintenance of national and state highways,94 N.E.S. Block, Coir Board (a statutory body) community development (establishment of the government), Southern Railway, Kerala State Civil Supplies Corporation Ltd, Trichur, municipal council and Kerala State Electricity Board,95 Christian Medical College Hospital attached to the Christian Medical College,96 Bihar Khadi Gramodyog Sangh,97 Provident Fund Organization,98 Indian Institute of Petroleum,99 basic training institutes,100 Corporation of Cochin,101 Karnataka State Road Corporation,102 trade unions103 (carrying on activities other than trade unionism), Indian Navy Sailors’ Home Department104 (to provide facilities like loading, cafeteria, indoor games, reading rooms, etc., to the sailors and their guests not provided by navy establishments due to lack of space and exigencies

of service), Kamla Retreat105 (a place of rest and relaxation), public health engineering department of the state of Bihar106, Doordarshan,107 irrigation department,108 forest department109, societies promoting health and training of women in family planning programme of the state government110, labour indentor carrying the business of recruiting labour,111 a cooperative milk society,112 a hair cutting saloon,113 the Marmat section of Travancore Devaswom Board engaged in the construction of buildings connected with dairy farms, schools, hostels, cottage industries and workshops and shops,114 the activities of Grain Dealers’ Association whose principal activity was to transport goods from the government godowns to respective ration shops of its members,115 a milk supply scheme, a government undertaking supplying milk to city of Jaipur under animal husbandry department,116 the activities of the Khadi Gramodyog Sangh,117 the activities of the survey and investigation division of the irrigation department of the govt.,118 the Chambal Hydel Irrigation Project,119 the Salandi Irrigation Project;120 the Tea Board constituted under the Tea Act, 1953,121 the Bihar Relief Committee which undertook minor irrigation schemes in the state of Bihar with all ancillary systematic operations,122 a shop governed by the provisions of the U.P. Shops & Establishments Act,123 the construction work of the Tenughat Dam carried on by the government of Bihar,124 the Balemala Dam Project which has the ultimate object of generating electrical power to run different business and industries,125 the telephone126 and telegraph,127 Hindustan Dwakhana128, Security Paper Mills Hoshangabad129, services like supply of water, electricity, lift, sanitation, made available to tenants by company,130 National Remote Sensing Agency having a systematic activity or organization with cooperation between it and its employees,131 the Baikunth Nath Debasthan Mandir Trust,132 Sahkari Bhumi Vikas Bank,133 U P Scheduled Caste Finance and Development Corporation,134 barrage division under irrigation department of state governments,135 Railways,136 a society formed for the purpose of protection, care and treatment of old, infirm and injured cows, calves, bulls etc. and also engaged in activities of selling milk, etc.,137 professional activities of architects,138 Punjab State Tubewell Corporation,139 Indian Red Cross Society, Haryana state branch,140 Kurukshetra University and persons employed therein as carpenters,141 Industrial Development Centre for Tools and Dyes, Jagadhri providing technical guidance, testing and certification facilities apart from providing services and facilities such as heart treatment, anodizing, etc., charge money for the use of various

machines on hourly basis,142 Central Research Institute for Yoga143, lac manufacturing factory run by the department of forest,144 irrigation department of the government of the state145, periodic maintenance, repair of hand pumps installed by Panchayat Samitis146 Haryana Woollen Development Corporation147 and rural engineering services148 were held to be ‘industry’ under Section 2 (j). On the other hand, activities/establishments such as octroi department of municipality,149 Central Institute of Fisheries150, works department of government,151 judicial department152 drought relief work by the government153, retail cloth shop run by two partners with the assistance of one salesman,154 firm or trademarks agents;155 trust of a temple156 a building let out on rent by a palace administration board managing the estate of royal family for the benefit of the junior members of the family,157 the activities of the Farashkhana and Baggikhanna including Kapatdwara, horse breeding and riding section of the city palace of were held not be ‘industry’ under Section 2 (j).

U. Response of the [First] National Commission on Labour The scope of the word ‘industry’ also continues to engage public attention. In 1966, the Government of India appointed the National Commission on Labour, inter alia, to report on changes in the existing labour legislation. After a very thorough investigation of the industrial law, the Commission submitted its recommendation, in 1969. In respect to the definition of ‘industry’, the Commission recommended that: In our view, there appears to be no valid ground for narrowing the scope of the definition of ‘industry’ as it stands today. In fact, there is a case for enlarging its scope so as to cover teaching or educational institutions or institutes, universities, professional firms and offices etc., whose employees are at present denied the protection of the provisions of the Industrial Disputes Act. In saying so, we are not unmindful of the fact that the problem of industrial relationship pertaining to the administration of teaching institutions and universities presents several distinctive features and they will have to be carefully considered before such institutions are brought within the purview of the definition of ‘industry’. The autonomy of the universities is a very important concept which is respected in all

democratic countries. Besides, the salaries of teachers employed by the university or colleges affiliated to it are, in some cases, determined not be the university or the colleges on the one hand and the teachers on the other, but the University Grants Commission and state governments and the Union Government also come into the picture. The staff employed by educational institutions broadly consists of two categories, viz., administrative and teaching; and the problems of these two categories of staff may not always be the same or identical. That is why we would suggest that the extension of the scope of the definition of ‘industry’ should be made by stages in a phased manner over a reasonable period, depending upon the administrative arrangements to meet the requirements of the law and upon the consideration of a number of other relevant factors. Continuing it said: Besides, it is necessary to emphasize that if the scope of the concept of ‘industry’ has to be expanded to cover teaching institutions and universities, it may become necessary to provide for a different set-up to deal with the problems or disputes which may arise in such institutions. As we have just pointed out, these institutions have certain special distinctive characteristics, and even if employees working in them are, in future, included within the definition of ‘workmen’, care will have to be taken to see that a special procedure, self-contained in character, is provided for dealing with grievances or industrial disputes raised by the employees and a special machinery set up in this behalf. But these are matters of detail and we do not propose to deal with them.158 The Commission recommended that government should consider whether in respect of such hospitals and non-profit making philanthropic institutions which devote themselves to humanitarian work, a special procedure could not be devised to avoid hardship to the community and at the same time, give satisfaction to the workers engaged therein.

V. Parliament’s Disapproval of Judicial Response The Parliament through the Industrial Disputes (Amendment) Act, 1982,

disapproved of the widening of the coverage of the term ‘industry’ by the Supreme Court in Bangalore Water Supply and Sewerage Board v. Rajappa (supra), by excluding a number of activities such as hospitals, educational institutes, scientific and research institutions, charitable, social and philanthropic organizations and institutions performing sovereign functions. Thus, Section 2 (j) of Industrial Disputes (Amendment) Act, 1982, defines the term ‘industry’ to mean: Any systematic activity carried on by cooperation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfying human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not — (i)

any capital has been invested for the purpose of carrying on such activity or (ii) such activity is carried on with a motive to make any gain or profit, and includes – (a) any activity of the dock labour board established under Section 5-A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948); (b) any activity relating to the promotion of sales or business or both carried on by an establishment But does not include — (a) any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as is referred to in the foregoing provisions of this clause) and such other activity is the predominant one. Explanation—For the purposes of this sub-clause, ‘agricultural operation’ does not include any activity carried on in a plantation as defined in clause (f) of Section 2 of the Plantations Labour Act, 1951, or (b) hospitals or dispensaries, or (c) educational, scientific, research or training institutions, or (d) institutions owned or managed by organizations wholly or

substantially engaged in any charitable, social or philanthropic service, or (e) khadi or village industries, or (f) and activity of the government relatable to the sovereign functions of the government, all the activities carried on by the department of the Central Government … activities … dealing with defence research, atomic energy and space, or (g) any domestic service, or (h) any activity, being a profession practised by an individual or body of individuals, if the number of persons employed by an individual or body of individuals in relation to such profession is less than ten, or (i) any activity, being an activity carried on by a cooperative society or a club or any other like body of individuals, if the number of persons employed by the cooperative society, club or other like body of individuals in relation to such activity is less than ten. However, almost 30 years have elapsed since the aforesaid amendment came on the statute book, but it has not been enforced till the date. This has led the Supreme Court to observe that ‘we have not been able to gather as to why even 6 years after the amendment has been brought to the definition of industry in Section 2(j) of the Act, the same has not been brought into force. The Court on more than one occasion, has indicated that the position should be clarified by an appropriate amendment and when keeping in view the opinion of this Court, the law was sought to be amended, it is appropriate that the same should be brought into force as such or with such further alteration as may be considered necessary and the legislative view of the matter is made known and the confusion in the field is cleared up.’159

Issuance of Writ of Mandamus for giving effect to Amendment in ID Act Can a High Court issue a writ of mandamus to enforce clause (c) of the Industrial Disputes (Amendment) Act, 1982 which excludes, inter alia ‘charitable trust’ from the definition of ‘industry’? This issue was raised in Union of India v. Shree Gajanan Maharaj Sansthan.160 The Supreme Court answered the question in negative. The Court had earlier directed the Union of

India to examine and decide within six months as to when it would be feasible to give effect to sub-section (2) of Section 1 of the Industrial Disputes (Amendment) Act, 1982. In response, the Central Government filed an affidavit stating the various steps taken by it which are as follows: (i) (ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

The Industrial Disputes (Amendment) Bill, 1982 was introduced to amend the definition of the term ‘industry’. The government also introduced the Hospitals and Other Institutions (Settlement of Disputes) Bill and Education Institution (Settlement of Disputes) Bill in the Rajya Sabha. The former bill was enacted but the latter bill was not pursued because of opposition to various provisions. As a consequence, the amended definition of the term 'industry' could not be brought into effect in the absence of alternative grievance machinery for employees in hospitals, educational institutions, etc., who would have been denied the protection of the Industrial Disputes Act, 1947. Another attempt was made by introducing, the Hospitals and other Institutions (Redressal of Grievances of Employees) Bill but it lapsed with the dissolution of the Lok Sabha in 1989. The bipartite committee for new industrial relations law under the chairmanship of G Ramanujam was set up by the government for formulation of comprehensive industrial relations law but the committee member were not unanimous on the definition of the term 'industry'. A proposal for modification of the definition of the term ‘industry’ was placed in the standing labour committee. Thereafter, the issue was referred to the new Bipartite committee to formulate a comprehensive Industrial Relations Bill. It was wound up as no consensus emerged. The Ministry of Labour prepared a proposal to amend the Industrial Disputes Act, 1947 including definition of ‘industry’ and the proposal was sent to committee of secretaries. In the meeting of Committee of Secretaries (COS) on 15 February 1999, it was agreed that an inter-ministerial group would be set up by the Ministry of Labour of finalize the proposals. Accordingly, an interministerial group was set up with the representatives of 13 ministries/department. Meetings of the inter-ministerial group with the representatives of all the 13 ministries/department were held on 14 May 1999 and 11 January 2001 to consider the amendment proposals. Meetings of COS under the chairmanship of the cabinet secretary were

held on 15 February 1999, 3 November 1999, and 21 January 2000 to consider the amendment proposals. (x) The proposal was revised/recast on the basis of recommendations made by the group and inter-ministerial committee of secretaries. (xi) Group of ministers was constituted under the chairmanship of Dy. Chairman, Planning Commission to suggest the amendment proposals. The group consisted of ministers of nine ministries. (xii) The group of ministers had met on 11 April 2000, 12 May 2000 and 27 May 2000. (xiii) The proposal to amend the Industrial Disputes Act was again revised on the basis of recommendations of group ministers. (xiv) After finalizing the proposals, it was sent to Ministry of Law, Justice and Company Affairs for the opinion of department of legal affairs which has concurred with the proposals and a draft bill is being drafted by the legislative department, Ministry of Law, Government of India. The Supreme Court, in view of the above, held that it would not be feasible for government to set out any definite day as to when they can take action as indicated by the High Court and therefore, the order made by the High Court cannot be given effect. The court added that though there has been a sense of urgency on the part of the government in this regard, it has not been able to take a decision under the circumstances set forth by then in which writ of mandamus has been issued to the government to take action and to indicate as to when it would be feasible to appoint a date for bringing into force the amending Act. In other respects, the order made by the High Court was maintained by the Supreme Court.

W. Current Confusion Irrigation Department – If Industry While in Des Raj v. State of Punjab161, the Supreme Court held that irrigation department was an ‘industry’ under Section 2 (j), a two-judge bench of the Supreme Court in Executive Engineer, State of Karnataka v. K Soonasetty162 following the decisions in Union of India v. Jai Narain Singh163 and State of H P v. Suresh Kumar Varma164 held it to be not an ‘industry’. The Court ruled: The function of public welfare of the State is a sovereign function. It is the constitutional mandate under the Directive Principles, that the government should bring about welfare State

by all executive and legislative actions. Under these circumstances, the State is not an ‘industry’ under the Industrial Disputes Act. The Allahabad High Court in State of Uttar Pradesh v. Industrial Tribunal IV, Agra & Another165 following the decision of the Supreme Court in General Manager Telecom v. A Sriniwasa166 held that irrigation department of the state is not an industry. But the Patna High Court in State of Bihar v. Gajadhar Singh167 held that the department of irrigation is an ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947.

Postal and Telecom Departments – If Industry In Sub Divisional Inspector of Post Vaikam v. Theyyam Joseph168, a question arose whether the establishment of the Sub-divisional Inspector of Post was an 'industry' under the Industrial Disputes Act, 1947. A two-judge bench of the Supreme Court answered the question in negative and held that the functions of the postal department are part of the sovereign functions of the State and it is, therefore, not an industry within the definition of Section 2(j) of the Industrial Disputes Act, 1947. Incidentally, this decision was rendered without any reference to the seven judge bench decision in Bangalore Water Supply case. Again in Bombay Telephone Canteen Employees Association, Prabhadevi Telephone Exchange v. Union of India169, the Supreme Court held that workmen employed in the departmental canteen of Telephone Nigam Limited holding civil posts were not workmen within the meaning of the Industrial Disputes Act. In General Manager, Telecom v. S Srinivasa Rao170, the question whether postal and telecom department was an ‘industry’ was placed specifically before the bench of three judges was whether the telecom department of the Union of India was an ‘industry’. A three judge bench of the Supreme Court answered the question in affirmative and observed: With respect, we are unable to subscribe to this view for the obvious reason that it is in direct conflict with the seven judge bench decision in Bangalore Water Supply case (supra) by which we are bound. It is needless to add that it is not permissible for us, or for that matter any bench of lesser strength, to take a view contrary to that in Bangalore Water Supply case (supra) or to bypass that decision so long as it holds

the field. Moreover, that decision was rendered long back, nearly two decades earlier and we find no reason to think otherwise. Judicial discipline requires us to follow the decision in Bangalore Water Supply case (supra) and Bombay Telephone Canteen Employees’ Association case (supra) cannot be treated as laying down the correct law. In Senior Superintendent of Post Office, Postal Department, Ludhiana v. Baljit Singh171, the Punjab and Haryana High Court held that postal department is an ‘industry’ under Section 2(j) of IDA.

National Remote Sensing Agency In National Remote Sensing Agency v. Additional Tribunal-cum-Additional Labour Court, Hyderabad172, the Andhra Pradesh High Court held that the National Remote Sensing Agency which carries on systematic activity in cooperation with employees for production and distribution of material services meant to satisfy human wants and wishes does not discharge any sovereign functions and is therefore, an industry under Section 2(j) of the Industrial Disputes Act. The court also held that absence of profit motive is not a decisive factor.

Research Laboratory – If Industry In Physical Research Laboratory v. K G Sharma,173 a question arose whether Physical Research Laboratory hereinafter referred to as PRL, is an ‘industry’ within the meaning of Section 2(j) of the Industrial Disputes Act. The facts of the case were that the respondent was appointed by PRL. He was transferred to photography documentation services on a post which was non-technical and administrative. On 31 December 1978 on attaining the age of 58 years, he was retired from service with effect from 1 January 1979. Aggrieved by his retirement at the age of 58 years and not at 60, he filed a writ petition in the High Court of Gujarat but it was withdrawn. He then filed a complaint before the labour commissioner who, on the basis thereof, made a reference to the labour court, Ahmedabad. The labour court held that PRL is carrying on, in an organized and systematic manner, the activity of research in its laboratory by active cooperation between itself and its employees and the discoveries and inventions made would be eligible for sale, hence PRL is an industry. It accordingly held that the respondent was entitled to continue in service up to the age of 60 years. As the respondent had already completed the age of 60 years by

then, no order of reinstatement was passed but only back wages for those two years were ordered to be paid. This decision was upheld by the High Court. Thereupon, the appellant filed an appeal by special leave before the Supreme Court. It was urged on behalf of the appellants that PRL being a purely research institute of the Central Government, engaged in carrying out fundamental research regarding the origin and evolution of the universe and the atmosphere of the earth is not an ‘industry’ as defined by Section 2 (j). Further, it carried on research function and not a commercial venture, hence it is not an industry. Accepting the contention, the Supreme Court observed: The question whether PRL is an ‘industry’ under the I D Act will have to be decided by applying the principles laid down in Bangalore Water Supply case but, at the same time, it has to be kept in mind that these principles were formulated as this Court found the definition of the word ‘industry’ vague and rather clumsy, vaporous and tall-and-dwarf. Therefore, while interpreting the words ‘undertaking’, ‘calling’ and ‘service’ which are of much wider import, the principle of noscitur a sociis was applied and it was held that they would be ‘industry’ only if they are found to be analogous to trade or business. Furthermore, an activity undertaken by the government cannot be regarded as ‘industry’ if it is done in discharge of its sovereign functions. One more aspect to be kept in mind is that the aforesaid principles are not exhaustive either as regards what can be said to be sovereign functions or as regards the other aspects dealt with by the Court. The Court added: PRL is an institution under the Government of India’s department of space. It is engaged in pure research in space science. The purpose of the research is to acquire knowledge about the formation and evolution of the universe but the knowledge thus acquired is not intended for sale. The material on record further discloses that PRL is conducting research not for the benefit or use of others. Though the results of the research work done by it are occasionally published, they have never been sold. There is no material to show that the knowledge so acquired by PRL is marketable or has any commercial value. It has not been pointed out how the

knowledge acquired by PRL or the results of the research occasionally published by it will be useful to persons other than those engaged in such type of study. The material discloses that the object with which the research activity is undertaken by PRL is to obtain knowledge for the benefit of the department of space. Its object is not to render services to others nor in fact it does so except in an indirect manner. Neither from the nature of its organization nor from the nature and character of the activity carried on by it, can it be said to be an ‘undertaking’ analogous to business or trade. It is not engaged in a commercial or industrial activity and it cannot be described as an economic venture or a commercial enterprise as it is not its object to produce and distribute services which would satisfy wants and needs of the consumer community. It is more an institution discharging governmental functions and a domestic enterprise than a commercial one. PRL is not an industry even though it is carrying on the activity of research in a systematic manner with the help of its employees as it lacks that element which would make it an organization carrying on an activity which can be said to be analogous to the carrying on of a trade or business because it is not producing and distributing services which are intended or meant for satisfying human wants and needs, as ordinarily understood.

Forest Department – If industry The bench of three judges in Chief Conservator of Forests v. Jagannath Maruti Kondhare174 held that ‘Social Forestry Department’ is covered by the definition of ‘industry’ whereas the two-judge bench of the Supreme Court in State of Gujarat v. Pratamsingh Narsingh Parmar,175 the question for consideration was whether the forest department in the state of Gujarat where the respondent was appointed as a clerk could be held to be an ‘industry’ under the Act so that an order of termination in contravention of Section 25F of the Act would get vitiated. The Supreme Court held that the forest department to which the respondent had been recruited could not be held to be ‘industry’ within the meaning of Section 2(j) of the Act and as such, the compliance with Section 25F of the Act did not arise. However, in Range Forest Officer v. Galabhai Kalabhai Damor176, the Gujarat High Court held the activities of the forest department engaged in processing of sandalwood at Tiruppattur Sandalwood Depot cannot be said to be in discharge of sovereign function of the state. It is nothing but a commercial activity intended to regulate and control the movement

of sandalwood to augment the income of the state and therefore, an ‘industry’ under Section 2(j) of IDA.

Zoological Park The Allahabad High Court in State of Uttar Pradesh v. Jai Pal Singh & Another177 held that Kanpur Zoological Park is an ‘industry’ under Section 2(j) of the ID Act.

Radio and Doordarshan – If Industry In All India Radio v. Santosh Kumar and Another,178 the question arose whether All India Radio and Doordarshan Kendras are industries within Section 2(j) of the Industrial Disputes Act, 1947. The contention of the appellant was that All India Radio and Doordarshan Kendra discharge sovereign functions of the State and they are not industries within the meaning of Section 2 (j) of the ID Act. The Supreme Court dismissed the appeal and held: The functions which are carried on by All India Radio and Doordarshan Kendra cannot be said to be confined to sovereign functions as they carry on commercial activity for profit by setting commercial advertisements telecast or broadcast through their various kendras and stations by charging fees…. Consequently, it must be held that the appellant All India Radio as well as Doordarshan are industries within the meaning of Section 2(j) of the Act and the said definition is operative being applicable at present and as existing on the statute book as on date. Joint Legal Remembrance and Director Litigation, Law Department – if Industry In State of Rajasthan v. Ganeshi Lal179 a question, inter alia, arose whether the law department is an ‘industry’ under the Industrial Disputes Act, 1947. The labour court answered the question in affirmative. The single judge of the High Court approved the decision of the labour court. On appeal in the Supreme Court, it was argued by the State that by no stretch of imagination the law department of the state could be considered to be an 'industry'. It was also submitted that the question whether government departments can be treated as an 'industry' was under consideration of the larger bench of the Supreme Court. The Court held that the labour court and the High Court had not even indicated

as to how the law department is an ‘industry’. It had merely stated that in some cases, irrigation department and public departments have been held to be covered by the definition of ‘industry’. However, this line of view cannot be applied to the law department of the government.

X. Re-examination of the Decision in Bangalore Case In Coir Board Ernakulam v. Indira Devi P S,180 the two-judge bench of the Supreme Court was called upon to examine whether the appellant, Coir Board, is an industry under the Industrial Disputes Act, 1947. In this case, Coir Board set up under the Coir Industry Act, 1953 discharged certain temporary clerks and typists. The discharged employees claimed that their services could only be terminated in accordance with the provisions of the Industrial Disputes Act, 1947. The Kerala High Court held that the Coir Board is an ‘industry’ under the Industrial Disputes Act, 1947. On appeal, the Supreme Court observed: Looking to the uncertainty prevailing in this area and in the light of the experience of the last two decades in applying the test laid down in the case of Bangalore Water Supply and Sewerage Board (supra), it is necessary that the decision in Bangalore Water Supply and Sewerage Board’s case (supra) be reexamined. The experience of the last two decades does not appear to be entirely happy. Instead of leading to industrial peace and welfare of the community (which was the avowed purpose of artificially extending the definition of industry), the application of the Industrial Disputes Act to organizations which were, quite possibly, not intended to be so covered by the machinery set up under the Industrial Disputes Act, might have done more damage than good, not merely to the organizations but also to employees by the curtailment of employment opportunities. Undoubtedly, it is of paramount importance that a proper law is framed to promote the welfare of labour employed in industries. It is equally important that the welfare of labour employed in other kinds of organizations is also promoted and protected. But the kind of measures which may be required for the latter may be different and may have to be tailored to suit the nature of such organizations, their infrastructure and their financial capacity as also the needs of their employees. The elimination of profit motive or a desire to generate income as the

purpose of industrial activity has led to a large number of philanthropic and charitable activities being affected by the Industrial Disputes Act. In a number of cases, where the organization is run by voluntary social workers, they are unable to cope with the requirements of Industrial Disputes Act. This has led to cessation of many welfare activities previously undertaken by such organizations which has deprived the general community of considerable benefit and the employees their livelihood. There are many activities which are undertaken not with a view to secure any monetary returns—whether one labels it as livelihood, income or profit but for other more generous or different motives. Such activities would not normally be labelled as industrial activities but for the wide interpretation given judicially to the term industry in the Industrial Disputes Act. For example, a number of voluntary organizations run workshops in order that the poor and more particularly poor or destitute women may earn some income. Voluntary welfare organizations organize activities like preparation of spices, masalas, pickles so that they secure small orders from industries for poor women. A small number of persons were employed to assist in the activities. The income earned by these activities was distributed to the women who were given such work. Other voluntary organizations organized tailoring or embroidery classes or similar activities for poor women and provided an outlet for the sale of the work produced by them. These persons would otherwise have found it impossible to secure a market for their products. Such organizations are not organized like industries and they do not have the means or manpower to run them as industries. A large number of such voluntary welfare schemes have had to be abandoned because of the wide interpretation given to the term ‘industry’. Apart from above activities, there may be other activities also which are undertaken in the spirit of community service, such as charitable hospitals where free medical services and free medicines may be provided. Such activities may be sustained by free services given by professional men and women and by donations. Sometimes, such activities may be sustained by using the profits in the paid section of that activity for providing free services in the free section. Doctors who work in these hospitals may work for no returns or sometimes, for very nominal fees. Fortunately, philanthropic instinct is far from extinct. Can such philanthropic organizations be called industries? The definition needs reexamination so that while the workers in an industry have the benefit of industrial legislation, the community as such is not deprived of philanthropic and other vital services which contribute so much to its well-being. Educational services and the work done by teachers in educational institutions, research organizations, professional activities, or recreational activities, amateur sports, promotion of arts—fine arts and performing arts, promoting crafts and special

skills, all these and many other similar activities also require to be considered in this context. In fact, in 1982, the legislature itself decided to amend the definition of industry under the Industrial Disputes Act, 1947 by enacting the Amending Act 46 of 1982 and curtailing the coverage of ‘industry’. Unfortunately, despite the legislative mandate, the definition has not been notified by the executive as having come into force. Since the difficulty has arisen because of the judicial interpretation given to the definition of industry in the Industrial Disputes Act, there is no reason why the matter should not be judicially re-examined. In the present case, the function of the Coir Board is to promote coir industry, open markets for it and provide facilities to make the coir industry’s products more marketable. It is not set up to run any industry itself. Looking to the predominant purpose for which it is set up, we would not call it an industry. However, if one were to apply the tests laid down by Bangalore Water Supply and Sewerage Board’s case (supra), it is an organization where there are employers and employees. The organization does some useful work for the benefit of others. Therefore, it will have to be called an industry under the Industrial Disputes Act. We do not think that such a sweeping test was contemplated by the Industrial Disputes Act, nor do we think that every organization which does useful service and employs people can be labelled as industry. We, therefore, direct that the matter be placed before the Hon’ble Chief Justice of India to consider whether a larger bench should be constituted to re-consider the decision of this Court in Bangalore Water Supply and Sewerage Board (supra). The three-judge bench presided over by the Chief Justice in Coir Board Ernakulam, Kerala State v. Indira Devi P S and others181 ruled that the judgement delivered by seven learned judges of this Court in Bangalore Water Supply case does not require any reconsideration on a reference being made by a two-judge bench of this Court, which is bound by the judgement of the larger bench. A Constitution bench of five judges of the Supreme Court was constituted in State of U.P. v. Jai Bir Singh182 on a reference made by a bench of three judges in State of U.P. v. Jai Bir to give findings in an apparent conflict between the decisions of two benches of this Court in Chief Conservator of Forests v. Jagannath Maruti Kondhare of three judges and State of Gujarat v. Pratamsingh Narsinh Parmar of two judges. The bench in its judgement dated 8 May 2005 observed that in construing the definition clause and determining its ambit, one has not to lose sight of the fact that in activities like hospitals and

education, concepts like right of the workers to go on 'strike' or the employer's right to 'close down' and 'layoff' are not contemplated because these are services in which the motto is 'service to the community'. If the patients or students are to be left to the mercy of the employer and employees exercising their rights at will, the very purpose of the service/activity would be frustrated. Hence, it is not necessary to say anything more and leave it to the larger bench to give such meaning and effect to the definition clause in the present context with the experience of all these years and keeping in view the amended definition of 'industry' kept dormant for 23 long years. The cases were, therefore, placed before the Chief Justice of India for constituting a suitable larger bench for reconsideration of the judgement of Bangalore Water Supply & Sewerage Boards.

1 2 3

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

This was recognized in Corporation of City of Nagpur v. Its Employees, (1960) 1 LLJ 523 (SC) and State of Bombay v. Hospital Mazdoor Sabha, (1960) LLJ 251 (SC). D N Banerji v. P R Mukherjee, (1953) 1 LLJ 195. Federated Municipal and Shire Council Employees' Union of Australia v. Lord Mayor, Alderman, Councillors and Citizens of the Melbourne Corporation, 26 CLR, 5008, 554555. Baroda Borough Municipality v. Its Workmen, AIR 1957 SC 110. Corporation of City of Nagpur v. Its Employees, (1960) 1 LLJ 523. The judgement was delivered by the same bench which decided Hospital Mazdoor Sabha case. The definition in this Act was similar to the definition of ‘industry’ under Section 2 (j). AIR 1978 SC 54. 1991(1) SCALE 655. (2003) 9 SCC 290. State of Bombay v. Hospital Mazdoor Sabha, (1960) 1 LLJ 251 (SC). Management of Safdarjang Hospital v. Kuldip Singh Seth, AIR 1970 SC 1407. Management of Hospital, Orissa v. Their Workmen, (1971) Lab. IC 835 (SC). Dhanrajgiri Hospital v. Workmen, (1975) 2 LLJ 409 (SC). AIR 1978 SC 548. AIR 1978 SC 548. AIR 2000 SC 3116: (2000) 2 LLJ 1382. National Union of Commercial Employees v. M R Mehar, AIR 1962 SC 1080. Id. at 1085. Bar Association Canteen v. Chief Commissioner, Delhi, (1967) 2 LLJ 227 (Delhi).

20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

40 41 42 43 44 45 46 47 48 49 50

Id. at 230. Id. at 231. Rabindranath Sen v. First Industrial Tribunal, (1963) 1 LLJ 567 (Calcutta). Alien Macgregor Smith Forge v. First Industrial Tribunal, (1963) 1 LLJ 556 (Calcutta). Ram Krishna Ayyar Vaidyanathan v. Fifth Industrial Tribunal, (1968) LLJ 597 (Calcutta). N E Merchant v. Bombay Municipal Corporation, (1968) 1 LLJ (Bombay). T K Menon v. District Labour Officer, (1966) 2 LLJ 613 (Kerala). Fraser and Ross v. District Labour Officer, (1966) 2 LLJ 682 (Madras). Bangalore Water Supply v. Rajappa, AIR 1978 SC 548, 584. Corporation of City of Nagpur v. Its Employees, (1960) 1 LLJ 523. University of Delhi v. Ram Nath, AIR 1963 SC 1873. (1988) 4 SCC 42. Madras Gymkhana Club Employees' Union v. Gymkhana Club, (1967) 2 LLJ 720 (SC). Cricket Club of India v. Bombay Labour Union, (1966) 1 LLJ 775 (SC). AIR 1978 SC 548, 591. Ahmedabad Textile Industry Research Association v. State of Bombay, (1960) 2 LLJ 720 (SC). Ahmedabad Textile Industry Research Association v. State of Bombay, (1960) 2 LLJ 720 at 724. Federation of Indian Chamber of Commerce and Industry v. Their Workmen, (1971) 2 LLJ 630 (SC). Id. at 631. Workmen v. Management of Indian Standard Institution, (1976) 1 LLJ 33 (SC). This decision has been overruled by the Supreme Court in its subsequent judgement in the Bangalore Water Supply case. Corporation of the City of Nagpur v. Its Employees, AIR 1960 SC 523, 535. State of Bombay v. Hospital Mazdoor Sabha, (1960) 1 LLJ 251 (SC). Madras Gymkhana Club Employees’ Union v. Madras Gymkhana Club, (1967) 2 LLJ 720. Travancore Devaswom Board v. State of Kerala, (1963) 2 LLJ 218 (Kerala). Harihar Bahinipati v. State of Orissa, (1965) 1 LLJ 501 (Orissa). (2004) LLR 60. (2005) 1 LLJ 32. Pappammal Annachatrum v. Labour Court, (1964) 1 LLJ 493 (Madras). (2011) LLR 262. Bombay Pinjrapole v. The Workmen, (1971) 2 LLJ 393 (SC). AIR 1978 SC 548.

51 52 53 54 55 56 57 58 59 60 61 62 63

64 65

66

67

68

69

70

Ibid. (1995) 1 LLJ 470. (1999) 1 LLJ 234. (2002) Lab. IC 2468. (2004) LLR 853. Vishakapatnam Dock Labour Board v. Stevedores’ Association, Vishakapatnam, (1970) 1 LLJ 46 (SC). Madras Gymkhana Club Union v. Madras Gymkhana Club, (1967) 2 LLJ 720, 728. Budge Budge Municipality, (1953) 1 LLJ 195 (SC). Hospital Mazdoor Sabha, (1960) 1 LLJ 25 1. Corporation of City of Nagpur, (1960) 1 LLJ 523. Ahmedabad Textile Industry Research Association, (1960) 2 LLJ 720 (SC). National Union of Commercial Employees v. M R Mehar, AIR 1962 SC. 1080. Section 2(j) does not define ‘industry’ in the usual manner by prescribing what it means: the first clause of the definition gives the statutory meaning of ‘industry’ and the second clause deliberately refers to several other items of industry and brings them in the definition in an inclusive way. It is obvious that the words used in the inclusive definition denote extension and cannot be treated as restricted in any sense. See Hospital Mazdoor Sabha case. Madras Gymkhana Club case (1967) 2 LLJ 720. ‘… What must he established is the existence of an industry viewed from the angle of what the employer is doing and if the definition from the angle of the employer’s occupation is satisfied, all who render service and fall within the definition of workman come within the fold of industry irrespective of what they do.’ Madras Gymkhana Club, (1967) 2 LLJ 720, 727–28. Safdarjang Hospital, AIR 1970 SC 1407 at 1411. There must, therefore, be an enterprise in which the employers follow their avocations as detailed in the definition and employ workmen who follow one of the avocations detailed for workmen. Though the word undertaking in the definition of ‘industry’ is wedged in between business and trade on the one hand and manufacture on the other and though therefore, it might mean only a business, trade or undertaking, still it must be remembered, that if that were so, there was no need to use the word separately from business or trade. Budge Budge Municipality, (1953) 1 LLJ 195. ‘The undertaking or the service will still remain within the ambit of what we understand by an industry though it is carried on with the aid of taxation and no immediate materials gain by way of profit is envisaged.’ Budge Budge Municipality (1953) 1 LLJ 195 at 200. ‘It must be borne in mind that noscitur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the words have been deliberately used to make the scope of the aforesaid word correspondingly wider’. Hospital Mazdoor Sabha, (1960) 1 LLJ 251. Hospital Mazdoor Sabha, op. cit., 259.

71

72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88

89 90 91 92 93 94 95 96

The bench consisted of Chief Justice Beg and Justices Krishna Iyer, Chandrachud, Bhagwati, Jaswant Singh, Tuizapurkar and Desai. Justice Krishna Iyer wrote the main judgement of the Court on behalf of himself, Justice Bhagwati and Justice Desai. Chief Justice Beg, Chandrachud J, (as he then was) wrote a separate but concurring judgement. However, Justice Jaswant Singh and Justice Tulzapurkar wrote dissenting opinion. It is significant to note that none of the judges except Justice Bhagwati, who gave a judgement in Indian Standard Institution, (1976) 2 SCR 138 has participated in the decision of delineating the scope of the term industry. Bangalore Water Supply and Sewerage Board v. Rajappa, AIR 1978 SC 548. Bangalore Water Supply and Sewerage Board v. Rajappa, AIR 1978 SC 548. Ibid. Bangalore Water Supply and Sewerage Board v. Rajappa, AIR 1978 SC 548. Like Gymkhana Club, Cosmopolitan Club, Cricket Club of India and National Sports Club of India. University, college, school. Pinjrapole, Gandhi Ashram. Credit Societies, marketing cooperatives, producers or consumer societies or apex societies. Municipalities. AIR 1978 SC 548. Similar argument was made by Mr Chari in Fazalbhoy's case. Bangalore Water Supply v. Rajappa, AIR 1978 SC 548. Ibid. Bangalore Water Supply v. Rajappa op. cit. C M T Institute v. Assistant Labour Commissioner, (1979) 1 LLJ 192 (Karnataka). K R. B. Kaimal v. Director of Postal Services (1979) 1 LLJ 176 (Kerala). Tapan Kumar v. General Manager Calcutta Telephones, (1980) Lab. IC 508 (Cal.) and X R B Kaimal v. Director of Postal Services op. cit. Bhaskaran v. SDO, (1982) 2 LLJ 248 (SC). T T Devasthanam v. Commer. of Labour, (1979) 1 LLJ 448. Bihar Relief Committee v. State of Bihar, (1979) 2 LLJ 53 (Pat). Security Paper Mills v. Hati Shankar Namdeo, (1980) 2 LLJ 61 (M.P.). SC Workers’ Union v. Management of Ayurvedic A Unani Tibbia College Board, (1980) Lab. IC 892 (Del.). Najeema Beevi v. Public Service Commission, (1983) 1 LLJ 433 (Ker.). State of Punjab v. Kuldip Singh, (1983) 1 LLJ 309 (Punj. & Haryana). Kmaymmal v. State of Kerala, (1983) 1 LLJ 267. Christian Medical College, Vellore Association v. Govt, of India, (1983) 2 LLJ 372 (Madras).

97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126

Gopalji Jha Shastri v. State of Bihar, (1983) 2 LLJ 22 (SC). PF Employees ’ Union v. Addl. Industrial Tribunal, (1983) 2 LLJ 108 (Kerala). Indian Institute of Petroleum v. State of U.P., (1985) Lab IC 198 (Allahabad). B Jateshwar Sharma v. Director of Education, (1985) Lab. IC 414 (Gujarat). Corporation of Cochin v. Jalaja, (1984) 1 LLJ 526 (Kerala). Hariba v. K S R T Corporation, (1983) 2 LLJ 76 (Karnataka). Vasudeo Ambre v. State of Maharashtra, (1988) Lab. IC 554 (Bombay). Indian Navy Sailors’ Home v. Bombay Gymkhana Club Caterers and Allied Employees‘ Union; (1986) Lab. IC 11 18. Cotton & Woollen Textile Workers’ Union v. Industrial Tribunal, (1982) Lab. IC 1329 (SC). Dinesh Sharma v. State of Bihar, (1983) BLJR 207 (Patna). Doordarshan Karmachari Congress v Union of India, (1988) 2 LLJ 83 (Allahabad). Des Raj v. State of Punjab, AlR 1988 SC 1182. Raj Mukari v. State of Himachal Pradesh, (1989) Lab. IC 841 (Himachal Pradesh). Mahila Samiti v. State of MP, (1989) Lab. IC 891 (Madhya Pradesh). K C Das v. State of West Bengal, (1960) 2 LLJ 505 (Calcutta). Cooperative Milk Societies’ Union Ltd., v. State of West Bengal, (1958)2 LLJ 61 (Calcutta). Central Hair Cutting Saloon v. Harishikesh Pramanik, (1956) 1 LLJ 596 (LAT). Travancore Devaswom Board v. State of Kerala, (1963) 2 LLJ 218 (Kerala). V A Chedda v. Bambai Mazdoor Union, (1973) Lab. IC 697 (Bombay). Jaipur Milk Supply Scheme v. Labour Court, Jaipur, (1976) Lab, IC 863 (Raj.). Management of Bihar Khadi Gramodyog Sangh v. State of Bihar, (1977) Lab. IC 466 (Patna). State of Rajasthan v. Industrial Tribunal, Rajasthan, (1970) (Raj.) LW 137 (Raj.) followed in Mahesh Chandra Sharma v. State of Rajasthan, (1974) Raj. LW 338 (Raj.). Madhya Pradesh Irrigation Karamchari Sangh v. State of Madhya Pradesh, (1972) 1 LLJ 374 (MP) (D.B.). Chief Engineer Irrigation, Orissa v. Harihar Patra, (1977), Lab. IC 1033 (Orissa). Tea Board v. First Industrial Tribunal, West Bengal, (1978). Lab. IC (NOC) 179 (Calcutta). Bihar Relief Committee v. State of Bihar, (1979) Lab. IC 445 (Patna). J N Singh & Co. Pvt. Ltd. v. S N Sexena,(1916) Lab. IC 840 (Allahabad). Management of Radio Foundation Engineering Ltd., v. State of Bihar, (1970) Lab. IC 1119 (Patna). Anando Chandra Swam v. State of Orissa, (1973) 1 LLJ 508 (Orissa). Tapan Kumar Jana v. Central Manager, Calcutta Telephones, (1981) Lab IC (NOC) 68 (Calcutta).

127 Kunjan Bhaskaran v. Sub-Divisional Officer, Telegraphs Changanassery, (1983) Lab.

IC 135 (Kerala). 128 Shops and Commercial Workers’ Union v. Management of Ayurvedic and Unani Tibbia 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154

College Board, Delhi, (1980) Lab. IC 892 (Delhi). Security Paper Milts v. Hati Shankar Namdeo, (1980) 2 LLJ 61 (63) (M.P). Karnami Properties Ltd. v. State of West Bengal, (1990) 2 Lab. IC 1677 (SC). R Sreenivasa Rao v. Labour Court, Hyderabad, (1990) 1 Lab. IC 175 (Andhra Pradesh). Workmen of M/s Baikuntha Nath Debasthan Trust v. State of West Bengal, (1990) 2 Lab. IC 1586. Prabhudayal v. Alwar SekJiari Bhumi Vikas Bank, (1990) Lab. IC 944 (Rajasthan). Nathaniel Nasib v. U P. Scheduled Caste Finance & Development Corporation Ltd., (1989) 2 Lab. IC 2276 (Allahabad). Executive Engineer, Anandpur Barrage Division v. President, Work Charged & N M R Employees Union Salinla, (1989) Lab. IC NOC 130 (Orissa). Basant Lal v. Div. Mechanical Engineers (G.W.) Rly Kathiar, (1977) (3) LLJ 154 (Patna). The Bombay Pinjrapole Bhuleswar v. The Workmen, AIR (1971) SC 2422. G C Sharma Sons v. R K Baveja, (1972) 2 LLJ 475 (Delhi). Rajesh Garg v. The Management of the Punjab State Tubewell Corporation, (1984). SLJ (P & H) 693. Indian Red Cross Society Haryana State v. The Additional Labour Court, Chandigarh. (1992) (1) PLR 121 (P & H). Sumer Chand v. The Presiding Officer, Labour Court, Ambata, (1990) (1) SLJ 91. Harjinder Singh v. State of Haryana, (1992) (1) PLR 186 (P & H). Suresh Kumar v. Union of India, (1990) Lab. IC NOC 75 (Delhi). Binoy Kumar v. State of Bihar, (1983) Lab IC 1884 (Patna) (F.B.). Des Raj v. State of Punjab, AIR l988 SC 1182, 1997 LLR 889. Akhil Raj Rajya Hand Pump Mistries Sangthan v. State of Rajasthan, (1994) Lab. IC 345. Haryana Woollen Development Corporation v. PO I.T cum LC, (1993) 2 LLJ 318. State of U P v. Presiding Officer, Labour Court, (1997) LLR 558 (H.C. Alld.). Abdul Wahab Shaikh Lai Bhai v. G E Patankar, (1980) Lab. IC 623 (Bombay). P Jost v. Director Central Institute of Fisheries, (1986) Lab. IC 1564, (Kerala). Executive Engineer, Rational Highway Division v. R.P.F. Commissioner, (1988) Lab. IC 690 (Orissa). Govindbhai Kanabhat Mari v. N K Desai, (1988) Lab IC 505 (Gujarat). J J Shrimali v. District Development Office, Jila Panchayat, (1989) Lab. IC 689 (Gujarat). P M Murugappa Mudaliar, Rathina Mudaliar & Sons v. P Raju Mudaliar, (1965) 1 LLJ

155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182

489 (Mys.). See also the decision of division bench of the Delhi High Court in Om Prakash Jhumman Lai v. Labour Court, (1970) 1 LLJ 43 (Delhi). The view taken in this case that activity where one man is employed is ‘industry’ is incorrect because it loses sight of ‘organized labour force’ and ‘collectiveness’ of labour in the law of industrial disputes. William Fredric De Pennmg v. Therd Industrial Tribunal, AIR 1959 Cal 749. Indravadan N Adhvaryu v. Laxminarayan Dev Trust through Chief Executive Kothari, (2011) LLR 262. Palace Administration Board v. State of Kerala, (1960) 1 LLJ 178. The Government of India, Report of the National Commission on Labour, (1969) 482. Des Raj v. State of Punjab, 1988 Lab. IC 1713; see also State of UP v. Presiding Officer, Labour Court, (1997) LLR 528. (2002) LLR 711. (1988) Lab IC 1713. (1997) LLR 889. (1995) Supp 4672. JT 1996 (2) 455. (2002) LLR 609. 1998 (78) FLR 143 (SC). (2012) 1 LLJ 75. (1996) 8 SSC 489. (1997) 6 SSC 723. AIR 1998 SCC 657. 2012 (1) SLR 199. (2003) LLR 108. (1997) 4 SCC 257 (SC). (1996) 2 SSC 293. (2001) 8 SSC 713. (2011) II CLR 528 (HC Gujarat). (2002) LLR 444. (2003) LLR 9. (2008) 2 SCC 533. (1998) 78 FLR 845 (SC). (1999) 1 LLJ 319. (2005) 5 SSC 1.

CHAPTER

16 Workmen Section 2 (s) of the Industrial Disputes Act, 1947, defines ‘workman’ to mean: Any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person — (i) (ii) (iii) (iv)

who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957; or who is employed in the police service or as an officer or other employee of a prison; or who is employed mainly in a managerial or administrative capacity; or who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.1

Broadly speaking, the definition requires that ‘workman’ must be: (a) person, (b) employed, (c) in any industry, (d) to do the specified type of work, (e) for hire or reward, but excludes certain specified categories of persons. The scope of the aforesaid expression has been the subject-matter of judicial interpretation in a series of decided cases. Let us turn to examine the scope of the aforesaid expressions.

A. Person The use of the word ‘person’ in the definition of ‘workman’ indicates the difference between the coverage of the expression ‘persons’’ employed in any ‘industry’ and ‘workmen’. Further, the words ‘including an apprentice’ extends the coverage of the ‘person employed in any industry’. Moreover, to the extent to which the expression ‘workman’ includes: any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment led to that dispute… is wider than the expression ‘person employed in any industry’.

B. Employed The word ‘employed’, however, is susceptible to two meanings: (a) in a broader sense, it is a synonym of ‘engaged’ or ‘occupied’, and (b) in a restricted sense, it involves the connotation of the master–servant relationship. A question, therefore, arises as to which of these two meanings provides the key to the interpretation of the phrase ‘person employed in any industry’. The Supreme Court in Dharangadhra Chemicals Works Ltd v. State of Saurashtra2 has, however, interpreted the term ‘workman’ in a restricted sense. In this case, the company is a lessee of the salt works and held licence for the manufacture of salt on the land. The salt is manufactured from rain water which soaks down the surface and becomes impregnated with saline matter. The entire area was divided into small plots called pattas. Each agarias (who were a class of professional labourers) were allotted a patta which was renewed from year to year. The company paid each agarias ₹400 to meet his initial expenses. The agarias levelled the land and enclosed the sink well in them. The brine was then brought to the surface and collected in reservoirs and crystals were prepared. If

the salt crystals were found of a prescribed quality, the company made payment to agarias. The salt which was not of prescribed quality was rejected. The agarias were neither allowed to remove nor sell the salt rejected by the company. The company employed a salt superintendent to supervise and control all stages of the manufacture of salt. The salt manufactured by the company was used partly for production of chemicals and the rest was sold. The agarias worked themselves, along with members of their families and were free to engage extra labourers on their own account. No hours of work were prescribed. Neither muster rolls were maintained, nor working hours were controlled by the masters. There were no rules as regards leave or holidays. Agarias were free to go out of the factory after making arrangement for the manufacture of salt. When monsoon began, the agarias returned to their villages to take up agricultural work. In 1950, an industrial dispute arose between the company and the agarias over the conditions of service which was referred to by the appropriate government to the industrial tribunal for adjudication. The company contended that agarias were not ‘workmen’. The company, after unsuccessfully appealing to the labour appellate tribunal and moving the High Court of Saurashtra for a writ under Article 226, appealed to the Supreme Court. A question arose whether the agarias working in the salt works of the company were workmen within the definition of Section 2(s). Justice Bhagwati, speaking for the Court observed: The essential condition of a person being a workmen within the terms of this definition is that he should be employed to do the work in that industry, that there should be, in other words, an employment of his by the employer and that there should be the relationship between the employer and him as between employer and employee or master and servant. Unless a person is thus employed, there can be no question of his being a workman within the definition of the term as contained in the Act.3 Assuming that the definition of workman requires master-servant relationship, a question arises as to how to ascertain the existence of that relationship. In Dharangadhra Chemical Works Ltd case, the Supreme Court ruled: The principle according to which the relationship… between employer and employee or master and servant has to be determined is well settled. The test which is uniformly applied in order to determine the relationship is the existence of a right

of control in respect of the manner in which the work is to be done.4 The Court then drew a distinction between ‘contract of service’ and ‘contract for service’: In the one case the master can order or require what is to be done while in the other case, he cannot only order or require what is to be done but how it shall be done.5 The Court after considering several English cases and certain observations in Halsbury’s Laws of England observed: The principle which emerges from above is that the prima facie test for the determination of the relationship between master and servant is the existence of the right in the master to supervise and control the work done by the servant not only in the matter of directing what work the servant is to do but also the manner in which he shall do his work.6 Again, in Workmen of the Food Corporation of India v. M/s Food Corporation of India,7 the Supreme Court, construed the word ‘employed’ used in Section 2(s) of the Industrial Disputes Act, 1947 and held : The expression employed has at least two known connotations but as used in the definition, the context would indicate ‘that it is used in the sense of a relationship brought about by express or implied contract of service in which the employee renders service for which he is engaged by the employer and latter agrees to pay him in cash or kind as agreed between them or statutorily prescribed.’ It discloses a relationship of command and obedience. The above requirement of a ‘workman’ being employed as a servant, restricts the coverage of the definition of ‘workman’ and excludes not only independent contractors but also dependent entrepreneurs.8 Thus, the decision renders millions of dependent entrepreneurs legal orphans. The aforesaid test was invoked and applied in Chintaman Rao v. State of Madhya Pradesh9 for determining whether a person is a ‘worker’ under the Factories Act, 1948. In this case, a bidi factory entered into a contract with certain persons known as sattedars for the supply of bidis. The sattedars were

supplied tobacco and in some cases bidi leaves also. The sattedars were neither bound to work in the factory nor to prepare bidis themselves, but could get them prepared by others. The sattedars in their turn collected bidis prepared by the coolies and took them to the factory where they were stored and checked by ‘workers’ of the factory and such lots as were rejected were taken back by sattedars to be re-made. The management then made the payment to sattedars and not to ‘workers’ because they were neither employed by the management (directly or indirectly) nor did they work in the factory. This principle was reiterated and re-affirmed by the Supreme Court in State of Kerala v. V M Patel.10 The Court also emphasized that a right to control or supervise is one of the tests for determining the relationship of master and servant. The Supreme Court in Bridhichand Sharma v. First Civil Judge,11 relaxed the qualitative and quantitative contents of the ‘direction and control’ test laid down in Dharangadhra Chemical Works, Ltd.12 In this case Bridhichand Sharma, the appellant, was the manager of the bidi factory. The respondents worked in the factory. They were, however, at liberty to come and go at their convenience anytime during the working hours in the factory subject to the condition that if they came after midday, they were not given any work on that day and consequently they lost their wages of that day. The payments to them were made on piece rate basis. According to the standing orders of the company, a worker who remained absent for eight days (without leave) could be removed. The payment of wages was made to them on piece rate basis according to the amount of work done, and the bidis which did not come up to a proper standard were rejected. It was in these circumstances that the Court held that the employees were ‘workers’ under the Factories Act, 1948 and were not independent contractors. Shankar Balaji Waje v. State of Maharashtra13 distinguished Bridichand Sharma v. First Civil Judge, Nagpur14 on the facts and applied the criteria laid down in Chintaman Rao v. State of Madhya Pradesh15 for ascertaining whether respondent Pandurang was a ‘worker’ or an independent contractor. The appellant was the owner and occupier of the bidi factory. The respondent Pandurang rolled bidis in the factory for a number of days in 1957. After the respondent worked for 70 days, the appellant terminated his services without paying him any wages for 4 days and earned leave as required under Section 79 (ii) of the Factories Act, 1948. On these facts, a question arose whether the respondent was a worker or an independent contractor. Justice Raghubar Dayal, while pronouncing the majority view, observed: There was no contract of service between the appellant and

Pandurang. What can be said at the most is that whenever Pandurang went to work, the appellant agreed to supply him tobacco for rolling bidis and that Pandurang agreed to roll bidis on being paid at a certain rate for the bidis turned out. The appellant exercised no control and supervision over Pandurang.16 Justice Subba Rao, however, took a contrary view. According to him, the question raised in this appeal is directly covered by the judgement of this court in Bridhichand Sharma v. First Civil Judge, Nagpur17. We now revert to the cases falling under Section 2(s) of the Industrial Disputes Act, 1947. D C Dewan Mohideen Sahib & Sons v. United Bidi Workers Union18 has met the hardship caused by Dharangadhra Chemical Works by emphasizing that the principal employer does not cease to be so merely because he employs workmen through intermediaries. It was found that contractors took leaves and tobaccos from the management and employed workers for manufacturing bidis. After bidis were prepared, the contractors delivered them to the management. The workers took leaves to their homes and cut them there but they rolled the bidis and filled them with tobacco only in ‘contractors’ factories’. Neither any attendance register was maintained nor were there any prescribed working hours. Sometimes, they informed the contractors and sometimes they did not, if they remained absent. No action was taken against workers absenting themselves without leave. The payment was made to them on piece-rate basis according to the amount of work done19. The Court held that the so-called contractor was merely an employee or an agent of the (management)… and as such employed as workers to roll bidis on behalf of the management.20 Be that as it may, there has been a consistent demand of working class to abolish the system of contract labour. In Standard Vacuum Refining Co. of India Ltd v. Their Workmen21, the Supreme Court was again confronted with this problem. In this case, contract labour was engaged in the cleaning and maintenance work at the refinery. The work done by contract labour was not only of perennial nature to be done everyday but the same type of work was done in other similar industries by regular workmen. A dispute arose between the employer and contractor's employees. The government referred the dispute to the tribunal. The management questioned the jurisdiction of the tribunal to adjudicate upon the dispute between employer and contractor’s employees. The tribunal overruled the objection and held that it had jurisdiction to decide such disputes. The tribunal also accepted the claim of contractor’s employees and directed abolition

of contract labour. On appeal, the Supreme Court ruled that the industrial tribunal should rest its decision not merely on theoretical or abstract objections to contract labour but also on the terms and condition on which contract labour is employed and the grievance made by the employees in respect thereof. The Supreme Court accordingly confirmed the findings of the tribunal abolishing contract labour. The Court also held that the dispute in the instant case was an industrial disputes, because (a) the management had a community of interest with the contractor’s employees; (b) they had a substantial interest in the subject-matter of the dispute in the sense that the class to which they belonged, namely, workmen was substantially affected thereby; and (c) the management could grant relief to the contractor’s employees. The aforesaid view was re-affirmed22 in a number of decided cases. The Supreme Court in Punjab National Bank v. Ghulam Dastagir23 exploded the myth of the direction and control test laid down in Dharangdhara Chemicals Ltd v. State of Saurashtra24 and Shivanandan Sharma v. Punjab National Bank25 case applied in bidi cases decided by the Supreme Court. In bidi cases, there was a common practice of using deceptive devices and the so-called independent contractors were really agents of the management posing as independent contractors for the purposes of circumventing the Factories Act, 1948 and like statutes which compel management to meet certain economic and social obligations towards the workers. In the instant case, the area manager of the bank was allowed certain allowance to engage a driver. The salary of the driver was paid by the area manager out of the allowances paid to him. However, the jeep (which the driver had to drive), its petrol and oil requirements and maintenance fell within the financial responsibility of the bank. The area manager terminated the services of the driver. The driver challenged the justifiability of the termination of his services. He raised a dispute with the bank. The government referred the dispute to the industrial tribunal for adjudication. The tribunal held that (i) the driver was employed by the bank and (ii) his termination of services was not justified and was therefore, entitled for reinstatement. Aggrieved by the order, the bank filed an appeal with the Supreme Court. The Supreme Court conceded that the proposition laid down in Shivanandan Sharma is an exception26 but added that direction and control are the telling factors27 to decide as to whether the driver in the present case was the employee of the bank’. This test, according to the Court, did not ‘exclude other factors also … and … the questions in each case are determined on its own circumstances and decision in other cases is rather illustrative than determinate’.28 The Court, however, held that the driver was not

a ‘workman’ because (i) there was no nexus between the bank and the driver and (ii) there was no direction and control of the bank over the driver. In Hussainbhai v. Alath Factory,29 the Supreme Court has tried to mitigate the hardship caused by the decision in Dharangadhra Chemical Works by extending the coverage of ‘worker’ to include ‘dependent entrepreneur’. Justice Krishna Iyer laid down the following tests for determining the scope of the term ‘worker’: Where a worker or group of workers labour to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the workers’ subsistence, skill and continued employment. It be, for any reason, chokes-off, the worker is, virtually, laid-off. The presence of intermediate contractors with whom alone the workers have immediate or direct relationship ex-contractu is of no consequence when, on lifting the veil or looking at the conspectus of factors governing employment, we discern the naked truth though draped in different perfect paper arrangement that the real employer is the management, not the immediate contractor.30 The aforesaid decision would provide relief to millions of persons who had been excluded from the purview of ‘workmen’. It is submitted that the word ‘employed’, as used in the Industrial Disputes Act, 1947, by itself, signifies ‘engaged’ and that wherever necessary, the legislature has limited the scope of the word by using appropriate qualifying expression. Be that as it may, this line of thinking was referred to by the Constitution bench of the Supreme Court in Steel Authority of India Ltd v. National Union Water Front Workers31. The Supreme Court in Shining Tailors v. Industrial Tribunal32 observed that ‘supervision and control test was more suited to an agricultural society prior to Industrial Revolution and during the last few decades, the emphasis in the field has shifted and no longer rests exclusively or strongly on the question of control.’ In Ram Singh v. Union Territory, Chandigarh33, the Supreme Court held that though ‘control’ is one of the important tests in determining employeremployee relationship but it is not the sole test. All other relevant factors and circumstances are also required to be considered including the terms and conditions of contract. The court also emphasized the importance of an

integrated approach in such matters. The court held that whether a particular relationship between employer–employees is genuine or a smoke screen or a camouflage through the mode of a contractor is essentially a question of fact to be determined on the basis of (i) features of the relationship, (ii) the written terms of the employment, if any, and (iii) the actual nature of employment and these questions could be raised and proved only before an industrial adjudicator. In General Manager (USD), Bengal Nagpur Cotton Mills v. Bharat 34 Lai , the Supreme Court, while dealing with the question whether the contract labourers are the direct employees of the principal employer laid down two tests, namely (i) whether the principal employer pays the salary instead of the contractor; and (ii) whether the principal employer controls and supervises the work of the employee. Dealing with the onus, the Court added: It is for the employee to aver and prove that he was paid salary directly by the principal employer and not the contractor. The first respondent did not discharge this onus. Even in regard to the second test, the employee did not establish that he was working under the direct control and supervision of the principal employer. The industrial court misconstrued the meaning of the terms ‘control and supervision’ and held that as the officers of the appellant were giving some instructions to the first respondent working as a guard, he was deemed to be working under the control and supervision of the appellant. The Court also reiterated its earlier decision in International Airport Authority of India v. International Air Cargo Workers’ Union35 wherein while explaining the expression ‘control and supervision’ in the context of contract labour, the Supreme Court observed: If the contract is for supply of labour, necessarily, the labour supplied by the contractor will work under the directions, supervision and control of the principal employer but that would not make the worker a direct employee of the principal employer, if the salary is paid by the contractor, if the right to regulate employment is with the contractor, and the ultimate supervision and control lies with the contractor. The principal employer only controls and directs the work to be done by a contract labour, when such labour is assigned/allotted/sent to him. But it is the contractor as employer, who chooses whether the worker is to be assigned/allotted to the principal employer or

used otherwise. In view of the above, the Court held that the industrial court ought to have held that the first respondent was not the direct employee of the appellant. The Court accordingly set aside the order of the labour court, the industrial court and the High Court. In Devinder Singh v. Municipal Council36, the Supreme Court held that the source of employment, the method of recruitment, the terms and conditions of employment/contract of service, the quantum of wages/pay and the mode of payment are not at all relevant for deciding whether or not a person is a workman within the meaning of Section 2(s) of the Act.

C. Nature of Work In order to be a ‘workman’, a person must be employed in an industry to do any (i) skilled and unskilled manual work; (ii) supervisory work; (iii) technical work; and (iv) clerical work. Those who though ‘employed in a industry’ are not engaged in the aforesaid types of work are beyond the scope of ‘workman’. Essentially, the emphasis is on the nature of work done by an employee, the degree of his responsibility,37 the nature of industry and the organizational set up of a particular unit.38 However, merely because any one of the aforesaid types of work done by a person is incidental to and not the main duty which a person is doing and if the main duty is not covered in any one of the four specified nature of the work, such a person would not be a ‘workman.’39 1. Manual Work. Manual work under Section 2(s) refers to work done by physical effort as distinguished from mental or intellectual effort.40 The work may be done with hands or with any other part of the body.41 Accordingly durban,42 jamadar of watch and ward staff43 and handling of the pieces of cloth, measuring them and cutting into pieces according to the requirement of customer,44 have been held to be persons doing ‘manual work’ under Section 2(s). On the contrary work of an artiste45, chemical analyst in an advertising concern, chemist46 mainly carrying out chemical analysis in a sugar mill, doctor and his compounder47 and others incharge of watch and ward and fire fighting department48 of a sugar mill (whose primary duty was to supervise the duty of watchmen and jamadars and to look after the security of the factory) have not been held to be persons doing ‘manual work’ under Section 2(s). 2. Skilled or unskilled. The scope of the expression ‘any skilled or

unskilled manual, supervisory, technical or clerical work’ has been the subjectmatter of controversy. In S K Verma v. Mahesh Chandra49, a dispute arose whether a development officer of a corporation is a ‘workman’. The Central Government referred a dispute regarding the dismissal of a development officer of the Life Insurance Corporation of India, New Delhi to the industrial tribunal-cum-labour court for adjudication. The tribunal held that the development officer was not a ‘workman’ and therefore, the reference was incompetent. On dismissal of the writ petition, the petitioner appealed to the Supreme Court. The Court examined the scope of the expression ‘any skilled or unskilled workman’ and held that the term ‘workmen’ takes into account the entire labour force excepting managerial work. The Court then examined the nature of the duty of the development officer and came to the conclusion that he was not engaged in any administrative or managerial work. The Court accordingly held that the development officer was a ‘workman’ under the Act. Resolution of conflicting views. After the amendment of the definition of ‘workman’, a Constitution bench of the Supreme Court in H R Adyanthaya v. Sandoz (India) Ltd50 applied the rule of ejusdem generis to give a narrow meaning to the wide words in the amended definition of 'workman' under the ID Act. Accordingly, the Court excluded 'sales representatives' from the definition of 'workman' by holding that the words 'skilled', 'unskilled' and 'manual' had to be read ejusdem generis. A Constitution bench of the Supreme Court in H R Adyanthaya51 after noticing all the earlier judgements the Supreme Court observed as under: We thus have three-judge bench decisions which have taken the view that a person to be qualified to be a workman must be doing the work which falls in any of the four categories, viz., manual, clerical, supervisory or technical and two-judge bench decisions which have by referring to one or the other of the said three decisions have reiterated the said law. As against this, we have three-judge bench decisions which have without referring to the decisions in May & Baker [AIR 1967 SC 618], WIMCO [AIR 1964 SC 472] and Burmah-Shell cases (1971) 2 SCR 758, have taken the other view which was expressly negatived, viz., if a person does not fall within the four exceptions to the said definition, he is a workman within the meaning of the Industrial Disputes Act. These decisions are also based on the facts found in those cases. They have, therefore, to be confined to those

facts. Hence, the position in law as it obtains today is that a person to be a workman under the Industrial Disputes Act must be employed to do the work of any of the categories, viz., manual, unskilled, skilled, technical, operational, clerical or supervisory. It is not enough that he is not covered by either of the four exceptions to the definition. We reiterate the said interpretation. 3. Supervisory Capacity. The essence of supervisory nature of work under Section 2(s) is the supervision by one person over others.52 The term ‘supervisor’ means any individual having authority of the employer to hire, transfer, suspend, lay-off, recall, promote, discharge, assign or discipline other employees, or responsibility to direct them or to adjudge their grievances, or to recommend such action in connection with the foregoing. The exercise of such authority is not of a routine or clerical nature, but requires the use of independent judgement. The person exercising supervisory work is required to control men and not machines. His duty is to see how the employees will be engaged in different works of production and that the supervisor himself must have technical expertise, otherwise he may not be in a position to exercise proper supervision of the workmen handling sophisticated plants and machineries. However, if the main work done by persons employed in an industry is of manual, technical or clerical nature, the mere fact that some supervisory duties are also carried out incidentally or as a small fraction of the work done by him will not convert his employment into one of supervisory capacity.53 Conversely, if a person mainly doing supervisory work, but incidentally or for a fraction of the time also does some clerical work, it would have to be held that he is employed in the supervisory capacity.54 In All India Reserve Bank Employees’ Association v. Reserve Bank of 55 India , the Court was called upon to decide whether the work done by an employee engaged in checking and distributing the work, detecting the faults, reporting for penalty and making arrangements for filling up vacancies is supervisory in nature. The Court answered the question in the affirmative, and observed that the question is ultimately a question of fact, or at best of mixed fact and law and would primarily depend upon the nature of the industry, the type of work in which he is engaged, the organizational set up of the particular unit and the like. The Court, while construing the word ‘supervise’ observed that the word supervise and its derivatives are not of precise import and most often construed in the light of the context, for unless controlled, they cover simple oversight and direction as manual work coupled with the power of inspection

and superintendence of manual work of others. In Anand Bazar Patrika v. Its Workmen56, the principal work that the employee concerned was doing was of maintaining and writing cash book and of preparing various returns. Being the senior-most clerk, he was made incharge of provident fund section and three clerks who were working in the same section were put under him. He was required to allocate work between them, to permit them to leave during office hours and to recommend their leave applications. The Supreme Court held that the duties of the senior clerk incharge were not of a supervisory nature because the few minor duties cannot convert his office into that of a ‘supervisor’. In Burmah Shell Co. v. Burmah Shell Management Staff Association57, 20 workmen (including checkers, general workmen, packers and chemical mixers) were working under a foreman (chemical). The foreman allotted the work to workmen under him, signed gate passes and other material vouchers, recommended promotions of men who had been working under him, selected persons for acting in a higher capacity, insured maximum utilization of manpower and was responsible for blending of chemicals. On these facts the Supreme Court observed: In determining the nature of employment … (of any person) and in holding that he is employed to do supervisory work, we have taken into account not only the work of supervision which he carries on in ensuring that… workmen employed under him are properly doing the work … but also the fact that the workmen function under his control and direction. The Court accordingly held that the duties of a foreman were of ‘supervisory’ nature and the manual work done by him personally was only incidental. In Mayank Desai v. Sayaji Iron and Engineering Co. Ltd58, a person was appointed as design and development engineer. He was required to check certain drawings prepared by the draftsman but not to approve such drawings. He had no authority to appoint a person, to sanction leave of anybody or take disciplinary action against any person. No one was reporting to him. On these facts, the Gujarat High Court held that he was not acting in a supervisory capacity under Section 2(s)(iv) of the IDA.

Tests for Determination of Supervisory Capacity The Bombay High Court in Union Carbide (India) Ltd v. D Samuel and

others59 summarized the tests laid down by the Supreme Court in various decisions as follows : 1. 2.

Designation is not material but what is important is the nature of work; Find out the dominant purpose of employment and not any additional duties the employee may be performing; 3. Can he bind the company/employer to some kind of decisions on behalf of the company/employer; 4. Has the employee the power to direct or oversee the work of his subordinates; 5. Does he have the power to sanction leave or recommend it; and 6. Does he have he the power to appoint, terminate or take disciplinary action against workmen. The Supreme Court in National Engineering Industries Ltd v. Shri Kishan Bhageria60 noted the distinction between the expression 'supervisory', ‘managerial’ and ‘administrative’. The Court also noted that these terms or expressions cannot be put in a water-tight compartment. However, the Court observed that one must always look into the main work and that must be found out from the main duties. A supervisor is one who could bind the company to take some kind of decision on behalf of the company. One who was reporting merely as to the affairs of the company and making assessment for the purpose of reporting was not a supervisor. The Court, therefore, will have to bear in mind these tests while examining as to what is the main work of an employee. 4. Technical Work. The word ‘technical’ was inserted in Section 2(s) by amending Act 36 of 1956. Broadly speaking, a work which depends upon the special training or scientific or technical knowledge of a person, constitutes technical work. In Marugalli Estate v. Industrial Tribunal, Madras,61 a person was employed as a medical officer for the plantation estate on a monthly salary exceeding ₹500. His duties were: (i) management and running of a central hospital staff; (ii) supervision of work of the hospital staff: (iii) supervision of dispensaries; (iv) inspection of lines and quarters; (v) malaria control work; and (vi) supervision of creches. On these facts, the Court concluded that the main function for which he was appointed may not occupy as much time as the medical attendance on patients. All these show that it is a technical employment for a particular purpose, because of particular qualifications and should not be lost sight of in determining the character of employment.62 The Court also laid

down a test to determine whether the work done by any person is technical or supervisory: The test to be applied to my mind, to cases of technical employment such as in this case, should be the purpose for which the employment is made, irrespective of whether the performance of the duties may or may not occupy the entire time of the employee. That is because the employment is made on the basis of the particular level of professional efficiency and technical qualifications. If an employee is found suitable for supervisory work, because of those reasons, it cannot be said that the functions are mainly those of a medical attendant, as on account of his professional qualification, he happened to be engaged in that capacity as well.63 The Court, therefore, opined that the employee concerned was not at all entrusted with supervisory work. The advancement of science and technology and the era of automation pose new problems for lawyers, judges and legislators. Thus, in Titaghur Paper Mills Co. Ltd v. First Industrial Tribunal64, the Calcutta High Court was, inter alia, confronted with the issue whether persons with technical expertise could be said to be ‘workmen’ within the meaning of Section 2(s). The Court observed: That in the matter of production and running sophisticated machines, persons having technical expertise are often required to guide the labourers as to how the machine will be run and how the technical process of production will be carried out. Such technicians render their technical expertise along with other workers. In such circumstances, it cannot be said that simply because they did not run the machines themselves but stood by and guided ordinary workmen in the matter of running the machine and/or carrying out the phases of production, they were purely administrators and/or supervisors and their only job is to supervise the men and not the machine and/or technical works of production.65 5. Clerical Work. In general connotation, ‘a clerk is one employed as writer, copyist, account keeper or correspondent in the office’.66 Clerical work ‘implies a stereotyped work, without power of control or dignity or creativeness.’67

In D P Maheshwari v. Delhi Administration68, a question arose whether an employee discharging the duties of clerical nature was a workman. The labour court found that D P Maheshwari was discharging work of clerical nature. The single judge and division bench of the Delhi High Court reversed the findings of the labour court. On appeal, the Supreme Court held the fact that Maheswari was not discharging supervisory function but he was discharging duties of clerical nature. It accordingly set aside the decision of single judge and division bench of the High Court and restored the orders of the labour court. In Anameinuger Development Corporation Ltd v. Second Industrial Tribunal,69 the management employed the appellant as a typist-cum-clerk. Thereafter, he was appointed an officer to make purchases, attend to sales tax authorities and transport. On these facts, a question arose whether he was a ‘workman’ under Section 2(s) of the Act. The division bench of the Calcutta High Court answered the question in the affirmative and observed that mere designation would not govern the nature of the work. The Court also held that he was receiving low emoluments and was not an officer, therefore, he fell within the category of ‘workman’ under Section 2(s) of the Act. In Prakash v. M/s Delton Cables India (P) Ltd70, the appellant was employed as a chargeman security to look after the security of the factory and its property. He was also required to depute watchmen working under him to work at the factory gate or to send them to watch in or around the factory and to make entries about the visitors in the register and about materials entering or going out of the premises of the factory in the concerned register. The appellant had no power to appoint or dismiss any workman or even order an inquiry against any workman. On these facts, the Supreme Court held that the substantial duty of the appellant was only of a security inspector at the gate of the factory premises. The Court also held that his nature of duty was neither managerial nor supervisory in nature within the exclusory clause of Section 2(s). A survey of decided cases reveals that a clerk of audit department71, manager of hotel (required to write ledgers, file correspondence and enter cash book, etc.)72, senior clerk of a bank73 and accountant of a bank signing salary bills of the staff74 are workmen under Section 2(s). 6. Multifarious Duties. In practice, quite a large number of employees are employed in industries to do work of more than one of the kinds mentioned in the definition. In such cases, it would be necessary to determine under which classification he will fall for the purpose of finding out whether he does or does not go out of the definition of ‘workman’ under the exceptions. In Burmah Shell Oil Storage and Distribution Company India Limited

v. Burmah Shell Management Staff Association75, the Supreme Court held that where an employee is doing multifarious duties, the main work which he is required to do should be held to be the work done by him to find out whether he is a workman or not. The Supreme Court in National Engineering Industries v. Shri Krishna Bhageria76 was seized of the question of whether an internal auditor working in the company was a workman or not. After considering his main duties and the work, it was held that he was not doing any kind of supervisory work. It was also held that since the employee had no independent right or authority to take decisions and his decision did not bind the company and, therefore, he was a workman and not a supervisor. In S K Maini v. M/s Carona Sahu Company Ltd77, the Supreme Court laid down the following principles for determination of the question as to whether a particular employee falls within the definition of ‘workman’ under Section 2(s): Whether or not an employee is a workman under Section 2(s) of the Industrial Disputes Act is required to be determined with reference to his principal nature of duties and functions. Such question is required to be determined with reference to the facts and circumstances of the case and materials on record and it is not possible to lay down any strait-jacket formula which can decide the dispute as to the real nature of duties and functions being performed by an employee in all cases. When an employee is employed to do the types of work enumerated in the definition of workman under Section 2(s), there is hardly any difficulty in treating him as a workman under the appropriate classification, but in the complexity of industrial or commercial organization, quite a large number of employees are often required to do more than one kind of work. In such cases, it becomes necessary to determine under which classification the employee shall fall for the purpose of deciding whether he comes within the definition of workman or goes out of it. The designation of the employee is not of much importance and what is important is the nature of duties being performed by the employee. The determinative factor is the main duties of the concerned employee and not some work incidentally done. In other words, that is in substance, the work which an employee does or what in substance he is employed to do. Viewed from

this angle, if the employee is mainly doing supervisory work but incidentally or for a fraction of time also does some manual or clerical work, the employee should be held to be doing supervisory works. Conversely, if the main work is of manual, clerical or of technical nature, the mere fact that some supervisory or other work is also done by the employee incidentally or only a small fraction of working time is devoted to some supervisory works, the employee will come within the purview of ‘workman’ as defined under Section 2(s) of the Industrial Disputes Act, 1947. The position that emerges from the aforesaid discussion is that in determining the question whether a person employed by the employer is workman under Section 2(s) of the Industrial Disputes Act or not, the Court has principally to see main or substantial work for which the employee has been employed and engaged to do. Neither the designation of the employee is decisive nor any incidental work that may be done or required to be done by such employee shall get him outside the purview of workman, if the principal job and the nature of employment of such employee is manual, technical or clerical. In hierarchy of employees, some sort of supervision by the employee over the employees of the lower ladder without any control may not by itself be sufficient to bring that employee in the category of supervisory, yet if the principal job of that employee is to oversee the work of employees who are in the lower ladder of the hierarchy and he had some sort of independent discretion and judgement, obviously such an employee would fall within the category of supervisor. Each case would depend on the nature of the duties predominantly or primarily performed by such employee and whether such function was supervisory or not would have to be decided on facts keeping in mind correct principles. Where the employee possesses the power of assigning duties and distribution of work, such authority of employee may be indicative of his being supervisor doing supervision. In a broad sense, supervisor is one who has authority over others: someone who superintends and directs others. An employee who, in the interest of the employer has responsibility to directly control the work done by other workers and if the work is not done correctly, to guide them to do it correctly in accordance with norms shall certainly be a supervisor. A supervisory work may be distinguished from managerial and administrative work and, so also a supervisor from manager and administrator. Supervisor’s predominant function is to see that work is done by workers under him in accordance with the norms laid down by the management; he has no power to take disciplinary action.

D. Hire and Reward The expression ‘for hire or reward’ which is frequently used to denote contractual relationship78 has been used in Section 2(s). Only those persons are ‘workmen’ who are employed for ‘hire or reward’. The expression ‘hire and reward’ is wider than ‘wages’. Legislature was, however, alive of this situation and, therefore, preferred to adopt the former expression rather than the latter to include those who are not technically getting ‘wages’. There is, however, a difference between ‘hire and reward’. While the former refers to payment or receipt of compensation, as distinguished from a gratuitous or non-remunerative service79, the latter implies something given in return for good or evil done or received and does not necessarily mean money or a thing in itself of pecuniary value. In Management of Indian Bank, Madras v. The Presiding Officer, Industrial Tribunal Madras,80 the Madras High Court held that the commission providing for payment to a tiny deposit agent under the agreement will be ‘hire or reward’ within the meaning of Section 2(s) of the Industrial Disputes Act, 1947. In Devinder Kaur (Smt) v. Child Welfare Council, Punjab81, the Punjab and Haryana High Court held that a person working for honorarium as a Balsevika in Child Welfare Council is not a workmen under the Industrial Disputes Act, 1947.

E. Persons Excluded The exclusory clause in the definition of ‘workman’, namely: (i) (ii)

who is subject to the Army, Air Force and Navy Acts, or who is employed in the police service or as officer or other employee of a prison, or (iii) who is employed mainly in a managerial or administrative capacity; or (iv) who being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem or exercises either by the nature of the duties attached to the office or by reason of the power vested in him, functions mainly of a managerial nature, curtails the scope of the term ‘workmen.’ The aforesaid clauses indicate that if they did not occur in the definition, a good number of persons employed in navy, military, air force, police or prison would have been regarded as ‘manual’ workers and hence ‘workmen’. The

legislature was obviously alive of this problem and, therefore, excluded such persons. But, even the aforesaid clauses are inadequate and incomplete as unlike Section 2 (9) (b) of the Industrial Relations Bill, 1978, it does not include any person: who is employed … (as) an officer or member of the Railway Protection Force constituted under Section 3 of the Railway Protection Force Act, 1957 or the Border Security Force constituted under Section 4 of the Border Security Force Act, 1968 or the Central Industrial Security Force constituted under Section 3 of the Central industrial Security Force Act, 1968.82 The Bill also specifically excluded any person: who is employed or engaged as a seaman as defined in clause (42) of Section 3 of the Merchant Shipping Act, 1958 …83 But, due to the change in the government, the aforesaid recommendation could not find place in the statute book. 1. Person Employed Mainly in Managerial and Administrative Capacity. Section 2(s) (iii) excludes the aforesaid category. The aforesaid phrase which has not been defined in the Industrial Disputes Act appears to indicate that there may be plurality of person in this category of any industry.84 However, it is not necessary that such persons should have the power of making appointments. Nor is it essential that before a person can fall in the aforesaid category, he should have the power to dismiss any employee. Further, the mere fact that a person is designated as ‘managerial’ or ‘administrative’ personnel is not conclusive proof of his being so, but has to be established by the actual nature of work done by him. In order to bring a person in the aforesaid category, it is necessary that he must have workmen, persons or officers subordinate to him whose work he is required to supervise. He should take decisions and also assume responsibility for ensuring that the matters entrusted to be charged are efficiently conducted and an ascertainable area or section of work is assigned to him.85 In Air India Cabin Crew Association v. Union of India86, the Supreme Court held that once an employee is placed in the executive cadre, he ceases to be a workman and also ceases to be governed by a settlement arrived at between the management and the workmen through the trade union concerned. 2. Supervisory Capacity Drawing Wages Exceeding Rupees Ten Thousand Per Mensem. The salary limit is associated with the person in the

supervisory capacity. But managerial or administrative personnel are excluded, irrespective of their salary. Further, no such limit applies in case of manual, clerical or technical personnel. Thus, Section 2(s) (iv) excludes those person employed in a supervisory capacity who draw wages exceeding ₹10,000 per month.87 In M/s Bharat Heavy Electricals Ltd, Haridwar v. State,88 the Uttranchal High Court held that assistant foreman employed in Bharat Heavy Electricals Ltd, an undertaking of Government of India who was performing duties of supervisory nature, cannot be treated as ‘workman’. However, an incidental performance of supervisory duties will not impress his employment with the character of supervisory capacity. The mere designation as supervisor is not decisive.89 A similar view was taken by this Court in Western India Match Co. Ltd v. Workmen90 and Burmah Shell Oil Storage & Distribution Co. of India Ltd v. Burmah Shell Management Staff Assn.91 A division bench of this Court, however, without noticing the aforementioned binding precedent, in S K Verma v. Mahesh Chandra92 held that the duties and obligations of a development officer of Life Insurance Corporation of India being neither managerial nor supervisory in nature, he must be held to be a workman. Correctness of S K Verma (supra) came up for consideration before a Constitution bench of this Court in H R Adyanthaya93 case. Referring to this Court's earlier decisions in May and Baker (supra), Western India Match Co. and Burmah Shell Oil Storage, it was observed that as in S K Verma (supra) the binding precedents were not noticed and furthermore, in view of the fact that no finding was given by the Court as to whether the development officer was doing clerical or technical work and admittedly not doing any manual work, the same had been rendered per incuriam. The Constitution bench summarized the legal position that arose from the statutory provisions and from the decisions rendered by this Court, stating: Till 29-8-1956, the definition of workman under the ID Act was confined to skilled and unskilled, manual or clerical work and did not include the categories of persons who were employed to do 'supervisory' and 'technical' work. The said categories came to be included in the definition w.e.f. 29-8-1956 by virtue of the Amending Act 36 of 1956. It is, further for the first time that by virtue of the Amending Act 46 of 1982, the categories of worker

employed to do ‘operational’ work came to be included in the definition. What is more, it is by virtue of this amendment that for the first time, those doing non-manual, unskilled and skilled work also came to be included in the definition with the result that persons doing skilled and unskilled work, whether manual or otherwise, qualified to become workmen under the ID Act. Considering the decisions in May & Baker (supra), Western India Match Co. (supra), Burmah Shell Oil Storage (supra) as also S K Verma (supra) and other decisions following the same, this Court in H R Adyanthaya (supra) observed: However, the decisions in the later cases, viz., S K Verma ((1983) 3 SCR 799), Delton Cable, ((1984) 3 SCR 169), and Ciba Geigy, ((1985 Supp (1) SCR 282) cases did not notice the earlier decisions in May & Baker ((1964) 3 SCR 560), and Burmah Shell ((1971) 2 SCR 758) cases and the very same contention, viz., if a person did not fall within any of the categories of manual, clerical, supervisory or technical, he would qualify to be workman merely because he is not covered by either of the four exceptions to the definition, was canvassed and though negatived in earlier decisions, was accepted. Further, in those cases the development officer of the LIC, the security inspector at the gate of the factory and the stenographer-cumaccountant respectively, were held to be workmen on the facts of those cases. It is the decision of this Court in A Sundarambal case ((1988) 4 SCC 42) which pointed out that the law laid down in May & Baker case ((1961) 2 LLJ 940) was still good and was not in terms disowned. A three-judge bench of the Supreme Court in Mukesh K Tripathi v. Senior Divisional Manager, LIC94 while dealing with the above cases held: (i) That Constitution bench though noticed the distinct cleavage of opinion in two lines of cases but held: … these decisions are also based on the facts found in those cases. They have, therefore, to be confined to those facts. Hence, the position in law as it obtains today is that a person to be a workman under the ID Act must be employed to do the work of any of the categories, viz., manual, unskilled, skilled, technical,

operational, clerical or supervisory. It is not enough that he is not covered by either of the four exceptions to the definition. We reiterate the said interpretation. (ii)

The said reasonings are, therefore, supplemental to the ones recorded earlier, viz.: (i) They were rendered per incuriam; and (ii) May & Baker (supra) is still a good law. (iii) Once the ratio of May & Baker (supra) and other decisions following the same had been reiterated, despite observations made to the effect that S K Verma (supra) and other decisions following the same were rendered on the facts of that case, we are of the opinion that this Court had approved the reasonings of May & Baker (supra) and subsequent decisions in preference to S K Verma (supra). (iv) The Constitution bench, further, took notice of the subsequent amendment in the definition of ‘workman’ and held that even the legislature impliedly did not accept the said interpretation of this Court in S K Verma (supra) and other decisions. (v) It may be true, that S K Verma (supra) has not been expressly overruled in H R Adyanthaya (supra) but once the said decision has been held to have been rendered per incuriam, it cannot be said to have laid down a good law. This Court is bound by the decision of the Constitution bench. In P B Sivasankaran v. Presiding Officers, First Additional Labour Court95, a question arose whether the petitioner who worked as supervisor in charge of a shift, having power to grant leave, recommend confirmation of regularization and issue memos against the subordinate workers, was a workman. On the facts of the case, the Madras High Court held that he was not a ‘workman’ under Section 2(s) of the Act.

F. Specific Cases 1. Sales/Medical Representative: If Workman In May & Baker India Ltd v. Their Workman,96 the pharmaceutical concern employed the petitioner as a representative for canvassing and procuring orders. However, he was also required to do some clerical or manual work which was incidental to his main work. On these facts, the Supreme Court held that he was not a ‘workman’ under Section 2 (s) of the Act. The Supreme Court added that if the nature of duties is manual or clerical, then the person must be held to be a workman. On the other hand, if the manual or clerical work is only a small part

of the duties of the person concerned and is incidental to the main work which is not manual or clerical, then such a person would not be a workman. In T P Srivastava v. M/s National Tabacco Co. of India97, the Supreme Court was called upon to decide a question whether a person looking after sales promotion is a ‘workman’ under the Industrial Disputes Act, 1947. In this case, the appellant was employed to do canvassing and promoting sales for the company. His duties among others included suggesting ways and means to improve sales, study the type of status of the public to whom the product has to reach and study the market conditions. He was also required to suggest about the publicity in markets and melas, advertisements, including the need for posters, holders and cinema slides. On these facts the Supreme Court held that persons looking after sales promotion were not workmen under the Industrial Disputes Act. In H R Adyanthaya v. Sandoz (India) Ltd98, a question arose whether a medical representative was a 'workman' under Section 2(s). The Supreme Court answered the question in negative and observed ‘… the word skilled has to be construed ejusdem generis and thus construed would mean skilled work, whether manual or non-manual which is of a general or other types of work mentioned in the definition clause 2(s). The work of promotion of sales of products or services of the establishments is distinct from the independent type of work covered by Section 2(s). Therefore, medical representatives are not workmen.’ In Sharad Kumar v. Government of NCT of Delhi99, the Supreme Court was called upon to decide whether the area sales executive was a ‘workman’ under Section 2(s) of the ID Act. While holding that he was not a ‘workman’, the Court laid down the following tests for guidance: (a) In order to fall under the purview of the expression ‘workman’ as defined under Section 2(s) of the Act, the person has to discharge any one of the types of the works enumerated in the first portion of Section 2(s). (b) If the person does not come within the first portion of Section 2(s), then it is not necessary to consider the further question whether he comes within any classes of workmen excluded under the latter part of the section. (c) Whether the person concerned comes within the first part of Section 2(s) depends upon the nature of duties assigned to him and/or discharged by him. (d) The duties of the employee may be spelt out (i) in the service rules or (ii) service regulations or (iii) standing orders or (iv) the appointment order; or

(v) in any other material in which the duties are assigned to him. (e) When the employee is assigned to a particular type of duty and has been discharging the same till date of dispute then there may not be any difficulty in coming to a conclusion whether he is a workman within the meaning of Section 2(s). If on the other hand, the nature of duties discharged by the employee is multifarious, then the further question that may arise for consideration is which of them is his principal duty and which are the ancillary duties performed by him. (f) Designation of the employee is not of much importance and certainly not conclusive in the matter as to whether or not he is a workman under Section 2(s) of the Act.

2. Part-time Employees: If Workman In Div. Manager, New India Assurance Co. Ltd v. A Sankaralingam100, the Supreme Court held that part-time worker will be a workman. This is so because Section 2(s) of the Industrial Disputes Act, 1947 which defines the term ‘workman’ does not make any distinction between a full-time and part-time employee. When the attention of the Court was drawn in this case to the Uttranchal Forest Hospital Trust v. Dinesh Kumar101 wherein the Court had observed that part-time workers do not fit into the scheme of law relating to retrenchments and are not entitled to the benefits of Section 25-F of the Industrial Disputes Act, 1947, the Supreme Court said that it was merely an obiter in regard to the status of part-time employee where the main issue before the Court was whether workman in fact had put in 240 days of service which could have entitled him to the benefit of Section 25-F. The question again came up for consideration before the Supreme Court in New India Assurance Co. v. Vipin Behari Lal Srivastava102. The Court held that a part-time worker is covered under Section 2(s) and is entitled to the benefit of continuous service under Section 25-B and cannot be retrenched without complying with the mandatory provisions of Section 25-F of the Act. In Devinder Singh v. Municipal Council103, the Supreme Court held that the definition of workman also does not make any distinction between full-time and part-time employees or persons appointed on contract basis. There is nothing in the plain language of Section 2(s) from which it can be inferred that only a person employed on regular basis or a person employed for doing whole-time job is a workman and the one employed on temporary, part-time or contract basis on fixed wages or as a casual employee or for doing duty for fixed hours is

not a workman.

3. Creative Artists In Bharat Bhawan Trust v. Bharat Bhawan Artists’ Association104, the Court was, inter alia, called upon to consider whether the respondents, who were artists are ‘workmen’. In this case, Bharat Bhawan Trust was established under the Bharat Bhawan Nyas Adhiniyam, 1982 for promotion of art and preservation of artistic talent. It is a national centre of excellence in creative arts. The trust entered into various agreements with creative artists for production of drama and theatre management. The said artists apprehending termination of their services raised a dispute. The appropriate government referred the dispute to labour court for adjudication. The labour court held that the trust was an ‘industry’ and artists were ‘workmen’. On appeal, the Supreme Court held that it was doubtful if the trust can be held to be an ‘industry’. It also held that artists were not ‘workmen’.

4. Teacher: If Workman In Miss A Sundarmbal v. Govt of Goa, Daman & Diu105, a question arose whether a teacher employed in a school falls within the definition of ‘workman’ under Section 2(s) of the Act. The Supreme Court answered the question in the negative and observed: We are of the view that the teachers employed by educational institutions whether the said institutions are imparting primary, secondary, graduate or post-graduate education, cannot be called ‘workman’ within the meaning of Section 2(s) of the Act. Imparting of education which is the main function of teachers cannot be considered as skilled or unskilled manual work or supervisory work or clerical work. Imparting of education is in the nature of a mission or noble vocation. A teacher educates children, he moulds their character, builds up their personality and makes them fit to become responsible citizens. Children grow under the care of teachers. The clerical work, if any, they do is only incidental to their principal work of teaching. The Court added: We may at this stage observe that teachers as a class cannot be denied the benefits of social justice. We are aware of the several methods adopted by unscrupulous management to exploit them

by imposing on them unjust conditions of service. In order to do justice to them, it is necessary to provide for an appropriate machinery so that teachers may secure what is rightly due to them. The Court directed that ‘if no such Act is in force in Goa, it is time that the state of Goa takes necessary steps to bring into force an appropriate legislation providing for adjudication of disputes between teachers and managements of educational institutions. The Court hoped that the lacuna in the legislative area will be filled soon. The aforesaid view was reiterated in Ahmedabad Pvt. Primary Teachers Association v. Administrative officer.106

5. Doctor-If a Workman Is a doctor who has been performing duties of technical nature a workman irrespective of the fact whether the hospital is charitable or not, under the Industrial Disputes Act? In Surendra Kumar v. Union of India107, the petitioner was employed as assistant medical officer Class II to treat patients who were employees of the railways and their families. He was also required to meet the administrative requirement where he was in charge of the hospital of a wealth unit. The staff was also under his administrative control. On these facts, the division bench of Allahabad High Court held that the duties of the doctor were technical and not supervisory. The Court accordingly held that the doctor was a ‘workman’ under Section 2(s) of the Industrial Disputes Act, 1947. However, the division bench of the Kerala High Court in Mar Basellos Medical Mission Hospital v. Dr Joseph Babu108 held that a senior doctor engaged in diagnosis and treatment of patients was not a workman under the IDA. The court gave the following reasons. (i)

A post-graduate doctor was engaged at a fairly high salary for treatment of patients as a senior doctor in the department of medicine. (ii) His work is essentially to diagnose diseases of patients and treat the same. (iii) A senior doctor is always assisted by a team of junior doctors, medical attendants, nurses, etc., and it is the duty of the senior doctor to ensure examination of the patient by way of x-ray, blood test, etc., and that the treatment suggested by him is carried out strictly in accordance with his instructions. (iv) No one can doubt that any subordinate employee disobeying the doctor's instructions will do so expect at the risk of disciplinary action.

Thus, he was engaged in supervisory and technical work, even if a doctor's work is only technical in nature. In M M Wadia Charitable Hospital v. (Dr) Umakant Ramchandra Warerkar109, the Bombay High Court held that a doctor, though employed and rendering professional services will not be a 'workman' under the Act. The Supreme Court in Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate110 while construing Section 2 (s) (as it existed prior to 1956 amendment) held that the duties performed by a medical practitioner were of a technical nature.

6. Apprentice: If Workman Does an apprentice ipso facto become a ‘workman’ merely because Section 2(s) specifically includes ‘apprentice’’ within its fold? The Supreme Court in Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd111 held that if the employer takes the kind of work mentioned in Section 2 (s) from the apprentice, the dispute between them would be settled under the Industrial Disputes Act, 1947. But if the apprentices do not perform such work, the Industrial Disputes Act will not apply to them. In Mukesh K Tripathi v. Senior Divisional Manager, L I C and Ors112, the Supreme Court while dealing with the case of apprentice observed that the definition of ‘workmen’ as contained in Section 2(s) of the Industrial Disputes Act, 1947 includes an apprentice, but a ‘workman’ defined under the Industrial Disputes Act, 1947 must conform to the requirements laid down therein meaning thereby, inter alia, that he must be working in one or the other capacities mentioned therein and not otherwise. The Court added: (i)

(ii)

A ‘workman’ within the meaning of Section 2(s) of the Industrial Disputes Act, 1947 must not only establish that he is not covered by the provisions of the Apprenticeship Act but must further establish that he is employed in the establishment for the purpose of doing any work contemplated in the definition. Even in a case where a period of apprenticeship is extended, a further written contract carrying out such intention need not be executed. But in a case where a person is allowed to continue without extending the period of apprenticeship either expressly or by necessary implication and regular work is taken from him, he may become a workman. A person who claims himself to be an apprentice has certain rights and obligations under the statute. In case any person raises a contention that his status has been changed

from apprentice to a workman, he must plead and prove the requisite facts. In absence of any pleading or proof that either by novation of the contract or by reason of the conduct of the parties, such a change has been brought about, an apprentice cannot be held to be a workman. In Dhampur Sugar Mills Ltd v. Bhola Singh113, the Supreme Court held that an apprentice or trainee appointed in terms of the Apprentices Act, 1961 is not a workman.

7. Trainees In Trambak Rubber Industries Ltd v. Nasik Workers’ Union114, a question arose whether the ‘trainees’ where the entire production activity in the company was carried out with none other than the trainees were workmen under Section 2(s) of Industrial Disputes Act, 1947. The Supreme Court answered the question in the affirmative. In this case, the company which employed only trainees to run the production activity were not allowed to resume work on and from 14 August 1989 unless they gave an undertaking on the employer’s term. The employer terminated their services with effect from 15 November 1989. The industrial court held that they were trainees because (i) neither the complainant union nor the management had placed on record the appointment letters that would have been issued when the persons concerned were recruited in 1988; (ii) merely because the trainees were employed for performing regular nature of work would not by itself make them workmen; (iii) a trainee is not equivalent to a ‘workman’ unless there is sufficient evidence of existence of employeremployee relationship. On a writ petition the High Court held that the persons concerned whose engagement was terminated were not trainees but they were ‘workmen’ and therefore, their services could not have been terminated without following the due procedure. On a special leave, the Supreme Court observed: According to the industrial court, the fact that the ‘trainees’ were employed for performing the regular nature of work would not by itself make them workmen. The question then is, would it lead to an inference that they were trainees? The answer must be clearly in the negative. …It is pertinent to note the statement of the management’s witness that in June-July 1989, the company did not have any permanent workmen and all the person employed were trainees. It would be impossible to believe that the entire production activity was being carried on with none other than the so-called trainees. If there were trainees, there

should have been trainers too. The management evidently came forward with a false plea dubbing the employees/workmen as trainees so as to resort to summary termination and deny the legitimate benefits. Can a trainee who has undergone 3 years‘ training claim status mentioning him to be confirmed? This question was raised in Shri Vijay Kumar v. Presiding Judge, Labour Court115. Dealing with this question, the Himachal Pradesh High Court held that where the petitioner was only a trainee, never became workman and was never offered employment after completion of training, the mere fact that a wage slip mentioned that petitioner has been confirmed will not make him a confirmed employee. In order to become workman, there should be a separate order confirming him on successful completion of training.

8. Probationer: If Workman In Hutchiah v. Karnataka State Road Transport Corporation116, a question arose whether a person appointed on probation for doing work for the industry and receiving salary therefor was a ‘workman’. This issue was answered in the affirmative by the Karnataka High Court.117 The Court observed: The definition of the word ‘workman’ given in Section 2(s) of the Act without causing the least violence to the language used, is susceptible of only meaning that every person employed in an industry irrespective of his status—temporary, permanent or probationary, would be a workman. Only such persons employed in an industry who fall within the excepted categories specified in clauses (i) to (iv) of that provision would not be workmen for the purpose of the Act. It is not the case of the corporation that a probationer falls within any of the excepted categories. The Court 'accordingly' held that exclusion of probationary from the purview of Section 2(s) would do violence to the language of the provision.

9. Domestic Servant – Not Workman In Management of Som Vihar Apartment Owners Housing Maintenance Society Ltd v. Workmen C/o Indian Engg. & General Management118, the Supreme Court ruled that service rendered by a domestic servant is purely a

personal or domestic matter and, therefore, falls outside the purview of ‘workman’ under the Industrial Disputes Act. The Court referred to its earlier decision in Bangalore Water Supply & Sewerage Board119 and observed that it is not an authority for the proposition that domestic servants are also to be treated to be workmen even when they carry out work in respect of one or many masters. The Court observed that the whole purpose of the ID Act is to focus on resolution of industrial disputes and the regulation will not meddle with every little carpenter or a blacksmith, a cobbler or a cycle repairer who comes outside the ambit of industry and rendered service to the members of a society, which is constituted only for the benefit of those members; employees engaged by it for rendering such services cannot be said to be ‘workmen’ under Section 2(s) of the ID Act. The aforesaid view was reiterated in Md. Manjur & Ors v. Syam Kunj Occupants’ Society & Others.120

10. Legal Representative of Deceased Workman: If Workman Does the definition of ‘workman’ include heir or the legal representative of deceased workman? This issue figured in Veerarnani v. Madurai District Cooperative Supply and Marketing Society Ltd.121 The Madras High Court, however, answered it in negative because the definition of ‘workmen does not include the heir or the legal representative of a deceased workman.’

11. Gardener The Supreme Court in M/s Bharat Heavy Electricals Ltd v. State of Uttar Pradesh122 was called upon to determine whether gardeners engaged through contracts for upkeeping parks inside factory premises and residential colonies were workmen under the Industrial Disputes Act, 1947 read with Uttar Pradesh Industrial Disputes Act, 1947. In this case, the respondents were engaged as gardeners (malis) to sweep, clean, maintain and look after the lawns and parks inside the factory premises and the campus of the residential colony of M/s Bharat Heavy Electricals Ltd through the agency of the respondent. Their services were terminated on 1 December 1988. They raised industrial dispute before the labour court. The company took the plea that they were never employed by it and it was not liable to pay any amount of compensation or to reinstate them in service. The labour court directed their re-employment and payment of compensation. Aggrieved by the award, the appellant filled writ

petition before the High Court. The High Court dismissed the petition. Aggrieved by this finding, the company filed an appeal before the Supreme Court. While dealing with the status of gardeners, the Supreme Court ruled that where workman-labour is engaged to produce goods or services and these goods or services are for the business of another, the other is employer. The Court also held that the work of the respondent workmen is not totally disassociated for the appellant to say that they were not employees of the appellant. The Court held that the definition of ‘employer’ given in Section 2(i) (iv) of the Act is an inclusive definition. If the respondents-workmen as a matter of fact were employed with the appellant to work in their premises and which fact is found established after removing the mask or facade of make-believe employment under the contractor, the appellant cannot escape its liability. The Court also drew attention to a vital fact that the appellant did not produce the records alleging that they were not available and this led to adverse inference against it. A perusal of the aforesaid judgement reveals that the Court distinguished this case with the decision given by the Constitution bench of this Court in Steel Authority of India Ltd & Ors. v. National Union Waterfront Workers123. Be that as it may, the judgement does not meet the requirement of global competition which is the main demand of the employer.

12. Piece-Rated Workers In Shining Tailors v. Industrial Tribunal124, the Supreme Court held that tailors working on piece rate basis in a big tailoring establishment were workmen of the owner of the establishment. The Court cautioned that every piece-rated workman is not an independent contractor and that piece-rated payment meaning thereby payment correlated to production is a well-recognized mode of payment to industrial workmen.

13. Legal Assistant/Legal Advisor: If Workman In Management of Sonepat Cooperative Sugar Mills Ltd v. Ajit Singh125, the respondent was appointed to the post of ‘legal assistant’, the qualification for which was a degree in law with a practising licence. The nature of his duties was to prepare written statements and notices, recording equity proceedings, giving opinions to the management, drafting, filing the pleadings and representing the appellant in all types of cases. He was also conducting departmental enquiries against workmen in the establishment. He was placed on probation and his post

was dispensed with, following which he was terminated. He raised an industrial dispute. The question before the labour court was ‘Whether the applicant was a workman’; labour court held he was a workman, which was upheld by High Court. Management preferred an appeal to the Supreme Court. Following its earlier decisions in A Sundarambal v. Govt of Goa, Daman & Diu126, and H R Adyanthaya v. Sandoz (India) Ltd,127 and rejecting S K Verma v. Mehesh Chandra (supra), this Court held: Thus, a person who performs one or the other jobs mentioned in the aforementioned provisions only would come within the purview of the definition of workman. The job of a clerk ordinarily implies stereotyped work without power of control or dignity or initiative or creativeness. The question as to whether the employee has been performing clerical work or not is required to be determined upon arriving at a finding as regards the dominant nature thereof. With a view to give effect to the expression to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work, the job of the employee concerned must fall within one or the other category thereof. It would not be correct to contend that merely because the employee had not been performing any managerial or supervisory duties, ipso facto he would be a workman …The respondent had not been performing any stereotyped job. His job involved creativity. He not only used to render legal opinion on a subject but also used to draft pleadings on behalf of the appellant as also represent it before various courts/authorities. He would also discharge quasi-judicial functions as an inquiry officer in departmental enquiries against workmen. Such a job, in our considered opinion, would not make him a workman. In Sonipat Central Cooperative Bank Ltd v. Presiding Officer, Industrial Tribunal-cum-Labour Court128, the Punjab and Haryana High Court held that an advocate/legal advisor cannot come under the definition of ‘workman’.

14. Appraiser: If Workman In Puri Urban Cooperative Bank v. Madhusudan Sahu129, the Supreme Court held that the appraiser engaged by a bank to appraise quality, purity and value of ornaments offered for pledging to bank was not a ‘workman’ because there was

no master and servant relationship between the employer and the appraiser.

15. Research Fellow: If Workman Delhi High Court in Jamia Hamdard v. K S Durrany130 held that a research fellow of Jamia Hamdard, a deemed university, doing his own research during the tenure of fellowship, guiding research and helping the administration of the department’s quarterly was not a ‘workman’ under Section 2(s) of the Industrial Disputes Act, 1947, because his functions were purely academic.

16. Driver: If Workman In Mahajan Borewell Company v. Rajaram Bhat131, the Karnataka High Court held that a geologist provided with a driver to drive his vehicle and a helper to assist him in transportation of instruments was not exercising supervisory, administrative or managerial function. Hence he was held to be a ‘workman’.

17. Other Cases Persons employed as carpenters with Kurukshetra University, Kurukshetra,132 a conductor in Road Transport Corporation,133 employees employed to do skilled, manual, clerical or technical work, irrespective of their salary,134 temporary employees of municipal corporation completing 240 days of service,135 clerk who is miscalled the branch manager of a central cooperative bank,136 employees of the cafetaria to provide food service to the residents of the hostel and others in the G B Pant University of Agriculture and Technology137, drivers of UP Scheduled Caste Finance and Development Corporation Ltd, getting salary less than ₹500/- per month as it then was,138 have been held to be workmen within the meaning of Section 2(s). Pujaris of temples,139 persons supervising work of maintenance in the capacity of maintenance engineers having power to grant leave140, an appraiser engaged by a bank to appraise quality, purity, value of ornaments offered for pledging to bank,141 and daily rated lower division clerks in the Famine Relief Section142 have been held not to be workmen under Section 2(s).

G. Current Approach of the Supreme Court on the Interpretation of Section 2(s) In Devinder Singh v. Municipal Council, Sanaur143, the Supreme Court ruled:

1.

The source of employment, the method of recruitment, the terms and conditions of employment/contract of service, the quantum of wages/pay and the mode of payment are not at all relevant for deciding whether or not a person is a workman within the meaning of Section 2(s) of the Act. 2. The definition of workman also does not make any distinction between full-time and part-time employees or a person appointed on contract basis. There is nothing in the plain language of Section 2(s) from which it can be inferred that only a person employed on regular basis or a person employed for doing whole-time job is a workman and the one employed on temporary, part-time or contract basis on fixed wages or as a casual employee or for doing duty for fixed hours in not a workman. 3. Whenever an employer challenges the maintainability of industrial dispute on the ground that the employee is not a workman within the meaning of Section 2(s) of the Act, what the labour court/industrial tribunal is required to consider is whether the person is employed in an industry for hire of reward for doing manual, unskilled skilled, operational, technical or clerical work in an industry. Once the test of employment for hire or reward for doing the specified type of work is satisfied, the employee would fall within the definition of ‘workman’. From the above, it appears that the definition does not exclude persons employed on (i) temporary basis, (ii) part-time, (iii) contract basis on fixed wages, (iv) casual employees or (v) for doing duty for fixed hours. The Court has also brushed aside various tests laid down by it in its earlier decisions.

H. Recommendations of the [Second] National Commission on Labour The [Second] National Commission on Labour has recommend that government may lay down a list of such highly paid jobs which are presently deemed to be employing workmen as being outside the purview of the laws relating to workmen and included in the proposed law for the protection of non-workmen. Another alternative is that the government fix a cut-off limit of remuneration which is substantially high, in the present context, such as ₹25,000/- p.m. beyond which employees will not be treated as ordinary ‘workmen’. The Commission has also recommended that supervisors would be kept out of definition of ‘workers’ and would be clubbed alongwith managerial and administrative employees.

I. Employer Section 2(g) of the Act defines an ‘employer’ to mean: (i) in relation to an industry carried on by or under the authority of any department of the Central Government or a state government, the authority prescribed in this behalf, or where no authority is prescribed, the head of the department; (ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority. In Western India Automobile Association v. I. T.144, the federal court held the statutory definition to be neither exhaustive nor inclusive. Observed Justice Mahajan: In relation to (industries carried on by government and local authorities) a definition has been given of the term ‘employer’… No attempt, however, was made to define the term ‘employer’ generally or in relation to other persons carrying on industries or running undertakings.145 The proposition has since not been challenged though, paradoxically, the provisions of the Act have never been invoked to resolve industrial disputes arising in ‘an industry carried on by or under the authority of any department of the Central or a state government’. An ‘employer’ does not cease to be an ‘employer’ merely because, instead of employing workmen himself, he authorizes his agents or servants to employ them.146 Further, in view of the provisions of Section 18, judicial pronouncements have extended the coverage of expression ‘employer’ to include his heirs, successors and assignees. However, only those who are currently employees of the transferee-employer can be lawful participants in an ‘industrial dispute’ and raise a dispute concerning such erstwhile employees of the transferor-employer as have not been employed by the transferee employer.147 The erstwhile employees of the transferor-employer cannot, unless they are employed by the transferee-employer, themselves raise an industrial dispute with the transferee-employer.148 This is so because of the requirement of master and servant relationship between the disputants.

1 2

Section 2(s) (vi) of the Industrial Disputes (Amendment) Act, 2010 has raised the wage limit to ₹10,000. AIR 1957 SC 264.

3 4 5 6 7 8

9 10 11 12 13 14 15 16 17 18 19 20 21 22

23 24 25 26 27 28 29 30 31 32

Dharangadhra Chemical Works Ltd v. State of Saurashtra, AIR 1957 SC 264 at 267. Ibid. Ibid. Id. at 268. (1965) 2 LLJ 4 (SC). i.e., persons who though have no independent calling of their own work for the enterprise of another and depend for their income on the hire or reward which they get in respect of their employment, e. g., handloom weavers, cigar rollers, match box framers, steel trunk makers, goldsmiths and brass workers, etc. Chintaman Rao v. State of Madhya Pradesh, (1958) 2 LLJ 252 (SC). State of Kerala v. V M Patel, (1961) 1 LLJ 744 (SC). Bridhichand Sharma v. First Civil Judge, (1961) 2 LLJ 86 (SC). Dharangadhra Chemical Works Ltd. case, AIR 1957 SC 264. Shankar Balaji Waje v. State of Maharashta, 1962 1 LLJ 119 (SC). (1961) 2 LLJ 86 (SC). (1958) 2 LLJ 252 (SC). (1962) 1 LLJ 119 at 123. (1961) 2 LLJ 86 at 126. D C Dewan Mohideen Sahib & Sons v. United Bidi Worker's Union, (1964) 2 LLJ 633. (SC). Id. at 638. Ibid. Standard Vacuum Refining Co. of India Ltd v. Its Workmen, (1980) 2 LLJ 233 (SC). See Shibu Metal Works v. Their Workmen, (1966) 1 LLJ 717 (SC); National Iron & Steel Co. Ltd v. State of W. Bengal, (1967) 2 LLJ 23 (SC); Vegoils Pvt. Ltd v. Workmen, (1972) 2 LLJ 567 (SC). The Parliament gave its approval by adopting the Contract Labour (Regulation and Abolition) Act, 1970 to ‘regulate the employment of contract labour in certain establishments and provide for its abolition in certain circumstances and matters connected therewith.’ Punjab National Bank v. Ghulam Dastagir, (1978) 2 SCR 358. Dharangdhara Chemicals Ltd v. State of Saurashtra, op. cit. 262. Shivanandan Sharma v. Punjab National Bank, op. cit. Shivandandan Sharma v. Punjab National Bank, op. cit. Ibid. Shivandan Sharma v. Punjab National Bank, op. cit. Ibid. Hussainbhai v. Alath Factory, (1978) 2 LLJ 397 (SC). Ibid. 2001 LLR 961 (SC). 1983 Lab. IC 1509.

33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66

(2004) 1 SCC 126. 2011 (10) SCALE 478. (2009) 13 SCC 374. 2011 Lab. IC 2799. See Chintaman Martand Salvekar v. Phalton Sugar Works Ltd, (1954) 1 LLJ 499 (L.A.T.); Janardhan Mills Ltd v. Certain Workman, (1953) 1 LLJ 344. Raymond v. Ford Motors Co. Ltd, (1951) 1 LLJ 167. Lakshmi Devi Sugar Mills v. State of UP, (1955) 2 LLJ 250 (Allahabad). See Jute Mills, West Bengal v. Their Workmen, (1952) 1 LLJ 264 (IT); See also Cawnpore Tannery Ltd v. Their Workmen, (1955) 2 LLJ 259. An armless person working with legs or chest would be doing manual work. See supra note 40. B L C Ltd v. Ram Bahadur Jamadar, (1957) 1 LLJ 422 (LAT). Bharat Kala Kendra v. R K Baweja, (1980) 2 LLJ 236 (Delhi). See S A Phenany v. J Walter Thompson Co., (Eastern) Ltd Bombay, 9 FIR 324 (LAT). See Chintaman Martand Salvekar v. Phalton Sugar Works Ltd, op. cit., 499. See Lakshmi Devi Sugar Mills Ltd v. State of Uttar Pradesh, (1995) 2 LLJ 250. See Cawnpore Tannery Ltd v. Their Workmen, (1954) 2 LLJ 459 and Jaswant Sugar Mills Ltd v. Shri D Smith, (1954) 2 LLJ 337. (1983) 2 LLJ 429. (1994) 4 SCC 164. Ibid. Blue Star Ltd v. N R Sharma, (1975) 2 LLJ 300 (Delhi). Anand Bazar Patrika (Pvt.) Ltd v. Its Workmen, (1969) 2 LLJ 670 (SC). Ibid. All India Reserve Bank Employees' Association v. Reserve Bank of India (1965) 2 LIJ 178. Ananda Bazar Patrika v. Its Workman, op. cit. Burmah Shell Co. v. Burmah Shell Management Staff Association, AIR 1971 SC 922. (2011) II CLR 485. (1999) LLR 21 (Bom.). (1988) (56) FLR 148 (SC). Murugalli Estate v. Industrial Tribunal, (1964) 2 LLJ 164 (Madras). Id. at 168. Marugalli Estate, Hardypet, v. Industrial Tribunal Madras, op. cit. (1982) 2 LLJ 288. Id. at 297–98. Workmen of Macforline and Co. v. Fifth I T, (1964) 2 LLJ 556. (Calcutta).

67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85

86 87

88 89 90 91 92 93 94 95 96 97 98 99 100

Id. at 588. (1981) 1 LLJ 267; On appeal 1983 Lab. IC 1629 (SC). (1986) Lab. IC 1741. (1984) Lab IC 658. Lloyds Bank Ltd. v. P L Gupta, AIR 1967 SC 428. Indian Iron and Steel Co. Ltd v. Workmen, AIR 1958 SC 130, 137. Madan Gopal v. R S Bhatia, AIR 1975 SC 1898. Punjab Cooperative Bank v. R S Bhatia, AIR 1975 SC 1526. (1970) 2 LLJ 590 (SC). (1988) I LLJ 363 (SC). (1994) (68) FLR 1101 (SC). Corpus Juris, Vol. 40, 402. (1991) Lab. IC 557 (H C Madras). Section 2(9). 2011 LLR 357. Section 2(9) (d). Section 2(9) (d). Standard Vacuum Oil Co. v. Labour Commissioner, AIR 1960 Madras 288 at 291. The press superintendent who has been discharging the functions of managerial supervisory nature not a workman. See Yadeshwar Kumar v. M S Bennet Coleman, 2007 LLC 1138. See also V K Sharma v. Govt. of NCT, 2008 LLR 521. (2012) 1 SCC 619. The Industrial Disputes (Amendments) Bill, 2009 has raised the wage limit to ₹10,000. But still it is being debated whether the supervisor should be considered to be a ‘workman’. 2004 LLR 1078. J Philips v. Labour Court. (1993) Lab. IC 1455. (1964) 3 SCR 56. (1970) 3 SCR 378. S K Verma v. Mahesh Chandra, (1983) 3 SCR 799. H R Adyanthaya v. Sandoz (India) Ltd. (1994) 5 SCC 737. (2004) 8 SCC 387. 2012 LLR 30 (Mad.). AIR 1976 SC 678. (1991) Lab. IC 2371 (SC). (1995) 1 LLJ 303 (SC); See also M/s Pfizer Ltd v. State of UP, 2010 LLR 586. (2002) 2 LLJ 275. (2008) 10 SCC 698.

101 (2008) 1 SCC 542. 102 (2008) 3 SCC 446; See also Kan Singh v. Distt. Ayurved Officer, 2012 LLR 325 (Patna)

and Himachal Pradesh State Electricity Board v. Laxmi Devi, 2011 LLR 52 (H.P.). 103 2011 Lab. IC 2799. 104 (2001) 7 SCC 630. 105 (1989) 1 LLJ 62 (SC); See also Amar Jyoti School v. Govt. of NCT. (2009) 122 FLR 354. 106 (2004) 1 SCC 755. 107 1986 Lab. IC 1516 (Alld.) 108 2010 LLR 376. 109 (1997) 2 LLJ 549. 110 Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate, (1958) 1 LLJ 500. 111 (1999) 1 LLJ 449. 112 (2004) 1 LLR 993. 113 (2005) LLR 320. 114 (2003) 6 SCC 416. 115 (1983) 1 LLJ 30. 116 Id. at 37. 117 (2000) lab. IC 2468. 118 (2000) Lab. IC 2468. 119 (2002) (9) SCC 652. 120 (2004) LLR 863. 121 (1983) 2 LLJ 88 (Madras). 122 (2003) LLR 817. 123 JT (2001) (7) SC 268. 124 AIR 1984 SC 268. 125 (2005) LLR 309. 126 2012 LLR 26. 127 AIR 1994 SC 2608. 128 2012 LLR 26. 129 1993 Lab. IC 1462. 130 (1992) 1 LLJ 874 (Delhi). 131 (1998) LLR 363 (Karnataka). 132 2002 Lab. IC 2249. 133 R Mallesham v. The Additional Industrial Tribunal, Malakpet, Hyderabad, (1990) Lab.

IC NOC 158 (Andh. Prad.). 134 Iqbal Hussain Qureshi v. Asstt. Labour Commissioner, (1990) Lab. IC NOC 131 (MP). 135 Mam Chand v. State of Haryana. (1989) Lab. IC NOC 42 (P & H).

136 Nirmal Singh v. The State of Punjab, (1984), SLJ (P & H) 674. 137 G B Pant University of Agriculture & Technology v. State of U.P. (2000) SCC. 138 Nathaniel Masih v. UP Scheduled Caste Finance & Development Corporation Ltd,

(1989) 2 Lab. IC 2276 (All). 139 Kesavo Bhat v. Sree Ram Ambulam Trust, (1990) Lab. IC NOC 104 (Kerala). 140 Vimal Kumar Jain v. Labour Court, Knapur, AIR (1988) SC 384. 141 Management of Puri Urban Cooperative Bank v. Madhusnhan Sahu, (1992) Lab. IC

1462 (SC). 142 State of Rajasthan v. Babu Khan, (1994) Lab. IC 181 (Rajasthan). 143 2011 LLR 785 (SC). 144 Western India Automobile Association v. Industrial Tribunal, Bombay, (1949) LLJ 245 145 146 147 148

(FC). Id. at 245, 248. Purushottam Pottery Works, Dharangdhara, (1958) 2 LLJ 523 (IT); Bombay Dock Labour Board v. Stevedore Workers, (1954) 2 LLJ 200 (IT). Dahingeapara Tea Estate v. Their Workmen, (1956) 1 LLJ 187 (LAT) Kays Construction Co. (P) Ltd v. Its Workmen, (1958) 2 LLJ 660 (SC). Anakapalla Cooperative Agricultural & Industrial Society v. Its Workmen (1962) 2 LLJ 621 (SC).

CHAPTER

17 Settlement of Industrial Disputes Labour management relations involve dynamic socio-economic process. Both parties, namely, labour and management, constantly, strive to maximize their preferred values by applying resources to institutions. In their efforts, they are influenced by and are influencing others. The objectives of labour and management are not amenable to easy reconciliation. For instance, labour and management are interested in augmenting their respective incomes and improving their power position. Since, however, the resources are limited, interest of one party conflicts with the other. Further, the means adopted to achieve the objective which vary from simple negotiation to economic warfare adversely affect the community’s interests in maintaining an uninterrupted and high level of production. Moreover, in a country like ours where labour is neither adequately nor properly organized, unqualified acceptance of the doctrine of ‘free enterprise’, particularly between labour and management strengthens the bargaining position of already powerful management. In order, therefore, to protect the interest of the community as well as that of labour and management, legislature has found it necessary to intervene in labour management relations. Thus, the Industrial Disputes Act, 1947 provides for the constitution of various authorities to preserve industrial harmony. At the lowest level is the works committee. The various machineries for investigation and settlement of industrial disputes under the Act are (i) conciliation (ii) court of inquiry (iii) adjudication and (iv) voluntary arbitration. Quite apart from the aforesaid statutory machineries, several nonstatutory machineries such as code of discipline, joint management council,

tripartite machinery and joint consultative machinery play an important role in the process of preventing and settling industrial disputes.

I. WORKS COMMITTEE The institution of works committee was introduced in 1947 under the Industrial Disputes Act 1947, to promote measures for securing and preserving amity and good relations between employers and workmen.1 It was meant to create a sense of partnership or comradeship between employers and workmen.2 It is concerned with problems arising in day-to-day working of the establishment and to ascertain grievances of the workmen.3

A. Constitution of Works Committee Industrial Disputes (Central) Rules The Industrial Disputes Act, 1947 empowers the appropriate government to require an employer having 100 or more workmen to constitute a works committee. Such a committee shall consist of representatives of employers and workmen engaged in the establishment. However, the number of representatives of the workmen shall not be less than the number of representatives of the employer. The Industrial Disputes (Central) Rules, 1957, Rule 39 contemplates that the number of representatives of the workmen shall not be less than the number of representatives of the employer and further that the total number of members shall not exceed 20. Rule 40 contemplates that the representatives of the employer shall be nominated by the employer and shall, as far as possible, be officials in direct touch with or associated with the working of the establishment. Rule 41 envisages that the employer shall ask the registered trade union of the workmen in the concerned establishment to inform the employer in writing as to how many of the workmen are members of that union and how their membership is distributed among the sections, shops or departments of the establishment. In other words, the employer is required to ask the registered trade union to supply him the nominal roll of members of the trade union. The election held without consultation with the trade union is liable to be set aside.4 Rule 42 provides that on receipt of the said information from the registered trade union, the employer shall provide for the election of representatives of the workmen on the works

committee in two groups: (i) those to be elected by the workmen who are members of the registered trade union and (ii) those to be elected by the workmen who are not members of the registered union. It is further provided that the number of two groups should bear same proportion to each other as the union members in the establishment bear to the non-members. The first proviso to this rule contemplates that where more than half the workmen are members of the union or any one of the unions, the above kind of division in two groups shall not be made. This shows that where in an industrial establishment the majority of workers are members of a registered trade union, the distribution of the elected representatives as provided in Rule 42 in two groups will not be necessary5. In other words, in that situation, the representatives of the workmen will be elected in a single group without any kind of division. It is not provided that if the union has majority of the workers as its members, then nomination of the representatives of the workmen may be done by the employer in consultation with the trade union. Thus, there cannot be any nomination of representatives of workmen on the works committee. The scheme of these rules for constitution of works committee has been fully explained in Union of India v. M T S S D Workers Union,6 as follows: (a) Where there is a registered trade union having more than 50 per cent membership of the workers in that establishment, the total number of members of the works committee will be elected without distribution of any constituencies, (b) if in an industry no trade union registered under Trade Unions Act represents more than 50 per cent of the members, then only the election will be held in two constituencies, one from the members of the registered trade union or unions and the other from nonmembers of the trade unions and it is only in this contingency, it is further provided that if the employer thinks proper, (he) may further subdivide the constituency into department, section or shed. In B Chinna Rao v. Naval Civilian Employees Union7, Andhra Pradesh High Court was invited to interpret Rule 41 of the Industrial Disputes (Central) Rules, 1957 which reads as under: Rule 41: Consultation with trade unions: (i) Where any workmen of an establishment are members of a registered trade union; the employer shall ask the union to inform him in writing (a) how many workmen are

members of the union, and (b) how their membership is distributed among the sections, shops or departments of the establishment. (ii) Where an employer has reason to believe that the information furnished to him under sub-rule (i) by any trade union is false, he may, after informing the union, refer the matter to the assistant labour commissioner (central) concerned for his decision; and the assistant labour commissioner, after hearing the parties shall decide the matter and his decision shall be final. While interpreting the aforesaid provisions, the Court held that reference to the commissioner has to be made when the employer has ‘reason to believe that the information furnished to him by the trade union is false’. False doubt expressed by the employer need not necessarily entail a reference. If a mere perusal of the list furnished by a trade union enables an employer to form a definite opinion, he can certainly act accordingly. Since the reference to the commissioner would have the effect of postponing the election, recourse must be had only when it is otherwise necessary and mandatory.

B. Functions of Works Committee The main function of the works committee is ‘to promote measures for securing and preserving amity and good relations between the employers and workmen and, to that end, to comment upon matters of their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters.’8 Thus, the works committees are normally concerned with problems of day-to-day working of the concern. They are ‘not intended to supplant or supersede the union for the purpose of collective bargaining. They are also not entitled to consider real or substantial changes in the conditions of service. Their task is only to reduce friction that might arise between the workmen and the management in the day-to-day working. The decision of works committee is neither agreement nor compromise nor arbitrament. Further, it is neither binding on the parties nor enforceable under the Industrial Disputes Act. It is true that according to the Supreme Court the ‘comments’ of the works committee are not to be taken lightly but it is obvious that the observation has relevance only where a third party gets involved in the claim adjustment process. As between the disputants, these comments, have only added persuasive value. But, by no stretch of imagination can it be said that the duties and functions of the works

committee include the decision on such an important matter as an alteration in conditions of service.’9

C. Operation and Assessment We shall now turn to discuss the functioning of the works committee and assess its working. A survey of the functioning of the works committee reveals that during 1997, 869 works committees were actually formed in the central sphere establishment involving 8,16,924 workers out of the 1,131 works committees to be formed involving 11,79,577 workers.10 Be that as it may, the works committees on the whole failed to deliver the goods. Several factors are responsible for the same. First, in the absence of strong industry-wise labour organization, the politically-oriented trade unions consider works committees to be just another rival. The elaborate provisions for securing representation of registered trade unions for proportional representation of union and non-union workmen and the possibility of further splitting of electoral constituencies into groups, sections, departments or shops not only accentuates the problem of rivalry but also weakens the strength of workmen in such committees. Second, notwithstanding the parity between workmen’s and employers’ representatives, the fact that the chairman of the committee is nominated by the employer from amongst his own representatives, has often helped the management to maintain an upper hand in the proceedings. Unwelcome items on the agenda are promptly declared to be out of order on one ground or the other. Absence of statutory provisions defining jurisdiction of these committees only helps the recalcitrant employer. Lastly, although tribunals and courts feel that ‘agreed solution between the works committee and the management are always entitled to great weight and should not be readily disturbed’, the fact remains that there is no machinery to enforce the decisions of these committees. Indeed, there is nothing to prevent by-passing of works committee. Perhaps it will be incorrect to say that most of the disputes that come up for adjudication have never been discussed in the works committee. Confronted with this situation, particularly in the absence of statutory provisions, the tribunals and courts have invariably held that nondiscussion is no bar to reference by the government.

D. Remedial Measures The [First] National Commission on Labour suggested the following measures for the successful functioning of a works committee:

(a) A more responsive attitude on the part of management (b) Adequate support from unions (c) Proper appreciation of the scope and functions of the works committee (d) Whole-hearted implementation of the recommendations of the works committee (e) Proper coordination of the functions of the multiple bipartite institutions at the plant level now in vogue The Commission also added: It is the creation of an atmosphere of trust on both sides. Unions should feel that management is not sidetracking the effective union through a works committee. Management should equally realize that some of their known prerogatives are meant to be parted with. Basic to the success of such unit level committees is union recognition.11 It is submitted that for the success of a works committee, the following steps should be taken: (i) Trade unions should change their attitude towards the works committee. The unions should feel that management is not sidetracking the effective union through a works committee, (ii) The management should also realize that some of their known prerogatives are meant to be parted with, (iii) Recognition of trade unions should be made compulsory and the provisions therefore should be incorporated in the Trade Unions Act, 1926.

II. GRIEVANCE SETTLEMENT AUTHORITIES Experience shows that in the day-to-day running of business, disputes between the employer and workmen are resolved by administrative process referred to as grievance procedure.12 The Indian Labour Conference has also adopted a similar concept of a grievance in its following recommendations:13 Complaints, affecting one or more individual workers in respect of their wage payments, overtime, leave, transfer, promotion, seniority, work assignment, working conditions and interpretation of service agreement, dismissal and discharges would constitute grievance. Where the points of dispute are of general applicability or of considerable magnitude, they will fall

outside the scope of grievance procedure. The aforesaid concept has also been adopted in the guiding principles for a grievance procedure appended to the Model Grievance Procedure in India.14 Further, Clause 15 of the Model Standing Orders in Schedule I of the Industrial Employment (Standing Orders) Central Rules, 1946, specifies that ‘all complaints arising out of employment including those relating to unfair treatment or wrongful exaction on the part of the employer or his agent, shall be submitted to the manager or the other person specified in this behalf with the right to appeal to the employers.’ Moreover, the state governments have framed rules under the Factories Act, 1948 requiring a welfare officer to ensure settlement of grievances. The Voluntary Code of Discipline adopted by the Sixteenth Session of the Indian Labour Conference in 1958 also provides that: (a) the management and unions will establish, upon a mutually agreed basis, a grievance procedure which will ensure a speedy and full investigation leading to settlement, and (b) they will abide by the various stages in the grievance procedures.15 However, there is no legislation in force which provides for a well-defined and adequate procedure for redressal of day-to-day grievances in an industrial establishment. In order to meet the shortcoming, the Industrial Disputes (Amendment) Act, 1982, provides for setting up of grievance settlement authorities and reference of certain individual disputes to such authorities. Section 9C of the amended Act provided: (1) The employer in relation to every industrial establishment in which 50 or more workmen are employed or have been employed on any day in the preceding 12 months, shall provide for, in accordance with the rules made in that behalf under this Act, a grievance settlement authority for the settlement of industrial disputes connected with an individual workman employed in the establishment. (2) Where an industrial dispute connected with an individual workman arises in an establishment referred to in sub-section (1), a workman or any trade union of workmen of which such workman is a member, refer, in such manner as may be prescribed, such dispute to the grievance settlement authority provided for by the employer under that sub-section for settlement. (3) The grievance settlement authority referred to in sub-section (1) shall follow such procedure and complete its proceedings within such period as may be prescribed. (4) No reference shall be made under Chapter III with respect to any dispute

referred to in this section unless such dispute has been referred to the grievance settlement authority concerned and the decision of the grievance settlement authority is not acceptable to any of the parties to the dispute. However, the aforesaid provisions of the Industrial Disputes (Amendment) Act, 1982, have not been enforced, presumably because the Hospitals and Other Institutions (Settlement of Disputes) Bill, 1982, has not so far been passed. Further, no rules were framed under the unenforced Section 9C. The (Second) National Commission on Labour in 2002 has recommended that a grievance redressal committee for organizations employing 20 or more workers be constituted. But no legislative or administrative action was taken till 2010.

Grievance Redressal Machinery In 2010, the Industrial Disputes (Amendment) Act, 201016 inserted new chapter IIB on grievance redressal machinery. Section 9C of the Amendment Act provides as follows : (1) Every industrial establishment employing 20 or more workmen shall have one or more grievance redressal committees for the resolution of disputes arising out of individual grievances. (2) The grievance redressal committee shall consist of equal number of members from the employer and the workmen. (3) The chairperson of the grievance redressal committee shall be selected from the employer and from among the workmen alternatively on rotation basis every year. (4) The total number of members of the grievance redressal committee shall not exceed six: Provided that there shall be, as far as practicable, one woman member if the grievance redressal committee has two members and in case the number of members are more than two, the number of women members may be increased proportionately. (5) Notwithstanding anything contained in this section, the setting up of grievance redressal committee shall not affect the right of the workman to raise industrial dispute on the same matter under the provisions of this Act. (6) The grievance redressal committee may complete its

proceedings within 30 days on receipt of a written application by or on behalf of the aggrieved party. (7) The workman who is aggrieved of the decision of the grievance redressal committee may prefer an appeal to the employer against the decision of grievance redressal committee and the employer shall, within one month from the date of receipt of such appeal, dispose of the same and send a copy of his decision to the workman concerned. (8) Nothing contained in this section shall apply to the workmen for whom there is an established grievance redressal mechanism in the establishment concerned.

III. CONCILIATION A. General Conciliation is a persuasive process of settling industrial disputes. It is a process by which a third party persuades disputants to come to an equitable adjustment of claims. The third party, however, is not himself a decision maker: he is merely a person who helps the disputants through persuasion to amicably adjust their claims. The ultimate decision is of the disputants themselves. For this purpose, the Industrial Disputes Act, 1947, provides for the appointment of conciliation officers and constitution of board of conciliation by the appropriate government for promoting settlement of industrial disputes. For the successful functioning of the conciliation machinery, the Act confers wide powers and imposes certain duties upon them. Conciliation as a mode of settling industrial disputes has shown remarkable success in many industrialized countries. It is said that it has proved to be a great success in Sweden.17 In India, it has generally been reported that conciliation machinery has played an important role in resolving industrial disputes. Statistics no doubt, supports this claim. During 2008-2009, the Central Industrial Relations Machinery (CIRM) intervened in 397 threatened strikes and its conciliatory effort succeeded in averting 362 strikes which represent a success rate of 95.5 per cent. In the year, the number of disputes received by CIRM were 8,586, number of disputes in which formal conciliation was successful were 1,377 and number of disputes in which conciliation proceeding ended in failure were

1,798. The statistics of the working of the conciliation machinery reveal that the conciliation machinery at central level is extremely high in many states. It has, however, made no remarkable success in several states. Several factors may be accounted for the same. First, failure of conciliation proceeding may lead to the reference to adjudicating authorities under the Industrial Disputes Act, 1947.18 Second, lack of proper personnel, inadequate training and low status enjoyed by conciliation officers and frequent transfers of conciliation officers result in the failure of conciliation.19 Third, undue emphasis on legal and formal requirements also leads to the failure of conciliation. Fourth, considerable delay in conclusion of conciliation proceedings also makes the conciliation machinery ineffective. Fifth, failure of conciliation machinery has been attributed to lack of adequate powers of conciliation authorities.

B. Conciliation Authorities 1. Constitution of Conciliation Authorities (a) Appointment of Conciliation Officer. Under Section 4, the appropriate government is empowered to appoint conciliation officers for promoting settlement of industrial disputes. These officers are appointed for a specified area or for specified industries in a specified area or for one or more specified industries,20 either permanently or for a limited period. (b) Constitution of Board of Conciliation. Where dispute is of complicated nature and requires special handling, the appropriate government is empowered to constitute a board of conciliation. The boards are preferred to conciliation officers. However, in actual practice it is found that boards are rarely constituted. Under Section 10(1) (a), the appropriate government is empowered to refer the existing or apprehended dispute to a board. The board is constituted on an ad hoc basis. It consists of an independent person as chairman and one or two nominees respectively of employers and workmen as members.21 The chairman must be an independent person. A quorum is also provided for conducting the proceedings.

2. Qualifications and Experiences Unlike the adjudicating authorities, the Act does not prescribe any qualification and/or experience for conciliation officer or member of a board of conciliation.

A report of the study committee of the [First] National Commission on Labour, however, reveals that one of the causes of failure of conciliation machinery is lack of proper personnel in handling the dispute. The conciliation officer is sometimes criticized on the ground of his being unaware about industrial life and not having received the requisite training. It is, therefore, suggested that the Act should prescribe qualification and experience for conciliation officer which may include proper and adequate training and knowledge of handling labour problems.

3. Filling of Vacancies The proviso to Section 5(4) requires that where the services of the chairman or any other member have ceased to be available, the board shall not function until the appointment of chairman or member, as the case may be, is made. Section 8 deals with the manner in which the vacancy in the office of chairman or other members of a board will be filled.

4. Jurisdiction Conciliation officers are appointed by the Central and state governments for industries which fall within their respective jurisdiction.

5. Powers of Conciliation Authorities (a) Powers of Conciliation Officer. The Act empowers conciliation officer to conciliate and mediate between the parties. He is deemed to be a public servant within the meaning of Section 21 of the Indian Penal Code.22 He is empowered to enforce the attendance of any person for the purpose of examination of such person or call for and inspect the documents which he considers (i) to be relevant to the industrial dispute or (ii) to be necessary for the purpose of verifying the implementation of any award or carrying out any other duty imposed on him under the Act. For this purpose, he enjoys the same powers as are vested in the civil court under the Code of Civil Procedure, 1908.23 The conciliation officer is also empowered for the purposes of inquiry into any existing or apprehended industrial dispute to enter the premises occupied by any establishment to which the dispute relates after giving reasonable notice.24 Failure to give any such notice does not, however, affect the legality of conciliation proceedings.25 (b) Powers of the Board of Conciliation. The board of conciliation acts in a

judicial capacity and enjoys more powers than conciliation officers. Under the Act, every board of conciliation enjoys the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, when trying a suit. It can enforce the attendance of any person and examine him on oath, compel the production of documents and material objects, issue commission for examination of witnesses, make discovery and inspection, grant adjournment and receive evidence taken on affidavit.26 Every inquiry by a board is deemed to be judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code27 and Sections 345, 346 and 348 of the Code of Criminal Procedure, 1973.28 The proceedings are normally held in public but the board may at any stage direct that any witness be examined or proceedings be held in camera.29 The board is empowered, subject to the rules in this behalf, to follow such procedure as it may think fit.30 The rules provide for the place and time of hearing of the industrial dispute by adjudication or arbitration authorities as the case may be,31 administration of oath by adjudication or arbitration authorities,32 citation or description of the parties in certain cases,33 the issuance of notices to the parties,34 the circumstances when the board can proceed ex-parte35 and correction of clerical mistakes or errors arising from accidental slip or omission in any award.36 The board also has to keep certain matters confidential in the award.37 The board can accept, admit or call for evidence at any stage of the proceedings before it in such manner as it thinks fit.38 The representatives of the parties have the right of examination, cross-examination and addressing the board when any evidence has been called.39 The witnesses who appear before a board are entitled for expenses in the same way as witnesses in the civil court.40

6. Duties of Conciliation Authorities Duties of Conciliation Officers. The Industrial Disputes Act provides for the appointment of conciliation officer, ‘charged with the duty of mediating in and promoting the settlement of industrial disputes.’41 Where an industrial dispute exists or is apprehended, the conciliation officer may, or where the dispute relates to a public utility service and a notice under Section 22 has been given, he shall hold conciliation proceeding in the prescribed manner. He may do all such things which he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the disputes.’42 Further, Section 12 (2) directs the conciliation officer to investigate ‘without delay’ the dispute and all matters

affecting merits and right settlement thereof.43 If the settlement is arrived at, the conciliation officer shall send a report together with memorandum of settlement signed by the parties to the dispute, to the appropriate government or an officer authorized on his behalf.44 If no settlement is arrived at, the conciliation officer is required to send a report to the appropriate government containing (i) a full report setting forth the steps taken by him for ascertaining the facts and circumstances of the dispute and for bringing about a settlement thereof, (ii) a full statement of facts and circumstances leading to the dispute, and (iii) the reasons why a settlement could not be arrived at.45 It is a mandatory duty on the part of the conciliation officer to submit the failure report. His omission to do so is culpable, if not motivated.46 Be that as it may, it is for the appropriate government to consider whether on the basis of the failure report and other relevant materials, it should refer the dispute for adjudication or not. If on a consideration of the report, the appropriate government is satisfied that there is a case for reference to board or adjudicating authority, it may make a reference. Where it does not make a reference, it shall record and communicate to the parties concerned its reasons therefor.47 Sub-section 6 of Section 12 provides that the report ‘shall be submitted’ either within 14 days of the commencement of the conciliation proceedings or earlier if required by the appropriate government, or later if all the parties to the dispute agree in writing. The Industrial Disputes Act 1947, draws a distinction between public utility services and non-public utility services. Thus, while in a public utility service, the conciliation officer is bound to hold conciliation, he is not bound to do so in a non-public utility service.48 The powers of the conciliation officer are not adjudicatory but are intended to promote a settlement of dispute. However, a special responsibility has been vested in conciliation officer to see that the settlement arrived at is fair and reasonable and he should then give his concurrence. This is so because the settlement arrived at in the course of conciliation proceedings is binding not only on all parties to the industrial dispute but all other parties summoned to appear in the proceedings and where a party is an employer, his heirs, successors or assignees in respect of the establishment to which the dispute relates; and where a party is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part. Section 12, however, raises several important issues: (i) What will be the effect of the failure of a conciliation officer to submit the

(ii)

report within 14 days of the commencement of the conciliation proceedings? Two views are discernible. One view is that the conciliation officer becomes functus officio on the expiry of 14 days from the commencement of conciliation proceedings and thereby invalidates the conciliation proceedings. The other view is that failure to submit the report within 14 days of the commencement of the conciliation proceedings does not affect the legality of the proceedings. The latter view found the approval of the Supreme Court in the State of Bihar v. Kripa Shankar Jaiswal.49 In this case, the conciliation officer had not sent his report to the appropriate government within 14 days of the commencement of the conciliation proceedings. A question arose whether failure to submit the report by the conciliation officer within the prescribed period will affect the legality of the conciliation proceedings. The Supreme Court answered the question in negative. The Court observed that the failure of the conciliation officer to submit his report after the prescribed period does not affect the legality of the proceedings. However, contravention of Section 12 (6) may amount to a breach of duty on the part of the conciliation officer. This decision is, however open to several objections. First, protracted conciliation proceedings tend to be fruitless. Second, since under Section 22 of the Industrial Disputes Act a strike or lockout cannot be declared during the pendency of any conciliation proceedings… and 7 days after (its) conclusion and, on the other hand in order to make the strike or lockout legal it must take place within 6 weeks of the date of notice, the time limit must be certain. Third, management too is debarred by Section 33 from exercising certain of its prerogatives during conciliation proceedings and since this means deprivation of a right, the canons of statutory interpretation suggest that the period of deprivation should be definite and tailored to meet the needs of the situation. Fourth, for industrial peace and harmony, it is essential that the dispute must be settled at an early date. Under the circumstances, it is suggested that the Supreme Court may reconsider its view in the light of the aforesaid reasoning. Whether a conciliation officer has jurisdiction to initiate conciliation proceedings at a place where the management’s establishment is not situated? This issue was raised in M/s. Juggat Pharma (P) Ltd v. Deputy Commissioner of Labour, Madras.50 In this case, the management’s establishment was situated at Bangalore. The company employed certain workmen therein as sales representatives at Madras to look after its

business. The management later terminated their services. On these facts, a question arose whether the conciliation officer at Madras had jurisdiction under Section 12 over the management whose establishment was situated at Bangalore and the sales representatives appointed by them were looking after their work at Madras. The answer to the question depends upon whether a dispute existed or was apprehended between the management and the workmen in Madras. The Court observed that Section 2 (k), which defines an industrial dispute, is not controlled by the location of the management’s establishment in Bangalore or the absence of such establishment in Madras. The fact that the management had no establishment or branch office in Madras did not alter the fact that termination of the workmen’s service was in connection with their employment in Madras. The Court accordingly held that it was open to the conciliation officer to initiate conciliation proceedings under Section 12(1). (iii) Is a notice necessary for a settlement to be in the course of conciliation proceedings? This question was raised in Delhi Cloth & General Mills Co. Ltd v. Union of India.51 In this case, the conciliation officer neither initiated any proceeding for conciliation nor issued any notice for holding the conciliation proceedings. He also made no attempt to induce the parties for reaching a settlement de hors conciliation proceedings. The Delhi High Court held that there was no settlement in the course of conciliation proceedings. (iv) Whether a conciliation officer could go into the merit of the dispute and decide various points in issue one way or the other? The Kerala High Court52 answered the question in the negative and observed that a conciliation officer was not competent to decide the various points at issue between the opposing parties. All that he could do was to persuade the parties to come to a fair and amicable settlement. Although wide powers are conferred upon a conciliation officer to use his resourcefulness to persuade the parties but he has no power to decide anything at all. After having commenced the conciliation proceedings under Section 12, the conciliation officer exceeded his power and acted beyond his jurisdiction by passing the order. The Court highlighted the duties of a conciliation officer: The provision in sub-section (4) of Section 12 of the Act relating to the sending to the government a full report as contemplated thereunder is mandatory in nature. Having failed to bring about

or arrive at a settlement of the dispute, it was the bounden duty of the conciliation officer …. to send to the appropriate government a full report as mandatorily enjoined under Section 12(4) of the Act setting forth the steps taken by him for ascertaining the facts and circumstances relating to the dispute and for bringing about a settlement thereof together with a full statement of such facts and circumstances and the reasons on account of which, in his opinion, a settlement could not be arrived at. Thereafter, by virtue of the provisions in Section 12(5), it is for the appropriate government to consider whether it should make a reference or refuse to make a reference. The Court accordingly held that by disposing of the conciliation proceedings on the close of the investigation, the conciliation officer not only failed to perform the statutory function vested in him under Section 12 (4) but also exceeded his power under Section 12 (1). (v) Whether a writ of mandamus can be issued to the conciliation officer, on whose intervention a settlement was arrived at between the management and workmen, directing him to take all measures to see that settlements are implemented or to prohibit the management from laying-off the staff? The Court53 answered the question in the negative and observed that the labour commissioner, while acting under Section 12 as conciliation officer, was not empowered to adjudicate an industrial dispute. All that he could do was to try to persuade the parties to come to a fair and amicable settlement. In other words, his duties were only administrative and incidental to industrial adjudication. There was nothing either in the Act or in the rules empowering the labour commissioner to implement the settlement arrived at between the parties under Section 12 (3). If any of the parties to the settlement were aggrieved by the non-implementation of the terms of settlement by the other party, then the remedy would be to move the government for sanction to prosecute the party in breach of settlement under Section 29. The scope of Section 12 was raised in Manoharan Nair v. State of Kerala54 where the Central Government rejected the demand of the trade unions regarding minimum wages and dearness allowance. Consequently, the workmen went on strike but later it was called off. The negotiations commenced on the Central Government’s counter-proposal but the trade unions rejected the proposal. The regional joint labour commissioner’s efforts to convene another conference also failed. The additional labour commissioner, however, succeeded

in persuading three of these unions to accept the Central Government’s proposal and a settlement was arrived at to this effect, which was countersigned by the additional labour commissioner. The validity of this settlement was challenged on two main grounds: The conciliation officer erred in holding that the trade unions, who were parties to the settlement, represented the majority of the workmen in the establishment and (ii) the jurisdiction of the conciliation officer to resolve that dispute, which related to the matters mentioned in clause 6 did not bind the workmen in other matters. As to the first contention, the Kerala High Court, following the Supreme Court decision in Ramnagar Cane & Sugar Co. v. Jatin Chakravarthy,55 negatived it by holding that a settlement made with the minority would bind all the workmen of the establishment when it was countersigned by the conciliation officer unless, a collusive settlement, designed to defeat certain kinds of claims, is arrived at with those who could not speak for even a small section of the interested workmen. As to the second contention, the Court held that no manner was prescribed for raising an industrial dispute (whether existing at the commencement or cropping up during the pendency of proceedings). It accordingly, rejected the contention that the conciliation officer was incompetent to countersign the final settlement. If the conciliation officer fails to effect a settlement, the appropriate government may, after considering the report of the conciliation officer, refer the dispute to a board or adjudicating authorities and, in particular, not to a court of inquiry. The power is discretionary. But, if the appropriate government decides not to refer the matter, it must record the reasons there of, and communicate the same to the parties concerned. It follows that conciliation officer‘s report is considered by the appropriate government. But unlike the board of conciliation, the conciliation officer is not required to make recommendation for the determination of dispute under the Act. It is suggested that the conciliation will prove to be more effective if the conciliation officer is also be required to make a recommendation to the appropriate government whether or not the matter is fit for adjudication. It is also suggested that the recommendation of a conciliation officer should be given due consideration by the appropriate government. (vi) Can conciliation proceedings pertaining to industrial disputes be initiated and continued by legal heirs even after death of the workman? This question was answered in the affirmative by the division bench of the Karnataka High Court in Dhanalakshmi v. Reserve Bank of India, Bombay.56 The Court held that despite the death of the workman, the

(vii)

point sought to be settled by legal heirs remains an ‘industrial dispute’ for the purpose of adjudication under the Industrial Dispute Act, 1947. Can the registrar of a cooperative society nullify a settlement pertaining to wages made before the conciliation officer between cooperative societies and their employees ? This question was answered in the negative by the Madras High Court in S Jina Chandran v Registrar of Cooperative Societies, Madras.57

7. Duties of Board of Conciliation A board to which a dispute is referred must investigate the dispute and all matters affecting the merits and the right settlement thereof and do all things for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute without delay.58 If a settlement is arrived at, the board should send a report to the appropriate government together with a memorandum of the settlement signed by the parties to the dispute.59 If no settlement is reached, the board must send a full report together with its recommendation for the determination of the dispute.60 In case of failure of settlement by a board, the ‘appropriate government’ may refer the dispute to a labour court, tribunal or national tribunal. The government is, however, not bound to make a reference. But where the government does not make a reference in a public utility service after receiving a report from a board, it must record and communicate to the parties concerned its reasons for not doing so.61 A board is required to submit its report within two months of the date on which the dispute was referred to it or within such shorter period as may be fixed by the appropriate government. The time limit for the submission of a report can be extended by the appropriate government or by agreement in writing by all the parties to the dispute.62

8. Conciliation Proceedings The study of conciliation proceedings requires examination of: (i) when and how conciliation machinery is set in motion? and (ii) what is the duration of conciliation proceedings? These questions are of great practical significance. It is important because the management is prohibited from exercising its prerogative during the pendency of conciliation proceedings before a conciliation officer and board of conciliation in respect of an industrial dispute.

