INDUSTRIAL

RELATIONS AND LABOUR

LAWS
INDUSTRIAL RELATIONS AND LABOUR
LAWS

Suresh C Srivastava

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First Published in 1982
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Copyright © S C Srivastava, 2012

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

Labour law seeks to regulate relations between an employer or a class of

employers and their workmen. The reach of this law is so wide that it touches the
lives of millions of men and women who constitute the labour force. However, it
is unfortunate that barring a few statutes such as the Minimum Wages Act, 1948
and the recently enacted Unorganized Workers Social Security Act, 2008, most
labour laws are, in effect, not applicable to unorganized labour which constitutes
about 93 per cent of the entire labour force. Further, most labour legislation is
more than 6 decades old. It is felt that our labour laws are over-protective, over-
reactive, fragmented, outdated and irrelevant and have created hurdles in
achieving economic targets, particularly given the global competition and
economic recession. The emergence of globalization, liberalization and
privatization has further brought new challenges. There is therefore, mounting
pressure to reform labour laws. In view of this, the First and Second National
Commissions on Labour and the National Labour Law Association made a series
of recommendations to remove the irritants and stumbling blocks but barring
some legislative amendments in recent years, no major reforms have been
undertaken to give legislative shape to the recommendations of the
Commissions.
Since the fifth edition of this book was brought out, much water has
flown under the bridge in the area of labour laws and industrial relations. In the
legislative sphere, the most notable development was the amendment in the
Industrial Disputes Act, 1947 in 2010. The Amended Act has (i) expanded the
definition of ‘appropriate government’ under Section 2(a); (ii) raised the wage
ceiling of a supervisor from ₹1,600 to ₹10,000 per month under Section 2(s);
(iii) provided direct access to the workman to labour court/tribunal in cases of
disputes arising out of Section 2A; (iv) expanded the scope of qualifications of
presiding officers of labour courts or tribunals under Sections 7 and 7A; (v)
provided for grievance redressal machinery in every industrial establishment
employing 20 or more workmen for the resolution of disputes arising out of
individual grievances; (vi) empowered the labour court/tribunal to execute
awards/settlements/orders.
Apart from the above, a survey of judgements delivered by the Supreme
Court and high courts reveals that there has been a marked shift in the approach
of the Indian judiciary in the area of discipline and disciplinary procedure.
Further, new norms have been evolved to determine whether a person is a
workman. Moreover, post 2005, the Supreme Court has generally held that relief
by way of reinstatement with back wages is not automatic even if termination of
an employee is found to be illegal or in contravention of the prescribed
procedure and in such cases, compensation in lieu of reinstatement may be
appropriate. However, in two cases reported in 2010, the Supreme Court felt that
the approach of the courts must be compatible with the constitutional philosophy
of which the Directive Principles of State Policy constitute an integral part and
justice due to the workman should not be denied by entertaining spurious and
untenable grounds put forward by the employer (public or private). Whatever
may be the justification for the aforesaid line of approach, the law has become
uncertain on this issue. Further, the requirement of notice for strike/lock-out in
public utility services under Section 22 received a new interpretation in 2008,
which appears to be contrary to the legislative scheme and has added to
uncertainty on this subject. Moreover, in 2006 the Supreme Court has held that
daily/casual/temporary/contract workers employed in public employment could
not claim regularization but in 2010–2011, it laid down that this principle did not
apply in labour disputes. In fact courts even refused to apply this principle where
the plea that the affected worker was not employed in public employment
through the proper selection procedure, was not taken before the tribunal.
In view of the above, a need was felt to bring out the sixth edition of this
book. This edition has not only been extensively revised and updated to cater to
the needs of labour lawyers, managers, public administrators and labour
tribunals, but has also widened the scope and dimensions of the book. Thus,
Chapter 1 now includes judicial legislation on labour law, review of labour laws
and labour reforms along with a look at the International Labour Organization
and its influence on Indian labour laws. Chapter 2 (a new chapter) provides an
overview of industrial relations. Chapter 3 includes a new section on regulation
of daily/casual/contract/temporary workers. Chapter 4 now includes the
objectives, composition and functioning of employers’ organizations. Chapter 15
includes a new section on current approaches of the Supreme Court on
interpretation of Section 2(s). Chapter 21 which is now titled ‘Management of
Discipline’ also includes the procedure for conducting a domestic inquiry and
precautions to be taken by disciplinary authority in awarding punishment.
The book has been divided into five parts. Part I provides the contextual
and constitutional framework of labour law. Part II briefly sketches the trade
union movement and employers’ organizations and also examines the laws
relating to trade unions, collective bargaining, unfair labour practices and
victimization. Part III deals with regulation of industrial disputes including the
arena of interaction and participants. It also provides the framework of
persuasive, coercive and voluntary processes for settlement of industrial disputes
and governmental power under the Industrial Disputes Act. This part examines
the laws relating to instruments of economic coercion, which has brought within
its fold strikes, picketing, gherao and lockouts. It also examines the laws
regulating management of discipline and the management’s prerogative during
pendency of proceedings and change in conditions of service. Moreover, it
examines laws relating to lay-off, retrenchment, transfer and closure. Part IV
deals with standing orders in the light of statutory provisions and judicial
decisions. Part V seeks to delineate the functioning of workers’ participation in
management.
It is hoped that the book will receive appreciation from lawyers,
managers, officials of the labour department, labour judiciary and students.
At the end, I wish to place on record my gratitude for the support and
encouragement received from my daughters Reena, Rachna and Simmi and
sons-in-law Manoj Khare and Sumit Sahay. I cherish the love and affection
received from my granddaughters Eesha, Somya, Shivika and Sanvi. I also wish
to express my sincere thanks to M/s Vikas Publishing House, New Delhi for
their keen interest and skilled editorial inputs for the publication of the present
edition of the book.

Suresh C Srivastava
 CONTENTS

PREFACE
LIST OF Cases
PART I INDUSTRIAL RELATIONS AND LABOUR LAWS

CHAPTER 1 Introduction to Labour Law

Approach to Labour Law
Basis of Labour Law
Social Justice and Labour Law
Public Interest Litigation for Enforcement of Labour Laws
International Labour Organization and its Influence on Indian Labour Laws
Review of Labour Law by the First National Commission on Labour
Review of Labour Law by the Second National Commission on Labour
Approaches of Indian Judiciary and Judicial Legislation on Industrial
Relations
Labour Reforms: Review of Labour Law
CHAPTER 2 Industrial Relations: An Overview
The Contextual Framework
Dimensions of the Problems of Industrial Relations
Industrial Unrest and Work-Stoppages
Unemployment and Underemployment as Barriers to Improving Industrial
Relations
Other Difficulties in Healthy Growth of Industrial Relations through Labour
Law Policy
Scope and Concept of Industrial Relations
Industrial Relations vis-a-vis Human Relations Management
 Objectives of Industrial Relations
Role of the State in Industrial Relations
Changing Dimensions of Industrial Relations in India
Impact of Globalization and the WTO Regime on Industrial Relations
Five-year Plans and Industrial Relations
CHAPTER 3 Constitutional Framework on Industrial Relations
Constitutional Perspective
Constitutional Amendments on Right to Free and Compulsory Education
Contribution of Indian Judiciary in Evolution of Industrial Jurisprudence
Through Constitutional Interpretation
Sexual Harassment of Women at Workplace and the Constitution
Constitutional Validity of Service Contracts and Standing Orders
Regulation of Daily Wager/Casual Workers or Contract Labour/Temporary
Workers in Public Employment
PART II TRADE UNIONS AND LAW

CHAPTER 4 Trade Unions of Workers and Employers’ Organizations: A

Contextual and Historical Analysis
Need to Form Trade Unions
Right to Form Trade Unions
History of the Trade Union Movement in India
Existing Strength of Central Trade Unions
Current Issues
Closed Shop/Union Shop
Employers’ Organizations
CHAPTER 5 Judicial Delineation of Statutory Definition of Trade Union and
Trade Dispute
The Definition
Members of Trade Unions
Trade or Industry
Objectives of Trade Unions
 Trade Dispute
CHAPTER 6 Registration of Trade Unions
Legal Status of Registered Trade Unions
Compulsory Versus Voluntary Registration
Appointment of the Registrar
Mode of Registration
Powers of the Registrar
No Power of the Registrar to Verify Membership of Trade Unions
Power to Conduct Election
No Power to Hold Inquiry
No Power to Decide Rival Claims
No Power to Decide Regarding Admission of Membership
Duties of the Registrar
Certificate of Registration: A Conclusive Evidence
Minimum Requirement for Membership of a Trade Union
Cancellation and Deregistration of A registered Trade Union
Appeal
The Result of Deregistration
Re-registration
Registered Office
Change of Name, Structure and Dissolution
Submission of Returns
Penalties and Procedure
CHAPTER 7 Members, Office Holders and Outsiders in Trade Unions
Some Disturbing Aspects of Outsiders in the Union
Rights of Minors to Membership of Trade Unions
Outsiders in the Union Executive and the Law
Disqualification of Office-Bearers
Ceiling on Holding Offices in Trade Unions
Tenure of Elected-Bearers/Members of Executive
 Rights And Duties of Office-Bearers and Members
Transfer of Office-Bearers of Trade Union
Inter-Union and Intra-Union Rivalries
CHAPTER 8 Trade Union Finances and Funds
Factual Review
Membership Subscription: Law’s Response
General Fund: Purposes for Which it May be Spent
Political Fund: Nature and Effect of Non-Contribution
CHAPTER 9 Privileges of Registered Trade Unions
Immunity from Criminal Conspiracy
Immunity From Civil Actions
Enforceability of Agreements
Termination at the Instance of Union
CHAPTER 10 Recognition of Trade Unions
The Need For Recognition of Trade Unions
Recognition of Trade Unions In Retrospect
Law and Practice Relating to Recognition of Trade Unions
CHAPTER 11 Collective Bargaining
The Perspective
ILO Principles on the Right to Collective Bargaining
Concept and Meaning of Collective Bargaining
Prerequisites for Collective Bargaining
Advantages and Disadvantages of Collective Bargaining
Collective Bargaining in India
CHAPTER 12 Unfair Labour Practices and Victimizations
Unfair Labour Practices on the Part of Employers under the Trade Unions
(Amendment) Act, 1947
Unfair Labour Practices on The Part of Trade Unions under the Trade
Unions (Amendment) Act, 1947
Judicial Delineation of ‘Unfair Labour Practice’
 Code of Discipline in Industry
Response of The [First] National Commission on Labour
Unfair Labour Practices on the Part of Employers and Trade Unions of
Employers under The Industrial Disputes (Amendment) Act, 1982
Unfair Labour Practices on the Part of Workmen and Trade Unions of
Workmen under The Industrial Disputes (Amendment) Act, 1982
Proof of Unfair Labour Practice
Victimization
Scope of Interference by Industrial Tribunal
PART III INDUSTRIAL DISPUTES ACT, 1947

CHAPTER 13 Industrial Disputes Act: A Contextual Framework

Object of the Act
Scheme of the Act
Industrial Disputes (Amendment) Act 1982 and 1984
Trade Unions and The Industrial Disputes (Amendment) Bill, 1988
Industrial Disputes (Amendment) Act, 2010
Scope of the Act
Interpretation of Industrial Relations Law
No Jurisdiction of Civil Court in Industrial Dispute
CHAPTER 14 Concept and Scope of Individual and Industrial Disputes
Industrial Dispute
Individual Dispute
Legislative Response : Insertion of Section 2A
No Time Limit Prescribed
Recommendation of The [Second] National Commission on Labour
Remedy to Individual Workman under Section 2A Prior to 2010
Amendment
Amendment of Section 2A by the Industrial Disputes (Amendment) Act,
2010
CHAPTER 15 Arena of Interaction and Participants in Industrial Disputes
 Industry
Bangalore Water Supply and Sewerage Board Case
Response of the (First) National Commission on Labour
Parliament’s Disapproval of Judicial Response
Current Confusion
Re-examination of the Decision in Bangalore Case
CHAPTER 16 Workmen
Definition
Tests for Determination of Supervisory Capacity
Specific Cases
Current Approach of the Supreme Court on the Interpretation of Section
2(S)
Recommendations of the (Second) National Commission on Labour
Employer
CHAPTER 17 Settlement of Industrial Disputes
Works Committee
Grievance Settlement Authorities
Court of Inquiry
Voluntary Arbitration
Processes Involved in Reference of Dispute to Voluntary Labour Arbitrator
Adjudication
Award
Non-Statutory Machinery and its Working
CHAPTER 18 Powers of the Appropriate Government
Government’s Power of Reference
Power of the Government to Withdraw and Transfer Certain Proceedings
Government’s Power to Refer any Question for Interpretation of the Award
Power to Make Rules
Delegation of Power
Power to Amend Schedules
 Power of the Government to Exempt
CHAPTER 19 Instruments of Economic Coercion
Strike
Picketing
Gherao
Bandh
Lockout
Right to Strike
Right to Lockout
Regulation of Strikes and Lockouts
Illegal Strikes and Lockouts
Sanctions and Criminal Proceedings
Justification of Strike and Lockout
Dismissal Of Strikers
Wages For Strike and Lockout Period
CHAPTER 20 Lay-off, Retrenchment, Transfer and Closure
Lay-Off
Retrenchment
Transfer and Closure of the Undertaking: Prevention and Regulation
CHAPTER 21 Management of Discipline and Disciplinary Procedure
Regulation of Management’s Prerogative of Disciplinary Action: The
Context
Meaning and Scope of Misconduct
Nature and Concept of Dismissal and Discharge
Discharge Simpliciter or Dismissal in Disguise: Courts’ Power to Lift the
Veil
Domestic Inquiry
Right to be Defended by a Lawyer in Domestic Inquiry
Right of Representation in Disciplinary Proceedings through Co-employees
Applicability of the Evidence Act
 Domestic Inquiry Pending Criminal Proceedings
Can Departmental Proceedings be Continued against the Delinquent in Case
of his Acquittal by Criminal Court
Effect of Delay in Conduct of Inquiry
Power to Conduct Inquiry Afresh
Non-Supply of Inquiry Report
Domestic Inquiry Found Defective—Date of its Effect
Power of Labour Courts, Tribunals and National Tribunals to Give
Appropriate Relief in Case of Discharge or Dismissal of Workman
Discriminatory Treatment
Relief to Wrongfully Dismissed Workmen
CHAPTER 22 Management’s Prerogative During the Pendency of Proceedings
and Notice of Change
Section – I
Legislative Development and the Present Legislation
Object of Section 33
Requirements under Section 33
Scope of Inquiry under Section 33
Alteration in the Conditions of Service
Misconduct not Connected with Pending Dispute: Section 33(2)(B)
Protection of Union Official under Section 33
Section 33-A: The Remedy to an Aggrieved Workman
Section – II
Change In Conditions of Services: Notice of Change
PART IV STANDING ORDERS

CHAPTER 23 Contextual Frame-Work of the Industrial Employment (Standing

Orders) Act, 1946
Constitutional Validity of Automatic Termination of Service under Standing Orders

CHAPTER 24 Scope and Coverage of the Industrial Employment (Standing

Orders) Act, 1946
 Coverage of the Act
Workers Covered
Employer under the Act
CHAPTER 25 Concept and Nature of Standing Orders
The Concept of Standing Orders
II. Nature of the Standing Orders
CHAPTER 26 Certification Process—Its Operation and Binding Effect
Submission of Draft Standing Orders by Employers
Conditions for Certification of Standing Orders
Procedure for Certification of Standing Orders
Certifying Officers: Their Appointment, Jurisdiction, Powers and Duties
Appeals Against Certification
Date of Operation of Standing Orders or Amendments
Binding Nature and Effect of Certified Standing Orders
Posting of Standing Orders
CHAPTER 27 Modification and Temporary Application of Model Standing
Orders
Modification of Standing Orders
Temporary Application of Model Standing Orders
CHAPTER 28 Interpretation and Enforcement of Standing Orders
Interpretation of Standing Orders
Penalties and Procedure
Remedies for Enforcement of Rights and Liabilities Created under the
IESOA
Inspection Machinery
CHAPTER 29 Role of Government under the IESOA
Concept of the ‘Appropriate Government’
Delegation of Power
Power of the Government to Make Rules
Time-Limit for Completion of Domestic Inquiry
 Payment of Subsistence Allowance
PART V WORKERS’ PARTICIPATION IN MANAGEMENT

CHAPTER 30 Workers’ Participation in Management

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

A
A C C Rajanka Lime Stone Quarries Mazdoor Union v. Registrar of Trade Unions, AIR
1958 Pat. 475, 92
A C Mukerjee v. Union of India, (1972) 2 LLJ 1978 (Calcutta), 132
A G Kher v. Atlas Copco (India) Ltd, (1992) 1LLJ 423, 127
A G Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503 (Allahabad), 687
A L Kalra v. Project & Equipment Corporation of India, 1984 LIC 961 (SC), 581
A L P Hindustan Zinc Ltd v. H Z Workers’ Union, (1988) Lab. IC 1361, 295
A M Sainalabdeen Musaliar v. District Collector, (1994) Lab. IC 57, 321
A P Electrical Equipment Corporation v. Its Staff Union (1986) Lab. IC 1851, 438, 454
A Rodrick v. K C Thapar, (1963) 1 LLJ 248 (SC), 563
A Sundarambal v. Government of Goa, Daman and Diu, (1988) 4 SCC 42: 2012 LLR 26,
214, 267
A V Nachane v. Union of India AIR 1982 SC 1126: (1982) 25CF 1246 (1982) 1 SCC 205,
497
Abdul Khalil St. Bharu v. Commission of Labour, Nagpur, 1997 Lab. IC 122 (Bom), 202
Abdul Rahiman Haji v. Abdul Rahiman 1980 Lab. IC 910, 389
Abdul Salem v. State of Tamil Nadu, (1973) 43 FJR 180 (Madras), 375
Abdul Wahab Shaikh Lai Bhai v. G E Patankar, (1980) Lab. IC 623 (Bombay), 230
Addl. Chancellor, Farmers Service Cooperative Bank v. Labour Court, (1996) LLR 654
(Kerala), 313, 314, 598
Administrator, Union Territory of Dadra and Nagar Haveli v. Gulabhia M Lad, 2010 (125)
FLR 880 (SC), 582
Aeron Steel Rolling Mills v. State of Punjab, (1959) 1 LLJ 73 (Punjab), 392
Aftab-e-jadid, Urdu Daily Newspapers v. Bhopal Shramjivi Patrakar Sangh, (1985) 1 LLJ
272, 301
Agra Electric Supply Co. v. Aladin, (1969) 2 LLJ 540 544 (SC): AIR 1970 SC 5 13, 340, 665,
692
Agriculture Produce Market Committee v. Ashok Harikuni, AIR 2000 SC 3116: (2000) 2
LLJ 1382, 211
Ahmedabad Mfg. & Calico Ptg. Co. v. Ramtahel, AIR 1972 SC 1598, 351
Ahmedabad Pvt. Primary Teachers Association v. Administrative officer, (2004) 1 SCC 755,
262
Ahmedabad Textile Industry Research Association v. State of Bombay and Others, AIR 1978
SC 548, 591, 215
Ahmedabad Textile Industry Research Association v. State of Bombay, (1960) 2 LLJ 720
 (SC), 125, 215, 216
Air Corporation Employees’ Union v. D V Vyas, (1962) 1 LLJ 31 (Bombay), 302
Air Gases Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503, 505 (Allahabad), 688
Air India Cabin Crew Association v. Union of India, (2012) 1 SCC 619, 257
Air India Corporation Bombay v. V A Rehellow, (1972) 1 LLJ 501, 627, 652
Air India Statutory Corporation v. United Labour Union, (1997) 9 SCC 377, 368
Ajanta Industries v. Central Board of Direct Taxes, AIR 1976 SC 437, 389
Ajit Kumar Nag v. General Manager (PJ) Indian Oil Corporation Ltd, (2005) 7 SCC 764,
587
Akhil Raj Rajya Hand Pump Mistries Sangthan v. State of Rajasthan, (1994) Lab. IC 345,
230
Akhil Ranjan Das Gupta v. State of Assam, (1965) 2 LLJ 614, 680
Alexandra Jute Mills Ltd v. Their Workmen, (1950) ILLJ 1261, 158, 186
Alien Macgregor Smith Forge v. First Industrial Tribunal, (1963) 1 LLJ 556 (Calcutta), 213
Aligarh Muslim University v. Mansoor Ali Khan JT 2000 (7) SC 529: 2000) 5 SCC 65, 51,
611
All India Bank Employees Association v. National Industrial Tribunal, (1961) I LLJ 375:
AIR 1962 SC 171, 57, 132, 423, 431
All India Bombay Tyres International Employees’ Federation v. C B Dinagre (1993) Lab. IC
817, 281
All India Radio v. Santosh Kumar and Another, (2003) LLR 9, 238
All India Reserve Bank Employees’ Association v. Reserve Bank of India, AIR 1966 SC 305:
(1965) 2 LIJ 178, 189, 190, 250
Allahabad District Cooperative Bank Ltd v. Vidhya Varidh Mishra, (2004) 6 SCC 482, 587
Allen Berry & Co. Ltd v. Their Workmen, (1951) 1 LLJ 228 (LAT), 327
Alloy Steel Project Company v. Their Workmen, (1971) 1 LLJ (SC), 483
Alumina Mazdoor Sangh v. Ratna Construction Co. and Others (2003) LLR 382, 506
Amal Kumar Parial v. Union of India, (1989) ATC 679, 581
Amalendu Gupta v. LIC, (1982) 2 LLJ 332 (Calcutta), 424, 470
Amar Jyoti School v. Govt. of NCT, (2009) 122 FLR 354, 261
Amar Singh v. State of Rajasthan, AIR 1955 SC 504, 348
Ambabai Manjunath Amin v. P L Majumdar, (1987) 1 LLJ 36 (Bombay), 336
Ambica Mills Ltd v. Second Labour Court, (1967) 2 LLJ 800 (Gujarat), 338
Ambika Jute Mills v. Their Workers, (1954) 1 LLJ 835 (IT), 459, 460
Ambika Singh v. U P State Sugar Corpn. Ltd (1991) I LLN 490, 498
Ameteep Machine Tools v. Labour Court, (1980) 2 LLJ 453 (SC), 319
Amulya Ratan Mukkerjee v. Deputy Chief Mechanical Engineer, Eastern Railways, AIR
1961 Cal 40, 572
Anakapalla Cooperative Agricultural & Industrial Society v. Its Workmen (1962) 2 LLJ 621
(SC, 253, 270, 538
Anameinuger Development Corporation Ltd v. Second Industrial Tribunal, (1986) Lab. IC
1741, 253
Anand Bazar Patrika (Pvt.) Ltd v. Its Workmen, (1969) 2 LLJ 670 (SC), 250
Anand Bihar v. Rajasthan State Road Transport Corporation, Jaipur (1991) Lab. IC 494,
503
Ananda Bazar Patrika v. Their Employees, 1963 2 LLJ 429, 165
Anandam v. Tamil Nadu Electricity Board, 1997 LLR 247, 590
Anando Chandra Swam v. State of Orissa, (1973) 1 LLJ 508 (Orissa), 229
Ananthanarayanan v. S R, (1956) 1 LLJ 29 (Madras), 572
Andhra Pradesh Electrical Equipment Corporation, Hyderabad v. Andhra Pradesh
Electrical Equipment Corporation Staff Union 1986 Lab. IC 1851 (AP), 423
Andhra Scientific Co. Ltd v. A Sheshagiri Rao, AIR (1967) SC 408: 1959) 2 LLJ 551, 349,
563, 638
Anil Bapurao Kanase v. Krishnq Sahkari Sakkar Karkhana Ltd (1998) I LLJ 343, 502
Anil Giluker v. Bilaspur—Raipur Gramin Bank, 2011 LLR 1121 (SC), 573, 582
Anil Kumar Chakraborty v. Saraswatipur Tea Co. Ltd, (1982) 2 SCC 328; 1982 SCC (L&S)
249; AIR 1982 SC 1062, 628
Anil Sood v. S K Sarvaria, (1997) LLR. 386, 342
Ankulaiah v. DG, P&T, SLJ (1986) CAT 407, 580
Annamalai Timber Trust Ltd (1950) LLJ 994 (IT), 473, 535
Anoop Sharma v. Executive Engineer Public Health Division, Panipat 2010 (4) SCALE 203,
53, 505, 508, 523
Antony v. Kumaran, (1979) 1 LLJ 606, 545
AP SRTC v. Raghuda Siva Sankar Prasad, (2007) 1 SCC 222; (2007) 1 SCC (L&S) 151; AIR
2007 SC 152, 628
Apparel Export Promotion Council v. A K Chopra, JT 1999 (1) SC 61: (1999) 1 SCC 759, 47
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State Bank of India v. Workmen of State Bank of India (1990) Lab. IC 1750 (SC), 499
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State Express Transport Corporation Ltd v. Arasu Vuralvua Pokkuvarthu Oozhlyar
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State of Karnataka v. Ganapathi Chaya Nayak, (2010) 3 SCC 115, 53
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State of MP v. Lalit Kumar Verma (2007) 1 SCC 2007, 524
State of Punjab v. Gondhara Transport Co., AIR 1975 SC 53 1, 196
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State of Punjab v. Labour Court (1980) Lab. IC 1084 (SC), 335
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State of Rajasthan v. Panna Ram, (1999) Lab. IC 490 (Raj.), 342
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State of UP v. Mohd. Nooh, AIR 1958 C 86, 349
State of UP v. Raj Pal Singh 2010 (4) SCALE 485, 623
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State of West Bengal v. Sobodh Gopal, AIR 1964 SC 587, 38
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651
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693
Sudhir Vishnu Panvalkar v. Bank of India, (1997) 6 SCC 271; 1997 SCC (L&S) 1662; AIR
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Syndicate Bank v. Umesh Nayak (1994) (5) JT 648, 469

T
T C Basappa v. T Nagappa, AIR 1954 SC 440, 349
T K Menon v. District Labour Officer, (1966) 2 LLJ 613 (Kerala), 213
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T T Devasthanam v. Commr. of Labour, (1979) 1 LLJ 448, 79, 80, 228
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Triveni Engineering & Indust. v. Jaswant Singh 2010 (8) SCALE 113, 703
Tulsidas Paul v. Second Labour Court, AIR 1963 Calcutta 624, 127

U
UP Electric Supply Co. Ltd v. Their Workers, (1972) 2 SCC 54, 665
UP Electricity Supply Co. v. Chatterjee, AIR 1972 SC 1201, 676, 677
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Uttranchal Forest Hospital Trust v. Dinesh Kumar, (2008) 1 SCC 542, 260

V
V A Chedda v. Bambai Mazdoor Union, (1973) Lab. IC 697 (Bombay), 288
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V Ramachandran v. Indian Bank (1979) 1 LLJ 122, 470
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V Veerarajan v. Government of Tamil Nadu, AIR 1987 SC 494, 391
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Ved Prakash Gupta v. M/s Delton Cable India Ltd 1982 Lab IC 1790(SC), 613
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Vellanikara and Thuttil Rubber Estate v. Its Employees (1959), 113, 459, 467
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Vermula Thimmappa v. Addl. Distt. Magistrate, AIR 1955 NUC Andhra Pradesh 4458, 389
Viakuntam Estate v. Arbitrator, (1968) 1 LLJ 79 (Madras), 303
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W
Warayam Singh v. Amar Nath, AIR 1954 SC 2 1, 351
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West Bengal State Electricity Board v. Desh Bandhu Ghosh, (1985) 3 SCC 116, 48
Western India Automobile Association Ltd v. Industrial Tribunal, (1949) LLJ 245 (FC), 78,
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Western India Match Co. Ltd v. Western India Match Co. Workers Union, (1970) 2 LLJ 256
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William Fredric De Pennmg v. Therd Industrial Tribunal, AIR 1959 Cal 749, 230
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Working Journalists of the Hindu v. The Hindu (1961) 1 LLJ 288 (SC), 119, 421
Workman of Oswal Weaving Factory v. State of Punjab, (1967) 1 LLJ 557 (Punjab), 375
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Workmen of Edward Keventers (P) Ltd v. Delhi Administration, ILR (1969) Delhi 767, 453
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 4 (SC), 243
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Workmen v. Management of Indian Standard Institution, (1976) 1 LLJ 33 (SC), 216
Workmen v. Rohtak General Transport Company, 1962 1 LLJ 634 (SC), 196

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

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

Z
Zaverbhai v. State of Bombay, AIR 1954 SC 752, 41
 PART I
INDUSTRIAL RELATIONS AND LABOUR LAWS
 CHAPTER
1
Introduction to Labour Law
Over the years, labour laws have undergone change with regard to their object
and scope. Early labour legislations were enacted to safeguard the interest of
employers. They were governed by the doctrine of laissez faire. Modern labour
legislation, on the other hand, aims to protect workers against exploitation by
employers. The advent of doctrine of welfare state is based on the notion of
progressive social philosophy which has rendered the old doctrine of laissez
faire obsolete. The theory of ‘hire and fire’ as well as the theory of ‘supply and
demand’ which found free scope under the old doctrine of laissez faire no longer
hold good.

I. APPROACH TO LABOUR LAW

Labour law seeks to regulate the relations between an employer or a class of
employers and their employees. The reach of this law is so wide that it touches
the lives of far more people. Indeed, it covers millions of working men and
women as compared to any other branch of law. It is this aspect which makes it
most fascinating of all branches of law and, therefore, the study of this subject is
of enormous dimension and of ever changing facets.
There has been a remarkable change in the approach to labour law and
industrial relations since World War II. Philadelphia Charter adopted in 1944
provided that ‘labour is not a commodity’ and that ‘poverty anywhere is a
danger to prosperity everywhere’. W Friedmann and others who have tried to
analyse the essential characteristics of legal development in this branch of law
consider it to be a ‘social duty’ on the part of employer as the main bedrock on
which this law is built. This is exemplified by the very approach of law makers
to the construction of a wage packet of the working men and women, wage
fixation and condition of service. The Indian Constitution lays down broad
guidelines to be followed by the state.
The Supreme Court in D N Banerji v. P R Mukherjee1, stated that the
law as developed after the Second World War, particularly in a welfare state, has
reversed the theories of Sir Henry Maine and now society progresses form
contract to status and has witnessed considerable legislation laying down
conditions of service and also ensuring payment of minimum wages by laws.

II. BASIS OF LABOUR LAW

Otto Kahn-Freund in his book Labour and the Law makes the following
propositions:
(i) The system of collective bargaining rests on a balance of the collective
forces of management and organized labour. The contribution which the
courts have made to the orderly development of collective labour
relations has been infinistesimal.
(ii) Collective bargaining is a process by which the terms of employment and
conditions of service are determined by agreement between management
and the union. In effect, ‘It is a business deal (which) determines the price
of labour services and terms and conditions of labour's employment.’
(iii) The law governing labour relations is one of the central branches of law
according to which a very large majority of people earn their living.
Nonetheless, law is a secondary force in human relations, especially in
labour relations.
(iv) Law is a technique for regulation of social power. This is as true of labour
law as it is for other aspects of any legal system. Labour law also seeks to
lay down minimum standard of employment. It lays down norms by
which basic conditions of labour are fulfilled such as maximum working
hours, minimum safety conditions, minimum provisions for holidays and
leave, protection for women and children from arduous labour,
prohibition of children below certain age from employment, provisions
for minimum standards of separation benefits and certain provision for
old age.
 III. SOCIAL JUSTICE AND LABOUR LAW
The development of industrial law during the last decade and several decisions
of the Supreme Court while dealing with industrial relations have emphasized
the relevance, validity and significance of the doctrine of social justice. The
concept of social justice is not narrow or one-sided or pedantic. Its sweep is
comprehensive. It is founded on the basic ideal of socio-economic equality and
its aim is to assist the removal of socio-economic disparities. Nevertheless, in
dealing with industrial relations, it does not adopt a doctrinaire approach and
refuses to yield blindly to abstract notions, but adopts a realistic and pragmatic
approach. It therefore, endeavours to resolve the competing claims of employees
by finding a solution which is just, fair and reasonable to both parties with the
object of establishing harmonious relations between labour and management.2

A. Concept of Social Justice

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

B. Social Justice and the Constitution of India

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

C. Application of Concept of Social Justice in Industrial

Adjudication
The application of the concept of social justice in the adjudication of industrial
disputes is now well settled. However, there is a word of caution. Its application
may vary according to the individual presiding officer's view, which may be
fanciful. Thus in Punjab National Bank v. Ram Kanwar4, the Supreme Court
observed that social justice does not mean that reason and fairness must always
yield to convenience of a party. The Court held that such one-sided or partial
view is next of kin to caprice or humour. Social justice need not always be in
favour of workers—there may be cases, whereby their own conduct or on
account of clear or unambigous provisions in a statute, they may not be entitled
to relief. In such cases, grant of relief would not be just or fair.
The Supreme Court has applied the principles of social justice while
upholding the workman’s right to equal pay for equal work, reinstatement in
service in case of wrongful discharge or dismissal, payment of wages to
temporary or daily rated employees at the rate payable to permanent employees
and regularization and confirmation of casual and daily wages employees. The
Court has also elevated the right to work, right to equal pay for equal work and
right to get minimum wages as fundamental rights. These pronouncements of the
Court are directed to secure the goal of social justice which has now attained the
status of basic feature of industrial adjudication.
A survey of decided cases reveals that courts have generally applied the
doctrine of social justice in interpreting labour laws. However, there has been a
conflict of opinion in the high courts and even in the Supreme Court on the
question of application of the concept of social justice. In Central India
Spinning and Weaving and Manufacturing Co case5, Justice Modholkar
speaking for the Bombay High Court held that the concept of social justice ought
not to be imported in interpreting the Industrial Disputes Act or other similar
Acts. The same learned judge speaking for Supreme Court in Rai Sahab Ram
Kanwar's Case6 held that tribunal has no jurisdiction to decide on the basis of its
own concept of social justice. However, Justice Gajendragadkjar in J K Cotton
& Spinning and Weawing Mills Case7 rejected the argument that the concept of
social justice is irrelevant. He added that ‘the concept of social justice has now
become such an integral part of industrial law that no one can suggest that
industrial adjudication can or should ignore the claims of social justice in dealing
with industrial disputes.’ He observed:
The concept of social justice is not narrow, or one-sided, or
pedantic, and not confined to industrial adjudication alone. Its
sweep is comprehensive. It is founded on the basic ideal of
socio-economic equality and its aim is to assist the removal of
socio-economic disparities and inequalities; nevertheless, in
 dealing with industrial matters, it does not adopt a doctrinaire
approach and refuses to yield blindly to abstract notions, but
adopts a realistic and pragmatic approach. It, therefore,
endeavours to resolve the competiting claim of employers and
employees by finding a solution which is just and fair to both
parties with the object of establishing harmony between capital
and labour, and good relationship. The ultimate object of
industrial adjudication is to help the growth and progress of
national economy, and it is with that ultimate object in view that
industrial disputes are settled by industrial adjudication on
principles of fair play and justice.
In Harijinder Singh v. Punjab State Warehousing Corpn8, the Supreme
Court has elaborately discussed the concept of social justice and its application.
The Court observed:
The preamble and various articles contained in Part IV of the
Constitution promote social justice so that life of every
individual becomes meaningful and he is able to live with
human dignity. The concept of social justice engrafted in the
Constitution consists of diverse principles essentially for the
orderly growth and development of the personality of every
citizen. Social justice is thus an integral part of justice in the
generic sense. Justice is the genus, of which social justice is one
species. Social justice is a dynamic device to mitigate the
sufferings of the poor, weak, dalits, tribals and deprived sections
of society and to elevate them to the level of equality to live a
life with dignity of person. In other words, the aim of social
justice is to attain substantial degree of social, economic and
political equality, which is the legitimate expectation of every
section of society. In a developing society like ours which is full
of unbridgeable and ever-widening gaps of inequality in status
and of opportunity, law is a catalyst to reach the ladder of
justice. The philosophy of welfare state and social justice is
amply reflected in large number of judgments of this Court,
various high courts, national and state industrial tribunals
involving interpretation of the provisions of the Industrial
Disputes Act, Indian Factories Act, Payment of Wages Act,
Minimum Wages Act, Payment of Bonus Act, Workmen's
 Compensation Act, the Employees Insurance Act, the
Employees Provident Fund and Miscellaneous Provisions Act
and the Shops and Commercial Establishments Act enacted by
different states.
In Ramon Services (P) Ltd v. Subhash Kapoor,9 Justice R P Sethi,
observed: ‘after independence, the concept of social justice has become a part of
our legal system. This concepts gives meaning and significance to the
democratic ways of life and of making the life dynamic. The concept of welfare
State would remain in oblivion unless social justice is dispensed. Dispensation of
social justice and achieving the goals set forth in the Constitution are not
possible without the active, concerted and dynamic efforts made by the persons
concerned with the justice dispensation system.’
In LIC of India v. Consumer Education and Research Centre,10 Justice
K Ramaswamy observed that social justice is a device to ensure life to be
meaningful and liveable with human dignity. The State is obliged to provide to
workmen facilities to reach minimum standard of health, economic security and
civilized living. The principle laid down by this law requires courts to ensure
that a workman who has not been found guilty cannot be deprived of what he is
entitled to get. Obviously, when a workman has been illegally deprived of his
device then that is misconduct on the part of the employer and employer cannot
possibly be permitted to deprive a person of what is due to him.

IV. PUBLIC INTEREST LITIGATION FOR

ENFORCEMENT OF LABOUR LAWS
The Supreme Court in S P Gupta v. Union of India, popularly known as the
Transfer of Judges case11 formulated the doctrine of public interest litigation in
the following words:
Where a legal wrong or a legal injury is caused to a person or to
a determinate class of persons by reason of violation of any
constitutional or legal right or any burden is imposed in
contravention of any constitutional or legal provision without
authority of law or any such legal wrong or legal injury or illegal
burden is threatened and such person or determinate class of
persons is by reason of poverty, helplessness or disability or
economically disadvantaged position, unable to approach the
 court for relief, any member of the public can maintain an
application for an appropriate direction or writ or order.
The Court found the view that public interest litigations unnecessarily
clog the dockets of the court and add to the already staggering arrears of cases
pending for years and should be discouraged, to be a totally perverse one
smacking of an elitist and status quo approach. On the contrary, the Court found
that the doors of courts were open for vindicating the right of the rich and well-
to-do, for the landlord and the gentry, for the wealthy and the affluent and held
that those who have decried public interest litigation did not seem to realize that
courts were not meant only for the business magnet and the industrial tycoon,
but they existed also for the poor and the downtrodden. The Court accordingly
treated the letter written to a judge to be a writ petition.

V. INTERNATIONAL LABOUR ORGANIZATION AND

ITS INFLUENCE ON INDIAN LABOUR LAWS
The International Labour Organization (ILO) has played a key role in promoting
international labour standards. It was set up in 1919 under the Treaty of
Versailles. India is a founder member of ILO.
There are certain fundamental principles of the ILO that were laid down
at the time of its inception. These principles are known as the Charter of
Freedom of Labour. The main principles of ILO are as follows:
• Labour is not a commodity.
• Freedom of expression and of association are essential to sustained
progress.
• Poverty anywhere constitutes danger to prosperity everywhere.
• The war against want requires to be carried on with unrelenting
vigour within each nation and by continuance and concerted
international effort in which the representatives of workers and
employers, enjoying equal status with those of the governments, join
with them in free discussion and democratic decision with a view to
promotion of common welfare.
The aforesaid principles were modified at the 26th session of ILO held in
Philadelphia in 1944. It also adopted a Declaration that concerns with the aims
and purposes of the organization. This Declaration is known as the Philadelphia
Charter.
By 2008, ILO had adopted 190 conventions and 198 recommendations.
India had ratified 42 of the 190 conventions and one protocol. The Constitution
of India and labour legislation uphold all the fundamental principles envisaged
in the 8 core international labour standards. It ratified 4 of the 8 core conventions
of ILO. With regard to the others, India seeks to proceed with progressive
implementation of the concerned standards and leave the formal ratification for
consideration at a later stage when it becomes practicable.
The ILO has influenced labour legislation in India. Most labour
legislation has been enacted in conformity with ILO conventions.
Today, the ILO stands as one of the specialized agencies of the United
Nations with longer history than any of its sister organizations.

A Structure and Activities

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

B. Making of International Labour Standard

The annual conference sets normative standards on important matters such as
regulation of hours of work and weekly rest in industry, equal remuneration for
equal work, abolition of forced labour, discrimination in employment, protection
of workmen against sickness, disease and work-injury, regulation of minimum
wages, prohibition of night work for women and young persons, recognition of
the principle of freedom of association, organization of vocational and technical
education, and many areas concerning labour management relations. The
standards are evolved after a full debate in the Conference. Usually the standards
are accepted after discussions in the Conference over two successive years.
Agreed standards on a specified subject are then converted into an international
instrument, a ‘Convention’ or a ‘Recommendation’, each having a different
degree of compulsion. A ‘Convention’ is binding on the member-state which
ratifies it; a ‘Recommendation’ is intended as a guideline for national action.12

C. ILO Declaration on Fundamental Principles and Rights at

Work
The ILO declaration on Fundamental Principles and Rights at Work, adopted by
the International Labour Conference in June 1998, declares inter alia that all
member states, whether they have ratified the relevant conventions or not, have
an obligation to respect, promote and realize the principles concerning the
fundamental rights which are the subject of those conventions, namely:
(a) freedom of association and the effective recognition of the right to
collective bargaining;
(b) elimination of all forms of forced or compulsory labour;
(c) effective abolition of child labour; and
(d) elimination of discrimination in respect of employment and occupation.13
The primary goal of the ILO today is to promote opportunities for women
and men to obtain decent and productive work in conditions of freedom, equity,
security and human dignity. The goal is not just the creation of jobs but the
creation of jobs of acceptable quality.14
The Government of India has ratified Convention 122 on Employment
and Social Policy in 1998. Article 1 of the Convention lays down:
1. With a view to stimulating economic growth and development, raising
levels of living, meeting manpower requirements, and overcoming
unemployment and under employment, each member shall declare and
pursue, as a major goal, an active policy designed to promote full,
productive and freely chosen employment.
2. The said policy shall aim at ensuring that:
(a) There is work for all who are available for and seeking work;
(b) Such work is as productive as possible;
(c) There is freedom of choice of employment and fullest possible
opportunity for each worker to qualify for, and to use skill and the
endowments in a job for which he is well suited, irrespective of
race, colour, sex, religion, political opinion, national extraction or
social origin.
 3. The said policy shall take due account of the state and the level of
economic development and mutual relationships between employment
objectives and other economic and social objectives, and shall be pursued
by methods that are appropriate to national conditions and practices.15
The aforesaid convention was ratified by India at a time when
unemployment levels were high. One, therefore, has to presume that the
government is now committed to pursue an active policy designed to promote
full, productive and freely chosen employment.16
From the commitments of the Government of India, it can be deduced that
the following rights of workers have been recognized as inalienable and must,
therefore, accrue to every worker under any system of labour laws and labour
policy. These are:
(a) Right to work of one's choice
(b) Right against discrimination
(c) Prohibition of child labour
(d) Just and humane conditions of work
(e) Right to social security
(f) Protection of wages including right to guaranteed wages
(g) Right to redressal of grievances
(h) Right to organize and form trade unions and right to collective bargaining
(i) Right to participation in management

VI. REVIEW OF LABOUR LAW BY THE FIRST

NATIONAL COMMISSION ON LABOUR
An important development in the arena of labour law and policy was setting up
of the (first) National Commission on Labour in December, 1966 by the
Government of India. The Commission was asked to undertake a comprehensive
review of labour law. The Commission investigated the problems relating to
labour and formulated a policy for the future. In the sphere of industrial
relations, the Commission made the following recommendations:17
(i) Any sudden change replacing adjudication by a system of collective
bargaining is neither called for nor practicable. The process has to be
gradual. A beginning has to be made in the move towards collective
 bargaining by declaring that it will acquire primacy in the procedure for
settling industrial disputes. Conditions have to be created for promotion
of collective bargaining. The most important among them is statutory
recognition of a representative union as the sole bargaining agent. The
place which strikes/lock-outs should have in the overall scheme of
industrial relations needs to be defined; collective bargaining cannot exist
without the right to strike/lockout.
(ii) With the growth of collective bargaining and the general acceptance of
recognition of representative unions and improved management attitudes,
the ground will be cleared, at least to some extent, for wider acceptance of
voluntary arbitration.
(iii) It would be desirable to make recognition compulsory under a central law
in all undertakings employing 100 or more workers or where the capital
invested is above a stipulated size. A trade union seeking recognition as a
bargaining agent from an individual employer should have a membership
of at least 30 per cent of workers in the establishment. The minimum
membership should be 25 per cent if recognition is sought for an industry
in a local area. The proposed National/State Industrial Relations
Commission will have the power to decide the representative character of
a union, either by examination of membership records, or if it considers
necessary, by holding an election by secret ballot open to all employees.
(iv) The present arrangement for appointing ad hoc industrial tribunals should
be discontinued. An Industrial Relations Commission (IRC) on a
permanent basis should be set up at the centre and one in each state for
settling ‘interest’ disputes. The IRC will be an authority independent of
the executive. The main functions of the National/States IRCs will be (a)
adjudication in industrial disputes; (b) conciliation; and (c) certification of
unions as representative unions.
(v) In essential industries/services, when collective bargaining fails and when
the parties to the dispute do not agree to arbitration, the IRC shall
adjudicate upon the dispute and its award shall be final and binding. It is
unfortunate that most of the above recommendations have not been
implemented.

VII. REVIEW OF LABOUR LAW BY THE SECOND

NATIONAL COMMISSION ON LABOUR
The poor conditions of unorganized labour and the defective labour laws
continued to engage public attention. On 11 January 1999, the Government of
India announced its decision to set up the second National Commission on
Labour to make suggestions to rationalize laws for workers in the organized
sector and recommend an ‘umbrella’ law to protect labour in unorganized
employments. The Commission was asked to take into account the emerging
economic environment involving rapid technological changes, requiring
response in terms of change in methods, timing and conditions of work, in
industry, trade and services, globalization of economy, besides desirability to
bring the existing laws in tune with further labour market needs and demands.18
While making a study, the Commission was also required to examine the
minimum level of labour protection and welfare measures and the basic
institutional framework for ensuring the same in the manner which is most
conducive to a flexible labour market and adjustments necessary for furthering
technological changes and economic growth.
The (second) National Commission on Labour, which submitted its report to the
Government of India on 29 June 2002, has made wide ranging recommendations
on various facets of labour, viz., review of laws, social security, women and
child labour, skill development, labour administration, unorganized sector, etc.
Some of the significant recommendations are as under:
(i) Existing set of labour laws should be broadly grouped into four or five
sets of laws pertaining to: (i) industrial relations; (ii) wages; (iii) social
security; (iv) safety; and (v) welfare and working conditions. The
Commission is of the view that the coverage as well as the definition of
the term ‘worker’ should be the same in all groups of laws, subject to the
stipulation that social security benefits must be available to all employees
including administrative, managerial, supervisory and others excluded
from the category of workmen and those not treated as workmen.
(ii) There is no need for different definitions of the term ‘appropriate
government’. There must be a single definition of the term, applicable to
all labour laws. The Central Government should be the ‘appropriate
government’ in respect of Central Government establishments, railways,
posts, telecommunications, major ports, light-houses, Food Corporation
of India, Central Warehousing Corporation, banks (other than cooperative
banks), insurance and financial institutions, mines, stock exchanges,
shipping, security, printing presses, air transport industry, petroleum
industry, atomic energy, space, broadcasting and television, defence
establishments, cantonment boards, central social security institutions and
 institutions such as those belonging to CSIR, ICAR, ICMR, NCERT and
in respect of industrial disputes between the contractor and the contract
labour engaged in these enterprises/establishments. In respect of all
others, the concerned state government/union territory administrations
should be the appropriate government. In case of dispute, the matter will
be determined by the proposed National Labour Relations Commission.
(iii) Central laws relating to the subject of labour relations are currently the
Industrial Disputes Act, 1947, the Trade Unions Act, 1926 and the
Industrial Employment (Standing Orders) Act, 1946. Mention must also
be made of the Sales Promotion Employees (Conditions of Service) Act,
1976 and other specific acts governing industrial relations in particular
trades or employments. There are state level legislations too on the
subject. The provisions of all these laws be judiciously consolidated into a
single law called the Labour Management Relation law or the law on
Labour Management Relations.
(iv) One of the most important steps that one needs to take in rationalizing and
simplifying the existing labour laws is in the area of simple common
definitions of terms that are in constant use; such terms include ‘worker’,
‘wages’ and ‘establishment’. By making the law applicable to an
establishment employing 20 or more workers, irrespective of the nature of
the activity in which the establishment is engaged, we have avoided the
need to define ‘industry’. After examining all aspects of the question, we
have come to the conclusion that persons engaged in domestic service are
better covered under the proposed type of umbrella legislation,
particularly in regard to wages, hours of work, working conditions, safety
and social security.
(v) In the case of socially essential services like water supply, medical
services, sanitation, electricity and transport, when there is a dispute
between employers and employees in an enterprise, and when the dispute
is not settled through mutual negotiations, there may be a strike ballot as
in other enterprises, and if the strike ballot shows that 51 per cent of
workers are in favour of a strike, it should be taken that the strike has
taken place, and the dispute must forthwith be referred to compulsory
arbitration (by arbitrators from the panel of the Labour Relations
Commission [LRC], or arbitrators agreed to by both sides).

VIII. APPROACHES OF INDIAN JUDICIARY AND

 JUDICIAL LEGISLATION ON INDUSTRIAL
RELATIONS

A. Current Approaches of Indian Judiciary

A survey of decided cases of the Supreme Court and high courts reveals a
marked shift in their approaches to deal with labour issues. While prior to the
21st Century and more particularly between 1970 and 1990, the interests of
workers were given prime consideration in dealing with labour cases; after 1990
and to be more specific, at the beginning of the 21st Century, the change in
economic policy and globalization have influenced the decision makers.
This shift in the approach of Indian judiciary may be seen in the
judgments in the area of discipline and disciplinary procedure, voluntary and
compulsory retirement, service contract and standing orders, compliance of
natural justice, bandhs, demonstrations, retrenchment and on management’s
prerogative during the pendency of proceedings before a labour tribunal. The
courts evolved new norms to determine whether a person is a workman or not,
and they have even exploded the judicial myth on the interpretation of the word
‘industry’ and workman.
The Supreme Court felt that this was necessary in order to strike a balance
between the earlier approach in the realm of industrial relations wherein only the
interests of the workmen were focused on, and the current emphasis on ensuring
fast industrial growth in the country. In several decisions, the Court noticed how
discipline at the workplace/industrial undertaking received a setback. In view of
the change in the economic policy of the country, the Court felt that it might not
now be proper to allow employees to break discipline with impunity because we
are governed by the rule of law. All action therefore, must be taken in
accordance with the law.
The aforesaid line of approach received a jolt in two decisions reported in
2010–2011. The Court19 noticed that ‘there had been a visible shift in the courts’
approach in dealing with cases involving the interpretation of social welfare
legislations. According to the Court, globalization and liberalization are the
raison d'être of the judicial process, and an impression has been created that the
constitutional courts are no longer sympathetic towards the plight of industrial
and unorganized workers. It was felt that in large number of cases, relief has
been denied to the employees falling in the category of workmen, who are
illegally retrenched from service by creating by-lanes and side-lanes in the
jurisprudence developed by this Court in three decades. It added that the plea
raised by the public employer in such cases is that the initial
employment/engagement of the workman/employee was contrary to some or the
other statute or that reinstatement of the workman will put unbearable burden on
the financial health of the establishment. It was also felt that the courts have
readily accepted such plea unmindful of the accountability of the wrong doer and
indirectly punished the tiny beneficiary of the wrong ignoring the fact that he
may have continued in the employment for years together and that micro wages
earned by him may be the only source of his livelihood.’
It was further felt that if a man is deprived of his livelihood, he is
deprived of all his fundamental and constitutional rights and for him the goal of
social and economic justice, equality of status and of opportunity, the freedoms
enshrined in the Constitution remain illusory. Therefore, the approach of the
courts must be compatible with the constitutional philosophy of which the
directive principles of State policy constitute an integral part and justice due to
the workman should not be denied by entertaining the specious and untenable
grounds put forward by the employer—public or private.20
In 2011, the Supreme Court also deprecated the new technique of
subterfuge adopted by some employers in recent years in order to deny the right
of workmen under various labour statutes by showing that the concerned
workmen are not their employees but are the employees/workmen of a
contractor, or that they are merely daily wagers or short term or casual
employees when in fact, they are doing the work of regular employees.21 The
Court therefore, disapproved and even condemned such practices. It felt that
globalization/liberalization cannot be at the cost of exploitation of workers22.

B. Judicial Legislation on Industrial Relations

The Indian judiciary has made significant contribution in not only evolving new
industrial jurisprudence but has also brought the following judicial legislations in
the process of interpretation.
1. Regulation of management’s power to dismiss workers by laying down
various norms
2. Termination of service after giving 3 months’ notice or wages in lieu
thereof without assigning any reason—illegal
3. Automatic termination of service for absence for specific period under
standing orders without following the principles of natural justice—not
proper
4. Wages for the period of strike/lock-out under certain circumstances
5. Widened scope of retrenchment
6. Evolved triple test for determining the scope of industry
7. Sexual harassment of women at work place by laying down law and
procedure
8. Representative union—to be determined by secret ballot (Food
Corporation of India case)
9. Absorption of contract labour—when contract is sham
10. Closure of industries due to (i) Environmental pollution and (ii) Hazardous
nature
11. Justified and unjustified strikes and lock-outs
12. Denial of minimum wages to be forced labour
13. Child labour—abolition and social security scheme
14. Bonded labour—rehabilitation, identification, abolition–enforcement
15. Workers' participation in management (i) Winding up and (ii) Running sick
industry
16. Profit sharing–bonus — linked with productivity
17. Rules of natural justice to be followed in domestic inquiry
18. Enforcing code of discipline

IX. LABOUR REFORMS: REVIEW OF LABOUR LAW

Labour law, which seeks to regulate the relations between employers and their
workmen, does not address several problems. Even though labour laws have
been amended during the last few years, but it cannot be denied that they have
become obsolete. Indeed, they suffer from various defects and shortcomings.
Thus, most labour legislations are not applicable to unorganized labour, which
constitutes about 93 per cent of the labour force. Further, most labour legislation
is more than five decades old. It is felt that our labour laws are overprotective,
over reactive, fragmented, outdated and irrelevant and as such have created
hurdles in achieving the target of fair labour practices.
The emergence of globalization, liberalization and privatization has
brought new challenges. There is therefore, mounting pressure to reform labour
laws. In view of this, the second National Commission on Labour had, in its
report, made some headway in removing the irritants and stumbling blocks.
However, it is unfortunate that no positive steps have so far been taken to give
legislative shape to the recommendations of the Commission.
It is often contended by employers that labour laws place unreasonable
restrictions on them to hire workmen and terminate their services and inhibit
them in meeting global competition. They also claim that this deters them from
opening of new businesses and discourages employment intensity. On the other
hand, workers' organizations have opposed the dilution of job security provisions
in the law since they feel that it would encourage exploitation of workers and
deterioration in the quality of employment. Whatever may be the justification of
managements and trade unions, there is a need to re-look at the existing
provisions in view of the interests of workers and also the recent developments.
The key areas of labour law reforms are as under:
1. Multiplicity of labour laws and the need for fewer labour legislations if not
a single labour code
There are about 165 legislations—both central and state to deal with
labour. These are the most voluminous in the world. More laws mean less
implementation if the inspection and enforcement machinery is limited.
The first National Commission on Labour and National Labour Law
Association favoured single labour code and even prepared a draft labour
code. The second National Commission on Labour grouped the entire
labour law into four or five categories. Be that as it may, it is better to
have fewer labour laws, if not a single labour code and better
enforcement.
2. Law relating to multiple definitions of same/similar terms under labour
legislation to be eliminated
(i) The Industrial Disputes Act, 1947 defines ‘workman’, the Factories
Act defines ‘worker’ and the Employees' State Insurance Act, 1948
defines ‘employee’ in different ways. This creates confusion. In
 order to bring uniformity, the term ‘worker’ should be uniformly
adopted and defined as suggested by the second National
Commission on Labour in all labour legislation.
(ii) The expression ‘appropriate government’ has been differently
defined in various labour legislations. In order to reduce conflict
and bring uniformity, there should be a single definition. The 2010
amendment in the IDA has however, provided a guideline.
(iii) The term ‘wage’ has been defined differently under the Minimum
Wages Act, 1948, Payment of Wages Act, 1936, Payment of
Gratuity Act, 1972 and the Industrial Disputes Act, 1947. A need
has therefore, been felt to provide a single definition.
3. Law relating to arena of interaction—vague
The definition of ‘industry’ under the Industrial Disputes Act, 1947 and
‘establishment’ under the Industrial Employment (Standing Orders) Act,
1946, despite the judicial interpretation, is still unsettled and needs to be
simplified.
4. Law relating to salary limit—obsolete
The salary limit provided under various labour legislations has become
obsolete. Thus, the wage limit under the Payment of Wages Act, 1936
has now been fixed at ₹6,500 per month. Likewise, the 2010 amendment
in the Industrial Disputes Act fixes the wage limit for workers doing
supervisory work at ₹10,000 per month. On the contrary, there is no
wage limit for persons doing technical/skilled work. Thus, even persons
like a pilot drawing several lakhs per month would be a workman under
the Industrial Disputes Act, but a supervisor drawing ₹10,000 or more
per month would not be a workman. This is an area which requires
review.
5. Number of persons employed
The minimum number of persons prescribed under various labour
legislations including social security and minimum standard legislations
need to be reviewed.
6. Simplify and rationalize labour
The substantive law and procedures prescribed under various labour
legislations should be simplified and rationalized.
7. Laws regulating strikes and lockouts These need to be reviewed as under:
(i) Minimum period of notice must be prescribed for strikes/lockouts
 in non-public utility services.
(ii) Secret ballot method for resorting to strikes may be considered.
(iii) Penalties prescribed for illegal strikes/lockouts should be deterrent
in nature.
(iv) Just like go-slow, stay-in-strike should be treated as a serious
misconduct.
8. Notice of change under Section 9A of the Industrial Disputes Act, 1947
This needs to be reviewed, particularly where the employers expands the
business or increases the strength of labour.
(i) Notice of Change—Mere Display of Notice not Sufficient
In Management of Salem District Co-operative Milk Producers'
Union Ltd v. Industrial Tribunal,23 the Madras High Court held
that mere display of the notice on the notice board will not be
sufficient. The notice must be in terms of the provisions of the
Industrial Disputes Act and the Tamil Nadu Industrial Disputes
Rules which, inter alia, stipulate that it must be exhibited in Tamil.
(ii) Recovery of Payments towards Inadmissible Allowances and
Incentives
In Jossie v. Flag Officer Commanding-in-Chief,24 the Kerala High
Court held that recovery of payment made towards inadmissible
allowance made by mistake is not violation of Section 9A of
Industrial Disputes Act, 1947.
(iii) Transfer of Employees
In Associated Cement Co. Ltd v. Cement Staff Union,25 the
Bombay High Court held that transfer of an employee being an
incident of service, there is no question of the order of transfer not
being in violation of Section 9A of the Industrial Disputes Act,
1947.
9. Government's permission for retrenchment, lay-off and closure of
enterprises
The crucial issue is (i) whether the management employing 100 workers
or more should seek prior approval of the appropriate government before
lay-off, retrenchment or closure, and (ii) whether the existing limit of 100
workers should be raised to 300.
10. Problems of enforcement and compliance of labour laws
The existing labour legislation does not fully address the problems of
 enforcement. This is more evident in the unorganized sector. Quite apart
from this, the enforcement process has failed to meet the intent of
legislature. The penal provisions, particularly in case of illegal
strikes/lockouts have remained only on paper. It is felt that it is better not
to have a law which is respected more in breach than in its observance. It
is further felt that so long as the cost of violation is less or negligible than
the cost of compliance, the provisions of labour laws would remain on
paper.
11. Recognition of trade unions
A crucial issue in labour laws relates to recognition os trade unions. This
is so because there is no provision in any central labour legislation for the
recognition of trade unions by the employer. The basic issue is about the
mode of determining the bargaining agent. The Federation of Trade
Unions is divided over the issue of whether verification or secret ballot
method should be adopted. No doubt, several legislative attempts have
been made but till date, (except in some states) there is no central
legislation to deal with recognition of trade unions.
12. National minimum wage
The first National Commission on Labour recommended that national
wage is not necessary because of wide variations due to socio-economic
and demographic conditions not only in various states but also at the
regional and district levels within the states. However, there is a need to
examine whether there should be a national minimum wage for all
scheduled employment.
13. Other areas for reform
(i) Social security for unorganized workers, particularly health,
maternity benefits, disablement benefits and old age benefits even
after the enactment of the Unorganized Worker’s Social Security
Act, 2008.
(ii) Contract labour
(iii) Inter-state migrant workmen
(iv) Child labour
(v) Minimum standards of employment for all workers
(vi) Application and extension of Equal Remuneration Act, 1976
1 AIR 1953 SC 58.
2 See J K Cotton Spining & Weaving Mills v. Labour Appellate Tribunal, AIR 1964 SC
737.
3 AIR 1995 SC 170.
4 (1957) ILLJ 542.
5 Central India Spg. Wvg & Mfg Co. Ltd v. Industrial Court, (1959) ILLJ 468.
6 (1963) 2 LLJ 65.
7 AIR 1964 SC 737.
8 (2010) 3 SCC 192. para 19.
9 (2000) 1 SCC 118.
10 (1995) 5 SCC 482.
11 AIR 1982 SC 149.
12 See Govt. of India, Report of the First National Commission on Labour (1968), 473.
13 Govt. of India, Report of the Second National Commission on Labour (2002), 35.
14 Ibid.
15 Govt. of India, Report of the Second National Commission on Labour (2002), 35.
16 Ibid.
17 Govt. of India, Report of the Second National Commission on Labour (2002), 35.
18 See Hindustan Times, January 12, 1999, New Delhi.
19 Harjinder Singh v. Punjab State Warehousing Corporation, (2010) 3 SCC 192.
20 Ibid.
21 Bhilwara Dugdh Utpadak Sahkari S Ltd v. Vinod Kumar Sharma, 2011 LLR 1079 (SC).
22 Ibid.
23 2010 LLR 435.
24 2011 LLR 1168.
25 2010 LLR 162.
 CHAPTER
2
Industrial Relations: An Overview

I. THE CONTEXTUAL FRAMEWORK

Industrial relations is a dynamic socio-economic process. It is a ‘designation of a
whole field of relationships that exist because of the necessary collaboration of
men and women in the employment processes of industry’.1 It is not the cause
but an effect of social, political and economic forces.2
It has two faces like a coin—cooperation and conflict.3 The relationship,
to use Hegal’s expression, undergoes change from thesis to antithesis and then to
synthesis. Thus, the relationship starting with cooperation soon changes into
conflict and after its resolution, again changes into cooperation.4 This changing
process becomes a continuous feature in an industrial system.
The relationship between labour and management is based on mutual
adjustment of interests and goals.5 It depends upon economic, social and
psychological satisfaction of the parties. Higher the satisfaction, healthier the
relationship. In practice it is, however, found that labour and capital constantly
strive to maximize their pretended values by applying resources to institutions.
In this effort they are influenced by and are influencing others. Both of them try
to augment their respective income and improve their power position.
The major issues involved in the industrial relations process are terms of
employment such as wages, dearness allowances, bonus, fringe benefits,
working conditions, leave, working hours, health, safety and welfare, non-
employment, job security, personnel issues such as discipline, promotional
opportunities and recognition of trade unions. However, in view of sharply
divided and vociferously pressed rival claims, the objectives of labour and
management are not amenable to easy reconciliation. This is all the more so
because the resources are limited. Be that as it may, the means adopted to
achieve the objectives which vary from simple negotiation to economic warfare
adversely affect the community's interest in maintaining an uninterrupted and
high level of production. Further, in a country like India where labour is neither
adequately nor properly organized, unqualified acceptance of the doctrine of
‘free enterprise’, particularly between labour and management, strengthens the
bargaining position of the already powerful management.
It is apparent that the State, with its ever-increasing emphasis on welfare
aspect of a governmental activity, cannot remain a silent and helpless spectator
in the economic warfare. The legislative task of balancing the conflicting interest
in the arena of labour-management relations proves to be an extremely difficult
one, in view of mutually conflicting interests of labour and management. The
substantive issues of industrial relations are of perennial nature and thus, there
can never be a ‘solution for all times to come.’6 There can only be broad norms
and guidelines as criteria in dealing with issues of industrial relations.7 The law
plays an important role in shaping the structure of industrial relations.8 It
represents the foundation from which the present system and procedure flows to
deal with the problems of industrial relations.9

II. DIMENSIONS OF THE PROBLEMS OF INDUSTRIAL

RELATIONS
India is primarily an agricultural country. As per the Census of India, 2001, the
total employment in both organized and unorganized sector in the country was of
the order of 40.22 crore. Out of this, about 2.65 crore were in the organized
sector and the balance 37.57 crore in the unorganized sector.10 Out of 37.57
crore workers in the unorganized sector, 23.7 crore workers were employed in
agriculture sector, 1.7 crore in construction, 4.1 crore in manufacturing activities
and 3.7 crore each in trade and transport, communication and services. The
workers in the unorganized sector fall in various categories but a large number
of them are home-based workers engaged in occupations like beedi rolling,
agarbatti making, pappad making, tailoring, zari and embroidery work.
However, the largest chunk of unorganized labour, namely, 60 per cent being
agricultural workers and cultivators including small and marginal farmers, who
are badly in need of legal/social protection, have been left out. Be that as it may,
the importance of industry cannot be minimized. Said J L Nehru:
The alternative (to industrialization) is to remain backward,
underdeveloped, poverty-stricken and a weak country. We
cannot even retain our freedom without industrial growth.11
According to a survey conducted by the National Sample Survey
Organization in the year 2004–2005, out of 45.9 crore which constitute the total
labour force, 43.3 crore persons are engaged in unorganized labour which
constitutes 93 per cent of work force. They are denied job security, social
security and other benefits. Most of the labour force, particularly in the
unorganized sector, is unskilled, underemployed, self-employed, casual and
unprotected. Rural development is essential for upgrading the living conditions
of the overwhelming majority of people and providing minimal economic
sustenance to the poverty-stricken sections of the community. But, industrial
development is necessary for affluence and for bringing the benefit of scientific
and technological progress to all sections of the community.
Out of the total of 40.22 crore in terms of 2001 census and 45.9 crore in
terms of estimate of National Sample Survey 2004–2005, 12.7 crore were
cultivators, 10.6 crore were agricultural labourers, 1.6 crore were in household
industries and 15.1 crore were other workers. Most labour legislation is not
applicable to them. However, an important recent initiative taken by the Ministry
of Labour and Employment to safeguard the interest of unorganized workers has
been the enactment of the Unorganized Workers’ Social Security Act, 2008. The
Act provides for constitution of National Social Security Board which will
recommend formulation of social security schemes for unorganized workers
from time to time. Accordingly, the National Board was constituted in 2009
which recommended that the social security schemes viz; Swavalamban Yojna,
Rashtriya Swasthya Bima Yojana (RSBY) providing for health insurance,
Janashree Bima Yojana (JBY) providing death and disability cover and Indira
Gandhi National Old Age Pension Scheme (IGNOAPS) providing for old age
pension which may be extended to building and other construction workers,
MNREGA workers, Asha workers, Anganwadi workers and helpers,
porters/coolies/gangmen and casual and daily wagers.

III. INDUSTRIAL UNREST AND WORK-STOPPAGES

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

Table 2.1: Number of Workers and Man-days Lost

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

IV. UNEMPLOYMENT AND UNDEREMPLOYMENT

AS BARRIERS TO IMPROVING INDUSTRIAL
RELATIONS
Unemployment and underemployment are the most important economic evils in
a welfare state. India is no exception. In India, one-sixth of the total population
of the country is either unemployed or chronically underemployed. As per the
Government of India report,13 upto the end of June, 2009, 1.07 lakh pensons had
been placed on employment exchange. The total number of jobseekers by June,
2009 were about 2 lakh.14 These are the phenomena of Indian industries that
have affected to a considerable extent the standard of living and have also
created disparity in the working class. They have hampered the growth of the
labour movement and trade unions. Political parties may take advantage of the
unemployed millions and divert them from the search for gainful employment
towards unproductive political actions. Further, underutilization of human
resources in the agricultural sector is likely to divert agriculturist section of job-
seekers to industrial sectors. Unemployment poses a serious threat to
development programmes. Government planners should be sensitive to the
present problem of unemployment. Labour law can be modelled or remodelled
to implement law, policies and programmes to provide relief to unemployed.

V. OTHER DIFFICULTIES IN HEALTHY GROWTH OF

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

Table 2.2: Education Levels of Workers

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

Similarly, workers with higher educational achievements are likely to get

higher wages as compared to those who are less educated. Again, as in case of
access to regular employment, wages increase significantly only after certain
thresholds of educational status (say secondary level) are reached both in rural as
well as urban areas. In rural and urban areas, there is not much difference in
wages of illiterates and of those up to primary level of education. Even middle
level of education brings marginal difference in daily earnings. Wages increase
significantly only after minimum secondary level of education.17
3. Heterogeneity: Another characteristic of Indian labour is its heterogeneity.
India is ‘a vast country where customs and traditions differ considerably
from one part to another. There are distinctions based on caste, creed and
religion and provincial jealousy (where residents of one state look down
upon residents of another state). In spite of the provisions in the
Constitution that there would be no distinction on the basis of caste,
creed, etc., there is no denying that these vices are widely prevalent.18
The effect of this is that workers do not unite for better conditions inter
se and for reform.
4. Absenteeism: Absenteeism has been a cause of great concern in most of
the organizations in India. There is no hard and fast rule to deal with this
problem. Industry-wise and state-wise, absenteeism rate, i.e., percentage
of man-days lost due to absence to the number of man-days scheduled to
work were 10.01 and 8.96 respectively during 2004.19 However, it is
certain that it requires a great deal of expertise to effectively bring down
the cases of absenteeism.
Disciplining is, of course, the last resort to curb and control absenteeism
but now with advancement of behavioural science, some psychological
 methods have also proved to be very useful which is known as human
relations approach.
5. Women workers: Employment of women in industrial establishments is
common in almost all countries—developed and developing. India is no
exception. Special provisions of labour law exist to deal with the special
problems of women workers employed in factories, mines, plantations
and other industrial establishments.
Women constitute a significant part of the work force in India. According
to 2001 census, the total number of women in the country was 494.82
million out of the total population of 1,025.25 million. This means
women accounted for 48.26 per cent of the total population. Employment
of women in the organized sector (both public and private as on 31
March 2006 was 5.12 million which constituted 19 per cent of the total
organized sector employment in the country).20
According to 2001 census, out of 127.73 million cultivators, only 41.89
million constituted female cultivators. Out of the agricultural labourers of
106.77 million in the same year, women agricultural labourers constituted
49.44 million. In case of agricultural labourers, there is parity between
men and women.21

Table 2.3: Demographic Profile of Indian Workman

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

The employment of women workers in modern industrial system has

given rise to several problems. First, a set of major social evils involved in the
employment of women is widespread disorganization of family life. The lack of
domestic care of the development of a child’s personality may continue even in
his adult life. The increasing number of juvenile delinquents, stillborn children,
abortions, morbidity of women, abnormal pregnancies and premature births are
clear reflections of employment of women.22 ‘Second, the economic problem
involved in industrial employment of women is in no way less significant. The
inadequacy of family income and the desire to supplement the meagre family
income23 compels women workers to work in industry. But employment in such
an establishment does not provide them adequate wages. They are generally
placed either in lower jobs or in traditional jobs which carry lower salaries and
are not generally given higher posts. Third, ‘equal pay for equal work’ for both
men and women has not been fully implemented and despite legislation, there is
disparity of pay between men and women. Fourth, the employment of women in
industry creates a variety of other problems such as hours of work (particularly
during night), overtime, health, safety, welfare and maternity leave. Fifth, the
legal protection afforded to women workers is also inadequate and involves
problems of inadequate inspecting staff. Sixth, working women face the problem
of sexual harassment for which norms have been laid down by the Supreme
Court for prevention and regulation.24
6. Child labour: Another major problem of industrial relations is that of child
labour. It is a common and serious problem for the country. It ultimately
affects the personality and creativity of children. Data regarding the
extent of employment of child labour are inadequate. According to the
2001 census, the estimated figure of working children was 12.6 million.25
This figure rose to 17.02 million according to the estimates of the 43rd
National Sample Survey conducted in 1987–88. However, the incidence
of child labour in India has declined from around 5 per cent in 1993–94 is
 approximately 3 per cent in 2004–05.26
The evil of employment of children in agricultural and industrial sectors
in India is a product of economic, social and, among others, inadequate
legislative measures. Social evils involved in the employment of children
are widespread illiteracy resulting in lack of development of child’s
personality which may continue even in his adult life and negligence and
indifference of the society towards the question of child labour.27 There
is also lack of proper appreciation on the part of parents as to how
continuance of child education would benefit his employment prospects
and improve the standard of living.28 The economic problems involved in
the employment of children are in no way less significant. Poverty
resulting in inadequate family income and the desire to supplement it
compels children to work. Indeed, the parents of low income groups like
artisans cannot afford to educate their wards even if education is free. For
them, an uneducated child is an asset; desire to be educated becomes a
double liability because of: (a) loss of earning if the child does not work;
and (b) expenditure on education, howsoever, small.29 Thus, the
economic evils have not only deprived children at work from education
but also led to high infant mortality, morbidity and malnutrition,
particularly in weaker sections of the society in urban areas. The
indifference of legislators to provide adequate legislation to regulate
employment of children has failed to minimize the growth of child
labour. The socio-legal problems involved in the employment of children
in agriculture and industries are: (a) is it feasible to abolish child labour
particularly of those: (i) who are orphans, destitutes, neglected, and
abandoned children; (ii) children who have to work for livelihood; (iii)
children belonging to migrant families; and (iv) handicapped children? If
not, what should be done mediately and immediately (b) Should child
labour be banned in hazardous employment? If so, what are the
alternatives? (c) What should be the minimum age for different kinds of
employment? (d) What should be the duration of their work including
rest interval? Is it desirable to adjust the working hours in such a manner
as to provide for schooling of children? (e) What privileges should be
afforded to them in matters of leave and holidays? (f) What protection
should be afforded to them in matters of health, safety and welfare?
The legislature has met the first problem by providing certain minimum
standards of age, physical fitness30 and sometimes educational attainments. The
second problem has also been dealt with by the legislature by prohibiting
employment in certain establishments or part of establishments.31 The third
problem has been met by prohibiting employment of women and children in
certain dangerous work.32 The rest of the problems have been met by the
legislature by imposing various restrictions on the conditions of work such as
limited hours of work, provisions for holidays, rest intervals, leave, health, safety
and welfare amenities.
India has been following a proactive policy in the matter of tackling the
problem of child labour by undertaking constitutional, statutory and
developmental measures that are required for its elimination. The recently
enacted Right of Children to Free and Compulsory Education Act, which came
into effect from 1 April, 2011 is a major initiative taken by the government in
this direction. Steps have been initiated to realign National Child Labour Policy
with the provisions of the Right to Education Act. Under the National Child
Labour Policy, 100 National Child Labour Projects (NCLPs) are in operation for
rehabilitation of about 2.11 lakh working children. A major activity undertaken
under the NCLP is the establishment of special schools to provide non-formal
education,33 vocational training, supplementary nutrition, stipend, health care,
etc., to children withdrawn from employment. So far, 1.87 lakh children from
special schools of NCLPs have been mainstreamed into formal education
system. The target is to eliminate child labour in a sequential manner, beginning
with its elimination from hazardous occupations through a determined move
towards its complete elimination from other occupations. Besides, a large
number of NGOs are working for elimination of child labour under the grant-in-
aid scheme.34
Apart from continuing the existing 100 NCLPs during the Tenth Plan,
government has approved setting up of additional 150 NCLPs in child labour
endemic districts during the 10th Plan. The expanded scheme in additional 50
districts has already been launched in January, 2004 and states have been asked
to set up NCLPs in these identified 50 districts. In the remaining 100 districts,
the scheme would be launched after additional 100 districts are identified on the
basis of the 2001 census report which is in process. Government has also
launched the INDOUS (INDUS) Child Labour Project on 16 February 2004
during the visit of Mr Arnold Levine, Deputy Undersecretary, US Department of
Labour and Mr Kari Tapiola, Executive Director, International Labour
Organization to India.35

VI. SCOPE AND CONCEPT OF INDUSTRIAL

 RELATIONS
Industrial relations deal with the relationship between labour and management,
and their organization. The concept of ‘industrial relations’ is very broad and
includes in its fold all the relationships in modern industrial society which arise
out of employee-employer exchanges and also the role of the state in these
relations. Explaining the concept of industrial relations, R A Lester observed:
It involves attempt to workable solutions between conflicting objectives
and values—between incentive and economic security, between
discipline and industrial democracy, between authority and freedom and
between bargaining and cooperation.
According to the Encyclopedia Britannica, ‘the concept of industrial relations
has been extended to denote the relations of the state with employers, workers
and their organizations’.
The International Labour Organization (ILO), while dealing with
industrial relations, states that they deal with either the relationship between the
State and employers and workers’ organization or between the occupational
organizations themselves.
The significance of industrial relations is aptly described by the (First)
National Commission on Labour (1969) as follows:
A quest for industrial harmony is indispensable when a country plans to
make economic progress. Economic progress is bound up with industrial
harmony for the simple reason that industrial harmony leads to more
cooperation between employers and employees which results in more
productivity and thereby contributes to all-round prosperity of the
country. Healthy industrial relations on which industrial harmony
depends cannot, therefore, be regarded as a matter in which employers
and employees are concerned. It is of vital significance for the
community as a whole.
The scope of industrial relations varies from time to time and place to
place. According to Professor Richardson, the scope of industrial relations
includes: ‘How people get on together at their work, what difficulties arise
between them, how their relations including wages and working conditions are
regulated, and what organizations are set up for the protection of different
interests.’
 VII. INDUSTRIAL RELATIONS VIS-A-VIS HUMAN
RELATIONS MANAGEMENT
Industrial relations are basically a problem of human relations, and are
influenced, if not conditioned, by all the complex circumstances that affect the
latter. While the apparent causes of good or bad labour management relations
may not be difficult to classify, the real causes underlying outward and visible
signs, over which there is seldom any unanimity, have their roots in historical,
political, socio-economic factors and depend upon attitudes of workers and
employers. Many times, work-stoppages which can be apparently ascribed to
some simple demand, namely, economic or personnel, are found, on a deeper
examination, to have complex roots in the social and cultural attitudes of the
worker involved. At times, though strikes take place because of certain
economic demands, harmonious relations are not necessarily restored even after
the monetary benefits demanded are granted to workers. On the contrary, it is
also possible that even without the apparent demand being satisfied or conceded,
good relations are restored once the deeper cause, be it political, social or
economic is properly tackled. A change in the leadership in the workers' union or
a change in the management may radically alter the basic relationship between
the management and the workers. As such, a particular state of industrial
relations cannot be viewed in isolation from the political, social and economic
characteristics obtaining therein nor the remedies to correct certain situations
developed without giving due consideration to such factors.36

VIII. OBJECTIVES OF INDUSTRIAL RELATIONS

It is difficult to precisely lay down the objectives of industrial relations.
However, various authors on the subject attempted to highlight the main
objectives of industrial relations.
Nair and Nair citing Kirkaldy (1947), state that there are four objectives
for industrial relations:
(i) To improve economic conditions of workers;
(ii) For state control on industries for regulating production and promoting
harmonious industrial relations;
(iii) For socialization or rationalization of industries by making state itself a
major employer;
 (iv) For vesting of the proprietary interest of the workers in the industries in
which they are employed.
The objectives of industrial relations require examinations of following
key features:
(i) Employer to individual employee relationships: This relates to
management’s policies and practices that ultimately affect the
productivity and well-being of their employees as individuals. With a
view to optimizing the interests of the employer and those of employees,
necessary steps need be taken which may cover wages and salary
administration, career prospects inclusive of planning and promotion,
retirement and medical benefits, discipline and redressal of grievances,
training and development, counselling, workers’ compensation and other
related issues such as insurance.
(ii) Management relations with trade union or group of workers: It covers
rights and practices, regulated by law or legal machinery. It relates to:
(a) Collective agreements
(b) Settlement of industrial disputes
(c) Management’s rights
(d) Formation and recognition of unions as representative body of
workers
Another focus of labour management relations are health, safety and
welfare of workers.
(iii) Industrial peace and productivity: One of the most important object of
industrial relations is to maintain industrial peace and harmony and,
thereby, increase productivity. It depends on the quality of union-
management relations at workplaces.

IX. ROLE OF THE STATE IN INDUSTRIAL

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

X. CHANGING DIMENSIONS OF INDUSTRIAL

 RELATIONS IN INDIA
Globalization, liberalization and privatization have brought new market
imperatives. The traditional industrialization system is under unprecedented
pressure because it is unable to meet this situation. It is felt that a market
determined industrial relations may meet the challenges of the market. Some of
the key features are given below:
(i) The institution of trade union is becoming weaker. Employers, despite
the provisions of unfair labour practice under the Industrial Disputes
Act, 1947, are discouraging the formation of unions and promoting non-
unionism. In IT, SEZ and several private industries, there are hardly any
trade unions.
(ii) The institution of collective bargaining is being decentralized and
replaced by unit bargaining, individual bargaining, commercial
bargaining and collaborative bargaining.
(iii) Disinvestment/privatization and VRS are almost accepted facts of
industrial relations.
(iv) Changing pattern of compensation/rewards management—fixed/assured
time rate wages are replaced by variable/performance-based wages.
(v) Social security and employment guarantee schemes are being provided
for unorganized/agricultural workers.
(vi) Pro-labour attitude of government is being diluted. This is evident from
the shift in government’s attitude of non-interference and liberally
granting permission to lay-off, retrench or close the undertaking under
Chapter V-B.
(vii) The establishment of ‘special economic zones’ is another area which
shows the attitude of the government towards emerging business
scenario.
(viii) The attitude of judiciary is also changing. The recent judgements of the
Supreme Court on contract labour, discipline and disciplinary action,
absenteeism and strikes show that it looks at the problem from the
viewpoint of economic reforms and global competition.

XI. IMPACT OF GLOBALIZATION AND THE WTO

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

XII. FIVE-YEAR PLANS AND INDUSTRIAL

RELATIONS
Immediately after India became a Sovereign Democratic Republic, the concept
of planned economic development through planning was accepted and the
Planning Commission was set up in March 1950. The advent of the era of
planning brought in its wake a set of new problems as well as popular
expectation.37 Eleven plans have been completed and the eleventh is continuing.
The 11 successive plans laid down certain basic concepts and principles
regarding: (i) workers' right of association and organization (ii) the machinery
and procedure for settlement of disputes and (iii) the implementation of awards
and agreements. The plans have had two distinctive objectives in regard to
industrial relations: (i) the avoidance of industrial disputes and creation of
machinery for settlement of industrial disputes and (ii) the creation of necessary
atmosphere for the development of labour management co-operation and
harmonious relations through the adoption of suitable institutional frame-work.38
The First Five-Year Plan (1951–52—1955–56) paid considerable
attention to labour problems including strikes and lockouts, as well as popular
expectation of the working class. The Plan recognized workers’ right to strike
and observed:
In an economy organized on the basis of competition, private
monopoly or private profits, the workers' right to have recourse
to peaceful direct action for the defence of their rights and the
improvement of their conditions cannot be denied and should
not be curtailed unduly.39
But, in any emergency and in the case of services essential to the safety and
well-being of the community, recourse to a strike or lockout may be suspended
or withheld on the condition that in all such cases, provision is made for just
settlement of the parties' claim.40
Reiterating the aforesaid line of thinking, the planners observed:
Experience of many years have demonstrated that in majority of
labour struggles, owing to ignorance and mistakes of the
workers and their organizational and bargaining weaknesses,
they have failed to gain their ends irrespective of the merits of
the disputes.41
While accepting the wisdom of holding the balance fairly between capital
and labour, the planners conceded that the employer usually possesses superior
strength which may become a source of injustice and oppression unless he is
imbibed with high sense of fairness and uses his advantage with scrupulous
regard to the rights and interests of others. It, accordingly, pleaded for
intervention to strike the balance:
The community has, therefore, to intervene for redressing the
balance in favour of the weaker party to assure just treatment for
all concerned. Legal provisions relating to trade unions and
 industrial disputes have to be framed and interpreted in relation
of these objectives.42
The Second Five-Year Plan envisaged a marked shift in industrial
relations policy consequent on the acceptance of the socialistic pattern of society
and the goal of planning. The plan stated that greater stress should be laid on the
creation of industrial democracy in which a worker should realize that he is a
part and parcel of the industrial apparatus that is to usher in socialistic pattern of
society. The planners emphasized mutual negotiations as an effective mode of
settling industrial disputes. Among the other recommendations in the plan were
demarcation of functions between works committee and increased association of
labour unions with management and provision for recognition of trade unions.
Keeping in mind the desirability of having one union to one industry, the plan
also suggested that the number of outsiders who could serve as union office-
bearers be further restricted. Thus, the plan pleaded for maintenance of industrial
peace by preventing strikes and lockouts.
The Third Five-Year Plan did not suggest any major change in policy. It
placed emphasis on collective bargaining and on mutual agreements for
industrial relations as well as workers' well-being. It also emphasized the
economic and social aspects of industrial peace and elaborated the concept that
workers and management were partners in a joint endeavour to achieve common
ends. The voluntary arrangement agreed to in Second Plan was strengthened by
the Industrial Truce Resolution, 1962.
The Fourth Five-Year Plan also stressed on the need for more effective
implementation of labour administration for better enforcement of labour laws.
The Fifth Five-Year Plan highlighted that inadequacies of management
and bad industrial relations are among the most important factors for delay and
inefficiency in implementation of projects and for under-utilization of capacity.
It accordingly pleaded:
It is imperative to bring about a marked improvement in the
operational efficiency of the public sector as also of the private
sector.
Important suggestions given in the Fifth Plan are as follows:
Some unification of the trade union movement is necessary even
for smooth functioning of modern capitalist society, let alone for
building a socialist society. Only through this way can industrial
relations be put on an orderly basis, through collective
 bargaining and other devices.
Among the other suggestions of the Fifth Five-Year Plan were
professionalization of management and active association of the working class.
The Sixth Five-Year Plan did not introduce any major change in the
industrial relations policy. However, there are two aspects which received the
planners’ attention. First, it stressed the need for simplification of procedure for
settlement of industrial disputes in order to ensure ‘quick justice’ to workers and
a feeling of certainty among employers. Second, it emphasized the need for
increasing the number of existing labour courts and tribunals for speedy
settlement of industrial disputes. However, the nature and design of the new
machinery has not been spelt out. Realizing the importance of the system of
industrial relations machinery, the Sixth Plan pleaded that the industrial relations
machinery should be strengthened both in Centre and states for anticipating
labour problems and taking preventive measure to avert work-stoppages.43
The Seventh Five-Year Plan laid considerable emphasis on measures
designed to improve labour management relations without which the realization
of developmental objectives of the plan would be difficult. Viewed from this
perspective, increases in industrial production and productivity are attainable
only in an atmosphere free from industrial conflicts of any kind.44 For this
discipline and motivation for work, harmonious industrial relations, participation
of workers and healthy working climate are sine quo non. The plan highlighted
the need for creating harmonious industrial relations by adopting several
measures such as: (i) there should be proper management of industrial relations;
(ii) there should be identification of responsibilities of the unions and the
employers; and (iii) inter-union and intra-union rivalries should be avoided.
Further, the plan suggested that some policy for tackling industrial sickness in
future has to be evolved while protecting the interest of labour. Moreover, the
plan laid emphasis on upgradation of technology, modernization of equipment,
better utilization of assets and promotion of efficiency.45
The Eighth Five-Year Plan paid considerable attention to the working
conditions, welfare and social security measures and enforcement of labour laws
for unorganized labour, women and child labour. The plan stated that emphasis
should be laid ‘on skill formation and development, strengthening and
modernization of employment, service, promotion of industrial and mines safety,
workers' education, promotion of self-employment, enforcement of labour laws,
promotion of a healthy industrial relations situation and encouragement of
workers' participation in management.’46
The Ninth Five-Year Plan stressed on the need to create conditions for
improvement of labour productivity and provisions for social security to
supplement the operation of the labour market. The resources would be directed
through plan programmes towards skill formation and development, exchange of
information on job opportunities, monitoring of working conditions, creation of
industrial harmony through an infrastructure for healthy industrial relations and
insurance against disease and unemployment for the workers and their families.
The plan envisages that the trade unions will contribute to promoting changes in
the work culture.
The plan also stated that action will be taken to: (a) identify the laws
which are no longer needed and repeal them; (b) identify the laws which are in
harmony with the concept of economic liberalization and need no change; (c)
amend the laws which require change; and (d) revise the rules, regulations,
orders and notifications. Further under the plan, efforts would be made to extend
the coverage of the National Social Assistance Programme comprising old age
pension, maternity benefit and family benefit for girl child, casual and self-
employed workers and informal sector both in rural and urban areas.47
In the Tenth Five Year plan (2002–2007), the salient feature of the labour
department was to ensure payment of minimum wages to the workers engaged in
agricultural and unorganized sectors. The labour department also proposed to
play a major role in improving industrial peace and harmony among the working
class and to maintain harmonious relation between the employer and the
employee. The working condition and safety of the workers engaged in the
organized sector of the economy is looked after by the Directorate of Factories.
The changing scenario of globalization involves greater emphasis on
strengthening of conciliation and adjudication machinery to cope with the
increasing numbers of industrial disputes. The conciliation machinery of the
department is conscious of its challenging role in resolving labour disputes.
Some of the measures taken by the department are as under:
(1) Effective enforcement of the Minimum Wages Act, Contract Labour
(Regulation and Abolition) Act, Child Labour (Regulation and
Prohibition) Act and Equal Remuneration Act which were specially
designed to protect unorganized workers and women;
(2) Rehabilitation of migrant, orphan and homeless labour and child labour in
core carpet zones;
(3) Identification and rehabilitation of bonded labour;
(4) Setting up of a Centre for Productivity and Industrial Management in UP;
(5) Setting up of legal cells at regional offices at Allahabad, Lucknow and
 Ghaziabad;
(6) Creating awareness amongst the workers and involving them in fruitful
occupation;
(7) Greater emphasis on safer working conditions of industrial workers and
strengthening of Boiler Directorate;
(8) Creation of labour court and industrial tribunal;
(9) Establishment of Fast Track Court and
(10) Labour statistics, training and establishment of data bank.
The Eleventh Five Year Plan (2007–2012), emphasized the need to supplement
employment generating sector such as medium and small industries and services
by targeted livelihood support programmes aimed at increasing production and
income of the poor in several low-income occupations. The plan laid emphasis
on generating adequate number of productive employment opportunities. The
planners asserted that rapid growth focussed on labour-intensive industries and
small and medium enterprises will create employment opportunities in
manufacturing and service sector. The ability to create jobs will be enhanced by
greater labour flexibility which may require some change in labour. While they
conceded that ‘hire and fire’ approach may not be desirable but felt that there is
a need to create greater flexibility. While dealing with skill development, the
Eleventh Plan reiterated that specific programme for development of skills at all
levels will form part of the plan.
While dealing with welfare provisions, the plan stated that while in the
short run, access to basic facilities such as health, education, clean drinking
water, etc., would be provided but in the long run, stress would be laid on the
welfare of workers.
The planners emphasized that the broad vision of the Eleventh Plan would
be rapid growth that reduces poverty and creates employment opportunities,
recognition of women's agency, good governances, access to essential services in
health and education specially for poor; equality of opportunities, empowerment
through education, skill development, employment opportunities under the
Mahatma Gandhi National Rural Employment Guarantee Act and environment
sustainability.

Approaches to the Twelfth Five-Year Plan (2012–2017)

As the country moves to adopt the 12th Five-Year Plan, macro-economic balance
with environmental sustainability, water and energy management along with
urbanization among others, are the key challenges before the government. The
approach paper suggests that the main focus will be on inclusive growth. The
Plan is expected to encourage agriculture, education, health and social welfare. It
is also expected to create employment through developing India's manufacturing
sector.

1 Dale Younder, Personnel Management and Industrial Relations (Englewood Cliffs, New
Jersey: Prentice Hall Inc., 1965).
2 R C Goyal, ‘Determinants of Industrial Relations’, Indian Journal of Labour Economics,
XII, 78.
3 Id. at 91.
4 Ibid.
5 Ibid.
6 See Report of the Study Group on Industrial Relations (Western Region), National
Commission on Labour (1969). 26.
7 Ibid.
8 O P Thakkar, ‘Determinants of Industrial Relations’, Indian Journal of Labour
Economics, XII 102.
9 See supra note 6 at 34.
10 Government of India, Ministry of Labour Annual Report 2007 (2009) 2.
11 Report of the All Indian Congress Committee at Avadi (January, 1955).
12 See Government of India, Indian Labour Journal (2010) 808.
13 Government of India, Ministry of Labour & Employment, Annual Report 2009–2010
(2010) 221.
14 Ibid.
15 Ashok Mehta, Dynamics of the Labour Movement, Presidential Address delivered at IX
Annual Conference of the Indian Society of Labour Economics (Varanasi, 1965).
16 Government of India, Ministry of Labour & Employment, Annual Report to the People on
Employment (2010) 19.
17 Ibid.
18 Mathur and Mathur, Trade Union Movement of India (1962), 82.
19 Government of India, Ministry of Labour Year Book 2007 (2009).
20 Government of India, Indian Labour Year Book, 2008 (2010) 2.
21 Government of India, Indian Labour Year Book, 2007 (2009) 10.
22 Mathur and Mathur, Op cit. 72.
23 Ibid.
24 See chapter 3 section IV infra.
25 Government of India, Ministry of Labour, Indian Labour Year Book 2007 (2009) 4.
26 Government of India, Ministry of Labour & Employment, Annual Report to the People on
Employment (2010) 21.
27 See Child Labour in India (Ed. M K Pandia), 1979, 54.
28 Child Labour in India (Ed. M K Pandia) 1979, 54.
29 See Government of India, Report of the National Commission on Labour, 1969, 386.
30 Child Labour (Regulation and Abolition) Act, 1986.
31 See for instance the Factories Act, 1948, Mines Act, 1952, Plantation Workers Act, 1951.
32 Ibid.
33 Govt. of India, Ministry of Labour, Annual Report 2003–2004, (2004) 3.
34 Ibid.
35 Govt. of India, Ministry of Labour, Annual Report 2003–2004, (2004) 3.
36 Government of India, Report of the First Study Group of Industrial Relations in Eastern
India, National Commission on Labour (1968).
37 Government of India, Report of the Committee on Labour Welfare, (1969), 15.
38 Government of India, Report of the Study Group on Industrial Relations (Northern
Region), (1968), 15.
39 Government of India, First Five-Year Plan 1951, 570, 572–573.
40 Ibid.
41 First Five-Year Plan (1951).
42 Ibid.
43 B R Patil, ‘Labour Relations—A Need Based System’, Economic Times, September 26,
1981, 5.
44 Government of India, Annual Report 1985–86 (1986), 8.
45 Government of India, Seventh Five-Year Plan 1985–90, (Vol. 20) (1985), 119.
46 Government of India, Eighth Five-Year Plan 1992–97, (Vol. 27) (1992), 154.
47 Government of India, Ninth Five-Year Plan 1997–2002, (Vol. 2), 390, 392 and 397.
 CHAPTER
3
Constitutional Framework on Industrial
Relations

I. CONSTITUTIONAL PERSPECTIVE

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

B. Directive Principles of State Policy

The Preamble has been amplified and elaborated in the Constitution, particularly
in ‘Directive Principles of State Policy’. The State has been directed to promote
the welfare of the people by securing and protecting as effectively as it may, a
social order in which justice, social, economic and political shall inform all
institutions of national life.3 Further, the state has been directed to secure, inter
alia, (a) adequate means of livelihood;4 (b) proper distribution of ownership and
control of the material resources of the community so that it may subserve the
common need;5 (c) prevention of the concentration of wealth and means of
production; (d) equal pay for equal work for men and women;6 (e) the health and
strength of workers;7 (f) right to work, to education and to public assistance in
cases of undeserved want;8 (g) just and humane conditions of work and for
maternity relief;9 (h) living wage and decent standard of life of labourers;10 (i)
participation of workers in the management of undertakings or industrial
establishments by suitable legislation or otherwise11 and (j) higher level of
nutrition and standard of living and improving public health.12 These provisions
spell out the socio-economic objectives of the national policy to be realized by
legislation. These are the directives13 to the legislature and executive organs of
the State which are committed to make, interpret and enforce law.

C. Constitutional Guarantee
The labour policy is, however, not unqualified. It is subject to various
limitations. The Indian Constitution imposes an express limitation on it. Labour
legislation, therefore, should not be inconsistent with or in derogation of the
fundamental rights. It is to the extent of such inconsistency void.14 Further, the
rights are enforceable by the courts under Articles 32 and 22615 and cannot be
denied in case of violation of fundamental rights.16
Fundamental rights are enumerated in Part III of the Constitution. The
whole object of Part III is to provide protection for the freedom and rights
mentioned therein against arbitrary action by the State.17 Of particular relevance
is Article 14 which provides that ‘the State shall not deny to any person equality
before the law or equal protection of the laws within the territory of India’.18 In
addition to this, Article 16 guarantees equality of opportunity in matters of
public employment. Further Article 19, inter alia, guarantees ‘the right to
freedom of speech and expression,’19 to assemble peacefully and without
arms;20 to form associations or unions,21 to acquire, hold and dispose of
property22 and to practise any profession, or to carry on any occupations, trade
or business.23These constitutional guarantees are of great practical significance
in the area of labour management relations.
Equal protection constitutes a limitation on the legislative power to select
or decide which business or industry must achieve minimial standards. The right
to carry on trade, profession or business limits the burden which the legislation
may place on business in the interest of workers. The freedom of speech,
assembly, association and unionization protect workers in their efforts to achieve
their objectives through self organizing, picketing or striking.
Article 21 provides protection of life and personal liberty. It provides that
no person shall be deprived of his life or personal liberty except according to
procedure established by law. Article 23 prohibits traffic in human beings and
forced labour. It says (i) Traffic in human beings and begar and other similar
forms of forced labour are prohibited and any contravention of this provision
shall be an offence punishable in accordance with law. Life, in Article 21, has
been interpreted by the Supreme Court as including livelihood and the Court has
held in several cases that any employment below minimum wage levels is
impremissible as it amounts to forced labour as understood in Article 23.
Holding a person in bondage is a constitutional crime. Article 24 places a ban on
employment below the age of 14 in any factory, mine or in any other hazardous
employment.
A survey of decided cases reveals that the vires of the Industrial Disputes
Act, 1947 has been challenged time and again on the ground of infringement of
fundamental rights guaranteed under Articles 14 and 19 before the high courts
and the Supreme Court. In Niemla Textile Finishing Mills Ltd v. Industrial
Tribunal, Punjab24, the Supreme Court observed that neither the Industrial
Disputes Act nor any provision thereof is void as infringing the fundamental
rights guaranteed by Article 14 or 19. Thus, it has now been settled that the
provisions of Industrial Disputes Act are not violative of the fundamental rights
guaranteed under the Constitution.

D. Distribution of Law-making Power

Distribution of power imposes another limitation on the overriding labour
policy. It will be observed that the power to make laws for the whole or any part
of the territory of India25 is vested in the Parliament.26 This power extends only
to such subjects of legislations as are enumerated in Union List27 and Concurrent
List28 of the Seventh Schedule of the Constitution. Further, the Parliament has
been empowered to make laws on any of the matters of the State List under the
following conditions. First, if the Council of States declares by resolution
supported by not less than two-third of the members present and voting that it is
necessary or expedient in the national interest that the Parliament should make
laws in respect to any matter enumerated in the State List specified in the
resolution, it shall be lawful for the Parliament to make laws on such matters.
The resolution will remain in force for the period of one year unless
relaxed.29Second, the Parliament is empowered to legislate on any matter
enumerated in the State List while proclamation of emergency is in operation.30
Third, the Parliament is empowered to legislate for two or more states by their
consent. Such a legislation shall apply to such states and any other state by
which it is adopted afterwards by resolution passed in this behalf by each of the
houses of state legislature.31 The Parliament has also been given power to
legislate on such matters as are not enumerated in the Seventh Schedule.32 Quite
apart from this, fundamental rights33 and freedom of inter-state trade and
commerce34 impose express limitation on the legislative power.
The power to make laws for the whole or any part of the state is vested in
the state legislature, which may make laws on such subjects as are enumerated in
the State List35 and Concurrent List of the Seventh Schedule of the Constitution.
But, where laws made by the state legislature on matters enumerated in the
Concurrent List are inconsistent with a central act on the same matter, the state
laws will be inoperative to the extent of inconsistency.36 There is, however, one
exception to it, namely, if a law made by the state legislature is inconsistent with
the Union law, state law will prevail over the Union law, if the same has been
referred for the consideration of the President and it has received his assent.37
State legislations too are subject to limitations like those imposed by
fundamental rights and freedom of inter-state trade and commerce.
The main topics directly affecting labour relations are included in each of
the following lists:
Union List: List I
Item 13: Participation in international conferences, associations and
other bodies and implementation of decisions made there
at
Item 55: Regulation of labour and safety in mines and oilfields
Item 61: Industrial disputes concerning union employees
Item 94: Inquiries, surveys and statistics for the purposes of any of the
matters in the list
Concurrent List: List III
Item 20: Economic and social planning
Item 22: Trade unions; industrial and labour disputes
Item 23: Social security and social insurance; employment and
unemployment
Item 24: Welfare of labour including conditions of work, provident
 fund, employers’ liability, workmen’s compensation,
invalid and old age pensions and maternity benefits
Item 25: Vocational and technical training of labour
Item 36: Factories
Item 37: Boilers
Item 45: Inquiries and statistics for the purposes of any of the matters
specified in List II or List III
State List: List II
Item 9: Relief for disabled and unemployable
In addition to the aforesaid items, there are several other items. A perusal
of the items mentioned in the lists of the Seventh Schedule reveals that the
Parliament has been vested with wide powers in labour matters. However, it
’may sometimes happen that in the course of making a law, one may incidentally
touch upon subject assigned to the other. This incidental encroachment,
however, is not considered bad, for the reason that the entries in the lists have to
be widely construed and some amount of overlapping could not altogether be
avoided. If the legislation is in pith and substance on a matter assigned to one
legislative body, an incidental encroachment into the territory of the other could
be considered permissible. Pith and substance and incidental encroachment are
the doctrines evolved by courts to ensure that the federal machinery could
function without serious friction.’38
There ‘is however, no provision in the Constitution which lays down that
a Bill which has been assented to by the President would be ineffective as an Act
if there was no compelling necessity for the Governor to reserve it for the assent
of the President. There might be a genuine doubt about the applicability of any
of the provisions of the Constitution which required the assent of the President to
be given to it in order that it might be effective as an Act. If the Governor in
exercise of his discretion decided to reserve the Bill for consideration of the
President to avoid any future complication, that could not be put forward as a
proof of the existence of repugnancy between the Parliamentary enactment and
the Bill which had been reserved for the assent of the President.’39
The Supreme Court in a catena of cases40 laid down the following tests
for repugnancy:
(i) whether there is direct conflict between the two propositions?
(ii) whether Parliament intended to lay down an exhaustive code in respect of
the subject matter replacing the Act of the State Legislature?, and
 (iii) whether the law made by the Parliament and the law made by the state
legislature occupy the same field?41

II. CONSTITUTIONAL AMENDMENTS ON RIGHT TO

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

III. CONTRIBUTION OF INDIAN JUDICIARY IN

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

Area of Conflict
The court was directly called upon to decide, inter alia, the following main
issues:
(i) Is a writ petition under Article 32 of the Constitution maintainable for
 mere violation of labour laws and not for breaches of any fundamental
right?
(ii) What is the true scope and meaning of the expression ‘traffic in human
beings and begar and other similar forms of forced labour’ in Article 23
of the constitution?
(iii) Whether there was any violation of the Equal Remuneration Act, 1976,
the Contract Labour (Regulation and Abolition) Act, 1970, the Minimum
Wages Act, 1948 and the Inter-State Migrant Workmen (Regulation of
Employment and Conditions of Service) Act 1979 ?
The Supreme Court through Justice Bhagwati answered all the aforesaid
questions in the affirmative.

Maintainability of the Writ Petition for Violation of Labour

Legislation under Article 32
As regards the first and third issues, the Court accepted the contention that the
writ petition under Article 32 of the Constitution could not be maintained unless
there was a violation of fundamental rights. Consequently, it examined whether
there was any violation of fundamental rights in this petition and observed:
The complaint of violation of Article 24 based on the averment
that children below the age of 14 years are employed in the
construction work of the Asiad projects is clearly a complaint
of violation of a fundamental right. So also when the
petitioners allege non-observance of the provisions of the
Equal Remuneration Act, 1976, it is in effect and substance a
complaint of breach of the principle of equality before the law
enshrined in Article 14…. Then there is the complaint of non-
observance of provisions of the Contract Labour (Regulation
and Abolition) Act, 1970 and the Inter-State Migrant
Workmen (Regulation of Employment and Conditions of
Service) Act, 1979 and this is also in our opinion a complaint
relating to violation of Article 21.43
Now, the rights and benefits conferred on the workmen
employed by a contractor under the provisions of the Contract
Labour (Regulation and Abolition) Act, 1970 and the Inter-State
Migrant Workmen (Regulation of Employment and Conditions
of Service) Act, 1979 are clearly intended to ensure basic human
 dignity to the workmen and if the workmen are deprived of any
of these rights and benefits to which they are entitled under the
provisions of these two pieces of social welfare legislation, that
would clearly be a violation of Article 21 of the Constitution of
India. The Delhi Administration and Delhi Development
Authority which, as principal employers, are made statutorily
responsible for securing such rights and benefits to the
workmen. That leaves for consideration the complaint in regard
to non-payment of minimum wages to the workmen under the
Minimum Wages Act, 1948. We are of the view that this
complaint is also one relating to breach of a fundamental right…
it is the fundamental right enshrined in Article 23 which is
violated by non-payment of the minimum wages to the
workmen.44

Prohibition of Traffic in Human Beings and Forced Labour

As regards the second issue, the court pointed out that Article 23 was ‘designed
to protect the individual not only against the State but also against any other
person indulging in any such practice.’ It imposes prohibition on traffic in
human beings and begar and other similar forms of forced labour. Explaining
the scope of the expression ‘traffic in human beings and begar and other similar
form of forced labour’ the court observed:
What Article 23 prohibits is ‘forced labour’ that is labour or
service which a person is forced to provide and ‘force’ which
would make such labour or service ‘forced labour’ may arise in
several ways. It may be physical force which may compel a
person to provide labour or service to another or it may be force
exerted through a legal provision such as a provision for
imprisonment or fine in case the employee fails to provide
labour or service or it may even be compulsion arising from
hunger and poverty, want and destitution… The word ‘force’
must, therefore, be construed to include not only physical or
legal force but also force arising from the compulsion of
economic circumstances which leaves no choice or alternatives
to a person in want and compels him to provide labour or service
even though the remuneration received for it is less than the
minimum wage.
The court added:
[W]here a person provides labour or service to another for
remuneration which is less than the minimum wage, the labour
or service provided by him clearly falls within the scope and
ambit of the words ‘forced labour’ under Art. 23. Such a person
would be entitled to come to the Court for enforcement of his
fundamental right under Art. 23 by asking the Court to direct
payment of the minimum wage to him so that the labour or
service provided by him ceases to be ‘forced labour’ and the
breach of Art. 23 is remedied.45

Enforcement of Fundamental Rights

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

Violation of Labour Law

As to the third issue, the Court pointed out that admittedly there were certain
violations committed by the contractors and for those violations, prosecution
was launched against them but remarked that no violation of any of the labour
laws should be allowed to go unpunished. The Union of India also conceded that
₹1 per worker per day was deducted by the jamadars from the wages payable to
the workers with the result that the workers did not get the minimum wage of
₹9.25 per day but stated that proceedings have been taken for the purpose of
recovering the amount of shortfall in the minimum wage from the contractors. In
view of this, the Court directed that whenever any construction work is being
carried out either departmentally or through contractors, the government or any
other governmental authority including a public sector corporation which is
carrying out such work, must take great care to see that the provisions of the
labour laws are strictly observed and they should not wait for any complaint to
be received from the workmen in regard to non-observance of any such
provisions before proceeding to take action against the erring officers or
contractors. Instead, they should institute an effective system of periodic
inspections coupled with occasional surprise checks by the higher officers in
order to ensure that there are no violations of the provisions of labour laws and
the workmen are not denied the rights and benefits to which they are entitled and
where such violations are found, immediate action should be taken against
defaulting officers or contractors. However, it is unfortunate that these directives
only remain on paper and do not appear to have been followed in the
Commonwealth Games.

IV. SEXUAL HARASSMENT OF WOMEN AT

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

Guidelines and Norms

The Supreme Court laid down the following guidelines and norms to be strictly
observed at all work places for the preservation and enforcement of the right to
gender equality of working women. These directions according to the Court
would be binding and enforceable in law until suitable legislation is enacted to
occupy the field. However, these guidelines will not prejudice any rights
available under the Protection of Human Rights Act, 1993.
1. Duty of the Employer or Other Responsible Persons in Workplaces and
Other Institutions: It shall now be the duty of the employer or other responsible
persons in workplaces or other institutions to take necessary steps to prevent the
commission of acts of sexual harassment, deter the commission of acts of sexual
harassment and provide the procedure for (i) resolution (ii) settlement and (iii)
prosecution of acts of sexual harassment.
2. Preventive Steps: All employers or persons incharge of workplace, whether
in public or private sector, should take appropriate steps to prevent sexual
harassment. They are further required to take the following steps:
(i) Express prohibition of sexual harassment as defined above at the
workplace should be notified, published and circulated in appropriate
ways;
(ii) The rules/regulations of the government and public sector bodies
relating to conduct and discipline should include rules/regulations
prohibiting sexual harassment and provide for appropriate penalties in
such rules against the offender;
(iii) As regards private employers, steps should be taken to include the
aforesaid prohibitions in the Standing Orders under the Industrial
Employment (Standing Orders) Act, 1946; and
(iv) Appropriate work conditions should be provided in respect of work,
leisure, health and hygiene to further ensure that there is no hostile
environment towards women at workplaces and no woman employee
should have reasonable grounds to believe that she is disadvantaged in
connection with her employment.
3. Disciplinary Action: When the conduct of the accused amounts to
misconduct in employment under the relevant service rules, the employer should
initiate disciplinary action in accordance with the rules.
4. Complaint Mechanism: Employer is required to create an appropriate
complaint mechanism in his organization for redressal of the complaint made by
the victim whether or not the conduct of the accused constitutes an offence under
law or a breach of service. Such complaint mechanism should ensure time-bound
disposal of all complaints.
5. Complaint Committee
 (a) Design of Complaint Mechanism: The complaint mechanism should be
adequate to provide assistance where it is necessary to have a complaint
committee, a special counsellor or other support service (including
maintenance of confidentiality).
(b) Composition of Complaint Committee: The composition of complaint
committee shall be as under:
(i) It shall be headed by a woman;
(ii)Not less than half of the members of the committee should be
women;
(iii) The committee should involve a third party, either an NGO or
another body familiar with the issues of sexual harassment, in
order to prevent the possibility of any undue pressures or influence
from senior levels.
(c) Annual Report: The complaint committee of the concerned government
department shall prepare an annual report of its activities during the
previous year. Such a report should also state complaints and action taken
by them. The committee shall forward a copy thereof to the head of the
organization concerned who shall forward the same to the government
department concerned with its comments.
(d) Compliance Report: The employer and the person incharge is also
required to report:
(i) On compliance with the aforesaid guidelines;
(ii) Compliance on the reports of the complaint committee;
(iii) Such report must be sent to the concerned government department.
6. Workers’ Initiative: In order to prevent and control sexual harassment at
workplace, employers should be allowed to raise these issues:
(i) at workers’ meeting; and
(ii) in other appropriate forums.
The issues of sexual harassment should be affirmatively discussed in
employer-employee meetings.
7. Awareness: In order to create awareness about the right of female employees
in regard to sexual harassment, the employer should take the following steps: (i)
prominently notify the guidelines in a suitable manner; and (ii) enact appropriate
legislation on the subject that should be suitably notified and displayed.
8. Third Party Harassment: Where sexual harassment occurs as a result of an act
or omission by: (i) any third party or (ii) outsider, the employer and persons
incharge are required to take necessary and reasonable steps to assist the affected
person—(a) in terms of support and (b) take preventive action.
9. Steps to be Taken by the Government: The Central and state governments are
required to:
(i) take suitable measures (including legislation)
(ii) ensure that the guidelines are observed by the employers in private
sector
Two years later, in Apparel Export Promotion Council v. A K Chopra48,
the Supreme Court was invited to decide the following issues:
1. Does an action of the superior against a female employee which is against
moral sanctions and does not withstand the test of decency and modesty,
not amount to sexual harassment?
2. Is physical contact with the female employee an essential ingredient of
such a charge?
3. Does the allegation that the superior ‘tried to molest’ a female employee
at the ‘place of work’ not constitute an act unbecoming of good conduct
and behaviour expected from the superior?
As regards the first issue the Supreme Court ruled that ‘each incident of
sexual harassment at the place of work results in violation of the fundamental
right to gender equality and the right to life and liberty—the two most precious
fundamental rights guaranteed by the Constitution of India’.
The Supreme Court answered the second issue in negative and held that it
was erroneous to hold that since the respondent had not ‘actually molested’ Miss
X and that he had only ‘tried to molest’ her and had ‘not managed’ to make
physical contact with her, the punishment of removal from service was not
justified.
On the third issue the Supreme Court held that the act of the respondent
was unbecoming of good conduct and behaviour expected from a superior
officer and amounted to sexual harassment. The Court ruled that:
(i) sexual harassment covers any action or gesture which, whether directly
or by implication, aims at or has the tendency to outrage the modesty of a
female employee;
(ii) for an offending action to be outrageous, actual molestation or touch by
the offender is not necessary;
(iii) objectionable overtures with sexual overtones are enough; and
(iv) physical contact is not necessary.
 V. CONSTITUTIONAL VALIDITY OF SERVICE
CONTRACTS AND STANDING ORDERS
The law of employer-employee relationship is governed primarily by service
rules and regulations, standing orders or contract of employment. The service
rules and regulations empower the employer to terminate the service of an
employee by giving 3 months’ notice on either side or by making payment in
lieu of notice, without assigning any reason and without providing any hearing
opportunity to the employee before passing the order of termination of service.
Standing orders of a company certified under the Industrial Employment
(Standing Orders) Act, 1946 also contain a clause stipulating abandonment of
service by a workman on remaining absent for 7/8 consecutive days. Further,
such clause is also contained in the model standing orders of a company.

Validity of Service Rules and Regulations

The validity of service rules and regulations has been challenged in a catena of
cases before the Supreme Court. The courts have held such rules and regulations
were arbitrary, discriminatory and inconsistent with public policy. Likewise, the
provisions of automatic termination of services in the standing orders have been
held to be violative of principles of natural justice. Some other courts have even
held that such termination of service amounted to ‘retrenchment’ under the
Industrial Disputes Act, 1947.
The Supreme Court in West Bengal State Electricity Board v. Desh
Bandhu Ghosh49 held that any provision in the regulation enabling the
management to terminate the services of a permanent employee by giving 3
months’ notice or pay in lieu thereof, would be held as violative of Article 14 of
the Constitution. Such a regulation was held to be capable of vicious
discrimination and was also held to be naked ‘hire and fire’ rule.
Again in O P Bhandari v. Indian Tourism Development Corporation
50
Ltd , the Supreme Court held that Rule 31 (v) of the Indian Tourism
Development Corporation (Conduct, Discipline and Appeal) Rules, 1978, which
provided that the service of a permanent employee could be terminated by giving
him 90 days’ notice or pay in lieu thereof, would be violative of Articles 14 and
16 of the Constitution.
The aforesaid view was reiterated in Central Inland Water Transport
Corporation Ltd v. Brojo Nath Ganguly.51 Here, the Supreme Court has
displayed creative role to protect the interest of employees. Here, Rule 9(1) of
the Central Inland Water Transport Corporation Ltd Service Discipline and
Appeal Rules, 1979 provided that service of a permanent employee could be
terminated by giving ‘3 months’ notice in writing on either side’. The Court
while dealing with the validity of Rule 9 ruled:
(i) Rule 9 was arbitrary and discriminatory and, therefore, violative of
Article 14 of the Constitution.
(ii) The rule was inconsistent with public policy and consequently invalid
under Section 23 of the Contract Act, 1872.
(iii) The termination of service of a permanent employee in terms of Rule 9 is
both arbitrary and unreasonable, ignores Audi Alterem Partem Rule and
is violative of Article 14 of the Constitution.
The whole case law was reviewed by the Constitution bench in Delhi
Transport Corporation v. DTC Majdoor Congress52 and except the then Chief
Justice, Sabya Sachi Mukharji, who dissented, the other four judges reiterated
the earlier view. They affirmed the decision in Central Inland Water Transport
Corporation Ltd’s case. The Court, by a majority held that the service rules and
regulations which empowered the authority to terminate the services of
permanent employees by issuing notice or terminating their service by making
payment in lieu of notice, without assigning any reason and without providing
any hearing opportunity to the employees before passing the impugned order
was arbitrary, uncanalized, unrestricted and violative of the principles of natural
justice as also Article 14 of the Constitution. The Court (in its majority
judgement) ruled that (i) Regulation 9 (b) of the Delhi Road Transport Authority
(Conditions of Appointment and Service) Regulations, 1952 suffered from the
vice of arbitrariness as there was no guidance in the Regulations or in the Act as
to when or in which cases and circumstances, this power of giving notice or pay
in lieu of notice can be exercised. (ii) Regulation 9 (b) was void under Section
23 of the Contract Act as being opposed to public policy.
In K C Sharma v. Delhi Stock Exchange53, Delhi Stock Exchange
(management) terminated the services of the general manager, an employee after
giving 3 months’ notice as per the terms of the appointment. The employee
challenged the order of termination of service in a writ petition before the Delhi
High Court. The Delhi High Court held that the termination of services of the
employee (appellant) was illegal and mala fide. It, therefore, directed
reinstatement with continuity in service. Thereupon the respondent, Delhi Stock
Exchange challenged this order in the division bench of the High Court. The
division bench held that (i) Delhi Stock Exchange was a ‘State’ within the
meaning of Article 12 of the Constitution (ii) Appellant was a permanent
employee and therefore his termination as per clause (4) of the letter of
appointment was ultra vires (iii) On one hand, the appellant had made serious
allegations on the member directors of the Stock Exchange including president,
vice-president and other senior members, while on the other, there were serious
allegation against him of using his office for unauthorizedly making
correspondence with authorities. Such allegations and counter-allegations are of
serious nature and there was bad blood between the parties. In view of this, the
division bench held that it would not be advisable to direct reinstatement
irrespective of the fact that loss of confidence had not been pleaded or proved.
The Court, therefore, directed the appellant be paid ₹1.2 lakh as compensation in
lieu of reinstatement. Thereupon, the appellant filed an appeal before the
Supreme Court. The Supreme Court held that: (i) the termination of service of
the appellant under clause of letter of appointment was illegal and the removal
was both malafide and unjustified (ii) the totality of the circumstances of the
case render it improper and unjust to direct the relief of reinstatement with full
back wages. It, however, raised the compensation from ₹1.2 lakh to ₹1.5 lakh.
It is submitted that the court has opened the scope of granting
compensation in lieu of reinstatement even where the plea of loss of confidence
is not pleaded. Be that as it may, it causes loss to the stock market. In such a
situation, the court could have fixed the accountability when there were
allegations against high officials.

Validity of Certified Standing Orders

We now turn to examine whether stipulation in the certified standing orders for
automatic termination of services for overstaying the leave would be bad.
In D K Yadav v. J M A Industries Ltd54, the Supreme Court has laid
down that where the rule provided that the service of an employee who overstays
the leave would be treated to have been automatically terminated, it would be
bad as violative of Articles 14, 16 and 21 of the Constitution. It further held that
if any action was taken on the basis of such a rule without giving any
opportunity of hearing to the employee, it would be wholly unjust, arbitrary and
unfair. The Court emphasized that principles of natural justice would have to be
read into the provision relating to automatic termination of services.
In Uptron India Ltd55 case, the Supreme Court was also invited to
consider whether Clause 17 (g) of the certified standing orders providing that
‘the services of a workman are liable to automatic termination if he overstays on
leave without permission for more than 7 days was bad and violative of the
principles of natural justice. The Court answered the question in the affirmative
and observed:
We are of the positive opinion that any clause in the certified
standing orders providing for automatic termination of service of
a permanent employee, not directly related to ‘production’ in a
factory or industrial establishment, would be bad if it does not
purport to provide an opportunity of hearing to the employee
whose services are treated to have come to an end automatically.
However, earlier in Hindustan Paper Corpn. v. Purnendu
Chakrobarty, the Supreme Court has held that an employee
absenting from duty without prior sanction for about 6 months
by sending applications for leave on medical ground but not
supporting with medical certificates will be deemed to have lost
the lien on the job when he has failed to avail the opportunity in
replying in half-hearted way and not reporting for duty.
The pendulum swung in other direction in some of the later cases.
In Syndicate Bank v. General Secretary, Syndicate Bank Staff
Association56, the Supreme Court also ruled that:
(i) Where an employee is absent beyond the prescribed period,
for which leave of any kind cannot be granted, he should be
treated to have resigned and he ceases to be in service. In
such a case, there is no need to hold an inquiry or to give any
notice, as it would amount to useless formalities.
(ii) Undue reliance on the principle of natural justice leads to
miscarriage of justice.
(iii) The principles of natural justice and duty to act in a just, fair
and reasonable manner have to be read in certified standing
order/statutory rules. The employee had unauthorizedly
absented himself from work for a period exceeding the period
of prescribed limit. He was sent a notice by registered post
calling him to report for duty, failing which he would have
been deemed to have retired. The notice came with the
endorsement ‘refusal to accept’. The Supreme Court held that
as the employee refused to accept the notice, service of notice
upon him was complete and in such a case, removal from
service without holding inquiry was fully justified.
In Aligarh Muslim University v. Mansoor Ali Khan,57 the Supreme
Court considered a large number of its earlier judgements and held that, where
an employee is unauthorizedly absent for which leave of any kind cannot be
granted, only one conclusion is possible and holding inquiry may not be
necessary. The Court also held that mere violation of principles of natural justice
does not entitle one to any relief unless the affected party satisfies the Court that
non-observance thereof has prejudiced his cause.
In Punjab and Sind Bank v. Sakattar Singh58, it has been held that the
termination of a bank employee absenting for 190 days without holding an
inquiry will not be violative of principles of natural justice.
Earlier, in Hindustan Paper Corporation v. Purnendu Chakrobarty59,
the Supreme Court held that where an employee absented from duty without
prior sanction for about 6 months by sending applications for leave on medical
ground but not supporting them with medical certificates, it would be deemed
that the employee had lost the lien on the job, particularly when he had failed to
avail the opportunity in replying in half-hearted way and not reporting for duty.
We now turn to examine the decisions where it has been held that
compliance of natural justice is not necessary. Thus in Harmohinder Singh v.
Kharga Canteen, Ambala Cantt60, it was held that the principles of natural
justice are not applicable where the termination takes place on the expiry of the
contract of service.
In Uptron India Ltd v. Shammi Bhan61, the Supreme Court also held that
the principle of natural justice is not applicable where the termination takes place
on the expiry of the contract. Likewise compliance of principles of natural
justice is not necessary where the services of employees are terminated who
procured appointment on the basis of forged documents.
In Umesh Kumar Singh v. State of Bihar and62 the Supreme Court held
that if a person gets appointment on the basis of forged and fabricated letter of
appointment, then services of such person can be terminated without initiating
any full fledged departmental proceedings and the same will not amount to
violation of principles of natural justice. The Court also held that when
appointment is made illegally, irregularly and in violation of Article 16 of the
Constitution of India, then such appointment can be terminated without initiating
full-fledged departmental proceeding. Such termination of services will not
amount to violation of principles of natural justice.

Application of Labour Laws to Minority Educational

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

VII REGULATION OF DAILY WAGER/CASUAL

WORKERS OR CONTRACT LABOUR/TEMPORARY
WORKERS IN PUBLIC EMPLOYMENT
In Secretary, State of Karnataka v. Umadevi65 a Constitution bench of the
Supreme Court ruled:
Those who are working on daily wages formed a class by themselves,
they cannot claim that they are discriminated as against those who have been
regularly recruited on the basis of the relevant rules. No right can be founded on
an employment on daily wages to claim that such employee should be treated on
a par with a regularly recruited candidate, and made permanent in employment,
even assuming that the principle could be invoked for claiming equal wages for
equal work. There is no fundamental right in those who have been employed on
daily wages or temporarily or on contractual basis, to claim that they have a right
to be absorbed in service. As has been held by this Court, they cannot be said to
be holder of a post, since, a regular appointment could be made only by making
appointments consistent with the requirements of Articles 14 and 16 of the
Constitution. The right to be treated equally with the other employees employed
on daily wages, cannot be extended to a claim for equal treatment with those
who were regularly employed. That would be treating unequals as equals. It
cannot also be relied on to claim a right to be absorbed in service even though
they have never been selected in terms of the relevant recruitment rules.
The aforesaid view was reiterated in State of Karnataka v. Ganapathi
Chaya Nayak66, Union of India and Another v. Kartick Chandra Mondal,
Satya Prakash and Others v. State of Bihar67 and Rameshwar Dayal v. Indian
Railway Construction Company Limited68. In Union of India v. Vartak Labour
Union69, the court reiterated its earlier view but recommended:
Where members of the respondent union have been employed in
terms of the regulations and have been consistently engaged in
service for the past 30 to 40 years, of course with short breaks,
we feel, the Union of India would consider enacting an
appropriate regulation/scheme for absorption and regularization
of the services of the causal workers engaged by the BRO for
execution of its on-going projects.

Non-application of Umadevi’s principle

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

Non-application of Umadevi in cases under Sections 11A and

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

1 Inserted by the Constitution (42nd Amendment) Act 1976, Section 2.

2 The Preamble of the Indian Constitution.
3 Article 38.
4 Article 39 (a).
5 Article 39 (b).
6 Article 39 (d).
7 Article 39 (c).
8 Article 41.
9 Article 42.
10 Article 43.
11 Article 43A (42nd Amendment Act), 1976.
12 Article 47.
13 See Part IV of the Constitution.
14 Article 13.
15 Article 32 guarantees the right to move the Supreme Court for appropriate relief by writs.
In addition to this, Article 226 empowers the High Courts to issue appropriate writs for
enforcement of the provisions of Part III of the Constitution.
16 State of Bombay v. United Motors, (1953) SCJ 373.
17 Ibid.
18 State of West Bengal v. Sobodh Gopal, AIR 1964 SC 587.
19 Article 19 (1) (a).
20 Article 19 (1) (b).
21 Article 19 (1) (c).
22 Article 19 (1) (f).
23 Article 19 (1) (g).
24 (1957) 1 LLJ 460 (SC).
25 Article 245 (2).
26 Article 245 (1).
27 Union List contains 97 items of legislation, e.g., Defence, Foreign Affairs, Railways,
Airways, Post and Telegraph, Currency Coinage and Legal Tender, Trade and Commerce
with other countries, Banking, Insurance, Income tax, Duties of Customs including
Export Duty.
28 Concurrent List contains 47 items of legislation.
29 Article 249.
30 Article 250.
31 Article 252.
32 Article 249.
33 Part III of the Constitution.
34 Part XIII of the Constitution.
35 State List contains 66 items of legislation.
36 Article 254 (1).
37 Article 254 (2).
38 APSWL Co-operative Society Ltd v. Labour Court, 1987 Lab. LC 642 at 649 (SC).
39 Ibid.
40 Zaverbhai v. State of Bombay, AIR 1954 SC 752, Tike Ramji v. State of UP, AIR (1956)
SC 676. Deep Chand v. State of UP, AIR 1959 SC 648, Karunandh v. Union of India,
AIR 1979 SC 878 and Hoechst Pharmaceuticals v. State of Bihar, AIR 1983 SC 1019.
41 1987 Lab. LC 642.
42 (1982) 2 LLJ 454.
43 See Hussainera Khatoona v. State of Bihar, (1978) I SCC 238; Sunil Batra v. Delhi
Administration, (1978) 4 SCC 494: See also AIR 1980 SC 1979; Khatri v. State of
Bihar, (1981) I SCC 635; S P Gupta v. Union of India, AIR 1982 SC 149.
44 (1982) 2 LLJ 454.
45 (1982) 2 LLJ 454 at 464–65.
46 Id. at 470–71.
47 1997 LLR 991 (SC).
48 JT 1999 (1) SC 61: (1999) 1 SCC 759.
49 (1985) 3 SCC 116.
50 (1986) 4 SCC 337.
51 (1986) 2 LLJ 171.
52 (1985) 3 SCC 116.
53 2005 LLR 417 (SC).
54 AIR 1987 SC 2408.
55 Uptron India Ltd. v. Shammi Bhan, AIR 1991 SC 101.
56 (1993) 3 SCC 259.
57 (2000) 5 SCC 65.
58 JT 2000 (7) SC 529.
59 (2001) LLR 155 (SC).
60 (1997) 2 LLN 1007 (SC).
61 (2000) LLR (SC) 849.
62 (1998) 6 SCC 538.
63 (2001) LLR 585.
64 1988 Lab. IC 225.
65 2006 (109) FLR 826 (SC).
66 (2010) 3 SCC 115.
67 2010 (125) FLR 517 (SC).
68 2011 (128) FLR 60 (SC).
69 2011 (129) FLR 500 (SC).
70 Harjinder Singh v. Punjab State Warehousing Corporation, (2010) 3 SCC 192, Ramesh
Kumar v. State of Haryana, (2010) 2 SCC 543.
71 Krishna Singh v. Executive Engineer, Haryana State Agricultural Marketing Board,
Rohtak, 2010 (2) SCALE 848. See also Anoop Sharma v. Executive Engineer, PHD,
2010 (4) SCALE 203.
72 2006 (109) FLR 826 (SC).
73 2010 (4) SCALE 203.
 PART II
TRADE UNIONS AND LAW
 CHAPTER
4
Trade Unions of Workers and
Employers’ Organizations: A
Contextual and Historical Analysis

I. NEED TO FORM TRADE UNIONS

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

II. RIGHT TO FORM TRADE UNIONS

Article 19(1)(c) of the Indian Constitution guarantees that all citizens shall have
a right to form associations or unions. This right includes not only the right to
form trade unions but also the right to continue as members of the trade unions1.
It also includes the right to refuse to be a member of an association, the right to
not be compelled to join an association and the right to not be compelled to
withdraw from an association.2 However, this right is not absolute. Clause 4 of
Article 19 empowers the State to make any law in the interest of the sovereignty
and integrity of India or public order or ‘morality’ and place reasonable
restrictions on the exercise of the above right.

III. HISTORY OF THE TRADE UNION MOVEMENT IN

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

A. Pre-1918 Period
The earliest sign of labour agitation in India was a movement in Bengal in 1860
led by Dinbandhu Mitra, a dramatist and social reformer of Bengal followed by
some journalists to protest against the hardships of the cultivators and also the
plantation workers. The government thereupon appointed an Indigo
Commission. The report of the commission reflected upon the gross cruelties
perpetrated by foreign planters with the aid and under the protection of laws
framed by the British Government specially for this purpose.5 Thereafter, the
system of indigo cultivation was abolished due to discovery of synthetic process.
In 18756 Sarobji Shapuri in Bombay protested against poor working
conditions of workers at that time.7 The deplorable conditions of workers were
brought to the notice of the Secretary of State for India. The first Factory
Commission was, therefore, appointed in 1875 and as a result, the Factories Act,
1881 was enacted. This Act was, however, inadequate to meet the evil of child
labour. Moreover, no provision was made to regulate the working conditions of
women workers. This gave rise to great disappointment among workers.
Thereupon, another Factory Commission was appointed in 1884. In the same
year, Mr N M Lokhande organized the conference of Bombay factory workers
and drew up a memorandum signed by 5,300 workers demanding a complete
day of rest on Sunday, half-an-hour recess, working hours between 6.30 a.m. to
sunset, the payment of wages not later than 15th of the month, and compensation
for injuries.8 In 1889, in Bombay, workers of spinning and weaving mills
demanded Sunday as holiday, regularity in the payment of wages and adequate
compensation in case of accident.9
Inspite of these agitations, no material change could be brought and,
therefore, another representation was made to the government in 1890. The stand
of 1884 was also reiterated and the petition this time was signed by 17,000
workers. The same year, the Bombay Mill Hands Association, the first labour
association was organized10 with Mr Lokhande as its President. It started a
labour journal (Dinbandhu) in order to propagate effective views of their own.
In the very same year, Bombay Mill Hands Association placed its demand
before the Factory Labour Commission (1890), with Mr Bangalee, the great
philanthropist as a member. The Commission gave due consideration to the
demands of labour.
Several labour associations were formed after 1890. For instance, the
Amalgamated Society of Railway Servants in India and Burma was formed in
April 1897 and registered under the Indian Companies Act,11 the Printers Union,
Calcutta was formed in 1905, the Bombay Postal Union was formed in 1907, the
Kamgar Hityardhak Sabha and Service League were formed in 1910.
The post-1890 period was also important for the reason that several
strikes occurred during this period. Instances, may be cited of two strikes which
occurred in Bombay in 1894. The first big strike of mill operators of Ahmedabad
occurred in the first week of February, 1895. The Ahmedabad Mill Owners
Association decided to substitute a fortnightly wage system for a weekly one
which was in force ever since 1896. This forced over 8,000 weavers to leave
work. However, the strike was unsuccessful.12
There were also strikes in jute industries in Calcutta in 1896.13 In 1897,
after a plague epidemic, the mill workers in Bombay went on strike for payment
of daily wages instead of monthly payment of wages.14
In 1903, the employees of press and machine section of Madras
Government went on strike against overtime work without payment. The strike
prolonged for six months and after great hardship and starvation, workers
returned to work. Two years later in 1905, the workers of the Government of
India Press, Calcutta, launched a strike over the question of (i) non-payment for
Sunday and gazetted holidays; (ii) imposition of irregular fines; (iii) low rate of
overtime pay; and (iv) the refusal of authorities to grant leave on medical
certificate.15 The strike continued for over a month. The workers returned on
fulfilment of certain demands. In December 1907, the workers of Eastern
Railway Workshop at Samastipur went on strike on the issue of increment of
wages. They went back to work after six days when they were granted extra
allowance owing to famine conditions prevailing at that time in the region. In the
same year, the Bombay Postal Union and Indian Telegraph Association called a
strike. In 1908, workers of textile operators in Bombay struck work in sympathy
with Shri Bal Gangadhar Tilak who was imprisoned for sedition. The workers in
Bombay went on strike in 1910 demanding reduction in working hours. As a
result of this agitation, the Government of India set up a commission to enquire
into the desirability of reducing the working hours. On the basis of the
recommendation, the working hours were reduced to 12 hours a day. Similar
strikes continued from year to year particularly in Bengal and Bombay
demanding an increase in wages.
Certain broad features of the labour movement during the period of 1860–
1917 may be briefly noted:
First, the movement was led by philanthropists and social reformers and
not by workers.
Second, there was no trade unions in the modern sense. According to the
report on the working of the Factories Act at Bombay, in 1892, the Bombay Mill
Hands Association was not to be classified as a genuine trade union. The
following excerpts of the report are pertinent:
The Bombay Mill Hands have no organized trade unions. It
should be explained that although Mr N M Lokhande, who
served on the last Factory Commission, described himself as
President of the Bombay Mill Hands Association, that
Association has no existence as an organized body, having no
roll of membership, no funds and no rules. I understand that Mr
Lakhonde simply acts as volunteer adviser to any mill hand who
may come to him.16
But, the trade unions existed as early as 1897. For instance, the
Amalgamated Society of Railway Servants of India and Burma and other unions
were formed in April 1897.
Third, the associations mainly relied on petitions, memoranda and other
constitutional means for placing their demands which were mainly confined to
factory legislation, e.g., hours of work, health, wages for overstay, leave,
holidays and such other matters.
Fourth, the early movement was confined to revolt against conditions of
child labour and women workers employed in various industries.
Fifth, there was absence of strike as a means of getting grievances
redressed. The association of workers worked with the cooperation of
management and government officials and some of them considered it their duty
‘to avoid strikes upon the part of its members by every possible and lawful
means’17
Sixth, strike during this period was considered to be a problem of law and
order, instances are not lacking where police acted upon strikers by using force
and framed false charges against them.18

B. 1918–1924
The period 1918–1924 can perhaps be best described as the era of formation of
modern trade unionism. This period witnessed the formation of a large number
of trade unions. Important among these were Madras Labour Union, Ahmedabad
Textile Labour Association, Indian Seamen’s Union, Calcutta Clerks’s Union
and All India Postal and RMS Association. One of the significant features of this
period was that the All India Trade Union Congress was formed in 1920.
The growth of trade unions was accompanied by a large number of
strikes. The deteriorating economic conditions of workers resulted in strikes. The
wages of workers were increased but it could not keep pace with the soaring
prices of commodities. Further, there was a shortage of labour in some industries
due to influenza epidemic.19
Several factors were responsible for formation and growth of trade
unions:
First, the economic conditions of workers played an important role in the
formation of trade unions. The demand for Indian goods increased enormously
for two reasons: (i) The shortage of shipping facilities led to restricted imports of
several commodities for which India was dependent on foreign countries; (ii)
There was great demand for Indian goods from allies and neutral countries. For
these reasons the prices of Indian commodities, viz., salt, cotton, cloth, kerosene,
rose high. Naturally, the cost of living steadily increased. The employer earned
huge profits. The wages of workers were increased but not in pace with the
soaring prices of commodities. This resulted in further deterioration of
conditions of workers. Further, there was shortage of labour in some industrial
centres due to epidemic of influenza.20 These reasons led to the formation of
trade unions to improve their bargaining positions.
Second, the political conditions prevailing in the country also helped the
growth of the labour movement. The struggle for independence started during
this period and political leaders asserted that organized labour would be an asset
to the cause. The labour unions were also in need of some help. The political
leaders took lead and helped in the growth of trade unions.
Third, the workers’ revolution in Russia which established the first
workers’ State in the world had its own influence on the growth of trade union
movement.
Fourth, was the worldwide unrest in the post-war period. The war
awakened in the minds of industrial workers.
Fifth, was the setting up of the International Labour Organization in 1919
of which India was the founder member. The constitution of ILO required one
representative from the governments of member states. The government, without
consulting the unions, appointed Shri N M Joshi as its representative. This
propelled the workers to organize. As a result, AITUC was formed in 1920. This
gave an opportunity to send members for ILO conferences and also brought a
change in government attitude while dealing with labour problems.

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

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

E. 1939–1946
World War II, like World War I, brought chaos in industrial relations. Several
reasons may be accounted for the industrial unrest and increased trade union
activity. First, the rise in prices far outpaced the increase in wages. Second,
there was a split in AITUC due to nationalist movement. Third, the post-World
War II period witnessed retrenchment and, therefore, the problem of
unemployment. During this period, the membership of registered trade unions
increased from 667 in 1939–40 to 1087 in 1945–46. Further, the number of
women workers in the registered trade unions increased from 18,612 in 1939–40
to 38,570 in 1945–46. Moreover, the period witnessed a large number of strikes.
During the emergency, the Defence of India Rules, 1942 remained in
force. Rule 81 A of the Rules empowered the government—(i) to require
employers to observe such terms and conditions of employment in their
establishments as may be specified; (ii) to refer any dispute to conciliation or
adjudication; (iii) to enforce the decisions of the adjudicators; and (iv) to make
general or special orders to prohibit strikes or lockouts in connection with any
trade dispute unless reasonable notice had been given. These provisions thus
permitted the government to use coercive processes for the settlement of ‘trade
disputes’ and to place further restrictions on the right to use instruments of
economic coercion.
In 1946, another enactment of great significance in labour relations,
namely, the Industrial Employment (Standing Orders) Act, 1946 was passed
with a view to bring uniformity in the condition of employment of workmen in
industrial establishments and thereby to minimize industrial conflicts.23 The Act
makes it compulsory for employers engaging 100 or more workmen ‘to define
with sufficient precision the conditions of employment’ and to make those
conditions known to workmen.24
Another important enactment at state level was the Bombay Industrial
Relations Act, 1946. The Act made elaborate provisions for the recognition of
trade unions and rights thereof.

F. 1947 and Since

With Independence, the trade union movement in India got diversified on
political considerations. The labour leaders associated with the National
Congress Party formed the Indian National Trade Union Congress in 1947. The
aim of the INTUC was ‘to establish an order of society which is free from
hinderances in the way of an all-round development of its individual members,
which fosters the growth of human personality in all its aspects and goes to the
utmost limit in progressively eliminating social, political or economic activity
and organization of society and the anti-social concentration of power in any
form.
In 1948, the Socialist Party formed an organization known as Hind
Mazdoor Sabha. The aims and objects of the Sabha were to: (i) promote the
economic, political, social and cultural interest of the Indian working class; (ii)
guide and coordinate the activities of affiliated organizations and assist them in
their work; (iii) watch, safeguard and promote the interests, rights and privileges
of workers in all matters relating to their employment; (iv) promote the
formation of federation of unions from the same industry or occupation; (v)
secure and maintain for the workers freedom of association, freedom of speech,
freedom of assembly, freedom of press, right of work or maintenance; right of
social security and right to strike; (vi) organize and promote the establishment of
a democratic socialist society in India; (vii) promote the formation of
cooperative societies and to foster workers’ education; (viii) cooperate with other
organizations in the country and outside having similar aims and objectives’.25
A year later in 1949, another organization, namely, the United Trade
Union Congress was formed. The aims and objects of the United Trade Union
Congress as given in its constitution were: (i) establishment of socialist society
in India; (ii) establishment of a workers and peasants state in India; (iii)
nationalization and socialization of the means of production; (iv) safeguarding
and promoting the interests, rights and privileges of the workers in all matters,
social, cultural, economic and political; (v) securing and maintaining for the
workers’ freedom of speech, freedom of press, freedom of association, freedom
of assembly, right to strike, right to work or maintenance and the right to social
security; and (vi) bringing about unity in the trade union movement.26
The same year also witnessed the passing of the Industrial Disputes Act,
1947 and the Trade Unions (Amendment) Act, 1947. The former Act introduced
the adjudication system on an all India level. It prohibits strikes and lockouts
without giving 14 days’ prior notice and during the pendency of conciliation
proceeding before a conciliation officer in public utility services. In public and
non-public utility services, it prohibits strikes and lockouts during the pendency
of proceedings before board of conciliation, labour court, tribunal, national
tribunal and arbitration (when a notice is given under Section 10-A of the Act).
The Act further prohibits strikes and lockouts during the operation of settlement
or award in respect of any matter covered under settlement or award. The latter
Act brought several changes of great significance. It provided for recognition of
trade unions and penalties for unfair labour practices by employers and unions.
But the Act has not yet been enforced. Again in 1950, the Trade Unions’ Bill
was introduced in the Parliament providing for registration and recognition of
trade unions and penalties for certain unfair labour practices. On dissolution of
the Parliament, the bill lapsed and has since not been brought forward by
government before the Parliament.
Political involvement continued even after 1950. In addition to four major
all India organizations discussed above, three unattached unions dominated by
one or the other political parties were formed. For instance on 23 July 1954, a
federation namely, Bharatiya Mazdoor Sangh (BMS) was formed in Bhopal by
Jan Sangh Party, presently known as Bhartiya Janta Party. The main object of
BMS is to check the increasing influence of the Communist unions in the
industry and cooperate with non-Communist unions in their just cause. A year
later, Hind Mazdoor Panchayat, a new trade union organization by Sanyukt
Socialist Party and Indian Federation of Independent Trade Unions which have
no affiliation with any political party, were formed.
The period also saw amendments in the Trade Unions Act in 1960. The
amended Act brought four new provisions: (i) minimum membership
subscription was incorporated; (ii) the registrar of trade unions was empowered
to inspect account books, register, certificate of registration and other documents
connected with the return submitted by them under the Trade Unions Act; (iii)
government was empowered to appoint additional and deputy registrar with such
powers and functions as it deemed fit; (iv) fate of the application for registration
where applicants (not exceeding half of them) ceased to be members or
disassociated themselves from the application was statutorily decided.
Some independent trade unions met at Patna on 21 March 1964 and
decided to form the All India Independent Trade Union Congress, but this effort
to unite the unaffiliated unions did not continue for a longer period and met an
early death.
The Act was once again amended in 1964. It made two changes: (i) it
disqualified persons convicted by the court of an offence involving moral
turpitude from becoming office-bearers or members of the executive of a
registered trade union; and (ii) it required for submission of annual returns by
registered trade unions on a calendar year basis.
1970 witnessed another split at the national level in the AITUC. The
decision of Communist group, which decided not to remain within the AITUC
resulted in the formation of a separate organization, namely, Centre of Indian
Trade Union by the Marxist Communists.
A further split took place in 1970–72. During the period, there was a split
in the United Trade Union Congress and another organization namely, the
United Trade Union Congress Lenin Sarani was formed.

G. The Unity Move

In 1972, a new experiment was made when three central trade union
organizations, namely, the HMS, the INTUC and the AITUC, in the meeting
held on 21 May 1972 at New Delhi agreed to establish a National Council of
Central Trade Unions for the purpose of promoting understanding, cooperation
and coordination in the activities of the central trade unions, to defend the
interests of the working class and the trade union movement, and help towards
the development of the national economy on a democratic, self-reliant and non-
monopoly basis, to overcome trade union rivalry and bring about trade union
unity for common objectives and action. However, this organization could not
survive for a longer period and met an early death. The year also witnessed the
emergence of the Trade Union SEWA by leading workers in Ahmedabad. Ms
Ela Bhatt has been instrumental for the same.
In September 1977, an All India Convention of Central Organization of
Trade Unions including CITU, BMS, HMS, HMP and the TUCC was called
which demanded time-bound programmes ensuring reduction in wage disparity,
national wage and price policy and need-based wages for industrial and
agricultural workers.
In 1981, once again unity was shown by the trade unions in the protest
against the promulgation of the Essential Services Maintenance Ordinance, 1981
and also the Bill in that regard in the Parliament. A year later in 1982, the Trade
Unions (Amendment) Bill, was introduced in Lok Sabha. The Bill proposed to
make the following amendments in the Act, namely:
(i) To reduce multiplicity of unions, it proposed to change the existing
provision of enabling any seven workmen to form a trade union by
providing for a minimum qualifying membership of 10 per cent of
workmen (subject to a minimum of ten) employed in the establishment or
industry where the trade union is proposed to function or 100 workmen,
whichever is less, for the registration of trade unions;
(ii) There is at present no machinery or procedure for resolution of trade
union disputes arising from inter-union and intra-union rivalries. It
proposed to define the expression ‘trade union dispute’ and to make
provision for resolving such disputes through voluntary arbitration, or by
empowering the appropriate government and the parties to the dispute to
refer it to the registrar of trade unions for adjudication;
(iii) The Act does not lay down any time-limit for registration of trade unions.
It proposed to provide for a period of 60 days for the registration of trade
unions by the registrar after all the formalities have been completed by
trade unions. It also proposed to provide that a trade union whose
certificate of registration has been cancelled would be eligible for re-
registration only after the expiry of a period of 6 months from the date of
cancellation of registration, subject to certain conditions being fulfilled by
 the trade union;
(iv) Under the existing provisions of the Act, 50 per cent of the office bearers
in the executive of a registered trade union shall be persons actually
engaged or employed in an industry with which the trade union is
connected. It proposed to enhance this limit to 75 per cent so as to
promote development of internal leadership;
(v) It proposed to empower the registrar of trade unions to verify the
membership of registered unions and connected matters and report the
matter to the state and Central Governments;
(vi) Penalties specified in the Act for the contravention of its provisions were
proposed to be enhanced.27
In order to reduce multiplicity in trade union, strengthening their
bargaining power and to provide check-off facilities to trade union, the Bill
seeks to provide that in relation to a trade union of workmen engaged or
employed in an establishment or in a class of industry in a local area and where
the number of such workmen are more than 100, the minimum membership for
the registration of such trade union shall be 10 per cent of such workmen. Such
unions shall be eligible for registration only if they meet this minimum test of
strength. From this it follows that the setting up of bargaining councils (which
will be able to negotiate on all matters of interest to workmen with employers)
will to some degree bring confidence and strength. The limitations placed upon
the leadership of trade unions by restricting the number of non-workmen as
office-bearers of a trade union to two and the provision that a person can become
an office-bearer or a member of an executive of not more than seven registered
trade unions will go a long way in developing internal leadership in trade unions.
The Bill also provides for the constitution of a bargaining council for a
three year term to negotiate and settle industrial disputes with the employer. The
check-off system would be normally adopted for verification of the strength of
trade unions in an industrial establishment, though the Bill provides for the
holding of a secret ballot in certain exceptional circumstances.28
While the unit-level bargaining council will be set up by the employers,
the appropriate government will be empowered to set up such councils at
industry level. All the registered trade unions will be represented on the
bargaining councils in proportion to their relative strength, but any union with a
strength of not less than 40 per cent of the total membership of the workmen in
an industrial establishment will be recognized as the ‘principal agent’. If there is
no trade union having members among the workmen employed in an industrial
establishment, a workmen’s council will be set up in such a manner as may be
prescribed. The Central Government will also be empowered to constitute such
bargaining councils at the national level.
However, the aforesaid Bill lapsed. Six years later, the Trade Unions and
the Industrial Disputes (Amendment) Bill, 1988 was introduced in the Rajya
Sabha on 13 May 1988 but it has not yet received the colour of an Act.
The Government of India had in 1997, approved certain amendments to
the Trade Unions Act, 1926. The objective of these amendments is to ensure
organized growth of trade unions and reduce multiplicity of trade unions. The
Trade Union Amendment Bill, 1997 was to be introduced in the Rajya Sabha in
the winter session of the Parliament in the year 1997, but due to various reasons,
it was not introduced.29
During 1999, a consensus emerged among the leading trade union
federations like the BMS, AITUC, CITU and INTUC on protection to domestic
industry, strengthening the public sector units by way of revival and induction of
professionals in the management and amendment of labour laws and inclusion of
rural and unorganized labour in the social safety net.30
The year 2001 witnessed several amendments of much relevance, in the
Trade Unions Act, 1926. However, this amendment came into force w.e.f. 9
January 2002.
During 2009, the Workmen’s Compensation Act, 192 was amended on
the recommendation of the (Second) National Commission on Labour. Another
development in this year was the enactment of the Unorganized Workers’ Social
Security Act, 2008 which came into force with effect from 16 May 2009. A year
later, the Employees’ State Insurance Act, 1948 was amended by the
Employees’ State Insurance (Amendment) Act, 2010. Moreover, the Payment of
Gratuity Act, 1972 was amended by the Payment of Gratuity (Amendment) Act,
2010 and the Plantation Labour Act, 1951 by the Plantation Labour
(Amendment) Act, 2010. Another major legislative development was the
amendment in the Industrial Disputes Act, 1947 by the Industrial Disputes
(Amendment) Act, 2010 which came into force with effect from 19 August
2010.
During 2009, a consensus emerged among major central trade unions
including BMS, INTUC, AITUC, HMS, CITU, AIUTUC, TUCC, AICCTU and
UTUC which had organized the National Convention of Workers in Delhi on 14
September 2009 and decided to launch joint action programme on price rise,
labour law violations, job losses, creation of National Social Security Fund for
Unorganized Workers and against disinvestment of profit-making PSUs. The
National Convention was followed by All India Protest Day on 28 October 2009.
The trade unions also met the Prime Minister on 17 September 2009 and urged
upon him to address the above main concerns of the working people effectively.
As a follow up, central trade unions staged massive dharna before Parliament on
16 December 2009 as a protest against government inaction to control price rise,
check labour law violations, non-creation of National Fund for Unorganized
Workers Social Security, loss of jobs in the name of recession and disinvestment
of profit-making public sector undertakings. Similar joint dharnas have been
staged all over the country in state capitals and industrial centres. The trade
unions being dissatisfied with the attitude of the government in not taking any
appropriate steps to meet the five demands, the workers went on Satyagraha/Jail
bharo on 4 March 2010 all over the country, for the aforesaid demands.
On 28 February 2012, a national strike was called by 11 central trade
union organizations (including AITUC, BMS, CITU, HMS, INTUC, AITUC,
TUCI and NLO) supported by about 5,000 other smaller trade unions for their
10-point charter of demand which included rising unemployment, labour right
violations, mass contractualization, price rise particularly of essential
commodities, universalization of social security, etc. It was not only successful
in bringing together the much-divided trade union movement but was also able
to convey its seriousness over the issues facing the working class.

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

IV. EXISTING STRENGTH OF CENTRAL TRADE

UNIONS
As per the report of the Ministry of Labour, Government of India, the strength of
central trade unions as per the verification of membership of trade unions as on
31 December 2002 was as follows:
(i) BMS – 6215797
(ii) INTUC – 3954012
(iii) AITUC – 3442239
(iv) HMS – 33384.91
(v) CITU – 2678473
(vi) UTUCLS – 13,73268
(vii) UTUC – 606935
(viii) AICCTU – 639962
(ix) TUCC – 732760
(x) SEWA – 688140
(xi) LPF – 6115 06
(xii) NIFTU CDHN – 569599
Source: Govt. of India; Ministry of Labour and Employment, Order No L–52025/20/2003–1R
(IMP–1) dated 11.1.2008

V. CURRENT ISSUES
The (Second) National Commission on Labour in its report of 2002 gave the
following account on the development of trade union movement.
(i) The trade union movement in India has now come to be characterized
by multiplicity of unions, fragmentation, politicization, and a reaction
that shows a desire to stay away from politically-oriented central
federation of trade unions and struggles for cooperation and joint
action.
(ii) One sees an increase in the number of registered unions in the years
 from 1983 to 1994. But one also sees a reduction in the average
membership per union and in the number of unions submitting
returns.
(iii) There are other unions that have founded into bodies relating to
certain industries or employment, but have kept out of the main
central trade union federations. This includes National Alliance of
Construction Workers, National Fish Workers’ Federation, National
Alliance of Street Vendors, etc.
(iv) We must also make specific mention of the emergence of the trade
union—SEWA group of organization. It did not confine itself to the
traditional method of presenting demands and resorting to industrial
action in pursuit of them. It took up the work of organizing the
women workers who were engaged in unorganized sector of
employment, combining other constructive activities like marketing,
the provision of micro-credit, banking, training and representing the
views and interests of workers.
(v) There is yet another development on the trade union scene which
relates to the increasing tendency on the part of trade unions to get
together in ad hoc struggle committees to launch struggles, or to
support a struggle that one of them has launched.
(vi) Another new feature is the readiness and the determination of central
trade unions to escalate the objective to matters of government policy
like, disinvestment, privatization, etc. Instances of such action were
witnessed in the strike on BALCO privatization, the Rajasthan
agitation by the government servants and the strikes by electricity
workers in U P, government employees in Kerala, and so on.
(vii) A grave threat to the authentic trade union movement seems to be
emerging from the underworld. There are also reports of some cases
where such unions have succeeded through other means. Many
questions arise. The primary question perhaps is: what are the
methods or abnormal methods that these new ‘leaders’ employ, and
how can the authentic trade unions, the management and industry as a
whole be protected from the inroads and tactics of these interlopers
from the underworld. The use of terror in any form will only nullify
democratic rights by creating an atmosphere in which people are
forced to act or not to act merely to protect their skin. It has therefore,
become necessary to protect the workers as well as managements
from such forces.
 (viii) There are trade union leaders who ask for abolition of contract labour
but ultimately relent if the contract assignment is given to them or
their benami agents. This makes a mockery of the trade union
movement and brings down the trade union leaders in the esteem of
employees.
(ix) Another practice that undermines respect is that of permitting
permanent workers to get their jobs done through proxy workers or
letting others work in their place, and taking a cut form the wages of
their proxies. Similar is the effect of so-called unions that take up the
grievances of workers and charge a commission on the monetary
gains they may secure.
(x) There is also a tendency to convert unions into closed shops.

VI. CLOSED SHOP/UNION SHOP

The trade unions get greater strength and security if they have a contract over the
supply of labour at pre-entry or at least post-entry level in the industry. In order
to appreciate the feasibility of adopting such a system in India, it is necessary to
examine the concept of closed shop and union shop.
Lord Denning defines ‘closed shop’ as:
A factory or workshop or firm in which all the workmen are
members of trade union; it is closed to everyone except the
members. Any newcomer who comes to work must join the
union. If the newcomer refuses to do so, the union members will
insist on his dismissal. They tell the employer, sack him or we
will go on strike. The employer gives in. He dismisses the man,
or the man gives in and joins the union.32
The First National Commission on Labour explains ‘closed shop’ as an
agreement with the employer or at least his acquiesce to recruit only trade union
members. On the other hand ‘union shop’ is one ‘by which new entrants to
employment, if they are not union members, they must join the union within a
specified period.’33
Unlike the industrially advanced countries like USA or UK, closed shop
or union shop has not gained momentum in India. The committee appointed by
the Government of Bihar in 1956 strongly opposed the system of closed shop on
the ground that ‘the right of the citizens to seek and get employment is one of the
fundamental rights guaranteed under the Constitution and any interference with
that right in the shape of prior membership of a trade union would impose an
unreasonable restriction on the right to work.’ The same line of approach was
adopted by the First National Commission on Labour. According to the
Commission, closed shop is neither practicable nor desirable. Indeed it is against
the fundamental right of association guaranteed under Article 19 (1) (c) of the
Constitution.34

VII. EMPLOYERS’ ORGANIZATIONS

A. Need to Form Employers’ Organizations

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

B. Origin and Growth

The origin, growth and development of employers’ organizations have three
distinct phases :(i) the period prior to 1930; (ii) the period between 1931 to 1946;
and (iii) the post-Independence period. Each phase reveals its own structural and
functional characteristics; in each period the organizations had to undergo
changes because of contemporary economic, social and political developments.
These changes have been more rapid in some than in others. The periods referred
to also coincided with important developments in the labour field, and these
have had a great impact on the pattern and development of employers'
organization as also on their functioning37.
1. Pre-1930 period: This period was characterized mainly by the formation of
associations of merchants in the form of chambers of commerce. During the
latter half of the last century, industrial associations also came into being with
the aim of protecting the commercial interest of their members and securing
concessions from the government. Regional associations at important centres of
industrial activity developed, but again with a different focus for action. The
Bombay Mill-Owners Association, the Bengal Mill-Owners' Association, the
Ahmedabad Mill-Owners' Association are instances in point38.
2. 1931–1946: Organizing chambers of commerce and industrial associations
for dealing with a variety of problems connected with industry was the rule prior
to 1930. Some of these chambers dealt with labour matters too.39 The All-India
Organization of Industrial Employers (AIOIE)40 and the Employers' Federation
of India (EFI) came into existence in 1933 to comprehend and deal with
problems of industrial labour in a concerted manner. The All-India
Manufacturers’ Organization (AIMO) was formed in 1941. The setting up of
these organizations was again, as in the case of workers unions, in response to
the need then felt for representation on international conferences and legislative
bodies.41
3. Post-Independence period—The period since Independence witnessed the
growth of planning, expansion of industrial activity, extension of the democratic
apparatus, passing of several labour laws and a growing trade union movement,
all of which acted as a spur for the strengthening and expansion of employers’
organizations. Experience of working together convinced employers of the
advantage of united action. Employers' organizations grew in strength mainly to
meet the requirements of individual employers for advice on labour matters. In
some cases, they built up their strength to match that of organized labour; in
others, it was the other way round. At present, employers’ organizations are
organized at three levels namely: (a) employers operating through their local
organizations or otherwise; (b) industrial associations which cut across state
boundaries; and (c) federations which comprise representatives both of
industries and centres. Of the three, the local organizations which operate mainly
through the chambers of commerce cover all industries in an area; their activities
in the labour field are comparatively less extensive.
This period witnessed significant developments and several employers’
organizations and federations were set up. However, multiplicity of
organizations at the national level has not been a problem with employers'
interest at tripartite forums. This has, for all practical purposes, been effectively
secured by the main employers' organizations coming together under the CIE.
But the AIMO is outside the CIE. The First National Commission on Labour felt
that it will be desirable that CIE brings this organization also within its fold.
Some organizations at the industry level and the Employers' Federation of
India at the national level, originally registered under the Companies Act, are
now registered under the Trade Unions Act, 1926, while many are still outside
its purview.

C Role and Functions of Employers’ Organizations

The main role and functions of an employers’ organization is to protect and
promote the interest of its members. The membership of employers’
organizations is basically composed of corporations/employers. All enterprises
have to meet the test of economic viability. For a proper appraisal of the role and
functions of an organization, this aspect cannot be ignored. Thus, its activities
are designed and directed in such a manner that their members stand to gain.
Also the organizations have to work on a broader plane; labour problems are
only a part of their overall responsibilities. Economic, commercial and fiscal
matters and policies are equally or even more important for them. The
organizations represent their members’ view in formulation of government's
policies, rules and regulations and in giving advice to members on the
interpretations and extent of applicability of agreements arrived at various
bipartite and tripartite bodies and on Acts and regulations which come into force.
Labour departments/advisory services, which have come in vogue in many
employers' organizations to advise and assist members have been the direct
consequence of the recognition of these functions.42
Employers’ organizations find it necessary to have legislative support for
realization of their objectives. The pursuit of their activities leads to their
involvement in politics or to their developing lobbies without directly aligning
themselves with any political party. There is evidence on record to show that
individual employers and not the employers' organizations have used these
avenues to the extent necessary although providing finances to political parties
or sponsoring candidates are not unknown to the organizations or industrial
associations—national or local. Political activity by employers' associations may
be as inimical to peace in industry as that by workers' associations, particularly
when we are envisaging employers’ organizations to include both public and
private sector units. This should be eschewed. It is thus, that they will be able to
establish rapport between the two sectors and work exclusively in the interest of
industry rather than in the sectional interests of one or the other form of
ownership.43
The pursuit of economic gains by employers’ organizations does not
mean that they should not recognize social responsibilities. With planned
economic development and increasing democratization of the institutional
framework of society, there is active consultation by the state with all
organizations, including those of employers, for formulation, inter alia, of
economic, educational, social and labour policies. Employers’ organizations are,
therefore, expected to take a stand consistent with the social and economic
objectives of the community/country as a whole and be active in promoting
policies and measures that are not contrary to the general interest of the
community. Along with their gains, they should keep in view the needs of the
developing economy, the requirements of planned growth, importance of
maintenance of peace in industry and the desirability of an equitable distribution
of national wealth. There can, however, be differences as in the case of trade
unions, as to the priority between the interest of the community and the
employers.44

D. Employers’ Federations
1. Employers’ Federation of India: The principal objects for which the EFI has
been established are embodied in its constitution. These are :
(i) to promote and protect the legitimate interests of employers engaged in
industry, trade and commerce;
(ii) to maintain harmonious relations between management and labour and to
initiate and support all well-considered schemes that would increase
productivity and at the same time, give labour a fair share of the increased
return;
(iii) to collect and disseminate information affecting employers and to advise
members on their employer–employee relations and other ancillary
problems.
These objects lie within the field of ‘industrial relations’. Although
consideration of broad economic problems is not altogether excluded, the EFI
does not generally comment on commercial questions of customs, taxation and
the like which lie in the sphere of the Associated Chambers of Commerce and
Industry.45
2. The All India Organization of Employers : The objects of the AIOE inter
alia include:
(i) To take all steps which may be necessary for promoting, supporting or
 opposing legislative and other measures affecting or likely to affect
directly or indirectly, industries in general, or particular industries;
(ii) To nominate delegates and advisors, etc., to represent the employers at
the International Labour Conference, United Nations Organization,
International Chamber of Commerce and other conferences and
committees affecting the interests of trade, commerce and industries,
whether as employers or otherwise;
(iii) To promote and support all well-considered schemes for the general uplift
of labour and to take all possible steps to establish harmonious relations
between capital and labour".46
3. The All India Manufacturers’ Organization: The objectives of the AIMO are
:
(i) To help in bringing about rapid industrialization of the country through
sound and progressive economic policies;
(ii) To help in increasing the aggregate wealth of India;
(iii) To raise the standard of living of the people of India by utilizing to the
fullest possible extent all the available national resources and talent in the
country; and
(iv) To play a positive role in relieving the pressure of population on land.
The industrial relations functions of the AIMO are similar to those of the
EFI and AIOE. All these federations function through their regional offices.
4. Council of Indian Employers: The Council of Indian Employers founded in
1956 is responsible for choosing delegates to represent Indian employers in
international conferences/committees. It is this Council which is a member of the
International Organization of Employers at Brussels in place of the AIOE and
the EFI. The period since Independence is thus particularly important because of
the joint approach by employers to deal with labour problems, informally in the
first half and somewhat more formally in the second. Building up of adequate
specialized advisory services in labour matters and training of management and
personnel officers at various levels have been the result of this joint approach,
although a beginning in this direction had been made earlier by individual
industrial associations.47
5. Federation of Indian Chambers of Commerce and Industry (FICCI): FICCI
was established in 1927. It is the largest and oldest apex business organization in
India with a nationwide membership of over 1,500 corporates and 500 chambers
of commerce. Its activities are representative, legislative and promotional. The
Federation is represented in various advisory committees appointed by the
government. It also provides training programmes and organizes seminars and
conferences. It works with the government on policy issues and on enhancing
efficiency, competitiveness and expanding opportunities for industry.
6. The Associated Chamber of Commerce and Industry of India
(ASSOCHAM): The membership of ASSOCHAM is confined to local chambers
of commerce. It provides advisory service on labour matters. It has been given
representation on many consultative bodies set up by the government.
7. Standing Conference of Public Enterprises (SCOPE): It is one of the three
constituents of the Council of Indian Employers and is a member of the
International Organization of Employers. It represents employers at various
tripartite forums and committees. It has representations on the boards of Central
Provident Fund, the Employees' State Insurance Board, National Apprentices
Board, National Workers’ Education Board, National Productivity Council and
many other committees/boards. It also represents employers at ILO conferences.
The main tasks of SCOPE are both internal and external to the public sector.
Internally, it endeavours to assist the public sector in such ways so as to improve
its performance. Externally it seeks to provide required information and assist
the public sector to improve its performance and advise the community and the
government in order to help public sector in its role.

1 Coimbatore Periyar Districts Dravida, Panjalal Thozhilalar Munnetra Sangam v.

National Textile Corporation Limited, 2011 LLR 1076 (HC Madras).
2 See All India Bank Employees‘ Association v. National Industrial Tribunal, AIR 1962
SC 171: Damyanti v. Union of India, AIR 1971 SC 966.
3 N M Joshi, The Trade Union Movement in India (1927), 8 and R F Rustomji, The Law
of Industrial Disputes in India (Law Publishing House, 1961), XCIV: (contd.) Most of
the writers on the subject trace the history of labour movement in India since 1875 or
even later. See for instance, S D Punekar, Trade Unionism in India, Ahmad Mukhtar,
Trade Unionism and Labour Disputes in India, Longmans Green and Co. Ltd (1935);
Shiva Rao, State in Relation to Labour in India. Chapter VI; R K Das. The Labour
Movement in India, Berlin de Gruyter (1923) 65; A S Mathur; and J S Mathur; Trade
Union Movement in India, Allahabad, Chaitanya Publishing House, (1962) 12, 14; V V
Giri, Labour Problems in Indian Industry, Bombay, Asia Publishing House (1959), 1; C
A Myres, Industrial Relations in India, Bombay, Asia Publishing House (1958) 100; C
B Kumar. The Development of Industrial Relations in India, Bombay, Orient Longman,
(1961), 87; N F Duftry, Industrial Relations in India, Bombay, Allied Publishers Private
Ltd, (1964); T N Bhagoliwal, Economics of Labour and Social Welfare, Agra, Sahitya
Bhawan (1966), Chapter VI; Indian Law Institute, Labour Law and Labour Relations,
 Rev S C Srivastava, New Delhi, (2007).
4 The period between 1875–1917 has been described as the social welfare period of early
trade union movement by Dr S D Punekar. Dr R K Das has divided the period of 1875–
1917 into two sections. The first period between 1875–1891, according to him, was
devoted mainly to the regulation of women and child labour in Indian factories. In the
second period (1891–1917), very little was done except placing memoranda before
commissions and committees.
5 R F Rustomji, op. cit., XCLIV.
6 The deplorable condition of workers were brought to the notice of the Secretary of State
for India and the first Factory Commission was set up in 1875.
7 V V Giri, Labour Problems in Indian Industry, Bombay, Asia Publishing House, (1959),
1.
8 R K Das, The Labour Movement in India, Berline de Gruyer (1923) 9; Ahmad Mukhtar,
Trade Unionism and Labour Disputes in India, Bombay, Longmans Green and Co. Ltd,
(1935), 11; C B Kumar, op. cit., 87.
9 Ahmad Mukhtar, op. cit. 11.
10 The Bombay Mill Hands Association cannot, however, be classified as a genuine trade
union. The workers did not have any effective organization of their own. The Bombay
Mill Hands Association has no existence as an organized body, having no roll of
membership, no funds and no rules. (See Report on the Working of Factories Act in
Bombay, 1892).
11 Ahmad Mukhtar, op. cit., 13.
12 Annual Provincial Factory Report for Bombay for the year 1895, 5–6.
13 G Ramanujam, Story of Indian Labour.
14 Gopal Ghosh, Indian Trade Union Movement.
15 Ahmad Mukhtar, op. cit., 4.
16 Report on the Working of Factories Act at Bombay, (1892), 15.
17 S D Punekar, op. cit., 59.
18 See AITUC Report of the First Session held at Bombay, (1920), 12.
19 Shiv Rao, op. cit.
20 Shiv Rao, The Industrial Workers in India, 19.
21 For instance see National Federation of AITUC.
22 See Government of India, Report of the National Commission on Labour, New Delhi.
(1969), 319.
23 S S Rly Co. v. Workers Union, AIR 1969 SC 513.
24 Preamble of the Industrial Employment (Standing Orders) Act, 1946.
25 Constitution of the Hind Mazdoor Sabha.
26 Constitution of UTUC.
27 See ‘Statement of Objects and Reasons’ appended to the Bill.
28 Ibid.
29 Government of India, Ministry of Labour, Annual Report 1997–98. 31.
30 See Economic Times, New Delhi, February 14, 1999.
31 See the Report of the Bombay Industrial Disputes Committee, 1922.
32 Lord Denning, The Closing Chapter (1983), 197.
33 Government of India, Report of the (First) National Commission on Labour (1969), 293.
34 Government of India, Report of the (First) National Commission on Labour (1969) 298.
35 N H Tata ‘Why Employers’ Organization? In Pursuit of Industrial Harmony—An
Employer‘s perspective’, Bombay, National Institute of Labour Management (1975) 122.
36 Ibid
37 Ibid.
38 Ibid.
39 The role played by employers’ organization has been described in the Report of the Royal
Commission on Labour. 316–17.
40 This organization has since changed its name. It is now called All India Organization of
Employers.
41 Ibid.
42 See Govt of India, Report of the [First] National Labour Commission (1969) 299.
43 Ibid.
44 Ibid.
45 Supra note 41.
46 Ibid.
47 Ibid.
 CHAPTER
5
Judicial Delineation of Statutory
Definition of Trade Union and Trade
Dispute

I. THE DEFINITION
Until 1926, no legislative attempt was made in India to delineate the contours of
the expression ’trade union‘ or any of its synonyms. In 1926, Section 2(h) of the
Trade Unions Act, 1926, inter alia, defines a ’Trade Union‘ to mean:
Any combination, whether temporary or permanent, formed
primarily for the purpose of regulating the relations between
workmen and employers or between workmen and workmen, or
between employers and employers, or for imposing restrictive
conditions on the conduct of any trade or business, and includes
any federation of two or more trade unions.
The dimensions of the aforesaid definition determine the permissible area
of trade union activities. An analysis of the above definition reveals that a trade
union: (i) must be a combination; (ii) such a combination should be either
temporary or permanent; and (iii) should include any federation of two or more
trade unions. Further, the definition recognizes that the objectives under its
constitution are one or more of the following: (a) to regulate the relations: (i)
between workmen and employers; (ii) among workmen; or (iii) among
employers; (b) to impose restrictive conditions on the conduct of any trade or
business. But it shall not affect: (i) an agreement between parties as to their own
business; (ii) agreement as to employment; (iii) agreement in consideration of
sale of the goodwill of a business or profession, trade or handicraft.1
A delineation of the nature of trade unions requires description of: (1) the
person who can become member of a trade union; (2) the place in relation to
which trade unions are formed; and (3) the objectives of trade union. Let us now
examine each of them.

II. MEMBERS OF TRADE UNIONS

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

A. Workmen
In the traditional sense4, trade union is used to denote the union of workmen.
Further, the workmen constitute the major part of a trade union. It is, therefore,
necessary to ascertain its meaning. The term ’workmen’ has not been
independently defined in the Trade Unions Act. But in the definition of the term
’trade dispute’ in Section 2(g), the definition of the term ’workmen‘ is found
which says:
All persons employed in the trade or industry whether or not in
the employment of the employer with whom the trade disputes
arise.
Broadly speaking, workmen must be: (a) persons; (b) employed; (c) in
any trade or industry; (d) to do work.
The definition of the term ’workmen‘ however raises various problems:
First, whether the persons other than those who are employed to do any skilled
or unskilled, manual, supervisory, technical or clerical work may be covered
within the meaning of the word ’workmen‘? Second, whether the ’workmen‘
may be persons: (a) who are subjected to Army, Air Force or Navy Act; or (b)
who are employed in the police service or as officers or other employees of a
prison; or (c) who are employed mainly in a managerial or administrative
capacity or exercise functions mainly of managerial ’nature’? Third, whether the
gratuitous workers may indulge in trade unions? Fourth, whether there should
be a contract of employment between ’employers‘ and ’workmen‘? Fifth,
whether there is any age restriction for becoming a member of a trade union?
Sixth, whether badli workers are workmen? Seventh, can the dismissed,
discharged or retrenched worker become member of a trade union? Let us turn to
examine these issues.
As to the first, it is significant to note that the term ’workmen‘ as defined
in the Trade Unions Act, 1926 has a wide coverage and is not merely confined to
only those persons who are employed to do any manual, skilled, unskilled,
supervisory, technical, operational or clerical work. In other words, all persons
employed to do any kind of work may be covered within the definition of
’workmen‘ provided they are employed in any trade or industry.
The second problem may conveniently be divided in two categories. The
employees of the first category, namely: (i) those who are subject to the Army,
Air Force and Navy Act or (ii) those who are employed in the police service or
as officers or other employees of a prison are not covered within the meaning of
the term ’workmen‘ because they are not employed in the trade or industry. The
employees of the second category, namely: (i) those who are employed mainly
in the managerial or administrative capacity; or (ii) those who are employed in
the supervisory capacity exercising functions mainly of managerial nature may
conveniently be brought within the preview of ’workmen‘ provided they are
employed in any ’trade‘ or ’industry‘.
As to the third problem, it may be said that the definition of ’workmen‘
covers even gratuitous workers. It may, therefore, be possible for them under the
Trade Unions Act, 1926 to be members of a trade union.
The fourth problem requires careful scrutiny. According to the definition,
it is not necessary that there should be a contract of employment between the
’employer’‘ and ’workmen‘. Indeed, the courts emphasize that an ’employee‘
does not cease to be an ’employee‘ merely because he is employed through
intermediaries.
Section 21 A (1) (i) of the Trade Unions Act, 1926 sheds sufficient light
on the fifth problem. It, inter alia, provides that a person who has attained the
age of 15 years, may be a member of registered trade unions unless the rules of
trade unions provide otherwise. But a person who has not attained the age of 18
years can neither be an office-bearer of any such trade union nor can he be
chosen a member of the executive of the unions.5
Formation of Trade Union by Badli Workers
As to the sixth problem, the Andhra Pradesh High Court in Panyam Cement
Employees Union v. Commr. of Labour6 held that badli workmen are
’workmen‘ and, therefore, if management disapproves of a trade union of badli
workers or discourages badli workers to join a trade union or denies voting right
to badli workers, the same would amount to unfair labour practice.
The last problem requires due consideration. The definition unlike the
Industrial Disputes Act, 1947, does not specifically include the dismissed,
discharged or retrenched workers in its fold. Indeed, the use of the expression
’employed in the trade or industry‘ occurring in Section 2(g) of the Act and the
expression ’union of workers engaged in industry occurring in Form A of the
Central Trade Unions Regulation, 1938, make it highly doubtful whether the
dismissed, discharged or retrenched workmen may be covered in the definition
of ’workmen‘.
It has been observed7 that the definition brings under the term ’trade
union‘ not only combination of workmen, but also combination of employers
such as employers‘ federation (or union of employers) or a combination of
employers in any industry, imposing restrictions on the members in respect of
prices to be charged from the customers, since one of the principal objects of the
latter is to regulate the relations between employers. The Trade Unions Act,
1926, therefore, applies to employers‘ federation as it does to unions of
workmen. It is, therefore, essential to know its coverage. The Trade Unions Act,
1926, does not define the term ’employer‘. However, Section 2(g) of the
Industrial Disputes Act, 1947, defines an ’employer‘ to mean: (i) in relation to
an industry carried on by or under the authority of any department of the Central
Government or a state government, the authority prescribed in this behalf, or
where no authority is prescribed, the head of the department; (ii) in relation to an
industry carried on by or on behalf of a local authority, the chief executive
officer of that authority.
In Western India Automobile Association Ltd v. Industrial Tribunal,8
the Federal Court held that statutory definition is not exhaustive. Observed
Justice Mahajan:
In relation to (industries carried on by government or local
authorities only) a definition has been given of the term
’employer‘ … No attempt, however, was made to define the
term ’employer‘ generally or in relation to other persons
carrying on industries or running undertakings. The proposition
 has since been not challenged though, paradoxically, the
provisions of the Industrial Disputes Act, 1947, have never been
invoked to the industrial disputes arising in ’an industry carried
on by or under the authority of any department of the Central or
a State Government.‘
An ’employer‘ does not cease to be an ’employer‘ merely because instead
of employing workmen himself, he authorizes his agent or servant to employ
them.9 However, in view of the provisions of Section 18 of the Industrial
Disputes Act, 1947, the coverage of the expression ’employer‘ has been
extended to include his heirs, successors and assignees.

Formation of a Trade Union by Supervisors and Managers

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

III. TRADE OR INDUSTRY

After having discussed as to who may become the members of a trade union, it is
necessary to determine the area in which the trade unions operate. The arena of
interaction of trade union is ’trade or industry‘. The Trade Unions Act, 1926,
however, does not spell out either the term ’trade‘ or ’industry‘. A question,
therefore, arises whether the Trade Unions Act, 1926 is in pari materia with the
Industrial Disputes Act, 1947. The Madras High Court11 has answered it in
negative12 because in its view, a comprehensive meaning of the term ’industry‘
was considered by the legislature in regard to the Industrial Disputes Act. On the
other hand, the Andhra Pradesh13 and Karnataka14 High Courts have taken the
view that two enactments are in pari materia and that the expression ’trade or
industry‘ in Section 2(g) of the Trade Unions Act carries the same meaning as
the word ’industry‘ in Section 2 (j) of the Industrial Disputes Act. There is,
however, no decision of the Supreme Court on this point. Section 2 (j) of the
Industrial Disputes Act, 1947, however, defines the term, ’Industry‘ to mean:
any business, trade, undertaking, manufacture or calling of
employers and includes any calling services, employment,
handicraft, or industrial occupation or avocation of workmen.
The words used in the above definition are of very ’wide import‘. It will
be observed that the word ’industry‘ is wide enough to include ’trade‘ in its
ambit. It will be further noticed that the definition is in two parts. The first part
defines ’industry‘ with reference to employers and the other part defines it with
reference to workers. The words occurring in the definition are vague and have
given rise to several disputes. Courts and tribunals have, therefore, been called
upon to interpret and apply the key expression on innumerable occasions.
An analysis of judicial response relating to the Trade Unions Act, 1926,
reveals that the several organizations such as Employees‘ State Insurance
Corporation,15 Provident Fund Organization,16 Fire Brigade Service,17
Devasthanam,18 CMT Institute19 have been held to be trade or industry under
Section 2(j) of the Industrial Disputes Act, 1947 and the Trade Unions Act,
1926.
 On the other hand, persons employed in the following are not employed
in ’industry‘, e. g., Raj Bhawan,20 educational institutions run by Ramakrishna
Mission,21 Pasteur Institute of Southern India and the Council of Scientific and
Industrial Research,22 sovereign or legal functions23 of the state and a temple
managed by trustee of a Devaswom governed by the Hindu Religious and
Charitable Endowment Act, 1951.24

IV. OBJECTIVES OF TRADE UNIONS

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

V. TRADE DISPUTE
‘Trade dispute’ is defined in Section 2(g) of the Trade Unions Act, 1926 to
mean:
any dispute between employers and workmen, or between workmen and
workmen, or between employers and employers which is connected with
the employment or non-employment, or the terms of employment or the
conditions of labour, of any person, and ’workmen‘ means all persons
employed in trade or industry whether or not in the employment of the
employer with whom the trade dispute arises:
Reading the definitions of ’trade union‘ and ’trade dispute‘ it is evident
that any dispute, inter alia, between the employer and workmen
 connected with the employment or non-employment, terms of
employment or conditions of labour of any person would be a trade
dispute and the term ’workman‘ includes all persons employed in the
trade or industry. Any dispute between badli workers and the
management is also a trade dispute. It is for this reason that when there
was a settlement between the Mazdoor Union and Panyam Cement Co. in
June, 2000, both the parties agreed on certain terms regarding assured
employment to badli workers. In that view of the matter, badli workers
cannot be excluded from participating in the election to recognize the
majority trade union. Any other interpretation would lead to badli
workers to lurch in helpless state of suspended animation.25

1 See proviso to Section 2(h) of the Trade Unions Act, 1926.

2 Out of 402.3 million workers in terms of 2001 census, only 8.93 million were members of
reporting registered trade unions during 2006.
3 See for instance, Entry 4 of Form A; Application for registration of trade union prescribed
under the Central Trade Unions Regulations, 1938.
4 According to Sydney and Beatrice Webb in History of Trade Unions, ’a Trade Union is a
continuous association of wage earners for the purpose of maintaining the conditions of
their lives.‘
5 See Section 21 A.
6 (2004) 1 LLJ 915.
7 Radkhakishan Jaikishan Ginning and Pressing Factory v Jimnadas Nursery Ginning
and Pressing Co. Ltd, AIR 1940 Nagpur, 228.
8 Western India Automobile Association Ltd v. Industrial Tribunal, (1949) LLJ 245 (FC).
9 Purushottam Pottery Works, (1958) 2 LLJ 523 (IT); Bombay Dock Labour Board and
the Stevedores, (1953) 2 LLJ 200 (IT).
10 (2002) Lab. IC 103.
11 Rangaswami v. Registrar of Trade Unions, AIR 1962 Madras 231.
12 ’I am very doubtful whether at all it could be said that the Industrial Disputes Act and the
Trade Unions Act form as it were, a system or code of legislation so that either could be
read together as pari materia, that is, as forming one system and interpreting one in the
another. See supra note 11.
13 T T Devasthanam v. Commissioner of Labour, (1979) 1 LLJ 448.
14 C M T Institute v. Assistant Labour Commissioner, (1979) 1 LLJ 192.
15 Registrar of Trade Unions v. Mihir Kumar Gooha, AIR 1963, Cal 56. In this case a
question arose whether employees of Employees‘ State Insurance Corporation could form
 a ’trade union‘ under the Trade Unions Act. The Registrar on an application made by the
employees for registration first registered it but later cancelled its registration. Against the
latter order of cancellation, an appeal was filed before the appellate court. The court set
aside the order of the registrar cancelling the certificate of registration. Against this
decision they preferred a Letters Patent Appeal before the division bench of the Calcutta
High Court. The Division Bench, upholding the order of the single judge, observed: In my
opinion, this test may well be applied to the expression industry as also ’trade‘ or
’business‘ as used in the Trade Unions Act. In this Act also, profit motive is not essential
and providing of amenities or services to the community or a substantial portion of it
would be sufficient to satisfy the test. The fact that such services are to be rendered by a
statutory corporation makes no difference. The fact that a large number of employees are
employed by an employer, to render services for particular class of persons in an
organized manner is quite sufficient to bring the corporation within the mischief of the
Act. The employees of such a corporation are, ’workmen‘ as defined in Section 2 (g) of
the Trade Unions Act and are entitled to form a trade union and get it registered. The
Court added the learned judge below had come to the right conclusion and rightly set
aside the order of cancellation passed by the registrar of trade unions.
16 Registrar of Trade Unions v. M Mariswami, (1973) 2 LLJ 256. In this case, the
employees of the Provident Fund Organization made an application to the registrar of
trade unions for the registration of its trade union called the Mysore State Provident Fund
Employees Union under the Trade Unions Act, 1926. The registrar of trade unions first
issued a certificate of registration but later, after issuing a show cause notice, withdrew its
registration certificate. On appeal, the district court allowed the appeal and set aside the
order of the registrar. In a revision petition against the order of the district court, the High
Court observed:
… As the activity of the Provident Fund Organization is ’industry‘, the members of the
union, who are its employees have to be regarded as workmen. As the union was formed
primarily for the purpose of regulating the relations between the workmen and its
employer, it is a trade union as defined in Section 2(h) of the Act.
17 Registrar of Trade Unions v. Fire Service Workers Union (1963) 1 LLJ 167. In this case,
the employees of the Fire Brigade Services formed a union and applied for its registration
to the registrar of trade unions. The registrar first registered the union but later cancelled
the certificate of registration after giving the notice. Against this order, the union filed an
appeal to the High Court. The High Court held that employees employed in Fire Brigade
Services were employed in ’trade or industry‘ and were entitled to be registered under the
Trade Unions Act, 1926.
18 T T Devasthanam v. Commissioner of Labour, (1979) 1 LLJ 192.
19 The Karnataka High Court in C M T Institute v. Assistant Labour Commissioner, (1979)
1 LLJ 192 applied and extended the definition of ’industry‘ under the Industrial Disputes
Act, 1947 in interpreting the word ’trade or industry‘ occurring in section 2(g) of the
Trade Unions Act, 1926. The Court also pointed out that there was no difference between
the meaning of the word ’industry‘ as defined in section 2(j) of the Industrial Disputes
Act and the word ’trade or industry‘ as used under section 2(g) of the Trade Unions Act.
The Court also held that the word ’trade or industry‘, even without elaborate definition of
 the word ’industry‘ under the Industrial Disputes Act, was sufficiently wide enough to
bring the Society of Central Machine Tool Institute within the definition of ’trade or
industry‘ notwithstanding the fact that it had no profit motive.
20 Rangaswami v. Registrar of Trade Unions, AIR 1962 Madras 231. In this case it was
held that persons employed in Raj Bhawan for domestic and other duties could not form
trade union on the ground that workers were not employed in trade or industry carried on
by the employer. The services rendered by them were purely of a personal nature. A
union of such workers was not, therefore, entitled for registration under the Trade Unions
Act, 1926.
21 N Karappann v. Additional Registrar of Trade Unions, (1976). Lab. IC 1388, 1389–90.
But in Bangalore Water Supply and Sewerage Board v. A Rajappa, AIR 1976 SC 548,
the Supreme Court held that Research Institute, irrespective of profit motive, was an
’industry‘.
22 Ibid.
23 Bangalore Water Supply and Sewerage Board v. Rajappa, AIR 1978 SC 548.
24 Cherinjumpatty Tharipuratty v. State of Kerala, (2005) 1 LLJ 32.
25 Panyan Cement Employees Union v. Commissioner of Labour, Hyderabad, (2004) 1
LLJ 915.
 CHAPTER
6
Registration of Trade Unions
The Trade Unions Act, 1926, was enacted with a view to encourage the
formation of permanent and stable trade unions and to protect their members
from certain civil and criminal liabilities. The registration of a trade union is,
however, not conclusive proof of its existence.1 The Societies Registration Act,
19602, Co-operative Societies Act, 19123 and the Companies Act, 19564 do not
apply to trade unions and registration thereof under any of these Acts is void ab
initio.5

I. LEGAL STATUS OF REGISTERED TRADE UNIONS

Every registered trade union is a body corporate by the name under which it is
registered and ‘shall have perpetual succession and a common seal6 with a
power to sue and to be sued.’7 It is, however, not a statutory body. It is not
created by statute or incorporated in accordance with the provisions of a statute.
In other words, a registered trade union is neither an instrumentality nor an
agency of the state discharging public functions or public duties.8 A registered
trade union is an entity distinct from the members of which the trade union is
composed. It has a power to contract and to hold property—both moveable and
immovable and to sue and be sued by the name in which it is registered. It can
institute a suit in forma pauperis within the meaning of Order XXXIII Rule 1 of
the Civil Procedure Code.9 However, by mere registration of a trade union under
the Trade Unions Act, the trade union does not become an authority under
Article 12 of the Constitution of India. It continues to remain just a private body
and all disputes relating to election of such a private body cannot be canvassed
or challenged in a writ petition.10

II. COMPULSORY VERSUS VOLUNTARY

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

III. APPOINTMENT OF THE REGISTRAR

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

A. Who may Apply: Minimum Membership of Trade Unions

1. Legislative Response: Under section 4(1):
Any seven or more members of a trade union may by subscribing their names to
the rules of trade union and by otherwise complying with the provisions of this
Act with respect to registration, apply for registration of the trade union under
this Act.
Provided that no trade union of workmen shall be registered unless at
least 10 per cent or 100 of the workmen, whichever is less, engaged or employed
in the establishment or industry with which it is connected are the members of
such trade union on the date of making application for registration:
Provided further that no trade union of workmen shall be registered unless
it has on the date of making application not less than seven persons as its
members, who are workmen engaged or employed in the establishment or
industry with which it is connected.14
Where an application has been made under sub-section (1) for the
registration of a trade union, such application shall not be deemed to have
become invalid merely by reason of the fact that, at any time after the date of the
application, but before the registration of the trade union, some of the applicants,
but not exceeding half of the total number of persons who made the application,
have ceased to be members of the trade union or have given notice in writing to
the Registrar dissociating themselves from the application.15
The Supreme Court in Tirumala Tirupati Devasthanam v.
Commissioner of Labour16 held that any group of employees may be registered
as a trade union under the Act for the purpose of regulating the relations between
them and their employer or between themselves. The Court added:
It would be apparent from this definition that any group of
employees which comes together primarily for the purpose of
regulating the relations between them and their employer or
between them and other workmen may be registered as a trade
union under the Act. It cannot be disputed that the relationship
between the appellant and the workmen in question is that of
employer and employee. The registration of the association of
the said workmen as a trade union under the Act has nothing to
do with whether the said wings of the appellant are an ‘industry’
 or not. We are, therefore, of the view that the High Court went
into the said issue, although the same has not arisen before it.
Since the findings recorded by the High Court on the said issue,
are not germane to the question that falls for consideration
before us, we express no opinion on the same and leave the
question open.
Earlier in Registrar of Trade Unions in Mysore v. M Mariswamy17, the
employees of the Provident Fund Organization got themselves registered under
the Trade Unions Act, 1926. This registration was subsequently withdrawn by
the department resulting in litigation which ultimately reached the Karnataka
High Court. It was held by the court that from the definition of the expression
‘trade union’, it could be a combination either of workmen or of employees or of
both, provided it is formed primarily for one of the purposes mentioned in clause
(h) of Section 2 of the Act. It is, therefore, possible to have a trade union
consisting only of employers. The emphasis in Section 2(h) is on the purpose for
which the union is formed and not so much on the persons who constitute the
union. The court accordingly directed the registrar to register the petitioner who
fulfils all other legal requirements in terms of the Trade Unions Act, 1926.
It is submitted that under the Trade Unions Act, 1926, both employers
and workers can get themselves registered. Indeed both Section 2(g) and 2(h)
refer to the employer. One may wish to add that the attention of the court was
not drawn to this aspect.
2. Registration of Trade Unions in Unorganized Sector: The (Second) National
Commission on Labour has recommended that trade unions of workers in the
unorganized sector should be registered even where there is no employer–
employee relationship or such relationship is not clear.

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

C. Form for the Application

Section 5 requires that every application for registration made to the Registrar
must be in Form ‘A’. Further, every application must be accompanied with a
statement of the following particulars, namely: (a) the names, occupations and
addresses of the members making the application. However, in the case of a
trade union of workmen, the names, occupations, and addresses of the place of
work of the members of the trade union making the application.18 (b) the name
of the trade union and the address of its head offices and (c) the title, names,
ages, addresses and occupations of the office bearers of the trade union.
Moreover, every application must be accompanied by a copy of rules. Such rules
must comply with the items mentioned under Section 6 of the Act. Furthermore,
the trade union of more than one year standing applying for registration is
required to submit a general statement of its assets and liabilities in the
prescribed manner to the Registrar.19 Moreover, a trade union (which had
previously been registered by the registrar in any state) applying for registration
is required to submit with its application a copy of certificate of registration
granted to it and copies of entries to it to the Registrar of Trade Unions for the
state.20

D. Rules of a Trade Union

Section 6 provides that no union can be registered unless its constitution
provides for the following items, namely:
(a) the name of the trade union;
(b) the objects for which the trade union has been established;
(c) the whole of the purposes for which the general funds of a trade union shall
be applicable, all of which purposes shall be purposes to which such funds
are lawfully applicable under this Act;
(d) the maintenance of a list of the members of the trade union and adequate
facilities for the inspection thereof by the office-bearers and members of
the trade union;
(e) the admission of ordinary members who shall be persons actually engaged
or employed in a trade or industry with which the trade union is connected
and also the admission of the number of honorary or temporary members
as office-bearers, required under Section 22 to form the executive of the
trade union;
(ee) the payment of a minimum subscription by members of the trade union
which shall not be less than:
(i) one rupee per annum for rural workers;
(ii) three rupees per annum for workers in other unorganized sectors; and
(iii) twelve rupees per annum for workers in any other case.
(f) the conditions under which any member shall be entitled to any benefit
assured by the rules and under which any fine or forfeiture may be
 imposed on the members;
(g) the manner in which the rules shall be amended, varied or rescinded;
(h) the manner in which the members of the executive and the other office-
bearers of the trade union shall be appointed and removed;
(hh) the duration of period being not more than three years, for which the
members of the executive and other office-bearers of the trade union shall
be elected;
(i) the safe custody of the funds of the trade union, and annual audit, in such a
manner as may be prescribed, of the accounts thereof, and adequate
facilities for the inspection of the account books by the office-bearers and
members of the trade union; and
(j) the manner in which the trade union may be dissolved.

a. Nature and Scope of Rules

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

b. Amendment in Rules of the Trade Union when not Valid

In B S V Hemantha Rao v. Deputy Registrar, Trade Union22, the Hyderabad
Allwyn Workers’ Union amended its rules appointing its president to act as
election officer and empowering him to nominate all office-bearers, whereas this
power is vested with the general body of the trade union. Even though such
amendments were registered by the Registrar of Trade Union, the Court held the
amendments were contrary to the letter and spirit of the trade union and such a
procedure allowing the president to nominate office bearers amounts to allowing
a person to act as a judge in his own cause. Accordingly, it was held invalid.

c. Scope of Section 6(e)

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

V. POWERS OF THE REGISTRAR

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

VI. NO POWER OF THE REGISTRAR TO VERIFY

MEMBERSHIP OF TRADE UNIONS
Under the Trade Unions Act 1926, the Registrar has no power to verify
membership of registered trade unions. However, Section 28A of the Trade
Unions (Amendment) Bill, 1982, empowers the Registrar to verify the
membership of registered trade unions and matters connected therewith and, for
this purpose, Registrar shall follow such procedure as may be prescribed by
regulation.

VII. POWER TO CONDUCT ELECTION

The Registrar of Trade Unions is the authority charged with the duty of
administration of the provisions of the Act. The Registrar is empowered under
Section 28 to ascertain who are the elected office-bearers in order to register
their names. However, in making such inquiry, the Registrar does not perform
any quasi-judicial functions; but only administrative functions. He has no
authority to ask any party to lead evidence and to give opportunity to the other
party to cross-examine any witness. Under this concept of a limited
administrative inquiry, the dispute as raised by the rival parties cannot be set at
rest.29
In Ranipet Greaves Employees’ Union v. Commissioner of Labour30,
the union requested the labour commissioner to conduct the election of the union
as per settlement arrived at under section 12 (3) of the Industrial Disputes Act.
The labour commissioner rejected such a request. On a writ petition the Madras
High Court held that the labour commissioner committed an error in rejecting
such a request. It accordingly directed the labour commissioner to conduct the
union election to elect the representative body which could get recognition from
the management and the right to negotiate with it.
Earlier in H M T Karmika Sangh v. Labour Commissioner31, the Court
held that if a trade union makes a request to appoint an officer of labour
department as returning officer, as he considers that it is expedient to do so, he
could do so and there is nothing in the Act or rules which prevents him from
doing so. However, the order of the High Court in designation to the general
manager to hold election of the trade union was wrong. Instead, the Court
ordered that the election should be held under the supervision of the Registrar of
Trade Union or his nominee.32
In IFFCO Phulpur Karmchari Sangh v. Registrar, Trade Union
Kanpur,33 the Allahabad High Court held that Section 28 (3) of the Trade
Unions Act, 1926 read with Regulation 17A does not contemplate holding of
any elaborate inquiry such as one required in judicial or quasi-judicial
proceedings. All that the Registrar is required to do is to hold a summary inquiry
for satisfying himself before making any change in the register regarding office
bearers whether the elections have been held in accordance with the rules of the
trade union.
In K V Sridharan and Others v. S Sundermoorthy34, the Madras High
Court held that all disputes relating to holding of election of such incorporated
bodies, which are nothing but private bodies, cannot be challenged before the
writ court. If there are disputes between the parties over such election, those
disputes can be challenged, if so advised, before the appropriate civil court.
Since the writ petition itself is not maintainable, this Court held that no order can
be passed in the writ petition on the dispute relating to the election of such trade
union. It may be noted that these private bodies are not enforcing any statutory
direction by filing such writ petitions inasmuch in the State of Tamil Nadu, there
is no law relating to grant of recognition to a trade union, nor is there any law
relating to holding of election of such trade unions. These matters are covered by
general law and as such, the disputes in this regard should be settled by civil
court.

VIII. NO POWER TO HOLD INQUIRY

In IFFCO Phulpur Karmchari Sangh v. Registrar, Trade Union Kanpur,35 the

Allahabad High Court held that Section 28 (3) of the Trade Unions Act, 1926
read with Regulation 17A does not contemplate holding of any elaborate inquiry
such as one required in judicial or quasi-judicial proceedings. All that the
Registrar is required to do is to hold a summary inquiry for satisfying himself
before making any change in the register regarding office bearers whether the
elections have been held in accordance with the rules of the trade union.

IX. NO POWER TO DECIDE RIVAL CLAIMS

In Rattan Kumar Dey v. Union of India36, the Guwahati High Court held that
under Section 28 of the Trade Unions Act, 1926, the Registrar of Trade Unions
has no power or authority to decide a dispute between the rival office-bearers of
the union. However, Registrar of Trade Unions under Section 28(4) has the
power to make inquiries and give his own conclusion in regard to maintenance
of the office-bearers of the union.
 In Ram Das Tigga v. State of Jharkhand37, the Jharkhand High Court
held that the Registrar of Trade Union cannot resolve the dispute pertaining to
election of rival office-bearers of union. Such dispute can only be decided by
civil court of competent jurisdiction.
In Kovai Periyar Maavatta Dravida Panchalai Thozhilalar Munnetra
Sangam, Coimbatore v. Commissioner of Labour (Registrar of Trade Unions),
Chennai38, the Madras High Court held that Section 28 of the Trade Unions Act
does not confer any quasi-judicial power to decide the dispute between the rival
claimants and even if any decision is taken, such a decision does not have any
binding force and the dispute between the rival claimants in a union can be
decided by a civil court.
In Roadways Mazdoor Sabha, UP v. State of UP39, the Allahabad High
Court held that the Registrar has got only limited power to make the necessary
entry in his records. Under Section 28 of the Trade Unions Act, he can record
the changes in the office bearers made by the trade union during the year to
which general statements were filed. Thus, he has no power to adjudicate as to
which one of the rival claims is correct.

X. NO POWER TO DECIDE REGARDING ADMISSION

OF MEMBERSHIP
In Borosil Glass Works Ltd Employees Union v. D D Bombode,40 the Supreme
Court interpreted Section 28 (1-A) of the Trade Unions Act. In this case, certain
workers made a joint application for membership of the appellant union which is
a registered and recognized trade union. However, no action was taken because
the application was not in accordance with the procedure laid down by the
appellant union thereon. The employees were asked by the union to apply
individually in the prescribed form and make payment of requisite fee and
membership subscription. Aggrieved by this, employees filed a complaint before
the Registrar of Trade Unions. Thereupon, the Registrar of Trade Unions under
Section 10(b) of the Trade Unions Act issued a notice to the appellant union
threatening to cancel its registration pursuant to a complaint filed by these
employees under Section 28(1-A). The union then represented its case before the
Registrar. The Registrar of Trade Unions found that the complainants were not
members of the appellant union for six months prior to the date of the
application which was a necessary condition under Section 28(1-A). Therefore,
no certificate under that section could be granted to them, permitting them to
refer the dispute to the industrial tribunal. Aggreived by the decision of the
Registrar, these employees filed a writ petition in the Bombay High Court
seeking direction to the Registrar of Trade Unions to issue a consent certificate.
The High Court ruled that even a person who has applied to become a member is
covered by Section 28(1-A) of the Trade Unions Act and accordingly, directed
the Registrar of Trade Unions to issue a consent certificate to these employees to
enable them to refer the dispute to the industrial tribunal. This order of the High
Court was challenged by the union before the Supreme Court under Article 136
of the Constitution.
The Supreme Court found the interpretation given by the High Court to
Section 28(1-A) of the Act to be too wide. According to the court, the said
provision is to be interpreted to ensure that internal disputes in trade unions get
decided expeditiously but it can be only invoked by a person who has been a
member of such registered trade union for a period of not less than six months.
The court observed that words ‘where there is a dispute on whether or not any
person is an office-bearer or a member of a registered trade union’ have to be
read along with the words ‘any member of such registered trade union for a
period of less than six months’. A person whose application for membership has
not been considered or allowed would not have been a member for six months.
The Court held that the dispute between persons who are not members and the
union would not be covered by Section 28(1-A). Indeed, a dispute between a
person who is not yet a member and a union would not be an internal dispute of
the union. The Court added that under Section 28(1-A), the jurisdiction of the
civil court is barred only in respect of the matters which have been referred to an
industrial court under Section 28(1-A). But, if a dispute does not fall under
Section 28(1-A), then that dispute can be taken to civil court. Further, in a case
like the present one where the dispute is whether a person should or should not
be admitted, is not a dispute falling under Section 28(1-A) and, therefore, it is
open to such person to approach a civil court for resolution thereof. However, if
the law permits, they may also raise an industrial dispute before the industrial
court in this behalf. The Court, accordingly, set aside the judgement of the High
Court.

XI. DUTIES OF THE REGISTRAR

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

A. Time-Limit for Registration

The Trade Unions Act does not prescribe any time-limit for the grant or refusal
of registration. It only imposes a statutory duty upon the Registrar to register a
trade union if he is satisfied that the requirements of the statute have been
complied with. The absence of any provision regarding the time-limit for grant
or refusal raises a question whether the court can interfere in regard to the time
taken by the Registrar in granting or refusing registration of trade union. The
decision in ACC Rajanka Lime Stone Quarries Mazdoor Union v. Registrar of
Trade Unions, Government of Bihar42 has a direct bearing on this question. In
this case the union sent an application on 31 July 1957 for registration to the
Registrar of Trade Unions in the prescribed manner together with the
constitution and rules of the said union which was received by the latter on 3
August 1957. But no action was apparently taken under Sections 7 and 8 on the
application for over 3 months. The union sent many reminders but they remained
unreplied. Under the circumstances, the union filed a writ petition before the
Patna High Court, praying that the Registrar of Trade Unions be directed to
perform his statutory duty of registering or refusing to register the trade union
under the Act. The High Court of Patna held that Section 8 imposes the statutory
duty upon the Registrar to register a trade union on being satisfied that it had
complied with the requirements of the Act. The court accordingly held that there
was a case for issuance of writ in the nature of mandamus under Article 226 of
the Constitution. The court directed the Registrar of Trade Unions to perform the
statutory duty imposed upon him under Sections 7 and 8 and to deal with the
application of the trade union according to law at an early date.
It is submitted that time limit should be prescribed for the grant or refusal
of registration by the Registrar. The National Commission on Labour has
suggested 30 days excluding the time which the union takes in answering queries
from the Registrar. This view is likely to give some scope to the Registrar to
make vexatious inquiries simply to gain time. Indeed, Section 23 of the
Industrial Relations Bill, 2978 prescribed 60 days’ time from the date of the
receipt of the application by the Registrar either in granting or refusing to grant
registration to trade union and communicating the order to the applicant. Where,
however, the Registrar refuses to grant registration to a trade union, he is under
an obligation to state reasons for refusing to grant registration. The Trade Unions
(Amendment) Bill, 1982 has provided for insertion of the words ‘within a period
of 60 days from the date of such compliance’ after the words ‘Register the Trade
Unions’ in Section 8 of the Trade Union Act, 1926.

B. Scope of Inquiry Under Section 8

The second problem also requires careful scrutiny. Three pronouncements of
Indian judiciary in regard to the scope of inquiry of Section 8 deserve to be
mentioned.
Inland Steam Navigation Workers’ Union43 decided an important point,
namely, the scope of inquiry with reference to the application for registration of
trade unions. In this case, an application made by the Inland Steam Navigation
Worker’s Union for its registration was rejected by the Registrar of Trade
Unions on the ground that the union was for all practical purposes the same
union which has been registered and, therefore, be declared unlawful under
Section 16 of the Criminal Law (Amendment) Act, 1908. Against this finding,
the appeal was preferred before the Calcutta High Court under Section 11 of the
Trade Unions Act, 1926. Chief Justice Derbyshire, in the course of the
judgement observed:
In my view, the Registrar in taking up that attitude is wrong. The
functions of the Registrar are laid down in Section 8…The new
union may or may not be a continuation of the other union or its
successor. Whether the new union is or is not the same as the old
union, depends on evidence.
He added:
In my view, the duties of the Registrar were to examine the
application and to look at the objects for which the union was
formed. If those objects were objects set out in the Act, and if
 those objects did not go outside the objects prescribed in the Act
and if all the requirements of the Act, and the regulations made
thereunder had been complied with, it was his duty, in my view,
to register the union.44
R K Workmen’s Union v. Registrar of Trade Unions,45 raised an
important problem as to whether the Registrar of Trade Union is under an
obligation to hear the then-existing unions in the field before making the order
under Section 8. The High Court of Calcutta answered the question in negative
and observed:
Once, therefore, the Registrar is satisfied that the requirements
of the statute have been complied with, it is obligatory upon him
to enter in a register the applicant-union and he has no
obligation to hear the existing unions in the field before making
the order under Section 8.
The Court added:
In fact, the statute does not deal with the matter of registration
from the standpoint of any existing union at all. It is significant
to note that though Section 11 (1) provides a statutory appeal
from an order of refusal to register a union, there is no provision
for an appeal or other remedy against an order granting
registration.
The aforesaid decisions suggest that the only duty of the Registrar is to
examine the application for registration with reference to the provisions of
Sections 2(h), 4 to 7 and 15.46 If the Registrar is satisfied that statutory
requirements have been complied, he is bound to register the trade union within
a reasonable time. He is under no obligation to hear the existing trade unions
before making the registration under Section 8.
ONGC Workmen’s Association v. State of West Bengal47 delineated the
nature and scope of inquiry under Section 8. The Calcutta High Court held that
any order passed under Section 8 by the Registrar must be administrative in
nature. The Court also held that the Registrar is not deemed to be a quasi-judicial
authority to decide any disputed question of fact or law. He has no authority to
ask for any of the parties to lead evidence and to give opportunity to the other
party to cross examine any witness. Thus, the scope of inquiry under Section 8 is
very limited.
C. Constitutional Problems in Section 8
Kesoram Rangan Workmen’s Union v. Registrar of Trade Union48 is an
important case on this problem. The Registrar of Trade Unions failed to offer
any opportunity to an existing trade union while registering a new union under
Section 8. The question arose whether Section 8 imposed any unreasonable
restriction on the fundamental right by not offering a right of hearing to an
existing union. The question was answered in negative by the Calcutta High
Court. In the course of judgement, the Court observed that the freedom
guaranteed under Article 19 (1) (c) of the Constitution belongs to all workmen,
so that every workman has the freedom to form a union of his own choice and to
refuse to become a member of any union which he does not like.49 The Court,
therefore, concluded that ‘no union can claim a monopoly or a right to complain
if some other union is brought into existence by other workmen’.

D. Registration of One Union in One Industry

It has been seen elsewhere that the Trade Unions Act, 1926, provides that as
soon as the Registrar is satisfied that the trade union has complied with all the
requirements in regard to registration, he shall register the trade union. From this
it is clear that the Act does not empower the Registrar to refuse registration of
trade union in cases where one or more unions are already in existence in the
plant/industry. A question, therefore, arises, whether it is in the interest of trade
unions to empower the Registrar to refuse to register a trade union on the above
ground. Two views are discernible:
(i) The Registrar of Trade Unions should be empowered to refuse to register
more than one union in one plant or industry. The reason in that the
multiplicity of unions leads to rivalry among trade unions. This view, is
however, open to several objections. First, this may run contrary to
Article 19(1)(c) of the Constitution. Second, the problem of multiplicity
of trade unions may be resolved to a great extent by providing recognition
to a representative union.
(ii) The Registrar of Trade Unions should not be given the power to refuse to
register more than one union because the refusal may infringe Article
19(1)(c) of the Constitution. The other reason is that recognition of the
majority union will, to a great extent, meet this problem. The second view
seems to be a better one.
 XII. CERTIFICATE OF REGISTRATION: A
CONCLUSIVE EVIDENCE
The certificate of registration issued by Registrar shall be in the prescribed form,
i.e., in Form C of Schedule III and is conclusive evidence to show that the trade
union has been duly registered under the Act.50 This finality is only for the
purposes of the Act and cannot in any way affect the powers of the High Court
under Article 226 of the Constitution as the provisions of the statute are always
subjected to the jurisdiction of the Constitution.51

XIII. MINIMUM REQUIREMENT FOR MEMBERSHIP

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

XIV. CANCELLATION AND DEREGISTRATION OF A

REGISTERED TRADE UNION

A. Grounds for Cancellation of Registration

The registration of a trade union may be cancelled by the Registrar on any one of
the following grounds: (i) that the certificate under Section 9 had been obtained
by fraud or mistake; (ii) that the trade union had ceased to exist; (iii) that the
trade union had ‘wilfully’ contravened any provision of the Act even after notice
from the Registrar53; (iv) that a trade union allowed any rule to continue in force
which was inconsistent with any provisions of the Act; (v) that the trade union
had rescinded any rule providing for any material provision which was required
by Section 6; (vi) if the Registrar is satisfied that a registered trade union of
workmen ceases to have the requisite number of members. However, not less
than two months’ previous notice in writing specifying the ground on which it is
proposed to withdraw or cancel the certificate shall be given by the Registrar to
the trade union before the certificate is withdrawn or cancelled otherwise than on
the application of the trade union.54
The grounds for cancellation of registration are open to several
objections: First, the term ‘wilful’ is vague. In practice, it is found that trade
unions do not submit their annual return. The section, however, requires that the
default has to be ‘wilful’. To establish a wilful default to the satisfaction of a
court is difficult. In view of this, the (First) National Commission on Labour
recommended that where the union failed to submit the annual return, its
registration should be cancelled irrespective of whether the default is ‘wilful’ or
otherwise. This recommendation should be implemented. Second, it is doubtful
whether the materially defective return should be treated as ‘return’ under
Section 10. In view of the prevailing ambiguity, the National Commission on
Labour suggested that ‘materially defective return’ should amount to a default
and the union should be under an obligation to rectify mistakes within the
prescribed period failing which the Registrar should be deemed not to have
received the return.55
The Registrar is not competent to cancel the registration of a trade union,
without, in the first instance, giving to the trade union concerned two months’
previous notice in writing, specifying the grounds on which he proposes to
withdraw or cancel the certificate and giving an opportunity to the trade unions
to show cause against proposed action.56 However, unlike Section 26(3) of the
Industrial Relations Bill, 1978, there is no provision that ‘while cancelling the
certificate of registration of a trade union, the Registrar shall record the reasons
of doing so and communicate the same in writing to the trade union concerned.’
Once the Registrar cancels or withdraws the registration of a trade union, he has
no power to quash that order. Further, he has no power to review it. Moreover,
he has no power to withdraw it because of subsequent events.57

B. Powers of the High Court in Respect of Cancellation of

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

C. Powers of the Registrar in Respect of Deregistration

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

XV. APPEAL

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

A. Appellate Forum
The appeal may be filed (a) where the head office of the trade union is situated
within the limits of a presidency town to the High Court; (aa) where the head
office is situated in an area falling within the jurisdiction of a labour court or an
industrial tribunal, to that court or tribunal, as the case may be; or (b) where the
head office is situated in any other area to such court, not inferior to the court of
an additional or assistant judge of a principal civil court of original jurisdiction,
as the appropriate government may appoint in this behalf for the area.
The expression ‘High Court’ in Clause (a) above refers to the original
side of the High Court and not to the appellate side. Further, the expression
‘Presidency Town’ in Clause (a) refers to the towns where the High Court has
original civil jurisdiction. And Section 3(44) of the General Clauses Act (Act X
of 1897) defines ‘Presidency Town’ to mean the total limits for the time being or
the ordinary original civil jurisdiction of the High Court of Judicature at
Calcutta, Madras or Bombay as the case may be.64 In cases where high courts
are situated outside the presidency town, the high courts have no jurisdiction to
entertain appeals under Section 11 (1) (b). In regard to such areas, any court not
inferior to the court of an additional/assistant judge of the principal civil court of
original jurisdiction, as the appropriate government may appoint in this behalf
for that area, shall have jurisdictions.65

B. Powers of The Appellate Court66

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

C. Procedure to be Adopted by the Appellate Court67

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

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

E. Time for Making an Appeal

The appeal under Section 11 must be filed within such time as may be prescribed
under the rules for the purpose.

XVI. THE RESULT OF DEREGISTRATION

A trade union whose certificate of registration has been withdrawn or cancelled,
loses its status as a legal entity under the Act. Upon the cancellation of
certificate of registration, the trade union and its members cease to enjoy the
privileges of a registered trade union.

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

XVIII. REGISTERED OFFICE

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

XIX. CHANGE OF NAME, STRUCTURE AND

DISSOLUTION

A. Change of Name
A registered trade union with the consent of not less than two-third of the total
number of the members may change its name.72 Notice of the change of name
signed by seven members and the secretary of the trade union changing its name
must be sent to the Registrar.73 The Registrar, before approving the change of
name, has to ascertain that the new name is not identical with that of any existing
trade union known to him, or so nearly resembling such name as to deceive the
public or member.74 If otherwise, he shall refuse to register the change of name.
On the contrary, if he is satisfied that the provisions of the Act have been
complied with in respect of changing the name, he shall register the change of
name in the register maintained for this purpose.75 The change in the name of
registered trade union neither affects its rights nor obligations nor does it render
defective any legal proceedings by or against the trade union and any legal
proceedings which might have commenced or continued by its new name.76

B. Amalgamation of Trade Unions

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

C. Dissolution of Trade Unions

When a registered trade union is dissolved, notice of the dissolution signed by
the secretary and seven members must be sent within 14 days of dissolution to
the Registrar of Trade Unions.81 The notice must be in the prescribed form. The
Registrar after satisfying himself that the dissolution has been effected in
accordance with the provisions of the Act makes the entry in the register
maintained by him.82 Where the rules of trade union contain no provision for the
distribution of funds on dissolution, the Registrar shall divide the funds in
proportion to the amounts contributed by the members by way of subscription
during their memberships.83
 XX. SUBMISSION OF RETURNS
Registered trade unions are required under Section 28: (1) to submit annual
returns in the prescribed form to the Registrar along with an audited statement of
income and expenditure during each year of all receipts and expenditure during
the year ending on the 31 st day of December, next preceding such prescribed
date; and of the assets and liabilities of trade union existing on 31st December84
(2) The general statement should be accompanied by the statements, (i) showing
any change of office bearers made during the year to which general statement
refers; and (ii) a copy of rules of the trade union corrected upto the date of
despatch thereof to the Registrar85 (3) Every alteration made in the rules of trade
union shall be sent within 15 days of the alterations.86 (4) The Registrar or any
other duly authorized officer is empowered to inspect and require production of
the certificate of registration, account books, registers and other documents
relating to trade unions for examining the returns submitted by them.87 A
statement of change of office-bearers under Section 28(2) has to accompany a
general statement as required under Section 28(1). Even if general statement
cannot be prepared under Section 28(1), statement under Section 28(2) can still
be re-prepared.88

XXI. PENALTIES AND PROCEDURE

A. Failure to Submit Return

In case of failure to submit returns or statements required under Section 28: (i)
every office-bearer; (ii) other persons bound by the rules of the trade union to
give or send the same; or (iii) if there is no such office-bearer or person, every
member of the executive of the trade union shall be punishable with fine not
exceeding ₹5. But if the contravention is continued after conviction, a further
fine not exceeding ₹5 for each week during which the default was made shall be
imposed.89 However, the aggregate fine shall not exceed ₹50.90
The Act provides more deterrent punishment with a fine which may
extend upto ₹500 upon persons wilfully making, or causing to be made any false
entry in, or any omission from the general statement required by Section 28, or
in or from any copy of rules or of alterations of rules or document sent to the
Registrar under that section.91
B. Penalties for Supplying False Information Regarding
Trade Unions
Quite apart from penalties mentioned earlier, if any person with intent to deceive
or with like intent gives: (i) to any member of a registered trade union; or (ii) to
any prospective member of such union, any document purporting to be a copy of
rules of a trade union or any alteration of such rules which he knows or has
reason to believe that it is not a correct copy, or (iii) gives a copy of any rules of
any unregistered trade union to any person on the pretence that such rules are the
rules of a registered trade union shall be punishable with a fine which may
extend to ₹200.92

C. Cognizance of the Offence

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

1 Kandan Textile Ltd v. Industrial Tribunal, AIR 1951 Mad. 661.

2 XXI of 1860.
3 11 of 1912.
4 1 of 1956.
5 Section 14.
6 Section 13.
7 Radhakishan Jaikishan Ginning and Pressing Factory v. Jamnadas Nursery Ginning
and Pressing Company Ltd, AIR 1940 Nagpur 228.
8 Chemosyn Pvt. Ltd v. Kerala Medical and Sales Representative’s Association 1988 Lab.
IC 115.
9 East Indian Coal Co. Ltd v. East Indian Coal Co. Ltd Workers' Union, AIR. 1961 Pat
51.
10 K V Sridharan v. S Sundarmoorthy, 2009 LLR414.
11 Govt. of India, Report of the National Commission on Labour (1969) 295.
12 Under Section 2 of the Trade Unions Act, 1926, the Central Government is the appropriate
 government in relation to trade unions whose objects are not confined to one state. The
state government is the appropriate government in relation to other trade unions.
However, in practice, the Act is implemented by the state government. The powers of the
Central Government were delegated to the state governments.
13 Section 2(f) defines ‘Registrar’ to mean:
(i) a Registrar of Trade Unions appointed by the appropriate government under
Section 3, and includes any additional or deputy registrar of trade unions and (ii)
in relation to any trade union, the Registrar appointed for the State in which the
head or registered office, as the case may be, of the trade union is situated.
14 Section 4(1).
15 Section 4(2).
16 (1995) Supp (3) SCC 653.
17 (1974) Lab IC 695.
18 Ins. by Act No. 31 of 2001 w.e.f. 9-1-2002.
19 Trade Unions Act, 1926, Section 5(2).
20 Central Trade Union Regulation, 1938, Rule 7.
21 Tirlok Nath v. All India Postal Workers Union, AIR 1957 All. 234.
22 (1988) 1 LLJ 83 (AP).
23 (2004) 1 LLJ 197.
24 Trade Unions Act, 1926, Section 7.
25 Kondalnao v. Registrar of Trade Unions, (1952) 1 LLJ. Notes of cases, 15.
26 Trade Unions Act, 1926, Section 7(2).
27 Ratan Kumar Dey v. Union of India, (1991) 2 LLN 506 (Gau.) (DB).
28 R Tanji v. Registrar of Trade Unions, Bihar, AIR 1962 Pat. 338.
29 North Eastern Railway Employees’ Union v. Registrar of Trade Unions, 1975 Lab. IC
860 (Allahabad); Mukund Ram Tanti v. Registrar of Trade Unions AIR 1962 Pat. 338,
ONGC Workmen’s Association v. State of West Bengal, 1988 Lab. IC 555 (Calcutta).
30 (2004) 2 LLJ 622.
31 (1985) Lab IC 633.
32 North Eastern Railway Employees’ Union v. Addl. District Judge, (1989) Lab IC 44
(SC). See also, Indian Explosive Workers Union v. State of Bihar (1992) 1 LLJ 578.
33 1991 Lab. IC 531.
34 2009 LLR 414.
35 1991 Lab. IC 531.
36 1991 (2) LLN 506; See also North-Eastern Railway Employees’ Union, Gorakhpur v.
The Registrar of Trade Unions, U P, Kanpur 1975 Lab. IC 860.
37 (2004) LLR 936.
38 (2004) 1 LLJ 6. Similar view has been expressed in R Murugesan v. Union Territory of
Pondicherry, (1976) 1 LLJ 435 (Mad.). Fateh Singh v. Rashtriya Mill Mazdoor Sangh,
 1994 I LLJ 294 (Raj.), and Bokaro Steel Workers Union and Another v. State of Bihar,
2000 I LLJ 117 (Pat).
39 (2011)1LLJ 239.
40 (2001) 1 SCC 350.
41 Tamil Nadu Union v. Registrar of Trade Unions, AIR 1962 Mad. 234.
42 ACC Rajanka Lime Stone Quarries Mazdoor Union v. Registrar of Trade Unions, AIR
1958 Pat. 475.
43 AIR 1963 Cal 57.
44 R K Workmen's Union v. Registrar of Trade Unions, (1968) 1 LLJ 335 (Calcutta).
45 (1968) I LLJ 335 at 337.
46 This duty is, of course, subject to the powers of Registrar laid down in Section 7.
47 ONGC Workmen’s Association v. State of West Bengal, (1988) Lab. IC 555 at 560.
48 Kesoram Rangan Workmen’s Union v. Registrar of Trade Unions, (1968) 1 LLJ 335,
337. See also Survapal v. Uttar Pradesh Government, AIR 1951 Allahabad 674–698;
and O K Ghosh v. E X Joseph, (1962) 2 LLJ 615.
49 Kesoram Rangan Workmen’s Union v. Registrar of Trade Unions, (1968) 1 LLJ 335
(Calcutta).
50 Section 9.
51 Inserted by Act No. 31 of 2001 w.e.f. 9-1-2002.
52 Cancellation of registration is illegal on basis of reply by one of disputed members and no
finding as to wilful disobedience of Section 10. [See Ceramic Workers Progressive
Union v. Addl. Registrar, (1994) Lab. IC NOC 66.]
53 New Section 9A inserted by Act No. 31 or 2001 w.e.f. 9-1-2002.
54 The Trade Union (Amendment) Bill, 1982, provides for insertion of new clause (c) after
the proviso to Section 10, namely:
if the Registrar is satisfied that the Trade Union has called for, or participated in, any
illegal strike.
Explanation— For the purposes of this section, ‘illegal strike’ has the meaning assigned
to it in Section 24 of the Industrial Disputes Act, 1947. See also Government of India,
Report of the National Commission on Labour (1969) 296.
55 Section 10; See also Mysore Iron and Steel Works v. Commissioner of Labour and
Registrar of Trade Unions, (1972) Lab. IC 799. See also Tata Electric Companies
Officer Guild v. Registrar of Trade Unions, (1993) Lab. IC 1849. Tamil Nadu
Government Press Workers Sangam v. First Trade Union Addl. Registrar (Deputy
Commissioner of Labour I), (2004) 1 LLJ 274.
56 Mukund Iron Steel Works Ltd v. V V Deshpande, (1986) Lab. IC 1612 (Bombay).
57 Ibid.
58 Gujarat Rajya Kamdar Sabha v. Registrar under the Trade Unions Act, (1999) LLR 285
59 Association of Engineering Workers v. Dockyard Labours, (1992) 1 Lab. IC 214.
60 Section 11.
61 Mysore Iron and Steel Works Labourers' Association v. Commissioner of Labour and
Registrar Trade Unions, (1972) Lab. IC 779
62 KSEB v. KSEB Trade Union, (1987) 2 LLN 560.
63 Tamil Nadu Non-gazetted Government Officers Union, Madras v. Registrar of Trade
Unions, Madras, AIR 1959 Madras 55.
64 Tamil Nadu Non-gazetted Government Officers Union, Madras v. Registrar of Trade
Unions, Madras, AIR (1959) Madras 55.
65 Section 11(2).
66 Section 11(3).
67 Section 11(4).
68 Govt. of India, Report of the National Commission on Labour, (1969) 297.
69 Section 28 of the Industrial Relations Bill, 1978, (since lapsed owing to the dissolution of
the Lok Sabha), provided the following for re-registration of trade union:
A trade union whose certificate of registration has been cancelled may apply for re-
registration after the expiry of a period of six months from the date of the last cancellation
of the certificate of registration.
70 The Trade Union (Amendment) Bill, 1982, provides for insertion of new Section 11A in
the Act to read as follows:
A trade union whose certificate of registration has been cancelled may apply for re-
registration to the Registrar after the expiry of a period of six months from the date of
such cancellation:
Provided that where such cancellation is on the ground that such trade union has failed to
comply with any of the requirements provided by or under this Act, it shall not be re-
registered until it has complied with such requirement.
71 Section 23.
72 Ibid.
73 Section 25(1).
74 Section 25(2).
75 Section 25(3).
76 Section 26.
77 Section 24.
78 Section 25(1).
79 Section 25(3).
80 Section 26.
81 Section 27(1).
82 Mysore Iron and Steel Works v. Commissioner of Labour and Registrar of Trade
Unions, (1972) Lab. IC 799.
83 Section 27(2).
84 Sub-section (1).
85 Sub-section (2).
86 Sub-section (3).
87 Sub-section (4).
88 Sagdish Bharti v. Union of India, 1969 Lab. IC 205 (Allahabad).
89 Section 31(1).
90 Provision to Section 31(1).
91 Section 31(2).
92 Section 32.
93 Section 31(1).
94 Section 32(2).
 CHAPTER
7
Members, Office Holders and Outsiders
in Trade Unions

I. SOME DISTURBING ASPECTS OF OUTSIDERS IN

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

II. RIGHTS OF MINORS TO MEMBERSHIP OF TRADE

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

III. OUTSIDERS IN THE UNION EXECUTIVE AND THE

LAW
Section 22 of the Trade Unions Act, 1926, provides:
Proportion of office-bearers to be connected with the industry: (1) Not
less than one half of the total number of the office-bearers of every registered
trade union in an unorganized sector shall be persons actually engaged or
employed in an industry with which the trade union is connected:
(1) Provided that the appropriate government may, by special or general
order, declare that the provision of this Section shall not apply to any trade union
or class of trade unions specified in the order.
Explanation: For the purposes of this section, ‘unorganized sector’ means
any sector which the appropriate government may, by notification in the official
gazette declare.
(2) Save as otherwise provided in sub-section (1), all office-bearers of a
registered trade union, except not more than one-third of the total number of the
office-bearers or five, whichever is less, shall be persons actually engaged or
employed in the establishment or industry with which the trade union is
connected.
Explanation: For the purpose of this sub-section, an employee who has
retired or has been retrenched shall not be construed as an outsider for the
purpose of holding an office in a trade union.
(3) No member of the council of ministers or a person holding an office
of profit (not being an engagement or employment in an establishment or
industry with which the trade union is connected), in the Union or a state, shall
be a member of the executive or other office-bearer of a registered trade union.
The aforesaid provisions which permit non-employees to be an office-
bearer of a registered trade union raises various problems:
(a) What is meant by the ‘outsider’? (i) Whether an ex-worker or a
worker whose services had been terminated by the employer may be treated as
an outsider? (ii) Whether a full-time employee of a trade union should be treated
as an outsider?
(b) Whether there should be a legal ban on non-employees holding
positions in the executive of the union? Does it affect Article 19 of the
Constitution?
(c) Whether the present limit of non-employees in the executive of a
trade union be curtailed? (iii) Whether union leaders should be debarred from
holding offices in more than a specified number of unions? Let us discuss these
questions.

