MODULE 1

What is Labour Law for? Articulating Labour Law’s Goals+ Labour, Employment and Contract

Davidov Article- The (Changing?) Idea of Labour Law,

Davidov aims to defend to labour law because it is under threat from government favouring free markets and from various
scholars. Many scholars believe that labour law is like an intervention and restricting the markets from working freely thereby
prohibiting the growth and affecting efficiency.

Davidov believes that equity and efficiency do not always conflict with each other. As these laws can aid in rectifying market
failures. Labour norms can promote efficient functioning of the market. He tries to rebut the other view which believes that
labour law tries to achieve equity at the expense of efficiency.

He believes that the above argument about market failure rectification does not apply to all labour legislations.

He also believes that efficiency should not be held to be the most important aspect, which would imply that inefficient labour
laws would have to be removed.

Workplace relationships are also a matter of human rights. In several European countries, attempts are made to argue labour
cases under the European Convention of Human Rights.

Divided into collective bargaining laws, laws which govern workplace safety, payment of wages etc., social security laws
dealing with insurance, provident funds, etc., and laws targeted at specific workers which require special protection such as
contract labour

Potential of abuse implicit in the subordinate relationship created by an employment contract. Courts have tentatively used
sec 23 of contract act to strike down unfair employment contracts as opposed to public policy. But this is has been used very
tentatively. Its use has not been sufficient to meet the concerns. Even now, certain concerns may not be struck down. Sec 28
(restraint of trade) may also be relied on.

Asymmetry of power was seen the most in industrial workforce, requiring the use of laws beyond conventional contract
principles. Labour law minimise the information asymmetries, transaction costs or monopoly power.

Two types of government mandates: basic mandates which give specific standards which must be complied with; and,
mandates which create a processing network which may level bargaining power between both parties.

HUGH COLLINS, EMPLOYMENT LAW

Employment Relation as a special case

I) LONG TERM (problematic: because people change jobs frequently, but the general trend is that the contract is to extend
for a significant period of time). In long term contract, employer might want worker to do more tasks while worker might be
lazy to do the work which he used to do.

b) ASSYMETRIC POWER BETWEEN PARTIES- employers have greater economic power. But workers with special skills
(such as footballer ) highly skilled professionals, etc.) may not suffer from this problem. But the terms of general contract
may still result in this, despite their special skills. They may not have the requisite skills to understand the legal terms. There
may be other pressures as well. Others say that dependency is only one of the sources of asymmetry of power. They believe
that labour law only covers those workers who have no bargaining power at all.

c) PRESENCE OF MARKET FAILURES: it reduces transaction costs, information asymmetry, address the problem of
incompleteness of contracts. Economic argument.

Another argument is that it mitigates the possibility of abuse by employer because of incomplete contracts.

Employment contracts do not generally cover all aspects. Not exhaustive. Incomplete by design. Do not specify what
instructions may be given.
(see page 9-10 of Hugh Collins article for Incompleteness and Authority)

d) SUBORDINATION-employers have right to issue commands. This can be potentially abused.

e) LABOUR IS NOT A COMMODITY-basic principles were contract were based on the idea of exchange of goods or
commodities. Workers sell their labour, but not themselves. There is a halfway margin. So problematic conceptually to assign
all contractual principles to labour laws. Conceptual disjoint is seen. The protection a human requires is different from the
protection required by commodities or chattel. Also, work becomes the place where workers spend most of their time. Social
development, social interactions, etc. So it deals with other aspects of life as well. Also, the salary paid often has a deep
impact on other aspects of a worker's life.

f) REDUCES TRANSACTION costs-collective bargaining with trade unions. Trade unions also aid in reducing information
asymmetry. Unions have access to legal service, which aid in informing workers of their rights. The union will also have
knowledge of profit turnovers to negotiate wages effectively.

ROSEMARY OWENS, JOELLEN RILEY AND JILL MURRAY, THE LAW OF WORK

The purpose of labour law in the global era is

a. The Protection of workers

b. Redistributive justice

c. Fostering social cohesion

d. Work as an expression of social citizenship

e. Social Inclusion and participation

f. Work and the protection of human rights.

g. Fostering competition in the marketplace

MODULE 2

1. CONSTITUTIONAL SCHEME RELATING TO LABOUR REGULATION IN INDIA

S.C. SRIVASTAVA, LABOUR,Constitutional Framework and Industrial Relations

The constitution has explicitly addressed labour concerns within its provision.

Prohibition of child labour-article 24

Prohibition of forced labour-article 23

Article 19, 21 and 14.

Directive Principles

Article 39:, 43, 41, etc. Courts have relied on these to give an expansive interpretation to labour concerns.

Fundamental rights are restrictions on legislations. Used to challenge them.

Distribution of legislative powers. Mostly found in the concurrent list. State amendments to Central Legislations. This has
increased flexibility to labour laws. Rule making powers have been vested in the 'appropriate government' which includes
both the Central and the State Government. The administrative power has been given the 'appropriate government,' so
includes both the Central and State Governments.
For example, the IT Act has been significantly amended by AP and Maharashtra Government.

This may also be a weakness. A state may try to dismantle labour norms to attract investment. Also, when businesses run in
different states, there may be significant differences in labour norms, thus increasing transactions.

1. Excel Wear v Union of India (1978) 4 SCC 224

Issue: Whether the restrictions imposed by section 25 (O) and section 25 (R ) are reasonable or not within the meaning of
article 19 (6).

Facts: The petitioners (employer) served a notice to the State government for approval of the intended closure in accordance
with section 25( O) of IDA. The state government refused to give approval on the ground that the intended closure was
prejudicial to public interest.

Decision: The contention on behalf of the employers was that a right to close down a business is an integral part of the right
to carry on the business under art 19 (1)(g). The impugned law imposes a restriction which is highly unreasonable, excessive
and arbitrary. Right to carry on a business includes the right not to carry on a business. The UOI contended that the
restrictions imposed by the impugned law are reasonable and justified to put a stop to the unfair labour practices and for the
welfare of the workmen. It is a progressive legislation for the protection of a weaker section of the society.

The court also cited Hatisingh case which says that the right to close down a business is an integral part of the right to carry it on.The
court said that a right to close down a business cannot be equated or placed at par with the right to not to carry on a business.
The court rejected the contention of the Labour Unions that right to close down a business is not an integral part of the right to carry on a business,
but it is a right appurtenant to the ownership of the property or that it is not a FR at all. It is wrong to say that an employer
has no right to close down a business once he starts it. The court further said that if the reasons for closure are correct, it
is preposterous to say that they are not adequate and sufficient for a closure. 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 civil liability, he incurs penal liability. The court declared that section 25-O of IDA as a
whole and section 25-R in so far as it relates to the awarding of punishment for infraction of the provisions of section 25-O
are constitutionally bad and invalid for violation of article 19(1)(g).

2. CONSTITUTIONAL SCHEME RELATING TO LABOUR REGULATION IN INDIA

PUDR v Union of India (1982) 2 LLJ 454 (SC)

In 1982 Asian Games were to be held in Delhi and construction for the games was happening at various places in Delhi.
PUDR filed a writ petition complaining of violation of various labour laws, seeking interference by the Supreme Court to
render social justice by means of appropriate directions to the affected workmen. Four major points can be derived from this
judgement.

1) The SC described the term ‘begar’ used in Article 23 of the Constitution in detail. Article 23 provides a fundamental ‘Right
against exploitation’ and makes a specific reference to the prohibition of bonded and forced labour. According to the SC
‘…where a person is made to work for less than the minimum wages, it would be considered forced labour as
required by Article 23.’ By this definition, forced labour includes giving less than the stipulated minimum wages, taking
advantage of workers’ extreme poverty and their powerlessness to bargain with the employer. Article 23 is clearly designed
to protect the individual not only against the State but also against other private citizens. That is, Article 23 can also
be read as prohibiting ‘traffic in human beings and begarand other similar forms of forced labour’ practiced by anyone else. So
the violation of the Minimum Wages Act, 1948 is a violation of the fundamental right under Article 23 of the Constitution.

The respondents argued that not every form of forced labour is prohibited by Article 23 but only which is similar to begar
and the current case doesn’t fall within the term “ other similar forms of forced begar”. Court held that this argument is
clearly in conflict with Manika Gandhi vs UOI which states that the court must expand the reach of fr instead of
attenuating their meaning and limiting the interpretation. The force under Article 23 can be of physical as well as compulsion
out of hunger etc.

2) Violation of Equal Remuneration Act, 1946, that is, not giving equal wages to male and female workers for the same work,
is a violation of right to equality under Article 14 of the Constitution.
3) The SC stated that through the Contract Labour (Prohibition and Regulation) Act 1970 and Inter State Migrant Workmen
(Regulation of Employment and Condition of Services) Act, 1979, the basic human dignity of the workers is ensured and
therefore their violation amounts to the violation of right to life and liberty under Article 21 of the Constitution.

4) The SC held the Central Government, Delhi administration and DDA responsible for these violations because as
principal employers they are responsible for ensuring that these rights are not violated. The court issued notices to the
above three and directed them to ensure that labour laws are adhered to. The court also said that the concerned authorities
should develop machinery through which it can investigate violations of the labour laws. It further directed that in case
violations occur, strict action should be taken against the contractors and the concerned officials.

The court also rebutted the argument of government that unless the objection arises out of violations of fundamental rights,
writ remedy under 32 cannot be invoked as the current objections are merely of labour law violations. Court held that the
violation of these labour laws is also leading to violation of frs like Article 14, Article 21, Article 23 and hence writ remedy is
well invoked.

Bandhua Mukti morcha and PUDR cases are important cases when it comes to interpretation of labour laws through
fundamental rights. Even though it is like an intrusion it is mandated by the constitution.

Visakha v State of Rajasthan AIR 1997 SC 3011: Guidelines on sexual harassment in the workplace. Absence of national
laws led to the use of International Conventions signed by India. It was a writ petition filed under article 32 after the gang
rape of a female social worker. Court recognized that absence of regulations could lead to a violation of fundamental rights.
The rights were used to create guidelines, rather than as a limitation on state power. Sexual assault is harassment and a form
of discrimination. Individuals can invoke Article 32. Where there were no norms, Supreme Court have used several
fundamental rights in making legislations. In the current case SC held that the directions under CEDAW would be binding
and enforceable in the law until suitable legislation is enacted to occupy the field.

3. GENERAL PRINCIPLES OF CONTRACT AND EMPLOYMENT LAW

Malik v BCCI [1997] 3 All ER 1

Facts: Collapse of BCCI happened and many people lost their jobs. Two of them claimed that their association with the bank
had place them in difficulty in finding new jobs. Mahmud worked for 16 years while Malik worked for 12 years.The
employees claimed damages, saying that their employer operated in corrupt and dishonest manner while the were innocent to
know this and now when they are out of the bank they are bearing, ‘stigma damages’ after the termination.

Held: It is an implied obligation under a contract of employment that the employer shall not without reasonable and proper
cause conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust
between employer and employee.

An employer might be liable in damages to an employee stigmatised by association with employers’ improper methods of
conducting business, even though he had only learned of the misdeeds after the termination. The breach of duty confidence
when the act took place, not later when the employee learned of it. ‘The motives of the employer cannot be determinative or
even relevant, in judging the employees’ claims for damages for breach of the implied obligation. If conduct objectively
considered is likely to cause serious damage to the relationship between employer and employee a breach of the implied
obligation may arise.’. They cited Scally case stating that all employees in a certain category had to be notified by an employer
of their entitlements to certain benefits. The major importance of the implied duty of trust and confidence lies in its impact
on the obligations of the employer.

Scally v Southern Health and Social Services Board

The plaintiffs were junior doctors employed by the respondents. Their terms had been collectively negotiated, and
incorporated the Regulations. During the period of their employment different regulations had given and then taken way
their right to purchase additional superannuation contributions. They could "top up" their superannuation by a lump sum
purchase of added years of superannuation entitlement within twelve months of beginning their first period of employment
in the Health and Social Services. Their employer did not inform them of this option within the twelve month time limit and
therefore they were not in a position to take advantage of the enhancement. They had not been told of the rights and had
failed to exercise them. They claimed damages for breach of contract and of statutory duty.
Held: The term was valuable and not negotiated with the plaintiffs. The defendants had a duty to bring the new rights to their
attention. ‘If a duty of the kind in question is not inherent in the contractual relationship, I do not see how it could possibly
be derived from the tort of negligence.’ The claims were not time barred because the obligation to inform had been
continuing.

Since the employee entitlement to enhance his pension right is of no effect unless he is aware of it which was not done by the
employer in the current case. The following means that relationship of employer and employee exists:

1. The terms of contract are result of negotiation with a representative body.

2. Employee is conferred a valuable right contingent upon action being taken by him to avail himself of its benefit
3. The employee cannot be known of all the terms unless he is informed.

In the current case it was an obligation on part of employer to take reasonable terms to bring the term of the contract to
employees attention.

Paramount Coaching Centre Private Limited v Rakesh Ranjan Jha

Plaintiff institute is an educational institute imparting education to the aspiring students of various competitive examinations
having its branches throughout India. Defendant entered into an agreement with the plaintiff company through its Director
with regard to rendering service for the purpose of imparting education particularly in the subject of English for the students
aspiring to appear in the competitive exams of SSC for a further period of three years. In May, 2014 the defendant was forced
to sign on certain blank pages by the plaintiff and he was warned that if he did not sign the blank pages he would be denied
his salary and would not be permitted to teach at the plaintiff's institute. Copies of these agreement was not supplied to the
defendant. He was not paid for the service rendered for the months of January to June 2017. He drew the attention of the
plaintiff several times however, no payment was made. On 27th June, 2017 Mr. Saumitra, Director of the plaintiff promised
that the amount of the defendant would be released on 28th June, 2017 however, on 28th June, 2017 he virtually refused to
make the payment and thereafter avoided all calls by the defendant.

The bone of contention between the parties was clause 6 of the MOU of January which included that the teacher shall not do
any private coaching to any student.

Ratio: Even assuming that the defendant had signed the agreement, the terms of the agreement are unconscionable and harsh
and thus the agreement is void. it is required to be thus considered whether the negative covenant in Clause 6 of the MOU
dated 6th January, 2017 is (a) contrary to Section 27 of the Indian Contract Act, (b) is void being unconscionable and harsh
thus driving the defendant to idleness and/or (c) was got entered into under "undue influence", thus void in terms of Section
10 and 16 of the Indian Contract Act. 14. Section 27 of the Indian Contract Act holds an agreement restraining a person
from exercising a lawful profession, trade or business of any kind to be void, subject to the exception wherein a person sells
the goodwill of a business thereby agreeing to refrain from carrying on a similar business.

Referring to the decision of the Supreme Court reported Niranjan Shankar Golikari vs. The Century Spinning and
Manufacturing Co. Ltd. it is contended that a negative covenant operating during the period of contract of employment when
the employee is bound to serve his employer exclusively is generally not regarded as restraint of trade and therefore, is not
prohibited under Section 27 of the Contract Act. the negative covenant in the present case restricted as it is to the period of
employment and to work similar or substantially similar to the one carried on by the appellant when he was in the employ of
the respondent Company was reasonable and necessary.

Restrictions on competition during that period are normally valid, But if the covenant is to operate after the termination of
services, or is too widely worded, the court may refuse to enforce it.

The essential line of distinction is that the purchaser is entitled to protect himself against competition on the part of his
vendor, while the employer is not entitled to protection against mere competition on the part of his servant. In addition
thereto, a restrictive covenant ancillary to a contract of employment is likely to affect the employee's means or
procuring a livelihood for himself and his family to a greater degree than that of a seller, who usually receive ample
consideration for the sale of the goodwill of his business.
What is restricted is that during the subsistence of the agreement between the parties, the defendant would not impart private
tuitions to any student whether of the plaintiff's coaching institute or any other coaching institute. Court held that the
defendant is not restrained from carrying out his professional activity of teaching students who are not enrolled with any
coaching institute. Thus the negative covenant cannot be said to be contrary to Section 27 driving the defendant to idleness
and thus void ab-initio. There is no averment of the defendant that when he agreed to enter into MOU dated 6th January,
2017 he was left with no choice but to sign the present contract. The plea of the defendant that he had taken loan from the
plaintiff company and was under obligation is also defied by the averment that a huge amount of his remuneration was due
towards the plaintiff. Thus there is no prima facie material before this court to come to the conclusion that the contract was
entered into under undue influence and thus void in terms of Sections 10 and 16 of the Contract Act.
Injunction was issued against defendant to not teach in any other private coaching but he could teach anywhere
else and following his right to freedom of association. On question of specific performance the law denounces
compelling an employee to work against his will for a particular employer and the courts should not issue an
injunction if by doing so the effect would be of granting specific performance of contract of personal service.
Damages can be granted to appellants in case of violation of contract but specific performance in personal contract
cannot be imposed.

MODULE 3- BEFORE WINTERS

DEFINITION OF INDUSTRY UNDER INDUSTRIAL DISPUTES ACT – SECTION 2 (J)

For definitions page 55 of the module.

1. Bangalore Water Supply and Sewerage Board v A.S. Rajappa (1978) 2 SCC 548

[enunciated the triple test of systematic activity, cooperation and production of G&S – industry is an organised activity
towards a purposeful pursuit – not a fleeting and motiveless engagement – production not for self-consumption

The court opines that the focus of IDA along with Part IV of the Constitution is towards contentment of workers and peace
in the industry. Therefore, judicial interpretation needs to be in conformity with such objectives and not in frustration of
them. The court goes on to illustrate the definition of an industry as given under S. 2(j) of IDA and says that it is a
continuity, an organised activity, is a purposeful pursuit and not any isolated adventure desultory excursion or
casual, fleeting engagement motivelessly undertaken.
Moreover, the expression ‘undertaking’ must be read down to conform to the restrictive characteristic shared by the society
of words before and after. Additionally, the court expounds that an industry can’t exist without cooperative endeavour
between employer and employee. Also, another feather in this definition is the fact that production should be carried
out for the community and not for mere self-consumption.
Therefore, a triple test of systematic activity, cooperation and production of goods and services was enunciated by the
court.

 Sovereign Functions

Sovereign functions of the state cannot be included within an industry; they are the primary and inalienable
functions of a constitutional government.
A.309 to 311, enactments dealing with Defence Forces and other legislations dealing with employment under
statutory bodies may, expressly or by necessary implication, exclude the operation of the IDA.Applying the
‘severability test’, it can be stated that industrial units essentially severable in government undertakings and possessing an
entity of their own may plausibly be industries and their workers be ‘workmen’.

A blanket exclusion of every one of the host of employees engaged by govt. departments is not practicable; justice, defence,
taxation and legislature may not necessarily be excluded from IDA.

 Liberal Professions

A firm of lawyers is not the single handed effort of its owner, rather it is the successful amalgamation of the work of
several specialists, juniors and seniors. Along with these stenos, para-legals, and supportive staff is equally
important. Therefore, professional goodwill comes from not only the expert in that field, rather from all those, whose
excellence in their respective parts makes for total proficiency.

This aside, a single lawyer or a doctor may ply his practice with a little assistance from an extra hand, he may not be
said to be plying and industry. Such a phenomena also includes a baker, a candle maker, a butcher, petty handicraftsmen
etc.

However, in regular industries, even a few employees (plurality of workers) are enough to bring them under S. 2(j).
 Education If the triple test is applied, a college or a university may well be an industry. The true test is the
predominant nature of the activity underway; this is education and ergo, a university is an industry. The number of
people employed does not matter.
Ancillary activities of the university, such as a printing press are demonstrably industrial. Also, a univ. may have a
large transport fleet with an army of running staff. The court holds that if a univ has around 50 buses, drivers,
conductors etc, then how such staff can be denied the benefits of the IDA. Their work is severable from that
performed by the teachers and the management.
To christen education as a mission does not do away with its industrial character, therefore, education is therefore an
industry. Such conclusion overruled University of Delhi case (1963).

 Charitable Institutions

The 1st type is where profits are earned but they are siphoned off for altruistic purposes. This category is not exempted from
being an industry. It is a business run for production with an eye on profits. It is thus squarely an industry. A part of
the profits going into altruistic ends is of no consequence since there is cooperation between the employer and employee
towards production. The workers receive wages and are treated like any other workmen in an industry.
The 2nd type is where goods and services are produced but they are not sold for profit, rather sold at nominal charitable
prices. Here also, workmen are employed and though they may be of altruistic mind-set, they still contribute labour
in return for wages. For them the charitable employer is like any other commercial employer. The only alteration is that
such owner does not earn profits from such production, the beneficiaries being the indigent consumers. Therefore,
this is also an industry.
The 3rd is where the establishment is humanely oriented, involving men who work not for wages but for a passion towards
the cause of charity. In this category, philanthropy is the basis for the institution.Workers work not for wages but
because they share an altruistic and philanthropic fervour. The mere presence of charitable impulse does not extricate
the institution from being an industry, but the total lack of an economic relationship between the employer and the
employee does so. All are crusaders and none are employees or employers. The dominant nature of work revolves
around the voluntary nature of it all. Not an industry.

In such determinations, the severability test should be applied. It should be figured if there are separate depts. For separate
concerns regarding the varied works of an establishment. If this test does not work, then the dominant nature of the
establishment should be scrutinised to determine if it is actually an industry or not.

 Research Institutions

It involves collaboration between employer and employee. Also, scientific research is a service since it benefits the
industry in innumerable ways. Therefore, a research institution can be regarded as an organisation propelled by
systematic activity and modelled in cooperation between the employer and employee. All of this comes together to
throw up inventions that are useful and beneficial for the nation in terms of goods and services and wealth.

