LABOUR LAW NOTES

Table of Contents
MODULE 1..................................................................................................................................6

Guy Davidov: The Idea of Labour Law + Collins: Labour as a Commodity........................6

Formal and Informal Sector...................................................................................................8

MODULE 2................................................................................................................................12

Essential Defense Services Ordinance 2021........................................................................12

Constitution..........................................................................................................................12

Excel Wear v. UoI................................................................................................................13

PUDR v. UoI........................................................................................................................14

Visakha Guidelines Case......................................................................................................15

International Labour Law.....................................................................................................16

Malik v. BCCI.......................................................................................................................17

Paramount Coaching v. Rakesh Ranjan..............................................................................18

Overview of Labour Laws in India......................................................................................19

MODULE 3................................................................................................................................20

DEFINITION OF INDUSTRY.........................................................................................................20

Bangalore Water Supply and Sewerage Board v. A Rajappa..............................................21

Bombay Telephone Canteen.................................................................................................25

GM, Telecom v. Srinivasa Rao.............................................................................................25

Agriculture Produce Market Committee v. Ashok Harikuni................................................26

PRL v. KG Sharma...............................................................................................................27

Coir Board v. Indira Devi....................................................................................................28

State of UP v. Jaibir Singh...................................................................................................28

DEFINITIONS UNDER ESI ACT – SHOP AND FACTORY.............................................................32

Bangalore Turf Club v. ESIC...............................................................................................32

Uttaranchal Forest Department v. Jabar Singh..................................................................35

 Delhi Gymkhana v. ESIC.....................................................................................................36

Assistant Director v. Western Outdoor Interactive..............................................................39

Noor Niwas v. Regional Provident Fund.............................................................................42

RELATIONSHIP OF EMPLOYMENT.............................................................................................45

Dharangadhara Chemical Works v. State of Saurashtra.....................................................45

Hussanbhai v. Alath Factory................................................................................................46

Silver Jubilee v. Chief Inspector..........................................................................................46

Balwant Rai Saluja v. Air India...........................................................................................47

Sushilaben Indravadan v. New India Assurance..................................................................48

Bharat Heavy Electricals v. Mahendra Prasad Jakhmola...................................................48

Zomato/Uber Contracts........................................................................................................48

‘WORKMEN’ – INDUSTRIAL DISPUTES ACT..............................................................................50

HR Adhyanthaya v. Sandoz..................................................................................................50

SK Maini v. CaronaSahu......................................................................................................52

Adhyanthaya.........................................................................................................................53

Bharat Bhawan Trust v. Artists Association........................................................................54

Muir Mills v. Swayam Prakash Srivastava..........................................................................56

ESIC Medical Officers v. ESIC............................................................................................57

‘EMPLOYEE’ UNDER ESI ACT..................................................................................................57

Royal Talkies v. ESIC...........................................................................................................57

Royal Talkies v. ESIC...........................................................................................................58

Hasan Cooperative v. ESIC.................................................................................................59

Royal Western Turf Club v. ESIC........................................................................................60

EPF ACT...................................................................................................................................61

PF v. Godavari Garments....................................................................................................61

FACTORIES ACT........................................................................................................................63

Rohtas Industries v. Ramlakhan Singh.................................................................................63

EMPLOYER UNDER IDA............................................................................................................63

Province of Bombay v. Western India Automobiles Association.........................................63

MODULE 4................................................................................................................................64

Benjamin Levin: Criminal Labour Law...............................................................................64

KR Shyam Sundar................................................................................................................65

TTD v. Commissioner of Labour (AP HC and SC)..............................................................67

Govt Toolroom v. Asst Commissioner..................................................................................68

RG D’Souza v. Poona Employees Union.............................................................................69

Charu Khurana v. Union of India........................................................................................71

Jay Engineering Works v. State of WB.................................................................................73

Recognition of Trade Unions (EPW Article).......................................................................74

Balmer Lawrie Workers Union v. Balmer Lawrie...............................................................75

Recognition in IRC 2020.....................................................................................................76

CONSTITUTIONAL STATUS OF RIGHT TO STRIKE......................................................................78

AIBEA v. National Industrial Tribunal................................................................................78

Kameshwar Prasad v. State of Bihar...................................................................................79

Bharat Kumar v. State of Kerala (Ker HC).........................................................................80

CPI v. Bharat Kumar (SC)...................................................................................................80

Kerala Vyapari Vavasayi Ekopana Samithi v. State of Kerala............................................80

TK Rangarajan v. State of Tamil Nadu................................................................................81

Health Services and Support – Facilities Subsector Bargaining Assn v. British Columbia
(Canada SC).........................................................................................................................82

STRIKES UNDER IDA................................................................................................................83

Buckingham and Carnatic Co v. Workers............................................................................83

Gujarat Steel Tubes v. Mazdoor Sabha................................................................................84

Rohtas Industries v. UoI.......................................................................................................85

CONSEQUENCES OF STRIKES....................................................................................................86
 Bank of India v. TS Kelawala...............................................................................................86

Syndicate Bank v. Umesh Nayak..........................................................................................88

Anumeha Yadav article........................................................................................................92

WEIGO – Unionisation of informal workers.......................................................................92

MODULE 5................................................................................................................................93

Rohtak Hissar District Electricity v. State of UP.................................................................94

RSRTC v. Krishna Kant........................................................................................................96

Shahdara –Saharanpur Light Railway v. Workers’ Union..................................................97

Sudhir Chandra Sarkar v. Tata Iron and Steel Co...............................................................97

Jaivir Singh...........................................................................................................................97

MODULE 6................................................................................................................................99

LOCKOUT VERSUS LAYOFF.......................................................................................................99

Kairbetta Tea Estate v. Rajamanickam................................................................................99

Associated Cement v. Workmen.........................................................................................102

Dewan Tea Estate v. Workmen..........................................................................................105

Workmen v. Firestone Tyre and Rubber Co.......................................................................107

RETRENCHMENT.....................................................................................................................108

Punjab Land Development and Reclamation v. Presiding Officer....................................108

Anand Bihari v. RSRTC......................................................................................................111

Uptron India v. Shammi Bhan............................................................................................112

Harjinder Singh v. Punjab Warehousing Corporation......................................................115

TRANSFER OF UNDERTAKING.................................................................................................116

CLOSURE OF UNDERTAKING...................................................................................................117

District Red Cross Society v. Babita Arora.......................................................................117

RELIEF IN CASE OF ILLEGAL TERMINATION............................................................................120

Hindustan Tin Works..........................................................................................................120

Jagbir Singh v. Haryana State Agriculture Mktg Board....................................................121

 Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya...............................121

MODULE 7..............................................................................................................................122
 MODULE 1
Guy Davidov: The Idea of Labour Law + Collins: Labour as a Commodity
Why is contract law insufficient?

Imbalance of power:

Contract is incomplete – employer has power to command the employee – which work, what
tools, method, etc – authority is central to the contract (subordination). This is because work
is not fully certain – need flexibility.

Contracts are standard form – very little negotiation happens, take it or leave it contract -
employee needs work for survival – workers have to sell labour for survival, so ability to
bargain w employers is systematically reduced and absolute free consent is not possible. But
inequality of bargaining is not particular only to labour contracts, it’s there even in other
contracts like when you contract w a big corporate.

When a contract right is violated, you just go and enforce the contract. But as an employer
and a worker, you can’t simply say enforce contract as that may be very adjudicatory and
confrontational – could end the relationship of employment – need alt models that are less
adversarial. Also the inequality here is systemic – subordination (where an employee
commits to work as per directions of employer, employer can exercise control and authority
over worker) is inherent in the relationship of employee-employer. The subordination creates
potential for abuse of managerial power. Cannot do this thru contract law. Also, labour law
increase trust in incomplete contracts.

Contract law presumes that the bargaining power is equal and that market is a fair distributor

Workers are humans – should not be fully commodified – need to have welfare aspects and
ensure human dignity – needs us to move beyond principles of contract. Freedom of contract
also ensures no slavery or serfdom and only employment.

Replaceability also depends on skill level – but even for highly skilled workers, there is an
imbalance and structure of subordination, so need statutory protection even here.

The problem is of inequality of bargaining power and structure of authority. How does labour
law address this?
Baseline standards – wages, safety standards, max working hours and days, basic social
security

Unionisation and collective bargaining (also shows shortfalls of individual bargaining that is
the standard under liberal contract law)

Anti-discrimination (including maternity leave, child care) and removing entry barriers,
inclusive employment space

Equity v. Efficiency:

Equity concerns take away from efficiency – free market operates efficiently when left alone,
but labour laws challenge this. Labour laws were considered to hinder the functioning of the
free market. The labour laws introduce distortion in demand and supply by increasing cost of
labour. So cannot achieve market equilibrium.

Inherent conflict between profit vs labour cost – trade-off.

How to solve the debate:

Studies which show that better labour laws enhance productivity and efficiency

Also, neoclassical economics based on unreasonable assumptions. So labour laws may

actually end up fixing market failures and distortions.

Collective bargaining may also reduce transaction costs.

Every labour law does not promote efficiency but they also do not hinder efficiency.

Market itself is a product of laws and regulations – market does not pre-exist the law. But
more strategic response is that equity and efficiency can co-exist. Making efficiency the
primary and main goal of labour law is very dangerous – can result in deregulation,
supporting business and governments, delegitimising redistributive concerns. Can’t take
away redistributive functions of labour law in the name of making labour laws market
efficiency. Labour law was introduced to address inequality. The new narrative is not entirely
w/o merit – regulations can be tailored for efficient operation of economy.

Minimum wage standards in many countries is actually a living wage and not a market wage.
Given abundance of labour and scarcity of jobs, market wages are arbitrary. Need to
recognise the labour done, which is not thru market wages. So need another standard – which
is the minimum wage.

Effect of redistributive (old) vs efficiency (new) narrative on current labour law changes:

Focus on efficiency – neoliberal markets – deregulate labour – race to the bottom

Complicity of state legislations, executive and judiciary in race to the bottom – efficiency
again taking front seat, state using its power to discipline labour.

Internal conflicts in labour law – new strands (Langille) ignore the redistributive concerns –
can again lead to neoliberal agenda

Formal and Informal Sector

Most of labour workforce in India is outside labour regulation. Found that employment in
recent times has been in informal sector, not in formal sector. Informal and unorganised
sector are used interchangeably.

Informal workers: workers who work with the formal sector but are informalised –
outsourced. Informal employment (employment means working for wage) – employment can
be in informal sector or in formal sector but work is such that you are not covered within
labour laws. Informal work or employment is hence a much broader category.

Thus, the % in informal sector is lower than informal workers.

National Commission of Labour (1966-69) – used unorganised sector to refer to no

organisation, dispersed workers because their work was such that it was not done in a
systematic scale and done in scattered establishments. Not just from POV of unionisation but
also from the POV of their ability to get together and seek redress. But still lot of focus from
unionisation.

No unionisation due to:

 No job security so fear of job loss

 Presence of intermediaries like sub-contractors and agencies – so lack of knowledge of
contractual terms and also that when there are intermediaries, workers don’t negotiate the
contract, the intermediary does
 Replaceable nature of work – “unskilled” labour
 Caste and gender and religious barriers in unionisation
 Dispersed nature of work in gig economy – no personal contact between the workers for
them to unionise

NCEUS criteria are similar to ICLS but there is cut-off at 10 workers.

Original assumption on informality was that it is temporary and transitional – Arthur Lewis
model will happen and then surplus people will be absorbed into industry. Industry will lead
to formalisation. Informal work is there because industries are not matured enough to absorb
all that labour. But experience has been reverse. Informal sector continues to remain
dominant in India.
The reasons given by each school apply to some extent, some more than others.
Dualist theory: informal sector is separate and independent from formal sector, perform
marginal activities. There is informalisation due to difference in skill set and economic
opportunities, and also because of growth in population which results in surplus labour. This
argument was there in the 60s as well, when Indian and Bangladeshi workers did not have the
capability to operate industrial machinery. Also lack of capital base and infrastructure.

Structuralist school: Capitalist growth drives informal sector – to reduce labour costs. Can’t
see these two as two parallel worlds. Informal sector enterprises serve demand from formal
sector (in a globalisation context). Even domestically, same thing happens.

Legalist school: enterprises that choose to work informally to avoid costs and time required
for formal registration. So simplify bureaucratic processes so that small enterprises also join
the formal sector.
De Soto – Dead Capital. Another term is diverted capital. Eg: unauthorised colonies. A house
is a piece of property that also acts as security. But when property rights are not certain and
conferred on you, the house remains only a house. It cannot act as security or capital.
Potential capital cannot be used due to legal restrictions. The loss of opportunity due to
underdeveloped capital regimes and poorly maintained land records is dead capital.
Eg: street vendors having to pay bribes to police means that there is no reinvestment of
capital – dead capital due to loss of opportunity – diverted capital – capital not reinvested so
condemned to an informal arrangement. Same with rickshaw puller.

Voluntarist school: same as legalist school but do not blame the difficult legal processes.

Sliding slope of informality: can be partially formalised – not regulated by all but some
labour laws. Different types of informal workers – daily wage workers, self-employed
workers, etc

Control and supervision as a marker of employment – not there for NTFP collectors and who
sell it – no real supervision but there is work. There is work but no employment – so fall
outside LL. So one response has been to liberalise the control test and expand scope of LL.
Similarly, self-employed waste picker, forest worker, fisher, etc are outside LL. This is done
in the UK context in Uber v. Aslam.
Theoretical framework of LL is centred around employer and worker. So can it be applied to
workers who are self-employed? Can instead have a body social security laws.
Maybe not every element may apply but many may still apply. Social security is itself part of
labour law – see these together.
If we apply current conceptual model to self-employed – may result in loss of flexibility to
self-employed because of focus on employment in LL. For example: a person may work for
Uber and Ola – who is the employer?
Need to expand application of LL to ensure that informal workers are not excluded from
benefits on the pretence of no employment.
Some theorists say that LL is a developed world concept because of the kind of work done in
developing countries – self-employed.
Minimum workers in factories for them to be formal:
Some provision of IDA need 50-100
Shops and Establishments Act – 10
ESI Act – 10 with power and 20 w/o power
Multiple thresholds. Most workplaces in India have less than 10 workers. 6 th economic census
found 94% of Indian work establishments have less than 10 workers. Average size is 6
workers. Then statutory regime that requires 10 workers ends up excluding most workplaces.
That’s why we have such a large informal sector.
Barabara White argues that informalisation is a conscious strategy based on industry
lobbying. The new Codes have further increased thresholds.

Employee Provident Fund:

Part of salary is kept aside and deposited in PF by employer – interest rates are higher, can
withdraw after retirement and In some other contingencies. A small roadside owner – can
they really contribute to PF of their employees? Payment into PF is very burdensome for the
employees themselves.

Umbrella legislation for unorganised sector proposed – never materialised. Others

highlighted need for a sectoral approach. Each type needs unique regulatory requirements
that tailor it – have homeworkers, agro workers, workers in factories, construction workers
etc – what is the standard for this legislation? But there are common points.
Even in the 4 new Codes – the legislations are very skeletal. Most of the details are in the
government rules. So the need for sectoral approach is there in the formal sector itself.
 MODULE 2
Essential Defense Services Ordinance 2021
Takes away right to strike of workers who produce goods of national defence.

Can be justified but a slippery slope – what do defence services need? Which workers are
covered? Drafted in a broad manner – does it include all ancillary services? ILO says
restrictions have to be proportionate and finely tuned to distinguish between what needs to be
prohibited/regulated from what need not.

Constitution
Part III and Part IV have provisions on labour protection

Articles 23 and 24: explicit provisions on protection of workers but Arts. 14, 19, 21 have also
shaped. Also DPSPs – right to work, living wage, social security and public assistance,
worker participation in factory management.

Why didn’t Part III have more detailed rights and why were they given as DPSPs –

i. Issue of resources and capacity

ii. Didn’t want bigger role for judiciary in policy matters so put it in the part on
governance, because FRs has judicial intervention. But courts repeatedly look at
Part IV while interpreting.

Why is it placed in the concurrent list?

To allow states to respond to labour conditions at a localised level – differences across states.
Even though we have central laws, there are lot of state amendments to the central laws and
also separate state legislations.

Section 10 of the Industrial Disputes Act:

Appropriate government can refer disputes. Apart from CG establishments (PSUs, controlled,
instrumentalities etc), SG is the appropriate government to refer disputes. So actual executive
power is with SG. Even rule-making power is with SG. So administrative powers are with SG
(“appropriate government”). With bulk of business in private sector – SG is mostly the
appropriate government. So execution of central law is with the state.
Advantage is that it allows state to care at a localised level. Family set-ups may be different
in various states. For example – some states have migrant workers but some have local
workers – so allow states to account for this. It also allows recognition of labour rights even
without national consensus. Like Gujarat may not want to recognise certain rights but Kerala
and WB may be willing to recognise. So Kerala and WB can recognise even without national
legislation. With devolution of power, trade unions and industrial unions can lobby with the
SG as opposed to CG. So this can work in favour or against either. Principle is that
devolution of power allows for more representation. Each state is participating in the race to
the bottom as they are competing for investment, CG encourages this, labour departments are
hardly given actual power.

Criticism is that there is increase in transaction cost due to laws at the central and state level –
it makes business costly and labour regulation complex. This is due to multiplicity of
compliance costs, rent seeking (corruption and lobbying) at multiple levels, have to lobby
different governments – CG+ whatever states they work in (big business hence support
centralised laws), WFH also means that work is very dispersed now – so paradigm of labour
regulation changes as workplace is an online space – which SG applies.

Article 23: prohibition of begar and other forms of forced labour

Article 24: prohibition of child labour

Argument was that given that serious nature of these problems, their wide spread nature and
social sanction, state practicing these – that’s why put them in Part III, cannot guarantee that
there will be legislation.

