Industrial Disputes Act and Compensation for Members: A Comprehensive Overview, Schemes and Mind Maps of Policy analysis

Download Industrial Disputes Act and Compensation for Members: A Comprehensive Overview and more Schemes and Mind Maps Policy analysis in PDF only on Docsity! KLE LAW ACADEMY BELAGAVI (Constituent Colleges: KLE Society’s Law College, Bengaluru, Gurusiddappa Kotambri Law College, Hubballi, S.A. Manvi Law College, Gadag, KLE Society’s B.V. Bellad Law College, Belagavi, KLE Law College, Chikodi, and KLE College of Law, Kalamboli, Navi Mumbai) STUDY MATERIAL for LABOUR LAW I Prepared as per the syllabus prescribed by Karnataka State Law University (KSLU), Hubballi Compiled by Dr. Vijay V. Muradande, Asst. Prof. Reviewed by Mr. Santosh R. Patil, Principal K.L.E. Society’s S.A. Manvi Law College, Gadag This study material is intended to be used as supplementary material to the online classes and recorded video lectures. It is prepared for the sole purpose of guiding the students in preparation for their examinations. Utmost care has been taken to ensure the accuracy of the content. However, it is stressed that this material is not meant to be used as a replacement for textbooks or commentaries on the subject. This is a compilation and the authors take no credit for the originality of the content. Acknowledgement, wherever due, has been provided. This Study Material is prepared by me in consultation with Principal by reading the following reference books mentioned below, for more and further reading the reader can refer these books. Books Referred:  Malhotra O. P. – Law of Industrial Disputes, Vol. I and II.  S C Srivastava, Industrial Relations and Labour Laws  Dr V G Goswami Labour Insdustrial Laws  S. N Mishra - Labour Laws S. C. Srivastava - Social Security and Labour Laws.  G Ramanujam, Industrial Labour Movement  P L Malik, Industrial Law  Mamoria and Memoria, Dynamic of Industrial Relations  First National Labour Commission Report, 1969  Second National Labour Commission Report, 2002  International Labour Conventions and Recommendations. Bare Acts:  The Trade Unions Act,1926  The Industrial Disputes Act, 1947  The Industrial Disputes Act, 1947  The Employees Standing Orders Act, 1946  The Employees Compensation Act, 1923  The Employers State Insurance Act, 1948  The Payment of wages Act,1936  The Factories Act, 1948 UNIT-I LAW RELATING TO TRADE UNION IN INDIA Introduction: The law relating to labour and employment in India is primarily known under the broad category of “Industrial Law”. Industrialization is considered to be one of the key engines to support the economic growth of any country. The commence of industry and its growth is not a venture of the employer alone; yet it involves the hard work and tough grind of each and every stakeholder of the industry including the labourers, supervisors, managers and entrepreneurs. With the initiation of the concept of welfare state in the early realm of independence of our country, various legislative efforts have made their first move in the direction of welfare, equitable rights, social justice, social equity and equitable participation of the labour as a stakeholder at parity. A plethora of labour laws have been established to ensure elevated health, safety, and welfare of workers; to protect workers against oppressive terms as individual worker is economically weak and has little bargaining power; to encourage and facilitate the workers in the organization; to deal with industrial disputes; to enforce social insurance and labour welfare schemes and alike. Labour laws are the one dealing with employment laws in any organization – whether it is a manufacturing organization or trading organization or shops and establishment. The labour laws address the various administrative rulings (such as employment standing orders) and procedure to be followed, compliance to be made and it addresses the legal rights of, and restrictions on, working people and their organizations. By and large the labour law covers the industrial relations, certification of unions, labour management relations, collective bargaining and unfair labour practices and very importantly the workplace health and safety with good environmental conditions. Further the labour laws also focus on employment standards, including general holidays, annual leave, working hours, unfair dismissals, minimum wage, layoff procedures and severance pay and many other issues related to employer and employee and the various compliance requirements. The labour laws derive their origin, authority and strength from the provisions of the Constitution of India. The relevance of the dignity of human labour and the need for protecting and safeguarding the interest of labour as human beings has been enshrined in Chapter-III (Articles 16, 19, 23 & 24) and Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India keeping in line with Fundamental Rights and Directive Principles of State Policy. Labour law reforms are an ongoing and continuous process and the Government has been introducing new laws and amending the existing ones in response to the emerging needs of the workers in a constantly dynamic economic environment. Labour is a subject in the Concurrent List where both the Central & State Governments are competent to enact legislation subject to certain matters being reserved for the Centre. Historical aspects: Master and Slave Relationship Since the Industrial Revolution, the law and practice of capital-labour relationship which is the most important aspect of master and servant relationship have undergone a great evolution and for the proper understanding of the significance and development of industrial Jurisprudence, a resume of this evolution is very essential. During the early stage of capitalism, the relationship between the capitalist and the labourer was governed by the principle of master and slave. According to this principle, the capitalist was a man and the labour was a thing. The former, therefore, could not confer on the latter nor could the latter contract from the former any rights. The capitalist did not employ the labourer; either he bought him or got him. The relationship between them was based on coercion and not on free will. In the language of law, it was status and not contract that determined their relationship. Later on, when the labourer’s position improved from slave to serf, he could contract few rights. But even then, the capitalist retained most of his unrestricted coercive powers over him. As a serf, the labourer was neither an unfree slave nor a free servant; he was rather a half slave and half servant. It was predominantly status, again, that determined the relationship between the labourer as a serf and the capitalist. In the next stage, the capital-labour relationship came to be based on contract instead of on status. The relationship between the capitalist and the labourer was now that of master and servant. They were, at least in theory, free to acquire rights from and impose duties upon each other by voluntary mutual contract; though in practice the freedom was false. The then prevailing state of policy of laissez faire i.e. of letting the bargain between the capitalist and the labourer be what they liked in combination with the superior social and economic position of the capitalist, rendered the freedom of contract meaningless. In an industrial era, now the evolution of capital labour relationship is marked by the recognition of two aspects, namely- (i) The existence of two distinct social groups or classes i.e. Capitalist and Labourers, each possessing a different social and economic position; and (ii) The necessity of State intervention in capital-labour relationship for protecting and balancing the contracting claims of these groups. The enhancement of industrial laws in particular, and State support to trade unionism and collective bargaining in general, are the important characteristics of the new basis of capital-labour relationship. The new capital-labour relationship is still that of master and servant and is based on the freedom of contract, but unlike in the past, the freedom is now no more the individual freedom of a labourer, but is the collective freedom of a group or union of labourers and the contract is no more an individual contract between the capitalist and the labourer but is ‘collective agreement’ between a group or class or union of labourers on the one hand and the capitalist or group of capitalists on the other. In short, the labourer is now no more a condemned slave, neither an unfree serf nor a submissive servant, but is a free member of a group or class or union of labourers now known by the name ‘employee’ or ‘worker’. However, this recognized right assuming different dimensions with the changing needs of the State and employer. The Nature of Master and Servant Relationship A servant is one who works for another individual, known as the master, with or without pay. The master and servant relationship only arises when the tasks are performed by the servant under the direction and control of the master and are subject to the master's knowledge and consent. Advocate S. R. Samant observed that: “The words master and servant are suggestive of the ideas of domination and submission hidden behind them. According to the settled law of master and servant, the master not have much impact, unlike in developing economy. Countries like the U.S. and England, etc. with advanced and free market economy only lay down bare rules for observance of employers and workers giving them freedom to settle their disputes. In the U.S., States intervention in industrial dispute is eliminated to actual or threatened workers’ stoppages that may imperil the national economy, health or safety. However, in a developing economy, the States rules cover a wider area of relationship and there is equally greater supervision over the enforcement of these rules. This is emphatically so in developing countries with labour surplus. It is a concern of the state to achieve a reasonable growth rate in the economy and to ensure the equitable distribution thereof. This process becomes more complex in a country with democratic framework guaranteeing fundamental individual freedoms to its citizens. Hence, the State in a developing country concerns itself not only with the content of work rules but also with the framing of rules relating to industrial discipline, training, and employment. The founding fathers of democratic Constitution of India were fully aware about these implications while they laid emphasis to evolve a welfare state embodying federal arrangement. Entries about labour relations are represented in all the three lists in the Constitution. Yet most important ones come under the Concurrent list. These are industrial and labour disputes, trade unions and many aspects of social securities and welfare like employer’s’ liability, employees’ compensation, provident fund, old age pensions, maternity benefit, etc. Thus, the Industrial Disputes Act, 1947, the Minimum Wages Act, 1948, the Employees’ State Insurance Act, 1948, etc. come under the concurrent list. Some States have enacted separate amendment Acts to some of the above legislations to meet local needs. Such amendments are recommended either with the assent of the President of India or by promulgating rules pursuant to the powers delegated by the Central Act. Under the rule making powers delegated by the Centre, the States have often been able to adopt Central Act to local needs without the President’s assent. The Central acts often delegate such powers. For example, Section 38 of the Industrial Disputes Act delegates to the appropriate government, which in many is the State Government, the power to promulgate such rules as may be needed for making the Act effective. Similarly, Section 29 and Section 30 of the Minimum Wages Act and Section 26 of the Payment of Wages Act delegated the rule making power to the State. In pursuance to this, several States have promulgated separate minimum wages rules and payment of wage rules. The Factories Act also contains similar provisions and they have been similarly availed of. Further, the goals and values to be secured by labour legislation and workmen have been made clear in Part IV, Directive Principles of the State Policy of the Constitution. Thus, the State shall secure a social order for the promotion of welfare of the people and certain principles of policy should be followed by the State towards securing right to adequate means of livelihood, distribution of the material resources of the community to subserve the common good, prevention of concentration of wealth via the economic system, equal pay for equal work for both men and women, health and strength of workers including men, women and children are not abused, participation of workers in management of industries, just and humane conditions of work and that childhood and youth are protected against exploitation against exploitation and against moral and material abandonment. By and large industrial and labour legislations have been directed towards the implementation of these directives. Factories Act, 1948, ESI Act, 1948, Employees’ Compensation Act, 1923 are focused to the regulation of the employment of the women and children in factories, just and humane conditions of work, protection of health and compensation for injuries sustained during work. Minimum Wages Act, 1948 and the Payment of Wages Act, 1936 regulate wage payment. Payment of Bonus Act, 1965 seeks to bridge the gap between the minimum wage and the living wage. However, the directives relating to distribution of wealth, living wages, equal pay for equal work, public assistance, etc. have not been generally implemented as yet. TRADE UNIONS ACT, 1926 Trade Union Movement in India is not a new idea. From the Marxian to the Gandhian, move violently to non violence, howlingness to achievement Trade Union Movement has been gradually developed till date. It is mentionable that, in industrially developed countries, there are every Trade Unionism in the fields of Agriculture, Industry, Bus and Lorry, Handy Workers and Labours, and Edu- Professionals etc. Their Trade Unionism had made a great impact on the social, political and economic life, while in India; Trade Unionism can be seen only in the field of Industrial area. As long as history of human society various conflicts between workers group and employers group have been lasting in the form of strike, gherao, lock out, pen down etc against exploitation. To make people strengthen in a democratic way to asset their demands over their contribution to an organization, people associate themselves in a group and constitute a Union for common welfare. Thus Trade Union is an instrument of defence formed by employees against exploitations to protect themselves from economic as well as social interests. This is a complex institution with a numerous facts like social, economic, political and psychological. Trade Union provides services as an agent of workers and working classes at large. In this epistle thought on Trade Union Movement in India, a brief discussion is made on stipulations in relation to Trade Unionism. The need for Trade Unionism: The need for Trade Unionism since the human set up has been felt necessary in the following ways- a) To provide job security to the workers group working in different industries. b) To safe guard workers common interest. c) To bring the situation in participation of decision making. d) To communicate better industrial relation among workers, employers and system groups. e) To bring an industrial relation with win-win- situation through collective bargaining with the union leaders’ representativeness. Gandhiji comments, Trade Union movement as a reformist and economic organization and considers capital and lobour are equally parts and parcels of an organization.