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

B. Entry of Outsiders in the Executive of Trade Unions

As the law stands today, there is no bar to having outsiders such as lawyers,
politicians, social workers etc., in the executive of trade unions. Conflicting
views have, however, been expressed in regard to the question of banning
outsiders in the executive of trade unions. Managements do not favour outside
entry in the executives of trade unions. Workers, on the contrary, are of the view
that devoted leaders, even if they are outsiders, should be permitted to be office-
bearers of trade unions. They are of the view that management or any outside
agency should not interfere in their affairs. If they decide to allow outsiders in
the trade union's executive, they should be permitted to do so. However, sub-
section 3 of Section 22 debars
(i) a member of the council of ministers or
(ii) a person holding an office of profit, other than those engaged or employed
in an establishment or industry with which the trade union is connected,
in the Union or state to be a member of the executive or office-bearer of a
registered trade union.
(iii) From the above it appears that a member of the Parliament or state
legislature or ex-member of the council of ministers may become a
member or executive or other office-bearer of a registered trade union.

C. Number of Outsiders in the Executive of Trade Unions

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

IV. DISQUALIFICATION OF OFFICE-BEARERS

The following persons are not eligible to be appointed as office-bearers or
members of the executive of a registered trade union if
(i) he has not attained the age of 18 years;
(ii) he has been convicted by a court in India of any offence involving moral
turpitude and sentenced to imprisonment, unless a period of five years has
elapsed since his release.3
Section 21A(2) gives retrospective effect to the application of the aforesaid
clause. It provides that any member of the executive or other office-bearer of a
registered trade union who, before the commencement of the (Indian) Trade
Unions (Amendment) Act, 1964 has been convicted of any offence involving
moral turpitude and sentenced to imprisonment shall on the date of such
commencement cease to be a member or office-bearer unless a period of five
years has elapsed since his release before that date.
 In R Murugesan v. Union Territory of Pondicherry,4 the Madras High
Court held that where a dispute arises as to who are validly and legally elected
office-bearers of a trade union, the Registrar is under an obligation to decide the
question so that he can record the name in his register. For this purpose, the
scope of enquiry is limited. Otherwise, the registrar will be in an enviable
position of having to record two sets of office bearers of the same trade unions
without having any power to decide as to which of them will be recognized for
the purpose of administration of the Act.5

V. CEILING ON HOLDING OFFICES IN TRADE

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

VI. TENURE OF ELECTED OFFICE-

BEARERS/MEMBERS OF EXECUTIVE
Section 6(hh) of the Trade Unions Act 1926 provides that the members of the
executive and other office-bearers of a trade union shall be elected for a period
of not more than 3 years.
 VII. RIGHTS AND DUTIES OF OFFICE-BEARERS AND
MEMBERS
An office-bearer or member shall be entitled to inspect: (i) the account-books;
and (ii) list of members6 at such time as may be provided for in the rules of the
trade union. Further, a member not under 15 has a right to execute all
instruments and give all acquittance necessary to be executed or given under the
rules.7 The scope of the legal rights and privileges was delineated in Secretary of
Tamil Nadu Electricity Board Accounts Subordinate Union v. Tamil Nadu
Electricity Board.8 In this case, two workmen of the Tamil Nadu Electricity
Board were allowed to do the full-time union work. However, the board refused
to extend this facility after about 4 years. On a dispute being raised, the
government referred it to the labour court for adjudication. The labour court held
that this was a mere concession granted to the office-bearers of the union and
was not a part of service condition. Aggrieved by this order, the trade unions
preferred a writ petition before the Madras High Court. Three issues were raised,
namely: (i) Whether the workman had a legal right to do trade union activity
without attending to office duties? (ii) Whether the withdrawal of permission to
do trade union work on full-time basis would affect the service conditions? and
(iii) Whether it is a privilege within the meaning of Item 8 of Schedule IV of the
Act? The court answered all the issues in the negative and observed:
It is true that trade unionism (has been) recognized all over the
world but that does not mean that an office-bearer or any trade
union can claim, as a right, to do trade union activities during
office hours. In a poor country like India, tax payers pay money
not for the purpose of encouraging trade unionism, but in the
fond and reverend hope that every person who is entrusted with
the task of doing service will do his service. Whether he actually
does service or not, there can be a fond expectation of the same.
To allow one to claim as of right to do trade union activity
without attending to office duties, would in my opinion be an
anachronism since it will amount to fleecing the tax payer in
order to encourage trade union activities. That is not the purpose
for which the workman was appointed by the Electricity Board.
The Court further stated:
[We] are totally unable to appreciate the argument of the
 petitioner that merely because the recognition of trade union is a
part of the service condition, it must necessarily follow that a
right to represent or espouse the cause of workmen during office
hours is a necessary concomitant. If this kind of trade unionism
is allowed to flourish in our country, I could say ‘Woe to our
country and poor tax payers.’ For my part, not that one should
be against trade unionism, which is welcome because it is that
which brings about solidarity among workers, the crucial
question is, can a right be claimed to active trade unionism
during office hours? The answer should be an emphatic ‘no’.
Again in Indian Bank Employees Union v. Indian Bank9, it was held
that a trade union worker cannot enjoy the luxury of getting salary and not doing
the assigned work. In other words, the indulgence of trade union activity cannot
be at the cost of the work for which they are paid their emoluments by the
employer.
In Burn & Co. v. Their workmen10, the Court held that the office-bearers
are not immune from punishment for remaining absent from their duty.
Likewise, office-bearers of a trade union are not immune from disciplinary
action.11 Moreover, office-bearers of a trade union cannot claim immunity from
transfer.12
Again, in Usha Breco Mazdoor Sangh v. M/s Usha Breco Ltd13, it was held :
1. Whereas the management cannot resort to victimization and unfair labour
practice so as to get rid of the union leaders, the union leaders in turn are
bound to maintain discipline;
2. A union leader does not enjoy immunity from being proceeded against in
a case of misconduct.
3. Assault and intimidation are penal offences. A workman indulging in
commission of a criminal offence should not be spared only because he
happens to be a union leader.
It is submitted that the Court, while recognizing the need of a healthy
trade union, cautioned that it should not be at the cost of the tax payer. This
appears to be a very healthy approach and would bring discipline in the industry.

VIII. TRANSFER OF OFFICE-BEARERS OF TRADE

UNION
It has now been held in a series of cases of the Supreme Court and high courts
that :
(i) The power of the employer to transfer its employees (including the office-
bearers of trade union is a general conditions of service of the employee
and that such transfers are to be effected for administration convenience
of the board and the court does not sit in appeal nor calls for details of
administrative exigencies);
(ii) The employee under transfer cannot claim any immunity from transfer
merely by reason of his being office bearer of the trade union;
(iii) The fact that the office bearer of the trade union organized protests and
agitations is not a ground from which intention to victimize the petitioner
(office bearer of trade union) can be inferred.
(iv) Only in cases where the order of transfer is found to be mala fide or
colourable exercise of power, would the order become illegal;
(v) Transferring an employee because he is troublesome/trouble-maker would
be in the interest of administration and such transfers cannot be
characterized as punishment.14
In Singapore Airlines Ltd v. Mr Rodrigntin15, the plaintiff joined the
Singapore Airlines Ltd as clerk at Mumbai on 5 January 1987. As per item 6 of
the appointment letter, the airlines was empowered to transfer the plaintiff at any
time at any SAL station all over India at its discretion. However, according to
the plaintiff, the airlines had not transferred any employees from Mumbai to
elsewhere. The plaintiff was carrying on trade union activities for more than 10
years and he was also elected as president of the union. According to the
plaintiff, as the defendant wanted to prohibit him from participating in trade
union activities and charter of demands made by the union, the airlines
transferred the plaintiff to Jalandhar. The airlines issued transfer order on 9 July
2007 and asked him to join within 15 days. According to the plaintiff, the
transfer was mala fide and not in accordance with model standing orders.
According to the airlines, it transferred the plaintiff because it wanted to
concentrate on its business at Jalandhar and since the plaintiff was experienced
in marketing for over 10 years; it decided to transfer him from Mumbai to
Jalandhar. Upholding the validity of the order of transfer, the Bombay High
Court ruled:
1. Merely that the employee is president of the union, the transfer would not
be mala fide.
2. Transfer cannot be stalled merely because he is an office-bearer of the
 union;
3. Had there been mala fide intention of the management, transfer of the
employee who has been an active worker of the union for the last 10
years would have been made earlier also;
4. It is an individual dispute and not an industrial dispute. The union has not
passed any resolution supporting the case of the employee. It did not
espouse or take up or support his case. Hence, civil court has no
jurisdiction;
5. Inconvenience to the employee is not relevant to stay the transfer;
6. In matter of transfer, employee who has been served with the transfer
order must first report to the place where he is transferred and, thereafter
make a representation or file legal proceedings;
The Court, accordingly, set aside the order of the trial Judge that the
transfer was mala fide and not in accordance with terms of contract.

IX. INTER-UNION AND INTRA-UNION RIVALRIES

Since independence, inter-union and intra-union rivalries, primarily based on
political considerations, leading to disputes between rival sets of office-bearers
of trade unions, have become sharper. However, except non-statutory Code of
Discipline evolved in 1958 which has failed to achieve the desired result, there is
at present no legal machinery or procedure for resolution of inter-union disputes
in the Trade Unions Act. To fill this gap, the Trade Unions (Amendment) Bill,
1982, provides for such machinery. Section 2(i) of the Bill defines ‘trade union
dispute’ to mean any dispute:
(a) between one trade union and another; or
(b) between one or more members or office-bearers of a trade union and the
trade union (whether also with any of the other members or office-bearers
of the trade union or not) relating to its registration, administration or
management of its affairs, including the appointment of the members of
the executive or other office-bearers of the trade union, the validity of any
such appointment, the area of operation of the trade union, verification of
membership and any other matter arising out of the rules of the trade
union, but excluding matters involving determination of issues as to the
title to, or ownership of, any building or other property or any funds.
 And, Section 28B permits the parties to a trade union dispute to refer such
dispute for arbitration. Such arbitration agreement must be in the prescribed
form and signed by the parties in the manner prescribed by regulation. Further,
Section 28C empowers the Registrar to follow such procedure as he thinks fit in
adjudging the disputes referred to him. The procedure that may be followed by
the Registrar will be subject to such regulation as may be made in this regard.
Any person aggrieved by the award of the Registrar in a reference may appeal to
the court within such period as may be prescribed by regulation. The Bill also
permits the parties to trade union disputes to apply jointly or separately in the
manner prescribed by regulation for adjudication of disputes to the Registrar.

1 Government of India, Report of the Royal Commission in India (1931) 328.

2 2004 1 LLJ 197.
3 Section 21A(i) of the Trade Unions (Amendment) Bill, 1982 provides for insertion of a
new clause viz., ‘(iii) he has been convicted of any offence under the Industrial Disputes
Act, 1947.’
4 (1976) 2 LLJ 435.
5 Sanjeeva Reddi v. Registrar of Trade Unions, (1969) 1 LLJ 11 and Mukund Ram Tanti
v. Registrar of Trade Unions, (1963) 1 LLJ 60.
6 Section 20.
7 Section 21.
8 (1984) 2 LLJ. 478.
9 (1994) 2 LLJ 497.
10 (1959) I LLJ 458.
11 (1991) LLR 456.
12 TNEB Engineers Sangam v. Tamil Nadu Electricity Board, (1996) LLR 942 (Mad).
13 2008 LLR 619.
14 Varada Rao v. State of Karnataka, (1986)11 CLR 277 (SC); N K Singh v. Union of
India, (1995) 1 LLJ 854 (SC); TNEB Engineering Sangram v. Tamilnadu Electricity
Board, AIR 1966 SC 1685.
15 (2004) ILLJ 197 (SC).
 CHAPTER
8
Trade Union Finances and Funds

I. FACTUAL REVIEW
The weakness of a trade union is also determined by its financial status. It is,
therefore necessary to know the income and expenditure of workers’ and
employers’ unions from 1996 to 2005.

Table 8.1: Income and Expenditure of Registered Workers’ and Employers’

Trade Unions Submitting Returns for the Years 1991 to 2005
Source: Government of India, Ministry of Labour, Indian Labour Year Book, 2007 (2009),
90.

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

II. MEMBERSHIP SUBSCRIPTION: LAW’S RESPONSE

A. Rate of Subscription of Union Members

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

B. Right of Members to Subscribe

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

C. Realization of Union Subscription and Check-off

In India, the Trade Unions Act, 1926 does not provide for check-off facilities.
The check-off system is a system under which the employer regularly deducts
membership subscription from the wages of employees and hands over the
amount to the union. This system is in vogue in USA and UK and is enforced
through a clause in the collective bargaining agreement and is made legally
permissible.5 Obviously, the collection is made by the union concerned from the
members. This is a lacuna in the law. To fill this gap, the (First) National
Commission on Labour recommended that the right to demand check-off
facilities should vest with the union and if such a demand is made by a
recognized union, it should be made incumbent on the management to accept it.
In this direction, an attempt was made by the Trade Unions (Amendment) Bill,
1969. The Bill empowered the employer to deduct the subscriptions from the
pay of employees for handing over the same to the appropriate union.

D. Deduction of Subscription Under Payment of Wages Act,

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

E Check-off: Judicial Response

Judicial policy to strengthen the hands of trade unions by allowing union
subscription to be deducted by employer is evident from the judgement in
Balmer Lawrie Workers’ Union v. Balmer Lawrie & Co. Ltd.7 The Supreme
Court examined the validity of a clause of settlement between employer and a
representative union which authorized the employer to deduct 15 per cent of
gross arrears payable to workmen towards union fund. Upholding the validity of
the clause, the Court observed:8
It is well known that no deduction could be made from the
 wages and salary payable to a workman governed by the
Payment of Wages Act unless authorized by that Act. A
settlement arrived at on consent of parties can be however,
permitted as it is the outcome of understanding between the
parties even though such deduction may not be authorized or
legally permissible under the Payment of Wages Act …. Such
deductions can neither be said to be compulsory exaction nor
tax. Therefore such a provision of deduction at a certain rate as
agreed between the parties for payment to the union, the same
being with the consent and as part of overall settlement would
neither be improper nor impermissible nor illegal.
The Court therefore, rejected the contention that by permitting deductions
towards union fund of one union, the management discriminated between union
and union, and between members of the union and non-members and thereby
violated Article 14 of the Constitution.
The division bench of the Madras High Court in State Bank Staff Union
v. State Bank of India9 held that the plea of the recognized trade union that it
should alone be given the check-off facility cannot be accepted because: (i)
check-off facility granted to the recognized trade union under the code of
discipline was not statutory in character; (ii) There was nothing in the code to
indicate that such a facility must be given only to the recognized trade unions.
The aforesaid view as reiterated in Coimbatore Periyar District Dravida
Panjalal Thozhilalar Muneetra Sangam v. National Textile Corporation Ltd.10
In this case, the Madras High Court held that management was not justified in
refusing to deduct and remit subscriptions to the account of the registered trade
unions, a practice which has been in vogue for the past 25 years, merely on the
ground that the said trade unions were not recognized unions for the purposes of
negotiations.
In Rashtriya Colliery Mazdoor v South Eastern Coalfields Ltd.11, the
Madhya Pradesh High Court upheld the order of withdrawal of check-off facility
to the petitioner on the ground that it is not affiliated to one of the recognized
central trade union organizations which are in turn recognized under the Code of
Discipline as being the representative union under industrial relations prevalent
in the SECL. The Court also held that it is a policy matter of the petitioner and
since a policy decision is taken and code of conduct has been evolved by the
process of joint consultative machinery, the same is beyond the scope of judicial
review.
 III. GENERAL FUND: PURPOSES FOR WHICH IT MAY
BE SPENT
Section 15 of the Trade Unions Act, 1926, lays down the purposes for which
general fund of a registered trade union can be utilized namely:
(a) the payment of salaries, allowances and expenses to office-bearers of the
trade union;
(b) the payment of expenses for the administration of the trade union,
including audit of the accounts of general funds of the trade union;
(c) the prosecution or defence of any legal proceeding to which the trade
union or any member thereof is a party, when such prosecution or defence
is undertaken for the purpose of securing or protecting any rights of the
trade union as such or any rights arising out of the relations of any
member with his employer or with a person whom the member employs;
(d) the conduct of trade disputes on behalf of the trade union or any member
thereof;
(e) the compensation to members for loss arising out of trade disputes;
(f) the allowances to members or their dependants on account of death, old
age, sickness, accidents or unemployment of such members;
(g) the issue of, or the undertaking of liability under, policies of assurance on
the lives of members, or under policies insuring members against
sickness, accident or unemployment;
(h) the provision of educational, social or religious benefits for members
(including the payment of expenses of funeral or religious ceremonies for
deceased member) or for the dependants of members;
(i) the upkeep of a periodical published mainly for the purpose of discussing
questions affecting employers or workmen as such;
(j) the payment, in furtherance of any of the objects on which the general
funds of the trade union may be spent, for contributions to any cause
intended to benefit workmen in general, provided that the expenditure in
respect of such contributions in any financial year shall not at any time
during that year be in excess of one-fourth of the combined total of the
gross income, which has upto that time accrued to the general funds of the
trade union during that year and of the balance at the credit of those funds
at the commencement of that year; and
 (k) subject to any conditions contained in the notification, any other object
notified by the appropriate government in the official gazette.

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

IV. POLITICAL FUND

As mentioned earlier, trade unions have political affiliation and they are often
compelled to plunge in political sphere in order to show their strength. Law,
therefore, cannot keep itself away from realities. It is in view of this that Section
16 of the Act permits a registered trade union to raise a separate political fund
for its members in furtherance of the objectives mentioned in Section 16 (2),
namely;
(a) the payment of any expenses incurred, either directly or indirectly, by a
candidate or prospective candidate for election as a member of any
legislative body constituted under the Constitution or of any local
authority, before, during, or after the election in connection with his
candidature or election; or
(b) the holding of any meeting or the distribution of any literature or
documents in support of any such candidate or prospective candidate; or
(c) the maintenance of any person who is a member of any legislative body
constituted under the Constitution or for any local authority; or
(d) the registration of electors or the selection of a candidate for any
legislative body constituted under the Constitution or for any local
authority; or
(e) the holding of political meetings of any kind, or the distribution of political
literature or political documents of any kind.
Of these, clause (c) requires further examination. This clause which
confers a right upon a trade union to spend as much as it likes for the
maintenance of the member has been criticized13 on the ground that: (i) it
violates the fundamental right to equality as guaranteed by the Indian
Constitution (ii) it results in improper influence on the members thereby
interfering with the freedom of speech amounting to breach of privilege (iii) it
encourages the growth of puppet legislators who can get double maintenance (iv)
such a provision has great potential for corrupting our parliamentary system and
(v) a new line of lobbying pattern emerges.14

Nature and Effect of Non-contribution

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

1 S C Pant, Indian Labour Problem (1964), p 101.

2 Ibid.
3 Coimbatore Periyar Districts Dravida, Panjalal Thozhilalar Munnetra Sangam v.
National Textile Corporation Limited, 2011 LLR 1076 (HC Madras).
4 M T Chandrasennan v. N Sukumaran, AIR 1974 SC 1789.
5 See Government of India, Paper of the National Commission on Labour, (1969), 294.
6 See infra note 10.
7 (1985) Lab. IC 242.
8 Id. at 253 (emphasis added).
9 1991 Lab. IC 197.
10 (2011) 4 LLJ 857.
11 2009 Lab IC 2836.
12 AIR 1988 SC 1829.
13 See Shashi K Sharma, Maintenance Clause as per Section 45 16(2) (c) of the Trade Unions
Act, 1926, 22 JILJ 282 (1980).
14 Ibid.
15 Section 16(3).
 CHAPTER
9
Privileges of Registered Trade Unions
Let us turn to consider the immunity afforded to the members and office-bearers
of registered trade unions from civil and criminal conspiracies and restraint of
trade under the Trade Unions Act. Until 1926, unions or workers indulging in
strike and causing financial loss to management were liable for illegal
conspiracies. For instance, in Buckingham and Carnatic Mills, the unions were
held liable for illegal conspiracies and employers were awarded damages.

I. IMMUNITY FROM CRIMINAL CONSPIRACY

A. Only a Fraction of Labour Force Protected

Section 17 of the Trade Unions Act, 1926, (hereinafter referred to as TUA) seeks
to insulate trade union activity from liability for criminal conspiracy:
No office-bearer or member of a registered trade union shall be
liable for punishment under sub-section (2) of Section 120 B of
the Indian Penal Code in respect of any agreement made
between the members for the purpose of furthering any such
object of the trade union as is specified in Section 15, unless the
agreement is an agreement to commit an offence.
The immunity is, however, available only:
(i) to office-bearers and members of registered trade unions;
(ii) for agreement between the members;
 (iii) such agreement that may further any such trade union object as is
specified in Section 15 of the Act; and
(iv) such agreements is not to commit an offence.
The first of these limitations confines the protection to a only members
and office-bearers of a trade union. Table 9.1 tabulates the position of registered
trade unions.

Table 9.1: Number of Registered Unions (Workers’ and Employers’) and

Membership of Unions Submitting Returns for the Years 1991 to 2006
Source: Government of India, Indian Labour Year Book. 2008 (2010) 85.

B. Immunity Jeopardizes Community’s Interests

As to the second limitation, the most significant provision is Section 15 which
relates to the conduct of trade disputes on behalf of the trade union or any
member thereof. The key expression ‘trade dispute’ is defined in Section 2 (g) of
the Act to mean:
any dispute between employers and workmen or between
workmen and workmen or between employers and employers
which is connected with employment or non-employment, or the
terms of employment or the conditions of labour, of any person.
The words used in this definition differ from the definition of ‘industrial
dispute’ in the Industrial Disputes Act, 1947 (hereinafter referred to as IDA) in
two minor respects (i) whereas the Trade Unions Act uses the word ‘trade’ or
‘industry’, the Industrial Disputes Act uses the legislatively defined word
‘industry’; and (ii) the definition of ‘trade dispute’ omits the words ‘or
difference’ which occur in the definition of ‘industrial dispute.’
We believe that despite these differences, the definition of ‘trade dispute’
as such, is pari materia with the definition of ‘industrial dispute’ and generally
the controlling judicial decisions1 while interpreting the latter definition also
delineate the contours of the former definition.
An effective difference between the respective coverages of the definition
of ‘trade dispute’ and ‘industrial dispute’ arises because of the definition of
‘workmen’ in the TUA. The aforesaid Section 2(g) of TUA further states that
‘workmen’ means:
all persons employed in trade or industry whether or not in the
employment of the employer with whom the trade dispute
arises (emphasis added).
It will be noticed that on the one hand, the italicized words in the
aforesaid definition did not occur in the corresponding definition of ‘workman’
in the IDA. On the other hand, a whole series of qualifying words used in the
definition of ‘workman’ in the IDA are conspicuous by their absence from the
corresponding definition in the TUA. Under Section 2(s) of IDA:
workman means any person (including an apprentice) employed
in any industry to do any manual, unskilled, skilled, technical,
operational, clerical or supervisory work for hire or reward,
whether the terms of employment be express or implied, and for
the purposes of any proceeding under this Act in relation to an
industrial dispute, includes any such person who has been
dismissed, discharged or retrenched in connection with, or as a
consequence of, that dispute, or whose dismissal, discharge or
 retrenchment has led to that dispute, but does not include any
such person:
(i) who is subject to the Army Act, 1950, or the Air Force Act, 1950
or the Navy Act, 1957; or
(ii) who is employed in the police service or as an officer or employee
of a prison; or
(iii) who is employed mainly in a managerial or administrative
capacity; or
(iv) who, being employed in a supervisory capacity, draws wages
exceeding one thousand and six hundred rupees per mensem or
exercises, either by the nature of duties attached to the office or by
reason of the powers vested in him, functions mainly of a
managerial nature.
The Trade Unions Act, 1926 has the potential2 to cover a much larger
number of persons than the Industrial Disputes Act, 1947. Thus, Section 17 of
the TUA grants immunity from liability for criminal conspiracy to persons in
whose industrial dispute the government cannot intervene, whether by way of
conciliation or adjudication, and in the absence of the possibility of such
intervention, the provisions of the IDA regulating the use of instruments of
economic coercion do not apply.

C. Nature of the Immunity

The last of the limitations on the scope of the immunity granted by Section 17 of
the TUA raises an issue relating to the very nature of the immunity. Section 120-
A of the Indian Penal Code (hereinafter referred to as IPC) defines criminal
conspiracy to mean: (i) an agreement between two or more persons to commit an
offence, i.e., in, general,3 an act which is punishable under IPC or any other law
for the time being in force; and (ii) an overt act done in pursuance of an
agreement between two or more persons to do an illegal act or to do a legal act
by illegal means. The IPC defines the word ‘illegal’ to include, inter alia:
… everything which is prohibited by law, or which furnishes ground for a
civil action.4
Since workman’s use of instruments of economic coercion in an industrial
dispute involves breach of contract and injury to the property right of the
employer, both the acts are actionable, and amount to an illegal act within the
meaning of Section 120A read with Section 43 of the IPC.
But under Section 17, breach of contract and injury to employer’s
property cease to be actionable and, therefore, do not amount to criminal
conspiracy as defined in Section 120-A read with Section 43 of the IPC. A
question therefore, arises as to what is the criminal liability in respect of which
Section 17 of the TUA grants immunity. In considering the matter, it is relevant
to note that Section 17 does not grant charter of liberty to commit an offence,
which is punishable with death, life imprisonment or rigorous imprisonment for
a term of two years or more.5 In fact, the last words of the Section 17 of the
TUA indicate that it does not insulate agreement to commit any offence
whatsoever. Perhaps the immunity is confined to an agreement between two or
more persons to do, or cause to be done, acts which are prohibited by law but
which neither amount to an offence nor furnish grounds for civil action.
Breach of contract does give rise to a civil cause of action. Therefore,
under Section 43 of the IPC, an agreement to commit breach of contract through
withdrawal of labour as an instrument of economic coercion in an industrial
dispute is a criminal conspiracy. Further, so long as any law declares withdrawal
of labour in breach of contract to be an offence, if a member of the consenting
party takes any step to encourage, abet, instigate, persuade, incite or in any
manner act in furtherance of the objective, criminal conspiracy would have been
committed. Finally, since criminal conspiracy is a substantive offence
punishable under Section 120B of the Indian Penal Code, it is doubtful if Section
17 grants immunity at all. The word ‘illegal’ is applicable to everything which is
an offence or which is prohibited by law, or which furnishes ground for a civil
action, and a person is said to be ‘legally’ bound to do, whatever it is illegal in
him to omit. Reading Section 18 of the Trade Unions Act with Section 43 of the
Indian Penal Code, it would appear that withdrawal of labour as an instrument of
economic coercion in an industrial dispute in breach of contract is not illegal.
Accordingly, an agreement between two or more workmen, members of a
registered trade union to withdraw labour as an instrument of economic coercion
in an industrial dispute is not an agreement ‘to do or cause to be done an illegal
act’ and amounts to a criminal conspiracy within the meaning of Section 120-A
of the IPC. Accordingly, withdrawal of labour in breach of contract does not
give rise to a cause of action in civil courts.

D. Judicial Response
The Calcutta High Court in Jay Engineering Works Ltd v. Staff6 while
interpreting the provisions of Section 17 observed:
No protection is available to members of a trade union for any
 agreement to commit an offence … When a group of workers,
large or small, combine to do an act for the purpose of one
common aim or object, it must be held that there is an agreement
among the workers to do the act and if the act committed is an
offence, it must similarly be held that there is an agreement to
commit an offence.

II. IMMUNITY FROM CIVIL ACTIONS

Section 18 of the Trade Unions Act, 1926, grants immunity to registered trade
unions from civil suits.7
(i) No suit or other legal proceeding shall be maintainable in any civil court
against any registered trade union or any office-bearer or member thereof
in respect of any act done in contemplation or furtherance of a trade
dispute to which a member of the trade union is a party on the ground that
such act induces some other person to break a contract of employment, or
that it is in interference with the trade, business or employment of some
other person or with the right of some other person to dispose of his
capital or his labour as he wills.
(ii) A registered trade union shall not be liable in any suit or other legal
proceeding in any civil court in respect of any tortuous act done in
contemplation or furtherance of a trade dispute by an agent of the trade
union if it is proved that such person acted without the knowledge of, or
contrary to express instructions given by the executive of the trade
unions.
The above section does not afford immunity to the members or office-
bearers of a trade union for an act of deliberate trespass.8 The immunity also
cannot be availed of by them for unlawful or tortuous act.9 Further, such
immunity is denied if they indulge in an illegal strike or gherao. Moreover, the
immunities enjoyed by the union do not impose any public duty on the part of
the union.’10
The section, however, raises various problems.11
First, like immunity from criminal conspiracy, immunity from civil action
is also confined to members of the registered trade unions. We have already seen
that such protection was limited to 10.6 per cent of the labour force in 2005.
Second, it does not afford adequate protection from civil liabilities. For, it
is arguable whether it gives protection and, if so, to what extent in excess of the
aforementioned Section 17 of the Trade Unions Act. A suit or proceeding may
not be maintainable for a number of reasons. Does it necessarily follow that the
conduct does not ‘furnish ground for civil action’ within the meaning of Section
43 of the Indian Penal Code?
Third, the expression ‘in contemplation or furtherance of a trade dispute
to which a member of the trade union is a party’ is obviously narrower than the
ambit of protection under the said Section 17.
Fourth, Section 18 helped in maintenance of union funds, howsoever
meagre. The real significance is in rejecting the application of the common law
doctrines of restraint of trade and criminal conspiracy in so far as they encroach
on the field of labour management relations. Together with Section 17, it
provides a great impetus for, and facilitates the active participation of ‘outside
leaders’ in the trade union movement.
In Rohtas Industries Staff Union v. State of Bihar12, certain workmen
went on an illegal and unjustified strike at the instance of the union. A question
arose whether the employers had any right of civil action for damages against
the strikers. The arbitrator held that the workers who participated in an illegal
and unjustified strike, were jointly and severally liable to pay damages. On a
writ petition, the Patna High Court quashed the award of the arbitrator and held
that employers had no right of civil action for damages against the employees
participating in an illegal strike within the meaning of Section 24 of the
Industrial Disputes Act, 1947. From this decision, it is evident that Section 18
grants civil immunity in case of strike by the members of the trade union. On
appeal, the Supreme Court affirmed the judgement of the High Court on the
ground that the claim for compensation and the award thereof in arbitration
proceedings were invalid and such compensation for loss of business was not a
dispute or difference between the employers and the workmen which was
connected with the employment or non-employment or terms of employment or
with the condition of labour of any person. The Supreme Court did not decide
the question as to whether the Patna High Court was right in relying on Section
18 of the Act to rebuff the claim for compensation because the Supreme Court
did not wish to rest its judgement on that ground.
In Jay Engineering Works v. Staff13, the full bench of the Calcutta High
Court was invited to consider the question whether the protection under Sections
17 and 18 of the Trade Unions Act can be availed of where workers resort to
gherao. Chief Justice Sinha explaining the scope and ambit of protection
observed:
 The net result of the decision set out above is that Sections 17
and 18 of the Indian Trade Unions Act grant certain exemption
to members of a trade union but there is no exemption against
either an agreement to commit an offence or intimidation,
molestation or violence, where they amount to an offence.
Members of a trade union may resort to a peaceful strike, that is
to say, cessation of work with the common object of enforcing
their claims. Such strikes must be peaceful and not violent and
there is no exemption where an offence is committed. Therefore,
a concerted movement by workmen by gathering together either
outside the industrial establishment or inside, within the working
hours is permissible when it is peaceful and does not violate the
provisions of law. But when such a gathering is unlawful or
commits an offence then the exemption is lost. Thus, where it
resorts to unlawful confinement of persons or criminal trespass
or where it becomes violent and indulges in criminal force or
criminal assault or mischief to person or property or molestation
or intimidation, the exemption can no longer be claimed.
The Calcutta High Court once again in Reserve Bank of India v. Ashis14
held that in order to secure immunity from civil liability under Section 18,
inducement or procurement in breach of employment in furtherance of trade
dispute must be by lawful means and not by means which would be illegal or
wrong under any other provisions of the law.
The Madras High Court in Sri Ram Vilas Service Ltd v. Simpson Group
Company Union15 held that it was not within the purview of the High Court to
prevent or interfere with the legitimate rights of the labour to pursue their
agitation by means of a strike so long as it did not indulge in unlawful and
tortuous acts.
In Federation of Western India Cine Employees v. Filmalaya Pvt. Ltd16,
a question arose whether an injunction can be issued restraining the trade union,
its members or agents from acting upon the direction issued by the union,
namely, not to report at the studio? The Bombay High Court answered it in the
negative because such act was protected by Section 18 of the Trade Unions Act,
1926. In this case, there was a dispute between Filmalaya Pvt. Ltd, a private
limited company and the workers (represented through federation of affiliated
unions) regarding employment, non-employment, status of 19 employees and
alleged illegal termination of services of certain workers. The federation of the
concerned affiliated union issued a letter on 3 May 1980 addressed to various
bodies and associations of cine artists, technicians and workers requiring them to
issue instructions directing their members not to report for shooting work at the
studio of Filmalaya Pvt. Ltd. The net effect of that letter was that the business of
the company came to a standstill. The company, therefore, filed a suit against the
employees mainly for an injunction restraining them from acting upon the
directive of the federation. The civil court came to the conclusion that there was
no trade dispute pending between the parties and hence, Section 18 had no
application to the fact. It also issued a notice of motion in absolute in terms of
prayer. The High Court observed that the directions amount to intimidation or
coercion and, therefore, are not protected by Section 18. The court added that the
act in contemplation or in furtherance of trade dispute, which induces breach of
contract of other employees causes interference with the trade, business or
employment of some other person, fell within the ambit and scope of Section 18.
However, the inducement or interference must be by lawful means. In other
words, Section 18 does not give protection to trade union from acts of
violence.17 The court accordingly held that the union was entitled to carry out its
legitimate trade union activities peacefully and, therefore, slogans or
demonstrations per se could not be termed as unlawful and hence, a blanket
injunction could not be granted in that behalf. The court however, cautioned that
this was not to say that the trade union was also protected from its violent
activities; activities which were normally termed as violent could not be
regarded as trade union activities of a union.
In Usha Breco Mazdoor Sangh v. Management of M/s Usha Breco
18
Ltd. , the Supreme Court ruled:
(i) A workman indulging in commission of a criminal offence should
not be spared only because he happens to be a union leader;
(ii) A union leader does not enjoy immunity from being proceeded with
in case of misconduct.
Again, in Indian Bank v. Federation of Indian Bank Employees’
Union19, the Indian Bank sought an interim injunction against the employees’
unions restraining them from holding meetings, demonstrations, etc., within a
radius of 50 metres of the central office or any of the branches of the bank. A
question arose whether the bank was entitled to an interim injunction against its
own employees? The Madras High Court held that an interim injunction would
virtually prevent the exercise of statutory rights conferred on unions to hold
demonstrations and meetings within the scope of the Trade Unions Act and,
therefore, no injunction could be issued. The court, however, added that if any
act is committed resulting in unlawful activities, and constitutes cognizable
offences under the Indian Penal Code, or other special enactments like the
Banking Regulations Act, 1949, etc., the immunity available under the Trade
Unions Act, 1926, would not be available.
In Ahmedabad Textile Research Association v. ATlRA Employees
20
Union , a division bench of the Gujarat High Court held that it is not within the
purview of the civil court to prevent or interfere with the legitimate rights of the
workmen to pursue their demands by means of strike or agitation or other lawful
activities so long as they do not indulge in acts unlawful, tortuous and violent.
The court further held that any agitation by the workmen must be peaceful and
not violent. Any concerned movement by workmen to achieve their objectives is
certainly permissible even inside the industrial establishment.
In Orchid Employees Union v. Orchid Chemicals & Pharmaceuticals
21
Ltd , the Supreme Court held that although the trade union and its members
were restrained to assemble within 100 meters of the boundary of the factory
premises of the respondent company and raise slogans or obstruct the ingress
and egress of the vehicles carrying raw materials and finished products, staff bus
and other vehicles into factory premises, and obstruct the loyal workers, foreign
customers and other visitors from entering into the respondent company and
getting out of the same till the disposal of the suit or the conciliation
proceedings, whichever is earlier. It was, however, observed that the above
interim injunctions will not in any way interfere with the present appellants'
rights to strike or peaceful picketing.
Under the Trade Unions Act, 1926, the members of the union are
certainly not permitted to involve themselves in violent activities. In such
circumstances, giving police protection to factory by this court in exercising its
jurisdiction under Article 226 of the Constitution of India is not unknown22.
In Mining and Allied Machinery Corporation Ltd, (by its law officer and
constituted attorney N X Mandal) v. Superintendent of Police, St. Thomas
Mount, Madras,23 it was held that a negative approach of lawful agitation by the
working class cannot be justified by resorting to law and order problem in the
industrial sector, which is as follows:
Strikes, lock-outs, satyagrahas and demonstrations are nothing
new in our country. Promotion of social justice over the past few
decades was to a considerable extent, due to militant and
agitational approach of the workmen and not, to any appreciable
degree, due to condescension by the management. It is but true
that in the process of securing to the workmen more amenities
and privileges and better condition of service, the industrial
 tribunals, labour courts, and the courts of this country have
played a vital role. A negative approach to lawful agitation by
the working class to secure higher wages and better living
conditions cannot be justified by resort to the plea of
maintaining law and order in the industrial sector.
The jurisdiction of this court in granting a writ of mandamus by directing
the police to give protection to the management to carry on lawful trade was
again reiterated by the division bench of Kerala High Court in Midland Rubber
& Produce Co. Ltd, Cochin v. Superintendent of Police, Pathanamthitta and
Others,24 wherein Justic A R Lakshmanan, while presiding over the bench, held
as follows :
…Just as the workers are entitled to protection of their legal
rights by courts of law, the employers are also equally entitled to
protection of their fundamental right to carry on their lawful
trade or business. In our opinion, it is not open to the
respondents—unions to take the law in their own hands and
obstruct the permanent workers of the appellant from
discharging their duties or prevent the appellant from doing the
rain guarding work. Sufficient safeguards are provided under the
Industrial Disputes Act to prevent exploitation of workers by
employers. It is strange to find that one set of workers claimed
the right to get employment on the basis of some practice and
preventing the employer from engaging labour of their choice. If
the claim of the labour is allowed, then a day will come when a
citizen of this country has to seek his employment in his own
village, taluk or district. Such a claim would run counter to the
rights guaranteed under the Constitution of India. therefore the
right now claimed by the respondents on the basis of some
practice cannot be countenanced at all.
The court added that Section 18(1) of the Trade Unions Act, 1926
certainly prohibits the employer from breaking the contract of employment and
gives immunity to an office bearer in respect of the act done by him. When the
employer attempts to divide the striking workers, which is not lawful, it is
certainly open to the union and its members to approach the inspector of
factories or raise an industrial dispute by treating the same as unfair labour
practice, and the immunity granted under section 18(1) of the Act cannot mean
to say that the union must be permitted to achieve its object by resorting to the
methods which are not permitted in law.
In M/s Avtec Limited, Power Products Division Poonapally, Hosur v.
Superintendent of Police, Krishnagiri District,25 the Madras High Court held
that even thought Section 18 prohibits the employers from giving immunity to
office bearer in respect of the act done by him but when there is violation of any
law by the employer, it is open to the office-bearer of the union to approach the
appropriate authority under the Factories Act, 1948 or to initiate proceedings for
unfair labour practice. The court clarified that the immunity under Section 18(1)
of the Trade Unions Act cannot mean that the union must be permitted to
achieve its object by resorting to methods which are not permitted by law.
The Court also held that even if it is presumed that the strike resorted to
by members of the union is valid in law, it does not mean that the union and its
members can indulge in any violent activity. If there is any breach of contract by
the employer, the appropriate provisions are available to be invoked under
Industrial Disputes Act but not to increase pressure on employer by violent
means.

III. ENFORCEABILITY OF AGREEMENTS

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

IV. TERMINATION AT THE INSTANCE OF UNION

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

1 Newspapers Ltd v. Industrial Tribunal, (1995) 2 LLJ 1 (SC); Working Journalists of the
Hindu v. The Hindu, (1961) 2 LLJ 188 (SC); Indian Cable Co. Ltd v. Its Workmen,
(1962) 1 LLJ 409 (SC); Workmen of Rohtak General Transport Co. v. Rohtak General
Transport Co., (1962) 1 LLJ 654 (SC): Workman v. Dharam Pal Prem Chand, (1965) 1
LLJ 668 (SC).
2 Actually, because of the requirement of registration, the effective difference may be less.
3 Section 40 of IPC defines the word ‘offence’ to mean ‘except in the chapters and sections
mentioned in clauses 2 and 3 of this section the word’ offence ‘denotes a thing made
punishable by this Code’. In Chapter IV, Chapter V-A and in the following sections
namely, Sections 64, 65, 66, 67, 71, 109, 110, 112, 114, 115, 116, 117, 187, 194, 195,
203, 211, 213, 214, 221, 222, 223, 224, 225, 327, 328, 329, 330, 331, 347, 348, 388, 389,
and 445, the word ‘offence’ denotes a thing punishable under this Code, or under any
special or local law as hereinafter defined.
And in Sections 141, 176, 177, 201, 202, 212, 216, and 441, the word ‘offence’ has the
same meaning when the thing punishable under the special or local law is punishable
under such law with imprisonment for a term of six months or upwards, whether with or
without fine.
4 Section 43.
5 Section 17 does not refer to clause (1) of Section 120B of the Indian Penal Code.
6 AIR 1968 Cal. 407.
7 Since Section 18 of the Trade Unions Act, 1926 is based upon English law, it is useful to
note the developments in the United Kingdom. Until 1906, wilful interference with the
business of employer, e. g., strikes causing financial loss to management was actionable
in England and until 1926 in India. In Quinn v. Leathern [1901]. A.C. 495 unions were
held liable for illegal conspiracies. Dissatisfaction in England with Taff Value Co. v.
Amalgamated Society of Railway Servants [1901]. A.C. 406, decision led to the
enactment of the Trade Disputes Act, 1906, which gave legislative disapproval to judicial
decision, [see Bertram F Willcox and Others (Ed.). Labour Law and Labour Relation,
Indian Law Institute, 43. (1967)]
Section 3 of the English Trade Disputes Act, 1906 exempted trade unions from the
liability in tort for an act done by a person in contemplation or furtherance of a trade
dispute if: (i) it induces a breach of contract of employment; or (ii) it interferes with the
trade, business or employment or right to dispose of his capital or his labour as he wills.
The scope of immunity afforded in Section 3 was delineated by the House of Lords in
Rookes v. Barnard, All E.R. 1964 367. In this case a worker (who resigned from
membership of the union) was dismissed by the corporation in consequence of a threat by
fellow workers (union members) to strike in breach of a no-strike clause in their service
agreement. He brought an action for damages against union officials for tort of intimation.
The Court awarded him damages of £7,500. Justice Sach, held that the threat to strike in
breach of the agreement was an unlawful act constituting intimidation, and actionable as
tort as it had harmed the plaintiff. The Court accordingly held that the defendants were
not protected under Section 3. The Court of Appeal revised the findings and held that
although the tort of intimidation existed, it did not cover the case of threat to breach of
contract. The House of Lords reversed the findings of the Court of Appeal and held that a
threat by persons that contracts of employment would he be broken unless the employer
conceded their demands was a threat to do something unlawful and constituted the tort of
intimidation. Consequently, the person concerned when sued for damages for civil
conspiracy could not rely on the protection afforded by the 1906 Act. This decision was
nullified by the Trade Disputes Act, 1965. ‘Then followed the decisions in J T Stratford
& Sons Ltd, v. Lindley [1965] A.C. 269; Emerald Construction Co. Ltd v. Lowthian &
Others [1966] IWLR. 691. Torquay Hotel Co. Ltd v. Cousins & Others [1969] 2 Ch. 106
and Ford Motor Co. Ltd v. Amalgamated Union of Engineering and Foundary Workers
[1969] 2 All. ER 481 which did not totally free the industrial relations from the operation
of law efforts and the Trade Disputes Act of 1906 was found to be inadequate. Parliament
passed the Industrial Relations Act, 1971 to alleviate the position of labour to some
extent. This Act was repealed by the Trade Unions and Labour Relations Act, 1974 which
was amended in 1976.’ [See E S Vankataramiah. ‘A Brief History of the Liability of a
Participant in a Strike in England,’ 23 JILI (1981), 331.
8 Dalmia Cement Ltd v. Naraindas Anandjee Bechar, AIR 1939 Sind 256.
9 Shri Ram Vilas Service Ltd v. Simpson and Group Companies Workers Union, (1979) 2
LLJ 284 (Madras).
10 See Chemosyn Pvt. Ltd v. Kerala Medical and Representatives Association, (1988) Lab.
IC 115.
11 Anandjee, ‘Impact of Labour Laws on Trade Union Movement,’ a paper read at the All
India Labour Economic Conference.
12 Rohtas Industries Staff Union v. State of Bihar, AIR 1963 Patna 170; On appeal AIR
1979 SC 425.
13 Joy Engineering Works v. Staff, AIR 1968 Cal. 407.
14 Reserve Bank of India v. Ashis, 73 CWN 388, (1969).
15 Sri Ram Vilas Service Ltd v. Simpson & Group Company Union, (1979) 2 LLJ 284
(Madras).
16 (1981) 1 LLJ 123.
17 See Jay Engineering Works v. Stage of West Bengal, AIR 1963 Cal. 407; Railway
Board, New Delhi v. Niranjan Singh, (1969) 2 LLJ 743; M P Collieries Workers
Federation v. United Colliers, (1972) Madh. Pr LJ 79; Sri Rama Vilas Service Ltd v.
Simpson & Group Companies Workers Union, (1979) 2 LLJ 284.
18 2008 LLR 619.
19 (1982) 1 LLJ 123.
20 (1993) Guj. LH 783.
21 2008 LLR 519.
22 K C P Ltd v. Inspector of Police, Tiruvottiyur, 1993 ILLJ 365.
23 (1987) 2. LLN 294.
24 (1999) 1. LLJ 385.
25 2009 LLR 62.
26 Section 27 of Indian Contract Act dealing with agreement in restrain of trade reads:
Every agreement by which any one is restrained from exercising a lawful profession,
trade or business of any kind, is to that extent void.
Exception 1: One who sells the goodwill of a business may agree with the buyer to refrain
from carrying on a similar business, within specified local limits, so long as the buyer, or
any person deriving title to the goodwill from him, carries on a like business therein;
provided that such limits appear to the Court reasonable, regard being had to the nature of
the business.
27 Tulsidas Paul v. Second Labour Court, AIR 1963 Calcutta 624.
28 (1992) 1 LLJ 423.
29 For details see chapter 4 Section VI closed shop/union shop.
 CHAPTER
10
Recognition of Trade Unions

I. THE NEED FOR RECOGNITION OF TRADE UNIONS

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

II. RECOGNITION OF TRADE UNIONS IN

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

A. Appointment of the Royal Commission

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

B. Legislative Action on the Royal Commission’s

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

C. International Labour Organization Convention

At an international level, the concern felt by the International Labour
Organization for evolving an international instrument for recognition of trade
unions resulted in ILO Convention No. 87 on ‘Freedom of Association and
Protection of the Right to Organize’ in 1948 and Convention No. 98 concerning
the right to organize and bargain collectively in 1949. The former states:
Workers and employers, without distinction whatsoever, shall
have the right to establish and, subject only to the rules of the
organization concerned, to join organization of their own
choosing without previous authorization. The convention
empowers the workers' organization to frame their constitution,
to elect representatives and among others to organize their
activities. To establish and join federations, Article 8 of the
Convention requires that workers and employers and their
respective organizations, like all other, shall respect the law of
the land. The law of the land shall not be such as to impair nor
shall it be so applied as to impair, the guarantees provided for in
the constitution. The latter confers protection to workers against
acts of anti-union discrimination in respect of their employment.
The protection is, directed in respect to acts calculated to: (a)
make the employment of a worker subject to the condition that
he shall not join a union or shall relinquish trade union
membership; and (b) cause the dismissal of, or otherwise
prejudice a worker by reason of union membership or because of
his participation in union activities outside working hours.

D. Plans and Recognition of Trade Unions

Immediately after India became a sovereign democratic republic, the Trade
Unions Bill, 1950, concerning the recognition of trade unions through planning
was accepted and a Planning Commission was constituted.5 In the evolution of
labour policy during the plan, recognition of trade union has been accorded due
importance by the planners. Thus, the Second Five-Year Plan (1956–61) paid
considerable attention to the problems of recognition of trade unions. In view of
the fact that ‘recognition has strengthened the trade union movement in some
states‘ the plan recommended that ‘some statutory provisions for securing
recognition should be made, where such recognition does not exist at present. In
doing so, the importance of one union for one industry in a local area requires to
be kept in view’. The Third Five Year Plan (1961–66) envisaged a marked shift
in the policy of recognition of trade unions. It was stated in the plan that ‘the
basis for recognition of unions, adopted as a part of the Code of Discipline will
pave the way for the growth of strong and healthy trade unionism in the country.
A union can claim recognition if it has a continuing membership of at least 15
per cent of the workers in the establishment over a period of 6 months and will
be entitled to be recognized as a representative union for an industry or a local
area, if it has membership of at least 25 per cent of workers. Where there are
several unions in an industry or establishment, the union with the largest
membership will be recognized. Once a union has been recognized, there should
be no change in its position for a period of 2 years, if it has been adhering to the
Code of Discipline.’

E. First National Commission on Labour

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

F. Industrial Relations Bill, 1978

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

G. The Hospital and other Institutions (Settlement of

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

A. Constitution and Recognition of Trade Unions

Is the right to grant recognition to trade unions a fundamental right within the
meaning of Article 19 (1) (c) of the Constitution? This has been answered in
negative6 because the right to form an association does not carry with it the
concomitant right7 that the association should be recognized by the employers.
Hence, neither withdrawal of recondition8 of the union nor the discontinuance of
recognition9 infringes on the fundamental rights guaranteed under Article 19(1)
(c) of the Constitution.

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

1. Trade Unions Act, 1926

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

2. Trade Unions (Amendment) Act, 1947

In India, it has been observed earlier, that there is no central enactment
governing recognition of ‘trade unions’. The Trade Unions (Amendment) Act,
1947, however, provided for recognition of unions: (i) by agreements; and (ii) by
order of the court on satisfying the conditions laid down in relevant sections of
the act. But the Act, as stated earlier, has not been enforced.
a. Machinery for Determination of Representative Unions: Section 28E of
the Trade Unions (Amendment) Act, 1947, empowers the labour court to
grant recognition where a registered trade union having applied for
recognition to an employer fails to obtain the same within a period of 3
 months.
b. Conditions for Recognition. Section 25D provides that a trade union shall
not be entitled for recognition by order of a labour court under Section
25E unless it fulfils the following conditions, namely:
(a) that all its ordinary members are workmen employed in the same
industry or in industries closely allied to or connected with another;
(b) that it is representative of all the workmen employed by the employer
in that industry or those industries;
(c) that its rules do not provide for the exclusion from membership of
any class of workmen referred to in clause (b);
(d) that its rules provide for the procedure for declaring a strike;
(e) that its rules provide that a meeting of its executive shall be held at
least once in every 6 months;
(f) that it is a registered trade union and that it has complied with all
provisions of this Act.
The aforesaid provisions of the Act raise various problems: (i) Can an
employer voluntarily recognize a union which is not registered under the Act and
which is in fact a majority union? (ii) Can an employer be compelled to
recognize more than one union? Notwithstanding the relative importance of
these questions and rather unsatisfactory answer that we get from the statute, the
significance of Trade Unions (Amendment) Act, 1947, must not be overlooked.
But, even this could not be put into force.
c. Rights of Recognized Trade Unions: The recognized trade unions have
been conferred the right to negotiate with employers in respect of matters
connected with employment, non-employment, the terms of employment
or the conditions of labour of all or any of its members, and the employer
is under an obligation to receive and send replies to letters sent by the
executive and grant interviews to them regarding such matters.
d. Withdrawal of Recognition of Trade Unions: Under Section 28G of the
Trade Unions (Amendment) Act, 1947, the Registrar or the employer is
entitled to apply to the labour court in writing for the withdrawal of
recognition on any one of the following grounds:
(a) that the executive or the members of the trade union have committed
any unfair practice set out in Section 28 J within 3 months prior to
the date of the application;
 (b) that the trade union has failed to submit any return referred to in
Section 281;
(c) that the trade union has ceased to be representative of the workmen
referred to in Clause (b) of Section 28 D.
On receipt of the application, the labour court is required to serve a show
cause notice in the prescribed manner on the trade union as to why its
recognition should not be withdrawn. If the court is satisfied that trade union did
not satisfy conditions for the grant of recognition, it shall make an order
declaring the withdrawal of recognition.
The aforesaid provisions raise a question as to whether recognition of
trade union can be withdrawn on the ground that recognized trade union has lost
its status as a representative union.
e. Re-recognition of Trade Unions: Section 28H of the Trade Unions
(Amendment) Act, 1947, permits the registered trade union whose
recognition is withdrawn under subsection (3) of Section 28G to make an
application for re-recognition after 6 months from the date of withdrawal
of recognition.

3. The Trade Unions Bill, 1950

In 1950, the Trade Unions Bill, 1950 was introduced in the Parliament. The bill
was primarily a consolidating measure, but there were some new provisions
which were added namely:
(a) A trade union of civil servants shall not be entitled to recognition by
the appropriate government if it does not consist wholly of civil
servants or if such union is affiliated to a federation of trade unions
to which a trade union consisting of members other than civil
servants is affiliated.
(b) A trade union shall not be entitled to recognition by an employer in
relation to any hospital or educational institution by order of a labour
court if it does not consist wholly of employees of any hospital or
educational institutions, as the case may be.
(c) A trade union consisting partly of supervisor and partly of other
employees, or partly of watch and ward staff and partly of other
employees shall not be entitled to recognition by an employer by
order of a labour court.
The bill also provided for recognition of trade unions where application
for recognition was made by more than one union. The trade union having the
largest membership gets preference over others. The recognized unions are given
rights such as collecting subscriptions, holding meetings on employer’s premises
and of collective bargaining. The labour court is empowered under the bill to
order for recognition of unions. The bill could not, however, be brought in the
form of the Act because of opposition by several quarters. The bill lapsed on the
dissolution of the legislature.

4. State Legislation
In some states, there are legislations on the recognition of trade unions. These
legislations may be briefly discussed:
(a) Maharashtra: The Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practice Act, 1972, provides for the recognition of
trade unions for facilitating collective bargaining for certain undertakings and
confers certain rights and obligations upon recognized trade unions and also
confers certain powers on unrecognized trade unions.11 The Act is applicable in
every undertaking employing 50 or more employees on any day of the preceding
12 months.12 The application of the Act can be extended by the state government
even in undertakings employing less than 50 employees.13 In order to be
registered as recognized trade union (i) the trade union must have a total
membership of 30 per cent in the said undertaking; (ii) it must be in existence for
the last 6 months; and (iii) it must make an application in the prescribed form to
the industrial court.14
When such an application is made and is found to be in order, a notice
shall be issued and after considering the objections and holding enquiries, if any,
the union would be recognized and a certificate would be issued. On the
contrary, if a counter claim is put forward by any other union and it is found that
union has the largest number of employees employed in the undertaking, and if
that other union also fulfils the requirements which the applicant-union also
fulfils for being recognized, then the industrial court is empowered to grant
recognition and issue a certificate not to the applicant union but to the other
union which has the largest number of employees employed in the
undertaking.15
(b) C P and Berar: The C P and Berar Act, 1947 lays down the following
conditions for recognition of unions:
(i) The membership of union is open to all employees irrespective
of caste, creed or colour;
 (ii) The union has for the whole of the period of 6 months next
preceding the date of application, membership of not less than
between 15 and 20 per cent as the state government may
prescribe for that local area of the employees employed in the
industry in that area;
(iii) The constitution of the union shall be such as may be provided
under this Act.
(c) Madhya Pradesh: The Madhya Pradesh Industrial Relations Act,
1960, provides that a union for the purpose of recognition shall have
‘not less than 25 per cent of the total number of employees
employed in the industry in such local area’.

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

D. Non-statutory Code of Discipline in Industry

To fill the lacuna in the Central Law, the 16th Session of the Indian Labour
Conference provides for the recognition of trade unions. It lays down the
following criteria for their recognition:
1. Where there is more than one union, a union claiming recognition should
have been functioning for at least one year after registration. Where there
is only one union, this condition would not apply;
2. The membership of the union should cover at least 15 per cent of the
workers in the establishment concerned. Membership would be counted
only of those who had paid their subscription for at least 3 months during
the period of 6 months immediately preceding the reckoning;
3. A union may claim to be recognized as a representative union for an
industry in a local area if it has a membership of at least 25 per cent of
the workers of that industry in that area;
 4. When a union has been recognized, there should be no change in its
position for a period of 2 years;
5. Where there are several unions in an industry or establishment, the one
with the largest membership should be recognized.
6. A representative union for an industry in an area should have the right to
represent the workers in all the establishments in the industry, but if a
union of workers in a particular establishment has membership of 50 per
cent or more of the workers of that establishment, it should have the right
to deal with matters of purely local interest such as, for instance, the
handling of grievances pertaining to its own members. All other workers
who are not members of that union might either operate through the
representative union for industry or seek redress directly.
7. In the case of trade union federations which are not affiliated to any of the
four central organizations of labour, the question of recognition would
have to be dealt with separately.
8. Only unions which observed the Code of Discipline would be entitled to
recognition.
The code, however, has not been effectively implemented and it is
respected more in its breach than in its observance. The failure of enforcement
machinery of the code is revealed by the fact that during 1960–70,10,402 cases
of breach of Code of Discipline were reported. In addition to this, there are
numerous unreported cases as well. The Central Implementation and Evaluation
Division has done much work in this regard. The division secured recognition to
24 unions during 1968–70.18 Faced with the problem of infringement of the
Code of Discipline, the committee took certain decisions:
(1) When a union is recommended for recognition by the implementation
machinery after proper verification of its membership, the employer
should recognize it within a month. If he fails to do so, he should be
considered responsible for infringement of the Code of Discipline and
action should be taken against him by the central organization concerned;
(2) A union which is not affiliated to any of the four central organizations of
workers should wait for a period of one year after it has accepted the Code
of Discipline before its claim for recognition can be considered;
(3) When the breach of the code by a union has been established by the
appropriate implementation machinery, it would be open to the employer
concerned to derecognize the union.
 However, the question of recognition of the union by the employer raises
various doubts: (i) whether the gap in law will be filled by the provisions of the
code? (ii) whether the provisions of the code particularly regarding the
recognitions of the union can effectively be implemented? (iii) whether the
provisions of code have also been adopted by such organizations and unions
which are not affiliated to central federation?
The division bench of the Madras High Court in Tamil Nadu Electricity
Board v. Tamil Nadu Electricity Board Accounts and Executive Staff Union19
gave a helping hand in strengthening provisions for recognition of trade union
under the voluntary Code of Discipline. In this case, the name of the petitioner
was changed from Tamil Nadu Electricity Subordinates Union to Tamil Nadu
Electricity Board Accounts and Executive Staff Union. Originally, the
membership was open to all workmen who were engaged in clerical, accounting
and other work. The coverage was extended to employees covered under Section
2 (i) of the Industrial Employment (Standing Orders) Act, 1946. This change
was communicated to the management with a request to accord recognition to
the changed name of the trade union but the management withdrew recognition
without giving a notice on the ground that the recognition granted to it was for
clerical workmen and not to workmen covered by Section 2 (i). Aggrieved by
this order, the union preferred a writ petition in the Madras High Court; single
judge of the High Court allowed the petition. It was submitted by the
management that the writ petition was not maintainable because recognition was
not granted under any statute. Rejecting the contention, Chief Justice Ismail,
observed:
[T]he Code of Discipline in industry does contemplate
recognition and that it was only under that Code that recognition
was applied for and granted. It is not disputed that the grant of
recognition confers a status on a body like the respondent union
to represent the workers in a particular category with reference
to their service conditions, with the management; in other
words, it becomes a bargaining agent on behalf of the group of
workers with reference to which it was recognized. Withdrawal
of that status or recognition will certainly bring about adverse
consequences on a body like the respondent union, and with
reference to such adverse consequences, even an order of
withdrawal like the one made by the appellant if it is illegal or is
in violation of principles of natural justice, certainly a body like
the respondent union can approach this court under Art. 226 of
 the Constitution. Therefore we reject the contention of the
learned counsel for the appellant that the writ petition was not
maintainable.
It is thus evident that courts may interfere under Article 226 of the
Constitution even where the recognition granted by the employer under the non-
statutory Code of Discipline is withdrawn on flimsy grounds or erroneous basis
or in violation of the principles of natural justice.
Do principles of natural justice apply in the de-recognition of a trade
union recognized under the Code of Discipline by the management? This issue
was raised in Secretary, Meters Staff Association v. Union Electrical Industries
Ltd.20 Here, the staff association was recognized by a government company
wholly owned and controlled by the government under the Code of Discipline.
After some time, the recognition enjoyed by the association was withdrawn.
Thereupon, the association filed a writ petition before the Kerala High Court.
The questions arose: (i) whether the discretion exercised by the management to
derecognize the association could be interfered with under Article 226? and (ii)
whether the management is bound to apply the principles of natural justice in
derecognizing a union? While dealing with these questions, the court observed:
Recognition certainly confers a status on the union to represent
the workers and as a bargaining agent, unions have come to
enjoy various facilities by virtue of such status. De-recognition
involves deprivation of such status, right and facilities. It
certainly involves serious adverse consequences. No doubt the
decision to derecognize a particular union can be regarded as an
administrative decision or order. Nevertheless, since it involves
serious adverse consequences to the union and the employees
organized under the union, their right to hearing before the
decision is taken has certainly to be recognized, as part of the
principle of fair play in action. If the decision is taken without
giving a hearing to the union, it has to be regarded as violative
of principles of natural justice and must be treated as void.21
In the absence of any statutory recognition of trade unions, the question
has arisen whether a civil suit is maintainable on an action by a trade union
under the voluntary Code of Discipline? This issue was answered in the negative
in T C C Thozhilali Union v. TCC Ltd.22 In this case, the management and
workers represented by six unions arrived at a settlement over the then existing
differences and drew up a memorandum of settlement. The settlement inter alia,
provided that the management recognized all the six unions as the collective
bargaining agents of the workmen. The settlement was operative for 4 years and
was to be governed by the Code of Discipline. When the period of 4 years was
about to expire, the company refused to allow the plaintiffs union to enter into a
‘Long Term Settlement’. The union then filed a civil suit praying that the
management be restrained from entering into any settlement or agreement with
other unions. The trial court dismissed the suit. The lower appellate court, on
appeal by the union upheld the findings of the court below. The union thereupon
filed a second appeal before the Kerala High Court which observed:
The position, therefore, is—(i) ‘recognition dispute’ is an
industrial dispute; (ii) recognition is a matter of volition on the
part of the employer; (iii) a trade union has neither common law
right nor statutory right which enables and entitles it to compel
an employer to give recognition to it as the bargaining agent of
its members; and (iv) since it has no such common law right, a
‘recognition disputed’, cannot be said to be one emanating from,
and emerging out of, any right under the general common law;
and, therefore (v) principle No. 2, stated by the Supreme Court
in the Premier Automobiles case is not attracted to a
‘recognition dispute’, no matter that a trade union has no such
right under any statute either.
The court held that the lower courts rightly held that the suit brought by
the union in respect of the ‘recognition dispute’ could not be entertained by a
civil court.

E. Claim of Trade Union for Recognition Based on Circulars

—Not Maintainable
In K V Sridharan v. S Sundaramoorthy23, the division bench of the Madras
High Court held that the Trade Unions Act, 1926 does not make any provision
for recognition of a union based on circular. Any recognition of union, if it is a
union relating to the employees of the Central Government, is governed by some
departmental circulars. These circulars are administrative in nature and not
statutory. Therefore, these circulars cannot be enforced in a writ petition.
The aforesaid view was reiterated in Port and Dock Labour Union
affiliated to Bharatiya Mazdoor Sangh v. Union of India24. In this case, the
petitioner-trade union sought a declaration by Chennai Port Trust that it was a
recognized trade union entitled to statutory benefits under a circular issued by
the government. The Madras High Court rejected the claim and held that in the
absence of any law relating to trade union recognition in the state of Tamil
Nadu, the claims of the union can be based only upon the circulars and various
communications issued by the ministry. In fact, as per the communication issued
by the registry, pending finalization of policy by the ministry, the first seven
unions alone have to be recognized and as rightly held by the Port Trust, those
seven unions even as per the check-off verification conducted during 2010, are
having more membership than the petitioner union.

F. Secret Ballot Method for Determining the Representation

Character of Trade Union
In Food Corporation of India Staff Union v. Foods Corporation of India25, the
Food Corporation of India (FCI) and the union representing the workmen agreed
to follow the secret ballot method for determining the representative character of
the trade union. They approached the Supreme Court to lay down as to how the
method of secret ballot should be tailored to yield the correct result. Keeping in
view the importance of the matter, the Court issued notice to all the major all
India trade union organizations on this aspect. Pursuant to this notice, some trade
union organizations appeared and were heard by the Court. The Supreme Court,
after perusing various documents and records, directed that the following norms
and procedure shall be followed for assessing the representative character of the
trade unions by the secret ballot system:
(i) As agreed to by the parties, the relative strength of all the eligible
unions by way of secret ballot be determined under the overall
supervision of the Chief Labour Commissioner (Central) (CLC).
(ii) The CLC will notify the returning officer who shall conduct the
election with the assistance of the FCI. The returning officer shall be
an officer of the Ministry of Labour, Government of India.
(iii) The CLC shall fix the month of election while the actual date/dates of
election shall be fixed by the returning officer.
(iv) The returning officer shall require the FCI to furnish sufficient
number of copies of the lists of all the employees/workers (Categories
III and IV) governed by the FCI (Staff) Regulations, 1971 borne on
the rolls of the FCI as on the date indicated by the CLC. The list shall
be prepared in the proforma prescribed by the CLC. The said list shall
constitute the voters list.
(v) The FCI shall display the voters list on the notice board and other
conspicuous places and shall also supply copies thereof to each of the
unions for raising objections, if any. The unions will file the objection
to the returning officer within the stipulated period and the decision of
the returning officer shall be final.
(vi) The FCI shall make necessary arrangement to:
(a) give wide publicity to the date/dates of election by
informing the unions and by affixing notices on the
notice boards and also at other conspicuous places for the
information of all the workers;
(b) print requisite number of ballot papers in the proforma
prescribed by the CLC incorporating therein the names
of all the participating unions in an alphabetical order
after different symbols of respective unions;
(c) the ballot papers would be prepared in the proforma
prescribed by the CLC in Hindi/English and the regional
language concerned;
(d) set up requisite number of polling stations and booths
near the premises where the workers normally work; and
(e) provide ballot boxes with requisite stationary, boards,
sealing wax, etc.
(vii) The returning officer shall nominate a presiding officer for each of the
polling stations/booths with requisite number of polling assistants to
conduct the election in an impartial manner. The presiding officers
and the polling assistants may be selected by the returning officer
from amongst the officers of the FCI.
(viii) The election schedule indicating the nominators, scrutiny of
nomination papers, withdrawal of nomination, polling, counting of
votes and the declaration of results shall be prepared and notified by
the returning officer in consultation with the FCI. The election
schedule shall be notified by the returning officer well in advance and
at least one month's time shall be allowed to the contesting unions for
canvassing before the date of filing the nominations.
(ix) To be eligible for participating in the election, the unions must have
valid registration under the Trade Unions Act, 1926 for one year with
an existing valid registration on the first day of filing of nomination.
(x) The presiding officer shall allow only one representative to be present
 at each polling station/booth as observer.
(xi) At the time of polling, the polling assistant will first score out the
name of the employee/workman who comes for voting, from the
master copy of the voters list and advice him thereafter to procure the
secret ballot paper from the presiding officer.
(xii) The presiding officer will hand over the ballot paper to the
workman/employee concerned after affixing his signatures thereon.
The signatures of the workman/employee casting the vote shall also
be obtained on the counterfoil of the ballot paper. He will ensure that
the ballot paper is put inside the box in his presence after the voter is
allowed to mark on the symbol of the candidate with the inked rubber
stamp in camera. No employee/workman shall be allowed to cast his
vote unless he produces his valid identity card before the presiding
officer concerned. In the event of non-production of identity card due
to any reason, the voter may bring in an authorization letter from his
controlling officer certifying that the voter is the bona fide employee
of the FCI.
(xiii) After the close of the polling, the presiding officer shall furnish
detailed ballot paper account in the proform prescribed by the CLC
indicating total ballot papers received, ballot papers used, unused
ballot papers available, etc., to the returning officer.
(xiv) After the close of the polling, the ballot boxes will be opened and
counted by the returning officer or his representative in the presence
of the representatives of each of the unions. All votes which are
marked more than once, spoiled, cancelled or damaged, etc., will not
be taken into account.
(xv) The contesting unions through their representatives present at the
counting place may be allowed to file applications for re-counting of
votes to the returning officer. The request would be considered by the
returning officer and in a given case, if he is satisfied that there is
reason to do so, he may permit re-counting. However, no application
for re-counting shall be entertained after the results of the poll are
declared.
(xvi) The result of voting shall be compiled on the basis of valid votes
polled in favour of each union in the proforma prescribed by the CLC
and signatures obtained thereon from the representatives of all the
unions concerned as a proof of counting having been done in their
presence.
(xvii) After declaring the result on the basis of the votes polled in favour of
each union by the returning officer, he will send a report of his
findings to the CLC.
(xviii) The union/unions obtaining the highest number of votes in the
process of election shall be given recognition by the FCI for a period
of 5 years from the date of the conferment of the recognition.
(xix) It would be open to the contesting unions to object to the result of the
election or any illegality or material irregularity which might have
been committed during the election. Before the returning officer such
objection can only be raised after the election is over. The objection
shall be heard by the CLC and disposed of within 30 days of the filing
of the same. The decision of the CLC shall be final, subject to
challenge before a competent court, if permitted under law.
The Court also held that it would be open to the CLC to deal with any
situation not covered by the procedure detailed above. He may do so in
consultation with the returning officer and the FCI. The Court accordingly
directed the CLC and the FCI to hold election in accordance with the procedure
prescribed by this order on the date specified therein.

G. Method of Recognizing a Trade Union

In M R P Workers Union v. Govt of Tamil Nadu26, it was held in the absence of
specific statutory provisions in the Trade Unions Act, 1926 for recognition of
trade union as representative body of workmen in the industry, the same would
be determined by state government and labour commissioner. On receipt of such
an application, the concerned labour commissioner will issue notice to the two
unions, within 2 weeks from the date of receipt of the application, calling upon
them to submit their membership registers and the necessary supportive
documents under the Code of Discipline within 2 weeks from the date of receipt
of the notice by them. The notice will call upon them to produce their records as
per the Code of Discipline during the period of 6 months prior to the date of
notice. The labour commissioner shall thereafter proceed to decide as to which
union is the representative union of the workmen: The Court observed that we
cannot permit the management to say that:
The union which shows larger membership at the end of the
exercise will not be recognized by the management. Recognition
is for the purpose of representing the causes of the workmen in
 various forum before the management and various authorities
under the labour law. It is not a determination available for the
sole satisfaction of the management. It is a factual determination
and the determination leads to a status. The union which
establishes larger membership at the end of the aforesaid
exercise, shall be recognized as the representative union.
In Petrolium Employee's Union v. Chief Labour Commissioner27, the
Court ruled that once a trade union has given its consent for verification of
membership by secret ballot, it is estopped from challenging the same in a writ
petition.

H. Rights of Unrecognized Unions

The management is obliged to hear a trade union registered though not
recognized and resolve its dispute as far as possible without resorting to
conciliation or adjudication processes. Though the management is not obliged to
recognize a trade union but at the same time, it cannot refuse to hear grievances
voiced by it in respect of service conditions or its members. There is no
provision in the Industrial Disputes Act or Trade Unions Act prohibiting the
management from negotiating, discussing or entering into settlement with an
unrecognized union. It is only in case where the demands of unrecognized union
are already seized of by the recognized union, such demand would not be
maintainable. Direction can be given to management falling under Article 12 of
the Constitution.28
The Supreme Court, in Chairman, State Bank of India v. All Orissa
State Bank Officers Association29 delineated the rights of recognized and
unrecognized trade unions, while interpreting the provision of Rule 24 of the
verification of membership and recognition of Trade Union Rules, 1974 framed
by the state of Orissa which is as follows:
22(a) Rights of Unrecognized Union—to meet and discuss with
the employer or any person appointed by him in that behalf the
grievances of any individual member relating to his service
conditions.
22(b) To appear on behalf of its members employed in the
establishment in any domestic or departmental enquiry held by
the employer and before the conciliation officer/labour
court/industrial tribunal or arbitrator.
 While interpreting the aforesaid clause, the Court held that an
unrecognized trade union unlike ‘recognized trade union’ has (i) no right to
participate in the discussions/negotiations regarding general issues affecting all
workmen/employees; and (ii) settlement, if any, arrived at as a result of such
discussion/negotiations is not binding on all workmen/employees. But it has (i)
the right to meet and discuss with the management/employer about the
grievances of any individual member relating to his service conditions; and (ii)
to represent an individual member in domestic inquiry or departmental inquiry
and proceedings before the conciliation officer and adjudicator.
The Court gave two reasons in support of its conclusion: (i) the right of
the citizens of this country to form an association or union is recognized under
Article 19(1) (c) of the Constitution; (ii) for the sake of industrial peace and
proper administration of the industry, it is necessary for the management to seek
cooperation of the entire work force.
The Court added that the very fact that certain rights are vested in a non-
recognized union shows that the Trade Unions Act, 1926 and the rules framed
thereunder acknowledge the existence of a non-recognized union. Such a union
is not a superfluous entity and it has relevance in specific matters relating to
administration of the establishment. Thus, the management/employer cannot
outrightly refuse to have any discussion with a non-recognized union in matters
relating to service conditions of individual members and other matters incidental
thereto.

I. Response of the First National Commission on Labour

(a) Scheme for recognition: The First National Commission on Labour has
recommended compulsory recognition of trade unions by the employers
under the central legislation in industrial undertakings employing 100 or
more workers or where the capital invested is above the stipulated size. In
order to claim recognition by the individual employer, the union must
have the total membership of 30 per cent of the plant or establishment.
The industry-wise union in local area may, however, be recognized if the
minimum membership is 25 per cent. The commission has recommended
that where recognition is sought by more than one union, the larger union
should be recognized. But the commission was in favour of recognition of
industry-wise union over plant or unit union. The commission’s
recommendations are open to several objections: First, recognition of
either industry-wise union or unit-wise union may lead to industrial unrest
and rivalry. Second, the two alternative choices given to Industrial
 Relations Commission may also lead to confusion and thus, no uniform
method may be followed. It may, in effect, affect industrial peace and
harmony.
(b) Mode of determination of representative character. The National
Commission on Labour has suggested alternative methods, namely,
‘verification’ and ‘ballot’. It suggested that the proposed Industrial
Relations Commission should be empowered to decide the representative
character of union either by examination of membership or holding an
election through secret ballot of all employees. The alternative choice
given by the National Commission may also lead to confusion and thus no
uniform method may be followed. It may, in effect, also affect industrial
peace and harmony. Out of the two methods, the secret ballot method is a
democratic method and is more acceptable for a welfare society like ours.
(c) Machinery for determination of representative character: The National
Commission recommended that the Industrial Relations Commission at
centre and states (as proposed by the commission) should be empowered
to issue certificates to unions as representatives for collective bargaining.
(d) Right of recognized trade unions: The National Commission on Labour
recommended that the recognized trade unions should be given certain
rights and privileges such as: (i) right of sole representation; (ii) entering
into collective agreement on terms of employment and conditions of
service; (iii) collection of membership subscription within the premises of
the undertaking, the right to check-off; (iv) holding discussion with
departmental representatives of its workers–members within factory
premises; (v) inspecting by prior agreement the place of work of any of its
members; and (vi) nominating its representatives on works/grievance
committees and other bipartite committees. As regards the rights of
unrecognized trade unions, the commission suggested that they should
enjoy the right to represent individual grievances relating to termination of
service and other conditions of service.
The proposed rights of recognized trade unions suggested by the National
Commission on Labour has been subject of criticism by AITUC and other
organizations. According to them, the proposed rights are inadequate. They
suggested that more rights should be conferred upon the recognized trade unions.

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

1988.
The bill seeks to provide for the constitution of a bargaining council to negotiate
and settle industrial disputes with the employer. Thus, under Chapter II-D, every
employer is required to establish a bargaining council for the industrial
establishment for which he is the employer consisting of representatives of all
the trade unions having membership among the workmen employed in the
establishment, not being trade unions fenced on the basis of craft or occupation;
each trade union being called a bargaining agent.
Where there are more than one trade unions having members among the
workmen employed in an industrial establishment, the representation of all such
trade unions on the bargaining council shall be in proportion to the number of
the members in that establishment as determined under the Trade Unions Act,
1926.
The trade union with the highest membership of workmen employed in
that establishment and having in no case, less than 40 per cent of the total
membership among the workmen shall be known as the principal bargaining
agent.
Where there is only one trade union having members among the workmen
employed in an industrial establishment, that trade union shall be the bargaining
council for that establishment and such bargaining council shall also act as the
sole bargaining agent.
The chairman of the bargaining council shall be a person chosen by the
principal or sole bargaining agent from amongst its representatives. However, if
there is no trade union having membership of at least 40 per cent of the total
membership of the trade unions of workmen in an industrial establishment, the
one with the highest membership among the workmen employed in the
establishment shall have the right to nominate one of its representatives as the
chairman of the bargaining council.
If there is no trade union having members among the workmen employed
in an industrial establishment, a workmen’s council shall be established by the
employer in the prescribed manner and such workmen’s council shall be the
bargaining council for that establishment.
The state government is empowered to establish a bargaining council in a
class of industry in a local area in respect of which it is the appropriate
government on the basis of the relative strength of the trade unions of workmen
concerned as determined under the provisions of the Trade Unions Act, 1926, in
such manner as may be prescribed.
Similarly the Central Government may establish a bargaining council in
respect of an industrial undertaking or a class of industry in respect of which it is
the appropriate government on the basis of the relative strength of the trade
unions of workmen concerned as determined under the provisions of the State
Trade Unions Act in the prescribed manner.
The Central Government is also empowered to set up, in consultation
with the state government concerned, a council at the national level to be called
the National Bargaining Council in respect of a class of industry or a group of
central public sector undertakings in relations to which the appropriate
government is the state government.
The National Bargaining Council shall comprise representatives of the
Central Government, the state government concerned, employers or trade unions
of employers and trade unions of workmen, being represented in proportion to
their relative strength of membership as determined under the provisions of the
Trade Unions Act, 1926.
Every bargaining council establishment under Section 9, other than a
national bargaining council establishment shall be registered with the labour
court in such manner as may be prescribed.
The term of office of bargaining council registered under this chapter
shall be 3 years.
A registered bargaining council shall, subject to the provisions of this Act
be entitled:
(a) to raise industrial disputes with the employer or employers;
(b) to settle industrial disputes with the employer or employers;
(c) to sign on behalf of the workmen the documents settling industrial
disputes;
(d) to represent the workmen in any industrial dispute; and
(e) to exercise such other powers as may be prescribed.
Where a labour court finds a bargaining agent guilty of indulging in all or
any of the unfair labour practices listed at item No. 1 (illegal strike), item No. 5
(in so far as it relates to go slow) and item No. 8 (violence) of Part II of the Fifth
Schedule, it may disqualify such bargaining agent to function for such period as
may be determined by it.

K. Response of the Second National Commission on Labour

The (Second) National Commission on Labour which submitted its report to the
Government of India on 29 June 2002 has recommend that the negotiating agent
should be selected for recognition on the basis of the check off system. A union
with 66 per cent membership be entitled to be accepted as the single negotiating
agent, and if no union has 66 per cent support, then unions that have the support
of more than 25 per cent should be given proportionate representation on the
negotiating college. The commission also suggested that recognition once
granted, should be valid for a period of 4 years, to be coterminus with the period
of settlement. The individual workers’ authorization for check off should also be
coterminus with the tenure of recognition of the negotiating agent or college.

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

1 Paramount Films India Ltd v. Their Workmen, (1950) LLJ 690.

2 Report of the Royal Commission on Labour, (1931) 325.
3 Id. at 326.
4 Suresh C Srivastava, 'Trade Unionism in India", Review of Contemporary Law, Brussels
and Paris, (1970), 83.
5 Govt. of India, Report of the Committee on Labour Welfare (1969), 15.
6 A C Mukerjee v. Union of India, (1972) 2 LLJ 1978 (Calcutta); M A David v. KSE
Board, (1973) 2 LLJ 466, (Kerala) 1973; Tamil Nadu Electricity Board Accounts
Executive Staff Union v. Tamil Nadu Electricity Board, Madras, (1980) 2 LLJ 246.
7 All India Bank Employees Association v. National Industrial Tribunal, (1961) I LLJ
375; Raghubir Dayal Jai Prakash v. Union of India, AIR 1962 SC 363; DAV College
Jullunder v. State of Punjab, AIR 1971 SC 1737.
8 M A David v. KSE Board, op. cit., supra note 6.
9 Tamil Nadu Electricity Board, op. cit., supra note 6.
10 K V Sridharan v. S Sundamoorthy, 2009 LLR 414.
11 See the Preamble of the Act.
12 Section 10(1).
13 Proviso to Section 10(1).
14 Section 11.
15 Pfizer Employees' Union v. Mazdoor Congress, (1980) 1 LLJ 65 (Bombay).
16 Premier Automobiles Ltd. v. K S Wadke, (1975) 2 LLJ, 445; TCC Thozhilali Union v.
TCC Ltd, (1982) 1 LLJ 425; Premier Construction Co. Ltd v. Their Workmen, (1949)
ICR 708, Beedi Factory v. Their Employees, (1950) LIJ 207; Nellimarla Jute Mills Co.
Ltd v. Their Staff, (1950) LLJ 394.
17 Ibid.
18 Government of India, Annual Report of the Ministry of Labour and Employment of
Relevant Years.
19 1981 Lab. IC 1138.
20 (1984) 2 LLJ 446.
21 Id. at 449.
22 TCC Thozhilali Union v. TCC Ltd, (1982) 1LLJ 425 at 428–29.
23 (2009) 3 MLJ 1320.
24 (2012) 1 LLJ 650.
25 1995 Supp (1) SCC 678 (SC).
26 (2009) 4 LLJ 685.
27 2010 LLR 214.
28 See Indian Airlines Ltd case, 1997 FLR 489.
29 2000 Lab. I.C. 2153.
 CHAPTER
11
Collective Bargaining

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

II. ILO PRINCIPLES ON THE RIGHT TO COLLECTIVE

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

III. CONCEPT AND MEANING OF COLLECTIVE

BARGAINING

The expression ‘collective bargaining’ was coined by Sydney and Beatrice.2

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

A. Parties to Collective Bargaining

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

B. Subject Matter of Collective Bargaining

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

C. Objectives of Collective Bargaining

The International Confederation of Free Trade Union called collective
bargaining ‘A Workers’s Bill of Rights’. It enumerated the following objects of
the union in collective bargaining:
1. to establish and build union recognition as an authority in the work place;
2. to raise workers' standard of living and win a better share in company's
profits;
3. to express in practical terms the workers' desire to be treated with due
respect and to achieve democratic participation in decisions affecting
 their working conditions;
4. to establish orderly practices for sharing in these decisions and to settle
disputes which may arise in day-to-day life of the company;
5. to achieve broad general objectives such as defending and promoting the
workers' interests throughout the country.10
The ILO also states that:
In collective bargaining, the object is to reach agreement on
wages and other conditions of employment about which the
parties begin with divergent viewpoints but try to reach a
compromise. When a bargain is reached, the terms of the
agreement are put into effect.11
Thus, it is evident that the prime object of collective bargaining is to
resolve the differences between the parties in respect of employment, non-
employment, terms of employment and conditions of service of the members of
the union.

D. Duration of Collective Bargaining

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

IV. PREREQUISITES FOR COLLECTIVE BARGAINING

A. Freedom of Association
In order to achieve collective bargaining, it is essential to ensure that the denial
of such freedom negates collective bargaining. In this respect, it is significant to
note that the International Labour Organization adopted the ‘Convention No. 87
concerning freedom of association and protection of the right to organize’ which
seeks to provide for freedom of association. India has, however, not formally
ratified this convention perhaps due to administrative and constitutional
problems. However, Article 19(1) (c) of the Constitution of India guarantees ‘the
right to form associations or unions’. Earlier the Trade Unions Act, 1926
impliedly concedes the freedom of association by conferring certain rights,
duties and immunities upon members of registered trade unions. However, there
is a need to ratify the ILO Convention.

B. Strong and Stable Trade Unions

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

C. Recognition of Trade Unions

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

D. Willingness to Give and Take

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

E. Absence of Unfair Labour Practices or Victimizations

Statutory provisions for unfair labour practice or victimization are another
prerequisite of collective bargaining. We will discuss in Chapter 12 unfair labour
practices and victimizations.

V. ADVANTAGES AND DISADVANTAGES OF

COLLECTIVE BARGAINING

A. Advantages of Collective Bargaining

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

B. Disadvantages of Collective Bargaining

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

VI. COLLECTIVE BARGAINING IN INDIA

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

A. Plans and Collective Bargaining

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

B. Response of the [First] National Commission on Labour

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

C. Factors Affecting Successful Collective Bargaining in

India
Labour laws have effected the formation of trade unions in two ways. First, it
has weakened the protest movement. Second, it has failed to give adequate
protection to the members of a union for their trade union activities.
History of trade union movement in different countries of the world
shows that economic dependence on industrial employment, oppressive
conditions of work in industrial undertakings, economic exploitation of workers
and impersonal handling of their personal problems have generally built up the
protest movement and the urge to form unions to combat the management's
superior powers. However, in India, minimum standard statutes like Factories
Act, 1948, Mines Act, 1952, Minimum Wages Act, 1948, Payment of Wages
Act, 1936, Payment of Bonus Act, 1965 and Social Security Statutes like
Employees' State Insurance Act, 1948, Workmen's Compensations Act, 1923,
Employees' Provident Fund and Miscellaneous Provisions Act, 1952, and
Payment of Gratuity Act, 1972, which are not only far in advance of the level
dictated by the strength of workers but also of those dictated by the significant
protest movement. Moreover, institutions such as a works committees and
adjudication system, have in general, tended to minimize the value of trade
unions. Further, the institution of standing orders, the procedure for their
certification and the provisions regarding the adjudication, disputes relating to
their interpretation and application mitigate against the necessity of forming
trade unions.
Members of trade unions need as much protection from the common law
doctrines of criminal conspiracy and restraint of trade as from employers' wrath.
However, it has to be noted that the Trade Unions (Amendment) Act, 1947,
which prohibited certain forms of unfair practices on the part of management,
have not yet been enforced.
Even the protections granted against common law doctrine of criminal
conspiracy, civil conspiracy and restraint of trade under Sections 17, 18 and 19
of the Trade Unions Act are hardly sufficient. If the expression ‘unless the
agreement is an agreement to commit an offence’ renders Section 17 almost
meaningless. The expression ‘on the ground only’ severely curtails the
benevolent aspect of Section 18.
Further, law relating to labour management relations and adjudication
system prevalent in our country reveals that the labour law had not been to a
great extent responsive to the bargaining power of Indian workers. Thus, the
Industrial Disputes Act, 1947, restricts the striking power of Indian workers. It
regulates the use of instruments of economic coercion. Of course, Article 19 (1)
(c) of the Constitution guarantees ‘the right to form associations or unions’ but
after the Supreme Court decision in All India Bank Employees case22 that the
Article merely guarantees the ‘right to form associations or unions’ and, in
particular does not guarantee the right to strike, the usefulness of the Article is
extremely limited.
Moreover, Section 7 of the Criminal Law (Amendment) Act, 1932,
renders it impossible for the workers to indulge in several kinds of labour
activities. It, adversely affects the workmen's right to picket. It prohibits
obstruction of access and intimidation of persons or employees or loitering at
places of residence or business with the intent of deterring others from entering
or approaching or dealing at such place. The Bombay High Court in Damodar
Ganesh v. State23 has, however, held that Section 7 prohibits even peaceful
picketing. It has, therefore, severely affected the bargaining power of trade
unions.
Moreover, the surplus labour market (which exists in India) affects the
bargaining power of Indian labour. It will be observed that ‘the backlog of
unemployed which stood at 3 million at the commencement of the First Five
Year Plan, was estimated to be above 10 million in 1968. This is in spite of 31
million jobs created during the first three plans which is almost equivalent to the
size of the entire economically active population of a number of countries like
West Germany, United Kingdom, and Pakistan.’24 In addition, about 18 to 19
million job opportunities were created during the Fourth Five-Year Plan.25 They
further estimated that even if the entire plan projects were successfully
implemented, over 4 million would represent the backlog at the end of the
Fourth Five-Year Plan.26
Further, the absence of any statutory provisions at central level for the
recognition of a representative trade union by an employer also affects the
bargaining power of trade unions. Again, the right of unions has jeopardized the
striking power of unions. Moreover, the government's unfettered discretion in
referring a dispute for adjudication and for issuing of prohibitory order under
Section 10 of Industrial Disputes Act has adversely affected the labour's
interests.
Labour laws have also not given any special status to a trade union.
Section 36 of the Industrial Disputes Act, 1947, enables a worker, if he so
desires, to be represented by a union, but it does not enable a union to represent
its members. Indeed, apart from the general law of agency, a union cannot bind
by its decision, its own member, far less the non-union member in the
establishment.
1 Tamil Nadu Electricity Workers Federation v. Madras Electricity Board, AIR 1965
Mad. 111.
2 Sydney and Beatrice, Industrial Democracy, (1897).
3 F H Harbison, Goals and Strategy in Collective Bargaining, (Harper and Bros, 1951).
4 International Labour Office, Collective Bargaining (A Worker’s Education Manual),
Geneva (1960), 3.
5 C S Golden, Causes of Industrial Peace under Collective Bargaining, USA, the National
Planning Association, 1949.
6 James J Healy (Ed.), Creative Collective Bargaining, Prentice Hall, 1965, 9.
7 1990 Lab IC 301 (SC).
8 Bartram F Willlcox, ‘A Sketch of the Federal Law of Labour in the United States’ Aligarh
Law Journal, (1965) 39.
9 Id. at 46.
10 Referred in Mary Sur, Collective Bargaining (1965), 4.
11 International Labour Office, Collective Bargaining (A Workers' Education Manual),
Geneva (1960), 5.
12 Mary Sur, supra note 10, 34.
13 ILO Collective Bargaining, A Worker's Education Manual, Geneva, (1960) 128.
14 Government of India, Report of the National Commission on Labour (1969), 325.
15 Bartram F Willcox and other (Ed.) Labour Law and Labour Relations: Cases and
Materials (1967), 29.
16 Ibid.,
17 Bartram F Willcox : op. cit.
18 Ibid., Id at 37.
19 Government of India, Second Five-Year Plan (1956), 574.
20 Government of India, Fourth Five-Year Plan: A Draft Outline (1966), 387.
21 Government of India, Report of the National Commission on Labour (1969), 327.
22 (1962) SCR 17 1.
23 Damodar Ganesh v. State, (1961) 2 LLJ 385.
24 The statement was made by Shri Jaisukh Lal Hathi, Union Minister of Labour and
Employment and Rehabilitation in a broadcast on ‘employment’ dated 17 January, 1968.
See Northern India Patrikla, dated 19 January, 1968.
25 Government of India, Fourth Five-Year Plan: A Draft Outline, 108.
26 Ibid.
 CHAPTER
12
Unfair Labour Practices and
Victimizations

I. UNFAIR LABOUR PRACTICES ON THE PART OF

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

II. UNFAIR LABOUR PRACTICES ON THE PART OF

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

III. JUDICIAL DELINEATION OF ‘UNFAIR LABOUR

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

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

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

IV. CODE OF DISCIPLINE IN INDUSTRY

The Code of Discipline, 1958 contains a list of unfair labour practices to be
avoided by unions and management:
(1) Management agrees… not to support or encourage any unfair labour
practice such as:
(a) interference with the rights of employees to enrol or continue as
union members;
(b) discrimination, restraint or coercion against any employee because of
recognized activity of trade unions; and
(c) victimization of any employee and abuse of authority in any form.
 (2) Unions agree to discourage unfair labour practices such as:
(a) negligence of duty;
(b) careless operation;
(c) damages to property;
(d) interference with or disturbance to normal work; and
(e) insubordination.

V. RESPONSE OF THE [FIRST] NATIONAL

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

VI. UNFAIR LABOUR PRACTICES ON THE PART OF

EMPLOYERS AND TRADE UNIONS OF EMPLOYERS
UNDER THE INDUSTRIAL DISPUTES (AMENDMENT)
ACT, 1982
Section 2 (ra) read with the Fifth Schedule of Industrial Disputes (Amendment)
Act, 1982 defines and enumerates unfair labour practices on the part of
employers to mean:
1. To interfere with, restrain from, or coerce, workmen in the exercise of their
right to organize, form, join or assist a trade union or to engage in
concerted activities for the purposes of collective bargaining or mutual aid
or protection, that is to say:
(a) threatening workmen with discharge or dismissal, if they join a trade
union;
(b) threatening a lockout or closure, if a union is organized;
 (c) granting wage increase to workmen at crucial periods of trade union
organization, with a view to undermining the efforts of the trade
union organization.
2. To dominate, interfere with or contribute support, financial or otherwise, to
any trade union, that is to say:
(a) an employer taking an active interest in organizing a trade union of
his workmen; and
(b) an employer showing partiality or granting favour to one of several
trade unions attempting to organize his workmen or to its members,
where such a trade union is not a recognized trade union.
3. To establish employer-sponsored trade unions of workmen.
4. To encourage or discourage membership in any trade union by
discriminating against any workman, that is to say:
(a) discharging or punishing a workman, because he urged other
workmen to join or organize a trade union;
(b) discharging or dismissing a workman for taking part in any strike
(not being a strike which is deemed to be an illegal strike under this
Act);
(c) changing seniority rating of workmen because of trade union
activities;
(d) refusing to promote workmen to higher posts on account of their
trade union activities;
(e) giving unmerited promotions to certain workmen with a view to
creating discord amongst other workmen, or to undermine the
strength of their trade union;
(f) discharging office-bearers or active members of the trade union on
account of their trade union activities.
5. To discharge or dismiss workmen
(a) by way of victimization;
(b) not in good faith but in the colourable exercise of the employer's
rights;
(c) by falsely implicating a workman in a criminal case on false evidence
or on concocted evidence;
(d) for patently false reasons;
 (e) on untrue or trumped up allegations of absence without leave:
(f) in utter disregard of the principles of natural justice in the conduct of
domestic inquiry or with undue haste;
(g) for misconduct of a minor or technical character, without having any
regard to the nature of the particular misconduct or the past record or
service of the workman, thereby leading to a disproportionate
punishment.
6. To abolish the work of a regular nature being done by workmen, and to
give such work to contractors as a measure for breaking a strike.
7. To transfer a workman mala fide from the one place to another, under the
guise of following management policy.
8. To insist upon individual workmen, who are on a legal strike, to sign a
good conduct bond, as a pre-condition to allowing them to resume work.
9. To show favouritism or partiality to one set of workers regardless of merit.
10. To employ workmen as ‘badlis’, casuals or temporaries and to continue
them as such for years, with the object of depriving them of the status and
privileges of permanent workmen.
11. To discharge or discriminate against any workman for filing charges or
testifying against an employer in any inquiry or proceeding relating to any
industrial dispute.
12. To recruit workmen during a strike which is not an illegal strike.
13. Failure to implement award, settlement or agreement.
14. To indulge in acts of force or violence.
15. To refuse to bargain collectively, in good faith with the recognized trade
unions.
16. Proposing or continuing a lockout deemed to be illegal under this Act.
And Section 25 T of the Act prohibits employers (whether registered
under the Trade Unions Act, 1926 or not) to commit any of the aforesaid unfair
labour practices. Violation of the provision is punishable with imprisonment for
a term which may extend to 6 months or with fine which may extend to ₹1,000
or with both.
A perusal of item 7 of the Fifth Schedule read with Section 25 T of the
Act reveals that there is a statutory prohibition engrafted in the Industrial
Disputes Act prohibiting transfer of a workman mala fide from one place to
another under the guise of management policy. Thus, a valued right has been
created by the statute in favour of the workman from being subjected to by his
employer to transfers mala fide under the guise of following the management
policy. This is a right which has been created by the Industrial Disputes Act in
favour of the workmen restricting the unfettered right of the management in the
matter of effecting transfers of his employees. The obligation not to transfer a
workman mala fide from one place to another under the guise of management
policy was not recognized under common law. That right it now created by the
statute.3 The remedy has been provided in Section 10 of the Act. There are
several conditions which are to be satisfied for invoking the remedy provided
under Section 10 of the Act. When the statute prescribes a remedy and also
prescribes the conditions for availing of that remedy, if the conditions for
invoking the remedy cannot be complied with, it does not mean that the statute
has not provided the remedy.4 Thus, the right as well as the remedy have been
provided by the Industrial Disputes Act in the matter of transfer by the
management. In such a case, the jurisdiction of the civil court is by necessary
implication barred.5
From the above, it is clear that (i) management is not expected to interfere
with the rights of the workmen to organize themselves into a trade union. (ii)
The management is also not supposed to dominate, interfere with or support,
financial or otherwise, to any trade union. (iii) The management is not expected
to establish employer-sponsored trade unions of workmen, and it is also not
supposed to encourage or discourage membership to any union by taking the
various steps which are mentioned above, clearly speaks of a recognized trade
union. (iv) To refuse to bargain collectively even in good faith with a recognized
trade union is an unfair labour practice.6
Discouragement of Badli workmen to join a trade union—an unfair
labour practice. In Panyam Cement Employees Union affiliated to INTUC,
Kurnool District v. Commissioner of Labour, Hyderabad7, the High Court of
Andhra Pradesh held that a reading of clause 4 of Part 1 of the Fifth Schedule
reveals that any action on the part of the employer/workmen to discourage a
workman from participating in a trade union activity is unfair labour practice.
Badli workmen are workmen and, therefore, if any employer disapproves of a
‘trade union of badli workers’ or discourages badli workers to join a trade union
or denies voting right to badli workers, the same would amount to unfair labour
practice.
Temporary appointment for successive fixed tenure with artificial
breaks—an unfair labour practice. The Supreme Court in Regional Manager,
SBI v. Raja Ram8 ruled that when an employee is appointed temporarily for
successive fixed tenures with artificial breaks in between so as to deny the
employee the right to claim permanent appointment, such action would be an
unfair labour practice within the meaning of the phrase in Section 2(ra) of the
Act. Section 2(ra) says that unfair labour practice means any of the practices
specified in the Fifth Schedule the Act. The Fifth Schedule to the Act contains a
list of unfair labour practices which have been classified under two heads,
namely:
(I) on the part of the employer and trade unions of employers; and
(II) on the part of the workmen and trade unions of workmen. The principle
that we have referred to earlier finds place in Item 10 of Part I under
which:
‘to employ workmen as ‘badlis’, casuals or temporaries and to
continue them as such for years, with the object of depriving
them of the status and privileges of permanent workmen,’ is an
unfair labour practice.
In other words, before an action can be termed as an unfair labour
practice, it would be necessary for the labour court to come to the conclusion
that the badlis, casuals and temporary workmen had been continued for years as
badlis, casuals or temporary workmen, with the object of depriving them of the
status and privileges of permanent workmen. To this has been added the judicial
gloss that artificial breaks in the service of such workmen would not allow the
employer to avoid a charge of unfair labour practice. However, it is the
continuity of service of workmen over a period of years which is frowned upon.
Besides, it needs to be emphasized that for the practice to amount to unfair
labour practice, it must be found that the workmen had been retained on a casual
or temporary basis with the object of depriving the workmen of the status and
privileges of a permanent workman.
The aforesaid view was reiterated in Krishna Lal v. General Manager,
Haryana Roadways, Rohtak9. The Punjab and Haryana High Court held that
where the services of a workman are terminated before the expiry of 240 days in
order to give artificial break for a few days and after some time, he is again re-
employed, it amounts to unfair labour practice under Section 2(ra) of the
Industrial Disputes Act, 1947.
Contravention of Model Standing Orders — an unfair labour practice. In
R P Sawant v. Bajaj Auto Ltd.10, the Bombay High Court held that the
contravention of the Model Standing Order is an unfair labour practice within
meaning of item 9 of Schedule IV in respect of which industrial court was
competent to grant relief to the complainants.

VII. UNFAIR LABOUR PRACTICES ON THE PART OF

WORKMEN AND TRADE UNIONS OF WORKMEN
UNDER THE INDUSTRIAL DISPUTES (AMENDMENT)
ACT, 1982
Section 2 (va) read with the Fifth Schedule of the Amendment Act also
enumerates the following unfair labour practices on the part of workmen and
their trade unions:
1. To advice or actively support or instigate any strike deemed to be illegal
under this Act.
2. To advice workmen in the exercise of their right to self-organization or to
join a trade union or refrain from joining any trade union, that is to say:
(a) for a trade union or its members to picket in such a manner that non-
striking workmen are physically debarred from entering the work
places;
(b) to indulge in acts of force or violence or to hold out threats of
intimidation in connection with a strike against non-striking
workmen or against managerial staff.
3. For a recognized union to refuse to bargain collectively in good faith with
the employer.
4. To indulge in coercive activities against certification of a bargaining
representative.
5. To stage, encourage or instigate such forms of coercive actions as wilful
‘go slow’, squatting on the work premises after working hours or
‘gherao’ of any of the members of the management or other staff.
6. To stage demonstrations at the residences of the employers or the
managerial staff members.
7. To incite or indulge in wilful damage to employer's property connected
with the industry.
8. To indulge in acts of force or violence or to hold out threats of
intimidation against any workman with a view to prevent him from
 attending work.
The commission of aforesaid unfair labour practices are prohibited under
Section 25 T and whosoever commits any such unfair labour practice is
punishable under Section 25 U of the Industrial Disputes (Amendment) Act,
1982 with imprisonment which may extend to 6 months or with fine which may
extend to ₹1,000 or with both.

Proof of Unfair Labour Practice

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

VIII. VICTIMIZATION
Victimization and unfair labour practice are ‘like twins who cling together’.
According to some, unfair labour practice can stand by itself, but victimization
must always keep company with unfair labour practice. For instance, where the
employer interferes with employees' right to self organization or with the
formation of any labour organization, or where the employer bangs the door on
any settlement by negotiation, there may be unfair labour practice. In such cases,
no punishment need be inflicted on any employee. It cannot be said that there is
any victimization. Thus, separate existence of unfair labour practice is
conceivable. ‘In other words, the dividing line between victimization and unfair
labour practice is very thin and what is unfair labour practice may also be a
victimization and vice versa.’12
Like unfair labour practice, the word ‘victimization’ has not been defined
either in the Trade Unions Act, 1926 or in the Industrial Disputes Act, 1947. The
Supreme Court in Bharat Bank Ltd v. Employees of Bharat Bank Ltd13, has,
however, defined the word ‘victimization’ to mean:
a certain person has become a victim, in other words, that he has
been unjustly dealt with.
The aforesaid meaning was followed in Bharat Iron Works v.
Bhagubhai Balubhai Patel14, wherein the Supreme Court observed that a
person is victimized, if he is subjected to persecution, prosecution or punishment
for no real fault or guilt of his own, in the manner, as it were a sacrificial victim.
The Supreme Court said that victimization may partake various types. For
example, pressurizing an employee to leave the union or union activities,
treating an employee unequally or in an obviously discriminatory manner for the
sole reason of his connection with union or his particular union activity;
inflicting a grossly monstrous punishment which no rational person would
impose upon an employee and the like.
The Supreme Court in Workmen of M/s Williamson Magor and Co. Ltd
v. M/s Williamson Magor and Co. Ltd,15 accepted the normal meaning of
‘victimization’, namely, being the victim of unfair and arbitrary action, and held
that there was ‘victimization of the superseded workmen. The tendency of the
Court to safeguard the interest of workmen, is also evident from the observation
of the Court, that whenever, the word ‘victimization’ can be interpreted in two
different ways, the interpretation which is in favour of the labour should be
accepted as they are the poorer section of the people compared to that of
management.16
Justice Dhawan in L H Sugar Factories & Oil Mills (P) Ltd,17 expressed
the view that what are unfair labour practices or victimizations is a question of
fact to be decided by the tribunal upon the circumstance of each case. However,
from the mere fact that the concerned workmen were office-bearers of the union,
it cannot be inferred that the company was actuated by any improper motive to
victimize them when the charge of misconduct was proved against them.18
Ludig Teller has enumerated and given seven instances where the
employees may be held guilty of unfair labour practice. These are, for instance,
sit down strikes, to compel members to join the union, strikes in violation of
collective bargaining agreement, strike during ‘cooling-off’, obstruction of
lawful works, the commission of misdemeanours in connection with labour
disputes, unlawful picketing, etc.
In RBS Jain Rubber Mills19, the tribunal listed the following as outward
manifestation to be taken into account for victimization or unfair labour practice:
1. Discrimination between workers
2. Singling out union leaders or members
3. Anti-union statement made at the time of discharge or shortly prior thereto
4. Relative significance of the alleged infraction
5. Whether others ever committed the same infraction without similarly
 being punished to the extent of discharge
6. Failure without explanation to introduce specific evidence in support of a
general accusation or reason for discharge or to call witnesses who have
personal knowledge of the basis of denial
7. Failure of the employer to hold an investigation
8. Failure to afford an employee the opportunity to defend himself
9. Uneven application of the company’s rule

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

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

IX. SCOPE OF INTERFERENCE BY INDUSTRIAL

TRIBUNAL

It was established in Indian Iron and Steel Co. v. Their Workmen23 that
industrial tribunal can interfere, inter alia, in management’s order when there is
victimization or unfair labour practice.
Again, in Ananda Bazar Patrika v. Their Employees24, the Supreme
Court dealt with the extent of jurisdiction of a labour court or an industrial
tribunal and observed as follows: If on the one hand, in terminating the services
of the employee, the management has acted maliciously or vindictively or has
been actuated by a desire to punish the employee for his trade union activities,
the tribunal would be entitled to give adequate protection to the employees by
ordering his reinstatement, or directing in his favour the payment of
compensation. But if the inquiry has been proper and the conduct of the
management in dismissing the employee is not mala fade, then the tribunal
cannot interfere with the conclusions of the inquiry officer, or with the orders
passed by the management after accepting the said conclusions.
In Bengal Bhatdee Coal Co. v. Singh25, the Supreme Court ruled:
[T]here is no doubt that though in a case of proved misconduct,
normally the imposition of a penalty may be within the
discretion of management, there may be cases where the
punishment of dismissal for the misconduct proved may be so
unconscionable or so grossly out of proportion to the nature of
offence that the tribunal may be able to draw an inference of
victimization merely from the punishment inflicted.
The Supreme Court in Hind Construction and Engineering Co. Ltd v.
Their Workmen26 has put the position of law as follows:
It is now settled law that the tribunal is not to examine the
finding or the quantum of punishment because the whole of the
dispute is not really open before the tribunal as it is ordinarily
before a court of appeal. The tribunal's powers have been stated
by this court in a large number of cases and it has been ruled that
the tribunal can only interfere if the conduct of the employer
shows lack of bona fides or victimization of employee or
employees or unfair labour practices. The tribunal may, in a
strong case, interfere with a basic error on a point of fact or a
perverse finding, but it cannot substitute its own appraisal of the
evidence for that of the officer conducting the domestic inquiry
though it may interfere where the principles of natural justice or
fair play have not been followed or where the inquiry is so
 perverted in its procedure as to amount to no inquiry at all. In
respect of punishment it has been ruled that the award of
punishment for misconduct under the Standing Orders, if any, is
a matter for the management to decide and if there is any
justification for the punishment imposed, the tribunal should not
interfere. The tribunal is not required to consider the propriety or
adequacy of the punishment or whether it is excessive or too
severe. But where the punishment and the past record are such,
as no reasonable employer would ever impose in like
circumstances, the tribunal may treat the imposition of such
punishment as itself showing victimization or unfair labour
practice.

1 Alexandra Jute Mills Ltd v. Their Workmen, (1950) I LLJ 1261.

2 Government of India, Report of the National Commission on Labour (1969) 336.
3 Kerala Rubber and Reclaims Ltd v. P A Sunny, (1989) Lab. IC 964 at 967 (Kerala).
4 Id. at 968.
5 Id. at 969.
6 MRF United Workers Union Rep. by its General Secretary v. Government of Tamil
Nadu, 2010 LLR 165 (HC Madras).
7 (2004) I LLJ 915.
8 (2005) I LLJ 12 at 14–15.
9 2011 LLR 359.
10 2001 LLR 935.
11 Gurdaspur Central Co-operative Bank Ltd v. Labour Court, (1999) Lab. IC 192.
12 Everyday Flash Light Co. v. Labour Court, (1962) 2 LLJ 204 (Allahabad).
13 Bharat Bank Ltd v. Employees of Bharat Bank Ltd (1950) LLJ 921.
14 Bharat Iron Works v. Bhagubhai Balubhai Patel AIR 1976 SC 98.
15 Workmen of M/s Williamson Magor and Co. Ltd, v. M/s Williamson, Magor and Co.,
Ltd, (1982) 1 LLJ 33 (SC).
16 Id. at 38.
17 LH Sugar Factories & Oil Mills (P) Ltd v. State of UP, (1961) 1 LLJ 686.
18 Brown Co. Ltd v. Their Workmen, (1959) 1 LLJ 450.
19 RBS Jain Rubber Mills‘ (1968) 1 LLJ vii (Journal Section).
20 Bharat Iron Works v. Bhagubhai, AIR 1976 SC 98.
21 Id. at 102.
22 Ibid.
23 Indian Iron and Steel Co. v. Their Workmen, AIR 1958 SC 130.
24 Ananda Bazar Patrika v. Their Employees, 1963 2 LLJ 429.
25 Bengal Bhatdee Coal Co. v. Singh, (1962–63) 24 FJR 406.
26 Hind Construction and Engineering Co. Ltd v. Their Workmen, AIR 1965 SC 917:
(1965) 1 LLJ 462.
 PART III
INDUSTRIAL DISPUTES ACT, 1947
 CHAPTER
13
Industrial Disputes Act: A Contextual
Framework
One of the most striking trends is the progressively increasing government
intervention in labour management relations. The Employers’ and Workmen’s
Disputes Act, 1860, provided for speedy and summary disposal by magistrates
of disputes concerning wages of workmen employed in railways, canals and
other public works. Like some of the earlier regulations of the East India
Company, it was concerned with specific industries and with only those disputes
that gave rise to a cause of action in civil courts. The government had no active
role to play. Provisions making breach of contract a criminal offence
undoubtedly affected the workers' right to strike but the statute did not directly
seek to regulate the use of instruments of economic coercion. The Trade
Disputes Act, 1929, provided for the constitution of two ad hoc bodies, viz., the
Court of Inquiry and the Board of Conciliation to inquire into and promote the
resolution of ‘trade disputes’. The expression ‘trade dispute’ meant ‘any dispute
or difference between employers and workmen or between workmen and
workmen, which is connected with the employment or with the conditions of
labour of any person’ and was neither confined to disputes in any particular trade
or industry, nor to justifiable causes. Further, the statute regulated strikes and
lockouts by declaring them illegal if their object was ‘other than the furtherance
of a trade dispute within the trade or industry in which the participants were
engaged; or if they were designed or calculated to inflict severe, general or
prolonged hardship upon the community and thereby to compel the government
to take or abstain from taking any particular course of action’ or if they were
undertaken in the public utility services without giving prescribed notices. Under
the Act, the government could, therefore, intervene in labour management
relations for the first time and use persuasive processes for the settlement of
‘trade disputes.’ The restrictions on the right to strike and lockout, particularly,
the uncertainty inherent in the phrase ‘severe, general or prolonged hardship
upon the community,’ were, of course, detrimental to the free use of instruments
of economic coercion. Rule 81 A of the Defence of India Rules, 1942,
empowered the government to (1) require employers to observe such terms and
conditions of employment in their establishments as may be specified (2) refer
any dispute for conciliation or adjudication (3) enforce the decisions of the
adjudicators and (4) make general or special order to prohibit strikes or lockouts
in connection with any trade dispute unless reasonable notice had been given.
These provisions, thus, permitted the government to use coercive processes for
the settlement of ‘trade disputes’ and to place further restrictions on the right to
use instruments of economic coercion. The Industrial Disputes Act, 1947, put the
wartime emergency provisions in a permanent peacetime legislation.

I. OBJECT OF THE ACT

The object of the Industrial Disputes Act, 1947 was contained in the statement of
Objects and Reasons:
Experience of the working of Trade Disputes Act, 1929, has
revealed that its main defect is that while restraints have been
imposed on the rights of strikes and lockouts in public utility
services, no provisions have been made to render the settlement
of an industrial dispute, either by reference to a board of
conciliation or to a court conclusive and binding on the parties
to the dispute. This defect was overcome during the war by
empowering under Rule 81A of the Defence of India Rules, the
Central Government to refer industrial disputes to adjudicators
and to enforce their awards. Rule 81A which was to lapse on the
1st of October, 1946 is being kept in force by the Emergency
Powers (Continuance) Ordinance, 1946, for a further period of
six months and as industrial unrest, in checking which this Rule
has proved useful, is gaining momentum due to stress of postwar
industrial readjustment, the need of permanent legislation in
replacement of this rule is self-evident. This bill embodies the
essential principles of Rule 81A, which have proved generally
 acceptable to both employers and workmen retaining in tact for
the most part, the provisions of the Trade Disputes Act, 1929.
However, adjudication proceedings under the Industrial Disputes Act, 1947,
(hereinafter referred to IDA) are not confined to ‘public utility services’ or to
such employment as ‘is essential for securing the defence of British India, the
public safety, the maintenance of public order, the efficient prosecution of war,
or for maintaining supplies or services necessary to the life of the community’
but may be invoked in any ‘industrial dispute.’ Further, though the obnoxious
provisions of Section 16 of the Trade Disputes Act, 1929, has been omitted,
Section 23 of the IDA prohibits strikes and lockout ‘(a) during the pendency of
conciliation proceedings before a board and 7 days after the conclusion of such
proceedings (b) during the pendency of any adjudication proceedings and (c)
during any period in which a settlement or award is in operation, in respect of
any matter covered by the settlement or award.’ Where a strike or lockout has
commenced before reference of the dispute to a board of conciliation or
adjudicating body, the government may prohibit the continuance of such strike
or lockout. The amendments further widened the scope of governmental
intervention.
The Supreme Court in Dimakuchi Tea Estate Karmchari Sangh v.
Dimakuchi Tea Estate,1 summed up the principal objects of the Act as follows:
(i) promotion of measures for securing and preserving amity and good
relations between the employers and workmen;
(ii) investigation and settlement of industrial disputes, between employers
and employers, employers and workmen or workmen and workmen, with
a right of representation by registered trade union or a federation of trade
unions or an association of employers or a federation of association of
employers;
(iii) prevention of illegal strikes and lockouts;
(iv) relief to workmen in the matter of layoff and retrenchment; and
(v) collective bargaining.
In Life Insurance Corporation of India v. D J Bahadur2, Justice V R
Krishna Iyer speaking for the Supreme Court has observed that ‘the Industrial
Disputes Act is a benign measure which seeks to pre-empt industrial tensions,
provide the mechanics of dispute resolution and set up the necessary
infrastructure so that the energies of partners in production may not be dissipated
in counter-productive battles and assurance of industrial justice may create a
climate of goodwill.’
 The Supreme Court in Rajasthan State Road Transport Corporation3
observed that the object of the Industrial Disputes Act, as its preamble indicates,
is to make provision for the investigation and settlement of industrial disputes
which means adjudication of such disputes also. The Act envisages collective
bargaining, contracts between union representing the workmen and the
management, a matter which is outside the realm of the common law or the
Indian law of contact. The Act also provided for the constitution of various
committees and conferred extensive powers on different kinds of authorities in
the matter of settlement of adjudication of industrial disputes. It also provide
remedies under Sections 10, 12, 18, 19 and 31(2), 33(1)(a), 33C(1) and 33C(2).

II. SCHEME OF THE ACT

The long title shows that the object of the Act is ‘to make provision for
investigation and settlement of industrial disputes and for certain other
purposes.’ The preamble states the same object and Section 2 of the Act which
contains the definitions states that unless there is anything repugnant in the
subject or context, certain expressions will have certain meanings. Chapter II
refers to the authorities set up under the Act, such as, works committees,
conciliation officers, boards of conciliation, courts of enquiry and industrial
tribunals. The primary duty of a works committee is to promote measures for
securing and preserving amity and good relations between employers and
workmen and to that end, to comment upon their common interest or concern
and endeavour to compose any material difference of opinion in respect of such
matters. Conciliation officers are charged with the duties of mediating in, and
promoting the settlement of industrial disputes. A board of conciliation may also
be constituted for the same purpose, namely, for promoting the settlement of an
industrial dispute. A court of enquiry may be appointed for inquiring into any
matter which appears to be connected with or relevant to an industrial dispute.
Section 7 empowers the appropriate government to constitute one or more
tribunals for the adjudication of industrial disputes in accordance with the
provisions of the Act. Chapter III contains provisions relating to the reference of
industrial disputes to the board of conciliation, court of inquiry or labour court,
tribunal or national tribunal. Under Section 10 (1) (c), where an appropriate
government is of the opinion that any industrial dispute exists or is apprehended,
it may, at any time, by order in writing, refer the dispute or any matter appearing
to be connected with or relevant to the dispute to a tribunal for adjudication.
Chapter IV of the Act deals with procedure, powers and duties of the authorities
set up under the Act. Where an industrial dispute has been referred to a tribunal
for adjudication, Section 15 requires that the tribunal shall hold its proceedings
expeditiously and shall, as soon as practicable on the conclusion thereof, submit
its award to the appropriate government. Section 17 lays down, inter alia, that
the award of a tribunal shall, within a period of one month from the date of its
receipt by the appropriate government, be published in such manner as it thinks
fit. Section 17A lays down that the award of a tribunal shall become enforceable
on the expiry of 30 days from the date of its publication. Section 17 also contains
certain other provisions which empower the appropriate government to modify
or reject the award. Section 18 relates to awards. Section 19 lays down the
period of operation of settlements and awards and states, inter alia, that an
award shall, subject to the provisions of the section, remain in operation for a
period of one year.
Chapter V of the Act deals with strikes and lockouts. Chapter VA and VB
deal with layoff, retrenchment, closure and transfer. Chapter VI prescribes
penalties and Chapter VII deals with miscellaneous matters. It is important to
note that though in the definition of ‘lockout’ under Section 2(l) and ‘strike’
under Section 2(q) and further in Section 22, the expression ‘any person’ has
been used; in Section 22 (2) and Section 23 which also deal with ‘lockout’ and
‘strike’, the word ‘workman’ has been used.
Section 33 provides that during the pendency of any conciliation
proceedings or any proceedings before a tribunal, the conditions of service, etc.,
shall not be changed. Section 33A, however, uses the word ‘employee’ but read
with Section 33, the word ‘employee’ must mean a workman. Section 36 deals
with representation of parties. Sub-section (3) of Section 36 states that no party
to a dispute shall be entitled to be represented by a legal practitioner in any
conciliation proceedings under the Act or in any proceedings before a court.
Sub-section (4) states that in any proceedings before a tribunal, a party to a
dispute may be represented by a legal practitioner with the consent of the parties
to the proceeding and with the leave of the tribunal.
The analysis of the aforesaid provisions shows that the Industrial Disputes
Act enables the State to compel the parties to resort to industrial arbitration and
for that purpose, different forums have been set up for the resolution of such
disputes. The Act is intended to be a self-contained one and it seeks to achieve
social justice on the basis of collective bargaining. The scheme of the Act shows
that it attains a settlement of all industrial disputes arising between labour and
management by peaceful methods through the machinery of conciliation and
arbitration and if necessary, by approaching the tribunal constituted under the
Act.

III. INDUSTRIAL DISPUTES (AMENDMENT) ACT 1982

AND 1984
The Industrial Disputes Act, 1947 has undergone several amendments since
1947. Thus, the Industrial Disputes (Amendment) Act, 1982 made the following
amendments:
(i) Amended the definition of ‘appropriate government’
(ii) Amended the definition of industry and thereby curtailed the scope of
‘industry’ as laid down by the Supreme Court in Bangalore Water Supply
& Sewerage Board v. A Rajappa
(iii) Inserted new clause (cc) defining ‘closure’
(iv) Inserted new clauses, namely, Section 2 (ka) and 2(kka) (defining
‘industrial establishment or undertaking’ and ‘Khadi’ respectively
(v) Inserted new Sections 2 (qq), 2 (ra) and 2 (rb) defining ‘trade union’,
‘unfair labour practice’ and ‘village industries’. Further, Fifth Schedule
was added enumerating unfair labour practice
(vi) Inserted Chapter VC dealing with prohibition of unfair labour practice
and penalty thereof
(vii) Inserted Chapter II B which provides for grievance settlement
authorities and reference of certain individual disputes to such
authorities
(viii) Extended the special provisions relating to layoff, retrenchment and
closure in establishments employing not less than 100 workmen. It also
inserted procedure for closing an undertaking and penalty for violation
therefor.
Two years later, the Industrial Disputes (Amendment) Act, 1984, was
introduced which inter alia, seeks to make the following amendments in the Act.
(i) It excludes from the definition of ‘retrenchment’ as contained in the Act
‘termination of the service of a workman as a result of the non-renewal of
the contract of employment on its expiry and on the termination of such
contract in accordance with the provisions thereof’.
(ii) Following the decision of the Supreme Court in the Excel Wear case
(AIR 1979 SC 25), some high courts declared invalid the special
 provisions relating to layoff and retrenchment contained in the Act which
applied to establishments employing 300 or more workmen. It redrafted
these provisions on the same lines as in the amended provision relating to
closure, which was inserted by the Industrial Disputes (Amendment) Act,
1982, (46 of 1982), after taking into consideration the observations of the
Supreme Court in the said case.

IV. TRADE UNIONS AND THE INDUSTRIAL

DISPUTES (AMENDMENT) BILL, 1988
Four years later, the aforesaid Bill sought to undertake comprehensive
amendments to the Trade Unions Act, 1926 and the Industrial Disputes Act,
1947 with the intention of promoting healthy industrial relations, effective
bargaining councils at unit, industry or national levels and, finally, expeditious
settlement of industrial disputes through a system of industrial relations
commissions (with labour courts working under them) from whose decisions
appeals would lie only to the Supreme Court. The Bill proposed to set up IRCs
both at the Centre and in the states. These will comprise both judicial and non-
judicial members, the latter being drawn from among persons having eminence
in the fields of industry, labour or management. The IRCs will be high-powered
tribunals under Article 323B of the Constitution and appeals against their orders
or awards will be only to the Supreme Court. These commissions will have
jurisdiction in respect of adjudication and will hear appeals against the order of
the labour courts including those relating to registration of bargaining councils.
It is not, however, proposed to entrust them with conciliation functions which
have been traditionally performed by the appropriate government.
The Bill makes a specific provision for bipartite negotiations. The Bill
also lays stress on the need to exhaust all modes of settlement like bipartite
discussions, conciliation, voluntary arbitration, etc., before resort to direct
action. Even for the last resort, i.e., strike or lockout, the conditions prescribed
must be met, by either party contemplating it, with corresponding penalties for
resorting to such extreme steps in contravention of the law.
In order to provide quick relief and cut down delays, it is proposed to
provide that a workman or a trade union of which he is a member, can refer an
individual dispute directly to a labour court.
 V. INDUSTRIAL DISPUTES (AMENDMENT) ACT, 2010
The statement of Objects and Reasons appended to the Bill seeks to lay down the
following objectives and salient features of the amendment:
1. The Industrial Disputes Act, 1947 had been amended from time to time in
the light of experience gained in its actual working, case laws and
industrial relations policy of the government.
2. At present the workman, whose services have been discharged, dismissed,
retrenched, or otherwise terminated under Section 2A of the Act, is
unable to approach the labour court or tribunal in the absence of a
reference of industrial dispute by the appropriate government to the
labour court or tribunal. This causes delay and untold suffering to the
workmen. The Industrial Disputes (Amendment) Act, 1982 provided for
an in-house Grievance Settlement Authority for the settlement of
industrial disputes connected with an individual workman employed in
the industrial establishment, but it does not permit the workman to
approach labour court or tribunal until such dispute has been decided by
the grievance settlement authority. The labour courts and tribunals have
no power under the Act to enforce the awards published by the
appropriate government.
3. In view of the above, it is considered necessary to provide for workman a
direct access to labour court or tribunal in case disputes arising due to
discharge, dismissal, retrenchment or termination of service of workman.
It is also proposed to establish a grievance redressal machinery as an in-
house mechanism in an industrial establishment with 20 or more
workmen without affecting the right of workman to raise an industrial
dispute on the same matter under the provisions of the Act.
4. Accordingly, the Industrial Disputes (Amendment) Bill, 2009, inter alia,
seeks to provide for:
(i) amendment of the term ‘appropriate government’ defined under
section 2(a) of the Act to amplify the existing definition;
(ii) enhancement of wage ceiling of a workman from ₹1,600 per
month to ₹10,000 per month under Section 2(s) of the Act;
(iii) direct access for the workman to the labour court or tribunal in
case of disputes arising out of Section 2A of the Act;
(iv) expanding the scope of qualifications of presiding officers of
 labour court or tribunals under Sections 7 and 7A of the Act;
(v) establishment of grievance redressal machinery in every industrial
establishment employing 20 or more workmen for the resolution
of disputes arising out of individual grievances;
(vi) empowering the labour court or tribunal to execute the awards,
orders or settlements arrived at by labour court or tribunal.

VI. SCOPE OF THE ACT

The Act extends to the whole of India, the original Act came into force on the
first day of April, 1947.

VII. INTERPRETATION OF INDUSTRIAL RELATIONS

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

VIII. NO JURISDICTION OF CIVIL COURT IN

INDUSTRIAL DISPUTE
Premier Automobiles Limited v. Kamalakar Shantaram Wadke6 is a leading
authority on jurisdiction of civil courts in industrial disputes. The three-judge
bench of the Supreme Court held that (i) If the dispute is not an industrial
dispute, nor does it relate to enforcement of any other right under the Act, the
remedy lies only in the civil court. (ii) If the dispute is an industrial dispute
arising out of a right or liability under the general or common law and not under
the IDA, 1947, the jurisdiction of the civil court is alternative, leaving it to the
election of the suitor concerned to choose his remedy for the relief which is
competent to be granted in a particular remedy. (iii) If the industrial dispute
relates to the enforcement of a right or an obligation created under the industrial
Disputes Act, then the only remedy available to the suitor tis to get an
adjudication under the Industrial Disputes act. (iv) If the right which is sought to
be enforced is a right created under the Industrial Disputes Act, such as Chapter
VA, then the remedy for its enforcement is either Section 33C or raising of an
industrial dispute as the case may be. Cases of industrial disputes, by and large,
are invariably bound to be covered by principle (iii) stated above.
Again a three-judge bench of the Supreme Court in Rajasthan State Road
Transport Corporation v. Krishna Kant7 held that:
(i) ‘Where the dispute arises from general law of contract, i.e., where reliefs are
claimed on the basis of the general law of contract, a suit filed in civil
court cannot be said to be not maintainable, even though such a dispute
may also constitute an ‘industrial dispute’ within the meaning of Section
2(k) or Section 2A of the Industrial Disputes Act, 1947. (ii) Where,
however, the dispute involves recognition, observance or enforcement of
any of the rights or obligations created by the Industrial Disputes Act, the
only remedy is to approach the forums created by the said Act. (iii)
Similarly, where the dispute involves the recognition, observance or
enforcement of rights and obligations created by enactment, like Industrial
Employment (Standing Orders) Act, 1946—which can be called "sister
enactments" to Industrial Disputes Act and which do not provide a forum
for resolution of such disputes, the only remedy shall be to approach the
forums created by the Industrial Disputes Act provided they constitute
industrial disputes within the meaning of Section 2(k) and Section 2A of
Industrial Disputes Act or where such enactment says that such dispute
shall be either treated as an industrial dispute or says that it shall be
adjudicated by any of the forums created by the Industrial Disputes Act.
Otherwise, recourse to civil court is open.
 In Rajasthan State Road Transport Corporation v. Zakir Hussain8, the
Supreme Court held that the employees of the corporation were not civil servants
and they were not entitled to protection of Article 311(2) of the Constitution.
While dealing with the question of jurisdiction of civil courts in matters of
industrial disputes, the Court applied the principles enunciated in Rajasthan
State Road Transport Corporation v. Krishna Kant (supra) and held that the
respondent ought to have approached the remedies provided under the IDA and
civil court has no jurisdiction to entertain and try the suit.
A three-judge bench of the Supreme Court in Rajasthan SRTC v.
Khadarmal9 again considered the question regarding jurisdiction of the civil
court in the matter of termination of service of a probationer following its earlier
judgements in Rajasthan SRTC v. Zakir Hussain (supra) and Rajasthan SRTC
v. Krishna Kant (supra), held that as the civil court had no jurisdiction, the
decrees which were passed have no force of law.
It appears that in Rajasthan SRTC v. Bal Mukund Bairwa10, a two-judge
bench of the Supreme Court noticed some conflict in the decisions in Krishna
Kant and Khadarmal and accordingly, referred the matter to a larger bench.
A three-judge bench of the Supreme Court in Rajasthan State Road
Transport Corporation v. Bal Mukund Bairwa11 revisited the issue with regard
to jurisdiction of the civil court to entertain suits questioning the orders of
termination and held that if an employee intends to enforce his constitutional
rights or a right under a statutory regulation, the civil court will have necessary
jurisdiction to try a suit. If however, he claims his right and corresponding
obligations only in terms of the provisions of the Industrial Disputes Act or the
sister laws so called, the civil court will have none. The Court also held that it
would not be correct to contend that only because the employee concerned is
also a workman under the Industrial Disputes Act, 1947, or the conditions of his
service are otherwise governed by the standing orders certified under the
Industrial Employment (Standing Orders) Act, 1946, ipso facto the civil court
will have no jurisdiction.
The aforesaid matter was again considered by the Supreme Court in
Rajasthan SRTC v. Mohar Singh12. The Court held that if the infringement of
the standing orders or other provisions of the Industrial Disputes Act are alleged,
the civil court’s jurisdiction may be held to be barred but if the suit is based on
the violation of principles of common law or constitutional provisions or on
other grounds, the civil court’s jurisdiction may not be held to be barred. If no
right is claimed under a special statute in terms whereof the jurisdiction of the
civil court is barred, the civil court will have jurisdiction.
 In RSRTC v Deen Dayal Sharma13, the respondent who had hardly
served for 3 months as a conductor was dismissed by the Rajasthan State Road
Transport Corporation for not issuing tickets to six passengers. He then filed a
civil suit. The trial judge dismissed the petition. The first and second appeals
filed against the said order were also dismissed. The respondent then filed an
appeal before the Supreme Court. He asserted that the departmental inquiry as
contemplated under the standing orders ought to have been held before issuing
the order of dismissal and in absence thereof such order was liable to be
quashed. However, the Supreme Court held that such right, if available, could
have been enforced by the respondent only by raising an industrial dispute and
not in a civil suit. In such circumstances, it held that civil court had no
jurisdiction to entertain and try the suit filed by the respondent.

1 AIR 1958 SC 358.

2 AIR 1980 SC 2181.
3 2005 LLR 1044.
4 1986 Lab. IC 850 : AIR 1986 SC 842.
5 1999 Lab. IC 286 (Karnataka).
6 (1976) 1 SCC 496.
7 (1995) 5 SCC 75: 1995 LLR 481 (SC).
8 (2005) 7 SCC 447.
9 (2006) 1 SCC 59.
10 (2007) 14 SCC 41.
11 (2009) 4 SCC 299.
12 (2008) 5 SCC 542.
13 (2010) 5 SCALE 1.
 CHAPTER
14
Concept and Scope of Individual and
Industrial Disputes

I. INDUSTRIAL DISPUTE
Section 2 (k) of the Industrial Disputes Act, 1947, defines ‘industrial dispute’1 to
mean:
Any dispute or difference between employers and employers or
between employers and workmen, or between workmen and
workmen, which is connected with the employment or non-
employment or the terms of employment or with the conditions
of labour, of any person.
The dimensions of the aforesaid definition determine the permissible area
of both community intervention in industrial relations as well as labour activity.
Stated broadly, the definition of ‘industrial dispute’ contains two
limitations. (i) The adjective ‘industrial’ relates to the disputes of an industry as
defined in the Act, and (ii) it expressly states that not all sorts of dispute and
differences but only those which bear upon the relationship of employers and
workmen regarding employment, non-employment, terms of employment and
conditions of labour are contemplated.2
Broadly speaking, the definition of ‘industrial dispute’ may be analysed
under four heads:
(i) Factum of industrial dispute;
(ii) Parties to the dispute;
(iii) Subject matter of the dispute;3 and
(iv) Origin of the dispute.

A. Factum of Industrial Dispute

The existence of a dispute or difference is the key to the expression ‘industrial
dispute’. The expression ‘dispute or difference’ connotes a real and substantial
difference having some element of persistency and continuity till resolved, and
likely, if not adjusted, to endanger the industrial peace of the undertaking or the
community.4 When the parties are at variance, and the dispute or difference is
connected with the employment, or non-employment or the terms of
employment or with the conditions of labour, there comes into existence an
industrial dispute.5 But there is divergence of opinion among the courts on the
issue whether a mere demand to the appropriate government or to the
conciliation officer without a dispute being raised by the workmen with the
employer regarding such demand can become an industrial dispute. The
Supreme Court in Sindhu Resettlement Corporation Ltd v. Industrial Tribunal6
answered it in negative. Observed Justice Bhagwati:
If no dispute at all was raised by the (workmen) with the
management, any request sent by them to the government would
only be a demand by them and not an industrial dispute between
them and their employer. An industrial dispute, as defined, must
be a dispute between employers and employers, employers and
workmen and workmen and workmen. A mere demand to a
government, without a dispute being raised by the workmen
with their employer, cannot become an industrial dispute.7
The aforesaid view does not appear to be in conformity with the earlier
decision of the Supreme Court in Bombay Union of Journalists v. The Hindu8
wherein it was held that industrial dispute must be in existence or apprehended
on the date of reference. The net effect of the principle is that even if the demand
was not made earlier before the management and rejected by them and is raised
at the time of reference or during conciliation proceedings, the dispute may be an
‘industrial dispute’.
The aforesaid view in the Hindu (Supra) appears to have been followed
in Shambhu Nath Goel v. Bank of Baroda.9 An employee of the Bank of
Baroda was dismissed from service after an inquiry in which the employee
appeared and claimed reinstatement. Further, when the union approached the
conciliation officer, the management resisted the claim for reinstatement.
Thereafter, the employee preferred an appeal to the competent authority. Before
the tribunal, the management raised the preliminary objection that the employee
had not made a demand. The tribunal accepted the claim of the management and
held that the reference was incompetent. Thereafter, the employee preferred an
appeal before the Supreme Court. The question arose whether the government’s
reference was proper and in accordance with the provisions of the Act. The
Court observed:
… to read into the definition the requirement of written demand
for bringing into existence an industrial dispute would be
tantamount to rewriting the section.
The Court added:
Undoubtedly, it is for the government to be satisfied about the
existence of the dispute and the government does appear to be
satisfied. However, it would be open to the party impugning the
reference that there was no material before the government, and
it would be open to the tribunal to examine the question, but that
does not mean that it can sit in appeal over the decision of the
government.
In Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd,10 the
Government of Maharashtra referred a dispute between Hindustan Lever Ltd and
its workmen for adjudication to the industrial tribunal, Maharashtra. A
preliminary objection was raised by the employers that reference was
incompetent because the dispute raised by workmen and referred by the
government to the industrial tribunal was not an ‘industrial dispute’ because if
the demand as raised is conceded, it would be tantamount to allowing the
workmen to decide the strength of the work force required in various grades and
it is well-settled that determining and deciding the strength of work force
required in an industry is a management function. The industrial tribunal held
that the dispute was not an ‘industrial dispute’. On appeal, the Supreme Court set
aside the award and remitted the matter for disposing of the reference on merits
and observed:
The expression ‘industrial dispute’ has been so widely defined
as not to leave anything out of its comprehension and purview
involving the area of conflict that may develop between the
 employer and the workmen and in respect of which a
compulsory adjudication may not be available. This is
recognized to be the width and comprehension of the expression.
Be that as it may, the full bench of the Himachal Pradesh High Court in
M/s Village Papers Pvt. Ltd v. State of Himachal Pradesh11 has summarized
the views expressed by the Supreme Court and high courts on the aforesaid
subject as follows:
1. A mere demand made to the government cannot become an industrial
dispute without it being raised by the workmen with their employer.
2. If such a demand is made to the government, it can be forwarded to the
management and if rejected, becomes an industrial dispute.
3. Though it is apparent that for a dispute to exist, there must be a demand by
the workmen or the employer. This demand need not be in writing, unless
the matter pertains to a public utility service, in view of the provisions of
Section 22 of the Industrial Disputes Act, 1947.
4. The demand need not be sent directly to the employer nor it is essential for
it to be made expressly. It can be even implied or constructive, e.g., by
way of filing an appeal or refusal of an opportunity to work when
demanded by the workmen. A demand can be made through the
conciliation officer, who can forward it to the management and seek its
reaction. If the reaction is in negative and not forthcoming and the parties
remain at loggerheads, a dispute exists and a reference can be made.
5. Whether a dispute exists has to be decided in each case and is dependent
on the facts and circumstances of that case. The crucial time for this
examination is the date of making the reference; material which comes
into existence after the reference has been made is not relevant.
6. Only that dispute which exists or is apprehended can be referred. If there is
a different kind of demand made before the management and the
reference pertains to some other demand, then the reference is
incompetent, e.g., reference pertains to reinstatement whereas the
demand pertains to retrenchment compensation.
7. The jurisdiction of the labour court/industrial tribunal is limited to the
points specifically referred and matters incidental thereto. Since the scope
of its jurisdiction and power is circumscribed by the order of reference, it
is not permissible for it to go beyond the terms of reference.
8. Thus, if a reference is made without any demand having been made on the
 employer either expressly or impliedly, there is no occasion for the
employer to point out the nature of the dispute so as to facilitate the
government for making an appropriate reference of the dispute.

B. Parties to the Industrial Dispute

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

C. Subject Matter of Industrial Dispute

In order to be an ‘industrial dispute’, the dispute must be:
…connected with the employment or non-employment or the terms of
employment or with the conditions of labour, of any person.
In practice, however, it is exceedingly difficult to draw a line between
various expressions used to indicate the subject-matter of industrial dispute.
Generally speaking, the expressions used in Section 2(k) are of wide amplitude
and have been put in juxtaposition to make the definition thoroughly
comprehensive.15 Thus, the phrase ‘conditions of labour’ is wide enough to
include ‘terms of employment’ as well as matters connected with
unemployment. Similarly, the expression ‘terms of employment’ includes certain
matters relating to ‘employment or non-employment’.
It is however, doubtful if the legislature intended any water-tight
compartmentalization. The words ‘in connection with’ widen the scope of
‘industrial disputes’ and do not restrict it by any means.
The legislature used these phrases in the definition of ‘industrial dispute’
so that all aspects of labour problems may be resolved through the industrial
relations machinery provided under the Industrial Disputes Act, 1947. Any
attempt to draw a rigid line would limit, or at least create an impression of
limiting the scope of ‘industrial dispute’ which, it must be emphasized, deals not
only with the disputes between employers and workmen but also between
‘employers and employers’ and between ‘workmen and workmen’. However,
since every expression used by the legislature indicates certain meaning and
idea, it is necessary to examine them.
‘Employment’ brings in the contract of service between the employer and
the employed.16 The concept of employment involves three ingredients: (i)
employer, (ii) employee and (iii) the contract of employment. The employer is
one who employs, i.e., one who engages the services of other persons. The
employee is one who works on hire basis. The employment is the contract of
service between the employer whereunder the employee agrees to serve the
employer, subject to his control or supervisions.
‘Unemployment’ is the opposite of ‘employment’ and would mean that
disputes of workmen which arise out of service with their employers are within
the ambit of the definition. It is the positive or negative act of the employer that
leads to employment or unemployment. It may relate to an existing fact of
unemployment or a contemplated unemployment. Four illustrations were cited
by the Federal Court in Western Indian Automobiles Association v. Industrial
Tribunal17 in support of the aforesaid explanations. Of them, two are in respect
of ‘employment and two are in respect of unemployment.’ A dispute is as to
‘employment’ or connected with or arising out of employment if:
(i) An employer has already employed a person and a trade union says
‘please do not employ him’.
(ii) An employer gives notice to a union saying that he wishes to employ two
particular persons. The union says ‘no’.
A matter raises a dispute as to unemployment or contemplated
unemployment if:
(i) An employer may dismiss a man, or decline to employ him.
(ii) An employer contemplates turning out those who are already in his
employment.
The failure to employ or the refusal to employ are actions on the part of
employer which would be covered by the expression ‘employment or
unemployment’. Accordingly, the expression ‘unemployment’ is sufficiently
elastic to include all cases of (i) termination of service either voluntary or by act
of parties (as employer or workmen). The instances of this kind are dismissal,18
discharge, retrenchment19, compulsory retirement,20 etc. It also includes
temporary unemployment, e.g., suspension, layoff, compulsory leave, lockout,
strike, etc. Further, it would include within its scope the words arising out of
unemployment, e.g., reinstatement,21 re-employment, compensation and back
wages for wrongful termination of service.
The expression ‘terms of employment’ and ‘conditions of labour’ indicate
the kind of conflict between those engaged in industry on the opposite but
cooperative sides.22 These words connote dispute to be the share in which the
receipts in a commercial venture shall be divided.
The expression ‘terms of employment’ generally covers basic wages,
dearness allowance and other allowances, wages on promotion, wages on
demotion, wages on transfer out of town, wages for over-time work, wages for
work on holiday, payment of wages, recovery of wages, bonus, retiral benefits,
e.g., pension, provident fund, gratuity, pension, etc.
The expression ‘conditions of labour’ is much wider in scope and refers
to the conditions of service under which they work and the amenities provided or
to be provided to them. This expression may include hours of work, holidays,
leave, health, safety and welfare of labour.
Quite apart from those matters which have been said to be covered in the
subject-matter of industrial dispute, an analysis of decided cases reveals that
following matters have also been included in the definitions: (i) alteration of
conditions of service of employees23 (ii) demand for modification of standing
orders24 (iii) disputes regarding contract labour25 (iv) dispute on lockout in
disguise of closure26 (v) dispute of workmen whose cases are left unsettled27 (vi)
transfer of workman from one place to another28.
In Workmen of Hindustan Levers Ltd v. Hindustan Levers Ltd29, a
question arose whether a demand for confirmation in the promoted post would
be a dispute connected with the terms of employment or the conditions of labour
within the meaning of Section 2 (k). The Supreme Court answered the question
in the affirmative and observed:
In respect of the classification, a dispute can conceivably arise
between the employer and the workman because failure of the
employer to carry out the statutory obligation would enable the
workman to question his action which will bring into existence a
dispute. It would become an industrial dispute because it would
be connected with the conditions of employment. It becomes a
condition of employment because necessary conditions of
service have to be statutorily prescribed, one such being
classification of the workmen was to confirm employees
employed in an acting capacity in a grade, it would
unquestionably be an industrial dispute.
However, dispute between two unions regarding membership of the union
is not an ‘industrial dispute.’30
In Cipla Limited v. Maharashtra General Kamgar Union,31 the Supreme
Court held that, if the employees are working under a contract covered by the
Contract Labour (Regulation and Abolition) Act, then the labour court or the
industrial tribunals have no jurisdiction to decide the question of abolition of
contract labour as it falls within the province of an appropriate government to
abolish the same. But if the workmen claim that they have been directly
employed by the company but the contract itself is a camouflage and, therefore,
needs to be adjudicated, is a matter which can be adjudicated by the appropriate
industrial tribunal or labour court under the Industrial Disputes Act, 1947.

D. Origin of Industrial Dispute

The scope of the expression ‘any person’ occurring in the last part of the
definition of ‘industrial dispute’ has been a subject matter of controversy. The
question has arisen in several cases before the high courts and also before the
Supreme Court as to what exactly is the scope of the expression ‘any person’ as
contemplated in Section 2 (k). If construed literally, it may mean and include
both natural as well as artificial persons. On the contrary, if interpreted narrowly,
the expression ‘of any person’ may be equated with ‘workman’. How and where
to draw a line is not easy to answer.
An analysis of the decided cases of tribunals and courts reveals that prior
to the Supreme Court decision in Dimakuchi Tea Estate (supra), there was no
unanimity of opinion with regards to the scope of the expression ‘any person’.
Three views were discernible.
(i) The first view emphasized the literal meaning and held that
employment or non-employment or terms of employment or conditions of labour
of any person whether that person is a workman or not and whether that person
was a sweeper in a director’s bungalow could form the subject matter of
industrial dispute.32 According to them, if ‘the intention of the Legislature was
to restrict the scope of the expression of industrial dispute as a dispute between
employers and workmen relating to the terms of employment of workmen alone,
there was no need to use the wider expression of ‘any person’.33
(ii) The second view equated the word ‘person’ with that of ‘workman’.
According to the supporters of this line of view, unless the ‘person’ was a
‘workman’ within the meaning of Section 2(s) of the Industrial Disputes Act,
1947, a dispute concerning him could not be an ‘industrial dispute’ under
Section 2(k).34
(iii) The third view adopted a middle course, namely that ‘concerned
person’ need not necessarily be a ‘workman’ within the meaning of the Act; it
was enough if the present workmen of the employer were interested in such a
person and the employer had the capacity to grant the requested demand. The
supporters of this view emphasized that merely because such a dispute would
become an ‘industrial dispute’, it did not follow that the demand would be
accepted.
The construction of the word ‘any person’ came up for consideration
before the Supreme Court in Assam Chah Karamchari Sangha v. Dimakuchi
Tea Estate.35 There, Mr Banerjee was appointed by the tea estate as an assistant
medical officer, on three months’ probation. After 3 months, his services were
terminated by the management after paying him one month’s salary in lieu of
notice. The legality of the termination of service was questioned and the cause of
the assistant medical officer was espoused by the workers’ union of tea estate.
The government of Assam referred the dispute to the industrial tribunal about his
reinstatement. The management raised a preliminary objection that the assistant
medical officer was not a ‘workman’ and hence the industrial tribunal had no
jurisdiction to adjudicate the question of reinstatement. The tribunal upheld the
management’s plea. On appeal before the Supreme Court, a question arose
whether the workmen of the tea estate can raise an industrial dispute regarding
the termination of service of an assistant medical officer (who was not a
workman of the Tea Estate. Justice S K Das, who wrote the majority judgement
for the Court, while explaining the expression ‘any person’ in the definition
clause held that it cannot mean anybody and everybody in this world. The
expression according to his Lordship means:
… a person in whose employment, or non-employment, or terms
of employment or conditions of labour the workmen as a class
have a direct or substantial interest with whom they have under
the scheme of the Act, a community of interest. Our reason for
so holding is not merely that the Act makes a distinction
between workmen and non-workmen, but because a dispute to
be a real dispute must be one in which the parties to the dispute
have a direct or substantial interest. Can it be said that workmen
as a class are directly or substantially interested in the
employment, non-employment, terms of employment or
conditions of labour of persons who belong to the supervisory
staff and are, under the provisions of the Act, non-workmen and
for whose representation the Act makes no particular provision?
We venture to think that the answer must be in the negative.
He further pointed out that though a dispute concerning a person who is
not a ‘workman’ may be an ‘industrial dispute’ within the meaning of Section
2(k), having regard to the scheme, object and the provisions of the Industrial
Disputes Act, 1947 the expression ‘any person’ in the definition clause must be
read subject to two crucial limitations and qualification, namely:
(i) the dispute must be a real dispute between the parties to the dispute (as
indicated in the first two parts of the definition clause) so as to be capable of
settlement or adjudication by one party to the dispute giving necessary relief to
the other, and (ii) the persons regarding whom the dispute is raised must be one
in whose employment, non-employment, terms of employment or conditions of
labour (as the case may be) the parties to the dispute have direct or substantial
interest.
He then observed:
In the absence of such interest, the dispute cannot be said to be a
real dispute between the parties. Where the workmen raise a
dispute as against their employer, the person regarding whose
employment, non-employment, terms of employment or
conditions of labour the dispute is raised need not be the
‘workmen’ but workmen as a class have a direct or substantial
interest.
The Court in its majority judgement accordingly held that the medical
officer was not a ‘workman’ because he could not be held to have any
community of interest with the other members of the union to justify the
industrial dispute being raised with regard to his unemployment.
The aforesaid majority view was reaffirmed by the larger bench of the
Supreme Court in Workmen of Dahingeapar Tea Estate v. Dahingeapar Tea
Estate36 and was reiterated in Kays Construction Co. Ltd v. Its Workmen.37 In
the former case, a tea estate was sold as a going concern and the purchaser
continued to employ the labour and some other members of the staff of the
vendor. Under the agreement of sale, an option was given to the purchaser to
continue to employ the members of the staff. It also made the vendor liable for
the claims made by the members of the staff not retained in service by the
purchaser. The claims of the members of the staff not retained in service by the
vendee tea estate was raised by the workmen of the vendee tea estate. A question
arose whether the dispute raised by such workmen regarding the employment of
rest of the staff was an ‘industrial dispute.’ Justice S K Das (who wrote the
majority view in Dimakuchi Tea Estate supra) delivering the judgement for the
Court applied the test laid down in Dimakuchi case and held that such a dispute
was an ‘industrial dispute’. In the latter case, the business of M/s Kays
Construction Co. was taken over by a private company called M/s Kays
Construction Co. (Pvt) Ltd. The successor company had the proprietor, his wife
and manager of the vendor company as its directors. The transferee employer
refused to employ certain workmen of the transferrer employer. The workmen of
the transferee employer raised a dispute regarding the erstwhile co-employees of
the transferrer employer. It was held that a dispute which validly gave rise to a
reference under the Industrial Disputes Act need not necessarily be a dispute
directly between an employer and his workmen. The Court further held that the
definition of the expression ‘industrial dispute’ was wide enough to cover a
dispute raised by the workmen in regard to the non-employment of others who
may not be the workmen at the material time.
The application and interpretation of ‘any person’ again came up for
consideration of the Supreme Court in Standard Vacuum Refining Co. of India
Ltd v. Their Workmen.38 In this case, regular workmen of the company raised
an industrial dispute relating to contract labour. The dispute was that the workers
of the contractor (who in effect were doing the work of the company) unlike
regular workmen of the company, were getting low wages and were not
provided any security of tenure. The regular workmen who raised their dispute,
therefore, wanted that the contract system should be abolished and the
contractors be considered as workmen of the company. Following Dimakuchi
Tea Estate (supra), the Supreme Court held that the dispute was an ‘industrial
dispute’ because: (i) the regular workmen of the company had a community of
interest with the contractor’s workers (who were, in effect, working for the same
employer), (ii) the workmen had substantial interest in the subject-matter of the
dispute of contractor’s workers in the sense that the class to which they belong
(namely workmen) was substantially affected thereby and (iii) the company
could give relief in the matter.
Again in Bombay Union of Journalists v. The Hindu39, the cause of a
working journalist was taken up by a trade union of his profession, but not by
other journalists under the employment of that particular branch office of the
Hindu, in which he was employed. The Supreme Court, while determining the
scope of ‘any person’ demonstrated how the test of ‘direct and substantial
control’ could be applied. Justice Shah observed:
The principle that the persons who seek to support the cause of a
workman must themselves be directly and substantially
interested in the dispute in our view applied to this class of cases
also; persons who are not employees of the same employer
cannot be regarded as so interested that by their support they
may convert an individual dispute into an industrial dispute.
This application of the test only confirms the fears expressed by Justice
Sarkar of the Supreme Court in his dissenting judgement in Dimakuchi Tea
Estate case.40 Adverting later to the fact that the Act is dealing with a new
concept, that of relations between employer and employee or between capital
and labour—he sounded a warning to bear in mind that the concept is
undergoing a ‘fast change’ from day-to-day. He observed:
The numerous and radical amendments made in the Act since it
came on the statute book not so long ago, testify to the fast-
changing nature of the concept. Bearing all these things in mind,
I find it almost impossible to define adequately or with any
usefulness an interest which will serve the purposes of the Act. I
feel that an attempt to do so will introduce a rigidity which will
work harm and no good. Nor does it, to my mind, in any manner
help to define such interest by calling it direct and substantial.
He added:
It is enough to assume that as normal men, workmen would not
raise a dispute or threaten industrial peace on account of it
unless they are interested in it … It is not a condition of an
industrial dispute that workmen must be interested in it and no
question of interest falls for decision by a court if it can be
called upon to decide whether a dispute is an industrial dispute
or not.
In All India Reserve Bank Employees’ Association v. Reserve Bank of
India41 the Court coined a new phrase ‘vitally interested’ to determine the scope
of ‘any person’ in Section 2(k). In this case, a question arose whether the
‘workmen’ belonging to class III (who drew less than ₹500 per month) of the
Reserve Bank of India were entitled to raise the dispute in respect of Class II
employees who were doing supervisory nature of duties and drawing more than
₹500 per month and were excluded from the ambit of ‘workmen’. The Supreme
Court, after referring to the first excerpt (cited earlier by the author) in
Diniakuchi Tea Estate supra, added:
It may, however, be said that if the dispute regarding
employment, non-employment, terms of employment or
conditions of labour of non-workmen in which workmen are
themselves vitally interested, the workmen may be able to raise
an industrial dispute. Workmen can, for example, raise a dispute
that a class of employees not within the definition of workmen
should be recruited by promotion from workmen. The workmen
can also raise a dispute about the terms of the their own
 employment though incidentally the terms of employment of
those who are not workmen is involved. But workmen cannot
take up a dispute in respect of a class of employees who are not
workmen and (in whom workmen) have no direct interest of
their own. What direct interest suffices, is a question of fact but
it must be a real and positive interest and not fanciful or remote.
The Court also rejected the management’s contention that the tribunal had
no jurisdiction to adjudicate in respect of the dispute between it and those of its
employees who fell within the purview of ‘workmen’. Observed Justice
Hidayatullah:
It follows, therefore, that the national tribunal was in error is not
considering the claims of Class II employees whether at the
instance of members drawing less than ₹500 as wages or at the
instance of those lower down in the scale of wages in excess of
₹500 per month at any stage were not within the jurisdiction of
tribunal or that government could not make a reference in such a
contingency.
The aforesaid issue once again came up for consideration in Workmen v.
Greaves Cotton Ltd42 in which it was held :
It would, therefore, appear that the consistent view of this court
is that non-workmen as well as workmen can raise a dispute in
respect of matter affecting their employment, conditions of
service, etc., where they have a community of interest, provided
they are direct and not remote.
It is submitted that the aforesaid observation does not correctly reflect the
law stated in earlier decisions of the Supreme Court. In none of the aforesaid
decisions of the Supreme Court, is it stated that non-workmen can raise a dispute
in respect of matters affecting their employment, unemployment, terms of
employment or conditions of labour where they have community of interest.
Greaves Cotton Ltd, poses a question as to what would happen if none at
all or all the ‘workmen’ have become non-workmen either during the pendency
or at the time or adjudication. Does the dispute survive? The Court answered it
in negative. Observed Justice Jagamohan Reddy:
… if there are no workmen of the category with respect to whom
the dispute has been referred, the tribunal cannot be called upon
 to prescribe a wage structure for non-existing workmen, nor
does it have the jurisdiction to do so.43
We are inclined to agree with the aforesaid view. It may, however, be
added that the ‘direct or substantial interest’ test to limit the horizons of the
expression ‘any person’, has not been uniformly applied. While the workman
has been said to be substantially interested in the subject matter of contractor’s
employees44, he is not held to be so interested in case of ‘doctors’45 or
‘supervisors’46 who were not ‘workmen’ but employees of the same employer.
Again the ‘workmen of the transferee company are said to have a direct or
substantial interest in the dispute of unemployment by the transferee employer of
the erstwhile co-employees of the transferor employer.47 Quite apart from this,
the application of the aforesaid test is not in conformity with the statement that
‘persons who are not employees of the same employer cannot be regarded as so
interested, that by their support they may convert an individual dispute into an
industrial dispute’.48
In Bongaigaon Refinery & Petrochemicals Ltd v. Samijuddin Ahmed,49
a question arose whether a person who had been issued an offer of appointment
which was withdrawn before he could join on knowing that he had suppressed
material facts and who raised a dispute about his non-employment could fall
within the meaning of ‘any person’ under Section 2(k) of the Industrial Disputes
Act. The Court answered the question in negative and held that the reference of
the dispute under Section 10 of the Act was wholly unwarranted and uncalled
for. The present case did not satisfy the test laid down in Dimakuchi Tea Estate
so as to warrant the validity of the reference being upheld. It rejected the
contention of the respondent that his case fell within the meaning of ‘any person’
even if he was not a ‘workman’ stricto sensu and held that ‘any person’ cannot
be read without limitation. In a case where employer-employee relationship
never existed and can never possibly exist cannot be the subject matter of
dispute between employer and workmen. Accordingly, the Court set aside the
judgement of the division bench of the High Court and restored the judgement of
the single judge of the High Court.

II. INDIVIDUAL DISPUTE

A. Judicial Legislation
Is a dispute between an individual workman and his employer an ‘industrial
dispute’ under Section 2 (k) of IDA? This question has evoked considerable
conflict of opinion. Prior to the Supreme Court decision in Central Provinces
Transport Services v. Raghunath Gopal Patwardhan50 disclosed three different
views as to the meaning of the expression ‘industrial dispute’. They are (i) a
dispute between an employer and single workman cannot be an ‘industrial
dispute’51 (ii) it can be an industrial dispute52 and (iii) it cannot per se be an
industrial dispute but may become one if taken up by a trade union or a number
of workmen.53
In Central Provinces Transport Services Ltd v. Raghunath Gopal
Patwardhan54, though the question which directly arose, was whether a
dismissed worker was an employee within the meaning of Section 2 (10) of the
Central Provinces and Brar Industrial Disputes Settlement Act, 1947, the
Supreme Court considered the scope of ‘industrial dispute’ as defined in Section
2(k) of the Industrial Disputes Act. The Court, after referring to the divergent
opinions expressed by tribunals and courts as to its applicability in the case of a
dispute between employer and a single workman, observed:
The preponderance of judicial opinions is clearly in favour of
the last of the three views stated above, and there is considerable
reason behind it. Notwithstanding that the language of Section
(2) (k) is wide enough to cover a dispute between an employer
and single employee, the scheme of the Industrial Disputes Act
does appear to contemplate that the machinery provided therein
should be set in motion, to settle only disputes which involve the
rights of workmen as a class and that a dispute touching the
individual rights of a workman was not intended to be the
subject of an adjudication under the Act, when the same has not
been taken up by the union or a number of workmen.
Although the question did not arise directly, the Supreme Court in D N
Banerjee v. P R Mukherjee55 discussed the scope of ‘industrial dispute’ (in the
context of individual dispute) and observed that the words:
Convey the meaning to the ordinary mind that the dispute must
be such as would affect large groups of workmen and employers
ranged on opposite sides… But at the same time, having regard
to the modern conditions of society where capital and labour
have organized themselves into groups for the purpose of
fighting their disputes and settling them on the basis of the
 theory that union is strength, and collective bargaining has come
to stay, a single employee’s case might develop into an
industrial dispute, when as often happens, it is taken up by the
trade union of which he is a member and there is concerted
demand by the employees for redress.
The aforesaid issue figured directly in Newspapers Ltd v. State Industrial
Tribunal56. In this case, Tajammal Hussain, a linotypist was dismissed by the
Newspapers Ltd on the ground of incompetence. His case was neither taken up
by the union of workers of the establishment nor by any union of allied or
similar trade. His case was, however, taken up by the U P Working Journalists
Union, with which the employee had no concern. The government referred the
dispute to the industrial tribunal for adjudication. The tribunal ordered
reinstatement. The appellate tribunal and the High Court, successively affirmed.
Thereupon, the management preferred an appeal to the Supreme Court. Justice
Kapoor who delivered the judgement for the Court made the following
significant observation:
The case of respondent No. 3 was not taken up by union of the
workers of the appellant company nor by any of unions of
workmen employed in similar or allied trades but the U P
Journalists Union, Lucknow, with which respondent No. 3 had
no connection, took the matter to the Conciliation Board,
Allahabad.
The Court accordingly held that Tajammal Hussain could not be termed
as workmen (in the plural) nor could U P Working Journalists Union be called
‘his union’ nor is there any indication that the individual dispute had been
transformed into ‘industrial dispute’.
Bombay Union of Journalists v. The Hindu,57 however, has tried to
further curtail the scope of ‘industrial dispute.’ In this case, the dispute of the
workman was taken up by the Bombay Union of Journalists of which union the
workman was a member. The Bombay Union of Journalists was a union not of
employees of one establishment but of employees of the entire industry of
journalism in Bombay. None of the employees of the Hindu were its members.
The industrial tribunal, on these facts, held that the dispute was merely an
‘individual dispute’ and not an ‘industrial dispute’. The Supreme Court affirmed
the decision. Justice Shah who delivered the judgement for the Court observed:
The dispute, in the present case, is prima facie an ‘individual
 dispute.’ In order that it may become an industrial dispute, it had
to be established that it had been taken up by the union of the
employees of the ‘The Hindu’ Bombay or by an appreciable
number of employees of the ‘The Hindu’ Bombay.
Justice Shah rationalized his decision on the basis of an earlier decision of
the Supreme Court and observed:
In Workmen of Dimakuchi Tea Estate v. The Management of
Dimakuchi Tea Estate, this Court held by a majority that the
two tests of an industrial dispute as defined by Section 2(k) of
the Industrial Disputes Act, 1947, must, therefore be: (1) the
dispute must be a real dispute capable of being settled by relief
given by one party to the other, and, (2) the person in respect of
whom the dispute is raised must be one in whose employment,
non-employment, terms of employment, or conditions of labour
(as the case may be), the parties to the dispute have a direct or
substantial interest and this must depend on facts and
circumstances of each particular case. In that case, certain
employees sought to raise a dispute about a person who was not
a workman. In the present case, members of the union who were
not workmen of the employer against whom the dispute was
sought to be raised, seek by supporting the dispute to convert
what is prima facie an individual dispute into an industrial
dispute. The principle that the persons who seek to support the
cause of the workmen must themselves be directly and
substantially interested in the dispute, in our view, applies to this
class of cases also: persons who are not employees of the same
employer cannot be regarded as so interested, that by their
support they may convert an individual dispute into an industrial
dispute. The mere support to his cause by the Bombay Union of
Journalists cannot, therefore, assist the claim of Salivateeswaran
so as to convert it into an industrial dispute.
The aforesaid requirements resulted in curtailing the growth of industry-
wide unions and runs counter to the decision in Newspaper Ltd supra. However,
the Supreme Court in Workmen of Dharampal Prem Chand v. M/s Dharampal
Prem Chand58 relaxed the requirement that only the union of the employees of
the same employer against whom demands are made, can raise an industrial
dispute59. Thus the Court, by distinguishing process impliedly overruled the
decision in Bombay Union of Journalists v. The Hindu supra. The firm
dismissed its 18 workmen. The Mercantile Employees Association (which was
the employees’ union) of which the dismissed workmen were members took up
the cause of these dismissed workmen. A contention was raised that besides the
18 dismissed workmen, no other workman of the employer was the member of
the said association and as such the association was not authorized to raise an
industrial dispute. Rejecting the contention, the Supreme Court observed:
… It is conceivable that the workmen of an establishment have
no union of their own, and some or all of them join the union of
another establishment belonging to the same industry. In such a
case, if such a union takes up the cause of the workmen working
in an establishment which has no union of its own, it would be
unreasonable to hold that the dispute does not become an
industrial dispute because the union which sponsored it is not
the union exclusively of the workmen working in the
establishment concerned… In some cases, the union of
workmen working in the one industry may be competent to raise
a dispute about the wrongful dismissal of an employee engaged
in an establishment belonging to the same industry where
workmen in such an establishment have no union of their own
and an appreciable number of such workmen had joined such
other union before their dismissal.
Earlier, the Court observed:
It is well known that in dealing with industrial disputes,
industrial adjudication is generally reluctant to lay down any
hard and fast rule or adopt any test of general or universal
application. The approach of industrial adjudication in dealing
with industrial disputes had necessarily to be pragmatic, and the
tests which it applied and the considerations on which it relied
would vary from case to case and would not admit any rigid or
inflexible formula… The object of trade union movement is to
encourage the formation of larger and bigger unions on healthy
and proper trade union lines, and this object would be frustrated
if industrial adjudication were to adopt the rigid rule that before
any dispute about wrongful dismissal can be validly referred
under Section 10 (1) of the Act, it should receive the support of
the union consisting exclusively of the workmen working in the
 establishment concerned.
The question again came up for consideration in Workmen of Indian
Express Ltd v. Management of Indian Express Ltd.60 In this case, a question
arose whether the cause of two workmen in a particular establishment in an
industry could be sponsored by Delhi Union of Working Journalists, which was
not a union of workmen of the establishment but a union in similar or allied
trade. Dealing with the contention, the Supreme Court observed:
… where the workmen of an establishment have no union of
their own and some or all of them have joined a union of another
establishment belonging to the same industry, if such a union
takes up the cause of the workmen working in an establishment
which has no union of its own, the dispute would become an
industrial one if such a union can claim a representative
character in a way that its support would make the dispute an
industrial dispute.
Another principle laid down by the Supreme Court in M/s Western India
Match Co. Ltd v. Western India Match Company Workers’ Union61 is that the
parties to the reference being the employer and his employees, the test must
necessarily be whether the dispute referred to adjudication is one in which the
workman and substantial section of those who have a direct and substantial
interest even though such a dispute relates to a single workman. The Supreme
Court held that an ‘individual dispute’ may be converted into an industrial
dispute by the workmen espousing it on the ground that they have community of
interest and are directly or substantially interested in the employment, non-
employment or conditions of work of the concerned workmen.
In J H Yadav v. M/S Forbes Gokak62, the appellant who was employed
by the respondent, claimed promotion as a clerk. When this was not granted, the
appellant raised an industrial dispute. The tribunal held that in view of the
evidence given by the general secretary and the documents produced, it was
clear that the appellant's cause had been espoused by the union which was one of
the unions of the respondent employer. On the merits, the tribunal accepted the
appellant's contentions that employees who were junior to him have been
promoted as clerks. The award of the industrial tribunal was challenged by the
respondent by way of a writ petition. A single judge dismissed the writ petition.
The respondent being aggrieved, filed a writ appeal before the High Court. The
High Court, while construing Section 2(k) of the Industrial Disputes Act, 1947,
came to the conclusion that (i) an individual dispute is not an industrial dispute
unless it directly and substantially affects the interest of other workmen, (ii) an
individual dispute should be taken up by a union which has representative
character or by a substantial number of employees before it can be converted
into an industrial dispute neither of which had happened in the present case, (iii)
there was nothing on record to show that the appellant was a member of the
union or that the dispute has been espoused by the union by passing any
resolution in that regard. On appeal, the Supreme Court held that in the present
case, it was not questioned that the appellant was a member of the Gokak Mills
Staff Union. Nor was any issue raised that the union was not of the respondent
establishment. The objection as noted in the issues framed by the industrial
tribunal was that the union was not the majority union. The Court in view of its
earlier decision in Dharam Pal's case, held that the objection was rightly
rejected by the tribunal and wrongly accepted by the High Court.
The aforesaid decisions indicate that individual dispute per se is not
‘industrial dispute’ unless it is espoused by: (i) trade union or (ii) appreciable
number of workmen. It is, therefore, necessary to examine the aforesaid
requirement in details.
1. Requirement of Appreciable Number: It has been seen that courts
insist that in order to convert an individual dispute into ‘industrial dispute’, the
dispute must be espoused by ‘appreciable number’ either of the entire labour
force in the establishment or at least in a particular section thereof to which the
dispute relates. But courts at the same time have admitted that the expression
‘appreciable number’ does not necessarily mean majority of workmen in the
establishment or, indeed, even in the section in which the aggrieved workman
was employed. But then, they have also declined to categorically delineate the
limits of that illusive requirement. Thus, the task of defining the expression has
been left for case to case determination.
Thus in Workmen v. M/s Dharampal Prem Chand63, out of 45
employees, 18 were dismissed. There was no union of workmen. It was held that
they could raise a dispute by themselves. In Workmen of Indian Express
Newspaper v. Management64, 31 out of the total 68 working journalists of the
union in the establishment espousing the cause met the requirement of
‘appreciable number’. It was also held that even if the number of working
journalists was taken to be 131, the representation of 25 per cent could be an
‘appreciable number’. Similarly, in Workmen v. Rohtak General Transport
Company65, five out of 22 workmen sponsoring the union were held to be
‘appreciable number’. But, in State of Punjab v. Gondhara Transport (P) Ltd66,
espousal of dispute by five out of 60 workmen of the establishment was held not
to be an ‘appreciable number.’ From these decisions, it is evident that there is no
uniformity as to what amounts to ‘appreciable number’.
2. Requirement of Dispute Being Sponsored by Trade Unions:
Notwithstanding the decision in Bombay Union of Journalists v. The Hindu67
the Supreme Court has held that in order to convert an individual dispute into
‘industrial dispute’, it must be taken up by a union of workers of the
establishment and where there is no such union, it may be sponsored by any of
the unions of workmen employed in similar or allied trades.68 The union of the
plant may even be a minority union.69 Further, the sponsoring union need not be
a registered or a recognized trade union.70
The aforesaid principle was laid down in Newspapers Ltd v. U P State
Industrial Tribunal71 and State of Bombay v. Kripa Shankar Jaiswal.72 In the
former case, the cause of certain retrenched workmen was espoused by an
unregistered body known as Leader Press Karamchari Sangh. The government
referred the dispute to the industrial tribunal for adjudication. The tribunal
directed the employer to reinstate the said workmen. On dismissal of the writ
petition, the management filed an appeal wherein it was contended before the
Supreme Court that the association which sponsored the cause of the concerned
workmen was an unregistered body and, therefore, the reference was invalid.
Rejecting the contention Justice Gajendragadkar, speaking for the Court held,
that ‘it is not necessary that a registered body should sponsor a workman’s case
to make it an industrial dispute. Once it is shown that a body of workmen, either
acting through their union or otherwise, had sponsored a workman’s case, it
becomes an industrial dispute.’
In the latter case, the respondent was prosecuted under Section 29 for not
carrying out the terms of settlement arrived at, between him and Mankatha
Distillery Panchayta Union. The defence was that the union was neither a
registered nor a recognized union. The Patna High Court held that lack of
registration or recognition of trade union incapacitated the union from raising an
industrial dispute, and consequently there could not be a valid settlement arrived
at in the course of conciliation proceedings. The respondent was accordingly
acquitted. The Supreme Court, however, took the contrary view:
It would be an erroneous view if it were said that for a dispute to
constitute an industrial dispute, it is a requisite condition that it
should be sponsored by a recognized union or that all the
workmen of an industrial establishment should be parties to it. A
dispute becomes an industrial dispute even where it is sponsored
 by a union which is not registered as in the instant case or where
the dispute raised is by some of the workmen because in either
case, the matter falls within Section 18 (3) (a) and 18 (d) of the
Act.
The aforesaid view was reaffirmed in Pradip Lamp Works v. Its
Workmen.73
From the aforesaid decision, it is evident that the sponsoring union may
be (i) unregistered (ii) unrecognized or (iii) minority. This view is valid because
Trade Unions Act, 1926 does not provide either for compulsory registration of
trade union or for recognition of trade union. This view would require
consideration when the provisions for compulsory recognition of trade union
would be incorporated under the Trade Unions Act.
There is yet another issue, namely, whether formal authorization of a
trade union to sponsor the cause of aggrieved workmen is necessary. The high
courts are divided on the issue whether the burden of proof lies upon the union
to prove that it had the authority to represent the cause of individual workmen so
as to convert an individual dispute into an industrial dispute. The Madras74,
Andhra Pradesh75, Mysore76, Calcutta77, Madras78, Patna, Kerala and Bombay
High Courts have taken the view that when a dispute of a workman or workmen
is espoused by a union and its authority is challenged by the employer, it must be
proved by the union concerned, by appropriate resolution being passed by the
general body of the union or otherwise that it had the authority to take up the
cause of aggrieved workmen.79 On the other hand, the Punjab High Court took
the opposite view, namely, there must be a presumption that when the union
takes up the cause of the aggrieved workmen, it has the support of the members
of the union and then it is for the company to prove that facts are otherwise and
that the members of the union are not behind it in the action.
The Supreme Court in Bombay Union of Journalists v. The Hindu80
seems to be inclined to affirm the former view of majority of the high courts
when it said that ‘apart from the statement that 225 members of the union
requested its secretary to take up the cause of Salivateeswaran, there was nothing
to show that the union as such had passed any resolution or authorized its
secretary to take up Salivateeswaran’s cause and to raise an industrial dispute
thereon’.
It is submitted that the Punjab High Court’s view seems to be more
convincing. To this it may be added that the Court may well look into the
constitution of the union to ascertain whether the president/secretary had the
authority to do what they have done.
 It has also been held that the registration of trade union concerned under
the Trade Unions Act is not conclusive proof of its real existence or the authority
to represent the workmen on reference before the tribunal. Furthermore,
negotiations by some officials of the union with the workmen for conciliation by
executing certain documents on behalf of the workmen prior to the reference are
no conclusive proof of the authority of the union to represent the cause of
aggrieved workmen.81
3. Effect of Subsequent Withdrawal of Support by Workmen: It has
now been settled through the Supreme Court decision82 that subsequent
withdrawal of support by the workmen of a cause previously espoused by them
would not take away the jurisdiction of an industrial tribunal. Likewise, if the
dispute was in its inception an individual dispute and continued to be such till
the date of reference by the government, it would not be converted into an
industrial dispute by support subsequent to the reference even if workmen are
interested in the dispute. This principle is also applicable in subsequent
withdrawal of the case by a union. Thus, it has been held that the dispute with
regard to the dismissal does not cease to be an industrial dispute after the union
ceased to sponsor his case because if there was an industrial dispute at the time
of reference, it would not cease to be one merely because the claim of some of
the dismissed employees was settled by mutual agreement.83
4. Form of Espousal: The Supreme Court in J H Yadav v. M/S Forbes
84
Gokak held that as far as espousal is concerned, there is no particular form
prescribed to effect such espousal. But there is no doubt that the union must
normally express itself in the form of a resolution which should be proved if it is
in issue. However, proof of support by the union may also be available aliunde.
It would depend upon the facts of each case.
5. Time for the Espousal of the Dispute: In Western India Match Co. v.
Workers’ Union85, the Supreme Court held that the test is whether the dispute
referred to adjudication is one in which the workmen or a substantial section of
them have a direct and substantial interest even though it relates to a single
workman. Such an interest on the part of workman must exist on the date of
reference and not necessarily on the date on which the cause occurs, as otherwise
an individual dispute cannot become an industrial dispute.
6. Institution of Legal Proceedings by Legal Heir of Deceased
Workman: In Smt. Anjilamma v. Labour Court86, the Andhra Pradesh High
Court held that the legal heirs of deceased workmen have locus standi to pursue
a dispute against dismissal of deceased workmen either by continuing the
pending proceedings or by instituting fresh proceedings.
7. Industrial Dispute Survives even after Death of Workman: The
Supreme Court in Rameshwar Manjihi v. Sangramgarh Colliery87 held that
industrial dispute survives even after the death of workmen and the maxim actio
personalis moritur cum persona does not apply. Accordingly, the proceedings
before the tribunal may be continued by the legal heir/representative of the
deceased workmen.
8. An Appraisal: A survey of the aforesaid decisions indicates that the
following tests have been applied by the Court in determining as to when an
individual dispute would be converted into an ‘industrial dispute’.
(a) If the cause of aggrieved workmen is taken up by appreciable number of
workmen or the union of workmen (either registered or not or whether
recognized or unrecognized or whether majority or minority union) or in
the absence of any union of workmen by union of similar or allied trade
and there is a concerted demand by the workmen for redress.
(b) If the workmen espousing it have a community of interest and are directly
or substantially interested in the employment, non-employment, terms of
employment or conditions of labour of the concerned workman/workmen.
(c) If such an interest on the part of workman or substantial number of
workmen exists on the date of reference and need not necessarily exist on
the date on which the cause occurs.
(d) A dispute would not cease to be an ‘industrial dispute’ on subsequent
support or withdrawal of a cause of individual dispute previously
espoused by a workmen or union.
The net effect of the aforesaid decisions is that an individual worker,
unsupported by ‘appreciable number’ of workmen or the union, has no remedy
under the Industrial Disputes Act, 1947, particularly when no dispute is pending
before authorities under the Industrial Disputes Act, 1947.

III. LEGISLATIVE RESPONSE : INSERTION OF

SECTION 2A
In the preceding section, it has been seen that before the introduction of Section
2A as a result of judicial legislation, an individual workman who was
discharged, dismissed, retrenched or whose service was otherwise terminated or
who had been transferred, suspended or was subject to any other punishment,
had no remedy under the Industrial Disputes Act, unless his case was sponsored
by his fellow workmen or by a trade union. In such a situation, he had been left
with no alternative but to approach the civil court and involve himself in lengthy
and expensive civil remedy. Section 2A of the Industrial Disputes (Amendment)
Act, 1965 attempts to mitigate some of the hardships caused as a result of
judicial pronouncements.88 Section 2A came into force on 1 December 1965.
Section 2A provides: where an employer discharges, dismisses,
retrenches or otherwise terminates the services of an individual workman, any
dispute or difference between an individual workman and his employer
connected with, or arising out of such discharge, dismissal, retrenchment or
termination shall be deemed to be an ‘‘industrial dispute’ notwithstanding that
no other workman nor any union of workmen is a party to the dispute.
The net effect of Section 2A is that by legislative action, such a dispute is
deemed to be an industrial dispute even where it is not espoused by a trade union
or appreciable number of workmen.89 Thus, the result of insertion of Section 2A
was that, what was not an ‘industrial dispute’ as per the interpretation of the
Supreme Court, would be deemed to be an ‘industrial dispute’. But there is a
difference between an individual dispute which is deemed to be an industrial
dispute under Section 2A of the Industrial Disputes Act, 1947 on one hand and
an industrial dispute espoused by the union in terms of Section 2(1) of the said
1947 Act. An individual dispute which is deemed to be an industrial dispute
under Section 2A concerns discharge, dismissal, retrenchment or termination
whereas an industrial dispute under Section 2(k) covers a wider field. It includes
even the question of status. This aspect is relevant for the purposes of deciding
this case90.
In Radhey Shyam v. State of Haryana91, it has been held after
considering various judgments of the Supreme Court that Section 2A
contemplates nothing more than to declare an individual dispute to be an
industrial dispute. It does not amend the definition of industrial dispute set out in
Section 2(k) of the Industrial Disputes Act, 1947.
Section 2A does not cover every type of dispute between an individual
workman and his employer. Section 2A enables the individual worker to raise an
industrial dispute, notwithstanding that no other workmen or union is a party to
the dispute. It applies only to disputes relating to discharge, dismissal,
retrenchment or termination of service of an individual workman. It does not
cover other kinds of disputes such as bonus, wages, leave facilities, etc.92 and
does not apply in case of dispute arising from the transfer or promotion or the
refusal or failure to promote the employee or any punishment (excluding
dismissal, discharge, retrenchment or other termination of service) imposed on
such employee or dispute or difference as to money due to such employee from
the employer or as to any amount at which a benefit, which is capable of being
computed in terms of money, is to be computed. Thus, in cases not covered by
Section 2A, the principle laid down by the Supreme Court as to when individual
dispute becomes ‘industrial dispute’ is still applicable and thereby causes
hardship to the individual workman. This is not a very happy situation. It is,
therefore, necessary that the scope of the application of Section 2A should be
enlarged so as to include certain other causes stated above within its purview. It
may be relevant to note that Section 2 (15) of the Industrial Relations Bill, 1978,
which defines ‘individual dispute’, has widened the coverage of ‘individual
dispute’, by bringing within its ambit additional causes of dispute relating to
transfer, promotion and computation of money due. However, the Bill, we have
stated elsewhere, lapsed after the dissolution of the Parliament.
The aforesaid section raised four important issues:
(i) What is the significance of the word ‘deemed’ in Section 2A?
(ii) What is the significance of the expression ‘connected with or arising out
of’ in Section 2A?
(iii) Is Section 2A a constitutionally valid provision?
(iv) Can a retrospective effect be given to Section 2A?
These questions have been the subject matter of judicial controversy.
1. Significance of the Word ‘Deemed’: It has now been established
through the Supreme Court decision in Chemicals and Fibres of India Ltd v. D
S Bhoir93 and Rustom and Hornsby (P) Ltd v. T B Kadam that ‘Section 2A is,
in effect, a definition section. It provides, in effect that what would not be an
industrial dispute’ as defined in Section 2(k) and as interpreted by the Supreme
Court as to what would be deemed to be an ‘industrial dispute’ in certain
specified cases. The Court further said that the definition could as well have
made part of clause (k) of Section 2 instead of being put as a separate section.
2. Scope of the Expression ‘Connected with, or Arising out of
Discharge, Dismissal, Retrenchment or Termination’: Section 2A is not limited
to bare discharge dismissal, retrenchment or termination of the service of an
individual workman but any dispute or difference between the workmen and his
employer ‘connected with’ or arising out of discharge, dismissal, retrenchment
or termination will be deemed to be an industrial dispute,94 A thing is said to
arise out of another when there is close nexus between the two and one thing
flows out of another as a consequence.95
 In J N K Pradhan v. Industrial Tribunal, the Court was called upon to
decide whether the claim for gratuity was connected with or arose out of
discharge, dismissal, retrenchment or termination of service. The Court,
however, observed that whether he would be entitled for gratuity under the
Orissa Shops and Commercial Establishment Act is not for us to decide at this
stage. This is a matter for the tribunal to determine on examining the merits of
the dispute.
3. Constitutionality of Section 2A: After the insertion of Section 2A in
the Industrial Disputes Act, 1947, through 1965 Amendment, the management
challenged the constitutional validity of the section. They argued that (i) the
Parliament had no power to convert an ‘individual dispute’ into an ‘industrial
dispute’, (ii) the 1965 Amendment by which Section 2A was inserted was
repugnant to the legislative scheme of the IDA and (iii) Section 2A should be
struck down as it was violative of Article 14 of the Constitution. While Delhi,96
Punjab and Haryana,97 Madras98 and Mysore High Courts99 upheld the
constitutionality of Section 2A, Calcutta High Court100 declared the provision to
be ultra vires the Constitution. The obiter of the Supreme Court101 decision,
however, indicates that it upheld the validity of Section 2A. Let us now turn to
examine the judicial approach to this issue.
4. No Retrospective Effect: The Supreme Court in Rustom and Hornsby
(P) Ltd v. T B Kadam102 held that Section 2A provides in effect that what would
not be an industrial dispute as defined in Section 2(k) as interpreted by this Court
could be deemed to be an industrial dispute in certain circumstances. There is,
therefore, no question of giving retrospective effect to that section in making the
reference which resulted in the award under consideration. When the section
uses words where any employer discharges, dismisses, retrenches or otherwise
terminates the services of an individual workman, it does not deal with the
question as to when that was done.
The Court therefore ruled that if ‘there was an industrial dispute or an
industrial dispute was apprehended, even though the facts giving rise to that
dispute might have arisen before the reference was made, the reference would
still be valid.’

IV. NO TIME LIMIT PRESCRIBED

In Abdul Khalil St. Bharu v. Commission of Labour, Nagpur,103 a workman

was dismissed after a departmental inquiry on 5 February 1986. The first and
second appeals dated 19 December 86 and 9 January 1988 respectively were
dismissed. An application was made under Section 2A on 29 August 1989. It
was communicated to the applicant that as the application was made after two
and a half years, hence closed on 16 October 1988. A writ petition was filed in
1990 in the High Court of Bombay. The Court held that (i) there is no time limit
prescribed under Section 2A or section 12, (ii) the application cannot be said to
be stale or grossly belated, (iii) closing of the proceedings cannot be sustained
and (iv) conciliation officer is duty bound under Section 12 to proceed for the
purpose of bringing settlement and if his efforts fail, then he is required to
submit failure report.

V. RECOMMENDATION OF THE [SECOND]

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

VI. REMEDY TO INDIVIDUAL WORKMAN UNDER

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

VII. AMENDMENT OF SECTION 2A BY THE

INDUSTRIAL DISPUTES (AMENDMENT) ACT, 2010

The Industrial Disputes (Amendment) Act, 2010105 has inserted new clauses (2)
and (3) in Section 2A which are as follows:
‘(2) Notwithstanding anything contained in section 10, any such
workman as is specified in sub-section (1) may make an application
direct to the labour court or tribunal for adjudication of the dispute
referred to therein after the expiry of 45 days from the date he has made
the application to the conciliation officer of the appropriate government
for conciliation of the dispute, and in receipt of such application the
labour court or tribunal shall have powers and jurisdiction to adjudicate
upon the dispute, as if it were a dispute referred to it by the appropriate
government in accordance with the provisions of this Act and all the
provisions of this Act shall apply in relation to such adjudication as they
apply in relation to an industrial dispute referred to it by the appropriate
 government.
(3) The application referred to in sub-section (2) shall be made to the
labour court or tribunal before the expiry of 3 years from the date of
discharge, dismissal, retrenchment or otherwise termination of service as
specified in sub-section (1).’
An analysis of the aforesaid amended provision reveals that a workman
aggrieved by the order of dismissal, discharge, retrenchment or otherwise
termination of service may directly make an application to the labour court or
tribunal for adjudication of the dispute and the aforesaid labour court/tribunal is
empowered to adjudicate such dispute as it were referred to it by the appropriate
government. But, the two conditions must be satisfied before such application
can be entertained: (i) Such application must be made after the expiry of 45 days
from the date the aggrieved workman made the application to the conciliation
officer of the appropriate government for conciliation of the dispute (ii) Such
application must be made before the expiry of 3 years from the date of
discharge, dismissal, retrenchment or otherwise termination of service.

1 The definition of ‘industrial dispute’ is taken from an (English) Act 1906 (6 Edw VII C47)
and slightly modified. The definition ran:
any dispute between employers and workmen which is connected with the
employment or non-employment or the terms of employment or with the
conditions of labour of any person.
The definition only adds to the list of disputes ‘one between employers’. [See Madras
Gymkhana Club Employees' Union v. Gymkhana Club, (1967) 2 LLJ 720, 729 (SC)].
Prior to 1947 the Trade Dispute Act, 1929, used the expression ‘trade dispute’. Section
2(j) of the Trade Dispute Act, 1929 defined ‘trade dispute’ to mean:
any dispute or difference between employers and workmen and workmen and
workmen, which is connected with the employment or non-employment or the
terms of employment or with the conditions of labour of any person,
which was borrowed from Section 8 of the (English) Industrial Courts Act, 1919.
The scope of Section 2 (j) attracted the attention of the Royal Commission of Labour.
The Commission suggested widening the coverage of the definition. The Trade Disputes
(Amendment) Act, 1938, accordingly amended the definition of ‘trade dispute’ under the
Trade Disputes Act, 1929 to include disputes between employers and employees, and at
the same time provided for the omission of the following words ‘occurring between an
employer and any of his workmen’ from Section 3 of the Trade Disputes Act, 1929.
 The amended definition of ‘trade dispute’ was incorporated in the Industrial Disputes
Act, 1947.
2 Madras Gymkhana Club Employees' Union v. Gymkhana Club, op. cit. 720–28.
3 Workmen of Dikmakuchi Tea Estate v. Management of Dimakuchi Tea Estate, (1959) 1
LLJ 500 (SC).
4 Sambhu Nath Goyal v. Bank of Baroda, (1978) 2 SCC. 353.
5 (1978) 2 SCC. 353.
6 Sindhu Resettlement Corporation Ltd v. Industrial Tribunal, (1968) LLJ 834.
7 Id. at 839. The aforesaid view was followed in Fedders Lloyd Corporation (Pvt.) Ltd v.
Lieutenant Governor, (1970) Lab. IC 421. In this case, Justice Deshpande speaking for
the division bench of the Delhi High Court observed:
a demand by the workmen must be raised first on the management and rejected
by them before industrial dispute can be said to arise and exist and that the
making of such a demand to the conciliation officer and its communication by
him to the management, who rejected the demand is not sufficient to constitute
an industrial dispute.
8 Bombay Union of Journalists v. The Hindu. AIR 1963 SC 318: In T K Padamanabha
Menon v. P V Kora, (1968) Lab. IC, 1134, the Kerala High Court held that no specific
demand by the workmen was necessary to bring into existence an ‘industrial dispute’.
9 Shambhu Nath Goyal v. Bank of Baroda, (1978) 2 SCC 353.
10 (1984) 4 SCC 392 (SC).
11 (1993) Lab. IC 99 at 102–03.
12 Bangalore W C and Mills Co. v. Their Workmen, (1968) 1 LLJ 514 at 518.
13 Madras Gymkhana Club Employees Union v. Madras Gymkhana Club, (1967) 2 LLJ
720.
14 Conway v. Wade, (1909) AC 506, 517. There is no decided case in India on this subject.
15 Western India Automobiles Association v. Industrial Tribunal, (1949) LLJ 245 (FC).
16 Shankar Balaji Waje v. State of Maharashtra, (1961) 1 LLJ 119 (SC).
17 Western Indian Automobiles Association v. Industrial Tribunal, (1949) LLJ 245.
18 Ibid. See also Sindhu Resettlement Corporation Ltd v. LT., (1965) 2 LLJ 270 (Gujarat).
19 M/s Altherton West and Co. Ltd v. Jute Mill Mazdoor Union, AIR 1953 SC 24.
20 F L Corporation (P) Ltd v. Union of India, AIR 1970 Delhi, 60, 66.
21 Bilash Chander v. Balmer Lawrie and Co. Ltd, AIR 1953 Calcutta 613.
22 Indian Paper Pulb Co. Ltd v. Their Workmen, AIR 1949 FC 148; See also Madras
Gymkhana Club, (1967) 2 LLJ 720.
23 Cooperative Central Bank Ltd v. Addl LT, AIR 1970 SC 245.
24 Shahadara (Delhi) Saharanpur Light Rly. Co. v. S S Railway Workers, AIR 1960 SC
945.
25 Standard Vacuum Refining Co. of India Ltd v. Workmen, AIR 1960 SC 945.
26 Express Newspapers (P) Ltd v. Workmen, AIR 1963 SC 569.
27 Bata Shoe Co. v. D N Ganguly, AIR 1961 SC 1158.
28 Kerala Rubber and Reclaims Ltd v. P A Sunny, (1989) Lab. IC 964 (Kerala).
29 1984 Lab. IC 1573 (SC).
30 Tamil Nadu National Engineering Employees Union v: T I Cycles of India Ltd, (1994)
Lab. IC NOC 21.
31 (2001) 3 SCC 101.
32 Kanpur Woolen Mills v. Kanpur Mazdoor Congress, (1950) LLJ 61. 1. (IC); Alexandra
Jute Mills Ltd v. Their Workmen, (1950) LLJ 1262; (IT), Lister Antiseptic and Dressing
Co. Ltd v. Their Employees, (1951) 2 LLJ 791 (IT); Delhi Administration v. Edward
Keventer Ltd, (1978) 2 LLJ 209.
33 Kanpur Woolen Mills, v. Kanpur Mazdoor Congress, (1950) LLJ 611.
34 United Commercial Bank Ltd v. Kedar Nath Gupta, (1952) 1 LLJ 782; Mahahoob Sahi
Kalbarga Mills Co. Ltd v. Their Employees, (1959) 2 LLJ 196.
35 Assam Chah Karmachari Sanagha v. Dimakuchi Tea Estate, AIR (1958) SC 353.
36 Workmen of Dahingeapur Tea Estate, AIR 1958 SC 1026.
37 Kays Construction Co. Ltd v. Its Workmen, AIR 1959 SC 208.
38 Standard Vacuum Refining Co. of India Ltd v. Their Workmen, AIR 1960 SC 948;
Bombay Union of Journalists v. The Hindu, (1994) 2 LLJ 600.
39 Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318.
40 Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate, (1959)
ILLJ 500.
41 All India Reserve Bank Employees' Association v. Reserve Bank of India, AIR 1966 SC
305.
42 Workmen v. Greaves Cotton Ltd, (1971) 2 LLJ 479 (SC).
43 Workmen v. Greaves Cotton Ltd, (1970) 2 LLJ 479 at 490.
44 Standard Vacuum Refining Co. v. Their Workmen, AIR 1960 SC 948.
45 Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate, (1959) 1
LLJ 500.
46 All India Reserve Bank Employees’ Association v. Reserve Bank of India, AIR 1966 SC
305 at 308.
47 Workmen of Dimakuchi Tea Estate, (1959) 1 LJJ 500; Kays Construction Co. (P) Ltd v.
Its Workmen, AIR 1959 SC 208.
48 Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318.
49 (2001) 9 SCC 557.
50 Central Provinces Transport Services v. Raghunath Gopal Patwardhan, (1957) 1 LLJ 27
(SC).
51 Kandan Textiles Ltd v. Industrial Tribunal, 875; United Commercial Bank Ltd v.
 Commissioner of Labour, (1951) 1 LIJ 1 (SC).
52 Swadeshi Cotton Mills Co. v. Ramzani, (1953) 1 LLJ 277 (LAT); Newspapers Ltd v.
State Industrial Tribunal, (1954) 2 LLJ 263 (Allahabad), reversed in appeal, (1957) 2
LLJ 1 (SC).
53 New India Assurance Co. Ltd v. Central Government Industrial Tribunal, (1954) 2 LLJ
21 (Patna); J Chowdhary v. M N Banerjee, 56 CWN 256 (1951).
54 Central Provinces Transport Services Ltd v. Raghunath Gopal Patwardhan, (1957) 1
LLJ 27.
55 D N Banerjee v. P R Mukhejee, (1953) 1 LLJ 195 (SC).
56 Newspapers Ltd. v. State Industrial Tribunal, (1957) 2 LLJ 1 (SC).
57 Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318.
58 Workmen of Dharampal Prem Chand v. M/s Dharmpal Prem Chand, AIR 1966 SC 182.
59 Commenting on the principles laid down in Bombay Union of Journalists v. The Hindu,
AIR 1963 SC 318, the Supreme Court in M/S Dharampal Prem Chand, op. cit. observed:
In our opinion, the observation (made in The Hindu)... should not be read as laying down
any hard and fast rule in the matter. Take for instance, the case of an employer who
employs 20 workmen, and assume that these workmen have not formed any union. If the
employer illegally dismisses all the workmen employed by him, it cannot be suggested
that the dispute raised by employees would not become an industrial dispute because
there was no union to support them and the dismissed employees themselves cannot
convert their individual dispute, op. cit., 182–86.
60 Workmen of Indian Express Ltd v. Management of Indian Express Ltd, (1970) 2 LLJ
132 (SC).
61 M/s Western India Match Co. Ltd v. Western India Match Company Workers' Union,
(1970) 2 LLJ 256 (SC).
62 2005 LLR 314.
63 Workmen v. M/s Dharampal Prem Chand, AIR 1966 SC 182.
64 Workmen of Indian Express Newspaper v. Management, 1970 2 LLJ 132, 137.
65 Workmen v. Rohtak General Transport Company, 1962 1 LLJ 634 (SC).
66 State of Punjab v. Gondhara Transport Co., AIR 1975 SC 53 1.
67 Bombay Union of Journalists v. The Hindu, AIR, 1963 SC 318. See also Deepak Puri v.
Fifth Industrial Tribunal, 1986 Lab. IC.
68 Newspapers Ltd v. State Industrial Tribunal, AIR 1960, SC 1328; Workmen of
Dharampal Prem Chand v. M/s Dharampal Prem Chand, AIR 1966 SC 182; Workmen
of Indian Express Newspaper v. Management (1970) 2 LLJ 132.
69 Associated Cement Co. v. Workmen, AIR 1970 SC 177; Pradip Lamp Works v.
Workmen, (1970) 1 LLJ 507 (SC).
70 Newspapers Ltd v. U P State Industrial Tribunal, AIR 1960 SC 1328; State of Bombay
v. Kripa Shankar Jaiswal, AIR 1961 SC 304; Pradip Lamp Works v. Its Workmen,
(1970) 1 LLJ 507.
71 Newspapers Ltd v. U P State Industrial Tribunal AIR 1960 SC 1328.
72 State of Bombay v. Kripa Shankar Jaiswal, AIR 1961 SC 304.
73 Pradip Lamp Works v. Its Workmen, (1970) 1 LLJ 507.
74 Kandan Textiles Ltd v. Industrial Tribunal, 875; Sri Ram Vilas Service Ltd v. State of
Madras (1956) 1 LLJ, 198; Murgan Transport v. Its Workers, (1960) 1 LLJ 349;
Murugalli Estate v. Industrial Tribunal, (1964) 2 LLJ 164.
75 Shri Kripa Printing Press v. Labour Court, (1960) 1 LLJ 53.
76 P M Murugappa Mudaliar Rathina Mudaliar & Sons v. Raji Mudaliar, (1965) 1 LLJ
489.
77 Deepok Industrial Ltd v. State of West Bengal, (1975) 1 LLJ 293 at 294-98.
78 Visalakshmi Mills Ltd v. Labour Court, (1962) 2 LLJ 93.
79 Hindustan Ltd v. Chief Commissioner, (1957) 2 LLJ 466.
80 Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318.
81 Deepak Industrial Ltd v. State of West Bengal, (1975) 1 LLJ 293 at 294–98.
82 Bombay Union of Journalists v. The Hindu, AIR 1963 SC 318.
83 Binny Ltd. v. Workmen, AIR 1972 SC 1975.
84 (2005) LLR 314.
85 Western India Match Co. v. Workers Union, (1970) 2 LLJ 256 (SC).
86 (1995) Lab. IC 2784 (AP).
87 AIR 1994 SC 1176.
88 In the Statement of Objects and Reasons of the Bill which resulted in the enactment of
Section 2A it was stated:
In construing the scope of industrial dispute, courts have taken the view that a
dispute between an employer and individual workman cannot per se be an
industrial dispute but it may become one if it is taken up by a union or a number
of workmen making a common cause with the aggrieved individual workman.
In view of this, cases of individual dismissals and discharges cannot be taken up
for conciliation or arbitration or referred to adjudication under the Industrial
Disputes Act, unless they are sponsored by union or a number of workmen. It is
now proposed to make the machinery under the Act available in such cases.
89 Rustaom and Hornsby (P) Ltd v. T B Kadam, (1975) 2 LLJ 352 at 355 (SC).
90 Bharat Heavy Electricals Ltd v. Anil and others, 2007 LLR 201.
91 (1998) 2 LLJ 1217.
92 2007 LLR 201.
93 Chemicals and Fibres of India Ltd. v. D S Bhoir, (1975) 2LLJ 168 (SC).
94 J N L Pradhan v. Industrial Tribunal, (1977) 1 LLJ 36 (Orissa).
95 Machinnon Machenzie and Co. v. L M Lassk, (1970) 1 LLJ 16 (SC).
96 Toshniwal Brothers (Pvt.) Ltd v. Labour Court, (1969) FJR 19 352. Fedders Lloyd
Corporation (P) Ltd v. Lt Governor, Delhi, (1970). Lab. IC 421 (Delhi).
97 Atlas Cycle Industries v. P V Thukral (1971) Lab. IC203, 205 (Punjab and Haryana).
98 T V S Iyengar and Sons (P) Ltd v. State of Madras, (1970) Lab. IC 203 (Madras).
99 P Janardhana Shetty v. Union of India, (1970) 2 LLJ 738 (Mysore).
100 Jute and Jute Goods Buffer Stock Association v. Second Industrial Tribunal, Matter No.
654 of 1970 decided by the Calcutta High Court on 28 July, 1971.
101 Rustom and Hornsby (P) Ltd v. T B Kadam, (1975) 2 LLJ 352.
102 Rustom and Hornsby (P) Ltd v. T B Kadam, (1975) 2 LLJ 352.
103 1997 Lab. IC 122 (Bom); see also M/s John and Mani Agencies v. Labour Court
Madras, (1991) Lab. IC 306 (Madras).
104 Krishna Distt Cooperative Marketing Society Ltd v. N V Purnachandra Rao, (1987) Lab.
IC 1651 (SC).
105 It came into force with effect from 19 August 2010.
 CHAPTER
15
Arena of Interaction and Participants in
Industrial Disputes

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

A. Municipalities and Municipal Corporations

The Supreme Court was called upon to interpret the word ‘industry’ for the first
time in D N Banerji v. P R Mukherjee2 (hereinafter referred to as Budge Budge
Municipality case). A head clerk and a sanitary inspector of the Budge Budge
Municipality were dismissed on certain charges by the municipality. The dispute
relating to the validity of dismissal was referred by state of West Bengal to the
industrial tribunal for adjudication, which directed the reinstatement of those
persons. Against this order, the municipality filed a writ petition under Articles
226 and 227 of the Constitution before the Calcutta High Court, but the petition
was dismissed. Aggrieved by this order, the municipality filed an appeal before
the Supreme Court. Two questions were raised before the Court: (i) that there
being no industrial dispute, the reference to the tribunal was bad, and (ii) that the
Industrial Disputes Act was not applicable to the municipality as it was not an
industry. While dealing with these questions, Justice Chandersekhara Aiyar
observed:
It is obvious that the limited concept of what an industry meant
in early times must now yield place to enormously wider
concept so as to take in various and varied forms of industry,
though the word ‘undertaking’ in the definition of ‘industry’ is
wedged in between business and trade on the one hand and
manufacture on the other and though therefore it might mean
only a business or trade, still it must be remembered that if there
were so, there was no need to use the word separately from
business or trade. The wider import is attracted even more
clearly when we look at the latter part of the definition which
refers to ‘calling, service, employment, or industrial occupation
or avocation of workmen’. Undertaking in the first part of the
definition and industrial occupation or avocation in the second
part obviously mean much more than what is ordinarily
understood by trade or business. The definition was apparently
intended to include within its scope what might not strictly be
called a trade or business venture.
The Court in the course of its judgement referred to the following
observations made by Justice Isaecs and Justice Rich, in Federated Municipal
and Shire Council Employees’ Union of Australia v. Lord Mayor, Alderman,
Councillors and Citizens of the Melbourne Corporation:3
Industrial disputes occur when, in relation to operations in which
capital and labour are contributed in cooperation for the
satisfaction of human wants and desires, those engaged in
cooperation dispute as to the basis to be observed, by the parties
engaged, respecting either in share of the product or any other
terms and conditions of their cooperation.
The Supreme Court accordingly dismissed the appeal filed by the
municipality.
The aforesaid decision was followed in Baroda Borough Municipality v.
Its Workmen.4 The employees working in the electricity department of the
municipality demanded, inter alia, bonus which was refused by the
management. On reference of the dispute by the appropriate government, the
tribunal held that employees were not entitled to bonus because the municipality
was not a profit-oriented concern. On appeal, the labour appellate tribunal
reversed the decision of the tribunal on the ground that the municipality was an
‘industry’. Aggrieved by this finding, the municipality filed an appeal to the
Supreme Court. The Court following the decision in D N Banerjee v. P R
Mukherjee affirmed the findings of labour appellate tribunal and held that the
undertaking was an ‘industry’ and that could be regarded as analogous to the
carrying on of a trade or business.
This was followed by Corporation of City of Nagpur v. Its Employees5
in which the Supreme Court emphasized the inclusive character of the definition
of ‘industry’. It drew a distinction between (a) regal and (b) municipal function
of the corporation, the latter being ‘analogous to business or trade’. In this case,
a dispute arose between the corporation and its employees regarding wage scale,
etc. The government of Madhya Pradesh referred the dispute under Section 39 of
the C.P. and Brar Industrial Disputes Settlement Act, 1947 to the state industrial
court. The corporation questioned the jurisdiction of the industrial court, inter
alia, on the ground that the corporation was not an industry but the tribunal
overruled the objection and held that the corporation was an ‘industry’ and that
the further question whether any department of the corporation was industry or
not, would be decided on evidence. The corporation, after unsuccessfully
moving the Bombay High Court on a writ petition under Article 226, appealed to
the Supreme Court. The Supreme Court was called upon to decide whether and
to what extent various activities carried on by the corporation of the city of
Nagpur were ‘industry’ within the meaning of Section 2 (4) of Central Province
and Brar Industrial Disputes Settlement Act, 1947.6 The Court summed up its
conclusions in the following words:
(1) The definition of ‘industry’ in the Act is very
comprehensive. It is in two parts: one part defines it from the
standpoint of the employer and the other from the standpoint of
the employee. If an activity falls under either part of the
definition, it will be an industry within the meaning of the Act.
(2) The history of industrial disputes and legislation recognizes
the basic concept that the activity shall be an organized one and
not that which pertains to private or personal employment. (3)
The regal functions described as primary and inalienable
functions of State though statutorily delegated to a corporation
are necessarily excluded from the purview of the definition.
 Such regal functions shall be confined to legislative power,
administration of law and judicial power. (4) If a service
rendered by an individual or a private person would be an
industry, it would equally be an industry in the hands of a
corporation. (5) If a service rendered by a corporation is an
industry, the employees in the departments connected with that
service whether financial, administrative or executive, would be
entitled to the benefits of the Act. (6) If a department of a
municipality discharges many functions, some pertaining to
industry as defined in the Act and other non-industrial activities,
the predominant functions of the department shall be the
criterion for the purposes of the Act.
The Court also ruled that neither investment of capital nor profit motive
was sine qua non for determining whether an activity was an ‘industry’ or not.
The Court accordingly held that several departments of a municipal
corporation, namely: (i) tax department, (ii) fire brigade department, (iii) public
conveyance department, (iv) lighting department, (v) water works department,
(vi) city engineering department, (vii) enforcement (encroachment) department,
(viii) sewerage department, (ix) public gardens department, (x) public works
department, (xi) assessment department, (xii) estate department, (xiii) education
department, (xiv) printing press department, (xv) building department and (xvi)
general administration department were not discharging sovereign or regal
function and were, therefore, included within the definition of industry.
The Court, however, held that departments pertaining to (i) assessment
and levy of house tax, (ii) assessment and levy of octroi, (iii) removal of
encroachment and pulling down of dilapidated houses, (iv) maintenance of cattle
ponds and (v) prevention and control of food adulteration were outside the
purview of Section 2 (4).
The decision in this case and also in D N Banerjee v. P R Mukherjee
(supra) found the approval of the seven-judges bench of the Supreme Court in
Bangalore Water Supply and Sewerage Board v. Rajappa7. This view was re-
affirmed in Samishta Dube v. City Board, Etawah,8 (I). The Court held that the
general administration department was an ‘industry’.
Even though it is well established in a catena of cases decided by the
Supreme Court that municipality is an industry under 2(j) of the Industrial
Disputes Act, 1947, yet an attempt was made in Parmanand v. Nagar Palika,
Dehradun9 to reopen the position and re-examine the decisions of the Supreme
Court in view of inclusion of municipalities in the Constitution. It was urged that
municipality should not be held to be an industry under Section 2(j) of the
Industrial Disputes Act, 1947 after (i) it became creature of the Constitution (ii)
it has been elevated to the status of State and (iii) it is carrying on certain
governmental functions. The Court rejected the contention by holding that
inclusion of municipalities in the Constitution by itself would not dilute the
effect of its decision in Corpn. of the City of Nagpur v. Employees and
Bangalore Water Supply and Sewerage Board v. A Rajappa wherein the
Supreme Court held that municipality is an industry under the Industrial
Disputes Act.

B. Hospitals and Pharmacies

We now come to State of Bombay v. Hospital Mazdoor Sabha10 which
constitutes a landmark in labour law. In this case, the Supreme Court not only
declined to adopt the expression ‘analogous to carrying out of a trade or
business’, but coined a new expression ‘systematically’ organized in a business
or trade like manner. In this case, J J Group of Hospitals run by the State of
Bombay retrenched two of its ward servants. Against this order, the aggrieved
workers moved the Bombay High Court for the issuance of writ of mandamus
directing their reinstatement. The management, i.e., the State of Bombay
contended that the hospital being not an ‘industry’, the Industrial Disputes Act,
1947 was not applicable. The Bombay High Court held that the hospital was an
‘industry’. Aggrieved by this finding, the State of Bombay filed an appeal before
the Supreme Court. One of the main issues before the Supreme Court was
whether in running the hospitals, the State was carrying on an activity of an
‘industry’. The Court answered it in the affirmative and observed:
We have yet to decide which are the attributes whose presence
makes an activity an undertaking within Section (j), on the
ground that it is analogous to trade or business. It is difficult to
state these possible attributes definitely or exhaustively as a
working principle but it may be stated that an activity
systematically or habitually undertaken for the production or
distribution of goods or for the rendering of material services to
the community at large or a part of such community with the
help of employees is an undertaking. Such an activity generally
involves the cooperation of the employer and the employees and
its object is the satisfaction of material human needs. It must be
organized or arranged in manner in which trade or business is
generally organized or arranged. It must not be casual nor must
 it be for oneself nor for pleasure. Thus, the manner in which the
activity in question is organized or arranged, the condition of the
cooperation between employer and the employee necessary for
its success and its object to render material service to the
community can be regarded as some of the features which are
distinctive of activities to which Section 2 (j) applies. Judged by
this test, there would be no difficulty in holding that the State is
carrying on an undertaking when it runs the group of hospitals in
question.
However, a larger bench of the Supreme Court in Management of
Safdarjang Hospital v. Kuldip Singh Sethi11 disapproved of the aforesaid
decision, by holding that a hospital which was run and administered by the
government was a part of its sovereign functions and it was outside the scope of
‘industry’ and thereby unduly curtailed the scope of the term ‘industry’.
In this case, three appeals were heard together. In the first appeal, a
dispute arose between the management of Safdarjang Hospital—a government
owned and run hospital and its employees for the computation of amount of
salary due to workers consequent upon change in the grade. Thereupon, the
employees made an application to the labour court under Section 33 C (2) of the
Industrial Disputes Act for the recovery of money due from the employer. The
labour court directed the hospital to pay the money due to them. It is against this
finding of the labour court that an appeal was filed.
In the second appeal, a dispute arose between the Tuberculosis
Association of India (a research and training institution) and its employees
relating to pay scales and other facilities of the employees. The government
referred the dispute to the tribunal. The tribunal held that ‘neither the research
carried out nor the training imparted nor the existence of Tuberculosis
Association of India with which the hospital is affiliated, makes any difference
and the hospital is an industry within the meaning of the Act.’ Against this order,
the appeal was filed to the Supreme Court.
In the third appeal, the management of Kurji Holy Family Hospital, Patna
(a wholly charitable hospital maintaining some paid beds) took disciplinary
action against two of its employees. The dispute was referred by the state of
Bihar to the labour court under Section 10 of the Act. The management raised
the preliminary objection that they were not engaged in ‘industry’ and
consequently, labour court had no jurisdiction. Against this, a writ petition was
filed to the Patna High Court which held that it was an ‘industry’. It was against
this decision that an appeal was filed to the Supreme Court.
 The common question involved in all the three appeals was whether the
activities carried on by these hospitals were ‘industry’? The Court formulated
the following test to determine whether or not an activity is an ‘industry’:
(i) It is not necessary to view the definition in two parts. The definition read
as a whole denotes a collective enterprise in which employers and
employees are associated. It does not exist either by the employers alone
or by employees alone. It exists only when there is a relationship between
employers and employees, the former engaged in business, trade,
undertaking, manufacture or calling of employers and the latter engaged
in any calling, service, employment, handicraft, or industrial occupation
or avocation.
(ii) The word ‘industry’ (in the definition of ‘workmen’) must take its colour
from the definition of industry and discloses that a workman is to be
regarded as one employed in an ‘industry’ if he is following one of the
vocations mentioned in conjunction with his employers.
(iii) In the collocation of the terms and their definitions, these terms have a
definite economic content of a particular type and on the authorities of
this Court have been uniformly accepted as excluding professions and are
only concerned with the production, distribution and consumption of
wealth and the production and availability of material services. Industry
has thus been accepted to mean only trade, business, manufacture, or
undertaking analogous to trade or business for the production of material
goods or wealth and material services.
(iv) Material services are not services which depend wholly or largely upon
the contribution of professional knowledge, skill or dexterity for the
production of result. Such services are services no doubt but not material
services. Material services involve an activity carried on through
cooperation between employers and employees to provide the community
with the use of something such as electric power, water, transportation,
mail delivery and the emphasis is upon the productivity of a service
organized as an industry and commercially valuable. It is the commercial
character of the activity and the production of something of benefit to
particular individuals rendered by all services which is described as the
production of material services.
In the light of aforesaid test, the court concluded that the Hospital
Mazdoor Sabha wrongly held: (i) that ‘the second part of the definition
contained an extension of the first part by including other items of industry’ (ii)
that economic activity was not an essential part of the concept of industry (iii)
that an economic activity could not exist without the presence of capital or
profit-making or both (iv) that the test namely, ‘can such activity be carried on
by private individuals or group of individuals’ applied to the facts of the case.
The aforesaid principle was reiterated in Management of Hospital,
Orissa v. Their Workmen.12 In this case, a dispute arose regarding the
conditions of service of employees employed in hospitals, sanatorium and
infectious wards owned and run by the government. The government of Orissa
made three references to the tribunal for adjudication. The tribunal in all three
cases held that the activities of the hospitals, sanatorium and infectious wards
were ‘industry’. Against this finding, the management of the hospitals preferred
an appeal before the Supreme Court. The question arose whether the aforesaid
activities run by the government were ‘industry’. The Supreme Court, following
the decision in Safdarjang Hospital case held that the aforesaid activities were
not ‘industry’ because it was being run as a part of the functions of the
government and were being run as a department. It further held that the ‘mere
fact that payment was accepted in respect of some beds… could not… (lead) to
the inference that the hospitals (were) run as a business in a commercial way.
Primarily, the hospitals (were) meant as free service by the government to the
patient, without any profit motive.’
The principle enunciated in Safdarjang Hospital supra was once again
followed and applied by the Supreme Court in Dhanrajgiri Hospital v.
Workmen.13 The hospital run by a charitable trust was engaged in imparting
training in general nursing and midwifery. There were good number of trainees
in general nursing and midwifery. There were also good number of trainee beds
in the hospital meant for their practical training. The hospital was not distinct or
separate from training nurses. The patients were charged according to their
financial conditions and there was no regular charge fixed for a patient. On these
facts, the Supreme Court held that the hospital was not engaged in any ‘industry’
under the IDA.
The law laid down in the aforesaid decision is no longer applicable in
view of the Supreme Court decision in Bangalore Water Supply and Sewerage
Board case wherein the Court overruled these decisions and rehabilitated
Hospital Mazdoor Sabha case.

