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Industrial Relations and Labour Laws 6th S C Srivastava 1 PDF
Industrial Relations and Labour Laws 6th S C Srivastava 1 PDF
Suresh C Srivastava
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ISBN: 978-93-259-5540-0
Vikas® is the registered trademark of Vikas Publishing House Pvt Ltd
First Published in 1982
Sixth Edition: 2012
Copyright © S C Srivastava, 2012
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use. Disputes if any are subject to Delhi Jurisdiction only.
This book is dedicated to the memory of my Grand Uncle and
Grandfather,
Late Mr Jai Mangal Prasad
Late Dr Mata Prasad
My Parents,
Late Mrs and Dr S R Varma
My respected teacher,
Late Professor Anandjee
whose blessings inspire me
This book is also dedicated to my wife,
Late Mrs Vinodini Kumari
PREFACE TO THE SIXTH EDITION
Suresh C Srivastava
CONTENTS
PREFACE
LIST OF Cases
PART I INDUSTRIAL RELATIONS AND LABOUR LAWS
A
A C C Rajanka Lime Stone Quarries Mazdoor Union v. Registrar of Trade Unions, AIR
1958 Pat. 475, 92
A C Mukerjee v. Union of India, (1972) 2 LLJ 1978 (Calcutta), 132
A G Kher v. Atlas Copco (India) Ltd, (1992) 1LLJ 423, 127
A G Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503 (Allahabad), 687
A L Kalra v. Project & Equipment Corporation of India, 1984 LIC 961 (SC), 581
A L P Hindustan Zinc Ltd v. H Z Workers’ Union, (1988) Lab. IC 1361, 295
A M Sainalabdeen Musaliar v. District Collector, (1994) Lab. IC 57, 321
A P Electrical Equipment Corporation v. Its Staff Union (1986) Lab. IC 1851, 438, 454
A Rodrick v. K C Thapar, (1963) 1 LLJ 248 (SC), 563
A Sundarambal v. Government of Goa, Daman and Diu, (1988) 4 SCC 42: 2012 LLR 26,
214, 267
A V Nachane v. Union of India AIR 1982 SC 1126: (1982) 25CF 1246 (1982) 1 SCC 205,
497
Abdul Khalil St. Bharu v. Commission of Labour, Nagpur, 1997 Lab. IC 122 (Bom), 202
Abdul Rahiman Haji v. Abdul Rahiman 1980 Lab. IC 910, 389
Abdul Salem v. State of Tamil Nadu, (1973) 43 FJR 180 (Madras), 375
Abdul Wahab Shaikh Lai Bhai v. G E Patankar, (1980) Lab. IC 623 (Bombay), 230
Addl. Chancellor, Farmers Service Cooperative Bank v. Labour Court, (1996) LLR 654
(Kerala), 313, 314, 598
Administrator, Union Territory of Dadra and Nagar Haveli v. Gulabhia M Lad, 2010 (125)
FLR 880 (SC), 582
Aeron Steel Rolling Mills v. State of Punjab, (1959) 1 LLJ 73 (Punjab), 392
Aftab-e-jadid, Urdu Daily Newspapers v. Bhopal Shramjivi Patrakar Sangh, (1985) 1 LLJ
272, 301
Agra Electric Supply Co. v. Aladin, (1969) 2 LLJ 540 544 (SC): AIR 1970 SC 5 13, 340, 665,
692
Agriculture Produce Market Committee v. Ashok Harikuni, AIR 2000 SC 3116: (2000) 2
LLJ 1382, 211
Ahmedabad Mfg. & Calico Ptg. Co. v. Ramtahel, AIR 1972 SC 1598, 351
Ahmedabad Pvt. Primary Teachers Association v. Administrative officer, (2004) 1 SCC 755,
262
Ahmedabad Textile Industry Research Association v. State of Bombay and Others, AIR 1978
SC 548, 591, 215
Ahmedabad Textile Industry Research Association v. State of Bombay, (1960) 2 LLJ 720
(SC), 125, 215, 216
Air Corporation Employees’ Union v. D V Vyas, (1962) 1 LLJ 31 (Bombay), 302
Air Gases Mazdoor Sangh v. Indian Air Gases Ltd, (1977) 2 LLJ 503, 505 (Allahabad), 688
Air India Cabin Crew Association v. Union of India, (2012) 1 SCC 619, 257
Air India Corporation Bombay v. V A Rehellow, (1972) 1 LLJ 501, 627, 652
Air India Statutory Corporation v. United Labour Union, (1997) 9 SCC 377, 368
Ajanta Industries v. Central Board of Direct Taxes, AIR 1976 SC 437, 389
Ajit Kumar Nag v. General Manager (PJ) Indian Oil Corporation Ltd, (2005) 7 SCC 764,
587
Akhil Raj Rajya Hand Pump Mistries Sangthan v. State of Rajasthan, (1994) Lab. IC 345,
230
Akhil Ranjan Das Gupta v. State of Assam, (1965) 2 LLJ 614, 680
Alexandra Jute Mills Ltd v. Their Workmen, (1950) ILLJ 1261, 158, 186