(Known as Sorvodya) History of Trade Union Movement in India: In India, Trade Union movement has been considered as the product of industrial development since the First World War 1914-18. Before the time Indian workers were poor and did not have strong union to effort legal fight against any exploiters. At that time they used to follow the guidelines of Government of India’s Factory Act 1881 which was not perfect to protect the interests of employees. The system of collective bargaining was totally absent. In several industries, the workers went on strikes every now and then to secure wage increase. In that mean time, Labour leader Narayan Meghaji Lokkande led a labour movement and formed wages from their employers according to the rules of The Plantation Labour Act, 1951, which regulates the wages of tea-garden workers, their duty hours and the amenities, states that the management is supposed to provide housing, drinking water, education, health care, child care facilities, accident cover and protective equipment. ILO Conventions relating to trade Unions and Constitutional Provision: International Labour Organisation (ILO) is the most important organisation in the world level and it has been working for the benefit of the workers throughout the world. It was established in the year 1919. It is a tripartiate body consisting of representatives of the Government, Employer, workers. It functions in a democratic way by taking interest for the protection of working class throughout the world. It is also working at the international level as a ‘saviour of workers’ ‘protector of poor’ and it is a beacon light for the change of social justice and social security. The I.L.O examines each and every problem of the workers pertaining to each member country and discusses thoroughly in the tripartiate body of all the countries. The I.L.O passes many Conventions and Recommendations on different subjects like Social Security, Basic Human Rights, Welfare Measures and Collective Bargaining. On the basis of Conventions and Recommendations of I.L.O. every country incorporates its recommendations and suggestions in its respective laws. The idea of protecting the interest of the labour against the exploitation of capitalists owes its origin to the philanthropic ideology of early thinkers and philosophers, and famous among them is “Robert Owen” who being himself an employer took interest in regulating hazardous working conditions of the workers and also in human conditions under which the workers were being crushed underneath the giant wheels of production. Aims of the International Labour Organisation: The principle aim of the I.L.O is the welfare of labour as reaffirmed by the Philadelphia Conference of 1944 under the Philadelphia Declaration, on which the I.L.O. is based 1. Labour is not a commodity; 2. Freedom of expression and of association are essential to sustained progress; 3. Poverty anywhere constitutes danger to prosperity everywhere; and 4. The war against want requires to be carried on with unrelenting vigour within each nation, and by continuous and concerted international effort in which the representatives of workers and employers, employing equal status with those of governments, join with them in free discussion and democratic decision with a view to the promotion of the common welfare. International Labour Standards on Freedom of Association: The principle of freedom of association is at the core of the ILO's values: it is enshrined in the ILO Constitution (1919), the ILO Declaration of Philadelphia (1944), and the ILO Declaration on Fundamental Principles and Rights at Work (1998). It is also a right proclaimed in the Universal Declaration of Human Rights (1948). The right to organize and form employers' and workers' organizations is the prerequisite for sound collective bargaining and social dialogue. Nevertheless, there continue to be challenges in applying these principles: in some countries certain categories of workers (for example public servants, seafarers, workers in export processing zones) are denied the right of association, workers' and employers' organizations are illegally suspended or interfered with, and in some extreme cases trade unionists are arrested or killed. ILO standards, in conjunction with the work of the Committee on Freedom of Association and other supervisory mechanisms, pave the way for resolving these difficulties and ensuring that this fundamental human right is respected the world over. 1. Freedom of Association and Protection of the Right to Organize Convention, 1948: This Convention provides that workers and employers shall have the right to establish and join organizations of their own choosing without previous authorization. The public authorities are to refrain from any interference which would restrict the right to form organization or impede its lawful exercise. These organizations shall not be liable to be dissolved or suspended by administrative authority. It also provides protection against act of anti-union discrimination in respect of their employment. This convention has been ratified by Albania, Argentina, Austria, Belgium, Brazil, Byelorussia, Cuba, Denmark, Dominican Republic, Finland and France. Federal Republic of Germany and India have not ratified this particular convention. As regards the Trade Unions Act, 1926, it limits the number of outsiders in the executive of a trade union. Further there is restriction on outsiders in the federations of Government servants who cannot affiliate themselves with any central federations of workers. Also, the Government in public interest can forego any association or trade union and detain or arrest a trade union leader under the Essential Services Act, 1967 , the Preventive Detention Act, 1950, the Maintenance of Internal Security Act, 1971 Likewise the Code of discipline in industry, although non-legal and non- statutory, one regulates the organization of constitution of India itself, while guaranteeing freedom in public interest and public good. These laws and practice on trade unions do not conform to the requirements of the convention. 2. Right to Organize and Collective Bargaining Convention, 1949 This fundamental convention provides that workers shall enjoy adequate protection against acts of anti-union discrimination, including requirements that a worker not join a union or relinquish trade union membership for employment, or dismissal of a worker because of union membership or participation in union activities. Workers' and employers' organizations shall enjoy adequate protection against any acts of interference by each other, in particular the establishment of workers' organizations under the domination of employers or employers' organizations, or the support of workers' organizations by financial or other means, with the object of placing such organizations under the control of employers or employers' organizations. The convention also enshrines the right to collective bargaining. 3. Workers' Representatives Convention, 1971 Workers' representatives in an undertaking shall enjoy effective protection against any act prejudicial to them, including dismissal, based on their status or activities as a workers' representative or on union membership or participation in union activities, in so far as they act in conformity with existing laws or collective agreements or other jointly agreed arrangements. Facilities in the undertaking shall be afforded to workers' representatives as may be appropriate in order to enable them to carry out their functions promptly and efficiently. gardeners and maistries employed at the Raj Bhavan at Ootacamund. Those persons are employed for doing domestic and other services and for the maintenance of the Governor's household and to attend to the needs of the Governor, the members of his family, staff and State guests. When employees applied for the registration of trade union, the registrar had rejected their application on the ground that, Raj Bhavan not comes under the meaning of trade and business. The petition has been field seeking to set aside the order of the Registrar of Trade Unions, Madras refusing to register the union of employees of the Madras Raj Bhavan as a trade union under the Trade Unions Act. Supreme Court rejecting the petition, held that, even apart from the circumstance that a large section of employees at Raj Bhavan are Government servants who could not form themselves into a trade union, it cannot be stated that the workers are employed in a trade or business carried on by the employer. The services rendered by them are purely of a personal nature. The union of such workers would not come within the scope of the Act, so as to entitle it to registration there under. The term "trade union" as defined under the Act contemplates the existence of the employer and he employee engaged in the conduct of a trade or business. The definition of the term "workmen" in Sec. 2 (g) would prima facie indicate that it was intended only for interpreting the term "trade dispute". But even assuming that that definition could be imported for understanding the scope of the meaning of the term "trade union" in S. 2 (h), it is obvious that the industry should be one as would amount to a trade or business, i.e., a commercial undertaking. So much is plain from the definition of the term "trade union", itself. I say this because the definition of "industry" in the Industrial Disputes Act is of wider significance. Section 2 (j) of the Industrial Disputes Act which defines "industry" states its meaning as “any business, trade undertaking, manufacture or calling of employers and includes any calling, services, employment, handicraft or industrial occupation or avocation of workmen." In Tamil Nadu NGO Union v. Registrar, Trade Unions, in this case Tamil Nadu NGO Union, which was an association of sub magistrates of the judiciary, tahsildars, etc., was not a trade union because these people were engaged in sovereign and regal functions of the State which were its inalienable functions. In GTRTCS and Officer’s Association, Bangalore and others vs Asst. Labor Commissioner and anothers, in this case the definition of workmen for the purpose of Trade Unions is a lot wider than in other acts and that the emphasis is on the purpose of the association rather than the type of workers and so it is a valid Trade Union. Definition of Trade Dispute: "trade dispute" means any dispute between employers and workmen, or between workmen and workmen, or between employers and employers which is connected with the employment or non-employment, or the terms of employment or the conditions of labor, of any person, and "workmen" means all persons employed in trade or industry whether or not in the employment of the employer with whom the trade dispute arises; Procedures for the Registration of Trade Unions: The main object of the Trade Unions Act, 1926 is to provide machinery for registration and regulation of Trade Unions. Although registration of a trade union is not mandatory, it is advisable to register the trade unions as the registered trade unions are entitled to get several benefits, immunities and protection under the act. There are specific rights and privileges conferred on the members of the registered trade unions. The members of the registered trade unions are entitled to get protection, immunity and certain exceptions from some civil and criminal liabilities. A trade union can only be registered under the Trade Unions Act, 1926. Trade union Act, 1926 not provides compulsory registration. However, there are certain disadvantages of non registration. Therefore it is better to register the trade union. The following is the procedure for registration of trade union. Appointment of Registrar: Section 3 of the Trade Union Act, 1926 empowers the appropriate Government to appoint a person to be a registrar of Trade Unions. The appropriate Government is also empowered to appoint additional and Deputy Registrars as it thinks fit for the purpose of exercising and discharging the powers and duties of the Registrar. However, such person will work under the superintendence and direction of the Registrar. He may exercise such powers and functions of Registrar with local limit as may be specified for this purpose. Mode of registration: Sec 4 of the Act states that, any seven or more members of a Trade Union may, by subscribing their names to the rules of the Trade Union and by otherwise complying with the provisions of this Act with respect to registration, apply for registration of the Trade Union under this Act. However, no Trade Union of workmen shall be registered unless at least ten per cent. or one hundred of the workmen, whichever is less, engaged or employed in the establishment or industry with which it is connected are the members of such Trade Union on the date of making of application for registration. No Trade Union of workmen shall be registered unless it has on the date of making application not less than seven persons as its members, who are workmen engaged or employed in the establishment or industry with which it is connected. Where an application has been made under sub-section (1) of Sec 4 for the registration of a Trade Union, such application shall not be deemed to have become invalid merely by reason of the fact that, at any time after the date of the application, but before the registration of the Trade Union, some of the applicants, but not exceeding half of the total number of persons who made the application, have ceased to be members of the Trade Union or have given notice in writing to the Registrar dissociating themselves from the applications. The Supreme Court in Tirumala Tirupati Devasthanam held that, any group of employees may be registered as a trade union under the Act for the purpose of regulating the relations between them and their employer or between themselves. It would be apparent from this definition that any group of employees which comes together primarily for the purpose of regulating the relations between them and their employer or between them and other workmen may be registered as a trade union under the Act. Application for registration: Application for registration must be submitted in the prescribed format. Sec 5 provides that, every application for registration of a Trade Union shall be made to the Registration: As per sec 8 of the Act, the Registrar, on being satisfied that the Trade Union has complied with all the requirements of this Act in regard to registration, shall register the Trade Union by entering in a register, to be maintained in such form as may be prescribed, the particulars relating to the Trade Union contained in the statement accompanying the application for registration. Certificate of registration: Sec 9 of the Act empowers the Registrar, on registering a Trade Union under section 8, shall issue a certificate of registration in the prescribed form which shall be conclusive evidence that the Trade Union has been duly registered under this Act. Minimum requirement about membership of a Trade Union: Sec 9-A provides that, a registered Trade Union of workmen shall at all times continue to have not less than ten percent or one hundred of the workmen, whichever is less, subject to a minimum of seven, engaged or employed in an establishment or industry with which it is connected, as its members. Cancellation of registration: A certificate of registration of a Trade Union may be withdrawn or cancelled under Sec 10 of the Act, by the Registrar 1. on the application of the Trade Union to be verified in such manner as may be prescribed; 2. if the Registrar is satisfied that the certificate has been obtained by fraud or mistake, or that the Trade Union has ceased to exist or has willfully and after notice from the Registrar contravened any provision of this Act or allowed any rule to continue in force which is inconsistent with any such provision, or has rescinded any rule providing for any matter provision for which is required by section 6; 3. if the Registrar is satisfied that a registered Trade Union of workmen ceases to have the requisite number of members: Registrar to the Trade Union shall give a previous notice of two months in writing specifying the ground on which he proposed to withdraw or cancel the certificate of registration otherwise than on the application of the Trade Union. Appeal: Any person aggrieved by any refusal of the Registrar to register a Trade Union or by the withdrawal or cancellation of a certificate of registration may, within such period as may be prescribed, appeal under Sec 11 of the Act, a) where the head office of the Trade Union is situated within the limits of a Presidency town to the High Court, or b) where the head office is situated in an area, falling within the jurisdiction of a Labour Court or an Industrial Tribunal, to that Court or Tribunal, as the case may be; c) where the head office is situated in any area, to such Court, not inferior to the Court of an additional or assistant Judge of a principal Civil Court of original jurisdiction, as the appropriate Government may appoint in this behalf for that area. The appellate Court may dismiss the appeal, or pass an order directing the Registrar to register the Union and to issue a certificate of registration under the provisions of section 9 or setting aside the order or withdrawal