Thus, though they may be run without a profit motive, they are nonetheless industries.

 Clubs

Reliance on professional workers makes it an industry since the element of self service is done away with. Thus, if a club or
other like collectively has a basic and dominant self-service mechanism, a few employees at the periphery would not
metamorphose it into a conventional club whose verve and virtue are taken care of by paid staff and the members’ role is to
enjoy.

Thus the clinching factor remains to be self-service.

 Cooperatives

These are industries, for the simple and Choate reason that a society is an employer and a legal person. The members-
workers are wage earners. Thus there can be disputes regarding the rates and different scales of payment. Thus,
merely because such societies are encouraged by the state, does not take out of the purview of an industry.

All organised activities possessing the triple elements, although not a trade and business, may still be industry
provided the nature of the activity viz. the employer-employee relationship bears resemblance to what we find in trade or
business. Therefore, the cooperation as between the employer and employee is of paramount importance.
A restricted category comprising of professions, clubs, cooperatives and even gurukulas and little research labs may qualify
for the exemption, if going by the dominant nature test, marginal employees are hired without destroying the non-employee
character of the unit.

Moreover, in a pious or altruistic mission, many may employ themselves, but don’t draw wages and the services are supplied
free of cost or for a small honorarium, then it is not an industry for lack of economic purpose in the same.

 Dominant Nature

If in an undertaking, a complex mix of employees exist, some qualifying as workmen and some not, then in that
case the predominant nature of the services and the integrated nature of the departments will be the true test for
determination if industry or not. The whole undertaking can be an industry but those in it who don’t qualify to be
workmen as under S. 2(s), may not be able to take advantage of that fact.

Also, sovereign functions will be exempt but in case within such functions, there are units which are industries and
they are substantially severable, they can come under the definition of industry.
The Dissent (Justice Y.V. Chadrachud)

As with regards to the sovereign functions of the State, it was opined that it is not so much about who undertakes the
activity, rather about the nature of the activity. If State’s inalienable functions are excluded from the definition of an
industry as under S. 2(j), then it leads to trashing of the rule that ‘it is the nature of the activity that determines its
nature vis-à-vis ‘industry’. There should be no differencebetween an activity undertaken by a corporation pursuant to
its statute and the inalienable functions of the State.
If water supply and municipal activities can be industry, then so can activities like the manufacturing of oil, coins and
currency, arms and ammunitions.The dichotomy lies in treating them as industry when undertaken by a private player
and not when undertaken by the State.The nature of the activity should be the sole determinative factor in this
regard.

2. Sub-Divisional Inspector of Post, Vaikam v Theyyam Joseph AIR 1996 SC 1271- Only one page case. Read on your own

Respondent in this case was terminated even when the person on whose spot he was substituted didn’t return to the
company. Whether the Post & Telecom Department was industry and extra departmental packer was a workman under ID
act?

Appellant: The worker was part time on contract basis and was governed by statutory rules. Neither the appellant neither is
an industry nor is the respondent a workman under ID Act. Under DPSP providing telecommunication service to the general
public and an amenity and so is one essential part of the sovereign functions and not an industry.

Court: Accepted the appellant contention, these employees are civil servants regulated by these conduct rules. They don’t
belong to the category of workmen attracting the provisions of the Act. Held the approach by tribunal [which said
termination is illegal] was wrong. [ This is clearly in violation of Bangalore water supply]

3. Physical Research Laboratory v K.G. Sharma, (1997) 4 SCC 257

Prl is financed mainly by the GOI with nominal contribution from Gujarat gov. An individual was retired at the age of 58 and
he claimed that his retirement age should also be 60 i.e. same as of technical staff.
Issue: PRL was an industry or not?
Labour court held that it is industry but since he was already 60+now , they ordered full back wages for 2 years.
Gujarat HC and many other tribunals had conflicting views on whether research institutes run by the government could
be said to be industry under sec 2(j) of ID ACT?
Ratio: SC cited BWSS and held that they would be industry only if they are found to analogous to the trade or business. An
activity undertaken by the GOI cannot be regarded as industry if it is done in dishcharge of sovereign functions.
SC also cited Jagannath Maruti for rejecting the argument that all welfare activities would come under sovereign functions. It
held tha it would all depend on the nature of the power and manner of its exercise. Besides three traditional sovereign
functions i.e. legislative power, rhe administration of laws and the judicial exercise of power, there can be other sovereign
fnctions also.
Government on relying theyyam joseph and Maruti case argued that PRL work is research work and hence should be
regarded as a sovereign function.
Court held that the research work by PRL is not connected with production, supplu or distribution of goods or services.
They don’t research to benefit others and the knowledge acquired by them doesn’t have any proof of having commercial
value. PRL is to obtain knowledge for department of Space and the object of PRL was not earning profit. It lacks the element
of production and distribution of goods and services even though it was systematic activity with employer-employee
relationship. It was held that PRL was not an industry.

4. General Manager, Telecom v A. Srinivasa Rao (1997) 8 SCC 767

Theyyam Joseph was cited by Bombay Telephone Canteen employees v UOI and it held that the telecom department is not
an industry within industry of Section 2(j) of ID Act since it is welfare activity and cannot be exercised by private body.
Appellant argument: The reference un Sec 10A id act in the current case was wrong as Telecommunication department was
not industry.
Theyyam joseph was given without any reference to BWSS. Both Bombay and Joseph case are directly in conflict with BWSS.
Hence they should be overruled. Appeal dismissed

5. AIR vs Santosh Kumar

Question: Whether the appellant AIR and Doordarshan are industries under Section 2(j) of the ID Act?
Appellant: Sovereign functions of the state and are not industries un Section 2(j).

The functions which are carried on by AIR and Doordarshan cannot be confined within sovereign functions. Additionally
they earn revenue through advertisements and this takes away the nature of being a sovereign body. Appellant relied on
Bombay Telephone which was already overruled by General Manager, Telecom v A. Srinivasa Rao (1997) 8 SCC 767. Both AIR
and Doordarshan are industry.

6. Agricultural Produce Market Committee v Ashok Harikuni(2000) 8 SCC 61

[by virtue of it being statutorily established DOES NOT result in it not being industry – true test is dominant
nature of enterprise – sovereign functions are absolutely closed to private persons – mere monopoly of govt. would
not make it sovereign – total exclusion of private players is warranted]

The appellants manage the market produce for the benefit of the agriculturists. Profit is not a motive and protecting the
interests of the public at large and the agriculturists is the sole objective. In course of time, the appellant terminated
services of some of its temporary employees. Such employees raised an industrial dispute.

The question this arises is whether the appellant is an industry or not under the IDA. An enterprise being a statutory
corporation would not mean that is it not an ‘industry’. Moreover, the present case does not fall under any of the
exception as given in Bangalore Water case. Therefore, the true test for determination is to be gathered from the
dominant objective that the functionaries are working for.
Applying this principle of ‘dominant object’ the court concludes that none of the operations of the appellant are
sovereign in nature.Sovereign functions are essentially the primary inalienable functions of the state (taxation,
eminent domain and police power). Therefore the difference between sovereign and non-sovereign can be understood by
determining which of the functions are absolutely closed to private persons. Mere monopolistic nature of a
government undertaking would not make it a sovereign function, but complete exclusion of private players would.
For the appellants, most of the functions can also be undertaken by private persons. Therefore, they fall squarely
under the definition of industry under S. 2(j) of the IDA and its employees can be held to be workmen under S. 2(s)
of the IDA.
7. Coir Board, Ernakulam and Cochin v Indira Devi (1998) 3 SCC 259

[re-examination of the judgment in the Bangalore Water Supply case]

Agrument: Two judges in BWSS dissented from the view and applied doctrine of noscitur a sociis as pointed in State of
Bombay vs Hospital MAzdoor Sabha, when two or more words are coupled together, they take color from each other.
Definition should be limited to those activities systematically or habitually undertaken on commercial lines by pvt bodies with
cooperation of employees for the production of goods and services.

The 2 judge bench of the SC was of the opinion that in the light of all the uncertainty clouding the judgment of the court in
BWSS, time was ripe for reconsideration.

Further the court opined that the elimination of profit motive or a desire to generate income as the purpose of
industrial activity had led to a large number of philanthropic and charitable activities being affected by the IDA; in
a number of cases where the charity is run by volunteers, it has been found difficult to cope with the requirements of IDA.
This has prevented many charities from functioning properly.

The court was of the opinion that such activities would not have normally been under the umbrella of industry but for the
judgment in BWSS. The definition thus needs reconsideration so that while the workers are protected by the IDA, the
society as a result is not deprived of philanthropic and other vital services. Educational services or a teacher’s work,
research organisations, amateur sports etc. need a relook.

The legislature itself amended the IDA in 1982 to exclude from the scope of an ‘industry’, institutions such as hospitals,
dispensaries, educational, scientific or training institutes, charitable institutions etc. It was further proposed to have a separate
law for the employees in such institutions for safeguarding their interests as well; albeit outside of the IDA.

Thus the court referred the matter to a 3 judge bench stating that such a sweeping test wasn’t contemplated by the IDA. Not
every institution that does useful work and employs persons can and should be labelled as industry.

The Three Judge Bench(2001)

The court while delivering its judgment stated that though the order in BWSS was delivered nearly 2 decades in the past, it
has consequently been amended by the government. However, such amendment has not been notified and thus not in force.
Hence, BWSS acts as a law and the court in the present matter adjudged that BWSS does not require any reconsideration and
the 2 judge bench is bound by the decision of the 7 judge bench in BWSS.

8. State of UP v Jai Bir Singh (2005) 5 SCC 1

Reconsideration of BWSS – a look at the precedential value and unanimity of the majority decision delivered in
BWSS]

The bench of 3 judges in case of Jagannath Maruti held that Social FOresty department is industry while State of Gujarat vs
Pratamsingh Parmar took a different view.Appellant ( Employers) wanted the new definition of the word industry with
certain services getting excluded to be interpreted along with BWSS. This is a judgment of a 5 judge bench on reconsidering
the judgment in the Bangalore Water Supply. The contention here is with regards to whether Social Forestry Dept. of
State is an industry or not?
The court while discussing the validity of the definition of industry stated in Bangalore Water Supply case, opines that the
judgment rendered by Krishna Iyer on his own behalf and on behalf of Bhagwati and Desai was only generally
agreed to by Beg who delivered a separate but concurring opinion. CJ Beg agreed with the conclusion that Bangalore
Water Supply is an industry, but did not delve deep into the other judgments previously given by the court with regards to
similar issues. Only those services governed by constitutional provisions and separate rules such as ARTICLE 310 and Article
311 must be excluded from the sphere of industry by necessary implication.

However, what the court misses upon is the fact that such disagreement was only with regards to the interpretation
given to the term ‘sovereign functions’ and not other aspects of the judgment. Thus, no issue should exist
regarding the binding value of the other elements enunciated in BWSS.

9. State of UP v Jai Bir Singh (2017) 3 SCC 311

After analyzing the decision in Court in Bangalore Water Supply & Sewerage Board etc. v. A. Rajappa and Ors. etc. and the
reference order passed by a Five-Judges Bench of this Court pursuant to which these matters have been placed before us.
The wide ranging implications of the issue that fall for determination as also the fact that serious doubts have been expressed
in the reference order about the correctness of the view taken in Bangalore Water Supply's case (supra), it held these appeals
need to be placed before a Bench comprising Nine-Judges to be constituted by the Chief Justice.

MODULE 3- AFTER WINTERS

DEFINITION OF ESTABLISHMENT AND SHOPS UNDER EMPLOYEES’ STATE INSURANCE ACT 1948– SECTION 1, 2
(12), 2 (14-AA)
1. Bangalore Turf Club Ltd. v ESI Corpn. (2014) 9 SCC 657 [ID NO. 1-33, 66-96]

2. Delhi Gymkhana Club Ltd. v ESI Corpn. (2015) 1 SCC 142

Facts: Appellant-club has a kitchen to cook food items to provide food and refreshment to its members. On 20.03.1975, a
notification was issued by the Delhi Administration, in exercise of the powers conferred under Section 1(5) of the ESI Act,
stating that the provisions contemplated under the Act shall be extended to the establishments specified in the Schedule
thereon. In furtherance of the said notification, the respondent-ESI Corporation sought to apply the provisions of the Act on
the appellant-club, on the ground that the preparation of food items amounts to “manufacturing process” and that the
appellant–club is a factory/establishment covered under the provisions of the ESI Act.

ESIC passed an order imposing the liability to contribute in form of insurance along with interest for employees.
Appellants argued Preparation of eatables does not fall under “manufacturing process” and hence, ESI Act is not
applicable to the appellant-club and the appellant was not liable to pay contribution.

This was allowed by ESI Court but reversed by HC which held that the kitchen is an integral part of the club and that
cooking of foodstuffs amounts to ‘manufacturing process’ falling within the and comes within the meaning of ‘factory’
as defined under Section 2(12) of ESI Act.

Appellant: Club is NPO exclusively giving facilities to the members and ESI not applicable to them as they are already giving
better social perks than ESI. They cited Indian Hotels case wherein it was held that preparation of foodstuffs in hotel
kitchen is merely processing of food to make it edible and that there is no manufacturing process.

Respondents: the purpose is to extend the benefit of the scheme to the employees working in the appellant-club and while
doing so, the object of welfare legislations, like the ESI Act, ought to be kept in mind. Refuting the appellant’s contention
that preparation of foodstuffs in the kitchen does not amount to ‘manufacturing process’, the respondent placed reliance on
the decision of this Court in G.L. Hotels vs. T.C. Sarin (1993) 4 SCC 363, wherein it was held that cooking forms part of
manufacturing process, as it alters and treats or otherwise adapts an article of food or substance with a view to its use, sale,
delivery or disposal in the club.

Court: Sub-section (4) of Section 1 of the ESI Act shall not apply to a factory or establishment belonging to or under
the control of the Government whose employees are otherwise in receipt of benefits substantially similar or
superior to the benefits provided under this Act.

DEFINITION OF FACTORIES UNDER FACTORIES ACT 1948 – SECTIONS 2 (K) AND 2 (M)

1. Uttaranchal Forest Development Corporation v Jabar Singh (2007) 2 SCC 112

[work carried out by the appellant corporation falls squarely within the definition given under S. 2(k) of Factories Act, 1948 –
has ‘fixed premises’ thus making it a factory as under S. 2(m) – qualifies for being an ‘industrial establishment’ under S. 25L
of IDA – thus amenable to the caveats and requirements under S. 25N of the IDA and can’t escape them while making
retrenchment orders]

The UP Forest Corporation had engaged certain number of daily wage workers. However, following a dictate from the
government putting a stop to logging activities, it had to retrench certain daily wagers. Thus an industrial dispute was raised
by the respondents. Further appeals took place and thus the present appeal by special leave.

The question for determination was whether the provisions of S. 25N of IDA are attracted or not and whether for non-
compliance with the conditions contained in S. 25N, retrenchment order as well as award are illegal and non-est?

In Col. Sardar C.S. Angre v. State (1965), it was held with regards to grading and storing potatoes in a cold storage, that if
such gradation and sorting beings into existence standardised goods or a particular category or variety saleable as such, then it
can be treated as ‘manufacturing process’ under S. 2(k) of Factories Act. However if used for primarily storage purpose, then
not ‘manufacturing process’. The crux lies in bringing into existence commercially different products or
commodities.
In Ardeshir H. Bhiwandiwala v. State of Bombay (1962), a constitution bench opined upon a question as to the determination
of ‘premises’ and stated that it is a generic term meaning open land or land with buildings or buildings alone; the
salt works came within such definition of ‘Factory’ under S. 2(m) of IDA. The salt extraction was a result of human
efforts and is a manufacturing process in as much as salt was manufactured from seawater by way of treatment and
adaptation.
In Tega India Ltd. v. CCE (2004), it was further stated that circulars issued by the Central Board of Excise and Customs are
binding and thus if a circular makes no difference between coated and uncoated pipes, then the process of coating wouldn’t
amount to manufacture of some new commodity. An extra process does not in itself lead to a new product, thus not a
‘manufacturing process’.
In Kores India Ltd. v. CCE (2005), the court categorically stated that ‘manufacturing is a process of transformation of an
article into a commercially altered one. Something is brought into existence which is marketably different from the
previous product.
In Lal Mohammad v. Indian Rly Construction Co. Ltd (1999), the court stated that ‘premises’ occurring in the definition
of a ‘Factory’ under S. 2(k) would connote a ‘fixed site of work’. For laying down a railway line, a number of workmen,
supervisors, engineers etc. will have to attend the site where such work is being carried out. Thus such construction would no
doubt imply a ‘fixed site’ on which such activity takes place; every part of the land on which the 54km long line is being laid
would comprise of a ‘Factory Premises’.

Further, in the same case, it was also held that raw materials like railway sleepers, bolts, nuts, loose railway rails etc. were
brought to the site and transformed into the laying down of the railway line. Thus it also conforms to the definition of a
‘manufacturing process’ under S. 2(k)(i) of Factories Act.

In the present matter, the counsel for the Appellants conceded that the question of ‘premises’ of a Factory has been
settled by virtue of ArdeshirBhiwandiwala case and thus the arguments were left confined to cutting trees being a
manufacturing process or not?

The court commenting on the present case, stated that work of the respondents included ‘cutting of trees by axe and
changing the shape of timber into logs using hand driven saw’. In the court’s opinion, such process would squarely
fall within the 1st part of the definition under S. 2(k); making and breaking-up.

Also, changing the shape of the timber would further fall within the terms ‘altering and adapting’ under S. 2(k).
More so, the conversion of trees into logs is admittedly for the purpose of sale, disposal, use and transport; all again
being part of S. 2(k) and confirming to a ‘manufacturing process’.

With regards to it being an industrial establishment, the court in Lal Mohammad case had stated that S. 25L of IDA lays
down the requirements of an ‘industrial establishment’ governed by Ch. 5B of IDA. Therefore, for the purposes of Ch. 5B,
an ‘industrial establishment’ would mean ‘a factory as under S. 2(m) of Factories Act, 1948’.

Therefore, in the present case, if the appellant corporation is not a factory, then it wouldn’t be an ‘industrial establishment’
governed by Ch. 5B of IDA. Consequently, since the work of the appellant corporation was a ‘manufacturing
process’ (shown above) having a ‘fixed premises’, it would be deemed a factory and thus an industrial
establishment governed by Ch. 5B of IDA. As a natural consequence, S. 25N of IDA would be applicable to the
present establishment. Furthermore, the appellant corporation while issuing retrenchment orders did not comply with any
of the provisions of S. 25N, therefore orders are bad in law and illegal.

Summarising the judgment, it is stated that the work carried out by the appellant corporation falls squarely within the
definition given under S. 2(k) of Factories Act, 1948. Furthermore, it has a ‘fixed premises’ thus making it a factory as under
S. 2(m) and consequently qualifying it for being an ‘industrial establishment’ under S. 25L of IDA. As a result of being
such, it is amenable to the caveats and requirements under S. 25N of the IDA and can’t escape them while making
retrenchment orders.

3. Seelan Raj R v P.O.I. Addl. Labour Court (1997) 2 LLJ 972 (Mad) (DB) and Seelan Raj R v P.O.I. Addl. Labour Court
(2001) 4 SCC 634

Relied on explanation II. Said unless there is other manufacturing work, mere installation of data centres would not make
it manufacturing. (see pg 464 para 10) did not even consider if software would amount to manufacturing. Just
because it manufactures software it will not be factory unless it indulges other manufacturing.
The SC said that the main question is what is the basic nature of software is. Referred to larger bench. Still pending decision

4. Assistant Director v M/S Western Outdoor Interactive Ltd.

STANDARD FOR MULTIPLE ESTABLISHMENTS AND THRESHOLD EXEMPTIONS UNDER STATUTES

Noor Niwas Nursery Public School v Regional Provident Fund Commissioner (2001) 1 SCC 1

The Hon.ble Supreme Court held that whether two units are one or distinct will have to be considered in the light of
the provisions of Section 2-A of the Act and in such cases, the court has to consider how far there is functional
integrality between the two units, whether one unit cannot exist conveniently and reasonably without the other, and on
the further question, in matters of finance and employment, the employer has actually kept the two units distinct or
integrated.

RELATIONSHIP OF EMPLOYMENT

1. Dharangadhara Chemical Works v. Management AIR 1958 SC 264

[essentially a workman carries out the work himself – control and supervision test applied]

The appellant co. manufactures salt in the Rann of Kutch. A salt superintendent has also been employed to supervise
such manufacture. A dispute arose as between the agarias (salt manufacturing villagers) and the management of the co.
regarding the conditions under which they should be engaged with the co.

In this appeal against the HC decision, the SC said that the essential condition for being a workman within S. 2(s) is that he
should be employed to do work in that industry and there should be a master-servant relation between him and the
employer. Also, there is a distinction between a ‘contract for service’ and a ‘contract of service’; in the former, the master
can order or require what is to be done while in the latter, he can also direct Howthe work is to be done.

Therefore, the SC says that there should be an existence of the right of the master to supervise and control the work done
by the servant not only what is to be done but also how it is to be done. The SC concluded that there were materials on
record to show that the agariaswereNOT independent contractorsbut workmen within the meaning of IDA; the
essential difference being that the former (independent contractor) gets others to work while the latter (workman)
works himself.

The SC states that the even though they may not be paid for fixed hours of work and rather as according to the quantity of
salt produced, it does not take away from the fact that workmen can also be of such type as not paid per day and rather
according to the job done.
Moreover, a person remains a workman even if he gets others to work alongside him, the essential of personally
working still being retained.