Alien Macgregor Smith Forge v. First Industrial Tribunal, (1963) 1 LLJ 556 (Calcutta), 213
Aligarh Muslim University v. Mansoor Ali Khan JT 2000 (7) SC 529: 2000) 5 SCC 65, 51,
611
All India Bank Employees Association v. National Industrial Tribunal, (1961) I LLJ 375:
AIR 1962 SC 171, 57, 132, 423, 431
All India Bombay Tyres International Employees’ Federation v. C B Dinagre (1993) Lab. IC
817, 281
All India Radio v. Santosh Kumar and Another, (2003) LLR 9, 238
All India Reserve Bank Employees’ Association v. Reserve Bank of India, AIR 1966 SC 305:
(1965) 2 LIJ 178, 189, 190, 250
Allahabad District Cooperative Bank Ltd v. Vidhya Varidh Mishra, (2004) 6 SCC 482, 587
Allen Berry & Co. Ltd v. Their Workmen, (1951) 1 LLJ 228 (LAT), 327
Alloy Steel Project Company v. Their Workmen, (1971) 1 LLJ (SC), 483
Alumina Mazdoor Sangh v. Ratna Construction Co. and Others (2003) LLR 382, 506
Amal Kumar Parial v. Union of India, (1989) ATC 679, 581
Amalendu Gupta v. LIC, (1982) 2 LLJ 332 (Calcutta), 424, 470
Amar Jyoti School v. Govt. of NCT, (2009) 122 FLR 354, 261
Amar Singh v. State of Rajasthan, AIR 1955 SC 504, 348
Ambabai Manjunath Amin v. P L Majumdar, (1987) 1 LLJ 36 (Bombay), 336
Ambica Mills Ltd v. Second Labour Court, (1967) 2 LLJ 800 (Gujarat), 338
Ambika Jute Mills v. Their Workers, (1954) 1 LLJ 835 (IT), 459, 460
Ambika Singh v. U P State Sugar Corpn. Ltd (1991) I LLN 490, 498
Ameteep Machine Tools v. Labour Court, (1980) 2 LLJ 453 (SC), 319
Amulya Ratan Mukkerjee v. Deputy Chief Mechanical Engineer, Eastern Railways, AIR
1961 Cal 40, 572
Anakapalla Cooperative Agricultural & Industrial Society v. Its Workmen (1962) 2 LLJ 621
(SC, 253, 270, 538
Anameinuger Development Corporation Ltd v. Second Industrial Tribunal, (1986) Lab. IC
1741, 253
Anand Bazar Patrika (Pvt.) Ltd v. Its Workmen, (1969) 2 LLJ 670 (SC), 250
Anand Bihar v. Rajasthan State Road Transport Corporation, Jaipur (1991) Lab. IC 494,
503
Ananda Bazar Patrika v. Their Employees, 1963 2 LLJ 429, 165
Anandam v. Tamil Nadu Electricity Board, 1997 LLR 247, 590
Anando Chandra Swam v. State of Orissa, (1973) 1 LLJ 508 (Orissa), 229
Ananthanarayanan v. S R, (1956) 1 LLJ 29 (Madras), 572
Andhra Pradesh Electrical Equipment Corporation, Hyderabad v. Andhra Pradesh
Electrical Equipment Corporation Staff Union 1986 Lab. IC 1851 (AP), 423
Andhra Scientific Co. Ltd v. A Sheshagiri Rao, AIR (1967) SC 408: 1959) 2 LLJ 551, 349,
563, 638
Anil Bapurao Kanase v. Krishnq Sahkari Sakkar Karkhana Ltd (1998) I LLJ 343, 502
Anil Giluker v. Bilaspur—Raipur Gramin Bank, 2011 LLR 1121 (SC), 573, 582
Anil Kumar Chakraborty v. Saraswatipur Tea Co. Ltd, (1982) 2 SCC 328; 1982 SCC (L&S)
249; AIR 1982 SC 1062, 628
Anil Sood v. S K Sarvaria, (1997) LLR. 386, 342
Ankulaiah v. DG, P&T, SLJ (1986) CAT 407, 580
Annamalai Timber Trust Ltd (1950) LLJ 994 (IT), 473, 535
Anoop Sharma v. Executive Engineer Public Health Division, Panipat 2010 (4) SCALE 203,
53, 505, 508, 523
Antony v. Kumaran, (1979) 1 LLJ 606, 545
AP SRTC v. Raghuda Siva Sankar Prasad, (2007) 1 SCC 222; (2007) 1 SCC (L&S) 151; AIR
2007 SC 152, 628
Apparel Export Promotion Council v. A K Chopra, JT 1999 (1) SC 61: (1999) 1 SCC 759, 47
APSWL Co-operative Society Ltd v. Labour Court, 1987 Lab. LC 642 at 649 (SC), 41
Arun Mathur v. Labour Court 1993 1 C.L.R. 467, 497
Aruna Mills Company Ltd v. Textile Labour Association, (1951) 1LLJ 647, 486
Ashok Kumar Sharma v. Oberoi Flight Services (2010) 1 SCC 142, 633
Ashok Leyland Ltd v. State of Tamil Nadu, (2004) 3 SCC 1, 339
Ashok Leyland Ltd, Madras v. Presiding Officer, Second Additional Labour Court, Madras
2003 LLR 784, 699
Ashok Textile Pvt. Ltd v. Their Employees, 461, 469
Assam Chah Karmachari Sanagha v. Dimakuchi Tea Estate, AIR (1958) SC 353, 186
Assam Oil Co. Ltd v. Its Workmen, (1960) 1 LLJ 587, 560, 561, 563, 591