Further, workmen and employers in public utility services are prohibited from declaring strike or lockout as the case may be during the pendency of any conciliation proceedings before a conciliation officer. In non-public utility services, management and workmen are prohibited to declare lockout or strike during the pendency of conciliation proceeding before a board of conciliation and 7 days thereafter. Let us now turn to examine when a conciliation machinery is set in motion and what is the duration of conciliation proceedings before the conciliation officer and board of conciliation. (i) Cognizance (a) By Conciliation Officer. In case of public utility services, where a notice of strike or lockout has been given under Section 22, it is mandatory for the conciliation officer to intervene under the Act.63 But in non-public utility services, where an industrial dispute exists or is apprehended, conciliation officer my exercise his discretion to conciliate or not.64 In practice, it has been found that the optional provision is acquiring compulsory status in non-public utility services also.65 The conciliation officer may take note of an existing or apprehended dispute either suo motu or when approached by either of the parties. His power under the Act is essentially confined to investigation and mediation of industrial dispute. (b) By Board of Conciliation. The board assumes jurisdiction over the existing or apprehended dispute when it is referred to it by the appropriate government. (ii)

Pendency of conciliation proceeding before a conciliation officer The opening clause of Sections 22 (1) (d), 22 (2) (d) and 33, namely, ‘during the pendency of any conciliation proceeding before a conciliation officer’ prescribes the period of prohibition of strikes and lockouts in public utility services as well as on the exercise of management’s prerogative. These critical words, however, have to be read with other provisions of the Act and the rules framed thereunder. (a) The commencement of proceedings. Sub-section (1) of Section 20 provides that in public utility services, the starting point of the prohibition is the date on which the conciliation officer receives a notice of strike or lockout under Section 22. (b) The termination of proceedings. Sub-section (2) of Section 20

provides the other terminus of the period of prohibition: A conciliation proceeding shall be deemed to have concluded— (a) where a settlement is arrived at, when a memorandum of the settlement is signed by the parties to the disputes; (b) where no settlement is arrived at, when the report of the conciliation officer is received by the appropriate government or when the report of the board is published under Section 17, as the case may be; or (c) where reference is made to a court, labour court, tribunal or national tribunal under Section 10 during the pendency of conciliation proceedings. Of these, clause (b) alone which has given some ground for anxiety, need detain us. The Supreme Court, however, in Industry Colliery66 while construing the word ‘received’ in Section 20(2) (b) interpreted it to mean ‘when the report is actually received by the appropriate government’ and imposes criminal liability where the employer or the workmen could not possibly know that he was doing an illegal act by declaring a strike or lockout illegal and put prohibition on the use of instruments of economic coercion by the parties which can hardly be justified on the ground of maintaining harmonious labour management relations to facilitate settlement of disputes. The facts are as follows: On 13 October 1949, the workmen gave a notice to the management under Section 22(1) of a one day strike to take place on 6 November 1949. The regional labour commissioner (central) held conciliation proceedings on 22 October 1949. The workmen declined to participate in the conciliation proceedings. On the same day, the regional labour commissioner sent the failure report to the chief labour commissioner stating that no settlement was arrived at in the conciliation proceedings and that he ‘was not in favour of recommending a reference of the dispute to the industrial tribunal’ for adjudication. The failure report of the chief labour commissioner, Delhi was, however, received by the Ministry of Labour only on 19 November 1949. In the meanwhile, the workmen went on a one day strike as per their notice on 7 November 1949. The question arose whether the strike was illegal. This question depended on whether the strike occurred ‘during the conclusion of such proceedings’. The Supreme Court pointed out that under Section 24 (1), a strike was illegal if it commenced or was declared during pendency of a conciliation proceedings …. and 7 days after the conclusion of such proceedings’ which is prohibited under clause (1) of Section 22 (1) and the proceeding is deemed to

have concluded’ where no settlement is arrived at, when the report of the conciliation officer is received by the appropriate government.’ The Court dealt with the word ‘received’ occurring under Section 20(2) (b) as follows: ‘… while the word ‘send’ is used in Section 12 (4) and the word ‘submitted’ in Section 12 (6), the word used in Section 20 (2) (b) is ‘received’. That word obviously implies the actual receipt of the report. To say that the conciliation proceedings shall be deemed to have concluded when the report should, in the ordinary course of business, have been received by the appropriate government would introduce an element of uncertainty, for the provisions of Section 22 (1) (d) clearly contemplate that the appropriate government should have a clear 7 days’ time after the conclusion of the conciliation proceedings to make up its mind as to the further steps it should take. It is, therefore, necessary that the beginning of the seven days’ time should be fixed so that there would be certainty as to when the seven days’ time would expire. It is, therefore, provided in Section 20 (2) (b) that the proceedings shall be deemed to have concluded, where no settlement is arrived at, when the report is actually received by the appropriate governments.’ (iii)

Pendency of proceedings before a board of conciliation (a) The commencement of proceedings. The proceeding is deemed to have commenced on the date of the order referring the dispute to the board.67 The effect of this provision can be interpreted only with reference to the provisions of Section 5 and Rule 6 of the Industrial Disputes (Central) Rules, 1957. These provisions do not provide sufficient safeguards to the workmen or the employer. What if the employer declares a lockout or the workmen declare a strike between the date of notice under Rule 6 and the date of order referring the dispute to the board of conciliation? (b) The termination of proceedings. Under sub-section (2) of Section 20, conciliation proceedings shall be deemed to have concluded— (i) where a settlement is arrived at, when a memorandum of the settlement is signed by the parties to the dispute (ii) where no settlement is arrived at, …. when the report of the board is published under Section 17 (iii) when a reference is made to a labour court, tribunal or national

tribunal under Section 10

9. Settlement in Conciliation After having discussed the proceedings in conciliation, it is necessary to examine the settlement in conciliation. The settlement in conciliation requires consideration of several aspects such as concept and nature of settlement, form of settlement, publication of settlement, period of operation of settlement, persons on whom settlement is binding and enforceability of settlement. (a) Concept of settlement. Section 2 (p) defines ‘settlement’ to mean: a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and the workmen arrived at otherwise than in the course of conciliation proceeding, where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorized in this behalf by the appropriate government and the conciliation officer. An analysis of the aforesaid definition reveals that there are two modes of settlement of industrial disputes: (i) settlement arrived at in the course of conciliation proceedings, i.e., one which is arrived at with the assistance and concurrence of the conciliation officer, who is duty-bound to promote a settlement and to do everything to induce the parties to come to a fair and amicable settlement of the dispute,68 and (ii) a written agreement between employer and workmen arrived at otherwise than in the course of conciliation proceedings.69 It also appears from the above definition that ‘unless an agreement arrived at between the parties is a settlement in its grammatical or ordinary signification, such an arrangement although arrived at in a conciliation proceedings70 will not be a settlement within the meaning of Section 2 (p).’ Further, the expression ‘in the course of conciliation proceedings’ refers to the duration when the conciliation proceedings are pending.71 Moreover, for the validity of this kind of settlement ‘it is essential that the parties thereto should have subscribed to it in the prescribed manner and a copy thereof should have been sent to an officer authorized in this behalf by the appropriate government and the conciliation officer.’72 (b) Nature of settlement. The nature of proceedings before the conciliation officer is not judicial or quasi-judicial but administrative.73 Let us examine the requirements therefor. (i)

Settlement must be ‘in writing’. The Industrial Disputes Act, 1947,

requires the settlement arrived at in the course of conciliation proceedings by the conciliation officer and board of conciliation74 to be ‘in writing’. The purpose is to minimize area of disputes over the contents thereof and to have permanent record in matters affecting labour management relations. (ii) Settlement must be signed by the parties. The Industrial Disputes Act 1947, requires the ‘settlement arrived at in the course of conciliation proceedings by the conciliation officer75 or by the board76 to be signed by the parties to the dispute. Thus, clause (2) of Rule 58 of the Industrial Disputes (Central) Rules provides: The settlement shall be signed by (a) in the case of employer, by the employer himself, or by his authorized agent, or when the employer is an incorporated company or other body corporate, by the agent, manager or other principal officer of the corporation; (b) in case of workmen, by an officer of a trade union of the workmen or by five representatives of the workmen duly authorized in this behalf at a meeting of the workmen held for the purpose. The aforesaid provision raises several problems. First, what if the parties do not sign it? Second, what is the position of an individual workman who is not a member of any union whatsoever and his erstwhile co-workers are not prepared to help him? Third, what is the position of an individual workman who is made a scapegoat by his own union? As to the first, it is significant to note that Sections 12 (3) and 13 (3) make it obligatory upon the conciliation officer and the board of conciliation to submit the report with a ‘memorandum of the settlement signed by the parties to the dispute’. The second and third problems are not easy to answer. It would be observed that Rule 59(2) (b) does not at all recognize an individual workman. This is all the more so in view of the fact that his erstwhile co-workers are not prepared to help him. Under the circumstances, he will be helpless, and will be bound by the settlement arrived at by the union. This view is fortified by the provisions of Section 18. (c) Settlement must be in the prescribed form. Should the settlement be one document signed by both the parties, or can it be gathered from documents which have been separately signed by the parties, e. g., correspondence? Clause (i) of Rule 58 which provides that ‘a settlement arrived at in the

course of conciliation proceedings or otherwise, shall be in form 4’ suggests that the written agreement must be embodied in one document. (d) Publication of the settlement by board of conciliation. Section 17 (1) which deals with the publication of award by the appropriate government, provides: Every report of a board… together with any minute of dissent recorded therewith …. shall, within a period of thirty days from the date of its receipt by the appropriate government, be published in such manner as the appropriate government thinks fit. The aforesaid provision raises several issues: the key question is whether the aforesaid provision is mandatory or directory? Second, what will be the effect of withholding the publication of the report? Third, whether the publication of the report after the expiry of statutory period of 30 days will make the settlement invalid or unenforceable? Fourth, whether the report will be taken to have been published on the date of the government’s notification or the date on which such notification appeared in the gazette? (e) Settlement must be fair, just and bonafide. The apex Court in K C P Ltd. v. The Presiding Officer,77 held that a court or tribunal must satisfy itself that a settlement was not ex facie unfair, unjust or mala fide. (f) Period of operation of settlement. (i) Commencement. Sub-section (1) of Section 19 provides: A settlement shall come into operation on such date as is agreed upon by the parties to the dispute and if no date is agreed upon, on the date on which the memorandum of settlement is signed by the parties to the dispute. Thus, the settlement shall come into operation on the date agreed upon by the parties or, if none, the date on which the memorandum of settlement is signed by them. (ii) Termination. Sub-section (2) of Section 19 provides for other terminus of the settlement. Such settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of six months from the date on which the memorandum of settlement is signed by the parties to the dispute, and shall

continue to be binding on the parties after the expiry of the period aforesaid, until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement. The object of the provision under sub-sections 1 and 2 of Section 19 is to ensure that once a settlement is arrived at, there prevails peace, accord and cordiality between the parties during the period agreed upon and if the settlement does not require to be altered for some reason or the other, the same climate prevails by extension of the settlement by operation of law. Section 19 is not dead and freezing (in) all manner… There is an option given to either party to terminate the settlement by a written intimation after the expiry of two months from the date of such notice. This is in accord with the policy of settlement of industrial disputes which is the principal object underlying the provisions of the Act.78 Section 19 (2) has given rise to a controversy whether a settlement made for a specified period expires by efflux of the said period. Answering the question, the Supreme Court in Shukla Manseta Industries Pvt. Ltd v. The Workmen79 observed: To avoid uncertainty and speculation, Section 19 prescribes a terminus ad quo and a terminus ad quem. If in a settlement there is no time limit agreed upon between the parties, the period of operation is a space of six months from the date of signing the settlement and will also last until the expiry of two months from the date of receipt of the notice of termination of settlement. If the period is fixed, it commences from the date as specified in the settlement and will theoretically end as agreed upon but shall continue to operate under the law until the expiry of the requisite period of two months by a clear written notice.80 Jaypore Sugar Company Ltd v. Their Employees81 decided the other issue, namely, when a settlement would terminate if no period was agreed upon? Here, settlement was reached between the management and workers in the course of conciliation proceedings. It stated that the workers’ union gave an undertaking that there ‘shall be no strike till the end of the next crushing season.’ No period was, however, agreed upon for such settlement and no notice was given to terminate such settlement. The labour appellate tribunal observed:

Under Section 19 (2) of the Industrial Disputes Act, this will be binding for a period of six months and also shall continue to be binding for a further period of two months after notice to terminate it. In this case, we find that no such notice to terminate this settlement was given by either party and the settlement is still in force.82 The Supreme Court in South Indian Bank Ltd v. Chako83 held that binding ‘nature of award’ and ‘operation of award’ are two different expressions. The notice under Section 19 (2) must be given by a party representing the majority of persons bound by the settlement.84 Further, such a notice can be inferred from correspondence between the parties. In Cochin State Power Light Corporation Ltd v. Its Workmen85, the employer and the employees arrived at a settlement on 25 November 1954, which was to remain in force upto 30 September 1959. The employer contended that the settlement was never terminated by notice in writing, so it continued to be in force when the reference was made. Hence, the tribunal had no jurisdiction to adjudicate the dispute. The workmen had presented a charter of demands on 14 October 1959 in which there was a reference to the settlement and it was stated therein that the union had on 18 October 1959 resolved to terminate the existing settlement. It was contended that this did not put an end to the settlement as required by Section 19 (2) of the Act because there was no reference to the termination of settlement by the charter. While rejecting the contention, Justice Wanchoo observed: There is, however, no form prescribed for terminating settlement under Section 19 (2) of the Act and all that has to be seen is whether the provisions of Section 19 (2) are complied with in substance and a notice is given as required thereunder.86 The Court rejected the employer’s contention and held that as there was a reference under the charter of demands to a resolution in which specific statement that the settlement was being terminated thereby was made, it was sufficient notice as required under Section 19 (2) of the Act. The above view was approved by the Supreme Court in Indian Link Chain Manufacturers Ltd v. Their Workmen.87 But at the same time, the Court warned: It is true that though a written notice can be spelled out of the correspondence, there must be some certainty regarding the date

or which such a written notice can be construed to have been given because a settlement notwithstanding such notice continues to be in force for a period of two months from that date.88 The lacuna in the law on this point is that unlike the provisions for termination of operation of award under Section 19 (3), the Act does not expressly provide for termination of the operation of a settlement. It is, therefore, suggested that the Parliament should make an express provision in the Act for the termination of operation of settlement. In Management of Karnataka State Road Transport Corporation v. KSRTC Staff and Workers Federation89, a settlement was arrived at between the Karnataka State Road Transport Corporation (KSRTC) and union federation of KSRTC emerging as sole bargaining agent on 28 July 1988. The payroll check-off facility was made available to the union as per the settlement. The settlement was to last till recognition of federation or until both parties terminate it by mutual consent. On 10 May 1993, a memorandum of understanding was reached subject to the approval of board of directors and state government. On 21 September 1999, the Karnataka State Road Transport Corporation by notification withdrew the responsibility of collection of donation or monthly subscription called payroll check-off facility. On these facts, a question arose whether (i) there was sufficient notice and (ii) the settlement was legally terminated. The Supreme Court answered the question in the negative and held that the government orders and consequential notification withdrawing payroll check-off facility was illegal and ultra-vires of Section 19 (1) of the ID Act. The agreement of 1988 continued to be binding on parties and KSRTC could not act unilaterally. (g) Persons on whom settlement is binding. The Industrial Disputes Act, 1947 draws a distinction between a settlement arrived at by agreement between the parties and settlement arrived at in the course of conciliation proceedings. Whereas the first category of settlement ‘shall be binding only on the parties to the agreement’90, the second one is binding not only on ‘all parties to the industrial dispute’ but also on: (a) all other parties summoned to appear in the proceedings as parties to the dispute unless the board, arbitrator, labour court, tribunal or national tribunal as the case may be, records the opinion that they were so summoned without proper clause; (b) where a party referred to in clause (a) or clause (b) is an employer,

his heirs, successors or assignees in respect of the establishment to which the dispute relates; (c) where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.91 It is evident from above that the settlement arrived at in the course of conciliation proceedings shall be binding on all categories of persons mentioned above. In extending the operation of such a settlement beyond the parties thereto, Section 18 (3) of the Industrial Disputes Act makes a departure from the ordinary law of contract which leads towards collective bargaining.92 The object of this section is to promote industrial peace and harmony between the parties. It is with this object that wide coverage has been given to Section 18 (3) and this can possibly be done when settlement would bind all the parties. In Virudhachalam P v. Mgmt of Lotus Mills93, the Supreme Court ruled that once a written settlement is arrived at during the conciliation proceedings, such settlement under Section 12 (3) has a binding effect not only on the signatories to the settlement but also on all parties to the industrial dispute which would cover the entire body of workmen, not only existing workmen but also future workmen. Such a settlement has the same legal effect as an award of labour court, tribunal or national tribunal or an arbitration award. They all stand on par. It is easy to visualize that settlement contemplated by Section 12(3) necessarily means a written settlement which would be based on a written agreement where signatories to such settlement sign the agreement. Therefore, settlement under Section 12(3) during conciliation proceedings and all other settlements contemplated by Section 2(p) outside conciliation proceedings must be based on written agreements. Written agreements would become settlements contemplated by Section 2(p) read with Section 12(3) of the Act when arrived at during conciliation proceedings or even outside conciliation proceedings. Thus, written agreements would become settlements after relevant procedural provisions for arriving at such settlements are followed. Thus, all settlements necessarily are based on written agreements between the parties. The scope of Section 18 (3) (d) has been the subject-matter of judicial interpretation in a series of cases decided by the high courts and the Supreme Court. The debatable issue has been whether settlement with one or more concerned union in a conciliation proceeding would bind all other workmen of unions of establishment who were not made parties to the settlement. This issue

was raised in Ramnagar Cane and Sugar Co. Ltd v. Jatin Chakravarty.94 In this case, Ramnagar Cane and Sugar Co. Ltd, a public utility concern, carried on the business of manufacturing sugar. The management employed 545 permanent and 703 seasonal workers (excluding casual labourers). Majority of these workmen belonged to the Ramnagar Cane Sugar Co. Employees’ Union (hereinafter referred to as the workers’ union). On 9 December 1953, the workers’ union submitted a charter of demands to the management. On 20 January 1954, a similar charter of demands was also submitted by the employees’ union to the management. On the same day, the workers’ union gave a strike notice to the management. On 1 February 1954, the conciliation officer started conciliation proceedings which were attended by the employees’ union and the management. Workers’ union, apparently did not attend the meeting even though a notice was served upon the said union. On 2 February 1954, the management suggested to the conciliation officer to discuss the disputed matter with the representatives of two unions separately. The workers’ union objected to this suggestion and informed the conciliation officer that it assumed that the conciliation has failed. Consequently, on 2 February 1954, the conciliation officer sent his report about the failure of conciliation with workers’ union. On 25 February 1954, the management and employees’ union, arrived at a settlement, which was recorded in a form of memorandum of settlement signed by them. Meanwhile on 13 February 1954, the workers’ union went on strike which was alleged to be in contravention of the provisions of the Industrial Disputes Act. Accordingly, the members of the workers’ union were prosecuted. Here, we are concerned with a limited issue, namely, whether workers belonging to the worker's union were bound by the settlement arrived at between the workers-members of employees’ union and the management. Answering the question in the affirmative, Justice Gajendragadkar observed: In order to bind the workmen it is not necessary to show that the said workmen belong to the union which was a party to the dispute before conciliator….. [Thus] if a conciliation proceeding is pending between one union and the employer and it relates to matters concerning all the employees of the employer, the pendency of the said conciliation proceeding would be a bar against all the employees of the employer employed in a public utility service to go on a strike during the pendency of the proceeding under Section 22 (1) (d). In our opinion, this construction would be consistent with the specific provisions as to the effect of conciliation settlements prescribed by Section 18

(3) (d) and is harmonious with the general policy of the Act; otherwise, it would unnecessarily disturb industrial peace, if one union employed in a public utility service is allowed to go on strike even though demands common to the members of the said union as well as the rest of the workmen are being considered in conciliation proceedings between the said employer and his other employees represented by another union. The Court accordingly held that the settlement arrived at between the management and the employees’ union in the course of conciliation proceedings on 25 February 1954 was binding not only upon the members of the said employees’ union but on all the four categories of persons bound by such settlement as are specified in sub-section (3) of Section 18 including workmen employed by the management at that time. The aforesaid view was reiterated in Tata Chemical Ltd v. Workmen.95 In G M Security Paper Mills v. R S Sharma96, the Supreme Court once again laid down the scope and objective of Section 18 (3) of the Act in the following words: Even though a conciliation officer is not competent to adjudicate upon the dispute between the management and its workmen, he is expected to assist them to arrive at a fair and just settlement. He has to play the role of an advisor and friend of both the parties and should see that neither party takes undue advantage of the situation. Any settlement arrived at should be a just and fair one. It is on account of this special feature of the settlement, sub-section (3) of Section 18 of the Industrial Disputes Act, 1947 provides that a settlement arrived at in the course of conciliation proceeding under that Act shall be binding on (i) all parties to the industrial dispute (ii) where a party referred to in clause (i) is an employer, his heirs, successors or assignees in respect of the establishment to which the dispute relates and (iii) where a party referred to in clause (i) is comprised of workmen, all persons who were employed in the establishment or part of the establishment as the case may be to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part. Law thus attaches importance and sanctity to a settlement arrived at in the course of a conciliation proceeding since it carries a

presumption that it is just and fair and makes it binding on all the parties as well as the other workmen in the establishment or the part of it to which it relates as stated above. But in the case of a settlement not arrived at in the course of the conciliation proceeding, it has to be in writing and signed by the parties in the prescribed manner and a copy thereof should be sent to the officer authorized by the appropriate government in this behalf and to the conciliation officer. Such a settlement arrived at by agreement between the employer and workmen otherwise than in the course of conciliation proceeding is binding only on the parties to the agreement as provided in Section 18 (1) of the Industrial Disputes Act, 1947. Such a settlement is not binding on the other workmen who are not parties to the settlement. From the above, it is evident that a settlement arrived at in the course of conciliation proceeding shall be valid and binding on all the present and future employees of the establishment but not to past or retired workmen.97 It is not necessary that if there are several unions in the establishment, all the unions must be represented. It is enough if one of such unions enters into a settlement with the management in the course of conciliation proceedings.98 The decision is, however, open to criticism. Assume that there are 4,000 workers employed in an establishment. Out of these 4,000 workers, 2,000 workers belong to Union A, 1,800 workers belong to Union B and 200 workers belong to a Union C (management sponsored union). Assume further that in an industrial dispute between labour and management, Union C arrived at a settlement with the management in the course of conciliation proceedings. According to the Supreme Court, the settlement entered into between the management and Union C representing 200 workers shall be binding on the other two unions representing 3,800 workers. Is it desirable in the interest of industrial peace and harmony that such a settlement should bind all the workmen? It is highly doubtful if the fate of 3,800 workers should be allowed to be determined by a management-sponsored union having only 200 workmen as its members. In Praga Tools Ltd v. Praga Tools Mazdoor Sabha99, the Court extended the aforesaid principle in cases where the conciliation officer arrived at a settlement between the workmen and management after the submission of the failure report. In this case, the issue was whether a settlement brought about after the submission of failure report by the conciliation officer binds all workmen including the workmen of the union which was not represented in a conciliation

proceedings. The High Court answered the question in the affirmative and held that such a settlement was binding on all the workmen including the workmen of a union who did not join the conciliation proceedings. Be that as it may, the aforesaid view encouraged the minority union. This has invited the attention of the Supreme Court in Herbert Sons Ltd v. Workman,100 wherein the court ruled that a settlement arrived at with a majority union precludes a minority union from raising dispute on the same subject-matter thereby making such settlement binding even on members of the minority unions. However, if there is a dispute that the settlement is not bona fide in nature or that it has been arrived at on account of fraud, misrepresentation or concealment of facts or even corruption and other inducements, it can be the subject-matter of an industrial dispute which an appropriate government may refer for adjudication after examining the allegation prima facie. The appropriate government must satisfy itself prima facie whether the allegation needs to be adjudicated, more so when there is a settlement which is reached with the help of the conciliation officer in which case, there is a basic assumption that the settlement must be fair and reasonable. A settlement which is sought to be assailed has to be scanned and scrutinized. In National Engineering Industries v. State of Rajasthan101, showing its concern about the above issue, the Supreme Court observed that every trade union registered under the Trade Unions Act, 1926 having a few members, if allowed to raise industrial disputes for reference, will defeat the very purpose of a settlement. That is why it is only a representative union which has been given the right to raise an industrial dispute. Under the Voluntary Code of Discipline and also under various state laws there can be, at a given point of time, only one representative union. Under the Rajasthan Act, a representative union means a union for the time being registered as a representative union under the said Act. Although, representative union is not defined in the Act but in common parlance, it means the union which has been registered as the majority union and thus entitled to represent all the workers and thereby precluding the minority union from raising an industrial dispute on the same subject-matter. Further, it is the representative union which alone can give notice under Section 19(2) of the ID Act terminating the settlement. Any notice given by a union which does not represent the majority of the persons bound by the settlement or which is not a representative union is illegal. The Court further held that merely because a settlement in the course of conciliation proceedings was arrived at between the majority union and the management on a holiday, it cannot render such a settlement invalid. There is no bar in having conciliation proceedings under the Act on a holiday. To arrive at a settlement, a holiday atmosphere is more relaxed

and more congenial. It may be noted that the Second National Commission on Labour has recommended that a union, which does not have at least 10 per cent membership amongst the employees in an establishment, should have no locus standi in that establishment. The Supreme Court in I T C Ltd. Workers’ Welfare Association v. Management of I T C Ltd102 decided five important issues connected with the settlement arrived at in the course of concilation proceedings namely, (i) Is it open to the industrial tribunal to ignore the settlement? (ii) What is the effect of a settlement arrived at in the course of conciliation proceedings? (iii) What presumption can be drawn if a settlement is arrived at in the conciliation proceedings? (iv) What weight should be attached to a settlement arrived at in the course of conciliation proceedings? and (v) Can the validity of the settlement arrived at in the course of conciliation proceeding be tested on the touchstone of Article 14 of the Constitution? As to the first issue, the Supreme Court held that the industrial adjudicator has to keep in the forefront of his mind the settlement reached under Section 18(3) of the Act. Once it is found that the terms of the settlement operate in respect of the dispute raised before it, it is not open to the industrial tribunal to ignore the settlement or even belittle its effect by applying its mind independent of the settlement unless the settlement is found to be contrary to the mandatory provisions of the Act or unless there is non-conformity with the norms by which the settlement could be subjected to limited judicial scrutiny. Regarding the second issue, the Court held that a settlement arrived at in the course of conciliation proceedings with a recognized majority union has extended application as it will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. To this extent, it departs from the ordinary law of contract. The object obviously is to uphold the sanctity of settlements reached with the active assistance of the conciliation officer and to discourage an individual employee or a minority union from scuttling the settlement. Coming to the third issue, the Court observed that the settlement arrived at in the course of conciliation proceedings carries a presumption that it is just and fair. An unjust, unfair or mala fide settlement militates against the spirit and basic postulates of the agreement reached as a result of conciliation and, therefore, such settlement will not be given effect to while deciding an industrial dispute. Of course, the issue has to be examined keeping in view the presumption that is attached to the settlement under Section 12(3). As to the fourth issue, the Court said that a settlement which is a product

of collective bargaining is to be given due weight and consideration, more so when a settlement is arrived at in the course of conciliation proceeding. The settlement can only be ignored in exceptional circumstances, viz., if it is demonstrably unjust, unfair or the result of mala fides such as corrupt motives on the part of those who were instrumental in effecting the settlement. Keeping that apart, the settlement has to be judged as a whole, taking an overall view. As regards the last issue, the Court held that there may be some facets which apply in common to determine the crucial issue whether the settlement on the whole is just and fair but that is not to say that the settlement is liable to be tested on the touchstone of Article 14 of the Constitution.

IV. COURT OF INQUIRY A. Constitution A procedure similar to the constitution of a board of conciliation is provided for bringing into existence a court of inquiry as well. While a board of conciliation may be constituted for promoting the settlement of an industrial dispute; the purpose for which a court of inquiry may be constituted is ‘for enquiring into any matter appearing to be connected with or relevant to an industrial dispute.’103 The idea of a court of inquiry is borrowed from the British Industrial Courts Act, 1919. This Act enables the minister on his own motion and irrespective of the consent of the parties to a dispute, to set up a court of inquiry to enquire into the report on the causes and circumstances of any trade dispute, together with such recommendations as the court may make for the resolution of the dispute. Perhaps because of the extended field of operation of the court of inquiry, the legislature thought it fit to allow the parties to use instruments of economic coercion during pendency of proceeding before it.

B. Jurisdiction of the Court of Inquiry The Act empowers the appropriate government to constitute a court of inquiry to inquire into any matter appearing to be connected with or relevant to an industrial dispute.104 The court of inquiry consists of one or more independent persons at the discretion of the appropriate government. Where a court consists of two or more members, one of them shall be appointed as a chairman.105 The court having the prescribed quorum, may act notwithstanding the absence of the chairman or any of its members or any vacancy in its number. However, if the

appropriate government notifies that the services of the chairman have ceased to be available, the court shall not act until a new chairman has been appointed.106 Court can inquire into matters ‘connected with or relevant to an industrial dispute’ but not into the industrial dispute.

C. Duties of the Court It is the duty of the court of inquiry to inquire into matters referred to it and submit its report to the appropriate government, ordinarily within 6 months from the commencement of its inquiry.107 This period is, however, not mandatory and the report even after the said period would not be invalid.

D. Publication of the Report The Act requires that the report of appropriate government shall be published within 30 days of its receipt.

V. VOLUNTARY ARBITRATION Voluntary arbitration is one of the effective modes of settlement of an industrial dispute; it supplements collective bargaining. When negotiation fails, arbitration may prove to be a satisfactory and most enlightened method or resolving an industrial dispute. It provides ‘a new focus for set-up animosities.’ It has been found that in ‘many arbitration cases, in which the parties start out by being angry at each other, they end up being less so. The winning party is satisfied, and the losing party is likely to feel aggrieved, not at the other party, but at the arbitrator.’108 Further, informal arbitration offers an opportunity to dissipate hard feelings which the industrial dispute may have aroused.109 It is important because it is (i) expected to take into consideration the realities of the situation; (ii) expected to meet the aspiration of the parties: (iii) based on voluntarism; (iv) does not compromise the fundamental position of the parties and (v) expected to promote mutual trust.110 However, it is unfortunate that despite government’s stated policy to encourage collective bargaining and voluntary arbitration, India adopted only compulsory adjudication system ever since independence and did not give legal sanctity to voluntary arbitration till 1956. The severe criticism111 of conciliation and adjudication led to the introduction of Section 10 A relating to voluntary arbitration through the Industrial Disputes (Amendment) Act, 1956. The 1956 Amendment to some

extent has tried to give legal force to voluntary arbitration but still it stands on a lower footing than adjudication as it permits the parties to adopt recourse to arbitration prior to reference to adjudication. Further, 1956-Amendment also did not place an arbitrator on the same footing as that of adjudicators. The 1964 Amendment did try to bridge the gap but still the disparity lies in several respects.

VI. PROCESSES INVOLVED IN REFERENCE OF DISPUTE TO VOLUNTARY LABOUR ARBITRATOR A. Choice of Dispute Settlement Section 10A (1)112 of the Industrial Disputes Act, 1947 authorizes the parties to make reference to a voluntary arbitrator. But before the reference may be made to the arbitrator, four conditions must be satisfied: 1. The industrial dispute must exist or be apprehended. 2. The agreement must be in writing. 3. The reference must be made before a dispute has been referred under Section 10 to a labour court, tribunal or national tribunal. 4.

The name of arbitrator/arbitrators113 must be specified.

B. The Conditions Precedent A perusal of the aforesaid provision may conveniently be delineated with reference to: 1. Parties to arbitration. Under the Industrial Disputes Act, 1947, a reference to the voluntary arbitrator under Section 10 A can only be made if a dispute arises between employers and employers, or between employers and workmen, or between workmen and workmen. 2. Subject-matter of reference. The Industrial Disputes Act, 1947 seeks to resolve the industrial disputes. The parties can only make a reference of an ‘industry dispute’ to an arbitrator. If, for instance, parties refer a dispute, which is not an ‘industrial dispute’, the arbitrator will have no jurisdiction to make a valid

award.114 3. Time for making the agreement. Section 10A of the Industrial Disputes Act, inter alia, provides that the reference to the arbitrator should be made at any time before the dispute has been referred under Section 10 to a labour court, tribunal or national tribunal.

C. Selection of Arbitrator The next phase is the selection of the arbitrator. The parties acting under Section 10A are required to select any person or persons including the presiding officer of a labour court, tribunal or national tribunal to arbitrate in a dispute. Further, the parties may select or appoint as many arbitrators as they wish. However, where a reference is made to an even number of arbitrators, the parties by agreement should provide for appointment of an umpire who shall enter upon the reference and if the arbitrators are equally divided in their opinion, the award of umpire shall prevail and be deemed to be the ‘award’. However, Section 10A unlike the ‘procedure for voluntary arbitration of labour disputes’ as approved by the National Arbitration Promotion Board or Section 7 (1) of the Industrial Relations Bills, 1978, does not provide for any agreement if the parties on their own fail to agree to an arbitrator or arbitrators.

D. Arbitration Agreement 1. Agreement must be in writing. Once the parties agree to refer the dispute to arbitration, it is required to make such arbitration agreement in writing.115 2.Form of the agreement. Section 10A (2)(d) requires that the arbitration agreement should be in the prescribed form and Rule 7 of the Industrial Disputes (Central) Rules, 1957, provides that it should be in Form C. How far and to what extent the aforesaid requirement should be complied with formed the subjectmatter of dispute in North Orissa Workers’ Union v. State of Orissa.116 The Court held that it is not necessary that the agreement must be made in the prescribed form ‘C’. It would be enough if the requirements of that form are substantially complied with. 3. Signature of the parties. Section 10A (2) further requires that an arbitration agreement shall be signed by the parties thereto in such manner as may be prescribed in the rules framed by the appropriate government. However, decided cases reveal that the validity of the award or arbitration agreement has

often been questioned on the basis of non-compliance of signature of all parties on the arbitration agreement. This has been a ground for not issuing the notification by the appropriate government and enabling the government to refer such dispute to labour tribunals. This tendency of appropriate government has, however, been scrutinized by the judiciary. 4. Consent of arbitrator( s). Even though the Act does not expressly require that the arbitration agreement must be accompanied by the consent of arbitrator, the Industrial Disputes (Central) Rule, 1957 provides that the arbitration agreement must be accompanied by consent, in writing, of the arbitrator or arbitrators. But for the purposes, it is enough if there is substantial compliance with this rule.117 5. Submission of the copy of arbitration agreement. Once an arbitration agreement has been entered into and executed in the prescribed form under Section 10A, a copy of the arbitration agreement shall be forwarded to the appropriate government and the conciliation officer.118 Non-submission of a copy of the arbitration agreement to the appropriate government would make the award made thereon outside the purview of Section 10A of the Industrial Disputes Act, 1947 because Section 10A (4) is interlinked with Section 10A (3) and only on satisfaction of the mandates of Section 10A there would be an investigation into the dispute and the award would be made by the arbitrator and then forwarded to the appropriate government.119 6. Publication of arbitration agreement. The appropriate government comes into picture in the process of reference to arbitrator only after the receipt of a copy of a valid arbitration agreement. If this is done: …. the appropriate government shall, within one month from the date of the receipt of such copy publish the same in the official gazette.120 The aforesaid provision raises a question whether the publication of the agreement is mandatory or directory. A corollary of this issue is: whether the appropriate government can override the wishes of the parties to refer the matter for arbitration by making a reference to labour court, tribunal or national tribunal. This issue may be discussed under two heads: (i) Publication of arbitration agreement, and (ii) time of publication. (i) Publication of arbitration agreement. In Karnal Leather Karamchari Sangathan v. Liberty Footwear Co.,121 the Supreme Court was invited to consider whether the publication of arbitration agreement under Section 10A(3) is obligatory. The Supreme Court answered the question in the affirmative and observed:

The voluntary arbitration is a part of the infrastructure of dispensation of justice in industrial adjudication. The arbitrator thus falls within the rainbow of statutory tribunals. When a dispute is referred to arbitration, it is therefore, necessary that the workers must be made aware of the dispute as well as the arbitrator whose award ultimately will bind them. They must know what is referred for arbitration, who is their arbitrator and what is in store for them. They must have an opportunity to share their views with each other and if necessary, place the same before the arbitrator. The Court held that the arbitration agreement must be published before an arbitrator considered the merits of the disputes. Non-compliance of this requirement will be fatal to the arbitration award. (ii) Time for publication. The high courts are divided on the issue: whether the requirement of publication of agreement within one month is mandatory or directory? While the division bench of the Madhya Pradesh High Court in K P Singh v. S K Gokhale122 and the Orissa High Court in North Orissa Workers’ Union v. State of Orissa123 have taken the view that the requirement is mandatory, the High Court of Punjab and Haryana in Landra Engineering and Foundary Workers v. Punjab State124, the Delhi High Court in Mineral Industrial Association v. Union of India125, Madhya Pradesh High Court in Modern Stores Cigarettes v. Krishnadas Shah126 and Aftab-e-Jadid, Urdu Daily Newspapers v. Bhopal Shramjivi Patrakar Sangh127 has taken the opposite view and held that the requirement is only directory. The decisions of these three high courts which held the provisions to be directory said: … on the true construction of … Section 10A(3) that the other requirement namely, its notification within one month from its receipt is only directory and not imperative.

E. Voluntary Labour Arbitrator 1. Nature of Voluntary Arbitrator. It is exceedingly difficult to maintain a distinction between statutory and private arbitrator on the basis of nomenclature because both are products of statute: the former is made under the Industrial Disputes Act, 1947 while the latter under the Arbitration Act, 1940. But such a distinction has not come to stay through a series of judicial decisions. Thus, in R V National Joint Council for the Craft of Dental Technicians,128

Chief Justice Goodard drew such a distinction when he said: There is no instance of which I know in the books, where certiorari or prohibition has gone to any arbitrator, except a statutory arbitrator, and a statutory arbitrator is a person to whom by statute, the parties must resort. The aforesaid distinction was adopted by the Supreme Court in Engineering Mazdoor Sabha v. Hind Cycles Ltd129 wherein Justice Gajenderagadkar introduced the concept of ‘statutory arbitrator’ in India by holding: Having regard to several provisions contained in the Act and rules framed thereunder, an arbitrator appointed under Section 10A cannot be treated to be exactly similar to a private arbitrator to whom a dispute has been referred under an arbitration agreement under the Arbitration Act. The arbitrator under Section 10A is clothed with certain powers. His procedure is regulated by certain rules and the award pronounced by him is given by statutory provisions a certain validity and a binding character for a specified period. Having regard to these provisions, it may perhaps be possible to describe such an arbitrator in a loose sense, a statutory arbitrator. 2. Conduct of the Arbitrator. The Industrial Disputes Act, 1947 does not prescribe how the conduct of the arbitrator can be regulated. However, the decided cases130 of the Supreme Court and high courts reveal that an arbitrator should be impartial and must build a relationship of confidence with both the parties. Thus, he or any of his near relatives should not accept any hospitality or favour from any party to the disputes before him because justice should not only be done but it must be seen to be done.131 If he does so, it would be an act of misconduct.132 Similarly, if he does not hear the party or exceeds his jurisdiction or fails to determine an important question referred to him, his decision is liable to be interfered.133 3. Jurisdiction of the Voluntary Arbitrator. An arbitrator under Section 10A comes into existence when appointed by the parties, and he derives his jurisdiction from the agreement of the parties. If the arbitrator decides matters not referred to him by the parties, he acts beyond his jurisdiction. For instance in Raza Textile Labour Union v. Mohan,134 three disputes upon which the arbitrator gave the award were not covered by 167 matters of disputes which

were referred to him. The Court quashed the award as these matters were beyond the jurisdiction of the arbitrator. Similarly, in Rohtas Industries Ltd v. Workmen135, the Patna High Court held that the award regarding dearness allowance was vitiated by the fact that it was not in accordance with the terms of agreement. Likewise, the Madras High Court in Vaikuntam Estate v. Arbitrator136 quashed the interim award of arbitrator where he exceeded the terms of reference. Further, unlike the jurisdiction of adjudicatory bodies, the arbitrator cannot arbitrate upon matters ‘incidental to’137 or ‘any matter appearing to connected or relevant’138 to the dispute. But unlike adjudicatory authorities under the Act, the arbitrator has wider power to decide upon all ‘industrial disputes’ referred to him under an arbitration agreement irrespective of the fact whether they fall under Schedule II or III of the Industrial Disputes Act, 1947.

4. Powers of Arbitrator: Section 11A merely provides: Where an industrial dispute relating to the discharge or dismissal of a workmen has been referred to a labour court, tribunal or national tribunal for adjudication and, in the course of the adjudication proceedings, the labour court, tribunal or national tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require. The aforesaid Section 11 A does not specifically mention ‘arbitrator’. It, therefore, raises a question whether the arbitrator has the power to interfere with the punishment awarded by the management. Justice Krishna Iyer in Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha139 answered the question in affirmative. He stated: Section 11 did clothe the arbitrator with similar powers as tribunals, despite the doubt created by the abstruse absence of specific mention of ‘arbitrator’ in Section 11 A. In Rajinder Kumar v. Delhi Administration,140 the Supreme Court explained the powers of the arbitrator:

‘In exercise of the jurisdiction conferred by Section 11A of the Industrial Disputes Act, 1947 both arbitrator and … (the Supreme Court) can reappraise the evidence led in the domestic inquiry and satisfy themselves whether the evidence led by the employer established misconduct against the workman. It is too late in the day to contend that the arbitrator has only the power to decide whether the conclusions reached by the inquiry officer were plausible or deducible from the evidence led in the inquiry and not to re-appraise the evidence itself and to reach the conclusion whether the conduct alleged against the workman has been established or not.141 The Court added: Where the findings of misconduct are based on no legal evidence and the conclusion is one to which no reasonable man would come, the arbitrator appointed under Section 10A or this court in appeal under Article 136 can reject such findings as perverse. The industrial tribunal or the arbitrator or a quasijudicial authority can reject not only such findings but also the conclusion based on no legal evidence or if it is merely based on surmises and conjectures unrelated to evidence on the ground that they disclose total non-application of mind.

F. Signing of an Award Sub-section (4) of Section 10A requires that the arbitration award shall be signed by the arbitrator or all the arbitrators, as the case may be. The provisions of the section are mandatory. The award of arbitrator shall be void and inoperative in the absence of signature in view of mandatory term of the section.

G. Submission of an Award Section 10A (4A) of the Act enjoins the arbitrator to investigate the dispute and submit its award to the appropriate government. The non-submission would render the award inoperative.142

H. Publication Sub-section (3) of Section 10A requires that a copy of the arbitration agreement shall be forwarded to the appropriate government and the conciliation officer

and the appropriate government shall within one month from the date of receipt of such copy, publish the same in the official gazette. Can the award of the arbitrator under Section 10A be set aside on its nonpublication in the official gazette? The Supreme Court in Karnal Leather Karmchari Sanghatan v. Liberty Footwear Company143 answered the question in the negative and observed: Now look at the provisions of sub-section (3). It is with respect to time for publication of the agreement. But publication appears to be not necessary for validity of the agreement. The agreement becomes binding and enforceable as soon as it is entered into by the parties. Publication is also not an indispensable foundation of jurisdiction of the arbitrator. The jurisdiction of the arbitrator stems from the agreement and not by its publication in the official gazettee. Why then publication is necessary? Is it an idle formality? Far from it, it would be wrong to construe subsection (3) in the manner suggested by counsel for the appellant. The Act seeks to achieve social justice on the basis of collective bargaining. Collective bargaining is a technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion. The dispute is settled peacefully and voluntarily although reluctantly between labour and management. The voluntary arbitration is a part of infrastructure of dispensation of justice in industrial adjudication. The arbitrator thus falls within the rainbow of statutory tribunals. When a dispute is referred to arbitration, it is, therefore, necessary that the workers must be made aware of the dispute as well as the arbitrator whose award ultimately would bind them. They must know what is referred to arbitration, who is their arbitrator and what is in store for them. They must have an opportunity to share their views with each other and if necessary to place the same before the arbitrator. This is the need for collective bargaining and there cannot be collective bargaining without involving the workers. The union only helps the workers in resolving disputes with their management but ultimately it would be for the workers to take decision and suggest remedies. It seems to us that the arbitration agreement must be published before the arbitrator considers the merits of the dispute. Noncompliance of this requirement would be fatal to be arbitral

award. The aforesaid view was followed in S K M Sangh v. General Manager, W C Ltd144.

I. Power of Superintendence of the High Court: Article 227 of the Constitution over Voluntary Arbitrators In addition to Article 226, Article 227 confers upon high courts the power of superintendence over all lower courts and tribunals within their jurisdiction. A question, therefore, arises whether a high court can interfere under Article 227 with an award of an arbitrator (under Section 10A). The Supreme Court in Engineering Mazdoor Sabha v. Hind Cycles Ltd145 answered it in negative and placed Article 227 at par with Article 136. It held: Like Art. 136, Art. 227 refers to courts and tribunals and what we have referred to the requirements of Art. 136 may prima facie apply to the requirements of Art. 227.146 The net effect of the aforesaid statement is that the high court is not competent to have power of superintendence over voluntary arbitrators under Section 10A because the ‘arbitrator’ was not a ‘tribunal’. But in Rohtas Industries Ltd v. Rohtas Industries Staff Union147, Justice Krishna Iyer even though conceded that the position of arbitrator under Section 10A (as it then stood) visa-vis Article 227 might have been different but in view of the changed situation after the amendment in the Industrial Disputes Act by XXXVI of 1964 observed: Today, however, such an arbitrator has power to bind even those who are not parties to the reference or agreement and the whole exercise under Section 10A as well as the source of the force of the award on publication derive from the statute. It is legitimate to regard such an arbitrator now as part of the methodology of the sovereign’s dispensation of justice, thus falling within the rainbow of statutory tribunals amenable to judicial review. The aforesaid view was reiterated in the majority judgement in Gujarat Steel Tubes case.148 However, one is tempted to ask whether the Court’s decision would have been different if the government did not issue a notification under sub-section 3A of Section 10A on the ground that persons making a reference do not represent the majority of each party. An answer in affirmative would revive the

view stated in Engineering Mazdoor Sabha (supra). Under the circumstances, it is suggested that the Parliament may clarify the position by legislative amendment.

J. Relief under Article 136 of the Constitution from Arbitration Award The question that arose before the Supreme Court was whether an appeal would lie to it under Article 136149 of the Constitution from an arbitration award under Section 10A of the Industrial Disputes Act. The Supreme Court in Engineering Mazdoor Sabha v. Hind Cycles150 answered the question in negative. It stated: ….. the arbitrator is not a tribunal because the State has not invested him with its inherent judicial power and the power of adjudication which he exercises is derived by him from the agreement of the parties. His position thus, may be said to be higher than that of a private arbitrator and lower than that of a tribunal. Accordingly, the Court held that the decision of arbitrator would not amount to ‘determination’ or ‘order’ for the purposes of Article 136. But, this position appears to have been changed in Rohtas Industries v. Rohtas Industries Staff Union.151 The Court in view of the amendment in 1964 of the Industrial Disputes Act appears to have extended the application of Article 136 to an award of an arbitrator under Section 10A. This view was reiterated in Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha.152 The aforesaid view removes one of the stated hurdles in the progress of arbitration, namely, that in law, no appeal is maintainable against the award of the arbitrator.

K. Recommendation of the (Second) National Commission on Labour The (Second) National Commission on Labour felt that arbitration as a dispute settlement machinery is better than adjudication.

VII. ADJUDICATION

The final stage in the settlement of industrial disputes (where the parties are unable to settle either through bipartite negotiations or through the good offices of the conciliation machinery or through voluntary arbitration) is compulsory arbitration which envisages governmental reference to statutory bodies such as labour court, industrial tribunal or national tribunal. Disputes are generally referred for adjudication on the recommendation of the conciliation officer who had dealt with them earlier. However, the appropriate government has discretion either to accept or not to accept his recommendation and accordingly, to refer or not refer the case for adjudication. The percentage of disputes referred to adjudication varied from state to state.153 The system of adjudication by labour court, tribunal and national tribunal has perhaps been one of the most important instruments of regulating the rights of the parties in general and wages, allowances, bonus, working conditions, leave, holidays and social security provisions in particular. Such norms setting which in advanced countries is done through the process of collective bargaining between the employers and the trade unions, is done in India by adjudication system because the trade union movement is weak and is in no position to negotiate with the employer on an equal footing. However, this system has been criticized for its unfavourable effects on the trade union movement. Further, undue dependence on compulsory adjudication has deprived the trade unions of the incentive to organize themselves on a strong and efficient basis and has rendered the unions mere petitioning and litigant organizations arguing their cases before tribunals, etc. The system of adjudication has also been criticized because of long delays involved in the final settlement of disputes, particularly, where one or the other party chooses to go in appeal against an award. Such delays, it is argued, are themselves responsible for much industrial strife.154 Be that as it may, it is beyond doubt that the labour judges occupy a very important position in adjudicating the disputes between the management and the labour. The disputes which are brought before the labour judiciary involve huge stakes, both for the management as well as the workers.

A. Origin and Growth of Adjudication System In the era of laissez fair, employers enjoyed unfettered right to ‘hire and fire’. They had vastly superior bargaining powers and were in a position to dominate workmen in every conceivable way. They preferred to settle terms and conditions of employment of workmen and abhorred statutory regulation unless, it was to their advantage. However, this tendency coupled with rise in the incidence of strikes and lockouts made it necessary for the government to

intervene in labour management relations. While voluntary and persuasive processes had been playing their role in settling industrial disputes since 1929, World War II marked the beginning of compulsory adjudication. Rule 81A of the Defence of India Rules, 1942 empowered the government inter alia, to refer any trade dispute to adjudicators and to enforce the awards. After the end of hostilities, these measures with a number of innovations and modifications were incorporated in the Industrial Disputes Act, 1947. The Act ‘substitutes for free bargaining between the parties a binding award by an impartial tribunal’. The tribunal is not bound by contractual terms between the parties but can make a suitable award for bringing about harmonious relations between the employer and the workmen. ‘The industrial tribunal is not fettered by any limitation on its power. The only limitation on its power is to bring about harmonious relationship between the employer and the workmen.’ In the original Act only one constituting body, namely, industrial tribunal was designated for the compulsory settlement of industrial disputes. Within a short span of 9 years of its working, it was found that a large number of cases were referred to it. This led to the introduction of three-tier system, viz., the labour court, tribunal and national tribunal in 1956.

B. Composition of Labour Court, Tribunal and National Tribunal The issue of composition of labour courts and tribunals has an important bearing on their working. The present system of reference to adjudication is, however, open to several criticisms. First, from ‘the workers’ side it is often argued that with various restrictions placed on strikes, the recourse to judicial determination of disputes should not be barred by the government.’155 Second, the decision to refer disputes or to withhold reference is sometimes not made on any strict principle and the system is open to pressurization.156 The Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 introduces a three tier system for industrial adjudication. The machinery provided under the Act consists of labour courts, industrial tribunals and national tribunals. The appropriate government is empowered under Section 7 and 7A to constitute one or more labour courts and industrial tribunals with limited jurisdiction, to adjudicate ‘industrial disputes’, and the Central Government is authorized under Section 7B to constitute the national tribunal. The labour courts, industrial tribunals and national tribunals are ad hoc bodies and consist of a single member called presiding officer. The appointment of the tribunal

may, however, be for a limited duration.157 Appointment of Assessors. There is no provision for the appointment of assessors in labour courts, but in case of industrial tribunal or national tribunal, the appropriate government may appoint two persons as assessors to advise the tribunal in the proceedings before it.158 The assessors are supposed to be experts having special knowledge of the matter under consideration and can be appointed only when the dispute involves technical matters and requires expert knowledge for its settlement. This provision has hardly been used and for all practical purposes, this is defunct.

C. Appointment, Qualifications and Disqualifications of Presiding Officer of Labour Court, Tribunal and National Tribunal Industrial peace, prosperity and progress depend upon the efficiency of the labour judiciary. The labour judiciary is, thus the centre of the system of industrial adjudication in India. These appointments of the presiding officers of the labour judiciary are made by the appropriate Central Government. But at the same time, in a large number of industries, State is one of the parties taking the part as the employer. In this context, the method of appointment of the labour judiciary assumes great significance. It is absolutely necessary that the labour judges should be highly qualified, experienced, independent and committed to the Constitution of India. In other words, labour judiciary should be independent of the executive government as is the case of the judiciary under the Constitution. It is, therefore, desirable that the labour judiciary must be taken out of the control of the executive government.159 The Supreme Court in the State of Maharashtra v. Labour Law Practitioner’s Association and others160 considered the relevant provisions of the Industrial Disputes Act and the Bombay Industrial Relations Act and came to the conclusion that the labour court judges and judges of the industrial court belong to ‘Judicial Service’, as that expression is understood in Charter VI of the Constitution of India. According to the Court, the expression ‘District Judge’’ covers a judge of any principal civil court of original jurisdiction and includes the hierarchy of specialized civil courts, such as labour courts and industrial courts. The term ‘Courts’ will cover all tribunals, which are basically courts performing judicial functions, giving judgement, which are binding. They are exercising sovereign judicial power transferred to them by the State. Men, who could be described as ‘independent’ and having sufficient judicial experience,

must alone according to their lordships, be selected as labour court judges. The court accordingly held that persons presiding over industrial and labour courts constitute a judicial service and their recruitment should be in accordance with Article 234 of the Constitution. In case of labour courts, there is a wider range of alternatives in the qualifications for appointment. They are as follows: (a) he is, or has been, a judge of a high court; or (b) he has, for a period of not less than 3 years, been a district judge or an additional district judge; or (c) he has held any judicial office in India for not less than 7 years; (d) he has been the presiding officer of a labour court constituted under any Provincial Act or State Act for not less than 5 years. (e) He is or has been a deputy chief labour commissioner (central) or joint commissioner of the state labour department, having a degree in law and at least 7 years' experience in the labour department including 3 years of experience as conciliation officer: Provided that no such deputy chief labour commissioner of joint labour commissioner shall be appointed unless he resigns from the service of the Central Government or state government, as the case may be, before being appointed as the presiding officer; or he is an officer of Indian Legal Service in Grade III with 3 years' experience in the grade. Qualifications for appointment to tribunals are the same as prescribed for labour courts in Section 7, clauses (a), (b), (f) and (g). Thus, the range of alternatives is narrower. For national tribunals, the range of alternative qualifications for appointment is further narrower, namely, he is or has been a judge of a high court. The requirements of Section 7C are applicable to all the three bodies, i.e., labour courts, tribunals and national tribunals. Section 7C lays down disqualifications in regard to age and independence of persons appointed. It requires that the person to be appointed must be (a) an independent person and (b) less than 65 years of age.161 In actual practice it is, however, found that insistence is made on judicial qualification in the appointment of presiding officer of labour courts and industrial tribunals. Further, generally retired personnel are chosen to serve as a presiding officer. It is submitted that the appointment should be made in consultation with the Chief Justice of the high court. This will ensure the appointment of independent persons by the appropriate government as presiding officer of labour courts and industrial tribunals. Further, the appointment should be made on a permanent basis with promotional avenues open to them.

D. Jurisdiction of Labour Court, Tribunal and National Tribunal The labour court has jurisdiction162 to adjudicate industrial disputes which may be referred to it under Section 10 of the Act by the appropriate government and which relates to: (1) The propriety or legality of an order passed by an employer under the standing orders; (2) the application and interpretation of standing order; (3) discharge or dismissal of workmen including reinstatement of, or grant of relief to, workmen wrongfully dismissed; (4) withdrawal of any customary concession or privilege; (5) illegality or otherwise of strike or lockout; and (6) all matters other than those specified in the Third Schedule. The industrial tribunals have jurisdiction to adjudicate industrial disputes referred under Section 10 which relates to: (1) wages, including the period and mode of payment; (2) compensatory and other allowances; (3) hours of work and rest intervals; (4) leave with wages and holidays; (5) bonus, profit sharing, provident fund and gratuity; (6) shift working otherwise than in accordance with standing orders; (7) classification by grades; (8) rules of discipline; (9) rationalization; (10) retrenchment of workmen and closure of establishment; and (11) any other matter that may be prescribed. The national tribunals have jurisdiction to adjudicate industrial disputes which in the opinion of the Central Government involve questions of national importance or are of such a nature that industrial establishments situated in more than one state are likely to be interested in or affected by such disputes and which may be referred to them by Central Government. Under the Industrial Disputes Act, 1947, the labour court, tribunal and national tribunal can acquire jurisdiction only when there is existence or apprehension of an industrial dispute and a reference of such dispute has been made by the appropriate government under Section 10. The labour courts, tribunals and national tribunals are also required to deal with complaints. Labour courts are also required to decide the question of amount of money due under Section 33 C (2) of the Industrial Disputes Act, 1947.

E. Powers and Functions of Labour Court, Tribunal and National Tribunal The labour court, tribunal and national tribunal have a statutory duty to hold the proceedings expeditiously and, as soon as it is practicable on the conclusion163 thereof submit its award to the appropriate government. They are empowered,

subject to the rules in this behalf, to follow such procedure as they may think fit.164 The rules provide for place and time of hearing of the industrial dispute by adjudication or arbitration authorities as the case may be.165

F. No Power to Pass ‘No Dispute’ Award The Central Government in exercise of powers conferred by Section 38 of the Industrial Disputes Act, 1947 has framed the rules, namely ‘The Industrial Disputes (Central) Rules, 1957’. Rule 10B(9) of the aforesaid Rules which is as under, prescribes that the labour court may proceed with the reference ex-parte in absence of any party and decide the reference: 10B. Proceeding before the labour court, tribunal or national tribunal. (1) … (9) In case any party defaults or fails to appear at any stage, the labour court, tribunal or national tribunal, as the case may be, may proceed with the reference ex-parte and decide the reference application in the absence of the defaulting party: Provided that the labour court, tribunal or national tribunal, as the case may be, shall submit its award to the Central Government within one month from the date of arguments, oral hearing or within the period mentioned in the order of reference, whichever is earlier. From the aforesaid Rule, it is clear that it is obligatory on the part of the labour court to answer the reference after considering merits of the case. However, in Satendra Singh Gujar v. Bank of India166, the labour court had no power to pass an award as ‘no dispute award’ on the ground that one party did not appear before the labour court. Further, the labour court committed an error of law in rejecting the application for restoration of dispute filed by the petitioner. Earlier, the division bench of the Madhya Pradesh High Court in the case of Sital v. Central Government Industrial Tribunal-cum-Labour Court, Jabalpur167 held that the labour court has no power to dismiss the reference in defaults. The Court observed: We think that the work ‘determination’ used in the definition of ‘award’ under Section 2(b) implies adjudication upon relevant material by the labour court or the tribunal. So, it has been held that once a reference has been made under Section 10(1) of the Act, it cannot be rescinded or cancelled: State of Bihar v. Ganguli168. It cannot also be dismissed for default because that would amount to putting an end to the proceedings otherwise than by adjudicating upon the dispute.

G. Power to Set Aside an Ex-parte Award Even though there is no provision either in the Industrial Disputes Act to empower the labour tribunals to set aside an ex-parte award, the Supreme Court169 through the process of judicial legislation has invested in them such powers. However, industrial tribunal becomes functus officio if the application is not moved within 30 days of the publication of the award in the official gazette. Thereafter, the interim award stands vacated.170

H. Power to Cancel Order of Promotion and Grant ad hoc Increase in Wages The tribunal may also cancel the promotion order passed by the management where it finds that persons were superseded on account of mala fide victimization.171 In this regard, the tribunal may also frame rules of promotion in consultation with the management and union and direct the management to give promotions or upgradation in accordance with those norms/rules.172 Industrial tribunal while deciding upon the wage scales of the employees of an establishment has full liberty to propose ad hoc increase of salaries as a part of the revision of wages.173 Further, figment into the revised scale is a part of revision of pay scales.174

I. Power under Section 36A The tribunal, however, under Section 36A has no power to determine the question about propriety, correctness or validity of any provision or the powers conferred under any statute. Further, the tribunal has no power to amend or modify its award after it became final except to correct clerical mistakes and the powers under Section 11(3) could be exercised by the tribunal after the proceedings pending before it have terminated.175

J. Power to Grant interim Relief The Supreme Court in Hotel Imperial v. Chief Commissioner176 ruled that interim relief may be granted (i) if there is a prima facie case, (ii) tribunal interference is necessary to protect a party from irreparable loss or injury, and (iii) the balance and convenience. The Bombay High Court in Bharat Petroleum Corporation Ltd v. R J Tiwari177 held that even full wages may be granted by way of interim relief.

But ‘where a quasi-judicial tribunal or arbitrator records findings based on no legal evidence and the findings are either his ipse dixit or based on conjectures and surmises, the inquiry suffers from the additional infinity of nonapplication of mind and stands vitiated. The industrial tribunal or the arbitrator or a quasi-judicial authority can reject not only such findings but also the conclusion based on no legal evidence or on surmises and conjectures unrelated to evidence on the ground that they disclose total non-application of mind.’178

K. Powers of Tribunal under Section 11A The labour court, tribunal, national tribunal179 and voluntary arbitrator are also empowered to go into the question of adequacy of the punishment.180 Under Section 11A, they may direct ‘reinstatement of the workman on such terms and conditions, if any, as (they) think fit or give such relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case require.’ The purpose for which Section 11A has been enacted is to enlarge the powers of the labour court, tribunal or national tribunal, as the case may be, so that in appropriate cases, even if they find that the inquiry had been held properly and the charge is borne out by the evidence, they may still give some relief to the worker if they find the punishment to be disproportionate to the charges held proved. 1. Jurisdiction to Record Evidence under Section 11A (i) It is exercisable even in cases where opportunity of hearing was given and principles of natural justice complied with before passing the order of dismissal but the appellate authority find it necessary to record evidence in order to draw its own conclusion as to whether the person dismissed was or was not guilty of the charges framed against him. (ii) Where the employer had filed an application to produce evidences in support of the charges and the appellate authority without disposing of that application set aside the order of dismissal merely on the omission to hold domestic inquiry, the appellate authority committed a grave error. (iii) Omission to afford opportunity during domestic inquiry is curable by adducing evidence before the appellate authority.181 2. Scope of Consideration of Labour Court/Tribunal under Section 11A (i) Where domestic inquiry conducted by management is found defective. (ii) Labour court may grant opportunity to the management and workmen to adduce evidence.

(iii) On evidence, if labour court agrees with the management’s conclusion that misconduct was proved, it may declare dismissal order justified.182 3. Production of Additional Evidence The Supreme Court in Bharat Forge Company Ltd v. A B Zodge183 held that under Section 11A of the Industrial Disputes Act, 1947, employer is entitled to adduce evidence for the first time before the tribunal even if the employer had not conducted any inquiry or the inquiry conducted by him is found to be perverse. A domestic inquiry may be vitiated either for non-compliance of rules of natural justice or for perversity. Disciplinary action taken on the basis of a vitiated inquiry does not stand on a better footing than a disciplinary action with no inquiry. The right of the employer to adduce evidence in both the situations is well recognized. 4. When Can the Labour Court Permit Parties to Adduce Evidence In Rajendra Jha v. Labour Court184, the Supreme Court held that even when the application for permission to adduce further evidence is not made in the pleading, labour court is empowered to permit the management to adduce evidence before it and to prove the misconduct. However, the court has observed that the request of the employer to adduce evidence should be made at the earliest opportunity or delay be explained.185 However, such request must be made before the closure of the proceedings.186 5. No Obligation of Asking the Parties to Adduce Evidence The tribunal is neither under a duty to give opportunity to the parties to adduce evidence nor under an obligation to acquaint parties before it for their rights to adduce evidence under Section 11A.187 6. Recommendation of the (Second) National Commission on Labour The Second National Commission on Labour has recommended that Section 11A of the ID Act 1947 may be retained. However, the law may be amended to the effect that where a worker has been dismissed or removed from service after a proper and fair inquiry on charges of violence, sabotage, theft and/or assault, and if the labour court comes to the conclusion that the grave charges have been proved, then the court will not have the power to order reinstatement of the delinquent worker. 7. Powers of the High Court under Article 226 The High Court, in exercise of writ jurisdiction, can exercise similar powers and discretion as exercised by labour court under Section 11A188.

L. Powers of the Labour Court to Review the Award The above power is restricted only to: (i) typographical mistake or (ii) accidental slip or omission.189

M. Discharge or Dismissal of a Workman and the Date of its Effect When domestic inquiry is found defective, it relates back to the date on which the management passed the order and not from the date of judgement.190

N. Disposal of Preliminary or Technical Objections It has been held in a catena of cases that all issues, preliminary or otherwise, should be decided together so as to rule out the possibility of any litigation at the interlocutory stage.191

O. Discretion of Labour Court to Deny Relief to Workmen when the Claim was Made after a Long Time In Haryana State Co-operative Land Development Bank v. Neelam192, a typist was appointed on ad hoc basis in a bank. Her services were finally terminated after 17 months of service. She joined some other establishment and continued to work there. While this was so, some of the employees who were placed and terminated similarly as the said typist approached the labour court and got certain relief. After more than 7 years, the said typist also raised an industrial dispute. On reference, the labour court refused to grant any relief, inter alia, on the ground that there was no justification for such delay. Thereafter, the appellant filed an appeal before the Supreme Court. The Court upheld the award of labour court by observing that: (i) The Industrial Disputes Act does not contain any provision which mandates the industrial court to grant relief in every case to the workman. The extent to which a relief can be moulded will inevitably depend upon the facts and circumstances obtaining in each case. In the absence of any express provision contained in the statute in this behalf, it is not for the Court to lay down a law which will have a universal application, (ii) It is right that the courts and tribunals having preliminary jurisdiction have discretionary power to grant appropriate relief to the parties. The aim and object of the Industrial Disputes Act may be to impart social justice to the workman but the same by itself would not mean that irrespective of his conduct, a workman would automatically be entitled to relief. The procedural laws like estoppel,

waiver and acquiescence are equally applicable to industrial proceedings. A person in certain situation may even be held to be bound by the doctrine of acceptance sub silentio. The employee did not raise any industrial dispute questioning the termination of her services within a reasonable time. She even accepted an alternative employment and has been continuing therein. (iii) The conduct of the employee in approaching the labour court after more than 7 years is relevant factor for refusing to grant any relief to her. Such a consideration on the part of the labour court cannot be said to be an irrelevant one.

P. Other Powers of Tribunals and Execution of Award Every labour court, tribunal and national tribunal enjoys the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, when trying a suit. It can enforce the attendance of any person and examine him on oath; compel the production of documents and material objects; issue commission for examination of witness, make discovery and inspection193 grant adjournment; and receive evidence on affidavit.194 Further, every award made, order issued or settlement arrived at by or before labour court or tribunal or national tribunal shall be executed in accordance with the procedure laid down for execution of orders and decree of a civil court under order 21 of the Code of Civil Procedure, 1908. Moreover, the labour court or tribunal or national tribunal, as the case may be, is required to transmit any award, order or settlement to a civil court having jurisdiction and such civil court shall execute the award, order or settlement as if it were a decree passed by it195. The tribunal is required to abide by the provisions of the Indian Evidence Act in matters relating to the proof of a document and the claim for privilege.196 The labour court or the industrial tribunal while adjudicating industrial dispute referred to it by appropriate government, may summon a party other than employer and employee whose presence would help the concerned court in adjudication of dispute finally, effectively and completely.197 Every inquiry by a labour court, tribunal or national tribunal are judicial proceedings within the meaning of Sections 193 and 228 of the Indian Penal Code198 and Sections 345, 346 and 348 of the Code of Criminal Procedure, 1973.199 But the legal practitioners are allowed to represent the parties before the adjudication authorities with the consent of the other parties to the proceedings and with the permission of the authorities.200 The proceedings are normally held in public, but the labour court, tribunal or national tribunal as the case may be can, at any stage, direct that any witness be examined or proceedings be held in camera.

These provisions reveal that the tribunal in discharging functions is very near to those of a court, although, it is not a court in the technical sense of the word.201

Q. Other Duties of Tribunal In addition to the above, the labour court, tribunal and national tribunal act in a judicial capacity in settling industrial dispute, the functions and duties of the industrial tribunal are very much like those of a body discharging judicial functions, although it is not a court.202 The duty of the tribunal was best described by the Supreme Court in Hindustan Lever Ltd v. The Management.203 In this case, the Court held that it was the duty of the tribunal ‘not to travel beyond the pleadings and is precluded or prohibited from raising to writ if the employer does not question the status of the workmen. It further added that the tribunal cannot suo motu raise the issue and proceed to adjudicate upon the same and throw out the reference on the sole ground that the concerned workman was not a workman within the meaning of the Act. In settling the industrial dispute, ‘the functions of the tribunal are not confined to administration in accordance with law. It can confer rights and privileges on either parties which it considers reasonable and proper though they may not be within the terms of existing agreement. It is not merely to interpret to give effect to contractual rights or obligations of the parties but it can create new rights or obligations between them which it considers essential for them for keeping industrial peace.’204

R. Filling of Vacancies Section 8 authorizes the appropriate government to fill vacancies when the presiding officers of labour courts and industrial tribunals cease to be available. If for any reason, a vacancy occurs, it is open to the government to fill the same whether the vacancy is permanent or temporary.205 In case of a national industrial tribunal, only the Central Government is empowered to fill the vacancy by appointing any person in accordance with the provisions of the Act. The high court cannot examine whether the services of a tribunal have ceased to be available. It is for the appropriate government to say so.206 Section 8 does not apply to such tribunals which are constituted for a limited period and whose proceedings could not be continued by the new tribunal from the stage at which the same was left by the previous tribunal.207

S. Response of the National Commission on Labour

The [First] National Commission on Labour set up by the Government of India in 1966 found the working of the industrial relations machinery under the Industrial Disputes Act, 1947 unsatisfactory. It, therefore, emphasized the need for ‘a formal arrangement which is independent in character, expeditious in its functioning and which is equipped to build up the necessary expertise.’208 The Commission, therefore, recommended: (i) the setting up of a National Industrial Relations Commission by the Central Government to deal with disputes which involve questions of national importance or which are likely to affect establishments situated in more than one state. (ii) The setting up of an Industrial Relations Commission at the state level for settlement of disputes for which the state government is the appropriate government. (iii) The proposed national and state industrial relations commissions would be presided over by a person having prescribed judicial qualifications and experience appointed by the Union and state government respectively in consultation with the Chief Justice of India or Chief Justice of the high court concerned as the case may be, and the Union Public Service Commission or the State Public Service Commission as the case may be. The Commission shall also constitute two non-judicial members, who will be officers in the field of industry, labour or management. The main functions of the proposed machinery are three-fold: (i) adjudication of industrial disputes; (ii) conciliation; and (iii) certification of unions as representative unions. However, no step has yet been taken to implement these recommendations. This line of approach was also reiterated by the Second National Commission on Labour with some modification.

T. Court Fee The [Second] National Commission on Labour has recommended levy of a token court fee in respect of all matters coming up before labour courts and labour relations commissions.

U. Representation of Parties Section 36 of the Industrial Disputes Act deals with the representation of a party to a dispute. Under sub-section 1 of Section 36, a workman who is a party to a dispute shall be entitled to be represented in any proceeding under the Act by (a) any member of the executive or other office-bearers of a registered trade union of which he is a member; or (b) any member of the executive or other officebearers of a federation of trade unions to which the trade union referred to in clause (a) is affiliated; (c) where the worker is not a member of any trade union, by any member of the executive or other office bearers of any trade union

connected with, or by any other workmen employed in the industry in which the worker is employed and authorized in the prescribed manner. Similarly, under Section 36(2), an employer who is a party to a dispute shall be entitled to be represented in any proceeding under this Act by (a) an officer of an association of employers of which he is a member; (b) an officer of a federation of associations of employers to which the association referred to in clause (a) is affiliated; (c) where the employer is not a member of any association of employers, by an officer of any association of employers connected with, or by any other employer engaged in the industry in which the employer is engaged and authorized in such manner as may be prescribed. Section 36 (3), however, imposes a total ban on representation of a party to the dispute by a legal practitioner in any conciliation proceeding or in any proceedings before a court of inquiry. Section 36 (4) permits a party to dispute to be represented by a legal practitioner with the prior consent of the other party to the proceeding and with the leave of the labour court, tribunal or national tribunal as the case may be. Thus, a party to a dispute may be represented by a lawyer upon fulfilment of two conditions viz. (1) consent of the other party, (2) leave of the tribunal. These two conditions are mandatory in nature. Consent of the other party is a requirement which cannot be given a go by. Question of any inference in regard to the consent does not and cannot arise. The requirement is to be complied with in order to give effect to the provisions under Section 36 (4). However, the high courts are divided on the issue whether the consent should be express or implied. While the Calcutta High Court209 held that the consent must be express and not implied, the Kerala High Court210 held that the consent may even be implied. Thus, in the latter case when Vakulathnama was accepted by the Court on the first posting date and no objection was raised by the opposite party, there was implied consent of the opposite party and leave of the Court. In Laxmi Engineering Industries v. State of Rajasthan and Others211, the validity of section 36 of the Industrial Disputes Act, 1947 was challenged. It was contended that (i) Section 36 which provides that a lawyer cannot appear before the labour court/industrial tribunal except with the consent of the opposite party and the leave of the labour court/industrial tribunal was violative of Article 14 of the Constitution of India and the principles of natural justice and (ii) Section 36 ran against Section 14(1)(b) of the Bar Council Act. The Rajasthan High Court answered the questions in the negative. In Prasar Bharati Broadcasting Corporation of India v. Shri Suraj Pal Sharma212, the workman had not objected earlier to the appearance of a legal

practitioner on behalf of the management. On these facts, the Delhi High Court held that since the workman had not at any time given his consent under Section 36(4), the failure of the workman to object to the representation of the management by the additional central government standing counsel at early stages cannot preclude the workman from raising the objection at later stage. In Britannia Engineering Products & Services Ltd v. Second Labour Court & Ors.213, the company, after receiving notices of adjudication proceedings appeared before the labour court and filed letters of authority authorizing G S Sengupta, advocate along with A Dasgupta, manager (personnel and administration) of the company to represent the company. At no stage of the proceedings the workmen raised any objection disputing such representation by the company through the said advocate. Later, the company obtained no objections from their erstwhile advocate and filed fresh authorization in favour of D K Ghosh. At that stage, the workmen raised an objection and refused to give consent for representation of the company through this advocate. The labour court, accordingly, refused to accept the authorities of representation by the present advocate of the company. Aggrieved by this order, the company filed a writ petition before the Calcutta High Court. The court observed that there was implied consent of workmen for representation of the company through its advocate. Once consent is given, it is not open to the workmen to withdraw such consent nor can the court or tribunal recall the lease granted to a party. Thus, at the time of change of the lawyer, a party need not obtain fresh leave nor does it require consent to be obtained from the other party; the choice of the legal practitioner lies with the party concerned and it is not open to the other side to object to change of lawyer.

V. Form of Consent The consent need not be in a particular manner or in a particular form as there is no form prescribed either under the Act or the Rules.214 If that be so, the consent of a party which is the basis for the grant of leave to the other party for being represented by a lawyer in a proceeding under the Industrial Disputes Act can be inferred from the surrounding circumstances as also the conduct of the consenting party. Section 36(4) does not insist upon a written consent. Consent once given, cannot be withdrawn or revoked at a later stage because there is no provision in the Industrial Disputes Act enabling such withdrawal or revocation.215 To be represented in the proceeding by a lawyer would ensure to his benefit till the proceeding is finally disposed of.216 Thus, if sub-section (1), (2) and (3) of Section 36 foreclose the possibility of judicial discretion being

exercised against granting audience to persons mentioned in clauses (a), (b), (c) of sub-sections (1), (2) and (3), sub-section (4) regulates the right of parties to authorize advocates to plead their cause and, thereby without coming in conflict with the provisions of Section 30 of the Advocates Act, sought to keep the arena of labour-management relations free from lawyers. The scope of the aforesaid section has been delineated by the Supreme Court as well as the high courts. In particular, four issues have arisen: (i) Can there be representation by worker himself? (ii) Can there be representation of workman by trade unions for the purpose of Section 36? (iii) Whether an employee’s right to be represented by any office-bearer in subsection (1) is qualified or restricted on the ground that such an officer is a legal practitioner? (iv) Can Indian Chamber of Commerce be entitled to appear on behalf of employer? Issue no 1. In Ameteep Machine Tools v. Labour Court217, the Supreme Court decided the first issue. The Court ruled that Section 36 does not impose any obligation upon a workman who is a party to the dispute to be represented by someone else. He may participate in the conciliation proceedings and if a settlement is arrived at, then it is a valid settlement and binding on the parties even if the workmen who were parties to the dispute presumably participated in the proceedings and were not represented by any persons mentioned in Section 36 (1). Issue no 2. Modella Textile Workers Union v. Union of India218 decided the second issue, namely, whether the trade unions have locus standi to file writ petition to challenge the government’s order refusing to make a reference to adjudication pertaining to termination of employees. The Punjab and Haryana High Court held that not only a workman who is a member of a trade union but even in the absence of his membership of any trade union, a workman is entitled to obtain assistance from any trade union connected with the industry and observed: Thus, the trade union or any member of its executive or other office bearer is entitled to canvass the cause of the workman concerned for the purposes of pursuing conciliation proceedings, issuing a demand notice and making a demand on the government to refer a dispute to the industrial tribunal or the labour court. If in pursuance of a demand notice, a dispute is referred to the tribunal or the court, as the case may be, under the Act the trade union concerned is also empowered to represent the case of the workman on whose behalf demand

notice had been issued to the government by the union before the tribunal. In these circumstances, if a trade union has been given the power by the legislature to represent a workman and espouse his cause before the tribunal or the court, there is no reason to deprive such a union of the right to challenge the order of the government declining a reference by way of writ petition under Art. 226 of the Constitution.219 The Court added: The power of representation of the cause of another person is intended to be given its full scope at all stages. Thus, it cannot be held that the trade union, the present petitioner, was not interested in the industrial dispute which is the subject-matter of adjudication in this writ petition and was not aggrieved by the decision of the government declining to make a reference. In view of the wide scope of Section 36 of the Act, the trade union petitioner was widely interested in the dispute and there is no reason or warrant to deprive it of the locus standi to file the writ petition under Art. 226.220 From the aforesaid decision, it is evident that courts are inclined to permit the workman himself to represent his case in any proceedings under the Industrial Disputes Act or may be represented through trade unions (even if he is not a member of such a trade union) even in writ proceedings. Issue no. 3. The third issue was answered in the negative by the Supreme Court in Paradip Port Trust v. Their Workmen.221 Observed Justice Goswami: If however, a legal practitioner is appointed as an officer of a company or corporation and is in their pay (roll) and under their control and is not a practising advocate, the fact that he was earlier a legal practitioner or has a legal degree will not stand in the way of the company or the corporation being represented by him. Similarly, if a legal practitioner is an officer of an association of employers or of a federation of such association, there is nothing in Section 36(4) to prevent him from appearing before the tribunal under the provisions of Section 36 (2) of the Act. Again an office-bearer of the trade union or a member of its executive even though he is a legal practitioner will be entitled to represent the workman before the tribunal under Section

36(1) in the former capacity. The legal practitioner in the above two cases will appear in the capacity of an officer of the association in the case of an employer and in the capacity of an office-bearer of the union, in the case of workmen and not in the capacity of a legal practitioner.222 He added: It must be made clear that there is no scope for inquiry by the tribunal into the motive for appointment of such legal practitioner as office-bearers of the trade unions or as officers of the employers’ association. The Court accordingly overruled the full bench decision of the labour appellate tribunal in Hosiery Workers’ Union v. J K Hosiery Factory, Kanpur223 and Rajasthan High Court in Duduwala and Co. v. LT.224 and affirmed the ruling of Calcutta High Court in Hall & Anderson Ltd v. S K Neogi225 and Bombay High Court in K K Khadilkar v. Indian Hume Pipe Co. Ltd.226 Quite apart from the aforesaid principles, it may be observed that neither the Industrial Disputes Act, 1947 nor any of the rules made thereunder provide for the form or the manner in which the consent of the other party is to be given. Any leave granted by a court or a tribunal should ordinarily be in writing. Likewise, in ordinary cases, the consent of the other party should also be given in writing. This does not, however, mean that implied consent is negatived by Section 36 (4).227 Issue no. 4. The last issue was decided in the negative by the Madras High Court in R M Duraiswamy v. Labour Court.228 In this case, the court held that employers can be represented by an (i) executive or office-bearers of the trade union, (ii) association of employers or an executive of association of employers. (iii) officers like deputy manager (law), assistant manager (law), who are qualified law graduates. But they cannot be represented by the Indian Chamber of Commerce.

VIII. AWARD A. Judicial Interpretation of ‘Award’ Section 2 (b) of the Industrial Disputes Act, 1947, defines ‘award’ to mean an

interim or a final determination of any industrial dispute or any question relating to thereto by any labour court, tribunal or national tribunal and includes an arbitration award made under Section 10A. Thus, quantification of the back arrears and other attendant circumstances falls within the ambit of award.229 The aforesaid definition of ‘award’ has two parts. The first part covers a determination, final or interim, of any industrial dispute. The second part takes in determination of any questions relating to an industrial dispute. The basic postulate common to both parts of the definition is the existence of an industrial dispute, actual or apprehended. The ‘determination’ contemplated by the definition is of industrial dispute or questions relating thereto on merits. It is to be noted further that Section 2 itself expressly makes the definition subject to ‘anything repugnant in the subject or context’.230 It, however, raises two questions: First, whether the order in terms of compromise allowing the dispute to be withdrawn is an ‘award’? Second, what is the nature and scope of interim award? Let us turn to examine these problems. If Orders in Terms of Compromise for Withdrawal are Awards. This problem has been the subject matter of much controversy. The high courts are, however, divided in this regard. While the High Court of Bombay231 is of the view that the order is not an ‘award’, the High Court of Kerala232 took the opposite view by holding it to be an ‘award’. The approach of the Bombay High Court seems to be more pragmatic and it is in conformity with the accepted notion of industrial adjudication.

B. Interim Award 1.

2.

The Issues. Interim award involves several issues: (i) What is the nature of an interim award? (ii) What are its elements? (iii) Whether interim relief is an interim award? Let us now discuss these questions. Nature and Concept of Award. The legislature has not defined the word ‘interim’ award occurring in Section 2(b) of the Industrial Disputes Act, 1947. There are, however, series of cases which endeavour to delineate the expression. The courts and tribunals adopted the dictionary meaning of the term ‘interim’ in determining the nature of ‘interim’ award. For instance, in Thakur Yugal Kishor Sinha v. State of Bihar,233 the High Court of Patna adopted the meaning given in the Oxford Dictionary, namely, ‘a temporary or provisional arrangement, adopted in the meanwhile’. The Court accordingly held that ‘manifestly, the word ‘interim’ in such a context must mean provisional or temporary

3.

4.

arrangements made in a matter of urgency and subject to a final adjustment or complete determination of the dispute, for example, a payment on account pending final settlement of the amount as in the present case.’234 Elements of Interim Award. Coming to the elements of interim award, it may be noted that following are the essential elements: (1) The order must have been passed by the labour court, industrial tribunal, or national tribunal and voluntary arbitrator (2) the order passed by the labour court, tribunal, national tribunal or voluntary arbitrator must have determined any question referred to it. Interim Relief vis-a-vis Interim Award. The other question is whether the order granting interim relief235 is an ‘award’ within the meaning of Section 2 (b) of the Act. This question was left open by the Supreme Court in Hotel Imperial v. Hotel Workers’ Union236 and Delhi Cloth and General Mills v. Rameshwar Dayal.237 The high courts are, however, divided on this issue. While Delhi,238 Calcutta,239 Patna240 and Punjab241 High Courts held that an order granting interm relief amounted to interim award required to be published under Section 17 and enforceable under Section 17A, the Karnataka High Court took the opposite view and held that an order granting interim relief is not a determination of an industrial dispute and hence not an ‘award’.

C. Forms of the Award The award of a labour court, tribunal, national tribunal or voluntary arbitrator must be in writing and signed by the presiding officer.242 The award which is not in accordance with this provision is void and inoperative in view of the mandatory terms of this section.243

D. Certain Confidential Matters are not to be Included in Any Award The labour court, tribunal, national tribunal and voluntary arbitrator are prevented from including in their awards the contents of any information claimed by the parties to any industrial dispute to be confidential.244

E. The Language of an Award There is no provision in the Industrial Disputes Act, 1947, or rules framed

thereunder dealing with the language of an award. However, the Court laid down several norms regarding the use of language in the award. They are: (1) The language used in the award should not be inconsistent with a judicial approach.245 (2) The language used in the award should not be ‘intemperate’. (3) The language of the award should be dignified. (4) Strong language should not be used in the award ‘without realizing the due significance and without considering whether the use is justified.’246

F. Signing of an Award Section 16 of the Industrial Disputes Act, 1947 requires that the award of a labour court, tribunal or national tribunal shall be signed by the presiding officer. Similarly, Sub-section 4 of Section 10A requires that every arbitration award shall be signed by the arbitrator or all the arbitrators, as the case may be. The provisions of the sections are mandatory. The award of the labour court, tribunal, national tribunal or arbitrator shall be void and inoperative in the absence of signature of the presiding officer/arbitrator(s) in view of the mandatory terms of Section 16.247

G. Submission of an Award Section 15 enjoins the labour court, tribunal or national tribunal to hold ‘its proceedings expeditiously and as soon as practicable on conclusion thereof, submit its award to the appropriate government.’ The non-submission would render the award inoperative.248 The provisions of the Section are inadequate for several reasons: First, a perusal of various reported decisions, however, reveals that despite the requirement of the Act to submit its award, ‘as soon as it is practicable on the conclusion’ of the proceedings, the time taken by the tribunal is quite long.249 Further, instances are not lacking where the tribunals have taken over 3 years.250 Second, Section 23 prohibits strikes and lockouts during the pendency of proceedings before an arbitrator, labour court, tribunal or national tribunals and 2 months after the conclusion of such proceedings. And under subsection (3) of Section 20, proceedings before an arbitrator under Section 10A or before a labour court, tribunal or national tribunal ‘shall be deemed to have commenced on the date of the reference of the dispute for arbitration or adjudication, as the case may be and such proceedings shall be deemed to have concluded on the date on which the award becomes enforceable under Section 17A’. Since the parties cannot exercise legal strike or lockout during the pendency of proceeding before a labour court, tribunal, national tribunal or an

arbitrator (under Section 10A), the need for the prescribed time limit within which the adjudication/arbitration authorities may submit their award is significant. Third, under Section 33, the management is debarred from exercising its prerogative during the pendency of proceedings before a labour court, tribunal, national tribunal or arbitrator (under Section 10A) where a notification has been issued under Section 10 (3A). This provision also requires that time limit under Section 15 should be certain. Fourth, for industrial peace and harmony which is the avowed objective of Industrial Disputes Act, 1947, it is essential that disputes must be settled at an early date. Under the circumstances, it is suggested that Section 15 should be amended and the time limit should be prescribed for the submission of the award. In Secretary, Cheruvathur Beedi Workers' Industrial Co-operative Society v. Shyamala251, the Kerala High Court showed its concern regarding the inordinate delay in the adjudication process as it affected the interest of the parties. Under Section 12(6) of the Act, the conciliation proceedings have to be completed within a fortnight and a report has to be sent to the government. When reference order is passed, the government is obliged to prescribe the time limit for passing of the award. Under Section 10 (2A), when an order is passed by the government, simultaneously, there is a direction that the award should be passed within the specified period. In case of an individual dispute of the present nature, it is mandatory that an award is to be passed within 3 months. Extension should be for specific reasons and should be recorded. The delay as happened in the instant case, might never have been conceived by the statute.

H. Publication of the Industrial Award 1. The Legal Issue. Section 17 (1) of the Industrial Dispute Act, 1947 which deals with the publication of the award by the appropriate government provides: ……. every arbitration award and every award of labour court tribunal or national tribunal shall, within a period of thirty days from the date of its receipt by the appropriate government, be published in such manner as the appropriate government thinks fit. The aforesaid provisions raise several issues: (i) Whether the provisions of Section 17 are mandatory or directory? (ii) What will be the effect of withholding the publication of the award? (iii) Whether the publication of the award after the expiry of statutory period of 30 days would make the award

invalid or unenforceable? (iv) Does the interim award need to be published? (v) Whether the award will be taken to have been published on the date of notification of the government or on the date on which such notification appeared in the gazette? Let us examine these issues. 2. The Judicial Response. (i) Withholding the publication of industrial award. In Sirsilk Ltd v. Government of Andhra Pradesh,252 the Supreme Court was faced with the problem as to what would happen in a situation where the settlement was arrived at between the parties to a dispute on which an award had been given by the industrial tribunal but was not published. The Supreme Court solved this problem by directing the government to withhold the publication of the award in view of the settlement. The Government of Andhra Pradesh referred certain disputes between the management of Sirsilk Ltd and its workmen to the industrial tribunal for adjudication. The industrial tribunal gave its award and sent it to the government for publication. Before the government published it, the parties came to a settlement on the issues. They asked the government not to publish the award. The government asserted its inability to withhold the publication in view of the mandatory provisions of Section 17 of the Act. Thereupon, the parties filed a writ petition before the High Court of Andhra Pradesh, praying that the government be directed not to publish the award. The High Court held that the provisions of Section 17 were mandatory and that the government could not withhold its publication. The parties appealed to the Supreme Court. Justice Wanchoo, in the course of the judgement, observed: Though Section 17 (1) is mandatory and the government is bound to publish the award received by it from an industrial tribunal, the situation arising in a case like the present is of an exceptional nature and requires reconciliation between Section 18 (1) and Section 18 (3)(d) and in such a situation, the only way to reconcile the two provisions is to withhold the publication of the award, as a binding settlement has already come into force in order to avoid possible conflict between a binding settlement under Section 18 (1) and a binding award under Section 18 (3). The Supreme Court ‘accordingly’ directed the government not to publish the award. The decision is open to several objections253. First, it ignores the scheme and statutory provisions of the Industrial Disputes Act, 1947. Under Sub-section

(3) of Section 20, proceedings before a tribunal are deemed to commence on the date on which the appropriate government refers the dispute for adjudication. Such proceedings are deemed to end on the date on which the award becomes enforceable under Section 17A, i.e., usually 30 days from the date of its publication, which the appropriate government must make. There are only two statutory exceptions to Section 17A: (i) Where the appropriate government is party to the dispute and is of the opinion that it will be inexpedient on public grounds affecting national economy or social justice to give effect to the whole or any part of the award, (ii) Where the award has been given by a national industrial tribunal and the Central Government is of the opinion that it will be inexpedient on such or similar grounds to give effect to it. It follows that the proceedings before the tribunal had not come to an end because no such exceptional circumstances existed. The Supreme Court, it is submitted, failed to notice that withholding the publication of the award would make the pendency of the proceedings to continue ad infinitum. Second, Section 23, prohibits the workmen from striking and the employers from locking out during the pendency of proceedings before a labour court, tribunal or national tribunal or an arbitrator (where a notification has been issued under sub-section 3A of Section 10A) and 2 months after the conclusion of such proceedings. The policy behind these prohibitions is to provide an atmosphere for smooth settlement of disputes. Their effect can be assessed only by reference to other provisions of the Act and the rules framed thereunder. Here also, the proceedings are deemed to have been concluded only 30 days after the publication of the award. The Supreme Court’s decision with regards to withholding the publication of award takes away the right of the workmen to strike and of management to lockout, because Section 23 prohibits the management and workmen of this establishment from resorting to the aforesaid coercive measures during the pendency of proceedings before the tribunal. (ii) Effect of Non-publication of the Industrial Award within the Prescribed Period. The Supreme Court’s decision in Remington Rand of India v. The Workmen,254 throws interesting light on this question. In this case, the award was made by the industrial tribunal on 5 October 1966. It was received by the appropriate government on 14 October 1966. But it was published in the Kerala Gazette on 15 November 1966. On these facts, the appeal was preferred against the award of industrial tribunal. The appellant raised an objection, inter alia, that the award was inoperative and unenforceable as it was published after the expiry of the period fixed by Section 17 (1) of the Industrial Disputes Act, 1947. The Supreme Court, it appears, in an attempt to justify the delay in the

publication of the award overruled the objection. Speaking for the Court, Justice Mitter observed: Section 17(1) makes it obligatory on the government to publish the award. The limit of time has been fixed as showing that the publication of the award ought not to be held up. But the fixation of the period of 30 days mentioned therein does not mean that the publication beyond that time will render the award invalid…..255 The Court accordingly held that the provision as to the time limit in Section 17(1) was merely directory and not mandatory. The decision is open to several objections.256 First, the provision of Sections 13(5), 14, 15, 17, 18, 19 and 29 of the Industrial Disputes Act, 1947 emphasize that the ‘time is the essence of the Act and the requirement of its relevant provisions must punctually be obeyed and carried out if the Act is to operate harmoniously at all’.257 Under the circumstances, if one holds the provision of Section 17(1) to be directory, as the Supreme Court did, the entire scheme of the Act would be thrown out of gear. Second, the decision of holding the publication of the award to be directory under Section 17 (1) extends the period of applicability of Section 33 of the Act which is unwarranted. Third, the decision affects the bargaining power of the workers. By holding the provisions of Section 17 (1) to be directory, the Supreme Court not only extended indefinitely the period of prohibition of strikes and lockouts but also exposed the parties to the risk of prosecution under Section 26. Thus, in effect, the decision might create hardship upon workers (and employers) ‘for no fault of their own but simply because of the callous indifference or utter inefficiency and slackness’258 on the part of the government. It is, therefore, desirable that the report of the board, labour court, tribunal or national industrial tribunal must be published within the period prescribed under Section 17 (1) of the Act. (iii) Publication of Interim Award. There is no provision in the Industrial Disputes Act, 1947, dealing specifically with the publication of an interim award. As already stated, Section 17 deals with the publication of the award and since the award has been defined to include an interim determination of any industrial dispute or a question relating thereto by the tribunal, the question arises whether the interim award should be published? This question has been the subject matter of controversy before tribunals and courts. In Allen Berry & Co. Ltd v. Their Workmen259, the labour appellate

tribunal was called upon to decide the question whether interim awards are required to be published under the Industrial Disputes Act 1947. The labour appellate tribunal answered the question in the negative. It rationalized: Section 15 of the Act required the tribunal to submit its award to the appropriate government on the conclusion of the proceedings. The word ‘proceedings’ in this section, in our judgement, mean the whole proceedings that is to say, all that had been referred to the tribunal by the appropriate government for adjudication. It is, therefore, in our judgement not obligatory on a tribunal to submit an interim award to the appropriate government before the final award is made and if it chooses not to submit it before that time a fortiori the question of publication of such an award by the appropriate government does not arise.260 It accordingly held that the interim award need not be published under Section 17.

I. Pendency of Proceedings before Arbitrators and Adjudicating Authorities 1. Commencement of Proceedings. Sub-section (3) of Section 20 of the IDA provides: Proceedings before an arbitrator under Section 10A or before a labour court, tribunal or national tribunal shall be deemed to have commenced on the date of reference of the dispute for arbitration or adjudication, as the case may be… The meaning of the expression ‘on a reference of the dispute for arbitration or adjudication’ is, however, not free from doubt. A few of the decisions emphasized literal interpretation.261 Some of the tribunals chose the middle course. For instance in Goenka Mica Syndicate v. Mohd. Yasin262, the industrial tribunal ruled that according to Section 20 of the Act, the proceedings of the tribunal commenced when the notification was received by the tribunal263 and rejected the management’s contention that the proceedings before a tribunal should commence from the date when it is made known to the parties. We have not been able to locate any decision holding that the effective

date of the commencement of adjudication proceedings, for the purposes of Section 23 of the Industrial Disputes Act, 1947, is the date of the party’s knowledge of the reference. However, there are some cases264 in relation to Section 33, where also provisions of Section 20(3), have been interpreted and these decisions indicate that the effective date of ‘reference of the dispute for adjudication’ is the date on which parties receive information of such reference. 2. Termination of Proceedings. The adjudication proceeding shall be deemed to have concluded on the date on which the award becomes enforceable under Section 17A.265 This provision is relevant not only for determining the legality or otherwise of strikes and lockouts but also for determining the period of regulation of management’s prerogative under Section 33 of the Industrial Disputes Act, 1947.

J. The Period of the Operation of the Award 1. Commencement of the Period. Section 17A(4) of the Industrial Disputes Act, 1947, provides: Subject to the provisions of Sub-section (1) and Sub-section (3) regarding the enforceability of an award, the award shall come into operation with effect from such date as may be specified therein, but where no date is specified, it shall come into operation on the date when the award becomes enforceable under Sub-section (1), or Sub-section (3), as the case may be. The aforesaid provisions indicate that (i) there is a difference between ‘enforceability’ of an award and its ‘operation’; (ii) if for any reasons an award does not become ‘enforceable’, it can never come into ‘operation’; and (iii) that the date on which an award comes into ‘operation’ may, or may not be the date on which it becomes ‘enforceable’. Awards and decisions, however, indicate alarming misconception of the true import of sub-section (4) of Section 17 A of the Industrial Disputes Act, 1947. They use the statutorily explained concept of the date on which an award comes into operation in a manner which is inconsistent with the provisions of the Industrial Disputes Act, 1947. A tribunal may direct the grant of the benefits of its award from a date: (i) Anterior to the date on which the demand was first made266 (ii) On which the demand was first made267 (iii) Posterior to the date on which the demand was first made but anterior to

(iv) (v) (vi) (vii) (viii) (ix)

the date of reference268 On which the reference was made269 Posterior to the date of reference but anterior to the date of the submission of the award270 On which the award is submitted Posterior to the date of submission of the award but anterior to the date on which it becomes enforceable On which the award becomes enforceable Posterior to the date on which the award becomes enforceable

The validity of award granting benefits from any date anterior to the date on which award becomes enforceable has frequently been questioned in the courts of law. In a series of cases, the Supreme Court271 has emphasized that under Section 17A (4) the tribunal is empowered to indicate the date on which an award shall come into operation and that date can be any one of the dates mentioned above. Where, however, a tribunal, without specifying the date on which an award shall come into operation, directs grant of benefits from a specific date, the Supreme Court is of the view that an award comes into operation from the date. 2. Date of Award. The question came up for consideration of the Supreme Court in Lloyds Bank Ltd v. Lloyds Bank Union Staff Association.272 In this case, the award was published under Section 17 of the Industrial Disputes Act, 1947, by the appropriate government in a notification of the Ministry of Labour on 17 January 1950, but the notification appeared in the Gazette on 28 January 1950 The question, inter alia, for the consideration of the Supreme Court was on which date the award will be taken to have been published. Answering this question, the Supreme Court held that the award must be taken to have been published on 17 January 1950 and not on 28 January 1950. 3. The Termination of the Operation of Award. Section 19(3) of the IDA provides that all awards shall remain in operation for a period of one year from the date on which the award becomes enforceable under Section 17A. The award becomes enforceable under Section 17A on the expiry of 30 days from the date of its publication under Section 17. Under the latter provision, the appropriate government is under an obligation to publish the award within a period of 30 days of its receipt. The provisions of Section 19(3) are subject to two exceptions. First, the appropriate government is empowered to reduce the period of operation of

award. Second, the appropriate government is empowered to extend the period of operation by a period not exceeding one year at a time. The total period of operation of an award, however, is not to exceed 3 years. Of course, the appropriate government may also take action under Section 17A (1) (a), 17A (3) and (4) of the IDA. The scope of the Section 19(3) on the prohibition contained in Section 23(c) was explained by the Supreme Court in South Indian Bank Ltd v. A R Chako.273 So long as the award remains in operation under Section 19(3), Section 23(c) stands in the way of any strike by the workmen and lockout by the employer in respect of any matter covered by the award.274 When the award is in operation under Section 19(3), both Sections 23 and 29 would be applicable. Even after expiry of the period of operation of award under Section 19 (3), the award continues to be binding upon the parties until a period of two months has elapsed from the date on which notice is given by any party or parties intimating its intention to terminate the award under Section 19(6). During this period, when the award is not in operation but is only binding on the parties, Section 29 alone will be applicable. After the period of its operation and also after the period for which the award is binding have elapsed, Sections 23 and 29 can have no operation. However, according to the Supreme Court, even after the expiry of the periods mentioned above, the award would continue to govern relations between the parties till it is displaced by another contract.275 It has already been stated that the Court did not state the circumstances under which an award is displaced by another contract and this particular concept has created other complications.

K. Enforcement of Settlement and Award 1. General. In order to ensure compliance of settlement and award, the Industrial Disputes (Amendment) Act, 2010 specifically provides in section 11 (9) that every award made or issued or settlement arrived at by or before a labour court or tribunal or national tribunal shall be executed in accordance with the procedure laid down for execution of order and decree of a civil court under Order 21 of the Code of Civil Procedure, 1908. Further, Section 11(10) imposes an obligation upon the labour court, tribunal and national tribunal as the case may be to transmit any award, order or settlement to a civil court having jurisdiction and such civil court shall execute the award or settlement as if it were a decree passed by it. The settlement arrived at through the intervention of a conciliation officer or board of conciliation and an award are enforceable by

their own force and by the coercive machineries under the Act. It may also be enforceable by voluntary and persuasive processes. Let us now discuss the coercive processes in some details. 2. Penal Provisions. The enforcement of the settlement and award is sought to be ensured by imposing penal liability on those who commit a breach thereof.276 Imprisonment extending up to 6 months or fine or both may be awarded for the breach of a settlement or an award. Besides, the Industrial Disputes Act, 1947 empowers the court trying the offences (if it fines the offender) to order payment of the whole or any part of the fine realized to the injured party as compensation. But, the Act failed to distinguish between the first and subsequent convictions.277 Recovery of the money due from the employer. Section 33C(1) provides for another mode of enforcement by providing the mode or recovery of the money due from an employer where any workman is entitled to receive from the employer any money or any benefit which is capable of being computed in terms of money and if the question arises as to the amount of money due or as to the amount at which such benefit should be computed, then the question may, subject to any rules that may be made under this Act, be decided by such labour court as may be specified in this behalf by the appropriate government. Where workmen employed under the same employer are entitled to receive from him any money or any benefit capable of being computed in terms of money, then subject to such rules as may be made in this behalf, a single application for the recovery of the amount due may be made on behalf of or in respect of any number of such workmen. In this section ‘Labour Court’ includes any court constituted under any law relating to investigation and settlement of industrial disputes in force in any state. a. Conditions-Precedent for Making an Application. The simple statement of Section 32C (2) namely: Where any workman is entitled to receive from the employer any money or any benefit which is capable of being computed in terms of money….. has raised several issues. The key question is: what is the significance of the expression ‘entitled’? First, does it imply that the right of the workman to receive benefit from the employer has already accrued, i.e., should there be any predetermined liability of the employer? Also, should the right to receive benefit have necessarily accrued under settlement or an award, or under the provisions

of Chapter VA of the Act? Or can a workman put in an application for computation of benefits to which he is otherwise entitled to, e. g., under an award or under an agreement, or under the statutes other than the Industrial Disputes Act, 1947? Second, does the expression ‘entitled’ imply a preascertained identity of the employer and the workmen? Third, what is the nature of the benefit to which the workman must be entitled in order to move an application under Section 33C (2)? Can a workman request for computation of only non-monetary benefits or only of monetary benefits or both? Let us turn to these questions. b. Pre-determined liability of employer. It has been settled in a catena of cases of tribunals and courts278 that Section 33C (2) covers cases of workmen who claim the benefit to which the concerned workman is entitled. It has to be computed in terms of money even though the benefit on which their claim is based has been disputed by their employers. c. Pre-determined identity of parties. The labour courts under Section 33C (2) of the Industrial Disputes Act, 1947 have jurisdiction to determine the nature of work done by the concerned workmen279 and to decide the claims under Section 33 C. The benefits provided under Section 33C (2) includes both monetary and ‘other’ benefits. It has however, no jurisdiction to determine the status of the employees. d. Amount of money due. What is meant by the expression ‘amount of money due’? The Supreme Court in N A Choudhary v. Central Inland Water Transport Corporation Ltd280, observed that the expression raises any one or more of the following kinds of disputes281. 1. Whether there is any settlement or award as alleged 2. Whether any workman is entitled to receive from the employer any money at all under any settlement or an award, etc.? 3. If so, what will be the amount? 4. Whether the amount claimed is due or not? The Supreme Court held that if the right to get the money on the basis of settlement or an award was not established, no amount of money could be due. If it was established, it had to be found out, albiet, it may be by mere calculation, as to what is the amount due. e. Time limit. Every application under proviso to Section 33C shall be made within one year from the date on which the money becomes due to the workman from the employers. The appropriate government is, however,

authorized to condone delay, even after the expiry of period of one year, if sufficient cause is shown by the applicant. f.

Who can make an application. Under Section 33C (1) the application for the recovery of money due may be made by: (a) the workmen entitled to money from the employer; or, (b) any other person authorized by him in writing in this behalf; (c) the assignees, or heirs of the workman in case of his death. If the appropriate government is satisfied that any money is so due, it shall issue a certificate for that amount to the collector who shall proceed to recover the same in the same manner as an arrear of land revenue. However, under Section 33C (2) it is not specified as to who can make an application. It is evident from this provision that if a workman is entitled to receive from the employer any money or any benefit which is capable of being computed, then the labour court will entertain such an application and shall compute the amount to which the workman is entitled. Before the 1964-Amendment, even in Section 33C (1), there was no reference to the heirs or assignees. Heirs and assignees were included after the amendment, but so far as Section 33 C (2) is concerned, there is no mention as to who can make the application. The 1964-Amendment raises a question whether the widow of a workman can maintain an application under Section 33C (2) of the Act before the labour court. This question came up for consideration in Sitabai Naruna Pujari v. M/s. Auto Engineer.282 In that case, the widow of a deceased employee had filed an application before the labour court for computing the money and the money value of the benefits which she was entitled to. Her claim was rejected by the labour court on the ground that she was the widow of the workman and not the workman himself and, therefore, her application was not maintainable. In an application for writ before the Bombay High Court, the contention of the petitioner to maintain an application under Section 33(C) (2) of the Act was upheld. It was observed that all civil rights of every kind vested in a deceased person in all cases in that connection except those which are not capable to surviving after his death survived to his heirs. The right to claim benefits accrued of his heirs and, therefore, application by her or assignee of a deceased workman was entitled to maintain an application under Sub-section (2) of Section 33 of the Act. But Delhi High Court in Yad Ram v. B N Singh283 took the opposite view. The Patna High Court in J F B & P Works (P) Ltd v. B. Sharma284 agreed with the view expressed by the Bombay High Court.

g.

h.

Number of applications Section 33C (5) permits any number of workmen who are employed by the same employer to make a single application for the recovery of the amount due on behalf of or in respect of such workmen. Nature and Scope of Section 33 C (2). In Punjab Beverages v. Suresh Chand,285 Justice Bhagwati, speaking for the Court explained the nature and scope of Section 33C (2) in the following terms: It is now well-settled, as a result of several decisions of this Court that a proceeding under Section 33C (2) is a proceeding in the nature of executive proceeding in which the labour court calculates the amount of money due to a workman from his employer, or, if the workman is entitled to any benefit which is capable of being computed in terms of money, proceeds to compute the benefit in terms of money. But the right to the money which is sought to be calculated or to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship between the industrial workman and his employer vide Chief Mining Engineer, East India Coal Co. Ltd v. Rameshwar.286 It is not competent to the labour court exercising jurisdiction under Section 33 C (2) to arrogate to itself the function of an industrial tribunal and entertain claim which is not based on an existing right but which may appropriately be made the subject-matter of an industrial dispute in a reference under Section 10 of the Act, vide State Bank of Bikaner v. R L Khandelwal.287 That is why Justice Gajendragadkar pointed out in the Central Bank of India Ltd v. P S Raja Gopalam,288 that if an employee is dismissed or demoted and it is his case that the dismissal or demotion is wrong, it would not be open to him to make a claim for the recovery of his salary or wages under Section 33C(2).

In Namor Ali v. Central Inland Water Transport Corporation Ltd289, the Supreme Court observed that where the only dispute in the proceeding under Section 33C (2) between the management and a section of its workmen is whether those workmen are entitled to take advantage of a settlement and the quantum or rate of extra wages to which the application under Section 33C(2) has been made could not be rejected on ground that there is no dispute about the

money due. The provisions of Section 33C(2) do not require that for conferring jurisdiction on labour court not only that the workmen should be entitled to any money due but that there should be dispute about the amount of that money. The Court added: The expression if any question arises as to the ‘amount of money due’ embraces within its ambit any one or more of the following kinds of disputes: 1. Whether there is any settlement or award as alleged? 2. Whether any workman is entitled to receive from the employer any money at all under any settlement or an award, etc.? 3. If so, what will be the rate or quantum of such amount? 4. Whether the amount claimed is due or not? If settlement or the award is not established, no amount of money will be due. If it is established, then it has to be found out, albeit it may be by mere calculation, as to what is the amount due. For finding it out, it is not necessary that there should be a dispute as to the amount of money due also. The fourth kind of dispute….. obviously and literally will be covered by the phrase ‘amount of money due’. A dispute as to all such questions or any of them would attract the provisions of Section 33C(2) of the Act and make the remedy available to the workman concerned. The Court held that: it cannot be said that if there is a dispute as to any amount due, it is to be decided by the appropriate government under Sub-section (1) of Section 33C and not by the labour court under Sub-section (2) of Section 33C. However, in Municipal Corporation of Delhi v. Ganesh Razak and another,290 the Supreme Court after considering earlier decisions on the question, has laid down as under: The ratio of these decisions clearly indicates that where the very basis of the claim or the entitlement of the workmen to a certain benefit is disputed, there being no earlier adjudication or recognition thereof by the employer, the dispute relating to entitlement is not incidental to the benefit claimed and is, therefore, clearly outside the scope of a proceeding under Section 33C(2) of the Act. The labour court has no jurisdiction

to first decide the workmen’s entitlement and then proceed to compute the benefit so adjudicated on that basis in exercise of its power under Section 33C(2) of the Act. It is only when the entitlement has been earlier adjudicated or recognized by the employer and thereafter for the purpose of implementation or enforcement thereof, some ambiguity requires interpretation; that interpretation is treated as incidental to the labour court’s power under Section 33C(2) like that of the executing court’s power under Section 33C(2) to interpret the decree for the purpose of its execution. i. Recovery of money due from employer under Section 33(C) (2) vis-a-vis jurisdiction of the labour court. The Supreme Court in Bombay Gas Co. v. Gopal Bhiwa291 held that the claim under the Payment of Wages Act, 1936 may also be made under Section 33C(2). In Athani Municipality v. Labour Court292, the Supreme Court held that the jurisdiction of the labour court to entertain an application under Section 33C(2) was not barred by Section 20 (1) of the Minimum Wages Act, 1948 because labour court was not a court within the meaning of the Code of Civil Procedure or Limitation Act. However, in State of Punjab v. Labour Court293, the Supreme Court was invited to consider whether employees were entitled to apply under Section 33 C(2) of the Industrial Disputes Act, 1947 for payment of gratuity? The Court answered the question in the negative and observed: It is apparent that the Payment of Gratuity Act enacts a complete code containing detailed provisions covering all the essential features of a scheme for payment of gratuity. It creates the right to payment of gratuity. It indicates when the right will accrue, and lays down the principles for qualification of gratuity. It provides further for recovery of the amount, and contains a special provision that compound interest at 9 per cent per annum will be payable against delayed payment. For the enforcement of its provisions, the Act provides for the appointment of a controlling authority, who is entrusted with the task of administrating the Act. The fulfilment of the rights and obligations of the parties are made his responsibility, and he has been invested with an amplitude of power for the full discharge of that responsibility. An error committed by him can be corrected in appeal by the appropriate government or an

appellate authority particularly constituted under the Act. In view of the aforesaid, the Court held that it was the intention of the Parliament that proceedings for payment of gratuity due under the Payment of Gratuity Act must be taken under that Act and not under any other Act. The Court accordingly held that labour court had no jurisdiction to entertain and dispose of applications under Section 33C (2) in respect to the payment of gratuity. In U P State Road Transport Corporation v. Birendra Bhandari294: it has been stated as under: 1. The benefit which can be enforced, under Section 33C(2) is a pre-existing benefit or one flowing from a pre-existing right. 2.

In State Bank of India v. Ram Chandra Debey295, this Court held as under: When a reference is made to an industrial tribunal to adjudicate the question not only as to whether the termination of a workman is justified or not but to grant appropriate relief, it would consist of examination of the question whether the reinstatement should be with full or partial back-wages or none. Such a question is one of fact depending upon the evidence to be produced before the tribunal. If after the termination of the employment, the workman is gainfully employed elsewhere, it is one of the factors to be considered in determining whether or not reinstatement should be with full back-wages or with continuity of employment. Such questions can be appropriately examined only in a reference. When a reference is made under section 10 of the Act, all incidental questions arising thereto an be determined by the tribunal and in this particular case, a specific question has been referred to the tribunal as to the nature of relief to be granted to the workman.

The principles enunciated in the decisions referred by either side have been summed up as follows : Whenever a workman is entitled to receive from his employer any money or any benefit which is capable of being computed in terms of money and which he is entitled to receive from his employer and is denied of such benefit, he can approach labour court under section 33C(2) of the Act, The benefit sought to be

enforced under section 33C(2) of the Act is necessarily a preexisting benefit or one flowing from a pre-existing right. The difference between a pre-existing right or benefit on one hand and the right or benefit, which is considered just and fair on the other hand is vital. The former falls within the jurisdiction of labour court exercising powers under section 33C(2) of the Act while the latter does not. j.

Effect of the death of workmen during the pendency of proceedings under Section 33C(2). Courts have held that there is no statutory bar for the legal representatives to continue action in an industrial dispute for the purposes of adjudication and also under Section 33C(2). Thus, legal representatives of a deceased worker can be allowed to continue the proceedings under Section 33C (2) of the Act.296 k. Who will decide the claim In Vijaya Bank v. Shyamat Kumar Lodh.297 The Supreme Court observed that from a plain reading of Section 33C (2) it is evident that money due to a workman has to be decided by such labour court ‘as may be specified in this behalf by the appropriate government.’ Section 7 of the Industrial Disputes Act, 1947 inter alia confers power to the appropriate government for constitution of one or more labour courts for the adjudication of industrial disputes. The Court then referred to the explanation of Section 33 C(2), its significance and objects and observed that the explanation appended to Section 33C of the Act provides to include any court constituted under any law relating to investigation and settlement of industrial disputes in force in any state as labour court. The underlying object behind inserting the explanation seems to be varying qualifications prescribed for appointment of presiding officers of labour court by different state enactments. The Parliament took note of the fact while inserting explanation that there are different kinds of labour courts constituted under Industrial Disputes Act and state acts and a question may arise whether a labour court constituted under various acts, Central or state could entertain a claim made under Section 33C (2) of the Act. The court added that in view of the explanation, aforesaid labour court shall include any court constituted under any law relating to investigation and settlement of industrial disputes in force in any state. Money due to an employee under Section 33C (2) is to be decided by ‘labour court as may be specified in this behalf by the appropriate government’. In view of this, the court observed that the expression ‘Labour Court’ in Section 33C(2) has to be given an extended meaning so as to include a court constituted

under any law relating to investigation and settlement of industrial disputes in force in any state. It widens the choice of appropriate government and it can specify not only the labour courts constituted under Section 7 of the Industrial Disputes Act, 1947 but such other courts constituted under any other law relating to investigation and settlement of industrial disputes in force in any state. The Court added: But this does not end the controversy. The power to adjudicate money claim is to the labour court ‘as may be specified in this behalf by the appropriate government’. Every word used by the legislature carries meaning and therefore effort has to be made to give meaning to each and every word used by it. A construction brushing aside words in a statute is not a sound principle of construction. The court avoids a construction, if reasonably permissible on the language, which renders an expression or part of the statute devoid of any meaning or application. Legislature never wastes its words or says anything in vain and a construction rejecting the words of a statute is not resorted to, excepting for compelling reasons. There does not exist any reason, much less compelling reason to adopt a construction, which renders the words ‘as may be specified in this behalf’ used in Section 33C(2) of the Act as redundant. These words have to be given full meaning. These words in no uncertain terms indicate that there has to be specification by the appropriate government that a particular court shall have jurisdiction to decide money claim under Section 33C(2) of the Act and it is that court alone which shall have the jurisdiction. Appropriate government can specify the court or courts by general or special order in its discretion. In the present case, there is nothing on record to show that the labour court at Dibrugarh has been specified by the appropriate government, i.e., Central Government for adjudication of the disputes under Section 33C(2) of the Industrial Disputes Act. This question in our opinion has squarely been answered by this Court in the case of Treogi Nath (Supra). True it is that rendering this decision, this Court did not consider the explanation appended to Section 33C of the Act, as the lis pertained to period earlier to amendment but in view of what we have said above, excepting the widening of choice pertaining to courts, explanation does not

dispense with the requirement of specification of court by appropriate government 6. Civil Remedy under the Civil Procedure Code not Barred. The amount due under a settlement or award can also be enforced by way of civil remedy. However, the high courts were divided on the issue whether recourse to the remedy under Section 33C (2) would bar the remedy available under the Civil Procedure Code. The Madras High Court took the view that the jurisdiction of civil court was barred298 whereas Calcutta High Court was of the view that provision of Section 33C could not be pleaded as a bar to the jurisdiction of Civil Court.299 The alternative remedies are independent of each other.300 But, if a remedy is claimed under either of the two and fails on merit, an alternative claim is barred before another authority or court.301 7. Government’s Power of Reference is not Barred by Section 33C. A remedy provided under Section 33C (2) does not take away the right of the government to make a reference under Section 10 if the circumstances justify such a reference to an authority mentioned in the Act. 8. Duty of the Labour Court to Forward the Decision to the Government. Section 33C (4) requires that after the labour court decides the question as to the amount of money due or the rate at which the benefit should be computed to which the workman in entitled, it shall forward its decision to the appropriate government. On receipt of the decision of the labour court, the government shall proceed to recover the amount found due by the labour court. On having the amount determined, the concerned workman has to make an application to the appropriate government for the recovery of the amount due to him.

L. Finality and Enforceability of Award Section 17A provides : (1) An award (including an arbitration award) shall become enforceable on the expiry of thirty days from the date of its publication under Section 17: Provided that: (a) if the appropriate government is of opinion, in any case where the award has been given by a labour court or tribunal in relation to an industrial dispute to which it is a party; or (b) if the Central Government is of opinion, in any case where the award has been given by a national tribunal,

that it will be inexpedient on public grounds affecting national economy or social justice to give effect to the whole or any part of the award, the appropriate government or as the case may be, the Central Government may, by notification in the official gazette, declare that the award shall not become enforceable on the expiry of the said period of thirty days. (2) Where any declaration has been made in relation to an award under the proviso to Sub-section (1), the appropriate government or the Central Government may, within ninety days from the date of publication of the award under Section 17, make an order rejecting or modifying the award and shall on the first available opportunity, lay the award together with a copy of the order before the legislature of the state, if the order has been made by a state government, or before Parliament, if the order has been made by the Central Government. (3) Where any award as rejected or modified by an order made under Subsection (2) is laid before the legislature of a state or before Parliament, such award shall become enforceable on the expiry of fifteen days from the date on which it is so laid and where no order under Sub-section (2) is made in pursuance of a declaration under the proviso to Sub-section (1), the award shall become enforceable on the expiry of the period of ninety days referred to in sub-section (2). (4) Subject to the provisions of sub-section (1) and sub-section (3) regarding the enforceability of an award, the award shall come into operation with effect from such date as may be specified therein, but where no date is so specified, it shall come into operation on the date when the award becomes enforceable under sub-section (1) or sub-section (3), as the case may be. The Scope of Jurisdiction of the Supreme Court under Article 136 of the Constitution vis-a-vis Section 17(2). Article 136(1) of the Constitution provides: Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgement, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India. For over 45 years, the Supreme Court has been increasingly concerned about the question of exercise of the power but it has not succeeded in determining exactly the scope of interference under Article 136 of the Constitution. What is, however, beyond doubt is that no statutory provision or technical hurdles of any kind like finality of award under Section 17(2) of the

Industrial Disputes Act can stand in the way of exercise of the powers under Article 136 of the Constitution. The power of the Supreme Court under Article 136 is meant to safeguard and guarantee that injustice should not be ‘perpetuated or perpetrated by decisions of courts and tribunals because certain laws have made the decision of the courts and tribunals final and conclusive’. Application of Res-judicata in Industrial Disputes. It has now been settled in a catena of cases, that the application of technical rules of res-judicata is not applicable to industrial adjudication.302 The principle underlying this rule is that industrial adjudications are intended to have long-term operation and at the same time are liable to be modified by change in the circumstances on which they are based.303 It has, therefore, been held that the subsequent reference and award made in circumstances different from those prevalent in the earlier reference and award would not permit the application of the principle of resjudicata.304 Similarly, the claim for modification of standing orders relating to age of superannuation was not based by acquiescence and laches.305

M. Constitutionality of Section 17(2) and 17A In Telugunadu Work Charged Employees v. Government of India306, the High Court of Andhra Pradesh was invited to consider whether the impugned provision contained in proviso to Section 17A(1) of the Act is offensive of constitutional scheme or any of the constitutional provisions. It was contended on behalf on the petitioner that (i) Section 17A of the Act is ultra vires the Constitution of India as the government, which is the executive authority, cannot annul the order of industrial tribunal or labour court and (ii) when an industrial dispute is undertaken for adjudication, there cannot be any distinction between the employers, be they government or private, and that all workmen have to be treated alike and that the judgement rendered by the independent judicial body has to be given credence and enforceability and it is mockery of the Constitution. If the executive is permitted to sit over the judgement of a judicial body, which is a separate wing of the Constitution and which enjoins the power of judicial review, it will frustrate the scheme of distribution of power. Accepting the contention, the Court observed that in State of Bihar v. D N Ganguly307 it was held by the Supreme Court that once a reference is made under Section 10(1) of the Act, the government becomes functus officio in so far as the reference aspect is concerned and the industrial tribunal or labour court, as the case may be, assumes jurisdiction to adjudicate the matter. In view of this, it is incomprehensible as to how the government can sit in appeal over the award made by the industrial tribunal or labour court, when it is incompetent to

withdraw or cancel the reference even at the initial stages. Further, the reference is made not only inter-party, but it is inter se workman and also government and there is absolutely no distinction or difference made with regard to the reference part of it. No special circumstances are made available to the government to deny the reference merely because the government is the party. The considerations for making reference are the same for the party in opposition, be it private or government. Rule of law also requires that in exercise of its governmental or quasi governmental functions, those who are equal will be treated equally. Equal treatment postulates rational classification. In fact, it was held in Hindustan Antibiotics v. Workmen308 that there is no distinction between a government employee or another kind of employee be it private sector or public sector under the Act and that no distinction can be made between industries in public and private sectors vis-a-vis the service conditions of the labour and that a combined reading of clauses (g), (j) and (s) of Section 2 of the Act indicates that the Act regulates the relationship of employer and employee irrespective of the fact that the employer is the state government or not and that disputes between the employers and employees irrespective of the character of the employer, are made the subject-matter of industrial adjudication. The Supreme Court even went to the extent of saying that the constitutional directive in Articles 39(d) and 43 will certainly be disobeyed if the State attempts to make a distinction between the same class of labourers on the ground that some of them are employed by a company financed by the government and others by companies floated by private enterprise. But, the impugned provision, in the instant case, makes a distinction with regard to enforcement of the awards and while the awards rendered inter se the workmen and the private sector undertakings are made binding and compulsorily enforceable, reserves the power to the government to annul the award on the ground of either national economy or public interest, if the government is a party to the dispute and suffered the award. This is clearly violative of equality clause guaranteed under Article 14 of the Constitution of India and the impugned provision is unconstitutional on this ground. The second and the foremost point for consideration in as to whether the impugned provision enabling the government to annual the award rendered by the industrial tribunal or labour court violates the constitutional scheme or mandate in the context of violation of rule of law and basic structure of the Constitution. The Court then referred to the decisions of the Supreme Court is Pruthvi Cotton Mills v. Brough Muni309, G C Kanungo v. State of Orissa310 and S R

Bhagat v. State of Mysore311 and observed: The judicial precedents make it amply clear and unambiguous and they are so uniform in their pronouncements, that too authoritatively, that law should conform to the democratic pattern envisaged by the Constitution and the power which the Parliament exercises is not power to override the constitutional scheme. Our constitutional scheme provides for judicial review by constitutional authorities like the Supreme Court and the high courts and also courts and tribunals created under the statutes. The learned Advocate General seeks a distinction that while the judgements rendered by the constitutional authorities like the Supreme Court and the high courts are binding and are unimpeachable by the legislature or executive, the judgements of the courts and tribunals which are the creatures of the statutes stand on a different footing and can be annulled by the provisions contained in the same statutes creating the said courts or tribunals while the ambit and extent of power of the constitutional functionaries like Supreme Court and high courts are wide enough and all-prevading, the judgements rendered by the courts and the tribunals, even created under the statutes to the extent of their rights and limitations, cannot be made nugatory and redundant by any legislative or executive action and are enforceable with the same vigour and rigour as that of the decisions rendered by the Supreme Court and the high courts. Thus, while mode of exercise of power in the case of constitutional judicial review and statutory judicial review may differ, there is no difference with regard to enforceability as, the power of the said judicial review, be it constitutional or statutory, is a basic structure of the Constitution. The Court added: The Constitution has assigned the courts the function of determining as to whether the laws made by the legislature are in conformity with the provisions of the Constitution. In adjudicating the constitutional validity of the statutes, the courts discharge an obligation which has been imposed on them by the Constitution. The courts would be shirking their responsibility if they hesitate to declare the provisions of a statute to be unconstitutional, even though those provisions are found to be violative of constitutional scheme or the provisions. The Court accordingly held that the impugned provision encroaches upon

the judicial power of the State, as it violates the basic concept of the rule of law and democratic pattern envisaged by the Indian Constitution. The Court accordingly struck down the impugned provision as being ultra vires the Constitution and consequently the provision contained under Sec. 17(2) of the Act to the extent of the words subject to the provisions of Section 17A and whole of Section 17A with sub-sections (1) to (4) thereof are non-est under law.

N. Power to Set Aside the Ex-parte Award Beyond 30 Days The Supreme Court in Grindlays Bank v. Central Government Industrial Tribunal312 while dealing with the contention that the tribunal becomes functus officio on the expiry of 30 days from the date of publication on the award and, therefore, has no jurisdiction to set aside the ex-parte award, held that the proceedings with regard to a reference under Section 10 of the Act are not deemed to be concluded until the expiry of 30 days from the publication of the award and till then, the tribunal retains jurisdiction over the dispute referred to it for adjudication and upto that date it has been powered to entertain an application in connection with such a dispute and that stage is not reached till the award becomes enforceable under Section 17A. On the basis of the aforesaid decision, the High Court313 held that after expiry of 30 days from the date of publication of the award, the industrial tribunal/labour court becomes functus officio and has thus, no jurisdiction to entertain an application filed beyond expiry of 30 days.

O. Payment of Full Wages Pending Proceedings in Higher Courts Experience shows that when labour court, tribunal or national tribunal directs reinstatement of aggrieved workman, employers very often challenge such an order in the high court and the Supreme Court. This causes great hardship to the workman concerned. In order to discourage the dilatory tactics adopted by the employer on the grounds of preliminary objection and technical pleas and long pendency of dispute, the Parliament inserted Section 17B by the Industrial Disputes (Amendment) Act, 1982. The objects and reasons for enacting the Section is as follows: When labour courts passes awards of reinstatement, these are often contested by employer in Supreme Court and high courts.

It was found that the delay in the implementation of the award causes hardship to the workman concerned. It was, therefore, proposed to provide the payment of wages last drawn by the workman concerned, under certain conditions, from the date of the award till the case is finally decided in the Supreme Court or High Court. Section 17B came into force w.e.f. 21 August 1984. Section 17B, which prescribes the payment of full wages to workman pending proceeding in higher courts provides: Where in any case, a labour court, tribunal or national tribunal by its award directs reinstatement of any workman and the employer prefers any proceedings against such award in a high court or the Supreme Court, the employer shall be liable to pay such workman, during the period of pendency of such proceedings in the high court or the Supreme Court, full wages last drawn by him, inclusive of any maintenance allowance admissible to him under any rule if the workman had not been employed in any establishment during such period and an affidavit by such workman had been filed to that effect in such court: Provided that where it is proved to the satisfaction of the high court or the Supreme Court that such workman had been employed and had been receiving adequate remuneration during any such period or part thereof, the Court shall order that no wages shall be payable under this section for such period or part, as the case may be. The aforesaid stipulates that when an award of reinstatement of a workman is challenged by the employer before the high court or the Supreme Court and the operation of the same is stayed, the employer shall be liable to pay the workman, during the period of pendency of such proceedings, full wages last drawn by him. It also indicates that the same would be subject to the workman filing an affidavit to satisfy the court that he had not been gainfully employed during the said period. The said question has been set at rest in favour of the workmen314. Thus, there are three essential elements to Section 17B namely: (i) the labour court must have directed reinstatement of the workman, (ii) the employer should have preferred proceedings against such award in the high court or in the Supreme Court, (iii) the workman should not have been employed in any establishment during such period.315

In Bharat Singh v. Management, New Delhi Tuberculosis Centre316, the Supreme Court was invited to determine the question whether a workman would be denied the benefit of Section 17B, even if all the above three conditions are satisfied. The Supreme Court answered the question in negative. According to the Court ‘there are no words in the section to compel the Court to hold that it cannot operate retrospectively. Before Section 17B was introduced, there was no bar for courts for awarding wages. Of course, the workmen had no right to claim it. This section, recognizes such a right. To construe it in a manner detrimental to workmen would be to defeat its object.’ In Workmen Employed under IT Shramik Sena v. M/S Raptakos Brett & Co. Ltd317, the Supreme Court held that when an employer moves the high court against award of reinstatement of a workman and the former is not willing to take him on duty, the last drawn wages not less than the standard minimum wages will be payable during pendency of the proceedings. (a) Application of Section 17B in case of award of regularization In M/s Bharat Cooking Coal Ltd v. Their Workmen318 a division bench of Supreme Court, while considering the above question with regard to application of section 17B of the Act in a case of award of regularization, held: Section 17B of the Act has application when the award is one for reinstatement of a workman and the employer prefers any proceeding against such an award in the high court or the Supreme Court. The wording of Section 17B can have application only when the award is one for reinstatement and not in any other case. When the words of a statute are plain and unambiguous, the court must understand the purport of the statutory provision based on the language used by the statute. This is the fundamental principle of interpretation and the other aids can be resorted to only when the words of section 17B are not plain or are ambiguous. From reading of the Section, there cannot be any doubt that it applies to a case of reinstatement. (b) Meaning and scope of the expression ‘full wages last drawn’ Whether the expression ‘full wages last drawn’ in Section 17B means wages drawn by a workman at the time of termination of his employment or wages which he would have drawn on the date of award? Prior to the Supreme Courts decision, the high courts were divided and held that ‘full wages last drawn’ can mean: (i) Wages only at the rate last drawn and not at the same rate at

which the wages are being paid to the workmen who are actually working.319 (ii) Wages drawn on the date of termination of services plus the yearly increment and the dearness allowance to be worked out till the date of award.320 (iii) Full wages which the workman was entitled to draw in pursuance of the award and the implementation of which is suspended during the pendency of the proceeding.321 The Supreme Court in Dena Bank v. Kirat Kumar T Patel322 disapproved the extended meaning given by some high courts on the ground that in substance, these constructions read the words ‘full wages last drawn’ as ‘full wages which would have been drawn’. It held that such an extended meaning to the words ‘full wages last drawn’ does not find support in the language of Section 17B. Nor can this extended meaning be based on the object underlying the enactment of Section 17B.’ The Court observed: Section 17B has been enacted by Parliament with a view to give relief to a workman who has been ordered to be reinstated under the award of a labour court or industrial tribunal during the pendency of proceedings in which the said award is under challenge before the high court or the Supreme Court. The object underlying the provision is to relieve to a certain extent the hardship that is caused to the workman due to delay in the implementation of the award. The payment which is required to be made by the employer to the workman is in the nature of subsistence allowance which would not be refundable or recoverable from the workman even if the award is set aside by the high court or this Court. Since the payment is of such a character, Parliament thought it proper to limit it to the extent of the wages which were drawn by the workman when he was in service and when his services were terminated and therefore used the words ‘full wages last drawn’. To read these words to mean wages which would have been drawn by the workman if he had continued in service if the order terminating his services had not been passed since it has been set aside by the award of the labour court or industrial tribunal would result in so enlarging the benefit as to comprehend the relief that has been granted under the award that is under challenge. Since the amount is not refundable or recoverable in the event of the

award being set aside, it would result in the employer being required to give effect to the award during the pendency of the proceedings challenging the award before the high court or the Supreme Court without his being able to recover the said amount in the event of the award being set aside. We are unable to construe the provisions contained in Section 17B to cast such a burden on the employer. In our opinion, therefore, the words ‘full wages last drawn’ must be given their plain and material meaning and they cannot be given the extended meaning as given by the Karnataka High Court in Vishveswarayya Iron & Steel Ltd. (supra) or the Bombay High Court in Carona Sahu Co. Ltd. (supra). The Court added: The expression ‘full’ only emphasizes that all the emoluments which are included in ‘wages’ as defined in clause (rr) of Section 2 of the Act so as to include the amounts referred to in sub-clauses (i) to (iv) are required to be paid. In this context, it may also be mentioned that in Section 17B, Parliament has also used the words ‘inclusive of any maintenance allowance admissible to him under any rule’. These words indicate that maintenance allowance that is admissible under any rule is required to be paid irrespective of the amount which was actually being paid as maintenance allowance to the workman. But with regard to wages, Parliament has used the words ‘full wages last drawn’ indicating that the wages that were actually paid and not the amount that would be payable are required to be paid. In Workmen Employed under IT Shramik Sena v. M/s Raptakos Brett Co. Ltd,323 the Supreme Court held that when the management does not reinstate the workmen as directed by the labour court and files an appeal writ petition against the workmen, the workmen shall be paid wages @ ₹2,500 per month till the disposal of the writ petition. Further, the management shall not call the workmen/appellant for work in the company and therefore, the workmen/appellant shall have no obligation to join the company for work but during the pendency of the writ petition, the management shall go on paying wages @ ₹2,500 per month. The aforesaid view was followed by the Calcutta High Court in Food

Corporation of India v. Union of India324, Madras High Court in Management of KSB Pumps Ltd v. Presiding Officer, Labour Court325 and Gujarat High Court in Cadila Pharmaceutical Ltd v. Jyotiben Harishbhai Pandit326. The Courts held that the benefit of Section 17B would be available to workmen from the date of institution of writ petition till the disposal by the High Court. (c) Benefit of last pay drawn when effective In Uttaranchal Forest Development Corporation v. K B Singh327, the Supreme Court held that: The benefit of section 17B of the industrial Disputes Act, 1947 by directing reinstatement in service or payment of last wages drawn in lieu thereof can be granted only in favour of such workmen who have obtained awards in their favour from the industrial tribunal or labour court and in support of their claims, filed affidavits. The Court directed that only such workmen in whose favour there are awards of reinstatement and who have filed affidavits of their not being in gainful employment shall be entitled to be granted reinstatement or in lieu thereof paid wages last drawn by them on respective dates of their terminations from services. Their entitlement for such wages would be from the respective dates by filing affidavits by each of them in this Court in compliance with section 17B of the industrial Disputes, Act. 1947. (d) Powers of the Supreme Court and high courts to award higher amount under Section 17B In Dena Bank v. Kirat Kumar T Patel328, the Supreme Court ruled that the courts are empowered to award higher amount under Section 17B. In Dena Bank II329, the Supreme Court laid down the following principles: (i) The import of Section 17B admits of no doubt that the Parliament intended that the workman should get the last drawn wages from the date of the award till the challenge to the award is finally decided. Section 17B also does not preclude the high courts or the Supreme Court under Articles 226 and 136 of the Constitution respectively from granting better benefits— more just and equitable on the facts of the case than

contemplated by that provision. The high court or the Supreme Court may, while entertaining the employer’s challenge to the award, in its discretion, in appropriate cases stay the operation of the award in its entirety or in regard to back wages only or in regard to reinstatement without interfering with the payment of back wages or on payment of wages in future irrespective of the result of the proceedings before it, etc., and/or impose such conditions as to the payment of salary as on the date of the order or a part of the back wages and its withdrawal by the workman as it may be deemed fit in the interest of justice. The court may, depending on the facts of the case, direct payment of full wages last drawn under Section 17B of the Act. (ii) Even though the amount paid by the employer under Section 17B cannot be directed to be refunded in the event he loses the case in the writ petition, any amount over and above the sum payable under the said provision has to be refunded. (e) Wages payable under Section 17B are non-recoverable In Syndicate Bank v. General Secretary, Syndicate Bank Staff Association,330 the Supreme Court held that the wages paid to the employee in terms of Section 17B will neither be recovered nor adjusted by the bank. (f) Where party agrees to receive lump sum in lieu of reinstatement In Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd331, the tribunal directed reinstatement of the workmen. The Allahabad High Court, on a writ petition filed by management, set aside the award. Workmen were paid wages by the employer from the date of award till it was set aside by the High Court even though they did not work. On a special leave petition before the Supreme Court, the workmen agreed to receive lump sum in lieu of reinstatement over and above the amount already received by them. The Supreme Court accordingly disposed of the petition as per the terms of agreement and understanding and directed the management to pay the agreed sum within 4 weeks. (g) Period of payment In Sri Varadaraja Textiles (Pvt) Ltd v. Presiding Officer, Labour Court, Coimbatore332, the Madras High Court held that the payment continues as long as the workman is in employment. The Court also held that reaching the age of

superannuation, the workman has lost his right to get wages last drawn under Section 17B as the workmen gets wages only as per award of the labour court which was already deposited by the employer. (h) No recourse under Section 33C in respect of Section 17B In Kalvalyadham Employees Association v. Kalvalyadham SMYM Samity333, the Supreme Court held that invocation of Section 33C(2) of the Industrial Disputes Act, is miconceived, having regard to the fact that section 33C(2) stands on a different footing from section 17B. While under Section 17B, it is under the order of the high court or the Supreme Court in a pending proceeding that the full wages last drawn by the workman, inclusive of any maintenance allowance admissible to him under any rule, is to be paid; Section 33C(2), on the other hand, provides for recovery of money due from the employer or any benefit which is capable of being computed in terms of money. The question of invocation of Section 33C(2) arises only when there is dispute as to the quantum of the dues. The two aforesaid provisions contemplate two different situations and in certain cases, the provisions of Section 33C(2) may have to be resorted to in respect of an order under Section 17B, but not as a matter of course. The necessary details required for giving effect to an order under Section 17B of the 1947 Act are available both with the employer as also the employee and only involve a matter of calculation for which no evidence is required to be taken. (i) Burden of Proof Section 17B requires a workman to file an affidavit before the high court or Supreme Court where the employer has preferred any proceedings against the award of reinstatement of the workmen that ‘he had not been employed in any establishment’ during the pendency of such proceedings. Thus, in Viveka Nand Sethi v. Chairman J & K Bank Ltd334, the Supreme Court held that Section 17B cannot be applied where the workman did not file an affidavit before the Court. Once such an affidavit has been filed by the workman, he has discharged his onus. It is then for the employer to satisfy the high court or the Supreme Court that the workmen in fact had not been employed or he had been receiving adequate remuneration during such period or part thereof. If the employer succeeds in satisfying the court in that behalf, the court shall order that wages contemplated in Section 17B shall not be payable by the employer to the workman for the period of pendency of proceedings before the court or part thereof.

P. Constitutional Remedies

1. General. Under Article 32 of the Constitution, the Supreme Court under Article 226 and the high courts in India are empowered to issue writs, orders or directions (including writs in the nature of mandamus, quo warrants, prohibition and certiorari to any person or authority including any government within their territories.335 The jurisdiction under Articles 32 and 226 are concurrent and independent of each other. But whereas the power of the Supreme Court under Article 32 is confined to the matters of enforcement of fundamental rights, the High Court’s power under Article 226 is wider inasmuch as it can issue writs not only for enforcement of fundamental rights,336 but for any other purpose.337 Power to issue writ is an integral and basic feature of the Constitution and cannot be taken away through any legislation.338 A high court’s dismissal on the merits of a petition under Article 226 operates as res judicata to barring the same or similar petition under Article 32.339 Broadly speaking, there are two general principles with regard to the exercise of the powers of the Supreme Court and the high courts, (i) The constitutional power of the Supreme Court and high courts to issue writs cannot be taken away or whittled down by any legislative device.340 (ii) Where adequate alternative remedy is available, the high court will, unless fundamental rights are shelved, refuse to issue the writ.341 But, the existence of an alternative remedy is no bar where a fundamental right is violated.342 We shall now briefly examine the writs which may be issued under Articles 32 and 226. 2. Writ of Certiorari. (a) Principles of interference. The issuance of a writ of certiorari involves two general principles. One of the fundamental principles with reference to the exercise of power is that the writ of certiorari may be issued against an inferior court or body exercising judicial or quasi judicial functions.343 Accordingly, the following orders in labour matters, have been held to be quasi-judicial in nature and, therefore, subject to writ of certiorari: • The award of the industrial tribunal constituted under the Industrial Disputes Act, 1947.344 • The award of the voluntary arbitrator appointed under the Industrial Disputes Act 1947.345 On the other hand, the following orders in labour matter have been held to be executive orders and, therefore, not subject to writ of certiorari. • Order by the government referring a dispute to an industrial tribunal under the Industrial Disputes Act. 1947.346

• Proceedings of a conciliation officer under the Industrial Disputes Act 1947.347 The other feature of a writ of certiorari is that in exercising the power, court acts in a supervisory and not in an appellate capacity. In exercising the supervisory power, the court does not act as an appellate tribunal.348 • Grounds of issuance. Writs of certiorari can be issued on any one of the following grounds against the industrial awards: (i) Defects of jurisdiction; • Want of jurisdiction,349

(ii)

•

Excess of jurisdiction,350

•

Failure to exercise jurisdiction.351

Violation of the principles of natural justice; • no evidence rule,352 •

against the evidence,353

•

against the rules of natural justice.354

misconduct of the arbitrators;355 error apparent on the face of the record;356 misconception of law;357 finding of facts suffering from an error of law;358 if no reasonable person would come to the conclusion which the arbitrator/adjudicator has arrived.359 3. Writ of Mandamus. A perusal of the decided cases reveals that the writ of Mandamus has been issued by the courts on any one of the following grounds: • Where the fundamental rights had been infringed360 (iii) (iv) (v) (vi) (vii)

•

Where the State refused to exercise its statutory duty361

•

Where the ultra vires statutes were enforced362

•

Where the authorities failed to perform the public duty363

•

Where there was error of law or violation of rules of natural justice364

Where there was abuse of discretion365 4. Writ of Prohibition. An analysis of the judicial decisions reveals that the writ of prohibition may be issued on any one of the following grounds: •

•

Defects of jurisdiction366

Violation of principle of natural justice367 5. Power of Superintendence of the High Court under Article 227 of the Constitution. Under Article 227, every high court has the power of superintendence over all lower courts and tribunals within its jurisdiction. This power is wider than the powers conferred on the high courts to control inferior courts through writs under Article 226. However, the power under Article 227 is exercised sparingly and only in exceptional cases. The court does not interfere unless there is any grave miscarriage of justice or flagrant violation of law requiring interference.368 Moreover, in exercise of the supervisory power under Article 227, the high court will not sit in appeal over the decision of any court or tribunal. It will not review or reweigh the evidence or correct errors of law in the decision unless, there was error in the face of record or grave miscarriage of justice or flagrant violation of law.369 Grounds of interference. The main grounds for interference under Article 227 are as follows: • Defects, excess370 or want of jurisdiction371 •

•

Failure to exercise jurisdiction372

•

Violation of the principles of natural justice373

Error of law374 6. Provisions Relating to Appeal from the Decisions of the High Court in Labour Matters. Another course open to the aggrieved person is to invoke the Supreme Court in regular civil appeal from the decisions of the high courts under Articles 132 and 133. Article 132 confers jurisdiction on the Supreme Court in respect of matters ‘involving a substantial question of law as to the interpretation of the Constitution.’ Under Article 133, the Supreme Court may entertain regular civil appeals from the decisions of the high court in ‘civil proceedings’ where a certificate of fitness has been granted by the high court. 7. Relief Under Article 136 of the Constitution from Industrial Awards. • General. Apart from the provisions of writs under Articles 32 and 226, the Constitution also provides another remedy to persons aggrieved for obtaining special leave, inter alia, in labour matters. Under Article 136, the Supreme Court is empowered to grant special leave to appeal from any judgement, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal, other than those constituted by or under •

any law relating to armed forces in the territory of India. • Principles of interference. Article 136 being a special provision, the Supreme Court evolved certain limiting principles for its use. First, the discretionary power under Article 136 should be exercised sparingly and in exceptional cases.375 Second, the discretionary power under Article 136 is exercisable notwithstanding (i) the finality clauses of statutes,376 (ii) the statutory provisions,377 (iii) the Supreme Court rules378 or other technical hurdles, provided the Court concludes that a person has been dealt with arbitrarily or has not been given a fair deal. Third, even where special leave has been granted in exercise of discretionary power under Article 136, no restriction can be imposed or applied at the time of final disposal of the appeal.379 Fourth, the exercise of the discretion would not be justified to give findings on matters which have become stale.380 • Grounds of interference. A perusal of the decisions of the Supreme Court reveals that—the Supreme Court has exercised its discretionary power under Article 136 against the award of the tribunals on any one of the following grounds: • Excess, want or abuse of jurisdiction381 •

Where the tribunal ostensibly fails to exercise a patent jurisdiction382

•

Where a question of general public importance was involved383

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Where there was manifest injustice or fundamental flaw in law384

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Where the problem was approached wrongly385

• •

Violation of any of the principles of natural justice386 Where the court erroneously applied the well-accepted principles of jurisprudence387

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Baseless or perverse finding388

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Cases requiring elucidation and final decisions389

•

Where it has traversed beyond the terms of reference390

•

Where it has not applied its mind to the real question391

•

Where the procedure adopted is against all notions of legal procedure392

Where it ignored a material document393 A survey of the Supreme Court’s decisions reveals that the Court has considerably enlarged the scope of its interference under Article 136. Thus, in •

Bharat Bank v. Employees of Bharat Bank394, the Court enunciated that it will interfere only in matters pertaining to the jurisdictions and procedure of the tribunal. But, in Bengal Chemical & Pharmaceutical Works Ltd v. Their Employees,395 the Court provided an additional ground for interference, namely, where an important question of law requiring elucidation and final decision was involved.396 Again, the court interfered where the tribunal erroneously applied established principles of jurisprudence,397 failed to apply its mind to the real question,398 approached the problem wrongly,399 and ignored a material document.400

IX. NON-STATUTORY MACHINERY AND ITS WORKING Besides statutory machinery provided under the Industrial Disputes Act, 1947, several voluntary machineries have also been set up. The most important among these are the joint management council, code of discipline and tripartite consultative machinery. These voluntary machineries influence to some extent both employers and workers for preservation and maintenance of industrial relations. However, they have shown limited success for limited purposes.

A. Joint Management Council The need for joint management consultation was emphasized in the Government Industrial Policy Resolution, 1956 which is as follows: In a socialist democracy, labour is a partner in a common task of development and should participate in it with enthusiasm …. There should be joint consultation, and workers and technicians should, wherever possible, be associated progressively in management. Enterprises in the public sector have to set an example in this respect.401 To translate the aforesaid idea into action, the Second Five-Year Plan reiterated that ‘this would be achieved by providing for council of management, workers and technicians’. The Plan accorded due importance to the joint consultation and made it obligatory upon the management to supply such councils with fair and correct statements of all relevant information to enable them to function effectively. Pursuant to this, the Labour Ministry constituted a

Study Group on Workers’ Participation in Management which toured Europe. It consisted of representatives of government, labour and management. After a detailed examination, the study group submitted its report which favoured a scheme of joint management council to be set up in the country. This report was considered in the Indian Labour Conference in July 1957. The conference gave its approval to the scheme of joint management council and suggested the appointment of a small tripartite sub-committee to examine the details of the scheme and to select undertakings in which the scheme could be introduced. The subcommittee met in August, 1957 and selected 48 units (32 in the private and 16 in the public sector).402 The sub-committee also prepared a draft scheme of joint management council. The scheme was tried on an experimental basis in certain establishments upto 1960. To review the working of establishments having joint management councils, a seminar was convened on March 8 and 9, 1960. This seminar found that joint management councils could not contribute much because their exact nature and functions were not properly defined and appreciated. In these circumstances, the seminar recommended to set up a compact body at national level to deal with problems arising out of and connected with the working of the joint management councils. This led to the appointment of a Tripartite Committee on Labour Management Cooperation in November, 1960, to ‘give advice and guidance on all matters pertaining to joint management councils, to collect and disseminate information relating thereto, and to explore possibilities of extending the scheme to new units.’403 The scheme of joint management councils was evolved on voluntary basis to promote industrial peace and harmony between labour and management, ensure closer association between workers and management, increase production and share the responsibilities of management. 1. Composition of the Council. The question of composition and representation in councils figured prominently in the seminar on labour management councils convened by the Government of India in 1958. The seminar suggested that the councils should consist of an equal number of representatives of labour and management. However, the total number of members should not exceed 12. It was suggested that in an establishment having one registered trade union, the employees’ representatives in the council were to be nominated by such union. However, where more than one registered trade union exist, the representative to the council was to be chosen by mutual agreement among such unions. The seminar also recommended that there should be no bar on members of supervisory and technical staff to be chosen as workers’ representative. Further, outside employees were also allowed to

represent the workers but the number of such representatives was not to exceed 25 per cent of the total number of representatives of such workers or unions in the establishment. The representation of employees in joint councils requires consideration of two issues. First, the question of representation of workers is linked with the question of recognition of trade unions. The problem of representation can be met by making statutory provisions for recognition of trade union. Second, ‘the management’s representatives in the joint council are invariably nominated by the management. In most cases, the workers’ representatives are nominated by the union…. In few cases, workers’ representatives complained that management nominated to the joint council comparatively junior officers who had often pleaded ignorance for want of instructions’.404 From this it is clear that the proper selection of representatives of management and trade union would play a significant part in making the council a success. 2. Powers and Functions of the Council. The draft model agreement regarding establishment of council of management prepared by sub-committee set up by the Indian Labour Conference and approved in the seminar on labour management corporation provided that ‘the council/councils would be consulted by the management on matters like: (i) administration of standing orders and their amendment, when needed; (ii) retrenchment; (iii) rationalization; and (iv) closure, reduction in or cessation of operations.’405 Clause 6 of the agreement conferred upon the council the right to receive information, to discuss and to give suggestions on (i) general economic situation of the concern; (ii) the state of market, production and sales programmes; (iii) organization and general running of the undertaking; (iv) circumstances affecting the economic position of the undertaking; (v) methods of manufacture and work; (vi) annual balance sheet and profit and loss statement and connected documents and explanation, (vii) long-term plans for expansion, re-employment, etc.; and (viii) such other matters as may be agreed to. However, matters such as wages, bonus, etc., which formed the subject of collective bargaining were kept outside the purview of council/councils. Further, individual grievances were also excluded from its scope. The Model Agreement conferred administrative responsibility upon the council in respect of (i) administration of welfare measures; (ii) superposition of safety measures; (iii) operation of vocational training and apprenticeship schemes; (iv) preparation of schedules of working-hours and breaks of holidays; (v) payment of rewards for valuable suggestions received from the employees; and (vi) any other matter.

3. Working of the Joint Management Council. It has been observed elsewhere that the sub-committee appointed by the Indian Labour Conference selected 48 units (32 in the private and 16 in the public sector) for setting up joint management councils. But in spite of governmental efforts, only 24 establishments could set up joint management councils till 1960. These 24 included seven councils in public sector and remaining 17 in private sector units. The public sector units among others included Hindustan Machine Tools Ltd, Bangalore; Kerala State Transport Department and Hindustan Insecticides Ltd. In 1962, the number rose to 95 (35 in public and 60 in private sector units). However, a perusal of the lists of establishments having joint councils in public sector units, Hindustan Machine Tools Ltd (which figured in 1959 on joint council map) did not find place in 1962. From this, one may presume that the experiment of institution of joint management councils must have failed over there.406 The year 1966 witnessed further increase in the number of joint management councils which were set up in establishments. Out of these, 43 councils were set up in public and 97 in private sector.407 Two years later, in 1968, the number of councils fell from 140 to 131; of these 46 were in public 85 in private sector.408 By the end of 1974, joint management councils were functioning only in 80 establishments, 31 in public and 49 in the private sector. From this it is clear that the scheme suffered a setback. Thus, a survey of the reports on the working of joint management councils in 1965 published by the Government of India reveals some key factors for the failure of the scheme of joint management council as under: (i) Some managements nominate to the joint council comparatively junior officers who often are ignorant or for want of instructions are unable to effectively participate in the process. (ii) Only in very few undertakings, meetings of the joint council had been held regularly in every month. (iii) In most cases, workers’ representatives seem to care more for the enlargement of amenities and facilities and in a few cases, the redressal of grievances, than about larger problems such as increasing productivity, reducing absenteeism, effecting economies, and suggesting methods for more efficient utilization of plant and equipment. In several cases, even employer’s representatives do not bring such matters on the agenda as they are doubtful about the competence of workers to understand such problems and much less to make any contribution towards their solution. (iv) Although the agreements by which joint councils were set up envisaged

consultation with the council by management on a variety of subjects, occasions have been rare when such consultations have been made, except in regard to the administration of standing orders. (v) Communication or sharing of information with the workers has not been adequately developed. In most cases, the employer’s attitude seems to be that it is sufficient to give to the workers’ representatives as much information as they seek, consistent with the terms of the agreement. (vi) The agreements by which joint councils were set up envisaged the management transferring to the council administrative responsibility in regard to welfare measures, safety measures, etc. But in actual practice, there is no real transfer of administrative responsibility in these matters…. In no case has the joint council been left the choice to determine, within the financial resources available, the priorities regarding welfare measures to be provided or the allocation to be made in respect of these facilities. (vii) Only in very few cases have incentive wage or bonus schemes been adopted to enable the workers to share the fruits of higher productivity. Most employers do not offer to share the gains of higher productivity. (viii) One reason for difficulties faced in the running of joint councils has been the management’s failure to implement the unanimous decisions of the joint council. Thus, this scheme has not met with much success in its operation.

B. Code of Discipline The need for voluntary code of discipline was felt in 1957 in order to create awareness among the parties to industrial relations about their obligations under labour laws, as also to create in them an attitude of willing acceptance of their responsibilities and a readiness to discharge them.409 It was in this context that the code of discipline found approval at the 16th Indian Labour Conference, and was formally announced in June, 1958. The code was ratified by the central organization of workers and employers. The code has been accepted by a majority of private and public sectors. The code, primarily as a result of the persuasive efforts of Central Implementation and Evaluation Division, has been accepted by 166 trade unions and 180 employers affiliated to Central Workers’ and Employers’ Organization. The code applies to all public sector undertakings run as companies and corporations except in defence, railways and ports and docks. Among those,

where the code of discipline applies with certain modifications include Reserve Bank of India, State Bank of India and the Department of Defence Production. Under the code, management and union(s) agree that: (i) no unilateral action should be taken in connection with any industrial matter and that disputes should be settled at appropriate level; (ii) the existing machinery for settlement of disputes should be utilized with utmost expedition; (iii) there should be no strike or lockout without notice; (iv) they affirm their faith in democratic principles and they bind themselves to settle all future differences, disputes and grievances by mutual negotiation, conciliation and voluntary arbitration; (v) neither party will have recourse to coercion, intimidation, victimization or go-slow; (vi) they will avoid litigation, sit-down and stay-in strikes, and lockouts; (vii) they will promote constructive cooperation between their representatives at all levels and between workers themselves and abide by the spirit of agreements mutually entered into; (viii) they will establish upon a mutually agreed basis, a grievance procedure which will ensure a speedy and full investigation leading to settlement; (ix) they will abide by various stages in the grievance procedure and take no arbitrary action which would bypass this procedure; and (x) they will educate the management personnel and workers regarding their obligations to each other. In order to ensure better discipline in industry, the code provides for: (i) a just recognition by employers and workers of the rights and responsibilities of either party as defined by the laws and agreements (including bipartite and tripartite agreements arrived at all levels from time to time) and (ii) proper and willing discharge by either party of its obligations consequent on such recognition. In the second set, the management agrees (i) not to increase workloads unless agreed upon or settled otherwise; (ii) not to support or encourage any unfair labour practice; (iii) to take prompt action for settlement of grievances, and implementation of settlements, awards, decisions and others; (iv) to display in conspicuous places in the undertaking the provisions of this code in local language(s); (v) to distinguish between actions justifying immediate discharge and those where discharge must be preceded by a warning, reprimand suspension or some other form of disciplinary action and to arrange that all such disciplinary actions should be subject to an appeal through normal grievance

procedure; (vi) to take appropriate disciplinary action against its officers and members in cases where inquiries reveal that they were responsible for precipitating action by workers leading to indiscipline; (vii) to recognize the union in accordance with the prescribed criteria. The third set imposes an obligation upon the unions; (i) not to engage in any form of physical duress; (ii) not to permit demonstrations which are not peaceful and not to permit rowdyism in demonstrations; (iii) that their members will not engage or cause other employees to engage in any union activity during working hours, unless as provided for by any law, agreement or practice; (iv) to discourage unfair labour practices, such as, negligence of duty, careless operation, damage of property, and insubordination; (v) to take prompt action to implement awards, agreements, settlements and decisions; (vi) to display in conspicuous places in the union offices, the provisions of this code in the local language(s); and (vii) to express disapproval and to take appropriate action against officebearers and members for indulging in action against the spirit of this code. The Supreme Court in General Secretary, Rourkela Shramik Sangh v. Rourkela Mazdoor Subha,410 held that although Section 11 of the code is headed ‘implementation machinery’, it consists of two separate organizations, viz., implementation units and tripartite implementation committees which is obvious from the language of Section 11 itself and also from the separate constitution and functions of the two organizations. The Court ruled that to hold that the implementation unit in the respective labour department together with the respective tripartite committee at centre, state or local level would constitute the implementation machinery jointly and not each of them separately would run not only counter to the intention of the code as is manifest from the language of Section 11 and their separate composition and functions but would also be impracticable in working. Dealing with the composition of the implementation committees and their functions, the Court observed: These committees consist of, at the central level, an equal number of employers and workers’ representatives—four each from the central employers and workers organizations as nominated by the organizations themselves. At the state level,

they are required to be constituted similarly and in consultation with the central employers and workers’ organizations whenever they are affiliated in the state concerned. The committees are presided over as far as possible by respective labour ministers and even when it is not possible for labour ministers to preside over them, they have to associate themselves as much as possible with the deliberations of the committees. At the local level, the committees are similarly constituted of an equal number of representatives of the employers and workers in the area and are presided over by an officer of the labour department or by a prominent person in the region. In a given case, there may be more associations than one of employers and employees, and the committees would then consist of an unwieldy number. To expect such a committee to carry out the work mentioned in appendix IV is unrealistic. This is why the code itself has entrusted to the implementation units and not to implementation committees the task of ensuring that recognition is granted to unions by managements. At the centre, the implementation unit is kept in charge of joint secretary and at the state level, it is in charge of a whole-time officer of the state labour department. However, the code of discipline has not been effectively implemented and it is respected more in breach than in observance. Several reasons may be accounted for the same: (i) the absence of a genuine desire for and limited support to, self-imposed voluntary restraints on the part of employers’ and workers’ organizations, (ii) the worsening economic situation which eroded the real wage of workers, (iii) the liability of some employers to implement their obligations, (iv) a disarray among labour representatives due to rivalries, and (v) conflict between the code and the law.411 In view of this, the National Commission on Labour recommended that the part of the code which enjoins stricter observance of obligations and responsibilities under the various labour laws may be left to the normal process of implementation and enforcement by the labour administration machinery, some others need to be formalized under law. These are: (a) recognition of a union as bargaining agent; (b) setting up of a grievance machinery in an undertaking: (c) prohibition of strike/lockout without notice; (d) penalties for unfair labour practices; and (e) provision of voluntary arbitration. With the removal of the above provisions from the code and on giving them a legal form, the code will have no useful function to perform.412

C. Tripartite Consultative Machinery Tripartite consultative machinery such as Indian Labour Conference, Standing Labour Advisory Committee and Industrial Committee also play an important role in ensuring the representation of the various interests involved in labour matters at the national level. Besides this, the committee on convention is also instrumental in reviewing the ratification of ILO conventions and the application of international labour standards. The ILC/SLC have facilitated the enactment of central legislation on various subjects to be made applicable to all the states of the Indian union in order to promote uniformity in labour legislation which was an important objective to be achieved by these tripartite bodies.