C. Agricultural Operation
In Hari Nagar Cane Farm v. State of Bihar,14 a question arose whether the
agricultural operation carried on by the two companies constituted an ‘industry’.
Both the companies were not only involved in agricultural operation, but were
also registered under the Indian Companies Act. While the former was formed to
produce sugarcane, wheat, paddy and other articles for sale, the latter was
involved in the production of sugar for its own consumption. On a dispute
having arisen between the workers and companies, the state of Bihar made a
reference to the industrial tribunal. The companies questioned the jurisdiction of
state of Bihar to make a reference in a writ petition under Article 226 of the
Constitution before the Patna High Court on the ground that the agricultural
operation carried on by them did not constitute an ‘industry’. The High Court
dismissed the petition and held that the activity carried on by them was an
‘industry’ and therefore, the reference was valid. It is against this order of the
High Court that the companies filed an appeal to the Supreme Court. The Court
on the facts held that ‘when a company if formed for the purpose of carrying on
an agricultural operation, it was carrying on trade or business’ under Section
2(j). The Court, however, declined to decide the larger issue as to whether all
agricultural operations connected with it were included in ‘industry’.
In Bangalore Water Supply and Sewerage Board v. Rajappa15, the seven-
judges bench of the Supreme Court appears to have re-affirmed the principles
laid down in Hari Nagar Cane Sugar Farm case. From the Bangalore decision
it is evident that the Supreme Court is inclined to treat organized agricultural
operation with the cooperation of capital and labour for the production and
distribution of goods and services calculated to satisfy human wants and wishes
to be an ‘industry’. But, the small and unorganized agricultural operations have
been excluded from the purview of the Industrial Disputes Act, 1947.

D. Agriculture Produce Market Committee

In Agriculture Produce Market Committee v. Ashok Harikuni,16 the Supreme
Court was called upon to determine whether the Agriculture Produce Market
Committee was exercising sovereign function in order to exclude it from the
purview of ‘industry’ under the Industrial Disputes Act, 1947. The Court
observed that even if a statute confers on any statutory body, any function which
could be construed to be ‘sovereign’ in nature that, would not mean every other
function under the same statue to be also sovereign. The Court should examine
the statute to sever one from other by comprehensively examining various
provisions of that statute. In interpreting any statute to find if it is ‘industry’ or
not, the Court has to find its pith and substance. The Industrial Disputes Act,
1947 is enacted to maintain harmony between employer and employee which
brings peace and amity in its functioning. This peace and amity should be the
objective in the functioning of all enterprises. This is to the benefit of both the
employer and employee. Misuse of rights and obligations by either or stretching
it beyond permissible limits have to be dealt with within the framework of the
law but endeavour should not be, in all circumstances, to exclude any enterprise
from its ambit. That is why courts have been defining ‘industry’ in the widest
permissible limits and ‘sovereign’ functioning within its limited orbit. It has
been held that the Agriculture Produce Market Committee is trading in
agriculture produce and is an ‘industry’ under the Industrial Disputes Act.

E. Professional Activities
Are the professional activities like solicitors’ firms, architects’ offices, medical
polyclinics and surgeries, firms of chartered accountants, etc., industries under
Section 2 (j)? This question formed the subject matter of controversy. In
National Union of Commercial Employees v. M R Mehar17, certain employees,
namely, clerks, typists, stenographers, accountants and menial servants of a
solicitor firm M/s Peeira Fazalbhoy and Co. demanded bonus. The management
rejected the demand. Thereupon the state of Bombay referred the dispute to the
industrial tribunal for adjudication. The management successfully questioned the
jurisdiction of the tribunal on the ground that the firm was not an ‘industry’.
Thereupon, the employees, after unsuccessfully moving the High Court for the
issuance of appropriate writ under Articles 226 and 227 of the Constitution,
appealed to the Supreme Court. The question arose whether the solicitor firm
was carrying on as ‘industry’? The Court held that the firm was only a ’liberal
profession’ like that of attorney and was not an ‘industry’ because (i) there was
no ‘direct or immediate’ cooperation, between solicitor and his employees to the
professional service which the solicitor rendered to his client and (ii) services
rendered by a person involved in a liberal profession required special or peculiar
intellectual and educational equipment18 and were not ‘material’.
The aforesaid principle was extended and applied in relation to employees
employed in a bar association canteen in Bar Association Canteen v. Chief
Commissioner, Delhi.19 In this case, the association ran a canteen on no profit,
no loss basis, for the benefit of its members and their guests. A dispute arose
between the management of the bar association and the employees employed in
the canteen regarding terms of employment. On reference, the tribunal held that
the activity was covered under ‘industry’. Against this finding, a writ petition
was preferred in the Punjab High Court. The High Court held that the activity of
the members of the bar association in rendering advice to the client and
appearing for them in cases were not ‘industry’. Extending it a little further, the
Court added that if the bar association employed workmen for supplying
drinking water or assisting the members in taking out books from the book-
racks, the dispute between such workmen and the bar association was not an
industrial dispute20. Extending it again, the Court added that the activity in
serving the food or snacks to the guest was merely incidental and was, therefore,
not an ‘industry’.21
The aforesaid decision was overruled in Bangalore Water Supply and
Sewerage Board case. The Court disapproved the view because in its view, a
solicitor’s firm or a lawyer’s firm becomes successful not merely by the talent of
a single lawyer but by the cooperative operations of several specialists, juniors
and seniors. Likewise, the ancillary services of competent stenographers, para-
legal supportive services are equally important, the same test is applied to other
professions. The conclusion is inevitable that in the success of the institution,
every professional unit has an institutional goodwill and reputation, it comes not
merely from the professional or specialist but from all those whose excellence in
their respective parts makes for the total proficiency.

F. Chartered Accountant’s Firm

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

G. Educational Institutions
We now turn to examine whether an educational institution is an ‘industry’. In
order to examine this issue, it would be relevant to note that education is a
mission and vocation, rather than a profession or business.28
 Corporation of City of Nagpur v. Its Employees29 is our starting point. In
this case, the Supreme Court held that the educational institutions run by
municipality/corporation was a service rendered by the department and so the
subordinate menial employees of the department came under the definition of
‘workman’ and were entitled to the benefits of the Act.
However, the pendulum swung back in curtailing the scope and coverage
of ‘industry’ in University of Delhi v. Ram Nath30 where the University was
plying buses for the convenience of female students attending one of its
constituent colleges since 1948. They had decided in 1961 to discontinue the
amenity from the next academic session, as it resulted in losses. In pursuance of
this decision, they terminated the service of two bus drivers on payment of one
month’s salary in advance in lieu of notice. The drivers demanded retrenchment
compensation alleging that they were workmen. The university declined.
Thereupon, they filed an application to the labour court under Section 33C(2) for
recovery of the compensation. The university raised a preliminary objection that
the labour court had no jurisdiction because the university was not an ‘industry’.
The labour court overruled the objection and directed the university to pay the
compensation. Against this award of the labour court, the university filed an
appeal to the Supreme Court. The Supreme Court held that the drivers employed
by the university were not employed in ‘industry’ because: (i) predominant
function of the university was to impart education; (ii) teachers were not
workmen and (iii) others (persons other than teachers) were insignificant in
number and did minor and insignificant work.
The seven-judges bench of the Supreme Court in Bangalore Water
Supply v. Rajappa overruled this decision and reaffirmed the decision in
Corporation of Nagpur case that educational institution was industry. Justice
Krishna Iyer laid down the following test to determine whether an activity is an
‘industry’.
The test is not the predominant number of employees entitled to enjoy the
benefits of the Act. The true test is the predominant nature of the activity. In the
case of the university or an educational institution, the nature of the activity, is,
ex hypothesis, education which is a service to the community. Ergo, the
university is an industry.
His Lordship added:
… there are a number of other activities of the university
administration, demonstrably industrial which are severable
although ancillary to the main cultural enterprise. For instance, a
university may have a large printing press as a separate but
 considerable establishment. It may have a large fleet of transport
buses with an army of running staff. It may have a tremendous
administrative strength of officers and clerical cadres. It may
have karamcharis of various hues.
And observed:
It would be strange, indeed, if a university has 50 transport
buses, with drivers, conductors, cleaners and workshop
technicians. How are they to be denied the benefits of the Act,
especially when their work is separable from academic teaching
merely because the buses are owned by the same corporate
personality?
In A Sundarambal v. Government of Goa, Daman and Diu31, the
Supreme Court held that educational institutions are covered by the definition of
‘industry’ under the Industrial Disputes Act, 1947.

H. Clubs
Are clubs industries? This question formed the subject matter of judicial
interpretation in a number of decided cases. Madras Gymkhana Club
Employees’ Union v. Gymkhana Club32 is a leading case on this. The Madras
Gymkhana Club—a members’ club, was engaged on a vast scale in multifarious
activities and for facilities of accommodation, catering, sale of alcoholic and
non-alcoholic beverages, games, etc., and the club organized parties at which
guests were freely entertained and the club had established arrangements with
other clubs. It had a membership of 1,200 with almost 800 active members. It
employed 194 employees. The club owned both movable and immovable
properties with several of its wage bills falling in between ₹1 and 2 lakh. A
dispute arose between the management of Madras Gymkhana Club and its
workmen regarding the payment of bonus for the year 1962. The government
referred the dispute to the industrial tribunal for adjudication. The tribunal held
that Madras Gymkhana Club was not an industry and was, therefore, not liable
to pay bonus to its workmen. Against this order, the aggrieved workmen filed an
appeal before the Supreme Court. On these facts a question arose for
determination before the Supreme Court—whether a club was an ‘industry’. The
Court limited the scope of ‘industry in four different ways: (i) the Court held that
the cardinal test was to find out whether there was an industry according to the
denotation of the words in the first part of the definition. The second part of the
definition did not enlarge the meaning of the expression ‘industry’ in the sense
that standing alone, it could not define ‘industry’, (ii) although the Court
observed that the second part of the definition of industry gave no extended
connotation, yet the manner in which it interpreted the second part limited the
meaning of the first part, because according to the Court, unless the parts of the
definition were independently fulfilled, there could not be an ‘industry’, (iii) the
emphasis on the production and distribution of material goods, i.e., ‘wealth’
indicated that the Court was giving an economic content to the first part of the
definition of ‘industry’ and (iv) the Court defined the word ‘undertaking’ as ‘any
business or any work or project which one engages in or attempts as an
enterprise analogous to business or trade’ and which results, ‘in material goods
or material services’. In Bangalore Water Supply and Sewerage Board case, the
Supreme Court overruled the aforesaid decision. The Court disapproved of the
reasoning of Madras Gymkhana that it was not an ‘industry’ because the club
belonged to members only.
The aforesaid view was followed in Cricket Club of India v. Bombay
Labour Union.33 The club was incorporated with a view to encouraging and
promoting various games and sports and to conduct sports and matches,
particularly of cricket. It carried on various activities of the club like recreation
and entertainment, catering to members and their guests and sometimes to
spectators. Among other facilities, the club provided for residence. The club also
made investments in immovable property. It had a membership of 4,800 and
employed 397 persons. On these facts a question arose whether the activities
carried on by the club were ‘industry’. The Court observed that (i) it was a
members’34 club without any shareholders and was of the nature of a self-
servicing institution organized by the club for its members and it was wrong to
equate it with the activity of a hotel, (ii) the opening of club stall to general
public to buy snacks, etc., on few occasions in a year could not be held to be an
‘undertaking of the nature of business or trade’, (iii) income from the rent of the
building did not accrue with aid and cooperation of employees, (iv) club’s
income from the stadium was not of the nature of ‘industry’. It, accordingly, held
that club was not an ‘industry’ under Section 2(j). This decision was overruled in
Bangalore Water Supply and Sewerage Board (Supra).

I. Commercial Institutions
In Ahmedabad Textile Industry Research Association v. State of Bombay and
Others35, the Supreme Court adopted the working principle formulated in
Hospital Mazdoor Sabha supra. Here the question arose whether an association
for research maintained by the textile industry and employing technical or other
staff fell within the definition of ‘industry’. In this case, the association was
founded with the object of establishing a textile research institute for carrying on
research and other scientific work in connection with textile trade and industry,
and other trades and industries allied therewith or necessary thereto. The
research was conducted with a view to finding greater efficiency, rationalization
and reduction of costs, research into conditions of work, time and motion
studies, fatigue and rest pauses, standardization of methods or work, condition of
factories and diseases and accidents arising out of employment in textile mills.
The Court analysed the activity of the research association and found that the
undertaking as a whole is in the nature of business or trade organized with the
object of discovering ways and means by which the member mills may obtain
large profits in connection with their industries.36 The Court accordingly held
that the nature of activity carried on by the research association fell within the
definition of the word ‘industry’.
In Federation of Indian Chamber of Commerce and Industry v. Their
Workmen37, the federation carried on systematic activity to assist its members
and other businessmen and industrialists and even non-members as for instance,
in giving them the right to subscribe to their bulletin; in taking up their cases
involving their business and in obtaining concession and facilities for them from
the government and to provide for arbitration in respect of disputes arising in the
course of trade, industry or transport. On these facts the question arose whether
the federation was engaged in an industry. Speaking for the Supreme Court,
Justice Jagmohan Reddy observed:
In our view, the linchpin of the definition of industry is to
ascertain the systematic activity which the organization is
discharging namely, whether it partakes the nature of a business
or trade or is an undertaking or manufacture or calling of
employers. If it is that and there is cooperation of the employer
and the employees resulting in the production of the material
services, it is an industry notwithstanding that its objects are
charitable or that it does not make profits or even where profits
are made, they are not distributed among the members.38
The Court accordingly held that the activities carried on by the federation
where business activities and material services were rendered to businessmen,
traders and industrialists who were members of the federation.
The aforesaid view was reiterated in Workmen v. Management of ISI.39
The institution prepared and published (whether new or revised) Indian
standards in different subjects and sold them. The institution also acted as a sole
selling agent for sale of overseas standards on commission basis and derived a
large income. Further, the institution carried on the activity of certification of
‘standard mark’. The institution had several laboratories and also a library. For
the aforesaid purpose, the management employed considerable number of
workmen. These workmen made certain demands which resulted in industrial
dispute which was referred to the industrial tribunal for adjudication. The
management questioned the jurisdiction of tribunal on the ground that the
workmen were not employed in an ‘industry’. The objection was upheld by the
tribunal. Thereupon, the workmen filed an appeal to the Supreme Court. Justice
Bhagwati (with whom Justice Goswami agreed), who wrote the majority
judgement for the Court, held that the Indian Standard Institution was an
‘industry’. His Lordship gave the following reasons in support of his conclusion:
(i) The activities of the institution are carried on in a systematic manner and
are organized or arranged in a manner in which trade or business is
ordinarily organized or arranged. The institution derives large income
from its activities.
(ii) The object of the activities of the institution is to render material services
to a part of the community, namely, manufacturers, distributors and
consumers.
(iii) There is also cooperation between the management of the institution and
the employees who associate together for rendering these material
services.
But, Justice Alagiriswami in his dissenting opinion held that undertaking
run in public interest of the country as a whole without profit motive and
engaged in activities in the form of social service or intended to benefit the
general public was not an ‘industry’.

J. Private or Domestic Servants

In Corporation of the City of Nagpur v. Its Employees40, the Supreme Court
held that domestic or personal service rendered by servants was outside the
ambit of the Industrial Disputes Act because they were not employed in the
‘industry’ which on its part was based on the principle that there was no
‘organized activity’. In State of Bombay v. Hospital Mazdoor Sabha41, the
Supreme Court excluded domestic services from the scope of ‘industry’ on the
ground that there was no systematic and habitually undertaken activity in which
employers and employees cooperate to produce material goods or material
services which is organized or arranged in business or trade like manner. But, in
Madras Gymkhana Club Employees’ Union v. Madras Gymkhana Club42, the
Supreme Court excluded domestic services from the scope of ‘industry’ on the
ground that the work done by them was not in pursuit of ‘trade, business,
undertaking, manufacture or calling of employers’.

K. Religious Institutions
The high courts are divided on the issue whether certain departments of religious
institutions were carrying on the ‘industry’. While the High Court in Travancore
Devaswom Board v. State of Kerala43 held that Maramat department of the
Devaswom Board constituted under Travancore Cochin High Religious
Institutions Act, 1950 was carrying on an ‘industry’ under Section 2(j) because:
(i) construction of buildings for various purposes was undertaken, (ii) there was
cooperation between labour and capital and (iii) the work had been undertaken
by private persons. The Orissa High Court in Harihar Bahinipati v. State of
Orissa44 held that maintenance of law and order in Shri Jagannath Temple, Puri
was outside the ambit of ‘industry’ because there was (i) no cooperation of
capital and labour, (ii) no material service was rendered, (iii) primary function
was spiritual and not secular, and (iv) no material human needs were met. But
the Punjab and Haryana High Court in Shiromani Gurudwara Prabandhak
Committee, Patiala v. Presiding Officer, Labour Court, Patiala45 held that
Gurudwara Prabandhak Committee distributing Karah-prasad was opening up
free kitchen, i.e., langar would not come within the purview of ‘industry’.
Neither is it a commercial organization nor is it running any business, but
discharging purely religious functions.
In Cheirinjumpatty Thampuratty v. State of Kerala46, the Kerala High
Court held that Devaswom (temple) governed by the Religious and Charitable
Endowments Act, 1951 was not an ‘industry’ under Section 2(j) of the Act.
Earlier, in Pappammal Annachatrum v. Labour Court47’, a division bench of
the Madras High Court ruled that the activity of providing assistance in the form
of boarding and lodging to students in educational institutions which constituted
the main activity of the endowment was not covered by ‘industry’ under Section
2(j) because it was serving the cause of education.
In Indravadan N Adhvaryu v. Laxminarayan Dev Trust through Chief
Executive Kothari48, the Gujarat High Court held that the trust of a temple
which is not involved in any business or undertaking or manufacturing activity
would not fall within the definition of ‘industry’.
L. Charitable Institutions
In Bombay Pinjrapole v. The Workmen49, the Supreme Court was called upon
to decide as to whether the Bombay Pinjrapole was an ‘industry’. In this case,
Pinjrapole was originally stated as a charitable institution solely devoted to the
welfare of the sick and disabled animals. Subsequently, the institution had
substantially altered its complexion and a dairy farm was set up. The ‘value of
milk supplied to the sick and infirm cattle’ was negligible as compared to that
sold in the market, both in terms of persons employed and also in terms of
money. A dispute arose between the Bombay Pinjrapole and its workmen over
the question of revision of wage scale and other service conditions. On
reference, the tribunal held that activities of the Pinjrapole constituted an
‘industry’. The Pinjrapole, after unsuccessfully moving to the Bombay High
Court, filed an appeal to the Supreme Court. The Supreme Court also held that
the Pinjrapole was running an ‘industry’ and the ‘mere fact, that the Pinjrapole
never purchase … cows and stud bulls except once makes no difference to the
question as to whether their activity of maintaining cows and bulls could only be
considered as investment.
In Bangalore Water Supply and Sewerage Board case50, the Supreme
Court approved the holding in the case not because Pinjrapoles had commercial
motives, but despite compassionate objectives, they share business-like
operations. Justice Krishna Iyer classified enterprise into three categories:
The first is one where the enterprise, like any other, yields
profits but they are siphoned off for altruistic objects. The
second is one where the institution makes no profit but hires the
services of employees as in other like businesses but the goods
and services which are the output, are made available at low or
no cost, to the indigent needy who are priced out of the market.
The third is where the establishment is oriented on a humane
mission fulfilled by men who work, not because they are paid
wages, but because they share the passion for the cause and
derive job satisfaction from their contribution. The first and
second are industries, the third not.

M. Cooperative Societies
Cooperative Societies ordinarily cannot fall outside Section 2(j). After all, the
society, a legal person, is the employer. The members and/or others are
employees and the activity partakes of the nature of trade. Merely because
cooperative enterprises deserve state encouragement, the definition can not be
distorted. Even if the society is run by the members only, the entity (save where
they are few and self serving) is an ‘industry’ because the member-workers are
paid wages and there can be dispute about rates and different scales of wages
among the different categories, i. e., workers and workers or between workers
and employer. These societies—credit societies, marketing cooperatives,
producers or consumers’ societies of apex societies are industries.51

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

O. Zila Sainik Board

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

P. Apartment Owners’ Housing Society

In Management of Som Vihar Apartment Owners Housing Maintenance
Society Ltd v. Workmen C/o Indian Engg. & General Management54, a dispute
arose between the owners’ of the apartments and its employees engaged to
maintain cleanliness and other services in the apartments regarding dearness
allowance, house rent allowance, conveyance allowance and uniforms. The
government of Delhi referred the dispute to the industrial tribunal for
adjudication. The question to be decided was whether owners’ housing
maintenance society is an ‘industry’ within the meaning of Section 2(j) of the ID
Act? The court held that society was an ‘industry’. Aggrieved by this order, the
society filed an appeal before the Supreme Court. The Court following its earlier
decision in Bangalore Water Supply and Sewerage Board, answered the
question in negative. The Court held that the society constituted for the purpose
of its members could not be treated as ‘industry’.
The aforesaid view was reiterated in Md. Manjur v. Shyam Kunj
Occupants’ Society.55

Q. Dock Labour Board

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

R. An Appraisal
Thus, it is evident that judicial response in the aforesaid cases reveals conflicting
view. In the Budge Budge Municipality,58 Hospital Mazdoor Sabha,59
Corporation of City of Nagpur60, Ahmedabad Textile Industry Research
Association61 and even in Fazalbhoys62 case, the Supreme Court specifically
held63 that the second part of the definition was added to the area covered by the
first part of the definition. But, in Madras Gymkhana Club64, the Supreme
Court rendered the second part superfluous,65 whereas in Safdarjang Hospital
case, the Supreme Court used the second part actually limiting the scope of even
the first part.’66
Again the word ‘undertaking’ has received conflicting interpretations. In
Budge Badge Municipality case, the Supreme Court declined to imbue it with
the characteristics of business, trade or manufacture.67 But with a view to avoid
a formulation in terms wider than that was strictly necessary for the disposal of
case, the Court itself concluded that activities ‘analogous to the carrying out of a
trade or business’, as the situation in that case was within the ambit of the
expression ‘undertaking’.68 In Hospital Mazdoor Sabha, the Supreme Court not
only declined to adopt the rule of construction noscitur a sociis69 but even in
formulation of working principle. It refrained from using the expression
‘analogous to the carrying out of a trade or business’ but coined the phrase
‘organized or arranged’.70 Nevertheless, in Madras Gymkhana Club case, the
Supreme Court read the aforesaid observations and expression ‘undertakings’ so
that the employer’s activity must not only be analogous to carrying out a ‘trade
or business’ but must also be organized as business or trade is ordinarily
organized.

S. Bangalore Water Supply and Sewerage Board Case:

1. An Epoch-making Judgement
These conflicting opinions of the Supreme Court during the last 25 years left the
coverage of the expression ‘industry’ more uncertain and vague. This state of
affairs led to the constitution of seven members bench71 of Supreme Court in
Bangalore Water Supply and Sewerage Board v. Rajappa72 to enter into a
detailed examination of earlier decisions with a view to find out a rationale basis
for determining whether activities like clubs, educational institutions, research
institutes, cooperatives, charitable projects and other ventures including
domestic servants and governmental functions fall within or outside the scope of
the statutory expression ‘industry’. The majority opinion not only answered it in
affirmative but exploded the judicial myth. The Court, while restoring its ruling
in Budge Budge Municipality Corporation of City of Nagpur and Hospital
Mazdoor Sabha (supra), overruled its decisions in Safdarjang Hospital,
National Union of Commercial Employees, Delhi University, Gymkhana Club
and Dhanarajgiri Hospital (supra) cases. However, in a partially dissenting
opinion, Justices Jaswant Singh and Tulzapurkar (though they agreed in the
conclusion) were not in favour of giving such a wide coverage to the term
‘industry’. Indeed, both majority and minority decisions expressed the view that
the matter should be clarified by the legislature by a suitable amendment.
For the purposes of analysis, the majority judgement may conveniently be
considered under three headings, viz., areas of conflict, interpretation of
‘industry’, and formulation of tests for determining the scope of the term
‘industry’.
1. Area of Conflict. The Supreme Court itself itemized the area of
conflict namely:
(i) (a) Are establishments run without profit–motive, industries?
(b) Are charitable institutions industries?
 (c) Do undertakings governed by a no-profit-no-loss rule, statutorily or
otherwise fastened, fall within the definition in Section 2 (j)?
(d) Do clubs or other organizations (like the YMCA), whose general
emphasis is not on profit-making but fellowship and self-service fit
into the definitional circle?
(e) To go to the core of the matter, is it an inalienable ingredient of
‘industry’ that it should be plied with a commercial object?
(ii) (a) Should cooperation between employer and employee be direct in so
far as it related to the basic service or essential manufacture which
is the output of the undertaking?
(b) Could a lawyer’s chamber or chartered accountant’s office, a
doctor’s clinic or other liberal professions, occupations or calling be
designated an industry?
(c) Would a university or college or school or research institute be
called an industry?
(iii) (a) Is the inclusive part of the definition in Section 2 (j) relevant to the
determination of an industry? If so, what impact does it make on the
categories?
(b) Do domestic services—who slave without respite become
‘industries’ by this extended sense?
(iv) Are governmental functions, stricto sensu, industrial and if not, what is
the extent of the immunity of instrumentalities of government?
(v) What rational criterion exists for a cutback on the dynamic potential and
semantic sweep of the definition, implicit in the industrial law of a
progressive society geared to greater industrialization and consequent
concern for regulating relations and investigating disputes between
employers and employees as industrial processes and relations become
more complex and sophisticated and workmen become more right-
conscious?
(vi) As the provision now stands, it is scientific to define ‘industry’ based on
the nature—the dominant nature of the activity, i.e., on the terms of the
work, remuneration and conditions of service which bond the two wings
together into an employer-employee complex?73
Did these issues figure in the judgement?
2. Interpretation of the Word ‘Industry’. In order to answer these issues,
Justice Krishna Iyer considered the word ‘industry’ in the light of historical
perspective, objects and reasons, international thoughts, popular undertaking,
contextual connotation and suggestive subject-matters, dictionary meaning and
social perspective in Part IV of the Constitution. In this perspective, Justice
Krishna Iyer interpreted the word ‘undertaking’ as follows:
The expression ‘undertaking’ cannot be torn off the words
whose company it keeps. If birds of a feather flock together and
nositur a sociis is commonsense guide to construction,
‘undertaking’, must be read down to confirm to the restrictive
characteristic shared by the society of words before and after.
Nobody will torture ‘undertaking’ in Section 2(j) to mean
meditation or Mushaira which are spiritual and aesthetic
undertakings. Wide meanings must fall in line and discordance
must be excluded from a sound system.74
The aforesaid principle was also applied in interpreting the expressions
‘service’, ‘calling’ and the ‘like’. Further, the word ‘trade’, according to Justice
Iyer, embraced ‘functions of local authorities and even profession’.
The term ‘manufacture’ received the attention of Chief Justice Beg who
explained it to mean:
… a process of manufacture in which the employers may be engaged.
He, however, pointed out that the term ‘employer’ necessarily postulated
employees, without whom there could be no employer. Chief Justice Beg also
emphasized the inclusive character of second part of the definition which:
Makes the concept more nebulous as it obviously extends the
definition to any calling, service, employment, handicraft or
industrial occupation or avocation of workmen.
The aforesaid interpretation given by Chief Justice Beg is in conformity
with the legislative intent of Section 2 (j) of the Industrial Disputes Act.
3. Formulation of Test. Justice Krishna Iyer, after review of Supreme
Court decisions, laid down the following tests for determining the scope of the
term ‘industry’:
(a) Where (i) systematic activity, (ii) organized by cooperation between
employer and employee (the direct and substantial element is chimerical),
(iii) for the production and/or distribution of goods and services calculated
to satisfy human wants and wishes (not spiritual or religious but inclusive
of material things or services geared to celestial bliss, e.g., making on a
large scale prasad or food), prima facie, there is an ‘industry’ in that
enterprise.
(b) Absence of profit motive or gainful objective is irrelevant, be the venture
 in public, joint, private or other sector.
(c) The true focus is functional and the decisive test is the nature of the
activity with special emphasis on employer-employee relations.
(d) If the organization is a trade or business, it does not cease to be one
because of philanthropy animating the undertaking although Section 2(j)
uses the words of the widest amplitude in its two limbs, their meaning
cannot be magnified to overreach itself.
Nevertheless, Justice Krishna Iyer pointed out that although Section 2(j)
used words of widest amplitude in its two limbs, their meaning could not be
magnified to overreach itself and observed:
Undertaking must suffer a contextual and associational
shrinkage as explained in Banerji (supra) and in this judgement,
so also, service, calling and the like. This yields the inference
that all organized activities possessing the triple elements in 3
(a) (supra), although not trade or business, may still be
‘industry’ provided the nature of the activity, viz., the employer-
employees basis bears resemblance to what we find in trade or
business. This takes into the fold ‘industry’, undertaking, calling
and services ventures ‘analogous to the carrying on the
business’. All features, other than the methodology of carrying
on the activities, viz., in organizing the cooperation between
employer and employees, may be dissimilar. It does not matter,
if on the employment terms there is analogy.75
However, where a complex group of activities were involved, he adopted
the ‘dominant nature test’ enunciated in Corporation of City of Nagpur and
explained:
Where a complex of activities, some of which qualify for
exemption, others not, involves employees of the total
undertaking, some of whom are not ‘workmen’ as in the
University of Delhi case (supra) or some departments are not
productive of goods and services if isolated, even then, the
predominant nature of the services in the integrated nature of the
departments as explained in the Corporation of Nagpur (supra),
will be the true test. The whole undertaking will be ‘industry’
although those who are not ‘workmen’ by definition may not
benefit by the status.
 Applying the aforesaid tests in specific cases, the Court held that
activities such as clubs,76 educational institutions,77 research institutes,
charitable institutions,78 cooperative societies79, hospitals and local bodies80 and
kindred ventures (which fulfilled the triple test laid down in this case) fell within
the purview of ‘industry’.
A wide amplitude has been given to the term ‘industry’ in six different
ways: First, The Court held that a single lawyer, a rural medical practitioner or
urban doctor with an assistant and/or menial servant were not running an
industry because there was nothing like organized labour in such employment.
The image of industry or even quasi-industry was one of plurality of workmen,
not an isolated or single assistant or attendant. The category was more or less
like personal avocation for livelihood taking some paid or part-time work from
another. Second, he held that charitable institutions (where the establishment
was oriented and a human mission fulfilled by men who worked not because
they were paid wages, but because they shared the passion for the cause and
derived job satisfaction from their contribution), were not industries. Third, he
held that self-serving members’ clubs were not industry because in such a club,
the dynamic aspect was self-service. He accordingly held that in such an
institution, a part-time sweeper or scavenger or multi-purpose attendant would
not be considered to be employed in any industry because this marginal element
would not transform a little association into an ‘industry’. Fourth, he held that
restricted category of cooperatives, even gurukulas and little research
laboratories were not industry if no employee were hired without destroying the
non-employee character of the unit. Fifth, he excluded regal and sovereign
functions (described as ‘the primary and alienable function of a constitutional
government’) from the purview of industry. Sixth, he also excluded
constitutional and competently enacted legislative provisions from the ambit of
‘industry’.
Accordingly, he held that petty handicraftsmen, domestic servants,
cobblers, cycle repairers, butchers, bakers, candle-stick makers, the single
lawyer, rural medical practitioner, urban doctor, rural engineer with or without a
little assistance or menial servants, self-service members’ club and charitable
institutions oriented on human mission were outside the purview of ‘industry’.
We are in basic agreement with the aforesaid line of approach. However,
the exclusion of certain categories of employers from the ambit of the expression
‘industry’ needs consideration.
First, Justice Krishna Iyer has excluded ‘a single lawyer, a rural medical
practitioner, urban doctor and a rural engineer with a little assistance or menial
servant’ from the purview of the word ‘industry’ on the ground that:
… there is nothing like organized labour in such employment.
The image of industry or even quasi-industry is one of a
plurality of workmen, not an isolated or single little assistant or
attendant. The latter category is more or less like personal
avocation for livelihood taking some paid or part-time work
from another. The whole purpose of the Industrial Disputes Act
is to focus on resolution of industrial disputes and regulation of
industrial relations and not to meddle with every little carpenter
in a village or blacksmith in a town who sits with his son or
assistant to work for the customers who trek in. The ordinal
spectacle of a cobbler and his assistant or a cycle repairer with a
helper, we come across in the pavements of cities and towns,
repels the idea of industry and industrial disputes.81
It is difficult to agree with this line of reasoning. It will be appreciated
that a solicitor, a doctor or an engineer may himself carry on his entire
professional work; or he may, with other experts in the same profession,
organize a firm or nursing home to carry on the work in an institutionalized
manner. While we cannot distinguish in law relating to labour management
relations a solicitors’ firm, or nursing home from a single solicitor, engineer or
doctor conducting his work with the aid of personnel employed by him, there is
vital difference between these cases and the case of a single solicitor, doctor,
engineer, etc. conducting his entire professional work himself.82
It is respectfully submitted that unless a person employs another or is
employed by another, the question of his being an ‘employer’ or a ‘workman’
within the meaning of the Industrial Disputes Act, 1947 does not arise. Since a
solicitor, doctor, engineer and the like acting individually and rendering all
service by himself is neither an employer nor workman, he cannot be a
participant in an ‘industrial dispute’.
On the other hand, a single solicitor, doctor or engineer employing
personnel to assist him in his work is as much an ‘employer’ as a firm/nursing
home employing such personnel and if the employed personnel are ‘workmen’
within the meaning of the IDA, an ‘industrial dispute’ between them and their
employer may well arise.
Second, Justice Krishna Iyer, like Justice Subba Rao,83 also excluded
small professional, handicraftsman, butcher, baker, candle-stick maker and
domestic servant from the purview of the definition of ‘industry’ on the ground
that ‘there was nothing like organized activity in such employment.’ It is
submitted that the grounds did not emanate from the words used in the definition
of industry though the interpretation did limit the amplitude of the words used
therein. Section 2(s) of the IDA defines ‘workman’ to mean inter alia, ‘any
person employed in any industry’. Obviously, the expression ‘industry’ in this
section is used in the same sense as in Section 2(j) because if a person is
employed in an activity which is not ‘industry’, he cannot be a workman.
However, it cannot be said that domestic servants are not engaged in ‘any
calling, service, employment, handicraft, industrial occupation or avocation’.
They cannot, therefore, be excluded on the ground of absence of industry. Here,
we would like to emphasize that merely because the activity is held to be an
‘industry’, the IDA does not become applicable. There must also be disputes
between employers and employers, workmen and workmen or workmen and
employers. Further, barring cases falling under Chapters V-A and V-B, there
must also be, an ‘industry dispute’. It is these requirements which ensure that the
IDA deals with disputants who are ‘employers’ and ‘workmen’.
It is significant to note that Chief Justice Beg who concurred with Justice
Krishna Iyer in case under review, expressly held that:
… the second part, relating to workman, must necessarily
indicate something, which … may include an ‘industry’
consisting of individual handicraft or workmen only.84
The aforesaid observation cuts the line of thinking followed by Justice Krishna
Iyer.
Third, the exclusion of ‘regal or sovereign functions of the State’ leaves
much to be desired. We on our part, find it difficult to accept the decision as
correctly interpreting the legislative intent. Our difficulty primarily arises from
the definition of ‘workman’. Omitting words and expressions that are not
germane to the present discussion, Section 2 (s) of IDA reads:
Workman means any person… employed in any industry… but
does not include any such person: (i) who is subject to Army
Act, 1950, or the Air Force Act, 1950 or the Navy (Discipline)
Act 1934, or (ii) who is employed in police service or as an
officer or other employee of a prison…
If the expression ‘industry’ did not include ‘regal or sovereign functions
of State’, strictly understood or ‘government function’, why did the legislature
write exclusory clauses (i) and (ii). The argument that it did so ex abundanti
cantela is self-defeating because the question then will arise as to why make an
exception in regard only to some and not in regard to all persons engaged in
‘regal or sovereign functions of State’? After all army, air force, navy, police and
prison do not exhaust the category of ‘regal and sovereign functions of State’.
On the other hand, if ‘regal and sovereign functions of the State’ are included
within the definition of ‘industry’, the exclusory provisions make sense.
Fourth, the Court has also excluded ‘stray wage earning employees’ or
marginally employed on regular basis for hire, scavengers, servants, auditors or
accountants employed on wages in charitable institutions (which were oriented
on a human mission fulfilled by men who work not because they are paid wages
but because they share the passion for the cause and derive job satisfaction from
their contribution) from the purview of ‘industry’ because:
(i) … the substantive nature of the work, as distinguished from trivial terms,
is rendered by voluntary wagesless sishyas.
(ii) in the crucial, substantial and substantive aspect of institutional life, the
nature of the relations between the participants is non-industrial …
(iii) We must look at the predominant character of office institution and the
nature of the relations resulting in the production of goods and services.85
Are these relevant factors? Are the problems of labour management
relations resolved because the substantive nature of work is rendered by
voluntary wagesless sishyas? Are the economic needs of the excluded categories
of employees satisfied by the fact that substantive nature of work is rendered by
voluntary wageless sishyas. These and other problems involved hereunder would
be discussed under three heads.
(I) In the law relating to labour management relations, we are essentially
concerned with the relationship between the employer and the employees: in
particular, we are not concerned with the relationship of the employer with the
outside world. Further, an employee is vitally concerned with his own
employment, non-employment, terms of employment or conditions of service
and his interest is not affected by the nature of service which the employer
renders to the outside world (whether such services be spiritual, pious,
philanthropic or even professional or because the substantive nature of work is
rendered by voluntary wageless sishyas). Under the circumstances, it is difficult
to ignore the factual existence of employer-employee relationship even on the
ground that substantive nature of work is rendered by voluntary wageless
sishyas.
(II) The decision brought back the ruling in Delhi University case where
it was held that the employment of subordinate staff who came within the
expression ‘workmen’ did not affect the issue as they not only comprise ‘very
minor and insignificant number of persons’ but also, played, ‘such a minor,
subordinate and insignificant part’ that it would be unreasonable to allow this
work to lend its industrial colour to the principal activity of the university which
is imparting education. It suffices to mention that the Supreme Court in the case
under review overruled Delhi University case.
(III) It appears that Justice Krishna Iyer who had earlier at one place held
that:
The test is not the predominant number of employees entitled to
enjoy the benefit of the Act. In fact, the Court applied that test of
‘predominant number’ while excluding these categories of
workers.
He, however, asserted that the test which he was applying was
predominant character of the institution. The fact that majority of persons
engaged in the aforesaid charitable institution are wageless sishyas, we submit,
is no ground for denying the protection of the IDA to those, even stray wage-
earning employees who are otherwise covered by the provisions of IDA.

T. Application of the Bangalore Water Supply Case

The net effect of the decision of the Bangalore Water Supply & Sewerage
Board (supra) was that several activities/establishments such as research and
development organizations,86 public utility services such as post and telegraph,87
telephones88, charitable and social organizations, Tirumala Tirupati
Devesthanam,89 Bihar Relief Committee of a humanitarian,90 Government
Security Paper Mills,91 Hindustani Dawakhana,92 public service commissions,93
construction and maintenance of national and state highways,94 N.E.S. Block,
Coir Board (a statutory body) community development (establishment of the
government), Southern Railway, Kerala State Civil Supplies Corporation Ltd,
Trichur, municipal council and Kerala State Electricity Board,95 Christian
Medical College Hospital attached to the Christian Medical College,96 Bihar
Khadi Gramodyog Sangh,97 Provident Fund Organization,98 Indian Institute of
Petroleum,99 basic training institutes,100 Corporation of Cochin,101 Karnataka
State Road Corporation,102 trade unions103 (carrying on activities other than
trade unionism), Indian Navy Sailors’ Home Department104 (to provide facilities
like loading, cafeteria, indoor games, reading rooms, etc., to the sailors and their
guests not provided by navy establishments due to lack of space and exigencies
of service), Kamla Retreat105 (a place of rest and relaxation), public health
engineering department of the state of Bihar106, Doordarshan,107 irrigation
department,108 forest department109, societies promoting health and training of
women in family planning programme of the state government110, labour
indentor carrying the business of recruiting labour,111 a cooperative milk
society,112 a hair cutting saloon,113 the Marmat section of Travancore
Devaswom Board engaged in the construction of buildings connected with dairy
farms, schools, hostels, cottage industries and workshops and shops,114 the
activities of Grain Dealers’ Association whose principal activity was to transport
goods from the government godowns to respective ration shops of its
members,115 a milk supply scheme, a government undertaking supplying milk to
city of Jaipur under animal husbandry department,116 the activities of the Khadi
Gramodyog Sangh,117 the activities of the survey and investigation division of
the irrigation department of the govt.,118 the Chambal Hydel Irrigation
Project,119 the Salandi Irrigation Project;120 the Tea Board constituted under the
Tea Act, 1953,121 the Bihar Relief Committee which undertook minor irrigation
schemes in the state of Bihar with all ancillary systematic operations,122 a shop
governed by the provisions of the U.P. Shops & Establishments Act,123 the
construction work of the Tenughat Dam carried on by the government of
Bihar,124 the Balemala Dam Project which has the ultimate object of generating
electrical power to run different business and industries,125 the telephone126 and
telegraph,127 Hindustan Dwakhana128, Security Paper Mills Hoshangabad129,
services like supply of water, electricity, lift, sanitation, made available to
tenants by company,130 National Remote Sensing Agency having a systematic
activity or organization with cooperation between it and its employees,131 the
Baikunth Nath Debasthan Mandir Trust,132 Sahkari Bhumi Vikas Bank,133 U P
Scheduled Caste Finance and Development Corporation,134 barrage division
under irrigation department of state governments,135 Railways,136 a society
formed for the purpose of protection, care and treatment of old, infirm and
injured cows, calves, bulls etc. and also engaged in activities of selling milk,
etc.,137 professional activities of architects,138 Punjab State Tubewell
Corporation,139 Indian Red Cross Society, Haryana state branch,140 Kurukshetra
University and persons employed therein as carpenters,141 Industrial
Development Centre for Tools and Dyes, Jagadhri providing technical guidance,
testing and certification facilities apart from providing services and facilities
such as heart treatment, anodizing, etc., charge money for the use of various
machines on hourly basis,142 Central Research Institute for Yoga143, lac
manufacturing factory run by the department of forest,144 irrigation department
of the government of the state145, periodic maintenance, repair of hand pumps
installed by Panchayat Samitis146 Haryana Woollen Development
Corporation147 and rural engineering services148 were held to be ‘industry’ under
Section 2 (j).
On the other hand, activities/establishments such as octroi department of
municipality,149 Central Institute of Fisheries150, works department of
government,151 judicial department152 drought relief work by the government153,
retail cloth shop run by two partners with the assistance of one salesman,154 firm
or trademarks agents;155 trust of a temple156 a building let out on rent by a palace
administration board managing the estate of royal family for the benefit of the
junior members of the family,157 the activities of the Farashkhana and
Baggikhanna including Kapatdwara, horse breeding and riding section of the
city palace of were held not be ‘industry’ under Section 2 (j).

U. Response of the [First] National Commission on Labour

The scope of the word ‘industry’ also continues to engage public attention. In
1966, the Government of India appointed the National Commission on Labour,
inter alia, to report on changes in the existing labour legislation.
After a very thorough investigation of the industrial law, the Commission
submitted its recommendation, in 1969. In respect to the definition of ‘industry’,
the Commission recommended that:
In our view, there appears to be no valid ground for narrowing
the scope of the definition of ‘industry’ as it stands today. In
fact, there is a case for enlarging its scope so as to cover
teaching or educational institutions or institutes, universities,
professional firms and offices etc., whose employees are at
present denied the protection of the provisions of the Industrial
Disputes Act. In saying so, we are not unmindful of the fact that
the problem of industrial relationship pertaining to the
administration of teaching institutions and universities presents
several distinctive features and they will have to be carefully
considered before such institutions are brought within the
purview of the definition of ‘industry’. The autonomy of the
universities is a very important concept which is respected in all
 democratic countries. Besides, the salaries of teachers employed
by the university or colleges affiliated to it are, in some cases,
determined not be the university or the colleges on the one hand
and the teachers on the other, but the University Grants
Commission and state governments and the Union Government
also come into the picture. The staff employed by educational
institutions broadly consists of two categories, viz.,
administrative and teaching; and the problems of these two
categories of staff may not always be the same or identical. That
is why we would suggest that the extension of the scope of the
definition of ‘industry’ should be made by stages in a phased
manner over a reasonable period, depending upon the
administrative arrangements to meet the requirements of the law
and upon the consideration of a number of other relevant factors.
Continuing it said:
Besides, it is necessary to emphasize that if the scope of the
concept of ‘industry’ has to be expanded to cover teaching
institutions and universities, it may become necessary to provide
for a different set-up to deal with the problems or disputes which
may arise in such institutions. As we have just pointed out, these
institutions have certain special distinctive characteristics, and
even if employees working in them are, in future, included
within the definition of ‘workmen’, care will have to be taken to
see that a special procedure, self-contained in character, is
provided for dealing with grievances or industrial disputes raised
by the employees and a special machinery set up in this behalf.
But these are matters of detail and we do not propose to deal
with them.158
The Commission recommended that government should consider whether
in respect of such hospitals and non-profit making philanthropic institutions
which devote themselves to humanitarian work, a special procedure could not be
devised to avoid hardship to the community and at the same time, give
satisfaction to the workers engaged therein.

V. Parliament’s Disapproval of Judicial Response

The Parliament through the Industrial Disputes (Amendment) Act, 1982,
disapproved of the widening of the coverage of the term ‘industry’ by the
Supreme Court in Bangalore Water Supply and Sewerage Board v. Rajappa
(supra), by excluding a number of activities such as hospitals, educational
institutes, scientific and research institutions, charitable, social and philanthropic
organizations and institutions performing sovereign functions. Thus, Section 2
(j) of Industrial Disputes (Amendment) Act, 1982, defines the term ‘industry’ to
mean:
Any systematic activity carried on by cooperation between an
employer and his workmen (whether such workmen are
employed by such employer directly or by or through any
agency, including a contractor) for the production, supply or
distribution of goods or services with a view to satisfying human
wants or wishes (not being wants or wishes which are merely
spiritual or religious in nature), whether or not —
(i) any capital has been invested for the purpose of carrying
on such activity or
(ii) such activity is carried on with a motive to make any
gain or profit, and includes –
(a) any activity of the dock labour board established
under Section 5-A of the Dock Workers (Regulation
of Employment) Act, 1948 (9 of 1948);
(b) any activity relating to the promotion of sales or
business or both carried on by an establishment
But does not include —
(a) any agricultural operation except where such agricultural
operation is carried on in an integrated manner with any
other activity (being any such activity as is referred to in the
foregoing provisions of this clause) and such other activity
is the predominant one.
Explanation—For the purposes of this sub-clause,
‘agricultural operation’ does not include any activity carried
on in a plantation as defined in clause (f) of Section 2 of the
Plantations Labour Act, 1951, or
(b) hospitals or dispensaries, or
(c) educational, scientific, research or training institutions, or
(d) institutions owned or managed by organizations wholly or
 substantially engaged in any charitable, social or
philanthropic service, or
(e) khadi or village industries, or
(f) and activity of the government relatable to the sovereign
functions of the government, all the activities carried on by
the department of the Central Government … activities …
dealing with defence research, atomic energy and space, or
(g) any domestic service, or
(h) any activity, being a profession practised by an individual or
body of individuals, if the number of persons employed by
an individual or body of individuals in relation to such
profession is less than ten, or
(i) any activity, being an activity carried on by a cooperative
society or a club or any other like body of individuals, if the
number of persons employed by the cooperative society,
club or other like body of individuals in relation to such
activity is less than ten.
However, almost 30 years have elapsed since the aforesaid amendment
came on the statute book, but it has not been enforced till the date. This has led
the Supreme Court to observe that ‘we have not been able to gather as to why
even 6 years after the amendment has been brought to the definition of industry
in Section 2(j) of the Act, the same has not been brought into force. The Court
on more than one occasion, has indicated that the position should be clarified by
an appropriate amendment and when keeping in view the opinion of this Court,
the law was sought to be amended, it is appropriate that the same should be
brought into force as such or with such further alteration as may be considered
necessary and the legislative view of the matter is made known and the
confusion in the field is cleared up.’159

Issuance of Writ of Mandamus for giving effect to

Amendment in ID Act
Can a High Court issue a writ of mandamus to enforce clause (c) of the
Industrial Disputes (Amendment) Act, 1982 which excludes, inter alia
‘charitable trust’ from the definition of ‘industry’? This issue was raised in
Union of India v. Shree Gajanan Maharaj Sansthan.160 The Supreme Court
answered the question in negative. The Court had earlier directed the Union of
India to examine and decide within six months as to when it would be feasible to
give effect to sub-section (2) of Section 1 of the Industrial Disputes
(Amendment) Act, 1982. In response, the Central Government filed an affidavit
stating the various steps taken by it which are as follows:
(i) The Industrial Disputes (Amendment) Bill, 1982 was introduced to
amend the definition of the term ‘industry’.
(ii) The government also introduced the Hospitals and Other Institutions
(Settlement of Disputes) Bill and Education Institution (Settlement of
Disputes) Bill in the Rajya Sabha. The former bill was enacted but the
latter bill was not pursued because of opposition to various provisions.
As a consequence, the amended definition of the term 'industry' could
not be brought into effect in the absence of alternative grievance
machinery for employees in hospitals, educational institutions, etc., who
would have been denied the protection of the Industrial Disputes Act,
1947.
(iii) Another attempt was made by introducing, the Hospitals and other
Institutions (Redressal of Grievances of Employees) Bill but it lapsed
with the dissolution of the Lok Sabha in 1989.
(iv) The bipartite committee for new industrial relations law under the
chairmanship of G Ramanujam was set up by the government for
formulation of comprehensive industrial relations law but the committee
member were not unanimous on the definition of the term 'industry'.
(v) A proposal for modification of the definition of the term ‘industry’ was
placed in the standing labour committee. Thereafter, the issue was
referred to the new Bipartite committee to formulate a comprehensive
Industrial Relations Bill. It was wound up as no consensus emerged.
(vi) The Ministry of Labour prepared a proposal to amend the Industrial
Disputes Act, 1947 including definition of ‘industry’ and the proposal
was sent to committee of secretaries.
(vii) In the meeting of Committee of Secretaries (COS) on 15 February 1999,
it was agreed that an inter-ministerial group would be set up by the
Ministry of Labour of finalize the proposals. Accordingly, an inter-
ministerial group was set up with the representatives of 13
ministries/department.
(viii) Meetings of the inter-ministerial group with the representatives of all the
13 ministries/department were held on 14 May 1999 and 11 January
2001 to consider the amendment proposals.
(ix) Meetings of COS under the chairmanship of the cabinet secretary were
 held on 15 February 1999, 3 November 1999, and 21 January 2000 to
consider the amendment proposals.
(x) The proposal was revised/recast on the basis of recommendations made
by the group and inter-ministerial committee of secretaries.
(xi) Group of ministers was constituted under the chairmanship of Dy.
Chairman, Planning Commission to suggest the amendment proposals.
The group consisted of ministers of nine ministries.
(xii) The group of ministers had met on 11 April 2000, 12 May 2000 and 27
May 2000.
(xiii) The proposal to amend the Industrial Disputes Act was again revised on
the basis of recommendations of group ministers.
(xiv) After finalizing the proposals, it was sent to Ministry of Law, Justice
and Company Affairs for the opinion of department of legal affairs
which has concurred with the proposals and a draft bill is being drafted
by the legislative department, Ministry of Law, Government of India.
The Supreme Court, in view of the above, held that it would not be
feasible for government to set out any definite day as to when they can take
action as indicated by the High Court and therefore, the order made by the High
Court cannot be given effect. The court added that though there has been a sense
of urgency on the part of the government in this regard, it has not been able to
take a decision under the circumstances set forth by then in which writ of
mandamus has been issued to the government to take action and to indicate as to
when it would be feasible to appoint a date for bringing into force the amending
Act. In other respects, the order made by the High Court was maintained by the
Supreme Court.

W. Current Confusion
Irrigation Department – If Industry
While in Des Raj v. State of Punjab161, the Supreme Court held that irrigation
department was an ‘industry’ under Section 2 (j), a two-judge bench of the
Supreme Court in Executive Engineer, State of Karnataka v. K Soonasetty162
following the decisions in Union of India v. Jai Narain Singh163 and State of H
P v. Suresh Kumar Varma164 held it to be not an ‘industry’. The Court ruled:
The function of public welfare of the State is a sovereign
function. It is the constitutional mandate under the Directive
Principles, that the government should bring about welfare State
 by all executive and legislative actions. Under these
circumstances, the State is not an ‘industry’ under the Industrial
Disputes Act.
The Allahabad High Court in State of Uttar Pradesh v. Industrial
Tribunal IV, Agra & Another165 following the decision of the Supreme Court in
General Manager Telecom v. A Sriniwasa166 held that irrigation department of
the state is not an industry. But the Patna High Court in State of Bihar v.
Gajadhar Singh167 held that the department of irrigation is an ‘industry’ under
Section 2(j) of the Industrial Disputes Act, 1947.

Postal and Telecom Departments – If Industry

In Sub Divisional Inspector of Post Vaikam v. Theyyam Joseph168, a question
arose whether the establishment of the Sub-divisional Inspector of Post was an
'industry' under the Industrial Disputes Act, 1947. A two-judge bench of the
Supreme Court answered the question in negative and held that the functions of
the postal department are part of the sovereign functions of the State and it is,
therefore, not an industry within the definition of Section 2(j) of the Industrial
Disputes Act, 1947. Incidentally, this decision was rendered without any
reference to the seven judge bench decision in Bangalore Water Supply case.
Again in Bombay Telephone Canteen Employees Association,
Prabhadevi Telephone Exchange v. Union of India169, the Supreme Court held
that workmen employed in the departmental canteen of Telephone Nigam
Limited holding civil posts were not workmen within the meaning of the
Industrial Disputes Act.
In General Manager, Telecom v. S Srinivasa Rao170, the question
whether postal and telecom department was an ‘industry’ was placed specifically
before the bench of three judges was whether the telecom department of the
Union of India was an ‘industry’. A three judge bench of the Supreme Court
answered the question in affirmative and observed:
With respect, we are unable to subscribe to this view for the
obvious reason that it is in direct conflict with the seven judge
bench decision in Bangalore Water Supply case (supra) by
which we are bound. It is needless to add that it is not
permissible for us, or for that matter any bench of lesser
strength, to take a view contrary to that in Bangalore Water
Supply case (supra) or to bypass that decision so long as it holds
 the field. Moreover, that decision was rendered long back,
nearly two decades earlier and we find no reason to think
otherwise. Judicial discipline requires us to follow the decision
in Bangalore Water Supply case (supra) and Bombay
Telephone Canteen Employees’ Association case (supra)
cannot be treated as laying down the correct law.
In Senior Superintendent of Post Office, Postal Department, Ludhiana
v. Baljit Singh171, the Punjab and Haryana High Court held that postal
department is an ‘industry’ under Section 2(j) of IDA.

National Remote Sensing Agency

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

Research Laboratory – If Industry

In Physical Research Laboratory v. K G Sharma,173 a question arose whether
Physical Research Laboratory hereinafter referred to as PRL, is an ‘industry’
within the meaning of Section 2(j) of the Industrial Disputes Act. The facts of
the case were that the respondent was appointed by PRL. He was transferred to
photography documentation services on a post which was non-technical and
administrative. On 31 December 1978 on attaining the age of 58 years, he was
retired from service with effect from 1 January 1979. Aggrieved by his
retirement at the age of 58 years and not at 60, he filed a writ petition in the High
Court of Gujarat but it was withdrawn. He then filed a complaint before the
labour commissioner who, on the basis thereof, made a reference to the labour
court, Ahmedabad. The labour court held that PRL is carrying on, in an
organized and systematic manner, the activity of research in its laboratory by
active cooperation between itself and its employees and the discoveries and
inventions made would be eligible for sale, hence PRL is an industry. It
accordingly held that the respondent was entitled to continue in service up to the
age of 60 years. As the respondent had already completed the age of 60 years by
then, no order of reinstatement was passed but only back wages for those two
years were ordered to be paid. This decision was upheld by the High Court.
Thereupon, the appellant filed an appeal by special leave before the Supreme
Court. It was urged on behalf of the appellants that PRL being a purely research
institute of the Central Government, engaged in carrying out fundamental
research regarding the origin and evolution of the universe and the atmosphere
of the earth is not an ‘industry’ as defined by Section 2 (j). Further, it carried on
research function and not a commercial venture, hence it is not an industry.
Accepting the contention, the Supreme Court observed:
The question whether PRL is an ‘industry’ under the I D Act
will have to be decided by applying the principles laid down in
Bangalore Water Supply case but, at the same time, it has to be
kept in mind that these principles were formulated as this Court
found the definition of the word ‘industry’ vague and rather
clumsy, vaporous and tall-and-dwarf. Therefore, while
interpreting the words ‘undertaking’, ‘calling’ and ‘service’
which are of much wider import, the principle of noscitur a
sociis was applied and it was held that they would be ‘industry’
only if they are found to be analogous to trade or business.
Furthermore, an activity undertaken by the government cannot
be regarded as ‘industry’ if it is done in discharge of its
sovereign functions. One more aspect to be kept in mind is that
the aforesaid principles are not exhaustive either as regards what
can be said to be sovereign functions or as regards the other
aspects dealt with by the Court.
The Court added:
PRL is an institution under the Government of India’s
department of space. It is engaged in pure research in space
science. The purpose of the research is to acquire knowledge
about the formation and evolution of the universe but the
knowledge thus acquired is not intended for sale. The material
on record further discloses that PRL is conducting research not
for the benefit or use of others. Though the results of the
research work done by it are occasionally published, they have
never been sold. There is no material to show that the
knowledge so acquired by PRL is marketable or has any
commercial value. It has not been pointed out how the
 knowledge acquired by PRL or the results of the research
occasionally published by it will be useful to persons other than
those engaged in such type of study. The material discloses that
the object with which the research activity is undertaken by PRL
is to obtain knowledge for the benefit of the department of
space. Its object is not to render services to others nor in fact it
does so except in an indirect manner.
Neither from the nature of its organization nor from the nature and
character of the activity carried on by it, can it be said to be an ‘undertaking’
analogous to business or trade. It is not engaged in a commercial or industrial
activity and it cannot be described as an economic venture or a commercial
enterprise as it is not its object to produce and distribute services which would
satisfy wants and needs of the consumer community. It is more an institution
discharging governmental functions and a domestic enterprise than a commercial
one. PRL is not an industry even though it is carrying on the activity of research
in a systematic manner with the help of its employees as it lacks that element
which would make it an organization carrying on an activity which can be said
to be analogous to the carrying on of a trade or business because it is not
producing and distributing services which are intended or meant for satisfying
human wants and needs, as ordinarily understood.

Forest Department – If industry

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

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

Radio and Doordarshan – If Industry

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

X. Re-examination of the Decision in Bangalore Case

In Coir Board Ernakulam v. Indira Devi P S,180 the two-judge bench of the
Supreme Court was called upon to examine whether the appellant, Coir Board, is
an industry under the Industrial Disputes Act, 1947. In this case, Coir Board set
up under the Coir Industry Act, 1953 discharged certain temporary clerks and
typists. The discharged employees claimed that their services could only be
terminated in accordance with the provisions of the Industrial Disputes Act,
1947. The Kerala High Court held that the Coir Board is an ‘industry’ under the
Industrial Disputes Act, 1947. On appeal, the Supreme Court observed:
Looking to the uncertainty prevailing in this area and in the light
of the experience of the last two decades in applying the test laid
down in the case of Bangalore Water Supply and Sewerage
Board (supra), it is necessary that the decision in Bangalore
Water Supply and Sewerage Board’s case (supra) be re-
examined. The experience of the last two decades does not
appear to be entirely happy. Instead of leading to industrial
peace and welfare of the community (which was the avowed
purpose of artificially extending the definition of industry), the
application of the Industrial Disputes Act to organizations which
were, quite possibly, not intended to be so covered by the
machinery set up under the Industrial Disputes Act, might have
done more damage than good, not merely to the organizations
but also to employees by the curtailment of employment
opportunities.
Undoubtedly, it is of paramount importance that a proper law is framed to
promote the welfare of labour employed in industries. It is equally important that
the welfare of labour employed in other kinds of organizations is also promoted
and protected. But the kind of measures which may be required for the latter
may be different and may have to be tailored to suit the nature of such
organizations, their infrastructure and their financial capacity as also the needs of
their employees.
The elimination of profit motive or a desire to generate income as the
purpose of industrial activity has led to a large number of philanthropic and
charitable activities being affected by the Industrial Disputes Act. In a number of
cases, where the organization is run by voluntary social workers, they are unable
to cope with the requirements of Industrial Disputes Act. This has led to
cessation of many welfare activities previously undertaken by such organizations
which has deprived the general community of considerable benefit and the
employees their livelihood. There are many activities which are undertaken not
with a view to secure any monetary returns—whether one labels it as livelihood,
income or profit but for other more generous or different motives. Such activities
would not normally be labelled as industrial activities but for the wide
interpretation given judicially to the term industry in the Industrial Disputes Act.
For example, a number of voluntary organizations run workshops in order that
the poor and more particularly poor or destitute women may earn some income.
Voluntary welfare organizations organize activities like preparation of spices,
masalas, pickles so that they secure small orders from industries for poor
women. A small number of persons were employed to assist in the activities.
The income earned by these activities was distributed to the women who were
given such work. Other voluntary organizations organized tailoring or
embroidery classes or similar activities for poor women and provided an outlet
for the sale of the work produced by them. These persons would otherwise have
found it impossible to secure a market for their products. Such organizations are
not organized like industries and they do not have the means or manpower to run
them as industries. A large number of such voluntary welfare schemes have had
to be abandoned because of the wide interpretation given to the term ‘industry’.
Apart from above activities, there may be other activities also which are
undertaken in the spirit of community service, such as charitable hospitals where
free medical services and free medicines may be provided. Such activities may
be sustained by free services given by professional men and women and by
donations. Sometimes, such activities may be sustained by using the profits in
the paid section of that activity for providing free services in the free section.
Doctors who work in these hospitals may work for no returns or sometimes, for
very nominal fees. Fortunately, philanthropic instinct is far from extinct. Can
such philanthropic organizations be called industries? The definition needs re-
examination so that while the workers in an industry have the benefit of
industrial legislation, the community as such is not deprived of philanthropic and
other vital services which contribute so much to its well-being. Educational
services and the work done by teachers in educational institutions, research
organizations, professional activities, or recreational activities, amateur sports,
promotion of arts—fine arts and performing arts, promoting crafts and special
skills, all these and many other similar activities also require to be considered in
this context.
In fact, in 1982, the legislature itself decided to amend the definition of
industry under the Industrial Disputes Act, 1947 by enacting the Amending Act
46 of 1982 and curtailing the coverage of ‘industry’. Unfortunately, despite the
legislative mandate, the definition has not been notified by the executive as
having come into force.
Since the difficulty has arisen because of the judicial interpretation given
to the definition of industry in the Industrial Disputes Act, there is no reason
why the matter should not be judicially re-examined. In the present case, the
function of the Coir Board is to promote coir industry, open markets for it and
provide facilities to make the coir industry’s products more marketable. It is not
set up to run any industry itself. Looking to the predominant purpose for which it
is set up, we would not call it an industry. However, if one were to apply the
tests laid down by Bangalore Water Supply and Sewerage Board’s case
(supra), it is an organization where there are employers and employees. The
organization does some useful work for the benefit of others. Therefore, it will
have to be called an industry under the Industrial Disputes Act.
We do not think that such a sweeping test was contemplated by the
Industrial Disputes Act, nor do we think that every organization which does
useful service and employs people can be labelled as industry. We, therefore,
direct that the matter be placed before the Hon’ble Chief Justice of India to
consider whether a larger bench should be constituted to re-consider the decision
of this Court in Bangalore Water Supply and Sewerage Board (supra).
The three-judge bench presided over by the Chief Justice in Coir Board
Ernakulam, Kerala State v. Indira Devi P S and others181 ruled that the
judgement delivered by seven learned judges of this Court in Bangalore Water
Supply case does not require any reconsideration on a reference being made by a
two-judge bench of this Court, which is bound by the judgement of the larger
bench.
A Constitution bench of five judges of the Supreme Court was constituted
in State of U.P. v. Jai Bir Singh182 on a reference made by a bench of three
judges in State of U.P. v. Jai Bir to give findings in an apparent conflict
between the decisions of two benches of this Court in Chief Conservator of
Forests v. Jagannath Maruti Kondhare of three judges and State of Gujarat v.
Pratamsingh Narsinh Parmar of two judges. The bench in its judgement dated
8 May 2005 observed that in construing the definition clause and determining its
ambit, one has not to lose sight of the fact that in activities like hospitals and
education, concepts like right of the workers to go on 'strike' or the employer's
right to 'close down' and 'layoff' are not contemplated because these are services
in which the motto is 'service to the community'. If the patients or students are to
be left to the mercy of the employer and employees exercising their rights at
will, the very purpose of the service/activity would be frustrated. Hence, it is not
necessary to say anything more and leave it to the larger bench to give such
meaning and effect to the definition clause in the present context with the
experience of all these years and keeping in view the amended definition of
'industry' kept dormant for 23 long years.
The cases were, therefore, placed before the Chief Justice of India for
constituting a suitable larger bench for reconsideration of the judgement of
Bangalore Water Supply & Sewerage Boards.

1 This was recognized in Corporation of City of Nagpur v. Its Employees, (1960) 1 LLJ
523 (SC) and State of Bombay v. Hospital Mazdoor Sabha, (1960) LLJ 251 (SC).
2 D N Banerji v. P R Mukherjee, (1953) 1 LLJ 195.
3 Federated Municipal and Shire Council Employees' Union of Australia v. Lord Mayor,
Alderman, Councillors and Citizens of the Melbourne Corporation, 26 CLR, 5008, 554-
555.
4 Baroda Borough Municipality v. Its Workmen, AIR 1957 SC 110.
5 Corporation of City of Nagpur v. Its Employees, (1960) 1 LLJ 523. The judgement was
delivered by the same bench which decided Hospital Mazdoor Sabha case.
6 The definition in this Act was similar to the definition of ‘industry’ under Section 2 (j).
7 AIR 1978 SC 54.
8 1991(1) SCALE 655.
9 (2003) 9 SCC 290.
10 State of Bombay v. Hospital Mazdoor Sabha, (1960) 1 LLJ 251 (SC).
11 Management of Safdarjang Hospital v. Kuldip Singh Seth, AIR 1970 SC 1407.
12 Management of Hospital, Orissa v. Their Workmen, (1971) Lab. IC 835 (SC).
13 Dhanrajgiri Hospital v. Workmen, (1975) 2 LLJ 409 (SC).
14 AIR 1978 SC 548.
15 AIR 1978 SC 548.
16 AIR 2000 SC 3116: (2000) 2 LLJ 1382.
17 National Union of Commercial Employees v. M R Mehar, AIR 1962 SC 1080.
18 Id. at 1085.
19 Bar Association Canteen v. Chief Commissioner, Delhi, (1967) 2 LLJ 227 (Delhi).
20 Id. at 230.
21 Id. at 231.
22 Rabindranath Sen v. First Industrial Tribunal, (1963) 1 LLJ 567 (Calcutta).
23 Alien Macgregor Smith Forge v. First Industrial Tribunal, (1963) 1 LLJ 556 (Calcutta).
24 Ram Krishna Ayyar Vaidyanathan v. Fifth Industrial Tribunal, (1968) LLJ 597
(Calcutta).
25 N E Merchant v. Bombay Municipal Corporation, (1968) 1 LLJ (Bombay).
26 T K Menon v. District Labour Officer, (1966) 2 LLJ 613 (Kerala).
27 Fraser and Ross v. District Labour Officer, (1966) 2 LLJ 682 (Madras).
28 Bangalore Water Supply v. Rajappa, AIR 1978 SC 548, 584.
29 Corporation of City of Nagpur v. Its Employees, (1960) 1 LLJ 523.
30 University of Delhi v. Ram Nath, AIR 1963 SC 1873.
31 (1988) 4 SCC 42.
32 Madras Gymkhana Club Employees' Union v. Gymkhana Club, (1967) 2 LLJ 720 (SC).
33 Cricket Club of India v. Bombay Labour Union, (1966) 1 LLJ 775 (SC).
34 AIR 1978 SC 548, 591.
35 Ahmedabad Textile Industry Research Association v. State of Bombay, (1960) 2 LLJ 720
(SC).
36 Ahmedabad Textile Industry Research Association v. State of Bombay, (1960) 2 LLJ 720
at 724.
37 Federation of Indian Chamber of Commerce and Industry v. Their Workmen, (1971) 2
LLJ 630 (SC).
38 Id. at 631.
39 Workmen v. Management of Indian Standard Institution, (1976) 1 LLJ 33 (SC). This
decision has been overruled by the Supreme Court in its subsequent judgement in the
Bangalore Water Supply case.
40 Corporation of the City of Nagpur v. Its Employees, AIR 1960 SC 523, 535.
41 State of Bombay v. Hospital Mazdoor Sabha, (1960) 1 LLJ 251 (SC).
42 Madras Gymkhana Club Employees’ Union v. Madras Gymkhana Club, (1967) 2 LLJ
720.
43 Travancore Devaswom Board v. State of Kerala, (1963) 2 LLJ 218 (Kerala).
44 Harihar Bahinipati v. State of Orissa, (1965) 1 LLJ 501 (Orissa).
45 (2004) LLR 60.
46 (2005) 1 LLJ 32.
47 Pappammal Annachatrum v. Labour Court, (1964) 1 LLJ 493 (Madras).
48 (2011) LLR 262.
49 Bombay Pinjrapole v. The Workmen, (1971) 2 LLJ 393 (SC).
50 AIR 1978 SC 548.
51 Ibid.
52 (1995) 1 LLJ 470.
53 (1999) 1 LLJ 234.
54 (2002) Lab. IC 2468.
55 (2004) LLR 853.
56 Vishakapatnam Dock Labour Board v. Stevedores’ Association, Vishakapatnam, (1970)
1 LLJ 46 (SC).
57 Madras Gymkhana Club Union v. Madras Gymkhana Club, (1967) 2 LLJ 720, 728.
58 Budge Budge Municipality, (1953) 1 LLJ 195 (SC).
59 Hospital Mazdoor Sabha, (1960) 1 LLJ 25 1.
60 Corporation of City of Nagpur, (1960) 1 LLJ 523.
61 Ahmedabad Textile Industry Research Association, (1960) 2 LLJ 720 (SC).
62 National Union of Commercial Employees v. M R Mehar, AIR 1962 SC. 1080.
63 Section 2(j) does not define ‘industry’ in the usual manner by prescribing what it means:
the first clause of the definition gives the statutory meaning of ‘industry’ and the second
clause deliberately refers to several other items of industry and brings them in the
definition in an inclusive way. It is obvious that the words used in the inclusive definition
denote extension and cannot be treated as restricted in any sense. See Hospital Mazdoor
Sabha case.
64 Madras Gymkhana Club case (1967) 2 LLJ 720.
65 ‘… What must he established is the existence of an industry viewed from the angle of
what the employer is doing and if the definition from the angle of the employer’s
occupation is satisfied, all who render service and fall within the definition of workman
come within the fold of industry irrespective of what they do.’ Madras Gymkhana Club,
(1967) 2 LLJ 720, 727–28.
66 Safdarjang Hospital, AIR 1970 SC 1407 at 1411. There must, therefore, be an enterprise
in which the employers follow their avocations as detailed in the definition and employ
workmen who follow one of the avocations detailed for workmen.
67 Though the word undertaking in the definition of ‘industry’ is wedged in between business
and trade on the one hand and manufacture on the other and though therefore, it might
mean only a business, trade or undertaking, still it must be remembered, that if that were
so, there was no need to use the word separately from business or trade. Budge Budge
Municipality, (1953) 1 LLJ 195.
68 ‘The undertaking or the service will still remain within the ambit of what we understand
by an industry though it is carried on with the aid of taxation and no immediate materials
gain by way of profit is envisaged.’ Budge Budge Municipality (1953) 1 LLJ 195 at 200.
69 ‘It must be borne in mind that noscitur a sociis is merely a rule of construction and it
cannot prevail in cases where it is clear that the words have been deliberately used to
make the scope of the aforesaid word correspondingly wider’. Hospital Mazdoor Sabha,
(1960) 1 LLJ 251.
70 Hospital Mazdoor Sabha, op. cit., 259.
71 The bench consisted of Chief Justice Beg and Justices Krishna Iyer, Chandrachud,
Bhagwati, Jaswant Singh, Tuizapurkar and Desai. Justice Krishna Iyer wrote the main
judgement of the Court on behalf of himself, Justice Bhagwati and Justice Desai. Chief
Justice Beg, Chandrachud J, (as he then was) wrote a separate but concurring judgement.
However, Justice Jaswant Singh and Justice Tulzapurkar wrote dissenting opinion. It is
significant to note that none of the judges except Justice Bhagwati, who gave a judgement
in Indian Standard Institution, (1976) 2 SCR 138 has participated in the decision of
delineating the scope of the term industry.
72 Bangalore Water Supply and Sewerage Board v. Rajappa, AIR 1978 SC 548.
73 Bangalore Water Supply and Sewerage Board v. Rajappa, AIR 1978 SC 548.
74 Ibid.
75 Bangalore Water Supply and Sewerage Board v. Rajappa, AIR 1978 SC 548.
76 Like Gymkhana Club, Cosmopolitan Club, Cricket Club of India and National Sports
Club of India.
77 University, college, school.
78 Pinjrapole, Gandhi Ashram.
79 Credit Societies, marketing cooperatives, producers or consumer societies or apex
societies.
80 Municipalities.
81 AIR 1978 SC 548.
82 Similar argument was made by Mr Chari in Fazalbhoy's case.
83 Bangalore Water Supply v. Rajappa, AIR 1978 SC 548.
84 Ibid.
85 Bangalore Water Supply v. Rajappa op. cit.
86 C M T Institute v. Assistant Labour Commissioner, (1979) 1 LLJ 192 (Karnataka).
87 K R. B. Kaimal v. Director of Postal Services (1979) 1 LLJ 176 (Kerala).
88 Tapan Kumar v. General Manager Calcutta Telephones, (1980) Lab. IC 508 (Cal.) and
X R B Kaimal v. Director of Postal Services op. cit. Bhaskaran v. SDO, (1982) 2 LLJ
248 (SC).
89 T T Devasthanam v. Commer. of Labour, (1979) 1 LLJ 448.
90 Bihar Relief Committee v. State of Bihar, (1979) 2 LLJ 53 (Pat).
91 Security Paper Mills v. Hati Shankar Namdeo, (1980) 2 LLJ 61 (M.P.).
92 SC Workers’ Union v. Management of Ayurvedic A Unani Tibbia College Board, (1980)
Lab. IC 892 (Del.).
93 Najeema Beevi v. Public Service Commission, (1983) 1 LLJ 433 (Ker.).
94 State of Punjab v. Kuldip Singh, (1983) 1 LLJ 309 (Punj. & Haryana).
95 Kmaymmal v. State of Kerala, (1983) 1 LLJ 267.
96 Christian Medical College, Vellore Association v. Govt, of India, (1983) 2 LLJ 372
(Madras).
97 Gopalji Jha Shastri v. State of Bihar, (1983) 2 LLJ 22 (SC).
98 PF Employees ’ Union v. Addl. Industrial Tribunal, (1983) 2 LLJ 108 (Kerala).
99 Indian Institute of Petroleum v. State of U.P., (1985) Lab IC 198 (Allahabad).
100 B Jateshwar Sharma v. Director of Education, (1985) Lab. IC 414 (Gujarat).
101 Corporation of Cochin v. Jalaja, (1984) 1 LLJ 526 (Kerala).
102 Hariba v. K S R T Corporation, (1983) 2 LLJ 76 (Karnataka).
103 Vasudeo Ambre v. State of Maharashtra, (1988) Lab. IC 554 (Bombay).
104 Indian Navy Sailors’ Home v. Bombay Gymkhana Club Caterers and Allied Employees‘
Union; (1986) Lab. IC 11 18.
105 Cotton & Woollen Textile Workers’ Union v. Industrial Tribunal, (1982) Lab. IC 1329
(SC).
106 Dinesh Sharma v. State of Bihar, (1983) BLJR 207 (Patna).
107 Doordarshan Karmachari Congress v Union of India, (1988) 2 LLJ 83 (Allahabad).
108 Des Raj v. State of Punjab, AlR 1988 SC 1182.
109 Raj Mukari v. State of Himachal Pradesh, (1989) Lab. IC 841 (Himachal Pradesh).
110 Mahila Samiti v. State of MP, (1989) Lab. IC 891 (Madhya Pradesh).
111 K C Das v. State of West Bengal, (1960) 2 LLJ 505 (Calcutta).
112 Cooperative Milk Societies’ Union Ltd., v. State of West Bengal, (1958)2 LLJ 61
(Calcutta).
113 Central Hair Cutting Saloon v. Harishikesh Pramanik, (1956) 1 LLJ 596 (LAT).
114 Travancore Devaswom Board v. State of Kerala, (1963) 2 LLJ 218 (Kerala).
115 V A Chedda v. Bambai Mazdoor Union, (1973) Lab. IC 697 (Bombay).
116 Jaipur Milk Supply Scheme v. Labour Court, Jaipur, (1976) Lab, IC 863 (Raj.).
117 Management of Bihar Khadi Gramodyog Sangh v. State of Bihar, (1977) Lab. IC 466
(Patna).
118 State of Rajasthan v. Industrial Tribunal, Rajasthan, (1970) (Raj.) LW 137 (Raj.)
followed in Mahesh Chandra Sharma v. State of Rajasthan, (1974) Raj. LW 338 (Raj.).
119 Madhya Pradesh Irrigation Karamchari Sangh v. State of Madhya Pradesh, (1972) 1
LLJ 374 (MP) (D.B.).
120 Chief Engineer Irrigation, Orissa v. Harihar Patra, (1977), Lab. IC 1033 (Orissa).
121 Tea Board v. First Industrial Tribunal, West Bengal, (1978). Lab. IC (NOC) 179
(Calcutta).
122 Bihar Relief Committee v. State of Bihar, (1979) Lab. IC 445 (Patna).
123 J N Singh & Co. Pvt. Ltd. v. S N Sexena,(1916) Lab. IC 840 (Allahabad).
124 Management of Radio Foundation Engineering Ltd., v. State of Bihar, (1970) Lab. IC
1119 (Patna).
125 Anando Chandra Swam v. State of Orissa, (1973) 1 LLJ 508 (Orissa).
126 Tapan Kumar Jana v. Central Manager, Calcutta Telephones, (1981) Lab IC (NOC) 68
(Calcutta).
127 Kunjan Bhaskaran v. Sub-Divisional Officer, Telegraphs Changanassery, (1983) Lab.
IC 135 (Kerala).
128 Shops and Commercial Workers’ Union v. Management of Ayurvedic and Unani Tibbia
College Board, Delhi, (1980) Lab. IC 892 (Delhi).
129 Security Paper Milts v. Hati Shankar Namdeo, (1980) 2 LLJ 61 (63) (M.P).
130 Karnami Properties Ltd. v. State of West Bengal, (1990) 2 Lab. IC 1677 (SC).
131 R Sreenivasa Rao v. Labour Court, Hyderabad, (1990) 1 Lab. IC 175 (Andhra Pradesh).
132 Workmen of M/s Baikuntha Nath Debasthan Trust v. State of West Bengal, (1990) 2
Lab. IC 1586.
133 Prabhudayal v. Alwar SekJiari Bhumi Vikas Bank, (1990) Lab. IC 944 (Rajasthan).
134 Nathaniel Nasib v. U P. Scheduled Caste Finance & Development Corporation Ltd.,
(1989) 2 Lab. IC 2276 (Allahabad).
135 Executive Engineer, Anandpur Barrage Division v. President, Work Charged & N M R
Employees Union Salinla, (1989) Lab. IC NOC 130 (Orissa).
136 Basant Lal v. Div. Mechanical Engineers (G.W.) Rly Kathiar, (1977) (3) LLJ 154
(Patna).
137 The Bombay Pinjrapole Bhuleswar v. The Workmen, AIR (1971) SC 2422.
138 G C Sharma Sons v. R K Baveja, (1972) 2 LLJ 475 (Delhi).
139 Rajesh Garg v. The Management of the Punjab State Tubewell Corporation, (1984). SLJ
(P & H) 693.
140 Indian Red Cross Society Haryana State v. The Additional Labour Court, Chandigarh.
(1992) (1) PLR 121 (P & H).
141 Sumer Chand v. The Presiding Officer, Labour Court, Ambata, (1990) (1) SLJ 91.
142 Harjinder Singh v. State of Haryana, (1992) (1) PLR 186 (P & H).
143 Suresh Kumar v. Union of India, (1990) Lab. IC NOC 75 (Delhi).
144 Binoy Kumar v. State of Bihar, (1983) Lab IC 1884 (Patna) (F.B.).
145 Des Raj v. State of Punjab, AIR l988 SC 1182, 1997 LLR 889.
146 Akhil Raj Rajya Hand Pump Mistries Sangthan v. State of Rajasthan, (1994) Lab. IC
345.
147 Haryana Woollen Development Corporation v. PO I.T cum LC, (1993) 2 LLJ 318.
148 State of U P v. Presiding Officer, Labour Court, (1997) LLR 558 (H.C. Alld.).
149 Abdul Wahab Shaikh Lai Bhai v. G E Patankar, (1980) Lab. IC 623 (Bombay).
150 P Jost v. Director Central Institute of Fisheries, (1986) Lab. IC 1564, (Kerala).
151 Executive Engineer, Rational Highway Division v. R.P.F. Commissioner, (1988) Lab. IC
690 (Orissa).
152 Govindbhai Kanabhat Mari v. N K Desai, (1988) Lab IC 505 (Gujarat).
153 J J Shrimali v. District Development Office, Jila Panchayat, (1989) Lab. IC 689
(Gujarat).
154 P M Murugappa Mudaliar, Rathina Mudaliar & Sons v. P Raju Mudaliar, (1965) 1 LLJ
 489 (Mys.). See also the decision of division bench of the Delhi High Court in Om
Prakash Jhumman Lai v. Labour Court, (1970) 1 LLJ 43 (Delhi). The view taken in this
case that activity where one man is employed is ‘industry’ is incorrect because it loses
sight of ‘organized labour force’ and ‘collectiveness’ of labour in the law of industrial
disputes.
155 William Fredric De Pennmg v. Therd Industrial Tribunal, AIR 1959 Cal 749.
156 Indravadan N Adhvaryu v. Laxminarayan Dev Trust through Chief Executive Kothari,
(2011) LLR 262.
157 Palace Administration Board v. State of Kerala, (1960) 1 LLJ 178.
158 The Government of India, Report of the National Commission on Labour, (1969) 482.
159 Des Raj v. State of Punjab, 1988 Lab. IC 1713; see also State of UP v. Presiding Officer,
Labour Court, (1997) LLR 528.
160 (2002) LLR 711.
161 (1988) Lab IC 1713.
162 (1997) LLR 889.
163 (1995) Supp 4672.
164 JT 1996 (2) 455.
165 (2002) LLR 609.
166 1998 (78) FLR 143 (SC).
167 (2012) 1 LLJ 75.
168 (1996) 8 SSC 489.
169 (1997) 6 SSC 723.
170 AIR 1998 SCC 657.
171 2012 (1) SLR 199.
172 (2003) LLR 108.
173 (1997) 4 SCC 257 (SC).
174 (1996) 2 SSC 293.
175 (2001) 8 SSC 713.
176 (2011) II CLR 528 (HC Gujarat).
177 (2002) LLR 444.
178 (2003) LLR 9.
179 (2008) 2 SCC 533.
180 (1998) 78 FLR 845 (SC).
181 (1999) 1 LLJ 319.
182 (2005) 5 SSC 1.
 CHAPTER
16
Workmen
Section 2 (s) of the Industrial Disputes Act, 1947, defines ‘workman’ to mean:
Any person (including an apprentice) employed in any industry
to do any manual, unskilled, skilled, technical, operational,
clerical or supervisory work for hire or reward, whether the
terms of employment be express or implied, and for the
purposes of any proceeding under this Act in relation to an
industrial dispute, includes any such person who has been
dismissed, discharged or retrenched in connection with, or as a
consequence of, that dispute, or whose dismissal, discharge or
retrenchment has led to that dispute, but does not include any
such person —
(i) who is subject to the Air Force Act, 1950, or the Army
Act, 1950, or the Navy Act, 1957; or
(ii) who is employed in the police service or as an officer
or other employee of a prison; or
(iii) who is employed mainly in a managerial or
administrative capacity; or
(iv) who, being employed in a supervisory capacity, draws
wages exceeding
ten thousand rupees per mensem or exercises, either by
the nature of the duties attached to the office or by
reason of the powers vested in him, functions mainly of
a managerial nature.1
 Broadly speaking, the definition requires that ‘workman’ must be:
(a) person, (b) employed, (c) in any industry, (d) to do the specified type
of work, (e) for hire or reward, but excludes certain specified categories of
persons.
The scope of the aforesaid expression has been the subject-matter of
judicial interpretation in a series of decided cases. Let us turn to examine the
scope of the aforesaid expressions.

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

B. Employed
The word ‘employed’, however, is susceptible to two meanings: (a) in a broader
sense, it is a synonym of ‘engaged’ or ‘occupied’, and (b) in a restricted sense, it
involves the connotation of the master–servant relationship. A question,
therefore, arises as to which of these two meanings provides the key to the
interpretation of the phrase ‘person employed in any industry’. The Supreme
Court in Dharangadhra Chemicals Works Ltd v. State of Saurashtra2 has,
however, interpreted the term ‘workman’ in a restricted sense. In this case, the
company is a lessee of the salt works and held licence for the manufacture of salt
on the land. The salt is manufactured from rain water which soaks down the
surface and becomes impregnated with saline matter. The entire area was
divided into small plots called pattas. Each agarias (who were a class of
professional labourers) were allotted a patta which was renewed from year to
year. The company paid each agarias ₹400 to meet his initial expenses. The
agarias levelled the land and enclosed the sink well in them. The brine was then
brought to the surface and collected in reservoirs and crystals were prepared. If
the salt crystals were found of a prescribed quality, the company made payment
to agarias. The salt which was not of prescribed quality was rejected. The
agarias were neither allowed to remove nor sell the salt rejected by the
company. The company employed a salt superintendent to supervise and control
all stages of the manufacture of salt. The salt manufactured by the company was
used partly for production of chemicals and the rest was sold.
The agarias worked themselves, along with members of their families
and were free to engage extra labourers on their own account. No hours of work
were prescribed. Neither muster rolls were maintained, nor working hours were
controlled by the masters. There were no rules as regards leave or holidays.
Agarias were free to go out of the factory after making arrangement for the
manufacture of salt. When monsoon began, the agarias returned to their villages
to take up agricultural work.
In 1950, an industrial dispute arose between the company and the agarias
over the conditions of service which was referred to by the appropriate
government to the industrial tribunal for adjudication. The company contended
that agarias were not ‘workmen’. The company, after unsuccessfully appealing
to the labour appellate tribunal and moving the High Court of Saurashtra for a
writ under Article 226, appealed to the Supreme Court. A question arose whether
the agarias working in the salt works of the company were workmen within the
definition of Section 2(s). Justice Bhagwati, speaking for the Court observed:
The essential condition of a person being a workmen within the
terms of this definition is that he should be employed to do the
work in that industry, that there should be, in other words, an
employment of his by the employer and that there should be the
relationship between the employer and him as between employer
and employee or master and servant. Unless a person is thus
employed, there can be no question of his being a workman
within the definition of the term as contained in the Act.3
Assuming that the definition of workman requires master-servant
relationship, a question arises as to how to ascertain the existence of that
relationship. In Dharangadhra Chemical Works Ltd case, the Supreme Court
ruled:
The principle according to which the relationship… between
employer and employee or master and servant has to be
determined is well settled. The test which is uniformly applied
in order to determine the relationship is the existence of a right
 of control in respect of the manner in which the work is to be
done.4
The Court then drew a distinction between ‘contract of service’ and
‘contract for service’:
In the one case the master can order or require what is to be
done while in the other case, he cannot only order or require
what is to be done but how it shall be done.5
The Court after considering several English cases and certain
observations in Halsbury’s Laws of England observed:
The principle which emerges from above is that the prima facie
test for the determination of the relationship between master and
servant is the existence of the right in the master to supervise
and control the work done by the servant not only in the matter
of directing what work the servant is to do but also the manner
in which he shall do his work.6
Again, in Workmen of the Food Corporation of India v. M/s Food
Corporation of India,7 the Supreme Court, construed the word ‘employed’ used
in Section 2(s) of the Industrial Disputes Act, 1947 and held :
The expression employed has at least two known connotations
but as used in the definition, the context would indicate ‘that it is
used in the sense of a relationship brought about by express or
implied contract of service in which the employee renders
service for which he is engaged by the employer and latter
agrees to pay him in cash or kind as agreed between them or
statutorily prescribed.’ It discloses a relationship of command
and obedience.
The above requirement of a ‘workman’ being employed as a servant,
restricts the coverage of the definition of ‘workman’ and excludes not only
independent contractors but also dependent entrepreneurs.8 Thus, the decision
renders millions of dependent entrepreneurs legal orphans.
The aforesaid test was invoked and applied in Chintaman Rao v. State of
Madhya Pradesh9 for determining whether a person is a ‘worker’ under the
Factories Act, 1948. In this case, a bidi factory entered into a contract with
certain persons known as sattedars for the supply of bidis. The sattedars were
supplied tobacco and in some cases bidi leaves also. The sattedars were neither
bound to work in the factory nor to prepare bidis themselves, but could get them
prepared by others. The sattedars in their turn collected bidis prepared by the
coolies and took them to the factory where they were stored and checked by
‘workers’ of the factory and such lots as were rejected were taken back by
sattedars to be re-made. The management then made the payment to sattedars
and not to ‘workers’ because they were neither employed by the management
(directly or indirectly) nor did they work in the factory. This principle was
reiterated and re-affirmed by the Supreme Court in State of Kerala v. V M
Patel.10 The Court also emphasized that a right to control or supervise is one of
the tests for determining the relationship of master and servant.
The Supreme Court in Bridhichand Sharma v. First Civil Judge,11
relaxed the qualitative and quantitative contents of the ‘direction and control’
test laid down in Dharangadhra Chemical Works, Ltd.12 In this case
Bridhichand Sharma, the appellant, was the manager of the bidi factory. The
respondents worked in the factory. They were, however, at liberty to come and
go at their convenience anytime during the working hours in the factory subject
to the condition that if they came after midday, they were not given any work on
that day and consequently they lost their wages of that day. The payments to
them were made on piece rate basis. According to the standing orders of the
company, a worker who remained absent for eight days (without leave) could be
removed. The payment of wages was made to them on piece rate basis according
to the amount of work done, and the bidis which did not come up to a proper
standard were rejected. It was in these circumstances that the Court held that the
employees were ‘workers’ under the Factories Act, 1948 and were not
independent contractors.
Shankar Balaji Waje v. State of Maharashtra13 distinguished
Bridichand Sharma v. First Civil Judge, Nagpur14 on the facts and applied the
criteria laid down in Chintaman Rao v. State of Madhya Pradesh15 for
ascertaining whether respondent Pandurang was a ‘worker’ or an independent
contractor. The appellant was the owner and occupier of the bidi factory. The
respondent Pandurang rolled bidis in the factory for a number of days in 1957.
After the respondent worked for 70 days, the appellant terminated his services
without paying him any wages for 4 days and earned leave as required under
Section 79 (ii) of the Factories Act, 1948. On these facts, a question arose
whether the respondent was a worker or an independent contractor. Justice
Raghubar Dayal, while pronouncing the majority view, observed:
There was no contract of service between the appellant and
 Pandurang. What can be said at the most is that whenever
Pandurang went to work, the appellant agreed to supply him
tobacco for rolling bidis and that Pandurang agreed to roll bidis
on being paid at a certain rate for the bidis turned out. The
appellant exercised no control and supervision over
Pandurang.16
Justice Subba Rao, however, took a contrary view. According to him, the
question raised in this appeal is directly covered by the judgement of this court
in Bridhichand Sharma v. First Civil Judge, Nagpur17.
We now revert to the cases falling under Section 2(s) of the Industrial
Disputes Act, 1947. D C Dewan Mohideen Sahib & Sons v. United Bidi
Workers Union18 has met the hardship caused by Dharangadhra Chemical
Works by emphasizing that the principal employer does not cease to be so
merely because he employs workmen through intermediaries. It was found that
contractors took leaves and tobaccos from the management and employed
workers for manufacturing bidis. After bidis were prepared, the contractors
delivered them to the management. The workers took leaves to their homes and
cut them there but they rolled the bidis and filled them with tobacco only in
‘contractors’ factories’. Neither any attendance register was maintained nor were
there any prescribed working hours. Sometimes, they informed the contractors
and sometimes they did not, if they remained absent. No action was taken
against workers absenting themselves without leave. The payment was made to
them on piece-rate basis according to the amount of work done19. The Court
held that the so-called contractor was merely an employee or an agent of the
(management)… and as such employed as workers to roll bidis on behalf of the
management.20 Be that as it may, there has been a consistent demand of working
class to abolish the system of contract labour.
In Standard Vacuum Refining Co. of India Ltd v. Their Workmen21, the
Supreme Court was again confronted with this problem. In this case, contract
labour was engaged in the cleaning and maintenance work at the refinery. The
work done by contract labour was not only of perennial nature to be done
everyday but the same type of work was done in other similar industries by
regular workmen. A dispute arose between the employer and contractor's
employees. The government referred the dispute to the tribunal. The
management questioned the jurisdiction of the tribunal to adjudicate upon the
dispute between employer and contractor’s employees. The tribunal overruled
the objection and held that it had jurisdiction to decide such disputes. The
tribunal also accepted the claim of contractor’s employees and directed abolition
of contract labour. On appeal, the Supreme Court ruled that the industrial
tribunal should rest its decision not merely on theoretical or abstract objections
to contract labour but also on the terms and condition on which contract labour is
employed and the grievance made by the employees in respect thereof.
The Supreme Court accordingly confirmed the findings of the tribunal
abolishing contract labour. The Court also held that the dispute in the instant
case was an industrial disputes, because (a) the management had a community of
interest with the contractor’s employees; (b) they had a substantial interest in the
subject-matter of the dispute in the sense that the class to which they belonged,
namely, workmen was substantially affected thereby; and (c) the management
could grant relief to the contractor’s employees.
The aforesaid view was re-affirmed22 in a number of decided cases. The
Supreme Court in Punjab National Bank v. Ghulam Dastagir23 exploded the
myth of the direction and control test laid down in Dharangdhara Chemicals
Ltd v. State of Saurashtra24 and Shivanandan Sharma v. Punjab National
Bank25 case applied in bidi cases decided by the Supreme Court. In bidi cases,
there was a common practice of using deceptive devices and the so-called
independent contractors were really agents of the management posing as
independent contractors for the purposes of circumventing the Factories Act,
1948 and like statutes which compel management to meet certain economic and
social obligations towards the workers.
In the instant case, the area manager of the bank was allowed certain
allowance to engage a driver. The salary of the driver was paid by the area
manager out of the allowances paid to him. However, the jeep (which the driver
had to drive), its petrol and oil requirements and maintenance fell within the
financial responsibility of the bank. The area manager terminated the services of
the driver. The driver challenged the justifiability of the termination of his
services. He raised a dispute with the bank. The government referred the dispute
to the industrial tribunal for adjudication. The tribunal held that (i) the driver was
employed by the bank and (ii) his termination of services was not justified and
was therefore, entitled for reinstatement. Aggrieved by the order, the bank filed
an appeal with the Supreme Court. The Supreme Court conceded that the
proposition laid down in Shivanandan Sharma is an exception26 but added that
direction and control are the telling factors27 to decide as to whether the driver in
the present case was the employee of the bank’. This test, according to the Court,
did not ‘exclude other factors also … and … the questions in each case are
determined on its own circumstances and decision in other cases is rather
illustrative than determinate’.28 The Court, however, held that the driver was not
a ‘workman’ because (i) there was no nexus between the bank and the driver and
(ii) there was no direction and control of the bank over the driver.
In Hussainbhai v. Alath Factory,29 the Supreme Court has tried to
mitigate the hardship caused by the decision in Dharangadhra Chemical Works
by extending the coverage of ‘worker’ to include ‘dependent entrepreneur’.
Justice Krishna Iyer laid down the following tests for determining the scope of
the term ‘worker’:
Where a worker or group of workers labour to produce goods or
services and these goods or services are for the business of
another, that other is, in fact, the employer. He has economic
control over the workers’ subsistence, skill and continued
employment. It be, for any reason, chokes-off, the worker is,
virtually, laid-off. The presence of intermediate contractors with
whom alone the workers have immediate or direct relationship
ex-contractu is of no consequence when, on lifting the veil or
looking at the conspectus of factors governing employment, we
discern the naked truth though draped in different perfect paper
arrangement that the real employer is the management, not the
immediate contractor.30
The aforesaid decision would provide relief to millions of persons who
had been excluded from the purview of ‘workmen’. It is submitted that the word
‘employed’, as used in the Industrial Disputes Act, 1947, by itself, signifies
‘engaged’ and that wherever necessary, the legislature has limited the scope of
the word by using appropriate qualifying expression.
Be that as it may, this line of thinking was referred to by the Constitution
bench of the Supreme Court in Steel Authority of India Ltd v. National Union
Water Front Workers31.
The Supreme Court in Shining Tailors v. Industrial Tribunal32 observed
that ‘supervision and control test was more suited to an agricultural society prior
to Industrial Revolution and during the last few decades, the emphasis in the
field has shifted and no longer rests exclusively or strongly on the question of
control.’
In Ram Singh v. Union Territory, Chandigarh33, the Supreme Court
held that though ‘control’ is one of the important tests in determining employer-
employee relationship but it is not the sole test. All other relevant factors and
circumstances are also required to be considered including the terms and
conditions of contract. The court also emphasized the importance of an
integrated approach in such matters. The court held that whether a particular
relationship between employer–employees is genuine or a smoke screen or a
camouflage through the mode of a contractor is essentially a question of fact to
be determined on the basis of (i) features of the relationship, (ii) the written
terms of the employment, if any, and (iii) the actual nature of employment and
these questions could be raised and proved only before an industrial adjudicator.
In General Manager (USD), Bengal Nagpur Cotton Mills v. Bharat
34
Lai , the Supreme Court, while dealing with the question whether the contract
labourers are the direct employees of the principal employer laid down two tests,
namely (i) whether the principal employer pays the salary instead of the
contractor; and (ii) whether the principal employer controls and supervises the
work of the employee. Dealing with the onus, the Court added:
It is for the employee to aver and prove that he was paid salary
directly by the principal employer and not the contractor. The
first respondent did not discharge this onus. Even in regard to
the second test, the employee did not establish that he was
working under the direct control and supervision of the principal
employer. The industrial court misconstrued the meaning of the
terms ‘control and supervision’ and held that as the officers of
the appellant were giving some instructions to the first
respondent working as a guard, he was deemed to be working
under the control and supervision of the appellant.
The Court also reiterated its earlier decision in International Airport
Authority of India v. International Air Cargo Workers’ Union35 wherein while
explaining the expression ‘control and supervision’ in the context of contract
labour, the Supreme Court observed:
If the contract is for supply of labour, necessarily, the labour
supplied by the contractor will work under the directions,
supervision and control of the principal employer but that would
not make the worker a direct employee of the principal
employer, if the salary is paid by the contractor, if the right to
regulate employment is with the contractor, and the ultimate
supervision and control lies with the contractor. The principal
employer only controls and directs the work to be done by a
contract labour, when such labour is assigned/allotted/sent to
him. But it is the contractor as employer, who chooses whether
the worker is to be assigned/allotted to the principal employer or
 used otherwise.
In view of the above, the Court held that the industrial court ought to have
held that the first respondent was not the direct employee of the appellant. The
Court accordingly set aside the order of the labour court, the industrial court and
the High Court.
In Devinder Singh v. Municipal Council36, the Supreme Court held that
the source of employment, the method of recruitment, the terms and conditions
of employment/contract of service, the quantum of wages/pay and the mode of
payment are not at all relevant for deciding whether or not a person is a
workman within the meaning of Section 2(s) of the Act.

C. Nature of Work
In order to be a ‘workman’, a person must be employed in an industry to do any
(i) skilled and unskilled manual work; (ii) supervisory work; (iii) technical work;
and (iv) clerical work.
Those who though ‘employed in a industry’ are not engaged in the
aforesaid types of work are beyond the scope of ‘workman’. Essentially, the
emphasis is on the nature of work done by an employee, the degree of his
responsibility,37 the nature of industry and the organizational set up of a
particular unit.38 However, merely because any one of the aforesaid types of
work done by a person is incidental to and not the main duty which a person is
doing and if the main duty is not covered in any one of the four specified nature
of the work, such a person would not be a ‘workman.’39
1. Manual Work. Manual work under Section 2(s) refers to work done
by physical effort as distinguished from mental or intellectual effort.40 The work
may be done with hands or with any other part of the body.41 Accordingly
durban,42 jamadar of watch and ward staff43 and handling of the pieces of cloth,
measuring them and cutting into pieces according to the requirement of
customer,44 have been held to be persons doing ‘manual work’ under Section
2(s). On the contrary work of an artiste45, chemical analyst in an advertising
concern, chemist46 mainly carrying out chemical analysis in a sugar mill, doctor
and his compounder47 and others incharge of watch and ward and fire fighting
department48 of a sugar mill (whose primary duty was to supervise the duty of
watchmen and jamadars and to look after the security of the factory) have not
been held to be persons doing ‘manual work’ under Section 2(s).
2. Skilled or unskilled. The scope of the expression ‘any skilled or
unskilled manual, supervisory, technical or clerical work’ has been the subject-
matter of controversy.
In S K Verma v. Mahesh Chandra49, a dispute arose whether a
development officer of a corporation is a ‘workman’. The Central Government
referred a dispute regarding the dismissal of a development officer of the Life
Insurance Corporation of India, New Delhi to the industrial tribunal-cum-labour
court for adjudication. The tribunal held that the development officer was not a
‘workman’ and therefore, the reference was incompetent. On dismissal of the
writ petition, the petitioner appealed to the Supreme Court. The Court examined
the scope of the expression ‘any skilled or unskilled workman’ and held that the
term ‘workmen’ takes into account the entire labour force excepting managerial
work. The Court then examined the nature of the duty of the development officer
and came to the conclusion that he was not engaged in any administrative or
managerial work. The Court accordingly held that the development officer was a
‘workman’ under the Act.
Resolution of conflicting views. After the amendment of the definition of
‘workman’, a Constitution bench of the Supreme Court in H R Adyanthaya v.
Sandoz (India) Ltd50 applied the rule of ejusdem generis to give a narrow
meaning to the wide words in the amended definition of 'workman' under the ID
Act. Accordingly, the Court excluded 'sales representatives' from the definition
of 'workman' by holding that the words 'skilled', 'unskilled' and 'manual' had to
be read ejusdem generis. A Constitution bench of the Supreme Court in H R
Adyanthaya51 after noticing all the earlier judgements the Supreme Court
observed as under:
We thus have three-judge bench decisions which have taken the
view that a person to be qualified to be a workman must be
doing the work which falls in any of the four categories, viz.,
manual, clerical, supervisory or technical and two-judge bench
decisions which have by referring to one or the other of the said
three decisions have reiterated the said law. As against this, we
have three-judge bench decisions which have without referring
to the decisions in May & Baker [AIR 1967 SC 618], WIMCO
[AIR 1964 SC 472] and Burmah-Shell cases (1971) 2 SCR 758,
have taken the other view which was expressly negatived, viz.,
if a person does not fall within the four exceptions to the said
definition, he is a workman within the meaning of the Industrial
Disputes Act. These decisions are also based on the facts found
in those cases. They have, therefore, to be confined to those
 facts. Hence, the position in law as it obtains today is that a
person to be a workman under the Industrial Disputes Act must
be employed to do the work of any of the categories, viz.,
manual, unskilled, skilled, technical, operational, clerical or
supervisory. It is not enough that he is not covered by either of
the four exceptions to the definition. We reiterate the said
interpretation.
3. Supervisory Capacity. The essence of supervisory nature of work
under Section 2(s) is the supervision by one person over others.52 The term
‘supervisor’ means any individual having authority of the employer to hire,
transfer, suspend, lay-off, recall, promote, discharge, assign or discipline other
employees, or responsibility to direct them or to adjudge their grievances, or to
recommend such action in connection with the foregoing. The exercise of such
authority is not of a routine or clerical nature, but requires the use of independent
judgement. The person exercising supervisory work is required to control men
and not machines. His duty is to see how the employees will be engaged in
different works of production and that the supervisor himself must have
technical expertise, otherwise he may not be in a position to exercise proper
supervision of the workmen handling sophisticated plants and machineries.
However, if the main work done by persons employed in an industry is of
manual, technical or clerical nature, the mere fact that some supervisory duties
are also carried out incidentally or as a small fraction of the work done by him
will not convert his employment into one of supervisory capacity.53 Conversely,
if a person mainly doing supervisory work, but incidentally or for a fraction of
the time also does some clerical work, it would have to be held that he is
employed in the supervisory capacity.54
In All India Reserve Bank Employees’ Association v. Reserve Bank of
55
India , the Court was called upon to decide whether the work done by an
employee engaged in checking and distributing the work, detecting the faults,
reporting for penalty and making arrangements for filling up vacancies is
supervisory in nature. The Court answered the question in the affirmative, and
observed that the question is ultimately a question of fact, or at best of mixed
fact and law and would primarily depend upon the nature of the industry, the
type of work in which he is engaged, the organizational set up of the particular
unit and the like. The Court, while construing the word ‘supervise’ observed that
the word supervise and its derivatives are not of precise import and most often
construed in the light of the context, for unless controlled, they cover simple
oversight and direction as manual work coupled with the power of inspection
and superintendence of manual work of others.
In Anand Bazar Patrika v. Its Workmen56, the principal work that the
employee concerned was doing was of maintaining and writing cash book and of
preparing various returns. Being the senior-most clerk, he was made incharge of
provident fund section and three clerks who were working in the same section
were put under him. He was required to allocate work between them, to permit
them to leave during office hours and to recommend their leave applications.
The Supreme Court held that the duties of the senior clerk incharge were not of a
supervisory nature because the few minor duties cannot convert his office into
that of a ‘supervisor’.
In Burmah Shell Co. v. Burmah Shell Management Staff Association57,
20 workmen (including checkers, general workmen, packers and chemical
mixers) were working under a foreman (chemical). The foreman allotted the
work to workmen under him, signed gate passes and other material vouchers,
recommended promotions of men who had been working under him, selected
persons for acting in a higher capacity, insured maximum utilization of
manpower and was responsible for blending of chemicals. On these facts the
Supreme Court observed:
In determining the nature of employment … (of any person) and
in holding that he is employed to do supervisory work, we have
taken into account not only the work of supervision which he
carries on in ensuring that… workmen employed under him are
properly doing the work … but also the fact that the workmen
function under his control and direction.
The Court accordingly held that the duties of a foreman were of
‘supervisory’ nature and the manual work done by him personally was only
incidental.
In Mayank Desai v. Sayaji Iron and Engineering Co. Ltd58, a person
was appointed as design and development engineer. He was required to check
certain drawings prepared by the draftsman but not to approve such drawings.
He had no authority to appoint a person, to sanction leave of anybody or take
disciplinary action against any person. No one was reporting to him. On these
facts, the Gujarat High Court held that he was not acting in a supervisory
capacity under Section 2(s)(iv) of the IDA.

Tests for Determination of Supervisory Capacity

The Bombay High Court in Union Carbide (India) Ltd v. D Samuel and
others59 summarized the tests laid down by the Supreme Court in various
decisions as follows :
1. Designation is not material but what is important is the nature of work;
2. Find out the dominant purpose of employment and not any additional
duties the employee may be performing;
3. Can he bind the company/employer to some kind of decisions on behalf of
the company/employer;
4. Has the employee the power to direct or oversee the work of his
subordinates;
5. Does he have the power to sanction leave or recommend it; and
6. Does he have he the power to appoint, terminate or take disciplinary action
against workmen.
The Supreme Court in National Engineering Industries Ltd v. Shri
Kishan Bhageria60 noted the distinction between the expression 'supervisory',
‘managerial’ and ‘administrative’. The Court also noted that these terms or
expressions cannot be put in a water-tight compartment. However, the Court
observed that one must always look into the main work and that must be found
out from the main duties. A supervisor is one who could bind the company to
take some kind of decision on behalf of the company. One who was reporting
merely as to the affairs of the company and making assessment for the purpose
of reporting was not a supervisor. The Court, therefore, will have to bear in mind
these tests while examining as to what is the main work of an employee.
4. Technical Work. The word ‘technical’ was inserted in Section 2(s) by
amending Act 36 of 1956. Broadly speaking, a work which depends upon the
special training or scientific or technical knowledge of a person, constitutes
technical work.
In Marugalli Estate v. Industrial Tribunal, Madras,61 a person was
employed as a medical officer for the plantation estate on a monthly salary
exceeding ₹500. His duties were: (i) management and running of a central
hospital staff; (ii) supervision of work of the hospital staff: (iii) supervision of
dispensaries; (iv) inspection of lines and quarters; (v) malaria control work; and
(vi) supervision of creches. On these facts, the Court concluded that the main
function for which he was appointed may not occupy as much time as the
medical attendance on patients. All these show that it is a technical employment
for a particular purpose, because of particular qualifications and should not be
lost sight of in determining the character of employment.62 The Court also laid
down a test to determine whether the work done by any person is technical or
supervisory:
The test to be applied to my mind, to cases of technical
employment such as in this case, should be the purpose for
which the employment is made, irrespective of whether the
performance of the duties may or may not occupy the entire time
of the employee. That is because the employment is made on the
basis of the particular level of professional efficiency and
technical qualifications. If an employee is found suitable for
supervisory work, because of those reasons, it cannot be said
that the functions are mainly those of a medical attendant, as on
account of his professional qualification, he happened to be
engaged in that capacity as well.63
The Court, therefore, opined that the employee concerned was not at all
entrusted with supervisory work.
The advancement of science and technology and the era of automation
pose new problems for lawyers, judges and legislators. Thus, in Titaghur Paper
Mills Co. Ltd v. First Industrial Tribunal64, the Calcutta High Court was, inter
alia, confronted with the issue whether persons with technical expertise could be
said to be ‘workmen’ within the meaning of Section 2(s). The Court observed:
That in the matter of production and running sophisticated
machines, persons having technical expertise are often required
to guide the labourers as to how the machine will be run and
how the technical process of production will be carried out.
Such technicians render their technical expertise along with
other workers. In such circumstances, it cannot be said that
simply because they did not run the machines themselves but
stood by and guided ordinary workmen in the matter of running
the machine and/or carrying out the phases of production, they
were purely administrators and/or supervisors and their only job
is to supervise the men and not the machine and/or technical
works of production.65
5. Clerical Work. In general connotation, ‘a clerk is one employed as
writer, copyist, account keeper or correspondent in the office’.66 Clerical work
‘implies a stereotyped work, without power of control or dignity or
creativeness.’67
 In D P Maheshwari v. Delhi Administration68, a question arose whether
an employee discharging the duties of clerical nature was a workman. The
labour court found that D P Maheshwari was discharging work of clerical nature.
The single judge and division bench of the Delhi High Court reversed the
findings of the labour court. On appeal, the Supreme Court held the fact that
Maheswari was not discharging supervisory function but he was discharging
duties of clerical nature. It accordingly set aside the decision of single judge and
division bench of the High Court and restored the orders of the labour court.
In Anameinuger Development Corporation Ltd v. Second Industrial
Tribunal,69 the management employed the appellant as a typist-cum-clerk.
Thereafter, he was appointed an officer to make purchases, attend to sales tax
authorities and transport. On these facts, a question arose whether he was a
‘workman’ under Section 2(s) of the Act. The division bench of the Calcutta
High Court answered the question in the affirmative and observed that mere
designation would not govern the nature of the work. The Court also held that he
was receiving low emoluments and was not an officer, therefore, he fell within
the category of ‘workman’ under Section 2(s) of the Act.
In Prakash v. M/s Delton Cables India (P) Ltd70, the appellant was
employed as a chargeman security to look after the security of the factory and its
property. He was also required to depute watchmen working under him to work
at the factory gate or to send them to watch in or around the factory and to make
entries about the visitors in the register and about materials entering or going out
of the premises of the factory in the concerned register. The appellant had no
power to appoint or dismiss any workman or even order an inquiry against any
workman. On these facts, the Supreme Court held that the substantial duty of the
appellant was only of a security inspector at the gate of the factory premises. The
Court also held that his nature of duty was neither managerial nor supervisory in
nature within the exclusory clause of Section 2(s).
A survey of decided cases reveals that a clerk of audit department71,
manager of hotel (required to write ledgers, file correspondence and enter cash
book, etc.)72, senior clerk of a bank73 and accountant of a bank signing salary
bills of the staff74 are workmen under Section 2(s).
6. Multifarious Duties. In practice, quite a large number of employees
are employed in industries to do work of more than one of the kinds mentioned
in the definition. In such cases, it would be necessary to determine under which
classification he will fall for the purpose of finding out whether he does or does
not go out of the definition of ‘workman’ under the exceptions.
In Burmah Shell Oil Storage and Distribution Company India Limited
v. Burmah Shell Management Staff Association75, the Supreme Court held that
where an employee is doing multifarious duties, the main work which he is
required to do should be held to be the work done by him to find out whether he
is a workman or not.
The Supreme Court in National Engineering Industries v. Shri Krishna
Bhageria76 was seized of the question of whether an internal auditor working in
the company was a workman or not. After considering his main duties and the
work, it was held that he was not doing any kind of supervisory work. It was also
held that since the employee had no independent right or authority to take
decisions and his decision did not bind the company and, therefore, he was a
workman and not a supervisor.
In S K Maini v. M/s Carona Sahu Company Ltd77, the Supreme Court
laid down the following principles for determination of the question as to
whether a particular employee falls within the definition of ‘workman’ under
Section 2(s):
Whether or not an employee is a workman under Section 2(s) of
the Industrial Disputes Act is required to be determined with
reference to his principal nature of duties and functions. Such
question is required to be determined with reference to the facts
and circumstances of the case and materials on record and it is
not possible to lay down any strait-jacket formula which can
decide the dispute as to the real nature of duties and functions
being performed by an employee in all cases. When an
employee is employed to do the types of work enumerated in the
definition of workman under Section 2(s), there is hardly any
difficulty in treating him as a workman under the appropriate
classification, but in the complexity of industrial or commercial
organization, quite a large number of employees are often
required to do more than one kind of work. In such cases, it
becomes necessary to determine under which classification the
employee shall fall for the purpose of deciding whether he
comes within the definition of workman or goes out of it. The
designation of the employee is not of much importance and what
is important is the nature of duties being performed by the
employee. The determinative factor is the main duties of the
concerned employee and not some work incidentally done. In
other words, that is in substance, the work which an employee
does or what in substance he is employed to do. Viewed from
 this angle, if the employee is mainly doing supervisory work but
incidentally or for a fraction of time also does some manual or
clerical work, the employee should be held to be doing
supervisory works. Conversely, if the main work is of manual,
clerical or of technical nature, the mere fact that some
supervisory or other work is also done by the employee
incidentally or only a small fraction of working time is devoted
to some supervisory works, the employee will come within the
purview of ‘workman’ as defined under Section 2(s) of the
Industrial Disputes Act, 1947.
The position that emerges from the aforesaid discussion is that in
determining the question whether a person employed by the employer is
workman under Section 2(s) of the Industrial Disputes Act or not, the Court has
principally to see main or substantial work for which the employee has been
employed and engaged to do. Neither the designation of the employee is decisive
nor any incidental work that may be done or required to be done by such
employee shall get him outside the purview of workman, if the principal job and
the nature of employment of such employee is manual, technical or clerical. In
hierarchy of employees, some sort of supervision by the employee over the
employees of the lower ladder without any control may not by itself be sufficient
to bring that employee in the category of supervisory, yet if the principal job of
that employee is to oversee the work of employees who are in the lower ladder
of the hierarchy and he had some sort of independent discretion and judgement,
obviously such an employee would fall within the category of supervisor. Each
case would depend on the nature of the duties predominantly or primarily
performed by such employee and whether such function was supervisory or not
would have to be decided on facts keeping in mind correct principles. Where the
employee possesses the power of assigning duties and distribution of work, such
authority of employee may be indicative of his being supervisor doing
supervision. In a broad sense, supervisor is one who has authority over others:
someone who superintends and directs others. An employee who, in the interest
of the employer has responsibility to directly control the work done by other
workers and if the work is not done correctly, to guide them to do it correctly in
accordance with norms shall certainly be a supervisor. A supervisory work may
be distinguished from managerial and administrative work and, so also a
supervisor from manager and administrator. Supervisor’s predominant function
is to see that work is done by workers under him in accordance with the norms
laid down by the management; he has no power to take disciplinary action.
D. Hire and Reward
The expression ‘for hire or reward’ which is frequently used to denote
contractual relationship78 has been used in Section 2(s). Only those persons are
‘workmen’ who are employed for ‘hire or reward’. The expression ‘hire and
reward’ is wider than ‘wages’. Legislature was, however, alive of this situation
and, therefore, preferred to adopt the former expression rather than the latter to
include those who are not technically getting ‘wages’. There is, however, a
difference between ‘hire and reward’. While the former refers to payment or
receipt of compensation, as distinguished from a gratuitous or non-remunerative
service79, the latter implies something given in return for good or evil done or
received and does not necessarily mean money or a thing in itself of pecuniary
value.
In Management of Indian Bank, Madras v. The Presiding Officer,
Industrial Tribunal Madras,80 the Madras High Court held that the commission
providing for payment to a tiny deposit agent under the agreement will be ‘hire
or reward’ within the meaning of Section 2(s) of the Industrial Disputes Act,
1947.
In Devinder Kaur (Smt) v. Child Welfare Council, Punjab81, the Punjab
and Haryana High Court held that a person working for honorarium as a
Balsevika in Child Welfare Council is not a workmen under the Industrial
Disputes Act, 1947.

E. Persons Excluded
The exclusory clause in the definition of ‘workman’, namely:
(i) who is subject to the Army, Air Force and Navy Acts, or
(ii) who is employed in the police service or as officer or other employee of a
prison, or
(iii) who is employed mainly in a managerial or administrative capacity; or
(iv) who being employed in a supervisory capacity, draws wages exceeding
ten thousand rupees per mensem or exercises either by the nature of the
duties attached to the office or by reason of the power vested in him,
functions mainly of a managerial nature, curtails the scope of the term
‘workmen.’
The aforesaid clauses indicate that if they did not occur in the definition, a
good number of persons employed in navy, military, air force, police or prison
would have been regarded as ‘manual’ workers and hence ‘workmen’. The
legislature was obviously alive of this problem and, therefore, excluded such
persons. But, even the aforesaid clauses are inadequate and incomplete as unlike
Section 2 (9) (b) of the Industrial Relations Bill, 1978, it does not include any
person:
who is employed … (as) an officer or member of the Railway
Protection Force constituted under Section 3 of the Railway
Protection Force Act, 1957 or the Border Security Force
constituted under Section 4 of the Border Security Force Act,
1968 or the Central Industrial Security Force constituted under
Section 3 of the Central industrial Security Force Act, 1968.82
The Bill also specifically excluded any person:
who is employed or engaged as a seaman as defined in clause
(42) of Section 3 of the Merchant Shipping Act, 1958 …83
But, due to the change in the government, the aforesaid recommendation
could not find place in the statute book.
1. Person Employed Mainly in Managerial and Administrative
Capacity. Section 2(s) (iii) excludes the aforesaid category. The aforesaid phrase
which has not been defined in the Industrial Disputes Act appears to indicate that
there may be plurality of person in this category of any industry.84 However, it is
not necessary that such persons should have the power of making appointments.
Nor is it essential that before a person can fall in the aforesaid category, he
should have the power to dismiss any employee. Further, the mere fact that a
person is designated as ‘managerial’ or ‘administrative’ personnel is not
conclusive proof of his being so, but has to be established by the actual nature of
work done by him. In order to bring a person in the aforesaid category, it is
necessary that he must have workmen, persons or officers subordinate to him
whose work he is required to supervise. He should take decisions and also
assume responsibility for ensuring that the matters entrusted to be charged are
efficiently conducted and an ascertainable area or section of work is assigned to
him.85
In Air India Cabin Crew Association v. Union of India86, the Supreme
Court held that once an employee is placed in the executive cadre, he ceases to
be a workman and also ceases to be governed by a settlement arrived at between
the management and the workmen through the trade union concerned.
2. Supervisory Capacity Drawing Wages Exceeding Rupees Ten
Thousand Per Mensem. The salary limit is associated with the person in the
supervisory capacity. But managerial or administrative personnel are excluded,
irrespective of their salary. Further, no such limit applies in case of manual,
clerical or technical personnel. Thus, Section 2(s) (iv) excludes those person
employed in a supervisory capacity who draw wages exceeding ₹10,000 per
month.87
In M/s Bharat Heavy Electricals Ltd, Haridwar v. State,88 the Uttranchal
High Court held that assistant foreman employed in Bharat Heavy Electricals
Ltd, an undertaking of Government of India who was performing duties of
supervisory nature, cannot be treated as ‘workman’.
However, an incidental performance of supervisory duties will not
impress his employment with the character of supervisory capacity. The mere
designation as supervisor is not decisive.89
A similar view was taken by this Court in Western India Match Co. Ltd
v. Workmen90 and Burmah Shell Oil Storage & Distribution Co. of India Ltd
v. Burmah Shell Management Staff Assn.91
A division bench of this Court, however, without noticing the
aforementioned binding precedent, in S K Verma v. Mahesh Chandra92 held
that the duties and obligations of a development officer of Life Insurance
Corporation of India being neither managerial nor supervisory in nature, he must
be held to be a workman. Correctness of S K Verma (supra) came up for
consideration before a Constitution bench of this Court in H R Adyanthaya93
case. Referring to this Court's earlier decisions in May and Baker (supra),
Western India Match Co. and Burmah Shell Oil Storage, it was observed that
as in S K Verma (supra) the binding precedents were not noticed and
furthermore, in view of the fact that no finding was given by the Court as to
whether the development officer was doing clerical or technical work and
admittedly not doing any manual work, the same had been rendered per
incuriam.
The Constitution bench summarized the legal position that arose from the
statutory provisions and from the decisions rendered by this Court, stating:
Till 29-8-1956, the definition of workman under the ID Act was
confined to skilled and unskilled, manual or clerical work and
did not include the categories of persons who were employed to
do 'supervisory' and 'technical' work. The said categories came
to be included in the definition w.e.f. 29-8-1956 by virtue of the
Amending Act 36 of 1956. It is, further for the first time that by
virtue of the Amending Act 46 of 1982, the categories of worker
 employed to do ‘operational’ work came to be included in the
definition. What is more, it is by virtue of this amendment that
for the first time, those doing non-manual, unskilled and skilled
work also came to be included in the definition with the result
that persons doing skilled and unskilled work, whether manual
or otherwise, qualified to become workmen under the ID Act.
Considering the decisions in May & Baker (supra), Western India
Match Co. (supra), Burmah Shell Oil Storage (supra) as also S K Verma
(supra) and other decisions following the same, this Court in H R Adyanthaya
(supra) observed:
However, the decisions in the later cases, viz., S K Verma
((1983) 3 SCR 799), Delton Cable, ((1984) 3 SCR 169), and
Ciba Geigy, ((1985 Supp (1) SCR 282) cases did not notice the
earlier decisions in May & Baker ((1964) 3 SCR 560), and
Burmah Shell ((1971) 2 SCR 758) cases and the very same
contention, viz., if a person did not fall within any of the
categories of manual, clerical, supervisory or technical, he
would qualify to be workman merely because he is not covered
by either of the four exceptions to the definition, was canvassed
and though negatived in earlier decisions, was accepted. Further,
in those cases the development officer of the LIC, the security
inspector at the gate of the factory and the stenographer-cum-
accountant respectively, were held to be workmen on the facts
of those cases. It is the decision of this Court in A Sundarambal
case ((1988) 4 SCC 42) which pointed out that the law laid
down in May & Baker case ((1961) 2 LLJ 940) was still good
and was not in terms disowned.
A three-judge bench of the Supreme Court in Mukesh K Tripathi v.
Senior Divisional Manager, LIC94 while dealing with the above cases held:
(i) That Constitution bench though noticed the distinct cleavage of opinion in
two lines of cases but held:
… these decisions are also based on the facts found in those
cases. They have, therefore, to be confined to those facts. Hence,
the position in law as it obtains today is that a person to be a
workman under the ID Act must be employed to do the work of
any of the categories, viz., manual, unskilled, skilled, technical,
 operational, clerical or supervisory. It is not enough that he is
not covered by either of the four exceptions to the definition. We
reiterate the said interpretation.
(ii) The said reasonings are, therefore, supplemental to the ones recorded
earlier, viz.: (i) They were rendered per incuriam; and (ii) May & Baker
(supra) is still a good law.
(iii) Once the ratio of May & Baker (supra) and other decisions following the
same had been reiterated, despite observations made to the effect that S K
Verma (supra) and other decisions following the same were rendered on
the facts of that case, we are of the opinion that this Court had approved
the reasonings of May & Baker (supra) and subsequent decisions in
preference to S K Verma (supra).
(iv) The Constitution bench, further, took notice of the subsequent amendment
in the definition of ‘workman’ and held that even the legislature impliedly
did not accept the said interpretation of this Court in S K Verma (supra)
and other decisions.
(v) It may be true, that S K Verma (supra) has not been expressly overruled
in H R Adyanthaya (supra) but once the said decision has been held to
have been rendered per incuriam, it cannot be said to have laid down a
good law. This Court is bound by the decision of the Constitution bench.
In P B Sivasankaran v. Presiding Officers, First Additional Labour
Court95, a question arose whether the petitioner who worked as supervisor in
charge of a shift, having power to grant leave, recommend confirmation of
regularization and issue memos against the subordinate workers, was a
workman. On the facts of the case, the Madras High Court held that he was not a
‘workman’ under Section 2(s) of the Act.

F. Specific Cases
1. Sales/Medical Representative: If Workman
In May & Baker India Ltd v. Their Workman,96 the pharmaceutical concern
employed the petitioner as a representative for canvassing and procuring orders.
However, he was also required to do some clerical or manual work which was
incidental to his main work. On these facts, the Supreme Court held that he was
not a ‘workman’ under Section 2 (s) of the Act. The Supreme Court added that if
the nature of duties is manual or clerical, then the person must be held to be a
workman. On the other hand, if the manual or clerical work is only a small part
of the duties of the person concerned and is incidental to the main work which is
not manual or clerical, then such a person would not be a workman.
In T P Srivastava v. M/s National Tabacco Co. of India97, the Supreme
Court was called upon to decide a question whether a person looking after sales
promotion is a ‘workman’ under the Industrial Disputes Act, 1947. In this case,
the appellant was employed to do canvassing and promoting sales for the
company. His duties among others included suggesting ways and means to
improve sales, study the type of status of the public to whom the product has to
reach and study the market conditions. He was also required to suggest about the
publicity in markets and melas, advertisements, including the need for posters,
holders and cinema slides. On these facts the Supreme Court held that persons
looking after sales promotion were not workmen under the Industrial Disputes
Act.
In H R Adyanthaya v. Sandoz (India) Ltd98, a question arose whether a
medical representative was a 'workman' under Section 2(s). The Supreme Court
answered the question in negative and observed ‘… the word skilled has to be
construed ejusdem generis and thus construed would mean skilled work,
whether manual or non-manual which is of a general or other types of work
mentioned in the definition clause 2(s). The work of promotion of sales of
products or services of the establishments is distinct from the independent type
of work covered by Section 2(s). Therefore, medical representatives are not
workmen.’
In Sharad Kumar v. Government of NCT of Delhi99, the Supreme Court
was called upon to decide whether the area sales executive was a ‘workman’
under Section 2(s) of the ID Act. While holding that he was not a ‘workman’,
the Court laid down the following tests for guidance:
(a) In order to fall under the purview of the expression ‘workman’ as defined
under Section 2(s) of the Act, the person has to discharge any one of the
types of the works enumerated in the first portion of Section 2(s).
(b) If the person does not come within the first portion of Section 2(s), then it
is not necessary to consider the further question whether he comes within
any classes of workmen excluded under the latter part of the section.
(c) Whether the person concerned comes within the first part of Section 2(s)
depends upon the nature of duties assigned to him and/or discharged by
him.
(d) The duties of the employee may be spelt out (i) in the service rules or (ii)
service regulations or (iii) standing orders or (iv) the appointment order; or
 (v) in any other material in which the duties are assigned to him.
(e) When the employee is assigned to a particular type of duty and has been
discharging the same till date of dispute then there may not be any
difficulty in coming to a conclusion whether he is a workman within the
meaning of Section 2(s). If on the other hand, the nature of duties
discharged by the employee is multifarious, then the further question that
may arise for consideration is which of them is his principal duty and
which are the ancillary duties performed by him.
(f) Designation of the employee is not of much importance and certainly not
conclusive in the matter as to whether or not he is a workman under
Section 2(s) of the Act.

2. Part-time Employees: If Workman

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

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

4. Teacher: If Workman
In Miss A Sundarmbal v. Govt of Goa, Daman & Diu105, a question arose
whether a teacher employed in a school falls within the definition of ‘workman’
under Section 2(s) of the Act. The Supreme Court answered the question in the
negative and observed:
We are of the view that the teachers employed by educational
institutions whether the said institutions are imparting primary,
secondary, graduate or post-graduate education, cannot be called
‘workman’ within the meaning of Section 2(s) of the Act.
Imparting of education which is the main function of teachers
cannot be considered as skilled or unskilled manual work or
supervisory work or clerical work. Imparting of education is in
the nature of a mission or noble vocation. A teacher educates
children, he moulds their character, builds up their personality
and makes them fit to become responsible citizens. Children
grow under the care of teachers. The clerical work, if any, they
do is only incidental to their principal work of teaching.
The Court added:
We may at this stage observe that teachers as a class cannot be
denied the benefits of social justice. We are aware of the several
methods adopted by unscrupulous management to exploit them
 by imposing on them unjust conditions of service. In order to do
justice to them, it is necessary to provide for an appropriate
machinery so that teachers may secure what is rightly due to
them.
The Court directed that ‘if no such Act is in force in Goa, it is time that
the state of Goa takes necessary steps to bring into force an appropriate
legislation providing for adjudication of disputes between teachers and
managements of educational institutions. The Court hoped that the lacuna in the
legislative area will be filled soon.
The aforesaid view was reiterated in Ahmedabad Pvt. Primary Teachers
Association v. Administrative officer.106

5. Doctor-If a Workman
Is a doctor who has been performing duties of technical nature a workman
irrespective of the fact whether the hospital is charitable or not, under the
Industrial Disputes Act? In Surendra Kumar v. Union of India107, the petitioner
was employed as assistant medical officer Class II to treat patients who were
employees of the railways and their families. He was also required to meet the
administrative requirement where he was in charge of the hospital of a wealth
unit. The staff was also under his administrative control. On these facts, the
division bench of Allahabad High Court held that the duties of the doctor were
technical and not supervisory. The Court accordingly held that the doctor was a
‘workman’ under Section 2(s) of the Industrial Disputes Act, 1947. However, the
division bench of the Kerala High Court in Mar Basellos Medical Mission
Hospital v. Dr Joseph Babu108 held that a senior doctor engaged in diagnosis
and treatment of patients was not a workman under the IDA. The court gave the
following reasons.
(i) A post-graduate doctor was engaged at a fairly high salary for treatment
of patients as a senior doctor in the department of medicine.
(ii) His work is essentially to diagnose diseases of patients and treat the same.
(iii) A senior doctor is always assisted by a team of junior doctors, medical
attendants, nurses, etc., and it is the duty of the senior doctor to ensure
examination of the patient by way of x-ray, blood test, etc., and that the
treatment suggested by him is carried out strictly in accordance with his
instructions.
(iv) No one can doubt that any subordinate employee disobeying the doctor's
instructions will do so expect at the risk of disciplinary action.
 Thus, he was engaged in supervisory and technical work, even if a
doctor's work is only technical in nature.
In M M Wadia Charitable Hospital v. (Dr) Umakant Ramchandra
Warerkar109, the Bombay High Court held that a doctor, though employed and
rendering professional services will not be a 'workman' under the Act. The
Supreme Court in Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea
Estate110 while construing Section 2 (s) (as it existed prior to 1956 amendment)
held that the duties performed by a medical practitioner were of a technical
nature.

6. Apprentice: If Workman
Does an apprentice ipso facto become a ‘workman’ merely because Section 2(s)
specifically includes ‘apprentice’’ within its fold? The Supreme Court in
Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd111 held that if the
employer takes the kind of work mentioned in Section 2 (s) from the apprentice,
the dispute between them would be settled under the Industrial Disputes Act,
1947. But if the apprentices do not perform such work, the Industrial Disputes
Act will not apply to them.
In Mukesh K Tripathi v. Senior Divisional Manager, L I C and Ors112, the
Supreme Court while dealing with the case of apprentice observed that the
definition of ‘workmen’ as contained in Section 2(s) of the Industrial Disputes
Act, 1947 includes an apprentice, but a ‘workman’ defined under the Industrial
Disputes Act, 1947 must conform to the requirements laid down therein meaning
thereby, inter alia, that he must be working in one or the other capacities
mentioned therein and not otherwise. The Court added:
(i) A ‘workman’ within the meaning of Section 2(s) of the Industrial
Disputes Act, 1947 must not only establish that he is not covered by the
provisions of the Apprenticeship Act but must further establish that he is
employed in the establishment for the purpose of doing any work
contemplated in the definition. Even in a case where a period of
apprenticeship is extended, a further written contract carrying out such
intention need not be executed. But in a case where a person is allowed to
continue without extending the period of apprenticeship either expressly
or by necessary implication and regular work is taken from him, he may
become a workman. A person who claims himself to be an apprentice has
certain rights and obligations under the statute.
(ii) In case any person raises a contention that his status has been changed
 from apprentice to a workman, he must plead and prove the requisite
facts. In absence of any pleading or proof that either by novation of the
contract or by reason of the conduct of the parties, such a change has been
brought about, an apprentice cannot be held to be a workman.
In Dhampur Sugar Mills Ltd v. Bhola Singh113, the Supreme Court held
that an apprentice or trainee appointed in terms of the Apprentices Act, 1961 is
not a workman.

7. Trainees
In Trambak Rubber Industries Ltd v. Nasik Workers’ Union114, a question
arose whether the ‘trainees’ where the entire production activity in the company
was carried out with none other than the trainees were workmen under Section
2(s) of Industrial Disputes Act, 1947. The Supreme Court answered the question
in the affirmative. In this case, the company which employed only trainees to run
the production activity were not allowed to resume work on and from 14 August
1989 unless they gave an undertaking on the employer’s term. The employer
terminated their services with effect from 15 November 1989. The industrial
court held that they were trainees because (i) neither the complainant union nor
the management had placed on record the appointment letters that would have
been issued when the persons concerned were recruited in 1988; (ii) merely
because the trainees were employed for performing regular nature of work
would not by itself make them workmen; (iii) a trainee is not equivalent to a
‘workman’ unless there is sufficient evidence of existence of employer-
employee relationship. On a writ petition the High Court held that the persons
concerned whose engagement was terminated were not trainees but they were
‘workmen’ and therefore, their services could not have been terminated without
following the due procedure. On a special leave, the Supreme Court observed:
According to the industrial court, the fact that the ‘trainees’ were
employed for performing the regular nature of work would not
by itself make them workmen. The question then is, would it
lead to an inference that they were trainees? The answer must be
clearly in the negative. …It is pertinent to note the statement of
the management’s witness that in June-July 1989, the company
did not have any permanent workmen and all the person
employed were trainees. It would be impossible to believe that
the entire production activity was being carried on with none
other than the so-called trainees. If there were trainees, there
 should have been trainers too. The management evidently came
forward with a false plea dubbing the employees/workmen as
trainees so as to resort to summary termination and deny the
legitimate benefits.
Can a trainee who has undergone 3 years‘ training claim status
mentioning him to be confirmed? This question was raised in Shri Vijay Kumar
v. Presiding Judge, Labour Court115. Dealing with this question, the Himachal
Pradesh High Court held that where the petitioner was only a trainee, never
became workman and was never offered employment after completion of
training, the mere fact that a wage slip mentioned that petitioner has been
confirmed will not make him a confirmed employee. In order to become
workman, there should be a separate order confirming him on successful
completion of training.

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

9. Domestic Servant – Not Workman

In Management of Som Vihar Apartment Owners Housing Maintenance
Society Ltd v. Workmen C/o Indian Engg. & General Management118, the
Supreme Court ruled that service rendered by a domestic servant is purely a
personal or domestic matter and, therefore, falls outside the purview of
‘workman’ under the Industrial Disputes Act. The Court referred to its earlier
decision in Bangalore Water Supply & Sewerage Board119 and observed that it
is not an authority for the proposition that domestic servants are also to be
treated to be workmen even when they carry out work in respect of one or many
masters. The Court observed that the whole purpose of the ID Act is to focus on
resolution of industrial disputes and the regulation will not meddle with every
little carpenter or a blacksmith, a cobbler or a cycle repairer who comes outside
the ambit of industry and rendered service to the members of a society, which is
constituted only for the benefit of those members; employees engaged by it for
rendering such services cannot be said to be ‘workmen’ under Section 2(s) of the
ID Act.
The aforesaid view was reiterated in Md. Manjur & Ors v. Syam Kunj
Occupants’ Society & Others.120

10. Legal Representative of Deceased Workman: If

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

11. Gardener
The Supreme Court in M/s Bharat Heavy Electricals Ltd v. State of Uttar
Pradesh122 was called upon to determine whether gardeners engaged through
contracts for upkeeping parks inside factory premises and residential colonies
were workmen under the Industrial Disputes Act, 1947 read with Uttar Pradesh
Industrial Disputes Act, 1947. In this case, the respondents were engaged as
gardeners (malis) to sweep, clean, maintain and look after the lawns and parks
inside the factory premises and the campus of the residential colony of M/s
Bharat Heavy Electricals Ltd through the agency of the respondent. Their
services were terminated on 1 December 1988. They raised industrial dispute
before the labour court. The company took the plea that they were never
employed by it and it was not liable to pay any amount of compensation or to
reinstate them in service. The labour court directed their re-employment and
payment of compensation. Aggrieved by the award, the appellant filled writ
petition before the High Court. The High Court dismissed the petition.
Aggrieved by this finding, the company filed an appeal before the Supreme
Court. While dealing with the status of gardeners, the Supreme Court ruled that
where workman-labour is engaged to produce goods or services and these goods
or services are for the business of another, the other is employer. The Court also
held that the work of the respondent workmen is not totally disassociated for the
appellant to say that they were not employees of the appellant.
The Court held that the definition of ‘employer’ given in Section 2(i) (iv)
of the Act is an inclusive definition. If the respondents-workmen as a matter of
fact were employed with the appellant to work in their premises and which fact
is found established after removing the mask or facade of make-believe
employment under the contractor, the appellant cannot escape its liability.
The Court also drew attention to a vital fact that the appellant did not
produce the records alleging that they were not available and this led to adverse
inference against it.
A perusal of the aforesaid judgement reveals that the Court distinguished
this case with the decision given by the Constitution bench of this Court in Steel
Authority of India Ltd & Ors. v. National Union Waterfront Workers123. Be
that as it may, the judgement does not meet the requirement of global
competition which is the main demand of the employer.

12. Piece-Rated Workers

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

13. Legal Assistant/Legal Advisor: If Workman

In Management of Sonepat Cooperative Sugar Mills Ltd v. Ajit Singh125, the
respondent was appointed to the post of ‘legal assistant’, the qualification for
which was a degree in law with a practising licence. The nature of his duties was
to prepare written statements and notices, recording equity proceedings, giving
opinions to the management, drafting, filing the pleadings and representing the
appellant in all types of cases. He was also conducting departmental enquiries
against workmen in the establishment. He was placed on probation and his post
was dispensed with, following which he was terminated. He raised an industrial
dispute. The question before the labour court was ‘Whether the applicant was a
workman’; labour court held he was a workman, which was upheld by High
Court. Management preferred an appeal to the Supreme Court. Following its
earlier decisions in A Sundarambal v. Govt of Goa, Daman & Diu126, and H R
Adyanthaya v. Sandoz (India) Ltd,127 and rejecting S K Verma v. Mehesh
Chandra (supra), this Court held:
Thus, a person who performs one or the other jobs mentioned in
the aforementioned provisions only would come within the
purview of the definition of workman. The job of a clerk
ordinarily implies stereotyped work without power of control or
dignity or initiative or creativeness. The question as to whether
the employee has been performing clerical work or not is
required to be determined upon arriving at a finding as regards
the dominant nature thereof. With a view to give effect to the
expression to do any manual, unskilled, skilled, technical,
operational, clerical or supervisory work, the job of the
employee concerned must fall within one or the other category
thereof. It would not be correct to contend that merely because
the employee had not been performing any managerial or
supervisory duties, ipso facto he would be a workman …The
respondent had not been performing any stereotyped job. His job
involved creativity. He not only used to render legal opinion on
a subject but also used to draft pleadings on behalf of the
appellant as also represent it before various courts/authorities.
He would also discharge quasi-judicial functions as an inquiry
officer in departmental enquiries against workmen. Such a job,
in our considered opinion, would not make him a workman.
In Sonipat Central Cooperative Bank Ltd v. Presiding Officer,
Industrial Tribunal-cum-Labour Court128, the Punjab and Haryana High Court
held that an advocate/legal advisor cannot come under the definition of
‘workman’.

14. Appraiser: If Workman

In Puri Urban Cooperative Bank v. Madhusudan Sahu129, the Supreme Court
held that the appraiser engaged by a bank to appraise quality, purity and value of
ornaments offered for pledging to bank was not a ‘workman’ because there was
no master and servant relationship between the employer and the appraiser.

15. Research Fellow: If Workman

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

16. Driver: If Workman

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

17. Other Cases

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

G. Current Approach of the Supreme Court on the

Interpretation of Section 2(s)
In Devinder Singh v. Municipal Council, Sanaur143, the Supreme Court ruled:
 1. The source of employment, the method of recruitment, the terms and
conditions of employment/contract of service, the quantum of wages/pay
and the mode of payment are not at all relevant for deciding whether or
not a person is a workman within the meaning of Section 2(s) of the Act.
2. The definition of workman also does not make any distinction between
full-time and part-time employees or a person appointed on contract
basis. There is nothing in the plain language of Section 2(s) from which it
can be inferred that only a person employed on regular basis or a person
employed for doing whole-time job is a workman and the one employed
on temporary, part-time or contract basis on fixed wages or as a casual
employee or for doing duty for fixed hours in not a workman.
3. Whenever an employer challenges the maintainability of industrial dispute
on the ground that the employee is not a workman within the meaning of
Section 2(s) of the Act, what the labour court/industrial tribunal is
required to consider is whether the person is employed in an industry for
hire of reward for doing manual, unskilled skilled, operational, technical
or clerical work in an industry. Once the test of employment for hire or
reward for doing the specified type of work is satisfied, the employee
would fall within the definition of ‘workman’.
From the above, it appears that the definition does not exclude persons
employed on (i) temporary basis, (ii) part-time, (iii) contract basis on fixed
wages, (iv) casual employees or (v) for doing duty for fixed hours. The Court
has also brushed aside various tests laid down by it in its earlier decisions.

H. Recommendations of the [Second] National Commission

on Labour
The [Second] National Commission on Labour has recommend that government
may lay down a list of such highly paid jobs which are presently deemed to be
employing workmen as being outside the purview of the laws relating to
workmen and included in the proposed law for the protection of non-workmen.
Another alternative is that the government fix a cut-off limit of remuneration
which is substantially high, in the present context, such as ₹25,000/- p.m.
beyond which employees will not be treated as ordinary ‘workmen’.
The Commission has also recommended that supervisors would be kept
out of definition of ‘workers’ and would be clubbed alongwith managerial and
administrative employees.
I. Employer
Section 2(g) of the Act defines an ‘employer’ to mean:
(i) in relation to an industry carried on by or under the authority of any
department of the Central Government or a state government, the
authority prescribed in this behalf, or where no authority is prescribed, the
head of the department;
(ii) in relation to an industry carried on by or on behalf of a local authority,
the chief executive officer of that authority.
In Western India Automobile Association v. I. T.144, the federal court held the
statutory definition to be neither exhaustive nor inclusive. Observed
Justice Mahajan:
In relation to (industries carried on by government and local authorities) a
definition has been given of the term ‘employer’… No attempt, however, was
made to define the term ‘employer’ generally or in relation to other persons
carrying on industries or running undertakings.145
The proposition has since not been challenged though, paradoxically, the
provisions of the Act have never been invoked to resolve industrial disputes
arising in ‘an industry carried on by or under the authority of any department of
the Central or a state government’.
An ‘employer’ does not cease to be an ‘employer’ merely because,
instead of employing workmen himself, he authorizes his agents or servants to
employ them.146 Further, in view of the provisions of Section 18, judicial
pronouncements have extended the coverage of expression ‘employer’ to include
his heirs, successors and assignees. However, only those who are currently
employees of the transferee-employer can be lawful participants in an ‘industrial
dispute’ and raise a dispute concerning such erstwhile employees of the
transferor-employer as have not been employed by the transferee employer.147
The erstwhile employees of the transferor-employer cannot, unless they are
employed by the transferee-employer, themselves raise an industrial dispute with
the transferee-employer.148 This is so because of the requirement of master and
servant relationship between the disputants.

1 Section 2(s) (vi) of the Industrial Disputes (Amendment) Act, 2010 has raised the wage
limit to ₹10,000.
2 AIR 1957 SC 264.
3 Dharangadhra Chemical Works Ltd v. State of Saurashtra, AIR 1957 SC 264 at 267.
4 Ibid.
5 Ibid.
6 Id. at 268.
7 (1965) 2 LLJ 4 (SC).
8 i.e., persons who though have no independent calling of their own work for the enterprise
of another and depend for their income on the hire or reward which they get in respect of
their employment, e. g., handloom weavers, cigar rollers, match box framers, steel trunk
makers, goldsmiths and brass workers, etc.
9 Chintaman Rao v. State of Madhya Pradesh, (1958) 2 LLJ 252 (SC).
10 State of Kerala v. V M Patel, (1961) 1 LLJ 744 (SC).
11 Bridhichand Sharma v. First Civil Judge, (1961) 2 LLJ 86 (SC).
12 Dharangadhra Chemical Works Ltd. case, AIR 1957 SC 264.
13 Shankar Balaji Waje v. State of Maharashta, 1962 1 LLJ 119 (SC).
14 (1961) 2 LLJ 86 (SC).
15 (1958) 2 LLJ 252 (SC).
16 (1962) 1 LLJ 119 at 123.
17 (1961) 2 LLJ 86 at 126.
18 D C Dewan Mohideen Sahib & Sons v. United Bidi Worker's Union, (1964) 2 LLJ 633.
(SC).
19 Id. at 638.
20 Ibid.
21 Standard Vacuum Refining Co. of India Ltd v. Its Workmen, (1980) 2 LLJ 233 (SC).
22 See Shibu Metal Works v. Their Workmen, (1966) 1 LLJ 717 (SC); National Iron &
Steel Co. Ltd v. State of W. Bengal, (1967) 2 LLJ 23 (SC); Vegoils Pvt. Ltd v. Workmen,
(1972) 2 LLJ 567 (SC). The Parliament gave its approval by adopting the Contract
Labour (Regulation and Abolition) Act, 1970 to ‘regulate the employment of contract
labour in certain establishments and provide for its abolition in certain circumstances and
matters connected therewith.’
23 Punjab National Bank v. Ghulam Dastagir, (1978) 2 SCR 358.
24 Dharangdhara Chemicals Ltd v. State of Saurashtra, op. cit. 262.
25 Shivanandan Sharma v. Punjab National Bank, op. cit.
26 Shivandandan Sharma v. Punjab National Bank, op. cit.
27 Ibid.
28 Shivandan Sharma v. Punjab National Bank, op. cit. Ibid.
29 Hussainbhai v. Alath Factory, (1978) 2 LLJ 397 (SC).
30 Ibid.
31 2001 LLR 961 (SC).
32 1983 Lab. IC 1509.
33 (2004) 1 SCC 126.
34 2011 (10) SCALE 478.
35 (2009) 13 SCC 374.
36 2011 Lab. IC 2799.
37 See Chintaman Martand Salvekar v. Phalton Sugar Works Ltd, (1954) 1 LLJ 499
(L.A.T.); Janardhan Mills Ltd v. Certain Workman, (1953) 1 LLJ 344.
38 Raymond v. Ford Motors Co. Ltd, (1951) 1 LLJ 167.
39 Lakshmi Devi Sugar Mills v. State of UP, (1955) 2 LLJ 250 (Allahabad).
40 See Jute Mills, West Bengal v. Their Workmen, (1952) 1 LLJ 264 (IT); See also
Cawnpore Tannery Ltd v. Their Workmen, (1955) 2 LLJ 259.
41 An armless person working with legs or chest would be doing manual work.
42 See supra note 40.
43 B L C Ltd v. Ram Bahadur Jamadar, (1957) 1 LLJ 422 (LAT).
44 Bharat Kala Kendra v. R K Baweja, (1980) 2 LLJ 236 (Delhi).
45 See S A Phenany v. J Walter Thompson Co., (Eastern) Ltd Bombay, 9 FIR 324 (LAT).
46 See Chintaman Martand Salvekar v. Phalton Sugar Works Ltd, op. cit., 499.
47 See Lakshmi Devi Sugar Mills Ltd v. State of Uttar Pradesh, (1995) 2 LLJ 250.
48 See Cawnpore Tannery Ltd v. Their Workmen, (1954) 2 LLJ 459 and Jaswant Sugar
Mills Ltd v. Shri D Smith, (1954) 2 LLJ 337.
49 (1983) 2 LLJ 429.
50 (1994) 4 SCC 164.
51 Ibid.
52 Blue Star Ltd v. N R Sharma, (1975) 2 LLJ 300 (Delhi).
53 Anand Bazar Patrika (Pvt.) Ltd v. Its Workmen, (1969) 2 LLJ 670 (SC).
54 Ibid.
55 All India Reserve Bank Employees' Association v. Reserve Bank of India (1965) 2 LIJ
178.
56 Ananda Bazar Patrika v. Its Workman, op. cit.
57 Burmah Shell Co. v. Burmah Shell Management Staff Association, AIR 1971 SC 922.
58 (2011) II CLR 485.
59 (1999) LLR 21 (Bom.).
60 (1988) (56) FLR 148 (SC).
61 Murugalli Estate v. Industrial Tribunal, (1964) 2 LLJ 164 (Madras).
62 Id. at 168.
63 Marugalli Estate, Hardypet, v. Industrial Tribunal Madras, op. cit.
64 (1982) 2 LLJ 288.
65 Id. at 297–98.
66 Workmen of Macforline and Co. v. Fifth I T, (1964) 2 LLJ 556. (Calcutta).
67 Id. at 588.
68 (1981) 1 LLJ 267; On appeal 1983 Lab. IC 1629 (SC).
69 (1986) Lab. IC 1741.
70 (1984) Lab IC 658.
71 Lloyds Bank Ltd. v. P L Gupta, AIR 1967 SC 428.
72 Indian Iron and Steel Co. Ltd v. Workmen, AIR 1958 SC 130, 137.
73 Madan Gopal v. R S Bhatia, AIR 1975 SC 1898.
74 Punjab Cooperative Bank v. R S Bhatia, AIR 1975 SC 1526.
75 (1970) 2 LLJ 590 (SC).
76 (1988) I LLJ 363 (SC).
77 (1994) (68) FLR 1101 (SC).
78 Corpus Juris, Vol. 40, 402.
79 (1991) Lab. IC 557 (H C Madras).
80 Section 2(9).
81 2011 LLR 357.
82 Section 2(9) (d).
83 Section 2(9) (d).
84 Standard Vacuum Oil Co. v. Labour Commissioner, AIR 1960 Madras 288 at 291.
85 The press superintendent who has been discharging the functions of managerial
supervisory nature not a workman. See Yadeshwar Kumar v. M S Bennet Coleman,
2007 LLC 1138. See also V K Sharma v. Govt. of NCT, 2008 LLR 521.
86 (2012) 1 SCC 619.
87 The Industrial Disputes (Amendments) Bill, 2009 has raised the wage limit to ₹10,000.
But still it is being debated whether the supervisor should be considered to be a
‘workman’.
88 2004 LLR 1078.
89 J Philips v. Labour Court. (1993) Lab. IC 1455.
90 (1964) 3 SCR 56.
91 (1970) 3 SCR 378.
92 S K Verma v. Mahesh Chandra, (1983) 3 SCR 799.
93 H R Adyanthaya v. Sandoz (India) Ltd. (1994) 5 SCC 737.
94 (2004) 8 SCC 387.
95 2012 LLR 30 (Mad.).
96 AIR 1976 SC 678.
97 (1991) Lab. IC 2371 (SC).
98 (1995) 1 LLJ 303 (SC); See also M/s Pfizer Ltd v. State of UP, 2010 LLR 586.
99 (2002) 2 LLJ 275.
100 (2008) 10 SCC 698.
101 (2008) 1 SCC 542.
102 (2008) 3 SCC 446; See also Kan Singh v. Distt. Ayurved Officer, 2012 LLR 325 (Patna)
and Himachal Pradesh State Electricity Board v. Laxmi Devi, 2011 LLR 52 (H.P.).
103 2011 Lab. IC 2799.
104 (2001) 7 SCC 630.
105 (1989) 1 LLJ 62 (SC); See also Amar Jyoti School v. Govt. of NCT. (2009) 122 FLR 354.
106 (2004) 1 SCC 755.
107 1986 Lab. IC 1516 (Alld.)
108 2010 LLR 376.
109 (1997) 2 LLJ 549.
110 Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate, (1958) 1 LLJ 500.
111 (1999) 1 LLJ 449.
112 (2004) 1 LLR 993.
113 (2005) LLR 320.
114 (2003) 6 SCC 416.
115 (1983) 1 LLJ 30.
116 Id. at 37.
117 (2000) lab. IC 2468.
118 (2000) Lab. IC 2468.
119 (2002) (9) SCC 652.
120 (2004) LLR 863.
121 (1983) 2 LLJ 88 (Madras).
122 (2003) LLR 817.
123 JT (2001) (7) SC 268.
124 AIR 1984 SC 268.
125 (2005) LLR 309.
126 2012 LLR 26.
127 AIR 1994 SC 2608.
128 2012 LLR 26.
129 1993 Lab. IC 1462.
130 (1992) 1 LLJ 874 (Delhi).
131 (1998) LLR 363 (Karnataka).
132 2002 Lab. IC 2249.
133 R Mallesham v. The Additional Industrial Tribunal, Malakpet, Hyderabad, (1990) Lab.
IC NOC 158 (Andh. Prad.).
134 Iqbal Hussain Qureshi v. Asstt. Labour Commissioner, (1990) Lab. IC NOC 131 (MP).
135 Mam Chand v. State of Haryana. (1989) Lab. IC NOC 42 (P & H).
136 Nirmal Singh v. The State of Punjab, (1984), SLJ (P & H) 674.
137 G B Pant University of Agriculture & Technology v. State of U.P. (2000) SCC.
138 Nathaniel Masih v. UP Scheduled Caste Finance & Development Corporation Ltd,
(1989) 2 Lab. IC 2276 (All).
139 Kesavo Bhat v. Sree Ram Ambulam Trust, (1990) Lab. IC NOC 104 (Kerala).
140 Vimal Kumar Jain v. Labour Court, Knapur, AIR (1988) SC 384.
141 Management of Puri Urban Cooperative Bank v. Madhusnhan Sahu, (1992) Lab. IC
1462 (SC).
142 State of Rajasthan v. Babu Khan, (1994) Lab. IC 181 (Rajasthan).
143 2011 LLR 785 (SC).
144 Western India Automobile Association v. Industrial Tribunal, Bombay, (1949) LLJ 245
(FC).
145 Id. at 245, 248.
146 Purushottam Pottery Works, Dharangdhara, (1958) 2 LLJ 523 (IT); Bombay Dock
Labour Board v. Stevedore Workers, (1954) 2 LLJ 200 (IT).
147 Dahingeapara Tea Estate v. Their Workmen, (1956) 1 LLJ 187 (LAT) Kays
Construction Co. (P) Ltd v. Its Workmen, (1958) 2 LLJ 660 (SC).
148 Anakapalla Cooperative Agricultural & Industrial Society v. Its Workmen (1962) 2 LLJ
621 (SC).
 CHAPTER
17
Settlement of Industrial Disputes
Labour management relations involve dynamic socio-economic process. Both
parties, namely, labour and management, constantly, strive to maximize their
preferred values by applying resources to institutions. In their efforts, they are
influenced by and are influencing others.
The objectives of labour and management are not amenable to easy
reconciliation. For instance, labour and management are interested in
augmenting their respective incomes and improving their power position. Since,
however, the resources are limited, interest of one party conflicts with the other.
Further, the means adopted to achieve the objective which vary from simple
negotiation to economic warfare adversely affect the community’s interests in
maintaining an uninterrupted and high level of production. Moreover, in a
country like ours where labour is neither adequately nor properly organized,
unqualified acceptance of the doctrine of ‘free enterprise’, particularly between
labour and management strengthens the bargaining position of already powerful
management.
In order, therefore, to protect the interest of the community as well as that
of labour and management, legislature has found it necessary to intervene in
labour management relations. Thus, the Industrial Disputes Act, 1947 provides
for the constitution of various authorities to preserve industrial harmony. At the
lowest level is the works committee. The various machineries for investigation
and settlement of industrial disputes under the Act are (i) conciliation (ii) court
of inquiry (iii) adjudication and (iv) voluntary arbitration.
Quite apart from the aforesaid statutory machineries, several non-
statutory machineries such as code of discipline, joint management council,
tripartite machinery and joint consultative machinery play an important role in
the process of preventing and settling industrial disputes.

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

A. Constitution of Works Committee

Industrial Disputes (Central) Rules
The Industrial Disputes Act, 1947 empowers the appropriate government to
require an employer having 100 or more workmen to constitute a works
committee. Such a committee shall consist of representatives of employers and
workmen engaged in the establishment. However, the number of representatives
of the workmen shall not be less than the number of representatives of the
employer.
The Industrial Disputes (Central) Rules, 1957, Rule 39 contemplates that the
number of representatives of the workmen shall not be less than the number of
representatives of the employer and further that the total number of members
shall not exceed 20. Rule 40 contemplates that the representatives of the
employer shall be nominated by the employer and shall, as far as possible, be
officials in direct touch with or associated with the working of the establishment.
Rule 41 envisages that the employer shall ask the registered trade union of the
workmen in the concerned establishment to inform the employer in writing as to
how many of the workmen are members of that union and how their membership
is distributed among the sections, shops or departments of the establishment. In
other words, the employer is required to ask the registered trade union to supply
him the nominal roll of members of the trade union. The election held without
consultation with the trade union is liable to be set aside.4 Rule 42 provides that
on receipt of the said information from the registered trade union, the employer
shall provide for the election of representatives of the workmen on the works
committee in two groups: (i) those to be elected by the workmen who are
members of the registered trade union and (ii) those to be elected by the
workmen who are not members of the registered union. It is further provided that
the number of two groups should bear same proportion to each other as the union
members in the establishment bear to the non-members. The first proviso to this
rule contemplates that where more than half the workmen are members of the
union or any one of the unions, the above kind of division in two groups shall
not be made. This shows that where in an industrial establishment the majority
of workers are members of a registered trade union, the distribution of the
elected representatives as provided in Rule 42 in two groups will not be
necessary5. In other words, in that situation, the representatives of the workmen
will be elected in a single group without any kind of division. It is not provided
that if the union has majority of the workers as its members, then nomination of
the representatives of the workmen may be done by the employer in consultation
with the trade union. Thus, there cannot be any nomination of representatives of
workmen on the works committee. The scheme of these rules for constitution of
works committee has been fully explained in Union of India v. M T S S D
Workers Union,6 as follows:
(a) Where there is a registered trade union having more than 50
per cent membership of the workers in that establishment, the
total number of members of the works committee will be elected
without distribution of any constituencies, (b) if in an industry
no trade union registered under Trade Unions Act represents
more than 50 per cent of the members, then only the election
will be held in two constituencies, one from the members of the
registered trade union or unions and the other from non-
members of the trade unions and it is only in this contingency, it
is further provided that if the employer thinks proper, (he) may
further subdivide the constituency into department, section or
shed.
In B Chinna Rao v. Naval Civilian Employees Union7, Andhra Pradesh
High Court was invited to interpret Rule 41 of the Industrial Disputes (Central)
Rules, 1957 which reads as under:
Rule 41: Consultation with trade unions:
(i) Where any workmen of an establishment are members of a
registered trade union; the employer shall ask the union to
inform him in writing (a) how many workmen are
 members of the union, and (b) how their membership is
distributed among the sections, shops or departments of the
establishment.
(ii) Where an employer has reason to believe that the
information furnished to him under sub-rule (i) by any
trade union is false, he may, after informing the union,
refer the matter to the assistant labour commissioner
(central) concerned for his decision; and the assistant
labour commissioner, after hearing the parties shall decide
the matter and his decision shall be final.
While interpreting the aforesaid provisions, the Court held that reference
to the commissioner has to be made when the employer has ‘reason to believe
that the information furnished to him by the trade union is false’. False doubt
expressed by the employer need not necessarily entail a reference. If a mere
perusal of the list furnished by a trade union enables an employer to form a
definite opinion, he can certainly act accordingly. Since the reference to the
commissioner would have the effect of postponing the election, recourse must be
had only when it is otherwise necessary and mandatory.

B. Functions of Works Committee

The main function of the works committee is ‘to promote measures for securing
and preserving amity and good relations between the employers and workmen
and, to that end, to comment upon matters of their common interest or concern
and endeavour to compose any material difference of opinion in respect of such
matters.’8 Thus, the works committees are normally concerned with problems of
day-to-day working of the concern. They are ‘not intended to supplant or
supersede the union for the purpose of collective bargaining. They are also not
entitled to consider real or substantial changes in the conditions of service. Their
task is only to reduce friction that might arise between the workmen and the
management in the day-to-day working. The decision of works committee is
neither agreement nor compromise nor arbitrament. Further, it is neither binding
on the parties nor enforceable under the Industrial Disputes Act. It is true that
according to the Supreme Court the ‘comments’ of the works committee are not
to be taken lightly but it is obvious that the observation has relevance only where
a third party gets involved in the claim adjustment process. As between the
disputants, these comments, have only added persuasive value. But, by no
stretch of imagination can it be said that the duties and functions of the works
committee include the decision on such an important matter as an alteration in
conditions of service.’9

C. Operation and Assessment

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

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

II. GRIEVANCE SETTLEMENT AUTHORITIES

Experience shows that in the day-to-day running of business, disputes between
the employer and workmen are resolved by administrative process referred to as
grievance procedure.12 The Indian Labour Conference has also adopted a similar
concept of a grievance in its following recommendations:13
Complaints, affecting one or more individual workers in respect
of their wage payments, overtime, leave, transfer, promotion,
seniority, work assignment, working conditions and
interpretation of service agreement, dismissal and discharges
would constitute grievance. Where the points of dispute are of
general applicability or of considerable magnitude, they will fall
 outside the scope of grievance procedure.
The aforesaid concept has also been adopted in the guiding principles for
a grievance procedure appended to the Model Grievance Procedure in India.14
Further, Clause 15 of the Model Standing Orders in Schedule I of the Industrial
Employment (Standing Orders) Central Rules, 1946, specifies that ‘all
complaints arising out of employment including those relating to unfair
treatment or wrongful exaction on the part of the employer or his agent, shall be
submitted to the manager or the other person specified in this behalf with the
right to appeal to the employers.’ Moreover, the state governments have framed
rules under the Factories Act, 1948 requiring a welfare officer to ensure
settlement of grievances.
The Voluntary Code of Discipline adopted by the Sixteenth Session of the
Indian Labour Conference in 1958 also provides that: (a) the management and
unions will establish, upon a mutually agreed basis, a grievance procedure which
will ensure a speedy and full investigation leading to settlement, and (b) they
will abide by the various stages in the grievance procedures.15 However, there is
no legislation in force which provides for a well-defined and adequate procedure
for redressal of day-to-day grievances in an industrial establishment. In order to
meet the shortcoming, the Industrial Disputes (Amendment) Act, 1982, provides
for setting up of grievance settlement authorities and reference of certain
individual disputes to such authorities. Section 9C of the amended Act provided:
(1) The employer in relation to every industrial establishment in which 50 or
more workmen are employed or have been employed on any day in the
preceding 12 months, shall provide for, in accordance with the rules made
in that behalf under this Act, a grievance settlement authority for the
settlement of industrial disputes connected with an individual workman
employed in the establishment.
(2) Where an industrial dispute connected with an individual workman arises
in an establishment referred to in sub-section (1), a workman or any trade
union of workmen of which such workman is a member, refer, in such
manner as may be prescribed, such dispute to the grievance settlement
authority provided for by the employer under that sub-section for
settlement.
(3) The grievance settlement authority referred to in sub-section (1) shall
follow such procedure and complete its proceedings within such period as
may be prescribed.
(4) No reference shall be made under Chapter III with respect to any dispute
 referred to in this section unless such dispute has been referred to the
grievance settlement authority concerned and the decision of the grievance
settlement authority is not acceptable to any of the parties to the dispute.
However, the aforesaid provisions of the Industrial Disputes
(Amendment) Act, 1982, have not been enforced, presumably because the
Hospitals and Other Institutions (Settlement of Disputes) Bill, 1982, has not so
far been passed. Further, no rules were framed under the unenforced Section 9C.
The (Second) National Commission on Labour in 2002 has recommended that a
grievance redressal committee for organizations employing 20 or more workers
be constituted. But no legislative or administrative action was taken till 2010.

Grievance Redressal Machinery

In 2010, the Industrial Disputes (Amendment) Act, 201016 inserted new chapter
IIB on grievance redressal machinery. Section 9C of the Amendment Act
provides as follows :
(1) Every industrial establishment employing 20 or more
workmen shall have one or more grievance redressal committees
for the resolution of disputes arising out of individual
grievances.
(2) The grievance redressal committee shall consist of equal
number of members from the employer and the workmen.
(3) The chairperson of the grievance redressal committee shall
be selected from the employer and from among the workmen
alternatively on rotation basis every year.
(4) The total number of members of the grievance redressal
committee shall not exceed six:
Provided that there shall be, as far as practicable, one woman
member if the grievance redressal committee has two members
and in case the number of members are more than two, the
number of women members may be increased proportionately.
(5) Notwithstanding anything contained in this section, the
setting up of grievance redressal committee shall not affect the
right of the workman to raise industrial dispute on the same
matter under the provisions of this Act.
(6) The grievance redressal committee may complete its
 proceedings within 30 days on receipt of a written application by
or on behalf of the aggrieved party.
(7) The workman who is aggrieved of the decision of the
grievance redressal committee may prefer an appeal to the
employer against the decision of grievance redressal committee
and the employer shall, within one month from the date of
receipt of such appeal, dispose of the same and send a copy of
his decision to the workman concerned.
(8) Nothing contained in this section shall apply to the
workmen for whom there is an established grievance redressal
mechanism in the establishment concerned.

III. CONCILIATION

A. General
Conciliation is a persuasive process of settling industrial disputes. It is a process
by which a third party persuades disputants to come to an equitable adjustment
of claims. The third party, however, is not himself a decision maker: he is
merely a person who helps the disputants through persuasion to amicably adjust
their claims. The ultimate decision is of the disputants themselves. For this
purpose, the Industrial Disputes Act, 1947, provides for the appointment of
conciliation officers and constitution of board of conciliation by the appropriate
government for promoting settlement of industrial disputes. For the successful
functioning of the conciliation machinery, the Act confers wide powers and
imposes certain duties upon them.
Conciliation as a mode of settling industrial disputes has shown
remarkable success in many industrialized countries. It is said that it has proved
to be a great success in Sweden.17
In India, it has generally been reported that conciliation machinery has
played an important role in resolving industrial disputes. Statistics no doubt,
supports this claim. During 2008-2009, the Central Industrial Relations
Machinery (CIRM) intervened in 397 threatened strikes and its conciliatory
effort succeeded in averting 362 strikes which represent a success rate of 95.5
per cent. In the year, the number of disputes received by CIRM were 8,586,
number of disputes in which formal conciliation was successful were 1,377 and
number of disputes in which conciliation proceeding ended in failure were
1,798.
The statistics of the working of the conciliation machinery reveal that the
conciliation machinery at central level is extremely high in many states. It has,
however, made no remarkable success in several states. Several factors may be
accounted for the same. First, failure of conciliation proceeding may lead to the
reference to adjudicating authorities under the Industrial Disputes Act, 1947.18
Second, lack of proper personnel, inadequate training and low status enjoyed by
conciliation officers and frequent transfers of conciliation officers result in the
failure of conciliation.19 Third, undue emphasis on legal and formal
requirements also leads to the failure of conciliation. Fourth, considerable delay
in conclusion of conciliation proceedings also makes the conciliation machinery
ineffective. Fifth, failure of conciliation machinery has been attributed to lack of
adequate powers of conciliation authorities.

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

2. Qualifications and Experiences

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

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

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

5. Powers of Conciliation Authorities

(a) Powers of Conciliation Officer. The Act empowers conciliation officer to
conciliate and mediate between the parties. He is deemed to be a public
servant within the meaning of Section 21 of the Indian Penal Code.22 He
is empowered to enforce the attendance of any person for the purpose of
examination of such person or call for and inspect the documents which
he considers (i) to be relevant to the industrial dispute or (ii) to be
necessary for the purpose of verifying the implementation of any award or
carrying out any other duty imposed on him under the Act. For this
purpose, he enjoys the same powers as are vested in the civil court under
the Code of Civil Procedure, 1908.23 The conciliation officer is also
empowered for the purposes of inquiry into any existing or apprehended
industrial dispute to enter the premises occupied by any establishment to
which the dispute relates after giving reasonable notice.24 Failure to give
any such notice does not, however, affect the legality of conciliation
proceedings.25
(b) Powers of the Board of Conciliation. The board of conciliation acts in a
 judicial capacity and enjoys more powers than conciliation officers. Under
the Act, every board of conciliation enjoys the same powers as are vested
in a civil court under the Code of Civil Procedure, 1908, when trying a
suit. It can enforce the attendance of any person and examine him on oath,
compel the production of documents and material objects, issue
commission for examination of witnesses, make discovery and inspection,
grant adjournment and receive evidence taken on affidavit.26 Every
inquiry by a board is deemed to be judicial proceeding within the meaning
of Sections 193 and 228 of the Indian Penal Code27 and Sections 345, 346
and 348 of the Code of Criminal Procedure, 1973.28 The proceedings are
normally held in public but the board may at any stage direct that any
witness be examined or proceedings be held in camera.29
The board is empowered, subject to the rules in this behalf, to follow such
procedure as it may think fit.30 The rules provide for the place and time of
hearing of the industrial dispute by adjudication or arbitration authorities as the
case may be,31 administration of oath by adjudication or arbitration authorities,32
citation or description of the parties in certain cases,33 the issuance of notices to
the parties,34 the circumstances when the board can proceed ex-parte35 and
correction of clerical mistakes or errors arising from accidental slip or omission
in any award.36 The board also has to keep certain matters confidential in the
award.37 The board can accept, admit or call for evidence at any stage of the
proceedings before it in such manner as it thinks fit.38 The representatives of the
parties have the right of examination, cross-examination and addressing the
board when any evidence has been called.39 The witnesses who appear before a
board are entitled for expenses in the same way as witnesses in the civil court.40

6. Duties of Conciliation Authorities

Duties of Conciliation Officers. The Industrial Disputes Act provides for the
appointment of conciliation officer, ‘charged with the duty of mediating in and
promoting the settlement of industrial disputes.’41 Where an industrial dispute
exists or is apprehended, the conciliation officer may, or where the dispute
relates to a public utility service and a notice under Section 22 has been given,
he shall hold conciliation proceeding in the prescribed manner. He may do all
such things which he thinks fit for the purpose of inducing the parties to come to
a fair and amicable settlement of the disputes.’42 Further, Section 12 (2) directs
the conciliation officer to investigate ‘without delay’ the dispute and all matters
affecting merits and right settlement thereof.43 If the settlement is arrived at, the
conciliation officer shall send a report together with memorandum of settlement
signed by the parties to the dispute, to the appropriate government or an officer
authorized on his behalf.44 If no settlement is arrived at, the conciliation officer
is required to send a report to the appropriate government containing (i) a full
report setting forth the steps taken by him for ascertaining the facts and
circumstances of the dispute and for bringing about a settlement thereof, (ii) a
full statement of facts and circumstances leading to the dispute, and (iii) the
reasons why a settlement could not be arrived at.45 It is a mandatory duty on the
part of the conciliation officer to submit the failure report. His omission to do so
is culpable, if not motivated.46 Be that as it may, it is for the appropriate
government to consider whether on the basis of the failure report and other
relevant materials, it should refer the dispute for adjudication or not. If on a
consideration of the report, the appropriate government is satisfied that there is a
case for reference to board or adjudicating authority, it may make a reference.
Where it does not make a reference, it shall record and communicate to the
parties concerned its reasons therefor.47 Sub-section 6 of Section 12 provides
that the report ‘shall be submitted’ either within 14 days of the commencement
of the conciliation proceedings or earlier if required by the appropriate
government, or later if all the parties to the dispute agree in writing.
The Industrial Disputes Act 1947, draws a distinction between public
utility services and non-public utility services. Thus, while in a public utility
service, the conciliation officer is bound to hold conciliation, he is not bound to
do so in a non-public utility service.48
The powers of the conciliation officer are not adjudicatory but are
intended to promote a settlement of dispute. However, a special responsibility
has been vested in conciliation officer to see that the settlement arrived at is fair
and reasonable and he should then give his concurrence. This is so because the
settlement arrived at in the course of conciliation proceedings is binding not only
on all parties to the industrial dispute but all other parties summoned to appear in
the proceedings and where a party is an employer, his heirs, successors or
assignees in respect of the establishment to which the dispute relates; and where
a party is composed of workmen, all persons who were employed in the
establishment or part of the establishment, as the case may be to which the
dispute relates on the date of the dispute and all persons who subsequently
become employed in that establishment or part.
Section 12, however, raises several important issues:
(i) What will be the effect of the failure of a conciliation officer to submit the
 report within 14 days of the commencement of the conciliation
proceedings? Two views are discernible. One view is that the conciliation
officer becomes functus officio on the expiry of 14 days from the
commencement of conciliation proceedings and thereby invalidates the
conciliation proceedings. The other view is that failure to submit the
report within 14 days of the commencement of the conciliation
proceedings does not affect the legality of the proceedings. The latter
view found the approval of the Supreme Court in the State of Bihar v.
Kripa Shankar Jaiswal.49 In this case, the conciliation officer had not
sent his report to the appropriate government within 14 days of the
commencement of the conciliation proceedings. A question arose whether
failure to submit the report by the conciliation officer within the
prescribed period will affect the legality of the conciliation proceedings.
The Supreme Court answered the question in negative. The Court
observed that the failure of the conciliation officer to submit his report
after the prescribed period does not affect the legality of the proceedings.
However, contravention of Section 12 (6) may amount to a breach of duty
on the part of the conciliation officer. This decision is, however open to
several objections. First, protracted conciliation proceedings tend to be
fruitless. Second, since under Section 22 of the Industrial Disputes Act a
strike or lockout cannot be declared during the pendency of any
conciliation proceedings… and 7 days after (its) conclusion and, on the
other hand in order to make the strike or lockout legal it must take place
within 6 weeks of the date of notice, the time limit must be certain. Third,
management too is debarred by Section 33 from exercising certain of its
prerogatives during conciliation proceedings and since this means
deprivation of a right, the canons of statutory interpretation suggest that
the period of deprivation should be definite and tailored to meet the needs
of the situation. Fourth, for industrial peace and harmony, it is essential
that the dispute must be settled at an early date. Under the circumstances,
it is suggested that the Supreme Court may reconsider its view in the light
of the aforesaid reasoning.
(ii) Whether a conciliation officer has jurisdiction to initiate conciliation
proceedings at a place where the management’s establishment is not
situated? This issue was raised in M/s. Juggat Pharma (P) Ltd v. Deputy
Commissioner of Labour, Madras.50 In this case, the management’s
establishment was situated at Bangalore. The company employed certain
workmen therein as sales representatives at Madras to look after its
 business. The management later terminated their services. On these facts,
a question arose whether the conciliation officer at Madras had
jurisdiction under Section 12 over the management whose establishment
was situated at Bangalore and the sales representatives appointed by them
were looking after their work at Madras. The answer to the question
depends upon whether a dispute existed or was apprehended between the
management and the workmen in Madras. The Court observed that
Section 2 (k), which defines an industrial dispute, is not controlled by the
location of the management’s establishment in Bangalore or the absence
of such establishment in Madras. The fact that the management had no
establishment or branch office in Madras did not alter the fact that
termination of the workmen’s service was in connection with their
employment in Madras. The Court accordingly held that it was open to
the conciliation officer to initiate conciliation proceedings under Section
12(1).
(iii) Is a notice necessary for a settlement to be in the course of conciliation
proceedings? This question was raised in Delhi Cloth & General Mills
Co. Ltd v. Union of India.51 In this case, the conciliation officer neither
initiated any proceeding for conciliation nor issued any notice for holding
the conciliation proceedings. He also made no attempt to induce the
parties for reaching a settlement de hors conciliation proceedings. The
Delhi High Court held that there was no settlement in the course of
conciliation proceedings.
(iv) Whether a conciliation officer could go into the merit of the dispute and
decide various points in issue one way or the other? The Kerala High
Court52 answered the question in the negative and observed that a
conciliation officer was not competent to decide the various points at
issue between the opposing parties. All that he could do was to persuade
the parties to come to a fair and amicable settlement. Although wide
powers are conferred upon a conciliation officer to use his
resourcefulness to persuade the parties but he has no power to decide
anything at all. After having commenced the conciliation proceedings
under Section 12, the conciliation officer exceeded his power and acted
beyond his jurisdiction by passing the order. The Court highlighted the
duties of a conciliation officer:
The provision in sub-section (4) of Section 12 of the Act relating
to the sending to the government a full report as contemplated
thereunder is mandatory in nature. Having failed to bring about
 or arrive at a settlement of the dispute, it was the bounden duty
of the conciliation officer …. to send to the appropriate
government a full report as mandatorily enjoined under Section
12(4) of the Act setting forth the steps taken by him for
ascertaining the facts and circumstances relating to the dispute
and for bringing about a settlement thereof together with a full
statement of such facts and circumstances and the reasons on
account of which, in his opinion, a settlement could not be
arrived at. Thereafter, by virtue of the provisions in Section
12(5), it is for the appropriate government to consider whether it
should make a reference or refuse to make a reference.
The Court accordingly held that by disposing of the conciliation
proceedings on the close of the investigation, the conciliation officer not only
failed to perform the statutory function vested in him under Section 12 (4) but
also exceeded his power under Section 12 (1).
(v) Whether a writ of mandamus can be issued to the conciliation officer, on
whose intervention a settlement was arrived at between the management
and workmen, directing him to take all measures to see that settlements
are implemented or to prohibit the management from laying-off the staff?
The Court53 answered the question in the negative and observed that the
labour commissioner, while acting under Section 12 as conciliation
officer, was not empowered to adjudicate an industrial dispute. All that he
could do was to try to persuade the parties to come to a fair and amicable
settlement. In other words, his duties were only administrative and
incidental to industrial adjudication. There was nothing either in the Act
or in the rules empowering the labour commissioner to implement the
settlement arrived at between the parties under Section 12 (3). If any of
the parties to the settlement were aggrieved by the non-implementation of
the terms of settlement by the other party, then the remedy would be to
move the government for sanction to prosecute the party in breach of
settlement under Section 29.
The scope of Section 12 was raised in Manoharan Nair v. State of
Kerala54 where the Central Government rejected the demand of the trade unions
regarding minimum wages and dearness allowance. Consequently, the workmen
went on strike but later it was called off. The negotiations commenced on the
Central Government’s counter-proposal but the trade unions rejected the
proposal. The regional joint labour commissioner’s efforts to convene another
conference also failed. The additional labour commissioner, however, succeeded
in persuading three of these unions to accept the Central Government’s proposal
and a settlement was arrived at to this effect, which was countersigned by the
additional labour commissioner. The validity of this settlement was challenged
on two main grounds:
The conciliation officer erred in holding that the trade unions, who were
parties to the settlement, represented the majority of the workmen in the
establishment and (ii) the jurisdiction of the conciliation officer to resolve that
dispute, which related to the matters mentioned in clause 6 did not bind the
workmen in other matters. As to the first contention, the Kerala High Court,
following the Supreme Court decision in Ramnagar Cane & Sugar Co. v. Jatin
Chakravarthy,55 negatived it by holding that a settlement made with the
minority would bind all the workmen of the establishment when it was
countersigned by the conciliation officer unless, a collusive settlement, designed
to defeat certain kinds of claims, is arrived at with those who could not speak for
even a small section of the interested workmen.
As to the second contention, the Court held that no manner was
prescribed for raising an industrial dispute (whether existing at the
commencement or cropping up during the pendency of proceedings). It
accordingly, rejected the contention that the conciliation officer was incompetent
to countersign the final settlement.
If the conciliation officer fails to effect a settlement, the appropriate
government may, after considering the report of the conciliation officer, refer the
dispute to a board or adjudicating authorities and, in particular, not to a court of
inquiry. The power is discretionary. But, if the appropriate government decides
not to refer the matter, it must record the reasons there of, and communicate the
same to the parties concerned. It follows that conciliation officer‘s report is
considered by the appropriate government. But unlike the board of conciliation,
the conciliation officer is not required to make recommendation for the
determination of dispute under the Act. It is suggested that the conciliation will
prove to be more effective if the conciliation officer is also be required to make a
recommendation to the appropriate government whether or not the matter is fit
for adjudication. It is also suggested that the recommendation of a conciliation
officer should be given due consideration by the appropriate government.
(vi) Can conciliation proceedings pertaining to industrial disputes be initiated
and continued by legal heirs even after death of the workman? This
question was answered in the affirmative by the division bench of the
Karnataka High Court in Dhanalakshmi v. Reserve Bank of India,
Bombay.56 The Court held that despite the death of the workman, the
 point sought to be settled by legal heirs remains an ‘industrial dispute’
for the purpose of adjudication under the Industrial Dispute Act, 1947.
(vii) Can the registrar of a cooperative society nullify a settlement pertaining
to wages made before the conciliation officer between cooperative
societies and their employees ? This question was answered in the
negative by the Madras High Court in S Jina Chandran v Registrar of
Cooperative Societies, Madras.57

7. Duties of Board of Conciliation

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

8. Conciliation Proceedings
The study of conciliation proceedings requires examination of: (i) when and how
conciliation machinery is set in motion? and (ii) what is the duration of
conciliation proceedings? These questions are of great practical significance. It
is important because the management is prohibited from exercising its
prerogative during the pendency of conciliation proceedings before a
conciliation officer and board of conciliation in respect of an industrial dispute.
Further, workmen and employers in public utility services are prohibited from
declaring strike or lockout as the case may be during the pendency of any
conciliation proceedings before a conciliation officer. In non-public utility
services, management and workmen are prohibited to declare lockout or strike
during the pendency of conciliation proceeding before a board of conciliation
and 7 days thereafter.
Let us now turn to examine when a conciliation machinery is set in
motion and what is the duration of conciliation proceedings before the
conciliation officer and board of conciliation.
(i) Cognizance
(a) By Conciliation Officer. In case of public utility services, where a
notice of strike or lockout has been given under Section 22, it is
mandatory for the conciliation officer to intervene under the Act.63
But in non-public utility services, where an industrial dispute
exists or is apprehended, conciliation officer my exercise his
discretion to conciliate or not.64 In practice, it has been found that
the optional provision is acquiring compulsory status in non-public
utility services also.65 The conciliation officer may take note of an
existing or apprehended dispute either suo motu or when
approached by either of the parties. His power under the Act is
essentially confined to investigation and mediation of industrial
dispute.
(b) By Board of Conciliation. The board assumes jurisdiction over the
existing or apprehended dispute when it is referred to it by the
appropriate government.
(ii) Pendency of conciliation proceeding before a conciliation officer
The opening clause of Sections 22 (1) (d), 22 (2) (d) and 33, namely,
‘during the pendency of any conciliation proceeding before a conciliation
officer’ prescribes the period of prohibition of strikes and lockouts in
public utility services as well as on the exercise of management’s
prerogative. These critical words, however, have to be read with other
provisions of the Act and the rules framed thereunder.
(a) The commencement of proceedings. Sub-section (1) of Section 20
provides that in public utility services, the starting point of the
prohibition is the date on which the conciliation officer receives a
notice of strike or lockout under Section 22.
(b) The termination of proceedings. Sub-section (2) of Section 20
 provides the other terminus of the period of prohibition:
A conciliation proceeding shall be deemed to have concluded—
(a) where a settlement is arrived at, when a memorandum of the
settlement is signed by the parties to the disputes;
(b) where no settlement is arrived at, when the report of the conciliation
officer is received by the appropriate government or when the report
of the board is published under Section 17, as the case may be; or
(c) where reference is made to a court, labour court, tribunal or national
tribunal under Section 10 during the pendency of conciliation
proceedings.
Of these, clause (b) alone which has given some ground for anxiety, need
detain us.
The Supreme Court, however, in Industry Colliery66 while construing the
word ‘received’ in Section 20(2) (b) interpreted it to mean ‘when the report is
actually received by the appropriate government’ and imposes criminal liability
where the employer or the workmen could not possibly know that he was doing
an illegal act by declaring a strike or lockout illegal and put prohibition on the
use of instruments of economic coercion by the parties which can hardly be
justified on the ground of maintaining harmonious labour management relations
to facilitate settlement of disputes.
The facts are as follows: On 13 October 1949, the workmen gave a notice
to the management under Section 22(1) of a one day strike to take place on 6
November 1949. The regional labour commissioner (central) held conciliation
proceedings on 22 October 1949. The workmen declined to participate in the
conciliation proceedings. On the same day, the regional labour commissioner
sent the failure report to the chief labour commissioner stating that no settlement
was arrived at in the conciliation proceedings and that he ‘was not in favour of
recommending a reference of the dispute to the industrial tribunal’ for
adjudication. The failure report of the chief labour commissioner, Delhi was,
however, received by the Ministry of Labour only on 19 November 1949. In the
meanwhile, the workmen went on a one day strike as per their notice on 7
November 1949. The question arose whether the strike was illegal. This question
depended on whether the strike occurred ‘during the conclusion of such
proceedings’. The Supreme Court pointed out that under Section 24 (1), a strike
was illegal if it commenced or was declared during pendency of a conciliation
proceedings …. and 7 days after the conclusion of such proceedings’ which is
prohibited under clause (1) of Section 22 (1) and the proceeding is deemed to
have concluded’ where no settlement is arrived at, when the report of the
conciliation officer is received by the appropriate government.’ The Court dealt
with the word ‘received’ occurring under Section 20(2) (b) as follows:
‘… while the word ‘send’ is used in Section 12 (4) and the word
‘submitted’ in Section 12 (6), the word used in Section 20 (2)
(b) is ‘received’. That word obviously implies the actual receipt
of the report. To say that the conciliation proceedings shall be
deemed to have concluded when the report should, in the
ordinary course of business, have been received by the
appropriate government would introduce an element of
uncertainty, for the provisions of Section 22 (1) (d) clearly
contemplate that the appropriate government should have a clear
7 days’ time after the conclusion of the conciliation proceedings
to make up its mind as to the further steps it should take. It is,
therefore, necessary that the beginning of the seven days’ time
should be fixed so that there would be certainty as to when the
seven days’ time would expire. It is, therefore, provided in
Section 20 (2) (b) that the proceedings shall be deemed to have
concluded, where no settlement is arrived at, when the report is
actually received by the appropriate governments.’
(iii) Pendency of proceedings before a board of conciliation
(a) The commencement of proceedings. The proceeding is deemed to
have commenced on the date of the order referring the dispute to the
board.67 The effect of this provision can be interpreted only with
reference to the provisions of Section 5 and Rule 6 of the Industrial
Disputes (Central) Rules, 1957. These provisions do not provide
sufficient safeguards to the workmen or the employer. What if the
employer declares a lockout or the workmen declare a strike
between the date of notice under Rule 6 and the date of order
referring the dispute to the board of conciliation?
(b) The termination of proceedings. Under sub-section (2) of Section
20, conciliation proceedings shall be deemed to have concluded—
(i) where a settlement is arrived at, when a memorandum of the
settlement is signed by the parties to the dispute
(ii) where no settlement is arrived at, …. when the report of the
board is published under Section 17
(iii) when a reference is made to a labour court, tribunal or national
 tribunal under Section 10

9. Settlement in Conciliation
After having discussed the proceedings in conciliation, it is necessary to examine
the settlement in conciliation. The settlement in conciliation requires
consideration of several aspects such as concept and nature of settlement, form
of settlement, publication of settlement, period of operation of settlement,
persons on whom settlement is binding and enforceability of settlement.
(a) Concept of settlement. Section 2 (p) defines ‘settlement’ to mean: a
settlement arrived at in the course of conciliation proceeding and includes
a written agreement between the employer and the workmen arrived at
otherwise than in the course of conciliation proceeding, where such
agreement has been signed by the parties thereto in such manner as may
be prescribed and a copy thereof has been sent to an officer authorized in
this behalf by the appropriate government and the conciliation officer.
An analysis of the aforesaid definition reveals that there are two modes of
settlement of industrial disputes: (i) settlement arrived at in the course of
conciliation proceedings, i.e., one which is arrived at with the assistance and
concurrence of the conciliation officer, who is duty-bound to promote a
settlement and to do everything to induce the parties to come to a fair and
amicable settlement of the dispute,68 and (ii) a written agreement between
employer and workmen arrived at otherwise than in the course of conciliation
proceedings.69
It also appears from the above definition that ‘unless an agreement arrived
at between the parties is a settlement in its grammatical or ordinary signification,
such an arrangement although arrived at in a conciliation proceedings70 will not
be a settlement within the meaning of Section 2 (p).’ Further, the expression ‘in
the course of conciliation proceedings’ refers to the duration when the
conciliation proceedings are pending.71 Moreover, for the validity of this kind of
settlement ‘it is essential that the parties thereto should have subscribed to it in
the prescribed manner and a copy thereof should have been sent to an officer
authorized in this behalf by the appropriate government and the conciliation
officer.’72
(b) Nature of settlement. The nature of proceedings before the conciliation
officer is not judicial or quasi-judicial but administrative.73 Let us
examine the requirements therefor.
(i) Settlement must be ‘in writing’. The Industrial Disputes Act, 1947,
 requires the settlement arrived at in the course of conciliation
proceedings by the conciliation officer and board of conciliation74
to be ‘in writing’. The purpose is to minimize area of disputes over
the contents thereof and to have permanent record in matters
affecting labour management relations.
(ii) Settlement must be signed by the parties. The Industrial Disputes
Act 1947, requires the ‘settlement arrived at in the course of
conciliation proceedings by the conciliation officer75 or by the
board76 to be signed by the parties to the dispute. Thus, clause (2)
of Rule 58 of the Industrial Disputes (Central) Rules provides:
The settlement shall be signed by (a) in the case of employer, by
the employer himself, or by his authorized agent, or when the
employer is an incorporated company or other body corporate,
by the agent, manager or other principal officer of the
corporation; (b) in case of workmen, by an officer of a trade
union of the workmen or by five representatives of the workmen
duly authorized in this behalf at a meeting of the workmen held
for the purpose.
The aforesaid provision raises several problems. First, what if the parties
do not sign it? Second, what is the position of an individual workman who is not
a member of any union whatsoever and his erstwhile co-workers are not
prepared to help him? Third, what is the position of an individual workman who
is made a scapegoat by his own union?
As to the first, it is significant to note that Sections 12 (3) and 13 (3) make
it obligatory upon the conciliation officer and the board of conciliation to submit
the report with a ‘memorandum of the settlement signed by the parties to the
dispute’.
The second and third problems are not easy to answer. It would be
observed that Rule 59(2) (b) does not at all recognize an individual workman.
This is all the more so in view of the fact that his erstwhile co-workers are not
prepared to help him. Under the circumstances, he will be helpless, and will be
bound by the settlement arrived at by the union. This view is fortified by the
provisions of Section 18.
(c) Settlement must be in the prescribed form. Should the settlement be one
document signed by both the parties, or can it be gathered from documents
which have been separately signed by the parties, e. g., correspondence?
Clause (i) of Rule 58 which provides that ‘a settlement arrived at in the
 course of conciliation proceedings or otherwise, shall be in form 4’
suggests that the written agreement must be embodied in one document.
(d) Publication of the settlement by board of conciliation. Section 17 (1)
which deals with the publication of award by the appropriate government,
provides:
Every report of a board… together with any minute of dissent
recorded therewith …. shall, within a period of thirty days from
the date of its receipt by the appropriate government, be
published in such manner as the appropriate government thinks
fit.
The aforesaid provision raises several issues: the key question is whether
the aforesaid provision is mandatory or directory? Second, what will be the
effect of withholding the publication of the report? Third, whether the
publication of the report after the expiry of statutory period of 30 days will make
the settlement invalid or unenforceable? Fourth, whether the report will be taken
to have been published on the date of the government’s notification or the date
on which such notification appeared in the gazette?
(e) Settlement must be fair, just and bonafide. The apex Court in K C P Ltd.
v. The Presiding Officer,77 held that a court or tribunal must satisfy itself
that a settlement was not ex facie unfair, unjust or mala fide.
(f) Period of operation of settlement. (i) Commencement. Sub-section (1) of
Section 19 provides:
A settlement shall come into operation on such date as is agreed
upon by the parties to the dispute and if no date is agreed upon,
on the date on which the memorandum of settlement is signed
by the parties to the dispute.
Thus, the settlement shall come into operation on the date agreed upon by
the parties or, if none, the date on which the memorandum of settlement is
signed by them.
(ii) Termination. Sub-section (2) of Section 19 provides for other
terminus of the settlement.
Such settlement shall be binding for such period as is agreed
upon by the parties, and if no such period is agreed upon, for a
period of six months from the date on which the memorandum
of settlement is signed by the parties to the dispute, and shall
 continue to be binding on the parties after the expiry of the
period aforesaid, until the expiry of two months from the date on
which a notice in writing of an intention to terminate the
settlement is given by one of the parties to the other party or
parties to the settlement.
The object of the provision under sub-sections 1 and 2 of Section 19 is to
ensure that once a settlement is arrived at, there prevails peace, accord and
cordiality between the parties during the period agreed upon and if the settlement
does not require to be altered for some reason or the other, the same climate
prevails by extension of the settlement by operation of law. Section 19 is not
dead and freezing (in) all manner… There is an option given to either party to
terminate the settlement by a written intimation after the expiry of two months
from the date of such notice. This is in accord with the policy of settlement of
industrial disputes which is the principal object underlying the provisions of the
Act.78
Section 19 (2) has given rise to a controversy whether a settlement made
for a specified period expires by efflux of the said period. Answering the
question, the Supreme Court in Shukla Manseta Industries Pvt. Ltd v. The
Workmen79 observed:
To avoid uncertainty and speculation, Section 19 prescribes a
terminus ad quo and a terminus ad quem. If in a settlement there
is no time limit agreed upon between the parties, the period of
operation is a space of six months from the date of signing the
settlement and will also last until the expiry of two months from
the date of receipt of the notice of termination of settlement. If
the period is fixed, it commences from the date as specified in
the settlement and will theoretically end as agreed upon but shall
continue to operate under the law until the expiry of the requisite
period of two months by a clear written notice.80
Jaypore Sugar Company Ltd v. Their Employees81 decided the other
issue, namely, when a settlement would terminate if no period was agreed upon?
Here, settlement was reached between the management and workers in the
course of conciliation proceedings. It stated that the workers’ union gave an
undertaking that there ‘shall be no strike till the end of the next crushing season.’
No period was, however, agreed upon for such settlement and no notice was
given to terminate such settlement. The labour appellate tribunal observed:
 Under Section 19 (2) of the Industrial Disputes Act, this will be
binding for a period of six months and also shall continue to be
binding for a further period of two months after notice to
terminate it. In this case, we find that no such notice to terminate
this settlement was given by either party and the settlement is
still in force.82
The Supreme Court in South Indian Bank Ltd v. Chako83 held that
binding ‘nature of award’ and ‘operation of award’ are two different expressions.
The notice under Section 19 (2) must be given by a party representing the
majority of persons bound by the settlement.84 Further, such a notice can be
inferred from correspondence between the parties.
In Cochin State Power Light Corporation Ltd v. Its Workmen85, the
employer and the employees arrived at a settlement on 25 November 1954,
which was to remain in force upto 30 September 1959. The employer contended
that the settlement was never terminated by notice in writing, so it continued to
be in force when the reference was made. Hence, the tribunal had no jurisdiction
to adjudicate the dispute. The workmen had presented a charter of demands on
14 October 1959 in which there was a reference to the settlement and it was
stated therein that the union had on 18 October 1959 resolved to terminate the
existing settlement. It was contended that this did not put an end to the
settlement as required by Section 19 (2) of the Act because there was no
reference to the termination of settlement by the charter. While rejecting the
contention, Justice Wanchoo observed:
There is, however, no form prescribed for terminating settlement
under Section 19 (2) of the Act and all that has to be seen is
whether the provisions of Section 19 (2) are complied with in
substance and a notice is given as required thereunder.86
The Court rejected the employer’s contention and held that as there was a
reference under the charter of demands to a resolution in which specific
statement that the settlement was being terminated thereby was made, it was
sufficient notice as required under Section 19 (2) of the Act.
The above view was approved by the Supreme Court in Indian Link
Chain Manufacturers Ltd v. Their Workmen.87 But at the same time, the Court
warned:
It is true that though a written notice can be spelled out of the
correspondence, there must be some certainty regarding the date
 or which such a written notice can be construed to have been
given because a settlement notwithstanding such notice
continues to be in force for a period of two months from that
date.88
The lacuna in the law on this point is that unlike the provisions for
termination of operation of award under Section 19 (3), the Act does not
expressly provide for termination of the operation of a settlement. It is, therefore,
suggested that the Parliament should make an express provision in the Act for
the termination of operation of settlement.
In Management of Karnataka State Road Transport Corporation v.
KSRTC Staff and Workers Federation89, a settlement was arrived at between
the Karnataka State Road Transport Corporation (KSRTC) and union federation
of KSRTC emerging as sole bargaining agent on 28 July 1988. The payroll
check-off facility was made available to the union as per the settlement. The
settlement was to last till recognition of federation or until both parties terminate
it by mutual consent. On 10 May 1993, a memorandum of understanding was
reached subject to the approval of board of directors and state government. On
21 September 1999, the Karnataka State Road Transport Corporation by
notification withdrew the responsibility of collection of donation or monthly
subscription called payroll check-off facility. On these facts, a question arose
whether (i) there was sufficient notice and (ii) the settlement was legally
terminated. The Supreme Court answered the question in the negative and held
that the government orders and consequential notification withdrawing payroll
check-off facility was illegal and ultra-vires of Section 19 (1) of the ID Act. The
agreement of 1988 continued to be binding on parties and KSRTC could not act
unilaterally.
(g) Persons on whom settlement is binding. The Industrial Disputes Act, 1947
draws a distinction between a settlement arrived at by agreement between
the parties and settlement arrived at in the course of conciliation
proceedings. Whereas the first category of settlement ‘shall be binding
only on the parties to the agreement’90, the second one is binding not only
on ‘all parties to the industrial dispute’ but also on:
(a) all other parties summoned to appear in the proceedings as parties to
the dispute unless the board, arbitrator, labour court, tribunal or
national tribunal as the case may be, records the opinion that they
were so summoned without proper clause;
(b) where a party referred to in clause (a) or clause (b) is an employer,
 his heirs, successors or assignees in respect of the establishment to
which the dispute relates;
(c) where a party referred to in clause (a) or clause (b) is composed of
workmen, all persons who were employed in the establishment or
part of the establishment, as the case may be, to which the dispute
relates on the date of the dispute and all persons who subsequently
become employed in that establishment or part.91
It is evident from above that the settlement arrived at in the course of
conciliation proceedings shall be binding on all categories of persons mentioned
above. In extending the operation of such a settlement beyond the parties thereto,
Section 18 (3) of the Industrial Disputes Act makes a departure from the
ordinary law of contract which leads towards collective bargaining.92 The object
of this section is to promote industrial peace and harmony between the parties. It
is with this object that wide coverage has been given to Section 18 (3) and this
can possibly be done when settlement would bind all the parties.
In Virudhachalam P v. Mgmt of Lotus Mills93, the Supreme Court ruled
that once a written settlement is arrived at during the conciliation proceedings,
such settlement under Section 12 (3) has a binding effect not only on the
signatories to the settlement but also on all parties to the industrial dispute which
would cover the entire body of workmen, not only existing workmen but also
future workmen. Such a settlement has the same legal effect as an award of
labour court, tribunal or national tribunal or an arbitration award. They all stand
on par. It is easy to visualize that settlement contemplated by Section 12(3)
necessarily means a written settlement which would be based on a written
agreement where signatories to such settlement sign the agreement. Therefore,
settlement under Section 12(3) during conciliation proceedings and all other
settlements contemplated by Section 2(p) outside conciliation proceedings must
be based on written agreements. Written agreements would become settlements
contemplated by Section 2(p) read with Section 12(3) of the Act when arrived at
during conciliation proceedings or even outside conciliation proceedings. Thus,
written agreements would become settlements after relevant procedural
provisions for arriving at such settlements are followed. Thus, all settlements
necessarily are based on written agreements between the parties.
The scope of Section 18 (3) (d) has been the subject-matter of judicial
interpretation in a series of cases decided by the high courts and the Supreme
Court. The debatable issue has been whether settlement with one or more
concerned union in a conciliation proceeding would bind all other workmen of
unions of establishment who were not made parties to the settlement. This issue
was raised in Ramnagar Cane and Sugar Co. Ltd v. Jatin Chakravarty.94 In
this case, Ramnagar Cane and Sugar Co. Ltd, a public utility concern, carried on
the business of manufacturing sugar. The management employed 545 permanent
and 703 seasonal workers (excluding casual labourers). Majority of these
workmen belonged to the Ramnagar Cane Sugar Co. Employees’ Union
(hereinafter referred to as the workers’ union). On 9 December 1953, the
workers’ union submitted a charter of demands to the management. On 20
January 1954, a similar charter of demands was also submitted by the
employees’ union to the management. On the same day, the workers’ union gave
a strike notice to the management. On 1 February 1954, the conciliation officer
started conciliation proceedings which were attended by the employees’ union
and the management. Workers’ union, apparently did not attend the meeting
even though a notice was served upon the said union. On 2 February 1954, the
management suggested to the conciliation officer to discuss the disputed matter
with the representatives of two unions separately. The workers’ union objected
to this suggestion and informed the conciliation officer that it assumed that the
conciliation has failed. Consequently, on 2 February 1954, the conciliation
officer sent his report about the failure of conciliation with workers’ union. On
25 February 1954, the management and employees’ union, arrived at a
settlement, which was recorded in a form of memorandum of settlement signed
by them. Meanwhile on 13 February 1954, the workers’ union went on strike
which was alleged to be in contravention of the provisions of the Industrial
Disputes Act. Accordingly, the members of the workers’ union were prosecuted.
Here, we are concerned with a limited issue, namely, whether workers
belonging to the worker's union were bound by the settlement arrived at between
the workers-members of employees’ union and the management. Answering the
question in the affirmative, Justice Gajendragadkar observed:
In order to bind the workmen it is not necessary to show that the
said workmen belong to the union which was a party to the
dispute before conciliator….. [Thus] if a conciliation proceeding
is pending between one union and the employer and it relates to
matters concerning all the employees of the employer, the
pendency of the said conciliation proceeding would be a bar
against all the employees of the employer employed in a public
utility service to go on a strike during the pendency of the
proceeding under Section 22 (1) (d). In our opinion, this
construction would be consistent with the specific provisions as
to the effect of conciliation settlements prescribed by Section 18
 (3) (d) and is harmonious with the general policy of the Act;
otherwise, it would unnecessarily disturb industrial peace, if one
union employed in a public utility service is allowed to go on
strike even though demands common to the members of the said
union as well as the rest of the workmen are being considered in
conciliation proceedings between the said employer and his
other employees represented by another union.
The Court accordingly held that the settlement arrived at between the
management and the employees’ union in the course of conciliation proceedings
on 25 February 1954 was binding not only upon the members of the said
employees’ union but on all the four categories of persons bound by such
settlement as are specified in sub-section (3) of Section 18 including workmen
employed by the management at that time.
The aforesaid view was reiterated in Tata Chemical Ltd v. Workmen.95
In G M Security Paper Mills v. R S Sharma96, the Supreme Court once
again laid down the scope and objective of Section 18 (3) of the Act in the
following words:
Even though a conciliation officer is not competent to adjudicate
upon the dispute between the management and its workmen, he
is expected to assist them to arrive at a fair and just settlement.
He has to play the role of an advisor and friend of both the
parties and should see that neither party takes undue advantage
of the situation. Any settlement arrived at should be a just and
fair one. It is on account of this special feature of the settlement,
sub-section (3) of Section 18 of the Industrial Disputes Act,
1947 provides that a settlement arrived at in the course of
conciliation proceeding under that Act shall be binding on (i) all
parties to the industrial dispute (ii) where a party referred to in
clause (i) is an employer, his heirs, successors or assignees in
respect of the establishment to which the dispute relates and (iii)
where a party referred to in clause (i) is comprised of workmen,
all persons who were employed in the establishment or part of
the establishment as the case may be to which the dispute relates
on the date of the dispute and all persons who subsequently
become employed in that establishment or part. Law thus
attaches importance and sanctity to a settlement arrived at in the
course of a conciliation proceeding since it carries a
 presumption that it is just and fair and makes it binding on all
the parties as well as the other workmen in the establishment or
the part of it to which it relates as stated above. But in the case
of a settlement not arrived at in the course of the conciliation
proceeding, it has to be in writing and signed by the parties in
the prescribed manner and a copy thereof should be sent to the
officer authorized by the appropriate government in this behalf
and to the conciliation officer. Such a settlement arrived at by
agreement between the employer and workmen otherwise than
in the course of conciliation proceeding is binding only on the
parties to the agreement as provided in Section 18 (1) of the
Industrial Disputes Act, 1947. Such a settlement is not binding
on the other workmen who are not parties to the settlement.
From the above, it is evident that a settlement arrived at in the course of
conciliation proceeding shall be valid and binding on all the present and future
employees of the establishment but not to past or retired workmen.97 It is not
necessary that if there are several unions in the establishment, all the unions
must be represented. It is enough if one of such unions enters into a settlement
with the management in the course of conciliation proceedings.98
The decision is, however, open to criticism. Assume that there are 4,000
workers employed in an establishment. Out of these 4,000 workers, 2,000
workers belong to Union A, 1,800 workers belong to Union B and 200 workers
belong to a Union C (management sponsored union). Assume further that in an
industrial dispute between labour and management, Union C arrived at a
settlement with the management in the course of conciliation proceedings.
According to the Supreme Court, the settlement entered into between the
management and Union C representing 200 workers shall be binding on the
other two unions representing 3,800 workers. Is it desirable in the interest of
industrial peace and harmony that such a settlement should bind all the
workmen? It is highly doubtful if the fate of 3,800 workers should be allowed to
be determined by a management-sponsored union having only 200 workmen as
its members.
In Praga Tools Ltd v. Praga Tools Mazdoor Sabha99, the Court extended
the aforesaid principle in cases where the conciliation officer arrived at a
settlement between the workmen and management after the submission of the
failure report. In this case, the issue was whether a settlement brought about after
the submission of failure report by the conciliation officer binds all workmen
including the workmen of the union which was not represented in a conciliation
proceedings. The High Court answered the question in the affirmative and held
that such a settlement was binding on all the workmen including the workmen of
a union who did not join the conciliation proceedings. Be that as it may, the
aforesaid view encouraged the minority union. This has invited the attention of
the Supreme Court in Herbert Sons Ltd v. Workman,100 wherein the court ruled
that a settlement arrived at with a majority union precludes a minority union
from raising dispute on the same subject-matter thereby making such settlement
binding even on members of the minority unions. However, if there is a dispute
that the settlement is not bona fide in nature or that it has been arrived at on
account of fraud, misrepresentation or concealment of facts or even corruption
and other inducements, it can be the subject-matter of an industrial dispute
which an appropriate government may refer for adjudication after examining the
allegation prima facie. The appropriate government must satisfy itself prima
facie whether the allegation needs to be adjudicated, more so when there is a
settlement which is reached with the help of the conciliation officer in which
case, there is a basic assumption that the settlement must be fair and reasonable.
A settlement which is sought to be assailed has to be scanned and scrutinized.
In National Engineering Industries v. State of Rajasthan101, showing its
concern about the above issue, the Supreme Court observed that every trade
union registered under the Trade Unions Act, 1926 having a few members, if
allowed to raise industrial disputes for reference, will defeat the very purpose of
a settlement. That is why it is only a representative union which has been given
the right to raise an industrial dispute. Under the Voluntary Code of Discipline
and also under various state laws there can be, at a given point of time, only one
representative union. Under the Rajasthan Act, a representative union means a
union for the time being registered as a representative union under the said Act.
Although, representative union is not defined in the Act but in common parlance,
it means the union which has been registered as the majority union and thus
entitled to represent all the workers and thereby precluding the minority union
from raising an industrial dispute on the same subject-matter. Further, it is the
representative union which alone can give notice under Section 19(2) of the ID
Act terminating the settlement. Any notice given by a union which does not
represent the majority of the persons bound by the settlement or which is not a
representative union is illegal. The Court further held that merely because a
settlement in the course of conciliation proceedings was arrived at between the
majority union and the management on a holiday, it cannot render such a
settlement invalid. There is no bar in having conciliation proceedings under the
Act on a holiday. To arrive at a settlement, a holiday atmosphere is more relaxed
and more congenial.
It may be noted that the Second National Commission on Labour has
recommended that a union, which does not have at least 10 per cent membership
amongst the employees in an establishment, should have no locus standi in that
establishment.
The Supreme Court in I T C Ltd. Workers’ Welfare Association v.
Management of I T C Ltd102 decided five important issues connected with the
settlement arrived at in the course of concilation proceedings namely, (i) Is it
open to the industrial tribunal to ignore the settlement? (ii) What is the effect of
a settlement arrived at in the course of conciliation proceedings? (iii) What
presumption can be drawn if a settlement is arrived at in the conciliation
proceedings? (iv) What weight should be attached to a settlement arrived at in
the course of conciliation proceedings? and (v) Can the validity of the settlement
arrived at in the course of conciliation proceeding be tested on the touchstone of
Article 14 of the Constitution?
As to the first issue, the Supreme Court held that the industrial adjudicator
has to keep in the forefront of his mind the settlement reached under Section
18(3) of the Act. Once it is found that the terms of the settlement operate in
respect of the dispute raised before it, it is not open to the industrial tribunal to
ignore the settlement or even belittle its effect by applying its mind independent
of the settlement unless the settlement is found to be contrary to the mandatory
provisions of the Act or unless there is non-conformity with the norms by which
the settlement could be subjected to limited judicial scrutiny.
Regarding the second issue, the Court held that a settlement arrived at in
the course of conciliation proceedings with a recognized majority union has
extended application as it will be binding on all workmen of the establishment,
even those who belong to the minority union which had objected to the same. To
this extent, it departs from the ordinary law of contract. The object obviously is
to uphold the sanctity of settlements reached with the active assistance of the
conciliation officer and to discourage an individual employee or a minority
union from scuttling the settlement.
Coming to the third issue, the Court observed that the settlement arrived
at in the course of conciliation proceedings carries a presumption that it is just
and fair. An unjust, unfair or mala fide settlement militates against the spirit and
basic postulates of the agreement reached as a result of conciliation and,
therefore, such settlement will not be given effect to while deciding an industrial
dispute. Of course, the issue has to be examined keeping in view the
presumption that is attached to the settlement under Section 12(3).
As to the fourth issue, the Court said that a settlement which is a product
of collective bargaining is to be given due weight and consideration, more so
when a settlement is arrived at in the course of conciliation proceeding. The
settlement can only be ignored in exceptional circumstances, viz., if it is
demonstrably unjust, unfair or the result of mala fides such as corrupt motives
on the part of those who were instrumental in effecting the settlement. Keeping
that apart, the settlement has to be judged as a whole, taking an overall view.
As regards the last issue, the Court held that there may be some facets
which apply in common to determine the crucial issue whether the settlement on
the whole is just and fair but that is not to say that the settlement is liable to be
tested on the touchstone of Article 14 of the Constitution.

IV. COURT OF INQUIRY

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

B. Jurisdiction of the Court of Inquiry

The Act empowers the appropriate government to constitute a court of inquiry to
inquire into any matter appearing to be connected with or relevant to an
industrial dispute.104 The court of inquiry consists of one or more independent
persons at the discretion of the appropriate government. Where a court consists
of two or more members, one of them shall be appointed as a chairman.105 The
court having the prescribed quorum, may act notwithstanding the absence of the
chairman or any of its members or any vacancy in its number. However, if the
appropriate government notifies that the services of the chairman have ceased to
be available, the court shall not act until a new chairman has been appointed.106
Court can inquire into matters ‘connected with or relevant to an industrial
dispute’ but not into the industrial dispute.

C. Duties of the Court

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

D. Publication of the Report

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

V. VOLUNTARY ARBITRATION
Voluntary arbitration is one of the effective modes of settlement of an industrial
dispute; it supplements collective bargaining. When negotiation fails, arbitration
may prove to be a satisfactory and most enlightened method or resolving an
industrial dispute. It provides ‘a new focus for set-up animosities.’ It has been
found that in ‘many arbitration cases, in which the parties start out by being
angry at each other, they end up being less so. The winning party is satisfied, and
the losing party is likely to feel aggrieved, not at the other party, but at the
arbitrator.’108 Further, informal arbitration offers an opportunity to dissipate hard
feelings which the industrial dispute may have aroused.109
It is important because it is (i) expected to take into consideration the
realities of the situation; (ii) expected to meet the aspiration of the parties: (iii)
based on voluntarism; (iv) does not compromise the fundamental position of the
parties and (v) expected to promote mutual trust.110 However, it is unfortunate
that despite government’s stated policy to encourage collective bargaining and
voluntary arbitration, India adopted only compulsory adjudication system ever
since independence and did not give legal sanctity to voluntary arbitration till
1956. The severe criticism111 of conciliation and adjudication led to the
introduction of Section 10 A relating to voluntary arbitration through the
Industrial Disputes (Amendment) Act, 1956. The 1956 Amendment to some
extent has tried to give legal force to voluntary arbitration but still it stands on a
lower footing than adjudication as it permits the parties to adopt recourse to
arbitration prior to reference to adjudication. Further, 1956-Amendment also did
not place an arbitrator on the same footing as that of adjudicators. The 1964
Amendment did try to bridge the gap but still the disparity lies in several
respects.

VI. PROCESSES INVOLVED IN REFERENCE OF

DISPUTE TO VOLUNTARY LABOUR ARBITRATOR

A. Choice of Dispute Settlement

Section 10A (1)112 of the Industrial Disputes Act, 1947 authorizes the parties to
make reference to a voluntary arbitrator. But before the reference may be made
to the arbitrator, four conditions must be satisfied:
1. The industrial dispute must exist or be apprehended.
2. The agreement must be in writing.
3. The reference must be made before a dispute has been referred under
Section 10 to a labour court, tribunal or national tribunal.
4. The name of arbitrator/arbitrators113 must be specified.

B. The Conditions Precedent

A perusal of the aforesaid provision may conveniently be delineated with
reference to:
1. Parties to arbitration. Under the Industrial Disputes Act,
1947, a reference to the voluntary arbitrator under Section 10 A
can only be made if a dispute arises between employers and
employers, or between employers and workmen, or between
workmen and workmen.
2. Subject-matter of reference. The Industrial Disputes Act,
1947 seeks to resolve the industrial disputes. The parties can
only make a reference of an ‘industry dispute’ to an arbitrator.
If, for instance, parties refer a dispute, which is not an ‘industrial
dispute’, the arbitrator will have no jurisdiction to make a valid
 award.114
3. Time for making the agreement. Section 10A of the
Industrial Disputes Act, inter alia, provides that the reference to
the arbitrator should be made at any time before the dispute has
been referred under Section 10 to a labour court, tribunal or
national tribunal.

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

D. Arbitration Agreement
1. Agreement must be in writing. Once the parties agree to refer the
dispute to arbitration, it is required to make such arbitration agreement in
writing.115
2.Form of the agreement. Section 10A (2)(d) requires that the arbitration
agreement should be in the prescribed form and Rule 7 of the Industrial Disputes
(Central) Rules, 1957, provides that it should be in Form C. How far and to what
extent the aforesaid requirement should be complied with formed the subject-
matter of dispute in North Orissa Workers’ Union v. State of Orissa.116 The
Court held that it is not necessary that the agreement must be made in the
prescribed form ‘C’. It would be enough if the requirements of that form are
substantially complied with.
3. Signature of the parties. Section 10A (2) further requires that an
arbitration agreement shall be signed by the parties thereto in such manner as
may be prescribed in the rules framed by the appropriate government. However,
decided cases reveal that the validity of the award or arbitration agreement has
often been questioned on the basis of non-compliance of signature of all parties
on the arbitration agreement. This has been a ground for not issuing the
notification by the appropriate government and enabling the government to refer
such dispute to labour tribunals. This tendency of appropriate government has,
however, been scrutinized by the judiciary.
4. Consent of arbitrator( s). Even though the Act does not expressly
require that the arbitration agreement must be accompanied by the consent of
arbitrator, the Industrial Disputes (Central) Rule, 1957 provides that the
arbitration agreement must be accompanied by consent, in writing, of the
arbitrator or arbitrators. But for the purposes, it is enough if there is substantial
compliance with this rule.117
5. Submission of the copy of arbitration agreement. Once an arbitration
agreement has been entered into and executed in the prescribed form under
Section 10A, a copy of the arbitration agreement shall be forwarded to the
appropriate government and the conciliation officer.118 Non-submission of a
copy of the arbitration agreement to the appropriate government would make the
award made thereon outside the purview of Section 10A of the Industrial
Disputes Act, 1947 because Section 10A (4) is interlinked with Section 10A (3)
and only on satisfaction of the mandates of Section 10A there would be an
investigation into the dispute and the award would be made by the arbitrator and
then forwarded to the appropriate government.119
6. Publication of arbitration agreement. The appropriate government
comes into picture in the process of reference to arbitrator only after the receipt
of a copy of a valid arbitration agreement. If this is done:
…. the appropriate government shall, within one month from the date of
the receipt of such copy publish the same in the official gazette.120
The aforesaid provision raises a question whether the publication of the
agreement is mandatory or directory. A corollary of this issue is: whether the
appropriate government can override the wishes of the parties to refer the matter
for arbitration by making a reference to labour court, tribunal or national
tribunal. This issue may be discussed under two heads:
(i) Publication of arbitration agreement, and
(ii) time of publication.
(i) Publication of arbitration agreement. In Karnal Leather Karamchari
Sangathan v. Liberty Footwear Co.,121 the Supreme Court was invited to
consider whether the publication of arbitration agreement under Section 10A(3)
is obligatory. The Supreme Court answered the question in the affirmative and
observed:
 The voluntary arbitration is a part of the infrastructure of
dispensation of justice in industrial adjudication. The arbitrator
thus falls within the rainbow of statutory tribunals. When a
dispute is referred to arbitration, it is therefore, necessary that
the workers must be made aware of the dispute as well as the
arbitrator whose award ultimately will bind them. They must
know what is referred for arbitration, who is their arbitrator and
what is in store for them. They must have an opportunity to
share their views with each other and if necessary, place the
same before the arbitrator.
The Court held that the arbitration agreement must be published before an
arbitrator considered the merits of the disputes. Non-compliance of this
requirement will be fatal to the arbitration award.
(ii) Time for publication. The high courts are divided on the issue:
whether the requirement of publication of agreement within one month is
mandatory or directory? While the division bench of the Madhya Pradesh High
Court in K P Singh v. S K Gokhale122 and the Orissa High Court in North
Orissa Workers’ Union v. State of Orissa123 have taken the view that the
requirement is mandatory, the High Court of Punjab and Haryana in Landra
Engineering and Foundary Workers v. Punjab State124, the Delhi High Court
in Mineral Industrial Association v. Union of India125, Madhya Pradesh High
Court in Modern Stores Cigarettes v. Krishnadas Shah126 and Aftab-e-Jadid,
Urdu Daily Newspapers v. Bhopal Shramjivi Patrakar Sangh127 has taken the
opposite view and held that the requirement is only directory. The decisions of
these three high courts which held the provisions to be directory said:
… on the true construction of … Section 10A(3) that the other
requirement namely, its notification within one month from its
receipt is only directory and not imperative.

E. Voluntary Labour Arbitrator

1. Nature of Voluntary Arbitrator. It is exceedingly difficult to maintain
a distinction between statutory and private arbitrator on the basis of
nomenclature because both are products of statute: the former is made under the
Industrial Disputes Act, 1947 while the latter under the Arbitration Act, 1940.
But such a distinction has not come to stay through a series of judicial decisions.
Thus, in R V National Joint Council for the Craft of Dental Technicians,128
Chief Justice Goodard drew such a distinction when he said:
There is no instance of which I know in the books, where
certiorari or prohibition has gone to any arbitrator, except a
statutory arbitrator, and a statutory arbitrator is a person to
whom by statute, the parties must resort.
The aforesaid distinction was adopted by the Supreme Court in
Engineering Mazdoor Sabha v. Hind Cycles Ltd129 wherein Justice
Gajenderagadkar introduced the concept of ‘statutory arbitrator’ in India by
holding:
Having regard to several provisions contained in the Act and
rules framed thereunder, an arbitrator appointed under Section
10A cannot be treated to be exactly similar to a private arbitrator
to whom a dispute has been referred under an arbitration
agreement under the Arbitration Act. The arbitrator under
Section 10A is clothed with certain powers. His procedure is
regulated by certain rules and the award pronounced by him is
given by statutory provisions a certain validity and a binding
character for a specified period. Having regard to these
provisions, it may perhaps be possible to describe such an
arbitrator in a loose sense, a statutory arbitrator.
2. Conduct of the Arbitrator. The Industrial Disputes Act, 1947 does not
prescribe how the conduct of the arbitrator can be regulated. However, the
decided cases130 of the Supreme Court and high courts reveal that an arbitrator
should be impartial and must build a relationship of confidence with both the
parties. Thus, he or any of his near relatives should not accept any hospitality or
favour from any party to the disputes before him because justice should not only
be done but it must be seen to be done.131 If he does so, it would be an act of
misconduct.132 Similarly, if he does not hear the party or exceeds his jurisdiction
or fails to determine an important question referred to him, his decision is liable
to be interfered.133
3. Jurisdiction of the Voluntary Arbitrator. An arbitrator under Section
10A comes into existence when appointed by the parties, and he derives his
jurisdiction from the agreement of the parties. If the arbitrator decides matters
not referred to him by the parties, he acts beyond his jurisdiction. For instance in
Raza Textile Labour Union v. Mohan,134 three disputes upon which the
arbitrator gave the award were not covered by 167 matters of disputes which
were referred to him. The Court quashed the award as these matters were beyond
the jurisdiction of the arbitrator. Similarly, in Rohtas Industries Ltd v.
Workmen135, the Patna High Court held that the award regarding dearness
allowance was vitiated by the fact that it was not in accordance with the terms of
agreement. Likewise, the Madras High Court in Vaikuntam Estate v.
Arbitrator136 quashed the interim award of arbitrator where he exceeded the
terms of reference. Further, unlike the jurisdiction of adjudicatory bodies, the
arbitrator cannot arbitrate upon matters ‘incidental to’137 or ‘any matter
appearing to connected or relevant’138 to the dispute. But unlike adjudicatory
authorities under the Act, the arbitrator has wider power to decide upon all
‘industrial disputes’ referred to him under an arbitration agreement irrespective
of the fact whether they fall under Schedule II or III of the Industrial Disputes
Act, 1947.