Shankar Balaji Waje v State of Maharathtra (1962) I LLJ 119 (SC)

[Pandurang case - Piece-rate workers can be workers within the definition of 'worker' in the Act, but they must be
regular workers and not-workers who come and work according to their sweet will – an obligation to work for a
certain amount of time is necessary]

There was no agreement or contract of service between the appellant and Pandurang. He was not bound to attend
the factory for the work of rolling bidis for any fixed hours of work and was free to go and leave the factory. If he was
to be absent for more than ten days he had to inform the appellant, not for the purpose of taking his permission or leave, but
for the purpose of assuring the appellant that he had no intention to give up work at the factory.

There was no actual supervision of the work Pandurang did in the factory. There was no stipulation that he had to
turn out a certain number of bidis per day and was paid at filed rates on the quantity of bidis turned out. He could
roll at home also and had to take permission to take the tobacco home pursuant to the Excise Rules and not on account of
any condition of alleged service. At the close of the day, the bidis used to be delivered to the appellant and bidis not up to
the standard, used to be rejected.

The facts of the case indicate that the appellant had no control and supervision over the details of Pandurang's work.
The management could notregulate the manner in which he discharged his work. The appellant could only order
Pandurang to roll the bidis, using the tobacco and leaves supplied to him, but could notorder him as to how it was to be
done. In the present case, how the labourer carries out the work is his own concern and is not controlled by the
management, which is concerned only with getting bidis rolled in a particular style with certain contents. Piece-rate
workers can be workers within the definition of 'workman' in the Act, but they must be regular workers and not-
workers who come and work according to their sweet will. The worker must have, under his contract of service, an
obligation to work either for a fixed period.
2. Hussain Bhai v Alath Factory Employees Union (1978) 4 SCC 257

A number of workmen were engaged in a factory, but those workmen, according to the petitioner, were hired by contractors
who had executed agreements with the petitioner to get such work done. The court held that the workers were workmen
because the raw materials was supplied by the management, equipment used belonged to the management and the
finished product was taken by the management and defective articles were directed to be rectified by the
management. In a way, the workmen were under the control of the management. Where a worker or group of workers
labours 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. If the livelihood of the
workmen substantially depends on labour rendered to produce goods and services for the benefit and satisfaction of an
enterprise, the absence of direct relationship or the presences of dubious intermediaries does not affect the status of
workman.

3. Silver Jubilee Tailoring House v Chief Inspector of Shops AIR 1974 SC 37

[work done in the premises of the employer – Provision of equipment – power to reject work – evidence of control
and supervision – with development of specialised skills and professional skills, application of control and
supervision test has become redundant – the worker must be principally employed in the business under
consideration]

All workers are paid on a piece rate basis and wages paid to the workers is not uniform. The rate depends upon the skill of
the worker and nature of the work. The worker is further instructed how to stitch the piece of cloth and if not done
properly, the employer rejects the work. There is further no obligation on part of the worker to inform the employer that
he is taking a leave. All of them work in the shop premises. The machines installed in the shop belong to the owner
of the shop as also the premises.
The traditionally primary test to determine a relationship between employer and employee is whether there exists between
them the right in the master to supervise and control the work done by the servant; directing the manner in which
the work is to be done. The court further opined that with development of specialized skilled and professional work,
the control test in its traditional form has really broken down because it is no longer possible to direct how the
work is to be performed by such specialists. The focus has now shifted and no longer rests on the question of control. In
most cases, it is more like one of the factors and not THE decisive one.

The fact that the workers generally attend shop and work there on the machines which the proprietor owns is a decisive
factor. When the service is performed in the premises of the employer then it is indicative of the fact that there is a
contract of service. If equipment was provided by someone else, then it would have been indicative of the presence an
independent contractor. This significance for the machines is derived from the basic factor that where work is hired
out to contractors, the hirer generally expects the independent contractor to arrange for his own equipment; if a
direct servant, machines are the employer’s own.
This aside, the right to reject defective work is also determinative of the fact that a significant degree of control and
supervision is exercised. This is evidence of an ultimate level of authority.
Coming to the next factor, it is immaterial if the workers don’t work in the shop for the whole day. Even a part timer is
considered an employee; as under S. 2(14) of IDA, a person not wholly employed is considered as ‘person employed’ if
he is principally employed in connection with the business. Thus the part timers are principally employed in the shop.
4. Workmen of Nilgiri Cooperative Marketing Society v State of Tamil Nadu (2004) 3 SCC 514

[supervision and control test though important are not the only criteria – other factors can be taken into
consideration – integration of various factors and tests to be important – marketing supervisor of the society only
allows for smooth functioning of the auctioning – also controls grading, packing, loading etc. but not enough to
show complete control and supervision of society – porters and graders are appointed by 3rd party members of the
society – wages are also paid by such members and not society – employment of such porters and graders not by
the society – the society doesn’t carry out trading activities – society only facilitates smooth functioning of entire
process – society only a cooperative – renders services to only its members – not an industry – porters and graders
not its employees and not workmen under S. 2(s) of IDA]

Nilgiris Cooperative Marketing Society Ltd. was formed for the benefit of the vegetable growers of the area. The primary
members brought their produce to the market yards of the society and the produce was subsequently auction sold. Free
gunny bags were provided for the purpose of bringing potatoes. Mostly farmers unloaded the bags themselves and also
graded the potatoes before placing in the yard.

For doing various items of work in the yard, services of certain 3rd parties were availed by the members. However, there was
no obligation to hire for the same. No attendance or grade registers were maintained regarding the 3rd parties. The society had
no control over them and they were free to go and come at their own will. Further, no formal appointment was done for the
porters by the society and so no formal payment.

The present dispute was rained by 73 porters and 335 graders for demanding permanency in service and other benefits.After
failure of conciliation proceedings, on reference to tribunal, the claim of porters was rejected on the ground that there was no
employer-employee relationship between the two. Subsequently, after rejection of WP in the HC, the present SLP was filed
by the concerned workmen.

The SC, right from Shivanandan Sharma v. Punjab National Bank Ltd. to Dharangadhara v. State of Saurashtra has
consistently held that supervision and control test is the prima-facie test for determining the relationship of employment. The
court opines that the control and the organisation test are not the only decisive factors and factors such as

 Who is the appointing authority

 Who is the paymaster

 Who can dismiss

 How long alternative service lasts

 Extent of control and supervision

 Nature of the job etc.

The integration of the various tests is necessary in the present case. The society is not a trading society. It cannot buy
or sell the agricultural produce or the fruits except in the case ‘when the society enters into a contract with the govt. or the
military etc. the board may purchase the produce outright whenever necessary and sell it as owner on behalf of the society’.
Further, the job of the ‘marketing supervisor’ is to attend to speedy disposal of the stocks, seeing to the delivery
without delay of all the stocks purchased by members; controlling the staff in the godowns. Also he is to supervise
grading, weighing and packing of potatoes promptly and properly.
Thus the job of a marketing supervisor does not show that the complete control and supervision is upon the society.
Here is not a case where the workmen are bereft of any master. The 3rd parties employ them and pay them their wages
invariably. They have the right to appoint or not to appoint. The little supervision exercised by the society officers
is to ensure smooth functioning of the entire process.
The court hereinafter, referring to a number of cases, came to the conclusion that the application of the control and
supervision test is alone not viable. Such resort to these tests has to be taken in view of the fact of the contract being
of service or for service; or whether the employer had set up a contractor for the purpose of employment of
workmen by way of a smokescreen with a view to avoid its statutory liability.
The court adjudges that the workmen concerned are employed by both the growers and the traders and it is only in
some cases that payment is made through 3rd parties.
Although certain activities are carried out in the market yard of the society and some basic infrastructure is also provided, yet
the society in general doesn’t have the necessity of employing any workman for the purpose of loading, unloading
or grading. Ultimately the remuneration of the workmen is bourne by either the merchants or the farmers.
In light of these circumstances, the court opines that since the respondent is a cooperative that only renders services to
its own members and despite the fact that it receives commission from both the farmers as well as traders, it is still not an
industry and the workers not workmen as under S. 2(s).

5. Balwant Rai Saluja v Air India 2014 Indlaw SC 556

The 3-judge bench of H.L. Dattu, R.K. Agrawal and Arun Mishra, JJ deliberated upon the question whether the
workmen engaged in statutory canteens, through a contractor, could be treated as employees of the principal
establishment which came up from a reference made by a 2-judge bench of this Court as contrasting opinions were
made by said bench on the question. Elucidating the question, the Court held that the workers engaged by a
contractor to work in the statutory canteen of a factory would be the workers of the said factory, but only for
the purposes of the Factories Act, 1948 and not for other purposes, and further for the said workers, to be
called the employees of the factory for all purposes, they would need to satisfy the test of employer-
employee relationship and it must be shown that the employer exercises absolute and effective control over
the said workers.
In the present case, the appellant represented by Jayant Bhushan, provided canteen services to the respondents
represented by Praveen Jain and contended that they should be treated to be the deemed employees of the
respondents as they work in the canteen established in the Air India Premises and that too for the benefit of the
employees of the respondent. The 2-judge bench differed in their opinion on the said matter on the aspects of
supervision and control exercised by the respondents over the appellants i.e. the issues surrounding the economic
dependence of the subsidiary role in management and maintenance of the canteen premises, representation of
workers, modes of appointment and termination as well as resolving disciplinary issues among workmen.

The Court, taking into account the facts of the case and various judgments of the Court, held that the appellants
would be workmen of the Air India, but only for the purposes of the Factories Act and solely by virtue of this
deemed status under the Factories Act, the said workers would not be able to claim regularisation in their
employment from the Air India. [Balwant Rai Saluja v. Air India Ltd., Civil Appeal Nos. 10264-10266 of 2013,
decided on 25.08.2014]

MMR Khan v Union of India

The SC said that if it is a statutory obligation and under sec 46 Factories act it states that any establishment with
more than 100 workmen must have a canteen, the canteen will be integral part of establishment and the canteen
workers must be treated as regular employees. If it is an obligation under the rules and not a statutory obligation, the
same obligation applies
2 judge bench. Restored MMR Khan. The rationale was based on the fact the statutory obligation makes the canteen
an integral part of the organization. So the work of the canteen worker becomes integral part of the establishment
and must be treated as a regular employee.

DEFINITION OF WORKMEN UNDER INDUSTRIAL DISPUTES ACT

1. SK Verma v Mahesh Chandra (1983) II LLJ 429

The words “any skilled or unskilled manual, supervisory, technical or clerical work”, under Section 2(s) are not
intended to give a narrow meaning to the definition of workman; on the other hand they indicate and emphasis the
broad sweep of the definition.

The Act basically wants to differentiate between managerial force and labour force, and being a social welfare
legislation, wide ambit must be given to the term workmen. In order to determine whether development officers of
LIC are workman, the Court considered as to whether they fall under labour or management.

A development officer is a whole time employee and supposed to organise and develop the business in the area
allotted to him and for that purpose he can recruit any reliable agent. He is supposed to train, assist and
guide these agents, but neither can he appoint, nor supposed to supervise the agent’s work. Agents are not his
subordinates. Development Officer has no subordinate working under him. He cannot be said to be
engaged in managerial or administrative work. He is a workman.

2. HR Adhyantaya v Sandoz (India)Ltd.

[medical representatives not workmen – cannot be ‘skilled’ and neither operational – not everyone
associated with IDA can be said to workman]

Decision regarding the status of medical representatives; whether they are workmen or not?

Till August 29, 1956, the definition of a workman only included skilled and unskilled or clerical work. By
Amending Act 36 of 1956, the categories of supervisory and technical work were added to the definition. Further,
by Amendment Act 46 of 1982, category of operational work was included in the definition. Also those doing non-
manual unskilled and skilled work also came to be included in the definition with the result that the persons
doing skilled and unskilled work, be it manual or otherwise, came to be included under the IDA.

Thus the position today is that a person to be a workman under the IDA must be employed to do work in any
of the categories enunciated under the amended definition of workmen.
Subsequently, S. 6 of the Sales Promotion Employees (Conditions of Service) Act, 1976 makes Workmen
Compensation Act, 1923 and the IDA applicable to the MRs.

The decisions of SK Verma case and the Ved Prakash Gupta case were declared per incuriam since they did not
follow the precedent set in May & Baker, WIMCO and Burmah Shell cases.

In Burmah Shell case, sales Engineering Reps and District Sales Reps were involved. The court adjudged that the
work of such sales representatives was neither clerical nor supervisory nor technical. Any amount of technical work
done was ancillary to the primary work of promoting sales. The court further opined that advising and removing
complaints in promoting sales was not technical work. Also, clerical work was only incidental to main work of
promoting sales.

Relying upon May and Baker case, the court said that in order to qualify under S. 2(s), the worker has to squarely
fall under any of the 4 categories present therein. As regards skilled work, the court said that MRs will not be
considered to be undertaking skilled work. ‘Skilled’ has to be construed ejusdem generis and thus would need to be
of a genre of the other types of work mentioned in the definition. As regards MRs doing ‘technical work’, that
argument was rejected squarely in the Burmah Shell case and thus not even technical. The work of a MR is
distinct and independent of the types of work covered by the said definition. The court further commented saying
that it is permissible to classify workmen according to their income and the protective umbrella need not cover all.

Furthermore, to hold that everyone associated with any operation of manufacturing or sales is a workman
would render the categorisation as in the act meaningless. Such an interpretation would mean that all in an
establishment other than those expressly excluded would be considered as workmen. Such an interpretation was out
rightly rejected in May and Baker, WIMCO, Burmah Shell etc. If such an interpretation was to be accepted then
the legislature itself would have done away with the various categories and simply stated that anyone
associated with the operations in an establishment is a workman, albeit not expressly excluded.
Therefore, the court bunks the dictionary meaning of operational, but ends up not giving an alternate
definition suitable to be followed for future purposes.

3. SK Maini v M/S CaronaSahu Company Ltd. (Followed SK Verma.But how do you decide which
category the person belongs to? Will look at the main function that the person performs.)

The appellant Shri S.K. Maini was working as the Shop Manager of the respondent-Company M/s Carona Sahu
Company Limited. On an allegation of misconduct against the appellant, a domestic enquiry was caused by the
respondent-Company and by order dated March, 1981 the service of the appellant was terminated. The questions
to be answered here are, whether the termination of service of Shri S.K. Maini is justied? If not, to what
relief and amount of compensation is he entitled? It was contended that S.K. Maini was not a workman
within the denition of Section 2(s) because being a Shop Manager, he was discharging mainly managerial
and administrative functions and had been supervising the works of other employees subordinate to him
for running the said shop. Maini, under the terms and conditions of service, was to be held responsible for any loss
suffered by the Company due to deterioration of the quality of the stock and loss of any of the other articles lying in
the shop caused by reason of any act of negligence and / or omission to take any precaution by the employees. Mr.
Maini was also required to notify the Company not later than three hours after the discovery in the said shop of any
re, theft, burglary, loot or arson. He was required to investigate into the matter immediately and get the cause and
amount of loss established by local authorities. Mr. Maini as in- charge of the shop. She is required to keep and
maintain proper accounts as approved by the Company indicating the exact amount to be paid from the receipts
from the respective staff. Also, in the event of a salesman being absent, the shop in-charge was empowered to
appoint temporary helper. Such functions appear to be administrative and managerial. By virtue of his being in-
charge of the shop, he was the principal ofcer-in-charge of the management of the shop. Even if he was required to
do some works of clerical nature, by and large he was discharging administrative and managerial work. Shri Maini
was authorized to take decisions in the matter of temporary appointments and all reasonable steps incidental to the
proper running of the shop. The High Court was justied in holding that the appellant was not a workm
The high court held that though Maini performed clerical work but his major job was administrative or
managerial and therefore he was not a workman. The Supreme Court said that the determinative factor is the main
duties of the employee concerned and not some works incidental to it. In Mcloed and Co .v Sixth Industrial
Tribunal it was said that words such as supervisory, managerial and administrative are loose impressions with
no rigid frontiers. These words have to be broadly interpreted from a common sense point of view where tests will
be simple both in theory and in their application. The fact that he could appoint part- time sweeper, and main would
be responsible for damages and other such facts show that maini carried out administrative work. He was authorized
to make decisions in the matter of temporary appointments. It is to be noted that an employee discharging
managerial duties may not be invested with the power of appointment and discharge of other employees.
Thus he was not a workman.

4. Anand Regional Coop Oil Union v H.S. Shah

The Respondent was working as an Assistant Executive in the Quality Control Department of the Appellant
Cooperative Society. On an allegation that he had committed a misconduct, a disciplinary proceeding was initiated
against him. Punishment of dismissal from service was imposed upon him. Respondent was not only the Head of the
Department but also had been supervising the works of nine assistants. An industrial dispute was raised culminating
in a reference made by the appropriate Government to the Labour Court, Anand on 25.10.1996. Before the Labour
Court, the Appellant inter alia raised a contention that in view of the nature of duties performed by the Respondent
herein he does not fall within the definition of 'workman' as contained in Section 2(s) of the Industrial Disputes Act,
1947 (for short "the Act"). The Labour Court negatived the said contention of the Appellant.

The precise question came up for consideration in Ananda Bazar Patrika (P) Ltd. v. Workmen [(1970) 3 SCC 248]
wherein it was held: "The question, whether a person is employed in a supervisory capacity or on clerical
work, in our opinion, depends upon whether the main and principal duties carried out by him are those of a
supervisory character, or of a nature carried out by a clerk. If a person is 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 supervisory capacity; and, conversely, if the main work done is of 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 as a clerk into one in supervisory capacity

A person indisputably carries on supervisory work if he has power of control or supervision in regard to recruitment,
promotion, etc. The work involves exercise of tact and independence.

Judging by the said standard, we are of the opinion that the First Respondent did not come within the purview of the
exclusionary clause of the definition of workman. Ananda Bazar Patrika (supra) was followed by the court in a large
number of cases.

5. Muir Mills v Swayam Prasad Srivastava AIR 2007 SC 519

[legal assistant case – a professional can never be a workman – profession requires extensive training,
specialisation, a professional association, ethical code and process of certification or licensing]

The respondent is a legal assistant appointed on probationary basis. On completion of the probation, the services
were terminated citing unsatisfactory work. Thus the present industrial dispute arises to decide of a legal assistant was
infact a workman under S. 2(s) of the IDA or not.

The court going into the merits of the appeal stated that the Respondent had not been performing any
stereotype 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 enquiry officer in departmental enquiries against workmen. Such a
job, in our considered opinion, would notmake him a workman.

Drawing a distinction between an occupation and profession we can see that an occupation is a principal activity
(job, work or calling) that earns money (regular wage or salary) for a person and a profession is an occupation that
requires extensive training and the study and mastery of specialized knowledge, and usually has a
professional association, ethical code and process of certification or licensing.
Classically, there were only three professions: ministry, medicine, and law. These three professions each hold to a
specific code of ethics, and members are almost universally required to swear some form of oath to uphold those
ethics, therefore "professing" to a higher standard of accountability. Each of these professions also provides and
requires extensive training in the meaning, value, and importance of its particular oath in the practice of that
profession. On the basis of this, the court opined that a profession can never be a workman under S. 2(s) of
IDA.
6. ESIC Medical Officers Association v ESIC 2013 Indlaw SC 767

Doctors were claiming allowance that was paid to doctors on deputation.

SC said that this claim cannot be maintained. (see paras 8-11)Distinguish between occupation and profession.
Medicine is a profession. Rules applying to occupation cannot apply to a profession.

7. A Sundarambal v Govt.of Goa, Daman and Diu

The appellant was a schoolteacher whose services were terminated by the management. She raised an industrial
dispute before the Conciliation officer under the Act. The conciliation proceedings failed and her case failed even in
the HC, on the grounds that she was not a workman. The SC had two issues to consider – whether the school was
an industry, and whether the teacher was a workman (if not, then reference u/§ 10 (1) (c) of the Act cannot be
sought.

The SC held that educational institutions are industries, following the rule laid down in BWSS. However, it laid down
the following criteria for qualifying as a workman under the Act – 1) employment in an industry for hire or reward,
2) engaged in skilled or unskilled manual, supervisory, technical or clerical work and 3) not under clauses (i) to (iv) of
§ 2 (s).

The SC was of the view that teachers do not fall under the categories mentioned (skilled or unskilled manual,
supervisory, technical or clerical work) under the Act. Impartation of education cannot be considered to be such. It is
in the nature of a mission or a noble vocation. Any clerical work they might perform is incidental to the principal
task of teaching. However, teachers as a class cannot be denied the benefits of social justice. In order to do justice to
them the Court calls for appropriate machinery. The appeal was dismissed but.

[imparting education noble and akin to a mission – a person not engaged in any of the 4 categories
mentioned under S. 2(s) is not ‘workman’ – all employees in industry not ‘workmen’ if not covered by the
exception clauses]

The services of the appellant were terminated. She was a teacher in the school run by a society. An industrial dispute
was raised but the appropriate government declined to refer the matter to the tribunal citing the reason that she was
not a workman. The same is in issue here.

The main issues to be decided here are; (1) whether the school was an industry as under S. 2(j)? (2) Whether she
was a workman as under S. 2(s)?
In BWSS, it was decided by the court that educational institutions are included within the definition of an ‘industry’.
However, some of the workers in such institutes may not be ‘workmen’.

In order to be a workman, a person should be one who satisfies the following conditions: (i) he should be a
person employed in an industry for hire or reward; (ii) he should be engaged in skilled or unskilled manual,
supervisory, technical or clerical work; and (iii) he should not be a person falling under any of the four
exception clauses, i.e., (i) to (iv) mentioned in the definition of 'workman' in section 2(s) of the Act.