Constitutionalism and FRs: primary goal of FRs:

 To ensure basic minimum rights that should be available to every human

 Defined relation between citizen and state and limited power of state (many of the first
few cases of LL and Constitution were related to challenge based on FRs – Art. 19(1)(g)
– eg: Excel Wear v. UoI)

Excel Wear v. UoI

Challenged Section 25O of the Industrial Disputes Act. Employer must seek permission from
SG and then SG will decide on sufficiency of reason. Even if SG found reason sufficient,
they can reject the permission on grounds of public interest. Procedural grounds for
challenge: decision of government not subject to JR, no appeal, no need to give reasons for
decision, no duty to respond within certain number of days – the industry had to apply at least
90 days before but the government had no duty to respond in 90 days, there was a sunset
clause of 120 days only as a transitional phase exception – deemed approval only for those
who gave notice before 1976 Amendment, can you apply again if it is once refused – there is
no time-limit for this so it was very unclear

Very few safeguards in the wording of Section 25O. that’s why it was argued that this is
violative of Article 19(1)(g).

Does Article 19(1)(g) have right to close down business: yes. But there is hierarchy. There is
right to start business, not start business, and right to close down. The last is at a lower level
than the first two – because others rights are affected. Government argued that it is not even
part of 19(1)(g) and employer argued that it is same as right to start. Court used some middle
approach. Court recognised the right to close an existing business as part of Article 19(1)(g) –
but can have reasonable restrictions on it as per Article 19(6). Procedurally and substantively
reasonable restrictions.

Implication of hierarchy – may give labour preference in cases of closing down – regulation
of right to close down. Court also alludes to role of state in taking over business in cases of
poor management – so trying to balance both rights.

Reason for striking down Section 25O: (para 21 gives all issues with the provision)

 No need for reasons for rejecting permission – Here, even though fairly detailed reasons
were given by petitioner, the government rejected – possibility of capricious orders –
shows unreasonableness of provision. Court does not differentiate law and its abuse. Its
abuse shows the unreasonableness. Also that all closure will lead to unemployment – so
can you force people to continue business on this ground? Court says no
 Civil and criminal penalties if you shut down or economic ruin if you continue business
 Socialism and social justice – can it be pushed to the extent that private interests are
completely done away? Court says no.
Section 25O was added in 1976.

PUDR v. UoI
Non-compliance with Article 23 and 24, State Migrant Workmen Act, Contract Labour Act –
minimum wage not paid, child labour employed, different wages for men and women.
Case was about implementation of statutes by private persons. how did it turn into an Article
32 petition?

Article 21 violation - living conditions not met due to non-payment of minimum wages and
compliance with laws; Article 14 violation – equal remuneration; Article 24 violation – child
labour.
Government is the duty bearer: responsibilities of principal employer. Even if private
contractors were violating these, principal employer has responsibility under the statute. So
the state is involved. Then there is also the issue of FRs.
Government argued that Article 23 ‘forced’ means no payment at all, not any work with any
quantum of payment. Court refused to accept this argument – used Maneka Gandhi; said that
it would be very restrictive; and that it would make the phrase ‘other such forms of forced
labour redundant’.
Forced labour is when there is coercion – this could be physical force, legal threat of penalty,
economic compulsion. The ILOs position on what is force is much more restrictive.
What is the implication of this interpretation:
 Art 23 and 24 now enforceable against private citizens also – so can take minimum wage
cases to higher judiciary – HC and SC
Minimum wage is itself starvation wage.
Another issue is that minimum wage is different in all states. Also, employers use the
statutory loopholes to avoid minimum wages.
Compulsion and economic necessity – this is the reality for most of the labour force. It
becomes forced labour when minimum wage is not paid because the law entitles you to that.

Visakha Guidelines Case

Use of CEDAW to define sexual harassment and also that act against discrimination at
workplace. Relied on Article 51. See GBV at workplace as discrimination, denial of equality,
denial of safe and decent working conditions, right to carry on trade and business and
occupation. Using these principles, court highlights how Art 32 can be used to frame
guidelines.

FRs and Constitution – use of Art 226 for protection of government employees. Branch of
service law in India.
International Labour Law
ILO started in 1919.

Why was ILO established:

 Russian revolution and Bolshevik uprising – need labour rights to prevent these; fear of
Soviet political thought. After collapse of Soviet Union, there was deregulation of labour.
 Economics of colonialism: first major wave of globalisation was in colonial times – trade
opening up across the world – colony products sold in the coloniser and vice versa.
Labour laws introduced to ensure that cost of production in India is not lower than UK,
because by the end of 19th C, there were labour standards and laws in UK.

Structure of ILO:
ILO Conference approves conventions and recommendations
Then it goes to General Body
There is also a Secretariat.

Tripartism: shaped development of ILO and how it functions. This means that in the
Conference, there are government reps, business and industry reps, and worker reps – to
ensure adequate representation. Question is how independent are these reps because
government chooses them.
Lot of ILO conventions but countries have signed and ratified different numbers. ILO focuses
on implementation of core labour standards. Freedom of association, forced labour, child
labour, discrimination – these are the 4 core ones. Emphasis is on these. 8 fundamental
conventions to enforce these standards. All countries should implement these.
How to enforce ILO standards and ensure states are complying:
 Periodic reports by state – ideally annually but actually – once every 2 years for these 8
and less frequently for others
 Labour and business groups can provide comments on the report
 Committee of expert looks at report and comment and can ask the state for more info
 Then committee submits report to ILO Conference and there is Conference Committee
which can discuss this report. Here, there is naming and shaming if States are not doing
enough. It works against countries who need loans and financial support. The support can
be contingent on favourable reports by ILO. Not a very stringent adversarial process.
 More like prodding information and asking govt to take action. Slow, incremental
dialogue so that states just don’t back out.
 Committee on Freedom of Association - complaints by labour and business related to
freedom of association – Freedom of Association No 87, Collective Bargaining
Convention 98 – India has not ratified but complaints have been filed against India – its
because even tho not ratified, Members have to follow by virtue of membership.
 Social clauses: access to markets or other trade benefits contingent on compliance with
Labour rights, if not, benefits can be denied. This was rejected at WTO due to fear of use
of labour standards for protectionist purposes. Developing countries also don’t want these
clauses – because no comparative advantage if there are lot of LL.
Regional agreements like between EU and African countries
NAFTA has provisions on labour standards – these connected w trade benefits.
System of GSP (Generalised System of Preferences) – trade benefits if you follow
international labour norms

US took steps against Pakistan once under the Trade Act. Under George Bush, they
restored benefits for Pakistan. After 9/11 because Pakistan cooperated w them in war on
terror. They restored benefits not on grounds of labour rights but geo-political scenario.
Given the clear economic costs, this works better than naming and shaming at ILO.

Malik v. BCCI
Employment contracts bank had signed had implied term that employer would not violate
trust In employer-employee relationship. Employees sought damages due to the
unemployment they faced due to their association with the bank.

Did the court rely on facts of the case or a general implication – they relied on implication
and they specifically say that they are not relying on the facts of the case. They also assumed
that the bank was in the wrong and that Malik and someone else were fired.

Implied duty was recognised by the court based on an expansive notion of trust in
employment. These are implicit rules and need not be included in the contract. Even if statute
is not applicable, these are implied terms in contracts. Need to specifically exclude them from
the contract, so party autonomy remains.
Consensus ad idem and implied terms – given inequality of bargaining power, the consent
ought to be subject to scrutiny. While consent and freedom of contract has a role, there need
to be spl provisions either thru LL provisions or change in contract law.

Why aren’t there this kind of cases in India:

 Cases going to industrial courts – they don’t have to rely on contract law and general
principles of contract to decide, can decide the best way without relying on this. So
maybe courts haven’t felt the need to develop the jurisprudence
 Since we have specific codification unlike UK, the court just relies on these and does not
develop principles
 Implicit duties have not been claimed by the plaintiffs themselves as we have very
detailed contract law in India – in England, it is more flexible because of common law.
 Reliance on constitutional principles in India, at least in public sector employment. So
maybe that’s why they didn’t use contract law.

But these principles are not altogether irrelevant. Courts use Sections 23 and 27 of ICA to
help those who are not workmen under IDA – like teachers (Paramount). But this only helps
with voiding the contract, not placing any positive obligation on the employer. Ss 23 and 27
may not be useful then. Need to follow British and Canadian courts for implied terms. If the
employee wants to continue the relationship, a void contract is useless.

Paramount Coaching v. Rakesh Ranjan

Rakesh joined Paramount Coaching. As per MoU had to serve 3 years. Most recent MoU on
6th January 2017, ends in 2020. Meanwhile, the defendant put FB post said that he left
plaintiff and joined rival. The defendant alleged that in May 2014, he was made to sign blank
papers or he would be denied salary. Around 9 lakhs owed to the defendant.

Para 10 of OG judgment – they have provisions of MoU – cl 6 says teacher should not do
tuition thru coaching institute or o/w till agreement exists. But he left and joined another one
during the 3 years. Can this provision be considered void under contract act for restraint of
trade?

Niranjan Shankar Golikari v. Century Spinning and Mfg case:

If the restraint extends beyond the term of the employment

Time period of limitation

Geographical reach of limitation

Look at these facts to decide. Every restriction will not be void as employers also have
interest due to specialised training of worker.

Krishan Murgai case: cited in para 17 – this case also is similar to Golikari

Most restrictions within original term of employment are permissible. But have to decide on
facts of each case.

It’s a reasonable restriction – because the restriction does not go beyond the 3-year period of
the agreement – not a post-employment covenant. Also it did not prohibit him from teaching
altogether but only at coaching institute – so can do private tuition or join a school.

Court also looked at nature of restriction in pars 20 – payment on hourly basis – this is on the
undue influence claim. Court said that there is nothing on facts to indicate that he was left
with no choice but to sign.

Para 24: relies on Brojonath – terms have to be so unreasonable that they have to be
unconscionable – very apparent inequality in bargaining power – this is opposed to Section
23. Here court uses same standard for Section 16 also.

For workers not covered by statutory laws, they use Sections 16, 23 and 27 for voiding
contract.

Overview of Labour Laws in India

Many legislations under each category but they have not been surgically separate categories.
Even under the new Codes – Industrial Disputes Code deals with Occupational Safety,
Occupational Safety Code deals with social security. This is just to provide an overview.
Look at the table in this article.
Which establishments, workers, employers, etc are covered under these laws?

MODULE 3

DEFINITION OF INDUSTRY
The definition was subject to a lot of litigation with some cases taking liberal view and some
taking conservative view – never really a linear progression. 60s took conservative, 70s
became liberal after J. Krishna Iyer.

Bangalore Water Supply and Sewerage Board v. A Rajappa

J. Krishna Iyer: broad definition because the IDA is meant to protect workers and to ensure
steady dispute settlement (uses Union List)

Para 38:

Industry is a continuous, organised activity, not isolated adventure

Excludes spiritual services except those for profit – eg: sale of prasad. Temple by itself does
not give material service. So even if they have one or two employees – say someone to sweep
– they are not cooperating with the employer for producing goods or services for community
at large. The presence of one or two employees who are not doing for spiritual purpose does
not make the temple an industry. Look at dominant nature. Also check severability.

3 prong test:

 Systematic activity
 Cooperation between employers and employees
 Production of good and services to others
This test is from the Bombay Mazdoor Sabha case.

Severability – predominant function might not be industry but the associated or ancillary
functions might
Eg: some people may be working in managing both but some may be separate, finances are
combined, geographical proximity – this may show no severability.
In such situations, try and severe and apply triple test to each part and then determine whether
a part is industry. If not, apply to dominant function to check.
Sovereign function is exempt but is also subject to severability – not all sovereign functions
but only primary and inalienable ones, not welfare ones. Implicit or explicit exclusion due to
constitutional provisions or statutory law made by Parliament says IDA does not apply – then
it can be said to be sovereign function.
In Solicitor’s (Mehar Industrial Tribunal) case, SC on liberal profession laid down that there
is no direct cooperation between employers and employees in a liberal profession (eg:
lawyer’s chamber, CA, architect). The professional service given by these people to the client
is the main service. The employee’s work is very marginal to the work of the professional.
The lawyer or CA is the main actor in the firm. So need direct cooperation, not any
cooperation.
J. Krishna Iyer: says that the employee is also required for work. Also such exemption will
open floodgate for exemption – so IDA will be diluted. The standard of direct cooperation is
indefensible – every small contribution that happens in a firm lays a role in the overall
efficiency of the firm.
Also recognises that firm nature changes.
But that does not mean very small offices – say a carpenter’s assistant – are industries. There
is not organised or systematic work – first element not met in triple test. J. Iyer still relies on
people’s perception of industry. The objective of the Act is meant for settlement of disputes
between workers and employers – so need plurality of workers for being an industry. But
there is no clear number for plurality. Later he says that even few employees are enough for
industry as o/w automated industries will get excluded. So what is the number? Not given.
Have to decide number based on industry – eg: automation means lesser number.
2nd National Labour Commission – 10 employees means you are industry. Under IRC is there
numerical threshold in definition of industry? No. the 2015 Bill had but now there are
thresholds in various chapters. The 1982 Amendment had numerical threshold for certain
activities but this was never notified.
Education: teachers are not considered as workmen under IRA as they are not “manual or
clerical workers”. In DU v. Ramnath SC took line that if teachers are not workmen then can
University be considered an industry? As teachers are not workers, edu insti are not industry.
Plus teaching is a mission and not an occupation.
J. Iyer says that if you apply triple test then edu institution is an industry – can’t reverse
reason that since teachers are not workers, edu insti is not industry as that excludes bus
drivers, cleaners etc. The question is not how many people are entitled to benefit under the
Act but have to apply triple test. Also, teaching being a service and edu insti being an
industry are not mutually exclusive. So DU v. Ramnath rejected. Even if dominant number of
employees do not meet defn of workmen does not mean it’s not an industry. There are other
people who are workers. In such a situation, since teachers are not workers, even if there is
dispute under IDA, teachers can’t use.
Charitable institutions:
 Institutions which yield profits and the profits are used for charity
 No profit but there is employer and employee
 No profit and run by a group of people w/o employer and employee relations
Only the first two are considered as industries –
 First is industry because even if profit is being used for charity does not mean that initial
activity is not industry. The ultimate use of profit does not matter – it’s like any other
industry.
 Second is industry as even if there is altruistic motive, you still have wages, employer-
employee relations like in any profit-motive activity. The charity is only for recipients,
employer and employee is like any commercial enterprise.
 Third is not industry as there is no employer-employee relation – do not meet triple test,
not really an exception of the test, just that the test is not met.
If there is one employee here:
Dominant nature is still charity in third form
Plus no plurality of employees – no systematic or organised work – can draw analogy
with liberal profession that J. Iyer talks about.
If there are no wages then that means no employment. Work for wages is a critical
component of employment viewed from traditional perspective.
Earlier benches had more blanket exemptions for charitable work, liberal profession, etc.

Research:
Research and its products are monetised. Innovations are sold at high prices in the market.
There is cooperation between employer and employee. Research is systematic activity.

Clubs:
Madras Gymkhana Employees Union v. Management and CCI cases said that clubs are not
industry. Organising cricket is not material good or services, promoting sports is not business
or trade or analogous activity. These are self-serving clubs – do not serve public. The
organisations are meant for members, activities organised by members.
He makes a purposive argument – look at industry from the perspective of possibility of
disputes.
Second argument is that these clubs are not exactly self-serving – there are lot of employees
in CCI and Madras Gymkhana – systematic work. – para 145
There are actual self-serving clubs like book clubs that are no industries. There the
employment of one or two people does not make it an industry.

Cooperatives:
Similar line as clubs – while there may be members there are also employees. Look at credit
unions – there also employees are present.

All the observations that the bench emphasises on focus on the triple test. If triple test is met
it is an industry, except sovereign function. Profit motive is irrelevant, philanthrophy is
irrelevant.

Justice Beg:
Definition is just a guide and nothing more, none of the rules are enough to cover the entire
statute.
Capability of entering the world of commerce – res commercium – this is the test of industry.
Can be non-profit now but should be capable regal of entering the world of commerce – fairly
broad approach.
Sovereign function – only those governed by separate statutory rules or consti provision
ought to be exempted – Art. 310 and 311. J. Iyer says that is it primary and inalienable
function? And there is implicit or explicit exception when some other rules apply.
Courts have not been consistent in applying this. Courts look at the function, like in Agri
Produce Market Committee – they don’t consider that State Civil Service rules apply and
only look at function.

Justice Chandrachud:
If the nature of the work matters, then why does it matter whether government or private
does? No need for sovereign function exception. Just see if triple test applies.
Dissent: Justice Jaswant Singh and Tulzapurkar:
Liberal professions – contribution is not so imp that J. Iyer is mentioning. They agree with
earlier position on charitable institutions, educational and research institutions – they agree
with the direct cooperation test – the service is based on professional qualifications. They
also have issue w government schools, hospitals etc within the definition. They want only
commercial, for profit activity taken on by private individuals.

Bombay Telephone Canteen

If there are statutory or constitutional rules, then those will apply and use Art 226 or
Administrative Services Act. If there aren’t, then IDA applies.

Here it was found that they were governed by relevant administrative rules. Because of this,
IDA does not apply.

This is what Justice Iyer and Beg also says – when statutory rules apply, there is implicit
exclusion.

So was it really per incuriam, as is said in GM, Telecom v. Srinivasa Rao.

But in para 31, they say BWSSB would be catastrophic because IDA does not have as much
job security as in government jobs. In this case, it is between for employees to use
government rules as there is more job security, higher standard for removing – cannot be
arbit. In this case, it would be counterproductive for workers to use BWSSB. This is entirely
fact based. But the phrasing is such that they seem to ignore BWSSB. But the ruling is based
in BWSSB – the court did not do this. This is a DB decision – how are they saying applying
BWSSB would not be fine?

GM, Telecom v. Srinivasa Rao

Wrong for Bombay Canteen and Theyyam Joseph to go against BWSSB – they were wrongly
decided. Theyyam Joseph said that it’s a welfare function and hence, not industry. So this is
wrong. Bombay Canteen actually used BWSSB – this was not appreciated. The court simply
said you have to follow precedent, follow judicial discipline. They don’t engage with actual
rationale in Bombay Canteen – it’s not really wrong because can be justified in Justice Iyer’s
and Beg’s opinions.