1 2 3 4 5 6 7 8 9 10 11 12 13 14

15 16 17 18

Section 3(2) of the Industrial Disputes Act, 1947. See R F Rustamji, The Law of Industrial Disputes in India, (1962), 219. See Kemp and Co. Ltd v. Its Workmen, (1955) 1 LLJ 48 (LAT). Praful Mohan Das v. SAIL, (1992) 1 LLJ 621. Bangali Raje v. Union of India, (1993) Lab. IC 812. AIR 1988 SC 633. 2011 (1) SLR 375. See Section 3(2). See M/s Northbrook Jute Co. Ltd v. Their workmen, AIR 1960 SC 879. See Government of India, Ministry of Labour, Annual Report (1997) 29. See Government of India, Report of the [First] National Commission on Labour, (1969) 343. I L I, Labour Law and Labour Relations (Ed. Suresh C Srivastava (2007) 53. I L O, Report No. VII (2), (1966). See also Government of India, Report of [First] National Commission on Labour, (1969), 23. Likewise, in the United States, a grievance has been defined as ‘a formal complaint over an allegation by an employees’ union… that… a collective bargaining contract, company policy or agreement has been violated.’ See Society of the Advancement of Management, Glossary of Personnel Management and Industrial Relations Terms, New York. (1959), 18. Government of India, Code of Discipline in Industry (1961) 2–3. The Amendment Act came into force w.e.f. 15th September, 2010. See Foenander, Industrial Conciliation and Arbitration in Australia, (1959), 95. Section 12(5).

19 See Government of India, Report of the National Commission on Labour, 322–23. 20 Section 4(2). 21 Section 5(2). 22 Section 11(6). 23 Section 11(4). 24 Section 22(2). 25 State of Bihar v. Kripa Shanker Jaiswal, AIR 1961 SC 304. 26 The Industrial Disputes (Central) Rules, 1957, Rule 24. 27 The former section punishes giving or fabricating false evidence; while the latter section

punishes insulting or interrupting judicial proceedings. 28 These sections deal with the court's power to punish for contempt of court. 29 The Industrial Disputes (Central) Rules, 1957, Rule 30. 30 Section 11(1) of the Industrial Disputes Act 1947. 31 Rule 13 of the Industrial Disputes (Central) Rules, 1957. 32 Rule 16 of the Industrial Disputes (Central) Rules, 1957. 33 Rule 19 of the Industrial Disputes (Central) Rules, 1957. 34 Rule 20 of the Industrial Disputes (Central) Rules, 1957. 35 Rule 22 of the Industrial Disputes (Central) Rules, 1957. 36 Rule 28 of the Industrial Disputes (Central) Rules, 1957. 37 Rule 15 of the Industrial Disputes (Central) Rules, 1957. 38 Rule 21 of the Industrial Disputes Act (Central), 1957. 39 Rule 29 of the Industrial Disputes Act, (Central) Rules, 1957. 40 Rule 33 of the Industrial Disputes (Central) Rules, 1957. 41 See, Section 4(1) of the Industrial Disputes Act, 1947. 42 Madhavan Kutty v. Union of India (1982) 2 LLJ 212 (Kerala). 43 Sub-section 2 of Section 12 lays down: ‘the conciliation officer shall, for the purpose of

44 45 46 47 48 49

bringing about a settlement of the dispute without delay, investigate the dispute and all matters affecting the merits and the right settlement thereof and may do all things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the disputes.’ Section 12 (3). Section 12 (4). All India Bombay Tyres International Employees' Federation v. C B Dinagre (1993) Lab. IC 817. Section 12 (5). Britannia Biscuit Co. Ltd Employees’ Union v. Assistant Commissioner of Labour, (1983) 1 LLJ 181. State of Bihar v. Kripa Shankar Jaiswal, AIR 1961 SC 340.

50 (1982) 2 LLJ 71. 51 (1984) 1 LLJ 174. 52 Madhavan Kutty v. Union of India, (1982) 2 LLJ 212. 53 Workmen of Buckingham & Carnatic Mills v. State of Tamil Nadu, (1982) 2 LLJ 90. 54 (1983) 1 LLJ 13. 55 AIR 1960 SC 1012. 56 (1999) LLR 278. 57 (1999) LLR 230. 58 Section 12 (1). 59 Section 13 (1). 60 Section 13 (3). 61 Section 13 (4). 62 Section 13 (5). 63 Section 12 (1). See also Rule 9 of the rules framed thereunder. 64 See Rule 10 of the Industrial Dispute (Central) Rule, 1957. See also East Asiatic Allied

Companies v. Shelka, (1961) 1 LLJ 162 (Bombay). 65 See Government of India, Report of [First] National Commission on Labour, (1969) 322. 66 Workmen of Industry Colliery v. Industry Colliery, (1953) 1 LLJ 190 (SC). 67 Sub-section 1 of Section 20 of the Industrial Disputes Act, 1947, provides that conciliation

68 69 70 71 72 73

74 75 76 77 78 79 80 81

proceedings shall be deemed to have commenced… on the date of the order referring the dispute to a board. See Bata Shoe Co. (P) Ltd v. Ganguli (D N), AIR 1961 SC 1158. See Tata Chemical Ltd v. Workmen, (1978) 2 LLJ 22 (SC). See Indian Tobacco Company Ltd v. Government of West Bengal, (1971) 1 LLJ 89 at 94 (Calcutta). Bata Shoe Co. Ltd v. Ganguli, AIR 1961 SC 1158 at 1161. See Tata Chemicals Ltd v. Its workmen, (1978) 2 LLJ 22 at 26. See Royal Calcutta Gold Club Mazdoor Union v. State of West Bengal, AIR 1956 Calcutta 550 and Caltex (India) Ltd v. The Commissioner of Labour and Conciliation Officer, AIR 1956 Madras 441. Section 16 (1) of the Industrial Disputes Act, 1947. Section 12(3) of the Industrial Disputes Act, 1947. Section 13 (2) of the Industrial Disputes Act, 1947. (1997) 1 LLJ 308 : AIR 1997 SC 2334. India Construction Corporation Limited, (1953) LIC 568 (Calcutta). Shukla Manseta Industries Pvt. Ltd v. The Workmen, (1977) 2 LLJ 339 (SC). Id. at 342. Jaypore Sugar Company Ltd v. Their Employees, (1955) 2 LLJ 444 (LAT).

82 Jaypore Sugar Company Ltd v. Their Employees, op. cit., 446. 83 South Indian Bank Ltd v. Chako, (1964) 1 LLJ 19 (SC). 84 The Indian Link Chain Manufactures Ltd v. Their Workmen, (1972) Lab. IC 200. 85 Cochin State Power Light Corporation Ltd v. Its Workmen, (1964) 2 LLI 100 (SC). 86 Ibid. at 101. 87 The Indian Link Chain Manufactures Ltd v. Their Workmen, op. cit., 200 and 206. 88 Ibid. 89 JT 1999 (1) SC 554: 1999 LLR 390 (SC); (1999) 1 LLJ 489 (SC). 90 Section 18 (1) of the Industrial Disputes Act, 1947. 91 Section 18 (3) of the Industrial Disputes Act, 1947. 92 See Jharkhand Collieries v. Central Government Industrial Tribunal, (1975) Lab. IC

137, 139 (SC). 93 (1998) 1 LLJ 389 (SC): AIR 1998 SC 554. 94 Ramnagar Cane and Sugar Co. Ltd v. Jatin Chakravarty, AIR 1960 SC 1012 at 1015. 95 Tata Chemicals Ltd v. Workmen, (1978) 1 LLJ 22 (SC). 96 (1986) Lab. IC 667. 670 (SC). 97 Management of Pandian Roadways Corporation v. Labour Court, (1994) Lab. IC 1817. 98 See Bata Shoe Co. (Pvt.) Ltd v. Ganguli D N, AIR 1961 SC 158: See also Ram Pukar

Singh v. Heavy Engineering, (1995) LLR 201. 99 In Praga Tools Ltd v. Praga Tool Mazdoor Sabha, (1975) 1 LLJ 218: Sec also A L P

Hindustan Zinc Ltd v. H Z Workers' Union, (1988) Lab. IC 1361. 100 (1977) Lab IC 162 (SC). 101 (2000) 1 SCC 371. 102 (2000) 1 SCC 371. 103 Section 6 (1). 104 Ibid. 105 Section 6 (2). 106 Section 6 (3). 107 Section 14. 108 See Julius G Getman, Grievance Arbitration: ‘Law and Policy in India’, American Labour

Supplement, New Delhi, December 15, 1976. 109 Ibid. 110 See Manohar Lal. ‘Problems of Arbitration from Management’s Point of View’,

Arbitration News, Vol. 1, 1966, 32. 111 A somewhat similar scheme of settlement operating in Australia was severely criticized, as

early as 1929 by the British Economic Commission wherein it intended to consolidate the contesting parties into two opposing camps (See R F Rustomji, The Law of Industrial Disputes in India, (2nd ed. 1954), 484-85. The ILO gave renewed emphasis to such criticism. In 1951, it recommended voluntary arbitration as a better mode of settlement of

112

113 114

115 116 117 118 119 120 121

122 123 124 125 126 127 128 129 130 131 132 133

134 135 136

industrial disputes. [See ILI, Labour Law and Labour Relations (Sharma ed). (1968), 179]. This provision is similar to Section 10 (2), where the parties can request the appropriate government to refer the dispute to the appropriate government for adjudication. The government must do so if satisfied that the persons applying represent the majority. The presiding officer of a labour court or tribunal may also be an arbitrator. See Raza Textiles Labour Union v. Mohan, (1964) 2 LLJ 65 (Allahabad): Rohtas Industries Ltd v. Its Workmen, (1968) 1 LLJ 710 (Patna); and Sindhu Hochtief v. Pratap Dialdas, (1968) 2 LLJ 515 (Bombay). Sub-section (1) of Section 10 A. North Orissa Workers' Union v. State of Orissa, (1971) LLJ 199 (Orissa). Ibid. Section 10A (3) of the Industrial Disputes Act, 1947. Moorco (India) Ltd v. Government of Tamil Nadu, (1993) Lab. IC 1663. Sub-section (3) of the Section 10A of the Industrial Disputes Act, 1947. (1989) 2 LLJ 550 (SC). Also see Kathayee Cotton Mills Ltd v. District Labour Officer (1988) 1 LLJ 417 (Ker.): Krishnaveni Transports v. Special Deputy Commissioner of Labour, Madras, (1989) 2 LLJ 245. K P Singh v. S K Gokhale, (1970) 1 LLJ, 125. North Orissa Workers' Union v. State of Orissa (1971) 2 LLJ 199. Landra Engineering & Foundary Workers v. Punjab State, (1969). Lab. IC 52. Mineral Industrial Association v. Union of India, (1971) Lab. IC 837. Modern Stores Cigarettes v. Krishadas Shah, (1970) Lab. IC 196. Aftab-e-jadid, Urdu Daily Newspapers v. Bhopal Shramjivi Patrakar Sangh, (1985) 1 LLJ 272. R V National Joint Council for the Craft of Denal Technicians, (1953) All ER 327. Engineering Mazdoor Sabha v. Hind Cycle Ltd (1962) 2 LLJ 760 (SC). Air Corporation Employees’ Union v. D V Vyas, (1962) 1 LLJ 31 (Bombay); Sindhu Hochief v. Pratap Dialdas, (1968) 2 LLJ 515 (Bombay). Ibid. See National Project Construction Corporation Ltd v. Their Workmen, (1960) Lab. IC 907 (Patna). See Gujarat Steel Tubes Ltd v. Their Workmen, (1980) 1 LLJ 137; Hindustan Construction Co. Ltd v. All India Hindustan Construction Workers Union, (1974) 2 LLJ 212. (Kerala); National Project Construction Corporation Ltd v. Their Workmen, 1970 Lab. IC 907 (Patna). Raza Textile Labour Union v. Mohan, (1964) 2 LLJ 65 (Allahabad). Rohtas Industries Ltd v. Workmen, (1968) 1 LLJ 710. Viakuntam Estate v. Arbitrator, (1968) 1 LLJ 79 (Madras).

137 Section 10 (4). 138 Section 10 (1) (d). 139 Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha (1980) 1 LLJ 137. 140 1986 Lab. IC 374 (SC). 141 Id. at 380–81. 142 Sec K P Singh v. S K Gokhale, op. cit., 125. 143 (1989) 2 LLJ 550 (SC). 144 (1998) 1 LLJ 150, 152. 145 Engineering Mazdoor Sabha v. Hind Cycles Ltd, op cit., 760. 146 Id at 884. 147 Rohtas Industries Ltd v. Rohtas Industries Staff Union, (1976) 1 LLJ 272 (SC), as per

Krishna Iyer J. 148 (1980) 1 LLJ 137. 149 Under Article 136, the Supreme Court is empowered to grant special leave to appeal from

150 151 152 153 154 155 156 157

158 159 160

any judgement, degree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India other than those constituted by or under any law relating to armed forces in the territory of India. Engineering Mazdoor Sabha v. Hind Cycles, op. cit., 760. Rohtas Industries v. Rohtas Industries Staff Union, op. cit. 274. Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha, op. cit. Government of India, Report of the Study Group on Industrial Relations (North Region) of the National Commission on Labour, 19–20. Government of India, Report of the Study Group on Industrial Relations, op. cit., 20. Government of India, Report of the Study Group for Sugar Industry, (1969) 48. Ibid. This was explained by the Supreme Court in Minerva Mills Ltd v. Its Workers, AIR 1953 SC 505, 507 in the following words: Section 7 (now Section 7A) does not restrict or limit the powers of the government in any manner and does not provide that a tribunal cannot be constituted for a limited period. It is quite clear that such tribunals are not to be constituted permanently. It is only when some industrial disputes arise that such tribunals are constituted and normally such tribunals function so long as the disputes referred to them are not disposed of. But from these circumstances, it cannot be inferred that it is not open to the government to fix a time limit for the life of these tribunals in order to see that they function expeditiously and do not prolong their own existence by acting in a dilatory manner. Section 7A (4) of the Industrial Disputes Act, 1947. (1998) 1 LLJ 868. This decision was followed by the full bench of the Gujarat High Court in Gujarat Mazdoor Sabha v. State of Gujarat, (1999) 1 LLJ 39. Ibid.

161 Section 7 C. 162 Section 7 (1). 163 Section 15. The Industrial Disputes Act, 1947 provides that where an industrial dispute has

164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186

187

been referred to a labour court, tribunal or national tribunal for adjudication, it shall hold its proceedings expeditiously and shall within the period specified in the order referring such industrial dispute or the further period extended under the second proviso to subsection (2A) of Section 10, submit its award to the appropriate government. The Industrial Disputes Act, 1947, Section 11 (1). Industrial Disputes (Central) Rules, 1957, Rule 13. 2011 LLR 62. 1969 MPLJ 33; 1969 JLJ 68. (1958) 2 LLJ 834 (SC). Grindlays Bank Ltd v. Central Government Industrial Tribunal, (1981) 1 LLJ 327 (SC); Satnam Verma v. Union of India, (1985) Lab. IC 738. DDA v. Shri Radhey Shyam Tyagi, (1996) LLR 216 (Delhi). Workmen of Williamson Magor & Co. Ltd v. Williamson Magor & Co. Ltd, (1982) 1 LLJ 33 (SC). Ibid. Tata Consultating Engineers v. Workmen, (1981) 2 LLJ 146, 156. Ibid. Kaloo Singh v. Madan Lal, (1985) Lab. IC 130 (Rajasthan). (1959) 2 LLJ 553; see also EID Parry (India) Ltd v. Industrial Tribunal (1993) 2 LL N 168 (1995) LLR 259. Rajender Kumar Kindra v. Delhi Administration, (1986) Lab. IC 374, 381 (SC). Section 11 A. See MPFA. Dairy Development Corporation Ltd v. V K Durga Rao, (1988) Lab. IC 833 (Andhra Pradesh). See United Plantation Association of Southern India v. K G Sangameshariya, (1997) 4 SCC 741. Punjab Dairy Development Corporation Ltd v. Kala Singh, (1997) 6 SCC 159. 1996 LLR 385. 1984 (Supp.) SCC 520. Adichancellor Farmers Service Co-operative Bank v. L C, (1996) LLR 659. See Shankar Chakravarty v. Britannia Biscuit Co. Ltd, (1979) 3 SCR 1165; Delhi Cloth & General Mills v. Ludh Budh Singh, (1972) 1 LLJ 180 (SC); Bharat Forge Co. Ltd v. A B Zodge, 1996 LLR 385 (SC). Delhi Cloth Mills, (1972) 1 LLJ 180; Shambhu Nath v. Bank of Baroda, AIR 1984 SC 289 and Adichancellor Farmers Service Co-operative Bank v. Labour Court, 1996 LLR

654. 188 See Oriental Containers Ltd v. Engg. Workers Association, (1996) LLR 739. 189 M/s Expo Modern Ltd v. Labour Court, (1995) LLJ 816. 190 Thiruvirkolam v. Presiding Officer, (1997) 1 SCC 9 and P H Kalyani v. Air France,

(1964) 2 SCR 104 and Desh Raj Gupta v. I T, (1991) 1 SCC 249. 191 See Cooper Engineering Ltd. v. PP Mukherjee, (1976) 1SCR 361; S K Varma v. Mahesh

192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218

Chandra, (1983) SLR 799, D Maheshwari v. Delhi Administration, (1983) 3 SCR 949 and Taj Service Ltd. v. Delhi Administration, (1990) LLR 25. (2005) 1 LLJ 1153 (SC). Section 11. The Industrial Dispute (Central) Rule, 1957, Rule 24. Inserted by the Industrial Disputes (Amendment) Act, 2010 wef 15 September, 2010. Punjab National Bank v. Vitro Pharma Products Ltd (1998) Lab. IC 444 (Bombay). Petlad Turkey Red Dye Works Ltd v. Dyes & Chemical Workers Union, (1969) 1 LLJ 548 (SC). These sections deal with the Court’s power to punish for contempt of Court. The Industrial Disputes Act, 1947, Section 36 (4). The Industrial Disputes (Central) Rules, 1957, Rule 30. Bharat Bank v. Employees of Bharat Bank, (1950) LLJ 921 (SC). Bharat Bank v. The Employees of Bharat Bank, (1950) LLJ 921. (1984) 2 LLJ 388. Ibid. United Commercial Bank Ltd v. Their Workmen, (1951) 1 LLJ 621. Union of Workmen v. R S N Co., AIR 1951 Assam. 96; (1956) 1 LLJ 49. (1956) 1 LLJ 49. Government of India, Report of the National Commission on Labour, (1969) 332. Deepak Puri v. Fifth Industrial Tribunal, (1986) Lab. IC 132 (Calcutta). Francis Gomez v. President, Thiruvanathapuram Shops and Commercial Establishments Employees’ Union, 1999 LLR 166. (2003) LLR 816. (1999) LLR 352. (2002) 4 CHN 704. Deepak Puri v. Fifth Industrial Tribunal, (1986) Lab. IC 132 at 134 (Calcutta). Ibid. Calicut Co-operative Milk Supply Union v. Calicut Co-operative Milk Supply Workers’ Union, (1986) Lab. IC 1681 (Kerala). Ameteep Machine Tools v. Labour Court, (1980) 2 LLJ 453 (SC). Modella Textile Workers Union v. Union of India, (1980) Lab. IC 949.

219 (1980) Lab. IC 949 at 952. 220 Ibid. 221 Paradip Port Trust v. Their Workmen, AIR 1977 SC 36. 222 AIR 1977 SC 36 at 42. 223 Hosiery Workers’ Union v. J K Hosiery Factory, Kanpur, (1952) (LAT). 224 Duduwala and Co. v. IT., AIR 1958 Raj. 20. 225 Hall & Anderson Ltd v. S K Neogi, (1954) 1 LLJ 628 (Calcutta). 226 K K Khandilkar v. Indian Hume Pipe Co., Ltd, AIR 1967 Bom. 531, and Shastri v. S D

227 228 229 230 231 232 233 234 235

236 237 238 239 240

241 242 243

244 245

Patil, (1975) 1 LLJ 458 (Bombay) was also to the same effect but was not referred to in the judgement. MSCO (P) Ltd v. S D Rana, (1982) 1 LLJ 431, 437. 1998 LLR 478. A M Sainalabdeen Musaliar v. District Collector, (1994) Lab. IC 57. See Cox & Kings (Agents) Ltd v. Their Workmen, AIR 1977 SC 1666. Maharama Mills Kamgar Union v. N L Vyas, (1959) 2 LLJ 172 (Bombay). Krishnan Kutty Nair v. Industrial Tribunal, (1957) 2 LLJ 45 (Kerala). (1950) LLJ 539. This view was followed in Punjab National Bank v. A N Sen, (1952) 1 LLJ 371. Thakur Yugal Kishor Sinha v. The State of Bihar, (1950) 1 LLJ 539. Interim relief as the term signifies ‘is in aid of the final relief ultimately to be granted and incidental to the power to grant the final relief except in aid to the final relief which could be granted, no interim relief can he given.’ Hotel Imperial v. Hotel Workers’ Union, (1959) 2 LLJ 544 (SC). Delhi Cloth and General Mills v. Rameshwar Dayal, (1960) 2 LLJ 712 (SC). Mehar Singh v. Delhi Administration, ILR (1973) 1 Delhi 732. Jeewan Lal (1929) Ltd v. State of West Bengal, (1975) Lab. IC 1161 (Calcutta). Management of Bihar State Electricity Board v. The Workmen, (1971) 1 LLJ 389 (Patna): See also Management of Bihar Khadi Gramodyog Sangh v. State of Bihar, (1977) Lab. IC 466 (Patna). Punjab National Bank Ltd v. A V Sen, AIR 1952 Punjab, 143. The Industrial Disputes Act, 1947, Section 16. See Bharat Bank Ltd v. Their Workmen, (1950) LLJ 921; United Commercial Bank Ltd v. Their Workmen, (1951) SCR 380; Lloyds Bank Ltd v. Lloyds Bank Union Staff Association, AIR 1956 SC 746. The Industrial Disputes Act, 1947, Section 21. See for instance, in Indian General Navigation and Railway Co. Ltd v. Their Workmen, (1960) 1 LLJ 13 (SC). Chief Justice Sinha speaking for the Court said that it was the duty of the tribunal making an award not to indulge in language which is not characteristic of a judicial approach. In the course of the judgement, the Supreme Court referred to the

246

247 248 249

250 251 252 253

254 255 256

257 258 259 260 261 262 263 264

following excerpts of the award: Curiously enough it appears that the company’s joint agent at Dhurbri dabbled in politics and meddled in internal administration of the unions. He propped up another union and backed it up to stand as a rival union. The Court disapproved of the above remarks of the tribunal and said that it is an instance of its intemperate language with which the award bristles. On the facts it found that the ‘tribunal’ was not …. justified in holding that the management had either meddled in the internal administration of the unions or dabbled in politics, and had, thus been guilty of unfair labour practice. In Pure Drinks (Pvt.) Ltd v. Kirat Singh, (1961) 2 LLJ 99, the Supreme Court observed that the strong language may sometimes be justified in judicial pronouncements, but using strong words without realizing their due significance and without considering whether the use is justified is entirely out of place in judicial pronouncements. Ibid. See K P Singh v. S K Gokhale, (1970) 1 LLJ 125 (Madhya Pradesh). 1 year 2 months (see Daily Aljamiat v. Gopi Nath Aman, 1977 Lab. IC (1352); 1 year 7 months [see Rohtas Industries Staff Unions v. State of Bihar, (1963-64) XXVI. F.J. 3961. See Plantation Corporation of Kerala v. P N Krishan Pillai, (1971) 1 LLJ 116 (Kerala); Plantation Corporation of Kerala v. Purshuthaman Nair, (1967) 1 LLL 593 (Kerala). 2003 LLR 813. Sirsilk Ltd v. Government of Andhra Pradesh, AIR 1964 SC 160. For details of the criticism of Sirsilk Ltd v. Government Andhra Pradesh, AIR 1964 SC 160; See Suresh Chandra Srivastava, ‘Implication of Withholding the Publication of the Industrial Award.’ 2 Banaras Law Journal, (1966), 201. Remington Rand of India v. The Workmen, (1967) 2 LLJ 866 (SC). Id. at 868. For details of the criticism of Remington Rand of India v. The Workmen, case, see Suresh Chandra Srivastava: ‘Effect of Non-Publication of Industrial Award within the Period Prescribed under the Industrial Disputes Act, 1947,’ 10 JILI 321 (1968). Workers of Industry Colliery v. Industry Colliery, (1953) 1 LLJ 190, 194 (SC). Ibid. Allen Berry & Co. Ltd v. Their Workmen, (1951) 1 LLJ 228 (LAT). Id. at 230. See for instance Tobacco Manufacturing (India) Ltd, (1953) 1 LLJ 259 (LAT); Association Cement Co. Ltd v. Their Workmen, (1953) 2 LLJ 369. Goenka Mica Syndicate v. Mohd. Yasin, (1954) 1 LLJ 507 (IT). Id. at 507–08. See for instance, Gorden Woodroff Leather Manufacturing Co. Ltd Workers’ Union v. Their Management, (1949) LLJ 45 (IT); Deccan Sugar and Abkari Co. Ltd v. Their Workmen, (1951) 1 LLJ 572 (IT).

265 ‘Proceedings before an arbitrator under Section 10A or before a labour court, tribunal or

266

267 268 269 270 271 272 273 274 275 276 277 278 279

280 281 282 283 284 285 286 287 288 289 290

national tribunal shall be deemed to have commenced on the date of the reference of the dispute for arbitration or adjudication, as the case may be, and such proceedings shall be deemed to have concluded on the date on which the award becomes enforceable under Section 17A.’ See Jhagrakhand Collieries (Pvt.) Ltd v. Central Government Industrial Tribunal, (1960) 2 LLJ 71 (SC). See also Sarva Shramik Sangh v. Indian Hume Pipe Co. Ltd, 1993 Lab. IC 870. Ibid., See also Inder Singh & Sons Ltd v. Their Workmen, (1961) 2 LLJ 89 (SC). Sarva Shramik Sangh v. Indian Hume Pipe Co. Ltd, (1993) Lab, IC 870 (SC). See United Collieries Ltd v. Its Workmen, (1961) 2 LLJ 75 (SC). Hindustan Times Ltd v. Their Workmen, (1963) 1 LLJ 108 (SC). Raj Kamal Kalamandir (Pvt.) Ltd v. Indian Motion Picture Employees Union, (1963) 1 LLJ 318 (SC), Wenger & Co. Ltd v. Their Workmen, (1963) 2 LLJ 403 (SC). Hindustan Times v. Their Workmen, op. cit., Wenger & Co. v. Their Workmen op. cit., 403. Lloyds Bank Ltd v. Lloyds Bank Union Staff Association, AIR 1956 SC 746. South India Bank Ltd v. A R Chako, (1964) 1 LLJ 19 (SC). Ibid. at 22. (1964) 1 LLJ 19. The Industrial Disputes Act, 1947, Section 29. Government of India, Indian Labour Year Book, (1965), 328. Central Bank of India Ltd v. P S Rajgopalan, (1963) 2 LLJ 89 (SC). See also Kasturi and Sons (Pvt) Ltd v. Salivateeswran, (1958) 1 LLJ 527 (SC). South Arcot Electricity Distribution Co. Ltd v. Elumalai, (1959) 1 LLJ 624 (Madras); Kairbetta Estate v. Rajamanikam, (1960) 2 LLJ 275 (SC): Punjab National Bank v. Kharbanda, (1962) 1 LLJ 234; Central Bank of India Ltd v. Rajagopalan op. cit. N A Choudhary v. Central Inland Water Transport Corporation Ltd, (1978) 1 LLJ 167 (SC). Ibid. at 169. Sitabai Naruna Pujari v. M/s Auto Engineer, (1972) 1 LLJ 290 (Bombay). Yad Ram v. B N Singh, (1974) 2 LLJ 306 (Delhi). J F B & P Works (P) Ltd v. B Sharma, (1977) 1 LLJ 306 (Patna). Punjab Beverages v. Suresh Chand, AIR 1978 SC 995. Chief Mining Engineer, East India Coal Co. Ltd v. Rameshwar, AIR 1968 SC 218. State Bank of Bikaner v. R L Khandelwal, (1968) 1 LLJ 589. Central Bank of India Ltd v. P S Raja Gopalam, AIR 1964 SC 743. Namor Ali v. Central Inland Water Transport Corporation Ltd, AIR 1978 SC 275. (1995) 1 LLJ 395 (SC).

291 Bombay Gas Co. v. Gopal Bhiwa, AIR 1964 SC 752. 292 Athani Municipality v. Labour Court, AIR 1969 SC 1335. 293 (1980) Lab. IC 1084 (SC). 294 2006 LLR 1219 (SC). 295 2000 (87) FLR 849 (S): 2001 (1) SCC 73. 296 Rathikanthamanal v. B Pankajaminal, (1988) 1 LLJ 423 (Madras); Ambabai Manjunath

297 298 299 300 301 302

303 304 305 306 307 308 309 310 311 312 313

314

Amin v. P L Majumdar, (1987) 1 LLJ 36 (Bombay); Jharia Fire Bricks & Pottery Works v. B Sharma, (1977) 2 LLJ 366 (Patna); Gwalior Rayons v. Labour Court, (1978) 2 LLJ, 188 (Kerala); Smt. Dhanalakshmi v. Reserve Bank of India, (1999) Lab. IC 286 (Karnataka). 2010 (6) SCALE 300. C B R Ratnam & Co. v. Ekambram, (1957), 2 LLJ 206 (Madras). Rivers Steam Navigation Co. Ltd v. Inland Stream Navigation Workers Union, (1964) 1 LLJ 98 (Calcutta). Ambica Mills Ltd v. Second Labour Court, (1967) 2 LLJ 800 (Gujarat). C K Iypunny v. Madhu Sudan Mills, (1964) 1 LLJ 197 (Bombay). Management Shahdara (Delhi) Sharanpur Light Railway Co. Ltd v. S S Railway Workers Union, AIR 1969 SC 513. See also Ashok Leyland Ltd v. State of Tamil Nadu, (2004) 3 SCC 1 and J H Yadav. v. M/s Forbes Gokak Ltd (2005) LLR 314. Bum and Co. v. Their Workmen, (1957) 1 LLJ 226. Agra Electric Supply Co. v. Alladin, AIR 1970 SC 5 13. Guest Keen Williams P Ltd v. P J Sterling, (1959) 2 LLJ 405. (1997) LLR 1067 (AP). AIR 1958 SC 1018. AIR 1967 SC 948. (1969) 2 SCC 283. AIR 1995 SC 1655. (1995) II CLR 797. 1980 (supp) SCC 420. Jagdamba Auto Industries v. Kamal Yadav, 45 (1991) DLT 125; Management of Delhi Development Authority v. Shri Radhey Shyam Tyagi, (1996) (74) I.F.L.R; Warning Coop. Agriculture Services Society Ltd v. State of Punjab and Others, (1987) Lab & IC 359 (P&H) and UPSRTC Kanpur v. State of UP. & Ors. (1996) (1) LLJ 31; See also Anil Sood v. S K Sarvaria, (1997) LLR. 386; State of Rajasthan v. Panna Ram, (1999) Lab. IC 490 (Raj.). Kaivalyadham Employees Association v. Kaivalyadham SMYM Samity, 2009 LLR 340 (SC). In this case, the Supreme Court also held that if the amount is reduced or directed to be calculated under Section 33 C(2) of the IDA, it would frustrate the very purpose of section 17B which, as has been consistently held by this Court, is to provide the workman with the means of sustenance for his family members and himself during the pendency of

the proceedings taken by the employer before the High Court or the Supreme Court. 315 Bharat Singh v. Management, New Delhi Tuberculosis Centre, 1986 Lab. IC 850. 316 Ibid. 317 2008 LLR 520 (SC). 318 2008 (1) JCR 255 (SC). 319 Daladdi Co-operative Agriculture Service Society Ltd v. Gurcharan Singh, (1993) (5) 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343

344 345

Serv LR 719 (P&H) and Kirtiben B Arain v. Mafatlal Apparels, (1995) (2) Guj LR 804. Vishveswaraya Iron and Steel Ltd v. M Chandrappa, (1994 (84) FJR 46) (Kant). Carona Sahu Co. Ltd v. A K Munakhan, (1995) (1) LLN 1014 (Mad) and P Channaiah v. Dy. Ex. Eng. (1996) (2) Lab LJ 240) (AP). AIR 1998 SC 511 : (1998) 2 LL 1 (SC). 2008 LLR 520 (SC). 2011 LLR 77. 2010 LLR 813. 2011 LLR 162. (2001) 5 SCC 169. AIR 1998 SC 511. (2001) 5 SCC 169. (2000) 5 SCC 64. (1999) 1 LLJ 449 (SC). (1999) LLR 45 (Mad.). 2009 LLR 340 (SC). 2005 LLR 641. Amar Singh v. State of Rajasthan, AIR 1955 SC 504. Yasin v. Town Area Committee, (1952) SCR 572. Irani v. State of Madras, AIR 1961 SC 1731. L. Chandra Kumar v. Union of India, (1997) Lab. IC 1098. (SC). See for example, Darayo v. State of UP, AIR 1961 SC 1457. Raj Krishna Bose v. Binod, AIR 1954 SC 202. State of UP v. Mohd. Nooh, AIR 1958 C 86: Gandhinagar Motor Transport Society v. Bombay State, AIR 1954 Bombay 202. Kuchni v. State of Madras, AIR 1959 SC 725. Kirloskar Electric Co. v. Their Workmen, AIR 1973 SC, 2119; Province of Bombay v. Khushaldas, AIR 1950 SC 222; T C Basappa v. T Nagappa, AIR 1954 SC 440; Shivaj Nathubai v. Union of India, AIR 1963 SC 606. See also Hindustan Levers Ltd v. B N Dongre, (1995) Lab IC. 113(SC). Engineering Mazdoor Sabha v. Hind Cycles, AIR (1963) SC 874. Ibid; See also Gujarat Steel Tubes Ltd v. Its Mazdoor Sabha. AIR 1980 SC 1897.

346 State of Madras v. C P Sarathy, (1953) SCR 334. 347 Jaswant Sugar Mills v. Lakshmi Chand, AIR 1963 SC 677. 348 Andhra Scientific Co. v. Seshagiri Rao, AIR 1967 SC 408; Dabur v. Workmen, AIR

1968 SC 17. 349 Newspapers Ltd v. State Industrial Tribunal, AIR 1957 SC 537; CKG Sugar Mills v. All

350 351 352

353 354 355 356

357 358 359 360 361 362 363 364 365

366

Hasan, AIR 1959 SC 230; Sindhu Hochief v. Pratap Dialdas, (1968) 2 LLJ 515. (Bombay). Indian Iron & Steel Company v. Their Workmen, AIR 1958 SC 130; National Project Construction Corporation Ltd v. Their Workmen, (1970) Lab. IC 907. S M. Islan v. Suite of Bihar, AIR 1956 Patna 73; National Project Construction Corporation Ltd v. Their Workmen, op. cit. DC Works v. State of Saurashtra, AIR 1957 264; Parry & Co. v. Second Industrial Tribunal, AIR 1970 SC 1334; Gujarat Steel Tubes Ltd v. Its Mazdoor Sabha, (1980) 1 LLJ 137 (SC). Hindustan Construction Co. v. All India Hindustan Construction Workers Union, (1974) 2 LLJ 212 (Kerala). National Project Construction Corporation v. Their Workmen, op. cit., Textile Employee Association v. Arbitrator, (1968) 1 LLJ 349 (Madras). Ibid. Veerappa v. Raman, AIR (1952) SC 192; Rajkrishna v. Binod, AIR 1954 SC 202; Shri Ambika Mills v. S B Bhat, AIR (1961) SC 970; Gujarat Steel Tubes v. Its Mazdoor Sabha, AIR 1980 SC 1897. Gujarat Steel Tubes v. Its Mazdoor Sabha, AIR 1980 SC 1897. Ibid. Ibid. See Ram Prasad v. State of Bihar, Chintamani Rao v. State of MP, AIR 1951 SC 11 8; AIR 1953 SC 215; State of Jammu and Kashmir v. Ganga Singh, AIR 1951 SC 356. See for example, Bengal Immunity Co. v. State of Bihar, (1955) 2 SCR 603; Himmat Lal v. State of MP (1954) SCA 654; Mini Chatterjee v. PSC, AIR 1958 Calcutta 345. Mhd. Yasin v. Town Area Committee, (1952) SCR 572. See for example, Shanker v. Returning Officer, AIR 1952 Bombay 277; Rameshwar v. Municipal Board, AIR 1958 Allahabad 841. See for example, Balkrishna v. LT Commissioner, AIR 1954 Madras 11 18; Babulal v. Collector, AIR (1956) M.B. 221. See for example, Durga Pd. v. State of UP, (1954) SCA 204; State of Rajasthan v. Nathumal, (1954) SCA 347: Saroj Rawat v. Secy. Bar Council, AIR 1954 All 745; State of Madras v. Swadeshmitran, AIR (1958) Cal. 227; Indumati Devi v. Bengal Court of Wards, AIR 1958 Cal. 385. Brij Bhusan v. Delhi, AIR 1950 SC 129; Himmat Lal v. State of M.P., AIR 1954 SC 1403; Commissioner v. Lakshmindra, (1954) SCR 1005: Sales Tax Officer v. Budh

Prakash, (1955) 1 SCR 243. 367 See for example, Indumati Devi v. Bengal Court of Wards, AIR 1938 Cal. 384; Manak

Chandy, Municipal Council, AIR 1951 Raj. 139. 368 Ram Roop v. Vishwanath, AIR 1958 All. 256. 369 See for example, D N Banerjee v. P R Mukherji, AIR 1953 SC 58. 370 See for example, Gulab Singh v. Collector of Farukhabad, AIR 1953 All. 585; Dhian

Singh v. Deputy Secretary, AIR 1960 Punjab 41. 371 Ibid. 372 Warayam Singh v. Amar Nath, AIR 1954 SC 2 15. 373 Ahmedabad Mfg. & Calico Ptg. Co. v. Ramtahel, AIR 1972 SC 1598; Statesman Ltd v.

Workmen, (1976) 1 LLJ 484 (SC). 374 Hari Vishnu Kamath v. Ahmad Ishaq, AIR 1955 SC 223. 375 Pritam Singh v. The State, AIR 1950 SC 169 at 171. 376 Raj Krishna v. Binod, AIR 1954 202-204, Durga Shankar v. Raguraj Singh, AIR 1954

377

378 379

380 381 382 383 384 385 386

387 388 389

SC 520; D.C. Cotton Mills v. Commissioner of Income Tax, AIR 1965 SC 65. 69; Sangram Singh Eastern Railways, AIR (1958) SC 525, 529; L.G.N. Co. v. Workmen, AIR 1960 SC 219, 224; Laliteshwar Prasad v. Bateshwar Prasad, AIR 1966 SC 580, 585. Kishorilal v. Union of India, AIR 1959 SC 1362; See also, Rampa v. Bajappa, AIR 1963 SC 1833; Raruha Singh v. Achal Singh, AIR (1961) Balkrishna v. Ramaswami, AIR (1965) SC 195. See for example, Venkatramana v. State of Mysore, AIR 1965 SC 255 at 262. The reasons are two-fold (i) the Court may not be in full possession of all material circumstances to make up its mind and (ii) the order is only ex-parte. (see Bengal Chemical and Pharmaceutical Works Ltd v. Their Employees, AIR 1959 SC 633. Ibid. See for example, Harish Chandra v. The Colli, AIR 1957 SC 444; Punjab National Bank v. Industrial Tribunal, (1959) SCR 220. Gujarat Steel Tubes v. Its Mazdoor Sabha, AIR 1980 SC 1987. Hindustan Tin Works Ltd v. Its Employees, (1958) 2 LLJ 474 (SC). Shaw Wallace & Co. v. Workmen, (1978) 1 LLJ 482 (SC). Model Mills v. Dharam Das, (1958) 1 LLJ 539 (SC) See also Bharat Bank v. Employees of Bharat Bank, AIR (1950) SC 188. Bengal Chemical P. Ltd v. Their Employees, AIR 1959 SC 633; Clerks Depot and Cashiers of the Calcutta Tramways Co. Ltd v. Calcutta Tramways Co., AIR 1957 SC 387. Clerk of Calcutta Tramways v. Calcutta Tramways, AIR 1957 SC 387. Bengal Chemical and Pharamaceutical Works Ltd v. Their Employees, (1959) 1 LLJ 413 (SC). Ibid.

390 Calcutta Electric Supply Co. v. Their Workmen, AIR 1959 SC 119 1. 391 Rohtas Industries Ltd v. Brijnandan Pandey, (1956) 2 LLJ 444 (Patna). 392 JK Iron and Steel Co. Ltd v. Mazdoor Union, AIR 1957 SC 78, 81. 393 Mahalakshmi Sugar Mills v. Their Workmen, (1961) 2 LLJ 822 (SC). 394 Bharat Bank v. Employees of Bharat Bank, AIR (1950) SC 188. 395 Bengal Chemical & Pharmaceutical Works Ltd v. Their Employees, AIR 1959 SC 633. 396 Ibid. 397 Clerks of Calcutta Tramways Co. Ltd v. Calcutta Tramways Co. Ltd, AIR (1957) SC 78. 398 Rohtas Industries v. Brijnandan Pandey, AIR 1957 SCI. 399 Takla Experiment Station v. Its Workmen, (1961) 2 LLJ 697, Model Mills v. Dharam 400 401 402 403 404 405 406

407 408 409 410 411 412

Das, AIR 1958 SC 311. Mahalakshmi Sugar Mills v. Their Workmen, (1961) 2 LLJ 622 (SC). Government of India, Second Five-Year Plan (1956) 49. Employers’ Federation of India, Workers Participation in Management, (1971), 6. Ibid. See Charles A Myers and Subbiah Kannappan, Industrial Relations in India, (1970), 284. See clause 5. The Joint Management Council introduced in Hindustan Machine Tools in 1958 soon became extinct, after the union complained that unilateral actions were taken by management without the consultation of workers’ representative (see Statesman, 22 October, 1957). Government of India, Indian Labour Journal, December, 1970. K V Iyer ‘The Role of workers’ Participation in Management in improving Productivity,’ Indian Labour Journal, August 1965. Government of India, Report of the National Commission on Labour, (1969), 346–47. 1991 Lab. IC 1270 (SC). Government of India, Report of the National Commission on Labour, (1969), 356–57. Id at 312.

CHAPTER

18 Powers of the Appropriate Government I. GOVERNMENT’S POWER OF REFERENCE A. The Legislative Scheme Section 101 of the Industrial Disputes Act, 1947, empowers the appropriate government not only to refer the industrial dispute but also to choose the dispute settlement process. Thus, Sub-section (1) thereof provides: Where the appropriate government is of the opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing — (a) refer the dispute to a board for promoting a settlement thereof, or (b) refer any matter appearing to be connected with or relevant to the dispute to a court for inquiry, or (c) refer the dispute or any matter appearing to be connected with or relevant to the dispute, if it relates to any matter specified in the Second Schedule, to a labour court for adjudication, or (d) refer the dispute or any matter appearing to be connected with, or relevant to the dispute, whether it relates to any matter specified in the Second Schedule or the Third Schedule, to a tribunal for adjudication. The discretion to choose the dispute settlement process, however, is not unqualified. Under Sub-section (2) of Section 10: Where the parties to an industrial dispute apply in the prescribed manner, whether jointly or separately, for a reference of the dispute to a board, court,

labour court, tribunal or national tribunal, the appropriate government, if satisfied that the persons applying represent the majority of each party, shall make the reference accordingly. And under the second proviso to Section 10(1) (d): Where the dispute relates to a public utility service and a notice under Section 22 has been given, the appropriate government shall, unless it considers that the notice has been frivolously or vexatiously given or that it would be inexpedient so to do, make a reference (to a labour court or tribunal for adjudication) under this sub-section not withstanding that any other proceedings under this Act in respect of the dispute may have commenced. Besides, the choice of dispute settlement process, like any other executive discretion, is necessarily regulated by the exigencies of circumstances.2 But where the parties to an industrial dispute apply in the prescribed manner, whether jointly or separately, for a reference of the dispute to a board, court, labour court or tribunal, the appropriate government, if satisfied that the persons applying represent the majority of each party, shall make a reference accordingly.3 The choice of forum on the other hand, is relaxable. Thus, the first proviso to Section 10(1)(d) specifically provides that where the dispute relates to any matter specified in the Third Schedule and is not likely to affect more than 100 workmen, the appropriate government may, if it so thinks fit, make the reference to a labour court under clause (c). Likewise, where the dispute in relation to which the Central Government is the appropriate government, it shall be competent for the government to refer the dispute to a labour court or an industrial tribunal, as the case may be, constituted by the state government.4 Sub-section (5) of Section 10 empowers the government to add new parties to the dispute where a dispute concerning any establishment or establishments has been or is to be referred to a labour court, tribunal or national tribunal, if the appropriate government is of the opinion, whether on an application made to it in this behalf or otherwise, that the dispute is of such a nature that any other establishment, group or class of establishments of a similar nature is likely to be interested in, or affected, by such dispute. The appropriate government may, at the time of making the reference or any time thereafter but before the submission of the award, include in that reference such establishment, group or class of establishments, whether or not at the time of such inclusion any dispute exists or is apprehended in that establishment, group or class of establishments.

There is, however, no statutory provision empowering the appropriate government to enlarge the subject-matter of reference, though it may, by making a new reference to the same tribunal, achieve that objective.5 The labour court, tribunal or national tribunal as the case may be, shall confine its adjudication to the points of dispute specified by the appropriate government in an order or in a subsequent order referring an industrial dispute or matters incidental thereto.6 Sub-section (3) of Section 10 empowers the appropriate government to prohibit the continuance of any strike or lockout which may be in existence on the date of the reference. It reads: Where an industrial dispute has been referred to a board, labour court, tribunal or national tribunal under this Section, the appropriate government may by order prohibit the continuance of any strike or lockout in connection with such dispute which may be in existence on the date of the reference. And, thus, together with Sections 22 and 23 has provided the complete mechanism for the regulation of instruments of economic coercion. The Industrial Disputes (Amendment and Miscellaneous Provision) Act, 1956, granted additional powers to the Central Government: Where the Central Government is of opinion that an industrial dispute exists or is apprehended and, the dispute involves any question of national importance or is of such a nature that industrial establishments situated in more than one state are likely to be interested in, or affected by, such dispute and that the dispute should be adjudicated by a national tribunal, then, the Central Government may, whether or not it is the appropriate government in relation to that dispute, at any time, by order in writing, refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, whether it relates to any matter specified in the Second Schedule or the Third Schedule, to a national tribunal for adjudication. And, lest concurrent jurisdictions create confusion. Section 10 (1A) provides: Where any reference has been made under sub-section (1A) to a national tribunal, then notwithstanding anything contained in this Act, no labour court or tribunal shall have jurisdiction to adjudicate upon any matter–which is under adjudication before

the national tribunal, and accordingly. (a) if the matter is under adjudication before the national tribunal and is pending in a proceeding, the proceeding before the Labour Court or the Tribunal, as the case may be, in so far as it relates to such matter, shall be deemed to have been quashed on such reference to the national tribunal, and (b) it shall not be lawful for the appropriate government to refer the matter under adjudication before the national tribunal to any labour court or tribunal for adjudication during the pendency of the proceeding in relation to such matter before the national tribunal. Sub-section 2A and Sub-section 8 of Section 10 has been inserted by the Industrial Disputes (Amendment) Act, 1982 to: (i) fill the gap in the absence of any provision specifying time limit within which the adjudicating authorities would submit their award, (ii) provide for the continuance of proceedings on the death of either parties respectively. Thus, Section 2A provides that an order referring an industrial dispute to a labour court, tribunal or national tribunal shall specify the period within which such labour court, tribunal or national tribunal shall submit its award on such dispute to the appropriate government. However, (i) where such industrial dispute is connected with an individual workman, no such period shall exceed three months, (ii) where the parties to an industrial dispute apply in the prescribed manner, whether jointly or separately, to the labour court, tribunal or national tribunal for extension of such period or for any other reason, and the presiding officer of such labour court, tribunal or national tribunal considers it necessary or expedient to extend such period, he may for reasons to be recorded in writing, extend such period by such further period as he may think fit, (iii) in computing any period specified in this sub-section, the period, if any, for which the proceedings before the labour court, tribunal or national tribunal had been stayed by any injunction or order of a civil court shall be excluded, (iv) no proceedings before a labour court, tribunal or national tribunal shall lapse merely on the ground that any period specified under this sub-section had expired without such proceedings being completed. Likewise, in order to provide continuity to the proceedings before the adjudicating authority, Sub-section 8 of Section 10 provides that: No proceedings pending before a labour court, tribunal or national tribunal in relation to an industrial dispute shall lapse merely by reason of the death of any of the parties to the dispute being a workmen, and such labour court, tribunal or national

tribunal shall complete such proceedings and submit its award to the appropriate government.

B. The Conditions Precedent 1. Intervening Government must be the ‘Appropriate Government’. Section 2 (a) of the Industrial Disputes Act, 1947 defines ‘appropriate government’ to mean: In relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government or by a railway company or concerning any such controlled industry as may be specified in this behalf by the Central Government or in relation to an industrial dispute concerning a Dock Labour Board established under Section 5A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948), or the Industrial Finance Corporation of India established under Section 3 of the Industrial Finance Corporation Act, 1948 (15 of 1948), or the Employees’ State Insurance Corporation established under Section 3 of the Employees State Insurance Act, 1948 (34 of 1948), or the Board of Trustees constituted under Section 3A of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, (46 of 1948), or the Central Board of Trustees and the State Boards of Trustees constituted under Section 5A and Section 5B, respectively of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or the ‘Indian Airlines’ and ‘Air India’ Corporations established under Section 3 of the Air Corporation Act, 1953 (27 of 1953), or the Life Insurance Corporations of India established under Section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956), or the Oil and Natural Gas Commission established under Section 3 of the Oil and Natural Gas Commission Act, 1959 (43 of 1959), or the Deposit Insurance and Credit Guarantee Corporation established under Section 3 of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), or the Central Warehousing Corporation established under Section 3 of the Warehousing Corporations Act, 1962 (58 of 1962), or the Unit Trust of India established under Section 3 of the Unit Trust of India Act, 1963 (52 of 1963), or the Food Corporation of India established under

Section 3, or a Board of Management established for two or more contiguous States under Section 16 of the Food Corporations Act, 1964 (37 of 1964), or the International Airports Authority of India constituted under Section 3 of the International Airports Authority of India Act, 1971 (43 of 1971), or a regional rural bank established under Section 3 of the Regional Rural Banks Act, 1976 (21 of 1976), or the Export Credit and Guarantee Corporation Limited or the Industrial Reconstruction Corporation of India Limited or a banking or an insurance company, a mine, an oilfield, a cantonment board or a major port, any company in which not less than 51 per cent of the paid-up share capital is held by the Central Government, or any corporation, not being a corporation referred to in this clause, established by or under any law made by Parliament, or the Central public sector undertaking, subsidiary companies set up by the principal undertaking and autonomous bodies owned or controlled by the Central Government, the Central Government and (ii) in relation to any other industrial dispute including state public sector undertakings, subsidiary companies set up by the principal undertaking and autonomous bodies owned or controlled by the state government, the state government: Provided that in case of a dispute between a contractor and the contract labour employed through the contractor in any industrial establishment where such dispute first arose, the appropriate government shall be the Central Government or the state government, as the case may be, which has control over such industrial establishment. 2. Authority of the Central Government. When the undertaking is run by an incorporated company and not directly by the Central Government or any of its departments, then the company cannot be said to be carrying on the business under the authority of the Central Government. In effect, the company is separate from its shareholders and the facts that the entire share capital was contributed by the government, the shares are held by agent of the President or the Central Government and the ministers can appoint the directors and can give them instructions, are immaterial.7

C. Controlled Industry The definition of the ‘appropriate government’ includes such controlled industries as may be specified in this behalf by the Central Government, and therefore, unless the Central Government is specified in this behalf, it would not be the appropriate government.8

D. Determination of the Appropriate Government In Workmen of Sri Ranga Vilas Motors (P) Ltd v. Sri Ranga Vilas Motor (P) Ltd9, the head office of the company was located in Krishnagiri in the state of Madras (New Tamil Nadu) and it had a branch at Bangalore but the dispute was sponsored by the workman at Krishnagiri. It was contended that since the dispute become an industrial dispute at Krishnagiri, the state of Madras and not the State of Mysore was the appropriate government. The Supreme Court ruled: The place where the impugned order operates on the service of a workman is the place where the cause of action arises and the state in which the place is situated will be the appropriate government. Earlier it held: There should clearly be some nexus between the dispute and the territory of the State and not necessarily between the territory and the industry concerning which the dispute arose. Ordinarily, if there is a separate establishment and the workman is working in that establishment, the dispute would arise in that establishment. Since there was a separate establishment at Bangalore where the concerned workman and other workmen where working, the impugned order had to operate on the workman at Bangalore and, therefore, the Government of Mysore was the appropriate government. India Cables Co. Ltd v. Workman10 highlighted the issue as to which of the states has jurisdiction to make a reference in regard to dispute arising out of closure of undertaking in one state and transfer to the other state. In order to resolve the problem, the Supreme Court followed the test laid down in Lalbhai Tricumlal Mills Ltd v. Vin (D.M.)11 for determining the appropriate government. It ruled that a court or tribunal would have jurisdiction if the parties reside within its jurisdiction or if the subject-matter of the dispute substantially

arises within its jurisdiction. The proper test to determine ‘appropriate government’ in relation to an industrial dispute is to see where the dispute substantially arose. If a workman is working in a separate establishment, the dispute can be taken to arise only at the place where the establishment exists. The mere fact that the head office exercises administrative control over the workman does not confer jurisdiction on the government within whose territorial jurisdiction the head office was located to make a reference under Section 10. The Court accordingly held that the employer, by participating in the conciliation proceeding, submitted itself to the jurisdiction of conciliation officer and therefore, he cannot be allowed to dispute the jurisdiction of the state government to make a reference. In Goa Sampling Employees’ Association v. G S Company of India P. Ltd,12 the Supreme Court was invited to consider whether the administration of the Union Territory of Goa, Daman and Diu fell within the state government under Section 2 (a) (i) read with Section 10 (1). The Court answered the question in the negative and observed that under the Government of Union Territories Act, 1963, the concept of state government was foreign to the administration of union territory. The Court further added that Article 239 which provides that every union territory is to be administered by the President who acts through an administrator appointed by him, suggests that the administrator is the delegate of the President and his position is entirely different from that of Governor of a state. Accordingly, the Court held the Central Government was the appropriate government. The question concerning interpretation of the concept of ‘appropriate government’ defined under Section 2 (a) of the Industrial Disputes Act, 1947 came up for consideration in Tata Memorial Hospital Workers Union v. Tata Memorial Centre13. A dispute arose between the Tata Memorial Hospital Workers’ Union and the management. The labour court in Mumbai rejected the demands of the hospital’s employees’ union to stage demonstrations against unfair labour practices like deduction of salary, citing that the hospital is governed by the Union government laws, hence, the special state law, Maharasthra Recognition of Trade Unions and Prevention of Unfair Labour Practices, Act, 1971 (MRTU), was not applicable to it. Dismissing a Bombay High Court judgment, the Supreme Court held that the Tata Memorial Centre

was not under the control of the Central Government and the appropriate government in this case was the state government. The scope of the expression ‘appropriate government’ under the ID Act, 1947 has been debated since long. In Heavy Engineering Mazdoor Union v. State of Bihar14 the expression 'appropriate government' was interpreted as follows: When the undertaking is run by an incorporated company and not directly by the Central Government or any of its departments, then the company cannot be said to be carrying on the business under the authority of the Central Government. In effect, the company is separated from its shareholders and the mere fact that the entire share capital was contributed by the Central Government and the shares are held by the President and some officers of the Government does not make it an agent of the President or the Central Government. The fact that the ministers can appoint the directors and can give them instructions is immaterial. Hindustan Aeronautics Ltd v. Workmen15 is another case of significance. Here, a bench of three judges of the Supreme Court was concerned with the dispute between the management of the Barrackpore branch of the appellant government company situated in West Bengal and its employees. The appellant had challenged the award of the industrial tribunal, West Bengal and one of the challenges was to the competence of the government of West Bengal to make the reference of the industrial dispute. It was contended that the Barrackpore branch was under the direct control of the Bangalore Division of the company and since it was a government company constituted under section 617 of the Companies Act, (the shares of which were entirely owned by the Central Government), the reference ought to have been made either by the Central Government or by the government of Karnataka. This Court rejected the contention and observed: The workers were receiving their pay packages at Barrackpore and were under the control of the officers of the company stationed there. If there was any disturbance of industrial peace at Barrackpore where a considerable number of workmen were working, the appropriate government concerned in the maintenance of the industrial peace was the West Bengal government. The grievances of the workmen of Barrackpore

were their own and the cause of action in relation to the industrial dispute in question arose there. The reference, therefore, for adjudication of such a dispute by the Governor of West Bengal was good and valid. It is difficult to support the line of reasoning followed by the court particularly one which has been underlined. If this view is accepted in all establishments run by the government, the state government should be appropriate government because the law and order falls under the purview of state government. Further, it ignores the fact that 'labour' falls under concurrent list. Moreover, it runs counter to the object and scheme of the Industrial Disputes Act, 1947. The aforesaid view was reiterated in Rashtriya Mill Mazdoor Sangh, Nagpur v. Model Mills,16 a reference (though under the Bombay Industrial Relations Act, 1946) of the demands of the employees for payment of bonus was challenged on the ground that an authorized controller under the Industries (Development and Regulation) Act, 1951 had been appointed in respect of the industrial undertaking and since the undertaking was being run by an authorized controller under the authority of a department of the Central Government, the reference under the Bombay Industrial Relations Act, 1946 was not competent. A bench of three judges of this Court once again referred to the interpretation given in Heavy Engineering Mazdoor Union's case and held that even though the authorized controller was appointed by the Central Government and that he had to work subject to the directions of the Central Government, it would not render the industrial undertaking an agent of the Central Government and therefore, could not be said to be an establishment engaged in an industry carried on by or under the authority of the Central Government. The aforesaid line of approach was reiterated in Food Corporation of India Workers Union v. Food Corporation of India17. Therein, a writ petition was filed by the employees seeking the regularization of their services under the Contract Labour (Regulation and Abolition) Act 1970. In that matter, inspite of the fact that FCI is a specified industry under Section 2(a) (i) of the Industrial Disputes Act 1947, the Supreme Court referred to the definition of ‘appropriate government’ under the CLRA Act 1970. It referred to judgments in Heavy Engineering Mazdoor Union and Rashtriya Mill Mazdoor Sangh (supra) with approval, and held that for the regional offices and warehouses which were situated in various states, the state governments were the ‘appropriate governments’ and not the Central Government. The aforesaid decision by ignoring the specific inclusion of FCI in the

definition of ‘appropriate government’ has rendered the specific inclusion a useless appendage. The issue figured again in Air India Statutory Corporation v. United Labour Union.18 The three judge bench of the Supreme Court, while dealing with the issue under the Contract Labour Regulation Abolition Act, adopted the definition of appropriate government under the Industrial Disputes Act. The Court was concerned with the question as to whether the Central Government was the competent appropriate government for the purposes of the notification which it had issued under that Act to abolish the contract labour system in the establishment of the appellant. The court held that the Central Government was the ‘appropriate government’. After examining the principles laid down in R D Shetty v. International Airport Authority of India19 and Ajay Hasia v. Khalid Muzib Sehravardi20, the Court held that corporations and companies controlled and held by the state governments will be institutions of those states within the meaning of Article 12 of the Constitution. A priori, in relation to corporations and companies held and controlled by the Central Government, the ‘appropriate government’ will be the Central Government. However, the three-judge bench of the Supreme Court held that the bench in Heavy Engineering case narrowly construed the meaning of phrase ‘appropriate government’ placing reliance on the concession and common law doctrine of ‘principal and agent’ which no longer bears any relevance when it is tested on the anvil of Article 14 of the Constitution. The Supreme Court accordingly overruled its earlier decision in Heavy Engineering case and observed that the public law interpretation is the appropriate principle of construction of the phrase ‘appropriate government’. In Steel Authority of India Ltd v. National Union Water Front Workers21, the constitution bench of Supreme Court was invited to re-determine the scope of the expression ‘appropriate government’. The following questions arose for determination: (i) Is the Central Government the appropriate government in cases of Central Government undertakings ? (ii)

Can an industry carried on by a company/corporation or by or under the authority of the Central Government fall within the meaning of 'appropriate government' under Section 2(1) (a) CLRA Act ?

(iii) Can the state government corporation/company/undertaking fall under the authority of the Central Government if it is owned by the state government or is an instrumentality or agency of state government? The Court analysed the definition under Section 2(a) (as it then was) and

referred to the meaning given in Concise Oxford Dictionary and Black Law Dictionary and observed: 1. The phrase ‘any industry carried on under the authority of the Central Government’ implies an industry which is carried on (a) by virtue of, (b) pursuant to, (c) conferment of, (d) grant of, (e) delegation of power, or (f) permission by the Central Government to a Central Government company or other government company/undertaking. In other words, if there is lack of conferment of power or permission by the Central Government to the government company or undertaking, it would disable such a company/undertaking to carry on the industry in question. 2. Where the authority, to carry on an industry for or on behalf of the Central Government is conferred on the government company or any undertaking under the statute under which it is created, no further question arises. But if it is not so, the question is whether there is any conferment of authority on the government company or undertaking by the Central Government to carry on the industry in question. This is a question of fact and has to be ascertained on the facts and circumstances of each case. 3. The Supreme Court ruled that the criterion for determining whether the Central Government is appropriate government in government undertaking or company under CLRA Act is that the industry must be carried only by or under the authority of the Central Government and not that the company/undertaking is an instrumentality or an agency of the Central Government for purpose of Article 12 of the Constitution. It is submitted that the Supreme Court, in Steel Authority of India case by holding that ‘where the authority to carry on an industry, for or on behalf of the Central Government, if created by the statute, it would be said to be run under the authority of the Central Government’ has rendered 316 out of the 404 words used in Section 2(a) useless appendage. Indeed, the Court misread the intention of legislature in enacting Section 2(a) and on the whole, threw the legislative scheme out of gears. We believe that both Air India case and Steel Authority of India case, for different reasons, have failed to appreciate the significance of specific inclusion

of 25 establishments created under the statute in section 2(a) of the ID Act, 1947. Quite apart from this, the Supreme Court failed to appreciate the implications of the definition of ‘appropriate government’. Thus, the Central Government is the appropriate government only in relation to an establishment in respect of which the ‘appropriate government’ under the ID Act, 1947 is Central Government and state government in relation to other establishment in which that any other establishment is situated. Thus, the state government is the appropriate government in most of the establishments of the Central Government. In view of this, there is no uniformity in respect to the norms and procedure for enforcement of the Act. There is also variation in regard to scope of coverage of establishment or process, which has been brought within the purview of prohibition under Section 10. Further, an activity may be prohibited in one state but the same activity may not be covered in other state. This poses a problem in the enforcement of the Act. Further, there is variation not only amongst states but also between state and centre in regards to the prohibition and exemptions. All these have created hurdles in the enforcement of the Act22. The aforesaid principle was applied in M/s Delhi International Airport Pvt. Ltd v. Union of India.23 Here, 136 workers were employed by the contractor M/s TDI International Pvt. Ltd to do the work of trolley retrieving at the domestic and international airport, Delhi in the year 1992. In view of the perennial nature of the work, the workmen approached the labour court for abolition of contract labour system and for their absorption as its regular eemployees.24 On 26 July 2004, the Central Government accepted the recommendations of the Contract Labour Board and issued a notification abolishing the contract labour system. The notification was challenged by AAI before the Delhi High Court. The Court felt that the present proceedings cannot be proceeded with till the matter is resolved by the High Powered Committee (HPC). Accordingly, the matter was referred to the HPC and the notification was not given effect to. Meanwhile, the aforesaid 136 workers were removed from service on 5 December 2003 as the contract of M/s TDI International had come to an end and a new contractor, Sindhu Holdings, came in its place. Against this order, these 136 workmen filed a writ petition before the High Court of Delhi praying for their absorption in service as regular employees and for implementation of the notification dated 26 July 2004. The single judge of the High Court dismissed the petition and held that the establishment of AAI is no longer in existence and has changed. As such, the notification dated 26 July 2004, cannot be applied to the new entity, DIAL. In view of this, it directed the appropriate government to issue a fresh notification. Thereupon, the Indira

Gandhi International Airport TDI Karmachari Union filed a letter patent appeal (LPA) against the judgement of the single judge. The Union of India also filed LPA against this judgement. However, during the pendency of these LPAs, an order was passed by the chief labour commissioner, Government of India holding that the appropriate government for DIAL is the Central Government. These orders were challenged by DIAL in a writ petition. After getting the permission, AAI filed another writ petition challenging the said notification on merit. The division bench of the High Court heard all these matters together and passed the impugned order on 18 December 2009. Thereupon, the review petition was filed by the Union of India which was decided on 12 March 2010, by the High Court modifying para 61 of the impugned judgement. Against the impugned judgement of the division bench of the High Court, two appeals were preferred by DIAL and three by AAI and one by the Indira Gandhi International Airport TDI Karmachari Union before the Supreme Court. A question, inter alia arose as to: who is the appropriate government for DIAL under CLRAA and ID Act? The Court answered the question by giving several reasons in support of its conclusions, namely (i) DIAL could not have entered into a contract with AAI without the approval of the Central Government according to the mandate of Section 12A of the AAI Act. (ii) AAI acts under the authority of the Central Government and DIAL acts under the authority of AAI because of its contract with DIAL. From this, it may be concluded that DIAL works under the authority of the Central Government, (iii) The Central Government has given AAI the responsibility for overseeing the airports. To fulfil its obligations, AAI contracted with DIAL. However, if DIAL does not perform its work properly or adequately, then AAI will be breaching its statutory obligations and would be responsible for the consequences, (iv) AAI is under an obligation to follow the directions of the Central Government and if DIAL has undertaken those obligations through OMDA, then DIAL is presumably also obligated to follow such directions, (v) Under Section 12(2) of the AAI Act. AAI is obliged to provide air traffic service at the airport and since AAI has transferred its ‘air transport service’ responsibilities to DIAL, the Central Government must be held to be the appropriate government for DIAL, (vi) Privatization of airports does not mean that the ‘appropriate government’ cannot be the Central Government. In UP Sugar and Cane Development Corpn. Ltd v. Chini Mill Mazdoor Sangth,25 the Supreme Court held that the question of granting promotion is a management function and the labour court could not arrogate to itself such a function unless it is mala fide or by way of any unfair labour practice or victimization. Even if any labour court or industrial tribunal found that promotion had been made which was not justified on the above mentioned

ground, the proper course for it was to set aside the promotion/promotions and ask the management to reconsider the cases of superceded employees and decide for itself as to whom to promote, except of course, the person whose promotion has been set aside by the labour court/tribunal. Regional Provident Fund Commissioner v. Karnataka Provident Fund Employees Union26 raises an important issue whether the activity carried on under the Provident Fund Act, is being carried on by or under the authority of the Central Government as provided in Section 2 (a) or not. Answering the question in the affirmative, the Supreme Court observed: The activity carried on by the central board or the state board under the Provident Fund Act is not similar to the activity carried on by any private trade or manufacturing business. They are truly the agents of the government and they function under the authority of the government as provided in the statute because the Central Government could have, for the purpose of introducing the scheme of compulsory contribution to the provident fund, set up an organization or a department in the absence of the corporate bodies envisaged in the Provident Fund Act. The aforesaid decision is in conformity with the scheme of distribution of powers under the Constitution as also the scheme of the Industrial Disputes Act, 1947.

E. The Dispute Must Exist or Be Apprehended The existence or apprehension of industrial dispute is another condition precedent for making reference of the dispute. However, an opinion has to be formed regarding its existence or apprehension. Naturally, a question arises as to what should be the quantum of materials for such formation of opinion? To what extent the subjectivity or objectivity test should be applied? Whether the dispute, before it is referred, should be specific or even general reference is sufficient? What facts, circumstances, materials should be taken into account by the government while referring the disputes? In C P Sarathy case,27 the respondent manager was chargesheeted under Section 29 for non-implementation of award. An objection as to the validity of award was raised on the ground that what had been referred by the government was not an industrial dispute. Chief Justice Patanjali Shastri appreciating the collective nature of dispute opined that it was not at all necessary that dispute

must actually arise. According to the Chief Justice, the expression ‘or is apprehended’ under Section 10 of the Act is sufficient to indicate that mere apprehension of dispute would arm the government to refer the dispute. In Sindhu Resettlement Corporation v. Industrial Tribunal28, a dispute which was referred to the tribunal was as follows: Demand 1: R S Ambwaney should be reinstated in the service of Sindhu Resettlement Corporation Ltd and he should be paid his wages from 21 February 1958. The tribunal granted reinstatement with back wages to Ambwaney but on appeal the Supreme Court held: Since no such dispute about reinstatement was raised by either of the respondents before the management of the appendix, it is clear that the state government was not competent to refer a question of reinstatement as an industrial dispute for adjudication by the tribunal. The dispute that the state government could have referred competently was the dispute relating to payment of retrenchment compensation by the appellant to respondent 3 which had been refused. The aforesaid observations, reveal that if the basis of an industrial dispute does not exist and the government refers that dispute for adjudication, the tribunal is not bound to adjudicate that dispute without questioning the existence or the basis of that dispute which was never demanded by Ambwaney from the management. The tribunal was competent to question and ought to have decided the existence of the demand of reinstatement. Shambhu Nath Goyal v. Bank of Baroda, Jullundur29 provided an opportunity to the Supreme Court to determine the scope of state government’s intervention under Section 10 of the Industrial Disputes Act. In this case, an employee of the Bank of Baroda was dismissed from service after an inquiry in which the employee appeared and claimed reinstatement. Further, when the union approached the conciliation officer, the management resisted the claim for reinstatement. Thereafter, the employee preferred an appeal to the competent authority. On failure, the dispute was referred to the tribunal. Before the tribunal, the management raised the preliminary objection that the employee had not made a demand. The tribunal accepted the claim of the management and held that the reference was incompetent. Thereafter, the employee preferred an appeal before the Supreme Court. The question before the Court was whether the

government’s reference was proper and in accordance with the provisions of the Act. The Court was of the view that to read into the definition the requirement of written demand for bringing into existence an industrial dispute would be tantamount to rewriting the Section, and ruled: Undoubtedly, it is for the government to be satisfied about the existence of the dispute and the government does appear to be satisfied. However, it would be open to the party impugning the reference that there was no material before the government, and it would be open to the tribunal to examine the question, but that does not mean that it can sit in appeal over the decision of the government. The aforesaid view seems to be opposed to an earlier decision of the Supreme Court in Sindhu Resettlement Corporation Ltd v. Industrial Tribunal, Gujarat.30 The decision in Shambu Nath Goyal v. Bank of Baroda is, however, instructive in two respects. First, the dispute may arise even if it is raised impliedly. The existence of the demand may be seen from the facts of each case. Second, the caution that the tribunal cannot sit in appeal over the decision of the government also helps in maintaining industrial peace. Third, the view that it will be open to the tribunal to examine the question when the party impugning the reference pleads that there is no material before the government for making a reference tries to balance the arbitrary exercise of jurisdiction by the government. Before we conclude the section, it would be relevant to note that though it is the discretion of the appropriate government to form the opinion whether an industrial dispute exists or is apprehended, it must be a honest opinion.31 In other words, the opinion must be reasonably formed and not capriciously or arbitrarily made.32

F. The Choice 1. Two-fold Discretion. The Industrial Disputes Act, 1947 provides for government initiation in persuasive and coercive processes for the settlement of industrial disputes. However, government is vested with large measures of discretion, both in the matter of the choice of settlement process as also in regard to the basic decision to intervene in labour-management relations. 2. Choice of Settlement Process. Section 10, we have already seen, is the omnibus provision empowering the appropriate government to choose a

dispute settlement process. Besides, the limitations are imposed by that section on the choice of settlement process as well the forum for adjudication of industrial disputes. Sections 12(5) and 13(4) regulate government’s choice. Thus under Section 12 (1), where any industrial dispute exists or is apprehended, the conciliation officer may, or where the dispute relates to a public utility service and a notice under Section 22 has been given, shall, hold conciliation proceedings in the prescribed manner and if the conciliation officer fails to effect a settlement, the appropriate government is empowered under Section 12(5) to make a reference of the dispute only to a board of conciliation or the appropriate adjudicating authority and, in particular not to a court of inquiry. Likewise, where a board of conciliation is unable to promote a settlement, the appropriate government is empowered to use coercive process for the settlement of the dispute. Section 13 (4) bars a reference to a court of inquiry. Statutory provisions may, therefore, be summed up as follows: Under Section 10(2) as also under Sections 10(1A) and 13(4), the appropriate government has no role to play in the choice of dispute settlement process. If the parties to the dispute decide the settlement process under first of these the other two remaining sections, in sharp contrast. Section 12(5) grants some, and Section 10(1) confers full, discretion to the appropriate government to choose any one of the prescribed persuasive or coercive processes for effecting settlement of industrial disputes.

G. Nature and Scope of Discretion in Making or Refusing to Make Reference State of Madras v. C P Sarathy33 enunciated an epoch-making principle for exercise of governmental power of reference. Here, the Supreme Court declared that governmental function under Section 10 (1) was administrative in nature and admonished courts from subjecting them to close security. Chief Justice Pitanjali Shastri observed: In making a reference under Section 10 (1), the government is doing an administrative act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. The court cannot, therefore, canvass the order of reference closely to see if there was any material before the government to support its conclusion, as if it was a judicial or quasi-judicial determination.

But, if the dispute was an industrial dispute as defined in the Act, its factual existence and the expediency of making a reference in the circumstances of particular case are matters entirely for the government to decide upon, and it will not be competent for the court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before the government on which it could have come to an affirmative conclusion on those matters. In contrast to the aforesaid decision, there are series of decisions where the Supreme Court34 and high courts have tended to regulate government discretion to an extent where the government may find it extremely difficult to refuse reference. Indeed, courts persist in the government making out a prima facie case for reference and then refusing reference on the ground of ‘relevant’, ‘germane’ and ‘cogent’ reasons. Conversely, the courts are unanimous that ‘extraneous’ as much as ‘irrelevant reasons’ vitiate government determination.35 The contents of the key words, namely ‘relevant’, ‘cogent’, ‘germane’, ‘extraneous’ and ‘irrelevant’ in these observations belie verbal formulation. They are matters of case-to-case determination. Nevertheless, the courts have, on occasions, indulged in the luxury of indicating what they consider to be ‘extraneous’ or ‘irrelevant’36. But beyond these generalities, decisions have invariably turned on the facts of each case. It is submitted that by evolving the aforesaid test, courts had shook the foundation laid in State of Madras v. C P Sarathy.37 It would, however, be significant to note that in Bombay Union of Journalists v. State of Bombay38 the Supreme Court rehabilitated State of Madras v. C P Sarathy. But in spite of this decision, high courts have given conflicting opinions on the application of Section 12 (5), which have left the scope of governmental power to make or refuse reference more uncertain. It is in this context that we have to examine the Supreme Court decision in Avon Services (Production Agencies) Pvt. Ltd v. Industrial Tribunal.39 This decision restored its ruling in State of Madras v. C P Sarathy, Justice Desai speaking for the Court observed: Section 10(1) confers a discretionary power and this discretionary power can be exercised on being satisfied that an industrial dispute exists or is apprehended. There must be some material before the government on the basis of which it forms an opinion that an industrial dispute exists or is apprehended. The power conferred on the appropriate government is an

administrative power and the action of the government in making the reference is an administrative act. The formation of an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. Thus, the jurisdictional facts on which the appropriate government may act are the formation of an opinion that an industrial dispute exists or is apprehended which undoubtedly is a subjective one, the next step of making reference is an administrative act. The adequacy or sufficiency of the material on which the opinion was formed is beyond the pale of judicial scrutiny.40 The aforesaid view found the approval of the Supreme Court in State of Bombay v. K P Krishnan.41 This was followed42 and applied in M/s Hochtief Gammon v. State of Orissa.43 Here the Supreme Court observed that the executive has to reach its decisions by taking into account relevant considerations. They should not refuse to consider relevant matters nor should they take into account wholly irrelevant or extraneous matter. The Court also ruled that even in an administrative decision, whatever may be the reasoning given by the government, the Court will go into the question whether the reasons given by the government are good reasons. But in Prem Kakar v. State of Haryana44, the government of Haryana on receipt of the report of the conciliation officer wherein he found that petitioner was not a ‘workman’ under the Act and, therefore, it was not a fit case for reference refused to make a reference of the workman concerned on the ground that he was not a workman. Aggrieved by the order, the workman filed a writ petition in the High Court of Punjab and Haryana challenging the government’s power to decide the issue whether he was a workman or not. The High Court negatived the contention. Thereupon, he filed a special leave to appeal to the Supreme Court. The Court held that the government had considered all the relevant considerations and no writ of mandamus was maintenanable and that the High Court had rightly rejected the application. In Nirmal Singh v. State of Punjab45, the appropriate government refused to refer the dispute for adjudication on the ground that the delinquent bank employee was not a workman within the meaning of Section 2(s) of the Act but no reasons were given by the government to justify this conclusion. The Supreme Court held that ‘the labour commissioner ought to have given reasons why he came to the conclusion that the appellant is not a workman within the meaning of Section 2(s) of the Industrial Disputes Act.’ The Apex Court,

therefore, directed the labour commissioner to make a reference to the tribunal. Post-1984 witnessed a change in approach of the Court, particularly in regard to the issuance of a writ of mandamus. In Ram Autar Sharma v. State of Haryana46, the government refused to make a reference on the ground that the termination of service of the workman was made after charges against him were proved in a domestic inquiry. Further, the government was of the view that the punishment was not disproportionate to the gravity of the misconduct charged. The validity of the government’s refusal to make reference was challenged in a writ petition filed before the Supreme Court. The Court held that a ‘bare statement that a domestic inquiry was held in which charges were held to be proved, if considered sufficient for not exercising power of making a reference under Section 10 (1), almost all cases of termination of service cannot go before the tribunal and it would render Section 2A of the Act denuded of all its intent and meaning. The reasons given by the government must show that it examined the relevant paper of inquiry and it was satisfied that the inquiry was legally valid and that there was sufficient and adequate evidence to hold the charges proved. Further, the inquiry was not biased against the workman and the punishment was commensurate with the gravity of the misconduct charged. All these relevant and vital aspects have to be examined by the industrial tribunal while adjudicating upon the reference made to it. In other words, the reasons given by the government without examination of these issues would be tantamount to adjudication which is impermissible. That is the function of the tribunal and the government cannot arrogate to itself to that function.’47 Accordingly the Court issued a writ of mandamus. In the same case in another writ petition, the Central Government had declined to make a reference on the ground that the action of the management in imposing on the workman penalty of removal from service on the basis of an inquiry and in accordance with the procedure laid down in the Railway Servants (Discipline and Appeal) Rules, 1968 was neither mala fide nor unjustified. Disapproving the action of the government, the Supreme Court held that ex-facie it would appear that the government acted on extraneous and irrelevant considerations and the reasons mentioned would mutatis mutandis apply in respect of present order of the government under challenge. Accordingly, the Court issued a writ of mandamus. In Workmen of Syndicate Bank v. Government of India,48 the government refused to make a reference on the ground that (i) the charge of misconduct against the workmen was proved in a domestic inquiry; and (ii) penalty was imposed on the workmen after following the required procedure.

Setting aside this order, the Supreme Court observed: It would not be right for the Government of India to refuse to make a reference on the ground that the charges of misconduct against the worker were proved during a duly constituted departmental inquiry and penalty was imposed on the worker after following the required procedure. If such grounds were permissible, it would be the easiest thing for the management to avoid a reference to adjudication and to deprive the worker of the opportunity of having the dispute referred for adjudication, even if the order holding the charges of misconduct proved was unreasonable or perverse or was actuated by mala fides or even if the penalty imposed on the worker was totally disproportionate to the offence said to have been proved. The management has simply to show that it has held a proper inquiry after complying with the requisite procedure and that would be enough to defeat the worker’s claim for adjudication. The Court accordingly directed the government to reconsider the question of making a reference of the industrial dispute for adjudication without taking into account the aforesaid irrelevant ground. In M P Irrigation Karamchari Sangh v. State of M P,49 the Supreme Court was invited to determine the validity of the government’s order refusing to make a reference. The union raised three demands such as payment of dearness allowance, wages for the period of strike and Chambal allowance. The state government referred only the question relating to wages for the period of strike to the tribunal for adjudication but declined to refer the other two issues on the ground that (i) the government was not in a position to bear the additional burden; and (ii) grant of special allowance claimed would invite similar demands by other employees which would affect the entire administration. Disapproving the government’s refusal to make a reference, the Court observed: While conceding a very limited jurisdiction to the state government to examine the demands it is to be understood as a rule, that adjudication of demands made by the workmen should be left to the tribunal to decide. Section 10 permits appropriate government to determine whether dispute exists or is apprehended and then refer it for adjudication on merits. The demarcated functions are: (1) reference; (2) adjudication. When a reference is rejected on the specious plea that the government

cannot bear the additional burden, it constitutes adjudication and thereby usurpation of the power of a quasi-judicial tribunal by an administrative authority namely the appropriate government. In our opinion, the reasons given by the state government to decline reference are beyond the powers of the government under the relevant sections of the Industrial Disputes Act…… Same is the case… of the state government that the employees were not entitled to the Chambal allowance as the same was included in the consolidated pay. This question, in fact, relates to the conditions of service of the employees. What exactly are the conditions of service of the employees and in what manner their conditions of service could be improved are matters which are the special preserve of the appropriate tribunals to be decided in adjudicatory processes and are not ones to be decided by the government on a prima facie examination of the demand. The Court cautioned: There may be exceptional cases in which the state government may, on a proper examination of the demand, come to a conclusion that the demands are either perverse or frivolous and do not merit a reference. Government should be very slow to attempt an examination of the demand with a view to decline reference and courts will always be vigilant whenever the government attempts to usurp the powers of the tribunal for adjudication of valid disputes. To allow the government to do so would be to render Section 10 and Section 12 (5) of the Industrial Disputes Act nugatory. In Telco Convoy Drivers Mazdoor Sangh and Another v. State of Bihar,50 the question relating to the powers of the appropriate government under Section 10(1) of the Act to make reference or not, again came up for consideration and the Supreme Court held as under: While exercising power under Section 10(1), the function of the appropriate government is an administrative function and not a judicial or quasi-judicial function, and that in performing this administrative function the government cannot delve into the merits of the dispute and take upon itself the determination of the lis, which would certainly be in excess of the power

conferred on it by Section 10. It is true that in considering the question of making a reference under Section 10(1), the government is entitled to form an opinion as to whether an industrial dispute ‘exists or is apprehended.’ But the formation of opinion as to whether an industrial dispute ‘exists or is apprehended’ is not the same thing as to adjudicate the dispute itself on its merits. Where, as in the instant case, the dispute was whether the persons raising the dispute are workmen or not, the same cannot be decided by the government in exercise of its administrative function under Section 10(1) of the Act. The order of the government, refusing to refer the dispute on ground that the persons raising dispute are not workmen is liable to be set aside. As the government had persistently declined to make a reference under Section 10(1), the Supreme Court directed the government to make a reference. In Secretary, Tea Association v. Ajit Kumar Barat,51 the Supreme Court summarized the legal position on the scope of the power of the appropriate government to make reference under Section 10 of the ID Act namely. 1. The appropriate government would not be justified in making a reference under Section 10 of the Act without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or is apprehended and if such a reference is made, it is desirable wherever possible, for the government to indicate the nature of dispute in the order of reference. 2. The order of the appropriate government making a reference under Section 10 is an administrative order and not a judicial or quasi-judicial one and the court, therefore, cannot canvass the order of the reference closely to see if there was any material before the government to support its conclusion, as if it was a judicial or quasi-judicial order. 3. An order made by the appropriate government under Section 10 being an administrative order no lis is involved, as such an order is made on the subjective satisfaction of the government. 4. If it appears from the reasons given that the appropriate government took into account any consideration irrelevant or foreign material, the court may in a given case consider the case for a writ of mandamus. 5. It would, however, be open to a party to show that what was referred by the government was not an industrial dispute within the meaning of the

Act. There appears to be reversal in the line of thinking followed between 1985–95. Thus, in Sultan Singh v. State of Haryana52, the Supreme Court examined the power of government to make reference. In this case in 1955, the appellant had joined the respondents as a workman. He was promoted on 6 September 1972, as a tape reader. On 28 June 1979, he was served with a chargesheet and on 9 August 1979, his services were terminated. On 30 June 1981, he made a demand on the respondent/employer for reinstatement, which was rejected. Thereafter, he made an application for reference under Section 10 to the state government, which was rejected by order dated 20 October 1981. The appellant again made a representation on 25 March 1982 and the Minister made a note on the representation directing it to make a reference. However, since no communication was received by the appellant, he wrote a letter to the labour commissioner, Haryana on 26 April 1984 but to no avail. He then filed the writ petition. By order dated 6 August 1984, the High Court dismissed the writ petition. Thereafter, the appellant filed before the Supreme Court by special leave to appeal. Two questions which arose in this appeal were: (1) Whether the state government should hear the respondent/employer before making a reference on a second representation under Section 10 of Industrial Disputes Act, 1947, since it was rejected on earlier occasion; and (2) Whether there is an order of reference by state government so as to entitle the appellant to have the dispute adjudicated by the tribunal. While dealing with these question, the Supreme Court observed: A conjoint reading of Section 10(1) and Section 12(5) of Industrial Disputes Act, 1947 would yield the conclusion that on making an application for reference, it would be open to the state government to form an opinion whether industrial dispute exists or is apprehended and then either to make a reference to the appropriate authorities or refuse to make the reference. Only on rejection thereof, the order is only an administrative order, and not a quasi-judicial order….. The appropriate government is entitled to go into the question whether an industrial dispute exists or is apprehended. It would only be subjective satisfaction on the basis of the material on record. Being an administrative order no lis is involved. Thereby, there is no need to issue any notice to the employer nor to hear the employer before making a

reference or refusing to make a reference. Neither Section 10(1) nor Section 12(5) enjoins the appropriate government to record reasons for making reference…..The need for hearing is obviated, if it is considered on second occasion as even then if it makes reference, it does not cease to be, an administrative order and so is not incumbent upon the state government to record the reasons therein. On the issue whether, as a fact reference has been ordered by the government, the Supreme Court held that as government was of the opinion that there existed no industrial dispute, it declined to make reference under Section 10(1). Therefore, there is no reference made to the appropriate tribunal/labour court, or industrial tribunal and therefore, no relief can be given to the appellant. In Hindustan Aeronautics Ltd v. Hindustan Aero Canteen K Sangh53 the question arose whether High Court was justified in holding that state government is the ‘appropriate government’ under the Contract Labour (Regulation & Abolition) Act, 1986. The Supreme Court referred to its earlier decision in Steel Authority of India v. National Union Water Front Workers54 and came to the conclusion that the appropriate government will be that government which exercises control and authority over the concerned organization. Applying this principle in this case, the Court held that ‘it is undisputed that the Hindustan Aeronautics Ltd is an undertaking of the Central Government and it is the Central Government which exercises full control over the same. Issuance of licence by the state government is no criteria to come the conclusion that state government should be the appropriate government.’ It is submitted that the Court, even though referred the Steel Authority of India case, but in fact did not apply the ratio of the said decision. Is it permissible for a tribunal to which reference was made by the appropriate government to decide whether badli workmen should be regularized? This issue came up for consideration before the Supreme Court in Gauri Shankar Chatterjee v. Taxmaco Ltd55 In this case, the petitioners claimed that they had been working in the first respondent company since last several years as ‘badli’ workers and that they were entitled to be regularized. The dispute was referred by the appropriate government of the industrial tribunal for adjudication. The industrial tribunal held that out of the 100 workmen, 92 were entitled to be regularized and to have all benefits and status like regular employees. They were also entitled to have other statutory benefits from the date of their respective initial engagement. This award of the tribunal was challenged before the High Court on the ground that the industrial tribunal had committed

an error of jurisdiction as it allowed the scope of the reference to be enlarged. The division bench of the High Court held that the tribunal had enlarged the scope of the reference and thereby committed an error of jurisdiction. Against this order, an appeal was filed before the Supreme Court. The Supreme Court confirmed the orders of the division bench of the High Court. In Empire Industries Ltd v. State of Maharashtra56, the Court held that it is not open to the management to make a demand/proposal for retrenchment of workmen and disregarding the provisions of the Act ask the government to refer the demand/dispute under section 10(1) to the tribunal for adjudication. Sharad Kumar v. Government of NCT of Delhi57 raises an important issue as to whether the appropriate government, while performing the administrative function of making a reference to the labour court/industrial tribunal can delve into the merits of dispute and take upon itself the question of deciding whether a person is a ‘workman’ or not? The Supreme Court answered the question in the negative and held that the state government could not arrogate to itself the power to adjudicate on the question and hold that the respondent was not a workman within the meaning of Section 2(s) of the Act. Such a matter should be decided by the industrial tribunal or the labour court on the basis of the materials to be placed before it by the parties. The court accordingly held that the order passed by the state government not to make a reference is clearly erroneous and accordingly, the order passed by the High Court maintaining the same is unsustainable. It is submitted that the aforesaid decision runs counter to the principles laid down in its earlier decision in Secretary, Indian Tea Association v. Ajit Kumar Barat58 wherein the court ruled that ‘before making a reference under Section 10 of the Act, the appropriate government has to form an opinion whether an employee is a workman and thereafter has to consider as to whether an industrial dispute exists or is apprehended.’59 It is unfortunate that the court’s attention was not drawn to this decision in the case under review. In Virendra Bhandari v. Rajasthan State Road Corporation60, the government referred an industrial dispute regarding termination during suspension to the industrial tribunal cum labour court for adjudication. The tribunal held that though notices had been served upon the appellant, he had remained absent. It, therefore, decided the case ex-parte. Thereafter, an application was filed by the appellant for restoration. The tribunal held that since the appellant had not evinced any interest in the dispute and there had been delay in seeking restoration of those proceedings, it was not proper to cancel the award

after having issuance of notification of the award challenged before the High Court. However, the government by another order dated 20 December 1988 made another reference of a dispute to the tribunal on the same questions on which the earlier reference had been made. The High Court held that (i) the tribunal had already given a finding on an earlier occasion; and that (ii) no industrial dispute exists which is to be determined. It, therefore, held that the second reference was incompetent. On appeal, the Supreme Court laid down the following principles: (i) When the parties concerned do not appear before the tribunal, the tribunal should note its inability to record the finding on the issue referred to it and not that the dispute itself does not exist. (ii) When there is no adjudication of the matter on merits, it cannot be said that the industrial dispute does not exist. (iii) If the industrial dispute still exists, such a matter can be referred under Section 10 of the Act. (iv) In proceedings of this nature it should be borne in mind that the industrial disputes are referred to the labour court or the industrial tribunal for maintenance of industrial peace and not merely for adjudication of the dispute between two private parties. The Supreme Court, accordingly held that it was not permissible for the government to have made the second reference. In Sarva Shramik Sangh v. Indian Oil Corporation, the Supreme Court ruled that a writ of mandamus would be issued to the appropriate government to reconsider the refusal to make a reference, where (i) the refusal is on irrelevant, irrational or extraneous grounds; (ii) the refusal is a result of the appropriate government examining the merits of the dispute and prejudging/adjudicating/determining the dispute; (iii) the refusal is mala fide or dishonest or actuated by malice; (iv) the refusal ignores the material available in the failure report of the conciliation officer or is not supported by any reason.

H. Reference Should be Clearly Spelled Out The full bench of Delhi High Court in India Tourism Development Corporation v. Delhi Administration61 held that the terms of reference should clearly spell out the real dispute between the parties otherwise the order of reference would be liable to be interfered with in exercise of writ jurisdiction as the labour court would not travel beyond the reference and decide the real question in dispute.

I. Reference Once Made Cannot be Cancelled, Withdrawn

or Superseded The Industrial Disputes Act does not either expressly or impliedly confer any power on the appropriate government to cancel, withdraw or supersede a reference made under Section 10 (1) of the Act. The Supreme Court in State of Bihar v. D N Ganguli62 has held that no such power is vested on it either expressly or impliedly to cancel, withdraw or supersede its earlier reference. In the Court’s view, if the legislature had intended to confer on the appropriate government the power to cancel its own order made under Section 10 (1), the legislature would have made a specific provision in that behalf and would have prescribed appropriate limitation to the exercise of the said power. The Court also held that the rule of construction enunciated by Section 21 of the General Clauses Act in so far as it refers to the power of rescinding or cancelling the original order cannot be invoked in respect of the provision of Section 10(1) of the Industrial Disputes Act, 1947.

J. Government’s Power to Make Reference ‘At Any Time’ The expression ‘at any time’ in Section 10 raises four issues, (i) Whether it is mandatory for the appropriate government to wait for the outcome of conciliation proceedings before making a reference? (ii) Whether refusal by the appropriate government to refer the dispute for adjudication debars it from making subsequent reference? (iii) Whether there is any time limit for making the order of reference? (iv) Is the government bound to issue notice to the parties when it decides to refer a dispute which it had refused to refer at the first instance? These issues formed the subject-matter of judicial scrutiny in a number of decided cases.

K. Failure Report of Conciliation Authorities–not a Condition Precedent It has been held that it is not mandatory for the appropriate government to wait for the outcome of conciliation proceedings before making the order of reference. Thus, the Supreme Court in Western India Match Co. Ltd v. Western India Match Co. Workers Union63 while construing the expression ‘at any time’ occurring in Section 4 (k) of the UP Industrial Disputes Act, 1947 which is in pari materia with Section 10 of the Industrial Disputes Act 1947 observed: Ordinarily, the question of making a reference would arise after conciliation proceedings have gone through and the conciliation

officer has made a failure report. But the government need not wait until such a procedure has been completed. In an urgent case, it can ‘at any time’ i.e., even when such proceedings have not begun or are still pending, decide to refer the dispute for adjudication. The expression ‘at any time’ thus takes in such cases as where the government decides to make a reference without waiting for conciliation proceedings to begin or to be completed. The aforesaid view is based on the principle that there is nothing in Section 10(1) to suggest that the ‘appropriate government’ must wait for the failure report of conciliation officer.

L. Refusal to Make Reference on Earlier Occasion–if Debars Subsequent Reference It has now been well established through a series of decided cases of the Supreme Court that refusal of the government to refer the dispute to adjudication does not debar it from making subsequent reference. In Western India Match Co. v. Western India Match Co. Workers 64 Union , the Supreme Court ruled that the government does not exhaust its power to refer when it refuses reference. This is based on the reasoning that the function of the government under Section 10(1) is administrative function. The principles of rejudica cannot be imported in such a situation. In fact, when the government refuses to make a reference, it does not exercise its power, it exercises its power only when it decides to refer. Consequently, the power to refer cannot be said to have been exhausted when it has declined to make a reference at an earlier stage. Again in Binny Ltd v. Their Workmen,65 the Supreme Court reiterated that the mere fact that on two previous occasions government had taken the view that no reference was called for, does not entitle the court to conclude that there could be no cause for a reference at the later date. The judicial policy to preserve the government’s power to make a reference of a dispute subsequently after declining to do so initially, is evident from the Supreme Court decision in Avon Services (Production Agencies) Pvt. Ltd v. Industrial Tribunal.66 In this case, it was contended that once the appropriate government declined to make a reference, it would not subsequently change its mind and make such reference unless there was some fresh or additional material before it. The Court, however, rejected the contention. Justice

Desai observed: Merely because the government rejects a request for a reference or declines to make a reference, it cannot be said that the industrial dispute has ceased to exist, nor could it be said to be a review of any judicial or quasi-judicial order or determination. The industrial dispute may nonetheless continue to remain in existence and if at a subsequent stage, the appropriate government is satisfied that in the interest of industrial peace and for promoting industrial harmony, it is desirable to make a reference, the appropriate government does not lack power to do so under Section 10(1), nor is it precluded from making the reference on the only ground that on an earlier occasion it had declined to make the references. The learned judge fortified his view by pointing out that the expression ‘at any time’ in Section 10 (1) would clearly negative the contention that once the government declined to make a reference, the power to make it under that Section in respect of the same dispute got exhausted. Such a construction, he observed, would ‘denude a very vital power conferred on the government in the interest of industrial peace and harmony and it need not be whittled down by interpretative process.’ The Court then examined the contention that the ratio of Western India Match Co. Ltd v. Western Indian Match Co. Workers Union,67 suggests that the government must have some material made available to it, subsequent to its refusal to make a reference, for the formation of a fresh opinion for making the reference and observed: It is not absolutely necessary that there ought to be some fresh material before the government for reconsideration of its earlier decision. The government may reconsider its decision on account of some new facts brought to its notice or for any relevant consideration and such other relevant consideration may include the threat to industrial peace by the continued existence of the industrial dispute without any attempt at resolving it and that a reference would at least bring the parties to the talking table. It added: A refusal of the appropriate government to make a reference is not indicative of an exercise of the power under Section 10 (1),

the exercise of the power would be a positive act of making a reference. Therefore, when the government declines to make a reference, the source of power is neither dried up nor exhausted. It only indicates that the government for the time being refused to exercise the power but that does not denude the power. It is, thus, evident that the tendency of the Court is to protect the administrative discretion under the Industrial Disputes Act even in the absence of any fresh material.

M. Time Limit for Making Reference Even though the Industrial Disputes Act, 1947, does not prescribe any time limit for reference of the dispute to industrial tribunal, the courts have emphasized that disputes should be referred as soon as possible after they have arisen and after the failure of conciliation proceedings, particularly when dispute relates to wholesale discharge of workman. In Nedungadi Bank Ltd v. K P Madhavankutty,68 the appellant bank initiated disciplinary proceedings against its employee (clerk) on the charges of misappropriation of certain amount and falsification of records. On conclusion of the inquiry, he was served with show cause notice as to why punishment of dismissal from service be not awarded to him in the light of the grave misconduct proved against him. However, the respondent admitted his guilt but pleaded for mercy. Thereupon, the appellant bank dismissed him from the services of the bank. In his appeal he expressed unconditional regret and prayed for a lenient view to be taken in the matter. His appeal was dismissed. He was given the benefit due to him. However, after a period of about 7 years, he served a notice on the bank contending that he was discriminated against as two other employees of the bank under similar situation were reinstated in the service of the bank. The workman raised dispute before the assistant labour commissioner (Central). He held that there was no scope for formal proceedings under the Act since the matter was stale, having arisen more than 9 years back. The respondent moved the High Court for direction of the Central Government to pass an order on his application. The High Court directed the assistant labour commissioner to send his report under Section 12(4) of the Act to the Central Government which he did. The Central Government declined to make a reference which led him to again file a writ petition in the High Court which was disposed of with the direction to the Central Government to examine the matter. This order was challenged by the management in writ appeal in which the division bench held

that it will be well within the right of the Central Government to examine the entire facts of the case including the fact that the employee had admitted guilt and only pleaded for merciful treatment and accepted the amount due to him in full satisfaction of his claim. The Court further held that the question of delay or the claim being stale or belated will also be relevant factors for the appropriate government to consider. Thereafter, the Central Government made the reference as to whether the dismissal of the employee from service was justified and if not, to what relief the workman concerned was entitled. Aggrieved by this, the bank challenged the reference in the High Court. A single judge of the High Court allowed the writ petition. However, on the writ appeal the division bench upheld the validity of the reference. Thereupon, the special leave to appeal was filed in the Supreme Court. The Supreme Court held that there is no rational basis for making a reference by the Central Government after a lapse of 7 years of the order dismissing the respondent from service, particularly when the respondent did not challenge the disciplinary proceedings, which resulted in his dismissal. Furthermore, it could not be said that an industrial dispute had arisen or was apprehended after a lapse of 7 years of his dismissal. The Supreme Court also observed that every dispute that a workman raises does not become an industrial dispute and the appropriate government cannot in a mechanical manner make the reference of the alleged dispute terming it as an ‘industrial dispute’. The court accordingly held that the Central Government lacked power to make reference both on the ground of delay in invoking the power under Section 10 of the Act and there being no ‘industrial dispute’ existing or even apprehended. A perusal of the aforesaid decision reveals that the appropriate government should not make reference in a mechanical manner and may refuse to refer the case on the ground of delay in invoking the power and no industrial dispute existed or was apprehended in such cases. In UP State Electricity Board v. Rajesh Kumar69, the UP State Electricity Board terminated the services of certain workmen. After 19 years, the dispute was referred for adjudication. The labour court awarded reinstatement of the workers with continuity of service. The board challenged the said award before the High Court and one of the grounds of challenge was that the reference made after a long delay of almost 19 years was not proper and it being stale, the dispute did not exist on the date of reference. However, on a writ petition, the High Court confirmed the labour court's award. Thereupon, the board filed an appeal before the Supreme Court. The Supreme Court also upheld the award of the labour court by observing that the issue with regard to the stale claim of the workmen was not raised before the labour court. For the first time, it was sought to be urged before the High Court. If the board was really aggrieved and serious

at the stale claim of the workmen, it was open to the board to question the very reference made by the state government, when it was referred. The validity of the reference was not questioned. Thereafter, the board participated in the process before the labour court and contested the award. Therefore, in view of the facts as stated above, and particularly when the board did not challenge the order of reference when it was referred, it is not necessary to examine the question of stale claim made by the board. In Karan Singh v. Executive Engineer, Haryana State Marketing70 the Supreme Court held that the industrial tribunal cannot strike down a reference for adjudication on a ground of delay in raising a dispute by the workman. Following the aforesaid decision in Nedungadi Bank Ltd (supra), another two-judge bench of the Court in Haryana State Cooperative Land Development Bank v. Neelam71, accepted the similar claim of the management and non-suited the workman on the ground of delay. In Kuldeep Singh v. GM, Instrument Design Development and Facilities Centre72, the services of the appellant/workman were terminated with effect from 26 May 1992. He made various representations from the day his services were terminated. The particulars furnished also showed that the appellant was fighting for his cause before the management as well the state government including the chief secretary and the minister of the concerned department. Ultimately, the state government made a reference on 22 November 1999 to the labour court for adjudication. On these facts, a question arose whether the appropriate government is empowered to make a reference at any time. The Supreme Court laid down the following principles: There is no prescribed time limit for the appropriate government to exercise its powers under Section 10 of the Act. It is more so in view of the language used, namely, if any industrial dispute exists or is apprehended, the appropriate government ‘at any time’ refer the dispute to a board or court for inquiry. The reference sought for by the workman cannot be said to be delayed or suffering from a lapse when the law does not prescribe any period of limitation for raising a dispute under Section 10 of the Act. The real test for making a reference is whether at the time of the reference, dispute exists or not and when it is made, it is presumed that the state government is satisfied with the ingredients of the provision; hence, the labour court cannot go behind the reference. It is not open to the government to go into the merits of the dispute and once it is

found that an industrial dispute exists, then it is incumbent on the part of the government to make reference. It cannot itself decide the merit of the dispute and it is for the appropriate court or forum to decide the same. The satisfaction of the appropriate authority in the matter of making reference under Section 10(1) of the Act is subjective satisfaction. Normally, the government cannot decline to make reference for laches committed by the workman. If adequate reasons are shown, the government is bound to refer the dispute to the appropriate court or forum for adjudication. Even though there is no limitation prescribed for reference of dispute to the labour court/industrial tribunal, it is only reasonable that it should be referred as soon as possible after it has arisen and after conciliation proceedings have failed; particularly, when disputes relate to discharge of workmen. If sufficient materials are not put forth for the enormous delay, it would certainly be fatal. However, in view of the explanation offered by the workman in the case on hand, as stated and discussed by us in the earlier paragraphs, we do not think that the delay in the case on hand has been so culpable as to disentitle him any relief. We are also satisfied that in view of the details furnished and the explanation offered, the workman cannot be blamed for the delay and he was all along hoping that one day, his grievance would be considered by the management or by the state government.73 Recommendations of the Second National Commission on Labour. The (Second) National Commission on Labour has recommended that all disputes, claims or complaints under the law on labour relations should be raised within one year of the occurrence of the cause of action.

N. Audi Alteram Partem Rule—If Applies in Subsequent Reference by the Government In Avon Services (Production) Agencies (P) Ltd v. Industrial Tribunal, Haryana74, the Supreme Court has held: … when the government declines to make a reference, the source of power is neither dried up nor exhausted …. The power to make the reference remains intact and can be exercised if the material and relevant considerations for the exercise of the

power are available…. However, the Court did not specifically clarify as to whether the government is under an obligation to issue notice to the (one or both) party concerned when it makes a second reference, after the first refusal. This had led to conflicting opinions among the High Courts. While the full bench of Madras High Court in G Mathu Krishnan v. New Horizon Sugar Mills Pvt. Ltd75 held that the state government of Pondicherry, when it made the reference acting for the second time, in exercise of its statutory power under Section 10 of the Act, did not act fairly, in that it did not hear the mills in question. Therefore, the award passed by the labour court, Pondicherry, pursuant to such reference made by the government is also a nullity and made without jurisdiction and has therefore to be quashed. The Allahabad High Court in UPSE Board, Lucknow v. State of U P,76 held that the principle of audi alteram partem cannot apply while making second reference. The division bench of the Kerala High Court on the other hand in Abdul Rahiman Haji v. Abdul Rahiman77 held: [I]f the government chooses to reconsider its earlier decision not to refer the dispute for adjudication, it was not necessary to give notice to the employer of the proposed action, because no civil rights of any parties are being adjudicated upon.78 In Management of Theatre Sanjaya v. The State,79 the full bench of the Karnataka High Court was invited to consider the question whether parties should be given opportunity to be heard, where the government first decides to make a reference. The majority answered as follows: The principle of audi alteram partem is applicable to a case in which the government having declined to make a reference of dispute for industrial adjudication under Section 10 (1) … according and communicating such decision in accordance with the latter part of Section 12 (5) … proposes to refer the same dispute for adjudication subsequently except when: (a) the reference becomes necessary under circumstances set out in Section 10 (5)…… or (b) the government finds that there are exceptional circumstances in which any delay in making the reference

is fraught with serious consequences to industrial peace and, therefore, affording of an opportunity to the party concerned is expedient.

O. Reference can be Amended or Corrected It has been held in Dabur (Dr S K Burman) Pvt. Ltd v. Their Workmen80 that government is competent to correct clerical errors.

P. Scope of Writ of Mandamus Another issue connected with Section 10 read with Section 12 (5) is whether the Supreme Court under Article 32 of the Constitution or the High Court under Article 226 of the Constitution is competent to issue writ of mandamus or directions to the government to make a reference for adjudication. This issue has received the attention of the Supreme Court in a catena of cases. In State of Bombay v. K P Krishnan81, the Supreme Court held that even though the order passed by the government under Section 12(5) of the Industrial Disputes Act refusing to make a reference was an administrative order and the reasons given by it must not be justifiable in the sense that their propriety, adequacy or satisfactory character might not be open to judicial scrutiny, nonetheless if the Court was satisfied that the reasons given by the Government for refusing to make a reference are extraneous and not germane, then the Court could issue, and would be justified in issuing a writ of mandamus. Again in Bombay Union of Journalists v. State of Bombay,82 the Supreme Court pointed out that if the appropriate government refuses to make a reference on irrelevant consideration or on extraneous grounds, or acts mala fide, a party would be entitled to move the High Court for a writ of mandamus. In a subsequent case in Mahabir Jute Mills v. Shibanal Saxena83, the Supreme Court while hearing an appeal against the order of Allahabad High Court, which issued a writ of mandamus to the government of Uttar Pradesh to refer the dispute for adjudication held that it was not open to the High Court to issue directions to the appropriate government so as to circumscribe the statutory powers under Section 4 (k) of the UP Industrial Disputes Act, 1947. It added that ‘all that it could have done was to ask the government as to how to exercise statutory discretion conferred on it by Section 4 (k) of the Act’. The aforesaid view was reiterated in Govind Sugar Mills v. Hind Mazdoor Sabha.84 But in this case, the Supreme Court interpreted the following observations made by it in Bombay Union of Journalists v. State of Bombay:

If the appropriate government refuses to make a reference for irrelevant considerations, or on extraneous grounds, or acts mala fide, that of course, would be another matter, in such a case the party would be entitled to move the High Court for a writ of mandamus. to mean: …… What was meant to be conveyed by the sentence aforesaid was that the party would be entitled to move the High Court for interfering with the order of the government and not necessarily for the issuance of a writ of mandamus to direct the government to make a reference. The mandamus would be to reconsider the matter. It does not seem to be quite reasonable to take the view that after the refusal of the government to make a reference is quashed, a writ of mandamus to make a reference must necessarily follow. The matter has still to be left for the exercise of the power by the government on relevant consideration in the light of the judgement quashing the order of refusal. From the aforesaid decision, it is evident that the writ of mandamus would lie to reconsider the matter where the appropriate government refuses to refer the dispute on (i) irrelevant considerations, (ii) extraneous grounds or (iii) in a mala fide manner. In Hochtief Gammon v. State of Orissa85, the Supreme Court following the decision of the House of Lords in Padfield v. Minister of Agriculture, Fisheries and Food86 ruled that the Court would be justified in issuing a writ of mandamus if the order of the government declining to refer the dispute amounted to an outright refusal to consider relevant matters, or if the government had misdirected itself in point of law in wholly omitting, to take into account the relevant considerations which would amount to unlawful behaviour. In Rohtas Industries Ltd v. S D Aggarwal,87 the Supreme Court again observed that the order of reference could be challenged if there were no grounds or material before the government upon which it could reasonably be satisfied that the order should be made.

Q. Court’s Power to Issue Directions Can the Court direct the government to refer an industrial dispute for adjudication? This issue was raised before the Supreme Court in Sankari

Cement Alai Thozhilalar Munnetra Sangam v. Government of Tamil Nadu.88 In this case, the appropriate government failed to perform the duty imposed by the Act, for reasons which are, irrelevant. In view of this, the Court directed the government to refer the dispute within 4 weeks to the tribunal for adjudication. Similarly, in Nirmal Singh v. State of Punjab89, the Supreme Court gave direction that the reference be made forthwith. Again in V Veerarajan v. Government of Tamil Nadu,90 the Supreme Court issued direction to the government and the labour court to which the reference was to be made to do so within the prescribed period. In this case, the government of Tamil Nadu refused to make a reference of the dispute regarding dismissal of workmen, on the ground that the domestic inquiry was conducted by the employer according to the principles of natural justice and the punishment imposed by the employer was not disproportionate to the gravity of the offence committed by the workmen. On rejection of the writ petition by the single judge and confirmation of the said order by the division bench, the aggrieved workmen filed a special leave to appeal in the Supreme Court challenging the order of the court below. The Supreme Court, pending appeal at the first instance, directed the state government to reconsider the matter without taking into account the irrelevant grounds stated therein within a period of 30 days, whether it would make a reference of the industrial dispute to the labour court. The government again reiterated its earlier stand and gave seven reasons in support of its order refusing to make a reference. When the appeal was heard again, the Supreme Court disapproved of the reasons given by the government and directed the state government to make a reference within one month from the date of the order. It also directed the labour court to which the reference was made to dispose of the reference within 4 months from the date of reference. The aforesaid decision not only shows the concern of the judiciary to protect the interest of the dismissed workmen where no reference was made even 7 years after such dismissal, but also reveals that the Supreme Court can give direction to the government to make a reference where the refusal to make a reference was not germane or relevant.

II. POWER OF THE GOVERNMENT TO WITHDRAW AND TRANSFER CERTAIN PROCEEDINGS Under Sub-section (1) of Section 33 B, power is conferred upon the state government by order in writing to withdraw any proceeding under the said Act

pending, inter alia before an industrial tribunal and transfer the same to another tribunal for disposal of the proceeding. When a proceeding is transferred from one tribunal to the other tribunal, the tribunal to which the proceedings is so transferred may either proceed de-novo or from the stage at which the proceeding is so transferred, subject to any special direction which may be given to it in the order of transfer. The power conferred upon the government under the aforesaid Section is an extraordinary power. The conferment of this power raises a question whether the requirement of giving recourse in the transfer order under Section 33B is mandatory or directory? Conflicting views were expressed by the high courts. While the Punjab High Court91 held it to be directory, the Allahabad92 and Calcutta93 High Courts took the opposite views. The controversy was resolved by the Supreme Court in Associated Electrical Industries (India) Private Ltd v. The Workmen.94 In this case, no reason was mentioned in the order in which reference was withdrawn from one industrial tribunal and transferred to another. The order merely stated that it was expedient to withdraw the reference from one tribunal and transfer the same to another. The Supreme Court found it not amounting to a statement of reason as required under Section 33 B. The statement of reason must be complied with both in substance and in letter. To say that it is expedient to withdraw a case from one tribunal and transfer it to another is not to give any reason as required by the Section. Normally, when an individual dispute is referred to an industrial court or tribunal, it is said to be tried before the court and tribunal and so the power of transfer can be exercised only for sufficient reasons.

III. GOVERNMENT’S POWER TO REFER ANY QUESTION FOR INTERPRETATION OF THE AWARD A. The Context Section 36 A empowers the appropriate government to refer any question to the labour court, tribunal or national tribunal on being satisfied that the difficulty or doubt has arisen as to the interpretation of any provisions of an award or settlement. It further provides that when such a question is referred to, it shall, after giving the parties an opportunity of being heard, decide such question and its decision shall be final and binding on all such parties. The provisions of Section 36 A, however, raises several problems. (i)

What is the scope of reference under Section 36 A? (ii) What is the significance of the expression ‘after giving the parties an opportunity of being heard’? (iii) Whether fresh evidence can be adduced by the parties under Section 36A? Let us examine these problems.

B. The Judicial Response 1. Scope of Reference Under Section 36 A. Section 36A, namely, ‘if, in the opinion of the appropriate government, any difficulty or doubt arise as to the interpretation of any provision of an award’… imposes a condition for making a reference. If the words used in any provision of an award are ambiguous or obscure and it is not reasonably possible to interpret them, the difficulty arising from the use of such ambiguous or obscure words, may be resolved by moving the appropriate government to make a reference under Section 36A. Where there is no difficulty or doubt about their meaning, the tribunal may refuse the direction of the government. All that can be referred under this Section by the appropriate government to the labour court, tribunal or national industrial tribunal is about the interpretation of any provisions of the award already made.95 However, a reference cannot be made by the appropriate government in order to supplement the original award.96 Further, a fresh question (which may be referred under Section 10) is not permissible under this Section.97 Moreover, the tribunals have no jurisdiction if an order of reference as framed by the appropriate government is not in accordance with the provisions of Sections 36A.98 The other question was considered in Rivers Steam Navigation Co. v. Inland Steam Navigation Workers Union99 wherein the Calcutta High Court observed that Section 36A excludes the jurisdiction of civil court unless, recourse be had in the first instance to get the dispute referred to the tribunal for interpretation. Explaining this, Justice Mookerjee held that if the recourse had been taken by the parties under Section 36A, nothing and not even the government’s view would bar the civil court’s jurisdiction to interpret the award.100 2. Significance of the Expression ‘After Giving the Parties an Opportunity of Being Heard’. Coming to the second question, it might be noted that Section 36A (2) of the Act imposes upon tribunals a duty to give the parties an opportunity of being heard. In other words, to give notice to the parties is a condition of assuming jurisdiction.101 Bengal Coal Company Ltd v. Central Government Industrial Tribunal102 provided an opportunity to the Patna High

Court to delineate the meaning of the expression ‘after giving the parties an opportunity of being heard’ occurring under Sub-section (2) of Section 36 A of the Act. Explaining the meaning of the phrase, the Patna High Court observed that the tribunals are obliged to give the parties to the original award, or the appellate award as the case may be, an opportunity of being heard. In other words, the industrial tribunals are required to give notice to the parties before them to decide a question of inter-relation referred to it by the appropriate government under Sub-Section (2) of Section 36 A.103 3. Fresh Evidence. The third question is whether fresh evidence can be adduced by the parties before the tribunal under Section 36 A. This question was negatived by the Punjab High Court in Atlas Cycle Industries Ltd v. State of Punjab104 wherein the Court observed that it was not necessary or even proper to record evidence for the purpose of interpreting a document.105 To sum up, it is significant to note that Section 36 A enables the tribunal only to clarify the provisions of its award where any difficulty or doubt arises about its interpretation.106 The scope of the inquiry under Section 36 A is limited to the decision of the difficulties or doubts arising as to the interpretation of any provision in the award.107 The question about the ‘propriety, correctness or validity of any provision of the award’ is outside the purview of the inquiry under Section 36A.108 Further the Tribunal under Section 36B is not authorised to ‘review or modify its own order.’109

IV. POWER TO MAKE RULES Section 38 empowers the appropriate government to make rules for the purpose of giving effect to the provisions of this Act in general and in particular: (a) The powers and procedure of conciliation officers, boards, courts, labour courts, tribunals and national tribunals including rules as to the summoning of witnesses, the production of documents relevant to the subject-matter of an inquiry or investigation, the number of members necessary to form a quorum and the manner of submission of reports and awards; (aa) the form of arbitration agreement, the manner in which it may be signed by the parties, the manner in which a notification may be issued under sub-section (3A) of Section 10A, the powers of the arbitrator named in the arbitration agreement and the procedure to

be followed by him; (b)

(c)

(d)

(e)

(f)

(aaa) the appointment of assessors in proceedings under this Act; the constitution and functions of and the filling of vacancies in works committees, and the procedure to be followed by such committees in the discharge of their duties; the salaries and allowances and the terms and conditions for appointment of the presiding officers of the labour court. Tribunal and the national tribunal including the allowances admissible to members of courts, boards and to assessors and witnesses; the ministerial establishment which may be allotted to a court board, labour court, tribunal or national tribunal and the salaries and allowances payable to members of such establishment; the manner in which and the persons by and to whom notice of strike or lockout may be given and the manner in which such notices shall be communicated; the conditions subject to which parties may be represented by legal practitioners in proceedings under this Act before a court, labour court, tribunal or national tribunal;

(g) any other matter which is to be or may be prescribed.110 The aforesaid rule-making power of the appropriate government is regulated by previous publication of such rules and laying down such rule before the state legislature where the appropriate government is a state government or before both houses of the Parliament where Central Government is the appropriate government. Every rule made by the Central Government shall be laid, as soon as maybe after it is made, before each house of the Parliament while it is in session for a total period of 30 days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both houses agree that rules should not be made, the rule shall thereafter have effect only in such modified form or, be of no effect, as the case may be. But any such modification or annulment will not affect the validity of anything done under the rule before the modification or annulment. The appropriate government is also empowered to provide for rules for imposing penalty not exceeding ₹50 in case of contravention of rules framed by it. The rules made under the Act have the same force as the provision of the Act provided, of course, they are not contrary or repugnant to the statute under which they are

framed. A statutory rule has to yield to the main provision of the Section of the Act and the same is true with regard to rules framed under the provisions of the Industrial Disputes Act, 1947.

V. DELEGATION OF POWER Section 39 (a) empowers the Central Government where it is the appropriate government by notification to delegate its powers to any of the following authorities: (i) (ii)

any officer or authority subordinate to the Central Government; or any officer or authority subordinate to the state government as specified in the notification. Likewise, Section 39 (b) empowers the state government (where it is the appropriate government) to delegate its powers by notification to (a) an officer, subordinate to the state government or; (b) an authority subordinate to state government. While delegating the power, the state government may prescribe the conditions subject to which the power shall be exercisable by the authority concerned. Where a notification is issued under Section 39 clarifying that powers exercisable by the Central Government in relation to cement industry shall be exercisable by state government, it is competent for both Central and state government to make a reference of dispute regarding contract of labour of cement industries. In such a situation, reference made by state government was a valid reference.111

VI. POWER TO AMEND SCHEDULES Section 40(1) empowers the appropriate government to add to the First Schedule any industry which it considers to be expedient or necessary and on issuance of such notification, the First Schedule shall be deemed to be amended. Similarly, under Section 40(2), the Central Government is empowered to add to or, alter or amend the Second or the Third Schedules and on such notification, it shall be deemed to be amended accordingly. However, this power is regulated by the laying provision before the appropriate legislatures.

VII. POWER OF THE GOVERNMENT TO EXEMPT Section 9 B of the Act empowers the appropriate government to exempt any class of industrial establishments, or any class of workmen employed in any industrial establishment from the application of the provisions of Section 9A of the Act. Such exemption may be granted if the appropriate government is of the opinion that the application of the provisions of Section 9A to any class of industrial establishment or to any class of workmen employed in any industrial establishment (i) affects the employers in relation thereto so prejudically that such application may cause serious repercussion on the industry concerned; and (ii) that public interest so requires. Where the appropriate government grants the exemption, it must notify in the official gazette. Further, it is required to specify in the notification that the provision of Section 9A shall not apply or shall apply subject to such conditions, which must be specified in the notification itself. Thus, the exemption granted may either be absolute or limited, but in any case, the limitation must be specified in the notification.

1

The validity of Section 10 has been upheld by the Supreme Court in D C & G Mills v. Shambhu Nath, AIR 1978 SC 8. 2 See for instance, State of Madras v. C P Sarathy, (1953) 1 LLJ 174; Radhakrishna Mills (Pollachi) Ltd v. State of Madras, (1956) 1 LLJ 221; Harendranath Bose v. Second Industrial Tribunal, (1958) 2 LLJ, 1987; Jagannatham v. State of Andhra Pradesh, (1958) 1 LLJ, 202; Paramount Films of India Ltd v. State of Madras, (1959) 1 LLJ 68; and State of Madras v. K N Padmannabha Iyer, (1958) 2 MLJ 266. 3 Section 10(l) (d). 4 Section 10(2). 5 See for instance Minerva Mills Ltd v. Their Workers, (1954) 1 LLJ II 9 (SC); Straw Board Manufacturing Co. Ltd v. State of Uttar Pradesh, (1953) 1 LLJ 186 (SC). 6 Section 10(4). 7 Heavy Engineering Mazdoor Union v. State of Bihar, (1969) 2 LLJ 549. 8 AIR 1967 SC 1040. 9 (1970) 2 LLJ 177. 10 (1962) 1 LLJ 409(SC). 11 (1956) 1 LLJ 557, 558. 12 1985 Lab. IC. 666.

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

31 32 33 34 35 36

37 38

2010 (8) SCALE 78. (1996) 2 LLJ 549. (1975) 4 SCC 679. 1984(Supp) SCC 443; 1984 (49) FLR 401. (1985) 2 SCC 295. (1997) 9 SCC 377. (1979) 3 SCC 489. (1981) 1 SCC 722. 2001 LLR 961 (SC). See S C Srivastava, Impact of the Supreme Court decision on Contract Labour (Steel Authority of India Ltd v. National Union Water Front), 43 JIL 1 (2001). 2011 (10) SCALE 478. AAI came into force by merging the International Airport authority Act, 1971 and the National Airport Authority Act, 1985. (2008) 9 SCC 544. (1994) 2 LLJ 503 (SC). State of Madras v. C P Sarathy, (1953) 1 LLJ 174 (SC). The dispute had arisen before 1952-Amendment of Section 10 of the Act. Sindhu Resttlement Corporation v. Industrial Tribunal, (1968) 1 LLJ 834 (SC). Shambhu Nath Goyal v. Bank of Baroda, Jullundur, (1978) 1 LLJ 484 (SC). Sindhu Resettlement Corporation v. Industrial Tribunal, Gujarat, (1968) 1 LLJ 834 (SC); See also Management of Needle Industries v. Labour Court, (1986) 1 LLJ 405 (Madras). Barium Chemicals Ltd v. Company Law Board, AIR 1967 SC, 295. Rohtas Industries Ltd v. S D Agarwal, AIR 1969 SC 707. State of Madras v. C P Sarathy, (1953) 1 LLJ 174 (SC). See State of Bombay v. K P Krishnan, (1960) 2 LLJ 592 (SC); Hochtief Gammon v. State of Orissa, (1975) 2 LLJ 418 (SC). See Firstone Tyre and Rubber Co. Ltd v. K P Krishnan, AIR 1956 Bombay 273. State of Bombay v. K P Krishna, (1960) 2 LLJ 592. For an excellent analysis, see M Kamraju, ‘Government Intervention in Labour Management Relations’, a dissertation submitted for the degree of LLM in the Banaras Hindu University, 1964, (unpublished). See also Workman of Oswal Weaving Factory v. State of Punjab, (1967) 1 LLJ 557 (Punjab). State of Madras v. C P Sarathy, (1953) 1 LLJ 174 (SC). Bombay Union of Journalists v. State of Bombay, (1964) 1 LLJ 351 (SC). See Workmen of J and P Coats (India) Pvt. Ltd v. State of Kerala, (1977) 2, LLJ 534. (Kerala); Sri Krishna Jute Mills v. Government of Andhra Pradesh, (1977) 2 LLJ 363 (Andhra); Abdul Salem v. State of Tamil Nadu, (1973) 43 FJR 180 (Madras).

39 40 41 42

43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68

Avon Services (Production Agencies) Pvt. Ltd v. Industrial Tribunal, (1979) 1 LLJ 1 (SC). Id. at 4. State of Bombay v. K P Krishnan, (1960) 2 LLJ 592. See Kartikeshwar Panda v. State of Orissa, (1971); 1 LLJ 70 (Orissa); Sureshwar Narain Srivastava v. Government of Bihar, (1971) 2 LLJ 152 (Patna); Workmen of Dalmia Cement (Bharat) Ltd v. State of Madras, (1969) 1 LLJ 499 (Madras). M/s. Hochtief Gammon v. State of Orissa, (1975) 2 LLJ 418 (SC). Prem Kakar v. State of Haryana, AIR 1976 SC 1474. AIR 1984 SC 1619. 1985 Lab. IC 1001. See also Gandharba Bhagi v. Steel Authority of’India, (1987) Lab. IC 1226 (Orissa); Veerarajan v. Government of Tamil Nadu, AIR 1987 SC 695. Prem Kakar v. State of Haryana, (1985) Lab. IC 1001, 1005. (1985) 1 LLJ 93 at 94. (SC). (1985) 1 LLJ 519. AIR 1989 SC 1565. (2000) 3 SCC 93. 1996 1 LLJ 879. (2003) 1 LLJ 494 (SC). 2001 LLR 971. (2002) Lab IC 2467. (2010) 4 SCC 271 at 274. (2000) 3SCC 324. (2002) 4 SCC 490. (2000) 1 LLJ 809. (2002) 9 SCC 104. 1982 LIC 1309 followed by Division Bench of Delhi High Court in Eagle Fashion v. Secretary (Labour), (1999) 1 LLJ 232. (1958) 2 LLJ 634: AIR 1958 SC 1018. (1970) 2 LLJ 256 (SC). Western India Match Co. v. Western India Match Co. Workers Union, AIR 1970 SC 1205. Binny Ltd v. Their Workmen, (1972) 1 LLJ 478 (SC). Avon Services (Production) Agencies Pvt. Ltd v. Industrial Tribunal, Haryana, (1979) 1 LLJ 1 (SC). Western India Match Co. Ltd v. Western India Match Co. Workers Union, (1970) 2 LLJ 256 (SC). (2000) 2 SCC 455.

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80 81 82 83 84 85 86 87 88 89 90 91

92 93 94 95 96

(2005) 1 LLJ 1081. 2007 LLR 1233. (2005) 5 SCC 94. 2011 (2) SLR 376. Id at 383–384. (1979) 1 LLJ 1. G Mathu Krishnan v. New Horizon Sugar Mills Pvt. Ltd, (1980) Lab. IC 475. (1992) Lab. IC 153 (All.). 1980 Lab. IC 910. 1980 Lab IC 910 at 911. See also M U M Services Ltd v. R T A Malabar, AIR 1954 Mad. 59; Sudhansa Kanta v. State of Bihar, AIR 1954 Pat. 299; Bagga Singh v. Distt. Magistrate, AIR 1955 Assam 83; Ratilal Bhogilal v. State of Gujarat, AIR 1966 Guj. 244; Ajanta Industries v. Central Board of Direct Taxes, AIR 1976 SC 437. (1984) 2 LLJ 400. See also Mum Services Ltd v. R T A Malabar, AIR 1953 Madras, 59; Sudhansa Kanta v. State of Bihar, AIR 1954 Patna 299; Bagga Singh v. Distt. Magistrate, AIR 1955 Assam 183; Vermula Thimmappa, v. Addl. Distt. Magistrate, AIR 1955 NUC Andhra Pradesh 4458; Ratilal Bhogilal v. State of Gujarat, AIR 1966 S.C. 244. Ajanta Industries v. Central Board of Direct Taxes, AIR 1976 SC 437. Dabur (Dr S K Burman) Pvt. Ltd v. Their Workmen, AIR 1968 SC 17. State of Bombay v. K P Krishnan, 1960 2 LLJ 592. Bombay Union of Journalists v. State of Bombay, (1964) 1 LLJ 351. Mahabir Jute Mills v. Shibanal Saxena, (1975) 2 LLJ 326 (SC). Govind Sugar Mills v. Hind Mazdoor Sabha, (1975) 2 LLJ 370, 373. Hochtief Gammon v. State of Orissa, (1975) 2 LLJ 418 (SC). Padfield v. Minister of Agriculture, Fisheries and Food, [1968] AC. 997. Rohtas Industries Ltd v. S D Aggarwal, AIR 1969 SC 702. (1983) 1 LLJ 460. AIR 1984 SC 1619. AIR 1987 SC 494. Aeron Steel Rolling Mills v. State of Punjab, (1959) 1 LLJ 73 (Punjab); Aeron Steel Mills v. State of Punjab, AIR 1960 Punjab 55; See also Prabhudayal Himat Singh v. State of Punjab, AIR 1959 Punjab 460; Workmen of New Eqerton Woollen Mills v. State of Punjab, (1967) 2 LLJ 686 (Haryana and Punjab). Bharat Bhushan v. State of Industrial Tribunal, 6 FJR 278 (Allahabad). Shree Shiv Sakti Oil Mills Ltd v. Second Industrial Tribunal, (1961) 2 LLJ 36 (Calcutta). Associated Electrical Industries (India) Private Ltd v. The Workmen, (1961) 2 LLJ 123 (SC). Britannia Engineering Co. Ltd v. Basil Mazumdar, (1961) 2 LLJ 310 at 311 (Calcutta). Ibid.

97 98 99 100

101 102 103 104 105 106 107 108 109

110

111

Id at 3l2. Ibid. Rivers Steam Navigation Co. v. Inland Steam Navigation Workers Union, (1964) 1 LLJ 98 (Calcutta). The question of interpretation of the award would be concluded on its final determination by the special tribunal under Section 36 A, but if, for any reason, the reference thereunder is not or fails to be, effective or proves infructuous, it may still be open to the aggrieved party to approach the civil court for the purposes of the aforesaid interpretation (See Rivers Steam Navigation Co. v. Inland Steam Navigation Workers Union, op. cit.). Rivers Steam Navigation Co. v. Inland Steam Navigation Workers Union, op. cit. Bengal Coal Company Ltd v. Central Government Industrial Tribunal, (1962) 2 LLJ 414 (Patna). Id. at 417. Atlas Cycle Industries Ltd v. State of Punjab, (1962) 1 LLJ 536 (Punjab). Id. at 544. Kirloskar Oil Engines Ltd v. Its Workmen, (1962) 2 LLJ 675. Id. at 677. Ibid. Section 36B of The Industrial Disputes (Amendment) Act 1982 provides: Where the appropriate government is satisfied in relation to any industrial establishment or undertaking or any class of industrial establishments or undertakings carried on by a department of that government that adequate provisions exist for the investigation and settlement of industrial disputes in respect of workmen employed in such establishment or undertaking or class of establishments or undertakings it may, by notification in the official gazette, exempt conditionally or unconditionally such establishment or undertaking or class of establishments or undertakings from all or any of the provisions of this Act. The Industrial Disputes (Amendment) Act, 1982 provides that in Sub-section (2) of Section 38 of the principal Act, after clause (aaa), the following clause shall be inserted, namely: (ab) the constitution of grievance settlement authorities referred to in Section 9 C, the manner in which industrial disputes may be referred to such authorities for settlement, the procedure to be followed by such authorities in the proceedings in relation to disputes referred to them and the period within which such proceedings shall be completed. Shri Yovan, India Cements Employees Union v. Management of India Cements Limited, (1994) Lab.IC 38.

CHAPTER

19 Instruments of Economic Coercion In general, labour’s instruments of economic coercion comprise such workers’ action or omission, in furtherance of an industrial dispute which threaten or inflict financial loss on the management. They put management under economic pressure to accept the (industrial dispute) demands of workers. Likewise, management’s instruments of economic coercion comprise such management’s action or omission, in furtherance of an industrial dispute which is resorted to with the objective of inflicting financial loss on the labour so that they would rather accept management’s terms than suffer irreparable financial loss. Further, in harmony with the view ‘no work, no payment’, the closing of a place of employment or suspension of work or the refusal by an employer to continue to employ any number of persons employed by him is the means adopted to put the requisite economic pressure. The activities may assume various forms, e.g., withdrawal of labour and quarantines of labour, raw material, customer, dealer or any combination of these. Further, the withdrawal of labour or the quarantine may be total or partial.

I. STRIKE Looking back from the vantage point of the year 2012, it appears as commonplace to appreciate that capital, raw materials, tools and labour are essential prerequisites for industrial production. The owner of any one or more of these ingredients yields a vital economic power subject to the prevailing environmental conditions. He can use this power to his advantage in negotiating

with the owner or owners of the other ingredients, the terms and conditions for the supply of that which he owns. In particular, withholding of labour until stated terms and conditions of employment are conceded, is a potent instrument of economic coercion. Though the use of the term ‘strike’ to describe workmen’s instrument of economic coercion in labour management relations is relatively of recent origin, the strategy of withholding labour as an instrument of economic coercion has been known for several centuries. Indeed, prohibition, direct or indirect or withholding labour as an instrument of economic coercion is not unknown.

A. Statutory Definition Section 2(q) of the Industrial Dispute Act, 1947 (IDA) defines ‘strike’ to mean: a cessation or work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment. Judicial delineation of the aforesaid expression of ‘strike’ is confusing, inadequate and inapt. While some of these may be the result of imprecise legislative definition, ignorance of the facts of industrial life and lack of policyoriented approach have also contributed to the prevailing confusion. The shortcoming of the definition became a matter of concern. It raises several issues: (i) Who goes on strike? (ii) Against whom do they go on strike? (iii) What are the acts which constitute strike? (iv) Why do they go on strike? 1. Who Goes on Strike? The Industrial Disputes Act does not specifically mention as to who goes on strike. However, the definition of strike itself suggests that ‘strikers’ must be: (a) persons (b) employed (c) in any industry (d) to do work. 2. Against Whom They Go on Strike? Strike, we have already seen, is called by persons employed in any industry. Further, it is an instrument of economic coercion. It seeks to deprive an ‘employer’ of labour input and thereby, diminish through loss of production, his earning capacity in the hope that the resulting economic strain would compel him to come round to the strikers’ point of view. If this analysis is correct, it follows that the person against whom strike is called must be an employer. Further, the statutory regulation of strikes, namely: No person employed in a public utility service shall go on strike, in

breach of contract: (i) without giving to the employer notice of strike.1 Read with Rule 71 of the rules framed under Section 30 Office Act and the prescribed form, makes it clear that a ‘strike’ is called against the ‘employer’, at least, the Act is concerned with only those strikes that are called against ‘employers’. 3. The Element of Combination. The definition recognizes concerted action under common understanding on the part of strikers as an essential element of strike. The expression ‘concerted’ action indicates that it has been planned, arranged, adjusted or agreed on and settled between parties acting together pursuant to some design or scheme.2 The emphasis in strike is on acting together and not on pre-planning or pre-arranging: the parties who resort to strike may come to a common understanding at the time in question without any formal agreement or consultations, but nevertheless the concerted action must be collectively combined on the basis of esprit de corps and must be combined together by the community of demands and interest with a view to compel employer to accede to their demands of wages, bonus, allowances, hours of work, holidays and the likes. The length or duration of the ‘concerted’ action is immaterial.3 (a) Judicial delineation of statutory provisions: (i) The concept of acting in combination or a concerted refusal or a refusal under a common understanding. The Tribunals and Courts have had several4 opportunities to delineate the contours of the expression: acting in combination, or a concerted refusal or refusal under a common understanding. The emerging picture, however, is hardly satisfactory. Generally speaking, conceptual interpretations have been superseded by literal interpretation. (ii) The conceptual interpretation. In Shamnagar Jute Factory v. Their Workmen5, the tribunal observed: The words, ‘acting in combination’ mean that the body of persons employed must be shown to be acting in combination, with their psychology directed to a particular end, namely, the cessation of work … and… that the cessation of work was the direct common object of the body of persons acting in

combination. For instance, if a factory is on fire, the body of workers should be expected to run simultaneously for safety and leave their work thus bringing about a cessation of work. Under such circumstances, the body of workers may be said to be acting in combination in so far as they would be acting conjointly and simultaneously more or less for the purpose. But such a cessation would not amount to a strike, for the simple reason that the object of the body of workers under such circumstances would not involve a direct purpose of bringing about a cessation of work, although the purpose actually pursued would have the indirect effect of causing cessation of work and being of the opinion that ‘workers were members of an unlawful assembly with the common object of assaulting and overpowering the manager and the police party’ held that the conduct of the workmen did not amount to a strike. All that happened had the indirect effect of causing a cessation of work … there was, therefore, no strike. Standard Vacuum Oil Co. v. Gunaseelan (M G)6 put an additional restriction, albeit from a different angle. The workmen in this case, wanted ‘1st May’ to be declared holiday so as to enable them to celebrate ‘May Day’. A protracted negotiation between management and workmen followed. But the management were recalcitrant to declare ‘1st May’ as holiday. The workmen threatened to go on strike, though on receipt of directives from the All India Petroleum Workmen’s Federation, the local Madras union (of which concerned workmen were members), explicitly advised the concerned workmen to call off the threatened strike. However, on the 1st of May, which was a half working day, workmen indulged in, what decision-makers called ‘an ingenious activity’. Taking advantage of the fact that leave was due to them, they en bloc put in individual applications for leave and in anticipation of grant of such requested leave, left their work to join the ‘May day’ celebrations. Union leaders had masterminded the strategy and advised workmen to put in individual leave applications en masse. On these facts, a question arose whether the absence of workmen en masse, amounted to a strike. The tribunal emphasized that: in making applications for leave, they were submitting themselves to the authority and control of company. They were expecting that the company would act reasonably and would

grant them the holiday in view of the past precedents. And being of the view that in strike ‘the cessation to work or concerted refusal to work must be in defiance of the authority of the employers’7 held that the conduct of concerned workmen did not amount to strike (as the element of defiance was missing). (iii) Literal interpretation. Buckingham and Carnatic Mills Ltd v. Their Workmen8 is the leading case on the subject. When the workmen of afternoon shift came to work at 3 p.m., they insisted for granting the leave (because the day shift workers had been granted leave with pay) to celebrate solar eclipse. The management refused. Consequently, a large number of workmen applied for leave. Management rejected all the leave applications and asked the workers to go back to work. It is not clear from the report as to what happened thereafter except that the workmen did not resume work until about 9 p.m. The tribunal held the stoppage of work to be a strike. The labour appellate tribunal reversed the finding but the Supreme Court restored it: It cannot be disputed that there was a cessation of work by a body of persons employed in the mills and that they were acting in combination and their refusal to go back to work was concerted. All the necessary ingredients, therefore, of the definition exist in the present case and the stoppage of work on 1 November 1948, amounted to a strike.9 (b) The evidence required to prove ‘combination’ or ‘concert’ or ‘common understanding’. The mere absence from work does not amount to taking part in a strike. There ought to be some evidence to show that the absence was due to some concert between him and other persons.10 Proof of ‘combination’ or ‘concert’ or ‘common understanding’ is inevitably dependent on proof of ‘common intention’ or ‘common object’ and though the theoretical possibility of direct evidence to prove ‘common intention’ cannot be eliminated, in practice, there cannot be any direct evidence of ‘common intention’ except by an approver and the common intention must be gathered from the circumstances.11 In Delta Jute Mills Ltd v. Their Workmen12, the workmen demanded Friday evening and Saturday morning as a holiday to observe Muharram. The management declined to grant them the requested holiday but agreed to declare the whole of Saturday as holiday. Thereupon, workmen requested that they be paid wages on the morning of Friday and not in the evening, as per practice. It

was not clear from the report whether the management conceded this demand. However, the workmen absented themselves en masse from the afternoon shift on Friday. Even those few who turned up did not start work and the work completely paralyzed. On these facts, it was held that there was a common intention to remain absent from work in the afternoon shift on Friday. In Sirka Colliery v. South Karanpura Coal Mines Workers’ Union13, the labour appellate tribunal held that ‘… The fact that none of the coal loaders and trammers attended on those 4 consecutive days and their total number was very large, about 2262, the 19th… (and other circumstantial evidence) leave no room for doubt that the cessation of work on those days was concerted refusals under a common understanding.’ In Buckingham and Carnatic Mills Ltd v. Their Workers14, the industrial tribunal observed that the fact that very large number of leave applications were put in for various reasons points to concerted action. The explanation given by the workers and their representatives also indicates that they were acting in combination… Their refusal to resume work in spite of the attempts made by the officers and their own Madras Labour Union representatives shows that they were not as a body prepared to resume work unless their demand was conceded. The aforesaid findings of the tribunal were upheld by the Supreme Court. In Lakshmi Devi Sugar Mills v. Ram Sarup15, the Supreme Court took notice of the avowed intention of strikers not to resume work until their plan conceived at a meeting held on the previous night was carried out, to come to the conclusion that there was a ‘common understanding’. Moreover, tribunals16 have held that it is not necessary to prove in ‘combination and concert’ that workers had any former consultation and thereby had come to that decision.

B. Forms of Strike Most of the cases present relatively simple instances of ‘cessation of work’ ‘refusal to continue to work’ or ‘refusal to accept employment.’17 While negotiating for settlement of an industrial dispute, workmen may resort to the use of instruments of economic coercion to get their point of view accepted by the management. The workmen may remain at their respective home or at any place other than the place of their work or may even be present near or within the premises or the place of employment but not at their seats. However, difficult questions arise when workmen deviate from traditional methods. What about stay-in-strike, pen-down strike, tool-down strike, go-slow, hunger strike,

sympathetic strike, and work-to-rule? Do these fall within the meaning of the definition of strike18 as defined in Section 2 (q) of the IDA? 1. Stay-in-Strike, Sit-Down Strike, Pen-Down Strike, or Tool-Down Strike. Decision makers19 and writers20 have used the expressions ‘stay-in strike’,21 ‘sit-down strike’,22 ‘pen-down strike’’23 and ‘tool-down strike’24 as synonyms of each other. In Punjab National Bank Ltd v. Their Workmen,25 Mr Sabbarwal, a typist and secretary of the Punjab National Bank Employees’ Union of Delhi, applied for 7 days’ leave. The management declined to grant him leave. Even so, Sabbarwal absented himself from duty. On resumption of duties, he was chargesheeted for absence without leave. However, Sabbarwal refused to accept the show cause notice. The management thereupon sent it to him by registered post and pending further inquiry, suspended him. Thereupon, the employee’s union instructed employees to stick to their seats and to refuse to work until police intervened and threatened arrest or until orders of discharge or suspension were served on them. The co-employees of Sabbarwal did this. Meanwhile, a turbulent crowd gathered outside the premises of the bank. Some of the persons in the crowd shouted slogans in support of the action of the employees. The management suspended 60 of the aforesaid participating employees. This led to an industry-wide strike in Delhi and Uttar Pradesh. The bank gave notice that unless the strikers resumed their duties by a specified date, they would be treated as having voluntarily ceased to be employees and on their failure to report for duty on the specified date, terminated the services of 150 of its employees after giving them another chance to resume their duties. On these facts, a question arose as to what is the nature of the employees’ activities in sticking to their seats but refusing to work. The Supreme Court recognized that the main grievance of the bank was that the employees not only sat in their places and refused to work but they did not vacate their seats when they were asked to do so by their superior officers. However, it considered such an element of insubordination to be ‘a different matter’ and not relevant for interpreting the definition of ‘strike’. The Court also rejected the contention that the impugned activity amounted to criminal trespass: … there are two essential ingredients which must be established before criminal trespass can be proved against the employees. Even if we assume that the employees’ entry in the premises was unlawful or that their continuance in the premises became unlawful, it is difficult to appreciate the argument that the said

entry was made with intent to insult or annoy the superior officers. The sole intention of the strikers obviously was to put pressure on the bank to concede their demands. Even if the strikers may have known that the strike may annoy or insult the bank’s officers, it is difficult to hold that such knowledge would necessarily lead to the inference of the requisite intention …26 And on a plain and grammatical construction of the definition held: Refusal under common understanding to continue to work is a strike audit in pursuance of such common understanding the employees entered the premises and refused to take their pens in their hands, that would no doubt be a strike under Section 2 (q).27 We believe that the emphasis on literal interpretation resulted in ignoring the conceptual understanding of the phenomenon known as strike and in encouraging undesirable activities. 2. Go-Slow. Often workers deliberately slow down the pace of production. There is no ‘cessation of work’ or ‘refusal to continue to work’ or ‘refusal to accept employment’. But, nevertheless, the economic implications are very serious as the cost of production goes up, delivery schedule gets upset and very often, raw material and machinery are adversely affected. Workers adopt this practice to circumvent the statutory restrictions.28 On go-slow, however, when they are disciplined for misconduct, they assert that the practice amounts to a strike.29 Obviously, they cannot be permitted to blow hot and cold at the same time. But, then the all important question is whether this practice, popularly called ‘go-slow’ is a ‘strike’? The definition of a ‘strike’ uses the phrases ‘cessation of work’, ‘refusal to continue to work’ and ‘refusal to accept employment.’ These phrases are not qualified by the expression ‘total’ or ‘partial’.30 But in Bharat Sugar Mills Ltd v. Jai Singh,31 Justice Das Gupta, speaking for the Supreme Court observed: Go-slow which is a picturesque description of deliberate delaying of production by workmen pretending to be engaged in the factory is one of the most pernicious practices that discontented or disgruntled workmen sometime resort to. It would not be far wrong to call this dishonest. For, while thus delaying production and thereby reducing the output, the workmen claim to have remained employed and thus to be

entitled to full wages. Apart from this also, ‘go-slow’ is likely to be much more harmful than total cessation of work by strike. For, while during a strike much of the machinery can be fully turned off, during the ‘go-slow’, the machinery is kept going on at reduced speed which is often extremely damaging to machinery parts. For all these reasons ‘go-slow’ has always been considered a serious type of misconduct.32 The aforesaid view was reaffirmed in Bank of India v. T S Kelawala33 wherein the Supreme Court observed: … go-slow is a serious misconduct being a covert and a more damaging breach of the contract of employment. It is insidious method of undermining discipline and at the same time a crude device to defy the norms of work. It has been roundly condemned as an industrial action and has not been recognized as an legitimate weapon of the workmen to redress their grievance. 3. Hunger Strike. Hunger strike is a strike34 with fasting by some or all strikers35 or even outsiders super added to exert moral force or perhaps what may be more aptly described as coercion, for acceptance of the demands. Its usage, however, is complicated because, like the word strike, it is used to describe all protest fasts, whether or not the particular protest activity is in furtherance of an industrial dispute.36 4. Lightning or Wildcat Strike. The characteristic feature of this type of withdrawal of labour is that the workmen suddenly withdraw their labour and bargain afterwards.37 Such strikes are prohibited in public utility services under the Industrial Disputes Act, 194738 and all industrial establishments in public utility services in UP, Maharashtra, CP and Gujarat, where notice is required to be given. Further, the standing orders of the company generally requires for notice. Since no notice is required in industrial establishments other than public utility concerns, a question arises whether such a strike in such a situation would be a misconduct or unjustified strike. These questions have been the subjectmatter of judicial controversy. In Swami Oil Mills v. Their Workmen39, certain workmen resorted to sudden lightning strike allegedly on failure of the government to refer the dispute to the tribunal. The question for consideration with respect to strike was whether it was illegal or unjustified. The tribunal held that the strike was not

illegal and unjustified but observed: It must be conceded that a sudden lightning strike, such as the one in question, without any previous notice to the management, cannot be looked upon as quite proper … In Sadul Textile Mills v. Their Workmen40, certain workmen struck work as a protest against the lay-off and the transfer of some workers from one shift to another without giving four days’ notice provided by Standing Order 23. On these facts, a question arose whether the strike was justified. The industrial tribunal answered it in affirmative. Against this, a writ petition was preferred in the High Court of Rajasthan. Reversing the decision of the tribunal, Justice Wanchoo observed: … we are of opinion that what is generally known as a lightning strike like this takes place without notice and each worker striking (is) guilty of misconduct under the standing orders and liable to be summarily dismissed (as) the strike cannot be justified at all. 5. Work-to-Rule. In this form of concerted activity, employees, though remaining on job, do the work literally in accordance with rules or procedure laid down for the purpose, decline to do anything not mentioned therein, take all permissible time of the job, and do the work in such a manner that it results in dislocation of the work. Usually rules of work are stretched and followed in such a manner that under the shelter of complying with rules, the very purpose of these rules, namely, harmonious working for maximizing production is frustrated. In these tactics, the workers literally work according to rules but in spirit they work against them. Though they are called ‘work to rule’ tactics, in substance they amount to work against rule tactics. These tactics are generally employed as an alternative to a traditional strike particularly, where traditional strike cannot be called. Whatever may be the form of compliance of the rules and whatever may be the outward manifestation, in substance, the conduct of employees amounts to compliance in a manner not commensurable with the prevailing normal practice and in harmony with expectations then entertained, it amounts to bringing about unilateral changes in the working system by the employees and it is a misconduct for which the employer is justified in taking action. In USA, these tactics are recognized as a form of strike. But, in India they are not covered by the definition of ‘strike’. As in go-slow, so here, there is no

‘stoppage’ of work. Again for the very reason because of which we are against extension of definition of ‘strike’ to include go-slow, we are also against inclusion of work-to-rule within the ambit of ‘strike’. The (Second) National Commission on Labour has recommended that work-to-rule must be regarded as misconduct.

C. Why Do Workmen Go on Strike We have already seen that the Industrial Disputes Act, 1947 defines ‘strike’. A question arises whether strike is a means to achieve ends other than getting timeoff or an end in itself, i.e., to get time-off on the very day the workmen indulge in cessation of work. Further, if strike is merely a means to an end, whether the three forms of withdrawal of labour, viz., ‘cessation of work’, ‘refusal to continue to work’ and ‘refusal to accept employment’ are means to further ‘trade dispute objectives’ of the participants or even to achieve political and other nontrade dispute objectives.

D. Judicial Response 1. Withdrawal of labour as a coercive measure to achieve non-trade dispute objectives is not a strike. In Goodlass Wall Co. v. Amir Ahmad Bakoor Khan41, the workmen’s union requested the management to close the factory for half a day to mourn the death of Marshal Stalin which was refused by the management. Thereupon, a large majority of workers kept away from work after the lunch break. On these facts, a question arose whether the conduct of workmen amounted to a strike. The labour appellate tribunal upheld the decision of the tribunal that there was a ‘concerted refusal to work’ and, therefore, a ‘strike’ and opined: It is not correct to say that cessation or stoppage of work, unless it is caused by virtue of an industrial dispute, is not a strike under Section 2 (q) … of the (Industrial Disputes) Act. There is nothing in the scheme of the Act or the provisions thereof, to show any compelling necessity to add any such words. In Matchwel Electricals Company v. Chief Commissioner42, the workmen of the company along with workers of various other industries stopped work to protest the intervention of the Central Government in dismissing the Kerala Ministry in August 1959. The tribunal held the stoppage to be a strike. The company sought the intervention of the High Court under Article 226 of the

Constitution. Justice Gosain conceded: It is true that the strike in question was a sort of political strike and was not, in any way, connected with any grievance of the workmen against the management of the company, but nevertheless held the stoppage to be a strike and, on this point, confirmed the decision of the tribunal. It is difficult to agree with these decisions. It is true that in India, stoppages of work to express one’s resentment has been the order of the day in the political arena ever since 1921 and these work stoppages are popularly called strikes: indeed, political leader’s call is for a strike. Even so they are not strikes within the meaning of the law relating to labours management relations and whatever their merits under conditions of foreign rule, the earlier we isolate labours management relations from them in independent India, the better it would be for all concerned. But quite apart from policy considerations, the aforesaid work stoppages is not a strike within the meaning of the Industrial Disputes Act, 1947 because of the absence of the element of purpose, namely, to further trade disputes with employers. 2. Withdrawal of labour as a means to an end in itself i.e., as a means to get time-off on a particular day, is not a strike. In Shree Meenakshi Mills v. Their Workers43, a workman died while he was working on a loom. His coworkers, without informing the management, left the work post and proceeded to attend the funeral ceremony of the deceased co-worker. The result was that the work was stopped. The labour appellate tribunal upheld the decision of the tribunal that the stoppage amounted to a strike. In Jeewan Dallo v. Metal Box Co.44, the workmen requested the management to close the factory on 14th, the last day of Ganesh Chaturthi, for half a day. The management refused. On 14th, 35 workers did not report for work after the lunch recess, and further 323 workers walked out of the factory and did not report for afternoon shift. On these facts, the tribunal held that there was cessation in concert, so strike. In Upper India Couper Paper Mills v. Their Workmen45, the management directed workmen (due to the exigencies of work) to do work on a listed holiday and offered compensatory holiday (which was in accordance with prior agreement). Workers refused to work. The labour appellate tribunal held the resulting stoppage of work to be a strike. In Dalmia Cement Co. v. Chaniah46, the management (due to exigencies

of work) informed 20 workmen individually on Saturday the 16th that on Sunday the 17th (a weekly off-day) they had to report for work and they will get off-day on another day. The workmen did not turn up. On these facts, the conduct of workmen was held to amount to a strike.

II. PICKETING A. Elements of Picketing Several elements comprise picketing. There is, for instance: (a) element of freedom of speech and expression to the extent to which the communication of facts and views are involved; (b) element of freedom of movement to the extent to which picketers remain stationary or indulge in movement; (c) element of freedom of association to the extent to which picketing involves group activity; and (d) element of freedom to carry on trade, profession or business to the extent to which the activities may be designed to improve the working conditions of the workers and adversely affect the corresponding right of the management or nonpicketing workers. All these elements may not be concurrently present in each and every picketing. Events often quickly move from a phase involving some of these elements to another involving other of these elements.

B. Picketing may be a Permissible Weapon Picketing affects business and business is property. Frankfurter and Greene have indicated, in their classic treaties, the Labour Injunction47, the American judiciary’s response to picketing. Whether or not picketing was illegal under the common law, may be open to serious debate. But there is no doubt that in British India, early regulations and statutes which directly or indirectly rendered strikes illegal and exposed strikers to criminal prosecution also rendered picketing an offence, both in specified industries as well as generally. The Indian Penal Code affected picketing through abetment, criminal intimidation, criminal restraint and among others, breach of contract. Since 1930, picketers could also be prosecuted for criminal conspiracy. The Criminal Law (Amendment) Act, 1932, further affected picketing. The relief given by the Trade Unions Act did not extend to condoning such acts in furtherance of a trade dispute as it amounted to an offence. Trade Disputes Act, 1929 further affected inciting, abetting or acting in furtherance of an illegal strike was an offence–a position which is preserved under the 1947-IDA even though the concept of an illegal strike has undergone a

revolutionary change. Even at the risk of repetition, it may be reiterated that picketing in support of a legal strike, or picketing in the absence of any strike whatsoever is not necessarily legal. Even today, in order to maintain its legality, picketers’ conduct must steer clear of the aforesaid provisions of the IPC and the Criminal Law (Amendment) Act, 1932, but this may not be easy. The Indian Constitution added another dimensions to the problem. To the extent to which picketing involves elements of freedom of speech, movement, association and trade, profession or business and to the extent to which the State is enjoined from taking away the freedom, that law cannot adversely affect picketing.