If an employee in an industry is not a person engaged in doing work falling in any of these categories, he
would not be a workman at alleven though he is employed in an industry.
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 as 'workmen' within the meaning of section
2(s) of the Act. Imparting of education is in the nature of a mission or a noble vocation. The clerical work, if
any they may do, is only incidental to their principal work of teaching.
It is not possible to accept the suggestion that having regard to the object of the Act, all employees in an
industry except those falling under the four exceptions (i) to (iv) in section 2(s) of the Act should be treated
as workmen. The acceptance of this argument will render the words 'to do any skilled or unskilled manual,
supervisory, technical or clerical work' meaningless.
 8. Bharat Bhawan Trust v Bharat Bhawan Artists Association (

DEFINITION OF WORKMEN UNDER INDUSTRIAL DISPUTES ACT + DEFINITION OF WORKER

UNDER FACTORIES ACT

1. Royal Talkies, Hyderabad v ESIC (1978) 4 SCC 204

3. Managing Director, Hassan Cooperative v ARD, ESIC (2010) 11 SCC 537
5. Royal Western India Turf Club v ESIC (2016) 4 SCC 521 [ID NO. 1-33, 66-96]
7. Rohtas Industries v Ramlakhan Singh (1978) 2 SCC 140

Employer under IDA, ESI Act, Occupier under Factories Act

o Section 2 (g) of IDA
o Immediate Employer and Principal Employer under Employees’ State Insurance Act
1948 – Section 2 (13) and Section 2 (17)
o Occupier under Factories Act 1948 – section 2 (l)
o Indian Oil Corporation v Chief Inspector of Factories AIR 1998 SC 2456
o Province of Bombay v Western India Automobile Association 11 FJR 12 (Bom HC)

MODULE 4: COLLECTIVE BARGAINING AND LAWS OF TRADE UNION

REGISTRATION OF TRADE UNIONS UNDER TRADE UNIONS ACT 1926

1. TTD v. Comm. of Labour (1979) I LLJ 448 (AP)

Under S. 10 of the Trade Unions Act, only the trade union themselves can approach the registrar for
cancellation of their registration.The relationship between the appellant and the workmen is prima-facie
that of employer and employee and therefore, the registration of the said union has nothing to do with the
water and the power wings are industry or not.

2. TTD v Commissioner of Labour(1996) III LLJ (Suppl.) 362 (SC), 1995 Supp (3) SCC 653

A union is formed primarily for the regulation of the relationship between the employer and the employee.
Moreover, under S. 22 of the TUA, the institution in which the workmen are employed should be of
the nature of an industry.
Looking at the IDA, the court says that the water and the power wings are industry and the
workmen of the said industry can form a union and get it registered by the registrar of trade unions.
The definition of an ‘industry’ will have to be imported from the IDA for a similar consideration under the
TUA.

3. Govt. Tool Room & Training Centre’s Supervisory & Officers Assn v Asst. Labour Commsnr

REGISTRATION OF TRADE UNIONS + RIGHTS AND LIABILITIES OF TRADE UNIONS

Sections 2 (g), 2 (h), Section 10, 11, 15-19, 21, 21A, 22

2. R.G. D'Souza v. Poona Employees Union (2015) 2 SCC 526

3. Charu Khurana v Union of India (2015) 1 SCCC 192

CONSTITUTIONAL RIGHT OF TRADE UNIONS, RECOGNITION AND COLLECTIVE

BARGAINING

1. Jay Engineering Works v State of West Bengal Air 168 Cal 407

[gherao in itself not unlawful – unlawful when accompanied by wrongful confinement and restraint –
the labour minister or the govt. has not authority to issue directions to police – no exemption for
criminal offences under S. 17 & 18 of TUA]
The management and the staff were blockaded by the retrenched workers, together with other employees on
numerous occasions. The question before the Calcutta HC was what the meaning of ‘gherao’ extended to,
and whether gheraos such as the one is this case were lawful.

The Court said that gherao is the physical blockade of a target, either by encirclement or forcible
occupation. The target maybe a place or a person, and usually is the managerial staff in an industrial
establishment. The blockade maybe complete or partial. However, a gherao accompanied by wrongful
restraint or wrongful confinement or accompanied by assault, criminal trespass, mischief to a person or
property or various other criminal offences is both unconstitutional and unlawful. Under the IPC, though
gherao is not an offence, but wrongful restraint/ confinement is under Section 339/340 of the code is an
offence. Intention to commit an offence can also render liability under Section 120 of the IPC and is not
saved by Section 17 of the TUA.

Even offences committed by the trade union, in case they are criminal in nature are not saved by Sections 17
or 18 of the TUA. Further, the circulars issued by the executive in this case that in case there is a gherao,
police action should be different from normal course of action under the CPC or the Police Act, are contrary
to law.

2. Vidyasagar Institute of Mental Health v Hospital Employees Union (2006) ILLJ 781 (Del)

Gherao case – Strike to be conducted at a distance from the establishment – right to peaceful
demonstration is a right of the workers – should not indulge in violence and assault – demonstration
cannot disrupt functioning of establishment or obstruct willing employees from working –
demarcation of a certain distance to demonstrate

A strike was threatened by the workers of the VIMHANS hospital employees union. By interim order dt.
June 21, 2002, the defendant was restrained from holding demonstrations and slogan shouting from within 50
metres of the hospital premises.

The right of the plaintiff to carry on his business unhindered has been recognised by the court and it has been
further stated that; peaceful demonstrations is a fundamental right of the workers, yet while making
legitimate demands by way of going on a peaceful and legal strike, the union cannot disrupt the
functioning of the employer or obstruct willing workers from carrying on their work. Furthermore,
indulgence in acts of violence and assault and intimidation is prohibited and the perpetrators are liable to be
booked since the protection granted to trade unions under S. 17 and 18 does not extend to criminal offences.

Thus such balance as between the right to strike and the smooth carrying on of the work can be
achieved by demarcating a particular distance at which the demonstrations can be held. Since the
premises in question here was a hospital and slogan shouting would undoubtedly result in nuisance to the
patients, the court set the boundary for such activities at 200 metres from the premises of the hospital.

3. Workers Union, Bombay v BalmerLawrie and Company Ltd (1985)

[a recognised union does not impinge upon the freedom of association – it only reiterates the larger
national interest of industrial peace and harmony – preventing lockouts and strikes – S. 2A acts as
safeguard against concentration of power in the recognised union’s hands – S. 2A gives individual
disputes a collective nature in certain circumstances – thus S. 20(2)(b) of Maharashtra Act not
violative of A. 19(1)(c)]

Two unions of the respondent company are at loggerheads. The validity of S. 20(2) read with Schedule 1 of
the Maharashtra Recognition of trade Unions & Prevention of Unfair Labour Practices Act, 1971. The
primary issue was that S. 20(2)(b) would compel and force the workmen to join the recognised
union. This would violate the fundamental freedom to forms associations under A. 19(1)(c).
The recognised union is the one which has for at least 6 months of the calendar year, membership of
more than 30% of the employees. Then an application has to be sent to the labour court and then the
court comes out with a notice for other unions to show cause as to why such recognition should not
be granted. If after all the objections are taken care of, the labour court is satisfied, it grants
recognition to that union and issue a certificate to that effect.
The primary argument of those opposed to such exclusive recognition was that it would lead to much decried
concentration of power in particular hands and thus giving it too much power to control employee issues. To
remedy this, the government brought in S. 2A to the IDA by which the individual ground is given to
workmen in cases of dismissal, discharge or termination from service. Such events were given the
colour of an industrial dispute even though they were individual grievances.

Before the introduction of S. 2A in the IDA, the courts did not entertain individual industrial
disputes such as were not sponsored by a union for the general benefit of all workmen. Similarly, S.
20(2)(b) also retains the provision of S. 2A and thus while giving exclusive rights to the recognised union to
represent the workmen, it does not leave the individual employee in a conundrum. It is the court’s observance
that a similar safeguard has also been retained in the present legislation under consideration. The
court opines that the issue has to be observed from the point of view of public interest of peace and
harmony in the industry and larger national interests of preventing strikes, lock-outs etc.
Additionally, the right to form associations under A. 19(1)(c) has not been taken away by way of S.
20(2)(b).The right to be recognised is different from the right to form a union. The members of a non-
recognised union are therefore at full liberty to enjoy their freedom to enjoy their right to form
associations. Additionally, even a non-recognised union can meet and discuss the grievance of an individual
employee with the employer; also enjoys the right to appear and participate in a domestic or departmental
enquiry in which its member is involved. Therefore, the exclusion of a non-recognised union is only
partial and in interest of industrial harmony.

4. All India Bank Employees Association v. National Industrial Tribunal (1962)

the stream cannot rise higher than the source – no right to a union that is not open to the individuals
themselves – concomitant right not included under A. 19(1) – the right to achieve objectives of union
not guaranteed under A. 19(1)(c) – such ‘right to strike’ can be given under a particular industrial
legislation, liable to be struck under A. 19(6) – hypothetically, if included then it would fall outside
of A. 19(6) and thus would only be amenable to lesser restrictions under A. 19(4) – thus not part of A.
19(1)(c)

Whether the right to go on strike is also assimilated within the right to form association under
Article 19(1)(c)?

An association of individuals cannot claim any rights not open to individuals themselves. The stream
cannot rise higher than the source and thus while the right to form a union is guaranteed under A. 19(1)(c),
each such freedom as guaranteed under A. 19(1) is restricted under A. 19(2) to A. 19(6). It is a folly to read
concomitant rights under each of those guaranteed under A. 19(1); incorrect to include concomitant
rights necessary to achieve the objective of granting such rights. This would lead to a grotesque result as
each expanding concomitant right would lead to another concentric concomitant right.

If A. 19 is read in a manner to include all rights to form an association and also those rights to fulfil every
object of the formation of such an association, then in that case, the qualification therefore would be not only
those under A. 19(4) but much more numerous and different restrictions which bore upon and took into
account the several fields in which associations or unions of citizens might engage themselves.

Therefore, the court said that even when interpreted liberally, the construction which would give a right to
effective collective bargaining or a right to strike is not viable under A. 19(1)(c). Consequently, the
right to strike would be controlled by effective industrial legislation and the validity of such a
restriction would not be tested against A. 19(4).
Therefore, A. (19)(1)(c) does not carry with it the effective right to strike or achieve collective bargaining
objectives. If right to strike is in fact included under A. 19(1)(C), then it would be tested against A.
19(4) and not A. 19(6). Therefore, the additional restrictions under A. 19(6) of ‘in the interests of the
general public’ will not apply to such a right. Thus, the industrial legislation would not be able to limit
this ‘right to strike’ in cases where essential and emergency services are involved.

5. Kameshwar Prasad v State of BiharAIR 1962 SC 1166

[demonstration a form of communication – included under A. 19(1)(a) and (b) – only those
demonstrations prohibited that are against public order – peaceful demonstrations are not
prohibited – govt. rule violates A. 19(1)(a) and (b) since it put blanket ban on every form of
demonstration]

Whether rules prohibiting a ‘right to go on strike’ infringed A. 19(1)(a), (b) and (c)?

A demonstration is a communication of one’s idea to others and thus a means of speech and
expression. Such demonstration can also be in the form of an assembly. Thus, there are forms of
demonstration that would fall under the rights guaranteed by A. 19(1)(a) and (b). As a natural
corollary, the restrictions under A. 19(2) and (3) apply to such demonstrations.

Additionally, the state submitted that such a ban on strike is to ensure some government servants are subject
to strict discipline so that public order is maintained and also that such disorderly demonstration on part of
the government servants would inturn lead to demoralisation of the general public and more public disorder.

The court did not agree with these arguments and said that such a blanket ban on every type of
demonstration is unwarranted and violative of A. 19. In any case, those demonstrations that lead to a
vitiation of public order are to be prohibited, but since the rule of the government does not only concern
such demonstrations and lays down that every single type of demonstration, even peaceful, is prohibited, the
rule violated the right to freedom of speech and expression.

However, having regard to the previous case, such a right to demonstration cannot be upheld to be included
under A. 19(1)(c) since there is no fundamental ‘right to strike’ under the Indian Constitution.

6. B.R. Singh v Union of India (1989) 2 LLJ 591 (SC)

[power of collective bargaining essentially involves power to carry on demonstrations for demand
redressal – demonstrations can also take form of a strike – such right not raised to pedestal of FR
but recognised to be essential – certain restrictions under S. 10(3), 10A (4A), 22 and 23 of the IDA
have been placed upon this right to strike]

The right to form associations is a fundamental right under A. 19(1)(c); under S. 8 of TUA,
registration of TUs can be done if all conditions are satisfied. The court further stated that the necessity
to form a union was to voice the employee’s concern in a collective bargaining environment. Therefore,
such bargaining power of the unions would be drastically curtailed if not allowed to demonstrate;
and strike in a given situation is only a demonstration.
It is further stated that the right to strike, though not a fundamental right, is a recognised mode of
redress for resolving grievances. However, certain restrictions under S. 10(3), 10A(4A), 22 and 23 of
the IDA have been placed upon this right to strike. It meant that the power of collective bargaining
essentially involved the power to carry on demonstration for demand redress subject to certain
statutory restrictions. Therefore, though not a fundamental right, it sure is essential for carrying out a
union’s collective bargaining purpose.

7. Bharat Kumar v State of KeralaAIR 1997 Ker 292

[a bundh inherently involves closing of shop and stopping commerce – non observers met with
severity – it is different from a strike – it encroaches upon freedoms of others – the callers of bundh
have no right to encroach upon others’ collective rights – bundh declared unconstitutional]

Several petitions filed were done so for the calling of a bundh to be declared as unconstitutional. The court
stated that when a bundh is called, it expresses the intention of the organisers to shut everything and
call for all activities to be stopped on that day.A bundh is further differentiated as against a strike or a
hartal. The intention of a bundh is to ensure no activity takes place on the day of the bundh. Also,
although not expressly stated, the non-observers of a bundh are generally met with severely and
threatened with consequences.
Thus properly understood, the calling of a bundh generally entails restriction on free movement and a
right to carry on one’s avocation. A bundh thus encroaches upon the freedoms and rights guaranteed
to others. Though no such express claim is made by the callers of the bundh, reality forces the court to take
note of the manner in which a bundh forces an individual to shut shop and not carry on with his work. The
callers of the bundh have no right to stop commerce and business that is what a bundh aims to
achieve.
The court goes ahead and says that it has sufficient jurisdiction to declare the calling of a bundh as
unconstitutional and not in the interests of the nation but rather tending towards leading to national
loss of production. The political parties that call for bundhs are liable to compensate the government, the
public and the private citizen. These assets justify the court’s intervention under A. 226.

This judgment was reaffirmed by the Supreme Court in Communist Party of India v. Bharat Kumar
(1998).

8. Communist Party of India v Bharat Kumar (1998) 1 SCC 201

The judgement went to the Supreme Court which held that the HC has rightfully differentiated between a
bundh and hartal, on the basis of the effect of a bundh on the fundamental rights of other citizens.
Fundamental rights of people cannot be subservient to the fundamental rights of an individual or group (in
this case, political parties).

9. Kerala VyapariVavasayiEkopanaSamithi v State of Kerala(2000)

In bharatkumar case the court made a distinction between a hartal and bundh. It was pointed out that a
bundh involved coercion of others into toeing the line of those who called for the bundh. On the other hand,
a hartal was a peaceful act of non- cooperation.

In the present case the petitioners filed a complaint stating that coercion is used accompanying the calls for
hartals and the call is enforced by violence, threat, physical or mental.

No party can have a right to compel incurring of such non-productive expenditure merely because they feel
like calling a hartal. When a call for hartal made by an association is enforced by force and the activities of
others unwilling to respond to the call, is brought to a standstill by threat, coercion or force, election
commission shall take action for cancelling the registration of such organisations. Therefore, enforcement of
hartal by force, coercion or intimidation is unconstitutional.

10. TK Rangarajan v Govt of Tamil Nadu(2003)

Some Government employees (including teachers) went on strike. The TN Govt issued an ordinance
(TESMA) and dismissed all 1.7 lakh employees for striking, without giving them opportunity to be heard. The
workers were prevented from returning to their duties and some of them arrested for inciting the strikers. A
single judge suspended the dismissal order and permitted employees to return. The division bench set aside
interim order and held that without exhausting the alternate remedy of approaching the arbitral tribunal, writ
petition cannot be entertained.

The Supreme Court held that though the Court has previously held that HC could not have extraordinary
jurisdiction under Article 226 for matters before Tribunals, such as provision can be excused when there are a
large number of petitioners. Three major issues were put forth before the court. Whether there a FR to go
on strike? Do Govt servants fall under ID act? (fordeptt. Of telecom, railways etc, its blurred) Whether
there a statutory right to go on strike? Whether there a moral right to go on strike

The Court decided that there settled law that no FR to strike, reiterating Kameshwar Prasad, Bharat
Kumar, AIBEA case. The Court relied on Bharat Kumar, even though it dealt with bandhs and not
necessarily strikes. The Court also held that no statute provides right to go on strike. The TN State rules
explicitly barred employees from strike. Further regarding moral right, the Court held that Government
employees cannot go on strike, because if a large no of them do so, the entire state will came to a halt. In a
democratic welfare State, they have to pursue the legal measures available to them. Govt. servants are
different from other workers, they have to be aware of their duties and responsibilities. Any misconduct by
them has to be dealt in accordance with the law. Often, even if the employee doesn’t want to strike, he is
forced to do so by the leader. Court ordered reinstatement and apology to be given by employees.

11. Health Servs. & Support-Facilities Subsector Bargaining Ass'n v. British Columbia, [2007]

Facts: - The province of British Columbia passed the Health and Social Services Delivery Improvement Act
where it enabled health care employers to reorganize the administration of the labour force. The act was
passed with minimum consultation with the labour unions. The part in issue was Part 2 of the said act to the
extent that it affected and introduced changes to the existing collective agreement provisions that protected
employees against contracting out and provided for job security, including layoff and bumping rights. It also
precluded employers and unions from bargaining on those issues in the future. A number of unions thus
challenged the legislation, arguing that it violated the guarantee of freedom of association (sec 2 (d)) and
equality (sec 15) as provided by the Canadian Charter of Rights and Freedoms.

Decision:-The Supreme Court reversed the line of interpretation that collective bargaining was not a part of
the right to freedom of association, as in earlier cases. The Court held that the Act was unconstitutional nd
violated the Charter. The legislation held to breach s. 2(d) of the Charter because it substantially interfered
with the process of collective bargaining by disregarding past processes of collective bargaining and also
affecting future processes of collective bargaining. The Court held that collective bargaining could be held to
be protected by the freedom of association because collective bargaining was seen as central to freedom of
association. Thus the narrow view that FOA protected only individual activities could not be held. Another
concern raised was that constitutional guarantee could not be given to the object of any association.

The court however held that the charter did not protect the outcomes of collective bargaining but collective
bargaining was indeed a “process” and such a process could be distinguished from the objects of the
association, which would be the goals of collective bargaining. Thus collective bargaining could be protected
by the constitution.

CONSTITUTIONAL RIGHT OF TRADE UNIONS + STRIKE UNDER ID ACT

1. Buckingham and Carnatic Co. v Workmen AIR 1953 SC 47

Workers take a 4 hour break on solar eclipse- No time period used in Section 2 (q) therefore held to be strike.

Timeframe will vary from industry to industry, so any cessation of work that may cause substantial
interference with work can be called a strike. There was a concerted efforet and they worked in combination
and refused to go back to work

2. Rohtas Industries v. Union (1976) 2 SCC 82

[PRIMARY MOTIVE IN INDUSTRIAL MATTERS IS FURTHERANCE OF WORKERS’ INTEREST – NO

MOTIVE TO HARM THE INDUSTRY – EVEN AN ILLEGAL STRIKE CANNOT BE SAID TO BE A
WRONGFUL TORT SINCE PRIMARY MOTIVE TO FURTHER WORKER INTERESTS – S. 24 PROVIDES
FOR ILLEGAL STRIKE AND REMEDY ONLY UNDER S. 26 OF IDA – COMPENSATION TO EMPLOYER
IS NOWHERE CONTEMPLATED UNDER THE IDA – REMEDY FOR ILLEGAL STRIKE IS
PROSECUTION, NOT COMPENSATION]

Two unions served a strike notice pursuant to non-execution of an award and failure to give enhanced
wages and bonus.The main question before the SC was (1) whether an award under S. 10A of the IDA
was amenable to correction under A. 226 of the Constitution and (2) whether the industrial
workers who went on the illegal strike could be asked to make compensation to the employer?
Adaptation of English law torts into the Indian legal system without modification is not possible since the
history, political theory and life-style being different from Indian conditions. Therefore, a tort transplant is
not possible so easily.

In instances of mixed motives, the predominant one will be taken into consideration and more often
than not, in such industrial matters the motive is far from being a ‘conspiracy’, the main objective is
always to advance the interests of the workers or to steal a march over the rival union. The primary
motive is rarely to destroy or damage the industrial setup itself. Having said this, the inevitable result of a
cessation of work is loss of production leading to a loss of profit. However, it is far too recondite to
think that such a strike was carried out with the primary motive of destroying the industry.

A strike, albeit illegal, cannot be said to be a combination in tort since the primary motive was to
bring to the fore the grievances of the workers and to demand for betterment. In the present matter,
since the conciliatory proceedings were pending, the call to strike was ipso-facto illegal. However the remedy
for such an illegal strike is prosecution under S. 26 of the IDA and not compensation. Therefore, the
SC ruled that the relief of compensation to the employer is bad in law and contrary to the remedy
under the IDA.