Agriculture Produce Market Committee v. Ashok Harikuni

Whether APMC is an industry? APMC is constituted under State Act. Farmers can go here
and there is bidding on produce. The function of APMC – is it purely sovereign or industry?
It regulated marketing of agricultural produce. Employees are covered by civil service rules,
they are state govt bureaucrats, they can levy fees etc

One of the arguments was that because they have separate rules and provisions, they are
excluded from IDA.

But the court’s focus is on inalienable sovereign function – first part of Justice Iyer’s decision
on sovereign function – has to be inalienable function, cannot be undertaken by private
person, merely because it is state monopoly now and that there is statutory board does not
make it sovereign function. By this logic, railways Is not private function. In a previous case,
SC said that All India Radio is an industry as it can be done by private bodies – not a
sovereign function. Here, the courts focus is on private persons used to regulate market
earlier – so not sovereign and inalienable. Now, Farm Bills themselves are changing
regulation to private domain.

The list of activities they give for sovereign function does not seem to be exhaustive, they use
terms like broadly, etc.

What did they do about the non-obstante clause?

There is a clear provision which says n/w IDA. J. Iyer envisages this in his judgment. But
here the court says that the non-obstante clause is limited to certain aspects only, for others
IDA applies. The fact that the phrasing is limited suggests that IDA is not excluded in toto.
So can consider industry for other parts of IDA. They don’t go against BWSSB but make it a
more stringent standard. The standard is so stringent that not clear when there will be
exclusion because Srinivasa Rao overturned Bombay Telephone Canteen.

How to go about reasoning whether something is an industry?

Triple test met or not?

Is there sovereign function exception?

In the appellate court, the question revolves around sovereign function, so they don’t go into
triple test.

Doubts:

interesting to note that in Agri Produce, courts don't talk about themselves - are they an
industry? Other decisions say that admin of justice is sovereign function.

in Agri Market, they do not address whether state leg can exempt from law, they just draw
limited restriction - but BWSSB says Parliament can exempt? J. Iyer would have meant both
because bulk of govt employees are SG employees. Unfair to allow CG exclusion but not SG.
In any case, this case does not even address this.

PRL v. KG Sharma
A public trust research lab that was financed by ISRO (CG) and Gujarat Govt. Would it be an
industry?

This is research work but it is not being monetised here. It is a pure research institute and not
connected with production or supply of goods and services. Not being patented or sold.

Even if we use J. Beg’s test of capable of entering world of commerce, PRL will be an
industry. But J. Beg is not in majority. J. Iyer wrote for 3 judges and J. Chandrachud agreed
w him on everything except sovereign exception. So J. Iyer’s decision should be followed.

They look at whether it’s a commercial industrial activity or not – paras 14 and 15 – this is
similar to the dissenting opinion in BWSSB where test is ‘analogous to business or trade’ was
used.

They refer to government function in para 15 but they don’t explicitly say sovereign function.
Focus is on whether it is commercial enterprise. Focus is on nature of activity but BWSSB
does not use this. They don’t consider how employment is organised.
Can be seen as per incuriam but is there any way of reconciliation with BWSSB?

 It can be reconciled using J. Beg’s test on res commercium and argue that it’s not capable
of entering the market because the government is primary user of the research and it
directly goes to them – the government does not really buy it.
 Para 14 they say that the object is not to render services to others (direct or indirect
manner). That means they are not calling for direct connection. – Sir does not agree with
this.
 they are saying it’s not a service but J. Krishna Iyer fleshes out what is a service by
dealing w specific instances of research, education, etc. So while it may be argued that the
bit on ratio is obiter and triple test is ratio but Sir does not agree.

Coir Board v. Indira Devi

Justice Sujata Manohar:If we apply triple test then Coir Board is industry. But charitable
organisations cannot meet the rigorous requirements of IDA.

Reference to larger bench on correctness of BWSSB.

Application of BWSSB has led to unpalatable consequences – para 22 – harmful to social

welfare / charitable orgs because they can’t cope with IDA requirements – true in cases of
some law firms, educational orgs, etc.

Does not say that these employees should have no protection at all – ideally, there should
have been an amendment which gave certain exemptions but this has not come into force.

This DB decision was referred to 3 JB but they said that we won’t refer as inappropriate for
DB to refer 7JB decision.

State of UP v. Jaibir Singh

Chief Conservator of Forests v. Jagannath Maruti Kondhare: social forestry department is
industry – 3JB in 1995

State of Gujarat v. Pratamsingh Narsinh Parmar: is not an industry – 2 JB in 2001

Could have decided on this point but became full-fledged case on BWSSB:

1982 Amendment:
Enacted but not notified. So employers argued that use for interpretation but employees said
don’t. external aid for interpretation.

In 1982 Amendment, all provisions had been enforced except for definition of industry.

Employees and govt argued that it’s a deliberate decision to not notify, this was concluded in
UoI v. Alteimeish Rein. Hence, court did not look at 1982 Amendment.

But the court does say that BWSSB cannot be considered as an authoritative precedent.
Factual circumstances of the decision – J. Beg says he overall agrees w J. Iyer but does not
engage with him really. He does not even get to read J. Chandrachud’s decision as that came
out only in April but J. Beg wrote in February. J. Singh and Tulzapurkar was also not ready.

Judges in BWSSB themselves said definition is wide and vague. They themselves said that
their decision is guideline, not meant to be carried on forever, waiting for legislature to come
up with a more clear definition. This creates issue of its precedential value.

Substance of triple test is problematic:

One of the reasons is that J. Iyer said that the law is social legislation meant to protect
workers. But here judges say that the point is industrial peace and reducing conflict – so don’t
take ideological position. very burdensome for industries to meet IDA requirements (this is
also the reason in Coir Board). The judge gives examples of back wages, in para 43:

It is experienced by all dealing in industrial law that over-emphasis on the rights of the
workers and undue curtailment of the rights of the employers to organize their business,
through employment and non-employment, have given rise to large number of industrial and
labour claims resulting in awards granting huge amounts of back wages for past years,
allegedly as legitimate dues of the workers, who are found to have been illegally terminated
or retrenched. Industrial awards granting heavy packages of back wages, sometimes result in
taking away the very substratum of the industry.

Refer to public utility service like education, hospitals, etc – Court says that just because
public utility services are enlisted in the Act does not mean that the definition of industry
includes these. First show they are industry and then see if they are public utility service.
Can’t say because it’s in the list it’s an industry. Have to apply test for industry first.
They used Safdarjung Hospital case, which used Madras Gymkhana Club – check whether
run on commercial lines.

Also can’t use industrial concepts like closure, strike, etc for public utility services like
healthcare, education. This will affect patients, students, etc.

Call for constitution of larger bench and in 2017, Justice Thakur set up 9 judge bench but it
wasn’t constituted as J. Thakur resigned and new Code came up

Chronology of Cases

BWSSB – 1978

PRL v. KG Sharma – April 1997 – looked at nature of activity instead of employer-employee

relationship

Bombay Telephone Canteen – July 1997 – government employees not covered

GM, Telecom – Nov 1997 – overruled Bombay Telephone

Coir Board v. Indira Devi – March 1998 – DB said that need to reconsider BWSSB because
of its application to non-profits but a 3JB of the same case said reference not valid.

Agri Produce Market – Sept 2000 –just because it is stat body does not mean it is sovereign
function, restricted it to defence, acquisition of territory, war and peace, taxation, eminent
domain, police power, maintenance of law and order, legislative function, admin of law,
internal and external security, grant of pardon, etc., distinguished between inalienable
sovereign function and welfare function so that BWSSB is not diluted.

Jaibir Singh – May 2005 – refer to larger bench

Precedential value:

What is the precedential value of BWSSB since larger bench not constituted and new Code
not in force? Does the new Code differ from BWSSB or does it retain position? Are any of the
current ambiguities unaddressed?

Standard of BWSSB applies because it still hasn’t been reconsidered by a larger bench

Change in the new Code:

They are saying that charity is not included but profit motive is not determinant – how to
resolve this.
Government can exclude – no guidelines for this – constitutional?

Can be interpreted as a place which does not fit the main standard and then it can be excluded
– that way there are some guidelines. But this is usually not how these provisions have been
interpreted.

Only CG can exempt – not SG. Why? Centralisation of powers – enables CG to override SG
benefits

How to identify what is sovereign function? It’s an inclusive definition. No idea on

inalienable. Can it be argued that all welfare functions will be inalienable and primary? One
way is that the three mentioned are primary and inalienable. Also it says only CG
departments – so are PSUs excluded? What about organisations like PRL that work under the
department? The people in departments are not people of the ministry. Ministry is anyways
excluded because CG rules apply.

But many have argued that the courts will read it in a very broad manner.it also says
“relatable” to the sovereign function – how broad is relatable?

This clause was taken from 1982 Amendment mostly.

Core of BWSSB standard has been retained – the exception on charitable institutions makes
the profit motive bit redundant.

DEFINITIONS UNDER ESI ACT – SHOP AND FACTORY

Section 1(4) of the ESI Act:

Applies to factories, except for seasonal factories (eg: sugarcane factory). Applies to govt
factories unless they receive substantially similar to or better than benefits under some
rules/scheme

Section 1(5):

Appropriate government can notify establishments – agricultural, industrial, commercial or

otherwise. Question is what type of establishment.

Procedural requirements: Need 1 month notice of intent to notify, SG can notify but need CG
approval, consult with ESIC.

Section 1(6):

Notifications – have a numerical threshold also – those governed by the Act, even if the
number falls down, you’d still be governed by the Act, the fact that the number has now
fallen won’t make it inapplicable

These numerical thresholds encourage remaining small – don’t have economies of scale then.
Bangalore Turf Club v. ESIC
Bangalore Turf (Race) Club – does it fall under ESI Act? Definitely not a factory. But the
govt notified that shops would fall under ESI Act.

Common parlance understanding of shop – place where goods are sold. But many cases,
including Hyderabad Race Club moved beyond the common parlance understanding to
include even those places which sell goods thru offices (advertising, music services) and
facilitate sale of other goods and services.

Main argument by employer:

Common parlance understanding – where goods are sold

Also compared to Karnataka Shops and Commercial Establishments Act

Another argument is that there must be closed space

Court responds to this is a beneficial social legislation – so give liberal interpretation

They are saying that Shops and Establishments Act is not in pari materia – for that, they have
to be exactly similar. But here, their objectives and purposes are different. The Shops Act
mentions other laws like Compensation Act, etc but not ESI Act.

Establishment means: where systematic and organised activity of trade, profession, business,
or work, or any other activity ancillary thereto. Shop is one where there is commercial
activity – where goods and services are sold or it is facilitated (eg: godown is a shop, or if
there are any connected services that are not by themselves sold – eg: inhouse operations for
R&D, data processing – if these are meant to facilitate sale then it will be a shop). Trade or
commerce is not needed for establishment, broader definition. This seems like the triple test
in BWSSB – same framework. Every commercial establishment is now considered a shop.

The difference is that the triple test is subject to exceptions of sovereign function. All those
places will still be an establishment under ESI Act. But this does not mean that ESI applies
because govt notification is required for application to establishments.
But this is not classical meaning of shop where goods are sold in a building.

They looked at entry fees, commission, etc – so there is a price being paid. Entertainment as a
service is being sold. Since shop is defined so broadly, Turf Club is a shop.

Why Would Chit Funds Meet this Standard:

There is a contractual arrangement – no debtor-creditor relationship but there is financial

service being provided and commission is charged – so there is sale of service. So Chit Fund
office will also be a shop. In TN, chit fund is brought within ESI Act but now question is
what is the wage on which ESI contribution has to be calculated?

Does ESI apply to law firm? CAs office? Education? Other professions – are all these shops?

The bit on facilitating services came up in Hinduja Band case where office was taking
bookings – they are facilitating entertainment service. The actual service was elsewhere but
the booking office is a shop as it is facilitating. For services, pin-pointing location of service
can be difficult. That’s why court took line of facilitating sale.

Definition of Factory in Section 2(12) of ESI Act: dealt with under Delhi Gymkhana v. ESIC

 numerical threshold – 10 workers

When we look at numerical threshold, what if the total number of employees meet the
threshold, but not all meet the statutory definition of employee – Court held that only
those who fit within statutory definition would count for the numerical threshold – ESIC
v. MM Suri
 premises including precincts
 manufacturing process
 Mines Act and railway sheds excluded
 Persons employed
Section 2(m) of Factories Act: dealt with under Uttaranchal Forest Department v. Jabar
Singh
 10 people when aid of power – manufacturing process needs aid of power – direct
connection. In Delhi Gymkhana, there was use of LPG – and hence, there is aid of power
(para 15). This point was explicitly dealt with under Bombay Anand Bhavan case. Power
 that is not human-generated – includes LPG. The test is not how vital or essential power
is but that it is directly connected to manufacturing. Mere lightbulb for lighting not
enough – Hotel New Nalanda v. ESIC
 20 when no power
 Manufacturing process
 Premises including precincts.
 Workers – means people in relationship of employment

Uttaranchal Forest Department v. Jabar Singh

Para 21: Ardeshir H. Bhiwandiwala v. The State of Bombay: no need for closed space for it to
be premises. Can be open also – eg: where salt is made. Also see para 64.

Case here was not about Factories Act. It was about Industrial Disputes Act, S. 25N but that
referenced definition of factory – so had to look at Section 2(m) and 2(k).

Manufacturing not actually defined under ESI Act – see Section 2(14-AA) of ESI Act, only
under Factories Act under Section 2(k):
The process has to be to make the product a new one – be it grading, drying, cold storage. If
cold storage is to make a commercially different commodity, only then it is manufacturing.

Need to have a distinct product which is commercially saleable for something to be

manufacturing. That way, wines which are simply stored for longer are distinct products, so it
would be manufacturing. But have to figure out the point at which it becomes vintage and is
saleable as a different product. While storing is a separate element in Section 2(m), dominant
approach is that there needs to be transformation even in storage. (Qazi Nurul is one case
which says that read it literally but Adeshi Bhiwandiwala, Lal Mohemad, and other cases
cited in Jabar Singh all say that transformation needs to be there).
Para 19:Some observations made in Re: A.M. Chinniah, AIR (1957) Madras 755 were
brought to the notice of the learned single Judge of the Rajasthan High Court. The
observation made by the Madras High Court is detailed below:

"To sum up, to constitute a manufacture there must be a transformation. Mere labour
bestowed on an article even if the labour is applied through machinery, will not make it a
manufacture, unless it has progressed so far that a transformation ensues and the articles
become commercially known as an other and distinct article from that as which it begins its
existence."

In Ardeshir H. Bhiwandiwala v. The State of Bombay, there is clearly transformation from

salt water to salt. It may be a natural process but it needs human efforts. Salt is a distinct
commercial product from saline sea water.

Eg: in dry cleaning, there is no manufacturing as there is no new product, just a cleaner
product. There is no new commercial product as the clothes remain the same. But other
industrial washing processes can be manufacturing if the nature of the cloth changes to
something else.- ESIC v. Triplex Dry Cleaning

Bhag Singh v. ESIC: petrol/diesel pump not manufacturing as no new product. (this could
instead be a shop)

Activity in this:

Cutting trees, making it into logs – this is manufacturing process.

See notes for this case.

Delhi Gymkhana v. ESIC

is kitchen of this club part of ESIC – so is kitchen a factory? The notice was to make the
entire club a factory. If kitchen is factory, is entire club a factory?

In para 5: G.L. Hotels vs. T.C. Sarin (1993) 4 SCC 363 1993 Indlaw SC 587, wherein it was
held that cooking forms part of manufacturing process, as it alters and treats or otherwise
adapts an article of food or substance with a view to its use, sale, delivery or disposal in the
club.

In Para 15: In Bombay Anand Bhavan Restaurant vs. Deputy Director, Employees State
Insurance Corporation And Anr., (2009) 9 SCC 61 2009 Indlaw SC 1105, the question for
consideration was whether the appellant-restaurant, which was using LPG gas for preparation
of coffee, tea and other beverages, is covered under the ESI Act. Observing that it is a settled
position of law that cooking, preparing of food items qualifies as manufacturing process and
that the use of LPG satisfies the definition of power.

After this Parliament intervened and said that under Factories Act, hotel, restaurant or eating
place will not be a factory. But the exception was not added to the ESI Act. While the defn is
borrowed from Factories Act, they don’t say that refer to Factories Act. Which means that
any changes to Factories Act will not apply to ESI Act.

Club is non-profit institution:

Does not matter to employees if it is non-profit.

But what about restricting it to the kitchen and not extending to whole club – this was there in
GL Hotels also.
The definition of factory is that in any part in which manufacturing is carried out – so kitchen
is where there is manf – does not have to be everywhere – this was reason in GL Hotels. Is
this fair? It’s better from numerical threshold point of view. It may be that kitchen itself does
not have 10 workers. Also, how to clearly segregate manf and no manf – workers may
overlap.

Explanation added to Factories Act:

Explanation 2: Just having computer does not make it into a factory. This was a time when
there was confusion on role of computers.

Assistant Director v. Western Outdoor Interactive

Cites Seelan Raj R v. Cholamandalam Software Ltd in para 14: Mad HC DB: can software
firm be considered as factory: para 9 of this decision says that computer use implies
manufacturing activity but Legislature has granted exemption to promote computerisation.
Though they are factory, they are exemption. Explanation is an exception. They will only be
considered factory only if they have some other additional manufacturing activity without the
use of computers. “no manufacturing” in Explanation 2 means no manf without computers.
The matter was referred to a larger bench but not constituted. This was 2001.

Also cited TCS v. S/o AP in para 15 – taxation case – here court acknowledged that software
can be goods if it is customised and since it take tangible form - stored in floppy disks

DV Shetty v. Bombay Municipal Corporation – software firm not considered factory. Here, it
was a municipal law that sought to reduce pollution from factory and had permits. But
software office does not emit pollution, or cause nuisance. So no need to consider it factory
under Bombay Municipal Corporation Act. But this case is not under ESI Act or Factories
Act.

