UNIT-I

INTRODUCTION

Industrial relations is a dynamic socio-economic process between two groups of people –

worker/labour and management. The relationship between these two is based on adjustment of
interests and goals. Higher the satisfaction, healthier the relationship. However, in practice it
is found that these two constantly fight as their interest are in conflict. Both of them try to
augment their respective interests and improve their position. It is also true that one cannot
exist without the other and they are interdependent on each other.

To maximise benefit, one group has to use the other group. Management has to provide social
security (minimum wages, paid leaves) and other incentives to the workers for the utilisation
of their skills. Management would always try to maximise its benefit (profit) and for this
purpose they provide certain benefits to the workers such as schools and hospitals in the
vicinity, insurance, social assistance etc. However, in a country like India where labour is not
organised properly, management has the upper hand when it comes to bargaining the interest.
To avoid such domineering power of the management, the legislature has come up to balance
the conflicting interest and has formulated broad norms and guidelines in dealing with these
issues. These represent the foundation from which the present system and procedure flow to
deal with problems of industrial relations.

• PROSPECT OF RELATION BETWEEN MANAGEMENT AND LABOUR

There are three major prospects: dispute settlement, social security and welfare measures.
Every legislation dealing with labour law would fall under any of this prospect. The difference
between social security and welfare measure is very important. On one hand, social security
measures provide security at the time of crisis. Ex – A worker meets an accident while working
leading to his permanent disability. It is a time of crisis and these measures help to cope with
such situations. On the other, welfare measures are not intended to provide at the time of crisis
but are meant to provide a decent standard of living like hospital facility, schools etc.

CONSTITUTIONAL FRAMEWORK AND INDUSTRIAL RELATIONS

The Constitution of India provides for the upliftment of labour by guaranteeing certain rights
to it. These rights have been enshrined in the Preamble, FRs and DPSP. The goals set in our
Constitution have a bearing on industrial legislation and adjudication.

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The Preamble enshrines the following principles:

• Justice, Social, Economic and Political

• Liberty of thought, expression, belief, faith and worship
• Equality of status and of opportunity
• Fraternity, assuring the dignity of the individual and unity and integrity of nation.

These principles provide the bedrock for framing all labour and social legislation and their
progressive and creative interpretation in favour of working classes. These principles run
through our labour legislations like invisible golden threads and provide them strength and
stamina to meet the aspirations of working classes.

There are a number of FRs to which the labour legislation has to conform. They are:

i. Art. 14 – Equality before law and equal protection of law.

ii. Art. 19(1) – (a) freedom of speech and expression; (b) assemble peacefully without
arms; (c) form association and unions; (d) practice any profession, or carry on any
occupation, trade or business.
iii. Art. 21 – Right to life and personal liberty
iv. Art. 23 – Prohibition of trafficking of human beings.
v. Art. 24 – Employment of children below the age of 14.

Part IV of the Constitution contains the Directive Principles of State Policy. Some of these
specify the goals and values to be secured by labour legislation for workmen. They are:

i. Art. 39(a) – an adequate means of livelihood

ii. Art. 39(b) – proper distribution of ownership and control of material resources
iii. Art. 39(c) – Prevention of concentration of wealth and means of production
iv. Art. 39(d) – Equal pay for equal work for men and women
v. Art. 39(e) – The health and strength of workers
vi. Art. 41 – Right to work, to education and to public assistance
vii. Art. 42 – Just and humane conditions of work and maternity relief
viii. Art. 43 – Living wage and decent standard of life of labourers
ix. Art. 43A – Participation of workers in the management.
x. Art. 47 – Decent standard of living.

By and large, industrial legislation has been directed towards the implementation of these
Constitutional principle.

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LABOUR ADJUDICATION

Industrial dispute has a different mechanism in dealing with adjudication. The matters doesn’t
directly go to the civil courts, but goes to Labour Courts Industrial Tribunals or National
Tribunals. There is no hierarchy in these and a person can appeal against the decision of the
Court/Tribunal before the HC u/a 226, 227 and/or to SC u/a 136. However, dismissal of petition
by HC u/a 226 will operate as res judicata barring similar petition u/a 32. A number of judicial
pronouncement have also dealt with the question of labour rights and adjudication.

• PEOPLE’S UNION FOR DEMOCRATIC RIGHTS V UOI (1982)

A writ petition in the form of a letter was entertained by the SC after a report highlighted that
the workers working for the Asiad Project were being exploited on various fronts. The major
issues of the case are discussed as follows:

A. Locus Standi – SC pointed out with regard to the socio-economic conditions prevailing in
the country where there is considerable poverty, illiteracy and ignorance to the laws, the weaker
sections of the society will be always on the losing end if the petition is sought from the affected
only. The Court referred to SP Gupta v UoI (1982) in which it was held in cases where a
person could not approach the Court due to poverty or other disability, any member of the
public can move to the Court for the same. SC applied this jurisprudence and accepted the
petition addressed in the form of a letter.

B. Employment of Children – The report mentioned that children below the age of 14 were
employed in the Project. The petition mentioned the prohibition of Employment of Children
Act, 1938. The respondents contended by pointing out the Schedule in the Act which did not
include “employment in construction industry” and claimed impunity. The SC characterized it
as a “sad and deplorable omission” and ordered the governments (Centre and State) to amend
the schedule and include the said provision. SC also pointed out such employment to be in
contravention of Convention No. 59 of ILO (ratified by India) and Art. 24 of the Constitution.

C. Basic Dignity of Workers – The Employer was in violation of Contract Labour Act, 1970
for not making provision for First Aid, Canteen and Restrooms for the workers, Inter-State
Migrant Workmen Act, 1979 for non-payment of wages, allowances and other facilities, Equal
Remuneration Act, 1976 for paying unequal wages and Minimum Wages Act, 1948 for not
paying minimum wages. These Acts are intended to ensure basic human dignity for the workers
violation of which defies Art. 14 and 21. In Maneka Gandhi v UoI (1978) it was held that

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right to life u/a 21 includes right to live with basic human dignity and the State cannot deprive
a person of these.

D. Forced Labour – The question was whether non-payment of minimum wages can be
declared to be violative of Art. 23 which prohibits forced labour. The respondents contended
that only such form of labour is prohibited where a person is forced to give service without any
remuneration at all and if some remuneration is paid, be it inadequate, it will not fall u/a 23.
The contention was rejected saying allowing such activities will result is more exploitation of
the workers. The employer may exploit the workers’ vulnerable economic condition so much
that their only option left will be to either starve or submit to the exploitative terms of the
employer. In such cases, he is acting under force which may be physical, legal or compulsion
arising out of hunger and poverty. SC held working for below minimum wage to be a “forced
labour” u/a 23 even if the service is rendered under a contract.

E. Obligation of the State – SC held that whenever any FR enumerated in 17, 23 or 24 is

being violated, it is the constitutional obligation of the state to take necessary steps for the
purpose of ensuring observance by those who are transgressing it, particularly when he belongs
to the weaker section of the society and is unable to wage a legal battle against those exploiting
him.

Instrumentalities governing Employer-Employee Relationship

There are 3 instrumentalities which govern the relationship between employer and employee:

1. Service Rules and Regulation which have a statutory backing.

2. Employment Contract
3. Standing Order which are decided using quasi-judicial process in an employer-
employee agreement. Such SOs are backed by The Industrial Employment (Standing Orders)
Act, 1946.

UNLAWFUL TERMINATION OF EMPLOYEES

• CENTRAL INLAND WATER TRANSPORT CORPN V BROJO NATH GANGULY (1986)

The appellant was a corporation registered under Companies Act. The shares of the corporation
were held by the Centre and State government (WB & Assam). The respondent was served a
notice seeking his response on his alleged negligence. Thereafter, he was terminated from the
services under rule 9(i) with immediate effect by paying three months’ salary. Another

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employee was also terminated under the same provision. Rule 9(i) provided for termination of
a service of an employee immediately by paying him three months’ pay in lieu of notice
(without providing any reason). Rule 9(ii) provided for termination of services when no longer
required. Rule 36(b)(iv) r/w rule 38 states the termination of employee on the ground of
misconduct. Rule 37 allows immediate termination without notice if the employee is found
guilty of the acts mentioned in the rule.

A. Unlawful of multiple fronts – The rule confers absolute and arbitrary power upon the
corporation. There are no guidelines laid down indicating the circumstances when it can be
applied. No opportunity is afforded to the employee whose service is being terminated in the
exercise of the power. It is violative of principle of natural justice – audi alteram partem. It is
also discriminatory as it enables the corporation to discriminate between employees where it
can terminate one employee under one clause and another employee under another clause.
Hence being violative of Art. 14. Rule 9(i) confers gross unequal bargaining power to the
corporation. Such a clause in a contract of employment is harmful and injurious to public
interest for it tends to create a sense of insecurity in the minds of the employee. It is opposed
to public policy and is in contravention of Art. 23 of Indian Contract Act.

B. Corporation is a State – Corporation is a state within the meaning of Art. 12 as an

instrumentality (agency) of the State. Its action has to be judged in the light of FRs and have to
be in accordance with the DPSP. Art. 39(a) provides that the State shall direct its policy towards
securing adequate means of livelihood for the citizen. Art. 41 requires the State to ensure right
to work. State cannot fulfil these objectives by taking away the employment of another, that
too without any reason. Rule 9(i) is contrary to the provisions mentioned in the DPSP.

• WEST BENGAL STATE ELECTRICITY BOARD V DESH BANDHU GHOSH (1985)

The regulation gave power to the Board to terminate the services of the employee by three
months’ notice or pay in lieu of it. The SC named this power as “naked hire and fire rule” and
declared it to be violative of Art. 14. The Board being an instrumentality of the State has to act
in consonance with Art. 14.

• OP BHANDARI V INDIAN TOURISM DEVELOPMENT CORPORATION (1986)

Rule 31(v) of the ITDC rules which provides for termination of the services of the employees
of the corporation simply by giving 90 days' notice or by payment of salary for the notice period
in lieu of such notice was quashed as being violative of Art. 14 and 16(1). The tenure of service
of a citizen who takes up employment with the State cannot be made to depend on the pleasure

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or whim of the competent authority unguided by any principle or policy, nor his services
allowed to be terminated on an irrational ground arbitrarily or capriciously.

When granting relief, reinstatement would be a rule and compensation in lieu thereof would be
a rare exception. However, if the Court is satisfied that ends of justice so demand, it can direct
the employer the option not to reinstate provided the employer pays reasonable compensation
as indicated by the Court.

• DTC V DTC MAJDOOR CONGRESS (1991)

Regulation 9(b) gave unbriddled power on the authority to terminate the service of an
employee, including a permanent employee, without any reason whatsoever. The power was
held to be in contravention of Art. 14 of the Constitution and S. 23 of the Contact Act. The
audi alteram partem rule enforces the equality clause in Art. 14 is applicable not only to quasi-
judicial orders but to administrative orders affecting prejudicially the party-in question. The
principles of natural justice supplement the rules and regulation and not supplant it.