or cancellation of the certificate, as the case may be, and the Registrar shall comply with such order. Advantages of registration of trade Union: A trade union enjoys the following advantages after registration under sec 13, namely a) A trade union after registration becomes a body corporate b) It gets perpetual succession and common seal c) It can acquire and hold both movable and immovable property d) It can enter into a contract e) It can sue and be sued in its registered name Objects on which general funds may be spent: Sec 15 provides the objects on which general fund may be spent. The general funds of a registered Trade Union shall not be spent on any other objects than the following, namely:— 1. the payment of salaries, allowances and expenses to office-bearers of the Trade Union; 2. the payment of expenses for the administration of the Trade Union, including audit of the accounts of the general funds of the Trade Union; 3. the prosecution or defence of any legal proceeding to which the Trade Union or any member thereof is a party, when such prosecution or defence is undertaken for the purpose of securing or protecting any rights of the Trade Union as such or any rights arising out of the relations of any member with his employer or with a person whom the member employs; 4. the conduct of trade disputes on behalf of the Trade Union or any member thereof; 5. the compensation of members for loss arising out of trade disputes; 6. allowances to members or their dependants on account of death, old age, sickness, accidents or unemployment of such members; 7. the issue of, or the undertaking of liability under, policies of assurance on the lives of members, or under policies insuring members against sickness, accident or unemployment; 8. the provision of educational, social or religious benefits for members (including the payment of the expenses of funeral or religious ceremonies for deceased members) or for the dependants of members; 9. the upkeep of a periodical published mainly for the purpose of discussing questions affecting employers or workmen as such; 10. the payment, in furtherance of any of the objects on which the general funds of the Trade Union may be spent, of contributions to any cause intended to benefit workmen in general, provided that the expenditure in respect of such contributions in any financial year shall not at any time during that year be in excess of one-fourth of the combined total of the gross income which has up to that time accrued to the general funds of the Trade Union during that year and of the balance at the credit of those funds at the commencement of that year. Until 1926, unions of workers indulging in strike and causing financial loss to management were liable for illegal conspiracies. For instance in Buckingham and Carnatic Mills the unions were held liable for illegal conspiracies and employers were awarded damages. It was only in 1926 that the Trade Unions Act, 1926 immunizes trade union activity, from restraint of trade and conspiracy. But these provisions are of pre constitutional era. These statutory provisions must now be considered in the light of the Constitutional guarantees of the right to freedom of speech and expression, to assemble peaceably, to form associations and unions, to practice any profession and to carry on any occupation, trade or business, and grants protection against economic exploitation. Let’s examine the nature and scope of the immunity afforded to the members and office-bearers of registered trade union from civil and criminal conspiracies and restraint of trade under the Trade Unions Act, 1926. 1. Immunity From Criminal Conspiracy Section 17 of the Trade Unions Act, 1926 seeks to insulate trade unions activity from liability for criminal conspiracy. It states that, no office-bearer or member of a registered Trade Union shall be liable to punishment under sub-section (2) of Section 120-B of the Indian Penal Code in respect of any agreement made between the members for the purpose of furthering any such object of the Trade Union as is specified in Section 15, unless the agreement is an agreement to commit an offence. The immunity is, however, available only: (i) to office-bearers and members of registered trade unions; (ii) for agreement; (iii) which further any such trade union object as is specified in section 15 of the Act; and (iv) which are not agreements to commit offences. The last of the limitations on the scope of the immunity granted by section 17 of the Trade Unions Act, 1926 raises an issue relating to the very nature of the immunity. Section 120-A of the Indian Penal Code defines criminal conspiracy to mean: (i) an agreement between two or more persons to commit an offence, t.e., in general," an act which is punishable under the Indian Penal Code or any other law for the time being in force; and (ii) an overt act done in pursuance of an agreement between two or more persons to do an illegal act or to do a legal act by illegal means. The Indian Penal Code defines the word "illegal" to include, inter alia, everything which is prohibited by law, or which furnishes ground for a civil action. Since workman's use of instruments of economic coercion in an industrial dispute involve breach of contract and 'frequently injury to the property right of the employer both of which are actionable, use of the instruments of economic coercion amounts to an illegal act within the meaning of section 120-A read with section 43 of the Indian Penal Code. However, section 18 of the Trade Unions Act, inter alia. provides: No suit or other legal proceeding shall be maintainable in any. Civil Court against any registered Trade Union or any office bearer or member thereof in respect of any act 'done in contemplation or furtherance of a trade dispute to which a member of the Trade Union is a party on the ground only that such act induces some other person to break a contract of employment, or that it is in interference with the trade, business or employment of some other person or with the right of some other person to dispose of his capital or of his labour as he wills. Thus, under Section 17 the breach of contract and injury to employers property right cease to be actionable and. therefore, does not amount to criminal conspiracy" as defined in section 120-A read with section 43 of the Indian Penal Code. A question, therefore, arises as, what is the criminal liability in respect of which Section 17 of the Trade Unions Act, 1926 grants immunity? In considering the matter it is relevant to note that section 17 does not grant charter of liberty to commit an offence, which is punishable with death, life imprisonment or rigorous imprisonment for a term of two years or more. In fact as the last words of the section 17 of the Trade Union Act, 1926 indicate that it does not insulate agreement to commit any offence whatsoever. Perhaps the immunity is confined to agreement between two or more persons to do or cause to be done, acts which are prohibited by law but which neither amounts to an offence nor furnishes ground for civil action. Breach of contract does give rise to a civil cause of action, therefore, under section 43 of the Indian Penal Code an agreement to commit breach of contract through withdrawal of labour as an instrument of economic coercion in an industrial dispute, is a criminal conspiracy. Further, so long as any law declares withdrawal of labour in breach of contract to be an offence of a member of the consenting party takes any step to encourage, abet, instigate, persuade, incite or in any manner act in furtherance of the objective, the crime of criminal conspiracy would have been committed. Finally, since criminal conspiracy is a substantive offence punishable under section 120-B of the Indian Penal Code it is doubtful if Section 17 grants immunity at all. The word "illegal" is applicable to everything which is an offence or which is prohibited by law, or which furnishes ground for a civil action, and a person is said to be "legally' bound to do, whatever it is illegal for him to omit. Reading section 18 of the Trade Unions Act with section 43 of the Indian Penal Code it would appear that withdrawal of labour as an instrument of economic coercion in an industrial dispute in breach of contract is not illegal. Accordingly, an agreement between two or more workmen, members of a registered trade union to withdraw labour as an instrument of economic coercion in an industrial dispute is not an agreement "to do or cause to be done an illegal act" and amounts to a criminal conspiracy within the meaning of section 120-A of the Indian Penal Code. Accordingly, withdrawal of labour in breach of contract does not give rise to a cause of action in civil courts. The Calcutta High Court in Jay Engineering Works Ltd. v. Staff while interpreting the provisions of section 17 of the Trade Unions Act, 1926 held that, no protection is available to the members of a trade union for any agreement to commit an offence. When a group of workers, large or small, combined to do an act for the purpose of one common aim or object it must be held that there is an agreement among the workers to do the act and if the act committed is an offence, it must similarly be held that there is an agreement to commit an offence. 2. Immunity From Civil Actions Section 18 of the Trade Unions Act, 1926, grants immunity to registered trade unions from civil suits i. No suit or other legal proceeding shall be maintainable in any civil court against any registered trade union or any officebearer or member thereof in respect of any act done in contemplation or furtherance of a trade dispute to which a member of the trade union is a party on the ground only that such act induces some other person to break a contract of employment, or that it is in agitation by the workmen must be peaceful and not violent. Any concerned movement by workmen to achieve their objectives is certainly permissible even inside the industrial establishment. 3. Enforceability of Agreements: Section 19 grants protection to the agreements (between the members of a registered trade union) whose objects are in restraint of trade notwithstanding anything contained in any other law for the time being in force declaring such agreements to be void or voidable. Problems of trade Union: Following are some of the problems that are faced by trade unions in India, namely 1. Multiplicity of unions: Unlike the developed countries of the world (like U.K. and U.S.A) the number of unions is relatively large in India. A number of unions exist in one industrial unit. The rival unions sometimes do more harm to the workers than good. 2. Absence of union structure: The structure of the trade union may be a craft union, industrial union or the general union. A craft union is a union of workers representing particular skills such as electricians. When all the workers of an industry become members of the union, it is known as industrial union. A general union on the other hand covers various types of workers working in the different industries. In India, there is an absence of craft union. National commission on labour has recommended the formation of industrial unions and industrial federations. 3. Limited membership: The membership of the trade unions in India is very less. A trade union cannot become strong unless it can enroll large number of workers as its members. 4. Scarcity of finances: The main problem faced by trade unions in India is the paucity of financial resources. Fragmentation necessarily keeps the finances of the union very low. The membership fees paid by the members are very nominal. For this reason it is not possible for the union to take up welfare activities for its members. 5. Small size: On account of the limited membership, the size of the unions in India is very small. About 70 to 80% of the unions have less than 500 members. 6. Lack of unity: The major weakness of the trade union movement in India is the lack of unity among the various unions existing in India at present. The labour leaders have their own political affiliations. They use labour force for achieving their political gains rather than concentrating on the welfare of the workers. 7. Lack of trained workers: The workers in India are uneducated and untrained. The politicians, who are least concerned with the welfare of the workers, become their leaders. Backwardness of the workers and their fear of victimisation keep them away from union activities. 8. Political dominance: It is very unfortunate for the workers that all trade unions in India are being controlled by political parties. In order to achieve their political ends, they exaggerate workers’ demands and try to disturb the industrial peace of the country. 9. Hostile attitude of employers:The employers have their own unions to oppose the working class. According to M. M. Joshi “They first try to scoff at it, then try to put it down; lastly if the movement persists to exist, they recognise it”. In order to intimidate the workers, employers use many foul means which go to the extent of harassing the leaders by black-listing them or threatening them through hired goondas. Certain other reasons which also make the union movement weak are a) recruitment of workers through the middlemen who do not allow these persons to become members of the union b) workers in India come from different castes and linguistic groups it affects their unity c) unions least care for the welfare activities of their members. The weak position of the Trade Unions in the country stands in the way of the healthy growth of the device of collective bargaining for the achievement of workers’ aims. It is one of the principal reasons that adjudication rather than negotiation has to be applied for the settlement of industrial disputes. It is incumbent on the part of all concerned with the welfare of the workers to make the trade unions strong and effective for the purposes for which they are formed. A strong union is good for the workers, the management, as well as for the community. Amalgamation of Trade Unions: Sec 24 provides that, any two or more registered Trade Unions may become amalgamated together as one Trade Union with or without dissolution or division of the funds of such Trade Unions or either or any of them, provided that the votes of at least one-half of the members of each or every such Trade Union entitled to vote are recorded, and that at least sixty per cent. of the votes recorded are in favour of the proposal. Notice of change of name or amalgamation: Sec 25 provides that, notice in writing of every change of name and of every amalgamation signed, in the case of a change of name, by the Secretary and by seven members of the Trade Union changing its name, and in the case of an amalgamation, by the Secretary and by seven members of each and every Trade Union which is a party thereto, shall be sent to the Registrar and where the head office of the amalgamated Trade Union is situated in a different State, to the Registrar of such State. Recognition of Trade Union: There is no specific provision for the recognition of the trade unions under the Trade Unions Act, 1926. Hence, recognition is a matter of discretion in the hands of the employer. Provisions for the recognition of trade unions were included in the Trade Union (Amendment) Act, 1947, but the act has not been implemented. The Trade Union Bill, 1950 also provided for recognition of trade union (based on the largest membership among the existing trade unions), but the bill lapsed due to dissolution of parliament. Recognition of Central Trade Unions The Central Government gives recognition to Trade Union as Central Trade Union for the purpose of representing in the International Labour Organizations and International Conferences, if such trade union fulfils the following conditions: industrial disputes. The Whitely Commission made in this regard the perceptive observation that the attempt to deal with unrest must begin rather with the creation of an atmosphere unfavourable to disputes than with machinery for their settlement. The next stage in the development of industrial law in this country was taken under the stress of emergency caused by the Second World War. Rule 81-A of the Defence of India Rules was intended to provide speedy remedies for industrial disputes by referring them compulsorily to conciliation or adjudication, by making the awards legally binding on the parties and by prohibiting strikes or lock-outs during the pendency of conciliation or adjudication proceedings and for two months thereafter. This rule also put a blanket ban on strikes which did