Western Outdoor does not refer to a Kerala HC decision where single judge bench held that
software firms come up with algorithms – new formula – that is not manufacturing. There is
transformation but not into article – so intangible that it cannot be considered as
manufacturing. But this was appealed to DB where it was reversed:
Court refused to rely on DV Shetty as there the issue was nuisance-related. They interpreted
in that context and in light of Bombay Municipal Corporation Act. But this is a welfare
legislation.

Even if you agree with Astrovision (2010), what happens to software when there is no
tangible form? Is it not generation of new article? This was question before Western Outdoor.

Para 18 and 19:

They disagree with Seelan Raj.

Eg: there is printing operation with a computer. Because it is being done with computer, there
is exemption as per Seelan Raj. If there is other printing press that is not computerised –
additional manufacturing without use of computer, only then it will be a factory. But
ordinarily, anything that uses computer is not a manufacturing activity due to legislative
exemption. Even if printing operation with computer is manufacturing, it is not a factory as
per Seelan Raj.

Western Outdoor: Literal interpretation: mere installation of computer does not make
something manufacturing, need to independently assess whether there is manufacturing. So if
printing is being done with computer, it can be a manufacturing. But the use of the computer
is not the decisive factor.
Para 20: definition of manufacturing activity is very broad – while the computer activity was
not contemplated at the time of drafting but terms are very broad

Para 24: Online shopping services

Software development as a form of manufacture under ESI Act because it is welfare law.

But this does not answer question under Factories Act. Also, the basis that it is article – is this
problematic?

Social Security Code:

ESI Chapter applicability:

Establishment defined in Bangalore Turf Club.

The whole applicability has been widened.

EPF Act:
Numerical threshold is higher (20) and also not every factory covered

Sub-section 4: can choose to opt in with 2 months notice. NLU-D and NLS opted in.

Section 16 exemption:

Noor Niwas v. Regional Provident Fund

Noor Niwas and Frank Girls Higher Secondary School – are they same – Section 2A:

Court had to examine whether they are same o/w Noor Niwas was not meeting threshold.
Here they emphasise whether they have geographical proximity, the school information was
provided by the principal of other school, the students of one go to the other, parent society is
same. A society that runs 30 schools, seems strange that they have one with only 4 people.
It’s actually a branch of the same school (unity of finance, control ownership, functional
intergality, geographical proximity)

Secondary school while covered by EPF Act – Section 17 has scope for exemption – received
such exemption. Court held that exemption applies only to Frank Sr Secondary. Once Act
applies to Noor Niwas, does not mean that exemption also extends. Noor Niwas is covered by
EPF. Also, Section 17 is not exemption from Act completely, need to have in your scheme.

This principle has been used in lot of other statutes where employers have divided branches –
this is very relevant in determining whether numerical threshold is met or not.

Application of new codes:

Factory as there in Occupational Safety Code and EPF in SS Code. The two explanations to
factory definition have been retained. Structure has remained same change is only with
numerical threshold. This reduces applicability.

Now there are chapter specific numerical tresholds

This way, most industries are not covered by standing orders, contract labour

Kinds of Work:

See these sections:

IDA: very specific kind of work

Payment of Gratuity Act: no restriction – very few LL that covers teachers

ESI Act: in connection with work of factory or establishment and any work incidental or
preliminary to work of establishment – no specific qualification on nature of work. Under
ESI Act, control is NOT important as per statutory definition. Traditionally, degree of control
by principal employer over contract labour is very important. But here, if you work on the
premise of the factory, you are an employee. What is important is that you work on premises
of factory or under supervision of principal employer – so satisfying first condition is
enough. Supervision is not the sole element. So contract labour gets covered under ESI Act.

Here also broad coverage

In some statutes, you have to show employment relationship and show that your nature of
work falls under specified categories and in some, relationship of employment is sufficient.
There are others like POSH Act, where no need for remuneration also – so no need for
relationship of employment. Beyond common law understanding of relationship of
employment.

Under IDA, while the terms are broad, judiciary has interpreted narrowly. Plus, legislature
intention seems to be to cover more as earlier only manual, skilled and unskilled were there,
then more categories added, but judiciary did not expand. Teachers and doctors are skilled
but not under IDA.

Both ESI Act and POSH Act reduce emphasis on control. Control has not been completely
abandoned but they are saying that employment is there even if there is no direct supervision.
The traditional model is there in IDA, where principal employer has to exercise some control
over the work – which may not exist in cases of contract labour. There is progression in some
aspect with each law.

Payment of Gratuity – no need for specific type of work

ESI Act – no need for direct control

POSH Act – no need for remuneration also

RELATIONSHIP OF EMPLOYMENT

[Read Sir’s document for this entire topic]

Dharangadhara Chemical Works v. State of Saurashtra

Status of agariyas – assigned patta for salt production – work with the family, engaged other
workers also, paid on piece work basis (based on quantity, no fixed amount), product
supervision, no fixed time

Whether this was a relationship of employment?

Control – 

 product supervision, 
 Salt Superintendent monitors the density of water, the pans, etc

Legal standard of employment:

1. Evidence of right of control in respect of manner of work to be done – Court refers to

this in para 15 – which talks about control and power of employer
2. Distinction between contract of service and contract for service 
Short v J&W Henderson – expands on the definition of control – 

a. the master's power of selection of his servant,

b. the payment of wages or other remuneration, 
c. the master's right to control the method of doing the work, and 
d. the master's right of suspension or dismissal, but observed

Cassidy v Ministry of Health – Person employed as part of a business and their work is an
integral part of the business

Test is the supervision and control over manner of work – but what is a sufficient degree of
control depends on the industry/business in question

Employer-employee relationship is a finding of fact – scope of review of higher courts is

limited 

Argument – that since family / other workers could be engaged, and the agariyas themselves
need not be the one doing the work – so, independent contractor

Held: A workman doesn’t cease to be one simply because other persons work along with him
and they are controlled and paid by him – determining factor on whether they are IC is
whether they have agreed to work personally or not

Court: Although agariyas do atypical work, because there is some control, they are
employees 

The logical extension of this is that the labourers hired by agariyas are also employees of the
Company – but there is ambiguity about this, Court doesn’t go into this 

One approach – agariyas are employees of the company, so control exercised by agariyas
over labourers are essentially by the company

Another – that agariyas exercise control, not company, so they are employees of agariyas

If you apply a liberalised standard of control then a lot of the rights of IDA may not strictly
apply or may lead to practical difficulties – like fixed hours/days of work

Diwan Mohideen: Trilateral relationship – whether the intermediary is an independent actor

or whether they are a sham/camouflage/employee or the principal employee – product
supervision would be sufficient for employment

Shankar Balaji: Product control is insufficient, need control over manner of work
Birdichand Sharma: Refers to – people could come and go as and when they liked, no fixed
timings, could be removed if absent for 8 days | SC: Beedi industry – no need constant
supervision since the process wasn’t very complex

Hussanbhai v. Alath Factory

Economic control test – economic control over workers’ subsistence, skill, and continued
employment

Lifted the veil to find out whether – work done by workmen was an integral part of industry;
raw material, factory premises and equipment belonged to Management, workmen broadly
under control of Management, defective articles directed to management

Silver Jubilee v. Chief Inspector

MULTIFACTORIAL/BALANCING TEST

Explicitly rejects the use of control test alone – developed in a much older era when the
employer had technical expertise – now, employers may not always exercise control over
manner of work, you often have special supervisory/managerial roles

Para 27 – It reflects a state of society where the ownership of means of production coincided
with the profession of technical knowledge and skill in 

Organisational test / part and parcel test – test of being a servant doesn’t rest on submission to
orders but rather on whether a person is part and parcel of an organisation

Montreal Locomotive – 1. Control; 2. Ownership of tools; 3. Chance of profit; 4. Risk of loss,

and that control is not always conclusive

US v Silk – Matter of economic reality – degrees of control, opportunities of profit or loss,

investment in facilities, permanency of relations, skill required in the claimed independent
operation

Para 29 – can’t rely on one singular test – take all factors together – exercise in balancing
between factors that suggest employment and those that don’t and decide

Facts of this case – paid on piece rate basis, no fixed hours of work, if instructions not
followed they could be removed, some people had WFH option, right to reject

Para 31 - The fact that generally the workers attend the shop which belongs to the employer
and work there, on the machines, also belonging to him, is a relevant factor. When the
services are performed generally in the employer's premises, this is some indication that the
contract is a contract of service.

Also looked at the fact that the employer can reject end product

This case reflects the global shift towards a more multifactorial test

See: Table on page 55 in sir’s doc for an overview of tests in diff jurisdictions 

Balwant Rai Saluja v. Air India

COMPLETE CONTROL TEST

Refers to Bengal Nagpur which came after Silver Jubilee – speaks about control as economic
control (to some extent) and control and supervision (largely this)

Saraspur – not referred to because that case did not look at defn of workmen, but instead
looked at a Bombay Act where employee was defined – not a general rule; similarly MMR
Khan was also not referred to 

S.46 of Factories Act – Even if you have a statutory obligation under this provision, doesn’t
mean there will be a relationship of employment – they are only employees for the purpose of
that section

Lifting corporate veil – can only be done if corporate structure has been used to perpetuate
illegality or evade legal responsibility – no such impropriety done here

Arguing to be direct employees because of additional benefits – like pension, job security,
health-related benefits 

Whether Air India exercises control over HCI – not a lot of control found

Just because principal employer exercises some control is not sufficient, need to look at who
exercises primary control

Para 81 – standard used by court – nature of control and whether it is absolute or not – Air
India did have some control, but Court says it’s not control over appointment, dismissal,
salaries

This shows that many courts are still reluctant to go beyond control (similar in NALCO and
AAI cases), but recognising that control has its limitations they have made a distinction
between ultimate, absolute, effective, ordinary and holistic control
Sushilaben Indravadan v. New India Assurance
Case under insurance law, not labour law

Nilgiri Cooperative – Complete admin control test – who appoints; who pays salary; who can
dismiss; how long does alternative service last; how much control and supervision; nature of
job (professional or skilled); nature of establishment; right to reject

Doesn’t talk about Balwant Saluja or control test – instead go the balancing test way –
discusses factors on both sides (employee v contractor) and judges based on context

para 25 – differentiates between contract of service and contract for service

Bharat Heavy Electricals v. Mahendra Prasad Jakhmola

Read from Sir’s document

Zomato/Uber Contracts
Zomato:

 liability with “partners”

 vehicles owned by “partners”
 contract for service
 no fixed hours or payment

Uber:

 ride charges fixed by company

 payment through company
 control by the app
 follow instructions of company
 no direct negotiation with passengers
 ratings as a system of control

UK Case – Uber v Aslam – Held that Uber drivers are workers

Deliveroo (parallel to Zomato) – Netherlands held that they are employees, UK held that they
are not

Intermediate category – “dependent entrepreneurs” – coined in Canada in 1930s – they get

some rights, though not all, some protection

Labour Code of Canada – “dependent contractors” – perform work or services, there is

economic dependence – whether or not under a contract
Employment Rights Act 1996 – distinguish between employee and workers – gives some
rights to workers also 

Uber drivers undertake to personally work – Uber isn’t their customer – hence driver is a
worker

US – some states have ABC test – Dynamic Operations West v Superior Court – Presumption
is that they are employees; Independent Contractors only when all of the following three
conditions are met:

Someone is independent contractor only when three factors are met

(A) that “the individual is free from control and direction in connection with the performance
of the service, both under his contract for the performance of service and in fact,” 
(B) that “the service is performed outside the usual course of the business of the putative
employer,” AND, 
(C) that “the individual is customarily engaged in an independently established trade,
occupation, profession or business of the same nature as that involved in the service
performed.” 

Presumption of employee - more  gig workers can be classified employee

Critique that it is too wide 

‘WORKMEN’ – INDUSTRIAL DISPUTES ACT

 Is the list illustrative or exhaustive

 What does each term mean
 How to account for multiple functions
HR Adhyanthaya v. Sandoz
In May and Baker - sales rep not workman because the clerical work was only small part of
their work

In Burma Shell Oil – sales rep – argued that they do technical work (this was added in an
amendment) but the court held that activities are not mainly clerical or manual. Their work
was sales, while they provided some advisory services, they don’t perform technical work.
Just having and using technical knowledge (being qualified engineers) does not turn their
work into technical nature unless the technical expertise is applied to the work.

Also argued that all people are workmen unless they fall in the 4 exceptions – contention
rejected. This means that the list is exhaustive. Have to check whether you fit in one of the
listed terms

This happens in May and Baker, Western India, and Burmah Shell.

In SK Verma – take a broad approach as it is a welfare legislation, see whether they are
worker side or manager side so if you don’t fall under exception, you are worker – list is
illustrative. Ved Prakash Gupta also took this line.

Sundarambal – list is exhaustive, relied on May and Baker. If you allow for the list to be
illustrative, then the list itself is redundant. If the list were only illustrative, what was the need
for amendment to add technical and supervisory, and putting comma between skilled and
unskilled – this means list has some weight.

What does Adhyanthaya say?

They say it is exhaustive – para 25. They use the May and Baker line. Rationale for this: o/w
list would be redundant. Simply said that SK Verma and those lines were based on facts of
those cases, cannot be generally applied. This approach has been followed after that also.

How to draw boundary between these terms:

Supervisory and managerial:

SK Verma v. Mahesh:

LIC Development Officer – looked at job description – no subordinate employees, no

supervisory power over workers, no authority to bind corporation, no power to appoint
people, no power to exercise disciplinary control.
This shows there is no administrative or managerial work.

But here, the test is if you don’t fall under exception, you are covered by Act. So they didn’t
check if Development Officers fit the list and automatically said they are workmen.

In the supervisory exception – there is a ceiling limit. Further, if they perform

managerial/administrative worker, then not supervisor. Ceiling now is Rs 10,000 p/m. Mostly
there is no person under this limit – so not workmen.

Ved Prakash Gupta

Security inspector –

Substantial nature of work was not managerial or supervisory – while he was taking
attendance and allotting torches, he could not hire or fire them. No power to appoint, dismiss,
exercise disciplinary control, he himself worked under other officers. Primary work was same
as other security inspectors.

Middle level supervisors may not have power to appoint but they have disciplining power.

SK Maini v. CaronaSahu
He was a shop manager. Labour Court said his work is clerical. HC said administrative and
managerial.
This was his job description

All these suggest that he is managerial worker or supervisory worker, definitely not clerical.

Legal standard of court – para 11 – looked at principal duties. Designation is not decisive,
look at nature of work.

Used Llyod’s Bank v. Panna Lal Gupta – has power to act independently without directions
from his superiors.

Supervisors have to get sanction while managers can work independently – this is the
boundary test.

Signing off documents on behalf of employer is also a managerial power – should be able to
sign on statutory forms. Supervisors don’t have this power.
Power of appointment and discharge is not invested in all managers. So it’s not a decisive test
to determine whether someone is a manager.

Adhyanthaya

Interpretation of each of the terms in S.2(s)

Employees in question - Medical sales representatives
Other Act referred to – Sales Promotion Employees Act – there was a wage ceiling applicable
to this Act which left the employee in this case outside the purview of the Act – this is why
he wanted to claim under ID Act

Manual work – Work involving physical exertion

Unskilled – no special expertise – work anyone can perform

Skilled –

If you have professional skill or expertise, something that requires some training –
compounders, doctors, carpenters, ironsmith, masons

Operational – not defined really

Clerical- monotonous repetitive work without initiative or innovation – stenographer, ledger,

etc

Technical work – which requires specific scientific training and knowledge – mechanical
engineers, chemists, etc. But mere training is not enough – Burma Shell

Mere operation of a machine (switch on or off) – this is not scientific knowledge or expertise
– not technical. Should involve special training or scientific knowledge.

In Adhyantha – argued that consider medical reps as doing skilled work - interpret skilled
ejusdem generis (common genre that qualifies list – so interpret the broad term in the list in
light of the genre) – skilled manual or skilled non-manual work which is of a genre that fits
with the definition

What is the specific criteria for ejusdem generis – what is the common genre – do not say
what this is. Can a common genre be determined?

Snooty perception of what is skilled work – so excluding sales rep. so then why not include it
in unskilled work?

Argument on operational work in para 37:

But they don’t say what is the marker for operational work.

For skilled and operational work – they say what it is not but don’t actually define it.

Is ejusdem generis even applicable here, considering there is no open ended term or common
genre.

Bharat Bhawan Trust v. Artists Association

Not an industry as per BWSSB – as they cannot undertake their activity at such a large scale.
Even though BWSSB has wide definition, it is not industry – it does not meet the employer
employee cooperation element of the triple test – not large scale enough for this. Also there is
no systematic activity of production of service.

They also say arts has creativity and freedom of expression but industry has lot of organised
work.

They read BWSSB in a very different manner. Bharat Bhawan is performs service. It includes
entertainment – Bangalore Turf Club.

Bharat Bhawan is providing some infrastructure to artists. Rejected direct cooperation

standard in Solicitors case.
Even assuming they are industry – are artists workmen?

No – they are creative artists – relying on their skills and artistic judgment and ability and
talent

So aren’t they skilled workers?

Court rejects this possibility – court says artist must be distinguished from skilled “manual”
worker – this takes back to the pre-amendment standard. They cite Adhyanthaya for this.
They read skilled and manual together.

Also, nobody gives them work – the artists decide a lot of things for themselves – there is a
fair degree of autonomy and freedom. But this means that there is no relationship of
employment at all.

Court focuses on types of work they do and say that artists don’t fit – so need to critique on
this ground.

TP Srivastava – advertising executive carries out creative work so court held that they are not
skilled workers.

Court is reading skilled along with manual.

Sundarambal case:

Their clerical work is marginal to their main work. This judgment came at a time when
skilled was not a category by itself but was read with manual. But by the time decision came,
amendment was in force.

Sundarambal has continued to date, teachers not considered workmen.

Parliament keeps expanding terms but court does not account for these changes in their
judgments
Muir Mills v. Swayam Prakash Srivastava
Respondent is a legal officer

Clerical work defined in Sonepat Cooperative Sugar Mills – clerical work is stereotypical
work, without power of creativity.