C. Picketing and Right to Freedom of Speech Section 7 of the Criminal Law Amendment Act, 1932 prohibits obstruction of access and intimidation of persons or employees or loitering at places of residence or business with the intent of deterring others from entering or approaching or dealing at such places. The constitutional validity of the section was challenged in Damodar Ganesh v. State48 and Vimal Kishore Malhotra v. State of Uttar Pradesh.49 In the former case, a dispute arose between Bombay Mill Owners’ Association and employees of various member mills regarding bonus. The state of Bombay referred the dispute to the industrial court, Bombay which gave an award. Against the award, the management preferred an appeal to the then labour appellate tribunal. During the pendency of appeal before the labour appellate tribunal, the employees of various mills commenced a strike and posted some of the workers near the gates of the mills, where they distributed leaflets to the non-strikers. The petitioner did not intimidate any workers. Further, they were behaving in such a manner that their acts were sufficient to deter the workers from going on strike. These picketers were convicted under Section 7 of the Criminal Law Amendment Act, 1932. Aggrieved by the order, the picketer-accused filed a revision application before the Calcutta High Court. It was, inter alia, contended before the High Court that the provisions of Section 7 were contrary to Article 19 (1) (a) and (d) of the Constitution and, therefore, void under Article 13 of the Constitution. The Court rejected the contention and observed: Peaceful picketing, as indulged in by the petitioners before us, can affect only two rights which have been given by the Constitution, viz., the right of freedom of expression and the right to move freely throughout the territory of India. A

restriction has been imposed only on the latter right by Section (1) of the Criminal Law Amendment Act whether it is accompanied by the exercise of the former right or not. If the Section had imposed restriction on both rights then it would have been necessary to justify both the restrictions in the light of the other clauses of Article 19 of Constitution. But in this case, restriction is placed only on the right to freedom of movement of the petitioner without any abridgement of their exercise of any other fundamental right.50 Vimal Kishore Malhotra v. State of Uttar Pradesh51 is another case in point. In this case, certain workers of textile mills at Kanpur went on strike. The strike lasted for several weeks. One of the general secretaries of the union was arrested under Section 7 of the Criminal Law Amendment Act, 1932. It was proved that while one Janardan Pandey and other (non-strikers) were going to the mills, the petitioner in the course of picketing said to the strikers, ‘Note these men. They are rebels. They will not listen to verbal persuasion, until their hands and feet are broken.’ These words according to the Court amounted to criminal intimidation made punishable by Section 506 IPC. Against the order of arrest, the petitioner Vimal Kishore Malhotra preferred a writ petition under Article 226 of the Constitution for a direction of writ in the nature of habeas corpus. It was, inter alia, contended by the petitioner that Section 7 of the Criminal Law Amendment Act, 1932 was ultra vires the Constitution. The Court held that Section 7 was inter vires the Constitution at least so far as is it related to the charges against the petitioner. But the Court did express an opinion about the constitutionality of peaceful picketing and observed: Section 7[of the] Criminal Law Amendment Act prohibits several acts. It may be that prohibition of some of these acts is unconstitutional. But it does not follow that prohibition of other acts also is unconstitutional. It is possible to separate the valid part from the invalid parts. So assuming (without deciding) that certain parts of sub-section (1) of Section 7 of the Act are ultra vires the Constitution, the entire Section 7 cannot be condemned on that ground. In Simpson Group Companies Workers & Staff Union v. Amco Batteries Ltd52, the Karnataka High Court held that the right to picket is a very intangible one which is closely limited by the equal right of others to go about their lawful affairs free from objection, molestation or intimidation. The methods

of persuasion are limited to oral and visual methods, i.e., the use of voice and exhibition of placards and should not be extended to physical obstruction of a vehicle or a person which would be illegal. Accordingly, the workers may resort to peaceful picketing, i. e., the marching to and fro before the premises of an establishment. They may be accompanied by the carrying and display of signboards, placards or banners bearing statements in connection with the dispute. They may also politely request the employees not to assist in the running of the business and ask the customers not to patronize that establishment. Such acts would constitute peaceful picketing and are protected under Section 18. Pickets are, however, not entitled to (i) compel people to listen to them or to obstruct by deliberately standing in their way or catching hold of their arms (ii) obstruct passage of vehicles by lying down on the highway in front of them or otherwise blocking the highway and (iii) pester those persons who do not wish to listen to them and who have requested them to desist.

D. Picketing and Freedom of Movement Article 19(1) (d) of the Constitution guarantees to every citizen the right to move freely throughout the territory of India, This right, however, does not protect loitering at or near a place where such person or member of his family resides or works or carries on business.53 A question therefore, arises whether Section 7 of the Criminal Law Amendment Act, 1932 or other law curtails the freedom of movement by making a mere exercise of the right of freedom of movement penal under certain circumstances. Upholding the same, the Bombay High Court in Damodar Ganesh v. State54 observed: In testing, therefore, the validity of Sec. 7 of the Criminal Law Amendment Act, we have to see whether this restriction on freedom of movement, viz., loitering under certain circumstances accompanied by the requisite intention is justified by Cl. (5) of Art. 19 of the Constitution. The Court continued: If even in this extreme form–without curtailment of any other fundamental right–the section is good as contended by the learned Advocate General, it cannot be bad if, the act prohibited is accompanied by certain other aggravating circumstances which bring into play other fundamental rights, which the

section is not designed to restrict. If loitering simpliciter (under certain circumstances can validly be made an offence, then such loitering accompanied by verbal utterances or distribution of pamphlet cannot be any the less an offence, merely because the offender is exercising other fundamental rights and uttering slogans.

E. Picketing and Freedom of Association If picketing is resorted to in combination by a number of workers or involves group activity, it may well raise the question of freedom of association. Thus, Article 19(1) (c) of the Constitution guarantees to all citizens the right to form associations and unions. This right is, however, subject to reasonable restrictions in the interest of public order and morality. For instance, if workers resort to picketing which endangers public peace, or interferes with the maintenance of public order or the administration of law, it is not protected under Article 19 (1) (c). In other words, Article 19 (1) (c) does not include the right to picketing. However, Section 7 of the Criminal Law (Amendment) Act prohibits mere loitering with certain intention and places restriction on picketing.

III. GHERAO A. Nature and Concept of Gherao The word ‘gherao’ is to be found in several of the Indian and Persian languages and literally means encirclement.55 It is used to describe certain activities of workers in labour-management relations and is of recent origin. In the 1960s gherao became the most potent weapon in the hands of workers. Its use spread throughout the length and breadth of India and found a special niche in West Bengal56 where ironically it, for the first time, lost its legitimacy in 1968.

B. Gherao is an Instrument of Physical, not Economic Coercion In Jay Engineering Works v. State of West Bengal57, Chief Justice Sinha observed:

A ‘gherao’ is not an offence as such mentioned in the Indian Penal Code. But it is an act indulged by labour against the management and where it is accompanied by confinement, restraint or other offences under the criminal law of the land, the fact that it is done by members of a trade union, and used as an instrument of collective bargaining, gives rise to no special treatment or exemption from liability under the law. All workmen guilty of wrongfully restraining any person belonging to the management, or wrongfully confining him, during a gherao are guilty under Section 339 or 340 of the Indian Penal Code. We might add that gherao also comes within the term ‘mischief’ of Section 7 of the Criminal Law Amendment Act, a fact which was overlooked by the Court. Indeed it appears that even scholars have failed to notice the legality of gherao under the aforesaid provisions. Further, gherao may also fall within the purview of ‘criminal intimidation’ under Section 503 IPC. Interestingly, the workers tried to escape the consequence flowing from the aforesaid declaration of illegality of gherao by pointing out that gherao was a concerted activity and consequently they were immune from action under Section 17 of the Trade Unions Act, 1926. But, the Court rejected the contention: Where there is concerted intention to commit an offence, it amounts to criminal conspiracy under Section 120A of the Indian Penal Code and is not saved by Section 17 of the Trade Unions Act, 1926. We agree that an act which is legal if done individually, may become illegal, if done by persons acting in combination. But an act which is illegal, if done by an individual does not become legal when done by persons acting in combination. The (First) National Commission of Labour deprecated the technique of gherao as an instrument of coercion and observed: We endorse this view and deprecate resort to gheraos which invariably tend to inflict physical duress on the person(s) affected and endanger not only industrial harmony but also create problems of law and order. If such means are to be adopted by labour for realization of its claims, trade unions may

come into disrepute. It is the duty of all union leaders, therefore, to condemn this form of labour protest as harmful to the interests of the working class itself. Gheraos cannot be treated as a form of industrial protest. In the long run, they may affect national interest.58 The (Second) National Commission on Labour also recommended that ‘Go-slow’ must be regarded as misconduct.

IV. BANDH A. Nature and Concept of Bandh It is a Hindi word which means ‘closed’ or ‘locked’. ‘The expression therefore conveys an idea that everything is to be blocked or closed’. Bandh is distinct and different from a general strike or hartal.59

B. Bandh is Illegal and Unconstitutional In Bharat Kumar K Palicha v. State of Kerala60, the petitioners sought for a declaration that calling for and holding of bandh is unconstitutional as it is violative of the fundamental rights guaranteed to them under Articles 19 and 21 of the Constitution. The full bench of the Kerala High Court upholding the contention declared bandh to be illegal and unconstitutional. On appeal, the Supreme Court in Communist Party of India (M) v. Bharat Kumar and others61 upheld the decision of the High Court. The Supreme Court, while approving the distinction between a bandh and strike made by the High Court upheld the judgement of Kerala High Court. The High Court gave following reasons in support of its conclusions: (a) The call of bandh implies a threat to the citizen that any failure on his part to honour the call would result in either injury to person or injury to property and psychological fear against defiance. (b) A citizen is coerced not to attend his work or prevented from going out for his work or from practising his profession or carrying on his business which is a violation of his fundamental right at the instance of others when a bandh is called and held. (c) The calling of bandh entails the restriction of free movement of the citizen and his right to carry on his vocation.

(d) No political party has a right to call for bandh on the plea that it is the fundamental right of freedom of speech and expression. Moreover, nothing stands in the way of political parties calling for a general strike or hartal accompanied by express or implied threat of violence to enforce it. It is not possible to accept that the calling of a bandh alone could demonstrate the protest of a political party. (e) The High Court has jurisdiction under Article 226 of the Constitution to grant declaratory relief to the petitioner regarding the right of political parties to call for a bandh and to enforce it. (f) No political party or organization can claim that it is entitled to paralyze the industry and commerce in the entire state or nation and is entitled to prevent the citizens not in sympathy with its viewpoint from exercising their fundamental rights or from performing their duties for their own benefit or benefit of the State or nation. Such a claim would be unreasonable and could not be accepted as a legitimate exercise of a fundamental right by a political party or those comprising it. (g) The political parties and organizations which call for such bandh are liable to compensate the government, the public and private citizens for the loss suffered by them for such destruction. The State cannot shirk its responsibility of taking steps to recoup the loss from the sponsors and organizers of such bandhs. The aforesaid view was reiterated in T K Rangrajan v. Government of Tamil Nadu.62

C. No work No Pay for Absence during Bandh In Management of Nagammal Mills Ltd v. Kumari Mavatta Noorppalal Thozilalar Munnetra Sangam63, the state government called a Bandh. But the management did not declare it a holiday. Certain workmen did not report for work. The employer, therefore, did not pay them wages on the principle of ‘no work, no wages’. On these facts, a question arose whether the denial of payment of wages to workmen absenting themselves from duty was justified. The Madras High Court answered the question in affirmative. The Court ruled: If an employee wants to show his protest in issue either at the instance of any external force or by himself and thereby he is not attending the work, during which period he has to work according to the terms of the employment, he must be ready to

forgo the wages for the said period. When holding bandh itself is against the interest of the nation, can the government or its authorities direct the employers to declare that as holiday with wages. Even if it is so, as has been done in this case, such direction would be nothing but illegal. In this case the government had also declared holiday in support of the bandh which is nothing but supporting illegality and unconstitutional activities. The Court added: In this case, it is factually found, which is not in dispute, that only with a view to participate in the bandh, the respondents absented themselves from attending the work. So, they are not entitled for any salary as they did not earn their wages. So any employer cannot be compelled to pay wages to such employees for such period. Giving such direction would be adding premium to the illegality and against the interest of the society.

V. LOCKOUT The use of the term ‘lockout’ to describe employer’s instruments of economic coercion dates back to 186064 and is younger65 than its counterparts in the hands of workers, i.e. strike, by 100 years. Formerly, the instrument of lockout was resorted to by an employer or group of employers to ban union membership. The employers refused employment to workers who did not sign a pledge not to belong to trade union. Later, a lockout was declared generally by a body of employers against a strike at a particular work by closing all factories until strikers returned to work.66 India witnessed lockout 25 years after it was known and used in the arena of labour-management relations in industrially advanced countries. Karnik reports that the first known lockout was declared in 1895 in Budge Budge Jute Mills.67

A. The Statutory Definition Section 2 (1) of the Industrial Disputes Act, 1947 defines ‘lockout’ to mean: The temporary closing of a place of employment or the suspension of

work, or the refusal by an employer to continue to employ any number of persons employed by him.68 A delineation of the nature of this weapon of industrial warfare requires description of (i) the acts which constitute it (ii) the party who uses it (iii) the party against whom it is directed and (iv) the motive which prompts resort to it.

B. Judicial Response Early decision makers (judicial and quasi-judicial) generally69 declined to treat lockout merely as an instrument of economic coercion. They emphasized deliberate omission of the objective clause from the definition of lockout and gave a catch-all meaning to Section 2 (1) of Industrial Disputes Act, 1947. In Sun Rolling Mills v. Their Workmen70, Shri S N Modak observed that: … the definition under the Trade Disputes Act intended the concept of ‘lockout’ to be restricted by certain words involving an element of intention on the part of employer. Those restrictive words have been deliberately omitted under the present Industrial Disputes Act and in my view, there is no room for introducing any element of intention, either bona fide or mala fide in the definition of lockout under the present Act. And, in Bengal Jute Mills v. Their Workmen, industrial tribunal after explaining that: If the legislature intended to convey that a lockout as defined by Section 2 (1) of the present Industrial Disputes Act could not possibly cover a case of termination of employment, it was for the legislature to say so in clear terms,71 held that the termination of service irrespective of the intention of the employer, amounted to a ‘lockout’. Other industrial tribunals adopted the rule of literal interpretation to hold that cases of lay-off, retrenchment and closure of business were also covered by the definition of lockout. However, there is a catena of cases in which appropriate decision makers stressed that lockout is essentially an instrument of economic coercion and the omission of the objective clause did not change its meaning. The observation of the labour appellate tribunal in Presidency Jute Mills Co. Ltd v. Presidency Jute Mills Co. Employees Union72 is significant: The definition of strike as given in the (Industrial Disputes) Act is the same as that given in the Trade Disputes Act of 1929. Those definitions do not express in terms refer to any reason behind the concerted action of the workmen, but the very

conception of strike is that it is a recognized weapon in the hands of the workmen for enforcing their collective demands. The use of the term ‘strike’ necessarily implies that it has relation to a collective demand which has not been acceded to by the employer. Lockout is the counterpart of strike, the corresponding weapon in the hands of the employer to resist the collective demands of workmen or to enforce his terms. It referred to the Oxford dictionary to ascertain the meaning of the expression ‘lockout’ and in rearbitration between Messers Richardson and Sumuel & Co.,73 where the court of appeal in England had ascertained the meaning of the expression untramelled by any statutory definition, to conclude that the very use of the word ‘lockout’ necessarily implied that the act of the employer was prompted by reason of a dispute with his workmen. The labour appellate tribunal conceded that the then objective clause had been deliberately omitted by the Legislature but explained that the clause may have been dropped in the Industrial Disputes Act for the reason that it was a surplusage and for the purpose of placing the definition of lockout and strike textually on the same terms. It ruled that the omission was not made by the legislature to indicate that the necessity of a nexus between the termination of service and a trade dispute was not necessary nor was the intention of the employer behind the discharge.74 The scope of the words used in Section 2 (1) in general and ‘suspension of work’ in particular was delineated in Premier Automobiles Ltd v. G R Sapre.75 The Premier Automobiles Ltd had three plants located at Kurla, Kalyan and Wadala. The workmen of the first plant resorted to go-slow and indulged in subversive activities as a protest against non-recognition of union in these plants. Consequently, the management not only locked out the plant at Kurla but also suspended the work at Kalyan. The labour court held that the stoppage of work at Kalyan plant amounted to a ‘lockout’ and it was illegal inasmuch as the same was resorted to without giving 14 days’ notice as required under Section 22 (2) of the Act. The management challenged this order in the Bombay High Court. The first question arose whether the suspension and stoppage of work at Kalyan plant amounted to a ‘lockout’. The Court held that the definition was wide enough to cover every process of stopping the work. The other question was whether the abrupt stoppage of work at Kalyan Plant from 16 December 1978 was aimed ‘at persuading’ by a coercive process the employees to see the employer’s ‘point of view’ and accept their ‘demand’. The Court held that even though no demand as such was ever made by the employers against the workmen, it would be idle to expect the employers to

make express demands every time. In its view it would be enough if any such demand can even be implied from the course of conduct. The Court accordingly, held that such suspension of work at Kalyan satisfied the test laid down in Kaibetta’s76 case and amounted to a ‘lockout’. Earlier, the Supreme Court in Kairbetta Estate v. Rajmanickam77 upheld the interpretation given in the Presidency Jute Mills case. In the instant case, the manager of the estate was assaulted by some of the workmen as a result of which he suffered a fracture and was hospitalized for a month. Other members of the staff were also threatened and they wrote to the management stating that they were afraid to go to the affected division of the estate as their lives were in danger. On receiving this communication, the management notified that the affected division would be closed until such time as workmen gave an assurance that there would not be any further trouble and that the members of the staff would not be assaulted. In due course of time, on the intervention of labour commissioner, the concerned workmen gave the requisite undertaking and work was resumed. However, the affected workers claimed lay-off compensation for the period they had been locked-out. The industrial tribunal granted the compensation. The management appealed to the Supreme Court. Justice Gajendragadkar referred to the omission of the objective clause from the 1947definition and added: Even so, the essential character of lockout continues to be substantially the same. Lockout can be described as the antithesis of a strike. Just as a strike is a weapon available to the employees for enforcing their industrial demands, a lockout is a weapon available to the employer to persuade by a coercive process the employees to see his point of view and to accept his demands. In the struggle between capital and labour, the weapon of strike is available to labour and is often used by it, so is the weapon of lockout available to the employer and can be used by him. The use of both weapons by the respective parties must, however, be subject to the relevant provision of the (Industrial Disputes) Act.78 He concluded that this was a case of a lockout. 1. Disciplinary measure not lockout. Cases of indiscipline, misconduct and violation of the provisions of the certified standing orders frequently occur in Indian industrial and business undertakings. Disciplinary measures adopted by the management range from adverse entry in the character roll to the termination

of employment. We are concerned here with only such management’s actions which result in suspension of the concerned workmen during the pendency of investigatory proceedings as a punishment or otherwise either on payment of emoluments, or otherwise and all other cases resulting in refusal by an employer to continue to employ any number of persons employed by him such as orders prohibiting late-coming workmen to resume work and making them absent for the day. The question here is whether these disciplinary measures which come within the literal meaning of Section 2 (1) of the Industrial Disputes Act, 1947, amount to a lockout or not. In Ram Naresh Kumar v. State of West Bengal,79 the management found certain ash-coolies guilty of adopting go-slow tactics, disobedience and assaulting the chief engineer. Since, however, an adjudication proceeding was pending, the management suspended the concerned workmen and applied to the tribunal for permission to terminate their services. The concerned ash-coolies claimed, in a writ petition, that the suspension amounted to a lockout, that such lockout was illegal under Section 23 and that the tribunal had no jurisdiction to entertain the application. However, the Calcutta High Court rejected the petition on the ground that the suspension of workers in this case would not amount to a lockout. Explaining this, Justice Ray observed: Evidently, the order of suspension of eight ash-coolies does not amount to a closing of the place of employment or to a suspension of work. The only part of the definition therefore, which may conceivably cover the order of suspension of eight ash-coolies is the last part. The order of suspension of the eight ash-coolies was merely a provisional order which to my mind, can only mean a suspension for the time being of the employment of these ash-coolies or a provisional putting into abeyance of the position of these men as employees, although it could not amount to a final termination of their employment. As a matter of fact, the true effect of this order of suspension, provisional in its character, cannot be estimated till the final order of dismissal or discharge or refusal to dismiss or discharge is passed. So long as the final order is not passed, it can only amount to a provisional putting into abeyance of the position of the men suspended as employees.80 While we agree that the suspension of workmen in this case was not about any lockout, we do not at all agree with the implications of the aforesaid

observation, namely, that if the management had terminated the services of the ash coolies, its conduct would have come within the ambit of Section 2 (1) of the Industrial Disputes Act, 1947. It might be mentioned that, during a lockout situation, employer-workmen relationship subsists and where there is a termination of service, that essential condition is lacking.81 It is, accordingly submitted that whereas in case of Bharat Barrel and Drum Mfg. Co. v. Their Workmen,82 the particular disciplinary measure taken by the management results in termination of employer-workmen relationship, the management action cannot fall within the mischief of Section 2 (1) of the Industrial Disputes Act, 1947. In Talchar Coalfields Ltd v. Talchar Coalfields Workers’ Union83, certain workmen arrived late and were loitering near the pithead. They were refused permission to resume their duties. On a question having arisen as to whether such refusal amounted to a declaration of lockout, the labour appellate tribunal observed: The point … for consideration is whether the act of the manager in not allowing the latecomers of the first shift to resume their duties was prompted by reason of a collective dispute with the workmen. If the dispute arose in the consequence of, that is to say, after the act of the manager, his act would not amount to lockout.84 2. Security measure not lockout. Dicta in certain cases85 indicate that ‘the closing of a place of employment, or the suspension of work or the refusal by an employer to continue to employ any number of persons employed by him’ may be a security measure and yet the conduct of the employer may fall within the ambit of Section 2 (1) of the Industrial Disputes Act, 1947. For instance, in Lakshmi Devi Sugar Mills v. Ram Sarup86, Justice Bhagwati, summarizing the views expressed by labour appellate tribunal in Jute Workers’ Federation v. Clive Jute Mills,87 observed that ‘a lockout is generally adopted as a security measure and may in certain cases be used as a weapon corresponding to what the employees have in the shape of a strike.’ This is unacceptable. Lockout is an instrument of economic coercion and not a security measure. Lockout is not an end in itself but a means to an end. The particular means adopted are the putting of economic pressures on recalcitrant workmen. Further, in harmony with the view ‘no work no pay’, ‘the closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ and number of persons employed by him’ is the means adopted to put the requisite economic

pressure. The emphasis here is due as much on the means adopted as on the object sought to be achieved. The observation of Justice Aiyar in Shri Ram Chandra Spinning Mills Ltd v. State of Madras88 is more pertinent: The lockout is the corresponding weapon in the armoury of the employer. If an employer shuts down his place of business as a means of reprisal or as an instrument of coercion or, as a mode of exerting pressure on the employees or, generally speaking, when his act is that may be called an act of belligerency, there would be a lockout. If, on the other hand, he shuts down his work because he cannot for instance get raw materials or the fuel or the power necessary to carry on his undertaking or because he is unable to sell the goods he has made or because his credit is exhausted or because he (is) losing money, that would not be a lockout.89 The Kairbetta Estate90 case raised the reverse problem, namely whether layoff included lockout so that locked-out workmen could claim lay-off compensation. The Supreme Court, after discussing the scope of the expression ‘any other reason’ occurring in Section 2 (kkk) and the provisions relating to lay-off compensation under Section 25C and Section 25E (iii) of the Industrial Disputes Act observed: Stated broadly, lay-off generally occurs in a continuing business, whereas a lockout is the closure of the business, in the case of a lay-off owing to the reasons specified in Section 2 (kkk), the employer is unable to give employment to one or more workmen. In the case of lockout, the employer closes the place of the business and locks-out the whole body of workmen for reason which have no relevance to causes specified in Section 2 (kkk).91 The Court concluded that lay-off compensation could not be granted to locked-out workmen. 3. Closure not lockout. In Express Newspaper Ltd v. Industrial Tribunal92, Justice Gajendragadkar indicated that: … the main point which the tribunal will have to consider is whether the strike of the (workmen) on 27th April 1959 was

justified and whether the action of the (management) which followed the said strike is either a lockout or amounts to a closure. The (workmen) will contend that it is a lockout which is in the nature of an act of a reprisal on the part of the (management) whereas the (management) will contend that it is not a lockout but a closure, genuine and bona fide. And, such inquiry, his Lordship held, was within the competence of the industrial tribunal. The Supreme Court in General Labour Union (Red Flag) v. B V Charvan93 was invited to determine the distinction between lockout and closure. The Court laid down the following tests.94 [W]here the parties are at variance whether the employers have imposed a lockout or have closed the establishment, it is necessary to find out what was the intention of the employer at the time when it resorts to lockout or claims to have closed down the industrial undertaking. It is to be determined with accuracy whether the closing down of the industrial activity was a consequence of imposing lockout or the owner/employer had decided to close down the industrial activity. In a lockout, the employer refuses to continue to employ the workmen employed by him even though the business activity was not closed down nor intended to be closed down. The essence of lockout is the refusal of the employer to continue to employ workman. There is no intention to close the industrial activity. Even if the suspension of work is ordered, it would constitute lockout. On the other hand, closure implies closing of industrial activity as a consequence of which workmen are rendered jobless. While examining whether the employer had imposed a lockout or had closed the industrial establishment, it is not necessary to approach the matter from this angle that the closure has to be irrevocable, final and permanent and that lockout is necessarily temporary or for a period… … [T]he true test is when it is claimed that the employer has resorted to closure of industrial activity, the industrial court in order to determine whether the employer is guilty of unfair labour practice must ascertain on evidence produced before it whether the closure was a device or pretence to terminate services of workmen or whether it is bona fide and for reasons beyond the control of the employer. The duration of the closure may be a significant fact to determine the intention and bona

fides of the employer at the time of closure but is not decisive of the matter. The aforesaid judgement emphasizes the possibility of closure being mala fide and a disguise for lockout. The argument might have had some force had it been before the ‘catch-all’ definition of ‘retrenchment’ which was incorporated in the Industrial Disputes Act, 1947. It might have continued to have some force after the Supreme Court curtailed the meaning of the statutory definition of retrenchment in Barsi Light Railway Co.95 but it loses much of its weight in the face of Sections 25F, 25FF and 25FFF. Managements, particularly employers of large number of workmen in an old and established concern, can hardly act lightheartedly or merely with a motive of malice. The economic implications of these provisions are tremendous. Moreover, they render closure or transfer ineffective as an instrument of economic coercion. The only lacuna in the law is that although on closure, a workman is entitled to compensation, he is not, as in the case of retrenchment, entitled to re-employment on re-opening. However, the decisions in Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate96 and Working Journalists of the Hindu v. The Hindu97 render it impossible for the discharged workmen to claim re-employment on re-opening. Under the circumstances, so long as these decisions lay down the law of the land, either Parliament should extend the provisions of Section 25H, relating to reemployment of retrenched workmen, to cover cases of transfer and reopening after closure or it should be settled by an award. 4. Discharge not lockout. In Feroz Din v. State of West Bengal98, a company dismissed from its service four employees for taking part and instigating others to join in an illegal slow-down strike in the hot mills section of its workshop which was a public utility concern. On such dismissal, the slowdown strike, instead of abating, gained strength. The company thereupon issued a notice to the concerned workers that unless they voluntarily recorded their willingness to operate the plant to its normal capacity they would be considered ‘to be no longer employed by the company’. In pursuance of this notice, some of the workers only recorded their willingness: majority of the workers did not respond at all. The company thereafter issued a second notice, inter alia, stating that the workers who did not record their willingness to work in the plant to its normal capacity in terms of the first notice, were being considered as being no longer in service, but their formal discharge from the company’s service was being kept pending in order to ensure that no one who wanted to work normally was discharged on circumstantial assumptions; calling upon the workers to record their willingness, by a certain date, to operate the plant to its normal

capacity; and intimating that names of those who did not comply with the aforesaid request would be removed from the company’s roll and their discharge would become fully effective with all the implications of a discharge. Consequent on this second notice, the entire body of workers except those engaged in the essential services, went on strike. Thereafter the company, with the permission of the government, filed a complaint under Section 27 of the Act against some of the workmen for having instigated and incited others to take part in an illegal strike. The magistrate found that the charge established and convicted the workmen under the said section. On appeal, the additional session judge confirmed that order and a petition to the High Court by way of revision also failed. The workmen then appealed to the Supreme Court. They argued that the discharge of the workmen under the aforesaid two notices amounted to a lockout; that such a lockout was illegal because it was declared in a public utility service without complying with the provisions of Section 22 of the Act, that the strike which was in pursuance of an illegal lockout was legal; and that conviction of workmen under Section 27 of the Act was contrary to law as they had not instigated or participated in any illegal strike. However, the Supreme Court rejected the plea. Justice Sarkar who delivered the judgement for the Court observed: The Act treats strike and lockout on the same basis. It treats one as the counterpart of the other. A strike is a weapon of the workers while a lockout is that of the employer. A strike does not, of course, contemplate the severance of the relation of employer and employed. It would be surge in these circumstances, if a lockout did so. … the words ‘refusal by an employer to continue to employ any number of persons employed by him’ in Section 2 (1) do not include the discharge of an employee. We feel no difficulty in taking this view, for it does not seem to us that the words ‘refusal to continue to employ’ in Section 2 (1) plainly include a discharge. These words have to be read with the rest of the definition and also the word ‘lockout’. The other parts of the definition contemplate no severance of the relation of employer and employee.99 The Court held that discharge was not covered in Section 2 (1) of the Act. 5. Refusal to Give Work to a Single Workman: in Case of a Lockout. Whether the management’s refusal to give work to a single workman amounts to a lockout within the meaning of Section 2(1) of the Act. This question was

answered in the negative in Singareni Collieries Co. v. Their Mining Sirdars100 wherein it was observed: …the definition of the word ‘lockout’ in Section 2(1) of the Act does not mean and include one workman, but means more than one, that is, a number of workmen. On this interpretation, an individual workman is not included in the word ‘lockout’ as defined in Section 2(1) of the Act.

VI. RIGHT TO STRIKE A. No Fundamental Right to Strike Article 19 (1) (c) of the Constitution declares that: All citizens shall have a right … to form associations or unions. This right, however, is not absolute. Clause 4 of Article 19 provides that: Nothing in sub-clause (c) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, in the interests of the sovereignty and integrity of India or public order or morality, reasonable restrictions on the exercise of the right conferred by the said sub-clause. In All India Bank Employees Association v. National Industrial Tribunal,101 the Supreme Court considered the aforesaid provisions. It, inter alia, ruled that: … even a very liberal interpretation of sub-clause (c) of clause (1) of Article 19 cannot lead to the conclusion that the trade unions have a guaranteed right to … strike, either as part of collective bargaining or otherwise.102 The Court however, added: the right to strike or the right to declare lockout may be controlled or restricted by appropriate industrial legislation, and the validity of such legislation would have to be tested not with reference to the criteria laid down in clause (4) of Art. 19 but by totally different consideration.

Similarly, the Andhra Pradesh High Court in Andhra Pradesh Electrical Equipment Corporation, Hyderabad v. Andhra Pradesh Electrical Equipment Corporation Staff Union103 held that the right to lockout or strike cannot be a fundamental rights as it is controlled by Sections 10 (3), 10 A (4A), 22 and 23 of the Act and the penal action is engrafted for disobedience of the prohibition of lockout and strike under Section 26 of the Act. Hence, right to strike can be stated to be merely a statutory right but not a fundamental right. On the basis of this analogy, one may well bring the right to strike within the purview of fundamental right. Thus, the Allahabad High Court in Uttar Pradesh Shramik Sangh v. State of Uttar Pradesh104 equated ‘freedom of association’ with ‘freedom to pursue without restrictions the objects of association’, and observed: The right to form an association is not a right to be exercised in a vacuum or an empty or a paper right. The enjoyment and fulfilment of the right begins with the fulfilment of the purpose for which the association is formed.105 And the Supreme Court declared in Gujarat Steel Tubes v. GST Mazdoor Sabha106: The right to union, the right to strike as a part of collective bargaining and … the right of… the labour to pressurize … the capital, to negotiate and render justice are processes recognized by industrial jurisprudence.107

B. Right to Strike under the Industrial Disputes Act Though, the right to strike is not a fundamental right as such, it is open to a citizen to go on strike or withhold his labour. The right to strike has been recognized under the Industrial Disputes Act, 1947 by defining the circumstances under which a strike is to be regarded as illegal.108 Thus, the labour appellate tribunal in Ram Krishna Iron Foundry v. Their Workers109 ruled: The right to strike has been recognized by necessary implication in the industrial legislation in India and express statutory provisions have been made for the purpose of regulating it. It is thus a recognized weapon of the workmen to be resorted to by them for asserting their bargaining power and backing up their

collective demands on an unwilling employer.110 Again, in G R S M (W) Co. Ltd v. District Collector111, the Kerala High Court summarized the legal position of the workers’ right to strike in the following words: Though under the Constitution of India, the right to strike is not a fundamental right as such, it is open to a citizen to go on strike or withhold his labour. Every strike is not illegal and the workers in any democratic State have the right to resort to strike whenever they are so pleased in order to express their grievances or to make certain demands. A strike in the circumstances is a necessary safety valve in industrial relations when properly resorted to. It is a legitimate weapon in the matter of industrial relations. In common law also the right to strike112 cannot be taken away even if there are standing orders abrogating their rights. To hold otherwise would be to interfere with the fundamental right of employees to resort to strike as a means to enforce their demands which falls within the subject of an industrial dispute.113 The Supreme Court in B R Singh v. Union of India114 has observed that the right to strike ‘though not raised to the high pedestal of a fundamental right…… it is recognized as a mode of redressal for resolving the grievances of workers. But the right to strike is not absolute under our industrial jurisprudence and restrictions have been placed on it. These are to be found in Sections 10 (3), 10A (4A), 22 and 23 of the Industrial Disputes Act, 1947.’ The Court added: The right to form associations or unions is a fundamental right under Article 19(l) (c) of the Constitution. Section 8 of the Trade Unions Act provides for registration of a trade union if all the requirements of the said enactment are fulfilled. The right to form associations and unions and provide for their registration was recognized obviously for conferring rights on trade unions. The necessity to form unions is obviously for voicing the demands and grievances of labour. The trade unions act as mouthpieces of labour. The strength of a trade union depends on its membership. Therefore, trade unions with sufficient membership strength are able to bargain more effectively with the managements. This bargaining power would be considerably

reduced if it is not permitted to demonstrate. Strike in a given situation is only a form of demonstration. There are different modes of demonstrations e.g., go slow, sit-in, work-to-rule, absentism, etc., and strike is one such mode of demonstration by workers for their rights. The right to demonstrate and, therefore, the right to strike is an important weapon in the armoury of the workers. This right has been recognized by almost all democratic countries. Though not raised to the highest pedestal of a fundamental right, it is recognized as a mode of redress for resolving the grievances of workers. The aforesaid right is available only to industrial workers and not to government servants.

C. Interference of Court and Police The Kerala High Court relying upon its earlier decision in C Kannan v. Superintendent of Police115 held that the Court should exercise great caution in dealing with an application for police protection. Managements placed under very tying circumstances may have to seek the assistance of the Court in obtaining orders for police protection. However, such orders should not interfere with the rights of workers to carry on their agitation peacefully. In this connection, the Court underlined the need for adopting Mahatma Gandhi’s method of resistance. The Court also pointed out that if the government decided not to step in the labour dispute with its police power ‘to tilt the balance in favour of the capital, the Court shall not act a spoke in the wheel to interfere with such policy.’116 At the same time, the Court cautioned that the police could not be told that they should not take action when an offence was committed. The police officer was answerable to law and to the law alone. If in the guise of peaceful satyagraha or strike, cognizable offences were sought to be committed and violence was resorted to, police should interfere. Police should certainly interfere if there was any imminent danger or peril to life and property. But the right to strike conferred by the Act cannot be extended to non-workmen because that would result in anarchy in the industrial society.117 In Standard Chartered Bank v. Chartered Bank Employees’ Union (Regd)118, the High Court of Delhi held that workmen’s right to strike is not unlimited. ‘As the Indian citizens when they want to exercise their fundamental rights to form a union and to have demonstrations for the redressal of their grievances, they also have a reciprocal duty not to cause nuisance or mental or

physical danger to their employers and others.’ The Court also held that if the defendants comply with the provisions of sub-section (1) of Section 22, there could not be any injunction in absolute terms to restrain them from exercising their right to go on strike. Similarly, the using of badges or putting mask on the mouth or wearing some caps indicating that they are going on strike, the court cannot restrain them from doing so if they fulfil the provisions of Section 22. Strike has, however, an adverse effect upon production and upon the industry. It is, therefore, desirable that it should be used ‘as a last resort when all other avenues for settlement of industrial disputes, have proved futile.’119 The Supreme Court in Chandramalai Estate v. Their Workmen120 recognized that strike is a legitimate and sometimes unavoidable weapon in the hands of labour.

D. Right to Demonstrate In Kameshwar Prasad v. State of Bihar121, the Supreme Court applied the theory of concomitant rights to include demonstration under the constitutional guarantee of Article 19(1)(a) and 19 (1)(b): ‘Article 19 (1) confers on all citizens the right by sub clause (a) to freedom of speech and expression and by subclause (b) to assemble peacefully and without arms, and the right to demonstrate would be covered by these sub-clauses’122. The Court added: The approach to the question regarding the constitutionality of the rule should be whether the ban that if imposes on demonstration would be covered by limitation of the guaranteed rights contained in Article 19(2) and 19 (3).123 The Court declared Rule 4A as unconstitutional insofar as it prohibited all demonstrations, even those which were peaceful, if the Rule had been so framed as to prohibit such demonstrations only as were likely to lead to a disturbance or public tranquility, it would have been valid. But it prohibited even innocent demonstration and so it could not be sustained under Article 19 (2) and (3). Injunction against staging of demonstration: The Supreme Court in Railway Board, New Delhi v. Niranjan Singh124 held that exercise of this freedom will come to an end as soon as the right of someone else to hold his property intervenes. However, use of badges, masks, caps, and placards, to sit on relay hunger strike cannot be restrained.125 A trade union can be restrained from holding demonstration, dharna, meeting, etc., within 100 metres from the factory or residential premises of the

employer.126 However, in Standard Chartered Bank v. Chartered Bank Employees’ 127 Union , the Delhi High Court held that bank employees can be restrained from staging demonstration within 50 metres of the building.

E Government Servants’ Right to Strike The right of ‘government servants’ to form association, hold demonstration and strike has been questioned in a number of decided cases. Their position is somewhat anomalous. On the one hand, government servants like industrial workers have the guaranteed fundamental right to form associations or unions and to demonstrate for redressal of their grievances. On the other hand, unlike industrial workers, government servants generally are charged with onerous responsibilities for operating essential and vital services to the community. As such, they are expected to behave in a responsible manner without resorting to concerted activity on the ground that strike would be tantamount to disloyalty to the nation and the public. However, it is unfortunate that government servants have in fact resorted to strike despite the prohibition provided by law. Government has tried to regulate these activities through the Government Servants’ Conduct Rules, Essential Services Maintenance Ordinances, etc. For example, the President, in exercise of powers conferred upon him by the proviso to Article 309, issued the Central Civil Services (Conduct) Rules, 1955. Rule 4A of the Rules reads: No government servant shall participate in any demonstration or resort to any strike in connection with any matter pertaining to his condition of service.

F. Right to Strike of Government Servants under the Constitution The question whether government employees have a right to strike has consistently been answered in the negative. Meghraj v. State of Rajasthan128 is one of the earliest cases on this point. In this case, the validity of the Rajasthan Government Servants Conduct Rules129 was challenged. Justice Wanchoo in the course of judgement observed: … under our Constitution, the right to strike is not a fundamental right.

Kameshwar Prasad v. State of Bihar130 is a leading case on this point. The petitioner Kameshwar Prasad was an assistant in the public health engineering department. On 27 September 1956, the Governor of Bihar promulgated the (Bihar) Government Servants Conduct Rules under proviso to Article 309 of the Constitution and inserted Rule 4A which provided that: No government servant shall participate in any demonstration or resort to any form of strike in connection with any matter pertaining to their conditions of service. Aggrieved by such action, the petitioner filed a writ petition in the Patna High Court under Article 226 of the Constitution challenging the validity of Rule 4A of the Bihar Service Conduct Rules, on the ground that it interfered with the fundamental rights guaranteed to the petitioner under Article 19 (1) (a), (b) and (c) of the Constitution. He demanded a stay order to restrain the state of Bihar from giving effect to the Rule and desist from interfering with his right to go on strike or to hold demonstration. The Patna High Court pointed out that Rule 4A prohibited only two methods of showing their dissatisfaction by the government servants—‘strike’ and ‘demonstration’. Other reasonable methods remain open to them for purpose of ventilating their grievances, e.g. making representations orally or in writing. The restrictions imposed by Rule 4A apply only to one very important class of the community, namely government servants, who occupy a very different position from those who are working in industries. Government servants have a greater responsibility and status. Rule 4A, the Court held, had been promulgated in the interest of public order within the meaning of Articles 19(2) and 19(4) of the Constitution. The petitioner then appealed to the Supreme Court. The Supreme Court did not fully agree with the view of the Patna High Court in regard to the validity of Rule 4A and it accepted the appeal only partially. The Court held that the validity of Rule 4A could not be challenged insofar as it prohibited strike, but held the rule invalid in so far as it banned all kinds of demonstrations.131 In Ramrao Laxmikant Shirkhedkar and Others v. Accountant General Maharashtra132, the argument stood on a different footing. It was contended that the persons on whom the prohibition of Rule 4A did not apply must be taken to have the right to strike. Disposing to this question, the Bombay High Court observed: It is true that so far as persons in industrial establishments are concerned, a right to go on strike as a weapon to be used for

implementing or enforcing the demands is recognized before industrial tribunals called upon to adjudicate between employers and employees. In our opinion, such a contention cannot be availed of because there is no such right as a legal right to strike and, as far as we are able to see, whether the strike should be prohibited in one form or another according to the categories of employment in the government service was a matter within the discretion and powers of the government as an employer in framing rules. O K Ghosh and Others v. E X Joseph133 is another case on this point. In this case, Joseph was a clerk in the audit and accounts department at Bombay. He was the secretary of the civil accounts association. The government withdrew recognition of the association but he still continued to be its secretary. He was suspended from service and was served with a chargesheet for having committed a deliberate breach of Rules 4A of the Central Civil Services (Conduct) Rules, 1955. Departmental disciplinary proceedings were initiated against him. The charges against him were mainly two-fold: Firstly, he had infringed Rule 4A insofar as he participated actively in various demonstrations organized in connection with the strike. He was also charged for having organized meeting and instigating the staff to participate in the strike by delivering inflammatory speeches. Secondly, by continuing to remain on strike, the secretary of an unrecognized union of government servants, he had infringed Rule 4B. Aggrieved by the order, he filed a writ petition before the Bombay High Court under Article 226. He challenged the validity of these proceedings on the ground that Rule 4A and Rule 4B were void as contravening the fundamental rights guaranteed by Articles 19 (1) (a), (b), (c) and (g) of the Constitution. The High Court held Rule 4B to be invalid but held Rule 4A to be valid as a whole. The Court accordingly held that the departmental proceedings initiated against Joseph for breach of Rule 4A were not valid. Against the decision of the Bombay High Court, Joseph filed an appeal to the Supreme Court. The Supreme Court, following its earlier ruling in the Kameshwar Prasad case, held that since there was no recognized fundamental right to resort to strike, the Bombay High Court was in error in holding that the said rule was valid in its entirety. On 6 August 2003, a two-judge bench of the Supreme Court in T K Rangrajan v. Government of Tamil Nadu and Others134 delivered a

momentous judgement on government servant’s right to strike. This decision has raised a lot of hue and cry among political parties and trade unionists.135 The Factual Background In order to appreciate the decision, it is necessary to examine the relevant facts. In this case, the government employees (including teachers of government-aided school and colleges) went on an indefinite strike in pursuance of their demands relating to pension benefits that had been curtailed on grounds of a resource crunch. The government of Tamil Nadu first invoked the Tamil Nadu Essential Services Maintenance Act (TESMA), 2002 and then promulgated an ordinance empowering the government with the power of summary dismissal en masse, without giving the employees an opportunity to be heard. Accordingly, the government of Tamil Nadu summarily dismissed about 1.7 lakh government employees (including teachers) for participating in a strike under the Tamil Nadu Government Servants Conduct Rules, 1973, Tamil Nadu Essential Services Maintenance Act, 2002 and Tamil Nadu Ordinance No. 3 of 2003. The employees were also prevented from resuming their duties. Quite apart from this, 2211 employees and their leaders were also arrested against whom FIRs were registered and who had ‘incited’ the strike or ‘indulged in violence’. Aggrieved by this decision, the employees filed a writ petition under Article 226/227 of the Constitution in the Madras High Court. The single Judge of the Madras High Court by an interim order directed, inter alia, the state of Tamil Nadu (i) to keep in suspension the dismissal order issued to the striking government employees until further orders, and (ii) to permit the employees to resume duties forthwith in view of their undertaking to withdraw the strike and resume duty. Aggrieved by this order, the state of Tamil Nadu filed an appeal before the division bench of the Madras High Court challenging the interim order. A public interest litigation was also filed on behalf of government employees wherein the validity of the Tamil Nadu Essential Services Maintenance Act, 2002 and Tamil Nadu Ordinance No. 3 of 2003 were challenged. The division bench of the High Court set aside the interim order and held that without exhausting the alternative remedy of approaching the administrative tribunal, writ petitions were not maintainable. It directed the state government employees to approach the state administrative tribunal and not the Court. The Court also directed that those who were arrested and lodged in jails be released on bail. Against this order, the employees filed an appeal before the Supreme Court. The writ petitions were also filed before the Supreme Court for getting the same relief. Area of Conflict

The Supreme Court was called upon to decide the following issues: (i)

Was there any justifiable reason for the division bench of the High Court not to entertain the petition on the ground the petitioner did not avail the alternative remedy provided under the Constitution and the statute? (ii) Is there any fundamental right to go on strike? (iii) Whether the government servants have the right under any statute to resort to strike? (iv) Is there any moral or equitable justification to go on strike? (v) Whether the Tamil Nadu Essential Services Maintenance Act, 2000 and the Tamil Nadu Ordinance No. 3 of 2003 were voilative of the provisions of the Constitution?

Power of the High Court to Exercise its Extraordinary Jurisdiction The Supreme Court examined the order of the division bench of the High Court that the writ is not maintainable because over 170,000 employees have not exhausted the alternative remedy of approaching the state administrative tribunal provided under the Administrative Tribunal Act. The Supreme Court found such refusal to entertain the writ petition to be legalistic, particularly in an extraordinary situation where the government of Tamil Nadu dismissed over 170,000 employees and the Tamil Nadu State Administrative Tribunal is almost defunct as it has only the vice-chairman to run the same. The Court remarked that it is unfortunate that the concerned authorities are not making the administrative tribunals under the Administrative Tribunal Act, 1985, functional and effective by appointing men of calibre and observed: It is to be reiterated that under Article 226 of the Constitution, the High Court is empowered to exercise its extraordinary jurisdiction to meet unprecedented extraordinary situation having no parallel. It is equally true that extraordinary powers are required to be sparingly used. The facts of the present case reveal that this was a most extraordinary case, which called for interference by the High Court, as the State Government had dismissed about two lakh employees for going on strike.136 The Court conceded that no doubt it is true that the Supreme Court in L Chandra Kumar v. Union of India137 held that it is not open to the employees to directly approach the High Court even where the question of vires of the

statutory legislation is challenged. The Court, however, added that this ratio should be read in the context of the question, which was decided by the Supreme Court wherein it was contended that once the tribunals are established under Article 323 A or Article 323 B, jurisdiction of the High Court would be excluded. Negating the said contention, the Court in that case made it clear that jurisdiction conferred upon the High Court under Article 226 of the Constitution is a part of inviolable basic structure of the Constitution and it cannot be said that such tribunals are effective substitute of the high courts in discharging powers of judicial review. No Fundamental Right to Strike The Supreme Court in the instant case ruled that there is no fundamental right to strike as it has been well-settled in a series of cases decided by the Supreme Court. In order to appreciate this ruling, it is necessary to examine the law on this subject.138 Article 19(1)(a) of the Constitution provides: All citizens shall have the right…to freedom of speech and expression. The aforesaid right is subject to limitation prescribed under Article 19(2). The Supreme Court, in Radhey Shyam Sharma v. The Post Master General Central Circle, Nagpur held that there is no fundamental right to strike under the aforesaid article. Let us turn to examine whether strike falls within the purview of Article 19(1)(c). Article 19(1)(c) of the Constitution declares: All citizens shall have a right … to form associations or unions. The above right, is however, not absolute. Clause 4 of Article 19 provides. Nothing in sub-clause (c) of the said Clause shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, in the interests of the sovereignty and integrity of India or public order or morality, reasonable restrictions on the exercise of the right conferred by the said sub-clause. In All India Bank Employees Association v. National Industrial Tribunal,139, the Supreme Court considered the scope of the aforesaid provisions and inter alia, ruled: …. even a very liberal interpretation of sub-clause (c) of Clause (1) of Article 19 cannot lead to the conclusion that the trade

unions have a guaranteed right to … strike, either as part of collective bargaining or otherwise.140 The Court, however, added: The right to strike or the right to declare lockout may be controlled or restricted by appropriate industrial legislation, and the validity of such legislation would have to be tested not with reference to the criteria laid down in clause (4) of Article 19 but by totally different consideration. A perusal of the aforesaid decision reveals that the Supreme Court in the case under review has merely reiterated and applied the well-settled law on this point.

Statutory Prohibition on Government Servants’ Right to Strike The Supreme Court in the instant case observed that there is no statutory provision, which empowers the employees to go on strike. On the other hand, there is a prohibition to go on strike under the Tamil Nadu Government Servants Conduct Rules, 1973. Rule 22 of the said Rules provides: No government servant shall engage himself in strike or in incitements thereto or in similar activities. Explanation to the aforesaid provision defines the expression of ‘similar activities’ to include: The absence from work or neglect of duties without permission and with the object of compelling something to be done by his superior officer of the government or any demonstrative fast called ‘hunger strike’ for similar purposes. Rule 22A provides: No government servant shall conduct any procession or hold or address any meeting in any part of any open ground adjoining any Government office or inside any office premises — (a) during office hours on any working day; and (b) outside office hours or any holiday, save with the prior permission of the head of the department or head of office as the case may be.

Let us turn to examine the legal position which existed prior to this case. The right of ‘government servants’ to form association, hold demonstration and strike has figured in a number of decided cases. Their position is somewhat anomalous. While government servants like industrial workers have the guaranteed fundamental right to form associations or unions and to demonstrate for redressal of their grievances. But unlike industrial workers, government servants are generally charged with onerous responsibilities for operating essential and vital services to the community. As such, Government servants are expected to behave in a responsible manner without resorting to concerted activity on the ground that strike would be tantamount to disloyalty to the nation and the public. But, it is unfortunate that government servants have in fact ignored the law of the land and resorted to strike which led the government to regulate these activities through the Government Servants’ Conduct Rules and Essential Services Maintenance Ordinances, etc. Thus, the President in exercise of powers conferred upon him by the proviso to Article 309 issued the Central Civil Services (Conduct) Rules, 1955. Rule 4A of the Rules reads: No government servant shall participate in any demonstration or resort to any strike in connection with any matter pertaining to his condition of service. From the above, it is evident that a government servant has no right to go on strike under any legislative enactment. On the contrary, there is a prohibition under the statute to go on strike.

Moral or Equitable Justification to Go on Strike After having held that strike is not a fundamental right and government servant has no right to strike under any law, the Supreme Court proceeded to determine the issue whether there is any moral or equitable justification to go on strike. The Court observed that (i) government employees cannot claim that they can hold the society to ransom by going on strike. The Court, however, added that even if there is injustice to some extent, they have to resort to the machinery provided under different statutory provisions for redressal of their grievances; (ii) Strike as a weapon is mostly misused which results in chaos and total maladminstration and (iii) Strike affects the society as a whole and particularly in the instant case when two lakh employees go on strike en masse, the entire administration comes to a grinding halt. The Court also referred to the inconvenience caused to public due to strike by teachers, doctors and transporters. In the case of strike by teachers,

entire educational system suffers; many students are prevented from appearing in their exam, which ultimately affects their whole career. In case of strike by doctors, innocent patients suffer; in case of strike by employees of transport services, entire movement of the society comes to a stand still; business is adveresely affected and a number of persons find it is difficult to attend to their work, to move from one place to another or one city to another. On occasions, public properties are destroyed or damaged and finally this creates bitterness among public against those who are on strike. The Court also showed its concern against irresponsible behavior of government servants, particularly when out of the total income from direct tax, approximately 90 per cent of the amount is spent on the salary of about 12 lakh government employees in the state. This is all the more so where there is large scale unemployment and number of qualified persons are eagerly waiting for employment in government departments or in public sector undertakings. Accordingly, the Court emphasized the need to be fully aware of their duties, responsibilities and effective methods for discharging the same in the prevailing situation. The Court suggested that for redressing their grievances, instead of going on strike, the employees should do more work. Such gesture of employees for acting honestly, diligently and efficiently would not only be appreciated by the authority but also by people at large, the Court added. This is so because in a democracy, even though they are government employees, they are part and parcel of governing body and owe duty to the Society. The Court also emphasized the need to deal with the misconduct by government employees in accordance with law. ‘However, considering the gravity of the situation and the fact that on occasion, even if the employees are not prepared to agree with what is contended by some leaders who encourage the strikes, they are forced to go on strikes for reasons beyond their control. Therefore, even though the provisions of the Act and the Rules are to be enforced, they are to be enforced after taking into consideration the situation and the capacity of the employees to resist. On occasion, there is tendency or compulsion to blindly follow the others’. The aforesaid observations raise a basic question whether it was necessary to decide the issue of moral or equitable justification to go on strike when it had already held the strike to be illegal. This is all the more so when the Court, following its earlier decisions, ruled that strike is not a fundamental right and government servants do not have any legal right to go on strike. It is submitted that there was no need to decide such issues particularly when the Supreme Court ruled that illegal strikes cannot be justified. In this context it is

necessary to refer to the development of case law on legality and justification. A survey of the aforesaid decisions, therefore leads us to the conclusion that the observation of majority has left the issue whether illegal strike per se is unjustified wide open and introduces uncertainty.

Role of the Supreme Court in Providing Relief to Dismissed Strikers The Supreme Court has played a constructive or even conciliatory role in easing and possibly bringing to an end, the unfortunate situation created due to en masse dismissal of over 1,70,000 government employees including teachers, who had gone on strike. In this process, the Court succeeded in getting the undertaking from the government of Tamil Nadu to the following effect: (i)

To reinstate all the government employees who are dismissed because they had gone on strike, except (a) 2,200 employees who had been arrested and (b) employees against whom FIRs had been lodged. (ii) The aforesaid order of reinstatement in service would be subject to unconditional apology as well as undertaking to the effect that employees would abide by Rule 22 of the Tamil Nadu Government Servants Conduct Rules 1973. (iii) The government will proceed under the disciplinary rules only against those employees who had indulged in violence and who had incited the other employees to go on strike. (iv) The government of Tamil Nadu would pass an appropriate order for regularizing the services of reinstated employees for the period for which they remained absent and this would not be treated as a break in service. We now turn to examine the specific direction issued by the Court: • Direction to Reinstated Employees. The Supreme Court pointed out that employees who are reinstated in service would take care in future to maintain discipline as there is no question of having any fundamental, legal or equitable right to go on strike. On the other hand, the employees adopt other alternative methods for redressal of their grievances. • Direction in Respect to Employees who are not Reinstated. The Supreme Court ordered that for those employees who are not reinstated in service on the ground that FIRs are lodged against them or after holding any departmental inquiry penalty is imposed, it would be open to them to challenge the same before the administrative tribunal and the tribunal would pass appropriate order including interim order within a period of

•

•

two weeks from the date of filing of such application before it. Direction to Government. The Supreme court showed its concern about the concerned authorities not making the administrative tribunals under the Administrative Tribunal Act, 1985, functional and effective by appointing men of calibre. Directions to the High Court. In case the administrative tribunal is not functioning, it would be open to the employees to approach the High Court and it is for the High Court to ensure that justice should not be denied to the affected persons if the administrative tribunals are not functioning.

Constitutional Validity of the Tamil Nadu Maintenance Act, 2002 and Tamil Nadu Ordinance No. 3 of 2003 The Tamil Nadu Government Servants Conduct Rules, 1973 prohibits a government servant to engage himself in strike or in incitements thereto or in similar activities. For the purpose of the aforesaid rule, the expression ‘similar activities’ shall be deemed to include the absence from work or neglect of duties without permission and with the object of compelling something to be done by his superior officers or the government or any demonstrative fast usually called ‘hunger strike’ for similar purposes. However, despite this provision, in the year 2002, the Tamil Nadu Essential Services Maintenance Act (TESMA), 2002, which is said to be a draconian law, was first invoked in response to an indefinite strike by employees in pursuance of demands relating to pension benefits that had been curtailed on grounds of a resource crunch. The government also issued an ordinance empowering itself with the summary power of dismissal en masse, without any application of mind and without giving the employees an opportunity to be heard. The ordinance, which amended TESMA141 provides for treatment as ‘deemed participation’ in the banned strike any absence of employees irrespective of the actual reasons for their abstention from duty after the promulgation of the ordinance. Midnight arrests of employees and their leaders, retrospective effect sought to be given to the ordinance and dismissals without giving individual notices, all show that the government was intent upon crushing the strike by any means. The validity of the aforesaid Act and Ordinance was challenged before the Supreme Court. The Supreme Court, however, did not decide the issue whether the Tamil Nadu Services Maintenance Act, 2002 and Tamil Nadu Ordinance No. 3 of 2003 or interpretation of any of the provisions thereof are

ultra vires the Constitution on the ground that (i) state government has gracefully agreed to reinstate ‘most’ of the employees who had gone on strike. However, 6,072 employees were not covered by the order and were not entitled to reinstatement. The aforesaid decision raises several issues (i) Can the Court refuse to determine the constitutionality of the Ordinance, or Act on the ground that most (and not all workers) are likely to be reinstated? (ii) Whether the employees who have not been reinstated under the agreement should become legal orphans? What would happen to those employees who would not be reinstated? Quite apart from this, the Tamil Nadu Ordinance also raises several issues, namely: (i) Can post-facto amendment be valid without application of mind and without giving the employees an opportunity of being heard valid? (ii) Is the practical relief provided to certain employees be the substitute for the alleged illegal act of Tamil Nadu Government? (iii) Can the order of dismissal under the Act or Ordinance (which is itself questionable) be sustained? Quite apart from this, the court’s judgement also raises various questions. First, to what extent the Supreme Court’s observations are enforceable? Second, will it really be possible for the aggrieved employees to expect prompt response from the tribunals given the way they function?

An Appraisal From the above discussion, the following conclusions emerge: (i)

(ii)

The Supreme Court, relying upon its earlier judgements, held that right to strike is not a fundamental right and government servants have no constitutional or legal right to go on strike. In this regard, we wish to point out that press reports referred to the 1989 judgement of the Supreme Court B R Singh v. Union of India142 to support the viewpoint that right to strike is recognized as a mode of redressal for resolving the grievances of workers. However, we wish to point out that they failed to look into the very next sentence wherein the court said, ‘these are to be found in Sections 10(3), 10A(4A), 22 and 23 of the Industrial Disputes Act, 1947. From this it is evident that the aforesaid rule is only applicable in cases of industrial workers and not to government employees.’ This judgement is also not applicable to teachers employed in school and colleges because they are not ‘workmen’ under the Industrial Disputes Act, 1947 and, therefore, the Industrial Disputes Act, 1947 is not applicable. This law has been laid down by the Supreme Court in

(iii)

(iv)

(v)

(vi)

Miss A Sundarmbal v. Govt. of Goa, Daman & Diu.143 Quite apart from this, press statements of political parties and trade union federations do not make a distinction between the right to strike of industrial workers and government employees while commenting on government servants’ right to strike. Indeed they are unable to distinguish between fundamental and statutory right to strike and use them as if they are interchangeable. We wish to emphasize that fundamental rights are those rights which are guaranteed under the Constitution while statutory rights are those rights provided under the statute, i.e., in case of strike under the Industrial Disputes Act, 1947. Press statements of political parties and Federation of Trade Unions have also misinterpreted the scope of ILO Convention No. 87 on Freedom of Association and Convention No. 98 on Right to Organize and Collecting Bargaining, 1949. It is true that India was a founder member of ILO but it has not yet ratified these conventions primarily because government servants have no right to collectively raise disputes with the State under the respective conduct rules. The administrative tribunals have therefore, been set up to resolve individual disputes. Quite apart from this, joint consultative machinery for Central Government employees permits negotiations on certain matters. The determination of moral or equitable justification to go on strike by the Supreme Court in this case has been debated. It has been commented by various jurists that it is ‘unwarranted and uncalled" for. Be that as it may, we feel that once the Court has held that there is no fundamental right to strike and the government servants do not have the right to go on strike as it is prohibited in the Conduct Rules, it was not necessary to decide such issue. This is so because the Supreme Court in Indian General Navigation and Railway Co. v. Their Workmen,144 and Model Mills v. Dharam Das145 held that strike which is illegal cannot be characterized as ‘justified’. The failure of the Supreme Court to decide the vital question of the constitutional validity of the Tamil Nadu Essential Services Maintenance Act, 2002 and Tamil Nadu Ordinance No. 3 of 2003 on the ground that the state government has gracefully agreed to reinstate most of the employees who had gone on strike is open to debate. This is all the more so when the ordinance suffers from infirmities and runs against the settled principles of law. The Supreme Court has played a significant role in persuading the

government of Tamil Nadu to reinstate the employees and also to lay down norms for disposal of cases of those employees who have not been reinstated. This is a commendable attempt and needs to be highlighted. (vii) The Supreme Court deprecated the tendency of Madras High Court to exercise its extraordinary jurisdiction to meet the unprecedented situation wherein about 2 lakh employees who had gone on strike were dismissed. While dealing with decision in L Chandra Kumar v. Union of India146 decided upon by the High Court, the Supreme Court said that no doubt it was held in that case that alternative remedy should have been exhausted before moving to the High Court under Article 226 and 227 of the Constitution but in the instant case, if thousands of employees are directed to approach the High Court which incidentally has only one man, it would not be in a position to render justice. The Court accordingly held that in a very exceptional circumstance, that arose in the present case, it was not justifiable for the High Court not to entertain the petition. (viii) The Supreme Court’s remarks that administrative authorities are not making the tribunal functional and effective by appointing men of calibre, which makes the alternative remedy less effective is instructive. It is hoped that the government will take adequate steps in this direction. In Jan Chowkidar (Peoples Watch) v. State of Bihar,147 the Patna High Court held that the government servants who are getting salary from the state from the public exchequer should be more responsible to the public at large. Whether strike was illegal or whether it was unjustified, what was the misconduct of each of the employees, whether they have merely participated in the strike or whether they have committed any offence, incited violence and obstructed other willing employees to work, all these questions are to be decided by the employer according to law complying with the principle of natural justice and service law. In any event, right to work is a fundamental right and nobody has the right to obstruct the willing employees to do the work. Destruction of public property etc., cannot be justified.

G. Constitutional Validity of the Essential Services Maintenance Ordinance 1960 S Vasudevan and Others v. S D Mital148 again raised the problem of government servants’ right to go on strike vis-a-vis the power of the government to prohibit it under the Essential Services Maintenance Ordinance, 1960. The

main issue involved in this case was whether the right to form an association or union included the right to go on strike. The Supreme Court answered the issue in the negative. The facts of the case were as follows: The petitioner, S Vasudevan, was a permanent upper division clerk of the Union of India in the office of the general manager, Telephones, Bombay. He joined the general strike of the employees of Union of India commencing on 12 July 1960. The director of telegraphs suspended him from service on the ground that disciplinary proceedings were contemplated to be taken against him. He was charged with committing grave misconduct by participating in an illegal strike in contravention of the Essential Services Maintenance Ordinance, 1960, which had declared the strike by Posts and Telephone officials as illegal. He was also charged for having deliberately contravened the provision of the Central Government Civil Services (Conduct) Rules, 1955, insofar as he had participated actively in demonstration organized in connection with the strike of the Central Government employees and took very active part in preparation for the strike and he failed to report for duty as required of him from 12 July 1960. This was also in contravention of the Essential Services Maintenance Ordinance, 1960. Vasudevan filed a writ petition under Article 226 in the Bombay High Court wherein he prayed to hold the order of suspension and the charges served on him as void, illegal and inoperative in law. The Ordinance was challenged on the ground that it was in excess of the powers conferred on the President under Article 123(1) of the Constitution. It was also argued on behalf of workmen that the Ordinance violated the right conferred on a citizen by Article 19(1) (c) of the Constitution. Deciding the question whether the right to go on strike was included within it the right to form associations or unions, Justice Tambe observed: (The right to go on strike) is not joint or collective expression of view but is joint or collective action. By its very nature it is fraught with possibilities of leading to violence. History has been telling us that in large number of cases where people have gone on strike there has been resort to violence. He added: If the Constitution-makers had intended to confer on the citizens as a fundamental right, the right to go on strike, they would have expressly said so.

On the basis of the assumption that the right to go on strike has not expressly been conferred on the citizen, his Lordship arrived at the conclusion that right to strike was not included in the right conferred under Article 19 (1) (c) of the Constitution. Further, his Lordship also referred to the observation in Corpus Juris Secundum149 that ‘the right to strike is a negative right which can be exercised with due regard to the right of others. Neither the common law nor the Fourteenth Amendment to the Federal Constitution confers an absolute right to strike.’

VII. RIGHT TO LOCKOUT Since 1950, the Constitution guarantees the right to acquire, hold and dispose of property. The Constitution also guarantees the right to carry on any occupation, trade or business. Is the employer’s right to lockout workmen guaranteed under any or both of these constitutional provisions violative of the Constitutional guarantee unless it imposes reasonable restrictions in the interest of general public? This question was answered in this negative by the Andhra Pradesh High Court in A P Electrical Equipment Corporation v. Its Staff Union.150 The Court observed: … the right to lockout is now controlled by Sections (10) (3), 10A (4A) … 22 and 23 of the Act and the penal action is engrafted for disobedience of the prohibition of lockout under Section 24. If it is held that the petitioner has a fundamental right to declare lockout, then naturally the provisions referred to earlier would be rendered otiose.151 The Court accordingly held that right to lockout is a statutory right controlled by the relevant provisions of the Industrial Disputes Act, 1947 and must be exercised in conformity therewith.

VIII. REGULATION OF STRIKES AND LOCKOUTS A. General Prohibition on Strikes and Lockouts Section 23 which prohibits strikes and lockouts provides: No workman who is employed in any industrial establishment shall go on

strike in breach of contract and no employer of any such workman shall declare a lockout: (a) during the pendency of conciliation proceedings before a board and seven days after the conclusion of such proceedings; (b) during the pendency of proceedings before a labour court, tribunal or national tribunal and two months after the conclusion of such proceedings; (c) during the pendency of arbitration proceedings before an arbitrator and two months after the conclusion of such proceedings, where a notification has been issued under sub-section (3A) of section 10 A; or (d) during any period in which a settlement or award is in operation in respect of any of the matters covered by the settlement or award. The aforesaid provisions do not limit illegality only to strikes (or lockouts) which cover demands which are the subject-matter of the pending proceedings. Thus, a strike (or lockout) which is called during the pendency of conciliation proceedings or pendency of adjudication or arbitration proceedings is illegal, although it is in respect of demands which are not covered by conciliation or adjudication proceedings.152 Curtailment of Scope of General Prohibitation. In Chemicals and Fibres of India Ltd v. D C Bhoir153 there was a dispute between a workman and the employer concerning the former’s dismissal. This ‘individual dispute’ became an ‘industrial dispute’ because of the provisions of Section 2A of the IDA and the reference thereof by the appropriate government to a labour court for adjudication. During the pendency of adjudication proceedings relating thereto, the management of M/s Chemicals and Fibres Ltd, dismissed three other workmen. Thereafter, the workmen of M/s Chemicals and Fibres Ltd, went on strike to protest against the dismissal of the aforesaid three employees. Was this strike prohibited under Section 23 (b)? The Supreme Court ruled: Even in respect of clause (b), some limitations should be read confining it to the parties to the proceedings either actually or constructively, as in the case of the Union espousing the cause of an individual workman.154 The Court held that the prohibition contained in Section 23 did not apply to the workmen employed in Chemical and Fibres of India Ltd, even though they went on strike, and matters relating to the dismissal of a single workman of that establishment were pending adjudication before labour court. At the same time, the Supreme Court widened, in a different direction, the scope of the prohibition

imposed by Section 23 when it approved the High Court decisions which established: … that even though the proceedings pending before the labour court, tribunal or national tribunal might relate to certain matters only, there cannot be a strike or lockout even in relation to matters other than those which are pending before the labour court tribunal or national tribunal.155 Among the decisions cited and approved by the Supreme Court is the decision of the Calcutta High Court in Provat Kumar Kar v. W T Parkar.156 In view of its approval of the principle established in Provat Kumar Kar’s Co. Ltd, the Supreme Court did not advert to the question whether the subject matter of the impugned strike arose out of or was connected with or was relevant to, the subject-matter of pending adjudication proceedings. The Court proceeded on the basis, (as decided in that case), that the general prohibition contained in Section 23 did not cover workmen employed in establishments which were not concerned in the adjudication proceedings. It applied itself to a limited question: did the prohibition affect all workmen employed in the establishment or establishments involved in the pending adjudication proceedings, or only those workmen who were parties to the proceeding? Having reached the conclusion that the general prohibition imposed by Section 23(b) affected only those workmen who were parties to the adjudication proceedings, the Supreme Court went to assert that, since the pending adjudication proceeding related to an ‘individual dispute’, other workmen of the establishment were not affected by the general prohibition.

B. Additional Restrictions on Strikes and Lockouts in Public Utility Services Strikes and lockouts adversely affect the interest of the community in maintaining a high level of production and uninterrupted public utility services. Section 22, which regulates strikes and lockouts in public utility services, inter alia, directs: (1) No person employed in a public utility service shall go on strike, in breach of contract: (a) without giving to the employer notice of strike, as hereinafter provided, within 6 weeks before striking; (b) within 14 days of giving such notice; or

(c) before the expiry of the date of strike specified in any such notice as aforesaid; or (d) during the pendency of any conciliation proceedings before a conciliation officer and 7 days after the conclusion of such proceedings. (2) No employer carrying on any public utility service shall lockout any of his workmen: (a) without giving them notice of lockout as hereinafter provided, within 6 weeks before locking-out; or (b) within 14 days of giving such notice; or (c) before the expiry of the date of lockout specified in any such notice as aforesaid; or (d) during the pendency of any conciliation proceedings before a conciliation officer and 7 days after the conclusion of such proceedings. The scope of this section will be examined hereunder: 1. Public Utility Services. Unlike the provisions of Section 23 which, as we have already seen, contain general prohibition on the use of the instruments of economic coercion, the provisions of Section 22 are limited in their scope. They apply to strikes and lockouts only in public utility services. Section 2(n) of the IDA defines ‘public utility services’ to mean: (i) any railway service or any transport service for the carriage of passengers or goods by air; (ia) any service in or in connection with the working of, any major port or dock; (ii) any section of an industrial establishment on the working of which the safety of the establishment or the workmen employed therein depends; (iii) any postal, telegraph or telephone service; (iv) any industry which supplies power, light or water to the public; (v) any system of public conservancy or sanitation; (vi) any industry specified in the First Schedule which the appropriate government may, if satisfied that public emergency or public interest so requires, by notification in the official gazette, declared to be a public utility service for the purposes of this Act, for such period as may be specified in the notification:

Provided that the period so specified shall not, in the first instance, exceed six months but may, by a like notification, be extended from time to time, by any period not exceeding 6 months, at any one time if in the opinion of the appropriate government public emergency or public interest requires such extension. It will be observed that there are two categories of public utility services (i) those that are mentioned in clauses; (i) to (v) of Section 2 (n); and (ii) those which being listed in the First Schedule, are declared by the appropriate government to be ‘public utility services.’ The second of these two categories can be classified as public utility service only for a period of six months from the date of government notification though the government is empowered to extend to period from time to time by successive notifications. Lest the true scope of governmental power to impose additional restrictions on the use of instruments of economic coercion remains camouflaged in the provisions of the IDA, it is necessary to point out that appropriate governments are empowered to add to or subtract from the list of industries mentioned in the First Schedule. Thus, Section 40 of the Industrial Disputes Act, inter alia, specifically provides: (a) The appropriate government may, if it is of the opinion that ‘it is expedient or necessary in the public interest to do so, by notification in the official gazette, add to the First Schedule any industry and on any such notification being issued, the First Schedule shall be deemed to be amended accordingly. (b) The Central Government may, by notification in the official gazette, add to or alter or amend the Second Schedule or the Third Schedule and on any such notification being issued, the Second Schedule or the Third Schedule, as the case may be, shall be deemed to be amended accordingly. (c) Every such notification shall, as soon as possible after it is issued be laid before the legislature of the state, if the notification has been issued by a state government or before Parliament, if the notification has been issued by the Central Government. Accordingly, the First Schedule has grown in bulk. The First Schedule, as modified by the Central Government from time to time, now provides: (a) Transport (other than railways) for the carriage of passengers or goods, by land or water (b) Banking

(c) Cement (d) Coal (e) Cotton textiles (f) Foodstuffs (g) Iron and steel (h) Defence establishments (i) Service in hospitals and dispensaries (j) Fire brigade service (k) India Government mints (l) India Security Press (m) Copper mining (n) Lead mining (o) Zinc mining (p) Iron ore mining (q) Service in any oilfield (r) Service in the uranium industry (s) Pyrites mining (t) Security Paper Mills, Hoshangabad The 1971 Amendment however, deleted item 18 from the First Schedule and added in it a sub-clause (ia) to the aforesaid clause (n) of Section 2. Thus, the concept of public utility service itself has undergone a change. It now includes not only those industries which directly affect health and safety of the members of the society but also those which are the basis of national economic reconstruction and development. In addition, state governments have declared other industries157 to be public utility services. In Swadeshi Industries v. Its Workmen158, the company was running three different units, namely, (i) cotton textile weaving unit, (ii) silk unit, and (iii) art silk products manufacturing unit. The cotton textile industry was declared a ‘public utility service’ by the appropriate Government. The workmen employed in the silk unit went on strike without giving any notice as required by the aforesaid Section 22. The company dismissed the striking workmen on the ground that they had gone on illegal strike. The strikers, however, asserted that the silk unit was not a ‘public utility service’ and consequently Section 22 was

not applicable. The Supreme Court agreed that prima facie the silk unit was not a public utility service. Further, since the company did not prove that the concerned workmen at the time of strike or prior to that, had even worked in the cotton weaving unit; that the workmen employed in the silk unit, were required under the terms of employment to work in the cotton unit, and that textile unit workers in the cotton textiles unit was ever assigned to any of the striking workmen, the concerned workmen could not be said to be employed in a ‘public utility service’ within the meaning of Section 2 (n) and for the purposes of Section 22. Earlier in D N Banerjee v. P R Mukherjee159 the Supreme Court referred to the provisions of Section 2 (n) and the First Schedule of the IDA to support the decision of the Court that local bodies were within the purview of the IDA. Seven years later, Justice Gajendragadkar speaking for the Supreme Court referred to entry (q) in the First Schedule and; even though he could not decide in State of Bombay v. Hospital Mazdoor Sabha160 on the basis of that entry as the Parliament had added that entry after the commencement of the proceedings in that case, he used it to demonstrate legislative intent indicative of including services in hospitals within the purview of industry and added: After the addition of the relevant entry in the Section 1, it would not be open to anybody to suggest that services in hospitals does not fall under Section 2 (j).161 Even so, Chief Justice Hidayatullah held in Safdarjung Hospital162 that, though public conservancy or sanitation was an industry, services in government or charitable hospitals did not fall within Section 2 (j). 2. The Central Scheme of Regulation under Section 22. The Act163 adopts a two pronged approach to prevent the use of instruments of economic coercion in public utility concerns and thereby to maintain continuity of production or services. First, the section postpones the implementation of the decision to use the instruments of economic coercion by prescribing a statutory requirement of notice. Second, Section 22 read with Section 12 ensured ‘peace making’ efforts by imposing a statutory duty on conciliation officers to hold conciliation proceedings and directing the parties not to resort to the use of the instruments of economic coercion during the pendency of a statutory requirement of notice. The overall perspective of the IDA indicates that Section 22 may also be looked at as the step which leads to governmental intervention in labour management relations to preserve the interest of the community.

(a) Requirements of notice. Section 22 (1) of the IDA requires that persons employed in public utility services shall not go on strike ‘in breach of contract’ without giving the requisite notice. And Section 22 (4) directs that the notice of strike shall be given in the prescribed manner. Likewise, Section 22 (2) of the IDA states that employers carrying on any public utility service shall not declare lockout without giving the requisite notice. And Section 22 (5) directs that the notice of lockout shall be given in the prescribed manner. It is difficult to ignore the difference in the phraseology of Section 22 (1) and 22(2). While the former speaks of ‘person employed’ and ‘in breach of contract’, the latter merely speaks of ‘employer’ and ‘his workmen’. The obvious question is what, if any, are the consequences of this difference in terminology? The clause ‘no person employed in a public utility service shall go on strike in breach of contract’ must necessarily be read in the light of the definition of ‘strike’. The net effect of this interpretation would be that even if a person is not a ‘workman’ within the meaning of Section 2 (s) of the IDA, but is employed under a contract, whether the contract is of service or for services, he is prohibited from going on strike in ‘breach of contract’. In view of the importance of public utility services, this enlarged coverage or the prohibition is logical. Further, the emphasis on ‘breach of contract’ suggests the prohibition under Section 22 would not apply to persons who after the termination of the period of contract ‘refuse to continue to work or to accept employment’. In view of the penal consequences flowing from violation of the prohibition and the constitutional prohibition against forced labour contained in Article 23 of the Constitution, the emphasis on breach contract is again logical. The use of the expression ‘employer’ and ‘his workmen’ automatically import the element of contract. However, to the extent to which ‘non-workmen’ persons employed under a contract are excluded from the prohibition of Section 22 (2) that subsection is narrower than Section 22 (1). (b) To whom notice is to be given: (i) Strike notice. Section 22 (1) (a) of the Act states the persons to whom the notice of strike is to be given. It, inter alia, provides: No person employed in a public utility service shall go on strike in breach of contract without giving to the employer notice of strike… and, Section 22 (4) directs that: The notice of strike referred to in sub-section (1) shall be given by such number of persons to such person or persons and in such

manner as may be prescribed. However, the Industrial Disputes (Central) Rules, 1957 do not prescribe person or persons to whom notice of strike is to be given. Under the circumstances, notice is to be given to persons stated in Section 22(1) (a), i.e., ‘employer.’ (ii) Lockout notice. Section 22 (2) (a) of the IDA provides that: No employer carrying on any public utility service shall lockout any of his workmen: without giving them notice of lockout…… And Section 22 (5) directs that: ‘The notice of lockout referred to in sub-section (2) shall be given in such manner as may be prescribed.’ This has to be read with Rule 72 which, inter alia, provides that: … where a registered trade union exists, a copy of notice shall also be served on the secretary of the union. Unlike Section 22(4), Section 22(5) does not specifically include ‘to such person or persons’ but Rule 72 requires that persons, other than those mentioned in 22 (1) to whom a copy of notice is to be served. (c) Notice: when to be given. The legislature has drafted in a perplexing manner the minimum period of notice. Section 22(1)(b) of the IDA provides: No person employed in a public utility service shall go on strike, in breach of contract— (b) within fourteen days of giving such notice. Likewise, Section 22(2)(b) prescribed the minimum period of notice, to be given by the employer: No employer carrying on any public utility service shall lockout any of his workmen. (c) ‘within fourteen days of giving such notice.’ The reason for prescribing the minimum period is presumably to give time to employer or workmen, as the case may be, and to the various governmental authorities to see whether strike or lockout can be prevented and workmen may come either partially or wholly to workmen’s or employer’s point of view as the case may be. Otherwise it becomes difficult if not, impossible, for the authorities to anticipate outbreak of hostilities. (d) Notice: effective for how long. Section 22(1) (a) prescribes the upper

limit within which strike notice would be effective. It states: No person employed in a public utility service shall go on strike, in breach of contract. (a) without giving to the employer notice of strike, as hereinafter provided, within 6 weeks before striking. Similarly, Section 22 (2) (a) prescribes the upper limit in case of lockout: No employer carrying on any public utility service shall lockout any of his workmen. (a) without giving them notice of lockout as hereinafter provided, within 6 weeks before locking-out. It is clear from above that notice of strike or lockout would be ineffective after 6 weeks from the date it is given: the strike or lockout must be effected within this period from the date of notice of strike or lockout. The reasons for prescribing the maximum limit is to provide sufficient security measure by the custodian of law, if the strike or lockout was to break out within the stipulated period. Otherwise, it becomes too difficult, if not impossible, for the authorities to anticipate outbreak of hostilities. In Mineral Miner’s Union v. Kudremukh Iron Ore Co. Ltd164, the union of workmen employed in a public utility service gave a notice of strike required under Section 22 on 1 September 1984 of its intention to go on one day token strike any day after 20 September 1984. Thereupon the conciliation proceedings commenced and took place between 19 September, 1984 to 1 October 1984 on which date the conciliation failed. The failure report was submitted to the Government on 12 October 1984 and the parties were informed about the failure of conciliation only on 9 November 1984. Thereafter on 10 December 1984 the workmen who were members of the union went on strike. Thereupon the management informed the union considering the strike to be illegal, that the workers were not entitled to wages for 10 December 1981, which amount was deductible under the Payment of Wages Act, 1936. On these facts a question, inter alia, arose for determination whether fresh notice is required on failure of conciliation and conclusion after six weeks from the date of strike notice. The Karnataka High Court answered the question in the affirmative and observed: a fresh notice under S. 22 (1) in compliance with clauses (a), (b) and (c) of S. 22 (1) and S. 24 is necessary if in a given case, by the date on which the failure of conciliation proceeding is intimated, 6 weeks period from the date of notice of strike issued

earlier under S. 22 (1) of Act had expired. In Management, Essoripe Mills Ltd v. Presiding Officer, Labour Court and Others,165 the respondents 2 to 23 went on illegal strike from 8 November 1990. Respondent no. 15 and one S L Sundaram who had died in the meantime were the first to strike work in the blow room resulting in stoppage of the entire operation of the appellant’s mill. On 14 March 1991, the general secretary of the Tamil Nadu Panchalai Workers’ Union served a strike notice on the management under Section 22(1) of the Industrial Disputes Act, 1947 stating that ‘strike would commence on or after 24 March 1991’. But on 8 April, 24 April and 13 May 1991, the management dismissed respondents 2 to 23 from service after holding a disciplinary inquiry. Aggrieved by this order, respondents 2 to 23 filed petitions under Section 2A of the Act for reinstatement with back wages and continuity of service. The labour court by its award dated 24 January 1994 held that the strike was illegal. However, in purported exercise of its powers under Section 11A of the Act, the labour court substituted the punishment of dismissal by order of discharge and awarded compensation of ₹50,000 to each workman. The award was challenged by the appellant as well as the workmen before the High Court. On 5 August 2000, a single judge of the High Court allowed the writ petition filed by respondents 2 to 23 on the ground of non-compliance of Section 33(2)(b) of the Act and directed reinstatement of the workmen with full back wages and continuity of service. According to him, a copy of the strike notice dated 14 March 1991 was sent to the conciliation officer and therefore, conciliation proceedings were pending on the date of the dismissal and since the dismissal was without the approval of the conciliation officer in terms of Section 33 of the Act, the same was illegal. Against this order, the appellant filed a writ petition against the order of punishment, which was dismissed. Thereupon, special leave petitions were filed before the Supreme Court. In the course of the hearing, the Court suggested certain terms for amicable settlement which the appellant agreed to but respondents 2 to 23 did not agree. The Supreme Court observed: Section 22(1) prohibits a strike in a public utility service, in breach of contract, without giving to the employer advance notice of 6 weeks. Section 22(1) prohibits a strike in a public utility service, in breach of contract, without giving to the employer advance notice of 6 weeks. It prohibits strike (a) within the notice period of 6 weeks, (b) within 14 days of giving

such notice, (c) before the expiry of the date of strike specified in such a notice, (d) during the pendency of any conciliation proceedings before a conciliation officer and 7 days after the conclusion of such proceedings. The Court added that the strike notice issued on 14-3-1991 stating that the strike will commence on or after 24-3-1991 i.e. (just 10 days notice) does not satisfy the requirement of advance notice stipulated under section 22(1). Therefore, it is not a valid notice. Consequently, in the eye of law, there was no commencement of conciliation proceedings as a result of the said notice. Unless a conciliation proceeding was pending at the time of dismissal of workmen, section 33 will not be attracted and there is no question of seeking permission of the conciliation officer in such a case. The Court remarked that the High Court failed to appreciate that in terms of Section 33A for not obtaining permission of the conciliation officer under Section 33, the only legal consequence is that the conciliation officer shall take the complaint of contravention of the provisions of Section 33 into account in mediating in and promoting the settlement of such industrial dispute. Therefore the order of dismissal in any event was not illegal. The Court also observed that the conciliation officer, unlike the labour court or an industrial tribunal, has no power of adjudication. Therefore, he cannot set aside the order of dismissal and therefore dismissal would be valid. The Court then noted that the notice was given about the proposed strike after the strike. Thus, the workers resorted to strike on 8 November 1990, while the notice was given on 14 March 1991. The Court then enumerated the following stages under Section 22: (i) advance notice of 6 weeks (ii) 14 days given to the employer to consider the notice; (iii) the workmen giving the notice cannot go on strike before the indicated date of strike; (iv) pendency of any conciliation proceedings. The Court then observed that in case no conciliation proceedings were pending under. Sub-section (4) of Section 22, the notice of strike referred to in sub-section (1) has to be given in such manner as may be prescribed. The Central Rule 71 prescribes the manner in which the notice has to be given and the notice is in Form ‘L’. The notice as mandated under Section 22 has to be given to the employer. Further, there is nothing in Section 22 which requires giving of intimation or copy of the notice under Section 22 to the conciliation officer. At the stage of notice under Section 22, there is no dispute. Moreover, the date of notice is 14 March 1991 and the proposed strike was on 24 March

1991. Therefore, on the face of it, it cannot be treated to be a notice as contemplated under Section 22(1)(a). In the notice it is stated that the strike will commence on or after 24-3-1991. Obviously, 6 weeks’ time before the date of strike was not given. In this case the date of notice is 14-3-1991 and the proposed strike was on or after 24-3-1991. The inevitable conclusion is that the notice cannot be treated to be one under Section 22. If no notice is given to the employer, the effect of it is that he is not aware of the proceedings. Obviously, the conciliation proceedings must be one meeting the requirements of law. Here, no notice in terms of Section 22 of the Act was there. The Court added: Somewhat unacceptable plea has been taken by Respondents 2 to 23 that in terms of Section 22(1)(b) after 14 days of giving the notice, the workmen can go on strike. If this plea is accepted 6 weeks’ time stipulated in Section 22(1) (a) becomes redundant. The expression ‘giving such notice’ as appearing in Section 22(1)(b) refers to the notice under Section 22(1)(a). Obviously, therefore, the workmen cannot go the strike within 6 weeks’ notice in terms of Section 22(1)(a) and 14 days therefore in terms of Section 22(1)(b). The expression ‘such notice’ refers to 6 weeks’ advance notice. It is difficult to accept the aforesaid interpretation. If the expression ‘without giving to the employer notice of strike, as hereinafter provided, within 6 weeks of before striking’ means what the Supreme Court has held it to mean; one wonders what was the need of clause (b), namely ‘within 14 days of giving such notice’, which means that persons employed in public utility services shall not go on strike ‘in breach of contract’ without giving 14 days’ notice. And Section 22(4) directs that the notice of strike shall be given in the prescribed manner. Indeed, Section 22(1)(a) prescribes the upper limit within which strike notice would be effective. In other words, the notice of strike or lock-out would be ineffective after 6 weeks from the date it is given. The reason for prescribing the maximum limit is to provide sufficient security by custodian of law, if the strike or lock-out were to break out within the stipulated period. Otherwise, it becomes too difficult, if not impossible, for the authorities to anticipate outbreak

of hostilities. (e) Notice: how to be given. The notice of strike is to be given by workmen under subsection 4 in accordance with Rule 71 of the Industrial Disputes (Central) Rules, 1957, which reads: (1) The notice of strike to be given by workmen in a public utility service shall be in Form ‘L.’ (2) On receipt of a notice of a strike under sub-rule (1), the employer shall intimate the fact to the conciliation officer having jurisdiction on the matter. Similarly Sub-section (5) requires that: (t)he notice of lockout referred to in sub-section (2) shall be given in such manner as may be prescribed, and Rule 72 of the Industrial Disputes (Central) Rules, 1957 provides that: (t)he notice of lockout to be given by an employer carrying on a public utility service shall be in Form ‘M’. The Rules further states: The notice shall be displayed conspicuously by the employer on a notice board at the main entrance of the establishment and in manager’s office. The Rule also makes it obligatory upon the employer: Where registered trade union exists, a copy of notice shall be served on the secretary of the union.166 A perusal of the aforesaid provisions reveals that the form in which notice is to be given is mandatory. This view gets support from the use of the term, ‘shall’ both in subsections (4) and (5). Further the word ‘shall’ which occurs in Rules 71 and 72 of the Central Rules confirms this view. Moreover, ‘the intention of the legislature in enacting the relevant provisions and the scheme of the IDA leaves no doubt that compliance of the contents of notice is mandatory.’ Judicial decisions also, confirm this view. For instance, in Employees of Dewan Bahadur Ram Gopal Mills v. Dewan Bahadur Ram Gopal Mills167, the workmen of a public utility concern gave a notice under Section 22. The notice was, however, not in the prescribed form and it did not specify the date of strike as required under Rule 52 (1) of the (Hyderabad) Industrial Disputes Rules,

1950, which was in pari materia with Rule 71 of the Industrial Disputes (Central) Rules 1957. Construing Rule 52 (1) of the Hyderabad Industrial Disputes Rules, the labour court observed: A perusal of the form E shows that the notice of strike shall specify: the date of strike. Rule 71 of the Industrial Dispute (Central) Rules of 1957 contains a similar provision. It is contended that neither the so called notice of strike … is on the prescribed form nor does it specify any date of strike. In my opinion, the provision of Rule 52 … is mandatory and contravention thereof renders the alleged notice, ineffective as a statutory notice, as contemplated by Section 22 (1) of the Industrial Disputes Act, 1947.168 The same question figured again in Municipal Committee v. Industrial Tribunal.169 In this case workmen gave a notice of strike to the employer on 26 March, 1967. The notice was, however, not in accordance with the provisions of Section 22 read with Rule 71 and form ‘L’ of the Schedule. Construing the provisions of Section 22 read with Rule 71, the Punjab and Haryana High Court held: Reading relevant statutory provisions of Section 22 (1) in conformity with Rule 71 and the contents of Form L, it appears to be self evident that the statutory requirements of the notice are of a mandatory norm. The Court rejected the contention that the provisions of sub-section (3) of Section 22 are merely directory and a patent violation of these provisions would entail no legal consequence. The Court reiterated that ‘compliance with the provisions of Section 22 is the core of the matter for determining whether a particular strike be legal or otherwise’. In Savita Chemicals (Pvt.) Ltd v. Dyes and Chemical Workers Union,170, the Supreme Court while dealing with validity or otherwise of the notice of strike given by the union under the Maharashtra Act, read with the rules made thereunder namely the labour court (Practice & Procedure) Rules, 1975 held that if all the essential requirements in the prescribed form for giving of notice are fulfilled, in substance, the basic requirement of the prescribed form of notice of strike would be satisfied. It is not necessary that the notice must be typed in the same sequence as given in the prescribed form. The prescribed form and the sequence of any information to be given therein are mere formal

requirements. Similarly, whether notice is given by registered post or by hand delivery is also not a basic requirement. It is sufficient if the notice is duly served on the employer. It is submitted that aforesaid reasoning can be equally applied examining the validity or otherwise of a strike notice under Section 22(1) (a) of the ID Act, read with rule 71 and form L under the Industrial Disputes (Central) Rules, 1957. (f) Notice: When not necessary. Sub-section (3) of Section 22, provides that no notice needs to be given when a strike or lockout already exists, but in such a case, the employer must send notice of such strike or lockout on the day when it was declared to the authorities specified by the appropriate Government under the IDA. (g) Requirement of compliance with notice. Clause (c) of sub-section (1) of Section 22 is not happily worded. It provides that strike or lockout shall not be resorted to: ‘before the expiry of the date of strike or (lockout) specified in any such notice as aforesaid’ the relevant portion of Form L framed under Rule 71 of the Industrial Disputes (Central) Rules, 1957 reads: In accordance with the provisions contained in sub-section (1) of Section 22 of the Industrial Disputes Act, 1947, I/We hereby give you notice that/I propose to call on strike we propose to go on strike on … 20 … for the reasons explained in the annexe… Similarly, Form M framed under Rule 72 reads: In accordance with the provisions of sub-section (2) of Section 22 of the Industrial Disputes Act, 1947. I/We hereby give notice to all concerned that it is my/our intention to effect a lockoutin……….. department(s)/section(s) of my/our establishment with effect from… for the reasons explained in the annexure. Whether the workmen are bound to specify the date of strike in a notice given under Section 22 (1) of the Act? The Karnataka High Court171 answered the question in the affirmative and observed that in a notice of strike required to be given under Section 22 (1) of the Act, the date on which the workmen intended to go on strike should be specified and its non-specification renders the strike illegal. (h) Requirement of reporting to the government agencies. Sub-section (6) makes it incumbent on the employer within five days of receipt of notice of

strike under sub-section (1) or where he served a notice of lockout under subsection (2) to report to the appropriate government regarding the number of notices received or given on a particular date. And Rule 74 of the Industrial Disputes (Central) Rules, 1957 lays down: The report of notice of a strike or lockout to be submitted by the employer under subsection (6) of Section 22 shall be sent by registered post or given personally to the assistant labour commissioner (central) appointed for local areas concerned with copy by registered post to: 1. The concerned administrative department of the Government of India. 2. The regional labour commissioner (central) for the zone. 3. Chief labour commissioner (Central). 4. Ministry of Labour of the Government of India. 5. Labour department of the state government concerned. 6. The district magistrate concerned. The object of Sub-section (6) is perhaps to enable the authorities either to make efforts to avert such strike or lockout or to make alternative arrangements for running the public utility service or even to make security arrangements as public service is vital to the day-to-day life of the community. (i) Issuance of second notice of strike/lockout on failure of conciliation. While the requirement of issuing a fresh notice of strike (under Section 22) might be mandatory for going on strike after the failure of conciliation, on the issue of such second notice, conciliation cannot be deemed to have commenced or required to be commenced under Section 20 (1) and 12 (1) of the Act respectively, for the conciliation proceedings would have already taken place, a failure report would have been intimated to the parties by the government and consequently clause (d) of Section 22 which prohibits strike during the pendency of conciliation does not get attracted. The only course open under the Act to prevent strike in a public utility service is to refer the demands for adjudication under Section 10 of the Act as by such reference, the prohibition of strike incorporated in Section 23(b) gets attracted. Obviously for this reason, the second proviso to Section 10 (1) makes it obligatory for the government to refer a dispute relating to a public utility service on the issuance of notice under Section 22 unless the demand is found to be frivolous or vexatious or otherwise inexpedient for being referred for adjudication.172 3. The Response of the (First) National Commission on Labour. The Commission has attached considerable importance to public utility services. It has, therefore, provided for compulsory adjudication as an alternative for strike.

In the event of failure of negotiation as also after the failure of the party to agree to arbitration, ‘either party shall notify the proposed IRC with a copy to the appropriate government, of the failure of such negotiation, whereupon the IRC shall adjudicate upon the dispute and its award shall be binding upon the parties’173 4. The Response of the (Second) National Commission on Labour. The Second National Commission on Labour recommended that in socially essential services like water supply, there may be a strike ballot and if the strike ballot shows that 51 per cent of workers are in favour of strike, it should be taken that the strike has taken place, and the dispute must forthwith be referred to compulsory arbitration. The commission also recommended that a strike could be called only by the recognized negotiating agent and that too only after it has conducted a strike ballot amongst all the workers, of whom at least 51 per cent support the move to strike.

C. Prohibition on Continuance of Strike and Lockout 1. Legislature Measures Sub-section (3) of Section 10 provides: Where an industrial dispute has been referred to a board, labour court, tribunal or national tribunal under this Section, the appropriate government may by order prohibit the continuance of any strike or lockout in connection with such dispute which may be in existence on the date of the reference. The discretion to issue prohibitory order where an industrial dispute has been referred to arbitrator under Section 10 A, however, is subject to additional restrictions. Sub-section 4 A of Section 10 A lays down: Where an industrial dispute has been referred to arbitration and a notification has been issued under sub-section (3A), the appropriate government may, by order, prohibit the continuance of any strike or lockout in connection with such dispute which may be in existence on the date of the reference. A plain reading of the aforesaid provision clearly indicates that to invoke the power under the said sub-section for making an order prohibiting a strike, two conditions must exist: first there must be an industrial dispute in existence

and secondly, such dispute must have been already referred for adjudication.174 A strike or lockout shall be illegal if it is continued in contravention of an order made under Sub-section (3) of Section 10 or Sub-section 4A of Section 10 A. The reason underlying the prohibition is that industrial disputes should be tried in a spirit of amity and no party should be in a position to coerce the other during the pendency of such proceedings. It is for this reason that the appropriate Government has been empowered by Section 10 (3) of the IDA in case of strike or lockout declared before the commencement of such proceedings to prohibit their continuance while the dispute is being adjudicated.175 The discretion given to the appropriate government to make a prohibition order has to be exercised in accordance with the object and purposes of the Act. There cannot be any absolute rule obliging the appropriate government to prohibit continuance of strike during the pendency of proceedings because in some cases, strike may not affect production or injure the community in general and, in such cases, the appropriate government may not, in the exercise of its discretion, prohibit such continuance.176 However, the exercise of this unfettered discretionary power has been attacked by opposition political parties, and perhaps not always without reason.

2. Section 10 (3) or 10A (4A) if Mandatory: Judicial Approach The judicial interpretation has raised several problems. (i) Whether courts can quash the order where the very nature of management action is in dispute? (ii) Whether Section 10(3) violates Article 14 of the Constitution? (iii) Whether strike can be prohibited where one or more and not all the demands were referred for adjudication? (iv) Whether workman should be given any opportunity of show cause before strike is prohibited? (a) Nature of the order of prohibition. In Express Newspapers Ltd177, the Court held that the management could ignore the prohibitory order with impunity and, while remanding the case to tribunal to determine whether there was lockout or closure, refused to quash the order. The decision raises at least two problems. (1) What if the tribunal holds the management conduct to be a lockout?178 (2) Can the government issue the prohibitory order where the very nature of management’s action is in dispute? (b) Can Government issue prohibitory orders where some and not all demands were referred? Prior to 1978, even different benches of the court in their decisions in Workmen of Edward Keventers (P) Ltd v. Delhi

Administration179 and Keventers Karmachari Sangh v. Lt. Governor Delhi180 were divided on the issue whether strike could be prohibited where one or more and not all the demands were referred for adjudication? In the former case, a division bench of the Delhi High Court took the view that if out of several demands only some were referred for adjudication, the continuance of strike could be prohibited only regarding the dispute with respect to the matter which had been referred to adjudication and prohibition of the continuance of strike with respect to the matter which had not been referred to adjudication was unwarranted. On the other hand, in the latter case another division bench of the same High Court was of the opinion that even if one of the demands connected with strike had been referred as industrial dispute, the strike would be in connection with such dispute and the power to prohibit the continuance of strikes could be exercised. This conflicting opinion among the two benches of the same High Court provided an opportunity to the Supreme Court in Delhi Administration v. Workmen of Edward Keventers and Others,181 to express its opinion on the aforesaid issue. Speaking for the Supreme Court, Justice Krishna Iyer observed: Two conditions are necessary to make Section 10 (3) applicable. There must be an industrial dispute existing and such existing dispute must have been referred to a board, labour court, tribunal or national tribunal under this section, namely, Section 10 (1). Section 10 stands as a self contained code as it were so far as this subject-matter is concerned… Secondly, such dispute must have been already referred for adjudication. Then, and then alone, the power to prohibit in respect of such referred dispute can be exercised. But having said so, his Lordship framed an inquiry: Imagine 20 good grounds of dispute being raised in a charter of demands by the workmen, and the appropriate government unilaterally and subjectively deciding against the workmen on 19 of them and referring only one for adjudication. How can this result in the anomalous situation of the workmen being deprived of their basic right to go on strike in support of those 19 demands?182 and came to the conclusion: This would be productive not of industrial peace, which is the

objective of the Industrial Disputes Act, but counter-productive of such a purpose. If government feels that it should prohibit a strike under Section 10 (3), it must give scope for the merits of such a dispute or demand being gone into by some other adjudicatory body by making a reference of all those demands under Section 10 (1) as disputes. In regard to such disputes as are not referred under Section 10 (1), Section 10 (3) cannot operate. This stands to reason and justice and a demand which is suppressed by a prohibitory order and is not allowed to be ventilated for adjudication before a tribunal will explore into industrial unrest and run contrary to the policy of industrial jurisprudence.183 (c) No requirement to give show cause notice. The High Courts are divided on the issue whether the government is bound to give show cause notice to the affected parties. Thus, the Kerala High Court in A K Kalippa Chettiar & Sons v. State of Kerala184 held that power exercised under Section 10 (3) is a quasi judicial power and an order thereunder cannot be passed without a reasonable opportunity to all those who would be affected by the order to state and establish their case. On the other hand, the High Courts of Andhra Pradesh, Karnataka and Bombay took the opposite view. Thus, in Eenadu Press Workers Union v. Government of Andhra Pradesh185 and A P Electricals Equipment Corporation v. Its Staff Union186, the Andhra Pradesh High Court held that it was not necessary that the government should issue a show cause notice to the affected parties before issuing the prohibitory order under Section 10 and it would not violate the principles of natural justice. According to the Court, the action under Section 10(3) is only preventive one, and if prior opportunities and hearing is given before invoking Section 10(3), the object of restoring industrial peace and harmony would be jeopardized and a self defeating one. Similar view was expressed by the Karnataka High Court in Mysore City Powerloom and General Workers’ Association v. State of Karnataka. In this case, the petitioner challenged the validity of the order issued by the government of Karnataka under Section 10(3) prohibiting the continuance of strikes and lockouts on the ground that the appropriate government had failed to provide opportunity of being heard and, therefore, the order was violative of the principles of natural justice. The Court rejected the contention and observed: Having regard to the nature and purpose of the power conferred under subsection (3) of Section 10… by necessary implication

the application of rules of natural justice stands excluded. The power conferred under the sub-section is such as would call for an immediate action, on the part of the government in order to ensure industrial peace, of prohibiting a lockout or strike, as the case may be, when the dispute, in connection with which the lockout or strike was resorted to, had been referred by the appropriate government for industrial adjudication. To insist on compliance with the Rule of audi alteram partem before passing an order under sub-section (3) of Section 10 is plainly contrary to the common sense of the situation and would make the provision lifeless and would defeat the purpose of the provision. The aforesaid view was followed by the Bombay High Court in H B Khaitan v. State of Maharashtra.187 (d) Scope of discretion in refusing to prohibit the continuance of strike/lockout. In Cement Works Karmcharis Sangh, Sawai Madhopur v. State of Rajasthan,188 on receipt of failure report of conciliation officer, the government referred the dispute in the public utility services to the Industrial Tribunal for adjudication. The Government, however, refused to take action under Section 10 (3) to prohibit the continuance of lockout. No reason was stated as to why lockout be allowed to continue even after the enforcement of rehabilitation scheme by BIFR. On these facts, the Jaipur bench of the Rajasthan High Court held that the order under Section 10 (3) was not proper and be set aside. (e) Whether Section 10A(4A) is mandatory. Section 10A (4A) empowers the appropriate government where – (i) an industrial dispute has been referred to arbitration; and (ii) it is satisfied that the person making a reference present the majority of each party to issue a notification within a period of one month with a view to provide an opportunity to those who are not parties to arbitration agreement but are concerned in the dispute to present their case before the arbitrator or arbitrators. Is the aforesaid provision mandatory or directory? One confronts with the divergence of judicial opinion on this question. The Madras High Court in Madras Machine Tools Manufacturers v. Special Deputy Commissioner of Labour189 has held that the provisions of Section 10A (3A) to be mandatory because: If Section 10A (3A) is not complied with, we fail to understand how an award could ever be characterized as valid. There is an

important legal consequence if Section 10A (3A) is not complied with. No notification under Section 10A (4A) can be issued prohibiting the continuance of that strike or lockout,190 which not only would jeopardize the peace and harmony but divert the government from issuing a notification under Section 10(A) (4A). However, this aforesaid decision runs contrary to the views expressed by the Madhya Pradesh High Court in Singh (K P) v. Gokhale (S K).191 Here, the Court has held that the procedural requirement in Section 10A (3A) is directory and is dependent on the satisfaction of the appropriate government.

IX. ILLEGAL STRIKES AND LOCKOUTS Section 24 of the Industrial Disputes Act, 1947 defines ‘illegal strikes and lockouts’. Subsection (1) provides that a strike or a lockout shall be illegal if – (i)

it is commenced or declared in contravention of Section 22 or Section 23: or (ii) it is continued in contravention of an order made under Section 10 (3) or Section 10A (4A). Further, Sub-section (2) says that where a strike or lockout in pursuance of an industrial disputes has already commenced and is in existence at the time of the reference of the dispute to a board, an arbitrator, labour court, tribunal or national tribunal, the continuance of such strike or lockout ‘shall not be deemed to be illegal’, if: (i) such strike or lockout was not, at its commencement in contravention of the provision of the Industrial Disputes Act, 1947. (ii) the continuance of such strike or lockout was not prohibited under subsection (3) of Section 10 or sub-section 4A of Section 10A of the Act. Under Sub-section (3) of Section 24, a lockout is not illegal if it is declared in consequence of an illegal strike. Similarly, a strike is not illegal if declared in consequence of an illegal lockout.

X. SANCTIONS AND CRIMINAL PROCEEDINGS A. Sanction

1. Penalty for Illegal Strikes and Lockouts. Section 26 (1) prescribes punishment to a workman for commencing, continuing or otherwise acting in furtherance of a strike which is ‘illegal’ under Section 24 of the IDA. The penalty in case of participation in an illegal strike may extend with imprisonment for a term which may extend to one month, or with a fine which may extend upto fifty rupees, or with both. Thus, in order to convict a person under the Act, it is necessary to prove that: (i) (ii)

the accused is a ‘workman’; the accused commenced, continued or otherwise acted in furtherance of a strike; and (iii) the accused had the knowledge that the strike in question was illegal. Likewise, Section 26(2) prescribes punishment to employers for commencing, continuing or otherwise acting in furtherance of a lockout which is illegal under Section 24. The employer is punishable for imprisonment for a term which may extend upto one month, or with fine upto ₹1,000 of with both for commencing, continuing or otherwise acting in furtherance of illegal lockout. A perusal of the aforesaid provision reveals that (i) the correlation between imprisonment and fine is missing. Whereas Section 26 (1) prescribes the ratio of one month imprisonment and/or ₹50 fine, Section 26 (2) provides one month imprisonment and/or ₹1,000; (ii) the penalties under the section are different from penalties mentioned in Section 31 for contravention of Section 33192; and (iii) the duties imposed by Section 26 are statutory duties owed by the workmen or employers to the public, which could solely be enforced by criminal procedure. 2. Penalty for Instigating or Inciting Illegal Strikes or Lockouts. Section 27, unlike Section 26 (which is limited to workmen and employers) is wide enough to cover all persons. Section 27 provides for imprisonment for a term which may extend to 6 months, or with a fine which may extend to ₹1,000, or with both for ‘instigation and incitement of any strike or lockout which is illegal under the IDA’. In order to bring the activities of a person within the mischief of Section 27, two conditions must be satisfied: (i) the particular strike complained of is itself illegal, and (ii) the strike for which he incited the workers to take part in is to his knowledge illegal.193 The vires of this provisions was challenged in Raja Kulkarni and Others v. State of Bombay.194 The Supreme Court upheld the validity of the Section and observed that the Industrial Disputes (Appellate Tribunal) Act, 1950 imposed no restriction either upon the freedom of speech and expression of the textile workers or their right to form associations or unions. Hence Section 27 of

the Act was not void as being opposed to the fundamental rights under Article 19(1) (a) and (c) of the Constitution. Deshpande v. Ferro Alloy Corporation,195 the management and workmen (represented by the office-bearers of the union) entered into a settlement on 30 September 1959. Such a settlement was arrived at in the course of conciliation proceedings. Two persons (non-workmen and officer of trade union) who were fully aware of the settlement incited the workmen to go on strike in breach of settlement with effect from 24 September to 2 October 1960. A prosecution was launched against these two officers (non-workmen) of trade unions. The magistrate convicted the accused under Section 27 of IDA. The decision was upheld by the session judge. Then the concerned accused filed a petition before the Andhra Pradesh High Court. Justice Kumarayya observed: In fact the workers have a fundamental right to launch a strike, and, any instigation or incitement to stage a strike would not therefore be illegal, unless the particular strike complained of itself is illegal under the Act. The person instigating would be guilty only when it is established that the strike which he incited the workers to take part in is to his knowledge illegal.196 The Court accordingly upheld the order of conviction of lower court and held that non-workmen inciting workmen bound by settlement to go on illegal strike were liable under Section 27. 3. Penalty for Giving Financial Aid to Illegal Strikes or Lockouts. Whereas Section 25 prohibits financial aid to illegal strikes and lockouts, Section 28 provides penalty therefor. The latter section reads: (Any) person who knowingly expends or applies any money in direct furtherance or support of any illegal strike or lockout shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees or with both. It is clear from the aforesaid provisions that the person spending or applying money must know that the strike or lockout is illegal. Thus, mens rea is a necessary element of an offence under this Section. The provisions of this Section are attracted if the strike or lockout is held to be illegal and not otherwise.

B. Criminal Proceedings

1. Permission of the Government. (a) Legislative response. Sub-section (1) of Section 34 of the IDA provides: No court shall take cognizance of any offence punishable under this Act or of the abetment of any such offence save on complaint made by or under the authority of the appropriate government. It follows that Section 34 (1) empowers the appropriate government (i) to make a complaint or (ii) to authorize someone else to file a complaint. The object of the Section is to prevent a frivolous, vexatious or otherwise patently untenable complaint being filed.197 (b) Judicial Response. The seed of examining whether sanctioning authority knew the facts alleged to constitute the offence was shown in Gokul Chand Dwarka Das Morarka v. King.198 Here the sanction given by the government mentioned the name of person to be prosecuted, and the clause of the order which was alleged to have contravened. The sanction, however, did not specify the facts alleged to constitute such contravention. On these facts their Lordships of the Privy Council observed: Under … (Clause 23 of Cotton Cloth and Yarn (Control) Order, … sanction has to be given to a prosecution for the contravention of any of the provisions of the order … he must be charged with the commission of certain acts which constitute a breach, and it is to that prosecution that is for having done acts which constitute a breach of the order—that the sanction is required. The Privy Council accordingly held that there was no extraneous evidence to show that the sanctioning authority knew the facts alleged to constitute a breach of the order, and hence the sanction was improper and invalid. In Feroz Din v. State of West Bengal199, the above view received the approval of Supreme Court. In the instant case, the authority given by the government did not specify the facts constituting the offence. There was, however, ample evidence which stated that all facts connected with the offence had been placed before the sanctioning authority and the sanction had been granted after due consideration. It was consented by workmen that the authority given was bad as it had been granted without reference to the fact constituting the offence, and hence invalid. The Supreme Court, however, rejected the

contention relying on Gokul Chand Dwarka Das case.200 In Raj Kumar Gupta v. Lt Governor, Delhi,201 the three-judge bench of the Supreme Court interpreted the expression 'or under the authority of' under Section 34 to mean that ‘the appropriate government may authorize someone other than itself, even a non-government servant to file a complaint under Section 34.’ Earlier the court observed that under Section 34 ‘there is no limitation is regard to the party to whom authorization may be given. It is the workman, the trade union and the employer who are most concerned with offences under the Act and neither the terms of Section 34 nor public policy require that they should be excluded from making such complaint.’ 2. Court of Competent Jurisdiction. Section 34 (2) of the IDA provides that no court inferior to that of a metropolitan magistrate or a judicial magistrate of the first class is competent to try an offence punishable under the Act.

C. Protection to Persons Refusing to take Part in an Illegal Strike and Lockout The Industrial Disputes Act202 protects persons, refusing to take part or to continue to take part in an illegal strike or lockout from (i) expulsion from any trade union or society or (ii) any fine or any penalty, or (iii) deprivation of any right or benefit to which he or his legal representatives would otherwise be entitled or from (iv) liability to be placed in any respect, either directly or indirectly under the disability or at any disadvantage as compared with other members of union or society. The immunity under this section is to prevail notwithstanding anything contrary in the rules of the trade union or society.

XI. JUSTIFICATION OF STRIKE AND LOCKOUT A. Justified Strike and Lockout In collective bargaining, the question of employment of striking employees and wages for the strike or lockout period can form the subject of negotiation in the settlement of a dispute. In adjudication system that possibility being closed, refusal to award wages for strike or lockout period might lead to further unrest. To avoid this unhappy situation and at the same time to protect the interest of working class and industry, tribunals and courts have evolved the concept of ‘justified’ and ‘unjustified’ strike and lockout. In a series of decisions the courts and tribunals have provided guidelines for determining whether a strike or

lockout is justified or not. 1. Justified Strike. A strike would be held to be justified, when it was resorted to: (i) after exhausting the remedies provided in the IDA and these being proved futile203, (ii) against an unfair labour practice or victimization on the part of the management204, (iii) to press reasonable demands of workmen in a peaceful manner205, (iv) due to provocation of the other party206, (v) as a measure of protest against retrenchment of workmen207, (vi) as a measure of protest against suspension of fellow workmen208, (vii) against discharge of union officials209, (viii) against refusal to recognize the union210, (ix) against employer’s refusal to pay advance wages211, (x) on refusal to give advance for festival holidays212 or against government’s refusal to refer the dispute for adjudication.213 2. Justified Lockout. A lockout is held to be justified if: (i) it was neither actuated nor occasioned by any unfair labour practice on the part of employer214, (ii) it was adopted due to security measure215; (iii) it was necessitated by the conduct of the workmen216, (iv) it was in consequence of a strike which was unreasonable217, (v) it was declared after a tool down strike was staged.218

B. Unjustified Strike and Lockout 1. Nature and Concept. The concept of unjustified strike seems to be based upon the principle that in their dealings with the management, the workers should be considerate, loyal and disciplined. The workers realize that the capacity to pay is dependent upon the economic situation of the industry. In any case, they should adopt peaceful and orderly method for venting their grievances. Similarly, the concept of the unjustified lockout is based on the principle that it should not be declared in haste or by way of reprisal or victimization, etc. In short, strike and lockout should be declared as a last resort after all available remedies, formal or informal, have been exhausted. When a strike or lockout situation is brought before the tribunal or court, there is a tendency on the part of both workers and management to blame each other. While in a unjustified strike most of the blame for the strike rests with the workers, in unjustified lockout the blame for lockout rests with employers. 2. Factual Analysis. Like justified strike or lockout, an unjustified strike or lockout is a varying concept. No attempt has been made to give an exhaustive description or the situation, which would give rise to an ‘unjustified’ strike or

lockout. (a) Unjustified strike. A strike is held to be ‘unjustified’ if it was resorted to: (i) to press the demands of workers which according to community standards are unreasonably high,219 (ii) immediately on failure of conciliation proceedings without awaiting for reference,220 (iii) without exhausting the remedies provided under the IDA,221 (iv) as a measure of protest against assault of co-workers by the officer of the company, even after the assurance given by the management to inquire into the incidents of assault222 or any other grievance of the workmen, (v) even when the management was prepared from the beginning to settle the dispute through the conciliation, adjudication or arbitration,223 (vi) force arbitration,224 (vii) as a measure of protest against the transfer of the President of the Union,225 (viii) when the workers did not co-operate with the authorities for peaceful solution,226 (ix) when the staff association was hasty,227 (x) by using violence or acts of sabotage.228 (b) Unjustified lockout. A lockout was held to be unjustified if: it was with a view to oblige workmen to accept the lower wages229 or the management’s refusal to allow workers to enter the factory230 or it was declared on account of an unfair labour practice on the part of the management231 or it was uninevitable and unjustified.232

C. Determination of ‘Justified’ or ‘Unjustified’ Strike and Lockout 1. Reasonableness of Demand. Justified or unjustified strike or lockout, we have already seen, determines whether workmen are entitled to wages for the period of strike or lockout. The question, therefore, arises; how to ascertain the justification or otherwise of strike, or lockout? First reading of Associated Cement Co. Ltd v. Their Workmen233 leaves an impression that reasonableness of demand is determinative. Observed the industrial tribunal: I am of opinion (that) it was a legitimate and proper demand, that is to say, as a demand it was proper and as such required due consideration… [The] demand was one which the management should have given due consideration and in respect of which the workmen were left without remedy, and held that workmen had reasonable and justifiable cause for strike and hence workmen were entitled to wages for such a period. Even independently of this decision, other decisions of the Tribunals

and Courts have also adopted the test of reasonableness of demand. 2. Bonafides of Strike or Lockout. Reasonableness of demand is not the only relevant factor to arrive at a conclusion whether a strike or lockout is justified or not. The bona fide of the strike or lockout should be the most important factor for deciding the issue. It is necessary, therefore, to describe the circumstances when a strike or lockout can be deemed to be bona fide. Thus, when a strike is resorted to without exhausting the remedies available to workmen under the IDA or without waiting for the result of the conciliation officer’s report sent to the government or if it is not inevitable or if the strike is continued even after the assurance given by the management or the preparedness of the management to settle the dispute by direct negotiations or adjudication or when it is resorted to frequently and frivolously, predominant motive being to ruin the industry, we may say it is not a bona fade strike. The full bench of the labour appellate tribunal in Ram Krishna Iron Foundry v. Their Workers234 has held that a strike is normally a weapon to lodge a protest and as such it is unobjectionable unless it is used for a purpose other than of giving an expression of the grievances of the workers. A strike would normally be deemed to be unjustified unless the reasons for it are absolutely perverse and unsustainable. Similarly, a lockout may be deemed to be bona fide, if it is adopted as a security measure to protect the personnel and property, or if it is in consequence of a strike which is unreasonable or if it is launched after remedies provided in the IDA proved futile, or when it is declared if the workmen do not show their willingness to settle the dispute through negotiation. However, it might be mentioned that the illustrations given are not exhaustive but illustrative. It is hoped that it would lessen the uncertainties connected with classification of strike or lockout. 3. Can an Illegal Strike be Justified. Even though the legislature has not provided for any classification of illegal strike into justified and unjustified strike, the judiciary has examined this question while dealing with the cases of dismissal of strikers and wages for the period of strike/lockout. The question came up for interpretation before the Supreme Court for the first time in Indian General Navigation of Railway Co. Ltd v. Their Workmen.235 The Supreme Court ruled that a strike which is illegal cannot be characterized as ‘perfectly justified’ and these two conclusions cannot in law coexist. The Court reasoned; The law has made a distinction between a strike which is illegal and one

which is not, but it has not made any distinction between an illegal strike which may be said to be justifiable and one which is not justifiable.236 The Court accordingly depricated the tendency to condone illegal act in the statute. An attempt to re-open the question was negatived in Model Mills v. Dharam Das237 wherein the Supreme Court held that even though the reasons for going on strike may be completely justified, yet the illegal strike would be totally unjustified. Likewise, when a strike is illegal, the question whether it is provoked or not is immaterial.238 The majority decision in Gujarat Steel Tubes v. Gujarat Steel Tubes Mazdoor Sabha239, however, shook the foundation laid in Indian General Navigation and ruled that ‘mere illegality of strike does not per se spell unjustifiability.’ It visualized that between perfectly justified and unjustified the neighbourhood is distinct.’ In support of the aforesaid observation, the Court heavily relied upon its earlier decision Crompton Greaves Ltd v. Their Workmen.240 But it may be pointed out that the Supreme Court misread the decision of Crompton Greaves Ltd case when it said: even if strike is illegal, it cannot be castigated as unjustified, unless the reasons for it are entirely perverse or unreasonable. Indeed, what it said was: … in order to entitle the workmen to wages for the period of strike, the strike should be legal as well as justified. A strike is legal if it does not violate any provision of the statute. Again, a strike cannot be said to be unjustified unless the reasons for it are entirely perverse or unreasonable.241 A survey of the aforesaid decisions, therefore leads us to the conclusion that the observation of majority has left the issue whether illegal strike per se is unjustified wide open and introduces uncertainty.

XII DISMISSAL OF STRIKERS The problems of dismissal of strikers has assumed great significance in India since the adoption of adjudication system. In the absence of any specific statutory provisions in the industrial legislation, the Supreme Court has faced the problems relating to dismissal of strikers. In deciding the questions of legality of

management’s action to dismiss strikers, the courts have not been solely governed by the legality or illegality of the strike. According to the Court, neither illegal strike authorizes the management to terminate the services of strikers not the legal strike disallows the management to terminate their service. In such a situation, the Supreme Court has made a significant contribution to industrial jurisprudence by evolving a multifaced and highly complex concept of ‘justified’ and ‘unjustified’ strike to decide the issue. The Court laid down the following grounds for intervention by tribunals for the purpose of giving relief to the workers against wrongful dismissal: (i) when there is want of good faith (ii) when there is victimization or unfair labour practice (iii) when the management has been guilty of a basic error or violation of principles of natural justice, and (iv) when on the materials, the finding is completely baseless or perverse242 Where the order terminating services of workmen was held illegal, the courts have generally directed reinstatement of workmen with or without wages. The aforesaid norms have been formulated by the Supreme Court on at least three important conditions. First, the industrial worker must be placed in such a position that security of his service may not depend upon the caprice or arbitrary will of the employer. Second, the industrial peace should be maintained. Lastly, the industry should be efficiently managed.243 Tribunals and courts have ruled that workers participating in a legal and justified strike cannot be dismissed because if this is permitted, the statutory right of strike would become ineffective even in a reasonable and bona fide situation. The court also ruled that workers participating in a legal and justified strike cannot be denied reinstatement simply on the ground that their places were filled by other persons. While laying down these rules, the court was cautious in maintaining industrial discipline when it held that such a rule was applicable only to peaceful strikers. The legal and unjustified strike raises more complex issues. It has been recognized by the Court that merely because the strike has been held to be legal, it does not foreclose the possibility of dismissal of strikers. This line of thinking has been adopted in view of the fact that sometimes the conduct of strikers has been objectionable, or they have been guilty of serious misconduct or intentional damage to the property of concern or they have inflicted personal injuries to the employees of the concern. It is also found that strike is sometimes resorted to in haste. In the aforesaid situation, the courts have evolved the following rule to regulate management’s power to dismiss strikers in a legal and unjustified strike:

1. 2.

A workman cannot be dismissed for joining a strike which is not illegal but which is simply unjustified;

The employer, however, will have the right to dismiss a workman joining an unjustified strike: (a) when the strike itself was not bona fide or (b) when it was launched on other extraneous considerations and not solely with a view to better the conditions of labour.244 It has been settled in view of the Supreme Court decision in National Transport General Co. v. Workman245 and Punjab National Bank v. Their Employees246 that workers wrongfully dismissed for participating in a legal but unjustified strike are normally entitled to reinstatement notwithstanding the fact that their places were filled by other persons during the strike. Further, workers are entitled to reinstatement if they participated in a strike with was occasioned on account of any unfair labour practice or victimization on the part of the employer. But it is exceedingly doubtful in view of the decision in Spencer & Co. Ltd v. Their Workmen,247 Swadeshmirtran & Co. Ltd v. Their Workmen248 and Bangalore Silk Throwing Factory v. Their Workmen249 that workmen participating in a legal and unjustified strike (who were substituted by other persons) provided unfair labour practice is absent, can claim reinstatement. It is equally doubtful if the workmen can claim reinstatement for participating in an illegal strike for non-observance of the provisions of certified standing orders. It has also been well-established that mere participation in an illegal strike would not justify the dismissal of strikers. The ruling of the Supreme Court in Model Mills v. Dharam Das250 and I M H Press, Delhi v. Addl. Tribunal251 suggests that the management can dismiss the strikers participating in an illegal strike according to the rules of standing orders of the company. The Court, however, pointed out that even in this situation, the rules of natural justice must be followed. This view raises two significant questions: First, is it desirable in the interest of industry to allow wholesale dismissal or strikers? Second, whether the rule equally applies to peaceful strikers as against violent strikers? Indeed, the view taken by the Court in the above case is not in conformity with its decision in Punjab National Bank. v. Their Workmen252 and Indian General Navigation v. Their Workmen.253 The end of justice would be served if a lesser punishment is given to strikers, participating in an illegal strike where their conduct has been peaceful. The Supreme Court in Burn & Co. Ltd v. Their Workmen254 has

deprecated the tendency of the management to discriminate among strikers while terminating their services in the absence of clear distinction. It has to be proved in each case that certain strikers who have been singled out for disciplinary action can be treated differently on rational and reasonable consideration. The Supreme Court255 has adopted a pragamatic approach in dealing with the question of management’s power to dismiss peaceful strikers even though they happen to participate in an illegal strike. It has distinguished between peaceful and violent strikers. It ruled that the punishment of dismissal may be imposed upon violent strikers. But, where the strikers remained peaceful, such extreme punishment of dismissal would not be justified. Further, it would not be in the interest of industry and workers themselves. The process of distinguishing one case from the other is best depicted in Bata Shoe Co. v. D N Ganguli256 and I M H Press v. Addl. Tribunal.257 Here the Supreme Court observed that the peaceful strikers should not be subjected to extreme penalty of dismissal as it would lead to mass dismissal of workers. However, the Court at the same time ruled that in the process of distinguishing the case, the context in which judgements were given should always be kept in mind. The Supreme Court258 has consistently held that the order of dismissal of strikers by the management in violation of Section 33 is illegal. In such situation they are entitled to reinstatement. The Supreme Court259 has given due importance to the observance of the provisions of Standing Orders of the Company. If the dismissal was found to be in accordance with the principles of natural justice the Court refused to interfere in the management’s order of dismissal of strikers. The only exception to this rule has been the case in which a striker is dismissed for participating in a legal and justified strike. The Supreme Court260 has consistently held that one of the functions of the industrial tribunals is to scrutinize the action taken by the management in dismissing the strikers in order to satisfy itself that proper domestic inquiry has been held and the principles of natural justice, have been complied with. Thus, Lord Hewart verdict that ‘justice should not only be done’ is regarded to a considerable extent in matters of dismissal of strikers. It has now been settled through the decisions of Supreme Court261 that normal relief in cases of wrongful dismissal is reinstatement. But in so ordering the tribunal is expected to be inspired by a sense of foul play towards the employees on the one hand and considerations of discipline on the other. The relief of reinstatement is granted on the basis of social justice.

XIII. WAGES FOR STRIKE AND LOCKOUT PERIOD There is no specific provision either in the Industrial Disputes Act, 1947 or in other labour legislation for determining the question of wages for the period of strike or lockout. In the absence of such a provision, the judiciary has evolved certain norms to fill this gap. In Statesman Ltd v. Their Workmen,262 certain workmen went on an illegal strike. Thereupon the management declared a lockout. The question arose whether the workmen are entitled to wages for the period of illegal strike or illegal lockout? The Supreme Court observed: If the strike is illegal, wages during the period will ordinarily be negatived unless considerate circumstances constrain a different course. Likewise, if the lockout is illegal, full wages for the closure period have to be ‘worked out’, if one may use the expression. But in between lies a grey area of twilit law. Strictly speaking, the whole field is left to the judicious discretion of the tribunal. Where the strike is illegal and the sequel of a lockout legal, we have to view the whole course of developments and not stop with examining the initial legitimacy. If one side or other behaved unreasonably or the overall interests of good industrial relations warrant the tribunal making such directions regarding strike period wages as will meet with justice, fair play and pragmatic wisdom, there is no error in doing so. His power is flexible. From the aforesaid observation, it is evident that irrespective of the illegality of the strike, the tribunal has a discretion to pass such order regarding wages during the strike period as ‘justice, fair play and pragmatic wisdom’ dictate. This decision was given by the bench of three judges. In the latter decision in Crompton Greaves Ltd v. Workmen263, a bench of two judges of the Supreme Court without referring to its judgement in Statesman Ltd supra has observed that in order to enable the workmen to wages for the period of the strike, the strike should be legal as well as justified. Justice Krishna Iyer was a party to both the decisions. Yet no attempt has been made in the latter case to explain the earlier observations.

A. Effect of Illegality of Lockout on Payment of Wages

Courts264 have held that, if the lockout is illegal, full wages for the period of lockout shall have to be paid to workers.

B. Effect of Justification of Strike on Wages No doubt strike is a legitimate weapon in the armoury of working class but it should be sparingly used depending upon the exigencies of the case, particularly in the conditions prevailing in India. With a view to discouraging the misuse of the weapon of strike, the tribunal and courts have applied the concept of ‘justified’ and ‘unjustified’ strike in cases where strike is legal. They held that in case of unjustified strike, workmen are not entitled to wages. 1. Strike Declared Against Unfair Labour Practice or Victimization on the Part of Management. The courts and tribunals while deciding the question of wages for the period of strike have generally taken into account the fact whether such strike was occasioned due to unfair labour practice on the part of employer. In such cases, the workmen have been allowed wages for the period of strike. 2. Strike Declared to Press Reasonable Demands of Workmen in a Peaceful Manner. The general policy of the tribunals and courts265 while dealing with the question of strike has been to take into account the right of workers to resort to strike for redressal of their genuine grievances, in tackling such questions tribunals emphasized that strike is justified if it is resorted to in a peaceful manner. Where these conditions are satisfied tribunals and courts have awarded wages for the period of strike. 3. Strike due to Provocation of the other Party. Another consideration taken into account by the tribunals and courts266 in deciding the question of payment of wages for the strike period is whether the strike was provoked by the action of the other party. In such a situation, the tribunals and courts granted wages for strike period if the strike was provoked as a consequence of unreasonable stand adopted by the management in relation to workers’ demand, provided of course the strike was not illegal. 4. Strike as a Measure of Protest against Retrenchment of Workmen. Tribunals and courts267 have recognized that strike is a weapon to register a protest including a protest against retrenchment and it cannot be said to be unjustified unless the reasons for it are absolutely perverse of unreasonable.

C. Effect of Legal but Unjustified Strike on Wages 1.

2.

Strike to Press the Demands of Workers Which According to Community Standards are Unreasonably High. One of the important considerations which has been taken into account by tribunals and courts in reaching the conclusion that a strike is ‘unjustified’ is nature of demands made by the workers. If the demands of the workers are unreasonably high or frivolous with the dominant nature to ruin the industrial establishment, the strike is held to be unjustified and the workers have been refused wages for the strike period.268 Strike Resorted Immediately after the Failure of Conciliation Proceedings without Awaiting for Reference. In order to bring about settlement of disputes, the conciliation officer is enjoined under the IDA (i) to expeditiously investigate the dispute and all matter affecting the merits and the right settlement thereof, and (ii) to do all such things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute. With a view to give time to the government to from an opinion for making a reference, the Courts have held that strike resorted to immediately after the failure of conciliation proceeding without awaiting for reference to be made to the tribunal is unjustified, and accordingly denied wages for strike period.

In Chandramalai Estate v. Its Workmen269, the union of workmen of the estate raised certain demands. The conciliation proceedings in respect of these items of the disputes ended in failure on 30 November 1955. Without awaiting further and without asking the State Government to make a reference under Section 10 of the IDA, the workmen went on strike from 9 December 1955, and the strike was withdrawn on 5 January 1956, the day when the dispute was referred to the industrial tribunal for adjudication. One of the questions for determination before the industrial tribunal was whether the strikers were entitled to wage? The industrial tribunal granted 50 per cent of the total emoluments for the strike period. Aggrieved by the order of the tribunal, the management filed an appeal before the Supreme Court. Speaking for the Court, Justice Das observed: In our opinion the workmen might well have waited for some time after conciliation efforts failed before starting a strike and in the meantime to have asked the government to make the reference. They did not wait at all. The conciliation efforts failed on 30 November 1955 and on the very next day the union made

its decision on strike and sent the notice of the intended strike from 9 December 1955, and on 9 December 1955 the workmen actually struck work. The government appears to have acted quickly and referred the dispute on 3 January 1956. It was after this that the strike was called off. We are unable to see how the strike in such circumstances could be held to be justified.270 The Court accordingly held that workmen were not entitled to wages for such period. In Syndicate Bank v. Umesh Nayak271 it was held that if a strike is legal but unjustified, it does not save such workers from losing their salary for strike period. It only saves them from disciplinary action. 3. Strike Declared without Exhausting the Remedies Provided under the Act. It has been observed elsewhere that strike is a recognized weapon of the workmen to be resorted to by them for asserting their bargaining power for backing up their collective demands upon an adamant employer. But in order to avoid the misuse of the weapon, the Court272 cautioned that it should be used as a last resort when all other avenues for settlement of industrial dispute, as provided under the IDA have beer exhausted and proved futile. 4. Strike Resorted to in Haste. The tribunals and courts273 have deprecated the tendency of workers to strike in haste. 5. Use of Violence during Strike. It has now been settled that the use of force, or violence or act of sabotage resorted to by the workmen would disentitle them for wages. Thus, in Crompton Greaves Ltd v. Its Workmen, the Supreme Court ruled, that the use of force or violence or acts of sabotage resorted to by the workmen during a strike disentitle them to wages for the strike period.274

D. Effect of Legal but Unjustified Lockout on Payment of Wages Tribunals and courts have generally awarded wages to workmen when a lockout was legal but unjustified. In Bharat Barrel and Drum Mfg Co. v. Their Workmen275, certain workmen turned up for work at the appointed hour on a certain date. Finding the doors locked, they waited half an hour and then left. Thereupon the management locked its door and demanded explanation from workmen for not attending the work on concerned day. The tribunal held that workmen were entitled to wages for the lockout period. The labour appellate tribunal in Italkholic Tea Estate v. Their

Workmen276 held that workmen cannot be denied wages on the ground of their failure to report for work every day during the lockout period because lockout implies that the employer would not allow the workmen concerned in the dispute to work and the act of the employer, in declaring lockout amounted to an anticipatory breach of contract on his part under any obligation to present themselves for work.277

E. Problem of Unjustified Lockout following Unjustified Strike and Vice Versa Tribunals and courts are often faced with the situation where unjustified strike was followed by unjustified lockout and vice versa. Faced with this situation, the Supreme Court in India Marine Service Pvt Ltd v. Their Workmen278 evolved the doctrine of ‘apportionment of blame’. To quote the Supreme Court: Where, however, a strike is unjustified and is followed by a lockout which becomes unjustified, a case of apportionment of blame arises. The aforesaid view was followed in Northern Dooars Tea Company v. Workmen of Dem Dima Tea Estate.279

F. Deduction of Full Day’s Wages for Absence during Crucial Portion of the Day The Supreme Court in Bank of India v. T S Kelawala and S U Motors (P) Ltd v. Their Workmen280 has settled the controversy relating to the power of the management to deduct for the portion of the day. Prior to the Supreme Court decision in Bank of India case, the High Courts were divided on the issue whether the employer can deduct full day’s wages for absence for a portion of the day. Thus, the Calcutta,281 Kerala,282 Punjab and Haryana283 and Madras284 High Courts took the view that it is not only permissible for the employer to deduct wages for the hours of the day for which the employees are absent from duty but in certain cases it is also permissible to deduct wages for the whole day even if the absence is for few hours. On the other hand, the single judge of the Madras High Court in V Ganesan v. State of India285 and the division bench of the same High Court in State Bank of India v. Ganesan286 took the opposite view. They held that ‘it is not possible to clothe the employer with the power or a right to deduct or withhold the emoluments of the employee even for the hours during which he worked.’ Be that as it may, the Supreme Court in the instant case ruled that it is permissible to deduct full day’s wages for absence during

crucial portion of the day. Thus, in this process it emphasized the need for maintaining uninterrupted production, efficiency and discipline in industry and thereby demonstrate the vital role of judicial process in building the nation.

G. Other Problems The Calcutta High Court in Amalendu Gupta v. Life Insurance Corporation of India287 found itself faced with two problems, namely, (i) whether justifiability of strike is a pure question of fact which can be decided in a writ petition? and (ii) whether the Court can mandate the Life Insurance Corporation (L I C) to pay the striking employees their wages for the period of strike. The Calcutta High Court answered both the questions in the affirmative. On the first issue the Court held that it may decide the question whether the strike was justified or not. As regards the second issue, the Court observed: If I refuse to exercise my powers under Art. 226 of the Constitution and to deny the reliefs prayed for in this petition, the employees of the respondent No. 1, who have been affected by the impugned circulars and who I understand, will number about 45,000 will have to fall back on other remedies which may be available to them under the law. When the respondent No. 1 and the Central Government took recourse to various measures in order to prevent the employees from getting the bonus in terms of the settlement, it is unlikely that the workmen will get a quick or efficacious relief by taking recourse to the remedies available to them under the Act. In my view, the workmen have already been driven from pillar to post and in spite of repeated orders of the highest Court of the land, the respondent No. 1 did not pay them the bonus to which they were legally entitled, till they resorted to the strike. It must also he borne in mind that the workmen immediately called off the strike on 15 April 81 on receiving an assurance from the respondent No. 1 that the bonus will be paid.288 Swastic Textile Engineerings P. Ltd v. Rajan Singh Sant Singh289 raises three issues namely, (i) whether deduction of wages after withdrawal of illegal strike amounts to a penalty? (ii) whether deduction of wages after withdrawal of strike amounts to change in conditions of service? (iii) whether insistence on workmen to execute a written undertaking not to go on strike in future and seek pardon is valid? In this case certain workmen went on an alleged illegal strike. After termination of strike, the management asked them to give an undertaking that they would not go on such strike. However, the concerned workmen refused to furnish such an undertaking, and therefore they were not allowed to resume their duties. On failure of the conciliation proceedings, the aggrieved workmen

filed a complaint under Section 34A. Further, the management deducted their wages for the strike period. The tribunal held that the strike was not illegal. It accordingly held that each of the concerned workman was entitled to wages for the period of strike. The tribunal further held that it was neither fair nor legal on the part of the management to insist that its workmen should execute an unconditional apology and an execution of such writing amounted to change in the conditions of service. Against this order, the management filed a petition under Article 227 of the Constitution challenging the order of the tribunal in regard to wages for the period of strike. The Gujarat High Court held that (i) insistence upon the execution of the writing amounted to a change in the conditions of service of workmen because they were not bound to execute such writing; (ii) deduction of wages amounted to a change in the conditions of service because employer had no right to deduct wages; and (iii) withholding of wages amounted to imposition of penalty under the Standing Orders.

1 2 3 4

5 6 7 8 9 10 11 12 13

14 15 16

Section 22 (1). Shamnagar Jute Factory v. Their Workmen, (1950) LLJ 235 (IT). D N Banerjee v. P R Mukherjee, AIR 1953 SC 58. See for instance Buckingham and Carnatic Mills v. Their Workmen, (1951) 1 LLJ Suppl. 1, reversed on appeal. (1951) 2 LLJ 314 but restored by Supreme Court, (1953) 1 LLJ (SC); Standard Vacuum v. Gunaseelan Oil Co., (1954) 2 LLJ 656. Shamnagar Jute Factory v. Their Workmen, (1950) LLJ 235 (IT). Standard Vacuum Oil Co. v. Gunaseelan (M G), (1954) 2 LLJ 656. Id. at 661. Buckingham and Carnatic Mills Ltd v. Their Workmen, (1953) 1 LLJ 181 (SC). Id at 183. Ram Sarup v. Rex, AIR 1949 All. 218. Delta Jute Mills Ltd v. Their Workmen, (1950) 2 LLJ 1054. Ibid. Sirka Colliery v. South Karanpura Coal Mines Workers Union, (1951) 2 LJ 52 (LAT). The strike was by way of protest against the arrests made by police on account of clash and assaults occurring between members of two rival unions. Buckingham and Carnatic Mills Ltd v. Their Workers, (1951) 1 LLJ Supp. 1 (IT) on appeal (1953) 1 LLJ 181. Lakshmi Devi Sugar Mills v. Ram Sarup, (1957) 1 LLJ 17(SC). Shree Meenakshi Mills v. Their Workmen, (1951), 1 LLJ 579, confirmed on appeal; J K Cotton Mills Spg. and Wev. Mills Ltd v. Their Workmen, (1956) 2 LLJ 278.

17

18

19

20

21

22 23 24 25 26

Diamond Machinery Mfg. Works v. Their Workers, (1952) 1 LLJ 137 is perhaps the only case of its kind. The management asked 14 of its moulders to do certain specified work. The moulders, however, did not do the entire work despite the fact that they had been specifically informed of the urgency of the work. They also did not report for duty after the lunch break. Next day, the manager issued notices suspending each one of the concerned moulders for a period of 4 days and called for an explanation of their conduct. The moulders themselves refused to take notice which, however, was taken by their union secretary on their behalf. As a protest against the order of suspension of the 14 moulders, the remaining 63 workers in the establishment also left the workspot that day at lunch break. The tribunal held that the 14 moulders were on strike along with the 63 workmen. The National Commission on Labour, while considering the adequacy or otherwise of the definition of ‘strike’ under Section 2 (q) of the IDA declined to include concerted action such as ‘go slow’ and ‘work-to-rule’ in the definition of ‘strike’. According to the Commission, labour protest such as ‘go-slow’ and ‘work-to-rule’ should be ‘treated as misconduct or unfair labour practices under the standing orders’ (see the Report of the National Commission on Labour, 1969, 483.) The Industrial Relations Bill, 1978 also did not include the aforesaid forms of labour protest in the definition of ‘strike’ under Section 2 (43). See Punjab National Bank Ltd v. Their Workmen, (1959) 2 LLJ 666 (SC); Sadul Textile Mills v. Their Workmen, (1958) 2 LLJ 628 (Rajasthan); Howrah Foundry Works v. Their Workmen, (1955) 2 LLJ 97 (IT); Shalimar Works v. Their Workmen, (1955) 2 LLJ 395 (LAT); Dalmia Cement Co. v. Their Workmen, (1955) 2 LLJ 466 (LAT). These strikes were first used in the United States of America and France. The sit-down strike set its foot on the Indian soil in April, 1939. The then Congress Government was hesitant to declare them illegal. They attracted the attention of Indian judiciary in 1952. Early decision-makers held that it was an invasion of the rights of the employer in the property of the mill. (See generally Dwarkadas Kanji, Forty Five Years with Labour, 1962, 53.) But in Punjab National Bank Co. op. cit., the Supreme Court took a somewhat different view. See Ludwig Teller, 1 Labour Dispute and Collective Bargaining 31 referred to and approved in Punjab National Bank v. Their Workmen, op. cit., supra note 19. 666–87. See also Sadul Textile Mills v. Their Workmen, op. cit. supra note 19. Chelpark Co. Ltd v. Commissioner of Police, (1967) 2 LLJ 836 (Madras); Mysore Machinery Mfg. Co. Ltd v. State of Mysore, (1967) 2 LLJ 853, (Madras); Shalimar Works Ltd v. Their Workmen, op. cit., Supra note 19 p. 363; Indian Machinery Co. v. Their Workmen, (1957) LAC 539; Dalmia Cement Ltd v. Their Workmen, (1967) 2 LLJ 56 (LAT). Ibid. See Punjab National Bank v. Their Workmen, (1959), 2 LLJ 666 (SC). See for instance, Lakshmi Devi Sugar Mill v. Ram Swaroop, (1957) 1 LLJ 17, 22 (SC). Punjab National Bank Ltd v. Their Workmen, (1952) 1 LLJ 531 (IT); on appeal (1952) 2 LLJ 648 and on special appeal (1959) 2 LLJ 666 (SC). Punjab National Bank Ltd v. Their Workmen, (1959) 2 LLJ 666 at 685.

27 28 29 30

31 32 33 34

35

36

37 38 39 40 41 42 43 44 45 46 47

Id. at 684. Sections 22, 23 & 10 (3). See for instance, Firestone Tyre and Rubber Co. of India Ltd v. B. Shetty, (1953) 1 LLJ 599. (LAT); This view was upheld by the Bombay High Court in (1954) 1 LLJ 281. Clause 2 (34) of the Industrial Relations Bill, 1978 has defined ‘strike’, inter alia, to mean: total or partial cessation of work by a body of persons employed in any industrial establishment or undertaking… (emphasis added). Bharat Sugar Mills Ltd v. Jai Singh, (1961) 2 LLJ 644 (SC). Id at 647. (1990) 2 RSJ I at l5 (SC). In Katkona Colliery Western Coalfields Ltd v. Central Government Industrial Tribunal cum Labour Court, Jabalpur, (1978) Lab. IC 1531 the High Court of Madhya Pradesh held that ‘if hunger strike is not simply refraining from taking food but is also accompanied by cessation of work by a body of persons employed in any industry, the same would obviously come within the definitions of strike.’ Pipraich Sugar Mills v. Their Workmen, (1956–57) X FJR 4113 (LAT). Certain workmen who held key posts in the factory went on a hunger strike on a holiday at the residence of the managing director of the factory and continued to do so on other working days. On these facts, the labour appellate tribunal held that the mere fact that the hunger strike was staged on … a holiday, does not reduce the essential characteristics of strike from this hunger ‘satyagraha’ for the intention of the strikers was to continue it till their demands were met or till they die of starvation. Thus, students are said to be on hunger strike to press their demands against educational authorities; political leaders are said to be on hunger strike to compel the government to redress their grievances and various sections of community are said to be on hunger strike in support of their stand against various authorities or bodies. Kothari, Labour Law and Practice, (1964), 66. Section 22. Swami Oil Mills v. Their Workmen, (1953) 2 LLJ 785. Sadul Textile Mills v. Their Workmen, (1958) 2 LLJ 628 (Rajasthan). Goodlass Wall Co. v. Amir Ahmad Bakoor Khan, (1954) 2 LLJ 573 confirmed on appeal, (1956) 1 LLJ 468 (LAT). Matchwel Electricals Company (India) Ltd v. Chief Commissioner, (1962) 1 LLJ 545 (Punjab). Shree Meenakshi Mills v. Their Workers, (1951) 1 LLJ 579, confirmed on appeal (1951) 2 LLJ 516. Jeewan Dallo v. Metal Box Co., (1952) 2 LLJ 869. Upper India Couper Paper Mills v. Their Workmen, (1954) 2 LLJ 347 (LAT). Dalmia Cement Co. v. Chaniah, (1955) 1 LLJ 599 (IT). See Frankfurter and Greene, Labour Injunction, (1930).

48 Damodar Ganesh v. State, AIR 1951 Bom. 459. 49 Vimal Kishore Malhotra v. State of Uttar Pradesh, AIR 1956 Alld. 56. 50 Damodar Ganesh v. State op. cit., 463. 51 Vimal Kishore Malhotra v. State of Uttar Pradesh supra note 49. 52 1992 Lab. IC 414. 53 Raj Narain v. State, AIR 1961 Mad. 531. 54 Damodar Ganesh v. State, op. cit., AIR 1951 Bom. 459. 55 In the dictionary compiled by Jananendra Mohan Das, the word, ‘gherao’, is stated to have

56 57 58 59 60 61 62 63 64

65 66 67

68

69

been derived from the Hindi word ‘ghera’ and means ‘covered or encircled’. It is also mentioned that the word ‘gher’ is derived from the Sanskrit word ‘ghari’ which means ‘to cover or to encircle’. The word ‘gherao’ in this sense has been mentioned in ‘Chalantika’ and in the ‘Bishwakosh’. In the Sanskrit English Dictionary by Dr Monier Williams Boden, Professor of Sanskrit in the University of Oxford, the Sanskrit word ‘gher’ (ghrihyate-Yitam) means to cover. In Williams’s Glossary of Legal Terms ‘gher’ or ‘gherao’ or ‘gherana’ are Persian words which mean surround, encircle, fence or to bind a hedge. In Richardson’s Persian-Arabic Dictionary we come across the Persian word ‘ghera’ which means ‘confinement, not free’. See Govt. of India, Annual Report of the Ministry of Labour of 1967–68 13. Jay Engineering Works v. State of West Bengal, AIR 1968 Cal. 407. See Government of India, Report of National Commission on Labour, (1969) 328. Bharat Kumar K. Palicha v. State of Kerala, AIR 1997 Ker. 291 at 295. AIR 1997 Ker. 291. (1997) (7) SCALE 21. 2003 (6) SCALE 84. 1999 LLR 24. The first record of the use of phrase ‘to strike work’ occurred in 1768, at the beginning of Industrial Revolution (See Knowles, Strikes - A Study of Industrial Conflicts), 1952, 2– 3. See Encyclopaedia Britannica, (1959) 467. Ibid. V B Karnik, Strikes in India, 1967, 13–14 citing the Bengal Administration Report (1895–96). Another lockout of which reference is found in that of the one declared in Buckingham and Carnatic Mills in 1968, See V B Karnik op.cit., 97. The Industrial Disputes (Amendment) Act, 1982 provides that in Section 2 (1) for the words ‘closing of a place of employment’ the words ‘temporary closing of a place of employment’ be substituted. Empire of India Life Insurance Co. Ltd v. Their Employees, Labour Gazette, October, 1947 187, Sun Rolling Mills v. Their Workmen, (1949) LLJ 696; Ganges Jute Manufacturing Company Ltd v. Their Employees, (1950) LLJ 10; Bengal Jute Mills v. Their Workmen, (1950) LLJ 437 (IT).

70 Sun Rolling Mills v. Their Workmen, (1949) LLJ 696 (IT). 71 Bengal Jute Mills v. Their Workmen, (1950) LLJ 437, 440 (IT). 72 Presidency Jute Mills Co. Ltd v. Presidency Jute Mills Co. Employee’s Union, (1952) 1

LLJ 796 (LAT). 73 In rearbitration between Messers Richardson and Sumuel & Co., 77 LT, 479–77; L.T.

868 (QB). 74 Messers Richardson and Sumuel & Co., op. cit. 75 (1981) Lab. IC 221 (Bombay). 76 Kairbetta Estate v. Rajmanickam, (1960) 2 LLJ 275 (SC). 77 Ibid. 78 (1960) 2 LLJ 275 at 278. 79 Ram Naresh Kumar v. State of West Bengal, (1958) 1 LLJ 667 (Calcutta). 80 Continuing, he said:

81

82 83 84 85

86 87

In this view, even the last part of the definition of a lockout will not be satisfied by order of suspension for the simple reason that as there was a temporary termination of their employment or as these workers ceased, under the order of suspension, for the time being, to be the employees of the company, by refusing to give them employment during the subsistence of that order, the company cannot be said to have refused to give them employment during the subsistence of that order or the company cannot be said to have refused to continue to employ men employed by it or men who were still in its employment. There was thus no lockout … . It will be observed that certified standing orders not only itemize various acts of misconduct but also provide for the grievance procedure. Further, Section 33 of the Industrial Disputes Act places certain restrictions on the management’s right to take disciplinary action by way of dismissal. However, there is no provisions of the law which entirely takes away the right of the management to discipline their workmen. On the contrary, Section 33 specifically permits management to dismiss erring workmen under stated circumstances. The reason for this freedom, albiet, regulated freedom, is obvious. Total prohibition would encourage indiscipline and render day-to-day running of the industry impossible. Under the circumstances, if we were to hold that dismissal is included within the term ‘lock-out’ we would be defeating the very purpose of the Industrial Disputes Act, namely, to keep the wheels of industry moving, besides rendering a part of Section 33 useless. Bharat Barrel and Drum Mfg. Co. v. Their Workmen, (1952) 2 LLJ 532 (IT). Talchar Coalfields Ltd v. Talchar Coalfields Workers Union, (1953) 2 LLJ 21 (LAT). Ibid at 24. See Jute Workers Federation v. Clive Jute Mills, (1951) 1 LLJ 663; Lakshmi Devi Sugar Mills v. Ram Sarup, (1957) 1 LLJ 17 (SC); Lord Krishna Sugar Mills Ltd v. State of Uttar Pradesh, (1964) 2 LLJ 76 (All.). Lakshmi Devi Sugar Mills v. Ram Sarup, op. cit. Jute Workers’ Federation v. Clive Jute Mills, op. cit.

88 Shri Ram Chandra Spinning Mills Ltd v. State of Madras, (1957) 1 LLJ 90 (Madras). 89 Id at 92–93. 90 Kairbetta Estate v. Rajmanickam, (1960) 2 LLJ 275 (SC). 91 Id. at 278. 92 Express Newspaper Ltd v. Industrial Tribunal, (1962) 2 LLJ 227 (SC). 93 (1985) 1 LLJ 82. 94 Id. at 83–84. 95 Barsi Light Railway Co. Ltd v. Joglekar, (1957) 1 LLJ 243 (SC). 96 (1958) 1 LLJ 500 (SC). 97 (1961) 1 LLJ 288 (SC). 98 Feroz Din v. State of West Bengal, (1960) 1 LLJ 244 (SC). 99 (1960) 1 LLJ 244 at 249. 100 (1967) 2 LLJ 472. 101 All India Bank Employees Association v. National Industrial Tribunal, AIR 1962 SC

171. 102 Id. at 181. 103 1986 Lab. IC 1851 (AP). 104 AIR 1960 All. 45. 105 Id. at 49. 106 (1980) 1 LLJ 137 (SC). 107 Id. at 168. 108 Gwalior Rayon Silk Mfg. Co. v. District Collector, (1982) 1 LLJ 356 (Kerala);

109 110 111 112

113 114 115 116 117 118

Buckingham and Carnatic Mills Ltd v. Their Workmen, (1951) 2 LLJ 314–316 (LAT); Amalendu Gupta v. LIC., (1982) 2 LLJ 332 (Calcutta). Ram Krishna Iron Foundary v. Their Workers, (1954) 2 LLJ 372 (LAT). Id. at 373. 1982 Lab. IC 367. See also Coimbatore PDM. Sangam v. Sivakumar Transport, (1986) Lab. IC 1012 (Madras). ‘There is nothing inherently unlawful or illegal in a strike…… common law permitted an employee to stop work if he so desired’. See Raja Bahadur Motilal Poona Mills v. Mills Mazdoor Sabha, (1954) 1 LLJ 124. Id. at 71. 1990 Lab. IC 389 (SC). 1974 Ker. LT 516. Id. at 361. Kerala State Electricity Workers Federations v. Kerala State Electricity Board, (1983) 1 LLJ 435, 442 (Kerala). 1996 LLR 418 (Delhi).