Associated Cement Co. Ltd v. Cement Staff Union 2010 LLR 162, 16, 660
Associated Cement Co. Ltd v. T C Srivastava (1984) 2 LLJ 105, 702
Associated Cement Co. Ltd v. Their Workmen, (1952) 2 LLJ 255 (IT): AIR 1970 SC 177,
196, 460, 461, 483
Associated Cement v. P D Vyas, AIR (1960) SC 665, 685
Associated Electrical Industries (India) Private Ltd v. The Workmen, (1961) 2 LLJ 123 (SC),
392
Association Cement Co. Ltd, v. Their Workmen, (1953) 2 LLJ 369, 328
Association of Engineering Workers v. Dockyard Labours, (1992) 1 Lab. IC 214, 97, 520
Athani Municipality v. Labour Court, AIR 1969 SC 1335, 335
Atherton West & Co. Ltd v. Suti Mill Mazdoor Union, AIR 1953 SC 241, 638
Atlas Cycle Industries Ltd v. State of Punjab, (1962) 1 LLJ 536 (Punjab), 394
Atlas Cycle Industries v. P V Thukral (1971) Lab. IC203, 205 (Punjab and Haryana), 201
Authority of India19 and Ajay Hasia v. Khalid Muzib Sehravardi, (1981) 1 SCC 722, 369
Automative Manufacturing Ltd v. Member, Industrial Court 1993 Lab. IC 534, 710
Automobile Products of India Ltd v. Rukmaji Bala. AIR (1955) SC 258, 637, 655
Avon Services (Production Agencies) Pvt. Ltd v. Industrial Tribunal, (1979) 1 LLJ 1 (SC),
376, 388, 384, 543
Avtar Singh Anand v. Krishna, (1969) 2 LLJ 524 (Delhi), 545
B
B C Chaturvedi v. Union of India 1984 Lab IC 658, 613
B Chinna Rao v. Naval Civilian Employees Union, 2011 (1) SLR 375, 273
B Jateshwar Sharma v. Director of Education, (1985) Lab. IC 414 (Gujarat), 228
B L C Ltd v. Ram Bahadur Jamadar, (1957) 1 LLJ 422 (LAT), 249
B R Singh v. Union of India (1990) Lab IC 389, 424, 436
B S V Hemantha Rao v. Deputy Registrar, Trade Union, (1988) 1 LLJ 83 (AP), 87
Babu Lal v. Haryana State Agricultural Marketing Board 2009 LLR 936 (SC), 589
Babulal v. Collector, AIR (1956) M.B. 221, 350
Badarpur Power Engineers’ Association v. Dy. Chief Labour Commissioner (1993) Lab. IC
636, 689
Bagalkot Cement Co. v. R K Pathan, AIR 1963 SC 439, 676, 678
Bagga Singh v. Distt. Magistrate, AIR 1955 Assam 83, 389
Balakrishna Pillai v. Anant Engineering Works Pvt. Ltd, (1975) 2 LLJ 391, 669
Balkrishna v. LT Commissioner, AIR 1954 Madras 11 18, 350
Balkrishna v. Ramaswami, AIR (1965) SC 195, 352
Balmer Lawrie & Co. Ltd v. Its Employees’ Union, (1989) Lab. IC 88 (Bombay), 439
Balmer Lawrie Workers’ Union v. Balmer Lawrie & Co. Ltd, (1985) Lab. IC 242, 113
Banaras Electric Light & Power Co. vs Labour Court, (1972) 2 LLJ 328 (SC), 563
Banaras Ice Factory Ltd v. Their Workmen, (1957) I LLJ 253 (SC), 494
Bangali Raje v. Union of India, (1993) Lab. IC 812, 272
Bangalore Silk Throwing Factory v. Its Workmen, (1957) 1 LLJ 435 (LAT), 465, 560
Bangalore W C and Mills Co. v. Their Workmen, (1968) 1 LLJ 514 at 518, 183
Bangalore Water Supply & Sewerage Board, (2002) (9) SCC 652, 265
Bangalore Water Supply and Sewerage Board case, AIR 1978 SC 548, 80, 218
Bangalore Water Supply and Sewerage Board v. Rajappa, AIR 1978 SC 548, 207, 211, 213,
221, 222, 224, 225
Bank of Baroda v. Ghemarbhai Harjibhai Rabri 2005 LLR 443 (SC), 513
Bank of India v. Apurba Kumar Saha, (1994) SCC 615, 580
Bank of India v. Bhimsen Gochhayat 2010 LLR 113 (SC), 588, 589
Bank Of India v. Dagala Suryanarayana, 1999 LLR 1073 (SC), 582
Bank of India v. T S Kelawala and S U Motors (P) Ltd v. Their Workmen (1990) 2 LLJ 39,
470
Bar Association Canteen v. Chief Commissioner, Delhi, (1967) 2 LLJ 227 (Delhi), 212
Barium Chemicals Ltd v. Company Law Board, AIR 1967 SC, 295, 374
Baroda Borough Municipality v. Its Workmen, AIR 1957 SC 110, 206
Barsi Light Railway Co. Ltd v. Joglekar, (1957) 1 LLJ 243 (SC), 421, 535
Barsi Light Railway Company v. Joglekar (K N), (1957) SCR 121, 490, 494
Basant Lal v. Div. Mechanical Engineers (G.W.) Rly Kathiar, (1977) (3) LLJ 154 (Patna),
229
Bata Shoe Co. (P) Ltd v. Ganguli (D N), AIR 1961 SC 1158, 185, 288, 298, 465, 466, 559,