They hold that work of legal assistant not at same level – they exercise creative thinking

Argument on supervisory work – but court does not focus on this. They say that he supervises
court cases so he is supervising. But the meaning is to supervise other people.

Is this skilled work? Court doesn’t go into it

They instead look at occupation vs profession

Professional regulator, specialised knowledge, training, code of ethics, not meant for money
but some higher calling – these are distinguishing characteristics of profession – but how
does this matter to nature of work?

They don’t use Sundarambal but seems like they implicitly agree with the skilled manual
ruling of this case.

At a threshold level, lawyer or legal officer is not workman as they are not involved in
occupation but a profession. Professional can never be a workman under any law.

What is the basis for distinguishing profession and occupation:

 Degree of autonomy is greater in profession – but this is traditional test for employment –
so it would be used to answer whether the person Is an employee
Using the May and Baker logic, since there is a list of exceptions, why go beyond? Also, till
where does this exception extend? CAs, architects? They all have their regulators and
specialised regulators

ESIC Medical Officers v. ESIC

Also use the profession vs occupation difference. Use the higher calling reason in
Sundarambal. Combine both and say doctors are professionals who are working to serve
others.

In Section 2(s): one of the elements is relationship of employment. Most apprentices are
registered under Apprenticeship Act 1961 and they are excluded from definition. But of they
are not registered, then IDA covers them

‘EMPLOYEE’ UNDER ESI ACT

Royal Talkies v. ESIC
Section 2(9) of ESI Act – no specific type of work – but have to be employed in connection
with work of factory or establishment –

 People directly employed for work preliminary or incidental or connected with function
of factory
 Hired thru intermediary – work on premises of factory, work under supervision of
employer or agent, doing work that is work of the factory or is preliminary or incidental
or connected to the work of the factory or establishment

The inclusive bit is in response to HC judgments. Given that it is social insurance law, the
scope of ESI Act is very broad. Administrative work is specifically excluded from IDA but
included under ESI.
The ESI Act also has many exceptions –

There is a wage ceiling that can be determined by the CG – so can exclude lot of people.
Currently, the ceiling is Rs 21,000.

Royal Talkies v. ESIC

Theatres with canteen and cycle stall run by contractors. Are the employee of the canteen and
cycle standard considered as employees within the law? They are not directly employed but
hired by contractors. Clearly falls under clause 2.

The court said yes they are included.

Is the test control by principal employer?

They look at the incidental function component. The theatre could’ve survived without
canteen or cycle stand. But the test is whether they are employed in connection with the
factory or establishment. Does it have some nexus – paragraph 13. Need not be integral,
central, etc. Cannot be altogether irrelevant, like an architect firm at cinema.

Para 17: they acknowledge that this is not a case under clause 1.

Under clause 1, the workers can be home-based also because no requirement to work on
factory premise.

3 requirements under clause 2:

Ordinarily employed

Preliminary, incidental or connected work – need not be necessary or integral but should not
be irrelevant

Work on the premises or work under the supervision of employer or his agent
Hasan Cooperative v. ESIC
Milk cooperatives hired contractors to transport milk. Are the drivers employees of the
cooperative?

Court says no as they fall under clause 2 but premises and control requirements not satisfied.
Also, no control/supervision over drivers. The elements of control were with the contractor –
removing people when requested by cooperative, hiring people, etc

Working on premises does not mean entry or exit, which is what happened here.

Test is consistency of vigil – employer should be able to immediately issue remedial

directions and direct disciplinary control to ensure that work is being done satisfactorily.
There is no direct disciplinary control as the contractor was the one who was doing it, the
cooperative could only request.

Product supervision as a test for control – there in Dharangadhara – not there here.

Agent is different from independent contractor. With independent contractor, there is

business arrangement to do certain work. But agent is a replacement of the employer himself.

Theres no absolute control as required in Balwant Saluja. Consistency of vigil requires some
control but it is not absolute requirement. More relaxed, liberal standard under ESI Act.

Fundamentally, when we talk of ESI Act, there is departure in the way employment is
understood:

 No need to work on premises if there is direct employment

 Work need not be central
 Supervision not needed when you work on premises
 When you don’t work on premises, only then need to show control, but even this is not
absolute control.

Royal Western Turf Club v. ESIC

Are casual workers covered by the ESI Act?

Casual workers – not permanent employees, work only on some days. In this case, it was
only on the race days.

What is ESI scheme and why would fitting causal working in this scheme be difficult?

Usually works on the basis of monthly contribution. So how does this work for casual
workers?

Para 5: they say that there is nothing to exclude casual workers from the definition of
employee

There is no intermediary, so they fall under clause 1.

Section 39: model of ESI Act

They look at sub-section (4): envisages possibility of being employed only for part of wage
period or of being employed with two or more people

Turf club relied on Section 2(22) for definition of wages and wage period in Section 2(23) –
nothing specific in these provisions which provide for exclusion of casual workers. They are
both very general clauses and don’t say anything about mandatory monthly payments

Contribution period – maximum of 6 months but no minimum. ESI has contribution period
from April to Sept and Oct to March. If they cross wage ceiling in middle of contribution
period, they remain employee till end of the period. Lot of the schemes framed under the Act
are based on whether you’ve completed a contribution period and how many days you have
worked in the contribution period.

Reference to Mad HC decision – ESI Corp v. Gnanambikai Mills – exclusion of casual

workers from some schemes – sickness benefits need the worker to work for certain number
of days. But this cannot be ground for complete exclusion as there are other benefits like
disablement benefits which do not require minimum time.
Differentiate from Premium Clay Products – here the workers were employed sporadically
but in this case, the workers were employed on some days perennially. They could also go
and work for another person on the same day.

But is the difference based on something?

Even if they are doing sporadic work, the Act does not exclude them. Even if there is
distinction between sporadic and perennial – where to draw the line?

But should the employer be asked to keep track of these people and contribute to their ESI?

Instead of saying sporadic work, should have looked at relationship of employment and said
that there is no control for the employer-employee relationship.

EPF ACT

Any kind of work

In or in connection with work of establishment – so are out-workers covered?

PF v. Godavari Garments
Women workers would make garments for respondent. They would get material from the
respondent, used their own stitching machine, and then made the garment by working at their
homes. No specific hours of work. They were paid per piece.

In terms of control: paras 5 and 6

Definition does not only talk of people who work in the establishments

Can be in the establishment or can be in connection with work of establishment – envisages

homebased workers

Indirectly engaged employees also covered

The definition is inclusive

Refers to Silver Jubilee – right to reject garments is indicative of control.

Why does control matter: Shining Tailor case:

Shining Tailor also talks about right to reject, determining whether they give you work in the
future. No need for traditional ideas of control. Control over end product is enough.

PM Patel – homebased beedi rolling workers are included:

Does not have to be in factory, can be connected to the work.

Conflict with Dharangadhara – because there they say personal service is there even If you
hire someone else. But here they say it doesn’t matter. The outcome is the same.

Employer tried to use Subhash Chandra Bose to say supervision not there. Court says that
was under ESI Act where supervision is needed. But here, no such requirement. Product
control is enough.

Hasan Cooperative referred to Subhash Chandra Bose and used this supervision requirement.

While both statutes are very wide in scope, they have subtle differences.
 FACTORIES ACT

Rohtas Industries v. Ramlakhan Singh

Whether the respondent is a worker under the Act. The appellant runs a paper factory out of
raw material like bamboo, cotton rags, etc. This person is the sectional officer of the paper
waste department. They fired him for divulging secret info – one month wages and no
enquiry. He said no wages were given. The case emerged from Bihar Shops and
Establishments Act – worker is defined as anyone excluded from Factories Act. These are
mutually exclusive statutes.

There is reference to State of UP v. MP Singh – they said that if you read worker definition
and factory definition, It is seen that people need to work on the premises of the factory. But
the definition of worker does not say premises or precinct. It does not even use the word
‘factory’. Here, the job was to ensure sugarcane is grown and available to the factory – so he
is working outside and not covered.

The court red down the definition of worker. The nature of regulation in the Factories Act is
about safety and decent conditions at the workplace. They don’t apply when you talk of an
out-worker. But what about conditions on number of hours, leave, holidays?

Ram Lakhan does not overrule but it distinguishes:

It distinguishes on the ground that he deals with the subject of the manufacturing process – so
he is defo a worker.

Look at definitions comparison in the word doc shared by Sir

EMPLOYER UNDER IDA

Province of Bombay v. Western India Automobiles Association
This is under IDA. The respondent argued that it does not fall within the definition of
employer as it is neither CG or SG or local authority.

They reason that exhaustiveness of definition is wrt the enumerated categories but does not
limit the definition itself.

They look at Trade Disputes Act 1929, predecessor of IDA, and say that here, both private
and public industries are covered. There is no legislative policy shift to remove private
industries. The aim of the definition is to clarify who within the CG, SG, or local authority
would be responsible. It is not implied that these are the only establishments covered.

MODULE 4
Benjamin Levin: Criminal Labour Law
Unions increase worker’s bargaining power and address issue of asymmetry. Collective
bargaining as an institution had been a natural response in industrialising spaces.

Criminalisation of labour unions in America but it’s a common history in all common law
countries. First intersection between law and trade union was criminalisation. Collectivisation
was seen as threat to the monarch and democratic system and market order.

But by mid-19th C, no direct criminalisation. How else did criminal laws cover unions?

Labour conspiracy theory:

State of outlaw to state of semi-outlawry

Claims under private laws – tort suits. When there was an injunctive claim filed, it gave
power to police and military. So not a direct criminal sanction but using police power thru
private law. Also used criminal conspiracy to outlaw strikes, picketing, collective action, etc
– criminal charge of conspiracy. The victim of crime was employer. So had to prove harm to
employer, no longer crime against just monarch.

In 19th C England, there was a gradual rise of economic torts. By late 19 th C, it became quite
clear that worker mobilisation needs to be allowed. Creates a safety valve, gives legitimate
place for workers to voice concerns, workers had enough political influence to push for laws
that allowed their unionisation.

IPC:

No mandate to register Trade Unions Act, no need for formal registration. From a practical
standpoint, important to get registered as o/w cannot carry on trade union activities.

this is an immunity given to trade unions under the Act. Even S.18. if you are unregistered,
don’t get these immunities. This is because inducement to break a contract is a tort. Every
strike or picketing involves interference with contract and to harm the employer so that he
negotiates. All these constitute torts.

KR Shyam Sundar
Association of unions and political parties.

 Union interest tied to party interest

 If they are associated with ruling party, their activities could be quite muted
 If they are associated with opposition, their activities just become bashing ruling party
 Ideology of the party
 Splintering of unions: due to association with political parties, there is divide. This creates
issues as there can be conflict on demands, no solidarity. Also, transaction costs increase
as with multiple unions, have to engage with each of them. Recognition of unions by
organisations: employers can choose to recognise the least problematic one and maybe
leave out those with more marginalised people. Other countries have laws on recognition
but not India
 State has interventionist role in Industrial relations in India – due to close political ties
between unions and parties.

In India, degree of unionism is fairly limited.

Types of unions:

In India, industry level union is prominent (both national and regional) – eg: bank employees,
textile workers, bidi workers in Maharashtra, etc. But now there is increasing presence of
plant/enterprise level unions. This is in response to political nature of industrial unions. Plant
level unions can take decisions better but have lower bargaining power than industry level
union. Also resources are lesser at plant level – monetary, legal.

Economic torts law made every act of collectivisation actionable.

The provisos added in 2001, wef 2002.

Only restriction on formation is numerical strength.

10% or 100 workmen of industry or enterprise.

Eg: if there are 364 workers in a Union: 37 (10%)

But if there are 15922 workers: then 100 workers needed

But if there are 37 workers, then need 7 (2nd proviso)

Trade dispute defined in S.2(g):

Workmen also defined – but will this definition apply to whole Act or only S.2(g).

TTD v. Commissioner of Labour (AP HC and SC)

Mad HC in Rangaswamy v. Registrar of Trade Unions said that defn in S.2(g) is meant only
to interpret trade dispute.

AP HC: TTD v. Commissioner of Labour: even tho the expression is used only in S.2(g), they
can use it to interpret other parts of the Act as there is no other definition of workmen in the
Act.

Even if you assume that workmen mean people employed in trade or industry, how to
interpret “industry”?

Mad HC in Registrar v. Government Press Employees Union 1975: Trade Disputes Act came
before IDA, IDA defn is very broad, cannot use the same definition.
But AP HC said that IDA applies, used those cases and said that this is an industry. The
reason was that TUA did not have its own defn of industry.

SC: TTD v. Commissioner of Labour: does not matter whether industry or not, all that matters
is relationship of employment, which exists in this case.

Any group of employees which come together to regulate employer-employee relations or

relations between workmen, then they would be eligible for registration – whether they are an
industry or not is irrelevant
Para 2 – Court says there were no grounds under S.10 for cancellation of certificate of
registration were available to the employer/appellant – This can be considered as ratio, and
the rest of the judgement (including the point on irrelevance of whether or not it’s an
industry) can be considered obiter
But, the second order issued by the same bench on the same day, they say in para 1 that they
held that the workmen are entitled to get registered, irrespective of whether they are in an
industry – so hard to say that this was obiter
Therefore, SC held that any group of employees can obtain registration

Domestic workers can now register themselves in a union, because no industry requirement.
Similar for informal workers who don’t work in “industry”.

Govt Toolroom v. Asst Commissioner

Registration refused as the people were workmen. Karnataka HC says look at purpose of
union, even tho they are not workmen under IDA, they are eligible for registration. They refer
to TTD SC decision

Because HC relied on SC TTD, did not have to look at whether this is sovereign function or
not.

Section 6: provisions on which TU must have its own rules. But does not say anything on
content of the rules. Considerable autonomy given.

Section 10 – Cancellation of registration – Provides grounds for cancellation; Also provides

procedural safeguards for cancellation
RG D’Souza v. Poona Employees Union
Claimed that the registration was obtained by mistake, as they failed to specify which
industry they are connected to.

Under Section 10, the application for cancellation can be filed by a trade union or the
Registrar can take suo motu action. Here, the applicant is a former member, court says not
allowed. TTD also says the same (there it was employer, here former member) but court does
not go into the rationale of it.

On the main substantive ground: para 16 onwards:

Section 10 implies that there must be a deliberate fraud by the union. If the registrar was not
able to notice omissions and mistakenly gave the registration, that cannot be corrected under
Section 10. Section 10 only corrects fraud or deliberate mistake by the union itself.

They failed to give which industry. But this could mean that the union is connected with all
industries. The term used is “any” and court says that it means all.

This also applies to older unions but the requirements in this case came in 2002 but union
was registered much before, so those requirements not needed for reg itself.

The any and all requirement is imp here because 9A applies to older unions also.

argued non-compliance with certain mandatory requirements of registration – failed to

specify industry with which they are connected, didn’t meet numerical requirement – so 10(b)
was argued to be applicable

Whether application of third party would be maintainable? – No, no scope for complaint by
third party – can only be Registrar suo moto or by Trade Union, can’t be by a former member
/ employer / other third party

On failure to meet numerical requirement, and to mention industry – Para 17 – Requirement

of S.4 not applicable in 1986 (came into force in 2002)

Mistake on part of Registrar can’t result in the use of S.10 power as correctional – need to use
appellate powers or writ jurisdiction. Section 10 cannot be used for non-application of mind
by the Registrar himself. Then, cannot use this power. Can only use when there is deliberate
fraud on part of trade union.

Section 11 however does not allow for appeal on grant of registration but only for withdrawal
and refusal. So what about refusal to withdraw? Cases do not allow for this to be brought
within the scope of S.11.

Writ petition – there may be a possibility

Videocon Industries v. VV Pandya:Guj HC: employer filed writ for cancelling trade union
registration, Guj HC did not allow as then employer could keep interfering and undermine
collective bargaining. However, an aggrieved union can file a writ seeking cancellation.
Aggrieved union not only means the union whose registration is to be cancelled but also
some other union.

Solapur District Central Cooperative Bank Employees Union v. Addl Labour Commissioner:
Bom HC: registrar can act based on info received by it, suo motu. Impractical that only union
can file, employer should also have some recourse.

Now under IRC, S.9(5):

Here, fraud or mistake has not been explicitly mentioned here. Contravention of provisions
can cover this but there is no special ground for fraud.

Now, since Registrar suo motu power is under the Code, the other union need not file a WP
as under Videocon. If registrar does not act, then can use WP. The strict position in TTD and
RG D’Souza that no third party can file is now changed.
RG D’Souza position was that you cannot even go to the Registrar because the Registrar must
act suo motu.

Industrial Relations Code: Chapter III deals with TU Act.

Section 2 of IRC:

The IRC is going wider than current position. but now, what about sovereign industry
workers? Going back to TTD case AP HC position.

So now cases like Govt Tool Room – these workers will not be able to be registered.

Cancellation of registration: S.10 gives grounds – one is application of TU, if Registrar is

satisfied that certificate has been obtained by fraud, rescinding a rule mandatory under S.6,
violating a mandatory condition, numbers have gone below threshold, TU violates rules, if
there is mistake.

Section 21 – Rights of minors – 15+ y/o can be members of trade unions – subject to TU
rules. If membership rules do not allow, then can’t become. S.21 is more of an enabling
provision, that allows for TU rules to this effect.

Unions have autonomy to determine who becomes their member.

Damyanti Naranga v. UoI 1971:

Freedom of association is not only freedom to associate but also who you associate with.

Charu Khurana v. Union of India

She was denied membership of Cine Costume Make-up Artists and Hair Dressers
Association. She was denied membership on the ground that she was a woman. Women could
only become hairdresser and men could become only makeup artists.

Such a restriction violates many constitutional provisions – Art 14, 15, 19(1)(g), 21
Can TU rules be violative of Constitution, even tho TU is not ‘State’ under Article 12. The
rules are supposed to formulated under the trade union and approved by the Registrar. The
rules draw authority thru registration.

They also talk of Section 21 and say that qualification is only based on age, not gender. So
such disqualification cannot be allowed.