4. Powers of Arbitrator: Section 11A merely provides:

Where an industrial dispute relating to the discharge or dismissal
of a workmen has been referred to a labour court, tribunal or
national tribunal for adjudication and, in the course of the
adjudication proceedings, the labour court, tribunal or national
tribunal, as the case may be, is satisfied that the order of
discharge or dismissal was not justified, it may, by its award, set
aside the order of discharge or dismissal and direct reinstatement
of the workman on such terms and conditions, if any, as it thinks
fit, or give such other relief to the workman including the award
of any lesser punishment in lieu of discharge or dismissal as the
circumstances of the case may require.
The aforesaid Section 11 A does not specifically mention ‘arbitrator’. It,
therefore, raises a question whether the arbitrator has the power to interfere with
the punishment awarded by the management. Justice Krishna Iyer in Gujarat
Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha139 answered the
question in affirmative. He stated:
Section 11 did clothe the arbitrator with similar powers as
tribunals, despite the doubt created by the abstruse absence of
specific mention of ‘arbitrator’ in Section 11 A.
In Rajinder Kumar v. Delhi Administration,140 the Supreme Court
explained the powers of the arbitrator:
 ‘In exercise of the jurisdiction conferred by Section 11A of the
Industrial Disputes Act, 1947 both arbitrator and … (the
Supreme Court) can reappraise the evidence led in the domestic
inquiry and satisfy themselves whether the evidence led by the
employer established misconduct against the workman. It is too
late in the day to contend that the arbitrator has only the power
to decide whether the conclusions reached by the inquiry officer
were plausible or deducible from the evidence led in the inquiry
and not to re-appraise the evidence itself and to reach the
conclusion whether the conduct alleged against the workman has
been established or not.141
The Court added:
Where the findings of misconduct are based on no legal
evidence and the conclusion is one to which no reasonable man
would come, the arbitrator appointed under Section 10A or this
court in appeal under Article 136 can reject such findings as
perverse. The industrial tribunal or the arbitrator or a quasi-
judicial authority can reject not only such findings but also the
conclusion based on no legal evidence or if it is merely based on
surmises and conjectures unrelated to evidence on the ground
that they disclose total non-application of mind.

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

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

H. Publication
Sub-section (3) of Section 10A requires that a copy of the arbitration agreement
shall be forwarded to the appropriate government and the conciliation officer
and the appropriate government shall within one month from the date of receipt
of such copy, publish the same in the official gazette.
Can the award of the arbitrator under Section 10A be set aside on its non-
publication in the official gazette? The Supreme Court in Karnal Leather
Karmchari Sanghatan v. Liberty Footwear Company143 answered the question
in the negative and observed:
Now look at the provisions of sub-section (3). It is with respect
to time for publication of the agreement. But publication appears
to be not necessary for validity of the agreement. The agreement
becomes binding and enforceable as soon as it is entered into by
the parties. Publication is also not an indispensable foundation
of jurisdiction of the arbitrator. The jurisdiction of the arbitrator
stems from the agreement and not by its publication in the
official gazettee. Why then publication is necessary? Is it an idle
formality? Far from it, it would be wrong to construe sub-
section (3) in the manner suggested by counsel for the appellant.
The Act seeks to achieve social justice on the basis of collective
bargaining. Collective bargaining is a technique by which
dispute as to conditions of employment is resolved amicably by
agreement rather than coercion. The dispute is settled peacefully
and voluntarily although reluctantly between labour and
management. The voluntary arbitration is a part of infrastructure
of dispensation of justice in industrial adjudication. The
arbitrator thus falls within the rainbow of statutory tribunals.
When a dispute is referred to arbitration, it is, therefore,
necessary that the workers must be made aware of the dispute as
well as the arbitrator whose award ultimately would bind them.
They must know what is referred to arbitration, who is their
arbitrator and what is in store for them. They must have an
opportunity to share their views with each other and if necessary
to place the same before the arbitrator. This is the need for
collective bargaining and there cannot be collective bargaining
without involving the workers. The union only helps the workers
in resolving disputes with their management but ultimately it
would be for the workers to take decision and suggest remedies.
It seems to us that the arbitration agreement must be published
before the arbitrator considers the merits of the dispute. Non-
compliance of this requirement would be fatal to be arbitral
 award.
The aforesaid view was followed in S K M Sangh v. General Manager,
W C Ltd144.

I. Power of Superintendence of the High Court: Article 227

of the Constitution over Voluntary Arbitrators
In addition to Article 226, Article 227 confers upon high courts the power of
superintendence over all lower courts and tribunals within their jurisdiction. A
question, therefore, arises whether a high court can interfere under Article 227
with an award of an arbitrator (under Section 10A). The Supreme Court in
Engineering Mazdoor Sabha v. Hind Cycles Ltd145 answered it in negative and
placed Article 227 at par with Article 136. It held: Like Art. 136, Art. 227 refers
to courts and tribunals and what we have referred to the requirements of Art. 136
may prima facie apply to the requirements of Art. 227.146
The net effect of the aforesaid statement is that the high court is not
competent to have power of superintendence over voluntary arbitrators under
Section 10A because the ‘arbitrator’ was not a ‘tribunal’.
But in Rohtas Industries Ltd v. Rohtas Industries Staff Union147, Justice
Krishna Iyer even though conceded that the position of arbitrator under Section
10A (as it then stood) visa-vis Article 227 might have been different but in view
of the changed situation after the amendment in the Industrial Disputes Act by
XXXVI of 1964 observed:
Today, however, such an arbitrator has power to bind even those
who are not parties to the reference or agreement and the whole
exercise under Section 10A as well as the source of the force of
the award on publication derive from the statute. It is legitimate
to regard such an arbitrator now as part of the methodology of
the sovereign’s dispensation of justice, thus falling within the
rainbow of statutory tribunals amenable to judicial review.
The aforesaid view was reiterated in the majority judgement in Gujarat
Steel Tubes case.148
However, one is tempted to ask whether the Court’s decision would have
been different if the government did not issue a notification under sub-section
3A of Section 10A on the ground that persons making a reference do not
represent the majority of each party. An answer in affirmative would revive the
view stated in Engineering Mazdoor Sabha (supra). Under the circumstances, it
is suggested that the Parliament may clarify the position by legislative
amendment.

J. Relief under Article 136 of the Constitution from

Arbitration Award
The question that arose before the Supreme Court was whether an appeal would
lie to it under Article 136149 of the Constitution from an arbitration award under
Section 10A of the Industrial Disputes Act. The Supreme Court in Engineering
Mazdoor Sabha v. Hind Cycles150 answered the question in negative. It stated:
….. the arbitrator is not a tribunal because the State has not
invested him with its inherent judicial power and the power of
adjudication which he exercises is derived by him from the
agreement of the parties. His position thus, may be said to be
higher than that of a private arbitrator and lower than that of a
tribunal.
Accordingly, the Court held that the decision of arbitrator would not
amount to ‘determination’ or ‘order’ for the purposes of Article 136. But, this
position appears to have been changed in Rohtas Industries v. Rohtas
Industries Staff Union.151 The Court in view of the amendment in 1964 of the
Industrial Disputes Act appears to have extended the application of Article 136
to an award of an arbitrator under Section 10A. This view was reiterated in
Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha.152
The aforesaid view removes one of the stated hurdles in the progress of
arbitration, namely, that in law, no appeal is maintainable against the award of
the arbitrator.

K. Recommendation of the (Second) National Commission

on Labour
The (Second) National Commission on Labour felt that arbitration as a dispute
settlement machinery is better than adjudication.

VII. ADJUDICATION
The final stage in the settlement of industrial disputes (where the parties are
unable to settle either through bipartite negotiations or through the good offices
of the conciliation machinery or through voluntary arbitration) is compulsory
arbitration which envisages governmental reference to statutory bodies such as
labour court, industrial tribunal or national tribunal. Disputes are generally
referred for adjudication on the recommendation of the conciliation officer who
had dealt with them earlier. However, the appropriate government has discretion
either to accept or not to accept his recommendation and accordingly, to refer or
not refer the case for adjudication. The percentage of disputes referred to
adjudication varied from state to state.153
The system of adjudication by labour court, tribunal and national tribunal
has perhaps been one of the most important instruments of regulating the rights
of the parties in general and wages, allowances, bonus, working conditions,
leave, holidays and social security provisions in particular. Such norms setting
which in advanced countries is done through the process of collective bargaining
between the employers and the trade unions, is done in India by adjudication
system because the trade union movement is weak and is in no position to
negotiate with the employer on an equal footing. However, this system has been
criticized for its unfavourable effects on the trade union movement. Further,
undue dependence on compulsory adjudication has deprived the trade unions of
the incentive to organize themselves on a strong and efficient basis and has
rendered the unions mere petitioning and litigant organizations arguing their
cases before tribunals, etc. The system of adjudication has also been criticized
because of long delays involved in the final settlement of disputes, particularly,
where one or the other party chooses to go in appeal against an award. Such
delays, it is argued, are themselves responsible for much industrial strife.154 Be
that as it may, it is beyond doubt that the labour judges occupy a very important
position in adjudicating the disputes between the management and the labour.
The disputes which are brought before the labour judiciary involve huge stakes,
both for the management as well as the workers.

A. Origin and Growth of Adjudication System

In the era of laissez fair, employers enjoyed unfettered right to ‘hire and fire’.
They had vastly superior bargaining powers and were in a position to dominate
workmen in every conceivable way. They preferred to settle terms and
conditions of employment of workmen and abhorred statutory regulation unless,
it was to their advantage. However, this tendency coupled with rise in the
incidence of strikes and lockouts made it necessary for the government to
intervene in labour management relations. While voluntary and persuasive
processes had been playing their role in settling industrial disputes since 1929,
World War II marked the beginning of compulsory adjudication. Rule 81A of
the Defence of India Rules, 1942 empowered the government inter alia, to refer
any trade dispute to adjudicators and to enforce the awards. After the end of
hostilities, these measures with a number of innovations and modifications were
incorporated in the Industrial Disputes Act, 1947. The Act ‘substitutes for free
bargaining between the parties a binding award by an impartial tribunal’. The
tribunal is not bound by contractual terms between the parties but can make a
suitable award for bringing about harmonious relations between the employer
and the workmen. ‘The industrial tribunal is not fettered by any limitation on its
power. The only limitation on its power is to bring about harmonious
relationship between the employer and the workmen.’ In the original Act only
one constituting body, namely, industrial tribunal was designated for the
compulsory settlement of industrial disputes. Within a short span of 9 years of its
working, it was found that a large number of cases were referred to it. This led to
the introduction of three-tier system, viz., the labour court, tribunal and national
tribunal in 1956.

B. Composition of Labour Court, Tribunal and National

Tribunal
The issue of composition of labour courts and tribunals has an important bearing
on their working. The present system of reference to adjudication is, however,
open to several criticisms. First, from ‘the workers’ side it is often argued that
with various restrictions placed on strikes, the recourse to judicial determination
of disputes should not be barred by the government.’155 Second, the decision to
refer disputes or to withhold reference is sometimes not made on any strict
principle and the system is open to pressurization.156
The Industrial Disputes (Amendment and Miscellaneous Provisions) Act,
1956 introduces a three tier system for industrial adjudication. The machinery
provided under the Act consists of labour courts, industrial tribunals and national
tribunals. The appropriate government is empowered under Section 7 and 7A to
constitute one or more labour courts and industrial tribunals with limited
jurisdiction, to adjudicate ‘industrial disputes’, and the Central Government is
authorized under Section 7B to constitute the national tribunal. The labour
courts, industrial tribunals and national tribunals are ad hoc bodies and consist
of a single member called presiding officer. The appointment of the tribunal
may, however, be for a limited duration.157
Appointment of Assessors. There is no provision for the appointment of
assessors in labour courts, but in case of industrial tribunal or national tribunal,
the appropriate government may appoint two persons as assessors to advise the
tribunal in the proceedings before it.158 The assessors are supposed to be experts
having special knowledge of the matter under consideration and can be
appointed only when the dispute involves technical matters and requires expert
knowledge for its settlement. This provision has hardly been used and for all
practical purposes, this is defunct.

C. Appointment, Qualifications and Disqualifications of

Presiding Officer of Labour Court, Tribunal and
National Tribunal
Industrial peace, prosperity and progress depend upon the efficiency of the
labour judiciary. The labour judiciary is, thus the centre of the system of
industrial adjudication in India. These appointments of the presiding officers of
the labour judiciary are made by the appropriate Central Government. But at the
same time, in a large number of industries, State is one of the parties taking the
part as the employer. In this context, the method of appointment of the labour
judiciary assumes great significance. It is absolutely necessary that the labour
judges should be highly qualified, experienced, independent and committed to
the Constitution of India. In other words, labour judiciary should be independent
of the executive government as is the case of the judiciary under the
Constitution. It is, therefore, desirable that the labour judiciary must be taken out
of the control of the executive government.159
The Supreme Court in the State of Maharashtra v. Labour Law
Practitioner’s Association and others160 considered the relevant provisions of
the Industrial Disputes Act and the Bombay Industrial Relations Act and came to
the conclusion that the labour court judges and judges of the industrial court
belong to ‘Judicial Service’, as that expression is understood in Charter VI of the
Constitution of India. According to the Court, the expression ‘District Judge’’
covers a judge of any principal civil court of original jurisdiction and includes
the hierarchy of specialized civil courts, such as labour courts and industrial
courts. The term ‘Courts’ will cover all tribunals, which are basically courts
performing judicial functions, giving judgement, which are binding. They are
exercising sovereign judicial power transferred to them by the State. Men, who
could be described as ‘independent’ and having sufficient judicial experience,
must alone according to their lordships, be selected as labour court judges. The
court accordingly held that persons presiding over industrial and labour courts
constitute a judicial service and their recruitment should be in accordance with
Article 234 of the Constitution.
In case of labour courts, there is a wider range of alternatives in the
qualifications for appointment. They are as follows: (a) he is, or has been, a
judge of a high court; or (b) he has, for a period of not less than 3 years, been a
district judge or an additional district judge; or (c) he has held any judicial office
in India for not less than 7 years; (d) he has been the presiding officer of a labour
court constituted under any Provincial Act or State Act for not less than 5 years.
(e) He is or has been a deputy chief labour commissioner (central) or joint
commissioner of the state labour department, having a degree in law and at least
7 years' experience in the labour department including 3 years of experience as
conciliation officer:
Provided that no such deputy chief labour commissioner of joint labour
commissioner shall be appointed unless he resigns from the service of the
Central Government or state government, as the case may be, before being
appointed as the presiding officer; or he is an officer of Indian Legal Service in
Grade III with 3 years' experience in the grade.
Qualifications for appointment to tribunals are the same as prescribed for
labour courts in Section 7, clauses (a), (b), (f) and (g). Thus, the range of
alternatives is narrower.
For national tribunals, the range of alternative qualifications for
appointment is further narrower, namely, he is or has been a judge of a high
court.
The requirements of Section 7C are applicable to all the three bodies, i.e.,
labour courts, tribunals and national tribunals. Section 7C lays down
disqualifications in regard to age and independence of persons appointed. It
requires that the person to be appointed must be (a) an independent person and
(b) less than 65 years of age.161
In actual practice it is, however, found that insistence is made on judicial
qualification in the appointment of presiding officer of labour courts and
industrial tribunals. Further, generally retired personnel are chosen to serve as a
presiding officer. It is submitted that the appointment should be made in
consultation with the Chief Justice of the high court. This will ensure the
appointment of independent persons by the appropriate government as presiding
officer of labour courts and industrial tribunals. Further, the appointment should
be made on a permanent basis with promotional avenues open to them.
D. Jurisdiction of Labour Court, Tribunal and National
Tribunal
The labour court has jurisdiction162 to adjudicate industrial disputes which may
be referred to it under Section 10 of the Act by the appropriate government and
which relates to: (1) The propriety or legality of an order passed by an employer
under the standing orders; (2) the application and interpretation of standing
order; (3) discharge or dismissal of workmen including reinstatement of, or grant
of relief to, workmen wrongfully dismissed; (4) withdrawal of any customary
concession or privilege; (5) illegality or otherwise of strike or lockout; and (6)
all matters other than those specified in the Third Schedule.
The industrial tribunals have jurisdiction to adjudicate industrial disputes
referred under Section 10 which relates to: (1) wages, including the period and
mode of payment; (2) compensatory and other allowances; (3) hours of work and
rest intervals; (4) leave with wages and holidays; (5) bonus, profit sharing,
provident fund and gratuity; (6) shift working otherwise than in accordance with
standing orders; (7) classification by grades; (8) rules of discipline; (9)
rationalization; (10) retrenchment of workmen and closure of establishment; and
(11) any other matter that may be prescribed.
The national tribunals have jurisdiction to adjudicate industrial disputes
which in the opinion of the Central Government involve questions of national
importance or are of such a nature that industrial establishments situated in more
than one state are likely to be interested in or affected by such disputes and
which may be referred to them by Central Government.
Under the Industrial Disputes Act, 1947, the labour court, tribunal and
national tribunal can acquire jurisdiction only when there is existence or
apprehension of an industrial dispute and a reference of such dispute has been
made by the appropriate government under Section 10. The labour courts,
tribunals and national tribunals are also required to deal with complaints. Labour
courts are also required to decide the question of amount of money due under
Section 33 C (2) of the Industrial Disputes Act, 1947.

E. Powers and Functions of Labour Court, Tribunal and

National Tribunal
The labour court, tribunal and national tribunal have a statutory duty to hold the
proceedings expeditiously and, as soon as it is practicable on the conclusion163
thereof submit its award to the appropriate government. They are empowered,
subject to the rules in this behalf, to follow such procedure as they may think
fit.164 The rules provide for place and time of hearing of the industrial dispute by
adjudication or arbitration authorities as the case may be.165

F. No Power to Pass ‘No Dispute’ Award

The Central Government in exercise of powers conferred by Section 38 of the
Industrial Disputes Act, 1947 has framed the rules, namely ‘The Industrial
Disputes (Central) Rules, 1957’. Rule 10B(9) of the aforesaid Rules which is as
under, prescribes that the labour court may proceed with the reference ex-parte
in absence of any party and decide the reference:
10B. Proceeding before the labour court, tribunal or national tribunal. (1)
…
(9) In case any party defaults or fails to appear at any stage, the labour
court, tribunal or national tribunal, as the case may be, may proceed with the
reference ex-parte and decide the reference application in the absence of the
defaulting party:
Provided that the labour court, tribunal or national tribunal, as the case
may be, shall submit its award to the Central Government within one month
from the date of arguments, oral hearing or within the period mentioned in the
order of reference, whichever is earlier.
From the aforesaid Rule, it is clear that it is obligatory on the part of the
labour court to answer the reference after considering merits of the case.
However, in Satendra Singh Gujar v. Bank of India166, the labour court had no
power to pass an award as ‘no dispute award’ on the ground that one party did
not appear before the labour court. Further, the labour court committed an error
of law in rejecting the application for restoration of dispute filed by the
petitioner. Earlier, the division bench of the Madhya Pradesh High Court in the
case of Sital v. Central Government Industrial Tribunal-cum-Labour Court,
Jabalpur167 held that the labour court has no power to dismiss the reference in
defaults. The Court observed:
We think that the work ‘determination’ used in the definition of ‘award’
under Section 2(b) implies adjudication upon relevant material by the labour
court or the tribunal. So, it has been held that once a reference has been made
under Section 10(1) of the Act, it cannot be rescinded or cancelled: State of
Bihar v. Ganguli168. It cannot also be dismissed for default because that would
amount to putting an end to the proceedings otherwise than by adjudicating upon
the dispute.
G. Power to Set Aside an Ex-parte Award
Even though there is no provision either in the Industrial Disputes Act to
empower the labour tribunals to set aside an ex-parte award, the Supreme
Court169 through the process of judicial legislation has invested in them such
powers. However, industrial tribunal becomes functus officio if the application
is not moved within 30 days of the publication of the award in the official
gazette. Thereafter, the interim award stands vacated.170

H. Power to Cancel Order of Promotion and Grant ad hoc

Increase in Wages
The tribunal may also cancel the promotion order passed by the management
where it finds that persons were superseded on account of mala fide
victimization.171 In this regard, the tribunal may also frame rules of promotion in
consultation with the management and union and direct the management to give
promotions or upgradation in accordance with those norms/rules.172 Industrial
tribunal while deciding upon the wage scales of the employees of an
establishment has full liberty to propose ad hoc increase of salaries as a part of
the revision of wages.173 Further, figment into the revised scale is a part of
revision of pay scales.174

I. Power under Section 36A

The tribunal, however, under Section 36A has no power to determine the
question about propriety, correctness or validity of any provision or the powers
conferred under any statute. Further, the tribunal has no power to amend or
modify its award after it became final except to correct clerical mistakes and the
powers under Section 11(3) could be exercised by the tribunal after the
proceedings pending before it have terminated.175

J. Power to Grant interim Relief

The Supreme Court in Hotel Imperial v. Chief Commissioner176 ruled that
interim relief may be granted (i) if there is a prima facie case, (ii) tribunal
interference is necessary to protect a party from irreparable loss or injury, and
(iii) the balance and convenience. The Bombay High Court in Bharat Petroleum
Corporation Ltd v. R J Tiwari177 held that even full wages may be granted by
way of interim relief.
 But ‘where a quasi-judicial tribunal or arbitrator records findings based
on no legal evidence and the findings are either his ipse dixit or based on
conjectures and surmises, the inquiry suffers from the additional infinity of non-
application of mind and stands vitiated. The industrial tribunal or the arbitrator
or a quasi-judicial authority can reject not only such findings but also the
conclusion based on no legal evidence or on surmises and conjectures unrelated
to evidence on the ground that they disclose total non-application of mind.’178

K. Powers of Tribunal under Section 11A

The labour court, tribunal, national tribunal179 and voluntary arbitrator are also
empowered to go into the question of adequacy of the punishment.180 Under
Section 11A, they may direct ‘reinstatement of the workman on such terms and
conditions, if any, as (they) think fit or give such relief to the workman including
the award of any lesser punishment in lieu of discharge or dismissal as the
circumstances of the case require.’ The purpose for which Section 11A has been
enacted is to enlarge the powers of the labour court, tribunal or national tribunal,
as the case may be, so that in appropriate cases, even if they find that the inquiry
had been held properly and the charge is borne out by the evidence, they may
still give some relief to the worker if they find the punishment to be
disproportionate to the charges held proved.
1. Jurisdiction to Record Evidence under Section 11A
(i) It is exercisable even in cases where opportunity of hearing was given and
principles of natural justice complied with before passing the order of
dismissal but the appellate authority find it necessary to record evidence
in order to draw its own conclusion as to whether the person dismissed
was or was not guilty of the charges framed against him.
(ii) Where the employer had filed an application to produce evidences in
support of the charges and the appellate authority without disposing of
that application set aside the order of dismissal merely on the omission to
hold domestic inquiry, the appellate authority committed a grave error.
(iii) Omission to afford opportunity during domestic inquiry is curable by
adducing evidence before the appellate authority.181
2. Scope of Consideration of Labour Court/Tribunal under Section 11A
(i) Where domestic inquiry conducted by management is found defective.
(ii) Labour court may grant opportunity to the management and workmen to
adduce evidence.
 (iii) On evidence, if labour court agrees with the management’s conclusion
that misconduct was proved, it may declare dismissal order justified.182
3. Production of Additional Evidence
The Supreme Court in Bharat Forge Company Ltd v. A B Zodge183 held that
under Section 11A of the Industrial Disputes Act, 1947, employer is entitled to
adduce evidence for the first time before the tribunal even if the employer had
not conducted any inquiry or the inquiry conducted by him is found to be
perverse. A domestic inquiry may be vitiated either for non-compliance of rules
of natural justice or for perversity. Disciplinary action taken on the basis of a
vitiated inquiry does not stand on a better footing than a disciplinary action with
no inquiry. The right of the employer to adduce evidence in both the situations is
well recognized.
4. When Can the Labour Court Permit Parties to Adduce Evidence
In Rajendra Jha v. Labour Court184, the Supreme Court held that even when
the application for permission to adduce further evidence is not made in the
pleading, labour court is empowered to permit the management to adduce
evidence before it and to prove the misconduct. However, the court has observed
that the request of the employer to adduce evidence should be made at the
earliest opportunity or delay be explained.185 However, such request must be
made before the closure of the proceedings.186
5. No Obligation of Asking the Parties to Adduce Evidence
The tribunal is neither under a duty to give opportunity to the parties to adduce
evidence nor under an obligation to acquaint parties before it for their rights to
adduce evidence under Section 11A.187
6. Recommendation of the (Second) National Commission on Labour
The Second National Commission on Labour has recommended that Section
11A of the ID Act 1947 may be retained. However, the law may be amended to
the effect that where a worker has been dismissed or removed from service after
a proper and fair inquiry on charges of violence, sabotage, theft and/or assault,
and if the labour court comes to the conclusion that the grave charges have been
proved, then the court will not have the power to order reinstatement of the
delinquent worker.
7. Powers of the High Court under Article 226
The High Court, in exercise of writ jurisdiction, can exercise similar powers and
discretion as exercised by labour court under Section 11A188.
L. Powers of the Labour Court to Review the Award
The above power is restricted only to: (i) typographical mistake or (ii) accidental
slip or omission.189

M. Discharge or Dismissal of a Workman and the Date of

its Effect
When domestic inquiry is found defective, it relates back to the date on which
the management passed the order and not from the date of judgement.190

N. Disposal of Preliminary or Technical Objections

It has been held in a catena of cases that all issues, preliminary or otherwise,
should be decided together so as to rule out the possibility of any litigation at the
interlocutory stage.191

O. Discretion of Labour Court to Deny Relief to Workmen

when the Claim was Made after a Long Time
In Haryana State Co-operative Land Development Bank v. Neelam192, a typist
was appointed on ad hoc basis in a bank. Her services were finally terminated
after 17 months of service. She joined some other establishment and continued
to work there. While this was so, some of the employees who were placed and
terminated similarly as the said typist approached the labour court and got
certain relief. After more than 7 years, the said typist also raised an industrial
dispute. On reference, the labour court refused to grant any relief, inter alia, on
the ground that there was no justification for such delay. Thereafter, the
appellant filed an appeal before the Supreme Court. The Court upheld the award
of labour court by observing that: (i) The Industrial Disputes Act does not
contain any provision which mandates the industrial court to grant relief in every
case to the workman. The extent to which a relief can be moulded will inevitably
depend upon the facts and circumstances obtaining in each case. In the absence
of any express provision contained in the statute in this behalf, it is not for the
Court to lay down a law which will have a universal application, (ii) It is right
that the courts and tribunals having preliminary jurisdiction have discretionary
power to grant appropriate relief to the parties. The aim and object of the
Industrial Disputes Act may be to impart social justice to the workman but the
same by itself would not mean that irrespective of his conduct, a workman
would automatically be entitled to relief. The procedural laws like estoppel,
waiver and acquiescence are equally applicable to industrial proceedings. A
person in certain situation may even be held to be bound by the doctrine of
acceptance sub silentio. The employee did not raise any industrial dispute
questioning the termination of her services within a reasonable time. She even
accepted an alternative employment and has been continuing therein. (iii) The
conduct of the employee in approaching the labour court after more than 7 years
is relevant factor for refusing to grant any relief to her. Such a consideration on
the part of the labour court cannot be said to be an irrelevant one.

P. Other Powers of Tribunals and Execution of Award

Every labour court, tribunal and national tribunal enjoys the same powers as are
vested in a civil court under the Code of Civil Procedure, 1908, when trying a
suit. It can enforce the attendance of any person and examine him on oath;
compel the production of documents and material objects; issue commission for
examination of witness, make discovery and inspection193 grant adjournment;
and receive evidence on affidavit.194 Further, every award made, order issued or
settlement arrived at by or before labour court or tribunal or national tribunal
shall be executed in accordance with the procedure laid down for execution of
orders and decree of a civil court under order 21 of the Code of Civil Procedure,
1908. Moreover, the labour court or tribunal or national tribunal, as the case may
be, is required to transmit any award, order or settlement to a civil court having
jurisdiction and such civil court shall execute the award, order or settlement as if
it were a decree passed by it195.
The tribunal is required to abide by the provisions of the Indian Evidence
Act in matters relating to the proof of a document and the claim for privilege.196
The labour court or the industrial tribunal while adjudicating industrial dispute
referred to it by appropriate government, may summon a party other than
employer and employee whose presence would help the concerned court in
adjudication of dispute finally, effectively and completely.197 Every inquiry by a
labour court, tribunal or national tribunal are judicial proceedings within the
meaning of Sections 193 and 228 of the Indian Penal Code198 and Sections 345,
346 and 348 of the Code of Criminal Procedure, 1973.199 But the legal
practitioners are allowed to represent the parties before the adjudication
authorities with the consent of the other parties to the proceedings and with the
permission of the authorities.200 The proceedings are normally held in public,
but the labour court, tribunal or national tribunal as the case may be can, at any
stage, direct that any witness be examined or proceedings be held in camera.
These provisions reveal that the tribunal in discharging functions is very near to
those of a court, although, it is not a court in the technical sense of the word.201

Q. Other Duties of Tribunal

In addition to the above, the labour court, tribunal and national tribunal act in a
judicial capacity in settling industrial dispute, the functions and duties of the
industrial tribunal are very much like those of a body discharging judicial
functions, although it is not a court.202 The duty of the tribunal was best
described by the Supreme Court in Hindustan Lever Ltd v. The
Management.203 In this case, the Court held that it was the duty of the tribunal
‘not to travel beyond the pleadings and is precluded or prohibited from raising to
writ if the employer does not question the status of the workmen. It further
added that the tribunal cannot suo motu raise the issue and proceed to adjudicate
upon the same and throw out the reference on the sole ground that the concerned
workman was not a workman within the meaning of the Act. In settling the
industrial dispute, ‘the functions of the tribunal are not confined to
administration in accordance with law. It can confer rights and privileges on
either parties which it considers reasonable and proper though they may not be
within the terms of existing agreement. It is not merely to interpret to give effect
to contractual rights or obligations of the parties but it can create new rights or
obligations between them which it considers essential for them for keeping
industrial peace.’204

R. Filling of Vacancies
Section 8 authorizes the appropriate government to fill vacancies when the
presiding officers of labour courts and industrial tribunals cease to be available.
If for any reason, a vacancy occurs, it is open to the government to fill the same
whether the vacancy is permanent or temporary.205 In case of a national
industrial tribunal, only the Central Government is empowered to fill the
vacancy by appointing any person in accordance with the provisions of the Act.
The high court cannot examine whether the services of a tribunal have ceased to
be available. It is for the appropriate government to say so.206 Section 8 does not
apply to such tribunals which are constituted for a limited period and whose
proceedings could not be continued by the new tribunal from the stage at which
the same was left by the previous tribunal.207

S. Response of the National Commission on Labour

The [First] National Commission on Labour set up by the Government of India
in 1966 found the working of the industrial relations machinery under the
Industrial Disputes Act, 1947 unsatisfactory. It, therefore, emphasized the need
for ‘a formal arrangement which is independent in character, expeditious in its
functioning and which is equipped to build up the necessary expertise.’208 The
Commission, therefore, recommended: (i) the setting up of a National Industrial
Relations Commission by the Central Government to deal with disputes which
involve questions of national importance or which are likely to affect
establishments situated in more than one state. (ii) The setting up of an Industrial
Relations Commission at the state level for settlement of disputes for which the
state government is the appropriate government. (iii) The proposed national and
state industrial relations commissions would be presided over by a person having
prescribed judicial qualifications and experience appointed by the Union and
state government respectively in consultation with the Chief Justice of India or
Chief Justice of the high court concerned as the case may be, and the Union
Public Service Commission or the State Public Service Commission as the case
may be. The Commission shall also constitute two non-judicial members, who
will be officers in the field of industry, labour or management. The main
functions of the proposed machinery are three-fold: (i) adjudication of industrial
disputes; (ii) conciliation; and (iii) certification of unions as representative
unions. However, no step has yet been taken to implement these
recommendations. This line of approach was also reiterated by the Second
National Commission on Labour with some modification.

T. Court Fee
The [Second] National Commission on Labour has recommended levy of a
token court fee in respect of all matters coming up before labour courts and
labour relations commissions.

U. Representation of Parties
Section 36 of the Industrial Disputes Act deals with the representation of a party
to a dispute. Under sub-section 1 of Section 36, a workman who is a party to a
dispute shall be entitled to be represented in any proceeding under the Act by (a)
any member of the executive or other office-bearers of a registered trade union
of which he is a member; or (b) any member of the executive or other office-
bearers of a federation of trade unions to which the trade union referred to in
clause (a) is affiliated; (c) where the worker is not a member of any trade union,
by any member of the executive or other office bearers of any trade union
connected with, or by any other workmen employed in the industry in which the
worker is employed and authorized in the prescribed manner.
Similarly, under Section 36(2), an employer who is a party to a dispute
shall be entitled to be represented in any proceeding under this Act by (a) an
officer of an association of employers of which he is a member; (b) an officer of
a federation of associations of employers to which the association referred to in
clause (a) is affiliated; (c) where the employer is not a member of any
association of employers, by an officer of any association of employers
connected with, or by any other employer engaged in the industry in which the
employer is engaged and authorized in such manner as may be prescribed.
Section 36 (3), however, imposes a total ban on representation of a party
to the dispute by a legal practitioner in any conciliation proceeding or in any
proceedings before a court of inquiry.
Section 36 (4) permits a party to dispute to be represented by a legal
practitioner with the prior consent of the other party to the proceeding and with
the leave of the labour court, tribunal or national tribunal as the case may be.
Thus, a party to a dispute may be represented by a lawyer upon fulfilment of two
conditions viz. (1) consent of the other party, (2) leave of the tribunal. These two
conditions are mandatory in nature. Consent of the other party is a requirement
which cannot be given a go by. Question of any inference in regard to the
consent does not and cannot arise. The requirement is to be complied with in
order to give effect to the provisions under Section 36 (4). However, the high
courts are divided on the issue whether the consent should be express or implied.
While the Calcutta High Court209 held that the consent must be express and not
implied, the Kerala High Court210 held that the consent may even be implied.
Thus, in the latter case when Vakulathnama was accepted by the Court on the
first posting date and no objection was raised by the opposite party, there was
implied consent of the opposite party and leave of the Court.
In Laxmi Engineering Industries v. State of Rajasthan and Others211,
the validity of section 36 of the Industrial Disputes Act, 1947 was challenged. It
was contended that (i) Section 36 which provides that a lawyer cannot appear
before the labour court/industrial tribunal except with the consent of the opposite
party and the leave of the labour court/industrial tribunal was violative of Article
14 of the Constitution of India and the principles of natural justice and (ii)
Section 36 ran against Section 14(1)(b) of the Bar Council Act. The Rajasthan
High Court answered the questions in the negative.
In Prasar Bharati Broadcasting Corporation of India v. Shri Suraj Pal
Sharma212, the workman had not objected earlier to the appearance of a legal
practitioner on behalf of the management. On these facts, the Delhi High Court
held that since the workman had not at any time given his consent under Section
36(4), the failure of the workman to object to the representation of the
management by the additional central government standing counsel at early
stages cannot preclude the workman from raising the objection at later stage.
In Britannia Engineering Products & Services Ltd v. Second Labour
Court & Ors.213, the company, after receiving notices of adjudication
proceedings appeared before the labour court and filed letters of authority
authorizing G S Sengupta, advocate along with A Dasgupta, manager (personnel
and administration) of the company to represent the company. At no stage of the
proceedings the workmen raised any objection disputing such representation by
the company through the said advocate. Later, the company obtained no
objections from their erstwhile advocate and filed fresh authorization in favour
of D K Ghosh. At that stage, the workmen raised an objection and refused to
give consent for representation of the company through this advocate. The
labour court, accordingly, refused to accept the authorities of representation by
the present advocate of the company. Aggrieved by this order, the company filed
a writ petition before the Calcutta High Court. The court observed that there was
implied consent of workmen for representation of the company through its
advocate. Once consent is given, it is not open to the workmen to withdraw such
consent nor can the court or tribunal recall the lease granted to a party. Thus, at
the time of change of the lawyer, a party need not obtain fresh leave nor does it
require consent to be obtained from the other party; the choice of the legal
practitioner lies with the party concerned and it is not open to the other side to
object to change of lawyer.

V. Form of Consent
The consent need not be in a particular manner or in a particular form as there is
no form prescribed either under the Act or the Rules.214 If that be so, the consent
of a party which is the basis for the grant of leave to the other party for being
represented by a lawyer in a proceeding under the Industrial Disputes Act can be
inferred from the surrounding circumstances as also the conduct of the
consenting party. Section 36(4) does not insist upon a written consent. Consent
once given, cannot be withdrawn or revoked at a later stage because there is no
provision in the Industrial Disputes Act enabling such withdrawal or
revocation.215 To be represented in the proceeding by a lawyer would ensure to
his benefit till the proceeding is finally disposed of.216 Thus, if sub-section (1),
(2) and (3) of Section 36 foreclose the possibility of judicial discretion being
exercised against granting audience to persons mentioned in clauses (a), (b), (c)
of sub-sections (1), (2) and (3), sub-section (4) regulates the right of parties to
authorize advocates to plead their cause and, thereby without coming in conflict
with the provisions of Section 30 of the Advocates Act, sought to keep the arena
of labour-management relations free from lawyers.
The scope of the aforesaid section has been delineated by the Supreme
Court as well as the high courts. In particular, four issues have arisen: (i) Can
there be representation by worker himself? (ii) Can there be representation of
workman by trade unions for the purpose of Section 36? (iii) Whether an
employee’s right to be represented by any office-bearer in subsection (1) is
qualified or restricted on the ground that such an officer is a legal practitioner?
(iv) Can Indian Chamber of Commerce be entitled to appear on behalf of
employer?
Issue no 1. In Ameteep Machine Tools v. Labour Court217, the Supreme
Court decided the first issue. The Court ruled that Section 36 does not impose
any obligation upon a workman who is a party to the dispute to be represented
by someone else. He may participate in the conciliation proceedings and if a
settlement is arrived at, then it is a valid settlement and binding on the parties
even if the workmen who were parties to the dispute presumably participated in
the proceedings and were not represented by any persons mentioned in Section
36 (1).
Issue no 2. Modella Textile Workers Union v. Union of India218
decided the second issue, namely, whether the trade unions have locus standi to
file writ petition to challenge the government’s order refusing to make a
reference to adjudication pertaining to termination of employees. The Punjab
and Haryana High Court held that not only a workman who is a member of a
trade union but even in the absence of his membership of any trade union, a
workman is entitled to obtain assistance from any trade union connected with the
industry and observed:
Thus, the trade union or any member of its executive or other
office bearer is entitled to canvass the cause of the workman
concerned for the purposes of pursuing conciliation proceedings,
issuing a demand notice and making a demand on the
government to refer a dispute to the industrial tribunal or the
labour court. If in pursuance of a demand notice, a dispute is
referred to the tribunal or the court, as the case may be, under
the Act the trade union concerned is also empowered to
represent the case of the workman on whose behalf demand
 notice had been issued to the government by the union before
the tribunal. In these circumstances, if a trade union has been
given the power by the legislature to represent a workman and
espouse his cause before the tribunal or the court, there is no
reason to deprive such a union of the right to challenge the order
of the government declining a reference by way of writ petition
under Art. 226 of the Constitution.219
The Court added:
The power of representation of the cause of another person is
intended to be given its full scope at all stages. Thus, it cannot
be held that the trade union, the present petitioner, was not
interested in the industrial dispute which is the subject-matter of
adjudication in this writ petition and was not aggrieved by the
decision of the government declining to make a reference. In
view of the wide scope of Section 36 of the Act, the trade union
petitioner was widely interested in the dispute and there is no
reason or warrant to deprive it of the locus standi to file the writ
petition under Art. 226.220
From the aforesaid decision, it is evident that courts are inclined to permit
the workman himself to represent his case in any proceedings under the
Industrial Disputes Act or may be represented through trade unions (even if he is
not a member of such a trade union) even in writ proceedings.
Issue no. 3. The third issue was answered in the negative by the Supreme
Court in Paradip Port Trust v. Their Workmen.221 Observed Justice Goswami:
If however, a legal practitioner is appointed as an officer of a
company or corporation and is in their pay (roll) and under their
control and is not a practising advocate, the fact that he was
earlier a legal practitioner or has a legal degree will not stand in
the way of the company or the corporation being represented by
him. Similarly, if a legal practitioner is an officer of an
association of employers or of a federation of such association,
there is nothing in Section 36(4) to prevent him from appearing
before the tribunal under the provisions of Section 36 (2) of the
Act. Again an office-bearer of the trade union or a member of its
executive even though he is a legal practitioner will be entitled
to represent the workman before the tribunal under Section
 36(1) in the former capacity. The legal practitioner in the above
two cases will appear in the capacity of an officer of the
association in the case of an employer and in the capacity of an
office-bearer of the union, in the case of workmen and not in the
capacity of a legal practitioner.222
He added:
It must be made clear that there is no scope for inquiry by the
tribunal into the motive for appointment of such legal
practitioner as office-bearers of the trade unions or as officers of
the employers’ association.
The Court accordingly overruled the full bench decision of the labour
appellate tribunal in Hosiery Workers’ Union v. J K Hosiery Factory,
Kanpur223 and Rajasthan High Court in Duduwala and Co. v. LT.224 and
affirmed the ruling of Calcutta High Court in Hall & Anderson Ltd v. S K
Neogi225 and Bombay High Court in K K Khadilkar v. Indian Hume Pipe Co.
Ltd.226
Quite apart from the aforesaid principles, it may be observed that neither
the Industrial Disputes Act, 1947 nor any of the rules made thereunder provide
for the form or the manner in which the consent of the other party is to be given.
Any leave granted by a court or a tribunal should ordinarily be in writing.
Likewise, in ordinary cases, the consent of the other party should also be given
in writing. This does not, however, mean that implied consent is negatived by
Section 36 (4).227
Issue no. 4. The last issue was decided in the negative by the Madras
High Court in R M Duraiswamy v. Labour Court.228 In this case, the court held
that employers can be represented by an (i) executive or office-bearers of the
trade union, (ii) association of employers or an executive of association of
employers. (iii) officers like deputy manager (law), assistant manager (law), who
are qualified law graduates. But they cannot be represented by the Indian
Chamber of Commerce.

VIII. AWARD

A. Judicial Interpretation of ‘Award’

Section 2 (b) of the Industrial Disputes Act, 1947, defines ‘award’ to mean an
interim or a final determination of any industrial dispute or any question relating
to thereto by any labour court, tribunal or national tribunal and includes an
arbitration award made under Section 10A. Thus, quantification of the back
arrears and other attendant circumstances falls within the ambit of award.229
The aforesaid definition of ‘award’ has two parts. The first part covers a
determination, final or interim, of any industrial dispute. The second part takes
in determination of any questions relating to an industrial dispute. The basic
postulate common to both parts of the definition is the existence of an industrial
dispute, actual or apprehended. The ‘determination’ contemplated by the
definition is of industrial dispute or questions relating thereto on merits. It is to
be noted further that Section 2 itself expressly makes the definition subject to
‘anything repugnant in the subject or context’.230 It, however, raises two
questions: First, whether the order in terms of compromise allowing the dispute
to be withdrawn is an ‘award’? Second, what is the nature and scope of interim
award? Let us turn to examine these problems.
If Orders in Terms of Compromise for Withdrawal are Awards. This
problem has been the subject matter of much controversy. The high courts are,
however, divided in this regard. While the High Court of Bombay231 is of the
view that the order is not an ‘award’, the High Court of Kerala232 took the
opposite view by holding it to be an ‘award’. The approach of the Bombay High
Court seems to be more pragmatic and it is in conformity with the accepted
notion of industrial adjudication.

B. Interim Award
1. The Issues. Interim award involves several issues: (i) What is the nature of
an interim award? (ii) What are its elements? (iii) Whether interim relief
is an interim award? Let us now discuss these questions.
2. Nature and Concept of Award. The legislature has not defined the word
‘interim’ award occurring in Section 2(b) of the Industrial Disputes Act,
1947. There are, however, series of cases which endeavour to delineate
the expression. The courts and tribunals adopted the dictionary meaning
of the term ‘interim’ in determining the nature of ‘interim’ award. For
instance, in Thakur Yugal Kishor Sinha v. State of Bihar,233 the High
Court of Patna adopted the meaning given in the Oxford Dictionary,
namely, ‘a temporary or provisional arrangement, adopted in the
meanwhile’. The Court accordingly held that ‘manifestly, the word
‘interim’ in such a context must mean provisional or temporary
 arrangements made in a matter of urgency and subject to a final
adjustment or complete determination of the dispute, for example, a
payment on account pending final settlement of the amount as in the
present case.’234
3. Elements of Interim Award. Coming to the elements of interim award, it
may be noted that following are the essential elements: (1) The order
must have been passed by the labour court, industrial tribunal, or national
tribunal and voluntary arbitrator (2) the order passed by the labour court,
tribunal, national tribunal or voluntary arbitrator must have determined
any question referred to it.
4. Interim Relief vis-a-vis Interim Award. The other question is whether the
order granting interim relief235 is an ‘award’ within the meaning of
Section 2 (b) of the Act. This question was left open by the Supreme
Court in Hotel Imperial v. Hotel Workers’ Union236 and Delhi Cloth
and General Mills v. Rameshwar Dayal.237 The high courts are,
however, divided on this issue. While Delhi,238 Calcutta,239 Patna240 and
Punjab241 High Courts held that an order granting interm relief amounted
to interim award required to be published under Section 17 and
enforceable under Section 17A, the Karnataka High Court took the
opposite view and held that an order granting interim relief is not a
determination of an industrial dispute and hence not an ‘award’.

C. Forms of the Award

The award of a labour court, tribunal, national tribunal or voluntary arbitrator
must be in writing and signed by the presiding officer.242 The award which is not
in accordance with this provision is void and inoperative in view of the
mandatory terms of this section.243

D. Certain Confidential Matters are not to be Included in Any

Award
The labour court, tribunal, national tribunal and voluntary arbitrator are
prevented from including in their awards the contents of any information
claimed by the parties to any industrial dispute to be confidential.244

E. The Language of an Award

There is no provision in the Industrial Disputes Act, 1947, or rules framed
thereunder dealing with the language of an award. However, the Court laid down
several norms regarding the use of language in the award. They are: (1) The
language used in the award should not be inconsistent with a judicial
approach.245 (2) The language used in the award should not be ‘intemperate’. (3)
The language of the award should be dignified. (4) Strong language should not
be used in the award ‘without realizing the due significance and without
considering whether the use is justified.’246

F. Signing of an Award
Section 16 of the Industrial Disputes Act, 1947 requires that the award of a
labour court, tribunal or national tribunal shall be signed by the presiding officer.
Similarly, Sub-section 4 of Section 10A requires that every arbitration award
shall be signed by the arbitrator or all the arbitrators, as the case may be. The
provisions of the sections are mandatory. The award of the labour court, tribunal,
national tribunal or arbitrator shall be void and inoperative in the absence of
signature of the presiding officer/arbitrator(s) in view of the mandatory terms of
Section 16.247

G. Submission of an Award
Section 15 enjoins the labour court, tribunal or national tribunal to hold ‘its
proceedings expeditiously and as soon as practicable on conclusion thereof,
submit its award to the appropriate government.’ The non-submission would
render the award inoperative.248 The provisions of the Section are inadequate for
several reasons: First, a perusal of various reported decisions, however, reveals
that despite the requirement of the Act to submit its award, ‘as soon as it is
practicable on the conclusion’ of the proceedings, the time taken by the tribunal
is quite long.249 Further, instances are not lacking where the tribunals have taken
over 3 years.250 Second, Section 23 prohibits strikes and lockouts during the
pendency of proceedings before an arbitrator, labour court, tribunal or national
tribunals and 2 months after the conclusion of such proceedings. And under sub-
section (3) of Section 20, proceedings before an arbitrator under Section 10A or
before a labour court, tribunal or national tribunal ‘shall be deemed to have
commenced on the date of the reference of the dispute for arbitration or
adjudication, as the case may be and such proceedings shall be deemed to have
concluded on the date on which the award becomes enforceable under Section
17A’. Since the parties cannot exercise legal strike or lockout during the
pendency of proceeding before a labour court, tribunal, national tribunal or an
arbitrator (under Section 10A), the need for the prescribed time limit within
which the adjudication/arbitration authorities may submit their award is
significant. Third, under Section 33, the management is debarred from
exercising its prerogative during the pendency of proceedings before a labour
court, tribunal, national tribunal or arbitrator (under Section 10A) where a
notification has been issued under Section 10 (3A). This provision also requires
that time limit under Section 15 should be certain. Fourth, for industrial peace
and harmony which is the avowed objective of Industrial Disputes Act, 1947, it
is essential that disputes must be settled at an early date. Under the
circumstances, it is suggested that Section 15 should be amended and the time
limit should be prescribed for the submission of the award.
In Secretary, Cheruvathur Beedi Workers' Industrial Co-operative
Society v. Shyamala251, the Kerala High Court showed its concern regarding the
inordinate delay in the adjudication process as it affected the interest of the
parties. Under Section 12(6) of the Act, the conciliation proceedings have to be
completed within a fortnight and a report has to be sent to the government.
When reference order is passed, the government is obliged to prescribe the time
limit for passing of the award. Under Section 10 (2A), when an order is passed
by the government, simultaneously, there is a direction that the award should be
passed within the specified period. In case of an individual dispute of the present
nature, it is mandatory that an award is to be passed within 3 months. Extension
should be for specific reasons and should be recorded. The delay as happened in
the instant case, might never have been conceived by the statute.

H. Publication of the Industrial Award

1. The Legal Issue. Section 17 (1) of the Industrial Dispute Act, 1947
which deals with the publication of the award by the appropriate government
provides:
……. every arbitration award and every award of labour court
tribunal or national tribunal shall, within a period of thirty days
from the date of its receipt by the appropriate government, be
published in such manner as the appropriate government thinks
fit.
The aforesaid provisions raise several issues: (i) Whether the provisions
of Section 17 are mandatory or directory? (ii) What will be the effect of
withholding the publication of the award? (iii) Whether the publication of the
award after the expiry of statutory period of 30 days would make the award
invalid or unenforceable? (iv) Does the interim award need to be published? (v)
Whether the award will be taken to have been published on the date of
notification of the government or on the date on which such notification
appeared in the gazette? Let us examine these issues.
2. The Judicial Response. (i) Withholding the publication of industrial
award. In Sirsilk Ltd v. Government of Andhra Pradesh,252 the Supreme Court
was faced with the problem as to what would happen in a situation where the
settlement was arrived at between the parties to a dispute on which an award had
been given by the industrial tribunal but was not published. The Supreme Court
solved this problem by directing the government to withhold the publication of
the award in view of the settlement.
The Government of Andhra Pradesh referred certain disputes between the
management of Sirsilk Ltd and its workmen to the industrial tribunal for
adjudication. The industrial tribunal gave its award and sent it to the government
for publication. Before the government published it, the parties came to a
settlement on the issues. They asked the government not to publish the award.
The government asserted its inability to withhold the publication in view of the
mandatory provisions of Section 17 of the Act. Thereupon, the parties filed a
writ petition before the High Court of Andhra Pradesh, praying that the
government be directed not to publish the award. The High Court held that the
provisions of Section 17 were mandatory and that the government could not
withhold its publication. The parties appealed to the Supreme Court. Justice
Wanchoo, in the course of the judgement, observed:
Though Section 17 (1) is mandatory and the government is
bound to publish the award received by it from an industrial
tribunal, the situation arising in a case like the present is of an
exceptional nature and requires reconciliation between Section
18 (1) and Section 18 (3)(d) and in such a situation, the only
way to reconcile the two provisions is to withhold the
publication of the award, as a binding settlement has already
come into force in order to avoid possible conflict between a
binding settlement under Section 18 (1) and a binding award
under Section 18 (3).
The Supreme Court ‘accordingly’ directed the government not to publish
the award.
The decision is open to several objections253. First, it ignores the scheme
and statutory provisions of the Industrial Disputes Act, 1947. Under Sub-section
(3) of Section 20, proceedings before a tribunal are deemed to commence on the
date on which the appropriate government refers the dispute for adjudication.
Such proceedings are deemed to end on the date on which the award becomes
enforceable under Section 17A, i.e., usually 30 days from the date of its
publication, which the appropriate government must make. There are only two
statutory exceptions to Section 17A: (i) Where the appropriate government is
party to the dispute and is of the opinion that it will be inexpedient on public
grounds affecting national economy or social justice to give effect to the whole
or any part of the award, (ii) Where the award has been given by a national
industrial tribunal and the Central Government is of the opinion that it will be
inexpedient on such or similar grounds to give effect to it. It follows that the
proceedings before the tribunal had not come to an end because no such
exceptional circumstances existed. The Supreme Court, it is submitted, failed to
notice that withholding the publication of the award would make the pendency
of the proceedings to continue ad infinitum.
Second, Section 23, prohibits the workmen from striking and the
employers from locking out during the pendency of proceedings before a labour
court, tribunal or national tribunal or an arbitrator (where a notification has been
issued under sub-section 3A of Section 10A) and 2 months after the conclusion
of such proceedings. The policy behind these prohibitions is to provide an
atmosphere for smooth settlement of disputes. Their effect can be assessed only
by reference to other provisions of the Act and the rules framed thereunder. Here
also, the proceedings are deemed to have been concluded only 30 days after the
publication of the award.
The Supreme Court’s decision with regards to withholding the publication
of award takes away the right of the workmen to strike and of management to
lockout, because Section 23 prohibits the management and workmen of this
establishment from resorting to the aforesaid coercive measures during the
pendency of proceedings before the tribunal.
(ii) Effect of Non-publication of the Industrial Award within the
Prescribed Period. The Supreme Court’s decision in Remington Rand of India
v. The Workmen,254 throws interesting light on this question. In this case, the
award was made by the industrial tribunal on 5 October 1966. It was received by
the appropriate government on 14 October 1966. But it was published in the
Kerala Gazette on 15 November 1966. On these facts, the appeal was preferred
against the award of industrial tribunal. The appellant raised an objection, inter
alia, that the award was inoperative and unenforceable as it was published after
the expiry of the period fixed by Section 17 (1) of the Industrial Disputes Act,
1947. The Supreme Court, it appears, in an attempt to justify the delay in the
publication of the award overruled the objection. Speaking for the Court, Justice
Mitter observed:
Section 17(1) makes it obligatory on the government to publish
the award. The limit of time has been fixed as showing that the
publication of the award ought not to be held up. But the
fixation of the period of 30 days mentioned therein does not
mean that the publication beyond that time will render the award
invalid…..255
The Court accordingly held that the provision as to the time limit in
Section 17(1) was merely directory and not mandatory.
The decision is open to several objections.256 First, the provision of
Sections 13(5), 14, 15, 17, 18, 19 and 29 of the Industrial Disputes Act, 1947
emphasize that the ‘time is the essence of the Act and the requirement of its
relevant provisions must punctually be obeyed and carried out if the Act is to
operate harmoniously at all’.257 Under the circumstances, if one holds the
provision of Section 17(1) to be directory, as the Supreme Court did, the entire
scheme of the Act would be thrown out of gear. Second, the decision of holding
the publication of the award to be directory under Section 17 (1) extends the
period of applicability of Section 33 of the Act which is unwarranted. Third, the
decision affects the bargaining power of the workers.
By holding the provisions of Section 17 (1) to be directory, the Supreme
Court not only extended indefinitely the period of prohibition of strikes and
lockouts but also exposed the parties to the risk of prosecution under Section 26.
Thus, in effect, the decision might create hardship upon workers (and
employers) ‘for no fault of their own but simply because of the callous
indifference or utter inefficiency and slackness’258 on the part of the
government. It is, therefore, desirable that the report of the board, labour court,
tribunal or national industrial tribunal must be published within the period
prescribed under Section 17 (1) of the Act.
(iii) Publication of Interim Award. There is no provision in the Industrial
Disputes Act, 1947, dealing specifically with the publication of an interim
award. As already stated, Section 17 deals with the publication of the award and
since the award has been defined to include an interim determination of any
industrial dispute or a question relating thereto by the tribunal, the question
arises whether the interim award should be published? This question has been
the subject matter of controversy before tribunals and courts.
In Allen Berry & Co. Ltd v. Their Workmen259, the labour appellate
tribunal was called upon to decide the question whether interim awards are
required to be published under the Industrial Disputes Act 1947. The labour
appellate tribunal answered the question in the negative. It rationalized:
Section 15 of the Act required the tribunal to submit its award to
the appropriate government on the conclusion of the
proceedings. The word ‘proceedings’ in this section, in our
judgement, mean the whole proceedings that is to say, all that
had been referred to the tribunal by the appropriate government
for adjudication. It is, therefore, in our judgement not obligatory
on a tribunal to submit an interim award to the appropriate
government before the final award is made and if it chooses not
to submit it before that time a fortiori the question of
publication of such an award by the appropriate government
does not arise.260
It accordingly held that the interim award need not be published under
Section 17.

I. Pendency of Proceedings before Arbitrators and

Adjudicating Authorities
1. Commencement of Proceedings. Sub-section (3) of Section 20 of the
IDA provides:
Proceedings before an arbitrator under Section 10A or before a
labour court, tribunal or national tribunal shall be deemed to
have commenced on the date of reference of the dispute for
arbitration or adjudication, as the case may be…
The meaning of the expression ‘on a reference of the dispute for
arbitration or adjudication’ is, however, not free from doubt.
A few of the decisions emphasized literal interpretation.261 Some of the
tribunals chose the middle course. For instance in Goenka Mica Syndicate v.
Mohd. Yasin262, the industrial tribunal ruled that according to Section 20 of the
Act, the proceedings of the tribunal commenced when the notification was
received by the tribunal263 and rejected the management’s contention that the
proceedings before a tribunal should commence from the date when it is made
known to the parties.
We have not been able to locate any decision holding that the effective
date of the commencement of adjudication proceedings, for the purposes of
Section 23 of the Industrial Disputes Act, 1947, is the date of the party’s
knowledge of the reference. However, there are some cases264 in relation to
Section 33, where also provisions of Section 20(3), have been interpreted and
these decisions indicate that the effective date of ‘reference of the dispute for
adjudication’ is the date on which parties receive information of such reference.
2. Termination of Proceedings. The adjudication proceeding shall be
deemed to have concluded on the date on which the award becomes enforceable
under Section 17A.265 This provision is relevant not only for determining the
legality or otherwise of strikes and lockouts but also for determining the period
of regulation of management’s prerogative under Section 33 of the Industrial
Disputes Act, 1947.

J. The Period of the Operation of the Award

1. Commencement of the Period. Section 17A(4) of the Industrial
Disputes Act, 1947, provides:
Subject to the provisions of Sub-section (1) and Sub-section (3)
regarding the enforceability of an award, the award shall come
into operation with effect from such date as may be specified
therein, but where no date is specified, it shall come into
operation on the date when the award becomes enforceable
under Sub-section (1), or Sub-section (3), as the case may be.
The aforesaid provisions indicate that (i) there is a difference between
‘enforceability’ of an award and its ‘operation’; (ii) if for any reasons an award
does not become ‘enforceable’, it can never come into ‘operation’; and (iii) that
the date on which an award comes into ‘operation’ may, or may not be the date
on which it becomes ‘enforceable’.
Awards and decisions, however, indicate alarming misconception of the
true import of sub-section (4) of Section 17 A of the Industrial Disputes Act,
1947. They use the statutorily explained concept of the date on which an award
comes into operation in a manner which is inconsistent with the provisions of the
Industrial Disputes Act, 1947.
A tribunal may direct the grant of the benefits of its award from a date:
(i) Anterior to the date on which the demand was first made266
(ii) On which the demand was first made267
(iii) Posterior to the date on which the demand was first made but anterior to
 the date of reference268
(iv) On which the reference was made269
(v) Posterior to the date of reference but anterior to the date of the
submission of the award270
(vi) On which the award is submitted
(vii) Posterior to the date of submission of the award but anterior to the date
on which it becomes enforceable
(viii) On which the award becomes enforceable
(ix) Posterior to the date on which the award becomes enforceable
The validity of award granting benefits from any date anterior to the date
on which award becomes enforceable has frequently been questioned in the
courts of law.
In a series of cases, the Supreme Court271 has emphasized that under
Section 17A (4) the tribunal is empowered to indicate the date on which an
award shall come into operation and that date can be any one of the dates
mentioned above. Where, however, a tribunal, without specifying the date on
which an award shall come into operation, directs grant of benefits from a
specific date, the Supreme Court is of the view that an award comes into
operation from the date.
2. Date of Award. The question came up for consideration of the
Supreme Court in Lloyds Bank Ltd v. Lloyds Bank Union Staff Association.272
In this case, the award was published under Section 17 of the Industrial Disputes
Act, 1947, by the appropriate government in a notification of the Ministry of
Labour on 17 January 1950, but the notification appeared in the Gazette on 28
January 1950 The question, inter alia, for the consideration of the Supreme
Court was on which date the award will be taken to have been published.
Answering this question, the Supreme Court held that the award must be taken to
have been published on 17 January 1950 and not on 28 January 1950.
3. The Termination of the Operation of Award. Section 19(3) of the
IDA provides that all awards shall remain in operation for a period of one year
from the date on which the award becomes enforceable under Section 17A. The
award becomes enforceable under Section 17A on the expiry of 30 days from the
date of its publication under Section 17. Under the latter provision, the
appropriate government is under an obligation to publish the award within a
period of 30 days of its receipt.
The provisions of Section 19(3) are subject to two exceptions. First, the
appropriate government is empowered to reduce the period of operation of
award. Second, the appropriate government is empowered to extend the period
of operation by a period not exceeding one year at a time. The total period of
operation of an award, however, is not to exceed 3 years. Of course, the
appropriate government may also take action under Section 17A (1) (a), 17A (3)
and (4) of the IDA.
The scope of the Section 19(3) on the prohibition contained in Section
23(c) was explained by the Supreme Court in South Indian Bank Ltd v. A R
Chako.273
So long as the award remains in operation under Section 19(3), Section
23(c) stands in the way of any strike by the workmen and lockout by the
employer in respect of any matter covered by the award.274
When the award is in operation under Section 19(3), both Sections 23 and
29 would be applicable. Even after expiry of the period of operation of award
under Section 19 (3), the award continues to be binding upon the parties until a
period of two months has elapsed from the date on which notice is given by any
party or parties intimating its intention to terminate the award under Section
19(6). During this period, when the award is not in operation but is only binding
on the parties, Section 29 alone will be applicable. After the period of its
operation and also after the period for which the award is binding have elapsed,
Sections 23 and 29 can have no operation. However, according to the Supreme
Court, even after the expiry of the periods mentioned above, the award would
continue to govern relations between the parties till it is displaced by another
contract.275 It has already been stated that the Court did not state the
circumstances under which an award is displaced by another contract and this
particular concept has created other complications.

K. Enforcement of Settlement and Award

1. General. In order to ensure compliance of settlement and award, the
Industrial Disputes (Amendment) Act, 2010 specifically provides in section 11
(9) that every award made or issued or settlement arrived at by or before a labour
court or tribunal or national tribunal shall be executed in accordance with the
procedure laid down for execution of order and decree of a civil court under
Order 21 of the Code of Civil Procedure, 1908. Further, Section 11(10) imposes
an obligation upon the labour court, tribunal and national tribunal as the case
may be to transmit any award, order or settlement to a civil court having
jurisdiction and such civil court shall execute the award or settlement as if it
were a decree passed by it. The settlement arrived at through the intervention of
a conciliation officer or board of conciliation and an award are enforceable by
their own force and by the coercive machineries under the Act. It may also be
enforceable by voluntary and persuasive processes. Let us now discuss the
coercive processes in some details.
2. Penal Provisions. The enforcement of the settlement and award is
sought to be ensured by imposing penal liability on those who commit a breach
thereof.276 Imprisonment extending up to 6 months or fine or both may be
awarded for the breach of a settlement or an award. Besides, the Industrial
Disputes Act, 1947 empowers the court trying the offences (if it fines the
offender) to order payment of the whole or any part of the fine realized to the
injured party as compensation. But, the Act failed to distinguish between the first
and subsequent convictions.277
Recovery of the money due from the employer. Section 33C(1) provides
for another mode of enforcement by providing the mode or recovery of the
money due from an employer where any workman is entitled to receive from the
employer any money or any benefit which is capable of being computed in terms
of money and if the question arises as to the amount of money due or as to the
amount at which such benefit should be computed, then the question may,
subject to any rules that may be made under this Act, be decided by such labour
court as may be specified in this behalf by the appropriate government. Where
workmen employed under the same employer are entitled to receive from him
any money or any benefit capable of being computed in terms of money, then
subject to such rules as may be made in this behalf, a single application for the
recovery of the amount due may be made on behalf of or in respect of any
number of such workmen.
In this section ‘Labour Court’ includes any court constituted under any
law relating to investigation and settlement of industrial disputes in force in any
state.
a. Conditions-Precedent for Making an Application. The simple statement of
Section 32C (2) namely:
Where any workman is entitled to receive from the employer
any money or any benefit which is capable of being computed in
terms of money…..
has raised several issues. The key question is: what is the significance of the
expression ‘entitled’? First, does it imply that the right of the workman to
receive benefit from the employer has already accrued, i.e., should there be any
predetermined liability of the employer? Also, should the right to receive benefit
have necessarily accrued under settlement or an award, or under the provisions
of Chapter VA of the Act? Or can a workman put in an application for
computation of benefits to which he is otherwise entitled to, e. g., under an
award or under an agreement, or under the statutes other than the Industrial
Disputes Act, 1947? Second, does the expression ‘entitled’ imply a pre-
ascertained identity of the employer and the workmen? Third, what is the nature
of the benefit to which the workman must be entitled in order to move an
application under Section 33C (2)? Can a workman request for computation of
only non-monetary benefits or only of monetary benefits or both? Let us turn to
these questions.
b. Pre-determined liability of employer. It has been settled in a catena of
cases of tribunals and courts278 that Section 33C (2) covers cases of
workmen who claim the benefit to which the concerned workman is
entitled. It has to be computed in terms of money even though the benefit
on which their claim is based has been disputed by their employers.
c. Pre-determined identity of parties. The labour courts under Section 33C
(2) of the Industrial Disputes Act, 1947 have jurisdiction to determine the
nature of work done by the concerned workmen279 and to decide the
claims under Section 33 C. The benefits provided under Section 33C (2)
includes both monetary and ‘other’ benefits. It has however, no
jurisdiction to determine the status of the employees.
d. Amount of money due. What is meant by the expression ‘amount of
money due’? The Supreme Court in N A Choudhary v. Central Inland
Water Transport Corporation Ltd280, observed that the expression raises
any one or more of the following kinds of disputes281.
1. Whether there is any settlement or award as alleged
2. Whether any workman is entitled to receive from the employer any
money at all under any settlement or an award, etc.?
3. If so, what will be the amount?
4. Whether the amount claimed is due or not?
The Supreme Court held that if the right to get the money on the basis of
settlement or an award was not established, no amount of money could be due. If
it was established, it had to be found out, albiet, it may be by mere calculation,
as to what is the amount due.
e. Time limit. Every application under proviso to Section 33C shall be made
within one year from the date on which the money becomes due to the
workman from the employers. The appropriate government is, however,
 authorized to condone delay, even after the expiry of period of one year,
if sufficient cause is shown by the applicant.
f. Who can make an application. Under Section 33C (1) the application for
the recovery of money due may be made by:
(a) the workmen entitled to money from the employer; or,
(b) any other person authorized by him in writing in this behalf;
(c) the assignees, or heirs of the workman in case of his death.
If the appropriate government is satisfied that any money is so due, it
shall issue a certificate for that amount to the collector who shall proceed to
recover the same in the same manner as an arrear of land revenue. However,
under Section 33C (2) it is not specified as to who can make an application. It is
evident from this provision that if a workman is entitled to receive from the
employer any money or any benefit which is capable of being computed, then
the labour court will entertain such an application and shall compute the amount
to which the workman is entitled.
Before the 1964-Amendment, even in Section 33C (1), there was no
reference to the heirs or assignees. Heirs and assignees were included after the
amendment, but so far as Section 33 C (2) is concerned, there is no mention as to
who can make the application. The 1964-Amendment raises a question whether
the widow of a workman can maintain an application under Section 33C (2) of
the Act before the labour court. This question came up for consideration in
Sitabai Naruna Pujari v. M/s. Auto Engineer.282 In that case, the widow of a
deceased employee had filed an application before the labour court for
computing the money and the money value of the benefits which she was
entitled to. Her claim was rejected by the labour court on the ground that she was
the widow of the workman and not the workman himself and, therefore, her
application was not maintainable. In an application for writ before the Bombay
High Court, the contention of the petitioner to maintain an application under
Section 33(C) (2) of the Act was upheld. It was observed that all civil rights of
every kind vested in a deceased person in all cases in that connection except
those which are not capable to surviving after his death survived to his heirs. The
right to claim benefits accrued of his heirs and, therefore, application by her or
assignee of a deceased workman was entitled to maintain an application under
Sub-section (2) of Section 33 of the Act. But Delhi High Court in Yad Ram v. B
N Singh283 took the opposite view. The Patna High Court in J F B & P Works
(P) Ltd v. B. Sharma284 agreed with the view expressed by the Bombay High
Court.
 g. Number of applications Section 33C (5) permits any number of workmen
who are employed by the same employer to make a single application for
the recovery of the amount due on behalf of or in respect of such
workmen.
h. Nature and Scope of Section 33 C (2). In Punjab Beverages v. Suresh
Chand,285 Justice Bhagwati, speaking for the Court explained the nature
and scope of Section 33C (2) in the following terms:
It is now well-settled, as a result of several decisions of this
Court that a proceeding under Section 33C (2) is a proceeding in
the nature of executive proceeding in which the labour court
calculates the amount of money due to a workman from his
employer, or, if the workman is entitled to any benefit which is
capable of being computed in terms of money, proceeds to
compute the benefit in terms of money. But the right to the
money which is sought to be calculated or to the benefit which is
sought to be computed must be an existing one, that is to say,
already adjudicated upon or provided for and must arise in the
course of and in relation to the relationship between the
industrial workman and his employer vide Chief Mining
Engineer, East India Coal Co. Ltd v. Rameshwar.286 It is not
competent to the labour court exercising jurisdiction under
Section 33 C (2) to arrogate to itself the function of an industrial
tribunal and entertain claim which is not based on an existing
right but which may appropriately be made the subject-matter of
an industrial dispute in a reference under Section 10 of the Act,
vide State Bank of Bikaner v. R L Khandelwal.287 That is why
Justice Gajendragadkar pointed out in the Central Bank of
India Ltd v. P S Raja Gopalam,288 that if an employee is
dismissed or demoted and it is his case that the dismissal or
demotion is wrong, it would not be open to him to make a claim
for the recovery of his salary or wages under Section 33C(2).
In Namor Ali v. Central Inland Water Transport Corporation Ltd289, the
Supreme Court observed that where the only dispute in the proceeding under
Section 33C (2) between the management and a section of its workmen is
whether those workmen are entitled to take advantage of a settlement and the
quantum or rate of extra wages to which the application under Section 33C(2)
has been made could not be rejected on ground that there is no dispute about the
money due. The provisions of Section 33C(2) do not require that for conferring
jurisdiction on labour court not only that the workmen should be entitled to any
money due but that there should be dispute about the amount of that money. The
Court added:
The expression if any question arises as to the ‘amount of
money due’ embraces within its ambit any one or more of the
following kinds of disputes:
1. Whether there is any settlement or award as alleged?
2. Whether any workman is entitled to receive from the
employer any money at all under any settlement or an
award, etc.?
3. If so, what will be the rate or quantum of such amount?
4. Whether the amount claimed is due or not?
If settlement or the award is not established, no amount of money will be
due. If it is established, then it has to be found out, albeit it may be by mere
calculation, as to what is the amount due. For finding it out, it is not necessary
that there should be a dispute as to the amount of money due also. The fourth
kind of dispute….. obviously and literally will be covered by the phrase ‘amount
of money due’. A dispute as to all such questions or any of them would attract
the provisions of Section 33C(2) of the Act and make the remedy available to the
workman concerned.
The Court held that: it cannot be said that if there is a dispute as to any
amount due, it is to be decided by the appropriate government under Sub-section
(1) of Section 33C and not by the labour court under Sub-section (2) of Section
33C.
However, in Municipal Corporation of Delhi v. Ganesh Razak and
another,290 the Supreme Court after considering earlier decisions on the
question, has laid down as under:
The ratio of these decisions clearly indicates that where the very
basis of the claim or the entitlement of the workmen to a certain
benefit is disputed, there being no earlier adjudication or
recognition thereof by the employer, the dispute relating to
entitlement is not incidental to the benefit claimed and is,
therefore, clearly outside the scope of a proceeding under
Section 33C(2) of the Act. The labour court has no jurisdiction
 to first decide the workmen’s entitlement and then proceed to
compute the benefit so adjudicated on that basis in exercise of
its power under Section 33C(2) of the Act. It is only when the
entitlement has been earlier adjudicated or recognized by the
employer and thereafter for the purpose of implementation or
enforcement thereof, some ambiguity requires interpretation;
that interpretation is treated as incidental to the labour court’s
power under Section 33C(2) like that of the executing court’s
power under Section 33C(2) to interpret the decree for the
purpose of its execution.
i. Recovery of money due from employer under Section 33(C) (2) vis-a-vis
jurisdiction of the labour court. The Supreme Court in Bombay Gas Co.
v. Gopal Bhiwa291 held that the claim under the Payment of Wages Act,
1936 may also be made under Section 33C(2).
In Athani Municipality v. Labour Court292, the Supreme Court held that
the jurisdiction of the labour court to entertain an application under Section
33C(2) was not barred by Section 20 (1) of the Minimum Wages Act, 1948
because labour court was not a court within the meaning of the Code of Civil
Procedure or Limitation Act. However, in State of Punjab v. Labour Court293,
the Supreme Court was invited to consider whether employees were entitled to
apply under Section 33 C(2) of the Industrial Disputes Act, 1947 for payment of
gratuity? The Court answered the question in the negative and observed:
It is apparent that the Payment of Gratuity Act enacts a complete
code containing detailed provisions covering all the essential
features of a scheme for payment of gratuity. It creates the right
to payment of gratuity. It indicates when the right will accrue,
and lays down the principles for qualification of gratuity. It
provides further for recovery of the amount, and contains a
special provision that compound interest at 9 per cent per annum
will be payable against delayed payment. For the enforcement of
its provisions, the Act provides for the appointment of a
controlling authority, who is entrusted with the task of
administrating the Act. The fulfilment of the rights and
obligations of the parties are made his responsibility, and he has
been invested with an amplitude of power for the full discharge
of that responsibility. An error committed by him can be
corrected in appeal by the appropriate government or an
 appellate authority particularly constituted under the Act.
In view of the aforesaid, the Court held that it was the intention of the
Parliament that proceedings for payment of gratuity due under the Payment of
Gratuity Act must be taken under that Act and not under any other Act. The
Court accordingly held that labour court had no jurisdiction to entertain and
dispose of applications under Section 33C (2) in respect to the payment of
gratuity.
In U P State Road Transport Corporation v. Birendra Bhandari294: it
has been stated as under:
1. The benefit which can be enforced, under Section 33C(2) is a pre-existing
benefit or one flowing from a pre-existing right.
2. In State Bank of India v. Ram Chandra Debey295, this Court held as
under:
When a reference is made to an industrial tribunal to adjudicate
the question not only as to whether the termination of a
workman is justified or not but to grant appropriate relief, it
would consist of examination of the question whether the
reinstatement should be with full or partial back-wages or none.
Such a question is one of fact depending upon the evidence to be
produced before the tribunal. If after the termination of the
employment, the workman is gainfully employed elsewhere, it is
one of the factors to be considered in determining whether or not
reinstatement should be with full back-wages or with continuity
of employment. Such questions can be appropriately examined
only in a reference. When a reference is made under section 10
of the Act, all incidental questions arising thereto an be
determined by the tribunal and in this particular case, a specific
question has been referred to the tribunal as to the nature of
relief to be granted to the workman.
The principles enunciated in the decisions referred by either side have
been summed up as follows :
Whenever a workman is entitled to receive from his employer
any money or any benefit which is capable of being computed in
terms of money and which he is entitled to receive from his
employer and is denied of such benefit, he can approach labour
court under section 33C(2) of the Act, The benefit sought to be
 enforced under section 33C(2) of the Act is necessarily a pre-
existing benefit or one flowing from a pre-existing right. The
difference between a pre-existing right or benefit on one hand
and the right or benefit, which is considered just and fair on the
other hand is vital. The former falls within the jurisdiction of
labour court exercising powers under section 33C(2) of the Act
while the latter does not.
j. Effect of the death of workmen during the pendency of proceedings
under Section 33C(2). Courts have held that there is no statutory bar for
the legal representatives to continue action in an industrial dispute for the
purposes of adjudication and also under Section 33C(2). Thus, legal
representatives of a deceased worker can be allowed to continue the
proceedings under Section 33C (2) of the Act.296
k. Who will decide the claim
In Vijaya Bank v. Shyamat Kumar Lodh.297 The Supreme Court
observed that from a plain reading of Section 33C (2) it is evident that money
due to a workman has to be decided by such labour court ‘as may be specified in
this behalf by the appropriate government.’ Section 7 of the Industrial Disputes
Act, 1947 inter alia confers power to the appropriate government for
constitution of one or more labour courts for the adjudication of industrial
disputes. The Court then referred to the explanation of Section 33 C(2), its
significance and objects and observed that the explanation appended to Section
33C of the Act provides to include any court constituted under any law relating
to investigation and settlement of industrial disputes in force in any state as
labour court. The underlying object behind inserting the explanation seems to be
varying qualifications prescribed for appointment of presiding officers of labour
court by different state enactments. The Parliament took note of the fact while
inserting explanation that there are different kinds of labour courts constituted
under Industrial Disputes Act and state acts and a question may arise whether a
labour court constituted under various acts, Central or state could entertain a
claim made under Section 33C (2) of the Act. The court added that in view of
the explanation, aforesaid labour court shall include any court constituted under
any law relating to investigation and settlement of industrial disputes in force in
any state. Money due to an employee under Section 33C (2) is to be decided by
‘labour court as may be specified in this behalf by the appropriate government’.
In view of this, the court observed that the expression ‘Labour Court’ in Section
33C(2) has to be given an extended meaning so as to include a court constituted
under any law relating to investigation and settlement of industrial disputes in
force in any state. It widens the choice of appropriate government and it can
specify not only the labour courts constituted under Section 7 of the Industrial
Disputes Act, 1947 but such other courts constituted under any other law relating
to investigation and settlement of industrial disputes in force in any state.
The Court added:
But this does not end the controversy. The power to adjudicate
money claim is to the labour court ‘as may be specified in this
behalf by the appropriate government’. Every word used by the
legislature carries meaning and therefore effort has to be made
to give meaning to each and every word used by it. A
construction brushing aside words in a statute is not a sound
principle of construction. The court avoids a construction, if
reasonably permissible on the language, which renders an
expression or part of the statute devoid of any meaning or
application. Legislature never wastes its words or says anything
in vain and a construction rejecting the words of a statute is not
resorted to, excepting for compelling reasons. There does not
exist any reason, much less compelling reason to adopt a
construction, which renders the words ‘as may be specified in
this behalf’ used in Section 33C(2) of the Act as redundant.
These words have to be given full meaning. These words in no
uncertain terms indicate that there has to be specification by the
appropriate government that a particular court shall have
jurisdiction to decide money claim under Section 33C(2) of the
Act and it is that court alone which shall have the jurisdiction.
Appropriate government can specify the court or courts by
general or special order in its discretion. In the present case,
there is nothing on record to show that the labour court at
Dibrugarh has been specified by the appropriate government,
i.e., Central Government for adjudication of the disputes under
Section 33C(2) of the Industrial Disputes Act. This question in
our opinion has squarely been answered by this Court in the case
of Treogi Nath (Supra). True it is that rendering this decision,
this Court did not consider the explanation appended to Section
33C of the Act, as the lis pertained to period earlier to
amendment but in view of what we have said above, excepting
the widening of choice pertaining to courts, explanation does not
 dispense with the requirement of specification of court by
appropriate government
6. Civil Remedy under the Civil Procedure Code not Barred. The
amount due under a settlement or award can also be enforced by way of civil
remedy. However, the high courts were divided on the issue whether recourse to
the remedy under Section 33C (2) would bar the remedy available under the
Civil Procedure Code. The Madras High Court took the view that the jurisdiction
of civil court was barred298 whereas Calcutta High Court was of the view that
provision of Section 33C could not be pleaded as a bar to the jurisdiction of
Civil Court.299 The alternative remedies are independent of each other.300 But, if
a remedy is claimed under either of the two and fails on merit, an alternative
claim is barred before another authority or court.301
7. Government’s Power of Reference is not Barred by Section 33C. A
remedy provided under Section 33C (2) does not take away the right of the
government to make a reference under Section 10 if the circumstances justify
such a reference to an authority mentioned in the Act.
8. Duty of the Labour Court to Forward the Decision to the
Government. Section 33C (4) requires that after the labour court decides the
question as to the amount of money due or the rate at which the benefit should
be computed to which the workman in entitled, it shall forward its decision to
the appropriate government. On receipt of the decision of the labour court, the
government shall proceed to recover the amount found due by the labour court.
On having the amount determined, the concerned workman has to make an
application to the appropriate government for the recovery of the amount due to
him.

L. Finality and Enforceability of Award

Section 17A provides :
(1) An award (including an arbitration award) shall become enforceable on the
expiry of thirty days from the date of its publication under Section 17:
Provided that:
(a) if the appropriate government is of opinion, in any case where the
award has been given by a labour court or tribunal in relation to an
industrial dispute to which it is a party; or
(b) if the Central Government is of opinion, in any case where the award
has been given by a national tribunal,
 that it will be inexpedient on public grounds affecting national economy
or social justice to give effect to the whole or any part of the award, the
appropriate government or as the case may be, the Central Government
may, by notification in the official gazette, declare that the award shall
not become enforceable on the expiry of the said period of thirty days.
(2) Where any declaration has been made in relation to an award under the
proviso to Sub-section (1), the appropriate government or the Central
Government may, within ninety days from the date of publication of the
award under Section 17, make an order rejecting or modifying the award
and shall on the first available opportunity, lay the award together with a
copy of the order before the legislature of the state, if the order has been
made by a state government, or before Parliament, if the order has been
made by the Central Government.
(3) Where any award as rejected or modified by an order made under Sub-
section (2) is laid before the legislature of a state or before Parliament,
such award shall become enforceable on the expiry of fifteen days from
the date on which it is so laid and where no order under Sub-section (2) is
made in pursuance of a declaration under the proviso to Sub-section (1),
the award shall become enforceable on the expiry of the period of ninety
days referred to in sub-section (2).
(4) Subject to the provisions of sub-section (1) and sub-section (3) regarding
the enforceability of an award, the award shall come into operation with
effect from such date as may be specified therein, but where no date is so
specified, it shall come into operation on the date when the award
becomes enforceable under sub-section (1) or sub-section (3), as the case
may be.
The Scope of Jurisdiction of the Supreme Court under Article 136 of
the Constitution vis-a-vis Section 17(2). Article 136(1) of the Constitution
provides:
Notwithstanding anything in this Chapter, the Supreme Court may, in its
discretion, grant special leave to appeal from any judgement, decree,
determination, sentence or order in any cause or matter passed or made by any
court or tribunal in the territory of India.
For over 45 years, the Supreme Court has been increasingly concerned
about the question of exercise of the power but it has not succeeded in
determining exactly the scope of interference under Article 136 of the
Constitution. What is, however, beyond doubt is that no statutory provision or
technical hurdles of any kind like finality of award under Section 17(2) of the
Industrial Disputes Act can stand in the way of exercise of the powers under
Article 136 of the Constitution. The power of the Supreme Court under Article
136 is meant to safeguard and guarantee that injustice should not be ‘perpetuated
or perpetrated by decisions of courts and tribunals because certain laws have
made the decision of the courts and tribunals final and conclusive’.
Application of Res-judicata in Industrial Disputes. It has now been
settled in a catena of cases, that the application of technical rules of res-judicata
is not applicable to industrial adjudication.302 The principle underlying this rule
is that industrial adjudications are intended to have long-term operation and at
the same time are liable to be modified by change in the circumstances on which
they are based.303 It has, therefore, been held that the subsequent reference and
award made in circumstances different from those prevalent in the earlier
reference and award would not permit the application of the principle of res-
judicata.304 Similarly, the claim for modification of standing orders relating to
age of superannuation was not based by acquiescence and laches.305

M. Constitutionality of Section 17(2) and 17A

In Telugunadu Work Charged Employees v. Government of India306, the High
Court of Andhra Pradesh was invited to consider whether the impugned
provision contained in proviso to Section 17A(1) of the Act is offensive of
constitutional scheme or any of the constitutional provisions. It was contended
on behalf on the petitioner that (i) Section 17A of the Act is ultra vires the
Constitution of India as the government, which is the executive authority, cannot
annul the order of industrial tribunal or labour court and (ii) when an industrial
dispute is undertaken for adjudication, there cannot be any distinction between
the employers, be they government or private, and that all workmen have to be
treated alike and that the judgement rendered by the independent judicial body
has to be given credence and enforceability and it is mockery of the Constitution.
If the executive is permitted to sit over the judgement of a judicial body, which
is a separate wing of the Constitution and which enjoins the power of judicial
review, it will frustrate the scheme of distribution of power. Accepting the
contention, the Court observed that in State of Bihar v. D N Ganguly307 it was
held by the Supreme Court that once a reference is made under Section 10(1) of
the Act, the government becomes functus officio in so far as the reference aspect
is concerned and the industrial tribunal or labour court, as the case may be,
assumes jurisdiction to adjudicate the matter. In view of this, it is
incomprehensible as to how the government can sit in appeal over the award
made by the industrial tribunal or labour court, when it is incompetent to
withdraw or cancel the reference even at the initial stages. Further, the reference
is made not only inter-party, but it is inter se workman and also government and
there is absolutely no distinction or difference made with regard to the reference
part of it. No special circumstances are made available to the government to
deny the reference merely because the government is the party. The
considerations for making reference are the same for the party in opposition, be
it private or government. Rule of law also requires that in exercise of its
governmental or quasi governmental functions, those who are equal will be
treated equally. Equal treatment postulates rational classification. In fact, it was
held in Hindustan Antibiotics v. Workmen308 that there is no distinction
between a government employee or another kind of employee be it private sector
or public sector under the Act and that no distinction can be made between
industries in public and private sectors vis-a-vis the service conditions of the
labour and that a combined reading of clauses (g), (j) and (s) of Section 2 of the
Act indicates that the Act regulates the relationship of employer and employee
irrespective of the fact that the employer is the state government or not and that
disputes between the employers and employees irrespective of the character of
the employer, are made the subject-matter of industrial adjudication. The
Supreme Court even went to the extent of saying that the constitutional directive
in Articles 39(d) and 43 will certainly be disobeyed if the State attempts to make
a distinction between the same class of labourers on the ground that some of
them are employed by a company financed by the government and others by
companies floated by private enterprise. But, the impugned provision, in the
instant case, makes a distinction with regard to enforcement of the awards and
while the awards rendered inter se the workmen and the private sector
undertakings are made binding and compulsorily enforceable, reserves the power
to the government to annul the award on the ground of either national economy
or public interest, if the government is a party to the dispute and suffered the
award. This is clearly violative of equality clause guaranteed under Article 14 of
the Constitution of India and the impugned provision is unconstitutional on this
ground.
The second and the foremost point for consideration in as to whether the
impugned provision enabling the government to annual the award rendered by
the industrial tribunal or labour court violates the constitutional scheme or
mandate in the context of violation of rule of law and basic structure of the
Constitution.
The Court then referred to the decisions of the Supreme Court is Pruthvi
Cotton Mills v. Brough Muni309, G C Kanungo v. State of Orissa310 and S R
Bhagat v. State of Mysore311 and observed:
The judicial precedents make it amply clear and unambiguous
and they are so uniform in their pronouncements, that too
authoritatively, that law should conform to the democratic
pattern envisaged by the Constitution and the power which the
Parliament exercises is not power to override the constitutional
scheme.
Our constitutional scheme provides for judicial review by constitutional
authorities like the Supreme Court and the high courts and also courts and
tribunals created under the statutes. The learned Advocate General seeks a
distinction that while the judgements rendered by the constitutional authorities
like the Supreme Court and the high courts are binding and are unimpeachable
by the legislature or executive, the judgements of the courts and tribunals which
are the creatures of the statutes stand on a different footing and can be annulled
by the provisions contained in the same statutes creating the said courts or
tribunals while the ambit and extent of power of the constitutional functionaries
like Supreme Court and high courts are wide enough and all-prevading, the
judgements rendered by the courts and the tribunals, even created under the
statutes to the extent of their rights and limitations, cannot be made nugatory and
redundant by any legislative or executive action and are enforceable with the
same vigour and rigour as that of the decisions rendered by the Supreme Court
and the high courts. Thus, while mode of exercise of power in the case of
constitutional judicial review and statutory judicial review may differ, there is no
difference with regard to enforceability as, the power of the said judicial review,
be it constitutional or statutory, is a basic structure of the Constitution.
The Court added:
The Constitution has assigned the courts the function of
determining as to whether the laws made by the legislature are
in conformity with the provisions of the Constitution. In
adjudicating the constitutional validity of the statutes, the courts
discharge an obligation which has been imposed on them by the
Constitution. The courts would be shirking their responsibility if
they hesitate to declare the provisions of a statute to be
unconstitutional, even though those provisions are found to be
violative of constitutional scheme or the provisions.
The Court accordingly held that the impugned provision encroaches upon
the judicial power of the State, as it violates the basic concept of the rule of law
and democratic pattern envisaged by the Indian Constitution.
The Court accordingly struck down the impugned provision as being
ultra vires the Constitution and consequently the provision contained under Sec.
17(2) of the Act to the extent of the words subject to the provisions of Section
17A and whole of Section 17A with sub-sections (1) to (4) thereof are non-est
under law.

N. Power to Set Aside the Ex-parte Award Beyond 30 Days

The Supreme Court in Grindlays Bank v. Central Government Industrial
Tribunal312 while dealing with the contention that the tribunal becomes functus
officio on the expiry of 30 days from the date of publication on the award and,
therefore, has no jurisdiction to set aside the ex-parte award, held that the
proceedings with regard to a reference under Section 10 of the Act are not
deemed to be concluded until the expiry of 30 days from the publication of the
award and till then, the tribunal retains jurisdiction over the dispute referred to it
for adjudication and upto that date it has been powered to entertain an
application in connection with such a dispute and that stage is not reached till the
award becomes enforceable under Section 17A.
On the basis of the aforesaid decision, the High Court313 held that after
expiry of 30 days from the date of publication of the award, the industrial
tribunal/labour court becomes functus officio and has thus, no jurisdiction to
entertain an application filed beyond expiry of 30 days.

O. Payment of Full Wages Pending Proceedings in Higher

Courts
Experience shows that when labour court, tribunal or national tribunal directs
reinstatement of aggrieved workman, employers very often challenge such an
order in the high court and the Supreme Court. This causes great hardship to the
workman concerned. In order to discourage the dilatory tactics adopted by the
employer on the grounds of preliminary objection and technical pleas and long
pendency of dispute, the Parliament inserted Section 17B by the Industrial
Disputes (Amendment) Act, 1982. The objects and reasons for enacting the
Section is as follows:
When labour courts passes awards of reinstatement, these are
often contested by employer in Supreme Court and high courts.
 It was found that the delay in the implementation of the award
causes hardship to the workman concerned. It was, therefore,
proposed to provide the payment of wages last drawn by the
workman concerned, under certain conditions, from the date of
the award till the case is finally decided in the Supreme Court or
High Court.
Section 17B came into force w.e.f. 21 August 1984. Section 17B, which
prescribes the payment of full wages to workman pending proceeding in higher
courts provides:
Where in any case, a labour court, tribunal or national tribunal
by its award directs reinstatement of any workman and the
employer prefers any proceedings against such award in a high
court or the Supreme Court, the employer shall be liable to pay
such workman, during the period of pendency of such
proceedings in the high court or the Supreme Court, full wages
last drawn by him, inclusive of any maintenance allowance
admissible to him under any rule if the workman had not been
employed in any establishment during such period and an
affidavit by such workman had been filed to that effect in such
court: Provided that where it is proved to the satisfaction of the
high court or the Supreme Court that such workman had been
employed and had been receiving adequate remuneration during
any such period or part thereof, the Court shall order that no
wages shall be payable under this section for such period or part,
as the case may be.
The aforesaid stipulates that when an award of reinstatement of a
workman is challenged by the employer before the high court or the Supreme
Court and the operation of the same is stayed, the employer shall be liable to pay
the workman, during the period of pendency of such proceedings, full wages last
drawn by him. It also indicates that the same would be subject to the workman
filing an affidavit to satisfy the court that he had not been gainfully employed
during the said period. The said question has been set at rest in favour of the
workmen314. Thus, there are three essential elements to Section 17B namely: (i)
the labour court must have directed reinstatement of the workman, (ii) the
employer should have preferred proceedings against such award in the high
court or in the Supreme Court, (iii) the workman should not have been employed
in any establishment during such period.315
 In Bharat Singh v. Management, New Delhi Tuberculosis Centre316, the
Supreme Court was invited to determine the question whether a workman would
be denied the benefit of Section 17B, even if all the above three conditions are
satisfied. The Supreme Court answered the question in negative. According to
the Court ‘there are no words in the section to compel the Court to hold that it
cannot operate retrospectively. Before Section 17B was introduced, there was no
bar for courts for awarding wages. Of course, the workmen had no right to claim
it. This section, recognizes such a right. To construe it in a manner detrimental to
workmen would be to defeat its object.’
In Workmen Employed under IT Shramik Sena v. M/S Raptakos Brett
& Co. Ltd317, the Supreme Court held that when an employer moves the high
court against award of reinstatement of a workman and the former is not willing
to take him on duty, the last drawn wages not less than the standard minimum
wages will be payable during pendency of the proceedings.
(a) Application of Section 17B in case of award of regularization
In M/s Bharat Cooking Coal Ltd v. Their Workmen318 a division bench
of Supreme Court, while considering the above question with regard to
application of section 17B of the Act in a case of award of regularization, held:
Section 17B of the Act has application when the award is one
for reinstatement of a workman and the employer prefers any
proceeding against such an award in the high court or the
Supreme Court. The wording of Section 17B can have
application only when the award is one for reinstatement and not
in any other case. When the words of a statute are plain and
unambiguous, the court must understand the purport of the
statutory provision based on the language used by the statute.
This is the fundamental principle of interpretation and the other
aids can be resorted to only when the words of section 17B are
not plain or are ambiguous. From reading of the Section, there
cannot be any doubt that it applies to a case of reinstatement.
(b) Meaning and scope of the expression ‘full wages last drawn’
Whether the expression ‘full wages last drawn’ in Section 17B means
wages drawn by a workman at the time of termination of his employment or
wages which he would have drawn on the date of award? Prior to the Supreme
Courts decision, the high courts were divided and held that ‘full wages last
drawn’ can mean:
(i) Wages only at the rate last drawn and not at the same rate at
 which the wages are being paid to the workmen who are actually
working.319
(ii) Wages drawn on the date of termination of services plus the
yearly increment and the dearness allowance to be worked out
till the date of award.320
(iii) Full wages which the workman was entitled to draw in
pursuance of the award and the implementation of which is
suspended during the pendency of the proceeding.321
The Supreme Court in Dena Bank v. Kirat Kumar T Patel322
disapproved the extended meaning given by some high courts on the ground that
in substance, these constructions read the words ‘full wages last drawn’ as ‘full
wages which would have been drawn’. It held that such an extended meaning to
the words ‘full wages last drawn’ does not find support in the language of
Section 17B. Nor can this extended meaning be based on the object underlying
the enactment of Section 17B.’ The Court observed:
Section 17B has been enacted by Parliament with a view to give
relief to a workman who has been ordered to be reinstated under
the award of a labour court or industrial tribunal during the
pendency of proceedings in which the said award is under
challenge before the high court or the Supreme Court. The
object underlying the provision is to relieve to a certain extent
the hardship that is caused to the workman due to delay in the
implementation of the award. The payment which is required to
be made by the employer to the workman is in the nature of
subsistence allowance which would not be refundable or
recoverable from the workman even if the award is set aside by
the high court or this Court. Since the payment is of such a
character, Parliament thought it proper to limit it to the extent of
the wages which were drawn by the workman when he was in
service and when his services were terminated and therefore
used the words ‘full wages last drawn’. To read these words to
mean wages which would have been drawn by the workman if
he had continued in service if the order terminating his services
had not been passed since it has been set aside by the award of
the labour court or industrial tribunal would result in so
enlarging the benefit as to comprehend the relief that has been
granted under the award that is under challenge. Since the
amount is not refundable or recoverable in the event of the
 award being set aside, it would result in the employer being
required to give effect to the award during the pendency of the
proceedings challenging the award before the high court or the
Supreme Court without his being able to recover the said
amount in the event of the award being set aside. We are unable
to construe the provisions contained in Section 17B to cast such
a burden on the employer. In our opinion, therefore, the words
‘full wages last drawn’ must be given their plain and material
meaning and they cannot be given the extended meaning as
given by the Karnataka High Court in Vishveswarayya Iron &
Steel Ltd. (supra) or the Bombay High Court in Carona Sahu
Co. Ltd. (supra).
The Court added:
The expression ‘full’ only emphasizes that all the emoluments
which are included in ‘wages’ as defined in clause (rr) of
Section 2 of the Act so as to include the amounts referred to in
sub-clauses (i) to (iv) are required to be paid. In this context, it
may also be mentioned that in Section 17B, Parliament has also
used the words ‘inclusive of any maintenance allowance
admissible to him under any rule’. These words indicate that
maintenance allowance that is admissible under any rule is
required to be paid irrespective of the amount which was
actually being paid as maintenance allowance to the workman.
But with regard to wages, Parliament has used the words ‘full
wages last drawn’ indicating that the wages that were actually
paid and not the amount that would be payable are required to be
paid.
In Workmen Employed under IT Shramik Sena v. M/s Raptakos Brett
Co. Ltd,323 the Supreme Court held that when the management does not reinstate
the workmen as directed by the labour court and files an appeal writ petition
against the workmen, the workmen shall be paid wages @ ₹2,500 per month till
the disposal of the writ petition. Further, the management shall not call the
workmen/appellant for work in the company and therefore, the
workmen/appellant shall have no obligation to join the company for work but
during the pendency of the writ petition, the management shall go on paying
wages @ ₹2,500 per month.
The aforesaid view was followed by the Calcutta High Court in Food
Corporation of India v. Union of India324, Madras High Court in Management
of KSB Pumps Ltd v. Presiding Officer, Labour Court325 and Gujarat High
Court in Cadila Pharmaceutical Ltd v. Jyotiben Harishbhai Pandit326. The
Courts held that the benefit of Section 17B would be available to workmen from
the date of institution of writ petition till the disposal by the High Court.
(c) Benefit of last pay drawn when effective
In Uttaranchal Forest Development Corporation v. K B Singh327, the
Supreme Court held that:
The benefit of section 17B of the industrial Disputes Act, 1947
by directing reinstatement in service or payment of last wages
drawn in lieu thereof can be granted only in favour of such
workmen who have obtained awards in their favour from the
industrial tribunal or labour court and in support of their claims,
filed affidavits. The Court directed that only such workmen in
whose favour there are awards of reinstatement and who have
filed affidavits of their not being in gainful employment shall be
entitled to be granted reinstatement or in lieu thereof paid wages
last drawn by them on respective dates of their terminations
from services. Their entitlement for such wages would be from
the respective dates by filing affidavits by each of them in this
Court in compliance with section 17B of the industrial Disputes,
Act. 1947.
(d) Powers of the Supreme Court and high courts to award higher amount
under Section 17B
In Dena Bank v. Kirat Kumar T Patel328, the Supreme Court ruled that
the courts are empowered to award higher amount under Section 17B.
In Dena Bank II329, the Supreme Court laid down the following
principles:
(i) The import of Section 17B admits of no doubt that the
Parliament intended that the workman should get the last
drawn wages from the date of the award till the challenge
to the award is finally decided. Section 17B also does not
preclude the high courts or the Supreme Court under
Articles 226 and 136 of the Constitution respectively from
granting better benefits—
more just and equitable on the facts of the case than
 contemplated by that provision. The high court or the
Supreme Court may, while entertaining the employer’s
challenge to the award, in its discretion, in appropriate
cases stay the operation of the award in its entirety or in
regard to back wages only or in regard to reinstatement
without interfering with the payment of back wages or on
payment of wages in future irrespective of the result of the
proceedings before it, etc., and/or impose such conditions
as to the payment of salary as on the date of the order or a
part of the back wages and its withdrawal by the workman
as it may be deemed fit in the interest of justice. The court
may, depending on the facts of the case, direct payment of
full wages last drawn under Section 17B of the Act.
(ii) Even though the amount paid by the employer under
Section 17B cannot be directed to be refunded in the event
he loses the case in the writ petition, any amount over and
above the sum payable under the said provision has to be
refunded.
(e) Wages payable under Section 17B are non-recoverable
In Syndicate Bank v. General Secretary, Syndicate Bank Staff
Association,330 the Supreme Court held that the wages paid to the employee in
terms of Section 17B will neither be recovered nor adjusted by the bank.
(f) Where party agrees to receive lump sum in lieu of reinstatement
In Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd331, the
tribunal directed reinstatement of the workmen. The Allahabad High Court, on a
writ petition filed by management, set aside the award. Workmen were paid
wages by the employer from the date of award till it was set aside by the High
Court even though they did not work. On a special leave petition before the
Supreme Court, the workmen agreed to receive lump sum in lieu of
reinstatement over and above the amount already received by them. The
Supreme Court accordingly disposed of the petition as per the terms of
agreement and understanding and directed the management to pay the agreed
sum within 4 weeks.
(g) Period of payment
In Sri Varadaraja Textiles (Pvt) Ltd v. Presiding Officer, Labour Court,
Coimbatore332, the Madras High Court held that the payment continues as long
as the workman is in employment. The Court also held that reaching the age of
superannuation, the workman has lost his right to get wages last drawn under
Section 17B as the workmen gets wages only as per award of the labour court
which was already deposited by the employer.
(h) No recourse under Section 33C in respect of Section 17B
In Kalvalyadham Employees Association v. Kalvalyadham SMYM
Samity333, the Supreme Court held that invocation of Section 33C(2) of the
Industrial Disputes Act, is miconceived, having regard to the fact that section
33C(2) stands on a different footing from section 17B. While under Section 17B,
it is under the order of the high court or the Supreme Court in a pending
proceeding that the full wages last drawn by the workman, inclusive of any
maintenance allowance admissible to him under any rule, is to be paid; Section
33C(2), on the other hand, provides for recovery of money due from the
employer or any benefit which is capable of being computed in terms of money.
The question of invocation of Section 33C(2) arises only when there is dispute
as to the quantum of the dues. The two aforesaid provisions contemplate two
different situations and in certain cases, the provisions of Section 33C(2) may
have to be resorted to in respect of an order under Section 17B, but not as a
matter of course. The necessary details required for giving effect to an order
under Section 17B of the 1947 Act are available both with the employer as also
the employee and only involve a matter of calculation for which no evidence is
required to be taken.
(i) Burden of Proof
Section 17B requires a workman to file an affidavit before the high court
or Supreme Court where the employer has preferred any proceedings against the
award of reinstatement of the workmen that ‘he had not been employed in any
establishment’ during the pendency of such proceedings. Thus, in Viveka Nand
Sethi v. Chairman J & K Bank Ltd334, the Supreme Court held that Section 17B
cannot be applied where the workman did not file an affidavit before the Court.
Once such an affidavit has been filed by the workman, he has discharged his
onus. It is then for the employer to satisfy the high court or the Supreme Court
that the workmen in fact had not been employed or he had been receiving
adequate remuneration during such period or part thereof. If the employer
succeeds in satisfying the court in that behalf, the court shall order that wages
contemplated in Section 17B shall not be payable by the employer to the
workman for the period of pendency of proceedings before the court or part
thereof.

P. Constitutional Remedies
 1. General. Under Article 32 of the Constitution, the Supreme Court
under Article 226 and the high courts in India are empowered to issue writs,
orders or directions (including writs in the nature of mandamus, quo warrants,
prohibition and certiorari to any person or authority including any government
within their territories.335 The jurisdiction under Articles 32 and 226 are
concurrent and independent of each other. But whereas the power of the
Supreme Court under Article 32 is confined to the matters of enforcement of
fundamental rights, the High Court’s power under Article 226 is wider inasmuch
as it can issue writs not only for enforcement of fundamental rights,336 but for
any other purpose.337 Power to issue writ is an integral and basic feature of the
Constitution and cannot be taken away through any legislation.338 A high court’s
dismissal on the merits of a petition under Article 226 operates as res judicata to
barring the same or similar petition under Article 32.339
Broadly speaking, there are two general principles with regard to the
exercise of the powers of the Supreme Court and the high courts, (i) The
constitutional power of the Supreme Court and high courts to issue writs cannot
be taken away or whittled down by any legislative device.340 (ii) Where
adequate alternative remedy is available, the high court will, unless fundamental
rights are shelved, refuse to issue the writ.341 But, the existence of an alternative
remedy is no bar where a fundamental right is violated.342 We shall now briefly
examine the writs which may be issued under Articles 32 and 226.
2. Writ of Certiorari. (a) Principles of interference. The issuance of a
writ of certiorari involves two general principles. One of the fundamental
principles with reference to the exercise of power is that the writ of certiorari
may be issued against an inferior court or body exercising judicial or quasi
judicial functions.343 Accordingly, the following orders in labour matters, have
been held to be quasi-judicial in nature and, therefore, subject to writ of
certiorari:
• The award of the industrial tribunal constituted under the Industrial
Disputes Act, 1947.344
• The award of the voluntary arbitrator appointed under the Industrial
Disputes Act 1947.345
On the other hand, the following orders in labour matter have been held
to be executive orders and, therefore, not subject to writ of certiorari.
• Order by the government referring a dispute to an industrial tribunal under
the Industrial Disputes Act. 1947.346
 • Proceedings of a conciliation officer under the Industrial Disputes Act
1947.347
The other feature of a writ of certiorari is that in exercising the power,
court acts in a supervisory and not in an appellate capacity. In exercising the
supervisory power, the court does not act as an appellate tribunal.348
• Grounds of issuance. Writs of certiorari can be issued on any one of
the following grounds against the industrial awards:
(i) Defects of jurisdiction;
• Want of jurisdiction,349
• Excess of jurisdiction,350
• Failure to exercise jurisdiction.351
(ii) Violation of the principles of natural justice;
• no evidence rule,352
• against the evidence,353
• against the rules of natural justice.354
(iii) misconduct of the arbitrators;355
(iv) error apparent on the face of the record;356
(v) misconception of law;357
(vi) finding of facts suffering from an error of law;358
(vii) if no reasonable person would come to the conclusion which the
arbitrator/adjudicator has arrived.359
3. Writ of Mandamus. A perusal of the decided cases reveals that the
writ of Mandamus has been issued by the courts on any one of the following
grounds:
• Where the fundamental rights had been infringed360
• Where the State refused to exercise its statutory duty361
• Where the ultra vires statutes were enforced362
• Where the authorities failed to perform the public duty363
• Where there was error of law or violation of rules of natural justice364
• Where there was abuse of discretion365
4. Writ of Prohibition. An analysis of the judicial decisions reveals that
the writ of prohibition may be issued on any one of the following grounds:
 • Defects of jurisdiction366
• Violation of principle of natural justice367
5. Power of Superintendence of the High Court under Article 227 of
the Constitution. Under Article 227, every high court has the power of
superintendence over all lower courts and tribunals within its jurisdiction. This
power is wider than the powers conferred on the high courts to control inferior
courts through writs under Article 226. However, the power under Article 227 is
exercised sparingly and only in exceptional cases. The court does not interfere
unless there is any grave miscarriage of justice or flagrant violation of law
requiring interference.368 Moreover, in exercise of the supervisory power under
Article 227, the high court will not sit in appeal over the decision of any court or
tribunal. It will not review or reweigh the evidence or correct errors of law in the
decision unless, there was error in the face of record or grave miscarriage of
justice or flagrant violation of law.369
Grounds of interference. The main grounds for interference under Article
227 are as follows:
• Defects, excess370 or want of jurisdiction371
• Failure to exercise jurisdiction372
• Violation of the principles of natural justice373
• Error of law374
6. Provisions Relating to Appeal from the Decisions of the High
Court in Labour Matters. Another course open to the aggrieved person is to
invoke the Supreme Court in regular civil appeal from the decisions of the high
courts under Articles 132 and 133. Article 132 confers jurisdiction on the
Supreme Court in respect of matters ‘involving a substantial question of law as
to the interpretation of the Constitution.’ Under Article 133, the Supreme Court
may entertain regular civil appeals from the decisions of the high court in ‘civil
proceedings’ where a certificate of fitness has been granted by the high court.
7. Relief Under Article 136 of the Constitution from Industrial
Awards.
• General. Apart from the provisions of writs under Articles 32 and
226, the Constitution also provides another remedy to persons aggrieved for
obtaining special leave, inter alia, in labour matters. Under Article 136, the
Supreme Court is empowered to grant special leave to appeal from any
judgement, decree, determination, sentence or order in any cause or matter
passed or made by any court or tribunal, other than those constituted by or under
any law relating to armed forces in the territory of India.
• Principles of interference. Article 136 being a special provision, the
Supreme Court evolved certain limiting principles for its use. First, the
discretionary power under Article 136 should be exercised sparingly and in
exceptional cases.375 Second, the discretionary power under Article 136 is
exercisable notwithstanding (i) the finality clauses of statutes,376 (ii) the
statutory provisions,377 (iii) the Supreme Court rules378 or other technical
hurdles, provided the Court concludes that a person has been dealt with
arbitrarily or has not been given a fair deal. Third, even where special leave has
been granted in exercise of discretionary power under Article 136, no restriction
can be imposed or applied at the time of final disposal of the appeal.379 Fourth,
the exercise of the discretion would not be justified to give findings on matters
which have become stale.380
• Grounds of interference. A perusal of the decisions of the Supreme
Court reveals that—the Supreme Court has exercised its discretionary power
under Article 136 against the award of the tribunals on any one of the following
grounds:
• Excess, want or abuse of jurisdiction381
• Where the tribunal ostensibly fails to exercise a patent jurisdiction382
• Where a question of general public importance was involved383
• Where there was manifest injustice or fundamental flaw in law384
• Where the problem was approached wrongly385
• Violation of any of the principles of natural justice386
• Where the court erroneously applied the well-accepted principles of
jurisprudence387
• Baseless or perverse finding388
• Cases requiring elucidation and final decisions389
• Where it has traversed beyond the terms of reference390
• Where it has not applied its mind to the real question391
• Where the procedure adopted is against all notions of legal procedure392
• Where it ignored a material document393
A survey of the Supreme Court’s decisions reveals that the Court has
considerably enlarged the scope of its interference under Article 136. Thus, in
Bharat Bank v. Employees of Bharat Bank394, the Court enunciated that it will
interfere only in matters pertaining to the jurisdictions and procedure of the
tribunal. But, in Bengal Chemical & Pharmaceutical Works Ltd v. Their
Employees,395 the Court provided an additional ground for interference, namely,
where an important question of law requiring elucidation and final decision was
involved.396 Again, the court interfered where the tribunal erroneously applied
established principles of jurisprudence,397 failed to apply its mind to the real
question,398 approached the problem wrongly,399 and ignored a material
document.400

IX. NON-STATUTORY MACHINERY AND ITS

WORKING
Besides statutory machinery provided under the Industrial Disputes Act, 1947,
several voluntary machineries have also been set up. The most important among
these are the joint management council, code of discipline and tripartite
consultative machinery. These voluntary machineries influence to some extent
both employers and workers for preservation and maintenance of industrial
relations. However, they have shown limited success for limited purposes.

A. Joint Management Council

The need for joint management consultation was emphasized in the Government
Industrial Policy Resolution, 1956 which is as follows:
In a socialist democracy, labour is a partner in a common task of
development and should participate in it with enthusiasm ….
There should be joint consultation, and workers and technicians
should, wherever possible, be associated progressively in
management. Enterprises in the public sector have to set an
example in this respect.401
To translate the aforesaid idea into action, the Second Five-Year Plan
reiterated that ‘this would be achieved by providing for council of management,
workers and technicians’. The Plan accorded due importance to the joint
consultation and made it obligatory upon the management to supply such
councils with fair and correct statements of all relevant information to enable
them to function effectively. Pursuant to this, the Labour Ministry constituted a
Study Group on Workers’ Participation in Management which toured Europe. It
consisted of representatives of government, labour and management. After a
detailed examination, the study group submitted its report which favoured a
scheme of joint management council to be set up in the country. This report was
considered in the Indian Labour Conference in July 1957. The conference gave
its approval to the scheme of joint management council and suggested the
appointment of a small tripartite sub-committee to examine the details of the
scheme and to select undertakings in which the scheme could be introduced. The
subcommittee met in August, 1957 and selected 48 units (32 in the private and
16 in the public sector).402 The sub-committee also prepared a draft scheme of
joint management council. The scheme was tried on an experimental basis in
certain establishments upto 1960. To review the working of establishments
having joint management councils, a seminar was convened on March 8 and 9,
1960. This seminar found that joint management councils could not contribute
much because their exact nature and functions were not properly defined and
appreciated. In these circumstances, the seminar recommended to set up a
compact body at national level to deal with problems arising out of and
connected with the working of the joint management councils. This led to the
appointment of a Tripartite Committee on Labour Management Cooperation in
November, 1960, to ‘give advice and guidance on all matters pertaining to joint
management councils, to collect and disseminate information relating thereto,
and to explore possibilities of extending the scheme to new units.’403
The scheme of joint management councils was evolved on voluntary basis
to promote industrial peace and harmony between labour and management,
ensure closer association between workers and management, increase production
and share the responsibilities of management.
1. Composition of the Council. The question of composition and
representation in councils figured prominently in the seminar on labour
management councils convened by the Government of India in 1958. The
seminar suggested that the councils should consist of an equal number of
representatives of labour and management. However, the total number of
members should not exceed 12. It was suggested that in an establishment having
one registered trade union, the employees’ representatives in the council were to
be nominated by such union. However, where more than one registered trade
union exist, the representative to the council was to be chosen by mutual
agreement among such unions. The seminar also recommended that there should
be no bar on members of supervisory and technical staff to be chosen as
workers’ representative. Further, outside employees were also allowed to
represent the workers but the number of such representatives was not to exceed
25 per cent of the total number of representatives of such workers or unions in
the establishment.
The representation of employees in joint councils requires consideration
of two issues. First, the question of representation of workers is linked with the
question of recognition of trade unions. The problem of representation can be
met by making statutory provisions for recognition of trade union. Second, ‘the
management’s representatives in the joint council are invariably nominated by
the management. In most cases, the workers’ representatives are nominated by
the union…. In few cases, workers’ representatives complained that
management nominated to the joint council comparatively junior officers who
had often pleaded ignorance for want of instructions’.404 From this it is clear that
the proper selection of representatives of management and trade union would
play a significant part in making the council a success.
2. Powers and Functions of the Council. The draft model agreement
regarding establishment of council of management prepared by sub-committee
set up by the Indian Labour Conference and approved in the seminar on labour
management corporation provided that ‘the council/councils would be consulted
by the management on matters like: (i) administration of standing orders and
their amendment, when needed; (ii) retrenchment; (iii) rationalization; and (iv)
closure, reduction in or cessation of operations.’405 Clause 6 of the agreement
conferred upon the council the right to receive information, to discuss and to
give suggestions on (i) general economic situation of the concern; (ii) the state of
market, production and sales programmes; (iii) organization and general running
of the undertaking; (iv) circumstances affecting the economic position of the
undertaking; (v) methods of manufacture and work; (vi) annual balance sheet
and profit and loss statement and connected documents and explanation, (vii)
long-term plans for expansion, re-employment, etc.; and (viii) such other matters
as may be agreed to. However, matters such as wages, bonus, etc., which formed
the subject of collective bargaining were kept outside the purview of
council/councils. Further, individual grievances were also excluded from its
scope.
The Model Agreement conferred administrative responsibility upon the
council in respect of (i) administration of welfare measures; (ii) superposition of
safety measures; (iii) operation of vocational training and apprenticeship
schemes; (iv) preparation of schedules of working-hours and breaks of holidays;
(v) payment of rewards for valuable suggestions received from the employees;
and (vi) any other matter.
 3. Working of the Joint Management Council. It has been observed
elsewhere that the sub-committee appointed by the Indian Labour Conference
selected 48 units (32 in the private and 16 in the public sector) for setting up
joint management councils. But in spite of governmental efforts, only 24
establishments could set up joint management councils till 1960. These 24
included seven councils in public sector and remaining 17 in private sector units.
The public sector units among others included Hindustan Machine Tools Ltd,
Bangalore; Kerala State Transport Department and Hindustan Insecticides Ltd.
In 1962, the number rose to 95 (35 in public and 60 in private sector units).
However, a perusal of the lists of establishments having joint councils in public
sector units, Hindustan Machine Tools Ltd (which figured in 1959 on joint
council map) did not find place in 1962. From this, one may presume that the
experiment of institution of joint management councils must have failed over
there.406 The year 1966 witnessed further increase in the number of joint
management councils which were set up in establishments. Out of these, 43
councils were set up in public and 97 in private sector.407 Two years later, in
1968, the number of councils fell from 140 to 131; of these 46 were in public 85
in private sector.408 By the end of 1974, joint management councils were
functioning only in 80 establishments, 31 in public and 49 in the private sector.
From this it is clear that the scheme suffered a setback. Thus, a survey of the
reports on the working of joint management councils in 1965 published by the
Government of India reveals some key factors for the failure of the scheme of
joint management council as under:
(i) Some managements nominate to the joint council comparatively junior
officers who often are ignorant or for want of instructions are unable to
effectively participate in the process.
(ii) Only in very few undertakings, meetings of the joint council had been
held regularly in every month.
(iii) In most cases, workers’ representatives seem to care more for the
enlargement of amenities and facilities and in a few cases, the redressal
of grievances, than about larger problems such as increasing
productivity, reducing absenteeism, effecting economies, and suggesting
methods for more efficient utilization of plant and equipment. In several
cases, even employer’s representatives do not bring such matters on the
agenda as they are doubtful about the competence of workers to
understand such problems and much less to make any contribution
towards their solution.
(iv) Although the agreements by which joint councils were set up envisaged
 consultation with the council by management on a variety of subjects,
occasions have been rare when such consultations have been made,
except in regard to the administration of standing orders.
(v) Communication or sharing of information with the workers has not been
adequately developed. In most cases, the employer’s attitude seems to
be that it is sufficient to give to the workers’ representatives as much
information as they seek, consistent with the terms of the agreement.
(vi) The agreements by which joint councils were set up envisaged the
management transferring to the council administrative responsibility in
regard to welfare measures, safety measures, etc. But in actual practice,
there is no real transfer of administrative responsibility in these
matters…. In no case has the joint council been left the choice to
determine, within the financial resources available, the priorities
regarding welfare measures to be provided or the allocation to be made
in respect of these facilities.
(vii) Only in very few cases have incentive wage or bonus schemes been
adopted to enable the workers to share the fruits of higher productivity.
Most employers do not offer to share the gains of higher productivity.
(viii) One reason for difficulties faced in the running of joint councils has
been the management’s failure to implement the unanimous decisions of
the joint council.
Thus, this scheme has not met with much success in its operation.

B. Code of Discipline
The need for voluntary code of discipline was felt in 1957 in order to create
awareness among the parties to industrial relations about their obligations under
labour laws, as also to create in them an attitude of willing acceptance of their
responsibilities and a readiness to discharge them.409 It was in this context that
the code of discipline found approval at the 16th Indian Labour Conference, and
was formally announced in June, 1958. The code was ratified by the central
organization of workers and employers. The code has been accepted by a
majority of private and public sectors. The code, primarily as a result of the
persuasive efforts of Central Implementation and Evaluation Division, has been
accepted by 166 trade unions and 180 employers affiliated to Central Workers’
and Employers’ Organization.
The code applies to all public sector undertakings run as companies and
corporations except in defence, railways and ports and docks. Among those,
where the code of discipline applies with certain modifications include Reserve
Bank of India, State Bank of India and the Department of Defence Production.
Under the code, management and union(s) agree that:
(i) no unilateral action should be taken in connection with any industrial
matter and that disputes should be settled at appropriate level;
(ii) the existing machinery for settlement of disputes should be utilized with
utmost expedition;
(iii) there should be no strike or lockout without notice;
(iv) they affirm their faith in democratic principles and they bind themselves
to settle all future differences, disputes and grievances by mutual
negotiation, conciliation and voluntary arbitration;
(v) neither party will have recourse to coercion, intimidation, victimization
or go-slow;
(vi) they will avoid litigation, sit-down and stay-in strikes, and lockouts;
(vii) they will promote constructive cooperation between their
representatives at all levels and between workers themselves and abide
by the spirit of agreements mutually entered into;
(viii) they will establish upon a mutually agreed basis, a grievance procedure
which will ensure a speedy and full investigation leading to settlement;
(ix) they will abide by various stages in the grievance procedure and take no
arbitrary action which would bypass this procedure; and
(x) they will educate the management personnel and workers regarding
their obligations to each other.
In order to ensure better discipline in industry, the code provides for: (i) a
just recognition by employers and workers of the rights and responsibilities of
either party as defined by the laws and agreements (including bipartite and
tripartite agreements arrived at all levels from time to time) and (ii) proper and
willing discharge by either party of its obligations consequent on such
recognition.
In the second set, the management agrees (i) not to increase workloads
unless agreed upon or settled otherwise; (ii) not to support or encourage any
unfair labour practice; (iii) to take prompt action for settlement of grievances,
and implementation of settlements, awards, decisions and others; (iv) to display
in conspicuous places in the undertaking the provisions of this code in local
language(s); (v) to distinguish between actions justifying immediate discharge
and those where discharge must be preceded by a warning, reprimand
suspension or some other form of disciplinary action and to arrange that all such
disciplinary actions should be subject to an appeal through normal grievance
procedure; (vi) to take appropriate disciplinary action against its officers and
members in cases where inquiries reveal that they were responsible for
precipitating action by workers leading to indiscipline; (vii) to recognize the
union in accordance with the prescribed criteria.
The third set imposes an obligation upon the unions;
(i) not to engage in any form of physical duress;
(ii) not to permit demonstrations which are not peaceful and not to permit
rowdyism in demonstrations;
(iii) that their members will not engage or cause other employees to engage
in any union activity during working hours, unless as provided for by
any law, agreement or practice;
(iv) to discourage unfair labour practices, such as, negligence of duty,
careless operation, damage of property, and insubordination;
(v) to take prompt action to implement awards, agreements, settlements and
decisions;
(vi) to display in conspicuous places in the union offices, the provisions of
this code in the local language(s); and
(vii) to express disapproval and to take appropriate action against office-
bearers and members for indulging in action against the spirit of this
code.
The Supreme Court in General Secretary, Rourkela Shramik Sangh v.
Rourkela Mazdoor Subha,410 held that although Section 11 of the code is
headed ‘implementation machinery’, it consists of two separate organizations,
viz., implementation units and tripartite implementation committees which is
obvious from the language of Section 11 itself and also from the separate
constitution and functions of the two organizations. The Court ruled that to hold
that the implementation unit in the respective labour department together with
the respective tripartite committee at centre, state or local level would constitute
the implementation machinery jointly and not each of them separately would run
not only counter to the intention of the code as is manifest from the language of
Section 11 and their separate composition and functions but would also be
impracticable in working. Dealing with the composition of the implementation
committees and their functions, the Court observed:
These committees consist of, at the central level, an equal
number of employers and workers’ representatives—four each
from the central employers and workers organizations as
nominated by the organizations themselves. At the state level,
 they are required to be constituted similarly and in consultation
with the central employers and workers’ organizations whenever
they are affiliated in the state concerned. The committees are
presided over as far as possible by respective labour ministers
and even when it is not possible for labour ministers to preside
over them, they have to associate themselves as much as
possible with the deliberations of the committees. At the local
level, the committees are similarly constituted of an equal
number of representatives of the employers and workers in the
area and are presided over by an officer of the labour department
or by a prominent person in the region. In a given case, there
may be more associations than one of employers and employees,
and the committees would then consist of an unwieldy number.
To expect such a committee to carry out the work mentioned in
appendix IV is unrealistic. This is why the code itself has
entrusted to the implementation units and not to implementation
committees the task of ensuring that recognition is granted to
unions by managements. At the centre, the implementation unit
is kept in charge of joint secretary and at the state level, it is in
charge of a whole-time officer of the state labour department.
However, the code of discipline has not been effectively implemented and
it is respected more in breach than in observance. Several reasons may be
accounted for the same: (i) the absence of a genuine desire for and limited
support to, self-imposed voluntary restraints on the part of employers’ and
workers’ organizations, (ii) the worsening economic situation which eroded the
real wage of workers, (iii) the liability of some employers to implement their
obligations, (iv) a disarray among labour representatives due to rivalries, and (v)
conflict between the code and the law.411 In view of this, the National
Commission on Labour recommended that the part of the code which enjoins
stricter observance of obligations and responsibilities under the various labour
laws may be left to the normal process of implementation and enforcement by
the labour administration machinery, some others need to be formalized under
law. These are: (a) recognition of a union as bargaining agent; (b) setting up of a
grievance machinery in an undertaking: (c) prohibition of strike/lockout without
notice; (d) penalties for unfair labour practices; and (e) provision of voluntary
arbitration.
With the removal of the above provisions from the code and on giving
them a legal form, the code will have no useful function to perform.412
C. Tripartite Consultative Machinery
Tripartite consultative machinery such as Indian Labour Conference, Standing
Labour Advisory Committee and Industrial Committee also play an important
role in ensuring the representation of the various interests involved in labour
matters at the national level. Besides this, the committee on convention is also
instrumental in reviewing the ratification of ILO conventions and the application
of international labour standards.
The ILC/SLC have facilitated the enactment of central legislation on
various subjects to be made applicable to all the states of the Indian union in
order to promote uniformity in labour legislation which was an important
objective to be achieved by these tripartite bodies.

1 Section 3(2) of the Industrial Disputes Act, 1947.

2 See R F Rustamji, The Law of Industrial Disputes in India, (1962), 219.
3 See Kemp and Co. Ltd v. Its Workmen, (1955) 1 LLJ 48 (LAT).
4 Praful Mohan Das v. SAIL, (1992) 1 LLJ 621.
5 Bangali Raje v. Union of India, (1993) Lab. IC 812.
6 AIR 1988 SC 633.
7 2011 (1) SLR 375.
8 See Section 3(2).
9 See M/s Northbrook Jute Co. Ltd v. Their workmen, AIR 1960 SC 879.
10 See Government of India, Ministry of Labour, Annual Report (1997) 29.
11 See Government of India, Report of the [First] National Commission on Labour, (1969)
343.
12 I L I, Labour Law and Labour Relations (Ed. Suresh C Srivastava (2007) 53.
13 I L O, Report No. VII (2), (1966). See also Government of India, Report of [First]
National Commission on Labour, (1969), 23.
14 Likewise, in the United States, a grievance has been defined as ‘a formal complaint over
an allegation by an employees’ union… that… a collective bargaining contract, company
policy or agreement has been violated.’ See Society of the Advancement of Management,
Glossary of Personnel Management and Industrial Relations Terms, New York. (1959),
18.
15 Government of India, Code of Discipline in Industry (1961) 2–3.
16 The Amendment Act came into force w.e.f. 15th September, 2010.
17 See Foenander, Industrial Conciliation and Arbitration in Australia, (1959), 95.
18 Section 12(5).
19 See Government of India, Report of the National Commission on Labour, 322–23.
20 Section 4(2).
21 Section 5(2).
22 Section 11(6).
23 Section 11(4).
24 Section 22(2).
25 State of Bihar v. Kripa Shanker Jaiswal, AIR 1961 SC 304.
26 The Industrial Disputes (Central) Rules, 1957, Rule 24.
27 The former section punishes giving or fabricating false evidence; while the latter section
punishes insulting or interrupting judicial proceedings.
28 These sections deal with the court's power to punish for contempt of court.
29 The Industrial Disputes (Central) Rules, 1957, Rule 30.
30 Section 11(1) of the Industrial Disputes Act 1947.
31 Rule 13 of the Industrial Disputes (Central) Rules, 1957.
32 Rule 16 of the Industrial Disputes (Central) Rules, 1957.
33 Rule 19 of the Industrial Disputes (Central) Rules, 1957.
34 Rule 20 of the Industrial Disputes (Central) Rules, 1957.
35 Rule 22 of the Industrial Disputes (Central) Rules, 1957.
36 Rule 28 of the Industrial Disputes (Central) Rules, 1957.
37 Rule 15 of the Industrial Disputes (Central) Rules, 1957.
38 Rule 21 of the Industrial Disputes Act (Central), 1957.
39 Rule 29 of the Industrial Disputes Act, (Central) Rules, 1957.
40 Rule 33 of the Industrial Disputes (Central) Rules, 1957.
41 See, Section 4(1) of the Industrial Disputes Act, 1947.
42 Madhavan Kutty v. Union of India (1982) 2 LLJ 212 (Kerala).
43 Sub-section 2 of Section 12 lays down: ‘the conciliation officer shall, for the purpose of
bringing about a settlement of the dispute without delay, investigate the dispute and all
matters affecting the merits and the right settlement thereof and may do all things as he
thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement
of the disputes.’
44 Section 12 (3).
45 Section 12 (4).
46 All India Bombay Tyres International Employees' Federation v. C B Dinagre (1993)
Lab. IC 817.
47 Section 12 (5).
48 Britannia Biscuit Co. Ltd Employees’ Union v. Assistant Commissioner of Labour,
(1983) 1 LLJ 181.
49 State of Bihar v. Kripa Shankar Jaiswal, AIR 1961 SC 340.
50 (1982) 2 LLJ 71.
51 (1984) 1 LLJ 174.
52 Madhavan Kutty v. Union of India, (1982) 2 LLJ 212.
53 Workmen of Buckingham & Carnatic Mills v. State of Tamil Nadu, (1982) 2 LLJ 90.
54 (1983) 1 LLJ 13.
55 AIR 1960 SC 1012.
56 (1999) LLR 278.
57 (1999) LLR 230.
58 Section 12 (1).
59 Section 13 (1).
60 Section 13 (3).
61 Section 13 (4).
62 Section 13 (5).
63 Section 12 (1). See also Rule 9 of the rules framed thereunder.
64 See Rule 10 of the Industrial Dispute (Central) Rule, 1957. See also East Asiatic Allied
Companies v. Shelka, (1961) 1 LLJ 162 (Bombay).
65 See Government of India, Report of [First] National Commission on Labour, (1969) 322.
66 Workmen of Industry Colliery v. Industry Colliery, (1953) 1 LLJ 190 (SC).
67 Sub-section 1 of Section 20 of the Industrial Disputes Act, 1947, provides that conciliation
proceedings shall be deemed to have commenced… on the date of the order referring the
dispute to a board.
68 See Bata Shoe Co. (P) Ltd v. Ganguli (D N), AIR 1961 SC 1158.
69 See Tata Chemical Ltd v. Workmen, (1978) 2 LLJ 22 (SC).
70 See Indian Tobacco Company Ltd v. Government of West Bengal, (1971) 1 LLJ 89 at 94
(Calcutta).
71 Bata Shoe Co. Ltd v. Ganguli, AIR 1961 SC 1158 at 1161.
72 See Tata Chemicals Ltd v. Its workmen, (1978) 2 LLJ 22 at 26.
73 See Royal Calcutta Gold Club Mazdoor Union v. State of West Bengal, AIR 1956
Calcutta 550 and Caltex (India) Ltd v. The Commissioner of Labour and Conciliation
Officer, AIR 1956 Madras 441.
74 Section 16 (1) of the Industrial Disputes Act, 1947.
75 Section 12(3) of the Industrial Disputes Act, 1947.
76 Section 13 (2) of the Industrial Disputes Act, 1947.
77 (1997) 1 LLJ 308 : AIR 1997 SC 2334.
78 India Construction Corporation Limited, (1953) LIC 568 (Calcutta).
79 Shukla Manseta Industries Pvt. Ltd v. The Workmen, (1977) 2 LLJ 339 (SC).
80 Id. at 342.
81 Jaypore Sugar Company Ltd v. Their Employees, (1955) 2 LLJ 444 (LAT).
82 Jaypore Sugar Company Ltd v. Their Employees, op. cit., 446.
83 South Indian Bank Ltd v. Chako, (1964) 1 LLJ 19 (SC).
84 The Indian Link Chain Manufactures Ltd v. Their Workmen, (1972) Lab. IC 200.
85 Cochin State Power Light Corporation Ltd v. Its Workmen, (1964) 2 LLI 100 (SC).
86 Ibid. at 101.
87 The Indian Link Chain Manufactures Ltd v. Their Workmen, op. cit., 200 and 206.
88 Ibid.
89 JT 1999 (1) SC 554: 1999 LLR 390 (SC); (1999) 1 LLJ 489 (SC).
90 Section 18 (1) of the Industrial Disputes Act, 1947.
91 Section 18 (3) of the Industrial Disputes Act, 1947.
92 See Jharkhand Collieries v. Central Government Industrial Tribunal, (1975) Lab. IC
137, 139 (SC).
93 (1998) 1 LLJ 389 (SC): AIR 1998 SC 554.
94 Ramnagar Cane and Sugar Co. Ltd v. Jatin Chakravarty, AIR 1960 SC 1012 at 1015.
95 Tata Chemicals Ltd v. Workmen, (1978) 1 LLJ 22 (SC).
96 (1986) Lab. IC 667. 670 (SC).
97 Management of Pandian Roadways Corporation v. Labour Court, (1994) Lab. IC 1817.
98 See Bata Shoe Co. (Pvt.) Ltd v. Ganguli D N, AIR 1961 SC 158: See also Ram Pukar
Singh v. Heavy Engineering, (1995) LLR 201.
99 In Praga Tools Ltd v. Praga Tool Mazdoor Sabha, (1975) 1 LLJ 218: Sec also A L P
Hindustan Zinc Ltd v. H Z Workers' Union, (1988) Lab. IC 1361.
100 (1977) Lab IC 162 (SC).
101 (2000) 1 SCC 371.
102 (2000) 1 SCC 371.
103 Section 6 (1).
104 Ibid.
105 Section 6 (2).
106 Section 6 (3).
107 Section 14.
108 See Julius G Getman, Grievance Arbitration: ‘Law and Policy in India’, American Labour
Supplement, New Delhi, December 15, 1976.
109 Ibid.
110 See Manohar Lal. ‘Problems of Arbitration from Management’s Point of View’,
Arbitration News, Vol. 1, 1966, 32.
111 A somewhat similar scheme of settlement operating in Australia was severely criticized, as
early as 1929 by the British Economic Commission wherein it intended to consolidate the
contesting parties into two opposing camps (See R F Rustomji, The Law of Industrial
Disputes in India, (2nd ed. 1954), 484-85. The ILO gave renewed emphasis to such
criticism. In 1951, it recommended voluntary arbitration as a better mode of settlement of
 industrial disputes. [See ILI, Labour Law and Labour Relations (Sharma ed). (1968),
179].
112 This provision is similar to Section 10 (2), where the parties can request the appropriate
government to refer the dispute to the appropriate government for adjudication. The
government must do so if satisfied that the persons applying represent the majority.
113 The presiding officer of a labour court or tribunal may also be an arbitrator.
114 See Raza Textiles Labour Union v. Mohan, (1964) 2 LLJ 65 (Allahabad): Rohtas
Industries Ltd v. Its Workmen, (1968) 1 LLJ 710 (Patna); and Sindhu Hochtief v.
Pratap Dialdas, (1968) 2 LLJ 515 (Bombay).
115 Sub-section (1) of Section 10 A.
116 North Orissa Workers' Union v. State of Orissa, (1971) LLJ 199 (Orissa).
117 Ibid.
118 Section 10A (3) of the Industrial Disputes Act, 1947.
119 Moorco (India) Ltd v. Government of Tamil Nadu, (1993) Lab. IC 1663.
120 Sub-section (3) of the Section 10A of the Industrial Disputes Act, 1947.
121 (1989) 2 LLJ 550 (SC). Also see Kathayee Cotton Mills Ltd v. District Labour Officer
(1988) 1 LLJ 417 (Ker.): Krishnaveni Transports v. Special Deputy Commissioner of
Labour, Madras, (1989) 2 LLJ 245.
122 K P Singh v. S K Gokhale, (1970) 1 LLJ, 125.
123 North Orissa Workers' Union v. State of Orissa (1971) 2 LLJ 199.
124 Landra Engineering & Foundary Workers v. Punjab State, (1969). Lab. IC 52.
125 Mineral Industrial Association v. Union of India, (1971) Lab. IC 837.
126 Modern Stores Cigarettes v. Krishadas Shah, (1970) Lab. IC 196.
127 Aftab-e-jadid, Urdu Daily Newspapers v. Bhopal Shramjivi Patrakar Sangh, (1985) 1
LLJ 272.
128 R V National Joint Council for the Craft of Denal Technicians, (1953) All ER 327.
129 Engineering Mazdoor Sabha v. Hind Cycle Ltd (1962) 2 LLJ 760 (SC).
130 Air Corporation Employees’ Union v. D V Vyas, (1962) 1 LLJ 31 (Bombay); Sindhu
Hochief v. Pratap Dialdas, (1968) 2 LLJ 515 (Bombay).
131 Ibid.
132 See National Project Construction Corporation Ltd v. Their Workmen, (1960) Lab. IC
907 (Patna).
133 See Gujarat Steel Tubes Ltd v. Their Workmen, (1980) 1 LLJ 137; Hindustan
Construction Co. Ltd v. All India Hindustan Construction Workers Union, (1974) 2
LLJ 212. (Kerala); National Project Construction Corporation Ltd v. Their Workmen,
1970 Lab. IC 907 (Patna).
134 Raza Textile Labour Union v. Mohan, (1964) 2 LLJ 65 (Allahabad).
135 Rohtas Industries Ltd v. Workmen, (1968) 1 LLJ 710.
136 Viakuntam Estate v. Arbitrator, (1968) 1 LLJ 79 (Madras).
137 Section 10 (4).
138 Section 10 (1) (d).
139 Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha (1980) 1 LLJ 137.
140 1986 Lab. IC 374 (SC).
141 Id. at 380–81.
142 Sec K P Singh v. S K Gokhale, op. cit., 125.
143 (1989) 2 LLJ 550 (SC).
144 (1998) 1 LLJ 150, 152.
145 Engineering Mazdoor Sabha v. Hind Cycles Ltd, op cit., 760.
146 Id at 884.
147 Rohtas Industries Ltd v. Rohtas Industries Staff Union, (1976) 1 LLJ 272 (SC), as per
Krishna Iyer J.
148 (1980) 1 LLJ 137.
149 Under Article 136, the Supreme Court is empowered to grant special leave to appeal from
any judgement, degree, determination, sentence or order in any cause or matter passed or
made by any court or tribunal in the territory of India other than those constituted by or
under any law relating to armed forces in the territory of India.
150 Engineering Mazdoor Sabha v. Hind Cycles, op. cit., 760.
151 Rohtas Industries v. Rohtas Industries Staff Union, op. cit. 274.
152 Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha, op. cit.
153 Government of India, Report of the Study Group on Industrial Relations (North Region)
of the National Commission on Labour, 19–20.
154 Government of India, Report of the Study Group on Industrial Relations, op. cit., 20.
155 Government of India, Report of the Study Group for Sugar Industry, (1969) 48.
156 Ibid.
157 This was explained by the Supreme Court in Minerva Mills Ltd v. Its Workers, AIR 1953
SC 505, 507 in the following words:
Section 7 (now Section 7A) does not restrict or limit the powers of the
government in any manner and does not provide that a tribunal cannot be
constituted for a limited period. It is quite clear that such tribunals are not to be
constituted permanently. It is only when some industrial disputes arise that such
tribunals are constituted and normally such tribunals function so long as the
disputes referred to them are not disposed of. But from these circumstances, it
cannot be inferred that it is not open to the government to fix a time limit for the
life of these tribunals in order to see that they function expeditiously and do not
prolong their own existence by acting in a dilatory manner.
158 Section 7A (4) of the Industrial Disputes Act, 1947.
159 (1998) 1 LLJ 868. This decision was followed by the full bench of the Gujarat High Court
in Gujarat Mazdoor Sabha v. State of Gujarat, (1999) 1 LLJ 39.
160 Ibid.
161 Section 7 C.
162 Section 7 (1).
163 Section 15. The Industrial Disputes Act, 1947 provides that where an industrial dispute has
been referred to a labour court, tribunal or national tribunal for adjudication, it shall hold
its proceedings expeditiously and shall within the period specified in the order referring
such industrial dispute or the further period extended under the second proviso to sub-
section (2A) of Section 10, submit its award to the appropriate government.
164 The Industrial Disputes Act, 1947, Section 11 (1).
165 Industrial Disputes (Central) Rules, 1957, Rule 13.
166 2011 LLR 62.
167 1969 MPLJ 33; 1969 JLJ 68.
168 (1958) 2 LLJ 834 (SC).
169 Grindlays Bank Ltd v. Central Government Industrial Tribunal, (1981) 1 LLJ 327 (SC);
Satnam Verma v. Union of India, (1985) Lab. IC 738.
170 DDA v. Shri Radhey Shyam Tyagi, (1996) LLR 216 (Delhi).
171 Workmen of Williamson Magor & Co. Ltd v. Williamson Magor & Co. Ltd, (1982) 1
LLJ 33 (SC).
172 Ibid.
173 Tata Consultating Engineers v. Workmen, (1981) 2 LLJ 146, 156.
174 Ibid.
175 Kaloo Singh v. Madan Lal, (1985) Lab. IC 130 (Rajasthan).
176 (1959) 2 LLJ 553; see also EID Parry (India) Ltd v. Industrial Tribunal (1993) 2 LL N
168
177 (1995) LLR 259.
178 Rajender Kumar Kindra v. Delhi Administration, (1986) Lab. IC 374, 381 (SC).
179 Section 11 A.
180 See MPFA. Dairy Development Corporation Ltd v. V K Durga Rao, (1988) Lab. IC 833
(Andhra Pradesh).
181 See United Plantation Association of Southern India v. K G Sangameshariya, (1997) 4
SCC 741.
182 Punjab Dairy Development Corporation Ltd v. Kala Singh, (1997) 6 SCC 159.
183 1996 LLR 385.
184 1984 (Supp.) SCC 520.
185 Adichancellor Farmers Service Co-operative Bank v. L C, (1996) LLR 659.
186 See Shankar Chakravarty v. Britannia Biscuit Co. Ltd, (1979) 3 SCR 1165; Delhi Cloth
& General Mills v. Ludh Budh Singh, (1972) 1 LLJ 180 (SC); Bharat Forge Co. Ltd v.
A B Zodge, 1996 LLR 385 (SC).
187 Delhi Cloth Mills, (1972) 1 LLJ 180; Shambhu Nath v. Bank of Baroda, AIR 1984 SC
289 and Adichancellor Farmers Service Co-operative Bank v. Labour Court, 1996 LLR
 654.
188 See Oriental Containers Ltd v. Engg. Workers Association, (1996) LLR 739.
189 M/s Expo Modern Ltd v. Labour Court, (1995) LLJ 816.
190 Thiruvirkolam v. Presiding Officer, (1997) 1 SCC 9 and P H Kalyani v. Air France,
(1964) 2 SCR 104 and Desh Raj Gupta v. I T, (1991) 1 SCC 249.
191 See Cooper Engineering Ltd. v. PP Mukherjee, (1976) 1SCR 361; S K Varma v. Mahesh
Chandra, (1983) SLR 799, D Maheshwari v. Delhi Administration, (1983) 3 SCR 949
and Taj Service Ltd. v. Delhi Administration, (1990) LLR 25.
192 (2005) 1 LLJ 1153 (SC).
193 Section 11.
194 The Industrial Dispute (Central) Rule, 1957, Rule 24.
195 Inserted by the Industrial Disputes (Amendment) Act, 2010 wef 15 September, 2010.
196 Punjab National Bank v. Vitro Pharma Products Ltd (1998) Lab. IC 444 (Bombay).
197 Petlad Turkey Red Dye Works Ltd v. Dyes & Chemical Workers Union, (1969) 1 LLJ
548 (SC).
198 These sections deal with the Court’s power to punish for contempt of Court.
199 The Industrial Disputes Act, 1947, Section 36 (4).
200 The Industrial Disputes (Central) Rules, 1957, Rule 30.
201 Bharat Bank v. Employees of Bharat Bank, (1950) LLJ 921 (SC).
202 Bharat Bank v. The Employees of Bharat Bank, (1950) LLJ 921.
203 (1984) 2 LLJ 388.
204 Ibid.
205 United Commercial Bank Ltd v. Their Workmen, (1951) 1 LLJ 621.
206 Union of Workmen v. R S N Co., AIR 1951 Assam. 96; (1956) 1 LLJ 49.
207 (1956) 1 LLJ 49.
208 Government of India, Report of the National Commission on Labour, (1969) 332.
209 Deepak Puri v. Fifth Industrial Tribunal, (1986) Lab. IC 132 (Calcutta).
210 Francis Gomez v. President, Thiruvanathapuram Shops and Commercial
Establishments Employees’ Union, 1999 LLR 166.
211 (2003) LLR 816.
212 (1999) LLR 352.
213 (2002) 4 CHN 704.
214 Deepak Puri v. Fifth Industrial Tribunal, (1986) Lab. IC 132 at 134 (Calcutta).
215 Ibid.
216 Calicut Co-operative Milk Supply Union v. Calicut Co-operative Milk Supply Workers’
Union, (1986) Lab. IC 1681 (Kerala).
217 Ameteep Machine Tools v. Labour Court, (1980) 2 LLJ 453 (SC).
218 Modella Textile Workers Union v. Union of India, (1980) Lab. IC 949.
219 (1980) Lab. IC 949 at 952.
220 Ibid.
221 Paradip Port Trust v. Their Workmen, AIR 1977 SC 36.
222 AIR 1977 SC 36 at 42.
223 Hosiery Workers’ Union v. J K Hosiery Factory, Kanpur, (1952) (LAT).
224 Duduwala and Co. v. IT., AIR 1958 Raj. 20.
225 Hall & Anderson Ltd v. S K Neogi, (1954) 1 LLJ 628 (Calcutta).
226 K K Khandilkar v. Indian Hume Pipe Co., Ltd, AIR 1967 Bom. 531, and Shastri v. S D
Patil, (1975) 1 LLJ 458 (Bombay) was also to the same effect but was not referred to in
the judgement.
227 MSCO (P) Ltd v. S D Rana, (1982) 1 LLJ 431, 437.
228 1998 LLR 478.
229 A M Sainalabdeen Musaliar v. District Collector, (1994) Lab. IC 57.
230 See Cox & Kings (Agents) Ltd v. Their Workmen, AIR 1977 SC 1666.
231 Maharama Mills Kamgar Union v. N L Vyas, (1959) 2 LLJ 172 (Bombay).
232 Krishnan Kutty Nair v. Industrial Tribunal, (1957) 2 LLJ 45 (Kerala).
233 (1950) LLJ 539. This view was followed in Punjab National Bank v. A N Sen, (1952) 1
LLJ 371.
234 Thakur Yugal Kishor Sinha v. The State of Bihar, (1950) 1 LLJ 539.
235 Interim relief as the term signifies ‘is in aid of the final relief ultimately to be granted and
incidental to the power to grant the final relief except in aid to the final relief which could
be granted, no interim relief can he given.’
236 Hotel Imperial v. Hotel Workers’ Union, (1959) 2 LLJ 544 (SC).
237 Delhi Cloth and General Mills v. Rameshwar Dayal, (1960) 2 LLJ 712 (SC).
238 Mehar Singh v. Delhi Administration, ILR (1973) 1 Delhi 732.
239 Jeewan Lal (1929) Ltd v. State of West Bengal, (1975) Lab. IC 1161 (Calcutta).
240 Management of Bihar State Electricity Board v. The Workmen, (1971) 1 LLJ 389
(Patna): See also Management of Bihar Khadi Gramodyog Sangh v. State of Bihar,
(1977) Lab. IC 466 (Patna).
241 Punjab National Bank Ltd v. A V Sen, AIR 1952 Punjab, 143.
242 The Industrial Disputes Act, 1947, Section 16.
243 See Bharat Bank Ltd v. Their Workmen, (1950) LLJ 921; United Commercial Bank Ltd
v. Their Workmen, (1951) SCR 380; Lloyds Bank Ltd v. Lloyds Bank Union Staff
Association, AIR 1956 SC 746.
244 The Industrial Disputes Act, 1947, Section 21.
245 See for instance, in Indian General Navigation and Railway Co. Ltd v. Their Workmen,
(1960) 1 LLJ 13 (SC). Chief Justice Sinha speaking for the Court said that it was the duty
of the tribunal making an award not to indulge in language which is not characteristic of a
judicial approach. In the course of the judgement, the Supreme Court referred to the
 following excerpts of the award:
Curiously enough it appears that the company’s joint agent at Dhurbri dabbled in politics
and meddled in internal administration of the unions. He propped up another union and
backed it up to stand as a rival union.
The Court disapproved of the above remarks of the tribunal and said that it is an instance
of its intemperate language with which the award bristles. On the facts it found that the
‘tribunal’ was not …. justified in holding that the management had either meddled in the
internal administration of the unions or dabbled in politics, and had, thus been guilty of
unfair labour practice.
246 In Pure Drinks (Pvt.) Ltd v. Kirat Singh, (1961) 2 LLJ 99, the Supreme Court observed
that the strong language may sometimes be justified in judicial pronouncements, but using
strong words without realizing their due significance and without considering whether the
use is justified is entirely out of place in judicial pronouncements.
247 Ibid.
248 See K P Singh v. S K Gokhale, (1970) 1 LLJ 125 (Madhya Pradesh).
249 1 year 2 months (see Daily Aljamiat v. Gopi Nath Aman, 1977 Lab. IC (1352); 1 year 7
months [see Rohtas Industries Staff Unions v. State of Bihar, (1963-64) XXVI. F.J.
3961.
250 See Plantation Corporation of Kerala v. P N Krishan Pillai, (1971) 1 LLJ 116 (Kerala);
Plantation Corporation of Kerala v. Purshuthaman Nair, (1967) 1 LLL 593 (Kerala).
251 2003 LLR 813.
252 Sirsilk Ltd v. Government of Andhra Pradesh, AIR 1964 SC 160.
253 For details of the criticism of Sirsilk Ltd v. Government Andhra Pradesh, AIR 1964 SC
160; See Suresh Chandra Srivastava, ‘Implication of Withholding the Publication of the
Industrial Award.’ 2 Banaras Law Journal, (1966), 201.
254 Remington Rand of India v. The Workmen, (1967) 2 LLJ 866 (SC).
255 Id. at 868.
256 For details of the criticism of Remington Rand of India v. The Workmen, case, see
Suresh Chandra Srivastava: ‘Effect of Non-Publication of Industrial Award within the
Period Prescribed under the Industrial Disputes Act, 1947,’ 10 JILI 321 (1968).
257 Workers of Industry Colliery v. Industry Colliery, (1953) 1 LLJ 190, 194 (SC).
258 Ibid.
259 Allen Berry & Co. Ltd v. Their Workmen, (1951) 1 LLJ 228 (LAT).
260 Id. at 230.
261 See for instance Tobacco Manufacturing (India) Ltd, (1953) 1 LLJ 259 (LAT);
Association Cement Co. Ltd v. Their Workmen, (1953) 2 LLJ 369.
262 Goenka Mica Syndicate v. Mohd. Yasin, (1954) 1 LLJ 507 (IT).
263 Id. at 507–08.
264 See for instance, Gorden Woodroff Leather Manufacturing Co. Ltd Workers’ Union v.
Their Management, (1949) LLJ 45 (IT); Deccan Sugar and Abkari Co. Ltd v. Their
Workmen, (1951) 1 LLJ 572 (IT).
265 ‘Proceedings before an arbitrator under Section 10A or before a labour court, tribunal or
national tribunal shall be deemed to have commenced on the date of the reference of the
dispute for arbitration or adjudication, as the case may be, and such proceedings shall be
deemed to have concluded on the date on which the award becomes enforceable under
Section 17A.’
266 See Jhagrakhand Collieries (Pvt.) Ltd v. Central Government Industrial Tribunal,
(1960) 2 LLJ 71 (SC). See also Sarva Shramik Sangh v. Indian Hume Pipe Co. Ltd,
1993 Lab. IC 870.
267 Ibid., See also Inder Singh & Sons Ltd v. Their Workmen, (1961) 2 LLJ 89 (SC). Sarva
Shramik Sangh v. Indian Hume Pipe Co. Ltd, (1993) Lab, IC 870 (SC).
268 See United Collieries Ltd v. Its Workmen, (1961) 2 LLJ 75 (SC).
269 Hindustan Times Ltd v. Their Workmen, (1963) 1 LLJ 108 (SC).
270 Raj Kamal Kalamandir (Pvt.) Ltd v. Indian Motion Picture Employees Union, (1963) 1
LLJ 318 (SC), Wenger & Co. Ltd v. Their Workmen, (1963) 2 LLJ 403 (SC).
271 Hindustan Times v. Their Workmen, op. cit., Wenger & Co. v. Their Workmen op. cit.,
403.
272 Lloyds Bank Ltd v. Lloyds Bank Union Staff Association, AIR 1956 SC 746.
273 South India Bank Ltd v. A R Chako, (1964) 1 LLJ 19 (SC).
274 Ibid. at 22.
275 (1964) 1 LLJ 19.
276 The Industrial Disputes Act, 1947, Section 29.
277 Government of India, Indian Labour Year Book, (1965), 328.
278 Central Bank of India Ltd v. P S Rajgopalan, (1963) 2 LLJ 89 (SC). See also Kasturi and
Sons (Pvt) Ltd v. Salivateeswran, (1958) 1 LLJ 527 (SC).
279 South Arcot Electricity Distribution Co. Ltd v. Elumalai, (1959) 1 LLJ 624 (Madras);
Kairbetta Estate v. Rajamanikam, (1960) 2 LLJ 275 (SC): Punjab National Bank v.
Kharbanda, (1962) 1 LLJ 234; Central Bank of India Ltd v. Rajagopalan op. cit.
280 N A Choudhary v. Central Inland Water Transport Corporation Ltd, (1978) 1 LLJ 167
(SC).
281 Ibid. at 169.
282 Sitabai Naruna Pujari v. M/s Auto Engineer, (1972) 1 LLJ 290 (Bombay).
283 Yad Ram v. B N Singh, (1974) 2 LLJ 306 (Delhi).
284 J F B & P Works (P) Ltd v. B Sharma, (1977) 1 LLJ 306 (Patna).
285 Punjab Beverages v. Suresh Chand, AIR 1978 SC 995.
286 Chief Mining Engineer, East India Coal Co. Ltd v. Rameshwar, AIR 1968 SC 218.
287 State Bank of Bikaner v. R L Khandelwal, (1968) 1 LLJ 589.
288 Central Bank of India Ltd v. P S Raja Gopalam, AIR 1964 SC 743.
289 Namor Ali v. Central Inland Water Transport Corporation Ltd, AIR 1978 SC 275.
290 (1995) 1 LLJ 395 (SC).
291 Bombay Gas Co. v. Gopal Bhiwa, AIR 1964 SC 752.
292 Athani Municipality v. Labour Court, AIR 1969 SC 1335.
293 (1980) Lab. IC 1084 (SC).
294 2006 LLR 1219 (SC).
295 2000 (87) FLR 849 (S): 2001 (1) SCC 73.
296 Rathikanthamanal v. B Pankajaminal, (1988) 1 LLJ 423 (Madras); Ambabai Manjunath
Amin v. P L Majumdar, (1987) 1 LLJ 36 (Bombay); Jharia Fire Bricks & Pottery
Works v. B Sharma, (1977) 2 LLJ 366 (Patna); Gwalior Rayons v. Labour Court, (1978)
2 LLJ, 188 (Kerala); Smt. Dhanalakshmi v. Reserve Bank of India, (1999) Lab. IC 286
(Karnataka).
297 2010 (6) SCALE 300.
298 C B R Ratnam & Co. v. Ekambram, (1957), 2 LLJ 206 (Madras).
299 Rivers Steam Navigation Co. Ltd v. Inland Stream Navigation Workers Union, (1964) 1
LLJ 98 (Calcutta).
300 Ambica Mills Ltd v. Second Labour Court, (1967) 2 LLJ 800 (Gujarat).
301 C K Iypunny v. Madhu Sudan Mills, (1964) 1 LLJ 197 (Bombay).
302 Management Shahdara (Delhi) Sharanpur Light Railway Co. Ltd v. S S Railway
Workers Union, AIR 1969 SC 513. See also Ashok Leyland Ltd v. State of Tamil Nadu,
(2004) 3 SCC 1 and J H Yadav. v. M/s Forbes Gokak Ltd (2005) LLR 314.
303 Bum and Co. v. Their Workmen, (1957) 1 LLJ 226.
304 Agra Electric Supply Co. v. Alladin, AIR 1970 SC 5 13.
305 Guest Keen Williams P Ltd v. P J Sterling, (1959) 2 LLJ 405.
306 (1997) LLR 1067 (AP).
307 AIR 1958 SC 1018.
308 AIR 1967 SC 948.
309 (1969) 2 SCC 283.
310 AIR 1995 SC 1655.
311 (1995) II CLR 797.
312 1980 (supp) SCC 420.
313 Jagdamba Auto Industries v. Kamal Yadav, 45 (1991) DLT 125; Management of Delhi
Development Authority v. Shri Radhey Shyam Tyagi, (1996) (74) I.F.L.R; Warning
Coop. Agriculture Services Society Ltd v. State of Punjab and Others, (1987) Lab & IC
359 (P&H) and UPSRTC Kanpur v. State of UP. & Ors. (1996) (1) LLJ 31; See also
Anil Sood v. S K Sarvaria, (1997) LLR. 386; State of Rajasthan v. Panna Ram, (1999)
Lab. IC 490 (Raj.).
314 Kaivalyadham Employees Association v. Kaivalyadham SMYM Samity, 2009 LLR 340
(SC). In this case, the Supreme Court also held that if the amount is reduced or directed to
be calculated under Section 33 C(2) of the IDA, it would frustrate the very purpose of
section 17B which, as has been consistently held by this Court, is to provide the workman
with the means of sustenance for his family members and himself during the pendency of
 the proceedings taken by the employer before the High Court or the Supreme Court.
315 Bharat Singh v. Management, New Delhi Tuberculosis Centre, 1986 Lab. IC 850.
316 Ibid.
317 2008 LLR 520 (SC).
318 2008 (1) JCR 255 (SC).
319 Daladdi Co-operative Agriculture Service Society Ltd v. Gurcharan Singh, (1993) (5)
Serv LR 719 (P&H) and Kirtiben B Arain v. Mafatlal Apparels, (1995) (2) Guj LR 804.
320 Vishveswaraya Iron and Steel Ltd v. M Chandrappa, (1994 (84) FJR 46) (Kant).
321 Carona Sahu Co. Ltd v. A K Munakhan, (1995) (1) LLN 1014 (Mad) and P Channaiah
v. Dy. Ex. Eng. (1996) (2) Lab LJ 240) (AP).
322 AIR 1998 SC 511 : (1998) 2 LL 1 (SC).
323 2008 LLR 520 (SC).
324 2011 LLR 77.
325 2010 LLR 813.
326 2011 LLR 162.
327 (2001) 5 SCC 169.
328 AIR 1998 SC 511.
329 (2001) 5 SCC 169.
330 (2000) 5 SCC 64.
331 (1999) 1 LLJ 449 (SC).
332 (1999) LLR 45 (Mad.).
333 2009 LLR 340 (SC).
334 2005 LLR 641.
335 Amar Singh v. State of Rajasthan, AIR 1955 SC 504.
336 Yasin v. Town Area Committee, (1952) SCR 572.
337 Irani v. State of Madras, AIR 1961 SC 1731.
338 L. Chandra Kumar v. Union of India, (1997) Lab. IC 1098. (SC).
339 See for example, Darayo v. State of UP, AIR 1961 SC 1457.
340 Raj Krishna Bose v. Binod, AIR 1954 SC 202.
341 State of UP v. Mohd. Nooh, AIR 1958 C 86: Gandhinagar Motor Transport Society v.
Bombay State, AIR 1954 Bombay 202.
342 Kuchni v. State of Madras, AIR 1959 SC 725.
343 Kirloskar Electric Co. v. Their Workmen, AIR 1973 SC, 2119; Province of Bombay v.
Khushaldas, AIR 1950 SC 222; T C Basappa v. T Nagappa, AIR 1954 SC 440; Shivaj
Nathubai v. Union of India, AIR 1963 SC 606. See also Hindustan Levers Ltd v. B N
Dongre, (1995) Lab IC. 113(SC).
344 Engineering Mazdoor Sabha v. Hind Cycles, AIR (1963) SC 874.
345 Ibid; See also Gujarat Steel Tubes Ltd v. Its Mazdoor Sabha. AIR 1980 SC 1897.
346 State of Madras v. C P Sarathy, (1953) SCR 334.
347 Jaswant Sugar Mills v. Lakshmi Chand, AIR 1963 SC 677.
348 Andhra Scientific Co. v. Seshagiri Rao, AIR 1967 SC 408; Dabur v. Workmen, AIR
1968 SC 17.
349 Newspapers Ltd v. State Industrial Tribunal, AIR 1957 SC 537; CKG Sugar Mills v. All
Hasan, AIR 1959 SC 230; Sindhu Hochief v. Pratap Dialdas, (1968) 2 LLJ 515.
(Bombay).
350 Indian Iron & Steel Company v. Their Workmen, AIR 1958 SC 130; National Project
Construction Corporation Ltd v. Their Workmen, (1970) Lab. IC 907.
351 S M. Islan v. Suite of Bihar, AIR 1956 Patna 73; National Project Construction
Corporation Ltd v. Their Workmen, op. cit.
352 DC Works v. State of Saurashtra, AIR 1957 264; Parry & Co. v. Second Industrial
Tribunal, AIR 1970 SC 1334; Gujarat Steel Tubes Ltd v. Its Mazdoor Sabha, (1980) 1
LLJ 137 (SC).
353 Hindustan Construction Co. v. All India Hindustan Construction Workers Union,
(1974) 2 LLJ 212 (Kerala).
354 National Project Construction Corporation v. Their Workmen, op. cit., Textile Employee
Association v. Arbitrator, (1968) 1 LLJ 349 (Madras).
355 Ibid.
356 Veerappa v. Raman, AIR (1952) SC 192; Rajkrishna v. Binod, AIR 1954 SC 202; Shri
Ambika Mills v. S B Bhat, AIR (1961) SC 970; Gujarat Steel Tubes v. Its Mazdoor
Sabha, AIR 1980 SC 1897.
357 Gujarat Steel Tubes v. Its Mazdoor Sabha, AIR 1980 SC 1897.
358 Ibid.
359 Ibid.
360 See Ram Prasad v. State of Bihar, Chintamani Rao v. State of MP, AIR 1951 SC 11 8;
AIR 1953 SC 215; State of Jammu and Kashmir v. Ganga Singh, AIR 1951 SC 356.
361 See for example, Bengal Immunity Co. v. State of Bihar, (1955) 2 SCR 603; Himmat Lal
v. State of MP (1954) SCA 654; Mini Chatterjee v. PSC, AIR 1958 Calcutta 345.
362 Mhd. Yasin v. Town Area Committee, (1952) SCR 572.
363 See for example, Shanker v. Returning Officer, AIR 1952 Bombay 277; Rameshwar v.
Municipal Board, AIR 1958 Allahabad 841.
364 See for example, Balkrishna v. LT Commissioner, AIR 1954 Madras 11 18; Babulal v.
Collector, AIR (1956) M.B. 221.
365 See for example, Durga Pd. v. State of UP, (1954) SCA 204; State of Rajasthan v.
Nathumal, (1954) SCA 347: Saroj Rawat v. Secy. Bar Council, AIR 1954 All 745; State
of Madras v. Swadeshmitran, AIR (1958) Cal. 227; Indumati Devi v. Bengal Court of
Wards, AIR 1958 Cal. 385.
366 Brij Bhusan v. Delhi, AIR 1950 SC 129; Himmat Lal v. State of M.P., AIR 1954 SC
1403; Commissioner v. Lakshmindra, (1954) SCR 1005: Sales Tax Officer v. Budh
 Prakash, (1955) 1 SCR 243.
367 See for example, Indumati Devi v. Bengal Court of Wards, AIR 1938 Cal. 384; Manak
Chandy, Municipal Council, AIR 1951 Raj. 139.
368 Ram Roop v. Vishwanath, AIR 1958 All. 256.
369 See for example, D N Banerjee v. P R Mukherji, AIR 1953 SC 58.
370 See for example, Gulab Singh v. Collector of Farukhabad, AIR 1953 All. 585; Dhian
Singh v. Deputy Secretary, AIR 1960 Punjab 41.
371 Ibid.
372 Warayam Singh v. Amar Nath, AIR 1954 SC 2 15.
373 Ahmedabad Mfg. & Calico Ptg. Co. v. Ramtahel, AIR 1972 SC 1598; Statesman Ltd v.
Workmen, (1976) 1 LLJ 484 (SC).
374 Hari Vishnu Kamath v. Ahmad Ishaq, AIR 1955 SC 223.
375 Pritam Singh v. The State, AIR 1950 SC 169 at 171.
376 Raj Krishna v. Binod, AIR 1954 202-204, Durga Shankar v. Raguraj Singh, AIR 1954
SC 520; D.C. Cotton Mills v. Commissioner of Income Tax, AIR 1965 SC 65. 69;
Sangram Singh Eastern Railways, AIR (1958) SC 525, 529; L.G.N. Co. v. Workmen,
AIR 1960 SC 219, 224; Laliteshwar Prasad v. Bateshwar Prasad, AIR 1966 SC 580,
585.
377 Kishorilal v. Union of India, AIR 1959 SC 1362; See also, Rampa v. Bajappa, AIR 1963
SC 1833; Raruha Singh v. Achal Singh, AIR (1961) Balkrishna v. Ramaswami, AIR
(1965) SC 195.
378 See for example, Venkatramana v. State of Mysore, AIR 1965 SC 255 at 262.
379 The reasons are two-fold (i) the Court may not be in full possession of all material
circumstances to make up its mind and (ii) the order is only ex-parte. (see Bengal
Chemical and Pharmaceutical Works Ltd v. Their Employees, AIR 1959 SC 633.
380 Ibid.
381 See for example, Harish Chandra v. The Colli, AIR 1957 SC 444; Punjab National Bank
v. Industrial Tribunal, (1959) SCR 220.
382 Gujarat Steel Tubes v. Its Mazdoor Sabha, AIR 1980 SC 1987.
383 Hindustan Tin Works Ltd v. Its Employees, (1958) 2 LLJ 474 (SC).
384 Shaw Wallace & Co. v. Workmen, (1978) 1 LLJ 482 (SC).
385 Model Mills v. Dharam Das, (1958) 1 LLJ 539 (SC) See also Bharat Bank v. Employees
of Bharat Bank, AIR (1950) SC 188.
386 Bengal Chemical P. Ltd v. Their Employees, AIR 1959 SC 633; Clerks Depot and
Cashiers of the Calcutta Tramways Co. Ltd v. Calcutta Tramways Co., AIR 1957 SC
387.
387 Clerk of Calcutta Tramways v. Calcutta Tramways, AIR 1957 SC 387.
388 Bengal Chemical and Pharamaceutical Works Ltd v. Their Employees, (1959) 1 LLJ 413
(SC).
389 Ibid.
390 Calcutta Electric Supply Co. v. Their Workmen, AIR 1959 SC 119 1.
391 Rohtas Industries Ltd v. Brijnandan Pandey, (1956) 2 LLJ 444 (Patna).
392 JK Iron and Steel Co. Ltd v. Mazdoor Union, AIR 1957 SC 78, 81.
393 Mahalakshmi Sugar Mills v. Their Workmen, (1961) 2 LLJ 822 (SC).
394 Bharat Bank v. Employees of Bharat Bank, AIR (1950) SC 188.
395 Bengal Chemical & Pharmaceutical Works Ltd v. Their Employees, AIR 1959 SC 633.
396 Ibid.
397 Clerks of Calcutta Tramways Co. Ltd v. Calcutta Tramways Co. Ltd, AIR (1957) SC 78.
398 Rohtas Industries v. Brijnandan Pandey, AIR 1957 SCI.
399 Takla Experiment Station v. Its Workmen, (1961) 2 LLJ 697, Model Mills v. Dharam
Das, AIR 1958 SC 311.
400 Mahalakshmi Sugar Mills v. Their Workmen, (1961) 2 LLJ 622 (SC).
401 Government of India, Second Five-Year Plan (1956) 49.
402 Employers’ Federation of India, Workers Participation in Management, (1971), 6.
403 Ibid.
404 See Charles A Myers and Subbiah Kannappan, Industrial Relations in India, (1970), 284.
405 See clause 5.
406 The Joint Management Council introduced in Hindustan Machine Tools in 1958 soon
became extinct, after the union complained that unilateral actions were taken by
management without the consultation of workers’ representative (see Statesman, 22
October, 1957).
407 Government of India, Indian Labour Journal, December, 1970.
408 K V Iyer ‘The Role of workers’ Participation in Management in improving Productivity,’
Indian Labour Journal, August 1965.
409 Government of India, Report of the National Commission on Labour, (1969), 346–47.
410 1991 Lab. IC 1270 (SC).
411 Government of India, Report of the National Commission on Labour, (1969), 356–57.
412 Id at 312.
 CHAPTER
18
Powers of the Appropriate Government

I. GOVERNMENT’S POWER OF REFERENCE

A. The Legislative Scheme

Section 101 of the Industrial Disputes Act, 1947, empowers the appropriate
government not only to refer the industrial dispute but also to choose the dispute
settlement process. Thus, Sub-section (1) thereof provides:
Where the appropriate government is of the opinion that any industrial
dispute exists or is apprehended, it may at any time, by order in writing —
(a) refer the dispute to a board for promoting a settlement thereof, or
(b) refer any matter appearing to be connected with or relevant to the dispute
to a court for inquiry, or
(c) refer the dispute or any matter appearing to be connected with or relevant
to the dispute, if it relates to any matter specified in the Second Schedule,
to a labour court for adjudication, or
(d) refer the dispute or any matter appearing to be connected with, or relevant
to the dispute, whether it relates to any matter specified in the Second
Schedule or the Third Schedule, to a tribunal for adjudication.
The discretion to choose the dispute settlement process, however, is not
unqualified. Under Sub-section (2) of Section 10:
Where the parties to an industrial dispute apply in the prescribed manner,
whether jointly or separately, for a reference of the dispute to a board, court,
labour court, tribunal or national tribunal, the appropriate government, if
satisfied that the persons applying represent the majority of each party, shall
make the reference accordingly. And under the second proviso to Section 10(1)
(d):
Where the dispute relates to a public utility service and a notice
under Section 22 has been given, the appropriate government
shall, unless it considers that the notice has been frivolously or
vexatiously given or that it would be inexpedient so to do, make
a reference (to a labour court or tribunal for adjudication) under
this sub-section not withstanding that any other proceedings
under this Act in respect of the dispute may have commenced.
Besides, the choice of dispute settlement process, like any other executive
discretion, is necessarily regulated by the exigencies of circumstances.2 But
where the parties to an industrial dispute apply in the prescribed manner,
whether jointly or separately, for a reference of the dispute to a board, court,
labour court or tribunal, the appropriate government, if satisfied that the persons
applying represent the majority of each party, shall make a reference
accordingly.3 The choice of forum on the other hand, is relaxable. Thus, the first
proviso to Section 10(1)(d) specifically provides that where the dispute relates to
any matter specified in the Third Schedule and is not likely to affect more than
100 workmen, the appropriate government may, if it so thinks fit, make the
reference to a labour court under clause (c). Likewise, where the dispute in
relation to which the Central Government is the appropriate government, it shall
be competent for the government to refer the dispute to a labour court or an
industrial tribunal, as the case may be, constituted by the state government.4
Sub-section (5) of Section 10 empowers the government to add new
parties to the dispute where a dispute concerning any establishment or
establishments has been or is to be referred to a labour court, tribunal or national
tribunal, if the appropriate government is of the opinion, whether on an
application made to it in this behalf or otherwise, that the dispute is of such a
nature that any other establishment, group or class of establishments of a similar
nature is likely to be interested in, or affected, by such dispute. The appropriate
government may, at the time of making the reference or any time thereafter but
before the submission of the award, include in that reference such establishment,
group or class of establishments, whether or not at the time of such inclusion any
dispute exists or is apprehended in that establishment, group or class of
establishments.
 There is, however, no statutory provision empowering the appropriate
government to enlarge the subject-matter of reference, though it may, by making
a new reference to the same tribunal, achieve that objective.5 The labour court,
tribunal or national tribunal as the case may be, shall confine its adjudication to
the points of dispute specified by the appropriate government in an order or in a
subsequent order referring an industrial dispute or matters incidental thereto.6
Sub-section (3) of Section 10 empowers the appropriate government to
prohibit the continuance of any strike or lockout which may be in existence on
the date of the reference. It reads:
Where an industrial dispute has been referred to a board, labour
court, tribunal or national tribunal under this Section, the
appropriate government may by order prohibit the continuance
of any strike or lockout in connection with such dispute which
may be in existence on the date of the reference.
And, thus, together with Sections 22 and 23 has provided the complete
mechanism for the regulation of instruments of economic coercion.
The Industrial Disputes (Amendment and Miscellaneous Provision) Act,
1956, granted additional powers to the Central Government:
Where the Central Government is of opinion that an industrial
dispute exists or is apprehended and, the dispute involves any
question of national importance or is of such a nature that
industrial establishments situated in more than one state are
likely to be interested in, or affected by, such dispute and that
the dispute should be adjudicated by a national tribunal, then,
the Central Government may, whether or not it is the appropriate
government in relation to that dispute, at any time, by order in
writing, refer the dispute or any matter appearing to be
connected with, or relevant to, the dispute, whether it relates to
any matter specified in the Second Schedule or the Third
Schedule, to a national tribunal for adjudication.
And, lest concurrent jurisdictions create confusion. Section 10 (1A)
provides:
Where any reference has been made under sub-section (1A) to a
national tribunal, then notwithstanding anything contained in
this Act, no labour court or tribunal shall have jurisdiction to
adjudicate upon any matter–which is under adjudication before
 the national tribunal, and accordingly.
(a) if the matter is under adjudication before the national tribunal and is
pending in a proceeding, the proceeding before the Labour Court or the
Tribunal, as the case may be, in so far as it relates to such matter, shall be
deemed to have been quashed on such reference to the national tribunal,
and
(b) it shall not be lawful for the appropriate government to refer the matter
under adjudication before the national tribunal to any labour court or
tribunal for adjudication during the pendency of the proceeding in relation
to such matter before the national tribunal.
Sub-section 2A and Sub-section 8 of Section 10 has been inserted by the
Industrial Disputes (Amendment) Act, 1982 to: (i) fill the gap in the absence of
any provision specifying time limit within which the adjudicating authorities
would submit their award, (ii) provide for the continuance of proceedings on the
death of either parties respectively. Thus, Section 2A provides that an order
referring an industrial dispute to a labour court, tribunal or national tribunal shall
specify the period within which such labour court, tribunal or national tribunal
shall submit its award on such dispute to the appropriate government. However,
(i) where such industrial dispute is connected with an individual workman, no
such period shall exceed three months, (ii) where the parties to an industrial
dispute apply in the prescribed manner, whether jointly or separately, to the
labour court, tribunal or national tribunal for extension of such period or for any
other reason, and the presiding officer of such labour court, tribunal or national
tribunal considers it necessary or expedient to extend such period, he may for
reasons to be recorded in writing, extend such period by such further period as
he may think fit, (iii) in computing any period specified in this sub-section, the
period, if any, for which the proceedings before the labour court, tribunal or
national tribunal had been stayed by any injunction or order of a civil court shall
be excluded, (iv) no proceedings before a labour court, tribunal or national
tribunal shall lapse merely on the ground that any period specified under this
sub-section had expired without such proceedings being completed.
Likewise, in order to provide continuity to the proceedings before the
adjudicating authority, Sub-section 8 of Section 10 provides that:
No proceedings pending before a labour court, tribunal or
national tribunal in relation to an industrial dispute shall lapse
merely by reason of the death of any of the parties to the dispute
being a workmen, and such labour court, tribunal or national
 tribunal shall complete such proceedings and submit its award to
the appropriate government.

B. The Conditions Precedent

1. Intervening Government must be the ‘Appropriate Government’. Section 2
(a) of the Industrial Disputes Act, 1947 defines ‘appropriate government’ to
mean:
In relation to any industrial dispute concerning any industry
carried on by or under the authority of the Central Government
or by a railway company or concerning any such controlled
industry as may be specified in this behalf by the Central
Government or in relation to an industrial dispute concerning a
Dock Labour Board established under Section 5A of the Dock
Workers (Regulation of Employment) Act, 1948 (9 of 1948), or
the Industrial Finance Corporation of India established under
Section 3 of the Industrial Finance Corporation Act, 1948 (15 of
1948), or the Employees’ State Insurance Corporation
established under Section 3 of the Employees State Insurance
Act, 1948 (34 of 1948), or the Board of Trustees constituted
under Section 3A of the Coal Mines Provident Fund and
Miscellaneous Provisions Act, 1948, (46 of 1948), or the Central
Board of Trustees and the State Boards of Trustees constituted
under Section 5A and Section 5B, respectively of the
Employees’ Provident Funds and Miscellaneous Provisions Act,
1952 (19 of 1952), or the ‘Indian Airlines’ and ‘Air India’
Corporations established under Section 3 of the Air Corporation
Act, 1953 (27 of 1953), or the Life Insurance Corporations of
India established under Section 3 of the Life Insurance
Corporation Act, 1956 (31 of 1956), or the Oil and Natural Gas
Commission established under Section 3 of the Oil and Natural
Gas Commission Act, 1959 (43 of 1959), or the Deposit
Insurance and Credit Guarantee Corporation established under
Section 3 of the Deposit Insurance and Credit Guarantee
Corporation Act, 1961 (47 of 1961), or the Central Warehousing
Corporation established under Section 3 of the Warehousing
Corporations Act, 1962 (58 of 1962), or the Unit Trust of India
established under Section 3 of the Unit Trust of India Act, 1963
(52 of 1963), or the Food Corporation of India established under
 Section 3, or a Board of Management established for two or
more contiguous States under Section 16 of the Food
Corporations Act, 1964 (37 of 1964), or the International
Airports Authority of India constituted under Section 3 of the
International Airports Authority of India Act, 1971 (43 of 1971),
or a regional rural bank established under Section 3 of the
Regional Rural Banks Act, 1976 (21 of 1976), or the Export
Credit and Guarantee Corporation Limited or the Industrial
Reconstruction Corporation of India Limited or a banking or an
insurance company, a mine, an oilfield, a cantonment board or a
major port, any company in which not less than 51 per cent of
the paid-up share capital is held by the Central Government, or
any corporation, not being a corporation referred to in this
clause, established by or under any law made by Parliament, or
the Central public sector undertaking, subsidiary companies set
up by the principal undertaking and autonomous bodies owned
or controlled by the Central Government, the Central
Government and (ii) in relation to any other industrial dispute
including state public sector undertakings, subsidiary companies
set up by the principal undertaking and autonomous bodies
owned or controlled by the state government, the state
government:

Provided that in case of a dispute between a contractor and the

contract labour employed through the contractor in any
industrial establishment where such dispute first arose, the
appropriate government shall be the Central Government or the
state government, as the case may be, which has control over
such industrial establishment.
2. Authority of the Central Government. When the undertaking is run
by an incorporated company and not directly by the Central Government or any
of its departments, then the company cannot be said to be carrying on the
business under the authority of the Central Government. In effect, the company
is separate from its shareholders and the facts that the entire share capital was
contributed by the government, the shares are held by agent of the President or
the Central Government and the ministers can appoint the directors and can give
them instructions, are immaterial.7
C. Controlled Industry
The definition of the ‘appropriate government’ includes such controlled
industries as may be specified in this behalf by the Central Government, and
therefore, unless the Central Government is specified in this behalf, it would not
be the appropriate government.8

D. Determination of the Appropriate Government

In Workmen of Sri Ranga Vilas Motors (P) Ltd v. Sri Ranga Vilas Motor (P)
Ltd9, the head office of the company was located in Krishnagiri in the state of
Madras (New Tamil Nadu) and it had a branch at Bangalore but the dispute was
sponsored by the workman at Krishnagiri. It was contended that since the
dispute become an industrial dispute at Krishnagiri, the state of Madras and not
the State of Mysore was the appropriate government. The Supreme Court ruled:
The place where the impugned order operates on the service of a
workman is the place where the cause of action arises and the
state in which the place is situated will be the appropriate
government.
Earlier it held:
There should clearly be some nexus between the dispute and the
territory of the State and not necessarily between the territory
and the industry concerning which the dispute arose. Ordinarily,
if there is a separate establishment and the workman is working
in that establishment, the dispute would arise in that
establishment. Since there was a separate establishment at
Bangalore where the concerned workman and other workmen
where working, the impugned order had to operate on the
workman at Bangalore and, therefore, the Government of
Mysore was the appropriate government.
India Cables Co. Ltd v. Workman10 highlighted the issue as to which of
the states has jurisdiction to make a reference in regard to dispute arising out of
closure of undertaking in one state and transfer to the other state. In order to
resolve the problem, the Supreme Court followed the test laid down in Lalbhai
Tricumlal Mills Ltd v. Vin (D.M.)11 for determining the appropriate
government. It ruled that a court or tribunal would have jurisdiction if the parties
reside within its jurisdiction or if the subject-matter of the dispute substantially
arises within its jurisdiction.
The proper test to determine ‘appropriate government’ in
relation to an industrial dispute is to see where the dispute
substantially arose. If a workman is working in a separate
establishment, the dispute can be taken to arise only at the place
where the establishment exists. The mere fact that the head
office exercises administrative control over the workman does
not confer jurisdiction on the government within whose
territorial jurisdiction the head office was located to make a
reference under Section 10.
The Court accordingly held that the employer, by participating in the
conciliation proceeding, submitted itself to the jurisdiction of conciliation officer
and therefore, he cannot be allowed to dispute the jurisdiction of the state
government to make a reference.
In Goa Sampling Employees’ Association v. G S Company of India P.
Ltd,12 the Supreme Court was invited to consider whether the administration of
the Union Territory of Goa, Daman and Diu fell within the state government
under Section 2 (a) (i) read with Section 10 (1). The Court answered the question
in the negative and observed that under the Government of Union Territories
Act, 1963, the concept of state government was foreign to the administration of
union territory. The Court further added that Article 239 which provides that
every union territory is to be administered by the President who acts through an
administrator appointed by him, suggests that the administrator is the delegate of
the President and his position is entirely different from that of Governor of a
state. Accordingly, the Court held the Central Government was the appropriate
government.
The question concerning interpretation of the concept of ‘appropriate
government’ defined under Section 2 (a) of the Industrial Disputes Act, 1947
came up for consideration in Tata Memorial Hospital Workers Union v. Tata
Memorial Centre13. A dispute arose between the Tata Memorial Hospital
Workers’ Union and the management. The labour court in Mumbai rejected the
demands of the hospital’s employees’ union to stage demonstrations against
unfair labour practices like deduction of salary, citing that the hospital is
governed by the Union government laws, hence, the special state law,
Maharasthra Recognition of Trade Unions and Prevention of Unfair Labour
Practices, Act, 1971 (MRTU), was not applicable to it. Dismissing a Bombay
High Court judgment, the Supreme Court held that the Tata Memorial Centre
was not under the control of the Central Government and the appropriate
government in this case was the state government.
The scope of the expression ‘appropriate government’ under the ID Act,
1947 has been debated since long. In Heavy Engineering Mazdoor Union v.
State of Bihar14 the expression 'appropriate government' was interpreted as
follows:
When the undertaking is run by an incorporated company and
not directly by the Central Government or any of its
departments, then the company cannot be said to be carrying on
the business under the authority of the Central Government. In
effect, the company is separated from its shareholders and the
mere fact that the entire share capital was contributed by the
Central Government and the shares are held by the President and
some officers of the Government does not make it an agent of
the President or the Central Government. The fact that the
ministers can appoint the directors and can give them
instructions is immaterial.
Hindustan Aeronautics Ltd v. Workmen15 is another case of
significance. Here, a bench of three judges of the Supreme Court was concerned
with the dispute between the management of the Barrackpore branch of the
appellant government company situated in West Bengal and its employees. The
appellant had challenged the award of the industrial tribunal, West Bengal and
one of the challenges was to the competence of the government of West Bengal
to make the reference of the industrial dispute. It was contended that the
Barrackpore branch was under the direct control of the Bangalore Division of the
company and since it was a government company constituted under section 617
of the Companies Act, (the shares of which were entirely owned by the Central
Government), the reference ought to have been made either by the Central
Government or by the government of Karnataka. This Court rejected the
contention and observed:
The workers were receiving their pay packages at Barrackpore
and were under the control of the officers of the company
stationed there. If there was any disturbance of industrial peace
at Barrackpore where a considerable number of workmen were
working, the appropriate government concerned in the
maintenance of the industrial peace was the West Bengal
government. The grievances of the workmen of Barrackpore
 were their own and the cause of action in relation to the
industrial dispute in question arose there. The reference,
therefore, for adjudication of such a dispute by the Governor of
West Bengal was good and valid.
It is difficult to support the line of reasoning followed by the court
particularly one which has been underlined. If this view is accepted in all
establishments run by the government, the state government should be
appropriate government because the law and order falls under the purview of
state government. Further, it ignores the fact that 'labour' falls under concurrent
list. Moreover, it runs counter to the object and scheme of the Industrial Disputes
Act, 1947.
The aforesaid view was reiterated in Rashtriya Mill Mazdoor Sangh,
Nagpur v. Model Mills,16 a reference (though under the Bombay Industrial
Relations Act, 1946) of the demands of the employees for payment of bonus was
challenged on the ground that an authorized controller under the Industries
(Development and Regulation) Act, 1951 had been appointed in respect of the
industrial undertaking and since the undertaking was being run by an authorized
controller under the authority of a department of the Central Government, the
reference under the Bombay Industrial Relations Act, 1946 was not competent.
A bench of three judges of this Court once again referred to the interpretation
given in Heavy Engineering Mazdoor Union's case and held that even though
the authorized controller was appointed by the Central Government and that he
had to work subject to the directions of the Central Government, it would not
render the industrial undertaking an agent of the Central Government and
therefore, could not be said to be an establishment engaged in an industry carried
on by or under the authority of the Central Government.
The aforesaid line of approach was reiterated in Food Corporation of
India Workers Union v. Food Corporation of India17. Therein, a writ petition
was filed by the employees seeking the regularization of their services under the
Contract Labour (Regulation and Abolition) Act 1970. In that matter, inspite of
the fact that FCI is a specified industry under Section 2(a) (i) of the Industrial
Disputes Act 1947, the Supreme Court referred to the definition of ‘appropriate
government’ under the CLRA Act 1970. It referred to judgments in Heavy
Engineering Mazdoor Union and Rashtriya Mill Mazdoor Sangh (supra) with
approval, and held that for the regional offices and warehouses which were
situated in various states, the state governments were the ‘appropriate
governments’ and not the Central Government.
The aforesaid decision by ignoring the specific inclusion of FCI in the
definition of ‘appropriate government’ has rendered the specific inclusion a
useless appendage. The issue figured again in Air India Statutory Corporation
v. United Labour Union.18 The three judge bench of the Supreme Court, while
dealing with the issue under the Contract Labour Regulation Abolition Act,
adopted the definition of appropriate government under the Industrial Disputes
Act. The Court was concerned with the question as to whether the Central
Government was the competent appropriate government for the purposes of the
notification which it had issued under that Act to abolish the contract labour
system in the establishment of the appellant. The court held that the Central
Government was the ‘appropriate government’.
After examining the principles laid down in R D Shetty v. International
Airport Authority of India19 and Ajay Hasia v. Khalid Muzib Sehravardi20, the
Court held that corporations and companies controlled and held by the state
governments will be institutions of those states within the meaning of Article 12
of the Constitution. A priori, in relation to corporations and companies held and
controlled by the Central Government, the ‘appropriate government’ will be the
Central Government. However, the three-judge bench of the Supreme Court held
that the bench in Heavy Engineering case narrowly construed the meaning of
phrase ‘appropriate government’ placing reliance on the concession and
common law doctrine of ‘principal and agent’ which no longer bears any
relevance when it is tested on the anvil of Article 14 of the Constitution. The
Supreme Court accordingly overruled its earlier decision in Heavy Engineering
case and observed that the public law interpretation is the appropriate principle
of construction of the phrase ‘appropriate government’.
In Steel Authority of India Ltd v. National Union Water Front
Workers21, the constitution bench of Supreme Court was invited to re-determine
the scope of the expression ‘appropriate government’. The following questions
arose for determination:
(i) Is the Central Government the appropriate government in cases of Central
Government undertakings ?
(ii) Can an industry carried on by a company/corporation or by or under the
authority of the Central Government fall within the meaning of
'appropriate government' under Section 2(1) (a) CLRA Act ?
(iii) Can the state government corporation/company/undertaking fall under the
authority of the Central Government if it is owned by the state
government or is an instrumentality or agency of state government?
The Court analysed the definition under Section 2(a) (as it then was) and
referred to the meaning given in Concise Oxford Dictionary and Black Law
Dictionary and observed:
1. The phrase ‘any industry carried on under the authority of the Central
Government’ implies an industry which is carried on
(a) by virtue of,
(b) pursuant to,
(c) conferment of,
(d) grant of,
(e) delegation of power, or
(f) permission
by the Central Government to a Central Government company or other
government company/undertaking.
In other words, if there is lack of conferment of power or permission by
the Central Government to the government company or undertaking, it would
disable such a company/undertaking to carry on the industry in question.
2. Where the authority, to carry on an industry for or on behalf of the
Central Government is conferred on the government company or any
undertaking under the statute under which it is created, no further question
arises. But if it is not so, the question is whether there is any conferment of
authority on the government company or undertaking by the Central
Government to carry on the industry in question. This is a question of fact and
has to be ascertained on the facts and circumstances of each case.
3. The Supreme Court ruled that the criterion for determining whether
the Central Government is appropriate government in government undertaking
or company under CLRA Act is that the industry must be carried only by or
under the authority of the Central Government and not that the
company/undertaking is an instrumentality or an agency of the Central
Government for purpose of Article 12 of the Constitution.
It is submitted that the Supreme Court, in Steel Authority of India case
by holding that ‘where the authority to carry on an industry, for or on behalf of
the Central Government, if created by the statute, it would be said to be run
under the authority of the Central Government’ has rendered 316 out of the 404
words used in Section 2(a) useless appendage. Indeed, the Court misread the
intention of legislature in enacting Section 2(a) and on the whole, threw the
legislative scheme out of gears.
We believe that both Air India case and Steel Authority of India case, for
different reasons, have failed to appreciate the significance of specific inclusion
of 25 establishments created under the statute in section 2(a) of the ID Act, 1947.
Quite apart from this, the Supreme Court failed to appreciate the implications of
the definition of ‘appropriate government’. Thus, the Central Government is the
appropriate government only in relation to an establishment in respect of which
the ‘appropriate government’ under the ID Act, 1947 is Central Government and
state government in relation to other establishment in which that any other
establishment is situated. Thus, the state government is the appropriate
government in most of the establishments of the Central Government. In view of
this, there is no uniformity in respect to the norms and procedure for
enforcement of the Act. There is also variation in regard to scope of coverage of
establishment or process, which has been brought within the purview of
prohibition under Section 10. Further, an activity may be prohibited in one state
but the same activity may not be covered in other state. This poses a problem in
the enforcement of the Act. Further, there is variation not only amongst states
but also between state and centre in regards to the prohibition and exemptions.
All these have created hurdles in the enforcement of the Act22.
The aforesaid principle was applied in M/s Delhi International Airport
Pvt. Ltd v. Union of India.23 Here, 136 workers were employed by the
contractor M/s TDI International Pvt. Ltd to do the work of trolley retrieving at
the domestic and international airport, Delhi in the year 1992. In view of the
perennial nature of the work, the workmen approached the labour court for
abolition of contract labour system and for their absorption as its regular
eemployees.24 On 26 July 2004, the Central Government accepted the
recommendations of the Contract Labour Board and issued a notification
abolishing the contract labour system. The notification was challenged by AAI
before the Delhi High Court. The Court felt that the present proceedings cannot
be proceeded with till the matter is resolved by the High Powered Committee
(HPC). Accordingly, the matter was referred to the HPC and the notification was
not given effect to. Meanwhile, the aforesaid 136 workers were removed from
service on 5 December 2003 as the contract of M/s TDI International had come
to an end and a new contractor, Sindhu Holdings, came in its place. Against this
order, these 136 workmen filed a writ petition before the High Court of Delhi
praying for their absorption in service as regular employees and for
implementation of the notification dated 26 July 2004. The single judge of the
High Court dismissed the petition and held that the establishment of AAI is no
longer in existence and has changed. As such, the notification dated 26 July
2004, cannot be applied to the new entity, DIAL. In view of this, it directed the
appropriate government to issue a fresh notification. Thereupon, the Indira
Gandhi International Airport TDI Karmachari Union filed a letter patent appeal
(LPA) against the judgement of the single judge. The Union of India also filed
LPA against this judgement. However, during the pendency of these LPAs, an
order was passed by the chief labour commissioner, Government of India
holding that the appropriate government for DIAL is the Central Government.
These orders were challenged by DIAL in a writ petition. After getting the
permission, AAI filed another writ petition challenging the said notification on
merit. The division bench of the High Court heard all these matters together and
passed the impugned order on 18 December 2009. Thereupon, the review
petition was filed by the Union of India which was decided on 12 March 2010,
by the High Court modifying para 61 of the impugned judgement. Against the
impugned judgement of the division bench of the High Court, two appeals were
preferred by DIAL and three by AAI and one by the Indira Gandhi International
Airport TDI Karmachari Union before the Supreme Court. A question, inter alia
arose as to: who is the appropriate government for DIAL under CLRAA and ID
Act? The Court answered the question by giving several reasons in support of its
conclusions, namely (i) DIAL could not have entered into a contract with AAI
without the approval of the Central Government according to the mandate of
Section 12A of the AAI Act. (ii) AAI acts under the authority of the Central
Government and DIAL acts under the authority of AAI because of its contract
with DIAL. From this, it may be concluded that DIAL works under the authority
of the Central Government, (iii) The Central Government has given AAI the
responsibility for overseeing the airports. To fulfil its obligations, AAI
contracted with DIAL. However, if DIAL does not perform its work properly or
adequately, then AAI will be breaching its statutory obligations and would be
responsible for the consequences, (iv) AAI is under an obligation to follow the
directions of the Central Government and if DIAL has undertaken those
obligations through OMDA, then DIAL is presumably also obligated to follow
such directions, (v) Under Section 12(2) of the AAI Act. AAI is obliged to
provide air traffic service at the airport and since AAI has transferred its ‘air
transport service’ responsibilities to DIAL, the Central Government must be held
to be the appropriate government for DIAL, (vi) Privatization of airports does
not mean that the ‘appropriate government’ cannot be the Central Government.
In UP Sugar and Cane Development Corpn. Ltd v. Chini Mill Mazdoor
Sangth,25 the Supreme Court held that the question of granting promotion is a
management function and the labour court could not arrogate to itself such a
function unless it is mala fide or by way of any unfair labour practice or
victimization. Even if any labour court or industrial tribunal found that
promotion had been made which was not justified on the above mentioned
ground, the proper course for it was to set aside the promotion/promotions and
ask the management to reconsider the cases of superceded employees and decide
for itself as to whom to promote, except of course, the person whose promotion
has been set aside by the labour court/tribunal.
Regional Provident Fund Commissioner v. Karnataka Provident Fund
Employees Union26 raises an important issue whether the activity carried on
under the Provident Fund Act, is being carried on by or under the authority of
the Central Government as provided in Section 2 (a) or not. Answering the
question in the affirmative, the Supreme Court observed:
The activity carried on by the central board or the state board
under the Provident Fund Act is not similar to the activity
carried on by any private trade or manufacturing business. They
are truly the agents of the government and they function under
the authority of the government as provided in the statute
because the Central Government could have, for the purpose of
introducing the scheme of compulsory contribution to the
provident fund, set up an organization or a department in the
absence of the corporate bodies envisaged in the Provident Fund
Act.
The aforesaid decision is in conformity with the scheme of distribution of
powers under the Constitution as also the scheme of the Industrial Disputes Act,
1947.

E. The Dispute Must Exist or Be Apprehended

The existence or apprehension of industrial dispute is another condition
precedent for making reference of the dispute. However, an opinion has to be
formed regarding its existence or apprehension. Naturally, a question arises as to
what should be the quantum of materials for such formation of opinion? To what
extent the subjectivity or objectivity test should be applied? Whether the dispute,
before it is referred, should be specific or even general reference is sufficient?
What facts, circumstances, materials should be taken into account by the
government while referring the disputes?
In C P Sarathy case,27 the respondent manager was chargesheeted under
Section 29 for non-implementation of award. An objection as to the validity of
award was raised on the ground that what had been referred by the government
was not an industrial dispute. Chief Justice Patanjali Shastri appreciating the
collective nature of dispute opined that it was not at all necessary that dispute
must actually arise. According to the Chief Justice, the expression ‘or is
apprehended’ under Section 10 of the Act is sufficient to indicate that mere
apprehension of dispute would arm the government to refer the dispute.
In Sindhu Resettlement Corporation v. Industrial Tribunal28, a dispute
which was referred to the tribunal was as follows:
Demand 1: R S Ambwaney should be reinstated in the service of
Sindhu Resettlement Corporation Ltd and he should be paid his
wages from 21 February 1958.
The tribunal granted reinstatement with back wages to Ambwaney but on appeal
the Supreme Court held:
Since no such dispute about reinstatement was raised by either
of the respondents before the management of the appendix, it is
clear that the state government was not competent to refer a
question of reinstatement as an industrial dispute for
adjudication by the tribunal. The dispute that the state
government could have referred competently was the dispute
relating to payment of retrenchment compensation by the
appellant to respondent 3 which had been refused.
The aforesaid observations, reveal that if the basis of an industrial dispute
does not exist and the government refers that dispute for adjudication, the
tribunal is not bound to adjudicate that dispute without questioning the existence
or the basis of that dispute which was never demanded by Ambwaney from the
management. The tribunal was competent to question and ought to have decided
the existence of the demand of reinstatement.
Shambhu Nath Goyal v. Bank of Baroda, Jullundur29 provided an
opportunity to the Supreme Court to determine the scope of state government’s
intervention under Section 10 of the Industrial Disputes Act. In this case, an
employee of the Bank of Baroda was dismissed from service after an inquiry in
which the employee appeared and claimed reinstatement. Further, when the
union approached the conciliation officer, the management resisted the claim for
reinstatement. Thereafter, the employee preferred an appeal to the competent
authority. On failure, the dispute was referred to the tribunal. Before the tribunal,
the management raised the preliminary objection that the employee had not
made a demand. The tribunal accepted the claim of the management and held
that the reference was incompetent. Thereafter, the employee preferred an appeal
before the Supreme Court. The question before the Court was whether the
government’s reference was proper and in accordance with the provisions of the
Act. The Court was of the view that to read into the definition the requirement of
written demand for bringing into existence an industrial dispute would be
tantamount to rewriting the Section, and ruled:
Undoubtedly, it is for the government to be satisfied about the
existence of the dispute and the government does appear to be
satisfied. However, it would be open to the party impugning the
reference that there was no material before the government, and
it would be open to the tribunal to examine the question, but that
does not mean that it can sit in appeal over the decision of the
government.
The aforesaid view seems to be opposed to an earlier decision of the
Supreme Court in Sindhu Resettlement Corporation Ltd v. Industrial Tribunal,
Gujarat.30 The decision in Shambu Nath Goyal v. Bank of Baroda is, however,
instructive in two respects. First, the dispute may arise even if it is raised
impliedly. The existence of the demand may be seen from the facts of each case.
Second, the caution that the tribunal cannot sit in appeal over the decision of the
government also helps in maintaining industrial peace. Third, the view that it
will be open to the tribunal to examine the question when the party impugning
the reference pleads that there is no material before the government for making a
reference tries to balance the arbitrary exercise of jurisdiction by the
government.
Before we conclude the section, it would be relevant to note that though it
is the discretion of the appropriate government to form the opinion whether an
industrial dispute exists or is apprehended, it must be a honest opinion.31 In other
words, the opinion must be reasonably formed and not capriciously or arbitrarily
made.32

F. The Choice
1. Two-fold Discretion. The Industrial Disputes Act, 1947 provides for
government initiation in persuasive and coercive processes for the settlement of
industrial disputes. However, government is vested with large measures of
discretion, both in the matter of the choice of settlement process as also in regard
to the basic decision to intervene in labour-management relations.
2. Choice of Settlement Process. Section 10, we have already seen, is
the omnibus provision empowering the appropriate government to choose a
dispute settlement process. Besides, the limitations are imposed by that section
on the choice of settlement process as well the forum for adjudication of
industrial disputes. Sections 12(5) and 13(4) regulate government’s choice. Thus
under Section 12 (1), where any industrial dispute exists or is apprehended, the
conciliation officer may, or where the dispute relates to a public utility service
and a notice under Section 22 has been given, shall, hold conciliation
proceedings in the prescribed manner and if the conciliation officer fails to effect
a settlement, the appropriate government is empowered under Section 12(5) to
make a reference of the dispute only to a board of conciliation or the appropriate
adjudicating authority and, in particular not to a court of inquiry. Likewise,
where a board of conciliation is unable to promote a settlement, the appropriate
government is empowered to use coercive process for the settlement of the
dispute. Section 13 (4) bars a reference to a court of inquiry.
Statutory provisions may, therefore, be summed up as follows: Under
Section 10(2) as also under Sections 10(1A) and 13(4), the appropriate
government has no role to play in the choice of dispute settlement process. If the
parties to the dispute decide the settlement process under first of these the other
two remaining sections, in sharp contrast. Section 12(5) grants some, and
Section 10(1) confers full, discretion to the appropriate government to choose
any one of the prescribed persuasive or coercive processes for effecting
settlement of industrial disputes.

G. Nature and Scope of Discretion in Making or Refusing to

Make Reference
State of Madras v. C P Sarathy33 enunciated an epoch-making principle for
exercise of governmental power of reference. Here, the Supreme Court declared
that governmental function under Section 10 (1) was administrative in nature
and admonished courts from subjecting them to close security. Chief Justice
Pitanjali Shastri observed:
In making a reference under Section 10 (1), the government is
doing an administrative act and the fact that it has to form an
opinion as to the factual existence of an industrial dispute as a
preliminary step to the discharge of its function does not make it
any the less administrative in character. The court cannot,
therefore, canvass the order of reference closely to see if there
was any material before the government to support its
conclusion, as if it was a judicial or quasi-judicial determination.
 But, if the dispute was an industrial dispute as defined in the
Act, its factual existence and the expediency of making a
reference in the circumstances of particular case are matters
entirely for the government to decide upon, and it will not be
competent for the court to hold the reference bad and quash the
proceedings for want of jurisdiction merely because there was,
in its opinion, no material before the government on which it
could have come to an affirmative conclusion on those matters.
In contrast to the aforesaid decision, there are series of decisions where
the Supreme Court34 and high courts have tended to regulate government
discretion to an extent where the government may find it extremely difficult to
refuse reference. Indeed, courts persist in the government making out a prima
facie case for reference and then refusing reference on the ground of ‘relevant’,
‘germane’ and ‘cogent’ reasons. Conversely, the courts are unanimous that
‘extraneous’ as much as ‘irrelevant reasons’ vitiate government determination.35
The contents of the key words, namely ‘relevant’, ‘cogent’, ‘germane’,
‘extraneous’ and ‘irrelevant’ in these observations belie verbal formulation.
They are matters of case-to-case determination. Nevertheless, the courts have, on
occasions, indulged in the luxury of indicating what they consider to be
‘extraneous’ or ‘irrelevant’36. But beyond these generalities, decisions have
invariably turned on the facts of each case.
It is submitted that by evolving the aforesaid test, courts had shook the
foundation laid in State of Madras v. C P Sarathy.37 It would, however, be
significant to note that in Bombay Union of Journalists v. State of Bombay38
the Supreme Court rehabilitated State of Madras v. C P Sarathy. But in spite of
this decision, high courts have given conflicting opinions on the application of
Section 12 (5), which have left the scope of governmental power to make or
refuse reference more uncertain. It is in this context that we have to examine the
Supreme Court decision in Avon Services (Production Agencies) Pvt. Ltd v.
Industrial Tribunal.39 This decision restored its ruling in State of Madras v. C
P Sarathy, Justice Desai speaking for the Court observed:
Section 10(1) confers a discretionary power and this
discretionary power can be exercised on being satisfied that an
industrial dispute exists or is apprehended. There must be some
material before the government on the basis of which it forms an
opinion that an industrial dispute exists or is apprehended. The
power conferred on the appropriate government is an
 administrative power and the action of the government in
making the reference is an administrative act. The formation of
an opinion as to the factual existence of an industrial dispute as a
preliminary step to the discharge of its function does not make it
any the less administrative in character. Thus, the jurisdictional
facts on which the appropriate government may act are the
formation of an opinion that an industrial dispute exists or is
apprehended which undoubtedly is a subjective one, the next
step of making reference is an administrative act. The adequacy
or sufficiency of the material on which the opinion was formed
is beyond the pale of judicial scrutiny.40
The aforesaid view found the approval of the Supreme Court in State of
Bombay v. K P Krishnan.41 This was followed42 and applied in M/s Hochtief
Gammon v. State of Orissa.43 Here the Supreme Court observed that the
executive has to reach its decisions by taking into account relevant
considerations. They should not refuse to consider relevant matters nor should
they take into account wholly irrelevant or extraneous matter. The Court also
ruled that even in an administrative decision, whatever may be the reasoning
given by the government, the Court will go into the question whether the reasons
given by the government are good reasons. But in Prem Kakar v. State of
Haryana44, the government of Haryana on receipt of the report of the
conciliation officer wherein he found that petitioner was not a ‘workman’ under
the Act and, therefore, it was not a fit case for reference refused to make a
reference of the workman concerned on the ground that he was not a workman.
Aggrieved by the order, the workman filed a writ petition in the High Court of
Punjab and Haryana challenging the government’s power to decide the issue
whether he was a workman or not. The High Court negatived the contention.
Thereupon, he filed a special leave to appeal to the Supreme Court. The Court
held that the government had considered all the relevant considerations and no
writ of mandamus was maintenanable and that the High Court had rightly
rejected the application.
In Nirmal Singh v. State of Punjab45, the appropriate government
refused to refer the dispute for adjudication on the ground that the delinquent
bank employee was not a workman within the meaning of Section 2(s) of the Act
but no reasons were given by the government to justify this conclusion. The
Supreme Court held that ‘the labour commissioner ought to have given reasons
why he came to the conclusion that the appellant is not a workman within the
meaning of Section 2(s) of the Industrial Disputes Act.’ The Apex Court,
therefore, directed the labour commissioner to make a reference to the tribunal.
Post-1984 witnessed a change in approach of the Court, particularly in
regard to the issuance of a writ of mandamus.
In Ram Autar Sharma v. State of Haryana46, the government refused to
make a reference on the ground that the termination of service of the workman
was made after charges against him were proved in a domestic inquiry. Further,
the government was of the view that the punishment was not disproportionate to
the gravity of the misconduct charged. The validity of the government’s refusal
to make reference was challenged in a writ petition filed before the Supreme
Court. The Court held that a ‘bare statement that a domestic inquiry was held in
which charges were held to be proved, if considered sufficient for not exercising
power of making a reference under Section 10 (1), almost all cases of
termination of service cannot go before the tribunal and it would render Section
2A of the Act denuded of all its intent and meaning. The reasons given by the
government must show that it examined the relevant paper of inquiry and it was
satisfied that the inquiry was legally valid and that there was sufficient and
adequate evidence to hold the charges proved. Further, the inquiry was not
biased against the workman and the punishment was commensurate with the
gravity of the misconduct charged. All these relevant and vital aspects have to be
examined by the industrial tribunal while adjudicating upon the reference made
to it. In other words, the reasons given by the government without examination
of these issues would be tantamount to adjudication which is impermissible.
That is the function of the tribunal and the government cannot arrogate to itself
to that function.’47 Accordingly the Court issued a writ of mandamus.
In the same case in another writ petition, the Central Government had
declined to make a reference on the ground that the action of the management in
imposing on the workman penalty of removal from service on the basis of an
inquiry and in accordance with the procedure laid down in the Railway Servants
(Discipline and Appeal) Rules, 1968 was neither mala fide nor unjustified.
Disapproving the action of the government, the Supreme Court held that ex-facie
it would appear that the government acted on extraneous and irrelevant
considerations and the reasons mentioned would mutatis mutandis apply in
respect of present order of the government under challenge. Accordingly, the
Court issued a writ of mandamus.
In Workmen of Syndicate Bank v. Government of India,48 the
government refused to make a reference on the ground that (i) the charge of
misconduct against the workmen was proved in a domestic inquiry; and (ii)
penalty was imposed on the workmen after following the required procedure.
Setting aside this order, the Supreme Court observed:
It would not be right for the Government of India to refuse to
make a reference on the ground that the charges of misconduct
against the worker were proved during a duly constituted
departmental inquiry and penalty was imposed on the worker
after following the required procedure. If such grounds were
permissible, it would be the easiest thing for the management to
avoid a reference to adjudication and to deprive the worker of
the opportunity of having the dispute referred for adjudication,
even if the order holding the charges of misconduct proved was
unreasonable or perverse or was actuated by mala fides or even
if the penalty imposed on the worker was totally
disproportionate to the offence said to have been proved. The
management has simply to show that it has held a proper inquiry
after complying with the requisite procedure and that would be
enough to defeat the worker’s claim for adjudication.
The Court accordingly directed the government to reconsider the question
of making a reference of the industrial dispute for adjudication without taking
into account the aforesaid irrelevant ground.
In M P Irrigation Karamchari Sangh v. State of M P,49 the Supreme
Court was invited to determine the validity of the government’s order refusing to
make a reference. The union raised three demands such as payment of dearness
allowance, wages for the period of strike and Chambal allowance. The state
government referred only the question relating to wages for the period of strike
to the tribunal for adjudication but declined to refer the other two issues on the
ground that (i) the government was not in a position to bear the additional
burden; and (ii) grant of special allowance claimed would invite similar demands
by other employees which would affect the entire administration. Disapproving
the government’s refusal to make a reference, the Court observed:
While conceding a very limited jurisdiction to the state
government to examine the demands it is to be understood as a
rule, that adjudication of demands made by the workmen should
be left to the tribunal to decide. Section 10 permits appropriate
government to determine whether dispute exists or is
apprehended and then refer it for adjudication on merits. The
demarcated functions are: (1) reference; (2) adjudication. When
a reference is rejected on the specious plea that the government
 cannot bear the additional burden, it constitutes adjudication and
thereby usurpation of the power of a quasi-judicial tribunal by
an administrative authority namely the appropriate government.
In our opinion, the reasons given by the state government to
decline reference are beyond the powers of the government
under the relevant sections of the Industrial Disputes Act……
Same is the case… of the state government that the employees
were not entitled to the Chambal allowance as the same was
included in the consolidated pay. This question, in fact, relates
to the conditions of service of the employees. What exactly are
the conditions of service of the employees and in what manner
their conditions of service could be improved are matters which
are the special preserve of the appropriate tribunals to be
decided in adjudicatory processes and are not ones to be decided
by the government on a prima facie examination of the demand.
The Court cautioned:
There may be exceptional cases in which the state government
may, on a proper examination of the demand, come to a
conclusion that the demands are either perverse or frivolous and
do not merit a reference. Government should be very slow to
attempt an examination of the demand with a view to decline
reference and courts will always be vigilant whenever the
government attempts to usurp the powers of the tribunal for
adjudication of valid disputes. To allow the government to do so
would be to render Section 10 and Section 12 (5) of the
Industrial Disputes Act nugatory.
In Telco Convoy Drivers Mazdoor Sangh and Another v. State of
Bihar,50 the question relating to the powers of the appropriate government under
Section 10(1) of the Act to make reference or not, again came up for
consideration and the Supreme Court held as under:
While exercising power under Section 10(1), the function of the
appropriate government is an administrative function and not a
judicial or quasi-judicial function, and that in performing this
administrative function the government cannot delve into the
merits of the dispute and take upon itself the determination of
the lis, which would certainly be in excess of the power
 conferred on it by Section 10. It is true that in considering the
question of making a reference under Section 10(1), the
government is entitled to form an opinion as to whether an
industrial dispute ‘exists or is apprehended.’ But the formation
of opinion as to whether an industrial dispute ‘exists or is
apprehended’ is not the same thing as to adjudicate the dispute
itself on its merits. Where, as in the instant case, the dispute was
whether the persons raising the dispute are workmen or not, the
same cannot be decided by the government in exercise of its
administrative function under Section 10(1) of the Act. The
order of the government, refusing to refer the dispute on ground
that the persons raising dispute are not workmen is liable to be
set aside. As the government had persistently declined to make a
reference under Section 10(1), the Supreme Court directed the
government to make a reference.
In Secretary, Tea Association v. Ajit Kumar Barat,51 the Supreme Court
summarized the legal position on the scope of the power of the appropriate
government to make reference under Section 10 of the ID Act namely.
1. The appropriate government would not be justified in making a reference
under Section 10 of the Act without satisfying itself on the facts and
circumstances brought to its notice that an industrial dispute exists or is
apprehended and if such a reference is made, it is desirable wherever
possible, for the government to indicate the nature of dispute in the order
of reference.
2. The order of the appropriate government making a reference under Section
10 is an administrative order and not a judicial or quasi-judicial one and
the court, therefore, cannot canvass the order of the reference closely to
see if there was any material before the government to support its
conclusion, as if it was a judicial or quasi-judicial order.
3. An order made by the appropriate government under Section 10 being an
administrative order no lis is involved, as such an order is made on the
subjective satisfaction of the government.
4. If it appears from the reasons given that the appropriate government took
into account any consideration irrelevant or foreign material, the court
may in a given case consider the case for a writ of mandamus.
5. It would, however, be open to a party to show that what was referred by
the government was not an industrial dispute within the meaning of the
 Act.
There appears to be reversal in the line of thinking followed between
1985–95. Thus, in Sultan Singh v. State of Haryana52, the Supreme Court
examined the power of government to make reference. In this case in 1955, the
appellant had joined the respondents as a workman. He was promoted on 6
September 1972, as a tape reader. On 28 June 1979, he was served with a
chargesheet and on 9 August 1979, his services were terminated. On 30 June
1981, he made a demand on the respondent/employer for reinstatement, which
was rejected. Thereafter, he made an application for reference under Section 10
to the state government, which was rejected by order dated 20 October 1981.
The appellant again made a representation on 25 March 1982 and the Minister
made a note on the representation directing it to make a reference. However,
since no communication was received by the appellant, he wrote a letter to the
labour commissioner, Haryana on 26 April 1984 but to no avail. He then filed
the writ petition. By order dated 6 August 1984, the High Court dismissed the
writ petition. Thereafter, the appellant filed before the Supreme Court by special
leave to appeal. Two questions which arose in this appeal were:
(1) Whether the state government should hear the respondent/employer before
making a reference on a second representation under Section 10 of
Industrial Disputes Act, 1947, since it was rejected on earlier occasion;
and
(2) Whether there is an order of reference by state government so as to entitle
the appellant to have the dispute adjudicated by the tribunal.
While dealing with these question, the Supreme Court observed:
A conjoint reading of Section 10(1) and Section 12(5) of
Industrial Disputes Act, 1947 would yield the conclusion that on
making an application for reference, it would be open to the
state government to form an opinion whether industrial dispute
exists or is apprehended and then either to make a reference to
the appropriate authorities or refuse to make the reference. Only
on rejection thereof, the order is only an administrative order,
and not a quasi-judicial order….. The appropriate government is
entitled to go into the question whether an industrial dispute
exists or is apprehended. It would only be subjective satisfaction
on the basis of the material on record. Being an administrative
order no lis is involved. Thereby, there is no need to issue any
notice to the employer nor to hear the employer before making a
 reference or refusing to make a reference. Neither Section 10(1)
nor Section 12(5) enjoins the appropriate government to record
reasons for making reference…..The need for hearing is
obviated, if it is considered on second occasion as even then if it
makes reference, it does not cease to be, an administrative order
and so is not incumbent upon the state government to record the
reasons therein.
On the issue whether, as a fact reference has been ordered by the
government, the Supreme Court held that as government was of the opinion that
there existed no industrial dispute, it declined to make reference under Section
10(1). Therefore, there is no reference made to the appropriate tribunal/labour
court, or industrial tribunal and therefore, no relief can be given to the appellant.
In Hindustan Aeronautics Ltd v. Hindustan Aero Canteen K Sangh53
the question arose whether High Court was justified in holding that state
government is the ‘appropriate government’ under the Contract Labour
(Regulation & Abolition) Act, 1986. The Supreme Court referred to its earlier
decision in Steel Authority of India v. National Union Water Front Workers54
and came to the conclusion that the appropriate government will be that
government which exercises control and authority over the concerned
organization. Applying this principle in this case, the Court held that ‘it is
undisputed that the Hindustan Aeronautics Ltd is an undertaking of the Central
Government and it is the Central Government which exercises full control over
the same. Issuance of licence by the state government is no criteria to come the
conclusion that state government should be the appropriate government.’
It is submitted that the Court, even though referred the Steel Authority of
India case, but in fact did not apply the ratio of the said decision.
Is it permissible for a tribunal to which reference was made by the
appropriate government to decide whether badli workmen should be
regularized? This issue came up for consideration before the Supreme Court in
Gauri Shankar Chatterjee v. Taxmaco Ltd55 In this case, the petitioners
claimed that they had been working in the first respondent company since last
several years as ‘badli’ workers and that they were entitled to be regularized.
The dispute was referred by the appropriate government of the industrial tribunal
for adjudication. The industrial tribunal held that out of the 100 workmen, 92
were entitled to be regularized and to have all benefits and status like regular
employees. They were also entitled to have other statutory benefits from the date
of their respective initial engagement. This award of the tribunal was challenged
before the High Court on the ground that the industrial tribunal had committed
an error of jurisdiction as it allowed the scope of the reference to be enlarged.
The division bench of the High Court held that the tribunal had enlarged the
scope of the reference and thereby committed an error of jurisdiction. Against
this order, an appeal was filed before the Supreme Court. The Supreme Court
confirmed the orders of the division bench of the High Court.
In Empire Industries Ltd v. State of Maharashtra56, the Court held that
it is not open to the management to make a demand/proposal for retrenchment of
workmen and disregarding the provisions of the Act ask the government to refer
the demand/dispute under section 10(1) to the tribunal for adjudication.
Sharad Kumar v. Government of NCT of Delhi57 raises an important
issue as to whether the appropriate government, while performing the
administrative function of making a reference to the labour court/industrial
tribunal can delve into the merits of dispute and take upon itself the question of
deciding whether a person is a ‘workman’ or not? The Supreme Court answered
the question in the negative and held that the state government could not
arrogate to itself the power to adjudicate on the question and hold that the
respondent was not a workman within the meaning of Section 2(s) of the Act.
Such a matter should be decided by the industrial tribunal or the labour court on
the basis of the materials to be placed before it by the parties. The court
accordingly held that the order passed by the state government not to make a
reference is clearly erroneous and accordingly, the order passed by the High
Court maintaining the same is unsustainable.
It is submitted that the aforesaid decision runs counter to the principles
laid down in its earlier decision in Secretary, Indian Tea Association v. Ajit
Kumar Barat58 wherein the court ruled that ‘before making a reference under
Section 10 of the Act, the appropriate government has to form an opinion
whether an employee is a workman and thereafter has to consider as to whether
an industrial dispute exists or is apprehended.’59
It is unfortunate that the court’s attention was not drawn to this decision
in the case under review.
In Virendra Bhandari v. Rajasthan State Road Corporation60, the
government referred an industrial dispute regarding termination during
suspension to the industrial tribunal cum labour court for adjudication. The
tribunal held that though notices had been served upon the appellant, he had
remained absent. It, therefore, decided the case ex-parte. Thereafter, an
application was filed by the appellant for restoration. The tribunal held that since
the appellant had not evinced any interest in the dispute and there had been delay
in seeking restoration of those proceedings, it was not proper to cancel the award
after having issuance of notification of the award challenged before the High
Court. However, the government by another order dated 20 December 1988
made another reference of a dispute to the tribunal on the same questions on
which the earlier reference had been made. The High Court held that (i) the
tribunal had already given a finding on an earlier occasion; and that (ii) no
industrial dispute exists which is to be determined. It, therefore, held that the
second reference was incompetent. On appeal, the Supreme Court laid down the
following principles:
(i) When the parties concerned do not appear before the tribunal, the tribunal
should note its inability to record the finding on the issue referred to it
and not that the dispute itself does not exist.
(ii) When there is no adjudication of the matter on merits, it cannot be said
that the industrial dispute does not exist.
(iii) If the industrial dispute still exists, such a matter can be referred under
Section 10 of the Act.
(iv) In proceedings of this nature it should be borne in mind that the industrial
disputes are referred to the labour court or the industrial tribunal for
maintenance of industrial peace and not merely for adjudication of the
dispute between two private parties.
The Supreme Court, accordingly held that it was not permissible for the
government to have made the second reference.
In Sarva Shramik Sangh v. Indian Oil Corporation, the Supreme Court
ruled that a writ of mandamus would be issued to the appropriate government to
reconsider the refusal to make a reference, where (i) the refusal is on irrelevant,
irrational or extraneous grounds; (ii) the refusal is a result of the appropriate
government examining the merits of the dispute and
prejudging/adjudicating/determining the dispute; (iii) the refusal is mala fide or
dishonest or actuated by malice; (iv) the refusal ignores the material available in
the failure report of the conciliation officer or is not supported by any reason.