not arise out of genuine trade disputes. With the termination of the Second World War, Rule 81-A was about to lapse on 1st October, 1946, but it was kept alive by issuing an Ordinance in the exercise of the Government’s Emergency Powers. Then Industrial Disputes Act, 1947 enacted. The provisions of this Act, as amended from time to time, have furnished the basis on which industrial jurisprudence in this country is founded. OBJECT AND SIGNIFICANCE OF THE ACT The Industrial Disputes Act, 1947 makes provision for the investigation and settlement of industrial disputes and for certain other purposes. It ensures progress of industry by bringing about harmony and cordial relationship between the employers and employees. Definitions of the words ‘industrial dispute, workmen and industry’ carry specific meanings under the Act and provide the framework for the application of the Act. In the case of Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate, AIR 1958 S.C. 353, the Supreme Court laid down following objectives of the Act: (i) Promotion of measures of securing and preserving amity and good relations between the employer and workmen. (ii) Investigation and settlement of industrial disputes between employers and employers, employers and workmen, or workmen and workmen with a right of representation by registered trade union or federation of trade unions or an association of employers or a federation of associations of employers. (iii) Prevention of illegal strikes and lock-outs. (iv) Relief to workmen in the matter of lay-off and retrenchment. (v) Promotion of collective bargaining. This Act extends to whole of India. The Act was designed to provide a self- contained code to compel the parties to resort to industrial arbitration for the resolution of existing or apprehended disputes without prescribing statutory norms for varied and variegated industrial relating norms so that the forums created for resolution of disputes may remain unhampered by any statutory control and devise rational norms keeping pace with improved industrial relations reflecting and imbibing socio-economic justice. This being the object of the Act, the Court by interpretative process must strive to reduce the field of conflict and expand the area of agreement and show its preference for upholding agreements sanctified by mutuality and consensus in larger public interest, namely, to eschew industrial strife, confrontation and consequent wastage (Workmen, Hindustan Lever Limited v. Hindustan Lever Limited, (1984) 1 SCC 728). Important Definitions under Industrial Disputes Act, 1947 Definition of Industry: Section 2(j) defines industry, industry" means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. This definition is in two parts. The first says that industry means any business, trade, undertaking, manufacture or calling of employers and the second part provides that it includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. "If the activity can be described as an industry with reference to the occupation of the employers, the ambit of the industry, under the force of the second part takes in the different kinds of activity of employees mentioned in the second part. But the second part standing alone cannot define industry. By the inclusive part of the definition the labour force employed in any industry is made an integral part of the industry for the purpose' of industrial disputes although industry is ordinarily something which employers create or undertake". However, the concept that "industry is ordinarily something which employers create or undertake" is gradually yielding place to the modern concept which regards industry as a joint venture undertaken by employers, and workmen, an enterprise which belongs equally to both. Further it is not necessary to view definition of industry under Section 2(j) in two parts. The definition read as a whole denotes a collective which employers and employees are associated. It does not consist either by employers alone or by employees alone. An industry exists only when there is relationship between employers and employees, the former engaged in business, trade, undertaking, manufacture or calling of employers and the latter engaged in any calling, service, employment, handicraft or industrial occupation or avocation. There must, therefore, be an rise in which the employers follow their avocations as detailed in the defamation and employ workmen. Thus, a basic requirement of 'industry' is that the employers must "Be" ""carrying on any business, 'trade, undertaking, manufacture or calling of employers'. There is next much difficulty in ascertaining the meaning of the words business, trade, manufacture, or calling of employers in order to determine whether a particular activity carried on with the co-operation of employer and employees is an industry or not but the difficulties have cropped up in defining the word 'undertaking'. "Undertaking" means anything undertaken, any business, work or project which one engages in or attempts, or an enterprise. It is a term of very wide denotation have been evolved by the Supreme Court in a number of decisions which But all decisions of the Supreme Court are agreed that an undertaking to be within the definition in Section 2(j) must be read subject to a limitation, namely, that it must be analogous to trade or business.1 Some working principles furnish a guidance in determining what are the attributes or characteristics which will indicate that an undertaking is analogous to trade or business. The first principles was stated by Gajendragadkar, J. in Hospital Mazdoor Sobfefl case as follows : "As a working principle it may be stated that an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material services to the community at large or a part of such community- with, the organised activities possessing the triple elements abovementioned, although not trade or business, may still be industry provided the nature of the activity,, viz. the employer-employee basis, bears resemblance to what is found in, trade or business. This takes into the fold of "industry" undertaking, callings and services, adventures analogous to the carrying on of trade or business. All features other than the methodology of carrying on the activity, viz., in organizing the co-operation between employer and employee, may be dissimilar. It does not matter if on the employment terms there is analogy". The Supreme Court in Management of Safdarjung Hospital, Delhi v. Kuldip Singh counter to the principles enunciated in Bangalore Water Supply v. A. Rajappa case and overrule its decision. Whether Municipal corporation can be regarded as an industry This question was decided by the court in D.N. Banerjee v. P.R. Mukherjee. In this case the Budge Municipality dismissed two of its employees, Mr. P.C. Mitra, a Head clerk and Mr. P.N. Ghose a Sanitary Inspector on charges for negligence, insubordination and indiscipline. The Municipal Workers Union of which the dismissed employees were members questioned the propriety of the dismissal and the matter was referred to the Industrial Tribunal. The Tribunal directed reinstatement and the award was challenged by the Municipality on the ground that its duties being connected with the local self-government it was not an industry and the dispute was not an industrial dispute and therefore reference of the dispute to the tribunal was bad in law. The Supreme Court observed that in the ordinary or non-technical sense industry or business means an undertaking where capital and labour co-operate with each other for the purpose of producing wealth in the shape of goods, tools etc. and for making profits. In the opinion of the Court every aspect of activity in which the relationship of master and servant or employer and employees exists or arises does not become an industry It was further observed that 'undertaking' in the first part and industrial occupation or avocation in the second part of Section 2(j) obviously mean much more than what is ordinarily understood by trade or business. The definition was apparently intended to include within its scope what might not strictly be called a trade or business. Neither investment of capital nor profit making motive is essential to constitute an industry as they are generally, necessary in a business, A public utility service such as railways, telephones, and the supply of power, light or water to the public may be carried on by private companies or business corporations and if these public utility services are carried on by local bodies like a Municipality they do not cease to be an industry, for the reasons stated above Municipal Corporation was held to be an industry. In Permanand v. Nagar Palika, Dehradun and others the Supreme Court held that the activity of a Nagar Palika in any of its department except those dealing with levy of house tax etc, falls within the definition of industry in U.P. Industrial Disputes Act, 1947. Whether hospital is an industry: The question whether hospital is an industry or not has come for determination by the Supreme Court on a number of occasions and the uncertainty has been allowed to persist because of conflicting judicial decisions right from Hospital Mazdoor Sabha case to the Bangalore Water Supply v. A. Rajappa. In State of Bombay v. Hospital Mazdoor Sabha case, the Hospital MazdoorSabha was a registered Trade Union of the employees of hospitals in the State of Bombay, The services of two of its members were terminated by way of retrenchment' by the Government and the Union claimed their reinstatement through a writ petition. It was urged by the State that the writ application was misconceived because hospitals did not constitute an industry. The group of hospitals were run by the State for giving medical relief to citizens and imparting medical education. The Supreme Court held the group of hospitals to be industry and observed as follows : 1. The State is carrying on an 'undertaking' within Section 2(j) when it runs a group of hospitals for purpose of giving medical relief to the citizens and for helping to impart medical education. 2. An activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material services to the community at large or a part of such community with the help of employees is an undertaking. 3. It is the character of the activity in question which attracts the provisions of Section 2(j), who conducts the activity and whether it is conducted for profit or not make a material difference. 4. The conventional meaning attributed to the words, 'trade and business' has lost some of its validity for the purposes of industrial adjudication...it would be erroneous to attach undue importance to attributes associated with business or trade in the popular mind in days gone by. Hospital run by the Government as a part of its function is not an industry. Hospitals run by the State of Orissa are places where persons can get treated. they are run as departments of Government. The mere fact that payment is accepted in respect of some beds cannot lead to the inference that the hospitals are run as a business in a commercial way. Primarily, the hospitals are meant as free service by the Government to the patients without any profit motive". But in view of the decision of the Supreme Court in Bangalore Water Supply v. A. Rajappa Dhanrajgiri Hospital case has been overruled and all hospitals fulfilling the test laid down in Bangalore Water Supply case will be industry. Thus on an analysis of the entire case law up to Bangalore Water Supply case on the subject it can be said that such hospitals as are run by the Government as part of its sovereign functions with the sole object of rendering free service o the patients are not industry. But all other hospitals, both public and private; whether charitable or commercial would be industry if they fulfil the triple test laid down in Bangalore Water Supply v. A. Rajappa. Whether University and Educational Institutions: In University of Delhi v. Ram Nath, the respondent Mr. Ram Nath was employed as driver by University College for women. Mr. Asgar Mashih was initially employed as driver by Delhi University but was later on transferred to the University College for women in 1949. The University of Delhi found that running the busess for transporting the girl students of the women's college has resulted in loss. Therefore it decided to discontinue that facility and consequently the services of the above two drivers were terminated. Supreme Court. It was held that the Law Department of Government could not be considered as an industry. Labour Court and the High Court have not indicated as to how the Law Department is an industry. They merely stated that in some cases certain departments have been held to be covered by the expression industry in some decisions. It was also pointed out that a decision is a precedent on its own facts. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Whether Club is an industry: Clubs or self-service institutions or non-proprietary member's club will be industry provided they fulfill the triple test laid down in Bangalore 'Water Supply v, A. Rajappa.1 The Cricket Club of India case and Madras Gymkhana Club case (discussed below) which were the two leading cases, on- the point so far have been overruled by Bangalore Water Supply case. In Cricket Club of India v. Bombay Labour Union the question was whether the Cricket Club of India, Bombay which was a member's club and not a proprietary club, although it was incorporated as a company under the Companies Act was an industry or not. The club had membership of about 4800 and was employing 397 employees. It was held that the club was a self service institution and not an industry and it was wrong to equate the catering facilities provided by the club to its members or their guests (members paying for that), with a hotel. The catering facility also was in the nature of self service by the club to its members. This case has now been overruled. Madras Gymkhana Club Employees' Union v. Management; is another case on this point. This was a member's club and not a proprietary club with a membership of about 1200. Its object was to provide a venue for sports and games and facilities for recreation and entertainment. It was running a catering department which provided food and refreshment not only generally but also on special occasion. It was held that the club was a member's self-serving institution and not an industry. No doubt the material needs or wants of a section of the community were catered but that was not enough as it was not done as part of trade or business or as an undertaking analogous to trade or business. This case has also been overruled. Now it is not necessary that the activity should be a trade or business or analogous to trade or business It may, therefore, be submitted that both Cricket Club of India and Madras Gymkhana Club would now be an industry because they fulfill the triple test laid down in Bangalore Water Supply case. Both are systematically organized with the co-operation of employer and employee for distribution of service to satisfy human wishes. Whether Agricultural Operation is an industry: The carrying on of agricultural operations by the company for the purposes of making profits, employing workmen who contribute to the production of the agricultural commodities bringing profits to the company was held to be an industry within the meaning of this clause. Where a Sugar Mill owned a cane farm and used its produce for its own consumption and there was evidence that the farm section of the mill was run only to feed the mill, it was held that the agricultural activity being an integral part of industrial activity, the farm section was an industry. Whether Solicitor’s Firm or Lawyer’s Office are industries: In N.N.U.C. Employees v. Industrial Tribunal31; the question was whether a solicitor’s firm is an industry or not. It was held that a solicitor’s firm carrying on work of an attorney is not an industry, although specifically considered it is organized as an industrial concern. There are different categories of servants employed by a firm, each category being assigned by separate duties and functions. But the service rendered by a firm, each category being assigned separate duties or functions. But the service rendered by a solicitor functioning either individually or working together with parties is service which is essentially individual; it depends upon the professional equipments, knowledge and efficiency of the solicitor concerned. Subsidiary work which is purely incidental type and which is intended to assist the