But Section 21 is more of an enabling provision. Also even if TU is registered, unclear how
Constitution applies. Companies, factories, shops are all registered bodies. But should
Constitution start applying to all these bodies just because they are state? collapses the
difference between State and non-State. Could have used the Equal Remuneration Act
principles instead for a better doctrinal backing.

Here, even after Charu Khurana won the case, she faced backlash from the TU itself as they
took away big films from her. Shows gender discrimination in TU, how TU can disempower
workers, favourable verdict not protecting worker, lack of worker protection in TU also, etc.

This case opens space for horizontal application of FR.

So what about Damyanti Naranga:

Can say that Charu Khurana ratio based on FR and not Section 21, so can still determine
with whom you want to associate.

IRC does not take position on this.

Since child labour law says 14 yrs for non-hazardous work, Section 21 of IRC takes this
position.

Section 21A however says that need to be 18 for being office bearer of TU.
TTD SC case says that whether or not they are part of industry is irrelevant. But Section 22
needs certain proportion to be part of industry wrt office bearers. So can still reconcile these
decisions maybe.

In some pro-worker cases, SG was trying to use Section 17 of TU Act as complete immunity.
Jay Workers came when the first left-leaning govt was elected.

Jay Engineering Works v. State of WB

When there was gherao, police did not act. The SG issued an executive order that the police
law and criminal law does not apply to the industrial management.

They also gherao-ed the Cal HC and CJ had to call the CM for help.

Legality of gherao:

Gherao is itself not an offence, can have different forms of it. When gherao has wrongful
confinement, which usually follows, then gherao is illegal. It is usually accompanied by
offences and hence, becomes illegal.

Section 17 also says immunity will be given except when offence is committed.

Gherao is not an offence under IPC but it involves different forms of offences under IPC.
Section 17 does not provide immunity against all offences, but only under Sections 120A and
120B when the action is in furtherance of object u/s 15 of TU Act. If agreement is to commit
offence, 120A and 120B will again be applicable. If part of action some offences are
committed, then not everyone can be held liable under Section 120A and 120B.

Section 18 is specific to conditions of trade dispute. Section 15 is broader, includes legal

proceedings also. Consequently, Section 17 is also wider.
Court says that section 17 is not a blanket immunity. It prevents all strikes from becoming
illegal. when the plan is to commit offence in form of vandalism, destruction of property, fire,
etc

The court also said that Ministry of Labour does not have power to prevent the application of
criminal laws. Use Separation of Powers. The legislature has made laws and executive cannot
go against those and there is no statutory power to do so. So the circular is not legal. Police
failed in its duty to intervene, it should have followed IPC, CrPC, Police Act.

Section 17 does not create any exception or spl mechanism for criminal offences.

Section 18 is not a blanket immunity, it is a limited immunity against economic torts.

Difference between Section 18(1) and 18(2): 18(2) applies only in case one person is acting,
without the knowledge or contrary to the instruction of the union. Then TU will not be
vicariously liable. Is 18(2) a general immunity or specific to 18(1) torts? 18(2) says any
tortious activity, so applicable to all torts.

Recognition of Trade Unions (EPW Article)

What is a recognised union?

The recognised union will be the sole bargaining agent with the management. Other unions
will not be able to bargain.

In India, no central law on recognition. SGs have some laws. Reason:

 Debates within Congress on voluntarism (Gandhi’s notion of trust between management

and unions and unions themselves) vs mandatory recognition. Voluntary codes on
recognition – Code on Discipline.
 Even without strong faith in voluntarism, there is obstacle to mandatory recognition. First
NLC called for recognition. But unclear on how it would operate.
 How to ensure unions that get recognised are representative enough? Leadership of TU
has been Brahmins and forward caste men. Representativeness of union has been
questioned. As a matter of compromise, the laws provide for criteria in terms of numbers.
Even if we use numbers (whoever has most numbers), how to determine the number? Do
we go for verification of membership or do we go with secret ballot?
Workers are often members of multiple unions. Membership rolls are not monitored or
regularly updated. So using membership as criteria is not a good idea.
Alternative is to have secret ballot: opposition to this also:
 Will go to court even after election
 Voter list is unclear as rolls not maintained – so question of who can vote

Balmer Lawrie Workers Union v. Balmer Lawrie

Non-members of recognised union are still being required to contribute to the recognised
union. Argued that this violates freedom to form association as now that are being compelled
to join an association. The appellant here is an unrecognised minority union.

AP HC case: every school teacher had to be part of association that AP govt set up. AP HC
held that cannot compel people to be part of association.

The rights of other unions being denied as only one TU is being recognised.

Response by SC:

Section 20: they clearly imposed disqualification on non-recognised unions:

 Employees could not be represented by them

 Cannot nominate members to Works Committee
These are major disqualifications.
Is there right to be recognised as part of right to association?
Court rejects this argument.
Para 19:
The non-recognised union’s existence, freedom of speech etc are not violated due to
recognition of one union only. Recognition by employer is not implicit in freedom to form
association. Freedom of association is still there as they can still become a union and register
themselves.
Para 20 – Can’t say unrecognised union has no rights at all
Para 18 – You are not compelled to join the recognised unions; works individually can also
go under IDA and not necessarily through recognised union
Para 30 – Anyways a non-member of recognised union can go through his own union (is no
recognised) so you don’t have to join the recognised union as non-recognised union still has
bargaining power in limited spaces
Court also says when deal is settled by recognised unions it would apply to all workers,
whether they are members or not – However, sir says considering diff in workers, maybe
settlement by one union may not always be helpful
So no compulsion to join non-recognised union – you still have rights even when not part of
recognised union
Para 29 – Recognition constitutionality – Court keep this question open

Recognition in IRC 2020

Talks of a negotiating council but does not lay down its powers – rules would decide this

Special rights to NCs only in arbitration agreement and in consultation on Draft Standing
Orders. Sir says that first set of rules on IRC doesn’t have anything specific wrt powers of
NU/NC so maybe still no recognition actually, and only a cosmetic exercise. But, at least now
we have a central law that talks of recognition of negotiating union or council

Section 14 – Negotiating Union – special rights have only been given for:

 arbitration agreement – agreement has to be done with NU/NC

 consultation on draft standing orders – NU/NC has to be consulted

This seems more like a cosmetic exercise – This as well as Draft Rules are largely silent on
significant powers of NU/NC – very rudimentary legal framework, so we’ll have to see how
it develops and evolves over the years

Section 27 – Central/State Govts can recognise certain Trade Unions as Central/State Trade
Union – Doesn’t say anything about what the privilege is of being such a body, no precise
statutory rights given

Voluntary Code of Discipline by the Indian Labour Conference (those not governed by state
laws – like central govt establishment)

If recognition is granted and then withdrawn, it must be in accordance with PNJ

Southern Railway Mazdoor Union v Southern Railway – Grant of recognition and

continuation is discretion of govt, but once granted can’t be withdrawn without due cause,
opportunity to be heard / show cause

TN Electricity Board – Withdrawal of recognition does affect rights of workers – so

withdrawal must be with proper reasons

North East Frontier Railway Mazdoor Union v General Manager – Though a labour union
has no fundamental right to recognition by the employer, still recognition once obtained by it
in accordance with the relevant rules becomes its "life-blood and gets integrated into its very
existence. Therefore, they acquire a statutory status

Traditional Position: A.C. Mukherjee v. Union of India, 76 C.W.N. 208, (1972) 2 LLJ
297(CAL)

The order of derecognition does not infringe the fundamental right guaranteed under Art.
19(1)(c) of the Constitution. Of course, this has been laid down by the decisions of the
Supreme Court we have already referred to… Recognition or derecognition of a union, being
a matter of private arrangement under the code of discipline which has no statutory force
whatsoever, cannot confer on the appellants either individually or in a representative capacity
the right to ask for recognition, or to complain against derecognition, of the union.
Recognition of a trade union is, by and large, a matter of agreement between the employer
and the union

It hasn’t been clarified what the rights and privileges of an NU are, or the disqualifications

CONSTITUTIONAL STATUS OF RIGHT TO STRIKE

Sections 22-24 of IDA:

Section 24 – Some strikes or lock outs are illegal – if in contravention of Section 22 or 23; or
in contravention of order under S.10(3) or S.10(4A)

Whether the right to strike exists for:

 Non-industrial workmen – not covered by IDA

 supervisory/managerial workers – not covered by IDA
 Civil servants – subject to prohibitions in conduct rules
 Essential services maintenance laws – special restrictions on strike

AIBEA v. National Industrial Tribunal

Provision of Banking Companies Act where there were some exceptions with respect to
submitting documents to labour courts – challenged by union as they have the right to receive
these documents to understand the functioning of the bank

Argument given by union – object of trade union must also be seen as a part of freedom of
association

Court – Can’t interpret FoA to include all concomitant rights necessary to achieve its object

The right to form an association does not include the right to achieve the object of the
association, so achieving the object of trade union is not part of FoA – results in absurd
consequences if we include right to achieve objects

The way in which the restriction clause is drafted should be used to interpret main clause – if
we read main clause too broadly, we’ll have to assess what the restrictions are that would be
permitted – if restriction clause in 19(4) is limited and defined in narrow manner, so right
should also be interpreted in a narrow manner – So, scope of FoA 19(1)(c) must also be read
narrowly, otherwise legitimate restrictions on strike (for example, procedural restrictions)
can’t be justified under 19(4) – FoA restricted to formation of association
If right to strike is a part of FoA – association is made up of individual citizens and
association can’t have claim to rights not open to citizens or claim freedoms higher than those
given to individuals – so FoA is restricted to formation of association. Because activities of
individual governed by 19(1)(a) and that has lot of restrictions. However, if the same activity
done by union, then covered under 19(1)(c), which has lesser restrictions. So the association
will end up having more rights than individuals – court did not accept this.

Reasonable argument that this is only obiter because the judgment had nothing to do with
strikes

Kameshwar Prasad v. State of Bihar

Rule 4A of Bihar Government Servants' Conduct Rules, 1956 – employees cannot participate
in strike or demonstration.

They refer to AIBEA case and say question is settled – there is no FR to strike under 19(1)
(c). But they have detailed discussion on demonstration. They say this is form of speech and
expression. Could be peaceful or disorderly and violent. Peaceful demonstration would fall
under 19(1)(a) and 19(1)(b) but the other form cannot. Does Rule 4A fall within reasonable
restrictions under Article 19? Court says Rule 4A is a sweeping prohibition that does not
even allow for demonstrations allowed under 19(1)(a). Government argued that govt servants
need to maintain strict discipline otherwise it will demoralise public.

When the police are on strike, surely there is problem with public order. But not otherwise.
Threat to public order otherwise is connected to nature of demonstration. The Rules don’t
account for this, fails to distinguish.

Court says demonstration is a form of expressions so protected under 19(1)(a) and 19(1)(b).
AIBEA says strike is not protected under 19(1)(c), but is it a form of expression under 19(1)
(a)? Can be argued. Also ground for restriction is wider under 19(2). Parliament itself
recognises legal vs illegal strikes – so recognise it as a mode of communication in certain
situations. Also 19(2) gives good ground for having the distinction between legal and illegal
– reasonable restriction.

BR Singh case: strikes are also a form of communication

Bharat Kumar v. State of Kerala (Ker HC)

Bandh is when you impinge on lot of other people’s rights because you bring everything to
standstill. Bandh is about imposing restriction on the entire population – can’t open shop,
can’t use vehicles, etc. Also there is use of force to prevent people from moving or opening
anything

Strike – lot more private – only those who are impacted are the ones involved.

Hartal – more peaceful, does not impact everyone.

CPI v. Bharat Kumar (SC)

SC agrees with ker HC reasoning, says that state govt must take all necessary action that the
Ker HC recommends. Distinction between hartal and bandh is justified. Bandh declared as
unconstitutional action

Questions that come up:

Hartaal is a strike, so are these rulings in conflict with AIBEA and Radhey Shyam Sharma?

Kerala Vyapari Vavasayi Ekopana Samithi v. State of Kerala

Force being used for Hartaal also

Para 14:

Court said that nomenclature does not matter, cannot use force or intimidation or coercion. It
would be unconstitutional.
Court highlights that name is not protection, if you are calling for bandh in name of hartal,
cannot be protected. Used Bharat Kumar.

Gave directions to SG – recover losses, de-register political parties involved (election

commission)

TK Rangarajan v. State of Tamil Nadu

Refer to Radhey Shyam Sharma where the court held that there is no right to strike under
19(1)(a), also refer to AIBEA. But this case never says why there is no right to strike under
19(1)(a).

They also say no right to strike.

Large number of employees involved. Single Judge of Mad HC allowed relief, DB said why
you giving relief under 226 when AT are there, then petition filed before SC. Maintainability
of petition in SC: SC says there are lakhs of employees here, Tribunal cannot manage and
render justice, while ordinarily should go to AT before HC, this is an extraordinary
circumstance. Sheer number of workers whose employment status had to be dealt with.

Was there a right to strike? What about dismissals?

They also referred to Bharat Kumar, even tho it wasn’t about bandh. They also refer to
AIBEA. They don’t say anything new about strikes – reiterate position that strikes are
unconstitutional. Reiterated Bharat Kumar also – but doesn’t that create contradiction?
Because Bharat Kumar was talking of bandh as unconstitutional but hartal as allowed.

Here, they are not saying nobody has right to strike. they weren’t dealing with industrial
workmen who have statutory right under Sections 22-24. They are governed by TN Civil
Service Rules and that has conditions for strike – those not met here.

Moral and equitable reasons to not strike: paras 21 and 22

 Given large scale unemployment, they shouldn’t strike as they should be thankful to have
a job, lot of other people are waiting for this job
 Work harder and your work will be appreciated, so no need to go on strike
 Use statutory mechanisms and other mechanisms available to employees – but there is no
violation of existing right, so can’t go to AT. They are trying to renegotiate their rights, so
can’t do that at the tribunal.
 If they go on strike, public at large is impacted
Instead of looking at whether or not it is constitutional, went into some random reasoning.
Court never rules on constitutionality of the Essential Services Maintenance Ordinance, since
the SG agreed to take back the employees who did not have FIRs against them or who were
not dismissed pursuant to disciplinary proceedings.
Also, lot more man-hours lost due to lockouts than strikes, strikes seem more militant but
lockouts have more impact on economic activity.

Health Services and Support – Facilities Subsector Bargaining Assn v. British Columbia
(Canada SC)
Restriction on collective bargaining – any agreement that went against restrictive provisions
were considered as invalid. Invalidated large number of collective bargaining agreements.
Challenged under Section 2(d) of Canadian Charter of Freedom – freedom of association

How does the Court interpret FoA?

Trial judge and court of appeal disagreed with the Union and refused the claim. Historically,
FoA did not include collective bargaining in its scope.

SC position: says that collective bargaining is part of 2(d). look at history of Section 2(d),
how Canada has historically interpreted collective bargaining, intl HR obligation, relation
between collective bargaining and other rights.
Unions there to satisfy needs that individuals are unable to do themselves, so can’t just see
them as aggregation of individuals. Not just a collective of people but has a separate identity
of its own and can have different rights than individuals.

Question is whether activity is worthy of constitutional protection, irrespective of whether or

not it is an object of the association.

Read para 30:

Don’t treat all organisations uniformly, look at it based on facts.

STRIKES UNDER IDA

Strike is defined in IDA. Reason for strike not important, as long as it is a group of workers
who have stopped work.

Buckingham and Carnatic Co v. Workers

(need notes for 30.08.2021)

Section 10:
After reference to these bodies, the strike can become illegal. the prohibition is not automatic,
the government gets to decide whether they should stop the strike.

Section 10A deals with voluntary arbitration.

If arbitration has been opened to all parties and everyone has the opportunity to present case
before arbitrator, the appropriate government can issue notice to stop the strike.

Delhi Admin v. Workers of Edward Kevinter:

Where out of 5 or 6 demands, only a few have been referred, the workers can strike on the
other matters. Order of prohibition under Section 10A is only for matters that have been
referred to arbitration, strike can be legal for other demands.

Is notice required every time there is strike in public utility service?

Section 22: usually notice is required unless strike exists, then no need for notice of lockout
and vice versa. But employer must inform the appropriate government.

Section 24(3): if workers strike during lockout and vice versa, then it shall not be illegal
because the lockout is illegal and vice versa. It’s a deeming provision.

Consequences of an illegal strike:

Section 26-28 IDA: criminal liability

Buckingham Carnatic – revocation of certain benefits

Disciplinary measures like dismissal, reduced wages, etc

Gujarat Steel Tubes v. Mazdoor Sabha

The employer and employee reached some mutual agreement, proceeding is pending but
something happened in the middle and the workers went on strike. so the strike is clearly
illegal – parties also agreed to this.
They don’t use the term “dismissal” anywhere. After this, there is further negotiation between
union and management and there is some sort of compromise. The management took back a
lot of workmen but there were some 400 workers who did not get their job back. Dispute
regarding their reinstatement and referred to arbitration. Arbitrator had to deal with whether
the discharge was right. That would determine the final status of the workmen.

If strike is illegal, can the management terminate based on summary order, without full
enquiry? they used the words discharged simpliciter, which under industrial law is not
punitive. Dismissal is punitive and requires an enquiry with PNJ. Here, they “discharged”
workers with one month benefit in lieu of notice.

Court looked at whether it is a discharge or dismissal?

The court will not simply agree with management because they say it is a discharge
simpicter. Court will look at the substance and language of the order. 2 factors to distinguish
dismissal from discharge:

 Existence of misconduct
 Causal link between misconduct and removal
Here, the management went into detail about the Mazdoor Sabha’s role in the strike. so that
shows the link between the strike and the removal.
Court said that paying retiral benefits doesn’t automatically make it a discharge. Otherwise
employers can avoid PNJ and just pay off workers even when there is misconduct-related
punishment.
Management also argued on Standing Order which allowed them to discharge simpliciter.
Court said that while this is valid, you have to use it bona fide. You can’t use this to fire when
there is misconduct.
Procedural issues:
No individuated inquiry to find out individual guilt – not done. Also didn’t differentiate
participation of those leading vs those being passive vs those who instigated violence. Gave
collective punishment of dismissing all workers, court did not allow this as the punishment is
not individuated based on each employee’s participation in the strike. dismissal is an extreme
punishment and should be given only to those who engaged in violence or led the strike.
Rohtas Industries v. UoI
Workers went on strike, entered into agreement while conciliation proceeding was going on.
Referred to arbitration. Award was that backwages not there, and also employees must pay
the industry. Referred to courts.