H. Reference Should be Clearly Spelled Out

The full bench of Delhi High Court in India Tourism Development Corporation
v. Delhi Administration61 held that the terms of reference should clearly spell
out the real dispute between the parties otherwise the order of reference would
be liable to be interfered with in exercise of writ jurisdiction as the labour court
would not travel beyond the reference and decide the real question in dispute.

I. Reference Once Made Cannot be Cancelled, Withdrawn

 or Superseded
The Industrial Disputes Act does not either expressly or impliedly confer any
power on the appropriate government to cancel, withdraw or supersede a
reference made under Section 10 (1) of the Act. The Supreme Court in State of
Bihar v. D N Ganguli62 has held that no such power is vested on it either
expressly or impliedly to cancel, withdraw or supersede its earlier reference. In
the Court’s view, if the legislature had intended to confer on the appropriate
government the power to cancel its own order made under Section 10 (1), the
legislature would have made a specific provision in that behalf and would have
prescribed appropriate limitation to the exercise of the said power. The Court
also held that the rule of construction enunciated by Section 21 of the General
Clauses Act in so far as it refers to the power of rescinding or cancelling the
original order cannot be invoked in respect of the provision of Section 10(1) of
the Industrial Disputes Act, 1947.

J. Government’s Power to Make Reference ‘At Any Time’

The expression ‘at any time’ in Section 10 raises four issues, (i) Whether it is
mandatory for the appropriate government to wait for the outcome of
conciliation proceedings before making a reference? (ii) Whether refusal by the
appropriate government to refer the dispute for adjudication debars it from
making subsequent reference? (iii) Whether there is any time limit for making
the order of reference? (iv) Is the government bound to issue notice to the parties
when it decides to refer a dispute which it had refused to refer at the first
instance? These issues formed the subject-matter of judicial scrutiny in a number
of decided cases.

K. Failure Report of Conciliation Authorities–not a Condition

Precedent
It has been held that it is not mandatory for the appropriate government to wait
for the outcome of conciliation proceedings before making the order of
reference. Thus, the Supreme Court in Western India Match Co. Ltd v. Western
India Match Co. Workers Union63 while construing the expression ‘at any time’
occurring in Section 4 (k) of the UP Industrial Disputes Act, 1947 which is in
pari materia with Section 10 of the Industrial Disputes Act 1947 observed:
Ordinarily, the question of making a reference would arise after
conciliation proceedings have gone through and the conciliation
 officer has made a failure report. But the government need not
wait until such a procedure has been completed. In an urgent
case, it can ‘at any time’ i.e., even when such proceedings have
not begun or are still pending, decide to refer the dispute for
adjudication. The expression ‘at any time’ thus takes in such
cases as where the government decides to make a reference
without waiting for conciliation proceedings to begin or to be
completed.
The aforesaid view is based on the principle that there is nothing in
Section 10(1) to suggest that the ‘appropriate government’ must wait for the
failure report of conciliation officer.

L. Refusal to Make Reference on Earlier Occasion–if Debars

Subsequent Reference
It has now been well established through a series of decided cases of the
Supreme Court that refusal of the government to refer the dispute to adjudication
does not debar it from making subsequent reference.
In Western India Match Co. v. Western India Match Co. Workers
64
Union , the Supreme Court ruled that the government does not exhaust its
power to refer when it refuses reference. This is based on the reasoning that the
function of the government under Section 10(1) is administrative function. The
principles of rejudica cannot be imported in such a situation. In fact, when the
government refuses to make a reference, it does not exercise its power, it
exercises its power only when it decides to refer. Consequently, the power to
refer cannot be said to have been exhausted when it has declined to make a
reference at an earlier stage.
Again in Binny Ltd v. Their Workmen,65 the Supreme Court reiterated
that the mere fact that on two previous occasions government had taken the view
that no reference was called for, does not entitle the court to conclude that there
could be no cause for a reference at the later date.
The judicial policy to preserve the government’s power to make a
reference of a dispute subsequently after declining to do so initially, is evident
from the Supreme Court decision in Avon Services (Production Agencies) Pvt.
Ltd v. Industrial Tribunal.66 In this case, it was contended that once the
appropriate government declined to make a reference, it would not subsequently
change its mind and make such reference unless there was some fresh or
additional material before it. The Court, however, rejected the contention. Justice
Desai observed:
Merely because the government rejects a request for a reference
or declines to make a reference, it cannot be said that the
industrial dispute has ceased to exist, nor could it be said to be a
review of any judicial or quasi-judicial order or determination.
The industrial dispute may nonetheless continue to remain in
existence and if at a subsequent stage, the appropriate
government is satisfied that in the interest of industrial peace
and for promoting industrial harmony, it is desirable to make a
reference, the appropriate government does not lack power to do
so under Section 10(1), nor is it precluded from making the
reference on the only ground that on an earlier occasion it had
declined to make the references.
The learned judge fortified his view by pointing out that the expression
‘at any time’ in Section 10 (1) would clearly negative the contention that once
the government declined to make a reference, the power to make it under that
Section in respect of the same dispute got exhausted. Such a construction, he
observed, would ‘denude a very vital power conferred on the government in the
interest of industrial peace and harmony and it need not be whittled down by
interpretative process.’ The Court then examined the contention that the ratio of
Western India Match Co. Ltd v. Western Indian Match Co. Workers Union,67
suggests that the government must have some material made available to it,
subsequent to its refusal to make a reference, for the formation of a fresh opinion
for making the reference and observed:
It is not absolutely necessary that there ought to be some fresh
material before the government for reconsideration of its earlier
decision. The government may reconsider its decision on
account of some new facts brought to its notice or for any
relevant consideration and such other relevant consideration
may include the threat to industrial peace by the continued
existence of the industrial dispute without any attempt at
resolving it and that a reference would at least bring the parties
to the talking table.
It added:
A refusal of the appropriate government to make a reference is
not indicative of an exercise of the power under Section 10 (1),
 the exercise of the power would be a positive act of making a
reference. Therefore, when the government declines to make a
reference, the source of power is neither dried up nor exhausted.
It only indicates that the government for the time being refused
to exercise the power but that does not denude the power.
It is, thus, evident that the tendency of the Court is to protect the
administrative discretion under the Industrial Disputes Act even in the absence
of any fresh material.

M. Time Limit for Making Reference

Even though the Industrial Disputes Act, 1947, does not prescribe any time limit
for reference of the dispute to industrial tribunal, the courts have emphasized
that disputes should be referred as soon as possible after they have arisen and
after the failure of conciliation proceedings, particularly when dispute relates to
wholesale discharge of workman.
In Nedungadi Bank Ltd v. K P Madhavankutty,68 the appellant bank
initiated disciplinary proceedings against its employee (clerk) on the charges of
misappropriation of certain amount and falsification of records. On conclusion
of the inquiry, he was served with show cause notice as to why punishment of
dismissal from service be not awarded to him in the light of the grave
misconduct proved against him. However, the respondent admitted his guilt but
pleaded for mercy. Thereupon, the appellant bank dismissed him from the
services of the bank. In his appeal he expressed unconditional regret and prayed
for a lenient view to be taken in the matter. His appeal was dismissed. He was
given the benefit due to him. However, after a period of about 7 years, he served
a notice on the bank contending that he was discriminated against as two other
employees of the bank under similar situation were reinstated in the service of
the bank. The workman raised dispute before the assistant labour commissioner
(Central). He held that there was no scope for formal proceedings under the Act
since the matter was stale, having arisen more than 9 years back. The respondent
moved the High Court for direction of the Central Government to pass an order
on his application. The High Court directed the assistant labour commissioner to
send his report under Section 12(4) of the Act to the Central Government which
he did. The Central Government declined to make a reference which led him to
again file a writ petition in the High Court which was disposed of with the
direction to the Central Government to examine the matter. This order was
challenged by the management in writ appeal in which the division bench held
that it will be well within the right of the Central Government to examine the
entire facts of the case including the fact that the employee had admitted guilt
and only pleaded for merciful treatment and accepted the amount due to him in
full satisfaction of his claim. The Court further held that the question of delay or
the claim being stale or belated will also be relevant factors for the appropriate
government to consider. Thereafter, the Central Government made the reference
as to whether the dismissal of the employee from service was justified and if not,
to what relief the workman concerned was entitled. Aggrieved by this, the bank
challenged the reference in the High Court. A single judge of the High Court
allowed the writ petition. However, on the writ appeal the division bench upheld
the validity of the reference. Thereupon, the special leave to appeal was filed in
the Supreme Court. The Supreme Court held that there is no rational basis for
making a reference by the Central Government after a lapse of 7 years of the
order dismissing the respondent from service, particularly when the respondent
did not challenge the disciplinary proceedings, which resulted in his dismissal.
Furthermore, it could not be said that an industrial dispute had arisen or was
apprehended after a lapse of 7 years of his dismissal. The Supreme Court also
observed that every dispute that a workman raises does not become an industrial
dispute and the appropriate government cannot in a mechanical manner make the
reference of the alleged dispute terming it as an ‘industrial dispute’. The court
accordingly held that the Central Government lacked power to make reference
both on the ground of delay in invoking the power under Section 10 of the Act
and there being no ‘industrial dispute’ existing or even apprehended.
A perusal of the aforesaid decision reveals that the appropriate
government should not make reference in a mechanical manner and may refuse
to refer the case on the ground of delay in invoking the power and no industrial
dispute existed or was apprehended in such cases.
In UP State Electricity Board v. Rajesh Kumar69, the UP State
Electricity Board terminated the services of certain workmen. After 19 years, the
dispute was referred for adjudication. The labour court awarded reinstatement of
the workers with continuity of service. The board challenged the said award
before the High Court and one of the grounds of challenge was that the reference
made after a long delay of almost 19 years was not proper and it being stale, the
dispute did not exist on the date of reference. However, on a writ petition, the
High Court confirmed the labour court's award. Thereupon, the board filed an
appeal before the Supreme Court. The Supreme Court also upheld the award of
the labour court by observing that the issue with regard to the stale claim of the
workmen was not raised before the labour court. For the first time, it was sought
to be urged before the High Court. If the board was really aggrieved and serious
at the stale claim of the workmen, it was open to the board to question the very
reference made by the state government, when it was referred. The validity of
the reference was not questioned. Thereafter, the board participated in the
process before the labour court and contested the award. Therefore, in view of
the facts as stated above, and particularly when the board did not challenge the
order of reference when it was referred, it is not necessary to examine the
question of stale claim made by the board.
In Karan Singh v. Executive Engineer, Haryana State Marketing70 the
Supreme Court held that the industrial tribunal cannot strike down a reference
for adjudication on a ground of delay in raising a dispute by the workman.
Following the aforesaid decision in Nedungadi Bank Ltd (supra),
another two-judge bench of the Court in Haryana State Cooperative Land
Development Bank v. Neelam71, accepted the similar claim of the management
and non-suited the workman on the ground of delay.
In Kuldeep Singh v. GM, Instrument Design Development and
Facilities Centre72, the services of the appellant/workman were terminated with
effect from 26 May 1992. He made various representations from the day his
services were terminated. The particulars furnished also showed that the
appellant was fighting for his cause before the management as well the state
government including the chief secretary and the minister of the concerned
department. Ultimately, the state government made a reference on 22 November
1999 to the labour court for adjudication. On these facts, a question arose
whether the appropriate government is empowered to make a reference at any
time. The Supreme Court laid down the following principles:
There is no prescribed time limit for the appropriate government
to exercise its powers under Section 10 of the Act. It is more so
in view of the language used, namely, if any industrial dispute
exists or is apprehended, the appropriate government ‘at any
time’ refer the dispute to a board or court for inquiry. The
reference sought for by the workman cannot be said to be
delayed or suffering from a lapse when the law does not
prescribe any period of limitation for raising a dispute under
Section 10 of the Act. The real test for making a reference is
whether at the time of the reference, dispute exists or not and
when it is made, it is presumed that the state government is
satisfied with the ingredients of the provision; hence, the labour
court cannot go behind the reference. It is not open to the
government to go into the merits of the dispute and once it is
 found that an industrial dispute exists, then it is incumbent on
the part of the government to make reference. It cannot itself
decide the merit of the dispute and it is for the appropriate court
or forum to decide the same. The satisfaction of the appropriate
authority in the matter of making reference under Section 10(1)
of the Act is subjective satisfaction. Normally, the government
cannot decline to make reference for laches committed by the
workman. If adequate reasons are shown, the government is
bound to refer the dispute to the appropriate court or forum for
adjudication. Even though there is no limitation prescribed for
reference of dispute to the labour court/industrial tribunal, it is
only reasonable that it should be referred as soon as possible
after it has arisen and after conciliation proceedings have failed;
particularly, when disputes relate to discharge of workmen. If
sufficient materials are not put forth for the enormous delay, it
would certainly be fatal. However, in view of the explanation
offered by the workman in the case on hand, as stated and
discussed by us in the earlier paragraphs, we do not think that
the delay in the case on hand has been so culpable as to
disentitle him any relief. We are also satisfied that in view of the
details furnished and the explanation offered, the workman
cannot be blamed for the delay and he was all along hoping that
one day, his grievance would be considered by the management
or by the state government.73
Recommendations of the Second National Commission on Labour. The
(Second) National Commission on Labour has recommended that all disputes,
claims or complaints under the law on labour relations should be raised within
one year of the occurrence of the cause of action.

N. Audi Alteram Partem Rule—If Applies in Subsequent

Reference by the Government
In Avon Services (Production) Agencies (P) Ltd v. Industrial Tribunal,
Haryana74, the Supreme Court has held:
… when the government declines to make a reference, the
source of power is neither dried up nor exhausted …. The power
to make the reference remains intact and can be exercised if the
material and relevant considerations for the exercise of the
 power are available….
However, the Court did not specifically clarify as to whether the
government is under an obligation to issue notice to the (one or both) party
concerned when it makes a second reference, after the first refusal. This had led
to conflicting opinions among the High Courts. While the full bench of Madras
High Court in G Mathu Krishnan v. New Horizon Sugar Mills Pvt. Ltd75 held
that the state government of Pondicherry, when it made the reference acting for
the second time, in exercise of its statutory power under Section 10 of the Act,
did not act fairly, in that it did not hear the mills in question. Therefore, the
award passed by the labour court, Pondicherry, pursuant to such reference made
by the government is also a nullity and made without jurisdiction and has
therefore to be quashed.
The Allahabad High Court in UPSE Board, Lucknow v. State of U P,76
held that the principle of audi alteram partem cannot apply while making
second reference.
The division bench of the Kerala High Court on the other hand in Abdul
Rahiman Haji v. Abdul Rahiman77 held:
[I]f the government chooses to reconsider its earlier decision not
to refer the dispute for adjudication, it was not necessary to give
notice to the employer of the proposed action, because no civil
rights of any parties are being adjudicated upon.78
In Management of Theatre Sanjaya v. The State,79 the full bench of the
Karnataka High Court was invited to consider the question whether parties
should be given opportunity to be heard, where the government first decides to
make a reference. The majority answered as follows:
The principle of audi alteram partem is applicable to a case in
which the government having declined to make a reference of
dispute for industrial adjudication under Section 10 (1) …
according and communicating such decision in accordance with
the latter part of Section 12 (5) … proposes to refer the same
dispute for adjudication subsequently except when:
(a) the reference becomes necessary under circumstances set out
in Section 10 (5)…… or
(b) the government finds that there are exceptional
circumstances in which any delay in making the reference
 is fraught with serious consequences to industrial peace
and, therefore, affording of an opportunity to the party
concerned is expedient.

O. Reference can be Amended or Corrected

It has been held in Dabur (Dr S K Burman) Pvt. Ltd v. Their Workmen80 that
government is competent to correct clerical errors.

P. Scope of Writ of Mandamus

Another issue connected with Section 10 read with Section 12 (5) is whether the
Supreme Court under Article 32 of the Constitution or the High Court under
Article 226 of the Constitution is competent to issue writ of mandamus or
directions to the government to make a reference for adjudication. This issue has
received the attention of the Supreme Court in a catena of cases.
In State of Bombay v. K P Krishnan81, the Supreme Court held that even
though the order passed by the government under Section 12(5) of the Industrial
Disputes Act refusing to make a reference was an administrative order and the
reasons given by it must not be justifiable in the sense that their propriety,
adequacy or satisfactory character might not be open to judicial scrutiny,
nonetheless if the Court was satisfied that the reasons given by the Government
for refusing to make a reference are extraneous and not germane, then the Court
could issue, and would be justified in issuing a writ of mandamus.
Again in Bombay Union of Journalists v. State of Bombay,82 the
Supreme Court pointed out that if the appropriate government refuses to make a
reference on irrelevant consideration or on extraneous grounds, or acts mala
fide, a party would be entitled to move the High Court for a writ of mandamus.
In a subsequent case in Mahabir Jute Mills v. Shibanal Saxena83, the
Supreme Court while hearing an appeal against the order of Allahabad High
Court, which issued a writ of mandamus to the government of Uttar Pradesh to
refer the dispute for adjudication held that it was not open to the High Court to
issue directions to the appropriate government so as to circumscribe the statutory
powers under Section 4 (k) of the UP Industrial Disputes Act, 1947. It added that
‘all that it could have done was to ask the government as to how to exercise
statutory discretion conferred on it by Section 4 (k) of the Act’.
The aforesaid view was reiterated in Govind Sugar Mills v. Hind
Mazdoor Sabha.84 But in this case, the Supreme Court interpreted the following
observations made by it in Bombay Union of Journalists v. State of Bombay:
 If the appropriate government refuses to make a reference for
irrelevant considerations, or on extraneous grounds, or acts mala
fide, that of course, would be another matter, in such a case the
party would be entitled to move the High Court for a writ of
mandamus.
to mean:
…… What was meant to be conveyed by the sentence aforesaid
was that the party would be entitled to move the High Court for
interfering with the order of the government and not necessarily
for the issuance of a writ of mandamus to direct the government
to make a reference. The mandamus would be to reconsider the
matter. It does not seem to be quite reasonable to take the view
that after the refusal of the government to make a reference is
quashed, a writ of mandamus to make a reference must
necessarily follow. The matter has still to be left for the exercise
of the power by the government on relevant consideration in the
light of the judgement quashing the order of refusal.
From the aforesaid decision, it is evident that the writ of mandamus
would lie to reconsider the matter where the appropriate government refuses to
refer the dispute on (i) irrelevant considerations, (ii) extraneous grounds or (iii)
in a mala fide manner.
In Hochtief Gammon v. State of Orissa85, the Supreme Court following
the decision of the House of Lords in Padfield v. Minister of Agriculture,
Fisheries and Food86 ruled that the Court would be justified in issuing a writ of
mandamus if the order of the government declining to refer the dispute
amounted to an outright refusal to consider relevant matters, or if the
government had misdirected itself in point of law in wholly omitting, to take into
account the relevant considerations which would amount to unlawful behaviour.
In Rohtas Industries Ltd v. S D Aggarwal,87 the Supreme Court again
observed that the order of reference could be challenged if there were no
grounds or material before the government upon which it could reasonably be
satisfied that the order should be made.

Q. Court’s Power to Issue Directions

Can the Court direct the government to refer an industrial dispute for
adjudication? This issue was raised before the Supreme Court in Sankari
Cement Alai Thozhilalar Munnetra Sangam v. Government of Tamil Nadu.88
In this case, the appropriate government failed to perform the duty imposed by
the Act, for reasons which are, irrelevant. In view of this, the Court directed the
government to refer the dispute within 4 weeks to the tribunal for adjudication.
Similarly, in Nirmal Singh v. State of Punjab89, the Supreme Court gave
direction that the reference be made forthwith. Again in V Veerarajan v.
Government of Tamil Nadu,90 the Supreme Court issued direction to the
government and the labour court to which the reference was to be made to do so
within the prescribed period. In this case, the government of Tamil Nadu refused
to make a reference of the dispute regarding dismissal of workmen, on the
ground that the domestic inquiry was conducted by the employer according to
the principles of natural justice and the punishment imposed by the employer
was not disproportionate to the gravity of the offence committed by the
workmen. On rejection of the writ petition by the single judge and confirmation
of the said order by the division bench, the aggrieved workmen filed a special
leave to appeal in the Supreme Court challenging the order of the court below.
The Supreme Court, pending appeal at the first instance, directed the state
government to reconsider the matter without taking into account the irrelevant
grounds stated therein within a period of 30 days, whether it would make a
reference of the industrial dispute to the labour court. The government again
reiterated its earlier stand and gave seven reasons in support of its order refusing
to make a reference. When the appeal was heard again, the Supreme Court
disapproved of the reasons given by the government and directed the state
government to make a reference within one month from the date of the order. It
also directed the labour court to which the reference was made to dispose of the
reference within 4 months from the date of reference.
The aforesaid decision not only shows the concern of the judiciary to
protect the interest of the dismissed workmen where no reference was made even
7 years after such dismissal, but also reveals that the Supreme Court can give
direction to the government to make a reference where the refusal to make a
reference was not germane or relevant.

II. POWER OF THE GOVERNMENT TO WITHDRAW

AND TRANSFER CERTAIN PROCEEDINGS
Under Sub-section (1) of Section 33 B, power is conferred upon the state
government by order in writing to withdraw any proceeding under the said Act
pending, inter alia before an industrial tribunal and transfer the same to another
tribunal for disposal of the proceeding. When a proceeding is transferred from
one tribunal to the other tribunal, the tribunal to which the proceedings is so
transferred may either proceed de-novo or from the stage at which the
proceeding is so transferred, subject to any special direction which may be given
to it in the order of transfer.
The power conferred upon the government under the aforesaid Section is
an extraordinary power. The conferment of this power raises a question whether
the requirement of giving recourse in the transfer order under Section 33B is
mandatory or directory? Conflicting views were expressed by the high courts.
While the Punjab High Court91 held it to be directory, the Allahabad92 and
Calcutta93 High Courts took the opposite views. The controversy was resolved
by the Supreme Court in Associated Electrical Industries (India) Private Ltd v.
The Workmen.94 In this case, no reason was mentioned in the order in which
reference was withdrawn from one industrial tribunal and transferred to another.
The order merely stated that it was expedient to withdraw the reference from one
tribunal and transfer the same to another. The Supreme Court found it not
amounting to a statement of reason as required under Section 33 B. The
statement of reason must be complied with both in substance and in letter. To
say that it is expedient to withdraw a case from one tribunal and transfer it to
another is not to give any reason as required by the Section. Normally, when an
individual dispute is referred to an industrial court or tribunal, it is said to be
tried before the court and tribunal and so the power of transfer can be exercised
only for sufficient reasons.

III. GOVERNMENT’S POWER TO REFER ANY

QUESTION FOR INTERPRETATION OF THE AWARD

A. The Context
Section 36 A empowers the appropriate government to refer any question to the
labour court, tribunal or national tribunal on being satisfied that the difficulty or
doubt has arisen as to the interpretation of any provisions of an award or
settlement. It further provides that when such a question is referred to, it shall,
after giving the parties an opportunity of being heard, decide such question and
its decision shall be final and binding on all such parties.
The provisions of Section 36 A, however, raises several problems. (i)
What is the scope of reference under Section 36 A? (ii) What is the significance
of the expression ‘after giving the parties an opportunity of being heard’? (iii)
Whether fresh evidence can be adduced by the parties under Section 36A? Let us
examine these problems.

B. The Judicial Response

1. Scope of Reference Under Section 36 A. Section 36A, namely, ‘if, in the
opinion of the appropriate government, any difficulty or doubt arise as to the
interpretation of any provision of an award’… imposes a condition for making a
reference. If the words used in any provision of an award are ambiguous or
obscure and it is not reasonably possible to interpret them, the difficulty arising
from the use of such ambiguous or obscure words, may be resolved by moving
the appropriate government to make a reference under Section 36A. Where there
is no difficulty or doubt about their meaning, the tribunal may refuse the
direction of the government. All that can be referred under this Section by the
appropriate government to the labour court, tribunal or national industrial
tribunal is about the interpretation of any provisions of the award already
made.95 However, a reference cannot be made by the appropriate government in
order to supplement the original award.96 Further, a fresh question (which may
be referred under Section 10) is not permissible under this Section.97 Moreover,
the tribunals have no jurisdiction if an order of reference as framed by the
appropriate government is not in accordance with the provisions of Sections
36A.98
The other question was considered in Rivers Steam Navigation Co. v.
Inland Steam Navigation Workers Union99 wherein the Calcutta High Court
observed that Section 36A excludes the jurisdiction of civil court unless,
recourse be had in the first instance to get the dispute referred to the tribunal for
interpretation. Explaining this, Justice Mookerjee held that if the recourse had
been taken by the parties under Section 36A, nothing and not even the
government’s view would bar the civil court’s jurisdiction to interpret the
award.100
2. Significance of the Expression ‘After Giving the Parties an
Opportunity of Being Heard’. Coming to the second question, it might be noted
that Section 36A (2) of the Act imposes upon tribunals a duty to give the parties
an opportunity of being heard. In other words, to give notice to the parties is a
condition of assuming jurisdiction.101 Bengal Coal Company Ltd v. Central
Government Industrial Tribunal102 provided an opportunity to the Patna High
Court to delineate the meaning of the expression ‘after giving the parties an
opportunity of being heard’ occurring under Sub-section (2) of Section 36 A of
the Act. Explaining the meaning of the phrase, the Patna High Court observed
that the tribunals are obliged to give the parties to the original award, or the
appellate award as the case may be, an opportunity of being heard. In other
words, the industrial tribunals are required to give notice to the parties before
them to decide a question of inter-relation referred to it by the appropriate
government under Sub-Section (2) of Section 36 A.103
3. Fresh Evidence. The third question is whether fresh evidence can be
adduced by the parties before the tribunal under Section 36 A. This question was
negatived by the Punjab High Court in Atlas Cycle Industries Ltd v. State of
Punjab104 wherein the Court observed that it was not necessary or even proper
to record evidence for the purpose of interpreting a document.105
To sum up, it is significant to note that Section 36 A enables the tribunal
only to clarify the provisions of its award where any difficulty or doubt arises
about its interpretation.106 The scope of the inquiry under Section 36 A is limited
to the decision of the difficulties or doubts arising as to the interpretation of any
provision in the award.107 The question about the ‘propriety, correctness or
validity of any provision of the award’ is outside the purview of the inquiry
under Section 36A.108 Further the Tribunal under Section 36B is not authorised
to ‘review or modify its own order.’109

IV. POWER TO MAKE RULES

Section 38 empowers the appropriate government to make rules for the purpose
of giving effect to the provisions of this Act in general and in particular:
(a) The powers and procedure of conciliation officers, boards, courts, labour
courts, tribunals and national tribunals including rules as to the
summoning of witnesses, the production of documents relevant to the
subject-matter of an inquiry or investigation, the number of members
necessary to form a quorum and the manner of submission of reports and
awards;
(aa) the form of arbitration agreement, the manner in which it may be
signed by the parties, the manner in which a notification may be
issued under sub-section (3A) of Section 10A, the powers of the
arbitrator named in the arbitration agreement and the procedure to
 be followed by him;
(aaa) the appointment of assessors in proceedings under this Act;
(b) the constitution and functions of and the filling of vacancies in works
committees, and the procedure to be followed by such committees in the
discharge of their duties;
(c) the salaries and allowances and the terms and conditions for appointment
of the presiding officers of the labour court. Tribunal and the national
tribunal including the allowances admissible to members of courts, boards
and to assessors and witnesses;
(d) the ministerial establishment which may be allotted to a court board, labour
court, tribunal or national tribunal and the salaries and allowances payable
to members of such establishment;
(e) the manner in which and the persons by and to whom notice of strike or
lockout may be given and the manner in which such notices shall be
communicated;
(f) the conditions subject to which parties may be represented by legal
practitioners in proceedings under this Act before a court, labour court,
tribunal or national tribunal;
(g) any other matter which is to be or may be prescribed.110
The aforesaid rule-making power of the appropriate government is
regulated by previous publication of such rules and laying down such rule before
the state legislature where the appropriate government is a state government or
before both houses of the Parliament where Central Government is the
appropriate government. Every rule made by the Central Government shall be
laid, as soon as maybe after it is made, before each house of the Parliament
while it is in session for a total period of 30 days which may be comprised in one
session or in two or more successive sessions, and if, before the expiry of the
session immediately following the session or the successive sessions aforesaid,
both houses agree that rules should not be made, the rule shall thereafter have
effect only in such modified form or, be of no effect, as the case may be. But any
such modification or annulment will not affect the validity of anything done
under the rule before the modification or annulment. The appropriate
government is also empowered to provide for rules for imposing penalty not
exceeding ₹50 in case of contravention of rules framed by it. The rules made
under the Act have the same force as the provision of the Act provided, of
course, they are not contrary or repugnant to the statute under which they are
framed. A statutory rule has to yield to the main provision of the Section of the
Act and the same is true with regard to rules framed under the provisions of the
Industrial Disputes Act, 1947.

V. DELEGATION OF POWER
Section 39 (a) empowers the Central Government where it is the appropriate
government by notification to delegate its powers to any of the following
authorities:
(i) any officer or authority subordinate to the Central Government; or
(ii) any officer or authority subordinate to the state government as specified
in the notification.
Likewise, Section 39 (b) empowers the state government (where it is the
appropriate government) to delegate its powers by notification to (a) an officer,
subordinate to the state government or; (b) an authority subordinate to state
government. While delegating the power, the state government may prescribe
the conditions subject to which the power shall be exercisable by the authority
concerned.
Where a notification is issued under Section 39 clarifying that powers
exercisable by the Central Government in relation to cement industry shall be
exercisable by state government, it is competent for both Central and state
government to make a reference of dispute regarding contract of labour of
cement industries. In such a situation, reference made by state government was a
valid reference.111

VI. POWER TO AMEND SCHEDULES

Section 40(1) empowers the appropriate government to add to the First Schedule
any industry which it considers to be expedient or necessary and on issuance of
such notification, the First Schedule shall be deemed to be amended. Similarly,
under Section 40(2), the Central Government is empowered to add to or, alter or
amend the Second or the Third Schedules and on such notification, it shall be
deemed to be amended accordingly. However, this power is regulated by the
laying provision before the appropriate legislatures.
 VII. POWER OF THE GOVERNMENT TO EXEMPT
Section 9 B of the Act empowers the appropriate government to exempt any
class of industrial establishments, or any class of workmen employed in any
industrial establishment from the application of the provisions of Section 9A of
the Act. Such exemption may be granted if the appropriate government is of the
opinion that the application of the provisions of Section 9A to any class of
industrial establishment or to any class of workmen employed in any industrial
establishment (i) affects the employers in relation thereto so prejudically that
such application may cause serious repercussion on the industry concerned; and
(ii) that public interest so requires.
Where the appropriate government grants the exemption, it must notify in
the official gazette. Further, it is required to specify in the notification that the
provision of Section 9A shall not apply or shall apply subject to such conditions,
which must be specified in the notification itself. Thus, the exemption granted
may either be absolute or limited, but in any case, the limitation must be
specified in the notification.

1 The validity of Section 10 has been upheld by the Supreme Court in D C & G Mills v.
Shambhu Nath, AIR 1978 SC 8.
2 See for instance, State of Madras v. C P Sarathy, (1953) 1 LLJ 174; Radhakrishna Mills
(Pollachi) Ltd v. State of Madras, (1956) 1 LLJ 221; Harendranath Bose v. Second
Industrial Tribunal, (1958) 2 LLJ, 1987; Jagannatham v. State of Andhra Pradesh,
(1958) 1 LLJ, 202; Paramount Films of India Ltd v. State of Madras, (1959) 1 LLJ 68;
and State of Madras v. K N Padmannabha Iyer, (1958) 2 MLJ 266.
3 Section 10(l) (d).
4 Section 10(2).
5 See for instance Minerva Mills Ltd v. Their Workers, (1954) 1 LLJ II 9 (SC); Straw
Board Manufacturing Co. Ltd v. State of Uttar Pradesh, (1953) 1 LLJ 186 (SC).
6 Section 10(4).
7 Heavy Engineering Mazdoor Union v. State of Bihar, (1969) 2 LLJ 549.
8 AIR 1967 SC 1040.
9 (1970) 2 LLJ 177.
10 (1962) 1 LLJ 409(SC).
11 (1956) 1 LLJ 557, 558.
12 1985 Lab. IC. 666.
13 2010 (8) SCALE 78.
14 (1996) 2 LLJ 549.
15 (1975) 4 SCC 679.
16 1984(Supp) SCC 443; 1984 (49) FLR 401.
17 (1985) 2 SCC 295.
18 (1997) 9 SCC 377.
19 (1979) 3 SCC 489.
20 (1981) 1 SCC 722.
21 2001 LLR 961 (SC).
22 See S C Srivastava, Impact of the Supreme Court decision on Contract Labour (Steel
Authority of India Ltd v. National Union Water Front), 43 JIL 1 (2001).
23 2011 (10) SCALE 478.
24 AAI came into force by merging the International Airport authority Act, 1971 and the
National Airport Authority Act, 1985.
25 (2008) 9 SCC 544.
26 (1994) 2 LLJ 503 (SC).
27 State of Madras v. C P Sarathy, (1953) 1 LLJ 174 (SC). The dispute had arisen before
1952-Amendment of Section 10 of the Act.
28 Sindhu Resttlement Corporation v. Industrial Tribunal, (1968) 1 LLJ 834 (SC).
29 Shambhu Nath Goyal v. Bank of Baroda, Jullundur, (1978) 1 LLJ 484 (SC).
30 Sindhu Resettlement Corporation v. Industrial Tribunal, Gujarat, (1968) 1 LLJ 834
(SC); See also Management of Needle Industries v. Labour Court, (1986) 1 LLJ 405
(Madras).
31 Barium Chemicals Ltd v. Company Law Board, AIR 1967 SC, 295.
32 Rohtas Industries Ltd v. S D Agarwal, AIR 1969 SC 707.
33 State of Madras v. C P Sarathy, (1953) 1 LLJ 174 (SC).
34 See State of Bombay v. K P Krishnan, (1960) 2 LLJ 592 (SC); Hochtief Gammon v.
State of Orissa, (1975) 2 LLJ 418 (SC).
35 See Firstone Tyre and Rubber Co. Ltd v. K P Krishnan, AIR 1956 Bombay 273.
36 State of Bombay v. K P Krishna, (1960) 2 LLJ 592. For an excellent analysis, see M
Kamraju, ‘Government Intervention in Labour Management Relations’, a dissertation
submitted for the degree of LLM in the Banaras Hindu University, 1964, (unpublished).
See also Workman of Oswal Weaving Factory v. State of Punjab, (1967) 1 LLJ 557
(Punjab).
37 State of Madras v. C P Sarathy, (1953) 1 LLJ 174 (SC).
38 Bombay Union of Journalists v. State of Bombay, (1964) 1 LLJ 351 (SC).
See Workmen of J and P Coats (India) Pvt. Ltd v. State of Kerala, (1977) 2, LLJ 534.
(Kerala); Sri Krishna Jute Mills v. Government of Andhra Pradesh, (1977) 2 LLJ 363
(Andhra); Abdul Salem v. State of Tamil Nadu, (1973) 43 FJR 180 (Madras).
39 Avon Services (Production Agencies) Pvt. Ltd v. Industrial Tribunal, (1979) 1 LLJ 1
(SC).
40 Id. at 4.
41 State of Bombay v. K P Krishnan, (1960) 2 LLJ 592.
42 See Kartikeshwar Panda v. State of Orissa, (1971); 1 LLJ 70 (Orissa); Sureshwar Narain
Srivastava v. Government of Bihar, (1971) 2 LLJ 152 (Patna); Workmen of Dalmia
Cement (Bharat) Ltd v. State of Madras, (1969) 1 LLJ 499 (Madras).
43 M/s. Hochtief Gammon v. State of Orissa, (1975) 2 LLJ 418 (SC).
44 Prem Kakar v. State of Haryana, AIR 1976 SC 1474.
45 AIR 1984 SC 1619.
46 1985 Lab. IC 1001. See also Gandharba Bhagi v. Steel Authority of’India, (1987) Lab.
IC 1226 (Orissa); Veerarajan v. Government of Tamil Nadu, AIR 1987 SC 695.
47 Prem Kakar v. State of Haryana, (1985) Lab. IC 1001, 1005.
48 (1985) 1 LLJ 93 at 94. (SC).
49 (1985) 1 LLJ 519.
50 AIR 1989 SC 1565.
51 (2000) 3 SCC 93.
52 1996 1 LLJ 879.
53 (2003) 1 LLJ 494 (SC).
54 2001 LLR 971.
55 (2002) Lab IC 2467.
56 (2010) 4 SCC 271 at 274.
57 (2000) 3SCC 324.
58 (2002) 4 SCC 490.
59 (2000) 1 LLJ 809.
60 (2002) 9 SCC 104.
61 1982 LIC 1309 followed by Division Bench of Delhi High Court in Eagle Fashion v.
Secretary (Labour), (1999) 1 LLJ 232.
62 (1958) 2 LLJ 634: AIR 1958 SC 1018.
63 (1970) 2 LLJ 256 (SC).
64 Western India Match Co. v. Western India Match Co. Workers Union, AIR 1970 SC
1205.
65 Binny Ltd v. Their Workmen, (1972) 1 LLJ 478 (SC).
66 Avon Services (Production) Agencies Pvt. Ltd v. Industrial Tribunal, Haryana, (1979) 1
LLJ 1 (SC).
67 Western India Match Co. Ltd v. Western India Match Co. Workers Union, (1970) 2 LLJ
256 (SC).
68 (2000) 2 SCC 455.
69 (2005) 1 LLJ 1081.
70 2007 LLR 1233.
71 (2005) 5 SCC 94.
72 2011 (2) SLR 376.
73 Id at 383–384.
74 (1979) 1 LLJ 1.
75 G Mathu Krishnan v. New Horizon Sugar Mills Pvt. Ltd, (1980) Lab. IC 475.
76 (1992) Lab. IC 153 (All.).
77 1980 Lab. IC 910.
78 1980 Lab IC 910 at 911. See also M U M Services Ltd v. R T A Malabar, AIR 1954 Mad.
59; Sudhansa Kanta v. State of Bihar, AIR 1954 Pat. 299; Bagga Singh v. Distt.
Magistrate, AIR 1955 Assam 83; Ratilal Bhogilal v. State of Gujarat, AIR 1966 Guj.
244; Ajanta Industries v. Central Board of Direct Taxes, AIR 1976 SC 437.
79 (1984) 2 LLJ 400. See also Mum Services Ltd v. R T A Malabar, AIR 1953 Madras, 59;
Sudhansa Kanta v. State of Bihar, AIR 1954 Patna 299; Bagga Singh v. Distt.
Magistrate, AIR 1955 Assam 183; Vermula Thimmappa, v. Addl. Distt. Magistrate, AIR
1955 NUC Andhra Pradesh 4458; Ratilal Bhogilal v. State of Gujarat, AIR 1966 S.C.
244. Ajanta Industries v. Central Board of Direct Taxes, AIR 1976 SC 437.
80 Dabur (Dr S K Burman) Pvt. Ltd v. Their Workmen, AIR 1968 SC 17.
81 State of Bombay v. K P Krishnan, 1960 2 LLJ 592.
82 Bombay Union of Journalists v. State of Bombay, (1964) 1 LLJ 351.
83 Mahabir Jute Mills v. Shibanal Saxena, (1975) 2 LLJ 326 (SC).
84 Govind Sugar Mills v. Hind Mazdoor Sabha, (1975) 2 LLJ 370, 373.
85 Hochtief Gammon v. State of Orissa, (1975) 2 LLJ 418 (SC).
86 Padfield v. Minister of Agriculture, Fisheries and Food, [1968] AC. 997.
87 Rohtas Industries Ltd v. S D Aggarwal, AIR 1969 SC 702.
88 (1983) 1 LLJ 460.
89 AIR 1984 SC 1619.
90 AIR 1987 SC 494.
91 Aeron Steel Rolling Mills v. State of Punjab, (1959) 1 LLJ 73 (Punjab); Aeron Steel
Mills v. State of Punjab, AIR 1960 Punjab 55; See also Prabhudayal Himat Singh v.
State of Punjab, AIR 1959 Punjab 460; Workmen of New Eqerton Woollen Mills v.
State of Punjab, (1967) 2 LLJ 686 (Haryana and Punjab).
92 Bharat Bhushan v. State of Industrial Tribunal, 6 FJR 278 (Allahabad).
93 Shree Shiv Sakti Oil Mills Ltd v. Second Industrial Tribunal, (1961) 2 LLJ 36 (Calcutta).
94 Associated Electrical Industries (India) Private Ltd v. The Workmen, (1961) 2 LLJ 123
(SC).
95 Britannia Engineering Co. Ltd v. Basil Mazumdar, (1961) 2 LLJ 310 at 311 (Calcutta).
96 Ibid.
97 Id at 3l2.
98 Ibid.
99 Rivers Steam Navigation Co. v. Inland Steam Navigation Workers Union, (1964) 1 LLJ
98 (Calcutta).
100 The question of interpretation of the award would be concluded on its final determination
by the special tribunal under Section 36 A, but if, for any reason, the reference thereunder
is not or fails to be, effective or proves infructuous, it may still be open to the aggrieved
party to approach the civil court for the purposes of the aforesaid interpretation (See
Rivers Steam Navigation Co. v. Inland Steam Navigation Workers Union, op. cit.).
101 Rivers Steam Navigation Co. v. Inland Steam Navigation Workers Union, op. cit.
102 Bengal Coal Company Ltd v. Central Government Industrial Tribunal, (1962) 2 LLJ 414
(Patna).
103 Id. at 417.
104 Atlas Cycle Industries Ltd v. State of Punjab, (1962) 1 LLJ 536 (Punjab).
105 Id. at 544.
106 Kirloskar Oil Engines Ltd v. Its Workmen, (1962) 2 LLJ 675.
107 Id. at 677.
108 Ibid.
109 Section 36B of The Industrial Disputes (Amendment) Act 1982 provides: Where the
appropriate government is satisfied in relation to any industrial establishment or
undertaking or any class of industrial establishments or undertakings carried on by a
department of that government that adequate provisions exist for the investigation and
settlement of industrial disputes in respect of workmen employed in such establishment or
undertaking or class of establishments or undertakings it may, by notification in the
official gazette, exempt conditionally or unconditionally such establishment or
undertaking or class of establishments or undertakings from all or any of the provisions of
this Act.
110 The Industrial Disputes (Amendment) Act, 1982 provides that in Sub-section (2) of
Section 38 of the principal Act, after clause (aaa), the following clause shall be inserted,
namely:
(ab) the constitution of grievance settlement authorities referred to in Section 9 C, the
manner in which industrial disputes may be referred to such authorities for settlement, the
procedure to be followed by such authorities in the proceedings in relation to disputes
referred to them and the period within which such proceedings shall be completed.
111 Shri Yovan, India Cements Employees Union v. Management of India Cements Limited,
(1994) Lab.IC 38.
 CHAPTER
19
Instruments of Economic Coercion
In general, labour’s instruments of economic coercion comprise such workers’
action or omission, in furtherance of an industrial dispute which threaten or
inflict financial loss on the management. They put management under economic
pressure to accept the (industrial dispute) demands of workers.
Likewise, management’s instruments of economic coercion comprise
such management’s action or omission, in furtherance of an industrial dispute
which is resorted to with the objective of inflicting financial loss on the labour so
that they would rather accept management’s terms than suffer irreparable
financial loss. Further, in harmony with the view ‘no work, no payment’, the
closing of a place of employment or suspension of work or the refusal by an
employer to continue to employ any number of persons employed by him is the
means adopted to put the requisite economic pressure.
The activities may assume various forms, e.g., withdrawal of labour and
quarantines of labour, raw material, customer, dealer or any combination of
these. Further, the withdrawal of labour or the quarantine may be total or partial.

I. STRIKE
Looking back from the vantage point of the year 2012, it appears as
commonplace to appreciate that capital, raw materials, tools and labour are
essential prerequisites for industrial production. The owner of any one or more
of these ingredients yields a vital economic power subject to the prevailing
environmental conditions. He can use this power to his advantage in negotiating
with the owner or owners of the other ingredients, the terms and conditions for
the supply of that which he owns. In particular, withholding of labour until
stated terms and conditions of employment are conceded, is a potent instrument
of economic coercion.
Though the use of the term ‘strike’ to describe workmen’s instrument of
economic coercion in labour management relations is relatively of recent origin,
the strategy of withholding labour as an instrument of economic coercion has
been known for several centuries. Indeed, prohibition, direct or indirect or
withholding labour as an instrument of economic coercion is not unknown.

A. Statutory Definition
Section 2(q) of the Industrial Dispute Act, 1947 (IDA) defines ‘strike’ to mean:
a cessation or work by a body of persons employed in any
industry acting in combination, or a concerted refusal, or a
refusal under a common understanding of any number of
persons who are or have been so employed to continue to work
or to accept employment.
Judicial delineation of the aforesaid expression of ‘strike’ is confusing,
inadequate and inapt. While some of these may be the result of imprecise
legislative definition, ignorance of the facts of industrial life and lack of policy-
oriented approach have also contributed to the prevailing confusion.
The shortcoming of the definition became a matter of concern. It raises
several issues: (i) Who goes on strike? (ii) Against whom do they go on strike?
(iii) What are the acts which constitute strike? (iv) Why do they go on strike?
1. Who Goes on Strike? The Industrial Disputes Act does not
specifically mention as to who goes on strike. However, the definition of strike
itself suggests that ‘strikers’ must be: (a) persons (b) employed (c) in any
industry (d) to do work.
2. Against Whom They Go on Strike? Strike, we have already seen, is
called by persons employed in any industry. Further, it is an instrument of
economic coercion. It seeks to deprive an ‘employer’ of labour input and
thereby, diminish through loss of production, his earning capacity in the hope
that the resulting economic strain would compel him to come round to the
strikers’ point of view. If this analysis is correct, it follows that the person
against whom strike is called must be an employer. Further, the statutory
regulation of strikes, namely:
No person employed in a public utility service shall go on strike, in
breach of contract:
(i) without giving to the employer notice of strike.1
Read with Rule 71 of the rules framed under Section 30 Office Act and
the prescribed form, makes it clear that a ‘strike’ is called against the
‘employer’, at least, the Act is concerned with only those strikes that are called
against ‘employers’.
3. The Element of Combination. The definition recognizes concerted
action under common understanding on the part of strikers as an essential
element of strike.
The expression ‘concerted’ action indicates that it has been planned,
arranged, adjusted or agreed on and settled between parties acting together
pursuant to some design or scheme.2 The emphasis in strike is on acting together
and not on pre-planning or pre-arranging: the parties who resort to strike may
come to a common understanding at the time in question without any formal
agreement or consultations, but nevertheless the concerted action must be
collectively combined on the basis of esprit de corps and must be combined
together by the community of demands and interest with a view to compel
employer to accede to their demands of wages, bonus, allowances, hours of
work, holidays and the likes. The length or duration of the ‘concerted’ action is
immaterial.3
(a) Judicial delineation of statutory provisions:
(i) The concept of acting in combination or a concerted refusal
or a refusal under a common understanding.
The Tribunals and Courts have had several4 opportunities to delineate the
contours of the expression:
acting in combination, or a concerted refusal or refusal under a common
understanding.
The emerging picture, however, is hardly satisfactory. Generally
speaking, conceptual interpretations have been superseded by literal
interpretation.
(ii) The conceptual interpretation. In Shamnagar Jute Factory v. Their
Workmen5, the tribunal observed:
The words, ‘acting in combination’ mean that the body of
persons employed must be shown to be acting in combination,
with their psychology directed to a particular end, namely, the
cessation of work … and… that the cessation of work was the
direct common object of the body of persons acting in
 combination. For instance, if a factory is on fire, the body of
workers should be expected to run simultaneously for safety and
leave their work thus bringing about a cessation of work. Under
such circumstances, the body of workers may be said to be
acting in combination in so far as they would be acting
conjointly and simultaneously more or less for the purpose. But
such a cessation would not amount to a strike, for the simple
reason that the object of the body of workers under such
circumstances would not involve a direct purpose of bringing
about a cessation of work, although the purpose actually pursued
would have the indirect effect of causing cessation of work and
being of the opinion that ‘workers were members of an unlawful
assembly with the common object of assaulting and
overpowering the manager and the police party’ held that the
conduct of the workmen did not amount to a strike. All that
happened had the indirect effect of causing a cessation of work
… there was, therefore, no strike.
Standard Vacuum Oil Co. v. Gunaseelan (M G)6 put an additional
restriction, albeit from a different angle. The workmen in this case, wanted ‘1st
May’ to be declared holiday so as to enable them to celebrate ‘May Day’. A
protracted negotiation between management and workmen followed. But the
management were recalcitrant to declare ‘1st May’ as holiday.
The workmen threatened to go on strike, though on receipt of directives
from the All India Petroleum Workmen’s Federation, the local Madras union (of
which concerned workmen were members), explicitly advised the concerned
workmen to call off the threatened strike. However, on the 1st of May, which
was a half working day, workmen indulged in, what decision-makers called ‘an
ingenious activity’. Taking advantage of the fact that leave was due to them,
they en bloc put in individual applications for leave and in anticipation of grant
of such requested leave, left their work to join the ‘May day’ celebrations. Union
leaders had masterminded the strategy and advised workmen to put in individual
leave applications en masse. On these facts, a question arose whether the
absence of workmen en masse, amounted to a strike. The tribunal emphasized
that:
in making applications for leave, they were submitting
themselves to the authority and control of company. They were
expecting that the company would act reasonably and would
 grant them the holiday in view of the past precedents.
And being of the view that in strike ‘the cessation to work or concerted
refusal to work must be in defiance of the authority of the employers’7 held that
the conduct of concerned workmen did not amount to strike (as the element of
defiance was missing).
(iii) Literal interpretation. Buckingham and Carnatic Mills Ltd v.
Their Workmen8 is the leading case on the subject. When the workmen of
afternoon shift came to work at 3 p.m., they insisted for granting the leave
(because the day shift workers had been granted leave with pay) to celebrate
solar eclipse. The management refused. Consequently, a large number of
workmen applied for leave. Management rejected all the leave applications and
asked the workers to go back to work. It is not clear from the report as to what
happened thereafter except that the workmen did not resume work until about 9
p.m. The tribunal held the stoppage of work to be a strike. The labour appellate
tribunal reversed the finding but the Supreme Court restored it:
It cannot be disputed that there was a cessation of work by a
body of persons employed in the mills and that they were acting
in combination and their refusal to go back to work was
concerted. All the necessary ingredients, therefore, of the
definition exist in the present case and the stoppage of work on 1
November 1948, amounted to a strike.9
(b) The evidence required to prove ‘combination’ or ‘concert’ or
‘common understanding’. The mere absence from work does not amount to
taking part in a strike. There ought to be some evidence to show that the absence
was due to some concert between him and other persons.10
Proof of ‘combination’ or ‘concert’ or ‘common understanding’ is
inevitably dependent on proof of ‘common intention’ or ‘common object’ and
though the theoretical possibility of direct evidence to prove ‘common intention’
cannot be eliminated, in practice, there cannot be any direct evidence of
‘common intention’ except by an approver and the common intention must be
gathered from the circumstances.11
In Delta Jute Mills Ltd v. Their Workmen12, the workmen demanded
Friday evening and Saturday morning as a holiday to observe Muharram. The
management declined to grant them the requested holiday but agreed to declare
the whole of Saturday as holiday. Thereupon, workmen requested that they be
paid wages on the morning of Friday and not in the evening, as per practice. It
was not clear from the report whether the management conceded this demand.
However, the workmen absented themselves en masse from the afternoon shift
on Friday. Even those few who turned up did not start work and the work
completely paralyzed. On these facts, it was held that there was a common
intention to remain absent from work in the afternoon shift on Friday.
In Sirka Colliery v. South Karanpura Coal Mines Workers’ Union13,
the labour appellate tribunal held that ‘… The fact that none of the coal loaders
and trammers attended on those 4 consecutive days and their total number was
very large, about 2262, the 19th… (and other circumstantial evidence) leave no
room for doubt that the cessation of work on those days was concerted refusals
under a common understanding.’
In Buckingham and Carnatic Mills Ltd v. Their Workers14, the
industrial tribunal observed that the fact that very large number of leave
applications were put in for various reasons points to concerted action. The
explanation given by the workers and their representatives also indicates that
they were acting in combination… Their refusal to resume work in spite of the
attempts made by the officers and their own Madras Labour Union
representatives shows that they were not as a body prepared to resume work
unless their demand was conceded.
The aforesaid findings of the tribunal were upheld by the Supreme Court.
In Lakshmi Devi Sugar Mills v. Ram Sarup15, the Supreme Court took
notice of the avowed intention of strikers not to resume work until their plan
conceived at a meeting held on the previous night was carried out, to come to the
conclusion that there was a ‘common understanding’. Moreover, tribunals16 have
held that it is not necessary to prove in ‘combination and concert’ that workers
had any former consultation and thereby had come to that decision.

B. Forms of Strike
Most of the cases present relatively simple instances of ‘cessation of work’
‘refusal to continue to work’ or ‘refusal to accept employment.’17
While negotiating for settlement of an industrial dispute, workmen may
resort to the use of instruments of economic coercion to get their point of view
accepted by the management. The workmen may remain at their respective home
or at any place other than the place of their work or may even be present near or
within the premises or the place of employment but not at their seats. However,
difficult questions arise when workmen deviate from traditional methods. What
about stay-in-strike, pen-down strike, tool-down strike, go-slow, hunger strike,
sympathetic strike, and work-to-rule? Do these fall within the meaning of the
definition of strike18 as defined in Section 2 (q) of the IDA?
1. Stay-in-Strike, Sit-Down Strike, Pen-Down Strike, or Tool-Down
Strike. Decision makers19 and writers20 have used the expressions ‘stay-in
strike’,21 ‘sit-down strike’,22 ‘pen-down strike’’23 and ‘tool-down strike’24 as
synonyms of each other.
In Punjab National Bank Ltd v. Their Workmen,25 Mr Sabbarwal, a
typist and secretary of the Punjab National Bank Employees’ Union of Delhi,
applied for 7 days’ leave. The management declined to grant him leave. Even so,
Sabbarwal absented himself from duty. On resumption of duties, he was
chargesheeted for absence without leave. However, Sabbarwal refused to accept
the show cause notice. The management thereupon sent it to him by registered
post and pending further inquiry, suspended him. Thereupon, the employee’s
union instructed employees to stick to their seats and to refuse to work until
police intervened and threatened arrest or until orders of discharge or suspension
were served on them. The co-employees of Sabbarwal did this. Meanwhile, a
turbulent crowd gathered outside the premises of the bank. Some of the persons
in the crowd shouted slogans in support of the action of the employees. The
management suspended 60 of the aforesaid participating employees. This led to
an industry-wide strike in Delhi and Uttar Pradesh. The bank gave notice that
unless the strikers resumed their duties by a specified date, they would be treated
as having voluntarily ceased to be employees and on their failure to report for
duty on the specified date, terminated the services of 150 of its employees after
giving them another chance to resume their duties.
On these facts, a question arose as to what is the nature of the employees’
activities in sticking to their seats but refusing to work. The Supreme Court
recognized that the main grievance of the bank was that the employees not only
sat in their places and refused to work but they did not vacate their seats when
they were asked to do so by their superior officers. However, it considered such
an element of insubordination to be ‘a different matter’ and not relevant for
interpreting the definition of ‘strike’.
The Court also rejected the contention that the impugned activity
amounted to criminal trespass:
… there are two essential ingredients which must be established
before criminal trespass can be proved against the employees.
Even if we assume that the employees’ entry in the premises
was unlawful or that their continuance in the premises became
unlawful, it is difficult to appreciate the argument that the said
 entry was made with intent to insult or annoy the superior
officers. The sole intention of the strikers obviously was to put
pressure on the bank to concede their demands. Even if the
strikers may have known that the strike may annoy or insult the
bank’s officers, it is difficult to hold that such knowledge would
necessarily lead to the inference of the requisite intention …26
And on a plain and grammatical construction of the definition held:
Refusal under common understanding to continue to work is a
strike audit in pursuance of such common understanding the
employees entered the premises and refused to take their pens in
their hands, that would no doubt be a strike under Section 2
(q).27
We believe that the emphasis on literal interpretation resulted in ignoring
the conceptual understanding of the phenomenon known as strike and in
encouraging undesirable activities.
2. Go-Slow. Often workers deliberately slow down the pace of
production. There is no ‘cessation of work’ or ‘refusal to continue to work’ or
‘refusal to accept employment’. But, nevertheless, the economic implications are
very serious as the cost of production goes up, delivery schedule gets upset and
very often, raw material and machinery are adversely affected.
Workers adopt this practice to circumvent the statutory restrictions.28 On
go-slow, however, when they are disciplined for misconduct, they assert that the
practice amounts to a strike.29 Obviously, they cannot be permitted to blow hot
and cold at the same time. But, then the all important question is whether this
practice, popularly called ‘go-slow’ is a ‘strike’? The definition of a ‘strike’ uses
the phrases ‘cessation of work’, ‘refusal to continue to work’ and ‘refusal to
accept employment.’ These phrases are not qualified by the expression ‘total’ or
‘partial’.30 But in Bharat Sugar Mills Ltd v. Jai Singh,31 Justice Das Gupta,
speaking for the Supreme Court observed:
Go-slow which is a picturesque description of deliberate
delaying of production by workmen pretending to be engaged in
the factory is one of the most pernicious practices that
discontented or disgruntled workmen sometime resort to. It
would not be far wrong to call this dishonest. For, while thus
delaying production and thereby reducing the output, the
workmen claim to have remained employed and thus to be
 entitled to full wages. Apart from this also, ‘go-slow’ is likely to
be much more harmful than total cessation of work by strike.
For, while during a strike much of the machinery can be fully
turned off, during the ‘go-slow’, the machinery is kept going on
at reduced speed which is often extremely damaging to
machinery parts. For all these reasons ‘go-slow’ has always been
considered a serious type of misconduct.32
The aforesaid view was reaffirmed in Bank of India v. T S Kelawala33
wherein the Supreme Court observed:
… go-slow is a serious misconduct being a covert and a more
damaging breach of the contract of employment. It is insidious
method of undermining discipline and at the same time a crude
device to defy the norms of work. It has been roundly
condemned as an industrial action and has not been recognized
as an legitimate weapon of the workmen to redress their
grievance.
3. Hunger Strike. Hunger strike is a strike34 with fasting by some or all
strikers35 or even outsiders super added to exert moral force or perhaps what
may be more aptly described as coercion, for acceptance of the demands. Its
usage, however, is complicated because, like the word strike, it is used to
describe all protest fasts, whether or not the particular protest activity is in
furtherance of an industrial dispute.36
4. Lightning or Wildcat Strike. The characteristic feature of this type of
withdrawal of labour is that the workmen suddenly withdraw their labour and
bargain afterwards.37 Such strikes are prohibited in public utility services under
the Industrial Disputes Act, 194738 and all industrial establishments in public
utility services in UP, Maharashtra, CP and Gujarat, where notice is required to
be given. Further, the standing orders of the company generally requires for
notice. Since no notice is required in industrial establishments other than public
utility concerns, a question arises whether such a strike in such a situation would
be a misconduct or unjustified strike. These questions have been the subject-
matter of judicial controversy.
In Swami Oil Mills v. Their Workmen39, certain workmen resorted to
sudden lightning strike allegedly on failure of the government to refer the
dispute to the tribunal. The question for consideration with respect to strike was
whether it was illegal or unjustified. The tribunal held that the strike was not
illegal and unjustified but observed:
It must be conceded that a sudden lightning strike, such as the
one in question, without any previous notice to the management,
cannot be looked upon as quite proper …
In Sadul Textile Mills v. Their Workmen40, certain workmen struck work
as a protest against the lay-off and the transfer of some workers from one shift to
another without giving four days’ notice provided by Standing Order 23. On
these facts, a question arose whether the strike was justified. The industrial
tribunal answered it in affirmative. Against this, a writ petition was preferred in
the High Court of Rajasthan. Reversing the decision of the tribunal, Justice
Wanchoo observed:
… we are of opinion that what is generally known as a lightning
strike like this takes place without notice and each worker
striking (is) guilty of misconduct under the standing orders and
liable to be summarily dismissed (as) the strike cannot be
justified at all.
5. Work-to-Rule. In this form of concerted activity, employees, though
remaining on job, do the work literally in accordance with rules or procedure
laid down for the purpose, decline to do anything not mentioned therein, take all
permissible time of the job, and do the work in such a manner that it results in
dislocation of the work. Usually rules of work are stretched and followed in such
a manner that under the shelter of complying with rules, the very purpose of
these rules, namely, harmonious working for maximizing production is
frustrated. In these tactics, the workers literally work according to rules but in
spirit they work against them. Though they are called ‘work to rule’ tactics, in
substance they amount to work against rule tactics.
These tactics are generally employed as an alternative to a traditional
strike particularly, where traditional strike cannot be called. Whatever may be
the form of compliance of the rules and whatever may be the outward
manifestation, in substance, the conduct of employees amounts to compliance in
a manner not commensurable with the prevailing normal practice and in
harmony with expectations then entertained, it amounts to bringing about
unilateral changes in the working system by the employees and it is a
misconduct for which the employer is justified in taking action.
In USA, these tactics are recognized as a form of strike. But, in India they
are not covered by the definition of ‘strike’. As in go-slow, so here, there is no
‘stoppage’ of work. Again for the very reason because of which we are against
extension of definition of ‘strike’ to include go-slow, we are also against
inclusion of work-to-rule within the ambit of ‘strike’. The (Second) National
Commission on Labour has recommended that work-to-rule must be regarded as
misconduct.

C. Why Do Workmen Go on Strike

We have already seen that the Industrial Disputes Act, 1947 defines ‘strike’. A
question arises whether strike is a means to achieve ends other than getting time-
off or an end in itself, i.e., to get time-off on the very day the workmen indulge
in cessation of work. Further, if strike is merely a means to an end, whether the
three forms of withdrawal of labour, viz., ‘cessation of work’, ‘refusal to
continue to work’ and ‘refusal to accept employment’ are means to further ‘trade
dispute objectives’ of the participants or even to achieve political and other non-
trade dispute objectives.

D. Judicial Response
1. Withdrawal of labour as a coercive measure to achieve non-trade dispute
objectives is not a strike. In Goodlass Wall Co. v. Amir Ahmad Bakoor Khan41,
the workmen’s union requested the management to close the factory for half a
day to mourn the death of Marshal Stalin which was refused by the management.
Thereupon, a large majority of workers kept away from work after the lunch
break. On these facts, a question arose whether the conduct of workmen
amounted to a strike. The labour appellate tribunal upheld the decision of the
tribunal that there was a ‘concerted refusal to work’ and, therefore, a ‘strike’ and
opined:
It is not correct to say that cessation or stoppage of work, unless
it is caused by virtue of an industrial dispute, is not a strike
under Section 2 (q) … of the (Industrial Disputes) Act. There is
nothing in the scheme of the Act or the provisions thereof, to
show any compelling necessity to add any such words.
In Matchwel Electricals Company v. Chief Commissioner42, the
workmen of the company along with workers of various other industries stopped
work to protest the intervention of the Central Government in dismissing the
Kerala Ministry in August 1959. The tribunal held the stoppage to be a strike.
The company sought the intervention of the High Court under Article 226 of the
Constitution. Justice Gosain conceded:
It is true that the strike in question was a sort of political strike
and was not, in any way, connected with any grievance of the
workmen against the management of the company, but
nevertheless held the stoppage to be a strike and, on this point,
confirmed the decision of the tribunal.
It is difficult to agree with these decisions. It is true that in India,
stoppages of work to express one’s resentment has been the order of the day in
the political arena ever since 1921 and these work stoppages are popularly called
strikes: indeed, political leader’s call is for a strike. Even so they are not strikes
within the meaning of the law relating to labours management relations and
whatever their merits under conditions of foreign rule, the earlier we isolate
labours management relations from them in independent India, the better it
would be for all concerned.
But quite apart from policy considerations, the aforesaid work stoppages
is not a strike within the meaning of the Industrial Disputes Act, 1947 because of
the absence of the element of purpose, namely, to further trade disputes with
employers.
2. Withdrawal of labour as a means to an end in itself i.e., as a means
to get time-off on a particular day, is not a strike. In Shree Meenakshi Mills v.
Their Workers43, a workman died while he was working on a loom. His co-
workers, without informing the management, left the work post and proceeded to
attend the funeral ceremony of the deceased co-worker. The result was that the
work was stopped. The labour appellate tribunal upheld the decision of the
tribunal that the stoppage amounted to a strike.
In Jeewan Dallo v. Metal Box Co.44, the workmen requested the
management to close the factory on 14th, the last day of Ganesh Chaturthi, for
half a day. The management refused. On 14th, 35 workers did not report for
work after the lunch recess, and further 323 workers walked out of the factory
and did not report for afternoon shift. On these facts, the tribunal held that there
was cessation in concert, so strike.
In Upper India Couper Paper Mills v. Their Workmen45, the
management directed workmen (due to the exigencies of work) to do work on a
listed holiday and offered compensatory holiday (which was in accordance with
prior agreement). Workers refused to work. The labour appellate tribunal held
the resulting stoppage of work to be a strike.
In Dalmia Cement Co. v. Chaniah46, the management (due to exigencies
of work) informed 20 workmen individually on Saturday the 16th that on
Sunday the 17th (a weekly off-day) they had to report for work and they will get
off-day on another day. The workmen did not turn up. On these facts, the
conduct of workmen was held to amount to a strike.

II. PICKETING

A. Elements of Picketing
Several elements comprise picketing. There is, for instance: (a) element of
freedom of speech and expression to the extent to which the communication of
facts and views are involved; (b) element of freedom of movement to the extent
to which picketers remain stationary or indulge in movement; (c) element of
freedom of association to the extent to which picketing involves group activity;
and (d) element of freedom to carry on trade, profession or business to the extent
to which the activities may be designed to improve the working conditions of the
workers and adversely affect the corresponding right of the management or non-
picketing workers. All these elements may not be concurrently present in each
and every picketing. Events often quickly move from a phase involving some of
these elements to another involving other of these elements.

B. Picketing may be a Permissible Weapon

Picketing affects business and business is property. Frankfurter and Greene have
indicated, in their classic treaties, the Labour Injunction47, the American
judiciary’s response to picketing. Whether or not picketing was illegal under the
common law, may be open to serious debate. But there is no doubt that in British
India, early regulations and statutes which directly or indirectly rendered strikes
illegal and exposed strikers to criminal prosecution also rendered picketing an
offence, both in specified industries as well as generally. The Indian Penal Code
affected picketing through abetment, criminal intimidation, criminal restraint and
among others, breach of contract. Since 1930, picketers could also be prosecuted
for criminal conspiracy. The Criminal Law (Amendment) Act, 1932, further
affected picketing. The relief given by the Trade Unions Act did not extend to
condoning such acts in furtherance of a trade dispute as it amounted to an
offence. Trade Disputes Act, 1929 further affected inciting, abetting or acting in
furtherance of an illegal strike was an offence–a position which is preserved
under the 1947-IDA even though the concept of an illegal strike has undergone a
revolutionary change. Even at the risk of repetition, it may be reiterated that
picketing in support of a legal strike, or picketing in the absence of any strike
whatsoever is not necessarily legal. Even today, in order to maintain its legality,
picketers’ conduct must steer clear of the aforesaid provisions of the IPC and the
Criminal Law (Amendment) Act, 1932, but this may not be easy.
The Indian Constitution added another dimensions to the problem. To the
extent to which picketing involves elements of freedom of speech, movement,
association and trade, profession or business and to the extent to which the State
is enjoined from taking away the freedom, that law cannot adversely affect
picketing.

C. Picketing and Right to Freedom of Speech

Section 7 of the Criminal Law Amendment Act, 1932 prohibits obstruction of
access and intimidation of persons or employees or loitering at places of
residence or business with the intent of deterring others from entering or
approaching or dealing at such places. The constitutional validity of the section
was challenged in Damodar Ganesh v. State48 and Vimal Kishore Malhotra v.
State of Uttar Pradesh.49 In the former case, a dispute arose between Bombay
Mill Owners’ Association and employees of various member mills regarding
bonus. The state of Bombay referred the dispute to the industrial court, Bombay
which gave an award. Against the award, the management preferred an appeal to
the then labour appellate tribunal. During the pendency of appeal before the
labour appellate tribunal, the employees of various mills commenced a strike and
posted some of the workers near the gates of the mills, where they distributed
leaflets to the non-strikers. The petitioner did not intimidate any workers.
Further, they were behaving in such a manner that their acts were sufficient to
deter the workers from going on strike. These picketers were convicted under
Section 7 of the Criminal Law Amendment Act, 1932. Aggrieved by the order,
the picketer-accused filed a revision application before the Calcutta High Court.
It was, inter alia, contended before the High Court that the provisions of Section
7 were contrary to Article 19 (1) (a) and (d) of the Constitution and, therefore,
void under Article 13 of the Constitution. The Court rejected the contention and
observed:
Peaceful picketing, as indulged in by the petitioners before us,
can affect only two rights which have been given by the
Constitution, viz., the right of freedom of expression and the
right to move freely throughout the territory of India. A
 restriction has been imposed only on the latter right by Section
(1) of the Criminal Law Amendment Act whether it is
accompanied by the exercise of the former right or not. If the
Section had imposed restriction on both rights then it would
have been necessary to justify both the restrictions in the light of
the other clauses of Article 19 of Constitution. But in this case,
restriction is placed only on the right to freedom of movement of
the petitioner without any abridgement of their exercise of any
other fundamental right.50
Vimal Kishore Malhotra v. State of Uttar Pradesh51 is another case in
point. In this case, certain workers of textile mills at Kanpur went on strike. The
strike lasted for several weeks. One of the general secretaries of the union was
arrested under Section 7 of the Criminal Law Amendment Act, 1932. It was
proved that while one Janardan Pandey and other (non-strikers) were going to
the mills, the petitioner in the course of picketing said to the strikers, ‘Note these
men. They are rebels. They will not listen to verbal persuasion, until their hands
and feet are broken.’ These words according to the Court amounted to criminal
intimidation made punishable by Section 506 IPC. Against the order of arrest,
the petitioner Vimal Kishore Malhotra preferred a writ petition under Article 226
of the Constitution for a direction of writ in the nature of habeas corpus. It was,
inter alia, contended by the petitioner that Section 7 of the Criminal Law
Amendment Act, 1932 was ultra vires the Constitution. The Court held that
Section 7 was inter vires the Constitution at least so far as is it related to the
charges against the petitioner. But the Court did express an opinion about the
constitutionality of peaceful picketing and observed:
Section 7[of the] Criminal Law Amendment Act prohibits
several acts. It may be that prohibition of some of these acts is
unconstitutional. But it does not follow that prohibition of other
acts also is unconstitutional. It is possible to separate the valid
part from the invalid parts. So assuming (without deciding) that
certain parts of sub-section (1) of Section 7 of the Act are ultra
vires the Constitution, the entire Section 7 cannot be condemned
on that ground.
In Simpson Group Companies Workers & Staff Union v. Amco
Batteries Ltd52, the Karnataka High Court held that the right to picket is a very
intangible one which is closely limited by the equal right of others to go about
their lawful affairs free from objection, molestation or intimidation. The methods
of persuasion are limited to oral and visual methods, i.e., the use of voice and
exhibition of placards and should not be extended to physical obstruction of a
vehicle or a person which would be illegal. Accordingly, the workers may resort
to peaceful picketing, i. e., the marching to and fro before the premises of an
establishment. They may be accompanied by the carrying and display of
signboards, placards or banners bearing statements in connection with the
dispute. They may also politely request the employees not to assist in the
running of the business and ask the customers not to patronize that
establishment. Such acts would constitute peaceful picketing and are protected
under Section 18.
Pickets are, however, not entitled to (i) compel people to listen to them or
to obstruct by deliberately standing in their way or catching hold of their arms
(ii) obstruct passage of vehicles by lying down on the highway in front of them
or otherwise blocking the highway and (iii) pester those persons who do not
wish to listen to them and who have requested them to desist.

D. Picketing and Freedom of Movement

Article 19(1) (d) of the Constitution guarantees to every citizen the right to move
freely throughout the territory of India, This right, however, does not protect
loitering at or near a place where such person or member of his family resides or
works or carries on business.53 A question therefore, arises whether Section 7 of
the Criminal Law Amendment Act, 1932 or other law curtails the freedom of
movement by making a mere exercise of the right of freedom of movement
penal under certain circumstances. Upholding the same, the Bombay High Court
in Damodar Ganesh v. State54 observed:
In testing, therefore, the validity of Sec. 7 of the Criminal Law
Amendment Act, we have to see whether this restriction on
freedom of movement, viz., loitering under certain
circumstances accompanied by the requisite intention is justified
by Cl. (5) of Art. 19 of the Constitution.
The Court continued:
If even in this extreme form–without curtailment of any other
fundamental right–the section is good as contended by the
learned Advocate General, it cannot be bad if, the act prohibited
is accompanied by certain other aggravating circumstances
which bring into play other fundamental rights, which the
 section is not designed to restrict. If loitering simpliciter (under
certain circumstances can validly be made an offence, then such
loitering accompanied by verbal utterances or distribution of
pamphlet cannot be any the less an offence, merely because the
offender is exercising other fundamental rights and uttering
slogans.

E. Picketing and Freedom of Association

If picketing is resorted to in combination by a number of workers or involves
group activity, it may well raise the question of freedom of association. Thus,
Article 19(1) (c) of the Constitution guarantees to all citizens the right to form
associations and unions. This right is, however, subject to reasonable restrictions
in the interest of public order and morality. For instance, if workers resort to
picketing which endangers public peace, or interferes with the maintenance of
public order or the administration of law, it is not protected under Article 19 (1)
(c). In other words, Article 19 (1) (c) does not include the right to picketing.
However, Section 7 of the Criminal Law (Amendment) Act prohibits mere
loitering with certain intention and places restriction on picketing.

III. GHERAO

A. Nature and Concept of Gherao

The word ‘gherao’ is to be found in several of the Indian and Persian languages
and literally means encirclement.55 It is used to describe certain activities of
workers in labour-management relations and is of recent origin.
In the 1960s gherao became the most potent weapon in the hands of
workers. Its use spread throughout the length and breadth of India and found a
special niche in West Bengal56 where ironically it, for the first time, lost its
legitimacy in 1968.

B. Gherao is an Instrument of Physical, not Economic

Coercion
In Jay Engineering Works v. State of West Bengal57, Chief Justice Sinha
observed:
 A ‘gherao’ is not an offence as such mentioned in the Indian
Penal Code. But it is an act indulged by labour against the
management and where it is accompanied by confinement,
restraint or other offences under the criminal law of the land, the
fact that it is done by members of a trade union, and used as an
instrument of collective bargaining, gives rise to no special
treatment or exemption from liability under the law. All
workmen guilty of wrongfully restraining any person belonging
to the management, or wrongfully confining him, during a
gherao are guilty under Section 339 or 340 of the Indian Penal
Code.
We might add that gherao also comes within the term ‘mischief’ of
Section 7 of the Criminal Law Amendment Act, a fact which was overlooked by
the Court. Indeed it appears that even scholars have failed to notice the legality
of gherao under the aforesaid provisions. Further, gherao may also fall within
the purview of ‘criminal intimidation’ under Section 503 IPC.
Interestingly, the workers tried to escape the consequence flowing from
the aforesaid declaration of illegality of gherao by pointing out that gherao was
a concerted activity and consequently they were immune from action under
Section 17 of the Trade Unions Act, 1926. But, the Court rejected the
contention:
Where there is concerted intention to commit an offence, it
amounts to criminal conspiracy under Section 120A of the
Indian Penal Code and is not saved by Section 17 of the Trade
Unions Act, 1926.
We agree that an act which is legal if done individually, may become
illegal, if done by persons acting in combination. But an act which is illegal, if
done by an individual does not become legal when done by persons acting in
combination.
The (First) National Commission of Labour deprecated the technique of
gherao as an instrument of coercion and observed:
We endorse this view and deprecate resort to gheraos which
invariably tend to inflict physical duress on the person(s)
affected and endanger not only industrial harmony but also
create problems of law and order. If such means are to be
adopted by labour for realization of its claims, trade unions may
 come into disrepute. It is the duty of all union leaders, therefore,
to condemn this form of labour protest as harmful to the
interests of the working class itself. Gheraos cannot be treated as
a form of industrial protest. In the long run, they may affect
national interest.58
The (Second) National Commission on Labour also recommended that
‘Go-slow’ must be regarded as misconduct.

IV. BANDH

A. Nature and Concept of Bandh

It is a Hindi word which means ‘closed’ or ‘locked’. ‘The expression therefore
conveys an idea that everything is to be blocked or closed’. Bandh is distinct
and different from a general strike or hartal.59

B. Bandh is Illegal and Unconstitutional

In Bharat Kumar K Palicha v. State of Kerala60, the petitioners sought for a
declaration that calling for and holding of bandh is unconstitutional as it is
violative of the fundamental rights guaranteed to them under Articles 19 and 21
of the Constitution. The full bench of the Kerala High Court upholding the
contention declared bandh to be illegal and unconstitutional. On appeal, the
Supreme Court in Communist Party of India (M) v. Bharat Kumar and
others61 upheld the decision of the High Court. The Supreme Court, while
approving the distinction between a bandh and strike made by the High Court
upheld the judgement of Kerala High Court. The High Court gave following
reasons in support of its conclusions:
(a) The call of bandh implies a threat to the citizen that any failure on his part
to honour the call would result in either injury to person or injury to
property and psychological fear against defiance.
(b) A citizen is coerced not to attend his work or prevented from going out for
his work or from practising his profession or carrying on his business
which is a violation of his fundamental right at the instance of others when
a bandh is called and held.
(c) The calling of bandh entails the restriction of free movement of the citizen
and his right to carry on his vocation.
 (d) No political party has a right to call for bandh on the plea that it is the
fundamental right of freedom of speech and expression. Moreover,
nothing stands in the way of political parties calling for a general strike or
hartal accompanied by express or implied threat of violence to enforce it.
It is not possible to accept that the calling of a bandh alone could
demonstrate the protest of a political party.
(e) The High Court has jurisdiction under Article 226 of the Constitution to
grant declaratory relief to the petitioner regarding the right of political
parties to call for a bandh and to enforce it.
(f) No political party or organization can claim that it is entitled to paralyze
the industry and commerce in the entire state or nation and is entitled to
prevent the citizens not in sympathy with its viewpoint from exercising
their fundamental rights or from performing their duties for their own
benefit or benefit of the State or nation. Such a claim would be
unreasonable and could not be accepted as a legitimate exercise of a
fundamental right by a political party or those comprising it.
(g) The political parties and organizations which call for such bandh are liable
to compensate the government, the public and private citizens for the loss
suffered by them for such destruction. The State cannot shirk its
responsibility of taking steps to recoup the loss from the sponsors and
organizers of such bandhs.
The aforesaid view was reiterated in T K Rangrajan v. Government of
Tamil Nadu.62

C. No work No Pay for Absence during Bandh

In Management of Nagammal Mills Ltd v. Kumari Mavatta Noorppalal
Thozilalar Munnetra Sangam63, the state government called a Bandh. But the
management did not declare it a holiday. Certain workmen did not report for
work. The employer, therefore, did not pay them wages on the principle of ‘no
work, no wages’. On these facts, a question arose whether the denial of payment
of wages to workmen absenting themselves from duty was justified. The Madras
High Court answered the question in affirmative. The Court ruled:
If an employee wants to show his protest in issue either at the
instance of any external force or by himself and thereby he is not
attending the work, during which period he has to work
according to the terms of the employment, he must be ready to
 forgo the wages for the said period. When holding bandh itself is
against the interest of the nation, can the government or its
authorities direct the employers to declare that as holiday with
wages. Even if it is so, as has been done in this case, such
direction would be nothing but illegal. In this case the
government had also declared holiday in support of the bandh
which is nothing but supporting illegality and unconstitutional
activities.
The Court added:
In this case, it is factually found, which is not in dispute, that
only with a view to participate in the bandh, the respondents
absented themselves from attending the work. So, they are not
entitled for any salary as they did not earn their wages. So any
employer cannot be compelled to pay wages to such employees
for such period. Giving such direction would be adding premium
to the illegality and against the interest of the society.

V. LOCKOUT
The use of the term ‘lockout’ to describe employer’s instruments of economic
coercion dates back to 186064 and is younger65 than its counterparts in the hands
of workers, i.e. strike, by 100 years. Formerly, the instrument of lockout was
resorted to by an employer or group of employers to ban union membership. The
employers refused employment to workers who did not sign a pledge not to
belong to trade union. Later, a lockout was declared generally by a body of
employers against a strike at a particular work by closing all factories until
strikers returned to work.66
India witnessed lockout 25 years after it was known and used in the arena
of labour-management relations in industrially advanced countries. Karnik
reports that the first known lockout was declared in 1895 in Budge Budge Jute
Mills.67

A. The Statutory Definition

Section 2 (1) of the Industrial Disputes Act, 1947 defines ‘lockout’ to mean:
The temporary closing of a place of employment or the suspension of
work, or the refusal by an employer to continue to employ any number of
persons employed by him.68
A delineation of the nature of this weapon of industrial warfare requires
description of (i) the acts which constitute it (ii) the party who uses it (iii) the
party against whom it is directed and (iv) the motive which prompts resort to it.

B. Judicial Response
Early decision makers (judicial and quasi-judicial) generally69 declined to treat
lockout merely as an instrument of economic coercion. They emphasized
deliberate omission of the objective clause from the definition of lockout and
gave a catch-all meaning to Section 2 (1) of Industrial Disputes Act, 1947. In
Sun Rolling Mills v. Their Workmen70, Shri S N Modak observed that:
… the definition under the Trade Disputes Act intended the
concept of ‘lockout’ to be restricted by certain words involving
an element of intention on the part of employer. Those
restrictive words have been deliberately omitted under the
present Industrial Disputes Act and in my view, there is no room
for introducing any element of intention, either bona fide or
mala fide in the definition of lockout under the present Act.
And, in Bengal Jute Mills v. Their Workmen, industrial tribunal after
explaining that: If the legislature intended to convey that a lockout as defined by
Section 2 (1) of the present Industrial Disputes Act could not possibly cover a
case of termination of employment, it was for the legislature to say so in clear
terms,71 held that the termination of service irrespective of the intention of the
employer, amounted to a ‘lockout’. Other industrial tribunals adopted the rule of
literal interpretation to hold that cases of lay-off, retrenchment and closure of
business were also covered by the definition of lockout.
However, there is a catena of cases in which appropriate decision makers
stressed that lockout is essentially an instrument of economic coercion and the
omission of the objective clause did not change its meaning. The observation of
the labour appellate tribunal in Presidency Jute Mills Co. Ltd v. Presidency Jute
Mills Co. Employees Union72 is significant:
The definition of strike as given in the (Industrial Disputes) Act
is the same as that given in the Trade Disputes Act of 1929.
Those definitions do not express in terms refer to any reason
behind the concerted action of the workmen, but the very
 conception of strike is that it is a recognized weapon in the
hands of the workmen for enforcing their collective demands.
The use of the term ‘strike’ necessarily implies that it has
relation to a collective demand which has not been acceded to
by the employer. Lockout is the counterpart of strike, the
corresponding weapon in the hands of the employer to resist the
collective demands of workmen or to enforce his terms.
It referred to the Oxford dictionary to ascertain the meaning of the
expression ‘lockout’ and in rearbitration between Messers Richardson and
Sumuel & Co.,73 where the court of appeal in England had ascertained the
meaning of the expression untramelled by any statutory definition, to conclude
that the very use of the word ‘lockout’ necessarily implied that the act of the
employer was prompted by reason of a dispute with his workmen. The labour
appellate tribunal conceded that the then objective clause had been deliberately
omitted by the Legislature but explained that the clause may have been dropped
in the Industrial Disputes Act for the reason that it was a surplusage and for the
purpose of placing the definition of lockout and strike textually on the same
terms. It ruled that the omission was not made by the legislature to indicate that
the necessity of a nexus between the termination of service and a trade dispute
was not necessary nor was the intention of the employer behind the discharge.74
The scope of the words used in Section 2 (1) in general and ‘suspension
of work’ in particular was delineated in Premier Automobiles Ltd v. G R
Sapre.75 The Premier Automobiles Ltd had three plants located at Kurla, Kalyan
and Wadala. The workmen of the first plant resorted to go-slow and indulged in
subversive activities as a protest against non-recognition of union in these plants.
Consequently, the management not only locked out the plant at Kurla but also
suspended the work at Kalyan. The labour court held that the stoppage of work
at Kalyan plant amounted to a ‘lockout’ and it was illegal inasmuch as the same
was resorted to without giving 14 days’ notice as required under Section 22 (2)
of the Act. The management challenged this order in the Bombay High Court.
The first question arose whether the suspension and stoppage of work at Kalyan
plant amounted to a ‘lockout’. The Court held that the definition was wide
enough to cover every process of stopping the work.
The other question was whether the abrupt stoppage of work at Kalyan
Plant from 16 December 1978 was aimed ‘at persuading’ by a coercive process
the employees to see the employer’s ‘point of view’ and accept their ‘demand’.
The Court held that even though no demand as such was ever made by the
employers against the workmen, it would be idle to expect the employers to
make express demands every time. In its view it would be enough if any such
demand can even be implied from the course of conduct. The Court accordingly,
held that such suspension of work at Kalyan satisfied the test laid down in
Kaibetta’s76 case and amounted to a ‘lockout’.
Earlier, the Supreme Court in Kairbetta Estate v. Rajmanickam77 upheld
the interpretation given in the Presidency Jute Mills case. In the instant case, the
manager of the estate was assaulted by some of the workmen as a result of which
he suffered a fracture and was hospitalized for a month. Other members of the
staff were also threatened and they wrote to the management stating that they
were afraid to go to the affected division of the estate as their lives were in
danger. On receiving this communication, the management notified that the
affected division would be closed until such time as workmen gave an assurance
that there would not be any further trouble and that the members of the staff
would not be assaulted. In due course of time, on the intervention of labour
commissioner, the concerned workmen gave the requisite undertaking and work
was resumed. However, the affected workers claimed lay-off compensation for
the period they had been locked-out. The industrial tribunal granted the
compensation. The management appealed to the Supreme Court. Justice
Gajendragadkar referred to the omission of the objective clause from the 1947-
definition and added:
Even so, the essential character of lockout continues to be
substantially the same. Lockout can be described as the
antithesis of a strike. Just as a strike is a weapon available to the
employees for enforcing their industrial demands, a lockout is a
weapon available to the employer to persuade by a coercive
process the employees to see his point of view and to accept his
demands. In the struggle between capital and labour, the weapon
of strike is available to labour and is often used by it, so is the
weapon of lockout available to the employer and can be used by
him. The use of both weapons by the respective parties must,
however, be subject to the relevant provision of the (Industrial
Disputes) Act.78
He concluded that this was a case of a lockout.
1. Disciplinary measure not lockout. Cases of indiscipline, misconduct
and violation of the provisions of the certified standing orders frequently occur
in Indian industrial and business undertakings. Disciplinary measures adopted by
the management range from adverse entry in the character roll to the termination
of employment. We are concerned here with only such management’s actions
which result in suspension of the concerned workmen during the pendency of
investigatory proceedings as a punishment or otherwise either on payment of
emoluments, or otherwise and all other cases resulting in refusal by an employer
to continue to employ any number of persons employed by him such as orders
prohibiting late-coming workmen to resume work and making them absent for
the day. The question here is whether these disciplinary measures which come
within the literal meaning of Section 2 (1) of the Industrial Disputes Act, 1947,
amount to a lockout or not.
In Ram Naresh Kumar v. State of West Bengal,79 the management found
certain ash-coolies guilty of adopting go-slow tactics, disobedience and
assaulting the chief engineer. Since, however, an adjudication proceeding was
pending, the management suspended the concerned workmen and applied to the
tribunal for permission to terminate their services. The concerned ash-coolies
claimed, in a writ petition, that the suspension amounted to a lockout, that such
lockout was illegal under Section 23 and that the tribunal had no jurisdiction to
entertain the application. However, the Calcutta High Court rejected the petition
on the ground that the suspension of workers in this case would not amount to a
lockout. Explaining this, Justice Ray observed:
Evidently, the order of suspension of eight ash-coolies does not
amount to a closing of the place of employment or to a
suspension of work. The only part of the definition therefore,
which may conceivably cover the order of suspension of eight
ash-coolies is the last part. The order of suspension of the eight
ash-coolies was merely a provisional order which to my mind,
can only mean a suspension for the time being of the
employment of these ash-coolies or a provisional putting into
abeyance of the position of these men as employees, although it
could not amount to a final termination of their employment. As
a matter of fact, the true effect of this order of suspension,
provisional in its character, cannot be estimated till the final
order of dismissal or discharge or refusal to dismiss or discharge
is passed. So long as the final order is not passed, it can only
amount to a provisional putting into abeyance of the position of
the men suspended as employees.80
While we agree that the suspension of workmen in this case was not about
any lockout, we do not at all agree with the implications of the aforesaid
observation, namely, that if the management had terminated the services of the
ash coolies, its conduct would have come within the ambit of Section 2 (1) of the
Industrial Disputes Act, 1947. It might be mentioned that, during a lockout
situation, employer-workmen relationship subsists and where there is a
termination of service, that essential condition is lacking.81 It is, accordingly
submitted that whereas in case of Bharat Barrel and Drum Mfg. Co. v. Their
Workmen,82 the particular disciplinary measure taken by the management
results in termination of employer-workmen relationship, the management action
cannot fall within the mischief of Section 2 (1) of the Industrial Disputes Act,
1947.
In Talchar Coalfields Ltd v. Talchar Coalfields Workers’ Union83,
certain workmen arrived late and were loitering near the pithead. They were
refused permission to resume their duties. On a question having arisen as to
whether such refusal amounted to a declaration of lockout, the labour appellate
tribunal observed:
The point … for consideration is whether the act of the manager
in not allowing the latecomers of the first shift to resume their
duties was prompted by reason of a collective dispute with the
workmen. If the dispute arose in the consequence of, that is to
say, after the act of the manager, his act would not amount to
lockout.84
2. Security measure not lockout. Dicta in certain cases85 indicate that
‘the closing of a place of employment, or the suspension of work or the refusal
by an employer to continue to employ any number of persons employed by him’
may be a security measure and yet the conduct of the employer may fall within
the ambit of Section 2 (1) of the Industrial Disputes Act, 1947. For instance, in
Lakshmi Devi Sugar Mills v. Ram Sarup86, Justice Bhagwati, summarizing the
views expressed by labour appellate tribunal in Jute Workers’ Federation v.
Clive Jute Mills,87 observed that ‘a lockout is generally adopted as a security
measure and may in certain cases be used as a weapon corresponding to what the
employees have in the shape of a strike.’ This is unacceptable. Lockout is an
instrument of economic coercion and not a security measure. Lockout is not an
end in itself but a means to an end. The particular means adopted are the putting
of economic pressures on recalcitrant workmen. Further, in harmony with the
view ‘no work no pay’, ‘the closing of a place of employment, or the suspension
of work, or the refusal by an employer to continue to employ and number of
persons employed by him’ is the means adopted to put the requisite economic
pressure. The emphasis here is due as much on the means adopted as on the
object sought to be achieved.
The observation of Justice Aiyar in Shri Ram Chandra Spinning Mills
Ltd v. State of Madras88 is more pertinent:
The lockout is the corresponding weapon in the armoury of the
employer. If an employer shuts down his place of business as a
means of reprisal or as an instrument of coercion or, as a mode
of exerting pressure on the employees or, generally speaking,
when his act is that may be called an act of belligerency, there
would be a lockout. If, on the other hand, he shuts down his
work because he cannot for instance get raw materials or the
fuel or the power necessary to carry on his undertaking or
because he is unable to sell the goods he has made or because
his credit is exhausted or because he (is) losing money, that
would not be a lockout.89
The Kairbetta Estate90 case raised the reverse problem, namely whether
layoff included lockout so that locked-out workmen could claim lay-off
compensation. The Supreme Court, after discussing the scope of the expression
‘any other reason’ occurring in Section 2 (kkk) and the provisions relating to
lay-off compensation under Section 25C and Section 25E (iii) of the Industrial
Disputes Act observed:
Stated broadly, lay-off generally occurs in a continuing business,
whereas a lockout is the closure of the business, in the case of a
lay-off owing to the reasons specified in Section 2 (kkk), the
employer is unable to give employment to one or more
workmen. In the case of lockout, the employer closes the place
of the business and locks-out the whole body of workmen for
reason which have no relevance to causes specified in Section 2
(kkk).91
The Court concluded that lay-off compensation could not be granted to
locked-out workmen.
3. Closure not lockout. In Express Newspaper Ltd v. Industrial
Tribunal92, Justice Gajendragadkar indicated that:
… the main point which the tribunal will have to consider is
whether the strike of the (workmen) on 27th April 1959 was
 justified and whether the action of the (management) which
followed the said strike is either a lockout or amounts to a
closure. The (workmen) will contend that it is a lockout which is
in the nature of an act of a reprisal on the part of the
(management) whereas the (management) will contend that it is
not a lockout but a closure, genuine and bona fide.
And, such inquiry, his Lordship held, was within the competence of the
industrial tribunal.
The Supreme Court in General Labour Union (Red Flag) v. B V
Charvan93 was invited to determine the distinction between lockout and closure.
The Court laid down the following tests.94
[W]here the parties are at variance whether the employers have imposed a
lockout or have closed the establishment, it is necessary to find out what was the
intention of the employer at the time when it resorts to lockout or claims to have
closed down the industrial undertaking. It is to be determined with accuracy
whether the closing down of the industrial activity was a consequence of
imposing lockout or the owner/employer had decided to close down the
industrial activity.
In a lockout, the employer refuses to continue to employ the workmen
employed by him even though the business activity was not closed down nor
intended to be closed down. The essence of lockout is the refusal of the
employer to continue to employ workman. There is no intention to close the
industrial activity. Even if the suspension of work is ordered, it would constitute
lockout. On the other hand, closure implies closing of industrial activity as a
consequence of which workmen are rendered jobless.
While examining whether the employer had imposed a lockout or had
closed the industrial establishment, it is not necessary to approach the matter
from this angle that the closure has to be irrevocable, final and permanent and
that lockout is necessarily temporary or for a period…
… [T]he true test is when it is claimed that the employer has
resorted to closure of industrial activity, the industrial court in
order to determine whether the employer is guilty of unfair
labour practice must ascertain on evidence produced before it
whether the closure was a device or pretence to terminate
services of workmen or whether it is bona fide and for reasons
beyond the control of the employer. The duration of the closure
may be a significant fact to determine the intention and bona
 fides of the employer at the time of closure but is not decisive of
the matter.
The aforesaid judgement emphasizes the possibility of closure being mala
fide and a disguise for lockout. The argument might have had some force had it
been before the ‘catch-all’ definition of ‘retrenchment’ which was incorporated
in the Industrial Disputes Act, 1947. It might have continued to have some force
after the Supreme Court curtailed the meaning of the statutory definition of
retrenchment in Barsi Light Railway Co.95 but it loses much of its weight in the
face of Sections 25F, 25FF and 25FFF. Managements, particularly employers of
large number of workmen in an old and established concern, can hardly act light-
heartedly or merely with a motive of malice. The economic implications of these
provisions are tremendous. Moreover, they render closure or transfer ineffective
as an instrument of economic coercion. The only lacuna in the law is that
although on closure, a workman is entitled to compensation, he is not, as in the
case of retrenchment, entitled to re-employment on re-opening. However, the
decisions in Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate96
and Working Journalists of the Hindu v. The Hindu97 render it impossible for
the discharged workmen to claim re-employment on re-opening. Under the
circumstances, so long as these decisions lay down the law of the land, either
Parliament should extend the provisions of Section 25H, relating to re-
employment of retrenched workmen, to cover cases of transfer and reopening
after closure or it should be settled by an award.
4. Discharge not lockout. In Feroz Din v. State of West Bengal98, a
company dismissed from its service four employees for taking part and
instigating others to join in an illegal slow-down strike in the hot mills section of
its workshop which was a public utility concern. On such dismissal, the slow-
down strike, instead of abating, gained strength. The company thereupon issued
a notice to the concerned workers that unless they voluntarily recorded their
willingness to operate the plant to its normal capacity they would be considered
‘to be no longer employed by the company’. In pursuance of this notice, some of
the workers only recorded their willingness: majority of the workers did not
respond at all. The company thereafter issued a second notice, inter alia, stating
that the workers who did not record their willingness to work in the plant to its
normal capacity in terms of the first notice, were being considered as being no
longer in service, but their formal discharge from the company’s service was
being kept pending in order to ensure that no one who wanted to work normally
was discharged on circumstantial assumptions; calling upon the workers to
record their willingness, by a certain date, to operate the plant to its normal
capacity; and intimating that names of those who did not comply with the
aforesaid request would be removed from the company’s roll and their discharge
would become fully effective with all the implications of a discharge.
Consequent on this second notice, the entire body of workers except those
engaged in the essential services, went on strike.
Thereafter the company, with the permission of the government, filed a
complaint under Section 27 of the Act against some of the workmen for having
instigated and incited others to take part in an illegal strike. The magistrate found
that the charge established and convicted the workmen under the said section.
On appeal, the additional session judge confirmed that order and a petition to the
High Court by way of revision also failed. The workmen then appealed to the
Supreme Court. They argued that the discharge of the workmen under the
aforesaid two notices amounted to a lockout; that such a lockout was illegal
because it was declared in a public utility service without complying with the
provisions of Section 22 of the Act, that the strike which was in pursuance of an
illegal lockout was legal; and that conviction of workmen under Section 27 of
the Act was contrary to law as they had not instigated or participated in any
illegal strike. However, the Supreme Court rejected the plea. Justice Sarkar who
delivered the judgement for the Court observed:
The Act treats strike and lockout on the same basis. It treats one
as the counterpart of the other. A strike is a weapon of the
workers while a lockout is that of the employer. A strike does
not, of course, contemplate the severance of the relation of
employer and employed. It would be surge in these
circumstances, if a lockout did so. … the words ‘refusal by an
employer to continue to employ any number of persons
employed by him’ in Section 2 (1) do not include the discharge
of an employee. We feel no difficulty in taking this view, for it
does not seem to us that the words ‘refusal to continue to
employ’ in Section 2 (1) plainly include a discharge. These
words have to be read with the rest of the definition and also the
word ‘lockout’. The other parts of the definition contemplate no
severance of the relation of employer and employee.99
The Court held that discharge was not covered in Section 2 (1) of the Act.
5. Refusal to Give Work to a Single Workman: in Case of a Lockout.
Whether the management’s refusal to give work to a single workman amounts to
a lockout within the meaning of Section 2(1) of the Act. This question was
answered in the negative in Singareni Collieries Co. v. Their Mining Sirdars100
wherein it was observed:
…the definition of the word ‘lockout’ in Section 2(1) of the Act
does not mean and include one workman, but means more than
one, that is, a number of workmen. On this interpretation, an
individual workman is not included in the word ‘lockout’ as
defined in Section 2(1) of the Act.

VI. RIGHT TO STRIKE

A. No Fundamental Right to Strike

Article 19 (1) (c) of the Constitution declares that:
All citizens shall have a right … to form associations or unions.
This right, however, is not absolute. Clause 4 of Article 19 provides that:
Nothing in sub-clause (c) of the said clause shall affect the
operation of any existing law in so far as it imposes, or prevents
the State from making any law imposing, in the interests of the
sovereignty and integrity of India or public order or morality,
reasonable restrictions on the exercise of the right conferred by
the said sub-clause.
In All India Bank Employees Association v. National Industrial
Tribunal,101 the Supreme Court considered the aforesaid provisions. It, inter
alia, ruled that:
… even a very liberal interpretation of sub-clause (c) of clause
(1) of Article 19 cannot lead to the conclusion that the trade
unions have a guaranteed right to … strike, either as part of
collective bargaining or otherwise.102
The Court however, added:
the right to strike or the right to declare lockout may be
controlled or restricted by appropriate industrial legislation, and
the validity of such legislation would have to be tested not with
reference to the criteria laid down in clause (4) of Art. 19 but by
totally different consideration.
 Similarly, the Andhra Pradesh High Court in Andhra Pradesh Electrical
Equipment Corporation, Hyderabad v. Andhra Pradesh Electrical Equipment
Corporation Staff Union103 held that the right to lockout or strike cannot be a
fundamental rights as it is controlled by Sections 10 (3), 10 A (4A), 22 and 23 of
the Act and the penal action is engrafted for disobedience of the prohibition of
lockout and strike under Section 26 of the Act. Hence, right to strike can be
stated to be merely a statutory right but not a fundamental right.
On the basis of this analogy, one may well bring the right to strike within
the purview of fundamental right. Thus, the Allahabad High Court in Uttar
Pradesh Shramik Sangh v. State of Uttar Pradesh104 equated ‘freedom of
association’ with ‘freedom to pursue without restrictions the objects of
association’, and observed:
The right to form an association is not a right to be exercised in
a vacuum or an empty or a paper right. The enjoyment and
fulfilment of the right begins with the fulfilment of the purpose
for which the association is formed.105
And the Supreme Court declared in Gujarat Steel Tubes v. GST Mazdoor
Sabha106:
The right to union, the right to strike as a part of collective
bargaining and … the right of… the labour to pressurize … the
capital, to negotiate and render justice are processes recognized
by industrial jurisprudence.107

B. Right to Strike under the Industrial Disputes Act

Though, the right to strike is not a fundamental right as such, it is open to a
citizen to go on strike or withhold his labour. The right to strike has been
recognized under the Industrial Disputes Act, 1947 by defining the
circumstances under which a strike is to be regarded as illegal.108
Thus, the labour appellate tribunal in Ram Krishna Iron Foundry v.
Their Workers109 ruled:
The right to strike has been recognized by necessary implication
in the industrial legislation in India and express statutory
provisions have been made for the purpose of regulating it. It is
thus a recognized weapon of the workmen to be resorted to by
them for asserting their bargaining power and backing up their
 collective demands on an unwilling employer.110
Again, in G R S M (W) Co. Ltd v. District Collector111, the Kerala High
Court summarized the legal position of the workers’ right to strike in the
following words:
Though under the Constitution of India, the right to strike is not
a fundamental right as such, it is open to a citizen to go on strike
or withhold his labour. Every strike is not illegal and the
workers in any democratic State have the right to resort to strike
whenever they are so pleased in order to express their grievances
or to make certain demands. A strike in the circumstances is a
necessary safety valve in industrial relations when properly
resorted to. It is a legitimate weapon in the matter of industrial
relations.
In common law also the right to strike112 cannot be taken away even if
there are standing orders abrogating their rights. To hold otherwise would be to
interfere with the fundamental right of employees to resort to strike as a means
to enforce their demands which falls within the subject of an industrial
dispute.113
The Supreme Court in B R Singh v. Union of India114 has observed that
the right to strike ‘though not raised to the high pedestal of a fundamental
right…… it is recognized as a mode of redressal for resolving the grievances of
workers. But the right to strike is not absolute under our industrial jurisprudence
and restrictions have been placed on it. These are to be found in Sections 10 (3),
10A (4A), 22 and 23 of the Industrial Disputes Act, 1947.’ The Court added:
The right to form associations or unions is a fundamental right
under Article 19(l) (c) of the Constitution. Section 8 of the Trade
Unions Act provides for registration of a trade union if all the
requirements of the said enactment are fulfilled. The right to
form associations and unions and provide for their registration
was recognized obviously for conferring rights on trade unions.
The necessity to form unions is obviously for voicing the
demands and grievances of labour. The trade unions act as
mouthpieces of labour. The strength of a trade union depends on
its membership. Therefore, trade unions with sufficient
membership strength are able to bargain more effectively with
the managements. This bargaining power would be considerably
 reduced if it is not permitted to demonstrate. Strike in a given
situation is only a form of demonstration. There are different
modes of demonstrations e.g., go slow, sit-in, work-to-rule,
absentism, etc., and strike is one such mode of demonstration by
workers for their rights. The right to demonstrate and, therefore,
the right to strike is an important weapon in the armoury of the
workers. This right has been recognized by almost all
democratic countries. Though not raised to the highest pedestal
of a fundamental right, it is recognized as a mode of redress for
resolving the grievances of workers.
The aforesaid right is available only to industrial workers and not to
government servants.

C. Interference of Court and Police

The Kerala High Court relying upon its earlier decision in C Kannan v.
Superintendent of Police115 held that the Court should exercise great caution in
dealing with an application for police protection. Managements placed under
very tying circumstances may have to seek the assistance of the Court in
obtaining orders for police protection. However, such orders should not interfere
with the rights of workers to carry on their agitation peacefully. In this
connection, the Court underlined the need for adopting Mahatma Gandhi’s
method of resistance. The Court also pointed out that if the government decided
not to step in the labour dispute with its police power ‘to tilt the balance in
favour of the capital, the Court shall not act a spoke in the wheel to interfere
with such policy.’116 At the same time, the Court cautioned that the police could
not be told that they should not take action when an offence was committed. The
police officer was answerable to law and to the law alone. If in the guise of
peaceful satyagraha or strike, cognizable offences were sought to be committed
and violence was resorted to, police should interfere. Police should certainly
interfere if there was any imminent danger or peril to life and property. But the
right to strike conferred by the Act cannot be extended to non-workmen because
that would result in anarchy in the industrial society.117
In Standard Chartered Bank v. Chartered Bank Employees’ Union
(Regd)118, the High Court of Delhi held that workmen’s right to strike is not
unlimited. ‘As the Indian citizens when they want to exercise their fundamental
rights to form a union and to have demonstrations for the redressal of their
grievances, they also have a reciprocal duty not to cause nuisance or mental or
physical danger to their employers and others.’ The Court also held that if the
defendants comply with the provisions of sub-section (1) of Section 22, there
could not be any injunction in absolute terms to restrain them from exercising
their right to go on strike. Similarly, the using of badges or putting mask on the
mouth or wearing some caps indicating that they are going on strike, the court
cannot restrain them from doing so if they fulfil the provisions of Section 22.
Strike has, however, an adverse effect upon production and upon the
industry. It is, therefore, desirable that it should be used ‘as a last resort when all
other avenues for settlement of industrial disputes, have proved futile.’119 The
Supreme Court in Chandramalai Estate v. Their Workmen120 recognized that
strike is a legitimate and sometimes unavoidable weapon in the hands of labour.

D. Right to Demonstrate
In Kameshwar Prasad v. State of Bihar121, the Supreme Court applied the
theory of concomitant rights to include demonstration under the constitutional
guarantee of Article 19(1)(a) and 19 (1)(b): ‘Article 19 (1) confers on all citizens
the right by sub clause (a) to freedom of speech and expression and by sub-
clause (b) to assemble peacefully and without arms, and the right to demonstrate
would be covered by these sub-clauses’122.
The Court added:
The approach to the question regarding the constitutionality of
the rule should be whether the ban that if imposes on
demonstration would be covered by limitation of the guaranteed
rights contained in Article 19(2) and 19 (3).123
The Court declared Rule 4A as unconstitutional insofar as it prohibited all
demonstrations, even those which were peaceful, if the Rule had been so framed
as to prohibit such demonstrations only as were likely to lead to a disturbance or
public tranquility, it would have been valid. But it prohibited even innocent
demonstration and so it could not be sustained under Article 19 (2) and (3).
Injunction against staging of demonstration: The Supreme Court in
Railway Board, New Delhi v. Niranjan Singh124 held that exercise of this
freedom will come to an end as soon as the right of someone else to hold his
property intervenes. However, use of badges, masks, caps, and placards, to sit on
relay hunger strike cannot be restrained.125
A trade union can be restrained from holding demonstration, dharna,
meeting, etc., within 100 metres from the factory or residential premises of the
employer.126
However, in Standard Chartered Bank v. Chartered Bank Employees’
127
Union , the Delhi High Court held that bank employees can be restrained from
staging demonstration within 50 metres of the building.

E Government Servants’ Right to Strike

The right of ‘government servants’ to form association, hold demonstration and
strike has been questioned in a number of decided cases. Their position is
somewhat anomalous. On the one hand, government servants like industrial
workers have the guaranteed fundamental right to form associations or unions
and to demonstrate for redressal of their grievances. On the other hand, unlike
industrial workers, government servants generally are charged with onerous
responsibilities for operating essential and vital services to the community. As
such, they are expected to behave in a responsible manner without resorting to
concerted activity on the ground that strike would be tantamount to disloyalty to
the nation and the public. However, it is unfortunate that government servants
have in fact resorted to strike despite the prohibition provided by law.
Government has tried to regulate these activities through the Government
Servants’ Conduct Rules, Essential Services Maintenance Ordinances, etc. For
example, the President, in exercise of powers conferred upon him by the proviso
to Article 309, issued the Central Civil Services (Conduct) Rules, 1955. Rule 4A
of the Rules reads:
No government servant shall participate in any demonstration or
resort to any strike in connection with any matter pertaining to
his condition of service.

F. Right to Strike of Government Servants under the

Constitution
The question whether government employees have a right to strike has
consistently been answered in the negative.
Meghraj v. State of Rajasthan128 is one of the earliest cases on this point.
In this case, the validity of the Rajasthan Government Servants Conduct Rules129
was challenged. Justice Wanchoo in the course of judgement observed:
… under our Constitution, the right to strike is not a
fundamental right.
 Kameshwar Prasad v. State of Bihar130 is a leading case on this point.
The petitioner Kameshwar Prasad was an assistant in the public health
engineering department. On 27 September 1956, the Governor of Bihar
promulgated the (Bihar) Government Servants Conduct Rules under proviso to
Article 309 of the Constitution and inserted Rule 4A which provided that:
No government servant shall participate in any demonstration or
resort to any form of strike in connection with any matter
pertaining to their conditions of service.
Aggrieved by such action, the petitioner filed a writ petition in the Patna
High Court under Article 226 of the Constitution challenging the validity of Rule
4A of the Bihar Service Conduct Rules, on the ground that it interfered with the
fundamental rights guaranteed to the petitioner under Article 19 (1) (a), (b) and
(c) of the Constitution. He demanded a stay order to restrain the state of Bihar
from giving effect to the Rule and desist from interfering with his right to go on
strike or to hold demonstration.
The Patna High Court pointed out that Rule 4A prohibited only two
methods of showing their dissatisfaction by the government servants—‘strike’
and ‘demonstration’. Other reasonable methods remain open to them for purpose
of ventilating their grievances, e.g. making representations orally or in writing.
The restrictions imposed by Rule 4A apply only to one very important class of
the community, namely government servants, who occupy a very different
position from those who are working in industries. Government servants have a
greater responsibility and status. Rule 4A, the Court held, had been promulgated
in the interest of public order within the meaning of Articles 19(2) and 19(4) of
the Constitution.
The petitioner then appealed to the Supreme Court. The Supreme Court
did not fully agree with the view of the Patna High Court in regard to the validity
of Rule 4A and it accepted the appeal only partially. The Court held that the
validity of Rule 4A could not be challenged insofar as it prohibited strike, but
held the rule invalid in so far as it banned all kinds of demonstrations.131
In Ramrao Laxmikant Shirkhedkar and Others v. Accountant General
Maharashtra132, the argument stood on a different footing. It was contended
that the persons on whom the prohibition of Rule 4A did not apply must be taken
to have the right to strike. Disposing to this question, the Bombay High Court
observed:
It is true that so far as persons in industrial establishments are
concerned, a right to go on strike as a weapon to be used for
 implementing or enforcing the demands is recognized before
industrial tribunals called upon to adjudicate between employers
and employees. In our opinion, such a contention cannot be
availed of because there is no such right as a legal right to strike
and, as far as we are able to see, whether the strike should be
prohibited in one form or another according to the categories of
employment in the government service was a matter within the
discretion and powers of the government as an employer in
framing rules.
O K Ghosh and Others v. E X Joseph133 is another case on this point. In
this case, Joseph was a clerk in the audit and accounts department at Bombay.
He was the secretary of the civil accounts association. The government withdrew
recognition of the association but he still continued to be its secretary. He was
suspended from service and was served with a chargesheet for having committed
a deliberate breach of Rules 4A of the Central Civil Services (Conduct) Rules,
1955. Departmental disciplinary proceedings were initiated against him. The
charges against him were mainly two-fold:
Firstly, he had infringed Rule 4A insofar as he participated
actively in various demonstrations organized in connection with
the strike. He was also charged for having organized meeting
and instigating the staff to participate in the strike by delivering
inflammatory speeches.
Secondly, by continuing to remain on strike, the secretary of an
unrecognized union of government servants, he had infringed Rule 4B.
Aggrieved by the order, he filed a writ petition before the Bombay High Court
under Article 226. He challenged the validity of these proceedings on the ground
that Rule 4A and Rule 4B were void as contravening the fundamental rights
guaranteed by Articles 19 (1) (a), (b), (c) and (g) of the Constitution. The High
Court held Rule 4B to be invalid but held Rule 4A to be valid as a whole. The
Court accordingly held that the departmental proceedings initiated against
Joseph for breach of Rule 4A were not valid. Against the decision of the
Bombay High Court, Joseph filed an appeal to the Supreme Court. The Supreme
Court, following its earlier ruling in the Kameshwar Prasad case, held that since
there was no recognized fundamental right to resort to strike, the Bombay High
Court was in error in holding that the said rule was valid in its entirety.
On 6 August 2003, a two-judge bench of the Supreme Court in T K
Rangrajan v. Government of Tamil Nadu and Others134 delivered a
momentous judgement on government servant’s right to strike. This decision has
raised a lot of hue and cry among political parties and trade unionists.135
The Factual Background
In order to appreciate the decision, it is necessary to examine the relevant facts.
In this case, the government employees (including teachers of government-aided
school and colleges) went on an indefinite strike in pursuance of their demands
relating to pension benefits that had been curtailed on grounds of a resource
crunch. The government of Tamil Nadu first invoked the Tamil Nadu Essential
Services Maintenance Act (TESMA), 2002 and then promulgated an ordinance
empowering the government with the power of summary dismissal en masse,
without giving the employees an opportunity to be heard. Accordingly, the
government of Tamil Nadu summarily dismissed about 1.7 lakh government
employees (including teachers) for participating in a strike under the Tamil Nadu
Government Servants Conduct Rules, 1973, Tamil Nadu Essential Services
Maintenance Act, 2002 and Tamil Nadu Ordinance No. 3 of 2003. The
employees were also prevented from resuming their duties. Quite apart from
this, 2211 employees and their leaders were also arrested against whom FIRs
were registered and who had ‘incited’ the strike or ‘indulged in violence’.
Aggrieved by this decision, the employees filed a writ petition under Article
226/227 of the Constitution in the Madras High Court. The single Judge of the
Madras High Court by an interim order directed, inter alia, the state of Tamil
Nadu (i) to keep in suspension the dismissal order issued to the striking
government employees until further orders, and (ii) to permit the employees to
resume duties forthwith in view of their undertaking to withdraw the strike and
resume duty. Aggrieved by this order, the state of Tamil Nadu filed an appeal
before the division bench of the Madras High Court challenging the interim
order. A public interest litigation was also filed on behalf of government
employees wherein the validity of the Tamil Nadu Essential Services
Maintenance Act, 2002 and Tamil Nadu Ordinance No. 3 of 2003 were
challenged. The division bench of the High Court set aside the interim order and
held that without exhausting the alternative remedy of approaching the
administrative tribunal, writ petitions were not maintainable. It directed the state
government employees to approach the state administrative tribunal and not the
Court. The Court also directed that those who were arrested and lodged in jails
be released on bail. Against this order, the employees filed an appeal before the
Supreme Court. The writ petitions were also filed before the Supreme Court for
getting the same relief.
Area of Conflict
The Supreme Court was called upon to decide the following issues:
(i) Was there any justifiable reason for the division bench of the High Court
not to entertain the petition on the ground the petitioner did not avail the
alternative remedy provided under the Constitution and the statute?
(ii) Is there any fundamental right to go on strike?
(iii) Whether the government servants have the right under any statute to
resort to strike?
(iv) Is there any moral or equitable justification to go on strike?
(v) Whether the Tamil Nadu Essential Services Maintenance Act, 2000 and
the Tamil Nadu Ordinance No. 3 of 2003 were voilative of the provisions
of the Constitution?

Power of the High Court to Exercise its Extraordinary

Jurisdiction
The Supreme Court examined the order of the division bench of the High Court
that the writ is not maintainable because over 170,000 employees have not
exhausted the alternative remedy of approaching the state administrative tribunal
provided under the Administrative Tribunal Act. The Supreme Court found such
refusal to entertain the writ petition to be legalistic, particularly in an
extraordinary situation where the government of Tamil Nadu dismissed over
170,000 employees and the Tamil Nadu State Administrative Tribunal is almost
defunct as it has only the vice-chairman to run the same. The Court remarked
that it is unfortunate that the concerned authorities are not making the
administrative tribunals under the Administrative Tribunal Act, 1985, functional
and effective by appointing men of calibre and observed:
It is to be reiterated that under Article 226 of the Constitution,
the High Court is empowered to exercise its extraordinary
jurisdiction to meet unprecedented extraordinary situation
having no parallel. It is equally true that extraordinary powers
are required to be sparingly used. The facts of the present case
reveal that this was a most extraordinary case, which called for
interference by the High Court, as the State Government had
dismissed about two lakh employees for going on strike.136
The Court conceded that no doubt it is true that the Supreme Court in L
Chandra Kumar v. Union of India137 held that it is not open to the employees
to directly approach the High Court even where the question of vires of the
statutory legislation is challenged. The Court, however, added that this ratio
should be read in the context of the question, which was decided by the Supreme
Court wherein it was contended that once the tribunals are established under
Article 323 A or Article 323 B, jurisdiction of the High Court would be
excluded. Negating the said contention, the Court in that case made it clear that
jurisdiction conferred upon the High Court under Article 226 of the Constitution
is a part of inviolable basic structure of the Constitution and it cannot be said
that such tribunals are effective substitute of the high courts in discharging
powers of judicial review.
No Fundamental Right to Strike
The Supreme Court in the instant case ruled that there is no fundamental right to
strike as it has been well-settled in a series of cases decided by the Supreme
Court. In order to appreciate this ruling, it is necessary to examine the law on
this subject.138
Article 19(1)(a) of the Constitution provides:
All citizens shall have the right…to freedom of speech and
expression.
The aforesaid right is subject to limitation prescribed under Article 19(2).
The Supreme Court, in Radhey Shyam Sharma v. The Post Master General
Central Circle, Nagpur held that there is no fundamental right to strike under
the aforesaid article. Let us turn to examine whether strike falls within the
purview of Article 19(1)(c).
Article 19(1)(c) of the Constitution declares:
All citizens shall have a right … to form associations or unions.
The above right, is however, not absolute. Clause 4 of Article 19 provides.
Nothing in sub-clause (c) of the said Clause shall affect the operation of
any existing law in so far as it imposes, or prevents the State from making any
law imposing, in the interests of the sovereignty and integrity of India or public
order or morality, reasonable restrictions on the exercise of the right conferred
by the said sub-clause.
In All India Bank Employees Association v. National Industrial
Tribunal,139, the Supreme Court considered the scope of the aforesaid
provisions and inter alia, ruled:
…. even a very liberal interpretation of sub-clause (c) of Clause
(1) of Article 19 cannot lead to the conclusion that the trade
 unions have a guaranteed right to … strike, either as part of
collective bargaining or otherwise.140
The Court, however, added:
The right to strike or the right to declare lockout may be
controlled or restricted by appropriate industrial legislation, and
the validity of such legislation would have to be tested not with
reference to the criteria laid down in clause (4) of Article 19 but
by totally different consideration.
A perusal of the aforesaid decision reveals that the Supreme Court in the
case under review has merely reiterated and applied the well-settled law on this
point.

Statutory Prohibition on Government Servants’ Right to

Strike
The Supreme Court in the instant case observed that there is no statutory
provision, which empowers the employees to go on strike. On the other hand,
there is a prohibition to go on strike under the Tamil Nadu Government Servants
Conduct Rules, 1973. Rule 22 of the said Rules provides:
No government servant shall engage himself in strike or in
incitements thereto or in similar activities.
Explanation to the aforesaid provision defines the expression of ‘similar
activities’ to include:
The absence from work or neglect of duties without permission
and with the object of compelling something to be done by his
superior officer of the government or any demonstrative fast
called ‘hunger strike’ for similar purposes.
Rule 22A provides:
No government servant shall conduct any procession or hold or
address any meeting in any part of any open ground adjoining
any Government office or inside any office premises — (a)
during office hours on any working day; and (b) outside office
hours or any holiday, save with the prior permission of the head
of the department or head of office as the case may be.
 Let us turn to examine the legal position which existed prior to this case.
The right of ‘government servants’ to form association, hold
demonstration and strike has figured in a number of decided cases. Their
position is somewhat anomalous. While government servants like industrial
workers have the guaranteed fundamental right to form associations or unions
and to demonstrate for redressal of their grievances. But unlike industrial
workers, government servants are generally charged with onerous
responsibilities for operating essential and vital services to the community. As
such, Government servants are expected to behave in a responsible manner
without resorting to concerted activity on the ground that strike would be
tantamount to disloyalty to the nation and the public. But, it is unfortunate that
government servants have in fact ignored the law of the land and resorted to
strike which led the government to regulate these activities through the
Government Servants’ Conduct Rules and Essential Services Maintenance
Ordinances, etc. Thus, the President in exercise of powers conferred upon him
by the proviso to Article 309 issued the Central Civil Services (Conduct) Rules,
1955. Rule 4A of the Rules reads:
No government servant shall participate in any demonstration or resort to any
strike in connection with any matter pertaining to his condition of service.
From the above, it is evident that a government servant has no right to go
on strike under any legislative enactment. On the contrary, there is a prohibition
under the statute to go on strike.

Moral or Equitable Justification to Go on Strike

After having held that strike is not a fundamental right and government servant
has no right to strike under any law, the Supreme Court proceeded to determine
the issue whether there is any moral or equitable justification to go on strike. The
Court observed that (i) government employees cannot claim that they can hold
the society to ransom by going on strike. The Court, however, added that even if
there is injustice to some extent, they have to resort to the machinery provided
under different statutory provisions for redressal of their grievances; (ii) Strike
as a weapon is mostly misused which results in chaos and total mal-
adminstration and (iii) Strike affects the society as a whole and particularly in
the instant case when two lakh employees go on strike en masse, the entire
administration comes to a grinding halt.
The Court also referred to the inconvenience caused to public due to
strike by teachers, doctors and transporters. In the case of strike by teachers,
entire educational system suffers; many students are prevented from appearing in
their exam, which ultimately affects their whole career. In case of strike by
doctors, innocent patients suffer; in case of strike by employees of transport
services, entire movement of the society comes to a stand still; business is
adveresely affected and a number of persons find it is difficult to attend to their
work, to move from one place to another or one city to another. On occasions,
public properties are destroyed or damaged and finally this creates bitterness
among public against those who are on strike.
The Court also showed its concern against irresponsible behavior of
government servants, particularly when out of the total income from direct tax,
approximately 90 per cent of the amount is spent on the salary of about 12 lakh
government employees in the state. This is all the more so where there is large
scale unemployment and number of qualified persons are eagerly waiting for
employment in government departments or in public sector undertakings.
Accordingly, the Court emphasized the need to be fully aware of their duties,
responsibilities and effective methods for discharging the same in the prevailing
situation.
The Court suggested that for redressing their grievances, instead of going
on strike, the employees should do more work. Such gesture of employees for
acting honestly, diligently and efficiently would not only be appreciated by the
authority but also by people at large, the Court added. This is so because in a
democracy, even though they are government employees, they are part and
parcel of governing body and owe duty to the Society.
The Court also emphasized the need to deal with the misconduct by
government employees in accordance with law. ‘However, considering the
gravity of the situation and the fact that on occasion, even if the employees are
not prepared to agree with what is contended by some leaders who encourage the
strikes, they are forced to go on strikes for reasons beyond their control.
Therefore, even though the provisions of the Act and the Rules are to be
enforced, they are to be enforced after taking into consideration the situation and
the capacity of the employees to resist. On occasion, there is tendency or
compulsion to blindly follow the others’.
The aforesaid observations raise a basic question whether it was
necessary to decide the issue of moral or equitable justification to go on strike
when it had already held the strike to be illegal. This is all the more so when the
Court, following its earlier decisions, ruled that strike is not a fundamental right
and government servants do not have any legal right to go on strike. It is
submitted that there was no need to decide such issues particularly when the
Supreme Court ruled that illegal strikes cannot be justified. In this context it is
necessary to refer to the development of case law on legality and justification.
A survey of the aforesaid decisions, therefore leads us to the conclusion
that the observation of majority has left the issue whether illegal strike per se is
unjustified wide open and introduces uncertainty.

Role of the Supreme Court in Providing Relief to Dismissed

Strikers
The Supreme Court has played a constructive or even conciliatory role in easing
and possibly bringing to an end, the unfortunate situation created due to en
masse dismissal of over 1,70,000 government employees including teachers,
who had gone on strike. In this process, the Court succeeded in getting the
undertaking from the government of Tamil Nadu to the following effect:
(i) To reinstate all the government employees who are dismissed because
they had gone on strike, except (a) 2,200 employees who had been
arrested and (b) employees against whom FIRs had been lodged.
(ii) The aforesaid order of reinstatement in service would be subject to
unconditional apology as well as undertaking to the effect that employees
would abide by Rule 22 of the Tamil Nadu Government Servants Conduct
Rules 1973.
(iii) The government will proceed under the disciplinary rules only against
those employees who had indulged in violence and who had incited the
other employees to go on strike.
(iv) The government of Tamil Nadu would pass an appropriate order for
regularizing the services of reinstated employees for the period for which
they remained absent and this would not be treated as a break in service.
We now turn to examine the specific direction issued by the Court:
• Direction to Reinstated Employees. The Supreme Court pointed out that
employees who are reinstated in service would take care in future to
maintain discipline as there is no question of having any fundamental,
legal or equitable right to go on strike. On the other hand, the employees
adopt other alternative methods for redressal of their grievances.
• Direction in Respect to Employees who are not Reinstated. The Supreme
Court ordered that for those employees who are not reinstated in service
on the ground that FIRs are lodged against them or after holding any
departmental inquiry penalty is imposed, it would be open to them to
challenge the same before the administrative tribunal and the tribunal
would pass appropriate order including interim order within a period of
 two weeks from the date of filing of such application before it.
• Direction to Government. The Supreme court showed its concern about the
concerned authorities not making the administrative tribunals under the
Administrative Tribunal Act, 1985, functional and effective by appointing
men of calibre.
• Directions to the High Court. In case the administrative tribunal is not
functioning, it would be open to the employees to approach the High
Court and it is for the High Court to ensure that justice should not be
denied to the affected persons if the administrative tribunals are not
functioning.

Constitutional Validity of the Tamil Nadu Maintenance Act,

2002 and Tamil Nadu Ordinance No. 3 of 2003
The Tamil Nadu Government Servants Conduct Rules, 1973 prohibits a
government servant to engage himself in strike or in incitements thereto or in
similar activities. For the purpose of the aforesaid rule, the expression ‘similar
activities’ shall be deemed to include the absence from work or neglect of duties
without permission and with the object of compelling something to be done by
his superior officers or the government or any demonstrative fast usually called
‘hunger strike’ for similar purposes. However, despite this provision, in the year
2002, the Tamil Nadu Essential Services Maintenance Act (TESMA), 2002,
which is said to be a draconian law, was first invoked in response to an indefinite
strike by employees in pursuance of demands relating to pension benefits that
had been curtailed on grounds of a resource crunch.
The government also issued an ordinance empowering itself with the
summary power of dismissal en masse, without any application of mind and
without giving the employees an opportunity to be heard. The ordinance, which
amended TESMA141 provides for treatment as ‘deemed participation’ in the
banned strike any absence of employees irrespective of the actual reasons for
their abstention from duty after the promulgation of the ordinance. Midnight
arrests of employees and their leaders, retrospective effect sought to be given to
the ordinance and dismissals without giving individual notices, all show that the
government was intent upon crushing the strike by any means.
The validity of the aforesaid Act and Ordinance was challenged before
the Supreme Court. The Supreme Court, however, did not decide the issue
whether the Tamil Nadu Services Maintenance Act, 2002 and Tamil Nadu
Ordinance No. 3 of 2003 or interpretation of any of the provisions thereof are
ultra vires the Constitution on the ground that (i) state government has
gracefully agreed to reinstate ‘most’ of the employees who had gone on strike.
However, 6,072 employees were not covered by the order and were not entitled
to reinstatement.
The aforesaid decision raises several issues (i) Can the Court refuse to
determine the constitutionality of the Ordinance, or Act on the ground that most
(and not all workers) are likely to be reinstated? (ii) Whether the employees who
have not been reinstated under the agreement should become legal orphans?
What would happen to those employees who would not be reinstated? Quite
apart from this, the Tamil Nadu Ordinance also raises several issues, namely: (i)
Can post-facto amendment be valid without application of mind and without
giving the employees an opportunity of being heard valid? (ii) Is the practical
relief provided to certain employees be the substitute for the alleged illegal act of
Tamil Nadu Government? (iii) Can the order of dismissal under the Act or
Ordinance (which is itself questionable) be sustained?
Quite apart from this, the court’s judgement also raises various questions.
First, to what extent the Supreme Court’s observations are enforceable? Second,
will it really be possible for the aggrieved employees to expect prompt response
from the tribunals given the way they function?

An Appraisal
From the above discussion, the following conclusions emerge:
(i) The Supreme Court, relying upon its earlier judgements, held that right
to strike is not a fundamental right and government servants have no
constitutional or legal right
to go on strike. In this regard, we wish to point out that press reports
referred to the 1989 judgement of the Supreme Court B R Singh v.
Union of India142 to support the viewpoint that right to strike is
recognized as a mode of redressal for resolving the grievances of
workers. However, we wish to point out that they failed to look into the
very next sentence wherein the court said, ‘these are to be found in
Sections 10(3), 10A(4A), 22 and 23 of the Industrial Disputes Act,
1947. From this it is evident that the aforesaid rule is only applicable in
cases of industrial workers and not to government employees.’
(ii) This judgement is also not applicable to teachers employed in school
and colleges because they are not ‘workmen’ under the Industrial
Disputes Act, 1947 and, therefore, the Industrial Disputes Act, 1947 is
not applicable. This law has been laid down by the Supreme Court in
 Miss A Sundarmbal v. Govt. of Goa, Daman & Diu.143 Quite apart
from this, press statements of political parties and trade union
federations do not make a distinction between the right to strike of
industrial workers and government employees while commenting on
government servants’ right to strike. Indeed they are unable to
distinguish between fundamental and statutory right to strike and use
them as if they are interchangeable. We wish to emphasize that
fundamental rights are those rights which are guaranteed under the
Constitution while statutory rights are those rights provided under the
statute, i.e., in case of strike under the Industrial Disputes Act, 1947.
(iii) Press statements of political parties and Federation of Trade Unions
have also misinterpreted the scope of ILO Convention No. 87 on
Freedom of Association and Convention No. 98 on Right to Organize
and Collecting Bargaining, 1949. It is true that India was a founder
member of ILO but it has not yet ratified these conventions primarily
because government servants have no right to collectively raise disputes
with the State under the respective conduct rules. The administrative
tribunals have therefore, been set up to resolve individual disputes.
Quite apart from this, joint consultative machinery for Central
Government employees permits negotiations on certain matters.
(iv) The determination of moral or equitable justification to go on strike by
the Supreme Court in this case has been debated. It has been commented
by various jurists that it is ‘unwarranted and uncalled" for. Be that as it
may, we feel that once the Court has held that there is no fundamental
right to strike and the government servants do not have the right to go
on strike as it is prohibited in the Conduct Rules, it was not necessary to
decide such issue. This is so because the Supreme Court in Indian
General Navigation and Railway Co. v. Their Workmen,144 and Model
Mills v. Dharam Das145 held that strike which is illegal cannot be
characterized as ‘justified’.
(v) The failure of the Supreme Court to decide the vital question of the
constitutional validity of the Tamil Nadu Essential Services
Maintenance Act, 2002 and Tamil Nadu Ordinance No. 3 of 2003 on the
ground that the state government has gracefully agreed to reinstate most
of the employees who had gone on strike is open to debate. This is all
the more so when the ordinance suffers from infirmities and runs against
the settled principles of law.
(vi) The Supreme Court has played a significant role in persuading the
 government of Tamil Nadu to reinstate the employees and also to lay
down norms for disposal of cases of those employees who have not been
reinstated. This is a commendable attempt and needs to be highlighted.
(vii) The Supreme Court deprecated the tendency of Madras High Court to
exercise its extraordinary jurisdiction to meet the unprecedented
situation wherein about 2 lakh employees who had gone on strike were
dismissed. While dealing with decision in L Chandra Kumar v. Union
of India146 decided upon by the High Court, the Supreme Court said
that no doubt it was held in that case that alternative remedy should
have been exhausted before moving to the High Court under Article 226
and 227 of the Constitution but in the instant case, if thousands of
employees are directed to approach the High Court which incidentally
has only one man, it would not be in a position to render justice. The
Court accordingly held that in a very exceptional circumstance, that
arose in the present case, it was not justifiable for the High Court not to
entertain the petition.
(viii) The Supreme Court’s remarks that administrative authorities are not
making the tribunal functional and effective by appointing men of
calibre, which makes the alternative remedy less effective is instructive.
It is hoped that the government will take adequate steps in this direction.
In Jan Chowkidar (Peoples Watch) v. State of Bihar,147 the Patna High
Court held that the government servants who are getting salary from the state
from the public exchequer should be more responsible to the public at large.
Whether strike was illegal or whether it was unjustified, what was the
misconduct of each of the employees, whether they have merely participated in
the strike or whether they have committed any offence, incited violence and
obstructed other willing employees to work, all these questions are to be decided
by the employer according to law complying with the principle of natural justice
and service law. In any event, right to work is a fundamental right and nobody
has the right to obstruct the willing employees to do the work. Destruction of
public property etc., cannot be justified.

G. Constitutional Validity of the Essential Services

Maintenance Ordinance 1960
S Vasudevan and Others v. S D Mital148 again raised the problem of
government servants’ right to go on strike vis-a-vis the power of the government
to prohibit it under the Essential Services Maintenance Ordinance, 1960. The
main issue involved in this case was whether the right to form an association or
union included the right to go on strike. The Supreme Court answered the issue
in the negative.
The facts of the case were as follows: The petitioner, S Vasudevan, was a
permanent upper division clerk of the Union of India in the office of the general
manager, Telephones, Bombay. He joined the general strike of the employees of
Union of India commencing on 12 July 1960. The director of telegraphs
suspended him from service on the ground that disciplinary proceedings were
contemplated to be taken against him. He was charged with committing grave
misconduct by participating in an illegal strike in contravention of the Essential
Services Maintenance Ordinance, 1960, which had declared the strike by Posts
and Telephone officials as illegal. He was also charged for having deliberately
contravened the provision of the Central Government Civil Services (Conduct)
Rules, 1955, insofar as he had participated actively in demonstration organized
in connection with the strike of the Central Government employees and took
very active part in preparation for the strike and he failed to report for duty as
required of him from 12 July 1960. This was also in contravention of the
Essential Services Maintenance Ordinance, 1960.
Vasudevan filed a writ petition under Article 226 in the Bombay High
Court wherein he prayed to hold the order of suspension and the charges served
on him as void, illegal and inoperative in law. The Ordinance was challenged on
the ground that it was in excess of the powers conferred on the President under
Article 123(1) of the Constitution. It was also argued on behalf of workmen that
the Ordinance violated the right conferred on a citizen by Article 19(1) (c) of the
Constitution. Deciding the question whether the right to go on strike was
included within it the right to form associations or unions, Justice Tambe
observed:
(The right to go on strike) is not joint or collective expression of
view but is joint or collective action. By its very nature it is
fraught with possibilities of leading to violence. History has
been telling us that in large number of cases where people have
gone on strike there has been resort to violence.
He added:
If the Constitution-makers had intended to confer on the citizens
as a fundamental right, the right to go on strike, they would have
expressly said so.
 On the basis of the assumption that the right to go on strike has not
expressly been conferred on the citizen, his Lordship arrived at the conclusion
that right to strike was not included in the right conferred under Article 19 (1) (c)
of the Constitution. Further, his Lordship also referred to the observation in
Corpus Juris Secundum149 that ‘the right to strike is a negative right which can
be exercised with due regard to the right of others. Neither the common law nor
the Fourteenth Amendment to the Federal Constitution confers an absolute right
to strike.’

VII. RIGHT TO LOCKOUT

Since 1950, the Constitution guarantees the right to acquire, hold and dispose of
property. The Constitution also guarantees the right to carry on any occupation,
trade or business. Is the employer’s right to lockout workmen guaranteed under
any or both of these constitutional provisions violative of the Constitutional
guarantee unless it imposes reasonable restrictions in the interest of general
public? This question was answered in this negative by the Andhra Pradesh High
Court in A P Electrical Equipment Corporation v. Its Staff Union.150 The
Court observed:
… the right to lockout is now controlled by Sections (10) (3),
10A (4A) … 22 and 23 of the Act and the penal action is
engrafted for disobedience of the prohibition of lockout under
Section 24. If it is held that the petitioner has a fundamental
right to declare lockout, then naturally the provisions referred to
earlier would be rendered otiose.151
The Court accordingly held that right to lockout is a statutory right
controlled by the relevant provisions of the Industrial Disputes Act, 1947 and
must be exercised in conformity therewith.

VIII. REGULATION OF STRIKES AND LOCKOUTS

A. General Prohibition on Strikes and Lockouts

Section 23 which prohibits strikes and lockouts provides:
No workman who is employed in any industrial establishment shall go on
strike in breach of contract and no employer of any such workman shall declare
a lockout:
(a) during the pendency of conciliation proceedings before a board and seven
days after the conclusion of such proceedings;
(b) during the pendency of proceedings before a labour court, tribunal or
national tribunal and two months after the conclusion of such proceedings;
(c) during the pendency of arbitration proceedings before an arbitrator and
two months after the conclusion of such proceedings, where a notification
has been issued under sub-section (3A) of section 10 A; or
(d) during any period in which a settlement or award is in operation in respect
of any of the matters covered by the settlement or award.
The aforesaid provisions do not limit illegality only to strikes (or
lockouts) which cover demands which are the subject-matter of the pending
proceedings. Thus, a strike (or lockout) which is called during the pendency of
conciliation proceedings or pendency of adjudication or arbitration proceedings
is illegal, although it is in respect of demands which are not covered by
conciliation or adjudication proceedings.152
Curtailment of Scope of General Prohibitation. In Chemicals and
Fibres of India Ltd v. D C Bhoir153 there was a dispute between a workman and
the employer concerning the former’s dismissal. This ‘individual dispute’
became an ‘industrial dispute’ because of the provisions of Section 2A of the
IDA and the reference thereof by the appropriate government to a labour court
for adjudication. During the pendency of adjudication proceedings relating
thereto, the management of M/s Chemicals and Fibres Ltd, dismissed three other
workmen. Thereafter, the workmen of M/s Chemicals and Fibres Ltd, went on
strike to protest against the dismissal of the aforesaid three employees. Was this
strike prohibited under Section 23 (b)? The Supreme Court ruled:
Even in respect of clause (b), some limitations should be read
confining it to the parties to the proceedings either actually or
constructively, as in the case of the Union espousing the cause
of an individual workman.154
The Court held that the prohibition contained in Section 23 did not apply
to the workmen employed in Chemical and Fibres of India Ltd, even though they
went on strike, and matters relating to the dismissal of a single workman of that
establishment were pending adjudication before labour court. At the same time,
the Supreme Court widened, in a different direction, the scope of the prohibition
imposed by Section 23 when it approved the High Court decisions which
established:
… that even though the proceedings pending before the labour
court, tribunal or national tribunal might relate to certain matters
only, there cannot be a strike or lockout even in relation to
matters other than those which are pending before the labour
court tribunal or national tribunal.155
Among the decisions cited and approved by the Supreme Court is the
decision of the Calcutta High Court in Provat Kumar Kar v. W T Parkar.156
In view of its approval of the principle established in Provat Kumar Kar’s
Co. Ltd, the Supreme Court did not advert to the question whether the subject
matter of the impugned strike arose out of or was connected with or was relevant
to, the subject-matter of pending adjudication proceedings. The Court proceeded
on the basis, (as decided in that case), that the general prohibition contained in
Section 23 did not cover workmen employed in establishments which were not
concerned in the adjudication proceedings. It applied itself to a limited question:
did the prohibition affect all workmen employed in the establishment or
establishments involved in the pending adjudication proceedings, or only those
workmen who were parties to the proceeding? Having reached the conclusion
that the general prohibition imposed by Section 23(b) affected only those
workmen who were parties to the adjudication proceedings, the Supreme Court
went to assert that, since the pending adjudication proceeding related to an
‘individual dispute’, other workmen of the establishment were not affected by
the general prohibition.

B. Additional Restrictions on Strikes and Lockouts in Public

Utility Services
Strikes and lockouts adversely affect the interest of the community in
maintaining a high level of production and uninterrupted public utility services.
Section 22, which regulates strikes and lockouts in public utility services, inter
alia, directs:
(1) No person employed in a public utility service shall go on strike, in breach
of contract:
(a) without giving to the employer notice of strike, as hereinafter
provided, within 6 weeks before striking;
(b) within 14 days of giving such notice; or
 (c) before the expiry of the date of strike specified in any such notice as
aforesaid; or
(d) during the pendency of any conciliation proceedings before a
conciliation officer and 7 days after the conclusion of such
proceedings.
(2) No employer carrying on any public utility service shall lockout any of his
workmen:
(a) without giving them notice of lockout as hereinafter provided, within
6 weeks before locking-out; or
(b) within 14 days of giving such notice; or
(c) before the expiry of the date of lockout specified in any such notice
as aforesaid; or
(d) during the pendency of any conciliation proceedings before a
conciliation officer and 7 days after the conclusion of such
proceedings.
The scope of this section will be examined hereunder:
1. Public Utility Services. Unlike the provisions of Section 23 which, as
we have already seen, contain general prohibition on the use of the instruments
of economic coercion, the provisions of Section 22 are limited in their scope.
They apply to strikes and lockouts only in public utility services.
Section 2(n) of the IDA defines ‘public utility services’ to mean:
(i) any railway service or any transport service for the carriage of passengers
or goods by air;
(ia) any service in or in connection with the working of, any major port or
dock;
(ii) any section of an industrial establishment on the working of which the
safety of the establishment or the workmen employed therein depends;
(iii) any postal, telegraph or telephone service;
(iv) any industry which supplies power, light or water to the public;
(v) any system of public conservancy or sanitation;
(vi) any industry specified in the First Schedule which the appropriate
government may, if satisfied that public emergency or public interest so
requires, by notification in the official gazette, declared to be a public
utility service for the purposes of this Act, for such period as may be
specified in the notification:
 Provided that the period so specified shall not, in the first
instance, exceed six months but may, by a like notification, be
extended from time to time, by any period not exceeding 6
months, at any one time if in the opinion of the appropriate
government public emergency or public interest requires such
extension.
It will be observed that there are two categories of public utility services
(i) those that are mentioned in clauses; (i) to (v) of Section 2 (n); and (ii) those
which being listed in the First Schedule, are declared by the appropriate
government to be ‘public utility services.’ The second of these two categories
can be classified as public utility service only for a period of six months from the
date of government notification though the government is empowered to extend
to period from time to time by successive notifications.
Lest the true scope of governmental power to impose additional
restrictions on the use of instruments of economic coercion remains camouflaged
in the provisions of the IDA, it is necessary to point out that appropriate
governments are empowered to add to or subtract from the list of industries
mentioned in the First Schedule. Thus, Section 40 of the Industrial Disputes Act,
inter alia, specifically provides:
(a) The appropriate government may, if it is of the opinion that ‘it is expedient
or necessary in the public interest to do so, by notification in the official
gazette, add to the First Schedule any industry and on any such
notification being issued, the First Schedule shall be deemed to be
amended accordingly.
(b) The Central Government may, by notification in the official gazette, add to
or alter or amend the Second Schedule or the Third Schedule and on any
such notification being issued, the Second Schedule or the Third
Schedule, as the case may be, shall be deemed to be amended accordingly.
(c) Every such notification shall, as soon as possible after it is issued be laid
before the legislature of the state, if the notification has been issued by a
state government or before Parliament, if the notification has been issued
by the Central Government.
Accordingly, the First Schedule has grown in bulk. The First Schedule, as
modified by the Central Government from time to time, now provides:
(a) Transport (other than railways) for the carriage of passengers or goods, by
land or water
(b) Banking
 (c) Cement
(d) Coal
(e) Cotton textiles
(f) Foodstuffs
(g) Iron and steel
(h) Defence establishments
(i) Service in hospitals and dispensaries
(j) Fire brigade service
(k) India Government mints
(l) India Security Press
(m) Copper mining
(n) Lead mining
(o) Zinc mining
(p) Iron ore mining
(q) Service in any oilfield
(r) Service in the uranium industry
(s) Pyrites mining
(t) Security Paper Mills, Hoshangabad
The 1971 Amendment however, deleted item 18 from the First Schedule
and added in it a sub-clause (ia) to the aforesaid clause (n) of Section 2. Thus,
the concept of public utility service itself has undergone a change. It now
includes not only those industries which directly affect health and safety of the
members of the society but also those which are the basis of national economic
reconstruction and development. In addition, state governments have declared
other industries157 to be public utility services.
In Swadeshi Industries v. Its Workmen158, the company was running
three different units, namely, (i) cotton textile weaving unit, (ii) silk unit, and
(iii) art silk products manufacturing unit. The cotton textile industry was
declared a ‘public utility service’ by the appropriate Government. The workmen
employed in the silk unit went on strike without giving any notice as required by
the aforesaid Section 22. The company dismissed the striking workmen on the
ground that they had gone on illegal strike. The strikers, however, asserted that
the silk unit was not a ‘public utility service’ and consequently Section 22 was
not applicable. The Supreme Court agreed that prima facie the silk unit was not
a public utility service. Further, since the company did not prove that the
concerned workmen at the time of strike or prior to that, had even worked in the
cotton weaving unit; that the workmen employed in the silk unit, were required
under the terms of employment to work in the cotton unit, and that textile unit
workers in the cotton textiles unit was ever assigned to any of the striking
workmen, the concerned workmen could not be said to be employed in a ‘public
utility service’ within the meaning of Section 2 (n) and for the purposes of
Section 22.
Earlier in D N Banerjee v. P R Mukherjee159 the Supreme Court referred
to the provisions of Section 2 (n) and the First Schedule of the IDA to support
the decision of the Court that local bodies were within the purview of the IDA.
Seven years later, Justice Gajendragadkar speaking for the Supreme Court
referred to entry (q) in the First Schedule and; even though he could not decide
in State of Bombay v. Hospital Mazdoor Sabha160 on the basis of that entry as
the Parliament had added that entry after the commencement of the proceedings
in that case, he used it to demonstrate legislative intent indicative of including
services in hospitals within the purview of industry and added:
After the addition of the relevant entry in the Section 1, it would
not be open to anybody to suggest that services in hospitals does
not fall under Section 2 (j).161
Even so, Chief Justice Hidayatullah held in Safdarjung Hospital162 that,
though public conservancy or sanitation was an industry, services in government
or charitable hospitals did not fall within Section 2 (j).
2. The Central Scheme of Regulation under Section 22. The Act163
adopts a two pronged approach to prevent the use of instruments of economic
coercion in public utility concerns and thereby to maintain continuity of
production or services. First, the section postpones the implementation of the
decision to use the instruments of economic coercion by prescribing a statutory
requirement of notice. Second, Section 22 read with Section 12 ensured ‘peace
making’ efforts by imposing a statutory duty on conciliation officers to hold
conciliation proceedings and directing the parties not to resort to the use of the
instruments of economic coercion during the pendency of a statutory
requirement of notice.
The overall perspective of the IDA indicates that Section 22 may also be
looked at as the step which leads to governmental intervention in labour
management relations to preserve the interest of the community.
 (a) Requirements of notice. Section 22 (1) of the IDA requires that
persons employed in public utility services shall not go on strike ‘in breach of
contract’ without giving the requisite notice. And Section 22 (4) directs that the
notice of strike shall be given in the prescribed manner.
Likewise, Section 22 (2) of the IDA states that employers carrying on any
public utility service shall not declare lockout without giving the requisite notice.
And Section 22 (5) directs that the notice of lockout shall be given in the
prescribed manner.
It is difficult to ignore the difference in the phraseology of Section 22 (1)
and 22(2). While the former speaks of ‘person employed’ and ‘in breach of
contract’, the latter merely speaks of ‘employer’ and ‘his workmen’. The
obvious question is what, if any, are the consequences of this difference in
terminology?
The clause ‘no person employed in a public utility service shall go on
strike in breach of contract’ must necessarily be read in the light of the definition
of ‘strike’. The net effect of this interpretation would be that even if a person is
not a ‘workman’ within the meaning of Section 2 (s) of the IDA, but is employed
under a contract, whether the contract is of service or for services, he is
prohibited from going on strike in ‘breach of contract’. In view of the
importance of public utility services, this enlarged coverage or the prohibition is
logical. Further, the emphasis on ‘breach of contract’ suggests the prohibition
under Section 22 would not apply to persons who after the termination of the
period of contract ‘refuse to continue to work or to accept employment’. In view
of the penal consequences flowing from violation of the prohibition and the
constitutional prohibition against forced labour contained in Article 23 of the
Constitution, the emphasis on breach contract is again logical. The use of the
expression ‘employer’ and ‘his workmen’ automatically import the element of
contract. However, to the extent to which ‘non-workmen’ persons employed
under a contract are excluded from the prohibition of Section 22 (2) that sub-
section is narrower than Section 22 (1).
(b) To whom notice is to be given:
(i) Strike notice. Section 22 (1) (a) of the Act states the persons to whom
the notice of strike is to be given. It, inter alia, provides:
No person employed in a public utility service shall go on strike in breach
of contract without giving to the employer notice of strike… and, Section 22 (4)
directs that:
The notice of strike referred to in sub-section (1) shall be given
by such number of persons to such person or persons and in such
 manner as may be prescribed. However, the Industrial Disputes
(Central) Rules, 1957 do not prescribe person or persons to
whom notice of strike is to be given. Under the circumstances,
notice is to be given to persons stated in Section 22(1) (a), i.e.,
‘employer.’
(ii) Lockout notice. Section 22 (2) (a) of the IDA provides that:
No employer carrying on any public utility service shall lockout
any of his workmen: without giving them notice of lockout……
And Section 22 (5) directs that:
‘The notice of lockout referred to in sub-section (2) shall be given in such
manner as may be prescribed.’
This has to be read with Rule 72 which, inter alia, provides that:
… where a registered trade union exists, a copy of notice shall
also be served on the secretary of the union.
Unlike Section 22(4), Section 22(5) does not specifically include ‘to such
person or persons’ but Rule 72 requires that persons, other than those mentioned
in 22 (1) to whom a copy of notice is to be served.
(c) Notice: when to be given. The legislature has drafted in a perplexing
manner the minimum period of notice. Section 22(1)(b) of the IDA provides:
No person employed in a public utility service shall go on strike,
in breach of contract—
(b) within fourteen days of giving such notice.
Likewise, Section 22(2)(b) prescribed the minimum period of notice, to
be given by the employer:
No employer carrying on any public utility service shall lockout
any of his workmen.
(c) ‘within fourteen days of giving such notice.’
The reason for prescribing the minimum period is presumably to give
time to employer or workmen, as the case may be, and to the various
governmental authorities to see whether strike or lockout can be prevented and
workmen may come either partially or wholly to workmen’s or employer’s point
of view as the case may be. Otherwise it becomes difficult if not, impossible, for
the authorities to anticipate outbreak of hostilities.
(d) Notice: effective for how long. Section 22(1) (a) prescribes the upper
limit within which strike notice would be effective. It states:
No person employed in a public utility service shall go on strike,
in breach of contract.
(a) without giving to the employer notice of strike, as hereinafter
provided, within 6 weeks before striking.
Similarly, Section 22 (2) (a) prescribes the upper limit in case of lockout:
No employer carrying on any public utility service shall lockout
any of his workmen.
(a) without giving them notice of lockout as hereinafter provided, within
6 weeks before locking-out.
It is clear from above that notice of strike or lockout would be ineffective
after 6 weeks from the date it is given: the strike or lockout must be effected
within this period from the date of notice of strike or lockout. The reasons for
prescribing the maximum limit is to provide sufficient security measure by the
custodian of law, if the strike or lockout was to break out within the stipulated
period. Otherwise, it becomes too difficult, if not impossible, for the authorities
to anticipate outbreak of hostilities.
In Mineral Miner’s Union v. Kudremukh Iron Ore Co. Ltd164, the union
of workmen employed in a public utility service gave a notice of strike required
under Section 22 on 1 September 1984 of its intention to go on one day token
strike any day after 20 September 1984. Thereupon the conciliation proceedings
commenced and took place between 19 September, 1984 to 1 October 1984 on
which date the conciliation failed. The failure report was submitted to the
Government on 12 October 1984 and the parties were informed about the failure
of conciliation only on 9 November 1984. Thereafter on 10 December 1984 the
workmen who were members of the union went on strike. Thereupon the
management informed the union considering the strike to be illegal, that the
workers were not entitled to wages for 10 December 1981, which amount was
deductible under the Payment of Wages Act, 1936. On these facts a question,
inter alia, arose for determination whether fresh notice is required on failure of
conciliation and conclusion after six weeks from the date of strike notice. The
Karnataka High Court answered the question in the affirmative and observed:
a fresh notice under S. 22 (1) in compliance with clauses (a), (b)
and (c) of S. 22 (1) and S. 24 is necessary if in a given case, by
the date on which the failure of conciliation proceeding is
intimated, 6 weeks period from the date of notice of strike issued
 earlier under S. 22 (1) of Act had expired.
In Management, Essoripe Mills Ltd v. Presiding Officer, Labour Court
and Others,165 the respondents 2 to 23 went on illegal strike from 8 November
1990. Respondent no. 15 and one S L Sundaram who had died in the meantime
were the first to strike work in the blow room resulting in stoppage of the entire
operation of the appellant’s mill. On 14 March 1991, the general secretary of the
Tamil Nadu Panchalai Workers’ Union served a strike notice on the
management under Section 22(1) of the Industrial Disputes Act, 1947 stating
that ‘strike would commence on or after 24 March 1991’. But on 8 April, 24
April and 13 May 1991, the management dismissed respondents 2 to 23 from
service after holding a disciplinary inquiry. Aggrieved by this order, respondents
2 to 23 filed petitions under Section 2A of the Act for reinstatement with back
wages and continuity of service. The labour court by its award dated 24 January
1994 held that the strike was illegal. However, in purported exercise of its
powers under Section 11A of the Act, the labour court substituted the
punishment of dismissal by order of discharge and awarded compensation of
₹50,000 to each workman.
The award was challenged by the appellant as well as the workmen before
the High Court. On 5 August 2000, a single judge of the High Court allowed the
writ petition filed by respondents 2 to 23 on the ground of non-compliance of
Section 33(2)(b) of the Act and directed reinstatement of the workmen with full
back wages and continuity of service. According to him, a copy of the strike
notice dated 14 March 1991 was sent to the conciliation officer and therefore,
conciliation proceedings were pending on the date of the dismissal and since the
dismissal was without the approval of the conciliation officer in terms of Section
33 of the Act, the same was illegal.
Against this order, the appellant filed a writ petition against the order of
punishment, which was dismissed. Thereupon, special leave petitions were filed
before the Supreme Court. In the course of the hearing, the Court suggested
certain terms for amicable settlement which the appellant agreed to but
respondents 2 to 23 did not agree. The Supreme Court observed:
Section 22(1) prohibits a strike in a public utility service, in
breach of contract, without giving to the employer advance
notice of 6 weeks. Section 22(1) prohibits a strike in a public
utility service, in breach of contract, without giving to the
employer advance notice of 6 weeks. It prohibits strike (a)
within the notice period of 6 weeks, (b) within 14 days of giving
 such notice, (c) before the expiry of the date of strike specified
in such a notice, (d) during the pendency of any conciliation
proceedings before a conciliation officer and 7 days after the
conclusion of such proceedings.
The Court added that the strike notice issued on 14-3-1991 stating that the
strike will commence on or after 24-3-1991 i.e. (just 10 days notice) does not
satisfy the requirement of advance notice stipulated under section 22(1).
Therefore, it is not a valid notice. Consequently, in the eye of law, there was no
commencement of conciliation proceedings as a result of the said notice. Unless
a conciliation proceeding was pending at the time of dismissal of workmen,
section 33 will not be attracted and there is no question of seeking permission of
the conciliation officer in such a case. The Court remarked that the High Court
failed to appreciate that in terms of Section 33A for not obtaining permission of
the conciliation officer under Section 33, the only legal consequence is that the
conciliation officer shall take the complaint of contravention of the provisions of
Section 33 into account in mediating in and promoting the settlement of such
industrial dispute. Therefore the order of dismissal in any event was not illegal.
The Court also observed that the conciliation officer, unlike the labour court or
an industrial tribunal, has no power of adjudication. Therefore, he cannot set
aside the order of dismissal and therefore dismissal would be valid.
The Court then noted that the notice was given about the proposed strike
after the strike. Thus, the workers resorted to strike on 8 November 1990, while
the notice was given on 14 March 1991. The Court then enumerated the
following stages under Section 22:
(i) advance notice of 6 weeks
(ii) 14 days given to the employer to consider the notice;
(iii) the workmen giving the notice cannot go on strike before the indicated
date of strike;
(iv) pendency of any conciliation proceedings.
The Court then observed that in case no conciliation proceedings were
pending under. Sub-section (4) of Section 22, the notice of strike referred to in
sub-section (1) has to be given in such manner as may be prescribed. The
Central Rule 71 prescribes the manner in which the notice has to be given and
the notice is in Form ‘L’. The notice as mandated under Section 22 has to be
given to the employer. Further, there is nothing in Section 22 which requires
giving of intimation or copy of the notice under Section 22 to the conciliation
officer. At the stage of notice under Section 22, there is no dispute. Moreover,
the date of notice is 14 March 1991 and the proposed strike was on 24 March
1991. Therefore, on the face of it, it cannot be treated to be a notice as
contemplated under Section 22(1)(a).
In the notice it is stated that the strike will commence on or after
24-3-1991. Obviously, 6 weeks’ time before the date of strike
was not given. In this case the date of notice is 14-3-1991 and
the proposed strike was on or after 24-3-1991. The inevitable
conclusion is that the notice cannot be treated to be one under
Section 22. If no notice is given to the employer, the effect of it
is that he is not aware of the proceedings. Obviously, the
conciliation proceedings must be one meeting the requirements
of law. Here, no notice in terms of Section 22 of the Act was
there.
The Court added:
Somewhat unacceptable plea has been taken by Respondents 2
to 23 that in terms of Section 22(1)(b) after 14 days of giving the
notice, the workmen can go on strike. If this plea is accepted 6
weeks’ time stipulated in Section 22(1) (a) becomes redundant.
The expression ‘giving such notice’ as appearing in Section
22(1)(b) refers to the notice under Section 22(1)(a). Obviously,
therefore, the workmen cannot go the strike within 6 weeks’
notice in terms of Section 22(1)(a) and 14 days therefore in
terms of Section 22(1)(b). The expression ‘such notice’ refers to
6 weeks’ advance notice.
It is difficult to accept the aforesaid interpretation. If the expression
‘without giving to the employer notice of strike, as hereinafter provided, within 6
weeks of before striking’ means what the Supreme Court has held it to mean;
one wonders what was the need of clause (b), namely ‘within 14 days of giving
such notice’, which means that persons employed in public utility services shall
not go on strike ‘in breach of contract’ without giving 14 days’ notice. And
Section 22(4) directs that the notice of strike shall be given in the prescribed
manner. Indeed, Section 22(1)(a) prescribes the upper limit within which strike
notice would be effective. In other words, the notice of strike or lock-out would
be ineffective after 6 weeks from the date it is given. The reason for prescribing
the maximum limit is to provide sufficient security by custodian of law, if the
strike or lock-out were to break out within the stipulated period. Otherwise, it
becomes too difficult, if not impossible, for the authorities to anticipate outbreak
of hostilities.
(e) Notice: how to be given. The notice of strike is to be given by
workmen under subsection 4 in accordance with Rule 71 of the Industrial
Disputes (Central) Rules, 1957, which reads:
(1) The notice of strike to be given by workmen in a public utility
service shall be in Form ‘L.’
(2) On receipt of a notice of a strike under sub-rule (1), the employer
shall intimate the fact to the conciliation officer having jurisdiction on the
matter.
Similarly Sub-section (5) requires that:
(t)he notice of lockout referred to in sub-section (2) shall be
given in such manner as may be prescribed,
and Rule 72 of the Industrial Disputes (Central) Rules, 1957 provides
that:
(t)he notice of lockout to be given by an employer carrying on a
public utility service shall be in Form ‘M’.
The Rules further states:
The notice shall be displayed conspicuously by the employer on
a notice board at the main entrance of the establishment and in
manager’s office.
The Rule also makes it obligatory upon the employer:
Where registered trade union exists, a copy of notice shall be
served on the secretary of the union.166
A perusal of the aforesaid provisions reveals that the form in which notice
is to be given is mandatory. This view gets support from the use of the term,
‘shall’ both in subsections (4) and (5). Further the word ‘shall’ which occurs in
Rules 71 and 72 of the Central Rules confirms this view. Moreover, ‘the
intention of the legislature in enacting the relevant provisions and the scheme of
the IDA leaves no doubt that compliance of the contents of notice is mandatory.’
Judicial decisions also, confirm this view. For instance, in Employees of Dewan
Bahadur Ram Gopal Mills v. Dewan Bahadur Ram Gopal Mills167, the
workmen of a public utility concern gave a notice under Section 22. The notice
was, however, not in the prescribed form and it did not specify the date of strike
as required under Rule 52 (1) of the (Hyderabad) Industrial Disputes Rules,
1950, which was in pari materia with Rule 71 of the Industrial Disputes
(Central) Rules 1957. Construing Rule 52 (1) of the Hyderabad Industrial
Disputes Rules, the labour court observed:
A perusal of the form E shows that the notice of strike shall
specify: the date of strike. Rule 71 of the Industrial Dispute
(Central) Rules of 1957 contains a similar provision. It is
contended that neither the so called notice of strike … is on the
prescribed form nor does it specify any date of strike. In my
opinion, the provision of Rule 52 … is mandatory and
contravention thereof renders the alleged notice, ineffective as a
statutory notice, as contemplated by Section 22 (1) of the
Industrial Disputes Act, 1947.168
The same question figured again in Municipal Committee v. Industrial
Tribunal.169 In this case workmen gave a notice of strike to the employer on 26
March, 1967. The notice was, however, not in accordance with the provisions of
Section 22 read with Rule 71 and form ‘L’ of the Schedule. Construing the
provisions of Section 22 read with Rule 71, the Punjab and Haryana High Court
held:
Reading relevant statutory provisions of Section 22 (1) in
conformity with Rule 71 and the contents of Form L, it appears
to be self evident that the statutory requirements of the notice
are of a mandatory norm.
The Court rejected the contention that the provisions of sub-section (3) of
Section 22 are merely directory and a patent violation of these provisions would
entail no legal consequence. The Court reiterated that ‘compliance with the
provisions of Section 22 is the core of the matter for determining whether a
particular strike be legal or otherwise’.
In Savita Chemicals (Pvt.) Ltd v. Dyes and Chemical Workers
Union,170, the Supreme Court while dealing with validity or otherwise of the
notice of strike given by the union under the Maharashtra Act, read with the
rules made thereunder namely the labour court (Practice & Procedure) Rules,
1975 held that if all the essential requirements in the prescribed form for giving
of notice are fulfilled, in substance, the basic requirement of the prescribed form
of notice of strike would be satisfied. It is not necessary that the notice must be
typed in the same sequence as given in the prescribed form. The prescribed form
and the sequence of any information to be given therein are mere formal
requirements. Similarly, whether notice is given by registered post or by hand
delivery is also not a basic requirement. It is sufficient if the notice is duly
served on the employer.
It is submitted that aforesaid reasoning can be equally applied examining
the validity or otherwise of a strike notice under Section 22(1) (a) of the ID Act,
read with rule 71 and form L under the Industrial Disputes (Central) Rules,
1957.
(f) Notice: When not necessary. Sub-section (3) of Section 22, provides
that no notice needs to be given when a strike or lockout already exists, but in
such a case, the employer must send notice of such strike or lockout on the day
when it was declared to the authorities specified by the appropriate Government
under the IDA.
(g) Requirement of compliance with notice. Clause (c) of sub-section
(1) of Section 22 is not happily worded. It provides that strike or lockout shall
not be resorted to:
‘before the expiry of the date of strike or (lockout) specified in any such
notice as aforesaid’ the relevant portion of Form L framed under Rule 71 of the
Industrial Disputes (Central) Rules, 1957 reads:
In accordance with the provisions contained in sub-section (1) of
Section 22 of the Industrial Disputes Act, 1947, I/We hereby
give you notice that/I propose to call on strike we propose to go
on strike on … 20 … for the reasons explained in the annexe…
Similarly, Form M framed under Rule 72 reads:
In accordance with the provisions of sub-section (2) of Section
22 of the Industrial Disputes Act, 1947. I/We hereby give notice
to all concerned that it is my/our intention to effect a lockout-
in……….. department(s)/section(s) of my/our establishment
with effect from… for the reasons explained in the annexure.
Whether the workmen are bound to specify the date of strike in a notice
given under Section 22 (1) of the Act? The Karnataka High Court171 answered
the question in the affirmative and observed that in a notice of strike required to
be given under Section 22 (1) of the Act, the date on which the workmen
intended to go on strike should be specified and its non-specification renders the
strike illegal.
(h) Requirement of reporting to the government agencies. Sub-section
(6) makes it incumbent on the employer within five days of receipt of notice of
strike under sub-section (1) or where he served a notice of lockout under sub-
section (2) to report to the appropriate government regarding the number of
notices received or given on a particular date. And Rule 74 of the Industrial
Disputes (Central) Rules, 1957 lays down:
The report of notice of a strike or lockout to be submitted by the employer
under subsection (6) of Section 22 shall be sent by registered post or given
personally to the assistant labour commissioner (central) appointed for local
areas concerned with copy by registered post to:
1. The concerned administrative department of the Government of India.
2. The regional labour commissioner (central) for the zone.
3. Chief labour commissioner (Central).
4. Ministry of Labour of the Government of India.
5. Labour department of the state government concerned.
6. The district magistrate concerned.
The object of Sub-section (6) is perhaps to enable the authorities either to
make efforts to avert such strike or lockout or to make alternative arrangements
for running the public utility service or even to make security arrangements as
public service is vital to the day-to-day life of the community.
(i) Issuance of second notice of strike/lockout on failure of conciliation.
While the requirement of issuing a fresh notice of strike (under Section
22) might be mandatory for going on strike after the failure of conciliation, on
the issue of such second notice, conciliation cannot be deemed to have
commenced or required to be commenced under Section 20 (1) and 12 (1) of the
Act respectively, for the conciliation proceedings would have already taken
place, a failure report would have been intimated to the parties by the
government and consequently clause (d) of Section 22 which prohibits strike
during the pendency of conciliation does not get attracted. The only course open
under the Act to prevent strike in a public utility service is to refer the demands
for adjudication under Section 10 of the Act as by such reference, the prohibition
of strike incorporated in Section 23(b) gets attracted. Obviously for this reason,
the second proviso to Section 10 (1) makes it obligatory for the government to
refer a dispute relating to a public utility service on the issuance of notice under
Section 22 unless the demand is found to be frivolous or vexatious or otherwise
inexpedient for being referred for adjudication.172
3. The Response of the (First) National Commission on Labour. The
Commission has attached considerable importance to public utility services. It
has, therefore, provided for compulsory adjudication as an alternative for strike.
In the event of failure of negotiation as also after the failure of the party to agree
to arbitration, ‘either party shall notify the proposed IRC with a copy to the
appropriate government, of the failure of such negotiation, whereupon the IRC
shall adjudicate upon the dispute and its award shall be binding upon the
parties’173
4. The Response of the (Second) National Commission on Labour. The
Second National Commission on Labour recommended that in socially essential
services like water supply, there may be a strike ballot and if the strike ballot
shows that 51 per cent of workers are in favour of strike, it should be taken that
the strike has taken place, and the dispute must forthwith be referred to
compulsory arbitration.
The commission also recommended that a strike could be called only by
the recognized negotiating agent and that too only after it has conducted a strike
ballot amongst all the workers, of whom at least 51 per cent support the move to
strike.

C. Prohibition on Continuance of Strike and Lockout

1. Legislature Measures
Sub-section (3) of Section 10 provides:
Where an industrial dispute has been referred to a board, labour
court, tribunal or national tribunal under this Section, the
appropriate government may by order prohibit the continuance
of any strike or lockout in connection with such dispute which
may be in existence on the date of the reference.
The discretion to issue prohibitory order where an industrial dispute has
been referred to arbitrator under Section 10 A, however, is subject to additional
restrictions. Sub-section 4 A of Section 10 A lays down:
Where an industrial dispute has been referred to arbitration and a
notification has been issued under sub-section (3A), the
appropriate government may, by order, prohibit the continuance
of any strike or lockout in connection with such dispute which
may be in existence on the date of the reference.
A plain reading of the aforesaid provision clearly indicates that to invoke
the power under the said sub-section for making an order prohibiting a strike,
two conditions must exist: first there must be an industrial dispute in existence
and secondly, such dispute must have been already referred for adjudication.174
A strike or lockout shall be illegal if it is continued in contravention of an
order made under Sub-section (3) of Section 10 or Sub-section 4A of Section 10
A. The reason underlying the prohibition is that industrial disputes should be
tried in a spirit of amity and no party should be in a position to coerce the other
during the pendency of such proceedings. It is for this reason that the appropriate
Government has been empowered by Section 10 (3) of the IDA in case of strike
or lockout declared before the commencement of such proceedings to prohibit
their continuance while the dispute is being adjudicated.175 The discretion given
to the appropriate government to make a prohibition order has to be exercised in
accordance with the object and purposes of the Act. There cannot be any
absolute rule obliging the appropriate government to prohibit continuance of
strike during the pendency of proceedings because in some cases, strike may not
affect production or injure the community in general and, in such cases, the
appropriate government may not, in the exercise of its discretion, prohibit such
continuance.176 However, the exercise of this unfettered discretionary power has
been attacked by opposition political parties, and perhaps not always without
reason.

2. Section 10 (3) or 10A (4A) if Mandatory: Judicial

Approach
The judicial interpretation has raised several problems. (i) Whether courts can
quash the order where the very nature of management action is in dispute? (ii)
Whether Section 10(3) violates Article 14 of the Constitution? (iii) Whether
strike can be prohibited where one or more and not all the demands were
referred for adjudication? (iv) Whether workman should be given any
opportunity of show cause before strike is prohibited?
(a) Nature of the order of prohibition. In Express Newspapers Ltd177,
the Court held that the management could ignore the prohibitory order with
impunity and, while remanding the case to tribunal to determine whether there
was lockout or closure, refused to quash the order. The decision raises at least
two problems. (1) What if the tribunal holds the management conduct to be a
lockout?178 (2) Can the government issue the prohibitory order where the very
nature of management’s action is in dispute?
(b) Can Government issue prohibitory orders where some and not all
demands were referred? Prior to 1978, even different benches of the court in
their decisions in Workmen of Edward Keventers (P) Ltd v. Delhi
Administration179 and Keventers Karmachari Sangh v. Lt. Governor Delhi180
were divided on the issue whether strike could be prohibited where one or more
and not all the demands were referred for adjudication? In the former case, a
division bench of the Delhi High Court took the view that if out of several
demands only some were referred for adjudication, the continuance of strike
could be prohibited only regarding the dispute with respect to the matter which
had been referred to adjudication and prohibition of the continuance of strike
with respect to the matter which had not been referred to adjudication was
unwarranted. On the other hand, in the latter case another division bench of the
same High Court was of the opinion that even if one of the demands connected
with strike had been referred as industrial dispute, the strike would be in
connection with such dispute and the power to prohibit the continuance of strikes
could be exercised. This conflicting opinion among the two benches of the same
High Court provided an opportunity to the Supreme Court in Delhi
Administration v. Workmen of Edward Keventers and Others,181 to express its
opinion on the aforesaid issue. Speaking for the Supreme Court, Justice Krishna
Iyer observed:
Two conditions are necessary to make Section 10 (3) applicable.
There must be an industrial dispute existing and such existing
dispute must have been referred to a board, labour court, tribunal
or national tribunal under this section, namely, Section 10 (1).
Section 10 stands as a self contained code as it were so far as
this subject-matter is concerned… Secondly, such dispute must
have been already referred for adjudication. Then, and then
alone, the power to prohibit in respect of such referred dispute
can be exercised.
But having said so, his Lordship framed an inquiry:
Imagine 20 good grounds of dispute being raised in a charter of
demands by the workmen, and the appropriate government
unilaterally and subjectively deciding against the workmen on
19 of them and referring only one for adjudication. How can this
result in the anomalous situation of the workmen being deprived
of their basic right to go on strike in support of those 19
demands?182
and came to the conclusion:
This would be productive not of industrial peace, which is the
 objective of the Industrial Disputes Act, but counter-productive
of such a purpose. If government feels that it should prohibit a
strike under Section 10 (3), it must give scope for the merits of
such a dispute or demand being gone into by some other
adjudicatory body by making a reference of all those demands
under Section 10 (1) as disputes. In regard to such disputes as
are not referred under Section 10 (1), Section 10 (3) cannot
operate. This stands to reason and justice and a demand which is
suppressed by a prohibitory order and is not allowed to be
ventilated for adjudication before a tribunal will explore into
industrial unrest and run contrary to the policy of industrial
jurisprudence.183
(c) No requirement to give show cause notice. The High Courts are
divided on the issue whether the government is bound to give show cause notice
to the affected parties. Thus, the Kerala High Court in A K Kalippa Chettiar &
Sons v. State of Kerala184 held that power exercised under Section 10 (3) is a
quasi judicial power and an order thereunder cannot be passed without a
reasonable opportunity to all those who would be affected by the order to state
and establish their case. On the other hand, the High Courts of Andhra Pradesh,
Karnataka and Bombay took the opposite view. Thus, in Eenadu Press Workers
Union v. Government of Andhra Pradesh185 and A P Electricals Equipment
Corporation v. Its Staff Union186, the Andhra Pradesh High Court held that it
was not necessary that the government should issue a show cause notice to the
affected parties before issuing the prohibitory order under Section 10 and it
would not violate the principles of natural justice. According to the Court, the
action under Section 10(3) is only preventive one, and if prior opportunities and
hearing is given before invoking Section 10(3), the object of restoring industrial
peace and harmony would be jeopardized and a self defeating one. Similar view
was expressed by the Karnataka High Court in Mysore City Powerloom and
General Workers’ Association v. State of Karnataka. In this case, the petitioner
challenged the validity of the order issued by the government of Karnataka under
Section 10(3) prohibiting the continuance of strikes and lockouts on the ground
that the appropriate government had failed to provide opportunity of being heard
and, therefore, the order was violative of the principles of natural justice. The
Court rejected the contention and observed:
Having regard to the nature and purpose of the power conferred
under subsection (3) of Section 10… by necessary implication
 the application of rules of natural justice stands excluded. The
power conferred under the sub-section is such as would call for
an immediate action, on the part of the government in order to
ensure industrial peace, of prohibiting a lockout or strike, as the
case may be, when the dispute, in connection with which the
lockout or strike was resorted to, had been referred by the
appropriate government for industrial adjudication. To insist on
compliance with the Rule of audi alteram partem before passing
an order under sub-section (3) of Section 10 is plainly contrary
to the common sense of the situation and would make the
provision lifeless and would defeat the purpose of the provision.
The aforesaid view was followed by the Bombay High Court in H B
Khaitan v. State of Maharashtra.187
(d) Scope of discretion in refusing to prohibit the continuance of
strike/lockout. In Cement Works Karmcharis Sangh, Sawai Madhopur v. State
of Rajasthan,188 on receipt of failure report of conciliation officer, the
government referred the dispute in the public utility services to the Industrial
Tribunal for adjudication. The Government, however, refused to take action
under Section 10 (3) to prohibit the continuance of lockout. No reason was stated
as to why lockout be allowed to continue even after the enforcement of
rehabilitation scheme by BIFR. On these facts, the Jaipur bench of the Rajasthan
High Court held that the order under Section 10 (3) was not proper and be set
aside.
(e) Whether Section 10A(4A) is mandatory. Section 10A (4A)
empowers the appropriate government where –
(i) an industrial dispute has been referred to arbitration; and
(ii) it is satisfied that the person making a reference present the majority
of each party to issue a notification within a period of one month with a view to
provide an opportunity to those who are not parties to arbitration agreement but
are concerned in the dispute to present their case before the arbitrator or
arbitrators. Is the aforesaid provision mandatory or directory? One confronts
with the divergence of judicial opinion on this question. The Madras High Court
in Madras Machine Tools Manufacturers v. Special Deputy Commissioner of
Labour189 has held that the provisions of Section 10A (3A) to be mandatory
because:
If Section 10A (3A) is not complied with, we fail to understand
how an award could ever be characterized as valid. There is an
 important legal consequence if Section 10A (3A) is not
complied with. No notification under Section 10A (4A) can be
issued prohibiting the continuance of that strike or lockout,190
which not only would jeopardize the peace and harmony but
divert the government from issuing a notification under Section
10(A) (4A).
However, this aforesaid decision runs contrary to the views expressed by
the Madhya Pradesh High Court in Singh (K P) v. Gokhale (S K).191 Here, the
Court has held that the procedural requirement in Section 10A (3A) is directory
and is dependent on the satisfaction of the appropriate government.

IX. ILLEGAL STRIKES AND LOCKOUTS

Section 24 of the Industrial Disputes Act, 1947 defines ‘illegal strikes and
lockouts’. Subsection (1) provides that a strike or a lockout shall be illegal if –
(i) it is commenced or declared in contravention of Section 22 or Section 23:
or
(ii) it is continued in contravention of an order made under Section 10 (3) or
Section 10A (4A).
Further, Sub-section (2) says that where a strike or lockout in pursuance
of an industrial disputes has already commenced and is in existence at the time
of the reference of the dispute to a board, an arbitrator, labour court, tribunal or
national tribunal, the continuance of such strike or lockout ‘shall not be deemed
to be illegal’, if:
(i) such strike or lockout was not, at its commencement in contravention of
the provision of the Industrial Disputes Act, 1947.
(ii) the continuance of such strike or lockout was not prohibited under sub-
section (3) of Section 10 or sub-section 4A of Section 10A of the Act.
Under Sub-section (3) of Section 24, a lockout is not illegal if it is
declared in consequence of an illegal strike. Similarly, a strike is not illegal if
declared in consequence of an illegal lockout.

X. SANCTIONS AND CRIMINAL PROCEEDINGS

A. Sanction
1. Penalty for Illegal Strikes and Lockouts. Section 26 (1) prescribes
punishment to a workman for commencing, continuing or otherwise acting in
furtherance of a strike which is ‘illegal’ under Section 24 of the IDA. The
penalty in case of participation in an illegal strike may extend with imprisonment
for a term which may extend to one month, or with a fine which may extend
upto fifty rupees, or with both. Thus, in order to convict a person under the Act,
it is necessary to prove that:
(i) the accused is a ‘workman’;
(ii) the accused commenced, continued or otherwise acted in furtherance of a
strike; and
(iii) the accused had the knowledge that the strike in question was illegal.
Likewise, Section 26(2) prescribes punishment to employers for
commencing, continuing or otherwise acting in furtherance of a lockout which is
illegal under Section 24. The employer is punishable for imprisonment for a
term which may extend upto one month, or with fine upto ₹1,000 of with both
for commencing, continuing or otherwise acting in furtherance of illegal lockout.
A perusal of the aforesaid provision reveals that (i) the correlation
between imprisonment and fine is missing. Whereas Section 26 (1) prescribes
the ratio of one month imprisonment and/or ₹50 fine, Section 26 (2) provides
one month imprisonment and/or ₹1,000; (ii) the penalties under the section are
different from penalties mentioned in Section 31 for contravention of Section
33192; and (iii) the duties imposed by Section 26 are statutory duties owed by the
workmen or employers to the public, which could solely be enforced by criminal
procedure.
2. Penalty for Instigating or Inciting Illegal Strikes or Lockouts.
Section 27, unlike Section 26 (which is limited to workmen and employers) is
wide enough to cover all persons. Section 27 provides for imprisonment for a
term which may extend to 6 months, or with a fine which may extend to ₹1,000,
or with both for ‘instigation and incitement of any strike or lockout which is
illegal under the IDA’. In order to bring the activities of a person within the
mischief of Section 27, two conditions must be satisfied: (i) the particular strike
complained of is itself illegal, and (ii) the strike for which he incited the workers
to take part in is to his knowledge illegal.193
The vires of this provisions was challenged in Raja Kulkarni and Others
v. State of Bombay.194 The Supreme Court upheld the validity of the Section
and observed that the Industrial Disputes (Appellate Tribunal) Act, 1950
imposed no restriction either upon the freedom of speech and expression of the
textile workers or their right to form associations or unions. Hence Section 27 of
the Act was not void as being opposed to the fundamental rights under Article
19(1) (a) and (c) of the Constitution.
Deshpande v. Ferro Alloy Corporation,195 the management and
workmen (represented by the office-bearers of the union) entered into a
settlement on 30 September 1959. Such a settlement was arrived at in the course
of conciliation proceedings. Two persons (non-workmen and officer of trade
union) who were fully aware of the settlement incited the workmen to go on
strike in breach of settlement with effect from 24 September to 2 October 1960.
A prosecution was launched against these two officers (non-workmen) of trade
unions. The magistrate convicted the accused under Section 27 of IDA. The
decision was upheld by the session judge. Then the concerned accused filed a
petition before the Andhra Pradesh High Court. Justice Kumarayya observed:
In fact the workers have a fundamental right to launch a strike,
and, any instigation or incitement to stage a strike would not
therefore be illegal, unless the particular strike complained of
itself is illegal under the Act. The person instigating would be
guilty only when it is established that the strike which he incited
the workers to take part in is to his knowledge illegal.196
The Court accordingly upheld the order of conviction of lower court and
held that non-workmen inciting workmen bound by settlement to go on illegal
strike were liable under Section 27.
3. Penalty for Giving Financial Aid to Illegal Strikes or Lockouts.
Whereas Section 25 prohibits financial aid to illegal strikes and lockouts, Section
28 provides penalty therefor. The latter section reads:
(Any) person who knowingly expends or applies any money in
direct furtherance or support of any illegal strike or lockout shall
be punishable with imprisonment for a term which may extend
to six months, or with fine which may extend to one thousand
rupees or with both.
It is clear from the aforesaid provisions that the person spending or
applying money must know that the strike or lockout is illegal. Thus, mens rea is
a necessary element of an offence under this Section. The provisions of this
Section are attracted if the strike or lockout is held to be illegal and not
otherwise.

B. Criminal Proceedings
1. Permission of the Government. (a) Legislative response. Sub-section (1) of
Section 34 of the IDA provides:
No court shall take cognizance of any offence punishable under
this Act or of the abetment of any such offence save on
complaint made by or under the authority of the appropriate
government.
It follows that Section 34 (1) empowers the appropriate government (i) to
make a complaint or (ii) to authorize someone else to file a complaint. The
object of the Section is to prevent a frivolous, vexatious or otherwise patently
untenable complaint being filed.197
(b) Judicial Response. The seed of examining whether sanctioning
authority knew the facts alleged to constitute the offence was shown in Gokul
Chand Dwarka Das Morarka v. King.198 Here the sanction given by the
government mentioned the name of person to be prosecuted, and the clause of
the order which was alleged to have contravened. The sanction, however, did not
specify the facts alleged to constitute such contravention. On these facts their
Lordships of the Privy Council observed:
Under … (Clause 23 of Cotton Cloth and Yarn (Control) Order,
… sanction has to be given to a prosecution for the
contravention of any of the provisions of the order … he must be
charged with the commission of certain acts which constitute a
breach, and it is to that prosecution that is for having done acts
which constitute a breach of the order—that the sanction is
required.
The Privy Council accordingly held that there was no extraneous
evidence to show that the sanctioning authority knew the facts alleged to
constitute a breach of the order, and hence the sanction was improper and
invalid.
In Feroz Din v. State of West Bengal199, the above view received the
approval of Supreme Court. In the instant case, the authority given by the
government did not specify the facts constituting the offence. There was,
however, ample evidence which stated that all facts connected with the offence
had been placed before the sanctioning authority and the sanction had been
granted after due consideration. It was consented by workmen that the authority
given was bad as it had been granted without reference to the fact constituting
the offence, and hence invalid. The Supreme Court, however, rejected the
contention relying on Gokul Chand Dwarka Das case.200
In Raj Kumar Gupta v. Lt Governor, Delhi,201 the three-judge bench of
the Supreme Court interpreted the expression 'or under the authority of' under
Section 34 to mean that ‘the appropriate government may authorize someone
other than itself, even a non-government servant to file a complaint under
Section 34.’ Earlier the court observed that under Section 34 ‘there is no
limitation is regard to the party to whom authorization may be given. It is the
workman, the trade union and the employer who are most concerned with
offences under the Act and neither the terms of Section 34 nor public policy
require that they should be excluded from making such complaint.’
2. Court of Competent Jurisdiction. Section 34 (2) of the IDA provides
that no court inferior to that of a metropolitan magistrate or a judicial magistrate
of the first class is competent to try an offence punishable under the Act.

C. Protection to Persons Refusing to take Part in an Illegal

Strike and Lockout
The Industrial Disputes Act202 protects persons, refusing to take part or to
continue to take part in an illegal strike or lockout from (i) expulsion from any
trade union or society or (ii) any fine or any penalty, or (iii) deprivation of any
right or benefit to which he or his legal representatives would otherwise be
entitled or from (iv) liability to be placed in any respect, either directly or
indirectly under the disability or at any disadvantage as compared with other
members of union or society. The immunity under this section is to prevail
notwithstanding anything contrary in the rules of the trade union or society.

XI. JUSTIFICATION OF STRIKE AND LOCKOUT

A. Justified Strike and Lockout

In collective bargaining, the question of employment of striking employees and
wages for the strike or lockout period can form the subject of negotiation in the
settlement of a dispute. In adjudication system that possibility being closed,
refusal to award wages for strike or lockout period might lead to further unrest.
To avoid this unhappy situation and at the same time to protect the interest of
working class and industry, tribunals and courts have evolved the concept of
‘justified’ and ‘unjustified’ strike and lockout. In a series of decisions the courts
and tribunals have provided guidelines for determining whether a strike or
lockout is justified or not.
1. Justified Strike. A strike would be held to be justified, when it was
resorted to: (i) after exhausting the remedies provided in the IDA and these
being proved futile203, (ii) against an unfair labour practice or victimization on
the part of the management204, (iii) to press reasonable demands of workmen in
a peaceful manner205, (iv) due to provocation of the other party206, (v) as a
measure of protest against retrenchment of workmen207, (vi) as a measure of
protest against suspension of fellow workmen208, (vii) against discharge of union
officials209, (viii) against refusal to recognize the union210, (ix) against
employer’s refusal to pay advance wages211, (x) on refusal to give advance for
festival holidays212 or against government’s refusal to refer the dispute for
adjudication.213
2. Justified Lockout. A lockout is held to be justified if: (i) it was neither
actuated nor occasioned by any unfair labour practice on the part of employer214,
(ii) it was adopted due to security measure215; (iii) it was necessitated by the
conduct of the workmen216, (iv) it was in consequence of a strike which was
unreasonable217, (v) it was declared after a tool down strike was staged.218

B. Unjustified Strike and Lockout

1. Nature and Concept. The concept of unjustified strike seems to be based
upon the principle that in their dealings with the management, the workers
should be considerate, loyal and disciplined. The workers realize that the
capacity to pay is dependent upon the economic situation of the industry. In any
case, they should adopt peaceful and orderly method for venting their
grievances. Similarly, the concept of the unjustified lockout is based on the
principle that it should not be declared in haste or by way of reprisal or
victimization, etc.
In short, strike and lockout should be declared as a last resort after all
available remedies, formal or informal, have been exhausted. When a strike or
lockout situation is brought before the tribunal or court, there is a tendency on
the part of both workers and management to blame each other. While in a
unjustified strike most of the blame for the strike rests with the workers, in
unjustified lockout the blame for lockout rests with employers.
2. Factual Analysis. Like justified strike or lockout, an unjustified strike
or lockout is a varying concept. No attempt has been made to give an exhaustive
description or the situation, which would give rise to an ‘unjustified’ strike or
lockout.
(a) Unjustified strike. A strike is held to be ‘unjustified’ if it was resorted
to: (i) to press the demands of workers which according to community standards
are unreasonably high,219 (ii) immediately on failure of conciliation proceedings
without awaiting for reference,220 (iii) without exhausting the remedies provided
under the IDA,221 (iv) as a measure of protest against assault of co-workers by
the officer of the company, even after the assurance given by the management to
inquire into the incidents of assault222 or any other grievance of the workmen,
(v) even when the management was prepared from the beginning to settle the
dispute through the conciliation, adjudication or arbitration,223 (vi) force
arbitration,224 (vii) as a measure of protest against the transfer of the President of
the Union,225 (viii) when the workers did not co-operate with the authorities for
peaceful solution,226 (ix) when the staff association was hasty,227 (x) by using
violence or acts of sabotage.228
(b) Unjustified lockout. A lockout was held to be unjustified if: it was
with a view to oblige workmen to accept the lower wages229 or the
management’s refusal to allow workers to enter the factory230 or it was declared
on account of an unfair labour practice on the part of the management231 or it
was uninevitable and unjustified.232

C. Determination of ‘Justified’ or ‘Unjustified’ Strike and

Lockout
1. Reasonableness of Demand. Justified or unjustified strike or lockout, we
have already seen, determines whether workmen are entitled to wages for the
period of strike or lockout. The question, therefore, arises; how to ascertain the
justification or otherwise of strike, or lockout? First reading of Associated
Cement Co. Ltd v. Their Workmen233 leaves an impression that reasonableness
of demand is determinative. Observed the industrial tribunal:
I am of opinion (that) it was a legitimate and proper demand,
that is to say, as a demand it was proper and as such required
due consideration… [The] demand was one which the
management should have given due consideration and in respect
of which the workmen were left without remedy, and held that
workmen had reasonable and justifiable cause for strike and
hence workmen were entitled to wages for such a period. Even
independently of this decision, other decisions of the Tribunals
 and Courts have also adopted the test of reasonableness of
demand.
2. Bonafides of Strike or Lockout. Reasonableness of demand is not the
only relevant factor to arrive at a conclusion whether a strike or lockout is
justified or not. The bona fide of the strike or lockout should be the most
important factor for deciding the issue. It is necessary, therefore, to describe the
circumstances when a strike or lockout can be deemed to be bona fide. Thus,
when a strike is resorted to without exhausting the remedies available to
workmen under the IDA or without waiting for the result of the conciliation
officer’s report sent to the government or if it is not inevitable or if the strike is
continued even after the assurance given by the management or the preparedness
of the management to settle the dispute by direct negotiations or adjudication or
when it is resorted to frequently and frivolously, predominant motive being to
ruin the industry, we may say it is not a bona fade strike.
The full bench of the labour appellate tribunal in Ram Krishna Iron
Foundry v. Their Workers234 has held that a strike is normally a weapon to
lodge a protest and as such it is unobjectionable unless it is used for a purpose
other than of giving an expression of the grievances of the workers. A strike
would normally be deemed to be unjustified unless the reasons for it are
absolutely perverse and unsustainable.
Similarly, a lockout may be deemed to be bona fide, if it is adopted as a
security measure to protect the personnel and property, or if it is in consequence
of a strike which is unreasonable or if it is launched after remedies provided in
the IDA proved futile, or when it is declared if the workmen do not show their
willingness to settle the dispute through negotiation. However, it might be
mentioned that the illustrations given are not exhaustive but illustrative. It is
hoped that it would lessen the uncertainties connected with classification of
strike or lockout.
3. Can an Illegal Strike be Justified. Even though the legislature has not
provided for any classification of illegal strike into justified and unjustified
strike, the judiciary has examined this question while dealing with the cases of
dismissal of strikers and wages for the period of strike/lockout.
The question came up for interpretation before the Supreme Court for the
first time in Indian General Navigation of Railway Co. Ltd v. Their
Workmen.235 The Supreme Court ruled that a strike which is illegal cannot be
characterized as ‘perfectly justified’ and these two conclusions cannot in law co-
exist. The Court reasoned;
The law has made a distinction between a strike which is illegal and one
which is not, but it has not made any distinction between an illegal strike which
may be said to be justifiable and one which is not justifiable.236
The Court accordingly depricated the tendency to condone illegal act in
the statute.
An attempt to re-open the question was negatived in Model Mills v.
Dharam Das237 wherein the Supreme Court held that even though the reasons
for going on strike may be completely justified, yet the illegal strike would be
totally unjustified. Likewise, when a strike is illegal, the question whether it is
provoked or not is immaterial.238
The majority decision in Gujarat Steel Tubes v. Gujarat Steel Tubes
Mazdoor Sabha239, however, shook the foundation laid in Indian General
Navigation and ruled that ‘mere illegality of strike does not per se spell
unjustifiability.’ It visualized that between perfectly justified and unjustified the
neighbourhood is distinct.’ In support of the aforesaid observation, the Court
heavily relied upon its earlier decision Crompton Greaves Ltd v. Their
Workmen.240 But it may be pointed out that the Supreme Court misread the
decision of Crompton Greaves Ltd case when it said:
even if strike is illegal, it cannot be castigated as unjustified,
unless the reasons for it are entirely perverse or unreasonable.
Indeed, what it said was:
… in order to entitle the workmen to wages for the period of
strike, the strike should be legal as well as justified. A strike is
legal if it does not violate any provision of the statute. Again, a
strike cannot be said to be unjustified unless the reasons for it
are entirely perverse or unreasonable.241 A survey of the
aforesaid decisions, therefore leads us to the conclusion that the
observation of majority has left the issue whether illegal strike
per se is unjustified wide open and introduces uncertainty.

XII DISMISSAL OF STRIKERS

The problems of dismissal of strikers has assumed great significance in India
since the adoption of adjudication system. In the absence of any specific
statutory provisions in the industrial legislation, the Supreme Court has faced the
problems relating to dismissal of strikers. In deciding the questions of legality of
management’s action to dismiss strikers, the courts have not been solely
governed by the legality or illegality of the strike. According to the Court,
neither illegal strike authorizes the management to terminate the services of
strikers not the legal strike disallows the management to terminate their service.
In such a situation, the Supreme Court has made a significant contribution to
industrial jurisprudence by evolving a multifaced and highly complex concept of
‘justified’ and ‘unjustified’ strike to decide the issue. The Court laid down the
following grounds for intervention by tribunals for the purpose of giving relief to
the workers against wrongful dismissal:
(i) when there is want of good faith
(ii) when there is victimization or unfair labour practice
(iii) when the management has been guilty of a basic error or violation of
principles of natural justice, and
(iv) when on the materials, the finding is completely baseless or perverse242
Where the order terminating services of workmen was held illegal, the
courts have generally directed reinstatement of workmen with or without wages.
The aforesaid norms have been formulated by the Supreme Court on at
least three important conditions. First, the industrial worker must be placed in
such a position that security of his service may not depend upon the caprice or
arbitrary will of the employer. Second, the industrial peace should be
maintained. Lastly, the industry should be efficiently managed.243
Tribunals and courts have ruled that workers participating in a legal and
justified strike cannot be dismissed because if this is permitted, the statutory
right of strike would become ineffective even in a reasonable and bona fide
situation. The court also ruled that workers participating in a legal and justified
strike cannot be denied reinstatement simply on the ground that their places were
filled by other persons. While laying down these rules, the court was cautious in
maintaining industrial discipline when it held that such a rule was applicable
only to peaceful strikers.
The legal and unjustified strike raises more complex issues. It has been
recognized by the Court that merely because the strike has been held to be legal,
it does not foreclose the possibility of dismissal of strikers. This line of thinking
has been adopted in view of the fact that sometimes the conduct of strikers has
been objectionable, or they have been guilty of serious misconduct or intentional
damage to the property of concern or they have inflicted personal injuries to the
employees of the concern. It is also found that strike is sometimes resorted to in
haste. In the aforesaid situation, the courts have evolved the following rule to
regulate management’s power to dismiss strikers in a legal and unjustified strike:
 1. A workman cannot be dismissed for joining a strike which is not illegal
but which is simply unjustified;
2. The employer, however, will have the right to dismiss a workman joining
an unjustified strike:
(a) when the strike itself was not bona fide or
(b) when it was launched on other extraneous considerations and not
solely with a view to better the conditions of labour.244
It has been settled in view of the Supreme Court decision in National
Transport General Co. v. Workman245 and Punjab National Bank v. Their
Employees246 that workers wrongfully dismissed for participating in a legal but
unjustified strike are normally entitled to reinstatement notwithstanding the fact
that their places were filled by other persons during the strike. Further, workers
are entitled to reinstatement if they participated in a strike with was occasioned
on account of any unfair labour practice or victimization on the part of the
employer. But it is exceedingly doubtful in view of the decision in Spencer &
Co. Ltd v. Their Workmen,247 Swadeshmirtran & Co. Ltd v. Their
Workmen248 and Bangalore Silk Throwing Factory v. Their Workmen249 that
workmen participating in a legal and unjustified strike (who were substituted by
other persons) provided unfair labour practice is absent, can claim reinstatement.
It is equally doubtful if the workmen can claim reinstatement for participating in
an illegal strike for non-observance of the provisions of certified standing orders.
It has also been well-established that mere participation in an illegal strike
would not justify the dismissal of strikers.
The ruling of the Supreme Court in Model Mills v. Dharam Das250 and I
M H Press, Delhi v. Addl. Tribunal251 suggests that the management can
dismiss the strikers participating in an illegal strike according to the rules of
standing orders of the company. The Court, however, pointed out that even in
this situation, the rules of natural justice must be followed. This view raises two
significant questions: First, is it desirable in the interest of industry to allow
wholesale dismissal or strikers? Second, whether the rule equally applies to
peaceful strikers as against violent strikers? Indeed, the view taken by the Court
in the above case is not in conformity with its decision in Punjab National
Bank. v. Their Workmen252 and Indian General Navigation v. Their
Workmen.253 The end of justice would be served if a lesser punishment is given
to strikers, participating in an illegal strike where their conduct has been
peaceful.
The Supreme Court in Burn & Co. Ltd v. Their Workmen254 has
deprecated the tendency of the management to discriminate among strikers while
terminating their services in the absence of clear distinction. It has to be proved
in each case that certain strikers who have been singled out for disciplinary
action can be treated differently on rational and reasonable consideration.
The Supreme Court255 has adopted a pragamatic approach in dealing with
the question of management’s power to dismiss peaceful strikers even though
they happen to participate in an illegal strike. It has distinguished between
peaceful and violent strikers. It ruled that the punishment of dismissal may be
imposed upon violent strikers. But, where the strikers remained peaceful, such
extreme punishment of dismissal would not be justified. Further, it would not be
in the interest of industry and workers themselves.
The process of distinguishing one case from the other is best depicted in
Bata Shoe Co. v. D N Ganguli256 and I M H Press v. Addl. Tribunal.257 Here
the Supreme Court observed that the peaceful strikers should not be subjected to
extreme penalty of dismissal as it would lead to mass dismissal of workers.
However, the Court at the same time ruled that in the process of distinguishing
the case, the context in which judgements were given should always be kept in
mind.
The Supreme Court258 has consistently held that the order of dismissal of
strikers by the management in violation of Section 33 is illegal. In such situation
they are entitled to reinstatement.
The Supreme Court259 has given due importance to the observance of the
provisions of Standing Orders of the Company. If the dismissal was found to be
in accordance with the principles of natural justice the Court refused to interfere
in the management’s order of dismissal of strikers. The only exception to this
rule has been the case in which a striker is dismissed for participating in a legal
and justified strike.
The Supreme Court260 has consistently held that one of the functions of
the industrial tribunals is to scrutinize the action taken by the management in
dismissing the strikers in order to satisfy itself that proper domestic inquiry has
been held and the principles of natural justice, have been complied with. Thus,
Lord Hewart verdict that ‘justice should not only be done’ is regarded to a
considerable extent in matters of dismissal of strikers.
It has now been settled through the decisions of Supreme Court261 that
normal relief in cases of wrongful dismissal is reinstatement. But in so ordering
the tribunal is expected to be inspired by a sense of foul play towards the
employees on the one hand and considerations of discipline on the other. The
relief of reinstatement is granted on the basis of social justice.
 XIII. WAGES FOR STRIKE AND LOCKOUT PERIOD
There is no specific provision either in the Industrial Disputes Act, 1947 or in
other labour legislation for determining the question of wages for the period of
strike or lockout. In the absence of such a provision, the judiciary has evolved
certain norms to fill this gap.
In Statesman Ltd v. Their Workmen,262 certain workmen went on an
illegal strike. Thereupon the management declared a lockout. The question arose
whether the workmen are entitled to wages for the period of illegal strike or
illegal lockout? The Supreme Court observed:
If the strike is illegal, wages during the period will ordinarily be
negatived unless considerate circumstances constrain a different
course. Likewise, if the lockout is illegal, full wages for the
closure period have to be ‘worked out’, if one may use the
expression. But in between lies a grey area of twilit law. Strictly
speaking, the whole field is left to the judicious discretion of the
tribunal. Where the strike is illegal and the sequel of a lockout
legal, we have to view the whole course of developments and
not stop with examining the initial legitimacy. If one side or
other behaved unreasonably or the overall interests of good
industrial relations warrant the tribunal making such directions
regarding strike period wages as will meet with justice, fair play
and pragmatic wisdom, there is no error in doing so. His power
is flexible.
From the aforesaid observation, it is evident that irrespective of the
illegality of the strike, the tribunal has a discretion to pass such order regarding
wages during the strike period as ‘justice, fair play and pragmatic wisdom’
dictate. This decision was given by the bench of three judges.
In the latter decision in Crompton Greaves Ltd v. Workmen263, a bench
of two judges of the Supreme Court without referring to its judgement in
Statesman Ltd supra has observed that in order to enable the workmen to wages
for the period of the strike, the strike should be legal as well as justified. Justice
Krishna Iyer was a party to both the decisions. Yet no attempt has been made in
the latter case to explain the earlier observations.

A. Effect of Illegality of Lockout on Payment of Wages

Courts264 have held that, if the lockout is illegal, full wages for the period of
lockout shall have to be paid to workers.

B. Effect of Justification of Strike on Wages

No doubt strike is a legitimate weapon in the armoury of working class but it
should be sparingly used depending upon the exigencies of the case, particularly
in the conditions prevailing in India. With a view to discouraging the misuse of
the weapon of strike, the tribunal and courts have applied the concept of
‘justified’ and ‘unjustified’ strike in cases where strike is legal. They held that in
case of unjustified strike, workmen are not entitled to wages.
1. Strike Declared Against Unfair Labour Practice or Victimization on the
Part of Management. The courts and tribunals while deciding the
question of wages for the period of strike have generally taken into
account the fact whether such strike was occasioned due to unfair labour
practice on the part of employer. In such cases, the workmen have been
allowed wages for the period of strike.
2. Strike Declared to Press Reasonable Demands of Workmen in a
Peaceful Manner. The general policy of the tribunals and courts265 while
dealing with the question of strike has been to take into account the right
of workers to resort to strike for redressal of their genuine grievances, in
tackling such questions tribunals emphasized that strike is justified if it is
resorted to in a peaceful manner. Where these conditions are satisfied
tribunals and courts have awarded wages for the period of strike.
3. Strike due to Provocation of the other Party. Another consideration taken
into account by the tribunals and courts266 in deciding the question of
payment of wages for the strike period is whether the strike was
provoked by the action of the other party. In such a situation, the
tribunals and courts granted wages for strike period if the strike was
provoked as a consequence of unreasonable stand adopted by the
management in relation to workers’ demand, provided of course the
strike was not illegal.
4. Strike as a Measure of Protest against Retrenchment of Workmen.
Tribunals and courts267 have recognized that strike is a weapon to
register a protest including a protest against retrenchment and it cannot be
said to be unjustified unless the reasons for it are absolutely perverse of
unreasonable.
C. Effect of Legal but Unjustified Strike on Wages
1. Strike to Press the Demands of Workers Which According to Community
Standards are Unreasonably High. One of the important considerations
which has been taken into account by tribunals and courts in reaching the
conclusion that a strike is ‘unjustified’ is nature of demands made by the
workers. If the demands of the workers are unreasonably high or
frivolous with the dominant nature to ruin the industrial establishment,
the strike is held to be unjustified and the workers have been refused
wages for the strike period.268
2. Strike Resorted Immediately after the Failure of Conciliation
Proceedings without Awaiting for Reference. In order to bring about
settlement of disputes, the conciliation officer is enjoined under the IDA
(i) to expeditiously investigate the dispute and all matter affecting the
merits and the right settlement thereof, and (ii) to do all such things as he
thinks fit for the purpose of inducing the parties to come to a fair and
amicable settlement of the dispute. With a view to give time to the
government to from an opinion for making a reference, the Courts have
held that strike resorted to immediately after the failure of conciliation
proceeding without awaiting for reference to be made to the tribunal is
unjustified, and accordingly denied wages for strike period.
In Chandramalai Estate v. Its Workmen269, the union of workmen of the
estate raised certain demands. The conciliation proceedings in respect of these
items of the disputes ended in failure on 30 November 1955. Without awaiting
further and without asking the State Government to make a reference under
Section 10 of the IDA, the workmen went on strike from 9 December 1955, and
the strike was withdrawn on 5 January 1956, the day when the dispute was
referred to the industrial tribunal for adjudication. One of the questions for
determination before the industrial tribunal was whether the strikers were
entitled to wage? The industrial tribunal granted 50 per cent of the total
emoluments for the strike period. Aggrieved by the order of the tribunal, the
management filed an appeal before the Supreme Court. Speaking for the Court,
Justice Das observed:
In our opinion the workmen might well have waited for some
time after conciliation efforts failed before starting a strike and
in the meantime to have asked the government to make the
reference. They did not wait at all. The conciliation efforts failed
on 30 November 1955 and on the very next day the union made
 its decision on strike and sent the notice of the intended strike
from 9 December 1955, and on 9 December 1955 the workmen
actually struck work. The government appears to have acted
quickly and referred the dispute on 3 January 1956. It was after
this that the strike was called off. We are unable to see how the
strike in such circumstances could be held to be justified.270
The Court accordingly held that workmen were not entitled to wages for
such period.
In Syndicate Bank v. Umesh Nayak271 it was held that if a strike is legal
but unjustified, it does not save such workers from losing their salary for strike
period. It only saves them from disciplinary action.
3. Strike Declared without Exhausting the Remedies Provided under
the Act. It has been observed elsewhere that strike is a recognized weapon of the
workmen to be resorted to by them for asserting their bargaining power for
backing up their collective demands upon an adamant employer. But in order to
avoid the misuse of the weapon, the Court272 cautioned that it should be used as
a last resort when all other avenues for settlement of industrial dispute, as
provided under the IDA have beer exhausted and proved futile.
4. Strike Resorted to in Haste. The tribunals and courts273 have
deprecated the tendency of workers to strike in haste.
5. Use of Violence during Strike. It has now been settled that the use of
force, or violence or act of sabotage resorted to by the workmen would disentitle
them for wages. Thus, in Crompton Greaves Ltd v. Its Workmen, the Supreme
Court ruled, that the use of force or violence or acts of sabotage resorted to by
the workmen during a strike disentitle them to wages for the strike period.274

D. Effect of Legal but Unjustified Lockout on Payment of

Wages
Tribunals and courts have generally awarded wages to workmen when a lockout
was legal but unjustified. In Bharat Barrel and Drum Mfg Co. v. Their
Workmen275, certain workmen turned up for work at the appointed hour on a
certain date. Finding the doors locked, they waited half an hour and then left.
Thereupon the management locked its door and demanded explanation from
workmen for not attending the work on concerned day. The tribunal held that
workmen were entitled to wages for the lockout period.
The labour appellate tribunal in Italkholic Tea Estate v. Their
Workmen276 held that workmen cannot be denied wages on the ground of their
failure to report for work every day during the lockout period because lockout
implies that the employer would not allow the workmen concerned in the dispute
to work and the act of the employer, in declaring lockout amounted to an
anticipatory breach of contract on his part under any obligation to present
themselves for work.277

E. Problem of Unjustified Lockout following Unjustified

Strike and Vice Versa
Tribunals and courts are often faced with the situation where unjustified strike
was followed by unjustified lockout and vice versa. Faced with this situation, the
Supreme Court in India Marine Service Pvt Ltd v. Their Workmen278 evolved
the doctrine of ‘apportionment of blame’. To quote the Supreme Court:
Where, however, a strike is unjustified and is followed by a lockout
which becomes unjustified, a case of apportionment of blame arises.
The aforesaid view was followed in Northern Dooars Tea Company v.
Workmen of Dem Dima Tea Estate.279

F. Deduction of Full Day’s Wages for Absence during

Crucial Portion of the Day
The Supreme Court in Bank of India v. T S Kelawala and S U Motors (P) Ltd
v. Their Workmen280 has settled the controversy relating to the power of the
management to deduct for the portion of the day. Prior to the Supreme Court
decision in Bank of India case, the High Courts were divided on the issue
whether the employer can deduct full day’s wages for absence for a portion of
the day. Thus, the Calcutta,281 Kerala,282 Punjab and Haryana283 and Madras284
High Courts took the view that it is not only permissible for the employer to
deduct wages for the hours of the day for which the employees are absent from
duty but in certain cases it is also permissible to deduct wages for the whole day
even if the absence is for few hours. On the other hand, the single judge of the
Madras High Court in V Ganesan v. State of India285 and the division bench of
the same High Court in State Bank of India v. Ganesan286 took the opposite
view. They held that ‘it is not possible to clothe the employer with the power or
a right to deduct or withhold the emoluments of the employee even for the hours
during which he worked.’ Be that as it may, the Supreme Court in the instant
case ruled that it is permissible to deduct full day’s wages for absence during
crucial portion of the day. Thus, in this process it emphasized the need for
maintaining uninterrupted production, efficiency and discipline in industry and
thereby demonstrate the vital role of judicial process in building the nation.

G. Other Problems
The Calcutta High Court in Amalendu Gupta v. Life Insurance Corporation of
India287 found itself faced with two problems, namely, (i) whether justifiability
of strike is a pure question of fact which can be decided in a writ petition? and
(ii) whether the Court can mandate the Life Insurance Corporation (L I C) to pay
the striking employees their wages for the period of strike. The Calcutta High
Court answered both the questions in the affirmative. On the first issue the Court
held that it may decide the question whether the strike was justified or not. As
regards the second issue, the Court observed:
If I refuse to exercise my powers under Art. 226 of the Constitution and to
deny the reliefs prayed for in this petition, the employees of the respondent No.
1, who have been affected by the impugned circulars and who I understand, will
number about 45,000 will have to fall back on other remedies which may be
available to them under the law. When the respondent No. 1 and the Central
Government took recourse to various measures in order to prevent the
employees from getting the bonus in terms of the settlement, it is unlikely that
the workmen will get a quick or efficacious relief by taking recourse to the
remedies available to them under the Act. In my view, the workmen have
already been driven from pillar to post and in spite of repeated orders of the
highest Court of the land, the respondent No. 1 did not pay them the bonus to
which they were legally entitled, till they resorted to the strike. It must also he
borne in mind that the workmen immediately called off the strike on 15 April 81
on receiving an assurance from the respondent No. 1 that the bonus will be
paid.288
Swastic Textile Engineerings P. Ltd v. Rajan Singh Sant Singh289 raises
three issues namely, (i) whether deduction of wages after withdrawal of illegal
strike amounts to a penalty? (ii) whether deduction of wages after withdrawal of
strike amounts to change in conditions of service? (iii) whether insistence on
workmen to execute a written undertaking not to go on strike in future and seek
pardon is valid? In this case certain workmen went on an alleged illegal strike.
After termination of strike, the management asked them to give an undertaking
that they would not go on such strike. However, the concerned workmen refused
to furnish such an undertaking, and therefore they were not allowed to resume
their duties. On failure of the conciliation proceedings, the aggrieved workmen
filed a complaint under Section 34A. Further, the management deducted their
wages for the strike period. The tribunal held that the strike was not illegal. It
accordingly held that each of the concerned workman was entitled to wages for
the period of strike. The tribunal further held that it was neither fair nor legal on
the part of the management to insist that its workmen should execute an
unconditional apology and an execution of such writing amounted to change in
the conditions of service. Against this order, the management filed a petition
under Article 227 of the Constitution challenging the order of the tribunal in
regard to wages for the period of strike. The Gujarat High Court held that (i)
insistence upon the execution of the writing amounted to a change in the
conditions of service of workmen because they were not bound to execute such
writing; (ii) deduction of wages amounted to a change in the conditions of
service because employer had no right to deduct wages; and (iii) withholding of
wages amounted to imposition of penalty under the Standing Orders.