solicitor in doing his job has no direct relation to the professional service ultimately rendered by the solicitor. The work of his staff has no direct or essential nexus or connection with the advice which it is the duty of the solicitor to give to his client. There is, no doubt, a kind of cooperation between the solicitor and his employees, but that cooperation has no direct or immediate relation to the professional service which the solicitor renders to his client. This case has been overruled again in Bangalore Water Supply case and now a solicitor’s firm employing persons to help in catering to the needs of his client is an industry. Amended definition of ‘industry’ under the Industrial Disputes (Amendment) Act, 1982 2(j) “Industry” means any systematic activity carried on by co-operation between an employer and his workmen (Whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not: i. any capital has been invested for the purpose of carrying on such activity; or ii. such activity is carried on with a motive to make any gain or profit, and includes: (a) any activity of the Dock Labour Board established under Section 5A of the Dock Workers (Regulations of Employment) Act, 1948, (9 of 1948); (b) Any activity relating to the promotion of sales or business or both carried on by an establishment, but does not include: 1. Any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as is referred to in the foregoing provisions of this clause) and such other activity is the predominant one. Explanation: For the purpose of this sub-clause, “agricultural operation” does not include any activity carried on in a plantation as defined in clause (f) of Section 2 of the Plantations Labour Act, 1951; or 2. hospitals or dispensaries; or 3. educational, scientific, research to training institutions; or 4. institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic service; or 5. khadi or village industries; or 6. any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with defence research atomic energy and space; or 7. any domestic service; or contractor’. There should be due control and supervision by the employer for a master and servant relationship (Dharangadhara Chemical Works Ltd. v. State of Saurashtra). Payment on piece rate by itself does not disprove the relationship of master and servant. Even a part time employee is a worker (P.N. Gulati v. Labour Commissioner). Since he is under an obligation to work for fixed hours every day, jural relationship of master and servant would exist. A casual worker is nonetheless a workman. (c) Employed to do skilled or unskilled etc. Only those persons who are engaged in the following types of work are covered by the definition of “workman”: (i) Skilled or unskilled manual work; (ii) Supervisory work; (iii) Technical work; (iv) Clerical work. Where a person is doing more than one work, he must be held to be employed to do the work which is the main work he is required to do (Burma Shell Oil Storage & Distributing Co. of India v. Burma Shell Management Staff Association, Manual work referred in the definition includes work which involves physical exertion as distinguished from mental or intellectual exertion. A person engaged in supervisory work will be a workman only if he is drawing more than Rs. 1,600 per month as wages. The designation of a person is not of great importance, it is the nature of his duties which is the essence of the issue. If a person is mainly doing supervisory work, but incidentally or for a fraction of the time, also does some clerical work, it would have to be held that he is employed in supervisory capacity; and conversely, if the main work done is of clerical nature, the mere fact that some supervisory duties are also carried out incidentally, will not convert his employment as a clerk into one in supervisory capacity. In other words, the dominant purpose of employment must be taken into account at first and the gloss of additional duties to be rejected, while determining status and character of the job. The work of labour officer in jute mill involving exercise of initiative, tact and independence is a supervisory work. But the work of a teller in a bank does not show any element of supervisory character. Whether teachers are workmen or not After amendment of Section 2(s) of the Act, the issue whether “teachers are workmen or not” was decided in many cases but all the cases were decided on the basis of definition of workman prior to amendment. The Supreme Court in Sunderambal v. Government of Goa held that the teachers employed by the educational institution cannot be considered as workmen within the meaning of Section 2(s) of the Act, as imparting of education which is the main function of the teachers cannot be considered as skilled or unskilled manual work or supervisory work or technical work or clerical work. The Court in this case also said that manual work comprises of work involving physical exertion as distinct from mental and intellectual exertion. The teacher necessarily performs intellectual duties and the work is mental and intellectual as distinct from manual. A person doing technical work is also held as a workman. A work which depends upon the special training or scientific or technical knowledge of a person is a technical work. Once a person is employed for his technical qualifications, he will be held to be employed in technical work irrespective of the fact that he does not devote his entire time for technical work. Thus, the person doing technical work such as engineers, foreman, technologist, medical officer, draughtsman, etc., will fall within the definition of “workman”. A medical representative whose main and substantial work is to do convassing for promotion of sales is not a workman within the meaning of this Section (1990 Lab IC 24 Bom. DB). However, a salesman, whose duties included manual as well as clerical work such as to attend to the customer, prepare cash memos, to assist manager in daily routine is a workman (Carona Sahu Co. Ltd. v. Labour Court 1993 I LLN 300). A temple priest is not a workman (1990 1 LLJ 192 Ker.). Person employed mainly in managerial and administrative capacity: Persons employed mainly in the managerial or administrative capacity have been excluded from the definition of “workman”. Development officer in LIC is a workman (1983 4 SCC 214). In Standard Vacuum Oil Co. v. Commissioner of Labour, it was observed that if an individual has officers subordinate to him whose work he is required to oversee, if he has to take decision and also he is responsible for ensuring that the matters entrusted to his charge are efficiently conducted, and an ascertainable area or section of work is assigned to him, an inference of a position of management would be justifiable. Occasional entrustment of supervisory, managerial or administrative work, will not take a person mainly discharging clerical duties, out of purview of Section 2(s). Industrial Dispute: Industrial Dispute “Industrial Dispute” means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person. [Section 2(k)] The above definition can be analyzed and discussed under the following heads: 1. There should exist a dispute or difference; 2. he dispute or difference should be between: (a) Employer and employer; (b) Employer and workmen; or (c) Workmen and workmen. 3. The dispute or difference should be connected with (a) the employment or non-employment, or (b) terms of employment, or (c) the conditions of labour of any person; 4. The dispute should relate to an industry as defined in Section 2(j). 1. Existence of a dispute or difference The existence of a dispute or difference between the parties is central to the definition of industrial dispute. Ordinarily a dispute or difference exists when workmen make demand and the same is rejected by the employer. However, the demand should be such which the employer is in a position to fulfill. The dispute or difference should be fairly defined and of real substance and not a mere personal quarrel or a grumbling or an agitation. The term “industrial dispute” connotes a real and substantial difference having some element of persistency, and likely, and if not adjusted, to endanger the industrial peace of the community. An industrial dispute exists only when the same has been raised by the workmen with the employer. A mere dispute as their own and espousing it. Whether the individual dispute has been espoused by a substantial number of workmen depends upon the facts of each case. If after supporting the individual dispute by a trade union or substantial number of workmen, the support is withdrawn subsequently, the jurisdiction of the adjudicating authority is not affected. However, at the time of making reference for adjudication, individual dispute must have been espoused, otherwise it will not become an industrial dispute and reference of such dispute will be invalid. DISMISSAL ETC. OF AN INDIVIDUAL WORKMAN TO BE DEEMED TO BE AN INDUSTRIAL DISPUTE According to Section 2-A, where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, any dispute or difference between the workman and his employer connected with or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to be an industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the dispute. The ambit of Section 2-A is not limited to bare discharge, dismissal, retrenchment or termination of service of an individual workman, but any dispute or difference between the workman and the employer connected with or arising out of discharge, dismissal, retrenchment or termination is to be deemed industrial dispute. It has to be considered whether the claim for gratuity is connected with or arises out of discharge, dismissal, retrenchment or termination of service. The meaning of the phrase “arising out” of is explained in Mackinnon Mackenzie & Co. Ltd. v. I.M. Isaak. A thing is said to arise out of another when there is a close nexus between the two and one thing flows out of another as a consequence. The workman had claimed gratuity and that right flowed out of the termination of the services. Whether he is entitled to gratuity is a matter for the Tribunal to decide. It cannot be accepted that the claim of gratuity does not arise out of termination. 3. Subject matter of dispute The dispute should relate to employment or non-employment or terms of employment or conditions of labour of any person. The meaning of the term “employment or non-employment” was explained by Federal Court in the case of Western India Automobile Association v. Industrial Tribunal. If an employer refuses to employ a workman dismissed by him, the dispute relates to non-employment of workman. But the union insists that a particular person should not be employed by the employer, the dispute relates to employment of workman. Thus, the “employment or non-employment” is concerned with the employer’s failure or refusal to employ a workman. The expression “terms of employment” refers to all terms and conditions stated in the contract of employment. The expression terms of employment would also include those terms which are understood and applied by parties in practice or, habitually or by common consent without ever being incorporated in the Contract. The expression “condition of labour” is much wider in its scope and usually it was reference to the amenities to be provided to the workmen and the conditions under which they will be required to work. The matters like safety, health and welfare of workers are also included within this expression. It was held that the definition of industrial dispute in Section 2(k) is wide enough to embrace within its sweep any dispute or difference between an employer and his workmen connected with the terms of their employment. A settlement between the employer and his workmen affects the terms of their employment. Therefore prima facie, the definition of Industrial dispute in Section 2(k) will embrace within its sweep any fraudulent and involuntary character of settlement. Even a demand can be made through the President of Trade Union (1988 1 LLN 202). Dispute between workmen and employer regarding confirmation of workman officiating in a higher grade is an industrial dispute. Employer’s failure to keep his verbal assurance, claim for compensation for loss of business; dispute of workmen who are not employees of the Purchaser who purchased the estate and who were not yet the workmen of the Purchaser’s Estate, although directly interested in their employment, etc. were held to be not the industrial disputes. Payment of pension can be a subject matter of an industrial dispute. 4. Dispute in an “Industry” Lastly, to be an “industrial dispute”, the dispute or difference must relate to an industry. Thus, the existence of an “industry” is a condition precedent to an industrial dispute. No industrial dispute can exist without an industry. The word “industry” has been fully discussed elsewhere. However, in Pipraich Sugar Mills Ltd. v. P.S.M. Mazdoor Union, it was held that an “industrial dispute” can arise only in an “existing industry” and not in one which is closed altogether. The mere fact that the dispute comes under the definition of Section 2(k) does not automatically mean that the right sought to be enforced is one created or recognised and enforceable only under the Act. Where the right of the employees is not one which is recognised and enforceable under the Industrial Disputes Act, the jurisdiction of the Civil Court is not ousted. “Definition of Appropriate Government” According to Section 2 (a) of the Act, the term ‘Appropriate Government’ to include both the Central and State Government and lays down their respective dominions in relation to industrial disputes. The Constitution of India also envisages jurisdiction of both the Central and State Government on all matters of labour and industrial disputes in respect of both legislative and executive powers. The definition of Appropriate Government under Section 2(a), the Act is exhaustive. To facilitate the meaning it may be divided in following six headings. (i) Industrial disputes concerning any industry carried on by or under authority of the Central Government, the Central Government is an Appropriate Government. For example, Defense Factories, Central Government printing press, mint houses and press for currency notes, opium factory etc. (ii) Industrial disputes concerning any industry carried on by Railway Company, the Central Government is an Appropriate Government; and (iii) Industrial disputes concerning any industry which is a controlled industry, the Central Government is an Appropriate Government. It has two ingredients i.e. the industry must be a controlled industry and the same must be specified that the Appropriate Government under Section 2(a) would be the Central Government. The provision has been clarified by Hon’ble Apex Court in Bijay Cotton Mills Ltd. v. Its workman, and in Management of Vishnu Sugar Mills Ltd. v. Workmen, and held that “it is not enough that the industry is controlled industry, but it must be specified also under Section 2 (a) of the Act that the Appropriate Government for such controlled industry would be the Central Government”. notification of the Central Government wherein it has been stated that CSIR is a Society owned and controlled by the Central Government. The award was quashed because the reference was made by the State Government. According to the interpretation of this provision, no industry carried on by a private person or a limited company can be a business carried on by or under the authority of the Government. ikewise, industries which are carried on by incorporated commercial corporations, which are governed by their own constitutions for their own purposes cannot be described as carried on by or under the authority of the Central Government as these corporations are independent legal entities and run the industries for their own purposes. The Second part of the Section 2(a) which declares that the State Government is the Appropriate Government in relation to all other industrial disputes, also gave scope for much of litigation in case of concerns having establishments in more than one State. All industrial disputes which are outside the industrial purview of sub- clause (i) are the concerns of the State Government under sub-clause (ii). Thus, the employee would be referred for adjudication by the State Government, except in the cases falling under Section 2 (a) (i) of the Act. While interpreting the provision, the Courts have generally relied upon the principles governing the jurisdiction of Civil Courts to entertain actions or proceedings. In Lalbhai Tricumlal