622, 625
Bata Shoe Co. v. Its Workmen, (1956) 1 LLJ 278, 654
Beedi Factory v. Their Employees, (1950) LIJ 207, 135
Behar Journals Ltd v. Ali Hasan, AIR 1959 Pat. 431, 678
Bengal Bhatdee Coal Co. v. Ram Pradesh Singh 1963 1 LLJ 234 (SC), 166, 625
Bengal Chemical & Pharmaceutical Works Ltd v. Their Employees, AIR 1959 SC 633, 352,
353
Bengal Coal Company Ltd v. Central Government Industrial Tribunal, (1962) 2 LLJ 414
(Patna), 393
Bengal Immunity Co. v. State of Bihar, (1955) 2 SCR 603, 350
Bengal Jute Mills v. Their Workmen, (1950) LLJ 437 (IT), 415
Bengal United Tea Co. Ltd, (1962) 2 LLJ 376 (SC), 654
Bharat Bank Ltd v. Employees of Bharat Bank Ltd (1950) LLJ 921: AIR (1950) SC 188, 164,
352, 353
Bharat Bank v. Employees of Bharat Bank, AIR (1950) SC 188, 352, 353
Bharat Barrel and Drum Mfg. Co. v. Their Workmen, (1952) 2 LLJ 532 (IT), 418, 461, 469
Bharat Bhawan Trust v. Bharat Bhawan Artists’ Association, (2001) 7 SCC 630, 261
Bharat Bhushan v. State of Industrial Tribunal, 6 FJR 278 (Allahabad), 392
Bharat Forge Co. Ltd v. A B Zodge, 1996 LLR 385 (SC), 313, 597
Bharat Forge Co. Ltd v. Uttam Manohar Nakate 2005 LLR 210 (SC), 615
Bharat Heavy Electricals Ltd v. Anil and others, 2007 LLR 201, 200
Bharat Iron Works v. Bhagubhai Balubhai Patel AIR 1976 SC 98, 164, 165
Bharat Kala Kendra v. R K Baweja, (1980) 2 LLJ 236 (Delhi), 249
Bharat Kumar K. Palicha v. State of Kerala, AIR 1997 Ker. 291 at 295, 412
Bharat Petroleum Corporation Ltd v. Maharashtra General Kamgar Union 1997 LLR 180
(SC), 584, 666, 690, 693, 698
Bharat Petroleum Corporation Ltd v. R J Tiwari, (1995) LLR 259, 312
Bharat Sanchar Nigam v. Man Singh 2011 (12) SCALE 327, 528
Bharat Singh v. Management of New Delhi Tuberculosis Centre, New Delhi, 1986 Lab. IC
850, 175, 343
Bharat Sugar Mills Ltd v. Jai Singh, (1961) 2 LLJ 644 (SC), 404, 563
Bhattacharjee Rubber Works Ltd v. Bhattacharjee Rubber Workers Union’, (1960) 2 LLJ
198 (SC), 545
Bhavnagar Municipality v. A Karimbai, AIR (1977) SC 1229, 655
BHEL v. M Chandrasekhar Reddy, (2005) 2 SCC 481; 2005 SCC (L&S) 282; AIR 2005 SC
2769, 627
Bhilai Steel Project v. Steel Works Union AIR 1964 SC 1333, 688
Bhilwara Dugdh Utpadak Sahkari S Ltd v. Vinod Kumar Sharma, 2011 LLR 1079 (SC), 13
Bhola Nath Mukherjee v. Govt. of West Bengal, (1997) 1 SCC 562, 537
Bhopgur Coop. Sugar Mills Ltd v. Harmesh Kumar (2006) 13 SCC 28, 532
Biecco Lawrie Ltd v. State of West Bengal (2009) 10 SCC 32, 615, 577, 578, 580
Bihar Fire Works and Potteries Ltd (1953) 1 LLJ 49 (LAT), 460
Bihar Relief Committee v. State of Bihar, (1979) 2 LLJ 53 (Pat), 228, 229
Bijli Mazdoor Sangh, v. UP Electricity Board, AIR 1970 Allahabad 589, 594, 690
Bilash Chander v. Balmer Lawrie and Co. Ltd, AIR 1953 Calcutta 613, 184
Binny Ltd v. Their Workmen, (1972) 1 LLJ 478 (SC): (1974) 3 SCC 152; 1973 SCC (L&S)
444; AIR 1973 SC 1403, 198, 384, 628
Binoy Kumar Chatterjee v. Jugantar Limited (1983) 1 LLJ 8, 496
Binoy Kumar v. State of Bihar, (1983) Lab IC 1884 (Patna) (F.B.), 230
Blue Star Ltd v. N R Sharma, (1975) 2 LLJ 300 (Delhi), 250
Board of Directors of South Arcot Electricity Distribution Co. Ltd v. Elumalai (1970) 2 SCJ
118, 537
Board of Management of SVT Educational Institution v. A R Bhatt, 1997, Lab IC 1917, 590
Bokajan Cement Corpn. Employees’ Union v. Cement Corpn. of India Ltd, (2004) 1 LLJ
197, 88, 104
Bokaro Steel Workers Union and Another v. State of Bihar, 2000 I LLJ 117 (Pat), 90
Bombay Corporation v. Mavlankar (1978) 3 SCR 1000, 566
Bombay Dock Labour Board v. Stevedore Workers, (1954) 2 LLJ 200 (IT), 270
Bombay Garage (Ahmedabad) Ltd v. Its Workmen, (1961) 2 LLJ 40 (Gujarat), 563
Bombay Gas Co. v. Gopal Bhiwa, AIR 1964 SC 752, 335
Bombay Pinjrapole v. The Workmen, (1971) 2 LLJ 393 (SC), 218
Bombay Telephone Canteen Employees Association, Prabhadevi Telephone Exchange v.