Refer to common law discussion on conspiracy tort. They say that it was needed in IR
England but when applying in India, context is different. Have to look at object – whether it
is illegal. if you are doing it to vandalise property or cause violence, then there is conspiracy.
But if it is to coerce employers to agree to demands, then it won’t be conspiracy. Look at
predominant purpose – whether it is meant to damage business interest.

IDA does not envisage the employee paying the employer. The consequence of illegal strike
has to be within the IDA framework, can’t take a tort law position simply.

Bharat Petroleum v. Union Mad HC 2007:

Strike is a creation of IDA and hence, any remedy has to be found in IDA. Cannot say that
Section 18 of TU Act won’t apply because strike Is illegal. strike is illegal doesn’t mean tort
of conspiracy follows and compensation is awarded to employer. Section 18 immunity will
apply even if strike is illegal.

If strike is a legitimate weapon, then if you don’t pay wages, realistically, there is effective
prohibition on strikes as very few workers can surrender wages.

IDA does not provide anything on wages, courts have developed legal principles.

2 positions:

 No wages at all
 Wages only when it is legal
Legality provisions do not deal with purpose, so courts look at whether strike is justified.
Strike has to be legal and justified

CONSEQUENCES OF STRIKES
Bank of India v. TS Kelawala
As per the HC, you cannot deduct wages for a day or hour, cannot have pro-rata deduction
unless the contract, regulations or award permit it. the contract is indivisible.

SC sort of disagrees:
Legality of strike does not mean that you will always be paid the wages.

They refer to definition of wages – remuneration for work done under the contract of
employment. If work is not done, no need to pay wages. Court also says that you can deduct
pro-rata, even in the absence of a specific clause. This is because if someone dies or resigns
in the middle of a month, you’ll still pay them for the work done in that month.
If there is individual case, need individual enquiry. but in case of mass misconduct which is
admitted, no need for individual enquiries. The standing orders and the service rules have
been framed contemplating individual cases of misconduct. It would be excessively
cumbersome for employers to have individual enquiries when employees accept misconduct.
But this directly goes against Gujarat Steel Tubes, where they say that individual enquiry is a
must.

Para 14:

In TS Kelawala, problem is not dismissal but in Gujarat Steel Tubes, there was dismissal.
One way to reconcile them is to limit TS Kelawala to the case of deduction of wages and no
dispute on participation In strike. Legality does not give right to wage as no work means no
wages. So does justification even matter? No, because irrespective of justification or legality,
you don’t get wages. Irrespective of nature of strike, there is no work done. So no wages.

Syndicate Bank v. Umesh Nayak

Matter referred to this bench because of conflict between Kelawala and Churakulam,
Chandramalai and Compton Greaves line of cases.
Will receive wages only if the strike is legal and justified. An illegal strike can never be
justified but this doesn’t matter as you don’t receive wages for illegal strike.

Chandramalai Tea Estate decision:

Para 34: demands were not very urgent, should not have gone on strike so hastily. Could have
requested govt to refer to Industrial Tribunal, used other mechanisms. Didn’t even give notice
of strike, there was no need for such rush. Exhausting other avenues (strike must be used last
resort) and urgency of demand are relevant factors to determine whether strike is justified.

Churakulam Tea Estate case:

Workmen went on strike for demanding bonus, conciliation failed when they went to strike,
management refused to pay wages for strike duration and also laid off workers. Question of
whether it was legal and justified.

See para 25: court found that strike was not illegal because there was no specific prohibition
under Sections 22 or 23 that applied.

Immediate catalyst for strike was management boycotting meeting. So strike was justified.

Compton Greaves:
Demand was urgent because they were being retrenched but also that the management acted
unreasonable – when negotiations were underway, the company issued notice of termination
for many workers. Para 4 of the decision:

Wages are not seen as part of justification analysis but about wages. So for payment of
wages, look at legality, whether it is justified and whether there is violence. Is this standard
fair? If one workman resorts to violence, should everyone be punished? Is this standard of
violence even used in TS Kelawala or Syndicate Bank? No

Court in this case no real conflict between Kelawala and Churakulam. See paras 42 and 43.
They are reading these judgments together on the ground that Kelawala does not address the
question of justification.
Didn’t directly overrule TS Kelawala but implication is that have to look at legality and
justification. Has to be legal (as per the statute) and justified (based on fact situation, judicial
principles) for wages to be given.

Whether strike is justified: they look at Gandhian principles of trust. Interest of society as a
whole should be considered while deciding justified or not. Look at negative impact on
society.
Factors relevant for assessment justifiability (summary of cases):

 Urgency of demand
 Other avenues used
 Attitude of management
 Impact on public interest – issue of violence can be considered under this factor

The issue of violence – Compton Greaves does not see it as part of justification, but as a third
part. A larger bench has not referred to the issue of violence – so does that mean it has no
relevance now? The way of reading in violence is to look at it under justifiability.
Kar HC in Mysore Wine Products v. Presiding Officer (2005) talks of violence. Employer
went on lockout because workmen became violent. The court held this to be justified. But
this does not look at whether violence will make a strike unjustified.

Anumeha Yadav article

Number of strikes have dropped. But can’t trust govt data as they understate number of
strikes to portray good IR. Anumeha Yadav argues that labour agitation has not become less
militant just because strikes are lesser than those in 70s and 80s. She argues that fear of
unemployment or becoming contract workers keeps employees away from unionisation. Also
labour laws are making it more difficult to strike. reduced union cases does not mean workers
are satisfied, they are actually very angry and will fight back in other ways (resorting to
violence).

WEIGO – Unionisation of informal workers

Different economic interests at stake, classical form of collective bargaining may not work as
there is no defined employer. They are self employed sometimes.

Many of them don’t want unions. In India, we have SEWA – for bidi workers.

How much of this is addressed in our Trade Unions Act?

The conflicting economic interests are seen in auto drivers unionising – they stay in the union
to get some minimum fare but staying in the union also means customers often reject services
because the price is too high. In these kinds of cases, the issue is not really negotiation with
some employer but among themselves. Does TTD (SC ruling) enable registration of such
unions? Not really, because though the case says that union regulates relations among
employees, the use of the term employee shows that there is a presumption of employment
and the framework is still employment.

MODULE 5
Standing Orders – framed by employer, consult employees, submit it to the Certifying Officer
who can also make changes and then approve it.

What matters must standing order cover?

Section 3(2):

Must have rules on every matter covered in the schedule and should comply with the Model
SO to the max extent possible.

Flexibility is still less – where MSO is there, actual must conform to model as far as
practicable. So actually, employer is not framing much. Also, can’t frame on any issue
beyond the Schedule.

Section 1(3) determines applicability – industrial establishment with 100 people employed

Section 13B: exceptions to Section 1(3) – civil servants

Industrial establishment is not the IDA definition – have to actually check if it’s an industry
in traditional sense.

Contractor may himself not be an industrial establishment but will be if he enters into a
contract with an industrial establishment.

New Code:
The scope of industrial establishment has increased to the BWSSB standard. Threshold is 300
people. So many service sector enterprises will come into the ambit of standing orders.

Initially, certifying officer was not allowed to look at fairness and reasonableness of Standing
Order, from 1956 was allowed

Rohtak Hissar District Electricity v. State of UP

Prepared Standing Order along with few employee reps and then Certifying Officer made
changes to make it fair and reasonable. Employer argued that since there is consent of
employees, Officer cannot change and needs to accept it. Court disagreed and said that there
is no union, there are only employee reps. During the proceeding, employees were absent.
They are not a collective and organised unit to resist employer pressure, they may not have
been able to fully understand the implications. So it’s imp for Officer to look into it.
This ruling does not seem to be restricted to facts of the case, para 9 is pretty general.

Court also rules that cannot go beyond the schedule – can have terms only on items
mentioned in the schedule. The appropriate government can prescribe additional issues as per
the schedule.

But they also give some discretionary power to Certifying Officer, but employer cannot
insist.
the UP govt required for appellate mechanism under Standing order. The court said that
gratuity is connected to terms of service so govt can include it in Schedule but Court says that
appellate mechanism should be left to Legislature.

New Code gives more power to the employer:

Not restricted to Schedule, as long as not inconsistent with the Code.

Should Standing Order be considered as statutory conditions of service?

RSRTC v. Krishna Kant
Court says that standing order does not have force of statute. It represents relevant terms of
conditions and binding on parties and apply over contracts. They are statutorily imposed
conditions of service but that does not make them statutory provisions. Enforcement of
standing order will be done as standard industrial dispute is resolved.

Section 10 of Standing Orders Act has power of modification – cannot do within 6 month but
can if you have employee consent (look at provision)

Shahdara –Saharanpur Light Railway v. Workers’ Union 

Argued that allow for change in standing order only if there is change in circumstances.

Court reasons that Section 10 itself doesn’t have restrictions, so court cannot read it in. the 6
month requirement is to check efficacy of standing order. They also say that change in
circumstances is not required. Section 6 is preventing any further appeal and revision and the
order of appellate authority is final. Section 10 is an independent power of modification. So
even Section 6 is final, Section 10 allows for change.

Read case.

Sudhir Chandra Sarkar v. Tata Iron and Steel Co

Jaivir Singh
Standing orders have lot of strict safeguards which make it hard for employers to get rid of
employees who are incompetent. Employer must follow stringent procedure that complies
with PNJ. From a compliance POV, burden can be very high for employer. Even the way that
misconduct has been defined under the Central Rules Model Standing Order, lack of care for
work or incompetence or lethargy are themselves not misconduct or grounds for termination.
Habitual negligence is a misconduct but what’s the standard for this?

Also, very hard to prove smaller instances of negligence.

Section 13A: can refer questions of interpretation to Labour Court.

Under IDA, there is Tribunal, Court, etc

So can disputes arising under Standing Order go to Labour Court? No, not a parallel forum as
per the RSRTC case:

Don’t need to wait for government reference under Section 13A. with interpretation, parties
can arrive at compromise, if not govt will refer to Tribunal under Section 10 of IDA.

Changes under new Code:

 Threshold increased to 300

 Definition of industrial establishment is BWSSB – so scope increased
 Statutory duty to consult the union
 Can go beyond the Schedule

MODULE 6

LOCKOUT VERSUS LAYOFF

Initial IDA was about industrial dispute settlement. But later, it became evident that workers
need to be protected against employment termination and temporary loss of work.

Definition says not been retrenched. So it does not mean termination, it means inability to
give work during a certain period due to various reasons. It’s a short term crisis.

Lockout – counterpart to strike

The definition is not so detailed tho

So there was confusion if lockout includes layoff

Kairbetta Tea Estate v. Rajamanickam

Division in estate closed off because some violence by workers. The other workers argued it
is lay off and they should be paid compensation under Section 25(C). Labour Court agreed
with this. So SLP to SC. If a lockout is legal and justified, workers do not receive any wages.
Here definitely lockout had been justified as manager had been assaulted and other workers
had been threatened. So other workers would not receive any wages.

If reasons specified in S.2(kkk) is reason for closing, then it will be layoff. “any other reason”
also has to be read in a manner analogous to the others – factors beyond control of employer
altogether.

Court held that lock out is meant as a coercive weapon used in collective bargaining, it’s a
tool under the Trade Unions Act S.2(e). Lockout is the antithesis to strike. So impossible to
bring it under S. 2(kkk), which would mean that S. 25(C) does not apply to lockout. No
liability to pay compensation if lockout is justified and legal.

Para 11: General rule – lockout involves entire business to close down while layoff means
continuing business. But lockout could also be for only one specific department, like was
done in this case.

Held that in this case, it is a lockout and so look at whether lockout was justified and legal.
Held yes as workmen were threatening other employees from going to work. Considering the
violence preceding also, lockout is justified.

Sir: If lockout is justified and legal, no worker gets wages, irrespective of whether the worker
engaged in violence or did something wrong. This can especially affect unions and workers
who were not part of the negotiation or who did not plan or participate in violence. Industrial
dispute law treats workers as one collective group.

Is stoppage of work due to lockdown a layoff? Just on the basis of COVID? Not on the basis
of shortage of raw materials.

Natural calamity is used in S.2(kkk) so that may include COVID.

Explanation says that industrial establishment is a factory, mine or plantation. So Section 25C
won’t apply to NLS.

All conditions in Section 25A:

So this really limits situation in which Section 25C will apply.

Chapter V-B: Section 25A excludes this

Under the IRC, it has become 300 workmen

Does Section 25C give right to every workmen:

Have to be paid 50% of basic and dearness allowance except on the days of holidays.

But this right is not applicable to all workmen:

 Doesn’t apply to badli (employed in place of another workman) or casual workman

 Name has to be on muster roll
 Have to complete not less than 1 year of continuous service
But if he remains for one year as a badli, then you cease to be regarded as badli
Definition of continuous service:

Does one year mean 365 days on service?

No. sub-section 2 says that 1 year means 190 days in below ground mine and 240 days in any
other case

However, section uses the term “actually worked” but SC negates this requirement. So
holidays and Sundays will also be included, don’t need to actually work for 240 days.

The American Express ruling will only apply to regular workers, have to actually work for
240 days if it is casual worker. Because this ruling is based on employment but casual
workers are not in employment. So need to look at actual days of work.

Earlier position was that had to be in employment for 12 months and worked for 240 days.
Now position is that even if you worked for 240 days (incl holidays) or were in relationship
of employment for 240 days, it is considered as continuous service

Situation before Del HC:

Single judge held that yes, in continuous service. DB held that you have to look at preceding
year from date (this was case of retrenchment) – even Section 25B has this same standard. So
if you didn’t work for 240 days in the preceding year, then won’t get benefits.

Associated Cement v. Workmen

Section 25E: don’t have to pay layoff compensation:

 Alternate employment is given – limitations on this also – same geographical area, similar
wages
 Workmen not reporting to work
 If layoff caused by strike in another part of same establishment
This case deals with the third exception. What is a same establishment?

Court looks at geographical proximity, integrality, commonality, etc.

How to determine whether you are same org or diff org? like in Noor Niwas case

There is exclusive supply from one factory to the other. So they will form single
establishment

Para 18:

“Several tests were referred to in the course of arguments before us, such as,
geographical proximity, unity of ownership, management and control, unity of
employment and conditions of service, functional integrality, general unity of
purpose etc. To most of these we have referred while summarising the evidence
of Mr. Dongray ,and the findings of the Tribunal thereon. It is, perhaps,
impossible to lay down any one test as an absolute and invariable test for all
 cases. The real purpose of these tests is to find out the true relation between the
parts, branches, units etc. If in their true relation they constitute one integrated
whole, we say that the establishment is one; if on the contrary they do not
constitute one integrated whole, each unit is then a separate unit. How the
relation between the units will be judged must depend on the facts proved,
having regard to the scheme and object of the statute which gives the right of
unemployment compensation and also prescribes disqualification therefore.
Thus, in one case the unity of ownership, management and control may be the
important test; in another case functional integrality or general unity may be the
important test; and in still another case, the important test may be the unity of
employment. Indeed, in a large number of cases several tests may fall for
consideration at the same time. The difficulty of applying these tests arises
because of the complexities of modern industrial organisation; many enterprises
may have functional integrality between factories which are separately owned;
some may be integrated in part with units or factories having the same
ownership and -in part with factories or plants which are independently owned.
In the midst of all these complexities it may be difficult to discover the real
thread of unity. In an American decision (Donald L. Nordling v. Ford Motor
Company ((1950) 28 A.L.R., 2d. 272) there is an example of an industrial product
consisting of, 3,800 or 4,000 parts, about 900 of which came out of one plant;
some came from other plants owned by the same Company and still others came
from plants independently owned, and a shutdown caused by a strike-or other
labour dispute at any one of the plants might conceivably cause a closure of the
main plant or factory.”
Court said that all these criteria satisfied in this case:

Para 19:

Fortunately for us, such complexities do not present themselves in the case
under our consideration. We do not say that it is usual in industrial practice, to
have one establishment consisting of a factory and a mine; but we have to
remember the special facts of this case where the adjacent limestone quarry
supplies the raw material, almost exclusively, to the factory ; the quarry is
indeed a feeder of the factory and without limestone from the quarry, the
factory cannot function. Ours is a case where all the tests are fulfilled, as
 shown from the evidence given on behalf of the appellant to which we have
earlier referred. There are unity of ownership, unity of management,
supervision and control, unity of finance and employment, unity of labour and
conditions of service of workmen, functional integrality, general unity of
purpose and geographical proximity.

So here they don’t allow for compensation

Applicability of Chapter V-B (Section 25A excludes this, so Section 25B and 25C don’t
apply)

If layoff Is illegal because there is no permission, then you have to pay all benefits, not just
the 50% of basic + DA.

This limit has increased to 300 under IRC. If permission is given, then Section 25C
compensation applies.

For establishments not covered by Chapter V-B, is layoff a right of the employer? And is
every layoff legal? While IDA itself has some conditions in Sections 2(kkk) and 25C, if these
are met, is the layoff legal always?

Dewan Tea Estate v. Workmen

Para 7 has the relevant standing order. If there is shortage of supply, then can shut down.
Here there was stoppage of supply of finance so they tried to justify lay off. Court said
stoppage means of raw materials like tea leaves in this case, not finance.
So standing order does not justify layoff, need some other basis.

So employer argued that there is inherent right to layoff under IDA and common law. So
doesn’t matter if standing order permits it or not.

Para 6:

Section 25C does not have any right to layoff, it only gives manner of compensation.
Relevant standing order makes provision for layoff and compensation, so it will be covered
by that. If standing order only covers conditions for layoff, then compensation will be
covered by 25C.

Does 25C recognise common law right? No, because 25C uses layoff in the sense defined by
2(kkk). So if not standing order, will be governed by IDA. There is no common law right.