• KC SHARMA V DELHI STOCK EXCHANGE (2005)

The GM of GSE was terminated. Delhi HC quashed the termination and ordered compensation
instead of reinstatement of the GM. Appeal was made before the SC. It found that the allegation
and counter-allegation made by both sides indicated a bad blood between the parties. In such
cases where reinstatement would not be proper with regard to the relation of the parties and
doing so will cause irreparable loss to the business, court can order compensation to be paid.
In exceptional circumstances, the court can suo moto award compensation instead of
reinstatement without any plea from employer.

Provisions relating to the quantum of leave is decided by the Standing Order. One of the major
issues has been termination of employment on

• DK YADAV V JMA INDUSTRIES (1993)

The SO provided that if the worker is absent for more than 8 days without leave or prior
permission, he is deemed to have voluntarily left the service. This provision was challenged.
The Labour Court held that the action of the management was in accordance with the SO. He
appealed before the SC. SC held the mechanism to violative of Art. 14, 16, 21 and principles
of natural justice.

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• SYNDICATE BANK V GENERAL SECRETARY (2000)

The employee was absent was over 90 days. He was sent a notice to explain himself which was
returned on non-acceptance (rejection) of the notice. Thereafter, he was removed from the
services. SC held the termination to be not violative of principle of natural justice as they have
been applied in good faith. The requirement of the principle are:

1. Workman should know the nature of the complaint.

2. He should be given an opportunity to represent himself.
3. The action of the management should be just, fair and reasonable.

• ALIGARH MUSLIM UNIVERSITY V MANSOOR ALI KHAN (2000)

The employee was on leave for long period of time and was claiming extensions at the end of
each term. The university gave him a final extension. At the end of final term, he sought another
extension which was denied and the university informed him of the possible vacancy of his
post in case he fails to show up. He failed to join and he was removed. The same was
challenged. The Court held that such termination did not violate the principles of natural
justice. Too much reliance on the principle would cause miscarriage of justice.

• KAPILA HINGORANI V STATE OF BIHAR (2005)

For several years, the employees working in different government department were not paid.
A report was published highlighting the issue outlining the numerous incidents of death by
starvation and suicide of the employees and their family members due to the financial crunch.
A PIL was filed against the Bihar government. The State shifted the blame to the Union
government on the basis of vicarious liability and claimed immunity stating it is facing
financial difficulties.

A. Duty of State – Non-payment of remuneration violates the FR to livelihood enumerated in

Art. 21 and 39(a). It is the duty of the State to provide livelihood to its employees and it cannot
take plea of financial stringencies in devoid of affirmative actions. State cannot escape its duty
when the problem of such magnitude has been in existence for a long period of time. The
liability could not be shifted to the shareholder by “lifting the corporate veil” or to UoI by
pleading financial crunch.

B. Corporate Social Responsibility – State also has an obligation similar to that of corporate
bodies to take action for social welfare of citizens. State invests in the instrumentalities for its
development and if the agency violate any law, State will be held liable.

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• STATE OF MAHARASHTRA V DR. PRAFUL B. DESAI (2003)

Right to development is a human right concept and when looked in a developing country. It
includes economic as well as social (health, education, employment) development. It is the
obligation of the State and inter-governmental organisation to provide these 3rd generation
rights to the people by taking affirmative action within its economic capacity.

• STATE OF GUJARAT V HON’BLE HC OF GUJARAT (1998)

Extraction of work by the labour at a wage price which is lower than the minimum wage is
violative of Art. 23.

• SMD KIRAN PASHA V GOVERNMENT OF AP (1990)

When the right of a person is threatened to be violated or its violation is imminent, the affected
person can resort to Article 32 and 226 and the court will pay observance of his right by
restraining those threatening it.

• RLEK v State of UP (1985)

While closing down the limestone quarries in Mussoorie on grounds that these quarries caused
hazard to healthy environment and affected the perennial water springs, the court observed that
the workers employed there would be thrown out. It ordered the government to provide them
employment in the afforestation and soil conservation programmes in the area.

SEXUAL HARASSMENT AT WORKPLACE

• VISHAKA V STATE OF RAJASTHAN (1997)

A number of NGOs filed a writ petition for the enforcement of FR of working women u/a 14,
19, 21 drawing attention towards the unsafe and unhealthy work environment and eliminate
sexual harassment at workplace. The case reveals the hazards which a working woman may be
exposed and the urgency for safeguards by an alternative mechanism in the absence of
legislative measures.

A. Safe Working Environment – Right to carry on occupation, trade or profession u/a

19(1)(a) depends upon the availability of “safe” working environment. The primary
responsibility is creation of a mechanism for its enforcement. Art. 15 allows the State to make
special provisions for women and children. Art. 42 provides for just and humane work
conditions.

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B. International Obligation – In the absence of any domestic law relating to the evil of sexual
harassment of women at workplace, the contents of International Convention and norms are
significant for the purpose of interpretation of the guarantees of gender equality, right to work
with human dignity (universally recognized basic human right) in Art. 14, 15, 19(1)(g) and 21.
Art. 253 r/w Entry 14 of Union List in the VII th Schedule makes it clear. The Court has power
to enforce these rights and the government will have to meet the challenge and protect women
from sexual harassment at workplace. Art. 11 of The Convention on the Elimination of All
Forms of Discrimination against Women (CEDAW) has made the State responsible to
eliminate discrimination of women in the field of employment… and to safety in working
conditions. Art. 24 obliges the State to take all necessary steps for this purpose. India as ratified
the Convention. In Nilbati Behera v St of Orissa (1992), a provision of ICCPR was referred
to for construing the FRs expressly guaranteed in the Constitution. The same is done here. A
total of 15 guidelines were formulated by the Court in this case.

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 UNIT – II

*NOTE – S. 2(a) defines Appropriate Government (AG). As per the Act, both Central and
State government are vested with the powers and duties in relation to matters dealt in the Act.
For some matters, the Central government and for others the State government concerned are
the AG to deal with such dispute.

DISPUTE SETTLEMENT

IDA 1947 was enacted to resolve the different types of dispute in an industry. Any industrial
dispute coming under labour management shall be resolved as per the mechanism of this
legislation. The mechanism involves the participation of executive of the government in the
adjudication process. There are four different modes of resolving dispute under the Act:

1. Preventive – U/s 3, Works Committee is an authority whose main purpose is to develop

a sense of partnership between the employer and workmen. It seeks to a reach an amicable
settlement between the employer and the workmen. The Committee consists of representatives
of employer and workmen engaged in the industrial establishment where 100 or more workmen
are employed. The number of representatives of workers shall not be less than that of the
employer. However, total number shall not exceed 20.
2. Persuasive – There are two instruments for this settlement:
a. Conciliation Officer – S. 4 provides for appointment of Conciliation Officers. These
officers are charged with the duty of mediating and promoting the settlement of industrial
dispute. It is the oldest and most widely used technique in labour dispute. The CO does not
decide anything but gives direction to the parties to resolve their dispute. He is to be appointed
by the appropriate government for a specified area or for specified industries in a specified
area. No such qualifications have been provided for before choosing a CO.
b. Board of Conciliation – The appropriate government may also constitute a BoC u/s 5.
A Board consists of a Chairman (independent) and two or four other members (persons
representing parties to dispute) as the appropriate government thinks fit. The object is to
promote settlement of an industrial dispute.
3. Voluntary Arbitration – Arbitration differs from conciliation in the sense that in
arbitration the arbitrator gives his judgment on a dispute while in conciliation, the conciliator
disputing parties to reach at a decision. U/s 10A, the parties can enter into an arbitration
agreement and refer it to an arbitrator. Once the party has chosen the remedy u/s 10A, the

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government cannot refer it for adjudication u/s 10. The outcome is called an ‘award’ and is
binding on the parties. There is no right of appeal, review or writ petition.
4. Coercive – Three adjudicatory authorities have been furnished under the Act. Here, an
application is sent to the AG by the Trade Union which is then forwarded to any of the
following adjudicatory authorities.
a. Labour Court – LC is appointed u/s 7 by the AG. LC are empowered to deal with
matters specified in IInd Schedule of the Act. These include matters with ‘rights issue’ like
legality of an order, application and interpretation of Standing Order, dismissal or workmen
(including reinstatement), legality of strike and lockout etc. LC consists of only one person
known as Presiding Officer. LC may also exercise limited jurisdiction over any matter falling
within IIIrd Schedule. Here, LC has jurisdiction only when the appropriate government refers
the matter to it.
b. Tribunal – AG has the power to constitute Tribunals u/s 7A. Tribunals adjudicate upon
matters specified in IInd or IIIrd Schedule. These matters are mainly ‘interest issues’ such as
wages, bonus, provident funds, dearness allowance etc. A Tribunal is headed by a Presiding
Officer appointed by the State government. Assessors may also be appointed if the
government thinks it fit. Tribunals can be apointed for limited period or for deciding a
specified number of disputes.
c. National Tribunals – U/s 7B, NT can only be constituted by Central government by
issuing notification in the Official Gazette. It deals with those issues in the opinion of the
government – (i) involved question of national importance or (ii) are of such nature that the
industrial establishments situated in more than one States are likely to be affected by such
dispute. It is the sole discretion of the Central Government to decide whether it falls in either
of the two qualifications. NT consists of only one person appointed by the Central
Government. 2 assessors may also be appointed if the government thinks it fit to advise NT.

GENERAL MECHANISM OF DISPUTE SETTLEMENT

A reference of industrial dispute is made to the AG who then sends it to an adjudicatory

authority. It is the total discretion of the AG as to whether a dispute should be sent for
adjudication or not. However, in most of the cases, a dispute is referred to the adjudicatory
authority. The steps taken are:

1. Firstly, the dispute is referred to the CO. He holds a conciliation proceedings u/s 12(1)
to arrive at a settlement between the parties. However, if the dispute relates to public utility

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services, it becomes mandatory for CO to take cognizance unlike in cases where he has
discretion. U/s 12(2), he has the power to investigate all the matters affecting the settlement
and has to power to do all such things necessary for reaching an amicable settlement.
2. S. 12(3) provides that if a settlement is reached in the course of proceedings, the CO
has to send a report to the AG with a memorandum of settlement signed by both the parties. As
per S. 12(6), the report shall be submitted within 14 days from the date of commencement of
proceedings. This time period can be extended with the approval of the parties in writing. State
of Bihar v Kripa Shanker Jaiswal (1961) – Where conciliation proceedings continue beyond
14 days, the proceedings will be valid because non-submission of report amounts to breach of
duty on part of CO but that does not affect the legality of proceedings.
3. If no settlement is arrived, he submits a failure report to the AG as per S. 12(4). In the
failure report, the CO mentions if adjudication is required or not. Based on this report, u/s 12
(5), the AG decides whether to go for adjudication or not and if it does not make any reference,
it shall record and communicate the parties concerned its reason. If parties decide to go for
voluntary arbitration u/s 10A, both the parties must give their consent.