Union of India, (1997) 6 SSC 723, 235
Bombay Union of Journalists v. State of Bombay, (1964) 1 LLJ 351 (SC), 375, 390, 516
Bombay Union of Journalists v. The Hindu, (1994) 2 LLJ 600: AIR 1963 SC 318, 181, 188,
191, 192, 193, 197, 198
Bongaigaon Ref nery & Petrochemicals Ltd v. Samijuddin Ahmed, (2001) 9 SCC 557, 191
Borosil Glass Works Ltd Employees Union v. D D Bombode, (2001) 1 SCC 350, 91
BPL Ltd v. R. Sudhakar (2004) 7 SCC 223, 650
Bridhichand Sharma v. First Civil Judge, (1961) 2 LLJ 86 (SC), 244, 245
Brij Bhusan v. Delhi, AIR 1950 SC 129, 350
Britannia Biscuit Co. Ltd Employees’ Union v. Assistant Commissioner of Labour, (1983) 1
LLJ 181, 281, 393
Britannia Engineering Products & Services Ltd v. Second Labour Court & Ors, (2002) 4
CHN 704, 318
Brown Co. Ltd v. Their Workmen, (1959) 1 LLJ 450, 164
Buckingham and Carnatic Co. v. Venkatayaga, AIR (1964) SC 1272, 680, 691
Buckingham and Carnatic Mills Co. Ltd v. Their Workmen, (1951) 2 LLJ, 399, 400, 401,
424, 466, 560, 564, 624
Bum and Co. v. Their Workmen, (1957) 1 LLJ 226, 340
Burdwan Central Cooperative Bank Ltd v. Asim Chatterjee (2012) 2 SCC 641, 594
Burmah Shell Co. v. Burmah Shell Management Staff Association, AIR 1971 SC 922:
(1970) 3 SCR 378: (1970) 2 LLJ 590 (SC), 251, 254, 257
Burn & Co. Ltd v. Their Workmen, AIR 1957 SC 438: (1959) 1 LLJ 450 (SC), 107, 465, 563,
621, 626
Burn Standard and Company v. I T 1995 (4) SC 23, 685
C
C B R Ratnam & Co. v. Ekambram, (1957), 2 LLJ 206 (Madras), 338
C K Iypunny v. Madhu Sudan Mills, (1964) 1 LLJ 197 (Bombay), 338
C Kannan v. Superintendent of Police, 1974 Ker. LT 516, 425
C L Kannan v. E S L Corporation, AIR 1968 Mad. 280, 671
C M C H Employees Union v. CM Cottage, Vellore Association, (2001) LLR 585, 52
C M T Institute v. Assistant Labour Commissioner, (1979) 1 LLJ 192 (Karnataka), 79 227
C P Transport Services Ltd v. R G Patwardhan. (1957) 1 LLJ 27 (SC), 680
C S T Corporation v. Mohd Noor Alam, AIR 1973 SC 1404, 651
C/o Indian Engg. & General Management, (2000) Lab. IC 2468, 265
Cadila Pharmaceutical Ltd v. Jyotiben Harishbhai Pandit 2011 LLR 162, 346
Calcutta Electric Supply Co. v. Their Workmen, AIR 1959 SC 119 1, 352
Calicut Co-operative Milk Supply Union v. Calicut Co-operative Milk Supply Workers’
Union, (1986) Lab. IC 1681 (Kerala), 319
Calicut Wynd Motor Service (P) Ltd v. Industrial Tribunal, (1982) Lab. IC 517, 650
Caltex (India) Ltd v. The Commissioner of Labour and Conciliation Officer, AIR 1956
Madras 441, 288
Caltex India Ltd, Madras v. Their Workmen, (1955) 2 LLJ 693 (LAT), 462
Caltex Ltd v. Their Workmen, (1954) 2 LLJ 51, 460
Cantonment Executive Officer v. Vijay D Wani, AIR 2008 SC 2953; (2009) 1 LLJ 26, 574
Capt. M Paul Anthony v. Baharat Gold Nines Ltd, AIR 1999 SC 1416: 1999) 3 SCC 679,
585, 711 (2006) 5 SCC 446: 2006 SCC (L&S) 1121, 589
Carona Sahu Co. Ltd v. A K Munakhan, (1995) (1) LLN 1014 (Mad), 344
Cawnpore Tannery Ltd v. S Gupta, (1961) 2 LLJ 110 (SC), 533
Cawnpore Tannery Ltd v. Their Workmen, (1954) 2 LLJ 459, 249
Cement Works Karmcharis Sangh, Sawai Madhopur v. State of Rajasthan (1999) Lab. IC
503 (Raj.), 455
Central Bank of India Ltd v. P S Raja Gopalam, AIR 1964 SC 743: (1963) 2 LLJ 89 (SC),
332, 334
Central Bank of India v. P C Jain, AIR (1969) SC 183, 640
Central Bank of India v. S Satyam (1996) 5 SSC 419, 532, 533
Central Hair Cutting Saloon v. Harishikesh Pramanik, (1956) 1 LLJ 596 (LAT), 228
Central India Spg. Wvg & Mfg Co. Ltd v. Industrial Court, (1959) ILLJ 468, 5
Central Inland Water Transport Corporation Ltd v. Brojo Nath Ganguly, (1986) 2 LLJ 171,
49
Central Provinces Transport Services Ltd v. Raghunath Gopal Patwardhan, (1957) 1 LLJ
27, 191
Ceramic Workers Progressive Union v. Addl. Registrar, (1994) Lab. IC NOC 66, 95
Certain Banks in the State of Punjab and Delhi v. The Workmen, (1950) LLJ 425 (IT), 460,
461, 467
Certain Tailoring Concerns v. Its Workmen, (1950) LLJ 280, 460
Chairman-cum-Managing Director, Coal India Ltd v. Ananta Saha, 2011 Lab IC 2092 (SC),
572, 573
Chairman-cum-Managing Director, Coal India Ltd v. Mukul K Choudhuri 2009 III CLR
645 (SC), 599, 611
Chairman-cum-MD, Coal India Ltd v. Anant Saha, 2011 Lab. IC 2592 (SC), 581, 590, 633
Chairman-cum-MD, TNCS Corporation Ltd v. K Meerabai 2006 LLR 268, 588
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Chandu Lal v. Pan American World Airways Inc. (1985) 2 SCC 727; 1985 SCC (L&S) 535;