Mills Ltd. v. D.M. Vin, Chagla C.J. observed that “Applying the well known principles of jurisdiction, a court or tribunal would have jurisdiction if the parties reside within its jurisdiction or if the subject matter of the dispute substantially arises within its jurisdiction. And, therefore, the correct approach to the question is to ask ourselves – where did the dispute substantially arise?” In Indian Cable Company Ltd. v. Its Workmen, the Supreme Court echoing the voice of the Chagla C.J. observed that, “As the Act contained no provision bearing on the question, it must consequently be decided on the principles governing the jurisdiction of courts to entertain actions or proceedings. The court extracted the above quoted passage from Lalbhai Tricumlal Mills case and held that “these principles are applicable for deciding which of the states has jurisdiction to make a reference under Section 10 of the Act.” The principle established in the above two cases was followed by the Supreme Court in workmen of Sri Rangavilas Motors (P) Ltd. v. Sri Rangavilas Motors (P) Ltd., and later in Hindustan Aeronautics Ltd. v. their workmen, In Sri Rangavilas Motors case the Court laid down a test “where did the dispute arise?. Ordinarily, if there is a separate establishment and the workman is working in that establishment, the dispute would arise at that place, there would clearly be some nexus between the dispute and the territory of the State and not necessarily between the territory of the State and the industry concerning which the dispute arose”. But ambiguity still persist on the question, whether the existence of a separate branch or establishment in State other than the State in which the head quarters of the industry is situate, is necessary to consider the former as the Appropriate Government with respect to disputes concerning the workmen employed in that State. In other words, for the application of the above principle, whether “the existence of a separate branch” is part of the ratio of the above mentioned Supreme Court decisions. In Association of Medical Representatives v. Industrial Tribunal, the M.P. High Court held that, “in respect of a dispute relating to a workman employed in the State of M.P., where there is no separate establishment of the company, the Appropriate Government was the State of Maharashtra in which the head quarters are situated”. But in Paritosh Kumar pal v. State of Bihar, a full Bench of the Patna High Court considered that, “the existence of a separate establishment is not a necessary part of the ratio and therefore, in respect of dispute relating to a workman employed in Bihar, where there was no separate establishment of the company, the Appropriate Government was the State of Bihar and not the State of West Bengal in whose territories the head quarters of the company situated”. This ambiguity is further confounded by a new principle enunciated by some of the High Courts, according to which there can be two Appropriate Governments for the same dispute and a reference by either of them can be valid. Although most of them are obiter dictums, Delhi High Court in Gesterner Duplicators (P) Ltd. v. D.P. Gupta, had specifically taken this view and applied this principle to the facts in this case by validating reference made by the Delhi Administration, where the Appropriate Government was, as per the principle enunciated earlier by the Supreme Court, the Karnataka State Government. The pragmatic approach of these courts deserves to be appreciated. But a separate line of cases exist where some other High Courts had entirely rejected this theory of two Appropriate Government on purely technical and legalistic considerations. In J and J Dechane Distributors v. State of Kerala, Golanan Nambiya J. observed that: “It seems reasonable and fairly clear that there can be only one Government which can be regarded as the Appropriate Government for the purpose of making a reference of industrial dispute. The consequences of holding that more than one Government can refer the same industrial dispute for adjudication appear to us to be startling.” In spite of various decisions of High Courts, it is really painful that after a lapse of sufficient time spent on adjudication of dispute and the award was rendered, the courts quash the award on jurisdictional grounds because the Government which initially referred the dispute for adjudication was not the Appropriate Government in the opinion of those courts. Until the definition is suitably amended to provide for such situations, it is better that the principle of simultaneous jurisdiction of two Appropriate Governments is recognized, so that awards made by the tribunals shall be quashed on such technical grounds. Dispute Resolution Machineries: The Act provides for following Authorities for Investigation and settlement of industrial disputes: 1. Works Committee. 2. Conciliation Officers. 3. Boards of Conciliation. 4. Court of Inquiry. 1. Works Committee Section 3 of the Act provides that the appropriate Government may by general or special order require the employer to constitute in the prescribed manner a Works Committee in industrial establishments, where 100 or more workmen are employed or have been employed on any working day in the preceding 12 months. The Works Committee will be comprised of the representatives of employers and workmen engaged in the establishment. It shall be the duty of the Works Committee to promote measures for securing and preserving amity and good relations between the employer and workmen and, to that end, to comment upon matters of their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters [Section 3(2)]. concept. In the industrial sphere, voluntary arbitration originated at Ahmedabad in the textile industry under the influence of Mahatma Gandhi. Provision for it was made under the Bombay Industrial Relations Act by the Bombay Government along with the provision for adjudication, since this was fairly popular in the Bombay region in the 40s and 50s. The Government of India has also been emphasizing the importance of voluntary arbitration’ for settlement of disputes in the labour policy chapter in the first three plan documents, and has also been advocating this step as an essential feature of collective bargaining. This was also incorporated in the Code of Discipline in Industry adopted at the 15th Indian Labour Conference in 1958. Parties were enjoined to adopt voluntary arbitration without any reservation. The position was reviewed in 1962 at the session of the Indian Labour Conference where it was agreed that this ‘step would be the normal method after conciliation effort fails, except when the employer feels that for some reason he would prefer adjudication. In the Industrial Trade Resolution also which was adopted at the time of Chinese aggression, voluntary arbitration was accepted as a must in all matters of disputes. The Government had thereafter set up a National Arbitration Board for making the measure popular in all the states, and all efforts are being made to sell this idea to management and employees and their unions. In 1956 the Government decided to place voluntary arbitration as one of the measures for settlement of a dispute through third party intervention under the law. Sec. 10A was added to the Industrial Disputes Act, and it was enforced from 10th March, 1957. Reference of Disputes for Arbitration Where a dispute exists or is apprehended, it can be referred for arbitration if the parties to the dispute agree to do so by submitting a written agreement to that effect, mentioning the person acceptable to them as arbitrator and also the issues to be decided in arbitration - proceedings, to the Government and the Conciliation Officer concerned before it is referred for adjudication to Labour Court or Tribunal. The Agreement must be signed by both the parties. Both under Sec. 10A and 10(2) reference is obligatory. Where an agreement provides for even number of arbitrators, it will provide for the appointment of another person as an Umpire who shall decide upon the reference if the arbitrators are divided in their opinion. The award of the Umpire shall be deemed to be the arbitration award for the purposes of the Act. The appropriate Government shall within one month from the date of the receipt of the copy of the arbitration agreement publish the same in the Official Gazette if the Government is satisfied that the parties, who have signed the agreement for arbitration, represent majority of each party; otherwise it can reject the request for arbitration. Where any such notification has been issued, the employer and workmen who are not parties to the arbitration agreement, but are concerned in the dispute, shall be given an opportunity to present their case before the arbitrator or arbitrators. The arbitrator shall investigate the dispute and submit to the Government the Arbitration Award signed by him. Where an industrial dispute has been referred for arbitration and notification has been issued, the Government may by order prohibit the continuance of any strike or lock-out in connection with such dispute, which may be in existence on the date of reference. The arbitration award which is submitted to the Government and becomes enforceable, is binding on all parties to the agreement and all other parties summoned to appear in the proceedings as parties to ‘dispute. Such an award is also binding on all, employees at the time of award, or to be employed subsequently even if they are not party to the initial agreement. If the arbitration agreement is not notified in the Official Gazette under Sec. 10A, it is applicable only to the parties who have agreed to refer the dispute for arbitration. Arbitration Award is enforceable in the same manner as the adjudication award of Labour Court or Industrial Tribunal. Arbitration is an alternative-to adjudication and the two cannot be used simultaneously. It is voluntary at the discretion of the parties to a dispute. Arbitrator is a quasi-judicial body. He is an independent person and has all the attributes of a statutory arbitrator. He has wide freedom, but he must function within the limit of his powers. He must follow due procedure of giving notice to parties, giving fair hearings, relying upon all available evidence and documents. There must be no violation of the principles of natural justice. Acceptance of Arbitration Voluntary arbitration has been recommended and given place in law by the Government. Experience, however, shows that although the step has been strongly pressed by the Government for over thirty years it has yet to take roots. During the last decade not even 1% of the disputes reported were referred for arbitration. The National, Commission on Labour examined the working of arbitration as a method of settling disputes, and found that it was yet to be accepted by the parties, particularly by the ‘employers, unreservedly. The main hurdles noticed yet are, the Choice of suitable arbitrator acceptable to both parties and payment of-arbitration-fees-Unions can seldom afford to share such costs equally with management. Apart from these, it appears that arbitration under the Act is not correctly understood by the employers and trade unions. When arbitration is suggested, the impression often is that matter is to be left to the sole decision of an individual who can act in any manner he likes. The sanctity of the decision by an arbitrator is also held in doubt. The fact that law covers voluntary arbitration and places it almost parallel to adjudication, is not appreciated or known widely. Power of Appropriate Government to refer Industrial Dispute The State sponsored conciliation and adjudication are the hall mark of the law of industrial dispute resolution in India. The Act is the principal Central law which provides the mechanism for and conditions subject to which, the conciliation and adjudication powers are to be exercised. Under the Act, adjudication cannot be demanded by a disputant party as of right; it is the discretion of the “Appropriate Government” to refer or not to refer an industrial dispute collective or individual for adjudication by an adjudicatory body. If the disputants are not able to arrive at a “settlement” or if they are disinclined to refer their disputes to an Arbitrator, then, the ultimate legal remedy for the unresolved dispute is its reference to adjudication by the Appropriate Government. The Act envisages the exclusive power of the Appropriate Government to refer disputes for adjudication there by rendering the adjudication conditional on its discretion except applications under Sec 33, 33-A, 33(C)(2) all other matters will have to come before the adjudicatory authorities only through an order of reference by the Appropriate Government. But, now in some States like Karnataka, Tamilnadu and Andhra Pradesh in case of individual disputes relating to discharge, dismissal, retrenchment or termination of services, a workman may directly approach a Labour subjection opinion that an industrial dispute exists or is apprehended. The factual existence of the dispute or its apprehension and the expediency of making a reference are matters entirely for the Government to decide”. It was further observed that “the order of reference passed by the Government cannot be closely examined by a writ under Article 226 of the Constitution to see if the Government had material before it to support the conclusion that the dispute existed or was apprehended”. But later, the Supreme Court in Western India Match Co. v. Western India Match Co. Workers Union and in Shambunath Goyal v. Bank of Baroda, Jullundur insisted that, the Appropriate Government should satisfy itself on the basis of the material available before it that an industrial dispute exists or is apprehended and it was held that such a satisfaction of the Government is a condition precedent to the order of reference. In other words, if there is no material before Government that an industrial dispute exists or is apprehended, the Government has no power to make a reference of cause, the court observed that “the adequacy or sufficiency of the material on which the opinion was formed is beyond the pale of Judicial Scrutiny. Once the Government forms an opinion with respect to the existence of an industrial dispute or its apprehension, the next question of expediency i.e. whether to refer the dispute for adjudication or not is left to the subjective satisfaction of the Government”. However, where the Appropriate Government refuses to make a reference on receipt of a failure report of a conciliation officer under Section 12(4), the Government is bound to give reasons for its refusal and communicate the same to the parties concerned. The exercise of power by the Government or refusal to do so is subject to the well recognized principles regarding the exercise of administrative discretion. The discretionary power must be exercised honestly and not for any corrupt or ulterior purposes and the Appropriate Government must apply its mind to the relevant material before it and decide the question of expediency of referring the dispute in the interests of maintaining industrial peace in the concerned industry. It will be an absurd exercise of discretion, if for example the Government forms the requisite opinion on account of pressure by any political party, within these narrow limits, the Government opinion is not conclusive and can be challenged in a court of law. The well known grounds for challenging the exercise of administrative discretion like malafide, irrelevant considerations, not taking relevant considerations into account, improper purpose, acting mechanically or under dictation are also available for challenging the improper exercise of power by the Appropriate Government under Section 10(1) of the Act. The Supreme Court of India has pointed out on many occasions that the question as to whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The meaning and intention of the Legislature must govern, and these are to be ascertained not only from the phraseology of the provision, but also by considering its nature, its design and the consequences which would follow from construing it the one way or the other. It is well settled that the use of word ‘may’ in a statutory provision would not by itself show that the provision is directory in nature. In some cases the legislature may use the word ‘may’ as a matter of pure conventional courtesy and yet intent a mandatory force. In order, therefore, to interpret the legal import of the word ‘may’, the Court has to consider various factors, namely the