Western India Match Co. v Worker’s Union (1970) – Ordinarily, the making of reference
arises only after the report of conciliation proceedings have been submitted but the government
need not wait until such a procedure has been completed. In an urgent case, it can refer the
dispute for adjudication even if the conciliation proceeding has not started or is underway.

POWER OF APPROPRIATE GOVERNMENT

U/s 10, the AG has power to refer any existing or apprehended industrial dispute to such
authority so that the disturbances and unrest may be avoided. For State undertaking, state
government is the AG and for centre, central government. It is the total discretion of AG
whether to send a matter for adjudication or not. No one can challenge the subjective
satisfaction of the AG.State of Bombay v KP Krishnan (1955) – The order passed by the
Government being an administrative order, the reasons recorded therefore are not justiciable in
the sense that their propriety, adequacy or satisfactory character is not open to judicial scrutiny.
It is well within the constitutional limits and is free from judicial review. However, a writ of
mandamus may lie on the basis of non-exercise of discretion or improper exercise of discretion.

The power of the AG to exercise discretion can be struck down either at the stage of delegation
of power or at the stage of exercise of discretion. If the court is of the opinion that the AG

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exercised its discretion without the application of mind or exercises its power improperly then
such exercise of power will be deemed invalid and will be struck down.

STRIKE & CONCILIATION PROCEEDING

Strike is a collective stoppage of work by workmen in order to bring pressure upon those who
dependent on it. It is generally the labour’s last resort in connection with the industrial dispute.
Workmen in every industry have a right to strike but this right is not a constitutional right. S.
22 of the Act provides for strikes and lock-outs in industries carrying public utility services.
The section has a negative connotation and does not allow workers to go on strike unless certain
conditions have been fulfilled. These restrictions have been laid down in S. 22(1), limiting the
chances of workers to go on strike. The following have to be fulfilled before going on a strike.

1. A notice of strike is to be given to the employer.

2. The workmen cannot go for strike within 14 days from the date of such notice.
3. They cannot proceed with strike during the pendency of the conciliation proceedings
and seven days after the conclusion of such proceedings.
4. Strike has to take place within 6 weeks from the date of notification.

The period of 14 days might suggest that the legislature intends to conclude the conciliation
proceedings in that period. However, the SC has already stated in Kripa Shanker case that
conciliation proceedings can stretch beyond 14 days. When this is coupled with the other
stipulation, the chances for workers to go on a strike is diminished marginally. A conciliation
proceeding is deemed to be over when:

1. The parties sign a memorandum of settlement, or

2. When the failure report is received by the AG, or
3. When a pending conciliation proceedings is taken up by AG and forwarded to an
adjudicatory authority.

Submission of report to the Labour Commission shall not be deemed as submission of report
of AG.

Illustration –

1. Notice was given to the employer on 1st Jan. Now as per law, the workers will have to
go on strike before 12th Feb (6 weeks from the date of notice).

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2. Suppose the conciliation proceedings concluded on 22nd Jan and on the same day the
report is submitted to the Labour Commission. The LC delays in sending it to the AG and
finally submits it on 15th Feb. However, the last day to go on strike was 12th Feb.
3. If such is the situation and the workmen decide to go for a strike, the court will label it
as an illegal strike. Even so, such situations happen very rarely in our country as the Trade
Union is a powerful body.

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RIGHT TO STRIKE – in case a 20 marks question comes from this. otherwise strike has
been dealt under the heading “strike and conciliation proceeding” in the preceding page

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INTRODUCTION

- For strike, the industrial dispute act under 2 (q) defines strikes as “a cessation of work by a
body of persons employed in any industry acting in combination, or a concerted refusal, or a
refusal, under a common understanding of any number of persons who are or have been so
employed to continue to work or to accept employment”.

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-In the case of “Cox and Kings Limited v. Their Employees”, the Court held that a strike can
be considered justified if it is in connection with a current labour dispute or directed against an
unfair labour practice of the employer.

-Under the following situation as given under section 22, on these grounds the strikes can be
considered as illegal:

1. Without giving to employer notice of strike within six weeks before striking; or
2. Within fourteen days of giving such notice; or
3. Before the expiry of the date of strike specified in any such notice as aforesaid; or
4. During the pendency of any conciliation proceedings before a conciliation officer
and seven days after the conclusion of such proceedings.

- But herein it is important to notice these that these arrangements don’t forbid the
labourers from demonstration yet expect them to satisfy the condition before taking to
the streets. Further, these arrangements apply to open utility assistance in particular. The
Industrial Dispute Act, 1947 doesn’t explicitly specify who takes to the streets.
Nevertheless, the definition of the strike itself suggests that the strikers must be persons,
employed in any industry to do work.

SECTION 23 OF ID ACT

Further, the provisions under section 23 are general in nature. It imposes general restrictions
on declaring strike in breach of contract in both public as well as non- public utility services in
the following circumstances mainly: –

1. During the pendency of conciliation proceedings before a board and till the expiry
of 7 days after the conclusion of such proceedings;
2. During the pendency and 2 months after the conclusion of proceedings before a
Labour Court, Tribunal or National Tribunal;
3. During the pendency and 2 months after the conclusion of the arbitrator, when a
notification has been issued under subsection 3 (a) of section 10 A;
4. During any period in which a settlement or award is in operation in respect of any
of the matter covered by the settlement or award.

The main purpose of this section is to maintain the untroubled and discipline atmosphere when
conciliation, negotiation proceedings are on the process without any disturbance.

CASE- As held in the case of Ballarpur Collieries Co. v. The Presiding Officer, Central
Government Industrial Tribunal, “It was held, if a person was employed in public utility
services then, he/she cannot go for a strike without the consent and gathering the procedures
which must be satisfied in the provisions.”

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ILLEGAL STRIKE: SECTION 24

Section 24 of the Industrial dispute Act, 1947 provides that strikes which are in non-compliance
to section 22 and section 23 are illegal.

1. A strike or a lockout shall be illegal if,

1. It is commenced or declared in contravention of section 22 or section
23; or
2. It is continued on contravention of an order made under subsection (3)
of section 10 of subsection (4-A) of section 10-A.
2. Where a strike or lockout in pursuance of an industrial dispute has already
commenced and is in existence all the time of the reference of the dispute to a
board, an arbitrator, a Labour Court, Tribunal or National Tribunal, the
continuance of such strike or lockout shall not be deemed to be illegal; provided
that such strike or lockout was not at its commencement in contravention of the
provision of this Act or the continuance thereof was not prohibited under
subsection (3) of section 10 of subsection (4-A) of 10-A.
3. A strike declared in the consequence of an illegal lockout shall not be deemed to
be illegal.

CONSTITUTION STAND ON THE LEGALITY OF THE STRIKES

http://blog.ipleaders.in/right-to-strike-under-industrial-dispute-act-1947/ (can be
referred)

SIGNIFICANCE OF "WITHIN FOURTEEN DAYS & WITHIN SIX WEEKS":

. The clauses 'a' and 'b' appearing in sub-section (1) of Section 22 are significantly incorporated
to prohibit the workmen from going on strike without giving a minimum of 14 days' notice to
the employer, a copy of which is also served on the Conciliation Officer. The purpose is quite
obvious. It intends to give some time for the employer to consider. over the demands of the
workers who are now appeared to be more serious to go on strike in furtherance of their .
demand. It also imposes statutory obligation on the Conciliation Officer to commence
conciliation proceedings immediately so that the strife between the workmen and employer
shall not result in stoppage of work and production.

2. The sub-section(l) also prohibits the workers from going on strike before the expiry of the
date mentioned in the strike (clause (c)). It necessarily follows that such date can be fixed after
the period of fourteen days during which workers cannot go on strike (clause b). Now in clause
(a) the phrase “within six weeks before striking” is incorporated to determine the effectiveness
of the notice given by the workmen. In other words the notice of strike given by the workmen
in accordance with Section 22 will be effective only for a period of six weeks, after the expiry
of which, another fresh notice would be required.

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Example: This can be explained more clearly by an example. Suppose workmen give a notice
of strike under Section 22 on 1.1.2001 and fix the date to go on strike as 20.1.2001. Now they
cannot go on strike before 20.1.2001 as is required under clause c. They cannot fix any date in
the notice in this case before 14.1.2001 as they are prevented from going on strike “within 14
days” of giving such notice by virtue of clause (b). Thus the requirements of both the clauses
(b) and (c) arc complied with. Now suppose workmen do not go on strike on or after 20.1.2001,
the date fixed by them in the notice of strike and kept quite for several months. Then suddenly
they go on strike on any day after several months. This situation would defeat the very purpose
of the I.D. Act to avert stoppage ofwork.

Therefore to avoid such situation it is laid down in clause (a) that the workmen cannot go on
strike “without giving to the employer notice of strike within six weeks before striking”. It
means that, in this example, the workmen cannot go on strike in consequence to their notice
given on 1.1.2001 after the expiry of six weeks i.e. 15.2.2001, thus the effect of the notice is
confined to a period of six weeks requiring the notice “within six weeks before striking”.

CONCLUSION

Lastly the workmen cannot go on strike during the period of pendency of any conciliation
proceeding before the Conciliation Officer and seven days after the conclusion of such
proceedings (clause d). Same conditions are incorporated under sub-section (2) relating to the
employers who, too, cannot declare lockout without following the requirements laid down in
clauses (a) to (d) of sub-section 2.It must be noted .hat Section 2? of the I.D. Act does not
totally prohibit the strike or lockout, but requires the parties engaged in Public Utility Service
to give notice before resorting to the double-edged weapon of strike or lockout. This was also
clarified by Court in State of Bihar v. Deodhar Jha

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THE INDUSTRIAL DISPUTE ACT, 1947 – has been dealt in previous pages, still give it
a read in case we need to write more

The aim of Industrial Disputes Act, 1947 is to settle the industrial disputes in peaceful and
harmonious way. The Act provides for the establishment of several authorities under Chapter
III for the purpose of settling industrial disputes and Chapter IV deals with the power and
duties of such authorities. The authorities have been divided into adjudicatory and non-
adjudicatory bodies.

DISPUTE SETTLEMENT MECHANISM:

Dispute settlement method under the ID Act can be divided into following -

(i) Preventive method - Works committee (S. 3)

(ii) Persuasive method - Conciliation (S.4), Board of Conciliation (S.5)

(iii) Voluntary method - Voluntary Arbitration (S.10A)

(iv) Coercive method - Labour Court (S.7), Industrial Tribunals (S. 7A) and National
Tribunals (S. 7B)

Dispute settlement machinery under the ID Act can be broadly categorised into three, i.e.,
conciliation, adjudication and arbitration.

CONCILIATION:

Conciliation is a process where the dispute between the employer and workmen are referred to
a third party and the third party helps them to come to an agreement. However he is not the
ultimate decision maker. He helps the disputants to come to a consensus. For the purpose of
conciliation, the appropriate governments appoint conciliation officers and constitute board of
conciliation. This process has come out successful in many industrialized countries. However
it has failed in some states too.