119 See Ram Krishna Iron Foundry v. Their Workers, (1954) LLJ 516, 520 (LAT); See also

Chandramalai Estate v. Their Workmen, (1960) 2 LLJ 243 (SC). 120 Chandramalai Estate v. Their Workmen, op. cit. 121 AIR 1962 SC 1166. 122 Id. at 1168. 123 AIR 1969 SC 996. See also Sreekumar v. State of Kerala (1996) LLR 327. 124 Id. at 1168. 125 See Standard Chartered Bank v. Its Union, (1996) LLR 418 (Delhi). 126 Delhi Security Printer v. Hindustan Engg. and General Mazdoor Union (1996) LLR 127 128 129

130 131

132 133 134 135

136 137 138 139

714. (1996) LLR 418. Meghraj v. State of Rajasthan, (1956) 1 LLJ 366. Rule 22A of the Rajasthan Government Service Conduct Rules provided that ‘no government servant shall resort to any form of strike for the purpose of securing redress of his grievances’. Kameshwar Prasad v. State of Bihar, (1962) SCR 369. Justice Ayangar while delivering his judgement, observed that Rule 4A of the Bihar Government Servants Conduct Rules, 1956, has prohibited demonstration and strikes and no government servant has any fundamental right to resort to any kind of demonstration and strike. Ramrao Laxmikant Shirkhedhar v. Accountant General, Maharashtra, (1963) 1 LLJ 428 (Bombay) O K Ghosh and Others v. E X Joseph, AIR 1963 SC 814. (2003) (6) SCALE 84. The Communist Party of India (CPI), Communist Party India (Marxist), All India Trade Union Congress and Centre of Indian Trade Unions have criticized the decision. They regard the Court’s decision as an assault on a basic constitutional guarantee. Bhartiya Janta Party and Indian National Trade Union Congress require time to study the judgement. Some others described public servants to be the ‘laziest, most inefficient, corrupt lot in the world’. They feel that ‘crippling essential services is hardly exercising a fundamental right’. Some others observed ‘bloated babudom of a vital democratic home truth: Do not divorce the concept of right from responsibility or confuse liberty with licence’. Still some others feel that it is ‘a verdict that works’. [See the Hindu dt. August 8-9,.2003, ‘Talking Point’, Economic Times dt. 10.8.2003, Hindustan Times, New Delhi, August 7, 2003. Times of India, New Delhi, August 8, 2003, 12 and 14]. Supra note 134. (1997) 3 SCC 261. (1964) 7 SCR 403. All India Bank Employees Association v. National Industrial Tribunal, AIR 1962 SC 171.

140 Id. at 181. 141 Section 7. 142 (1990) Lab IC 389. 143 (1989) 1 LLJ 62 (SC). 144 (1960) 1 LLJ 13. 145 AIR 1958 SC 311. 146 (1997) 3 SCC 261. 147 (2009) 4 LLJ 870. 148 S Vasudevan v. S D Mital, AIR 1962 Bom. 53. 149 Corpus Juris Secundum, Vol. 83, 525. 150 (1986) Lab. IC 1851. 151 Id. at 1857. 152 Chemicals and Fibres of India Ltd v. D.C. Bhoir, (1975) 2 LLJ 168 (SC). 153 Balmer Lawrie & Co. Ltd v. Its Employees’ Union, (1989) Lab. IC 88 (Bombay). 154 Id. at 173. 155 Id. at 170. 156 Provat Kumar Kar v. W T Parkar, AIR 1950 Cal. 116; The Supreme Court approved the

decision in State of Bihar v. Deodhar Jha, AIR 1958 Pat. 51. 157 For instance Government of Bihar and West Bengal added ‘(ii) Oxygen and Acetylene’ in

the First Schedule. 158 Swadeshi Industries v. Its Workmen, (1960) 2 LLJ 78 (SC). 159 D N Banerjee v. P R Mukherjee, AIR 1953 SC 58. 160 State of Bombay v. Hospital Mazdoor Sabha, (1960) 1 LLJ 250 (SC). 161 (1960) 1 LLJ 250 at 259. 162 (1970) 2 LLJ 266 (SC). 163 Section 22. 164 (1986) 1 LLJ 204 (Karnataka). 165 (2008) 7 SCC 594. 166 Rule 71. 167 Employees of Dewan Bahadur Ram Gopal Mills v. Dewan Bahadur Ram Gopal Mills, 168 169 170 171 172 173 (i)

(1958) 2 LLJ 115. Id. at 116. Municipal Committee, v. Industrial Tribunal. (1971) 2 LLJ 52 (Punjab and Haryana). (1999) 2 SCC 143. Mineral Miners' Union v. K Iron Ore Co. Ltd, (1986) 1 LLJ 2004 at 2008. (1986) 1 LLJ 204 at 206. The procedure stated for the settlement of dispute is as follows: After negotiations have failed and before notice of strike/lockout is served, the parties may

(ii)

(iii)

174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199

agree to voluntary arbitration and the commission will help the parties in choosing an arbitrator mutually acceptable to them. Alternatively, either party may, during the period covered by the said notice, approach the commission for naming the conciliator within the Commission to help them in arriving at a settlement. In essential industries/services, when collective bargaining fails and when the parties to the dispute do not agree to arbitration, either party shall notify the IRC, with a copy to the appropriate government, of the failure of such negotiations, whereupon the IRC shall adjudicate upon the dispute and its award shall be final and binding upon the parties. See Government of India, Report of the National Commission on Labour, p. xxv (1969). S T Employees Federation, Orissa v. State of Orissa, (1990) Lab. IC 1591(Orissa). Keventers Karmachari Sangh v. Lt Governor, Delhi, 39 FLR 206 (1971). Id. at 211. Express Newspapers Ltd, (1962) 2 LLJ 227 (SC). Meghraj Kishangarh Mills Ltd, (1953) 2 LLJ 214 (Rajasthan). Workmen of Edward Keventers (P) Ltd v. Delhi Administration, ILR (1969) Delhi 767. Keventers Karmachari Sangh v. Lt. Governor Delhi, (1971) 2 LLJ 375. Delhi Administration v. Workmen of Edward Keventers, (1978) 2 LLJ 209 (SC). Id. at 211. Ibid. (1970) 1 LLJ 97 (Kerala). 1979 Lab. IC 330 (Andhra Pradesh). 1986 Lab. IC 1851 (Andhra Pradesh). (1987) Lab. IC 836 (Bom). (1999) Lab. IC 503 (Raj.). Madras Machine Tools Manufactures v. Special Deputy Commissioner of Labour, (1979) 2 LLJ 331. Ibid. K P Singh v. S K Gokhale, (1970) 1 LLJ 125. Sun Rolling Mills, v. Their Workmen, (1949) LLJ 382 . Deshpande v. Ferro Alloy Corporation, (1964) 1 LLJ 613. Raja Kulkarni and Others v. State of Bombay, AIR 1954 SC 73. Deshpande v. Ferro Alloy Corporation, (1964) 1 LLJ 613. Id. at 619. Raj Kumar Gupta v. Lt Governor, Delhi, AIR 1997 SC 2680. Gokul Chand Dwarka Das Morarka v. King., 75 I.A. 30. Feroz Din v. State of West Bengal, (1960) 1 LLJ 244 (SC) This view was followed in State of Kerala v. Chako, (1961) 2 LLJ 569 (Kerala).

200 Gokul Chand Dwarka Das Moraka v. King. op. cit. 30. 201 AIR 1997 SC 2600 at 2683. 202 Section 35. 203 See for instance, Swadeshi Industries Ltd v. Their Workmen, (1955) 2 LLJ 785 (LAT);

204

205 206 207

208 209 210 211 212 213 214 215 216 217 218 219

220 221 222 223

Swami Oil Mills v. Their Workmen, (1953) 2 LLJ 785 (IT); Crompton Greaves Ltd v. Their Workers, (1978) 36 FLR 329 (SC). See F W Heilgers and Co. Ltd v. Its Workmen, (1950) LLJ 231 (IT); Ambika Jute Mills v. Their Workers, (1954) 1 LLJ 835 (IT); See also Indian Machinery Mazdoor Union v. Indian Machinery Co. Ltd, (1956) 2 LLJ 408 (LAT). Vellanikara and Thuttil Rubber Estate v. Its Employees quoted in Govt. of India, Industrial Awards in India, (1959), 113. Indian Cycle Mfg Co. Ltd v. Their Workers, (1951)1 LLJ 390 (IT); Certain Banks in the State of Punjab and Delhi v. The Workmen, (1950) LLJ 425 (IT). Dalmia Cement (Bharat) Ltd v. Their Workers, (1955) 2 LLJ 466 (LAT); Standard Mills Ltd v. Their Workmen, (1953) 2 LLJ 135 (IT)., See also Crompton Greaves Ltd v. Its Workmen, op. cit., supra note 1. Union Tile Works v. Their Employees, (1954) 2 LLJ 103 (IT). Indian Cycle Mfg Co. v. Their Workers, (1952) 2 LLJ 390 (IT). Associated Cement Co. v. Their Workmen (1952) 2 LLJ 255 (IT). Bihar Fire Works and Potteries Ltd (1953) 1 LLJ 49 (LAT). Caltex Ltd v. Their Workmen, (1954) 2 LLJ 51. Swami Oil Mills v. Their Workers, (1953) 2 LCJ 785 (IT). Ambika Jute Mills v. Their Workers, (1954) 1 LLJ 835 (LAT). Hanuman Jute Mills v. Their Workmen, (1953) 2 LLJ 684 (LAT); Govind Sheet Metal Works and Foundry v. Their Workmen (1956) FJR 363 (LAT). Mahalaxmi Cotton Mills v. Their Workmen, (1952) 1 LLJ 68. See also Highway Group of Estates v. Industrial Tribunal, (1978) 2 LLJ 251 (IT); Certain Tailoring Concerns v. Its Workmen, (1950) LLJ 280. Pioneer Match Factory v. Their Workmen, (1951) 1 LLJ 43 (IT). Ram Krishna Iron Foundry v. Their Workmen, (1951) 2 LLJ 372 (LAT); Chandramalai Estate v. Its Workers, (1960) 2 LLJ 243 (SC); Indian Marine Service v. Its Workers, (1963) 1 LLJ 122 (SC); Viriji Bhai Laxman Bhai v. New Commercial Mfg. Co., (1958) Bom. Ind. Ct. Rep. 1153. Chandramalai Estate v. Its Workers, (1960) 2 LLJ 243. Hopkings and Williams Travancore Ltd v. Mineral Companies Staff Association, (1955) 2 LLJ 293 IT). Jaypore Sugar Co. Ltd v. Their Employees, (1955) 2 LLJ 444 (LAT). Digvijay Cement Co. Ltd v. Their Workmen, (1951) 1 LLJ 236 (IT); M/s Pierce Leslie & Co. Ltd published in Kerala Gazette, No. 43 dt. 3 November 1959, 13; Ashok Textiles Pvt. Ltd case, Kerala Gazette, October 13, 1959.

224 Lakshmi Vilasam Tile Works Kerala, Gazette No. 501 dt. 22 December 1959, 7. 225 Certain Banks in the State of Punjab and Delhi v. Workmen, (1950) LLJ 245 (IT). 226 Ashok Textile Pvt. Ltd v. Their Employees, published in Kerala Gazette, October 13,

1959, 13. 227 M/s Pierce Leslie and Co. Ltd Alleppey v. Their Workmen, published in Kerala Gazette,

No. 43, 3 November 1959, 13. 228 Crompton Greaves Ltd v. Its Workmen, (1978) 36 FLR 329 (SC). 229 Shri Ram Silk Mills v. Their Workmen, (1952) 2 LLJ 862 (IT). 230 Bharat Barrel and Drumn Mfg Co. v. Their Workmen, (1952) 2 LLJ 532 (IT). 231 India Machinery Mazdoor Union v. Indian Machinery Co. Ltd (1956) 2 LLJ 408 (LAT). 232 Pioneer Match Factory v. Their Workmen, (1951) 1 LLJ 43 (IT). 233 Associated Cement Co. Ltd v. Their Workmen, (1952) 2 LLJ 255 (IT). 234 Ram Krishna Iron Foundry v. Their Workers, (1954) 2 LLJ 372 (LAT). 235 Indian General Navigation of Railway Co. Ltd v. Their Workmen, (1960) 1 LLJ 13 (SC). 236 (1960) 1 LLJ 13 at 22. 237 Model Mills v. Dharam Das, AIR 1958 SCS 1; See also Caltex India Ltd, Madras v.

Their Workmen, (1955) 2 LLJ 693 (LAT). 238 See Colliery Mazdoor Congress v. New Virbhoom Coal Co. Ltd (1952) LAC 219

Mahalaxmi Cotton Mills Ltd v. Their Workmen, (1952) 2 LLJ 635 at 640 (LAT). 239 Gujarat Steel Tubes v. Gujarat Steel Tubes Mazdoor Sabha, (1980) 1 LLJ 137 (SC). 240 Crompton Greaves Ltd v. Their Workmen, (1978) 2 LLJ 80 (SC). 241 Ibid. 242 Indian Iron & Steel Co. v. Their Workmen, AIR 1958 SC 130. 243 See Smith Stain Street and Co. v. Smith Stain Street Worker’s Union, (1953) 1 LLJ 67

244 245 246 247 248 249 250 251 252 253 254 255

(LAT); see also Swami Oil Mills v. Their Workmen, (1953) 2 LLJ 785; Swadeshi Industries v. Its Workers, (1955) 2 LLJ 785 (LAT). Ram Krishna Iron Foundry v. Their Workmen, (1954) 2 LLJ 372, 375 (LAT). Civil Appeal No. 312 of 1956 decided by the Supreme Court on 2 January 1957. Punjab National Bank v. Their Employees, (1959) 2 LLJ 666 (SC). Spencer & Co. Ltd, v. Their Workmen, (1956) 1 LLJ 714 (LAT). Swadeshmitran & Co. Ltd v. Their Workmen, (1952) 1 LLJ 479 (IT). Bangalore Silk Throwing Factory v. Their Workmen, (1957) 1 LLJ 435 (LAT). Model Mills v. Dharam Das, AIR 1958, SC 311. I M H. Press, Delhi v. Addl. Tribunal, (1961) 1 LLJ 499 (SC). Punjab National Bank v. Their Workmen, (1959) 2 LLJ 666. Indian General Navigation Co. v. Their Workmen, (1960) 1 LLJ 13 (SC). Burn & Co. Ltd v. Their Workmen, (1959) 1 LLJ 450 (SC). See Indian General Navigation and Rly Co. v. Their Workmen, op. cit., Gujarat Steel

Tubes v. Gujarat Steel Tubes Mazdoor Sabha, (1980) 1 LLJ 137 (SC). 256 Bata Shoe Co. v. D N Ganguli, AIR 1961 SC 1158. 257 I M H. Press v. Addl. Tribunal, (1961) 1 LLJ 499. 258 See Punjab National Bank v. Their Workmen, op. cit: Shalimar Works Ltd v. Workmen,

AIR 1959 SC 1217. 259 See Model Mills Ltd v. Dharam Das, AIR 1958 SC 311.; Bata Shoe Co. (Pvt.) Ltd v. D N

Ganguli, op. cit. 260 See Indian General Navigation, and Rly Co. v. Their Workmen, (1960) 1 LLJ 13. 261 See Buckingham and Carnatic Mills Co. Ltd v. Their Workmen, (1951)2 LLJ 314

262 263 264 265 266 267 268 269 270 271 272 273

274 275 276 277 278 279

(LAT); Punjab National Bank v. Their Workmen op. cit; M L Base & Co. (Pvt.) Ltd v. Its Employees, (1961) 2 LLJ 107 (SC). (1976) 1 LLJ 484 (SC). (1978) 2 LLJ 80. See Statesman Ltd v. Their Workmen, (1976) 1 LLJ 484 (SC); North Brook Jute Co. Ltd v. Their Workmen, (1960) 1 LLJ 480 (SC). See Vellanikara and Thutil Rubber Estate v. Its Employees, quoted in Government of India, Industrial Awards in India, PSN Motors Ltd v. Their Workmen, 12 FJR 192. India Cycle Mfg. Co. Ltd v. Their Workers, (1951) 1 LLJ 390 (IT); cf Certain Banks in the State of Punjab and Delhi v. Their Workmen, (1950) LLJ 425 (IT). See Dalmia Cement Ltd v. Their Workers, (1955) 2 LLJ 466 (LAT); Standard Mills Ltd v. Their Workmen, (1953) 2 LLJ 135. Ram Krishna Iron Foundry v. Their Workers, (1954) 2 LLJ 572 (LAT); Viriji Bhai Laxman Bhai v. New Commercial Mfg. Co., (1958) ICR Bombay, 1153. Chandramalai Estate v. Its Workmen, (1960) 2 LLJ 243 (SC). (1960) 2 LU 243 at 246. (1994) (5) JT 648. Hopkings and Wiliam (Travancore Ltd v. Mineral Companies Staff Association), (1955) 2 LLJ 293 (LT). See M/s. Pierce Leslie and Co. Ltd v. Their Workmen, published in Kerala Gazette No. 43, 3 November 1959, 13, quoted in Government of India, Supplement to Industrial Awards in India, 80 (1961); Ashok Textiles Pvt. Ltd v. Their Employees, published in the Kerala Gazette, October 13, 1959, 3. Crompton Greaves Ltd v. Its Workmen, (1978) 2 LLJ 80, 82 (SC). Bharat Barrel and Drum Mfg. Co. v. Their Workmen, (1952) 2 LLJ 532 (IT). Italkholic Tea Estate v. Their Workmen, (1954) 2 LLJ 717 (LAT). Id. at 718. Indian Marine Service Pvt. Ltd v. Their Workmen, AIR 1963 SC 528. Northern Dooars Tea Company v. Workmen of Dem Dima Tea Estate, (1964) 1 LLJ 436 (SC), See also Pradip Lamp Works v. Their Workmen, (1969) 38 FJR 20 (SC); Statesman Ltd v. Their Workmen, (1976) 1 LLJ 484 (SC); Highway Group of Estates v.

Industrial Tribunal, (1978) 2 LLJ 251 (Madras). 280 (1990) 2 LLJ 39. 281 (1978) 2 LLJ 117: Sukumar Bandyopadhyay v. State of West Bengal, (1976) Lab. IC 282 283 284 285 286 287 288 289

1980. R N Shenoy v. Central Bank of India, (1984) Lab. IC 1493. Dharam Singh v. Bank of India, (1979) Lab. IC 1079. R Rajamanickam v. Indian Bank, (1981) 2 LLJ 367; V Ramachandran v. Indian Bank (1979) 1 LLJ 122. (1981) 1 LLJ 64. (1989) 1 LLJ 109. (1982) 2 LLJ 332. (1982) 2 LLJ 332 at 34 1. (1984) 2 LLJ 97.

CHAPTER

20 Lay-off, Retrenchment, Transfer and Closure I. LAY-OFF A. The Perspective In the day-to-day running of business, management is often compelled to take measures to effect economy and avoid waste. Some of these actions have a direct bearing on the workmen employed by it. For instance, management may not temporarily require the services of certain workmen on account of ‘shortage of coal, power, raw material, accumulation of stock, breakdown of machinery, strike by workmen in interdependent sections of the establishment, or for any other similar reason. Under these situations, an employer does not temporarily need the services of the normal strength of the workmen. In these circumstances, he may well terminate the services of surplus workmen. But because he expects to resume his normal work and the workmen wish to continue to work, the institution of lay-off has been evolved. Herein, workmen are not discharged but nevertheless, they do not receive their full wages. It is because of this anomaly that the right of lay-off compensation has been established by practice, contract, standing orders or statutory provisions. With the introduction of industrial adjudication system on an all-India basis, workmen sometimes take advantage of the existing legal provisions. Their attitude of taking advantage of the existing legal provisions is strongly demonstrated by their response to lay-off. An early attempt was made to suggest that management's action in laying-off its workmen

amounted to a lockout1. Further, quite apart from the general prohibition contained in Section 23, both lay-off and lockout were held to be within the mischief of Section 33 (2). However, after the Amending Act of 1953, which defines ‘lay-off’ and provided compensation therefor, workmen generally claimed that lockout amounted to lay-off and consequently, the locked-out workmen were entitled to lay-off compensation. It is unfortunate that the provisions relating to lay-off compensation were incorporated in the Industrial Disputes Act,1947, only after 6 years of the operation of adjudication system on an all-India basis. During this long period, several cases involving lay-off came before the tribunals and courts and they decided the question of payment of compensation. But a study of the awards and decisions reveals that there was no uniformity in the rates of compensation. Further, norms were irreconcilable. Quite apart from these difficulties, the Industrial Disputes Act, 1947 as amended in 1953, did not contain any provision for preventing lay-off. There had been many cases of large-scale lay-offs in big industrial concerns in the 1970s. This caused great hardship to workmen. In order to avoid this hardship, the National Apex Body as well as the state labour ministers urged the Central Government to bring out certain measures for having a check on such arbitrary action of the management. Accordingly, the Parliament enacted the Industrial Disputes (Amendment) Act, 1976 which made the prior approval of the appropriate government necessary in industrial establishments employing 300 or more workmen.2 The 1982 and 1984 Amendment not only extended the provisions contained in 1976 Amendment to ‘industrial establishments’3 employing 100 or more workmen but has made a drastic amendment after taking into account the observations of the Supreme Court in Excel Wear case.4

B. Nature of Lay-off 1.

2.

General. Strictly speaking, lay-off is neither a temporary discharge of the workman nor a temporary suspension of his contract of service.5 It is merely a fact of temporary suspension of his contract of service. It arises when there is the ‘failure’, ‘refusal’ or ‘inability’ on the part of the employer to give employment to his workmen for reasons beyond the control of the employer. Further, lay-off does not end the employerworkmen relationship. Lay-off and Lockout. Lay-off and lockout have some common features. Both are the phenomena of continuing business. Both are acts of the

employer. Both involve subsisting employer-workman relationship. But there are strong reasons to distinguish lay-off and lockout. This was brought out by the Supreme Court in Kairbetta Estate v. Rajmanickam.6 Stated broadly, lay-off generally occurs in a continuing business, whereas lockout is the closure of the business. In the case of a lay-off owing to the reasons specified in Section 2 (kkk), the employer is unable to give employment to one or more workmen. In the case of lockout, the employer closes the place of business and locks out the whole body of workmen for reasons which have no relevance to causes specified in Section 2(kkk)……. It may be pointed out that the broad proposition laid down by the Supreme Court does not clearly reflect the true legal position. First, both lay-off as well as lockout are phenomena of a continuing business. Second, it is not true that only one or more but not all the workmen of an establishment are denied job opportunities in the case of lay-off or that all the workmen of the establishment and not only a few of them are always put under economic pressure in a lockout. Third, the use of the expression ‘closure’ is exceedingly vague. It is theoretically possible that there may be lockout only in a section of the establishment and the rest of the establishment may be working.7 Lockout is an instrument of economic coercion. It is a means to an end and not an end in itself, the particular means adopted being putting of economic pressure on recalcitrant workmen. A lay-off on the contrary, is an economy measure; while it does affect the workmen, the motive of putting economic pressure is absent. There is yet another basis of distinction. Whereas in lay-off, statute makes it obligatory on the part of the employer to pay compensation in accordance with the provisions of the Industrial Disputes Act, 1947; in case of lockout, it is discretionary with the tribunals to grant wages for the period of lockout depending upon the situations. 3. Lay-off and Retrenchment. Lay-off and retrenchment have some elements in common. Both are measures of economy. Both are declared by the employer. In both the cases statutory compensation must be paid. But, they differ in other respects. Whereas there is a subsisting employerworkman relationship during lay-off, that relationship is terminated in case of retrenchment. There is yet another basis of distinction. While layoff is temporary, retrenchment is a permanent measure. Moreover, if the term ‘retrenchment’ is included within the term ‘lay-off’, one fails to

understand why the legislature has defined these two terms separately. 4.

Lay-off and Closure of Business. Lay-off as well as closure have some common features. Both are measures of economy adopted by the employer. Both require statutory compensation. But they differ in several respects. Lay-off is temporary while closure is permanent, In lay-off, employer-workman relationship subsists but such relationship is terminated in closure of business.

C. Statutory Definition of Lay-off Prior to 1953, the word ‘lay-off’ was not used in any legislative enactment in India. Section 2 (kkk)8 of the Industrial Disputes Act, 1947, defines ‘layoff’ to mean the ‘failure’, ‘refusal’ or ‘inability’ on the part of employer to give employment to any number of workmen on account of: (a) shortage of coal, or (b) shortage of power, or (c) shortage of raw material, or (d) accumulation of stock or (e) breakdown of machinery or (f) for any other reason. The definition requires further analysis. First, the definition mentions three acts, namely, ‘failure’, ‘refusal’, or ‘inability’ on the part of the employer. The absence of these circumstances will not amount to ‘lay-off’ within the meaning of Section 2 (kkk) of the Act. Second, the expression ‘for any other reason’ occurring in Section 2 (kkk) is ejusdem generis with the preceding expression.9 Third, the definition requires subsisting employer workman relationship during lay-off.

D. Management's Right to Lay-off 1.

Under the Traditional Law. Under the traditional law, management had a right to lay-off its workmen and adjust labour force to the requirement of work. If the lay-off or adjustment of labour-force happened to be in breach of contract of employment or otherwise wrongful, the aggrieved workmen are entitled to compensation. This right of management has been curtailed to a great extent by the modern labour legislation and judicial decisions following thereunder. They assert that the right of the

2.

3.

management to lay-off its workmen and adjust labour force is not absolute. It has now been settled that management has no right to lay-off its workmen.10 Under the Standing Orders. Where the standing orders certified under the Industrial Employment (Standing Orders) Act, 1946 provide for lay-off, the employers are allowed to lay-off their workmen in accordance with the provisions of the standing orders of their establishment. They have no right to lay-off for reasons other than those laid down in the relevant clauses of the standing orders. Under the Industrial Disputes Act, 1947. Chapter V-A and V-B recognize management's right to declare lay-off for reasons laid down therein. If any case is not covered by the provisions of the standing orders of the establishment, it will be regulated by the provisions of Industrial Disputes Act, 1947.

The Supreme Court in Workman of Dewan Tea Estate v. The Management11 while considering the management's right to lay-off observed: [W]hether it can be said that Section 25 C recognizes a common law right of the industrial employer to lay-off his workmen? This question must, in our opinion, be answered in the negative. When the laying-off of the workmen is referred to in Section 25 C, it is the laying-off as defined by Section 2 (kkk), and so, workmen who can claim the benefit of Section 25 C must be workmen who are laid-off for occasions contemplated by Section 2 (kkk). The Court added: If any case is not covered by the standing orders, it will necessarily be governed by the provisions of the Act and lay-off would be permissible only where one or the other of the factors mentioned by Section 2 (kkk) is present and for such lay-off, compensation would be awarded under Section 25 C. However, in Workmen v. Firestone Tyre and Rubber Co.,12 the Supreme Court explained the aforesaid observation to indicate that: [I]f the power of lay-off is there in the standing orders but the grounds of lay-off are not covered by them, rather are governed by the provisions of the Act, then lay-off would be permissible

only on one or the other of the factors mentioned in Clause (iii). …13 But there is no provision in the Industrial Disputes Act specifically providing that an employer would be entitled to layoff his workmen for the reasons prescribed by Section 2 (kkk). In case of compensation of lay-off, position is quite different: If the terms of contract of service or the statutory terms engrafted in the standing orders do not give the power of lay-off to the employer, the employer will be bound to pay compensation for the period of lay-off which ordinarily and generally would be equal to the full wages of the concerned workmen. If, however, the terms of employment confer a right of lay-off on the management, then, in the case of an industrial establishment which is governed by Chapter V-A, compensation will be payable in accordance with the provisions contained therein. But no compensation will be payable in the case of an industrial establishment to which the provisions of Chapter V-A do not apply and it will be so as per the terms of employment.

E. Prohibition on Lay-off Till 1976, there was no provision for preventing lay-off in the Industrial Disputes Act, 1947. In the 1970s, a number of cases of large-scale lay-off were reported. This resulted in all-round demoralizing effect on the workmen. In order to prevent avoidable hardship and to maintain higher tempo of production and productivity, the Industrial Disputes Act, 1947 was amended in 1976 whereby restrictions were imposed on the employer’s right to lay-off by Section 25 M. However, following the decision of the Supreme Court in Excel Wear case, some high courts14 declared invalid the provisions contained in Section 25 M. In order to remove the anomaly, Section 25 M was re-drafted and substituted by the Industrial Disputes (Amendment) Act, 1984 which came into force w.e.f. 18 August 1984. Section 25 M, applies to every industrial establishment (not of seasonal character) in which not less than 100 workmen are employed on the average per working day for the preceding 12 months.15 Thus, Section 25 M, which imposes prohibition on lay-off provides: 1. No workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment to which this Chapter applies, shall be laid-off by his employer except with the prior permission of the appropriate government or such authority as may

2.

3.

4.

5.

6.

7.

be specified by that government by notification in the official gazette (hereinafter in this section referred to as the specified authority). obtained on an application made in this behalf, unless such lay-off is due to shortage of power or to natural calamity, and in the case of a mine, such lay-off is due also to fire, flood, excess of inflammable gas or explosion. An application for permission under sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended lay-off and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner. Where the workmen (other than badli workmen or casual workmen) of an industrial establishment being a mine, have been laid-off under subsection (1) for reasons of fire, flood or excess of inflammable gas or explosion, the employer, in relation to such establishment, shall, within a period of 30 days from the date of commencement of such lay-off apply, in the prescribed manner, to the appropriate government or the specified authority for permission to continue the lay-off. Where an application for permission under sub-section (1) or sub-section (3) has been made, the appropriate government or the specified authority, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such lay-off, may, having regard to the genuineness and adequacy of the reasons for such lay-off, the interest of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen. Where an application for permission under sub-section (1) or sub-section (3) has been made and appropriate government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of 60 days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of 60 days. An order of the appropriate government or the specified authority granting or refusing to grant permission shall, subject to the provisions of subsection (7), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order. The appropriate government or the specified authority may, either on its own motion or on the application made by the employer or any workman,

review its order granting or refusing to grant permission under sub-section (4) or refer the matter or, as the case may be, cause it to be referred to a tribunal for adjudication: Provided that where a reference has been made to a tribunal under this sub-section, it shall pass an award within a period of 30 days from the date of such reference. 8. Where no application for permission under sub-section (1) is made, or where no application for permission under sub-section (3) is made within the period specified therein, or where the permission for any lay-off has been refused, such lay-off shall be deemed to be illegal from the date on which the workmen had been laid-off and the workmen shall be entitled to all the benefits under any law for the time being in force as if they had not been laid-off. 9. Notwithstanding anything contained in the foregoing provisions of this Section, the appropriate government may, if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, it is necessary to do so, by order, direct that the provisions of sub-section (1), or, as the case may be, sub-section (3) shall not apply in relation to such establishment for such period as may be specified in the order. 10. The provisions of Section 25 C (other than the second proviso thereto) shall apply to cases of lay-off referred to in this section. Explanation. For the purposes of this Section, a workman shall not be deemed to be laid-off by an employer if such employer offers any alternative employment (which in the opinion of the employer, does not call for any special skill or previous experience and can be done by the workmen) in the same establishment from which he has been laid-off or in any other establishment belonging to the same employer, situated in the same town or village, or situated within such distance from the establishment to which he belongs that the transfer will not involve undue hardship to the workman having regard to the facts and circumstances of his case, provided that the wages which would normally have been paid to the workman are offered for the alternative appointment also.

F. Penalty for Lay-off without Previous Permission Section 25 Q prescribes penalty upon the employer contravening the provisions of Section 25 M. Thus, the employer who contravenes the provisions of Section

25 M is punishable with imprisonment for a term which may extend to one month or with fine which may extend to ₹1,000 or with both.

G. Procedure for Lay-off The Industrial Disputes Act, 1947, does not provide for the procedure to be adopted before declaring a lay-off. The procedure is, however, provided in the Industrial Disputes (Central Rules) 1957. Rule 75 A makes it obligatory upon the employer of an industrial establishment as defined in the Explanation to Section 25 A to give notice of the period of lay-off in the forms 0–1 and 0–2 within 7 days of the commencement or termination of such lay-off as the case may be to the affected workmen, This notice should be given by the employer to the affected workmen irrespective of the fact whether they are or are not entitled to any compensation under Section 25-C of the Act.

H. Compensation for the Period of Lay-off 1.

2.

Under the Standing Orders. Most standing orders contain a clause providing for lay-off. It also generally provides for the manner in which lay-off compensation should be paid. Where the relevant clauses of the standing orders provide for lay-off and the compensation therefor, the question of compensation will be determined by such standing orders. But in case of conflict between the provisions of standing orders and the statutory provisions for lay-off compensation, the latter will override the former. If the standing orders of the establishment merely provide for the reasons for which lay-off may be declared by the employer and do not provide the manner in which the compensation shall be paid to the laidoff workmen, the compensation shall be paid to them in accordance with Section 25-C provided, of course, the lay-off is covered under Section 2 (kkk). Under Section 25 C of the Industrial Disputes Act. To ensure a minimum earning during forced unemployment when workmen's names are borne on muster rolls, the Industrial Disputes Act, 1947 provides for payment of compensation equal to 50 per cent of the total of the basic wage and dearness allowance, for all days during which he is laid-off; provided he has completed continuous service of one year or more. However, under proviso to Section 25-C (1) if during any period of 12 months, a workman is laid-off for more than 55 days, no compensation shall be payable to a workman in respect of any period of lay-off after the expiry

of 45 days if there is an agreement to that effect between the workman and the employer. Alternatively, the employer may retrench the workmen at any time after the expiry of 45 days. If the workmen is retrenched under such circumstances, compensation paid to him for having been laid-off during the proceeding 12 months may be set-off against compensation payable for retrenchment.

Nature and Scope of Agreement under Section 25-C(1) In P Virudhachalam v. Management of Lotus Ltd16, the Supreme Court was invited to consider whether there was an agreement between workman and employer to the effect that the period of lay-off would be curtailed or restricted to 45 days only. It was contended on behalf of the workman that in order to attract the first proviso to Section 25-C(1), there should be an independent agreement between the workman and the employer to that effect agreeing not to demand lay-off compensation beyond 45 days of the starting of the lay-off period. Rejecting the contention, the Supreme Court observed: It is difficult to appreciate this contention. An agreement restricting the claim of lay-off compensation beyond the available period of 45 days can be said to be arrived at between the workman on the one hand and the employer on the other as there is such an agreement embedded in a binding settlement which has a legal effect of binding all the workmen in the institution as per Section 18 (3) of the Act. The effect of such settlement arrived at during the conciliation proceedings would get telescoped into the first proviso to Section 25-C(l) and bind all workmen even though individually, they might not have signed the agreement with the management or their union on behalf of its member workmen. The first proviso to Section 25-C(1) clearly lays down that if there is an agreement for not paying any more lay-off compensation beyond 45 days between the workmen and the employer, such an agreement has binding effect both on the employer and the workman concerned. Such binding force gets clearly attracted in the case of the appellants by virtue of operation of Section l2(3) read with Section I 8 of the Act emanating from the settlement arrived at during the conciliation proceedings as aforesaid. The Court also rejected the contention of workmen for isolating the effect of Section 1S(3) and observed:

It is difficult to appreciate how the said proviso can be of any assistance to the appellants. All that is stated is that anything inconsistent with the provisions of Chapter VA found to have been laid down by any other law including standing orders, etc., will have no effect. Even sub-section (2) of Section 25-J overrides any inconsistent provision of any other law or otherwise binding rule of conduct and makes the provisions of Chapter VA operative on their own. The submission of learned counsel for the appellants in this connection was to the effect that ‘any other law’ as provided in Section 25-J(1) would include even the Industrial Disputes Act, specially the provisions contained in Section 18 thereof. It is difficult to agree that Section 25-J nowhere provides that the provisions of Chapter VA shall have effect notwithstanding anything inconsistent contained in any other chapter of the Industrial Disputes Act as well as in any other law. Such a provision is conspicuously absent in Section 25-J(l). If submission of learned counsel for the appellants is accepted, Section 25-J(1) will have to be rewritten by introducing the additional words therein ‘in any other part of this Act or’ before the words ‘any other law’ as mentioned therein. On the express language of the said provision, therefore, such an exercise is contra-indicated and is totally impermissible.

I. Applicability of Section 25 C to 25 E Scope and Coverage. Section 25 C to 25 E shall not apply to (i) an ‘industrial establishment’ which means any ‘factory’17 ‘mine18 ‘plantation’19 employing less than 50 persons on average per working day in preceding calendar months20, or to industrial establishments which are of seasonal character or in which work is performed only intermittently; or to industrial establishments to which Chapter V-B applies. From this it is clear that scope of Section 25 A to 25 E is limited. It, therefore, raises a significant question whether it is open to the industrial tribunal to award lay-off compensation to workmen employed in an ‘industrial establishment’ to which Section 25 C is not applicable. The question, however, has been answered in the negative, by the Bombay High Court in K T Rolling Mills Ltd v. M R Mehar21 and by Kerala High Court in South India Corporation v. All Kerala Cashewnut Factory Workers’ Federation.22 In the former case, less than 50 workmen were employed in an industrial establishment

on an average per working day. The management laid-off certain workmen without paying them any compensation. On failure of conciliation proceeding, the dispute was referred to the industrial tribunal for adjudication. The tribunal awarded compensation on the ground of equity and social justice. The management thereupon moved the High Court under Article 226 of the Constitution for appropriate relief. Justice K T Desai, who heard the writ petition for the High Court confirmed the findings of the tribunal. The management then appealed to the division bench of the High Court. While Justice J C Shah agreed with the findings of Justice K T Desai, Justice S T Desai took contrary view by holding that it was not open to a workman to claim lay-off compensation. Upon this difference, the case was referred to Justice Mudholkar for final disposal, who held that a tribunal had no jurisdiction to award lay-off compensation to the concerned workmen. It is submitted that the coverage of the Industrial Disputes Act, 1947, in regard to lay-off compensation is not in conformity with other labour legislation such as the Payment of Bonus Act, 1965, Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, and the Employes's State Insurance Act, 1948. The latter Acts are applicable to establishments employing 20 or more persons. The provisions relating to lay-off, retrenchment, transfer and closure compensation should be extended not only to ‘industry’ employing 20 or more persons but to every ‘industry’, irrespective of the number of workmen employed therein. This should however, be done in two stages. In the first stage, the coverage of provisions relating to lay-off compensation should be extended to workmen employed in any factory (under the Factories Act, 1948), mines (under the Mines Act, 1952), plantations (under the Plantation Labour Act, 1951) and other industries (under the Industrial Disputes Act,1947) employing 20 or more persons and in the second stage to others.23

J. Workmen Not Entitled to Compensation in Certain Cases (i)

If the workmen refuse to accept any alternative employment. Another limitation on the scope of statutory requirement of lay-off compensation is that a laid-off workman shall not be entitled to statutory lay-off compensation if he refuses to accept any alternative employment in the same establishment from which he has been laid-off, or in any other establishment belonging to the same employer situated in the same town or village or situated within a radius of 5 miles from the establishment to which he belongs. Whether or not laid-off workmen are entitled to

(ii)

compensation depends on the meaning of the expression ‘any alternative employment’. In a broad sense, it may be used as a synonym of ‘any’. According to this, the employer is free to offer ‘any employment’ (including a lower post) to laid-off workers without loss of wages provided in the opinion of the employer the post does not require any special skill or previous experience and can be done by workmen. In the literal sense it means employment of equal status. The latter view has been taken in Industrial Employees’ Union v. J K Cotton Spinning and Weaving Mills Co.24 Construing the expression ‘alternative employment,’ the labour appellate tribunal held that it means ‘like, similar or substitute of original job.’ This view is in conformity with fair play and justice. Another part of the establishment. The expression ‘another part of the establishment’ occurring in clause (iii) is, however, not free from ambiguity. The real difficulty arises when one attempts to delineate the aforesaid expression in order to decide whether a laid-off workman is entitled to compensation. Reported decisions, however, reveal that even in the identical facts-situation, the Supreme Court has held differently. For instance, in Associated Cement Companies Ltd v. Their Workmen,25 the Associated Cement Factory and a lime-stone quarry had a common manager and a common accountant and other features of functional integrity. A lay-off was declared in Associated Cement factory due to strike by the workmen of lime-stone quarry. On these fact-situation, the lime-stone quarry was held to be ‘another part of the establishment’ under Section 25 E (iii) so as to disentitle the workmen in the factory to claim lay-off compensation. Observed the Supreme Court: The Act not having prescribed any specific tests for determining what is ‘one establishment’, we must fall back on such considerations as in the ordinary industrial or business sense determine the unity of an industrial establishment, having regard no doubt to the scheme and object of the Act and other relevant provisions of the Mines Act, 1952, or the Factories Act, 1948. What then is ‘one establishment’ in the ordinary industrial or business sense? The question of unity or oneness presents difficulties when the industrial establishment consists of parts, units, departments, branches, etc. If it is strictly unitary in the sense of having one location and one unit only, there is little difficulty in saying that it is one establishment. Where, however

the industrial undertaking has parts, branches, departments units, etc., with different locations, near or distant, the question arises what test should be applied for determining what constitutes one establishment. The Court then observed that the relations between various units depend on the facts proved having regard to the scheme and object of the statute. But in Alloy Steel Project Company v. Their Workmen26 under similar situation and circumstances, the Court declared them two different establishments. This anomaly was due to the absence of an explanation clause clarifying the meaning of the expression ‘another part of the establishment’. Further, there is not a single criterion by which itself and standing alone, either establishes or negatives the determination of question as to what constitutes an establishment. The issue is to be decided on a number of considerations such as (i) unity of ownership, (ii) contract and supervision by same employer, (iii) finance, (iv) management and employment, (v) geographical proximity and (vi) general unity of purpose and functional integrity with particular reference to the industrial process.27 (iii) Badli or casual workmen. A badli or a casual workmen is not entitled to lay-off compensation. ‘Badli workman’ means: a workmen who is employed in an industrial establishment in the place of another workman whose name is borne on the muster rolls of the establishment, but shall cease to be regarded as such for the purposes of this Section, if he has completed one year of continuous service in the establishment. The Act does not, however, define the term ‘casual workman’. The absence of any such definition raises several problems: (1) Whether a workman can be said to be a ‘casual workman’ (a) when he has completed one year of service, or when he has not completed one year of service? (2) Is a ‘casual workman’ entitled to lay-off compensation in case he is employed in an establishment employing 50 or more workmen? (3) Can the employer avoid taking a casual workman on the muster roll who has completed one year of service? It is not easy to answer these questions. Had the Parliament defined the term ‘casual workman’ like badli workman, the problem would not have arisen. Under the circumstances, it is suggested that the Parliament may amend the Industrial Disputes Act,1947 and define the term ‘casual’ workmen. (iv) If he does not present himself for work. Clause (ii) of Section 25E28 provides that a workman would not be entitled to any compensation if he refuses to present himself for work as mentioned in clause (ii). This clause raises a significant question as to what is the effect of absence from work after the lay-off has been declared? This question was answered in

Nutan Mills v. Employees’ State Insurance Corporation.29 During the period of the lay-off, the employee would be entitled to go and serve another master. The only result of his doing so would be that he would be disentitled to receive compensation. But it is entirely a matter of his option whether he should present himself at the office of his employer and thus claim compensation or earn wages under a different employer and even though he may serve a different employer, he would still have the right to be reinstated when the proper occasion arises.30 (v)

If the laying-off is due to a strike or go-slow on the part of workmen in another part of establishment. Section 25 E (iii) provides that the workman would not be entitled to lay-off compensation if the lay-off was declared due to strike or go-slow on the part of workmen, in another part of the establishment.

K. Continuous Service Section 25 C of the Act requires that two conditions must be complied with. First, the workmen must have been in ‘continuous service’ of the employer. Second, such service should not be for less than one year. Section 25 B defines ‘continuous service’, inter alia, for the claim of lay-off compensation. The definition of ‘continuous service’ consists of two parts. The first part deals with the meaning of expression ‘continuous service’ and the second part is inclusive of definition. In the first part, in order that the service may be continuous, it must be uninterrupted. The second part says that notwithstanding any interruption in the continuity of service, it will be uninterrupted on account of sickness, or on account of authorized leave or accident or strike which is not illegal or lockout or a cessation of work which is not due to any fault of workmen. Section 25 B (2) provides a legal fraction by view of which a workmen not in continuous service shall be deemed to be in continuous service provided the conditions laid down in the Section are complied with. In Explanation (i) appended to subsection (2) of Section 25 B the words used are: he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946, or under this Act or under any other law applicable to the industrial establishment. The aforesaid provisions indicate that a workman can be laid-off under

the Industrial Disputes Act. But it is strange to find that no section in Chapter VA in express language or by necessary implication confers any such power upon the management of the industrial establishment to which the relevant provisions are applicable to lay-off a workman.

L. Employer's Duty to Maintain Muster-Rolls of Workmen Section 25 D31 casts an obligation upon an employer of an industrial establishment32 to maintain a muster-roll and to provide for the making of entries therein by workmen who may present themselves for work. This provision is equally applicable to industrial establishments employing 100 or more workmen.

M. Recovery of Lay-off Compensation Section 33 C (1), inter alia, provides for the mode of recovery of lay-off compensation namely: Where any money is due to a workman from an employer, under a settlement or an award or under the provisions of Chapter V-A or Chapter V-B, the workman himself or any other person authorized by him in writing in this behalf, or, in the case of the death of the workman, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate government for the recovery of the money due to him, and if the appropriate government is satisfied that any money is so due, it shall issue a certificate for that amount to the collector who shall proceed to recover the same in the same manner as an arrear of land revenue…. have raised several issues. The key question is what is the significance of the expression, ‘money due’ to workman from an employer under the provisions of Chapter V-A. In Kays Construction Company v. State of Uttar Pradesh33 the Supreme Court observed: [T]he benefit contemplated in sub-section (2) is not ‘money due’ but some advantage or perquisite which can be reckoned in terms of money…. For instance, loss of the benefit of free quarters is not loss of ‘money due’ though such loss can be

reckoned in terms of money by inquiry and equation. The contrast between ‘money due’ on the one hand and a ‘benefit’ which is not ‘money due’ but which can become so after the money equivalent is determined on the other, marks out the areas of operation of the two sub-sections. If the word ‘benefit’ was taken to cover a case of mere arithmetical calculation of wages, sub-section (1) would hardly have any play. Every case of calculation, however simple, would have to go first before a tribunal. In our judgement, a case such as the present, where money due is back wages for the period of unemployment is covered by the first sub-section and not the second.34

N. Lay-off and Section 33 Lay-off affects the earnings of the concerned industrial employees35 and therefore, apparently violates the provisions of clause (a) of sub-section (t), (2) and (3) of Section 33.36 The tribunals and courts have, however, held that laying-off of workmen in accordance with the establishment practice37 or provisions of standing orders or statutory provisions are outside the purview of Section 33.

O. Effect of Laws Inconsistent with Chapter V Section 25-J reads: (1) The provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law including standing orders made under the Industrial Employment (Standing Orders) Act. 1946: Provided that where under the provisions of any other Act or rules, orders or notifications issued thereunder or under any standing orders or any award, contract of service or otherwise, a workman is entitled to benefits in respect of any matter which are more favourable to him than those to which he would be entitled under this Act; the workman shall continue to be entitled to the more favourable benefits in respect of that matter, notwithstanding that he receives benefits in respect of other matter under this Act. (2) For the removal of doubts, it is hereby declared that nothing contained in this Chapter shall be deemed to affect the provisions of any other law for

the time being in force in any state in so far as that law provides for the settlement of industrial disputes, but the rights and liabilities of employers and workmen in so far as they relate to lay-off and retrenchment shall be determined in accordance with the provisions of this Chapter. The effect of the aforesaid provisions is that for the period of lay-off in an industrial establishment to which the said provisions apply, compensation will have to be paid in accordance with Section 25C. But if a workman is entitled to benefits which are more favourable to him than those provided in the Act, he shall continue to be entitled to the more favourable benefits. The rights and liabilities of employers and workmen in so far as they relate to lay-off and retrenchment, except as provided in Section 25-J, have got to be determined in accordance with the provisions of Chapter V-A. The aforesaid provision is equally applicable to industrial establishments to which Chapter V-B applies. Sub-section of (2) of Section 25 J is quite emphatic about the supremacy of the provisions relating to the rights and liabilities arising out of lay-off and retrenchment. These are special provisions and they do not apply to all kinds of termination of services38. By enacting Section 25-J, Parliament perhaps intended that the rights and liabilities arising out of lay-off and retrenchment should be uniform throughout India where the Central Act was in force and did not wish that states should have their own laws consistent with the Central law. If really the state legislature intended that it should have law of its own regarding the rights and liabilities arising out of retrenchment, it would have expressly provided for it. Legislature has not done so in this case.39

II. RETRENCHMENT A. The Context With the cessation of World War II and re-establishment of normal transport facilities, new and improved machinery began to flow into the country. These in turn resulted in rationalization of production processes and retrenchment of surplus labour. The situation was, however, met by the State’s interference in regulating the employers’ right to retrench their workmen directly through the Ministry of Labour and indirectly through the industrial tribunals. This situation continued till 1953. In 1953, a grave situation arose in textile mills resulting in retrenchment of a large number of workers employed therein. This led to the promulgation of the Industrial Disputes (Amendment) Ordinance No. 5 of 1953.

Subsequently, these measures with a number of innovations and refinements were incorporated in the Industrial Disputes (Amendment) (Act 42 of 1953). Though the 1953-Amendment Act provided for notice and retrenchment compensation, it did not contain any provision for preventing retrenchment. Cases of large-scale retrenchment were reported time and again. Consequently, the state government and national apex bodies approached the Central Government to take legislative measures for preventing arbitrary action of the management in retrenching its workmen. Accordingly, the Industrial Disputes (Amendment) Act, 1976 was enacted. By this amendment, a new Chapter V-B has been added to the Industrial Disputes Act, 1947 and this Chapter applies to industrial establishments which are factories, mines and plantations, employing 300 or more workmen. For purposes of these new provisions, the central sphere has been widened and the Central Government would also be the appropriate government in respect of (i) companies in which not less than 51 per cent of the paid-up share capital is held by the Central Government and, (ii) corporations established by or under any law made by Parliament, despite the fact that insofar as other provisions of the Industrial Disputes Act are concerned, some of these establishments are in the state sphere. This legislation makes it obligatory for the employers of these industrial establishments to obtain previous permission of the specified authority before retrenching any workmen. The specified authority has to give his decision within a period of 2 months and the previous approval for closure within 90 days of the date of intended closure. The Act also provides for certain transitional provisions in respect of continuing lay-off, retrenchments and closures where the period of notices already sent have not expired and also in respect of retrenchment. Now, decision will have to be communicated within 2 months. A new provision has also been made in the Act for restarting of an already closed down undertaking under certain special circumstances. The penal provisions in the Act for violation of any of these new provisions are much more stringent than those already existing in the Act. The maximum penalties provided are imprisonment for a term which may extend to one year or fine which may extend to ₹5,000 or with both. For continuing offences, the fine for each day of contravention after conviction is ₹2,000.40 However, the Industrial Disputes (Amendment) Act, 1982 extended the aforesaid special provisions of retrenchment to industrial establishments employing 100 workmen. Two years later, the Industrial Disputes (Amendment) Act, 1984 curtailed the scope of retrenchment by inserting a new clause (bb) in Section 2 (oo). Further, the proviso to clause (a) of Section 25-F was omitted.

Moreover, Section 25-N dealing with the conditions-precedent to retrenchment of workmen was substituted and Section 25 Q dealing with penalties for retrenchment was amended.

B. Nature of Retrenchment 1.

2.

3.

4.

General. Retrenchment generally means ‘discharge of surplus labour or staff’ by the employer on account of a long period of lay-off or rationalization or production processes or improved machinery or automation of machines or similar other reasons. It is adopted as an economy measure. The subsisting employer-workmen relationship is, however, terminated in case of retrenchment. Retrenchment and Lockout. Retrenchment and lockout have some common phenomena of continuing business. Both are acts of the employer. Both involve subsisting employer-workmen relationship. But, there are weighty reasons to distinguish lockout from retrenchment on the basis of the status of employment relationship. Whereas there is a subsisting employer-workman relationship in lockout, that relationship is terminated in case of retrenchment. There is yet another basis of distinction; lockout is an instrument of economic coercion and seeks to compel recalcitrant workmen to agree to the management's point of view, retrenchment is a measure of economy and, while it does affect workmen, the motive of bringing workmen to their knees by putting economic pressure on them is absent. Retrenchment and Lay-off. Retrenchment and lay-off have some elements in common. Both are declared by the employer. Both require statutory compensation but they differ in many other respects. Whereas there is a subsisting employer-workmen relationship during lay-off, that relationship is terminated in case of retrenchment. There is yet another basis of distinction. While retrenchment is a permanent measure to remove surplus labour, lay-off is a temporary measure. Retrenchment and Closure of Business. Retrenchment and closure of business have some common features. Both are measures of economy by the employer; both require statutory compensation. In both cases, employer-workmen relationship is terminated. But they differ in many other respects. In closure the industry is closed but in case of retrenchment, the industry may be continuing.

C. Statutory Definition of Retrenchment Prior to 1953, the word ‘rettenchment’ was not defined in any legislative enactment in India. Section 2 (oo) of the Industrial Disputes Act, 1947, defines ‘retrenchment’ to mean: the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include— (a) voluntary retirement of the workman: or (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or (bb) termination of the service of the workman as a result of non-renewal of contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or (c) termination of the service of a workman on ground of continued ill-health. The above definition may conveniently be divided into four parts, namely; (a) termination of the service of a workmen, (b) by the employer; (c) for any reason whatsoever, and (d) otherwise than as a punishment inflicted by way of disciplinary action. The definition, however, excludes, a workman who had (i) been dismissed as a measure of punishment inflicted by way of disciplinary action, or (ii) voluntarily retired, or (iii)retired on reaching the age of superannuation or (iv) been discharged on the ground of continued ill-health. The definition of retrenchment is very badly drafted for there are inherent contradictions in the definition. If retrenchment means the termination of service by the employer, then what about voluntary retirement of workman which is certainly not a termination of service of workmen by the employer? Similarly, the retirement on reaching the age of superannuation is also not a termination of service of the workman by the employer unless it is considered to be a formal act of the employer to remove the name of the workman from the muster-roll. Here, one fails to understand the purpose of exclusory clause for the aforesaid items. Notwithstanding the contradiction in the definition, it is interesting to note that the legislature intended to interpret the definition in its widest possible amplitude. But the Supreme Court in Barsi Light Railway Co. v. Joglekar (K N)41 while considering the meaning and scope of the definition of ‘retrenchment’ occurring in Section 2 (oo) of the Industrial Disputes Act, 1947 interpreted the words ‘for any reason whatsoever’ to mean ‘for any reason which

is connected with economy whatever the reasons might be’. In this case, under an agreement dated 1 August 1895 between the secretary of the state for India and Railway Company, the President of India gave notice to the Railway Co. on 19 December 1952 that the undertaking of the Railway Company would be taken over with effect from 1 January 1954. Consequently, the Railway Company served a notice to its workmen that in view of the aforesaid circumstances, the services of all the workmen of the Railway Company would be terminated with effect from the afternoon of 31 December 1953. It was also stated therein that the Government of India intended to employ those staff of the company who would be willing to serve the railways on terms and conditions fixed by the government. Majority of the staff of the Railway Company were re-employed on the same scales of pay. However, 23 per cent of the staff were re-employed on somewhat lower scales though the pay which they actually drew at the time of re-employment was not affected. Only about 24 of the former employees of the Railway Company were not taken back by the government. Soon after, Railwaymen's Union filed 61 applications under the Payment of the Wages Act, 1936 to the Payment of Wages Authority for payment of retrenchment compensation under Section 25 F. On these facts, three questions arose: (i) whether the authority under the Payment of Wages Act, 1936 had jurisdiction to adjudicate upon the claim of retrenchment compensation? (ii) whether the erstwhile workmen were entitled to claim compensation under Section 25 F (b)? (iii) whether they had been ‘retrenched’ by their former employer? The authority held that it had no jurisdiction to deal with the application but held that the workers were entitled to compensation as there had been retrenchment. Aggrieved by this order, the Railwaymen’s Union moved the Bombay High Court for a writ under the provisions of Articles 226 and 227 of the Constitution for quashing the order of dismissal passed by the authority and directing the latter to dispose of the application on merits. Chief Justice Chagla and Justice Dixit of the Bombay High Court held that the workmen had been retrenched and the Railway Company was liable to pay compensation to them. Against this judgement, the appeal was filed before the Supreme Court. Another case, Hariprasad Shivshankar Shukla v. A D Divalkar (Dinesh 42 Mills) was also heard by the Supreme Court along with Barsi Light Railway. Co. The management of Shri Dinesh Mills had decided to close down the shifts. Thereafter, the management gave notice to the workmen intimating that the second shift would be closed with effect from 20 December 1953 and the first shift with effect from 8 January 1954 and also mentioned in the notice that as a result of the closure, the services of all workmen shall stand terminated. The mill was closed and therefore, its workmen made an application to the authority

under the Payment of Wages Act, claiming retrenchment compensation under Section 25 F (b) of the Industrial Disputes Act, 1947. It held that the discharge of workmen on closure did not constitute retrenchment as defined in Section 2 (oo) of the Industrial Disputes Act, 1947. Thereupon the workmen moved the Bombay High Court for issuance of appropriate writ. Justice Babedkar and Justice Shah of the Bombay High Court relying on the decision in Barsi Light Railway Co.43 held that discharge of workmen on closure of business was retrenchment. Aggrieved by this order, the management preferred an appeal to the Supreme Court. The Supreme Court disposed of the two appeals together by a single order. The Supreme Court reversed the findings of the Bombay High Court and pointed out that the statutory definition of the word ‘retrenchment’ merely laid emphasis upon economic concept of the terms and ‘for any reason whatsoever’ meant ‘for any economic reasons whatsoever in a continuing or existing running industry.’ Justice S K Das of the Supreme Court observed: ….. retrenchment as defined in Section 2 (oo) and used in Section 25-F has no wider meaning than the ordinarily accepted connotation of the word: it means the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and it has no application where the services of all workmen have been terminated by the employer.44 The Court also referred to its earlier observation in Pipraich Sugar Mills Ltd v. Pipraich Sugar Mills Mazdoor Union45 which reads as follows: Retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff or the labour force is discharged as surplusage and the termination of services of all workmen as a result of closure of the business cannot therefore be properly described as retrenchment.46 The Court also held that termination of service as a result of transfer of ownership of an undertaking to another employer did not constitute ‘retrenchment’. It is difficult to accept this interpretation. If the expression ‘for any reason whatsoever’ means what their Lordships have held it to mean, one wonders what was the need of the qualifying clause, ‘otherwise than as a punishment inflicted by way of disciplinary action.’ It is regrettable that Justice Das did not consider sub-clauses (a), (b), (c) on the ground that they were not directly applicable to

the cases under consideration. But one cannot overlook the intention of the legislature in including all the categories mentioned in the earlier part of the definition. However, by narrowing the scope, the Supreme Court severely curtailed the meaning of the statutory definition of retrenchment and, correspondingly, increased the residuary area of discharge wherein, save in establishments having a gratuity scheme, workmen were not entitled to any severance pay and further rendered 63 words out of a total of 81 words used in the definition ‘useless appendage’. Further, the Court misread the intention of the legislature in enacting Section 25 F of the Industrial Disputes (Amendment) Act, 1953, and on the whole threw the provisions of the Industrial Disputes Act, 1947, out of gears. Thus, the decision caused considerable hardship to workmen by denying statutory compensation to workmen whose services were terminated on account of closure and transfer of undertaking. It is unfortunate that the impact of the aforesaid decision and curtailment of the meaning of statutory definition of ‘retrenchment’ did not attract the attention of Supreme Court for about 2 decades. It is only after about a decade when the Industrial Disputes Act, 1947 has undergone several amendments that the impact of the aforesaid decision appears to have been felt by the Supreme Court in State Bank of India v. N Sundara Money.47 The facts of the instant case were as follows: the respondent was appointed as cashier, off and on, by the State Bank of India between 4 July 1970 and 18 November 1972. There were intermittent breaks in the service of the respondent but he had completed 240 days in a year within the fold of ‘deemed’ continuous service occurring in Section 25-B(2). But the order of appointment which bore the termination of service of workman after a few days was challenged in view of Sections 2 (oo) and 25-F. Justice Krishna lyer delineating the scope of ‘retrenchment’ observed: A breakdown of Section 2 (oo) unmistakably expands the semantics of retrenchment. Termination for any reason whatsoever, are the key words. Whatever the reason, every termination spells retrenchment. So the sole question is, has the employee's service been terminated? Verbal apparel apart, the substance is decisive. A termination takes place where a term expires either by the active step of the master or the running out of the stipulated term. To protect the weak against the strong, this policy of comprehensive definition has been effectuated. Termination embraces not merely the act of termination by the employer, but the fact of termination howsoever produced.48

The aforesaid observation not only makes a departure from the interpretation of the Court in Barsi Light Railway Company, but also impliedly overrules the decision. However, in M/s. Hindustan Steel Ltd v. Labour Court,49 again an attempt was made to revive the issue of conflict in Supreme Court decision, but the Court explained that there was no conflict between the Barsi Light Railway Company and State Bank of India v. N Sundara Money50 because according to the first case,‘retrenchment’ would not include bona fide closure of the whole business. This attempt is not only futile but is selfcontradictory. It may be added that even after the 1956 and 1957 amendments to the Industrial Disputes Act, 1947, the non-prescription of re-employment on reopening of establishment persisted, leading the judiciary to examine the justifiability of closure. Again in Delhi Cloth and General Mills Co. Ltd v. Shambhu Nath Mukherji51, it was held that striking-off the names of the workmen from the rolls would amount to retrenchment within the meaning of Section 2 (oo) of the Act. Since Justice Krishna Iyer wrote the judgement in State Bank of India v. N Sundara Money, it is not surprising to find a similar view being referred to and followed concerning the interpretation of the word ‘retrenchment’ by Justice Krishna Iyer himself in Santosh Gupta v. State Bank of Patiala52 and Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha53 and thereby bringing the conflict in Barsi Light Railway Company and State Bank of India v. N Sundara Money to its forefront. Santosh Gupta v. State Bank of Patiala54 has stretched the principle laid down in Sundara Money's case. In this case, State Bank of Patiala terminated the services of one of its workman (a woman) who had put in more than 240 days of service, [deemed continuous service for a year under Section 25 B (2)] on the ground of her failure to pass the prescribed test provided for confirmation in service. She was neither served with a notice required under Section 25 F(a), nor paid retrenchment compensation under Section 25 F (b). On these facts a question arose whether termination of service of the workman by the bank due to the failure of the workman to pass the prescribed test for confirmation in service amounted to a ‘retrenchment’. The Court preferred to adopt a broad interpretation of the expression ‘retrenchment’ and stated: [I]f due weight is given to the words ‘the termination by the employer of the service of a workman for any reason whatsoever’ and if the words ‘for any reason whatsoever’ are understood to mean what they plainly say, it is difficult to

escape the conclusion that the retrenchment must include every termination of service of a workman by an act of the employer… except those not included in Section 25-F or not expressly provided for in any other provisions of the Act such as Section 25-FF and 25-FFF. The Court accordingly held that the discharge of the workman on the ground that she did not pass the test which would have enabled her to be confirmed was ‘retrenchment’. Earlier in Gujarat Steel Tubes v. Gujarat 'Steel Tubes Mazdoor Sabha55, Justice Krishna lyer speaking for the Court spoke in a similar tone: We are disposed to stand by the view that discharge, even where it is not occasioned by a surplus of hands, will be retrenchment, having regard to the breadth of the definition. From the aforesaid decisions, it is evident that the Supreme Court gave literal construction and rejected the ordinarily accepted connotation of the word ‘retrenchment’. The Court, has thereby, approved the controversial judgement in State Bank of India v. N Sundara Money56 as also in Hindustan Steel Ltd v. State of Orissa57 and made a departure from Barsi Light Railway Company v. K N Joglekar58, Pipraich Sugar Mills v. Pipraich Sugar Mills Mazdoor Union59 and, Banaras Ice Factory Ltd v. Their Workmen.60 The consequence of this interpretation is far-reaching. It would render use of the word ‘discharge’ in Section 2-A superfluous, introduce anomaly in the application of Sections-11A, 25 G, 25H and 33 and throw the scheme of the Industrial Disputes Act, 1947 out of gear. However, if this view is accepted, management would be forced either to dismiss, or retrench workers in case of loss of confidence or strained relationship between employers and workmen or termination on abolition of the post or even in cases of labour employed on contract work, work of temporary nature or work of seasonal character. Indeed, it would be anomalous to the point of absurdity and would result in horrifiying situation if an employer who terminates the services of his workman for loss of confidence or inefficiency or insubordination and the like is compelled to reemploy that very workman in the same industry or business and that too in preference to other workmen whose services are not terminated either for loss of confidence, inefficiency, insubordination and the like.61 We believe that Barsi Light Railway Company on the one hand, and State Bank of India v. N Sundara Money, Santosh Gupta and Gujarat Steel

Tubes on the other, took extreme views of the matter; if the former unduly restricted the coverage of ‘retrenchment’, the latter gave a wide meaning and, thus, threw the revised scheme of the Industrial Disputes Act, 1947 out of gear. Further, the consequences of re-opening of the issue after several amendments in the Industrial Disputes Act, 1947 are tremendous. Before we conclude our discussion of this section, it would be relevant to note that Justice Pathak who wrote a separate judgement in Surindra Kumar v. Industrial Tribunal-cum Labour Court62 was inclined to disagree with the decision in the Santosh Gupta case which is evident from the following observation: No question arises before us whether the termination of the services of the appellants amounts to ‘retrenchment’ within the meaning of Section 2 (oo) of the Act. The respondent bank has apparently accepted the finding of the industrial tribunal-cumlabour court that the termination amounts to retrenchment. It has not preferred any appeal. I mention this only because I should not be taken to have agreed with the interpretation of Section 2 (oo) rendered in Santosh Gupta v. State Bank of Patiala. In L Robert D 'Souza v. Executive Engineer, Southern Railway63, the Supreme Court had followed the interpretation of the expression ‘retrenchment’ given in State Bank of India v. N Sundra Money,64 Hindustan Steel Ltd v. Presiding Officer, Labour Court,65 Santosh Gupta v. State Bank of Patiala,66 Delhi Cloth & General Mills Ltd v. Shambhu Nath Mukherjee,67 Surindra Kumar Varma v. Central Government Industrial Tribunal68 and Mohan v. Bharat Electronics Ltd69 and refused to accept the contention that the Court should ignore the interpretation of ‘retrenchment’ given in the aforesaid cases and should proceed on the construction of Section 2 (oo) set out in Hariprasad Shivshankar Shukla v. A D Divalkar.70 The submission was made apparently in view of the obiter of Justice Pathak in Surindra Kumar Varma's case wherein he stated that his concurrence with the majority view propounded by Justice Reddy should not be taken to imply his agreement with the interpretation of Section 2(oo) rendered in Santosh Gupta's case. However, the Court stated: [T]here is neither apparent nor real conflict between the decision of the Constitution bench in Hariprasad Shukla's case and the later five decisions commencing from Sundara Money and ending with Mohanlal's case, it would be sheer waste of time and merely adding to the length of the judgement to re-examine

this contention all over again, so as to cover similar ground. The Court added: The definition of expression ‘retrenchment’ in Section 2(oo) is so clear and unambiguous that no external aids are necessary for its proper construction. Therefore, we adopt as binding the well settled position in law that if termination of service of a workman is brought about for any reason whatsoever, it would be retrenchment except if the case falls within any of the excepted categories, i.e., (i) termination by way of punishment inflicted pursuant to disciplinary action; (ii) voluntary retirement of the workman; (iii) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains as stipulation in that behalf; (iv) or termination on the ground of continued illhealth. Once the case does not fall in any of the excepted categories, the termination of service even if it be automatic discharge from service under agreement would nonetheless be retrenchment within the meaning of expression in Section 2 (oo). It must, as a corollary follow that if the name of the workman is struck off the roll, that itself would constitute retrenchment as held by this Court in Delhi Cloth & General Mills Ltd case.71 The Supreme Court in Binoy Kumar Chatterjee v. Jugantar Limited72 drew a sharp distinction between Santosh Gupta v. State Bank of Patiala73, Mohan Lal v. Bharat Electronics,74 L Robert D’ Souza v. Executive Engineer, Southern Railway75 and this case. It held that all the earlier cases arose on termination of a workman's service at a point of time when he had not reached the age of superannuation. However, on reaching the age of superannuation, if he is employed afresh for a certain period, such employment cannot be equated with ‘employment’ within the meaning of the term retrenchment and, therefore, the termination of the service of such workman on the expiry of his period of contract would not constitute retrenchment’. In this case, the petitioner was reemployed by the company on reaching the age of superannuation. He was paid retiral benefits which he willingly received. Thereafter, he was offered fresh employment on contract basis for a period of 12 months. His service was terminated on the expiry of the said period. Thereupon, the petitioner challenged the validity of the order on the ground that he was neither served a notice nor

was paid retrenchment compensation under Section 25 F and therefore, the termination of his service was illegal. On these facts, a question arose whether the termination of his subsequent service under a fresh contract was ‘retrenchment’. The Supreme Court held that the termination of service of the workmen was not retrenchment. The decision of Justice Pathak appears to be in conformity with the observations made by him in Surindra Kumar Varma case.76 This is also in accord with the legislative scheme framed under the Industrial Disputes Act, 1947. Indeed the decision has made some departure from the rigid approach adopted in L Robert D'Souza v. Executive Engineer, Southern Railway77.

Termination of Service of Probationer—Not Retrenchment In LIC of India v. Raghvendra Seshagiri Rao Kulkarni78, the Supreme Court was invited to consider the validity of order of termination of service of a development officer while he was on probation by the LIC of India. In the instant case, the respondent was discharged from service during probation in terms of Regulation 14(4) of the Life Insurance Corporation of India (Staff) Regulations, 1960. A three-judge bench of the Supreme Court in M Venugopal v. Divisional Manager, Life Insurance Corporation of India, Machalipatnam, A P79 held that the termination of respondent's services would amount to ‘retrenchment’ as defined in Section 2(oo) of the Industrial Disputes Act and since the requirements of Section 25-F of that Act were not complied with, the termination would be bad. It may be pointed out that Life Insurance Corporation (Amendment) Act, 1981 (Act of 1981) which came into force on 31 January 1981 provided that under subsection (2A) of Section 48 of the Life Insurance Corporation Act, 1956, the regulations which were already in force immediately before the commencement of the Amendment Act, shall be deemed to be rules made by the Central Government and they shall be deemed to have effect notwithstanding anything contained in the Industrial Disputes Act 1947. The validity of the Amendment Act was upheld by the Supreme Court in A V Nachane v. Union of India.80 For this reason also, the ground that termination would amount to retrenchment within the meaning of Section 2(oo) of the Industrial Disputes Act cannot be entertained.

Termination as a Result of Closure—Not Retrenchment The Supreme Court in H P Minerals and Industrial Development Corporation

Employees Union v. State of H P81 held that ‘retrenchment’ as defined under Section 2(oo) does not cover termination of service as a result of closure of an undertaking.

Striking-off the Name of Absentees—Retrenchment In Arun Mathur v. Labour Court82, striking off the name of the workman from the attendance register for being absent without any intimation was held to be retenchment under Section 2 (oo). Further, even service for fixed periods, with notional breaks, terminated, and not renewed, was also held to be ‘retrenchment’, and not covered under Clause (bb). In Hari Singh v. Industrial Tribunal-cum-Labour Court, Rohtak83, striking-off the name of the workman from the attendance register for being absent without any intimation was held to be ‘retrenchment’ under Section 2 (oo). The Supreme Court in Rolstan Joh v. Central Government Industrial Tribunal-cum-Labour Court,84 held that termination of service of a workman, under clause 24(e) of the standing orders, for overstaying of leave period without proper explanation amounted to ‘retrenchment’ under Section 2(oo) of the Industrial Disputes Act,1947.

Voluntary Resignation—lf Retrenchment Is voluntary resignation covered under the exception (a) to Section 2(oo)? The question came up for consideration before the Supreme Court in M/s J K Cotton Spinning and Weaving Mills Co. Ltd, Kanpur v. State of UP85. In this case, an employee had voluntarily resigned. The resignation was accepted by the employer. Subsequently, a dispute was raised by the workman which went up to the Allahabad High Court. The High Court held it to be a case of ‘retrenchment’ and ordered payment of retrenchment compensation. On appeal, the Supreme Court held that when a contract of service is terminated on the employee exercising his right to quit, such termination cannot be said to be at the instance of the employer to fall within the first part of the definition of ‘retrenchment’ in Section 2 of the Act. The Court accordingly held that voluntary resignation amounted to voluntary retirement and not ‘retrenchment’. In Shri Krishna v. Prescribed Authority, Kanpur86, the Allahabad High Court held that a resignation voluntarily given snaps employer-employee relationship, unless standing orders or terms of contract require acceptance of resignation by employer as a condition precedent. Accordingly, it falls within voluntary retirement under Clause (a) of Section 2(oo) and was not

retrenchment.

Termination of Service on Superannuation The second set of circumstance which takes termination of service outside Section 2 (oo) and Section 25-F of the Act is when a workman reaches the age of superannuation. Clause 2 (b), however, lays down a condition that the contract of service must contain a provision for such superannuation and also specify the age of superannuation. The question whether a workman attained the age of superannuation or not will depend on the facts of each case and on the conduct of the parties. A termination prior to the age of superannuation laid down in the contract of employment is liable to be struck down. Further, it would be prudent for an employer to give notice to the concerned workman of his intention to do so. This is all the more so when there is a difference of opinion as to the correct age of the concerned workman. In Ambika Singh v. U P State Sugar Corpn. Ltd87, dates of birth of two workmen in the records of the regional provident fund commissioner, U P and the Life Insurance Corporation of India were different. The company accepted the former record and retired the two employees on superannuation. The workmen's plea was that adequate opportunity had not been given to them before altering their dates of birth and hence there was a violation of principles of natural justice. The Allahabad High Court upheld the plea and set aside the orders of superannuation and dismissed the management's plea that the workman had an alternate remedy under the Industrial Disputes Act, 1947.

Compulsory Retirement The order of compulsory retirement amounts to ‘retrenchment’ and if Section 25-F has not been complied with in such case, the employee is entitled to restatement. Thus, the Court in Mahabir v. O K Mittal, Dy. Chief Mechanical Engineer, N.E. Rly.88 quashed the order of compulsory retirement of the petitioner employee who was compulsorily retired on attaining age of 55 years under Indian Railways Establishment Code Rule 2046. In State Bank of India v. Workmen of State Bank of India89, the Supreme Court held that the termination of service of the bank employees under paragraph 521 (10) (c) of the Sastry Award is a result of disciplinary proceedings and was ‘punitive’ and therefore did not amount to ‘retrenchment’ within the meaning of Section 2 (oo). The aforesaid decision suggests that the termination on the ground of loss

of confidence will be tantamount to dismissal. Thus, the Supreme Court decision overrules the possibility of termination of service by way of discharge. While agreeing with the Court's view that it is not a case of ‘retrenchment’, it is submitted that this decision, in effect, renders the use of the word ‘discharge’ in Section 2A superfluous, introduces anomaly in the application of Sections II A and 33 and throws the scheme of the Act out of gear. Scope of Section 2 (oo) (bb). In order to restrict the wide coverage given by the courts to the term ‘retrenchment’, Section 2 (oo) was amended adding sub-clause (bb) to Section 2 (oo) by the Industrial Disputes (Amendment) Act, 1984 which came into effect from 18 August 1984. The scope of Clause (bb) of Section 2 (oo) has been the subject-matter of judicial controversy. Courts have interpreted the expression ‘retrenchment’ in its widest possible connotation despite the legislative intent behind the clause (bb) to restrict the scopes of definition of retrenchment. This is evident from the decision of the constitution bench of five judges of the Supreme Court in Punjab Land Development Corporation Ltd v. Presiding Officer, Labour Court, Chandigarh90. The Court while considering the precise question whether the expression ‘retrenchment’ in Section 2 (oo) has to be interpreted in its narrow, natural, contextual meaning or in its wider, literal meaning negatived the contention of the employer and laid down that the definition of ‘retrenchment’ in Section 2(oo) means termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and those expressly excluded by the definition. The Supreme Court in State of Rajasthan v. Rameshwar Lal Gahlote91 held that where the service of workman is terminated in terms of letter of appointment which provides for termination after the expiry of a fixed period, it is saved by Clause (bb) of Section 2(oo) unless there is a finding that the power under Clause (bb) of Section 2 (oo) was misused or vitiated by its mala fide exercise or the appointment for a fixed period was a colourable exercise of power, no order of reinstatement or reappointment can be made.

Termination of Service after Expiry of Fixed Period In Haryana State F C C W Stores Ltd v. Ram Niwas,92 the workmen concerned were appointed on contract basis on payment of daily wages. They were told clearly that their appointment was on contract basis till the stock of grain stored in the open area at mandi was disposed of or for a period of 3 months. The management terminated their services after the stock lying in the open area was cleared. The workmen raised an industrial dispute which was referred to the

labour court. The labour court held that the workmen were not entitled to any relief. On a writ petition, High Court set aside the order of the labour court and directed reinstatement of workmen with full back wages. Aggrieved by this order, the employer filed a special leave to appeal before the Supreme Court. It was invited to decide (i) whether on the facts and circumstances of the case, the termination of service of the respondents was 'retrenchment’ in terms of section 2 (oo) of the ID Act; and (ii) whether Section 2 (oo) (bb) of the Act had any application in the case. The Court held that the termination of service did not amount to retrenchment as it fell under clause (bb) of Section 2 (oo) of the Act and, therefore, workmen were not entitled to any relief.

Project Employment—Not Covered In Surendra Kumar Sharma v. Vikas Adhikari,93 the appellant was employed as a junior engineer on daily wages for a period of 100 days in a scheme known as rural employment programme. On completion of 100 days, the authority passed a specific order of termination on 29 December 1988. But the appellant was offered yet another temporary employment in a scheme known as Jeevan Dhara vide order dated l7 January 1989. The employment was extended from time to time upto 12 June 1989. The last order of appointment was made for a period of 7 days which was issued on 24 June 1989 and which came to an end on 30 June 1989. Thereupon, the appellant, and a few others similarly employed filed a writ petition in the High Court, which by an interim order protected their employment. However, the High Court held that as the posts have been abolished, the question of their regularization did not arise. The High Court also held that the workmen were given employment under the schemes on an ad hoc basis, and from the very beginning, knew that the employment was of a temporary nature and coterminus with the scheme itself, and therefore, they could not be said to have been retrenched within the meaning of Section 2 (oo) of the Industrial Disputes Act and they were not entitled to the relief of reinstatement if the provisions of Section 25F of the Act were not complied with. Aggrieved by the order, the appellants filed a writ appeal which was also dismissed by the division bench of the High Court. Thereupon, an appeal by special leave was filed before the Supreme Court. The Supreme Court ruled that those employed under the scheme could not ask for more than what the scheme intended to give them. To get employment under such a scheme and to claim on the basis of the said employment, a right to regularization, is to frustrate the scheme itself. No court can be a party to such an exercise. It is wrong to approach the court with the problems of those employed

under such schemes with a view to providing them with full employment and guaranteeing equal pay for equal work. The Court, while dismissing the appeal, also remarked that the appellant was a daily wager in a scheme and knew it well that his employment was coterminus with the scheme. The post against which the appellant worked had been abolished for want of funds and had ceased to exist. Another landmark judgment is S M Nilajkar v. Telecom District Manger, Karnataka94. Here, the telecom department employed certain casual labourers on a project for extension of telecom facilities in the district of Belgaum. Their services were utilized for digging, laying of coaxial cables and other sundry work. The project was completed sometime in 1986–87 and the services of these workmen were terminated sometime during 1987. After a lapse of a few years, they raised an industrial dispute and the same was referred to the Central Government Industrial Tribunal-cum-Labour Court, Bangalore. The tribunal directed reinstatement of all the workmen with the benefit of continuity of service and with 50 per cent back wages. Aggrieved by this order, the employer filed a writ petition in the High Court. The single judge of the High Court held that the workers were not project employees as the appointment was not for any particular project. Hence they would not be governed by sub-clause (bb) of clause (oo) of Section 2 of the Industrial Disputes Act, 1947.95 Aggrieved by this order, the employer filed a writ appeal in the Karnataka High Court which held that the workmen were employed under a project of the telecom department and were, therefore, covered by sub-clause (bb) of clause (oo) of Section 2 of the Act. In appeal to the Supreme Court, the question to be decided was whether the workmen recruited for discharging a temporary job under a project can insist on compliance with Section 25-F of the Act if their services were dispensed with on the project coming to an end. The Court after referring to the provisions of Sections 2 (oo) and 25-F of the Act observed96: It is also well settled that Parliament has employed the expression ‘the termination by the employer of the service of a workman for any reason whatsoever’ while defining the term ‘retrenchment’, which is suggestive of the legislative intent to assign the term ‘retrenchment’ a meaning wider than what it is understood to have in common parlance. The Court then referred to the four exceptions of Section 2 (oo) and said that in order to be excluded from ‘retrenchment’, the termination of service must fall within one of the four excepted categories. Termination of service which

does not fall within these categories would fall within the meaning of ‘retrenchment’. Applying this principle, the Court pointed out that it may not amount to retrenchment within the meaning of sub-clause (bb) if: (i) the workman was employed in a project or scheme of temporary duration; (ii) the employment was on a contract, and not as a daily-wager simpliciter, which provided, inter alia, that the employment shall come to an end on the expiry of the scheme or project; (iii) the employment came to an end simultaneously with the termination of the scheme or project and consistently with the terms of the contract; and (iv) the workman was apprised or made aware of the above terms by the employer at the commencement of employment. The Court held that to exclude the termination of an employee under the scheme or project from the definition of retrenchment, it is for the employer to prove that he was employed in a project so as to attract the applicability of subclause (bb). In the instant case, the respondent employer had failed to prove the same. All that had been proved was that the appellants were engaged as casual workers or daily-wagers in a project. For want of proof, attracting applicability of sub-clause (bb) it had to be held that termination of services of the appellants amounted to retrenchment. As regards delay in raising the dispute, the Court said that delay in raising it would certainly be fatal if the delay has resulted in material evidence relevant to adjudication being lost and not available which was not the case with the case at hand. The Court, accordingly, upheld the order of the single judge of the High Court that workmen be reinstated but without back wages. While dealing with a number of cases pending in different form, namely, industrial-cum-labour court or high court raising similar issues awaiting decision, the Court made it clear that all such cases shall be heard and decided in accordance with the law laid down in this case. The Court posted out that as the project in which the workmen were engaged has come to an end, the government may consider the appellants being accommodated in some other project or scheme or regular employment, if available, by issuing suitable instructions or guidelines. However, if it was not possible, the respondent shall be at liberty to terminate the employment of the appellants after reinstating them as directed by the High Court, after complying with Section 25-F of the Industrial Disputes Act.

Automatic Termination of Service—Not Covered by Clause

(bb) In Uptron India Ltd v. Shammi Bhan97, the Supreme Court while interpreting clause (bb) of Section 2 (oo) observed: What the clause, therefore means is that there should have been a contract of employment for a fixed term between the employer and the workmen containing a stipulation that the services could be terminated even before the expiry of the period of contract. If such contract on the expiry of its original period, is not renewed and the services are terminated as a consequence of that period, it would not amount to retrenchment. Similarly, if the services are terminated even before the expiry of the period of contract but in pursuance of a stipulation contained in that contract that the services could be terminated, then in that case also, the termination would not amount to ‘retrenchment’. The Court accordingly held that the automatic termination of service under the certified standing orders would not be covered under clause (bb) of Section 2 (oo).

Termination of Service After Crushing Season was Over— Not Retrenchment In Morinda Co-op Sugar Mills Ltd v. Ram Kishan98, the Supreme Court while dealing with engagement of a seasonal workman in sugarcane crushing held that non-engagement of workman was not a case of ‘retrenchment’ but of the closure of the factory, after the crushing season was over. Thus, they were covered under clause (bb) of Section 2 (oo). The aforesaid view was reiterated by the three-judge bench of the Supreme Court in Anil Bapurao Kanase v. Krishnq Sahkari Sakkar Karkhana Ltd99. In this case, the management terminated the services of an employee working in the chemistry section of the sugar factory after the crushing season was over. It was contended that the termination amounted to ‘retrenchment’ and was made in violation of Section 25-F. The Supreme Court negatived the contention and held that since the work was of seasonal nature, the principle of the Industrial Disputes Act, 1947 was not applicable. Further, they were covered under clause (bb) of Section 2(oo) of the Act.

Retrenchment of Workmen due to Closure of a Unit—Not Retrenchment In M P State Textiles Corporation Ltd v. Mahendra,100 the corporation recruited certain workmen and posted them to its different units. However, on closure of one of its unit, namely, Indore Textile Mills, the workmen employed therein were retrenched, even though it was stipulated in the letter of appointment that they could be appointed anywhere or transferred to various textile mills. On these facts, the labour court held the retrenchment to be illegal and directed reinstatement. The award was upheld by the High Court. On appeal, the Supreme Court held that the respondent workmen were the employees of the corporation and their retrenchment by Indore Textile Mills was without authority of law since they were not the employees or workmen of Indore Textile Mills.

Scope of Section 2 (oo) (c) In Management of Bisra Stone Lime Co. Ltd v. Their Workmen101, a question arose whether workmen suffering from fits of intermittent nature were covered under continual ill-health under Section 2(oo) (c) of the Industrial Disputes Act, 1947. The Orissa High Court answered the question in the negative and observed: Ill-health means disease, physical defect or infirmity or unsoundness. A person who is not free from disease is certainly not possessing a sound health for (sic) active duties and if this sort of thing continued for a long period, he must be said to be suffering from continued ill-health for continued ill-health suggests that it is prolonged for a considerable period. Ill-health which is intermittent, cannot be termed as continued ill-health. It should be of sufficiently long duration and continuous. In Anand Bihar v. Rajasthan State Road Transport Corporation, Jaipur,102 the Supreme Court held that the termination of service of workmen on account of incapacity due to sub-normal eye-sight or loss of required vision to work was covered by clause (c) of Section 2(oo) and therefore, was not ‘retrenchment’. In M Venugopal v. Divisional Manager, Life Insurance Corporation of 103 India , the Supreme Court was invited to consider whether the termination of service of appellant while he was on probation on the ground that he failed to achieve the target business amounted to retrenchment within the meaning of

Section 2(oo). The Supreme Court answered the question in negative, and held that any such termination, even if the provisions of the Industrial Disputes Act were applicable, shall not be deemed to be retenchment within the meaning of Section 2(oo) having been covered by sub-section (bb). The Court added that if in the contract of employment, no stipulation as mentioned under clause (bb) of Section 2(oo) is provided or prescribed, then such contract shall be covered by clause (bb) of Section 2(oo).

D. Conditions Precedent to Retrenchment of Workmen 1. The Context Under common law, the employer had the unfettered right to terminate the services of his workmen. But with the emergence of the concept of social justice, restrictions have been imposed on the exercise of this unfettered right. Prior to 1953, we have already seen, there was no statutory law of retrenchment compensation. Due to serious and acute problems in textile industry, the provisions for lay-off and retrenchment compensation were incorporated into the Industrial Disputes Act, 1947 to relieve the hardship caused by unemployment without any fault of the workmen: involuntary unemployment also causes dislocation of trade and may result in general economic insecurity. Justice S K Das speaking for the Supreme Court in Hariprasad Shivashankar Shukla v. AD Divalkar104 pointed out the necessity and reasons for insertion of retrenchment compensation into the aforesaid Act as follows: It is reasonable to assume that in enacting Section 25F, the legislature standardized the payment of compensation to workmen retrenched in the normal or ordinary sense in an existing or continuing industry, the legislature did away with the perplexing variety of factors for determining the appropriate relief in such cases and adopted a simple yardstick of the length of service of the retrenched workmen…

2. Legislative Response In order to give effect to above recommendations, the Parliament enacted Section 25-F which lays down the conditions precedent to retrenchment of workmen as follows: No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that

employer until: (a) the workman has been given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice. (b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to 15 days’ average pay for every completed year of continuous service or any part thereof in excess of 6 months. An analysis of the above reproduced provisions shows that no workman employed in any industry who has been in continuous service for not less than one year under an employer can be retrenched by that employer until the conditions enumerated in clauses (a) and (b) of Section 25-F of the Act are satisfied. In terms of clause (a), the employer is required to give to the workman one month’s notice in writing indicating the reasons for retrenchment or pay him wages in lieu of the notice. Clause (b) casts a duty upon the employer to pay to the workman at the time of retrenchment, compensation equivalent to 15 days’ average pay for every completed year of continuous service or any part thereof in excess of 6 months.

3. Judicial Response The Supreme Court has held in State of Bombay v. Hospital Mazdoor Sabha105, Bombay Union of Journalists v. State of Bombay106, SBI v. N Sundara Money107, Santosh Gupta v. State Bank of Patiala108, Mohan Lal v. Bharat Electronics Ltd109, L Robert D’ Souza v. Southern Railway110, Surendra Kumar Verma v. Central Govt. Industrial Tribunal-cum-Labour Court111, Gammon India Ltd v. Niranjan Dass112, Gurmail Singh v. State of Punjab113 and Pramod Jha v. State of Bihar114; Sections 25-F(a) and (b) of the Act are mandatory and non-compliance therewith renders the retrenchment of an employee a nullity. The Supreme Court has used different expressions for describing the consequence of terminating a workman’s service/employment/engagement by way of retrenchment without complying with the mandate of Section 25-F of the Act. Sometimes it has been termed as ab initio void, sometimes as illegal per se, sometimes as nullity and sometimes as non est. Anoop Sharma v. Public Health Division, Haryana115 held that termination of service of an employee by way of retrenchment without complying with the requirement of giving one month’s notice or pay in lieu thereof and compensation in terms of Sections 25-F(a) and

(b) has the effect of rendering the action of the employer as nullity and the employee is entitled to continue in employment as if his service was not terminated. Requirement of Notice or Wages in Lieu thereof. Section 25 F requires that a workman employed in any industry should not be retrenched until he has been given either (i) one month's notice in writing indicating the reasons for retrenchment after the period of notice has expired; or (ii) the workmen has been paid in lieu of such notice wages for the period of notice. However, where retrenchment notice stated that most of the projects were completed and there was no other job available for the employees, it was not a valid notice as there was no complete closure116. The latter provision permits the employer to retrench the workman on paying him wages in lieu of one month's notice prescribed by the earlier part of the clause and if the employer decides to retrench a workman, he is not required to give one month's notice in writing and wait for the expiration of the said period before he retrenches him, he can proceed to retrench him straightaway on paying him his wages in lieu of the said notice. Displaying notice of retrenchment on notice board—does not meet the statutory requirements. In Alumina Mazdoor Sangh v. Ratna Construction Co.,117 the division bench of the Orissa High Court has clarified that notice pasted on the notice board will not be substitute for notice to workman to be retrenched. Compensation under Section 25 F (b). Clause (b) of Section 25 F provides another safeguard in the interest of the workmen. It provides that no workman employed in any industry, who has been in continuous service for not less than one year under an employer, shall be retrenched until he has been paid at the time of retrenchment, compensation, which ‘shall be equivalent to 15 days’ average pay for every completed year of service or any part thereof in excess of 6 months. The Supreme Court has held that the compliance with this provision is mandatory and failure to do so would render the retrenchment invalid and inoperative in law. In State of Bombay v. Hospital Mazdoor Sabha118, the hospital run by the state of Bombay terminated the services of two maid-servants. The retrenched employees moved the Bombay High Court for the appropriate writ against the state of Bombay on the ground that the retrenchment order was void for failure to comply with the mandatory provisions of Sections 25-F and 25-H of the Industrial Disputes Act, 1947. The Bombay High Court decided in favour

of the workmen. Thereupon, the state of Bombay preferred an appeal before the Supreme Court. Observed Justice Gajendragadkar: On a plain reading of Section 25 F (b), it is clear that the requirement prescribed by it is a condition precedent for the retrenchment of the workman. The Section provides that no workman shall be retrenched until the condition in question has been satisfied. It is difficult to accede to the argument that when the Section imposes in mandatory terms a condition precedent, non-compliance with the said condition would not render the impugned retrenchment invalid…. So failure to comply with the said provision renders the impugned orders invalid and inoperative. The nature of retrenchment compensation has been explained in Indian Hume Pipe Co. Ltd v. The Workmen119 as follows: As the expression ‘retrenchment compensation’ indicates, it is compensation paid to a workman on his retrenchment and it is intended to give him some relief and to soften the rigour of hardship which retrenchment inevitably causes. The retrenched workman is, suddenly and without his fault, thrown on the street and has to face the grim problem of unemployment. At the commencement of his employment, a workman naturally expects and looks forward to security of service spread over a long period; but retrenchment destroys his hopes and expectations. The object of retrenchment compensation is to give partial protection to the retrenched employee and his family to enable them to tide over the hard period of unemployment. Collection of dues from the office—if sufficient compliance with Section - 25F. Section 25F of the Industrial Disputes Act, 1947 requires that wages must be given at the time of retrenchment. A question, therefore, arises whether mere calling upon the workmen to be retrenched to collect dues from the office would be sufficient tender and fulfils the requirements of Section 25F. In M/s National Iron and Steel Co. Ltd v. State of West Bengal,120 the workman was given notice dated 15 November 1958 for termination of his service with effect from 17 November 1958. In the notice, it was mentioned that the workman would get one month’s wages in lieu of notice and he was asked to collect his dues from the cash office on 20 November 1958 or thereafter during

the working hours. On these facts, the Supreme Court held that the offer was not substantial compliance of Section 25F, under which it was incumbent on the employer to pay the workman the wages for the period of the notice in lieu of the notice. That is to say, if he was asked to go forthwith, he had to be paid at the time when he was asked to go and could not be asked to collect his dues afterwards. In Stain Steel Products v Naipal Singh121, the management had merely said that whatever was due could be collected from the office. The Court held that the offer was not in substantial compliance of Section 25F. In SBI v. N Sundara Money122, the Court emphasized that the workman cannot be retrenched without payment, at the time of retrenchment, compensation computed in terms of Section 25-F (b). The legal position has been summed up in Pramod Jha N State of 123 Bihar in the following words: 10…. The underlying object of Section 25-F is twofold. Firstly a retrenched employee must have one month’s time available at his disposal to search for alternate employment, and so, he should be paid wages for the notice period. Secondly, the workman must be paid retrenchment compensation at the time of retrenchment or before, so that once having been retrenched, there should be no need for him to go to his employer demanding retrenchment compensation and the compensation so paid is not only a reward earned for his previous services rendered to the employer but is also a sustenance to the worker for the period which may be spent in searching for another employment. Section 25-F nowhere speaks of the retrenchment compensation being paid or tendered to the worker along with one month’s notice; on the contrary, clause (b) expressly provides for the payment of compensation being made at the time of retrenchment and by implication, it would be permissible to pay the same before retrenchment. Payment or tender of compensation after the time when the retrenchment has taken effect would vitiate the retrenchment and non-compliance with the mandatory provision which has a beneficial purpose and a public policy behind it would result in nullifying the retrenchment. (emphasis in original) The aforesaid issue again came up for consideration in Anoop Sharma v.

Executive Engineer, Public Health Division124. Here, the Supreme Court held that if the workman is retrenched by an oral order or communication or he is simply asked not to come for duty, the employer will be required to lead tangible and substantive evidence to prove compliance with clauses (a) and (b) of Section 25-F of the Act. Here in his statement, the workman categorically stated that before discontinuing his service, the respondent did not give him notice pay and retrenchment compensation. Shri Ram Chander, who appeared as the sole witness on behalf of the respondent stated that the compensation amounting to ₹5,491 was offered to the appellant along the with letter, but he refused to accept the same. The respondent did not examine any other witness to corroborate the testimony of Ram Chander and no contemporaneous document was produced to prove that the compensation was offered to the appellant on 25 April 1998. Not only this, the respondent did not explain as to why the demand draft was sent to the appellant after more than 3 months of his alleged refusal to accept the compensation on 25 April 1998. In view of this, the Supreme Court observed that if there was any grain of truth in the respondent’s assertion that the compensation was offered to the appellant on 25 April 1998 and he refused to accept the same, there could be no justification for not sending the demand draft by post immediately after the appellant’s refusal to accept the offer of compensation. The minimum which the respondent ought to have done was to produce the letter with which the draft was sent at the appellant’s residence. The contents of that would have shown whether the offer of compensation was made to the appellant on 25 April 1998 and he refused to accept the same. However, the fact of the matter is that no such document was produced. Therefore there was non-compliance with Section 25-F of the Act. From the above it is evident that the Supreme Court has relaxed the requirement of Section 25F by adopting the doctrine of ‘substantial compliance’. It is submitted that whatever may be the impact of the judgement, it would certainly facilitate the process of retrenchment. Adjustment of Dues Against Payment Under Clauses (a) and (b) of Section 25 F. In Utkal Asbestos Ltd v. T S Rao125, the retrenched workman admitted that the dues were adjusted by the employer against payments to be made under clauses (a) and (b) of Section 25-F. It was contended that nonpayment was violative of Section 25-F. The labour court held termination of service to be void. On a writ petition filed against the order of the labour court, the Orissa High Court held that language of Section 25-F (a) and Section 25-F (b) does not permit adjustment. In Ram Krishan Sharma v. Samrat Ashok Technical Institute126,

services of a clerk in a technical education institution were terminated who had put in 5 years of service. But there was no compliance with Section 25-F. The Madhya Pradesh High Court admitted the petition, but held that the relief can only be a declaratory one, namely grant of continuity of service. Effect of Non-acceptance of Retrenchment Compensation. Where several workmen had been retrenched and retrenchment compensation and wages in lieu of notice were sent by registered post to each individual workman but were not accepted, it was held that pay in lieu of notice had been duly sent, and its refusal by workmen does not invalidate tender of payment.127

E. Continuous Service. For the purposes of Chapter VA: 1.

2.

a workman shall be said to be in continuous service for a period if he is, for that period, in uninterrupted service, including service which may be uninterrupted on account of sickness or authorized leave or an accident or strike which is not illegal, or a lockout or a cessation of work which is not due to any fault on the part of the workman: where a workman is not in continuous service within the meaning of clause (1) for a period of one year or 6 months, he shall be deemed to be in continuous service under an employer– (a) for a period of one year, if the workman, during a period of 12 calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than– (i)

190 days in the case of a workman employed below ground in a mine; and (ii) 240 days, in any other case; (b) for a period of 6 months, if the workman, during a period of 6 calendar months preceding the date with reference to which calculations are to be made, has actually worked under the employer for not less than– (i) 95, in the case of a workman employed below ground in a mine; and (ii) 120 days, in any other case. Explanation: For the purposes of clause (2), the number of days on which a workman has actually worked under an employer shall include the days in which–

(i)

he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Act or under any other law applicable to industrial establishments. (ii) he has been on leave with full wages, earned in the previous years; (iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and (iv) In the case of females, she has been on maternity leave; so, however that the total period of such maternity leave does not exceed 12 weeks.

Scope of Sub-sections 1 and 2 In Mohanlal v. Bharat Electronics Ltd128, Mohan Lal was employed as a salesman from 8 December 1979. The management terminated his services with effect from 19 October 1974. Consequent upon his termination, Delhi administration referred the dispute to the labour court for adjudication. The labour court having found that the termination of service of Mohan Lal was in accordance with the standing orders which justified removal of the employee on unsuccessful probation during the initial or extended period of probation held that it did not constitute ‘retrenchment’. Against this, the respondent appealed to the Supreme Court by special leave. The question, inter alia, for determination was whether Mohan Lal was entitled to a declaration that he continued to be in service with consequential benefits. In order to determine this question, the Court examined the requirements under sub-section (1) of Section 25-B and observed. Sub-section (1) provides deeming fiction. Thus, where a workman is in service for a certain period, he shall be deemed to be in continuous service for that period even if service is interrupted on account of sickness or authorized leave or an accident or a strike which is not illegal or lockout or a cessation of work which is not due to any fault on the part of the workman….Sub-section(1) mandates that interruption therein indicated is to be ignored meaning thereby that on account of such cessation, an interrupted service shall be deemed to be uninterrupted and such uninterrupted service shall for the purpose of Chapter VA be deemed to be continuous service. The Court then examined the requirements under sub-section (2) of Section 25 B and observed:

[1] n order to invoke the fiction enacted in sub-section (2) (a), it is necessary to determine first the relevant date, i.e., the date of termination of service. After that date is ascertained, move backward to a period of 12 months just preceding the date of retrenchment and then ascertain whether within the period of 12 months, the workman has rendered service for a period of 240 days. If these facts are affirmatively answered in favour of the workman, pursuant to the deeming fiction in sub-section (2), it will have to be assumed that the workman is in continuous service for a period of one year and he will satisfy the eligibility qualification enacted in section 25-F. The Court accordingly held that Mohan Lal rendered service for a period of 240 days within a period of 12 months and his case fell within Section 25 B (2) (a) and he shall be deemed to be in continuous service for a period of one year for the purpose of Chapter VA. It accordingly held that Mohan Lal had thus satisfied both the eligibility qualifications prescribed in Section 25-F for claiming retrenchment compensation.

Concept and Scope of One Year In General Manager, Haryana Roadways, v. Rudhan Singh,129 the Supreme Court held that the requirements of Section 25F of the Act would be satisfied if a workman has worked for 240 days in a period of 12 months and it is not necessary that he should have been in the service of the employer for complete one year. In H S Rajashekara v. State Bank of Mysore130, the Supreme Court held that for labour related matters, the terms ‘calendar year’ and ‘block of 12 months’ are interchangeable. It would be sufficient if the petitioner could establish that he had rendered more than 240 days’ service in a ‘block of 12 months’. This should be the determining factor in a case where the consideration pertained to an employee's claim for inclusion in the ‘protected category’ on account of having rendered 240 days’ service in a ‘calendar year’. In view of above, the Court was satisfied that the petitioner fulfilled the condition of having rendered service for 240 days in a ‘calendar year’. In H D Singh v. R B I131 and Workmen of American Express International Banking Corporation v. Management of the American Express International Banking Corporation,132 the Supreme Court held that even Sundays and other holidays would be included for the purpose of counting the

‘continuous service’ of 240 days under Section 25B of the Industrial Disputes Act, 1947. In Management of Standard Motor Products of India Limited v. A Parthasarathy133, the Supreme Court held that under Section 25-B (2), where a workman is not in continuous service within the meaning of clause (1) for a period of one year, he shall be deemed to be in continuous service for a period of one year, if the workman, during a period of 12 calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than 240 days. The Court added that even if the period of illegal strike is not taken into account, the number of days during which the workman actually worked under the employer, in the instant case, was more than 240 days and, therefore, he was in ‘continuous service’ for a period of one year immediately before the date of closure, under Section 25 B (2).

Determination of Continuity of Service Can work done in different units, projects, branches or subdivisions under the same authority be treated as one establishment for the purpose of recording continuity of service under Section 25B. This issue was raised in a number of decided cases. In Union of India v. Jummasha Diwan134, the Supreme Court observed that where there are several establishments of railways administration and if a workman voluntarily gives up his job in one establishment and joins another, the same would not amount to his being in continuous service. Further, when a casual employee is employed in different establishments, may be under the same employer, e.g. railways as a whole, having different administrative set ups, different requirements and different projects, the concept of continuous service cannot be applied. The Constitution bench of the Supreme Court in Management of Indian Cable Co. Ltd v. Workmen135 dealt with the expression ‘industrial establishment’ albeit with reference to Section 25-G of the ID Act and held that each branch of a company should normally be regarded as a distinct industrial establishment. In DGM Oil & Natural Gas Corporation Ltd v. Ilias Abdul Rehman136, the question arose whether work put in by the workman in different units, namely, Baroda and Mehsana projects of Oil and Natural Gas Corporation could be counted for determining whether the workman worked for 240 days continuously for the purpose of Section 25-F of the ID Act. The Supreme Court answered the question in the negative and held that the Baroda and Meshana

projects of the corporation could not be considered as a single unit or department under the corporation and, therefore, the days put in by the workman in different units could not be counted for determining whether the workman worked for 240 days continuously for the purpose of Section 25-F of the ID Act. In Haryana Urban Development Authority v. Om Pal137, the question raised before this Court was whether the two sub-divisions of Haryana Urban Development Authority could be treated to be one establishment for the purpose of recokoning continuity of service within the meaning of Section 25-B of the Act. The Court held that once two establishments are held to be separate and distinct having different cadre strength of workmen, then the period during which the workman was working in one establishment would not ensure to his benefit when he was recruited separately in another establishment, particularly when he was not transferred from one sub-division to the other. In this case, he was appointed merely on daily wages. In Haryana State Co-op. Supply Marketing Federation v Sanjay138, the respondent was engaged on contractual basis by the District Manager, HAFED, Jind for the period from 1.8.1998 to 31.12.1998, for 145 days of service. The district manager, HAFED, Hissar engaged the workman afresh on 15.1.1999 upto 31.5.199, for 112 days of service. As service of respondent was not renewed after 31.5.1999, he raised a dispute alleging that his services were illegally terminated without following mandatory procedure provided in Section 25-F of the ID Act. The management contended that the workman having not completed 240 days of continuous service, there was no necessity of compliance with Section 25-F of the Act. On the other hand, it was contended by the respondent workman that the period of his engagement with district manager, HAFED, Jind and district manager, HAFED, Hissar be clubbed while computing 240 days of continuous service. A question arose whether work rendered by the workman in the office of district manager, HAFED, Jind and district manager, HAFED, Hissar could be clubbed together for purposes of application of Section 25-F of the ID Act. The Court answered the question in negative and observed: [T]he office of the district manager, HAFED, Jind and the office of the district manager, HAFED, Hissar are two distinct and separate establishments and cannot be treated as one establishment for the purpose of reckoning continuity of service within the meaning of Section 25-F read with Section 25-B of the ID Act. It is so because the workman was engaged on contract basis by two separate authorities under different contracts.

The Court added: Merely because the district manager, Jind and the district manager, Hissar are subordinate officers under the control of managing director, HAFED, the two offices at Jind and Hissar do not cease to be separate establishments for the purposes of Section 25F of the ID Act. In Range Forest Officer v. S T Hadimani139, the Supreme Court held that where the management denies the claim that claimant worked for 240 days, it is for the claimant to lead evidence to show that he had in fact worked for 240 days in the year proceeding his termination. The Court also held that mere filing of an affidavit is not adequate as it is only his own statement in his favour and that cannot be regarded as sufficient evidence for any court or tribunal to arrive at the conclusion that a workman had, in fact, worked for 240 days in a year. This is all the more so when no proof of receipt of salary or wages for 240 days or order or record of appointment or engagement for this period was produced by the workman. Burden of Proof: It has now been well-settled in a series of decisions of the Supreme Court that the burden of proof is on the workman to show that he had worked for 240 days in the preceding 12 calender months prior to the alleged retrchment. Further, presumption as to adverse inference for nonproduction of muster-roll by the employer should not be taken as an inflexible rule. It is always optional and one of the factors which is required to be taken into consideration is the background of the factors involved in the lis. In Municipal Corporation, Faridabad v. Shri Niwas140, the Supreme Court held that the burden of proof was on the workman to show that he had worked for 240 days in the preceding 12 calendar months prior to the alleged retrenchment. On facts, the Court found that the workman, apart from examining himself in support of his contention did not produce or call for any document from the office of the management including the muster-roll. He did not produce his offer of appointment showing the terms and conditions therein. He also did not examine any other witness in support of his case. The Court, therefore, ruled that presumption as to adverse inference for non-production of evidence is always optional and one of the factors which is required to be taken into consideration is the background of the factors involved in the lis. The Court held that although the provisions of the Evidence Act, 1872 per se are not applicable to industrial adjudication, the general principles of it are still applicable. The Court also held that it was imperative for the industrial tribunal to see that

principles of natural justice were complied with. In Bank of Baroda v. Ghemarbhai Harjibhai Rabri141, the workman had established the fact that he worked as driver of the car belonging to the bank for more than 240 days during the relevant period. The workman also produced 3 vouchers which showed that he had been paid certain sums of money towards his wages and the said amount had been debited to the account of the bank. The bank denied the claim of the workman but did not produce any evidence to rebut the vouchers. It, however, pleaded that the employment of such driver was under a scheme by which he was in reality the employee of the executive concerned. On these facts, the Supreme Court held that the workman has established his claim to be the workman of the bank. The Supreme Court ruled that the burden of proof lies on the workman who claims to be a workman of the management. However, the degree of such proof so required varies from case to case. Again in Chief Engineer (Construction) v. Keshava Rao142, the Supreme Court reiterated that initial burden of establishing factum of continuous work for 240 days within a year is on respondent-workmen. In Manager, RBI Bangalore v. S Mani143, the management retrenched certain workmen. The workmen challenged the order for non-compliance with Section 25-F of the Industrial Disputes Act, 1947. However, the management denied such a claim on the ground that the workmen had not completed 240 days of service during a period of 12 months preceeding the order of termination. The workmen did not produce any oral or documentary proof in support of their claim. On these facts, a three-judge bench of the Supreme Court ruled that (i) the workmen have to state in their evidence that they worked for 240 days in the preceding one year of their termination, (ii) pleadings are not the substitute for proof, (iii) it is wrong to contend that the plea raised by the workmen that they had worked continuously for 240 days was deemed to have been admitted by applying the doctrine of non-traverse. The aforesaid view was reiterated in Rajasthan State Ganganagar S Mills Ltd v. State of Rajasthan144. It was the case of the workman that he had worked for more than 240 days in the year concerned. This claim was denied by the appellant. It was for the claimant to lead evidence to show that he had in fact worked up to 240 days in the year preceeding his termination. He has filed an affidavit. It is only his own statement which is in his favour and that cannot be regarded as sufficient evidence for any court or tribunal to come to the conclusion that in fact the workman had worked for 240 days in

a year. No proof of receipt of salary or wages for 240 days or order or record in that regard was produced. Mere non-production of the muster-roll for a particular period was not sufficient for the labour court to hold that the workman had worked for 240 days as claimed. In R M Yellatti v. Executive Engineer145, the Supreme Court while analysing the above decisions observed that the provisions of the Evidence Act in terms do not apply to the proceedings under Section 10 of the Industrial Disputes Act. However, applying general principles and on reading the aforestated judgements, the Court pointed out that it has repeatedly taken the view that the burden of proof is on the claimant to show that he had worked for 240 days in a given year. This burden is discharged only upon the workman stepping in the witness box for adducing cogent evidence, both oral and documentary. In cases of termination of services of daily-wage earners, there will be no letter of appointment or termination. There will also be no receipt or proof of payment. Thus in most cases, the workman (the claimant) can only call upon the employer to produce before the court the nominal muster roll for the given period, the letter of appointment or termination, if any, the wage register, the attendance register, etc. Drawing of adverse inference ultimately would depend thereafter on the facts of each case. In Ganga Kisan Sahkari Chini Mills Ltd v. Jaivir Singh146, the Supreme Court again held that the burden of proof to have worked for 240 days in the preceding 12 months of termination of service lies upon the workman and not the employer. In General Manager, B S N L v. Mahesh Chand147, the Supreme Court held that the High Court and the industrial tribunal have erred in placing the onus upon the employer to prove that the workman had worked for 240 days in a calendar year. In Chief Soil Conservator, Punjab v. Gurmail Singh148, the Supreme Court held that it is for the workman to establish that he was engaged for more than 240 days in the 12 months preceding the date of alleged termination. The Supreme Court in Krishan Bhagya Jal Nigam v. Mohammed Rafi149, held that mere affidavits or self-serving statements made by the claimant workman will not suffice in the matter of discharge of the burden placed by law on the workman to prove that he had worked for 240 days in a given year. The Court also held that mere non-production of muster-roll per se without any plea

of suppression by the claimant workman will not be the ground for the tribunal to draw an adverse inference against the management.

F. No Regularization for Adhoc, Temporary Workers under any Scheme who worked for 240 days In Delhi Development Horticulture Employee’s Union v. Delhi Administration,150 the Supreme Court held that persons employed under the scheme cannot claim regularization merely because they have put in more than 240 days of service. In State of Haryana v. Piara Singh151, the Supreme Court held that it is difficult to sustain the direction that all those ad hoc temporary employees who have continued for more than one year should be regularized. This direction is given without reference to the (i) existence of vacancies, (ii) sponsoring by employment exchange, (iii) fulfilling the eligibility conditions and service record, etc.

Badli Workers The Supreme Court had an opportunity to deal with the issues relating to badli workmen in Radha Raman Samanta v. Bank of India.152 Here, a bipartite agreement between the bank and the workers provided that a badli worker is entitled to be absorbed if he has completed 240 days of badli service in a block of 12 months or a calendar year after 10 February 1988. In pursuance to this agreement, a worker sought his regularization on the ground that he had completed 240 days of service in a calendar year as a badli worker. In order to determine the question, the Supreme Court, in absence of any definition of ‘badli worker’, defined it to mean a person who is employed as a casual workman working in place of another. The Court held that in this case, the worker had rendered service in a vacancy of a temporary post for more than 240 days even though the nomenclature of his work profile was changed. This, according to the Court was sufficient to treat him as a badli worker for the purposes of absorption. The Court, therefore, held that the badli worker had a right to be absorbed in the respondent bank by virtue of the bipartite agreement. The aforesaid view was reiterated in H S Rajashekara v. State Bank of Mysore.153

G. Notice to the Appropriate Government Clause (c) of Section 25-F requires notice to be served by the employer on the

appropriate government in the prescribed manner if a workman is retrenched. The nature of this clause namely, whether it is mandatory and conditions precedent, like clauses (a) and (b) of Section 25-F, has been debated in a number of decided cases. In State of Bombay v. Hospital Mazdoor Sabha154, the Supreme Court while holding Section 25-F (b) to be mandatory, observed that clauses (a) and (c) of the said Section prescribed similar conditions. However, the Court was cautious when it expressly added that it was not concerned to construe them. In Tea District Labour Association v. Its Ex-Employees155, it was conceded that the requirement as to notice prescribed by clause (c) of Section 23 was mandatory and amounted to condition precedent. Likewise, in Workmen of Subong Tea Estate v. Subong Tea Estate156 in an obiter, observed that three conditions laid down in clauses (a), (b) and (c) of Section 25-F prima facie appeared to constitute conditions before industrial workers could be validly retrenched. However, in Bombay Union of Journalists v. State of Bombay157, the Supreme Court was invited to decide whether clause (c) of Section 25-F providing for notice to the government was mandatory. The Supreme Court answered it in negative and pointed out that under clause (a), there was an option given to the employer either to give one month's notice or to pay one months's wages in lieu of notice, the Court asked the question as to how would clause (c) operate in the latter case and answered it as follows: ….if it is held that the notice in prescribed manner has to be served by the employer on the appropriate government before retrenching the employee in such a case, it would mean that even in a case where refrenchment is effected on payment of wages in lieu of notice, it cannot be valid unless the requisite notice is served on the appropriate government; and that does not appear to be logical or reasonable. Reading the latter part of clause (a), and clause (c) together, it seems to follow that in cases falling under the latter part of clause (a), the notice prescribed by clause (c) has to be given not before retrenchment, but after retrenchment; otherwise, the option given to the employer to bring about immediate retrenchment of the workman on paying him wages in lieu of notice would be rendered nugatory. Therefore, it seems that clause (c) cannot be held to be condition precedent even though it has been included under Section 25 F along with clauses (a) and (b) which

prescribe conditions precedent. From the aforesaid decision it is evident that clause (c) unlike clauses (a) and (b) is merely directory and not mandatory.

H. Conditions-Precedent to Retrenchment: 1976-Position The Industrial Disputes (Amendment) Act, 1976 imposed additional restrictions upon the power of employer employing 300 or more workmen in the industry in retrenching his employees. Thus, Section 25 N prohibited the employer from retrenching workmen until (i) he has been given three months’ notice in writing indicating reasons for retrenchment and the period of notice has expired or wages in lieu of such notice which may be dispensed with if the retrenchment is under an agreement which specifies the date of termination of service; (ii) the workmen have been paid at the time of retrenchment a compensation equivalent to 15 days’ average pay for each completed year of service or any part thereof in excess of 6 months; and (iii) a notice in the prescribed manner is served to the appropriate government or authority and its permission is obtained. Such permission or refusal shall be granted only after making such inquiry as the authority deems fit. However, such permission shall be deemed to be granted if no communication is received from the authority within 60 days from the date of notice.

I. Constitutional Validity of Sections 25 N and 25 Q of the industrial Disputes (Amendment) Act, 1976 (Since Amended) The division bench of the Madras High Court in K V Rajendram v. Deputy Commissioner158 was called upon to decide the constitutional validity of Sections 25-N and 25-Q of the Industrial Disputes Act, 1947. The Court held that Section 25 N as a whole and Section 25-Q in so far as it relates to the awarding of punishment for contravention of the provision of Section 25 N was ultra vires the Constitution. This view in the Court's opinion was based on the Supreme Court decision in Excel wear v. Union of India159 which declared Sections 25-Q and 25-R of the Act to be ultras vires the Constitution.

J. Industrial Disputes (Amendment) Act, 1984: ConditionPrecedent to Retrenchment of Workmen

1. General The aforesaid decisions of the high courts led the Parliament to re-draft the provisions of Section 25-N on the lines of the amended provisions relating to closure which was inserted by the Industrial Disputes (Amendment) Act, 1984 after considering the observations of the Supreme Court in Excel Wear case.160 Section 25-N of the Industrial Disputes (Amendment) Act, 1984 which lays down conditions precedent upon the power of the employer employing 100 or more workmen in the industrial establishment in retrenching his workmen provides: 1. No workman employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until— (a) the workman has been given 3 months’ notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; and (b) the prior permission of the appropriate government or such authority as may be specified by that government by notification in the official gazette (hereinafter in this section referred to as the specified authority) has been obtained on an application made in this behalf. 2. An application for permission under sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner. 3. Where an application for permission under sub-section (1) has been made, the appropriate government or the specified authority, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the person interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interest of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen. 4. Where an application for permission has been made under sub-section (1) and the appropriate government or the specified authority does not communicate the order granting or refusing to grant permission to the

employer within a period of 60 days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of 60 days. 5. An order of the appropriate government or the specified authority granting or refusing to grant permission shall, subject to the provisions of subsection (6), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order. 6. The appropriate government or the specified authority may, either on its own motion or on the application made by the employer or any workmen, review its order granting or refusing to grant permission under subsection (3) or refer the matter or, as the case may be, cause it to be referred to a tribunal for adjudication: Provided that where a reference has been made to a tribunal under this sub-section, it shall pass an award within a period of 30 days from the date of such reference. 7. Where no application for permission under sub-section (1) is made, or where the permission for any retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workman and the workman shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him. 8. Notwithstanding anything contained in the foregoing provisions of this Section, the appropriate government may, if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, find that it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such establishment for such period as may be specified in the order. 9. Where permission for retrenchment has been granted under sub-section (3) or where permission for retrenchment is deemed to be granted under subsection (4), every workman who is employed in that establishment immediately before the date of application for permission under this section shall be entitled to receive, at the time of retrenchment, compensation which shall be equivalent to 15 days’ average pay for every completed year of continuous service of any part thereof in excess of 6 months. A perusal of the aforesaid provisions reveals that Section 25 N provides complete scheme for retrenchment of workmen in industrial establishments

where the number of workers is in excess of 100. Clauses (a) and (b) lay down the conditions precedent to retrenchment and provide for 3 months’ notice or 3 months’ wages in lieu of notice to the concerned workmen and the prior permission of the appropriate government/prescribed authority. Sub-sections (2) and (3) plainly envisage the appropriate government/prescribed authority to take a quadi-judicial decision and to pass a reasoned order on the employer’s application for permission for retrenchment after making a proper inquiry and affording an opportunity of hearing not only to the employer and the concerned workmen but also the person interested in such retrenchment. Sub-section (4) has the provision of deemed permission. Sub-section (5) makes the decision of the government binding on all parties. Subsection (6) gives the government the power of review and the power to refer the employer’s application for permission to a tribunal for adjudication. Any retrenchment without obtaining prior permission of the government is made expressly illegal by sub-section (7) with the further stipulation that the termination of service in consequence thereof would be void ab initio. Sub section (8) empowers the government to exempt the application of subsection (1) under certain exceptional circumstances and subsection (9) provides for payment of retrenchment compensations to the concerned workmen. The procedural details for seeking prior permission of the appropriate government for carrying out retrenchment under section 25N are laid down in rule 76A of the Industrial Disputes Central Rules. The application for permission for retrenchment is to be made in Form PA and that requires the employer to furnish all the relevant materials in considerable detail.

2. Constitutionality of Section 25-N (as amended in 1984) In Workmen of Meenakshi Mills Ltd v. Meenakshi Mills161, a five-judge bench of the Supreme Court held that Section 25 N as amended in 1984 does not suffer from the vice of non-constitutionality on the ground that it is violative of the fundamental right guaranteed under Article 19 (1) (g) of the Constitution and is not saved by Article 19(6) of the Constitution. The Supreme Court while determining the validity of conferment of power on appropriate government to grant or not to grant permission of retrenchment observed: The power to grant or refuse permission for retrenchment of workmen that has been conferred under Section 25N(2) has to be exercised on an objective consideration of the relevant facts

after affording an opportunity to the parties having an interest in the matter and reasons have to be recorded in the order that is passed. The Court added: The inquiry, which has to be made under sub-section (2) before an order granting or refusing permission for retrenchment of workmen is passed, would require an examination of the said particulars and other material that is furnished by the employer as well as the workman. In view of the time limit of 3 months prescribed in sub-section (3), there is need for expeditious disposal which may not be feasible if the proceedings are conducted before a judicial officer accustomed to judicial process. Moreover, during the course of such consideration, it may become necessary to explore the steps that may have to be taken to remove the causes necessitating the proposed retrenchment which may involve interaction between the various departments of the government. This can be better appreciated and achieved by an executive officer rather than a judicial officer.162

3. Nature of Section 25N (6) Proviso 25-O The nature of Section 25N (6) proviso was explained by the division bench of the Bombay High Court in Association of Engineering Workers v. Indian Hume Pipe Co. Ltd163 The Court held that Section 25N (6) of the Act, which requires the tribunal to pass an award within a period of 30 days from the date of the reference, is directory and not mandatory and, therefore, on the expiry of the said time limit, the reference will not lapse but will survive for adjudication. The Supreme Court in Lal Mahammad v. Indian Railway Construction 164 Ltd , held that the proviso to Section 25-O cannot be transplanted by any judicial interpretation as proviso to Section 25-N deals with an entirely different topic namely, condition-precedent to retrenchment of workmen.

4. Settlement—if it prevails over statutory requirements In M/s Oswal Agro Ltd v. Oswal Agro Furane Workers165, the industrial undertaking was set up as a 100 per cent export oriented unit for paddy processing, furfural and rice bran extraction. However, allegedly in view of lack

of demand in the international market for its product, rice bran oil was sold by it in the local market, where for no registration-cum-allocation certificate below the minimum price was obtained. The said violation made the appellant liable to pay a sum of ₹50 crore under different heads to the State. Allegedly on the ground of such a huge liability, notices were issued to the state government under Section 25-O. Notices were also issued to the workmen, whereupon a purported settlement was arrived at under Section 12(3) of the Industrial Disputes Act, 1947. The respondent union questioned the said settlement in a writ petition before the High Court. The High Court allowed the petition. Thereupon, the appellant filed an appeal before the Supreme Court. A question, inter alia, arose whether in a case of closure of an industrial undertaking, prior permission of the appropriate government is imperative and whether a settlement arrived at by and between the employer and the workmen would prevail over the statutory requirements as contained in Section 25-N and Section 25-O of the Industrial Disputes Act, 1947. Answering the question, the Supreme Court laid down the following principles. A bare perusal of the provisions contained in Sections 25-N and 25-O of the Act leaves no manner of doubt that the employer who intends to close down the undertaking and/or effect retrenchment of workmen working in such industrial establishment, is bound to apply for prior permission at least 90 days before the date on which the intended closure is to take place. They constitute conditions precedent for effecting a valid closure; whereas the provisions of Section 25-N of the Act provide for conditions precedent to retrenchment; Section 25-O speaks of procedure for closing down an undertaking. Obtaining prior permission from the appropriate government, thus, must be held to be imperative in character. The Court added: A settlement within the meaning of Section 2(p) read with subsection (3) of Section 18 of the Act undoubtedly binds the workmen but the question which would arise is, would it mean that thereby the provisions contained in Sections 25-N and 25-O are not required to be complied with? The answer to the said question must be arrived at between the employer and workmen in case of an industrial dispute. An industrial dispute may arise as regard the validity of a retrenchment or a closure or

otherwise. Such a settlement, however, as regard retrenchment or closure can be arrived at provided such retrenchment or closure has been effected in accordance with law. Requirements of issuance of a notice in terms of Sections 25-N and 25-O, as the case may be, and/or a decision thereupon by the appropriate government are clearly suggestive of the fact that thereby a public policy has been laid down. The state government, before granting or refusing such permission, is not only required to comply with the principles of natural justice by giving an opportunity of hearing both to the employer and the workmen but is also required to assign reasons in support thereof and is also required to pass an order having regard to several factors laid down therein. One of the factors besides others which is required to be taken into consideration by the appropriate government before grant or refusal of such permission is the interest of the workmen. The aforementioned provisions being imperative in character would prevail over the right of the parties to arrive at a settlement. Such a settlement must conform to the statutory conditions laying down a public policy. A contract which may otherwise be valid, however, must satisfy the tests of public policy not only in terms of the aforementioned provisions but also in terms of Section 23 of the Indian Contract Act. The Court further held: It is trite that having regard to the maxim ‘exotropia causa non orator also’, an agreement which opposes public policy as laid down in terms of Sections 25-N and 25-O of the Act would be void and of no effect. The aforesaid view was reiterated in Empire Industries v. State of Maharashtra. However, the aforesaid decision was not cited.

5. Recommendations of the (Second) National Commission on Labour The Commission made the following recommendations: (i)

Prior permission is not necessary in respect of lay-off and retrenchment in an establishment of any employment size. Workers will however, be

(ii)

entitled to two month's notice or notice pay in lieu of notice, in case of retrenchment. We also feel that the rate of retrenchment compensation should be higher in a running organization than in an organization which is being closed. Again, we are of the view that the scale of compensation may vary for sick units and profit-making units even in cases of retrenchment. We would however, recommend that in the case of establishments employing 300 or more workers where lay-off exceeds a period of one month, such establishments should be required to obtain post facto approval of the appropriate government. We recommend that the provisions of Chapter VB pertaining to permission for closure should be made applicable to all establishments to protect the interests of workers in establishments which are not covered at present by this provision if they are employing 300 or more workers. Necessary changes in chapter VA in regard to retrenchment and closure will have to be made accordingly. Every employer will have to ensure, before a worker is retrenched or the establishment is closed, irrespective of the employment size of the establishment, that all dues to the workers, be it arrears of wages earned, compensation amount to be paid for retrenchment or closure as indicated in the next paragraph, or any other amount due to the worker, are first settled as a pre-condition of retrenchment or closure. These provisions will not bar industrial disputes being raised against a lay-off or retrenchment or closure. Having regard to the national debate on this issue and the principle outlined above, the Commission would like to recommend the compensation per completed year of service at the rate of 30 days on account of closure in case of a sick industry which has continuously run into losses for the last 3 financial years or has filed an application for bankruptcy or winding up, and other non-profit making bodies like charitable institutions, etc., and at the rate of 45 days for becoming viable. It would also recommend higher retrenchment compensation at the rate of 60 days of wages and similarly a higher rate of compensation for closure at the rate of 45 days of wages for every completed year of service for profit making organizations. For establishments employing less than 100 workers, half of the compensation mentioned above in terms of number of days’ wages may be prescribed. However, these establishments will also be required to give similar notice as prescribed for bigger establishments before retrenching the workers or closing down. While the lay-off compensation could be 50 per cent of the wages as at present, in the case of retrenchment, Chapter VA of the Act may be

amended to provide for 60 days’ notice for both retrenchment and closure or pay in lieu thereof. The provision for permission to close down an establishment employing 300 or more workmen should be made a part of Chapter VA, and Chapter VB should be repealed. In case of closure of such establishment which is employing 300 or more workers, the employer will make an application for permission to the appropriate government 90 days before the intended closure and also serve a copy of the same on the recognized negotiating agent. If permission is not granted by the appropriate government within 90 days of receipt of application, the permission will be deemed to have been granted.

K. Relief Available to Workmen Retrenched in Violation of Section 25 F/25N: Judicial Approach A survey of decided cases reveals that the Supreme Court is divided over the above issue. One view is that in case of violation of Section 25F/25N of IDA, retrenched workers would be entitled to reinstatement but not necessarily with full back wages as a right. The other view is that monetary compensation in lieu of reinstatement of workmen would subserve the ends of justice. The judicial approach may broadly be examined as under.

1. Judicial approach prior to 2005 and 2010 (Two cases) Prior to 2005, the Supreme Court, as observed earlier has repeatedly held that Sections 25F(a) and (b) and 25N of the Industrial Disputes Act are mandatory and non-compliance thereof renders the retrenchment of employees a nullity. If it is invalid, it cannot be said to have terminated the relationship of employer and employees. In such a situation, workers are entitled to reinstatement and full back wages. However, full back wages cannot be claimed as a matter of right. They may be denied in exceptional situations. In Delhi Cloth and General Mills Co. Ltd v. Shambhu Nath Mukherji166, the Supreme Court pointed out that any order of retrenchment in violation of these two pre-emptory conditions as specified in Section 25F(a) and (b) is invalid. If it is invalid, then he is still in service. The same view was taken in Workmen of Subong Tea Estate v. Management of Subong Tea Estate167. Here, the Supreme Court pointed out that the retrenchment of the workmen being invalid in law, it cannot be said to have terminated the relationship of employer and employee. Again, in Common India Ltd v. Niranjan Das168, the

Supreme Court observed that retrenchment of an employee without following the provisions of Section 25F would be void-ab-initio. In Anoop Sharma v. Executive Engineer Public Health Division, Panipat169, the Supreme Court without referring to cases cited in 2 below held that termination of service of an employee by way of retrenchment without complying with the requirement of giving one month's notice or pay in lieu thereof and compensation in terms of Section 25-F (a) and (b) has the effect of rendering the action of the employer a nullity and the employee is entitled to continue in employment as if his service was not terminated. In Harjinder Singh v. Punjab State Warehousing Corporation170, the Supreme Court while granting reinstatement to workman for violating the provisions of Section 25F, 25G and 25H of the Industrial Disputes Acts observed: Of late, there has been a visible shift in the courts’ approach in dealing with the cases involving the interpretation of social welfare legislations. The attractive mantras of globalization and liberalization are fast becoming the raison d’etre of the judicial process and an impression has been created that the constitutional courts are no longer sympathetic towards the plight of industrial and unorganized workers. In large number of cases like the present one, relief has been denied to the employees falling in the category of workmen, who are illegally retrenched from service by creating by-lanes and side-lanes in the jurisprudence developed by this Court in three decades. The stock plea raised by the public employer in such cases is that the initial employment/engagement of the workman-employee was contrary to some or the other statute or that reinstatement of the workman will put unbearable burden on the financial health of the establishment. The courts have readily accepted such plea unmindful of the accountability of the wrong doer and indirectly punished the tiny beneficiary of the wrong ignoring the fact that he may have continued in the employment for years together and that micro wages earned by him may be the only source of his livelihood. It needs no emphasis that if a man is deprived of his livelihood, he is deprived of all his fundamental and constitutional rights and for him the goal of social and economic justice, equality of

status and of opportunity; the freedoms enshrined in the Constitution remain illusory. Therefore, the approach of the courts must be compatible with the constitutional philosophy of which the Directive Principles of State Policy constitute an integral part and justice due to the workman should not be denied by entertaining the spurious and untenable grounds put forward by the employer—public or private. (Para 23).

2. Judicial approach between 2005 and 2011 (Except two cases) In UP State Brassware Corporation Ltd v. Uday Narain Pandey171, the question arose whether direction to pay back wages consequent upon a declaration that a workman has been retrenched in violation of the provisions of Section 6N of the UP Industrial Disputes Act, 1947 (equivalent to Section 25F of the IDA) as a rule was proper exercise of discretion. The Supreme Court observed as follows: A person is not entitled to get something only because it would be lawful to do so. If that principle is applied, the functions of an industrial court shall lose much of their significance. The changes brought about by the subsequent decisions of this Court, probably having regard to the changes in the policy decisions of the government in the wake of prevailing market economy, globalization, privatization and outsourcing, is evident. The Court therefore, emphasized that while granting relief, application of mind on the part of the industrial court is imperative. Payment of full back wages, therefore, cannot be the natural consequence. Again, in Uttaranchal Forest Development Corporation v. M C Joshi172, the Supreme Court held that relief of reinstatement with full back wages was not being granted automatically only because it would be lawful to do so and several factors have to be considered, few of them being as to whether appointment of the workman had been made in terms of statutes/rules and the delay in raising industrial dispute. The Supreme Court therefore, granted compensation instead of reinstatement although there was violation on Section 6N of the UP Industrial Disputes Act, 1947 (equivalent to Section 25F) of the IDA. In State of MP v. Lalit Kumar Verma173, the Supreme Court substituted the award of reinstatement by compensation. In yet another decision in MP

Administration v. Tribhuwan174, the management had retrenched the workman in violation of Section 25F; the industrial court directed only compensation to the respondent. The High Court ordered the reinstatement of the workman with full back wages. On appeal, the Supreme Court held that keeping in view the peculiar facts and circumstances of this case and particularly in view of the fact that the High Court had directed reinstatement with full back-wages, the interest of justice would be served if the appellant herein be directed to pay a sum of ₹75,000 by way of compensation to the respondent. Again in Sita Ram v. Moti Lal Nehru Farmers Training institute175, the Supreme Court considered the question as to whether the labour court was justified in awarding reinstatement of the appellants therein and held that keeping in view the period during which the services were rendered by the respondent (sic appellants); the fact that the respondent had stopped its operation of bee farming, and the services of the appellants were terminated in December 1996, it is not a fit case where the appellants could have been directed to be reinstated in service. Instead, payment of a sum of ₹1,00,000 to each of the appellants would meet the ends of justice. In Ghaziabad Development Authoirty v. Ashok Kumar176, the Supreme Court again considered the question whether the labour court was justified in awarding the relief of reinstatement with full back wages in favour of the workman. In this case, the first respondent was appointed on daily wages. He worked for a little more than two years. The sanction of the state of U.P was necessary for creation of posts but this post was not sanctioned after 31 March 1990 by the state. The management therefore, terminated his service. But the labour court directed reinstatement of the first respondent in service. On appeal the Supreme Court ruled: A statutory authority is obligated to make recruitments only upon compliance with the equality clause contained in Articles 14 and 16 of the Constitution of India. Any appointment in violation of the said constitutional scheme as also the statutory recruitment rules, if any, would be void. These facts were required to be kept in mind by the labour court before passing an award of reinstatement. Furthermore, public interest would not be subserved if after such a long lapse of time, the first respondent is directed to be reinstated in service.

The Court therefore, held that the appellant should be directed to pay compensation to the first respondent instead and in place of relief of reinstatement in service. Keeping in view the fact that the respondent worked for about six years as also the amount of daily wages which he had been getting, that the interest of justice would be subserved if the appellant is directed to pay a sum of ₹50,000 to the first respondent. In Mahboob Deepak v. Nagar Panchayat, Gajraula177, it was observed: Such termination of service, having regard to the fact that he had completed 240 days of work during a period of 12 months preceding the said date, required compliance with provisions of Section 6-N of the U.P. Industrial Disputes Act. An order of retrenchment passed in violation of the said provision although can be set aside but as has been noticed by this Court in a large number of decisions, an award of reinstatement should not, however, be automatically passed. The factors which are relevant for determining the same, inter alia, are; (i) whether in making the appointment, the statutory rules, if any, had been complied with; (ii) the period he had worked; (iii) whether there existed any vacancy; and (iv) whether he obtained some other employment on the date of termination or passing of the award. The respondent is a local authority. The terms and conditions of employment of the employees are governed by a statue and statuary rules. No appointment can be made by a local authority without following the provision of the recruitment rules. Any appointment made in violation of the said rules as also the constitutional scheme of equality as contained in Articles 14 and 16 of the Constitution of India would be a nullity. Due to some exigency of work, although recruitment on daily wages or on an ad hoc basis was permissible, but by reason thereof an employee cannot claim any right to be permanently absorbed in service or made permanent in absence of any statue or statutory rules. Merely because an employee has completed 240 days of work in a year preceding the date of retrenchment, the same would not mean that his services were liable to be

regularized. Applying the aforesaid legal principles, the court held that the relief granted in favour of the appellant by the labour court is wholly unsustainable. Dealing the decision of the High Court, the Court said that it did not consider the effect of non-compliance with the provisions of Section 6N of the U.P. Industrial Disputes Act, 1947. In view of this, the Court held that the appellant was entitled to compensation, notice and notice pay. In Jagbir Singh v. Haryana State Agriculture Marketing Board178, the appellant was engaged as a daily wager by the Haryana State Agriculture Marketing Board on 1 September 1995. He worked with Respondent No. 1 upto 18 July 1996. Thereafter, his services came to an end. During his employment, the appellant was paid consolidate wages of ₹1,498 per month. The appellant raised the industrial dispute contending that he was retrenched illegally in violation of Section 25F of ID Act, 1947. He therefore claimed reinstatement with continuity of service and full back-wages. The industrial tribunal-cumlabour court held that the appellant had worked for more than 240 days in the year preceding the date of termination and that the board violated the provisions of Section 25F of the Act, 1947 by not giving him notice, pay in lieu of notice and retrenchment compensation before his termination. The appellant was entitled to reinstatement with continuity of service and full back-wages from the date of demand notice, i.e. 27 January 1997. Thereupon the board challenged the award before the High Court of Punjab and Haryana. The High Court held that even if the appellant had completed 240 days of service in a calender year, he was neither entitled to be reinstated nor could he be granted back-wages. The High Court set aside the award holding that it was not sustainable in law. The daily wager filed an appeal by special leave before the Supreme Court against this order. The question arose whether the High Court, in a case such as this where termination of appellant was in contravention of Section 25 F, was justified in upsetting the award of the labour court whereby the first respondent was directed to reinstate the appellant with continuity of service and full back wages. Justice Lodha, Speaking for the Court, referred to a series of decided cases referred above and observed: It would be, thus, seen that by catena of decisions in recent times, this Court has clearly laid down that an order of retrenchment passed in violation of Section 25F although may be set aside but an award of reinstatement should not, however,

be automatically passed. The award of reinstatement with full back wages in a case where the workman has completed 240 days of work in a year preceding the date of termination, particularly, daily wagers has not been found to be proper by this Court and instead compensation has been awarded. This Court has distinguished between a daily wager who does not hold a post and a permanent employee. Therefore, the view of the High Court that the labour court erred in granting reinstatement and back wages in the facts and circumstances of the present case cannot be said to suffer from any legal flaw. However, in our view, the High Court erred in not awarding compensation to the appellant while upsetting the award of reinstatement and back wages. As a matter of fact, in all the judgments of this Court referred to and relied upon by the High Court while upsetting the award of reinstatement and back wages, this Court has awarded compensation. He laid down the following factors inter alia to be taken into account. While awarding compensation, a host of factors, inter-alia, (i) manner and method of appointment, (ii) nature of employment and (iii) length of service are relevant. He however added that each case will depend upon its own facts and circumstances. He held that in a case such as this where the total length of service rendered by the appellant was short and intermittent from 1 September 1995 to 1 July 1996 and that he was engaged as a daily wager, a compensation of ₹50,000/- to the appellant by respondent No. I will meet the ends of justice. The aforesaid view was re-stated by Justice Lodha in Incharge Officer v. Shankar shetty179. A question arose whether an order of reinstatement will automatically follow in case where engagement of daily wager has been brought to an end in violation of section 25 of the IDA Lodha J. Speaking for the Supreme court observed. It would be, thus, seen that in a catena of cases the Supreme Court has clearly laid down that an order of retrenchment passed in violation of Section 25-F although may be set aside but an award of reinstatement should not, however, be automatically passed. The award of reinstatement with full back wages in a case where the workman has completed 240 days of work in a year preceeding the date of termination, particularly, daily wagers has not been found to be proper by this Court and instead compensation has been awarded. This Court has distinguished between a daily wager who does not hold a post and a

permanent employee. In Bharat Sanchar Nigam v. Man Singh,180 the Supreme Court observed that in a catena of cases, it had clearly laid down that although an order of retrenchment passed in violation of Section 25F of the Industrial Disputes Act may be set aisde but an award of reinstatement should not be passed. This Court also distinguished between a daily wager who does not hold a post and a permanent employee.

3. An Appraisal It is difficult to support the manner in which the shift in judicial approach took place from the first to the second phase. An analysis of decided cases reveals that the judicial decisions during the second period were influenced mainly by two factors, namely (i) the policy decision of the government in the wake of prevailing market ecomony, globalization privatization and outsourcing181 (ii) by realizing that ‘an industry may not be compelled to pay the workman for the period during which he apparently contributed little or nothing at all to it and/or for a period that was spent unproductively as a result whereof the employer would be compelled to go back to a situation which prevailed many years ago, when the workman was retrenched’.182 Quite apart from above, the Court misread its earlier decision wherein it was said that on ‘termination being declared illegal, payment of full back wages cannot be granted mechanically along with reinstatement183. However, the Court interpreted this as reinstatement with full back wages cannot be granted automatically only because it would be lawful to do so’. Instead the Court awarded compensation in lieu of reinstatement. The Supreme Court in two cases of 2010 referred to in the first period has tried to adopt the judicial approach appearing in the pre-2005 period. However, the courts have not only failed to examine the decisions of the second period but have not even referred to the decisions given by the other bench even during 2009–10. This approach, it is submitted, sent a wrong message to lawyers, law teachers and students. This does not, however, mean the judicial decisions are not sound. Whatever may be the explanation for this shift in approach, there is still uncertainty about the prevailing law on the subject. It is high time to set up a constitution bench to settle the law on the above issue.

L. Procedure for Retrenchment

Section 25 G of the Industrial Disputes Act, 1947 lays down the procedure for retrenchment: Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman. Applicability of the Scheme in Industrial Establishment The Supreme Court in Indian Cable Co. Ltd v. Its Workmen184, affirmed the decision of Calcutta High Court in Pravat Kumar Kar v. W T C Parker185 and held that it was the essence of the concept of an industrial establishment that it is local in its set up. The Supreme Court further examined the decision of the Madras High Court in India Tyre and Rubber Company v. Their Workmen186 and affirmed the view that if an industry had establishments located in different places, each of them would be a separate industrial establishment under Section 25-G of the Act. The Supreme Court also observed in the aforesaid case: Then again, on the terms of Section 25-G the relief provided therein is to be granted within the category of workmen who are proposed to be discharged…. If there are different branches at different places and there are different scales of wages, the rule laid down in Section 25-G would be incapable of compliance unless all the branches have one scale of wages and the rules provide for automatic transfer from place to place having regard to the seniority and grades. Thus, whether we have regard to the popular sense of the word ‘industrial establishment’ or to the limitation of relief under Section 25-G to workmen in the same category, the conclusion would appear to be inescapable that each branch of a company would normally be regarded as a distinct industrial establishment. (emphasis added) In the Court’s view two things must co-exist in order to enable an employer to distribute workmen to its different establishments and avoid retrenchments namely, (i) automatic transfer under conditions of service, and (ii) same scale of wages in the different establishments.

The ordinary rule of retrenchment is ‘first come, last go’ and where other things are equal, this rule has to be followed by the employer in effecting retrenchment.187 But this rule should be applied in the interest of business. The industrial tribunal will not interfere with the decision of the management, unless preferential treatment is actuated by mala fides188… Whether the management has acted mala fide or not depends upon the circumstances of the case; it cannot be inferred merely from departure from the rule. Where those retrenched and those retained are doing substantially the same kind of work and no special skill or aptitude is required for doing the work which the retained clerk is doing, preference given to the retained clerk on the ground that he has some experience in the branch may justifiably raise an inference of mala fide.189 1. The Rule of Last Come, First Go. The judicial policy to protect the interest of retrenched workers by allowing departure from the principle of ‘last come first go’ only on ‘valid and justifiable reason’ to be proved by the management is evident from the decision of the Supreme Court in Workmen of Sudder Workshop of Jorhaut Tea Co. Ltd v. Management.190 In this case, the management retrenched 23 workmen. Out of these, the services of seven workmen were terminated without following the rule of ‘last come first go’ under Section 25-G. The tribunal, therefore, set aside the management's order of termination of the seven workmen and directed their reinstatement with some back wages. The Supreme Court, on appeal, confirmed the findings of the tribunal and ruled: The rule is that the employer shall retrench the workman who came last, popularly known as ‘last come first go’. Of course, it is not an inflexible rule and extraordinary situations may justify variations. For instance, a junior recruit who has a special qualification needed by the employer may be retained even though another who is one up is retrenched. There must be a valid reason for this deviation, and obviously, the burden is on the management to substantiate the special ground for departure from the rule. It added: There is none made out here, nor even alleged, except the only plea that the retrenchment was done in compliance with Section 25-G gradewise. Absence of mala fide by itself is no absolution from the rule in Section 25-G. Affirmatively, some valid and

justifiable grounds must be proved by the management to be exonerated from the 'last come, first go’ principle.191 The Court held that ‘grading for purposes of scales of pay and like considerations will not create new categorization.’ Nothing shows more forcefully than the following observations made in the aforesaid judgement when the Supreme Court deprecated the tendency of the management: [W]ho gambles in litigation to put off the evil day and when that day arrives prays to be saved front his own gamble. The award had given convincing reasons for reinstatement and even reduced the back wages to half, still, the workmen were dragged to the High Court and, worse, when worsted there, were driven from Assam to Delhi to defend their pittance. The logistics of litigation for indigent workmen is a burden the management tried to use by a covert blackmail through the judicial process. Misplaced sympathy is mirage justice, we cannot agree. Even so, we take note of the inordinate delay due to long pendency which is part of the pathology of processual justice in the Supreme Court.192 The Court, therefore, directed that half the back wages between the date of retrenchment and the publication of the award shall be paid, as directed in the award itself. For the post award period, the Court held that full wages will be paid until the High Court’s judgement on 13 April 1971 and therefore, 75 per cent of wages will be paid until 30 April 1981. This decision is an eye opener to the management which indulges in unnecessary litigation to harass workers. In Suraj Prakash Bhandari v. Union of India193, the management tried to evade the provisions of Section 25-G. In this case, a workman was appointed as welder in 1950 in the Central Tractor Organization in the pay scale of ₹125– 185. He served on this post for 9 years. In 1959, he was transferred to another place. On 30 October 1971 by an order dated 14 October 1971, he was redesignated as senior welder in the pay scale of ₹170–6–240. On 1 January 1973, he was declared surplus but was offered re-employment by Jullundur Cantonment. The workman refused the offer. He challenged the termination of his service on the ground that it was illegal retrenchment and the offer of reemployment amounted to demotion. The trial court decreed the suit with cost and directed the management to appoint the workman in the grade of ₹175–6– 205–7–240. The additional district judge dismissed the appeal. The High Court

allowed the appeal. On appeal, the Supreme Court held that ‘if this action could be justified, then it would arm the employers with new weapons to promote an employee after creating a new post, abolish it after some time and relieve him of this duties on the plea of surplusage.’ The Court added that the easiest course for a reasonable management to adopt in such cases would have been to revert the employee to the place where from he was promoted and give him the emoluments which he was drawing before such promotion. 2. Period of service In Harjinder Singh v. Punjab State Warehousing Corpn194, the Supreme Court held that it is settled law that for attracting the applicability of Section 25-G of the Act, the workman is not required to prove that he had worked for a period of 240 days during 12 calendar months preceding the termination of his service and it is sufficient for him to plead and prove that while effecting retrenchment, the employer violated the rule of ‘last come first go’ without any tangible reason. Departure from the Rule: Last Come, First Go. The normal rule, it has been observed earlier, is that the employer should adopt the principle of ‘last come, first go’ in effecting retrenchment. However, for departing from the rule, which would normally apply only when other things are equal; the employer; for the purpose of arriving at the specific reasons to be recorded, may take into account consideration of efficiency and trustworthy character of the employees, and that if he is satisfied that a person with long service is inefficient, unreliable or habitually irregular in the discharge of his duties, it would be open to him to retrench him while retaining in his employment, employees who are more efficient, reliable and regular, though they may be juniors in service to the retrenched workman. Normally, where the rule is thus departed from, there should be reliable evidence preferably in the recorded history of the workman showing his inefficiency, unreliability or habitual irregularity.195 From the above, it is evident ‘that wherever it is proved that rule in question has been departed from, the employer must satisfy the industrial tribunal that the departure was justified; and in that sense the burden would undoubtedly be on the employer…. The employer should be able to justify the departure before the industrial tribunal whenever an industrial dispute is raised by retrenched workmen on the ground that the retrenchment amounts to unfair labour practice or victimization.196 In each case of deviation from the principle ‘last come first go’, the employer has to write down the reason in his order itself. The reason cannot be improved later on.197 Recently in Harjinder Singh v. State of Punjab198, the Supreme Court

held that it is permissible for the employee to deviate from the rule in cases of lack of efficiency or loss of confidence, etc., But the burden will then be on the employer to justify the deviation. 3. Distinction between the Effect of Non-compliance of Sections 25-F and 25-G. In Central Bank of India v. S Satyam199, the Supreme Court observed that while Section 25-F is confined only to the mode of retrenchment of workmen in continuous service for not less than one year, Section 25-G prescribes the principle for retrenchment and applies ordinarily the principle of ‘last come first go’ which is not confined only to workmen who have been in continuous service for not less than one year, covered by Section 25-F. (emphasis supplied) The ratio of the above noted judgement was reiterated in Samishta Dube v. City Board Etawah200. In this case, the Court interpreted Section 6-P of the U P Industrial Disputes Act, 1947, which is pari materia to Section 25-G of the Act, and held: Now this provision is not controlled by conditions as to length of service contained in Section 6-N (which corresponds to Section 25-F of the Industrial Disputes Act, 1947). Section 6-P does not require any particular period of continuous service as required by Section 6-N. The distinction between Sections 25-F and 25-G of the Act was reiterated in Bhopgur Coop. Sugar Mills Ltd v. Harmesh Kumar201, in the following words: We are not oblivious of the distinction in regard to the legality of the order of termination in a case where Section 25-F of the Act applies on the one hand, and a situation where Section 25-G thereof applies on the other. Whereas in a case where Section 25-F of the Act applies, the workman is bound to prove that he had been in continuous service of 240 days during 12 months preceding the order of termination; in a case where he invokes the provisions of Sections 25-G and 25-H thereof, he may not have to establish the said fact.

M. Re-employment of Retrenched Workmen Section 25-H which provides for re-employment of retrenched workmen in preference to newcomers prescribes several conditions viz., (i) The workman is

‘retrenched’ within the meaning of Section 2 (oo) of the Industrial Disputes Act before re-employment; (ii) the workman should be a citizen of India; (iii) the workman should offer himself for re-employment in response to the notice by the management; (iv) the workman should be from the same category in which the employment is proposed. The concluding words of Section 25-H, namely, ‘the retrenched workmen who offer themselves for re-employment shall have preference over other persons’, must be deemed to include preference over persons in the lower cadre who are for the time being in the employment of the employer. Rule 78 of the Industrial Disputes (Central) Rules lays down the procedure for re-employment of retrenched workmen and requires the employer to display the vacancies on a notice board at least 10 days before the date on which the vacancies are to be filled and also to give notice by post to these vacancies to all the retrenched workmen eligible to be considered therefor.202 Further, the retrenched workmen must be given an opportunity for employment when the employer has to employ an additional hand.203 This principle is based not only on Section 25-H but also on fair play and justice. The Supreme Court in Rai Sahib Ramdayal Ghasiram Oil Mills and Partnership Firm v. Labour Appellate Tribunals204 held that Section 25-H provides for re-employment of retrenched workmen in certain circumstances in preference to newcomers. But the provisions of Section 25-H cannot apply to workmen who had been retrenched before this provision came into force. The legislature did not intend the provision to come into force before 25 October 1953. When that is the mandate of the legislature, no tribunal has jurisdiction on the basis of its own conception of social justice to ignore ‘if any’ to apply the provisions or its underlying ‘principle’ to a dispute which arose before the provision came into force. The Supreme Court in G S Ramaswamy v. The Inspector General of Police, Mysore,205 held that the usual principle is that the juniormost persons among those officiating in clear or long time vacancies are generally reverted to make room for the senior officers coming back from deputation or from leave, etc. Further, ordinarily as promotion on officiating basis is generally according to seniority, subject to fitness for promotion, the juniormost person reverted is usually the person promoted last. This state of affairs prevails ordinarily unless there are extraordinary circumstances. The aforesaid view was reiterated in State of Uttar Pradesh v. Kaushal Kishore Shukla.206 The Supreme Court held that if out of several employees working in a department, a senior is found unsuitable on account of his work and

conduct, it is open to the competent authority to terminate his services and retain the services of a junior who may be found suitable for the service. In Central Bank of India v. S Satyam207, the Supreme Court held that Chapter VA of the Act providing for retrenchment is not enacted only for the benefit of the workmen to whom Section 25-F applies but for all cases of retrenchment and, therefore, there is no reason to restrict application of Section 25-H therein only to one category of retrenched workmen. Therefore, restricted meaning cannot be given to the word 'retrenchment’ in Section 25-H. The Court ruled that Section 25-H is couched in broad language and is capable of application to all retrenched workmen, not merely those covered by Section 25F. It does not require curtailment of the ordinary meaning of the word 'retrenchment’ used therein. The provision for re-employment of retrenched workmen merely gives preference to a retrenched workman in the matter of reemployment over other workmen and there is no reason to restrict its ordinary meaning which promotes the object of the 'enactment without causing any prejudice to a better placed retrenched workman.’ The aforesaid view was reiterated in Harjinder Singh v. State of Punjab208.

Retrospective Operation of Section 25-H There is also a controversy regarding the retrospective operation of Section 25H. In Cownpur Tannery Ltd Kanpur v. Guha(s)209, it was contended on behalf of the management that it was erroneous and unfair for the tribunal to have virtually given effect to the said provision retrospectively. The Supreme Court rejected the argument and observed: Even before Section 25-H was added to the Act, industrial adjudication generally recognized the principle that if an employer retrenched the services of an employee on the ground that the employee in question had become surplus, it was necessary that whenever the employer had occasion to employ another hand, the retrenched workman should be given an opportunity to join service. This principle was regarded as of general application in industrial adjudication on the ground that it was based on considerations of fair play and justice. In sharp contrast to Rai Sahib Ramdayal Ghasiram Oil Mills and Partnership Firm v. Labour Appellate Tribunal210, the Supreme Court held that ‘Section 25-H provides for re-employment of retrenched workmen in certain

circumstances in preference to newcomers. But Act 43 of 1953 which enacted this provision clearly provides in sub-section (2) of Section 25-J thereof that it shall be deemed to have come into force on 24 October 1953. Clearly, therefore, the provisions of this Section cannot apply to workmen who had been retrenched before this provision came into force. The legislature did not intend the provision to come into force before 24 October 1953. When that is the mandate of the legislature, no tribunal has jurisdiction on the basis of its own conception of social justice to ignore it and apply the provisions or principle to a dispute which arose before the provisions came into force.’

Terms and Conditions of Re-employment Section 25-H is silent about the terms and conditions on which re-employment has to be offered by the employer. In Indian Hume Pipe Co. Ltd v. Labour Court, Andhra Pradesh211, the Andhra Pradesh High Court held: We are inclined to the view that the retrenched workmen are entitled to claim the same employments as at time of retrenchment and that the employer is not at liberty to change the wage structure at his will. In another case involving the same employer, Indian Hume Pipe Co. Ltd v. Bhimarar Baliram Gandhi212, the Bombay High Court dissented with the above view.