 25C does not contain the right

 It does not envisage a common law right
Because 25C is not the source of the power. But when not covered by standing order, it will
be covered by 2(kkk) – so is this the source of the power? The court still says no in para 10.
very confusing judgment.
But can 25C be invoked when workmen are laid off for reasons not under Section 2(kkk) but
are within the standing order? Court says not concerned by this situation at all. So question
remains open.
If there is ground under the standing order which is also under Section 2(kkk), then Court
says it will be covered by 25C.

Para 10 they say definition is not operative part of the Act. There is no specific provision that
empowers employer to exercise power of layoff defined in 2(kkk). But in para 6, they say that
if the lay off is not permitted by standing order, then employer can lay off provided one of the
factors in 2(kkk) is satisfied – so this indicates that some power is inherent in 2(kkk).

https://www.newsclick.in/After-Defence-Workers-Barred-Strike-Federations-Take-Legal-
Route-Battle-OFB-Corporatisation

the Essential Defence Services Ordinance challenged on the ground that it bars workers in
these organisations from striking

https://indianexpress.com/article/business/economy/distress-signal-came-early-farm-unpaid-
women-labour-surged-7493099/

Unpaid women workers in farm work have increased since lockdown, they’ve lost their jobs
in manufacturing
Plus agriculture anyways had more disguised unemployment and low labour productivity due
to increased workers since the pandemic, when people lost their other jobs

Workmen v. Firestone Tyre and Rubber Co

Only 30 workers so Standing Order not there and Chapter V-A does not apply.

They said that inability to give work under layoff is not a temporary discharge or suspension.
They refer to Section 25E which says that compensation shall not be payable if the employee
does not report to work once a day, even if the employer is unable to give any work. Hence,
there is no common law right. Have to find the power in the contract of employment or in the
standing order. If there is no such power, the worker would be entitled to full wages,
provided that the Labour Court can award lesser wages. Here standing order did not apply
and contract did not have any such power of layoff. Layoff was illegal so workers entitled to
full wages. However, court said pay 75% of ordinary and DA.

Court also makes sense of Dewan Tea Estate:

If power of layoff is in Standing Order but doesn’t cover all grounds under 2(kkk), then you
can reply on 2(kkk). If there is no power in Standing Order or contract of employment, then
can’t rely on 2(kkk) because it doesn’t contain any power.

If power is vested in contract of service but there are less than 50 people so that Chapter V-A
doesn’t apply, compensation depends on contract. if contract doesn’t provide for
compensation then it wont be paid.
KT Rolling Mills case Bom HC said that Industrial Tribunal does not have power to award
compensation when Section 25C does not apply. SC says this view is incorrect.

So technically, even if contract doesn’t provide for compensation and Section 25C doesn’t
apply, the Tribunal can award.

If there is power under SO and grounds are different from 2(kkk), then will 25C apply?
Dewan Tea Estate refused to answer and this Court did not even address. Situation hasn’t
arisen because Model Standing Order has grounds similar to 2(kkk).

RETRENCHMENT
Defined in Section 2(oo)

All forms of termination except specifically listed ones. But common meaning is termination
of employment when there is surplusage.

Punjab Land Development and Reclamation v. Presiding Officer

Pipraich Sugar Mills case (1956) – retrenchment in ordinary parlance means discharge of
surplus and does not include closure of business.

Hariprasad Shivshankar Shukla Constitution Bench case:

There was takeover of business in Barsi Light Railways.

Catalyst for discharge of surplus could be anything. But it is discharge of surplus, not entire
closedown of business.
Section 25FF inserted in IDA.

This provision was inserted even before Hariprasad was decided. It didn’t change meaning
of retrenchment, which Punjab Reclamation case acknowledges.

Anakapalla case – says that the difference between retrenchment and transfer is still there as
25FF only extends the rights available under retrenchment. But does not change the meaning
of retrenchment. Cases of closure and transfer of undertaking are not retrenchment but the
workers get limited right o notice and compensation as per 25FF.

SBI v. Sundara Money: here, contract of 1 year expired. Extended for 9 years and then
terminated. Argued that this is not retrenchment as it is not discharge of surplus labour but
termination due to expiry of contract. Court held that defn of retrenchment is very broad,
covers everything except what is specifically exempted. They did not even refer to
Hariprasad.

Delhi Cloth and General Mills case – end of probation, court said it Is retrenchment

Santosh Gupta v. State Bank of Patiala: condition was that you have to pass exam or
employment terminated. She didn’t pass exam so was fired. Court held it is retrenchment and
pay compensation.

So this line says that term retrenchment is defined broadly so include everything unless
exempted (literal meaning of the term)

Clause (bb) added in response to these line of cases.

But the fundamental difference between these case was not addressed.
Court in this case said that they are not per incuriam and instead look at ratio of the cases.

So this reconciles Sundra Money line of cases.

Then court goes on to interpret 2(oo) by itself. Holds in favour of literal interpretation. Says
that if it means termination of surplusage, then don’t even need those exceptions.

It’s a soft rule because you can deviate from the last to come first to go rule.

This is because identity of the worker doesn’t really matter during retrenchment, you’re firing
not because of work quality but because of surplusage.

Jaipur Development Authority v. Ramsahai (2006 SC): court held that you don’t have to
mandatorily follow this rule under Section 25G
In practice, the section isn’t implemented usually. But it ahs still been retained in the new
IRC.

Anand Bihari v. RSRTC

Drivers had defective eye sight. Not complete blindness.

Cannot be a singular benchmark that there has to be serious or systemic disease. Depends on
impact of condition on capacity to perform duties. Any disorder which incapacitates person
from performing duties or adversely affects work will be covered by clause (c) to Section
25(oo).

See para 13

Decline in eyesight was also due to driving – occupational disease. They fired about 30
drivers in a short time frame due to this. Hence, the employer has some duty. Termination
was illegal because the Corporation treated the case of drivers similarly as other workers who
got the disease outside their employment – it is discriminatory and not equitable. But the
court does not really refer to Article 14 or RSRTC being an instrumentality of the State –
question remains whether the same standard applies to private employers as well.

Relied: court comes up with a scheme because RSRTC doesn’t. they speak of compensation
based on years of service and alternative employment for them in the same place. There is
duty to provide alternative job and if not that, then compensation. Even tho the court says it is
not retrenchment, the employer has certain responsibilities.

Uptron India v. Shammi Bhan

She was absent without application for leave and her services were terminated. This was after
end of her maternity leave. Standing Order allowed for termination when there is absence
without leave. Is this retrenchment?
Court says need to give opportunity of hearing. Cannot automatically terminate as per the
Standing Order, management has discretion, which must be exercised in accordance with
PNJ.

Here court also invoked Article 12 and since she was a permanent employee, court said that
her tenure has to be secure.

What about clause (bb): termination of contract

But court rejects this argument. Under (bb), it must be a fixed term contract and such contract
must contain a clause on termination of services. Here, only latter is satisfied but it is not a
fixed term contract. (bb) uses “such contract” in the second part, which means it refers to the
contract of fixed term in the first part.

Section 25F:

Under Section 70 IRC, there is govt discretion to modify the formula in (b).

The provision was limited in Punjab Land Reclamation.

Under the rule, notice to appropriate government can happen after retrenchment but as per
section, it is a condition precedent.

Bombay Union of Journalists v. State of Bombay (1964 SC):

Notice to appropriate govt need not be a condition precedent. While notice to workmen or
wages in lieu is a condition precedent, notice to govt is not. They looked at Bombay Rules,
similar to central Rules.

Clause (c) is not meant to protect workers and does not affect their rights. hence not having it
as a condition precedent does not affect the interest of the worker. It is meant to give info to
the govt and can happen later also.

Pramod Jha v. State of Bihar (2003 SC) and Gurmail Singh v. State of Punjab (1991 SC)

Notice requirement to apt govt is not even a mandatory condition, it is only directory.

Mackinnon Mackenzie v. Workers (2015 SC):

It is not condition precedent but it is a mandatory condition

Raj Kumar v. Director of Education (2016 SC)

Reiterate that it is mandatory but may not be condition precedent.

Manju Saxena v. UoI (2019 SC)

Again follows Pramod Jha which says that it is directory.

Retrenchment under Chapter VB:

mines, establishments with more than 100 people (300 in IRC)

Section 25N

Section 25O – struck down in Excel Wear – no PNJ, arbitrariness, unfettered discretion, no
timeline, no appellate mechanism.

Section 25O amended after that:

Cable Corporation of India v. Commissioner (2008 SC):

Once you have sent review application to Tribunal, govt can’t review. And if govt reviews,
then can’t send to Tribunal.

If retrenchment is done without permission, it is illegal.

Compensation formula in (9):

Right to reemployment under Section 25H and Section 72 of the IRC.

Retrenched workers will be preferred in cases of re-employment. But what kind of preference
is unclear. Rule says they must be informed and union must be informed and they must be
given a chance to apply. But does this mean that give preference even when credentials are
different, is there a right?

Rule 78 describes how this is to be done – on giving information.

Section 83 of IRC – reskilling fund – another 15 days wages given to workers for them to
acquire new skill. Earlier proposal was that return money if you don’t acquire skill. But govt
backed off after this and says that it will be determined as per rules. Instead of discussing
stronger social security for unemployment, this puts the burden on the worker to reskill and
find new work after being retrenched, which is the fault of the employer.

Harjinder Singh v. Punjab Warehousing Corporation

He was initially appointed for 3 months, later extended to another 3 months, and he continued
in service and then he was fired. Is this retrenchment? Is there violation of 25F and 25G?

Labour Court holds Section 25G violated and reinstated.

HC says that no reinstatement but pay compensation. Appointment in violation of statutory

rules. So violation of Article 14 if he is reinstated into a permanent position.

One of the arguments – no continuous service for 240 days – so 25F and 25G doesn’t apply.
On facts, the court rejected the argument, there is evidence to show he worked for 240 days.
But even assuming that he worked less than that, is 240 days required for 25F and 25G?

Court refers to Central Bank of India v. Satyam:

There court had found that Section 25H does not talk of continuous service of a year. They
are eligible for re-employment even without continuous service for a year. But 25F uses that
term. 25G also doesn’t talk of continuous service for a year.

Even if there is argument that there is no continuous service, it will not take away the right
under Section 25G.

SC looks into extent of interference by higher courts with the Labour Court order. The only
instance when HC can exercise power under Art 226 is when there is error of law apparent on
the face, there is no evidence to support finding (perversity), error of process, when there is
lack of jurisdiction. HC is not a court of appeal and cannot go into whether there is better
relief or not.

TRANSFER OF UNDERTAKING
Transfer of ownership or management of undertaking, the employer will be required to pay
compensation under Section 25FF to workmen in continuous service for a year.

If A works for company X and has been working since 1 March 1992. X is sold to Y and
under terms of transfer or under a statute, Y is mandated to pay retrenchment compensation
to A in case of future retrenchment from the year 1992, as if the service had been continuous.
Ordinarily, if A works for Y from Dec 2016 to Sept 2021 and is then retrenched: have to
calculate from Sept 2021. It’ll be 5 years as there are more than 6 months from Dec 2016 to
Sept 2017.

But since the term of transfer has a clause on payment, Y has to pay from 1992.

Also, all three conditions need to be satisfied for the exception to apply.
Generally, X would be required to pay compensation under Section 25FF when the sale or
transfer takes place unless the exception applies, in which case Y will pay when there is
retrenchment in the future. Y will then have to pay for the earlier service as well (from 1992
to date of retrenchment).

If the proviso doesn’t apply and there is no retrenchment (maybe because clauses (1) or (2)
were not satisfied), then old employer (X) will pay when there is transfer (2016) and new
employer (Y) will pay when he actually retrenches them. This time, Y will only have to pay
from date of transfer to the date of retrenchment. As they already got compensation from old
employer for earlier service.

Delhi ITDC case deals with this – see the word doc shared in class.

Section 25FF does not have a consent requirement – SC held this in 2006 based on a 1969
decision – Mettur Beardsell case 2006

Sunil Kumar Ghosh v. Ram Chandran 2011 SC

Whoever did not want to work w new employer could take voluntary retirement. All
conditions in proviso were applicable but one worker who did not want to continue. Yet Cal
HC took line that no workman can be forced to join another company without consent. While
consent is not needed for transfer, it is needed for employee to continue working. So if
workman refuses to join new employer, he must be paid compensation under Section 25FF,
even if all 3 conditions are met.

CLOSURE OF UNDERTAKING

This chapter was added during the Emergency. Chapters V-A and V-B apply to closure.

Do the courts have a role in dealing with closure?

District Red Cross Society v. Babita Arora

First come last to go has to be followed in retrenchment but not in closure. Only one part of
the establishment was shut down so the person who was terminated argued that it was a
retrenchment and that Section 25G was not followed. Management claimed that the branch
was funded by charity and when funding ended, they had to close it. rest of the hospital was
run by government funding. and that branch was independent of others.

Indian Leaf Tobacco Company case – court cannot go into adequacy of reasons for closure.
But courts can examine whether it is a retrenchment being guised as a closure as lesser
requirements for closure. Courts can look at whether it is a genuine closure.

After Chapter V-B was added, govt could exercise power to determine whether closure
should be allowed – Section 25O

Hindustan Steel v. Workmen case in 1973 – closure can also be of a port

Straw Board Manf case in 1974 – test of functional integrality – does closure of one unit
automatically lead to closure of another unit? If a self-contained independent unit is closed
down then it is closure. But if functionally integral part is closed but other part is running,
then it is retrenchment. If it is only closure, then 25FFF will apply and compensation will
have to be paid as per 25F. but 25G and 25H will not apply.

The court adopted the functionally integrated test in this case. They held that the maternity
ward was a distinct wing and independent of the rest of the hospital set-up. See para 15

Section 25FFF- same notice and compensation requirement as in 25F

But there are exceptions:

First proviso:

Where undertaking is closed due to unavoidable circumstances beyond control of employer,

then the compensation will not be beyond 3 months pay
But the standard for unavoidable circumstances beyond control is very high – various
situations don’t come within its ambit.

Notice requirements – Section 25FFA: not just to workers but also to apt govt

Section 25O- govt can review closure.

Summary: first column is for Chapter VA establishments and second column is for Chapter
VB establishments:
CoE – contract of employment

SO – Standing Order

RELIEF IN CASE OF ILLEGAL TERMINATION

Hindustan Tin Works
If there is mistake on part of employer, then employee can be reinstated with back wages and
all other benefits – ordinary rule

Section 25N deals with retrenchment in Chapter V-B establishments – whenever permission
is not taken or is denied, then worker will be reinstated with back wages and benefits.

But this ruling was diluted in Gujarat Steel Tubes – other workers have taken their place and
the fired ones have found alt employment. And there is financial constraint. So court gave alt
relief. The people who got alt jobs were not reinstated but were deemed to be retrenched on
the day of judgment so they got compensation.

Casual workers who worked for more than 9 months were reinstated but not others.
Jagbir Singh v. Haryana State Agriculture Mktg Board
Casual worker who was fired. Termination was found to be in contravention with Section
25F. so the labour court reinstated. HC reversed it and appealed to SC.

Hindustan Tin – must reinstate and give backwages in all cases. Only in exceptional
situations you can depart.

Court cited decision in UP State Brassware (2006) where the SC held that grant of relief
requires application of mind, just because it is legal for the workers to be reinstated and
receive backwages doesn’t meant that they should receive it all the time. the court says that
Labour Court must apply mind and also consider prevailing market conditions of
globalisation, privatisation and outsourcing. So this case implies that there is no universal
rule. This case is one of the few ones to explicitly refer to LPG while eroding labour rights.

Uttaranchal Forest Development (2007):

Gives factors that must be looked at before deciding – whether the appointment was in
pursuance of rule/statute, is there delay in raising industrial dispute

Lalit Kumar Verma (2007): substituted reinstatement with a one time compensation

Sitaram v. Motilal Nehru Farmers Training Institute (2008):

Para 23 of this decision – court says other than nature of appointment, look at period of
appointment, availability of job after termination, length of service (even in GJ Steel Tubes
this was considered)

Ghaziabad Development Authority: if daily wage worker was not employed as per rules, then
cannot re-employ them as it will violate Art 14

Jagbir Singh ruling:

Paras 15 and 16: court noted trend that there is no reinstatement In case of daily wage
workers, so upheld HC ruling. But only addition is that HC did not compensate workers but
SC did.

Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya

Not a case under IDA but under a special statute to protect teachers. Tribunal found
termination to be illegal and reinstated her, HC reversed it. appeal to SC:

Tribunal has the power to reinstate the employee.

Normal rule is to reinstate with backwages. But there can be exceptions. Court also deals
with alt employment:

Point 6deals with the delay in raising dispute factor of Jagbir Singh. They says that due to
pendency of litigation and high legal cost, it should not affect the employee if there is delay.

They also overrule JK Synthetics where it was held that continuity of service is not a right
after reinstatement. But here the court held that the very concept of reinstatement is to put the
employee in the same place as before termination so it should mean continuity of service.

The lack of backwages and reinstatement has resulted in a situation where people have
stopped filing appeals. Even if you win the appeal, you don’t get monetary relief.

MODULE 7
There are also some internal authorities like the Works Committee (there in Sections 3 of
both IDA and IRC – 100 or more workmen, apt govt can require setting up of Works
Committee. Function is to secure and preserve amity and good relations, to prevent the
escalation of all disputes). But works Committee have not been successful – unions have
been suspicious as they are worries that Works Committee will replace them as it has both
reps from worker and management and that it is a powerless body. 1960 SC decision also
said Works Committee does not have any concrete power (North Brook Jute v. Workmen)

Grievance redressal machinery – also internal mechanism – to redress worker issues at an

individual level. IDA was meant for collective issues but it was added in 2010. Every
industry w more than 20 workmen needs GRM with equal rep of employer and workmen and
total shall not exceed 6. Rep of women workers – at least half. Again, not very successful.
This committee shall not affect right to raise dispute – so workers don’t use it. appellate
mechanism – from GRC to employer.

This has been retained in the IRC with some changes. Now appeal is to the conciliation
officer (external body). Some minor changes in membership. They’ve also introduced
limitation period of 1 year from cause of action.