Illegal strike is provided for in S. 24 of the IDA and is thus a creature of law, similarly the remedy
for such a legal phenomenon is not to be sought under common law, rather within the statute under
S. 26.

A crucial observation made by the court was with regards to the fact that an arbitral reference under S. 10A
of the IDA contemplates only existing or apprehended industrial disputes. Therefore, if there is no
industrial dispute, no valid reference to the arbitrator. Thus, everything that overflows such
industrial dispute slides into the non-jurisdictional area of the arbitrator. Consequently, a claim for
compensation can be a lawful subject for arbitration only if accommodated by the definition of
‘industrial dispute’ under S. 2(k) of the IDA.
Thus it is concluded that compensation for loss of business is not a ‘dispute’ or ‘difference’ between
employers and employees which would be connected with the such matters as non-employment, terms of
employment or even with the conditions of labour of any person. Therefore, a tort claim for
compensation based upon loss of business cannot be regarded as an industrial dispute. Further,
there is no provision in the statute that contemplates a claim for compensation by the employer from the
workmen.

3. Gujarat Steel Tubes v MazdoorSabhaAIR 1980 SC 1896

[Punitive Discharge of Workmen in cases where misconduct is moving factor – simple termination
where such misconduct is not the clinching factor – individual guilt to be established for punitive
discharge – no collective guilt can be assumed without inquiry]

To press for demands regarding the implementation of an increment in the wages of the workmen in the
factory, a mazdoorsabha was formed. The sabha went on strike for pressing such demands and it led to
paralysing the production. The management issued a number of notices to the sabha regarding the action that
it would take against them and so on and so forth. The final nail in the coffin was the discharge of all of its
853 strong workforce and taking in new recruits to fill in those empty slots.

As a balm , the management took out a notice to re-employ those discharged and under such considerations,
the unity of the sabha broke apart and about 419 workers returned to the factory.

The core issue that falls before the court relates to whether the dismissal of the workers was punitive in
nature or a simple termination; both having different outcomes under law.
A punitive discharge is when a severance of service is effected because of misconduct in service on
part of the servant. Given an alleged misconduct and a live nexus between it and the termination
orders, the conclusion is dismissal, irrespective of the fact that full benefits as on simple termination are
given. On the other hand, it is a case of simple termination when the master may not go into the guilt
of the servant for alleged misconduct but rather just not feel like keeping a man he is not happy
with. The misconduct in such a scenario is not the moving factor in termination of service.
In the present matter, the court opined that since there was a strike and all workmen were involved, the
management was hurt and consequently, the exasperated management hit back by ordering the discharge of
the striking workmen. To justify such action, the management took refuge behind the misconduct of the
workmen. This gives a punitive tinge to the discharge with a hard hitting penalty for removal. Since the
court concluded that the discharge was punitive, an enquiry before punishment was admittedly
obligatory and evidently not undertaken. The discharge orders were thus bad on this score alone.
The SC faults the arbitrator’s award on the grounds that instead of individuated findings of guilt on part of
each workman, it took a wholesale survey of the events and held that the sabha was wrong and every
employee must individually be held responsible for misconduct. In the process, the arbitrator
overlooked the fact that the theory of community guilt and collective punishment has been rejected
and no man shall be punished other than for his own wrongs. Thus in the present matter, no workman
could have been dismissed but for his personal delinquency. The SC observes that not reporting for work
does not mean that the workers were actively participating in the strike, rather it could also be that
because of fear for one’s own safety the workman did not turn up. Therefore, to dismiss worker for
delinquency, the degree of culpability and the quantum of punishment turn on the level of participation in the
unjustified strike. As is evident, no individual enquiry has been made by the arbitrator. Thus a
disciplinary enquiry resulting in punishment of particular delinquents cannot be legal if the evidence
is of mass misconduct by unspecified strikers. Thus the verdict is prima facie void since vicarious guilt
must be brought home against the actively participating members of the strike.

With regards the back-wages, the general rule is full payment since the termination was illegal, yet keeping in
mind the partial blame that rests upon the workmen also, the court ruled that 2/3rd of back wages be paid to
the illegally terminated workmen.

CONSEQUENCES OF STRIKE UNDER ID ACT

1. Bank of India vs TS Kelawala (1990) 4 SCC 744

[Issue relating to payment of back wages - legality of a strike does not always preclude wrongfulness
on part of the worker – strike during crucial hours of work – resumption of work useless – bank
justified in deducting wages under S. 7(2)(b) and S. 9 of PWA – wages also deductible under S. 2(rr)
r/w S. 2(q) of IDA – legality of strike precludes prosecution – no entitlement to wages]

The employees union gave a call for a 4 hour strike, in reply to which the management issued a circular
stating that if anyone participates in that strike then he will be considered absent for the entire day and not
paid for that particular day. Nevertheless, the employees went on a strike and consequently, after the
mandated 4 hours, they went back to work, the bank not preventing them from doing so. Subsequent
to this, the bank issued a circular deducting the entire day’s salary of the workers.

The primary issue involved in this appeal is whether the employer is right in deducting the entire
day’s wage for a 4 hour strike?

The court goes on further with the discussion and states that the legality of a strike does not always
preclude wrongfulness on part of the worker. The fact that the employees went on strike during the
crucial work hours of the bank, makes the return to work after the 4 hours is of no significance. Their
attendance after the 4 hours remains useless since there was minimal work after that.
Therefore, it was concluded by the court that the bank was under no obligation to pay any wages for the
entire day, irrespective of the fact that there was resumption of work. Moreover, the court responding to
the contention of the bank that they had the power to deduct wages under S. 7(2)(b) and S. 9 of the
Payment of Wages Act, 1936 also, said that in the absence of service rules/regulations, such a
scenario is not remote and the bank could have resorted to that legislation.
Therefore, where the contract, standing orders or the service rules/regulations are silent on the subject, the
management has the power to deduct wages for the absence from duty when the absence is a concerted
action on part of the employees. It is for the work performed by the employees that wages are given and not
merely for attendance at the work place. More so, under S. 2(rr) of the IDA r/w S. 2(q), it can be
concluded that wages would be deducted if the workers don’t put in the allotted work for the day.
The court further said that irrespective of the fact whether the strike is legal or illegal, the workers are liable to
lose wages. All that a legal strike does is that is precludes disciplinary action against the workers.
Thus the workers cannot expect to be paid during the continuance of a strike. However, for this, the
management should conduct an enquiry into who actively took part in the strike and who on account of
inability because of the strike, was not able to attend to work. The latter’s wages must not be deducted
unnecessarily. The court also went a step further and adjudged that since the contract of employment
is divisible in parts, the deduction of wages can also be done pro-rata.
2. Syndicate Bank v K UmeshNayakAIR 1995 SC 319

[payment of wages for strike period in question – to settle the varied approach taken in Churakulam,
Crompton Greaves and Kelawala – reiterated that wages payable only when strike is legal and
justified – illegal when contrary to S. 22, 23 & 24 of IDA – justifiability depends on ‘service
conditions of work’, ‘urgency of the cause of the demands of the workmen’, ‘reasons for not resorting
to the dispute resolving machinery’ – justifiability depends on societal interests of the strike]

This case was a reference with regard to the conflicting views taken in previous cases. The question was
with regards to entitlement to wages during the strike period. In Churakulam Tea Estate case and the
Crompton Greaves case, the court took the view that the strike must be legal and justified so as to entitle the
workmen to wages. Following this, in Kelawala case it was decided in the contrary and was stated that no
matter what the nature of the strike, wages can be withheld and not paid of the workers desist from work on
account of strike.

As a result of non-implementation of certain understandings reached between the management and the
workers, a notice to strike was issued. This came to the notice of the conciliation office and he informed that
he would be holding conciliation proceedings under S. 12 of the IDA. As a result, the union agreed to desist
from agitation against a written promise for implementation. However, another notice of strike was served as
a result of the inaction on part of the bank authorities.In previous cases on similar lines such as
Churakulam, Crompton Greaves and TS Kelawala, the principle upheld was that for wages to be given,
the strike has to be both, justified and legal. Even if one of these elements is missing then the
management is not liable to reimburse the wages. The same principle is again reaffirmed here in this case. It is
not enough for a strike to just be legal. It has to be legal and justified.
Holding the strike illegal, the SC said that a decision upon the legality and justifiability of the strike is
the prerogative of the industrial adjudicator and the HC is not empowered to enter into such
questions. Presently, for implementational purposes, the bank required the permission of the central
government, thus it can be concluded that an industrial dispute existed. This results in the conciliatory
proceedings being good in law. Consequently, the workers went on strike while the conciliatory
proceedings were still going on and as such making the strike illegal.

As according to law, a strike is illegal if it contravened the provisions of S. 22, 23 and 24 of the IDA.
Also to determine if a strike is justified or not depends upon factors such as ‘service conditions of work’,
‘urgency of the cause of the demands of the workmen’, ‘reasons for not resorting to the dispute
resolving machinery’ etc.

The court concluded saying that in cases where the law or the contract of employment provides for a
machinery to resolve the dispute, resorting to strike or other similar tactics is not justified. However,
in most situations, justifiability is to be determined on the basis of the fact that the demands were of such a
nature that delay could not have been tolerated. Yet, the final anvil to make such a determination is
societal interests.

CONSEQUENCES OF STRIKE UNDER ID ACT

LAY-OFF, CONSEQUENCES AND DIFFERENCES WITH LOCK-OUT

1. Kairbetta Estate v Rajamanickam AIR 1960 SC 893

[lay-off v. lockout]

A division of the appellant co. remained closed because of assault on its managers. The workers later
assured the management of no more trouble but demanded lay-off compensation for the time the division
was closed.

The IDA defines lay-off under S. 2(kkk) and lock-out under S. 2(1). A lockout can be describes as the
antithesis of a strike. It is a weapon in the hands of the employer to coerce the worker into accepting his
demands. Furthermore, a lockout is different in meaning to a lay-off and thus would be impossible to bring a
lockout within the scope of a lay-off.

The court opines that a lay-off generally occurs in a continuing business, rather a lockout is a closure
of business. The former is a situation where the employer is unable to give business to the employee
and latter where the employer closes down the business for any reason but that specified for lay-off
in S. 2(kkk). In case of a lockout, the compensation for a lay-off cannot be given. Its consequences are
different from that of a lay-off and much depends upon its justifiability and legality.

The court thus holds that in the present case it was a justified lockout and not a lay-off, thus no
compensation. An assault on one of its managers was justification enough to go through with the lock-out.

Since some workers assaulted the company and the manager, that specific division was shut down. The
workers claimed that it was a layoff and claimed layoff compensation. The issue before the Court was
whether lockout falls within the ambit of layoff. Under Section 2(kkk), layoff is a failure or inability on the
part of the employer to provide employment to existing workmen on certain specific grounds. Under
Section 2(1), lockout however means closing of a place of employment or suspension of work or refusal
to continue to employ. It is a weapon to coerce workers towards something. These concepts are thus
essentially different as layoff occurs during continuation of business and lockout implies closure. In
layoff, employer is liable to pay compensation, but in lockout it has to be first established whether such
lockout was justified or not. Inspite of of such illegality, no provisions of layoff can be applicable to
lockout. In this case, the lockout was justified as the manager was violently attacked and threatened.

2. Associated Cement Companies v Their Workmen AIR 1960 SC 56

[ONE ESTABLISHMENT – TESTS SUCH AS UNITY OF OWNERSHIP, OF MANAGEMENT, OF FINANCE
AND EMPLOYMENT, SUPERVISION AND CONTROL GENERAL UNITY OF PURPOSE – STRIKE WAS REAL
REASON WHY THERE WAS SHORTAGE OF LIMESTONE LEADING TO LAY-OFF – NO COMPENSATION AS
DISQUALIFIED UNDER S. 25E(iii) OF IDA]
 Non-fulfilment of certain demands led to a strike, after which the employer closed down some parts of the
co. as a result of shortage of limestone. As a result, some workers were laid-off. The demand for lay-off
compensation was resisted on grounds of S. 25E of IDA. This came to be disputed and thus the present
matter. Another matter to be resolved by the court was to give an authoritative interpretation of the wording
‘in another part of the establishment’.
In determining what ‘one establishment’ is the court encountered difficulty because of scenarios such as
one where many enterprises may have ‘functional integrity’ between factories that are separately
owned; some may be integrated in part with units or factories having the same ownership and in
part with factories or plants which are independently owned. Several tests can include other relevant
factors such as unity of ownership, of management, of finance and employment, supervision and
control general unity of purpose etc.
However in the present matter, the court holds that the Chaibasa Cement Works consisting of the
factory and the limestone quarry form one establishment. The existence of 2 sets of standing orders
is there because of statutory approval from 2 authorities.
S. 25G gives the right to compensation and S. 25E contains 3 disqualifying clauses for the same. Clause (iii)
of S. 25E disqualifies on ground of strike by workers or go slow tactics, therefore it treats workmen in
an establishment as one class and a strike by some resulting in the laying-off of other workmen disqualifies
the workmen laid-off from claiming unemployment compensation; the unemployment is not really
involuntary. The strike was the real reason why there was a shortage of limestone in the quarry,
leading to the lay-off. Thus, the quarry and the factory constitute ‘one establishment’ and no compensation
is payable.

The issue was whether the layoff of workers in part of the cement works due to shortage of supply,
caused by the strike in the adjacent limestone quarry, was eligible for compensation within the meaning
of section 25E of IDA. The Supreme court was faced with the issue as to what test is applicable to
determine ‘one establishment’. The court said that that the tests might be different based on the
circumstances; there might me some cases the test might be unity of ownership, management and
control, in another case functional integrity or general utility and in some another cases unity of
employment may be the important test. In this case, courts viewed the quarry and the factory constituted
one establishment within the meaning of clause (iii) of section 25E, as there existed an acute
dependency. Section 25C gives the right to the workers to receive layoff compensation. There are three
disqualifying clauses in Section 25E. They show that the basis of the right to unemployment
compensation is that the unemployment is involuntary, thus when the laying off is due to a strike or
slowing down of production on the part of workmen in another establishment as in clause (iii),
compensation is not payable. This clause treats the workman in an establishment as one class and a
strike or a slow down by some resulting in the laying off other workman disqualifies the workman laid
off from claiming unemployment compensation, the reason being that the unemployment is not really
involuntary.

RIGHT TO LAY OFF + DIFFERENCES WITH LOCK-OUT

1. Workmen of Dewan Tea-Estate v Their ManagementAIR 1964 SC 1458

[no inherent common law right to lay-off – for compensation under S. 25C, conditions under S.
2(kkk) must be satisfied]Certain workmen were laid off due to non-availability of financial
assistance. The workers agitated that they were entitled to full wages for the period of lay off. This dispute
was referred to the tribunal. S. 25C gives a right to the laid off worker to get compensation at the rate set
by the provision itself. The 2 clauses to S. 25C also lay down the conditions under which such compensation
is to be given; lay off for less than 45 days and lay off for more than 45 days within a period of 12 months.
However, to deal with lay off, inevitably one refers to the definition given in S. 2(kkk) of IDA.
The court does not decide what would happen if the standing orders lay down a definition or criteria
for lay off which is inconsistent with S. 2(kkk). Would S. 25C still apply?

The court then goes on to say that S. 25C is not a recognition of a common law right of the
employer to lay off his workers. If workers are to reap the benefits of S. 25C, then they must be covered
under the criteria/definition of lay off given under S. 2(kkk) of IDA. The common law right is of no
significance here. Lay off would only be permissible if the conditions presented under S. 2(kkk) are
satisfied.
No inherent right of employer under S. 25C to lay off the workers. The employer cannot lay down the
criteria that he himself wishes to follow in laying off his workers.
In the present case, the court bunks the argument that ‘stoppage of supply’ includes ‘stoppage of financial
assistance’ and says that it includes stoppage of raw materials or other such things. Moreover, the court
said that the financial crisis that the respondent suffered cannot be regarded as a factor beyond his
control.
Additionally, since the IDA does not contain any provision specifically stating that the wider definition
under S. 2(kkk) would apply in cases of lay off and also since S. 2(kkk) is not an operative part of
IDA, the much narrower definition under the Standing Orders [R. 8(a)(i)] would be followed and
thus the appeal is allowed as the layoff was not legal.

The management in this case laid off some workmen on grounds due to non-receipt of financial assistance. The
workers claimed that such was unjustified, and they were entitled to full wages. The major question before the
Court was whether the IDA recognizes any common law right to layoff. Section 25C (1) provides the right of laid-
off workers to claim compensation, and the compensation payable. Layoff is defined under Section 2(kkk). If the
standing orders prescribe the manner compensation should be paid, then such method has to be followed. In their
absence, the Section 25C can provide adequate remedy to the workers, the only condition being that they satisfy
the definitional requirements of 2(kkk), and the situation fits into one of the criteria of 2(kkk). Thus, there is no
inherent right to layoff. In this case, the Court remarked that stoppage of financial assistance does not imply
stoppage of supply, and thus is not a relevant ground for laying off. Further, the Standing orders in this case
mentioned that the management could layoff if there were ‘causes beyond his control’, but such was not the
situation in this case.

2.Workmen of Firestone Tyre and Rubber Co. v The Firestone Tyre and Rubber Co. (1976) I LLJ 493 (SC)

[no power to lay-off – such can only be found in the employment contract or the standing orders]

As a result of the strike in the co factory and shortage of supply to the distribution office in Delhi, the
management had to lay-off 17 out of the 30 workers that it had. No compensation was provided also. Delhi
Administration then referred this dispute to the Industrial Tribunal for Adjudication.

The primary point of adjudication is whether the management had a right to lay-off their workmen
and whether the workmen are entitled to wages or compensation?
Under S. 25J of IDA, in an industrial establishment where such provisions applied, lay-off compensation
would have to be paid as under S. 25C. However, the court also stated that if the workmen are entitled to
more favourable benefits, then such would continue.

As against retrenchment [See S. 2(oo)], lay-off is referred to as failure, refusal or inability of employer to
provide for meaningful work as a result of the contingencies mentioned under S. 2(kkk). The court
categorically states that it is merely a fact of temporary unemployment of the workmen in the work of
the industrial establishment.
As also noted in the Workmen of Dewan Tea Estate case, the employer does not enjoy any right to lay-off
his workers. In fact, no section in the IDA confers any power to lay-off.

Therefore, such a power must be searched in the ‘terms of contract of employment’ or the ‘standing
orders of the establishment’. In the present case, no such power conferred under both instruments thus the
lay-off termed by the court as without authority. All appeals allowed.In this case, the company had 30
workmen, and due to an impending strike as well as shortage of supply, the workers were laid off, and
compensation sought for was not given. The issue before the Court was whether the management had a right
to lay-off their workmen, and whether the workmen were entitled to compensation. The Court held that a
layoff is a period during which a workman is temporarily discharged. Section 25A excludes industries in
which less than 50 workers on an average per working day in the preceding month from the application 25C
to 25E. In the present case there were only 30 workers at the relevant time of layoff. The employer has a right
to terminate the services of workman. Retrenchment means the termination by the employer of the service of
a workman for any reason whatsoever as mention in clause Section 2(oo) IDA. Layoff means the failure,
refusal or inability of employer on account of contingencies mentioned in cl(kkk) to give employment to
workman whose name is on the muster-rolls of the company. It suggests temporary unemployment of the
workman in the work of the industrial establishment. There is no section which confers the employer with
the power to lay off his workers. Such a power must be found out from the terms of contract of service or
the standing orders governing the establishment. In the instant case the number of workman being only 30
there were no certified standing orders nor were there any terms of contract conferring any right to lay off.
Therefore the workmen were laid off without any authority of law. Regarding compensation, the Court said
that if the terms of contract of service or 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 layoff which ordinarily and
generally would be equal to the full wages of the concerned workman. If the terms of employment confer the
power of lay off, then in the case of an industrial establishment governed by chapter VA, compensation will
be payable according to the provisions contained there. But if an establishment is not covered by Chapter
VA then no compensation will be payable, and it will be so as per the terms of employment. (in this case
latter is applicable as there was less than 30 people and Chapter VA was not applicable)

LECTURE 3 –RETRENCHMENT- DEFINITION AND CONSEQUENCES

1. Punjab Land Development and Reclamation Corporation v. Presiding Officer (1990) 3 SCC 682

[retrenchment analysed, S. 2(oo) – dismissal for any reason valid if not covered in the exceptions –
termination of only surplus labour not the real intention of the provision – it can be for ‘any reason
whatsoever’ – Ss. 25FF and 25FFF specifically added to provide compensation in case of transfer of
business and closure of business – transfer and closure not technically retrenchment – compensation
‘as if’ retrenchment – such measure to protect worker interests]

The services of the respondents were terminated on the ground that the Chairman of the Corporation had to
no power to grant appointment to them in the first place.

The question to be answered is whether on a proper construction of the definition of ‘retrenchment’

under S. 2(oo) of IDA, is it termination of service as surplus labour for any reason or is it termination
of service as a punishment inflicted by way of disciplinary action?
In PipraichSugar Mills case (1956), the court opined that ‘retrenchment connoted in its ordinary
acceptation was that the business itself was being continued but a portion of the staff or the labour force
was discharged as surplusage. Thus the court adjudged that termination of all as a result of closure of
business could not be described as retrenchment. Thus for the court, surplus labour was the key factor.