The conciliation proceedings generally commence from the reference of the disputes by the
appropriate government. During the pendency of the conciliation proceedings, strikes and
lockouts are prohibited.

A conciliation proceeding is deemed to have concluded in the following circumstances:

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 i) When the settlement is arrived and memorandum of settlement is signed by both the
parties

ii) When no settlement is arrived, then the report of the board is actually received by the
appropriate government and is published under sec.17

iii) When reference is made to a labour court, tribunal or national tribunal under sec.10
The settlement, as defined by sec.2 (p), includes a written agreement signed by the parties and
a copy is sent to the officer authorized by the appropriate government. The settlement shall
come into force on the date in which the memorandum of settlement is signed and agreed by
the parties and it can be terminated by written intimation after the expiry of two months’ notice
(where the notice is given after the expiry of 6 months after the memorandum of settlement is
signed by both the parties or any period prescribed thereof).

Settlement arrived in the course of conciliation proceedings is binding not only on the parties
but also:

i) On all the parties summoned to appear in the proceedings (summoned with proper
clause by board, arbitrator, courts and tribunals)
ii) party referred in cl.(a) and (b) i.e. an employer, his heirs, successors and assignees
iii) party referred in cl.(a) and (b) i.e. workmen or persons who were employed in the
establishment and the persons who would be subsequently employed in the
establishment.
It binds the existing workmen as well as the future workmen.

ADJUDICATION

Adjudication means a mandatory settlement of Industrial Disputes by labour courts, Industrial

Tribunals or National Tribunals under the Act. The adjudicatory authority resolves the
Industrial Dispute referred to it by passing an award, which is binding on the parties to such
reference. There is no provision for appeal against such awards and the same can only be
challenged by way of writ under Articles 226 and 227 of the Constitution of India before the
concerned High Court or before the Supreme Court by way of appeal under special leave under
Article 136 of the Constitution of India.

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There are three adjudicatory bodies in India: Labour Courts, Industrial Tribunals and National
Tribunals. Disputes are generally referred by the appropriate government on the
recommendation of conciliation officers.

VOLUNTARY ARBITRATION

Arbitration is a process in which the conflicting parties agree to refer their dispute to a neutral
third party known as ‘Arbitrator’. Arbitration differs from conciliation in the sense that in
arbitration the arbitrator gives his judgment on a dispute while in conciliation, the conciliator
helps the disputing parties to reach at a decision/agreement. When negotiations fail, the parties
opt for voluntary arbitration. The decisions of the arbitrators are binding on the parties. Sec.
10A (1) authorizes the parties to make reference to voluntary arbitrator.

The conditions are:

i) The industrial dispute must exist or be apprehended

ii) The agreement must be in writing.

AUTHORITIES UNDER ID ACT:

NON-ADJUDICATORY BODIES:

Works Committee [Section 3]

Section 3 provides for the composition of the Works Committee. In the case of an industrial
establishment in which 100 or more workmen are employed, the appropriate Government
may require the employer to constitute a 'Works Committee’. It consists of equal number of
representatives of employers and workmen. Works committee deals with the day to day
problem arising in the industrial establishment. They have been set up to promote good
relations between the employer and workmen.

Conciliation Officer (S. 4):

Sec.4 of ID Act, 1947, provides for the appropriate government to appoint such number of
persons as conciliation officers for settling the industrial disputes. Their decisions are not
binding on the parties. There are no qualifications prescribed for the conciliation officers. At
state level, for undertakings that employ 20 or more persons, the Commissioner/ Additional
Commissioner/ Deputy Commissioner is appointed as the Conciliation Officer. At the Central

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level, some officers from the Central Labour Commission office are appointed as conciliation
officers. The conciliation officer enjoys the powers of a civil court.

Section 12 prescribes the duties of Conciliation Officers as below:

i) If the employer and the workmen fail to arrive at a settlement through negotiations, The
Conciliation Officer may intervene to reconcile the differences of opinion.
ii) Intervention by the Conciliation Officer is mandatory in case where an Industrial
Dispute has arisen in a Public Utility Service and a notice of strike or lockout (Under
Section 22) has been served. Such date is taken as the date of commencement of the
proceedings under sec. 20(1).
iii) The Conciliation Officer shall investigate the dispute and may do all such things as he
thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement
of the dispute under sec.12(2).
iv) The Conciliation Officer shall send a report of proceedings to the Government within
fourteen days of the commencement of the conciliation proceedings. If a settlement is
arrived at as a result of Conciliation Proceedings, a memorandum of settlement is
worked out and it becomes binding on all the parties concerned for a period agreed upon
as under sec.12(3). If no settlement is arrived at, the Conciliation Officer shall send a
full report to the government, including the reasons on account of which a settlement
could not be reached.
Even if conciliation officer does not submit his report within 14 days then also conciliation
would be valid as held by Supreme Court. This decision of the court may have repercussion on
the rights of worker.

Section 2(q) of said Act defines the term strike, it says, strike means a cassation of work by a
body of persons employed in any industry. Whenever employees want to go on strike they have
to follow the procedure provided by the Act otherwise there strike deemed to be an illegal
strike. Section 22(1) of the Industrial Dispute Act, 1947 put certain prohibitions on the right
to strike. It provides that no person employed in public utility service shall go on strike in
breach of contract:
(a) Without giving to the employer notice of strike.
(b) After six weeks of before giving such notice ; or
(c) Within fourteen days of giving such notice; or
(d) Before the expiry of the date of strike specified in any such notice as aforesaid; or

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(e) During the pendency of any conciliation proceedings before a conciliation officer and seven
days after the conclusion of such proceedings.

It is to be noted that these provisions do not prohibit the workmen from going on strike but
require them to fulfill the condition before going on strike. Further these provisions apply to a
public utility service only.

For eg. - On 22nd January notifications were issued by workers that they would go on strike.
On 17 February conciliation proceedings was started. According to Sec. 22 of ID Act, 3rd
March is the limitation (6 weeks from the date of notice) after which workers can’t go on strike.
On 5th March Conciliation report was submitted, it was delayed due to some reasons. Now
strike would be invalid after 3rd March. So worker’s rights may be jeopardized in such
situation but in reality this delay hardly happens where Trade union is a powerful body.

Board of Conciliation (S. 5):

Whenever there arises a dispute of complicated nature and requires special handling, the
appropriate government constitutes the board of conciliation under sec.5 of ID Act. The Board
of Conciliation is not a permanent institution like conciliation officer. It is an ad hoc body
consisting of a chairman and two or four other members nominated in equal numbers by the
parties to the dispute. The Board enjoys the powers of civil court. It follows the same
conciliation proceedings as is followed by the conciliation officer.

The Board is expected to give its judgment within two months of the date on which the dispute
was referred to it.

The board has the duty to settle the disputes amicably without any delay as under sec. 12(1). If
the settlement has been arrived, a report along with the memorandum of settlement signed by
the parties should be send to the appropriate government under sec. 13(1). In case of failure of
the settlement, the board should send a full report to the government along with the
recommendation for the determination of the dispute under sec. 13(3) and the government may
refer it to the labour court or tribunals.

Courts Of Inquiry [Section 6]

The concept is borrowed from the British Industrial Courts Act, 1919. The government may
constitute a court of inquiry under sec. 6(1) of ID Act for the purpose of ‘enquiring into any

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matter connected with or relevant to the industrial dispute’ and submit a report to the
government on the basis of inquiry. Such an arrangement is made when the situation requires
an investigation for the purpose of finding out the truth. It consists of two or more independent
members along with a chairman under sec. 6(2). The court has to and submit its report within
6 months from the commencement of the inquiry to the appropriate government. The report
shall be published within 30 days of its receipts (may be Official Gazette).

ADJUDICATORY BODIES:

Labour courts (sec.7):

The appropriate government under sec.7 (1) may constitute one or more labour courts. It
consists of only one person to be appointed as a presiding officer of the labour court by the
appropriate government who has been the judge of the High court or has been a district judge
or additional district judge for a period of not less than 3 years or…

Industrial Tribunals and National Tribunals (sec.7A and 7B):

The appropriate government may constitute one or more Industrial Tribunals (sec.7A) and
National Industrial Tribunals (sec.7B) for the purpose of adjudication of the industrial
disputes.

The tribunals have the power to adjudicate matters specified in second and third schedule and
such other matters assigned to it.

Matters specified in 3rd schedule are:

i) Wages
ii) Compensatory and other allowances
iii) Hours of work and rest intervals
iv) Leave with wages and holidays
v) Retrenchment of workmen and closure of establishment and
vi) Any other matter that may be prescribed.
There is no hierarchy among Labour Court, Industrial Tribunal and National Tribunal. They
all are at equal footing. Their jurisdiction is divided on the basis of issues. Labour Court deals
with matter specified in Schedule 2 and right issues. Industrial Tribunal deals with matter

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specified in Schedule 3 and interest issue. National Tribunal deals with matter of national
interest in a state.

Rights and Interest Disputes

Depending upon the nature of issues involved, the industrial disputes are categorized as “rights
disputes” or “interests disputes”. The right disputes involve issues relating to existing rights of
workmen under the existing contract of employment or any other norms having the force of
law, such as court decisions or legislation. These disputes originate when there is violation of
agreed standards, there arise differences regarding the meaning or interpretation of these
standards or the application of those standards.

On the other hand, disputes concerned with the variation of existing standards so as to lay down
new and better standards are called “interests disputes”. These disputes arise when the
workmen of trade unions put forward their demands for a wage increase or increase in other
allowances, extra bonus, a pension fund, etc. and the employer has denied to concede these
demands. The workers have no right to such demands under the existing contract of
employment or other legal norms, but they only have an interest in them.

CRITICAL ANALYSIS OF DISPUTE SETTLEMENT MACHINERY

INDUSTRIAL DISPUTES AND INDIVIDUAL DISPUTES:

Certain conditions have to be fulfilled for the dispute to be referred by the appropriate
government to the dispute settling authorities.

i) The management involved in the dispute should be an industry under sec.2(j) which
defines ‘industry’ as ‘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 inclusive in nature and not
exhaustive.
ii) The dispute referred should come within the purview of ‘industrial dispute’ under
sec.2(k) where the dispute should be between the employer and employer, employer
and workmen and between workmen and workmen connected with the employment or
non-employment or the terms of employment.

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The dispute between employer and a workman becomes industrial dispute only when the cause
of the workman is supported by the union or substantial number of workmen. Otherwise it
cannot be called as industrial dispute but those disputes come under sec.2A as individual
dispute.
Where the dispute is connected with the discharge, dismissal or termination of service of a
workman, is deemed to be an industrial dispute despite the union or workmen not supporting
his cause. Such disputes can be referred to the conciliation officers and on the expiry of 45 days
after applying to conciliation officer, the workman shall make an application to the labour court
or tribunal directly but before the expiry of 3 years after the date of such discharge, dismissal
or termination of service. And the court or the tribunal should treat that application in the same
way as referred by the appropriate government and apply the provisions of ID Act.