object and the scheme of the Act, the context and the background against which the words have been used, the purpose and the advantages sought to be achieved by the use of this word, and the like. It is equally well-settled that where the word ‘may’ involves a discretion coupled with an obligation or where it confers a positive benefit to a general class of subjects in a utility Act, or where the court advances a remedy and suppresses the mischief, or where giving the words a directory significance would defeat the very object of the Act, the word ‘may’ should be interpreted to convey a mandatory force. In D.A. Koregaonkar v. the State of Bombay, Chagla, C.J. observed that,“One of the important tests that must always be employed in order to determine whether a provision is mandatory or directory in character is to consider whether the non- compliance of a particular provision causes inconvenience or injustice and if it does then the Court would say that that provision must be complied with and that it is obligatory in its character”. The adjudication of industrial disputes under the Act, is based on the concept of compulsory adjudication and hence, the Appropriate Government has to refer the industrial dispute and the adjudicator is bound to adjudicate on the referred industrial dispute and thereafter to give its decision in writing in the form of an award. Power of Courts to direct the Government to make a reference of Industrial Disputes: In Pratap Singh v. State of Punjab, the Supreme Court observed that, “the Court is not an appellate forum where the correctness of the order of the Government could be canvassed. It has no jurisdiction to substitute its own view for entirely of the power, jurisdiction and discretion vested by law in Government the only question which could be considered by the Court is, whether the authority vested with the power has paid attention to or taken into account, circumstances, events or matter wholly extraneous to the purpose which the satisfying a private or personal grudge of the authority”. Power of reference under Section 10 (1) is undoubtedly an administrative function of the ‘Appropriate Government’ based upon its own opinion with respect to the existence or apprehension of an industrial dispute and its subjective satisfaction as to whether it would be expedient to make a reference or not. Though the earlier thinking was that such an order cannot be interfered with at all by the courts, the recent trend of judicial thinking is that though in a very limited field, the order of reference is amenable to judicial review under certain circumstances. The question of referring a industrial dispute for adjudication arises after the Government has received the failure report from the Conciliation Officer. According to Section 12(5), if on a consideration of the failure report by a conciliation officer, the Appropriate Government is satisfied that there is a case for reference, it may make such a reference. Where the Appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefore. Similar obligation to record reasons for non reference and communicating the same to the parties concerned arises under Sec 13(4) of the Act where the failure report is submitted by a Board of Conciliation only in case of Public Utility Services. In State of Bombay v. K.P. Krishnan, the Appropriate Government on consideration of the failure report refused to refer the dispute and the reason given by the Government was that the workmen resorted to go slow during the year 1952-53 for which year the workmen claimed bonus. The Supreme Court held that the Government had taken into consideration altogether an irrelevant matter in refusing to refer the dispute and therefore a writ of mandamus was issued to the Government directing it to reconsider the matter by ignoring the irrelevant consideration. While (d) Non-application of mind The Appropriate Government before forming an opinion to the questions whether there is an industrial dispute existing or apprehended and whether it will be expedient to refer the dispute on the basis of material before it. If the order of reference challenged on the above ground the Government will have to satisfy the Court by filing an affidavit to show that it had material before it and the reference was made after consideration of relevant factors, the absence of such evidence may make the reference vulnerable on the lack of material or non-application of mind. (iii)The activity carried on is not an ‘Industry’ and no ‘Industrial Dispute’ The term ‘industrial’ in the definition of ‘industrial dispute’ relates to the dispute in an ‘industry’ as defined in Sec 2(j) of the Act. Unless the dispute is related to an industry it will not be an industrial dispute. Therefore, if the reference is made of a dispute which relates to any activity which is not an industry it will not be a valid reference. In Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor union, Justice Venkatarama Ayer opines that“The definition of industrial dispute presupposes continued existence of industry and hence the dispute should be in a live industry and not in a closed industry, because closed industry or establishment would not fall within the definition of industry. The reference of an industrial dispute which arises after the establishment becomes dead on account of closure shall therefore be invalid as the provisions of the Act will apply only to an existing or live industry”. The power of the State to make a reference is to be determined with reference not to the date on which it is made but with reference to the date on which the right, which is the subject matter of the dispute arises and the machinery provided under the Act would be available for working out the right which accrued prior to the dissolution of the business. There is thus a clear distinction between the two classes of cases namely: (i) Those in which the cause of action arose at the time when the business had been closed; and (ii) Those in which the cause of action arose at the time when the business was being still carried on. There can be no ‘industrial dispute’ in respect of the first category of cases because the real subject matter of the dispute had ceased to exist when the dispute arose. But in regard to the second category, where the dispute actually arises before the closure of the business, it does not cease to be an industrial dispute merely because subsequently the industry is closed. If the dispute related to a period when the industry was in existence the reference even after the closure of the industry can be validity made. The dispute with respect to the existence or apprehension of which the Appropriate Government is to form its opinion must be an industrial dispute as defined in Section 2 (k) of the Act. According to this, “any dispute or difference between employers and employers and between employers and workmen or between workmen and workmen, connected with the employment or non employment or the terms of employment or with the conditions of labour of any person”. In Shambhunath v. Bank of Baroda, Supreme Court held that the term ‘industrial dispute’ connotes a real and substantial difference having some element of persistency and continuity till resolved and likely, if not adjusted to endanger the industrial peace of the undertaking or the community. The definition of industrial dispute expressly states that not dispute or difference of all sorts but only those which bear upon the relationship of employers and employers, employers and workmen or between workmen and workmen and if it is connected with grounds provided there under are contemplated and the Appropriate Government before exercising its power under Section 10, the industrial dispute must be in existence or apprehended on the date of reference i.e. a demand has been made by the workmen and it has been rejected by the employer before the date of reference, whether directly or through the conciliation officer, it would constitute an industrial dispute. If there is no industrial dispute in existence or apprehended the Appropriate Government lacks power to make any reference. (iv) Reference Contrary to Law: The order of reference should be made to the authorities in accordance with the provisions of Section 10(1). If the order is contrary to these provisions in the matter of selecting the appropriate authority, the order shall be invalid. Likewise where an order of reference covering some items of industrial disputes is pending adjudication a further order of reference covering the same subject matter would be invalid. In Rashtriya Hair Cutting Saloon v. Maharashtra Kamgar Sabha, held that a reference of dispute the subject matter of which is covered by the provisions of special enactments like Contract Labour (Regulation and Abolition) Act, 1970, Payment of Gratuity Act, 1972 etc. being a self contained code, cannot be validly referred or be adjudicated upon by the adjudicatory authorities under the Act. Disputes covered by a Settlement or a previous Award In Madras District Automobile and General Employees Union v. State of Madras, held that reference of an Industrial Dispute the subject matter of which is covered by a Settlement as defined in Section 2 (p) of the Act would be invalid during the period of operation of such a Settlement because when once a dispute is resolved by a Settlement in the course of Conciliation or otherwise no dispute remains to be resolved by Arbitration or Adjudication. The Law is well settled that if there is a binding settlement which has not been terminated in accordance with the procedure laid down in the Act, no industrial dispute can be raised with regard to the items which form the subject matter of the settlement. Such matters cannot be the subject matter of conciliation proceedings under Section 12 or of reference under Section 10 of the Act. From the analysis of above all cases the approach of the Supreme Court and High Courts in compelling the Appropriate Government to make a reference which may virtually amount to exercising appellate jurisdiction over the discretionary order of the Government is justified or not from a strict administrative law view point, the activists in these decisions is quite welcome from the point of view of labour law. In justification of the above decision of the Supreme Court, it may be stated First, that the Supreme Court is very much concerned about abnormal delay at the stage of reference by the Government, in many of these cases the delay was more than a decade. Although the Supreme Court was satisfied that case for reference was made out, the Court stand was considered to be patently unreasonable. Secondly, the Court in these cases also took into account the fact that the Appropriate Government had decided for itself the questions of fact and law which ought to be determined by the Tribunal after adjudication. Thirdly, the Court was considering that the adjudication of industrial disputes by the Tribunals should be considered as a quasi judicial remedy provided to the industrial workmen for the resolution of their grievances and demands which lead to disputes. This is of particular importance if it is relating to discharge, dismissal, retrenchment or the termination of services of workmen and therefore the the power to refer cannot be said to have been exhausted when it has declined to make a reference at an earlier stage”. The Court further pointed out that the Government may reconsider the matter either because some new facts had come to light or because it had misunderstood the existing facts or for any other relevant consideration with regard to too old claims or the extraneous consideration like, pressure from unions etc. The Court said, “there is no reason to think that the Government would not consider the matter properly or allow itself to be stampeded into making references in cases of old or stale disputes or reviving such disputes on the pressure of unions”. Later in Binny Ltd. v. Their workmen, the Supreme Court upheld the validity of a reference by the Government though the Government refused to refer the same on two earlier occasions. In Avon Services (production) Agencies Ltd. v. Industrial Tribunal, Haryana, the Supreme Court clarified the nature of power of the Appropriate Government when it subsequently refers the dispute after initial refusal and about the need for any fresh material before the Government justifying the change on its opinion. It was observed by Desai, J. that, “Merely because the Government rejects a request for reference or declines to make a reference, it cannot be said that the industrial dispute has ceased to exist, nor could it be said to be review of any judicial or quasi judicial order or determination. The industrial dispute may nevertheless continue to remain in existence and if at a subsequent stage the Appropriate Government is satisfied that in the interest of industrial peace and for promoting industrial harmony it is desirable to make a reference the Appropriate Government does not lack power to do so under Section 10(1), nor it is precluded from making a reference on the only ground that on an earlier occasion it had declined to make a reference”. The Supreme Court also held that “A refusal of the Appropriate Government to make a reference is not indicative of an exercise of power under Section 10(1), the exercise of power would be a positive act of making a reference. Refusal to make a reference does not tantamount to saying that the dispute, if at all existed stands resolved. On the contrary, the refusal to make a reference not compelling the parties to come to dispute reasoning authorities would further accentuate the feelings and a threat to direct action may become imminent and the Government may as well consider the decision and make the reference”. This holding of the Court seems to confer on the Government the power to refer the dispute after a previous refusal and for such a reference the Government need not have any fresh material before it and the only paramount consideration is the maintenance of industrial peace. But such a blanket power may result in some absurd situations or may put the employer in an embarrassing situation when he had already arranged the affairs of his business on the basis of the Government’s refusal to make a reference. It is also possible that such unlimited power may be abused or exercised due to some extraneous factors like, political pressure. In Mahavir Jute Mills Ltd. v. Shibbanlal Sexena, the Supreme Court itself noted that between the dismissal of 800 workmen, which was the subject matter of dispute and the hearing of the appeal by special leave nearly twenty years have elapsed and an embarrassing situation had arises for the employer, as the workmen employed in the place of the dismissed workmen had already put in twenty years of service. Despite these facts, the Court upheld the order of reference following the ratio of WIMCO case. In view of such possibilities, O. P. Malhotra suggests, that: “It is therefore desirable that when the Government subsequent to its refusal to make a reference decides to refer the same dispute for adjudication, it must state reasons, showing that new facts had came to light or there was misunderstanding as to the existing facts or there was any other relevant consideration including the threat to peace in the order of reference. Alternatively these reasons may be stated in the counter affidavit in reply to the writ petition challenging the order of reference”. Further, a considerable contention is that in making a reference the Government is performing an administrative function and not a judicial or a quasi judicial function and audi alterem partem is not invokable has become untenable in the light of the path breaking decision of the Supreme Court in State of Orissa v. Binapani Devi, kraipak v. UOI, Mohinder Singh Gill v. Chief Election Commissioner. The Supreme Court has observed that, “the dichotomy between administrative and quasi-judicial functions vis-a-vis the doctrine of natural justice is presumably obsolescent after kraipak case in India, In Binapani, the Supreme Court held that even an administrative order, which involves civil consequences must be made consistently with the principles of natural justice”. (iv) Whether there is any limitation in making the order of reference? The power of the Appropriate Government to make a reference to the Labour Courts and Industrial Tribunals are administrative in character. No time limit is prescribed and the power to make a reference can be exercised by it at any time. All that matters is that there should be an