The same was reiterated in HariprasadShivshankar Shukla v. A.D. Divelkar (1957) and the court said that
‘retrenchment connoted that the business itself was being continued but a portion of the staff was being
discharged as they were surplus to the establishment’s requirements’. The court said that ‘for any reason
whatsoever’ meant that the reason to discharge the surplus labour was not essential. The court here
too did not accept total closure of business, regardless of the fact that it may be bonafide, to mean
retrenchment.Right after this judgment, IDA was amended with Industrial Disputes (Amendment) Act,
1957. Sections 25FF and 25FFF were included in the IDA which specifically provided for retrenchment
compensation in the event of closure of business and transfer or business. Thus, such situations might not
technically be retrenchment, compensation would still be provided ‘as if’ it was retrenchment. The court in
analysing S. 2(oo) said that it means termination of service of a workman for any reason whatsoever.
Moreover, termination on ground of (a) voluntary retirement, (b) reaching the age of superannuation if
provided for in the contract of employment and (c) consequent to continued ill health and also the
grounds of punishment inflicted by way of disciplinary action is expressly excluded from the definition.
Therefore, the court says that if such exclusion was envisaged by the legislators, then the termination of
only surplus labour was not the intention of the parliamentarians, thus giving full effect to the expression
‘for any reason whatsoever’

Thus the court comments that the precise exclusion of (a) and (b) would have meant that they would have
been included otherwise. Therefore, retrenchment as a result of abandonment of service, efflux of time,
failure to qualify would also have been included as those have not been excluded expressly.
Further, S. 25F lays out the conditions precedent for retrenchment; S. 25FF provides for compensation to
the workmen in case of transfer of undertaking; S. 25FFA provides for a 60 days’ notice to be give of
intention to close down any undertaking and S. 25FFF provides for compensation for closing down
the undertaking. Both, S. 25FF and S. 25FFF use the expression ‘as if the workman had been
retrenched´.
Also, if retrenchment is understood in its wider sense, then the rights of the employer under the standing
orders may be affected by the introduction of S. 2(oo) and S. 25F or it may just happen that the rights are not
affected and only an additional social obligation is added to provide for retrenchment benefit to the affected
workman.

It is the final opinion of the court that a ‘statute passed to remedy what is perceived by Parliament to be a
defect may in actual operation turn out to be injurious. In such a scenario, it is for the Parliament to relook it
and amend it accordingly, not the judiciary. The court thus holds that retrenchment means the termination
by the employer of the service of a workman for any reason whatsoever except those expressly
excluded in the provision itself.

 Construction of definition of retrenchment as it has developed.

In Bennett Coleman it was held that even in case of closure of establishment the workmen were entitled to get
retrenchment compensation. Subsequently Pipraich Sugar Mills and Hari Prasad Shivshankar Shukla held that
termination due to closure did not amount to retrenchment as they construed retrenchment to mean existence of
the establishment, and retrenchment meant only termination of surplus labour and implied continuance of the
establishments, thus closures and takeovers were not to be included. (ordinary meaning given to Section 2-oo)
Parliament responded with an Amendment and inserted 25-FF and 25-FFF which stated in case of closures
and takeovers the workmen would be receiving compensation as if they had been retrenched.

In Anakpalle V. Workmen, the court said that there was a distinction between retrenchment in 2(oo) , 25-F and
those in 25-FF and 25-FFF. Next in Delhi cloth and General Mills and SBI v. Sundara Money, these decisions
were not taken into consideration while dealing with the topic of retrenchment. They held that retrenchment would
also amount to termination on expiration of a term in a contract as not providing so would mean that the employer
could use verbal language to retrench and yet not come under liability.

 Latter cases were not in per incuriam with Hariprasad

The issue was whether since the ratio in the latter cases were in conflict with the ratio in Hariprasad Shukla, these
cases of Delhi Cloth, Sundara Money and the amendment inserting 25-FF and 25-FFF the cases were per incuriam,
the court had the power to lay the law down afresh. The Court held that the ratio of Hariprasad only extended to the
principle that was propounded that retrenchment meant the implication that the establishment continued to
exist and whether retrenchment included other terminations or not was never needed to be decided and was
thus not part of the ratio. Also the Decision of Hariprasad has been confined to its own facts and the rule of law
amended. Thus the subsequent cases were not per incuriam.

 Interpretation

Section 2(oo) definition indicated that parliament specifically excluded exceptions to retrenchment. The word
“means” is narrow indicates hard and fast definition with no other meaning. Harmoniously construing, the court says
that in case of closure or takeover retrenchment in 25-FF and 25-FFF would not entitle re-employment rights but
only compensation and notice. FINALLY the court held that under their interpretation by applying the above
Section 2(oo) meant that retrenchment was termination by employer for any reason whatsoever except those
specifically excluded in the section.

2. Uptron v. Shammi Bhan (1998) 6 SCC 538

[scope of retrenchment under S. 2(oo)(bb) – contract not of fixed tenure thus it is retrenchment since
not covered by S. 2(oo)(bb)]

The clause (bb) to S. 2(oo) was added by Amendment Act 49 of 1984. The main issue was that the
termination of services of the respondent was covered under S. 2(oo)(bb) and therefore not
retrenchment. Consequently, the question of fulfilling other requirements of providing compensation under
S. 25F would not arise.The respondent was a permanent employee of the petitioner and therefore there was
no question of his contract coming to an end. The court commenting upon Clause (bb) stated that it
contemplates a contract for a fixed term. Therefore, such a contract not being renewed upon
expiration could result in termination of services NOTamounting to retrenchment. In another
scenario, even before the expiry of contract, if services are terminated with reliance upon a clause in the
employment contract, even then it is NOT retrenchment.

The present case is not falling under any of the exclusions given under S. 2(oo), thus amounting to
retrenchment.

The Court looked into the exceptions to retrenchment under Section 2(oo), and listed that the four exceptions
included voluntary retirement of the workman; reaching the age of superannuation if the contract so stipulated;
termination of service on ground of ill health, and; non renewal of contract of employment on the expiry of the
term of contract. If a contract contained a stipulation for termination of service and the service of the workman are
terminated in accordance with that stipulation, such termination according to clause (bb) would also not amount to
retrenchment.

The contract of employment referred to in the earlier part of clause (bb) has to be the same as is referred to in the
latter part. This is clear by the use of the words ‘such contract’ in the earlier part of the clause. What the clause
means is that if there is a contract of employment for a fixed term between the employer and the workman
containing a stipulation that the services could be terminated even before the expiry of the said term. If such a
contract on the expiry of its term is not renewed and the services are not terminated as a consequence of that
period then it would not amount to retrenchment. If the services are terminated even before the expiry of the
period of contract but due to a stipulation in the contract that services could be so terminated then it is not
retrenchment.

Anand Bihari and others v. RSRTC and another 1991 Lab IC 494

[bus driver eyesight case – ill health refers to illness interfering with daily execution of duties]

The respondents terminated the services of bus drivers at the age of 40, much before superannuation at 58
stating that they lack the vision required to drive HMVs like buses. Main issues contended were that (i)
the termination amounted to retrenchment under S. 2(oo) and (ii) termination was illegal because
the order was passed against the circular issued by RSRTC stating that unfit drivers would be given
the job of a helper.

The court said that under S. 2(oo)(c), the expression ‘ill health’ has to be construed in its context and thus
would refer to illness interfering with the daily orderly working and execution of duties. It is not in
general capacity that Clause (c) is to be construed, rather according to necessary ability to perform duty for
which a worker has been hired.

The court then categorically states that the present case would be squarely included within Clause (c) of S.
2(oo), i.e. discharge of service due to continuing ill-health NOT amounting to ‘retrenchment’. Thus the
termination order is not illegal.
The court further points towards the inherently debilitating effect on one’s eyesight as a result of driving
buses in every condition under the sun and straining the eye at every turn and further opines that such drivers
cannot be treated at par with other employees of RSRTC who are not exposed to similar hazards. Thus the
court says that in situations where the drivers can be employed alternatively, such should be carried
out and in the alternative they should be given compensation when not given alternate employment.
State had terminated services of bus drivers who had worked for long years and were much below the
superannuation age, on the ground that they don’t have the vision for driving the buses. The workmen
contended that the termination amounted to retrenchment and since 25F wasn’t followed, and it was illegal
because the order against the circular stated that the job of a helper would be given to an unfit driver. Reading
the exception under 2(oo)(c) and Section 25G, the Court remarked that ill health signifies that the person
should be unfit to carry on his duty. There is no contemplation of re-employment in such a case. Ill health is
anything that interferes with the usual, orderly functioning of duty and includes drivers with sub-normal
vision. Termination per se in this case was not illegal. However, the Court considered that Court cannot
equate general workmen with drivers, as their service conditions were very different, and hence sufficient
safeguards should be provided. Court evolved a scheme in this regard.

CONSEQUENCES OF RETRENCHMENT

1. Harjinder Singh v Punjab Warehousing Corporation (2010) 5 SCC 192

Violation of Last Come First Go RuleOBSERVATIONS of the court, which are not necessary to reach a
decision in the case before it, are called obiter dicta. They are non-binding elements of the judgment or order of
the court even though they may be of persuasive value.

In a recent case, a two-judge Bench of the Supreme Court made stringent observations against the court’s
two-decade-old tendency to compromise the interests of workers in order to facilitate economic reforms and
globalisation. Although the Bench comprising Justices G.S. Singhvi and Asok Kumar Ganguly couched its
observations in general terms, it was obvious that they were expressing their extreme displeasure over the
number of judgments rendered by the Supreme Court’s bigger Benches, including Constitution Benches
comprising five judges, against labour.

In their two separate but concurring orders in Harjinder Singh vs Punjab State Warehousing Corporation,
pronounced on January 5, Justices Singhvi and Ganguly articulated the pro-labour philosophy of the
Constitution in refreshingly lucid terms, even while deciding the case before them in accordance with facts,
law and precedents.

Harjinder Singh was employed with the Punjab State Warehousing Corporation (PSWC) as work charge
motor mate from March 5, 1986. On October 3 that year, he was appointed work munshi in the pay scale
of Rs.350-525 for a period of three months. On February 5, 1987, his pay scale was upgraded to Rs.400-
600 for a period of three months. Though his specified tenure ended on May 4, 1987, he was continued in
service until July 5, 1988, when the Managing Director of the PSWC issued one month’s notice seeking to
terminate his service by way of retrenchment.

Harjinder Singh moved the Punjab and Haryana High Court and obtained a stay on the notice. The High
Court vacated the stay when Harjinder Singh wanted to avail himself of remedy under the Industrial Disputes
Act (IDA), 1947, and withdraw his petition with the High Court.

Meanwhile, on November 26, 1992, the Managing Director of the PSWC retrenched Harjinder Singh and 21
other workmen by giving them one month’s pay and allowances in lieu of notice under the IDA.

The Government of Punjab referred Harjinder Singh’s industrial dispute to the labour court. Harjinder Singh
challenged his retrenchment on the grounds that persons junior to him were retained in service, thus violating
the mandate of the IDA. The PSWC, in its reply, contended that he was retrenched because the projects on
which he was employed had been completed. On December 15, 1999, the labour court ordered Harjinder
Singh’s reinstatement with 50 per cent back wages because the PSWC had violated the principle of equality
enshrined in Section 25G of the IDA by allowing persons junior to him to continue in service.

The PSWC challenged the labour court’s award in the Punjab and Haryana High Court on the grounds that
Harjinder Singh was not a regular employee and that there was no post against which he could be reinstated.
The High Court disapproved the award of reinstatement on the premise that his initial appointment was
against the law. The High Court, therefore, substituted the award of reinstatement and 50 per cent back
wages with an order to pay Rs.87,582by way of compensation.

The Supreme Court, in its order, held that the High Court had unjustifiably overturned an otherwise well-
reasoned award passed by the labour court, thus depriving Harjinder Singh of what might be the only source
of his own sustenance and that of his family. The Supreme Court also found that the High Court had
erroneously assumed that he was a daily wage employee.

It would have been sufficient for the Supreme Court Bench to dispose of the case before it by restoring the
award of the labour court in favour of Harjinder Singh and ordering the PSWC to pay him legal costs
of Rs.25,000, as it did in its order. But, interestingly, the Bench found it necessary to introspect and make
several observations that went against the general trend of many anti-labour judgments of the Supreme Court
in recent years.
The two-judge Bench might have been constrained to avoid – in view of judicial discipline – mentioning
judgments delivered by previous Benches that went against the interests of labour. But the message was
unmistakable and amounted to a forceful indictment of the previous Benches.

Justice Singhvi thus observed: “In matters like the present one, the High Courts are duty bound to keep in
mind that the IDA and other similar legislative instruments are social welfare legislations and the same are
required to be interpreted keeping in view the goals set out in the preamble of the Constitution and the
provisions contained in Part IV (Directive Principles) thereof in general and Articles 38, 39(a) to (e), 43 and
43A in particular, which mandate that the state should secure a social order for the promotion of welfare of
the people…and also ensure that the workers get their dues.”

The above observations were contrary to what the Supreme Court’s five-judge Constitution Bench held
in State of Uttar Pradesh vs Jai Bir Singh (delivered on May 5, 2005). The Bench in this case disagreed with
Justice V.R. Krishna Iyer’s pro-labour judgment in the Bangalore Water Supply and Sewerage Board case
(delivered by a Bench of seven judges in 1978), and referred it for reconsideration by a larger Bench.

While doing so, the five-judge Bench said: “…The statute under consideration [IDA] cannot be looked at
only as a worker-oriented statute. The main aim of the statute as is evident from its preamble and various
provisions contained therein is to regulate and harmonise relationships between employers and employees for
maintaining industrial peace and social harmony.”The issue before the Bench was the definition of the word
‘industry’. In the Bangalore Water Supply case, the Supreme Court suggested an expansive definition. Nearly
three decades later, the court appeared to be in favour of a restrictive definition in order to exempt many
areas of industrial activity from the purview of the IDA and its worker-protective umbrella.

In the Jai Bir Singh case, the Bench further observed:

“It is experienced by all dealing in industrial law that overemphasis on the rights of the workers and undue
curtailment of the rights of the employers to organise their business, through employment and non-
employment, have given rise to a large number of industrial and labour claims resulting in awards granting
huge amounts of back wages for past years, allegedly as legitimate dues of the workers, who are found to have
been illegally terminated or retrenched. An over expansive interpretation of the definition of ‘industry’ might
be a deterrent to private enterprise in India where public employment opportunities are scarce.”

The observations of the Singhvi-Ganguly Bench assume significance because the nine-judge Bench to
reconsider the Supreme Court’s judgment in the Bangalore Water Supply case has not yet been constituted by
the Chief Justice of India (CJI). The current CJI, Justice K.G. Balakrishnan, was part of the five-judge
Constitution Bench in the Jai Bir Singh case which referred the Bangalore Water Supply judgment for
reconsideration by a nine-judge Bench, despite opposition from counsel representing the interests of labour.

Justice Singhvi recalled that in the 1970s, 1980s and 1990s, the courts repeatedly negated the doctrine
of laissez-faire and the theory of hire and fire. But, he deplored, that of late there had been a visible shift in the
courts’ approach in dealing with cases involving the interpretation of social welfare legislation. The mantras of
globalisation and liberalisation were fast becoming the raison d’etre of the judicial process and an impression
had been created that the constitutional courts were no longer sympathetic to the plight of industrial and
unorganised workers, he pointed out.

Observers point out that Justice Singhvi perhaps had in mind the five-judge Constitution Bench’s decision in
the Uma Devi case in 2006. In this case, the court held that a person who had temporarily or casually got
employed could not be directed to be continued permanently. Although he did not specifically refer to this
case, his disagreement with the court’s judgment in Uma Devi was apparent in this sentence in his order:

“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 bylanes and sidelanes in the jurisprudence
developed by this court [emphasis added] in three decades.”

He continued: “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…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.”
Justice Singhvi reminded the Supreme Court and the High Courts that if a man was deprived of his
livelihood, he was deprived of all his fundamental and constitutional rights, and for him the goal of social and
economic justice, equality of status and of opportunity, and the freedoms enshrined in the Constitution
remained illusory.

Justice Ganguly’s observations were no less forceful than Justice Singhvi’s. He said: “If the judges fail to
discharge their duty in making an effort to make the preambular promise a reality, they fail to uphold and
abide by the Constitution, which is their oath of office. In my humble opinion, this has to be put as high as
that and should be equated with the conscience of this court.”

He emphasised that the court had a duty to interpret statutes with social welfare benefits in such a way as to
further the statutory goal and not to frustrate it. In doing so, this court (emphasis added) should make an effort
to protect the rights of the weaker sections of society in view of the clear constitutional mandate, he said.

Justice Ganguly warned: “Any attempt to dilute the constitutional imperatives in order to promote the so-
called trends of ‘globalisation’ may result in precarious consequences. Reports of suicidal deaths of farmers in
thousands from all over the country along with escalation of terrorism throw dangerous signal.”He recalled
Rabindranath Tagore’s reference to eventualities that might visit us in our mad rush to ape Western ways of
life. He concluded that at this critical juncture, the judges’ duty was to uphold the constitutional focus on
social justice without being in any way misled by the glitz and glare of globalisation

CONSEQUENCES OF CLOSURE AND TRANSFER OF UNDERTAKINGS

1. District Red Cross Society v Babita Arora (2007) 7 SCC 366

Respondent nurse working in appellant's hospital was transferred to De-Addiction Centre due to closure of
Appellant's maternity hospital which was not acceptable to respondent and so she was terminated.
Respondent then filed claim petition before Industrial Tribunal that the appellant management had not
followed due procedure in Sections 25F to 25H of the Industrial Disputes Act during termination as no
retrenchment compensation was paid to her at the time of termination and so prayed for reinstatement of
services with full back wages. Tribunal held that the appellant Society was running a Drug De-Addiction-
cum-Rehabilitation Centre, a Family Planning Centre and a Viklang Kendra and thus it cannot be said that
the establishment of the appellant had been closed. It was further held that the respondent had completed
more than 240 days of service in the year preceding the date of termination of her service and, therefore, she
was entitled to reinstatement compensation which had not been given by the management and thus
termination of her service was in violation of Section 25F of the Act. On these findings, the Tribunal held
that the termination of service of the respondent was illegal and contrary to law and accordingly gave an
award directing her reinstatement with continuity of service and full back wages from the date of demand
notice. Appellant challenged the awards of the Tribunal by filing writ petitions in the High Court. The High
Court also dismissed the writ petitions endorsing the view held by the Tribunal. Hence, present appeal. Held,
the position in law is well settled that if the entire establishment of the employer is not closed down but only
a unit or undertaking is closed down which has no functional integrity with other units or undertaking, the
provisions of Section 25FFF of the Act will get attracted and the workmen are only entitled to compensation
as provided in Section 25FFF of the Act which has to be calculated in accordance with Section 25F of the
Act. The Tribunal and also the High Court clearly erred in holding that as other units of the appellant Red
Cross Society like Drug De-Addiction-cum-Rehabilitation Centre, Family Planning Centre and Viklang
Kendra were functioning, the termination of services of the respondent would amount to retrenchment. The
Maternity Hospital was functioning as a distinct entity. It was not receiving any grant from the Government
and was being run entirely on charitable basis from donations received from public. Due to financial
stringency, the Maternity Hospital had to be closed down. The other three units, viz., Drug De-Addiction-
cum- rehabilitation Centre, Family Planning Centre and Viklang Kendra are receiving grants from
government and are functioning as separate entities and the mere fact that they have not been closed down,
cannot lead to the inference that the termination of services of the respondent was by way of retrenchment
which was illegal on account of non-compliance of the provisions of Section 25F of the Act. Appeal is
allowed

2.Jagbir Singh v Haryana State Agriculture Mktg Board(2009) 15 SCC 327

Reviewed all cases between 2006-2009. all these cases said that only special circumstances would permit
reinstatement or back-wages. Coined the principle of 'no work no pay.' No payment without work. This is
the present rule. The burden is on the workmen to show special circumstances.
Do workers have a right to claim wages for the duration of the strike?

3.DeepaliGunduSarwase v Kranti Junior Adhyapak 2013

The appellant is hereby reinstated on her original post and Respondents are directed to reinstate the appellant
in her original post as Asst. Teacher NandanvanVidyamandir (Primary School), Aurangabad
with full back wages from the date of termination till date of reinstatement.

4) The Respondent Nos.1 to 3 are hereby directed to deposit full back wages i.e. pay and allowances of the
appellant from the date of her termination till the date of her reinstatement in the service, within 45 days in
this Tribunal from the date of this order.

In the very nature of things there cannot be a strait-jacket formula for awarding relief of backwages. All
relevant considerations will enter the verdict. More or less, it would be a motion addressed to the discretion
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 within 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.” (emphasis supplied) After enunciating the above-noted principles,
this Court took cognizance of the appellant’s plea that the company is suffering loss and, therefore, the
workmen should make some sacrifice and modified the award of full back wages by directing that the
workmen shall be entitled to 75 % of the back wages.

iv) The cases in which the Labour Court/Industrial Tribunal exercises power under Section 11-A of the
Industrial Disputes Act, 1947 and finds that even though the enquiry held against the employee/workman is
consistent with the rules of natural justice and / or certified standing orders, if any, but holds that the
punishment was disproportionate to the misconduct found proved, then it will have the discretion not to
award full back wages. However, if the Labour Court/Industrial Tribunal finds that the employee or
workman is not at all guilty of any misconduct or that the employer had foisted a false charge, then there will
be ample justification for award of full back wages.

v) The cases in which the competent Court or Tribunal finds that the employer has acted in gross violation of
the statutory provisions and/or the principles of natural justice or is guilty of victimizing the employee or
workman, then the concerned Court or Tribunal will be fullyjustified in directing payment
of full back wages. In such cases, the superior Courts should not exercise power under Article 226 or 136 of
the Constitution and interfere with the award passed by the Labour Court, etc., merely because there is a
possibility of forming a different opinion on the entitlement of the employee/workman to
get full back wages or the employer’s obligation to pay the same. The Courts must always be kept in view
that in the cases of wrongful / illegal termination of service, the wrongdoer is the employer and sufferer is the
employee/workman and there is no justification to give premium to the employer of his wrongdoings by
relieving him of the burden to pay to the employee/workman his dues in the form of full back wages.