GRIEVANCE REDRESSAL MACHINERY:

Grievance redressal machinery is constituted to address the grievances of the individual

workman and make the solution readily accessible for him. The government under sec.9C
mandates any industrial establishment employing 20 or more workmen to have one or more
grievance redressal committees to solve the industrial disputes. The Grievance Redressal
Committee shall consist of equal number of members from the employer and the workmen and
such members cannot exceed 6 and for every two members there must be one woman member
and may be increased proportionately. This setup will not affect the right of the workman to
raise any industrial dispute and the committee completes its proceedings in 45 days.

NON-STATUTORY MACHINERIES:

There are several non-statutory machineries for dispute settlement. They are Joint
management council, Tripartite consultative machinery, Code of discipline.

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POWER OF APPROPRIATE GOVERNMENT/REFERENCE OF DISPUTE – dealt
earlier as well

Sec 10 - Reference of disputes to Boards, Courts or Tribunals

INDUSTRIAL DISPUTE-SEC. 2 (K)

Industrial Dispute is “any dispute of 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 of any person.” The following
point related to Industrail dispute is important-

a) There should be a factum of dispute not merely a difference of opinion.

b) It has to be espoused (followed) by the union in writing at the commencement of the dispute.
Subsequent espousal will render the reference invalid. Therefore date when the dispute was
espoused is very important.

c) It affects the interests of not merely an individual workman but several workmen as a class
who are working in an industrial establishment.

Parties to the industrial dispute can be:

• Employers and workmen

• Employers and Employers

• Workmen and workmen

Chandrakant Tukaram Nikam v. Municipal Corporation of Ahmedabad: It was held by

the Supreme Court that the Jurisdiction of the Civil Court was impliedly barred in cases of the
dismissal or removal from service. The appropriate forum for such relief was one constituted
under Industrial Disputes Act, 1947.

REFERENCE OF DISPUTES

Any industrial disputes should have to referred by the Appropriate Government under
section 10 for adjudication, to the Conciliation Board, Labour Court, Court of Inquiry or
Industrial Tribunal or National Tribunal.

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i. Reference of disputes to various Authorities:

A matter is referred to the Conciliation Board for promoting the settlement of the disputes.
The Conciliation Board is to promote settlement and not to adjudicate. But if the matter is
investigatory instead of conciliatory or adjudicatory, it should be referred to Court of Inquiry.
Again, if the matter is related to the Second Schedule or Third Schedule, it is referred to the
Labour court or Industrial Tribunal respectively. Where the disputes relate to a public utility
service and a notice of the same is given, it becomes mandatory of the Appropriate Government
or the Central Government to refer the matter for adjudication.

ii. Reference of disputes to National Tribunal

When industrial disputes are of national importance or they are likely to be affect the industrial
establishments situated in more than one State then they are referred to the National Tribunal
by the Appropriate Government for adjudication.

iii. Reference on application of parities:

If a person individually or jointly applies any matter in a prescribed manner to the Conciliation
Board, Labour Court, and Court of Inquiry, Industrial Tribunal or National Tribunal for
adjudication and the Appropriate Government on being satisfied that the persons represent the
majority of each party, shall make the reference accordingly.

For State undertakings state government is appropriate government and for central
undertakings like Railways etc Central government is appropriate government.

The power of the Appropriate Government to make a reference is discretionary and one cannot
challenge the subjective satisfaction of appropriate government under section 10 of industrial
dispute act.

Power of the Appropriate government to exercise its discretion can be divided into two parts-

i. When appropriate government did not exercise its discretion

ii. When there is improper exercise of discretion.
The discretion must be exercise in a rational way. If it is proved that administrative
authority/appropriate government acted without application of mind then it is deemed that

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administrative authority did not exercise its discretion and its decision can be struck down by
the Court.

So discretion of appropriate government under section 10 can be challenged if exercised

improperly or did not exercised it at all.

For example circumstances- C1, C2 and C3 are not considered by the appropriate government
then the decision of the appropriate government can be challenged. But, say, C1 C2 C3 are
considered by appropriate government but then also did not refer the matter to adjudicatory
authority then it cannot be challenged because subjective satisfaction of appropriate
government cannot challenged.

VOLUNTARY REFERENCE OF DISPUTES TO ARBITRATION

The settlement of industrial disputes may be done through voluntary reference under section
10-A.

i) When an industrial dispute is not referred to Conciliation Board, Labour Court, and Court of
Inquiry, Industrial Tribunal or National Tribunal for adjudication (etc), the employer and the
workmen through a written agreement forward the matter for arbitration specifying the names
of the arbitrator.

ii) The arbitration agreement should be made in prescribed form and should be signed by the
parties.

iii) Within one month from the receipt of the arbitration agreement which should be forwarded
to Appropriate Government and the Conciliation officer, a copy of the same has to be published
in the official Gazette.

iv) The arbitrator or arbitrators shall have to investigate the disputes and submit to the
Appropriate Government the award.

v) The award should be signed by the arbitrator or the arbitrators.

vi) The strike or lock-out in connection with the disputes should be prohibited by an order of
the Appropriate Government.

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AWARD AND SETTLEMENT

Award [Secn 2(b)] means an interim or a final determination of any industrial disputes or of
any question relating thereto by any Labour Court, Tribunal or National Tribunal and includes
an arbitration award made under section 10A.

An award usually is enforceable on the expiry of 30 days from the date of its publication except
when the Appropriate Government declares that the award given by the Labour Court and
Industrial Tribunal shall not be enforceable on the expiry of 30 days. In such case, the
Appropriate Government or the Central Government may within 90 days from the date of
publication of the award under section 17 make an order rejecting or modifying the award.

Persons on whom settlements and awards are binding (Section 18):

An arbitration award or settlement award or award of Labour Court, and Industrial Tribunal or
National Tribunal is binding on—

a. All the parties to the disputes,

b. On all other parties who are summoned to appear in the proceeding as parties to the disputes,
unless the Board, Arbitrator, Labour Court, Industrial Tribunal or National Tribunal in the
settlement of industrial disputes as the case may be, records the opinion that they were so
summoned without proper cause.

c. Where a party referred to Clause (a) and Clause (b) is an employer, his heirs, successors or
assigns in respect of the establishment to which the dispute relates.

d. But if the parties referred to in Clause (a) or Clause (b) is of workmen, all person who were
employed or subsequently become employed in the establishment to which the dispute relates.

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 LAY-OFF AND RETRENCHMENT

LAY-OFF

Lay-off has been defined in S. 2(kkk) of IDA. It is the short-term removal of employees from
services by the employer in case he fails to provide work or refuses or is unable to give work
although he desires to give work to the workmen. Employer has no intention to refuse work
but he is compelled to do so because of reasons. Lay-off has the following essentials:

1. A failure/refusal/inability of the employer to give employment to a workman.

2. The names of the workmen to be laid-off must be on the muster rolls of the industrial
establishment.
3. Failure to give employment must arise on account of shortage of coal/power/raw
materials, breakdown of machinery, natural calamity or any other connected reason.
4. The removal must not amount to retrenchment.

S. 25M restricts the exercise of this power and adds certain qualifications before it can be
exercised. It is mandatory for an employer u/s 25M to make an application to the AG for
obtaining prior permission before giving effect to lay-off. A copy of the said application has to
be given to the concerned workmen as well. After considering the same, the AG may or may
not grant the permission. If the government does not respond within sixty days from the date
of application, the permission will be deemed to have been granted.

S. 25C entitles a workman to get compensation from the employer for the period he is laid-off.
To claim this compensation, the workman must prove that his name was borne on the muster
rolls, he has completed at least one year of continuous service (as u/s 25B) and he is neither a
badly nor casual workman. S. 25A adds another qualification and states that to claim the
compensation, the industrial establishment must have at least 50 workmen on an average per
working day in the preceding calendar month. S. 25E provides that a workman is not entitled
to compensation if he refuses to accept alternative employment offered by the employer, he
does not present himself for work at the appointed time or the lay-off is due to strike.

Workmen of Firestone Tyre & Rubber Co. v Firestone & Rubber Co. (1976) –
Respondents were a tyre manufacturing company at Bombay and having its distribution office
in Delhi. As a result of a strike in Bombay and owing to short supply of tyres at the distribution
office, 17 of 30 employees were laid off in Delhi. No lay-off compensation were paid to these
employees. The SC made the following observations:

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1. Source of Power – Employer-employee relationship is governed by: Service Rules and
Regulation, Contract of Employment or Standing Order. Management has to derive the power
from these three. There is nothing in the IDA which confers power on the employer to lay-off
workers. The contract of employment was silent on this point. Standing orders are only
applicable to industries where at least 100 workers are employed. So, the lay-off was without
authority and hence is invalid. To exercise this power, the source has to be mentioned either in
the employment contract or the standing order (in compliance with IESOA). If the source of
power is not mentioned, the lay-off will be invalid.
Management of Imperial Hotel v Hotel Workers (1959) – In the absence of express term in
the contract or rules, master has no power to suspend worker and if he does so, he will pay
wages for those period.
2. Is lay-off equivalent to temporary discharge – Lay-off is not a temporary discharge
of the workmen or suspension of his contract of service. Mere refusal or inability to give
employment when he reports for duty for grounds mentioned in S. 2(kkk) is not a temporary
discharge. It is a temporary unemployment of the workman.
3. Whether entitled to compensation – It is the common law right of the worker to claim
compensation for invalid lay-off u/s 25C. When everything is silent about the exercise of this
power, the employer is bound to pay the compensation. Where the power and procedure is
provided in the employment contract or standing order, the amount of compensation will be
provided accordingly. If they are silent about the computation of the amount, the provisions of
IDA will be applied.

RETRENCHMENT

Retrenchment has been defined in S. 2(oo) of IDA. It is the termination of service of a

workman for reasons other than by way of punishment. A bare reading of S. 2(oo) might
suggest that it includes every kind of termination other than by way of punishment but this
illusion was removed in Hari Prasad v AD Divalker (1957) wherein it was held that
termination is retrenchment when it is of surplus labour and in an industry which is continuing
and not closed or transferred. Workmen may become surplus on grounds of rationalization,
economy or other industrial or trade relation. S. 25F and 25N both govern the principles relating
to retrenchment. 25F is applicable to industrial establishment where more than 50 employees
have been engaged on an average per working day in the preceding calendar year and also
applicable for industries which are of seasonal nature. Following conditions have to be satisfied
for a valid retrenchment u/s S. 25F:

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1. Workman should be given at least one month’s notice in writing indicating the reasons
for retrenchment.
2. The workmen has been paid compensation equivalent to 15 days’ average pay for every
completed year of continuous service. This compensation can be recovered u/s 33C.
3. A notice is served to the AG indicating the same. However, this does not protect the
interest of the employees and is only intended to keep the government informed. Therefore,
failure to serve a notice does not invalidate the retrenchment.