industrial dispute existing or even apprehended. The words “at any time” do not admit any such limitation. That is the express intention of the legislature and there should be no such restrictions imposed on the Government’s power. The laws of limitation which might bar any Civil Court from giving a remedy in respect of lawful rights cannot be applied by Industrial Tribunals. However, it is only reasonable that the Government shall refer disputes within a reasonable time after the fact of the existence of the dispute is brought to its notice, either through the parties directly or through the failure report of the Conciliation Officer and incase of delay there should be sufficient explanation for it. The Appropriate Government’s power to make a reference is unbridled. But any discretionary power cannot be regarded as absolute because absolute discretion is ground to breed arbitrariness and which shrikes at the roots of Article 14 of the Constitution, which forbids discriminatory actions. The discretionary authority, is therefore, is obliged to act fairly, justly and in good faith. In Shalimar Work Ltd. v. Its workmen, the Supreme Court pointed out that though there is no period of limitation prescribed in making a reference of dispute even so it is only reasonable that the disputes should be referred as soon as possible after they have arisen and after conciliation proceedings have failed particularly so when dispute relate to discharge of workmen wholesale. In the case of Western India Watch Company v. Western India Watch Company workers Union the Supreme Court even went a step forward and held that while considering the expediency to refer or not to refer an industrial dispute, the Government would consider the question of delay etc. properly and will not allow itself to be tempted into making references in case of old or stale disputes or review such disputes on the pressure of Union. same relief can be granted, the mistake may be considered as clerical, which can be corrected by an amendment. But if the same relief cannot be granted, then it means that the original notification has been cancelled and another notification has been issued in its place, which the Appropriate Government is not competent to do. Constitutional Validity of Section 10(1) In Nirmala Textile Finishing Mills Ltd. v. Industrial Tribunal, Punjab, the Constitutional validity of Section 10(1) of the Act was upheld by the Supreme Court. It held that, “the provisions of Section 10 are not unconstitutional, as there is no infringement of the fundamental rights guaranteed under Articles 14, 19(1)(f) and (g) of the Constitution. It was observed that the discretion conferred on the Government was not unfettered or unguided, because the criteria for the exercise of such discretion are to be found within the terms of Act itself”. In A. Sundarambal v. Governor of Goa, Daman and Diu, it was held that “the refusal of the Government to refer a dispute for adjudication would not amount to infringement of Article 14 of the Constitution merely because the Appropriate Government had in an earlier case referred the case of similar employer for adjudication because of the repetition of an error, if there is one, is not needed for complying with the principles of equality before law. If in law the Government justified in refusing a reference, the applicability of Article 14 does not arise at all”. The Circumstances in which the Power of Reference is Mandatory In order to protect the interest of public and to avoid the dislocation of services by the public utility services in case of sudden strikes or lockouts the Act contains some special provisions in which the Government imperatively has to refer the industrial disputes for adjudication i.e., under Section 20(1), second proviso to Section 10(1) and Section 10(2). According to Section 20(1) of the Act, Conciliation proceedings shall be deemed to have commenced on the date on which the notice of strike or lockout under Section 22 is received by the Conciliation Officer. Under second proviso to Section 10(1), “where the dispute relates to a public utility service and notice of strike or lockout under Section 22 is given, the Appropriate Government shall unless it considers that the notice has been frivolously or vexatiously given or that it would be inexpedient so to do, make a reference under this Section notwithstanding that any other proceedings under this Act in respect of the dispute may have commenced”. As per the proviso it is mandatory for the Government to make a reference subject to the two exceptions specified in the proviso itself. Since conciliation proceedings are compulsory in case of public utility services on receipt of notice of strike or lockout, practically in all such disputes the Government will have to either refer the dispute or record its reasons for refusing to make a reference and communicate the same to the parties concerned under Section 12(5). Although the word used in this proviso is “shall” instead of “May” used in the main provision, the Government has still the power to consider the question of expediency of making a reference even in case of public utility services and therefore it is difficult to distinguish this proviso with the main provision of the Section. In both cases the Government has to consider the question of expediency before making a reference. But the proviso by using the term ‘shall’ it has controlled the wide discretion of the Government in case of public utility services as compared to other industries. Thus, it is clear that in regard to cases falling under this proviso an responsibility is imposed on the Government to refer the dispute unless of course it is satisfied that the notice is frivolous or vexatious or that considerations of expediency required that a reference should not be made. The proviso also makes it clear that reference can be made even if other proceedings under the Act have already commenced in respect of the same dispute. Thus, so far as discretion of the Government to exercise its power of referring an industrial dispute is concerned it is very wide under Section 10(1) but is limited under the second proviso to Section 10(1). Section 10(2) of the Act provides “where the parties to an industrial disputes apply in the prescribed manner, whether jointly or separately, for a reference of the dispute to a board, Labour Court, Tribunal or National Tribunal, the Appropriate Government if satisfied that the persons applying represent the majority of such party, shall make a reference accordingly”. Where the parties apply for a reference the discretion of the Government is divested and it will be under an obligation to refer such dispute for adjudication. In such cases, the Government need not consider the question of existence of an industrial dispute or its expediency to refer. The only requirement is that Government should satisfy itself that the parties to the application represent the majority of each party. Thus, in dealing with this class of cases the only point on which the Government has to be satisfied is that the persons applying represent the majority of each party; once that test is satisfied the Government has no option but to make a reference as required by the parties. When on both sides of the dispute there are associations or unions, the requirement of majority on both sides arises. But if the dispute is between a single employer and his workmen, the question of majority with respect to the employer does not arise and the Government will have to be satisfied only with respect to the majority of workmen. In other words the trade union which makes such an application will have to be a representative of majority of the workmen of that establishment. The Appropriate Government before making a reference under this provision may hold such inquiry as it thinks necessary to satisfy itself about the representative character of the union, which is a party to the application. Central Government Power to refer Industrial Disputes The following special powers have been conferred on Central Government, for settlement of industrial dispute namely: (i) Power under third proviso to Section 10(1) The Third proviso to Section 10(1), “where the dispute in relation to which the Central Government is the Appropriate Government, it shall be competent for that Government to refer a dispute to Labour Court or an Industrial Tribunal, as the case may be constituted by the State Government.” According to this proviso, inserted by 1982 Amendment, it is not necessary that the Central Government shall refer disputes only to Labour Courts and Industrial Tribunals constituted by it, Instead, it may refer the disputes to a Labour Court or an Industrial Tribunal constituted by any State Government. This is aimed at facilitating the Central Government not to constitute separate adjudicatory authorities in areas where the dispute are not many in number, but all the same refer them to the authorities constituted by state Governments in those areas. (ii) Power under Section 10 (1-A) Under Section 10 (1-A), Central Government may, at any time, refer any industrial dispute, if it is of opinion that the dispute involves questions of national Apart from prolonging the dispute resolution process, the delay in reference leads to the exertion of extraneous pressure on the political executive for prejudicial exercise of the reference power. The disputant parties perceive the conciliation officer recommendation as most instrumental in reference decisions, but the actual exercise of these decisions shows an attempt on the part of the Appropriate Government to serve its own objective through its power. The Government reference involves in it, conciliation of the dispute first by the Conciliation Officer and the time specified under Section 12 (6) for completion of the conciliation proceedings is 14 days but in practice the conciliation proceedings are prolonged beyond a reasonable time; many times lasting up to 6 months or more. The conciliation officer does this without officially commencing the conciliation on his records. In addition to this delay, after receipt of the failure report from the Conciliation Officer, the Appropriate Government very often takes a pretty longtime before a reference is made. An empirical study conducted in Kolhapur District of Maharastra State and the data collected through opinion survey reveals that the average time taken for reference of disputes is 10 to 12 months, another study by a labour law consultant in the State of U.P. and he found that the time taken by the Government in many cases is more than a year. He mentioned it is an irony that the Appropriate Government invariably takes more than a year in making a reference after the Conciliation Officer submits his report. Yet in another study conducted by a Trade Union Leader at Dhanabad Coal mines he found that the delay was quite unreasonable on the basis of his empirical investigation he found on verification of 50 references randomly, which were made by the Central Government to the Industrial Tribunal at Dhanabad with respect to coal mines which is a public utility service for adjudication under Section 10 (1) of the Act, it was found that 15 months to 3 year was ordinarily taken for getting the dispute referred from the date of dispute raised by the union before the Conciliation Officer till it was referred to Industrial Tribunals. The Central Government itself took one to two years to make reference from the date of the receipt of the failure report by Conciliation Officers. Various empirical studies conducted in different States revealed that the Government had taken 6 to 24 months for making a reference after receiving the failure report from Conciliation Officer. A study conducted by researcher in the State of Jammu and Kashmir, reveals that the average time taken by the Appropriate Government to refer the dispute after receiving failure report from Conciliation Officer was 9 months. Four out of Twenty cases it is between 15 to 20 months and in Faridabad it reveals that out of 26 references 13 took more than 90 days, 6 references took more than 150 days and the reference of one dispute APL (9), took 452 days after the failure report. It is already discussed in the earlier, where the Supreme Court had directed the Government to refer the dispute for adjudication of the matter which was pending before it for more than a decade. It is submitted that, if the objective of vesting reference making discretion in the Government was to ensure and facilitate speedy resolution of Labour issues, Parliament has committed a stupendous error as well as miscalculation in this regard because on an average, the time spent by the Labour Department in making reference of an industrial dispute after receipt of the failure report of the Conciliation Officer was highly unreasonable and in some matters the Government does not make a reference at all and the aggrieved workmen are made to continue groping in the dark to hanker after the elusive social justice as envisaged for them under the Act. Hence, recommendations of Second NCL providing for direct approach of parties to the Labour Court, Conciliation, Arbitration or to Labour Relations Commissions in respect of all matters specified in Second Schedule of the I.D. Act is significant one. As such it needs serious considerations by the law making authority. 3. Discriminatory treatment by Government in exercise of power of reference under Section 10(1) of the Act The answer to above question is ‘yes’ because of the following reasons: (i) Inexpensive and quick resolving of industrial conflicts and thereby providing speedy justice to the working class is the reason for the creation of special procedure for the settlement of industrial disputes under the Industrial Disputes Act, 1947. The reference making power has been vested in the Government under the Act to ensure speedy settlement of industrial disputes. It is submitted that if the objective of vesting reference making discretion in the Government was to ensure and facilitate speedy resolution of labour issues, parliament has committed a stupendous error as well as miscalculation in this regard. because on an average, the time spent by the labour department in making reference of an industrial dispute after receipt of the failure report of the conciliation officer is about 9 to 12 months. While in some others, the Government does not make a reference at all and the aggrieved workmen are made to continue groping in the dark to hanker after the elusive social justice as envisaged for them under the Act. (ii) The power of the Government of referring industrial disputes for adjudication is prone to be exercised in a discriminatory manner. It is well known that various trade unions in the country have been affiliated with different political parties. In such circumstances, it is quite natural that a trade union affiliated to the political party in power shall get favored treatment from the Government formed by such party in respect of reference of disputes of that trade union for adjudication. On the contrary, a trade union having alliance with a political party opposed to the party in power is apt to get step-motherly treatment from the Government in matters of referring disputes for adjudication. Although outwardly these apprehensions appear to be hollow and banal remarks only, these are real sometimes (if not often) in the world of reality. (iii) We have adopted the concepts of mixed economy and Social Welfare State, for the economic development of the country as well as social uplift of the people. Under such a dispensation, the State is bound to be a major employer, as most of the development and public undertakings are to be controlled and carried on by the Government. As a result, the state agencies would happen to be party to most of the industrial disputes with their employees which may be adjudicated by the Labour Courts and Industrial Tribunals. In those cases at least where an agency of the state is a party to a dispute, the Government cannot be expected to conduct itself with necessary measure of impartiality and fairness while exercising its discretion whether such dispute is to be referred for adjudication or not. (iv) Referring of industrial disputes by the Government for adjudication tends to breed corruption and favoritism, allegations of this kind may seem to be mendacious and stale on their face value. But, in the world of reality such things cannot be entirely dismissed as untrue. Particularly there is a real danger of political influence being wielded in some cases installing the