1 Section 22 (1).
2 Shamnagar Jute Factory v. Their Workmen, (1950) LLJ 235 (IT).
3 D N Banerjee v. P R Mukherjee, AIR 1953 SC 58.
4 See for instance Buckingham and Carnatic Mills v. Their Workmen, (1951) 1 LLJ
Suppl. 1, reversed on appeal. (1951) 2 LLJ 314 but restored by Supreme Court, (1953) 1
LLJ (SC); Standard Vacuum v. Gunaseelan Oil Co., (1954) 2 LLJ 656.
5 Shamnagar Jute Factory v. Their Workmen, (1950) LLJ 235 (IT).
6 Standard Vacuum Oil Co. v. Gunaseelan (M G), (1954) 2 LLJ 656.
7 Id. at 661.
8 Buckingham and Carnatic Mills Ltd v. Their Workmen, (1953) 1 LLJ 181 (SC).
9 Id at 183.
10 Ram Sarup v. Rex, AIR 1949 All. 218.
11 Delta Jute Mills Ltd v. Their Workmen, (1950) 2 LLJ 1054.
12 Ibid.
13 Sirka Colliery v. South Karanpura Coal Mines Workers Union, (1951) 2 LJ 52 (LAT).
The strike was by way of protest against the arrests made by police on account of clash
and assaults occurring between members of two rival unions.
14 Buckingham and Carnatic Mills Ltd v. Their Workers, (1951) 1 LLJ Supp. 1 (IT) on
appeal (1953) 1 LLJ 181.
15 Lakshmi Devi Sugar Mills v. Ram Sarup, (1957) 1 LLJ 17(SC).
16 Shree Meenakshi Mills v. Their Workmen, (1951), 1 LLJ 579, confirmed on appeal; J K
Cotton Mills Spg. and Wev. Mills Ltd v. Their Workmen, (1956) 2 LLJ 278.
17 Diamond Machinery Mfg. Works v. Their Workers, (1952) 1 LLJ 137 is perhaps the only
case of its kind. The management asked 14 of its moulders to do certain specified work.
The moulders, however, did not do the entire work despite the fact that they had been
specifically informed of the urgency of the work. They also did not report for duty after
the lunch break. Next day, the manager issued notices suspending each one of the
concerned moulders for a period of 4 days and called for an explanation of their conduct.
The moulders themselves refused to take notice which, however, was taken by their union
secretary on their behalf. As a protest against the order of suspension of the 14 moulders,
the remaining 63 workers in the establishment also left the workspot that day at lunch
break. The tribunal held that the 14 moulders were on strike along with the 63 workmen.
18 The National Commission on Labour, while considering the adequacy or otherwise of the
definition of ‘strike’ under Section 2 (q) of the IDA declined to include concerted action
such as ‘go slow’ and ‘work-to-rule’ in the definition of ‘strike’. According to the
Commission, labour protest such as ‘go-slow’ and ‘work-to-rule’ should be ‘treated as
misconduct or unfair labour practices under the standing orders’ (see the Report of the
National Commission on Labour, 1969, 483.) The Industrial Relations Bill, 1978 also
did not include the aforesaid forms of labour protest in the definition of ‘strike’ under
Section 2 (43).
19 See Punjab National Bank Ltd v. Their Workmen, (1959) 2 LLJ 666 (SC); Sadul Textile
Mills v. Their Workmen, (1958) 2 LLJ 628 (Rajasthan); Howrah Foundry Works v.
Their Workmen, (1955) 2 LLJ 97 (IT); Shalimar Works v. Their Workmen, (1955) 2
LLJ 395 (LAT); Dalmia Cement Co. v. Their Workmen, (1955) 2 LLJ 466 (LAT).
20 These strikes were first used in the United States of America and France. The sit-down
strike set its foot on the Indian soil in April, 1939. The then Congress Government was
hesitant to declare them illegal. They attracted the attention of Indian judiciary in 1952.
Early decision-makers held that it was an invasion of the rights of the employer in the
property of the mill. (See generally Dwarkadas Kanji, Forty Five Years with Labour,
1962, 53.) But in Punjab National Bank Co. op. cit., the Supreme Court took a somewhat
different view.
21 See Ludwig Teller, 1 Labour Dispute and Collective Bargaining 31 referred to and
approved in Punjab National Bank v. Their Workmen, op. cit., supra note 19. 666–87.
See also Sadul Textile Mills v. Their Workmen, op. cit. supra note 19. Chelpark Co. Ltd
v. Commissioner of Police, (1967) 2 LLJ 836 (Madras); Mysore Machinery Mfg. Co. Ltd
v. State of Mysore, (1967) 2 LLJ 853, (Madras); Shalimar Works Ltd v. Their Workmen,
op. cit., Supra note 19 p. 363; Indian Machinery Co. v. Their Workmen, (1957) LAC
539; Dalmia Cement Ltd v. Their Workmen, (1967) 2 LLJ 56 (LAT).
22 Ibid.
23 See Punjab National Bank v. Their Workmen, (1959), 2 LLJ 666 (SC).
24 See for instance, Lakshmi Devi Sugar Mill v. Ram Swaroop, (1957) 1 LLJ 17, 22 (SC).
25 Punjab National Bank Ltd v. Their Workmen, (1952) 1 LLJ 531 (IT); on appeal (1952) 2
LLJ 648 and on special appeal (1959) 2 LLJ 666 (SC).
26 Punjab National Bank Ltd v. Their Workmen, (1959) 2 LLJ 666 at 685.
27 Id. at 684.
28 Sections 22, 23 & 10 (3).
29 See for instance, Firestone Tyre and Rubber Co. of India Ltd v. B. Shetty, (1953) 1 LLJ
599. (LAT); This view was upheld by the Bombay High Court in (1954) 1 LLJ 281.
30 Clause 2 (34) of the Industrial Relations Bill, 1978 has defined ‘strike’, inter alia, to
mean: total or partial cessation of work by a body of persons employed in any industrial
establishment or undertaking… (emphasis added).
31 Bharat Sugar Mills Ltd v. Jai Singh, (1961) 2 LLJ 644 (SC).
32 Id at 647.
33 (1990) 2 RSJ I at l5 (SC).
34 In Katkona Colliery Western Coalfields Ltd v. Central Government Industrial Tribunal
cum Labour Court, Jabalpur, (1978) Lab. IC 1531 the High Court of Madhya Pradesh
held that ‘if hunger strike is not simply refraining from taking food but is also
accompanied by cessation of work by a body of persons employed in any industry, the
same would obviously come within the definitions of strike.’
35 Pipraich Sugar Mills v. Their Workmen, (1956–57) X FJR 4113 (LAT). Certain
workmen who held key posts in the factory went on a hunger strike on a holiday at the
residence of the managing director of the factory and continued to do so on other working
days. On these facts, the labour appellate tribunal held that the mere fact that the hunger
strike was staged on … a holiday, does not reduce the essential characteristics of strike
from this hunger ‘satyagraha’ for the intention of the strikers was to continue it till their
demands were met or till they die of starvation.
36 Thus, students are said to be on hunger strike to press their demands against educational
authorities; political leaders are said to be on hunger strike to compel the government to
redress their grievances and various sections of community are said to be on hunger strike
in support of their stand against various authorities or bodies.
37 Kothari, Labour Law and Practice, (1964), 66.
38 Section 22.
39 Swami Oil Mills v. Their Workmen, (1953) 2 LLJ 785.
40 Sadul Textile Mills v. Their Workmen, (1958) 2 LLJ 628 (Rajasthan).
41 Goodlass Wall Co. v. Amir Ahmad Bakoor Khan, (1954) 2 LLJ 573 confirmed on appeal,
(1956) 1 LLJ 468 (LAT).
42 Matchwel Electricals Company (India) Ltd v. Chief Commissioner, (1962) 1 LLJ 545
(Punjab).
43 Shree Meenakshi Mills v. Their Workers, (1951) 1 LLJ 579, confirmed on appeal (1951)
2 LLJ 516.
44 Jeewan Dallo v. Metal Box Co., (1952) 2 LLJ 869.
45 Upper India Couper Paper Mills v. Their Workmen, (1954) 2 LLJ 347 (LAT).
46 Dalmia Cement Co. v. Chaniah, (1955) 1 LLJ 599 (IT).
47 See Frankfurter and Greene, Labour Injunction, (1930).
48 Damodar Ganesh v. State, AIR 1951 Bom. 459.
49 Vimal Kishore Malhotra v. State of Uttar Pradesh, AIR 1956 Alld. 56.
50 Damodar Ganesh v. State op. cit., 463.
51 Vimal Kishore Malhotra v. State of Uttar Pradesh supra note 49.
52 1992 Lab. IC 414.
53 Raj Narain v. State, AIR 1961 Mad. 531.
54 Damodar Ganesh v. State, op. cit., AIR 1951 Bom. 459.
55 In the dictionary compiled by Jananendra Mohan Das, the word, ‘gherao’, is stated to have
been derived from the Hindi word ‘ghera’ and means ‘covered or encircled’. It is also
mentioned that the word ‘gher’ is derived from the Sanskrit word ‘ghari’ which means
‘to cover or to encircle’. The word ‘gherao’ in this sense has been mentioned in
‘Chalantika’ and in the ‘Bishwakosh’. In the Sanskrit English Dictionary by Dr Monier
Williams Boden, Professor of Sanskrit in the University of Oxford, the Sanskrit word
‘gher’ (ghrihyate-Yitam) means to cover. In Williams’s Glossary of Legal Terms ‘gher’
or ‘gherao’ or ‘gherana’ are Persian words which mean surround, encircle, fence or to
bind a hedge. In Richardson’s Persian-Arabic Dictionary we come across the Persian
word ‘ghera’ which means ‘confinement, not free’.
56 See Govt. of India, Annual Report of the Ministry of Labour of 1967–68 13.
57 Jay Engineering Works v. State of West Bengal, AIR 1968 Cal. 407.
58 See Government of India, Report of National Commission on Labour, (1969) 328.
59 Bharat Kumar K. Palicha v. State of Kerala, AIR 1997 Ker. 291 at 295.
60 AIR 1997 Ker. 291.
61 (1997) (7) SCALE 21.
62 2003 (6) SCALE 84.
63 1999 LLR 24.
64 The first record of the use of phrase ‘to strike work’ occurred in 1768, at the beginning of
Industrial Revolution (See Knowles, Strikes - A Study of Industrial Conflicts), 1952, 2–
3.
65 See Encyclopaedia Britannica, (1959) 467.
66 Ibid.
67 V B Karnik, Strikes in India, 1967, 13–14 citing the Bengal Administration Report
(1895–96). Another lockout of which reference is found in that of the one declared in
Buckingham and Carnatic Mills in 1968, See V B Karnik op.cit., 97.
68 The Industrial Disputes (Amendment) Act, 1982 provides that in Section 2 (1) for the
words ‘closing of a place of employment’ the words ‘temporary closing of a place of
employment’ be substituted.
69 Empire of India Life Insurance Co. Ltd v. Their Employees, Labour Gazette, October,
1947 187, Sun Rolling Mills v. Their Workmen, (1949) LLJ 696; Ganges Jute
Manufacturing Company Ltd v. Their Employees, (1950) LLJ 10; Bengal Jute Mills v.
Their Workmen, (1950) LLJ 437 (IT).
70 Sun Rolling Mills v. Their Workmen, (1949) LLJ 696 (IT).
71 Bengal Jute Mills v. Their Workmen, (1950) LLJ 437, 440 (IT).
72 Presidency Jute Mills Co. Ltd v. Presidency Jute Mills Co. Employee’s Union, (1952) 1
LLJ 796 (LAT).
73 In rearbitration between Messers Richardson and Sumuel & Co., 77 LT, 479–77; L.T.
868 (QB).
74 Messers Richardson and Sumuel & Co., op. cit.
75 (1981) Lab. IC 221 (Bombay).
76 Kairbetta Estate v. Rajmanickam, (1960) 2 LLJ 275 (SC).
77 Ibid.
78 (1960) 2 LLJ 275 at 278.
79 Ram Naresh Kumar v. State of West Bengal, (1958) 1 LLJ 667 (Calcutta).
80 Continuing, he said:
In this view, even the last part of the definition of a lockout will not be satisfied by order
of suspension for the simple reason that as there was a temporary termination of their
employment or as these workers ceased, under the order of suspension, for the time being,
to be the employees of the company, by refusing to give them employment during the
subsistence of that order, the company cannot be said to have refused to give them
employment during the subsistence of that order or the company cannot be said to have
refused to continue to employ men employed by it or men who were still in its
employment. There was thus no lockout … .
81 It will be observed that certified standing orders not only itemize various acts of
misconduct but also provide for the grievance procedure. Further, Section 33 of the
Industrial Disputes Act places certain restrictions on the management’s right to take
disciplinary action by way of dismissal. However, there is no provisions of the law which
entirely takes away the right of the management to discipline their workmen. On the
contrary, Section 33 specifically permits management to dismiss erring workmen under
stated circumstances. The reason for this freedom, albiet, regulated freedom, is obvious.
Total prohibition would encourage indiscipline and render day-to-day running of the
industry impossible. Under the circumstances, if we were to hold that dismissal is
included within the term ‘lock-out’ we would be defeating the very purpose of the
Industrial Disputes Act, namely, to keep the wheels of industry moving, besides rendering
a part of Section 33 useless.
82 Bharat Barrel and Drum Mfg. Co. v. Their Workmen, (1952) 2 LLJ 532 (IT).
83 Talchar Coalfields Ltd v. Talchar Coalfields Workers Union, (1953) 2 LLJ 21 (LAT).
84 Ibid at 24.
85 See Jute Workers Federation v. Clive Jute Mills, (1951) 1 LLJ 663; Lakshmi Devi Sugar
Mills v. Ram Sarup, (1957) 1 LLJ 17 (SC); Lord Krishna Sugar Mills Ltd v. State of
Uttar Pradesh, (1964) 2 LLJ 76 (All.).
86 Lakshmi Devi Sugar Mills v. Ram Sarup, op. cit.
87 Jute Workers’ Federation v. Clive Jute Mills, op. cit.
88 Shri Ram Chandra Spinning Mills Ltd v. State of Madras, (1957) 1 LLJ 90 (Madras).
89 Id at 92–93.
90 Kairbetta Estate v. Rajmanickam, (1960) 2 LLJ 275 (SC).
91 Id. at 278.
92 Express Newspaper Ltd v. Industrial Tribunal, (1962) 2 LLJ 227 (SC).
93 (1985) 1 LLJ 82.
94 Id. at 83–84.
95 Barsi Light Railway Co. Ltd v. Joglekar, (1957) 1 LLJ 243 (SC).
96 (1958) 1 LLJ 500 (SC).
97 (1961) 1 LLJ 288 (SC).
98 Feroz Din v. State of West Bengal, (1960) 1 LLJ 244 (SC).
99 (1960) 1 LLJ 244 at 249.
100 (1967) 2 LLJ 472.
101 All India Bank Employees Association v. National Industrial Tribunal, AIR 1962 SC
171.
102 Id. at 181.
103 1986 Lab. IC 1851 (AP).
104 AIR 1960 All. 45.
105 Id. at 49.
106 (1980) 1 LLJ 137 (SC).
107 Id. at 168.
108 Gwalior Rayon Silk Mfg. Co. v. District Collector, (1982) 1 LLJ 356 (Kerala);
Buckingham and Carnatic Mills Ltd v. Their Workmen, (1951) 2 LLJ 314–316 (LAT);
Amalendu Gupta v. LIC., (1982) 2 LLJ 332 (Calcutta).
109 Ram Krishna Iron Foundary v. Their Workers, (1954) 2 LLJ 372 (LAT).
110 Id. at 373.
111 1982 Lab. IC 367. See also Coimbatore PDM. Sangam v. Sivakumar Transport, (1986)
Lab. IC 1012 (Madras).
112 ‘There is nothing inherently unlawful or illegal in a strike…… common law permitted an
employee to stop work if he so desired’. See Raja Bahadur Motilal Poona Mills v. Mills
Mazdoor Sabha, (1954) 1 LLJ 124.
113 Id. at 71.
114 1990 Lab. IC 389 (SC).
115 1974 Ker. LT 516.
116 Id. at 361.
117 Kerala State Electricity Workers Federations v. Kerala State Electricity Board, (1983) 1
LLJ 435, 442 (Kerala).
118 1996 LLR 418 (Delhi).
119 See Ram Krishna Iron Foundry v. Their Workers, (1954) LLJ 516, 520 (LAT); See also
Chandramalai Estate v. Their Workmen, (1960) 2 LLJ 243 (SC).
120 Chandramalai Estate v. Their Workmen, op. cit.
121 AIR 1962 SC 1166.
122 Id. at 1168.
123 AIR 1969 SC 996. See also Sreekumar v. State of Kerala (1996) LLR 327.
124 Id. at 1168.
125 See Standard Chartered Bank v. Its Union, (1996) LLR 418 (Delhi).
126 Delhi Security Printer v. Hindustan Engg. and General Mazdoor Union (1996) LLR
714.
127 (1996) LLR 418.
128 Meghraj v. State of Rajasthan, (1956) 1 LLJ 366.
129 Rule 22A of the Rajasthan Government Service Conduct Rules provided that ‘no
government servant shall resort to any form of strike for the purpose of securing redress
of his grievances’.
130 Kameshwar Prasad v. State of Bihar, (1962) SCR 369.
131 Justice Ayangar while delivering his judgement, observed that Rule 4A of the Bihar
Government Servants Conduct Rules, 1956, has prohibited demonstration and strikes and
no government servant has any fundamental right to resort to any kind of demonstration
and strike.
132 Ramrao Laxmikant Shirkhedhar v. Accountant General, Maharashtra, (1963) 1 LLJ
428 (Bombay)
133 O K Ghosh and Others v. E X Joseph, AIR 1963 SC 814.
134 (2003) (6) SCALE 84.
135 The Communist Party of India (CPI), Communist Party India (Marxist), All India Trade
Union Congress and Centre of Indian Trade Unions have criticized the decision. They
regard the Court’s decision as an assault on a basic constitutional guarantee. Bhartiya
Janta Party and Indian National Trade Union Congress require time to study the
judgement. Some others described public servants to be the ‘laziest, most inefficient,
corrupt lot in the world’. They feel that ‘crippling essential services is hardly exercising a
fundamental right’. Some others observed ‘bloated babudom of a vital democratic home
truth: Do not divorce the concept of right from responsibility or confuse liberty with
licence’. Still some others feel that it is ‘a verdict that works’. [See the Hindu dt. August
8-9,.2003, ‘Talking Point’, Economic Times dt. 10.8.2003, Hindustan Times, New
Delhi, August 7, 2003. Times of India, New Delhi, August 8, 2003, 12 and 14].
136 Supra note 134.
137 (1997) 3 SCC 261.
138 (1964) 7 SCR 403.
139 All India Bank Employees Association v. National Industrial Tribunal, AIR 1962 SC
171.
140 Id. at 181.
141 Section 7.
142 (1990) Lab IC 389.
143 (1989) 1 LLJ 62 (SC).
144 (1960) 1 LLJ 13.
145 AIR 1958 SC 311.
146 (1997) 3 SCC 261.
147 (2009) 4 LLJ 870.
148 S Vasudevan v. S D Mital, AIR 1962 Bom. 53.
149 Corpus Juris Secundum, Vol. 83, 525.
150 (1986) Lab. IC 1851.
151 Id. at 1857.
152 Chemicals and Fibres of India Ltd v. D.C. Bhoir, (1975) 2 LLJ 168 (SC).
153 Balmer Lawrie & Co. Ltd v. Its Employees’ Union, (1989) Lab. IC 88 (Bombay).
154 Id. at 173.
155 Id. at 170.
156 Provat Kumar Kar v. W T Parkar, AIR 1950 Cal. 116; The Supreme Court approved the
decision in State of Bihar v. Deodhar Jha, AIR 1958 Pat. 51.
157 For instance Government of Bihar and West Bengal added ‘(ii) Oxygen and Acetylene’ in
the First Schedule.
158 Swadeshi Industries v. Its Workmen, (1960) 2 LLJ 78 (SC).
159 D N Banerjee v. P R Mukherjee, AIR 1953 SC 58.
160 State of Bombay v. Hospital Mazdoor Sabha, (1960) 1 LLJ 250 (SC).
161 (1960) 1 LLJ 250 at 259.
162 (1970) 2 LLJ 266 (SC).
163 Section 22.
164 (1986) 1 LLJ 204 (Karnataka).
165 (2008) 7 SCC 594.
166 Rule 71.
167 Employees of Dewan Bahadur Ram Gopal Mills v. Dewan Bahadur Ram Gopal Mills,
(1958) 2 LLJ 115.
168 Id. at 116.
169 Municipal Committee, v. Industrial Tribunal. (1971) 2 LLJ 52 (Punjab and Haryana).
170 (1999) 2 SCC 143.
171 Mineral Miners' Union v. K Iron Ore Co. Ltd, (1986) 1 LLJ 2004 at 2008.
172 (1986) 1 LLJ 204 at 206.
173 The procedure stated for the settlement of dispute is as follows:
(i) After negotiations have failed and before notice of strike/lockout is served, the parties may
 agree to voluntary arbitration and the commission will help the parties in choosing an
arbitrator mutually acceptable to them.
(ii) Alternatively, either party may, during the period covered by the said notice, approach the
commission for naming the conciliator within the Commission to help them in arriving at
a settlement.
(iii) In essential industries/services, when collective bargaining fails and when the parties to
the dispute do not agree to arbitration, either party shall notify the IRC, with a copy to the
appropriate government, of the failure of such negotiations, whereupon the IRC shall
adjudicate upon the dispute and its award shall be final and binding upon the parties.
See Government of India, Report of the National Commission on Labour, p. xxv
(1969).
174 S T Employees Federation, Orissa v. State of Orissa, (1990) Lab. IC 1591(Orissa).
175 Keventers Karmachari Sangh v. Lt Governor, Delhi, 39 FLR 206 (1971).
176 Id. at 211.
177 Express Newspapers Ltd, (1962) 2 LLJ 227 (SC).
178 Meghraj Kishangarh Mills Ltd, (1953) 2 LLJ 214 (Rajasthan).
179 Workmen of Edward Keventers (P) Ltd v. Delhi Administration, ILR (1969) Delhi 767.
180 Keventers Karmachari Sangh v. Lt. Governor Delhi, (1971) 2 LLJ 375.
181 Delhi Administration v. Workmen of Edward Keventers, (1978) 2 LLJ 209 (SC).
182 Id. at 211.
183 Ibid.
184 (1970) 1 LLJ 97 (Kerala).
185 1979 Lab. IC 330 (Andhra Pradesh).
186 1986 Lab. IC 1851 (Andhra Pradesh).
187 (1987) Lab. IC 836 (Bom).
188 (1999) Lab. IC 503 (Raj.).
189 Madras Machine Tools Manufactures v. Special Deputy Commissioner of Labour,
(1979) 2 LLJ 331.
190 Ibid.
191 K P Singh v. S K Gokhale, (1970) 1 LLJ 125.
192 Sun Rolling Mills, v. Their Workmen, (1949) LLJ 382 .
193 Deshpande v. Ferro Alloy Corporation, (1964) 1 LLJ 613.
194 Raja Kulkarni and Others v. State of Bombay, AIR 1954 SC 73.
195 Deshpande v. Ferro Alloy Corporation, (1964) 1 LLJ 613.
196 Id. at 619.
197 Raj Kumar Gupta v. Lt Governor, Delhi, AIR 1997 SC 2680.
198 Gokul Chand Dwarka Das Morarka v. King., 75 I.A. 30.
199 Feroz Din v. State of West Bengal, (1960) 1 LLJ 244 (SC) This view was followed in
State of Kerala v. Chako, (1961) 2 LLJ 569 (Kerala).
200 Gokul Chand Dwarka Das Moraka v. King. op. cit. 30.
201 AIR 1997 SC 2600 at 2683.
202 Section 35.
203 See for instance, Swadeshi Industries Ltd v. Their Workmen, (1955) 2 LLJ 785 (LAT);
Swami Oil Mills v. Their Workmen, (1953) 2 LLJ 785 (IT); Crompton Greaves Ltd v.
Their Workers, (1978) 36 FLR 329 (SC).
204 See F W Heilgers and Co. Ltd v. Its Workmen, (1950) LLJ 231 (IT); Ambika Jute Mills
v. Their Workers, (1954) 1 LLJ 835 (IT); See also Indian Machinery Mazdoor Union v.
Indian Machinery Co. Ltd, (1956) 2 LLJ 408 (LAT).
205 Vellanikara and Thuttil Rubber Estate v. Its Employees quoted in Govt. of India,
Industrial Awards in India, (1959), 113.
206 Indian Cycle Mfg Co. Ltd v. Their Workers, (1951)1 LLJ 390 (IT); Certain Banks in the
State of Punjab and Delhi v. The Workmen, (1950) LLJ 425 (IT).
207 Dalmia Cement (Bharat) Ltd v. Their Workers, (1955) 2 LLJ 466 (LAT); Standard Mills
Ltd v. Their Workmen, (1953) 2 LLJ 135 (IT)., See also Crompton Greaves Ltd v. Its
Workmen, op. cit., supra note 1.
208 Union Tile Works v. Their Employees, (1954) 2 LLJ 103 (IT).
209 Indian Cycle Mfg Co. v. Their Workers, (1952) 2 LLJ 390 (IT).
210 Associated Cement Co. v. Their Workmen (1952) 2 LLJ 255 (IT).
211 Bihar Fire Works and Potteries Ltd (1953) 1 LLJ 49 (LAT).
212 Caltex Ltd v. Their Workmen, (1954) 2 LLJ 51.
213 Swami Oil Mills v. Their Workers, (1953) 2 LCJ 785 (IT).
214 Ambika Jute Mills v. Their Workers, (1954) 1 LLJ 835 (LAT).
215 Hanuman Jute Mills v. Their Workmen, (1953) 2 LLJ 684 (LAT); Govind Sheet Metal
Works and Foundry v. Their Workmen (1956) FJR 363 (LAT).
216 Mahalaxmi Cotton Mills v. Their Workmen, (1952) 1 LLJ 68.
217 See also Highway Group of Estates v. Industrial Tribunal, (1978) 2 LLJ 251 (IT);
Certain Tailoring Concerns v. Its Workmen, (1950) LLJ 280.
218 Pioneer Match Factory v. Their Workmen, (1951) 1 LLJ 43 (IT).
219 Ram Krishna Iron Foundry v. Their Workmen, (1951) 2 LLJ 372 (LAT); Chandramalai
Estate v. Its Workers, (1960) 2 LLJ 243 (SC); Indian Marine Service v. Its Workers,
(1963) 1 LLJ 122 (SC); Viriji Bhai Laxman Bhai v. New Commercial Mfg. Co., (1958)
Bom. Ind. Ct. Rep. 1153.
220 Chandramalai Estate v. Its Workers, (1960) 2 LLJ 243.
221 Hopkings and Williams Travancore Ltd v. Mineral Companies Staff Association, (1955)
2 LLJ 293 IT).
222 Jaypore Sugar Co. Ltd v. Their Employees, (1955) 2 LLJ 444 (LAT).
223 Digvijay Cement Co. Ltd v. Their Workmen, (1951) 1 LLJ 236 (IT); M/s Pierce Leslie &
Co. Ltd published in Kerala Gazette, No. 43 dt. 3 November 1959, 13; Ashok Textiles
Pvt. Ltd case, Kerala Gazette, October 13, 1959.
224 Lakshmi Vilasam Tile Works Kerala, Gazette No. 501 dt. 22 December 1959, 7.
225 Certain Banks in the State of Punjab and Delhi v. Workmen, (1950) LLJ 245 (IT).
226 Ashok Textile Pvt. Ltd v. Their Employees, published in Kerala Gazette, October 13,
1959, 13.
227 M/s Pierce Leslie and Co. Ltd Alleppey v. Their Workmen, published in Kerala Gazette,
No. 43, 3 November 1959, 13.
228 Crompton Greaves Ltd v. Its Workmen, (1978) 36 FLR 329 (SC).
229 Shri Ram Silk Mills v. Their Workmen, (1952) 2 LLJ 862 (IT).
230 Bharat Barrel and Drumn Mfg Co. v. Their Workmen, (1952) 2 LLJ 532 (IT).
231 India Machinery Mazdoor Union v. Indian Machinery Co. Ltd (1956) 2 LLJ 408 (LAT).
232 Pioneer Match Factory v. Their Workmen, (1951) 1 LLJ 43 (IT).
233 Associated Cement Co. Ltd v. Their Workmen, (1952) 2 LLJ 255 (IT).
234 Ram Krishna Iron Foundry v. Their Workers, (1954) 2 LLJ 372 (LAT).
235 Indian General Navigation of Railway Co. Ltd v. Their Workmen, (1960) 1 LLJ 13 (SC).
236 (1960) 1 LLJ 13 at 22.
237 Model Mills v. Dharam Das, AIR 1958 SCS 1; See also Caltex India Ltd, Madras v.
Their Workmen, (1955) 2 LLJ 693 (LAT).
238 See Colliery Mazdoor Congress v. New Virbhoom Coal Co. Ltd (1952) LAC 219
Mahalaxmi Cotton Mills Ltd v. Their Workmen, (1952) 2 LLJ 635 at 640 (LAT).
239 Gujarat Steel Tubes v. Gujarat Steel Tubes Mazdoor Sabha, (1980) 1 LLJ 137 (SC).
240 Crompton Greaves Ltd v. Their Workmen, (1978) 2 LLJ 80 (SC).
241 Ibid.
242 Indian Iron & Steel Co. v. Their Workmen, AIR 1958 SC 130.
243 See Smith Stain Street and Co. v. Smith Stain Street Worker’s Union, (1953) 1 LLJ 67
(LAT); see also Swami Oil Mills v. Their Workmen, (1953) 2 LLJ 785; Swadeshi
Industries v. Its Workers, (1955) 2 LLJ 785 (LAT).
244 Ram Krishna Iron Foundry v. Their Workmen, (1954) 2 LLJ 372, 375 (LAT).
245 Civil Appeal No. 312 of 1956 decided by the Supreme Court on 2 January 1957.
246 Punjab National Bank v. Their Employees, (1959) 2 LLJ 666 (SC).
247 Spencer & Co. Ltd, v. Their Workmen, (1956) 1 LLJ 714 (LAT).
248 Swadeshmitran & Co. Ltd v. Their Workmen, (1952) 1 LLJ 479 (IT).
249 Bangalore Silk Throwing Factory v. Their Workmen, (1957) 1 LLJ 435 (LAT).
250 Model Mills v. Dharam Das, AIR 1958, SC 311.
251 I M H. Press, Delhi v. Addl. Tribunal, (1961) 1 LLJ 499 (SC).
252 Punjab National Bank v. Their Workmen, (1959) 2 LLJ 666.
253 Indian General Navigation Co. v. Their Workmen, (1960) 1 LLJ 13 (SC).
254 Burn & Co. Ltd v. Their Workmen, (1959) 1 LLJ 450 (SC).
255 See Indian General Navigation and Rly Co. v. Their Workmen, op. cit., Gujarat Steel
 Tubes v. Gujarat Steel Tubes Mazdoor Sabha, (1980) 1 LLJ 137 (SC).
256 Bata Shoe Co. v. D N Ganguli, AIR 1961 SC 1158.
257 I M H. Press v. Addl. Tribunal, (1961) 1 LLJ 499.
258 See Punjab National Bank v. Their Workmen, op. cit: Shalimar Works Ltd v. Workmen,
AIR 1959 SC 1217.
259 See Model Mills Ltd v. Dharam Das, AIR 1958 SC 311.; Bata Shoe Co. (Pvt.) Ltd v. D N
Ganguli, op. cit.
260 See Indian General Navigation, and Rly Co. v. Their Workmen, (1960) 1 LLJ 13.
261 See Buckingham and Carnatic Mills Co. Ltd v. Their Workmen, (1951)2 LLJ 314
(LAT); Punjab National Bank v. Their Workmen op. cit; M L Base & Co. (Pvt.) Ltd v.
Its Employees, (1961) 2 LLJ 107 (SC).
262 (1976) 1 LLJ 484 (SC).
263 (1978) 2 LLJ 80.
264 See Statesman Ltd v. Their Workmen, (1976) 1 LLJ 484 (SC); North Brook Jute Co. Ltd
v. Their Workmen, (1960) 1 LLJ 480 (SC).
265 See Vellanikara and Thutil Rubber Estate v. Its Employees, quoted in Government of
India, Industrial Awards in India, PSN Motors Ltd v. Their Workmen, 12 FJR 192.
266 India Cycle Mfg. Co. Ltd v. Their Workers, (1951) 1 LLJ 390 (IT); cf Certain Banks in
the State of Punjab and Delhi v. Their Workmen, (1950) LLJ 425 (IT).
267 See Dalmia Cement Ltd v. Their Workers, (1955) 2 LLJ 466 (LAT); Standard Mills Ltd
v. Their Workmen, (1953) 2 LLJ 135.
268 Ram Krishna Iron Foundry v. Their Workers, (1954) 2 LLJ 572 (LAT); Viriji Bhai
Laxman Bhai v. New Commercial Mfg. Co., (1958) ICR Bombay, 1153.
269 Chandramalai Estate v. Its Workmen, (1960) 2 LLJ 243 (SC).
270 (1960) 2 LU 243 at 246.
271 (1994) (5) JT 648.
272 Hopkings and Wiliam (Travancore Ltd v. Mineral Companies Staff Association), (1955)
2 LLJ 293 (LT).
273 See M/s. Pierce Leslie and Co. Ltd v. Their Workmen, published in Kerala Gazette No.
43, 3 November 1959, 13, quoted in Government of India, Supplement to Industrial
Awards in India, 80 (1961); Ashok Textiles Pvt. Ltd v. Their Employees, published in the
Kerala Gazette, October 13, 1959, 3.
274 Crompton Greaves Ltd v. Its Workmen, (1978) 2 LLJ 80, 82 (SC).
275 Bharat Barrel and Drum Mfg. Co. v. Their Workmen, (1952) 2 LLJ 532 (IT).
276 Italkholic Tea Estate v. Their Workmen, (1954) 2 LLJ 717 (LAT).
277 Id. at 718.
278 Indian Marine Service Pvt. Ltd v. Their Workmen, AIR 1963 SC 528.
279 Northern Dooars Tea Company v. Workmen of Dem Dima Tea Estate, (1964) 1 LLJ 436
(SC), See also Pradip Lamp Works v. Their Workmen, (1969) 38 FJR 20 (SC);
Statesman Ltd v. Their Workmen, (1976) 1 LLJ 484 (SC); Highway Group of Estates v.
 Industrial Tribunal, (1978) 2 LLJ 251 (Madras).
280 (1990) 2 LLJ 39.
281 (1978) 2 LLJ 117: Sukumar Bandyopadhyay v. State of West Bengal, (1976) Lab. IC
1980.
282 R N Shenoy v. Central Bank of India, (1984) Lab. IC 1493.
283 Dharam Singh v. Bank of India, (1979) Lab. IC 1079.
284 R Rajamanickam v. Indian Bank, (1981) 2 LLJ 367; V Ramachandran v. Indian Bank
(1979) 1 LLJ 122.
285 (1981) 1 LLJ 64.
286 (1989) 1 LLJ 109.
287 (1982) 2 LLJ 332.
288 (1982) 2 LLJ 332 at 34 1.
289 (1984) 2 LLJ 97.
 CHAPTER
20
Lay-off, Retrenchment, Transfer and
Closure

I. LAY-OFF

A. The Perspective
In the day-to-day running of business, management is often compelled to take
measures to effect economy and avoid waste. Some of these actions have a direct
bearing on the workmen employed by it. For instance, management may not
temporarily require the services of certain workmen on account of ‘shortage of
coal, power, raw material, accumulation of stock, breakdown of machinery,
strike by workmen in interdependent sections of the establishment, or for any
other similar reason. Under these situations, an employer does not temporarily
need the services of the normal strength of the workmen. In these circumstances,
he may well terminate the services of surplus workmen. But because he expects
to resume his normal work and the workmen wish to continue to work, the
institution of lay-off has been evolved. Herein, workmen are not discharged but
nevertheless, they do not receive their full wages. It is because of this anomaly
that the right of lay-off compensation has been established by practice, contract,
standing orders or statutory provisions. With the introduction of industrial
adjudication system on an all-India basis, workmen sometimes take advantage of
the existing legal provisions. Their attitude of taking advantage of the existing
legal provisions is strongly demonstrated by their response to lay-off. An early
attempt was made to suggest that management's action in laying-off its workmen
amounted to a lockout1. Further, quite apart from the general prohibition
contained in Section 23, both lay-off and lockout were held to be within the
mischief of Section 33 (2). However, after the Amending Act of 1953, which
defines ‘lay-off’ and provided compensation therefor, workmen generally
claimed that lockout amounted to lay-off and consequently, the locked-out
workmen were entitled to lay-off compensation.
It is unfortunate that the provisions relating to lay-off compensation were
incorporated in the Industrial Disputes Act,1947, only after 6 years of the
operation of adjudication system on an all-India basis. During this long period,
several cases involving lay-off came before the tribunals and courts and they
decided the question of payment of compensation. But a study of the awards and
decisions reveals that there was no uniformity in the rates of compensation.
Further, norms were irreconcilable. Quite apart from these difficulties, the
Industrial Disputes Act, 1947 as amended in 1953, did not contain any provision
for preventing lay-off. There had been many cases of large-scale lay-offs in big
industrial concerns in the 1970s. This caused great hardship to workmen. In
order to avoid this hardship, the National Apex Body as well as the state labour
ministers urged the Central Government to bring out certain measures for having
a check on such arbitrary action of the management. Accordingly, the Parliament
enacted the Industrial Disputes (Amendment) Act, 1976 which made the prior
approval of the appropriate government necessary in industrial establishments
employing 300 or more workmen.2 The 1982 and 1984 Amendment not only
extended the provisions contained in 1976 Amendment to ‘industrial
establishments’3 employing 100 or more workmen but has made a drastic
amendment after taking into account the observations of the Supreme Court in
Excel Wear case.4

B. Nature of Lay-off
1. General. Strictly speaking, lay-off is neither a temporary discharge of the
workman nor a temporary suspension of his contract of service.5 It is
merely a fact of temporary suspension of his contract of service. It arises
when there is the ‘failure’, ‘refusal’ or ‘inability’ on the part of the
employer to give employment to his workmen for reasons beyond the
control of the employer. Further, lay-off does not end the employer-
workmen relationship.
2. Lay-off and Lockout. Lay-off and lockout have some common features.
Both are the phenomena of continuing business. Both are acts of the
 employer. Both involve subsisting employer-workman relationship. But
there are strong reasons to distinguish lay-off and lockout. This was
brought out by the Supreme Court in Kairbetta Estate v. Rajmanickam.6
Stated broadly, lay-off generally occurs in a continuing business,
whereas lockout is the closure of the business. In the case of a
lay-off owing to the reasons specified in Section 2 (kkk), the
employer is unable to give employment to one or more
workmen. In the case of lockout, the employer closes the place
of business and locks out the whole body of workmen for
reasons which have no relevance to causes specified in Section
2(kkk)…….
It may be pointed out that the broad proposition laid down by the
Supreme Court does not clearly reflect the true legal position. First, both lay-off
as well as lockout are phenomena of a continuing business. Second, it is not true
that only one or more but not all the workmen of an establishment are denied job
opportunities in the case of lay-off or that all the workmen of the establishment
and not only a few of them are always put under economic pressure in a lockout.
Third, the use of the expression ‘closure’ is exceedingly vague. It is theoretically
possible that there may be lockout only in a section of the establishment and the
rest of the establishment may be working.7
Lockout is an instrument of economic coercion. It is a means to an end
and not an end in itself, the particular means adopted being putting of economic
pressure on recalcitrant workmen. A lay-off on the contrary, is an economy
measure; while it does affect the workmen, the motive of putting economic
pressure is absent. There is yet another basis of distinction. Whereas in lay-off,
statute makes it obligatory on the part of the employer to pay compensation in
accordance with the provisions of the Industrial Disputes Act, 1947; in case of
lockout, it is discretionary with the tribunals to grant wages for the period of
lockout depending upon the situations.
3. Lay-off and Retrenchment. Lay-off and retrenchment have some elements
in common. Both are measures of economy. Both are declared by the
employer. In both the cases statutory compensation must be paid. But,
they differ in other respects. Whereas there is a subsisting employer-
workman relationship during lay-off, that relationship is terminated in
case of retrenchment. There is yet another basis of distinction. While lay-
off is temporary, retrenchment is a permanent measure. Moreover, if the
term ‘retrenchment’ is included within the term ‘lay-off’, one fails to
 understand why the legislature has defined these two terms separately.
4. Lay-off and Closure of Business. Lay-off as well as closure have some
common features. Both are measures of economy adopted by the
employer. Both require statutory compensation. But they differ in several
respects. Lay-off is temporary while closure is permanent, In lay-off,
employer-workman relationship subsists but such relationship is
terminated in closure of business.

C. Statutory Definition of Lay-off

Prior to 1953, the word ‘lay-off’ was not used in any legislative enactment in
India. Section 2 (kkk)8 of the Industrial Disputes Act, 1947, defines ‘layoff’ to
mean the ‘failure’, ‘refusal’ or ‘inability’ on the part of employer to give
employment to any number of workmen on account of:
(a) shortage of coal, or
(b) shortage of power, or
(c) shortage of raw material, or
(d) accumulation of stock or
(e) breakdown of machinery or
(f) for any other reason.
The definition requires further analysis. First, the definition mentions
three acts, namely, ‘failure’, ‘refusal’, or ‘inability’ on the part of the employer.
The absence of these circumstances will not amount to ‘lay-off’ within the
meaning of Section 2 (kkk) of the Act. Second, the expression ‘for any other
reason’ occurring in Section 2 (kkk) is ejusdem generis with the preceding
expression.9 Third, the definition requires subsisting employer workman
relationship during lay-off.

D. Management's Right to Lay-off

1. Under the Traditional Law. Under the traditional law, management had a
right to lay-off its workmen and adjust labour force to the requirement of
work. If the lay-off or adjustment of labour-force happened to be in
breach of contract of employment or otherwise wrongful, the aggrieved
workmen are entitled to compensation. This right of management has
been curtailed to a great extent by the modern labour legislation and
judicial decisions following thereunder. They assert that the right of the
 management to lay-off its workmen and adjust labour force is not
absolute. It has now been settled that management has no right to lay-off
its workmen.10
2. Under the Standing Orders. Where the standing orders certified under the
Industrial Employment (Standing Orders) Act, 1946 provide for lay-off,
the employers are allowed to lay-off their workmen in accordance with
the provisions of the standing orders of their establishment. They have no
right to lay-off for reasons other than those laid down in the relevant
clauses of the standing orders.
3. Under the Industrial Disputes Act, 1947. Chapter V-A and V-B recognize
management's right to declare lay-off for reasons laid down therein. If
any case is not covered by the provisions of the standing orders of the
establishment, it will be regulated by the provisions of Industrial Disputes
Act, 1947.
The Supreme Court in Workman of Dewan Tea Estate v. The Management11
while considering the management's right to lay-off observed:
[W]hether it can be said that Section 25 C recognizes a common
law right of the industrial employer to lay-off his workmen?
This question must, in our opinion, be answered in the negative.
When the laying-off of the workmen is referred to in Section 25
C, it is the laying-off as defined by Section 2 (kkk), and so,
workmen who can claim the benefit of Section 25 C must be
workmen who are laid-off for occasions contemplated by
Section 2 (kkk).
The Court added:
If any case is not covered by the standing orders, it will
necessarily be governed by the provisions of the Act and lay-off
would be permissible only where one or the other of the factors
mentioned by Section 2 (kkk) is present and for such lay-off,
compensation would be awarded under Section 25 C.
However, in Workmen v. Firestone Tyre and Rubber Co.,12 the Supreme
Court explained the aforesaid observation to indicate that:
[I]f the power of lay-off is there in the standing orders but the
grounds of lay-off are not covered by them, rather are governed
by the provisions of the Act, then lay-off would be permissible
 only on one or the other of the factors mentioned in Clause (iii).
…13 But there is no provision in the Industrial Disputes Act
specifically providing that an employer would be entitled to lay-
off his workmen for the reasons prescribed by Section 2 (kkk).
In case of compensation of lay-off, position is quite different:
If the terms of contract of service or the statutory terms
engrafted in the standing orders do not give the power of lay-off
to the employer, the employer will be bound to pay
compensation for the period of lay-off which ordinarily and
generally would be equal to the full wages of the concerned
workmen. If, however, the terms of employment confer a right
of lay-off on the management, then, in the case of an industrial
establishment which is governed by Chapter V-A, compensation
will be payable in accordance with the provisions contained
therein. But no compensation will be payable in the case of an
industrial establishment to which the provisions of Chapter V-A
do not apply and it will be so as per the terms of employment.

E. Prohibition on Lay-off
Till 1976, there was no provision for preventing lay-off in the Industrial
Disputes Act, 1947. In the 1970s, a number of cases of large-scale lay-off were
reported. This resulted in all-round demoralizing effect on the workmen. In order
to prevent avoidable hardship and to maintain higher tempo of production and
productivity, the Industrial Disputes Act, 1947 was amended in 1976 whereby
restrictions were imposed on the employer’s right to lay-off by Section 25 M.
However, following the decision of the Supreme Court in Excel Wear case,
some high courts14 declared invalid the provisions contained in Section 25 M. In
order to remove the anomaly, Section 25 M was re-drafted and substituted by the
Industrial Disputes (Amendment) Act, 1984 which came into force w.e.f. 18
August 1984. Section 25 M, applies to every industrial establishment (not of
seasonal character) in which not less than 100 workmen are employed on the
average per working day for the preceding 12 months.15 Thus, Section 25 M,
which imposes prohibition on lay-off provides:
1. No workman (other than a badli workman or a casual workman) whose
name is borne on the muster rolls of an industrial establishment to which
this Chapter applies, shall be laid-off by his employer except with the
prior permission of the appropriate government or such authority as may
 be specified by that government by notification in the official gazette
(hereinafter in this section referred to as the specified authority). obtained
on an application made in this behalf, unless such lay-off is due to
shortage of power or to natural calamity, and in the case of a mine, such
lay-off is due also to fire, flood, excess of inflammable gas or explosion.
2. An application for permission under sub-section (1) shall be made by the
employer in the prescribed manner stating clearly the reasons for the
intended lay-off and a copy of such application shall also be served
simultaneously on the workmen concerned in the prescribed manner.
3. Where the workmen (other than badli workmen or casual workmen) of an
industrial establishment being a mine, have been laid-off under sub-
section (1) for reasons of fire, flood or excess of inflammable gas or
explosion, the employer, in relation to such establishment, shall, within a
period of 30 days from the date of commencement of such lay-off apply,
in the prescribed manner, to the appropriate government or the specified
authority for permission to continue the lay-off.
4. Where an application for permission under sub-section (1) or sub-section
(3) has been made, the appropriate government or the specified authority,
after making such inquiry as it thinks fit and after giving a reasonable
opportunity of being heard to the employer, the workmen concerned and
the persons interested in such lay-off, may, having regard to the
genuineness and adequacy of the reasons for such lay-off, the interest of
the workmen and all other relevant factors, by order and for reasons to be
recorded in writing, grant or refuse to grant such permission and a copy of
such order shall be communicated to the employer and the workmen.
5. Where an application for permission under sub-section (1) or sub-section
(3) has been made and appropriate government or the specified authority
does not communicate the order granting or refusing to grant permission
to the employer within a period of 60 days from the date on which such
application is made, the permission applied for shall be deemed to have
been granted on the expiration of the said period of 60 days.
6. An order of the appropriate government or the specified authority granting
or refusing to grant permission shall, subject to the provisions of sub-
section (7), be final and binding on all the parties concerned and shall
remain in force for one year from the date of such order.
7. The appropriate government or the specified authority may, either on its
own motion or on the application made by the employer or any workman,
 review its order granting or refusing to grant permission under sub-section
(4) or refer the matter or, as the case may be, cause it to be referred to a
tribunal for adjudication:
Provided that where a reference has been made to a tribunal under this
sub-section, it shall pass an award within a period of 30 days from the
date of such reference.
8. Where no application for permission under sub-section (1) is made, or
where no application for permission under sub-section (3) is made within
the period specified therein, or where the permission for any lay-off has
been refused, such lay-off shall be deemed to be illegal from the date on
which the workmen had been laid-off and the workmen shall be entitled to
all the benefits under any law for the time being in force as if they had not
been laid-off.
9. Notwithstanding anything contained in the foregoing provisions of this
Section, the appropriate government may, if it is satisfied that owing to
such exceptional circumstances as accident in the establishment or death
of the employer or the like, it is necessary to do so, by order, direct that
the provisions of sub-section (1), or, as the case may be, sub-section (3)
shall not apply in relation to such establishment for such period as may be
specified in the order.
10. The provisions of Section 25 C (other than the second proviso thereto)
shall apply to cases of lay-off referred to in this section.
Explanation. For the purposes of this Section, a workman shall not be
deemed to be laid-off by an employer if such employer offers any
alternative employment (which in the opinion of the employer, does not
call for any special skill or previous experience and can be done by the
workmen) in the same establishment from which he has been laid-off or
in any other establishment belonging to the same employer, situated in
the same town or village, or situated within such distance from the
establishment to which he belongs that the transfer will not involve undue
hardship to the workman having regard to the facts and circumstances of
his case, provided that the wages which would normally have been paid
to the workman are offered for the alternative appointment also.

F. Penalty for Lay-off without Previous Permission

Section 25 Q prescribes penalty upon the employer contravening the provisions
of Section 25 M. Thus, the employer who contravenes the provisions of Section
25 M is punishable with imprisonment for a term which may extend to one
month or with fine which may extend to ₹1,000 or with both.

G. Procedure for Lay-off

The Industrial Disputes Act, 1947, does not provide for the procedure to be
adopted before declaring a lay-off. The procedure is, however, provided in the
Industrial Disputes (Central Rules) 1957. Rule 75 A makes it obligatory upon
the employer of an industrial establishment as defined in the Explanation to
Section 25 A to give notice of the period of lay-off in the forms 0–1 and 0–2
within 7 days of the commencement or termination of such lay-off as the case
may be to the affected workmen, This notice should be given by the employer to
the affected workmen irrespective of the fact whether they are or are not entitled
to any compensation under Section 25-C of the Act.

H. Compensation for the Period of Lay-off

1. Under the Standing Orders. Most standing orders contain a clause
providing for lay-off. It also generally provides for the manner in which
lay-off compensation should be paid. Where the relevant clauses of the
standing orders provide for lay-off and the compensation therefor, the
question of compensation will be determined by such standing orders.
But in case of conflict between the provisions of standing orders and the
statutory provisions for lay-off compensation, the latter will override the
former. If the standing orders of the establishment merely provide for the
reasons for which lay-off may be declared by the employer and do not
provide the manner in which the compensation shall be paid to the laid-
off workmen, the compensation shall be paid to them in accordance with
Section 25-C provided, of course, the lay-off is covered under Section 2
(kkk).
2. Under Section 25 C of the Industrial Disputes Act. To ensure a minimum
earning during forced unemployment when workmen's names are borne
on muster rolls, the Industrial Disputes Act, 1947 provides for payment
of compensation equal to 50 per cent of the total of the basic wage and
dearness allowance, for all days during which he is laid-off; provided he
has completed continuous service of one year or more. However, under
proviso to Section 25-C (1) if during any period of 12 months, a
workman is laid-off for more than 55 days, no compensation shall be
payable to a workman in respect of any period of lay-off after the expiry
 of 45 days if there is an agreement to that effect between the workman
and the employer. Alternatively, the employer may retrench the workmen
at any time after the expiry of 45 days. If the workmen is retrenched
under such circumstances, compensation paid to him for having been
laid-off during the proceeding 12 months may be set-off against
compensation payable for retrenchment.

Nature and Scope of Agreement under Section 25-C(1)

In P Virudhachalam v. Management of Lotus Ltd16, the Supreme Court was
invited to consider whether there was an agreement between workman and
employer to the effect that the period of lay-off would be curtailed or restricted
to 45 days only. It was contended on behalf of the workman that in order to
attract the first proviso to Section 25-C(1), there should be an independent
agreement between the workman and the employer to that effect agreeing not to
demand lay-off compensation beyond 45 days of the starting of the lay-off
period. Rejecting the contention, the Supreme Court observed:
It is difficult to appreciate this contention. An agreement
restricting the claim of lay-off compensation beyond the
available period of 45 days can be said to be arrived at between
the workman on the one hand and the employer on the other as
there is such an agreement embedded in a binding settlement
which has a legal effect of binding all the workmen in the
institution as per Section 18 (3) of the Act.
The effect of such settlement arrived at during the conciliation
proceedings would get telescoped into the first proviso to Section 25-C(l) and
bind all workmen even though individually, they might not have signed the
agreement with the management or their union on behalf of its member
workmen. The first proviso to Section 25-C(1) clearly lays down that if there is
an agreement for not paying any more lay-off compensation beyond 45 days
between the workmen and the employer, such an agreement has binding effect
both on the employer and the workman concerned. Such binding force gets
clearly attracted in the case of the appellants by virtue of operation of Section
l2(3) read with Section I 8 of the Act emanating from the settlement arrived at
during the conciliation proceedings as aforesaid.
The Court also rejected the contention of workmen for isolating the effect
of Section 1S(3) and observed:
 It is difficult to appreciate how the said proviso can be of any
assistance to the appellants. All that is stated is that anything
inconsistent with the provisions of Chapter VA found to have
been laid down by any other law including standing orders, etc.,
will have no effect. Even sub-section (2) of Section 25-J
overrides any inconsistent provision of any other law or
otherwise binding rule of conduct and makes the provisions of
Chapter VA operative on their own. The submission of learned
counsel for the appellants in this connection was to the effect
that ‘any other law’ as provided in Section 25-J(1) would
include even the Industrial Disputes Act, specially the
provisions contained in Section 18 thereof. It is difficult to agree
that Section 25-J nowhere provides that the provisions of
Chapter VA shall have effect notwithstanding anything
inconsistent contained in any other chapter of the Industrial
Disputes Act as well as in any other law. Such a provision is
conspicuously absent in Section 25-J(l). If submission of learned
counsel for the appellants is accepted, Section 25-J(1) will have
to be rewritten by introducing the additional words therein ‘in
any other part of this Act or’ before the words ‘any other law’ as
mentioned therein. On the express language of the said
provision, therefore, such an exercise is contra-indicated and is
totally impermissible.

I. Applicability of Section 25 C to 25 E
Scope and Coverage. Section 25 C to 25 E shall not apply to (i) an ‘industrial
establishment’ which means any ‘factory’17 ‘mine18 ‘plantation’19 employing
less than 50 persons on average per working day in preceding calendar months20,
or to industrial establishments which are of seasonal character or in which work
is performed only intermittently; or to industrial establishments to which Chapter
V-B applies. From this it is clear that scope of Section 25 A to 25 E is limited. It,
therefore, raises a significant question whether it is open to the industrial tribunal
to award lay-off compensation to workmen employed in an ‘industrial
establishment’ to which Section 25 C is not applicable. The question, however,
has been answered in the negative, by the Bombay High Court in K T Rolling
Mills Ltd v. M R Mehar21 and by Kerala High Court in South India
Corporation v. All Kerala Cashewnut Factory Workers’ Federation.22 In the
former case, less than 50 workmen were employed in an industrial establishment
on an average per working day. The management laid-off certain workmen
without paying them any compensation. On failure of conciliation proceeding,
the dispute was referred to the industrial tribunal for adjudication. The tribunal
awarded compensation on the ground of equity and social justice. The
management thereupon moved the High Court under Article 226 of the
Constitution for appropriate relief. Justice K T Desai, who heard the writ petition
for the High Court confirmed the findings of the tribunal. The management then
appealed to the division bench of the High Court. While Justice J C Shah agreed
with the findings of Justice K T Desai, Justice S T Desai took contrary view by
holding that it was not open to a workman to claim lay-off compensation. Upon
this difference, the case was referred to Justice Mudholkar for final disposal,
who held that a tribunal had no jurisdiction to award lay-off compensation to the
concerned workmen.
It is submitted that the coverage of the Industrial Disputes Act, 1947, in
regard to lay-off compensation is not in conformity with other labour legislation
such as the Payment of Bonus Act, 1965, Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952, and the Employes's State Insurance Act,
1948. The latter Acts are applicable to establishments employing 20 or more
persons.
The provisions relating to lay-off, retrenchment, transfer and closure
compensation should be extended not only to ‘industry’ employing 20 or more
persons but to every ‘industry’, irrespective of the number of workmen
employed therein. This should however, be done in two stages. In the first stage,
the coverage of provisions relating to lay-off compensation should be extended
to workmen employed in any factory (under the Factories Act, 1948), mines
(under the Mines Act, 1952), plantations (under the Plantation Labour Act,
1951) and other industries (under the Industrial Disputes Act,1947) employing
20 or more persons and in the second stage to others.23

J. Workmen Not Entitled to Compensation in Certain Cases

(i) If the workmen refuse to accept any alternative employment. Another
limitation on the scope of statutory requirement of lay-off compensation
is that a laid-off workman shall not be entitled to statutory lay-off
compensation if he refuses to accept any alternative employment in the
same establishment from which he has been laid-off, or in any other
establishment belonging to the same employer situated in the same town
or village or situated within a radius of 5 miles from the establishment to
which he belongs. Whether or not laid-off workmen are entitled to
 compensation depends on the meaning of the expression ‘any alternative
employment’. In a broad sense, it may be used as a synonym of ‘any’.
According to this, the employer is free to offer ‘any employment’
(including a lower post) to laid-off workers without loss of wages
provided in the opinion of the employer the post does not require any
special skill or previous experience and can be done by workmen. In the
literal sense it means employment of equal status. The latter
view has been taken in Industrial Employees’ Union v. J K Cotton
Spinning and Weaving Mills Co.24 Construing the expression ‘alternative
employment,’ the labour appellate tribunal held that it means ‘like,
similar or substitute of original job.’ This view is in conformity with fair
play and justice.
(ii) Another part of the establishment. The expression ‘another part of the
establishment’ occurring in clause (iii) is, however, not free from
ambiguity. The real difficulty arises when one attempts to delineate the
aforesaid expression in order to decide whether a laid-off workman is
entitled to compensation. Reported decisions, however, reveal that even
in the identical facts-situation, the Supreme Court has held differently.
For instance, in Associated Cement Companies Ltd v. Their Workmen,25
the Associated Cement Factory and a lime-stone quarry had a common
manager and a common accountant and other features of functional
integrity. A lay-off was declared in Associated Cement factory due to
strike by the workmen of lime-stone quarry. On these fact-situation, the
lime-stone quarry was held to be ‘another part of the establishment’ under
Section 25 E (iii) so as to disentitle the workmen in the factory to claim
lay-off compensation. Observed the Supreme Court:
The Act not having prescribed any specific tests for determining
what is ‘one establishment’, we must fall back on such
considerations as in the ordinary industrial or business sense
determine the unity of an industrial establishment, having regard
no doubt to the scheme and object of the Act and other relevant
provisions of the Mines Act, 1952, or the Factories Act, 1948.
What then is ‘one establishment’ in the ordinary industrial or
business sense? The question of unity or oneness presents
difficulties when the industrial establishment consists of parts,
units, departments, branches, etc. If it is strictly unitary in the
sense of having one location and one unit only, there is little
difficulty in saying that it is one establishment. Where, however
 the industrial undertaking has parts, branches, departments units,
etc., with different locations, near or distant, the question arises
what test should be applied for determining what constitutes one
establishment.
The Court then observed that the relations between various units depend
on the facts proved having regard to the scheme and object of the statute. But in
Alloy Steel Project Company v. Their Workmen26 under similar situation and
circumstances, the Court declared them two different establishments. This
anomaly was due to the absence of an explanation clause clarifying the meaning
of the expression ‘another part of the establishment’. Further, there is not a
single criterion by which itself and standing alone, either establishes or negatives
the determination of question as to what constitutes an establishment. The issue
is to be decided on a number of considerations such as (i) unity of ownership, (ii)
contract and supervision by same employer, (iii) finance, (iv) management and
employment, (v) geographical proximity and (vi) general unity of purpose and
functional integrity with particular reference to the industrial process.27
(iii) Badli or casual workmen. A badli or a casual workmen is not entitled to
lay-off compensation. ‘Badli workman’ means: a workmen who is
employed in an industrial establishment in the place of another workman
whose name is borne on the muster rolls of the establishment, but shall
cease to be regarded as such for the purposes of this Section, if he has
completed one year of continuous service in the establishment.
The Act does not, however, define the term ‘casual workman’. The
absence of any such definition raises several problems: (1) Whether a workman
can be said to be a ‘casual workman’ (a) when he has completed one year of
service, or when he has not completed one year of service? (2) Is a ‘casual
workman’ entitled to lay-off compensation in case he is employed in an
establishment employing 50 or more workmen? (3) Can the employer avoid
taking a casual workman on the muster roll who has completed one year of
service? It is not easy to answer these questions. Had the Parliament defined the
term ‘casual workman’ like badli workman, the problem would not have arisen.
Under the circumstances, it is suggested that the Parliament may amend the
Industrial Disputes Act,1947 and define the term ‘casual’ workmen.
(iv) If he does not present himself for work. Clause (ii) of Section 25E28
provides that a workman would not be entitled to any compensation if he
refuses to present himself for work as mentioned in clause (ii). This
clause raises a significant question as to what is the effect of absence from
work after the lay-off has been declared? This question was answered in
 Nutan Mills v. Employees’ State Insurance Corporation.29
During the period of the lay-off, the employee would be entitled
to go and serve another master. The only result of his doing so
would be that he would be disentitled to receive compensation.
But it is entirely a matter of his option whether he should present
himself at the office of his employer and thus claim
compensation or earn wages under a different employer and
even though he may serve a different employer, he would still
have the right to be reinstated when the proper occasion arises.30
(v) If the laying-off is due to a strike or go-slow on the part of workmen in
another part of establishment. Section 25 E (iii) provides that the
workman would not be entitled to lay-off compensation if the lay-off was
declared due to strike or go-slow on the part of workmen, in another part
of the establishment.

K. Continuous Service
Section 25 C of the Act requires that two conditions must be complied with.
First, the workmen must have been in ‘continuous service’ of the employer.
Second, such service should not be for less than one year. Section 25 B defines
‘continuous service’, inter alia, for the claim of lay-off compensation. The
definition of ‘continuous service’ consists of two parts. The first part deals with
the meaning of expression ‘continuous service’ and the second part is inclusive
of definition. In the first part, in order that the service may be continuous, it must
be uninterrupted. The second part says that notwithstanding any interruption in
the continuity of service, it will be uninterrupted on account of sickness, or on
account of authorized leave or accident or strike which is not illegal or lockout
or a cessation of work which is not due to any fault of workmen. Section 25 B
(2) provides a legal fraction by view of which a workmen not in continuous
service shall be deemed to be in continuous service provided the conditions laid
down in the Section are complied with. In Explanation (i) appended to sub-
section (2) of Section 25 B the words used are:
he has been laid-off under an agreement or as permitted by
standing orders made under the Industrial Employment
(Standing Orders) Act, 1946, or under this Act or under any
other law applicable to the industrial establishment.
The aforesaid provisions indicate that a workman can be laid-off under
the Industrial Disputes Act. But it is strange to find that no section in Chapter V-
A in express language or by necessary implication confers any such power upon
the management of the industrial establishment to which the relevant provisions
are applicable to lay-off a workman.

L. Employer's Duty to Maintain Muster-Rolls of Workmen

Section 25 D31 casts an obligation upon an employer of an industrial
establishment32 to maintain a muster-roll and to provide for the making of
entries therein by workmen who may present themselves for work.
This provision is equally applicable to industrial establishments
employing 100 or more workmen.

M. Recovery of Lay-off Compensation

Section 33 C (1), inter alia, provides for the mode of recovery of lay-off
compensation namely:
Where any money is due to a workman from an employer, under
a settlement or an award or under the provisions of Chapter V-A
or Chapter V-B, the workman himself or any other person
authorized by him in writing in this behalf, or, in the case of the
death of the workman, his assignee or heirs may, without
prejudice to any other mode of recovery, make an application to
the appropriate government for the recovery of the money due to
him, and if the appropriate government is satisfied that any
money is so due, it shall issue a certificate for that amount to the
collector who shall proceed to recover the same in the same
manner as an arrear of land revenue…. have raised several
issues.
The key question is what is the significance of the expression, ‘money
due’ to workman from an employer under the provisions of Chapter V-A. In
Kays Construction Company v. State of Uttar Pradesh33 the Supreme Court
observed:
[T]he benefit contemplated in sub-section (2) is not ‘money due’
but some advantage or perquisite which can be reckoned in
terms of money…. For instance, loss of the benefit of free
quarters is not loss of ‘money due’ though such loss can be
 reckoned in terms of money by inquiry and equation. The
contrast between ‘money due’ on the one hand and a ‘benefit’
which is not ‘money due’ but which can become so after the
money equivalent is determined on the other, marks out the
areas of operation of the two sub-sections. If the word ‘benefit’
was taken to cover a case of mere arithmetical calculation of
wages, sub-section (1) would hardly have any play. Every case
of calculation, however simple, would have to go first before a
tribunal. In our judgement, a case such as the present, where
money due is back wages for the period of unemployment is
covered by the first sub-section and not the second.34

N. Lay-off and Section 33

Lay-off affects the earnings of the concerned industrial employees35 and
therefore, apparently violates the provisions of clause (a) of sub-section (t), (2)
and (3) of Section 33.36
The tribunals and courts have, however, held that laying-off of workmen
in accordance with the establishment practice37 or provisions of standing orders
or statutory provisions are outside the purview of Section 33.

O. Effect of Laws Inconsistent with Chapter V

Section 25-J reads:
(1) The provisions of this Chapter shall have effect notwithstanding anything
inconsistent therewith contained in any other law including standing
orders made under the Industrial Employment (Standing Orders) Act.
1946:
Provided that where under the provisions of any other Act or rules, orders
or notifications issued thereunder or under any standing orders or any
award, contract of service or otherwise, a workman is entitled to benefits
in respect of any matter which are more favourable to him than those to
which he would be entitled under this Act; the workman shall continue to
be entitled to the more favourable benefits in respect of that matter,
notwithstanding that he receives benefits in respect of other matter under
this Act.
(2) For the removal of doubts, it is hereby declared that nothing contained in
this Chapter shall be deemed to affect the provisions of any other law for
 the time being in force in any state in so far as that law provides for the
settlement of industrial disputes, but the rights and liabilities of employers
and workmen in so far as they relate to lay-off and retrenchment shall be
determined in accordance with the provisions of this Chapter.
The effect of the aforesaid provisions is that for the period of lay-off in an
industrial establishment to which the said provisions apply, compensation will
have to be paid in accordance with Section 25C. But if a workman is entitled to
benefits which are more favourable to him than those provided in the Act, he
shall continue to be entitled to the more favourable benefits. The rights and
liabilities of employers and workmen in so far as they relate to lay-off and
retrenchment, except as provided in Section 25-J, have got to be determined in
accordance with the provisions of Chapter V-A. The aforesaid provision is
equally applicable to industrial establishments to which Chapter V-B applies.
Sub-section of (2) of Section 25 J is quite emphatic about the supremacy
of the provisions relating to the rights and liabilities arising out of lay-off and
retrenchment. These are special provisions and they do not apply to all kinds of
termination of services38. By enacting Section 25-J, Parliament perhaps intended
that the rights and liabilities arising out of lay-off and retrenchment should be
uniform throughout India where the Central Act was in force and did not wish
that states should have their own laws consistent with the Central law. If really
the state legislature intended that it should have law of its own regarding the
rights and liabilities arising out of retrenchment, it would have expressly
provided for it. Legislature has not done so in this case.39

II. RETRENCHMENT

A. The Context
With the cessation of World War II and re-establishment of normal transport
facilities, new and improved machinery began to flow into the country. These in
turn resulted in rationalization of production processes and retrenchment of
surplus labour. The situation was, however, met by the State’s interference in
regulating the employers’ right to retrench their workmen directly through the
Ministry of Labour and indirectly through the industrial tribunals. This situation
continued till 1953. In 1953, a grave situation arose in textile mills resulting in
retrenchment of a large number of workers employed therein. This led to the
promulgation of the Industrial Disputes (Amendment) Ordinance No. 5 of 1953.
Subsequently, these measures with a number of innovations and refinements
were incorporated in the Industrial Disputes (Amendment) (Act 42 of 1953).
Though the 1953-Amendment Act provided for notice and retrenchment
compensation, it did not contain any provision for preventing retrenchment.
Cases of large-scale retrenchment were reported time and again. Consequently,
the state government and national apex bodies approached the Central
Government to take legislative measures for preventing arbitrary action of the
management in retrenching its workmen. Accordingly, the Industrial Disputes
(Amendment) Act, 1976 was enacted.
By this amendment, a new Chapter V-B has been added to the Industrial
Disputes Act, 1947 and this Chapter applies to industrial establishments which
are factories, mines and plantations, employing 300 or more workmen. For
purposes of these new provisions, the central sphere has been widened and the
Central Government would also be the appropriate government in respect of (i)
companies in which not less than 51 per cent of the paid-up share capital is held
by the Central Government and, (ii) corporations established by or under any
law made by Parliament, despite the fact that insofar as other provisions of the
Industrial Disputes Act are concerned, some of these establishments are in the
state sphere. This legislation makes it obligatory for the employers of these
industrial establishments to obtain previous permission of the specified authority
before retrenching any workmen. The specified authority has to give his decision
within a period of 2 months and the previous approval for closure within 90 days
of the date of intended closure. The Act also provides for certain transitional
provisions in respect of continuing lay-off, retrenchments and closures where the
period of notices already sent have not expired and also in respect of
retrenchment. Now, decision will have to be communicated within 2 months. A
new provision has also been made in the Act for restarting of an already closed
down undertaking under certain special circumstances. The penal provisions in
the Act for violation of any of these new provisions are much more stringent
than those already existing in the Act. The maximum penalties provided are
imprisonment for a term which may extend to one year or fine which may extend
to ₹5,000 or with both. For continuing offences, the fine for each day of
contravention after conviction is ₹2,000.40
However, the Industrial Disputes (Amendment) Act, 1982 extended the
aforesaid special provisions of retrenchment to industrial establishments
employing 100 workmen. Two years later, the Industrial Disputes (Amendment)
Act, 1984 curtailed the scope of retrenchment by inserting a new clause (bb) in
Section 2 (oo). Further, the proviso to clause (a) of Section 25-F was omitted.
Moreover, Section 25-N dealing with the conditions-precedent to retrenchment
of workmen was substituted and Section 25 Q dealing with penalties for
retrenchment was amended.

B. Nature of Retrenchment
1. General. Retrenchment generally means ‘discharge of surplus labour or
staff’ by the employer on account of a long period of lay-off or
rationalization or production processes or improved machinery or
automation of machines or similar other reasons. It is adopted as an
economy measure. The subsisting employer-workmen relationship is,
however, terminated in case of retrenchment.
2. Retrenchment and Lockout. Retrenchment and lockout have some
common phenomena of continuing business. Both are acts of the
employer. Both involve subsisting employer-workmen relationship. But,
there are weighty reasons to distinguish lockout from retrenchment on the
basis of the status of employment relationship. Whereas there is a
subsisting employer-workman relationship in lockout, that relationship is
terminated in case of retrenchment. There is yet another basis of
distinction; lockout is an instrument of economic coercion and seeks to
compel recalcitrant workmen to agree to the management's point of view,
retrenchment is a measure of economy and, while it does affect workmen,
the motive of bringing workmen to their knees by putting economic
pressure on them is absent.
3. Retrenchment and Lay-off. Retrenchment and lay-off have some elements
in common. Both are declared by the employer. Both require statutory
compensation but they differ in many other respects. Whereas there is a
subsisting employer-workmen relationship during lay-off, that
relationship is terminated in case of retrenchment. There is yet another
basis of distinction. While retrenchment is a permanent measure to
remove surplus labour, lay-off is a temporary measure.
4. Retrenchment and Closure of Business. Retrenchment and closure of
business have some common features. Both are measures of economy by
the employer; both require statutory compensation. In both cases,
employer-workmen relationship is terminated. But they differ in many
other respects. In closure the industry is closed but in case of
retrenchment, the industry may be continuing.
C. Statutory Definition of Retrenchment
Prior to 1953, the word ‘rettenchment’ was not defined in any legislative
enactment in India. Section 2 (oo) of the Industrial Disputes Act, 1947, defines
‘retrenchment’ to mean:
the termination by the employer of the service of a workman for any
reason whatsoever, otherwise than as a punishment inflicted by way of
disciplinary action, but does not include—
(a) voluntary retirement of the workman: or
(b) retirement of the workman on reaching the age of superannuation if the
contract of employment between the employer and the workman
concerned contains a stipulation in that behalf; or
(bb) termination of the service of the workman as a result of non-renewal of
contract of employment between the employer and the workman
concerned on its expiry or of such contract being terminated under a
stipulation in that behalf contained therein; or
(c) termination of the service of a workman on ground of continued ill-health.
The above definition may conveniently be divided into four parts,
namely; (a) termination of the service of a workmen, (b) by the employer; (c) for
any reason whatsoever, and (d) otherwise than as a punishment inflicted by way
of disciplinary action. The definition, however, excludes, a workman who had (i)
been dismissed as a measure of punishment inflicted by way of disciplinary
action, or (ii) voluntarily retired, or (iii)retired on reaching the age of
superannuation or (iv) been discharged on the ground of continued ill-health.
The definition of retrenchment is very badly drafted for there are inherent
contradictions in the definition. If retrenchment means the termination of service
by the employer, then what about voluntary retirement of workman which is
certainly not a termination of service of workmen by the employer? Similarly,
the retirement on reaching the age of superannuation is also not a termination of
service of the workman by the employer unless it is considered to be a formal act
of the employer to remove the name of the workman from the muster-roll. Here,
one fails to understand the purpose of exclusory clause for the aforesaid items.
Notwithstanding the contradiction in the definition, it is interesting to note
that the legislature intended to interpret the definition in its widest possible
amplitude. But the Supreme Court in Barsi Light Railway Co. v. Joglekar (K
N)41 while considering the meaning and scope of the definition of
‘retrenchment’ occurring in Section 2 (oo) of the Industrial Disputes Act, 1947
interpreted the words ‘for any reason whatsoever’ to mean ‘for any reason which
is connected with economy whatever the reasons might be’. In this case, under
an agreement dated 1 August 1895 between the secretary of the state for India
and Railway Company, the President of India gave notice to the Railway Co. on
19 December 1952 that the undertaking of the Railway Company would be taken
over with effect from 1 January 1954. Consequently, the Railway Company
served a notice to its workmen that in view of the aforesaid circumstances, the
services of all the workmen of the Railway Company would be terminated with
effect from the afternoon of 31 December 1953. It was also stated therein that
the Government of India intended to employ those staff of the company who
would be willing to serve the railways on terms and conditions fixed by the
government. Majority of the staff of the Railway Company were re-employed on
the same scales of pay. However, 23 per cent of the staff were re-employed on
somewhat lower scales though the pay which they actually drew at the time of
re-employment was not affected. Only about 24 of the former employees of the
Railway Company were not taken back by the government. Soon after,
Railwaymen's Union filed 61 applications under the Payment of the Wages Act,
1936 to the Payment of Wages Authority for payment of retrenchment
compensation under Section 25 F. On these facts, three questions arose: (i)
whether the authority under the Payment of Wages Act, 1936 had jurisdiction to
adjudicate upon the claim of retrenchment compensation? (ii) whether the
erstwhile workmen were entitled to claim compensation under Section 25 F (b)?
(iii) whether they had been ‘retrenched’ by their former employer? The authority
held that it had no jurisdiction to deal with the application but held that the
workers were entitled to compensation as there had been retrenchment.
Aggrieved by this order, the Railwaymen’s Union moved the Bombay High
Court for a writ under the provisions of Articles 226 and 227 of the Constitution
for quashing the order of dismissal passed by the authority and directing the
latter to dispose of the application on merits. Chief Justice Chagla and Justice
Dixit of the Bombay High Court held that the workmen had been retrenched and
the Railway Company was liable to pay compensation to them. Against this
judgement, the appeal was filed before the Supreme Court.
Another case, Hariprasad Shivshankar Shukla v. A D Divalkar (Dinesh
42
Mills) was also heard by the Supreme Court along with Barsi Light Railway.
Co. The management of Shri Dinesh Mills had decided to close down the shifts.
Thereafter, the management gave notice to the workmen intimating that the
second shift would be closed with effect from 20 December 1953 and the first
shift with effect from 8 January 1954 and also mentioned in the notice that as a
result of the closure, the services of all workmen shall stand terminated. The mill
was closed and therefore, its workmen made an application to the authority
under the Payment of Wages Act, claiming retrenchment compensation under
Section 25 F (b) of the Industrial Disputes Act, 1947. It held that the discharge
of workmen on closure did not constitute retrenchment as defined in Section 2
(oo) of the Industrial Disputes Act, 1947. Thereupon the workmen moved the
Bombay High Court for issuance of appropriate writ. Justice Babedkar and
Justice Shah of the Bombay High Court relying on the decision in Barsi Light
Railway Co.43 held that discharge of workmen on closure of business was
retrenchment. Aggrieved by this order, the management preferred an appeal to
the Supreme Court. The Supreme Court disposed of the two appeals together by
a single order. The Supreme Court reversed the findings of the Bombay High
Court and pointed out that the statutory definition of the word ‘retrenchment’
merely laid emphasis upon economic concept of the terms and ‘for any reason
whatsoever’ meant ‘for any economic reasons whatsoever in a continuing or
existing running industry.’ Justice S K Das of the Supreme Court observed:
….. retrenchment as defined in Section 2 (oo) and used in
Section 25-F has no wider meaning than the ordinarily accepted
connotation of the word: it means the discharge of surplus
labour or staff by the employer for any reason whatsoever,
otherwise than as a punishment inflicted by way of disciplinary
action, and it has no application where the services of all
workmen have been terminated by the employer.44
The Court also referred to its earlier observation in Pipraich Sugar Mills
Ltd v. Pipraich Sugar Mills Mazdoor Union45 which reads as follows:
Retrenchment connotes in its ordinary acceptation that the
business itself is being continued but that a portion of the staff or
the labour force is discharged as surplusage and the termination
of services of all workmen as a result of closure of the business
cannot therefore be properly described as retrenchment.46
The Court also held that termination of service as a result of transfer of
ownership of an undertaking to another employer did not constitute
‘retrenchment’.
It is difficult to accept this interpretation. If the expression ‘for any reason
whatsoever’ means what their Lordships have held it to mean, one wonders what
was the need of the qualifying clause, ‘otherwise than as a punishment inflicted
by way of disciplinary action.’ It is regrettable that Justice Das did not consider
sub-clauses (a), (b), (c) on the ground that they were not directly applicable to
the cases under consideration. But one cannot overlook the intention of the
legislature in including all the categories mentioned in the earlier part of the
definition. However, by narrowing the scope, the Supreme Court severely
curtailed the meaning of the statutory definition of retrenchment and,
correspondingly, increased the residuary area of discharge wherein, save in
establishments having a gratuity scheme, workmen were not entitled to any
severance pay and further rendered 63 words out of a total of 81 words used in
the definition ‘useless appendage’. Further, the Court misread the intention of
the legislature in enacting Section 25 F of the Industrial Disputes (Amendment)
Act, 1953, and on the whole threw the provisions of the Industrial Disputes Act,
1947, out of gears. Thus, the decision caused considerable hardship to workmen
by denying statutory compensation to workmen whose services were terminated
on account of closure and transfer of undertaking.
It is unfortunate that the impact of the aforesaid decision and curtailment
of the meaning of statutory definition of ‘retrenchment’ did not attract the
attention of Supreme Court for about 2 decades. It is only after about a decade
when the Industrial Disputes Act, 1947 has undergone several amendments that
the impact of the aforesaid decision appears to have been felt by the Supreme
Court in State Bank of India v. N Sundara Money.47 The facts of the instant
case were as follows: the respondent was appointed as cashier, off and on, by the
State Bank of India between 4 July 1970 and 18 November 1972. There were
intermittent breaks in the service of the respondent but he had completed 240
days in a year within the fold of ‘deemed’ continuous service occurring in
Section 25-B(2). But the order of appointment which bore the termination of
service of workman after a few days was challenged in view of Sections 2 (oo)
and 25-F. Justice Krishna lyer delineating the scope of ‘retrenchment’ observed:
A breakdown of Section 2 (oo) unmistakably expands the
semantics of retrenchment. Termination for any reason
whatsoever, are the key words. Whatever the reason, every
termination spells retrenchment. So the sole question is, has the
employee's service been terminated? Verbal apparel apart, the
substance is decisive. A termination takes place where a term
expires either by the active step of the master or the running out
of the stipulated term. To protect the weak against the strong,
this policy of comprehensive definition has been effectuated.
Termination embraces not merely the act of termination by the
employer, but the fact of termination howsoever produced.48
 The aforesaid observation not only makes a departure from the
interpretation of the Court in Barsi Light Railway Company, but also impliedly
overrules the decision. However, in M/s. Hindustan Steel Ltd v. Labour
Court,49 again an attempt was made to revive the issue of conflict in Supreme
Court decision, but the Court explained that there was no conflict between the
Barsi Light Railway Company and State Bank of India v. N Sundara Money50
because according to the first case,‘retrenchment’ would not include bona fide
closure of the whole business. This attempt is not only futile but is self-
contradictory. It may be added that even after the 1956 and 1957 amendments to
the Industrial Disputes Act, 1947, the non-prescription of re-employment on re-
opening of establishment persisted, leading the judiciary to examine the
justifiability of closure.
Again in Delhi Cloth and General Mills Co. Ltd v. Shambhu Nath
Mukherji51, it was held that striking-off the names of the workmen from the
rolls would amount to retrenchment within the meaning of Section 2 (oo) of the
Act.
Since Justice Krishna Iyer wrote the judgement in State Bank of India v.
N Sundara Money, it is not surprising to find a similar view being referred to
and followed concerning the interpretation of the word ‘retrenchment’ by Justice
Krishna Iyer himself in Santosh Gupta v. State Bank of Patiala52 and Gujarat
Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha53 and thereby bringing
the conflict in Barsi Light Railway Company and State Bank of India v. N
Sundara Money to its forefront.
Santosh Gupta v. State Bank of Patiala54 has stretched the principle laid
down in Sundara Money's case. In this case, State Bank of Patiala terminated
the services of one of its workman (a woman) who had put in more than 240
days of service, [deemed continuous service for a year under Section 25 B (2)]
on the ground of her failure to pass the prescribed test provided for confirmation
in service. She was neither served with a notice required under Section 25 F(a),
nor paid retrenchment compensation under Section 25 F (b). On these facts a
question arose whether termination of service of the workman by the bank due to
the failure of the workman to pass the prescribed test for confirmation in service
amounted to a ‘retrenchment’. The Court preferred to adopt a broad
interpretation of the expression ‘retrenchment’ and stated:
[I]f due weight is given to the words ‘the termination by the
employer of the service of a workman for any reason
whatsoever’ and if the words ‘for any reason whatsoever’ are
understood to mean what they plainly say, it is difficult to
 escape the conclusion that the retrenchment must include every
termination of service of a workman by an act of the
employer… except those not included in Section 25-F or not
expressly provided for in any other provisions of the Act such as
Section 25-FF and 25-FFF.
The Court accordingly held that the discharge of the workman on the
ground that she did not pass the test which would have enabled her to be
confirmed was ‘retrenchment’.
Earlier in Gujarat Steel Tubes v. Gujarat 'Steel Tubes Mazdoor Sabha55,
Justice Krishna lyer speaking for the Court spoke in a similar tone:
We are disposed to stand by the view that discharge, even where
it is not occasioned by a surplus of hands, will be retrenchment,
having regard to the breadth of the definition.
From the aforesaid decisions, it is evident that the Supreme Court gave
literal construction and rejected the ordinarily accepted connotation of the word
‘retrenchment’. The Court, has thereby, approved the controversial judgement in
State Bank of India v. N Sundara Money56 as also in Hindustan Steel Ltd v.
State of Orissa57 and made a departure from Barsi Light Railway Company v. K
N Joglekar58, Pipraich Sugar Mills v. Pipraich Sugar Mills Mazdoor Union59
and, Banaras Ice Factory Ltd v. Their Workmen.60
The consequence of this interpretation is far-reaching. It would render use
of the word ‘discharge’ in Section 2-A superfluous, introduce anomaly in the
application of Sections-11A, 25 G, 25H and 33 and throw the scheme of the
Industrial Disputes Act, 1947 out of gear. However, if this view is accepted,
management would be forced either to dismiss, or retrench workers in case of
loss of confidence or strained relationship between employers and workmen or
termination on abolition of the post or even in cases of labour employed on
contract work, work of temporary nature or work of seasonal character. Indeed,
it would be anomalous to the point of absurdity and would result in horrifiying
situation if an employer who terminates the services of his workman for loss of
confidence or inefficiency or insubordination and the like is compelled to re-
employ that very workman in the same industry or business and that too in
preference to other workmen whose services are not terminated either for loss of
confidence, inefficiency, insubordination and the like.61
We believe that Barsi Light Railway Company on the one hand, and
State Bank of India v. N Sundara Money, Santosh Gupta and Gujarat Steel
Tubes on the other, took extreme views of the matter; if the former unduly
restricted the coverage of ‘retrenchment’, the latter gave a wide meaning and,
thus, threw the revised scheme of the Industrial Disputes Act, 1947 out of gear.
Further, the consequences of re-opening of the issue after several amendments in
the Industrial Disputes Act, 1947 are tremendous. Before we conclude our
discussion of this section, it would be relevant to note that Justice Pathak who
wrote a separate judgement in Surindra Kumar v. Industrial Tribunal-cum
Labour Court62 was inclined to disagree with the decision in the Santosh Gupta
case which is evident from the following observation:
No question arises before us whether the termination of the
services of the appellants amounts to ‘retrenchment’ within the
meaning of Section 2 (oo) of the Act. The respondent bank has
apparently accepted the finding of the industrial tribunal-cum-
labour court that the termination amounts to retrenchment. It has
not preferred any appeal. I mention this only because I should
not be taken to have agreed with the interpretation of Section 2
(oo) rendered in Santosh Gupta v. State Bank of Patiala.
In L Robert D 'Souza v. Executive Engineer, Southern Railway63, the
Supreme Court had followed the interpretation of the expression ‘retrenchment’
given in State Bank of India v. N Sundra Money,64 Hindustan Steel Ltd v.
Presiding Officer, Labour Court,65 Santosh Gupta v. State Bank of Patiala,66
Delhi Cloth & General Mills Ltd v. Shambhu Nath Mukherjee,67 Surindra
Kumar Varma v. Central Government Industrial Tribunal68 and Mohan v.
Bharat Electronics Ltd69 and refused to accept the contention that the Court
should ignore the interpretation of ‘retrenchment’ given in the aforesaid cases
and should proceed on the construction of Section 2 (oo) set out in Hariprasad
Shivshankar Shukla v. A D Divalkar.70 The submission was made apparently in
view of the obiter of Justice Pathak in Surindra Kumar Varma's case wherein
he stated that his concurrence with the majority view propounded by Justice
Reddy should not be taken to imply his agreement with the interpretation of
Section 2(oo) rendered in Santosh Gupta's case. However, the Court stated:
[T]here is neither apparent nor real conflict between the decision
of the Constitution bench in Hariprasad Shukla's case and the
later five decisions commencing from Sundara Money and
ending with Mohanlal's case, it would be sheer waste of time
and merely adding to the length of the judgement to re-examine
 this contention all over again, so as to cover similar ground.
The Court added:
The definition of expression ‘retrenchment’ in Section 2(oo) is
so clear and unambiguous that no external aids are necessary for
its proper construction. Therefore, we adopt as binding the well
settled position in law that if termination of service of a
workman is brought about for any reason whatsoever, it would
be retrenchment except if the case falls within any of the
excepted categories, i.e., (i) termination by way of punishment
inflicted pursuant to disciplinary action; (ii) voluntary retirement
of the workman; (iii) retirement of the workman on reaching the
age of superannuation if the contract of employment between
the employer and the workman concerned contains as stipulation
in that behalf; (iv) or termination on the ground of continued ill-
health. Once the case does not fall in any of the excepted
categories, the termination of service even if it be automatic
discharge from service under agreement would nonetheless be
retrenchment within the meaning of expression in Section 2
(oo). It must, as a corollary follow that if the name of the
workman is struck off the roll, that itself would constitute
retrenchment as held by this Court in Delhi Cloth & General
Mills Ltd case.71
The Supreme Court in Binoy Kumar Chatterjee v. Jugantar Limited72
drew a sharp distinction between Santosh Gupta v. State Bank of Patiala73,
Mohan Lal v. Bharat Electronics,74 L Robert D’ Souza v. Executive Engineer,
Southern Railway75 and this case. It held that all the earlier cases arose on
termination of a workman's service at a point of time when he had not reached
the age of superannuation. However, on reaching the age of superannuation, if
he is employed afresh for a certain period, such employment cannot be equated
with ‘employment’ within the meaning of the term retrenchment and, therefore,
the termination of the service of such workman on the expiry of his period of
contract would not constitute retrenchment’. In this case, the petitioner was re-
employed by the company on reaching the age of superannuation. He was paid
retiral benefits which he willingly received. Thereafter, he was offered fresh
employment on contract basis for a period of 12 months. His service was
terminated on the expiry of the said period. Thereupon, the petitioner challenged
the validity of the order on the ground that he was neither served a notice nor
was paid retrenchment compensation under Section 25 F and therefore, the
termination of his service was illegal. On these facts, a question arose whether
the termination of his subsequent service under a fresh contract was
‘retrenchment’. The Supreme Court held that the termination of service of the
workmen was not retrenchment.
The decision of Justice Pathak appears to be in conformity with the
observations made by him in Surindra Kumar Varma case.76 This is also in
accord with the legislative scheme framed under the Industrial Disputes Act,
1947. Indeed the decision has made some departure from the rigid approach
adopted in L Robert D'Souza v. Executive Engineer, Southern Railway77.

Termination of Service of Probationer—Not Retrenchment

In LIC of India v. Raghvendra Seshagiri Rao Kulkarni78, the Supreme Court
was invited to consider the validity of order of termination of service of a
development officer while he was on probation by the LIC of India. In the
instant case, the respondent was discharged from service during probation in
terms of Regulation 14(4) of the Life Insurance Corporation of India (Staff)
Regulations, 1960.
A three-judge bench of the Supreme Court in M Venugopal v. Divisional
Manager, Life Insurance Corporation of India, Machalipatnam, A P79 held
that the termination of respondent's services would amount to ‘retrenchment’ as
defined in Section 2(oo) of the Industrial Disputes Act and since the
requirements of Section 25-F of that Act were not complied with, the
termination would be bad. It may be pointed out that Life Insurance Corporation
(Amendment) Act, 1981 (Act of 1981) which came into force on 31 January
1981 provided that under subsection (2A) of Section 48 of the Life Insurance
Corporation Act, 1956, the regulations which were already in force immediately
before the commencement of the Amendment Act, shall be deemed to be rules
made by the Central Government and they shall be deemed to have effect
notwithstanding anything contained in the Industrial Disputes Act 1947.
The validity of the Amendment Act was upheld by the Supreme Court in
A V Nachane v. Union of India.80 For this reason also, the ground that
termination would amount to retrenchment within the meaning of Section 2(oo)
of the Industrial Disputes Act cannot be entertained.

Termination as a Result of Closure—Not Retrenchment

The Supreme Court in H P Minerals and Industrial Development Corporation
Employees Union v. State of H P81 held that ‘retrenchment’ as defined under
Section 2(oo) does not cover termination of service as a result of closure of an
undertaking.

Striking-off the Name of Absentees—Retrenchment

In Arun Mathur v. Labour Court82, striking off the name of the workman from
the attendance register for being absent without any intimation was held to be
retenchment under Section 2 (oo). Further, even service for fixed periods, with
notional breaks, terminated, and not renewed, was also held to be
‘retrenchment’, and not covered under Clause (bb).
In Hari Singh v. Industrial Tribunal-cum-Labour Court, Rohtak83,
striking-off the name of the workman from the attendance register for being
absent without any intimation was held to be ‘retrenchment’ under Section 2
(oo). The Supreme Court in Rolstan Joh v. Central Government Industrial
Tribunal-cum-Labour Court,84 held that termination of service of a workman,
under clause 24(e) of the standing orders, for overstaying of leave period without
proper explanation amounted to ‘retrenchment’ under Section 2(oo) of the
Industrial Disputes Act,1947.

Voluntary Resignation—lf Retrenchment

Is voluntary resignation covered under the exception (a) to Section 2(oo)? The
question came up for consideration before the Supreme Court in M/s J K Cotton
Spinning and Weaving Mills Co. Ltd, Kanpur v. State of UP85. In this case, an
employee had voluntarily resigned. The resignation was accepted by the
employer. Subsequently, a dispute was raised by the workman which went up to
the Allahabad High Court. The High Court held it to be a case of ‘retrenchment’
and ordered payment of retrenchment compensation. On appeal, the Supreme
Court held that when a contract of service is terminated on the employee
exercising his right to quit, such termination cannot be said to be at the instance
of the employer to fall within the first part of the definition of ‘retrenchment’ in
Section 2 of the Act. The Court accordingly held that voluntary resignation
amounted to voluntary retirement and not ‘retrenchment’.
In Shri Krishna v. Prescribed Authority, Kanpur86, the Allahabad High
Court held that a resignation voluntarily given snaps employer-employee
relationship, unless standing orders or terms of contract require acceptance of
resignation by employer as a condition precedent. Accordingly, it falls within
voluntary retirement under Clause (a) of Section 2(oo) and was not
retrenchment.

Termination of Service on Superannuation

The second set of circumstance which takes termination of service outside
Section 2 (oo) and Section 25-F of the Act is when a workman reaches the age of
superannuation. Clause 2 (b), however, lays down a condition that the contract
of service must contain a provision for such superannuation and also specify the
age of superannuation. The question whether a workman attained the age of
superannuation or not will depend on the facts of each case and on the conduct
of the parties. A termination prior to the age of superannuation laid down in the
contract of employment is liable to be struck down. Further, it would be prudent
for an employer to give notice to the concerned workman of his intention to do
so. This is all the more so when there is a difference of opinion as to the correct
age of the concerned workman.
In Ambika Singh v. U P State Sugar Corpn. Ltd87, dates of birth of two
workmen in the records of the regional provident fund commissioner, U P and
the Life Insurance Corporation of India were different. The company accepted
the former record and retired the two employees on superannuation. The
workmen's plea was that adequate opportunity had not been given to them before
altering their dates of birth and hence there was a violation of principles of
natural justice. The Allahabad High Court upheld the plea and set aside the
orders of superannuation and dismissed the management's plea that the workman
had an alternate remedy under the Industrial Disputes Act, 1947.

Compulsory Retirement
The order of compulsory retirement amounts to ‘retrenchment’ and if Section
25-F has not been complied with in such case, the employee is entitled to
restatement. Thus, the Court in Mahabir v. O K Mittal, Dy. Chief Mechanical
Engineer, N.E. Rly.88 quashed the order of compulsory retirement of the
petitioner employee who was compulsorily retired on attaining age of 55 years
under Indian Railways Establishment Code Rule 2046.
In State Bank of India v. Workmen of State Bank of India89, the
Supreme Court held that the termination of service of the bank employees under
paragraph 521 (10) (c) of the Sastry Award is a result of disciplinary
proceedings and was ‘punitive’ and therefore did not amount to ‘retrenchment’
within the meaning of Section 2 (oo).
The aforesaid decision suggests that the termination on the ground of loss
of confidence will be tantamount to dismissal. Thus, the Supreme Court decision
overrules the possibility of termination of service by way of discharge. While
agreeing with the Court's view that it is not a case of ‘retrenchment’, it is
submitted that this decision, in effect, renders the use of the word ‘discharge’ in
Section 2A superfluous, introduces anomaly in the application of Sections II A
and 33 and throws the scheme of the Act out of gear.
Scope of Section 2 (oo) (bb). In order to restrict the wide coverage given
by the courts to the term ‘retrenchment’, Section 2 (oo) was amended adding
sub-clause (bb) to Section 2 (oo) by the Industrial Disputes (Amendment) Act,
1984 which came into effect from 18 August 1984. The scope of Clause (bb) of
Section 2 (oo) has been the subject-matter of judicial controversy. Courts have
interpreted the expression ‘retrenchment’ in its widest possible connotation
despite the legislative intent behind the clause (bb) to restrict the scopes of
definition of retrenchment. This is evident from the decision of the constitution
bench of five judges of the Supreme Court in Punjab Land Development
Corporation Ltd v. Presiding Officer, Labour Court, Chandigarh90. The Court
while considering the precise question whether the expression ‘retrenchment’ in
Section 2 (oo) has to be interpreted in its narrow, natural, contextual meaning or
in its wider, literal meaning negatived the contention of the employer and laid
down that the definition of ‘retrenchment’ in Section 2(oo) means termination by
the employer of the service of a workman for any reason whatsoever, otherwise
than as a punishment inflicted by way of disciplinary action, and those expressly
excluded by the definition.
The Supreme Court in State of Rajasthan v. Rameshwar Lal Gahlote91
held that where the service of workman is terminated in terms of letter of
appointment which provides for termination after the expiry of a fixed period, it
is saved by Clause (bb) of Section 2(oo) unless there is a finding that the power
under Clause (bb) of Section 2 (oo) was misused or vitiated by its mala fide
exercise or the appointment for a fixed period was a colourable exercise of
power, no order of reinstatement or reappointment can be made.

Termination of Service after Expiry of Fixed Period

In Haryana State F C C W Stores Ltd v. Ram Niwas,92 the workmen concerned
were appointed on contract basis on payment of daily wages. They were told
clearly that their appointment was on contract basis till the stock of grain stored
in the open area at mandi was disposed of or for a period of 3 months. The
management terminated their services after the stock lying in the open area was
cleared. The workmen raised an industrial dispute which was referred to the
labour court. The labour court held that the workmen were not entitled to any
relief. On a writ petition, High Court set aside the order of the labour court and
directed reinstatement of workmen with full back wages. Aggrieved by this
order, the employer filed a special leave to appeal before the Supreme Court. It
was invited to decide (i) whether on the facts and circumstances of the case, the
termination of service of the respondents was 'retrenchment’ in terms of section
2 (oo) of the ID Act; and (ii) whether Section 2 (oo) (bb) of the Act had any
application in the case. The Court held that the termination of service did not
amount to retrenchment as it fell under clause (bb) of Section 2 (oo) of the Act
and, therefore, workmen were not entitled to any relief.

Project Employment—Not Covered

In Surendra Kumar Sharma v. Vikas Adhikari,93 the appellant was employed
as a junior engineer on daily wages for a period of 100 days in a scheme known
as rural employment programme. On completion of 100 days, the authority
passed a specific order of termination on 29 December 1988. But the appellant
was offered yet another temporary employment in a scheme known as Jeevan
Dhara vide order dated l7 January 1989. The employment was extended from
time to time upto 12 June 1989. The last order of appointment was made for a
period of 7 days which was issued on 24 June 1989 and which came to an end on
30 June 1989. Thereupon, the appellant, and a few others similarly employed
filed a writ petition in the High Court, which by an interim order protected their
employment. However, the High Court held that as the posts have been
abolished, the question of their regularization did not arise. The High Court also
held that the workmen were given employment under the schemes on an ad hoc
basis, and from the very beginning, knew that the employment was of a
temporary nature and coterminus with the scheme itself, and therefore, they
could not be said to have been retrenched within the meaning of Section 2 (oo)
of the Industrial Disputes Act and they were not entitled to the relief of
reinstatement if the provisions of Section 25F of the Act were not complied with.
Aggrieved by the order, the appellants filed a writ appeal which was also
dismissed by the division bench of the High Court. Thereupon, an appeal by
special leave was filed before the Supreme Court.
The Supreme Court ruled that those employed under the scheme could not
ask for more than what the scheme intended to give them. To get employment
under such a scheme and to claim on the basis of the said employment, a right to
regularization, is to frustrate the scheme itself. No court can be a party to such an
exercise. It is wrong to approach the court with the problems of those employed
under such schemes with a view to providing them with full employment and
guaranteeing equal pay for equal work.
The Court, while dismissing the appeal, also remarked that the appellant
was a daily wager in a scheme and knew it well that his employment was
coterminus with the scheme. The post against which the appellant worked had
been abolished for want of funds and had ceased to exist.
Another landmark judgment is S M Nilajkar v. Telecom District Manger,
Karnataka94. Here, the telecom department employed certain casual labourers
on a project for extension of telecom facilities in the district of Belgaum. Their
services were utilized for digging, laying of coaxial cables and other sundry
work. The project was completed sometime in 1986–87 and the services of these
workmen were terminated sometime during 1987. After a lapse of a few years,
they raised an industrial dispute and the same was referred to the Central
Government Industrial Tribunal-cum-Labour Court, Bangalore. The tribunal
directed reinstatement of all the workmen with the benefit of continuity of
service and with 50 per cent back wages. Aggrieved by this order, the employer
filed a writ petition in the High Court. The single judge of the High Court held
that the workers were not project employees as the appointment was not for any
particular project. Hence they would not be governed by sub-clause (bb) of
clause (oo) of Section 2 of the Industrial Disputes Act, 1947.95
Aggrieved by this order, the employer filed a writ appeal in the Karnataka
High Court which held that the workmen were employed under a project of the
telecom department and were, therefore, covered by sub-clause (bb) of clause
(oo) of Section 2 of the Act. In appeal to the Supreme Court, the question to be
decided was whether the workmen recruited for discharging a temporary job
under a project can insist on compliance with Section 25-F of the Act if their
services were dispensed with on the project coming to an end. The Court after
referring to the provisions of Sections 2 (oo) and 25-F of the Act observed96:
It is also well settled that Parliament has employed the
expression ‘the termination by the employer of the service of a
workman for any reason whatsoever’ while defining the term
‘retrenchment’, which is suggestive of the legislative intent to
assign the term ‘retrenchment’ a meaning wider than what it is
understood to have in common parlance.
The Court then referred to the four exceptions of Section 2 (oo) and said
that in order to be excluded from ‘retrenchment’, the termination of service must
fall within one of the four excepted categories. Termination of service which
does not fall within these categories would fall within the meaning of
‘retrenchment’.
Applying this principle, the Court pointed out that it may not amount to
retrenchment within the meaning of sub-clause (bb) if: (i) the workman was
employed in a project or scheme of temporary duration; (ii) the employment was
on a contract, and not as a daily-wager simpliciter, which provided, inter alia,
that the employment shall come to an end on the expiry of the scheme or project;
(iii) the employment came to an end simultaneously with the termination of the
scheme or project and consistently with the terms of the contract; and (iv) the
workman was apprised or made aware of the above terms by the employer at the
commencement of employment.
The Court held that to exclude the termination of an employee under the
scheme or project from the definition of retrenchment, it is for the employer to
prove that he was employed in a project so as to attract the applicability of sub-
clause (bb). In the instant case, the respondent employer had failed to prove the
same. All that had been proved was that the appellants were engaged as casual
workers or daily-wagers in a project. For want of proof, attracting applicability
of sub-clause (bb) it had to be held that termination of services of the appellants
amounted to retrenchment.
As regards delay in raising the dispute, the Court said that delay in raising
it would certainly be fatal if the delay has resulted in material evidence relevant
to adjudication being lost and not available which was not the case with the case
at hand.
The Court, accordingly, upheld the order of the single judge of the High
Court that workmen be reinstated but without back wages.
While dealing with a number of cases pending in different form, namely,
industrial-cum-labour court or high court raising similar issues awaiting
decision, the Court made it clear that all such cases shall be heard and decided in
accordance with the law laid down in this case. The Court posted out that as the
project in which the workmen were engaged has come to an end, the government
may consider the appellants being accommodated in some other project or
scheme or regular employment, if available, by issuing suitable instructions or
guidelines. However, if it was not possible, the respondent shall be at liberty to
terminate the employment of the appellants after reinstating them as directed by
the High Court, after complying with Section 25-F of the Industrial Disputes
Act.

Automatic Termination of Service—Not Covered by Clause

(bb)
In Uptron India Ltd v. Shammi Bhan97, the Supreme Court while interpreting
clause (bb) of Section 2 (oo) observed:
What the clause, therefore means is that there should have been
a contract of employment for a fixed term between the employer
and the workmen containing a stipulation that the services could
be terminated even before the expiry of the period of contract. If
such contract on the expiry of its original period, is not renewed
and the services are terminated as a consequence of that period,
it would not amount to retrenchment. Similarly, if the services
are terminated even before the expiry of the period of contract
but in pursuance of a stipulation contained in that contract that
the services could be terminated, then in that case also, the
termination would not amount to ‘retrenchment’.
The Court accordingly held that the automatic termination of service
under the certified standing orders would not be covered under clause (bb) of
Section 2 (oo).

Termination of Service After Crushing Season was Over—

Not Retrenchment
In Morinda Co-op Sugar Mills Ltd v. Ram Kishan98, the Supreme Court while
dealing with engagement of a seasonal workman in sugarcane crushing held that
non-engagement of workman was not a case of ‘retrenchment’ but of the closure
of the factory, after the crushing season was over. Thus, they were covered under
clause (bb) of Section 2 (oo).
The aforesaid view was reiterated by the three-judge bench of the
Supreme Court in Anil Bapurao Kanase v. Krishnq Sahkari Sakkar Karkhana
Ltd99. In this case, the management terminated the services of an employee
working in the chemistry section of the sugar factory after the crushing season
was over. It was contended that the termination amounted to ‘retrenchment’ and
was made in violation of Section 25-F.
The Supreme Court negatived the contention and held that since the work
was of seasonal nature, the principle of the Industrial Disputes Act, 1947 was not
applicable. Further, they were covered under clause (bb) of Section 2(oo) of the
Act.
Retrenchment of Workmen due to Closure of a Unit—Not
Retrenchment
In M P State Textiles Corporation Ltd v. Mahendra,100 the corporation
recruited certain workmen and posted them to its different units. However, on
closure of one of its unit, namely, Indore Textile Mills, the workmen employed
therein were retrenched, even though it was stipulated in the letter of
appointment that they could be appointed anywhere or transferred to various
textile mills. On these facts, the labour court held the retrenchment to be illegal
and directed reinstatement. The award was upheld by the High Court. On appeal,
the Supreme Court held that the respondent workmen were the employees of the
corporation and their retrenchment by Indore Textile Mills was without authority
of law since they were not the employees or workmen of Indore Textile Mills.

Scope of Section 2 (oo) (c)

In Management of Bisra Stone Lime Co. Ltd v. Their Workmen101, a question
arose whether workmen suffering from fits of intermittent nature were covered
under continual ill-health under Section 2(oo) (c) of the Industrial Disputes Act,
1947. The Orissa High Court answered the question in the negative and
observed:
Ill-health means disease, physical defect or infirmity or
unsoundness. A person who is not free from disease is certainly
not possessing a sound health for (sic) active duties and if this
sort of thing continued for a long period, he must be said to be
suffering from continued ill-health for continued ill-health
suggests that it is prolonged for a considerable period. Ill-health
which is intermittent, cannot be termed as continued ill-health. It
should be of sufficiently long duration and continuous.
In Anand Bihar v. Rajasthan State Road Transport Corporation,
Jaipur,102 the Supreme Court held that the termination of service of workmen on
account of incapacity due to sub-normal eye-sight or loss of required vision to
work was covered by clause (c) of Section 2(oo) and therefore, was not
‘retrenchment’.
In M Venugopal v. Divisional Manager, Life Insurance Corporation of
103
India , the Supreme Court was invited to consider whether the termination of
service of appellant while he was on probation on the ground that he failed to
achieve the target business amounted to retrenchment within the meaning of
Section 2(oo). The Supreme Court answered the question in negative, and held
that any such termination, even if the provisions of the Industrial Disputes Act
were applicable, shall not be deemed to be retenchment within the meaning of
Section 2(oo) having been covered by sub-section (bb). The Court added that if
in the contract of employment, no stipulation as mentioned under clause (bb) of
Section 2(oo) is provided or prescribed, then such contract shall be covered by
clause (bb) of Section 2(oo).

D. Conditions Precedent to Retrenchment of Workmen

1. The Context
Under common law, the employer had the unfettered right to terminate the
services of his workmen. But with the emergence of the concept of social justice,
restrictions have been imposed on the exercise of this unfettered right. Prior to
1953, we have already seen, there was no statutory law of retrenchment
compensation. Due to serious and acute problems in textile industry, the
provisions for lay-off and retrenchment compensation were incorporated into the
Industrial Disputes Act, 1947 to relieve the hardship caused by unemployment
without any fault of the workmen: involuntary unemployment also causes
dislocation of trade and may result in general economic insecurity. Justice S K
Das speaking for the Supreme Court in Hariprasad Shivashankar Shukla v. AD
Divalkar104 pointed out the necessity and reasons for insertion of retrenchment
compensation into the aforesaid Act as follows:
It is reasonable to assume that in enacting Section 25F, the
legislature standardized the payment of compensation to
workmen retrenched in the normal or ordinary sense in an
existing or continuing industry, the legislature did away with the
perplexing variety of factors for determining the appropriate
relief in such cases and adopted a simple yardstick of the length
of service of the retrenched workmen…

2. Legislative Response
In order to give effect to above recommendations, the Parliament enacted
Section 25-F which lays down the conditions precedent to retrenchment of
workmen as follows:
No workman employed in any industry who has been in continuous
service for not less than one year under an employer shall be retrenched by that
employer until:
(a) the workman has been given one month’s notice in writing indicating the
reasons for retrenchment and the period of notice has expired, or the
workman has been paid in lieu of such notice, wages for the period of the
notice.
(b) the workman has been paid, at the time of retrenchment, compensation
which shall be equivalent to 15 days’ average pay for every completed
year of continuous service or any part thereof in excess of 6 months.
An analysis of the above reproduced provisions shows that no workman
employed in any industry who has been in continuous service for not less than
one year under an employer can be retrenched by that employer until the
conditions enumerated in clauses (a) and (b) of Section 25-F of the Act are
satisfied. In terms of clause (a), the employer is required to give to the workman
one month’s notice in writing indicating the reasons for retrenchment or pay him
wages in lieu of the notice. Clause (b) casts a duty upon the employer to pay to
the workman at the time of retrenchment, compensation equivalent to 15 days’
average pay for every completed year of continuous service or any part thereof
in excess of 6 months.

3. Judicial Response
The Supreme Court has held in State of Bombay v. Hospital Mazdoor Sabha105,
Bombay Union of Journalists v. State of Bombay106, SBI v. N Sundara
Money107, Santosh Gupta v. State Bank of Patiala108, Mohan Lal v. Bharat
Electronics Ltd109, L Robert D’ Souza v. Southern Railway110, Surendra
Kumar Verma v. Central Govt. Industrial Tribunal-cum-Labour Court111,
Gammon India Ltd v. Niranjan Dass112, Gurmail Singh v. State of Punjab113
and Pramod Jha v. State of Bihar114; Sections 25-F(a) and (b) of the Act are
mandatory and non-compliance therewith renders the retrenchment of an
employee a nullity.
The Supreme Court has used different expressions for describing the
consequence of terminating a workman’s service/employment/engagement by
way of retrenchment without complying with the mandate of Section 25-F of the
Act. Sometimes it has been termed as ab initio void, sometimes as illegal per se,
sometimes as nullity and sometimes as non est. Anoop Sharma v. Public Health
Division, Haryana115 held that termination of service of an employee by way of
retrenchment without complying with the requirement of giving one month’s
notice or pay in lieu thereof and compensation in terms of Sections 25-F(a) and
(b) has the effect of rendering the action of the employer as nullity and the
employee is entitled to continue in employment as if his service was not
terminated.
Requirement of Notice or Wages in Lieu thereof. Section 25 F requires
that a workman employed in any industry should not be retrenched until
he has been given either (i) one month's notice in writing indicating the
reasons for retrenchment after the period of notice has expired; or (ii) the
workmen has been paid in lieu of such notice wages for the period of
notice. However, where retrenchment notice stated that most of the
projects were completed and there was no other job available for the
employees, it was not a valid notice as there was no complete closure116.
The latter provision permits the employer to retrench the workman on
paying him wages in lieu of one month's notice prescribed by the earlier
part of the clause and if the employer decides to retrench a workman, he
is not required to give one month's notice in writing and wait for the
expiration of the said period before he retrenches him, he can proceed to
retrench him straightaway on paying him his wages in lieu of the said
notice.
Displaying notice of retrenchment on notice board—does not meet the
statutory requirements. In Alumina Mazdoor Sangh v. Ratna
Construction Co.,117 the division bench of the Orissa High Court has
clarified that notice pasted on the notice board will not be substitute for
notice to workman to be retrenched.
Compensation under Section 25 F (b). Clause (b) of Section 25 F
provides another safeguard in the interest of the workmen. It provides
that no workman employed in any industry, who has been in continuous
service for not less than one year under an employer, shall be retrenched
until he has been paid at the time of retrenchment, compensation, which
‘shall be equivalent to 15 days’ average pay for every completed year of
service or any part thereof in excess of 6 months. The Supreme Court
has held that the compliance with this provision is mandatory and failure
to do so would render the retrenchment invalid and inoperative in law.
In State of Bombay v. Hospital Mazdoor Sabha118, the hospital run by
the state of Bombay terminated the services of two maid-servants. The
retrenched employees moved the Bombay High Court for the appropriate writ
against the state of Bombay on the ground that the retrenchment order was void
for failure to comply with the mandatory provisions of Sections 25-F and 25-H
of the Industrial Disputes Act, 1947. The Bombay High Court decided in favour
of the workmen. Thereupon, the state of Bombay preferred an appeal before the
Supreme Court. Observed Justice Gajendragadkar:
On a plain reading of Section 25 F (b), it is clear that the
requirement prescribed by it is a condition precedent for the
retrenchment of the workman. The Section provides that no
workman shall be retrenched until the condition in question has
been satisfied. It is difficult to accede to the argument that when
the Section imposes in mandatory terms a condition precedent,
non-compliance with the said condition would not render the
impugned retrenchment invalid…. So failure to comply with the
said provision renders the impugned orders invalid and
inoperative.
The nature of retrenchment compensation has been explained in Indian
Hume Pipe Co. Ltd v. The Workmen119 as follows:
As the expression ‘retrenchment compensation’ indicates, it is
compensation paid to a workman on his retrenchment and it is
intended to give him some relief and to soften the rigour of
hardship which retrenchment inevitably causes. The retrenched
workman is, suddenly and without his fault, thrown on the street
and has to face the grim problem of unemployment. At the
commencement of his employment, a workman naturally
expects and looks forward to security of service spread over a
long period; but retrenchment destroys his hopes and
expectations. The object of retrenchment compensation is to
give partial protection to the retrenched employee and his family
to enable them to tide over the hard period of unemployment.
Collection of dues from the office—if sufficient compliance with Section
- 25F. Section 25F of the Industrial Disputes Act, 1947 requires that wages must
be given at the time of retrenchment. A question, therefore, arises whether mere
calling upon the workmen to be retrenched to collect dues from the office would
be sufficient tender and fulfils the requirements of Section 25F.
In M/s National Iron and Steel Co. Ltd v. State of West Bengal,120 the
workman was given notice dated 15 November 1958 for termination of his
service with effect from 17 November 1958. In the notice, it was mentioned that
the workman would get one month’s wages in lieu of notice and he was asked to
collect his dues from the cash office on 20 November 1958 or thereafter during
the working hours. On these facts, the Supreme Court held that the offer was not
substantial compliance of Section 25F, under which it was incumbent on the
employer to pay the workman the wages for the period of the notice in lieu of the
notice. That is to say, if he was asked to go forthwith, he had to be paid at the
time when he was asked to go and could not be asked to collect his dues
afterwards. In Stain Steel Products v Naipal Singh121, the management had
merely said that whatever was due could be collected from the office. The Court
held that the offer was not in substantial compliance of Section 25F.
In SBI v. N Sundara Money122, the Court emphasized that the workman
cannot be retrenched without payment, at the time of retrenchment,
compensation computed in terms of Section 25-F (b).
The legal position has been summed up in Pramod Jha N State of
123
Bihar in the following words:
10…. The underlying object of Section 25-F is twofold. Firstly a
retrenched employee must have one month’s time available at
his disposal to search for alternate employment, and so, he
should be paid wages for the notice period. Secondly, the
workman must be paid retrenchment compensation at the time
of retrenchment or before, so that once having been retrenched,
there should be no need for him to go to his employer
demanding retrenchment compensation and the compensation so
paid is not only a reward earned for his previous services
rendered to the employer but is also a sustenance to the worker
for the period which may be spent in searching for another
employment. Section 25-F nowhere speaks of the retrenchment
compensation being paid or tendered to the worker along with
one month’s notice; on the contrary, clause (b) expressly
provides for the payment of compensation being made at the
time of retrenchment and by implication, it would be
permissible to pay the same before retrenchment. Payment or
tender of compensation after the time when the retrenchment has
taken effect would vitiate the retrenchment and non-compliance
with the mandatory provision which has a beneficial purpose
and a public policy behind it would result in nullifying the
retrenchment.
(emphasis in original)
The aforesaid issue again came up for consideration in Anoop Sharma v.
Executive Engineer, Public Health Division124. Here, the Supreme Court held
that if the workman is retrenched by an oral order or communication or he is
simply asked not to come for duty, the employer will be required to lead tangible
and substantive evidence to prove compliance with clauses (a) and (b) of Section
25-F of the Act. Here in his statement, the workman categorically stated that
before discontinuing his service, the respondent did not give him notice pay and
retrenchment compensation. Shri Ram Chander, who appeared as the sole
witness on behalf of the respondent stated that the compensation amounting to
₹5,491 was offered to the appellant along the with letter, but he refused to accept
the same. The respondent did not examine any other witness to corroborate the
testimony of Ram Chander and no contemporaneous document was produced to
prove that the compensation was offered to the appellant on 25 April 1998. Not
only this, the respondent did not explain as to why the demand draft was sent to
the appellant after more than 3 months of his alleged refusal to accept the
compensation on 25 April 1998. In view of this, the Supreme Court observed
that if there was any grain of truth in the respondent’s assertion that the
compensation was offered to the appellant on 25 April 1998 and he refused to
accept the same, there could be no justification for not sending the demand draft
by post immediately after the appellant’s refusal to accept the offer of
compensation. The minimum which the respondent ought to have done was to
produce the letter with which the draft was sent at the appellant’s residence. The
contents of that would have shown whether the offer of compensation was made
to the appellant on 25 April 1998 and he refused to accept the same. However,
the fact of the matter is that no such document was produced. Therefore there
was non-compliance with Section 25-F of the Act.
From the above it is evident that the Supreme Court has relaxed the
requirement of Section 25F by adopting the doctrine of ‘substantial compliance’.
It is submitted that whatever may be the impact of the judgement, it would
certainly facilitate the process of retrenchment.
Adjustment of Dues Against Payment Under Clauses (a) and (b) of
Section 25 F. In Utkal Asbestos Ltd v. T S Rao125, the retrenched workman
admitted that the dues were adjusted by the employer against payments to be
made under clauses (a) and (b) of Section 25-F. It was contended that non-
payment was violative of Section 25-F. The labour court held termination of
service to be void. On a writ petition filed against the order of the labour court,
the Orissa High Court held that language of Section 25-F (a) and Section 25-F
(b) does not permit adjustment.
In Ram Krishan Sharma v. Samrat Ashok Technical Institute126,
services of a clerk in a technical education institution were terminated who had
put in 5 years of service. But there was no compliance with Section 25-F. The
Madhya Pradesh High Court admitted the petition, but held that the relief can
only be a declaratory one, namely grant of continuity of service.
Effect of Non-acceptance of Retrenchment Compensation. Where
several workmen had been retrenched and retrenchment compensation
and wages in lieu of notice were sent by registered post to each
individual workman but were not accepted, it was held that pay in lieu of
notice had been duly sent, and its refusal by workmen does not
invalidate tender of payment.127

E. Continuous Service. For the purposes of Chapter VA:

1. a workman shall be said to be in continuous service for a period if he is,
for that period, in uninterrupted service, including service which may be
uninterrupted on account of sickness or authorized leave or an accident or
strike which is not illegal, or a lockout or a cessation of work which is
not due to any fault on the part of the workman:
2. where a workman is not in continuous service within the meaning of
clause (1) for a period of one year or 6 months, he shall be deemed to be
in continuous service under an employer–
(a) for a period of one year, if the workman, during a period of 12
calendar months preceding the date with reference to which
calculation is to be made, has actually worked under the employer
for not less than–
(i) 190 days in the case of a workman employed below ground in
a mine; and
(ii) 240 days, in any other case;
(b) for a period of 6 months, if the workman, during a period of 6
calendar months preceding the date with reference to which
calculations are to be made, has actually worked under the employer
for not less than–
(i) 95, in the case of a workman employed below ground in a
mine; and
(ii) 120 days, in any other case.
Explanation: For the purposes of clause (2), the number of days on which
a workman has actually worked under an employer shall include the days in
which–
(i) he has been laid-off under an agreement or as permitted by standing
orders made under the Industrial Employment (Standing Orders) Act,
1946 (20 of 1946), or under the Act or under any other law applicable to
industrial establishments.
(ii) he has been on leave with full wages, earned in the previous years;
(iii) he has been absent due to temporary disablement caused by accident
arising out of and in the course of his employment; and
(iv) In the case of females, she has been on maternity leave; so, however that
the total period of such maternity leave does not exceed 12 weeks.

Scope of Sub-sections 1 and 2

In Mohanlal v. Bharat Electronics Ltd128, Mohan Lal was employed as a
salesman from 8 December 1979. The management terminated his services with
effect from 19 October 1974. Consequent upon his termination, Delhi
administration referred the dispute to the labour court for adjudication. The
labour court having found that the termination of service of Mohan Lal was in
accordance with the standing orders which justified removal of the employee on
unsuccessful probation during the initial or extended period of probation held
that it did not constitute ‘retrenchment’. Against this, the respondent appealed to
the Supreme Court by special leave. The question, inter alia, for determination
was whether Mohan Lal was entitled to a declaration that he continued to be in
service with consequential benefits. In order to determine this question, the
Court examined the requirements under sub-section (1) of Section 25-B and
observed.
Sub-section (1) provides deeming fiction. Thus, where a
workman is in service for a certain period, he shall be deemed to
be in continuous service for that period even if service is
interrupted on account of sickness or authorized leave or an
accident or a strike which is not illegal or lockout or a cessation
of work which is not due to any fault on the part of the
workman….Sub-section(1) mandates that interruption therein
indicated is to be ignored meaning thereby that on account of
such cessation, an interrupted service shall be deemed to be
uninterrupted and such uninterrupted service shall for the
purpose of Chapter VA be deemed to be continuous service.
The Court then examined the requirements under sub-section (2) of
Section 25 B and observed:
 [1] n order to invoke the fiction enacted in sub-section (2) (a), it
is necessary to determine first the relevant date, i.e., the date of
termination of service. After that date is ascertained, move
backward to a period of 12 months just preceding the date of
retrenchment and then ascertain whether within the period of 12
months, the workman has rendered service for a period of 240
days. If these facts are affirmatively answered in favour of the
workman, pursuant to the deeming fiction in sub-section (2), it
will have to be assumed that the workman is in continuous
service for a period of one year and he will satisfy the eligibility
qualification enacted in section 25-F.
The Court accordingly held that Mohan Lal rendered service for a period
of 240 days within a period of 12 months and his case fell within Section 25 B
(2) (a) and he shall be deemed to be in continuous service for a period of one
year for the purpose of Chapter VA. It accordingly held that Mohan Lal had thus
satisfied both the eligibility qualifications prescribed in Section 25-F for
claiming retrenchment compensation.

Concept and Scope of One Year

In General Manager, Haryana Roadways, v. Rudhan Singh,129 the Supreme
Court held that the requirements of Section 25F of the Act would be satisfied if a
workman has worked for 240 days in a period of 12 months and it is not
necessary that he should have been in the service of the employer for complete
one year.
In H S Rajashekara v. State Bank of Mysore130, the Supreme Court held
that for labour related matters, the terms ‘calendar year’ and ‘block of 12
months’ are interchangeable. It would be sufficient if the petitioner could
establish that he had rendered more than 240 days’ service in a ‘block of 12
months’. This should be the determining factor in a case where the consideration
pertained to an employee's claim for inclusion in the ‘protected category’ on
account of having rendered 240 days’ service in a ‘calendar year’. In view of
above, the Court was satisfied that the petitioner fulfilled the condition of having
rendered service for 240 days in a ‘calendar year’.
In H D Singh v. R B I131 and Workmen of American Express
International Banking Corporation v. Management of the American Express
International Banking Corporation,132 the Supreme Court held that even
Sundays and other holidays would be included for the purpose of counting the
‘continuous service’ of 240 days under Section 25B of the Industrial Disputes
Act, 1947.
In Management of Standard Motor Products of India Limited v. A
Parthasarathy133, the Supreme Court held that under Section 25-B (2), where a
workman is not in continuous service within the meaning of clause (1) for a
period of one year, he shall be deemed to be in continuous service for a period of
one year, if the workman, during a period of 12 calendar months preceding the
date with reference to which calculation is to be made, has actually worked
under the employer for not less than 240 days. The Court added that even if the
period of illegal strike is not taken into account, the number of days during
which the workman actually worked under the employer, in the instant case, was
more than 240 days and, therefore, he was in ‘continuous service’ for a period of
one year immediately before the date of closure, under Section 25 B (2).

Determination of Continuity of Service

Can work done in different units, projects, branches or subdivisions under the
same authority be treated as one establishment for the purpose of recording
continuity of service under Section 25B. This issue was raised in a number of
decided cases.
In Union of India v. Jummasha Diwan134, the Supreme Court observed
that where there are several establishments of railways administration and if a
workman voluntarily gives up his job in one establishment and joins another, the
same would not amount to his being in continuous service. Further, when a
casual employee is employed in different establishments, may be under the same
employer, e.g. railways as a whole, having different administrative set ups,
different requirements and different projects, the concept of continuous service
cannot be applied.
The Constitution bench of the Supreme Court in Management of Indian
Cable Co. Ltd v. Workmen135 dealt with the expression ‘industrial
establishment’ albeit with reference to Section 25-G of the ID Act and held that
each branch of a company should normally be regarded as a distinct industrial
establishment.
In DGM Oil & Natural Gas Corporation Ltd v. Ilias Abdul Rehman136,
the question arose whether work put in by the workman in different units,
namely, Baroda and Mehsana projects of Oil and Natural Gas Corporation could
be counted for determining whether the workman worked for 240 days
continuously for the purpose of Section 25-F of the ID Act. The Supreme Court
answered the question in the negative and held that the Baroda and Meshana
projects of the corporation could not be considered as a single unit or department
under the corporation and, therefore, the days put in by the workman in different
units could not be counted for determining whether the workman worked for 240
days continuously for the purpose of Section 25-F of the ID Act.
In Haryana Urban Development Authority v. Om Pal137, the question
raised before this Court was whether the two sub-divisions of Haryana Urban
Development Authority could be treated to be one establishment for the purpose
of recokoning continuity of service within the meaning of Section 25-B of the
Act. The Court held that once two establishments are held to be separate and
distinct having different cadre strength of workmen, then the period during
which the workman was working in one establishment would not ensure to his
benefit when he was recruited separately in another establishment, particularly
when he was not transferred from one sub-division to the other. In this case, he
was appointed merely on daily wages.
In Haryana State Co-op. Supply Marketing Federation v Sanjay138, the
respondent was engaged on contractual basis by the District Manager, HAFED,
Jind for the period from 1.8.1998 to 31.12.1998, for 145 days of service. The
district manager, HAFED, Hissar engaged the workman afresh on 15.1.1999
upto 31.5.199, for 112 days of service. As service of respondent was not
renewed after 31.5.1999, he raised a dispute alleging that his services were
illegally terminated without following mandatory procedure provided in Section
25-F of the ID Act. The management contended that the workman having not
completed 240 days of continuous service, there was no necessity of compliance
with Section 25-F of the Act. On the other hand, it was contended by the
respondent workman that the period of his engagement with district manager,
HAFED, Jind and district manager, HAFED, Hissar be clubbed while computing
240 days of continuous service. A question arose whether work rendered by the
workman in the office of district manager, HAFED, Jind and district manager,
HAFED, Hissar could be clubbed together for purposes of application of Section
25-F of the ID Act. The Court answered the question in negative and observed:
[T]he office of the district manager, HAFED, Jind and the office
of the district manager, HAFED, Hissar are two distinct and
separate establishments and cannot be treated as one
establishment for the purpose of reckoning continuity of service
within the meaning of Section 25-F read with Section 25-B of
the ID Act. It is so because the workman was engaged on
contract basis by two separate authorities under different
contracts.
 The Court added:
Merely because the district manager, Jind and the district
manager, Hissar are subordinate officers under the control of
managing director, HAFED, the two offices at Jind and Hissar
do not cease to be separate establishments for the purposes of
Section 25F of the ID Act.
In Range Forest Officer v. S T Hadimani139, the Supreme Court held
that where the management denies the claim that claimant worked for 240 days,
it is for the claimant to lead evidence to show that he had in fact worked for 240
days in the year proceeding his termination. The Court also held that mere filing
of an affidavit is not adequate as it is only his own statement in his favour and
that cannot be regarded as sufficient evidence for any court or tribunal to arrive
at the conclusion that a workman had, in fact, worked for 240 days in a year.
This is all the more so when no proof of receipt of salary or wages for 240 days
or order or record of appointment or engagement for this period was produced
by the workman.
Burden of Proof: It has now been well-settled in a series of decisions of
the Supreme Court that the burden of proof is on the workman to show that he
had worked for 240 days in the preceding 12 calender months prior to the
alleged retrchment. Further, presumption as to adverse inference for non-
production of muster-roll by the employer should not be taken as an inflexible
rule. It is always optional and one of the factors which is required to be taken
into consideration is the background of the factors involved in the lis.
In Municipal Corporation, Faridabad v. Shri Niwas140, the Supreme
Court held that the burden of proof was on the workman to show that he had
worked for 240 days in the preceding 12 calendar months prior to the alleged
retrenchment. On facts, the Court found that the workman, apart from examining
himself in support of his contention did not produce or call for any document
from the office of the management including the muster-roll. He did not produce
his offer of appointment showing the terms and conditions therein. He also did
not examine any other witness in support of his case. The Court, therefore, ruled
that presumption as to adverse inference for non-production of evidence is
always optional and one of the factors which is required to be taken into
consideration is the background of the factors involved in the lis. The Court held
that although the provisions of the Evidence Act, 1872 per se are not applicable
to industrial adjudication, the general principles of it are still applicable. The
Court also held that it was imperative for the industrial tribunal to see that
principles of natural justice were complied with.
In Bank of Baroda v. Ghemarbhai Harjibhai Rabri141, the workman had
established the fact that he worked as driver of the car belonging to the bank for
more than 240 days during the relevant period. The workman also produced 3
vouchers which showed that he had been paid certain sums of money towards
his wages and the said amount had been debited to the account of the bank. The
bank denied the claim of the workman but did not produce any evidence to rebut
the vouchers. It, however, pleaded that the employment of such driver was under
a scheme by which he was in reality the employee of the executive concerned.
On these facts, the Supreme Court held that the workman has established his
claim to be the workman of the bank. The Supreme Court ruled that the burden
of proof lies on the workman who claims to be a workman of the management.
However, the degree of such proof so required varies from case to case.
Again in Chief Engineer (Construction) v. Keshava Rao142, the Supreme
Court reiterated that initial burden of establishing factum of continuous work for
240 days within a year is on respondent-workmen.
In Manager, RBI Bangalore v. S Mani143, the management retrenched
certain workmen. The workmen challenged the order for non-compliance with
Section 25-F of the Industrial Disputes Act, 1947. However, the management
denied such a claim on the ground that the workmen had not completed 240 days
of service during a period of 12 months preceeding the order of termination. The
workmen did not produce any oral or documentary proof in support of their
claim. On these facts, a three-judge bench of the Supreme Court ruled that (i) the
workmen have to state in their evidence that they worked for 240 days in the
preceding one year of their termination, (ii) pleadings are not the substitute for
proof, (iii) it is wrong to contend that the plea raised by the workmen that they
had worked continuously for 240 days was deemed to have been admitted by
applying the doctrine of non-traverse.
The aforesaid view was reiterated in Rajasthan State Ganganagar S
Mills Ltd v. State of Rajasthan144.
It was the case of the workman that he had worked for more
than 240 days in the year concerned. This claim was denied by
the appellant. It was for the claimant to lead evidence to show
that he had in fact worked up to 240 days in the year preceeding
his termination. He has filed an affidavit. It is only his own
statement which is in his favour and that cannot be regarded as
sufficient evidence for any court or tribunal to come to the
conclusion that in fact the workman had worked for 240 days in
 a year.
No proof of receipt of salary or wages for 240 days or order or
record in that regard was produced. Mere non-production of the
muster-roll for a particular period was not sufficient for the
labour court to hold that the workman had worked for 240 days
as claimed.
In R M Yellatti v. Executive Engineer145, the Supreme Court while
analysing the above decisions observed that the provisions of the Evidence Act
in terms do not apply to the proceedings under Section 10 of the Industrial
Disputes Act. However, applying general principles and on reading the
aforestated judgements, the Court pointed out that it has repeatedly taken the
view that the burden of proof is on the claimant to show that he had worked for
240 days in a given year. This burden is discharged only upon the workman
stepping in the witness box for adducing cogent evidence, both oral and
documentary. In cases of termination of services of daily-wage earners, there
will be no letter of appointment or termination. There will also be no receipt or
proof of payment. Thus in most cases, the workman (the claimant) can only call
upon the employer to produce before the court the nominal muster roll for the
given period, the letter of appointment or termination, if any, the wage register,
the attendance register, etc. Drawing of adverse inference ultimately would
depend thereafter on the facts of each case.
In Ganga Kisan Sahkari Chini Mills Ltd v. Jaivir Singh146, the Supreme
Court again held that the burden of proof to have worked for 240 days in the
preceding 12 months of termination of service lies upon the workman and not
the employer.
In General Manager, B S N L v. Mahesh Chand147, the Supreme Court
held that the High Court and the industrial tribunal have erred in placing the
onus upon the employer to prove that the workman had worked for 240 days in a
calendar year.
In Chief Soil Conservator, Punjab v. Gurmail Singh148, the Supreme
Court held that it is for the workman to establish that he was engaged for more
than 240 days in the 12 months preceding the date of alleged termination.
The Supreme Court in Krishan Bhagya Jal Nigam v. Mohammed
Rafi149, held that mere affidavits or self-serving statements made by the claimant
workman will not suffice in the matter of discharge of the burden placed by law
on the workman to prove that he had worked for 240 days in a given year. The
Court also held that mere non-production of muster-roll per se without any plea
of suppression by the claimant workman will not be the ground for the tribunal
to draw an adverse inference against the management.

F. No Regularization for Adhoc, Temporary Workers under

any Scheme who worked for 240 days
In Delhi Development Horticulture Employee’s Union v. Delhi
Administration,150 the Supreme Court held that persons employed under the
scheme cannot claim regularization merely because they have put in more than
240 days of service.
In State of Haryana v. Piara Singh151, the Supreme Court held that it is
difficult to sustain the direction that all those ad hoc temporary employees who
have continued for more than one year should be regularized. This direction is
given without reference to the (i) existence of vacancies, (ii) sponsoring by
employment exchange, (iii) fulfilling the eligibility conditions and service
record, etc.

Badli Workers
The Supreme Court had an opportunity to deal with the issues relating to badli
workmen in Radha Raman Samanta v. Bank of India.152 Here, a bipartite
agreement between the bank and the workers provided that a badli worker is
entitled to be absorbed if he has completed 240 days of badli service in a block
of 12 months or a calendar year after 10 February 1988. In pursuance to this
agreement, a worker sought his regularization on the ground that he had
completed 240 days of service in a calendar year as a badli worker. In order to
determine the question, the Supreme Court, in absence of any definition of ‘badli
worker’, defined it to mean a person who is employed as a casual workman
working in place of another. The Court held that in this case, the worker had
rendered service in a vacancy of a temporary post for more than 240 days even
though the nomenclature of his work profile was changed. This, according to the
Court was sufficient to treat him as a badli worker for the purposes of
absorption. The Court, therefore, held that the badli worker had a right to be
absorbed in the respondent bank by virtue of the bipartite agreement. The
aforesaid view was reiterated in H S Rajashekara v. State Bank of Mysore.153

G. Notice to the Appropriate Government

Clause (c) of Section 25-F requires notice to be served by the employer on the
appropriate government in the prescribed manner if a workman is retrenched.
The nature of this clause namely, whether it is mandatory and conditions
precedent, like clauses (a) and (b) of Section 25-F, has been debated in a number
of decided cases.
In State of Bombay v. Hospital Mazdoor Sabha154, the Supreme Court
while holding Section 25-F (b) to be mandatory, observed that clauses (a) and
(c) of the said Section prescribed similar conditions. However, the Court was
cautious when it expressly added that it was not concerned to construe them.
In Tea District Labour Association v. Its Ex-Employees155, it was
conceded that the requirement as to notice prescribed by clause (c) of Section 23
was mandatory and amounted to condition precedent. Likewise, in Workmen of
Subong Tea Estate v. Subong Tea Estate156 in an obiter, observed that three
conditions laid down in clauses (a), (b) and (c) of Section 25-F prima facie
appeared to constitute conditions before industrial workers could be validly
retrenched. However, in Bombay Union of Journalists v. State of Bombay157,
the Supreme Court was invited to decide whether clause (c) of Section 25-F
providing for notice to the government was mandatory. The Supreme Court
answered it in negative and pointed out that under clause (a), there was an option
given to the employer either to give one month's notice or to pay one months's
wages in lieu of notice, the Court asked the question as to how would clause (c)
operate in the latter case and answered it as follows:
….if it is held that the notice in prescribed manner has to be
served by the employer on the appropriate government before
retrenching the employee in such a case, it would mean that
even in a case where refrenchment is effected on payment of
wages in lieu of notice, it cannot be valid unless the requisite
notice is served on the appropriate government; and that does
not appear to be logical or reasonable. Reading the latter part of
clause (a), and clause (c) together, it seems to follow that in
cases falling under the latter part of clause (a), the notice
prescribed by clause (c) has to be given not before retrenchment,
but after retrenchment; otherwise, the option given to the
employer to bring about immediate retrenchment of the
workman on paying him wages in lieu of notice would be
rendered nugatory. Therefore, it seems that clause (c) cannot be
held to be condition precedent even though it has been included
under Section 25 F along with clauses (a) and (b) which
 prescribe conditions precedent.
From the aforesaid decision it is evident that clause (c) unlike clauses (a)
and (b) is merely directory and not mandatory.

H. Conditions-Precedent to Retrenchment: 1976-Position

The Industrial Disputes (Amendment) Act, 1976 imposed additional restrictions
upon the power of employer employing 300 or more workmen in the industry in
retrenching his employees. Thus, Section 25 N prohibited the employer from
retrenching workmen until (i) he has been given three months’ notice in writing
indicating reasons for retrenchment and the period of notice has expired or
wages in lieu of such notice which may be dispensed with if the retrenchment is
under an agreement which specifies the date of termination of service; (ii) the
workmen have been paid at the time of retrenchment a compensation equivalent
to 15 days’ average pay for each completed year of service or any part thereof in
excess of 6 months; and (iii) a notice in the prescribed manner is served to the
appropriate government or authority and its permission is obtained. Such
permission or refusal shall be granted only after making such inquiry as the
authority deems fit. However, such permission shall be deemed to be granted if
no communication is received from the authority within 60 days from the date of
notice.

I. Constitutional Validity of Sections 25 N and 25 Q of the

industrial Disputes (Amendment) Act, 1976 (Since
Amended)
The division bench of the Madras High Court in K V Rajendram v. Deputy
Commissioner158 was called upon to decide the constitutional validity of
Sections 25-N and 25-Q of the Industrial Disputes Act, 1947. The Court held
that Section 25 N as a whole and Section 25-Q in so far as it relates to the
awarding of punishment for contravention of the provision of Section 25 N was
ultra vires the Constitution. This view in the Court's opinion was based on the
Supreme Court decision in Excel wear v. Union of India159 which declared
Sections 25-Q and 25-R of the Act to be ultras vires the Constitution.

J. Industrial Disputes (Amendment) Act, 1984: Condition-

Precedent to Retrenchment of Workmen
1. General
The aforesaid decisions of the high courts led the Parliament to re-draft the
provisions of Section 25-N on the lines of the amended provisions relating to
closure which was inserted by the Industrial Disputes (Amendment) Act, 1984
after considering the observations of the Supreme Court in Excel Wear case.160
Section 25-N of the Industrial Disputes (Amendment) Act, 1984 which
lays down conditions precedent upon the power of the employer employing 100
or more workmen in the industrial establishment in retrenching his workmen
provides:
1. No workman employed in any industrial establishment to which this
Chapter applies, who has been in continuous service for not less than one
year under an employer shall be retrenched by that employer until—
(a) the workman has been given 3 months’ notice in writing indicating
the reasons for retrenchment and the period of notice has expired, or
the workman has been paid in lieu of such notice, wages for the
period of the notice; and
(b) the prior permission of the appropriate government or such authority
as may be specified by that government by notification in the official
gazette (hereinafter in this section referred to as the specified
authority) has been obtained on an application made in this behalf.
2. An application for permission under sub-section (1) shall be made by the
employer in the prescribed manner stating clearly the reasons for the
intended retrenchment and a copy of such application shall also be served
simultaneously on the workmen concerned in the prescribed manner.
3. Where an application for permission under sub-section (1) has been made,
the appropriate government or the specified authority, after making such
inquiry as it thinks fit and after giving a reasonable opportunity of being
heard to the employer, the workmen concerned and the person interested
in such retrenchment, may, having regard to the genuineness and
adequacy of the reasons stated by the employer, the interest of the
workmen and all other relevant factors, by order and for reasons to be
recorded in writing, grant or refuse to grant such permission and a copy
of such order shall be communicated to the employer and the workmen.
4. Where an application for permission has been made under sub-section (1)
and the appropriate government or the specified authority does not
communicate the order granting or refusing to grant permission to the
 employer within a period of 60 days from the date on which such
application is made, the permission applied for shall be deemed to have
been granted on the expiration of the said period of 60 days.
5. An order of the appropriate government or the specified authority granting
or refusing to grant permission shall, subject to the provisions of sub-
section (6), be final and binding on all the parties concerned and shall
remain in force for one year from the date of such order.
6. The appropriate government or the specified authority may, either on its
own motion or on the application made by the employer or any workmen,
review its order granting or refusing to grant permission under sub-
section (3) or refer the matter or, as the case may be, cause it to be
referred to a tribunal for adjudication:
Provided that where a reference has been made to a tribunal under this
sub-section, it shall pass an award within a period of 30 days from the
date of such reference.
7. Where no application for permission under sub-section (1) is made, or
where the permission for any retrenchment has been refused, such
retrenchment shall be deemed to be illegal from the date on which the
notice of retrenchment was given to the workman and the workman shall
be entitled to all the benefits under any law for the time being in force as
if no notice had been given to him.
8. Notwithstanding anything contained in the foregoing provisions of this
Section, the appropriate government may, if it is satisfied that owing to
such exceptional circumstances as accident in the establishment or death
of the employer or the like, find that it is necessary so to do, by order,
direct that the provisions of sub-section (1) shall not apply in relation to
such establishment for such period as may be specified in the order.
9. Where permission for retrenchment has been granted under sub-section (3)
or where permission for retrenchment is deemed to be granted under sub-
section (4), every workman who is employed in that establishment
immediately before the date of application for permission under this
section shall be entitled to receive, at the time of retrenchment,
compensation which shall be equivalent to 15 days’ average pay for
every completed year of continuous service of any part thereof in excess
of 6 months.
A perusal of the aforesaid provisions reveals that Section 25 N provides
complete scheme for retrenchment of workmen in industrial establishments
where the number of workers is in excess of 100. Clauses (a) and (b) lay down
the conditions precedent to retrenchment and provide for 3 months’ notice or 3
months’ wages in lieu of notice to the concerned workmen and the prior
permission of the appropriate government/prescribed authority. Sub-sections (2)
and (3) plainly envisage the appropriate government/prescribed authority to take
a quadi-judicial decision and to pass a reasoned order on the employer’s
application for permission for retrenchment after making a proper inquiry and
affording an opportunity of hearing not only to the employer and the concerned
workmen but also the person interested in such retrenchment. Sub-section (4)
has the provision of deemed permission. Sub-section (5) makes the decision of
the government binding on all parties. Subsection (6) gives the government the
power of review and the power to refer the employer’s application for
permission to a tribunal for adjudication. Any retrenchment without obtaining
prior permission of the government is made expressly illegal by sub-section (7)
with the further stipulation that the termination of service in consequence thereof
would be void ab initio. Sub section (8) empowers the government to exempt the
application of subsection (1) under certain exceptional circumstances and sub-
section (9) provides for payment of retrenchment compensations to the
concerned workmen.
The procedural details for seeking prior permission of the appropriate
government for carrying out retrenchment under section 25N are laid down in
rule 76A of the Industrial Disputes Central Rules. The application for permission
for retrenchment is to be made in Form PA and that requires the employer to
furnish all the relevant materials in considerable detail.

2. Constitutionality of Section 25-N (as amended in 1984)

In Workmen of Meenakshi Mills Ltd v. Meenakshi Mills161, a five-judge bench
of the Supreme Court held that Section 25 N as amended in 1984 does not suffer
from the vice of non-constitutionality on the ground that it is violative of the
fundamental right guaranteed under Article 19 (1) (g) of the Constitution and is
not saved by Article 19(6) of the Constitution.
The Supreme Court while determining the validity of conferment of
power on appropriate government to grant or not to grant permission of
retrenchment observed:
The power to grant or refuse permission for retrenchment of
workmen that has been conferred under Section 25N(2) has to
be exercised on an objective consideration of the relevant facts
 after affording an opportunity to the parties having an interest in
the matter and reasons have to be recorded in the order that is
passed.
The Court added:
The inquiry, which has to be made under sub-section (2) before
an order granting or refusing permission for retrenchment of
workmen is passed, would require an examination of the said
particulars and other material that is furnished by the employer
as well as the workman. In view of the time limit of 3 months
prescribed in sub-section (3), there is need for expeditious
disposal which may not be feasible if the proceedings are
conducted before a judicial officer accustomed to judicial
process. Moreover, during the course of such consideration, it
may become necessary to explore the steps that may have to be
taken to remove the causes necessitating the proposed
retrenchment which may involve interaction between the various
departments of the government. This can be better appreciated
and achieved by an executive officer rather than a judicial
officer.162

3. Nature of Section 25N (6) Proviso 25-O

The nature of Section 25N (6) proviso was explained by the division bench of
the Bombay High Court in Association of Engineering Workers v. Indian
Hume Pipe Co. Ltd163 The Court held that Section 25N (6) of the Act, which
requires the tribunal to pass an award within a period of 30 days from the date of
the reference, is directory and not mandatory and, therefore, on the expiry of the
said time limit, the reference will not lapse but will survive for adjudication.
The Supreme Court in Lal Mahammad v. Indian Railway Construction
164
Ltd , held that the proviso to Section 25-O cannot be transplanted by any
judicial interpretation as proviso to Section 25-N deals with an entirely different
topic namely, condition-precedent to retrenchment of workmen.

4. Settlement—if it prevails over statutory requirements

In M/s Oswal Agro Ltd v. Oswal Agro Furane Workers165, the industrial
undertaking was set up as a 100 per cent export oriented unit for paddy
processing, furfural and rice bran extraction. However, allegedly in view of lack
of demand in the international market for its product, rice bran oil was sold by it
in the local market, where for no registration-cum-allocation certificate below
the minimum price was obtained. The said violation made the appellant liable to
pay a sum of ₹50 crore under different heads to the State. Allegedly on the
ground of such a huge liability, notices were issued to the state government
under Section 25-O. Notices were also issued to the workmen, whereupon a
purported settlement was arrived at under Section 12(3) of the Industrial
Disputes Act, 1947. The respondent union questioned the said settlement in a
writ petition before the High Court. The High Court allowed the petition.
Thereupon, the appellant filed an appeal before the Supreme Court. A question,
inter alia, arose whether in a case of closure of an industrial undertaking, prior
permission of the appropriate government is imperative and whether a settlement
arrived at by and between the employer and the workmen would prevail over the
statutory requirements as contained in Section 25-N and Section 25-O of the
Industrial Disputes Act, 1947. Answering the question, the Supreme Court laid
down the following principles.
A bare perusal of the provisions contained in Sections 25-N and
25-O of the Act leaves no manner of doubt that the employer
who intends to close down the undertaking and/or effect
retrenchment of workmen working in such industrial
establishment, is bound to apply for prior permission at least 90
days before the date on which the intended closure is to take
place. They constitute conditions precedent for effecting a valid
closure; whereas the provisions of Section 25-N of the Act
provide for conditions precedent to retrenchment; Section 25-O
speaks of procedure for closing down an undertaking. Obtaining
prior permission from the appropriate government, thus, must be
held to be imperative in character.
The Court added:
A settlement within the meaning of Section 2(p) read with sub-
section (3) of Section 18 of the Act undoubtedly binds the
workmen but the question which would arise is, would it mean
that thereby the provisions contained in Sections 25-N and 25-O
are not required to be complied with? The answer to the said
question must be arrived at between the employer and workmen
in case of an industrial dispute. An industrial dispute may arise
as regard the validity of a retrenchment or a closure or
 otherwise. Such a settlement, however, as regard retrenchment
or closure can be arrived at provided such retrenchment or
closure has been effected in accordance with law. Requirements
of issuance of a notice in terms of Sections 25-N and 25-O, as
the case may be, and/or a decision thereupon by the appropriate
government are clearly suggestive of the fact that thereby a
public policy has been laid down. The state government, before
granting or refusing such permission, is not only required to
comply with the principles of natural justice by giving an
opportunity of hearing both to the employer and the workmen
but is also required to assign reasons in support thereof and is
also required to pass an order having regard to several factors
laid down therein. One of the factors besides others which is
required to be taken into consideration by the appropriate
government before grant or refusal of such permission is the
interest of the workmen. The aforementioned provisions being
imperative in character would prevail over the right of the
parties to arrive at a settlement. Such a settlement must conform
to the statutory conditions laying down a public policy. A
contract which may otherwise be valid, however, must satisfy
the tests of public policy not only in terms of the aforementioned
provisions but also in terms of Section 23 of the Indian Contract
Act.
The Court further held:
It is trite that having regard to the maxim ‘exotropia causa non
orator also’, an agreement which opposes public policy as laid
down in terms of Sections 25-N and 25-O of the Act would be
void and of no effect.
The aforesaid view was reiterated in Empire Industries v. State of
Maharashtra. However, the aforesaid decision was not cited.

5. Recommendations of the (Second) National Commission

on Labour
The Commission made the following recommendations:
(i) Prior permission is not necessary in respect of lay-off and retrenchment in
an establishment of any employment size. Workers will however, be
 entitled to two month's notice or notice pay in lieu of notice, in case of
retrenchment. We also feel that the rate of retrenchment compensation
should be higher in a running organization than in an organization which
is being closed. Again, we are of the view that the scale of compensation
may vary for sick units and profit-making units even in cases of
retrenchment. We would however, recommend that in the case of
establishments employing 300 or more workers where lay-off exceeds a
period of one month, such establishments should be required to obtain
post facto approval of the appropriate government. We recommend that
the provisions of Chapter VB pertaining to permission for closure should
be made applicable to all establishments to protect the interests of
workers in establishments which are not covered at present by this
provision if they are employing 300 or more workers. Necessary changes
in chapter VA in regard to retrenchment and closure will have to be made
accordingly. Every employer will have to ensure, before a worker is
retrenched or the establishment is closed, irrespective of the employment
size of the establishment, that all dues to the workers, be it arrears of
wages earned, compensation amount to be paid for retrenchment or
closure as indicated in the next paragraph, or any other amount due to the
worker, are first settled as a pre-condition of retrenchment or closure.
These provisions will not bar industrial disputes being raised against a
lay-off or retrenchment or closure. Having regard to the national debate
on this issue and the principle outlined above, the Commission would like
to recommend the compensation per completed year of service at the rate
of 30 days on account of closure in case of a sick industry which has
continuously run into losses for the last 3 financial years or has filed an
application for bankruptcy or winding up, and other non-profit making
bodies like charitable institutions, etc., and at the rate of 45 days for
becoming viable. It would also recommend higher retrenchment
compensation at the rate of 60 days of wages and similarly a higher rate
of compensation for closure at the rate of 45 days of wages for every
completed year of service for profit making organizations. For
establishments employing less than 100 workers, half of the
compensation mentioned above in terms of number of days’ wages may
be prescribed. However, these establishments will also be required to give
similar notice as prescribed for bigger establishments before retrenching
the workers or closing down.
(ii) While the lay-off compensation could be 50 per cent of the wages as at
present, in the case of retrenchment, Chapter VA of the Act may be
 amended to provide for 60 days’ notice for both retrenchment and closure
or pay in lieu thereof. The provision for permission to close down an
establishment employing 300 or more workmen should be made a part of
Chapter VA, and Chapter VB should be repealed. In case of closure of
such establishment which is employing 300 or more workers, the
employer will make an application for permission to the appropriate
government 90 days before the intended closure and also serve a copy of
the same on the recognized negotiating agent. If permission is not granted
by the appropriate government within 90 days of receipt of application,
the permission will be deemed to have been granted.

K. Relief Available to Workmen Retrenched in Violation of

Section 25 F/25N: Judicial Approach
A survey of decided cases reveals that the Supreme Court is divided over the
above issue. One view is that in case of violation of Section 25F/25N of IDA,
retrenched workers would be entitled to reinstatement but not necessarily with
full back wages as a right. The other view is that monetary compensation in lieu
of reinstatement of workmen would subserve the ends of justice. The judicial
approach may broadly be examined as under.

1. Judicial approach prior to 2005 and 2010 (Two cases)

Prior to 2005, the Supreme Court, as observed earlier has repeatedly held that
Sections 25F(a) and (b) and 25N of the Industrial Disputes Act are mandatory
and non-compliance thereof renders the retrenchment of employees a nullity. If
it is invalid, it cannot be said to have terminated the relationship of employer and
employees. In such a situation, workers are entitled to reinstatement and full
back wages. However, full back wages cannot be claimed as a matter of right.
They may be denied in exceptional situations.
In Delhi Cloth and General Mills Co. Ltd v. Shambhu Nath
Mukherji166, the Supreme Court pointed out that any order of retrenchment in
violation of these two pre-emptory conditions as specified in Section 25F(a) and
(b) is invalid. If it is invalid, then he is still in service. The same view was taken
in Workmen of Subong Tea Estate v. Management of Subong Tea Estate167.
Here, the Supreme Court pointed out that the retrenchment of the workmen
being invalid in law, it cannot be said to have terminated the relationship of
employer and employee. Again, in Common India Ltd v. Niranjan Das168, the
Supreme Court observed that retrenchment of an employee without following
the provisions of Section 25F would be void-ab-initio.
In Anoop Sharma v. Executive Engineer Public Health Division, Panipat169,
the Supreme Court without referring to cases cited in 2 below held that
termination of service of an employee by way of retrenchment without
complying with the requirement of giving one month's notice or pay in lieu
thereof and compensation in terms of Section 25-F (a) and (b) has the effect of
rendering the action of the employer a nullity and the employee is entitled to
continue in employment as if his service was not terminated.
In Harjinder Singh v. Punjab State Warehousing Corporation170, the
Supreme Court while granting reinstatement to workman for violating the
provisions of Section 25F, 25G and 25H of the Industrial Disputes Acts
observed:
Of late, there has been a visible shift in the courts’ approach in
dealing with the cases involving the interpretation of social
welfare legislations. The attractive mantras of globalization and
liberalization are fast becoming the raison d’etre of the judicial
process and an impression has been created that the
constitutional courts are no longer sympathetic towards the
plight of industrial and unorganized workers. In large number of
cases like the present one, relief has been denied to the
employees falling in the category of workmen, who are illegally
retrenched from service by creating by-lanes and side-lanes in
the jurisprudence developed by this Court in three decades. The
stock plea raised by the public employer in such cases is that the
initial employment/engagement of the workman-employee was
contrary to some or the other statute or that reinstatement of the
workman will put unbearable burden on the financial health of
the establishment. The courts have readily accepted such plea
unmindful of the accountability of the wrong doer and indirectly
punished the tiny beneficiary of the wrong ignoring the fact that
he may have continued in the employment for years together and
that micro wages earned by him may be the only source of his
livelihood.
It needs no emphasis that if a man is deprived of his livelihood,
he is deprived of all his fundamental and constitutional rights
and for him the goal of social and economic justice, equality of
 status and of opportunity; the freedoms enshrined in the
Constitution remain illusory. Therefore, the approach of the
courts must be compatible with the constitutional philosophy of
which the Directive Principles of State Policy constitute an
integral part and justice due to the workman should not be
denied by entertaining the spurious and untenable grounds put
forward by the employer—public or private. (Para 23).

2. Judicial approach between 2005 and 2011 (Except two

cases)
In UP State Brassware Corporation Ltd v. Uday Narain Pandey171, the
question arose whether direction to pay back wages consequent upon a
declaration that a workman has been retrenched in violation of the provisions of
Section 6N of the UP Industrial Disputes Act, 1947 (equivalent to Section 25F of
the IDA) as a rule was proper exercise of discretion. The Supreme Court
observed as follows:
A person is not entitled to get something only because it would
be lawful to do so. If that principle is applied, the functions of an
industrial court shall lose much of their significance. The
changes brought about by the subsequent decisions of this Court,
probably having regard to the changes in the policy decisions of
the government in the wake of prevailing market economy,
globalization, privatization and outsourcing, is evident.
The Court therefore, emphasized that while granting relief, application of
mind on the part of the industrial court is imperative. Payment of full back
wages, therefore, cannot be the natural consequence.
Again, in Uttaranchal Forest Development Corporation v. M C Joshi172,
the Supreme Court held that relief of reinstatement with full back wages was not
being granted automatically only because it would be lawful to do so and several
factors have to be considered, few of them being as to whether appointment of
the workman had been made in terms of statutes/rules and the delay in raising
industrial dispute. The Supreme Court therefore, granted compensation instead
of reinstatement although there was violation on Section 6N of the UP Industrial
Disputes Act, 1947 (equivalent to Section 25F) of the IDA.
In State of MP v. Lalit Kumar Verma173, the Supreme Court substituted
the award of reinstatement by compensation. In yet another decision in MP
Administration v. Tribhuwan174, the management had retrenched the workman
in violation of Section 25F; the industrial court directed only compensation to
the respondent. The High Court ordered the reinstatement of the workman with
full back wages.
On appeal, the Supreme Court held that keeping in view the peculiar facts
and circumstances of this case and particularly in view of the fact that the High
Court had directed reinstatement with full back-wages, the interest of justice
would be served if the appellant herein be directed to pay a sum of ₹75,000 by
way of compensation to the respondent.
Again in Sita Ram v. Moti Lal Nehru Farmers Training institute175, the
Supreme Court considered the question as to whether the labour court was
justified in awarding reinstatement of the appellants therein and held that
keeping in view the period during which the services were rendered by the
respondent (sic appellants); the fact that the respondent had stopped its operation
of bee farming, and the services of the appellants were terminated in December
1996, it is not a fit case where the appellants could have been directed to be
reinstated in service. Instead, payment of a sum of ₹1,00,000 to each of the
appellants would meet the ends of justice.
In Ghaziabad Development Authoirty v. Ashok Kumar176, the Supreme
Court again considered the question whether the labour court was justified in
awarding the relief of reinstatement with full back wages in favour of the
workman. In this case, the first respondent was appointed on daily wages. He
worked for a little more than two years. The sanction of the state of U.P was
necessary for creation of posts but this post was not sanctioned after 31 March
1990 by the state. The management therefore, terminated his service. But the
labour court directed reinstatement of the first respondent in service. On appeal
the Supreme Court ruled:
A statutory authority is obligated to make recruitments only
upon compliance with the equality clause contained in Articles
14 and 16 of the Constitution of India. Any appointment in
violation of the said constitutional scheme as also the statutory
recruitment rules, if any, would be void. These facts were
required to be kept in mind by the labour court before passing an
award of reinstatement.
Furthermore, public interest would not be subserved if after such
a long lapse of time, the first respondent is directed to be
reinstated in service.
 The Court therefore, held that the appellant should be directed to pay
compensation to the first respondent instead and in place of relief of
reinstatement in service. Keeping in view the fact that the respondent worked for
about six years as also the amount of daily wages which he had been getting, that
the interest of justice would be subserved if the appellant is directed to pay a
sum of ₹50,000 to the first respondent.
In Mahboob Deepak v. Nagar Panchayat, Gajraula177, it was observed:
Such termination of service, having regard to the fact that he had
completed 240 days of work during a period of 12 months
preceding the said date, required compliance with provisions of
Section 6-N of the U.P. Industrial Disputes Act. An order of
retrenchment passed in violation of the said provision although
can be set aside but as has been noticed by this Court in a large
number of decisions, an award of reinstatement should not,
however, be automatically passed.
The factors which are relevant for determining the same, inter alia, are;
(i) whether in making the appointment, the statutory rules, if any, had
been complied with;
(ii) the period he had worked;
(iii) whether there existed any vacancy; and
(iv) whether he obtained some other employment on the date of
termination or passing of the award.
The respondent is a local authority. The terms and conditions of
employment of the employees are governed by a statue and
statuary rules. No appointment can be made by a local authority
without following the provision of the recruitment rules. Any
appointment made in violation of the said rules as also the
constitutional scheme of equality as contained in Articles 14 and
16 of the Constitution of India would be a nullity.
Due to some exigency of work, although recruitment on daily
wages or on an ad hoc basis was permissible, but by reason
thereof an employee cannot claim any right to be permanently
absorbed in service or made permanent in absence of any statue
or statutory rules. Merely because an employee has completed
240 days of work in a year preceding the date of retrenchment,
the same would not mean that his services were liable to be
 regularized.
Applying the aforesaid legal principles, the court held that the relief
granted in favour of the appellant by the labour court is wholly unsustainable.
Dealing the decision of the High Court, the Court said that it did not consider the
effect of non-compliance with the provisions of Section 6N of the U.P. Industrial
Disputes Act, 1947. In view of this, the Court held that the appellant was entitled
to compensation, notice and notice pay.
In Jagbir Singh v. Haryana State Agriculture Marketing Board178, the
appellant was engaged as a daily wager by the Haryana State Agriculture
Marketing Board on 1 September 1995. He worked with Respondent No. 1 upto
18 July 1996. Thereafter, his services came to an end. During his employment,
the appellant was paid consolidate wages of ₹1,498 per month. The appellant
raised the industrial dispute contending that he was retrenched illegally in
violation of Section 25F of ID Act, 1947. He therefore claimed reinstatement
with continuity of service and full back-wages. The industrial tribunal-cum-
labour court held that the appellant had worked for more than 240 days in the
year preceding the date of termination and that the board violated the provisions
of Section 25F of the Act, 1947 by not giving him notice, pay in lieu of notice
and retrenchment compensation before his termination. The appellant was
entitled to reinstatement with continuity of service and full back-wages from the
date of demand notice, i.e. 27 January 1997. Thereupon the board challenged the
award before the High Court of Punjab and Haryana. The High Court held that
even if the appellant had completed 240 days of service in a calender year, he
was neither entitled to be reinstated nor could he be granted back-wages. The
High Court set aside the award holding that it was not sustainable in law. The
daily wager filed an appeal by special leave before the Supreme Court against
this order.
The question arose whether the High Court, in a case such as this where
termination of appellant was in contravention of Section 25 F, was justified in
upsetting the award of the labour court whereby the first respondent was directed
to reinstate the appellant with continuity of service and full back wages. Justice
Lodha, Speaking for the Court, referred to a series of decided cases referred
above and observed:
It would be, thus, seen that by catena of decisions in recent
times, this Court has clearly laid down that an order of
retrenchment passed in violation of Section 25F although may
be set aside but an award of reinstatement should not, however,
 be automatically passed. The award of reinstatement with full
back wages in a case where the workman has completed 240
days of work in a year preceding the date of termination,
particularly, daily wagers has not been found to be proper by
this Court and instead compensation has been awarded. This
Court has distinguished between a daily wager who does not
hold a post and a permanent employee. Therefore, the view of
the High Court that the labour court erred in granting
reinstatement and back wages in the facts and circumstances of
the present case cannot be said to suffer from any legal flaw.
However, in our view, the High Court erred in not awarding
compensation to the appellant while upsetting the award of
reinstatement and back wages. As a matter of fact, in all the
judgments of this Court referred to and relied upon by the High
Court while upsetting the award of reinstatement and back
wages, this Court has awarded compensation.
He laid down the following factors inter alia to be taken into account.
While awarding compensation, a host of factors, inter-alia, (i) manner and
method of appointment, (ii) nature of employment and (iii) length of service are
relevant. He however added that each case will depend upon its own facts and
circumstances.
He held that in a case such as this where the total length of service
rendered by the appellant was short and intermittent from 1 September 1995 to 1
July 1996 and that he was engaged as a daily wager, a compensation of
₹50,000/- to the appellant by respondent No. I will meet the ends of justice.
The aforesaid view was re-stated by Justice Lodha in Incharge Officer v.
Shankar shetty179. A question arose whether an order of reinstatement will
automatically follow in case where engagement of daily wager has been brought
to an end in violation of section 25 of the IDA Lodha J. Speaking for the
Supreme court observed.
It would be, thus, seen that in a catena of cases the Supreme Court has
clearly laid down that an order of retrenchment passed in violation of Section
25-F although may be set aside but an award of reinstatement should not,
however, be automatically passed. The award of reinstatement with full back
wages in a case where the workman has completed 240 days of work in a year
preceeding the date of termination, particularly, daily wagers has not been found
to be proper by this Court and instead compensation has been awarded. This
Court has distinguished between a daily wager who does not hold a post and a
permanent employee.
In Bharat Sanchar Nigam v. Man Singh,180 the Supreme Court observed
that in a catena of cases, it had clearly laid down that although an order of
retrenchment passed in violation of Section 25F of the Industrial Disputes Act
may be set aisde but an award of reinstatement should not be passed. This Court
also distinguished between a daily wager who does not hold a post and a
permanent employee.

3. An Appraisal
It is difficult to support the manner in which the shift in judicial approach took
place from the first to the second phase. An analysis of decided cases reveals
that the judicial decisions during the second period were influenced mainly by
two factors, namely (i) the policy decision of the government in the wake of
prevailing market ecomony, globalization privatization and outsourcing181 (ii)
by realizing that ‘an industry may not be compelled to pay the workman for the
period during which he apparently contributed little or nothing at all to it and/or
for a period that was spent unproductively as a result whereof the employer
would be compelled to go back to a situation which prevailed many years ago,
when the workman was retrenched’.182
Quite apart from above, the Court misread its earlier decision wherein it
was said that on ‘termination being declared illegal, payment of full back wages
cannot be granted mechanically along with reinstatement183. However, the Court
interpreted this as reinstatement with full back wages cannot be granted
automatically only because it would be lawful to do so’. Instead the Court
awarded compensation in lieu of reinstatement.
The Supreme Court in two cases of 2010 referred to in the first period has
tried to adopt the judicial approach appearing in the pre-2005 period. However,
the courts have not only failed to examine the decisions of the second period but
have not even referred to the decisions given by the other bench even during
2009–10. This approach, it is submitted, sent a wrong message to lawyers, law
teachers and students. This does not, however, mean the judicial decisions are
not sound.
Whatever may be the explanation for this shift in approach, there is still
uncertainty about the prevailing law on the subject. It is high time to set up a
constitution bench to settle the law on the above issue.

L. Procedure for Retrenchment

Section 25 G of the Industrial Disputes Act, 1947 lays down the procedure for
retrenchment:
Where any workman in an industrial establishment, who is a
citizen of India, is to be retrenched and he belongs to a particular
category of workmen in that establishment, in the absence of
any agreement between the employer and the workman in this
behalf, the employer shall ordinarily retrench the workman who
was the last person to be employed in that category, unless for
reasons to be recorded the employer retrenches any other
workman.
Applicability of the Scheme in Industrial Establishment
The Supreme Court in Indian Cable Co. Ltd v. Its Workmen184, affirmed
the decision of Calcutta High Court in Pravat Kumar Kar v. W T C Parker185
and held that it was the essence of the concept of an industrial establishment that
it is local in its set up. The Supreme Court further examined the decision of the
Madras High Court in India Tyre and Rubber Company v. Their Workmen186
and affirmed the view that if an industry had establishments located in different
places, each of them would be a separate industrial establishment under Section
25-G of the Act. The Supreme Court also observed in the aforesaid case:
Then again, on the terms of Section 25-G the relief provided
therein is to be granted within the category of workmen who are
proposed to be discharged…. If there are different branches at
different places and there are different scales of wages, the rule
laid down in Section 25-G would be incapable of compliance
unless all the branches have one scale of wages and the rules
provide for automatic transfer from place to place having
regard to the seniority and grades. Thus, whether we have regard
to the popular sense of the word ‘industrial establishment’ or to
the limitation of relief under Section 25-G to workmen in the
same category, the conclusion would appear to be inescapable
that each branch of a company would normally be regarded as a
distinct industrial establishment. (emphasis added)
In the Court’s view two things must co-exist in order to enable an
employer to distribute workmen to its different establishments and avoid
retrenchments namely, (i) automatic transfer under conditions of service, and (ii)
same scale of wages in the different establishments.
 The ordinary rule of retrenchment is ‘first come, last go’ and where other
things are equal, this rule has to be followed by the employer in effecting
retrenchment.187 But this rule should be applied in the interest of business. The
industrial tribunal will not interfere with the decision of the management, unless
preferential treatment is actuated by mala fides188… Whether the management
has acted mala fide or not depends upon the circumstances of the case; it cannot
be inferred merely from departure from the rule. Where those retrenched and
those retained are doing substantially the same kind of work and no special skill
or aptitude is required for doing the work which the retained clerk is doing,
preference given to the retained clerk on the ground that he has some experience
in the branch may justifiably raise an inference of mala fide.189
1. The Rule of Last Come, First Go. The judicial policy to protect the interest
of retrenched workers by allowing departure from the principle of ‘last
come first go’ only on ‘valid and justifiable reason’ to be proved by the
management is evident from the decision of the Supreme Court in
Workmen of Sudder Workshop of Jorhaut Tea Co. Ltd v.
Management.190 In this case, the management retrenched 23 workmen.
Out of these, the services of seven workmen were terminated without
following the rule of ‘last come first go’ under Section 25-G. The
tribunal, therefore, set aside the management's order of termination of the
seven workmen and directed their reinstatement with some back wages.
The Supreme Court, on appeal, confirmed the findings of the tribunal and
ruled:
The rule is that the employer shall retrench the workman who
came last, popularly known as ‘last come first go’. Of course, it
is not an inflexible rule and extraordinary situations may justify
variations. For instance, a junior recruit who has a special
qualification needed by the employer may be retained even
though another who is one up is retrenched. There must be a
valid reason for this deviation, and obviously, the burden is on
the management to substantiate the special ground for departure
from the rule.
It added:
There is none made out here, nor even alleged, except the only
plea that the retrenchment was done in compliance with Section
25-G gradewise. Absence of mala fide by itself is no absolution
from the rule in Section 25-G. Affirmatively, some valid and
 justifiable grounds must be proved by the management to be
exonerated from the 'last come, first go’ principle.191
The Court held that ‘grading for purposes of scales of pay and like
considerations will not create new categorization.’
Nothing shows more forcefully than the following observations made in
the aforesaid judgement when the Supreme Court deprecated the tendency of the
management:
[W]ho gambles in litigation to put off the evil day and when that
day arrives prays to be saved front his own gamble. The award
had given convincing reasons for reinstatement and even
reduced the back wages to half, still, the workmen were dragged
to the High Court and, worse, when worsted there, were driven
from Assam to Delhi to defend their pittance. The logistics of
litigation for indigent workmen is a burden the management
tried to use by a covert blackmail through the judicial process.
Misplaced sympathy is mirage justice, we cannot agree. Even
so, we take note of the inordinate delay due to long pendency
which is part of the pathology of processual justice in the
Supreme Court.192
The Court, therefore, directed that half the back wages between the date
of retrenchment and the publication of the award shall be paid, as directed in the
award itself. For the post award period, the Court held that full wages will be
paid until the High Court’s judgement on 13 April 1971 and therefore, 75 per
cent of wages will be paid until 30 April 1981. This decision is an eye opener to
the management which indulges in unnecessary litigation to harass workers.
In Suraj Prakash Bhandari v. Union of India193, the management tried
to evade the provisions of Section 25-G. In this case, a workman was appointed
as welder in 1950 in the Central Tractor Organization in the pay scale of ₹125–
185. He served on this post for 9 years. In 1959, he was transferred to another
place. On 30 October 1971 by an order dated 14 October 1971, he was re-
designated as senior welder in the pay scale of ₹170–6–240. On 1 January 1973,
he was declared surplus but was offered re-employment by Jullundur
Cantonment. The workman refused the offer. He challenged the termination of
his service on the ground that it was illegal retrenchment and the offer of re-
employment amounted to demotion. The trial court decreed the suit with cost
and directed the management to appoint the workman in the grade of ₹175–6–
205–7–240. The additional district judge dismissed the appeal. The High Court
allowed the appeal. On appeal, the Supreme Court held that ‘if this action could
be justified, then it would arm the employers with new weapons to promote an
employee after creating a new post, abolish it after some time and relieve him of
this duties on the plea of surplusage.’ The Court added that the easiest course for
a reasonable management to adopt in such cases would have been to revert the
employee to the place where from he was promoted and give him the
emoluments which he was drawing before such promotion.
2. Period of service
In Harjinder Singh v. Punjab State Warehousing Corpn194, the Supreme Court
held that it is settled law that for attracting the applicability of Section 25-G of
the Act, the workman is not required to prove that he had worked for a period of
240 days during 12 calendar months preceding the termination of his service and
it is sufficient for him to plead and prove that while effecting retrenchment, the
employer violated the rule of ‘last come first go’ without any tangible reason.
Departure from the Rule: Last Come, First Go. The normal rule, it has
been observed earlier, is that the employer should adopt the principle of ‘last
come, first go’ in effecting retrenchment. However, for departing from the rule,
which would normally apply only when other things are equal; the employer; for
the purpose of arriving at the specific reasons to be recorded, may take into
account consideration of efficiency and trustworthy character of the employees,
and that if he is satisfied that a person with long service is inefficient, unreliable
or habitually irregular in the discharge of his duties, it would be open to him to
retrench him while retaining in his employment, employees who are more
efficient, reliable and regular, though they may be juniors in service to the
retrenched workman. Normally, where the rule is thus departed from, there
should be reliable evidence preferably in the recorded history of the workman
showing his inefficiency, unreliability or habitual irregularity.195 From the
above, it is evident ‘that wherever it is proved that rule in question has been
departed from, the employer must satisfy the industrial tribunal that the
departure was justified; and in that sense the burden would undoubtedly be on
the employer…. The employer should be able to justify the departure before the
industrial tribunal whenever an industrial dispute is raised by retrenched
workmen on the ground that the retrenchment amounts to unfair labour practice
or victimization.196 In each case of deviation from the principle ‘last come first
go’, the employer has to write down the reason in his order itself. The reason
cannot be improved later on.197
Recently in Harjinder Singh v. State of Punjab198, the Supreme Court
held that it is permissible for the employee to deviate from the rule in cases of
lack of efficiency or loss of confidence, etc., But the burden will then be on the
employer to justify the deviation.
3. Distinction between the Effect of Non-compliance of Sections 25-F and
25-G. In Central Bank of India v. S Satyam199, the Supreme Court
observed that while Section 25-F is confined only to the mode of
retrenchment of workmen in continuous service for not less than one
year, Section 25-G prescribes the principle for retrenchment and
applies ordinarily the principle of ‘last come first go’ which is not
confined only to workmen who have been in continuous service for not
less than one year, covered by Section 25-F.
(emphasis supplied)
The ratio of the above noted judgement was reiterated in Samishta Dube
v. City Board Etawah200. In this case, the Court interpreted Section 6-P of the U
P Industrial Disputes Act, 1947, which is pari materia to Section 25-G of the
Act, and held:
Now this provision is not controlled by conditions as to length
of service contained in Section 6-N (which corresponds to
Section 25-F of the Industrial Disputes Act, 1947). Section 6-P
does not require any particular period of continuous service as
required by Section 6-N.
The distinction between Sections 25-F and 25-G of the Act was reiterated in
Bhopgur Coop. Sugar Mills Ltd v. Harmesh Kumar201, in the following words:
We are not oblivious of the distinction in regard to the legality
of the order of termination in a case where Section 25-F of the
Act applies on the one hand, and a situation where Section 25-G
thereof applies on the other. Whereas in a case where Section
25-F of the Act applies, the workman is bound to prove that he
had been in continuous service of 240 days during 12 months
preceding the order of termination; in a case where he invokes
the provisions of Sections 25-G and 25-H thereof, he may not
have to establish the said fact.

M. Re-employment of Retrenched Workmen

Section 25-H which provides for re-employment of retrenched workmen in
preference to newcomers prescribes several conditions viz., (i) The workman is
‘retrenched’ within the meaning of Section 2 (oo) of the Industrial Disputes Act
before re-employment; (ii) the workman should be a citizen of India; (iii) the
workman should offer himself for re-employment in response to the notice by
the management; (iv) the workman should be from the same category in which
the employment is proposed.
The concluding words of Section 25-H, namely, ‘the retrenched workmen
who offer themselves for re-employment shall have preference over other
persons’, must be deemed to include preference over persons in the lower cadre
who are for the time being in the employment of the employer. Rule 78 of the
Industrial Disputes (Central) Rules lays down the procedure for re-employment
of retrenched workmen and requires the employer to display the vacancies on a
notice board at least 10 days before the date on which the vacancies are to be
filled and also to give notice by post to these vacancies to all the retrenched
workmen eligible to be considered therefor.202 Further, the retrenched workmen
must be given an opportunity for employment when the employer has to employ
an additional hand.203 This principle is based not only on Section 25-H but also
on fair play and justice.
The Supreme Court in Rai Sahib Ramdayal Ghasiram Oil Mills and
Partnership Firm v. Labour Appellate Tribunals204 held that Section 25-H
provides for re-employment of retrenched workmen in certain circumstances in
preference to newcomers. But the provisions of Section 25-H cannot apply to
workmen who had been retrenched before this provision came into force. The
legislature did not intend the provision to come into force before 25 October
1953. When that is the mandate of the legislature, no tribunal has jurisdiction on
the basis of its own conception of social justice to ignore ‘if any’ to apply the
provisions or its underlying ‘principle’ to a dispute which arose before the
provision came into force.
The Supreme Court in G S Ramaswamy v. The Inspector General of
Police, Mysore,205 held that the usual principle is that the juniormost persons
among those officiating in clear or long time vacancies are generally reverted to
make room for the senior officers coming back from deputation or from leave,
etc. Further, ordinarily as promotion on officiating basis is generally according
to seniority, subject to fitness for promotion, the juniormost person reverted is
usually the person promoted last. This state of affairs prevails ordinarily unless
there are extraordinary circumstances.
The aforesaid view was reiterated in State of Uttar Pradesh v. Kaushal
Kishore Shukla.206 The Supreme Court held that if out of several employees
working in a department, a senior is found unsuitable on account of his work and
conduct, it is open to the competent authority to terminate his services and retain
the services of a junior who may be found suitable for the service.
In Central Bank of India v. S Satyam207, the Supreme Court held that
Chapter VA of the Act providing for retrenchment is not enacted only for the
benefit of the workmen to whom Section 25-F applies but for all cases of
retrenchment and, therefore, there is no reason to restrict application of Section
25-H therein only to one category of retrenched workmen. Therefore, restricted
meaning cannot be given to the word 'retrenchment’ in Section 25-H. The Court
ruled that Section 25-H is couched in broad language and is capable of
application to all retrenched workmen, not merely those covered by Section 25-
F. It does not require curtailment of the ordinary meaning of the word
'retrenchment’ used therein. The provision for re-employment of retrenched
workmen merely gives preference to a retrenched workman in the matter of re-
employment over other workmen and there is no reason to restrict its ordinary
meaning which promotes the object of the 'enactment without causing any
prejudice to a better placed retrenched workman.’
The aforesaid view was reiterated in Harjinder Singh v. State of
Punjab208.

Retrospective Operation of Section 25-H

There is also a controversy regarding the retrospective operation of Section 25-
H. In Cownpur Tannery Ltd Kanpur v. Guha(s)209, it was contended on behalf
of the management that it was erroneous and unfair for the tribunal to have
virtually given effect to the said provision retrospectively. The Supreme Court
rejected the argument and observed:
Even before Section 25-H was added to the Act, industrial
adjudication generally recognized the principle that if an
employer retrenched the services of an employee on the ground
that the employee in question had become surplus, it was
necessary that whenever the employer had occasion to employ
another hand, the retrenched workman should be given an
opportunity to join service. This principle was regarded as of
general application in industrial adjudication on the ground that
it was based on considerations of fair play and justice.
In sharp contrast to Rai Sahib Ramdayal Ghasiram Oil Mills and
Partnership Firm v. Labour Appellate Tribunal210, the Supreme Court held that
‘Section 25-H provides for re-employment of retrenched workmen in certain
circumstances in preference to newcomers. But Act 43 of 1953 which enacted
this provision clearly provides in sub-section (2) of Section 25-J thereof that it
shall be deemed to have come into force on 24 October 1953. Clearly, therefore,
the provisions of this Section cannot apply to workmen who had been retrenched
before this provision came into force. The legislature did not intend the
provision to come into force before 24 October 1953. When that is the mandate
of the legislature, no tribunal has jurisdiction on the basis of its own conception
of social justice to ignore it and apply the provisions or principle to a dispute
which arose before the provisions came into force.’

Terms and Conditions of Re-employment

Section 25-H is silent about the terms and conditions on which re-employment
has to be offered by the employer. In Indian Hume Pipe Co. Ltd v. Labour
Court, Andhra Pradesh211, the Andhra Pradesh High Court held:
We are inclined to the view that the retrenched workmen are
entitled to claim the same employments as at time of
retrenchment and that the employer is not at liberty to change
the wage structure at his will.
In another case involving the same employer, Indian Hume Pipe Co. Ltd
v. Bhimarar Baliram Gandhi212, the Bombay High Court dissented with the
above view.

Penalty for Lay-off and Retrenchment without Previous

Permission
Section 25-Q prescribes penalty upon an employer who contravenes the
provisions of Section 25-M or 25-N. This penalty shall extend to imprisonment
for a term which may extend to one month, or with fine which may extend to
₹1,000/- or with both.

III. TRANSFER AND CLOSURE OF THE

UNDERTAKING: PREVENTION AND REGULATION
Notwithstanding the resistance of Indian workmen to the closure or transfer of
undertaking, it is important to emphasize that workmen are concerned, not with
the closure or transfer as such, but with consequence of closure or transfer,
namely, discharge, unemployment and loss of earning. It is doubtful if an
employer continues to retain workmen in his employment and pay the
remuneration even after closing his business, there would be a hue and cry over
the closure or transfer. In every single case where bona fides of closure or
transfer have been challenged or an attempt has been made to convert a closure
either into a lockout or retrenchment, the basic demand has been for the
reinstatement and payment of compensation for the period of unemployment.
The desire of workmen to continue in employment and maintain their earnings is
understandable in a surplus labour market which exists in India.
Prior to 1953, the only provision of the Act, which in those days used the
word ‘closure’ was Section 2 (1) of the IDA, invariably led tribunals to hold that
closure came within the ambit of the definition of ‘lockout’, particularly because
unlike the 1929-definition, the 1947-definition had no restrictive qualifying
clause. The labour appellate tribunals,213 the high courts214 and the Supreme
Court215 on the other hand, (impressed by the Constitutional guarantee of the
right to carry on any trade, profession, business or a vocation) were at pains to
emphasize that lockout was the ‘closing of a place of employment’ and not ‘the
closing of the business itself.’ Realizing the difficulty of maintaining this
distinction in cases of temporary closures, and even independently of such
difficulty, there developed a marked tendency to enquire into the reasons for the
closure, and decision-makers entered into detailed investigation of the bona
fides of management action.
It will be observed that the 1953-Amending Act provided for lay-off
compensation in all cases where an employer was unable to provide work to a
workman whose name was on the muster-roll and for retrenchment
compensation in cases where, subject to certain specified exceptions, he
terminated their services.
The legislature intended to interpret the definition of retrenchment at its
widest possible amplitude. But the Supreme Court in Barsi Light Railway
Company v. Joglekar216 severally curtailed the scope and coverage of the
statutory compensation of ‘retrenchment’ by holding that:
Retrenchment as defined in Section 2 (oo) and as used in
Section 25-F has no wider meaning than the ordinary accepted
connotation of the word: it means the discharge of surplus
labour or staff by the employer for any reason whatsoever,
otherwise than as a punishment inflicted by way of disciplinary
action, and has no application where the service of all workmen
have been terminated by the employer on a real and bona fide
 closure of business….
The Court accordingly held that termination of service as a result of
transfer of ownership of an undertaking to another employer did not constitute
‘retrenchment’. Sections 25-FF and 25-FFF were, therefore, enacted by the
Parliament in 1956 and 1957 respectively to plug the loopholes in provisions
relating to retrenchment and, in particular, to provide for payment of
compensation to workmen on transfer and closure of an undertaking. These
benefits further widen the scope of unemployment benefits.
The requirement of notice period was felt inadequate in case of closing
down the undertaking. Section 25-FFA was, therefore, inserted requiring for 2
month's notice to be given by the employer to the government about its intention
to close down the undertaking. Though this provision provided for the notice, it
did not contain any provision for prevention of lay-off, retrenchment or closure.
Further, the Act did not provide for any prior scrutiny of the reasons of such
closure. In order to meet the situation, Chapter V-B was inserted in the Industrial
Disputes (Amendment) Act, 1976 and later amended in 1982 by the Industrial
Disputes (Amendment) Act, 1982. This chapter which was applicable to
industrial establishments which were factories, mines, and plantations employing
300 or more workmen has now been extended to ‘industrial establishments’
employing 100 or more workmen. Section 25-O added a new provision for
preventing closure. A new provision has also been made under Section 25-P for
restarting undertakings closed down before commencement of the Industrial
Disputes (Amendment) Act, 1976. The penal provision for violation of the
provision relating to closure has been made under Section 25-R.

A. Transfer Compensation
Section 25-FF provides that where the ownership or management of an
undertaking is transferred, whether by agreement or by operation of law, from
the employer in relation to that undertaking to a new employer, every workman
who satisfies the test prescribed in that Section shall be entitled to notice and
compensation in accordance with Section 25-FF. However, the provision will
not be applicable where, as a result of the transfer, three conditions are satisfied,
namely, (a) the services of the workmen have not been interrupted, (b) the terms
and conditions of service under the new employer are not less favourable than
what they were before the transfer, and (c) the transferee binds himself under the
terms of the transfer to pay to the workmen, in the event of future retrenchment,
compensation on the basis that there had been continuous service and had not
been interrupted by such transfer217. It may be noted that all the three conditions
are used conjunctively. The employer cannot escape from his liability by
providing any one of these conditions.
The working of Section 25-FF in actual practice and as judicially
construed gave rise to several problems. Important among them is whether the
workman is entitled to double benefit such as payment of compensation by
vendor company and re-employment by vendee? Confusion exists due to
conflicting decisions of the Supreme Court in this regard. The effect of the first
decision, as we shall see presently, is that the workmen are entitled to double
benefit. But according to the second decision, workmen are not allowed the
double benefit.
In Workmen of Subong Tea Estate v. Subong Tea Estate,218 Suborg Tea
Estate (vendor) agreed to sell the tea estate to Hindustan Tea Company (vendee)
on 12 January 1959. It was also agreed upon by the parties that transfer would
take effect from 1 January 1959. This agreement was subject to the approval of
the Reserve Bank of India and pending the execution of deed for the approval of
the Reserve Bank of India, the vendee took the de facto possession of the estate
on 17 February 1959 but workers employed therein were allowed to work and
receive their wages from it. The permission of the Reserve Bank was received on
15 July 1959. Before the execution of the sale deed, the vendor company
received a letter from vendee to retrench certain surplus staff. The manager of
the vendor company accordingly served a notice on eight workmen intimating
that their services would be terminated from 18 October 1959, after paying them
retrenchment compensation prescribed under Section 25-F. The concerned
workmen received the compensation under protest. They challenged the validity
of the retrenchment. On these facts, the Supreme Court held that the vendor was
nobody to retrench and as such the order of retrenchment was invalid. The Court
also directed reinstatement of the retrenched workmen with wages. The net
result of the decision has been to grant double benefit of compensation and
reinstatement.
In Board of Directors of South Arcot Electricity Distribution Co. Ltd v.
Elumalai219, the South Arcot Electricity Undertaking was taken over by the
State. The conditions of service under the state government were less favourable
than those with the erstwhile electricity undertaking. The workmen demanded
compensation from the electricity undertaking. The company refused. On these
facts, the Supreme Court held that the proviso to Section 25-FF cannot be
invoked by the company for the purposes of defeating the claim of workmen
under the principal clause of Section 25-FF.
In Gursham Thappa v. Abdul Khuddus,220 a government undertaking
was taken over by the company as a going concern. The workmen employed in
the government undertaking were also taken over by the company. The Supreme
Court held that since in law the company was a separate and distinct entity from
the government, the employees as a result of transfer of undertaking became
workmen of the company and ceased to be workmen of the government
undertaking.
In Bhola Nath Mukherjee v. Govt. of West Bengal221, the Supreme
Court held that where there is no legal obligation cast upon the board under the
terms of the transfer or otherwise to pay any retrenchment compensation to the
workmen, the employees have no right to claim any compensation from the
board. Nor do they have any right to claim to be in continuous employment on
the same terms and conditions, even after the purchase of the undertaking by the
board. The Supreme Court held that the High Court in appeal was right in
holding that the employees were entitled to retrenchment compensation under
the provision of Section 25-FF. But it was in error in holding that the board even
after payment of the purchase price to the transferor company, was liable to pay
retrenchment compensation to the employees.
In Anakpalia Cooperative Agricultural and Industrial Society Ltd v. Its
Workmen222, a sugar and refinery company which was running at a loss was
purchased by a cooperative society. Like the previous case, the vendor company
paid to its employees statutory compensation and terminated their services. The
vendee cooperative society employed some of the workers of vendor company.
Those workmen who were not employed claimed reemployment in the
cooperative society. On these facts, the five-judge bench of the Supreme Court
observed that since the employees were paid the compensation, reinstatement
cannot be granted because:
The double benefit in the form of payment of compensation and
immediate re-employment cannot be said to be based on any
considerations of fair play or justice. Fair play and justice
obviously mean fair play and social justice to both the parties. It
would, we think, not be fair that the vendor should pay
compensation to his employees on the ground that the transfer
brings about the termination of their services and the vendee
should be asked to take them back on the ground that principles
of social justice required him to do so.
Thus, in effect, the aforesaid decision had awarded single benefit of
compensation. It is difficult to reconcile Subong Tea Estate with Anakpalia
Cooperative Agricultural and Industrial Society, Moreover, we are unable to
understand how an employee who received the statutory compensation by
vendor company is at the same time entitled to reinstatement by vendee
company. Further, it is against fair play and social justice.
Another issue is: who should be made liable to pay compensation under
Section 25 FF of the ID Act to the workmen? This issue was raised in New
Horizon Sugal Mills Ltd v. Ariyur Sugar Mill Staff Welfare Union223. In this
case, the assets of New Horizon Sugar Mills Ltd were seized and sold by auction
under SARFAESI Act 2002 by the Indian Bank, a secured creditor. The property
was purchased in auction by EID Parry India Ltd. As a result, the services of
employees of New Horizon were terminated. On these facts, a question arose:
who should be made liable to pay compensation under Section 25FF to the
workmen whose services were deemed to have terminated? The Supreme Court
held that it is a settled legal position under several decisions of this Court
starting from Anakapalla Cooperative Agricultural and Industrial Society v. Its
Workmen224 that the liability to pay its workmen would be on New Horizon, the
transferer/seller. Therefore, it follows that the amount due to the workers will
have to be paid from out of the sale proceeds which are lying with the Indian
Bank. Thus the purchaser, namely EID Parry, who has already paid the sale
price, will have no liability.
The other problem is when can the purchaser of an industrial
establishment be said to be the successor-in-interest of the vendor for the
purposes of determining the rights of the old workmen against him. The
following factors have been taken into account in this regard. (i) Did the
purchaser purchase the whole of the business or the whole of the property of the
vendor concerned or only a part of it? (ii) Was the business purchased as a going
concern at the time of the sale transaction or only after the closure of the
undertaking? (iii) Was the business purchased carried on at the same place? (iv)
Was the business carried on without a substantial break in time? (v) Whether the
purchaser carried on the same business in the same establishment? (vi) If there
was a break in the continuity of the business, what was the nature of the break,
what were the reasons for the break, and what was the length of the break? (vii)
Has the goodwill of the business been purchased upon the transfer of the
ownership of an establishment?
There is yet another problem namely, whether Section 25-FF applies to a
partnership firm. This problem received the attention of the Supreme Court in R
S Madhoram & Sons Pvt. Ltd v. Its Workmen.225 Here, the company carried on
a variety of businesses of allied and retail nature. It transferred its retail business
to a newly incorporated private company. There was a common muster roll for
all the companies; they were governed by the same set of service conditions;
they were liable to be transferred from one department to other; they were
treated as one unit for the purposes of bonus; they were not employed for any
particular branch or line of business. On these facts, it was held that Section 25-
FF did not apply in this case because the real business was not a separate
establishment for the purposes of Section 25-FF. However, the Court was
cautious to add:
…as in other industrial matters, so on this question too, it would
be difficult to lay down any categorical or general proposition.
Whether or not the transfer in question attracts the provisions of
Section 25-FF, must be determined in the light of the
circumstances of each case. It is hardly necessary to emphasize
that it is the matter of substance and not of form…. The question
as to whether a transfer has been effected so as to attract Section
25-FF must ultimately depend upon the evaluation of all the
relevant factors and it cannot be answered by treating any one of
them as of overriding or conclusive significance.

Exception to Section 25 FF
The Supreme Court in Gurmail Singh v. State of Punjab226 ruled, that where
the transferer and/or transferee is a state or instrumentality of a state, an
exception to Section 25-FF of the Industrial Disputes Act, 1947 may be made. In
this case, the state of Punjab, which was incurring losses, decided to transfer all
the tubewells in the irrigation branch of the public works department to the
Punjab State Tubewells Corporation, a company owned and managed by the
state of Punjab. Consequently, it retrenched 498 tubewell operators. However,
the state government although transferring the tubewells, undertook to recoup
any losses that the corporation might incur as a result of the transfer. But while
doing so, it has abridged the rights of the retrenched workers by purporting to
transfer only the tubewells and consequently retrench the workers. On these
facts, the Supreme Court observed:
We think that certainly in such circumstances, it will be open to
this Court to review the arrangements between the state
government and the corporation and issue appropriate directions.
Indeed, such directions could be issued even if the elements of
the transfer in the present case fall short of a complete
 succession to the business or undertaking of the state by the
corporation, as the principle sought to be applied is a
constitutional principle flowing from the contours of Article 14
of the Constitution which the state and corporation are obliged
to adhere to.
The Court summed up the position as under:
[E]ven before the insertion of Section 25-FF in the Act, the
employees of a predecessor had no right to claim re-employment
by the successor in business save in exceptional circumstances.
Even where available, that claim was not a matter of absolute
right but one of discretion, to be judicially exercised, having
regard to all the circumstances. An industrial tribunal, while
investigating such a claim, had to carefully consider all the
aspects of the matter. It had to examine whether the refusal to
give re-employment was capricious and industrially unjustified
on the part of successor in business or whether he could show
cause for such refusal on reasonable and bona fide grounds such
as want of work, inability of the applicant to carry on the
available work efficiently, late receipt of application for re-
employment in view of prior commitments or any other cause
which in the opinion of the tribunal made it unreasonable to
force the successor-in-interest to give re-employment to all or
any of the employees of the old concern. This discretion given to
industrial courts is no longer generally available because of the
insertion of Section 25-FF. But in a case where one or both of
the parties is a state instrumentality, having obligations under
the Constitution, a court has a right of judicial review, over all
aspects of transfer of the undertaking. It is open to a court, in
such a situation, to give appropriate directions to ensure that no
injustice results from the change-over. In the present case, the
parties to the transfer are a state on the one hand and a fully-
owned state corporation on the other. That is why we have
examined the terms and conditions of the transfer and given
appropriate directions to meet the needs of the situation.
The Court accordingly held that the affected employees can claim either
compensation or continuity of service but not both. The Court emphasized that
in case any of the employees have been paid any compensation, that amount will
have to be refunded by them before this order can be given effect.
In Sunil K R Ghosh v. K Ramachandran227, the Supreme Court ruled
that without consent, workmen cannot be forced to work under different
managements and in the event workmen are entitled to retirement/retrenchment
compensation under ID Act.

B. Closure
Section 2 (cc) of the Industrial Disputes (Amendment) Act, 1982 defines
‘closure’ to mean ‘the permanent closing down of a place of employment or part
thereof'. Section 25-FFF imposes a liability on the employer, who closes down
his business, to give one month's notice and pay compensation equal to 15 days’
average pay for every completed year of continuous service or any part thereof
in excess of 6 months. In case of closure on account of unavoidable
circumstances beyond the control of employer, the maximum compensation
payable to a workman is 3 months’ salary. However, unlike Section 25-F,
payment of compensation in lieu of notice are not conditions precedent to
closure.228 Thus, as a consequence of closure of the industry, Section 25-F is not
attracted and the rigour imposed thereunder stands excluded.229 The Industrial
Disputes (Amendment) Act, 1916 Section 25-O (which was amended in 1982)
lays down the procedure for closing down an undertaking and Section 25-P
makes special provision as to restarting of undertakings closed down before the
commencement of the Industrial Disputes (Amendment) Act, 1976.
1. Constitutional validity of Section 25-FFF. In Hathi Singh Mfg. Co. Ltd v.
Union of India,230 the Supreme Court was called upon to decide the
constitutional validity of Section 25-FFF of the Industrial Disputes Act,
which provided for payment of compensation to the workman on the
closure of industry. The Court upheld the constitutionality of Section 25-
FFF.
The facts of the case may be briefly stated: the three petitioners viz.,
owner of the Cotton Textile Mills, Ahmedabad, the owner of the coal mine and
the owner of the spinning and weaving factory at Jamnagar had closed down
their undertakings in Apri1, 1957, 10 February 1957 and 24 April 1957
respectively on account of losses incurred by them. They terminated the services
of their workmen after giving them notice of closure. In 1957, Section 25-FFF
was inserted in the Industrial Disputes Act, 1947 and liability was imposed for
payment of compensation by employers who closed down their undertaking after
27 November 1956. These employers were accordingly required to pay
compensation to their workmen affected by such closure under Section 25-FFF.
The employers in a writ petition challenged the validity of the section in the
Supreme Court under Article 32 of the Constitution mainly on three grounds: (i)
that it imposed unreasonable restrictions on the management's right to carry on
trade, profession or business and thereby contravened Article 1 9(I) (g); (ii) that
it was discriminatory in as much as different employers belonging to the same
group placed in similar circumstances were treated differently and thereby
contravened Article 14 of the Constitution; and (iii) that it penalized acts which
when committed were not offences and thereby contravened Article 20 of the
Constitution. The Supreme Court rejected all these contentions.
The aforesaid decision requires careful scrutiny. First, it has been
observed that the Court laid down the following criteria for determining the
constitutionality of Section 25-FFF:
Whether an impugned provision, imposing a fetter on the
exercise of the fundamental right guaranteed by Article 19 (1)
(g) amounts to a reasonable restriction imposed in the interest of
general public must be adjudged… in the light of the nature and
incidents of the right, the interest of general public sought to be
secured by imposing the restrictions and the reasonableness of
the quality and extent of the fetter upon the right.
The Court did not in fact apply all the above criteria in determining the
constitutionality of Section 25-FFF. Specifically, the first criteria, namely
‘nature and incident of the right’ and third criteria, namely, ‘reasonableness of
the quality and extent of the fetter upon the right’ were not applied by the Court.
Second, the Court applied the following rationale for distinguishing
between prospective and retrospective operation of the statute:
When Parliament enacts a law imposing a liability as flowing
from certain transactions prospectively, it evidently makes a
distinction between those transactions which are covered by the
Act, and those which are not covered by the Act, because they
were completed before the date on which the Act was enacted.
This differentiation, however, does not amount to discrimination
which is liable to be struck down under Article 14. The power of
the legislature to impose civil liability in respect of transactions
completed even on the date on which the Act is enacted does not
appear to be restricted. If, as is conceded, and in our judgement
rightly, by a statute imposing civil liability in respect of post
 enactment transactions, no discrimination is practised, by the
statute which imposes liability in respect of transaction which
has taken place after a date fixed by the statute but before its
enactment, it cannot be said that discrimination is practised.
Article 14 strikes at discrimination in the application of the laws
between persons similarly circumstanced; it does not strike at a
differentiation which may result by the enactment of a law
between transactions governed thereby and those which are not
governed thereby.
The Court, however, did not in fact apply the above rationale in
distinguishing the two classes of cases involved in Hathi Singh's case, namely,
(i) those where the employer closed his business on or before 27 November
1956, and (ii) those where the industry was closed after 27 November 1957 but
before the enactment of the provisions in 1957.
Third, the Court failed to make a careful analysis of the present economic
and social conditions of the country. It is regretted that the Court in fact took into
account only in a very general sense, the social and economic conditions of the
country which was insufficient.
Fourth, the holding of the Court that as the requirements of payment of
compensation and service of notice to workmen provided in Section 25-FF and
25-FFF are not a condition-precedent to transfer or closure and, the employer
cannot be prosecuted under Section 31 (2) for non-compliance with the
provisions of Section 25-FF and 25-FFF and that non-compliance of either
Section 25-FF or Section 25-FFF only creates civil liability to pay compensation
to workmen upon transfer or closure of the undertaking seems to be a
postmortem operation of the disease. This is also likely to encourage frequent
violation of the provisions of the Act. Indeed, in actual practice it is found that
delay often occurred in payment of compensation on transfer or closure of
undertakings. This caused great hardship to the workmen.
2. Closure of a Portion of an Undertaking. So far as the closure of a portion
of an undertaking or a part of an industrial establishment is concerned,
the Supreme Court in Workmen of Straw Board Manufacturing Co. Ltd
v. M/s Straw Board Manufacturing Co. Ltd231 pointed out:
The most important aspect in this particular case relating to
closure, in our opinion, is whether one unit has such
componential relation that closing of one must lead to the
closing of the other or one cannot reasonably exist without the
 other. Functional integrality will assume an added significance
in a case of closure of a branch or unit. That the mill is capable
of functioning in isolation is of very material import in the case
of closure. There is bound to be a shift of emphasis in the
application of various tests from one case to another.
The Court added:
The workmen cannot question the motive of the closure, once
closure has taken place in fact. The matter may be different if
under the guise of closure, the establishment is being carried on
in some shape or form or at a different place and the closure is
only a ruse or pretence. Once the Court comes to the conclusion
that there is closure of an undertaking, the motive of the
employer ordinarily ceases to be relevant. No employer can be
compelled to carry on his business if he chooses to close it in
truth and reality for reasons of his own.
The Court further pointed out: ‘there is nothing wrong for an employer
who has decided to close the establishment to follow the steps of closure by
stages. It may be in the nature of a business to take recourse to such a mode,
which cannot ordinarily and per se be considered as unfair or illegitimate.
Therefore, the termination of services of the first batch of workmen on account
of closure is not unjustified.’
In Avon Services v. Industrial Tribunal232, the management attempted to
serve notice on certain workmen. The notice stated that the management had
decided to close the painting section from a certain date due to unavoidable
circumstances, and further that the services of the said workmen would no
longer be required due to surplusage; they were, therefore, retrenched. The
workmen were accordingly informed that they should collect their dues under
Section 25-FFF from the office of the company. On these facts, a question arose
whether the case fell under Section 25-F or 25-FFF. The Supreme Court first
explained the distinction between Sections 25-F and 25-FFF as follows:
By Section 25-F, a prohibition against retrenchment until the
conditions prescribed by that Section are fulfilled, is imposed;
by Section 25-FFF (1) termination of employment on closure of
the undertaking without payment of compensation and without
either serving notice or paying wages in lieu of notice is not
prohibited. Payment of compensation and payment of wages for
 the period of notice are not, therefore conditions precedent to
closure.
The Court proceeded to determine whether there was anything in the
notice to suggest that the case was one of retrenchment or closure. It observed:
The tenor of the notice clearly indicates that workmen were
rendered surplus and they were retrenched. It is thus on the
admission of appellant, a case of retrenchment.
The Court then examined the contention that the notice referred to in
Section 25-FFF, was intended to be a notice of termination of service consequent
upon closure of the painting undertaking. It pointed out:
Now, even if a closure of an undertaking as contemplated by
Section 25-FFF need not necessarily comprehend a closure of
the entire undertaking and a closure of a distinct and separate
unit of the undertaking would also be covered by Section 25-
FFF, the question is—whether painting section was itself an
undertaking.
The Court held that in the context of Section 25-FFF, it must mean a
separate and distinct business or commercial trading or industrial activity and
not an infinitesimally small part of a manufacturing process. In view of this, the
Court stated that if painting was no more undertaken as one of the separate jobs,
the workmen would become surplus and they could be retrenched, after paying
compensation as required by Section 25-F. It observed:
An employer may stop a certain work which was part of an
undertaking but which could not be classified as an independent
undertaking; the stoppage of work in this context would not
amount to closure of the undertaking. The three workmen were
doing the work of painting the containers. No records were
shown that there was a separate establishment, that it was a
separate subsection or that it had some separate supervisory
arrangement. In fact, once the container making section was
closed down, the three painters became part and parcel of the
manufacturing process and if the painting work was not
available for them, they could have been assigned some other
work and even if they had to be retrenched as surplus, the case
would squarely fall in Section 25-F and not be covered by
 Section 25-FFF on a specious plea of closure of an
undertaking.233
The Supreme Court, accordingly, upheld the finding of the tribunal that
this was a case of ‘retrenchment’. As conditions precedent were not complied
with, it was invalid and the workers were entitled to reinstatement with full back
wages.
The net effect of this decision has been to restrict the scope of closure
either to an entire undertaking or to a distinct and separate unit of the
undertaking.
3. Closure Compensation. In Management of Gordon Woodroffe Agencies
Pvt. Ltd v. Presiding Officer, Principal Labour Court234 the appellant, a
trading agency closed w.e.f. 3l May 1984, because it had incurred heavy
losses in its business. The appellant who had less then 50 workmen
offered to all its workmen closure compensation as prescribed by law and
other legal entitlements. Many workmen received the said compensation.
However, respondent-workmen claimed alternate employment in a sister
concern of the appellant which was a manufacturing company. The
appellant denied respondents’ claim. The dispute between workmen and
the management was referred for adjudication. The labour court held that
closure was genuine and justified in law. It directed appellant-
management to pay to respondent-workmen ex-gratia amounts apart from
closure compensation. Then a writ petition was filed before the High
Court challenging award of additional compensation. The High Court
dismissed the petition. Thereupon, an appeal was filed before the
Supreme Court. The Court held that the labour court or the High Court
has no authority in law to direct payment of any additional sum by way
of ex-gratia otherwise than what is provided under the statute when the
act of the management in closing down the establishment is found to be
valid and all legally payable amounts have been paid or offered in time.
The Court added that when the labour court came to the conclusion that
the closure of the establishment was legally justifiable and the management had
as required under the law, offered apart from the compensation payable for the
closure, all other statutory dues which some of the employees collected without
demur and in the case of respondent-workmen even though the same were
offered on time, they did not accept it, therefore, the question of paying any
additional ex-gratia compensation which is not contemplated under the statute,
did not arise.
4. Closure Compensation in Unavoidable Circumstances. The proviso to
 Section 25-FFF states that the maximum compensation payable to
workmen on account of unavoidable circumstances beyond the control of
the employer, is limited to the average pay for 3 months. The explanation
to Section 25-FFF (1) provides that an undertaking which is closed down
by reason merely of:
(i) financial difficulties (including financial losses); or
(ii) accumulation of undisposed stock; or
(iii) the expiry of the period of lease or license granted to it; or
(iv) in a case where the undertaking is engaged in mining operations,
exhaustion of the minerals in the area in which such operations are
carried on;
shall not be deemed to be closed down on account of unavoidable
circumstances beyond the control of the employer within the meaning of the
proviso to this sub-section.
The expression ‘the proviso to Section 25-FFF (1)’ functions more or less
as a definition of an undertaking being closed down on account of unavoidable
circumstances beyond the control of the employer.
An analysis of decided cases reveals that the following situations, namely,
(i) vis major, i.e., an act of God, calamities, e.g., earthquakes, floods, cyclones,
etc., (ii) enemy action as in time of war, (iii) civil commotion, e.g., riots etc., (iv)
action of state, viz., expropriation, restraint on trade, e.g., drastic cut in import
and control of supplies of raw materials, etc,; (v) acts of utter lawlessness to
which the employer is not a party, (vi) when the workmen create circumstances
which lead to closure, e.g., closure due to strike, threats, intimidation, violent
methods like stabbing and bomb throwing by workers235 are covered by the
expression ‘unavoidable circumstances beyond the control of employer.’ On the
other hand, closure on account of (i) differences in partnership;236 (ii) gherao
and the apprehension to the staff or danger to personal safety;237 (iii) variety of
reasons such as location in residential area, shortage of space, continued losses,
restrictions to operate at night238 are not covered within the expression
‘unavoidable circumstances beyond the control of the employer’.
The strict legal interpretation of the proviso of Sections 25-FF and 25-
FFF appears to have been taken by the Court, for instance, in Antony v.
Kumaran239 wherein the employer who was running a grocery shop had to close
it because he was suffering from tuberculosis and was confined to a sanatorium.
Aggrieved by the order, the workmen filed an application under Section 33-C(2)
to the labour court for compensation under Section 25-FFF. The Court held that
the workmen were entitled to compensation under Section 25-FFF. Thereupon,
the employer filed a writ petition in the Kerala High Court. A question arose as
to whether the closure was ‘for unavoidable circumstances beyond the control of
the employer’ under the provision of sub-section (1) of Section 25-FFF. The
Court, while conceding that an employer suffering from tuberculosis was
naturally not in a position to run his business as it was something beyond his
control, nevertheless held that his disease was not a reason connected with the
running of the business; it was only personal to him. In view of this, it was held
that closure of the undertaking would not deprive the workmen of their full
compensation.
In Shyamsunder v. Labour Court240, the proprietor closed down his
press on the ground that he was suffering from hypertension and was under
constant physical care and attention. He denied his liability to pay compensation
exceeding 3 months under the proviso to Section 25-FFF (1) on account of
‘unavoidable circumstances’ beyond the control of the proprietor. On these facts,
a question arose whether the closing down of the undertaking fell under proviso
to Section 25-FFF (1). The Bombay High Court answered the question in
negative and observed:
The expression ‘unavoidable circumstances’ appearing in the
proviso will have to be strictly construed, if the intent of the
legislature is to be carried out and which is apparent from the
explanation appended thereto. The expression ‘unavoidable
circumstances’ must refer to the closure, the reasons for which
they are connected with the business or its function. The
circumstances, however unavoidable, may not attract the
provision if those circumstances are unrelated to the business of
the undertaking or its functions. In order to attract the proviso,
the closure of an undertaking must be for unavoidable
circumstances beyond the control of the employer and such
circumstances must necessarily be in connection with or have
nexus with the functioning of the undertaking.
The Court accordingly held that illness of the proprietor cannot be an
unavoidable circumstance beyond his control as contemplated by the proviso to
sub-section (1) of Section 25-FFF.
In Shri Rameshwar Dass v. State of Haryana241, the Supreme Court held
that if there was complete lawlessness prevailing in the undertaking over the
course of a year, it could be ‘unavoidable circumstances beyond the control of
employer’ under Proviso to 25-FFF (1). However, in the present case, the
Supreme Court did not decide the issue because in its view, the proper course
was to raise an industrial dispute. The strict interpretation given by the Court
may be welcomed by the workmen, but at the same time it causes hardship in
genuine cases to the management.
5. Enforcement of Section 25-FFF. The problem of enforcement of the
provisions for the payment of transfer and closure compensation has
attracted great deal of attention. There is no specific penal provision for
contravention of the provisions of either Section 25-FF or Section 25-
FFF. But Section 31 (2) of the Industrial Disputes Act,1947 provides that:
whoever contravenes any of the provisions of this Act or any
rule made thereunder shall, if no other penalty is elsewhere
provided by or under this Act for such contravention, be
punishable with fine which may extend to ₹100.
The Supreme Court, we have already seen, in Hathi Singh Mfg Co. Ltd
v. Union of India242, had held that as the requirements of payment of
compensation and service of notice to workmen provided in Sections 25-FF and
25-FFF are not a condition precedent to transfer or closure and therefore, an
employer cannot be prosecuted under Section 31 (2) for non-compliance of the
provisions of either Section 25-FF or Section 25-FFF. The Court further held
that non-compliance of either Section 25-FF or Section 25-FFF only creates civil
liability to pay compensation to workmen upon transfer or closure of
undertaking. It seems to be a postmortem of the disease. This is also likely to
encourage frequent violation of the provisions of the Act. Indeed, in actual
practice it is found that delay often occurred in the payment of compensation on
closure of undertaking.
6. Additional Restrictions on Industrial Establishments Employing 50 or
More Workmen. (1) Section 25-FF A which was inserted by Act 32 of
1972, requires an employer intending to close down an undertaking to
serve a notice, in the prescribed manner, on the appropriate government
or prescribed authorities at least 60 days before the date on which the
intended closure is to become effective stating the reasons for the
intended closure of undertaking, (a) This provision shall, however, be not
applicable in case of an undertaking:
(i) in which less than 50 workmen are employed; or
(ii) in which less than 50 workmen were employed on an average per
working day in the preceding 12 months.
(b) set-up for the construction of buildings, bridges, roads, canals,
 dams or for other construction work or project.
(2) Notwithstanding anything contained in sub-section (1), the appropriate
government may, if it is satisfied that owing to such exceptional
circumstances as accident in the undertaking or death of the employer or
the like it is necessary so to do, by order, direct that provisions of sub-
section (1) shall not apply in relation to such undertakings for such
period as may be specified in the orders.
The language of the aforesaid section is clearly mandatory. Thus, a
closure effected in fact, without complying with the requirements of Section 25-
FFA must be held to be devoid of legal effect, invalid and illegal.243
7. Restrictions on Industrial Establishments Employing 100 or More
Workmen.244 In 1976, the legislature imposed further restrictions on the
power of the management employing 300 or more workmen to close
down the undertakings. However, the Supreme Court declared the then
Section 25-O ultra vires. This led to the amendment of Section 25-O by
Industrial Disputes (Amendment) Act, 1982,245 which lays down the
following procedure for closing an industrial establishment (not of
seasonal character) employing not less than 100 workmen.
1. An employer who intends to close down an undertaking of an
industrial establishment to which this Chapter applies shall, in the
prescribed manner, apply, for prior permission at least 90 days
before the date on which the intended closure is to become
effective, to the appropriate government, stating clearly the reasons
for the intended closure of the undertaking and a copy of such
application shall also be served simultaneously on the
representatives of the workmen in the prescribed manner:
Provided that nothing in this sub-section shall apply to an
undertaking set up for the construction of buildings, bridges, roads,
canals, dams or for other construction work.
2. Where an application for permission has been made under sub-
section (1), the appropriate government, after making such inquiry
as it thinks fit and after giving a reasonable opportunity of being
heard to the employer, the workmen and the persons interested in
such closure may, having regard to the genuineness and adequacy
of the reasons stated by the employer, the interest of the general
public and all other relevant factors, by order and for reasons to be
recorded in writing, grant or refuse to grant such permission and a
 copy of such order shall be communicated to the employer and the
workmen.
3. Where an application has been made under sub-section (1) and the
appropriate government does not communicate the order granting
or refusing to grant permission to the employer within a period of
60 days from the date on which such application is made, the
permission applied for shall be deemed to have been granted on the
expiration of the said period of 60 days.
4. An order of the appropriate government granting or refusing to
grant permission shall, subject to the provisions of sub-section (5),
be final and binding on all the parties and shall remain in force for
one year from the date of such order.
5. The appropriate government may, either on its own motion or on
the application made by the employer or any workman, review its
order granting or refusing to grant permission under sub-section
(2) or refer the matter to a tribunal for adjudication:
Provided that where a reference has been made to a tribunal under
this sub-section, it shall pass an award within a period of 30 days
from the date of such reference.
6. Where no application for permission under sub-section (1) is made
within the period specified therein, or where the permission for
closure has been refused, the closure of the undertaking shall be
deemed to be illegal from the date of closure and the workmen
shall be entitled to all the benefits under any law for the time being
in force as if the undertaking had not been closed down.
7. Notwithstanding anything contained in the foregoing provisions of
this Section, the appropriate government may, if it is satisfied that
owing to such exceptional circumstances as accident in the
undertaking or death of the employer or the like it is necessary so
to do, by order, direct that the provisions of sub-section (1) shall
not apply in relation to such undertaking for such period as may be
specified in the order.
8. Where an undertaking is permitted to be closed down under sub-
section (2) or where permission for closure is deemed to be granted
under sub-section (3), every workman who is employed in that
undertaking immediately before the date of application for
permission under this Section, shall be entitled to receive
 compensation which shall be equivalent to 15 days’ average pay
for every completed year of continuous service or any part thereof
in excess of 6 months.

a. Scope of Proviso to Section 25-0(1)

The proviso to Section 25-O (1) excludes an undertaking dealing with
construction of building, etc., or for other construction work from following the
procedure under Section 25-O for closure, cannot be transplanted by any judicial
interpretation to be a proviso to Section 25-N which deals with entirely a
different topic of conditions precedent to retrenchment of workmen. It is obvious
that retrenchment presupposes the termination of surplus workmen in a going
concern which is not closed down. If the concern itself is closed down, all the
workmen would be terminated by closure and on such closure for calculating the
compensation payable to them as closure compensation, the amount of
compensation may be computed by adopting the measure for compensation as if
it was a running establishment and to that extent Section 25-FFF may be pressed
into service by the closed undertaking. However, if the impugned notices issued
by employer to its workers are treated to have effected only retrenchment of
workmen of an ongoing project or establishment, the proviso to Section 25-O
sub-section (1) cannot be pressed in service by any process of judicial
interpretation, such an interpretation would go against the very legislative intent
in enacting Section 25-N which does not contain any such provision.246

b. Nature of inquiry under Section 25-0(2)

In Jayhind Engineering v. State of Karnataka247, the division bench of
Karnataka High Court explained that the nature of the inquiry contemplated
under sub-section (2) of Section 25-O of the Act envisages that some reasonable
time necessarily had to be taken by the state government in the course of the
inquiry. Once an inquiry notice is issued on receipt of the application by the state
government, the running of the period of 60 days under sub-section (3) of
Section 25-O of the Act is arrested. However, if the inquiry goes beyond 60 days
even for valid reasons, it cannot be said that permission is deemed to be granted.

c. Scope of Section 25-0(3)

Section 25-0(3) makes it clear that in order to get the benefit of deemed
permission, two conditions are required to be complied with (i) there should be
an application filed as required under sub-section (1) of Section 25-O of the Act,
and (ii) the government should not have made an order granting or refusing to
grant permission to the employer within a period of 60 days from the date on
which such an application is made. For all purposes, the date of receipt of such
an application after representation alone should be taken as the date of filing of
the application seeking permission to close down the industrial establishment for
the purpose of determining the period prescribed to get the benefit of deemed
permission. The date of filing of the application cannot be taken into account to
take the view that since there was no order made within 60 days, the applicant is
entitled to the benefit of deemed permission. The return of the application by the
state government even assuming for the sake of argument is not valid in law,
since the application was returned, it has to be held under the circumstances that
there was an order made by the state government refusing to grant the
permission on such an application. Therefore, if once an application is returned,
it must be held that the permission sought is rejected by the state government.248
Procedure for closing down an undertaking under Section 25-O (5). The
division bench of the Madhya Pradesh High Court in Ujjain Mill Mazdoor
Sangh v. State of M P249 held that Section 25-0(5) could not be interpreted in a
manner to impose obligation on the government to necessarily refer the matter to
the tribunal for adjudication. A perusal of the provision in sub-section (5) of
Section 25-O of the Act shows that word 'may’ occurring therein makes it
optional for the government to either review the order for granting or refusing
permission for closure or to refer the matter to the industrial tribunal for
adjudication. It is not mandatory for the government to resort to both options
simultaneously or one after the other. The word 'or’ assumes significance in this
context, it may or may not resort to either option, or may take one option. When
it elects to take review option, that ends the matter.
8. Special Provisions as to Restarting of Undertaking, Closed Down before
Commencement of the Industrial Disputes (Amendment) Act, 1976.
Section 25-P lays down special provisions as to the restarting of
undertaking closed down before commencement of the Industrial
Disputes Amendment Act, 1976. It provides: If the appropriate
government is of the opinion in respect of any undertaking of an
industrial establishment to which Chapter V-B applies and which closed
drown before the commencement of the Industrial Disputes
(Amendment) Act, 1976,
(a) that such undertaking was closed down otherwise than on account of
unavoidable circumstances beyond the control of the employer;
(b) that there are possibilities of restarting the undertaking;
 (c) that it is necessary for the rehabilitation of the workmen employed in
such undertaking before its closure or for the maintenance of
supplies and services essential to the life of the community to restart
the undertaking or both; and
(d) that the restarting of the undertaking will not result in hardship to the
employer in relation to the undertaking, it may, after giving an
opportunity to such employer and workmen, direct, by order
published in the official gazerte, that the undertaking shall be
restarted within such time (not being less than one month from the
date of the order) as may be specified in the order.
9. Penalty for Closure. Section 25 R provides penalty for violation of
Sections 25-O and 25-P: It reads:
(1) Any employer who closes down an undertaking without complying
with the provisions of sub-section (1) of Section 25-O shall be
punishable with imprisonment for a term which may extend to 6
months, or with fine which may extend to ₹5,000 or with both.
(2) Any employer who contravenes an order refusing to grant permission
to close down an undertaking under sub-section (2) of Section 25-O
or a direction given under Section 25-P shall be punishable with
imprisonment for a term which may extend to one year, or with fine
which may extend to ₹5,000, or with both and where the
contravention is a continuing one, with a further fine which may
extend to ₹2,000 for every day during which the contravention
continues after the conviction.
10. Constitutional validity of Sections 25-O and 25-R. Excel Wear v. Union
of India250 decided an extremely important issue of constitutionality of
Section 25-R under the Industrial Disputes (Amendment) Act,1976 (since
amended). The principal issues were: (i) Whether the right to close down
the business was an integral part of the fundamental right to carry on
business? (ii) Whether Section 25-O or 25-R as they existed prior to
1982, violated Articles 14 and 19 (1) (g) of the Constitution? (iii) Can the
partners challenge the validity of the law in the name of the firm and
company along with the shareholders?
The facts of the case were as follows: The petitioners filed three writ
petitions which raised common question of law. The judgement covered
all the three. In the first petition the petitioner firm, Excel Wear—a
partnership firm was involved, in the second Acme Manufacturing
Company Ltd and in the third petition, shareholders of Apar (P) Ltd were
involved. In the first case, about 400 workmen were employed.
According to the petitioner, various kinds of situations such as labour
trouble of an unprecedented nature, non-availability of raw material,
running of the factory at loss, paucity of adequate number of competent
and suitable persons in the family of partners, and unsurmountable
difficulty in the replacement of damaged or worn-out machineries
occurred from the year 1974 to 1976. Finding it difficult, almost
impossible, Excel Wear applied for previous approval of the state
government, in accordance with Section 25-O (1). The government,
however, refused to accord the approval on the ground that the reasons
given by the employer for the intended closure were ‘prejudicial to public
interest’. The petitioner challenged the validity of this order. In the
second case, the petitioner, decided to close down the establishment due
to huge losses incurred by him on account of low productivity, serious
labour unrest and indiscipline resulting in various incidents of assaults or
the like. The company accordingly applied to the state government on 2
May 1977 under Section 25-O (1) for approval of the intended closure.
The government again refused to grant approval on the ground that it was
prejudicial to public interest. In the last petition, the company was
compelled to close down the factory. It, thereupon, served a notice on the
state government under Section 25-O (1) on 16 September 1976. Again,
the government refused permission on the ground that the stated reasons
of intended closure were inadequate and insufficient and were prejudicial
to public interest. The company, therefore, filed a petition before the
Supreme Court. The challenge was directed against the new Chapter V-B
as a whole, but mainly centred round the provisions with regard to
Sections 25-O and 25-R. According to the employer, the impugned law
was ultra vires the Constitution. The Supreme Court after considering the
concept of ‘socialism’ or a ‘socialistic State’ examined the reasons given
by the government in refusing the permission for closing down and found
it to be vague and universal. It observed:
Whimsically and capriciously, the authority can refuse
permission to close down. Cases may be there, and those in hand
seem to be of that nature, where if the employer acts according
to the direction given in the order, he will have no other
alternative but to face ruination in the matter of personal safety
and on the economic front. If he violates it, apart from the civil
 liability which will be of a recurring nature, he incurs the penal
liability not only under Section 25-R of the Act but under many
other statutes.
The Court then examined the question whether it would be incumbent for
the authority to give reasons in an order under Section 25-O (2) and observed:
If the government order is not communicated to the employer
within 90 days, strictly speaking, the criminal liability under
Section 25-R may not be attracted if on the expiry of that period
the employer closes down the undertaking. But it seems the civil
liability under Section 25-O (5) will come into play even after
the passing of the order of refusal of permission to close down
on the expiry of the period of 90 days. Intrinsically no provision
in Chapter V-B of the Act suggests that the object of carrying on
the production can be achieved by the refusal to grant
permission although in the Objects and Reasons of the
Amending Act such an object seems to be there, although
remotely, and secondly, it is highly unreasonable to achieve the
object by compelling the employer not to close down in public
interest for maintaining the production.251
The Court was of the view that the order passed by the authority was not
subject to any scrutiny by any higher authority or tribunal either in an appeal or
application.
The Court then proceeded to examine whether Chapter V-B suffered from
any vice of excessive and unreasonable restrictions under Articles 14 and 19 of
the Indian Constitution. The Court answered it in affirmative when it observed:
It is no doubt true that Chapter V-B deals with certain
comparatively bigger undertakings and of a few types only. But
with all this difference, it has not made the law reasonable. It
may be a reasonable classification for saving the law from
violation of Article 14 but certainly it does not make the
restriction reasonable within the meaning of Article 19 (6).
Similarly, the interest of ancillary industry cannot be protected
by compelling an employer to carry on the industry although he
is incapacitated to do so. All the comprehensive and detailed
information given in the application forms are of no avail to the
employer if the law permits the authority to pass a cryptic,
 capricious, whimsical and one-sided order.252
Thereafter, the Court rejected the contention that a law which takes away
or abridges the fundamental rights of citizens under Article 19 (l) (g) would be
void and, therefore, non est in respect of non-citizens. The last contention
whether Chapter V-B was saved by Article 31 C of the Constitution was also
negatived.
11. Legislative Response. In order to fill the gap created by the Supreme Court
in Excel Wear v. Union of India, supra, Section 25-O of the Industrial
Disputes (Amendment) Act, 1982 (as is given in the text) has made an
amendment.
12. Constitutional validity of Section 25-O of the Industrial Disputes Act. The
constitution bench of the Supreme Court on 17 January 2002 in M/s
Orissa Textile and Steel Co. Ltd v. State of Orissa253 decided an
extremely important issue relating to constitutional validity of Section
25-O of the ID Act incorporated by the amendment Act 46 of 1982254
(hereinafter referred to as the amended Section 25-O). The Court, by
upholding the validity of the amended Section 25-O, has settled the
controversy once and for all.
Prior to the Supreme Court decision, the high courts were, however,
divided on the issue of constitutional validity of amended Section 25-O. While
the Delhi High Court in D C M Ltd v. Lieutenant Governor255 and the Kerala
High Court in Laxmi Starch v. Kundra Factory Workers Union256 upheld the
constitutionality of section 25-O, the Karnataka High Court in Union of India v.
Stumpp Schedule and Somappa Ltd257 and the Calcutta High Court in Maulis
of India Ltd v. State of West Bengal258 held section 25-O as a whole and
Section 25-R insofar as it relates to awarding of punishment for violation of
section 25-O to be constitutionally invalid for violation of Article 19(l)(g) of the
Constitution. The Kerala High Court in Laxmi Starch case while upholding the
validity of the amended section 25-O, observed that it is not violative of Article
19(l)(g) as reasonable restrictions are permissible under Article 19(6) of the
Constitution. The provision is also not violative of Article 14 of the Constitution
because (i) no arbitrariness is involved, as the classification is on a rational basis
as between big establishments and small ones having intelligible difference and
reasonable nexus to the object: and (ii) it is not lacking in procedural safeguards
to avoid or correct arbitrariness. The approach adopted by the Supreme Court
may now be examined.
Scope of amended Section 25-O
The Supreme Court analysed the scope of amended Section 25-O and ruled:
(i) the appropriate government before passing an order is bound to make an
inquiry;
(ii) the order passed by the appropriate government has to be in writing and
should contain reasons;
(iii) the employer has to give notice by filling up a form in which he has to
give precise details and information;
(iv) the requirement to make an inquiry postulates as held in Meenakshi
Mills’ case, an inquiry into the correctness of the facts stated by the
employer in the notice served by him and also all other relevant facts
and circumstances including the bona fides of the employer;
(v) an opportunity to be heard would have to be afforded to the employer,
workmen and all persons interested;
(vi) the detailed information which the employer gives would enable the
appropriate government to make up its mind and collect necessary facts
for the purposes of granting or refusing permission.
The appropriate government would have to ascertain whether the
information furnished is correct and whether the proposed action is
necessary and, if so, to what extent;
(vii) the making of an inquiry, the affording of an opportunity to the
employer, the workmen and all interested persons and the necessity to
pass a written order containing reasons envisages exercise of functions
which are not purely administrative in character but quasi-judicial in
nature; and
(viii) the words ‘appropriate government, after making such inquiry, as it
thinks fit’ as held in Meenakshi Mills’ case does not mean that the
government may dispense with the inquiry at its discretion. These words
only mean that the government has discretion about the nature of the
inquiry it is to make.