S. 25N is applicable to industrial establishment where more than 100 employees have been
engaged on an average per working day in the preceding calendar year. Sec 25N insists on:

1. The workmen has been given three months prior notice in writing indicating the reasons
for retrenchment.
2. An application has to be made to the AG seeking permission for the same. After
considering the same, the AG may or may not grant the permission. If the government does not
respond within sixty days from application, the permission will be deemed to have been
granted.

Workmen of Meenakshi Mills v Meenakshi Mills (1992) – The Court upheld the validity of
Section 25N since it satisfies the reasonableness of the restrictions. The Court examined the
object behind these restrictions. They were done primarily to introduce prior scrutiny of reasons
of retrenchment, to prevent avoidable hardship to the employees resulting from retrenchment
by protecting the existing employment. These steps also check the growth of unemployment.
These restrictions on the employers are intended to maintain the smooth and harmonious
industrial atmosphere. It also attempts to give effect to the directive principles of the
Constitution and therefore, it can be presumed to be a reasonable restriction in public interest.

Orissa Textile & Steel Ltd. v State of Orissa (2002) - While dealing with the nature of the
functions performed by the appropriate Government in exercising powers of review, the Court
ruled that it performs judicial functions. Being aware of the financial hardship in running the
establishment, the Court pointed out that in such a situation, the employer must prove that it
had become impossible for him to continue to run the establishment.

DISTINCTION BETWEEN RETRENCHMENT AND LAY-OFF

1. Lay-off is the provisional termination of employment at the instance of the employer

whereas retrenchment is involuntary separation of an employee due to replacement of labour.

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2. In lay-off, deprivation from work is for temporary period while in retrenchment the
workmen is permanently stripped from his employment.
3. Lay-off takes place on account of shortage of coal/power/raw materials etc but
retrenchment takes place because of surplus labour.
4. In lay-off, the employer-employee relationship subsists which is not the case in
retrenchment.
5. Laid-off employees are paid compensation but not gratuity but retrenched employees
are paid both.
6. All of the laid-off employees take back their usual posts, as soon as the lay-off lifted
out but not mandatory that all the retrenched workers should be appointed.

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 ‘INDUSTRY’

The term ‘industry’ has been defined u/s 2(j) of IDA. The definition is in two parts. First one
is from the point of view of employers and says that industry means any business, trade,
undertaking, manufacture or calling of employers. Second part is from the point of view
of employee and includes any calling, service, employment, handicraft, or industrial
occupation or avocation of workmen. However, the second part cannot alone define industry.
The definition read as whole denotes a collective enterprise where employers and employee
are associated.

DN Banerjee v PR Mukherjee [Budge-Budge Municipality Case] (1953) – The question

was whether a municipality comed under the definition of industry or not for the purpose of
this Act. In the SC, the Municipality pleaded that it is discharging sovereign function under the
Bengal Municipal Act and hence, it is not industry and thus the concerned dispute is not an
industrial dispute. The Court observed that the definition is intended to include even those
activities that cannot be called trade or business. It held that Municipality is an industry because
sanitation and conservation is an undertaking which is comparable to trade and industry.
Neither investment of capital nor profit making motive is essential to constitute an industry as
they are generally necessary in a business. Hence, a non-profit undertaking such as
municipality were included in the definition.

City Corporation of Nagpur v Its Employees (1960) – The question was whether all the
department of a Municipal Corporation are included in the definition of ‘industry’. The Court
made the following observations:

1. Every corporation has two types of function: Regal which are sovereign activity and
cannot be transferred and Municipal which are analogous to trade and business.
2. If a service is performed by an individual is an industry, it will continue to be so even
if it is undertaken by a corporation. It is not necessary that the service must be trade in a
different garb.
3. Monetary consideration for service is not essential characteristic of industry.
4. If the service rendered by a Corporation is “industry”, the employees connected with
the service in financial, executive or administrative department would be entitled to the benefit
of the Act.

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5. If a Corporation discharges may functions, some of which pertains to industry under
the Act while others are not, the predominant function of the department shall be the criterion
for determining.

State of Bombay v Hospital Mazdoor Sabha (1960) – The question was whether a hospital
is an ‘industry’ or not within the meaning of this Act. The court declared the hospital to be
covered within the word ‘undertaking’ u/s S. 2(j) and laid down the following guidelines:

1. An activity undertaken for the production or distribution of goods for rendering material
services to the community at large with the help of employees is an undertaking.
2. It is the character of the activity in question which attracts the provision of S. 2(j) and
profit-making motive is immaterial in its determination.
3. The manner in which the activity in question is organized, the condition of the
cooperation between employer and employee necessary for its success and its object to render
material service to the community can be regarded as some of the feature which are distinctive
for the application of S. 2(j).

Lalit Hari Ayurvedic College of Pharmacy v Workers Union (1960) – The college
manufactured medicine primarily for sale in market although a part of it was consumed in the
hospital and it was found that the hospital was not run for the benefit of the students in the
college. The pharmacy and the hospital were held to come within the definition of the term
‘industry’.

University of Delhi v Ramnath (1963) – An order terminating the services of bus drivers on
account of discontinuance of service was challenged. Retrenchment compensation was sought
and it was argued that University is not an ‘industry’ under the Act. SC held that the work of
imparting education is more of vocation than profession, trade or business and accordingly the
university is not an industry under the Act.

Madras Gymkhana Club Employees Union v Management (1968) – The Club was running
a catering department which provided food and refreshment not only generally but also on a
special occasion. It was held that the club was a member’s self-serving institution and not an
industry. No doubt that 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.

Management of Safdarjung Hospital v Kuldip Singh (1970) – A hospital which was run and
administered by the Government was a part of its sovereign functions and, therefore, it was

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held to be outside the scope of ‘industry’. It was also held that unless the public utility service
answers the test of it being an “industry” u/s 2(j), the enumeration of such utility service in the
first schedule to the Act would not make it an “industry”. Industry has thus been accepted to
mean only trade and business, manufacture, or undertaking analogous to trade or business for
the production of material goods or wealth and material services.

Hospital Mazdoor Sabha case was overruled by Safdarjung Hospital case. But Safdarjung
Hospital has now been overruled in Bangalore Water Supply case and Hospital Mazdoor Sabha
case has been rehabilitated. Madras Gymkhana is now an ‘industry’ as they fulfil the triple test
as laid in Bangalore Water Supply case.

Bangalore Water Supply and Sewage Board v A Rajappa (1978) – The question was
whether the concerned Board falls under the ambit of 2(j) or not. The Supreme Court came up
with a working principle called as 'triple test' to determine whether a body would amount to
industry or not. To qualify as one, it has to fulfil the following:

1. There should be systematic Activity.

2. Organised by Co-operation between employer and employee.
3. For the production and/or distribution of goods and services calculated to satisfy human
wants and wishes.

The Court also emphasised that:

1. Industry does not include spiritual or religious services or services geared to celestial
bliss.
2. Absence of profit motive or gainful objective is irrelevant, be the venture in the public,
joint, private or other sector.
3. The true focus is functional and the decisive test is the nature of the activity with special
emphasis on the employer- employee relationship.
4. If the organization is a trade or business it does not cease to be one because of
philanthropy animating the undertaking.

Therefore the consequences of the decision in this case are that professions, clubs, educational
institutions co-operatives, research institutes, charitable projects and other kindred adventures,
if they fulfil the triple test stated above cannot be exempted from the scope of section 2(j) of
the Act.

The definition was amended on 1982 which enacts a new definition altogether. This amended
definition has not been enforced till now. It attempts to clarify the conflicting views arising out
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of different interpretation of the word ‘industry’. The new definition, however, incorporates
the views of SC in Bangalore Water Supply case to a great extent.

[NOTE – Once, the entire batch bunked Kundu’s class. So, he only gave the name of the
cases and told us to read by ourselves. The cases have been descrbed above. But if he asks
any specific portion from the upcoming pictures, we will have to write only that]. So give
these pictures a read.

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41 | P a g e
LIBERAL PROFESSION AS INDUSTRY:

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EDUCATIONAL INSTITUTIONS

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CO-OPERATIVES

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HOSPITALS

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‘INDUSTRIAL DISPUTE’

S. 2(k) defines the term. As per this, an industrial dispute has following elements:

1. A dispute between – (a) employers and employers, or (b) employers and workmen, or
(c) workmen and workmen.
2. The dispute should be connected with - (a) employment or non-employment, or (b)
terms of employment, or (c) conditions of labour of any person. Non-employment
includes retrenchment as well as refusal to reinstate.
3. The dispute may be in relation to any workman or any person in whom they are
interested as a body.
4. It affects the interests of not merely an individual but several as a class who are working
in an industrial establishment.

Fedders Lloyd Corpn v LG of Delhi (1970) - For a dispute to be an industrial dispute it is

necessary that a demand must be first raised on management and rejected by them. Merely
making of demand to an authority and its communication by him to the management who reject
the same is not sufficient to constitute industrial dispute.

INDIVIDUAL DISPUTE V INDUSTRIAL DISPUTE

Before insertion of S. 2A of the Act an individual dispute could not per se be an industrial
dispute as S 2(k) speaks of a dispute between employer and workmen (plural), but it could

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become one if taken up by the Trade Union or a number of workmen. For an individual dispute
to be declared as an Industrial Dispute, the following conditions are to be satisfied:

1. A body of workmen (Trade Union ) or a considerable number of workmen, are found

to have made common cause with the individual workman;

2. That the dispute (individual dispute) was taken up or sponsored by the workmen as a
body (trade union) or by a considerable section of them before the date of reference.

S. 2A does not declare all individual disputes to be industrial disputes. It is only when a dispute
is connected with a discharged, dismissed retrenched or terminated workman that it shall be
treated as an industrial dispute. If the dispute or difference is connected with some other matter
e.g. payment of bonus/ gratuity etc. then it would have to satisfy the test laid down in judicial
decisions.

State of Bihar v Kripa Shankar Jaiswal (1961) - Only a collective dispute could constitute
an industrial dispute but collective dispute does not mean that the dispute should either be
sponsored by a recognized union or that all or majority of the workmen of an industrial
establishment should be parties to it.

PS Sundaram v Labour Court (1970) – In order to make a dispute industrial dispute it is not
necessary that there should be a resolution of substantial or appreciable number of workmen
What is necessary is that there must be some expression of “collective will” of substantial or
appreciable number of workmen taking up the cause of the aggrieved workman.