Penalty for Lay-off and Retrenchment without Previous Permission Section 25-Q prescribes penalty upon an employer who contravenes the provisions of Section 25-M or 25-N. This penalty shall extend to imprisonment for a term which may extend to one month, or with fine which may extend to ₹1,000/- or with both.

III. TRANSFER AND CLOSURE OF THE UNDERTAKING: PREVENTION AND REGULATION Notwithstanding the resistance of Indian workmen to the closure or transfer of undertaking, it is important to emphasize that workmen are concerned, not with the closure or transfer as such, but with consequence of closure or transfer,

namely, discharge, unemployment and loss of earning. It is doubtful if an employer continues to retain workmen in his employment and pay the remuneration even after closing his business, there would be a hue and cry over the closure or transfer. In every single case where bona fides of closure or transfer have been challenged or an attempt has been made to convert a closure either into a lockout or retrenchment, the basic demand has been for the reinstatement and payment of compensation for the period of unemployment. The desire of workmen to continue in employment and maintain their earnings is understandable in a surplus labour market which exists in India. Prior to 1953, the only provision of the Act, which in those days used the word ‘closure’ was Section 2 (1) of the IDA, invariably led tribunals to hold that closure came within the ambit of the definition of ‘lockout’, particularly because unlike the 1929-definition, the 1947-definition had no restrictive qualifying clause. The labour appellate tribunals,213 the high courts214 and the Supreme Court215 on the other hand, (impressed by the Constitutional guarantee of the right to carry on any trade, profession, business or a vocation) were at pains to emphasize that lockout was the ‘closing of a place of employment’ and not ‘the closing of the business itself.’ Realizing the difficulty of maintaining this distinction in cases of temporary closures, and even independently of such difficulty, there developed a marked tendency to enquire into the reasons for the closure, and decision-makers entered into detailed investigation of the bona fides of management action. It will be observed that the 1953-Amending Act provided for lay-off compensation in all cases where an employer was unable to provide work to a workman whose name was on the muster-roll and for retrenchment compensation in cases where, subject to certain specified exceptions, he terminated their services. The legislature intended to interpret the definition of retrenchment at its widest possible amplitude. But the Supreme Court in Barsi Light Railway Company v. Joglekar216 severally curtailed the scope and coverage of the statutory compensation of ‘retrenchment’ by holding that: Retrenchment as defined in Section 2 (oo) and as used in Section 25-F has no wider meaning than the ordinary accepted connotation of the word: it means the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and has no application where the service of all workmen have been terminated by the employer on a real and bona fide

closure of business…. The Court accordingly held that termination of service as a result of transfer of ownership of an undertaking to another employer did not constitute ‘retrenchment’. Sections 25-FF and 25-FFF were, therefore, enacted by the Parliament in 1956 and 1957 respectively to plug the loopholes in provisions relating to retrenchment and, in particular, to provide for payment of compensation to workmen on transfer and closure of an undertaking. These benefits further widen the scope of unemployment benefits. The requirement of notice period was felt inadequate in case of closing down the undertaking. Section 25-FFA was, therefore, inserted requiring for 2 month's notice to be given by the employer to the government about its intention to close down the undertaking. Though this provision provided for the notice, it did not contain any provision for prevention of lay-off, retrenchment or closure. Further, the Act did not provide for any prior scrutiny of the reasons of such closure. In order to meet the situation, Chapter V-B was inserted in the Industrial Disputes (Amendment) Act, 1976 and later amended in 1982 by the Industrial Disputes (Amendment) Act, 1982. This chapter which was applicable to industrial establishments which were factories, mines, and plantations employing 300 or more workmen has now been extended to ‘industrial establishments’ employing 100 or more workmen. Section 25-O added a new provision for preventing closure. A new provision has also been made under Section 25-P for restarting undertakings closed down before commencement of the Industrial Disputes (Amendment) Act, 1976. The penal provision for violation of the provision relating to closure has been made under Section 25-R.

A. Transfer Compensation Section 25-FF provides that where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who satisfies the test prescribed in that Section shall be entitled to notice and compensation in accordance with Section 25-FF. However, the provision will not be applicable where, as a result of the transfer, three conditions are satisfied, namely, (a) the services of the workmen have not been interrupted, (b) the terms and conditions of service under the new employer are not less favourable than what they were before the transfer, and (c) the transferee binds himself under the terms of the transfer to pay to the workmen, in the event of future retrenchment, compensation on the basis that there had been continuous service and had not been interrupted by such transfer217. It may be noted that all the three conditions

are used conjunctively. The employer cannot escape from his liability by providing any one of these conditions. The working of Section 25-FF in actual practice and as judicially construed gave rise to several problems. Important among them is whether the workman is entitled to double benefit such as payment of compensation by vendor company and re-employment by vendee? Confusion exists due to conflicting decisions of the Supreme Court in this regard. The effect of the first decision, as we shall see presently, is that the workmen are entitled to double benefit. But according to the second decision, workmen are not allowed the double benefit. In Workmen of Subong Tea Estate v. Subong Tea Estate,218 Suborg Tea Estate (vendor) agreed to sell the tea estate to Hindustan Tea Company (vendee) on 12 January 1959. It was also agreed upon by the parties that transfer would take effect from 1 January 1959. This agreement was subject to the approval of the Reserve Bank of India and pending the execution of deed for the approval of the Reserve Bank of India, the vendee took the de facto possession of the estate on 17 February 1959 but workers employed therein were allowed to work and receive their wages from it. The permission of the Reserve Bank was received on 15 July 1959. Before the execution of the sale deed, the vendor company received a letter from vendee to retrench certain surplus staff. The manager of the vendor company accordingly served a notice on eight workmen intimating that their services would be terminated from 18 October 1959, after paying them retrenchment compensation prescribed under Section 25-F. The concerned workmen received the compensation under protest. They challenged the validity of the retrenchment. On these facts, the Supreme Court held that the vendor was nobody to retrench and as such the order of retrenchment was invalid. The Court also directed reinstatement of the retrenched workmen with wages. The net result of the decision has been to grant double benefit of compensation and reinstatement. In Board of Directors of South Arcot Electricity Distribution Co. Ltd v. Elumalai219, the South Arcot Electricity Undertaking was taken over by the State. The conditions of service under the state government were less favourable than those with the erstwhile electricity undertaking. The workmen demanded compensation from the electricity undertaking. The company refused. On these facts, the Supreme Court held that the proviso to Section 25-FF cannot be invoked by the company for the purposes of defeating the claim of workmen under the principal clause of Section 25-FF. In Gursham Thappa v. Abdul Khuddus,220 a government undertaking

was taken over by the company as a going concern. The workmen employed in the government undertaking were also taken over by the company. The Supreme Court held that since in law the company was a separate and distinct entity from the government, the employees as a result of transfer of undertaking became workmen of the company and ceased to be workmen of the government undertaking. In Bhola Nath Mukherjee v. Govt. of West Bengal221, the Supreme Court held that where there is no legal obligation cast upon the board under the terms of the transfer or otherwise to pay any retrenchment compensation to the workmen, the employees have no right to claim any compensation from the board. Nor do they have any right to claim to be in continuous employment on the same terms and conditions, even after the purchase of the undertaking by the board. The Supreme Court held that the High Court in appeal was right in holding that the employees were entitled to retrenchment compensation under the provision of Section 25-FF. But it was in error in holding that the board even after payment of the purchase price to the transferor company, was liable to pay retrenchment compensation to the employees. In Anakpalia Cooperative Agricultural and Industrial Society Ltd v. Its Workmen222, a sugar and refinery company which was running at a loss was purchased by a cooperative society. Like the previous case, the vendor company paid to its employees statutory compensation and terminated their services. The vendee cooperative society employed some of the workers of vendor company. Those workmen who were not employed claimed reemployment in the cooperative society. On these facts, the five-judge bench of the Supreme Court observed that since the employees were paid the compensation, reinstatement cannot be granted because: The double benefit in the form of payment of compensation and immediate re-employment cannot be said to be based on any considerations of fair play or justice. Fair play and justice obviously mean fair play and social justice to both the parties. It would, we think, not be fair that the vendor should pay compensation to his employees on the ground that the transfer brings about the termination of their services and the vendee should be asked to take them back on the ground that principles of social justice required him to do so. Thus, in effect, the aforesaid decision had awarded single benefit of compensation. It is difficult to reconcile Subong Tea Estate with Anakpalia

Cooperative Agricultural and Industrial Society, Moreover, we are unable to understand how an employee who received the statutory compensation by vendor company is at the same time entitled to reinstatement by vendee company. Further, it is against fair play and social justice. Another issue is: who should be made liable to pay compensation under Section 25 FF of the ID Act to the workmen? This issue was raised in New Horizon Sugal Mills Ltd v. Ariyur Sugar Mill Staff Welfare Union223. In this case, the assets of New Horizon Sugar Mills Ltd were seized and sold by auction under SARFAESI Act 2002 by the Indian Bank, a secured creditor. The property was purchased in auction by EID Parry India Ltd. As a result, the services of employees of New Horizon were terminated. On these facts, a question arose: who should be made liable to pay compensation under Section 25FF to the workmen whose services were deemed to have terminated? The Supreme Court held that it is a settled legal position under several decisions of this Court starting from Anakapalla Cooperative Agricultural and Industrial Society v. Its Workmen224 that the liability to pay its workmen would be on New Horizon, the transferer/seller. Therefore, it follows that the amount due to the workers will have to be paid from out of the sale proceeds which are lying with the Indian Bank. Thus the purchaser, namely EID Parry, who has already paid the sale price, will have no liability. The other problem is when can the purchaser of an industrial establishment be said to be the successor-in-interest of the vendor for the purposes of determining the rights of the old workmen against him. The following factors have been taken into account in this regard. (i) Did the purchaser purchase the whole of the business or the whole of the property of the vendor concerned or only a part of it? (ii) Was the business purchased as a going concern at the time of the sale transaction or only after the closure of the undertaking? (iii) Was the business purchased carried on at the same place? (iv) Was the business carried on without a substantial break in time? (v) Whether the purchaser carried on the same business in the same establishment? (vi) If there was a break in the continuity of the business, what was the nature of the break, what were the reasons for the break, and what was the length of the break? (vii) Has the goodwill of the business been purchased upon the transfer of the ownership of an establishment? There is yet another problem namely, whether Section 25-FF applies to a partnership firm. This problem received the attention of the Supreme Court in R S Madhoram & Sons Pvt. Ltd v. Its Workmen.225 Here, the company carried on a variety of businesses of allied and retail nature. It transferred its retail business

to a newly incorporated private company. There was a common muster roll for all the companies; they were governed by the same set of service conditions; they were liable to be transferred from one department to other; they were treated as one unit for the purposes of bonus; they were not employed for any particular branch or line of business. On these facts, it was held that Section 25FF did not apply in this case because the real business was not a separate establishment for the purposes of Section 25-FF. However, the Court was cautious to add: …as in other industrial matters, so on this question too, it would be difficult to lay down any categorical or general proposition. Whether or not the transfer in question attracts the provisions of Section 25-FF, must be determined in the light of the circumstances of each case. It is hardly necessary to emphasize that it is the matter of substance and not of form…. The question as to whether a transfer has been effected so as to attract Section 25-FF must ultimately depend upon the evaluation of all the relevant factors and it cannot be answered by treating any one of them as of overriding or conclusive significance.

Exception to Section 25 FF The Supreme Court in Gurmail Singh v. State of Punjab226 ruled, that where the transferer and/or transferee is a state or instrumentality of a state, an exception to Section 25-FF of the Industrial Disputes Act, 1947 may be made. In this case, the state of Punjab, which was incurring losses, decided to transfer all the tubewells in the irrigation branch of the public works department to the Punjab State Tubewells Corporation, a company owned and managed by the state of Punjab. Consequently, it retrenched 498 tubewell operators. However, the state government although transferring the tubewells, undertook to recoup any losses that the corporation might incur as a result of the transfer. But while doing so, it has abridged the rights of the retrenched workers by purporting to transfer only the tubewells and consequently retrench the workers. On these facts, the Supreme Court observed: We think that certainly in such circumstances, it will be open to this Court to review the arrangements between the state government and the corporation and issue appropriate directions. Indeed, such directions could be issued even if the elements of the transfer in the present case fall short of a complete

succession to the business or undertaking of the state by the corporation, as the principle sought to be applied is a constitutional principle flowing from the contours of Article 14 of the Constitution which the state and corporation are obliged to adhere to. The Court summed up the position as under: [E]ven before the insertion of Section 25-FF in the Act, the employees of a predecessor had no right to claim re-employment by the successor in business save in exceptional circumstances. Even where available, that claim was not a matter of absolute right but one of discretion, to be judicially exercised, having regard to all the circumstances. An industrial tribunal, while investigating such a claim, had to carefully consider all the aspects of the matter. It had to examine whether the refusal to give re-employment was capricious and industrially unjustified on the part of successor in business or whether he could show cause for such refusal on reasonable and bona fide grounds such as want of work, inability of the applicant to carry on the available work efficiently, late receipt of application for reemployment in view of prior commitments or any other cause which in the opinion of the tribunal made it unreasonable to force the successor-in-interest to give re-employment to all or any of the employees of the old concern. This discretion given to industrial courts is no longer generally available because of the insertion of Section 25-FF. But in a case where one or both of the parties is a state instrumentality, having obligations under the Constitution, a court has a right of judicial review, over all aspects of transfer of the undertaking. It is open to a court, in such a situation, to give appropriate directions to ensure that no injustice results from the change-over. In the present case, the parties to the transfer are a state on the one hand and a fullyowned state corporation on the other. That is why we have examined the terms and conditions of the transfer and given appropriate directions to meet the needs of the situation. The Court accordingly held that the affected employees can claim either compensation or continuity of service but not both. The Court emphasized that in case any of the employees have been paid any compensation, that amount will

have to be refunded by them before this order can be given effect. In Sunil K R Ghosh v. K Ramachandran227, the Supreme Court ruled that without consent, workmen cannot be forced to work under different managements and in the event workmen are entitled to retirement/retrenchment compensation under ID Act.

B. Closure Section 2 (cc) of the Industrial Disputes (Amendment) Act, 1982 defines ‘closure’ to mean ‘the permanent closing down of a place of employment or part thereof'. Section 25-FFF imposes a liability on the employer, who closes down his business, to give one month's notice and pay compensation equal to 15 days’ average pay for every completed year of continuous service or any part thereof in excess of 6 months. In case of closure on account of unavoidable circumstances beyond the control of employer, the maximum compensation payable to a workman is 3 months’ salary. However, unlike Section 25-F, payment of compensation in lieu of notice are not conditions precedent to closure.228 Thus, as a consequence of closure of the industry, Section 25-F is not attracted and the rigour imposed thereunder stands excluded.229 The Industrial Disputes (Amendment) Act, 1916 Section 25-O (which was amended in 1982) lays down the procedure for closing down an undertaking and Section 25-P makes special provision as to restarting of undertakings closed down before the commencement of the Industrial Disputes (Amendment) Act, 1976. 1. Constitutional validity of Section 25-FFF. In Hathi Singh Mfg. Co. Ltd v. Union of India,230 the Supreme Court was called upon to decide the constitutional validity of Section 25-FFF of the Industrial Disputes Act, which provided for payment of compensation to the workman on the closure of industry. The Court upheld the constitutionality of Section 25FFF. The facts of the case may be briefly stated: the three petitioners viz., owner of the Cotton Textile Mills, Ahmedabad, the owner of the coal mine and the owner of the spinning and weaving factory at Jamnagar had closed down their undertakings in Apri1, 1957, 10 February 1957 and 24 April 1957 respectively on account of losses incurred by them. They terminated the services of their workmen after giving them notice of closure. In 1957, Section 25-FFF was inserted in the Industrial Disputes Act, 1947 and liability was imposed for payment of compensation by employers who closed down their undertaking after 27 November 1956. These employers were accordingly required to pay

compensation to their workmen affected by such closure under Section 25-FFF. The employers in a writ petition challenged the validity of the section in the Supreme Court under Article 32 of the Constitution mainly on three grounds: (i) that it imposed unreasonable restrictions on the management's right to carry on trade, profession or business and thereby contravened Article 1 9(I) (g); (ii) that it was discriminatory in as much as different employers belonging to the same group placed in similar circumstances were treated differently and thereby contravened Article 14 of the Constitution; and (iii) that it penalized acts which when committed were not offences and thereby contravened Article 20 of the Constitution. The Supreme Court rejected all these contentions. The aforesaid decision requires careful scrutiny. First, it has been observed that the Court laid down the following criteria for determining the constitutionality of Section 25-FFF: Whether an impugned provision, imposing a fetter on the exercise of the fundamental right guaranteed by Article 19 (1) (g) amounts to a reasonable restriction imposed in the interest of general public must be adjudged… in the light of the nature and incidents of the right, the interest of general public sought to be secured by imposing the restrictions and the reasonableness of the quality and extent of the fetter upon the right. The Court did not in fact apply all the above criteria in determining the constitutionality of Section 25-FFF. Specifically, the first criteria, namely ‘nature and incident of the right’ and third criteria, namely, ‘reasonableness of the quality and extent of the fetter upon the right’ were not applied by the Court. Second, the Court applied the following rationale for distinguishing between prospective and retrospective operation of the statute: When Parliament enacts a law imposing a liability as flowing from certain transactions prospectively, it evidently makes a distinction between those transactions which are covered by the Act, and those which are not covered by the Act, because they were completed before the date on which the Act was enacted. This differentiation, however, does not amount to discrimination which is liable to be struck down under Article 14. The power of the legislature to impose civil liability in respect of transactions completed even on the date on which the Act is enacted does not appear to be restricted. If, as is conceded, and in our judgement rightly, by a statute imposing civil liability in respect of post

enactment transactions, no discrimination is practised, by the statute which imposes liability in respect of transaction which has taken place after a date fixed by the statute but before its enactment, it cannot be said that discrimination is practised. Article 14 strikes at discrimination in the application of the laws between persons similarly circumstanced; it does not strike at a differentiation which may result by the enactment of a law between transactions governed thereby and those which are not governed thereby. The Court, however, did not in fact apply the above rationale in distinguishing the two classes of cases involved in Hathi Singh's case, namely, (i) those where the employer closed his business on or before 27 November 1956, and (ii) those where the industry was closed after 27 November 1957 but before the enactment of the provisions in 1957. Third, the Court failed to make a careful analysis of the present economic and social conditions of the country. It is regretted that the Court in fact took into account only in a very general sense, the social and economic conditions of the country which was insufficient. Fourth, the holding of the Court that as the requirements of payment of compensation and service of notice to workmen provided in Section 25-FF and 25-FFF are not a condition-precedent to transfer or closure and, the employer cannot be prosecuted under Section 31 (2) for non-compliance with the provisions of Section 25-FF and 25-FFF and that non-compliance of either Section 25-FF or Section 25-FFF only creates civil liability to pay compensation to workmen upon transfer or closure of the undertaking seems to be a postmortem operation of the disease. This is also likely to encourage frequent violation of the provisions of the Act. Indeed, in actual practice it is found that delay often occurred in payment of compensation on transfer or closure of undertakings. This caused great hardship to the workmen. 2. Closure of a Portion of an Undertaking. So far as the closure of a portion of an undertaking or a part of an industrial establishment is concerned, the Supreme Court in Workmen of Straw Board Manufacturing Co. Ltd v. M/s Straw Board Manufacturing Co. Ltd231 pointed out: The most important aspect in this particular case relating to closure, in our opinion, is whether one unit has such componential relation that closing of one must lead to the closing of the other or one cannot reasonably exist without the

other. Functional integrality will assume an added significance in a case of closure of a branch or unit. That the mill is capable of functioning in isolation is of very material import in the case of closure. There is bound to be a shift of emphasis in the application of various tests from one case to another. The Court added: The workmen cannot question the motive of the closure, once closure has taken place in fact. The matter may be different if under the guise of closure, the establishment is being carried on in some shape or form or at a different place and the closure is only a ruse or pretence. Once the Court comes to the conclusion that there is closure of an undertaking, the motive of the employer ordinarily ceases to be relevant. No employer can be compelled to carry on his business if he chooses to close it in truth and reality for reasons of his own. The Court further pointed out: ‘there is nothing wrong for an employer who has decided to close the establishment to follow the steps of closure by stages. It may be in the nature of a business to take recourse to such a mode, which cannot ordinarily and per se be considered as unfair or illegitimate. Therefore, the termination of services of the first batch of workmen on account of closure is not unjustified.’ In Avon Services v. Industrial Tribunal232, the management attempted to serve notice on certain workmen. The notice stated that the management had decided to close the painting section from a certain date due to unavoidable circumstances, and further that the services of the said workmen would no longer be required due to surplusage; they were, therefore, retrenched. The workmen were accordingly informed that they should collect their dues under Section 25-FFF from the office of the company. On these facts, a question arose whether the case fell under Section 25-F or 25-FFF. The Supreme Court first explained the distinction between Sections 25-F and 25-FFF as follows: By Section 25-F, a prohibition against retrenchment until the conditions prescribed by that Section are fulfilled, is imposed; by Section 25-FFF (1) termination of employment on closure of the undertaking without payment of compensation and without either serving notice or paying wages in lieu of notice is not prohibited. Payment of compensation and payment of wages for

the period of notice are not, therefore conditions precedent to closure. The Court proceeded to determine whether there was anything in the notice to suggest that the case was one of retrenchment or closure. It observed: The tenor of the notice clearly indicates that workmen were rendered surplus and they were retrenched. It is thus on the admission of appellant, a case of retrenchment. The Court then examined the contention that the notice referred to in Section 25-FFF, was intended to be a notice of termination of service consequent upon closure of the painting undertaking. It pointed out: Now, even if a closure of an undertaking as contemplated by Section 25-FFF need not necessarily comprehend a closure of the entire undertaking and a closure of a distinct and separate unit of the undertaking would also be covered by Section 25FFF, the question is—whether painting section was itself an undertaking. The Court held that in the context of Section 25-FFF, it must mean a separate and distinct business or commercial trading or industrial activity and not an infinitesimally small part of a manufacturing process. In view of this, the Court stated that if painting was no more undertaken as one of the separate jobs, the workmen would become surplus and they could be retrenched, after paying compensation as required by Section 25-F. It observed: An employer may stop a certain work which was part of an undertaking but which could not be classified as an independent undertaking; the stoppage of work in this context would not amount to closure of the undertaking. The three workmen were doing the work of painting the containers. No records were shown that there was a separate establishment, that it was a separate subsection or that it had some separate supervisory arrangement. In fact, once the container making section was closed down, the three painters became part and parcel of the manufacturing process and if the painting work was not available for them, they could have been assigned some other work and even if they had to be retrenched as surplus, the case would squarely fall in Section 25-F and not be covered by

Section 25-FFF on a specious plea of closure of an undertaking.233 The Supreme Court, accordingly, upheld the finding of the tribunal that this was a case of ‘retrenchment’. As conditions precedent were not complied with, it was invalid and the workers were entitled to reinstatement with full back wages. The net effect of this decision has been to restrict the scope of closure either to an entire undertaking or to a distinct and separate unit of the undertaking. 3. Closure Compensation. In Management of Gordon Woodroffe Agencies Pvt. Ltd v. Presiding Officer, Principal Labour Court234 the appellant, a trading agency closed w.e.f. 3l May 1984, because it had incurred heavy losses in its business. The appellant who had less then 50 workmen offered to all its workmen closure compensation as prescribed by law and other legal entitlements. Many workmen received the said compensation. However, respondent-workmen claimed alternate employment in a sister concern of the appellant which was a manufacturing company. The appellant denied respondents’ claim. The dispute between workmen and the management was referred for adjudication. The labour court held that closure was genuine and justified in law. It directed appellantmanagement to pay to respondent-workmen ex-gratia amounts apart from closure compensation. Then a writ petition was filed before the High Court challenging award of additional compensation. The High Court dismissed the petition. Thereupon, an appeal was filed before the Supreme Court. The Court held that the labour court or the High Court has no authority in law to direct payment of any additional sum by way of ex-gratia otherwise than what is provided under the statute when the act of the management in closing down the establishment is found to be valid and all legally payable amounts have been paid or offered in time. The Court added that when the labour court came to the conclusion that the closure of the establishment was legally justifiable and the management had as required under the law, offered apart from the compensation payable for the closure, all other statutory dues which some of the employees collected without demur and in the case of respondent-workmen even though the same were offered on time, they did not accept it, therefore, the question of paying any additional ex-gratia compensation which is not contemplated under the statute, did not arise. 4. Closure Compensation in Unavoidable Circumstances. The proviso to

Section 25-FFF states that the maximum compensation payable to workmen on account of unavoidable circumstances beyond the control of the employer, is limited to the average pay for 3 months. The explanation to Section 25-FFF (1) provides that an undertaking which is closed down by reason merely of: (i) financial difficulties (including financial losses); or (ii) accumulation of undisposed stock; or (iii) the expiry of the period of lease or license granted to it; or (iv) in a case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which such operations are carried on; shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub-section. The expression ‘the proviso to Section 25-FFF (1)’ functions more or less as a definition of an undertaking being closed down on account of unavoidable circumstances beyond the control of the employer. An analysis of decided cases reveals that the following situations, namely, (i) vis major, i.e., an act of God, calamities, e.g., earthquakes, floods, cyclones, etc., (ii) enemy action as in time of war, (iii) civil commotion, e.g., riots etc., (iv) action of state, viz., expropriation, restraint on trade, e.g., drastic cut in import and control of supplies of raw materials, etc,; (v) acts of utter lawlessness to which the employer is not a party, (vi) when the workmen create circumstances which lead to closure, e.g., closure due to strike, threats, intimidation, violent methods like stabbing and bomb throwing by workers235 are covered by the expression ‘unavoidable circumstances beyond the control of employer.’ On the other hand, closure on account of (i) differences in partnership;236 (ii) gherao and the apprehension to the staff or danger to personal safety;237 (iii) variety of reasons such as location in residential area, shortage of space, continued losses, restrictions to operate at night238 are not covered within the expression ‘unavoidable circumstances beyond the control of the employer’. The strict legal interpretation of the proviso of Sections 25-FF and 25FFF appears to have been taken by the Court, for instance, in Antony v. Kumaran239 wherein the employer who was running a grocery shop had to close it because he was suffering from tuberculosis and was confined to a sanatorium. Aggrieved by the order, the workmen filed an application under Section 33-C(2) to the labour court for compensation under Section 25-FFF. The Court held that the workmen were entitled to compensation under Section 25-FFF. Thereupon,

the employer filed a writ petition in the Kerala High Court. A question arose as to whether the closure was ‘for unavoidable circumstances beyond the control of the employer’ under the provision of sub-section (1) of Section 25-FFF. The Court, while conceding that an employer suffering from tuberculosis was naturally not in a position to run his business as it was something beyond his control, nevertheless held that his disease was not a reason connected with the running of the business; it was only personal to him. In view of this, it was held that closure of the undertaking would not deprive the workmen of their full compensation. In Shyamsunder v. Labour Court240, the proprietor closed down his press on the ground that he was suffering from hypertension and was under constant physical care and attention. He denied his liability to pay compensation exceeding 3 months under the proviso to Section 25-FFF (1) on account of ‘unavoidable circumstances’ beyond the control of the proprietor. On these facts, a question arose whether the closing down of the undertaking fell under proviso to Section 25-FFF (1). The Bombay High Court answered the question in negative and observed: The expression ‘unavoidable circumstances’ appearing in the proviso will have to be strictly construed, if the intent of the legislature is to be carried out and which is apparent from the explanation appended thereto. The expression ‘unavoidable circumstances’ must refer to the closure, the reasons for which they are connected with the business or its function. The circumstances, however unavoidable, may not attract the provision if those circumstances are unrelated to the business of the undertaking or its functions. In order to attract the proviso, the closure of an undertaking must be for unavoidable circumstances beyond the control of the employer and such circumstances must necessarily be in connection with or have nexus with the functioning of the undertaking. The Court accordingly held that illness of the proprietor cannot be an unavoidable circumstance beyond his control as contemplated by the proviso to sub-section (1) of Section 25-FFF. In Shri Rameshwar Dass v. State of Haryana241, the Supreme Court held that if there was complete lawlessness prevailing in the undertaking over the course of a year, it could be ‘unavoidable circumstances beyond the control of employer’ under Proviso to 25-FFF (1). However, in the present case, the

Supreme Court did not decide the issue because in its view, the proper course was to raise an industrial dispute. The strict interpretation given by the Court may be welcomed by the workmen, but at the same time it causes hardship in genuine cases to the management. 5. Enforcement of Section 25-FFF. The problem of enforcement of the provisions for the payment of transfer and closure compensation has attracted great deal of attention. There is no specific penal provision for contravention of the provisions of either Section 25-FF or Section 25FFF. But Section 31 (2) of the Industrial Disputes Act,1947 provides that: whoever contravenes any of the provisions of this Act or any rule made thereunder shall, if no other penalty is elsewhere provided by or under this Act for such contravention, be punishable with fine which may extend to ₹100. The Supreme Court, we have already seen, in Hathi Singh Mfg Co. Ltd v. Union of India242, had held that as the requirements of payment of compensation and service of notice to workmen provided in Sections 25-FF and 25-FFF are not a condition precedent to transfer or closure and therefore, an employer cannot be prosecuted under Section 31 (2) for non-compliance of the provisions of either Section 25-FF or Section 25-FFF. The Court further held that non-compliance of either Section 25-FF or Section 25-FFF only creates civil liability to pay compensation to workmen upon transfer or closure of undertaking. It seems to be a postmortem of the disease. This is also likely to encourage frequent violation of the provisions of the Act. Indeed, in actual practice it is found that delay often occurred in the payment of compensation on closure of undertaking. 6. Additional Restrictions on Industrial Establishments Employing 50 or More Workmen. (1) Section 25-FF A which was inserted by Act 32 of 1972, requires an employer intending to close down an undertaking to serve a notice, in the prescribed manner, on the appropriate government or prescribed authorities at least 60 days before the date on which the intended closure is to become effective stating the reasons for the intended closure of undertaking, (a) This provision shall, however, be not applicable in case of an undertaking: (i) (ii)

in which less than 50 workmen are employed; or in which less than 50 workmen were employed on an average per working day in the preceding 12 months. (b) set-up for the construction of buildings, bridges, roads, canals,

dams or for other construction work or project. (2) Notwithstanding anything contained in sub-section (1), the appropriate government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that provisions of subsection (1) shall not apply in relation to such undertakings for such period as may be specified in the orders. The language of the aforesaid section is clearly mandatory. Thus, a closure effected in fact, without complying with the requirements of Section 25FFA must be held to be devoid of legal effect, invalid and illegal.243 7. Restrictions on Industrial Establishments Employing 100 or More Workmen.244 In 1976, the legislature imposed further restrictions on the power of the management employing 300 or more workmen to close down the undertakings. However, the Supreme Court declared the then Section 25-O ultra vires. This led to the amendment of Section 25-O by Industrial Disputes (Amendment) Act, 1982,245 which lays down the following procedure for closing an industrial establishment (not of seasonal character) employing not less than 100 workmen. 1. An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least 90 days before the date on which the intended closure is to become effective, to the appropriate government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner: Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work. 2. Where an application for permission has been made under subsection (1), the appropriate government, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interest of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a

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copy of such order shall be communicated to the employer and the workmen. Where an application has been made under sub-section (1) and the appropriate government does not communicate the order granting or refusing to grant permission to the employer within a period of 60 days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of 60 days. An order of the appropriate government granting or refusing to grant permission shall, subject to the provisions of sub-section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order. The appropriate government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a tribunal for adjudication: Provided that where a reference has been made to a tribunal under this sub-section, it shall pass an award within a period of 30 days from the date of such reference. Where no application for permission under sub-section (1) is made within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down. Notwithstanding anything contained in the foregoing provisions of this Section, the appropriate government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order. Where an undertaking is permitted to be closed down under subsection (2) or where permission for closure is deemed to be granted under sub-section (3), every workman who is employed in that undertaking immediately before the date of application for permission under this Section, shall be entitled to receive

compensation which shall be equivalent to 15 days’ average pay for every completed year of continuous service or any part thereof in excess of 6 months.

a. Scope of Proviso to Section 25-0(1) The proviso to Section 25-O (1) excludes an undertaking dealing with construction of building, etc., or for other construction work from following the procedure under Section 25-O for closure, cannot be transplanted by any judicial interpretation to be a proviso to Section 25-N which deals with entirely a different topic of conditions precedent to retrenchment of workmen. It is obvious that retrenchment presupposes the termination of surplus workmen in a going concern which is not closed down. If the concern itself is closed down, all the workmen would be terminated by closure and on such closure for calculating the compensation payable to them as closure compensation, the amount of compensation may be computed by adopting the measure for compensation as if it was a running establishment and to that extent Section 25-FFF may be pressed into service by the closed undertaking. However, if the impugned notices issued by employer to its workers are treated to have effected only retrenchment of workmen of an ongoing project or establishment, the proviso to Section 25-O sub-section (1) cannot be pressed in service by any process of judicial interpretation, such an interpretation would go against the very legislative intent in enacting Section 25-N which does not contain any such provision.246

b. Nature of inquiry under Section 25-0(2) In Jayhind Engineering v. State of Karnataka247, the division bench of Karnataka High Court explained that the nature of the inquiry contemplated under sub-section (2) of Section 25-O of the Act envisages that some reasonable time necessarily had to be taken by the state government in the course of the inquiry. Once an inquiry notice is issued on receipt of the application by the state government, the running of the period of 60 days under sub-section (3) of Section 25-O of the Act is arrested. However, if the inquiry goes beyond 60 days even for valid reasons, it cannot be said that permission is deemed to be granted.

c. Scope of Section 25-0(3) Section 25-0(3) makes it clear that in order to get the benefit of deemed permission, two conditions are required to be complied with (i) there should be an application filed as required under sub-section (1) of Section 25-O of the Act,

and (ii) the government should not have made an order granting or refusing to grant permission to the employer within a period of 60 days from the date on which such an application is made. For all purposes, the date of receipt of such an application after representation alone should be taken as the date of filing of the application seeking permission to close down the industrial establishment for the purpose of determining the period prescribed to get the benefit of deemed permission. The date of filing of the application cannot be taken into account to take the view that since there was no order made within 60 days, the applicant is entitled to the benefit of deemed permission. The return of the application by the state government even assuming for the sake of argument is not valid in law, since the application was returned, it has to be held under the circumstances that there was an order made by the state government refusing to grant the permission on such an application. Therefore, if once an application is returned, it must be held that the permission sought is rejected by the state government.248 Procedure for closing down an undertaking under Section 25-O (5). The division bench of the Madhya Pradesh High Court in Ujjain Mill Mazdoor Sangh v. State of M P249 held that Section 25-0(5) could not be interpreted in a manner to impose obligation on the government to necessarily refer the matter to the tribunal for adjudication. A perusal of the provision in sub-section (5) of Section 25-O of the Act shows that word 'may’ occurring therein makes it optional for the government to either review the order for granting or refusing permission for closure or to refer the matter to the industrial tribunal for adjudication. It is not mandatory for the government to resort to both options simultaneously or one after the other. The word 'or’ assumes significance in this context, it may or may not resort to either option, or may take one option. When it elects to take review option, that ends the matter. 8. Special Provisions as to Restarting of Undertaking, Closed Down before Commencement of the Industrial Disputes (Amendment) Act, 1976. Section 25-P lays down special provisions as to the restarting of undertaking closed down before commencement of the Industrial Disputes Amendment Act, 1976. It provides: If the appropriate government is of the opinion in respect of any undertaking of an industrial establishment to which Chapter V-B applies and which closed drown before the commencement of the Industrial Disputes (Amendment) Act, 1976, (a) that such undertaking was closed down otherwise than on account of unavoidable circumstances beyond the control of the employer; (b) that there are possibilities of restarting the undertaking;

(c) that it is necessary for the rehabilitation of the workmen employed in such undertaking before its closure or for the maintenance of supplies and services essential to the life of the community to restart the undertaking or both; and (d) that the restarting of the undertaking will not result in hardship to the employer in relation to the undertaking, it may, after giving an opportunity to such employer and workmen, direct, by order published in the official gazerte, that the undertaking shall be restarted within such time (not being less than one month from the date of the order) as may be specified in the order. 9. Penalty for Closure. Section 25 R provides penalty for violation of Sections 25-O and 25-P: It reads: (1) Any employer who closes down an undertaking without complying with the provisions of sub-section (1) of Section 25-O shall be punishable with imprisonment for a term which may extend to 6 months, or with fine which may extend to ₹5,000 or with both. (2) Any employer who contravenes an order refusing to grant permission to close down an undertaking under sub-section (2) of Section 25-O or a direction given under Section 25-P shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to ₹5,000, or with both and where the contravention is a continuing one, with a further fine which may extend to ₹2,000 for every day during which the contravention continues after the conviction. 10. Constitutional validity of Sections 25-O and 25-R. Excel Wear v. Union of India250 decided an extremely important issue of constitutionality of Section 25-R under the Industrial Disputes (Amendment) Act,1976 (since amended). The principal issues were: (i) Whether the right to close down the business was an integral part of the fundamental right to carry on business? (ii) Whether Section 25-O or 25-R as they existed prior to 1982, violated Articles 14 and 19 (1) (g) of the Constitution? (iii) Can the partners challenge the validity of the law in the name of the firm and company along with the shareholders? The facts of the case were as follows: The petitioners filed three writ petitions which raised common question of law. The judgement covered all the three. In the first petition the petitioner firm, Excel Wear—a partnership firm was involved, in the second Acme Manufacturing

Company Ltd and in the third petition, shareholders of Apar (P) Ltd were involved. In the first case, about 400 workmen were employed. According to the petitioner, various kinds of situations such as labour trouble of an unprecedented nature, non-availability of raw material, running of the factory at loss, paucity of adequate number of competent and suitable persons in the family of partners, and unsurmountable difficulty in the replacement of damaged or worn-out machineries occurred from the year 1974 to 1976. Finding it difficult, almost impossible, Excel Wear applied for previous approval of the state government, in accordance with Section 25-O (1). The government, however, refused to accord the approval on the ground that the reasons given by the employer for the intended closure were ‘prejudicial to public interest’. The petitioner challenged the validity of this order. In the second case, the petitioner, decided to close down the establishment due to huge losses incurred by him on account of low productivity, serious labour unrest and indiscipline resulting in various incidents of assaults or the like. The company accordingly applied to the state government on 2 May 1977 under Section 25-O (1) for approval of the intended closure. The government again refused to grant approval on the ground that it was prejudicial to public interest. In the last petition, the company was compelled to close down the factory. It, thereupon, served a notice on the state government under Section 25-O (1) on 16 September 1976. Again, the government refused permission on the ground that the stated reasons of intended closure were inadequate and insufficient and were prejudicial to public interest. The company, therefore, filed a petition before the Supreme Court. The challenge was directed against the new Chapter V-B as a whole, but mainly centred round the provisions with regard to Sections 25-O and 25-R. According to the employer, the impugned law was ultra vires the Constitution. The Supreme Court after considering the concept of ‘socialism’ or a ‘socialistic State’ examined the reasons given by the government in refusing the permission for closing down and found it to be vague and universal. It observed: Whimsically and capriciously, the authority can refuse permission to close down. Cases may be there, and those in hand seem to be of that nature, where if the employer acts according to the direction given in the order, he will have no other alternative but to face ruination in the matter of personal safety and on the economic front. If he violates it, apart from the civil

liability which will be of a recurring nature, he incurs the penal liability not only under Section 25-R of the Act but under many other statutes. The Court then examined the question whether it would be incumbent for the authority to give reasons in an order under Section 25-O (2) and observed: If the government order is not communicated to the employer within 90 days, strictly speaking, the criminal liability under Section 25-R may not be attracted if on the expiry of that period the employer closes down the undertaking. But it seems the civil liability under Section 25-O (5) will come into play even after the passing of the order of refusal of permission to close down on the expiry of the period of 90 days. Intrinsically no provision in Chapter V-B of the Act suggests that the object of carrying on the production can be achieved by the refusal to grant permission although in the Objects and Reasons of the Amending Act such an object seems to be there, although remotely, and secondly, it is highly unreasonable to achieve the object by compelling the employer not to close down in public interest for maintaining the production.251 The Court was of the view that the order passed by the authority was not subject to any scrutiny by any higher authority or tribunal either in an appeal or application. The Court then proceeded to examine whether Chapter V-B suffered from any vice of excessive and unreasonable restrictions under Articles 14 and 19 of the Indian Constitution. The Court answered it in affirmative when it observed: It is no doubt true that Chapter V-B deals with certain comparatively bigger undertakings and of a few types only. But with all this difference, it has not made the law reasonable. It may be a reasonable classification for saving the law from violation of Article 14 but certainly it does not make the restriction reasonable within the meaning of Article 19 (6). Similarly, the interest of ancillary industry cannot be protected by compelling an employer to carry on the industry although he is incapacitated to do so. All the comprehensive and detailed information given in the application forms are of no avail to the employer if the law permits the authority to pass a cryptic,

capricious, whimsical and one-sided order.252 Thereafter, the Court rejected the contention that a law which takes away or abridges the fundamental rights of citizens under Article 19 (l) (g) would be void and, therefore, non est in respect of non-citizens. The last contention whether Chapter V-B was saved by Article 31 C of the Constitution was also negatived. 11. Legislative Response. In order to fill the gap created by the Supreme Court in Excel Wear v. Union of India, supra, Section 25-O of the Industrial Disputes (Amendment) Act, 1982 (as is given in the text) has made an amendment. 12. Constitutional validity of Section 25-O of the Industrial Disputes Act. The constitution bench of the Supreme Court on 17 January 2002 in M/s Orissa Textile and Steel Co. Ltd v. State of Orissa253 decided an extremely important issue relating to constitutional validity of Section 25-O of the ID Act incorporated by the amendment Act 46 of 1982254 (hereinafter referred to as the amended Section 25-O). The Court, by upholding the validity of the amended Section 25-O, has settled the controversy once and for all. Prior to the Supreme Court decision, the high courts were, however, divided on the issue of constitutional validity of amended Section 25-O. While the Delhi High Court in D C M Ltd v. Lieutenant Governor255 and the Kerala High Court in Laxmi Starch v. Kundra Factory Workers Union256 upheld the constitutionality of section 25-O, the Karnataka High Court in Union of India v. Stumpp Schedule and Somappa Ltd257 and the Calcutta High Court in Maulis of India Ltd v. State of West Bengal258 held section 25-O as a whole and Section 25-R insofar as it relates to awarding of punishment for violation of section 25-O to be constitutionally invalid for violation of Article 19(l)(g) of the Constitution. The Kerala High Court in Laxmi Starch case while upholding the validity of the amended section 25-O, observed that it is not violative of Article 19(l)(g) as reasonable restrictions are permissible under Article 19(6) of the Constitution. The provision is also not violative of Article 14 of the Constitution because (i) no arbitrariness is involved, as the classification is on a rational basis as between big establishments and small ones having intelligible difference and reasonable nexus to the object: and (ii) it is not lacking in procedural safeguards to avoid or correct arbitrariness. The approach adopted by the Supreme Court may now be examined.

Scope of amended Section 25-O The Supreme Court analysed the scope of amended Section 25-O and ruled: (i) the appropriate government before passing an order is bound to make an inquiry; (ii) the order passed by the appropriate government has to be in writing and should contain reasons; (iii) the employer has to give notice by filling up a form in which he has to give precise details and information; (iv) the requirement to make an inquiry postulates as held in Meenakshi Mills’ case, an inquiry into the correctness of the facts stated by the employer in the notice served by him and also all other relevant facts and circumstances including the bona fides of the employer; (v) an opportunity to be heard would have to be afforded to the employer, workmen and all persons interested; (vi) the detailed information which the employer gives would enable the appropriate government to make up its mind and collect necessary facts for the purposes of granting or refusing permission. The appropriate government would have to ascertain whether the information furnished is correct and whether the proposed action is necessary and, if so, to what extent; (vii) the making of an inquiry, the affording of an opportunity to the employer, the workmen and all interested persons and the necessity to pass a written order containing reasons envisages exercise of functions which are not purely administrative in character but quasi-judicial in nature; and (viii) the words ‘appropriate government, after making such inquiry, as it thinks fit’ as held in Meenakshi Mills’ case does not mean that the government may dispense with the inquiry at its discretion. These words only mean that the government has discretion about the nature of the inquiry it is to make.

Time limit The Court, while dealing with the time limit fixed in the amended sub-section (4) of Section 25-O, namely, that the order of the appropriate government shall remain in force for one year from the date of such order held that the provision for a period of one year makes the restriction reasonable. Justifying the

provisions, the Court said that if the reasons were genuine and adequate, the very fact that they have persisted for a year or more is sufficient to necessitate a fresh look. Also, if the reasons have persisted for a year, it can hardly be said that they are the same. The difficulties faced during the year, provided they are genuine and adequate, would by themselves be additional grounds. Further, by the end of the year the interest of the general public or other relevant factors, which necessitated refusal of permission on the earlier occasion may not prevail. The appropriate government would necessarily have to make a fresh inquiry, give a reasonable opportunity of being heard to the employer, workmen and all concerned.

Deemed permission The Supreme Court held the defect in the original Section 25-O regarding the effect of not communicating the order of the government on the application has been cured by incorporating a deeming clause in amended sub-section (3) of Section 25-O which provides that if the appropriate government does not communicate the order within a period of 60 days from the date on which the application is made, the permission applied for shall be deemed to have been granted.

Review of the order granting or refusing permission Would the amended sub-section (5) of Section 25-O which provides that the appropriate government may, either on its own or on an application made by the employer or any workman, review its order granting or refusing permission or refer the matter to a tribunal for adjudication and if a reference is made to a tribunal (under this sub-section) then the tribunal should pass its award within a period of 30 days from the date of such reference, cure the defects as pointed out in Excel Wear v. Union of India?259 To examine the above issue, it is necessary to consider the contentions of the employer, namely, (i) it is left to the discretion of the appropriate government to either review or make a reference; and (ii) the employer has no right to compulsorily seek a review or a reference. The Court rejected the aforesaid contentions and observed:260 A proper reading of sub-section (5) of amended Section 25-O shows that in the context in which it is used, the word ‘may’ necessarily means ‘shall’. Thus the appropriate government ‘shall’ review the order if an application in that behalf is made

by the employer or the workman. Similarly, as required by the employer or the workman, it shall refer the matter to a tribunal for adjudication. As submitted by the learned Attorney General, in a review the appropriate government would have to make an inquiry into all necessary facts, particularly into the genuineness and adequacy of the reasons stated by the employer. An opportunity of being heard would have to be given to the employer, workmen and all interested persons. The order on review would have to be in writing giving reasons. Thus, in exercising powers of review, the appropriate government would be performing quasi-judicial functions. The Court added:261 Sub-section (5) of amended Section 25-O provides that award should be passed within a period of 30 days from the date of reference. Even though it does not provide any time-frame within which the review is to be disposed of; it is settled law that the same would have to be disposed of within a reasonable period of time. In our view, a period of 30 days would be a reasonable period for disposing of a review also. This review and/or reference under amended Section 25-O would be in addition to a judicial review under Article 226 or Article 32.

Exceptional circumstances The Supreme Court, while dealing with the amended sub-section (7) of Section 25-O which provides that if there are exceptional circumstances or accident in the undertaking or death of the employer or the like, held that the appropriate government could direct that the provision of sub-section (1) would not apply to such an undertaking. In other words, the Court recognized the fact that if there were exceptional circumstances then there could be no compulsion to continue to run the business. The Court, however, clarified that it was not laying down that some difficulty or financial hardship in running the establishment would be sufficient. What is required is that the employer must show that it has become impossible to continue to run the establishment. The Court held that it is from this point of view that the restrictions imposed may seem to be reasonable and in the interest of general public.

An evaluation

To sum up, it may be said that the Supreme Court in the case under review has drawn an analogy with section 25-N in Meenakshi Mills case and generally extended the principles laid down therein while considering the constitutional validity of section 25-O. However, the Court was cautious in interpreting the words ‘the appropriate government, after making an inquiry, as it thinks fit’ to mean that the appropriate government has discretion about the nature of inquiry it is to make. It does not mean that it may dispense with the inquiry at its discretion. While dealing with nature of the function performed by the appropriate government in exercising its powers to review, the Court ruled that it performs judicial functions. Being aware of the financial hardship in running the establishment, the Court pointed out that in such a situation the employer must prove that it had become impossible for him to continue to run the establishment. Justifying the constitutional validity of the amended Section 25-O, the Court pointed out the phrase ‘in the interest of the general public’ is a phrase of definite connotation and a known concept. This phrase, as used in amended Section 25-O, has been bodily lifted from Article 19(6) of the Constitution of India. In, S G Chemical and Dyes Trading Employees’ Union v. S G Chemicals and Dyes Trading Ltd262, the Supreme Court held that Section 25-O applies to the closure of ‘an undertaking of an industrial establishment’ and not to the closure of ‘an industrial establishment’. Section 25-L, however, defines only the expression ‘industrial establishment’ and not the expression 'an undertaking of an industrial establishment’. It also does not define the term ‘undertaking’. Section 25-L does not require that an undertaking of an industrial establishment should also be an ‘industrial establishment’ or it should be located in the same premises as the ‘industrial establishment’. The term ‘undertaking’ though it occurs in several sections of the Industrial Disputes Act, as for instance, Sections 25-FF,25-FFA and 25-FFF, is not defined anywhere in the Act. Even the new Clause (ka) which was inserted in Section 2 by the Amendment Act, 1982, defines the expression ‘industrial establishment or undertaking’ and not the term ‘undertaking simpliciter’. It would appear from the opening words of Clause (ka) namely, ‘industrial establishment or undertaking’ means an establishment or undertaking in which any industry is carried on. The term ‘undertaking’ in that definition applies to an industrial undertaking. It would thus appear that the word ‘undertaking’ wherever it occurs in the Industrial Disputes Act, unless a specific meaning is given to that term by that particular provision, it is to be understood in its ordinary meaning and sense.

13. Penalty for closure. Section 25-R (1) prescribes penalty for an employer who closes down an undertaking without complying with the provision of Section 25-O (l), which may extend to 6 months, or with fine which may extend to ₹5,000 or with both. Further, Section 25-P (2) provides that ‘any employer,’ who contravenes an order refusing to grant permission to close down an undertaking under Section 25-O (2) or a direction given under Section 25-P, shall be punishable with imprisonment for a term which may extend to one year, or with a fine which may extend to ₹5,000 or with both, and where the contravention is a continuing one, with a further fine which may extend to ₹2,000 for every day during which the contravention continues after the conviction. 14. Adequacy of punishment awarded for violating Section 25-O. The tendency of the Court to strictly adhere to severe punishment provided under the Act for violation of labour laws is evident from the decision of the Gujarat High Court in State of Gujarat v. Continental Textile Mills263. In this case, the only question involved was whether the fine of ₹100/- imposed on each of the accused (charged with breach of Section 25-0(1) of the ID Act) was sufficient. The Court held that in the circumstances of the case, fine of ₹100/- was nothing but a mockery of statutory provisions. It enhanced, therefore, the sentence to 3 months’ simple imprisonment and fine of ₹5,000/- and in default of payment of the fine, to undergo a further period of one month's simple imprisonment. A reading of Section 25-O clearly shows that for closure, the procedure prescribed under sub-clause (1) of the said provision is mandatory be followed by an employer who intends to close down the undertaking. A failure to comply with the provisions of the said Section makes an employer liable under sub-clause (1) of Section 25-R for punishment of imprisonment for a term upto 6 months or with a fine upto ₹5,000/- or both.

1 2 3

See, for instance, Annamalai Timber Trust Ltd (1950) LLJ 994 (IT). Section 25 M. Under Section 25 L, it is provided that for the purposes of Chapter VB (a) ‘industrial establishment means (i) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948 (63 of 1948);(ii) a mine as defined in clause(7) of sub-section(1) of Section 2 of Mines Act, 1952 (35 of 1952), or (iii) a plantation as defined in clause (1) of Section 2 of Plantations Labour Act, 1951 (69 of 1951); (b) notwithstanding anything contained in the

4 5 6 7 8

9

10 11 12 13 14 15 16 17 18

sub-clause (ii) of clause (a) of Section 2. (ii) in relation to any company in which not less than 51 per cent of the paid-up share capital is held by the Central Government or (iii) in relation to any corporation not being a corporation established by or under any law made by Parliament, the Central Government shall be the appropriate government. Excel Wear v. Union of India, (1978) 2 LLJ 527 (SC). Workmen v. Firestone Tyre and Rubber Co. (1976) I LJ 493 (SC). Kairbetta Estate v. Rajmanickam, (1960) 2 LLJ 275 (SC). For details see, Suresh C Srivastava, ‘A Forgotten Element of Lockout’. 1966 Ban LJ 145. Section 2 (kkk) of the Act defines ‘lay-off ’ (with its grammatical variations and cognate expressions), to mean: the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or natural calamity or for any other connected reason to give employment to a workman whose name is borne on the muster-rolls of his industrial establishment and who has not been retrenched. Explanation. Every workman whose name is borne on the muster rolls of the industrial establishment and who presents himself for work at the establishment at the time appointed for the purpose during normal working hours on any day and is not given employment by the employer within two hours of his so presenting himself shall be deemed to have been laid-off on that day within the meaning of this clause: Provided that if the workman, instead of being given employment at the commencement of any shift for any day is asked to present himself for the purpose during the second-half of the shift for (the day and is given employment then, he shall be deemed to have been laid-off for one half of that day: Provided further that if he is not given any such employment even after so presenting himself, he shall not be deemed to have been laid-off for the second half of the shift for the day and shall be entitled to full basic wages and dearness allowances for that part of the day. See, Kairbetta Estate v. Rajmanickam, (1960) 2 LLJ, 275: See also Workmen of Dewan Tea Management, (1964) I LLJ 358 (SC); Illness of Assistant Managing Director is not a ground for lay-off. See Management of Gauhati Press (P) Ltd v. Labour Court, (1983)Lab. IC 824. Workmen of Dewan Tea Estate v. Their Management,(1964) I LLJ 358. lbid. Workmen v. Firestone Tyre and Rubber Co., (1976) 1 LLJ 493 (SC). Id. at 499. For instance, the Madras High Court in K Gurumurthy v. Simpson & Co.,(1981) 2 LLJ 360 held that Section 25 M was ultra vires the Constitution. Section 25 K. 1998 Lab. IC 834 (SC). See Section 2 (m) of the Factories Act 1948. See Section 2 (7) of the Mines Act, 1952.

19 See Section (f) of the Plantation Labour Act, l95l. 20 Section 25 A. 21 K T Rolling Mills Ltd v. M R Mehar, (1962)2LLI 667 (Bom.). 22 South India Corporation v. All Kerala Cashewnut Factory Workers’ Federation, (1960) 23 24 25 26 27 28

29 30 31

32 33 34 35

36 37

2 LLJ 103 (Kerala). For details, see Suresh C Srivaslava, Lay-off and Labour Law, (1969) 2 LLJ (Journal Section iii). Industrial Employees Union, Kanpur v. J K Spinning and Weaving Mills Co., (1956) l LLJ 327 (LAT). Associated Cement Companies Ltd v, Their Workmen, (1960) I LLJ 7 (SC). Alloy Steel Project Company v. Their Workmen, (1971) 1 LLJ (SC). Suresh C Srivastava, Lay-off and Labour Law, (1969)2 LLJ (Journal section) (iii). Clause (ii) of Section 25 E of the Industrial Disputes Act, 1947 provides that a workman shall not be entitled to any compensation ‘if he does not present himself for work at the establishment at the appointed time during normal working hours at least once a day.’ Nutan Mills v. Employees’ State Insurance Corporation, (1956) I LLJ 215 (Bombay). Id. at 2l9. Section 25 D of the Act provides: ‘Notwithstanding that workmen in any industrial establishment have been laid-off, it shall be the duty of every employer to maintain for the purposes of this Chapter a muster-roll, and to provide for the making of entries therein by workmen who may present themselves for work at the establishment at the appointed time during normal working hours.’ K T Rolling Mills v. Mehar, (1962) 2LLJ 667 (Bombay). Kays Construction Company v. State of Uttar Pradesh, (1965) 2 LLJ 429 (SC). ld. at 432. Lay-off of workmen in accordance with the prevailing practice and on the same terms and conditions cannot amount to a change in the conditions of service [see Sathe Biscuit Chocolate Company Ltd, (1958) 2 LLJ 70.] This issue was left open by the Supreme Court in Modi Food Products and Co. Ltd v. Faquir Chand Sharma, (1956) 1 LLJ 749. See Aruna Mills Company Ltd v. Textile Labour Association, (1951) 1LLJ 647 and Sri Dattaram Shankar v. Indian Smelting and Refining Company Ltd, (1953) 2LLJ 577. This line of thinking was followed by the Supreme Court in Modi Food Products and Co. Ltd v. Faquir Chand Sharma, (1956) | LLJ, 749 wherein Justice Ayyar observed: ‘It is common ground that there are no statutory rules prescribing the conditions under which there could be a lay-off. If there had been, they would operate as conditions of service between the parties, and then the question would simply have been whether there had been a compliance with them. Under the provisions of the Industrial Employment (Standing Orders) Act, 1946, certain standing orders had been framed. With reference to this matter, counsel on both sides state that after the enactment of the Industrial Disputes (Amendment) Act (XLIH of 1953) they are no longer in force and that there are no statutory provisions applicable to the present dispute. We must, therefore, decide the

38 39 40 41 42 43 44 45

question on the footing that the only condition which the parties might be taken to have agreed to is that the lay-off should be for adequate grounds and for a reasonable period. On this question, there is a clear finding in favour of appellant. The tribunal has found that groundnut and neem seeds were not available at parity prices, and for that reason, the work had to be stopped. It is not likely that businessmen would cut their profits to spite the workmen. The period of the lay-off was expressed to be until the next groundnut season, and we have been told that the season for groundnut begins sometimes in November-December. In fact, all the respondents have been re-employed in relays from September onwards, and by the first week of December, all of them had been absorbed. On the finding of the tribunal that the lay-off was justified, it follows that the application of the respondents under Section 23 of the Act was liable to be dismissed on the ground that there had been no contravention of Section 22 (a). Krishna Distt. Marketing Society Ltd v. N V Purnachandra Rao, (1987) Lab. IC 1651. ld. at 1658. See ‘Statement of Objects and Reasons’, Gazette of India, dated January 28, 1976 Part II. Section 2. Ext. 491. Barsi Light Railway Company v. Joglekar (K N), 1957 SCR 121. Hari Prasad Shivshankar Shukla v. Divalkar (A D), AIR 1957 SC 121. Barsi Light Railway Company v. Joglakar (K N) op. cit. Id. at 41. Pipraich Sugar Mills v. Pipraich Sugar Mills Mazdoor Union, AIR (1957) SC 95. The facts were as follows: The sugar mills situated in Pipraich in Gorakhpur District which suffered a heavy loss due to short supply of sugarcane and whose production and supply was controlled by the government, after obtaining the permission of the government, decided to sell the mill to a Madras firm in October 1950. It was agreed upon between the vendor and the vendee that the machinery had to be dismantled and transported to Madras by the seller. When the workers came to know about this transaction, they made unsuccessful attempts to persuade the government to withdraw the permission to sell the mills. Thereafter they decided to go on strike from 12 January 1951. In the course of negotiation, the employer agreed to pay 25 per cent of the profits from the sale to the workers provided they did not go on strike and helped the management in dismantling and transporting the machinery. Upon this agreement the strike was called off. On the day the machinery was to be dismantled for transportation to Madras to be re-erected there, the management asked the workers to help. The workers on being asked by the management, however, refused to do so. Thereupon on 28 February 1951, the management gave a notice to the workers to the effect that those who would not cooperate in dismantling the machinery will be discharged with effect from 1 March 1951 and the workers will be paid upto 14 March, 1951. In view of the inability of the seller to take up the contract, the purchaser entered into direct negotiation with the workmen and concluded an agreement with them for dismantling the machinery. On 14 March 1951 the employers gave notice to the workers that the machinery had to be transferred to the vendees on 15 March l95l and workers will be paid upto 16 March 1951 and this later date was extended upto 21 March, on the request of the workers on which date they were

46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68

discharged. On 19 April 1951, the workers claimed the bonus of 25 per cent under January agreement, but this claim was rejected by the employers. On 16 November 1951 the dispute was referred by the Uttar Pradesh government to the industrial tribunal for adjudication. The tribunal held that there was a contract between the workmen and the management to pay the said sum of ₹45,000 as bonus and accordingly directed the management to pay the same. The labour appellate tribunal upheld the award. Thereupon the employer preferred an appeal before the Supreme Court. Justice Venkataraman Ayyar of the Supreme Court agreed with the management that there was no concluded agreement between the parties and therefore, there was no liability to pay the said sum to workmen. However, his Lordship emphasized the need of economic reason in the ease of retrenchment and held that there was a discharge of workmen under both the circumstances when there was retrenchment and closure of business and, therefore, ‘the compensation was to be awarded under the law not for discharge as such but for discharge on retrenchment.’ Pipraich Sugar Mills v. Pipraich Sugar Mills Mazdoor Union, op. cit. AIR 1976 SC 1111; See Suresh C Srivastava ‘Benefits against Forced Unemployment in Indian Industries’ IJIR Vol. 10, No. 3, 197 5. 347. AIR 1976 SC 1111 at 1114. M/s. Hindustan Steel Ltd v. Labour Court, AIR 1977 SC 31. State Bank of India v. Sundara Money, AIR 1976 SC 1111. Delhi Cloth and General Mills Co. Ltd v. Shambhu Nath Mukherji AIR 1978 SC 8. Santosh Gupta v. State Bank of Patiala, (1980) 2 LLJ 72 (SC). Gujarat Steel Tubes Ltd v. GST. Mazdoor Sabha, (1980) l LLI 137. Santosh Gupta v. State Bank of Patiala. op. cit. Gujarat Steel Tubes v. Gujarat Steel Tubes Mazdoor Sabha (1980) 2 LLJ 72. State Bank of India v. N Sundara Money, AIR 1976 SC 1111. Hindustan Steel Ltd v. State of Orissa, AIR 1973 SC 31. Barsi Light Railway Company v. K N Joglekar, op. cit. Pipraich Sugar Mills v. Pipraich Sugar Mills Mazdoor Union, (1957) 1 LLJ 235 (SC). Banaras Ice Factory Ltd v. Their Workmen, (1957) I LLJ 253 (SC). Ramesh Kumar v. Central Government Industrial Tribunal, (1980) Lab. IC 1116 (Bom.). Surindra Kumar v. Industrial Tribunal, (1981) 1 LLJ 386. (1982) 1 SCC 545; AIR 1982 SC 854; (1982) 1 LLJ 330. A question arose whether the termination for unauthorized absence from duty by workmen amounted to ‘retrenchment’. (1976) 3 SCR 160. AIR 1977 SC 31. AIR 1981 SC 1219. AIR 1978 SC 8. AIR 1981 SC 422.

69 AIR 1981 SC 1253. 70 AIR 1957 SC 121. 71 (1982) Lab. IC 8l1 at 815; See also Devinder Singh v. Muncipal Council, Sanaur, 2011

Lab IC 2799 para 10 (SC). 72 (1983) 1 LLJ 8. 73 (1980) 2 LLJ 72. 74 (1981) 2 LLJ 70. 75 (1982) 1 LLJ 330. 76 Surender, Kumar Verma v. Central Government Industrial, AIR 1981 SC 422. 77 (1982) 1 LLJ 330 (SC). 78 1998 Lab. IC411(SC): See also Narmada Building Materials (P) Ltd v. Devassy, (1999)

1LLJ 142 (Kerala). 79 (1994) 2SCC 323: (1994 AIR SCW 778). 80 AIR 1982 SC 1126: (1982) 25CF 1246 (1982) 1 SCC 205. 81 (1996) 7 SCC 139. 82 1993 1 C.L.R. 467. Also see Hari Singh v. I.T. cum-L.C. Rohtak, (1993) II LLN 244;

Kurukshetra Central Co-operative Bank Ltd v. State of Haryana,1993 (66) FLR 197. 83 1993 II LLN 244. 84 1994 Lab. IC 1973; The same view was taken in Mohd. Abdul Kadir v. A.P. State Road

85 86 87 88 89 90 91 92 93 94 95

Corporation, (1984) 2 LLJ 75 (HC Andhra); Desh Raj v. Industrial Tribunal, (1984) Lab IC 1651 1HC Patna) and H.M.T. Ltd v. Labour Court, (1983)ILLI 33'7 (H.C. Kerala); Roop Narain Shukla v. Industrial Tribunal, (1997) LLR 924 (H C Punjab & Haryana). (1990) II CLR 542. (1995) Lab. IC 280. (1991) I LLN 490. (1979) 2LLJ 363. (1990) Lab. IC 1750 (SC). (1990) (61) FLR 73. (1996) I SCC 595: AIR 1996 SC 1001. (2002) Lab IC 2624. 2003 LLR 625 (SC). (2003) 4 SCC 27. In order to restrict the wide coverage given by the courts to the term ‘retrenchment’, Section 2 (oo) was amended adding sub-clause (bb) to it by the Industrial Disputes (Amendment) Act, 1984 which came into effect from 18 August 1984. The scope of clause (bb) of Section 2 (oo) has been the subject-matter of judicial controversy. Courts have interpreted the expression ‘retrenchment’ in its widest possible connotation despite the legislative intent behind clause (bb) to restrict the scope of definition of retrenchment.

96 Id. at 36–37. 97 1998 LLR 383 (SC); See also Escorts Ltd v. Presiding Officer, (1997) 2 SCC 621;

98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130

General Secretary, M.P.K.M. Panchayat (HMS) v. Western Coalfield Ltd, (1999) I LLJ 772. JT 1995 (6) SC 547. (1998) I LLJ 343. (2005) LLR 706. (1992) Lab. IC 451 (Orissa). (1991) Lab. IC 494. J.T. (1994) (t) SC 281. AIR 1957 SC 121. AIR 1960 SC 610. AIR 1964 SC 1617: (1964) 6 SCR 22. (1976) 1 SCC 822: 1976 SCC (L&S) 132: (1976) 3 SCR 160. (1980) 3 SCC 340: 1980 SCC (L&S)409: (1980) 2 LLJ 72. (1981) 3 SCC 225: 1981 SCC (L&S)478: AIR 1981 SC 1253. (1982) 1 SCC 545: 1982 SCC (L&S)124. (1980) 4 SCC 443: 1981 SCC (L&S)16. AIR 1981 SC 422. (1984) 4 SCC 509: 1984 SCC (L&S)144. (1991) 1 SCC 189: 1991 SCC (L&S)147. (2003) 4 SCC 619: 2003 SCC (L&S)545. 2010 (4) SCALE 203. Lal Mohammad v. Indian Railway Construction Co. Ltd, 1999 LLR 100. (2003) LLR 382. (1960) 2 SCR 866. AIR 1960 SC 251. 1967 (14) FLR 356. (1970) 1 SCC 822. (1976) 3 SCR 160. 2003 (97) FLR 110. 2010 (4) SCALE 203. (1992) 2 LLN 752. 1995 Lab. IC 654. EID Parry (India) Ltd v. Labour Court, 1992 Lab. IC 278. (1981) 2 LLJ 70 (SC). (2005) LLR 849. (2012) 1 SCC 285.

131 1985 Lab. IC 1733 (SC). 132 1986 Lab. IC 98. 133 1986 Lab. 101 (SC). 134 (2006) 8 SCC 544. 135 1962 Supp (3) SCR 589. 136 (2005) 2 SCC 183. 137 (2007) 5 SCC 742. 138 (2009) LLR 1014: (2009) 14 SCC 43. 139 2002 Lab. IC 987. 140 (2004) 8 SCC 195. 141 2005 LLR 443 (SC). 142 2005 LLR 446 (SC). 143 2005 LLR 737. 144 (2004) 8 SCC 161. 145 (2006) 1 SCC 106. 146 2007 LLR 260. 147 2008 LLR 435. 148 2009 LLR 875. 149 (2009) 11 SCC 522. 150 (1992) 1 LLN 939. 151 (1992) 2 LLN 1037. 152 (2004) 1 SCC 605: 2004 SCC (L&S) 248. 153 (2012) 1 SCC 285. 154 State of Bombay v. Hospital Mazdoor Sabha, (1960) I LLJ 251 (SC). 155 District Labour Association v. Its Ex-employees, (1960) 1 LLJ 802 (SC). 156 Workmen of Subong Tea Estate v. Subong Tea Estate, op. cit. 157 Bombay Union of Journalists v. State of Bombay, op.cit. 158 K V Rajendran v. Deputy Commissioner, (1980) 2 LLJ 276 (Mad.). 159 Excel Wear v. Union of India, (1978) 2 LLJ 527 (SC). 160 Ibid. 161 (1992) 2 LLJ 295. 162 (1992) 2 LLJ 295 at 313. 163 1986 Lab. IC 749. 164 1999 Lab. IC 407 (SC). 165 (2005) LLR 305. 166 Delhi Cloth and General Mills Co. Ltd v. Shambhu Nath Mukheiji, (1978) 1 LLJ 1 (SC). 167 Workmen of Subong Tea Estate v. Management of Subong Tea Estate, (1964) 1 LLJ 333

(SC). 168 (1984) 1 SCC 509. 169 2010 (4) SCALE 203. 170 (2010) 3 SSC 192. 171 (2006) 1 SSC 479: AIR 2005 SCW 6314. 172 (2007) 9 SCC 353. 173 (2007) 1 SCC 2007. 174 (2007) 9 SSC 748. 175 (2008) 5 SSC 75 176 (2008) 4 SSC 261. 177 (2008) 1 SSC 575. 178 2009 LLR 1254. 179 2010 (8) SCALE 583. 180 2011 (12) SCALE 327. 181 UP State Brassware Corporation Ltd v. Udai Narain Pandey, (2006) 1 SCC 179. 182 PK V Distillery Ltd v. Mahendra Ram (2009) 5 SCC 705. 183 M/s Reetu Marble v. Prabhakaran Shukla, (2010) 2 SCC 70. 184 Indian Cable Co. Ltd v. Its Workmen, (1962) 1 LLI 409. 185 Pravat Kumar Kar v. WTC Parker, (1949) 1 FJR 245. 186 Indian Tyre and Rubber Co. v. Their Workmen (1957) 2 LLJ 506. 187 Om Oilseeds Exchange Ltd v. Their Workmen, AIR 1966 SC 1657, 1959. 188 AIR 1966 SC 1657 at 1660. 189 Ibid. 190 Workmen of Sudder Workshop of Jorhaut Tea Co. v. Management, (1980) Lab. 1C 742

(SC). 191 Id. at 743–44. 192 (1980) Lab. IC 742 at 744–45. 193 Suraj Prakash Bhandari v. Union of India, (1986) Lab 1C 671 (SC). 194 (2010) 3 SCC 192. 195 Swadeshmitran v. Their Workman, (1960) 1 LLJ 504 at 507. 196 Tamil Nadu Transport v. Mariappan, (1970) 1 LLJ 90 at 92 (Mad.). 197 M/s Glodstone Lyall & Co. Ltd v. State of West Bengal, (1983) Lab. 1 C 1425 (Cal.). 198 (2010) 3 SCC 192. 199 (1996) 5 SCC 419. 200 (1999) 3 SCC 14. 201 (2006) 13 SCC 28. 202 Nuller and Phippa (India) v. Their Employers’ Union, (1967) 2 LLJ 222.

203 Cawnpore Tannery Ltd v. S Gupta, (1961) 2 LLJ 110 (SC). 204 (1963) 2 LLJ 65. 205 AIR 1966 SC 175. 206 1991 (1) JT 109. 207 AIR 1996 SC 2526. 208 (2010) 3 SCC 192. 209 (1961) 2 LLJ 110 at 112. 210 (1963) 2 LLJ 65 at 68; AIR 1964 SC 567; 24 FJR 266. 211 (1993) 1 LLJ 770 at 774; AIR 1964 AP 56; 24 FJR 333. 212 (1993) 2 LLJ 402 (B), dissenting from (1963) 1 LLJ 770 (AP). 213 See for instance, Annamalai Timber Trust, (1952) 2 LLJ 604 (LAT); Samalkot Tile

Factory, (1951) 2 LLJ 509 (LAT). 214 See for instance, Indian Metal and Metallurgical Corporation, (1952) 1 LLJ 364 (Mad.);

215 216 217 218 219 220 221 222 223 224 225 226 227 228 229

230 231 232 233

Jaya Bharat Tile Works, (1954) 1 LLJ 286 (Mad.); Maharaj Kishengarh Mills Ltd, (1953) 2 LLJ 214 (Raj.). See for instance, Express Newspapers Ltd, (1962) 2 LLJ 22 (SC). Barsi Light Railway Co. v. Joglekar, (1957) 1 LLJ 243 (SC). RS Madho Ram Sons (Agencies) Pvt. Ltd v. Its Workmen, (1964) 1 LLJ 366 (SC). (1964) 1 LLJ 333 (SC). (1970) 2 SCJ 118. AIR 1969 SC 744. (1997) 1 SCC 562. (1962) 2 LLJ 621 (SC). (2009) 3 CLR 682. (1962) 2 LLJ 629. (1964) 1 LLJ 366 (SC). 1993 Lab. IC 428. (2012) 1 LLJ 625 (SC). See M/s Avon Services Production Agencies (P) Ltd v. Industrial Tribunal, Haryana AIR (1979) SC 120. Managing Director, Harynana Seed Development Corporation v. Presdiging Officer, (1979) LLR 806 (SC); The Court also held that the respondents are entitled to be appointed if any junior person is appointed. Hathi Singh Mfg Co. v. Union of India, (1960) 3 SCR 528 (SC). Workmen of Straw Board Manufacturing Co. Ltd v. M/s Straw Board Manufacturing Co. Ltd, AIR (1974) SC 1132. Avon Services v. Industrial Tribunal, (1979) 1 LLJ 1 (SC). Id at 10.

234 2004 LLR 881. 235 See Bhattacharjee Rubber Works Ltd v. Bhattacharjee Rubber Workers Union’, (1960)

2 LLJ 198 (SC). 236 See Avtar Singh Anand v. Krishna, (1969) 2 LLJ 524 (Delhi). 237 Kalinga Tubes v. Their Workmen, (1969) 2 LLJ 557, 566 (SC). 238 Investa Machine Tools & Engineering Co. Ltd v. Its Workmen, (1963) 2 LLJ (IT). 239 Antony v. Kumaran, (1979) 1 LLJ 606. 240 1986 Lab. IC 767. 241 1987 Lab. IC 637. 242 (1960) 3 SCR 528. 243 (1983) 1 LLJ 326 (Bom.). 244 The Industrial Disputes (Amendment) Act, 1982, provides that for the words ‘three 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263

hundred’, ‘one hundred’ shall be substituted. This Section came into force with effect from 21 August 1984. Lal Mohammed v. Indian Railway Construction Co. Ltd, (1999) Lab. IC 40 (SC); (1999) LLR 100; (1999) 1 LLJ 317 (SC). (2004) Lab. IC 989. Ibid. 1999 LLR 49. Excel Wear v. Union of India, (1978) 4 SCC 224. Excel Wear v. Union of India, (1978) 4 SCC 224 at 247. Excel Wear v. Union of India, (1978) 4 SCC 224 at 249. 2002 LLR 225. The provision came into force with effect from 21 August 1984. AIR 1989 Del. 193. (1992) Lab IC 1337 (Ker.). (1989) 2 LLJ 4. (1989) 2 LLJ 400. (1979) 1 SCR 1009. 2002 LLR 225 at 234. Ibid. SG Chemicals and Dyes Trading Employees’ Union v. SG Chemicals and Dyes Trading Ltd, (1986) Lab. IC 863. State of Gujarat v. Continental Textile Mills, (1998) 1 LLJ 30.

CHAPTER

21 Management of Discipline and Disciplinary Procedure I. REGULATION OF MANAGEMENT’S PREROGATIVE OF DISCIPLINARY ACTION: THE CONTEXT The strict law of master and servant conferred upon the employer an unfettered right to hire and fire his employees1. This traditional law of employer-workmen relationship was based purely on contract. Quite apart from the law of contract, it is obvious that in the day-to-day running of the industry, the management is required to take disciplinary action against erring workmen. Initial decisions as to maintenance of discipline rest with the employer. These decisions, when made bona fide, are related to, and dependant upon considerations of the overall needs of the industry. But the reports of committees and commissions on labour2 and reported decisions3 are full of instances that managements have victimized their workmen for their union activities, and in particular, for inciting other workers to go on strike or fomenting a strike. Instances are not lacking when assertive striking employees were discharged en masse4. Further, instances of dismissal of workmen by the management without complying with the provisions of the standing orders5 of the company or rules of natural justice6 are not infrequent. Under the circumstances, the need to protect workmen against capricious and vindictive action of the management becomes obvious. It was realized in most industrially advanced countries that if the law of master and servant was given

free play, workers would hardly have any security of tenure. On the other hand, in day-to-day administration, management is called upon to take bona fide decisions against erring workmen. It is also called upon to take disciplinary action against a workman who is found guilty of serious misconduct where such misconduct consists of intentional damage to the property of the concern or serious personal injury to other employees of the concern or where there is reasonable apprehension of their committing acts of sabotage or instigation, abetment or incitement of workers of the concern to participate in the aforesaid activities. Under the circumstances, the mere fact that the management’s order of dismissal of the workman is wrongful, disproportionate or mala fide and affects the workman cannot altogether deprive the management from taking disciplinary action against the workman. To do so is to encourage indiscipline and render day-to-day running of the concern impossible. To meet this situation, courts have evolved various norms to regulate management’s power to dismiss its workmen. They have tried to maintain a balance between the power of the management to discipline the workmen and security of tenure of workmen. Further, the courts have not only interpreted the existing law but made new laws to meet the needs of the industry and to avoid hardship and unfairness to workers.

Tribunals’ Intervention in Management’s Right to Take Disciplinary Action The labour appellate tribunal in Buckingham and Carnatic Mills Ltd v. Their Workmen7 ruled that the decision of the management in relation to the charges against the employees will not prevail unless: (a) there is a want of bona fides, or (b) it is a case of victimization or unfair labour practice or violation of the principles of natural justice, or (c) there is a basic error on facts, or (d) there has been a perverse finding on the materials. The aforesaid principles found the approval of the Supreme Court in Chartered Bank Bombay v. Chartered Bank Employees’ Union8, Assam Oil Ltd v. Its Workmen9 and Indian Iron and Steel Co. Ltd v. Their Workmen10. In Assam Oil Company Ltd v. Its Workmen11, the Supreme Court observed:

Just as the employer’s right to exercise his option in terms of the contract has to be recognized, so is the employee’s right to expect security of tenure to be taken into account. These principles have been consistently followed by industrial tribunals and we think, rightly. Again, in Indian Iron and Steel Company Ltd v. Their Workmen12, the Supreme Court held: Undoubtedly, the management of a concern has the power to direct its own internal administration and discipline, but the power is not unlimited and, when a dispute arises, the industrial tribunals have been given the power to see whether the termination of service of a workman is justified and to give appropriate relief. In cases of dismissal on misconduct, the tribunal does not, however, act as a court of appeal and substitutes its own judgement for that of the management. It will interfere when: (a) there is want of good faith (b) there is victimization or unfair labour practice (c) the management has been guilty of a basic error of violation of a principle of natural justice (d) on the material, the finding is completely baseless or perverse Again, in Workmen of Motipur Sugar Factory Pvt. Ltd. v. Motipur Sugar Factory Pvt. Ltd.13, the Supreme Court while dealing with the evidence required to be adduced before tribunals in case of failure to hold domestic inquiry observed: It is now well settled that where an employer has failed to make an inquiry before dismissing or discharging a workman, it is open to him to justify the action before the tribunal by leading all relevant evidence before it. In such a case, the employer would not have the benefit which he had in case where domestic inquiries have been held. The entire matter would be open before the tribunal which will have jurisdiction not only to go into the limited questions open to tribunal where domestic inquiry has been properly held, but also to satisfy itself on the facts adduced before it by the employer whether the dismissal or

discharge was justified. In State Bank of Bikaner and Jaipur v. Nemi Chand Nalwaya14, the Supreme Court held that it is now well settled that the labour tribunals or courts will not act as an appellate court and re-assess the evidence led in the domestic inquiry, nor interfere on the ground that another view is possible on the material on record. If the inquiry has been fairly and properly held and the findings are based on evidence, the question of the adequacy of the evidence or the reliable nature of the evidence will not be grounds for interfering with the findings in departmental inquiries. Therefore, courts will not interfere with finding of facts recorded in departmental inquiries, except where such findings are based on no evidence or where they are clearly perverse. The test to find out perversity is to see whether a tribunal acting reasonably could have arrived at such conclusion or finding on the material on record. Courts will however, interfere with the findings in disciplinary matters, if principles of natural justice or statutory regulation have been violated or if the order is found to be arbitrary, capricious, mala fide or based on extraneous considerations.

II. MEANING AND SCOPE OF MISCONDUCT Since ‘misconduct’ results in dismissal, it is necessary to know the concept of misconduct. The expression ‘misconduct’ has not been defined in any industrial legislation. Under the Model Standing Order of the Industrial Employment (Standing Orders) Act, 1946, the following conducts shall be deemed to be misconduct: (a) wilful insubordination or disobedience, whether alone or in combination with others, to any lawful and reasonable order of a superior; (b) theft, fraud or dishonesty in connection with the employer’s business or property; (c) wilful damage to or loss of employer’s goods or property; (d) taking or giving bribes or any illegal gratification; (e) habitual absence without leave or absence without leave for more than 10 days; (f) habitual late attendance; (g) habitual breach of any law applicable to the establishment

(h) riotous or disorderly behaviour during working hours at the establishment or any act subversive of discipline; (i) habitual negligence or neglect of work; (j) frequent repetition of any act of omission for which a fine may be imposed to a maximum of 2 per cent of the wages in a month; (k) striking work or inciting others to strike work in contravention of the provisions of any law or rule having the force of law. In Ravi Yashwant Bhoir v. District Collector, Raigad15, the Supreme Court observed that ‘the word “misconduct” though not capable of precise definition, receives its connotation from the context of delinquency in its performance and its effect on the discipline and nature of the duty. It may involve moral turpitude, it must be improper or wrong behaviour, unlawful behaviour, wilful in character, a forbidden act, a transgression of established and definite rules of action or code of conduct but not mere error of judgement, carelessness or negligence in performance of the duty. The misconduct should bear forbidden quality or character. Its ambit has to be construed with reference to the subject matter and the context wherein the term occurs, regard being had to the scope of the statute and the public purpose it seeks to serve.’ Explaining the concept of ‘misconduct’, the Court pointed out: The expression ‘misconduct’ has to be understood as a transgression of some established and definite rule of action, a forbidden act, unlawful behaviour, wilful in character. It may be synonymous with misdemeanour in propriety and mismanagement. In a particular case, negligence or carelessness may also be a misconduct, for example, when a watchman leaves his duty and goes to watch cinema, though there may be no theft or loss to the institution, but leaving the place of duty itself amounts to misconduct. It may be more serious in case of disciplinary forces. Further, the expression ‘misconduct’ has to be construed and understood in reference to the subject matter and context wherein the term occurs taking into consideration the scope and object of the statute. Misconduct is to be measured in terms of the nature of the misconduct and it should be viewed with the consequences of misconduct as to whether it has been detrimental to public interest. A survey of decided cases indicates that acts such as absence without leave16,

go-slow17, habitual neglect of work18, misappropriation of fund or material19, disobedience and subverting of discipline20 including disobedience that is likely to endanger life, threatening a co-worker within premises, insulting behaviour by employee towards customers21, etc., constitute misconduct.

III. NATURE AND CONCEPT OF DISMISSAL AND DISCHARGE The expression ‘discharge’ is very often colourless as to the cause of relieving of the obligation arising from employer-workmen relationship. It may signify termination of the relationship by the workman himself or termination of the relationship by the employer either under the standing orders or under the agreements or otherwise. The Indian legislature however, emphasizes that action on the part of the employer was a necessary element. In Bombay Garrage (Ahmedabad) Ltd v. Its Workmen22, the Gujarat High Court observed: The expression ‘dismissal’ and the expression ‘discharge’ in connection with punishment for misconduct have acquired, in industrial law, different connotations and the one cannot be equated with the other…. In J K Hosiery Factory v. LAT23, Justice M C Desai observed: The words whether by dismissal or otherwise…govern the word ‘punishment’ only and not the word ‘discharge’. Punishment can be in the form of dismissal or suspension or fine or reduction of pay and, therefore, the words could be used with the word ‘punishment’ to make it clear that all forms of punishment are within the scope of the provisions. And in Assam Oil Company v. Its Workmen24, the Supreme Court cautioned: It may also appear in some cases that though the order of discharge is couched in words which do not impute any misconduct to the employee, in substance it is based on misconduct of which according to the employer the employee has been guilty, and that would make the impugned discharge a

punitive dismissal. Section 2 (ra) read with Fifth Schedule of the Industrial Disputes Act, 1947, which defines and enumerates ‘unfair labour practice’ inter alia, declares any one of the following practices to be an ‘unfair labour practice’ on the part of the employer: (a) discharging or punishing a workman because he urged other workmen to join or organize a trade union; (b) discharging or dismissing a workman for taking part in any strike (not being a strike which is deemed to be an illegal strike under this Act); (c) discharging office-bearers or active members of a trade union on account of their trade union activities. And even the original Section 33 of the Industrial Disputes Act, 1947 which ran: …Nor shall he (i.e.) the employer…discharge, dismiss or otherwise punish any such workman except for misconduct not connected with the dispute, make it clear that the legislative use of the expression ‘discharge’ was confined to those cases of termination of employment relationship only which were at the instance of employer. However, it was only after the 1950 Amendment of the Act that the distinction became clear. The amended Section 33 read as follows: No employer shall discharge or punish whether by dismissal or otherwise any workman concerned in such dispute. The above distinction has been retained in Section 33 of the Industrial Disputes Act, 1947, which was substituted by 1956 Amendment Act. Indeed, it emphasizes that even though a misconduct on the part of the workman might result in his discharge, if such termination of service is in consequence of disciplinary proceedings, it may be called ‘dismissal’.

IV. DISCHARGE SIMPLICITER OR DISMISSAL IN DISGUISE: COURTS’ POWER TO LIFT THE VEIL A. Scope of Intervention

The Supreme Court has, through a plethora of cases, laid down the scope of tribunal’s intervention in the management’s order of termination of service of workmen. Buckingham and Carnatic Mills v. Its Workmen25 is our starting point. In this case, the labour appellate tribunal has ruled that requirement of bona fides is essential even in a case of discharge by notice or payment in lieu thereof without assigning any reason. It has further ruled that where termination of service is a colourable exercise of power or is a result of victimization or unfair labour practices, the industrial tribunal would have jurisdiction to intervene and set aside such termination of service. The aforesaid rule found the approval of the Supreme Court in Chartered Bank v. Chartered Bank’s Employees Union26. The Court observed that this rule applies even in case of discharge made under the provisions of a contract or standing orders or awards like a bank award. The above view was reiterated in Tata Oil Mills Co. Ltd v. Its Workmen27 wherein Justice Gajendragadkar formulated the following test for tribunal’s interference in management’s action: The test always has to be whether the act of the employer is bona fide or not. If the act is mala fide or appears to be a colourable exercise of the power conferred on the employer either by the terms of contract or by standing orders, then notwithstanding the form of the order, industrial adjudication would examine the substance and would direct reinstatement in a fit case28. The law on the above point has been summarized in L Michael Ltd v. M/s Johnson Pumps Ltd29. The tribunals have the power and indeed the duty to x-ray the order and discover its true nature, if the object and effect in the attendant circumstances and the ulterior purpose be to dismiss the employee because he is an evil to be eliminated. But if the management, to cover up the inability to establish by an inquiry, illegitimately but ingeniously passes an innocent-looking order of termination simpliciter, such action is bad and is liable to be set aside. A survey of the aforesaid cases suggests that industrial tribunals have the power to determine the real nature of management’s orders. If the order is mala fide or

unfair labour practice or victimization, it cannot be sustained. But real difficulty arises where the standing orders of a company specifically provide that workmen guilty of misconduct may be discharged. In such a situation, it is open to the court to lift the veil and to hold an order of discharge to be one of dismissal merely because there was misconduct.

B. Bona Fides of Management’s Action In Murugan Mills v. Industrial Tribunal30, the management served a notice on the workman under clause 17(1) of the standing orders which empowers the management to terminate the services of a worker by giving 14 days’ notice, terminating his services without obtaining the approval of the industrial tribunal as required under Section 33(2)(b) of the Act. The notice did not contain any reason for the termination31. The management however, stated before the tribunal that the workman’s services were terminated for dereliction of duty and adopting go-slow tactics. On these facts, the Supreme Court held that this amounted to punishment for misconduct and therefore, to pass an order under clause 17(1) of the standing orders in such circumstances was clearly a colourable exercise of the power to terminate the services of a workman under the provisions of the standing orders. The above case may be distinguished from Gujarat Steel Tubes (supra) in two respects: (i) there was a violation of Section 33(2)(b) and (ii) no reasons were communicated to the workman. Bombay Corporation v. Mavlankar32 is yet another case. In this case, the services of a clerk were terminated under standing order 26 on the ground that her service record was unsatisfactory. The management, however, stated in the order of termination that she would be paid one month’s wages in lieu of notice and would be eligible for all benefits admissible under the standing orders and service regulations of the undertaking. Under the standing orders, powers were conferred on the employer: (i) to impose punishment for misconduct following a disciplinary inquiry under clause (2) of standing orders 21 read with standing order 23, and (ii) to terminate the services of the employee by giving one month’s notice or wages in lieu thereof under standing order 26. A question arose as to which one of the two powers was exercised in this case. The Supreme Court observed: (a) The power to terminate the service by an order of discharge simpliciter is distinct from and independent of the power to punish for misconduct and standing orders cannot be constructed so as to render either of these powers ineffective.

(b) Reasons for termination have to be communicated to the employee and those reasons cannot be arbitrary, capricious or irrelevant but that would not mean that the order of termination becomes punitive in character just because good reasons are its basis. The Court also pointed out that: If the misconduct of the employee constituted the foundation for terminating his service then it might be liable to be regarded as punitive but this proposition was doubted in as much as even in such case, it may be argued that the management has not punished the employee but has merely terminated his service under standing order 26. Thus, it clear that the Court was in favour of retaining the two distinct powers and maintaining the sanctity of the standing orders. In Municipal Employees’ Union v. Additional Commissioner (Water), Delhi Water Supply and Sewerage Disposal Undertaking33, a question arose whether the employer can terminate the services of a widow appointed on compassionate basis on her remarriage. The Delhi High Court answered the question in negative because it is (i) illegal, (ii) contrary to public policy of a welfare state and (iii) right to marry or remarry is an individual right and any contract prohibiting it is not legal. The Supreme Court in Gujarat Steel Tubes v. Gujarat Steel Tubes Mazdoor Sangh34, had an occasion to consider the scope of interference of tribunal and court in management’s action. The standing orders of the company specifically provided that a workman guilty of misconduct may be discharged under MSO 23. Further, under MSO 23, the reasons for the termination of service of a permanent workman have to be recorded in writing and communicated to him. The management, however, acted under MSO 23 of the standing orders. On these facts, the majority and minority arrived at diametrically opposite conclusions. The majority found the management’s action not bona fide and observed: In all conscience and common sense, the discharge is punishment for the misconduct. The management minces no words. What is explicitly stated is not a colourless farewell to make way for fresh hands to work in the factory until the strike is settled but a hard-hitting order with grounds of guilt and penalty of removal35.

From the above, it concluded: The inference is inevitable, however, ingenious the contrary argument, that precisely because the management found the workmen refractory in their misconduct, they were sacked. May be, the management had no other way of working in the factory but that did not change the character of the action taken. Once we hold the discharge punitive, the necessary consequence is that inquiry before punishment was admittedly obligator and confessedly not undertaken. The orders were bad on this score alone. On the contrary, the minority arrived at a different conclusion: The management made it clear that in spite of such misconduct, it had no intention of punishing the workers who were given not only the benefit of an order of discharge simpliciter but also the option to come back to work within a specified period in which case they would be reinstated with full benefits. An intention ‘not to punish’ could not be expressed in clearer terms and is further made out from the fact that more than 400 workers who resumed duty were reinstated without break in service. In passing the orders of discharge, the management did nothing more than act under MSO 23 and its action cannot be regarded as amounting to dismissal in the case of any of the workers36. Even so, the majority decision is a landmark from two points of view. In the first place, the majority of the Supreme Court approved the earlier trend to lift the veil to determine whether the order of discharge amounted to simple termination or punitive dismissal notwithstanding the provisions in the standing orders empowering the management, inter alia, to discharge workman found guilty of misconduct. In the second place, the Supreme Court rejected ‘the theory of community guilt and collective punishment’ and instead ruled that no worker shall be dismissed save on the proof of his individual delinquence. There are however, few puzzling features of the majority decision. First, the Court’s assumption that what is not dismissal is retrenchment provided there is work to be done ignores reality. The assumption reduces the management’s prerogative to terminate the services of workmen only in two ways, namely, retrenchment and dismissal and excludes discharge. This would thus make the use of the word ‘discharge’ in Sections 2-A and 33 useless

appendage besides thwarting the scheme of the Act. Second, the majority decision leaves the management to choose between the frying pan and the fire. ‘If the management discharges the workers to facilitate fresh recruitment and save the factory from statutory takeover37, it is not allowed to do so because an elaborate inquiry’ is not done. On the contrary, if the employer does not discharge the strikers and does not allow the adamant strikers to return to work and leaves them to tell the Central Government that for 3 months, there had been no production and so the mill should be taken over as ‘sick’ under the Industrial Development Regulation Act38 will bring the industry to a standstill. The majority, however, brushed aside the problem by saying ‘may be the management had no other way of working the factory but that did not change the character of the action taken39.’ Third, the majority decision laid undue emphasis on the motive of the employer to determine whether the discharge effected by management amounted to discharge simpliciter or punitive discharge. We agree with the majority view that ‘the employer cannot pass a real order of dismissal in the garb of one of discharge’. But it is difficult to support the view that ‘merely because the motive behind discharge was a misconduct attributed to the employee, the services of no employee could be terminated without holding an inquiry as is contemplated by the standing orders. This line of thinking is also in conformity with the decision in Parshotam Lal Dhingru v. Union of India40 that the government cannot terminate the service of a government servant unless it is entitled to do so by virtue of a special term of contract of employment, e.g., by giving requisite notice by the contract or by the rules governing the conditions of service. Further, the majority decision, it is submitted, has brushed aside the decisions in Tata Engineering and Locomotive Co. Ltd, Workmen of Sudder Office v. Management and Municipal Corporation of Greater Bombay41, on the ground that it did not run counter to its findings. We submit that the decision of majority in Gujarat Steel Tubes runs counter to these decisions. Further, even the decision in Murugan Mills and L Michael v. Johnson, which the majority heavily relied upon, may be distinguished from Gujarat Steel Tubes on the facts. Fourth, another impact of the majority decision in Gujarat Steel Tubes case is that even if the employer wishes to give concession to the workmen by taking a lenient view in case of misconduct not by way of dismissal but by way of termination simpliciter, he cannot do so. Be that as it may, the majority decision in Gujarat Steel Tubes illustrates some complexities of judicial process. To begin with, someone has to identify the benefits and disadvantages flowing from the decision and its implementation in both short and long run. For

instance, strikers would welcome the decision because it would secure them from the risk of losing their jobs and thereby protect them from unemployment. But management and a section of the public could well differ as to whether this view would better serve the public interest. In the long run, the decision would deprive the management from dismissing workmen and recruiting new hands till an inquiry is conducted. This would bring the industry to a standstill and would encourage indiscipline. This is likely to jeopardize not only the interest of employers but also of consumers. However, the majority view, namely: In a country where the despair of government is appalling unemployment, it is a terrible tragedy to put economic death to 853 workmen. And for what? For insisting that pittance of ₹100 per month be raised in terms of the Central Wage Board’s recommendations. is not only leaning towards but is also against management, particularly in the light of the following observations: May be, the management had no other way of working the factory but that did not change the character of the action taken. Thus, the choice actually made by majority had, in effect, failed to strike a balance between security of tenure which alone can ensure an efficient labour force and the interest of maintenance of discipline in the industry. It is needless to add that both are equally important for economic progress.

C. Loss of Confidence In Tata Engineering and Locomotive Co. Ltd v. S C Prasad42, the management discharged a workman from service on the ground that it had lost confidence in him and his continuance in service was prejudicial to the company’s interest. This discharge was, however, made under standing order 47 (which empowered the company to terminate the services of any worker on giving notice or wages in lieu thereof) in preference to disciplinary action. On these facts, a question arose whether discharge was proper or justified. Speaking for the Court, Justice Shelat observed: The company had two alternatives; either to act under standing order 47 or to take disciplinary action and hold a domestic inquiry. But the latter course would have meant that the company would have to launch an inquiry almost parallel to the

one which was going on before the committing magistrate. If the company, in the circumstances, preferred the former, it would not be reasonable to say, as the tribunal did, that the company should have charged the workman with misconduct and held an inquiry. The fact that it did not do so but exercised its power under standing order 47 cannot render the order mala fide or one passed in colourable exercise of its power to discharge a workman from the service if such power was properly exercised. Workmen of Sudder Office v. Management43 is a case of loss of confidence. The management discharged a head godown clerk and asked him to collect one month’s pay in lieu of notice and other benefits under clause 944 of the standing orders on the ground of loss of confidence. The labour court found that the workman was guilty of dishonesty in connection with the company’s property and would constitute ‘misconduct’ under clause 10(2)(a) of the standing orders and therefore, held that the management’s order of termination was really one of dismissal for misconduct. The labour appellate tribunal accordingly directed reinstatement. The High Court reserved the order of the labour court and held that the management’s order was of termination simpliciter under clause 9. On appeal, the Supreme Court upheld the order of the High Court and observed: Though prima facie it may appear that the management in this case was charging the workman in respect of matter which may be misconduct under the standing orders, ultimately we are satisfied that the management has passed the order of termination simpliciter and the order does not amount to one of dismissal by way of punishment45. L Michael v. Johnson Pumps Ltd46 is also a case of discharge for loss of confidence. The management discharged a permanent worker by giving him one month’s notice pay as per the terms of employment and relevant standing orders. Before the labour court, the management had lost confidence in him. However, the employer did not disclose the grounds on which the suspicion arose in 1968. Further after 1968, the worker was given two extra increments. On the other hand, the worker claimed that he had been victimized for his trade union activities. The labour court upheld the order of the management but the Supreme Court found that the impugned management’s action was not bona fide. Justice Krishna Iyer relying upon Murugan Mills case ruled: The tribunal has the power and indeed, the duty to x-ray the

order and discover its true nature if the object and effect of the attendant circumstances and the ulterior purpose is to dismiss the employee because he is an evil to be eliminated. The Lordship extended the application of the aforesaid rule in loss of confidence: Loss of confidence is no new armoury for the management, otherwise security of tenure, insured by the new industrial jurisprudence and authenticated by a catena of cases, can be subverted by this new formula. His Lordship, therefore, set aside the order of the labour court and directed reinstatement to the aggrieved worker.

V. DISCIPLINARY PROCEDURE A. Principles of Natural Justice It is recognized that the essence of justice is largely procedural and the history of liberty has largely been the history of procedural safeguards47. In legal terms, the inquiry conducted by the employer must be in accordance with the principles of natural justice. The two well-established and recognized principles of natural justice are (a) Nemo debet esse judex in propria sua causa (no man must sit in judgement in his own cause or in which he is interested) and (b) audi alteram partam (the parties must be heard). But it is equally well-settled that the concept of ‘natural justice’ is not a fixed one. It has meant many things to many writers, lawyers, jurists and systems of law. It has many colours, shades, shapes and forms. Rules of natural justice are not embodied rules and they cannot be imprisoned within the straightjacket of a rigid formula48. Applying these principles, the Supreme Court has held in a series of cases that where a case of dismissal or discharge of an employee is referred for industrial adjudication, the labour court or tribunal should first decide as a preliminary issue whether proper domestic inquiry has been conducted and the principles of natural justice have been complied with. Thus, Lord Hewart’s dictum that ‘Justice should not only be done but should manifestly and undoubtedly be seen to be done’49 is realized to a considerable extent in termination of service of workmen. The recognized principles of natural justice have given rise to the following procedural safeguards. The termination of services of workmen

without following principles of natural justice is wrongful. 1. Rule against bias A cardinal rule of natural justice is that no man should be a judge in his own cause. This is known as rule against bias. Bias means prejudice.

2. Audi Alteram Partem or Rule of Fair Hearing Right to Notice (i) Notice – Starting point Unless a person knows the subject and the issue involved, he cannot defend himself. (ii) Notice in order to be adequate, must contain: a) Time and place of hearing b) Authority under which hearing is to be held c) Statement of specific charges which the person has to face (iii) Test a) Sufficient information b) Sufficient material c) Sufficient time to enable the person to defend himself effectively. (iv) Article 21 of the Constitution a) Proceedings should be fair and reasonable b) No person shall be deprived of life and liberty without the procedure established by law50.

Requirements of the Principles of Natural Justice

B. Charge-sheet Before the management can dismiss a workman, it has to hold a proper domestic inquiry into the alleged misconduct of such a workman and such an inquiry must always begin with supply of a specific charge-sheet to the delinquent employee51. Such charges must clearly mention the allegations against him. In dealing with the merits of dismissal of a workman, the employer must confine the finding to the charges made and no extraneous factor would form the basis of the action taken. It would not be open to the employer to add any further charges against the employee and the case would have to be considered on the chargesheet as originally framed52. The essential requirements of charge-sheet are53: (i) (ii)

It must be specific. It should contain full particulars of the misconduct and charges levelled against the employee. (iii) It must be actually served on the erring workman. Where such a chargesheet has not been served and the workman is dismissed, the order of dismissal is liable to be rejected as opposed to natural justice54. (iv) It should refer the relevant clause(s) of the standing orders under which the delinquent is liable to be punished for the alleged misconduct.

(v) It should be issued under the signature of the disciplinary authority. (vi) It should also refer to the name of the inquiry officer and time, date and place of the inquiry. A survey of decided cases55 reveals that when the charges levelled against the delinquent officer in the charge-sheet are vague, not specific or definite; or are framed without giving details of allegations, relevant documents and/or statutory provisions, standing orders or service rules, the entire inquiry would be vitiated. The following table provides guidelines for framing a charge-sheet.

(i)

1.

There is no objection in issue of fresh charge-sheet if the earlier one is withdrawn. (ii) Modification, amendment and cancellation of charge-sheet can be resorted to in a fair and just manner. Who is competent to issue a charge-sheet (i) (ii)

The disciplinary authority shall draw up the charge-sheet. The officer performing current duties as stop-gap arrangement in the absence of disciplinary authority cannot exercise the statutory power of issuing charge-sheet56. (iii) Appointing authority himself need not issue the charge-sheet. (iv) Controlling authority can issue the charge memo and start disciplinary proceedings57. (v) The charge-sheet should not be signed in a routine manner. He is required to sign only after applying his mind. He has to give some reason which may be very brief, for initiation of inquiry58. (vi) The charge-sheet issued by a member of fact-finding inquiry committee which found prima facie the delinquent guilty is bad in law. A member of fact-finding inquiry committee is not competent to issue a charge-sheet as disciplinary authority59.

2.

Effect of Delay in Framing Charge-sheet

In State of AP v. Radhakishan60, the Supreme Court held that whether the delay vitiates the proceedings is the question that has to be decided on the facts and circumstances of each case. In this case, the charges related to an incident which was about 10 years old and were framed depending on the departmental records; there was no explanation why the inquiry officer did not examine such records; and the delinquent was not contributing to the delay. On these facts, the Supreme Court held that the charge-sheet was liable to be quashed. In Mahadevan P V v. MD, Tamil Nadu Housing Board61, the irregularities committed in 1990 came to the notice of the employer in the audit report of 1994–95. However, the charge memo was issued for the first time in 2000. Thus, there was delay of about 10 years or at least 5 to 6 years on the part of the management even before the charge memo was issued. In these circumstances, the Supreme Court held that the inquiry was liable to be quashed. In Cantonment Executive Officer v. Vijay D Wani62, 13 years had passed and no progress was made and therefore, the division bench of the High Court refused permission to the management to proceed further. When the matter came to the Supreme Court, 16 years had passed. In view of this, the Court held that it would not be fair on the part of the management to proceed afresh in the matter. 3. Service of Charge-sheet The charge-sheet framed against a delinquent employee should be served on him personally if possible and acknowledgement to that effect should be obtained from him. In case the workman is absent, or if he refuses to accept the chargesheet, the same should be sent to his local and home address by registered post with acknowledgement due, after getting his refusal attested by two witnesses. In case the charge-sheet is returned unserved with the remarks ‘refused’ of the postal authorities, the same should be kept intact without opening. It is then taken to be served. If the charge-sheet is returned by the postal authorities with the remarks ‘not found/not traceable’, the same should be kept intact and other available method should be exercised. In such a case, the employer should display the charge-sheet on the notice board or act in accordance with the provisions of the standing orders. In some cases, it may be necessary to publish the contents of the charge-sheet in a local newspaper having wide circulation. Bata Shoe Co. v. D N Ganguli63 is a leading case on serving notice. In this case, the standing orders of the company provided that the workman charged with an offence should be supplied a copy of such charges. They also provided

that a workman who refuses to accept the charge-sheet should be deemed to have admitted the charges made against him. There was no provision in the standing orders for affixing such charge-sheet on the notice board of the company. On these facts, the Supreme Court held that affixing of the chargesheet on the company’s notice board was not good service of notice. Justice Wanchoo observed: The proper course in our view, was when the registered notice came back unserved in the case of these 11 workmen, to publish notices in their names in some newspaper in the regional language with wide circulation in Bihar with the charges framed against them. From the above decision, it is clear that the law casts an obligation upon an employer to send charge-sheets to workers by registered post and if the same is returned unserved, to get the charges published in a local newspaper in the regional language understood by the workmen64.

C. Suspension Pending Inquiry Where the charges levelled against a delinquent workman are of a serious nature and the disciplinary authority feels that his physical presence might endanger the safety of other workmen, or if it is apprehended that he might intimidate others or tamper with the evidence, he may be suspended. During the period of suspension pending inquiry, the workman will get subsistence allowance as per rules. The following rates of subsistence allowance are admissible. UNDER SERVICE RULES UNDER STANDING ORDERS For first six months – For first 90 days – ½ of basic pay + DA + HRA + CCA ½ of basic pay + DA + other allowances Beyond six months – Beyond 90 days – ¼ of basic pay + DA + HRA + CCA ¾ of basic pay + DA + other allowances If it is delayed not due to fault of the If inquiry by outside agency – delinquent, then ¾ of the wages (i) First 180 days – ½ wages (ii) Beyond 180 days – ¾ or ¼ wages

Subsistence allowance: In Jagdamba Prasad Shukla v. State of UP65, the Supreme Court held that payment of subsistence allowance under suspension is not a bounty. Non-appearance before the inquiry officer for want of subsistence allowance was justified. The Court therefore, quashed the order of punishment of removal. The Court also ruled that non-payment of subsistence allowance amounted to denial of reasonable opportunity to defend oneself in the departmental inquiry and hence was violative of principles of natural justice.

D. Explanation The next requirement for a proper domestic inquiry is to give an opportunity to concerned workman to submit an explanation. If no opportunity is given to the workman to explain his conduct, it will amount to violation of principles of natural justice66. Further, the workman must be allowed sufficient time and the inquiry must not conclude unless the time given for the explanation expires. Four contingencies67 may arise in the explanation. The workman may (i) admit the charge, show repentance and plead that he will not repeat it; (ii) refute the charge; (iii) ask for extension of time for submitting explanation; or (iv) not submit the explanation at all. Where the concerned workman admits his guilt, further inquiry is not essential. In such cases, the management may award appropriate punishment according to the nature of the misconduct. If the workman pleads not guilty of the charges levelled against him, management has to examine the explanation offered by him and hold a proper domestic inquiry; but if it is satisfied with the explanation, it may drop the proceedings against the workman. In the third situation, the employer may extend the time he considers reasonable. Prudence demands that whenever a workman asks for extension of time for submission of his explanation, unless there are compelling reasons to the contrary, reasonable time should be allowed68. In the last situation, as a normal rule, the refusal by an employee must go against him, but the rules of natural justice require that even in such cases, charges must be proved by the management before it can take action against the workman.

VI. DOMESTIC INQUIRY Having considered the explanation submitted by the concerned workman, the management must hold a domestic inquiry to prove the allegations levelled

against the workman mentioned in the charge-sheet supplied to him. It is expected to conduct a proper inquiry in accordance with the provisions of the standing orders (where applicable) and the principles of natural justice. Further, the inquiry must be fair and just. A. Processes Involved in Domestic Inquiry (i) Preliminary inquiry: optional (ii) Show-cause notice, if provided for: optional (iii) Consideration of explanation (iv) Notice of inquiry (v) Holding of domestic inquiry (vi) Report of the inquiry officer (vii) Supply of copy of inquiry report to disciplinary authority (viii) Consideration of the report by the disciplinary authority (ix) Order of punishment and its communication (x) Appeal Let us discuss them. Preliminary Inquiry 1. When required (i) (ii) (iii) (iv)

2.

In case of interpersonal or inter-group misconduct If there are cross-complaints from two persons or groups If there is a reason to believe that the complaint is frivolous If misconduct is not precisely definable (in terms of its time or persons involved) (v) If there is a need for additional material before determining whether a proper disciplinary action is warranted Nature and scope (i) It is a fact-finding exercise. (ii) It does not per se lead to establishment of guilt. (iii) It can be ordered by any officer. (iv) It may be oral or in writing. (v) It may involve examination and/or recording of statements of any person who is believed to have knowledge of the act. (vi) It merely forms the basis for deciding whether there is prima facie case. (vii) Finding cannot be used to punish anyone.

B. Order for Holding Inquiry As mentioned above, after consideration of the explanation of the charge-sheeted workman or when no reply is received within the specified time limit, the disciplinary authority may issue an order appointing an inquiry officer or an inquiry committee. C. Appointment of Inquiry Officer The inquiry officer can be an official of the company but he should ordinarily be senior in rank to the charge-sheeted employee. Merely because the officer conducting the inquiry belongs to or is a part of the management, presumption of institutional bias cannot be inferred. Departmental bias arises when the functions of the judge and the prosecutor are combined in the same department and it is not uncommon to find that the same department which initiates the matter also decides it and, therefore at times, department fraternity and loyalty militates against the concept of fair hearing. But merely because the company lawyer was also the inquiry officer, he cannot be considered to be partial towards the management of the company69. In the absence of any material to show that the inquiry officer was in any way prejudiced or influenced by the rank of the presiding officer, the inquiry cannot be held to be unfair. Further, he should be disinterested in the case and should not be biased. Moreover, he should not be an eye witness to the incident. If some incriminating act of the delinquent has been witnessed by the officer, he should not be appointed as the inquiry officer70. However, difficulty may arise in small establishments where there are few supervisory officials and a totally disinterested person may not be available for conducting the departmental inquiry. In such a situation, engagement of an outsider, may be an advocate, for conducting the inquiry may not be improper71. Can an advocate be appointed as inquiry officer? In Management of Thanjavur Textiles Ltd v. Purushotam72, the relevant portion of the standing orders in sub-clause (c) of clause 62 provided that the manager may himself or through ‘other responsible officer’ make such inquiry and the workman shall present himself at the time and date fixed for such inquiry. It was contended that under clause 62, the words ‘other responsible officer’ referred to in this case could only be an officer of the company subordinate to the manager and not an outsider, and hence an advocate could not have been appointed as inquiry officer nor could he give findings on the merits of the misconduct. Rejecting the contention, the Supreme Court held that under the standing orders, an advocate can be appointed as inquiry officer.

D. Appointment of Presenting Officer For the departmental inquiry to be impartial, disciplinary authority is required to appoint a presenting officer to sponsor the management’s case before the inquiry officer73. E. Assistance to the Delinquent Worker It is now well settled in a series of cases decided by the courts that the delinquent officer should be given adequate facility to defend himself in a domestic inquiry74. F. Notice for Holding Inquiry One of the essential features of a fair hearing is that a person should be served with a proper notice, i.e., a person has a right to notice. Notice should be clear and precise so as to give the other party adequate information of the case he has to meet and make an effective defence75. While disciplinary authority is required to intimate after considering the explanation about holding of inquiry by a specified inquiry officer, the latter is required to issue detailed notice of inquiry. This notice should clearly mention the date, time and place of inquiry. It should ask the delinquent workman to present himself with his witnesses/documentary evidence, if any, for the inquiry. The notice should also mention that if the workman fails to attend the inquiry on the appointed date and time, the same will be held and decided ex-parte. A reasonable period of time should be given to the workman for preparing his defence. G. Procedure to be Followed by the Inquiry Officer Before starting the inquiry, the officer should ensure the receipt of following documents: (i) Charge-sheet (ii) Reply to the charge-sheet (iii) List of witnesses (iv) Statements of witnesses, if any, recorded during the preliminary inquiry (v) List of documents by which charges are to be proved (vi) Order appointing the inquiry officer and presenting officer At the commencement of the inquiry, if the charge-sheeted employee is present, the inquiry officer should record the date, time and place of the inquiry, names of persons present and obtain their signatures on the order-sheet. Thereafter, he should proceed as follows:

1.

Read out and explain the charges and the reply of the charge-sheeted employee and get his confirmation to that effect. In case the charges are admitted, it should be recorded and signatures of all concerned along with date should be taken. A full-fledged inquiry need not be held if the misconduct is of a minor nature. In case the charge, if proved, is serious enough to warrant discharge or dismissal, the proper course is to hold an inquiry. 2. If the charge-sheeted employee denies the charge, the following procedure should be followed. (a) Allow inspection of listed documents by the charge-sheeted employee. (b) Ask the charge-sheeted employee to submit a list of witnesses to be examined on his behalf. (c) List of documents should be given by the charge-sheeted employee. (d) Charge-sheeted employee should intimate the inquiry officer about the defence assistant. (e) Copies of all listed documents should be given to the charge-sheeted employee. If they are bulky, he should be given the facility of making notes. (f) Copies of the previous statements of witnesses should be given to the charge-sheeted employee if prosecution proposes to use them in inquiry. H. Other Steps Involved in Domestic Inquiry (a) The inquiry officer will explain the procedure to be followed by him in the inquiry. (b) The presenting officer first leads evidence against the delinquent in support of the charges by producing witnesses and documentary evidence. However, no leading questions are asked at the time of this examination-in-chief. The charge-sheeted employee or his defence assistant is to be given an opportunity to cross examine each management witness. In case he declines to cross examine any witness, an endorsement to that effect is recorded by the inquiry officer. (c) The charge-sheeted employee is then asked to produce his own witnesses one by one and the presenting officer is allowed to cross examine them. When an application is filed for summoning

witnesses by the delinquent officer, it is obligatory on the part of the inquiry officer to pass an order on such an application. However, if the presenting officer is not appointed in an inquiry and that the questions are put to the witnesses by the inquiry officer, this will not vitiate the inquiry76. (d) The charge-sheeted employee is asked to give his statement after his witnesses have been examined and cross examined. He may also produce documentary evidence, if any. In case the delinquent employee declines to produce any witness or documentary evidence or declines to give a statement, the inquiry officer makes a record to that effect in the charge-sheet and obtains signatures of all concerned. If the inquiry remains incomplete in the first sitting and some more witnesses are required to be examined, it may continue on any other day mutually agreed upon by both sides. In such a case, the inquiry officer should make a suitable endorsement in the ordersheet and obtain signatures of all. (e) The inquiry officer shall obtain on each page of the inquiry proceedings, the signatures with date of the charge-sheeted workman, his representative, if any, the concerned witness and the management’s representative. The concerned witness should sign on each page of his statement only. The inquiry officer will sign on each page of the proceedings after endorsing that the statement has been recorded by him and explained to the parties in their language before they were asked to sign. If the delinquent employee refuses to put his signature, the inquiry officer should make an endorsement to that effect and get it attested by others present. (f) After the evidences are recorded, both parties sum up their cases by placing oral or written arguments or both in support of their case. (g) The inquiry officer then closes the proceedings. (h) Finally, the inquiry officer writes his findings/report. While conducting an inquiry, the inquiry officer acts as a quasi-judicial body. In view of this, he is required to follow the principles of natural justice and fair play in disciplinary inquiry. Thus, when an application is filed for summoning the witnesses by the delinquent officer, it is obligatory on his part to pass an order on such an application77. Moreover, the inquiry officer is fully competent to control and regulate the inquiry proceedings and may refuse to examine witnesses who appear to be irrelevant provided he records in writing the reasons

for doing so78. I. Findings and Report of Inquiry Officer After close of the inquiry, the inquiry officer is required to give his findings on each charge together with an analysis of evidence brought before him so that his reasons for coming to the conclusion are clear to all. He cannot, however, make any recommendation about the penalty to be imposed. He will then submit the report to the disciplinary authority79. J. Ex-parte Inquiry A survey of decided cases reveals where the ex-parte inquiry is justified and where it is not. Ex-parte inquiry has been held to be justified in the following cases: If the delinquent takes a non-cooperative attitude80 When the employee puts up false excuses for not being able to get a defense assistant81 3. Where the intimations were served to the charge-sheeted employee by registered post and were ‘refused’ to be received82 4. Where the charge-sheeted employee adopted non-cooperative attitude with a view to frustrate the inquiry despite several notices83 5. Where the charge-sheeted employee wanted to cross examine the prosecution witness only after the examination-in-chief of all the witnesses84 6. Where the delinquent employee attended inquiry on one occasion but refused to attend on the next date on the ground of denial of legal representation85 7. When the delinquent failed to appear in spite of notice by the inquiry officer86 The inquiry officer must allow the delinquent to attend the inquiry at any stage whether his absence earlier from the inquiry proceedings was justified or not. He should be given due notice to submit his brief after sending a copy of the brief of PO to him, even if he does not attend the inquiry. Even in ex-parte proceedings, the inquiry officer should provide opportunity to inspect listed documents and to submit the list of defence documents, arrange for examination-in-chief, cross examination with notice to the charged employee at every stage and even ask him to submit the defence 1. 2.

brief87. Ex-parte inquiry has been held to be invalid in the following cases: 1. 2. 3.

Where the charge sheet has not been delivered and acknowledged88 Where the charged employee has not been supplied with copies of the relevant documents to prepare his defence effectively89 Where the inquiry officer, after receipt of letter from the delinquent in which certain allegations were leveled against him, abruptly closed the inquiry and proceeded ex-parte90

K. Inquiry on Holidays I. The management is entitled to hold inquiry on a holiday and in the absence of an application for adjournment, the inquiry officer is competent to proceed ex-parte against the workman91. L. Attending Inquiry during Leave Period I. The delinquent employee who has been granted leave is entitled to adjournment. II. The representative of the management appearing before the inquiry should inform this fact to inquiry officer. III. The inquiry officer should not, therefore, proceed ex-parte92. M. No Disciplinary Action for Misconduct not Specified in the Standing Orders The Supreme Court successively in a number of cases has held that no disciplinary action against a delinquent employee can be initiated or taken in respect of an act/misconduct not defined in the standing orders under the Industrial Employment (Standing Orders) Act, 1946 or the other service rules or regulations or even where such acts or omissions and commissions are vaguely defined93. N. Consideration of the Report of the Inquiry Officer by Disciplinary Authority The Supreme Court in a catena of cases has held that the disciplinary authority must be the competent authority. The jurisdiction of the disciplinary authority shall be determined with reference to the company/unit where the alleged misconduct was committed94. If the disciplinary authority agrees with the findings of the inquiry officer, he shall make a decision in regard to quantum of punishment to be imposed upon the charge-sheeted employee. However, the punishment imposed by him should not be disproportionate to the misconduct committed by the delinquent. In case of disagreement, the disciplinary authority

is required to record: (i)

The reasons for disagreement to each charge. This is a mandatory requirement to be complied with95. (ii) His own findings if sufficient evidence is available on record for such an exercise. (iii) Remit the case to the inquiry officer for further inquiry and report96. If the disciplinary authority differs with the view taken by the inquiry officer, he is bound to give a notice setting out his tentative conclusions to the delinquent employee. It is only after hearing the delinquent employee that the disciplinary authority would at all arrive at a final finding of guilt. Thereafter, the delinquent employee would again have to be served with a notice relating to the punishment proposed97. The disciplinary authority in exercise of discretion to impose punishment must take into consideration a host of factors such as (i) gravity of misconduct (ii) past conduct (iii) nature of duties assigned to the delinquent (iv) responsibilities of the position that the delinquent holds (v) previous penalty, if any, and (vi) the discipline required to be maintained in the department or establishment he works in98.

Appellate/Reviewing Authority The service rules or the standing orders may provide for filing appeals or review. An order of the appellate authority should be a reasonable order whether the appeal is allowed or dismissed. Whenever there is an appellate order, the order passed by the lower authority merges into the order passed by the appellate authority. It is the order of the appellate authority which gives cause of action to the employee to institute any legal proceedings. Period of limitation and territorial jurisdiction of the courts: If the service rules provide for appeal, the cause of action arises only after the appeal is disposed of. Appeal must be filed within the period of limitation.

VII. RIGHT TO BE DEFENDED BY A LAWYER IN DOMESTIC INQUIRY The right of a delinquent to be defended by a lawyer in a domestic inquiry in

labour cases has undergone material change since the Supreme Court decision Kraipak’s99 case. Thus, in Board of Trustees, Port of Bombay v. Dilip Kumar100, Justice D A Desai opined: We have reached a stage in our onward march to fair play in action that wherein an inquiry before a district tribunal, the delinquent officer is pitted against a legally-trained mind, if he (the delinquent) seeks permission to appear through a legal practitioner, the refusal to grant this request would amount to denial of a reasonable request to defend himself and the essential principles of natural justice would be violated101. In J K Aggarwal v. Haryana Seeds Development Corporation Limited102, Rule 7(5) of the Haryana Civil Service Appeal Rules, 1952 provides that if the charge or charges are likely to result in dismissal of the person from the service of the government, such person may, with the sanction of the inquiry officer, be represented by counsel. The Supreme Court, while interpreting this rule held that where the presenting officer was a person with legal attainments and experience and the employee had no legal background, the refusal of the service of a lawyer to the delinquent amounts to denial of natural justice. The Court also held that the legal advisor or lawyer for this purpose should be liberally construed and must include ‘whoever assists or advises on facts and law must be deemed to be in the position of legal advisor’. But in Harinarayan Srivastava v. United Commercial Bank103, the Supreme Court held that the refusal of inquiry officer to permit representation by an advocate even when the management was being represented by a law graduate will not be violative of principles of natural justice as the charges were simple and not complicated. The matter again came to be considered by a three-judge bench of the Supreme Court in Crescent Dyes and Chemicals Ltd v. Ram Naresh Tripathi104. The Court upheld the statutory restrictions imposed on the delinquent’s choice of representation in the domestic inquiry through a lawyer or an agent. The Court observed: Ordinarily, it is considered desirable not to restrict this right of representation by counsel or an agent of one’s choice but it is a different thing to say that such a right is an element of principles of natural justice and denial thereof would invalidate the inquiry. Representation through counsel can be restricted by law as for

example, Section 36 of the Industrial Disputes Act, 1947 and also by certified standing orders. In the present case, the standing orders permitted an employee to be represented by a clerk or a workman working in the same department as the delinquent. So also the right to representation can be regulated or restricted by statute.

VIII. RIGHT OF REPRESENTATION IN DISCIPLINARY PROCEEDINGS THROUGH CO-EMPLOYEES The right to representation has been made available in a restricted way to a delinquent employee. In Rule 14(8) of the Central Civil Services (Classification, Control and Appeal) Rules, 1965 also an employee has been given the choice of being represented in the disciplinary proceedings through a co-employee. In Kalindi v. Tata Engineering and Locomotive Company Ltd105, a three-judge bench observed as under: Ordinarily, in inquiries before domestic tribunals, the person accused of any misconduct conducts his own case. Rules have been framed by the government as regards the procedure to be followed in inquiries against its employees. No provision is made in these rules that the person against whom an inquiry is held may be represented by anybody else. When the general practice adopted by domestic tribunals is that the person accused conducts his own case, we are unable to accept an argument that natural justice demands that in the case of inquiries into a charge-sheet of misconduct against a workman, he should be represented by a member of his union. Besides, it is necessary to remember that if any inquiry is not otherwise fair, the workman concerned can challenge its validity in an industrial dispute. The Court accordingly held that a workman against whom an inquiry is being held, the management has no right to be represented at such inquiry by a representative of his union though of course, an employer in his discretion can and may allow his employee to avail himself of such assistance. In Dunlop Rubber Company v. Workmen106, it was laid down that there was no right of representation in a disciplinary proceeding by another person

unless the service rules specifically provided for the same. In Kalindi v. Tata Engineering and Locomotive Co. Ltd, Dunlop Rubber Company v. Workmen and Brook Bond India (P) Ltd v. Subba Roman (S) and Another107, it was held that the Indian law does not concede an absolute right of representation to an employee as part of his right to be heard. It was further specified that there is no right to representation as such unless the company, by its standing orders, recognizes such a right. In this case, it was also laid down that a delinquent employee has no right to be represented in the departmental proceedings by a lawyer unless the facts involved in the disciplinary proceedings are of a complex nature. In Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar Union108, the Supreme Court, while dealing with the right of representation through co-employees observed: Model standing orders, no doubt, provided that a delinquent employee could be represented in the disciplinary proceedings through another employee who may not be the employee of the parent establishment to which the delinquent belongs and may be an employee elsewhere, though he may be a member of the trade union, but this rule of representation has not been disturbed by the certified standing orders, as much as it still provides that the delinquent employee can be represented in the disciplinary proceedings through an employee. The only embargo is that the representative should be an employee of the parent establishment. The delinquent has to select his representative so that he is a co-employee of the same establishment in which the delinquent is employed. There appears to be some logic behind this as a co-employee would be fully aware of the conditions prevailing in the parent establishment, its service rules, including the standing orders, and would be in a better position than an outsider, to assist the delinquent in the domestic proceedings for a fair and early disposal. The basic features of the model standing orders are thus retained and the right of representation in the disciplinary proceedings through another employee is not altered, affected or taken away. The standing orders confirm to all standards of reasonableness and fairness and, therefore, the appellate authority was fully justified in certifying the draft standing orders as submitted by the appellant.

IX. APPLICABILITY OF THE EVIDENCE ACT Is the Indian Evidence Act, 1872 applicable in a domestic inquiry? It is wellsettled that in a domestic inquiry, the Indian Evidence Act is not applicable in strictu sensu. The Supreme Court in State of Haryana v. Rattan Singh reiterating this position pointed out109: In a domestic inquiry, the strict and sophisticated rules of evidence under the Indian Evidence Act may not apply. All materials which are logically probative for a prudent mind are permissible. There is no allergy to hearsay evidence provided it has reasonable nexus and credibility. The essence of a judicial approach is objectivity, exclusion of extraneous materials or considerations and observance of rules of natural justice. Of course, fair play is the basis and if perversity or arbitrariness, bias or surrender of interdependence of judgement vitiates the conclusions reached, such finding, even though of a domestic tribunal, cannot be held good. In Workmen of Balmadies Estate v. Management, Balmadies Estate110, the Supreme Court held that it is fairly well-settled now that in view of the wide power of the labour court, the court can, in an appropriate case, consider the evidence that has been considered by the domestic tribunal and may arrive at a different conclusion from the one arrived at by the domestic tribunal. However, the assessment of evidence in a domestic inquiry is not required to be made by applying the same yardstick as a civil court could do when a lis is brought before it. The Indian Evidence Act, 1872 is not applicable to the proceedings in a domestic inquiry so far as the domestic inquiries are concerned, though principles of fairness are to apply. It is also fairly well-settled that in a domestic inquiry, guilt may not be established beyond reasonable doubt and the proof of misconduct would be sufficient. In a domestic inquiry, all materials which are logically probative including hearsay evidence can be acted upon provided it has a reasonable nexus and credibility.

X. DOMESTIC INQUIRY PENDING CRIMINAL PROCEEDINGS

In Capt. M Paul Anthony v. Bharat Gold Mines Ltd111, the Supreme Court stated certain situations which should be kept in abeyance during pendency of a criminal case. In paragraph 22, conclusions which are deducible from various decisions were summarized. They are as follows: (i)

Departmental proceedings and proceedings in a criminal case can proceed simultaneously as there is no bar in their being conducted simultaneously, though separately. (ii) If the departmental proceedings and the criminal case are based on identical and similar set of facts and the charge in the criminal case against the delinquent employee is of a grave nature which involves complicated questions of law and fact, it would be desirable to stay the departmental proceedings till the conclusion of the criminal case. (iii) Whether the nature of a charge in a criminal case is grave and whether complicated questions of fact and law are involved in the case, will depend on the nature of offence, the nature of the case launched against the employee on the basis of evidence and material collected against him during investigation or as reflected in the charge-sheet. (iv) The factors mentioned in (ii) and (iii) above cannot be considered in isolation to stay the departmental proceedings but due regard has to be given to the fact that the departmental proceedings cannot be unduly delayed. (v) If the criminal case does not proceed or its disposal is being unduly delayed, the departmental proceedings, even if they were stayed on account of the pendency of the criminal case, can be resumed and proceeded with so as to conclude them at an early date, so that if the employee is found not guilty, his honour may be vindicated and in case he is found guilty, the administration may get rid of him at the earliest. However, while deciding the case, taking into consideration the facts involved therein, the Court in para 35 held: Since the facts and the evidence in both the proceedings, namely, the departmental proceedings and the criminal case were the same without there being any iota of difference, the distinction, which is usually drawn as between departmental proceedings and criminal case on the basis of approach and burden of proof, would not be applicable to the instant case. The aforesaid view was reiterated in State Bank of India v. R B Sharma112. In

this case, the Supreme Court observed: The purpose of departmental inquiry and prosecution are two different and distinct aspects. Criminal prosecution is launched for an offence, for violation of a duty the offender owes to the society, or for breach of law which has provided that the offender shall make sacrifice to the public. So, crime is an act of commission in violation of law or omission of public duty. Departmental inquiry is to maintain discipline in the service and efficiency of public service. In Food Corporation of India v. George Vergese113, the management did not initiate departmental inquiry against the workman during the pendancy of criminal trial against the employee. On conviction of the said employee by criminal court, the management dismissed him. On his acquittal in the criminal appeal, management set aside the order of dismissal and reinstated the workman. But he was placed under immediate suspension and served a charge-sheet for the purpose of holding a departmental inquiry against him. The High Court held that no departmental inquiry against the delinquent could be initiated once there was acquittal. In the letters patent appeal, the division bench of the High Court refused to interfere on the ground of delay on the part of the management in initiating the departmental inquiry. The Supreme Court in a special leave petition held that the division bench of the High Court was not justified in refusing to interfere only on the ground of delay because the delay was not occasioned on account of inaction on the part of the management.

XI. CAN DEPARTMENTAL PROCEEDINGS BE CONTINUED AGAINST THE DELINQUENT IN CASE OF HIS ACQUITTAL BY CRIMINAL COURT It has not been settled in a series of cases of the Supreme Court114 that acquittal in criminal trial cannot bar holding of a departmental inquiry into the charge. The Court gave several reasons for this115. (i) (ii)

A conclusion arrived at in disciplinary inquiry is different from that arrived by a criminal court. The burden of proof required to establish guilt in a criminal court is not required in disciplinary proceedings.

(iii) The evidence led by the management in disciplinary proceedings may be different from that led by the prosecution in a criminal case and the material before the criminal court and inquiry officer or labour court may be entirely different. In Allahabad District Cooperative Bank Ltd v. Vidhya Varidh Mishra116, a question arose whether an employee who was held guilty in a disciplinary proceeding for having a hand in embezzlement of money in the office but acquitted in a criminal trial on the same charge could ask for quashing of the penalty of dismissal. The Supreme Court answered the question in the negative and held that in a disciplinary inquiry, a different conclusion may be arrived at than by a criminal court. The Court added that the strict burden of proof required to establish guilt in a criminal court is not there in disciplinary proceedings. It was not the case of the employee that the disciplinary proceedings were not conducted fairly. The Court further held that as the termination of services of the employee was based on findings of the disciplinary committee, the fact that the appellant criminal court exonerated the employee was of no consequence. Accordingly, the Court upheld the order of termination pursuant to the disciplinary inquiry. In Ajit Kumar Nag v. General Manager (PJ) Indian Oil Corporation Ltd117, a three-judge Bench of the Supreme Court ruled that: 1. Acquittal by a criminal court would not debar an employer from exercising power in accordance with the rules and regulations in force. 2. The two proceedings, criminal and departmental, are entirely different. They operate in different fields and have different objectives. Whereas the object of criminal trial is to inflict appropriate punishment on the offender, the purpose of inquiry proceedings is to deal with the delinquent departmentally and to impose penalty in accordance with the service rules. 3. In a criminal trial, incriminating statement made by the accused in certain circumstances or before certain officers is totally inadmissible in evidence. Such strict rules of evidence and procedure would not apply to departmental proceedings. 4. The degree of proof which is necessary to order a conviction is different from the degree of proof necessary to record commission of delinquency. 5. The rule relating to appreciation of evidence in two proceedings is also not similar. In criminal law, burden of proof is on prosecution and unless the prosecution is able to prove the guilt of the accused beyond reasonable

6.

doubt, he cannot be convicted by the court of law. In departmental inquiry on the other hand, penalty can be imposed on the delinquent officer on a finding recorded on the basis of preponderances of probability. Acquittal of the appellant by a judicial magistrate, therefore, does not ipso facto absolve him of the liability under the disciplinary jurisdiction of the corporation.

In Chairman-cum-MD, TNCS Corporation Ltd v. K Meerabai118, while dealing with the effect of judgement of acquittal in criminal proceedings on initiation of disciplinary proceedings, the Supreme Court ruled: (a) The scope of disciplinary proceedings and the scope of criminal proceedings in a court of criminal law are quite distinct, exclusive and independent of each other. (b) The criminal case and departmental proceedings were not based on identical facts and charges. (c) Where the charge-sheeted employee holds a position of trust and where honesty and integrity are in-built requirements of functioning, the matter should be dealt with firmly and not leniently. In Suresh Pathrella v. Oriental Bank of Commerce119, the Supreme Court held that acquittal in a criminal case would be no bar for drawing up disciplinary proceedings against the delinquent officer. It added that it is a well-settled principle of law that the yardstick and standard of proof in a criminal case is different from the disciplinary proceedings. While the standard of proof in a criminal case is a proof beyond all reasonable doubt, the proof in a departmental proceeding is preponderance of probabilities. Again, in Noida Entrepreneurs Association v. Noida120, a three-judge bench of the Supreme Court held that there is a conceptual difference between departmental inquiry and criminal proceedings and the standard of proof required for departmental proceedings is not the same as required to prove criminal charges and therefore the acquittal in criminal proceedings is not a bar to departmental proceedings. The question arose again in Bank of India v. Bhimsen Gochhayat121. Here, the Supreme Court held that where the charges in departmental inquiry were different from those in criminal case, the acquittal of an employee could not bar or prevent subsequent departmental inquiry. In Babu Lal v. Haryana State Agricultural Marketing Board122, the

Supreme Court held that where the acquittal of an employee in criminal proceedings was on benefit of doubt, the employer has a right to decide whether or not such an employee deserves any salary for the intervening period. This view only deals with back wages and not with the issue whether the disciplinary proceedings should continue. In Bank of India v. Bhimsen Gochhayat123, the respondent was tried only on the basis of allegations of fraud committed by way of forgery whereas the respondent had used broken pieces of branch receipt scroll rubber stamp to affix Lindsay Street branch on the CAN. Apart from this, the respondent had also stolen the entire pad of CANs from the branch and kept the same at his residence. All these allegations were not there in the criminal proceedings. In view of this, the Court held that when a bank employee was acquitted in criminal trial, holding of departmental inquiry would not be invalid, if charges were different from those in the criminal case which ended in the acquittal of the employee. In Union of India v. Naman Singh Shekhawat124, the Supreme Court held that departmental proceedings can be initiated after acquittal by the criminal court. However, departmental proceedings should be initiated provided the department can adduce any evidence which could prove the charges against the delinquent officer. Therefore, initiation of proceedings should be bona fide and must be reasonable and fair. In Pandiyan Roadways Corp. Ltd v. N Balakrishnan125, the Supreme Court reconsidered the issue taking into account all earlier judgements and observed as under: There are evidently two lines of decisions of this Court operating in the field. One is evident in the cases which would come within the purview of Capt. M Paul Anthony v. Bharat Gold Mines Ltd and G M Tank v. State of Gujarat126. However, the second line of decisions shows that an honourable acquittal in the criminal case itself may not be held to be determinative in respect of order of punishment meted out to the delinquent officer, inter alia, when (i) the order of acquittal has not been passed on the same set of facts or same set of evidence; (ii) the effect of difference in the standard of proof in a criminal trial and disciplinary proceedings has not been considered (see Commissioner of Police v. Narender Singh), or (iii) where the delinquent officer was charged with something more than the

subject matter of the criminal case and/or covered by a decision of the civil court. In Divisional Controller, Karnataka State Road Transport Corporation v. M G Vittal Rao127, the Supreme Court, after examining the aforesaid decisions held: There can be no doubt regarding the settled legal proposition that as the standard of proof in both the proceedings is quite different, and the termination is not based on mere conviction of an employee in a criminal case, the acquittal of the employee in a criminal case cannot be the basis of taking away the effect of departmental proceedings. Nor can such an action of the department be termed as double jeopardy. The judgement of this Court in Capt. M Paul Anthony does not lay down the law of universal application. Facts, charges and nature of evidence, etc., involved in an individual case would determine as to whether decision of acquittal would have any bearing on the findings recorded in the domestic inquiry.

XII. EFFECT OF DELAY IN CONDUCT OF INQUIRY Courts have held that delay of over 2 or even 3 years in initiating inquiry would not vitiate the inquiry128.

XIII. POWER TO CONDUCT INQUIRY AFRESH It has been held that inquiry can be conducted afresh from the stage when illegality is found committed129. However, where liberty is given to the employer to hold de novo inquiry, the earlier proceedings including the chargesheet issued earlier would be quashed. In such a situation, it is not permissible for the employer to proceed on the basis of the charge-sheet issued earlier130. In State Bank of Bikaner and Jaipur v. Ajay Kumar Gulati131, a disciplinary inquiry was held against the respondent with respect to certain grave charges. The inquiry officer reported that the charges were established. After considering the report and objections submitted by the respondent, the disciplinary authority ordered de novo disciplinary inquiry against the delinquent

for affording him another opportunity to put up his defence. A new inquiry officer was appointed. The respondent questioned the aforesaid proceedings/order by way of a writ petition in Delhi High Court. The question arose from which stage of proceedings de novo inquiry should commence. The Court directed that the inquiry should not be from the very beginning but confined to the recording of evidence to be adduced by the respondent alone. The appellant then filed an appeal in the Supreme Court against the order of Delhi High Court. Before the Supreme Court, the appellant contended that no reasons were given in support of the High Court’s decision. The Supreme Court, while dismissing the appeal, upheld the decision of the High Court and held that fresh inquiry should not be from the very beginning. The Court also held that since fresh inquiry was ordered for affording opportunity to the defendant to put up his defence, it should commence from giving opportunity to the delinquent to produce his documentary and oral evidence and also for considering the question of recalling any witness for cross examination.

XIV. NON-SUPPLY OF INQUIRY REPORT The Supreme Court in Union of India v. Mohd. Ramzan Khan132, has held that wherever a domestic inquiry is conducted by the management and the inquiry officer submits a report to the disciplinary authority at the conclusion of the inquiry holding the delinquent employee guilty of all or any of the charges with proposal for punishment or not, the delinquent must be given a copy of such report. He would also be entitled to make a representation against it if he so desired. Not furnishing a copy of the inquiry report to the delinquent would be violative of the principles of natural justice and is liable to be quashed. The rule is given prospective effect from the date of judgement, i.e. 20 November 1990. The constitution bench of the Supreme Court in Managing Director, ECIL, Hyderabad v. B Karunakar133, dealt with various issues arising from the non-supply of the inquiry report and ruled: The denial of the report of the inquiry officer is denial of reasonable opportunity and a breach of the principles of natural justice, and therefore, invalid. The delinquent employee will, therefore, be entitled to a copy of the report even if the statutory rules do not permit the furnishing of the report or are silent on the subject.

Article 311(2) of the Constitution makes it obligatory to hold an inquiry before the employee is dismissed or removed in rank. The Article, however, cannot be construed to mean that it prevents or prohibits the inquiry when punishment other than that of dismissal, removal or reduction in rank is awarded. The procedure to be followed in awarding other punishment is laid down in the service rules governing the employee. Further, Article 311(2) applies only to members of civil services of the Union or an all-India service or a civil service of a state or to the holders of civil posts and others are governed by their service rules. Whenever, therefore, the service rules contemplate an inquiry before punishment is awarded and when the inquiry officer is not the disciplinary authority, the delinquent employee will have the right to receive the inquiry officer's report notwithstanding the nature of the punishment. (i) Since it is the right of the employee to have the report to defend himself effectively and he would not know in advance whether the report is in his favour or against him, it will not be proper to construe his failure to ask for the report as the waiver of his right. Therefore, whether the employee asks for the report or not, the report has to be furnished to him. (ii) the right to make representation to the disciplinary authority against the findings recorded in the inquiry report is an integral part of the opportunity of defence against the charges and is a breach of principles of natural justice to deny the said right. The aforesaid view was reiterated in Managing Director, Electronics Corporation of India v. B. Karunakaran134. Here the Supreme Court held that the right to receive a copy of the report of inquiry and make representation are integral part of the opportunity of defence. Breach thereof would violate the principles of natural justice. The Court further ruled that the report has to be furnished whether the employers want to do so or not. The pendulum swung back in State Bank of Patiala v. S K Sharma135 wherein the Supreme Court held that there will be no illegality in non-supply of inquiry report to the delinquent employees when no prejudice has been caused to him. The Court further held that complaint of violation of principles of natural justice has to be examined on the touchstone of prejudice caused to the complainant. The aforesaid view was reiterated in SK Singh v. Central Bank of 136 India , the Supreme Court held that non-supply of the copy of the inquiry report would not be illegal if no prejudice is caused to delinquent employee due to non-supply of the inquiry report.

The two-judge bench of the Supreme Court in Debotosh Pal Chaudhary v. Punjab Bank137 was, inter alia, invited to determine consequences of not furnishing a copy of inquiry report before imposing the punishment of dismissal. In this case, Debotosh Pal Chaudhary was employed in Punjab National Bank. On 8 October 1988, the management dismissed him from service on the basis of the inquiry report submitted by the inquiry officer on 26 September 1988. The petitioner in a writ petition challenged the order of dismissal by contending that (i) the inquiry was vitiated as he did not have reasonable opportunity to have the copies of the documents or inspection thereof; and (ii) he was not afforded an opportunity to adduce oral evidence by examining two witnesses. The single judge of the High Court, inter alia, held that the disciplinary authority did not forward to the inquiring authority the documenets and lists of witnesses before commencing the inquiry against the petitioner. On appeal, the division bench revised the decision of the single judge and dismissed the writ petition. Aggrieved by the order, the petitioner filed a special leave to appeal before the Supreme Court. The Court referred to regulation 6(5) which requires the disciplinary authority, where it is not the inquiring authority, to forward to the inquiring authority the following documents: (i) a copy of the articles of charge and statement of imputations of misconduct or misbehaviour; (ii) a copy of the written statement of defence, if any, submitted by the officer employee; (iii) a list of documents by which and list of witnesses by whom the articles of charge are proposed to be substantiated; (iv) a copy of the statement of the witnesses, if any; (v) evidence providing the delivery of the article of charge under subregulation (3); and (vi) a copy of the order appointing the ‘presenting officer’ in terms of sub-regulation (6). While dealing with the aforesaid requirements, the Court held that fulfilment of some of the requirements of this regulation is purely procedural in character. Unless in a given situation, the aggrieved party makes out a case of prejudice or injustice, mere infraction of this regulation will not vitiate the entire inquiry. While dealing with the issue of non-supply of the copy of inquiry report, the Court observed: It is true that the petitioner was not provided with a copy of the

inquiry report by the disciplinary authority before imposition of the punishment of dismissal, but that circumstance has no bearing on the dismissal of the petitioner in view of the decisions of this Court of Ramzan Khan’s case (supra) and Managing Director, ECIL, Hyderabad v. B. Karunakar. The said two decisions are to the effect that no order of punishment before the date of the decision in Ramzan Khan’s case would be changeable on the ground that there is failure to furnish inquiry report before imposing the punishment by the disciplinary authority. In the present case, the punishment had been imposed upon the petitioner by the disciplinary authority on October 8 1988, long before the decision of this Court in Ramzan Khan’s case on 20 November 1990. The aforesaid ratio of law has been; reiterated by the Supreme Court in Haryana Financial Corp. v. Kailash Chandra Ahuja138. This Court again examined the entire issue and observed as follows: From the ratio laid down in B Karunakar, it is explicitly clear that the doctrine of natural justice requires supply of a copy of the inquiry officer’s report to the delinquent if such inquiry officer is other than the disciplinary authority. It is also clear that non-supply of report of the inquiry officer is breach of natural justice. But it is equally clear that failure to supply a report of the inquiry officer to the delinquent employee would not ipso facto result in the proceedings being declared null and void and the order of punishment, non-est and ineffective. It is for the delinquent employee to plead and prove that non-supply of such report had caused prejudice and resulted in miscarriage of justice. If he is unable to satisfy the court on that point, the order of punishment cannot automatically be set aside. In Sarv UP Gramin Bank v. Manoj Kumar Sinha139, the respondent joined Devi Pattan Kshetria Gramin Bank, Gonda (now Sarva UP Gramin Bank) as an officer. He was served with two charge-sheets dated 9 November 2000 and 8 March 2004 for various acts of omissions and commissions while working at branches of district Gonda. He was suspended. The respondent submitted a reply to the charge-sheet. He denied the charges mentioned therein. Thereafter, two separate departmental inquiries were held, in which the respondent fully participated. On 19 May 2001, the inquiry officer submitted the inquiry report

with regard to chargesheet dated 9 November 2000. Agreeing with the findings of the inquiry officer, the disciplinary authority issued two show cause notices to the respondent proposing the punishment of reduction of pay by six stages permanently. Thereafter, the respondent was given an opportunity for a personal hearing by disciplinary authority on each of the inquiry reports. Taking into consideration the explanation submitted by the respondent, the disciplinary authority passed two orders on 3 April 2001 imposing the punishment of ‘reduction of pay by six stages permanently’ and ‘reduction of pay by four stages’ in relation to charge-sheets filed on 9 November 2000 and 8 March 2001 respectively. Against these orders, the respondent filed appeals which were dismissed by the board of directors of the bank which was communicated to the respondent. He then filed a writ petition challenging the orders dated 3 April 2002 and 9 September 2003. The division bench of the High Court allowed the writ petition on the ground that since a copy of the inquiry report was not served on the respondent; the action of the petitioner bank was violative of the principles of natural justice in view of the judgement in Mohd. Ramzan Khan case. The bank then challenged the legality of the aforesaid judgement in an appeal before the Supreme Court. The Court relied upon the decision in ECIL v. B Karunakar and observed: From the aforesaid decisions, it is clear that though the supply of report of the inquiry officer is part and parcel of natural justice and must be furnished to the delinquent employee, failure to do so would not automatically result in quashing or setting aside of the order or the order being declared null and void. For that, the delinquent employee has to show ‘prejudice’. Unless he is able to show that non-supply of report of the inquiry officer has resulted in prejudice or miscarriage of justice, an order of punishment cannot be held to be vitiated. And whether prejudice had been caused to the delinquent employee depends upon the facts and circumstances of each case and no rule of universal application can be laid down. In view of above, the Court held that there has been no failure of justice in the facts and circumstances of this case by non-supply of the inquiry report to the respondent. The Court also held that the punishment imposed on the respondent cannot be said to be disproportionate to the gravity of the charges against him. The charges related to the conduct of the respondent in a financial institution whereby taking advantage of the official position, he attempted to procure unlawful pecuniary benefits for himself.

In Burdwan Central Cooperative Bank Ltd v. Asim Chatterjee140 the Court applied the principle whether any prejudice was caused to the delinquent employee by non-supply of inquiry report. The Court referred to its earlier decision in B Karunakar case (supra) and observed: There is one aspect of the matter which cannot be ignored. In B Karunakar case, despite holding that non-supply of a copy of the inquiry officer’s report to the employee facing disciplinary proceedings amounts to denial of natural justice, in the later part of the judgement it was observed that whether in fact, prejudice has been caused to the employee on account of non-furnishing of a copy of the inquiry report has to be considered on the facts of each case. It was observed that where the furnishing of the inquiry report would not make any difference to the ultimate outcome of the matter, it would be perversion of justice to allow the employee concerned to resume his duties and to get all consequential benefits. Applying the above in this case where order of punishment had been passed against the respondent for financial irregularities in the bank and if the bank was of the view that his services could not be retained on account of his previous misdemeanour, it is then that the second part of B Karunakar case becomes attracted and it becomes necessary for the Court to examine whether any prejudice has been caused to the employee or not before punishment is awarded to him.

XV. DOMESTIC INQUIRY FOUND DEFECTIVE— DATE OF ITS EFFECT In Punjab Dairy Development Corporation Ltd v. Industrial Tribunal141, the three-judge bench of the Supreme Court ruled that when domestic inquiry is found defective, it relates back from the date on which the management passed the order and not from the date of judgement.

XVI. POWER OF LABOUR COURTS, TRIBUNALS AND NATIONAL TRIBUNALS TO GIVE APPROPRIATE

RELIEF IN CASE OF DISCHARGE OR DISMISSAL OF WORKMAN Section 11-A provides: Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a labour court, tribunal or national tribunal for adjudication and, in the course of the adjudication proceedings, the labour court, tribunal or national tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions if any as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require. Provided that in any proceedings under this Section, the labour court, tribunal or national tribunal, as the case may be, shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter. In order to appreciate the need for it, would be necessary to consider the past history with regard to the introduction of Section 11-A by Act No. 45 of 1971 in the Industrial Disputes Act, 1947 with effect from December 15, 1971. In Indian Iron and Steel Co. Ltd. v. Their Workmen142, the Supreme Court, while considering the tribunal’s power to interfere with the management’s decision to dismiss, discharge or terminate the services of a workman, has observed that in cases of dismissal for misconduct the tribunal does not act as court of appeal and substitute its own judgement for that of the management and that the tribunal will interfere only when there is want of good faith, victimization, unfair labour practice, etc. on the part of the management. The International Labour Organization in its recommendation (No. 119) concerning ‘termination of employment at the initiative of the employer’ adopted in June 1963, has recommended that a worker aggrieved by the termination of his employment should be entitled to appeal against the termination among others, to neutral body such as an arbitrator, a court, an arbitration committee or a similar body and that the neutral body concerned should be empowered to examine the reasons given in the termination of employment and the other circumstances relating to the case and to render a decision on the justification of their termination. The International Labour Organization has further recommended that the neutral body should be empowered (if it finds that the termination of employment was unjustified) to

order that the worker concerned, unless reinstated with unpaid wages should be paid adequate compensation or afforded some other relief. In accordance with above recommendations, it was considered that the tribunals’ power in adjudication proceeding relating to discharge or dismissal of a workman should not be limited and that the tribunal should have the power, in cases wherever necessary, to set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require. Accordingly, Section 11-A was inserted in the Industrial Disputes Act, 1947. Thus the position has been changed by Section 11-A. While previously the tribunal had no power to interfere with the punishment, it is now clothed with such a power. Under Section 11-A even ‘if the finding of misconduct is established, the tribunal now has power to consider whether the punishment of dismissal or discharge was necessary for the type of misconduct of which the workman is found guilty. In such circumstances, the tribunal may hold that the proved misconduct does not merit punishment by way of discharge or dismissal of the workmen and may award lesser punishment instead. The ambit and scope of Section 11-A came up for consideration before the Supreme Court in Workmen of Firestone Tyre and Rubber Company of India (P) Ltd. v. Firestone Tyre and Rubber Company of India (P) Ltd.143 The Court laid down the following principles: 1. The right to take disciplinary action and to decide upon the quantum of punishment are mainly managerial functions but if a dispute is referred to a tribunal, the latter has power to see if action of the employer is justified. 2.

3.

4.

Before imposing the punishment, an employer is expected to conduct a proper inquiry in accordance with the provisions of the standing orders, if applicable, and principles of natural justice. The inquiry should not be empty formality. When a proper inquiry has been held by an employer, and the finding of misconduct is plausible conclusion flowing from the evidence adduced at the said inquiry, the tribunal has no jurisdiction to sit in judgement over the decision of the employer as an appellate body. The interference with the decision of the employer will be justified only when findings arrived at in the inquiry are perverse or the management is guilty of victimization, unfair labour practice or mala fide conduct. Even if no inquiry has been held by an employer or if the inquiry held by

him is found to be defective, the tribunal in order to satisfy itself about the legality and the validity of the order, has to give an opportunity to the employer and employee to adduce evidence before it. It is open to the employer to adduce evidence for the first time justifying his action, and it is open to the employee to aduce evidence contra. 5. The effect of an employer not holding an inquiry is that the tribunal would not have to consider only whether there was a prima facie case. On the other hand, the issue about the merits of the impugned order of dismissal or discharge is at large before the tribunal and the latter, on the evidence adduced before it, has to decide for itself whether the misconduct alleged is proved. In such cases, the point about the exercise of managerial functions does not arise at all. A case of defective inquiry stands on the same footing as no inquiry. 6. The tribunal gets jurisdiction to consider the evidence placed before it for the first time in justification of the action taken only, if no inquiry has been held or the inquiry conducted by an employer is found to be defective. 7. It has never been recognized that the tribunal should straightaway, direct reinstatement of a dismissed or discharged employee once it is found that no domestic inquiry has been held or the said inquiry is found to be defective. 8. An employer, who wants to avail himself of the opportunity of adducing evidence for the first time before the tribunal to justify his action, should ask for it at the appropriate stage. If such an opportunity is asked for, the tribunal has no power to refuse. The giving of an opportunity to an employer to adduce evidence for the first time before the tribunal is in the interest of both the management and the employee and to enable the tribunal itself to be satisfied about the alleged misconduct. 9. Once the misconduct is proved either in the inquiry conducted by an employer or by the evidence placed before a tribunal for the first time, punishment imposed cannot be interfered with by the tribunal except in cases where the punishment is so harsh as to suggest victimization.144 10. In a particular case, after setting aside the order of dismissal, whether a workman should be reinstated or paid compensation is as held by this Court in Management oƒ Panitola Tea Estate v. The Workmen145, within the judicial decision of a labour court or tribunal.