1.Gujarat Steel Tubes v Mazdoor Sabha AIR 1980 SC 1896- Check in Strike above

2. L. Michael v Johnson Pumps India Ltd.

READING PLAN FOR MODULE 6

BACKGROUND, LEGISLATIVE INTENT AND SCHEME OF THE DISPUTE SETTLEMENT+

APPROPRIATE GOVERNMENT

1.Air India Statutory Corporation v United Labour Union

The appellants employed the respondent union members as contract labourers for the job of sweeping,
cleaning and maintenance of the buildings owned by the appellants. The Contract Labour Act came into
force in 1970 and the appellants got a certificate as per the Act from the Regional Labour Commissioner
(Central) in 1971. A notification under S.10 of the Act was passed in 1976 prohibiting contract labour for
cleaning and sweeping purposes. This came into effect in 1976.

By a letter dated January 1972 the Regional Labour Commissioner (Bombay) informed the appellants that the
State Govt. was the appropriate Govt. and thus the registration was revoked. By an amendment to the ID Act
in 1982, ID Act was made applicable to appellant and the Central Govt. again became the appropriate Govt.
The respondents then filed a writ petition for absorption of the contract labourers into regular service as per
the Central govt. notification. The current case is on appeal from these decisions.

What is the meaning of “appropriate Govt.” as per S.(1)(a) of CLR Act? The division Bench in this case
overruled the judgement in the Heavy Engineering case which gave a narrow interpretation to the term
“appropriate govt.”(in that case the Court said acase concerning body engaging in commercial activities under
control of Central govt. would not necessarily make Central Govt. the appropriate govt., it would only be
appropriate govt. if body was executing governmental functions under control of Central govt. and not
commercial functions) The Court analysed cases involving definition of State under Article 12 like RD
Shetty vs AAI and Ajay Hasia case. After analysing the above judgements the Court came to a conclusion
that a body is “State” as per Art. 12. if-

1. It is a statutory body or,

2. Its activities are controlled by the appropriate govt. or

3. Even if the above points are not fulfilled, a deep pervasive State control can be judged
through the facts and circumstances of the case.

And if a body is considered” State” any dispute relating to it the appropriate govt. will be Central Govt. Thus
in the present case the appellants initially being a statutory body under the Central govt. and then becoming a
Company under companies Act but still under State control, the appropriate Govt. was the Central Govt.

2. Steel Authority of India Ltd. V National Union Water Front Workers

Facts: Similar to above. In this case SAIL did not conform to a notification by the Govt. of WB to abolish
contract labour in particular stockyards of Calcutta.

What is the meaning of “appropriate Govt.” as per S.(1)(a) of ID Act?Is it always Central Govt. if
concerned body is under Central Govt.? The Court laid emphasis on the definition of appropriate govt. as
per Contract Labour Act. One common factor in this definition before and after amendment was the phrase-
“any industry carried on by or under the authority of the Central govt.” would have Central govt. as
appropriate govt. The Court here studied the various interpretations of “authority” under cases
relating to Art.12(as mentioned in earlier summary). The distinction between ‘other authorities’ and ‘by
or under the authority’ are different as the latter clearly indicates a delegation of power and permission. Also
the CLRA extends to private placements as well, which cannot fall under Article 12. After its analysis the
court opined that it is difficult to agree with the ruling in the Air India case as a body might be “state” as per
Art.12 and also under the control of State Government. The determining factor has to be whether the body is
under control or authority of Central Govt. depending on the facts and circumstances, thus overruling the Air
India case.

3. Nashik Workers Union v Hindustan Aeronautics Ltd- Overruled HAL 2 and reiterated HAL 1.
4.Sri Ranga Vilas Motors v Workmen AIR 1967 SC 1040 [Roll No. 1-33, 67-98]
5.Bikash Bhushan Ghosh v M/s Novartis India Ltd. (2007) 5 SCC 591
6.Nandram v Garware Polyester (2016) 6 290

INDUSTRIAL DISPUTES
1. Workmen of Dimakuchi Tea Estate v DTE AIR 1958 SC 353

[‘any person’ in definition under S. 2(k) refers to those persons with whom the workmen as a class
have a direct and substantial interest – provisions of the act are inclined towards benefiting the ‘
workman’ – solidarity of labour must be based on community of interest – a worker’s union cannot
represent a person employed in a supervisory position since no community of interest]
The Assistant Medical Officer’s service was terminated citing incompetency. His cause was taken
up by the Assam Cha KaramchariSangh.Consequently, after referral by the Assam Govt, the dispute arose
whether a dispute concerning a person who is not a ‘workman’ can be considered an industrial
dispute.Under S. 2(k), there should be (1) a dispute or differences (2) between employers and
workmen or between workmen and workmen (3) connected with the employment or non-
employment or the terms of employment or with conditions of labour. However, the expression ‘any
person’ in the 3rd part of the definition would obviously not refer to anyonein the world.

In the present case, the manager or the chief medical officer are definitely not workmen. The logic of
including ‘any person’ in the definition was to make sure that non-employment of a dismissed
worker was also within the ambit of an industrial dispute. Moreover, almost all provisions of the act
are intended to confer benefits or deal with that class of persons who generally fall within the
definition of workmen.
The court then goes ahead and gives a definition to the term ‘any person’; a person in whose employment
or not, 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.

Furthermore, solidarity of labour or the general interest of labour must be based on or correlated to the
principle of community of interest; the workmen can raise a dispute in respect of those persons only for
whom they have a direct or substantial interest. As a class, the workmen should have a direct community
of interest in that particular class which is having the dispute.The court further says that ‘all persons’ is not
to be confused with ‘all workmen’ and therefore, having recourse to the community of interest principle,
the person regarding whom the dispute is raised must be one in whose employment/non-
employment, conditions of labour etc. the party to the dispute has a direct or substantial interest. In
the present case, the doctor was not a workman, and rather belonged to the category of technical/medical
staff which is a wholly different category to ‘workmen’. Therefore, the appellant union had no direct or
substantial interest in the dispute concerning the doctor.

2. Workmen v DharampalPremchand (Saughandi)AIR 1966 SC 182

[other union only of same industry can also take up dispute – such union can be of different
establishment – limitations of S. 36 of IDA apply]

Out of a total of 45 employees, 18 were dismissed. The SC observed that if the employer illegally
dismisses all the workmen employed by him, then it is undoubtedly an industrial dispute and the
same cannot be refuted simply on the basis that there is no union to represent such aggrieved
employees.
In the present case, the employees don’t have a union of their own; this would not preclude them from
raising a dispute by themselves in a formal manner and as such it would become an industrial
dispute. However, because of certain limitations, only a union of the same industry can raise a dispute
on behalf of an individual employee or a number of them. A union from some faraway place and not of
the same industry can’t do so as under S. 36 of IDA.
However, being pragmatic, the court further opines that if the employees don’t have a union of their own,
they can join one of another establishment in the same industry. Such other union can take up the cause
of the aggrieved workers and can reasonably raise a dispute. It further opined that the aim of having larger
and healthier unions would be frustrated if only a union in the same establishment was allowed to raise an
industrial dispute.

VOLUNTARY REFERENCE OF DISPUTES TO ARBITRATION

Engineering MazdoorSabha v Hind Cycles (1962) 2 LLJ 760 (SC)

[an arbitrator’s power under S. 10A derived solely from the agreement between the parties to dispute
– tribunals under A. 136 are intended to be clothed with some of the powers of a court; summoning,
procedure, evidentiary rules etc. – under S. 10A it may appear to be court but lacks the basic
adjudicatory power to deliver justice – such power resides with the state alone – not a proper tribunal
since powers derived only from agreement – no appeal lied under A. 136]
This appeal is to decide upon a preliminary objection that arbitrators appointed under S. 10A are not
‘tribunals’ and thus no appeal could lie to the SC under A. 136.
The court opined upon A. 136 and stated that it could be invoked only under 2 circumstances; (1) the appeal
must be from any judgment, decree, determination, sentence or order and NOT against a purely
administrative or executive order and (2) the said determination or order must have been passed by a
court or tribunal in the territory of India.

Where an authority is required to act judicially either under a statutory provision or by necessary implication
of the said statute, its decisions are quasi-judicial in nature.

The tribunal as distinguished from the court decides matters brought before it in a judicial or a quasi-judicial
manner; not constituting a court in the technical sense. A domestic tribunal appointed in departmental
proceedings or instituted by an industrial employer cannot claim to be a tribunal as understood under A.
136(1). Purely administrative tribunals are also outside of the scope of A. 136.

On the other hand, those that are contemplated by A. 136 are the ones clothed with some of the powers of
the courts; power to summon, to administer oath, following certain rules of procedure, proceedings in
line with natural justice requirements. Summarily stated, they have to act judicially and on objective
terms, NOT delivering conclusions in a purely administrative manner with subjective inclinations.The
arbitrator under S. 10A is regulated by certain rules and the award pronounced by him is binding and
has statutory authority. Thus he exhibits evidence of being a ‘statutory arbitrator’ being separate
from a ‘private arbitrator’. However, though it may appear to be a court prima-facie, the arbitrator lacks
the State’s essential judicial power given to courts. His power to adjudicate upon the dispute derives
from the agreement between the parties exclusively. Therefore, though he may be clothed with certain
statutory powers under S. 10A, the power of adjudication is still not derived from the State. His position
may thus be higher than a private arbitrator, but still not a tribunal as required for A. 136.
Distinguishing A. 136 from A. 226, the court said that a writ of certiorari issued under A. 226 is not limited
by the constraints enumerated under A. 136. Under A. 226, it can be issued to any person or authority,
including a government and also against an arbitrator under S. 10A of IDA.Further, as under S. 10A(1),
the government is not introduced at any stage. The said clause only provides for what the parties to the
agreement can agree to do. If they wish, they can also refer the dispute to labour court, tribunal or national
tribunal makes no difference to the construction of the provision. Thus sole power derived from the
agreement between the parties and nowhere else.Thus not under the scrutiny of the SC under A. 136
since it is not a proper tribunal deriving its adjudicatory powers from the State’s inherent powers to
do justice.
Karnal Leather KaramchariSangathan v Liberty Footwear AIR 1990 SC 247

The publication of agreement is mandatory because the purpose was to inform workers about the arbitration
proceeding. However the timeline for publication is not mandatory. But the agreement must be published
before the arbitrator hears the merits of the case. 10A(5)-arbitration act does not apply to arbitration under
ID act.10A (3A)-not only parties to agreement are bound by it, but also those who are not parties to the
agreement, but are parties to the original dispute will be governed by the agreement when the people who
have signed the agreement represent the majority of the involved parties. But the government must issue a
notification to make such parties bound by the agreement. They will be given an opportunity to present their
case before the arbitrator. This is a major departure from the traditional aspects of arbitration.

CONCILIATION + REFERENCE OF DISPUTES TO BOARD/COURT/TRIBUNAL

Gujarat Steel Tubes Ltd. v. GST MazdoorSabha (1980) 1 LLJ 137 (SC)

[an Arbitrator is a Tribunal as under S. 2(r) and S. 11A (1), (2) & (3) – denotes a seat of justice similar
to the function of a tribunal – part of the state’s sovereign infrastructure of dispensation of justice –
S. 11A makes only hierarchical distinction, not a functional one]
 Certain workmen went on strike on connection with a dispute relation to non-implementation of wage board
recommendations. As a result, work was halted for a period of 4 months and started only with new
recruits.However, GST offered back some of the positions to the dismissed old employees. However, by this
time, out of 853 total discharged, 419 had been rehired and the Labour Commissioner had settled the dispute
regarding the other 15 strikers. After this, the issue was referred to an Arbitrator. The arbitrator held that (i)
the strike was illegal (ii) participation in such strike amounted to misconduct and (iii) management’s
termination order was justified. This award was quashed by the HC under A.226 and thus the present appeal.

The primary question to be addressed was whether the arbitrator had the power to re-examine the
punishment imposed by the management?

The SC opined that every wrong cannot be righted only because it is a wrong, rather can only be quashed if
vitiated by gross miscarriage of justice, absence of legal evidence, perversity, serious prima facie
legal errors etc.

Furthermore, relying upon RohtasIndustriescase, it was stated that an Arbitrator under S. 10A has the
power to bind even those not party to the reference and that it is legitimate to consider such an
arbitrator as part of the infrastructure of the sovereign’s dispensation of justice – falling within the
rainbow of statutory tribunals, amenable to judicial review.

Therefore, so long as the hierarchy of officers and appellate authorities created by the statute
function within their ambit, the manner in which they do so can be no ground for interference. The
powers of the HC under A. 227 are not more than those under A. 226 and thus must be limited to
only see if the tribunal is functioning within its authority.
In the court’s opinion, S. 11A clothed the Arbitrator with similar powers as Tribunals. An arbitrator
fulfils a role of being a seat of justice with jurisdiction to render justice. S. 11A only makes a
hierarchical difference between Tribunal and National Tribunal; not a functional difference.

Prima facie, under S. 2(r), the definition provides for a different category from arbitrators but all statutory
definitions are subject to contextual changes. Thus natural meaning of a ‘Tribunal’ is a ‘seat of justice’.
Justice can be dispensed by a quasi-judicial body, an arbitrator, a commission or any other adjudicatory
body created by the State. All these are tribunals, and thus also an ‘arbitral tribunal’.

Though the award of the arbitrator does not mention S. 11A, even prior to it, there was jurisdiction for a
labour ‘tribunal including’ an ‘arbitrator’ to go into the punitive aspects of the management’s orders.

The Dissent

The dissent given by J. Koshal highlights the fact that in IDA, an arbitrator would refer to an umpire, while a
Tribunal would ONLYmean an Industrial Tribunal constituted under the Act.

Under S. 11(1), ‘Tribunal’ has been used in accordance with S. 2(r) since an ‘Arbitrator’ is mentioned
separately under that sub-section. However, no such mention is present under S. 11(2) and S. 11(3). Thus it
can’t mean one thing under S. 11(1) and completely something else under S. 11(2) and (3). Also, the mention
of a ‘National Tribunal’ exclusively under S. 11(2) & (3), means that ‘Tribunal’ used over there means an
institution of that type. Therefore, the dissent held that ‘Tribunal’ used in S. 11 must be used in the sense of
the definition as under S. 2(r). Consequently, S. 11A being part of the same arrangement as under S. 11(2) and
(3), the use of ‘Tribunal’ there carries the same meaning as under S. 11. Thus, the arbitrator could not
exercise the powers conferred on a Tribunal under S. 11A and thus could not interfere with
punishment awarded by the management.
Does Tribunal include Arbitrator?

Krishna Iyer: The word 'tribunal' is used in generic sense. It is the seat of justice. It includes arbitrator. Functionally the
same. Based on ILO recommendation. Although arbitration is not explicitly mentioned, it is to be included-omission is
case of 'caucus omission'. Purposive interpretation.

Sec 2 R defines tribunals-does not include arbitration. Although prima facie they are different, definitions are subject to
contextual changes (pg 381)

Dissent: 1) word used in one sense in a section would mean the same elsewhere 2) use of capital 'T' 3) Usage of National
Tribunal after tribunal. Thus, does not include arbitrator (pg 384)-Minority judgment.

Majority ruling is still case law.

Question is does it change the principles in the Hind Cycles Case?

Scholars agree it is only applicable to sec 11A and not others. Thus the Hind Cycles case still prevails.

Sec 11A: labour court/tribunal+arbitrator.

Completely Different Issue

Facts:-There was a series of communications b/w the company and the Sabha which centered mainly around
implementation of the Wage Board recommendations. After the series of communications With which the Sabha was not
satisfied, the Sabha went on strike which the management deemed illegal and unjustified. Finally the management
terminated the services of all 853 employees stating it was a discharge simpliciter and offered their legal dues. After another
series of exchange of letters, the employer gave a final call to re-instate the discharged workmen to which the Sabha sent
back a letter agreeing. However with this new feeling of victory, the employers backtracked on its promise of full
employment and eventually only 419 out of the 853 were re-employed. The reemployment of the others was the dispute at
hand. [for full facts refer to page 155-161 of the module]

Decision:-The key issue that the court intended to deal with was whether the termination was a simple dismissal or a
punitive discharge for the strike which then would be liable to be void if the procedural imperatives for such a discharge
are not met. The court in the present case stated that even though the discharge was disguised under formal terms as
discharge simpliciter and offered dues it was not conclusive test to determine that the termination was indeed not a
punishment. The Court stated that the facts of the case which show the strike and the management then terminating the
workers show nothing but a flavour of punishment for the strike which hurt the management. The court said that the
events leading up to and the whole situation must be taken into account while determining the above. The court then said
that in the case the discharge was a punishment then there were other procedures required to make it legally acceptable.
There has to be an enquiry, and individual extent of every workmen’s involvement in the strike must be ascertained. The
Court stated that since our judicial system does not recognize collective guilt, the entire workforce cannot be dismissed
because of the faults of the few. In the present case there had been not enquiry by the employers and also there was no
enquiry to ascertain the individual involvement of all the workers and hence the dismissal which was deemed to be a
punishment was not procedurally satisfactory and void. The court as a passing observation also stated that right to strike
was a part of collective bargaining and as such guaranteed by article 19 and part IV of the constitution read together. The
court in the end spoke about the minor issue of quantum of backwages stating that full back wages on reinstatement was
the normal rule since the termination itself was void. But the Industrial Court may slice off a portion depending on a case-
by-case situation basis where the strike was illegal, unjustified, the workmen were not totally innocent etc.

1. State of Madras v CP Sarathy (1953) 1 LLJ 174 (SC), AIR 1953 SC 53

[reference to industrial tribunal – extent of power to scrutinize the government’s decision to refer –
reference under S. 10(1) an administrative power – courts can’t scrutinise the reference order for
veracity of materials relied upon – scrutiny limited to whether industrial dispute or not?]

The respondent was a manager of a cinema hall and was charged with criminal offence under Ss. 27 & 29 for
instigating a lockout and disobeying an award of an industrial tribunal.

Regarding the reference of the govt. in the present case, the SC said that the govt. will not be justified in
making a reference under S. 10(1) without satisfying itself of the existence of an industrial dispute on
the basis of the facts or circumstances. Also, as far as possible, the government should also indicate
the nature of the dispute in the order of reference.
Such reference under S. 10(1) is an administrative actSOLELY, and the fact that it forms an opinion with
regard to the nature of the dispute before reference does not denude it of its administrative character.
 Consequently, the court can’t canvass the order of reference to see if there was any actual material
before the govt. on the basis of which it made the reference.
As happens most of the times, the appropriate govt. is not able to authoritatively determine the
nature of the dispute. In situations where expediency requires, as in a strike or a lockout, the
government must have the power to set in motion the settlement machinery without having to waste
time determining the exact nature and point of dispute. Having said this, the govt. must have sufficient
knowledge of nature of the dispute to be able to determine if it’s an industrial dispute or not in the first place.

The courts can examine whether such dispute is industrial or not but don’t have the power to
examine the documents or materials on the basis of which the reference was made.
Sarathy the manager of Prabhat Talkies was charged with a criminal offense under section 27 and 29 of
the IDA for instigating a lock out and disobeying an award of an industrial tribunal. South Indian Cinema
Employees' Association a trade union whose members are workers in various cinemas had presented
written demands to the Labour Commissioner for better wages, dearness allowance,, bonus and a better
grievance procedure. He invited the parties to discuss certain minimum terms. The managers of Prabhat
and five other cinemas accepted those terms. The managers of other cinemas refused. The employees'
association told the commissioner that they would strike in a week. At the end of a week he reported
failure of conciliation procedure and the Government of Madras referred the dispute. The tribunal
notifies the 24 cinemas. Prabhat and other cinemas claimed that there was no dispute. The tribunal made
its award on merits and set the terms higher than that of the Commissioner. The Government confirmed
it and held it binding for a year. Sarathy refused to comply and was criminally charged. Issue: is there a
dispute between the management of the city theatres and their respective employees justifying the
reference by the Government to the Industrial Tribunal for adjudication? Whether the award was void
because of the lack of dispute permitting a valid reference?

Decision: The Government without a close examination of the conditions in each individual
establishments that disputes which have affected the workmen collectively existed in the cinema industry
and that even if such disputes had not arisen in any particular establishment, they could well be
apprehended as imminent in respect of that particular establishment also. Government therefore had
jurisdiction to make the reference and the award bound the respondent's organization under Section 18 of
the Act. Government before making a reference under Section 10(1) has to satisfy itself on the facts and
circumstances that an industrial dispute exists. The Government should also indicate the nature of the
dispute in the order of reference. The opinion formed on the factual situation by the Government is an
administrative step. The Court cannot scrutinize the order of reference as if it was a judicial or quasi
judicial decision of the Government. It will not be competent for the court to hold the reference bad and
quash the proceeding for want of jurisdiction merely because there was in its opinion no material in front
of the Government on which it could have come to an alternative conclusion on the matter.