Time limit
The Court, while dealing with the time limit fixed in the amended sub-section
(4) of Section 25-O, namely, that the order of the appropriate government shall
remain in force for one year from the date of such order held that the provision
for a period of one year makes the restriction reasonable. Justifying the
provisions, the Court said that if the reasons were genuine and adequate, the very
fact that they have persisted for a year or more is sufficient to necessitate a fresh
look. Also, if the reasons have persisted for a year, it can hardly be said that they
are the same. The difficulties faced during the year, provided they are genuine
and adequate, would by themselves be additional grounds. Further, by the end of
the year the interest of the general public or other relevant factors, which
necessitated refusal of permission on the earlier occasion may not prevail. The
appropriate government would necessarily have to make a fresh inquiry, give a
reasonable opportunity of being heard to the employer, workmen and all
concerned.

Deemed permission
The Supreme Court held the defect in the original Section 25-O regarding the
effect of not communicating the order of the government on the application has
been cured by incorporating a deeming clause in amended sub-section (3) of
Section 25-O which provides that if the appropriate government does not
communicate the order within a period of 60 days from the date on which the
application is made, the permission applied for shall be deemed to have been
granted.

Review of the order granting or refusing permission

Would the amended sub-section (5) of Section 25-O which provides that the
appropriate government may, either on its own or on an application made by the
employer or any workman, review its order granting or refusing permission or
refer the matter to a tribunal for adjudication and if a reference is made to a
tribunal (under this sub-section) then the tribunal should pass its award within a
period of 30 days from the date of such reference, cure the defects as pointed out
in Excel Wear v. Union of India?259
To examine the above issue, it is necessary to consider the contentions of
the employer, namely, (i) it is left to the discretion of the appropriate
government to either review or make a reference; and (ii) the employer has no
right to compulsorily seek a review or a reference. The Court rejected the
aforesaid contentions and observed:260
A proper reading of sub-section (5) of amended Section 25-O
shows that in the context in which it is used, the word ‘may’
necessarily means ‘shall’. Thus the appropriate government
‘shall’ review the order if an application in that behalf is made
 by the employer or the workman. Similarly, as required by the
employer or the workman, it shall refer the matter to a tribunal
for adjudication. As submitted by the learned Attorney General,
in a review the appropriate government would have to make an
inquiry into all necessary facts, particularly into the genuineness
and adequacy of the reasons stated by the employer. An
opportunity of being heard would have to be given to the
employer, workmen and all interested persons. The order on
review would have to be in writing giving reasons. Thus, in
exercising powers of review, the appropriate government would
be performing quasi-judicial functions.
The Court added:261
Sub-section (5) of amended Section 25-O provides that award
should be passed within a period of 30 days from the date of
reference. Even though it does not provide any time-frame
within which the review is to be disposed of; it is settled law that
the same would have to be disposed of within a reasonable
period of time. In our view, a period of 30 days would be a
reasonable period for disposing of a review also. This review
and/or reference under amended Section 25-O would be in
addition to a judicial review under Article 226 or Article 32.

Exceptional circumstances
The Supreme Court, while dealing with the amended sub-section (7) of Section
25-O which provides that if there are exceptional circumstances or accident in
the undertaking or death of the employer or the like, held that the appropriate
government could direct that the provision of sub-section (1) would not apply to
such an undertaking. In other words, the Court recognized the fact that if there
were exceptional circumstances then there could be no compulsion to continue
to run the business. The Court, however, clarified that it was not laying down
that some difficulty or financial hardship in running the establishment would be
sufficient. What is required is that the employer must show that it has become
impossible to continue to run the establishment. The Court held that it is from
this point of view that the restrictions imposed may seem to be reasonable and in
the interest of general public.

An evaluation
To sum up, it may be said that the Supreme Court in the case under review has
drawn an analogy with section 25-N in Meenakshi Mills case and generally
extended the principles laid down therein while considering the constitutional
validity of section 25-O. However, the Court was cautious in interpreting the
words ‘the appropriate government, after making an inquiry, as it thinks fit’ to
mean that the appropriate government has discretion about the nature of inquiry
it is to make. It does not mean that it may dispense with the inquiry at its
discretion.
While dealing with nature of the function performed by the appropriate
government in exercising its powers to review, the Court ruled that it performs
judicial functions. Being aware of the financial hardship in running the
establishment, the Court pointed out that in such a situation the employer must
prove that it had become impossible for him to continue to run the establishment.
Justifying the constitutional validity of the amended Section 25-O, the Court
pointed out the phrase ‘in the interest of the general public’ is a phrase of
definite connotation and a known concept. This phrase, as used in amended
Section 25-O, has been bodily lifted from Article 19(6) of the Constitution of
India.
In, S G Chemical and Dyes Trading Employees’ Union v. S G
Chemicals and Dyes Trading Ltd262, the Supreme Court held that Section 25-O
applies to the closure of ‘an undertaking of an industrial establishment’ and not
to the closure of ‘an industrial establishment’. Section 25-L, however, defines
only the expression ‘industrial establishment’ and not the expression 'an
undertaking of an industrial establishment’. It also does not define the term
‘undertaking’. Section 25-L does not require that an undertaking of an industrial
establishment should also be an ‘industrial establishment’ or it should be located
in the same premises as the ‘industrial establishment’. The term ‘undertaking’
though it occurs in several sections of the Industrial Disputes Act, as for
instance, Sections 25-FF,25-FFA and 25-FFF, is not defined anywhere in the
Act. Even the new Clause (ka) which was inserted in Section 2 by the
Amendment Act, 1982, defines the expression ‘industrial establishment or
undertaking’ and not the term ‘undertaking simpliciter’. It would appear from
the opening words of Clause (ka) namely, ‘industrial establishment or
undertaking’ means an establishment or undertaking in which any industry is
carried on. The term ‘undertaking’ in that definition applies to an industrial
undertaking. It would thus appear that the word ‘undertaking’ wherever it occurs
in the Industrial Disputes Act, unless a specific meaning is given to that term by
that particular provision, it is to be understood in its ordinary meaning and sense.
 13. Penalty for closure. Section 25-R (1) prescribes penalty for an employer
who closes down an undertaking without complying with the provision of
Section 25-O (l), which may extend to 6 months, or with fine which may
extend to ₹5,000 or with both. Further, Section 25-P (2) provides that
‘any employer,’ who contravenes an order refusing to grant permission to
close down an undertaking under Section 25-O (2) or a direction given
under Section 25-P, shall be punishable with imprisonment for a term
which may extend to one year, or with a fine which may extend to ₹5,000
or with both, and where the contravention is a continuing one, with a
further fine which may extend to ₹2,000 for every day during which the
contravention continues after the conviction.
14. Adequacy of punishment awarded for violating Section 25-O. The
tendency of the Court to strictly adhere to severe punishment provided
under the Act for violation of labour laws is evident from the decision of
the Gujarat High Court in State of Gujarat v. Continental Textile
Mills263. In this case, the only question involved was whether the fine of
₹100/- imposed on each of the accused (charged with breach of Section
25-0(1) of the ID Act) was sufficient. The Court held that in the
circumstances of the case, fine of ₹100/- was nothing but a mockery of
statutory provisions. It enhanced, therefore, the sentence to 3 months’
simple imprisonment and fine of ₹5,000/- and in default of payment of
the fine, to undergo a further period of one month's simple imprisonment.
A reading of Section 25-O clearly shows that for closure, the procedure
prescribed under sub-clause (1) of the said provision is mandatory be
followed by an employer who intends to close down the undertaking. A
failure to comply with the provisions of the said Section makes an
employer liable under sub-clause (1) of Section 25-R for punishment of
imprisonment for a term upto 6 months or with a fine upto ₹5,000/- or
both.

1 See, for instance, Annamalai Timber Trust Ltd (1950) LLJ 994 (IT).
2 Section 25 M.
3 Under Section 25 L, it is provided that for the purposes of Chapter VB (a) ‘industrial
establishment means (i) a factory as defined in clause (m) of Section 2 of the Factories
Act, 1948 (63 of 1948);(ii) a mine as defined in clause(7) of sub-section(1) of Section 2 of
Mines Act, 1952 (35 of 1952), or (iii) a plantation as defined in clause (1) of Section 2 of
Plantations Labour Act, 1951 (69 of 1951); (b) notwithstanding anything contained in the
 sub-clause (ii) of clause (a) of Section 2. (ii) in relation to any company in which not less
than 51 per cent of the paid-up share capital is held by the Central Government or (iii) in
relation to any corporation not being a corporation established by or under any law made
by Parliament, the Central Government shall be the appropriate government.
4 Excel Wear v. Union of India, (1978) 2 LLJ 527 (SC).
5 Workmen v. Firestone Tyre and Rubber Co. (1976) I LJ 493 (SC).
6 Kairbetta Estate v. Rajmanickam, (1960) 2 LLJ 275 (SC).
7 For details see, Suresh C Srivastava, ‘A Forgotten Element of Lockout’. 1966 Ban LJ
145.
8 Section 2 (kkk) of the Act defines ‘lay-off ’ (with its grammatical variations and cognate
expressions), to mean: the failure, refusal or inability of an employer on account of
shortage of coal, power or raw materials or the accumulation of stocks or the breakdown
of machinery or natural calamity or for any other connected reason to give employment to
a workman whose name is borne on the muster-rolls of his industrial establishment and
who has not been retrenched.
Explanation. Every workman whose name is borne on the muster rolls of the industrial
establishment and who presents himself for work at the establishment at the time
appointed for the purpose during normal working hours on any day and is not given
employment by the employer within two hours of his so presenting himself shall be
deemed to have been laid-off on that day within the meaning of this clause:
Provided that if the workman, instead of being given employment at the commencement
of any shift for any day is asked to present himself for the purpose during the second-half
of the shift for (the day and is given employment then, he shall be deemed to have been
laid-off for one half of that day:
Provided further that if he is not given any such employment even after so presenting
himself, he shall not be deemed to have been laid-off for the second half of the shift for
the day and shall be entitled to full basic wages and dearness allowances for that part of
the day.
9 See, Kairbetta Estate v. Rajmanickam, (1960) 2 LLJ, 275: See also Workmen of Dewan
Tea Management, (1964) I LLJ 358 (SC); Illness of Assistant Managing Director is not a
ground for lay-off. See Management of Gauhati Press (P) Ltd v. Labour Court,
(1983)Lab. IC 824.
10 Workmen of Dewan Tea Estate v. Their Management,(1964) I LLJ 358.
11 lbid.
12 Workmen v. Firestone Tyre and Rubber Co., (1976) 1 LLJ 493 (SC).
13 Id. at 499.
14 For instance, the Madras High Court in K Gurumurthy v. Simpson & Co.,(1981) 2 LLJ
360 held that Section 25 M was ultra vires the Constitution.
15 Section 25 K.
16 1998 Lab. IC 834 (SC).
17 See Section 2 (m) of the Factories Act 1948.
18 See Section 2 (7) of the Mines Act, 1952.
19 See Section (f) of the Plantation Labour Act, l95l.
20 Section 25 A.
21 K T Rolling Mills Ltd v. M R Mehar, (1962)2LLI 667 (Bom.).
22 South India Corporation v. All Kerala Cashewnut Factory Workers’ Federation, (1960)
2 LLJ 103 (Kerala).
23 For details, see Suresh C Srivaslava, Lay-off and Labour Law, (1969) 2 LLJ (Journal
Section iii).
24 Industrial Employees Union, Kanpur v. J K Spinning and Weaving Mills Co., (1956) l
LLJ 327 (LAT).
25 Associated Cement Companies Ltd v, Their Workmen, (1960) I LLJ 7 (SC).
26 Alloy Steel Project Company v. Their Workmen, (1971) 1 LLJ (SC).
27 Suresh C Srivastava, Lay-off and Labour Law, (1969)2 LLJ (Journal section) (iii).
28 Clause (ii) of Section 25 E of the Industrial Disputes Act, 1947 provides that a workman
shall not be entitled to any compensation ‘if he does not present himself for work at the
establishment at the appointed time during normal working hours at least once a day.’
29 Nutan Mills v. Employees’ State Insurance Corporation, (1956) I LLJ 215 (Bombay).
30 Id. at 2l9.
31 Section 25 D of the Act provides:
‘Notwithstanding that workmen in any industrial establishment have been laid-off, it shall
be the duty of every employer to maintain for the purposes of this Chapter a muster-roll,
and to provide for the making of entries therein by workmen who may present themselves
for work at the establishment at the appointed time during normal working hours.’
32 K T Rolling Mills v. Mehar, (1962) 2LLJ 667 (Bombay).
33 Kays Construction Company v. State of Uttar Pradesh, (1965) 2 LLJ 429 (SC).
34 ld. at 432.
35 Lay-off of workmen in accordance with the prevailing practice and on the same terms and
conditions cannot amount to a change in the conditions of service [see Sathe Biscuit
Chocolate Company Ltd, (1958) 2 LLJ 70.] This issue was left open by the Supreme
Court in Modi Food Products and Co. Ltd v. Faquir Chand Sharma, (1956) 1 LLJ 749.
36 See Aruna Mills Company Ltd v. Textile Labour Association, (1951) 1LLJ 647 and Sri
Dattaram Shankar v. Indian Smelting and Refining Company Ltd, (1953) 2LLJ 577.
37 This line of thinking was followed by the Supreme Court in Modi Food Products and Co.
Ltd v. Faquir Chand Sharma, (1956) | LLJ, 749 wherein Justice Ayyar observed:
‘It is common ground that there are no statutory rules prescribing the conditions under
which there could be a lay-off. If there had been, they would operate as conditions of
service between the parties, and then the question would simply have been whether there
had been a compliance with them. Under the provisions of the Industrial Employment
(Standing Orders) Act, 1946, certain standing orders had been framed. With reference to
this matter, counsel on both sides state that after the enactment of the Industrial Disputes
(Amendment) Act (XLIH of 1953) they are no longer in force and that there are no
statutory provisions applicable to the present dispute. We must, therefore, decide the
 question on the footing that the only condition which the parties might be taken to have
agreed to is that the lay-off should be for adequate grounds and for a reasonable period.
On this question, there is a clear finding in favour of appellant. The tribunal has found
that groundnut and neem seeds were not available at parity prices, and for that reason, the
work had to be stopped. It is not likely that businessmen would cut their profits to spite
the workmen. The period of the lay-off was expressed to be until the next groundnut
season, and we have been told that the season for groundnut begins sometimes in
November-December. In fact, all the respondents have been re-employed in relays from
September onwards, and by the first week of December, all of them had been absorbed.
On the finding of the tribunal that the lay-off was justified, it follows that the application
of the respondents under Section 23 of the Act was liable to be dismissed on the ground
that there had been no contravention of Section 22 (a).
38 Krishna Distt. Marketing Society Ltd v. N V Purnachandra Rao, (1987) Lab. IC 1651.
39 ld. at 1658.
40 See ‘Statement of Objects and Reasons’, Gazette of India, dated January 28, 1976 Part II.
Section 2. Ext. 491.
41 Barsi Light Railway Company v. Joglekar (K N), 1957 SCR 121.
42 Hari Prasad Shivshankar Shukla v. Divalkar (A D), AIR 1957 SC 121.
43 Barsi Light Railway Company v. Joglakar (K N) op. cit.
44 Id. at 41.
45 Pipraich Sugar Mills v. Pipraich Sugar Mills Mazdoor Union, AIR (1957) SC 95. The
facts were as follows: The sugar mills situated in Pipraich in Gorakhpur District which
suffered a heavy loss due to short supply of sugarcane and whose production and supply
was controlled by the government, after obtaining the permission of the government,
decided to sell the mill to a Madras firm in October 1950. It was agreed upon between the
vendor and the vendee that the machinery had to be dismantled and transported to Madras
by the seller. When the workers came to know about this transaction, they made
unsuccessful attempts to persuade the government to withdraw the permission to sell the
mills. Thereafter they decided to go on strike from 12 January 1951. In the course of
negotiation, the employer agreed to pay 25 per cent of the profits from the sale to the
workers provided they did not go on strike and helped the management in dismantling
and transporting the machinery. Upon this agreement the strike was called off. On the day
the machinery was to be dismantled for transportation to Madras to be re-erected there,
the management asked the workers to help. The workers on being asked by the
management, however, refused to do so. Thereupon on 28 February 1951, the
management gave a notice to the workers to the effect that those who would not cooperate
in dismantling the machinery will be discharged with effect from 1 March 1951 and the
workers will be paid upto 14 March, 1951. In view of the inability of the seller to take up
the contract, the purchaser entered into direct negotiation with the workmen and
concluded an agreement with them for dismantling the machinery. On 14 March 1951 the
employers gave notice to the workers that the machinery had to be transferred to the
vendees on 15 March l95l and workers will be paid upto 16 March 1951 and this later
date was extended upto 21 March, on the request of the workers on which date they were
 discharged. On 19 April 1951, the workers claimed the bonus of 25 per cent under
January agreement, but this claim was rejected by the employers. On 16 November 1951
the dispute was referred by the Uttar Pradesh government to the industrial tribunal for
adjudication. The tribunal held that there was a contract between the workmen and the
management to pay the said sum of ₹45,000 as bonus and accordingly directed the
management to pay the same. The labour appellate tribunal upheld the award. Thereupon
the employer preferred an appeal before the Supreme Court. Justice Venkataraman Ayyar
of the Supreme Court agreed with the management that there was no concluded
agreement between the parties and therefore, there was no liability to pay the said sum to
workmen. However, his Lordship emphasized the need of economic reason in the ease of
retrenchment and held that there was a discharge of workmen under both the
circumstances when there was retrenchment and closure of business and, therefore, ‘the
compensation was to be awarded under the law not for discharge as such but for discharge
on retrenchment.’
46 Pipraich Sugar Mills v. Pipraich Sugar Mills Mazdoor Union, op. cit.
47 AIR 1976 SC 1111; See Suresh C Srivastava ‘Benefits against Forced Unemployment in
Indian Industries’ IJIR Vol. 10, No. 3, 197 5. 347.
48 AIR 1976 SC 1111 at 1114.
49 M/s. Hindustan Steel Ltd v. Labour Court, AIR 1977 SC 31.
50 State Bank of India v. Sundara Money, AIR 1976 SC 1111.
51 Delhi Cloth and General Mills Co. Ltd v. Shambhu Nath Mukherji AIR 1978 SC 8.
52 Santosh Gupta v. State Bank of Patiala, (1980) 2 LLJ 72 (SC).
53 Gujarat Steel Tubes Ltd v. GST. Mazdoor Sabha, (1980) l LLI 137.
54 Santosh Gupta v. State Bank of Patiala. op. cit.
55 Gujarat Steel Tubes v. Gujarat Steel Tubes Mazdoor Sabha (1980) 2 LLJ 72.
56 State Bank of India v. N Sundara Money, AIR 1976 SC 1111.
57 Hindustan Steel Ltd v. State of Orissa, AIR 1973 SC 31.
58 Barsi Light Railway Company v. K N Joglekar, op. cit.
59 Pipraich Sugar Mills v. Pipraich Sugar Mills Mazdoor Union, (1957) 1 LLJ 235 (SC).
60 Banaras Ice Factory Ltd v. Their Workmen, (1957) I LLJ 253 (SC).
61 Ramesh Kumar v. Central Government Industrial Tribunal, (1980) Lab. IC 1116
(Bom.).
62 Surindra Kumar v. Industrial Tribunal, (1981) 1 LLJ 386.
63 (1982) 1 SCC 545; AIR 1982 SC 854; (1982) 1 LLJ 330. A question arose whether the
termination for unauthorized absence from duty by workmen amounted to ‘retrenchment’.
64 (1976) 3 SCR 160.
65 AIR 1977 SC 31.
66 AIR 1981 SC 1219.
67 AIR 1978 SC 8.
68 AIR 1981 SC 422.
69 AIR 1981 SC 1253.
70 AIR 1957 SC 121.
71 (1982) Lab. IC 8l1 at 815; See also Devinder Singh v. Muncipal Council, Sanaur, 2011
Lab IC 2799 para 10 (SC).
72 (1983) 1 LLJ 8.
73 (1980) 2 LLJ 72.
74 (1981) 2 LLJ 70.
75 (1982) 1 LLJ 330.
76 Surender, Kumar Verma v. Central Government Industrial, AIR 1981 SC 422.
77 (1982) 1 LLJ 330 (SC).
78 1998 Lab. IC411(SC): See also Narmada Building Materials (P) Ltd v. Devassy, (1999)
1LLJ 142 (Kerala).
79 (1994) 2SCC 323: (1994 AIR SCW 778).
80 AIR 1982 SC 1126: (1982) 25CF 1246 (1982) 1 SCC 205.
81 (1996) 7 SCC 139.
82 1993 1 C.L.R. 467. Also see Hari Singh v. I.T. cum-L.C. Rohtak, (1993) II LLN 244;
Kurukshetra Central Co-operative Bank Ltd v. State of Haryana,1993 (66) FLR 197.
83 1993 II LLN 244.
84 1994 Lab. IC 1973; The same view was taken in Mohd. Abdul Kadir v. A.P. State Road
Corporation, (1984) 2 LLJ 75 (HC Andhra); Desh Raj v. Industrial Tribunal, (1984)
Lab IC 1651 1HC Patna) and H.M.T. Ltd v. Labour Court, (1983)ILLI 33'7 (H.C.
Kerala); Roop Narain Shukla v. Industrial Tribunal, (1997) LLR 924 (H C Punjab &
Haryana).
85 (1990) II CLR 542.
86 (1995) Lab. IC 280.
87 (1991) I LLN 490.
88 (1979) 2LLJ 363.
89 (1990) Lab. IC 1750 (SC).
90 (1990) (61) FLR 73.
91 (1996) I SCC 595: AIR 1996 SC 1001.
92 (2002) Lab IC 2624.
93 2003 LLR 625 (SC).
94 (2003) 4 SCC 27.
95 In order to restrict the wide coverage given by the courts to the term ‘retrenchment’,
Section 2 (oo) was amended adding sub-clause (bb) to it by the Industrial Disputes
(Amendment) Act, 1984 which came into effect from 18 August 1984. The scope of
clause (bb) of Section 2 (oo) has been the subject-matter of judicial controversy. Courts
have interpreted the expression ‘retrenchment’ in its widest possible connotation despite
the legislative intent behind clause (bb) to restrict the scope of definition of retrenchment.
96 Id. at 36–37.
97 1998 LLR 383 (SC); See also Escorts Ltd v. Presiding Officer, (1997) 2 SCC 621;
General Secretary, M.P.K.M. Panchayat (HMS) v. Western Coalfield Ltd, (1999) I LLJ
772.
98 JT 1995 (6) SC 547.
99 (1998) I LLJ 343.
100 (2005) LLR 706.
101 (1992) Lab. IC 451 (Orissa).
102 (1991) Lab. IC 494.
103 J.T. (1994) (t) SC 281.
104 AIR 1957 SC 121.
105 AIR 1960 SC 610.
106 AIR 1964 SC 1617: (1964) 6 SCR 22.
107 (1976) 1 SCC 822: 1976 SCC (L&S) 132: (1976) 3 SCR 160.
108 (1980) 3 SCC 340: 1980 SCC (L&S)409: (1980) 2 LLJ 72.
109 (1981) 3 SCC 225: 1981 SCC (L&S)478: AIR 1981 SC 1253.
110 (1982) 1 SCC 545: 1982 SCC (L&S)124.
111 (1980) 4 SCC 443: 1981 SCC (L&S)16. AIR 1981 SC 422.
112 (1984) 4 SCC 509: 1984 SCC (L&S)144.
113 (1991) 1 SCC 189: 1991 SCC (L&S)147.
114 (2003) 4 SCC 619: 2003 SCC (L&S)545.
115 2010 (4) SCALE 203.
116 Lal Mohammad v. Indian Railway Construction Co. Ltd, 1999 LLR 100.
117 (2003) LLR 382.
118 (1960) 2 SCR 866.
119 AIR 1960 SC 251.
120 1967 (14) FLR 356.
121 (1970) 1 SCC 822.
122 (1976) 3 SCR 160.
123 2003 (97) FLR 110.
124 2010 (4) SCALE 203.
125 (1992) 2 LLN 752.
126 1995 Lab. IC 654.
127 EID Parry (India) Ltd v. Labour Court, 1992 Lab. IC 278.
128 (1981) 2 LLJ 70 (SC).
129 (2005) LLR 849.
130 (2012) 1 SCC 285.
131 1985 Lab. IC 1733 (SC).
132 1986 Lab. IC 98.
133 1986 Lab. 101 (SC).
134 (2006) 8 SCC 544.
135 1962 Supp (3) SCR 589.
136 (2005) 2 SCC 183.
137 (2007) 5 SCC 742.
138 (2009) LLR 1014: (2009) 14 SCC 43.
139 2002 Lab. IC 987.
140 (2004) 8 SCC 195.
141 2005 LLR 443 (SC).
142 2005 LLR 446 (SC).
143 2005 LLR 737.
144 (2004) 8 SCC 161.
145 (2006) 1 SCC 106.
146 2007 LLR 260.
147 2008 LLR 435.
148 2009 LLR 875.
149 (2009) 11 SCC 522.
150 (1992) 1 LLN 939.
151 (1992) 2 LLN 1037.
152 (2004) 1 SCC 605: 2004 SCC (L&S) 248.
153 (2012) 1 SCC 285.
154 State of Bombay v. Hospital Mazdoor Sabha, (1960) I LLJ 251 (SC).
155 District Labour Association v. Its Ex-employees, (1960) 1 LLJ 802 (SC).
156 Workmen of Subong Tea Estate v. Subong Tea Estate, op. cit.
157 Bombay Union of Journalists v. State of Bombay, op.cit.
158 K V Rajendran v. Deputy Commissioner, (1980) 2 LLJ 276 (Mad.).
159 Excel Wear v. Union of India, (1978) 2 LLJ 527 (SC).
160 Ibid.
161 (1992) 2 LLJ 295.
162 (1992) 2 LLJ 295 at 313.
163 1986 Lab. IC 749.
164 1999 Lab. IC 407 (SC).
165 (2005) LLR 305.
166 Delhi Cloth and General Mills Co. Ltd v. Shambhu Nath Mukheiji, (1978) 1 LLJ 1 (SC).
167 Workmen of Subong Tea Estate v. Management of Subong Tea Estate, (1964) 1 LLJ 333
 (SC).
168 (1984) 1 SCC 509.
169 2010 (4) SCALE 203.
170 (2010) 3 SSC 192.
171 (2006) 1 SSC 479: AIR 2005 SCW 6314.
172 (2007) 9 SCC 353.
173 (2007) 1 SCC 2007.
174 (2007) 9 SSC 748.
175 (2008) 5 SSC 75
176 (2008) 4 SSC 261.
177 (2008) 1 SSC 575.
178 2009 LLR 1254.
179 2010 (8) SCALE 583.
180 2011 (12) SCALE 327.
181 UP State Brassware Corporation Ltd v. Udai Narain Pandey, (2006) 1 SCC 179.
182 PK V Distillery Ltd v. Mahendra Ram (2009) 5 SCC 705.
183 M/s Reetu Marble v. Prabhakaran Shukla, (2010) 2 SCC 70.
184 Indian Cable Co. Ltd v. Its Workmen, (1962) 1 LLI 409.
185 Pravat Kumar Kar v. WTC Parker, (1949) 1 FJR 245.
186 Indian Tyre and Rubber Co. v. Their Workmen (1957) 2 LLJ 506.
187 Om Oilseeds Exchange Ltd v. Their Workmen, AIR 1966 SC 1657, 1959.
188 AIR 1966 SC 1657 at 1660.
189 Ibid.
190 Workmen of Sudder Workshop of Jorhaut Tea Co. v. Management, (1980) Lab. 1C 742
(SC).
191 Id. at 743–44.
192 (1980) Lab. IC 742 at 744–45.
193 Suraj Prakash Bhandari v. Union of India, (1986) Lab 1C 671 (SC).
194 (2010) 3 SCC 192.
195 Swadeshmitran v. Their Workman, (1960) 1 LLJ 504 at 507.
196 Tamil Nadu Transport v. Mariappan, (1970) 1 LLJ 90 at 92 (Mad.).
197 M/s Glodstone Lyall & Co. Ltd v. State of West Bengal, (1983) Lab. 1 C 1425 (Cal.).
198 (2010) 3 SCC 192.
199 (1996) 5 SCC 419.
200 (1999) 3 SCC 14.
201 (2006) 13 SCC 28.
202 Nuller and Phippa (India) v. Their Employers’ Union, (1967) 2 LLJ 222.
203 Cawnpore Tannery Ltd v. S Gupta, (1961) 2 LLJ 110 (SC).
204 (1963) 2 LLJ 65.
205 AIR 1966 SC 175.
206 1991 (1) JT 109.
207 AIR 1996 SC 2526.
208 (2010) 3 SCC 192.
209 (1961) 2 LLJ 110 at 112.
210 (1963) 2 LLJ 65 at 68; AIR 1964 SC 567; 24 FJR 266.
211 (1993) 1 LLJ 770 at 774; AIR 1964 AP 56; 24 FJR 333.
212 (1993) 2 LLJ 402 (B), dissenting from (1963) 1 LLJ 770 (AP).
213 See for instance, Annamalai Timber Trust, (1952) 2 LLJ 604 (LAT); Samalkot Tile
Factory, (1951) 2 LLJ 509 (LAT).
214 See for instance, Indian Metal and Metallurgical Corporation, (1952) 1 LLJ 364 (Mad.);
Jaya Bharat Tile Works, (1954) 1 LLJ 286 (Mad.); Maharaj Kishengarh Mills Ltd,
(1953) 2 LLJ 214 (Raj.).
215 See for instance, Express Newspapers Ltd, (1962) 2 LLJ 22 (SC).
216 Barsi Light Railway Co. v. Joglekar, (1957) 1 LLJ 243 (SC).
217 RS Madho Ram Sons (Agencies) Pvt. Ltd v. Its Workmen, (1964) 1 LLJ 366 (SC).
218 (1964) 1 LLJ 333 (SC).
219 (1970) 2 SCJ 118.
220 AIR 1969 SC 744.
221 (1997) 1 SCC 562.
222 (1962) 2 LLJ 621 (SC).
223 (2009) 3 CLR 682.
224 (1962) 2 LLJ 629.
225 (1964) 1 LLJ 366 (SC).
226 1993 Lab. IC 428.
227 (2012) 1 LLJ 625 (SC).
228 See M/s Avon Services Production Agencies (P) Ltd v. Industrial Tribunal, Haryana
AIR (1979) SC 120.
229 Managing Director, Harynana Seed Development Corporation v. Presdiging Officer,
(1979) LLR 806 (SC); The Court also held that the respondents are entitled to be
appointed if any junior person is appointed.
230 Hathi Singh Mfg Co. v. Union of India, (1960) 3 SCR 528 (SC).
231 Workmen of Straw Board Manufacturing Co. Ltd v. M/s Straw Board Manufacturing
Co. Ltd, AIR (1974) SC 1132.
232 Avon Services v. Industrial Tribunal, (1979) 1 LLJ 1 (SC).
233 Id at 10.
234 2004 LLR 881.
235 See Bhattacharjee Rubber Works Ltd v. Bhattacharjee Rubber Workers Union’, (1960)
2 LLJ 198 (SC).
236 See Avtar Singh Anand v. Krishna, (1969) 2 LLJ 524 (Delhi).
237 Kalinga Tubes v. Their Workmen, (1969) 2 LLJ 557, 566 (SC).
238 Investa Machine Tools & Engineering Co. Ltd v. Its Workmen, (1963) 2 LLJ (IT).
239 Antony v. Kumaran, (1979) 1 LLJ 606.
240 1986 Lab. IC 767.
241 1987 Lab. IC 637.
242 (1960) 3 SCR 528.
243 (1983) 1 LLJ 326 (Bom.).
244 The Industrial Disputes (Amendment) Act, 1982, provides that for the words ‘three
hundred’, ‘one hundred’ shall be substituted.
245 This Section came into force with effect from 21 August 1984.
246 Lal Mohammed v. Indian Railway Construction Co. Ltd, (1999) Lab. IC 40 (SC); (1999)
LLR 100; (1999) 1 LLJ 317 (SC).
247 (2004) Lab. IC 989.
248 Ibid.
249 1999 LLR 49.
250 Excel Wear v. Union of India, (1978) 4 SCC 224.
251 Excel Wear v. Union of India, (1978) 4 SCC 224 at 247.
252 Excel Wear v. Union of India, (1978) 4 SCC 224 at 249.
253 2002 LLR 225.
254 The provision came into force with effect from 21 August 1984.
255 AIR 1989 Del. 193.
256 (1992) Lab IC 1337 (Ker.).
257 (1989) 2 LLJ 4.
258 (1989) 2 LLJ 400.
259 (1979) 1 SCR 1009.
260 2002 LLR 225 at 234.
261 Ibid.
262 SG Chemicals and Dyes Trading Employees’ Union v. SG Chemicals and Dyes Trading
Ltd, (1986) Lab. IC 863.
263 State of Gujarat v. Continental Textile Mills, (1998) 1 LLJ 30.
 CHAPTER
21
Management of Discipline and
Disciplinary Procedure

I. REGULATION OF MANAGEMENT’S PREROGATIVE

OF DISCIPLINARY ACTION: THE CONTEXT
The strict law of master and servant conferred upon the employer an unfettered
right to hire and fire his employees1. This traditional law of employer-workmen
relationship was based purely on contract. Quite apart from the law of contract,
it is obvious that in the day-to-day running of the industry, the management is
required to take disciplinary action against erring workmen. Initial decisions as
to maintenance of discipline rest with the employer. These decisions, when made
bona fide, are related to, and dependant upon considerations of the overall needs
of the industry. But the reports of committees and commissions on labour2 and
reported decisions3 are full of instances that managements have victimized their
workmen for their union activities, and in particular, for inciting other workers to
go on strike or fomenting a strike. Instances are not lacking when assertive
striking employees were discharged en masse4. Further, instances of dismissal of
workmen by the management without complying with the provisions of the
standing orders5 of the company or rules of natural justice6 are not infrequent.
Under the circumstances, the need to protect workmen against capricious and
vindictive action of the management becomes obvious. It was realized in most
industrially advanced countries that if the law of master and servant was given
free play, workers would hardly have any security of tenure.
On the other hand, in day-to-day administration, management is called
upon to take bona fide decisions against erring workmen. It is also called upon
to take disciplinary action against a workman who is found guilty of serious
misconduct where such misconduct consists of intentional damage to the
property of the concern or serious personal injury to other employees of the
concern or where there is reasonable apprehension of their committing acts of
sabotage or instigation, abetment or incitement of workers of the concern to
participate in the aforesaid activities. Under the circumstances, the mere fact that
the management’s order of dismissal of the workman is wrongful,
disproportionate or mala fide and affects the workman cannot altogether deprive
the management from taking disciplinary action against the workman. To do so
is to encourage indiscipline and render day-to-day running of the concern
impossible.
To meet this situation, courts have evolved various norms to regulate
management’s power to dismiss its workmen. They have tried to maintain a
balance between the power of the management to discipline the workmen and
security of tenure of workmen. Further, the courts have not only interpreted the
existing law but made new laws to meet the needs of the industry and to avoid
hardship and unfairness to workers.

Tribunals’ Intervention in Management’s Right to Take

Disciplinary Action
The labour appellate tribunal in Buckingham and Carnatic Mills Ltd v. Their
Workmen7 ruled that the decision of the management in relation to the charges
against the employees will not prevail unless:
(a) there is a want of bona fides, or
(b) it is a case of victimization or unfair labour practice or violation of
the principles of natural justice, or
(c) there is a basic error on facts, or
(d) there has been a perverse finding on the materials.
The aforesaid principles found the approval of the Supreme Court in Chartered
Bank Bombay v. Chartered Bank Employees’ Union8, Assam Oil Ltd v. Its
Workmen9 and Indian Iron and Steel Co. Ltd v. Their Workmen10.
In Assam Oil Company Ltd v. Its Workmen11, the Supreme Court observed:
 Just as the employer’s right to exercise his option in terms of the
contract has to be recognized, so is the employee’s right to
expect security of tenure to be taken into account. These
principles have been consistently followed by industrial
tribunals and we think, rightly.
Again, in Indian Iron and Steel Company Ltd v. Their Workmen12, the
Supreme Court held:
Undoubtedly, the management of a concern has the power to
direct its own internal administration and discipline, but the
power is not unlimited and, when a dispute arises, the industrial
tribunals have been given the power to see whether the
termination of service of a workman is justified and to give
appropriate relief. In cases of dismissal on misconduct, the
tribunal does not, however, act as a court of appeal and
substitutes its own judgement for that of the management. It will
interfere when:
(a) there is want of good faith
(b) there is victimization or unfair labour practice
(c) the management has been guilty of a basic error of violation
of a principle of natural justice
(d) on the material, the finding is completely baseless or perverse
Again, in Workmen of Motipur Sugar Factory Pvt. Ltd. v. Motipur Sugar
Factory Pvt. Ltd.13, the Supreme Court while dealing with the evidence required
to be adduced before tribunals in case of failure to hold domestic inquiry
observed:
It is now well settled that where an employer has failed to make
an inquiry before dismissing or discharging a workman, it is
open to him to justify the action before the tribunal by leading
all relevant evidence before it. In such a case, the employer
would not have the benefit which he had in case where domestic
inquiries have been held. The entire matter would be open
before the tribunal which will have jurisdiction not only to go
into the limited questions open to tribunal where domestic
inquiry has been properly held, but also to satisfy itself on the
facts adduced before it by the employer whether the dismissal or
 discharge was justified.
In State Bank of Bikaner and Jaipur v. Nemi Chand Nalwaya14, the Supreme
Court held that it is now well settled that the labour tribunals or courts will not
act as an appellate court and re-assess the evidence led in the domestic inquiry,
nor interfere on the ground that another view is possible on the material on
record. If the inquiry has been fairly and properly held and the findings are based
on evidence, the question of the adequacy of the evidence or the reliable nature
of the evidence will not be grounds for interfering with the findings in
departmental inquiries. Therefore, courts will not interfere with finding of facts
recorded in departmental inquiries, except where such findings are based on no
evidence or where they are clearly perverse. The test to find out perversity is to
see whether a tribunal acting reasonably could have arrived at such conclusion or
finding on the material on record. Courts will however, interfere with the
findings in disciplinary matters, if principles of natural justice or statutory
regulation have been violated or if the order is found to be arbitrary, capricious,
mala fide or based on extraneous considerations.

II. MEANING AND SCOPE OF MISCONDUCT

Since ‘misconduct’ results in dismissal, it is necessary to know the concept of
misconduct.
The expression ‘misconduct’ has not been defined in any industrial legislation.
Under the Model Standing Order of the Industrial Employment (Standing
Orders) Act, 1946, the following conducts shall be deemed to be misconduct:
(a) wilful insubordination or disobedience, whether alone or in combination
with others, to any lawful and reasonable order of a superior;
(b) theft, fraud or dishonesty in connection with the employer’s business or
property;
(c) wilful damage to or loss of employer’s goods or property;
(d) taking or giving bribes or any illegal gratification;
(e) habitual absence without leave or absence without leave for more than 10
days;
(f) habitual late attendance;
(g) habitual breach of any law applicable to the establishment
 (h) riotous or disorderly behaviour during working hours at the establishment
or any act subversive of discipline;
(i) habitual negligence or neglect of work;
(j) frequent repetition of any act of omission for which a fine may be imposed
to a maximum of 2 per cent of the wages in a month;
(k) striking work or inciting others to strike work in contravention of the
provisions of any law or rule having the force of law.
In Ravi Yashwant Bhoir v. District Collector, Raigad15, the Supreme Court
observed that ‘the word “misconduct” though not capable of precise definition,
receives its connotation from the context of delinquency in its performance and
its effect on the discipline and nature of the duty. It may involve moral turpitude,
it must be improper or wrong behaviour, unlawful behaviour, wilful in character,
a forbidden act, a transgression of established and definite rules of action or code
of conduct but not mere error of judgement, carelessness or negligence in
performance of the duty. The misconduct should bear forbidden quality or
character. Its ambit has to be construed with reference to the subject matter and
the context wherein the term occurs, regard being had to the scope of the statute
and the public purpose it seeks to serve.’ Explaining the concept of
‘misconduct’, the Court pointed out:
The expression ‘misconduct’ has to be understood as a
transgression of some established and definite rule of action, a
forbidden act, unlawful behaviour, wilful in character. It may be
synonymous with misdemeanour in propriety and
mismanagement. In a particular case, negligence or carelessness
may also be a misconduct, for example, when a watchman
leaves his duty and goes to watch cinema, though there may be
no theft or loss to the institution, but leaving the place of duty
itself amounts to misconduct. It may be more serious in case of
disciplinary forces. Further, the expression ‘misconduct’ has to
be construed and understood in reference to the subject matter
and context wherein the term occurs taking into consideration
the scope and object of the statute. Misconduct is to be measured
in terms of the nature of the misconduct and it should be viewed
with the consequences of misconduct as to whether it has been
detrimental to public interest.
A survey of decided cases indicates that acts such as absence without leave16,
go-slow17, habitual neglect of work18, misappropriation of fund or material19,
disobedience and subverting of discipline20 including disobedience that is likely
to endanger life, threatening a co-worker within premises, insulting behaviour by
employee towards customers21, etc., constitute misconduct.

III. NATURE AND CONCEPT OF DISMISSAL AND

DISCHARGE
The expression ‘discharge’ is very often colourless as to the cause of relieving of
the obligation arising from employer-workmen relationship. It may signify
termination of the relationship by the workman himself or termination of the
relationship by the employer either under the standing orders or under the
agreements or otherwise. The Indian legislature however, emphasizes that action
on the part of the employer was a necessary element.
In Bombay Garrage (Ahmedabad) Ltd v. Its Workmen22, the Gujarat High
Court observed:
The expression ‘dismissal’ and the expression ‘discharge’ in
connection with punishment for misconduct have acquired, in
industrial law, different connotations and the one cannot be
equated with the other….
In J K Hosiery Factory v. LAT23, Justice M C Desai observed:
The words whether by dismissal or otherwise…govern the word
‘punishment’ only and not the word ‘discharge’. Punishment can
be in the form of dismissal or suspension or fine or reduction of
pay and, therefore, the words could be used with the word
‘punishment’ to make it clear that all forms of punishment are
within the scope of the provisions.
And in Assam Oil Company v. Its Workmen24, the Supreme Court cautioned:
It may also appear in some cases that though the order of
discharge is couched in words which do not impute any
misconduct to the employee, in substance it is based on
misconduct of which according to the employer the employee
has been guilty, and that would make the impugned discharge a
 punitive dismissal.
Section 2 (ra) read with Fifth Schedule of the Industrial Disputes Act, 1947,
which defines and enumerates ‘unfair labour practice’ inter alia, declares any
one of the following practices to be an ‘unfair labour practice’ on the part of the
employer:
(a) discharging or punishing a workman because he urged other
workmen to join or organize a trade union;
(b) discharging or dismissing a workman for taking part in any strike
(not being a strike which is deemed to be an illegal strike under this
Act);
(c) discharging office-bearers or active members of a trade union on
account of their trade union activities.
And even the original Section 33 of the Industrial Disputes Act, 1947 which ran:
…Nor shall he (i.e.) the employer…discharge, dismiss or
otherwise punish any such workman except for misconduct not
connected with the dispute, make it clear that the legislative use
of the expression ‘discharge’ was confined to those cases of
termination of employment relationship only which were at the
instance of employer.
However, it was only after the 1950 Amendment of the Act that the distinction
became clear. The amended Section 33 read as follows:
No employer shall discharge or punish whether by dismissal or
otherwise any workman concerned in such dispute.
The above distinction has been retained in Section 33 of the Industrial Disputes
Act, 1947, which was substituted by 1956 Amendment Act. Indeed, it
emphasizes that even though a misconduct on the part of the workman might
result in his discharge, if such termination of service is in consequence of
disciplinary proceedings, it may be called ‘dismissal’.

IV. DISCHARGE SIMPLICITER OR DISMISSAL IN

DISGUISE: COURTS’ POWER TO LIFT THE VEIL

A. Scope of Intervention
The Supreme Court has, through a plethora of cases, laid down the scope of
tribunal’s intervention in the management’s order of termination of service of
workmen.
Buckingham and Carnatic Mills v. Its Workmen25 is our starting point.
In this case, the labour appellate tribunal has ruled that requirement of bona
fides is essential even in a case of discharge by notice or payment in lieu thereof
without assigning any reason. It has further ruled that where termination of
service is a colourable exercise of power or is a result of victimization or unfair
labour practices, the industrial tribunal would have jurisdiction to intervene and
set aside such termination of service.
The aforesaid rule found the approval of the Supreme Court in Chartered
Bank v. Chartered Bank’s Employees Union26. The Court observed that this
rule applies even in case of discharge made under the provisions of a contract or
standing orders or awards like a bank award.
The above view was reiterated in Tata Oil Mills Co. Ltd v. Its
Workmen27 wherein Justice Gajendragadkar formulated the following test for
tribunal’s interference in management’s action:
The test always has to be whether the act of the employer is
bona fide or not. If the act is mala fide or appears to be a
colourable exercise of the power conferred on the employer
either by the terms of contract or by standing orders, then
notwithstanding the form of the order, industrial adjudication
would examine the substance and would direct reinstatement in
a fit case28.
The law on the above point has been summarized in L Michael Ltd v. M/s
Johnson Pumps Ltd29.
The tribunals have the power and indeed the duty to x-ray the
order and discover its true nature, if the object and effect in the
attendant circumstances and the ulterior purpose be to dismiss
the employee because he is an evil to be eliminated. But if the
management, to cover up the inability to establish by an inquiry,
illegitimately but ingeniously passes an innocent-looking order
of termination simpliciter, such action is bad and is liable to be
set aside.
A survey of the aforesaid cases suggests that industrial tribunals have the power
to determine the real nature of management’s orders. If the order is mala fide or
unfair labour practice or victimization, it cannot be sustained. But real difficulty
arises where the standing orders of a company specifically provide that workmen
guilty of misconduct may be discharged. In such a situation, it is open to the
court to lift the veil and to hold an order of discharge to be one of dismissal
merely because there was misconduct.

B. Bona Fides of Management’s Action

In Murugan Mills v. Industrial Tribunal30, the management served a notice on
the workman under clause 17(1) of the standing orders which empowers the
management to terminate the services of a worker by giving 14 days’ notice,
terminating his services without obtaining the approval of the industrial tribunal
as required under Section 33(2)(b) of the Act. The notice did not contain any
reason for the termination31. The management however, stated before the
tribunal that the workman’s services were terminated for dereliction of duty and
adopting go-slow tactics. On these facts, the Supreme Court held that this
amounted to punishment for misconduct and therefore, to pass an order under
clause 17(1) of the standing orders in such circumstances was clearly a
colourable exercise of the power to terminate the services of a workman under
the provisions of the standing orders.
The above case may be distinguished from Gujarat Steel Tubes (supra)
in two respects: (i) there was a violation of Section 33(2)(b) and (ii) no reasons
were communicated to the workman.
Bombay Corporation v. Mavlankar32 is yet another case. In this case, the
services of a clerk were terminated under standing order 26 on the ground that
her service record was unsatisfactory. The management, however, stated in the
order of termination that she would be paid one month’s wages in lieu of notice
and would be eligible for all benefits admissible under the standing orders and
service regulations of the undertaking. Under the standing orders, powers were
conferred on the employer: (i) to impose punishment for misconduct following a
disciplinary inquiry under clause (2) of standing orders 21 read with standing
order 23, and (ii) to terminate the services of the employee by giving one
month’s notice or wages in lieu thereof under standing order 26. A question
arose as to which one of the two powers was exercised in this case. The Supreme
Court observed:
(a) The power to terminate the service by an order of discharge
simpliciter is distinct from and independent of the power to punish
for misconduct and standing orders cannot be constructed so as to
render either of these powers ineffective.
 (b) Reasons for termination have to be communicated to the employee
and those reasons cannot be arbitrary, capricious or irrelevant but
that would not mean that the order of termination becomes punitive
in character just because good reasons are its basis.
The Court also pointed out that:
If the misconduct of the employee constituted the foundation for
terminating his service then it might be liable to be regarded as
punitive but this proposition was doubted in as much as even in
such case, it may be argued that the management has not
punished the employee but has merely terminated his service
under standing order 26.
Thus, it clear that the Court was in favour of retaining the two distinct powers
and maintaining the sanctity of the standing orders.
In Municipal Employees’ Union v. Additional Commissioner (Water),
Delhi Water Supply and Sewerage Disposal Undertaking33, a question arose
whether the employer can terminate the services of a widow appointed on
compassionate basis on her remarriage. The Delhi High Court answered the
question in negative because it is (i) illegal, (ii) contrary to public policy of a
welfare state and (iii) right to marry or remarry is an individual right and any
contract prohibiting it is not legal.
The Supreme Court in Gujarat Steel Tubes v. Gujarat Steel Tubes
Mazdoor Sangh34, had an occasion to consider the scope of interference of
tribunal and court in management’s action. The standing orders of the company
specifically provided that a workman guilty of misconduct may be discharged
under MSO 23. Further, under MSO 23, the reasons for the termination of
service of a permanent workman have to be recorded in writing and
communicated to him. The management, however, acted under MSO 23 of the
standing orders. On these facts, the majority and minority arrived at
diametrically opposite conclusions. The majority found the management’s action
not bona fide and observed:
In all conscience and common sense, the discharge is
punishment for the misconduct. The management minces no
words. What is explicitly stated is not a colourless farewell to
make way for fresh hands to work in the factory until the strike
is settled but a hard-hitting order with grounds of guilt and
penalty of removal35.
From the above, it concluded:
The inference is inevitable, however, ingenious the contrary
argument, that precisely because the management found the
workmen refractory in their misconduct, they were sacked. May
be, the management had no other way of working in the factory
but that did not change the character of the action taken. Once
we hold the discharge punitive, the necessary consequence is
that inquiry before punishment was admittedly obligator and
confessedly not undertaken. The orders were bad on this score
alone.
On the contrary, the minority arrived at a different conclusion:
The management made it clear that in spite of such misconduct,
it had no intention of punishing the workers who were given not
only the benefit of an order of discharge simpliciter but also the
option to come back to work within a specified period in which
case they would be reinstated with full benefits. An intention
‘not to punish’ could not be expressed in clearer terms and is
further made out from the fact that more than 400 workers who
resumed duty were reinstated without break in service. In
passing the orders of discharge, the management did nothing
more than act under MSO 23 and its action cannot be regarded
as amounting to dismissal in the case of any of the workers36.
Even so, the majority decision is a landmark from two points of view. In the first
place, the majority of the Supreme Court approved the earlier trend to lift the
veil to determine whether the order of discharge amounted to simple termination
or punitive dismissal notwithstanding the provisions in the standing orders
empowering the management, inter alia, to discharge workman found guilty of
misconduct. In the second place, the Supreme Court rejected ‘the theory of
community guilt and collective punishment’ and instead ruled that no worker
shall be dismissed save on the proof of his individual delinquence.
There are however, few puzzling features of the majority decision.
First, the Court’s assumption that what is not dismissal is retrenchment
provided there is work to be done ignores reality. The assumption reduces the
management’s prerogative to terminate the services of workmen only in two
ways, namely, retrenchment and dismissal and excludes discharge. This would
thus make the use of the word ‘discharge’ in Sections 2-A and 33 useless
appendage besides thwarting the scheme of the Act.
Second, the majority decision leaves the management to choose between
the frying pan and the fire. ‘If the management discharges the workers to
facilitate fresh recruitment and save the factory from statutory takeover37, it is
not allowed to do so because an elaborate inquiry’ is not done. On the contrary,
if the employer does not discharge the strikers and does not allow the adamant
strikers to return to work and leaves them to tell the Central Government that for
3 months, there had been no production and so the mill should be taken over as
‘sick’ under the Industrial Development Regulation Act38 will bring the industry
to a standstill. The majority, however, brushed aside the problem by saying ‘may
be the management had no other way of working the factory but that did not
change the character of the action taken39.’
Third, the majority decision laid undue emphasis on the motive of the
employer to determine whether the discharge effected by management amounted
to discharge simpliciter or punitive discharge. We agree with the majority view
that ‘the employer cannot pass a real order of dismissal in the garb of one of
discharge’. But it is difficult to support the view that ‘merely because the motive
behind discharge was a misconduct attributed to the employee, the services of no
employee could be terminated without holding an inquiry as is contemplated by
the standing orders. This line of thinking is also in conformity with the decision
in Parshotam Lal Dhingru v. Union of India40 that the government cannot
terminate the service of a government servant unless it is entitled to do so by
virtue of a special term of contract of employment, e.g., by giving requisite
notice by the contract or by the rules governing the conditions of service.
Further, the majority decision, it is submitted, has brushed aside the
decisions in Tata Engineering and Locomotive Co. Ltd, Workmen of Sudder
Office v. Management and Municipal Corporation of Greater Bombay41, on
the ground that it did not run counter to its findings. We submit that the decision
of majority in Gujarat Steel Tubes runs counter to these decisions. Further, even
the decision in Murugan Mills and L Michael v. Johnson, which the majority
heavily relied upon, may be distinguished from Gujarat Steel Tubes on the facts.
Fourth, another impact of the majority decision in Gujarat Steel Tubes
case is that even if the employer wishes to give concession to the workmen by
taking a lenient view in case of misconduct not by way of dismissal but by way
of termination simpliciter, he cannot do so. Be that as it may, the majority
decision in Gujarat Steel Tubes illustrates some complexities of judicial
process. To begin with, someone has to identify the benefits and disadvantages
flowing from the decision and its implementation in both short and long run. For
instance, strikers would welcome the decision because it would secure them
from the risk of losing their jobs and thereby protect them from unemployment.
But management and a section of the public could well differ as to whether this
view would better serve the public interest. In the long run, the decision would
deprive the management from dismissing workmen and recruiting new hands till
an inquiry is conducted. This would bring the industry to a standstill and would
encourage indiscipline. This is likely to jeopardize not only the interest of
employers but also of consumers. However, the majority view, namely:
In a country where the despair of government is appalling
unemployment, it is a terrible tragedy to put economic death to
853 workmen. And for what? For insisting that pittance of ₹100
per month be raised in terms of the Central Wage Board’s
recommendations.
is not only leaning towards but is also against management, particularly in the
light of the following observations:
May be, the management had no other way of working the
factory but that did not change the character of the action taken.
Thus, the choice actually made by majority had, in effect, failed to strike a
balance between security of tenure which alone can ensure an efficient labour
force and the interest of maintenance of discipline in the industry. It is needless
to add that both are equally important for economic progress.

C. Loss of Confidence
In Tata Engineering and Locomotive Co. Ltd v. S C Prasad42, the management
discharged a workman from service on the ground that it had lost confidence in
him and his continuance in service was prejudicial to the company’s interest.
This discharge was, however, made under standing order 47 (which empowered
the company to terminate the services of any worker on giving notice or wages
in lieu thereof) in preference to disciplinary action. On these facts, a question
arose whether discharge was proper or justified. Speaking for the Court, Justice
Shelat observed:
The company had two alternatives; either to act under standing
order 47 or to take disciplinary action and hold a domestic
inquiry. But the latter course would have meant that the
company would have to launch an inquiry almost parallel to the
 one which was going on before the committing magistrate. If the
company, in the circumstances, preferred the former, it would
not be reasonable to say, as the tribunal did, that the company
should have charged the workman with misconduct and held an
inquiry. The fact that it did not do so but exercised its power
under standing order 47 cannot render the order mala fide or one
passed in colourable exercise of its power to discharge a
workman from the service if such power was properly exercised.
Workmen of Sudder Office v. Management43 is a case of loss of confidence.
The management discharged a head godown clerk and asked him to collect one
month’s pay in lieu of notice and other benefits under clause 944 of the standing
orders on the ground of loss of confidence. The labour court found that the
workman was guilty of dishonesty in connection with the company’s property
and would constitute ‘misconduct’ under clause 10(2)(a) of the standing orders
and therefore, held that the management’s order of termination was really one of
dismissal for misconduct. The labour appellate tribunal accordingly directed
reinstatement. The High Court reserved the order of the labour court and held
that the management’s order was of termination simpliciter under clause 9. On
appeal, the Supreme Court upheld the order of the High Court and observed:
Though prima facie it may appear that the management in this
case was charging the workman in respect of matter which may
be misconduct under the standing orders, ultimately we are
satisfied that the management has passed the order of
termination simpliciter and the order does not amount to one of
dismissal by way of punishment45.
L Michael v. Johnson Pumps Ltd46 is also a case of discharge for loss of
confidence. The management discharged a permanent worker by giving him one
month’s notice pay as per the terms of employment and relevant standing orders.
Before the labour court, the management had lost confidence in him. However,
the employer did not disclose the grounds on which the suspicion arose in 1968.
Further after 1968, the worker was given two extra increments. On the other
hand, the worker claimed that he had been victimized for his trade union
activities. The labour court upheld the order of the management but the Supreme
Court found that the impugned management’s action was not bona fide. Justice
Krishna Iyer relying upon Murugan Mills case ruled:
The tribunal has the power and indeed, the duty to x-ray the
 order and discover its true nature if the object and effect of the
attendant circumstances and the ulterior purpose is to dismiss
the employee because he is an evil to be eliminated.
The Lordship extended the application of the aforesaid rule in loss of
confidence:
Loss of confidence is no new armoury for the management,
otherwise security of tenure, insured by the new industrial
jurisprudence and authenticated by a catena of cases, can be
subverted by this new formula.
His Lordship, therefore, set aside the order of the labour court and directed
reinstatement to the aggrieved worker.

V. DISCIPLINARY PROCEDURE

A. Principles of Natural Justice

It is recognized that the essence of justice is largely procedural and the history of
liberty has largely been the history of procedural safeguards47. In legal terms, the
inquiry conducted by the employer must be in accordance with the principles of
natural justice. The two well-established and recognized principles of natural
justice are (a) Nemo debet esse judex in propria sua causa (no man must sit in
judgement in his own cause or in which he is interested) and (b) audi alteram
partam (the parties must be heard). But it is equally well-settled that the concept
of ‘natural justice’ is not a fixed one. It has meant many things to many writers,
lawyers, jurists and systems of law. It has many colours, shades, shapes and
forms. Rules of natural justice are not embodied rules and they cannot be
imprisoned within the straightjacket of a rigid formula48. Applying these
principles, the Supreme Court has held in a series of cases that where a case of
dismissal or discharge of an employee is referred for industrial adjudication, the
labour court or tribunal should first decide as a preliminary issue whether proper
domestic inquiry has been conducted and the principles of natural justice have
been complied with. Thus, Lord Hewart’s dictum that ‘Justice should not only be
done but should manifestly and undoubtedly be seen to be done’49 is realized to
a considerable extent in termination of service of workmen.
The recognized principles of natural justice have given rise to the
following procedural safeguards. The termination of services of workmen
without following principles of natural justice is wrongful.
1. Rule against bias
A cardinal rule of natural justice is that no man should be a judge in his own
cause. This is known as rule against bias. Bias means prejudice.

2. Audi Alteram Partem or Rule of Fair Hearing

Right to Notice
(i) Notice – Starting point
Unless a person knows the subject and the issue involved, he cannot
defend himself.
(ii) Notice in order to be adequate, must contain:
a) Time and place of hearing
b) Authority under which hearing is to be held
c) Statement of specific charges which the person has to face
(iii) Test
a) Sufficient information
b) Sufficient material
c) Sufficient time
to enable the person to defend himself effectively.
(iv) Article 21 of the Constitution
a) Proceedings should be fair and reasonable
b) No person shall be deprived of life and liberty without the procedure
established by law50.
Requirements of the Principles of Natural Justice

B. Charge-sheet
Before the management can dismiss a workman, it has to hold a proper domestic
inquiry into the alleged misconduct of such a workman and such an inquiry must
always begin with supply of a specific charge-sheet to the delinquent
employee51. Such charges must clearly mention the allegations against him. In
dealing with the merits of dismissal of a workman, the employer must confine
the finding to the charges made and no extraneous factor would form the basis of
the action taken. It would not be open to the employer to add any further charges
against the employee and the case would have to be considered on the charge-
sheet as originally framed52. The essential requirements of charge-sheet are53:
(i) It must be specific.
(ii) It should contain full particulars of the misconduct and charges levelled
against the employee.
(iii) It must be actually served on the erring workman. Where such a charge-
sheet has not been served and the workman is dismissed, the order of
dismissal is liable to be rejected as opposed to natural justice54.
(iv) It should refer the relevant clause(s) of the standing orders under which
the delinquent is liable to be punished for the alleged misconduct.
(v) It should be issued under the signature of the disciplinary authority.
(vi) It should also refer to the name of the inquiry officer and time, date and
place of the inquiry.
A survey of decided cases55 reveals that when the charges levelled against the
delinquent officer in the charge-sheet are vague, not specific or definite; or are
framed without giving details of allegations, relevant documents and/or statutory
provisions, standing orders or service rules, the entire inquiry would be vitiated.
The following table provides guidelines for framing a charge-sheet.

(i) There is no objection in issue of fresh charge-sheet if the earlier

one is withdrawn.
(ii) Modification, amendment and cancellation of charge-sheet can be
resorted to in a fair and just manner.
1. Who is competent to issue a charge-sheet
(i) The disciplinary authority shall draw up the charge-sheet.
(ii) The officer performing current duties as stop-gap arrangement in
the absence of disciplinary authority cannot exercise the statutory
power of issuing charge-sheet56.
(iii) Appointing authority himself need not issue the charge-sheet.
(iv) Controlling authority can issue the charge memo and start
disciplinary proceedings57.
(v) The charge-sheet should not be signed in a routine manner. He is
required to sign only after applying his mind. He has to give some
reason which may be very brief, for initiation of inquiry58.
(vi) The charge-sheet issued by a member of fact-finding inquiry
committee which found prima facie the delinquent guilty is bad in
law. A member of fact-finding inquiry committee is not competent
to issue a charge-sheet as disciplinary authority59.
2. Effect of Delay in Framing Charge-sheet
In State of AP v. Radhakishan60, the Supreme Court held that whether the delay
vitiates the proceedings is the question that has to be decided on the facts and
circumstances of each case. In this case, the charges related to an incident which
was about 10 years old and were framed depending on the departmental records;
there was no explanation why the inquiry officer did not examine such records;
and the delinquent was not contributing to the delay. On these facts, the Supreme
Court held that the charge-sheet was liable to be quashed.
In Mahadevan P V v. MD, Tamil Nadu Housing Board61, the
irregularities committed in 1990 came to the notice of the employer in the audit
report of 1994–95. However, the charge memo was issued for the first time in
2000. Thus, there was delay of about 10 years or at least 5 to 6 years on the part
of the management even before the charge memo was issued. In these
circumstances, the Supreme Court held that the inquiry was liable to be quashed.
In Cantonment Executive Officer v. Vijay D Wani62, 13 years had
passed and no progress was made and therefore, the division bench of the High
Court refused permission to the management to proceed further. When the
matter came to the Supreme Court, 16 years had passed. In view of this, the
Court held that it would not be fair on the part of the management to proceed
afresh in the matter.
3. Service of Charge-sheet
The charge-sheet framed against a delinquent employee should be served on him
personally if possible and acknowledgement to that effect should be obtained
from him. In case the workman is absent, or if he refuses to accept the charge-
sheet, the same should be sent to his local and home address by registered post
with acknowledgement due, after getting his refusal attested by two witnesses. In
case the charge-sheet is returned unserved with the remarks ‘refused’ of the
postal authorities, the same should be kept intact without opening. It is then
taken to be served. If the charge-sheet is returned by the postal authorities with
the remarks ‘not found/not traceable’, the same should be kept intact and other
available method should be exercised. In such a case, the employer should
display the charge-sheet on the notice board or act in accordance with the
provisions of the standing orders. In some cases, it may be necessary to publish
the contents of the charge-sheet in a local newspaper having wide circulation.
Bata Shoe Co. v. D N Ganguli63 is a leading case on serving notice. In
this case, the standing orders of the company provided that the workman charged
with an offence should be supplied a copy of such charges. They also provided
that a workman who refuses to accept the charge-sheet should be deemed to
have admitted the charges made against him. There was no provision in the
standing orders for affixing such charge-sheet on the notice board of the
company. On these facts, the Supreme Court held that affixing of the charge-
sheet on the company’s notice board was not good service of notice. Justice
Wanchoo observed:
The proper course in our view, was when the registered notice
came back unserved in the case of these 11 workmen, to publish
notices in their names in some newspaper in the regional
language with wide circulation in Bihar with the charges framed
against them.
From the above decision, it is clear that the law casts an obligation upon an
employer to send charge-sheets to workers by registered post and if the same is
returned unserved, to get the charges published in a local newspaper in the
regional language understood by the workmen64.

C. Suspension Pending Inquiry

Where the charges levelled against a delinquent workman are of a serious nature
and the disciplinary authority feels that his physical presence might endanger the
safety of other workmen, or if it is apprehended that he might intimidate others
or tamper with the evidence, he may be suspended. During the period of
suspension pending inquiry, the workman will get subsistence allowance as per
rules.
The following rates of subsistence allowance are admissible.
UNDER SERVICE RULES UNDER STANDING ORDERS
For first six months – For first 90 days –
½ of basic pay + DA + HRA + CCA ½ of basic pay + DA + other
allowances
Beyond six months – Beyond 90 days –
¼ of basic pay + DA + HRA + CCA ¾ of basic pay + DA + other
allowances
If it is delayed not due to fault of the If inquiry by outside agency –
delinquent,
then ¾ of the wages (i) First 180 days – ½ wages
(ii) Beyond 180 days – ¾ or ¼ wages
Subsistence allowance: In Jagdamba Prasad Shukla v. State of UP65, the
Supreme Court held that payment of subsistence allowance under suspension is
not a bounty. Non-appearance before the inquiry officer for want of subsistence
allowance was justified. The Court therefore, quashed the order of punishment
of removal.
The Court also ruled that non-payment of subsistence allowance
amounted to denial of reasonable opportunity to defend oneself in the
departmental inquiry and hence was violative of principles of natural justice.

D. Explanation
The next requirement for a proper domestic inquiry is to give an opportunity to
concerned workman to submit an explanation. If no opportunity is given to the
workman to explain his conduct, it will amount to violation of principles of
natural justice66. Further, the workman must be allowed sufficient time and the
inquiry must not conclude unless the time given for the explanation expires.
Four contingencies67 may arise in the explanation. The workman may (i)
admit the charge, show repentance and plead that he will not repeat it; (ii) refute
the charge; (iii) ask for extension of time for submitting explanation; or (iv) not
submit the explanation at all. Where the concerned workman admits his guilt,
further inquiry is not essential. In such cases, the management may award
appropriate punishment according to the nature of the misconduct. If the
workman pleads not guilty of the charges levelled against him, management has
to examine the explanation offered by him and hold a proper domestic inquiry;
but if it is satisfied with the explanation, it may drop the proceedings against the
workman. In the third situation, the employer may extend the time he considers
reasonable. Prudence demands that whenever a workman asks for extension of
time for submission of his explanation, unless there are compelling reasons to
the contrary, reasonable time should be allowed68. In the last situation, as a
normal rule, the refusal by an employee must go against him, but the rules of
natural justice require that even in such cases, charges must be proved by the
management before it can take action against the workman.

VI. DOMESTIC INQUIRY

Having considered the explanation submitted by the concerned workman, the
management must hold a domestic inquiry to prove the allegations levelled
against the workman mentioned in the charge-sheet supplied to him. It is
expected to conduct a proper inquiry in accordance with the provisions of the
standing orders (where applicable) and the principles of natural justice. Further,
the inquiry must be fair and just.
A. Processes Involved in Domestic Inquiry
(i) Preliminary inquiry: optional
(ii) Show-cause notice, if provided for: optional
(iii) Consideration of explanation
(iv) Notice of inquiry
(v) Holding of domestic inquiry
(vi) Report of the inquiry officer
(vii) Supply of copy of inquiry report to disciplinary authority
(viii) Consideration of the report by the disciplinary authority
(ix) Order of punishment and its communication
(x) Appeal
Let us discuss them.
Preliminary Inquiry
1. When required
(i) In case of interpersonal or inter-group misconduct
(ii) If there are cross-complaints from two persons or groups
(iii) If there is a reason to believe that the complaint is frivolous
(iv) If misconduct is not precisely definable (in terms of its time or
persons involved)
(v) If there is a need for additional material before determining
whether a proper disciplinary action is warranted
2. Nature and scope
(i) It is a fact-finding exercise.
(ii) It does not per se lead to establishment of guilt.
(iii) It can be ordered by any officer.
(iv) It may be oral or in writing.
(v) It may involve examination and/or recording of statements of any
person who is believed to have knowledge of the act.
(vi) It merely forms the basis for deciding whether there is prima
facie case.
(vii) Finding cannot be used to punish anyone.
B. Order for Holding Inquiry
As mentioned above, after consideration of the explanation of the charge-sheeted
workman or when no reply is received within the specified time limit, the
disciplinary authority may issue an order appointing an inquiry officer or an
inquiry committee.
C. Appointment of Inquiry Officer
The inquiry officer can be an official of the company but he should ordinarily be
senior in rank to the charge-sheeted employee. Merely because the officer
conducting the inquiry belongs to or is a part of the management, presumption of
institutional bias cannot be inferred. Departmental bias arises when the functions
of the judge and the prosecutor are combined in the same department and it is
not uncommon to find that the same department which initiates the matter also
decides it and, therefore at times, department fraternity and loyalty militates
against the concept of fair hearing. But merely because the company lawyer was
also the inquiry officer, he cannot be considered to be partial towards the
management of the company69.
In the absence of any material to show that the inquiry officer was in any
way prejudiced or influenced by the rank of the presiding officer, the inquiry
cannot be held to be unfair. Further, he should be disinterested in the case and
should not be biased. Moreover, he should not be an eye witness to the incident.
If some incriminating act of the delinquent has been witnessed by the officer, he
should not be appointed as the inquiry officer70. However, difficulty may arise in
small establishments where there are few supervisory officials and a totally
disinterested person may not be available for conducting the departmental
inquiry. In such a situation, engagement of an outsider, may be an advocate, for
conducting the inquiry may not be improper71.
Can an advocate be appointed as inquiry officer?
In Management of Thanjavur Textiles Ltd v. Purushotam72, the relevant
portion of the standing orders in sub-clause (c) of clause 62 provided that the
manager may himself or through ‘other responsible officer’ make such inquiry
and the workman shall present himself at the time and date fixed for such
inquiry. It was contended that under clause 62, the words ‘other responsible
officer’ referred to in this case could only be an officer of the company
subordinate to the manager and not an outsider, and hence an advocate could not
have been appointed as inquiry officer nor could he give findings on the merits
of the misconduct. Rejecting the contention, the Supreme Court held that under
the standing orders, an advocate can be appointed as inquiry officer.
D. Appointment of Presenting Officer
For the departmental inquiry to be impartial, disciplinary authority is required to
appoint a presenting officer to sponsor the management’s case before the inquiry
officer73.
E. Assistance to the Delinquent Worker
It is now well settled in a series of cases decided by the courts that the delinquent
officer should be given adequate facility to defend himself in a domestic
inquiry74.
F. Notice for Holding Inquiry
One of the essential features of a fair hearing is that a person should be served
with a proper notice, i.e., a person has a right to notice. Notice should be clear
and precise so as to give the other party adequate information of the case he has
to meet and make an effective defence75. While disciplinary authority is required
to intimate after considering the explanation about holding of inquiry by a
specified inquiry officer, the latter is required to issue detailed notice of inquiry.
This notice should clearly mention the date, time and place of inquiry. It should
ask the delinquent workman to present himself with his witnesses/documentary
evidence, if any, for the inquiry. The notice should also mention that if the
workman fails to attend the inquiry on the appointed date and time, the same will
be held and decided ex-parte. A reasonable period of time should be given to the
workman for preparing his defence.
G. Procedure to be Followed by the Inquiry Officer
Before starting the inquiry, the officer should ensure the receipt of following
documents:
(i) Charge-sheet
(ii) Reply to the charge-sheet
(iii) List of witnesses
(iv) Statements of witnesses, if any, recorded during the preliminary
inquiry
(v) List of documents by which charges are to be proved
(vi) Order appointing the inquiry officer and presenting officer
At the commencement of the inquiry, if the charge-sheeted employee is present,
the inquiry officer should record the date, time and place of the inquiry, names
of persons present and obtain their signatures on the order-sheet. Thereafter, he
should proceed as follows:
 1. Read out and explain the charges and the reply of the charge-sheeted
employee and get his confirmation to that effect. In case the charges are
admitted, it should be recorded and signatures of all concerned along
with date should be taken. A full-fledged inquiry need not be held if the
misconduct is of a minor nature. In case the charge, if proved, is serious
enough to warrant discharge or dismissal, the proper course is to hold an
inquiry.
2. If the charge-sheeted employee denies the charge, the following procedure
should be followed.
(a) Allow inspection of listed documents by the charge-sheeted
employee.
(b) Ask the charge-sheeted employee to submit a list of witnesses to be
examined on his behalf.
(c) List of documents should be given by the charge-sheeted employee.
(d) Charge-sheeted employee should intimate the inquiry officer about
the defence assistant.
(e) Copies of all listed documents should be given to the charge-sheeted
employee. If they are bulky, he should be given the facility of
making notes.
(f) Copies of the previous statements of witnesses should be given to the
charge-sheeted employee if prosecution proposes to use them in
inquiry.
H. Other Steps Involved in Domestic Inquiry
(a) The inquiry officer will explain the procedure to be followed by him
in the inquiry.
(b) The presenting officer first leads evidence against the delinquent in
support of the charges by producing witnesses and documentary
evidence. However, no leading questions are asked at the time of
this examination-in-chief. The charge-sheeted employee or his
defence assistant is to be given an opportunity to cross examine each
management witness. In case he declines to cross examine any
witness, an endorsement to that effect is recorded by the inquiry
officer.
(c) The charge-sheeted employee is then asked to produce his own
witnesses one by one and the presenting officer is allowed to cross
examine them. When an application is filed for summoning
 witnesses by the delinquent officer, it is obligatory on the part of the
inquiry officer to pass an order on such an application. However, if
the presenting officer is not appointed in an inquiry and that the
questions are put to the witnesses by the inquiry officer, this will not
vitiate the inquiry76.
(d) The charge-sheeted employee is asked to give his statement after his
witnesses have been examined and cross examined. He may also
produce documentary evidence, if any. In case the delinquent
employee declines to produce any witness or documentary evidence
or declines to give a statement, the inquiry officer makes a record to
that effect in the charge-sheet and obtains signatures of all
concerned. If the inquiry remains incomplete in the first sitting and
some more witnesses are required to be examined, it may continue
on any other day mutually agreed upon by both sides. In such a case,
the inquiry officer should make a suitable endorsement in the order-
sheet and obtain signatures of all.
(e) The inquiry officer shall obtain on each page of the inquiry
proceedings, the signatures with date of the charge-sheeted
workman, his representative, if any, the concerned witness and the
management’s representative. The concerned witness should sign on
each page of his statement only. The inquiry officer will sign on
each page of the proceedings after endorsing that the statement has
been recorded by him and explained to the parties in their language
before they were asked to sign. If the delinquent employee refuses to
put his signature, the inquiry officer should make an endorsement to
that effect and get it attested by others present.
(f) After the evidences are recorded, both parties sum up their cases by
placing oral or written arguments or both in support of their case.
(g) The inquiry officer then closes the proceedings.
(h) Finally, the inquiry officer writes his findings/report.
While conducting an inquiry, the inquiry officer acts as a quasi-judicial body. In
view of this, he is required to follow the principles of natural justice and fair play
in disciplinary inquiry. Thus, when an application is filed for summoning the
witnesses by the delinquent officer, it is obligatory on his part to pass an order
on such an application77. Moreover, the inquiry officer is fully competent to
control and regulate the inquiry proceedings and may refuse to examine
witnesses who appear to be irrelevant provided he records in writing the reasons
for doing so78.
I. Findings and Report of Inquiry Officer
After close of the inquiry, the inquiry officer is required to give his findings on
each charge together with an analysis of evidence brought before him so that his
reasons for coming to the conclusion are clear to all. He cannot, however, make
any recommendation about the penalty to be imposed. He will then submit the
report to the disciplinary authority79.
J. Ex-parte Inquiry
A survey of decided cases reveals where the ex-parte inquiry is justified and
where it is not. Ex-parte inquiry has been held to be justified in the following
cases:
1. If the delinquent takes a non-cooperative attitude80
2. When the employee puts up false excuses for not being able to get a
defense assistant81
3. Where the intimations were served to the charge-sheeted employee by
registered post and were ‘refused’ to be received82
4. Where the charge-sheeted employee adopted non-cooperative attitude with
a view to frustrate the inquiry despite several notices83
5. Where the charge-sheeted employee wanted to cross examine the
prosecution witness only after the examination-in-chief of all the
witnesses84
6. Where the delinquent employee attended inquiry on one occasion but
refused to attend on the next date on the ground of denial of legal
representation85
7. When the delinquent failed to appear in spite of notice by the inquiry
officer86
The inquiry officer must allow the delinquent to attend the inquiry at any stage
whether his absence earlier from the inquiry proceedings was justified or not. He
should be given due notice to submit his brief after sending a copy of the brief of
PO to him, even if he does not attend the inquiry.
Even in ex-parte proceedings, the inquiry officer should provide
opportunity to inspect listed documents and to submit the list of defence
documents, arrange for examination-in-chief, cross examination with notice to
the charged employee at every stage and even ask him to submit the defence
brief87.
Ex-parte inquiry has been held to be invalid in the following cases:
1. Where the charge sheet has not been delivered and acknowledged88
2. Where the charged employee has not been supplied with copies of
the relevant documents to prepare his defence effectively89
3. Where the inquiry officer, after receipt of letter from the delinquent
in which certain allegations were leveled against him, abruptly
closed the inquiry and proceeded ex-parte90
K. Inquiry on Holidays
I. The management is entitled to hold inquiry on a holiday and in the
absence of an application for adjournment, the inquiry officer is
competent to proceed ex-parte against the workman91.
L. Attending Inquiry during Leave Period
I. The delinquent employee who has been granted leave is entitled
to adjournment.
II. The representative of the management appearing before the
inquiry should inform this fact to inquiry officer.
III. The inquiry officer should not, therefore, proceed ex-parte92.
M. No Disciplinary Action for Misconduct not Specified in the Standing Orders
The Supreme Court successively in a number of cases has held that no
disciplinary action against a delinquent employee can be initiated or taken in
respect of an act/misconduct not defined in the standing orders under the
Industrial Employment (Standing Orders) Act, 1946 or the other service rules or
regulations or even where such acts or omissions and commissions are vaguely
defined93.
N. Consideration of the Report of the Inquiry Officer by Disciplinary Authority
The Supreme Court in a catena of cases has held that the disciplinary authority
must be the competent authority. The jurisdiction of the disciplinary authority
shall be determined with reference to the company/unit where the alleged
misconduct was committed94. If the disciplinary authority agrees with the
findings of the inquiry officer, he shall make a decision in regard to quantum of
punishment to be imposed upon the charge-sheeted employee. However, the
punishment imposed by him should not be disproportionate to the misconduct
committed by the delinquent. In case of disagreement, the disciplinary authority
is required to record:
(i) The reasons for disagreement to each charge. This is a mandatory
requirement to be complied with95.
(ii) His own findings if sufficient evidence is available on record for
such an exercise.
(iii) Remit the case to the inquiry officer for further inquiry and
report96.
If the disciplinary authority differs with the view taken by the inquiry officer, he
is bound to give a notice setting out his tentative conclusions to the delinquent
employee. It is only after hearing the delinquent employee that the disciplinary
authority would at all arrive at a final finding of guilt. Thereafter, the delinquent
employee would again have to be served with a notice relating to the punishment
proposed97.
The disciplinary authority in exercise of discretion to impose punishment
must take into consideration a host of factors such as (i) gravity of misconduct
(ii) past conduct (iii) nature of duties assigned to the delinquent (iv)
responsibilities of the position that the delinquent holds (v) previous penalty, if
any, and (vi) the discipline required to be maintained in the department or
establishment he works in98.

Appellate/Reviewing Authority
The service rules or the standing orders may provide for filing appeals or review.
An order of the appellate authority should be a reasonable order whether the
appeal is allowed or dismissed. Whenever there is an appellate order, the order
passed by the lower authority merges into the order passed by the appellate
authority. It is the order of the appellate authority which gives cause of action to
the employee to institute any legal proceedings.
Period of limitation and territorial jurisdiction of the courts:
If the service rules provide for appeal, the cause of action arises only after the
appeal is disposed of. Appeal must be filed within the period of limitation.

VII. RIGHT TO BE DEFENDED BY A LAWYER IN

DOMESTIC INQUIRY
The right of a delinquent to be defended by a lawyer in a domestic inquiry in
labour cases has undergone material change since the Supreme Court decision
Kraipak’s99 case. Thus, in Board of Trustees, Port of Bombay v. Dilip
Kumar100, Justice D A Desai opined:
We have reached a stage in our onward march to fair play in
action that wherein an inquiry before a district tribunal, the
delinquent officer is pitted against a legally-trained mind, if he
(the delinquent) seeks permission to appear through a legal
practitioner, the refusal to grant this request would amount to
denial of a reasonable request to defend himself and the essential
principles of natural justice would be violated101.
In J K Aggarwal v. Haryana Seeds Development Corporation Limited102, Rule
7(5) of the Haryana Civil Service Appeal Rules, 1952 provides that if the charge
or charges are likely to result in dismissal of the person from the service of the
government, such person may, with the sanction of the inquiry officer, be
represented by counsel. The Supreme Court, while interpreting this rule held that
where the presenting officer was a person with legal attainments and experience
and the employee had no legal background, the refusal of the service of a lawyer
to the delinquent amounts to denial of natural justice. The Court also held that
the legal advisor or lawyer for this purpose should be liberally construed and
must include ‘whoever assists or advises on facts and law must be deemed to be
in the position of legal advisor’.
But in Harinarayan Srivastava v. United Commercial Bank103, the
Supreme Court held that the refusal of inquiry officer to permit representation by
an advocate even when the management was being represented by a law
graduate will not be violative of principles of natural justice as the charges were
simple and not complicated.
The matter again came to be considered by a three-judge bench of the
Supreme Court in Crescent Dyes and Chemicals Ltd v. Ram Naresh
Tripathi104. The Court upheld the statutory restrictions imposed on the
delinquent’s choice of representation in the domestic inquiry through a lawyer or
an agent. The Court observed:
Ordinarily, it is considered desirable not to restrict this right of
representation by counsel or an agent of one’s choice but it is a
different thing to say that such a right is an element of principles
of natural justice and denial thereof would invalidate the inquiry.
Representation through counsel can be restricted by law as for
 example, Section 36 of the Industrial Disputes Act, 1947 and
also by certified standing orders. In the present case, the
standing orders permitted an employee to be represented by a
clerk or a workman working in the same department as the
delinquent. So also the right to representation can be regulated
or restricted by statute.

VIII. RIGHT OF REPRESENTATION IN DISCIPLINARY

PROCEEDINGS THROUGH CO-EMPLOYEES
The right to representation has been made available in a restricted way to a
delinquent employee. In Rule 14(8) of the Central Civil Services (Classification,
Control and Appeal) Rules, 1965 also an employee has been given the choice of
being represented in the disciplinary proceedings through a co-employee.
In Kalindi v. Tata Engineering and Locomotive Company Ltd105, a three-judge
bench observed as under:
Ordinarily, in inquiries before domestic tribunals, the person
accused of any misconduct conducts his own case. Rules have
been framed by the government as regards the procedure to be
followed in inquiries against its employees. No provision is
made in these rules that the person against whom an inquiry is
held may be represented by anybody else. When the general
practice adopted by domestic tribunals is that the person accused
conducts his own case, we are unable to accept an argument that
natural justice demands that in the case of inquiries into a
charge-sheet of misconduct against a workman, he should be
represented by a member of his union. Besides, it is necessary to
remember that if any inquiry is not otherwise fair, the workman
concerned can challenge its validity in an industrial dispute.
The Court accordingly held that a workman against whom an inquiry is being
held, the management has no right to be represented at such inquiry by a
representative of his union though of course, an employer in his discretion can
and may allow his employee to avail himself of such assistance.
In Dunlop Rubber Company v. Workmen106, it was laid down that there
was no right of representation in a disciplinary proceeding by another person
unless the service rules specifically provided for the same.
In Kalindi v. Tata Engineering and Locomotive Co. Ltd, Dunlop Rubber
Company v. Workmen and Brook Bond India (P) Ltd v. Subba Roman (S) and
Another107, it was held that the Indian law does not concede an absolute right of
representation to an employee as part of his right to be heard. It was further
specified that there is no right to representation as such unless the company, by
its standing orders, recognizes such a right. In this case, it was also laid down
that a delinquent employee has no right to be represented in the departmental
proceedings by a lawyer unless the facts involved in the disciplinary proceedings
are of a complex nature.
In Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar
Union108, the Supreme Court, while dealing with the right of representation
through co-employees observed:
Model standing orders, no doubt, provided that a delinquent
employee could be represented in the disciplinary proceedings
through another employee who may not be the employee of the
parent establishment to which the delinquent belongs and may
be an employee elsewhere, though he may be a member of the
trade union, but this rule of representation has not been
disturbed by the certified standing orders, as much as it still
provides that the delinquent employee can be represented in the
disciplinary proceedings through an employee. The only
embargo is that the representative should be an employee of the
parent establishment. The delinquent has to select his
representative so that he is a co-employee of the same
establishment in which the delinquent is employed. There
appears to be some logic behind this as a co-employee would be
fully aware of the conditions prevailing in the parent
establishment, its service rules, including the standing orders,
and would be in a better position than an outsider, to assist the
delinquent in the domestic proceedings for a fair and early
disposal. The basic features of the model standing orders are
thus retained and the right of representation in the disciplinary
proceedings through another employee is not altered, affected or
taken away. The standing orders confirm to all standards of
reasonableness and fairness and, therefore, the appellate
authority was fully justified in certifying the draft standing
orders as submitted by the appellant.
 IX. APPLICABILITY OF THE EVIDENCE ACT
Is the Indian Evidence Act, 1872 applicable in a domestic inquiry? It is well-
settled that in a domestic inquiry, the Indian Evidence Act is not applicable in
strictu sensu. The Supreme Court in State of Haryana v. Rattan Singh
reiterating this position pointed out109:
In a domestic inquiry, the strict and sophisticated rules of
evidence under the Indian Evidence Act may not apply. All
materials which are logically probative for a prudent mind are
permissible. There is no allergy to hearsay evidence provided it
has reasonable nexus and credibility. The essence of a judicial
approach is objectivity, exclusion of extraneous materials or
considerations and observance of rules of natural justice. Of
course, fair play is the basis and if perversity or arbitrariness,
bias or surrender of interdependence of judgement vitiates the
conclusions reached, such finding, even though of a domestic
tribunal, cannot be held good.
In Workmen of Balmadies Estate v. Management, Balmadies Estate110, the
Supreme Court held that it is fairly well-settled now that in view of the wide
power of the labour court, the court can, in an appropriate case, consider the
evidence that has been considered by the domestic tribunal and may arrive at a
different conclusion from the one arrived at by the domestic tribunal. However,
the assessment of evidence in a domestic inquiry is not required to be made by
applying the same yardstick as a civil court could do when a lis is brought before
it. The Indian Evidence Act, 1872 is not applicable to the proceedings in a
domestic inquiry so far as the domestic inquiries are concerned, though
principles of fairness are to apply. It is also fairly well-settled that in a domestic
inquiry, guilt may not be established beyond reasonable doubt and the proof of
misconduct would be sufficient. In a domestic inquiry, all materials which are
logically probative including hearsay evidence can be acted upon provided it has
a reasonable nexus and credibility.

X. DOMESTIC INQUIRY PENDING CRIMINAL

PROCEEDINGS
In Capt. M Paul Anthony v. Bharat Gold Mines Ltd111, the Supreme Court
stated certain situations which should be kept in abeyance during pendency of a
criminal case. In paragraph 22, conclusions which are deducible from various
decisions were summarized. They are as follows:
(i) Departmental proceedings and proceedings in a criminal case can proceed
simultaneously as there is no bar in their being conducted simultaneously,
though separately.
(ii) If the departmental proceedings and the criminal case are based on
identical and similar set of facts and the charge in the criminal case
against the delinquent employee is of a grave nature which involves
complicated questions of law and fact, it would be desirable to stay the
departmental proceedings till the conclusion of the criminal case.
(iii) Whether the nature of a charge in a criminal case is grave and whether
complicated questions of fact and law are involved in the case, will
depend on the nature of offence, the nature of the case launched against
the employee on the basis of evidence and material collected against him
during investigation or as reflected in the charge-sheet.
(iv) The factors mentioned in (ii) and (iii) above cannot be considered in
isolation to stay the departmental proceedings but due regard has to be
given to the fact that the departmental proceedings cannot be unduly
delayed.
(v) If the criminal case does not proceed or its disposal is being unduly
delayed, the departmental proceedings, even if they were stayed on
account of the pendency of the criminal case, can be resumed and
proceeded with so as to conclude them at an early date, so that if the
employee is found not guilty, his honour may be vindicated and in case he
is found guilty, the administration may get rid of him at the earliest.
However, while deciding the case, taking into consideration the facts involved
therein, the Court in para 35 held:
Since the facts and the evidence in both the proceedings,
namely, the departmental proceedings and the criminal case
were the same without there being any iota of difference, the
distinction, which is usually drawn as between departmental
proceedings and criminal case on the basis of approach and
burden of proof, would not be applicable to the instant case.
The aforesaid view was reiterated in State Bank of India v. R B Sharma112. In
this case, the Supreme Court observed:
The purpose of departmental inquiry and prosecution are two
different and distinct aspects. Criminal prosecution is launched
for an offence, for violation of a duty the offender owes to the
society, or for breach of law which has provided that the
offender shall make sacrifice to the public. So, crime is an act of
commission in violation of law or omission of public duty.
Departmental inquiry is to maintain discipline in the service and
efficiency of public service.
In Food Corporation of India v. George Vergese113, the management did not
initiate departmental inquiry against the workman during the pendancy of
criminal trial against the employee. On conviction of the said employee by
criminal court, the management dismissed him. On his acquittal in the criminal
appeal, management set aside the order of dismissal and reinstated the workman.
But he was placed under immediate suspension and served a charge-sheet for the
purpose of holding a departmental inquiry against him. The High Court held that
no departmental inquiry against the delinquent could be initiated once there was
acquittal. In the letters patent appeal, the division bench of the High Court
refused to interfere on the ground of delay on the part of the management in
initiating the departmental inquiry. The Supreme Court in a special leave petition
held that the division bench of the High Court was not justified in refusing to
interfere only on the ground of delay because the delay was not occasioned on
account of inaction on the part of the management.

XI. CAN DEPARTMENTAL PROCEEDINGS BE

CONTINUED AGAINST THE DELINQUENT IN CASE
OF HIS ACQUITTAL BY CRIMINAL COURT
It has not been settled in a series of cases of the Supreme Court114 that acquittal
in criminal trial cannot bar holding of a departmental inquiry into the charge.
The Court gave several reasons for this115.
(i) A conclusion arrived at in disciplinary inquiry is different from that
arrived by a criminal court.
(ii) The burden of proof required to establish guilt in a criminal court is not
required in disciplinary proceedings.
 (iii) The evidence led by the management in disciplinary proceedings may be
different from that led by the prosecution in a criminal case and the
material before the criminal court and inquiry officer or labour court may
be entirely different.
In Allahabad District Cooperative Bank Ltd v. Vidhya Varidh Mishra116, a
question arose whether an employee who was held guilty in a disciplinary
proceeding for having a hand in embezzlement of money in the office but
acquitted in a criminal trial on the same charge could ask for quashing of the
penalty of dismissal. The Supreme Court answered the question in the negative
and held that in a disciplinary inquiry, a different conclusion may be arrived at
than by a criminal court. The Court added that the strict burden of proof required
to establish guilt in a criminal court is not there in disciplinary proceedings. It
was not the case of the employee that the disciplinary proceedings were not
conducted fairly. The Court further held that as the termination of services of the
employee was based on findings of the disciplinary committee, the fact that the
appellant criminal court exonerated the employee was of no consequence.
Accordingly, the Court upheld the order of termination pursuant to the
disciplinary inquiry.
In Ajit Kumar Nag v. General Manager (PJ) Indian Oil Corporation
Ltd117, a three-judge Bench of the Supreme Court ruled that:
1. Acquittal by a criminal court would not debar an employer from exercising
power in accordance with the rules and regulations in force.
2. The two proceedings, criminal and departmental, are entirely different.
They operate in different fields and have different objectives. Whereas
the object of criminal trial is to inflict appropriate punishment on the
offender, the purpose of inquiry proceedings is to deal with the
delinquent departmentally and to impose penalty in accordance with the
service rules.
3. In a criminal trial, incriminating statement made by the accused in certain
circumstances or before certain officers is totally inadmissible in
evidence. Such strict rules of evidence and procedure would not apply to
departmental proceedings.
4. The degree of proof which is necessary to order a conviction is different
from the degree of proof necessary to record commission of delinquency.
5. The rule relating to appreciation of evidence in two proceedings is also not
similar. In criminal law, burden of proof is on prosecution and unless the
prosecution is able to prove the guilt of the accused beyond reasonable
 doubt, he cannot be convicted by the court of law. In departmental
inquiry on the other hand, penalty can be imposed on the delinquent
officer on a finding recorded on the basis of preponderances of
probability.
6. Acquittal of the appellant by a judicial magistrate, therefore, does not ipso
facto absolve him of the liability under the disciplinary jurisdiction of the
corporation.
In Chairman-cum-MD, TNCS Corporation Ltd v. K Meerabai118, while dealing
with the effect of judgement of acquittal in criminal proceedings on initiation of
disciplinary proceedings, the Supreme Court ruled:
(a) The scope of disciplinary proceedings and the scope of criminal
proceedings in a court of criminal law are quite distinct, exclusive
and independent of each other.
(b) The criminal case and departmental proceedings were not based on
identical facts and charges.
(c) Where the charge-sheeted employee holds a position of trust and
where honesty and integrity are in-built requirements of functioning,
the matter should be dealt with firmly and not leniently.
In Suresh Pathrella v. Oriental Bank of Commerce119, the Supreme Court held
that acquittal in a criminal case would be no bar for drawing up disciplinary
proceedings against the delinquent officer. It added that it is a well-settled
principle of law that the yardstick and standard of proof in a criminal case is
different from the disciplinary proceedings. While the standard of proof in a
criminal case is a proof beyond all reasonable doubt, the proof in a departmental
proceeding is preponderance of probabilities.
Again, in Noida Entrepreneurs Association v. Noida120, a three-judge
bench of the Supreme Court held that there is a conceptual difference between
departmental inquiry and criminal proceedings and the standard of proof
required for departmental proceedings is not the same as required to prove
criminal charges and therefore the acquittal in criminal proceedings is not a bar
to departmental proceedings.
The question arose again in Bank of India v. Bhimsen Gochhayat121. Here, the
Supreme Court held that where the charges in departmental inquiry were
different from those in criminal case, the acquittal of an employee could not bar
or prevent subsequent departmental inquiry.
In Babu Lal v. Haryana State Agricultural Marketing Board122, the
Supreme Court held that where the acquittal of an employee in criminal
proceedings was on benefit of doubt, the employer has a right to decide whether
or not such an employee deserves any salary for the intervening period. This
view only deals with back wages and not with the issue whether the disciplinary
proceedings should continue.
In Bank of India v. Bhimsen Gochhayat123, the respondent was tried
only on the basis of allegations of fraud committed by way of forgery whereas
the respondent had used broken pieces of branch receipt scroll rubber stamp to
affix Lindsay Street branch on the CAN. Apart from this, the respondent had
also stolen the entire pad of CANs from the branch and kept the same at his
residence. All these allegations were not there in the criminal proceedings. In
view of this, the Court held that when a bank employee was acquitted in criminal
trial, holding of departmental inquiry would not be invalid, if charges were
different from those in the criminal case which ended in the acquittal of the
employee.
In Union of India v. Naman Singh Shekhawat124, the Supreme Court
held that departmental proceedings can be initiated after acquittal by the criminal
court. However, departmental proceedings should be initiated provided the
department can adduce any evidence which could prove the charges against the
delinquent officer. Therefore, initiation of proceedings should be bona fide and
must be reasonable and fair.
In Pandiyan Roadways Corp. Ltd v. N Balakrishnan125, the Supreme Court
reconsidered the issue taking into account all earlier judgements and observed as
under:
There are evidently two lines of decisions of this Court
operating in the field. One is evident in the cases which would
come within the purview of Capt. M Paul Anthony v. Bharat
Gold Mines Ltd and G M Tank v. State of Gujarat126.
However, the second line of decisions shows that an honourable
acquittal in the criminal case itself may not be held to be
determinative in respect of order of punishment meted out to the
delinquent officer, inter alia, when (i) the order of acquittal has
not been passed on the same set of facts or same set of evidence;
(ii) the effect of difference in the standard of proof in a criminal
trial and disciplinary proceedings has not been considered (see
Commissioner of Police v. Narender Singh), or (iii) where the
delinquent officer was charged with something more than the
 subject matter of the criminal case and/or covered by a decision
of the civil court.
In Divisional Controller, Karnataka State Road Transport Corporation v. M G
Vittal Rao127, the Supreme Court, after examining the aforesaid decisions held:
There can be no doubt regarding the settled legal proposition
that as the standard of proof in both the proceedings is quite
different, and the termination is not based on mere conviction of
an employee in a criminal case, the acquittal of the employee in
a criminal case cannot be the basis of taking away the effect of
departmental proceedings. Nor can such an action of the
department be termed as double jeopardy. The judgement of this
Court in Capt. M Paul Anthony does not lay down the law of
universal application. Facts, charges and nature of evidence,
etc., involved in an individual case would determine as to
whether decision of acquittal would have any bearing on the
findings recorded in the domestic inquiry.

XII. EFFECT OF DELAY IN CONDUCT OF INQUIRY

Courts have held that delay of over 2 or even 3 years in initiating inquiry would
not vitiate the inquiry128.

XIII. POWER TO CONDUCT INQUIRY AFRESH

It has been held that inquiry can be conducted afresh from the stage when
illegality is found committed129. However, where liberty is given to the
employer to hold de novo inquiry, the earlier proceedings including the charge-
sheet issued earlier would be quashed. In such a situation, it is not permissible
for the employer to proceed on the basis of the charge-sheet issued earlier130.
In State Bank of Bikaner and Jaipur v. Ajay Kumar Gulati131, a
disciplinary inquiry was held against the respondent with respect to certain grave
charges. The inquiry officer reported that the charges were established. After
considering the report and objections submitted by the respondent, the
disciplinary authority ordered de novo disciplinary inquiry against the delinquent
for affording him another opportunity to put up his defence. A new inquiry
officer was appointed. The respondent questioned the aforesaid
proceedings/order by way of a writ petition in Delhi High Court. The question
arose from which stage of proceedings de novo inquiry should commence. The
Court directed that the inquiry should not be from the very beginning but
confined to the recording of evidence to be adduced by the respondent alone.
The appellant then filed an appeal in the Supreme Court against the order of
Delhi High Court. Before the Supreme Court, the appellant contended that no
reasons were given in support of the High Court’s decision. The Supreme Court,
while dismissing the appeal, upheld the decision of the High Court and held that
fresh inquiry should not be from the very beginning. The Court also held that
since fresh inquiry was ordered for affording opportunity to the defendant to put
up his defence, it should commence from giving opportunity to the delinquent to
produce his documentary and oral evidence and also for considering the question
of recalling any witness for cross examination.

XIV. NON-SUPPLY OF INQUIRY REPORT

The Supreme Court in Union of India v. Mohd. Ramzan Khan132, has held that
wherever a domestic inquiry is conducted by the management and the inquiry
officer submits a report to the disciplinary authority at the conclusion of the
inquiry holding the delinquent employee guilty of all or any of the charges with
proposal for punishment or not, the delinquent must be given a copy of such
report. He would also be entitled to make a representation against it if he so
desired. Not furnishing a copy of the inquiry report to the delinquent would be
violative of the principles of natural justice and is liable to be quashed. The rule
is given prospective effect from the date of judgement, i.e. 20 November 1990.
The constitution bench of the Supreme Court in Managing Director,
ECIL, Hyderabad v. B Karunakar133, dealt with various issues arising from the
non-supply of the inquiry report and ruled:
The denial of the report of the inquiry officer is denial of
reasonable opportunity and a breach of the principles of natural
justice, and therefore, invalid. The delinquent employee will,
therefore, be entitled to a copy of the report even if the statutory
rules do not permit the furnishing of the report or are silent on
the subject.
 Article 311(2) of the Constitution makes it obligatory to hold an inquiry
before the employee is dismissed or removed in rank. The Article, however,
cannot be construed to mean that it prevents or prohibits the inquiry when
punishment other than that of dismissal, removal or reduction in rank is awarded.
The procedure to be followed in awarding other punishment is laid down in the
service rules governing the employee. Further, Article 311(2) applies only to
members of civil services of the Union or an all-India service or a civil service
of a state or to the holders of civil posts and others are governed by their service
rules. Whenever, therefore, the service rules contemplate an inquiry before
punishment is awarded and when the inquiry officer is not the disciplinary
authority, the delinquent employee will have the right to receive the inquiry
officer's report notwithstanding the nature of the punishment.
(i) Since it is the right of the employee to have the report to defend
himself effectively and he would not know in advance whether the
report is in his favour or against him, it will not be proper to
construe his failure to ask for the report as the waiver of his right.
Therefore, whether the employee asks for the report or not, the
report has to be furnished to him.
(ii) the right to make representation to the disciplinary authority against
the findings recorded in the inquiry report is an integral part of the
opportunity of defence against the charges and is a breach of
principles of natural justice to deny the said right.
The aforesaid view was reiterated in Managing Director, Electronics
Corporation of India v. B. Karunakaran134. Here the Supreme Court held that
the right to receive a copy of the report of inquiry and make representation are
integral part of the opportunity of defence. Breach thereof would violate the
principles of natural justice. The Court further ruled that the report has to be
furnished whether the employers want to do so or not.
The pendulum swung back in State Bank of Patiala v. S K Sharma135
wherein the Supreme Court held that there will be no illegality in non-supply of
inquiry report to the delinquent employees when no prejudice has been caused to
him. The Court further held that complaint of violation of principles of natural
justice has to be examined on the touchstone of prejudice caused to the
complainant.
The aforesaid view was reiterated in SK Singh v. Central Bank of
136
India , the Supreme Court held that non-supply of the copy of the inquiry
report would not be illegal if no prejudice is caused to delinquent employee due
to non-supply of the inquiry report.
 The two-judge bench of the Supreme Court in Debotosh Pal Chaudhary
v. Punjab Bank137 was, inter alia, invited to determine consequences of not
furnishing a copy of inquiry report before imposing the punishment of dismissal.
In this case, Debotosh Pal Chaudhary was employed in Punjab National Bank.
On 8 October 1988, the management dismissed him from service on the basis of
the inquiry report submitted by the inquiry officer on 26 September 1988. The
petitioner in a writ petition challenged the order of dismissal by contending that
(i) the inquiry was vitiated as he did not have reasonable opportunity to have the
copies of the documents or inspection thereof; and (ii) he was not afforded an
opportunity to adduce oral evidence by examining two witnesses. The single
judge of the High Court, inter alia, held that the disciplinary authority did not
forward to the inquiring authority the documenets and lists of witnesses before
commencing the inquiry against the petitioner. On appeal, the division bench
revised the decision of the single judge and dismissed the writ petition.
Aggrieved by the order, the petitioner filed a special leave to appeal before the
Supreme Court. The Court referred to regulation 6(5) which requires the
disciplinary authority, where it is not the inquiring authority, to forward to the
inquiring authority the following documents:
(i) a copy of the articles of charge and statement of imputations of
misconduct or misbehaviour;
(ii) a copy of the written statement of defence, if any, submitted by the
officer employee;
(iii) a list of documents by which and list of witnesses by whom the
articles of charge
are proposed to be substantiated;
(iv) a copy of the statement of the witnesses, if any;
(v) evidence providing the delivery of the article of charge under sub-
regulation (3); and
(vi) a copy of the order appointing the ‘presenting officer’ in terms of
sub-regulation (6).
While dealing with the aforesaid requirements, the Court held that fulfilment of
some of the requirements of this regulation is purely procedural in character.
Unless in a given situation, the aggrieved party makes out a case of prejudice or
injustice, mere infraction of this regulation will not vitiate the entire inquiry.
While dealing with the issue of non-supply of the copy of inquiry report, the
Court observed:
It is true that the petitioner was not provided with a copy of the
 inquiry report by the disciplinary authority before imposition of
the punishment of dismissal, but that circumstance has no
bearing on the dismissal of the petitioner in view of the
decisions of this Court of Ramzan Khan’s case (supra) and
Managing Director, ECIL, Hyderabad v. B. Karunakar. The
said two decisions are to the effect that no order of punishment
before the date of the decision in Ramzan Khan’s case would be
changeable on the ground that there is failure to furnish inquiry
report before imposing the punishment by the disciplinary
authority. In the present case, the punishment had been imposed
upon the petitioner by the disciplinary authority on October 8
1988, long before the decision of this Court in Ramzan Khan’s
case on 20 November 1990.
The aforesaid ratio of law has been; reiterated by the Supreme Court in Haryana
Financial Corp. v. Kailash Chandra Ahuja138. This Court again examined the
entire issue and observed as follows:
From the ratio laid down in B Karunakar, it is explicitly clear
that the doctrine of natural justice requires supply of a copy of
the inquiry officer’s report to the delinquent if such inquiry
officer is other than the disciplinary authority. It is also clear that
non-supply of report of the inquiry officer is breach of natural
justice. But it is equally clear that failure to supply a report of
the inquiry officer to the delinquent employee would not ipso
facto result in the proceedings being declared null and void and
the order of punishment, non-est and ineffective. It is for the
delinquent employee to plead and prove that non-supply of such
report had caused prejudice and resulted in miscarriage of
justice. If he is unable to satisfy the court on that point, the order
of punishment cannot automatically be set aside.
In Sarv UP Gramin Bank v. Manoj Kumar Sinha139, the respondent joined
Devi Pattan Kshetria Gramin Bank, Gonda (now Sarva UP Gramin Bank) as an
officer. He was served with two charge-sheets dated 9 November 2000 and 8
March 2004 for various acts of omissions and commissions while working at
branches of district Gonda. He was suspended. The respondent submitted a reply
to the charge-sheet. He denied the charges mentioned therein. Thereafter, two
separate departmental inquiries were held, in which the respondent fully
participated. On 19 May 2001, the inquiry officer submitted the inquiry report
with regard to chargesheet dated 9 November 2000. Agreeing with the findings
of the inquiry officer, the disciplinary authority issued two show cause notices to
the respondent proposing the punishment of reduction of pay by six stages
permanently. Thereafter, the respondent was given an opportunity for a personal
hearing by disciplinary authority on each of the inquiry reports. Taking into
consideration the explanation submitted by the respondent, the disciplinary
authority passed two orders on 3 April 2001 imposing the punishment of
‘reduction of pay by six stages permanently’ and ‘reduction of pay by four
stages’ in relation to charge-sheets filed on 9 November 2000 and 8 March 2001
respectively. Against these orders, the respondent filed appeals which were
dismissed by the board of directors of the bank which was communicated to the
respondent. He then filed a writ petition challenging the orders dated 3 April
2002 and 9 September 2003. The division bench of the High Court allowed the
writ petition on the ground that since a copy of the inquiry report was not served
on the respondent; the action of the petitioner bank was violative of the
principles of natural justice in view of the judgement in Mohd. Ramzan Khan
case. The bank then challenged the legality of the aforesaid judgement in an
appeal before the Supreme Court. The Court relied upon the decision in ECIL v.
B Karunakar and observed:
From the aforesaid decisions, it is clear that though the supply of
report of the inquiry officer is part and parcel of natural justice
and must be furnished to the delinquent employee, failure to do
so would not automatically result in quashing or setting aside of
the order or the order being declared null and void. For that, the
delinquent employee has to show ‘prejudice’. Unless he is able
to show that non-supply of report of the inquiry officer has
resulted in prejudice or miscarriage of justice, an order of
punishment cannot be held to be vitiated. And whether prejudice
had been caused to the delinquent employee depends upon the
facts and circumstances of each case and no rule of universal
application can be laid down.
In view of above, the Court held that there has been no failure of justice in the
facts and circumstances of this case by non-supply of the inquiry report to the
respondent. The Court also held that the punishment imposed on the respondent
cannot be said to be disproportionate to the gravity of the charges against him.
The charges related to the conduct of the respondent in a financial institution
whereby taking advantage of the official position, he attempted to procure
unlawful pecuniary benefits for himself.
 In Burdwan Central Cooperative Bank Ltd v. Asim Chatterjee140 the
Court applied the principle whether any prejudice was caused to the delinquent
employee by non-supply of inquiry report. The Court referred to its earlier
decision in B Karunakar case (supra) and observed:
There is one aspect of the matter which cannot be ignored. In B
Karunakar case, despite holding that non-supply of a copy of
the inquiry officer’s report to the employee facing disciplinary
proceedings amounts to denial of natural justice, in the later part
of the judgement it was observed that whether in fact, prejudice
has been caused to the employee on account of non-furnishing
of a copy of the inquiry report has to be considered on the facts
of each case. It was observed that where the furnishing of the
inquiry report would not make any difference to the ultimate
outcome of the matter, it would be perversion of justice to allow
the employee concerned to resume his duties and to get all
consequential benefits.
Applying the above in this case where order of punishment had been
passed against the respondent for financial irregularities in the bank and if the
bank was of the view that his services could not be retained on account of his
previous misdemeanour, it is then that the second part of B Karunakar case
becomes attracted and it becomes necessary for the Court to examine whether
any prejudice has been caused to the employee or not before punishment is
awarded to him.

XV. DOMESTIC INQUIRY FOUND DEFECTIVE—

DATE OF ITS EFFECT

In Punjab Dairy Development Corporation Ltd v. Industrial Tribunal141, the

three-judge bench of the Supreme Court ruled that when domestic inquiry is
found defective, it relates back from the date on which the management passed
the order and not from the date of judgement.

XVI. POWER OF LABOUR COURTS, TRIBUNALS AND

NATIONAL TRIBUNALS TO GIVE APPROPRIATE
 RELIEF IN CASE OF DISCHARGE OR DISMISSAL OF
WORKMAN
Section 11-A provides:
Where an industrial dispute relating to the discharge or dismissal of a workman
has been referred to a labour court, tribunal or national tribunal for adjudication
and, in the course of the adjudication proceedings, the labour court, tribunal or
national tribunal, as the case may be, is satisfied that the order of discharge or
dismissal was not justified it may, by its award, set aside the order of discharge
or dismissal and direct reinstatement of the workman on such terms and
conditions if any as it thinks fit, or give such other relief to the workman
including the award of any lesser punishment in lieu of discharge or dismissal as
the circumstances of the case may require.
Provided that in any proceedings under this Section, the labour court,
tribunal or national tribunal, as the case may be, shall rely only on the materials
on record and shall not take any fresh evidence in relation to the matter.
In order to appreciate the need for it, would be necessary to consider the
past history with regard to the introduction of Section 11-A by Act No. 45 of
1971 in the Industrial Disputes Act, 1947 with effect from December 15, 1971.
In Indian Iron and Steel Co. Ltd. v. Their Workmen142, the Supreme
Court, while considering the tribunal’s power to interfere with the management’s
decision to dismiss, discharge or terminate the services of a workman, has
observed that in cases of dismissal for misconduct the tribunal does not act as
court of appeal and substitute its own judgement for that of the management and
that the tribunal will interfere only when there is want of good faith,
victimization, unfair labour practice, etc. on the part of the management.
The International Labour Organization in its recommendation (No. 119)
concerning ‘termination of employment at the initiative of the employer’
adopted in June 1963, has recommended that a worker aggrieved by the
termination of his employment should be entitled to appeal against the
termination among others, to neutral body such as an arbitrator, a court, an
arbitration committee or a similar body and that the neutral body concerned
should be empowered to examine the reasons given in the termination of
employment and the other circumstances relating to the case and to render a
decision on the justification of their termination. The International Labour
Organization has further recommended that the neutral body should be
empowered (if it finds that the termination of employment was unjustified) to
order that the worker concerned, unless reinstated with unpaid wages should be
paid adequate compensation or afforded some other relief.
In accordance with above recommendations, it was considered that the
tribunals’ power in adjudication proceeding relating to discharge or dismissal of
a workman should not be limited and that the tribunal should have the power, in
cases wherever necessary, to set aside the order of discharge or dismissal and
direct reinstatement of the workman on such terms and conditions, if any, as it
thinks fit or give such other relief to the workman including the award of any
lesser punishment in lieu of discharge or dismissal as the circumstances of the
case may require.
Accordingly, Section 11-A was inserted in the Industrial Disputes Act,
1947. Thus the position has been changed by Section 11-A. While previously the
tribunal had no power to interfere with the punishment, it is now clothed with
such a power. Under Section 11-A even ‘if the finding of misconduct is
established, the tribunal now has power to consider whether the punishment of
dismissal or discharge was necessary for the type of misconduct of which the
workman is found guilty. In such circumstances, the tribunal may hold that the
proved misconduct does not merit punishment by way of discharge or dismissal
of the workmen and may award lesser punishment instead.
The ambit and scope of Section 11-A came up for consideration before
the Supreme Court in Workmen of Firestone Tyre and Rubber Company of
India (P) Ltd. v. Firestone Tyre and Rubber Company of India (P) Ltd.143 The
Court laid down the following principles:
1. The right to take disciplinary action and to decide upon the quantum of
punishment are mainly managerial functions but if a dispute is referred to
a tribunal, the latter has power to see if action of the employer is justified.
2. Before imposing the punishment, an employer is expected to conduct a
proper inquiry in accordance with the provisions of the standing orders, if
applicable, and principles of natural justice. The inquiry should not be
empty formality.
3. When a proper inquiry has been held by an employer, and the finding of
misconduct is plausible conclusion flowing from the evidence adduced at
the said inquiry, the tribunal has no jurisdiction to sit in judgement over
the decision of the employer as an appellate body. The interference with
the decision of the employer will be justified only when findings arrived
at in the inquiry are perverse or the management is guilty of
victimization, unfair labour practice or mala fide conduct.
4. Even if no inquiry has been held by an employer or if the inquiry held by
 him is found to be defective, the tribunal in order to satisfy itself about
the legality and the validity of the order, has to give an opportunity to the
employer and employee to adduce evidence before it. It is open to the
employer to adduce evidence for the first time justifying his action, and it
is open to the employee to aduce evidence contra.
5. The effect of an employer not holding an inquiry is that the tribunal would
not have to consider only whether there was a prima facie case. On the
other hand, the issue about the merits of the impugned order of dismissal
or discharge is at large before the tribunal and the latter, on the evidence
adduced before it, has to decide for itself whether the misconduct alleged
is proved. In such cases, the point about the exercise of managerial
functions does not arise at all. A case of defective inquiry stands on the
same footing as no inquiry.
6. The tribunal gets jurisdiction to consider the evidence placed before it for
the first time in justification of the action taken only, if no inquiry has
been held or the inquiry conducted by an employer is found to be
defective.
7. It has never been recognized that the tribunal should straightaway, direct
reinstatement of a dismissed or discharged employee once it is found that
no domestic inquiry has been held or the said inquiry is found to be
defective.
8. An employer, who wants to avail himself of the opportunity of adducing
evidence for the first time before the tribunal to justify his action, should
ask for it at the appropriate stage. If such an opportunity is asked for, the
tribunal has no power to refuse. The giving of an opportunity to an
employer to adduce evidence for the first time before the tribunal is in the
interest of both the management and the employee and to enable the
tribunal itself to be satisfied about the alleged misconduct.
9. Once the misconduct is proved either in the inquiry conducted by an
employer or by the evidence placed before a tribunal for the first time,
punishment imposed cannot be interfered with by the tribunal except in
cases where the punishment is so harsh as to suggest victimization.144
10. In a particular case, after setting aside the order of dismissal, whether a
workman should be reinstated or paid compensation is as held by this
Court in Management oƒ Panitola Tea Estate v. The Workmen145,
within the judicial decision of a labour court or tribunal.
A. Right of the Employer to Adduce Evidence
1. General
The Supreme Court in Bharat Forge Company Ltd v. A B Zodge146, held that
under Section 11-A, employer is entitled to adduce evidence for the first time,
before the tribunal even if the employer had not conducted any inquiry or the
inquiry conducted by him is found to be preverse. A domestic inquiry may be
vitiated either for non-compliance of rules of natural justice or for perversity.
Disciplinary action taken on the basis of a vitiated inquiry does not stand on a
better footing than a disciplinary action with no inquiry. The right of the
employer to adduce evidence in both situations is well recognized.
Again, in United Planters Association of Southern India v. K G
Sangameswaran147, the Supreme Court ruled:
1. Even in cases where opportunity of hearing was given and principles of
natural justice were complied with before passing the order of dismissal,
the appellate authority may find it necessary to record evidence in order
to draw its own conclusion as to whether the person dismissed was or
was not guilty of the charges framed against him.
2. Where the employer had filed an application to produce evidence in
support of the charges and the appellate authority without disposing of
that application set aside the order of dismissal merely on the omission to
hold domestic inquiry, the appellate authority committed a grave error.
In Neeta Kaplish v. Presiding Officer, Labour Court148, the Supreme
Court after examining various decisions observed:
In all cases where inquiry has not been held or inquiry has been
found to be defective, the tribunal can call upon the management
or the employer to justify the action taken against the workman
and to show by fresh evidence, that the termination or dismissal
order was proper. If the management does not lead any evidence
by availing of this opportunity, it cannot raise any grouse at any
subsequent stage that it should have been given that opportunity
as the tribunal, in those circumstances, would be justified in
passing an award in favour of the workman. If, however, the
opportunity is availed of and the evidence is adduced by the
management, the validity of the action taken by its has to be
scrutinized and adjudicated upon the basis of such fresh
 evidence.
The Court rejected the contention that under Section 11-A, the labour
court had to rely on the ‘materials on record’ and since the inquiry proceedings
constituted ‘material on record’, the same could not be ignored and observed:
The record pertaining to the domestic inquiry would not
constitute ‘fresh evidence’ as those proceedings have already
been found by the labour court to be defective. Such record
would also not constitute ‘material on record’, as contended by
the counsel for the respondents, within the meaning of Section
11-A as the inquiry proceedings, on being found to be bad, have
to be ignored altogether. The proceedings of the domestic
inquiry could be and were, in fact relied upon by the
management for the limited purpose of showing at the
preliminary stage that the action taken against the appellant was
just and proper and that full opportunity of hearing was given to
her in consonance with the principles of natural justice. This
contention has not been accepted by the labour court and the
inquiry has been held to bad. In view of the nature of objections
raised by the appellant, the record of inquiry held by the
management to be ‘material on record’ within the meaning of
Section 11-A of the Act and the only course open to the
management was to justify its action by leading fresh evidence
as required by the labour court. If such evidence has not been
led, the management has to suffer the consequences.
2. When can the tribunal permit parties to adduce fresh evidence
In Rajendra Jha v. Labour Court,149 the Supreme Court held that even
when the application for permission to adduce further evidence is not made in
the pleading, labour court is empowered to permit the management to adduce
evidence before the court and therefore, it should allow the parties to adduce
evidence to prove the misconduct. However, the Court has observed that the
request of the employer to adduce evidence should be made at the earliest
opportunity or delay be explained150. However, such request must be made
before the closure of the proceedings.
No obligation to ask the parties to adduce evidence. The Court held that the
tribunal has no obligation to acquaint parties before them for their right to
adduce evidence under Section 11-A151.
B. Interference with a Quantum of Punishment
Section 11-A confers jurisdiction on the labour court to evaluate the severity of
misconduct as to assess whether the punishment imposed by the employer is
commensurate with the gravity of the misconduct. In Hombe Gowda EDN Trust
v. State of Karnataka152, The Supreme Court observed that ‘the tribunal would
not normally interfere with the quantum of punishment imposed by the
employers unless an appropriate case is made out therefore. The tribunal being
inferior to this Court, was bound to follow the decision of this Court…. The
tribunal can neither ignore the ratio laid down by this Court nor refuse to follow
the same.’ The Court added:
Discipline at the workplace in an organization is a sine quo non
for the efficient working of the organization. When an employee
breaches such discipline and the employer terminates his
service, it is not open to the labour court or an industrial tribunal
to take the view that the punishment awarded is shockingly
disproportionate to the charge proved153.
However, in Management of Hindustan Machine Tools Ltd, Bangalore v.
Mohd. Usman154, the Supreme Court held that where the punishment imposed
by the employer is disproportionately excessive, the labour court in exercise of
its discretion under Section 11-A can reduce the punishment. Even in a case
where the labour court held that the domestic inquiry was conducted properly
and without prejudice to the worker, it can analyse the evidence to decide
whether the dismissal of the worker was justified. It is within the jurisdiction of
the labour court to consider the propriety and justifiability of the punishment in
the case and direct reinstatement if found necessary.
In Chairman-cum-MD, Coal India Ltd v. Mukul Kumar Choudhun155,
the apex court ruled:
One of the tests to be applied while dealing with the question of
quantum of punishment would be: would any reasonable
employer have imposed such punishment in like circumstances?
Obviously, a reasonable employer is expected to take into
consideration measure, magnitude and degree of misconduct and
all other relevant circumstances and exclude irrelevant matters
before imposing punishment. The punishment is not only unduly
harsh but grossly in excess to the allegations.
A year later, in Charanjit Lamba v. Commanding Officer156, the Supreme
Court observed:
That the punishment imposed upon the delinquent should be
commensurate with the nature of the misconduct is not only a
requirement of fairness, objectivity and non-discriminatory
treatment but the same is recognized as being part of Article 14
of the Constitution. It is also evident from the decisions referred
to above that the courts in India have recognized the doctrine of
proportionality as one of the grounds for judicial review.
Referring to scope of judicial review, the Court pointed out:
We need to remember that the quantum of punishment in
disciplinary matters is something that rests primarily with the
disciplinary authority. The jurisdiction of a writ court or an
administrative tribunal is limited to finding out whether the
punishment is so outrageously disproportionate as to be
suggestive of lack of good faith. What is clear is that while
judicially reviewing an order of punishment imposed on a
delinquent employee, the writ court would not assume the role
of an appellate authority. It would not impose a lesser
punishment merely because it considers the same to be more
reasonable than what the disciplinary authority had imposed. It
is only in cases where the punishment is so disproportionate to
the gravity of charge that no reasonable person placed in the
position of the disciplinary authority could have imposed such a
punishment that a writ court may step in to interfere with the
same.

C. Specific Facts/Situations
1. Non-issuance of Tickets
In Devendra Swamy v. State Road Transport Corporation157, the services of a
bus conductor were terminated after departmental inquiry for not issuing tickets
to eight passengers. Earlier, he was found guilty of similar offence in more than
41 cases in which lesser punishments were imposed upon him. Thereupon, an
appeal was filed before the Supreme Court. While dealing with justifiability of
termination of service, the Supreme Court referred to its earlier decisions158
wherein it was held that unless punishment is shockingly disproportionate to the
charge which has been proved, the punishment awarded by the disciplinary
authority should not be interfered with in exercise of power of judicial review.
The Supreme Court held that the corporation was fully justified in awarding the
punishment of dismissal looking at the gravity of the charge of misconduct for
which disciplinary proceedings were initiated and proved as also in the light of
previous service record of the appellant.
The Supreme Court in Regional Manager v. Ghanshayam Sharma159
was invited to assess the quantum of punishment keeping in view the nature and
severity of misconduct. In this case, the respondent who was employed as a
conductor by the Rajasthan Road Transport Corporation was punished several
times for having been charge-sheeted on the ground of not issuing tickets to
passengers. In this case, he was again found carrying 23-1/2 passengers without
ticket. An inquiry was conduced and he was removed from service. On a
reference, the labour court invoked its jurisdiction under section 11-A and held
that even though the respondent was guilty of misconduct, it directed
reinstatement with continuity of service but without back wages. On a writ
petition, the single judge of the High Court set aside the award. On a letters
patent appeal the division bench reversed the award of the single judge.
Thereupon an appeal was filed before the Supreme Court. The Court relied upon
its earlier decision in Karnataka State Road Transport Corporation v. B S
Hullikatti160 and held that in such cases where the bus conductors carry
passengers without ticket or issue tickets at a less rate than the proper rate, the
said acts would, inter alia, amount to either being a case of dishonesty or of
gross negligence and such conductors were not to be retained in service because
such inaction or action on the part of the conductors results in financial loss to
the Corporation. The Court accordingly held that the order of dismissal should
not be set aside. The Court remarked that although under Section 11-A, the
labour court has jurisdiction and power to interfere with the quantum of
punishment, the discretion has to be used judiciously. When the main duty or
function of the conductor is to issue tickets, collect the fare and deposit the same
with the Road Transport Corporation. In the event of his failure to do so, it will
be misplaced sympathy to order his reinstatement instead of dismissal. The
Court accordingly set aside the order of the division bench and restored the order
of the single judge.
In UP State Road Transport Corporation v. Vinod Kumar161, a
workman was found carrying passengers without issuing tickets. The
management, after holding a domestic inquiry, terminated his services.
Thereupon, the workman raised an industrial dispute in which he challenged the
conclusion arrived at by the inquiry officer as also the punishment awarded to
him by the disciplinary authority. However, the labour court held that the charge
of misappropriation had not been proved and thus, punishment of removal from
service was harsh. It therefore, held that the removal be substituted by stoppage
of one increment without any cumulative effect and directed him to be reinstated
with full back wages. On a writ petition filed by the management, the High
Court confirmed the order of reinstatement but instead of full back wages, it
ordered 50 per cent of the back wages. In an appeal before the Supreme Court
against this order, the Court held that since the respondent had not challenged
the correctness or the legality of the inquiry conducted, it was not open to the
labour court to go into the findings recorded by the inquiry officer regarding the
misconduct committed by the workman. The Court observed that it is a well-
settled legal position that punishment of removal/dismissal is the appropriate
punishment for an employee found guilty of misappropriation of funds; and the
court should be reluctant to reduce the punishment on misplaced sympathy for a
workman. The Court also held that there was nothing wrong in the employer
losing confidence or faith in such an employee and awarding punishment of
dismissal. The Court reiterated that there is no place for generosity or misplaced
sympathy on the part of judicial forums and interfering with the quantum of
punishment. The Court accordingly set aside the judgement of the High Court as
well as the award of labour court and restored the order of removal from service
ordered by the disciplinary authority.
In Divisional Manager, Rajasthan SRTC v. Kamruddin162, a conductor
employed by the Rajasthan State Roadways Corporation during his probationary
period of two years was charged for carrying passengers without tickets on not
less than five occasions for which he was given warnings. He was again found
guilty of not issuing tickets to two passengers and carrying large quantities of
luggage. The management, after holding a departmental inquiry, terminated his
services. He then raised an industrial dispute which was referred to the labour
court. The court found the inquiry to be in order but held that the punishment
was disproportionate to the gravity of the misconduct. It accordingly substituted
the order of termination to stoppage of two increments with cumulative effect
and ordered his reinstatement with continuity in service but without back wages.
The award of the labour court was upheld by the High Court. Against this order,
a special leave to appeal was filed before the Supreme Court. Dealing with the
case, the Court referred to its earlier decision in Karnataka SRTC v. B D
Hullikatti163 and Rajasthan SRTC v. Ghamshyam Sharma164 and observed that
it is now a settled legal position that if a conductor of a corporation whose main
duty or function is to issue tickets, collect fare and deposit the same with the
corporation was either dishonest or so grossly negligent in performing his duty,
he was not fit to be retained as a conductor whose acts of omission and
commission were bound to cause financial loss to the corporation. It felt that
such a workman should be shown the door. The Court also pointed out that it
would be misplaced sympathy to award him lesser punishment. It therefore,
restored the order of termination of service by the management and set aside the
award of the labour court. It observed that even though the power of the labour
court or industrial tribunal in terms of Section 11-A of the IDA to interfere with
the quantum of punishment cannot be denied, but it is also a well-settled
principle of law that the said power has to be exercised judiciously.
In UP State Road Transport Corporation v. Nanhe Lal Kushwaha165,
the respondent who was employed as a bus conductor by the corporation was
charged for carrying passengers without tickets on six occasions. The
management, after holding a departmental inquiry, removed him from service.
He then raised an industrial dispute. The labour court found him guilty on two
occasions. It therefore, directed reinstatement with 75 per cent back wages.
Against this order, the management filed a writ petition before the Allahabad
High Court which, without assigning any cogent reason, modified the award to
the extent that no back wages shall be payable to the workman. Thereupon, the
management filed an appeal before the Supreme Court. The Supreme Court,
relying on its earlier decision in UP SRTC v. Hoti Lal166, observed that the
conductor was holding a position of trust and acting in a fiduciary capacity. The
misconduct was serious and could not be dealt with leniently as was done both
by the labour court and the High Court. The Court also deprecated the practice
followed by high courts in disposing of writ petitions without assigning any
cogent reason. It observed that the labour courts should not ordinarily interfere
with the discretion exercised by employers in awarding punishment despite the
wide discretion given to them under Section 11-A of the IDA. The Court
observed that it was not the amount of loss to the corporation which was material
for determining the quantum of punishment. It accordingly set aside the award of
the labour court and the judgement of the High Court and affirmed the order of
the management.
In the same year, the above issue was again raised in UPSRTC v. Suresh
Chand Sharma167. In this case, the respondent was a conductor with UP
Roadway Transport Corporation and was found carrying 13 passengers without
tickets on 24 May 1987. Again on 10 May 1988, he was found carrying 10
passengers without tickets. On both occasions, he had recovered the fare from
them. The management, after holding an inquiry, dismissed the respondent. The
workman then preferred a departmental appeal which was rejected. He then
raised an industrial dispute which was referred by the appropriate government to
the labour court for adjudication. The labour court held that the inquiry had been
held strictly in accordance with law and both charges in respect of the two
incidents were found duly proved. Therefore, the employee was not entitled to
any relief whatsoever.
Being aggrieved, the employee challenged the award by filing a writ
petition before the Allahabad High Court. The High Court allowed the petition
partly and directed the reinstatement of the employee without back wages.
Thereupon, the appeal was filed before the Supreme Court. The Supreme Court
found that the High Court had decided the writ petition only on the ground that
the passengers were found without tickets and the cash was with the employee
when checked. No other reasoning whatsoever was given by the court. The
Supreme Court referred to the decision in State of Haryana v. Rattan Singh
wherein it has categorically held that the only right of a delinquent employee is
that he must be informed as to what are the charges against him and he must be
given full opportunity to defend himself on the said charges. However, the Court
rejected the contention that inquiry report stood vitiated for not recording the
statement of the passengers who were found travelling without tickets.
In view of the above, the Court held that the reasoning given by the High
Court cannot be sustained in the eyes of law. The Court added that the High
Court is under an obligation to give not only the reasons but cogent reasons
while reversing the findings of fact recorded by a domestic tribunal. In case the
judgement and order of the High Court is found not duly supported by reasons,
the judgement itself stands vitiated.
The Court also rejected the contention of the employee that for
embezzlement of such a petty amount, punishment of dismissal could not be
justified for the reason that it is not the amount embezzled by a delinquent
employee but the intention to misappropriate public money. In view of the
above, the Court set aside the judgement and order of the High Court.
An examination of the aforesaid decisions reveals that the courts have
taken non-issuance of tickets by conductors to be a case of serious misconduct
and maintained the punishment of dismissal awarded by managements. It is
hoped that this line of approach would deter employees from committing such
misconduct and would also help in maintenance of discipline.
2. Misplacement of File
Section 11-A of the Industrial Disputes Act, 1947 empowers the labour court to
evaluate severity of misconduct and to assess whether the punishments imposed
by the employer are commensurate with the gravity of misconduct. The Supreme
Court in Dev Singh v. Punjab Tourism Development Corporation Ltd168 had an
opportunity to delineate the scope of interference under Section 11-A. In this
case, the Punjab Tourism Development Corporation terminated the services of
an employee (who served the corporation for about 20 years with unblemished
service) for mere misplacement of a file. Such misplacement of file was not
proved to be a deliberate act with ulterior consideration, but was at the most an
act of negligence. On these facts, the Supreme Court held that the punishment of
dismissal for mere misplacement of a file without any ulterior motive is too
harsh a punishment which is totally disproportionate to the misconduct alleged
and the appellant be imposed a punishment of withholding of one increment
including stoppage in substitution of the punishment of dismissal awarded by the
disciplinary authority. Dealing with the general principle of interference, the
Court ruled that normally courts will not interfere with the punishment as
imparted by the disciplinary/appellate authorities but when it shocks the
conscience of the Court, it can mould the relief in exceptional cases which
should be supported with cogent reasons.
3. Assault of Senior Officer
In India Railways Construction Co. Ltd v. Ajay Kumar169, an employee on
probation allegedly assaulted a senior officer along with others and ranasacked
the office by creating chaotic conditions. The employer, therefore terminated his
service without holding an inquiry. On these facts, the Supreme Court laid down
the following principles:
(i) It is fairly well settled that the power to dismiss an employee by
dispensing with an inquiry is not to be exercised so as to circumvent the
prescribed rules. The satisfaction as to whether the facts exist to justify
dispensing with inquiry has to be of the disciplinary authority. Where two
views are possible as to whether holding of an inquiry would have been
proper or not, it would not be within the domain of the Court to substitute
its view for that of the disciplinary authority as if the Court is sitting as an
appellate authority over the disciplinary authority. The contemporaneous
circumstances can be duly taken note of in arriving at a decision whether
to dispense with an inquiry or not. What the High Court was required to
do was to see whether there was any scope for judicial review of the
disciplinary authority's order dispensing with inquiry. The focus was
required to be on the impracticability or otherwise of holding the inquiry.
(ii) An employee, even if he claims to be a member of the employees’ union,
has to act with a sense of discipline and decorum. Presentation of
demands relating to employees cannot be exhibited by muscle power. It
must be borne in mind that every employee is a part of a functioning
system, which may collapse if its functioning is affected improperly. For
smooth functioning, every employer depends upon a disciplined
employees' force. In the name of presenting demands they cannot hold the
employer to ransom. The employer has a duty to look into as as far as
practicable and obviate the genuine grievances of the employees. The
working atmosphere should be cordial, as that would be in the best
interest of the establishment. Unless an atmosphere of cordiality exists,
there is likelihood of inefficient working and that would not be in the
interest of the establishment and would be rather destructive of common
interest of both employer and employees.
(iii) The alleged acts are prima facie acts of misconduct. Therefore, the
employer can legitimately raise a plea of losing confidence in the
employee, warranting his non-continuance in the employment. The time
gap is another significant factor.
The Court accordingly held that compensating in lieu of reinstatement with back
wages would be appropriate relief to the employee, more so when he has lost the
confidence of management.
In Muriadih Colliery BCC Ltd v. Bihar Colliery Kamgar Union170, the
workman assaulted the senior officials and hampered discharge of their duties.
On these facts, the Supreme Court referring to its earlier decisions observed:
The courts below by condoning an act of physical violence have
undermined the discipline in the organization, hence, in the
above factual backdrop, it can never be said that the industrial
tribunal could have exercised its authority under Section 11-A of
the Act to interfere with the punishment of dismissal.
In M P Electricity Board v. Jagdish Chandra Sharma171, the respondent, an
employee working as a muster-roll labourer in the MP Electricity Board
(appellant) while in employment allegedly assaulted a superior officer in the
presence of other employees with a tension screw on his back and nose, which
resulted in fracture of the nose and severe bleeding. This incident was followed
by unauthorized absence from work for several days. The management after
holding a domestic inquiry terminated his services. The respondent-employee
raised an industrial dispute. The appropriate government referred the dispute to
the labour court for adjudication. The labour court, though did not disagree with
the finding of the inquiry on the inflicting of injuries on the superior officer or
on the unauthorized absence and the consequent violations of the service rules,
took the view that the punishment of termination inflicted on the employee was
punnitive in nature. According to the court, the employee who had been kept out
of service till the date of the decision was enough punishment in the
circumstances. Therefore, exercising its power under Section 107-A of the
Madhya Pradesh Industrial Relations Act, 1906, which corresponds to Section
11-A of the Industrial Disputes Act, the labour court set aside the punishment of
termination and ordered reinstatement of the employee but without back wages.
Thereupon, the employer filed an appeal before the industrial court challenging
the labour court's interference with the punishment imposed by the employer.
The employee also filed an appeal challenging the denial of back wages. The
industrial court held that the labour court acted illegally and perversely in
interfering with the punishment awarded on the findings at the inquiry accepted
by the labour court. Therefore, it set aside the order of the labour court and held
that the termination of service as a punishment was justified in the
circumstances.
Aggrieved by the decision of the industrial court, the employee filed a
writ petition in the High Court of Madhya Pradesh invoking Articles 226 and
227 of the Constitution. The High Court held that the charges against the
employee stood proved but since the labour court had decided to award a lesser
punishment, the same should not have been interfered with by the industrial
court. Thus, the High Court set aside the decision of the industrial court and
restored the decision of the labour court. Against this order, both the employer
and the employee challenged this decision of the High Court in an appeal by
special leave before the Supreme Court. While the employer has questioned the
interference with the punishment awarded, the employee questioned the denial
of back wages to him. The three-judge bench of the Supreme Court observed:
In the case on hand, the employee had been found guilty of
hitting and injuring his superior officer at the workplace,
obviously in the presence of other employees. This clearly
amounted to breach of discipline in the organization. Discipline
at the workplace in an organization like the employer herein, is
the sine qua non for the efficient working of the organization.
When an employee breaches such discipline and the employer
terminates his services, it is not open to a labour court or an
industrial tribunal to take the view that the punishment awarded
 is shockingly disproportionate to the charge proved. We have
already referred to the views of this Court. To quote Jack Chan:
‘discipline is a form of civilly responsible behaviour which
helps maintain social order and contributes to the preservation, if
not advancement, of collective interests of society at large.’
Obviously, the idea is more relevant in considering the working
of an organization like the employer herein or an industrial
undertaking. Obedience to authority in a workplace is not
slavery. It is not violative of one’s natural rights. It is essential
for the prosperity of the organization as well as that of its
employees. When in such situation, a punishment of termination
is awarded for hitting and injuring a superior officer supervising
the work of the employees, with no extenuating circumstance
established, it cannot be said to be not justified. It cannot
certainly be termed unduly harsh or disproportionate. The labour
court and the High Court in this case totally misdirected
themselves while exercising their jurisdiction. The industrial
court made the correct approach and came to the right
conclusion.
The Court therefore, allowed the appeal filed by the employer, set aside the
decision of the High Court, restored the decision of the industrial court and
thereby the punishment awarded by the employer was upheld. The appeal filed
by the employee was also dismissed.
In Hombe Gowda EDN Trust v. State of Karnataka172, the respondent, a
teacher, abused the head of the institution in filthy language and assaulted him
with a chappal. The management, therefore, dismissed the teacher. However, the
tribunal in place of dismissal ordered withholding of three increments. On
appeal, the Supreme Court held that punishment of dismissal from service
cannot be said to be wholly inadequate punishment. The Court also held that to
keep the appellant within the bounds of well disciplined conduct, a further
punishment is also called for and should be imposed so that our humanistic
approach may not induce him to repeat his intemperate performance. A person,
when dismissed from service, is put to great hardship but that would not mean
that a grave misconduct should go unpunished. Although the doctrine of
proportionality may be applicable in such matters, but a punishment of dismissal
from service for such a misconduct cannot be said to be unheard of. Maintenance
of discipline in an institution is equally important. Keeping the aforementioned
principles in view, we may hereinafter notice a few recent decisions of this
Court. It was added: ‘This Court has come a long way from its earlier view-
points. The recent trend in the decisions of this Court seeks to strike a balance
between the earlier approach of industrial relations wherein only the interest of
the workmen was sought to be protected with the avowed object of fast
industrial growth of the country. In several decisions of this Court, it has been
noticed that how discipline at the workplaces/industrial undertaking received a
set-back. In view of the change in economic policy of the country, it may not
now be proper to allow the employees to break discipline with impunity. Our
country is governed by rule of law. All actions, therefore, must be taken in
accordance with law. Law declared by this Court in terms of Article 141 of the
Constitution of India, as noticed in the decisions noted supra, categorically
demonstrates that the tribunal would not normally interfere with the quantum of
punishment imposed by the employers unless an appropriate case is made out
therefor. The tribunal, being inferior to this Court, was bound to follow the
decisions of this Court which are applicable to the fact of the present case in
question. The tribunal can neither ignore the ratio laid down by this Court nor
refuse to follow the same. The Court accordingly allowed the appeal.
4. Unauthorized Leave
A survey of decided cases reveals that the Supreme Court has taken a serious
view of absence on account of unauthorized leave.
In Delhi Transport Corporation v. Sardar Singh173, the Delhi Transport
Corporation initiated departmental proceedings against respondents who were
conductors on the ground of unauthroized long absence from duty, negligence of
duties and lack of interest in the employer's work. Such acts amounted to
misconduct under Paras 4 (11) and 19 (h) of the Standing Orders issued under
Para 15 (1) of the Delhi Road Transport Authority (Conditions of Appointment
and Service Regulation, 1952) which were applicable to respondents. After
having found the respondents-conductor guilty, the disciplinary authority
imposed punishment of dismissal/removal from service. Since an industrial
dispute was already pending before the industrial tribunal, the corporation filed
an application for approval of its action before the said tribunal under Section
33(2) (b) of the Industrial Dispute Act, 1947. The tribunal found that proper
inquiry was not held. It, therefore, granted opportunity to the corporation to
adduce further evidence to justify its action. The corporation, therefore, led
further evidence. But, the tribunal on consideration of materials brought before
it, held that absence from duty without leave, amounted to non-sanction of leave
and did not amount to misconduct. Thus, availing leave without pay also did not
amount to misconduct. In view of this, the tribunal refused to grant approval to
the action taken by the corporation, mainly on the ground that in most cases, the
leave was treated without pay and that being the position it cannot be said that
the absence was unauthorized. Against this order, the corporation preferred a
writ petition before the High Court. The single judge of the High Court held that
the disapproval by the tribunal was not in order. Thereupon, the respondent
conductors filed letters patent appeals before the Delhi High Court. The division
bench of the High Court affirmed the findings of the tribunal and reversed the
decision of the single judge. Aggrieved by this order, the corporation filed
appeals by special leave in the Supreme Court.
On these facts, the Supreme Court held :
(i) Mere making of an application after or even before absence from work
does not in any way assist the employee concerned. The requirement is
obtaining leave in advance. In all these cases, the absence was without
obtaining leave in advance.
(ii) When an employee absents himself from duty, even without sanctioned
leave for a very long period, it prima facie shows lack of interest in
work. Para 19(h) of the Standing Orders as quoted above relates to
habitual negligence of duties and lack of interest in the authority's work.
When an employee absents himself from duty without sanctioned leave,
the authority can, on the basis of the record, come to a conclusion about
the employee being habitually negligent in duties and exhibiting lack of
interest in the employer's work.
(iii) Ample material was produced before the tribunal in each case to show
as to how the employees concerned were remaining absent for long
periods which affects the work of the employer and the employee
concerned was required at least to bring some material on record to
show as to how his absence was on the basis of sanctioned leave and as
to how there was no negligence.
(iv) Habitual absence is a factor which establishes lack of interest in work.
There cannot be any sweeping generalization. But at the same time,
some telltale features can be noticed and pressed into service to arrive at
conclusions in the departmental proceedings.
(v) Conclusion regarding negligence and lack of interest can be arrived at
by looking into the period of absence, more particularly, when leave is
unauthroized.
(vi) Burden is on the employee who claims that there was no negligence
and/or lack of interest to establish it by placing relevant materials.
(vii) Clause (ii) of para 4 of the Standing Orders shows the seriousness
attached to habitual absence. In Clause (i) thereof, there is requirement
of prior permission. Only exception made is in case of sudden illness.
There also conditions are stipulated, non-observance of which renders
the absence unauthorized.
The Court, accordingly allowed these appeals and affirmed the view taken by the
single judge while reversing that of the division bench.
In State of Punjab v. Jagir Singh174, a driver in Punjab Roadways
absented himself from duty without applying for leave. He was asked to report
for duty by a registered letter but despite the same, he failed to report for duty. A
notice was therefore published in a newspaper stating the date by which he was
required to resume his duty. When he failed to do so even thereafter, the
management terminated his service on the ground of his being absent from duty.
Thereupon, the driver raised an industrial dispute and the labour court by an
award reinstated him with continuity of service and full back wages. On a writ
petition filed by the management, the High Court held that the workman was
entitled to 60 per cent of the back wages. Aggrieved by this both the state and
workman filed special leave to appeal petitions in the Supreme Court. The
Supreme Court held that the finding of the labour court were incorrect and self-
contradictory and it had failed to consider the conduct of the workman in not
joining duty despite having been asked to do so by a registered letter as well as
publication of a notice in the newspapers.
The aforesaid view was reiterated in New India Assurance Co. Ltd. v.
Vipin Behari Srivastava175. Here, the respondent-workman remained absent
unauthroizedly for more than 600 days. The management after holding
departmental inquiry removed the workman. Thereupon, the workman raised an
industrial dispute which was referred to the tribunal. The tribunal held that the
respondent was suffering from tuberculosis and had applied for medical leave
but management took no action. It, therefore, granted reinstatement. On a writ
petition, the High Court upheld the order of the tribunal. On appeal, the Supreme
Court noticed that ‘no leave was due and even leave without pay cannot be
granted’. The Court reiterated its earlier view and ruled:
(i) Mere sending of an application for grant of leave much after the period of
leave was over as also the date of resuming duties cannot be said to be a
bona fide act on the part of the workman. The bank, as noticed
hereinbefore, in response to the lawyer's notice categorically stated that
the workman had been carrying on some business elsewhere.
(ii) Only because on a later date an application for grant of medical leave was
 filed, the same ipso facto would (not) put an embargo on the exercise of
the jurisdiction of the bank from invoking clause 2 of the bipartite
settlement.
(iii) The Court evolved the new concept of limited inquiry in a case of this
nature. The principles of natural justice were required to be complied with
but the same would not mean that a full-fledged departmental proceeding
was required to be initiated. A limited inquiry as to whether the employee
concerned had sufficient explanation for not reporting for duty after the
period of leave had expired or failure to resume duty when asked to do so
would suffice.
The Court accordingly set aside the order of the tribunal and the High Court.
The aforesaid decision requires a careful examination. It is true that ‘mere
sending of application for grant of leave’ cannot amount to grant of leave but in
an exceptional situation where the workman suffering from tuberculosis applied
for medical leave, the above principle cannot be applied. Further, doctrine of
limited inquiry should also not be extended in this situation.
However in Jagdish Singh v. Punjab Engineering College176, the
Supreme Court while dealing with a case of unauthorized absence appears to
have been influenced by sympathy when it held that it was a case of violation of
discipline and not of ‘gross violation of discipline’ and it is a case of
unauthorized absenteeism but ‘not a case of habitual absenteeism’.
In this case, the appellant was working as a sweeper in Punjab
Engineering College. He remained absent unauthorizedly for 7 days in February
2004 and 9 days in March 2004. The management, after holding an inquiry,
dismissed the workman. Thereupon, he filed a writ petition before the High
Court challenging the order of dismissal. The High Court dismissed the petition.
Aggrieved by the order, the appellant filed an appeal before the Supreme Court.
It was contended by the appellant that the punishment imposed by the
disciplinary authority was disproportionate to the gravity of misconduct,
especially in view of the explanation offered by the appellant for his
unauthorized absence for a few days and lesser punishment would meet the ends
of justice. On the other hand, the respondent submitted that unauthorized
absence is a serious misconduct and the said charge having been proved against
the employee, the disciplinary authority was justified in imposing a major
penalty of dismissal from service. Dealing with the case, the Supreme Court
observed:
The instant case is not a case of habitual absenteeism. The
 appellant seems to have a good track record from the date he
joined service as a sweeper. In his long career of service, he
remained absent for 15 days on four occasions in the months of
February and March, 2004. This was primarily to sort out the
problem of his daughter with her in-laws. The filial bondage and
emotional attachment might have come in his way to apply and
obtain leave from his employer. The misconduct that is alleged,
in our view, would definitely amount to violation of discipline
that is expected of an employee to maintain in an establishment,
but may not fit into the category of gross violation of discipline.
We hasten to add that if it was habitual absenteeism, we would
not have ventured to entertain this appeal.
The Court accordingly allowed the appeal and set aside the order of the
disciplinary authority affirmed by the High Court. The Court held that taking the
totality of facts and circumstances of the case and having due regard to
unblemished record of the appellant and the reasons for which he remained
absent without obtaining permission; the end of justice would be met if the
punishment imposed by the disciplinary authority is modified to stoppage of two
increments with cumulative effect and further declare that he would not be
entitled to any monetary benefits during the period he was out of service but that
period would be counted only for the purpose of his service benefits.
Regional Manager, Bank of Baroda v. Anita Nandrajog177 saw irresponsible
behaviour of the bank employee to remain on unauthorized leave ‘whenever she
liked and for whatever period she liked’. In this case, respondent number 2
remained absent from duty on two occasions, i.e. from 4 August 1986 to 29
March 1987 and again from 20 September 1987 to 10 April 1988 (more than 266
days), but the petitioner bank condoned the aforesaid acts of absence for leaving
the country without permission. She again left for Libya on 22 August 1988
without permission and without sanctioned leave. She did not resume her duties
for more than 150 consecutive days. The petitioner bank therefore invoked the
provisions of clause 17(b) of the Fifth Bipartite Settlement and issued notice to
her to report for duty within 30 days, failing which it would be presumed that
she had voluntarily retired from the service of the bank. But she did not report
for duty and instead send two letters to the bank in which she stated that she
would be resuming duty in the last week of August 1989 and in the second letter,
she requested for extension of leave without pay up to April 1990 on the ground
of her domestic problems. Despite her letter, she did not resume duty in the last
week of August 1989. Through communication dated 25 August 1989, the
petitioner bank treated the respondent as having voluntarily terminated her
employment, and asked her to approach the authority concerned for claiming
terminal benefits. Aggrieved by this order, the respondent approached the
ministry of labour, Central Government which referred the dispute to the labour
court for adjudication. The tribunal held that the termination order was illegal
and unjustified. Against the order of the tribunal, the bank filed a writ petition in
Allahabad High Court which was dismissed. Thereupon, the bank filed a special
leave petition before the Supreme Court.
The main contention on behalf of the respondent employee before the
tribunal and the high court was that she was neither given any charge-sheet nor
was any inquiry held regarding her misconduct of being absent without leave,
and hence the order dated 25 August 1989 was illegal and against the principles
of natural justice. On the other hand, the contention on behalf of the bank was
that no inquiry was necessary since clause 17(b) of the Fifth Bipartite Settlement
dated 10 April 1989 was being invoked. The Supreme Court observed that the
management had been extremely lenient to the respondent by condoning her
absence without leave on the first occasion for a period of about 7 months.
‘However, the respondent thought that she could do whatever she liked for
whatever period she liked.’ She again sent an application for leave for 60 days
which was not sanctioned. However, she remained absent without leave and kept
sending letters for extension of leave although she was on unauthorized absence.
In the bank’s letter, it was clearly mentioned in clause 4 that the
respondent did not have any leave remaining to her credit yet she had remained
on unauthorized leave for a period of more than 150 days continuously and it
appeared she had no intention of joining duty. She was asked to report for duty
within 30 days, failing which it would be deemed that she had taken voluntary
retirement from service. In reply, she wrote a letter that she will be joining duty
in the last week of August 1989 but she wrote another letter for extension of
leave till April 1990 on account of domestic problems. In view of this, the Court
remarked that such behaviour on the part of an employee is clearly unfortunate
and highly improper.
The Court referred to clause 17(b) of the Bipartite Settlement and
observed that if an employee is absent without leave for more than 150 days and
has no more leave to his/her credit, then the bank can validly order voluntary
cessation of employment. Further, under clause 17(b), when the management is
reasonably satisfied that the employee has no intention of joining duty, it may
call upon the employee to report for duty within 30 days failing which action can
be taken. Such a notice was given by the bank but the respondent wanted leave
till April 1990, i.e. for another 8 months. The Court found that she had no
intention of resuming duty within 30 days. The Court accordingly held that the
action of the bank in terminating her service on the ground of voluntary
cessation of employment was valid. The appeal was accordingly allowed.
The aforesaid judgement is more in conformity with Syndicate Bank v.
General Secretary, Syndicate Bank Staff Association178 and Aligarh Muslim
University v. Mansoor Ali Khan179.
In contrast to the aforesaid decisions, the Supreme Court in Chairman-
cum-Managing Director, Coal India Ltd v. Mukul K Choudhuri180, took a
different line of approach. Here, the respondent, after expiry of sanctioned leave
for 14 days, did not report for duty and despite reminders, remained absent for 6
months without any authorization. Thereupon, the management initiated
disciplinary inquiry against him under rule 29 of the Coal India Executives
Conduct, Discipline and Appeal Rules, 1978 for misconduct on his part by (i)
absenting himself without leave, (ii) overstaying the sanctioned leave for more
than 4 consecutive days and (iii) desertion of job and failure to maintain integrity
and devotion to duty. During pendency of inquiry, the respondent sent a letter of
resignation which was not accepted by the management. Accordingly, he joined
duty. He also appeared before the inquiry officer and admitted the charges
levelled against him. The inquiry officer held that the delinquent was guilty of
the charges mentioned in the charge-sheet. Upon receipt of the inquiry report, a
second show-cause notice was issued. The delinquent was asked to show cause
as to why the punishment of termination of service be not awarded to him. A
copy of the inquiry report was sent along with the second show-case notice. Not
satisfied with his explanation, he was removed from service with immediate
effect. He then pursued departmental remedy but without any success.
Thereupon, he filed a writ petition with the High Court. The single judge of the
High Court directed the reinstatement of the respondent without back wages but
with continuous service, without any break and without affecting his seniority.
On appeal, the division bench, besides reinstatement, held that he was entitled to
back wages from the year 2000 until reinstatement. Against this order, an appeal
was filed before the Supreme Court. The Court held that where the misconduct
of the delinquent was unauthorized absence from duty for 6 months but upon
being charged of such misconduct, he fairly admitted his guilt and explained the
reason for his absence by stating that he did not have any intention nor desire to
disobey the order of higher authority or violate any of the company’s rules and
regulations; but the reason was purely personal and beyond his control and as a
matter of fact, he sent his resignation which was not accepted. The order of
removal cannot be held to be justified, since no reasonable employer would have
imposed extreme punishment of removal in like circumstances. The Court felt
that the punishment is not only unduly harsh but grossly in excess of the
allegations. The Court, therefore affirmed the order of reinstatement but without
back wages for the entire period by way of punishment for the proved
misconduct of unauthorized absence for 6 months.
It is difficult to reconcile the aforesaid decision with other decisions of
the Supreme Court discussed above. It is surprising that the Court even did not
mention its earlier decisions.
5. Consequences of Persistent Refusal to Join Duty at the Transferred Place
In Viveka Nanda Sethi v. Chairman, J&K Bank181, the workman was a cashier-
cum-clerk. He was transferred to Kolkata but he did not join. After issuing a
show-cause notice and taking a lenient view, he was transferred to Amritsar,
then to Simla and again to Amritsar. He applied for leave for 28 days which was
sanctioned. A further leave for 9 days was also sanctioned. He again applied for
1 month’s leave although he had only 25 days of accumulated leave and his
leave account had already been debited by 50 days’ medical leave. Despite the
expiry of the period of leave, he did not join. An explanation was called and he
was asked to join duty immediately. A show-case notice was therefore, served
on him, where under he was intimated that in the event of his failure to resume
duty by 15 January 1984, he would be deemed to have discharged from the
service of the bank. In reply, a telegram was received from another person
saying that the said workman was unwell and would not join on the said date. He
again applied for medical leave on 15 February 1984, i.e., one month after the
telegram. The bank dispensed with his services invoking bipartite settlement. A
legal notice was served by the workman on the bank asking for reinstatement.
Conciliation proceedings were initiated and later a reference was made by the
Central Government. The CCIT ordered reinstatement without back wages.
Thereupon, a writ petition was filed by the bank and also by the workman for
grant of back wages. Both the single judge and the division bench held that it
was obligatory on the part of the bank to conduct full-fledged departmental
proceedings. However, the High Court dismissed the petition of the workman.
Thereupon, he filed an appeal before the Supreme Court. The Supreme Court
ruled:
(a) It may be true that in a case of this nature, the principles of natural justice
were required to be complied with but the same would not mean that full-
fledged departmental proceedings were required to be initiated. A limited
inquiry as to whether the employee concerned had sufficient explanation
 for not reporting for duty after the period of leave had expired or failure
on his part on being asked to do so, amount to sufficient compliance with
the requirements of natural justice.
(b) Mere sending of an application for grant of leave much after the period of
leave was over cannot be said to be a bona fide act.
(c) The workman’s appeal under 17-B cannot be entertained as he did not file
an affidavit.
The Court accordingly allowed the appeal of the bank that the workman should
be dismissed.
In Novartis India Ltd v. State of West Bengal182, the management
dismissed an employee for not joining the place to which he had been transferred
without holding a domestic inquiry. The court held that the same was hit by
principles of natural justice and such dismissal could only be effected after
holding a domestic inquiry/disciplinary proceedings. However, the Supreme
Court ruled:
When an employee does not join at his transferred place, he
commits a misconduct. A disciplinary proceeding was,
therefore, required to be initiated. The order of discharge is not a
substitute for an order of punishment. If an employee is to be
dismissed from service on the ground that he had committed a
misconduct, he was entitled to an opportunity of hearing. Had
such an opportunity of hearing been given to him, he could have
shown that there were compelling reasons for his not joining at
the transferred place. Even a minor punishment could have been
granted.
In Kallakurichi Taluk Cooperative Housing Society Ltd v. M Maria Soosai183,
the respondent joined the post to which he had been transferred but thereafter,
unilaterally stopped coming to work without submitting any leave application or
prior intimation and that too not for a few days but for many months. Despite the
maximum latitude shown to him by allowing him to rejoin duty in the appellant
society, the respondent again failed to report for work. As a result, he was placed
under suspension and a domestic inquiry was conducted in which he was found
guilty of the charges brought against him. However, the High Court ordered
reinstatement which was complied with by the management. On appeal, the
Supreme Court observed:
It is, in fact, surprising as to why a decision was taken to
 consider his case on a compassionate basis despite lapses of his
own making. The decision of the appellant society to reappoint
respondent 1 on compassionate grounds leading to the order of
the registrar (housing) dated 27 July 1995, permitting the
appellant society to reappoint him was in itself a concession
made to respondent 1 which he missed subsequently.
The Court held that in such circumstances, the judgement and order of the
division bench of the High Court cannot be sustained and must necessarily be set
aside. ‘However, having regard to the fact that a domestic inquiry was conducted
against respondent 1 in which he was found guilty, we do not propose to
interfere with that part of the order impugned directing reinstatement, but we are
not inclined to maintain the order of the division bench of the High Court
regarding payment of back wages.’
6. Abusing and Threatening a Superior Officer
In Rama Kant Mishra v. State of UP184, the workman was charge-sheeted for
abusing an official saying, ‘Are these persons your father? I will make you
forget your high-handedness either here or somewhere else.’ On these facts, the
Supreme Court ruled that the labour court has jurisdiction and power to interfere
when it finds that the order of discharge/dismissal was not justified. The Court
directed reinstatement with back wages but withheld two increments.
In Ved Prakash Gupta v. M/s Delton Cable India Ltd185, the workman,
besides other charges, was also guilty of abusing in filthy manner/language,
namely ‘You may go to Vijay Kumar or Ram Kumar’. On these facts, the
Supreme Court held that the charges levelled against him were not serious and it
was not known how these charges would result in total loss of confidence of the
management. The Court accordingly directed reinstatement.
In B C Chaturvedi v. Union of India186, the three-judge bench of the
Supreme Court held that under Section 11-A, the High Court’s interference is
permissible only when the punishment/penalty is shockingly disproportionate.
In UP State Road Transport Corporation v. Subhash Chandra
Sharma187, the charge against the respondent was that in a drunken state, he
along with the conductor went to the assistant cashier in the cash room of the
appellant and demanded money from him. When the assistant cashier refused,
the respondent abused him and threatened to assault him. On these facts, the
Supreme Court observed that, ‘It was certainly a serious charge of misconduct
against the respondent. In such circumstances, the labour court was not justified
in interfering with the order of removal of the respondent from service when the
charge against him stood proved. Rather we find that the discretion exercised by
the labour court in the circumstances of the present case was capricious and
arbitrary and certainly not justified. It could not be said that the punishment
awarded to the respondent was in any way “shockingly disproportionate” to the
nature of charges proved against him. In our opinion, the High Court failed to
exercise its jurisdiction under Article 226 of the Constitution and did not correct
the erroneous order of the labour court which, if allowed to stand, would
certainly result in miscarriage of justice.’
In Kailash Nath Gupta v. Inquiry Officer (R K Raj), Allahabad Bank188,
the Supreme Court went a step further when it said that the power of interference
of tribunal with the quantum of punishment awarded by the management is
extremely limited.
In Mahindra & Mahindra Ltd v. N B Naravada189, the respondent
workman used abusive and filthy language against his supervisor. Thereupon,
the management, after holding a domestic inquiry, terminated his service. The
labour court came to the conclusion that under Section 11-A, the punishment
was harsh and improper and deserved to be set aside. It therefore, directed
reinstatement with continuity of service but with 2/3rd of the back wages. On a
writ petition, a single judge of the High Court dismissed the petition. On appeal,
the division bench of the High Court also dismissed the petition. Thereupon, the
management filed an appeal before the Supreme Court. The Supreme Court
reversed the judgements of the lower courts and ruled:
1. The discretion vested in the labour court under Section 11-A is not
unlimited.
2. The discretion which can be exercised under Section 11-A is available on
existence of certain factors, namely: (i) punishment being
disproportionate to the gravity of misconduct so as to disturb the
conscience of the court, (ii) the existence of any mitigating circumstances
which require reduction of the sentence, or (iii) the past conduct of the
workman which may persuade the labour court to reduce the punishment.
3. In the absence of any such factor, the labour court cannot by way of
sympathy alone exercise power under Section 11-A and reduce the
punishment.
4. Punishment of dismissal for using abusive language cannot be held to be
disproportionate.
5. The language used by the workman is such that it cannot be tolerated by
any civilized society. Use of such abusive language against a superior
 officer, that too not once but twice, in the presence of subordinates
cannot be said to be indiscipline calling for lesser punishment.
The Court accordingly set aside the order of lower courts and upheld the
dismissal order of the disciplinary authority.
In L K Verma v. HMT Ltd190, the Supreme Court ruled:
1. As regards the quantum of punishment, suffice it to say that verbal
abuse has been held to be sufficient for inflicting a punishment of
dismissal.
2. Once the appellant accepted that he made utterances which
admittedly lacked civility and he also threatened a superior officer,
it was for him to show that he later on felt remorse. If he was under
tension, at a later stage, he could have at least tendered an apology.
Furthermore, witnesses were examined and the charges were
proved.
3. An order of suspension may be passed by the employer by way of
punishment in terms of conduct rules in exercise of its inherent
power in the sense that he may not take any work from the
delinquent officer who may be paid only the subsistence allowance
specified therein.
In Biecco Lawrie Ltd v. State of West Bengal191, the respondent, a mazdoor in
the switch gear works, was charge-sheeted for instigation, insubordination and
using of abusive language against his superiors which was a major misconduct
under the standing orders of the appellant company. The respondent, through a
letter, admitted to all the charges and sought condonation and mercy attributing
his acts to his mental illness. However, his plea was rejected by the company on
the ground that he had been charged on an earlier occasion also on similar
misconduct and was given a chance to make amends. On inquiry, the inquiry
officer held that the respondent was guilty of major misconduct. After
consideration of the report of the inquiry officer, the disciplinary authority
dismissed him from service. Thereupon, he raised an industrial dispute which
was referred to the tribunal. The tribunal held that there was violation of
principles of natural justice. It heard the matter afresh on merits. The tribunal on
consideration of the inquiry report and evidence on record affirmed the order of
the disciplinary authority. Thereupon, the respondent approached the High Court
which set aside the order of the tribunal by holding that the charge of using
abusive language was not specific and was vague. It accordingly remitted the
matter to the tribunal for reconsideration on the basis of existing evidence only
with respect to the charge of disobedience. The decision was affirmed by the
division bench of the High Court. The management then filed an appeal before
the Supreme Court. The Court observed that the general trend of judicial
decisions is to minimize interference when punishment is not harsh for charges
that are levelled against a respondent and in the instant matter, dismissal is
definitely not shocking to the conscience of the Court. It added that the High
Court misused the power vested in it by remanding the matter back to the
industrial tribunal for reconsideration when the charges were found proved. The
tribunal also erred by reversing its own decision.
Dealing with the argument that the work assigned to the respondent was
not a part of his job, the Court observed that even if it is accepted, it does not
entitle him to abuse his position and create an unhealthy atmosphere where the
remaining workers might just take a clue from the unruly behaviour and
subsequently use it to the detriment of the company. Further, the letter by which
he accepted all the charges sets up strong proof against the respondent beyond
which nothing remains to be analysed. The Court accordingly, set aside the order
of the High Court and restored the order of dismissal passed against the
respondent.
7. Sleeping while on Duty
In Bharat Forge Co. Ltd v. Uttam Manohar Nakate192, the respondent who was
working as helper in the Bharat Forge Co. Ltd, was found sleeping on an iron
plate in the first shift at his work place. The management therefore, initiated
disciplinary proceedings against him in terms of the standing order 24(1) of the
model standing orders framed under the Industrial Employment (Standing
Orders) Act, 1946. He was found guilty in the said domestic inquiry. The
management accordingly dismissed him from service. On a dispute being raised,
the labour court held that the punishment of dismissal imposed upon the
employee was harsh and disproportionate and no reasonable employer could
impose such punishment for the proved misconduct. The tribunal therefore
directed the management to reinstate the respondent employee on his original
post with continuity of service with 50 per cent back wages for the period of his
dismissal. Aggrieved and dissatisfied, both parties preferred separate revision
applications before the industrial tribunal. By a common judgement, the revision
application filed by the appellant was allowed and the respondent was dismissed.
The respondent thereupon filed a writ petition before the Bombay High Court
and by reason of the judgement and order, the said writ petition was dismissed.
On a letter patent appeal, the High Court quashed and set aside the order of the
single judge as also of the industrial court and directed the employer to pay a
sum of ₹2,50,000 to the employee within one month from the date of order.
Thereupon, the management filed an appeal before the Supreme Court. The
Court ruled:
It is trite that the labour court or the industrial tribunal, as the
case may be, in terms of the provisions of the Act, must act
within the four corners thereof. The industrial courts would not
sit in appeal over the decision of the employer unless there
exists a statutory provision in this behalf. Although its
jurisdiction is wide, but the same must be applied in terms of the
provisions of the statute and no other.
If the punishment is harsh, albeit a lesser punishment may be
imposed, but such an order cannot be passed on an irrational or
extraneous factor and certainly not on compassionate ground.
The Court accordingly set aside the order of the lower court.
8. Gheraoing the Manager and Causing Damage to the Property
In Management of Krishnakali Tea Estate v. Akhil Bharatiya Chah Mazdoor
Sangh193, the workmen concerned entered the estate armed with deadly
weapons with a view to gherao the manager and others and in that process, they
caused damage to the property of the estate. They wrongfully confined the
manager and others from 8.30 pm on 12 October to 3 am the next day. On these
facts, the Supreme Court held that these charges are grave enough to attract the
punishment of dismissal even without the allegation of extortion. The Court
added that the fact that the management entered into a settlement with some of
the workmen who were also found guilty of the charge, would not in any manner
reduce the gravity of the misconduct with regard to the workmen concerned
because these workmen did not agree with the settlement to which others agreed.
9. Fraud and Corruption
In State Bank of India v. Bela Bagchi194, the bank employee was charge-
sheeted for gross misconduct as he had colluded with one of the branch
managers and enabled grant of fictitious loan to Ramkrishna while the real
beneficiary was named Raghav. The employee was dismissed after an inquiry.
The single judge and division bench of the High Court ordered reinstatement.
The Supreme Court ruled that it is for the disciplinary authority and not for the
court to decide as to which punishment should be imposed on a delinquent who
has admitted his misconduct. The Supreme Court has held in a series of cases
that employees have to exercise a higher degree of honesty and integrity. The
Court also held that the bank employee concerned with the deposits of customers
of the bank cannot be permitted to tinker with the deposits in any manner.
In Damoh Panna Sagar Rural Regional Bank v. Munna Lal Jain195,
the manager of a bank who had indulged in unauthorized withdrawals,
subsequently returned the amount with interest. Yet, the Supreme Court held that
this conduct of unauthorized withdrawals amounted to a serious misconduct.
In General Manager (P), Punjab and Sind Bank v. Daya Singh196, the
respondent who was working as manager was found on vigilance inspection to
have disbursed some 20 loans to the tune of ₹16.48 lakh to some persons against
FDRs which were in the names of other persons. The management, after holding
a domestic inquiry, dismissed the respondent. However, the High Court set aside
the order of dismissal and directed reinstatement. On appeal, the Supreme Court
held that there was clear documentary evidence on record in the handwriting of
the respondent which established his role in the withdrawal of huge amounts for
fictitious persons. The ledger entries also showed that whereas the FDRs were in
one name, the withdrawals showed the names of altogether different persons and
they were far in excess of the amounts in FDRs. The respondent had no
explanation and therefore, it had to be held that the respondent had
misappropriated the amount. Dealing with the order of the High Court, the
Supreme Court observed that in spite of a well-reasoned order by the inquiry
officer, the High Court had interfered therein by calling the same as sketchy. The
High Court has completely overlooked the role of the bank manager. In view of
this, the Court set aside the impugned judgement and order passed by the
division bench of the High Court.
Can the dismissal of a bank employee, guilty of dishonesty and
misappropriation be set aside merely because though convicted by the criminal
court, he has been released on Probation of Offenders Act? This issue was raised
in Sushil Kumar Singhal v. The Regional Manager, Punjab National Bank197.
In this case, the appellant who was appointed as a peon was later confirmed on
the said post in the respondent bank. He was handed over ₹5,000 in cash for
depositing dues for the telephone bill in the post office. However, on his failure
to deposit the same, the bank lodged an FIR under Section 409 of the Indian
Penal Code, 1860. The trial court convicted the appellant. Thereupon, the
respondent bank issued a show-cause notice to the appellant proposing dismissal
from service and asked the appellant to respond within 7 days. The respondent
bank, on consideration of explanation dismissed him from service. The appellant
then raised an industrial dispute under the Industrial Disputes Act, 1947 which
was referred to the tribunal. In the meanwhile, the appeal filed by the appellant
against the order of conviction was decided by the appellate court which
maintained the conviction, but granted him the benefit of probation under the
Probation of Offenders Act, 1958 and released the appellant on probation. The
tribunal in the award rejected the claim of the appellant by holding his dismissal
from service to be justified and in accordance with law. Being aggrieved, the
appellant challenged the said award of tribunal by filing a writ petition before
the High Court which was also dismissed. Thereupon, a special leave to appeal
was filed before the Supreme Court. The Court was invited to decide the
question whether the benefit granted to the appellant under the provisions of the
Probation of Offenders Act, 1958 makes him entitled to reinstatement in service.
While dealing with the issue, the Court referred to Section 10(1)(b)(i) of the Act,
which reads as under:
No banking company shall employ or continue the employment
of any person who is, or at any time has been, adjudicated
insolvent, or had suspended payment or has compounded with
his creditors, or who is, or has been, convicted by a criminal
court of an offence involving moral turpitude.
Interpreting the aforesaid provision, the Court pointed out that the management
is under an obligation to discontinue the services of an employee who is or has
been convicted by a criminal court for an offence involving moral turpitude. The
Court also referred to the dictionary meaning and a number of decided cases of
the Supreme Court and held that moral turpitude means anything contrary to
honesty, modesty or good morals. It means vileness and depravity. The Court
added that the conviction of a person in a crime involving moral turpitude
impeaches his credibility and he has been found to have indulged in shameful,
wicked and base activities. The Court also observed that the embezzlement of
₹5,000 by the appellant for which he had been convicted was an offence
involving moral turpitude. The statutory provisions of the Act, 1949, provide
that the management shall not permit any person convicted for an offence
involving moral turpitude to continue in employment.
The Court also referred to the decision in Manish Goel v. Rohini Goel198,
wherein it held that no court is competent to issue a direction contrary to law nor
can it direct an authority to act in contravention of the statutory provisions.
Indeed, the courts are meant to enforce the rule of law and not to pass orders or
directions which are contrary to what has been injucted by law. In view of this,
the Court held that once a criminal court grants a delinquent employee the
benefit of Probation of Offenders Act, 1958, its order does not have any bearing
so far as the service of such employee is concerned. The word, ‘disqualification’
on Section 12 of the Probation of Offenders Act provides that such a person shall
not stand disqualified for the purpose of other Acts like Representation of People
Act, 1950, etc. The Court added that conviction in a criminal case is one part of
the case and release on probation is another. Therefore, grant of benefit of the
provision of the Act only enables the delinquent not to undergo the sentence on
showing his good conduct during the period of probation. In case, after being
released, the delinquent commits another offence, benefit of the Probation of
Offenders Act, 1958 gets terminated and the delinquent can be made liable to
undergo the sentence. Therefore, in case of an employee who stands convicted
for an offence involving moral turpitude, it is his misconduct that leads to his
dismissal. The Court accordingly dismissed the appeal.
In PSEB v. Leela Singh199, the respondent was appointed as a lineman in
Punjab Electricity Board on the basis of the purported experience certificate
produced by him. However, in a vigilance inquiry, the charge against the
respondent was that he had committed fraud in obtaining the appointment by
production of a forged experience certificate. On the direction of the appellant
board, his services were terminated without holding a domestic inquiry. A
question arose whether in these circumstances, the appellant board could
terminate the services of the respondent, the Supreme Court held that the said
charge was required to be proved in a duly constituted departmental proceeding.
The services could not have been directed to be terminated relying on and/or on
the basis of the decision of the board. The Court, therefore, directed the appellant
board to initiate departmental proceedings against the respondent.
In Municipal Committee, Bahadurgarh v. Krishnan Bihari200, the
Supreme Court held that in cases involving corruption, there cannot be any other
punishment except dismissal. It felt that any sympathy shown in such cases is
totally uncalled for and opposed to public interest. It also held that the amount
misappropriated may be small or large but it is the act of misappropriation that is
relevant.
In Prabhulingappa H M Munichendragowda v. Divisional Controller,
KSRTC, Kolar201, it was held that the discretion which can be exercised under
Section 11A is available only on the existence of certain factors like punishment
being disproportionate to the gravity of misconduct so as to disturb the
conscience of the court. However, such discretion cannot be exercised by the
labour court under Section 11A where appointment was obtained on the basis of
false certificate by playing a fraud.
10. Theft
In Depot Manager, Andhra Pradesh State Road Transport Corporation v.
Raghuda Siva Sankar Prasad202, the respondent was charged for committing a
theft of fuel injection pump. He was also involved in stealing an alternator
bearing while working in the night shift. The management, after holding a
domestic inquiry, removed the respondent from the corporation. Earlier, a
criminal case was also initiated against him. The criminal court acquitted the
respondent of the charges that were levelled against him. Aggrieved by the order
of his removal, the respondent raised an industrial dispute. The labour court held
that the charges of respondent being involved in a case of theft of the property
belonging to the corporation were justified under the factual circumstances of
the case. Aggrieved by the award of the labour court, the respondent preferred a
writ petition before the Andhra Pradesh High Court. The single judge of the
High Court held that the charges of theft were correctly proved against the
respondent. It however, came to the conclusion that punishment of removal was
not in consonance with the gravity of the charges proved against him. It
therefore, set aside the order of removal and directed reinstatement of the
respondent with continuity of service but without back wages.
On appeal, the Supreme Court observed that when the delinquent
employee admitted his guilt before the inquiry officer that he had handed over
the alternator from the pan shop to the police authorities and further deposed that
he had handed over the stolen property and requested the labour court to excuse
him since it was his first offence. The tribunal rightly set aside the request by
taking into consideration the inquiry report and other evidence. The Court also
held that it is also not open to the tribunals and courts to substitute their
subjective opinion in place of the one arrived at by the domestic inquiry. In the
instant case, the opinion arrived at by the corporation was rightly accepted by the
tribunal but not by the court. The Court therefore, held that the order of
reinstatement passed by the High Court is contrary to the law on the basis of a
catena of decisions in this Court. In such cases, there is no place for generosity
or sympathy on the part of the judicial forums for interfering with the quantum
of punishment of removal which cannot be justified.
In Workmen v. Balmadies Estates203, it was alleged that two employees
had stolen large quantities of chemicals from the storeroom during the specified
period. The management, after holding an inquiry, dismissed the concerned
workmen from service. Thereupon, they raised an industrial dispute which was
referred to the labour court. The labour court held that there was no direct
evidence to show that they had committed theft. It accordingly directed
reinstatement. On a writ petition, the single judge held that appreciation of
evidence by the labour court was perverse and its interference with the order of
termination could not be supported in law. The writ appeal was also dismissed.
Against this order, the workmen filed special leave petition before the Supreme
Court. The Supreme Court observed that it is well settled that in view of wide
powers of the labour court under Section 11A, it can, in an appropriate case,
reconsider the evidence which has been considered by the domestic tribunal and
on such reconsideration, arrive at a conclusion different from the one arrived at
by the domestic tribunal. The Court however, made it clear that the assessment
of evidence in a domestic inquiry was not required to be made by applying the
same yardstick as a civil court could do when a lis is brought before it. Further,
the Evidence Act, 1872 is not applicable to the proceedings so far as domestic
inquiries are concerned, though principles of fairness can apply. It also observed
that it is established that in a domestic inquiry, guilt may not be established
beyond reasonable doubt and the proof of misconduct could be sufficient. In a
domestic inquiry, all materials which are logically probative including hearsay
evidence can be acted upon, provided it has reasonable nexus and credibility.
Even confessional and circumstantial evidence, despite lack of any direct
evidence, was sufficient to hold the delinquent guilty of misconduct and to
justify the order of termination that had been passed. The Court held that the
findings of labour court that the confessional statement could not be relied upon
in the absence of any other direct evidence which was pervasive and could be
termed to be based on misconduct of law. In accordingly upheld the order of the
High Court and set aside the order of the labour court.
11. Negligence
In Subhash v. Divisional Controller, Maharashtra SRTC204, the appellant was
employed as a driver in 1980 with the respondent corporation. He was made
permanent in 1985. However, while driving the bus on the fateful day, it ramped
on the railing of a bridge due to his rash and negligent driving resulting in
damage to the bus. The management, after holding an inquiry, held that charges
were proved against the appellant and accordingly, dismissed him from service.
The appellant challenged the order of dismissal before the appellate authority.
The first appellate authority set aside the order and directed that he be appointed
afresh without any monetary benefit for past service. Thereupon, he joined duty
reserving his right to challenge the order of denying him reinstatement with
continuity of service and back wages. He then filed a complaint under Section 28
read with items 5 and 9 of the Schedule IV of the Maharashtra Recognition of
Trade Union and Prevention Act, 1971 before the industrial tribunal,
Aurangabad, which was dismissed. A writ petition filed against the order was
also dismissed. Thereupon, he filed a special leave to appeal before the Supreme
Court. The Supreme Court observed that there was negligence on the part of the
appellant in driving the bus on that fateful day and as a result of which, the bus
ramped on the railing of a bridge resulting in damage to the bus. This act no
doubt was a misconduct. But taking into account the fact that during his service
tenure of 21 years, he had been punished twice and considering his past record
and the fact that no passenger was injured in the accident, the Court set aside the
order of dismissal and ordered that fresh appointment be given to the appellant
but without any benefit of past service. The Court, after looking into all the
relevant aspects, thought it fit in the interest of doing complete justice that the
order of the appellate authority be modified by ordering his reinstatement with
continuity of service but without back wages. The Court felt that in the interest
of justice and fair play, denial of back wages for the entire period from the date
of dismissal until his rejoining duties would be an appropriate punishment. The
appeal of the appellant was accordingly, allowed in part to the extent stated
above.

D. Powers of High Courts under Article 226

The high courts, in exercise of writ jurisdiction, can wield similar power and
discretion as is exercised by the labour court under Section 11A205. However,
they cannot interfere with award of labour court and quantum of punishment if
the labour court has exercised its discretion judicially. Decision of the
management in matter of punishment could be interfered with by labour court if
it is satisfied that the punishment imposed by the management is highly
disproportionate with the degree of guilt of the workman concerned206.

XVII. DISCRIMINATORY TREATMENT

The question of discrimination is really a question of bona fides of the
management’s action. The proper question is not whether the management has or
has not discriminated against any workman, but the question is whether choosing
certain workers and proceeding against them is based on rational and reasonable
consideration. Fair and proper domestic inquiry requires that the management's
action in choosing certain strikers and proceeding against them must not be
based on irritational and unreasonable discrimination.
The aforesaid line of thinking was formulated by the Supreme Court in
Burn and Co. Ltd. v. Their Workmen207. In this case, a very large number of
workmen had gone on an illegal strike. The management selected seven
workmen out of the large number of workmen participating in such strike and
proceeded against them. The management, after making an inquiry, dismissed
the aforesaid seven workmen on the ground that they had incited other workmen.
The industrial tribunal held that the domestic inquiry was not proper as it was
not proved that the concerned workmen had incited other workmen. Upholding
the view of the industrial tribunal, the Supreme Court observed.
The evidence did not specifically bring home any charge of
incitement against these persons, it cannot be said that mere
participation in the strike would justify their suspension or
dismissal, particularly when no clear distinction could be made
between these persons and the very large number of workmen
who had been taken back into service although they had
participated in the strike.
From the above decision, it is evident that unequal treatment by the employer of
workers in matters of punishment is illegal when there is no sound or reasonable
ground whatsoever for making such discrimination.
The Bata Shoe Co. v. DN Ganguly208 strikingly demonstrates the
discrimination practised by the trade unions representing the majority workers
rather than the employer. In this case, the management had not made any
discrimination and it was prepared to take back all workmen, but the union
which represented the majority of workmen was itself not agreeable that 47
workmen concerned should be taken back. The Supreme Court in view of the
above facts held that:
There is no doubt that if the employer makes an unreasonable
discrimination in the matter of taking back employees, there
may in certain circumstances be reason for the industrial tribunal
to interfere; but the circumstances of each case have to be
examined before the tribunal can interfere with the order of
employer in a properly held managerial inquiry on the ground of
discrimination.
The Court accordingly refused to interfere in management's decision on the
ground that discrimination was not practised by it.
The aforesaid conduct of trade unions is termed as ‘unfair labour practice’
as it is detrimental to the interest of industrial workers, it is true that
management followed the advise of the union to dismiss these workers in
particular. In our view, the practice followed by the union to pressurize the
employer to dismiss certain strikers is a case of an unfair labour practice by trade
unions. In such a situation, the Court could have provided the relief as it has
already been held by the Supreme Court in Indian Iron and Steel Co’s case that
it would not hesitate in interfering in case of unfair labour practice and
victimization.
In Northern Dooars Tea Co. Ltd v. Workmen209, several workers went
on an unjustified strike. Six strikers were dismissed after holding an inquiry on
the charge of causing wilful damage to the property of the management. The
industrial tribunal quashed the findings of the domestic inquiry inter alia, on the
grounds that charges of causing wilful damage to the property of the
management cannot be sustained against any one of these six strikers. Further, it
held that the management was unable to give any reasonable or rational
explanation why these six workmen were chosen out of the large mass of strikers
and proceeded against. On appeal, the Supreme Court upheld the decision.
Justice Gajendragadkar (as he then was) observed:
… no evidence whatever was led before the domestic inquiry to
show wilful damage or loss caused by the six workmen, we do
not see how it is possible to contend that the conclusion of the
tribunal about the invalidity of the order is not right.
It might be mentioned that the only charge that distinguishes the six strikers
from all others is that of wilful damage to the property of the management. Once
proof of this failed, the six workmen become indistinguishable from the rest of
the strikers and to select them alone for dismissal was obviously discriminatory.
In State of UP v. Raj Pal Singh210, the respondent, an assistant warder
along with four other assistant warders beat one Shivdan Singh, and they did not
listen to the senior officers who dissuaded them. The management after holding
departmental proceedings dismissed the respondent though in respect of four
others, passed the order of stoppage of five increments. The respondent
challenged the legality of the order before the Public Service Tribunal. The
tribunal refused to interfere. Thereupon, he approached the High Court. The
High Court held that the charges and the delinquency being same and identical,
and all the employees having been served with a set of charges out of the same
incident, there was no justifiable reason to pass different orders of punishment,
and therefore the order of dismissal cannot be sustained. The High Court
accordingly set aside the order of dismissal and directed stoppage of five
increments in case of the respondent as was the order in case of other assistant
warders. The High Court further directed that the delinquent respondent would
be paid only 50 per cent of back wages. It is against this order of the High Court
that the management appealed to the Supreme Court.
The Supreme Court observed that it is open for the disciplinary authority
to deal with the delinquency and once charges are established, to award
appropriate punishment. But when the charges are same and identical in relation
to one and the same incident, then to deal with the delinquents differently in the
award punishment would be discriminatory. The Court also held that the
reasoning given by the High Court cannot be faulted with since the state is not
able to indicate any difference in the delinquency of these employees. The
Supreme Court, however modified the order of the High Court regarding
payment of 50 per cent back wages by holding that no back wages will be paid
to him from the date of dismissal to the date of reinstatement.

XVIII. RELIEF TO WRONGFULLY DISMISSED

WORKMEN
If a workman is found to be wrongfully dismissed, he may be allowed either
reinstatement or any other relief; which is appropriate in the circumstances of a
particular case is a matter of judicial discretion depending upon facts of each
case.211
Under the traditional law of master and servant, courts, in case of
wrongful dismissal of workman, directed the employer to pay damage in lieu of
reinstatement. This view which is founded on the laissez faire conception of the
State has by and large been abandoned in modern times.212 It has now been
realized that adherence to the strict principle of master and servant would expose
the workers to arbitrary treatment on the part of management.213 The Parliament
gave its approval to this trend by inserting Section 11-A in IDA. This section
empowers the tribunal to scrutinize the action taken by the employer and to
direct reinstatement of workmen on such terms and conditions, if any, as it
thinks fit or give such other relief to the workman including the award of any
lesser punishment in lieu of discharge or dismissal as the circumstances of the
case may require. Quite apart from this, power is conferred on the labour court,
tribunal and national tribunal to direct reinstatement in cases of wrongful
discharge or dismissal or to subject the order of reinstatement to any terms and
conditions which they may think fit on the facts and circumstances of a case.
The adjudicating authorities may also vary the penalty by giving any other relief
inclusive of a lesser punishment in lieu of discharge or dismissal when in their
opinion, the penalty awarded is not commensurate with the fact of misconduct
alleged or proved against the workman.
An analysis of decided cases reveals that in certain situations, the remedy
by way of reinstatement has been refused. It is, therefore, necessary to examine
the circumstances in which the relief by way of reinstatement has been granted
and those in which reinstatement is denied but a worker is allowed payment of
compensation in lieu thereof.

A. When to Direct Reinstatement

It has now been settled in a catena of cases that where a workman is wrongfully
dismissed or discharged, the normal rule is that he should be reinstated.214 Said
Justice Gajendragadkar:
The employee is entitled to security of service and should be protected
against wrongful dismissals, and so the normal rule would be reinstatement in
such cases.
He added:
Nevertheless, in unusual or exceptional cases, tribunal may have to
consider whether in the interest of industry itself, it would be desirable or
expedient not to direct reinstatement. As in many other matters arising before the
industrial courts for their decisions, this question also has to be decided after
balancing the relevant factors and without adopting any legalistic or doctrinaire
approach.215
Let us examine the various factors under which the tribunal may order
reinstatement to workers whose services have been wrongfully terminated.
(a) Unfair labour practice and victimization. The Supreme Court has stated
that when a workman is dismissed on account of unfair labour practice or
victimization by the employer, reinstatement should be ordered. The
reason is obvious. If the employer takes disciplinary action against
workers on some pretext other than the real reason or in bad faith with an
ulterior motive, the action cannot be the sustained. This is all the more so
in India where majority of workers are neither well organized nor
unionized.
In Hind Construction and Engineering Co. Ltd216, certain workmen
went on strike which was not illegal. The management terminated the
services of such strikers. The tribunal, however, set aside the dismissal
 and directed reinstatement on the ground that punishment of dismissal for
this strike was due to victimization of the workmen and was quite
unjustified both in severity and in relation to strike for one day. Against
this order of the tribunal, the management preferred an appeal before the
Supreme Court. The question to be decided before the Court inter alia,
was whether the tribunal was justified in interfering with the punishment
of dismissal after it had come to the conclusion that the workmen had
gone on strike even though it was not illegal. Dealing with the question,
Justice Hidayatullah speaking for the Court observed:
…The tribunal can only interfere if the conduct of the employer shows lack of
bona fides or victimization of employee or employees for unfair labour practice.
He held that the order of reinstatement was proper and reasonable.
The aforesaid view was reiterated in Bata Shoe Co. (Pvt.) Ltd v. DN
Ganguly217 where the Supreme Court laid down:
It may be that participation in an illegal strike may not
necessarily and in every case be punished with dismissal; but
where an inquiry has been properly held and the employer has
imposed the punishment of dismissal on the employee who has
been guilty of the misconduct of joining the illegal strike, the
tribunal should not interfere unless it finds unfair labour practice
or victimization against the employee.
Bengal Bhatdee Coal Co. v. Ram Pradesh Singh218 is another case in point. In
this case, certain workmen physically obstructed the surface tamers working in
the colliery from doing their work during the strike. Some other workers incited
other workmen in order to compel them to join in the act of obstructing the loyal
and willing workers so that they may not be able to work. Thereupon, the
management dismissed workers who were active workers and officer-bearers of
trade unions. On these facts, the tribunal held that concerned workmen were
dismissed on the ground of victimization. The Supreme Court reversed the order
of the industrial tribunal and observed:
The fact that the relations between the employer and the union
were happy and the workmen concerned were office-bearers or
active workers of the union would itself be no evidence to prove
victimization, for if that were so, it would mean that the office-
bearers and active workers of a union with which the employer
is not on good terms would have carte blanche to commit any
 misconduct and get away with it on the grounds that relations
between the employer and the union were not happy.
The Court accordingly held that the finding of victimization in this case was
based merely on conjectures and surmises.
(b) Arbitrary conduct and effective procedure. Wherever management
dismisses strikers, it is essential to hold a proper domestic inquiry in order
to establish the charges levelled against them. The tribunals accordingly
have emphasized the need to enforce the observance of standing orders
and rules of natural justice while considering the relief to be granted to the
dismissed strikers. In Punjab National Bank v. Their Workmen, Justice
Gajendragadkar observed.
It is well-established that even where an employer is justified in
terminating the services of his employees, he is bound to give
them a charge-sheet.
He added:
The requirement is universally treated as consistent with natrual
justice and fair play and since the bank has not complied with it,
the impungend orders of dismissal are wholly invalid for this
additional reason; and the result again would be that the said
orders are inoperative and void and the employees are entitled to
reinstatement as a matter of course.
(c) Harshness of the order. Wherever dismissal of order of workers has been
considered to be too severe and out of proportion in relation to the fault,
the tribunal and courts have the power to award lesser punishment.
However, prior to 1971, the tribunal had no power to interfere with the
punishment except in extraordinary situations, namely, when there was
want of good faith, victimization, unfair labour practice, etc., on the part
of the employer. This position had been completely changed in 1971 when
Section 11 A was inserted in the IDA. For the first time, power has been
conferred upon a tribunal to interfere with the punishment imposed by an
employer. This Section applies at the time when the tribunal considers the
punishment to be imposed too harsh. This power is, however, subject to
certain restrictions.
(d) Whether mere participation in an illegal strike bars claim of
reinstatement. The Supreme Court in Burn, and Co. v. Their
 Workmen219 answered the question in negative. Speaking for the Court,
Justice Imam observed:
It cannot be said that mere participation in the strike would
justify their suspension or dismissal…
The aforesaid view was re-affirmed in later decisions.220
(e) Reinstatement cannot be refused because a long time has elapsed. There
is nothing in the IDA showing that the claim for reinstatement, if
otherwise justified, can be defeated simply on the ground of delay. The
IDA does not prescribe any time for making the reference of granting of
the relief. The question of delay may weigh with the government before
making the reference, but once a reference is made, the tribunal may order
reinstatement or compensation or both.221 This question whether delay
defeats reinstatement came up for consideration before the Supreme Court
in Swadeshi Industries Ltd v. Workmen222. We have already referred to
the facts of this case wherein strikers were wrongfully dismissed. In this
case, it was argued on behalf of management that while the order
terminating the services of strikers was made on 24 May 1951, the order
of reinstatement was made in April 1955. Observed Justice Das Gupta:
When however, as in this case, the order of termination is itself
bad, reinstatement cannot ordinarily be refused because long
time has elapsed.
Agreeing with the conclusion it may be added that in this case, reinstatement
order was made by the tribunal against the dismissal of strikers 4 years after the
reference and 9 years after the dismissal order. While we agree that the delay
cannot defeat reinstatement but we would like to assert that in cases where
tribunal awards back wages to strikers besides reinstatement, it may well take
into account the delay and its impact on the industry.
On the contrary, in Shalimar Works Ltd v. Its Workmen223,
reinstatement was refused, inter alia, for the delay in making the reference to
avoid dislocation of the industry. Approving the findings of the labour appellate
tribunal, Justice Wanchoo rationalized:
The tribunal would be justified in refusing the relief of
reinstatement to avoid dislocation of the industry and that is the
correct order to make … the defect in the order of discharge due
to permission not having been obtained under Section 33 can,
 under the circumstances of this case, be ignored on the ground
that the workmen who did not rejoin in July, 1948 were not
interested in reinstatement: firstly on account of the
circumstances in which that order came to be made after an
illegal and unjustified sit down strike; secondly, because the
workmen in their turn did not avail themselves of the remedy
under Section 33-A which was open to them, and thirdly,
because the reference was made after an unreasonable length of
time and in a vague manner.
(f) Whether mere civil trespass bars the claim to reinstatement of strikers.
This question came up for consideration before the Supreme Court for the
first time in Punjab National Bank Ltd v. Their Workmen.224
Confirming the findings of the labour appellate tribunal Justice
Gajendragadkar observed:
… the (labour) appellate tribunal was obviously right in holding
that even if civil trespass was involved in the conduct of
(strikers), that by itself cannot justify the rejection of their claim
for reinstatement.
He added that even in America, the simple act of trespassing upon the
employer's property was no bar to reinstatement.
(g) Loss of confidence: Once the employer has lost confidence in the
employee and the bona fide loss of confidence is affirmed, the order of
punishment must be considered to be immune from challenge for the
reason that discharging the office of trust and confidence requires absolute
integrity and in a case of loss of confidence, reinstatement cannot be
directed.225
In Kanhaiyalal Agrawal v. Gwalior Sugar Co. Ltd226, the Supreme Court laid
down the test for loss of confidence to find out as to whether there was bona fide
loss of confidence in the employee, observing that,
(i) the workman is holding a position of trust and confidence;
(ii) by abusing such position, he commits an act which results in forfeiting the
same; and
(iii) to continue him in service/establishment would be embarrassing and
inconvenient to the employer or would be detrimental to the discipline or
security of the establishment.
Loss of confidence cannot be subjective, based upon the mind of the
management. Objective facts which would lead to a definite inference of
apprehension in the mind of the management regarding trustworthiness or
reliability of the employee must be alleged and proved227.
In SBI v. Bela Bagchi228, this Court repelled the contention that even if
by the misconduct of the employee, the employer does not suffer any financial
loss, he can be removed from service in a case of loss of confidence. While
deciding the said case, reliance has been placed upon its earlier judgement in
Disciplinary Authority-cum-Regional Manager v. Nikunja Bihari Patnaik229.
An employer is not bound to keep an employee in service with whom
relations have reached the point of complete loss of confidence/faith between the
two230.
In Indian Airlines v. Prabha D Kanan231, while dealing with a similar
issue, the Supreme Court held that:
Loss of confidence cannot be subjective but there must be
objective facts which would lead to a definite inference of
apprehension in the mind of the employer regarding
trustworthiness of the employee and which must be alleged and
proved.
In case of theft, the quantum of theft is not important. What is important is the
loss of confidence of employer in employee232.
In Divisional Controller, Karnataka State Road Transport Corporation
v. M G Vittal Rao233, the Supreme Court said that in a case of misconduct of
grave nature like corruption or theft, no punishment other than dismissal may be
appropriate.
(h) Participating in strike and refusal to join duty. Courts are divided on the
issue whether reinstatement can be refused on the ground of persistent and
obdurate refusal by workmen to join duty notwithstanding the fact that the
management provides them opportunities to come back to work. While in
Oriental Textile Finishing Mills v. Labour Courts234 it was answered in
the affirmative, in Gujarat Steel Tubes case it was answered in the
negative.
(i) Participation in violent demonstration during strike. Courts have denied
reinstatement to workers whose attitude was violent and who took a
leading part in violent demonstrations during strike.
(j) Loss of Lien. Loss of lien on a permanent post on which the reinstatement
 may be refused235 are: (i) employee convicted by criminal court for
indecent assault on a girl of 11 years and sentenced to imprisonment.236
(ii) strained feeling237 (iii) abolition of post.238

B. Relief of back wages

If a workman is found to be wrongfully dismissed, he may be allowed either
reinstatement or any other relief; which is appropriate in the circumstances of a
particular case is a matter of judicial discretion depending upon facts of each
case. However, difficulty arises in regard to awarding relief of back wages where
the tribunal orders reinstatement. This has been best depicted by a three-judge
bench of the Supreme Court in Hindustan Tin Works (P) Ltd v. Employees239
which is as follows:
In the very nature of things there cannot be a straight-jacket
formula for awarding relief of back wages. All relevant
considerations will enter the verdict. More or less, if would be a
motion addressed to the direction of the tribunal. Full back
wages would be the normal rule and the party objecting to it
must establish the circumstances necessitating departure. At that
stage, the tribunal will exercise its discretion keeping in view all
the relevant circumstances. But the discretion must be exercised
in a judicial and judicious manner. The reason for exercising
discretion must be cogent and convincing and must appear on
the face of the record. When it is said that something is to be
done with the discretion of the authority, that something is to be
done according to the rules of reason and justice, according to
law and not humour. It is not to be arbitrary, vague and fanciful
but legal and regular.240
A two-judge bench of the Supreme Court in Hindustan Motors Ltd v. Tapan
Kumar Bhattacharya241 was invited to determine as to when back wages should
be awarded and to what extent. In this case, the respondent was employed as a
mazdoor in the production control department (care press shop) of Hindustan
Motors Ltd. On 13 February 1980 at about 10.40 p.m. while he was on duty in
the care press shop, he had assaulted the general supervisor of the department, as
a result of which he became unconscious and had to be hospitalized. The
management terminated his services w.e.f. 15 February 1980, after a
departmental inquiry, for the said misconduct. The industrial tribunal held that
the charges were not proved by any cogent and reliable evidence. It, therefore,
held that the respondent was entitled to reinstatement with full back wages. The
single judge of the High Court set aside this award. In appeal, the division bench
of the Calcutta High Court set aside the judgement of the single judge and
directed reinstatement of the workman with back wages. It further directed that
seniority and continuity in service should be maintained and any interim amount
paid by the management to the workman should be deducted from the amount of
back wages. Against this order, an appeal was filed before the Supreme Court.
The question before the apex court was limited to the propriety of award of full
back wages. The Court laid down the following principles:
(i) The order for payment of full back wages to the workman was passed by
the industrial tribunal which has been confirmed by the division bench of
the High Court without any discussion and without stating any reason. If
indeed the tribunal and the division bench had proceeded on the footing
that since the order of dismissal passed by the management was set aside,
the order of reinstatement with full back wages was to follow as a matter
of course.
(ii) There was no application of mind to the question of back wages by the
labour court. There was no pleading or evidence whatsoever on the aspect
whether the respondent was employed elsewhere during this long
interregnum. Instead of remitting the matter to the labour court or the
High Court for fresh consideration at this distance of time, we feel that
the issue relating to payment of back wages should be settled finally.
(iii) [I]n the context of the facts of this particular case including the
vicissitudes of long-drawn litigation, it will serve the ends of justice if the
respondent is paid 50 per cent of the back wages till the date of
reinstatement. The amount already paid as wages or subsistence
allowance during the pendency of the various proceedings shall be
deducted from the back wages now directed to be paid.
(iv) The appellant will calculate the amount of back wages as directed herein
and pay the same to the respondent within 3 months, failing which the
amount could carry interest @ 9 per cent per annum.
In Haryana Urban Development Authority v. Devi Dayal242, the management
terminated the services of a helper. It was alleged by the management that the
said helper did not work continuously during the period and he frequently
absented himself from duties for which show cause notice was issued. However,
he was not given either retrenchment compensation or one month's notice or pay
in lieu thereof. The helper had served the management for 340 days during the
preceding year. The tribunal held that the termination was illegal. It accordingly
directed reinstatement with full back wages. The High Court of Punjab and
Haryana upheld the award. On appeal, the Supreme Court held that having
regard to the facts of the case, the award of full back wages covering a period of
nearly 5 years is not warranted. Firstly, the respondent was in service for a short
period with frequent spells of absence. Second, there is a reasonable possibility
of the respondent being gainfully employed somewhere else. The respondent, in
all probability would have been working somewhere and earning daily wages, if
not regularly, at least for some days in a month. It, accordingly, held that the
award of back wages to the extent of 50 per cent would be proper and justified,
on the peculiar facts of this case.
The Supreme Court in Ram Ashrey Singh v. Ram Bux Singh243 case has
held that the payment of back wages is not automatic entitlement to the
workman since it is discretionary and has to be dealt with in accordance with
facts and circumstances of each case.
Again, in MP State Electricity Board v. Jarina Bez244, the Supreme
Court held that when termination of a workman is set aside, the award of back
wages is not a natural consequence.
In SM Nilakjar v. Telecom Distt. Manager245, the Supreme Court did not
allow back wages, in view of the delay in raising the dispute and initiating
proceedings.
In Hissar Central Cooperative Bank v. Kalu Ram246, the management
terminated the services of an employee who was secretary to the Hissar
Cooperative Bank Society for allegedly causing embezzlement of money of the
society after holding inquiry. The labour court held that there was no proper
inquiry and no proof to the effect that the respondent had caused embezzlement.
But there is interpolation at the instance of the workman. The labour court
accordingly ordered reinstatement with full back wages. Aggrieved by this order,
the employer field a writ petition in the High Court of Punjab and Haryana.
However, the division bench issued notice only on the question of payment of
back wages to the workmen. Thereupon, the employer filed an appeal before the
Supreme Court. A question arose whether the workman is entitled to full back
wages. The Court answered the question in negative and observed that while
ordering back wages, consideration of gainful employment is not the sole
criterion. The Court may consider various factors while considering the question
of payment of full back wages namely: the nature of the charge; the extent of his
involvement; and whether his conduct has caused loss to the employer, etc.
Quite apart from this, long delay may also be a ground for denial of full back
wages. The Court also took a serious note of misappropriation of public money,
howsoever slight evidence was adduced to this effect. In view of this, the
Supreme Court directed back wages only to the extent of 25 per cent.
UP State Brassware Corpn Ltd v. Uday Narain Pandey247 brought a
change in the approach of the Supreme Court. This is evident from the following
observations of the Supreme Court. Although direction to pay full back wages
on a declaration that the order of termination was invalid used to be the usual
result but now, with the passage of time, a pragmatic view of the matter is being
taken by the Court realizing that an industry may not be compelled to pay to the
workman for the period during which he apparently contributed little or nothing
at all to it and/or for a period that was spent unproductively as a result whereof
the employer would be compelled to go back to a situation which prevailed
many years ago, namely, when the workman was retrenched.
The Court added :
No precise formula can be laid down as to under what
circumstances, payment of entire back wages should be allowed.
Indisputably, it depends upon the facts and circumstances of
each case. It would however, not be correct to contend that it is
automatic. It should not be granted mechanically only because
on technical ground or otherwise an order of termination is
found to be in contravention of the provisions of Section 6-N of
the UP Industrial Disputes Act.
The Court further observed :
The changes brought about by the subsequent decisions of this
Court, probably having regard to the changes in the policy
decisions of the government in the wake of prevailing market
economy, globalization, privatization and outsourcing, is
evident.
From the above observations, it becomes apparent that payment of full back
wages upon an order of termination being declared illegal cannot be granted
mechanically. It does not automatically follow that reinstatement must be
accompanied by payment of full back wages even for the period when the
workman remained out of service and contributed little or nothing to the
industry.
Again, in the case of Haryana State Electricity Development
Corporation Ltd v. Mamni248 the Supreme Court reiterated the above principle.
Recently, this Court again examined the issues with regard to payment of
full back wages in the case of PVK Distillery Ltd v. Mahendra Ram249 and held
as follows:
Although direction to pay full back wages on a declaration that
the order of termination was invalid used to be the usual result
but now, with the passage of time, a pragmatic view of the
matter is being taken by the Court realizing that an industry may
not be compelled to pay to the workman for the period during
which he apparently contributed little or nothing at all to it
and/or for a period that was spent unproductively as a result
whereof the employer would be compelled to go back to a
situation which prevailed many years ago, namely when the
workman was retrenched.
Applying the aforesaid ratio of law, the Supreme Court in M/s Reetu Marbles v.
Prabhakant Shukla250 held:
Where the labour court exercising its discretionary jurisdiction
concluded that it was not a fit case for the grant of back wages,
the High Court was unjustified in awarding full back wages. The
labour court having found the termination to be illegal was
unjustified in not granting any back wages at all. Keeping in
view the facts and circumstances of this case, the Court directed
that the respondent shall be paid 50 per cent of the back wages
from the date of termination of service till reinstatement.

C. Compensation to Wrongfully Dismissed Workmen

Before the introduction of Section 11-A, in Hindustan Steel v. A K Roy251,
while dealing with the powers of industrial tribunal either to order reinstatement
or compensation in lieu or reinstatement in a case where it finds that the order of
discharge or dismissal of a workman was not justified or legal, expressed the
view that the tribunal has discretion to award compensation instead of
reinstatement if exceptional situation arises so as to make reinstatemet
inexpendient or improper. The tribunal should, however, exercise such discretion
judicially and in accordance with well recognized principle in that regard and
examine carefully the circumstances of each case and decide whether the case is
one of the exceptions to the general rule. In Management of ITC Ltd v. Labour
Court252, the labour court found that the order of discharge was mala fide and
unreasonable because workman was guilty of the charge of fault only and not of
misconduct.
The labour court, therefore, ordered reinstatement of the workman. This
order was affirmed by the High Court. On appeal, the Supreme Court expressed
the view that every case has to be judged on its special facts. It found that in this
case, the service card of the employee showed that he had committed several
faults in the past and was sometimes warned, sometimes suspended and
sometimes reprimanded for all those omissions and commissions and ultimately
observed:
We think on the facts and the circumstances of this case that it is
not a fit case where the High Court ought to have sustained the
order of reinstatement as passed by the labour court. We,
accordingly, direct that in lieu of reinstatement, respondent No.
3 will be entitled to get a compensation of ₹30,000 which will,
roughly speaking, include almost all sums of money payable to
the workman such as basic pay, dearness allowance, etc., for a
period of about 5 years.
From the aforesaid decision, it is evident that though ordinarily
reinstatement is to follow when the tribunal sets aside the order of penalty or
discharge of dismissal made by the management, but where it is alleged by the
management that reinstatement is not expedient or proper in certain
circumstances, the labour court has to examine the circumstances of each case to
see whether or not reinstatement of the discharged or dismissed employee is
expedient or proper and refuse to order reinstatement where such a course in the
circumstances of the case is not either desirable or expedient.

D. Current Judicial Approach

In recent years, there has been a notable shift in the approach of the Supreme
Court in granting relief in cases of wrongful dismissals. In a number of cases, the
Supreme Court has held that an award of compensation in lieu of reinstatement
and back wages would be proper and would not be said to be unjustified.
In Ashok Kumar Sharma v. Oberoi Flight Services253, the Supreme
Court approved the practice of awarding compensation in lieu of reinstatement
even is case of wrongful dismissal but observed that it should not be grossly
inadequate. The Court ruled that while fixing compensation, all relevant facts
and circumstances including the nature of employment and status of employee,
whether confirmed employee or not, should be taken into account.
 The legal position has been stated in Chairman-cum-MD, Coal India v.
Anant Saha254 which is as follows:
Even after punishment imposed upon the employee is quashed
by the court or tribunal, the payment of back wages still remains
discretionary. Power to grant back wages is to be exercised by
the court/tribunal keeping in view the facts in their entirety as no
straightjacket formula can be evolved, nor a universal
application can be laid for such cases. Even if the delinquent is
reinstated, it would not automatically make him entitled for back
wages as entitlement to get back wages is independent of
reinstatement. The factual scenario and principles of justice,
equity and good conscience have to be kept in view by the
appropriate authority/court or tribunal. In such matters, the
approach of the court or the tribunal should not be rigid or
mechanical but flexible and realistic.

E. Recommendations of the (Second) National Commission

on Labour
The (Second) National Commission on Labour has recommendent that when a
worker has been dismissed or removed from service after a proper and fair
inquiry on charges of violence, sabotage, theft and/or assault, and if the labour
court comes to the conclusion that the grave charges have been proved, then the
court will not have the power to order reinstatement of the delinquent worker.