A. Right of the Employer to Adduce Evidence 1. General The Supreme Court in Bharat Forge Company Ltd v. A B Zodge146, held that under Section 11-A, employer is entitled to adduce evidence for the first time, before the tribunal even if the employer had not conducted any inquiry or the inquiry conducted by him is found to be preverse. A domestic inquiry may be vitiated either for non-compliance of rules of natural justice or for perversity. Disciplinary action taken on the basis of a vitiated inquiry does not stand on a better footing than a disciplinary action with no inquiry. The right of the employer to adduce evidence in both situations is well recognized. Again, in United Planters Association of Southern India v. K G Sangameswaran147, the Supreme Court ruled: 1. Even in cases where opportunity of hearing was given and principles of natural justice were complied with before passing the order of dismissal, the appellate authority may find it necessary to record evidence in order to draw its own conclusion as to whether the person dismissed was or was not guilty of the charges framed against him. 2. Where the employer had filed an application to produce evidence in support of the charges and the appellate authority without disposing of that application set aside the order of dismissal merely on the omission to hold domestic inquiry, the appellate authority committed a grave error. In Neeta Kaplish v. Presiding Officer, Labour Court148, the Supreme Court after examining various decisions observed: In all cases where inquiry has not been held or inquiry has been found to be defective, the tribunal can call upon the management or the employer to justify the action taken against the workman and to show by fresh evidence, that the termination or dismissal order was proper. If the management does not lead any evidence by availing of this opportunity, it cannot raise any grouse at any subsequent stage that it should have been given that opportunity as the tribunal, in those circumstances, would be justified in passing an award in favour of the workman. If, however, the opportunity is availed of and the evidence is adduced by the management, the validity of the action taken by its has to be scrutinized and adjudicated upon the basis of such fresh

evidence. The Court rejected the contention that under Section 11-A, the labour court had to rely on the ‘materials on record’ and since the inquiry proceedings constituted ‘material on record’, the same could not be ignored and observed: The record pertaining to the domestic inquiry would not constitute ‘fresh evidence’ as those proceedings have already been found by the labour court to be defective. Such record would also not constitute ‘material on record’, as contended by the counsel for the respondents, within the meaning of Section 11-A as the inquiry proceedings, on being found to be bad, have to be ignored altogether. The proceedings of the domestic inquiry could be and were, in fact relied upon by the management for the limited purpose of showing at the preliminary stage that the action taken against the appellant was just and proper and that full opportunity of hearing was given to her in consonance with the principles of natural justice. This contention has not been accepted by the labour court and the inquiry has been held to bad. In view of the nature of objections raised by the appellant, the record of inquiry held by the management to be ‘material on record’ within the meaning of Section 11-A of the Act and the only course open to the management was to justify its action by leading fresh evidence as required by the labour court. If such evidence has not been led, the management has to suffer the consequences. 2.

When can the tribunal permit parties to adduce fresh evidence

In Rajendra Jha v. Labour Court,149 the Supreme Court held that even when the application for permission to adduce further evidence is not made in the pleading, labour court is empowered to permit the management to adduce evidence before the court and therefore, it should allow the parties to adduce evidence to prove the misconduct. However, the Court has observed that the request of the employer to adduce evidence should be made at the earliest opportunity or delay be explained150. However, such request must be made before the closure of the proceedings. No obligation to ask the parties to adduce evidence. The Court held that the tribunal has no obligation to acquaint parties before them for their right to adduce evidence under Section 11-A151.

B. Interference with a Quantum of Punishment Section 11-A confers jurisdiction on the labour court to evaluate the severity of misconduct as to assess whether the punishment imposed by the employer is commensurate with the gravity of the misconduct. In Hombe Gowda EDN Trust v. State of Karnataka152, The Supreme Court observed that ‘the tribunal would not normally interfere with the quantum of punishment imposed by the employers unless an appropriate case is made out therefore. The tribunal being inferior to this Court, was bound to follow the decision of this Court…. The tribunal can neither ignore the ratio laid down by this Court nor refuse to follow the same.’ The Court added: Discipline at the workplace in an organization is a sine quo non for the efficient working of the organization. When an employee breaches such discipline and the employer terminates his service, it is not open to the labour court or an industrial tribunal to take the view that the punishment awarded is shockingly disproportionate to the charge proved153. However, in Management of Hindustan Machine Tools Ltd, Bangalore v. Mohd. Usman154, the Supreme Court held that where the punishment imposed by the employer is disproportionately excessive, the labour court in exercise of its discretion under Section 11-A can reduce the punishment. Even in a case where the labour court held that the domestic inquiry was conducted properly and without prejudice to the worker, it can analyse the evidence to decide whether the dismissal of the worker was justified. It is within the jurisdiction of the labour court to consider the propriety and justifiability of the punishment in the case and direct reinstatement if found necessary. In Chairman-cum-MD, Coal India Ltd v. Mukul Kumar Choudhun155, the apex court ruled: One of the tests to be applied while dealing with the question of quantum of punishment would be: would any reasonable employer have imposed such punishment in like circumstances? Obviously, a reasonable employer is expected to take into consideration measure, magnitude and degree of misconduct and all other relevant circumstances and exclude irrelevant matters before imposing punishment. The punishment is not only unduly harsh but grossly in excess to the allegations.

A year later, in Charanjit Lamba v. Commanding Officer156, the Supreme Court observed: That the punishment imposed upon the delinquent should be commensurate with the nature of the misconduct is not only a requirement of fairness, objectivity and non-discriminatory treatment but the same is recognized as being part of Article 14 of the Constitution. It is also evident from the decisions referred to above that the courts in India have recognized the doctrine of proportionality as one of the grounds for judicial review. Referring to scope of judicial review, the Court pointed out: We need to remember that the quantum of punishment in disciplinary matters is something that rests primarily with the disciplinary authority. The jurisdiction of a writ court or an administrative tribunal is limited to finding out whether the punishment is so outrageously disproportionate as to be suggestive of lack of good faith. What is clear is that while judicially reviewing an order of punishment imposed on a delinquent employee, the writ court would not assume the role of an appellate authority. It would not impose a lesser punishment merely because it considers the same to be more reasonable than what the disciplinary authority had imposed. It is only in cases where the punishment is so disproportionate to the gravity of charge that no reasonable person placed in the position of the disciplinary authority could have imposed such a punishment that a writ court may step in to interfere with the same.

C. Specific Facts/Situations 1.

Non-issuance of Tickets

In Devendra Swamy v. State Road Transport Corporation157, the services of a bus conductor were terminated after departmental inquiry for not issuing tickets to eight passengers. Earlier, he was found guilty of similar offence in more than 41 cases in which lesser punishments were imposed upon him. Thereupon, an appeal was filed before the Supreme Court. While dealing with justifiability of termination of service, the Supreme Court referred to its earlier decisions158 wherein it was held that unless punishment is shockingly disproportionate to the

charge which has been proved, the punishment awarded by the disciplinary authority should not be interfered with in exercise of power of judicial review. The Supreme Court held that the corporation was fully justified in awarding the punishment of dismissal looking at the gravity of the charge of misconduct for which disciplinary proceedings were initiated and proved as also in the light of previous service record of the appellant. The Supreme Court in Regional Manager v. Ghanshayam Sharma159 was invited to assess the quantum of punishment keeping in view the nature and severity of misconduct. In this case, the respondent who was employed as a conductor by the Rajasthan Road Transport Corporation was punished several times for having been charge-sheeted on the ground of not issuing tickets to passengers. In this case, he was again found carrying 23-1/2 passengers without ticket. An inquiry was conduced and he was removed from service. On a reference, the labour court invoked its jurisdiction under section 11-A and held that even though the respondent was guilty of misconduct, it directed reinstatement with continuity of service but without back wages. On a writ petition, the single judge of the High Court set aside the award. On a letters patent appeal the division bench reversed the award of the single judge. Thereupon an appeal was filed before the Supreme Court. The Court relied upon its earlier decision in Karnataka State Road Transport Corporation v. B S Hullikatti160 and held that in such cases where the bus conductors carry passengers without ticket or issue tickets at a less rate than the proper rate, the said acts would, inter alia, amount to either being a case of dishonesty or of gross negligence and such conductors were not to be retained in service because such inaction or action on the part of the conductors results in financial loss to the Corporation. The Court accordingly held that the order of dismissal should not be set aside. The Court remarked that although under Section 11-A, the labour court has jurisdiction and power to interfere with the quantum of punishment, the discretion has to be used judiciously. When the main duty or function of the conductor is to issue tickets, collect the fare and deposit the same with the Road Transport Corporation. In the event of his failure to do so, it will be misplaced sympathy to order his reinstatement instead of dismissal. The Court accordingly set aside the order of the division bench and restored the order of the single judge. In UP State Road Transport Corporation v. Vinod Kumar161, a workman was found carrying passengers without issuing tickets. The management, after holding a domestic inquiry, terminated his services. Thereupon, the workman raised an industrial dispute in which he challenged the

conclusion arrived at by the inquiry officer as also the punishment awarded to him by the disciplinary authority. However, the labour court held that the charge of misappropriation had not been proved and thus, punishment of removal from service was harsh. It therefore, held that the removal be substituted by stoppage of one increment without any cumulative effect and directed him to be reinstated with full back wages. On a writ petition filed by the management, the High Court confirmed the order of reinstatement but instead of full back wages, it ordered 50 per cent of the back wages. In an appeal before the Supreme Court against this order, the Court held that since the respondent had not challenged the correctness or the legality of the inquiry conducted, it was not open to the labour court to go into the findings recorded by the inquiry officer regarding the misconduct committed by the workman. The Court observed that it is a wellsettled legal position that punishment of removal/dismissal is the appropriate punishment for an employee found guilty of misappropriation of funds; and the court should be reluctant to reduce the punishment on misplaced sympathy for a workman. The Court also held that there was nothing wrong in the employer losing confidence or faith in such an employee and awarding punishment of dismissal. The Court reiterated that there is no place for generosity or misplaced sympathy on the part of judicial forums and interfering with the quantum of punishment. The Court accordingly set aside the judgement of the High Court as well as the award of labour court and restored the order of removal from service ordered by the disciplinary authority. In Divisional Manager, Rajasthan SRTC v. Kamruddin162, a conductor employed by the Rajasthan State Roadways Corporation during his probationary period of two years was charged for carrying passengers without tickets on not less than five occasions for which he was given warnings. He was again found guilty of not issuing tickets to two passengers and carrying large quantities of luggage. The management, after holding a departmental inquiry, terminated his services. He then raised an industrial dispute which was referred to the labour court. The court found the inquiry to be in order but held that the punishment was disproportionate to the gravity of the misconduct. It accordingly substituted the order of termination to stoppage of two increments with cumulative effect and ordered his reinstatement with continuity in service but without back wages. The award of the labour court was upheld by the High Court. Against this order, a special leave to appeal was filed before the Supreme Court. Dealing with the case, the Court referred to its earlier decision in Karnataka SRTC v. B D Hullikatti163 and Rajasthan SRTC v. Ghamshyam Sharma164 and observed that it is now a settled legal position that if a conductor of a corporation whose main

duty or function is to issue tickets, collect fare and deposit the same with the corporation was either dishonest or so grossly negligent in performing his duty, he was not fit to be retained as a conductor whose acts of omission and commission were bound to cause financial loss to the corporation. It felt that such a workman should be shown the door. The Court also pointed out that it would be misplaced sympathy to award him lesser punishment. It therefore, restored the order of termination of service by the management and set aside the award of the labour court. It observed that even though the power of the labour court or industrial tribunal in terms of Section 11-A of the IDA to interfere with the quantum of punishment cannot be denied, but it is also a well-settled principle of law that the said power has to be exercised judiciously. In UP State Road Transport Corporation v. Nanhe Lal Kushwaha165, the respondent who was employed as a bus conductor by the corporation was charged for carrying passengers without tickets on six occasions. The management, after holding a departmental inquiry, removed him from service. He then raised an industrial dispute. The labour court found him guilty on two occasions. It therefore, directed reinstatement with 75 per cent back wages. Against this order, the management filed a writ petition before the Allahabad High Court which, without assigning any cogent reason, modified the award to the extent that no back wages shall be payable to the workman. Thereupon, the management filed an appeal before the Supreme Court. The Supreme Court, relying on its earlier decision in UP SRTC v. Hoti Lal166, observed that the conductor was holding a position of trust and acting in a fiduciary capacity. The misconduct was serious and could not be dealt with leniently as was done both by the labour court and the High Court. The Court also deprecated the practice followed by high courts in disposing of writ petitions without assigning any cogent reason. It observed that the labour courts should not ordinarily interfere with the discretion exercised by employers in awarding punishment despite the wide discretion given to them under Section 11-A of the IDA. The Court observed that it was not the amount of loss to the corporation which was material for determining the quantum of punishment. It accordingly set aside the award of the labour court and the judgement of the High Court and affirmed the order of the management. In the same year, the above issue was again raised in UPSRTC v. Suresh Chand Sharma167. In this case, the respondent was a conductor with UP Roadway Transport Corporation and was found carrying 13 passengers without tickets on 24 May 1987. Again on 10 May 1988, he was found carrying 10 passengers without tickets. On both occasions, he had recovered the fare from

them. The management, after holding an inquiry, dismissed the respondent. The workman then preferred a departmental appeal which was rejected. He then raised an industrial dispute which was referred by the appropriate government to the labour court for adjudication. The labour court held that the inquiry had been held strictly in accordance with law and both charges in respect of the two incidents were found duly proved. Therefore, the employee was not entitled to any relief whatsoever. Being aggrieved, the employee challenged the award by filing a writ petition before the Allahabad High Court. The High Court allowed the petition partly and directed the reinstatement of the employee without back wages. Thereupon, the appeal was filed before the Supreme Court. The Supreme Court found that the High Court had decided the writ petition only on the ground that the passengers were found without tickets and the cash was with the employee when checked. No other reasoning whatsoever was given by the court. The Supreme Court referred to the decision in State of Haryana v. Rattan Singh wherein it has categorically held that the only right of a delinquent employee is that he must be informed as to what are the charges against him and he must be given full opportunity to defend himself on the said charges. However, the Court rejected the contention that inquiry report stood vitiated for not recording the statement of the passengers who were found travelling without tickets. In view of the above, the Court held that the reasoning given by the High Court cannot be sustained in the eyes of law. The Court added that the High Court is under an obligation to give not only the reasons but cogent reasons while reversing the findings of fact recorded by a domestic tribunal. In case the judgement and order of the High Court is found not duly supported by reasons, the judgement itself stands vitiated. The Court also rejected the contention of the employee that for embezzlement of such a petty amount, punishment of dismissal could not be justified for the reason that it is not the amount embezzled by a delinquent employee but the intention to misappropriate public money. In view of the above, the Court set aside the judgement and order of the High Court. An examination of the aforesaid decisions reveals that the courts have taken non-issuance of tickets by conductors to be a case of serious misconduct and maintained the punishment of dismissal awarded by managements. It is hoped that this line of approach would deter employees from committing such misconduct and would also help in maintenance of discipline. 2. Misplacement of File Section 11-A of the Industrial Disputes Act, 1947 empowers the labour court to

evaluate severity of misconduct and to assess whether the punishments imposed by the employer are commensurate with the gravity of misconduct. The Supreme Court in Dev Singh v. Punjab Tourism Development Corporation Ltd168 had an opportunity to delineate the scope of interference under Section 11-A. In this case, the Punjab Tourism Development Corporation terminated the services of an employee (who served the corporation for about 20 years with unblemished service) for mere misplacement of a file. Such misplacement of file was not proved to be a deliberate act with ulterior consideration, but was at the most an act of negligence. On these facts, the Supreme Court held that the punishment of dismissal for mere misplacement of a file without any ulterior motive is too harsh a punishment which is totally disproportionate to the misconduct alleged and the appellant be imposed a punishment of withholding of one increment including stoppage in substitution of the punishment of dismissal awarded by the disciplinary authority. Dealing with the general principle of interference, the Court ruled that normally courts will not interfere with the punishment as imparted by the disciplinary/appellate authorities but when it shocks the conscience of the Court, it can mould the relief in exceptional cases which should be supported with cogent reasons. 3. Assault of Senior Officer In India Railways Construction Co. Ltd v. Ajay Kumar169, an employee on probation allegedly assaulted a senior officer along with others and ranasacked the office by creating chaotic conditions. The employer, therefore terminated his service without holding an inquiry. On these facts, the Supreme Court laid down the following principles: (i)

It is fairly well settled that the power to dismiss an employee by dispensing with an inquiry is not to be exercised so as to circumvent the prescribed rules. The satisfaction as to whether the facts exist to justify dispensing with inquiry has to be of the disciplinary authority. Where two views are possible as to whether holding of an inquiry would have been proper or not, it would not be within the domain of the Court to substitute its view for that of the disciplinary authority as if the Court is sitting as an appellate authority over the disciplinary authority. The contemporaneous circumstances can be duly taken note of in arriving at a decision whether to dispense with an inquiry or not. What the High Court was required to do was to see whether there was any scope for judicial review of the disciplinary authority's order dispensing with inquiry. The focus was required to be on the impracticability or otherwise of holding the inquiry.

(ii)

An employee, even if he claims to be a member of the employees’ union, has to act with a sense of discipline and decorum. Presentation of demands relating to employees cannot be exhibited by muscle power. It must be borne in mind that every employee is a part of a functioning system, which may collapse if its functioning is affected improperly. For smooth functioning, every employer depends upon a disciplined employees' force. In the name of presenting demands they cannot hold the employer to ransom. The employer has a duty to look into as as far as practicable and obviate the genuine grievances of the employees. The working atmosphere should be cordial, as that would be in the best interest of the establishment. Unless an atmosphere of cordiality exists, there is likelihood of inefficient working and that would not be in the interest of the establishment and would be rather destructive of common interest of both employer and employees. (iii) The alleged acts are prima facie acts of misconduct. Therefore, the employer can legitimately raise a plea of losing confidence in the employee, warranting his non-continuance in the employment. The time gap is another significant factor. The Court accordingly held that compensating in lieu of reinstatement with back wages would be appropriate relief to the employee, more so when he has lost the confidence of management. In Muriadih Colliery BCC Ltd v. Bihar Colliery Kamgar Union170, the workman assaulted the senior officials and hampered discharge of their duties. On these facts, the Supreme Court referring to its earlier decisions observed: The courts below by condoning an act of physical violence have undermined the discipline in the organization, hence, in the above factual backdrop, it can never be said that the industrial tribunal could have exercised its authority under Section 11-A of the Act to interfere with the punishment of dismissal. In M P Electricity Board v. Jagdish Chandra Sharma171, the respondent, an employee working as a muster-roll labourer in the MP Electricity Board (appellant) while in employment allegedly assaulted a superior officer in the presence of other employees with a tension screw on his back and nose, which resulted in fracture of the nose and severe bleeding. This incident was followed by unauthorized absence from work for several days. The management after holding a domestic inquiry terminated his services. The respondent-employee raised an industrial dispute. The appropriate government referred the dispute to

the labour court for adjudication. The labour court, though did not disagree with the finding of the inquiry on the inflicting of injuries on the superior officer or on the unauthorized absence and the consequent violations of the service rules, took the view that the punishment of termination inflicted on the employee was punnitive in nature. According to the court, the employee who had been kept out of service till the date of the decision was enough punishment in the circumstances. Therefore, exercising its power under Section 107-A of the Madhya Pradesh Industrial Relations Act, 1906, which corresponds to Section 11-A of the Industrial Disputes Act, the labour court set aside the punishment of termination and ordered reinstatement of the employee but without back wages. Thereupon, the employer filed an appeal before the industrial court challenging the labour court's interference with the punishment imposed by the employer. The employee also filed an appeal challenging the denial of back wages. The industrial court held that the labour court acted illegally and perversely in interfering with the punishment awarded on the findings at the inquiry accepted by the labour court. Therefore, it set aside the order of the labour court and held that the termination of service as a punishment was justified in the circumstances. Aggrieved by the decision of the industrial court, the employee filed a writ petition in the High Court of Madhya Pradesh invoking Articles 226 and 227 of the Constitution. The High Court held that the charges against the employee stood proved but since the labour court had decided to award a lesser punishment, the same should not have been interfered with by the industrial court. Thus, the High Court set aside the decision of the industrial court and restored the decision of the labour court. Against this order, both the employer and the employee challenged this decision of the High Court in an appeal by special leave before the Supreme Court. While the employer has questioned the interference with the punishment awarded, the employee questioned the denial of back wages to him. The three-judge bench of the Supreme Court observed: In the case on hand, the employee had been found guilty of hitting and injuring his superior officer at the workplace, obviously in the presence of other employees. This clearly amounted to breach of discipline in the organization. Discipline at the workplace in an organization like the employer herein, is the sine qua non for the efficient working of the organization. When an employee breaches such discipline and the employer terminates his services, it is not open to a labour court or an industrial tribunal to take the view that the punishment awarded

is shockingly disproportionate to the charge proved. We have already referred to the views of this Court. To quote Jack Chan: ‘discipline is a form of civilly responsible behaviour which helps maintain social order and contributes to the preservation, if not advancement, of collective interests of society at large.’ Obviously, the idea is more relevant in considering the working of an organization like the employer herein or an industrial undertaking. Obedience to authority in a workplace is not slavery. It is not violative of one’s natural rights. It is essential for the prosperity of the organization as well as that of its employees. When in such situation, a punishment of termination is awarded for hitting and injuring a superior officer supervising the work of the employees, with no extenuating circumstance established, it cannot be said to be not justified. It cannot certainly be termed unduly harsh or disproportionate. The labour court and the High Court in this case totally misdirected themselves while exercising their jurisdiction. The industrial court made the correct approach and came to the right conclusion. The Court therefore, allowed the appeal filed by the employer, set aside the decision of the High Court, restored the decision of the industrial court and thereby the punishment awarded by the employer was upheld. The appeal filed by the employee was also dismissed. In Hombe Gowda EDN Trust v. State of Karnataka172, the respondent, a teacher, abused the head of the institution in filthy language and assaulted him with a chappal. The management, therefore, dismissed the teacher. However, the tribunal in place of dismissal ordered withholding of three increments. On appeal, the Supreme Court held that punishment of dismissal from service cannot be said to be wholly inadequate punishment. The Court also held that to keep the appellant within the bounds of well disciplined conduct, a further punishment is also called for and should be imposed so that our humanistic approach may not induce him to repeat his intemperate performance. A person, when dismissed from service, is put to great hardship but that would not mean that a grave misconduct should go unpunished. Although the doctrine of proportionality may be applicable in such matters, but a punishment of dismissal from service for such a misconduct cannot be said to be unheard of. Maintenance of discipline in an institution is equally important. Keeping the aforementioned

principles in view, we may hereinafter notice a few recent decisions of this Court. It was added: ‘This Court has come a long way from its earlier viewpoints. The recent trend in the decisions of this Court seeks to strike a balance between the earlier approach of industrial relations wherein only the interest of the workmen was sought to be protected with the avowed object of fast industrial growth of the country. In several decisions of this Court, it has been noticed that how discipline at the workplaces/industrial undertaking received a set-back. In view of the change in economic policy of the country, it may not now be proper to allow the employees to break discipline with impunity. Our country is governed by rule of law. All actions, therefore, must be taken in accordance with law. Law declared by this Court in terms of Article 141 of the Constitution of India, as noticed in the decisions noted supra, categorically demonstrates that the tribunal would not normally interfere with the quantum of punishment imposed by the employers unless an appropriate case is made out therefor. The tribunal, being inferior to this Court, was bound to follow the decisions of this Court which are applicable to the fact of the present case in question. The tribunal can neither ignore the ratio laid down by this Court nor refuse to follow the same. The Court accordingly allowed the appeal. 4. Unauthorized Leave A survey of decided cases reveals that the Supreme Court has taken a serious view of absence on account of unauthorized leave. In Delhi Transport Corporation v. Sardar Singh173, the Delhi Transport Corporation initiated departmental proceedings against respondents who were conductors on the ground of unauthroized long absence from duty, negligence of duties and lack of interest in the employer's work. Such acts amounted to misconduct under Paras 4 (11) and 19 (h) of the Standing Orders issued under Para 15 (1) of the Delhi Road Transport Authority (Conditions of Appointment and Service Regulation, 1952) which were applicable to respondents. After having found the respondents-conductor guilty, the disciplinary authority imposed punishment of dismissal/removal from service. Since an industrial dispute was already pending before the industrial tribunal, the corporation filed an application for approval of its action before the said tribunal under Section 33(2) (b) of the Industrial Dispute Act, 1947. The tribunal found that proper inquiry was not held. It, therefore, granted opportunity to the corporation to adduce further evidence to justify its action. The corporation, therefore, led further evidence. But, the tribunal on consideration of materials brought before it, held that absence from duty without leave, amounted to non-sanction of leave and did not amount to misconduct. Thus, availing leave without pay also did not

amount to misconduct. In view of this, the tribunal refused to grant approval to the action taken by the corporation, mainly on the ground that in most cases, the leave was treated without pay and that being the position it cannot be said that the absence was unauthorized. Against this order, the corporation preferred a writ petition before the High Court. The single judge of the High Court held that the disapproval by the tribunal was not in order. Thereupon, the respondent conductors filed letters patent appeals before the Delhi High Court. The division bench of the High Court affirmed the findings of the tribunal and reversed the decision of the single judge. Aggrieved by this order, the corporation filed appeals by special leave in the Supreme Court. On these facts, the Supreme Court held : (i) Mere making of an application after or even before absence from work does not in any way assist the employee concerned. The requirement is obtaining leave in advance. In all these cases, the absence was without obtaining leave in advance. (ii) When an employee absents himself from duty, even without sanctioned leave for a very long period, it prima facie shows lack of interest in work. Para 19(h) of the Standing Orders as quoted above relates to habitual negligence of duties and lack of interest in the authority's work. When an employee absents himself from duty without sanctioned leave, the authority can, on the basis of the record, come to a conclusion about the employee being habitually negligent in duties and exhibiting lack of interest in the employer's work. (iii) Ample material was produced before the tribunal in each case to show as to how the employees concerned were remaining absent for long periods which affects the work of the employer and the employee concerned was required at least to bring some material on record to show as to how his absence was on the basis of sanctioned leave and as to how there was no negligence. (iv) Habitual absence is a factor which establishes lack of interest in work. There cannot be any sweeping generalization. But at the same time, some telltale features can be noticed and pressed into service to arrive at conclusions in the departmental proceedings. (v) Conclusion regarding negligence and lack of interest can be arrived at by looking into the period of absence, more particularly, when leave is unauthroized. (vi) Burden is on the employee who claims that there was no negligence and/or lack of interest to establish it by placing relevant materials.

(vii)

Clause (ii) of para 4 of the Standing Orders shows the seriousness attached to habitual absence. In Clause (i) thereof, there is requirement of prior permission. Only exception made is in case of sudden illness. There also conditions are stipulated, non-observance of which renders the absence unauthorized.

The Court, accordingly allowed these appeals and affirmed the view taken by the single judge while reversing that of the division bench. In State of Punjab v. Jagir Singh174, a driver in Punjab Roadways absented himself from duty without applying for leave. He was asked to report for duty by a registered letter but despite the same, he failed to report for duty. A notice was therefore published in a newspaper stating the date by which he was required to resume his duty. When he failed to do so even thereafter, the management terminated his service on the ground of his being absent from duty. Thereupon, the driver raised an industrial dispute and the labour court by an award reinstated him with continuity of service and full back wages. On a writ petition filed by the management, the High Court held that the workman was entitled to 60 per cent of the back wages. Aggrieved by this both the state and workman filed special leave to appeal petitions in the Supreme Court. The Supreme Court held that the finding of the labour court were incorrect and selfcontradictory and it had failed to consider the conduct of the workman in not joining duty despite having been asked to do so by a registered letter as well as publication of a notice in the newspapers. The aforesaid view was reiterated in New India Assurance Co. Ltd. v. Vipin Behari Srivastava175. Here, the respondent-workman remained absent unauthroizedly for more than 600 days. The management after holding departmental inquiry removed the workman. Thereupon, the workman raised an industrial dispute which was referred to the tribunal. The tribunal held that the respondent was suffering from tuberculosis and had applied for medical leave but management took no action. It, therefore, granted reinstatement. On a writ petition, the High Court upheld the order of the tribunal. On appeal, the Supreme Court noticed that ‘no leave was due and even leave without pay cannot be granted’. The Court reiterated its earlier view and ruled: (i) Mere sending of an application for grant of leave much after the period of leave was over as also the date of resuming duties cannot be said to be a bona fide act on the part of the workman. The bank, as noticed hereinbefore, in response to the lawyer's notice categorically stated that the workman had been carrying on some business elsewhere. (ii) Only because on a later date an application for grant of medical leave was

filed, the same ipso facto would (not) put an embargo on the exercise of the jurisdiction of the bank from invoking clause 2 of the bipartite settlement. (iii) The Court evolved the new concept of limited inquiry in a case of this nature. The principles of natural justice were required to be complied with but the same would not mean that a full-fledged departmental proceeding was required to be initiated. A limited inquiry as to whether the employee concerned had sufficient explanation for not reporting for duty after the period of leave had expired or failure to resume duty when asked to do so would suffice. The Court accordingly set aside the order of the tribunal and the High Court. The aforesaid decision requires a careful examination. It is true that ‘mere sending of application for grant of leave’ cannot amount to grant of leave but in an exceptional situation where the workman suffering from tuberculosis applied for medical leave, the above principle cannot be applied. Further, doctrine of limited inquiry should also not be extended in this situation. However in Jagdish Singh v. Punjab Engineering College176, the Supreme Court while dealing with a case of unauthorized absence appears to have been influenced by sympathy when it held that it was a case of violation of discipline and not of ‘gross violation of discipline’ and it is a case of unauthorized absenteeism but ‘not a case of habitual absenteeism’. In this case, the appellant was working as a sweeper in Punjab Engineering College. He remained absent unauthorizedly for 7 days in February 2004 and 9 days in March 2004. The management, after holding an inquiry, dismissed the workman. Thereupon, he filed a writ petition before the High Court challenging the order of dismissal. The High Court dismissed the petition. Aggrieved by the order, the appellant filed an appeal before the Supreme Court. It was contended by the appellant that the punishment imposed by the disciplinary authority was disproportionate to the gravity of misconduct, especially in view of the explanation offered by the appellant for his unauthorized absence for a few days and lesser punishment would meet the ends of justice. On the other hand, the respondent submitted that unauthorized absence is a serious misconduct and the said charge having been proved against the employee, the disciplinary authority was justified in imposing a major penalty of dismissal from service. Dealing with the case, the Supreme Court observed: The instant case is not a case of habitual absenteeism. The

appellant seems to have a good track record from the date he joined service as a sweeper. In his long career of service, he remained absent for 15 days on four occasions in the months of February and March, 2004. This was primarily to sort out the problem of his daughter with her in-laws. The filial bondage and emotional attachment might have come in his way to apply and obtain leave from his employer. The misconduct that is alleged, in our view, would definitely amount to violation of discipline that is expected of an employee to maintain in an establishment, but may not fit into the category of gross violation of discipline. We hasten to add that if it was habitual absenteeism, we would not have ventured to entertain this appeal. The Court accordingly allowed the appeal and set aside the order of the disciplinary authority affirmed by the High Court. The Court held that taking the totality of facts and circumstances of the case and having due regard to unblemished record of the appellant and the reasons for which he remained absent without obtaining permission; the end of justice would be met if the punishment imposed by the disciplinary authority is modified to stoppage of two increments with cumulative effect and further declare that he would not be entitled to any monetary benefits during the period he was out of service but that period would be counted only for the purpose of his service benefits. Regional Manager, Bank of Baroda v. Anita Nandrajog177 saw irresponsible behaviour of the bank employee to remain on unauthorized leave ‘whenever she liked and for whatever period she liked’. In this case, respondent number 2 remained absent from duty on two occasions, i.e. from 4 August 1986 to 29 March 1987 and again from 20 September 1987 to 10 April 1988 (more than 266 days), but the petitioner bank condoned the aforesaid acts of absence for leaving the country without permission. She again left for Libya on 22 August 1988 without permission and without sanctioned leave. She did not resume her duties for more than 150 consecutive days. The petitioner bank therefore invoked the provisions of clause 17(b) of the Fifth Bipartite Settlement and issued notice to her to report for duty within 30 days, failing which it would be presumed that she had voluntarily retired from the service of the bank. But she did not report for duty and instead send two letters to the bank in which she stated that she would be resuming duty in the last week of August 1989 and in the second letter, she requested for extension of leave without pay up to April 1990 on the ground of her domestic problems. Despite her letter, she did not resume duty in the last week of August 1989. Through communication dated 25 August 1989, the

petitioner bank treated the respondent as having voluntarily terminated her employment, and asked her to approach the authority concerned for claiming terminal benefits. Aggrieved by this order, the respondent approached the ministry of labour, Central Government which referred the dispute to the labour court for adjudication. The tribunal held that the termination order was illegal and unjustified. Against the order of the tribunal, the bank filed a writ petition in Allahabad High Court which was dismissed. Thereupon, the bank filed a special leave petition before the Supreme Court. The main contention on behalf of the respondent employee before the tribunal and the high court was that she was neither given any charge-sheet nor was any inquiry held regarding her misconduct of being absent without leave, and hence the order dated 25 August 1989 was illegal and against the principles of natural justice. On the other hand, the contention on behalf of the bank was that no inquiry was necessary since clause 17(b) of the Fifth Bipartite Settlement dated 10 April 1989 was being invoked. The Supreme Court observed that the management had been extremely lenient to the respondent by condoning her absence without leave on the first occasion for a period of about 7 months. ‘However, the respondent thought that she could do whatever she liked for whatever period she liked.’ She again sent an application for leave for 60 days which was not sanctioned. However, she remained absent without leave and kept sending letters for extension of leave although she was on unauthorized absence. In the bank’s letter, it was clearly mentioned in clause 4 that the respondent did not have any leave remaining to her credit yet she had remained on unauthorized leave for a period of more than 150 days continuously and it appeared she had no intention of joining duty. She was asked to report for duty within 30 days, failing which it would be deemed that she had taken voluntary retirement from service. In reply, she wrote a letter that she will be joining duty in the last week of August 1989 but she wrote another letter for extension of leave till April 1990 on account of domestic problems. In view of this, the Court remarked that such behaviour on the part of an employee is clearly unfortunate and highly improper. The Court referred to clause 17(b) of the Bipartite Settlement and observed that if an employee is absent without leave for more than 150 days and has no more leave to his/her credit, then the bank can validly order voluntary cessation of employment. Further, under clause 17(b), when the management is reasonably satisfied that the employee has no intention of joining duty, it may call upon the employee to report for duty within 30 days failing which action can be taken. Such a notice was given by the bank but the respondent wanted leave

till April 1990, i.e. for another 8 months. The Court found that she had no intention of resuming duty within 30 days. The Court accordingly held that the action of the bank in terminating her service on the ground of voluntary cessation of employment was valid. The appeal was accordingly allowed. The aforesaid judgement is more in conformity with Syndicate Bank v. General Secretary, Syndicate Bank Staff Association178 and Aligarh Muslim University v. Mansoor Ali Khan179. In contrast to the aforesaid decisions, the Supreme Court in Chairmancum-Managing Director, Coal India Ltd v. Mukul K Choudhuri180, took a different line of approach. Here, the respondent, after expiry of sanctioned leave for 14 days, did not report for duty and despite reminders, remained absent for 6 months without any authorization. Thereupon, the management initiated disciplinary inquiry against him under rule 29 of the Coal India Executives Conduct, Discipline and Appeal Rules, 1978 for misconduct on his part by (i) absenting himself without leave, (ii) overstaying the sanctioned leave for more than 4 consecutive days and (iii) desertion of job and failure to maintain integrity and devotion to duty. During pendency of inquiry, the respondent sent a letter of resignation which was not accepted by the management. Accordingly, he joined duty. He also appeared before the inquiry officer and admitted the charges levelled against him. The inquiry officer held that the delinquent was guilty of the charges mentioned in the charge-sheet. Upon receipt of the inquiry report, a second show-cause notice was issued. The delinquent was asked to show cause as to why the punishment of termination of service be not awarded to him. A copy of the inquiry report was sent along with the second show-case notice. Not satisfied with his explanation, he was removed from service with immediate effect. He then pursued departmental remedy but without any success. Thereupon, he filed a writ petition with the High Court. The single judge of the High Court directed the reinstatement of the respondent without back wages but with continuous service, without any break and without affecting his seniority. On appeal, the division bench, besides reinstatement, held that he was entitled to back wages from the year 2000 until reinstatement. Against this order, an appeal was filed before the Supreme Court. The Court held that where the misconduct of the delinquent was unauthorized absence from duty for 6 months but upon being charged of such misconduct, he fairly admitted his guilt and explained the reason for his absence by stating that he did not have any intention nor desire to disobey the order of higher authority or violate any of the company’s rules and regulations; but the reason was purely personal and beyond his control and as a matter of fact, he sent his resignation which was not accepted. The order of

removal cannot be held to be justified, since no reasonable employer would have imposed extreme punishment of removal in like circumstances. The Court felt that the punishment is not only unduly harsh but grossly in excess of the allegations. The Court, therefore affirmed the order of reinstatement but without back wages for the entire period by way of punishment for the proved misconduct of unauthorized absence for 6 months. It is difficult to reconcile the aforesaid decision with other decisions of the Supreme Court discussed above. It is surprising that the Court even did not mention its earlier decisions. 5. Consequences of Persistent Refusal to Join Duty at the Transferred Place In Viveka Nanda Sethi v. Chairman, J&K Bank181, the workman was a cashiercum-clerk. He was transferred to Kolkata but he did not join. After issuing a show-cause notice and taking a lenient view, he was transferred to Amritsar, then to Simla and again to Amritsar. He applied for leave for 28 days which was sanctioned. A further leave for 9 days was also sanctioned. He again applied for 1 month’s leave although he had only 25 days of accumulated leave and his leave account had already been debited by 50 days’ medical leave. Despite the expiry of the period of leave, he did not join. An explanation was called and he was asked to join duty immediately. A show-case notice was therefore, served on him, where under he was intimated that in the event of his failure to resume duty by 15 January 1984, he would be deemed to have discharged from the service of the bank. In reply, a telegram was received from another person saying that the said workman was unwell and would not join on the said date. He again applied for medical leave on 15 February 1984, i.e., one month after the telegram. The bank dispensed with his services invoking bipartite settlement. A legal notice was served by the workman on the bank asking for reinstatement. Conciliation proceedings were initiated and later a reference was made by the Central Government. The CCIT ordered reinstatement without back wages. Thereupon, a writ petition was filed by the bank and also by the workman for grant of back wages. Both the single judge and the division bench held that it was obligatory on the part of the bank to conduct full-fledged departmental proceedings. However, the High Court dismissed the petition of the workman. Thereupon, he filed an appeal before the Supreme Court. The Supreme Court ruled: (a) It may be true that in a case of this nature, the principles of natural justice were required to be complied with but the same would not mean that fullfledged departmental proceedings were required to be initiated. A limited inquiry as to whether the employee concerned had sufficient explanation

for not reporting for duty after the period of leave had expired or failure on his part on being asked to do so, amount to sufficient compliance with the requirements of natural justice. (b) Mere sending of an application for grant of leave much after the period of leave was over cannot be said to be a bona fide act. (c) The workman’s appeal under 17-B cannot be entertained as he did not file an affidavit. The Court accordingly allowed the appeal of the bank that the workman should be dismissed. In Novartis India Ltd v. State of West Bengal182, the management dismissed an employee for not joining the place to which he had been transferred without holding a domestic inquiry. The court held that the same was hit by principles of natural justice and such dismissal could only be effected after holding a domestic inquiry/disciplinary proceedings. However, the Supreme Court ruled: When an employee does not join at his transferred place, he commits a misconduct. A disciplinary proceeding was, therefore, required to be initiated. The order of discharge is not a substitute for an order of punishment. If an employee is to be dismissed from service on the ground that he had committed a misconduct, he was entitled to an opportunity of hearing. Had such an opportunity of hearing been given to him, he could have shown that there were compelling reasons for his not joining at the transferred place. Even a minor punishment could have been granted. In Kallakurichi Taluk Cooperative Housing Society Ltd v. M Maria Soosai183, the respondent joined the post to which he had been transferred but thereafter, unilaterally stopped coming to work without submitting any leave application or prior intimation and that too not for a few days but for many months. Despite the maximum latitude shown to him by allowing him to rejoin duty in the appellant society, the respondent again failed to report for work. As a result, he was placed under suspension and a domestic inquiry was conducted in which he was found guilty of the charges brought against him. However, the High Court ordered reinstatement which was complied with by the management. On appeal, the Supreme Court observed: It is, in fact, surprising as to why a decision was taken to

consider his case on a compassionate basis despite lapses of his own making. The decision of the appellant society to reappoint respondent 1 on compassionate grounds leading to the order of the registrar (housing) dated 27 July 1995, permitting the appellant society to reappoint him was in itself a concession made to respondent 1 which he missed subsequently. The Court held that in such circumstances, the judgement and order of the division bench of the High Court cannot be sustained and must necessarily be set aside. ‘However, having regard to the fact that a domestic inquiry was conducted against respondent 1 in which he was found guilty, we do not propose to interfere with that part of the order impugned directing reinstatement, but we are not inclined to maintain the order of the division bench of the High Court regarding payment of back wages.’ 6. Abusing and Threatening a Superior Officer In Rama Kant Mishra v. State of UP184, the workman was charge-sheeted for abusing an official saying, ‘Are these persons your father? I will make you forget your high-handedness either here or somewhere else.’ On these facts, the Supreme Court ruled that the labour court has jurisdiction and power to interfere when it finds that the order of discharge/dismissal was not justified. The Court directed reinstatement with back wages but withheld two increments. In Ved Prakash Gupta v. M/s Delton Cable India Ltd185, the workman, besides other charges, was also guilty of abusing in filthy manner/language, namely ‘You may go to Vijay Kumar or Ram Kumar’. On these facts, the Supreme Court held that the charges levelled against him were not serious and it was not known how these charges would result in total loss of confidence of the management. The Court accordingly directed reinstatement. In B C Chaturvedi v. Union of India186, the three-judge bench of the Supreme Court held that under Section 11-A, the High Court’s interference is permissible only when the punishment/penalty is shockingly disproportionate. In UP State Road Transport Corporation v. Subhash Chandra Sharma187, the charge against the respondent was that in a drunken state, he along with the conductor went to the assistant cashier in the cash room of the appellant and demanded money from him. When the assistant cashier refused, the respondent abused him and threatened to assault him. On these facts, the Supreme Court observed that, ‘It was certainly a serious charge of misconduct against the respondent. In such circumstances, the labour court was not justified in interfering with the order of removal of the respondent from service when the

charge against him stood proved. Rather we find that the discretion exercised by the labour court in the circumstances of the present case was capricious and arbitrary and certainly not justified. It could not be said that the punishment awarded to the respondent was in any way “shockingly disproportionate” to the nature of charges proved against him. In our opinion, the High Court failed to exercise its jurisdiction under Article 226 of the Constitution and did not correct the erroneous order of the labour court which, if allowed to stand, would certainly result in miscarriage of justice.’ In Kailash Nath Gupta v. Inquiry Officer (R K Raj), Allahabad Bank188, the Supreme Court went a step further when it said that the power of interference of tribunal with the quantum of punishment awarded by the management is extremely limited. In Mahindra & Mahindra Ltd v. N B Naravada189, the respondent workman used abusive and filthy language against his supervisor. Thereupon, the management, after holding a domestic inquiry, terminated his service. The labour court came to the conclusion that under Section 11-A, the punishment was harsh and improper and deserved to be set aside. It therefore, directed reinstatement with continuity of service but with 2/3rd of the back wages. On a writ petition, a single judge of the High Court dismissed the petition. On appeal, the division bench of the High Court also dismissed the petition. Thereupon, the management filed an appeal before the Supreme Court. The Supreme Court reversed the judgements of the lower courts and ruled: 1. The discretion vested in the labour court under Section 11-A is not unlimited. 2. The discretion which can be exercised under Section 11-A is available on existence of certain factors, namely: (i) punishment being disproportionate to the gravity of misconduct so as to disturb the conscience of the court, (ii) the existence of any mitigating circumstances which require reduction of the sentence, or (iii) the past conduct of the workman which may persuade the labour court to reduce the punishment. 3. In the absence of any such factor, the labour court cannot by way of sympathy alone exercise power under Section 11-A and reduce the punishment. 4. Punishment of dismissal for using abusive language cannot be held to be disproportionate. 5. The language used by the workman is such that it cannot be tolerated by any civilized society. Use of such abusive language against a superior

officer, that too not once but twice, in the presence of subordinates cannot be said to be indiscipline calling for lesser punishment. The Court accordingly set aside the order of lower courts and upheld the dismissal order of the disciplinary authority. In L K Verma v. HMT Ltd190, the Supreme Court ruled: 1. As regards the quantum of punishment, suffice it to say that verbal abuse has been held to be sufficient for inflicting a punishment of dismissal. 2. Once the appellant accepted that he made utterances which admittedly lacked civility and he also threatened a superior officer, it was for him to show that he later on felt remorse. If he was under tension, at a later stage, he could have at least tendered an apology. Furthermore, witnesses were examined and the charges were proved. 3. An order of suspension may be passed by the employer by way of punishment in terms of conduct rules in exercise of its inherent power in the sense that he may not take any work from the delinquent officer who may be paid only the subsistence allowance specified therein. In Biecco Lawrie Ltd v. State of West Bengal191, the respondent, a mazdoor in the switch gear works, was charge-sheeted for instigation, insubordination and using of abusive language against his superiors which was a major misconduct under the standing orders of the appellant company. The respondent, through a letter, admitted to all the charges and sought condonation and mercy attributing his acts to his mental illness. However, his plea was rejected by the company on the ground that he had been charged on an earlier occasion also on similar misconduct and was given a chance to make amends. On inquiry, the inquiry officer held that the respondent was guilty of major misconduct. After consideration of the report of the inquiry officer, the disciplinary authority dismissed him from service. Thereupon, he raised an industrial dispute which was referred to the tribunal. The tribunal held that there was violation of principles of natural justice. It heard the matter afresh on merits. The tribunal on consideration of the inquiry report and evidence on record affirmed the order of the disciplinary authority. Thereupon, the respondent approached the High Court which set aside the order of the tribunal by holding that the charge of using abusive language was not specific and was vague. It accordingly remitted the matter to the tribunal for reconsideration on the basis of existing evidence only

with respect to the charge of disobedience. The decision was affirmed by the division bench of the High Court. The management then filed an appeal before the Supreme Court. The Court observed that the general trend of judicial decisions is to minimize interference when punishment is not harsh for charges that are levelled against a respondent and in the instant matter, dismissal is definitely not shocking to the conscience of the Court. It added that the High Court misused the power vested in it by remanding the matter back to the industrial tribunal for reconsideration when the charges were found proved. The tribunal also erred by reversing its own decision. Dealing with the argument that the work assigned to the respondent was not a part of his job, the Court observed that even if it is accepted, it does not entitle him to abuse his position and create an unhealthy atmosphere where the remaining workers might just take a clue from the unruly behaviour and subsequently use it to the detriment of the company. Further, the letter by which he accepted all the charges sets up strong proof against the respondent beyond which nothing remains to be analysed. The Court accordingly, set aside the order of the High Court and restored the order of dismissal passed against the respondent. 7. Sleeping while on Duty In Bharat Forge Co. Ltd v. Uttam Manohar Nakate192, the respondent who was working as helper in the Bharat Forge Co. Ltd, was found sleeping on an iron plate in the first shift at his work place. The management therefore, initiated disciplinary proceedings against him in terms of the standing order 24(1) of the model standing orders framed under the Industrial Employment (Standing Orders) Act, 1946. He was found guilty in the said domestic inquiry. The management accordingly dismissed him from service. On a dispute being raised, the labour court held that the punishment of dismissal imposed upon the employee was harsh and disproportionate and no reasonable employer could impose such punishment for the proved misconduct. The tribunal therefore directed the management to reinstate the respondent employee on his original post with continuity of service with 50 per cent back wages for the period of his dismissal. Aggrieved and dissatisfied, both parties preferred separate revision applications before the industrial tribunal. By a common judgement, the revision application filed by the appellant was allowed and the respondent was dismissed. The respondent thereupon filed a writ petition before the Bombay High Court and by reason of the judgement and order, the said writ petition was dismissed. On a letter patent appeal, the High Court quashed and set aside the order of the single judge as also of the industrial court and directed the employer to pay a

sum of ₹2,50,000 to the employee within one month from the date of order. Thereupon, the management filed an appeal before the Supreme Court. The Court ruled: It is trite that the labour court or the industrial tribunal, as the case may be, in terms of the provisions of the Act, must act within the four corners thereof. The industrial courts would not sit in appeal over the decision of the employer unless there exists a statutory provision in this behalf. Although its jurisdiction is wide, but the same must be applied in terms of the provisions of the statute and no other. If the punishment is harsh, albeit a lesser punishment may be imposed, but such an order cannot be passed on an irrational or extraneous factor and certainly not on compassionate ground. The Court accordingly set aside the order of the lower court. 8. Gheraoing the Manager and Causing Damage to the Property In Management of Krishnakali Tea Estate v. Akhil Bharatiya Chah Mazdoor Sangh193, the workmen concerned entered the estate armed with deadly weapons with a view to gherao the manager and others and in that process, they caused damage to the property of the estate. They wrongfully confined the manager and others from 8.30 pm on 12 October to 3 am the next day. On these facts, the Supreme Court held that these charges are grave enough to attract the punishment of dismissal even without the allegation of extortion. The Court added that the fact that the management entered into a settlement with some of the workmen who were also found guilty of the charge, would not in any manner reduce the gravity of the misconduct with regard to the workmen concerned because these workmen did not agree with the settlement to which others agreed. 9. Fraud and Corruption In State Bank of India v. Bela Bagchi194, the bank employee was chargesheeted for gross misconduct as he had colluded with one of the branch managers and enabled grant of fictitious loan to Ramkrishna while the real beneficiary was named Raghav. The employee was dismissed after an inquiry. The single judge and division bench of the High Court ordered reinstatement. The Supreme Court ruled that it is for the disciplinary authority and not for the court to decide as to which punishment should be imposed on a delinquent who has admitted his misconduct. The Supreme Court has held in a series of cases that employees have to exercise a higher degree of honesty and integrity. The

Court also held that the bank employee concerned with the deposits of customers of the bank cannot be permitted to tinker with the deposits in any manner. In Damoh Panna Sagar Rural Regional Bank v. Munna Lal Jain195, the manager of a bank who had indulged in unauthorized withdrawals, subsequently returned the amount with interest. Yet, the Supreme Court held that this conduct of unauthorized withdrawals amounted to a serious misconduct. In General Manager (P), Punjab and Sind Bank v. Daya Singh196, the respondent who was working as manager was found on vigilance inspection to have disbursed some 20 loans to the tune of ₹16.48 lakh to some persons against FDRs which were in the names of other persons. The management, after holding a domestic inquiry, dismissed the respondent. However, the High Court set aside the order of dismissal and directed reinstatement. On appeal, the Supreme Court held that there was clear documentary evidence on record in the handwriting of the respondent which established his role in the withdrawal of huge amounts for fictitious persons. The ledger entries also showed that whereas the FDRs were in one name, the withdrawals showed the names of altogether different persons and they were far in excess of the amounts in FDRs. The respondent had no explanation and therefore, it had to be held that the respondent had misappropriated the amount. Dealing with the order of the High Court, the Supreme Court observed that in spite of a well-reasoned order by the inquiry officer, the High Court had interfered therein by calling the same as sketchy. The High Court has completely overlooked the role of the bank manager. In view of this, the Court set aside the impugned judgement and order passed by the division bench of the High Court. Can the dismissal of a bank employee, guilty of dishonesty and misappropriation be set aside merely because though convicted by the criminal court, he has been released on Probation of Offenders Act? This issue was raised in Sushil Kumar Singhal v. The Regional Manager, Punjab National Bank197. In this case, the appellant who was appointed as a peon was later confirmed on the said post in the respondent bank. He was handed over ₹5,000 in cash for depositing dues for the telephone bill in the post office. However, on his failure to deposit the same, the bank lodged an FIR under Section 409 of the Indian Penal Code, 1860. The trial court convicted the appellant. Thereupon, the respondent bank issued a show-cause notice to the appellant proposing dismissal from service and asked the appellant to respond within 7 days. The respondent bank, on consideration of explanation dismissed him from service. The appellant then raised an industrial dispute under the Industrial Disputes Act, 1947 which was referred to the tribunal. In the meanwhile, the appeal filed by the appellant

against the order of conviction was decided by the appellate court which maintained the conviction, but granted him the benefit of probation under the Probation of Offenders Act, 1958 and released the appellant on probation. The tribunal in the award rejected the claim of the appellant by holding his dismissal from service to be justified and in accordance with law. Being aggrieved, the appellant challenged the said award of tribunal by filing a writ petition before the High Court which was also dismissed. Thereupon, a special leave to appeal was filed before the Supreme Court. The Court was invited to decide the question whether the benefit granted to the appellant under the provisions of the Probation of Offenders Act, 1958 makes him entitled to reinstatement in service. While dealing with the issue, the Court referred to Section 10(1)(b)(i) of the Act, which reads as under: No banking company shall employ or continue the employment of any person who is, or at any time has been, adjudicated insolvent, or had suspended payment or has compounded with his creditors, or who is, or has been, convicted by a criminal court of an offence involving moral turpitude. Interpreting the aforesaid provision, the Court pointed out that the management is under an obligation to discontinue the services of an employee who is or has been convicted by a criminal court for an offence involving moral turpitude. The Court also referred to the dictionary meaning and a number of decided cases of the Supreme Court and held that moral turpitude means anything contrary to honesty, modesty or good morals. It means vileness and depravity. The Court added that the conviction of a person in a crime involving moral turpitude impeaches his credibility and he has been found to have indulged in shameful, wicked and base activities. The Court also observed that the embezzlement of ₹5,000 by the appellant for which he had been convicted was an offence involving moral turpitude. The statutory provisions of the Act, 1949, provide that the management shall not permit any person convicted for an offence involving moral turpitude to continue in employment. The Court also referred to the decision in Manish Goel v. Rohini Goel198, wherein it held that no court is competent to issue a direction contrary to law nor can it direct an authority to act in contravention of the statutory provisions. Indeed, the courts are meant to enforce the rule of law and not to pass orders or directions which are contrary to what has been injucted by law. In view of this, the Court held that once a criminal court grants a delinquent employee the benefit of Probation of Offenders Act, 1958, its order does not have any bearing

so far as the service of such employee is concerned. The word, ‘disqualification’ on Section 12 of the Probation of Offenders Act provides that such a person shall not stand disqualified for the purpose of other Acts like Representation of People Act, 1950, etc. The Court added that conviction in a criminal case is one part of the case and release on probation is another. Therefore, grant of benefit of the provision of the Act only enables the delinquent not to undergo the sentence on showing his good conduct during the period of probation. In case, after being released, the delinquent commits another offence, benefit of the Probation of Offenders Act, 1958 gets terminated and the delinquent can be made liable to undergo the sentence. Therefore, in case of an employee who stands convicted for an offence involving moral turpitude, it is his misconduct that leads to his dismissal. The Court accordingly dismissed the appeal. In PSEB v. Leela Singh199, the respondent was appointed as a lineman in Punjab Electricity Board on the basis of the purported experience certificate produced by him. However, in a vigilance inquiry, the charge against the respondent was that he had committed fraud in obtaining the appointment by production of a forged experience certificate. On the direction of the appellant board, his services were terminated without holding a domestic inquiry. A question arose whether in these circumstances, the appellant board could terminate the services of the respondent, the Supreme Court held that the said charge was required to be proved in a duly constituted departmental proceeding. The services could not have been directed to be terminated relying on and/or on the basis of the decision of the board. The Court, therefore, directed the appellant board to initiate departmental proceedings against the respondent. In Municipal Committee, Bahadurgarh v. Krishnan Bihari200, the Supreme Court held that in cases involving corruption, there cannot be any other punishment except dismissal. It felt that any sympathy shown in such cases is totally uncalled for and opposed to public interest. It also held that the amount misappropriated may be small or large but it is the act of misappropriation that is relevant. In Prabhulingappa H M Munichendragowda v. Divisional Controller, KSRTC, Kolar201, it was held that the discretion which can be exercised under Section 11A is available only on the existence of certain factors like punishment being disproportionate to the gravity of misconduct so as to disturb the conscience of the court. However, such discretion cannot be exercised by the labour court under Section 11A where appointment was obtained on the basis of false certificate by playing a fraud. 10. Theft

In Depot Manager, Andhra Pradesh State Road Transport Corporation v. Raghuda Siva Sankar Prasad202, the respondent was charged for committing a theft of fuel injection pump. He was also involved in stealing an alternator bearing while working in the night shift. The management, after holding a domestic inquiry, removed the respondent from the corporation. Earlier, a criminal case was also initiated against him. The criminal court acquitted the respondent of the charges that were levelled against him. Aggrieved by the order of his removal, the respondent raised an industrial dispute. The labour court held that the charges of respondent being involved in a case of theft of the property belonging to the corporation were justified under the factual circumstances of the case. Aggrieved by the award of the labour court, the respondent preferred a writ petition before the Andhra Pradesh High Court. The single judge of the High Court held that the charges of theft were correctly proved against the respondent. It however, came to the conclusion that punishment of removal was not in consonance with the gravity of the charges proved against him. It therefore, set aside the order of removal and directed reinstatement of the respondent with continuity of service but without back wages. On appeal, the Supreme Court observed that when the delinquent employee admitted his guilt before the inquiry officer that he had handed over the alternator from the pan shop to the police authorities and further deposed that he had handed over the stolen property and requested the labour court to excuse him since it was his first offence. The tribunal rightly set aside the request by taking into consideration the inquiry report and other evidence. The Court also held that it is also not open to the tribunals and courts to substitute their subjective opinion in place of the one arrived at by the domestic inquiry. In the instant case, the opinion arrived at by the corporation was rightly accepted by the tribunal but not by the court. The Court therefore, held that the order of reinstatement passed by the High Court is contrary to the law on the basis of a catena of decisions in this Court. In such cases, there is no place for generosity or sympathy on the part of the judicial forums for interfering with the quantum of punishment of removal which cannot be justified. In Workmen v. Balmadies Estates203, it was alleged that two employees had stolen large quantities of chemicals from the storeroom during the specified period. The management, after holding an inquiry, dismissed the concerned workmen from service. Thereupon, they raised an industrial dispute which was referred to the labour court. The labour court held that there was no direct evidence to show that they had committed theft. It accordingly directed reinstatement. On a writ petition, the single judge held that appreciation of

evidence by the labour court was perverse and its interference with the order of termination could not be supported in law. The writ appeal was also dismissed. Against this order, the workmen filed special leave petition before the Supreme Court. The Supreme Court observed that it is well settled that in view of wide powers of the labour court under Section 11A, it can, in an appropriate case, reconsider the evidence which has been considered by the domestic tribunal and on such reconsideration, arrive at a conclusion different from the one arrived at by the domestic tribunal. The Court however, made it clear that the assessment of evidence in a domestic inquiry was not required to be made by applying the same yardstick as a civil court could do when a lis is brought before it. Further, the Evidence Act, 1872 is not applicable to the proceedings so far as domestic inquiries are concerned, though principles of fairness can apply. It also observed that it is established that in a domestic inquiry, guilt may not be established beyond reasonable doubt and the proof of misconduct could be sufficient. In a domestic inquiry, all materials which are logically probative including hearsay evidence can be acted upon, provided it has reasonable nexus and credibility. Even confessional and circumstantial evidence, despite lack of any direct evidence, was sufficient to hold the delinquent guilty of misconduct and to justify the order of termination that had been passed. The Court held that the findings of labour court that the confessional statement could not be relied upon in the absence of any other direct evidence which was pervasive and could be termed to be based on misconduct of law. In accordingly upheld the order of the High Court and set aside the order of the labour court. 11. Negligence In Subhash v. Divisional Controller, Maharashtra SRTC204, the appellant was employed as a driver in 1980 with the respondent corporation. He was made permanent in 1985. However, while driving the bus on the fateful day, it ramped on the railing of a bridge due to his rash and negligent driving resulting in damage to the bus. The management, after holding an inquiry, held that charges were proved against the appellant and accordingly, dismissed him from service. The appellant challenged the order of dismissal before the appellate authority. The first appellate authority set aside the order and directed that he be appointed afresh without any monetary benefit for past service. Thereupon, he joined duty reserving his right to challenge the order of denying him reinstatement with continuity of service and back wages. He then filed a complaint under Section 28 read with items 5 and 9 of the Schedule IV of the Maharashtra Recognition of Trade Union and Prevention Act, 1971 before the industrial tribunal, Aurangabad, which was dismissed. A writ petition filed against the order was

also dismissed. Thereupon, he filed a special leave to appeal before the Supreme Court. The Supreme Court observed that there was negligence on the part of the appellant in driving the bus on that fateful day and as a result of which, the bus ramped on the railing of a bridge resulting in damage to the bus. This act no doubt was a misconduct. But taking into account the fact that during his service tenure of 21 years, he had been punished twice and considering his past record and the fact that no passenger was injured in the accident, the Court set aside the order of dismissal and ordered that fresh appointment be given to the appellant but without any benefit of past service. The Court, after looking into all the relevant aspects, thought it fit in the interest of doing complete justice that the order of the appellate authority be modified by ordering his reinstatement with continuity of service but without back wages. The Court felt that in the interest of justice and fair play, denial of back wages for the entire period from the date of dismissal until his rejoining duties would be an appropriate punishment. The appeal of the appellant was accordingly, allowed in part to the extent stated above.

D. Powers of High Courts under Article 226 The high courts, in exercise of writ jurisdiction, can wield similar power and discretion as is exercised by the labour court under Section 11A205. However, they cannot interfere with award of labour court and quantum of punishment if the labour court has exercised its discretion judicially. Decision of the management in matter of punishment could be interfered with by labour court if it is satisfied that the punishment imposed by the management is highly disproportionate with the degree of guilt of the workman concerned206.

XVII. DISCRIMINATORY TREATMENT The question of discrimination is really a question of bona fides of the management’s action. The proper question is not whether the management has or has not discriminated against any workman, but the question is whether choosing certain workers and proceeding against them is based on rational and reasonable consideration. Fair and proper domestic inquiry requires that the management's action in choosing certain strikers and proceeding against them must not be based on irritational and unreasonable discrimination. The aforesaid line of thinking was formulated by the Supreme Court in

Burn and Co. Ltd. v. Their Workmen207. In this case, a very large number of workmen had gone on an illegal strike. The management selected seven workmen out of the large number of workmen participating in such strike and proceeded against them. The management, after making an inquiry, dismissed the aforesaid seven workmen on the ground that they had incited other workmen. The industrial tribunal held that the domestic inquiry was not proper as it was not proved that the concerned workmen had incited other workmen. Upholding the view of the industrial tribunal, the Supreme Court observed. The evidence did not specifically bring home any charge of incitement against these persons, it cannot be said that mere participation in the strike would justify their suspension or dismissal, particularly when no clear distinction could be made between these persons and the very large number of workmen who had been taken back into service although they had participated in the strike. From the above decision, it is evident that unequal treatment by the employer of workers in matters of punishment is illegal when there is no sound or reasonable ground whatsoever for making such discrimination. The Bata Shoe Co. v. DN Ganguly208 strikingly demonstrates the discrimination practised by the trade unions representing the majority workers rather than the employer. In this case, the management had not made any discrimination and it was prepared to take back all workmen, but the union which represented the majority of workmen was itself not agreeable that 47 workmen concerned should be taken back. The Supreme Court in view of the above facts held that: There is no doubt that if the employer makes an unreasonable discrimination in the matter of taking back employees, there may in certain circumstances be reason for the industrial tribunal to interfere; but the circumstances of each case have to be examined before the tribunal can interfere with the order of employer in a properly held managerial inquiry on the ground of discrimination. The Court accordingly refused to interfere in management's decision on the ground that discrimination was not practised by it. The aforesaid conduct of trade unions is termed as ‘unfair labour practice’ as it is detrimental to the interest of industrial workers, it is true that

management followed the advise of the union to dismiss these workers in particular. In our view, the practice followed by the union to pressurize the employer to dismiss certain strikers is a case of an unfair labour practice by trade unions. In such a situation, the Court could have provided the relief as it has already been held by the Supreme Court in Indian Iron and Steel Co’s case that it would not hesitate in interfering in case of unfair labour practice and victimization. In Northern Dooars Tea Co. Ltd v. Workmen209, several workers went on an unjustified strike. Six strikers were dismissed after holding an inquiry on the charge of causing wilful damage to the property of the management. The industrial tribunal quashed the findings of the domestic inquiry inter alia, on the grounds that charges of causing wilful damage to the property of the management cannot be sustained against any one of these six strikers. Further, it held that the management was unable to give any reasonable or rational explanation why these six workmen were chosen out of the large mass of strikers and proceeded against. On appeal, the Supreme Court upheld the decision. Justice Gajendragadkar (as he then was) observed: … no evidence whatever was led before the domestic inquiry to show wilful damage or loss caused by the six workmen, we do not see how it is possible to contend that the conclusion of the tribunal about the invalidity of the order is not right. It might be mentioned that the only charge that distinguishes the six strikers from all others is that of wilful damage to the property of the management. Once proof of this failed, the six workmen become indistinguishable from the rest of the strikers and to select them alone for dismissal was obviously discriminatory. In State of UP v. Raj Pal Singh210, the respondent, an assistant warder along with four other assistant warders beat one Shivdan Singh, and they did not listen to the senior officers who dissuaded them. The management after holding departmental proceedings dismissed the respondent though in respect of four others, passed the order of stoppage of five increments. The respondent challenged the legality of the order before the Public Service Tribunal. The tribunal refused to interfere. Thereupon, he approached the High Court. The High Court held that the charges and the delinquency being same and identical, and all the employees having been served with a set of charges out of the same incident, there was no justifiable reason to pass different orders of punishment, and therefore the order of dismissal cannot be sustained. The High Court accordingly set aside the order of dismissal and directed stoppage of five

increments in case of the respondent as was the order in case of other assistant warders. The High Court further directed that the delinquent respondent would be paid only 50 per cent of back wages. It is against this order of the High Court that the management appealed to the Supreme Court. The Supreme Court observed that it is open for the disciplinary authority to deal with the delinquency and once charges are established, to award appropriate punishment. But when the charges are same and identical in relation to one and the same incident, then to deal with the delinquents differently in the award punishment would be discriminatory. The Court also held that the reasoning given by the High Court cannot be faulted with since the state is not able to indicate any difference in the delinquency of these employees. The Supreme Court, however modified the order of the High Court regarding payment of 50 per cent back wages by holding that no back wages will be paid to him from the date of dismissal to the date of reinstatement.

XVIII. RELIEF TO WRONGFULLY DISMISSED WORKMEN If a workman is found to be wrongfully dismissed, he may be allowed either reinstatement or any other relief; which is appropriate in the circumstances of a particular case is a matter of judicial discretion depending upon facts of each case.211 Under the traditional law of master and servant, courts, in case of wrongful dismissal of workman, directed the employer to pay damage in lieu of reinstatement. This view which is founded on the laissez faire conception of the State has by and large been abandoned in modern times.212 It has now been realized that adherence to the strict principle of master and servant would expose the workers to arbitrary treatment on the part of management.213 The Parliament gave its approval to this trend by inserting Section 11-A in IDA. This section empowers the tribunal to scrutinize the action taken by the employer and to direct reinstatement of workmen on such terms and conditions, if any, as it thinks fit or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require. Quite apart from this, power is conferred on the labour court, tribunal and national tribunal to direct reinstatement in cases of wrongful discharge or dismissal or to subject the order of reinstatement to any terms and conditions which they may think fit on the facts and circumstances of a case.

The adjudicating authorities may also vary the penalty by giving any other relief inclusive of a lesser punishment in lieu of discharge or dismissal when in their opinion, the penalty awarded is not commensurate with the fact of misconduct alleged or proved against the workman. An analysis of decided cases reveals that in certain situations, the remedy by way of reinstatement has been refused. It is, therefore, necessary to examine the circumstances in which the relief by way of reinstatement has been granted and those in which reinstatement is denied but a worker is allowed payment of compensation in lieu thereof.

A. When to Direct Reinstatement It has now been settled in a catena of cases that where a workman is wrongfully dismissed or discharged, the normal rule is that he should be reinstated.214 Said Justice Gajendragadkar: The employee is entitled to security of service and should be protected against wrongful dismissals, and so the normal rule would be reinstatement in such cases. He added: Nevertheless, in unusual or exceptional cases, tribunal may have to consider whether in the interest of industry itself, it would be desirable or expedient not to direct reinstatement. As in many other matters arising before the industrial courts for their decisions, this question also has to be decided after balancing the relevant factors and without adopting any legalistic or doctrinaire approach.215 Let us examine the various factors under which the tribunal may order reinstatement to workers whose services have been wrongfully terminated. (a) Unfair labour practice and victimization. The Supreme Court has stated that when a workman is dismissed on account of unfair labour practice or victimization by the employer, reinstatement should be ordered. The reason is obvious. If the employer takes disciplinary action against workers on some pretext other than the real reason or in bad faith with an ulterior motive, the action cannot be the sustained. This is all the more so in India where majority of workers are neither well organized nor unionized. In Hind Construction and Engineering Co. Ltd216, certain workmen went on strike which was not illegal. The management terminated the services of such strikers. The tribunal, however, set aside the dismissal

and directed reinstatement on the ground that punishment of dismissal for this strike was due to victimization of the workmen and was quite unjustified both in severity and in relation to strike for one day. Against this order of the tribunal, the management preferred an appeal before the Supreme Court. The question to be decided before the Court inter alia, was whether the tribunal was justified in interfering with the punishment of dismissal after it had come to the conclusion that the workmen had gone on strike even though it was not illegal. Dealing with the question, Justice Hidayatullah speaking for the Court observed: …The tribunal can only interfere if the conduct of the employer shows lack of bona fides or victimization of employee or employees for unfair labour practice. He held that the order of reinstatement was proper and reasonable. The aforesaid view was reiterated in Bata Shoe Co. (Pvt.) Ltd v. DN Ganguly217 where the Supreme Court laid down: It may be that participation in an illegal strike may not necessarily and in every case be punished with dismissal; but where an inquiry has been properly held and the employer has imposed the punishment of dismissal on the employee who has been guilty of the misconduct of joining the illegal strike, the tribunal should not interfere unless it finds unfair labour practice or victimization against the employee. Bengal Bhatdee Coal Co. v. Ram Pradesh Singh218 is another case in point. In this case, certain workmen physically obstructed the surface tamers working in the colliery from doing their work during the strike. Some other workers incited other workmen in order to compel them to join in the act of obstructing the loyal and willing workers so that they may not be able to work. Thereupon, the management dismissed workers who were active workers and officer-bearers of trade unions. On these facts, the tribunal held that concerned workmen were dismissed on the ground of victimization. The Supreme Court reversed the order of the industrial tribunal and observed: The fact that the relations between the employer and the union were happy and the workmen concerned were office-bearers or active workers of the union would itself be no evidence to prove victimization, for if that were so, it would mean that the officebearers and active workers of a union with which the employer is not on good terms would have carte blanche to commit any

misconduct and get away with it on the grounds that relations between the employer and the union were not happy. The Court accordingly held that the finding of victimization in this case was based merely on conjectures and surmises. (b) Arbitrary conduct and effective procedure. Wherever management dismisses strikers, it is essential to hold a proper domestic inquiry in order to establish the charges levelled against them. The tribunals accordingly have emphasized the need to enforce the observance of standing orders and rules of natural justice while considering the relief to be granted to the dismissed strikers. In Punjab National Bank v. Their Workmen, Justice Gajendragadkar observed. It is well-established that even where an employer is justified in terminating the services of his employees, he is bound to give them a charge-sheet. He added: The requirement is universally treated as consistent with natrual justice and fair play and since the bank has not complied with it, the impungend orders of dismissal are wholly invalid for this additional reason; and the result again would be that the said orders are inoperative and void and the employees are entitled to reinstatement as a matter of course. (c) Harshness of the order. Wherever dismissal of order of workers has been considered to be too severe and out of proportion in relation to the fault, the tribunal and courts have the power to award lesser punishment. However, prior to 1971, the tribunal had no power to interfere with the punishment except in extraordinary situations, namely, when there was want of good faith, victimization, unfair labour practice, etc., on the part of the employer. This position had been completely changed in 1971 when Section 11 A was inserted in the IDA. For the first time, power has been conferred upon a tribunal to interfere with the punishment imposed by an employer. This Section applies at the time when the tribunal considers the punishment to be imposed too harsh. This power is, however, subject to certain restrictions. (d) Whether mere participation in an illegal strike bars claim of reinstatement. The Supreme Court in Burn, and Co. v. Their

Workmen219 answered the question in negative. Speaking for the Court, Justice Imam observed: It cannot be said that mere participation in the strike would justify their suspension or dismissal… The aforesaid view was re-affirmed in later decisions.220 (e) Reinstatement cannot be refused because a long time has elapsed. There is nothing in the IDA showing that the claim for reinstatement, if otherwise justified, can be defeated simply on the ground of delay. The IDA does not prescribe any time for making the reference of granting of the relief. The question of delay may weigh with the government before making the reference, but once a reference is made, the tribunal may order reinstatement or compensation or both.221 This question whether delay defeats reinstatement came up for consideration before the Supreme Court in Swadeshi Industries Ltd v. Workmen222. We have already referred to the facts of this case wherein strikers were wrongfully dismissed. In this case, it was argued on behalf of management that while the order terminating the services of strikers was made on 24 May 1951, the order of reinstatement was made in April 1955. Observed Justice Das Gupta: When however, as in this case, the order of termination is itself bad, reinstatement cannot ordinarily be refused because long time has elapsed. Agreeing with the conclusion it may be added that in this case, reinstatement order was made by the tribunal against the dismissal of strikers 4 years after the reference and 9 years after the dismissal order. While we agree that the delay cannot defeat reinstatement but we would like to assert that in cases where tribunal awards back wages to strikers besides reinstatement, it may well take into account the delay and its impact on the industry. On the contrary, in Shalimar Works Ltd v. Its Workmen223, reinstatement was refused, inter alia, for the delay in making the reference to avoid dislocation of the industry. Approving the findings of the labour appellate tribunal, Justice Wanchoo rationalized: The tribunal would be justified in refusing the relief of reinstatement to avoid dislocation of the industry and that is the correct order to make … the defect in the order of discharge due to permission not having been obtained under Section 33 can,

under the circumstances of this case, be ignored on the ground that the workmen who did not rejoin in July, 1948 were not interested in reinstatement: firstly on account of the circumstances in which that order came to be made after an illegal and unjustified sit down strike; secondly, because the workmen in their turn did not avail themselves of the remedy under Section 33-A which was open to them, and thirdly, because the reference was made after an unreasonable length of time and in a vague manner. (f) Whether mere civil trespass bars the claim to reinstatement of strikers. This question came up for consideration before the Supreme Court for the first time in Punjab National Bank Ltd v. Their Workmen.224 Confirming the findings of the labour appellate tribunal Justice Gajendragadkar observed: … the (labour) appellate tribunal was obviously right in holding that even if civil trespass was involved in the conduct of (strikers), that by itself cannot justify the rejection of their claim for reinstatement. He added that even in America, the simple act of trespassing upon the employer's property was no bar to reinstatement. (g) Loss of confidence: Once the employer has lost confidence in the employee and the bona fide loss of confidence is affirmed, the order of punishment must be considered to be immune from challenge for the reason that discharging the office of trust and confidence requires absolute integrity and in a case of loss of confidence, reinstatement cannot be directed.225 In Kanhaiyalal Agrawal v. Gwalior Sugar Co. Ltd226, the Supreme Court laid down the test for loss of confidence to find out as to whether there was bona fide loss of confidence in the employee, observing that, (i) (ii)

the workman is holding a position of trust and confidence; by abusing such position, he commits an act which results in forfeiting the same; and (iii) to continue him in service/establishment would be embarrassing and inconvenient to the employer or would be detrimental to the discipline or security of the establishment.

Loss of confidence cannot be subjective, based upon the mind of the management. Objective facts which would lead to a definite inference of apprehension in the mind of the management regarding trustworthiness or reliability of the employee must be alleged and proved227. In SBI v. Bela Bagchi228, this Court repelled the contention that even if by the misconduct of the employee, the employer does not suffer any financial loss, he can be removed from service in a case of loss of confidence. While deciding the said case, reliance has been placed upon its earlier judgement in Disciplinary Authority-cum-Regional Manager v. Nikunja Bihari Patnaik229. An employer is not bound to keep an employee in service with whom relations have reached the point of complete loss of confidence/faith between the two230. In Indian Airlines v. Prabha D Kanan231, while dealing with a similar issue, the Supreme Court held that: Loss of confidence cannot be subjective but there must be objective facts which would lead to a definite inference of apprehension in the mind of the employer regarding trustworthiness of the employee and which must be alleged and proved. In case of theft, the quantum of theft is not important. What is important is the loss of confidence of employer in employee232. In Divisional Controller, Karnataka State Road Transport Corporation v. M G Vittal Rao233, the Supreme Court said that in a case of misconduct of grave nature like corruption or theft, no punishment other than dismissal may be appropriate. (h) Participating in strike and refusal to join duty. Courts are divided on the issue whether reinstatement can be refused on the ground of persistent and obdurate refusal by workmen to join duty notwithstanding the fact that the management provides them opportunities to come back to work. While in Oriental Textile Finishing Mills v. Labour Courts234 it was answered in the affirmative, in Gujarat Steel Tubes case it was answered in the negative. (i) Participation in violent demonstration during strike. Courts have denied reinstatement to workers whose attitude was violent and who took a leading part in violent demonstrations during strike. (j) Loss of Lien. Loss of lien on a permanent post on which the reinstatement

may be refused235 are: (i) employee convicted by criminal court for indecent assault on a girl of 11 years and sentenced to imprisonment.236 (ii) strained feeling237 (iii) abolition of post.238

B. Relief of back wages If a workman is found to be wrongfully dismissed, he may be allowed either reinstatement or any other relief; which is appropriate in the circumstances of a particular case is a matter of judicial discretion depending upon facts of each case. However, difficulty arises in regard to awarding relief of back wages where the tribunal orders reinstatement. This has been best depicted by a three-judge bench of the Supreme Court in Hindustan Tin Works (P) Ltd v. Employees239 which is as follows: In the very nature of things there cannot be a straight-jacket formula for awarding relief of back wages. All relevant considerations will enter the verdict. More or less, if would be a motion addressed to the direction of the tribunal. Full back wages would be the normal rule and the party objecting to it must establish the circumstances necessitating departure. At that stage, the tribunal will exercise its discretion keeping in view all the relevant circumstances. But the discretion must be exercised in a judicial and judicious manner. The reason for exercising discretion must be cogent and convincing and must appear on the face of the record. When it is said that something is to be done with the discretion of the authority, that something is to be done according to the rules of reason and justice, according to law and not humour. It is not to be arbitrary, vague and fanciful but legal and regular.240 A two-judge bench of the Supreme Court in Hindustan Motors Ltd v. Tapan Kumar Bhattacharya241 was invited to determine as to when back wages should be awarded and to what extent. In this case, the respondent was employed as a mazdoor in the production control department (care press shop) of Hindustan Motors Ltd. On 13 February 1980 at about 10.40 p.m. while he was on duty in the care press shop, he had assaulted the general supervisor of the department, as a result of which he became unconscious and had to be hospitalized. The management terminated his services w.e.f. 15 February 1980, after a departmental inquiry, for the said misconduct. The industrial tribunal held that the charges were not proved by any cogent and reliable evidence. It, therefore,

held that the respondent was entitled to reinstatement with full back wages. The single judge of the High Court set aside this award. In appeal, the division bench of the Calcutta High Court set aside the judgement of the single judge and directed reinstatement of the workman with back wages. It further directed that seniority and continuity in service should be maintained and any interim amount paid by the management to the workman should be deducted from the amount of back wages. Against this order, an appeal was filed before the Supreme Court. The question before the apex court was limited to the propriety of award of full back wages. The Court laid down the following principles: (i)

The order for payment of full back wages to the workman was passed by the industrial tribunal which has been confirmed by the division bench of the High Court without any discussion and without stating any reason. If indeed the tribunal and the division bench had proceeded on the footing that since the order of dismissal passed by the management was set aside, the order of reinstatement with full back wages was to follow as a matter of course. (ii) There was no application of mind to the question of back wages by the labour court. There was no pleading or evidence whatsoever on the aspect whether the respondent was employed elsewhere during this long interregnum. Instead of remitting the matter to the labour court or the High Court for fresh consideration at this distance of time, we feel that the issue relating to payment of back wages should be settled finally. (iii) [I]n the context of the facts of this particular case including the vicissitudes of long-drawn litigation, it will serve the ends of justice if the respondent is paid 50 per cent of the back wages till the date of reinstatement. The amount already paid as wages or subsistence allowance during the pendency of the various proceedings shall be deducted from the back wages now directed to be paid. (iv) The appellant will calculate the amount of back wages as directed herein and pay the same to the respondent within 3 months, failing which the amount could carry interest @ 9 per cent per annum. In Haryana Urban Development Authority v. Devi Dayal242, the management terminated the services of a helper. It was alleged by the management that the said helper did not work continuously during the period and he frequently absented himself from duties for which show cause notice was issued. However, he was not given either retrenchment compensation or one month's notice or pay in lieu thereof. The helper had served the management for 340 days during the preceding year. The tribunal held that the termination was illegal. It accordingly

directed reinstatement with full back wages. The High Court of Punjab and Haryana upheld the award. On appeal, the Supreme Court held that having regard to the facts of the case, the award of full back wages covering a period of nearly 5 years is not warranted. Firstly, the respondent was in service for a short period with frequent spells of absence. Second, there is a reasonable possibility of the respondent being gainfully employed somewhere else. The respondent, in all probability would have been working somewhere and earning daily wages, if not regularly, at least for some days in a month. It, accordingly, held that the award of back wages to the extent of 50 per cent would be proper and justified, on the peculiar facts of this case. The Supreme Court in Ram Ashrey Singh v. Ram Bux Singh243 case has held that the payment of back wages is not automatic entitlement to the workman since it is discretionary and has to be dealt with in accordance with facts and circumstances of each case. Again, in MP State Electricity Board v. Jarina Bez244, the Supreme Court held that when termination of a workman is set aside, the award of back wages is not a natural consequence. In SM Nilakjar v. Telecom Distt. Manager245, the Supreme Court did not allow back wages, in view of the delay in raising the dispute and initiating proceedings. In Hissar Central Cooperative Bank v. Kalu Ram246, the management terminated the services of an employee who was secretary to the Hissar Cooperative Bank Society for allegedly causing embezzlement of money of the society after holding inquiry. The labour court held that there was no proper inquiry and no proof to the effect that the respondent had caused embezzlement. But there is interpolation at the instance of the workman. The labour court accordingly ordered reinstatement with full back wages. Aggrieved by this order, the employer field a writ petition in the High Court of Punjab and Haryana. However, the division bench issued notice only on the question of payment of back wages to the workmen. Thereupon, the employer filed an appeal before the Supreme Court. A question arose whether the workman is entitled to full back wages. The Court answered the question in negative and observed that while ordering back wages, consideration of gainful employment is not the sole criterion. The Court may consider various factors while considering the question of payment of full back wages namely: the nature of the charge; the extent of his involvement; and whether his conduct has caused loss to the employer, etc. Quite apart from this, long delay may also be a ground for denial of full back wages. The Court also took a serious note of misappropriation of public money,

howsoever slight evidence was adduced to this effect. In view of this, the Supreme Court directed back wages only to the extent of 25 per cent. UP State Brassware Corpn Ltd v. Uday Narain Pandey247 brought a change in the approach of the Supreme Court. This is evident from the following observations of the Supreme Court. Although direction to pay full back wages on a declaration that the order of termination was invalid used to be the usual result but now, with the passage of time, a pragmatic view of the matter is being taken by the Court realizing that an industry may not be compelled to pay to the workman for the period during which he apparently contributed little or nothing at all to it and/or for a period that was spent unproductively as a result whereof the employer would be compelled to go back to a situation which prevailed many years ago, namely, when the workman was retrenched. The Court added : No precise formula can be laid down as to under what circumstances, payment of entire back wages should be allowed. Indisputably, it depends upon the facts and circumstances of each case. It would however, not be correct to contend that it is automatic. It should not be granted mechanically only because on technical ground or otherwise an order of termination is found to be in contravention of the provisions of Section 6-N of the UP Industrial Disputes Act. The Court further observed : The changes brought about by the subsequent decisions of this Court, probably having regard to the changes in the policy decisions of the government in the wake of prevailing market economy, globalization, privatization and outsourcing, is evident. From the above observations, it becomes apparent that payment of full back wages upon an order of termination being declared illegal cannot be granted mechanically. It does not automatically follow that reinstatement must be accompanied by payment of full back wages even for the period when the workman remained out of service and contributed little or nothing to the industry. Again, in the case of Haryana State Electricity Development Corporation Ltd v. Mamni248 the Supreme Court reiterated the above principle. Recently, this Court again examined the issues with regard to payment of

full back wages in the case of PVK Distillery Ltd v. Mahendra Ram249 and held as follows: Although direction to pay full back wages on a declaration that the order of termination was invalid used to be the usual result but now, with the passage of time, a pragmatic view of the matter is being taken by the Court realizing that an industry may not be compelled to pay to the workman for the period during which he apparently contributed little or nothing at all to it and/or for a period that was spent unproductively as a result whereof the employer would be compelled to go back to a situation which prevailed many years ago, namely when the workman was retrenched. Applying the aforesaid ratio of law, the Supreme Court in M/s Reetu Marbles v. Prabhakant Shukla250 held: Where the labour court exercising its discretionary jurisdiction concluded that it was not a fit case for the grant of back wages, the High Court was unjustified in awarding full back wages. The labour court having found the termination to be illegal was unjustified in not granting any back wages at all. Keeping in view the facts and circumstances of this case, the Court directed that the respondent shall be paid 50 per cent of the back wages from the date of termination of service till reinstatement.

C. Compensation to Wrongfully Dismissed Workmen Before the introduction of Section 11-A, in Hindustan Steel v. A K Roy251, while dealing with the powers of industrial tribunal either to order reinstatement or compensation in lieu or reinstatement in a case where it finds that the order of discharge or dismissal of a workman was not justified or legal, expressed the view that the tribunal has discretion to award compensation instead of reinstatement if exceptional situation arises so as to make reinstatemet inexpendient or improper. The tribunal should, however, exercise such discretion judicially and in accordance with well recognized principle in that regard and examine carefully the circumstances of each case and decide whether the case is one of the exceptions to the general rule. In Management of ITC Ltd v. Labour Court252, the labour court found that the order of discharge was mala fide and unreasonable because workman was guilty of the charge of fault only and not of

misconduct. The labour court, therefore, ordered reinstatement of the workman. This order was affirmed by the High Court. On appeal, the Supreme Court expressed the view that every case has to be judged on its special facts. It found that in this case, the service card of the employee showed that he had committed several faults in the past and was sometimes warned, sometimes suspended and sometimes reprimanded for all those omissions and commissions and ultimately observed: We think on the facts and the circumstances of this case that it is not a fit case where the High Court ought to have sustained the order of reinstatement as passed by the labour court. We, accordingly, direct that in lieu of reinstatement, respondent No. 3 will be entitled to get a compensation of ₹30,000 which will, roughly speaking, include almost all sums of money payable to the workman such as basic pay, dearness allowance, etc., for a period of about 5 years. From the aforesaid decision, it is evident that though ordinarily reinstatement is to follow when the tribunal sets aside the order of penalty or discharge of dismissal made by the management, but where it is alleged by the management that reinstatement is not expedient or proper in certain circumstances, the labour court has to examine the circumstances of each case to see whether or not reinstatement of the discharged or dismissed employee is expedient or proper and refuse to order reinstatement where such a course in the circumstances of the case is not either desirable or expedient.

D. Current Judicial Approach In recent years, there has been a notable shift in the approach of the Supreme Court in granting relief in cases of wrongful dismissals. In a number of cases, the Supreme Court has held that an award of compensation in lieu of reinstatement and back wages would be proper and would not be said to be unjustified. In Ashok Kumar Sharma v. Oberoi Flight Services253, the Supreme Court approved the practice of awarding compensation in lieu of reinstatement even is case of wrongful dismissal but observed that it should not be grossly inadequate. The Court ruled that while fixing compensation, all relevant facts and circumstances including the nature of employment and status of employee, whether confirmed employee or not, should be taken into account.

The legal position has been stated in Chairman-cum-MD, Coal India v. Anant Saha254 which is as follows: Even after punishment imposed upon the employee is quashed by the court or tribunal, the payment of back wages still remains discretionary. Power to grant back wages is to be exercised by the court/tribunal keeping in view the facts in their entirety as no straightjacket formula can be evolved, nor a universal application can be laid for such cases. Even if the delinquent is reinstated, it would not automatically make him entitled for back wages as entitlement to get back wages is independent of reinstatement. The factual scenario and principles of justice, equity and good conscience have to be kept in view by the appropriate authority/court or tribunal. In such matters, the approach of the court or the tribunal should not be rigid or mechanical but flexible and realistic.

E. Recommendations of the (Second) National Commission on Labour The (Second) National Commission on Labour has recommendent that when a worker has been dismissed or removed from service after a proper and fair inquiry on charges of violence, sabotage, theft and/or assault, and if the labour court comes to the conclusion that the grave charges have been proved, then the court will not have the power to order reinstatement of the delinquent worker.

1 2

Province of Bombay v. Western India Automobile Association, AIR 1949. Bombay 41. The Royal Commission on Labour was applied at the prevailing insecurity of service of workmen. The Bombay Textile Labour Investigation Committee (1939–1940) observed: There is no fear which haunts an industrial worker more constantly than the fear of losing his job as there is nothing which he prizes more than economic security. The fear of his being summarily dismissed for even a slight breach of rules of discipline or for interesting himself in trade union activities disturbs his peace of mind. It is a notorious fact that dismissal of workers has been the originating cause of not a few industrial disputes and strikes. The provision of effective safeguard against unjust and wrongful dismissal is therefore, in the interest as much as of industry as of workers. The evil of unfair dismissals or indefinite suspension unfortunately appears to be common in many industries.

3 4 5 6

7 8 9 10 11 12 13 14 15 16

17 18 19 20 21 22 23 24 25 26 27 28 29 30

See for instance, F W Heilegers & Co. Ltd v. Their Employees, (1950) LLJ 231, Kedar Nath Purshottam & Co. Ltd., (1952) 2 LLJ 349. See for instance, Bata Shoe Co. v. D N Ganguli, AIR 1961 SC 1158; I M H Press v. Additional Tribunal, 1961 1 LLJ 499 (SC). For instance, see I M H Press v. Additional Tribunal, 1961 1 LLJ 499 (SC); Punjab National Bank v. Their Workmen, 1959 2 LLJ 666 (SC). See for instance, Bangalore Silk Throwing Factory v. Its Workmen, (1957) 1 LLJ 435 (LAT); Model Mills v. Dharmdas, (1958) 1 LLJ 539; Punjab National Bank v. Their Workmen, (1959) 2 LLJ 666 (SC). Buckingham and Carnatic Mills Ltd v. Their Workmen, (1951) 2 LLJ 314 (LAT). Chartered Bank Bombay v. Chartered Bank Employees’ Union, (1960) 18 FJR 354. Assam Oil Ltd v. Its Workmen, (1960) 18 FJR 354. Indian Iron and Steel Co. Ltd v. Their Workmen, 1958 SC 130. Assam Oil Co. Ltd v. Its Workmen, (1960) 1 LLJ 587, 591. Indian Iron Co. Ltd v. Their Workmen, (1958) 1 LLJ 296, 270. Workmen of Motipur Sugar Factory Private Ltd v. Motipur Sugar Private Ltd, (1965) 2 LLJ 162, 169. 2011 LLR 634 (SC). (2012) 3 SCC 186 at 197. See Channappa Basappa Happali v. State of Mysore, AIR (1972) SC 32; Mafatlal Narain Das Barot v. Divisional Controller, (1966) 1 LLJ 437 (SC); Burn & Co. Ltd v. Workmen, AIR 1957 SC 438. Bharat Sugar Mills v. Jai Singh, (1961) 2 LLJ 644 (SC); Sasa Musa Sugar Mills (P) Ltd v. Shobati Khan, AIR 1959 SC 923. Andhra Scientific Co. Ltd v. A Sheshagiri Rao, AIR (1967) SC 408. A Rodrick v. K C Thapar, (1963) 1 LLJ 248 (SC); Hornsby (P) Ltd v. T B Kadam, (1976) 3 SCC 71. See Lalla Ram v. DCM Chemical Works Ltd, (1978) 1 LLJ 507; Banaras Electric Light & Power Co. v. Labour Court, (1972) 2 LLJ 328 (SC). Eastern Electric & Trading Co. v. Baldev Lal, (1975) 4 SCC 684. Bombay Garage (Ahmedabad) Ltd v. Its Workmen, (1961) 2 LLJ 40 (Gujarat). J K Hosiery Factory v. LAT, (1956) 2 LLJ 4 (Allahabad). Assam Oil Company v. Its Workmen, (1960) 1 LLJ 587 (SC). Buckingham and Carnatic Mills v. Its Workmen, (1975) 4 SCC 684. Chartered Bank v. Chartered Bank Employees’ Union, (1960) 3 SCR 441. Tata Oil Mills Co. Ltd v. Its Workmen, (1964) 2 SCR 125. (1964) 2 SCR 125 at 30–131. L Michael v. M/s Johnson Pumps Ltd, AIR 1975 SC 661; (1975) 1 LLJ 262. Murgan Mills v. Industrial Tribunal, (1965) 2 SCR 148.

31 It is provided in the standing orders that employees can ask for reasons in such a case. 32 (1978) 3 SCR 1000. 33 (1996) LLR 103 (Delhi). 34 Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha, (1980) 1 LLJ 137 (SC). 35 Id. at 153. 36 Id. at 184. 37 Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha, (1980) 1 LLJ 137. 38 (1980) 1 LLJ 137. 39 Id. at 152. 40 Parshotam Lal Dhingru v. Union of India, (1958) SCR 828. This case was relied upon 41

42 43 44 45 46 47 48 49 50 51

52 53 54 55

56 57 58

by the majority in some other context. Tata Engineering and Locomotive Co. Ltd v. S C Prasad, (1969) 2 LLJ 799; Workmen of Sudder Office v. Management, (1979) 2 LLJ 620; Municipal Corporation of Bombay, (1978) 2 LLJ 168 (SC). Tata Engineering and Locomotive Co. Ltd v. S C Prasad, (1969) 3 SCC 372. Workmen of Sudder Office v. Management, (1971) 2 LLJ 620 (SC). Under clause 9, the management is empowered to terminate the services of workmen by paying the specified wages in lieu of notice, wages earned and other dues. Workmen of Sudder Office v. Management, op. cit. L Michael v. Johnson Pumps Ltd, AIR 1975 SC 661; (1975) 1 LLJ 262. Chakravorty and Chakravarty, Law of Employees’ Victimization. (1966) 52. Rex v. Sussex Justices, (1924) 1 KB 256 at 259. Managing Director, ECIL v. B Karunakar, JT 1993 (6) SC 1; See also Sarv UP Gramin Bank v. Manoj Kumar, 2010 LLR 348. Maneka Gandhi v. Union of India, (1978) 1 SCC 248. See Punjab National Bank Ltd v. Its Workmen, (1959) 2 LLJ 666 at 679 (SC); UCO Bank v. Rajinder Lal Capoor, (2007) 6 SCC 694; Chairman-cum-Managing Director, Coal India Ltd v. Ananta Saha, 2011 Lab IC 2092 (SC). Lakshmi Devi Sagar Mills Ltd v. Ram Sarup, (1957) 1 LLJ 17 (SC). See Ananthanarayanan v. S R, (1956) 1 LLJ 29 (Madras); Amulya Ratan Mukkerjee v. Deputy Chief Mechanical Engineer, Eastern Railways, AIR 1961 Cal 40. See Swami Oil Mills, (1953) 2 LLJ 78 (IT). Anil Gilurker v. Bilaspur-Raipur Kshetria Gramin Bank, 2011 LLR 1121; Union Bank of India v. Gyan Chand Chattar, (2009) 12 SCC 78; Swami Singh v. State of Rajasthan, (1986) 3 SCC 454. V S Kamath v. State of Karnataka, 1988 (2) SLJ 241. Commissioner of Police v. Jayasurian, (1997) 65 SCC 75. See Union of India v. Prakash Kumar Tandon, (2009) 2 SCC 541; Chairman-cumManaging Director, Coal India Ltd v. Ananta Saha, 2011 Lab. IC 2592 (SC).

59 Union of India v. S K Agarwal, (2005) 1 SLR 151. 60 AIR 1998 SC 1833; (1998) 4 SCC 154. 61 (2005) LLJ 527. 62 AIR 2008 SC 2953; (2009) 1 LLJ 26. 63 AIR 1961 SC 1158. 64 See Aggarwal, O P, Conditions of Employment and Disciplinary Action against

Workmen, (1969) 320. 65 AIR 2000 SC 2806. 66 Swadeshi Industries Ltd v. Its Workmen, (1960) 2 LLJ 78 (SC); Indian General 67 68 69 70 71 72 73 74 75 76 77

78 79 80 81 82 83 84 85 86 87 88

Navigation and Rly Co. Ltd v. Its Workmen, (1960) 1 LLJ 13 (SC). See Aggarwal, O P. Conditions of Employment and Disciplinary Action Against Workmen. (1969) 320. Ibid. Biecco Lawrie Ltd v. State of West Bengal, (2009) 10 SCC 32. State of Uttaranchal v. Kharak Singh, 2008 LLR 170 (SC). Dalmia Dadri Cement Co. v. Murari Lal Bikaneria, (1970) 1 LLJ 416 (SC). 1999 (2) SCALE 216. Workmen of Buckingham and Carnatic Mills, (1970) 1 LLJ 26. (1999) 2 SCALE 216. See Biecco Lawrie Ltd v. State of West Bengal, (2009) 10 SCC 32. Union of India v. Prakash Chandra Tandon, 2009 (121) FLR 556 (SC); P V Gramin Bank v. D M Parmar, 2011 (131) FLR 1019. Narinder Mohan Arya v. United India Insurance Co. Ltd, 2006 (109) FLR 705 (SC); Union of India v. Prakash Kumar Tandon, 2009 (121) FLR 542 (SC); P V Gramin Bank v. D M Parmar, 2011 (131) FLR 1019. See Usha Breco Mazdoor Sangh v. Management of Usha Breco Ltd, 2008 LLR 619 (SC). AIR 1966 SC 269. Union of India v. H C Sarin, AIR 1976 SC 1686. K N Gupta v. Union of India, AIR 1968 Delhi 85. Ankulaiah v. DG, P&T, SLJ (1986) CAT 407. Ram Prasad v. Union of India, (1988) ATC 77. Bank of India v. Apurba Kumar Saha, (1994) SCC 615. Biecco Lawrie Ltd v. State of West Bengal, (2009) 10 SCC 32. State of UP v. Saroj Kumar Sinha, AIR 2010 SC 313; Chairman-cum-MD, Coal India v. Ananta Saha, 2011 Lab. IC 2592 (SC). J P Srivastava v. Union of India, (1977) Lab. NOC 134. Amal Kumar Parial v. Union of India, (1989) ATC 679.

89 Raizada Trilok Nath v. Union of India, AIR 1967 SC 759. 90 Thulasingaraj v. CPF Commissioner, AIR 1987 SC 194. 91 Shiv Durga Iron Works Ltd v. Its Workmen, 2 FLR 200. 92 M Muniswami v. Superintending Engineer, Vellore Electricity, (1969) ILLJ 89. 93 Glaxo Lab (India) Ltd v. PO, Labour Court, AIR 1984 SC 505; A L Kalra v. Project &

94 95 96 97 98

99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115

116 117 118

Equipment Corporation of India, 1984 LIC 961 (SC); Rasiklal V Patel v. Ahmedabad Municipal Corporation, (1985) FJR 225 (SC) 1995 LLR 8. Chairman-cum-MD, Coal India Ltd v. Ananta Saha, 2011 Lab.IC 2592 (SC). Punjab National Bank v. Kunj Behari Mishra, (1998) 7 SCC 84; K L Ahuja v. State of Haryana, 2011 (2) SLR 497. Bank Of India v. Dagala Suryanarayana, 1999 LLR 1073 (SC). Lal Nigam v. Chairman & MD, ITI Ltd, (2007) 1 LLJ 223 (SC); See also Anil Giluker v. Bilaspur—Raipur Gramin Bank, 2011 LLR 1121 (SC). Administrator, Union Territory of Dadra and Nagar Haveli v. Gulabhia M Lad, 2010 (125) FLR 880 (SC); See also Panchmahal Vadodra Gramin Bank v. D M Parmar, 2011 (131) FLR 1019 (SC). A K Kraipak v. Union of India, AIR 1970 SC 150. AIR 1983 SC 109. Id at 113. 1991 Lab. IC 1008. 1997 LLR 497 (SC). (1993) 2 SCC 215. AIR 1960 SC 914: (1960) 3 SCR 407. AIR 1965 SC 1392. (1962) 2 LLJ 417. 1997 LLR 180 (SC). (1982) 1 LLJ 46 at 47. 2008 LLR 231. (1999) 3 SCC 679. 2004 LLR 950. 1991 Lab. IC 1254 (SC) (1997) LLR 498 (SC). See Allahabad District Cooperative Bank Ltd v. Vidhya Varidh Mishra, (2004) 6 SCC 482; See also Krishnakali Tea Estate v. Akhil Bharatiya Mazdoor Sangh, (2004) 8 SCC 200. (2004) 6 SCC 482. (2005) 7 SCC 764. 2006 LLR 268.

119 AIR 2007 SC 199: (2007) 1 LLJ 728. 120 (2007) 10 SCC 385. 121 2010 LLR 113. 122 2009 LLR 936 (SC). 123 2010 LLR 113 (SC). 124 (2008) 4 SCC 1: (2008) 1 SCC (L&S) 1084. 125 (2007) 9 SCC 755: (2008) 1 SCC (L&S) 1084. 126 (2006) 5 SCC 446: 2006 SCC (L&S) 1121. 127 (2012) 1 SCC 442. 128 Anandam v. Tamil Nadu Electricity Board, 1997 LLR 247; Datta Balu Sagar v. Dock 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151

Manager, Bombay Port Trust, 1997 LLR 720. Board of Management of SVT Educational Institution v. A R Bhatt, 1997, Lab IC 1917. Chairman-cum-MD, Coal India Ltd v. Anant Saha, 2011 Lab. IC 2592 (SC). 1996 (5) SCALE 226; 1996 JT 447. 1991 Lab IC 308 (SC). (1995) 4 SCC 727. (1996) 4 SCC 727. 1997 LLR 268 (SC). 1997 (75) FLR 402. 2002 LLR 1989. JT 2008 (8) SC 70. 2010 LLR 348. (2012) 2 SCC 641. (1997) 6 SCC 159. (1958-1, LLJ-260) (1973) 1 LLJ 278; AIR 1973 SC 1273. (1973) 1 LLJ 278, 293–94. (1971) 1 SCC 742; AIR 1971 SC 2171. 1996 LLR 385. (1997) 4 SCC 741; (1997) 1 LLJ 1104 (SC). (1999) 1 LLJ 275 (SC). 1984 Supp SCC 520. Adichancellor Farmers Service Co-operative Bank v. LC., (1996) LLR 659. Shankar Chakravarty v. Britannia Biscuits Co. Ltd, AIR 1979 83 1652; Delhi Cloth and General Mills Co. v. Ludh Budh Singh, (1972) 1 LLJ 180; Shankar Nath v. Bank of Baroda, AIR 1984 SC 289; Addl. Chancellor, Farmers Service Cooperative Bank v. Labour Court, (1996) LLR 654 (Kerala); Neeta Kaplish v. Labour Court, (1999) 1 LLJ 275 (SC).

152 2006 LLR 141 (SC). 153 Ibid. 154 (1997) 1 LLN 391 (SC). 155 (2009) 8 MLJ 460 (SC). 156 (2010) 7 MLJ 367 (SC). 157 2002 Lab IC 2475. 158 State of Haryana v. Rattan Singh, AIR 1977 SC 1512; U P State Road Transport

159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186

Corporation v. Basudeo Chaudhary, (1997) 11 SCC 370; U P State Road Transport Corporation v. Subhash Chandra Sharma and Others, (2000) (3) SCC 324). (2002) ILLJ 234. (2001) ILLJ 725. (2008) 1 SCC 115. (2009) 7 SCC 552. (2001) 2 SCC 574. (2002) 10 SCC 330. 2010 LLR 230. (2003) 3 SCC 605. 2010 (6) SCALE 87. 2003 LLR 1023. 2003 LLR 337. (2005) 3 SCC 331. (2005) 3 SCC 401. 2006 LLR 141. (2004) 7 SCC 574. (2004) 8 SCC 1209. (2008) 3 SCC 446. (2010) 1 SLR 166. 2009 LLR 1135. (2000) 5 SCC 65. JT 2000 (7) SC 529. 2009 III CLR 645 (SC). 2005 LLR 641 (SC). (2009) 3 SCC 124. 2010 LLR 1016; (2010) 6 SCC 690. 2003 LLR 895. 1982 Lab IC 1790(SC). 1984 Lab IC 658.

187 1995 (6) SCC 749. 188 Ibid. 189 (2003) 9 SCC 32. 190 2006 LLR 296 (SC). 191 (2009) 10 SCC 32. 192 2005 LLR 210 (SC). 193 JT 2004 (7) SCC 333: (2004) 8 SCC 200. 194 JT 2005 (8) SC 96: (2005) 7 SCC 435. 195 (2005) 10 SCC 84. 196 2010 LLR 1029. 197 2010 LLJ 1025. 198 AIR 2010 SC 1099; JT 2010 (3) SC 189. 199 2007 LLR 590 (SC). 200 AIR 1996 SC 1249. 201 2012 Lab. IC 221. 202 2007 LLR 113. 203 (2008) 1 SCC 115. 204 (2009) 9 SCC 344. 205 Oriental Containers Ltd v. Engineering Workers’ Association, 1996 LLR 739. 206 Essorpe Mills (P) Ltd v. Labour Court, 1999 LLR 89. 207 (1959) 1 LLJ 450 at 454. 208 AIR 1961 SC 1158 at 1163. 209 (1964) 1 LLJ 436 (SC). 210 2010 (4) SCALE 485. 211 See Durga Prasad, Reinstatement and Labour Law, 7 J LLL, 36 (1965). 212 See D N Vohra, Dismissal, Discharge and Punishment, Lay-off and Retrenchment,

(1967) 316. 213 See Labour Bureau, Industrial Awards in India, (1959) 119. 214 Buckingham Carnatic Mills Co. Ltd v. Their Workmen, (1951) 2 LLJ 314; Punjab

215 216 217 218 219 220

National Bank v. Its Workmen, (1959) 2 LIJ 666 (SC); M L Base and Co. Pvt. Ltd v. Its Employees, (1961) 2 LLJ 107 (SC). Punjab National Bank v. Its Workmen, op.cit. (1965) 1 LLJ 462. AIR 1961 SC 1158 at 1164. 1963 1 LLJ 234 (SC). Burn and Co. v. Their Workmen, (1959) 1 LLJ 450, 454 (SC). See Punjab National Bank v. Their Workmen, (1959) 2 LLJ 666 (SC); Indian General Navigation and Rly. Co Ltd. v. Their Workmen, (1960) 1 LLJ 13 (SC); IMH Press v.

Addl. LT, (1960) 1 LLJ 499 (SC). 221 See Tika Ram and Sons Ltd. Oil Mill v. Its Workmen,. (1956) 1 LLJ 327. 222 Swadeshi Industries Ltd. v. Workmen, (1960) 2 LLJ 78 (SC). 223 (1959) 2 LLJ 26 (SC). 224 Punjab National Bank v. Its Workmen, AIR 1960 SC 160. 225 Air India Corporation v. V A Rebellow, (1972) 1 SCC 814; AIR 1972 SC 1343;Francis

226 227 228 229 230

231 232 233 234 235 236 237

238 239 240 241 242 243 244 245

Klein & Co. (P) Ltd v. Workmen, (1972) 4 SCC 569; AIR 1971 SC 2414 and BHEL v. M Chandrasekhar Reddy, (2005) 2 SCC 481; 2005 SCC (L&S) 282; AIR 2005 SC 2769. (2001) 9 SCC 609; 2002 SCC (L&S) 257; AIR 2001 SC 3645. Sudhir Vishnu Panvalkar v. Bank of India, (1997) 6 SCC 271; 1997 SCC (L&S) 1662; AIR 1997 SC 2249. (2005) 7 SCC 435; 2005 SCC (L&S) 940; AIR 2005 SC 3272. (1996) 9 SCC 69; 1996 SCC (L&S) 1194. Binny Ltd v. Workmen, (1972) 3 SCC 806; AIR 1972 SC 1975; Binny Ltd v. Workmen, (1974) 3 SCC 152; 1973 SCC (L&S) 444; AIR 1973 SC 1403; Anil Kumar Chakraborty v. Saraswatipur Tea Co. Ltd, (1982) 2 SCC 328; 1982 SCC (L&S) 249; AIR 1982 SC 1062; Chandu Lal v. Pan American World Airways Inc.; (1985) 2 SCC 727; 1985 SCC (L&S) 535; AIR 1985 SC 1128; Kamal Kishore Lakshman v. Pan American World Airways Inc., (1987) 1 SCC 146; 1987 SCC (L&S) 25; AIR 1987 SC 229 and Pearlite Liners (P) Ltd v. Manorama Sirsi, (2004) 3 SCC 172; 2004 SCC (L&S) 453; AIR 2004 SC 1378. (2006) 11 SCC 67; (2007) 1 SCC (L&S) 359; AIR 2007 SC 548. AP SRTC v. Raghuda Siva Sankar Prasad, (2007) 1 SCC 222; (2007) 1 SCC (L&S) 151; AIR 2007 SC 152. (2012) 1 SCC 442. Oriental Textile Finishing Mills v. Labour Court, (1971) 2 LLJ 505 (SC). Sandhu Resettlement Corporation Ltd v. Industrial Tribunal, AIR 1960 SC 529. Punjab National Bank Ltd v. PNB Employees' Federation, AIR 1960 SC 160. See Vishwamitra Press, 1954 2 LLJ 53 (Adj); Elgin Mills Co. Ltd v. Suti Mill Mazdoor Union, 1958 1 LLJ 100 (LAT); Mangalambika Metal Industries v. Its Workmen, 1958 1 LLJ 419 (SC). Varadraja Motor Services v. Its Workmen, (1953) 1 LLJ 226. (1979) 2 SCC 80. Id. at 86. (2002) 6 SCC 41. 2002 Lab. IC 1090. Ram Ashrey Singh v. Ram Bux Singh, (2003) 2 LLJ 176. (2003) 3 LLJ 244; 2003 LLR 848. (2003) 4 SCC 27.

246 (2003) 9 SCC 221. 247 (2006) 1 SCC 479. 248 (2006) 9 SCC 434. 249 (2009) 5 SCC 705. 250 (2010) 2 SCC 70. 251 (1970) 1 LLJ 228. 252 (1978), 2 LLJ 354. 253 (2010) 1 SCC 142. 254 2011 Lab. IC 2092 (SC).

CHAPTER

22 Management’s Prerogative During the Pendency of Proceedings and Notice of Change SECTION – I I. LEGISLATIVE DEVELOPMENT AND THE PRESENT LEGISLATION Prior to 1947, there was no provision corresponding to Section 33 in any legislative enactment. This section, as it was first enacted in the Industrial Disputes Act 1947, read: No employer shall, during the pendency of any conciliation proceedings or proceedings before a tribunal, in respect of any industrial dispute, alter, to the prejudices of the workmen concerned, such conditions of service applicable to them immediately before the commencement of such proceedings, nor, save with the express permission in writing of the conciliation officer, board or tribunal as the case may be, shall during the pendency of such proceedings, discharge, dismiss or otherwise punish such workmen, except for misconduct not

connected with the dispute. The restriction on alteration of conditions of service being absolute, these provisions adversely affected even legitimate management’s action. Moreover, they hardly served their intended purpose, viz., protection of labour against victimization and prevention of further exacerbation of already strained relations between parties. There was a marked tendency on the part of employers to take resort to the extreme punishment of dismissal wherever the misconduct was not connected with the pending dispute. To overcome the shortcomings, the 1950Amendment Act made several changes in the original section. The amended section ran: During the pendency of any conciliation proceedings or proceedings before a tribunal in respect of any industrial dispute, no employer shall: (a) alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceedings; or (b) discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute save with the express permission in writing of the conciliation officer, board or tribunal, as the case may be. However, the widening of the ambit of Section 33 had the natural effect of increasing the number of applications made to obtain the necessary permission and consequent delay in their disposal by the concerned authorities. Thus, notwithstanding the qualified nature of the ban introduced by the 1950Amendment, Section 33 severaly curtailed management’s prerogative, and thereby prevented employers from taking timely action and led to stultification of business. The 1956-Amendment seeks to provide greater freedom to management and, at the same time protect to a great extent, concerned workmen and union leaders against victimization and high-handed action of the employer. The present section runs: (1) During the pendency of any conciliation proceedings before a conciliation officer or a board or of any proceeding before an arbitrator or a labour court or tribunal or national tribunal in respect of an industrial dispute, no employer shall— (a) in regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceeding, or (b) for any misconduct connected with the dispute, discharge or punish,

whether by dismissal or otherwise, any workmen concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending. (2) During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with standing orders applicable to a workman concerned in such dispute, or, where there are no such standing orders, in accordance with the terms of the contract, whether express or implied, between him and the workman— (a) alter, in regard to any matter not connected with the dispute, the conditions of service applicable to that workman immediately before the commencement of such proceeding; or, (b) for any misconduct not connected with the dispute, discharge or punish that workman, whether by dismissal or otherwise: Provided that no such workman shall be discharged or dismissed, unless he has been paid wages for one month and an application has been made by the employer to the authority before which the proceeding is pending for approval of the action taken by the employer. (3) Notwithstanding anything contained in sub-section (2), no employer shall, during the pendency of any such proceeding in respect of an industrial dispute, take any action against any protected workman concerned in such dispute— (a) by altering to the prejudice of such protected workman, the conditions of service applicable to him immediately before the commencement of such proceedings; or (b) by discharging or punishing, whether by dismissal or otherwise, such protected workman, save with the express permission in writing of the authority before which the proceeding is pending. Explanation—For the purposes of this sub-section, a ‘protected workman’ in relation to an establishment, means a workman who, being a member of the executive or other office bearer of a registered union connected with the establishment, is recognized as such in accordance with rules made in this behalf. (4) In every establishment, the number of workmen to be recognized as protected workmen for the purposes of sub-section (3) shall be one per cent of the total number of workmen employed therein subject to a minimum number of five protected workmen and a maximum number of 100 protected workmen and for the aforesaid purpose, the appropriate

government may make rules providing for the distribution of such protected workmen among various trade unions, if any, connected with the establishment and the manner in which the workmen may be chosen and recognized as protected workmen. (5) Where an employer makes an application to a conciliation officer, board, an arbitrator, a labour court, tribunal or national tribunal under the proviso to sub-section (2) for approval of the action taken by him, the authority concerned shall, without delay, hear such application and pass, within a period of 3 months from the date of receipt of such application, such order in relation thereto as it deems fit. Provided that where any such authority considers it necessary or expedient so to do, it may, for reasons to be recorded in writing, extend such period by such further period as it may think fit. Provided further that no proceedings before any such authority shall lapse merely on the ground that any period specified in this sub-section has expired without such proceedings being completed.

II. OBJECT OF SECTION 33 The object of Section 33 is to (i) protect the workman against victimization by the employer and (ii) ensure expeditious termination of proceedings of industrial disputes in a peaceful atmosphere, undisturbed by any subsequent cause leading to further exacerbation of already strained relations between the employer and the workman1.

III. REQUIREMENTS UNDER SECTION 33 A. Pendency of Proceedings One of the fundamental conditions of Section 33 of the Industrial Disputes Act, 1947 is that the proceeding must be pending before one of the authorities specified in the section, namely, before the conciliation officer, board of conciliation or voluntary arbitrator under Section 10A or labour court, industrial tribunal or national tribunal. It does not, however, include pendency of proceedings before the high courts2. The pendency of relevant proceedings is thus the condition precedent for the application of Section 333.

B. Workmen Concerned in the Disputes The question about construction of the words ‘workman concerned in such dispute’ which occur in Sections 33(1) and 33(2) has been the subject matter of judicial decisions and somewhat inconsistent views have been taken by different high courts on this point. While some high courts have narrow interpretations4 to the aforesaid expression, several others adopted liberal interpretations5. The controversy has been set at rest by the Supreme Court in New India Motors Pvt Ltd v. Morris (K T)6 and Digwadih Colliery v. Ramji Singh7. In the former case, the Supreme Court observed that even as a matter of construction, there was no justification for assuming that the workman concerned in such dispute should be workman directly or immediately concerned in the said dispute. In the Court’s view, there was no justification for adding the further qualification of direct or immediate concern which necessarily narrows the construction. In dealing with the question as to which workman can be said to be concerned in an industrial dispute, the Court pointed out that the essential condition for raising of an industrial dispute itself, and if an industrial dispute can be raised only by a group of workmen acting on their own or through their union, then it would be difficult to resist the conclusion that all those who sponsored the dispute are concerned with it. It further added that this construction is harmonious with the definition prescribed by Section 2-A and with the provisions contained in Section 18 of the Act. It held that ‘workmen concerned in such dispute cannot be limited only to the workman who are directly concerned with the dispute’ but includes all workmen on whose behalf the dispute has been raised as well as those who would be bound by the award. In the latter case, the Supreme Court said: ‘It is necessary to enquire what was the subject matter of the industrial dispute concerned’. It pointed out that the petitioner filing an application under Section 33-A should have satisfied the tribunal by providing the nature of the dispute during the pendency of the act which gave rise to the application under Section 33-A before asking the tribunal to make a finding in his favour under Section 33(2) and in the absence of such evidence, the tribunal was not justified in holding that Section 33(2) had been contravened. The aforesaid view was reaffirmed by the Supreme Court in Tata Iron and Steel Co. v. Singh (D R).8

C. Action must be bona fide Another requirement for permission or approval under Section 33 is that the action of the management must be bona fide. It has been settled in a catena of

cases that if the discharge or dismissal of a workman is a colourable exercise of the power to discharge or dismiss a workman in accordance with the standing orders or is a result of victimization or unfair labour practice, the industrial tribunal will intervene by refusing to grant ‘permission’ or ‘approval’.9

IV. SCOPE OF INQUIRY UNDER SECTION 33 This question came up for consideration in Atherton West & Co. Ltd v. Jute Mill Mazdoor Union10 and Lakshmi Devi Sugar Mills v. Pt. Ram Sarup.11 In the former case, the Supreme Court ruled that in discharging its limited jurisdiction, the tribunal had only to institute an inquiry and come to the conclusion as to ‘whether there was a prima facie case made out for the discharge or dismissal of the workman and the employer, his agent or manager was not actuated by any improper motives or did not resort to any unfair labour practice or victimization in the matter of the proposed discharge or dismissal of the workman.’ In the latter case, Justice Bhagwati observed: A prima facie case, at least in the disciplinary situation would be made out if, on the materials before it, the tribunal comes to the conclusion that a fair inquiry was held by the management in the circumstances of the case and it had bona fide come to the conclusion that the workman was guilty of misconduct with which he had been charged… The combined effect of the aforesaid decision has been summarized in Punjab National Bank Ltd v. Its Workmen.12 Where an application is made by the employer for the requisite permission under Section 33, the jurisdiction of the tribunal in dealing with such an application is limited. It has to consider whether a prima facie case has been made out by the employer for the dismissal of the employee in question. If the employer has held a proper inquiry into the alleged misconduct of the employee, and if it does not appear that the proposed dismissal of the employee amounts to victimization, or an unfair labour practice, the tribunal has to limit its inquiry only to the question as to whether a prima facie case has been made out or not. In these proceedings, it is not open to tribunal to consider whether the order proposed to be passed by the employer is proper or adequate or whether it errs on the side of excessive severity; nor can the tribunal grant permission, subject to certain conditions, which it may deem to be fair. It has merely to consider the

prima facie aspect of the matter and either grant the permission or refuse it accordingly by holding that a prima facie case is or is not made out by the employer.13 Again, in Punjab Beverages (P) Ltd v. Suresh Chander,14 Justice Bhagwati explained the scope of inquiry under Section 33: … the only scope of inquiry before the tribunal exercising jurisdiction under Section 33 is to decide whether the ban imposed on the employer by this section should be lifted or maintained by granting or refusing the permission or approval asked for by the employer. If the permission or approval is refused by the tribunal, the employer would be precluded from discharging or punishing the workman by way of dismissal and the action of discharge or dismissal already taken would be void. But the reverse is not true for even if the permission or approval is granted, that would not validate the action of discharge or punishment by way of dismissal taken by the employer. The permission or approval would merely remove the ban so as to enable the employer to make an order of discharge or dismissal and thus avoid incurring the penalty under Section 31 (1), but the validity of the order of discharge or dismissal would still be liable to be tested in a reference at the instance of the workmen under Section 10. Concept of prima facie case: In Martin Burn Ltd v. Banerjee (R N),15 Justice Bhagwati delineated the concept of prima facie case: A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same was believed. While determining whether a prima facie case has been made, the relevant consideration is whether on the evidence led, it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence. It may be that the tribunal considering this question may itself have arrived at a different conclusion. It has, however, not to substitute its own judgement for the judgement in question. It has only got to consider whether the view taken is a possible view on the evidence on record.

The aforesaid view was reiterated in later decisions.16

V. ALTERATION IN THE CONDITIONS OF SERVICE An analysis of sub-sections (1) (a) and (2) (a) of Section 33 shows that they apply where: Sub-section (1) Sub-section (2) (i) there is pending dispute; (i) there is pending dispute; (ii) service conditions are (ii) service conditions are not connected with the dispute; connected with the dispute; (iii) service conditions sought to be (iii) any service condition, whether altered must be prejudicial to prejudicial or not, is sought to the workmen concerned. be alerted. (iv) service conditions sought to be (iv) service conditions sought to be altered affect the workman altered affect the workman concerned in the dispute. concerned in the dispute. It will be observed that if any of the aforesaid four elements under subsection (1) are missing, that sub-section would not apply. However, sub-section (2) comes into operation not when any of the elements of sub-section (1) are missing but, only when all the four elements of that sub-section are concurrently present. Thus, for instance, if the dispute is not pending, sub-section (1) would not apply. Again, if the service conditions sought to be altered do not affect the workmen concerned in the dispute, sub-section (1) would not apply. If the matter is unconnected with the dispute, the employer can change service conditions even if such service conditions are not prejudicial to the workman concerned, only in accordance with the standing orders. But, where the matter is connected with the dispute, the employer may alter the service conditions of the workmen concerned, so long as they are not prejudicial to them, without any reference to the standing orders. The Supreme Court in Reserve Bank of India v. C T Dighe17 reiterated its earlier view that promotion of personnel relates to their condition of service and not the chance of promotion only. Explaining this view, the Court observed: It is difficult to see how alteration of the conditions of eligibility governing the employees of a particular cadre can amount to changing the conditions of service of employees of another cadre, assuming that the said conditions are conditions of

service. The change introduced in respect of stenographers and personal assistants may have an impact on the promotional prospects of employees from another cadre who are already in the panel or even those who were expecting to be included in the panel, but it is not possible to agree that this would amount to changing their conditions of service. It is difficult to think of the conditions of service of an employee as including an implied right to prevent the employer from altering the conditions of other employees.

A. Lockout Tribunals and courts impliedly concede that lockout affects the ‘condition of service.’ However, they assert that the conditions of service would be affected if they lose their right to receive their pay during the period of lockout in all circumstances, but the question whether they would be entitled to get wages during that period cannot be postulated with certainty for that would depend upon a variety of conditions.

B. Lay-off Lay-off affects the earning of the concerned workman and would prima facie appear to attract the provisions of Section 33. However, the tribunals and courts have laid down that lay-off in accordance with (i) established practice, (ii) provisions of standing orders, (iii) legislative prescription, does not come within clause (a) of sub-section (1)(2)(3) of Section 33.

C. Suspension In Laxmi Devi Sugar Mills Ltd v. Ram Sarup,18 the Supreme Court observed that suspension does not amount to punishment; it is only an interim measure and will last till the application for permission to punish the workman is made and the tribunal passes order thereon. If the tribunal grants the permission, the concerned workman will not get wages for the suspension period, but if the permission is refused, he shall be paid for the whole period. In Sasamusa Sugar Works (P) Ltd v. Shobrati Khan,19 the Supreme Court observed that if the employer suspends a workman, he must pay wages for the suspension period. However, in Hotel Imperial v. Hotel Workers Union20, the Supreme Court observed:

The undisputed common law right of the master to dismiss his servant for proper cause has been subjected by Section 33 to a ban; and that in fairness must mean that pending the removal of the said statutory ban, the master can after holding proper inquiry, temporarily terminate the relationship of master and servant by suspending his employee pending proceedings under Section 33.

D. Transfer In K Devender Reddy v. Singareni Collieries Company Ltd,21 the Andhra Pradesh High Court held that if any employer transfers the workman during pendency of conciliation proceedings to an equivalent post, that will not amount to alteration of his conditions of service. Transfer is a condition of service.

VI. MISCONDUCT NOT CONNECTED WITH PENDING DISPUTE: SECTION 33 (2) (B) Section 33 (2) (b) permits an employer to discharge or punish a workman by way of dismissal or otherwise for any act of misconduct not connected with the dispute pending before the authority, in accordance with the standing orders, or with the terms of contract whether express or implied. But the proviso to this clause requires the employer in cases of discharge or punishment by way of dismissal or otherwise to pay to the workman concerned wages for one month and to make an application to the authority before which the proceeding is pending for ‘approval’ of the action taken’.22 A three judge bench of the Supreme Court in Tata Iron and Steel Co. Ltd v. S N Modak23, had the occasion to spell out the nature of the order of discharge or dismissal. The employer ruled that such order is incomplete and inchoate until the approval is obtained. The employer could not effectively terminate the relationship of the employer and the employee, as the question of the validity of the order would have to be gone into, and if approval is not accorded by the tribunal, he would be bound to treat the workmen concerned as his employees and pay them all the wages for the period even though he subsequently could proceed to terminate the employees’ services. The aforesaid view was reiterated by the Supreme Court in S. Ganpathy v. Air India.24 The Court held that the relationship of employer and employee is not effectively

terminated by the passing of the order of discharge or dismissal until approval thereto in terms of Section 33 (2) (b) is accorded by the tribunal. The provision of Section 33 (2) (b) has given rise to the following two issues: (i) Whether the action of the company in removing the names of applicants from its rolls on the presumption that they had abandoned it, constituted alteration in the conditions of service of the workmen? (ii) Whether in the absence of any pleading or request by the employer, it is the duty of the labour court or tribunal to call suo motu the employer to adduce additional evidence to justify the termination of service of a workman? We will deal with these questions seriatim. The first issue was raised in G T Lad v. Chemicals and Fibres India 25 Ltd. In this case, the appellant along with certain other workmen went on an indefinite and peaceful strike to demand reinstatement of three dismissed leaders. These workers did not resume duties in spite of notice from the company to do so by a specified date failing which their absence would be treated as voluntary abandonment of service and their names would be struck off from muster-rolls. Thereafter, the company sent separate communications to the appellant and others informing them that by not reporting for duty, they had confirmed its presumption that they were no longer interested in continuing their service in the company. It therefore struck off their names from its rolls and sent a cheque to each for the amount due to them. There was nothing in the standing orders of the company to indicate that it could terminate the services of workmen on the ground of abandonment of service because of their going on strike in enforcement of their demands. The Supreme Court held that in the absence of any provision in the certified standing orders by virtue of which the company could have terminated the services of the appellants, the impugned action on its part amounted to an alteration in the conditions of service of the appellants during the pendency of the industrial dispute before the labour court, which adversely affected them, could not be countenanced. In Shankar Chakravarty v. Britannia Biscuit Co.26, the Supreme Court was invited to decide the second issue. In this case, the management after holding an inquiry which was found to be defective and in violation of natural justice, terminated the service of the workman and gave him one month’s wages in lieu of notice. Since an industrial dispute between workmen and the management was pending before the industrial tribunal, the management filed an application under Section 33 (2) (b) seeking approval of its action by the authority concerned. The tribunal held that the inquiry was conducted in

violation of the principles of natural justice. Accordingly, the application was rejected. The company thereupon filed a writ petition under Articles 226 and 227 of the Constitution, in the Calcutta High Court, but it was dismissed. The company then preferred letters patent appeal before a division bench of the Calcutta High Court. It held that after the industrial tribunal has adjudicated upon the preliminary issue as to whether the inquiry was in accordance with the principles of natural justice and having held against the company, it was incumbent upon him to give to the employer an opportunity to lead evidence to prove the charges alleged against the workmen. It further observed that as the issue about the validity of the inquiry was not decided as a preliminary issue and since thereafter no opportunity was given to the employer, it would be necessary to remand the matter to the industrial tribunal for giving an opportunity to the employer to adduce further evidence, if so advised, and then to finally dispose of the application under Section 33 (2) (b). Thereupon, an appeal was filed in the Supreme Court. The Court held: Undoubtedly, if such a pleading is raised, an opportunity is sought to be given but if there is no such pleading either in the original application or in the statement of claim or written statement or by way of application, during the pendency of the proceedings, there is no duty cast by law or by the rules of justice, reason and fair play that a quasi-judicial tribunal like the industrial tribunal or the labour court should adopt an advisory role by informing the employer of its rights, namely the right to adduce additional evidence to substantiate the charges when it failed to make good the domestic inquiry and then to give an opportunity to it to adduce additional evidence. In view of this, the Court said that apart from being unfair to the workmen, it would be against the principles or rules governing the procedure to be adopted by quasi-judicial tribunals, against the adversary system and the principles governing the decision of lis between the parties arrayed before such tribunals.

Scope of Section 33 (2) (b) The jurisdiction of the tribunal while considering an application for grant of approval has succinctly been stated by the Supreme Court. Thus, in Martin Burn Ltd v. R N Banerjee,27 as stated earlier the Court held that while exercising jurisdiction under Section 33(2)(b) of the Act, the industrial tribunal is required

to see as to whether a prima facie case has been made out as regards the validity or otherwise of the domestic inquiry held against the delinquent; keeping in view the fact that if the permission or approval is granted, the order of discharge or dismissal which may be passed against the delinquent employee would be liable to be challenged in an appropriate proceeding before the industrial tribunal in terms of the provision of the Industrial Disputes Act. In Cholan Roadways Ltd v G. Thirugnanasambadam28, the Supreme Court also observed the standard of proof required in a domestic inquiry vis-avis a criminal trial is absolutely different. Whereas in the former ‘preponderance of probability’ would suffice; in the latter, ‘proof beyond all reasonable doubt’ is imperative. The tribunal while exercising its jurisdiction under Section 33(2)(b) of the Industrial Disputes Act was required to bear in mind the aforementioned legal principles. Furthermore, in a case of this nature, the probative value of the evidence showing the extensive damages caused to the entire left side of the bus; the fact that the bus first hit the branches of a tamarind tree and then stopped at a distance of 81 feet there from even after colliding with another bus coming from the opposite direction deserved serious consideration at the hands of the tribunal. The nature of impact clearly demonstrates that the vehicle was being driven rashly or negligently.

Application of Res Ipsa Loquitur In Pushpabai Parshottam Udeshi v. Ranjit Ginning and Pressing Co. Pvt. Ltd29, the Supreme Court observed: The normal rule is that it is for the plaintiff to prove negligence but as in some cases, considerable hardship is caused to the plaintiff as the true cause of the accident is not known to him but is solely within the knowledge of the defendant who caused it, the plaintiff can prove the accident but cannot prove how it happened to establish negligence on the part of the defendant. This hardship is sought to be avoided by applying the principle of res ipsa loquitur. The general purport of the words res ipsa loquitur is that the accident ‘speaks for itself’ or tells its own story. There are cases in which the accident speaks for itself so that it is sufficient for the plaintiff to prove the accident and nothing more. It will then be for the defendant to establish that the accident happened due to some other cause than his own negligence…

The above principle was applied in Sarla Dixit (Smt.) v. Balwant Yadav.30 In Thakur Singh v. State of Punjab31, the Supreme Court observed: It is admitted that the petitioner himself was driving the vehicle at the relevant time. It is also admitted that the bus was driven over a bridge and then it fell into a canal. In such a situation, the doctrine of res ipsa loquitur comes into play and the burden shifts on to the man who was in control of the automobile to establish that the accident did not happen on account of any negligence on his part. He did not succeed in showing that the accident happened due to causes other than negligence on his part. In Cholan Roadways Ltd v. G Thirugnanasambandam32, the Supreme Court ruled that res ipsa loquitur is a well-known principle which is applicable in the instant case. Once the said doctrine is found to be applicable, the burden of proof would shift on the delinquent. As noticed hereinabove, the inquiry officer has categorically rejected the defence of the respondent that the bus was being driven at a slow speed. The Court added that the burden of proof was, therefore, on the respondent to prove that the vehicle was not being driven by him rashly or negligently. Further, in a case involving an accident, it is not essential to examine the passengers of the bus.

Effect of failure to Make Application, Withdrawal of Application or Refusal To Grant Application Prior to the decision, conflicting views were expressed even by the Supreme Court. While two benches of three judges in Strawboard Manufacturing Co. v. Govind33 and Tata Iron and Steel Co. Ltd v. S N Modak34 discussed earlier, have held that if the approval is not granted under Section 33(2)(b), the order of dismissal becomes ineffective from the date such order was passed and, consequently the employee would become entitled to wages from the date of dismissal. This view was reiterated by a bench of two judges in S Ganapathi v. Air India.35 Here, the Court has held that the order of dismissal passed without the approval under Section 33(2)(b) remains in inchoate condition. On the contrary, a bench of three judges in Punjab Beverages Pvt. Ltd, Chandigarh v. Suresh Chand,36 has held that non-approval of the order of dismissal or failure to make application under Section 33(2)(b) would not render the order of dismissal inoperative; failure to apply for approval under Section

33(2)(b) would only render the employer liable to punishment under Section 31 of the Act and the remedy open to the employee is either by way of a complaint under Section 33-A or by way of a reference under Section 10(1))(d) of Industrial Disputes Act. The constitution bench in Jaipur Zila Sahkari Bhoomi Vikas Bank Ltd v. Ram Gopal Sharma37, decided an extremely important issue relating to interpretation of Section 33(2) (b) of the Industrial Disputes Act, namely: (i) whether the order of dismissal becomes ineffective from the date it was passed or from the date of non-approval of the order of dismissal if the approval was not granted under Section 33(2)(b); and (ii) whether failure to make an application under Section 33(2)(b) would render the order of dismissal inoperative? (iii) What is the effect of refusal to grant application? The Court after taking note of its earlier judgements deprecated the tendency of the employer to take advantage of the loopholes in the proviso to Section 33(2)(b). It observed that an employer who does not make an application under Section 33 (2)(b) or withdraws the one made, cannot be rewarded by relieving him of the statutory obligation created on him to make such an application. To do so would put such employer in a happier or more comfortable position than an employer who obeys the command of law and makes an application inviting scrutiny of the authority in the matter of granting approval of the action taken by him. The Court not only laid emphasis on the need to adhere and obey the law in a system governed by rule of law but deprecated the tendency of the employer who by design (i) avoids to make an application after dismissing or discharging an employee or file it and (ii) withdraws the application before any order is passed on it, on its merits, ‘to take a position that such order is not inoperative or void till it is set aside under Section 33-A notwithstanding the contravention of Section 33(2)(b) proviso, driving the employee to have recourse to one or more proceedings by making a complaint under Section 33-A or to raise another industrial dispute or to make a complaint under Section 31(1).’ The Court remarked that such an approach (i) destroys the protection specifically and expressly given to an employee under proviso to Section 33(2)(b) and (ii) may lead to victimization, unfair labour practice or harassment. The Court ruled: … if the authority refuses to grant approval, obviously it follows that the employee continues to be in service as if the order of discharge or dismissal had never been passed. The order of dismissal or discharge passed invoking Section 33(2)(b) dismissing or discharging an employee brings an end to the relationship of the employer and employee from the date of his

dismissal or discharge but that order remains incomplete and inchoate as it is subject to approval of the authority under the said provision. In other words, this relationship comes to an end de jure only when the authority grants approval. If approval is not given, nothing more is required to be done by the employee, as it will have to be deemed that the order of discharge or dismissal had never been passed. Consequences of it are that the employee is deemed to have continued in service entitling him to all the benefits available. ‘This being the position, there is no need of a separate or specific order for his reinstatement… From the above, it is evident that if approval is not given by the labour court under Section 33(2)(b) for an order of dismissal or discharge effected by a management on its employee, it would be deemed that the order of discharge or dismissal had never been passed and consequently the employee is deemed to have continued in service entitling him to all the benefits available.38 Thus, not making an application under Section 33(2)(b) seeking approval or withdrawing the application once made before any order is passed thereon, contravention of proviso to Section 33(2)(b). The aforesaid view was reiterated by a two judge bench of the Supreme Court in Indian Telephone Industries Ltd v. Prabhakar H Manjare39. In this case, the employer filed an application before the tribunal seeking approval of the order of dismissal of the workmen during the pendency of an industrial dispute before the tribunal. The tribunal refused to grant permission because the order of dismissal was invalid for non-compliance of Section 33(2)(b). Subsequently, the management passed another order of dismissal of workmen and then filed another application before the tribunal without paying full wages to the said workmen. The tribunal refused to grant the permission. The employer then filed a writ petition. The single judge of the High Court upheld the order of the tribunal; the respondents then filed writ appeals challenging the order of the tribunal as affirmed by the single judge. The division bench of the High Court by the impugned order allowed the appeals and set aside the order of the single judge. Aggrieved by the aforesaid decision, the petitioners filed a special leave petition before the Supreme Court. The Court held that it was not open to the employer to make a second application seeking approval of its second order of dismissal, particularly when full wages were not paid to them. The net effect of the decision shall be that the order of discharge or dismissal had never been passed and consequently, the employee would be deemed to have continued in

service entitling him to all the benefits available. A perusal of the aforesaid judgements reveals that the Supreme Court has not only overruled the decision of the three-judge bench in Punjab Beverages case but has also failed to take note of its earlier decisions in Hindustan General Electric Corporation Ltd v. Bishwanath Prasad40 and Rodrick LA v. Karan Chand Thaper & Brothers.41 In the former case, the three-judge bench of the Supreme Court while dealing, inter alia, with Section 33 observed that ‘… these sections do not lend themselves to the construction that as soon as the labour court, tribunal, etc., find that there has been a violation of Section 33, it should award reinstatement.’ The Court added that ‘it must go through the proceedings which have to be taken under Section 10 and it would be the duty of the labour court, etc., to examine the merits of the case in the light of the principles formulated in Indian Iron and Steel Company v. Their Workmen.42 In the latter case, the Supreme Court held that if an application is made by an employee under Section 33-A and it is shown that the impugned dismissal of the employee has contravened Section 33, it is open to the employer to justify the dismissal on merit by adducing satisfactory evidence before the tribunal.’ Quite apart from the above, one may wish to refer to the provision of section 2-A of the Industrial Disputes Act which confers a right on the individual workman to raise dispute connected with discharge, dismissal, retrenchment or otherwise termination of service. The Supreme Court in Ram Avtar Sharma v. State of Haryana43 has virtually compelled the appropriate government to make a reference in all cases covered under section 2A. This remedy would, however, be available where approval to terminate the services of employee is granted by the tribunal on an application made by the employer under Section 33(2)(b) of the Act. In Delhi Transport Corporation v. Sardar Singh44, the Supreme Court held that (i) merely because the absence of a workman was treated as leave without pay for the purpose of maintaining correct record by the management, it does not absolve a workman from the misconduct of his absence, (ii) when an employee habitually absents himself from duty even without sanctioned leave for very long period, it prima facie shows lack of interest in work. The Supreme Court in Indian Telephone Industries Ltd v. Prabhakar H Manjare45, has held that the conditions contained in the proviso to Section 33(2) (b) are mandatory in nature and their non-compliance would render the order of discharge or dismissal void or inoperative. The Court further held that if the tribunal refuses to grant approval sought for under Section 33(2)(b), the effect of it shall be that order of discharge or dismissal had never been passed and

consequently, the employee would be deemed to have continued in service entitling him to all the benefits available.

When and Where the Tribunal can Interfere with Punishment It has now been settled through Supreme Court decisions that the question of punishment is essentially a management’s decision and once the misconduct is proved either in inquiry conducted by the management or by adducing evidence before the tribunal for the first time, the quantum of punishments cannot be interfered with except where it is shockingly disproportionate as to suggest unfair labour practice and victimization. Thus, in Workmen of Firestone Tyre and Rubber Co. v. Management46, the Supreme Court ruled: Once the misconduct is proved either in the inquiry conducted by an employer or by the evidence placed before a tribunal for the first time, punishment imposed cannot be interfered with by the tribunal except in cases where the punishment is so harsh as to suggest victimization. Earlier, in Hind Construction and Engineering Co. Ltd v. Their Workmen47, the Supreme Court observed: In respect of punishment… for misconduct under the standing orders, if any, is a matter for the management to decide and if there is any justification for the punishment imposed, the tribunal should not interfere. The tribunal is not required to consider the propriety or adequacy of the punishment or whether it is excessive or too severe. But where the punishment is shockingly disproportionate, regard being had to the particular conduct and past record or is such as no reasonable employer would ever impose in like circumstances, the tribunal may treat the imposition of such punishment as itself showing victimization or unfair labour practice. The aforesaid view was re-affirmed in Eastern Electric Trading Co. v. Baldev Lal.48 In I T C Ltd v. Government of Karnataka49, two questions arose before the Court (i) whether the appropriate government was competent to make a reference under Section 10 (1) when the proceeding was pending before the tribunal? and (ii) whether the reference made by the government would be vitiated due to the pendency of the proceedings under Section 33 (2) (b)? The

division bench of the Karnataka High Court answered it in negative. The Court ruled that the pendency of proceedings under Section 33 (2) (b), did not in any way affect the powers of government to make a reference under Section 10 (1), and the reference under Section 10 did not stand vitiated on the ground that the government, in deciding to make reference did not take into account the pendency under Section 33 (2) (b). Further, the grant of approval under Section 33 (2) (b) did not conclude the dispute and the parties would be free to seek reference under Section 10; the proceedings under Section 33 (2)(b) would conclude immediately on a reference being made under Section 10 and the power of the authorities in proceedings under Section 10 would be void and more so, after Section 11-A was introduced. In order to avoid future disputes, the Court recommended that it would be better that similar provisions were made for automatic termination of proceedings under Section 33 (2) (b) on a reference of the same dispute being made under Section 10.

B. Proviso to Section 33 (2) (b) The proviso to Section 33 (2)(b) contemplates three things, namely: (a) discharge or dismissal; (b) payment of wages for one month; and (c) making of an application for approval of the action taken. The aforesaid acts must be simultaneous and the employer’s conduct should show that they form part of the same transaction, so that when he takes action under Section 33 (2) by dismissing or discharging an employee, he should immediately pay him wages for one month and also make an application to the tribunal at the same time.50 Thus, in Straw Board Manufacturing Co. Ltd v. Govind51, the Supreme Court explains the concept of ‘simultaneous and part of the same transaction’ in the following words: When, however, we say that the employer must take action simultaneously or immediately, we do not mean that literally, for when things are to be done, they cannot be done simultaneously but can only be done one after the other. What we mean is that the employer’s conducts should show that three things contemplated under the proviso, namely, (i) dismissal or discharge, (ii) payment of wages; and (iii) making of the applications are parts of the same transaction. If that is done, there will be no occasion whether the application was made as

part of the same transaction, or at the same time when the action was taken, would be a question of fact and will depend upon the circumstances of each case. Again in Filmistan Pvt. Ltd v. Balakrishna Bhiwa52, the Supreme Court held that ‘the question whether the application for approval under Section 33 (2) (b) proviso was made as part of the transaction or at the same time, when the action was taken, is a question of fact, and will depend upon the circumstances of each case.’ Whether stay of the reference proceedings by the High Court amounts to non-pendency of proceedings In BPL Ltd v. R. Sudhakar53, the question arose whether a dispute is said to be pending before the industrial tribunal for the purposes of the proviso to Section 33(2)(b) during the period when the operation of the order of reference of dispute remain stayed. The Supreme Court answered the question in the negative and observed that (i) the tribunal gets jurisdiction only on reference made by the government. When the operation of the very order of reference was stayed, the question of the dispute pending before the tribunal does not arise inasmuch as the reference order itself stood suspended so long as the stay order was operative. Therefore, it could not be said that dispute was pending before the tribunal when the workmen were dismissed from service and the stay order was operative. (ii) In case any tribunal proceeds to pass an order inspite of stay of the operation of the order of reference by the High Court, it may amount to contempt of the order of the High Court. (iii) In case of some grave misconduct, the management cannot afford to sit idle or simply wait to take action, particularly when stay of the operation of the order of reference is obtained at the instance of union on behalf of the workmen. The Court held that as in the present case, on the date of dismissal of the workman from service, the interim order staying the operation of the order of reference was operative. The question of dispute being pending on that day did not arise which is essential in order to make an application under proviso to Section 33(2)(b) of the Act. Therefore, the appellant did not violate the provisions of Section 33(2)(b) of the Act. Payment of One Month’s Wages. It has been held in a catena of cases54 that the payment of one month’s wages to the discharged or dismissed workman is a mandatory provision which should be complied with at the time of taking the action or within a reasonable time. Thereafter, management is not allowed to make any deduction or adjustment against the alleged past dues55. The management may, however, make compulsory deduction to fulfil a statutory obligation under the tax law.56 It is not necessary that the wages for one month

should have been actually paid, because in many cases the employer could only tender the amount before the dismissal but could not force the employee to receive the payment before the dismissal becomes effective.57 Application for approval of action taken. In Lord Krishna Textiles Mills v. Its Workmen58, the Court made an obiter: Though an express permission in writing is not required in cases falling under the proviso to Section 33 (2) (b), it is desirable that there should not be any time lag between the action taken by the employer and order passed by the appropriate authority in an inquiry under the said proviso. In the State Bank of Bikaner v. Balai Chander Sen59 Justice Wanchoo, while approving Straw Board Manufacturing Co. Ltd60 observed: …. But there is nothing in Section 33 (2)(b) which requires that an application for approval can only be made after the action has been taken. We see nothing in principle against the employer making an application under Section 33 (2) (b) for ‘approval’ of the proposed action before the actual action is taken….. Again in C S T Corporation v. Mohd. Noor Alam61, it has been held that it is the conduct of the employer that has to be considered and the dismissal or discharge, payment of wages and making of the application for ‘approval’ form part of the same transaction.

Effect of Withdrawal of Application In R S Nagar Central Electronics Ltd62, an application was filed before the industrial tribunal seeking approval of the action of terminating services of the workman. During pendency of such application, another application was filed seeking withdrawal of that application on certain grounds. The tribunal rejected the application. Thereupon, the employer moved a writ petition before the High Court. The High Court allowed the writ petition and directed the withdrawal of such application. Aggrieved by this order, the workman filed a special leave petition before the Supreme Court. The Court ruled that when an application for approval is filed by the employer and later he wants to withdraw such application, no right or liability flows from it and the same is done at the risk of the employer. The Court added that the workman has no risk in the same.

Crucial Date for Seeking Permission In Indian Oxygen Ltd v. T Natrajan63, the employer initiated domestic inquiry against a workman who was declared as ‘protected workman’ at that time. He applied for permission to the authority before which proceedings were pending. But before the disposal of the application, the workman ceased to be a protected workman. The employer, therefore, withdrew the application for approval of dismissal under Section 33(2)(b) and dismissed the workman. The Madras High Court held that the dismissal was not illegal because the crucial date for seeking permission to dismiss is the date of dismissal and not the date of initial action for disciplinary proceedings.

VII. PROTECTION OF UNION OFFICIAL UNDER SECTION 33 Section 33 of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act of 1956, inter alia, protects to a greater extent concerned union officials64 of the registered trade union against victimization and high-handed action of management. Sub-section (3) of Section 33 of the Act makes it incumbent on the employer to take express permission in writing whenever he wants to alter the conditions of service of any ‘protected workmen’ concerned. He is also required to take prior permission for discharging or punishing the workman by dismissal or otherwise. However, in Udumbanchola Estate Workers Union v. Indian Cardamom Research Institute65, the Kerala High Court held that even if the workman is a protected workman, merely because the employer failed to file an application under Section 33(3) while imposing punishment of dismissal, it will not per se make the dismissal void. The appropriate remedy is under Section 33-A of the Act.

Protected Workman The explanation of sub-section (3) of Section 33 defines a ‘protected workman’, to mean ‘a workman who, being an officer of a registered trade union connected with the establishment is recognized as such in accordance with the rules made in this behalf.’ Sub-section (4) of Section 33, lays down that for the purpose of subsection (3) there shall be one per cent protected workmen of total number of

workmen employed in the establishment, subject to the condition that there shall be at least 5 and not more than 100 protected workmen in every establishment. However, declaration of such workmen as protected workmen must be made within a reasonable time so that the application may not become infructuous.66 Be that as it may, the idea behind the insertion of such provision was obvious. ‘The legislature in this case appears to be anxious in the interest of healthy growth and development of trade union movement to ensure for them complete protection against every kind of order of discharge or punishment because of the employee’s special position as an officer of a registered trade union recognized as such in accordance with the rules made in that behalf.’67 Sub-section (3) of Section 33 does not afford any protection to the member of the executive or other office-bearers of such trade union which is not registered under the Trade Unions Act, 1926. Next, the requirement of a ‘protected workman’ being an officer of a registered trade union excludes within its coverage such active and leading members of trade unions who are not the officers of a trade union. Further, the requirement of a protected workmen’ being member of a union ignores the interest of those who are not the members of any union but nevertheless at one time or the other, were involved in trade union activities and were victimized for such activities. Moreover, sub-section (3) of Section 33 safeguards the interest of only protected workmen ‘concerned’ in the dispute. Further, the scope of the ‘limiting clause for any misconduct’ is wider than that provided under sub-section (1) or sub-section 2.

Declaration of Protected Workman In Rama Kant Chaudhary v. S K Sarwatia,68 the Delhi High Court has ruled that declaration of workman as protected under Section 33 (2)(b) is a positive act of the employer and unless the employer so declares, a workman cannot claim that he is a protected workman under the Act. But the choice is left to the union, to choose its office bearers who are to be ‘protected workmen’. It is a mandatory obligation cast on the employer under Section 33(4) of the Act. The only option available to employer is to have recognized the workman nominated by union as ‘protected workman’. Merely that the union official is facing disciplinary action would not render him ineligible of being recognized as a protect workman.69

VIII. SECTION 33-A: THE REMEDY TO AN AGGRIEVED WORKMAN

Section 33-A confers on industrial employees the right to seek the protection of industrial tribunals in cases where their rights are violated contrary to the provisions of Section 33. It confers dual protection to an employee aggrieved by the contravention of Section 33 namely, (i) by imposing penalty under Section 31 (1); and (ii) by conferring the right to make an application under Section 33 A. The section runs as follows: Where an employer contravenes the provisions of Section 33 during the pendency of proceedings before a conciliation officer, board, an arbitrator, a labour court, tribunal or national tribunal, any employee aggrieved by such contravention, may make a complaint in writing, in the prescribed manner — (a) to such conciliation officer or board, and the conciliation officer or board shall take such complaint into account in mediating in, and promoting the settlement of, such industrial dispute; and (b) to such arbitrator, labour court, tribunal or national tribunal and on receipt of such complaint, the arbitrator, labour court, tribunal or national tribunal, as the case may be, shall adjudicate upon the complaint as if it were a dispute referred to or pending before it, in accordance with the provisions of this Act and shall submit his or its award to the appropriate government and the provisions of this Act shall apply accordingly. This section was inserted in the Act in 1950. Prior to this, the only remedy available to the employee against the breach of Section 33 was to raise an industrial dispute on that behalf and to move the appropriate government for its reference to the tribunal for adjudication under Section 10 of the Act. The trade unions complained that the remedy of asking for a reference under Section 10 involved delay and left the redress of the grievance of the employees entirely to the discretion of the appropriate government; because even in cases of contravention of Section 33, the appropriate government was not bound to refer the dispute under Section 10. That is why Section 33-A was enacted for making a special provision for adjudication as to whether Section 33 has been contravened. The conditions precedent for a complaint under this Section are (i) the complainant must be a workman, and (ii) he must have been aggrieved because of contravention of Section 33 by an employer during the pendency of adjudication proceedings.

A. Who Can Apply

Section 33-A grants relief only to an aggrieved employee. Reading Sections 33 and 33-A together, it will appear that only those persons are competent to initiate proceedings under Section 33-A who are both ‘employees’ a well as ‘workmen’. The fact that the complainant satisfies only one out of the two capacities of ‘employee’ and ‘workman’ is not sufficient. Thus, the head of the personnel department in Bata Shoe Co.70 who was an ‘employee’ but was not a ‘workman’ was held to be not entitled to claim relief under Section 33-A. Again, the tribunal has no jurisdiction to grant relief to the medical doctor in Bengal United Tea Co. Ltd71 The decision in Kirloskar Oil Engines72 is yet another illustration. Complainants who are ‘workmen’ but not ‘employees’ cannot lodge a complaint under Section 33-A, e.g., dependent entrepreneurs (assuming that they are ‘workmen’). Section 33-A of the Industrial Disputes Act confers on industrial employees the right to seek protection from the industrial tribunal where their rights are violated contrary to the provisions of Section 33. It confers dual protection to an employee aggrieved by the contravention of Section 33, namely, (i) by imposing penalty under Section 31(1); and (ii) by conferring the right to make an application under Section 33-A. Rule 60 of the Industrial Disputes (Karnataka) Rules, 1957 permits not only the workman but also any other person who is acquainted with the facts to verify the facts averred in the complaint. Section 36 of the Industrial Disputes Act also provides that workman may be represented by any member of the executive or office-bearer of a registered trade union in any proceedings under the Act.73 M/s B D K Process Control Pvt. Ltd v. Bhartiya Mazdoor Sangh74, the question arose whether a trade union can file a complaint under Section 33-A of the Industrial Disputes Act. The Karnataka High Court answered the question in the affirmative and observed that in the instant case, as the union has been authorized by the workmen in writing and the names of the aggrieved workmen were also mentioned in the complaint, the application filed by the union is to be treated as an application filed by the aggrieved workmen and, therefore, the application filed by the union under Section 33-A of the Act is maintainable in law.

B. Time-Limit of Reference Under Section 33-A Section 33-A does not prescribe any time-limit for reference of the dispute to an industrial tribunal. But courts75 have stressed that ‘even so it is only reasonable that disputes should be referred as soon as possible after they have arisen and

after conciliation proceedings have failed, particularly so when the disputes relate to discharge of workmen wholesale.’