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United Commercial Bank Ltd v. Commissioner of Labour, (1951) 1 LIJ 1 (SC), 191
United Commercial Bank Ltd v. Kedar Nath Gupta, (1952) 1 LLJ 782, 186
United Commercial Bank Ltd v. Their Workmen, (1951) 1 LLJ 621, 316, 323
United Plantation Association of Southern India v. K G Sangameshariya, (1997) 4 SCC 741,
313, 597
University of Delhi v. Ram Nath, AIR 1963 SC 1873, 213
UP Electric Co. v. Workmen, (1972) 2 SCC 54, 692
UP Electric Supply Co. Ltd v. T N Chatterjee, (1972) 2 LLJ 9, 684
UP SRTC v. Hoti Lal (2003) 3 SCC 605, 602
UP State Brassware Corpn Ltd v. Uday Narain Pandey (2006) 1 SCC 479, 524, 528, 631
UP State Electricity Board v. Hari Shankar, (1978) 4 SCC 16, 683
UP State Road Transport Corporation v. Nanhe Lal Kushwaha 2010 LLR 230, 602
UP State Road Transport Corporation v. Subhash Chandra Sharma 1995 (6) SCC 749, 613
UP State Road Transport Corporation v. Vinod Kumar (2008) 1 SCC 115, 601
Upper India Couper Paper Mills v. Their Workmen, (1954) 2 LLJ 347 (LAT), 407
UPSRTC v. Suresh Chand Sharma 2010 (6) SCALE 87, 602
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Uptron India Ltd v. Workers Union; AIR (1969) SC 513, 666
Uptron India Ltd. v. Shammi Bhan, AIR 1991 SC 101, (2000) LLR (SC) 849, 50, 51
Usha Breco Mazdoor Sangh v. M/s Usha Breco Ltd, 2008 LLR 619, 108, 124, 580
Utkal Asbestos Ltd v. T S Rao (1992) 2 LLN 752, 508
Uttar Pradesh Shramik Sangh v. State of Uttar Pradesh, AIR 1960 All. 45, 423
Uttaranchal Forest Development Corporation v. K B Singh, (2001) 5 SCC 169, 346
Uttaranchal Forest Development Corporation v. M C Joshi (2007) 9 SCC 353, 524
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
V Ganesan v. State of India285 (1981) 1 LLJ 64, 470
V K Sharma v. Govt. of NCT, 2008 LLR 521, 257
V K Verma v. Hindustan Machine Tools Ltd, (1999) LLR 370 (P & H), 650
V Ramachandran v. Indian Bank (1979) 1 LLJ 122, 470
V S Kamath v. State of Karnataka, 1988 (2) SLJ 241, 573
V Veerarajan v. Government of Tamil Nadu, AIR 1987 SC 494, 391
Valsad Jilla Sahkor Bank Ltd v. D K Patil, 1991 Lab. IC 655, 671
Varada Rao v. State of Karnataka, (1986)11 CLR 277 (SC), 108
Varadraja Motor Services v. Its Workmen, (1953) 1 LLJ 226, 629
Vasudeo Ambre v. State of Maharashtra, (1988) Lab. IC 554 (Bombay), 228
Ved Prakash Gupta v. M/s Delton Cable India Ltd 1982 Lab IC 1790(SC), 613
Veerappa v. Raman, AIR (1952) SC 192, 350
Veerarajan v. Government of Tamil Nadu, AIR 1987 SC 695, 377
Veerarnani v. Madurai District Cooperative Supply and Marketing Society Ltd., (1983) 2
LLJ 88 (Madras), 265
Vegoils Pvt. Ltd v. Workmen, (1972) 2 LLJ 567 (SC), 246
Vellanikara and Thuttil Rubber Estate v. Its Employees (1959), 113, 459, 467
Venkatramana v. State of Mysore, AIR 1965 SC 255 at 262, 352
Vermula Thimmappa v. Addl. Distt. Magistrate, AIR 1955 NUC Andhra Pradesh 4458, 389
Viakuntam Estate v. Arbitrator, (1968) 1 LLJ 79 (Madras), 303
Vijaya Bank v. Shyamal Kumar Lodh 2010 (6) SCALE 300, 337, 711
Vimal Kishore Malhotra v. State of Uttar Pradesh, AIR 1956 Alld. 56, 409
Vimal Kumar Jain v. Labour Court, Knapur, AIR (1988) SC 384, 268
Virendra Bhandari v. Rajasthan State Road Corporation (2002) 9 SCC 104, 382
Viriji Bhai Laxman Bhai v. New Commercial Mfg. Co., (1958) ICR Bombay, 1153, 461, 468
Virudhachalam P v. Mgmt of Lotus Mills, (1998) 1 LLJ 389 (SC): AIR 1998 SC 554, 292
Visalakshmi Mills Ltd v. Labour Court, (1962) 2 LLJ 93, 197
Vishaka v. Union of India, 1997 LLR 991 (SC), 45
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LLJ 46 (SC), 229
Vishveswaraya Iron and Steel Ltd v. M Chandrappa, (1994 (84) FJR 46) (Kant), 344
Vishwamitra Press, 1954 2 LLJ 53 (Adj), 629
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Viveka Nanda Sethi v. Chairman, J&K Bank, 2005 LLR 641 (SC), 611
W
Warayam Singh v. Amar Nath, AIR 1954 SC 2 1, 351
Warning Coop. Agriculture Services Society Ltd v. State of Punjab and Others, (1987) Lab
& IC 359 (P&H), 342 UPSRTC Kanpur v. State of UP. & Ors.(1996) (1) LLJ 31, 342
Wenger & Co. Ltd v. Their Workmen, (1963) 2 LLJ 403 (SC), 329, 330
West Bengal State Electricity Board v. Desh Bandhu Ghosh, (1985) 3 SCC 116, 48
Western India Automobile Association Ltd v. Industrial Tribunal, (1949) LLJ 245 (FC), 78,
183, 269
Western India Match Co. Ltd v. Western India Match Co. Workers Union, (1970) 2 LLJ 256
(SC), 384, 385
Western India Match Co. v. Western India Match Co. Workers Union, AIR 1970 SC 1205:
AIR 1973 SC 2650, 198, 257, 384, 679, 687
William Fredric De Pennmg v. Therd Industrial Tribunal, AIR 1959 Cal 749, 230
Workers of Industry Colliery v. Industry Colliery, (1953) 1 LLJ 190, 194 (SC), 327
Working Journalists of the Hindu v. The Hindu (1961) 1 LLJ 288 (SC), 119, 421
Workman of Oswal Weaving Factory v. State of Punjab, (1967) 1 LLJ 557 (Punjab), 375
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578
Workmen of Dahingeapur Tea Estate, AIR 1958 SC 1026, 188
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376
Workmen of Dewan Tea Estate v. Their Management, AIR 1964 SC 1458, 476, 678
Workmen of Dharampal Prem Chand v. M/s Dharampal Prem Chand, AIR 1966 SC 182,
193, 196
Workmen of Dikmakuchi Tea Estate v. Management of Dimakuchi Tea Estate, (1959) 1 LLJ
500 (SC), 180, 189, 190
Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate (1958) 1 LLJ 500 (SC), 263,
421
Workmen of Edward Keventers (P) Ltd v. Delhi Administration, ILR (1969) Delhi 767, 453
Workmen of Firestone Tyre and Rubber Co. v. Management (1973) 3 SCR 587, 648
Workmen of Firestone Tyre and Rubber Company of India (P) Ltd. v. Firestone Tyre and
Rubber Company of India (P) Ltd, (1973) 1 LLJ 278; AIR 1973 SC 1273, 596
Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd, (1984) 4 SCC 392 (SC), 181
Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd, (1999) 1 LLJ 449, 263, 347
Workmen of Indian Express Ltd v. Management of Indian Express Ltd, (1970) 2 LLJ 132
(SC): (1984) 4 SCC 392 (SC), 181, 194, 196
Workmen of Industry Colliery v. Industry Colliery, (1953) 1 LLJ 190 (SC), 286
Workmen of J and P Coats (India) Pvt. Ltd v. State of Kerala, (1977) 2, LLJ 534 (Kerala),
375
Workmen of M/s Baikuntha Nath Debasthan Trust v. State of West Bengal, (1990) 2 Lab. IC
1586, 229
Workmen of M/s Williamson Magor and Co. Ltd, v. M/s Williamson, Magor and Co., Ltd,
(1982) 1 LLJ 33, (SC), 164
Workmen of Macforline and Co. v. Fifth I T, (1964) 2 LLJ 556 (Calcutta), 253
Workmen of Meenakshi Mills Ltd v. Meenakshi Mills (1992) 2 LLJ 295, 519
Workmen of Motipur Sugar Factory Private Ltd v. Motipur Sugar Private Ltd, (1965) 2 LLJ
162, 169, 561
Workmen of New Eqerton Woollen Mills v. State of Punjab, (1967) 2 LLJ 686 (Haryana and
Punjab), 392
Workmen of Rohtak General Transport Co. v. Rohtak General Transport Co., (1962) 1 LLJ
654 (SC), 119
Workmen of Sri Ranga Vilas Motors (P) Ltd v. Sri Ranga Vilas Motor (P) Ltd (1970) 2 LLJ
177, 365
Workmen of Straw Board Manufacturing Co. Ltd v. M/s Straw Board Manufacturing Co.
Ltd, AIR (1974) SC 1132, 542
Workmen of Subong Tea Estate v. Management of Subong Tea Estate, (1964) 1 LLJ 333
(SC), 516, 523, 537
Workmen of Sudder Office v. Management, (1971) 2 LLJ 620 (SC), 568, 569, 570
Workmen of Sudder Workshop of Jorhaut Tea Co. v. Management, (1980) Lab. 1C 742
(SC), 529
Workmen of Sur Iron & Steel Co. v. Sur Iron & Steel Co., (1971) 1 LLJ 570 (SC), 658
Workmen of Syndicate Bank v. Government of India (1985) 1 LLJ 93 at 94 (SC), 377
Workmen of the Food Corporation of India v. M/s Food Corporation of India, (1965) 2 LLJ
4 (SC), 243
Workmen of Williamson Magor & Co. Ltd v. Williamson Magor & Co. Ltd, (1982) 1 LLJ 33
(SC), 312
Workmen v. Balmadies Estates (2008) 1 SCC 115
Workmen v. Firestone Tyre and Rubber Co. (1976) I LJ 493 (SC), 474, 477
Workmen v. Greaves Cotton Ltd, (1971) 2 LLJ 479 (SC), 190
Workmen v. M/s Dharampal Prem Chand, AIR 1966 SC 182, 196
Workmen v. Management of Indian Standard Institution, (1976) 1 LLJ 33 (SC), 216
Workmen v. Rohtak General Transport Company, 1962 1 LLJ 634 (SC), 196
X
X R B Kaimal v. Director of Postal Services op. cit. Bhaskaran v. SDO, (1982) 2 LLJ 248
(SC), 227
Y
Yad Ram v. B N Singh, (1974) 2 LLJ 306 (Delhi), 333
Yadeshwar Kumar v. M S Bennet Coleman, 2007 LLC 1138, 257
Yasin v. Town Area Committee, (1952) SCR 572, 348
Z
Zaverbhai v. State of Bombay, AIR 1954 SC 752, 41
PART I
INDUSTRIAL RELATIONS AND LABOUR LAWS
CHAPTER
1
Introduction to Labour Law
Over the years, labour laws have undergone change with regard to their object
and scope. Early labour legislations were enacted to safeguard the interest of
employers. They were governed by the doctrine of laissez faire. Modern labour
legislation, on the other hand, aims to protect workers against exploitation by
employers. The advent of doctrine of welfare state is based on the notion of
progressive social philosophy which has rendered the old doctrine of laissez
faire obsolete. The theory of ‘hire and fire’ as well as the theory of ‘supply and
demand’ which found free scope under the old doctrine of laissez faire no longer
hold good.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
B. Whom to Apply?
Section 5 requires that every application for registration must be sent to the
Registrar of Trade Unions.
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
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).
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.
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
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.
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.
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.
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.
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.
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
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.
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
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.
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.
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.
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.’
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
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.
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. 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.
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
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.
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.
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’.
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.’
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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
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’.
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.
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
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.
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.
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.
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
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.
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.
III. GHERAO
IV. BANDH
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
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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
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
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.
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.
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.
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
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.
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
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.
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.
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.
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.
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.
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
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
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.
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.
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.
SECTION – II
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.
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
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
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
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.
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.
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.
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
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. 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.
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.’
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.
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.
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.
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
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.
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.
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.