The Government has the power, in order to maintain industrial peace and production, set in motion the
machinery of settlement with its sanctions and prohibitions without stopping to enquire whether what
specific points the parties are quarrelling about.

2. Avon Services v Industrial Tribunal (1979) 1 LLJ 1(SC)

[open to govt. to take up issue later even if at present referral is turned down – no need for new material
or circumstances for a fresh reference – power under S. 10(1) purely administrative and thus beyond the
anvil of judicial scrutiny – the very existence of an industrial dispute can be challenged but not veracity of
material]

The painting section was closed down and asked the workers to collect their dues as under S. 25FFF of IDA. The
Trade Union raised a demand stating termination was illegal and asking for reinstatement with full back wages. The
govt. refused to refer the dispute citing no work for the workers in the painting section. Regarding the referral of
disputes, the SC said that under S. 10(1), the govt. has a discretionary power and such can be exercised on
satisfaction of the fact that an industrial dispute exists. Such referral or non-referral is an administrative
power in the hands of the government.

The adequacy or sufficiency of the material on which the government forms its opinion is beyond the
scrutiny of the judiciary. The very fact of it being or not being an industrial dispute can challenged, but its
factual existence and the expediency of making reference are matters entirely for the govt. to decide upon. The sole
requirement for taking action under S. 10(1) is that there must be some material before the govt. which will
enable it to form an opinion regarding the dispute. Another crucial factor is that merely because the govt.
has refused to refer the dispute does not mean that it has ceased to exist. It is perfectly open to the govt. to
refer the dispute at some later stage. For such a deferred referral, there is no requirement of existence of
fresh material infront of the govt. to make a reference. The same considerations can weigh in again and a
referral can be made if the dispute poses a threat to industrial peace and harmony.

REFERENCE
State of Bombay v K.P.KrishnanAIR 1960 SC 1223

[the court can issue mandamus if certain that extraneous and irrelevant factors were considered while
making reference under S. 10(1) – report of conciliation officer can be used as well as other relevant
material – the govt. must act fairly and not in a punitive spirit]

The workmen of Firestone Rubber Co. made certain demands regarding the payment of bonus. After conciliation
failed, the State of Bombay decided not to refer the dispute for industrial adjudication. The reason given for such
refusal was that the workmen resorted to go-slow during the year 1952-53.

The SC, stating the law under S. 12(5) of the IDA said that this provision does not confer power on the
appropriate government to make a reference in isolation of S. 10(1) of IDA. Further the court, commenting
upon the report of the conciliation officer under S. 12(4), stated that although the report is invaluable for the
appropriate government to base its decision upon, but it is NOTthe only material on which the
government should or could base its decision. It would perfectly be open to the government to consider other
relevant facts which may come to its knowledge.

While making a reference, the govt. has to first consider on prima facie facts if reference is to be made and
later it would be open to consider any other relevant or material fact. Considerations of expediency can weigh in
favour of not making a reference, yet wholly irrelevant considerations cannot be taken by the govt. Also, the
govt. mustnot act in a punitive spirit and must consider the question fairly, reasonably taking into
account relevant facts and circumstances.
Furthermore, though the order under S. 12(5) may be an administrative order and thus not open to judicial
scrutiny, it would surely be open to the court to issue a writ of mandamus if it’s satisfied that the reasons
given by the govt. are extraneous and not germane.
In the present matter, the only reason given was that the workers resorted to go-slow. However, despite of this, 3
months’ bonus was given to the workers by the company and also the conciliator’s report gave weightage to the
claim of the respondents. Thus the appeal is dismissed citing extraneous circumstances considered by the
government.

The workmen of Firestone Tyre and contending Rubber Co. of India Ltd. made certain demands in respect of the payment
of a bonus. The demands were admitted to conciliation. The conciliation proved to be a failure. After considering the
failure report the State of Bombay decided not to refer the dispute for industrial adjudication. The reason communicated
to the respondent was that the workmen had resorted to go slow the previous year.

Issue: Is a reference made under section 12(5) independent of section 10(1)? whether the Government considers only the
report before making its conclusions? Whether a writ of mandamus would lie against the reasons issued by the
Government for not allowing the reference?

Decision: the supreme court rejected the view of the high court that reference can be made under Section 12(5)
independent 10(1). The High Court also seemed to suggest that the only material upon which the conclusions of the
appropriate government under section 12(5) should be based is the report. But the words of section 12(5) do not seem to
suggest that the report is the only material upon which the government should base its conclusion. It would be open to the
government to consider other relevant information and in light of these relevant facts that it has to come to a decision
whether a reference should be made or not. In refusing to make a reference under section 12(5) if government does not
record and communicate to the parties concerned its reasons therefore a writ of mandamus would lie. If the court is
satisfied that the reasons given by the government for the refusing to make a reference are extrataneous and not germane
then the court can issue writ of mandamus even in respect of an administrative order.
 Secretary, Indian Tea Association v Ajit Kumar Barat (2000) 3 SCC 93

[reference an administrative act – reiterated STANDS taken in previous cases – the very fact of it
being an industrial dispute or not can be questioned]

The respondent was appointed as the Assistant Secretary and later promoted to Jt. Secretary. He was later
dismissed from service for disobeying a transfer order. On failure of the conciliation proceedings, the govt.
did not refer the dispute to the industrial tribunal as the respondent was not a workman. The court said
that; the order under S. 10(1) is an administrative order and not a judicial or a quasi-judicial order and the
court cannot canvass the order of reference to scrutinise of there was any material before the govt. to support
its conclusion; it would be open to the parties to show that the dispute itself was not an industrial
dispute to begin with; before making reference, the govt. has to satisfy itself of whether he is a
workman or not.
The govt. took into account the salary and allowances of respondent 1 and also the nature of work, thus
taking into account relevant factors.

This decision has been criticised on the grounds that it goes against the echelons of ‘administrative
law’. If the govt. has to decide question of the nature of determination of an industrial dispute or not,
then it lends a legal colour to the government’s actions. In such a scenario, the govt. would then
have to adhere to basic legal tenets of natural justice, cross examination etc. Therefore, as was said
in the TELCO case, such determination should be left to the tribunal itself.

The respondent was the joint secretary. His duties included power to sanction expenses on behalf of the Indian Tea
Association. He was dismissed from service for disobeying an order of transfer. On failure of conciliation proceedings the
joint labour commissioner recommended for a reference the question whether respondent was a workman required
adjudication. The government did not refer the dispute. The appeal filed by the appellants was dismissed by the High Court
and the state government was directed to make an appropriate reference as to whether the respondent was a workman. An
appeal was filed in the supreme court. After referring to PremKakkar v. State of Haryana, Sultan Singh v. State of Haryana
and C.P. Sarathy, court summarized the point of law:

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 the industrial dispute exists or is
apprehended and if such a reference is made it is desirable that Government indicate the nature of the dispute in the
order of reference.

2. The order of the appropriate government making a reference under section 10 of the act is an administrative order
and not a quasi judicial or judicial order. Therefore the court cannot ask the government about the material it
referred to as in the case of judicial or quasi judicial order.

3. An order made by the appropriate government under section 10 of the act being an administrative order no lis is
involved, as such this order is made on subjective satisfaction of the government.

4. If the Government to ok into any consideration irrelevant or foreign material the court may in that case consider a
writ of mandamus.

5. It would be open to the party to show that what was referred by the government was not an industrial
dispute within the meaning of the act.

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 to consider as to whether an industrial dispute exists or is apprehended. The state
government considered the case and held that the respondent was not a workman. The appeal was allowed.

Prabhakar v. Joint Director Sericulture Department

AWARDS + SETTLEMENTS+ OPERATION OF AWARDS AND SETTLEMENTS

Sirsilk Ltd. v Government of Andhra Pradesh AIR 1964 SC 160
[withholding the publication of arbitrator’s award]

Under S. 17(1), every award needs to be published within a period of 30 days from the date of its
receipt by the appropriate government. The duty upon the govt. is mandatory and compulsory
publication of the award is incumbent upon the govt. However, in a situation where the parties have
reached a binding settlement under S. 18(1) of IDA, in all practicality, the dispute between them
comes to an end. A settlement between the parties is likely to broker long lasting peace as compared
to an award which will invariably be in favour of one of the parties.
Therefore, though it is obligatory upon the appropriate government to publish the award, in such scenarios
where the award no longer holds any significance, its publication can be withheld under special
circumstances.

The objective of the award was to broker industrial peace and harmony. Thus, if a settlement has been able to
do just that, then the award holds no significance anymore.

Settlement after award given but before publication. The court emphasized the importance of collective bargaining.
Though sec 17 is binding when the award has been given there is no dispute left to be settled by the award after a
settlement has been arrived at. Even without provision for compromise decree, the expectation is that the award
issued should reflect the terms of the settlement.

Government of andhrapradesh had referred a certain dispute between the management and the workers to the
industrial tribunal. The tribunal had given its award to the government for publication. Before the government
published it the parties had come to a settlement on the referred issues and therefore asked the government not to
publish it.

Issue: whether section 17(1) is mandatory?

Section 17(1) lays down that every award shall within a period of thirty days from the date of its receipt by the
appropriate government be published in such a manner as the appropriate government as it thinks fit. The use of the
word shall is a pointer to the section being mandatory, though undoubtedly in certain circumstances the word shall
used in a statute may be equal to the word may.Subsection 2 of section 17 provides that the award published under sub
section 1 shall not be called into question in any court in any manner whatsoever. Therefore the government does not
have the power to withhold publication of the award as witnessed from sub-section 2 of section 17.Where therefore
parties to an industrial dispute have reached a settlement, which is binding under section 18(1), the dispute between
them really comes to an end. It is urged that the settlement arrived at between the parties should be respected and
industrial peace should not be allowed to be disturbed by the publication of the award which might be different from
the settlement. That a settlement of the dispute between the parties themselves is to be preferred where it can be
arrived at to industrial adjudication, as the settlement is likely to lead to a more lasting peace since its done by the free
consent of the people.

Difficulty has to be resolved in order to avoid possible conflict between section 18(1) which makes the settlement
arrived at between the parties otherwise than in the course of conciliation proceedings binding on the parties and the
terms of an award which are binding under section 18(2) on publication and which may not be the same as the terms
of settlement binding under section 18(1). The only way to withhold the conflict between section 18(1) and (3) is to
withhold the publication of the award once the government has been informed jointly by the parties that a settlement
binding under section 18(1) has been arrived at. This would not affect the mandatory nature of the provision of in
section 17(1).

Virudhachalam v. Mgt of Lotus Mills (1998) 1 SCC 650

[case of 1 union not signing the settlement and the other 4 agreeing to the settlement – an agreement
under S. 2(p) reached between employers and employees is termed as settlement – such settlement if
during conciliation proceedings under S. 12(3) then binding upon the entire workforce – must be
during conciliation proceedings and in written form - binding upon all by virtue of S. 18(1), even
future workmen]The respondent mill remained closed for a certain period of time and consequently the
workmen raised a dispute regarding wages for the lay-off period. Conciliation proceedings took place between
5 unions representing all workmen and the management on the other hand. However, only 4 unions signed
the agreement and the union representing the appellant did not sign it.

The issue under consideration is whether an individual workman under the IDA can claim lay-off
compensation under S. 25C despite a settlement arrived at during conciliation proceedings under S.
12(3) by a union of which he is not a member?
It is to be noted that such settlement seeks to restrict the right of lay-off compensation payable to each
workman.Regarding the same, the SC observed that S. 2(p) provides for ‘settlement’. As such, it refers to a
settlement arrived at during a conciliation proceedings and includes a written agreement as between
the employer and the workman.
Such agreement, even if outside of conciliation proceedings, it would still be a ‘settlement’ once the procedure
under S. 2(p) is followed. However, such settlement outside of conciliation is ONLY binding upon the
parties to the dispute by virtue of S. 18(1) of IDA.
Therefore, once a written settlement is arrived atduring the conciliation proceedings, such settlement
under S. 12(3) has a binding effect not only on the signatories but also on all parties to the industrial
dispute, thus covering the entire body of workmen (future workmen also). Such power also derived by
virtue of S. 18(3) of IDA. A caveat in this regard is that such settlements should invariably be in the
written form. When read with S. 2(p) and in conformity with its procedure, written agreements are bound to
become ‘settlements’. In all such settlements related to the entire workforce, the individual worker recedes to
the background and the union espouses the common cause on behalf of all.

Thus the law settled in the present matter was that a settlement arrived at during a conciliatory
proceeding would bind ALL workmen. Such a binding agreement would get telescoped under the proviso
to S. 25C(1) which says that if there is an agreement for not paying lay-off compensation beyond 45 days,
such an agreement has binding effect on the employer as well as the concerned workman. The concerned
workman being all those associated with the industrial dispute.An individual workman comes under the
spotlight only in connection with conditions under S. 2A of IDA (dismissal, discharges,
retrenchments and otherwise termination of services). In all other matters concerning the industrial
peace and harmony, it is the union that bears the flag of the workers.

S. 25J does not prevent reading S. 25C with S. 18 of the IDA. In fact ‘Chapter VA’ is to have effect
over any other law inconsistent with IDA; not applicable to other provisions under the same law.

Issue: whether an individual workman can claim lay-off compensation under section 25-C of IDA despite a
settlement arrived at during conciliation proceedings under section 12(3) of IDA by a union of which he is
not a member.

Facts: a settlement was arrived at during conciliation proceedings under section 12(3) of IDA. The dispute
was regarding payment of lay-off compensation. Out of the five unions who took part in the conciliation
proceedings, four unions signed the said settlement but the union representing the appellants did not think it
fit to sign. The question is as to whether they would be bound by the settlement and the terms
regarding the payment of retrenched lay-off compensation, when their union did not sign the said
settlement. The appellants on the grounds that their union had not signed the settlement, filed an application
under section 33C(2) of IDA for computing the appropriate lay-off compensation payable to them under
section 25C. The labour court allowed the said application on the ground that the appellants individually had
not entered into any agreement with the management and consequently section 25C would not come in their
way and therefore they were entitled to be paid 50% of the lay-off compensation. The High court held that
the settlement arrived at the conciliation proceedings under section 12(3) was binding on all the workmen
being parties to the industrial dispute as per section 18(3) and so the said settlement could be treated as an
agreement arrived at between all the workmen as per the first proviso of section 25C and therefore the
appellants could not claim anything more than what was permissible as per the settlement.

Decision: it was contended by the appellants that the statutory right given to the workmen under section
25C cannot be whittled down, except by an agreement entered into between the workmen concerned and the
employer as provided by the first proviso of section 25C. In the present case such an agreement was
independent of any settlement contemplated under section 12(3) which could have any binding effect under
section 18(3). The court said that the workmen themselves have scant bargaining power. Therefore, their
disputes have to be highlighted by their unions representing the body of workmen- section 36 of
IDA. Consequently, settlements arrived at by any union with management would bind at least their members
and if such settlement is arrived at during a conciliation proceedings, it would bind even non-members.

IDA envisages two types of settlements. As defined by section 2(p) of IDA, a settlement which is based on
written agreement between the parties can be arrived at either in conciliation proceedings or even outside
conciliation proceedings between the representatives of the workmen and the management. Section 12 deals
with settlements by way of conciliation proceedings. So far as settlement arrived at outside the conciliation
proceedings is concerned, section 18(1) deals with such settlements and lays down that a settlement arrived at
by an agreement shall be binding on the parties. Once a written settlemt 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 could cover the entire body of workmen, not
only existing but future workmen as well.

An industrial dispute cannot arise between an individual workman and the management. The individual
workman can raise his grievance under section 25C only if his statutory right of lay-off under section 25C is
not hedged in by any binding effect of an agreement entered into by its own union with the management.

KCP v. Presiding Officer AIR 1997 SC 2334

[settlement reached by union is binding upon its members and those sponsored by it – individual
worker recedes into the background when dispute sponsored by union – the same also held in
Herbertsons Ltd. v. Workmen of Herbertsons Ltd. (1977)]
The appellant has an engineering unit in Madras employing about 500 workmen. Respondent 2 is the only
recognised union in the establishment. An issue over the payment of bonuses broke out between the
employer and on advice of the union, the workers adopted go-slow tactics that later turned into an illegal
strike. By a govt. order, the appellants were directed to end the lockout and let all workers resume work
barring 29 against whom inquiry proceedings were to be concluded.

After this, the appellants and the respondent union entered into an agreement under S. 12(3) of IDA wherein
the issue of those 29 workers would be discussed before the Jt. Labour Commissioner. No conciliation was
achieved and thus the issue was referred to the Presiding Officer, i.e. the 1st respondent.

The SC adjudged that the terms of the settlement were not ex facie, unjust or unfair and must be held to be
binding on the 29 workmen also. The industrial dispute was raised by the 2nd respondent itselfon behalf
of the 29 workmen. At the relevant time, respondents 3-14 were members of the said union and still
continue to be. The said union having considered all the pros and cons entered into a settlement on behalf
of all the workmen. Unless the said settlement can be said to be unjust and unfair, it cannot be berated and
thus stands firm. It must be stated that the moment a dispute is sponsored by a union, the individual
employee takes a background seat and is bound by the settlement reached between the union and
the employer. To vitiate this, an individual employee can do under S. 2A of IDA, albeit the remedies
under that are far less than S. 2(k).

In the present case, the settlement was arrived at during conciliation proceedings, but rather outside
of it. Thus under S. 18(1) of IDA, it would remain binding only upon the parties to the agreement
and not others. On the other hand, if such was achieved during a conciliation proceeding, then it would be
binding upon all workmen. The appeal is thus allowed and the settlement is held perfectly valid.

INDUSTRIAL STANDING ORDERS

Employees had no union, so elected three representatives to help draft standing order. But certifying officer
suggested modifications. Employer argued against this. Court said that the certifying officer has jurisdiction to
decide fairness and reasonableness. Cannot use employee consent to be decisive of fairness or reasonableness.
It may be an important consideration, but it is not the decisive consideration. Because workers may not be
organized to give significant input to the drafting of the standing orders.

Sec 10-changes subject to agreement between employer-worker. Ordinary rule is must wait for six months to
lapse after the certification before asking for modification. This rule can be ignored if both parties wish to
make modifications by agreement. Each application for modification will be examined in the same way a new
application of draft standing orders is. Will look at same considerations of fairness and reasonableness.
The certifying officer, after examining the fairness and reasonableness of the provisions, made several changes in
conformity with model standing orders and certified them. The company appealed and contended that the certifying
officer had no power to modify the agreed draft submitted by the two parties. It was also contended that the
certifying officer need not insist upon strict compliance with the model standing orders. The counsel relied on the
fact that the draft standing orders had been assented to by the employees.The court held that if both the parties
agree that certain standing orders are fair and reasonable, that, no doubt, is a consideration which the appropriate
authority must take into account: but clearly, the appropriate authority cannot be denied the jurisdiction to deal with
the mater according to its own judgement. It is for the appropriate authority to decide whether a particular standing
order is fair or reasonable. Sometimes the employees are not organised enough to resist the pressure put on them by
the employers.

Rajasthan State Road Transport Corporation v Krishna Kant [3 separate excerpts in the Reading
Material]

[S. 13A only a forum for determination of doubts and grey areas regarding the applicability and
interpretation of certified standing orders – not for adjudication of disputes involving such scenario
– such adjudication sole prerogative of Labour Courts and Tribunals]

S. 13A of the Standing Order Act provides that ‘if any question arises as to the application or
interpretation of a Standing Order certified under this Act, any employer or workman or their union
may refer the question to the labour court under the IDA. Such determination of the labour court is
made final and binding on the parties. The SC opined that S. 13A cannot be understood as creating a
forum for adjudication of industrial disputes involving the application &/or interpretation of the
Standing Orders. This remains the function of the courts and tribunals established under the IDA.
The limited purpose of S. 13A is to provide a forum for determination of any question arising ‘as to the
application or interpretation of the certified Standing Orders’. This, under the scenario, if either the
employer or the employee entertain a doubt as to the meaning of the Orders or their true applicability.
The true purpose of the Labour Court or the Tribunal under the IDA is adjudication of disputes, not
interpretation of the Standing Orders. If in the process of such adjudication, the court goes into questions
of applicability and interpretation of the Standing Orders, then it is not unwarranted. Moreover, the court
adjudged that certified Standing Orders DO NOT constitute statutory provisions or have statutory force,
because this would lead them to be enforced through a writ petition. In such a scenario, neither a suit
would be necessary not a reference under the IDA. A difference exists between statutorily imposed
conditions of service and statutory provisions and such should be maintained.
3. Shahdara-Saharanpur Light Railway Company Ltd. V Workers' Union

[modification of standing order without proof of change in circumstances]

The scope of S. 10(2) of the Standing Orders Act was under consideration and specifically if the standing
orders have been finally certified, if its modification can be made ONLY on proof of change of
circumstances?
Elaborating the various provisions of the Standing Orders Act, the court pointed out that;

S. 4: standing order shall be certified under the Act if (a) a provision is made therein for every matter set out
in the schedule and (b) they are otherwise in conformity with the Act.

S. 6: any person aggrieved by the order of the certifying officer passed under S. 5(2) may appeal to the
appellate authority and such authority whose decision shall be final, shall by an order confirming the standing
orders in the form certified under S. 5(2) or amend or add thereto to render them certifiable under the Act.

The court moving on stated that under the provisions of S. 10, 11 & 12, there is no express provision
restricting the right to apply for modification only on proof of change in circumstances. The sole
limitation to the power is a period of 6 months after the date of the standing orders or their last
modifications coming into operation.

Harmohinder Singh v Kharga Canteen, Ambala Cantonment (2001) 5 SCC 540