CHANGE OF SERVICE CONDITIONS

Earlier, the employers had the power to change service condition of the employees without any
limitation. But after the amendment in 1956, 9A was added restricting this absolute power of
the employer. This section restricts the employer’s power to make any changes in the
conditions of service of any workman in respect of the matters enumerated in the IVth Schedule.
The IVth Schedule contains a list of 11 service conditions for which notice of change is required
such as the usual wages, allowances, hours of work, leave, improvement of plants which is
likely to lead to retrenchment etc. The object and purpose of S. 9A is to afford an opportunity
to the workmen to consider the effect of proposed change and if necessary, to present their
view on the proposal. However, this section provides two conditions to be fulfilled before the
employer can effect any change in the condition of service. They are:

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1. The employer has to give notice to the workmen likely to be affected by such change.
The notice must be in a prescribed manner and must state the changes proposed.
2. No change shall be given effect to before the expiry of 21 days from the date of issuance
of notice.

Robert D Souza v Executive Engineer, Southern Railways (1982) – Retrenchment does not
constitute a change in service condition in respect of any item mentioned in IVth Schedule, and
hence the provisions of S. 9A is not attracted.

S. 33 is another section dealing with service conditions. Its main purpose is to maintain status
quo during the pendency of certain proceedings under the Act such as before a conciliation
officer, Board, Labour Court or any Tribunal. During this period, the employer is prohibited
from taking the following actions, except without the express permission of the authority where
proceeding is pending:

1. He shall not alter to the prejudice of the workmen the service conditions applicable to
them immediately before the commencement of the proceedings, or
2. He shall not discharge, dismiss or punish for any such misconduct connected with the
dispute.

Not every alteration is prohibited, but all those connected with dispute are. Also, the workmen
concerned has to be the ones connected with the dispute only and not anyone else. For the
application of S. 33(1), following conditions must be satisfied:

1. Some proceeding must be pending before any authority mentioned in the Act
2. There must be some alteration in the condition of service of workmen
3. The alteration must be in the condition applicable to workmen immediately before the
commencement of the proceeding.
4. The alteration must be to the prejudice of the workmen concerned in such dispute and
must be in regard to the matter connected with the dispute.
5. The workmen who claim protection under the Act should be a workmen u/s 2(s) of the
Act and should be connected with the pending dispute.
6. The action should be taken without the express permission of the authority where
dispute is pending.

*NOTE – S. 33(1)(a) deals with alteration of service condition whereas S. 33(1)(b) deals with
dismissal from employment.

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If in case the workmen is terminated, the action taken should be discharge or punishment by
way of dismissal. S. 33(2) provides that the employer can alter the service condition of the
workmen on matters not connected with the dispute or he can dismiss or terminate the services
of the workmen not connected with the dispute. However, this right u/s 33(2) has to be taken
in accordance with the SOs or terms of contract applicable.

Syndicate Bank v Ram Nath (1967) – A worker was dismissed on grounds of wilful
disobedience on 12/11/1963. An appeal against the order was made on 17/12/1963. It was
dismissed on 20/03/1964. The dispute was referred to Industrial Tribunal on 8/01/1964. The
SC on appeal held that on natural interpretation of S. 33, the order of dismissal is the original
order passed on 12/11/1963 and as there was no dispute pending on that date, there was no
contravention of S. 33.

New India Motors Pvt. Ltd. v KT Morris (1960) – The expression “workmen concerned in
such dispute” is not limited only to workmen on whose behalf the dispute has been raised as
well as those who would be bound by the award which may be made in the said dispute.

The remedy for the workman against breach of S. 33 lies under S. 33A of the Act. S 33A
enables an aggrieved employee to lodge a complaint in writing, in the prescribed manner, to
the concerned authority. The aggrieved employee is entitled to make a complaint in writing of
the contravention of S.33 by an employer to the authority before which the proceeding is
pending. S. 33A has the following essentials:

1. There should be proceeding pending before a Conciliation Officer, Board, an arbitrator,

LC, T, or NT.
2. A contravention of S. 33 by the employer during the pendency of proceeding.
3. A complaint is made to the authority where the proceeding is pending.
4. The concerned authority shall adjudicate upon the complaint as if it was an industrial
dispute referred to it.
5. The concerned authority shall submit its award to the AG
6. The award shall be published by the AG u/s 17A.

When an application is made u/s 33A, jurisdiction of the concerned authority would be same
as u/s 10 and such authority will adjudicate upon the matter as if a new industrial dispute has
arisen. Such interpretation has been confirmed by S. 2A which states that any discharge,
dismissal, retrenchment or termination of any employee or any matter connected with it shall
be deemed to be an industrial dispute. The matter need not be referred to the AG and a direct

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complaint can be filed before the concerned authority. When a complaint u/s 33A is filed, the
concerned authority has to pronounce upon the merits of the dispute between parties.

CA Roderick v Karan Chand Thapar (1963) – Contravention of S. 33 is a question related

to the jurisdiction and should be decided first. Then the Tribunal can proceed on with the merits
of the case. If judging on the merits, the Tribunal finds that the action of the employer against
the aggrieved employee is justified then contravention of S. 33 may be regarded as technical
breach and will not justify an order of compensation in favour of the employee.

RECOVERY OF MONEY DUE FROM EMPLOYER

S. 33C deals with the procedure for recovery of money due to a workman from an employer
under a settlement or an award or under the provisions of Chapter VA or VB. S. 33C(1)
provides that the application for this amount may be made to the AG and if the government is
satisfied that the claim is genuine, it shall issue a certificate for that amount to the collector.
The collector shall recover the amount as shown in the recovery certificate as an arrear of land
revenue. The application can be made either by the workman himself or by any person
authorised by him and in case of his death, his heirs. Permission of AG is not required for
enforcing S. 33C. The application has to be made within one year from the date on which the
money has become due and this limitation period can be exempted provided the AG finds a
reasonable cause.

S. 33C(2) deals with cases where a workman is entitled to receive money or benefit capable of
being computed in terms of money. It confers LC the jurisdiction to decide not only the right
of a workman to receive any money or benefit capable of being computed in terms of money
from the employer but also the exact amount of it. These questions may be decided by LC as
may be specified by the AG within a period of three months which may be extended on the
satisfaction of the presiding officer.

Union of India v OP Singh (1991) – A workman cannot make a claim u/s 33C(2) in respect
of a relief which is not based on an existing right and which could be appropriately the subject-
matter of an industrial dispute requiring a reference u/s 10.

Namor Ali v CIWT Corpn (1978) – The application u/s 33C(2) would not be rejected merely
on the ground that there is no dispute about money due. If the right to get the money on the
basis of the settlement or the award is not established, no amount of money will be due.

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Therefore, the question whether the workmen were entitled to take advantage of a settlement
would attract the provisions of S. 33C(2).

The LC can appoint a Commissioner u/s 33C(3) for the purpose of computing the money value
of benefit. Based on the report of the Commissioner, the LC would then determine the amount
of benefit. As per S. 33C(4), the LC shall forward its decision to the AG. The decision of the
LC shall be final and conclusive. S. 33C(5) enables any number of such workmen, employed
under the same employer, to file a single application for the recovery of money or benefit.

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 UNIT – IV

EMPLOYEE COMPENSATION ACT, 1923

INTRODUCTION

This Act was framed with a view to provide for compensation to workmen incapacitated by an
injury from accident arising out of and in course of employment. It is a guarantee against
hazards of employment to which a workman is exposed because of his employment. The
employer will not be liable to pay compensation if the employee engages himself in some work
which he was not hired to do and contracts an injury. This is known as doctrine of added peril.

DISABLEMENT

Under the Act, there are two kinds of disablement: Partial and Total.

A. Partial Disablement – S. 2(1)(g) of the Act deals with partial disablement. Such
disablement can be temporary or permanent. If the earning capacity of a workman is reduced
in any employment in which he was engaged at the time of the accident resulting in the
disablement, it is temporary partial disablement. Also, if the disablement reduces his earning
capacity in every employment which he was capable of undertaking at that time of accident, it
is permanent partial disablement. Furthermore, every injury specified in Part II of Schedule I
of the Act (48 items in total) shall be deemed to be a permanent partial disablement. It includes
amputation, loss of thumb, loss of 2/3/4 fingers of one hand, toes or either eye etc. Each injury
has been allotted a different weightage in loss of earning capacity in the Schedule. To determine
whether an injury is permanent or temporary, the courts will have to see whether the injury
incapacitated the workman from every employment which he was capable of undertaking at
the time of accident or merely from the particular employment in which he was at the time of
the accident resulting in disablement.

CLMB Chamber of Commerce v Mohd Hossain (1969) – Loss of earning capacity is a

question of fact. It has to be determined by taking into account the destruction of physical
capacity as disclosed by the medical evidences and then it is to be seen to what extent such
destruction would reasonably be taken to have disabled the affected workman from performing
his duties which a workman of his class ordinarily performs.

B. Total Disablement – S. 2(1)(l) deals with total disablement. As per this section, when a
workman is incapacitated of doing any work which he was capable of performing at the time

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of accident resulting in such disablement, it is total disablement. It can be permanent or
temporary. If the incapacity is of such nature that the workman cannot get employment for any
work he can undertake, it will be total permanent disablement. There must be incapacity for all
resulting in 100% loss of earning capacity. An injury will be considered to cause permanent
total disablement when it falls in any of the 6 items mentioned in Part I of Schedule I. It includes
injuries such as loss of both hands, one hand and a foot, absolute deafness, severe facial
disfigurement etc. If loss of earning capacity of one injury mentioned in Part II of Schedule I
is 50% and of other is 60% then it will be treated as total disability (>100%) in case a workman
suffers both these injuries.

Kalidas v SK Mondal (1957) – The loss of earning capacity is not a matter for medical opinion
but the extent of it is a question of fact. It has got to be determined by taking into account the
diminution or destruction of physical capacity, as disclosed by the medical evidence and then
it is to be seen to what extent such diminution or destruction could reasonably be taken to have
disabled the affected workman from performing the duties which a workman of his class
ordinarily performed and from earning the normal remuneration paid for such duties.

Ball v William (1962) – It is the incapacity to get employment which is relevant and not the
physical incapacity to undertake any work. If because of this apparent physical defects caused
by an injury no one will employ a workman, however efficient he may be, he has lost the power
to earn wages completely as if he was paralysed in every limb.

RELATIONSHIP BETWEEN EMPLOYER AND EMPLOYEE – most probably won’t be

asked, but yet again, he’s Kundu.

The general principal or contract, which in India have been incorporated under the Indian
Contract Act, 1872, regulated the relation between employers and employees, or between
master and servant, before the emergence of modern system of industrial jurisprudence. Under
the general law of contract, anyone can agree to work for another for hire or reward and thereby
put himself under his control and supervision, and in return be paid such remuneration as has
been agreed upon mutually. The ordinary courts of the country, in case of disputes between the
employers and the employees, enforce the contractual rights of the parties. Such contractual

rights need not be incorporated in any written document, in which case the terms of the contract
of employment have to be gathered from the surrounding circumstances, supplemented by

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certain implied conditions, which are deemed to have been agreed upon between the employer
and the employee, unless otherwise stated in writing. Upto 1946, apart from legislation laying
down certain safeguards to protect the health and safety of the workmen, and to ensure payment
of wages in time and providing for payment of compensation in case of accidents, there was
little regulation of the contract of employment with the result that the whole matter was left to

the sweet will of the parties.