1 Province of Bombay v. Western India Automobile Association, AIR 1949. Bombay 41.
2 The Royal Commission on Labour was applied at the prevailing insecurity of service of
workmen. The Bombay Textile Labour Investigation Committee (1939–1940) observed:
There is no fear which haunts an industrial worker more constantly than the fear of losing
his job as there is nothing which he prizes more than economic security. The fear of his
being summarily dismissed for even a slight breach of rules of discipline or for interesting
himself in trade union activities disturbs his peace of mind. It is a notorious fact that
dismissal of workers has been the originating cause of not a few industrial disputes and
strikes. The provision of effective safeguard against unjust and wrongful dismissal is
therefore, in the interest as much as of industry as of workers. The evil of unfair
dismissals or indefinite suspension unfortunately appears to be common in many
industries.
3 See for instance, F W Heilegers & Co. Ltd v. Their Employees, (1950) LLJ 231, Kedar
Nath Purshottam & Co. Ltd., (1952) 2 LLJ 349.
4 See for instance, Bata Shoe Co. v. D N Ganguli, AIR 1961 SC 1158; I M H Press v.
Additional Tribunal, 1961 1 LLJ 499 (SC).
5 For instance, see I M H Press v. Additional Tribunal, 1961 1 LLJ 499 (SC); Punjab
National Bank v. Their Workmen, 1959 2 LLJ 666 (SC).
6 See for instance, Bangalore Silk Throwing Factory v. Its Workmen, (1957) 1 LLJ 435
(LAT); Model Mills v. Dharmdas, (1958) 1 LLJ 539; Punjab National Bank v. Their
Workmen, (1959) 2 LLJ 666 (SC).
7 Buckingham and Carnatic Mills Ltd v. Their Workmen, (1951) 2 LLJ 314 (LAT).
8 Chartered Bank Bombay v. Chartered Bank Employees’ Union, (1960) 18 FJR 354.
9 Assam Oil Ltd v. Its Workmen, (1960) 18 FJR 354.
10 Indian Iron and Steel Co. Ltd v. Their Workmen, 1958 SC 130.
11 Assam Oil Co. Ltd v. Its Workmen, (1960) 1 LLJ 587, 591.
12 Indian Iron Co. Ltd v. Their Workmen, (1958) 1 LLJ 296, 270.
13 Workmen of Motipur Sugar Factory Private Ltd v. Motipur Sugar Private Ltd, (1965) 2
LLJ 162, 169.
14 2011 LLR 634 (SC).
15 (2012) 3 SCC 186 at 197.
16 See Channappa Basappa Happali v. State of Mysore, AIR (1972) SC 32; Mafatlal
Narain Das Barot v. Divisional Controller, (1966) 1 LLJ 437 (SC); Burn & Co. Ltd v.
Workmen, AIR 1957 SC 438.
17 Bharat Sugar Mills v. Jai Singh, (1961) 2 LLJ 644 (SC); Sasa Musa Sugar Mills (P) Ltd
v. Shobati Khan, AIR 1959 SC 923.
18 Andhra Scientific Co. Ltd v. A Sheshagiri Rao, AIR (1967) SC 408.
19 A Rodrick v. K C Thapar, (1963) 1 LLJ 248 (SC); Hornsby (P) Ltd v. T B Kadam, (1976)
3 SCC 71.
20 See Lalla Ram v. DCM Chemical Works Ltd, (1978) 1 LLJ 507; Banaras Electric Light
& Power Co. v. Labour Court, (1972) 2 LLJ 328 (SC).
21 Eastern Electric & Trading Co. v. Baldev Lal, (1975) 4 SCC 684.
22 Bombay Garage (Ahmedabad) Ltd v. Its Workmen, (1961) 2 LLJ 40 (Gujarat).
23 J K Hosiery Factory v. LAT, (1956) 2 LLJ 4 (Allahabad).
24 Assam Oil Company v. Its Workmen, (1960) 1 LLJ 587 (SC).
25 Buckingham and Carnatic Mills v. Its Workmen, (1975) 4 SCC 684.
26 Chartered Bank v. Chartered Bank Employees’ Union, (1960) 3 SCR 441.
27 Tata Oil Mills Co. Ltd v. Its Workmen, (1964) 2 SCR 125.
28 (1964) 2 SCR 125 at 30–131.
29 L Michael v. M/s Johnson Pumps Ltd, AIR 1975 SC 661; (1975) 1 LLJ 262.
30 Murgan Mills v. Industrial Tribunal, (1965) 2 SCR 148.
31 It is provided in the standing orders that employees can ask for reasons in such a case.
32 (1978) 3 SCR 1000.
33 (1996) LLR 103 (Delhi).
34 Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha, (1980) 1 LLJ 137 (SC).
35 Id. at 153.
36 Id. at 184.
37 Gujarat Steel Tubes Ltd v. Gujarat Steel Tubes Mazdoor Sabha, (1980) 1 LLJ 137.
38 (1980) 1 LLJ 137.
39 Id. at 152.
40 Parshotam Lal Dhingru v. Union of India, (1958) SCR 828. This case was relied upon
by the majority in some other context.
41 Tata Engineering and Locomotive Co. Ltd v. S C Prasad, (1969) 2 LLJ 799; Workmen
of Sudder Office v. Management, (1979) 2 LLJ 620; Municipal Corporation of Bombay,
(1978) 2 LLJ 168 (SC).
42 Tata Engineering and Locomotive Co. Ltd v. S C Prasad, (1969) 3 SCC 372.
43 Workmen of Sudder Office v. Management, (1971) 2 LLJ 620 (SC).
44 Under clause 9, the management is empowered to terminate the services of workmen by
paying the specified wages in lieu of notice, wages earned and other dues.
45 Workmen of Sudder Office v. Management, op. cit.
46 L Michael v. Johnson Pumps Ltd, AIR 1975 SC 661; (1975) 1 LLJ 262.
47 Chakravorty and Chakravarty, Law of Employees’ Victimization. (1966) 52.
48 Rex v. Sussex Justices, (1924) 1 KB 256 at 259.
49 Managing Director, ECIL v. B Karunakar, JT 1993 (6) SC 1; See also Sarv UP Gramin
Bank v. Manoj Kumar, 2010 LLR 348.
50 Maneka Gandhi v. Union of India, (1978) 1 SCC 248.
51 See Punjab National Bank Ltd v. Its Workmen, (1959) 2 LLJ 666 at 679 (SC); UCO
Bank v. Rajinder Lal Capoor, (2007) 6 SCC 694; Chairman-cum-Managing Director,
Coal India Ltd v. Ananta Saha, 2011 Lab IC 2092 (SC).
52 Lakshmi Devi Sagar Mills Ltd v. Ram Sarup, (1957) 1 LLJ 17 (SC).
53 See Ananthanarayanan v. S R, (1956) 1 LLJ 29 (Madras); Amulya Ratan Mukkerjee v.
Deputy Chief Mechanical Engineer, Eastern Railways, AIR 1961 Cal 40.
54 See Swami Oil Mills, (1953) 2 LLJ 78 (IT).
55 Anil Gilurker v. Bilaspur-Raipur Kshetria Gramin Bank, 2011 LLR 1121; Union Bank
of India v. Gyan Chand Chattar, (2009) 12 SCC 78; Swami Singh v. State of
Rajasthan, (1986) 3 SCC 454.
56 V S Kamath v. State of Karnataka, 1988 (2) SLJ 241.
57 Commissioner of Police v. Jayasurian, (1997) 65 SCC 75.
58 See Union of India v. Prakash Kumar Tandon, (2009) 2 SCC 541; Chairman-cum-
Managing Director, Coal India Ltd v. Ananta Saha, 2011 Lab. IC 2592 (SC).
59 Union of India v. S K Agarwal, (2005) 1 SLR 151.
60 AIR 1998 SC 1833; (1998) 4 SCC 154.
61 (2005) LLJ 527.
62 AIR 2008 SC 2953; (2009) 1 LLJ 26.
63 AIR 1961 SC 1158.
64 See Aggarwal, O P, Conditions of Employment and Disciplinary Action against
Workmen, (1969) 320.
65 AIR 2000 SC 2806.
66 Swadeshi Industries Ltd v. Its Workmen, (1960) 2 LLJ 78 (SC); Indian General
Navigation and Rly Co. Ltd v. Its Workmen, (1960) 1 LLJ 13 (SC).
67 See Aggarwal, O P. Conditions of Employment and Disciplinary Action Against
Workmen. (1969) 320.
68 Ibid.
69 Biecco Lawrie Ltd v. State of West Bengal, (2009) 10 SCC 32.
70 State of Uttaranchal v. Kharak Singh, 2008 LLR 170 (SC).
71 Dalmia Dadri Cement Co. v. Murari Lal Bikaneria, (1970) 1 LLJ 416 (SC).
72 1999 (2) SCALE 216.
73 Workmen of Buckingham and Carnatic Mills, (1970) 1 LLJ 26.
74 (1999) 2 SCALE 216.
75 See Biecco Lawrie Ltd v. State of West Bengal, (2009) 10 SCC 32.
76 Union of India v. Prakash Chandra Tandon, 2009 (121) FLR 556 (SC); P V Gramin
Bank v. D M Parmar, 2011 (131) FLR 1019.
77 Narinder Mohan Arya v. United India Insurance Co. Ltd, 2006 (109) FLR 705 (SC);
Union of India v. Prakash Kumar Tandon, 2009 (121) FLR 542 (SC); P V Gramin
Bank v. D M Parmar, 2011 (131) FLR 1019.
78 See Usha Breco Mazdoor Sangh v. Management of Usha Breco Ltd, 2008 LLR 619
(SC).
79 AIR 1966 SC 269.
80 Union of India v. H C Sarin, AIR 1976 SC 1686.
81 K N Gupta v. Union of India, AIR 1968 Delhi 85.
82 Ankulaiah v. DG, P&T, SLJ (1986) CAT 407.
83 Ram Prasad v. Union of India, (1988) ATC 77.
84 Bank of India v. Apurba Kumar Saha, (1994) SCC 615.
85 Biecco Lawrie Ltd v. State of West Bengal, (2009) 10 SCC 32.
86 State of UP v. Saroj Kumar Sinha, AIR 2010 SC 313; Chairman-cum-MD, Coal India v.
Ananta Saha, 2011 Lab. IC 2592 (SC).
87 J P Srivastava v. Union of India, (1977) Lab. NOC 134.
88 Amal Kumar Parial v. Union of India, (1989) ATC 679.
89 Raizada Trilok Nath v. Union of India, AIR 1967 SC 759.
90 Thulasingaraj v. CPF Commissioner, AIR 1987 SC 194.
91 Shiv Durga Iron Works Ltd v. Its Workmen, 2 FLR 200.
92 M Muniswami v. Superintending Engineer, Vellore Electricity, (1969) ILLJ 89.
93 Glaxo Lab (India) Ltd v. PO, Labour Court, AIR 1984 SC 505; A L Kalra v. Project &
Equipment Corporation of India, 1984 LIC 961 (SC); Rasiklal V Patel v. Ahmedabad
Municipal Corporation, (1985) FJR 225 (SC) 1995 LLR 8.
94 Chairman-cum-MD, Coal India Ltd v. Ananta Saha, 2011 Lab.IC 2592 (SC).
95 Punjab National Bank v. Kunj Behari Mishra, (1998) 7 SCC 84; K L Ahuja v. State of
Haryana, 2011 (2) SLR 497.
96 Bank Of India v. Dagala Suryanarayana, 1999 LLR 1073 (SC).
97 Lal Nigam v. Chairman & MD, ITI Ltd, (2007) 1 LLJ 223 (SC); See also Anil Giluker v.
Bilaspur—Raipur Gramin Bank, 2011 LLR 1121 (SC).
98 Administrator, Union Territory of Dadra and Nagar Haveli v. Gulabhia M Lad, 2010
(125) FLR 880 (SC); See also Panchmahal Vadodra Gramin Bank v. D M Parmar,
2011 (131) FLR 1019 (SC).
99 A K Kraipak v. Union of India, AIR 1970 SC 150.
100 AIR 1983 SC 109.
101 Id at 113.
102 1991 Lab. IC 1008.
103 1997 LLR 497 (SC).
104 (1993) 2 SCC 215.
105 AIR 1960 SC 914: (1960) 3 SCR 407.
106 AIR 1965 SC 1392.
107 (1962) 2 LLJ 417.
108 1997 LLR 180 (SC).
109 (1982) 1 LLJ 46 at 47.
110 2008 LLR 231.
111 (1999) 3 SCC 679.
112 2004 LLR 950.
113 1991 Lab. IC 1254 (SC)
114 (1997) LLR 498 (SC).
115 See Allahabad District Cooperative Bank Ltd v. Vidhya Varidh Mishra, (2004) 6 SCC
482; See also Krishnakali Tea Estate v. Akhil Bharatiya Mazdoor Sangh, (2004) 8 SCC
200.
116 (2004) 6 SCC 482.
117 (2005) 7 SCC 764.
118 2006 LLR 268.
119 AIR 2007 SC 199: (2007) 1 LLJ 728.
120 (2007) 10 SCC 385.
121 2010 LLR 113.
122 2009 LLR 936 (SC).
123 2010 LLR 113 (SC).
124 (2008) 4 SCC 1: (2008) 1 SCC (L&S) 1084.
125 (2007) 9 SCC 755: (2008) 1 SCC (L&S) 1084.
126 (2006) 5 SCC 446: 2006 SCC (L&S) 1121.
127 (2012) 1 SCC 442.
128 Anandam v. Tamil Nadu Electricity Board, 1997 LLR 247; Datta Balu Sagar v. Dock
Manager, Bombay Port Trust, 1997 LLR 720.
129 Board of Management of SVT Educational Institution v. A R Bhatt, 1997, Lab IC 1917.
130 Chairman-cum-MD, Coal India Ltd v. Anant Saha, 2011 Lab. IC 2592 (SC).
131 1996 (5) SCALE 226; 1996 JT 447.
132 1991 Lab IC 308 (SC).
133 (1995) 4 SCC 727.
134 (1996) 4 SCC 727.
135 1997 LLR 268 (SC).
136 1997 (75) FLR 402.
137 2002 LLR 1989.
138 JT 2008 (8) SC 70.
139 2010 LLR 348.
140 (2012) 2 SCC 641.
141 (1997) 6 SCC 159.
142 (1958-1, LLJ-260)
143 (1973) 1 LLJ 278; AIR 1973 SC 1273.
144 (1973) 1 LLJ 278, 293–94.
145 (1971) 1 SCC 742; AIR 1971 SC 2171.
146 1996 LLR 385.
147 (1997) 4 SCC 741; (1997) 1 LLJ 1104 (SC).
148 (1999) 1 LLJ 275 (SC).
149 1984 Supp SCC 520.
150 Adichancellor Farmers Service Co-operative Bank v. LC., (1996) LLR 659.
151 Shankar Chakravarty v. Britannia Biscuits Co. Ltd, AIR 1979 83 1652; Delhi Cloth and
General Mills Co. v. Ludh Budh Singh, (1972) 1 LLJ 180; Shankar Nath v. Bank of
Baroda, AIR 1984 SC 289; Addl. Chancellor, Farmers Service Cooperative Bank v.
Labour Court, (1996) LLR 654 (Kerala); Neeta Kaplish v. Labour Court, (1999) 1 LLJ
275 (SC).
152 2006 LLR 141 (SC).
153 Ibid.
154 (1997) 1 LLN 391 (SC).
155 (2009) 8 MLJ 460 (SC).
156 (2010) 7 MLJ 367 (SC).
157 2002 Lab IC 2475.
158 State of Haryana v. Rattan Singh, AIR 1977 SC 1512; U P State Road Transport
Corporation v. Basudeo Chaudhary, (1997) 11 SCC 370; U P State Road Transport
Corporation v. Subhash Chandra Sharma and Others, (2000) (3) SCC 324).
159 (2002) ILLJ 234.
160 (2001) ILLJ 725.
161 (2008) 1 SCC 115.
162 (2009) 7 SCC 552.
163 (2001) 2 SCC 574.
164 (2002) 10 SCC 330.
165 2010 LLR 230.
166 (2003) 3 SCC 605.
167 2010 (6) SCALE 87.
168 2003 LLR 1023.
169 2003 LLR 337.
170 (2005) 3 SCC 331.
171 (2005) 3 SCC 401.
172 2006 LLR 141.
173 (2004) 7 SCC 574.
174 (2004) 8 SCC 1209.
175 (2008) 3 SCC 446.
176 (2010) 1 SLR 166.
177 2009 LLR 1135.
178 (2000) 5 SCC 65.
179 JT 2000 (7) SC 529.
180 2009 III CLR 645 (SC).
181 2005 LLR 641 (SC).
182 (2009) 3 SCC 124.
183 2010 LLR 1016; (2010) 6 SCC 690.
184 2003 LLR 895.
185 1982 Lab IC 1790(SC).
186 1984 Lab IC 658.
187 1995 (6) SCC 749.
188 Ibid.
189 (2003) 9 SCC 32.
190 2006 LLR 296 (SC).
191 (2009) 10 SCC 32.
192 2005 LLR 210 (SC).
193 JT 2004 (7) SCC 333: (2004) 8 SCC 200.
194 JT 2005 (8) SC 96: (2005) 7 SCC 435.
195 (2005) 10 SCC 84.
196 2010 LLR 1029.
197 2010 LLJ 1025.
198 AIR 2010 SC 1099; JT 2010 (3) SC 189.
199 2007 LLR 590 (SC).
200 AIR 1996 SC 1249.
201 2012 Lab. IC 221.
202 2007 LLR 113.
203 (2008) 1 SCC 115.
204 (2009) 9 SCC 344.
205 Oriental Containers Ltd v. Engineering Workers’ Association, 1996 LLR 739.
206 Essorpe Mills (P) Ltd v. Labour Court, 1999 LLR 89.
207 (1959) 1 LLJ 450 at 454.
208 AIR 1961 SC 1158 at 1163.
209 (1964) 1 LLJ 436 (SC).
210 2010 (4) SCALE 485.
211 See Durga Prasad, Reinstatement and Labour Law, 7 J LLL, 36 (1965).
212 See D N Vohra, Dismissal, Discharge and Punishment, Lay-off and Retrenchment,
(1967) 316.
213 See Labour Bureau, Industrial Awards in India, (1959) 119.
214 Buckingham Carnatic Mills Co. Ltd v. Their Workmen, (1951) 2 LLJ 314; Punjab
National Bank v. Its Workmen, (1959) 2 LIJ 666 (SC); M L Base and Co. Pvt. Ltd v. Its
Employees, (1961) 2 LLJ 107 (SC).
215 Punjab National Bank v. Its Workmen, op.cit.
216 (1965) 1 LLJ 462.
217 AIR 1961 SC 1158 at 1164.
218 1963 1 LLJ 234 (SC).
219 Burn and Co. v. Their Workmen, (1959) 1 LLJ 450, 454 (SC).
220 See Punjab National Bank v. Their Workmen, (1959) 2 LLJ 666 (SC); Indian General
Navigation and Rly. Co Ltd. v. Their Workmen, (1960) 1 LLJ 13 (SC); IMH Press v.
 Addl. LT, (1960) 1 LLJ 499 (SC).
221 See Tika Ram and Sons Ltd. Oil Mill v. Its Workmen,. (1956) 1 LLJ 327.
222 Swadeshi Industries Ltd. v. Workmen, (1960) 2 LLJ 78 (SC).
223 (1959) 2 LLJ 26 (SC).
224 Punjab National Bank v. Its Workmen, AIR 1960 SC 160.
225 Air India Corporation v. V A Rebellow, (1972) 1 SCC 814; AIR 1972 SC 1343;Francis
Klein & Co. (P) Ltd v. Workmen, (1972) 4 SCC 569; AIR 1971 SC 2414 and BHEL v.
M Chandrasekhar Reddy, (2005) 2 SCC 481; 2005 SCC (L&S) 282; AIR 2005 SC 2769.
226 (2001) 9 SCC 609; 2002 SCC (L&S) 257; AIR 2001 SC 3645.
227 Sudhir Vishnu Panvalkar v. Bank of India, (1997) 6 SCC 271; 1997 SCC (L&S) 1662;
AIR 1997 SC 2249.
228 (2005) 7 SCC 435; 2005 SCC (L&S) 940; AIR 2005 SC 3272.
229 (1996) 9 SCC 69; 1996 SCC (L&S) 1194.
230 Binny Ltd v. Workmen, (1972) 3 SCC 806; AIR 1972 SC 1975; Binny Ltd v. Workmen,
(1974) 3 SCC 152; 1973 SCC (L&S) 444; AIR 1973 SC 1403; Anil Kumar Chakraborty
v. Saraswatipur Tea Co. Ltd, (1982) 2 SCC 328; 1982 SCC (L&S) 249; AIR 1982 SC
1062; Chandu Lal v. Pan American World Airways Inc.; (1985) 2 SCC 727; 1985 SCC
(L&S) 535; AIR 1985 SC 1128; Kamal Kishore Lakshman v. Pan American World
Airways Inc., (1987) 1 SCC 146; 1987 SCC (L&S) 25; AIR 1987 SC 229 and Pearlite
Liners (P) Ltd v. Manorama Sirsi, (2004) 3 SCC 172; 2004 SCC (L&S) 453; AIR 2004
SC 1378.
231 (2006) 11 SCC 67; (2007) 1 SCC (L&S) 359; AIR 2007 SC 548.
232 AP SRTC v. Raghuda Siva Sankar Prasad, (2007) 1 SCC 222; (2007) 1 SCC (L&S) 151;
AIR 2007 SC 152.
233 (2012) 1 SCC 442.
234 Oriental Textile Finishing Mills v. Labour Court, (1971) 2 LLJ 505 (SC).
235 Sandhu Resettlement Corporation Ltd v. Industrial Tribunal, AIR 1960 SC 529.
236 Punjab National Bank Ltd v. PNB Employees' Federation, AIR 1960 SC 160.
237 See Vishwamitra Press, 1954 2 LLJ 53 (Adj); Elgin Mills Co. Ltd v. Suti Mill Mazdoor
Union, 1958 1 LLJ 100 (LAT); Mangalambika Metal Industries v. Its Workmen, 1958 1
LLJ 419 (SC).
238 Varadraja Motor Services v. Its Workmen, (1953) 1 LLJ 226.
239 (1979) 2 SCC 80.
240 Id. at 86.
241 (2002) 6 SCC 41.
242 2002 Lab. IC 1090.
243 Ram Ashrey Singh v. Ram Bux Singh, (2003) 2 LLJ 176.
244 (2003) 3 LLJ 244; 2003 LLR 848.
245 (2003) 4 SCC 27.
246 (2003) 9 SCC 221.
247 (2006) 1 SCC 479.
248 (2006) 9 SCC 434.
249 (2009) 5 SCC 705.
250 (2010) 2 SCC 70.
251 (1970) 1 LLJ 228.
252 (1978), 2 LLJ 354.
253 (2010) 1 SCC 142.
254 2011 Lab. IC 2092 (SC).
 CHAPTER
22
Management’s Prerogative During the
Pendency of Proceedings and Notice of
Change

SECTION – I

I. LEGISLATIVE DEVELOPMENT AND THE PRESENT

LEGISLATION
Prior to 1947, there was no provision corresponding to Section 33 in any
legislative enactment. This section, as it was first enacted in the Industrial
Disputes Act 1947, read:
No employer shall, during the pendency of any conciliation
proceedings or proceedings before a tribunal, in respect of any
industrial dispute, alter, to the prejudices of the workmen
concerned, such conditions of service applicable to them
immediately before the commencement of such proceedings,
nor, save with the express permission in writing of the
conciliation officer, board or tribunal as the case may be, shall
during the pendency of such proceedings, discharge, dismiss or
otherwise punish such workmen, except for misconduct not
 connected with the dispute.
The restriction on alteration of conditions of service being absolute, these
provisions adversely affected even legitimate management’s action. Moreover,
they hardly served their intended purpose, viz., protection of labour against
victimization and prevention of further exacerbation of already strained relations
between parties. There was a marked tendency on the part of employers to take
resort to the extreme punishment of dismissal wherever the misconduct was not
connected with the pending dispute. To overcome the shortcomings, the 1950-
Amendment Act made several changes in the original section. The amended
section ran:
During the pendency of any conciliation proceedings or proceedings
before a tribunal in respect of any industrial dispute, no employer shall:
(a) alter, to the prejudice of the workmen concerned in such dispute, the
conditions of service applicable to them immediately before the
commencement of such proceedings; or
(b) discharge or punish, whether by dismissal or otherwise, any workman
concerned in such dispute save with the express permission in writing of
the conciliation officer, board or tribunal, as the case may be.
However, the widening of the ambit of Section 33 had the natural effect
of increasing the number of applications made to obtain the necessary
permission and consequent delay in their disposal by the concerned authorities.
Thus, notwithstanding the qualified nature of the ban introduced by the 1950-
Amendment, Section 33 severaly curtailed management’s prerogative, and
thereby prevented employers from taking timely action and led to stultification
of business. The 1956-Amendment seeks to provide greater freedom to
management and, at the same time protect to a great extent, concerned workmen
and union leaders against victimization and high-handed action of the employer.
The present section runs:
(1) During the pendency of any conciliation proceedings before a conciliation
officer or a board or of any proceeding before an arbitrator or a labour
court or tribunal or national tribunal in respect of an industrial dispute, no
employer shall—
(a) in regard to any matter connected with the dispute, alter, to the
prejudice of the workmen concerned in such dispute, the conditions
of service applicable to them immediately before the
commencement of such proceeding, or
(b) for any misconduct connected with the dispute, discharge or punish,
 whether by dismissal or otherwise, any workmen concerned in such
dispute, save with the express permission in writing of the authority
before which the proceeding is pending.
(2) During the pendency of any such proceeding in respect of an industrial
dispute, the employer may, in accordance with standing orders applicable
to a workman concerned in such dispute, or, where there are no such
standing orders, in accordance with the terms of the contract, whether
express or implied, between him and the workman—
(a) alter, in regard to any matter not connected with the dispute, the
conditions of service applicable to that workman immediately before
the commencement of such proceeding; or,
(b) for any misconduct not connected with the dispute, discharge or
punish that workman, whether by dismissal or otherwise:
Provided that no such workman shall be discharged or dismissed, unless
he has been paid wages for one month and an application has been made by the
employer to the authority before which the proceeding is pending for approval of
the action taken by the employer.
(3) Notwithstanding anything contained in sub-section (2), no employer shall,
during the pendency of any such proceeding in respect of an industrial
dispute, take any action against any protected workman concerned in such
dispute—
(a) by altering to the prejudice of such protected workman, the
conditions of service applicable to him immediately before the
commencement of such proceedings; or
(b) by discharging or punishing, whether by dismissal or otherwise, such
protected workman, save with the express permission in writing of
the authority before which the proceeding is pending.
Explanation—For the purposes of this sub-section, a ‘protected
workman’ in relation to an establishment, means a workman who, being a
member of the executive or other office bearer of a registered union connected
with the establishment, is recognized as such in accordance with rules made in
this behalf.
(4) In every establishment, the number of workmen to be recognized as
protected workmen for the purposes of sub-section (3) shall be one per
cent of the total number of workmen employed therein subject to a
minimum number of five protected workmen and a maximum number of
100 protected workmen and for the aforesaid purpose, the appropriate
 government may make rules providing for the distribution of such
protected workmen among various trade unions, if any, connected with
the establishment and the manner in which the workmen may be chosen
and recognized as protected workmen.
(5) Where an employer makes an application to a conciliation officer, board,
an arbitrator, a labour court, tribunal or national tribunal under the proviso
to sub-section (2) for approval of the action taken by him, the authority
concerned shall, without delay, hear such application and pass, within a
period of 3 months from the date of receipt of such application, such order
in relation thereto as it deems fit.
Provided that where any such authority considers it necessary or
expedient so to do, it may, for reasons to be recorded in writing, extend such
period by such further period as it may think fit.
Provided further that no proceedings before any such authority shall lapse
merely on the ground that any period specified in this sub-section has expired
without such proceedings being completed.

II. OBJECT OF SECTION 33

The object of Section 33 is to (i) protect the workman against victimization by
the employer and (ii) ensure expeditious termination of proceedings of industrial
disputes in a peaceful atmosphere, undisturbed by any subsequent cause leading
to further exacerbation of already strained relations between the employer and
the workman1.

III. REQUIREMENTS UNDER SECTION 33

A. Pendency of Proceedings
One of the fundamental conditions of Section 33 of the Industrial Disputes Act,
1947 is that the proceeding must be pending before one of the authorities
specified in the section, namely, before the conciliation officer, board of
conciliation or voluntary arbitrator under Section 10A or labour court, industrial
tribunal or national tribunal. It does not, however, include pendency of
proceedings before the high courts2. The pendency of relevant proceedings is
thus the condition precedent for the application of Section 333.
B. Workmen Concerned in the Disputes
The question about construction of the words ‘workman concerned in such
dispute’ which occur in Sections 33(1) and 33(2) has been the subject matter of
judicial decisions and somewhat inconsistent views have been taken by different
high courts on this point. While some high courts have narrow interpretations4 to
the aforesaid expression, several others adopted liberal interpretations5. The
controversy has been set at rest by the Supreme Court in New India Motors Pvt
Ltd v. Morris (K T)6 and Digwadih Colliery v. Ramji Singh7. In the former
case, the Supreme Court observed that even as a matter of construction, there
was no justification for assuming that the workman concerned in such dispute
should be workman directly or immediately concerned in the said dispute. In the
Court’s view, there was no justification for adding the further qualification of
direct or immediate concern which necessarily narrows the construction. In
dealing with the question as to which workman can be said to be concerned in an
industrial dispute, the Court pointed out that the essential condition for raising of
an industrial dispute itself, and if an industrial dispute can be raised only by a
group of workmen acting on their own or through their union, then it would be
difficult to resist the conclusion that all those who sponsored the dispute are
concerned with it. It further added that this construction is harmonious with the
definition prescribed by Section 2-A and with the provisions contained in
Section 18 of the Act. It held that ‘workmen concerned in such dispute cannot be
limited only to the workman who are directly concerned with the dispute’ but
includes all workmen on whose behalf the dispute has been raised as well as
those who would be bound by the award. In the latter case, the Supreme Court
said: ‘It is necessary to enquire what was the subject matter of the industrial
dispute concerned’. It pointed out that the petitioner filing an application under
Section 33-A should have satisfied the tribunal by providing the nature of the
dispute during the pendency of the act which gave rise to the application under
Section 33-A before asking the tribunal to make a finding in his favour under
Section 33(2) and in the absence of such evidence, the tribunal was not justified
in holding that Section 33(2) had been contravened.
The aforesaid view was reaffirmed by the Supreme Court in Tata Iron
and Steel Co. v. Singh (D R).8

C. Action must be bona fide

Another requirement for permission or approval under Section 33 is that the
action of the management must be bona fide. It has been settled in a catena of
cases that if the discharge or dismissal of a workman is a colourable exercise of
the power to discharge or dismiss a workman in accordance with the standing
orders or is a result of victimization or unfair labour practice, the industrial
tribunal will intervene by refusing to grant ‘permission’ or ‘approval’.9

IV. SCOPE OF INQUIRY UNDER SECTION 33

This question came up for consideration in Atherton West & Co. Ltd v. Jute
Mill Mazdoor Union10 and Lakshmi Devi Sugar Mills v. Pt. Ram Sarup.11 In
the former case, the Supreme Court ruled that in discharging its limited
jurisdiction, the tribunal had only to institute an inquiry and come to the
conclusion as to ‘whether there was a prima facie case made out for the
discharge or dismissal of the workman and the employer, his agent or manager
was not actuated by any improper motives or did not resort to any unfair labour
practice or victimization in the matter of the proposed discharge or dismissal of
the workman.’ In the latter case, Justice Bhagwati observed:
A prima facie case, at least in the disciplinary situation would
be made out if, on the materials before it, the tribunal comes to
the conclusion that a fair inquiry was held by the management in
the circumstances of the case and it had bona fide come to the
conclusion that the workman was guilty of misconduct with
which he had been charged…
The combined effect of the aforesaid decision has been summarized in
Punjab National Bank Ltd v. Its Workmen.12
Where an application is made by the employer for the requisite
permission under Section 33, the jurisdiction of the tribunal in dealing with such
an application is limited. It has to consider whether a prima facie case has been
made out by the employer for the dismissal of the employee in question. If the
employer has held a proper inquiry into the alleged misconduct of the employee,
and if it does not appear that the proposed dismissal of the employee amounts to
victimization, or an unfair labour practice, the tribunal has to limit its inquiry
only to the question as to whether a prima facie case has been made out or not.
In these proceedings, it is not open to tribunal to consider whether the order
proposed to be passed by the employer is proper or adequate or whether it errs
on the side of excessive severity; nor can the tribunal grant permission, subject
to certain conditions, which it may deem to be fair. It has merely to consider the
prima facie aspect of the matter and either grant the permission or refuse it
accordingly by holding that a prima facie case is or is not made out by the
employer.13
Again, in Punjab Beverages (P) Ltd v. Suresh Chander,14 Justice
Bhagwati explained the scope of inquiry under Section 33:
… the only scope of inquiry before the tribunal exercising
jurisdiction under Section 33 is to decide whether the ban
imposed on the employer by this section should be lifted or
maintained by granting or refusing the permission or approval
asked for by the employer. If the permission or approval is
refused by the tribunal, the employer would be precluded from
discharging or punishing the workman by way of dismissal and
the action of discharge or dismissal already taken would be void.
But the reverse is not true for even if the permission or approval
is granted, that would not validate the action of discharge or
punishment by way of dismissal taken by the employer. The
permission or approval would merely remove the ban so as to
enable the employer to make an order of discharge or dismissal
and thus avoid incurring the penalty under Section 31 (1), but
the validity of the order of discharge or dismissal would still be
liable to be tested in a reference at the instance of the workmen
under Section 10.
Concept of prima facie case: In Martin Burn Ltd v. Banerjee (R N),15
Justice Bhagwati delineated the concept of prima facie case:
A prima facie case does not mean a case proved to the hilt but a
case which can be said to be established if the evidence which is
led in support of the same was believed. While determining
whether a prima facie case has been made, the relevant
consideration is whether on the evidence led, it was possible to
arrive at the conclusion in question and not whether that was the
only conclusion which could be arrived at on that evidence. It
may be that the tribunal considering this question may itself
have arrived at a different conclusion. It has, however, not to
substitute its own judgement for the judgement in question. It
has only got to consider whether the view taken is a possible
view on the evidence on record.
 The aforesaid view was reiterated in later decisions.16

V. ALTERATION IN THE CONDITIONS OF SERVICE

An analysis of sub-sections (1) (a) and (2) (a) of Section 33 shows that they
apply where:
Sub-section (1) Sub-section (2)
(i) there is pending dispute; (i) there is pending dispute;
(ii) service conditions are (ii) service conditions are not
connected with the dispute; connected with the dispute;
(iii) service conditions sought to be (iii) any service condition, whether
altered must be prejudicial to prejudicial or not, is sought to
the workmen concerned. be alerted.
(iv) service conditions sought to be (iv) service conditions sought to be
altered affect the workman altered affect the workman
concerned in the dispute. concerned in the dispute.
It will be observed that if any of the aforesaid four elements under sub-
section (1) are missing, that sub-section would not apply. However, sub-section
(2) comes into operation not when any of the elements of sub-section (1) are
missing but, only when all the four elements of that sub-section are concurrently
present. Thus, for instance, if the dispute is not pending, sub-section (1) would
not apply. Again, if the service conditions sought to be altered do not affect the
workmen concerned in the dispute, sub-section (1) would not apply. If the matter
is unconnected with the dispute, the employer can change service conditions
even if such service conditions are not prejudicial to the workman concerned,
only in accordance with the standing orders. But, where the matter is connected
with the dispute, the employer may alter the service conditions of the workmen
concerned, so long as they are not prejudicial to them, without any reference to
the standing orders.
The Supreme Court in Reserve Bank of India v. C T Dighe17 reiterated
its earlier view that promotion of personnel relates to their condition of service
and not the chance of promotion only. Explaining this view, the Court observed:
It is difficult to see how alteration of the conditions of eligibility
governing the employees of a particular cadre can amount to
changing the conditions of service of employees of another
cadre, assuming that the said conditions are conditions of
 service. The change introduced in respect of stenographers and
personal assistants may have an impact on the promotional
prospects of employees from another cadre who are already in
the panel or even those who were expecting to be included in the
panel, but it is not possible to agree that this would amount to
changing their conditions of service. It is difficult to think of the
conditions of service of an employee as including an implied
right to prevent the employer from altering the conditions of
other employees.

A. Lockout
Tribunals and courts impliedly concede that lockout affects the ‘condition of
service.’ However, they assert that the conditions of service would be affected if
they lose their right to receive their pay during the period of lockout in all
circumstances, but the question whether they would be entitled to get wages
during that period cannot be postulated with certainty for that would depend
upon a variety of conditions.

B. Lay-off
Lay-off affects the earning of the concerned workman and would prima facie
appear to attract the provisions of Section 33. However, the tribunals and courts
have laid down that lay-off in accordance with (i) established practice, (ii)
provisions of standing orders, (iii) legislative prescription, does not come within
clause (a) of sub-section (1)(2)(3) of Section 33.

C. Suspension
In Laxmi Devi Sugar Mills Ltd v. Ram Sarup,18 the Supreme Court observed
that suspension does not amount to punishment; it is only an interim measure
and will last till the application for permission to punish the workman is made
and the tribunal passes order thereon. If the tribunal grants the permission, the
concerned workman will not get wages for the suspension period, but if the
permission is refused, he shall be paid for the whole period.
In Sasamusa Sugar Works (P) Ltd v. Shobrati Khan,19 the Supreme
Court observed that if the employer suspends a workman, he must pay wages for
the suspension period. However, in Hotel Imperial v. Hotel Workers Union20,
the Supreme Court observed:
 The undisputed common law right of the master to dismiss his
servant for proper cause has been subjected by Section 33 to a
ban; and that in fairness must mean that pending the removal of
the said statutory ban, the master can after holding proper
inquiry, temporarily terminate the relationship of master and
servant by suspending his employee pending proceedings under
Section 33.

D. Transfer
In K Devender Reddy v. Singareni Collieries Company Ltd,21 the Andhra
Pradesh High Court held that if any employer transfers the workman during
pendency of conciliation proceedings to an equivalent post, that will not amount
to alteration of his conditions of service. Transfer is a condition of service.

VI. MISCONDUCT NOT CONNECTED WITH PENDING

DISPUTE: SECTION 33 (2) (B)
Section 33 (2) (b) permits an employer to discharge or punish a workman by
way of dismissal or otherwise for any act of misconduct not connected with the
dispute pending before the authority, in accordance with the standing orders, or
with the terms of contract whether express or implied. But the proviso to this
clause requires the employer in cases of discharge or punishment by way of
dismissal or otherwise to pay to the workman concerned wages for one month
and to make an application to the authority before which the proceeding is
pending for ‘approval’ of the action taken’.22
A three judge bench of the Supreme Court in Tata Iron and Steel Co. Ltd
v. S N Modak23, had the occasion to spell out the nature of the order of
discharge or dismissal. The employer ruled that such order is incomplete and
inchoate until the approval is obtained. The employer could not effectively
terminate the relationship of the employer and the employee, as the question of
the validity of the order would have to be gone into, and if approval is not
accorded by the tribunal, he would be bound to treat the workmen concerned as
his employees and pay them all the wages for the period even though he
subsequently could proceed to terminate the employees’ services. The aforesaid
view was reiterated by the Supreme Court in S. Ganpathy v. Air India.24 The
Court held that the relationship of employer and employee is not effectively
terminated by the passing of the order of discharge or dismissal until approval
thereto in terms of Section 33 (2) (b) is accorded by the tribunal.
The provision of Section 33 (2) (b) has given rise to the following two
issues:
(i) Whether the action of the company in removing the names of applicants
from its rolls on the presumption that they had abandoned it, constituted
alteration in the conditions of service of the workmen?
(ii) Whether in the absence of any pleading or request by the employer, it is
the duty of the labour court or tribunal to call suo motu the employer to
adduce additional evidence to justify the termination of service of a
workman? We will deal with these questions seriatim.
The first issue was raised in G T Lad v. Chemicals and Fibres India
25
Ltd. In this case, the appellant along with certain other workmen went on an
indefinite and peaceful strike to demand reinstatement of three dismissed
leaders. These workers did not resume duties in spite of notice from the
company to do so by a specified date failing which their absence would be
treated as voluntary abandonment of service and their names would be struck off
from muster-rolls. Thereafter, the company sent separate communications to the
appellant and others informing them that by not reporting for duty, they had
confirmed its presumption that they were no longer interested in continuing their
service in the company. It therefore struck off their names from its rolls and sent
a cheque to each for the amount due to them. There was nothing in the standing
orders of the company to indicate that it could terminate the services of
workmen on the ground of abandonment of service because of their going on
strike in enforcement of their demands. The Supreme Court held that in the
absence of any provision in the certified standing orders by virtue of which the
company could have terminated the services of the appellants, the impugned
action on its part amounted to an alteration in the conditions of service of the
appellants during the pendency of the industrial dispute before the labour court,
which adversely affected them, could not be countenanced.
In Shankar Chakravarty v. Britannia Biscuit Co.26, the Supreme Court
was invited to decide the second issue. In this case, the management after
holding an inquiry which was found to be defective and in violation of natural
justice, terminated the service of the workman and gave him one month’s wages
in lieu of notice. Since an industrial dispute between workmen and the
management was pending before the industrial tribunal, the management filed an
application under Section 33 (2) (b) seeking approval of its action by the
authority concerned. The tribunal held that the inquiry was conducted in
violation of the principles of natural justice. Accordingly, the application was
rejected. The company thereupon filed a writ petition under Articles 226 and 227
of the Constitution, in the Calcutta High Court, but it was dismissed. The
company then preferred letters patent appeal before a division bench of the
Calcutta High Court. It held that after the industrial tribunal has adjudicated
upon the preliminary issue as to whether the inquiry was in accordance with the
principles of natural justice and having held against the company, it was
incumbent upon him to give to the employer an opportunity to lead evidence to
prove the charges alleged against the workmen. It further observed that as the
issue about the validity of the inquiry was not decided as a preliminary issue and
since thereafter no opportunity was given to the employer, it would be necessary
to remand the matter to the industrial tribunal for giving an opportunity to the
employer to adduce further evidence, if so advised, and then to finally dispose of
the application under Section 33 (2) (b). Thereupon, an appeal was filed in the
Supreme Court. The Court held:
Undoubtedly, if such a pleading is raised, an opportunity is
sought to be given but if there is no such pleading either in the
original application or in the statement of claim or written
statement or by way of application, during the pendency of the
proceedings, there is no duty cast by law or by the rules of
justice, reason and fair play that a quasi-judicial tribunal like the
industrial tribunal or the labour court should adopt an advisory
role by informing the employer of its rights, namely the right to
adduce additional evidence to substantiate the charges when it
failed to make good the domestic inquiry and then to give an
opportunity to it to adduce additional evidence.
In view of this, the Court said that apart from being unfair to the
workmen, it would be against the principles or rules governing the procedure to
be adopted by quasi-judicial tribunals, against the adversary system and the
principles governing the decision of lis between the parties arrayed before such
tribunals.

Scope of Section 33 (2) (b)

The jurisdiction of the tribunal while considering an application for grant of
approval has succinctly been stated by the Supreme Court. Thus, in Martin Burn
Ltd v. R N Banerjee,27 as stated earlier the Court held that while exercising
jurisdiction under Section 33(2)(b) of the Act, the industrial tribunal is required
to see as to whether a prima facie case has been made out as regards the validity
or otherwise of the domestic inquiry held against the delinquent; keeping in view
the fact that if the permission or approval is granted, the order of discharge or
dismissal which may be passed against the delinquent employee would be liable
to be challenged in an appropriate proceeding before the industrial tribunal in
terms of the provision of the Industrial Disputes Act.
In Cholan Roadways Ltd v G. Thirugnanasambadam28, the Supreme
Court also observed the standard of proof required in a domestic inquiry vis-a-
vis a criminal trial is absolutely different. Whereas in the former ‘preponderance
of probability’ would suffice; in the latter, ‘proof beyond all reasonable doubt’ is
imperative. The tribunal while exercising its jurisdiction under Section 33(2)(b)
of the Industrial Disputes Act was required to bear in mind the aforementioned
legal principles. Furthermore, in a case of this nature, the probative value of the
evidence showing the extensive damages caused to the entire left side of the bus;
the fact that the bus first hit the branches of a tamarind tree and then stopped at a
distance of 81 feet there from even after colliding with another bus coming from
the opposite direction deserved serious consideration at the hands of the tribunal.
The nature of impact clearly demonstrates that the vehicle was being driven
rashly or negligently.

Application of Res Ipsa Loquitur

In Pushpabai Parshottam Udeshi v. Ranjit Ginning and Pressing Co. Pvt.
Ltd29, the Supreme Court observed:
The normal rule is that it is for the plaintiff to prove negligence
but as in some cases, considerable hardship is caused to the
plaintiff as the true cause of the accident is not known to him but
is solely within the knowledge of the defendant who caused it,
the plaintiff can prove the accident but cannot prove how it
happened to establish negligence on the part of the defendant.
This hardship is sought to be avoided by applying the principle
of res ipsa loquitur. The general purport of the words res ipsa
loquitur is that the accident ‘speaks for itself’ or tells its own
story. There are cases in which the accident speaks for itself so
that it is sufficient for the plaintiff to prove the accident and
nothing more. It will then be for the defendant to establish that
the accident happened due to some other cause than his own
negligence…
The above principle was applied in Sarla Dixit (Smt.) v. Balwant Yadav.30
In Thakur Singh v. State of Punjab31, the Supreme Court observed:
It is admitted that the petitioner himself was driving the vehicle
at the relevant time. It is also admitted that the bus was driven
over a bridge and then it fell into a canal. In such a situation, the
doctrine of res ipsa loquitur comes into play and the burden
shifts on to the man who was in control of the automobile to
establish that the accident did not happen on account of any
negligence on his part. He did not succeed in showing that the
accident happened due to causes other than negligence on his
part.
In Cholan Roadways Ltd v. G Thirugnanasambandam32, the Supreme
Court ruled that res ipsa loquitur is a well-known principle which is applicable
in the instant case. Once the said doctrine is found to be applicable, the burden
of proof would shift on the delinquent. As noticed hereinabove, the inquiry
officer has categorically rejected the defence of the respondent that the bus was
being driven at a slow speed. The Court added that the burden of proof was,
therefore, on the respondent to prove that the vehicle was not being driven by
him rashly or negligently. Further, in a case involving an accident, it is not
essential to examine the passengers of the bus.

Effect of failure to Make Application, Withdrawal of

Application or Refusal To Grant Application
Prior to the decision, conflicting views were expressed even by the Supreme
Court. While two benches of three judges in Strawboard Manufacturing Co. v.
Govind33 and Tata Iron and Steel Co. Ltd v. S N Modak34 discussed earlier,
have held that if the approval is not granted under Section 33(2)(b), the order of
dismissal becomes ineffective from the date such order was passed and,
consequently the employee would become entitled to wages from the date of
dismissal. This view was reiterated by a bench of two judges in S Ganapathi v.
Air India.35 Here, the Court has held that the order of dismissal passed without
the approval under Section 33(2)(b) remains in inchoate condition.
On the contrary, a bench of three judges in Punjab Beverages Pvt. Ltd,
Chandigarh v. Suresh Chand,36 has held that non-approval of the order of
dismissal or failure to make application under Section 33(2)(b) would not render
the order of dismissal inoperative; failure to apply for approval under Section
33(2)(b) would only render the employer liable to punishment under Section 31
of the Act and the remedy open to the employee is either by way of a complaint
under Section 33-A or by way of a reference under Section 10(1))(d) of
Industrial Disputes Act.
The constitution bench in Jaipur Zila Sahkari Bhoomi Vikas Bank Ltd
v. Ram Gopal Sharma37, decided an extremely important issue relating to
interpretation of Section 33(2) (b) of the Industrial Disputes Act, namely: (i)
whether the order of dismissal becomes ineffective from the date it was passed
or from the date of non-approval of the order of dismissal if the approval was not
granted under Section 33(2)(b); and (ii) whether failure to make an application
under Section 33(2)(b) would render the order of dismissal inoperative? (iii)
What is the effect of refusal to grant application? The Court after taking note of
its earlier judgements deprecated the tendency of the employer to take advantage
of the loopholes in the proviso to Section 33(2)(b). It observed that an employer
who does not make an application under Section 33 (2)(b) or withdraws the one
made, cannot be rewarded by relieving him of the statutory obligation created on
him to make such an application. To do so would put such employer in a happier
or more comfortable position than an employer who obeys the command of law
and makes an application inviting scrutiny of the authority in the matter of
granting approval of the action taken by him. The Court not only laid emphasis
on the need to adhere and obey the law in a system governed by rule of law but
deprecated the tendency of the employer who by design (i) avoids to make an
application after dismissing or discharging an employee or file it and (ii)
withdraws the application before any order is passed on it, on its merits, ‘to take
a position that such order is not inoperative or void till it is set aside under
Section 33-A notwithstanding the contravention of Section 33(2)(b) proviso,
driving the employee to have recourse to one or more proceedings by making a
complaint under Section 33-A or to raise another industrial dispute or to make a
complaint under Section 31(1).’ The Court remarked that such an approach (i)
destroys the protection specifically and expressly given to an employee under
proviso to Section 33(2)(b) and (ii) may lead to victimization, unfair labour
practice or harassment. The Court ruled:
… if the authority refuses to grant approval, obviously it follows
that the employee continues to be in service as if the order of
discharge or dismissal had never been passed. The order of
dismissal or discharge passed invoking Section 33(2)(b)
dismissing or discharging an employee brings an end to the
relationship of the employer and employee from the date of his
 dismissal or discharge but that order remains incomplete and
inchoate as it is subject to approval of the authority under the
said provision. In other words, this relationship comes to an end
de jure only when the authority grants approval. If approval is
not given, nothing more is required to be done by the employee,
as it will have to be deemed that the order of discharge or
dismissal had never been passed. Consequences of it are that the
employee is deemed to have continued in service entitling him
to all the benefits available. ‘This being the position, there is no
need of a separate or specific order for his reinstatement…
From the above, it is evident that if approval is not given by the labour
court under Section 33(2)(b) for an order of dismissal or discharge effected by a
management on its employee, it would be deemed that the order of discharge or
dismissal had never been passed and consequently the employee is deemed to
have continued in service entitling him to all the benefits available.38 Thus, not
making an application under Section 33(2)(b) seeking approval or withdrawing
the application once made before any order is passed thereon, contravention of
proviso to Section 33(2)(b).
The aforesaid view was reiterated by a two judge bench of the Supreme
Court in Indian Telephone Industries Ltd v. Prabhakar H Manjare39. In this
case, the employer filed an application before the tribunal seeking approval of
the order of dismissal of the workmen during the pendency of an industrial
dispute before the tribunal. The tribunal refused to grant permission because the
order of dismissal was invalid for non-compliance of Section 33(2)(b).
Subsequently, the management passed another order of dismissal of workmen
and then filed another application before the tribunal without paying full wages
to the said workmen. The tribunal refused to grant the permission. The employer
then filed a writ petition. The single judge of the High Court upheld the order of
the tribunal; the respondents then filed writ appeals challenging the order of the
tribunal as affirmed by the single judge. The division bench of the High Court by
the impugned order allowed the appeals and set aside the order of the single
judge.
Aggrieved by the aforesaid decision, the petitioners filed a special leave
petition before the Supreme Court. The Court held that it was not open to the
employer to make a second application seeking approval of its second order of
dismissal, particularly when full wages were not paid to them. The net effect of
the decision shall be that the order of discharge or dismissal had never been
passed and consequently, the employee would be deemed to have continued in
service entitling him to all the benefits available.
A perusal of the aforesaid judgements reveals that the Supreme Court has
not only overruled the decision of the three-judge bench in Punjab Beverages
case but has also failed to take note of its earlier decisions in Hindustan General
Electric Corporation Ltd v. Bishwanath Prasad40 and Rodrick LA v. Karan
Chand Thaper & Brothers.41 In the former case, the three-judge bench of the
Supreme Court while dealing, inter alia, with Section 33 observed that ‘… these
sections do not lend themselves to the construction that as soon as the labour
court, tribunal, etc., find that there has been a violation of Section 33, it should
award reinstatement.’ The Court added that ‘it must go through the proceedings
which have to be taken under Section 10 and it would be the duty of the labour
court, etc., to examine the merits of the case in the light of the principles
formulated in Indian Iron and Steel Company v. Their Workmen.42 In the latter
case, the Supreme Court held that if an application is made by an employee
under Section 33-A and it is shown that the impugned dismissal of the employee
has contravened Section 33, it is open to the employer to justify the dismissal on
merit by adducing satisfactory evidence before the tribunal.’
Quite apart from the above, one may wish to refer to the provision of
section 2-A of the Industrial Disputes Act which confers a right on the individual
workman to raise dispute connected with discharge, dismissal, retrenchment or
otherwise termination of service. The Supreme Court in Ram Avtar Sharma v.
State of Haryana43 has virtually compelled the appropriate government to make
a reference in all cases covered under section 2A. This remedy would, however,
be available where approval to terminate the services of employee is granted by
the tribunal on an application made by the employer under Section 33(2)(b) of
the Act.
In Delhi Transport Corporation v. Sardar Singh44, the Supreme Court
held that (i) merely because the absence of a workman was treated as leave
without pay for the purpose of maintaining correct record by the management, it
does not absolve a workman from the misconduct of his absence, (ii) when an
employee habitually absents himself from duty even without sanctioned leave
for very long period, it prima facie shows lack of interest in work.
The Supreme Court in Indian Telephone Industries Ltd v. Prabhakar H
Manjare45, has held that the conditions contained in the proviso to Section 33(2)
(b) are mandatory in nature and their non-compliance would render the order of
discharge or dismissal void or inoperative. The Court further held that if the
tribunal refuses to grant approval sought for under Section 33(2)(b), the effect of
it shall be that order of discharge or dismissal had never been passed and
consequently, the employee would be deemed to have continued in service
entitling him to all the benefits available.

When and Where the Tribunal can Interfere with Punishment

It has now been settled through Supreme Court decisions that the question of
punishment is essentially a management’s decision and once the misconduct is
proved either in inquiry conducted by the management or by adducing evidence
before the tribunal for the first time, the quantum of punishments cannot be
interfered with except where it is shockingly disproportionate as to suggest
unfair labour practice and victimization. Thus, in Workmen of Firestone Tyre
and Rubber Co. v. Management46, the Supreme Court ruled:
Once the misconduct is proved either in the inquiry conducted
by an employer or by the evidence placed before a tribunal for
the first time, punishment imposed cannot be interfered with by
the tribunal except in cases where the punishment is so harsh as
to suggest victimization.
Earlier, in Hind Construction and Engineering Co. Ltd v. Their
Workmen47, the Supreme Court observed:
In respect of punishment… for misconduct under the standing
orders, if any, is a matter for the management to decide and if
there is any justification for the punishment imposed, the
tribunal should not interfere. The tribunal is not required to
consider the propriety or adequacy of the punishment or whether
it is excessive or too severe. But where the punishment is
shockingly disproportionate, regard being had to the particular
conduct and past record or is such as no reasonable employer
would ever impose in like circumstances, the tribunal may treat
the imposition of such punishment as itself showing
victimization or unfair labour practice.
The aforesaid view was re-affirmed in Eastern Electric Trading Co. v.
Baldev Lal.48
In I T C Ltd v. Government of Karnataka49, two questions arose before
the Court (i) whether the appropriate government was competent to make a
reference under Section 10 (1) when the proceeding was pending before the
tribunal? and (ii) whether the reference made by the government would be
vitiated due to the pendency of the proceedings under Section 33 (2) (b)? The
division bench of the Karnataka High Court answered it in negative. The Court
ruled that the pendency of proceedings under Section 33 (2) (b), did not in any
way affect the powers of government to make a reference under Section 10 (1),
and the reference under Section 10 did not stand vitiated on the ground that the
government, in deciding to make reference did not take into account the
pendency under Section 33 (2) (b). Further, the grant of approval under Section
33 (2) (b) did not conclude the dispute and the parties would be free to seek
reference under Section 10; the proceedings under Section 33 (2)(b) would
conclude immediately on a reference being made under Section 10 and the
power of the authorities in proceedings under Section 10 would be void and
more so, after Section 11-A was introduced. In order to avoid future disputes, the
Court recommended that it would be better that similar provisions were made for
automatic termination of proceedings under Section 33 (2) (b) on a reference of
the same dispute being made under Section 10.

B. Proviso to Section 33 (2) (b)

The proviso to Section 33 (2)(b) contemplates three things, namely:
(a) discharge or dismissal;
(b) payment of wages for one month; and
(c) making of an application for approval of the action taken.
The aforesaid acts must be simultaneous and the employer’s conduct
should show that they form part of the same transaction, so that when he takes
action under Section 33 (2) by dismissing or discharging an employee, he should
immediately pay him wages for one month and also make an application to the
tribunal at the same time.50 Thus, in Straw Board Manufacturing Co. Ltd v.
Govind51, the Supreme Court explains the concept of ‘simultaneous and part of
the same transaction’ in the following words:
When, however, we say that the employer must take action
simultaneously or immediately, we do not mean that literally,
for when things are to be done, they cannot be done
simultaneously but can only be done one after the other. What
we mean is that the employer’s conducts should show that three
things contemplated under the proviso, namely, (i) dismissal or
discharge, (ii) payment of wages; and (iii) making of the
applications are parts of the same transaction. If that is done,
there will be no occasion whether the application was made as
 part of the same transaction, or at the same time when the action
was taken, would be a question of fact and will depend upon the
circumstances of each case.
Again in Filmistan Pvt. Ltd v. Balakrishna Bhiwa52, the Supreme Court
held that ‘the question whether the application for approval under Section 33 (2)
(b) proviso was made as part of the transaction or at the same time, when the
action was taken, is a question of fact, and will depend upon the circumstances
of each case.’
Whether stay of the reference proceedings by the High Court amounts to
non-pendency of proceedings
In BPL Ltd v. R. Sudhakar53, the question arose whether a dispute is said
to be pending before the industrial tribunal for the purposes of the proviso to
Section 33(2)(b) during the period when the operation of the order of reference
of dispute remain stayed. The Supreme Court answered the question in the
negative and observed that (i) the tribunal gets jurisdiction only on reference
made by the government. When the operation of the very order of reference was
stayed, the question of the dispute pending before the tribunal does not arise
inasmuch as the reference order itself stood suspended so long as the stay order
was operative. Therefore, it could not be said that dispute was pending before
the tribunal when the workmen were dismissed from service and the stay order
was operative. (ii) In case any tribunal proceeds to pass an order inspite of stay
of the operation of the order of reference by the High Court, it may amount to
contempt of the order of the High Court. (iii) In case of some grave misconduct,
the management cannot afford to sit idle or simply wait to take action,
particularly when stay of the operation of the order of reference is obtained at the
instance of union on behalf of the workmen. The Court held that as in the present
case, on the date of dismissal of the workman from service, the interim order
staying the operation of the order of reference was operative. The question of
dispute being pending on that day did not arise which is essential in order to
make an application under proviso to Section 33(2)(b) of the Act. Therefore, the
appellant did not violate the provisions of Section 33(2)(b) of the Act.
Payment of One Month’s Wages. It has been held in a catena of cases54
that the payment of one month’s wages to the discharged or dismissed workman
is a mandatory provision which should be complied with at the time of taking the
action or within a reasonable time. Thereafter, management is not allowed to
make any deduction or adjustment against the alleged past dues55. The
management may, however, make compulsory deduction to fulfil a statutory
obligation under the tax law.56 It is not necessary that the wages for one month
should have been actually paid, because in many cases the employer could only
tender the amount before the dismissal but could not force the employee to
receive the payment before the dismissal becomes effective.57
Application for approval of action taken. In Lord Krishna Textiles Mills
v. Its Workmen58, the Court made an obiter:
Though an express permission in writing is not required in cases
falling under the proviso to Section 33 (2) (b), it is desirable that
there should not be any time lag between the action taken by the
employer and order passed by the appropriate authority in an
inquiry under the said proviso.
In the State Bank of Bikaner v. Balai Chander Sen59 Justice Wanchoo, while
approving Straw Board Manufacturing Co. Ltd60 observed:
…. But there is nothing in Section 33 (2)(b) which requires that
an application for approval can only be made after the action has
been taken. We see nothing in principle against the employer
making an application under Section 33 (2) (b) for ‘approval’ of
the proposed action before the actual action is taken…..
Again in C S T Corporation v. Mohd. Noor Alam61, it has been held that
it is the conduct of the employer that has to be considered and the dismissal or
discharge, payment of wages and making of the application for ‘approval’ form
part of the same transaction.

Effect of Withdrawal of Application

In R S Nagar Central Electronics Ltd62, an application was filed before the
industrial tribunal seeking approval of the action of terminating services of the
workman. During pendency of such application, another application was filed
seeking withdrawal of that application on certain grounds. The tribunal rejected
the application. Thereupon, the employer moved a writ petition before the High
Court. The High Court allowed the writ petition and directed the withdrawal of
such application. Aggrieved by this order, the workman filed a special leave
petition before the Supreme Court. The Court ruled that when an application for
approval is filed by the employer and later he wants to withdraw such
application, no right or liability flows from it and the same is done at the risk of
the employer. The Court added that the workman has no risk in the same.
Crucial Date for Seeking Permission
In Indian Oxygen Ltd v. T Natrajan63, the employer initiated domestic inquiry
against a workman who was declared as ‘protected workman’ at that time. He
applied for permission to the authority before which proceedings were pending.
But before the disposal of the application, the workman ceased to be a protected
workman. The employer, therefore, withdrew the application for approval of
dismissal under Section 33(2)(b) and dismissed the workman. The Madras High
Court held that the dismissal was not illegal because the crucial date for seeking
permission to dismiss is the date of dismissal and not the date of initial action for
disciplinary proceedings.

VII. PROTECTION OF UNION OFFICIAL UNDER

SECTION 33
Section 33 of the Industrial Disputes (Amendment and Miscellaneous
Provisions) Act of 1956, inter alia, protects to a greater extent concerned union
officials64 of the registered trade union against victimization and high-handed
action of management. Sub-section (3) of Section 33 of the Act makes it
incumbent on the employer to take express permission in writing whenever he
wants to alter the conditions of service of any ‘protected workmen’ concerned.
He is also required to take prior permission for discharging or punishing the
workman by dismissal or otherwise. However, in Udumbanchola Estate
Workers Union v. Indian Cardamom Research Institute65, the Kerala High
Court held that even if the workman is a protected workman, merely because the
employer failed to file an application under Section 33(3) while imposing
punishment of dismissal, it will not per se make the dismissal void. The
appropriate remedy is under Section 33-A of the Act.

Protected Workman
The explanation of sub-section (3) of Section 33 defines a ‘protected workman’,
to mean ‘a workman who, being an officer of a registered trade union connected
with the establishment is recognized as such in accordance with the rules made
in this behalf.’
Sub-section (4) of Section 33, lays down that for the purpose of sub-
section (3) there shall be one per cent protected workmen of total number of
workmen employed in the establishment, subject to the condition that there shall
be at least 5 and not more than 100 protected workmen in every establishment.
However, declaration of such workmen as protected workmen must be made
within a reasonable time so that the application may not become infructuous.66
Be that as it may, the idea behind the insertion of such provision was obvious.
‘The legislature in this case appears to be anxious in the interest of healthy
growth and development of trade union movement to ensure for them complete
protection against every kind of order of discharge or punishment because of the
employee’s special position as an officer of a registered trade union recognized
as such in accordance with the rules made in that behalf.’67
Sub-section (3) of Section 33 does not afford any protection to the
member of the executive or other office-bearers of such trade union which is not
registered under the Trade Unions Act, 1926. Next, the requirement of a
‘protected workman’ being an officer of a registered trade union excludes within
its coverage such active and leading members of trade unions who are not the
officers of a trade union. Further, the requirement of a protected workmen’ being
member of a union ignores the interest of those who are not the members of any
union but nevertheless at one time or the other, were involved in trade union
activities and were victimized for such activities. Moreover, sub-section (3) of
Section 33 safeguards the interest of only protected workmen ‘concerned’ in the
dispute. Further, the scope of the ‘limiting clause for any misconduct’ is wider
than that provided under sub-section (1) or sub-section 2.

Declaration of Protected Workman

In Rama Kant Chaudhary v. S K Sarwatia,68 the Delhi High Court has ruled
that declaration of workman as protected under Section 33 (2)(b) is a positive act
of the employer and unless the employer so declares, a workman cannot claim
that he is a protected workman under the Act. But the choice is left to the union,
to choose its office bearers who are to be ‘protected workmen’. It is a mandatory
obligation cast on the employer under Section 33(4) of the Act. The only option
available to employer is to have recognized the workman nominated by union as
‘protected workman’. Merely that the union official is facing disciplinary action
would not render him ineligible of being recognized as a protect workman.69

VIII. SECTION 33-A: THE REMEDY TO AN

AGGRIEVED WORKMAN
Section 33-A confers on industrial employees the right to seek the protection of
industrial tribunals in cases where their rights are violated contrary to the
provisions of Section 33. It confers dual protection to an employee aggrieved by
the contravention of Section 33 namely, (i) by imposing penalty under Section
31 (1); and (ii) by conferring the right to make an application under Section 33
A. The section runs as follows:
Where an employer contravenes the provisions of Section 33
during the pendency of proceedings before a conciliation officer,
board, an arbitrator, a labour court, tribunal or national tribunal,
any employee aggrieved by such contravention, may make a
complaint in writing, in the prescribed manner —
(a) to such conciliation officer or board, and the conciliation officer or board
shall take such complaint into account in mediating in, and promoting the
settlement of, such industrial dispute; and
(b) to such arbitrator, labour court, tribunal or national tribunal and on receipt
of such complaint, the arbitrator, labour court, tribunal or national
tribunal, as the case may be, shall adjudicate upon the complaint as if it
were a dispute referred to or pending before it, in accordance with the
provisions of this Act and shall submit his or its award to the appropriate
government and the provisions of this Act shall apply accordingly.
This section was inserted in the Act in 1950. Prior to this, the only
remedy available to the employee against the breach of Section 33 was to raise
an industrial dispute on that behalf and to move the appropriate government for
its reference to the tribunal for adjudication under Section 10 of the Act. The
trade unions complained that the remedy of asking for a reference under Section
10 involved delay and left the redress of the grievance of the employees entirely
to the discretion of the appropriate government; because even in cases of
contravention of Section 33, the appropriate government was not bound to refer
the dispute under Section 10. That is why Section 33-A was enacted for making
a special provision for adjudication as to whether Section 33 has been
contravened.
The conditions precedent for a complaint under this Section are (i) the
complainant must be a workman, and (ii) he must have been aggrieved because
of contravention of Section 33 by an employer during the pendency of
adjudication proceedings.

A. Who Can Apply

Section 33-A grants relief only to an aggrieved employee. Reading Sections 33
and 33-A together, it will appear that only those persons are competent to initiate
proceedings under Section 33-A who are both ‘employees’ a well as ‘workmen’.
The fact that the complainant satisfies only one out of the two capacities of
‘employee’ and ‘workman’ is not sufficient. Thus, the head of the personnel
department in Bata Shoe Co.70 who was an ‘employee’ but was not a ‘workman’
was held to be not entitled to claim relief under Section 33-A. Again, the tribunal
has no jurisdiction to grant relief to the medical doctor in Bengal United Tea
Co. Ltd71 The decision in Kirloskar Oil Engines72 is yet another illustration.
Complainants who are ‘workmen’ but not ‘employees’ cannot lodge a complaint
under Section 33-A, e.g., dependent entrepreneurs (assuming that they are
‘workmen’).
Section 33-A of the Industrial Disputes Act confers on industrial
employees the right to seek protection from the industrial tribunal where their
rights are violated contrary to the provisions of Section 33. It confers dual
protection to an employee aggrieved by the contravention of Section 33, namely,
(i) by imposing penalty under Section 31(1); and (ii) by conferring the right to
make an application under Section 33-A. Rule 60 of the Industrial Disputes
(Karnataka) Rules, 1957 permits not only the workman but also any other person
who is acquainted with the facts to verify the facts averred in the complaint.
Section 36 of the Industrial Disputes Act also provides that workman may be
represented by any member of the executive or office-bearer of a registered trade
union in any proceedings under the Act.73
M/s B D K Process Control Pvt. Ltd v. Bhartiya Mazdoor Sangh74, the
question arose whether a trade union can file a complaint under Section 33-A of
the Industrial Disputes Act. The Karnataka High Court answered the question in
the affirmative and observed that in the instant case, as the union has been
authorized by the workmen in writing and the names of the aggrieved workmen
were also mentioned in the complaint, the application filed by the union is to be
treated as an application filed by the aggrieved workmen and, therefore, the
application filed by the union under Section 33-A of the Act is maintainable in
law.

B. Time-Limit of Reference Under Section 33-A

Section 33-A does not prescribe any time-limit for reference of the dispute to an
industrial tribunal. But courts75 have stressed that ‘even so it is only reasonable
that disputes should be referred as soon as possible after they have arisen and
after conciliation proceedings have failed, particularly so when the disputes
relate to discharge of workmen wholesale.’

C. Scope of Inquiry
Section 33-A requires that on receipt of the complaint of the aggrieved
employee, the labour court, tribunal or national tribunal shall adjudicate upon the
complaint as if it were a dispute referred to or pending before it in accordance
with the provisions of this Act. The aforesaid words indicate that the jurisdiction
of the labour court, industrial tribunal or national tribunal under Section 33-A is
the same as the jurisdiction of these authorities relating to adjudication of an
industrial dispute on a reference being made to them under Section 10.76
The order passed in an application under Section 33-A is an award similar
to one made in a reference under Section 10 of the Act. Further, it has to be
submitted to the appropriate government and the same has to be published under
Section 17 of the Act.77
The first case where the question came up for consideration of the
Supreme Court was Automobile Products of India Ltd v. Rukmaji Bala.78
Justice Das while construing Section 23 of the Industrial Disputes (Appellate
Tribunal) Act, 1950 which corresponds to Section 33-A observed that the
scheme of the Section indicates that the authority to whom complaint is made is
to decide both the issues, viz., (i) the effect of contravention, and (ii) the merits
of the Act or order of the employer. His lordship added that the provisions of the
Section reveal: ‘that the jurisdiction of the authority is not only to decide
whether there has been a failure on the part of the employer to obtain the
permission of the authority before taking action but also to go into the merits of
the complaint and grant appropriate relief.’
The aforesaid view was reiterated in Equitable Coal Co. v. Algu Singh.79
where the Court observed:
In an inquiry held under Section 23, two questions were to be
considered. Is the fact of contravention by the employer of the
provisions of Section 22 proved? If yes, is the order passed by
the employer against the employee justified on the merits? If
both these questions are answered in favour of the employee, the
appellate tribunal would no doubt be entitled to pass an
appropriate order in favour of the employee. If the first point is
answered in favour of the employee, but on the second point the
ending is that on the merits, the order passed by the employer
 against the employee is justified, then the breach of Section 22
proved against the employer may ordinarily be regarded as a
technical breach and it may not, unless there are compelling
facts in favour of the employee, justify any substantial order of
compensation in favour of the employee.
In Punjab National Bank v. Its Workman80, Justice Gajendragadkar
pointed out that:
There can be no doubt that in an inquiry under Section 33-A, the
employee would not succeed in obtaining an order of
reinstatement merely by proving contravention of Section 33 by
the employer. After such contravention is proved, it would still
be open to the employer to justify the impugned dismissal on the
merits. That is a part of disputes which the tribunal has to
consider because the complaint made by the employer is treated
as an industrial dispute and all the relevant aspects of the said
dispute are to be considered under Section 33-A.
Again in Punjab Beverages Pvt. Ltd v. Suresh Chand81, Justice
Bhagwati summarized the effect of the aforesaid decisions in the following
words:
…. If the contravention of Section 33 is established, the next
question would be whether the order of discharge or dismissal
passed by the employer is justified on merits. The tribunal
would have to go into this question and decide whether, on
merits, the order of discharge or dismissal passed by the
employer is justified and if it is, the tribunal would sustain the
order, treating the breach of Section 33 as a mere technical
breach. Since, in such a case, the original order of discharge or
dismissal would stand justified, it would not be open to tribunal
unless there are compelling circumstances, to make any
substantial order of compensation in favour of the workman….
The tribunal would have to consider all the aspects of the case
and ultimately what order would meet the ends of justice would
necessarily have to be determined in the light of the
circumstances of the case. But this much is clear that mere
contravention of Section 33 by the employer will not entitle the
workman to an order of reinstatement, because inquiry under
 Section 33-A is not confined only to the determination of the
question as to whether the employer has contravened Section 33,
but even if such contravention is proved, the tribunal has to go
further and deal also with the merits of the order of discharge or
dismissal.

D. Power of Labour Court to Grant Interim Relief Under

Section 33-A
Is the tribunal empowered to grant anticipatory relief in the nature of injunction
to prevent a bank from proceeding to make appointment to the cadre of junior
officer by promotion and by direct recruitment in the complaint filed under
Section 33-A of the Industrial Disputes Act, 1947? This issue came up for
examination before the Kerala High Court in Dhanlakshmi Bank Ltd v.
Parameshwara Menon.82 The Court held that Section 33-A did not contemplate
the grant of such anticipatory relief for prevention of any apprehended
contravention of Section 33 and observed:
If and when it is established before the tribunal that there has
been, in fact a contravention of Section 33 by the employer, the
tribunal will, in such event, pass appropriate orders granting
effective relief to the workmen so as to obliterate the
consequences that may have resulted from the act of the
management performed in contravention of Section 33. It is only
to this extent that the jurisdiction of Section 33-A stretches.83
The Court accordingly held that the grant of interim relief in the nature of
injunction was not within the competence of the tribunal since no such power
has been conferred upon it by any of the provisions of the Industrial Disputes
Act.
The Gujarat High Court in Krishna Keshov Laboratories v. Ashwmbhai
G Raval84, held that the tribunal can pass an order for payment of subsistence
allowance by way of interim relief to the workmen.

SECTION – II

CHANGE IN CONDITIONS OF SERVICES: NOTICE OF

 CHANGE
Section 9-A of the Industrial Disputes Act, 1947 requires:
No employer, who proposes to effect any change in the conditions of
service applicable to any workman in respect of any matter specified in the
Fourth Schedule, shall effect such change:
(a) without giving to the workmen likely to be affected by such change a
notice in the prescribed manner of the nature of the change proposed to be
effected; or
(b) within 21 days of giving such notice.
An analysis of the aforesaid provisions reveals that Section 9-A comes
into operation the moment the employer proposes to change any condition of
service applicable to any workman, and once this is done, 21 days’ notice has to
be given to the workmen.

Scope and Purpose

The purpose of enacting Section 9-A is to afford an opportunity to the workmen
to consider the effect of the proposed change and, if necessary to present their
point of view on the proposal. Such consultation further serves to stimulate a
feeling of common/joint interest in the management and the workmen in
industrial progress and thereby increases productivity. This approach on the part
of the industrial employer would reflect his harmonious and sympathetic
cooperation in improving the status and dignity of the industrial employee in
accordance with the egalitarian and progressive trend of our industrial
jurisprudence, which strives to treat the capital and labour as co-sharers and to
break away from the tradition of labour’s subservience to capital.85 Section 9-A
contemplates three stages: the first stage is the proposal by the employer to
effect a change, the next stage is when he gives a notice and the last stage is
when he effects a change in the conditions of service on the expiry of 21 days
from the date of the notice. The conditions of service do not stand changed,
either when the proposal is made or the notice is given but only when the change
is actually effected. That actual change takes place when the new conditions of
service are actually introduced.86 If there is no such change, Section 9-A does
not come into operation.87 Section 9-A comes into operation at the moment the
employer proposes to change the conditions of services applicable to any
workmen, and once this is done, 21 days’ notice has to be given to the
workmen.88

Cancellation of the System of Direct Payment by Introducing

Payment by Contractor
Where the employers refused to pay wages unless the employees agree to work
in accordance with it as recognition scheme contrary to Section 9-A of the
Industrial Disputes Act, it was continued refusal to pay wages and would be a
permanent alteration in the conditions of service and not a solitary instance for
which applications could have been made under Section 33-A.89 The Supreme
Court emphasized the need of complying with the provisions of Section 9-A
before introducing any change in the conditions of service. Thus in Workmen of
FCI of India90, the management cancelled the system of direct payment of
wages and interposed the contractor without complying with the provisions of
Section 9-A. On these facts, the Court held that it amounted to alteration both in
wages and mode of payment to the disadvantage of the workmen. A notice was,
therefore, required to be given before introducing this change. Omission to do so
amounted to an illegal change inviting penalty under Section 31 (2).

Withdrawal of Customary Concession or Privilege

The Supreme Court in General Manager (Operations), State Bank of India v.
State Bank of India Staff Union91 held that Clause 8 of the conditions of
service prescribed in the Fourth Schedule, namely, ‘withdrawal of any
customary concession or privilege or change in usage under Section 9-A does
not cover participation in an election to a municipal council or local body’.
Therefore, the circular laying down a condition that the employees contesting an
election would give an undertaking that he was not and he would not become a
member of a political party and that he was not being nominated by a political
party and that he would not be required to be present in the council/body during
office hours and would not receive remuneration and would not plead his
membership of such body as a bar to his transfer would not bring any change in
the conditions of service of a workman under Section 9-A of the industrial
Disputes Act, 1947.

Voluntary Retirement Scheme

The Bombay High Court in KEC International Ltd v. Kamani Employees
Union92 held that Income Tax approved Voluntary Retirement Scheme (VRS)
results in reduction of posts and hence attracts Section 9-A read with Item 11 of
the IVth Schedule of the Industrial Disputes Act, 1947. On the facts of the case,
the Court distinguished those workmen who accepted VRS but had encashed the
compensation from those workmen who accepted VRS but had not encashed the
compensation cheque. In the latter category, the complaint of violation of
Section 9-A is maintainable.

Change in Age of Retirement

In Punjab State Co-operative Supply and Marketing Federation Ltd v.
Presiding Officer, Industrial Tribunal, Punjab,93 the issue regarding the age of
retirement of class IV employees working in Markfed plants/units was
considered in the meeting of the board of directors. The board, inter alia,
resolved that the age of retirement as mutually agreed between the management
and class IV employees of Markfed plants and units in terms of Rule 39 of the
Model Standing Order be 58 years. Accordingly, copies of the notice were sent
to the manager/general manager, Markfed Punjab Fertilizers, Ludhiana with a
direction to them to serve the same upon the employees union. A copy of the
notice was also displayed on the main entrance gate and one copy was endorsed
to the Secretary, Punjab Markfed Employees Union (Regd.) and Punjab
Fertilizers, Industrial Focal Point, Ludhiana. The workmen who were adversely
affected by the resolution raised an industrial dispute which was referred by the
state government to the tribunal. They claimed that their conditions of service
had been changed prejudicially affecting them without giving notice under
Section 9-A of the Industrial Disputes Act, and therefore, the resolution passed
by the board of directors is liable to be invalidated. They also pleaded that the
board of directors of the Federation did not have the jurisdiction to
amend/modify the 1967-Rules so as to deprive them of the benefits admissible
under those Rules. According to the workmen, the registrar alone was competent
to amend or modify the 1967-Rules and in any case, this could not be done by
the management of the Federation without prior approval of the registrar. The
employer (petitioners) contested the claim of the workmen by asserting that
change in the conditions of service of the workmen had been effected after
giving notice to them through their union. Aggrieved by this award, the
management filed a writ petition before the Punjab and Haryana High Court.
The Court, while dismissing the petition, laid down the following principles:
Section 9-A which is couched in mandatory form, lays down
that ‘no employer who proposes to affect any change in the
conditions of service applicable to any workman in respect of
 any matter specified in the Fourth Schedule, shall affect such
change without giving to the workman likely to be affected by
such change, a notice in the prescribed manner of the nature of
the change proposed to be effected’. This necessarily means that
individual workman, who is likely to be affected by the
proposed change in the conditions of service, must be given
notice of the proposed change. The object underlying the
requirement of issuing notice to the workman is to enable him to
make representation against the proposed change and also take a
decision whether or not to continue in the employment of the
particular employer. Therefore, sending of notice to the union of
the workman cannot be treated as sufficient compliance with the
mandatory requirement of Section 9-A. As a logical corollary to
the aforementioned conclusion, it must be held that
implementation or resolution passed by the board of directors of
the Federation was vitiated due to non-compliance with Section
9-A of the Act and the tribunal did not commit any illegality in
granting a declaration to that effect.

Notice of Change—Mere Display of Notice not Sufficient

In Management of Salem District Co-operative Milk Producers’ Union Ltd v.
Industrial Tribunal94, the Madras High Court held that mere display of the
notice on the notice board will not be sufficient. The notice must be in terms of
the provisions of the Industrial Dispute Act and the Tamil Nadu Industrial
Disputes Rules which, inter alia, stipulate that it must be exhibited in Tamil.

Withdrawal of Construction Allowance Without Notice of

Change
In Hindustan Steel Works Construction Ltd v. Hindustan Steel Works
Construction Ltd Employees Union95, the Supreme Court held that a writ
petition should not be entertained by the High Court under Article 226 of the
Constitution particularly in a matter like alleging change in conditions of service
by the workmen viz., withdrawl of construction allowance by a public sector
undertaking when appropriate remedy and forum are provided under the
Industrial Disputes Act and as such, the learned single judge as well as the
division bench erred in accepting the writ and appeal respectively as filed by the
workers through their union. The Supreme Court, therefore, directed the
employees’ union to approach the appropriate government after framing the
terms to be referred for adjudication.

When Notice of Change not Necessary

In Harmohinder Singh v. Kharga Canteen, Ambala Cantt.96, the Supreme
Court held that it is not necessary to give any notice to the workman under
Section 9-A of the ID Act before introducing Para 3-A in the Standing Orders.
Besides, the respondent’s averment that the amended standing orders were duly
intimated to all its employees who had also signed the same has not been
controverted by the appellant.

Recovery of Payments towards Inadmissible Allowances and

Incentives
In Jossie v. Flag Officer Commanding-in-Chief97, the Kerala High Court held
that recovery of payment made towards inadmissible allowance made by mistake
is not violation of Section 9A of Industrial Disputes Act, 1947.

Transfer of Employees
In Associated Cement Co. Ltd v. Cement Staff Union98, the Bombay High
Court held that transfer of an employee being an incident of service, there is no
question of the order of transfer not being in violation of Section 9A of the
Industrial Disputes Act, 1947.

Reduction in Pay of Workmen

In Sikh Educational Society v. Presiding Officer, Industrial-cum-Labour
Court, UT, Chandigarh,99 the Punjab and Haryana High Court held that there
was violation of Section 9A because notice of change was not given to the
workmen before reducing their pay by withdrawing the benefit of merging 50
per cent of dearness allowances in their basic pay.

Recommendations of the (Second) National Commission on

Labour
The (Second) National Commission on Labour has recommended that there
should be no statutory obligation for the employer to give prior notice in regard
to item 11 of the Fourth Schedule for the purpose of increase in the workforce,
as is the position now under Section 9A. Notice of change, issued by an
employer as per provisions of Section 9A, should not operate as a stay under
Section 33 through such a decision of the management will be justifiable under
Section 33-A.

1 See Punjab National Bank v. ALPNB Employee’s Federation, AIR 1960 SC 1;

Automobiles Products of India v. Rukmaji Bala, AIR 1955 SC 258; Punjab Beverages
(P) Ltd v. Suresh Chand, (1978) 2 SCC 144, 151.
2 Rajasthan State Road Transport Corporation v. Abdul Hussain, 2010 LLR 490.
3 Tata Iron & Steel Co. Ltd v. Modak (S N), (1965) 2 LLJ 128 (SC).
4 New Jehangir Vakil Mills Ltd, Bhavnagar v. N L Vyas, (1958) 2 LLJ 573.
5 Eastern Plywood Manufacturing Co. Ltd v. Eastern Plywood Manufacturing Workers’
Union, (1953) 1 LLJ 628; Newton Studies Ltd v. Ethirajulu, (1950) 1 LLJ 628; Andhra
Scientific Co. Ltd v. Seshgiri Rao, (1959) 2 LLJ 551.
6 New India Motors Pvt Ltd v. Morris (K T), (1960) 1 LLJ 551.
7 Digwadih Colliery v. Ramji Singh, (1964) 2 LLJ 143.
8 Tata Iron and Steel Co. v. Singh, (1965) 2 LIJ 122 (SC).
9 See, Chartered Bank, Bombay v. Chartered Bank Employees Union, (1960) 3 SCR 441;
This principle was adopted by the Supreme Court in Gujarat Steel Tubes Ltd v. G S T
Mazdoor Sabha, (1980) 1 LLJ 137 (SC).
10 Atherton West & Co. Ltd v. Suti Mill Mazdoor Union, AIR 1953 SC 241.
11 Lakshmi Devi Sugar Mills v. Pt. Ram Sarup, AIR 1957 SC 82.
12 Punjab National Bank Ltd v. Its Workmen, AIR (1960) SC 160.
13 Punjab National Bank Ltd v. Its Workmen, op. cit., p 170. See also Cominco Binani
Zinc Ltd v. K N Mohnan, (1993) Lab. IC 1298. Here, the Kerala High Court held that the
inquiry contemplated by the authority under Section 33 (2) (b) is of a very limited nature.
It can disregard the findings entered by the inquiry officer only if they are perverse.
14 Punjab Beverages (P) Ltd v. Suresh Chander, (1978) 2 SCC 144.
15 Martin Burn Ltd v. Banerjee (RN), (1958) 1 LLJ 247.
16 L K Textile Mills v. Its Workman, AIR (1961) SC 860; Swatantra Bharat Mills v. Ratan
Lal, AIR (1961) SC 1156; Central Bank of India v. P C Jain, AIR (1969) SC 183; Lalia
Ram v. D C M Chemical Works, AIR (1978) SC 1004 and Cominco Binani Zinc Ltd v.
K N Mohnan, (1993) Lab. IC 1298.
17 (1981) 2 LLJ 223 (SC).
18 Lakshmi Devi Sugar Mills v. Ram Sarup, (1957) 2 LLJ 17 (SC).
19 (1957) 2LLJ 17 (SC).
20 Hotel Imperial v. Hotel Workers Union, (1959) 2 LLJ 544 (SC).
21 (1999) LLR 242
22 M S Manickam v. Cheran Transport Corporation, (1981) 1 LLJ 396 (Madras). If there is
no ample evidence to connect the misconduct with the occurrence or incident against an
employee, it is always open to the authority under Section 33(2)(b) to say that the finding
of the inquiry officer are perverse. See M/s Brakes India Ltd v. Asstt. Labour
Commissioner, (1994) Lab. IC 552.
23 AIR 1966 SC 380 at 384.
24 1993 Lab. IC 1966.
25 G T Lad v. Chemicals and Fibres India Ltd, (1979) 1 LLJ 260.
26 Shankar Chakravarty v. Britannia Biscuit Co., (1979) 2 LLJ 194(SC).
27 AIR (1958) SC 79: (1958) I LLJ 247.
28 (2005) ILLJ 569.
29 AIR 1977 SC 1735: (1977) 2 SCC 745.
30 AIR 1996 SC 1274; (1996) 3 SCC 179.
31 (2003) 9 SCC 208.
32 (2005) 1 LLJ 569.
33 AIR 1962 SC 1500.
34 AIR 1966 SC 380.
35 AIR 1993 SC 2430.
36 AIR 1978 SC 995.
37 (2002) ILLJ 834 (SC.); (2002) 2 SCC 244.
38 The aforesaid view was followed in State Express Transport Corporation Ltd v. Arasu
Vuralvua Pokkuvarthu Oozhlyar Sangam, 2011 LLR 278 (HC Madras)
39 (2002) 3 LLJ 1134.
40 (1971) 2 LLJ 340.
41 (1963) 1 LLJ 248.
42 2004 LLR 953.
43 1985 Lab. IC 1001.
44 2004 LLR 953.
45 2003 LLR 68.
46 Workmen of Firestone Tyre and Rubber Co. v. Management (1973) 3 SCR 587.
47 Hind Construction and Engineering Co. Ltd v. Their Workmen, (1965) 1 LLJ 462 at
465.
48 Eastern Electric Trading Co. v. Baldev Lal, (1975) 2 LIJ 367 (SC).
49 (1985) 2 LLJ 430.
50 See Kalyani (P H.) v. AIR France, (1903) 1 LLJ 679 (SC); Tata Iron & Steel Co. Ltd v.
Modak, S N, (1965) 2 LLJ 28 (SC); Filmistan (Pvt.) v. Balakrishna Bhiwa (1967) 2 LLJ
637 (Bombay); See also Lord Krishna Textile Mills v. Its Workmen, (1961) 1 LLJ 211
(SC).
51 Straw Board Manufacturing Co. Ltd v. Govind, (1962) 1 LLJ 423 (SC).
52 Filmistan (Pvt.) Ltd v. Balakrishna Bhiwa, AIR 1972 SC 171.
53 (2004) 7 SCC 223.
54 Straw Board Manufacturing Co. Ltd V. Govind, op. cit.; Delhi Transport Undertaking
v. I T Delhi, (1965) 1 LLJ 428; Tata Iron & Steel Co. Ltd v. Modak S N, op. cit.; Calicut
Wynd Motor Service (P) Ltd v. Industrial Tribunal, (1982) Lab. IC 517; See also V K
Verma v. Hindustan Machine Tools Ltd, (1999) LLR 370 (P & H).
55 Delhi Transport Undertaking v. Industrial Tribunal, (1965) 1 LLJ 420 (SC).
56 S Ganpathy v. Air India, 1993 Lab. (C (1966), (SC).
57 Syndicate Bank Ltd v. KRV Bhat, (1967) 2 LLJ 745 (SC); Muzaffarpur Electric. Supply
Co. Ltd v. S K Dutta, (1970) 21 Fac LR 321 (Patna).
58 Lord Krishna Textiles Mills v. Its Workmen, (1962) 1 LLJ 420 (SC).
59 State Bank of Bikaner v. Balai Chander Sen, AIR 1964 SC 732
60 (1962) 1 LLJ 423 (SC).
61 CST Corporation v. Mohd Noor Alam, AIR 1973 SC 1404.
62 (2003) 8 SCC 171.
63 1999 LLR 213.
64 Shri V V Giri observed in the Parliament:
The top executives who are generally victimized by the employers for trade union action
are protected whether the matters referred to are connected with the existing dispute or
matters are unconnected with the dispute. See Lok Sabha Debates, Part II Vol. VI, (1956)
503.
65 1998 LLR 259.
66 Container Corporation of India v. Container Corporation Employes Union, (1998) LLR
301.
67 Air India Corporation Bombay v. V A Rehellow, (1972) 1 LLJ 501, 507–5098.
68 (2003) LLR 129 (Del.).
69 2010 LLR 544 (Kerala HC).
70 Bata Shoe Co. v. Its Workmen, (1956) 1 LLJ 278.
71 Bengal United Tea Co. Ltd, (1962) 2 LLJ 376 (SC).
72 Kirloskar Oil v. H L Bibawe, (1963) 1 LLJ 126.
73 (2002) 8 SCC 400.
74 (2002) Lab IC NOC 24.
75 See Shalimar Works Ltd v. Their Workmen, AIR (1959) SC 1217.
76 See Dalmia International Ltd v. Thomas, (1975) 2 LLJ 526 2 LLJ 526 (Kerala).
77 Bhavnagar Municipality v. A Karimbai, AIR (1977) SC 1229.
78 Automobile Products of India Ltd v. Rukmaji Bala. AIR (1955) SC 258 at 264.
79 Equitable Coal Co. v. Algu Singh, AIR (1958) SC 761.
80 Punjab National Bank v. Its Workmen, AIR 1960 SC 160.
81 Punjab beverages Pvt. Ltd v. Suresh Chand, AIR 1978 SC 995.
82 Dhanlakshmi Bank Ltd v. Parameshwara Menon, (1980) 2 LLJ 45.
83 Id. at 47.
84 (1999) LLR 210.
85 M/s Tata Iron and Steel Co. Ltd v. The Workmen (1972) 2 LLJ 259.
86 North Brook Jute Co. Ltd v. Workmen, AIR 1960 SC 879.
87 Workmen of Sur Iron & Steel Co. v. Sur Iron & Steel Co., (1971) 1 LLJ 570 (SC).
88 Indian Oil Corporation Ltd v. Workmen, (1976) 1 SCC 63.
89 Hindustan Lever Ltd v. Ram Mohan Ray, (1973) 4 SCC 141.
90 (1985) 2 LLJ 4.
91 (1998) LLR 402.
92 (1998) CLR 3.
93 (2003) LLR 463.
94 2010 LLR 435.
95 2005 LLR 1025.
96 2001 LLR 849 (SC).
97 2011 LLR 1168.
98 2010 LLR 162.
99 2011 LLR 159.
 PART IV
STANDING ORDERS
 CHAPTER
23
Contextual Frame work of the Industrial
Employment (Standing Orders) Act,
1946
The modern law of industrial employment requires that the terms of
employment, conditions of service and rules of discipline should not only be
written and known to the employees1 concerned but they should also be
reasonable, fair and uniform. Before the passing of the Industrial Employment
(Standing Orders) Act, 1946, conditions of service of industrial employees were
invariably ill-defined and were hardly ever known with even a slight degree of
precision to the employees.2 Further, in many industrial establishments, the
conditions of service of employees were not uniform and were not even reduced
to writing.3 No doubt, in some large scale industrial establishments, there were
standing orders and rules to govern the day-to-day relations between the
employers and workers but such standing orders or rules were one-sided and
were very elastic to suit the convenience of employers. Further, neither workers’
union nor the government was consulted before these rules or standing orders
were framed and more often than not, they gave an upper hand to employers in
respect of all disputable points.4 This state of affairs resulted in discriminatory
treatment between employers and employees, though all of them were appointed
in the same premises and for the same and similar work.5 Indeed, it was not only
detrimental to the interest of workers but even against the interest of industry
because ‘it resulted in unnecessary industrial conflicts’. Further, it was not in
conformity with social justice, inasmuch as there being no statutory protection
available to the workmen. Indeed, the contract of service was often so unnatural
in character that it would be described as mere manifestation of subdued wish of
the workmen to sustain their living at any cost. An agreement of this nature was
an agreement between two unequals, namely, those who invested their labour
and toil, flesh and blood and those who brought in capital.6 Moreover,7 this was
incompatible with the principles of collective bargaining and rendered their
effectiveness difficult, if not impossible. The Statement of Objects and Reasons
states that, ‘experience has shown that standing orders defining the conditions of
recruitment, discharge, disciplinary action, holidays, leave, etc., go a long way
towards minimizing friction between the management and workers in industrial
undertakings’. In order to overcome this difficulty and achieve harmony and
peace, the Industrial Employment (Standing Orders) Act, 1946 was enacted
requiring the management to define with sufficient precision and clarity the
conditions of employment under which the workmen were working in their
establishments. Thus, the preamble makes it expedient to define the conditions
of employment under them and to make the said conditions known to the
workmen employed by them.
Each industrial undertaking in the private sector enjoys the power to offer
conditions of service to its employees as deemed just and proper by it. This has
resulted in different industrial undertakings operating in the same industry often
offering different conditions of service to the employees and this has resulted in
unnecessary irritation and bitterness amongst the employees serving in the same
industry. The Act was enacted to curb the powers of the employer to offer such
conditions of service as would result in exploitation and bring about uniformity
in conditions of service amongst employees working in different industrial
establishments in the same industry. The Act imposes an obligation on the
employer to explain and state the terms and conditions of service before a person
accepts the employment.8 The Act seeks to define the terms and conditions of
employment of all categories of employees who discharge the same or similar
work in an industrial establishment9 and to make those terms and conditions
widely known to all workmen before they could be asked to express their
willingness to accept the employment.10 The Act also aimed at achieving a
transition from mere contract between unequals to the conferment of ‘status’ on
workmen through conditions statutorily imposed upon the employers by
requiring every industrial establishment to frame ‘standing orders’ in respect of
the matters enumerated in the Schedule appended to the Act. This would result
in employees securing clear and unambiguous conditions of their employment so
as to avoid any confusion in the minds of the employer and employees of their
rights and obligations concerning the terms and conditions of employment and
thereby avoid unnecessary industrial disputes.
Industrial Employment (Standing Orders), 1946 is an Act specially
designed to define the terms of employment of workmen in industrial
establishments, to give the workmen collective voice in defining the terms of
employment and to subject the terms of employment to the scrutiny of quasi-
judicial authorities by the application of the test of fairness and reasonableness.11
It is an Act giving recognition and form to hard-won and precious rights of
workmen.12
The Act, in its original form was, ‘designed only for the purpose of
ensuring that conditions of service, which the employer laid down, became
known to the workmen.’13 However, the liberty of the employer in prescribing
the conditions of service was only limited to the extent that the standing orders
had to be in conformity with the provisions of the Act and as far as practicable,
in conformity with Model Standing Orders. The certifying officer or the
appellant authority were debarred from adjudicating upon the fairness or the
reasonableness of the provisions of the standing orders.14 To meet this
deficiency, in 1956, Parliament widened the scope of the Act. It now casts a duty
upon the certifying officer ‘to adjudicate upon the fairness or reasonableness of
the draft standing orders.’15

Constitutional Validity of Automatic Termination of Service

under Standing Orders
In D K Yadav v. J M A Industries Ltd.16, the Supreme Court held that the
principles of natural justice are mandates of Articles 14 and 21. In view of this,
the Court ruled that the principles of natural justice must be read wherever the
standing orders provide for automatic termination of service for absence without
leave.
In Sudhir Chandra Sarkar v. TISCO17 too, it was held that certified
standing orders would be subject to the test of arbitrariness under Article 14 of
the Constitution.
In Hindustan Paper Corpn. v. Purnendu Chkrobarty18, an employee
absented from duty without prior sanction for about 6 months by sending
applications for leave on medical ground but not supporting them with medical
certificates. On these facts, the Supreme Court held that it would be deemed that
the employee had lost the lien on the job when he had failed to avail the
opportunity by replying in half-hearted way and not reporting for duty.
 In Punjab and Sind Bank v. Sakattar Singh19, it has been held that the
termination of a bank employee absenting for 190 days without holding an
inquiry will not be violative of principles of natural justice.
In Syndicate Bank v. The General Secretary, Syndicate Bank Staff
Association.20, the termination of a bank employee without holding of inquiry
who absented for 582 days in a span of 628 days was held to be justified when
the management had complied with the bipartite settlement.

1 An industrial worker has the right to know the terms and conditions under which he is
employed and the rules of discipline which he is expected to follow. Broadly speaking, in
Indian industries the rules of service are not definitely set out and, like all other laws;
where they exist, they have been very elastic to suit the convenience of employers. No
doubt, several large scale industrial establishments have adopted standing orders and rules
to govern day-to-day relations between the employers and workers, but such standing
orders or rules are merely one-sided. Neither workers’ organizations nor government are
generally consulted before these orders are drawn up and more often than not, they have
given the employers the upper hand in respect of all disputable points. [See Government
of India, Labour Investigation Committee Report (Main Report), 1946, 109.]
2 See U P State Electricity Board v. Hari Shankar Jain, (1978) 4 SCC 16.
3 S S Rly Co. v. Workers Union, AIR (1969) SC 513 at 518.
4 Ibid.
5 Agra Electric Supply Co. v. Aladin, (1969) 2 LLJ 540, 544 (SC); See also U P Electric
Supply Co. Ltd v. Their Workers, (1972) 2 SCC 54.
6 Uptron India Ltd v. Shammi Bhan, (1998) LLR 385.
7 Ibid.
8 Salem Erode Electricity Distribution Co. (Pvt.) Ltd v. Employees Union, (1966) 1 LLJ
443 (SC). See also Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar
Union, (1999) LLR 180: (1999) Lab. IC 430 (SC).
9 Rohtak and Hissar Electric Supply Co. v. State of U P, AIR (1966) SC 1471.
10 Uptron India Ltd v. Workers Union; AIR (1969) SC 513 at 26.
11 S S Rly. Co. v. Workers Union; AIR (1969) SC 513.
12 Ibid.
13 Section 4.
14 See, supra note.
15 Ibid.
16 (1993) 3 SCC 259.
17 (1984) 2 LLJ 223 (SC); AIR 1984 SC 1064.
18 1997 2 LLN 1007 (SC).
19 2001 LLR 155 (SC).
20 2000 LLR 689.
 CHAPTER
24
Scope and Coverage of the Industrial
Employment (Standing Orders) Act,
1946

I. COVERAGE OF THE ACT

A. Industrial Establishments Covered

The Act applies to every industrial establishment wherein 100 or more workmen
are employed, or were employed on any day of the preceding 12 months.1
Several states have extended the application of the Act to establishments
employing 50 or more persons. The (Second) National Commission on Labour
has recommended that establishments employing 20 or more workers should
have standing orders or regulations. There is no need to delimit the issues on
which standing orders can or need be framed. As long as the two parties agree,
all manner of things including multi-skilling, production, job enrichment,
productivity, and so on can also be added. These standing orders will be
prepared by the employer(s) in consultation with the recognized
unions/federations/centres depending upon the coverage, and where there is any
disagreement between the parties, the disputed matter will be determined by the
certifying authority having jurisdiction, to which either of the parties may apply.
Any amendment to the standing orders can be asked for by either party and
agreed to by both parties or referred to the certifying authority or the labour
court for determination. However, no demand for amendment can be made until
at least a year has elapsed. The appropriate government may prescribe a separate
model standing order for units employing less than 50 workers. We append a
draft of model standing orders for such small establishments. The employer will
have to append a copy of model standing orders or the standing orders, mutually
agreed upon with the workers, to the appointment letter of every employee.
The problem connected with the aforesaid provision is whether the fall in
the number of workmen below 100 at any time would make the Act inapplicable.
The division bench of the Bombay High Court in Balakrishna Pillai v. Anant
Engineering Works Pvt. Ltd2 answered it in negative. The Court gave three
reasons in support of its conclusion: First, the provision of Section 1 (3) ‘related
to initial application of the Act as the condition precedent viz., the number of
workmen.’3 ‘There was nothing in the provisions of the Act providing for
cessation or discontinuance of the application of the Act to an establishment on
account of fall in the number of workmen or on any other account.’4 Second,
‘the Act is a beneficial social legislation enacted for the purpose of defining with
certainty the terms of contract of employment and thus guaranteeing the
workmen their conditions of service.’5 Finally, ‘an interpretation which
promotes the objects and purposes of the Act will have to be preferred to one
which will only defeat the same.’
(i) an industrial establishment6 as defined in clause (ii) of Section 2 of
the Payment of Wages Act, 1936; or
(ii) a factory7 as defined in clause (m) of Section 2 of the Factories
Act, 1948 or
(iii) a railway as defined in clause (4) of Section 2 of the Railways Act,
1890, or
(iv) the establishment of a person who, for the purpose of fulfilling a
contract with the owner of any industrial establishment, employs
workmen.
The scope of the aforesaid definition has been delineated in a number of
decided cases. Conflicting views have, however, been expressed on the issue
whether ‘industrial establishment’ covers state electricity boards. While the
Allahabad and Patna High Courts included8 the same; the Madras High Court
excluded it.9 The Supreme Court10 has, however, approved the view of
Allahabad and Patna High Courts. Further, Employees’ State Insurance
Corporation has been excluded by the aforesaid definition, therefore, the
provisions of IESOA do not apply to them.11 Decisions12 also indicate that the
standing orders famed in an industrial establishment by an electrical undertaking
do not cease to be operative on the purchase of the undertaking by the board or
enframing the regulation under Section 79 of the Electricity Supply Act, 1948.
Courts have also held that the definition of ‘industrial establishment’ under
IESOA having been incorporated from the definition of that term in the Payment
of Wages Act, 1936, the position of the latter Act at the time of the enactment of
1946-legislation above would be material and any other or subsequent addition
or amendment to the 1936-Act would be of no avail.13
The appropriate government is empowered to extend the provisions of the
Act to an industrial establishment employing less than 100 workmen by giving 2
months’ notice and issuing notification in the official gazette and specifying the
number in the notification.14

B. Establishments Excluded
The Act is, however, not applicable to:
(i) any industry to which the provisions of Chapter VII of the Bombay
Industrial Relation Act, 1946 apply; or
(ii) any industrial establishment to which the provisions of the Madhya
Pradesh Industrial Employment (Standing Orders) Act, 1961 apply:
Provided that notwithstanding anything contained in the Madhya Pradesh
Industrial Employment (Standing Orders) Act, 1961 … the provisions of
this Act shall apply to all industrial establishments under the control of
the Central Government.15

C. Exempted Establishments
Section 1 (4) of the IESOA provides:
Nothing in this Act shall apply to an industrial establishment in
so far as the workmen employed therein are persons to whom
the Fundamental and Supplementary Rules, Civil Services
(Classification, Control and Appeal) Rules, Civil Services
(Temporary Service) Rules, Revised Leave Rules, Civil Service
Regulations, Civilian in Defence Service (Classification, Control
and Appeal Rules or the Indian Railways Establishment Code of
any other rules or regulation16 that may be notified in this behalf
by the appropriate government in the official gazette, apply.
The opening words of Section 13-B namely ‘nothing in the Act shall
apply’ have been interpreted by the Supreme Court in UP State Electricity
Board v. Hari Shankar Jain17 to exclude the applicability of the Act to the
extent to which the rule or regulation covers the field. According to the Court, to
give any other construction would lead to injustice and would once again place
workmen at the mercy of the employer to be so benign and would promote
industrial strife. The view is in conformity with the Directive Principles of State
Policy enshrined in Articles 42 and 43 of the Constitution. Further, the
expression ‘workmen … to whom … any other rules or regulations that may be
notified in this behalf’ occurring in Section 13-B means ‘workmen enjoying of
rules or regulation.’ The expression cannot be construed so narrowly as to mean
government servants only; nor can it be construed so broadly to mean workmen
employed by whomsoever including private employers, so long their conditions
of service are notified by the government under Section 13-B. The mere fact that
the electricity board had adopted the rules and regulations of the government of
Madras as its transitory rules and regulations did not bring the workmen
employed in industrial establishments under the board within the mischief of
Section 13 B of the IESA.18

D. Government's Power to Exempt

The appropriate government is empowered to exempt conditionally or
unconditionally (i) any industrial establishment, or (ii) class of establishments
from all or any of the provisions of the Act. This should be done by notification
in the official gazette.19 In exercise of this power, the following industrial
establishments in central sphere have been exempted from the provisions of the
Act as on 31 December 1978:
1. All major ports of Bombay, Calcutta, Madras, Cochin, Vishakapatnam and
Kandala including their own railways;
2. Government of India presses (excluding security presses);
3. Training establishments in connection with the re-settlement training
schemes in vocational training centres under the control of the directorate
general of employment and training;
4. Map production and printing offices known as Hathibarkala Litho Office
and Photolitho Office, Dehradun and Photolitho Office at Calcutta;
5. Delhi Road Transport Authority;
6. Mechanical workshop at Hirakund;
7. Industrial establishments of the zonal railways including the Integral
 Coach Factory, Perambur and Chittranjan Locomotive Works.
8. The Indian Veterinary Research Institute, Izatnagar/Mukteshwar.20
9. Industrial establishment owned by the Port Trust Authority administering
the port at Paradip.
An analysis of the aforesaid provisions reveals that the coverage of the
Act is inadequate and needs to be broadened. In this connection, it is relevant to
note that Section 72 of the Industrial Relations Bill, 1978 inter alia, provided:
The provisions of this Chapter shall not apply to any industrial
establishments or undertaking to:
(a) which ordinarily employs less than 50 employees; or
(b) which, during the period of 12 months immediately preceding the
commencement of this Act, ordinarily employed less than 50 employees.
The Bill could have provided relief to workers not covered under the
IESOA, but as stated earlier, the Bill could not find the colour of the Act and so
it lapsed.

II. WORKERS COVERED

Section 2 (i) of the Industrial Employment (Standing Orders) Amendment Act,
1982 provides that the ‘workman’ has the meaning assigned to it in clause (s) of
Section 2 of the Industrial Disputes Act, 1947.

III. EMPLOYER UNDER THE ACT

Section 2 (d) of the IESOA defined ‘employer’ to mean:
The owner of an industrial establishment to which this Act for the time
being applies, and includes:
(i) in a factory, any person named under clause (f) of sub-section (1) of
Section 7 of the Factories Act, 1948 (Act 63 of 1948), as manager of the
factory.
(ii) in any industrial establishment under the control of any department of any
government in India, the authority appointed by such government in this
behalf, or where no authority is so appointed, the head of the department;
(iii) in any other establishment, any person responsible to the owner for the
 supervision and control of the industrial establishment. In Hari Shankar
Jain v. Executive Engineer, Rural Electricity Division21, the Allahabad
High Court held that the employer would include the state electricity
board since it was the owner of the industrial establishment by virtue of
its compulsory purchase. It also held that unless there was any other
provision to the contrary, even the state government, if it happened to be
the owner of an industrial establishment,22 would fall within the ambit of
the definition of ‘employer.’

1 Section 1 (3).
2 Balakrishna Pillai v. Anant Engineering Works Pvt. Ltd, (1975) 2 LLJ 391.
3 Id. at 394.
4 Ibid.
5 Id. at 395.
6 Section 2 (ii) of the Payment of Wages Act defines ‘industrial or other establishment’ to
mean any:
(i) tramway service, or motor transport service engaged in carrying passengers
or goods or both by road for hire or reward;
(ii) air transport service, other than such service belonging to or exclusively
employed in the military, naval or air forces of the Union or civil aviation
department of the Government of India;
(iii) dock wharf or jetty;
(iv) inland vessel, mechanically propelled;
(v) mine, quarry or oilfield;
(vi) plantation;
(vii) workshop or other establishment in which articles are produced, adapted or
manufactured, with a view to their use, to transport and sale;
(viii) establishment in which any work relating to construction, development or
maintenance of building, roads, bridges or canals, or relating to operations
connected with navigation, irrigation or supply of water or relating to
generation, transmission and distribution of electricity or any other form of
power, is being carried on.
7 Section 2 (m) of the Factories Act defines ‘factory’ to mean ‘any premises’ including the
precincts thereof:
(i) whereon 10 or more workers are working or were working on any day of the
preceding 12 months, and in any part of which a manufacturing process is
being carried on with the aid of power, or is ordinarily so carried on, or
(ii) whereon 20 or more workers are, working, or were working on any day of the
 preceding 12 months, and in any part of which a manufacturing process is
being carried on without the aid of power, or is ordinarily so carried on but
does not include a mine, subject to the running shed or hotel, restaurant or
eating place.
A delineation of the above statutory definition of ‘factory’ requires that a factory must
have premises (including the precincts) where ‘manufacturing process’ is being carried
on. The word premises is defined in Murray’s Oxford Dictionary as a ‘house or building
with its ground or other appurtenancy.’ According to the ordinary use of this expression,
when speaking of a concern like a factory, 'premises' will include all the buildings of a
factory, together with the compound in which they stand. A ‘precinct’ is defined in the
same dictionary as ‘the space enclosed by the walls or other boundaries of a particular
place, or building’ and more vaguely, the space lying immediately around a place, without
distinct reference to any enclosure.’ (1) The expression ’manufacturing process’ has been
defined in Section 2 (k) to mean any process for –
(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing,
cleaning, breaking tip, demolishing, or otherwise treating or adapting any
article or substance with a view to its use, sale, transport delivery, or disposal;
or
(ii) pumping oil, water or sewage; or,
(iii) generating, transforming or transmitting power; or,
(iv) composing types for printing, printing by letter press, lithography,
photogravure or other
similar process or book binding; or,
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships
or vessels.
The other ingredient of the definition of ‘factory’ is regarding the workers employed
therein. The definition requires that there must be 10 or more persons working with the
aid of ‘power’ or 20 or more persons working without the aid of power. The word
‘power’ is defined in Section 2(g) to mean ‘electrical energy or any other form of energy
which is mechanically transmitted and is not generated by human or animal agency.’
8 Sindri Fertilizer and Chemical Ltd v. Labour Commissioner, AIR 1959 Pat. 36; Hari
Shankar Jain v. Executive Engineer, Rural Electrification Division, Etah, (1977) 2 LLJ
429 (Allahabad).
9 Coimbatore Municipality v. Triruvenkataswami, (1973) 1 LLJ 82 (Madras).
10 See U P State Electricity Board v. Hari Shankar Jain, (1978) 4 SCC 16.
11 C L Kannan v. ESL Corporation, AIR 1968 Mad. 280.
12 See Hari Shankar Jain v. Executive Engineer, Rural Electrification Division (1977) 2
LLJ 429 (Allahabad), see also U P State Electricity Board v. Hari Shankar Jain, op. cit.,
supra note 10.
13 Valsad Jilla Sahkor Bank Ltd v. D K Patil, 1991 Lab. IC 655.
14 Proviso to Section 1 (3); see also, Shitla Prasad v. State of U P, (1986) Lab. IC 2025.
15 Section 1 (4).
16 Section 13 B.
17 (1978) 4 SCC 16; see also Shitla Prasad v. State of U P, 1986 Lab. IC 2025.
18 See Roman Nambissan v. State Electricity Board, (1967) 1 LLJ 252 (Madras).
19 Section 14.
20 See Government of India, Indian Labour Year Book (1979), 310 (1982).
21 Hari Shankar Jain v. Executive Engineer Rural Electricity Division, (1977) 2 LLJ 429
(Allahabad).
22 Id. at 433.
 CHAPTER
25
Concept and Nature of Standing Orders

I. THE CONCEPT OF STANDING ORDERS

A. The Definition
Section 2 (g) of the Industrial Employment (Standing Orders) Act, 1946
(hereinafter referred to as IESOA) defines ‘standing orders’ to mean:
Rules relating to matters set out in the Schedule
Thus, the items which have to be covered by the standing orders in
respect of which the employer has to make a draft for submission to the
certifying officers are matters specified in the schedule.

B. Content of the Schedule

The matters referred to in the Schedule are:
1. Classification of workmen, e.g., whether permanent, temporary,
apprentices, probationers, or badlis
2. Manner of intimating to workmen periods and hours of work, holidays,
pay-days and wage rates
3. Shift working
4. Attendance and late coming
5. Conditions of procedure in applying for, and the authority which may
grant leave and holidays
 6. Requirements to enter premises by certain gates and liability to search
7. Closing and re-opening of sections of the industrial establishment, and
temporary stoppages of work and the rights and liabilities of the
employer and workmen arising therefrom
8. Termination of employment, and the notice thereof to be given by
employer and workmen
9. Suspension or dismissal for misconduct, and acts or omissions which
constitute misconduct
10. Means of redress for workmen against unfair treatment or wrongful
exactions by the employer or his agents or servants
11. Any other matter which may be prescribed
The enumeration of the aforesaid items is not exhaustive. There seems to
be no reason for including certain items and excluding many other important
items. If the object of the IESOA is to ‘give the workmen collective voice in
defining the terms of employment and to subject the terms of employment to
scrutiny of quasi-judicial and judicial authorities’, there is no reason to exclude
many items from terms of employment and conditions of service. It is significant
to note that Section 73 (1) of the Industrial Relation Bill, 1978 provided:
(i) The Central Government shall, by notification, make standing orders to
provide for the following matters, namely:
(a) Classification of employees, that is to say: whether permanent,
temporary, apprentice, probationers or badlis
(b) Conditions of service of employees, including matters relating to the
issue of orders of appointment of employees, procedure to be
followed by employees in applying for, and the authority which
may grant leave and holidays
(c) Misconduct of employees, inquiry into such misconduct and
punishment therefor
(d) Superannuation of employees
(e) Shift working of employees
The aforesaid provisions could have given great relief to workmen
but it lapsed after the dissolution of the Parliament.
Quite apart from the aforesaid shortcomings, the matters enumerated in
the Schedule have also been the subject-matter of judicial interpretation in a
number of decided cases. Some of the items which invited the attention of the
Court may be noted:
Item 5. In Bagalakot Cement Co. v. R K Pathan1, the Supreme Court has
interpreted ‘condition’ in clause 5 of the Schedule ‘in a broad and liberal sense’2
so as to include leave and holidays3. In its view, ‘to hold otherwise would defeat
the very purpose of clause 5’.4
Item 8. Prior to the Supreme Court decision in U P Electricity Supply Co.
v. T N Chatterjee5, the Madras and Orissa High Courts were divided on the
issue whether the word ‘termination’ in Item 8 included ‘termination of
employment on attainment of age of superannuation’. Thus, in the Hindu v.
Secretary, Hindu Office6, the management of the Hindu had framed certain
standing orders, one of the clauses of which provided that every employee shall
ordinarily retire from service after completing the age of 58 years or 30 years of
unbroken service, whichever is earlier. A question arose whether such a clause in
standing orders is covered by any of the items of the Schedule of the Act. The
Madras High Court held that termination in Item 8 of the Schedule was wide
enough to govern the case of superannuation. But in Saroj Kumar v. Chairman,
Orissa State Electricity Board7, the Court took the contrary view. It held that
‘superannuation’ was covered by ‘termination’ in the Item. However, the
controversy has been set at rest by the Supreme Court in U P Electricity Supply
Co. v. Chatterjee.8 It related to retirement of certain employees on completion of
the age of 55 years or 30 years of service. A question arose whether termination
in Item 8 covered ‘superannuation’. The Court held that termination in Item 8
does not cover each and every form of termination or cessation of employment.
In view of this it held that it did not cover ‘superannuation’ which is automatic
and did not require notice or any act on the part of employer or workmen. The
Court agreed that if termination is to be read in a wider sense as meaning
employment coming to an end, there was no necessity to have Item 9 because
dismissal would then be covered by termination.9
Item 9. The ‘misconduct’ under Item 9 for which an employee can be
dismissed need not necessarily have been committed in the course of his
employment. It is enough if it is of such a nature as to affect his suitability for a
particular employment.10
Item 11. This item refers to ‘any other matter which may be prescribed.’
When the appropriate government adds any item to the Schedule, the relevant
question to be asked would be whether it refers to the conditions of employment
or not. If it does, it would be within the competence of the appropriate
government to add such an item.11
 II. NATURE OF THE STANDING ORDERS
The nature of the standing order has assumed increasing importance in industrial
law. It has also attracted the attention of tribunal and courts. An analysis of the
decided cases relating to the nature of standing order reveals that different
shades of opinion have emerged on the subject namely, it is: (i) statutory in
nature, (ii) a special kind of contract, (iii) an ‘award’, and (iv) a form of
delegated legislation. Let us turn to examine them.

A. Statutory in Character
Prior to the Supreme Court decision, the High Courts were divided on this issue.
Most of the high courts were tilted on the side of statutory nature of contract.
In Tata Chemicals Ltd v. Kailash C Adhvaryar12, a question directly
arose before the Gujarat High Court whether a contract can override the terms of
the standing orders. The Court after considering the provisions of the Act opined
that:
… on a true construction of the various provisions of the Act,
the standing orders when finally certified under the Act are
binding on the employer and the workmen and govern the
relations between the employer and the workmen and it is not
open to the employer and the workmen to contract themselves
out of the rights and obligations created by the standing orders.13
In Behar Journals Ltd v. Ali Hasan14, the division bench of the Patna
High Court also spoke in similar terms:
… the certified standing orders have statutory force and under
the above standing orders, there is a statutory contract between
the employer and the workmen. It could not, therefore, be
possible in law for parties … to enter into a contract overriding
the statutory contract as embodied in the certified standing
orders and any contract contrary to the above orders must be
ignored.15
The aforesaid line of view found the approval of the Supreme Court in
Bagalkot Cement Company Ltd v. R K Pathan16. In this case, even though the
question was not directly in issue, the Court dealt with the nature of standing
orders in the following words:
The Act made relevant provision for making standing orders
which, after they are certified, constitute the statutory terms of
employment between the industrial establishments in question
and their employees17.
And while interpreting certain provisions of the standing orders, Justice
Gajendragadkar observed:
The object of the Act … was to require the employers to make
the conditions of employment precise and definite. The Act
ultimately intended to prescribe these conditions in the form of
standing orders so that what used to be governed by a contract
hereto before, would now be governed by the statutory standing
orders…18
The aforesaid view was reiterated by the Supreme Court in Workmen of
Dewan Tea Estate v. Their Management.19 In this case, a question arose
whether any provision of the Act could have overridden the provisions of the
standing orders. The Court held that the standing orders could only be
overridden by specific provisions of the Act, which may have been introduced
after the standing order was certified. In the course of judgement, the Supreme
Court explained the nature of the standing orders in the following words:
If the standing orders thus become the part of the statutory terms
and conditions of service, they will govern the relations between
the parties unless, of course, it can be shown that any provision
of the Act is inconsistent with the said standing orders. In that
case, it may be permissible to urge that the statutory provision
contained in the Act should override the standing order which
had been certified before the said statutory provision was
enacted.20
In Western India Match Co. v. Workmen21, the Court spoke in similar
terms:
The terms of employment specified in the standing orders would
prevail over the corresponding terms in the contract of service in
existence on the enforcement of the standing orders.22
The Supreme Court in Sudhir Chandra Sarkar v. Tata Iron and Steel
Company23 has clearly stated that the conditions of service laid down in the
standing orders is either statutory in character or has statutory flavour. Similarly,
certified standing orders which statutorily prescribe the conditions of service
shall be deemed to be incorporated in the contract of employment of each
employee with his employer. This line of view was followed in later decisions.24
In U P State Bridge Corporation Ltd v. U P Rajya Setu Nigam S
Karmchari Sangh25, the Supreme Court held that certified standing orders
constitute statutory terms and conditions of service.
A survey of the aforesaid decisions leads to the conclusion that the
standing orders are statutory in nature and their violation is punishable under the
Industrial Employment (Standing Orders) Act, 1946.
In Rajasthan State Road Transport Corporation v. Krishna Kant26, the
Supreme Court held:
The certified standing orders framed under and in accordance
with the Industrial Employment (Standing Orders) Act. 1946 are
statutorily imposed conditions of service and are binding both
upon the employers and employees, though they do not amount
to statutory provision. Any violation of these standing orders
entitles an employee to appropriate relief either before the
forums created by the Industrial Disputes Act or the civil court
where recourse to civil court is open according to the principles
indicated herein.
The aforesaid view was reiterated in RSRTC v. Deen Dayal Sharma27.

B. A Special Kind of Contract

The other view is that standing orders are a special kind of contract. This view
was expressed in Buckingham and Carnatic Co. v. Venkatayaga.28 Observed
Justice Gajendragadkar:
The certified standing orders represent the relevant terms and
conditions of service in a statutory form and they are binding on
the parties at least as much, if not more, as private contract
embodying similar terms and conditions of service.29
However, the high courts were more specific on the holding that the
standing orders are in the nature of contract. Thus, Madras High Court in Mettur
Industries v. Verma30 observed:
 Reading the Act as a whole, it is clear that the standing orders
form part of the contract between the management and every
one of its employees.31
Likewise, in Akhil Ranjan Das Gupta v. Assam Tribune32, Chief Justice
Mehrotra speaking for the Assam High Court observed:
the purpose of standing orders is to clarify the conditions of
service and they are in the nature of a contract on which openly
the employee enters into the service …33
Thus, it is evident that ‘though the certified standing orders have statutory
flavour34, the Act is directed to get the rights of an employee under a contract
defined’.35 This was also recognized by the Supreme Court in Guest Keen
Williams Ltd v. Sterling and Others:36
The standing orders certified under the Act no doubt become
part of the terms of employment by operation of Section 7, but if
an industrial dispute arises in respect of such (standing) orders
and it is referred to the tribunal by the appropriate government,
the tribunal has jurisdiction to deal with it on the merits.37
In M P Vidyut Karmchari Sangh v. M P Electricity Board38, the
question was whether the regulations made under Section 79 (c) of the
Electricity (Supply) Act, 1948 would prevail over the standing orders framed
under the Act of 1961. The Supreme Court held that, ‘for excluding the
operation of the 1961 Act, it is imperative that an appropriate notification in
terms of Section 2(2) of the 1961 Act is issued’. It has been further observed that
the 1961 Act is a special law whereas the regulations framed by the board under
Section 79(c) are general provisions. The maxim ‘generalia special bus non
derogant' would, thus be applicable in this case.
Following the aforesaid decision in Jabalpur Development Authority v.
Sharad Shrivastava39, the Madhya Pradesh High Court held that SSOs will
prevail over the Regulations of 1987 as these rules have not been notified under
Section 2(2) of the Act of 1961. The publication of the rules in the gazette is not
enough. These are required to be notified under Section 2(2) of the Act involving
a conscious decision of the government in the labour department that the
operation of the SSOs would be excluded and the rules would have
predominance.
From the above, it appears that the standing orders may also be of the
nature of special contract law.

C. Standing Orders: If ‘Award’

It is sometimes said that the nature of standing orders is like an ‘award’. This is
argued on the basis of the provisions of Section 4 (b) which says that ‘It shall be
the function of the certifying officer … to adjudicate upon the fairness and
reasonableness of the provisions of any standing orders’ and also on the basis of
judicial decision40 which rules that the function of the certifying officer is quasi-
judicial. However, standing orders cannot be an ‘award’ under Section 2 (b)41 of
the Industrial Disputes Act, 1947.42

D. Standing Orders: If Form of Delegated Legislation

Sometimes, it is also argued that standing orders under IESOA is a delegated
legislation. It is argued on the basis of the provision that standing orders should
contain every matter set out in the Schedule and it should as far as is practicable,
conform to the Model Standing Orders. But, this contention cannot be upheld,
particularly when the Act imposes a duty upon the employers to submit the draft
standing orders to the certifying officer and that he is required to examine the
fairness and reasonableness of the standing orders and is also empowered to
amend the same if they are not ‘fair or reasonable’. These provisions do not
conform that it is a delegated legislation. However, the Industrial Relations Bill,
1978 appears to have changed the nature of standing orders from statutory or
contractual to one of delegated legislation which is evident from the provisions
of Section 73 (1) and Section 73(2) of the Bill namely:
The provisions of standing orders made under sub-section (1)
may be modified by the employer, in relation to any industrial
establishment or undertaking, if an agreement is entered into by
him with the negotiating agent in relation to employees in such
industrial establishment or undertaking for such modification …
Further, provisions of Section 76 of the Bill which provides that:
Every standing orders made by the Central Government under
sub-section (1) of Section 73 shall be laid, as soon as, may be
after it is made, before each house of Parliament.
Further confirms that standing orders are in the nature of delegated
legislation. Needless to mention that the Bill lapsed after the dissolution of Lok
Sabha.
In RSRTC v. Deen Dayal Sharma43, the Supreme Court held that
standing orders are not in the nature of delegated/subordinate legislation.

1 Bagalkot Cement Co. v. R K Pathan, AIR 1963 SC 439.

2 Id. at p 443.
3 Ibid.
4 Ibid.
5 U P Electricity Supply Co. v. T N Chatterjee, AIR 1972 SC 1201.
6 The Hindu v. Secretary, Hindu Office, AIR 1961 Madras 107.
7 Saroj Kumar v. Chairman, Orissa State Electricity Board, AIR 1970 Orissa 126.
8 AIR 1972 SC 1201.
9 Id. at 1208.
10 New Victoria Mills v. Labour Court, AIR 1970 Alld. 210, 213.
11 See, Rohtak & Hissar District Electric Supply Co. Ltd v. State of U P, AIR 1966 SC
1471–1477.
12 Tata Chemicals Ltd v. Kailash C Adhvaryar, (1965) 1 LLJ 54 (Gujarat).
13 Id. at 65.
14 Behar Journals Ltd v. Ali Hasan, AIR 1959 Pat. 431.
15 Id. at 433.
16 Bagalkot Cement Company Ltd v. R K Pathan, (1962) 1 LLJ 203.
17 Bagalkot Cement Company Ltd v. R K Pathan (1962) 1 LLJ 203 (SC).
18 Id. at 208.
19 Workmen of Dewan Tea Estate v. Their Management , AIR 1964 SC 1458.
20 Id. at 2652.
21 Western India Match Co. Workmen, AIR 1973 SC 2650.
22 Id. at 2652.
23 Sudhir Chandra Sarkar v. Tata Iron and Steel Company, (1984) 2 LLJ 223 (SC).
24 The full bench of the Allahabad High Court in Srivastava (S P) v. Banaras Electric Light
& Power Co. Ltd, (1968) 2 LLJ 483, took the view that standing orders would prevail
over the terms of contract of service because:
The intention of the legislature in providing for statutory standing orders and laying down
the only mode in which they could be modified and attaching penal consequences to
violations of standing orders was necessarily to prohibit terms of contract which clash
with any of the standing orders. Any terms of a contract which contravene a standing
order would be struck by Section 23 of the Contract Act also. This provision invalidates
an agreement the object of which is, inter alia, ‘of such a nature, that if permitted, it
 would defeat the provisions of any law.’
In Biswanath Das v. Ramesh Chandra Patnaik (1979) 1 LLJ 129, 132 (Orissa); one of
the questions for consideration before the Court was whether the standing orders framed
under the Industrial Employment (Standing Orders) Act, 1946 have statutory force? The
Court answered it in affirmative and observed:
The employer cannot enter into any agreement with a workman which is inconsistent with
the standing orders. The violation of standing orders by the employer is a criminal
offence.
25 (2004) 4 SCC 268.
26 (1995) 5 SSC 75.
27 2010 (5) SCALE 1.
28 Buckingham and Carnatic Co. v. Venkatayaga, AIR (1964) SC 1272.
29 Id. at 1275.
30 Mettur Industries v. Verma, (1958) 2 LLJ 326.
31 (1958) 2 LLJ 326 at 330.
32 Akhil Ranjan Das Gupta v. State of Assam, (1965) 2 LLJ 614.
33 Id. at 618.
34 Yogendra Singh, ‘Nature of Standing Orders under the Industrial Employment (Standing
Orders) Act, 1946’, 9 July (1967) 443, 451.
35 C P Transport Services Ltd v. R G Patwardhan. (1957) 1 LLJ 27 (SC).
36 Guest Keen Williams Ltd v. Sterling and Others, (1959) 2 LLJ 405.
37 Id. at 411.
38 (2004) 9 SCC 755: (2004) 2 LLJ 470.
39 (2005) 1 LLJ 305.
40 See Indian Air Gases Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503, 505.
(Allahabad).
41 Section 2 (b) of the Industrial Disputes Act, 1947 defines ‘award’ to mean: ‘an interim or
final determination of any industrial dispute or any question relating thereto by any labour
court, industrial tribunal or national industrial tribunal and includes an arbitration award
made under section 10A’.
42 See supra note 31.
43 2010 (5) SCALE 45.
 CHAPTER
26
Certification Process— Its Operation
and Binding Effect

I. SUBMISSION OF DRAFT STANDING ORDERS BY

EMPLOYERS
The Industrial Employment (Standing Orders) Act (hereinafter referred to as
IESOA) requires every employer of an ‘industrial establishment’ to submit draft
standing orders, i.e., ‘rules relating to matters set out in the Schedule’ proposed
by him for adoption in his industrial establishment.1 Such a draft should be
submitted within 6 months of the commencement of the Act to the certifying
officer. Failure to do so is punishable and is further made a continuing offence.2
The draft standing orders must be accompanied by particulars of workmen
employed in the establishment as also the name of the trade union, if any, to
which they belong.3 If the industrial establishments are of similar nature, the
group of employers owning those industrial establishments may submit a joint
draft of standing orders.4

II. CONDITIONS FOR CERTIFICATION OF STANDING

ORDERS
Section 4 requires that standing orders shall be certified under the Act if:
 (a) provision is made therein for every matter set out in the Schedule which is
applicable to the industrial establishment;
(b) they are otherwise in conformity with the provision of the Act; and
(c) they are fair and reasonable.
Since the aforesaid conditions formed the nucleus of valid standing
orders, it is necessary to examine them in the light of decided cases.

A. Matters to be Set out in the Schedule

The draft standing orders should contain every matter set out in the schedule of
the Act5 with the additional matters prescribed by the government6 as are
applicable to the industrial establishment. And, according to Section 4, the
standing orders shall be certifiable if provisions are made therein for every
matter stated in the Schedule to the Act.

B. Matters not Covered by the Schedule

The Schedule, it has been seen earlier, contains Clauses 1 to 10 which deal with
several topics in respect of which standing orders have to make provision and
Clause 11 refers to any other matter which may be prescribed. These items are
not exhaustive and do not contain items on several subjects. The question then
arises: whether it is permissible for the employers to frame standing orders in
respect of the matters not provided in the Schedule of the Act ?
The Supreme Court in UP Electric Supply Co. Ltd v. TN Chatterjee7 left
the question open when it observed that it was unnecessary to decide the
question as to whether in the absence of any item in the Schedule, any standing
orders could be framed in respect of the matter which may be certified by the
certifying officer, as fair and reasonable. On the other hand, the Supreme Court
in Rohtak and Hissar Electric Supply Co. v. UP8 considered the question
squarely and observed:
Then in regard to the matter which may be covered by the
standing orders, it is not possible to accept the argument that the
draft standing orders can relate to matters outside the Schedule.
Take, for instance, the case of some of the draft standing orders
which the appellant wanted to introduce; these had reference to
the liability of the employees for transfer from one branch to
another and from one job to another at the discretion of the
management. These two standing orders were included in the
 draft of the appellant. These two provisions do not appear to fall
under any of the items in the Schedule; and so, the certifying
authorities were quite justified in not including them in the
certified standing orders.
and later added:
… The employer cannot insist upon adding a condition to the
standing orders which relates to a matter which is not included
in the Schedule.

C. Conformity with the Provisions of the Act

In Indian Express Employees Union v. Indian Express (Madurai) Ltd9, the
Kerala High Court held that the framing of the standing orders is to be in
conformity with the provisions of the Act. The same need not be in conformity
with the appointment order or any office order of the establishment.
In Rashtriya Chemicals and Fertilizers Ltd v. General Secretary, FCI
Workers Union10, the division bench of the Bombay High Court held that the
word conformity means that is should not be inconsistent. In other words, merely
because the central standing orders prescribe age of 58 years, it does not mean
that automatically anything other than 58 years is not in conformity.
In Burn Standard and Company v. I T11, the Supreme Court deprecated
the practice of correction of date of birth at the fag end of the career of an
employee.

D. Conformity with the Model Standing Orders

Where model standing orders have been prescribed, that draft submitted by the
employers must be in conformity with the model standing orders provided under
Section 15 (2) (b) ‘as far as it is practicable.’12 Conformity cannot be equated
with identity.13 In other words, it does not mean that the draft standing orders
must be in identical words but it means that in substance, it must conform to the
model prescribed by the appropriate government.14 The expression ‘as far as is
practicable’ also confirms the view.15 This expression indicates that the
appropriate authority may permit departure from the model standing order if it is
satisfied that insistence upon such conformity may be impracticable.16 There is,
however, no provision in the Act for making more beneficial provisions of the
model standing orders applicable in cases where the certified standing orders
exist.
 In the absence of such a provision under Section 15 (2) (b), a question
arose whether the standing orders can contain matters not found in the model
standing orders. This issue was raised in S K Seshadari v. HAL17. In this case,
the standing orders of Hindustan Aeronautics Ltd, inter alia, provided the
following acts and omission to be misconduct: Gambling and money lending or
doing any other private business within the company's premises’.
The validity of these provisions was challenged on the ground that the
model standing orders do not provide that the aforesaid acts would constitute
misconduct. Upholding the validity of these provisions, the Karnataka High
Court observed:
[T]he mere fact that the model standing orders do not provide
for constituting particular act as misconduct, it does not mean
that the standing orders cannot include such act or acts as
constituting misconduct. Sub-Section (2) of Section 3 of the Act,
merely provides that where model standing orders have been
prescribed, the standing orders shall have to be, so far as is
practicable, in conformity with such model standing orders.
Model standing orders are framed in exercise of the rule-making
power. The rules cannot restrict the scope and ambit of the
provisions contained in the Act. Thus, the question as to whether
the standing orders are within the ambit of power conferred in
that regard by the Act, has to be determined with reference to
the provisions contained in the Act, more especially with
reference to the Schedule which forms part of the Act. Providing
for certain acts and omissions in the standing orders not already
provided in the model standing orders, does not make such a
standing order invalid or beyond the power of the employer to
make such a standing order. Applicability of the model standing
orders depends upon the nature of the industrial establishment.
This view is in conformity with the object and scheme of the Industrial
Employment (Standing Orders) Act.

Model Standing Order

Under the Act, model standing orders are framed and as soon as the Act applies
to an industrial establishment. The employer is under an obligation to submit a
draft amendment to the model standing orders as desired by him but the
certifying officer has to certify the same. These model standing orders provide
for minimum decent conditions of service. The Act took the first step of
compelling the employer to give certain minimum conditions of service. These
model standing orders were framed as early as 1948 and there are minor
amendments here or there. They have undoubtedly stood the test of the time. But
as the industrial employees are becoming more and more aware of their rights
and concept of social justice is taking firm root, it is time that these model
standing orders are comprehensively reexamined and revised. In the course of
discussions, the committee came across certain suggestions relating to conditions
of service which may now appropriately find their place in the model standing
orders.
The model standing orders do not provide for any method or manner of
recruitment, promotion, transfer or grievance procedure. Today, the employer
enjoys an arbitrary discretion or an unfettered power of recruiting anyone he
likes. This definitely results in favouritism, nepotism and class of loyal workers.
It becomes counter-productive to healthy trade union activity.18
Recommendation of the Second National Commission on Labour: The
commission has recommended that the appropriate government may also frame
model standing orders, including the classification of acts of misconduct as
major and minor, and providing for graded punishments depending on the nature
and gravity of the misconduct, and publish them in the official gazette. Where an
establishment has no standing orders, or where draft standing orders are still to
be finalized, the model standing orders shall apply.

E. Fairness or Reasonableness of Standing Orders

Prior to 1956, the certifying officer had no power to go into the question of
reasonableness or fairness of the draft standing orders submitted to him by the
employers. His only function was to see that the draft must incorporate all
matters contained in the Schedule and that it was otherwise certifiable under the
Act.19 Such a power was also not conferred upon the appellate authority.
However, this provision did not provide adequate safeguards against unfair
practices in the standing orders and, therefore, caused great hardship to
workmen.20
In 1956, the Parliament amended the Act and thereby not only
considerably widened the scope of the Act but also gave a clear expression to the
change in legislative policy. Section 4, as amended by Act 36 of 1956, imposes a
duty upon the certifying officer and appellate authority to adjudicate upon
fairness and reasonableness of the standing orders.21 If they find that some
provisions are unreasonable, they must refuse to certify the same.22 While
adjudicating the fairness or reasonableness of any standing orders, the certifying
officer should consider and weigh the social interest in the claims of the
employer and the social interest in the demand of the workmen.23
Thus, the Parliament confers the right to individual workman to contest
the draft standing orders submitted by the employer for certification on the
ground that they are either not fair or reasonable. Further, the workers can also
apply for their modification and dispute the finality of the order of the appellate
authority.

III. PROCEDURE FOR CERTIFICATION OF STANDING

ORDERS
When the draft standing orders are submitted for certification, the certifying
officer shall send a copy of the draft to the trade union, if any, or in its absence
to the workmen concerned, to file objections, if any, in respect of the draft
standing orders, within 15 days of the receipt of the notice. He is further required
to provide hearing opportunity to the trade union or workmen concerned as the
case may be. After hearing the parties he shall decide whether or not any
modification of or addition to the daft submitted by the employer is necessary to
render the draft certifiable under the Act and shall make an order in writing
accordingly. For the purpose he shall inquire (i) whether the said sanding orders
are in conformity with the model standing orders issued by the government; and
(ii) whether they are reasonable and fair. He shall then certify the standing orders
with or without modification as the case may be. He shall send within 7 days
authenticated copies of standing orders to employers and to the trade unions or
other representatives of workmen.

IV. CERTIFYING OFFICERS: THEIR APPOINTMENT,

JURISDICTION, POWERS AND DUTIES
The ‘certifying officers’ under the IESOA mean a labour commission or a
regional labour commissioner, and includes any other officer appointed by the
appropriate government, by notification in the official gazette, to perform all or
any of the functions of certifying officer under the Act.24 He is ‘the statutory
representative of the Society.’25
Section 11 (1) empowers certifying officer and appellate authority with
all the powers of a civil court for the purposes of: (i) receiving evidence; (ii)
enforcing the attendance of witnesses; and (iii) compelling the discovery and
production of documents. He shall also be deemed to be the ‘civil court’ within
the meaning of Section 345 and 346 of the Code of Criminal Procedure, 1973.
The aforesaid power have been conferred upon the certifying officer and
appellate authority so that they may summon any witness and may not find any
difficulty in holding any inquiry when the draft standing orders are submitted for
certification to the certifying officer.26
No oral evidence having the effect of adding to or otherwise varying or
contradicting standing orders finally certified under the IESOA shall be admitted
in any court.27 Thus, Section 12 bars oral evidence in contradiction of written
standing orders.28 But there is no provision prohibiting written agreement.
However, in case of conflict between the general conditions of employment and
special terms contained in standing orders—a written contract, the terms of
special contract would prevail.29
Section 11 (2) authorizes certifying officer and appellate authority to
correct his own or his predecessor’s (i) clerical mistake; (ii) arithmetical mistake;
and (iii) error arising therin from any accidental slip or omission.

Jurisdiction
The Supreme Court in Bhilai Steel Project v. Steel Works Union,30 held that
when standing orders are under consideration of the certifying officer and in the
meanwhile if there is any amendment to the Industrial Employment (Sanding
Orders) Act, though certifying officer had no jurisdiction at the time when he
obtained the application to deal with the matter, during pendency of the
application if the law is repealed and that law is to deal with such application, he
can certainly entertain the same.
Section 4, we have already seen, imposes a duty upon the certifying
officer/appellate authority to:
(i) see whether the standing order provides for every matter set out in the
schedule, which is applicable to the industrial establishment;
(ii) consider whether the draft standing orders are in conformity with the
provisions of the model standing orders. If the certifying officer finds that
some provisions of the standing orders as proposed by the employer relate
to matters which are not included in the schedule, he may refuse to certify
 them;31 and
(iii) to adjudicate upon the fairness or reasonableness of the provisions of any
standing orders.
The aforesaid duties are mandatory32 to be performed by the certifying
officer. Further, certifying officer/appellate authority is required to discharge
these duties in a fair and quasi-judicial33 manner.

V. APPEALS AGAINST CERTIFICATION

A. The Legislative Scheme

Section 6 of the Industrial Employment (Standing Orders) Act, 1946, inter alia,
provides that any person who is aggrieved by the order of certifying officer may
‘within 30 days from the date on which the copies are sent,’ file an appeal to the
appellate authority.
The scope of the aforesaid section was examined in Badarpur Power
Engineers' Association v. Dy. Chief Labour Commissioner.34 In this case, the
Delhi High Court held that:
The word used in Section 6, on which emphasis has to be laid is
‘from’. Section 9 (1) of the General Clause Act clearly provides
that when in any Central Act or Regulation the word used is
‘from’, then the first day in a series of days shall be excluded.
Section 9 of the General Clauses Act was clearly applicable to
the present case and the effect of the same would be that 7
January, 1991 had to be excluded while computing the period of
limitation.

B. Finality of the Decision of Appellate Authority

Section 6 also incorporates a finality clause namely that the decision of the
appellate authority ‘shall be final.’ This provision means that there is no further
appeal or revision against that order. This view finds support from Section 12
which lays down that once the standing orders are finally certified, no oral
evidence can be led in any court which has the effect of adding to or otherwise
varying or contradicting such standing orders. Section 6 read with Section 12
indicates that the finality given to the certification by the appellate authority
cannot be challenged in a civil court. But the finality given to the appellate
authority order is subject to the modification by him.35

C. Appellate Authority: Its Nature and Constitution

Appellate authority means an authority appointed by the appropriate government
by notification in the official gazette to exercise in such areas as may be
specified in the notification of the functions of the appellate authority under the
Act. But, in relation to appeal pending before the industrial court or other
authority immediately before the commencement of the Industrial Employment
(Standing Orders) Amendment Act, 1963, that court or authority shall be
deemed to be the appellate authority.
A survey of the official statistics36 regarding persons authorized to act as
appellate authority under the Act reveals that only in the state of Assam and
Tripura, secretary of labour department acts as appellate authority. In remaining
states/union territories, such power is exercises by quasi-judicial tribunals, like
industrial tribunal/labour court. But, in the state of West Bengal, such power is
vested in the High Court. Looking to the quasi-judicial function exercised by the
appellate authority in many states, it is desirable if such functions are performed
by the industrial tribunal/labour courts in Assam and Tripura.

D. Powers of the Appellate Authority

An appellate authority can either confirm the standing orders in the form
certified by the certifying officer or amend the said standing orders by making
such modification thereof or addition thereto, as he thinks necessary so as to
render standing orders certifiable under the Act.37 He has, however, no power to
set aside the orders of certifying authority38. Likewise, it has no power to
remand the case because it has a power whether to confirm or modify the award
as it deems fit.39

E. Duties of the Appellate Authority

The Act casts a duty upon the appellate authority to send copies of the order
made by it to the certifying officer, employer and trade union or other prescribed
representatives of the workmen within 7 days of the date of the order, ‘unless it
had confirmed without amendment the standing orders as certified by the
certifying officer, by copies of the standing orders as certified by it and
authenticated in the prescribed manner.’40
The aforesaid provision is akin to a provision requiring the drawing up of
the degree in pursuance of the orders passed by a civil court. The Act requires
the appellate authority to send copies to the authorities mentioned therein after
effecting amendments or modification in terms of its order within 7 days of the
order.41 In other words, the obligation to draw up standing orders in conformity
with the orders passed in appeal is placed before the appellate authority and that
obligation has to be discharged within the period of 7 days from the date of the
order under sub-section (1).42

VI. DATE OF OPERATION OF STANDING ORDERS OR

AMENDMENTS
Section 7 sets out the date on which the standing orders or amendments made
thereto would become operative. It provides that the standing orders shall come
into operation on the expiry of 30 days from the date on which authenticated
copies thereof are sent as required by sub-section (5) of Section 3, or where an
appeal is preferred on the expiry of 7 days from the date on which the copies of
the appellate order are sent under sub-section (2) of Section 6.43

VII. BINDING NATURE AND EFFECT OF CERTIFIED

STANDING ORDERS
There is no specific provision in the Act dealing with the binding nature and
effect of standing orders. In the absence of any provision, courts have held that a
standing order certified under IESOA is binding upon the employers and
employees of the industry concerned. However, the decided case reveals that
even though they are binding, they do not have such force of laws as to be
binding on industrial tribunals adjudicating on industrial dispute.44
In Guest Keen Williams (Pvt.) Ltd v. P J Sterling45, Justice
Gajendragadkar delivering the judgement of the Supreme Court explained the
position:
… the standing orders when they were certified became
operative and bound the employer and all the employees.46
Buckingham and Carnatic Co. v. Venkatian47 spoke more in terms of
the binding nature of standing orders:
 The certified standing orders represent the relevant terms and
conditions of service in a statutory form and they are binding on
the parties at least as much, if not more, as a private contract
embodying similar terms and conditions of service.48
But, in Tata Chemicals v. Kailash C. Adhvaryet49, the Gujarat High
Court observed that:
the standing order when finally certified under the Act becomes
operative and binds the employer and the workmen by virtue of
the provisions of the Act and not by virtue of any contract
between the employer and the workmen.50
The Court added:
The rights and obligations created by the standing orders derive
their force not from the contract between the parties but from the
provisions of the Act. They are statutory rights and obligation
and not contractual rights and obligations.51
Whether certified standing orders govern the employees appointed before
they become operative? This question has formed the subject-matter of
controversy in number of decided cases.
In Guest Keen Williams Pvt. Ltd v. P J Sterling52, the Supreme Court
held that the retiring age fixed by the standing orders did not apply to the
workmen appointed before their coming into operation and for them, a higher
age of retirement was fixed as at the time when they were employed, there was
no age of retirement. But, in Salem Erode Electricity Distribution Co. v. Their
Employee Union53 and Agra Electric Supply Co. v. Alladin54, the Supreme
Court made a departure from its earlier decision in Guest Keen Williams Pvt.
Ltd supra. In the former case, the first standing orders were certified in 1947.
The management wanted to modify the certified standing orders, on the subject
of leave and holidays sometime in 1960 in respect of the new entrants preserving
the old rules in respect of old workmen. The modification was negatived by the
certifying officer and appellate authority. On appeal, the Supreme Court upheld
those orders observing that standing orders certified under the Act must be
uniformly applied to all workmen and it was not permissible for an industrial
establishment to have two sets of standing orders to govern the terms and
conditions of its employees. In the latter case, the first standing orders of the
company were certified in 1951. In these standing orders, the age of
superannuation of employees was fixed at 55 years. Prior to 1951, there were no
rules relating to superannuation. Three workmen who were appointed long
before 1951 were retired from service in 1963 and 1964 on the ground that they
had crossed the age of superannuation of 55 years. The workmen challenged the
order retiring them from service on the ground that they were appointed before
the making of the standing orders and were not governed by the rule of
superannuation contained in them. The Supreme Court negatived the contention
and ruled:
[O]nce the standing orders are certified and come into operation,
they become binding on the employer and all the workmen
presently employed as also those employed thereafter in the
establishment conducted by that employer. It cannot possibly be
that such standing orders would bind only those who are
employed after they come into force and not those who were
employed previously but are still in employment when they
come into force.
Because in its view:
[I]f the standing orders were to bind only those who are
subsequently employed, the result would be that there would be
different conditions of employment for different classes of
workmen, one set of conditions for those who are previously
employed and another for those employed subsequently, and
where they are modified, even several sets of conditions of
service depending upon whether a workman was employed
before the standing orders are certified or after, whether he was
employed before or after a modification is made to any one of
them and would bind only a few who are recruited after and not
the bulk of them, who though in employment, were recruited
previously. Such a result could never have been intended by the
legislature, for that would render the conditions of service of
workmen as indefinite and diversified, as before the enactment
of the Act.55
The aforesaid two decisions in Salem Erode Electricity Distribution Co.
and Agra Electric Supply Co. were re-affirmed in UP Electric Co. v. Workmen
wherein it was held ‘that it was not intended by the legislature that different sets
of conditions should apply to employees depending or whether a workman was
employed before the standing order was certified of after, which would defeat
the very object of the legislation’56. Here it is relevant to add that while the
Guest Keen Williams Pvt. Ltd was decided before the 1956 amendment, the
remaining three later cases were decided after 1956 amendment which
empowered the certifying officer to go into the reasonableness or fairness of
standing orders.
In Sudhir Chandra Sarkar v. Steel Company Ltd57 reliance was placed
on an earlier decision in Agra Electric Supply Company Ltd v. Alladin.
Again, the aforesaid view was reiterated in Bharat Petroleum
Corporation Ltd v. Maharashtra General Kamgar Union.58 Here, the Supreme
Court held that once the standing orders are certified, they constitute the
conditions of service binding upon the management and the employees serving
already and in employment or who may be employed after certification.

VIII. POSTING OF STANDING ORDERS

The Act imposes a duty upon the employer to put up the text of certified
standing orders in English language and in the language of the majority of
workmen on special boards maintained for the purpose, at or near the entrance
through which the majority of workmen enter the industrial establishment and in
all departments thereof where the workmen are employed.59 This section has
been held to be merely directory but non-compliance with the direction may
result in the employer not succeeding in satisfying the industrial tribunal that
there is proper case for termination of service or other disciplinary action.60

1 Section 3 (1).
2 See UP State Electricity Board v. Hari Shankar, (1978) 4 SCC 16.
3 Section 3 (3).
4 Section (4).
5 Section 3 (2).
6 MKE Association v. Industrial Tribunal, AIR 1959 Mysore 235, 236.
7 UP Electric Supply Co. Ltd v. T N Chatterjee, (1972) 2 LLJ 9.
8 Rohtak and Hissar Electric Supply Co. v. State of UP, AIR 1966 SC 1471.
9 1998 Lab. IC 529 (Kerala)
10 1997 LLR 654.
11 1995 (4) SC 23.
12 Section 3 (2); see also, Associated Cement Co. v. P D Vyas, AIR 1960 SC 665.
13 KKE Association v. Industrial Tribunal, AIR 1959 Mysore, 235, 236; Md. Yasin v.
Industrial Tribunal, (1975) 1 LLJ 100 (Orissa).
14 Associated Cement v. P D Vyas, AIR (1960) SC 665.
15 Supra note 5.
16 Rohtak and Hissar Electric Supply Co. v. UP, op. cit.
17 S K Seshadri v. HAL, (1983) 2 LLJ 410 at 411.
18 Government of Gujarat, Report of the Labour Laws Review Committee (1974) 63.
19 See S S Light Railway Co. Ltd v. Shadhara Saharanpur Railway Workers Union, (1969)
1 LLJ 734, 740 (SC).
20 Ibid.
21 Ibid.
22 See A G Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503 (Allahabad).
23 Western India Match Co. v. Workmen, AIR 1973 SC 2650, 2653.
24 Section 2 (c).
25 See Western India Match Co. v. Workmen, AIR 1973 SC 2650.
26 See Khadi Gram Udyog Sangh v. Jit Ram, (1975) 2 LLJ 413 (Punjab and Haryana).
27 Section 12.
28 J K Cotton Manufactures v. J N Tiwari, AIR 1959 Allahabad 639.
29 Ibid.
30 AIR 1964 SC 1333.
31 See Air Gases Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503, 505
(Allahabad).
32 Ibid.
33 Ibid.
34 (1993) Lab. IC 636.
35 See Shahdara (Delhi) Saharanpur Light Rly. Co. Ltd v. Saharanpur Rly. Workers
Union, (1969) 1 LLJ 741 (SC).
36 See Table 9.26 of the Indian Labour Year Book of 1979, 292–93 (1982).
37 Section 6 (1); See also, NGEF Ltd v. Industrial Tribunal, AIR 1970 Mysore 149, 150;
Bijli Mazdoor Sangh, v. UP Electricity Board, AIR 1970 Allahabad 589, 594; and see
Khadi Gram Udyog v. Jit Ram, (1975) 2 LLJ 413 (Punjab and Haryana).
38 Khadi Gram Udyog Sangh op. cit., 415; see also Kerala Agro Machinery Corp. Ltd v.
Industrial Tribunal, (1998) 2 LLJ 7 and Management of Manipal Power Press v.
Sadananda Devadiga, (2004) LLR 644.
39 Management of Manipal Power Press v. Sadananda Devadiga and Others, (2004) LLR
644.
40 Section 6 (2).
41 See NGEF Ltd v. Industrial Tribunal, AIR 1970 Mysore 149, 150.
42 Id. at 150–151.
43 Section 7; See also Mohd. Yasin v. Industrial Tribunal, (1975) 1 LLJ 100 (Orissa) See
Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar Union, (1999)
LLR 180 (SC).
44 Co-operative Central Bank Ltd v. Addl. Industrial Tribunal, AIR 1970 SC 245, 253.
45 Guest Keen Williams (Pvt.) Ltd v. P J Sterling, (1959) 2 LLJ 405 (SC).
46 (1959) 2 LLJ 405 at 411.
47 Buckingham and Carnatic Co. v. Venkatian, AIR 1964 SC 1272.
48 Id. at 1275.
49 Tata Chemicals v. Kailash C. Adhvaryer, (1965) 1 LLJ 54.
50 Id. at 65.
51 Tata Chemicals v. Kailash C. Adhvaryer, op. cit.
52 Guest Keen Williams (Pvt.) Ltd v. P J Sterling, op. cit., 1279.
53 Selam Erode Electricity Distribution Co. v. Their Employees Union, AIR 1966 SC 808.
54 Agra Electric Supply Co. v. Alladin, (1969) 2 LLJ 540 (SC).
55 Agra Electric Supply Co. v. Alladin, op. cit., 545.
56 UP Electric Co. v. Workmen, (1972) 2 SCC 54 at 61.
57 AIR 1984 SC 1164.
58 (1999) LLR 180 (SC).
59 Section 9.
60 See Ismail Papamia v. Labour Appellate Tribunal, AIR 1969 Bombay 584–586.
 CHAPTER
27
Modification and Temporary
Application of Model Standing Orders

I. MODIFICATION OF STANDING ORDERS

A. Law and Policy

The Industrial Employment (Standing Orders) Act, 1946 (hereinafter referred to
as IESOA) has provided a speedy and cheap remedy to workmen to get their
conditions of employment determined in the prescribed manner. Thus, the
IESOA provides remedy to both employees and employers who desire any
modification in the certified standing orders.1 The Act provides that the standing
orders finally certified under the IESOA cannot be modified except on
agreement between the employer and the workmen or a trade union or other
representative body of workmen before the expiry of 6 months from the date on
which the standing orders or the last modifications became operative. From this,
it is evident that the Act does not place any restriction on the right of the
employer or workman to apply for modification except, of course, in respect of
the time limit of 6 months2. But even in respect of the time there is an exception;
modification is permissible even before 6 months if there is an agreement
between the parties.
The policy underlying Section 10 is that modification should not be
allowed within 6 months from the date when the standing orders or the last
modification thereof came into operation3. The object of providing the time limit
was that the standing orders or their modification should be given a fair trial.4
However, decided cases5 reveal that an application for modification may be
entertained where: (i) a change of circumstances has occurred, or (ii) where
experience of the working of the standing orders last certified result in
inconvenience, hardship, anomaly, etc., or (iii) where some fact was lost sight of
at time of certification, or (iv) where the applicant feels that a modification will
be more beneficial to the parties concerned or in the interest of the
establishment.

B. Who May Apply for Modification

Prior to 1956, the right to apply for modification was conferred on the employer
alone. This remedy was hardly satisfactory. In order to remove this hardship, the
Act was amended in 1956. The amended Act, inter alia, permits both the
employer and workman to apply for modification of the standing orders. The use
of the word ‘workman’ in some cases led to doubt whether a body of workmen
could also exercise this right. In order to clarify this position, the 1982-
Amendment not only permits the employer and workmen but also trade unions
or other representatives of the workmen to apply for modification of standing
orders.
Under Section 10 (2), an employer or workmen or trade union or other
representative body of the workmen can apply for modification of the standing
orders. This shows that it can even be workmen. The workmen need not be in
sizeable number. Trade union can also be an applicant. It need only be a trade
union registered under the Trade Union Act. The Act does not say that it shall
have recognition or a representative character with substantial majority. It is
obviously so because notice on such application for modification shall
necessarily be given by the workmen or any one of the trade union to other trade
unions or such other representatives of workmen in terms of Section 5 (2) read
with sub-section (3) of Section 10. If the applicant is not the sizeable majority
and majority of the workmen represented by other trade unions object to it,
necessarily, the certifying officer can ascertain the will of the workers. Thus if
application for modification is made by a minority union, the majority union can
object to such modification.6

C. To Whom an Application for Modification May be Made

The application for modification must be made to the certifying officer.
D. Procedure for Modification
The application for modification of standing orders must be accompanied by 5
copies of the modification proposed to be made and where such modifications
are proposed to be made by agreement between the employer and the workmen,
a certified copy of that agreement shall be filed along with the application. Thus,
the only way to give effect to the amendment was by resorting to the procedure
of amendment contemplated by Section 10 of the Industrial Employment
(Standing Orders) Act, 1946. Until the existing certified standing orders are
suitably amended, the model standing orders could not be deemed to be
applicable to the concerned establishment.7
The aforesaid provisions of the Act shall apply in respect of an
application for modification as they apply to the certification of first standing
orders.8 But, the said provision is not applicable to an industrial establishment in
respect of which the appropriate government is the government of the state of
Gujarat or Maharashtra.9

E. No Time-limit for Making Application

In Indian Express Employees' Union v. Indian Express, Madurai, Ltd10, the
Kerala High Court held that Section 19(2) does not lay down any time limit for
making an application for modification of standing orders. The said application
can be made after expiry of 6 months from the last modification. There is no bar
to file an application for modification even after a decade.

F. Application of Principles of Resjudicata

It has been held by the Supreme Court decision in SS Rly Co. v. Workers
Union11 that it is doubtful whether principle analogous to resjudicata can be
applied for modification of standing orders.

G. Powers of Certifying Officer/Appellate Authority

In Falcon Tyres Ltd v. Falcon Tyres Employees' Union Mysore12, the
petitioner-management filed an application seeking for modification before the
certifying officer. The petitioner-management, wanted inclusion of standing
order 19(d) in the matter of medical discharge which reads as under:
All employees are required to undergo medical examination at
the time of recruitment and shall be referred to the district
 medical board by the company from time to time to determine
the medical fitness of the workman to carry out the job for
which he is recruited. If the employee is found medically unfit
by the district medical board he shall be liable to be discharged
from the company's services. If an employee is covered under
ESI, his discharge will be in accordance with Regulation 98 of
the ESI (General) Regulation.
The draft clause was certified by the certifying officer. In appeal, the
appellate authority modified the standing order certified by the certifying officer
which read as under:
All employees are required to undergo medical examination at
the time of recruitment and shall be referred to the medical
board by the company from time to time to determine the
medical fitness of the workmen to carry out the job for which he
is recruited. If an employee is found medically unfit by the
medical board to carry out the job for which he is recruited, then
he shall be given an alternative suitable job protecting his last
drawn salary.
On a writ petition filed against the order of the appellate authority, the
Karnataka High Court held that the modification suggested by the appellate
authority would virtually be an amendment directing the management to create
an alternative suitable job in terms of the amendment. Such a modification
cannot be termed as fair or reasonable in terms of the Industrial Employment
(Standing Orders) Act, 1946. It cannot be said that the management should not
have any concern for medically terminated employees but to compel an
employer to create a post stands on a different footing rather than suggesting to
the management to consider a case sympathetically in such cases, in the
circumstances. The Court, therefore set aside the order of appellate authority and
upheld the order of certifying officer.

II. TEMPORARY APPLICATION OF MODEL

STANDING ORDERS
Section 12 A deals with the temporary application of model standing orders to
the industrial establishments. This provision applies between the period from the
date of the application of the Act to an industrial establishment and to the date
on which the certified standing orders come into operation, under Section 7 of
the Act. Since it takes time in the certification process, Section 12-A provides:
Notwithstanding anything contained in Section 3 to 12, for the
period commencing on the date on which this Act becomes
applicable to an industrial establishment and ending with the
date on which the standing orders as finally certified under this
Act came into operation under Section 7 in that establishment,
the prescribed model standing orders shall be deemed to be
adopted in that establishment, and the provisions of Section 9,
sub-section (2) Section 13 and Section 13-A shall apply to such
model standing orders as they apply to the standing orders so
certified.
This Section provides that the model standing orders will be applicable to
an industrial establishment during the period commencing on the date on which
the Act becomes applicable to that establishment and the date on which the
standing orders, as finally certified under this Act, came into operation13. To
hold that the Act would not apply to industrial establishments which came into
existence after the date of enforcement of the Act, would exclude practically all
industrial establishments which came into existence after the Act was enforced
and which had not framed standing orders and got them certified under the Act.
This would defeat the intent underlying the Act.14 Be that as it may, these
provisions shall not apply to an industrial establishment in respect of which the
appropriate government is (i) the government of state of Gujarat and (ii) the
government of state of Maharashtra.15 Where there are two categories of
workers, namely, daily-rated and monthly-rated but the certified standing orders
are in respect of daily-rated workmen only, then model standing orders may be
made applicable to the monthly-rated workmen.16 The prescribed model
standing orders have the same legal efficacy to govern the terms and conditions
of service of industrial establishments to which the Act applies during the
relevant period as the certified standing orders.17

1 See, Rohtak and Hissar District Supply Co. v. State of UP, AIR 1966 SC 1471, 1476.
2 See SS Rly. Co. v. Workers Union, AIR 1969 SC 513.
3 Ibid.
4 AIR 1969 SC 513 at 521.
5 Ibid.
6 Indian Express Employees' Union v. Indian Express (Madurai) Ltd, (1999) 1 LLJ 490
(Kerala).
7 M C Raju v. Executive Director, (1985) 1 LLJ 210.
8 Section 10 (3).
9 Section 10 (4).
10 1998 Lab. IC 529.
11 SS Rly. Co. v. Workers Union, AIR 1969 SC 513.
12 (2006) LLR 129.
13 Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar Union, (1999) LLR
180 (SC).
14 Shitla Prasad v. State of UP, 1986 Lab. IC 2025.
15 Section 12-A (2).
16 Indian Iron & Steel Co. v. Ninth Industrial Tribunal, (1977) Lab. IC 607.
17 Pallavan Transport v. Labour Court, (1984) 2 LLJ 132 (Madras).
 CHAPTER
28
Interpretation and Enforcement of
Standing Orders

I. INTERPRETATION OF STANDING ORDERS

Section 13-A provides that if any question arises as to the application or
interpretation of standing orders certified under the Act, such question can be
referred to a labour court, by any employer or workman or a trade union or other
representative body of workmen, and on such reference, the labour court
constituted under the Industrial Disputes Act, 1947 ‘after giving the parties an
opportunity of being heard’,1 decide the question and such decision shall be final
and binding on the parties.
The expression ‘after giving the parties an opportunity of being heard’ has
been differently interpreted. In Chipping and Painting Employers Association
v. A T Zambre2, the Bombay High Court held that hearing the parties would not
include leading evidence before the court for determination of disputed question
of fact. On the other hand, in M/s Deoria Sugar Mills Ltd v. Deputy Labour
Commissioner,3 the Allahabad High Court held that under Section 13, it is
permissible for the workman concerned to produce any evidence which is
relevant and related to workmen concerned and what was its probative value and
whether it was sufficient to rebut the initial presumption in favour of the entry in
the provident fund records.
Section 13-A provides only for reference of a question as to the
application or interpretation of standing orders certified under the IESOA and
the labour court is empowered to give its decision on the question so referred.4
The jurisdiction of the labour court is, therefore, confined to decide the question
as to the application or interpretation of the standing orders which is referred to
it.5 The decision of the labour court shall be final and binding on the parties.6
In Sri Ganpathi Mills Co. Ltd v. Presiding Officer, Labour Court,7 the
second respondent and two other workers beat a co-worker Velu for union
activities and caused him injuries. Velu withdrew the complaint but the
management after initiating disciplinary proceedings dismissed the second
respondent on the charge of riotous and violent behaviour. The labour court
found that there was no riotous and violent behaviour and directed reinstatement.
Aggrieved by this order, the management filed a writ petition in the Madras
High Court. It was contended that the misconduct as projected against the
second respondent, was not an enumerated misconduct under the standing orders
and hence, the charges themselves were not entertainable. In order to deal with
the contention, Clause 24 K of the standing orders is relevant and which is to the
following effect: ‘drunkenness or riotous or disorderly behaviour during the
working hours on any act subversive of discipline and/or efficiency’. The second
respondent contended that the dispute was only between two workers and that it
had taken place outside the premises of the mill, and hence could not be a
subject-matter of any disciplinary proceeding. The Court found that this was not
a case of assault between the workers regarding their private affairs. Indeed the
assault related to union activities. As regards the place of occurrence, standing
order 24K does not refer to any geographical or territorial limitations. It is not
difficult to perceive a situation where the misconduct of an employee could take
place outside and far away from the premises. The test is whether the conduct
affects or tends to affect the establishment. The Court held that there was no
basis in the finding of the labour court that the charges against the second
respondent were not established.
In Ashok Leyland Ltd, Madras v. Presiding Officer, Second Additional
Labour Court, Madras8, the management dismissed a workman, who was a
checker in the store of the company for fraudulently acknowledging delivery of
challans without actually receiving the articles amounting to ₹1,15,500/- after
holding an inquiry. Similar charges were also levelled against the receipt clerk
but he was not found guilty in the inquiry hence no action was taken against him.
The workman raised an industrial dispute. The labour court directed
reinstatement of the employee without back wages but with continuity of
service. Aggrieved by the same, the management filed a writ petition and the
employee also filed a petition questioning that part of the award which held him
guilty of the charge levelled against him. It was, inter alia, contended that the
order of dismissal did not disclose any aggravating circumstance in the conduct
of the delinquent so as to justify an order of dismissal and hence, there was a
violation of the standing orders. Rejecting the contention, the Madras High
Court held that Standing Order No. 20 (iii) requires reference to be made to
aggravating circumstances ‘if any’. If there are no such aggravating
circumstances, it is not possible to expect any reference to be made in the order
of dismissal. The very nature of delinquency is serious enough without any
necessity to refer to any aggravating circumstances to justify the order of
dismissal. The Court, accordingly, set aside the order of the labour court and
sustained the order of dismissal passed by management.
In NDMC v. Mohd. Shamim,9 the Delhi High Court held that under
Section 13A of the Industrial Employment (Standing Orders) Act, 1946, only the
labour court and not the industrial tribunal is empowered to entertain an
application for interpretation of certified standing orders.
In Madhya Pradesh State Electricity Board v. S K Yadav10, the Supreme
Court considered the effect of a certified standing order which provided that any
employee who desired to obtain leave of absence ‘shall apply to the manager or
the officer authorized by him. It shall be the duty of the manager or the officer to
pass orders thereon on two days fixed for the purpose…’ Here the employee
applied for leave but he was not communicated any decision thereon. In view of
this, he contended that in the absence of any order of rejection, it should be
deemed that the leave was sanctioned. The Court rejected the contention and
held that non-compliance would not mean that he had been granted leave and he
could be held to be unauthorizedly absent. Non-compliance therewith would not
vitiate the ultimate order as the said provision must be held to be directory in
nature and not mandatory.

A. Powers of the Labour Court Under Section 13-A

Does Section 13-A of the IESOA provide a remedy for the enforcement of rights
and liabilities created by the standing orders certified under the Act? This
question arises because it is the only Section in the Act which confers a right
upon the employer and workmen to refer the question as to the application or
interpretation of standing orders certified under the act to the labour court.
The Gujarat High Court11 has held that ‘there are no words in Section 13-
A which empower the labour court to grant redress for violation of the rights and
obligations created under the standing orders.’ The Court added that no power to
grant relief by way of enforcement of the rights and obligations created by the
standing orders can be implied merely from the conferment of the power on the
labour court to decide any question as to the application or interpretation of
standing orders which might be referred to it by the employer or workmen. The
Court held that the labour court is not competent under Section 13-A to grant a
declaration that the dismissal of the workmen concerned was illegal and that
they continued in the employment of employer. Further, the Court ruled that
labour court is empowered to direct the employer to pay to workman concerned
his emoluments from the date of dismissal to the date of reinstatement.
The high courts are, however, divided on the issue whether it is possible
for a discharged or dismissed workman to approach the labour court under
Section 13-A to get an interpretation about certain provisions of the standing
orders. While the Rajasthan12 and Bombay13 High Courts answered it in
affirmative, the Calcutta14 High Court took a contrary view.
Labour courts under Section 13-A are, however, empowered to decide
whether evidence is relevant to workman concerned and what is its probative
value and whether it is sufficient to rebut the initial presumption in favour of the
entry in the provident fund record.15
The Supreme Court deprecated the tendency of some public sector
undertakings to continue archaic standing orders reminiscent of the days of hire
and fire in utter violation of the principles of natural justice. Thus, in Workmen
of Hindustan Steel v. Hindustan Steel Ltd16, the Supreme Court was invited to
determine the scope of Standing Order No. 32 of the Hindustan Steel Ltd,—a
public sector undertaking which enjoins the general manager to dismiss an
employee by merely recording the reasons for dispensing with inquiry if it is
inexpedient or against the interest of security to continue to employ the
workman. The Court held that this provision of standing orders was violative of
the principles of natural justice. In view of this, the Court emphasized the need
to recast Standing Order No. 32 in order to bring it in conformity with the
philosophy of the Constitution.
The question whether para 3 of the Standing Order No. 17 implies second
opportunity given to the delinquent, was answered in the negative by the
Supreme Court in Associated Cement Co. Ltd v. T C Srivastava.17 Speaking for
the Court, Justice Tulzapurkar observed:
On a plain reading of the relevant words, no second opportunity
of showing cause against the proposed punishment is
contemplated either expressly or by necessary implication. In
other words, it is clear to us that the opportunity spoken by Para-
3 of Standing Order No. 17 is the opportunity to be given to the
 delinquent to meet the charge framed against him.
In M/s Glaxo Laboratories (I) Pvt. Ltd v. Presiding Officer, Labour
Court,18 a question arose ‘whether the charges imputing misconduct as found by
the appellant company would be covered by the Clauses 10, 16, 30 of the
Standing Order 22’. The Supreme Court ruled that; the misconduct prescribed in
standing orders which would attract a penalty should have a casual connection
with the place of work as well as the time at which it is committed which would
ordinarily be within the establishment and during duty hours. Even where the
standing order is couched in a language which seeks to extend its operation far
beyond the establishment, it would nonetheless be necessary to establish casual
connection between the misconduct and the employment. This casual connection
must be real and substantial, immediate and proximate and not remote. The
Court pointed out that normal approach in law to the construction of a standing
order is that it would apply to the behaviour on the premises where the workmen
discharge their duties and during working hours of their work. It added that the
well-established canon of construction is that penal provisions must receive strict
construction. Referring to clause 10 of Standing Order 22, the Court observed
that it must be strictly construed so as not to comprehend any misconduct
committed anywhere irrespective of the time-place-content where and when it is
committed and merely has some remote impact on the ‘peaceful atmosphere in
the establishment’. The expression ‘committed within the premises of the
establishment or in the vicinity thereof’ are the words of limitation and a broad
construction would make those words redundant. Clauses 16 and 30 form an
integral part of the code and the setting and purpose underlying these two
clauses must receive the same construction which Clause 10 received. Therefore,
the charges against the workman would not be comprehended in Clauses 10, 16
and 30 of Standing Order 22 applicable to the appellant company.
The scope of section 11C of UP IDA which is almost pari materia to
Section 13-A came to be interpreted and considered by the Supreme Court in the
UP State Road Transport Corporation v. UP Rajya Parivahan Karmchari
Union19. In this case the Court, while setting aside the decision of the labour
court in a case where it had declared a contractual workman to be treated as
regular workman has held thus:
In our opinion, the power of the labour court under Section 11-C
of the UP Industrial Disputes Act or under Section 13A of the
Industrial Employment (Standing Orders) Act, 1946 is much
narrower than the power of the labour court on a reference under
 Section 10 of the Industrial Disputes Act which corresponds to
Section 4-K of the U P Industrial Disputes Act.
The question about the jurisdiction of labour court under section 13-A of
IESOA again came up for consideration in Triveni Engineering & Indust. v.
Jaswant Singh20.
In this case, respondent No. 1 who claimed to be a workman of the
appellant was transferred during the course of his employment, but he did not
join the place of transfer. Thereupon, the appellant terminated his services.
Being aggrieved by the order of termination of his services, he filed a writ
petition in the Allahabad High Court challenging the transfer order as also the
termination order issued by the appellant herein. He contended, inter alia, that
the standing orders contain no provision for the transfer of a workman from one
sugar factory to another, and therefore, his transfer was against the law.
Therefore, his services could not have been terminated for not joining at a place
of transfer.
The appellant on the other hand took a plea that the respondent was not a
‘workman’. The High Court disposed of the writ petition leaving the respondent
at liberty to move a representation before the labour commissioner, Kanpur, UP
in term of Clause ‘W’ of the standing orders applicable. A representation in
terms of the said order was filed by the respondent. It was contended before the
labour commissioner by the appellant that respondent number 1 was not a
workman, and therefore, the labour commissioner had no jurisdiction to
adjudicate the representation under the provisions of U P Industrial Disputes
Act, 1947, particularly in terms of Clause ‘W’ of the standing orders. The labour
commission disposed of the petition, concluding that the question at hand related
to whether respondent no. 1 was a workman under the UP Industrial Dispute
Act, 1947. The labour commission held that the question whether the respondent
number 1 was a workman or not could not be decided under clause ‘W’ of the
standing orders, but instead should be determined by the labour court/industrial
tribunal.
Aggrieved by the order of the labour commission, respondent number 1
filed a writ petition challenging the aforesaid conclusions. The learned single
judge, however, dismissed the said writ petition.
Thereupon, the respondent filed a special appeal before the division bench
of the Allahabad High Court. The division bench of the High Court set aside the
orders of the labour commissioner as also of the single judge and remitted the
matter back to the labour commissioner to decide the nature of service of
respondent number 1 in accordance with law.
 Being aggrieved by the said judgement and order, the special leave
petition was filed in the Supreme Court. The Court ruled:
Whether or not a person is a workman is a matter that relates
primarily to facts and circumstances of the case. The same has
nothing to do with the application and interpretation of the
standing orders. What needs to be examined and looked into for
deciding the aforesaid issue is the nature of job performed by the
concerned person, duties and responsibilities vested in him and
other such relevant material.
In view of above, the Court held that the division bench of the High Court
committed a mistake in determining the said issue as ancillary to that of the
applicability and interpretation of the standing order. Further, the order of
termination also could not have been examined and scrutinized as such power
and jurisdiction is not vested with the labour commissioner. The Court
accordingly set aside the judgment and order passed by the division bench of
Allahabad High Court and upheld and restored the orders of single judge as also
of the labour commissioner.

B. Powers of the High Court

In U P State Bridge Corpn. v. UP Rajya Setu Nigam S Karamchyari Sangh,21
the respondent workmen did not attend their duties from certain date and
presumably they had gone on strike in pursuance of their demands. Thereafter,
the appellant corporation issued an order under clause L-2.12 of the certified
standing orders of the company which provided:
Any workman who remains absent from duty without leave or in
excess of the period of leave originally sanctioned or
subsequently extended for more than 10 consecutive days, he
shall be deemed to have left the services of the corporation on
his own accord, without notice, thereby terminating his contract
of service with the corporation and his name will accordingly be
struck off the rolls. It stated therein that if the workmen
continued to absent themselves form work continuously for
more than 10 days, it shall be presumed that they have left the
services of the corporation without any notice and their services
shall come to an end and their names shall be removed from the
muster roll of the corporation.
 However, when after repeated public notices the workmen did not resume
duties, the corporation passed an order putting an end to the service of 168
workmen on the presumption that they had abandoned their services with the
corporation on their own. However, no inquiry had been held before the services
of the workmen were terminated. One such workman whose services were so
terminated challenged the order of termination before the High Court, Lucknow
bench. The Court dismissed the petition on the ground that the workman could
raise an industrial dispute, if he so desired. Thereafter, the respondent union filed
a second writ petition in the Allahabad High Court which was allowed. A single
judge of the Allahabad High Court held that (i) the word ‘absence’ in the
standing orders did not by itself mean abandonment of service, since the
employees were on strike, it was not their intention to abandon service. (ii)
resorting to strike was neither misuse of leave nor overstaying the leave. (iii)
standing order had not made a provision as to how a strike had to be dealt with
(iv) the strike resorted to by the workman was not an illegal strike and also
participation in strike whether legal or illegal, did not and could not be said to
amount to abandonment of service justified under Clause L-2.12 of the standing
orders (v) at most, participation in illegal strike may amount to misconduct for
which a punishment was provided under the standing orders after an inquiry.
The Court accordingly held that the impugned order of termination was bad for
non-compliance with principles of natural justice and, therefore, could not be
sustained. A division bench of the High Court dismissed the petition. Aggrieved
by this, the management filed an appeal in the Supreme Court. The Supreme
Court held that the High Court had erred in exercising extraordinary jurisdiction
under Article 226 of the Constitution by entertaining the writ petition of the
respondent union at all. The Court observed that the dispute being an ‘industrial
dispute’ both within the meaning of the Industrial Disputes Act as well as the UP
Industrial Disputes Act, the rights and obligations sought to be enforced by the
respondent union in the writ petitions were those created by the Industrial
Disputes Act. In further added that in terms of the decision of the court in
Premier Automobile Ltd v. Kamlekar Shantaram Wadke22 when the dispute
relates to the enforcement of a right or an obligation created under the said Act,
then the only remedy available is to get it adjudicated under the Act.

II. PENALTIES AND PROCEDURE

The enforcement of law implies that there are penalties, in case it is not
complied with. The enactment of legislative measure is thus always
accompanied by provision for specific penalties in case of violation of the
provisions of the Act. Thus, Section 13(1) prescribes a fine extending to ₹5,000
on those employers who fail to submit draft standing orders under Section 3, or
who modify their standing orders otherwise than in accordance with Section 10.
If the offence is a continuing one, he shall be liable for further fine extending to
₹200 every day after the first during which the offence continues. The Act also
imposes a fine extending to ₹100 upon employer who contravenes any provision
for the finally certified standing orders under the Act. If the offence is a
continuing one he shall be liable to a further fine extending to ₹25 everyday after
the first during which the offence continues.23 But, in order to be prosecuted for
the aforesaid offence, the prior sanction of the appropriate government is
essential.24 However, no court inferior to that of a metropolitan magistrate or
judicial magistrate of second class shall try any offence under this Section.25

III. REMEDIES FOR ENFORCEMENT OF RIGHTS AND

LIABILITIES CREATED UNDER THE IESOA

A. Civil Remedy under the IESOA

The penal provisions, however, do not foreclose the civil remedy. The IESOA
does not, however, invest the labour court with the power to grant relief in
enforcement of rights and liabilities created by the standing order which requires
to be given to the workman, such redress cannot be given by the labour court
under section 13a.

B. Remedy for Enforcement of Rights and Liabilities Created

under the Industrial Disputes Act, 1947
The Industrial Disputes Act, 1947, however, provides for relief to workmen
affected due to violation of the provisions of certified standing orders. But, in
order to do the same, an industrial dispute must be raised and the same must be
referred by the appropriate government under Section 10 to the labour court for
adjudication. Indeed, Section 7 read with Clause I of Schedule I empowers the
labour court to adjudicate upon industrial disputes relating to ‘the property or
legality of an order passed by an employer under the standing orders’.
C. Under the Civil Procedure Code
Can a civil court entertain a suit with respect to dispute between employer and
workman regarding enforcement of standing orders? This issue has been
considered by the Supreme Court in Rajasthan SRTC v. Mohar Singh26. The
Court held that if the infringement of the standing orders is alleged, the civil
court's jurisdiction may be held to be barred but if the suit is based on the
violation of principles of common law or constitutional provisions or on other
grounds, the civil court's jurisdiction may not be held to be barred. If no right is
claimed under a special statute in terms whereof the jurisdication of the civil
court is barred, the civil court will have jurisdiction.
The above view was reiterated by a three-judge bench of the Supreme
Court in Rajasthan State Road Transport Corporation v. Bal Mukund
Bairwa27. The Court ruled that if an employee intends to enforce his
constitutional rights or a right under a statutory regulation, the civil court will
have the necessary jurisdiction to try a suit. If, however, he claims his right and
corresponding obligations only in terms of the provisions of the Industrial
Employment (Standing Orders) Act, the civil court will have no jurisdiction. In
view of this it would not be correct to contend that only because the conditions
of service of workmen are otherwise governed by the standing orders certified
under the 1946 Act, ipso facto the civil court will have no jurisdiction.
In RSRTC v. Deen Dayal Sharma28, the Supreme Court held that it is the
nature of right sought to be enforced which is decisive in determining whether
the jurisdiction of civil court is barred or not.

IV. INSPECTION MACHINERY

The effectiveness of law lies in its implementation. Its non-enforcement is the
negative aspect of instrument of social control. The IESOA does not contain any
provision for inspection machinery for the enforcement of the provisions of the
standing orders. However, it is significant to note that the twenty-fourth session
of the Standing Labour Committee in its meeting on 13–14 February 1966 at
New Delhi suggested that the IESOA should be amended to provide for the
appointment of inspectors to enforce the provisions of the Act.
1 Tata Chemicals Ltd v. Kailash C Advaryer, AIR 1964 Gujarat 265.
2 Chipping and Painting Employers Associations v. A T Zambre, AIR 1969 Bombay 274.
3 M/s Deoria Sugar Mills Ltd v. Deputy Labour Commissioner, 1977 Lab. IC 102
(Allahabad).
4 Tata Chemicals Ltd v. Kailash C Advaryer, op. cit., 265, 75.
5 Tata Chemicals Ltd v. Kailash C Advaryar, AIR 1964 Guj. 265.
6 Ibid.
7 2003 LLR 88.
8 2003 LLR 784.
9 2003 LLR 524.
10 (2009) 2 SCC 50.
11 Ibid.
12 See Mahalaxmi Mills Co. Ltd v. Labour Court, (1965) 1 LLJ 517 (Rajasthan).
13 Chipping and Painting Employers' Association v. A T Zambre, AIR 1969 Bombay 274.
14 S K Mukerjee v. Calcutta Electric supply Co. Ltd, (1969) 1 LLJ 603 (Calcutta).
15 See Deoria sugar Mills Ltd v. Dy. Labour Commissioner, op. cit., 102.
16 (1985) 1 LLJ 267.
17 (1984) 2 LLJ 105.
18 (1984) 1 SCC 1.
19 2007 (4) SCALE 302.
20 2010 (8) SCALE 113.
21 (2004) 4 SCC 268.
22 (1976) 1 SCC 496.
23 Section 13 (2).
24 Section 13 (3).
25 Section 13 (4).
26 (2008) 5 SCC 542.
27 (2009) 4 SCC 299.
28 (2010) SCALE 1.
 CHAPTER
29
Role of Government
Under the IESOA

I. CONCEPT OF THE ‘APPROPRIATE GOVERNMENT’

The appropriate government has an active role to play in respect of application,
addition and exemption of industrial establishment, addition of items in the
Schedule and rule-making power. Before we turn to discuss these powers, it is
relevant to note the definition of ‘appropriate government.’ Section 2 (b) of the
IESOA defines ‘appropriate government’ to mean:
in respect of industrial establishments under the control of the
Central Government or a railway administration or in a major
port, mine or oil field, the Central Government, and in all other
cases, the state government.
A comparison of the aforesaid definition with that of the definition of the
‘appropriate government’ in Section 2 (a) of the Industrial Dispute Act, 1947,
reveals that two definitions are not similar. It is, therefore, necessary to amend
the aforesaid definition on the lines of the definition in IDA. This amendment is
necessary for the sake of uniformity in the enforcement of law.1

II. DELEGATION OF POWER

The appropriate government is empowered to delegate any power exercisable by
it under the Act or any rules made thereunder,2 provided notification is issued in
the official gazette specifying the matters in relation to which the powers are
delegated and the conditions governing delegations. Such power may be
delegated where appropriate government is Central Government to such officer
or authority subordinate to the state government as may be specified in the
notification.3 Where the appropriate government is a state government, by such
officer or authority subordinate to it as may be specified in the notification.

III. POWER OF THE GOVERNMENT TO MAKE RULES

Section 15 (1) of the IESOA empower the appropriate government to make rules
for carrying out the purposes of the Act. In order to exercise the power, the
following conditions must be complied with: (i) notification must be published
in the official gazette before making the rules; and (ii) the representatives of both
the employers and workmen are consulted.4

A. Power to Add Items in the Schedule

Under its rule-making powers, the appropriate government can (i) add additional
matter to be included in the Schedule of the IESOA; (ii) prescribe the procedure
to be followed in modifying standing orders certified under the Act.5 However,
before any rules are framed under this provision, the appropriate government is
required to consult both employers and workmen.6
Decided cases reveal that enumeration of the items in the Schedule of the
Act will not control or limit the width of the power conferred on the appropriate
government by sub-section (1) of Section 15 and so, if it appears that the items
added by the appropriate government have relation to conditions of employment;
their addition cannot be challenged as being invalid in law.7 It is the discretion of
the appropriate government to take a decision in respect of the matter whether or
not such addition should be made.8 Hence, the reasonableness of such addition
cannot be questioned because the power to decide which addition should be
made has been delegated to the appropriate government by the Parliament.9
Further, having ‘regard to the development of industrial law in this country
during recent years, it cannot be said that gratuity or provident fund is not a term
or condition of employment in industrial establishments’.10 Similarly, it relates
the age of superannuation or retirement to the conditions of employment in
industrial establishments.11

B. Power to Frame Model Standing Orders

The Appropriate Government Act12 can also frame rules setting out model
standing orders for the purposes of the Act. In pursuance of the power, the state
governments have framed model standing orders applicable to workmen.13

C. Power to Prescribe Procedure and Fee

The Act also empowers the appropriate government to (i) prescribe the
procedure of certifying officers and appellate authorities;14 (ii) prescribe the fee
which may be charged for copies of standing orders,15 and (iii) provide for any
other matter which may be prescribed.16

D. Approval of the Legislature

The Act requires that the approval of the legislature is essential whether the rules
are framed by Central or state government. In case the rules are framed by the
Central Government, it should be approved by both houses of the Parliament and
where the rules are framed by a state government, they should be approved by
the legislature of the state. The approval must be sought by laying down the
same before the legislature concerned while it is in session for total period of 30
days which may be comprised in one session or in two successive sessions, and
if, before the expiry of the session immediately following the session or the two
successive sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid, the legislature makes
any modification in the rule or decides that rule should not be made, such rule
shall be effective in modified form or be of no effect, as the case may be.17

IV. TIME-LIMIT FOR COMPLETION OF DOMESTIC

INQUIRY
There is no provision in the IESOA fixing a time-limit for completion of
disciplinary proceeding by the employer. However, Section 75 (1) of Industrial
Relation Bill, 1978 for the first time provided:
Where any employee is suspended by the employer pending
investigation or inquiry into complaints or charges of
 misconduct against him, such investigation or inquiry, or where
there is an investigation followed by an inquiry, both the
investigation and inquiry shall be completed ordinarily within a
period of 90 days from the date of suspension.
The inclusion of aforesaid provisions in the IESOA, it is submitted, would
protect the workers from undue harassment by the management.

V. PAYMENT OF SUBSISTENCE ALLOWANCE

Prior to 1982, there was no provision in IESOA for subsistence allowance in
case of suspension of an employee by the employer. However, the model
standing orders provide for graded system of payment of subsistence allowance.
But the incorporation of this provision created problems in the absence of any
provisions in the IESOA. Further, the standing orders in the state of Andhra
Pradesh provided for a subsistence allowance of 50 per cent for 30 days, 75 per
cent for 365 days and 100 per cent beyond 45 days. Similar provisions also exist
in Gujarat, Maharashtra, U P, West Bengal and Kerala. But they differ in several
respects. In order to meet this situation, Section 10-A was inserted in the
Industrial Employment (Standing Orders) Amendment Act, 1981. Sub-section
(1) of Section 10A provides for payment of subsistence allowance at the rate of
50 per cent of wages for the first 90 days of suspension, which would thereafter
be increased to 75 per cent of such wages for the remaining period of suspension
provided such workman is not responsible for delay in the completion of the
disciplinary proceeding.18 Under sub-section 2 of Section 10A if ‘any dispute
arises regarding the subsistence allowance payable to a workman under sub-
section (1), the workman or the employer concerned may refer the dispute to the
labour court constituted under the Industrial Disputes Act, 1947, within the local
limits of whose jurisdiction in the industrial establishment wherein such
workman is employed is situated and the labour court to which the dispute is so
referred shall, after giving the parties an opportunity of being heard, decide the
dispute and such decision shall be final and binding on the parties.’19 ‘Further,
Section 10A(3) provides that notwithstanding anything contained in the
governing provisions of this Section, where provisions relating to payment of
subsistence allowance under any other law for the time being in force in any
state are more beneficial than the provisions of this section, the provisions of
such other law shall be applicable to the payment of subsistance allowance in
that state.’20
Scope of Section 10A(1)
The scope of the Section 10-A of the Industrial Employment (Standing Orders)
Act, 1946 was examined in Bibhu Deb Roy v. J M Savery.21 The grievance of
the plaintiff was that he was under suspension although there was no provision
in the local staff manual of the company for subsistance allowance permissible
under Section 10-A. The Gauhati High Court held that (i) The payment of
subsistence allowance follows from suspension and an employee cannot be
deprived of this right; and (ii) For ends of justice, the principles laid down under
Section 10-A of the Industrial Employment (Standing Orders) Act, 1946 should
be followed in quantifying the payment of the amount of subsistence allowance
per month.
In Automative Manufacturing Ltd v. Member, Industrial Court22, the
Bombay High Court while dealing with the scope of section 10A (1) held that
the order of the Industrial Court to pay 100 per cent subsistence allowance could
not be sustained in view of Section 10-A of the Industrial Employment (Standing
Orders) Act, 1946. The Court, however, upheld the direction of the industrial
court to pay subsistance allowance on revised rate of salary.
In May & Baker Limited v. Kishore Jain Kishan Dass Icchaporie,23 the
workman was charge-sheeted for certain misconduct and was suspended from
service. During the period of suspension, he was paid suspension allowance as
per the provisions of certified standing orders applicable to the establishment.
The workman filed an application before the labour court under Section 13-A,
contending that he was entitled to subsistence allowance under the model
standing orders, as amended under the Bombay Industrial Employment
(Standing Orders) Rules, 1959, being more beneficial. The labour court rejected
the contention. However, the single judge of the Bombay High Court, on a writ
petition, reversed the order of the labour court. The division bench of the
Bombay High Court, on appeal, held that the model standing orders, as also the
certified standing orders are laws under the provisions of the Industrial
Employment Standing Orders Act, 1946 and not provisions ‘under any other
law’. The Court accordingly held that Section 10-A superceded in relation to the
payment of subsistence allowance over the provisions of the model standing
orders.

Scope of Sub-section 2 of Section 10A

In Vijaya Bank v. Shyamal Kumar Lodh24 the Supreme Court determined the
scope of sub-section 2 of section 10A (cited above). In this case the respondent,
an employee of appellant bank, filed an application before the labour court,
Dibrugarh constituted by the state government for an award computing his
suspension/subsistence allowance. The appellant-bank challenged the
jurisdiction of the labour court to adjudicate the dispute on the ground that the
said court has not been specified by the Central Government under Section 33
C(2) of the IDA, and therefore it had no jurisdiction to entertain the application.
The labour court rejected the contention. Thereupon, a writ petition was filed in
High Court which held that the labour court at Dibrugarh had not been specified
by the Central Government and therefore it had no jurisdiction to entertain the
petition filed by the employee. It however, added that as the branch of the bank
where the employee was working fell within the limits of jurisdiction of labour
court in question, it shall have jurisdiction to decide the claim whether labour
court at Dibrugarh could have entertained the application under Section 10 of the
Industrial Employment (Standing Orders) Act. An appeal was then filed before
the Supreme Court. The Court observed that from a plain reading of the Section
10 A(2) of the aforesaid Act, it is evident that the labour court constituted under
the Industrial Disputes Act, 1947 within the local limits of whose jurisdiction the
establishment is situated, has jurisdiction to decide any dispute regarding
subsistence allowance’. Referring to the case it observed: in the present case,
undisputedly dispute pertains to subsistence allowance and the labour court
where the workman had brought the action has been constituted under Section 7
of the Industrial Disputes Act, 1947 and further, the appellant bank is situated
within the local limits of its jurisdiction. The workman had, though, chosen to
file application under Section 33 C(2) of the Industrial Disputes Act but that
shall not denude the jurisdiction of the labour court, if it otherwise possesses
jurisdiction. The Court further observed incorrect label of the application and
mentioning wrong provision neither confers jurisdiction nor denudes the court of
its jurisdiction. Relief sought for, if it falls within the jurisdiction of the court,
cannot be thrown out on the ground of its erroneous label or wrong mentioning
of provision. The Court accordingly held that the labour court, Dibrugarh
satisfies all the requirements to decide the dispute raised by the employee before
it.

Effect of Non-payment of Subsistance Allowance

The Supreme Court in Capt. M Paul Anthony v. Baharat Gold Nines Ltd25 held
that non-payment of subsistence allowance is an inhuman act which has an
unpropitious effect on the life of an employee. When the employee is placed
under suspension, he is demolished and the salary is also paid to him at a
reduced rate under the nickname of ‘subsistence allowance’ so that the employee
may sustain himself. The act of non-payment of subsistence allowance can be
linked to slow poisoning of the employee, who if not permitted to sustain
himself on account of non-payment of subsistence allowance, would gradually
starve himself to death.
The Allahabad High Court in Municipal Board, Amroha v. UP Public
Service Tribunal26 ruled that non-payment of subsistence allowance during
period of suspension would not ipso facto render the order of removal invalid
unless coupled with real prejudice.
The Rajasthan High Court in the case of RSRTC v. Dharamvir Singh,27
even liberalized the prejudice concept and probably felt that non-payment of
subsistence allowance, other thing remaining the same, would only give a cause
of action to the workman to claim the arrears of subsistence allowance not paid
to him by initiating separate proceedings. On other limbs of this concept, if the
employer denies the payment of subsistence allowance in the event of the
workman not marking his attendance during period of suspension, it would not
be proper.

Recommendation of the Second National Commission on

Labour
The Commission has recommended that any worker who, pending completion of
domestic inquiry, is placed under suspension, should be entitled to 50 per cent of
his wage as subsistence allowance, and 75 per cent of wages for the period
beyond 90 days if the period of suspension exceeds 90 days, for no fault of the
worker, however the total period of suspension shall not, in any case, exceed one
year. If as a result of continued absence of the worker at the domestic inquiry or
if the inquiry and disciplinary action cannot be completed in time for reasons
attributable wholly to the worker's default or intransigence, the employer will be
free to conduct the inquiry ex-parte and complete the disciplinary proceedings
based on such ex-parte inquiry and further, there would be no increase in
subsistence allowance beyond 50 per cent for the period exceeding 90 days in
such cases.

1 See Memorandum of 31st Session of the Labour Ministries’ Conference, Government of

India, SIMC, July (1980).
2 Section 14-A.
3 Section 14-A.
4 Section 14A.
5 Section 15 (1).
6 Section 15 (2)(a).
7 Rohtak and Hissar District Electric Supply Co. v. State of UP, AIR (1966) SC 1471,
1478.
8 Ibid.
9 Ibid.
10 Rohtak and Hissar District Electric Supply Co. v. State of UP, AIR (1966) SC 1471,
1478.
11 Ibid.
12 Section 15 (2).
13 See Roman Nambisan v. Madras State Electric Board, (1967) 1 LLJ 252, 254 (Madras).
14 Section 2 (c).
15 Section 2 (d).
16 Section 2 (c).
17 See Section 15 (3).
18 Section 10A (1).
19 Section 10A (2).
20 Section 10A (3).
21 1993 Lab. IC 534.
22 (2009) 4 LLJ 153 (Bom.).
23 1991 Lab. IC 2066.
24 2010 (6) SCALE 300.
25 AIR 1999 SC 1416.
26 (2001) 2 LLJ 1221.
27 (2003) (2) WLC 64 (Raj.).
 PART V
WORKERS’ PARTICIPATION IN MANAGEMENT
 CHAPTER
30
Workers’ Participation in Management

I. INTRODUCTION
Rapid industrial development and attainment of economic self-reliance are the
two major tasks which the country has set out to accomplish among others.1 The
key to achieve these objectives is increased production. Output cannot be
increased unless there is effective cooperation between labour and management
at all levels. The way of ensuring this is to satisfy their social and psychological
needs besides economic ones. Workers’ participation in management is one of
the most significant modes of resolving industrial conflicts and encouraging
among workers a sense of belongingness in the establishment where they work.
It affords due recognition to the workers and enables them to contribute their
best in all round prosperity of the country in general and industrial prosperity in
particular. Moreover, in India which has launched a vast programme of
industrialization, the need for workers’ participation is all the more important. It
is in recognition of these needs that under the Second, Third, Fifth and Seventh
plans, specific measures have been suggested for workers’ participation. The last
five decades have witnessed a striking development in the arena of workers’
participation. Although the institution of works committee consisting of
representatives of employers and workmen was provided as early as 1947 which
sought ‘to promote measures for securing and preserving amity and good
relations between the employer and the workmen and to discuss day-to-day
problem of the industry’, the scheme of Joint Management Council, popularly
known as workers’ participation in management, was introduced on voluntary
basis only after over a decade. However, the scheme of joint management
council for various reasons could not succeed. In order to meet this unhappy
state of affairs and to secure greater measure of cooperation between labour and
management and to increase efficiency in public service, the Government of
India on October 30, 1975 introduced a scheme of workers’ participation in
management at shop floor and plant levels. In addition to these, there are
voluntary schemes of making the workers shareholders and directors in the
board of management. The inclusion of the concept of workers’ participation in
management in the Directive Principles of State Policy through the Constitution
(Forty-second) amendment, Act, 1976 gave a momentum to the institution of
workers’ participation in management. After the constitutional Amendment, the
Central Government expressed its intention to amend the 1975-scheme and to
provide for effective participation of workers in production processes and
accordingly amended the scheme in January 1977.
An analysis of the existing statutory and non-statutory schemes of workers’
participation in management reveals that the parties are dissatisfied and critical
of the existing schemes. It is, therefore, desirable to identify the framework of
participation including the various schemes of participation and the problems
connected thereto.
This chapter seeks to examine and evaluate the working of various statutory and
non-statutory schemes of workers’ participation in management in operation in
Indian industries.

II. CONSTITUTIONAL COMMITMENT

The Constitution (42nd Amendment) Act, 1976 makes a pioneering attempt to
provide for workers’ participation in management in industry by suitable
legislation in the Directive Principles of State Policy. Thus, Articles 43-A of the
Constitution (42nd Amendment) Act, 1976 provides:
The State shall take steps, by suitable legislation or in any other
way, to secure the participation of workers in the management
of undertakings, establishments or other organizations engaged
in any industry.
The principle underlying the inclusion of workers’ participation in the
Directive Principles of State Policy is to give due recognition to the workers and
to create among them a sense of partnership. It being a constitutional imperative,
the State is under an obligation to take suitable measures, legislative or
otherwise, to secure effective workers’ participation in management. But mere
inclusion of constitutional or statutory provisions would not serve the purpose.
There is a need not only to evolve a suitable and workable statutory scheme of
workers’ participation in industry but also a responsible trade union and equally
responsible and considerate management to fulfil the cherished objectives of
constitution-makers.

III. CONCEPT AND SCOPE

Workers’ participation is a broad concept. It varies from country to country and
industry to industry.
Workers’ participation has been differently viewed by sociologists,
psychologists, economists and lawyers. The sociologists view workers’
participation as an instrument of varying potentialities to improve industrial
relations and promote industrial peace. The psychologists consider participation
as a mental and emotional involvement of a person in a group situation which
encourages workers to share managerial responsibility.2 According to them,
workers’ participation is a psychological process by which workers become self-
involved in an establishment and see that it works successfully. The economists
think that the real basis of workers’ participation is higher productivity of labour
and utilization of collective experience of workers in order to advance the
qualitative and quantitative conditions of production. Lawyers, however, view
workers’ participation as a legal obligation upon the management to permit and
provide for involvement of workers of industrial establishments through proper
representation of workers at all levels of management in the entire range of
managerial action.
Being a dynamic subject, no rigid limits can be laid down for workers’
participation for all industries and for all times. It can be elastic enough to
include workers’ representation even at the top level, namely board of directors.
It can also be confined to the extremely limited domain of consultation at the
lowest level such as ‘to promote measures for securing and preserving amity and
good relations between the employer and workmen and to that end, to comment
upon matters of their interest or concern and endeavour to compose any material
difference of opinion in respect of such matters.’3
Within the broad range mentioned above, the scope of workers’
participation varies from country to country not only in form but also in the
degree of participation. Workers’ participation in management has been
classified into five stages. These are informative, consultative, associative,
administrative and decisive participations, the extend of each depending upon
the quality of management and the character of the employee.4 K C Alexander5
has, however, suggested different modes of workers’ participation viz., (i)
collective bargaining, (ii) joint administration, (iii) joint decision making, (iv)
consultation, and (v) information sharing. Issues over which the interests of
workers and management are conflicting such as wages, bonus, working hours,
holidays and leave, etc., are amenable through collective bargaining. On the
other hand, issues over which both parties are equally concerned, such as the
efficient management of provident fund money, canteen, labour welfare
facilities, etc., would form subjects of joint administration, joint decision making
or consultation. The difference between joint administration, joint decision
making and consultation though narrow, is nevertheless significant. Whereas in
joint administration workers and management jointly share responsibility and
power of execution, in joint decision making, even though the two groups
participate in deciding the policies, execution is generally carried-out by the
management. In the consultation form, the management merely invites workers’
opinion or suggestions on certain matters of common interest but retains with
itself the authority and responsibility of making decisions and executing them.
According to Kenneth F Walker6, various forms of workers’ participation in
management are ascending participation, descending participation, disjunctive
participation and informal participation. In ascending participation, workers may
be given an opportunity to influence managerial decision at higher levels,
through their elected representatives to works committee, shop or joint council
or board of the establishment. In descending participation, they may be given
more powers to plan and make decisions about their own work. They may
participate through collective bargaining. They may also participate informally
when, for example, a manager adopts a participative style of supervision of
workers. These and other forms of participation have played a significant role in
transforming the scope and concept of workers’ participation.

IV. STATUTORY AND NON-STATUTORY SCHEMES

Since independence, various schemes have been formulated by the Government
of India to encourage workers’ participation in management, which are briefly
given below.
A. Works Committee7
The scheme of joint consultation received legislative approval in 1947 when the
government enacted the Industrial Disputes Act, 1947. Though a large number
of committees were set up, the result of works committee were not
commensurate with expectations. ‘Experience has shown that a major
hinderance in the way of effective functioning of works committees is the lack
of clear-cut demarcation between committees’ responsibilities and
responsibilities of trade unions operating in the field.

B. Joint Management Council

In 1958, joint management councils were introduced. The JMCs were entrusted
with the administrative responsibilities for various matters relating to welfare,
safety, vocational training, preparation of schedule of working hours and
holidays. There were to be consulted in matters of change in work operation,
general administration and alteration in standing orders, rationalization, closure,
etc., to encourage smooth work operations and enhanced productivity. The JMCs
should consist of equal number of representatives of management and workers.
Representation of workman to the JMCs was based on nominations by
recognized trade unions.
JMCs did not receive much support from unions or management. It was
alleged that JMCs and works committees appeared similar in scope and function
and that multiplicity of bipartite consultative bodies served no purpose and
where the membership strength of unions were disputed, composition of the
council became a contentions issue.8

C. The 1975-Scheme of Workers’ Participation in Industries

1. The Need
The introduction by the Government of India of the scheme of workers’
participation in industries at the shop and floor levels on October 30, 1975
opened a new chapter in the history of employer-employee relations in Indian
industries. The other consultative machinery now existing are works committees
and joint management councils. While the former is statutory and has been set
up under the Industrial Disputes Act, 1947, the latter scheme like the present one
is non-statutory. This scheme has been formulated to make the worker realize
that he is a conscious participant in the society’s apparatus of production.9
 A feature of the scheme is that there is no legal sanction. Further, it
provides that the shop council should be set up at floor level and joint council at
plant level. Moreover, the scheme has been designed to be a flexible one so as to
allow variations to suit local conditions and for the system to work properly. The
scheme also provides for its implementation through executive action.

2. Scope and Coverage

The scheme applies in manufacturing and mining industries (whether in public,
private or cooperative sector, including departmentally-run enterprises)
employing 500 or more persons. In practice it is, however, found that though the
scheme is confined to only manufacturing and mining industries, some other
industries have also accepted the scheme.10 In 1977, the government extended
the scheme to commercial and service organizations of the public sector. Some
states have extended the application of this scheme even in establishments
employing less than 500 workers. For instance, Punjab has extended the scheme
in establishments employing 200 or more workers.

3. Shop Council
a. Constitution. The scheme requires every industrial unit covered under the
scheme to constitute shop council for each department or shop, or one council
for more than one department or shop, depending upon the number of workmen
employed therein. This would also include units run departmentally, whether or
not joint management council was functioning in such units. The number of shop
councils and departments to be attached to each council of the undertakings or
the establishments shall be determined by the employer in consultation with the
recognized union or the various registered trade unions, or with workers in
accordance with the local conditions.
The council shall consist of equal number of representatives of employers
and workers not generally exceeding 12. The scheme, however, does not provide
any minimum limit. The employer’s representatives are to be nominated by the
management from amongst the personnel of the unit concerned. The workers’
representative would be taken from amongst the workers actually engaged in the
department or shop concerned.
b. Method of Working. The Council shall have among its office-bearers a
chairman and a vice-chairman. The chairman of the council is to be nominated
by the management. The vice-chairman is to be elected by the workers’
representative on the council. The term of the representative of the committee is
2 years and it should meet at least once in a month. The scheme also provides
the manner in which the vacancy of a member of the council would be filled. All
the decisions of council shall be taken on the basis of consensus and not by
process of voting; but in case no consensus or agreement is reached, either party
is allowed to refer the same to the joint council for consideration and decision.
The concerned parties are required to implement the decision of the shop council
within a period of one month unless otherwise stated therein. However, if the
decisions of the shop council have a bearing on another’s shop or the
undertaking or establishment as a whole, they will be referred to the joint
council. But this again raises a question as to what would happen in case the
parties failed to implement the unanimous decision of the council. The scheme is
silent on it.
c. Functions of the Shop Council. The main function of the shop council is to
increase production, and overall efficiency of the shop or department in the
following matters:
(i) Assist management in achieving monthly/yearly production targets;
(ii) Improvement of production, productivity and efficiency including
elimination of wastage and optimum utilization of machine, capacity
and manpower;
(iii) Specifically identify areas of low productivity and take necessary
corrective steps at shop level to eliminate relevant contributing factors;
(iv) To study absenteeism in shops, departments and recommend steps to
reduce them;
(v) Safety measures;
(vi) Assist in maintaining general discipline in the shop/department;
(vii) Physical conditions of working, such as lighting, ventilation, noise, dust,
etc., and reduction of fatigue;
(viii) Welfare and health measures to be adopted for efficient running of the
shop/department; and
(ix) Ensure proper flow of adequate two-way communications between the
management and the workers, particularly on matters relating to
production figures, production schedules and progress in achieving the
targets.

4. Joint Council
a. Constitution of Joint Council. Under the scheme, every industrial unit
employing 500 or more workers is required to constitute a joint council for the
whole unit. The constitution of the council is on the pattern of shop council,
which we have discussed earlier.
b. Method of Working. The joint council shall have a chairman, a vice-
chairman and a secretary. The chief executive of the unit shall be the chairman
of the unit. The vice-chairman is to be nominated by the workers’ representative
of the council. The joint council shall also appoint one of its members as
secretary. It is, however, not mentioned in the scheme as to whether the secretary
would be chosen from amongst workers or employers’ representatives or by
rotation. The tenure of office of council shall be 2 years, and the council is
required to meet at least once in a quarter.
The scheme envisages that all decisions of the council shall be taken on
the basis of consensus, and not by a process of voting. There seems to be a
lacuna in the scheme. It is not clear as to what would happen in case no
consensus or agreement is reached in the joint council. Under the circumstances,
it is suggested that in such a situation, the power to decide such questions should
be left upon the board of management. In such cases, there should invariably be
a workers’ representative on the board and he should have a say at the decision-
making level. The scheme also provides that the decision shall be binding on the
parties and shall be implemented within one month unless otherwise stated. This
again raises a question as to what would happen if the parties are unable to
implement the unanimous decision of the council.
c. Functions of Joint Council. The main function of the joint council is to deal
with matters relating to ‘(i) optimum production, efficiency and fixation of
productivity norms of man and machine for the unit as a whole; (ii) functions of
a shop council which have a bearing on another shop or the unit as a whole; (iii)
matters emanating from shop council which remain unresolved; (iv) matters
concerning the unit of the plant as a whole, in respect of matters relating to work
planning and achieving production targets; more specially tasks assigned to a
shop council at the shop/department level but relevant to the unit as a whole will
be taken up by the joint council; (v) the development of skills of workmen and
adequate facilities for training; (vi) the preparation of schedule of working hours
and holidays; (vii) giving rewards for valuable and creative suggestions received
from workers; (viii) optimum use of raw materials and quality of finished
products; and (ix) general health, welfare and safety measures for the unit or the
plant.’

5. Operation and Assessment of the Scheme

The scheme of workers’ participation which was introduced by the Government
of India is voluntary and not compulsory. The reason for this seems to be the
readiness on the part of employers of the establishments covered under the
scheme to voluntarily implement the scheme and to accept the idea even without
ascertaining the defects or practicability of the scheme. This is a very healthy
trend. Some states have, however, made the scheme compulsory.11 There is yet
another state which has even taken statutory measures to implement the
scheme.12

D. Verma Committee (1977–78)

In pursuance of the recommendation of the tripartite labour conference,
Government of India constituted a Committee on Workers Participation in
Management under the chairmanship of Shri Ravindra Verma, the then Minister
of Labour and Parliamentary Affairs. The Committee recommended that the
experience of voluntary schemes of participative management in the past had not
been very happy. It was essential to introduce the scheme through legislation and
it should be flexible. The Committee favoured the adoption of a three-tier system
of participation at corporate level, plant level and shop-floor level. The scheme
of participation would be introduced in undertakings employing 500 or more
workers with an enabling provision to extend it to others employing at least 100
workers. It was recommended that 10 per cent of all new shares should be
reserved exclusively as workers’ share and should be offered first to the workers
of that company. It was suggested that an organization both at centre and in the
states be constituted to monitor the implementation of the scheme of workers’
participation in management and also to review its working.

E. The 1983-Scheme of Workers’ Participation in

Management
A new comprehensive scheme of workers’ participation in management was
notified by the Government of India on 30 December, 1983. The scheme is
applicable to all public sector undertakings. The state governments and private
sector enterprises have also been asked to implement the scheme. A committee
consisting of representatives of the employing ministries, state governments,
central public sector enterprises, central workers’ organizations and
representatives of private sector manufacturers’ organizations was set up in
August, 1984 to monitor the progress in the implementation of the scheme.
According to 1987–88 (Annual Report of the Ministry of Labour) as per the
information available, 100 public sector enterprises have adopted the scheme of
December 1983 at shop floor and plant levels. Another 33 public sector
enterprises have implemented their own scheme/variant of scheme notified by
the government. About 64 public sector enterprises have not been able to
implement the scheme. Majority of large enterprises employing large number of
persons and with larger investments, like SAIL, BHEL, IOL, HMT and Cement
Corporation of India have implemented the scheme. No enterprise has
implemented the scheme at board level.
However, the scheme has no legislative backing. The workers and
management have equal representatives in the shop/plant forums.

V MAKING WORKERS SHAREHOLDERS

A. General
The other method of involvement of workers in industries is to make them
shareholders in the company. This may be done by allotting shares to workers
and inducing them to buy equity shares. The management may promote the
scheme by allowing workers to make payments in instalments. The company
may also advance loan or even give financial assistance to such workers to
enable them to purchase shares. The idea underlying the scheme is that workers
can take more interest in the company for which they are working. This scheme
was mooted in a background paper at one of the Indian Labour Conferences.
According to the official spokesmen, the scheme would create a sense of
partnership among workers and make them feel that they have certain interests in
the concern to which they belong. It has also been asserted that by becoming
shareholders, a sense of attachment will follow among workers and this will
prompt them to work with dedication and sincerity for the prosperity of the
establishment.

B. Working of the Scheme in Indian Industries

As an experimental measure, the scheme of making workers shareholders was
introduced in Sehgal Sanitary Fittings near Jullundur and 40 per cent of shares
were allotted to workers. It has been found that the concern was doing well and
was exporting goods and earning good profits.13 Similar experiment was also
made in Rajasthan Spinning & Weaving Mills Ltd. Another private sector firm, a
heavy machinery manufacturing firm in Rourkela has introduced a scheme
known as Employees’ Share Participation Loan Scheme.14 The Tamil Nadu
Government also introduced a scheme of giving up to 24 per cent equity capital
to the workers in the state-owned Cheran Transport Corporation and referred to
it as a progressive step on the socialist path.15 It proposed to extend the scheme
to other transport corporations.’16 Similarly, the State Trading Corporation, a
public sector undertaking, offered equity shares to its employees in order to
create a greater sense of involvement in the corporation.17

VI REPRESENTATION OF WORKERS ON BOARD OF

DIRECTORS

A. General
One of the effective methods of inducing among the workers a sense of
partnership and belongingness to the establishment is to involve them at the
highest level of management namely, by giving them representation on the board
of directors. It is claimed that this scheme will satisfy the ego of workers and
will give them greater opportunity to realize their responsibility towards the
industry in which they are employed.
Subsequent to the nationalization of banks, under the Nationalized Banks
(Management and Miscellaneous Provisions) Scheme 1970, the government
required all nationalized banks to appoint employee directors to their boards, one
representing workmen and the other representing officers. The scheme required
verification of trade union membership, identification of the representative union
and the appointment of a worker director from a panel of three names proposed
to the government by the representative union. The tenure of an employee
director was to be 3 years.
This was the first major attempt to place representatives of workman on
boards of public sector industries. The verification of membership continues to
remain a major difficulty and process of appointment has been delayed. In
retrospect, it is also evident that while the scheme clearly laid down procedure
for appointment, etc., there was no clear enunciation of objectives of such
participation or of the role and functions a workers director had to fulfill.

B. Working of the Scheme

The Government of India on an experimental basis introduced a scheme for
appointing workers’ representatives on the board of management in two public
sector undertakings,18 viz., Hindustan Antibiotics Ltd, Pimpri and Hindustan
Organic Chemicals Ltd, Kolaba. The scheme envisages that the council will do
its best to resolve problems at the shop floor level but in case no consensus or
agreement is reached, the same will be referred to the board of management. The
workers’ representative is to be nominated by the recognized union in the
undertaking who is required ‘to submit a panel of name of three persons from
whom one person is to be selected for nomination as director. For being eligible
for nomination a person should have attained the age of 25 years, should have a
minimum of 5 years’ service in the undertaking and should not attain the age of
superannuation during his term of appointment as director.’19
The working group of the Administrative Reforms Commission also
considered the feasibility of statutory representation of workers on the board of
management of the companies. The Commission observed:
….. the time had not yet arrived for any such provision in our
law. Nor did the demand for such representation on the board of
management of companies appear to be particularly strong or
insistent.
We are inclined to take the view that it is only after further improvements
have been made in workers’ right and more systematic and comprehensive use
has been made of a wide range of joint determination within an enterprise in its
day-to-day activities that statutory representation of workers in management of
companies whether at the top (board), middle (executive management) or lower
(shop floor) levels can be considered. Before any attempt is made to provide for
statutory representations of the workers at any desired levels in company
management, efforts should be made to improve the education and training of
workers for some of the elementary tasks of management.
We do not consider that it is necessary at present to provide in the
Companies Act for compulsory representation of workers at any level of
management. But it is our hope that it may be possible for the management of
companies to increasingly associate the workers’ representatives particularly at
the shop floor level so that all managements’ decisions that affect the interest of
workers can be taken in the full light of discussion with workers’
representative.20
c. Conflict/Confusion. The appointment of workers as directors on the
board of management raises several issues: First, selection of workers to the
board of directors would lead to many complications. Various pressure groups
inside and outside the union will also claim representation on the board. Further,
political affiliation of the trade union is likely to complicate the situation.
Second, the role of workers’ directors will create difficult situations for the
labour leader who will occupy such position. They would be misunderstood and
misrepresented by both the labour and the management. It may also broaden gap
between the workers and workers’ director and ultimately workers’ director will
not have control over the workers whom he represents on the board. Third,
workers will be primarily interested only in matters relating to or affecting
employment, non-employment, terms of employment and conditions of service
of any workman and they will hardly participate in other management functions
of the concern as they will have neither knowledge nor interest in other
activities. Matters relating to investment planning, production, sales, price
policies, etc., will be of no interest to the labour leader. Fourth, it is difficult to
say how far the workers’ director will share the responsibility of the industry
jointly with other members of the board for matters adversely affecting the
working class. Fifth, nomination of one or two workers’ representatives in the
board of management would place them in minority while the decision would be
taken by the majority. Sixth, multiplicity and rivalry among trade unions would
lead to difficulties in selection of trade union. Further, the absence of statutory
provisions for recognition of trade union would also make the selection of
workers’ representative difficult.

VII WORKERS’ PARTICIPATION IN WINDING UP

OPERATION
A milestone in the area of workers’ participation in winding up proceedings was
reached with the pronouncement of a majority judgement of the Supreme Court
in National Textile Workers Union v. P R Ramakrishnan.21 Here, the Supreme
Court, by a majority of 3 as against 2 ruled that merely because the right to apply
for winding up a company is not given to the workers, it does not mean that they
cannot appeal to support or oppose a winding up petition under Section 439 of
the Companies Act. To deny the participation of the workers in the winding up
proceedings would, according to the Court, violate the basic principle of fair
procedure. Further, to hold that the workers, who have contributed to the
building of the enterprise, have no right to be heard in the winding up
proceedings would lead to demolition of the centre of economic power. In view
of this, the Court held that: (i) the workers are entitled to appear at the hearing of
the winding up petition whether to support or to oppose it so long as no winding
up order is made by the Court; (ii) the workers have a locus to appear and be
heard in the winding up petition both when the winding up petition is admitted
and when an order for advertisement is made as also after the admission and
advertisement of the winding up of the company: (iii) if a winding up order is
made and the workers are aggrieved by it, they would also be entitled to prefer
an appeal and contend in the appeal that no winding up order should have been
made by the company; and (iv) the workers have a right to be heard even when
an application for appointment of a provisional liquidator is made in a winding
up petition, because the appointment of a provisional liquidator may adversely
affect the interest of the workers.
Justices Venkataramaiah and A C Sen on the other hand, refused to
concede any such right to the workers or their trade unions since they have not
been given any right under the Companies Act. Venkataramaiah was of the view
that once this right is conceded to workers, there would be no stopping point. He
felt that there is no reason why such a right be not available to others like agents,
dealers, consumers and the local community. Moreover, the workers have at
their disposal the Industries (Development and Regulation) Act, 1951 under
which they can ask the Central Government to take over their unit which is
facing winding up. Sen was also not in favour of giving to employees the right to
appear and convey their point of view to the Court particularly where it is of
opinion that a proper disposal of the matter would require consideration of
workers’ position also.

VIII. WORKERS’ RIGHT TO RUN SICK INDUSTRIES

Navneet R Kamwni v. R R Kaniani22 is an epoch-making judgement on the

workers’ right to run sick units. Here the Supreme Court, for the first time,
conceded the demands of workers to own and manage a sick industry. The
Supreme Court also reduced the value of ₹10 per share to ₹1 per share and
directed the transfer of shares to the employees.
The aforesaid line of thinking found expression in the summary of
recommendations of the Inter-Ministerial Group on Industrial Restructuring
wherein it is recommended that sick units which are taken over by workers’
cooperatives should be provided special concessions by the central government,
financial institutions, banks and the state governments. Besides writing-off
loans, National Renewal Fund can be utilized to provide equity to units managed
by workers’ cooperatives.

IX. PARTICIPATION OF WORKERS IN THE

MANAGEMENT BILL, 1990
On 30 May, 1990 the aforesaid Bill was introduced in Rajya Sabha. Three
reasons have been advanced for the introduction of such a bill, namely (i) It is a
step required to be taken under Article 43 of the Constitution; (ii) The non-
statutory schemes for workers’ participation in management failed to provide an
effective framework for meaningful participation of workers in management at
all levels; and (iii) The statutory Works Committee has been proved to be
ineffective.23
The Bill abolishes the institution of works committee under Section 3 of
the Industrial Disputes Act, 1947.
The proposed Bill extends to whole of India.24 It shall come into force on
such date as the Central Government may notify. But the Central Government is
required to give not less than three months’ notice of its intention so to do.
However, the Central Government may fix different dates of application of
different provisions of the Act and for different classes of industrial
establishments.25

A. Constitution of Council
The Bill requires every industrial establishment to constitute one or more ‘shop
floor council’ at the shop floor level26 and an ‘establishment council’ at the
establishment level.27 However, no ‘shop floor council’ is required to be
constituted in an establishment having only one shop floor.
The shop floor council and establishment council shall consist of equal
number of representatives of employer and workmen.28 The number of
representatives of employer and workmen is required to be determined by the
appropriate government in consultation with the employer.

B. Mode of Representation
The employer’s representatives should be nominated by the employer in the
prescribed manner.29 The workmen’s representatives are either required to be
elected from amongst the workmen of the industrial establishment by secret
ballot or nominated by registered trade unions, in accordance with the scheme.30
The aforesaid provision suffers from various defects: (i) It has failed to
bring a uniform scheme for the mode of representation of workers in the council;
(ii) It will bring rivalry among trade unions in those establishments that have
more than one registered trade union and no recognized trade union; (iii) It has
failed to provide any criteria for the nomination of representatives in
establishments having more than one registered trade union; (iv) It does not lay
down the qualifications of the representatives of workmen.

C. Method of Working
Shop floor council and establishment council shall have a chairperson. The
chairperson is to be chosen by and from amongst the members of the council.31
The terms of the members shall be 3 years from the date of the constitution of
the council.32 The use of the expression ‘date of the constitution of council’ is
deceptive. It is submitted that it should be read as date of nomination/election.
However, a person representing the workmen shall cease to be a member when
he ceases to be a workman in that establishment and such vacancy shall be filled
in the prescribed manner. The vacancies of other members or chairperson shall
be filled in accordance with the scheme. Every council in discharge of its
functions and conduct of its business shall follow such procedure as laid down in
the scheme.33 The meeting of the Council should be held as and when necessary
but not less than 4 times in a year.34

D. Reference
Where a matter under consideration before a shop floor council or establishment
council is beyond its jurisdiction, a reference shall be made to the establishment
council or the board of management respectively. However, on failure of
agreement on any matter between representatives of employer and workmen’s
representatives, such matter shall be referred to the employer for his decision.35
This provision places the employer on a superior position and is likely to be
abused.

E. Powers and Functions of Shop Floor Council

A shop floor council shall exercise such powers and function as it deems
necessary in relation to (i) production facilities, (ii) storage facilities in a shop,
(iii) material economy, (iv) operational problems, (v) control, (vi) hazards and
safety problems, (vii) quality improvement, (viii) cleanliness, (ix) monthly
targets and production schedules, (x) cost reduction programmes, (xi)
formulation and implementation of work system, (xii) design group working and
(xiii) welfare measures related particularly to the shops.36

F. Powers and Functions of Establishment Council

The establishment council has been conferred with wide powers and functions.
These relate to operational areas, economic and financial areas, personnel
matters, welfare areas and environmental areas.

G. Board of Management
One of effective methods of inducing among the workers, a sense of partnership
and belonging to the establishment is to involve them at the highest level of
management namely, by giving them representation on the board of
management.37 This is likely to satisfy the ego of workmen and give them
greater opportunity to realize their responsibility towards the establishment in
which they are employed. In order to meet the aspiration of workers and greater
involvement in the management at the highest level, the Bill provides for the
constitution of board of management of every body corporate owing an
industrial establishment or establishments.38

H. Representation of Workmen and Other Workers

The Bill provides for 25 per cent representation of ‘workmen’ and ‘other
workers’ employed in that establishment on the board of management.39
The persons representing ‘workmen’ and ‘workers’ shall constitute 13
and 12 per cent respectively of the total strength of such board of management.40
However, in case of fraction of a number, such number shall be rounded off to
the nearest whole number and, for this purpose, where such fraction is one-half
or more, it shall be increased by a whole number and if such fraction is less than
one-half, it shall be ignored.
The board of management shall include at least one workman where the
total strength of the board of management is not sufficient to give representation
to any workman on the board.41

I. Mode of Representation of Workmen and Other Workmen

The representatives of ‘other workers’ shall be elected by and from amongst the
other workers of the establishment/establishments by secret ballot.42 The
workmen’s representative shall be elected by and from amongst the workmen of
the industrial establishment or establishments by secret ballot, or nominated by
the registered trade unions.43 From this, it is evident that the Bill adopts different
standards for the representatives of ‘other workers’ and ‘workmen’. While the
‘other workers’ are to be elected by secret ballot, the representatives of workmen
are either to be elected by secret ballot or nominated. This provision raises
significant questions. How should the representative be chosen for
establishments having more than one registered trade union? Can an
establishment having a recognized trade union nominate the representative? It is
submitted that the essential requirement of successful functioning of the board of
management is the existence of a recognized trade union. It is this union alone
which should nominate the representative of workmen.

J. Term of Workers’ Representatives

Under Section 6 (4), the term of the officer or representatives of ‘workers’ is 3
years from the date of constitution of the board of management.44 However, a
person representing the workmen or other workers shall cease to be a
representative on the board of management when he ceases to be a ‘workman’ or
‘other worker’ in an industrial establishment owned by the body corporate. The
vacancy, so caused, shall be filled in the prescribed manner.45
A perusal of the aforesaid provisions reveals that unlike Clauses (1), (2)
and (3), Clause (4) of Section 6 uses the term ‘workers’ instead of ‘workmen’
and ‘other workers’ and thereby creates confusion. Further, 3 years from the date
of constitution of the board of management raises a question as to whether board
would be constituted after every 3 years. It is submitted that this provision
should be amended to read as 3 years from the date of nomination/election.

K. Powers and Functions

The workers’ representative is empowered to exercise all the powers and
discharge all the functions of a member of the board of management. He shall
also be entitled to vote.46 Quite apart from these powers and functions, the board
of management is required to review the functioning of the shop floor council
and the establishment council of the industrial establishment or establishments
concerned.47

L. Enforcement of the Act

1. Penalties for Offences
The enforcement of the Act implies that there are specific penalties in case of
violation of the provision of the Act. The Participation of Workers in
Management Bill, 1990, therefore provides for penal provision. Thus, Section 7
provides that if any person contravenes any of the provisions of the Act or the
scheme made thereunder, he shall be punishable with imprisonment for a term
which may extend to 2 years, or with fine which may extend to ₹20,000, or with
both.

2. Offences by Companies
If an offence under the Act is committed by a company, every person, who at the
time when the offence was committed was in charge of, and was responsible to
the company for conduct of the business of the company is liable.48 However, no
person shall be liable if he proves that the offence was committed without his
knowledge or that he exercised all due diligence to prevent the commission of
such offence.49 But the liability lies on the director, manager, secretary or other
officer of the company, for any offence committed under the Act unless it is
proved that the offence was committed with the consent, connivance or neglect
of any officer concerned.

3. Cognizance of Offences
Section 9 provides that no court shall take cognizance of any offence punishable
under the Act except on a complaint made by or under the authority of the
appropriate government.

M. Administration of the Act

The effectiveness of law lies in its implementation. Its non-enforcement is the
negative aspect of such instrument of social control. Under the Participation of
Workers in Management Bill, 1990, the Central Government is the appropriate
government for the administration of its provisions in relation to an industrial
establishment. The Central Government is also the appropriate government in
relation to an industrial establishment carried on by a company in which not less
than 51 per cent of the paid-up share capital is held by Central Government and
in relation to an industrial establishment owned by a body corporate having
industrial establishment in more than one state. For other establishments, the
state government in which such other establishments are situated is the
appropriate government.50
For administration, the Act provides for inspection machinery and for a
monitoring committee. However till July 1999, it has not received the colour of
the Act.

N. An Appraisal
A perusal of Sections 8 and 9 reveals that unlike Section 7, these provisions do
not specifically include offences committed under any scheme made under the
Act. Further, the Bill does not provide for enhanced punishment in cases of
previous conviction.

X STEPS TAKEN DURING 1996–97

The Government of India convened the 11th meeting of the Tripartite
Committee on Employees’ Participation in Management on 3 October 1997 with
the object of revising the Employees’ Participation in Management Scheme,
1983 which is currently operating in central public sector undertakings. Earlier,
in February, 1996 under the Plan Scheme for Education and Training in order to
promote employees participation in management ₹45,000/- were released to the
Central Board for Workers’ Education to conduct training programmes.

XI AN EVALUATION
It is felt that ‘workers’ participation in management introduced statutorily
through the institution of works committee under Section 3 of the Industrial
Disputes Act has not been successful.51 Further, ‘the voluntary schemes
introduced in 1975, 1977 and 1983 have also not found many takers.’52 In view
of this, the Second National Commission on Labour observed that the time has
come for the government to enact a law to provide for participatory management
at all levels keeping in mind the necessity to ensure that the responsibility and
freedom to take managerial decisions are not fragmented to the detriment of the
enterprise, the social partners or society at large. It accordingly recommended
that the proposed Act be initially applicable to all establishments employing 300
or more persons. For smaller establishments, a non-statutory scheme may be
provided. The system of recognition for the bargaining agent, as also the
information available under the check-off system will furnish enough data to
select representatives of workers at each tier of participation.

1 Government of India, Approaches to the Fifth Plan 1974–79, 1. (1973).

2 Keith Davas, Human Relations at Work.
3 Section 3 of the Industrial Disputes Act, 1947.
4 V G Mehtas, Labour Participation in Management, 20-21.
5 K C Alexander, ‘Workers' Participation in Management’. The Economic Times (1971).
6 Kenneth F Walker, Workers' Participation in Management in Practice: An I national
Perspective. See also, Thakur & Sethi, ‘Industrial Democracy: Some Issues and
Experience’.
7 For details see Chapter 17, Section I.
8 See Government of India, Report of the (First) National Commission on Labour (1969),
345.
9 Government of India, Indian Labour Journal, 1148 (1976).
10 The Tribune, January 1, 1976, 1.
11 For instance, Orissa has made the scheme compulsory for state owned industrial
undertakings. See The Tribune, January 12, 1976, 4.
12 The Centre has approved the Rajasthan Government draft legislation on giving
representation in joint management council employing 500 or more workers in the State.
(See Indian Express, January 20, 1976, at p 7).
13 D Sanjivayya, Labour Problems and Industrial Development in India, 51 (1970)
14 The Economic Times, 1975.
15 M R Meher, ‘Making Workers Shareholders,’ Indian Management, November 1974, 39.
16 Ibid.
17 See The Economic Times, November 14, 1976, 1.
18 See The Hindustan Times, September 1, 1976.
19 See Government of India, Annual Report (Vol. I) 1975–76 of the Ministry of Labour, 148
(1976).
20 Government of India, Report of the Working Group on Company Law Administration,
Administrative Reform Commission (1968), 39–40.
21 (1983) 1 SCC 228.
22 AIR 1989 SC 9.
23 See Statements of Objects and Reasons.
24 Section 1(2).
25 Section 1(3).
26 See clause 2(h).
27 Section 4(1).
28 Section 4(3).
29 Section 4(5).
30 Section 4(6).
31 Section 4(7).
32 Section 4(8).
33 Section 2(9).
34 Section 2(10).
35 Section 4(1).
36 Section 5(1) read with Schedule 1.
37 ‘Board of Management’ by whatever name called means ‘body which is entitled to
exercise all or any of the powers and to do all or any of such acts and things as the body
corporate is authorized by law under which it is incorporated, to exercise and do in
relation to the industrial establishments owned by it’ [See Section 2 (b)].
38 Section 6.
39 Section 6(1).
40 Proviso to Section 6(1).
41 Section 6(1).
42 Section 6(2).
43 Section 6(3).
44 Section 6(4).
45 Proviso to Section 6(4).
46 Section 6(5).
47 Section 6(6).
48 Section 8(1).
49 Proviso to Section 8(1).
50 Section 2(a). See also Financial Memorandum.
51 Govt. of India, Report of the (Second) National Commission on Labour, Vol. I (2002) p
1301.
52 Ibid.