C. Scope of Inquiry Section 33-A requires that on receipt of the complaint of the aggrieved employee, the labour court, tribunal or national tribunal shall adjudicate upon the complaint as if it were a dispute referred to or pending before it in accordance with the provisions of this Act. The aforesaid words indicate that the jurisdiction of the labour court, industrial tribunal or national tribunal under Section 33-A is the same as the jurisdiction of these authorities relating to adjudication of an industrial dispute on a reference being made to them under Section 10.76 The order passed in an application under Section 33-A is an award similar to one made in a reference under Section 10 of the Act. Further, it has to be submitted to the appropriate government and the same has to be published under Section 17 of the Act.77 The first case where the question came up for consideration of the Supreme Court was Automobile Products of India Ltd v. Rukmaji Bala.78 Justice Das while construing Section 23 of the Industrial Disputes (Appellate Tribunal) Act, 1950 which corresponds to Section 33-A observed that the scheme of the Section indicates that the authority to whom complaint is made is to decide both the issues, viz., (i) the effect of contravention, and (ii) the merits of the Act or order of the employer. His lordship added that the provisions of the Section reveal: ‘that the jurisdiction of the authority is not only to decide whether there has been a failure on the part of the employer to obtain the permission of the authority before taking action but also to go into the merits of the complaint and grant appropriate relief.’ The aforesaid view was reiterated in Equitable Coal Co. v. Algu Singh.79 where the Court observed: In an inquiry held under Section 23, two questions were to be considered. Is the fact of contravention by the employer of the provisions of Section 22 proved? If yes, is the order passed by the employer against the employee justified on the merits? If both these questions are answered in favour of the employee, the appellate tribunal would no doubt be entitled to pass an appropriate order in favour of the employee. If the first point is answered in favour of the employee, but on the second point the ending is that on the merits, the order passed by the employer

against the employee is justified, then the breach of Section 22 proved against the employer may ordinarily be regarded as a technical breach and it may not, unless there are compelling facts in favour of the employee, justify any substantial order of compensation in favour of the employee. In Punjab National Bank v. Its Workman80, Justice Gajendragadkar pointed out that: There can be no doubt that in an inquiry under Section 33-A, the employee would not succeed in obtaining an order of reinstatement merely by proving contravention of Section 33 by the employer. After such contravention is proved, it would still be open to the employer to justify the impugned dismissal on the merits. That is a part of disputes which the tribunal has to consider because the complaint made by the employer is treated as an industrial dispute and all the relevant aspects of the said dispute are to be considered under Section 33-A. Again in Punjab Beverages Pvt. Ltd v. Suresh Chand81, Justice Bhagwati summarized the effect of the aforesaid decisions in the following words: …. If the contravention of Section 33 is established, the next question would be whether the order of discharge or dismissal passed by the employer is justified on merits. The tribunal would have to go into this question and decide whether, on merits, the order of discharge or dismissal passed by the employer is justified and if it is, the tribunal would sustain the order, treating the breach of Section 33 as a mere technical breach. Since, in such a case, the original order of discharge or dismissal would stand justified, it would not be open to tribunal unless there are compelling circumstances, to make any substantial order of compensation in favour of the workman…. The tribunal would have to consider all the aspects of the case and ultimately what order would meet the ends of justice would necessarily have to be determined in the light of the circumstances of the case. But this much is clear that mere contravention of Section 33 by the employer will not entitle the workman to an order of reinstatement, because inquiry under

Section 33-A is not confined only to the determination of the question as to whether the employer has contravened Section 33, but even if such contravention is proved, the tribunal has to go further and deal also with the merits of the order of discharge or dismissal.

D. Power of Labour Court to Grant Interim Relief Under Section 33-A Is the tribunal empowered to grant anticipatory relief in the nature of injunction to prevent a bank from proceeding to make appointment to the cadre of junior officer by promotion and by direct recruitment in the complaint filed under Section 33-A of the Industrial Disputes Act, 1947? This issue came up for examination before the Kerala High Court in Dhanlakshmi Bank Ltd v. Parameshwara Menon.82 The Court held that Section 33-A did not contemplate the grant of such anticipatory relief for prevention of any apprehended contravention of Section 33 and observed: If and when it is established before the tribunal that there has been, in fact a contravention of Section 33 by the employer, the tribunal will, in such event, pass appropriate orders granting effective relief to the workmen so as to obliterate the consequences that may have resulted from the act of the management performed in contravention of Section 33. It is only to this extent that the jurisdiction of Section 33-A stretches.83 The Court accordingly held that the grant of interim relief in the nature of injunction was not within the competence of the tribunal since no such power has been conferred upon it by any of the provisions of the Industrial Disputes Act. The Gujarat High Court in Krishna Keshov Laboratories v. Ashwmbhai G Raval84, held that the tribunal can pass an order for payment of subsistence allowance by way of interim relief to the workmen.

SECTION – II CHANGE IN CONDITIONS OF SERVICES: NOTICE OF

CHANGE Section 9-A of the Industrial Disputes Act, 1947 requires: No employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change: (a) without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or (b) within 21 days of giving such notice. An analysis of the aforesaid provisions reveals that Section 9-A comes into operation the moment the employer proposes to change any condition of service applicable to any workman, and once this is done, 21 days’ notice has to be given to the workmen.

Scope and Purpose The purpose of enacting Section 9-A is to afford an opportunity to the workmen to consider the effect of the proposed change and, if necessary to present their point of view on the proposal. Such consultation further serves to stimulate a feeling of common/joint interest in the management and the workmen in industrial progress and thereby increases productivity. This approach on the part of the industrial employer would reflect his harmonious and sympathetic cooperation in improving the status and dignity of the industrial employee in accordance with the egalitarian and progressive trend of our industrial jurisprudence, which strives to treat the capital and labour as co-sharers and to break away from the tradition of labour’s subservience to capital.85 Section 9-A contemplates three stages: the first stage is the proposal by the employer to effect a change, the next stage is when he gives a notice and the last stage is when he effects a change in the conditions of service on the expiry of 21 days from the date of the notice. The conditions of service do not stand changed, either when the proposal is made or the notice is given but only when the change is actually effected. That actual change takes place when the new conditions of service are actually introduced.86 If there is no such change, Section 9-A does not come into operation.87 Section 9-A comes into operation at the moment the employer proposes to change the conditions of services applicable to any workmen, and once this is done, 21 days’ notice has to be given to the

workmen.88

Cancellation of the System of Direct Payment by Introducing Payment by Contractor Where the employers refused to pay wages unless the employees agree to work in accordance with it as recognition scheme contrary to Section 9-A of the Industrial Disputes Act, it was continued refusal to pay wages and would be a permanent alteration in the conditions of service and not a solitary instance for which applications could have been made under Section 33-A.89 The Supreme Court emphasized the need of complying with the provisions of Section 9-A before introducing any change in the conditions of service. Thus in Workmen of FCI of India90, the management cancelled the system of direct payment of wages and interposed the contractor without complying with the provisions of Section 9-A. On these facts, the Court held that it amounted to alteration both in wages and mode of payment to the disadvantage of the workmen. A notice was, therefore, required to be given before introducing this change. Omission to do so amounted to an illegal change inviting penalty under Section 31 (2).

Withdrawal of Customary Concession or Privilege The Supreme Court in General Manager (Operations), State Bank of India v. State Bank of India Staff Union91 held that Clause 8 of the conditions of service prescribed in the Fourth Schedule, namely, ‘withdrawal of any customary concession or privilege or change in usage under Section 9-A does not cover participation in an election to a municipal council or local body’. Therefore, the circular laying down a condition that the employees contesting an election would give an undertaking that he was not and he would not become a member of a political party and that he was not being nominated by a political party and that he would not be required to be present in the council/body during office hours and would not receive remuneration and would not plead his membership of such body as a bar to his transfer would not bring any change in the conditions of service of a workman under Section 9-A of the industrial Disputes Act, 1947.

Voluntary Retirement Scheme The Bombay High Court in KEC International Ltd v. Kamani Employees Union92 held that Income Tax approved Voluntary Retirement Scheme (VRS)

results in reduction of posts and hence attracts Section 9-A read with Item 11 of the IVth Schedule of the Industrial Disputes Act, 1947. On the facts of the case, the Court distinguished those workmen who accepted VRS but had encashed the compensation from those workmen who accepted VRS but had not encashed the compensation cheque. In the latter category, the complaint of violation of Section 9-A is maintainable.

Change in Age of Retirement In Punjab State Co-operative Supply and Marketing Federation Ltd v. Presiding Officer, Industrial Tribunal, Punjab,93 the issue regarding the age of retirement of class IV employees working in Markfed plants/units was considered in the meeting of the board of directors. The board, inter alia, resolved that the age of retirement as mutually agreed between the management and class IV employees of Markfed plants and units in terms of Rule 39 of the Model Standing Order be 58 years. Accordingly, copies of the notice were sent to the manager/general manager, Markfed Punjab Fertilizers, Ludhiana with a direction to them to serve the same upon the employees union. A copy of the notice was also displayed on the main entrance gate and one copy was endorsed to the Secretary, Punjab Markfed Employees Union (Regd.) and Punjab Fertilizers, Industrial Focal Point, Ludhiana. The workmen who were adversely affected by the resolution raised an industrial dispute which was referred by the state government to the tribunal. They claimed that their conditions of service had been changed prejudicially affecting them without giving notice under Section 9-A of the Industrial Disputes Act, and therefore, the resolution passed by the board of directors is liable to be invalidated. They also pleaded that the board of directors of the Federation did not have the jurisdiction to amend/modify the 1967-Rules so as to deprive them of the benefits admissible under those Rules. According to the workmen, the registrar alone was competent to amend or modify the 1967-Rules and in any case, this could not be done by the management of the Federation without prior approval of the registrar. The employer (petitioners) contested the claim of the workmen by asserting that change in the conditions of service of the workmen had been effected after giving notice to them through their union. Aggrieved by this award, the management filed a writ petition before the Punjab and Haryana High Court. The Court, while dismissing the petition, laid down the following principles: Section 9-A which is couched in mandatory form, lays down that ‘no employer who proposes to affect any change in the conditions of service applicable to any workman in respect of

any matter specified in the Fourth Schedule, shall affect such change without giving to the workman likely to be affected by such change, a notice in the prescribed manner of the nature of the change proposed to be effected’. This necessarily means that individual workman, who is likely to be affected by the proposed change in the conditions of service, must be given notice of the proposed change. The object underlying the requirement of issuing notice to the workman is to enable him to make representation against the proposed change and also take a decision whether or not to continue in the employment of the particular employer. Therefore, sending of notice to the union of the workman cannot be treated as sufficient compliance with the mandatory requirement of Section 9-A. As a logical corollary to the aforementioned conclusion, it must be held that implementation or resolution passed by the board of directors of the Federation was vitiated due to non-compliance with Section 9-A of the Act and the tribunal did not commit any illegality in granting a declaration to that effect.

Notice of Change—Mere Display of Notice not Sufficient In Management of Salem District Co-operative Milk Producers’ Union Ltd v. Industrial Tribunal94, the Madras High Court held that mere display of the notice on the notice board will not be sufficient. The notice must be in terms of the provisions of the Industrial Dispute Act and the Tamil Nadu Industrial Disputes Rules which, inter alia, stipulate that it must be exhibited in Tamil.

Withdrawal of Construction Allowance Without Notice of Change In Hindustan Steel Works Construction Ltd v. Hindustan Steel Works Construction Ltd Employees Union95, the Supreme Court held that a writ petition should not be entertained by the High Court under Article 226 of the Constitution particularly in a matter like alleging change in conditions of service by the workmen viz., withdrawl of construction allowance by a public sector undertaking when appropriate remedy and forum are provided under the Industrial Disputes Act and as such, the learned single judge as well as the division bench erred in accepting the writ and appeal respectively as filed by the workers through their union. The Supreme Court, therefore, directed the

employees’ union to approach the appropriate government after framing the terms to be referred for adjudication.

When Notice of Change not Necessary In Harmohinder Singh v. Kharga Canteen, Ambala Cantt.96, the Supreme Court held that it is not necessary to give any notice to the workman under Section 9-A of the ID Act before introducing Para 3-A in the Standing Orders. Besides, the respondent’s averment that the amended standing orders were duly intimated to all its employees who had also signed the same has not been controverted by the appellant.

Recovery of Payments towards Inadmissible Allowances and Incentives In Jossie v. Flag Officer Commanding-in-Chief97, the Kerala High Court held that recovery of payment made towards inadmissible allowance made by mistake is not violation of Section 9A of Industrial Disputes Act, 1947.

Transfer of Employees In Associated Cement Co. Ltd v. Cement Staff Union98, the Bombay High Court held that transfer of an employee being an incident of service, there is no question of the order of transfer not being in violation of Section 9A of the Industrial Disputes Act, 1947.

Reduction in Pay of Workmen In Sikh Educational Society v. Presiding Officer, Industrial-cum-Labour Court, UT, Chandigarh,99 the Punjab and Haryana High Court held that there was violation of Section 9A because notice of change was not given to the workmen before reducing their pay by withdrawing the benefit of merging 50 per cent of dearness allowances in their basic pay.

Recommendations of the (Second) National Commission on Labour The (Second) National Commission on Labour has recommended that there should be no statutory obligation for the employer to give prior notice in regard to item 11 of the Fourth Schedule for the purpose of increase in the workforce,

as is the position now under Section 9A. Notice of change, issued by an employer as per provisions of Section 9A, should not operate as a stay under Section 33 through such a decision of the management will be justifiable under Section 33-A.

1

2 3 4 5

6 7 8 9

10 11 12 13

14 15 16

17 18 19 20

See Punjab National Bank v. ALPNB Employee’s Federation, AIR 1960 SC 1; Automobiles Products of India v. Rukmaji Bala, AIR 1955 SC 258; Punjab Beverages (P) Ltd v. Suresh Chand, (1978) 2 SCC 144, 151. Rajasthan State Road Transport Corporation v. Abdul Hussain, 2010 LLR 490. Tata Iron & Steel Co. Ltd v. Modak (S N), (1965) 2 LLJ 128 (SC). New Jehangir Vakil Mills Ltd, Bhavnagar v. N L Vyas, (1958) 2 LLJ 573. Eastern Plywood Manufacturing Co. Ltd v. Eastern Plywood Manufacturing Workers’ Union, (1953) 1 LLJ 628; Newton Studies Ltd v. Ethirajulu, (1950) 1 LLJ 628; Andhra Scientific Co. Ltd v. Seshgiri Rao, (1959) 2 LLJ 551. New India Motors Pvt Ltd v. Morris (K T), (1960) 1 LLJ 551. Digwadih Colliery v. Ramji Singh, (1964) 2 LLJ 143. Tata Iron and Steel Co. v. Singh, (1965) 2 LIJ 122 (SC). See, Chartered Bank, Bombay v. Chartered Bank Employees Union, (1960) 3 SCR 441; This principle was adopted by the Supreme Court in Gujarat Steel Tubes Ltd v. G S T Mazdoor Sabha, (1980) 1 LLJ 137 (SC). Atherton West & Co. Ltd v. Suti Mill Mazdoor Union, AIR 1953 SC 241. Lakshmi Devi Sugar Mills v. Pt. Ram Sarup, AIR 1957 SC 82. Punjab National Bank Ltd v. Its Workmen, AIR (1960) SC 160. Punjab National Bank Ltd v. Its Workmen, op. cit., p 170. See also Cominco Binani Zinc Ltd v. K N Mohnan, (1993) Lab. IC 1298. Here, the Kerala High Court held that the inquiry contemplated by the authority under Section 33 (2) (b) is of a very limited nature. It can disregard the findings entered by the inquiry officer only if they are perverse. Punjab Beverages (P) Ltd v. Suresh Chander, (1978) 2 SCC 144. Martin Burn Ltd v. Banerjee (RN), (1958) 1 LLJ 247. L K Textile Mills v. Its Workman, AIR (1961) SC 860; Swatantra Bharat Mills v. Ratan Lal, AIR (1961) SC 1156; Central Bank of India v. P C Jain, AIR (1969) SC 183; Lalia Ram v. D C M Chemical Works, AIR (1978) SC 1004 and Cominco Binani Zinc Ltd v. K N Mohnan, (1993) Lab. IC 1298. (1981) 2 LLJ 223 (SC). Lakshmi Devi Sugar Mills v. Ram Sarup, (1957) 2 LLJ 17 (SC). (1957) 2LLJ 17 (SC). Hotel Imperial v. Hotel Workers Union, (1959) 2 LLJ 544 (SC).

21 22

23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

(1999) LLR 242 M S Manickam v. Cheran Transport Corporation, (1981) 1 LLJ 396 (Madras). If there is no ample evidence to connect the misconduct with the occurrence or incident against an employee, it is always open to the authority under Section 33(2)(b) to say that the finding of the inquiry officer are perverse. See M/s Brakes India Ltd v. Asstt. Labour Commissioner, (1994) Lab. IC 552. AIR 1966 SC 380 at 384. 1993 Lab. IC 1966. G T Lad v. Chemicals and Fibres India Ltd, (1979) 1 LLJ 260. Shankar Chakravarty v. Britannia Biscuit Co., (1979) 2 LLJ 194(SC). AIR (1958) SC 79: (1958) I LLJ 247. (2005) ILLJ 569. AIR 1977 SC 1735: (1977) 2 SCC 745. AIR 1996 SC 1274; (1996) 3 SCC 179. (2003) 9 SCC 208. (2005) 1 LLJ 569. AIR 1962 SC 1500. AIR 1966 SC 380. AIR 1993 SC 2430. AIR 1978 SC 995. (2002) ILLJ 834 (SC.); (2002) 2 SCC 244. The aforesaid view was followed in State Express Transport Corporation Ltd v. Arasu Vuralvua Pokkuvarthu Oozhlyar Sangam, 2011 LLR 278 (HC Madras) (2002) 3 LLJ 1134. (1971) 2 LLJ 340. (1963) 1 LLJ 248. 2004 LLR 953. 1985 Lab. IC 1001. 2004 LLR 953. 2003 LLR 68. Workmen of Firestone Tyre and Rubber Co. v. Management (1973) 3 SCR 587. Hind Construction and Engineering Co. Ltd v. Their Workmen, (1965) 1 LLJ 462 at 465. Eastern Electric Trading Co. v. Baldev Lal, (1975) 2 LIJ 367 (SC). (1985) 2 LLJ 430. See Kalyani (P H.) v. AIR France, (1903) 1 LLJ 679 (SC); Tata Iron & Steel Co. Ltd v. Modak, S N, (1965) 2 LLJ 28 (SC); Filmistan (Pvt.) v. Balakrishna Bhiwa (1967) 2 LLJ 637 (Bombay); See also Lord Krishna Textile Mills v. Its Workmen, (1961) 1 LLJ 211 (SC).

51 52 53 54

55 56 57 58 59 60 61 62 63 64

65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80

Straw Board Manufacturing Co. Ltd v. Govind, (1962) 1 LLJ 423 (SC). Filmistan (Pvt.) Ltd v. Balakrishna Bhiwa, AIR 1972 SC 171. (2004) 7 SCC 223. Straw Board Manufacturing Co. Ltd V. Govind, op. cit.; Delhi Transport Undertaking v. I T Delhi, (1965) 1 LLJ 428; Tata Iron & Steel Co. Ltd v. Modak S N, op. cit.; Calicut Wynd Motor Service (P) Ltd v. Industrial Tribunal, (1982) Lab. IC 517; See also V K Verma v. Hindustan Machine Tools Ltd, (1999) LLR 370 (P & H). Delhi Transport Undertaking v. Industrial Tribunal, (1965) 1 LLJ 420 (SC). S Ganpathy v. Air India, 1993 Lab. (C (1966), (SC). Syndicate Bank Ltd v. KRV Bhat, (1967) 2 LLJ 745 (SC); Muzaffarpur Electric. Supply Co. Ltd v. S K Dutta, (1970) 21 Fac LR 321 (Patna). Lord Krishna Textiles Mills v. Its Workmen, (1962) 1 LLJ 420 (SC). State Bank of Bikaner v. Balai Chander Sen, AIR 1964 SC 732 (1962) 1 LLJ 423 (SC). CST Corporation v. Mohd Noor Alam, AIR 1973 SC 1404. (2003) 8 SCC 171. 1999 LLR 213. Shri V V Giri observed in the Parliament: The top executives who are generally victimized by the employers for trade union action are protected whether the matters referred to are connected with the existing dispute or matters are unconnected with the dispute. See Lok Sabha Debates, Part II Vol. VI, (1956) 503. 1998 LLR 259. Container Corporation of India v. Container Corporation Employes Union, (1998) LLR 301. Air India Corporation Bombay v. V A Rehellow, (1972) 1 LLJ 501, 507–5098. (2003) LLR 129 (Del.). 2010 LLR 544 (Kerala HC). Bata Shoe Co. v. Its Workmen, (1956) 1 LLJ 278. Bengal United Tea Co. Ltd, (1962) 2 LLJ 376 (SC). Kirloskar Oil v. H L Bibawe, (1963) 1 LLJ 126. (2002) 8 SCC 400. (2002) Lab IC NOC 24. See Shalimar Works Ltd v. Their Workmen, AIR (1959) SC 1217. See Dalmia International Ltd v. Thomas, (1975) 2 LLJ 526 2 LLJ 526 (Kerala). Bhavnagar Municipality v. A Karimbai, AIR (1977) SC 1229. Automobile Products of India Ltd v. Rukmaji Bala. AIR (1955) SC 258 at 264. Equitable Coal Co. v. Algu Singh, AIR (1958) SC 761. Punjab National Bank v. Its Workmen, AIR 1960 SC 160.

81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99

Punjab beverages Pvt. Ltd v. Suresh Chand, AIR 1978 SC 995. Dhanlakshmi Bank Ltd v. Parameshwara Menon, (1980) 2 LLJ 45. Id. at 47. (1999) LLR 210. M/s Tata Iron and Steel Co. Ltd v. The Workmen (1972) 2 LLJ 259. North Brook Jute Co. Ltd v. Workmen, AIR 1960 SC 879. Workmen of Sur Iron & Steel Co. v. Sur Iron & Steel Co., (1971) 1 LLJ 570 (SC). Indian Oil Corporation Ltd v. Workmen, (1976) 1 SCC 63. Hindustan Lever Ltd v. Ram Mohan Ray, (1973) 4 SCC 141. (1985) 2 LLJ 4. (1998) LLR 402. (1998) CLR 3. (2003) LLR 463. 2010 LLR 435. 2005 LLR 1025. 2001 LLR 849 (SC). 2011 LLR 1168. 2010 LLR 162. 2011 LLR 159.

PART IV STANDING ORDERS

CHAPTER

23 Contextual Frame work of the Industrial Employment (Standing Orders) Act, 1946 The modern law of industrial employment requires that the terms of employment, conditions of service and rules of discipline should not only be written and known to the employees1 concerned but they should also be reasonable, fair and uniform. Before the passing of the Industrial Employment (Standing Orders) Act, 1946, conditions of service of industrial employees were invariably ill-defined and were hardly ever known with even a slight degree of precision to the employees.2 Further, in many industrial establishments, the conditions of service of employees were not uniform and were not even reduced to writing.3 No doubt, in some large scale industrial establishments, there were standing orders and rules to govern the day-to-day relations between the employers and workers but such standing orders or rules were one-sided and were very elastic to suit the convenience of employers. Further, neither workers’ union nor the government was consulted before these rules or standing orders were framed and more often than not, they gave an upper hand to employers in respect of all disputable points.4 This state of affairs resulted in discriminatory treatment between employers and employees, though all of them were appointed in the same premises and for the same and similar work.5 Indeed, it was not only detrimental to the interest of workers but even against the interest of industry because ‘it resulted in unnecessary industrial conflicts’. Further, it was not in conformity with social justice, inasmuch as there being no statutory protection

available to the workmen. Indeed, the contract of service was often so unnatural in character that it would be described as mere manifestation of subdued wish of the workmen to sustain their living at any cost. An agreement of this nature was an agreement between two unequals, namely, those who invested their labour and toil, flesh and blood and those who brought in capital.6 Moreover,7 this was incompatible with the principles of collective bargaining and rendered their effectiveness difficult, if not impossible. The Statement of Objects and Reasons states that, ‘experience has shown that standing orders defining the conditions of recruitment, discharge, disciplinary action, holidays, leave, etc., go a long way towards minimizing friction between the management and workers in industrial undertakings’. In order to overcome this difficulty and achieve harmony and peace, the Industrial Employment (Standing Orders) Act, 1946 was enacted requiring the management to define with sufficient precision and clarity the conditions of employment under which the workmen were working in their establishments. Thus, the preamble makes it expedient to define the conditions of employment under them and to make the said conditions known to the workmen employed by them. Each industrial undertaking in the private sector enjoys the power to offer conditions of service to its employees as deemed just and proper by it. This has resulted in different industrial undertakings operating in the same industry often offering different conditions of service to the employees and this has resulted in unnecessary irritation and bitterness amongst the employees serving in the same industry. The Act was enacted to curb the powers of the employer to offer such conditions of service as would result in exploitation and bring about uniformity in conditions of service amongst employees working in different industrial establishments in the same industry. The Act imposes an obligation on the employer to explain and state the terms and conditions of service before a person accepts the employment.8 The Act seeks to define the terms and conditions of employment of all categories of employees who discharge the same or similar work in an industrial establishment9 and to make those terms and conditions widely known to all workmen before they could be asked to express their willingness to accept the employment.10 The Act also aimed at achieving a transition from mere contract between unequals to the conferment of ‘status’ on workmen through conditions statutorily imposed upon the employers by requiring every industrial establishment to frame ‘standing orders’ in respect of the matters enumerated in the Schedule appended to the Act. This would result in employees securing clear and unambiguous conditions of their employment so as to avoid any confusion in the minds of the employer and employees of their

rights and obligations concerning the terms and conditions of employment and thereby avoid unnecessary industrial disputes. Industrial Employment (Standing Orders), 1946 is an Act specially designed to define the terms of employment of workmen in industrial establishments, to give the workmen collective voice in defining the terms of employment and to subject the terms of employment to the scrutiny of quasijudicial authorities by the application of the test of fairness and reasonableness.11 It is an Act giving recognition and form to hard-won and precious rights of workmen.12 The Act, in its original form was, ‘designed only for the purpose of ensuring that conditions of service, which the employer laid down, became known to the workmen.’13 However, the liberty of the employer in prescribing the conditions of service was only limited to the extent that the standing orders had to be in conformity with the provisions of the Act and as far as practicable, in conformity with Model Standing Orders. The certifying officer or the appellant authority were debarred from adjudicating upon the fairness or the reasonableness of the provisions of the standing orders.14 To meet this deficiency, in 1956, Parliament widened the scope of the Act. It now casts a duty upon the certifying officer ‘to adjudicate upon the fairness or reasonableness of the draft standing orders.’15

Constitutional Validity of Automatic Termination of Service under Standing Orders In D K Yadav v. J M A Industries Ltd.16, the Supreme Court held that the principles of natural justice are mandates of Articles 14 and 21. In view of this, the Court ruled that the principles of natural justice must be read wherever the standing orders provide for automatic termination of service for absence without leave. In Sudhir Chandra Sarkar v. TISCO17 too, it was held that certified standing orders would be subject to the test of arbitrariness under Article 14 of the Constitution. In Hindustan Paper Corpn. v. Purnendu Chkrobarty18, an employee absented from duty without prior sanction for about 6 months by sending applications for leave on medical ground but not supporting them with medical certificates. On these facts, the Supreme Court held that it would be deemed that the employee had lost the lien on the job when he had failed to avail the opportunity by replying in half-hearted way and not reporting for duty.

In Punjab and Sind Bank v. Sakattar Singh19, it has been held that the termination of a bank employee absenting for 190 days without holding an inquiry will not be violative of principles of natural justice. In Syndicate Bank v. The General Secretary, Syndicate Bank Staff Association.20, the termination of a bank employee without holding of inquiry who absented for 582 days in a span of 628 days was held to be justified when the management had complied with the bipartite settlement.

1

2 3 4 5 6 7 8

9 10 11 12 13 14 15 16 17

An industrial worker has the right to know the terms and conditions under which he is employed and the rules of discipline which he is expected to follow. Broadly speaking, in Indian industries the rules of service are not definitely set out and, like all other laws; where they exist, they have been very elastic to suit the convenience of employers. No doubt, several large scale industrial establishments have adopted standing orders and rules to govern day-to-day relations between the employers and workers, but such standing orders or rules are merely one-sided. Neither workers’ organizations nor government are generally consulted before these orders are drawn up and more often than not, they have given the employers the upper hand in respect of all disputable points. [See Government of India, Labour Investigation Committee Report (Main Report), 1946, 109.] See U P State Electricity Board v. Hari Shankar Jain, (1978) 4 SCC 16. S S Rly Co. v. Workers Union, AIR (1969) SC 513 at 518. Ibid. Agra Electric Supply Co. v. Aladin, (1969) 2 LLJ 540, 544 (SC); See also U P Electric Supply Co. Ltd v. Their Workers, (1972) 2 SCC 54. Uptron India Ltd v. Shammi Bhan, (1998) LLR 385. Ibid. Salem Erode Electricity Distribution Co. (Pvt.) Ltd v. Employees Union, (1966) 1 LLJ 443 (SC). See also Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar Union, (1999) LLR 180: (1999) Lab. IC 430 (SC). Rohtak and Hissar Electric Supply Co. v. State of U P, AIR (1966) SC 1471. Uptron India Ltd v. Workers Union; AIR (1969) SC 513 at 26. S S Rly. Co. v. Workers Union; AIR (1969) SC 513. Ibid. Section 4. See, supra note. Ibid. (1993) 3 SCC 259. (1984) 2 LLJ 223 (SC); AIR 1984 SC 1064.

18 1997 2 LLN 1007 (SC). 19 2001 LLR 155 (SC). 20 2000 LLR 689.

CHAPTER

24 Scope and Coverage of the Industrial Employment (Standing Orders) Act, 1946 I. COVERAGE OF THE ACT A. Industrial Establishments Covered The Act applies to every industrial establishment wherein 100 or more workmen are employed, or were employed on any day of the preceding 12 months.1 Several states have extended the application of the Act to establishments employing 50 or more persons. The (Second) National Commission on Labour has recommended that establishments employing 20 or more workers should have standing orders or regulations. There is no need to delimit the issues on which standing orders can or need be framed. As long as the two parties agree, all manner of things including multi-skilling, production, job enrichment, productivity, and so on can also be added. These standing orders will be prepared by the employer(s) in consultation with the recognized unions/federations/centres depending upon the coverage, and where there is any disagreement between the parties, the disputed matter will be determined by the certifying authority having jurisdiction, to which either of the parties may apply. Any amendment to the standing orders can be asked for by either party and agreed to by both parties or referred to the certifying authority or the labour

court for determination. However, no demand for amendment can be made until at least a year has elapsed. The appropriate government may prescribe a separate model standing order for units employing less than 50 workers. We append a draft of model standing orders for such small establishments. The employer will have to append a copy of model standing orders or the standing orders, mutually agreed upon with the workers, to the appointment letter of every employee. The problem connected with the aforesaid provision is whether the fall in the number of workmen below 100 at any time would make the Act inapplicable. The division bench of the Bombay High Court in Balakrishna Pillai v. Anant Engineering Works Pvt. Ltd2 answered it in negative. The Court gave three reasons in support of its conclusion: First, the provision of Section 1 (3) ‘related to initial application of the Act as the condition precedent viz., the number of workmen.’3 ‘There was nothing in the provisions of the Act providing for cessation or discontinuance of the application of the Act to an establishment on account of fall in the number of workmen or on any other account.’4 Second, ‘the Act is a beneficial social legislation enacted for the purpose of defining with certainty the terms of contract of employment and thus guaranteeing the workmen their conditions of service.’5 Finally, ‘an interpretation which promotes the objects and purposes of the Act will have to be preferred to one which will only defeat the same.’ (i) an industrial establishment6 as defined in clause (ii) of Section 2 of the Payment of Wages Act, 1936; or (ii) a factory7 as defined in clause (m) of Section 2 of the Factories Act, 1948 or (iii) a railway as defined in clause (4) of Section 2 of the Railways Act, 1890, or (iv) the establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen. The scope of the aforesaid definition has been delineated in a number of decided cases. Conflicting views have, however, been expressed on the issue whether ‘industrial establishment’ covers state electricity boards. While the Allahabad and Patna High Courts included8 the same; the Madras High Court excluded it.9 The Supreme Court10 has, however, approved the view of Allahabad and Patna High Courts. Further, Employees’ State Insurance Corporation has been excluded by the aforesaid definition, therefore, the provisions of IESOA do not apply to them.11 Decisions12 also indicate that the

standing orders famed in an industrial establishment by an electrical undertaking do not cease to be operative on the purchase of the undertaking by the board or enframing the regulation under Section 79 of the Electricity Supply Act, 1948. Courts have also held that the definition of ‘industrial establishment’ under IESOA having been incorporated from the definition of that term in the Payment of Wages Act, 1936, the position of the latter Act at the time of the enactment of 1946-legislation above would be material and any other or subsequent addition or amendment to the 1936-Act would be of no avail.13 The appropriate government is empowered to extend the provisions of the Act to an industrial establishment employing less than 100 workmen by giving 2 months’ notice and issuing notification in the official gazette and specifying the number in the notification.14

B. Establishments Excluded The Act is, however, not applicable to: (i) (ii)

any industry to which the provisions of Chapter VII of the Bombay Industrial Relation Act, 1946 apply; or any industrial establishment to which the provisions of the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961 apply: Provided that notwithstanding anything contained in the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961 … the provisions of this Act shall apply to all industrial establishments under the control of the Central Government.15

C. Exempted Establishments Section 1 (4) of the IESOA provides: Nothing in this Act shall apply to an industrial establishment in so far as the workmen employed therein are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilian in Defence Service (Classification, Control and Appeal Rules or the Indian Railways Establishment Code of any other rules or regulation16 that may be notified in this behalf by the appropriate government in the official gazette, apply. The opening words of Section 13-B namely ‘nothing in the Act shall

apply’ have been interpreted by the Supreme Court in UP State Electricity Board v. Hari Shankar Jain17 to exclude the applicability of the Act to the extent to which the rule or regulation covers the field. According to the Court, to give any other construction would lead to injustice and would once again place workmen at the mercy of the employer to be so benign and would promote industrial strife. The view is in conformity with the Directive Principles of State Policy enshrined in Articles 42 and 43 of the Constitution. Further, the expression ‘workmen … to whom … any other rules or regulations that may be notified in this behalf’ occurring in Section 13-B means ‘workmen enjoying of rules or regulation.’ The expression cannot be construed so narrowly as to mean government servants only; nor can it be construed so broadly to mean workmen employed by whomsoever including private employers, so long their conditions of service are notified by the government under Section 13-B. The mere fact that the electricity board had adopted the rules and regulations of the government of Madras as its transitory rules and regulations did not bring the workmen employed in industrial establishments under the board within the mischief of Section 13 B of the IESA.18

D. Government's Power to Exempt The appropriate government is empowered to exempt conditionally or unconditionally (i) any industrial establishment, or (ii) class of establishments from all or any of the provisions of the Act. This should be done by notification in the official gazette.19 In exercise of this power, the following industrial establishments in central sphere have been exempted from the provisions of the Act as on 31 December 1978: 1. All major ports of Bombay, Calcutta, Madras, Cochin, Vishakapatnam and Kandala including their own railways; 2. Government of India presses (excluding security presses); 3. Training establishments in connection with the re-settlement training schemes in vocational training centres under the control of the directorate general of employment and training; 4. Map production and printing offices known as Hathibarkala Litho Office and Photolitho Office, Dehradun and Photolitho Office at Calcutta; 5. Delhi Road Transport Authority; 6. Mechanical workshop at Hirakund; 7. Industrial establishments of the zonal railways including the Integral

Coach Factory, Perambur and Chittranjan Locomotive Works. The Indian Veterinary Research Institute, Izatnagar/Mukteshwar.20 Industrial establishment owned by the Port Trust Authority administering the port at Paradip. An analysis of the aforesaid provisions reveals that the coverage of the Act is inadequate and needs to be broadened. In this connection, it is relevant to note that Section 72 of the Industrial Relations Bill, 1978 inter alia, provided: The provisions of this Chapter shall not apply to any industrial establishments or undertaking to: (a) which ordinarily employs less than 50 employees; or (b) which, during the period of 12 months immediately preceding the commencement of this Act, ordinarily employed less than 50 employees. The Bill could have provided relief to workers not covered under the IESOA, but as stated earlier, the Bill could not find the colour of the Act and so it lapsed. 8. 9.

II. WORKERS COVERED Section 2 (i) of the Industrial Employment (Standing Orders) Amendment Act, 1982 provides that the ‘workman’ has the meaning assigned to it in clause (s) of Section 2 of the Industrial Disputes Act, 1947.

III. EMPLOYER UNDER THE ACT Section 2 (d) of the IESOA defined ‘employer’ to mean: The owner of an industrial establishment to which this Act for the time being applies, and includes: (i) in a factory, any person named under clause (f) of sub-section (1) of Section 7 of the Factories Act, 1948 (Act 63 of 1948), as manager of the factory. (ii) in any industrial establishment under the control of any department of any government in India, the authority appointed by such government in this behalf, or where no authority is so appointed, the head of the department; (iii) in any other establishment, any person responsible to the owner for the

supervision and control of the industrial establishment. In Hari Shankar Jain v. Executive Engineer, Rural Electricity Division21, the Allahabad High Court held that the employer would include the state electricity board since it was the owner of the industrial establishment by virtue of its compulsory purchase. It also held that unless there was any other provision to the contrary, even the state government, if it happened to be the owner of an industrial establishment,22 would fall within the ambit of the definition of ‘employer.’

1 2 3 4 5 6

7

Section 1 (3). Balakrishna Pillai v. Anant Engineering Works Pvt. Ltd, (1975) 2 LLJ 391. Id. at 394. Ibid. Id. at 395. Section 2 (ii) of the Payment of Wages Act defines ‘industrial or other establishment’ to mean any: (i) tramway service, or motor transport service engaged in carrying passengers or goods or both by road for hire or reward; (ii) air transport service, other than such service belonging to or exclusively employed in the military, naval or air forces of the Union or civil aviation department of the Government of India; (iii) dock wharf or jetty; (iv) inland vessel, mechanically propelled; (v) mine, quarry or oilfield; (vi) plantation; (vii) workshop or other establishment in which articles are produced, adapted or manufactured, with a view to their use, to transport and sale; (viii) establishment in which any work relating to construction, development or maintenance of building, roads, bridges or canals, or relating to operations connected with navigation, irrigation or supply of water or relating to generation, transmission and distribution of electricity or any other form of power, is being carried on. Section 2 (m) of the Factories Act defines ‘factory’ to mean ‘any premises’ including the precincts thereof: (i) whereon 10 or more workers are working or were working on any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) whereon 20 or more workers are, working, or were working on any day of the

8

9 10 11 12

13 14 15

preceding 12 months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on but does not include a mine, subject to the running shed or hotel, restaurant or eating place. A delineation of the above statutory definition of ‘factory’ requires that a factory must have premises (including the precincts) where ‘manufacturing process’ is being carried on. The word premises is defined in Murray’s Oxford Dictionary as a ‘house or building with its ground or other appurtenancy.’ According to the ordinary use of this expression, when speaking of a concern like a factory, 'premises' will include all the buildings of a factory, together with the compound in which they stand. A ‘precinct’ is defined in the same dictionary as ‘the space enclosed by the walls or other boundaries of a particular place, or building’ and more vaguely, the space lying immediately around a place, without distinct reference to any enclosure.’ (1) The expression ’manufacturing process’ has been defined in Section 2 (k) to mean any process for – (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking tip, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport delivery, or disposal; or (ii) pumping oil, water or sewage; or, (iii) generating, transforming or transmitting power; or, (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; or, (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels. The other ingredient of the definition of ‘factory’ is regarding the workers employed therein. The definition requires that there must be 10 or more persons working with the aid of ‘power’ or 20 or more persons working without the aid of power. The word ‘power’ is defined in Section 2(g) to mean ‘electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal agency.’ Sindri Fertilizer and Chemical Ltd v. Labour Commissioner, AIR 1959 Pat. 36; Hari Shankar Jain v. Executive Engineer, Rural Electrification Division, Etah, (1977) 2 LLJ 429 (Allahabad). Coimbatore Municipality v. Triruvenkataswami, (1973) 1 LLJ 82 (Madras). See U P State Electricity Board v. Hari Shankar Jain, (1978) 4 SCC 16. C L Kannan v. ESL Corporation, AIR 1968 Mad. 280. See Hari Shankar Jain v. Executive Engineer, Rural Electrification Division (1977) 2 LLJ 429 (Allahabad), see also U P State Electricity Board v. Hari Shankar Jain, op. cit., supra note 10. Valsad Jilla Sahkor Bank Ltd v. D K Patil, 1991 Lab. IC 655. Proviso to Section 1 (3); see also, Shitla Prasad v. State of U P, (1986) Lab. IC 2025. Section 1 (4).

16 Section 13 B. 17 (1978) 4 SCC 16; see also Shitla Prasad v. State of U P, 1986 Lab. IC 2025. 18 See Roman Nambissan v. State Electricity Board, (1967) 1 LLJ 252 (Madras). 19 Section 14. 20 See Government of India, Indian Labour Year Book (1979), 310 (1982). 21 Hari Shankar Jain v. Executive Engineer Rural Electricity Division, (1977) 2 LLJ 429

(Allahabad). 22 Id. at 433.

CHAPTER

25 Concept and Nature of Standing Orders I. THE CONCEPT OF STANDING ORDERS A. The Definition Section 2 (g) of the Industrial Employment (Standing Orders) Act, 1946 (hereinafter referred to as IESOA) defines ‘standing orders’ to mean: Rules relating to matters set out in the Schedule Thus, the items which have to be covered by the standing orders in respect of which the employer has to make a draft for submission to the certifying officers are matters specified in the schedule.

B. Content of the Schedule The matters referred to in the Schedule are: 1. Classification of workmen, e.g., whether permanent, temporary, apprentices, probationers, or badlis 2. Manner of intimating to workmen periods and hours of work, holidays, pay-days and wage rates 3. Shift working 4. Attendance and late coming 5. Conditions of procedure in applying for, and the authority which may grant leave and holidays

6. 7.

Requirements to enter premises by certain gates and liability to search

Closing and re-opening of sections of the industrial establishment, and temporary stoppages of work and the rights and liabilities of the employer and workmen arising therefrom 8. Termination of employment, and the notice thereof to be given by employer and workmen 9. Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct 10. Means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servants 11. Any other matter which may be prescribed The enumeration of the aforesaid items is not exhaustive. There seems to be no reason for including certain items and excluding many other important items. If the object of the IESOA is to ‘give the workmen collective voice in defining the terms of employment and to subject the terms of employment to scrutiny of quasi-judicial and judicial authorities’, there is no reason to exclude many items from terms of employment and conditions of service. It is significant to note that Section 73 (1) of the Industrial Relation Bill, 1978 provided: (i) The Central Government shall, by notification, make standing orders to provide for the following matters, namely: (a) Classification of employees, that is to say: whether permanent, temporary, apprentice, probationers or badlis (b) Conditions of service of employees, including matters relating to the issue of orders of appointment of employees, procedure to be followed by employees in applying for, and the authority which may grant leave and holidays (c) Misconduct of employees, inquiry into such misconduct and punishment therefor (d) Superannuation of employees (e) Shift working of employees The aforesaid provisions could have given great relief to workmen but it lapsed after the dissolution of the Parliament. Quite apart from the aforesaid shortcomings, the matters enumerated in the Schedule have also been the subject-matter of judicial interpretation in a number of decided cases. Some of the items which invited the attention of the

Court may be noted: Item 5. In Bagalakot Cement Co. v. R K Pathan1, the Supreme Court has interpreted ‘condition’ in clause 5 of the Schedule ‘in a broad and liberal sense’2 so as to include leave and holidays3. In its view, ‘to hold otherwise would defeat the very purpose of clause 5’.4 Item 8. Prior to the Supreme Court decision in U P Electricity Supply Co. v. T N Chatterjee5, the Madras and Orissa High Courts were divided on the issue whether the word ‘termination’ in Item 8 included ‘termination of employment on attainment of age of superannuation’. Thus, in the Hindu v. Secretary, Hindu Office6, the management of the Hindu had framed certain standing orders, one of the clauses of which provided that every employee shall ordinarily retire from service after completing the age of 58 years or 30 years of unbroken service, whichever is earlier. A question arose whether such a clause in standing orders is covered by any of the items of the Schedule of the Act. The Madras High Court held that termination in Item 8 of the Schedule was wide enough to govern the case of superannuation. But in Saroj Kumar v. Chairman, Orissa State Electricity Board7, the Court took the contrary view. It held that ‘superannuation’ was covered by ‘termination’ in the Item. However, the controversy has been set at rest by the Supreme Court in U P Electricity Supply Co. v. Chatterjee.8 It related to retirement of certain employees on completion of the age of 55 years or 30 years of service. A question arose whether termination in Item 8 covered ‘superannuation’. The Court held that termination in Item 8 does not cover each and every form of termination or cessation of employment. In view of this it held that it did not cover ‘superannuation’ which is automatic and did not require notice or any act on the part of employer or workmen. The Court agreed that if termination is to be read in a wider sense as meaning employment coming to an end, there was no necessity to have Item 9 because dismissal would then be covered by termination.9 Item 9. The ‘misconduct’ under Item 9 for which an employee can be dismissed need not necessarily have been committed in the course of his employment. It is enough if it is of such a nature as to affect his suitability for a particular employment.10 Item 11. This item refers to ‘any other matter which may be prescribed.’ When the appropriate government adds any item to the Schedule, the relevant question to be asked would be whether it refers to the conditions of employment or not. If it does, it would be within the competence of the appropriate government to add such an item.11

II. NATURE OF THE STANDING ORDERS The nature of the standing order has assumed increasing importance in industrial law. It has also attracted the attention of tribunal and courts. An analysis of the decided cases relating to the nature of standing order reveals that different shades of opinion have emerged on the subject namely, it is: (i) statutory in nature, (ii) a special kind of contract, (iii) an ‘award’, and (iv) a form of delegated legislation. Let us turn to examine them.

A. Statutory in Character Prior to the Supreme Court decision, the High Courts were divided on this issue. Most of the high courts were tilted on the side of statutory nature of contract. In Tata Chemicals Ltd v. Kailash C Adhvaryar12, a question directly arose before the Gujarat High Court whether a contract can override the terms of the standing orders. The Court after considering the provisions of the Act opined that: … on a true construction of the various provisions of the Act, the standing orders when finally certified under the Act are binding on the employer and the workmen and govern the relations between the employer and the workmen and it is not open to the employer and the workmen to contract themselves out of the rights and obligations created by the standing orders.13 In Behar Journals Ltd v. Ali Hasan14, the division bench of the Patna High Court also spoke in similar terms: … the certified standing orders have statutory force and under the above standing orders, there is a statutory contract between the employer and the workmen. It could not, therefore, be possible in law for parties … to enter into a contract overriding the statutory contract as embodied in the certified standing orders and any contract contrary to the above orders must be ignored.15 The aforesaid line of view found the approval of the Supreme Court in Bagalkot Cement Company Ltd v. R K Pathan16. In this case, even though the question was not directly in issue, the Court dealt with the nature of standing

orders in the following words: The Act made relevant provision for making standing orders which, after they are certified, constitute the statutory terms of employment between the industrial establishments in question and their employees17. And while interpreting certain provisions of the standing orders, Justice Gajendragadkar observed: The object of the Act … was to require the employers to make the conditions of employment precise and definite. The Act ultimately intended to prescribe these conditions in the form of standing orders so that what used to be governed by a contract hereto before, would now be governed by the statutory standing orders…18 The aforesaid view was reiterated by the Supreme Court in Workmen of Dewan Tea Estate v. Their Management.19 In this case, a question arose whether any provision of the Act could have overridden the provisions of the standing orders. The Court held that the standing orders could only be overridden by specific provisions of the Act, which may have been introduced after the standing order was certified. In the course of judgement, the Supreme Court explained the nature of the standing orders in the following words: If the standing orders thus become the part of the statutory terms and conditions of service, they will govern the relations between the parties unless, of course, it can be shown that any provision of the Act is inconsistent with the said standing orders. In that case, it may be permissible to urge that the statutory provision contained in the Act should override the standing order which had been certified before the said statutory provision was enacted.20 In Western India Match Co. v. Workmen21, the Court spoke in similar terms: The terms of employment specified in the standing orders would prevail over the corresponding terms in the contract of service in existence on the enforcement of the standing orders.22 The Supreme Court in Sudhir Chandra Sarkar v. Tata Iron and Steel

Company23 has clearly stated that the conditions of service laid down in the standing orders is either statutory in character or has statutory flavour. Similarly, certified standing orders which statutorily prescribe the conditions of service shall be deemed to be incorporated in the contract of employment of each employee with his employer. This line of view was followed in later decisions.24 In U P State Bridge Corporation Ltd v. U P Rajya Setu Nigam S Karmchari Sangh25, the Supreme Court held that certified standing orders constitute statutory terms and conditions of service. A survey of the aforesaid decisions leads to the conclusion that the standing orders are statutory in nature and their violation is punishable under the Industrial Employment (Standing Orders) Act, 1946. In Rajasthan State Road Transport Corporation v. Krishna Kant26, the Supreme Court held: The certified standing orders framed under and in accordance with the Industrial Employment (Standing Orders) Act. 1946 are statutorily imposed conditions of service and are binding both upon the employers and employees, though they do not amount to statutory provision. Any violation of these standing orders entitles an employee to appropriate relief either before the forums created by the Industrial Disputes Act or the civil court where recourse to civil court is open according to the principles indicated herein. The aforesaid view was reiterated in RSRTC v. Deen Dayal Sharma27.

B. A Special Kind of Contract The other view is that standing orders are a special kind of contract. This view was expressed in Buckingham and Carnatic Co. v. Venkatayaga.28 Observed Justice Gajendragadkar: The certified standing orders represent the relevant terms and conditions of service in a statutory form and they are binding on the parties at least as much, if not more, as private contract embodying similar terms and conditions of service.29 However, the high courts were more specific on the holding that the standing orders are in the nature of contract. Thus, Madras High Court in Mettur Industries v. Verma30 observed:

Reading the Act as a whole, it is clear that the standing orders form part of the contract between the management and every one of its employees.31 Likewise, in Akhil Ranjan Das Gupta v. Assam Tribune32, Chief Justice Mehrotra speaking for the Assam High Court observed: the purpose of standing orders is to clarify the conditions of service and they are in the nature of a contract on which openly the employee enters into the service …33 Thus, it is evident that ‘though the certified standing orders have statutory flavour34, the Act is directed to get the rights of an employee under a contract defined’.35 This was also recognized by the Supreme Court in Guest Keen Williams Ltd v. Sterling and Others:36 The standing orders certified under the Act no doubt become part of the terms of employment by operation of Section 7, but if an industrial dispute arises in respect of such (standing) orders and it is referred to the tribunal by the appropriate government, the tribunal has jurisdiction to deal with it on the merits.37 In M P Vidyut Karmchari Sangh v. M P Electricity Board38, the question was whether the regulations made under Section 79 (c) of the Electricity (Supply) Act, 1948 would prevail over the standing orders framed under the Act of 1961. The Supreme Court held that, ‘for excluding the operation of the 1961 Act, it is imperative that an appropriate notification in terms of Section 2(2) of the 1961 Act is issued’. It has been further observed that the 1961 Act is a special law whereas the regulations framed by the board under Section 79(c) are general provisions. The maxim ‘generalia special bus non derogant' would, thus be applicable in this case. Following the aforesaid decision in Jabalpur Development Authority v. Sharad Shrivastava39, the Madhya Pradesh High Court held that SSOs will prevail over the Regulations of 1987 as these rules have not been notified under Section 2(2) of the Act of 1961. The publication of the rules in the gazette is not enough. These are required to be notified under Section 2(2) of the Act involving a conscious decision of the government in the labour department that the operation of the SSOs would be excluded and the rules would have predominance. From the above, it appears that the standing orders may also be of the

nature of special contract law.

C. Standing Orders: If ‘Award’ It is sometimes said that the nature of standing orders is like an ‘award’. This is argued on the basis of the provisions of Section 4 (b) which says that ‘It shall be the function of the certifying officer … to adjudicate upon the fairness and reasonableness of the provisions of any standing orders’ and also on the basis of judicial decision40 which rules that the function of the certifying officer is quasijudicial. However, standing orders cannot be an ‘award’ under Section 2 (b)41 of the Industrial Disputes Act, 1947.42

D. Standing Orders: If Form of Delegated Legislation Sometimes, it is also argued that standing orders under IESOA is a delegated legislation. It is argued on the basis of the provision that standing orders should contain every matter set out in the Schedule and it should as far as is practicable, conform to the Model Standing Orders. But, this contention cannot be upheld, particularly when the Act imposes a duty upon the employers to submit the draft standing orders to the certifying officer and that he is required to examine the fairness and reasonableness of the standing orders and is also empowered to amend the same if they are not ‘fair or reasonable’. These provisions do not conform that it is a delegated legislation. However, the Industrial Relations Bill, 1978 appears to have changed the nature of standing orders from statutory or contractual to one of delegated legislation which is evident from the provisions of Section 73 (1) and Section 73(2) of the Bill namely: The provisions of standing orders made under sub-section (1) may be modified by the employer, in relation to any industrial establishment or undertaking, if an agreement is entered into by him with the negotiating agent in relation to employees in such industrial establishment or undertaking for such modification … Further, provisions of Section 76 of the Bill which provides that: Every standing orders made by the Central Government under sub-section (1) of Section 73 shall be laid, as soon as, may be after it is made, before each house of Parliament. Further confirms that standing orders are in the nature of delegated legislation. Needless to mention that the Bill lapsed after the dissolution of Lok

Sabha. In RSRTC v. Deen Dayal Sharma43, the Supreme Court held that standing orders are not in the nature of delegated/subordinate legislation.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Bagalkot Cement Co. v. R K Pathan, AIR 1963 SC 439. Id. at p 443. Ibid. Ibid. U P Electricity Supply Co. v. T N Chatterjee, AIR 1972 SC 1201. The Hindu v. Secretary, Hindu Office, AIR 1961 Madras 107. Saroj Kumar v. Chairman, Orissa State Electricity Board, AIR 1970 Orissa 126. AIR 1972 SC 1201. Id. at 1208. New Victoria Mills v. Labour Court, AIR 1970 Alld. 210, 213. See, Rohtak & Hissar District Electric Supply Co. Ltd v. State of U P, AIR 1966 SC 1471–1477. Tata Chemicals Ltd v. Kailash C Adhvaryar, (1965) 1 LLJ 54 (Gujarat). Id. at 65. Behar Journals Ltd v. Ali Hasan, AIR 1959 Pat. 431. Id. at 433. Bagalkot Cement Company Ltd v. R K Pathan, (1962) 1 LLJ 203. Bagalkot Cement Company Ltd v. R K Pathan (1962) 1 LLJ 203 (SC). Id. at 208. Workmen of Dewan Tea Estate v. Their Management , AIR 1964 SC 1458. Id. at 2652. Western India Match Co. Workmen, AIR 1973 SC 2650. Id. at 2652. Sudhir Chandra Sarkar v. Tata Iron and Steel Company, (1984) 2 LLJ 223 (SC). The full bench of the Allahabad High Court in Srivastava (S P) v. Banaras Electric Light & Power Co. Ltd, (1968) 2 LLJ 483, took the view that standing orders would prevail over the terms of contract of service because: The intention of the legislature in providing for statutory standing orders and laying down the only mode in which they could be modified and attaching penal consequences to violations of standing orders was necessarily to prohibit terms of contract which clash with any of the standing orders. Any terms of a contract which contravene a standing order would be struck by Section 23 of the Contract Act also. This provision invalidates an agreement the object of which is, inter alia, ‘of such a nature, that if permitted, it

25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41

42 43

would defeat the provisions of any law.’ In Biswanath Das v. Ramesh Chandra Patnaik (1979) 1 LLJ 129, 132 (Orissa); one of the questions for consideration before the Court was whether the standing orders framed under the Industrial Employment (Standing Orders) Act, 1946 have statutory force? The Court answered it in affirmative and observed: The employer cannot enter into any agreement with a workman which is inconsistent with the standing orders. The violation of standing orders by the employer is a criminal offence. (2004) 4 SCC 268. (1995) 5 SSC 75. 2010 (5) SCALE 1. Buckingham and Carnatic Co. v. Venkatayaga, AIR (1964) SC 1272. Id. at 1275. Mettur Industries v. Verma, (1958) 2 LLJ 326. (1958) 2 LLJ 326 at 330. Akhil Ranjan Das Gupta v. State of Assam, (1965) 2 LLJ 614. Id. at 618. Yogendra Singh, ‘Nature of Standing Orders under the Industrial Employment (Standing Orders) Act, 1946’, 9 July (1967) 443, 451. C P Transport Services Ltd v. R G Patwardhan. (1957) 1 LLJ 27 (SC). Guest Keen Williams Ltd v. Sterling and Others, (1959) 2 LLJ 405. Id. at 411. (2004) 9 SCC 755: (2004) 2 LLJ 470. (2005) 1 LLJ 305. See Indian Air Gases Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503, 505. (Allahabad). Section 2 (b) of the Industrial Disputes Act, 1947 defines ‘award’ to mean: ‘an interim or final determination of any industrial dispute or any question relating thereto by any labour court, industrial tribunal or national industrial tribunal and includes an arbitration award made under section 10A’. See supra note 31. 2010 (5) SCALE 45.

CHAPTER

26 Certification Process— Its Operation and Binding Effect I. SUBMISSION OF DRAFT STANDING ORDERS BY EMPLOYERS The Industrial Employment (Standing Orders) Act (hereinafter referred to as IESOA) requires every employer of an ‘industrial establishment’ to submit draft standing orders, i.e., ‘rules relating to matters set out in the Schedule’ proposed by him for adoption in his industrial establishment.1 Such a draft should be submitted within 6 months of the commencement of the Act to the certifying officer. Failure to do so is punishable and is further made a continuing offence.2 The draft standing orders must be accompanied by particulars of workmen employed in the establishment as also the name of the trade union, if any, to which they belong.3 If the industrial establishments are of similar nature, the group of employers owning those industrial establishments may submit a joint draft of standing orders.4

II. CONDITIONS FOR CERTIFICATION OF STANDING ORDERS Section 4 requires that standing orders shall be certified under the Act if:

(a) provision is made therein for every matter set out in the Schedule which is applicable to the industrial establishment; (b) they are otherwise in conformity with the provision of the Act; and (c) they are fair and reasonable. Since the aforesaid conditions formed the nucleus of valid standing orders, it is necessary to examine them in the light of decided cases.

A. Matters to be Set out in the Schedule The draft standing orders should contain every matter set out in the schedule of the Act5 with the additional matters prescribed by the government6 as are applicable to the industrial establishment. And, according to Section 4, the standing orders shall be certifiable if provisions are made therein for every matter stated in the Schedule to the Act.

B. Matters not Covered by the Schedule The Schedule, it has been seen earlier, contains Clauses 1 to 10 which deal with several topics in respect of which standing orders have to make provision and Clause 11 refers to any other matter which may be prescribed. These items are not exhaustive and do not contain items on several subjects. The question then arises: whether it is permissible for the employers to frame standing orders in respect of the matters not provided in the Schedule of the Act ? The Supreme Court in UP Electric Supply Co. Ltd v. TN Chatterjee7 left the question open when it observed that it was unnecessary to decide the question as to whether in the absence of any item in the Schedule, any standing orders could be framed in respect of the matter which may be certified by the certifying officer, as fair and reasonable. On the other hand, the Supreme Court in Rohtak and Hissar Electric Supply Co. v. UP8 considered the question squarely and observed: Then in regard to the matter which may be covered by the standing orders, it is not possible to accept the argument that the draft standing orders can relate to matters outside the Schedule. Take, for instance, the case of some of the draft standing orders which the appellant wanted to introduce; these had reference to the liability of the employees for transfer from one branch to another and from one job to another at the discretion of the management. These two standing orders were included in the

draft of the appellant. These two provisions do not appear to fall under any of the items in the Schedule; and so, the certifying authorities were quite justified in not including them in the certified standing orders. and later added: … The employer cannot insist upon adding a condition to the standing orders which relates to a matter which is not included in the Schedule.

C. Conformity with the Provisions of the Act In Indian Express Employees Union v. Indian Express (Madurai) Ltd9, the Kerala High Court held that the framing of the standing orders is to be in conformity with the provisions of the Act. The same need not be in conformity with the appointment order or any office order of the establishment. In Rashtriya Chemicals and Fertilizers Ltd v. General Secretary, FCI Workers Union10, the division bench of the Bombay High Court held that the word conformity means that is should not be inconsistent. In other words, merely because the central standing orders prescribe age of 58 years, it does not mean that automatically anything other than 58 years is not in conformity. In Burn Standard and Company v. I T11, the Supreme Court deprecated the practice of correction of date of birth at the fag end of the career of an employee.

D. Conformity with the Model Standing Orders Where model standing orders have been prescribed, that draft submitted by the employers must be in conformity with the model standing orders provided under Section 15 (2) (b) ‘as far as it is practicable.’12 Conformity cannot be equated with identity.13 In other words, it does not mean that the draft standing orders must be in identical words but it means that in substance, it must conform to the model prescribed by the appropriate government.14 The expression ‘as far as is practicable’ also confirms the view.15 This expression indicates that the appropriate authority may permit departure from the model standing order if it is satisfied that insistence upon such conformity may be impracticable.16 There is, however, no provision in the Act for making more beneficial provisions of the model standing orders applicable in cases where the certified standing orders exist.

In the absence of such a provision under Section 15 (2) (b), a question arose whether the standing orders can contain matters not found in the model standing orders. This issue was raised in S K Seshadari v. HAL17. In this case, the standing orders of Hindustan Aeronautics Ltd, inter alia, provided the following acts and omission to be misconduct: Gambling and money lending or doing any other private business within the company's premises’. The validity of these provisions was challenged on the ground that the model standing orders do not provide that the aforesaid acts would constitute misconduct. Upholding the validity of these provisions, the Karnataka High Court observed: [T]he mere fact that the model standing orders do not provide for constituting particular act as misconduct, it does not mean that the standing orders cannot include such act or acts as constituting misconduct. Sub-Section (2) of Section 3 of the Act, merely provides that where model standing orders have been prescribed, the standing orders shall have to be, so far as is practicable, in conformity with such model standing orders. Model standing orders are framed in exercise of the rule-making power. The rules cannot restrict the scope and ambit of the provisions contained in the Act. Thus, the question as to whether the standing orders are within the ambit of power conferred in that regard by the Act, has to be determined with reference to the provisions contained in the Act, more especially with reference to the Schedule which forms part of the Act. Providing for certain acts and omissions in the standing orders not already provided in the model standing orders, does not make such a standing order invalid or beyond the power of the employer to make such a standing order. Applicability of the model standing orders depends upon the nature of the industrial establishment. This view is in conformity with the object and scheme of the Industrial Employment (Standing Orders) Act.

Model Standing Order Under the Act, model standing orders are framed and as soon as the Act applies to an industrial establishment. The employer is under an obligation to submit a draft amendment to the model standing orders as desired by him but the certifying officer has to certify the same. These model standing orders provide

for minimum decent conditions of service. The Act took the first step of compelling the employer to give certain minimum conditions of service. These model standing orders were framed as early as 1948 and there are minor amendments here or there. They have undoubtedly stood the test of the time. But as the industrial employees are becoming more and more aware of their rights and concept of social justice is taking firm root, it is time that these model standing orders are comprehensively reexamined and revised. In the course of discussions, the committee came across certain suggestions relating to conditions of service which may now appropriately find their place in the model standing orders. The model standing orders do not provide for any method or manner of recruitment, promotion, transfer or grievance procedure. Today, the employer enjoys an arbitrary discretion or an unfettered power of recruiting anyone he likes. This definitely results in favouritism, nepotism and class of loyal workers. It becomes counter-productive to healthy trade union activity.18 Recommendation of the Second National Commission on Labour: The commission has recommended that the appropriate government may also frame model standing orders, including the classification of acts of misconduct as major and minor, and providing for graded punishments depending on the nature and gravity of the misconduct, and publish them in the official gazette. Where an establishment has no standing orders, or where draft standing orders are still to be finalized, the model standing orders shall apply.

E. Fairness or Reasonableness of Standing Orders Prior to 1956, the certifying officer had no power to go into the question of reasonableness or fairness of the draft standing orders submitted to him by the employers. His only function was to see that the draft must incorporate all matters contained in the Schedule and that it was otherwise certifiable under the Act.19 Such a power was also not conferred upon the appellate authority. However, this provision did not provide adequate safeguards against unfair practices in the standing orders and, therefore, caused great hardship to workmen.20 In 1956, the Parliament amended the Act and thereby not only considerably widened the scope of the Act but also gave a clear expression to the change in legislative policy. Section 4, as amended by Act 36 of 1956, imposes a duty upon the certifying officer and appellate authority to adjudicate upon fairness and reasonableness of the standing orders.21 If they find that some

provisions are unreasonable, they must refuse to certify the same.22 While adjudicating the fairness or reasonableness of any standing orders, the certifying officer should consider and weigh the social interest in the claims of the employer and the social interest in the demand of the workmen.23 Thus, the Parliament confers the right to individual workman to contest the draft standing orders submitted by the employer for certification on the ground that they are either not fair or reasonable. Further, the workers can also apply for their modification and dispute the finality of the order of the appellate authority.

III. PROCEDURE FOR CERTIFICATION OF STANDING ORDERS When the draft standing orders are submitted for certification, the certifying officer shall send a copy of the draft to the trade union, if any, or in its absence to the workmen concerned, to file objections, if any, in respect of the draft standing orders, within 15 days of the receipt of the notice. He is further required to provide hearing opportunity to the trade union or workmen concerned as the case may be. After hearing the parties he shall decide whether or not any modification of or addition to the daft submitted by the employer is necessary to render the draft certifiable under the Act and shall make an order in writing accordingly. For the purpose he shall inquire (i) whether the said sanding orders are in conformity with the model standing orders issued by the government; and (ii) whether they are reasonable and fair. He shall then certify the standing orders with or without modification as the case may be. He shall send within 7 days authenticated copies of standing orders to employers and to the trade unions or other representatives of workmen.

IV. CERTIFYING OFFICERS: THEIR APPOINTMENT, JURISDICTION, POWERS AND DUTIES The ‘certifying officers’ under the IESOA mean a labour commission or a regional labour commissioner, and includes any other officer appointed by the appropriate government, by notification in the official gazette, to perform all or any of the functions of certifying officer under the Act.24 He is ‘the statutory

representative of the Society.’25 Section 11 (1) empowers certifying officer and appellate authority with all the powers of a civil court for the purposes of: (i) receiving evidence; (ii) enforcing the attendance of witnesses; and (iii) compelling the discovery and production of documents. He shall also be deemed to be the ‘civil court’ within the meaning of Section 345 and 346 of the Code of Criminal Procedure, 1973. The aforesaid power have been conferred upon the certifying officer and appellate authority so that they may summon any witness and may not find any difficulty in holding any inquiry when the draft standing orders are submitted for certification to the certifying officer.26 No oral evidence having the effect of adding to or otherwise varying or contradicting standing orders finally certified under the IESOA shall be admitted in any court.27 Thus, Section 12 bars oral evidence in contradiction of written standing orders.28 But there is no provision prohibiting written agreement. However, in case of conflict between the general conditions of employment and special terms contained in standing orders—a written contract, the terms of special contract would prevail.29 Section 11 (2) authorizes certifying officer and appellate authority to correct his own or his predecessor’s (i) clerical mistake; (ii) arithmetical mistake; and (iii) error arising therin from any accidental slip or omission.

Jurisdiction The Supreme Court in Bhilai Steel Project v. Steel Works Union,30 held that when standing orders are under consideration of the certifying officer and in the meanwhile if there is any amendment to the Industrial Employment (Sanding Orders) Act, though certifying officer had no jurisdiction at the time when he obtained the application to deal with the matter, during pendency of the application if the law is repealed and that law is to deal with such application, he can certainly entertain the same. Section 4, we have already seen, imposes a duty upon the certifying officer/appellate authority to: (i) see whether the standing order provides for every matter set out in the schedule, which is applicable to the industrial establishment; (ii) consider whether the draft standing orders are in conformity with the provisions of the model standing orders. If the certifying officer finds that some provisions of the standing orders as proposed by the employer relate to matters which are not included in the schedule, he may refuse to certify

them;31 and (iii) to adjudicate upon the fairness or reasonableness of the provisions of any standing orders. The aforesaid duties are mandatory32 to be performed by the certifying officer. Further, certifying officer/appellate authority is required to discharge these duties in a fair and quasi-judicial33 manner.

V. APPEALS AGAINST CERTIFICATION A. The Legislative Scheme Section 6 of the Industrial Employment (Standing Orders) Act, 1946, inter alia, provides that any person who is aggrieved by the order of certifying officer may ‘within 30 days from the date on which the copies are sent,’ file an appeal to the appellate authority. The scope of the aforesaid section was examined in Badarpur Power Engineers' Association v. Dy. Chief Labour Commissioner.34 In this case, the Delhi High Court held that: The word used in Section 6, on which emphasis has to be laid is ‘from’. Section 9 (1) of the General Clause Act clearly provides that when in any Central Act or Regulation the word used is ‘from’, then the first day in a series of days shall be excluded. Section 9 of the General Clauses Act was clearly applicable to the present case and the effect of the same would be that 7 January, 1991 had to be excluded while computing the period of limitation.

B. Finality of the Decision of Appellate Authority Section 6 also incorporates a finality clause namely that the decision of the appellate authority ‘shall be final.’ This provision means that there is no further appeal or revision against that order. This view finds support from Section 12 which lays down that once the standing orders are finally certified, no oral evidence can be led in any court which has the effect of adding to or otherwise varying or contradicting such standing orders. Section 6 read with Section 12 indicates that the finality given to the certification by the appellate authority cannot be challenged in a civil court. But the finality given to the appellate

authority order is subject to the modification by him.35

C. Appellate Authority: Its Nature and Constitution Appellate authority means an authority appointed by the appropriate government by notification in the official gazette to exercise in such areas as may be specified in the notification of the functions of the appellate authority under the Act. But, in relation to appeal pending before the industrial court or other authority immediately before the commencement of the Industrial Employment (Standing Orders) Amendment Act, 1963, that court or authority shall be deemed to be the appellate authority. A survey of the official statistics36 regarding persons authorized to act as appellate authority under the Act reveals that only in the state of Assam and Tripura, secretary of labour department acts as appellate authority. In remaining states/union territories, such power is exercises by quasi-judicial tribunals, like industrial tribunal/labour court. But, in the state of West Bengal, such power is vested in the High Court. Looking to the quasi-judicial function exercised by the appellate authority in many states, it is desirable if such functions are performed by the industrial tribunal/labour courts in Assam and Tripura.

D. Powers of the Appellate Authority An appellate authority can either confirm the standing orders in the form certified by the certifying officer or amend the said standing orders by making such modification thereof or addition thereto, as he thinks necessary so as to render standing orders certifiable under the Act.37 He has, however, no power to set aside the orders of certifying authority38. Likewise, it has no power to remand the case because it has a power whether to confirm or modify the award as it deems fit.39

E. Duties of the Appellate Authority The Act casts a duty upon the appellate authority to send copies of the order made by it to the certifying officer, employer and trade union or other prescribed representatives of the workmen within 7 days of the date of the order, ‘unless it had confirmed without amendment the standing orders as certified by the certifying officer, by copies of the standing orders as certified by it and authenticated in the prescribed manner.’40 The aforesaid provision is akin to a provision requiring the drawing up of

the degree in pursuance of the orders passed by a civil court. The Act requires the appellate authority to send copies to the authorities mentioned therein after effecting amendments or modification in terms of its order within 7 days of the order.41 In other words, the obligation to draw up standing orders in conformity with the orders passed in appeal is placed before the appellate authority and that obligation has to be discharged within the period of 7 days from the date of the order under sub-section (1).42

VI. DATE OF OPERATION OF STANDING ORDERS OR AMENDMENTS Section 7 sets out the date on which the standing orders or amendments made thereto would become operative. It provides that the standing orders shall come into operation on the expiry of 30 days from the date on which authenticated copies thereof are sent as required by sub-section (5) of Section 3, or where an appeal is preferred on the expiry of 7 days from the date on which the copies of the appellate order are sent under sub-section (2) of Section 6.43

VII. BINDING NATURE AND EFFECT OF CERTIFIED STANDING ORDERS There is no specific provision in the Act dealing with the binding nature and effect of standing orders. In the absence of any provision, courts have held that a standing order certified under IESOA is binding upon the employers and employees of the industry concerned. However, the decided case reveals that even though they are binding, they do not have such force of laws as to be binding on industrial tribunals adjudicating on industrial dispute.44 In Guest Keen Williams (Pvt.) Ltd v. P J Sterling45, Justice Gajendragadkar delivering the judgement of the Supreme Court explained the position: … the standing orders when they were certified became operative and bound the employer and all the employees.46 Buckingham and Carnatic Co. v. Venkatian47 spoke more in terms of the binding nature of standing orders:

The certified standing orders represent the relevant terms and conditions of service in a statutory form and they are binding on the parties at least as much, if not more, as a private contract embodying similar terms and conditions of service.48 But, in Tata Chemicals v. Kailash C. Adhvaryet49, the Gujarat High Court observed that: the standing order when finally certified under the Act becomes operative and binds the employer and the workmen by virtue of the provisions of the Act and not by virtue of any contract between the employer and the workmen.50 The Court added: The rights and obligations created by the standing orders derive their force not from the contract between the parties but from the provisions of the Act. They are statutory rights and obligation and not contractual rights and obligations.51 Whether certified standing orders govern the employees appointed before they become operative? This question has formed the subject-matter of controversy in number of decided cases. In Guest Keen Williams Pvt. Ltd v. P J Sterling52, the Supreme Court held that the retiring age fixed by the standing orders did not apply to the workmen appointed before their coming into operation and for them, a higher age of retirement was fixed as at the time when they were employed, there was no age of retirement. But, in Salem Erode Electricity Distribution Co. v. Their Employee Union53 and Agra Electric Supply Co. v. Alladin54, the Supreme Court made a departure from its earlier decision in Guest Keen Williams Pvt. Ltd supra. In the former case, the first standing orders were certified in 1947. The management wanted to modify the certified standing orders, on the subject of leave and holidays sometime in 1960 in respect of the new entrants preserving the old rules in respect of old workmen. The modification was negatived by the certifying officer and appellate authority. On appeal, the Supreme Court upheld those orders observing that standing orders certified under the Act must be uniformly applied to all workmen and it was not permissible for an industrial establishment to have two sets of standing orders to govern the terms and conditions of its employees. In the latter case, the first standing orders of the company were certified in 1951. In these standing orders, the age of

superannuation of employees was fixed at 55 years. Prior to 1951, there were no rules relating to superannuation. Three workmen who were appointed long before 1951 were retired from service in 1963 and 1964 on the ground that they had crossed the age of superannuation of 55 years. The workmen challenged the order retiring them from service on the ground that they were appointed before the making of the standing orders and were not governed by the rule of superannuation contained in them. The Supreme Court negatived the contention and ruled: [O]nce the standing orders are certified and come into operation, they become binding on the employer and all the workmen presently employed as also those employed thereafter in the establishment conducted by that employer. It cannot possibly be that such standing orders would bind only those who are employed after they come into force and not those who were employed previously but are still in employment when they come into force. Because in its view: [I]f the standing orders were to bind only those who are subsequently employed, the result would be that there would be different conditions of employment for different classes of workmen, one set of conditions for those who are previously employed and another for those employed subsequently, and where they are modified, even several sets of conditions of service depending upon whether a workman was employed before the standing orders are certified or after, whether he was employed before or after a modification is made to any one of them and would bind only a few who are recruited after and not the bulk of them, who though in employment, were recruited previously. Such a result could never have been intended by the legislature, for that would render the conditions of service of workmen as indefinite and diversified, as before the enactment of the Act.55 The aforesaid two decisions in Salem Erode Electricity Distribution Co. and Agra Electric Supply Co. were re-affirmed in UP Electric Co. v. Workmen wherein it was held ‘that it was not intended by the legislature that different sets of conditions should apply to employees depending or whether a workman was

employed before the standing order was certified of after, which would defeat the very object of the legislation’56. Here it is relevant to add that while the Guest Keen Williams Pvt. Ltd was decided before the 1956 amendment, the remaining three later cases were decided after 1956 amendment which empowered the certifying officer to go into the reasonableness or fairness of standing orders. In Sudhir Chandra Sarkar v. Steel Company Ltd57 reliance was placed on an earlier decision in Agra Electric Supply Company Ltd v. Alladin. Again, the aforesaid view was reiterated in Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar Union.58 Here, the Supreme Court held that once the standing orders are certified, they constitute the conditions of service binding upon the management and the employees serving already and in employment or who may be employed after certification.

VIII. POSTING OF STANDING ORDERS The Act imposes a duty upon the employer to put up the text of certified standing orders in English language and in the language of the majority of workmen on special boards maintained for the purpose, at or near the entrance through which the majority of workmen enter the industrial establishment and in all departments thereof where the workmen are employed.59 This section has been held to be merely directory but non-compliance with the direction may result in the employer not succeeding in satisfying the industrial tribunal that there is proper case for termination of service or other disciplinary action.60

1

Section 3 (1). See UP State Electricity Board v. Hari Shankar, (1978) 4 SCC 16. 3 Section 3 (3). 4 Section (4). 5 Section 3 (2). 6 MKE Association v. Industrial Tribunal, AIR 1959 Mysore 235, 236. 7 UP Electric Supply Co. Ltd v. T N Chatterjee, (1972) 2 LLJ 9. 8 Rohtak and Hissar Electric Supply Co. v. State of UP, AIR 1966 SC 1471. 9 1998 Lab. IC 529 (Kerala) 10 1997 LLR 654. 2

11 1995 (4) SC 23. 12 Section 3 (2); see also, Associated Cement Co. v. P D Vyas, AIR 1960 SC 665. 13 KKE Association v. Industrial Tribunal, AIR 1959 Mysore, 235, 236; Md. Yasin v.

Industrial Tribunal, (1975) 1 LLJ 100 (Orissa). 14 Associated Cement v. P D Vyas, AIR (1960) SC 665. 15 Supra note 5. 16 Rohtak and Hissar Electric Supply Co. v. UP, op. cit. 17 S K Seshadri v. HAL, (1983) 2 LLJ 410 at 411. 18 Government of Gujarat, Report of the Labour Laws Review Committee (1974) 63. 19 See S S Light Railway Co. Ltd v. Shadhara Saharanpur Railway Workers Union, (1969)

1 LLJ 734, 740 (SC). 20 Ibid. 21 Ibid. 22 See A G Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503 (Allahabad). 23 Western India Match Co. v. Workmen, AIR 1973 SC 2650, 2653. 24 Section 2 (c). 25 See Western India Match Co. v. Workmen, AIR 1973 SC 2650. 26 See Khadi Gram Udyog Sangh v. Jit Ram, (1975) 2 LLJ 413 (Punjab and Haryana). 27 Section 12. 28 J K Cotton Manufactures v. J N Tiwari, AIR 1959 Allahabad 639. 29 Ibid. 30 AIR 1964 SC 1333. 31 See Air Gases Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503, 505

(Allahabad). 32 Ibid. 33 Ibid. 34 (1993) Lab. IC 636. 35 See Shahdara (Delhi) Saharanpur Light Rly. Co. Ltd v. Saharanpur Rly. Workers

Union, (1969) 1 LLJ 741 (SC). 36 See Table 9.26 of the Indian Labour Year Book of 1979, 292–93 (1982). 37 Section 6 (1); See also, NGEF Ltd v. Industrial Tribunal, AIR 1970 Mysore 149, 150;

Bijli Mazdoor Sangh, v. UP Electricity Board, AIR 1970 Allahabad 589, 594; and see Khadi Gram Udyog v. Jit Ram, (1975) 2 LLJ 413 (Punjab and Haryana). 38 Khadi Gram Udyog Sangh op. cit., 415; see also Kerala Agro Machinery Corp. Ltd v. Industrial Tribunal, (1998) 2 LLJ 7 and Management of Manipal Power Press v. Sadananda Devadiga, (2004) LLR 644. 39 Management of Manipal Power Press v. Sadananda Devadiga and Others, (2004) LLR 644. 40 Section 6 (2).

41 See NGEF Ltd v. Industrial Tribunal, AIR 1970 Mysore 149, 150. 42 Id. at 150–151. 43 Section 7; See also Mohd. Yasin v. Industrial Tribunal, (1975) 1 LLJ 100 (Orissa) See

44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60

Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar Union, (1999) LLR 180 (SC). Co-operative Central Bank Ltd v. Addl. Industrial Tribunal, AIR 1970 SC 245, 253. Guest Keen Williams (Pvt.) Ltd v. P J Sterling, (1959) 2 LLJ 405 (SC). (1959) 2 LLJ 405 at 411. Buckingham and Carnatic Co. v. Venkatian, AIR 1964 SC 1272. Id. at 1275. Tata Chemicals v. Kailash C. Adhvaryer, (1965) 1 LLJ 54. Id. at 65. Tata Chemicals v. Kailash C. Adhvaryer, op. cit. Guest Keen Williams (Pvt.) Ltd v. P J Sterling, op. cit., 1279. Selam Erode Electricity Distribution Co. v. Their Employees Union, AIR 1966 SC 808. Agra Electric Supply Co. v. Alladin, (1969) 2 LLJ 540 (SC). Agra Electric Supply Co. v. Alladin, op. cit., 545. UP Electric Co. v. Workmen, (1972) 2 SCC 54 at 61. AIR 1984 SC 1164. (1999) LLR 180 (SC). Section 9. See Ismail Papamia v. Labour Appellate Tribunal, AIR 1969 Bombay 584–586.

CHAPTER

27 Modification and Temporary Application of Model Standing Orders I. MODIFICATION OF STANDING ORDERS A. Law and Policy The Industrial Employment (Standing Orders) Act, 1946 (hereinafter referred to as IESOA) has provided a speedy and cheap remedy to workmen to get their conditions of employment determined in the prescribed manner. Thus, the IESOA provides remedy to both employees and employers who desire any modification in the certified standing orders.1 The Act provides that the standing orders finally certified under the IESOA cannot be modified except on agreement between the employer and the workmen or a trade union or other representative body of workmen before the expiry of 6 months from the date on which the standing orders or the last modifications became operative. From this, it is evident that the Act does not place any restriction on the right of the employer or workman to apply for modification except, of course, in respect of the time limit of 6 months2. But even in respect of the time there is an exception; modification is permissible even before 6 months if there is an agreement between the parties. The policy underlying Section 10 is that modification should not be allowed within 6 months from the date when the standing orders or the last modification thereof came into operation3. The object of providing the time limit

was that the standing orders or their modification should be given a fair trial.4 However, decided cases5 reveal that an application for modification may be entertained where: (i) a change of circumstances has occurred, or (ii) where experience of the working of the standing orders last certified result in inconvenience, hardship, anomaly, etc., or (iii) where some fact was lost sight of at time of certification, or (iv) where the applicant feels that a modification will be more beneficial to the parties concerned or in the interest of the establishment.

B. Who May Apply for Modification Prior to 1956, the right to apply for modification was conferred on the employer alone. This remedy was hardly satisfactory. In order to remove this hardship, the Act was amended in 1956. The amended Act, inter alia, permits both the employer and workman to apply for modification of the standing orders. The use of the word ‘workman’ in some cases led to doubt whether a body of workmen could also exercise this right. In order to clarify this position, the 1982Amendment not only permits the employer and workmen but also trade unions or other representatives of the workmen to apply for modification of standing orders. Under Section 10 (2), an employer or workmen or trade union or other representative body of the workmen can apply for modification of the standing orders. This shows that it can even be workmen. The workmen need not be in sizeable number. Trade union can also be an applicant. It need only be a trade union registered under the Trade Union Act. The Act does not say that it shall have recognition or a representative character with substantial majority. It is obviously so because notice on such application for modification shall necessarily be given by the workmen or any one of the trade union to other trade unions or such other representatives of workmen in terms of Section 5 (2) read with sub-section (3) of Section 10. If the applicant is not the sizeable majority and majority of the workmen represented by other trade unions object to it, necessarily, the certifying officer can ascertain the will of the workers. Thus if application for modification is made by a minority union, the majority union can object to such modification.6

C. To Whom an Application for Modification May be Made The application for modification must be made to the certifying officer.

D. Procedure for Modification The application for modification of standing orders must be accompanied by 5 copies of the modification proposed to be made and where such modifications are proposed to be made by agreement between the employer and the workmen, a certified copy of that agreement shall be filed along with the application. Thus, the only way to give effect to the amendment was by resorting to the procedure of amendment contemplated by Section 10 of the Industrial Employment (Standing Orders) Act, 1946. Until the existing certified standing orders are suitably amended, the model standing orders could not be deemed to be applicable to the concerned establishment.7 The aforesaid provisions of the Act shall apply in respect of an application for modification as they apply to the certification of first standing orders.8 But, the said provision is not applicable to an industrial establishment in respect of which the appropriate government is the government of the state of Gujarat or Maharashtra.9

E. No Time-limit for Making Application In Indian Express Employees' Union v. Indian Express, Madurai, Ltd10, the Kerala High Court held that Section 19(2) does not lay down any time limit for making an application for modification of standing orders. The said application can be made after expiry of 6 months from the last modification. There is no bar to file an application for modification even after a decade.

F. Application of Principles of Resjudicata It has been held by the Supreme Court decision in SS Rly Co. v. Workers Union11 that it is doubtful whether principle analogous to resjudicata can be applied for modification of standing orders.

G. Powers of Certifying Officer/Appellate Authority In Falcon Tyres Ltd v. Falcon Tyres Employees' Union Mysore12, the petitioner-management filed an application seeking for modification before the certifying officer. The petitioner-management, wanted inclusion of standing order 19(d) in the matter of medical discharge which reads as under: All employees are required to undergo medical examination at the time of recruitment and shall be referred to the district

medical board by the company from time to time to determine the medical fitness of the workman to carry out the job for which he is recruited. If the employee is found medically unfit by the district medical board he shall be liable to be discharged from the company's services. If an employee is covered under ESI, his discharge will be in accordance with Regulation 98 of the ESI (General) Regulation. The draft clause was certified by the certifying officer. In appeal, the appellate authority modified the standing order certified by the certifying officer which read as under: All employees are required to undergo medical examination at the time of recruitment and shall be referred to the medical board by the company from time to time to determine the medical fitness of the workmen to carry out the job for which he is recruited. If an employee is found medically unfit by the medical board to carry out the job for which he is recruited, then he shall be given an alternative suitable job protecting his last drawn salary. On a writ petition filed against the order of the appellate authority, the Karnataka High Court held that the modification suggested by the appellate authority would virtually be an amendment directing the management to create an alternative suitable job in terms of the amendment. Such a modification cannot be termed as fair or reasonable in terms of the Industrial Employment (Standing Orders) Act, 1946. It cannot be said that the management should not have any concern for medically terminated employees but to compel an employer to create a post stands on a different footing rather than suggesting to the management to consider a case sympathetically in such cases, in the circumstances. The Court, therefore set aside the order of appellate authority and upheld the order of certifying officer.

II. TEMPORARY APPLICATION OF MODEL STANDING ORDERS Section 12 A deals with the temporary application of model standing orders to the industrial establishments. This provision applies between the period from the

date of the application of the Act to an industrial establishment and to the date on which the certified standing orders come into operation, under Section 7 of the Act. Since it takes time in the certification process, Section 12-A provides: Notwithstanding anything contained in Section 3 to 12, for the period commencing on the date on which this Act becomes applicable to an industrial establishment and ending with the date on which the standing orders as finally certified under this Act came into operation under Section 7 in that establishment, the prescribed model standing orders shall be deemed to be adopted in that establishment, and the provisions of Section 9, sub-section (2) Section 13 and Section 13-A shall apply to such model standing orders as they apply to the standing orders so certified. This Section provides that the model standing orders will be applicable to an industrial establishment during the period commencing on the date on which the Act becomes applicable to that establishment and the date on which the standing orders, as finally certified under this Act, came into operation13. To hold that the Act would not apply to industrial establishments which came into existence after the date of enforcement of the Act, would exclude practically all industrial establishments which came into existence after the Act was enforced and which had not framed standing orders and got them certified under the Act. This would defeat the intent underlying the Act.14 Be that as it may, these provisions shall not apply to an industrial establishment in respect of which the appropriate government is (i) the government of state of Gujarat and (ii) the government of state of Maharashtra.15 Where there are two categories of workers, namely, daily-rated and monthly-rated but the certified standing orders are in respect of daily-rated workmen only, then model standing orders may be made applicable to the monthly-rated workmen.16 The prescribed model standing orders have the same legal efficacy to govern the terms and conditions of service of industrial establishments to which the Act applies during the relevant period as the certified standing orders.17

1 2 3

See, Rohtak and Hissar District Supply Co. v. State of UP, AIR 1966 SC 1471, 1476. See SS Rly. Co. v. Workers Union, AIR 1969 SC 513. Ibid.

4 5 6 7 8 9 10 11 12 13 14 15 16 17

AIR 1969 SC 513 at 521. Ibid. Indian Express Employees' Union v. Indian Express (Madurai) Ltd, (1999) 1 LLJ 490 (Kerala). M C Raju v. Executive Director, (1985) 1 LLJ 210. Section 10 (3). Section 10 (4). 1998 Lab. IC 529. SS Rly. Co. v. Workers Union, AIR 1969 SC 513. (2006) LLR 129. Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar Union, (1999) LLR 180 (SC). Shitla Prasad v. State of UP, 1986 Lab. IC 2025. Section 12-A (2). Indian Iron & Steel Co. v. Ninth Industrial Tribunal, (1977) Lab. IC 607. Pallavan Transport v. Labour Court, (1984) 2 LLJ 132 (Madras).

CHAPTER

28 Interpretation and Enforcement of Standing Orders I. INTERPRETATION OF STANDING ORDERS Section 13-A provides that if any question arises as to the application or interpretation of standing orders certified under the Act, such question can be referred to a labour court, by any employer or workman or a trade union or other representative body of workmen, and on such reference, the labour court constituted under the Industrial Disputes Act, 1947 ‘after giving the parties an opportunity of being heard’,1 decide the question and such decision shall be final and binding on the parties. The expression ‘after giving the parties an opportunity of being heard’ has been differently interpreted. In Chipping and Painting Employers Association v. A T Zambre2, the Bombay High Court held that hearing the parties would not include leading evidence before the court for determination of disputed question of fact. On the other hand, in M/s Deoria Sugar Mills Ltd v. Deputy Labour Commissioner,3 the Allahabad High Court held that under Section 13, it is permissible for the workman concerned to produce any evidence which is relevant and related to workmen concerned and what was its probative value and whether it was sufficient to rebut the initial presumption in favour of the entry in the provident fund records. Section 13-A provides only for reference of a question as to the application or interpretation of standing orders certified under the IESOA and

the labour court is empowered to give its decision on the question so referred.4 The jurisdiction of the labour court is, therefore, confined to decide the question as to the application or interpretation of the standing orders which is referred to it.5 The decision of the labour court shall be final and binding on the parties.6 In Sri Ganpathi Mills Co. Ltd v. Presiding Officer, Labour Court,7 the second respondent and two other workers beat a co-worker Velu for union activities and caused him injuries. Velu withdrew the complaint but the management after initiating disciplinary proceedings dismissed the second respondent on the charge of riotous and violent behaviour. The labour court found that there was no riotous and violent behaviour and directed reinstatement. Aggrieved by this order, the management filed a writ petition in the Madras High Court. It was contended that the misconduct as projected against the second respondent, was not an enumerated misconduct under the standing orders and hence, the charges themselves were not entertainable. In order to deal with the contention, Clause 24 K of the standing orders is relevant and which is to the following effect: ‘drunkenness or riotous or disorderly behaviour during the working hours on any act subversive of discipline and/or efficiency’. The second respondent contended that the dispute was only between two workers and that it had taken place outside the premises of the mill, and hence could not be a subject-matter of any disciplinary proceeding. The Court found that this was not a case of assault between the workers regarding their private affairs. Indeed the assault related to union activities. As regards the place of occurrence, standing order 24K does not refer to any geographical or territorial limitations. It is not difficult to perceive a situation where the misconduct of an employee could take place outside and far away from the premises. The test is whether the conduct affects or tends to affect the establishment. The Court held that there was no basis in the finding of the labour court that the charges against the second respondent were not established. In Ashok Leyland Ltd, Madras v. Presiding Officer, Second Additional Labour Court, Madras8, the management dismissed a workman, who was a checker in the store of the company for fraudulently acknowledging delivery of challans without actually receiving the articles amounting to ₹1,15,500/- after holding an inquiry. Similar charges were also levelled against the receipt clerk but he was not found guilty in the inquiry hence no action was taken against him. The workman raised an industrial dispute. The labour court directed reinstatement of the employee without back wages but with continuity of service. Aggrieved by the same, the management filed a writ petition and the employee also filed a petition questioning that part of the award which held him

guilty of the charge levelled against him. It was, inter alia, contended that the order of dismissal did not disclose any aggravating circumstance in the conduct of the delinquent so as to justify an order of dismissal and hence, there was a violation of the standing orders. Rejecting the contention, the Madras High Court held that Standing Order No. 20 (iii) requires reference to be made to aggravating circumstances ‘if any’. If there are no such aggravating circumstances, it is not possible to expect any reference to be made in the order of dismissal. The very nature of delinquency is serious enough without any necessity to refer to any aggravating circumstances to justify the order of dismissal. The Court, accordingly, set aside the order of the labour court and sustained the order of dismissal passed by management. In NDMC v. Mohd. Shamim,9 the Delhi High Court held that under Section 13A of the Industrial Employment (Standing Orders) Act, 1946, only the labour court and not the industrial tribunal is empowered to entertain an application for interpretation of certified standing orders. In Madhya Pradesh State Electricity Board v. S K Yadav10, the Supreme Court considered the effect of a certified standing order which provided that any employee who desired to obtain leave of absence ‘shall apply to the manager or the officer authorized by him. It shall be the duty of the manager or the officer to pass orders thereon on two days fixed for the purpose…’ Here the employee applied for leave but he was not communicated any decision thereon. In view of this, he contended that in the absence of any order of rejection, it should be deemed that the leave was sanctioned. The Court rejected the contention and held that non-compliance would not mean that he had been granted leave and he could be held to be unauthorizedly absent. Non-compliance therewith would not vitiate the ultimate order as the said provision must be held to be directory in nature and not mandatory.

A. Powers of the Labour Court Under Section 13-A Does Section 13-A of the IESOA provide a remedy for the enforcement of rights and liabilities created by the standing orders certified under the Act? This question arises because it is the only Section in the Act which confers a right upon the employer and workmen to refer the question as to the application or interpretation of standing orders certified under the act to the labour court. The Gujarat High Court11 has held that ‘there are no words in Section 13A which empower the labour court to grant redress for violation of the rights and obligations created under the standing orders.’ The Court added that no power to grant relief by way of enforcement of the rights and obligations created by the

standing orders can be implied merely from the conferment of the power on the labour court to decide any question as to the application or interpretation of standing orders which might be referred to it by the employer or workmen. The Court held that the labour court is not competent under Section 13-A to grant a declaration that the dismissal of the workmen concerned was illegal and that they continued in the employment of employer. Further, the Court ruled that labour court is empowered to direct the employer to pay to workman concerned his emoluments from the date of dismissal to the date of reinstatement. The high courts are, however, divided on the issue whether it is possible for a discharged or dismissed workman to approach the labour court under Section 13-A to get an interpretation about certain provisions of the standing orders. While the Rajasthan12 and Bombay13 High Courts answered it in affirmative, the Calcutta14 High Court took a contrary view. Labour courts under Section 13-A are, however, empowered to decide whether evidence is relevant to workman concerned and what is its probative value and whether it is sufficient to rebut the initial presumption in favour of the entry in the provident fund record.15 The Supreme Court deprecated the tendency of some public sector undertakings to continue archaic standing orders reminiscent of the days of hire and fire in utter violation of the principles of natural justice. Thus, in Workmen of Hindustan Steel v. Hindustan Steel Ltd16, the Supreme Court was invited to determine the scope of Standing Order No. 32 of the Hindustan Steel Ltd,—a public sector undertaking which enjoins the general manager to dismiss an employee by merely recording the reasons for dispensing with inquiry if it is inexpedient or against the interest of security to continue to employ the workman. The Court held that this provision of standing orders was violative of the principles of natural justice. In view of this, the Court emphasized the need to recast Standing Order No. 32 in order to bring it in conformity with the philosophy of the Constitution. The question whether para 3 of the Standing Order No. 17 implies second opportunity given to the delinquent, was answered in the negative by the Supreme Court in Associated Cement Co. Ltd v. T C Srivastava.17 Speaking for the Court, Justice Tulzapurkar observed: On a plain reading of the relevant words, no second opportunity of showing cause against the proposed punishment is contemplated either expressly or by necessary implication. In other words, it is clear to us that the opportunity spoken by Para3 of Standing Order No. 17 is the opportunity to be given to the

delinquent to meet the charge framed against him. In M/s Glaxo Laboratories (I) Pvt. Ltd v. Presiding Officer, Labour Court,18 a question arose ‘whether the charges imputing misconduct as found by the appellant company would be covered by the Clauses 10, 16, 30 of the Standing Order 22’. The Supreme Court ruled that; the misconduct prescribed in standing orders which would attract a penalty should have a casual connection with the place of work as well as the time at which it is committed which would ordinarily be within the establishment and during duty hours. Even where the standing order is couched in a language which seeks to extend its operation far beyond the establishment, it would nonetheless be necessary to establish casual connection between the misconduct and the employment. This casual connection must be real and substantial, immediate and proximate and not remote. The Court pointed out that normal approach in law to the construction of a standing order is that it would apply to the behaviour on the premises where the workmen discharge their duties and during working hours of their work. It added that the well-established canon of construction is that penal provisions must receive strict construction. Referring to clause 10 of Standing Order 22, the Court observed that it must be strictly construed so as not to comprehend any misconduct committed anywhere irrespective of the time-place-content where and when it is committed and merely has some remote impact on the ‘peaceful atmosphere in the establishment’. The expression ‘committed within the premises of the establishment or in the vicinity thereof’ are the words of limitation and a broad construction would make those words redundant. Clauses 16 and 30 form an integral part of the code and the setting and purpose underlying these two clauses must receive the same construction which Clause 10 received. Therefore, the charges against the workman would not be comprehended in Clauses 10, 16 and 30 of Standing Order 22 applicable to the appellant company. The scope of section 11C of UP IDA which is almost pari materia to Section 13-A came to be interpreted and considered by the Supreme Court in the UP State Road Transport Corporation v. UP Rajya Parivahan Karmchari Union19. In this case the Court, while setting aside the decision of the labour court in a case where it had declared a contractual workman to be treated as regular workman has held thus: In our opinion, the power of the labour court under Section 11-C of the UP Industrial Disputes Act or under Section 13A of the Industrial Employment (Standing Orders) Act, 1946 is much narrower than the power of the labour court on a reference under

Section 10 of the Industrial Disputes Act which corresponds to Section 4-K of the U P Industrial Disputes Act. The question about the jurisdiction of labour court under section 13-A of IESOA again came up for consideration in Triveni Engineering & Indust. v. Jaswant Singh20. In this case, respondent No. 1 who claimed to be a workman of the appellant was transferred during the course of his employment, but he did not join the place of transfer. Thereupon, the appellant terminated his services. Being aggrieved by the order of termination of his services, he filed a writ petition in the Allahabad High Court challenging the transfer order as also the termination order issued by the appellant herein. He contended, inter alia, that the standing orders contain no provision for the transfer of a workman from one sugar factory to another, and therefore, his transfer was against the law. Therefore, his services could not have been terminated for not joining at a place of transfer. The appellant on the other hand took a plea that the respondent was not a ‘workman’. The High Court disposed of the writ petition leaving the respondent at liberty to move a representation before the labour commissioner, Kanpur, UP in term of Clause ‘W’ of the standing orders applicable. A representation in terms of the said order was filed by the respondent. It was contended before the labour commissioner by the appellant that respondent number 1 was not a workman, and therefore, the labour commissioner had no jurisdiction to adjudicate the representation under the provisions of U P Industrial Disputes Act, 1947, particularly in terms of Clause ‘W’ of the standing orders. The labour commission disposed of the petition, concluding that the question at hand related to whether respondent no. 1 was a workman under the UP Industrial Dispute Act, 1947. The labour commission held that the question whether the respondent number 1 was a workman or not could not be decided under clause ‘W’ of the standing orders, but instead should be determined by the labour court/industrial tribunal. Aggrieved by the order of the labour commission, respondent number 1 filed a writ petition challenging the aforesaid conclusions. The learned single judge, however, dismissed the said writ petition. Thereupon, the respondent filed a special appeal before the division bench of the Allahabad High Court. The division bench of the High Court set aside the orders of the labour commissioner as also of the single judge and remitted the matter back to the labour commissioner to decide the nature of service of respondent number 1 in accordance with law.

Being aggrieved by the said judgement and order, the special leave petition was filed in the Supreme Court. The Court ruled: Whether or not a person is a workman is a matter that relates primarily to facts and circumstances of the case. The same has nothing to do with the application and interpretation of the standing orders. What needs to be examined and looked into for deciding the aforesaid issue is the nature of job performed by the concerned person, duties and responsibilities vested in him and other such relevant material. In view of above, the Court held that the division bench of the High Court committed a mistake in determining the said issue as ancillary to that of the applicability and interpretation of the standing order. Further, the order of termination also could not have been examined and scrutinized as such power and jurisdiction is not vested with the labour commissioner. The Court accordingly set aside the judgment and order passed by the division bench of Allahabad High Court and upheld and restored the orders of single judge as also of the labour commissioner.

B. Powers of the High Court In U P State Bridge Corpn. v. UP Rajya Setu Nigam S Karamchyari Sangh,21 the respondent workmen did not attend their duties from certain date and presumably they had gone on strike in pursuance of their demands. Thereafter, the appellant corporation issued an order under clause L-2.12 of the certified standing orders of the company which provided: Any workman who remains absent from duty without leave or in excess of the period of leave originally sanctioned or subsequently extended for more than 10 consecutive days, he shall be deemed to have left the services of the corporation on his own accord, without notice, thereby terminating his contract of service with the corporation and his name will accordingly be struck off the rolls. It stated therein that if the workmen continued to absent themselves form work continuously for more than 10 days, it shall be presumed that they have left the services of the corporation without any notice and their services shall come to an end and their names shall be removed from the muster roll of the corporation.

However, when after repeated public notices the workmen did not resume duties, the corporation passed an order putting an end to the service of 168 workmen on the presumption that they had abandoned their services with the corporation on their own. However, no inquiry had been held before the services of the workmen were terminated. One such workman whose services were so terminated challenged the order of termination before the High Court, Lucknow bench. The Court dismissed the petition on the ground that the workman could raise an industrial dispute, if he so desired. Thereafter, the respondent union filed a second writ petition in the Allahabad High Court which was allowed. A single judge of the Allahabad High Court held that (i) the word ‘absence’ in the standing orders did not by itself mean abandonment of service, since the employees were on strike, it was not their intention to abandon service. (ii) resorting to strike was neither misuse of leave nor overstaying the leave. (iii) standing order had not made a provision as to how a strike had to be dealt with (iv) the strike resorted to by the workman was not an illegal strike and also participation in strike whether legal or illegal, did not and could not be said to amount to abandonment of service justified under Clause L-2.12 of the standing orders (v) at most, participation in illegal strike may amount to misconduct for which a punishment was provided under the standing orders after an inquiry. The Court accordingly held that the impugned order of termination was bad for non-compliance with principles of natural justice and, therefore, could not be sustained. A division bench of the High Court dismissed the petition. Aggrieved by this, the management filed an appeal in the Supreme Court. The Supreme Court held that the High Court had erred in exercising extraordinary jurisdiction under Article 226 of the Constitution by entertaining the writ petition of the respondent union at all. The Court observed that the dispute being an ‘industrial dispute’ both within the meaning of the Industrial Disputes Act as well as the UP Industrial Disputes Act, the rights and obligations sought to be enforced by the respondent union in the writ petitions were those created by the Industrial Disputes Act. In further added that in terms of the decision of the court in Premier Automobile Ltd v. Kamlekar Shantaram Wadke22 when the dispute relates to the enforcement of a right or an obligation created under the said Act, then the only remedy available is to get it adjudicated under the Act.

II. PENALTIES AND PROCEDURE The enforcement of law implies that there are penalties, in case it is not

complied with. The enactment of legislative measure is thus always accompanied by provision for specific penalties in case of violation of the provisions of the Act. Thus, Section 13(1) prescribes a fine extending to ₹5,000 on those employers who fail to submit draft standing orders under Section 3, or who modify their standing orders otherwise than in accordance with Section 10. If the offence is a continuing one, he shall be liable for further fine extending to ₹200 every day after the first during which the offence continues. The Act also imposes a fine extending to ₹100 upon employer who contravenes any provision for the finally certified standing orders under the Act. If the offence is a continuing one he shall be liable to a further fine extending to ₹25 everyday after the first during which the offence continues.23 But, in order to be prosecuted for the aforesaid offence, the prior sanction of the appropriate government is essential.24 However, no court inferior to that of a metropolitan magistrate or judicial magistrate of second class shall try any offence under this Section.25

III. REMEDIES FOR ENFORCEMENT OF RIGHTS AND LIABILITIES CREATED UNDER THE IESOA A. Civil Remedy under the IESOA The penal provisions, however, do not foreclose the civil remedy. The IESOA does not, however, invest the labour court with the power to grant relief in enforcement of rights and liabilities created by the standing order which requires to be given to the workman, such redress cannot be given by the labour court under section 13a.

B. Remedy for Enforcement of Rights and Liabilities Created under the Industrial Disputes Act, 1947 The Industrial Disputes Act, 1947, however, provides for relief to workmen affected due to violation of the provisions of certified standing orders. But, in order to do the same, an industrial dispute must be raised and the same must be referred by the appropriate government under Section 10 to the labour court for adjudication. Indeed, Section 7 read with Clause I of Schedule I empowers the labour court to adjudicate upon industrial disputes relating to ‘the property or legality of an order passed by an employer under the standing orders’.

C. Under the Civil Procedure Code Can a civil court entertain a suit with respect to dispute between employer and workman regarding enforcement of standing orders? This issue has been considered by the Supreme Court in Rajasthan SRTC v. Mohar Singh26. The Court held that if the infringement of the standing orders is alleged, the civil court's jurisdiction may be held to be barred but if the suit is based on the violation of principles of common law or constitutional provisions or on other grounds, the civil court's jurisdiction may not be held to be barred. If no right is claimed under a special statute in terms whereof the jurisdication of the civil court is barred, the civil court will have jurisdiction. The above view was reiterated by a three-judge bench of the Supreme Court in Rajasthan State Road Transport Corporation v. Bal Mukund Bairwa27. The Court ruled that if an employee intends to enforce his constitutional rights or a right under a statutory regulation, the civil court will have the necessary jurisdiction to try a suit. If, however, he claims his right and corresponding obligations only in terms of the provisions of the Industrial Employment (Standing Orders) Act, the civil court will have no jurisdiction. In view of this it would not be correct to contend that only because the conditions of service of workmen are otherwise governed by the standing orders certified under the 1946 Act, ipso facto the civil court will have no jurisdiction. In RSRTC v. Deen Dayal Sharma28, the Supreme Court held that it is the nature of right sought to be enforced which is decisive in determining whether the jurisdiction of civil court is barred or not.

IV. INSPECTION MACHINERY The effectiveness of law lies in its implementation. Its non-enforcement is the negative aspect of instrument of social control. The IESOA does not contain any provision for inspection machinery for the enforcement of the provisions of the standing orders. However, it is significant to note that the twenty-fourth session of the Standing Labour Committee in its meeting on 13–14 February 1966 at New Delhi suggested that the IESOA should be amended to provide for the appointment of inspectors to enforce the provisions of the Act.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Tata Chemicals Ltd v. Kailash C Advaryer, AIR 1964 Gujarat 265. Chipping and Painting Employers Associations v. A T Zambre, AIR 1969 Bombay 274. M/s Deoria Sugar Mills Ltd v. Deputy Labour Commissioner, 1977 Lab. IC 102 (Allahabad). Tata Chemicals Ltd v. Kailash C Advaryer, op. cit., 265, 75. Tata Chemicals Ltd v. Kailash C Advaryar, AIR 1964 Guj. 265. Ibid. 2003 LLR 88. 2003 LLR 784. 2003 LLR 524. (2009) 2 SCC 50. Ibid. See Mahalaxmi Mills Co. Ltd v. Labour Court, (1965) 1 LLJ 517 (Rajasthan). Chipping and Painting Employers' Association v. A T Zambre, AIR 1969 Bombay 274. S K Mukerjee v. Calcutta Electric supply Co. Ltd, (1969) 1 LLJ 603 (Calcutta). See Deoria sugar Mills Ltd v. Dy. Labour Commissioner, op. cit., 102. (1985) 1 LLJ 267. (1984) 2 LLJ 105. (1984) 1 SCC 1. 2007 (4) SCALE 302. 2010 (8) SCALE 113. (2004) 4 SCC 268. (1976) 1 SCC 496. Section 13 (2). Section 13 (3). Section 13 (4). (2008) 5 SCC 542. (2009) 4 SCC 299. (2010) SCALE 1.

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29 Role of Government Under the IESOA I. CONCEPT OF THE ‘APPROPRIATE GOVERNMENT’ The appropriate government has an active role to play in respect of application, addition and exemption of industrial establishment, addition of items in the Schedule and rule-making power. Before we turn to discuss these powers, it is relevant to note the definition of ‘appropriate government.’ Section 2 (b) of the IESOA defines ‘appropriate government’ to mean: in respect of industrial establishments under the control of the Central Government or a railway administration or in a major port, mine or oil field, the Central Government, and in all other cases, the state government. A comparison of the aforesaid definition with that of the definition of the ‘appropriate government’ in Section 2 (a) of the Industrial Dispute Act, 1947, reveals that two definitions are not similar. It is, therefore, necessary to amend the aforesaid definition on the lines of the definition in IDA. This amendment is necessary for the sake of uniformity in the enforcement of law.1

II. DELEGATION OF POWER

The appropriate government is empowered to delegate any power exercisable by it under the Act or any rules made thereunder,2 provided notification is issued in the official gazette specifying the matters in relation to which the powers are delegated and the conditions governing delegations. Such power may be delegated where appropriate government is Central Government to such officer or authority subordinate to the state government as may be specified in the notification.3 Where the appropriate government is a state government, by such officer or authority subordinate to it as may be specified in the notification.

III. POWER OF THE GOVERNMENT TO MAKE RULES Section 15 (1) of the IESOA empower the appropriate government to make rules for carrying out the purposes of the Act. In order to exercise the power, the following conditions must be complied with: (i) notification must be published in the official gazette before making the rules; and (ii) the representatives of both the employers and workmen are consulted.4

A. Power to Add Items in the Schedule Under its rule-making powers, the appropriate government can (i) add additional matter to be included in the Schedule of the IESOA; (ii) prescribe the procedure to be followed in modifying standing orders certified under the Act.5 However, before any rules are framed under this provision, the appropriate government is required to consult both employers and workmen.6 Decided cases reveal that enumeration of the items in the Schedule of the Act will not control or limit the width of the power conferred on the appropriate government by sub-section (1) of Section 15 and so, if it appears that the items added by the appropriate government have relation to conditions of employment; their addition cannot be challenged as being invalid in law.7 It is the discretion of the appropriate government to take a decision in respect of the matter whether or not such addition should be made.8 Hence, the reasonableness of such addition cannot be questioned because the power to decide which addition should be made has been delegated to the appropriate government by the Parliament.9 Further, having ‘regard to the development of industrial law in this country during recent years, it cannot be said that gratuity or provident fund is not a term or condition of employment in industrial establishments’.10 Similarly, it relates the age of superannuation or retirement to the conditions of employment in

industrial establishments.11

B. Power to Frame Model Standing Orders The Appropriate Government Act12 can also frame rules setting out model standing orders for the purposes of the Act. In pursuance of the power, the state governments have framed model standing orders applicable to workmen.13

C. Power to Prescribe Procedure and Fee The Act also empowers the appropriate government to (i) prescribe the procedure of certifying officers and appellate authorities;14 (ii) prescribe the fee which may be charged for copies of standing orders,15 and (iii) provide for any other matter which may be prescribed.16

D. Approval of the Legislature The Act requires that the approval of the legislature is essential whether the rules are framed by Central or state government. In case the rules are framed by the Central Government, it should be approved by both houses of the Parliament and where the rules are framed by a state government, they should be approved by the legislature of the state. The approval must be sought by laying down the same before the legislature concerned while it is in session for total period of 30 days which may be comprised in one session or in two successive sessions, and if, before the expiry of the session immediately following the session or the two successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, the legislature makes any modification in the rule or decides that rule should not be made, such rule shall be effective in modified form or be of no effect, as the case may be.17

IV. TIME-LIMIT FOR COMPLETION OF DOMESTIC INQUIRY There is no provision in the IESOA fixing a time-limit for completion of disciplinary proceeding by the employer. However, Section 75 (1) of Industrial Relation Bill, 1978 for the first time provided: Where any employee is suspended by the employer pending investigation or inquiry into complaints or charges of

misconduct against him, such investigation or inquiry, or where there is an investigation followed by an inquiry, both the investigation and inquiry shall be completed ordinarily within a period of 90 days from the date of suspension. The inclusion of aforesaid provisions in the IESOA, it is submitted, would protect the workers from undue harassment by the management.

V. PAYMENT OF SUBSISTENCE ALLOWANCE Prior to 1982, there was no provision in IESOA for subsistence allowance in case of suspension of an employee by the employer. However, the model standing orders provide for graded system of payment of subsistence allowance. But the incorporation of this provision created problems in the absence of any provisions in the IESOA. Further, the standing orders in the state of Andhra Pradesh provided for a subsistence allowance of 50 per cent for 30 days, 75 per cent for 365 days and 100 per cent beyond 45 days. Similar provisions also exist in Gujarat, Maharashtra, U P, West Bengal and Kerala. But they differ in several respects. In order to meet this situation, Section 10-A was inserted in the Industrial Employment (Standing Orders) Amendment Act, 1981. Sub-section (1) of Section 10A provides for payment of subsistence allowance at the rate of 50 per cent of wages for the first 90 days of suspension, which would thereafter be increased to 75 per cent of such wages for the remaining period of suspension provided such workman is not responsible for delay in the completion of the disciplinary proceeding.18 Under sub-section 2 of Section 10A if ‘any dispute arises regarding the subsistence allowance payable to a workman under subsection (1), the workman or the employer concerned may refer the dispute to the labour court constituted under the Industrial Disputes Act, 1947, within the local limits of whose jurisdiction in the industrial establishment wherein such workman is employed is situated and the labour court to which the dispute is so referred shall, after giving the parties an opportunity of being heard, decide the dispute and such decision shall be final and binding on the parties.’19 ‘Further, Section 10A(3) provides that notwithstanding anything contained in the governing provisions of this Section, where provisions relating to payment of subsistence allowance under any other law for the time being in force in any state are more beneficial than the provisions of this section, the provisions of such other law shall be applicable to the payment of subsistance allowance in that state.’20

Scope of Section 10A(1) The scope of the Section 10-A of the Industrial Employment (Standing Orders) Act, 1946 was examined in Bibhu Deb Roy v. J M Savery.21 The grievance of the plaintiff was that he was under suspension although there was no provision in the local staff manual of the company for subsistance allowance permissible under Section 10-A. The Gauhati High Court held that (i) The payment of subsistence allowance follows from suspension and an employee cannot be deprived of this right; and (ii) For ends of justice, the principles laid down under Section 10-A of the Industrial Employment (Standing Orders) Act, 1946 should be followed in quantifying the payment of the amount of subsistence allowance per month. In Automative Manufacturing Ltd v. Member, Industrial Court22, the Bombay High Court while dealing with the scope of section 10A (1) held that the order of the Industrial Court to pay 100 per cent subsistence allowance could not be sustained in view of Section 10-A of the Industrial Employment (Standing Orders) Act, 1946. The Court, however, upheld the direction of the industrial court to pay subsistance allowance on revised rate of salary. In May & Baker Limited v. Kishore Jain Kishan Dass Icchaporie,23 the workman was charge-sheeted for certain misconduct and was suspended from service. During the period of suspension, he was paid suspension allowance as per the provisions of certified standing orders applicable to the establishment. The workman filed an application before the labour court under Section 13-A, contending that he was entitled to subsistence allowance under the model standing orders, as amended under the Bombay Industrial Employment (Standing Orders) Rules, 1959, being more beneficial. The labour court rejected the contention. However, the single judge of the Bombay High Court, on a writ petition, reversed the order of the labour court. The division bench of the Bombay High Court, on appeal, held that the model standing orders, as also the certified standing orders are laws under the provisions of the Industrial Employment Standing Orders Act, 1946 and not provisions ‘under any other law’. The Court accordingly held that Section 10-A superceded in relation to the payment of subsistence allowance over the provisions of the model standing orders.

Scope of Sub-section 2 of Section 10A In Vijaya Bank v. Shyamal Kumar Lodh24 the Supreme Court determined the scope of sub-section 2 of section 10A (cited above). In this case the respondent,

an employee of appellant bank, filed an application before the labour court, Dibrugarh constituted by the state government for an award computing his suspension/subsistence allowance. The appellant-bank challenged the jurisdiction of the labour court to adjudicate the dispute on the ground that the said court has not been specified by the Central Government under Section 33 C(2) of the IDA, and therefore it had no jurisdiction to entertain the application. The labour court rejected the contention. Thereupon, a writ petition was filed in High Court which held that the labour court at Dibrugarh had not been specified by the Central Government and therefore it had no jurisdiction to entertain the petition filed by the employee. It however, added that as the branch of the bank where the employee was working fell within the limits of jurisdiction of labour court in question, it shall have jurisdiction to decide the claim whether labour court at Dibrugarh could have entertained the application under Section 10 of the Industrial Employment (Standing Orders) Act. An appeal was then filed before the Supreme Court. The Court observed that from a plain reading of the Section 10 A(2) of the aforesaid Act, it is evident that the labour court constituted under the Industrial Disputes Act, 1947 within the local limits of whose jurisdiction the establishment is situated, has jurisdiction to decide any dispute regarding subsistence allowance’. Referring to the case it observed: in the present case, undisputedly dispute pertains to subsistence allowance and the labour court where the workman had brought the action has been constituted under Section 7 of the Industrial Disputes Act, 1947 and further, the appellant bank is situated within the local limits of its jurisdiction. The workman had, though, chosen to file application under Section 33 C(2) of the Industrial Disputes Act but that shall not denude the jurisdiction of the labour court, if it otherwise possesses jurisdiction. The Court further observed incorrect label of the application and mentioning wrong provision neither confers jurisdiction nor denudes the court of its jurisdiction. Relief sought for, if it falls within the jurisdiction of the court, cannot be thrown out on the ground of its erroneous label or wrong mentioning of provision. The Court accordingly held that the labour court, Dibrugarh satisfies all the requirements to decide the dispute raised by the employee before it.

Effect of Non-payment of Subsistance Allowance The Supreme Court in Capt. M Paul Anthony v. Baharat Gold Nines Ltd25 held that non-payment of subsistence allowance is an inhuman act which has an unpropitious effect on the life of an employee. When the employee is placed under suspension, he is demolished and the salary is also paid to him at a

reduced rate under the nickname of ‘subsistence allowance’ so that the employee may sustain himself. The act of non-payment of subsistence allowance can be linked to slow poisoning of the employee, who if not permitted to sustain himself on account of non-payment of subsistence allowance, would gradually starve himself to death. The Allahabad High Court in Municipal Board, Amroha v. UP Public Service Tribunal26 ruled that non-payment of subsistence allowance during period of suspension would not ipso facto render the order of removal invalid unless coupled with real prejudice. The Rajasthan High Court in the case of RSRTC v. Dharamvir Singh,27 even liberalized the prejudice concept and probably felt that non-payment of subsistence allowance, other thing remaining the same, would only give a cause of action to the workman to claim the arrears of subsistence allowance not paid to him by initiating separate proceedings. On other limbs of this concept, if the employer denies the payment of subsistence allowance in the event of the workman not marking his attendance during period of suspension, it would not be proper.

Recommendation of the Second National Commission on Labour The Commission has recommended that any worker who, pending completion of domestic inquiry, is placed under suspension, should be entitled to 50 per cent of his wage as subsistence allowance, and 75 per cent of wages for the period beyond 90 days if the period of suspension exceeds 90 days, for no fault of the worker, however the total period of suspension shall not, in any case, exceed one year. If as a result of continued absence of the worker at the domestic inquiry or if the inquiry and disciplinary action cannot be completed in time for reasons attributable wholly to the worker's default or intransigence, the employer will be free to conduct the inquiry ex-parte and complete the disciplinary proceedings based on such ex-parte inquiry and further, there would be no increase in subsistence allowance beyond 50 per cent for the period exceeding 90 days in such cases.

1 2

See Memorandum of 31st Session of the Labour Ministries’ Conference, Government of India, SIMC, July (1980). Section 14-A.

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Section 14-A. Section 14A. Section 15 (1). Section 15 (2)(a). Rohtak and Hissar District Electric Supply Co. v. State of UP, AIR (1966) SC 1471, 1478. Ibid. Ibid. Rohtak and Hissar District Electric Supply Co. v. State of UP, AIR (1966) SC 1471, 1478. Ibid. Section 15 (2). See Roman Nambisan v. Madras State Electric Board, (1967) 1 LLJ 252, 254 (Madras). Section 2 (c). Section 2 (d). Section 2 (c). See Section 15 (3). Section 10A (1). Section 10A (2). Section 10A (3). 1993 Lab. IC 534. (2009) 4 LLJ 153 (Bom.). 1991 Lab. IC 2066. 2010 (6) SCALE 300. AIR 1999 SC 1416. (2001) 2 LLJ 1221. (2003) (2) WLC 64 (Raj.).

PART V WORKERS’ PARTICIPATION IN MANAGEMENT

CHAPTER

30 Workers’ Participation in Management I. INTRODUCTION Rapid industrial development and attainment of economic self-reliance are the two major tasks which the country has set out to accomplish among others.1 The key to achieve these objectives is increased production. Output cannot be increased unless there is effective cooperation between labour and management at all levels. The way of ensuring this is to satisfy their social and psychological needs besides economic ones. Workers’ participation in management is one of the most significant modes of resolving industrial conflicts and encouraging among workers a sense of belongingness in the establishment where they work. It affords due recognition to the workers and enables them to contribute their best in all round prosperity of the country in general and industrial prosperity in particular. Moreover, in India which has launched a vast programme of industrialization, the need for workers’ participation is all the more important. It is in recognition of these needs that under the Second, Third, Fifth and Seventh plans, specific measures have been suggested for workers’ participation. The last five decades have witnessed a striking development in the arena of workers’ participation. Although the institution of works committee consisting of representatives of employers and workmen was provided as early as 1947 which sought ‘to promote measures for securing and preserving amity and good relations between the employer and the workmen and to discuss day-to-day problem of the industry’, the scheme of Joint Management Council, popularly known as workers’ participation in management, was introduced on voluntary

basis only after over a decade. However, the scheme of joint management council for various reasons could not succeed. In order to meet this unhappy state of affairs and to secure greater measure of cooperation between labour and management and to increase efficiency in public service, the Government of India on October 30, 1975 introduced a scheme of workers’ participation in management at shop floor and plant levels. In addition to these, there are voluntary schemes of making the workers shareholders and directors in the board of management. The inclusion of the concept of workers’ participation in management in the Directive Principles of State Policy through the Constitution (Forty-second) amendment, Act, 1976 gave a momentum to the institution of workers’ participation in management. After the constitutional Amendment, the Central Government expressed its intention to amend the 1975-scheme and to provide for effective participation of workers in production processes and accordingly amended the scheme in January 1977. An analysis of the existing statutory and non-statutory schemes of workers’ participation in management reveals that the parties are dissatisfied and critical of the existing schemes. It is, therefore, desirable to identify the framework of participation including the various schemes of participation and the problems connected thereto. This chapter seeks to examine and evaluate the working of various statutory and non-statutory schemes of workers’ participation in management in operation in Indian industries.

II. CONSTITUTIONAL COMMITMENT The Constitution (42nd Amendment) Act, 1976 makes a pioneering attempt to provide for workers’ participation in management in industry by suitable legislation in the Directive Principles of State Policy. Thus, Articles 43-A of the Constitution (42nd Amendment) Act, 1976 provides: The State shall take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organizations engaged in any industry. The principle underlying the inclusion of workers’ participation in the Directive Principles of State Policy is to give due recognition to the workers and to create among them a sense of partnership. It being a constitutional imperative,

the State is under an obligation to take suitable measures, legislative or otherwise, to secure effective workers’ participation in management. But mere inclusion of constitutional or statutory provisions would not serve the purpose. There is a need not only to evolve a suitable and workable statutory scheme of workers’ participation in industry but also a responsible trade union and equally responsible and considerate management to fulfil the cherished objectives of constitution-makers.

III. CONCEPT AND SCOPE Workers’ participation is a broad concept. It varies from country to country and industry to industry. Workers’ participation has been differently viewed by sociologists, psychologists, economists and lawyers. The sociologists view workers’ participation as an instrument of varying potentialities to improve industrial relations and promote industrial peace. The psychologists consider participation as a mental and emotional involvement of a person in a group situation which encourages workers to share managerial responsibility.2 According to them, workers’ participation is a psychological process by which workers become selfinvolved in an establishment and see that it works successfully. The economists think that the real basis of workers’ participation is higher productivity of labour and utilization of collective experience of workers in order to advance the qualitative and quantitative conditions of production. Lawyers, however, view workers’ participation as a legal obligation upon the management to permit and provide for involvement of workers of industrial establishments through proper representation of workers at all levels of management in the entire range of managerial action. Being a dynamic subject, no rigid limits can be laid down for workers’ participation for all industries and for all times. It can be elastic enough to include workers’ representation even at the top level, namely board of directors. It can also be confined to the extremely limited domain of consultation at the lowest level such as ‘to promote measures for securing and preserving amity and good relations between the employer and workmen and to that end, to comment upon matters of their interest or concern and endeavour to compose any material difference of opinion in respect of such matters.’3 Within the broad range mentioned above, the scope of workers’ participation varies from country to country not only in form but also in the

degree of participation. Workers’ participation in management has been classified into five stages. These are informative, consultative, associative, administrative and decisive participations, the extend of each depending upon the quality of management and the character of the employee.4 K C Alexander5 has, however, suggested different modes of workers’ participation viz., (i) collective bargaining, (ii) joint administration, (iii) joint decision making, (iv) consultation, and (v) information sharing. Issues over which the interests of workers and management are conflicting such as wages, bonus, working hours, holidays and leave, etc., are amenable through collective bargaining. On the other hand, issues over which both parties are equally concerned, such as the efficient management of provident fund money, canteen, labour welfare facilities, etc., would form subjects of joint administration, joint decision making or consultation. The difference between joint administration, joint decision making and consultation though narrow, is nevertheless significant. Whereas in joint administration workers and management jointly share responsibility and power of execution, in joint decision making, even though the two groups participate in deciding the policies, execution is generally carried-out by the management. In the consultation form, the management merely invites workers’ opinion or suggestions on certain matters of common interest but retains with itself the authority and responsibility of making decisions and executing them. According to Kenneth F Walker6, various forms of workers’ participation in management are ascending participation, descending participation, disjunctive participation and informal participation. In ascending participation, workers may be given an opportunity to influence managerial decision at higher levels, through their elected representatives to works committee, shop or joint council or board of the establishment. In descending participation, they may be given more powers to plan and make decisions about their own work. They may participate through collective bargaining. They may also participate informally when, for example, a manager adopts a participative style of supervision of workers. These and other forms of participation have played a significant role in transforming the scope and concept of workers’ participation.

IV. STATUTORY AND NON-STATUTORY SCHEMES Since independence, various schemes have been formulated by the Government of India to encourage workers’ participation in management, which are briefly given below.

A. Works Committee7 The scheme of joint consultation received legislative approval in 1947 when the government enacted the Industrial Disputes Act, 1947. Though a large number of committees were set up, the result of works committee were not commensurate with expectations. ‘Experience has shown that a major hinderance in the way of effective functioning of works committees is the lack of clear-cut demarcation between committees’ responsibilities and responsibilities of trade unions operating in the field.

B. Joint Management Council In 1958, joint management councils were introduced. The JMCs were entrusted with the administrative responsibilities for various matters relating to welfare, safety, vocational training, preparation of schedule of working hours and holidays. There were to be consulted in matters of change in work operation, general administration and alteration in standing orders, rationalization, closure, etc., to encourage smooth work operations and enhanced productivity. The JMCs should consist of equal number of representatives of management and workers. Representation of workman to the JMCs was based on nominations by recognized trade unions. JMCs did not receive much support from unions or management. It was alleged that JMCs and works committees appeared similar in scope and function and that multiplicity of bipartite consultative bodies served no purpose and where the membership strength of unions were disputed, composition of the council became a contentions issue.8

C. The 1975-Scheme of Workers’ Participation in Industries 1. The Need The introduction by the Government of India of the scheme of workers’ participation in industries at the shop and floor levels on October 30, 1975 opened a new chapter in the history of employer-employee relations in Indian industries. The other consultative machinery now existing are works committees and joint management councils. While the former is statutory and has been set up under the Industrial Disputes Act, 1947, the latter scheme like the present one is non-statutory. This scheme has been formulated to make the worker realize that he is a conscious participant in the society’s apparatus of production.9

A feature of the scheme is that there is no legal sanction. Further, it provides that the shop council should be set up at floor level and joint council at plant level. Moreover, the scheme has been designed to be a flexible one so as to allow variations to suit local conditions and for the system to work properly. The scheme also provides for its implementation through executive action.

2. Scope and Coverage The scheme applies in manufacturing and mining industries (whether in public, private or cooperative sector, including departmentally-run enterprises) employing 500 or more persons. In practice it is, however, found that though the scheme is confined to only manufacturing and mining industries, some other industries have also accepted the scheme.10 In 1977, the government extended the scheme to commercial and service organizations of the public sector. Some states have extended the application of this scheme even in establishments employing less than 500 workers. For instance, Punjab has extended the scheme in establishments employing 200 or more workers.

3. Shop Council a. Constitution. The scheme requires every industrial unit covered under the scheme to constitute shop council for each department or shop, or one council for more than one department or shop, depending upon the number of workmen employed therein. This would also include units run departmentally, whether or not joint management council was functioning in such units. The number of shop councils and departments to be attached to each council of the undertakings or the establishments shall be determined by the employer in consultation with the recognized union or the various registered trade unions, or with workers in accordance with the local conditions. The council shall consist of equal number of representatives of employers and workers not generally exceeding 12. The scheme, however, does not provide any minimum limit. The employer’s representatives are to be nominated by the management from amongst the personnel of the unit concerned. The workers’ representative would be taken from amongst the workers actually engaged in the department or shop concerned. b. Method of Working. The Council shall have among its office-bearers a chairman and a vice-chairman. The chairman of the council is to be nominated by the management. The vice-chairman is to be elected by the workers’ representative on the council. The term of the representative of the committee is

2 years and it should meet at least once in a month. The scheme also provides the manner in which the vacancy of a member of the council would be filled. All the decisions of council shall be taken on the basis of consensus and not by process of voting; but in case no consensus or agreement is reached, either party is allowed to refer the same to the joint council for consideration and decision. The concerned parties are required to implement the decision of the shop council within a period of one month unless otherwise stated therein. However, if the decisions of the shop council have a bearing on another’s shop or the undertaking or establishment as a whole, they will be referred to the joint council. But this again raises a question as to what would happen in case the parties failed to implement the unanimous decision of the council. The scheme is silent on it. c. Functions of the Shop Council. The main function of the shop council is to increase production, and overall efficiency of the shop or department in the following matters: (i) Assist management in achieving monthly/yearly production targets; (ii) Improvement of production, productivity and efficiency including elimination of wastage and optimum utilization of machine, capacity and manpower; (iii) Specifically identify areas of low productivity and take necessary corrective steps at shop level to eliminate relevant contributing factors; (iv) To study absenteeism in shops, departments and recommend steps to reduce them; (v) Safety measures; (vi) Assist in maintaining general discipline in the shop/department; (vii) Physical conditions of working, such as lighting, ventilation, noise, dust, etc., and reduction of fatigue; (viii) Welfare and health measures to be adopted for efficient running of the shop/department; and (ix) Ensure proper flow of adequate two-way communications between the management and the workers, particularly on matters relating to production figures, production schedules and progress in achieving the targets.

4. Joint Council a. Constitution of Joint Council. Under the scheme, every industrial unit employing 500 or more workers is required to constitute a joint council for the

whole unit. The constitution of the council is on the pattern of shop council, which we have discussed earlier. b. Method of Working. The joint council shall have a chairman, a vicechairman and a secretary. The chief executive of the unit shall be the chairman of the unit. The vice-chairman is to be nominated by the workers’ representative of the council. The joint council shall also appoint one of its members as secretary. It is, however, not mentioned in the scheme as to whether the secretary would be chosen from amongst workers or employers’ representatives or by rotation. The tenure of office of council shall be 2 years, and the council is required to meet at least once in a quarter. The scheme envisages that all decisions of the council shall be taken on the basis of consensus, and not by a process of voting. There seems to be a lacuna in the scheme. It is not clear as to what would happen in case no consensus or agreement is reached in the joint council. Under the circumstances, it is suggested that in such a situation, the power to decide such questions should be left upon the board of management. In such cases, there should invariably be a workers’ representative on the board and he should have a say at the decisionmaking level. The scheme also provides that the decision shall be binding on the parties and shall be implemented within one month unless otherwise stated. This again raises a question as to what would happen if the parties are unable to implement the unanimous decision of the council. c. Functions of Joint Council. The main function of the joint council is to deal with matters relating to ‘(i) optimum production, efficiency and fixation of productivity norms of man and machine for the unit as a whole; (ii) functions of a shop council which have a bearing on another shop or the unit as a whole; (iii) matters emanating from shop council which remain unresolved; (iv) matters concerning the unit of the plant as a whole, in respect of matters relating to work planning and achieving production targets; more specially tasks assigned to a shop council at the shop/department level but relevant to the unit as a whole will be taken up by the joint council; (v) the development of skills of workmen and adequate facilities for training; (vi) the preparation of schedule of working hours and holidays; (vii) giving rewards for valuable and creative suggestions received from workers; (viii) optimum use of raw materials and quality of finished products; and (ix) general health, welfare and safety measures for the unit or the plant.’

5. Operation and Assessment of the Scheme

The scheme of workers’ participation which was introduced by the Government of India is voluntary and not compulsory. The reason for this seems to be the readiness on the part of employers of the establishments covered under the scheme to voluntarily implement the scheme and to accept the idea even without ascertaining the defects or practicability of the scheme. This is a very healthy trend. Some states have, however, made the scheme compulsory.11 There is yet another state which has even taken statutory measures to implement the scheme.12

D. Verma Committee (1977–78) In pursuance of the recommendation of the tripartite labour conference, Government of India constituted a Committee on Workers Participation in Management under the chairmanship of Shri Ravindra Verma, the then Minister of Labour and Parliamentary Affairs. The Committee recommended that the experience of voluntary schemes of participative management in the past had not been very happy. It was essential to introduce the scheme through legislation and it should be flexible. The Committee favoured the adoption of a three-tier system of participation at corporate level, plant level and shop-floor level. The scheme of participation would be introduced in undertakings employing 500 or more workers with an enabling provision to extend it to others employing at least 100 workers. It was recommended that 10 per cent of all new shares should be reserved exclusively as workers’ share and should be offered first to the workers of that company. It was suggested that an organization both at centre and in the states be constituted to monitor the implementation of the scheme of workers’ participation in management and also to review its working.

E. The 1983-Scheme of Workers’ Participation in Management A new comprehensive scheme of workers’ participation in management was notified by the Government of India on 30 December, 1983. The scheme is applicable to all public sector undertakings. The state governments and private sector enterprises have also been asked to implement the scheme. A committee consisting of representatives of the employing ministries, state governments, central public sector enterprises, central workers’ organizations and representatives of private sector manufacturers’ organizations was set up in August, 1984 to monitor the progress in the implementation of the scheme. According to 1987–88 (Annual Report of the Ministry of Labour) as per the

information available, 100 public sector enterprises have adopted the scheme of December 1983 at shop floor and plant levels. Another 33 public sector enterprises have implemented their own scheme/variant of scheme notified by the government. About 64 public sector enterprises have not been able to implement the scheme. Majority of large enterprises employing large number of persons and with larger investments, like SAIL, BHEL, IOL, HMT and Cement Corporation of India have implemented the scheme. No enterprise has implemented the scheme at board level. However, the scheme has no legislative backing. The workers and management have equal representatives in the shop/plant forums.

V MAKING WORKERS SHAREHOLDERS A. General The other method of involvement of workers in industries is to make them shareholders in the company. This may be done by allotting shares to workers and inducing them to buy equity shares. The management may promote the scheme by allowing workers to make payments in instalments. The company may also advance loan or even give financial assistance to such workers to enable them to purchase shares. The idea underlying the scheme is that workers can take more interest in the company for which they are working. This scheme was mooted in a background paper at one of the Indian Labour Conferences. According to the official spokesmen, the scheme would create a sense of partnership among workers and make them feel that they have certain interests in the concern to which they belong. It has also been asserted that by becoming shareholders, a sense of attachment will follow among workers and this will prompt them to work with dedication and sincerity for the prosperity of the establishment.

B. Working of the Scheme in Indian Industries As an experimental measure, the scheme of making workers shareholders was introduced in Sehgal Sanitary Fittings near Jullundur and 40 per cent of shares were allotted to workers. It has been found that the concern was doing well and was exporting goods and earning good profits.13 Similar experiment was also made in Rajasthan Spinning & Weaving Mills Ltd. Another private sector firm, a heavy machinery manufacturing firm in Rourkela has introduced a scheme

known as Employees’ Share Participation Loan Scheme.14 The Tamil Nadu Government also introduced a scheme of giving up to 24 per cent equity capital to the workers in the state-owned Cheran Transport Corporation and referred to it as a progressive step on the socialist path.15 It proposed to extend the scheme to other transport corporations.’16 Similarly, the State Trading Corporation, a public sector undertaking, offered equity shares to its employees in order to create a greater sense of involvement in the corporation.17

VI REPRESENTATION OF WORKERS ON BOARD OF DIRECTORS A. General One of the effective methods of inducing among the workers a sense of partnership and belongingness to the establishment is to involve them at the highest level of management namely, by giving them representation on the board of directors. It is claimed that this scheme will satisfy the ego of workers and will give them greater opportunity to realize their responsibility towards the industry in which they are employed. Subsequent to the nationalization of banks, under the Nationalized Banks (Management and Miscellaneous Provisions) Scheme 1970, the government required all nationalized banks to appoint employee directors to their boards, one representing workmen and the other representing officers. The scheme required verification of trade union membership, identification of the representative union and the appointment of a worker director from a panel of three names proposed to the government by the representative union. The tenure of an employee director was to be 3 years. This was the first major attempt to place representatives of workman on boards of public sector industries. The verification of membership continues to remain a major difficulty and process of appointment has been delayed. In retrospect, it is also evident that while the scheme clearly laid down procedure for appointment, etc., there was no clear enunciation of objectives of such participation or of the role and functions a workers director had to fulfill.

B. Working of the Scheme The Government of India on an experimental basis introduced a scheme for

appointing workers’ representatives on the board of management in two public sector undertakings,18 viz., Hindustan Antibiotics Ltd, Pimpri and Hindustan Organic Chemicals Ltd, Kolaba. The scheme envisages that the council will do its best to resolve problems at the shop floor level but in case no consensus or agreement is reached, the same will be referred to the board of management. The workers’ representative is to be nominated by the recognized union in the undertaking who is required ‘to submit a panel of name of three persons from whom one person is to be selected for nomination as director. For being eligible for nomination a person should have attained the age of 25 years, should have a minimum of 5 years’ service in the undertaking and should not attain the age of superannuation during his term of appointment as director.’19 The working group of the Administrative Reforms Commission also considered the feasibility of statutory representation of workers on the board of management of the companies. The Commission observed: ….. the time had not yet arrived for any such provision in our law. Nor did the demand for such representation on the board of management of companies appear to be particularly strong or insistent. We are inclined to take the view that it is only after further improvements have been made in workers’ right and more systematic and comprehensive use has been made of a wide range of joint determination within an enterprise in its day-to-day activities that statutory representation of workers in management of companies whether at the top (board), middle (executive management) or lower (shop floor) levels can be considered. Before any attempt is made to provide for statutory representations of the workers at any desired levels in company management, efforts should be made to improve the education and training of workers for some of the elementary tasks of management. We do not consider that it is necessary at present to provide in the Companies Act for compulsory representation of workers at any level of management. But it is our hope that it may be possible for the management of companies to increasingly associate the workers’ representatives particularly at the shop floor level so that all managements’ decisions that affect the interest of workers can be taken in the full light of discussion with workers’ representative.20 c. Conflict/Confusion. The appointment of workers as directors on the board of management raises several issues: First, selection of workers to the board of directors would lead to many complications. Various pressure groups

inside and outside the union will also claim representation on the board. Further, political affiliation of the trade union is likely to complicate the situation. Second, the role of workers’ directors will create difficult situations for the labour leader who will occupy such position. They would be misunderstood and misrepresented by both the labour and the management. It may also broaden gap between the workers and workers’ director and ultimately workers’ director will not have control over the workers whom he represents on the board. Third, workers will be primarily interested only in matters relating to or affecting employment, non-employment, terms of employment and conditions of service of any workman and they will hardly participate in other management functions of the concern as they will have neither knowledge nor interest in other activities. Matters relating to investment planning, production, sales, price policies, etc., will be of no interest to the labour leader. Fourth, it is difficult to say how far the workers’ director will share the responsibility of the industry jointly with other members of the board for matters adversely affecting the working class. Fifth, nomination of one or two workers’ representatives in the board of management would place them in minority while the decision would be taken by the majority. Sixth, multiplicity and rivalry among trade unions would lead to difficulties in selection of trade union. Further, the absence of statutory provisions for recognition of trade union would also make the selection of workers’ representative difficult.

VII WORKERS’ PARTICIPATION IN WINDING UP OPERATION A milestone in the area of workers’ participation in winding up proceedings was reached with the pronouncement of a majority judgement of the Supreme Court in National Textile Workers Union v. P R Ramakrishnan.21 Here, the Supreme Court, by a majority of 3 as against 2 ruled that merely because the right to apply for winding up a company is not given to the workers, it does not mean that they cannot appeal to support or oppose a winding up petition under Section 439 of the Companies Act. To deny the participation of the workers in the winding up proceedings would, according to the Court, violate the basic principle of fair procedure. Further, to hold that the workers, who have contributed to the building of the enterprise, have no right to be heard in the winding up proceedings would lead to demolition of the centre of economic power. In view of this, the Court held that: (i) the workers are entitled to appear at the hearing of

the winding up petition whether to support or to oppose it so long as no winding up order is made by the Court; (ii) the workers have a locus to appear and be heard in the winding up petition both when the winding up petition is admitted and when an order for advertisement is made as also after the admission and advertisement of the winding up of the company: (iii) if a winding up order is made and the workers are aggrieved by it, they would also be entitled to prefer an appeal and contend in the appeal that no winding up order should have been made by the company; and (iv) the workers have a right to be heard even when an application for appointment of a provisional liquidator is made in a winding up petition, because the appointment of a provisional liquidator may adversely affect the interest of the workers. Justices Venkataramaiah and A C Sen on the other hand, refused to concede any such right to the workers or their trade unions since they have not been given any right under the Companies Act. Venkataramaiah was of the view that once this right is conceded to workers, there would be no stopping point. He felt that there is no reason why such a right be not available to others like agents, dealers, consumers and the local community. Moreover, the workers have at their disposal the Industries (Development and Regulation) Act, 1951 under which they can ask the Central Government to take over their unit which is facing winding up. Sen was also not in favour of giving to employees the right to appear and convey their point of view to the Court particularly where it is of opinion that a proper disposal of the matter would require consideration of workers’ position also.

VIII. WORKERS’ RIGHT TO RUN SICK INDUSTRIES Navneet R Kamwni v. R R Kaniani22 is an epoch-making judgement on the workers’ right to run sick units. Here the Supreme Court, for the first time, conceded the demands of workers to own and manage a sick industry. The Supreme Court also reduced the value of ₹10 per share to ₹1 per share and directed the transfer of shares to the employees. The aforesaid line of thinking found expression in the summary of recommendations of the Inter-Ministerial Group on Industrial Restructuring wherein it is recommended that sick units which are taken over by workers’ cooperatives should be provided special concessions by the central government, financial institutions, banks and the state governments. Besides writing-off loans, National Renewal Fund can be utilized to provide equity to units managed

by workers’ cooperatives.

IX. PARTICIPATION OF WORKERS IN THE MANAGEMENT BILL, 1990 On 30 May, 1990 the aforesaid Bill was introduced in Rajya Sabha. Three reasons have been advanced for the introduction of such a bill, namely (i) It is a step required to be taken under Article 43 of the Constitution; (ii) The nonstatutory schemes for workers’ participation in management failed to provide an effective framework for meaningful participation of workers in management at all levels; and (iii) The statutory Works Committee has been proved to be ineffective.23 The Bill abolishes the institution of works committee under Section 3 of the Industrial Disputes Act, 1947. The proposed Bill extends to whole of India.24 It shall come into force on such date as the Central Government may notify. But the Central Government is required to give not less than three months’ notice of its intention so to do. However, the Central Government may fix different dates of application of different provisions of the Act and for different classes of industrial establishments.25

A. Constitution of Council The Bill requires every industrial establishment to constitute one or more ‘shop floor council’ at the shop floor level26 and an ‘establishment council’ at the establishment level.27 However, no ‘shop floor council’ is required to be constituted in an establishment having only one shop floor. The shop floor council and establishment council shall consist of equal number of representatives of employer and workmen.28 The number of representatives of employer and workmen is required to be determined by the appropriate government in consultation with the employer.

B. Mode of Representation The employer’s representatives should be nominated by the employer in the prescribed manner.29 The workmen’s representatives are either required to be elected from amongst the workmen of the industrial establishment by secret

ballot or nominated by registered trade unions, in accordance with the scheme.30 The aforesaid provision suffers from various defects: (i) It has failed to bring a uniform scheme for the mode of representation of workers in the council; (ii) It will bring rivalry among trade unions in those establishments that have more than one registered trade union and no recognized trade union; (iii) It has failed to provide any criteria for the nomination of representatives in establishments having more than one registered trade union; (iv) It does not lay down the qualifications of the representatives of workmen.

C. Method of Working Shop floor council and establishment council shall have a chairperson. The chairperson is to be chosen by and from amongst the members of the council.31 The terms of the members shall be 3 years from the date of the constitution of the council.32 The use of the expression ‘date of the constitution of council’ is deceptive. It is submitted that it should be read as date of nomination/election. However, a person representing the workmen shall cease to be a member when he ceases to be a workman in that establishment and such vacancy shall be filled in the prescribed manner. The vacancies of other members or chairperson shall be filled in accordance with the scheme. Every council in discharge of its functions and conduct of its business shall follow such procedure as laid down in the scheme.33 The meeting of the Council should be held as and when necessary but not less than 4 times in a year.34

D. Reference Where a matter under consideration before a shop floor council or establishment council is beyond its jurisdiction, a reference shall be made to the establishment council or the board of management respectively. However, on failure of agreement on any matter between representatives of employer and workmen’s representatives, such matter shall be referred to the employer for his decision.35 This provision places the employer on a superior position and is likely to be abused.

E. Powers and Functions of Shop Floor Council A shop floor council shall exercise such powers and function as it deems necessary in relation to (i) production facilities, (ii) storage facilities in a shop, (iii) material economy, (iv) operational problems, (v) control, (vi) hazards and

safety problems, (vii) quality improvement, (viii) cleanliness, (ix) monthly targets and production schedules, (x) cost reduction programmes, (xi) formulation and implementation of work system, (xii) design group working and (xiii) welfare measures related particularly to the shops.36

F. Powers and Functions of Establishment Council The establishment council has been conferred with wide powers and functions. These relate to operational areas, economic and financial areas, personnel matters, welfare areas and environmental areas.

G. Board of Management One of effective methods of inducing among the workers, a sense of partnership and belonging to the establishment is to involve them at the highest level of management namely, by giving them representation on the board of management.37 This is likely to satisfy the ego of workmen and give them greater opportunity to realize their responsibility towards the establishment in which they are employed. In order to meet the aspiration of workers and greater involvement in the management at the highest level, the Bill provides for the constitution of board of management of every body corporate owing an industrial establishment or establishments.38

H. Representation of Workmen and Other Workers The Bill provides for 25 per cent representation of ‘workmen’ and ‘other workers’ employed in that establishment on the board of management.39 The persons representing ‘workmen’ and ‘workers’ shall constitute 13 and 12 per cent respectively of the total strength of such board of management.40 However, in case of fraction of a number, such number shall be rounded off to the nearest whole number and, for this purpose, where such fraction is one-half or more, it shall be increased by a whole number and if such fraction is less than one-half, it shall be ignored. The board of management shall include at least one workman where the total strength of the board of management is not sufficient to give representation to any workman on the board.41

I. Mode of Representation of Workmen and Other Workmen The representatives of ‘other workers’ shall be elected by and from amongst the

other workers of the establishment/establishments by secret ballot.42 The workmen’s representative shall be elected by and from amongst the workmen of the industrial establishment or establishments by secret ballot, or nominated by the registered trade unions.43 From this, it is evident that the Bill adopts different standards for the representatives of ‘other workers’ and ‘workmen’. While the ‘other workers’ are to be elected by secret ballot, the representatives of workmen are either to be elected by secret ballot or nominated. This provision raises significant questions. How should the representative be chosen for establishments having more than one registered trade union? Can an establishment having a recognized trade union nominate the representative? It is submitted that the essential requirement of successful functioning of the board of management is the existence of a recognized trade union. It is this union alone which should nominate the representative of workmen.

J. Term of Workers’ Representatives Under Section 6 (4), the term of the officer or representatives of ‘workers’ is 3 years from the date of constitution of the board of management.44 However, a person representing the workmen or other workers shall cease to be a representative on the board of management when he ceases to be a ‘workman’ or ‘other worker’ in an industrial establishment owned by the body corporate. The vacancy, so caused, shall be filled in the prescribed manner.45 A perusal of the aforesaid provisions reveals that unlike Clauses (1), (2) and (3), Clause (4) of Section 6 uses the term ‘workers’ instead of ‘workmen’ and ‘other workers’ and thereby creates confusion. Further, 3 years from the date of constitution of the board of management raises a question as to whether board would be constituted after every 3 years. It is submitted that this provision should be amended to read as 3 years from the date of nomination/election.

K. Powers and Functions The workers’ representative is empowered to exercise all the powers and discharge all the functions of a member of the board of management. He shall also be entitled to vote.46 Quite apart from these powers and functions, the board of management is required to review the functioning of the shop floor council and the establishment council of the industrial establishment or establishments concerned.47

L. Enforcement of the Act

1. Penalties for Offences The enforcement of the Act implies that there are specific penalties in case of violation of the provision of the Act. The Participation of Workers in Management Bill, 1990, therefore provides for penal provision. Thus, Section 7 provides that if any person contravenes any of the provisions of the Act or the scheme made thereunder, he shall be punishable with imprisonment for a term which may extend to 2 years, or with fine which may extend to ₹20,000, or with both.

2. Offences by Companies If an offence under the Act is committed by a company, every person, who at the time when the offence was committed was in charge of, and was responsible to the company for conduct of the business of the company is liable.48 However, no person shall be liable if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.49 But the liability lies on the director, manager, secretary or other officer of the company, for any offence committed under the Act unless it is proved that the offence was committed with the consent, connivance or neglect of any officer concerned.

3. Cognizance of Offences Section 9 provides that no court shall take cognizance of any offence punishable under the Act except on a complaint made by or under the authority of the appropriate government.

M. Administration of the Act The effectiveness of law lies in its implementation. Its non-enforcement is the negative aspect of such instrument of social control. Under the Participation of Workers in Management Bill, 1990, the Central Government is the appropriate government for the administration of its provisions in relation to an industrial establishment. The Central Government is also the appropriate government in relation to an industrial establishment carried on by a company in which not less than 51 per cent of the paid-up share capital is held by Central Government and in relation to an industrial establishment owned by a body corporate having industrial establishment in more than one state. For other establishments, the state government in which such other establishments are situated is the

appropriate government.50 For administration, the Act provides for inspection machinery and for a monitoring committee. However till July 1999, it has not received the colour of the Act.

N. An Appraisal A perusal of Sections 8 and 9 reveals that unlike Section 7, these provisions do not specifically include offences committed under any scheme made under the Act. Further, the Bill does not provide for enhanced punishment in cases of previous conviction.

X STEPS TAKEN DURING 1996–97 The Government of India convened the 11th meeting of the Tripartite Committee on Employees’ Participation in Management on 3 October 1997 with the object of revising the Employees’ Participation in Management Scheme, 1983 which is currently operating in central public sector undertakings. Earlier, in February, 1996 under the Plan Scheme for Education and Training in order to promote employees participation in management ₹45,000/- were released to the Central Board for Workers’ Education to conduct training programmes.

XI AN EVALUATION It is felt that ‘workers’ participation in management introduced statutorily through the institution of works committee under Section 3 of the Industrial Disputes Act has not been successful.51 Further, ‘the voluntary schemes introduced in 1975, 1977 and 1983 have also not found many takers.’52 In view of this, the Second National Commission on Labour observed that the time has come for the government to enact a law to provide for participatory management at all levels keeping in mind the necessity to ensure that the responsibility and freedom to take managerial decisions are not fragmented to the detriment of the enterprise, the social partners or society at large. It accordingly recommended that the proposed Act be initially applicable to all establishments employing 300 or more persons. For smaller establishments, a non-statutory scheme may be provided. The system of recognition for the bargaining agent, as also the

information available under the check-off system will furnish enough data to select representatives of workers at each tier of participation.

1 2 3 4 5 6

7 8 9 10 11 12

13 14 15 16 17 18 19 20 21 22 23 24 25 26

Government of India, Approaches to the Fifth Plan 1974–79, 1. (1973). Keith Davas, Human Relations at Work. Section 3 of the Industrial Disputes Act, 1947. V G Mehtas, Labour Participation in Management, 20-21. K C Alexander, ‘Workers' Participation in Management’. The Economic Times (1971). Kenneth F Walker, Workers' Participation in Management in Practice: An I national Perspective. See also, Thakur & Sethi, ‘Industrial Democracy: Some Issues and Experience’. For details see Chapter 17, Section I. See Government of India, Report of the (First) National Commission on Labour (1969), 345. Government of India, Indian Labour Journal, 1148 (1976). The Tribune, January 1, 1976, 1. For instance, Orissa has made the scheme compulsory for state owned industrial undertakings. See The Tribune, January 12, 1976, 4. The Centre has approved the Rajasthan Government draft legislation on giving representation in joint management council employing 500 or more workers in the State. (See Indian Express, January 20, 1976, at p 7). D Sanjivayya, Labour Problems and Industrial Development in India, 51 (1970) The Economic Times, 1975. M R Meher, ‘Making Workers Shareholders,’ Indian Management, November 1974, 39. Ibid. See The Economic Times, November 14, 1976, 1. See The Hindustan Times, September 1, 1976. See Government of India, Annual Report (Vol. I) 1975–76 of the Ministry of Labour, 148 (1976). Government of India, Report of the Working Group on Company Law Administration, Administrative Reform Commission (1968), 39–40. (1983) 1 SCC 228. AIR 1989 SC 9. See Statements of Objects and Reasons. Section 1(2). Section 1(3). See clause 2(h).

27 Section 4(1). 28 Section 4(3). 29 Section 4(5). 30 Section 4(6). 31 Section 4(7). 32 Section 4(8). 33 Section 2(9). 34 Section 2(10). 35 Section 4(1). 36 Section 5(1) read with Schedule 1. 37 ‘Board of Management’ by whatever name called means ‘body which is entitled to

38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

exercise all or any of the powers and to do all or any of such acts and things as the body corporate is authorized by law under which it is incorporated, to exercise and do in relation to the industrial establishments owned by it’ [See Section 2 (b)]. Section 6. Section 6(1). Proviso to Section 6(1). Section 6(1). Section 6(2). Section 6(3). Section 6(4). Proviso to Section 6(4). Section 6(5). Section 6(6). Section 8(1). Proviso to Section 8(1). Section 2(a). See also Financial Memorandum. Govt. of India, Report of the (Second) National Commission on Labour, Vol. I (2002) p 1301. Ibid.