In the absence of effective collective bargaining in most industrial establishments, such bargain
used to be, generally speaking, a one-sided matter, because of the superior bargaining position
of the employer, and the inability of unorganized individual labourer to hold out for a better
bargain. He had either to accept employment on the terms offered by the employer, or to face
starvation. With the emergence of modern industrial jurisprudence, which had its birth during
theSecond World War and took concrete form only after the achievement of political
independence by India, these concepts have undergone drastic changes which have interfered
with the contractual relations between employers and employees in favour of the employees,
so as to give them protection against the superior economic strength and bargaining position
of the employer.

The Contract Labour (Regulation and Abolition) Act, 1970 which came into force on 1st
February 1971 aims at abolition of contract labour in respect of such categories as may be
notified by the appropriate government in the light of certain criteria that have been laid down,
and at regulating the service conditions of contract labour where abolition is not possible. It

provides for setting up of Advisory Boards of a tripartite character, representing various

interests, to advise Central and State Governments in administrating the legislation and
regulation of establishments and contractors. Under the scheme of the Act, the provision and
maintenance of certain basic welfare amenities for contract labour, like drinking water and

first-aid facilities, and in certain cases rest-rooms and canteens, have been made obligatory.
Provisions have also been made to guard against delays in the matter of wage payment.

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 Standing Order – could be a 20 mark ques

NOTE: The cases dealt here have been dealt in the first few pages of the notes under the
head “Unlawful termination of employee”. Here, they are dealt wrt Standing Order. The
content in both of them is more or less the same.

Introduction

The concept of ‘Standing Orders’ is one of the recent growth in relation to Indian labour-
management. Prior to 1946, there existed chaotic conditions of employment, wherein the
workmen were engaged on an individual basis with uncertain and vague terms of employment.
The modern law of industrial employment requires that the terms of employment, conditions
of service and rules of discipline should not only be written and known to the employees'
concerned but they should also be reasonable, fair and uniform.(Labour Investigation
Committee Report (Main Report), 1946, 109)

Objectives

The Act was enacted to curb the powers of the employer to offer such conditions of service as
would result in exploitation and bring about uniformity in conditions of service amongst
employees working in different industrial establishments in the same industry. The Act imposes
an obligation on the employer to explain and state the terms and conditions of service before a
person accepts the employment.

It seeks to define the terms and conditions of employment of all categories of employees who
discharge the same or similar work in an industrial establishment and to make those terms and
conditions widely known to all workmen before they could be asked to express their
willingness to accept the employment.

Standing orders

The Act applies to every industrial establishment wherein 100 or more workmen are employed,
or were employed on any day of the preceding 12 months. Several states have 'extended the
application of the Act to establishments employing 50 or more persons. Section 2(g) of the Act
states that “standing orders” are the rules relating to matters set out in the Schedule:

1. Classification of workmen, e.g., whether permanent, temporary, apprentices, probationers,

1[badlis]. 2. Manner of intimating to workmen periods and hours of work, holidays, pay-days

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and wage rates. 3. Shift working. 4. Attendance and late coming. 5. Conditions of, procedure
in applying for, and the authority which may grant, leave and holidays. 6. Requirement to enter
premises by certain gates, and liability to search. 7. Closing and re-opening of sections of the
industrial establishment, and temporary stoppages of work and the rights and liabilities of the
employer and workmen arising therefrom. 8. Termination of employment, and the notice
thereof to be given by employer and workmen. 9. Suspension or dismissal for misconduct, and
acts or omissions which constitute misconduct. 10. Means of redress for workmen against
unfair treatment or wrongful exactions by the employer or his agents or servants. 11. Any other
matter which may be prescribed.

Standing Orders should be reasonable

Section 4 of the Act declares the conditions upon the fulfilment of which, a standing order can
be certified. It thereby requires a standing order to provide for all the matters set out in the
Schedule of the Act and be in conformity with the provisions of this Act. The proviso to Section
4 of the Act, as amended by Act 56 of 1956, necessitates the Certifying Officer or appellate
authority to adjudicate upon the fairness or reasonableness of the contents of such Draft
Standing Order in order to proceed with its certification.

D.K. YADAV VS J.M.A. INDUSTRIES LTD

Facts: The respondent-company terminated the appellant's services on the ground that since he
had willingly absented from duty continuously for more than 5 days from December 3, 1980,
without leave or prior information of intimation or previous permission of the management, he
had been deemed to have left the service of the company on his own and lost the lien and the
appointment with effect from December 3, 1980. It relied on clause 13(2) (iv) of the Certified
Standing Order in support of its action.

Clause 13 (2) (iv) standing order reads thus:

"If a workman remains absent without sanctioned leave or beyond the period of leave originally
granted or subsequently extended, he shall lose his lien on his appointment unless.

(a) he returns within 3 calander days of the commencement of the absence of the expiry of leave
originally granted or subsequently extended as the case may be; and

(b) explains to the satisfaction of the manager/management the reason of his absence o r his
inability to return on the expiry of the leave, as the case may. The workman not reporting for

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duty within 8 calander days as mentioned above, shall be deemed to have automatically
abandoned the services and lost his lien on his appointment. His name shall be struck off from
the Muster Rolls in such an eventuality."

The appellant's plea that despite his reporting to duty on December 3, 1980 and every day
continuously thereafter, he was prevented entry at the gate and was not allowed to sign the
attendance register and that he was not permitted to join duty without assigning any reasons,
was not accepted.

Labour Court: The Labour Court upheld the termination order as legal and valid. It held that
the appellant had failed to prove his case, that the action of the respondent was in
accordance with the Standing Orders and it was not a termination nor retrenchment under the
Industrial Disputes Act and that the appellant in terms of Standing Orders lost his lien on his
appointment and was not entitled to reinstatement.

Supreme Court: Allowing the appeal of the employee, this Court held that the action of the
management in terminating the appellant's service is violative of the principles of natural
justice. Under clause 13 (2) (iv) of Certified Standing Orders, on completion of eight calendar
days' absence from duty an employee shall be deemed to have abandoned the services and lost
his lien on his appointment. Thereafter, the management is empowered to strike off the name
from the Muster Rolls. But it is not correct to say that expiry of eight days' absence from duty
brings about automatic loss of lien on the post and nothing more need be done by the
management to pass an order terminating the service and per force termination is automatic.
The principles of natural justice must be read into the Standing Order No. 13 (2) (iv).
Otherwise, it would become arbitrary, unjust and unfair violating Article 14. In the instant case,
admittedly, the management did not conduct any domestic enquiry nor gave the appellant any
opportunity to put forth his case.

The Supreme Court held that the principles of natural justice are mandates of Articles 14 and
21. In view of this, the Court ruled that the principles of natural justice must be read wherever
the standing orders provide for automatic termination of service for absence without leave.

The court held: “Article 21 of the Constitution clubs life with liberty, dignity of person with
means of livelihood without which the glorious content of dignity of person would be reduced
to animal existence. When it is interpreted that the colour and content of procedure established
by law must be in conformity with the minimum fairness and processual justice, it would

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relieve legislative callousness despising opportunity of being heard and fair opportunities of
defence. The order of termination of the service of an employee/workman visits with civil
consequences of jeopardising not only his/ her livelihood but also career and livelihood of
dependents. Therefore, before taking any action putting an end to the tenure of an
employee/workman, fair play requires that a reasonable opportunity to put forth his case is
given and domestic enquiry conducted complying with the principles of natural justice.”

VISKAKHA V STATE OF RAJASTHAN

In the case of Vishakha & Ors. v. State of Rajasthan (1997) 6 SCC 241 whereby a woman was
assaulted and harassed at her workplace. She was a social worker in Rajasthan who was
brutally gang raped for stopping a child marriage. Vishaka and other women's groups
filed Public Interest Litigation (PIL) against the state of Rajasthan and the central government
of India to enforce the fundamental rights of working women under Articles 14, 19 and 21 of
the Constitution of India. The petition was filed after Bhanwari Devi, a social worker
in Rajasthan was brutally gang raped for stopping a child marriage. The following issues were
raised:

• Whether sexual harassment at the Workplace amounts to a violation of Rights of Gender

Inequality and Right to Life and Liberty?
• Whether the court could apply international laws in the absence of applicable measures
under the existing?
• Whether the employer has any responsibility when sexual harassment is done to/by its
employees?
The Hon’ble Court took reference from the international conventions to proceed with the case.
It referred to the Beijing Statement of Principles on the independence of Judiciary[3] in the
LAWASIA region, to function as a guardian of citizens’ rights and independently make laws
in the absence of any legislative framework. Then the Hon’ble court took reference from the
provisions of Convention on the Elimination of All Forms of Discrimination against Women
(CEDAW)[4]. They were-

Article 11 (1) (a) & (f)- which states that the State takes all appropriate measures to eliminate
discrimination against women in the field of employment.

Article 24- which states that the State shall undertake to adopt all necessary measures at the
national level aimed at achieving the full realization.

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The Supreme Court observed: “Each such incident results in violation of the fundamental rights
of ‘Gender Equality’ and the ‘Right of Life and Liberty’. It is clear violation of the rights under
Articles 14, 15 and 21 of Constitution. One of the logical consequences of such an incident is
also the violation of the victim’s fundamental right under Article 19(1)(g) ‘to practice any
profession or to carry out any occupation, trade or business’.” The Hon’ble Supreme Court
framed the guidelines to prevent sexual harassment at the Workplace, known as Vishaka
Guidelines, that were to be treated as law declared under Article 141 of the Indian Constitution.

The Parliament enacted Sexual Harassment of Women at Workplace (Prevention, Prohibition

and Redressal) Act, 2013 on December 9, 2013 that seeks to protect women from sexual
harassment at their place of work. This statute superseded the Vishakha Guidelines for
prevention of sexual harassment introduced at work place by the Supreme Court of India.

SYNDICATE BANK V/S THE GENERAL SECRETARY, SYNDICATE BANK STAFF ASSOCIATION
AND ANOTHER

Appellant Bank was granted leave to appeal under Article 136 of the Constitution against
judgment dated September 11, 1998 of the Division Bench of the Karnataka High Court in writ
appeal upholding the order of the learned single Judge dismissing the writ petition. In the writ
petition the Bank had challenged the Award of the Central Government Industrial Tribunal
(`Tribunal' for short) dated September 26, 1994. By the Award the Tribunal had directed the
Bank to reinstate D.K. Dayananda, a clerk working in the Cottonpet Branch of the Bank. This
is what the Tribunal directed by the Award:- "The order of II party (Bank) as per Ex. M.16 is
set aside. The II party (Bank) is directed to reinstate the I party (Dayananda) forthwith with
continuity of service. No back wages. Calculated upto the date of reinstatement, the I party
(Dayananda) is not entitled to earn increments for the period during which he had not worked.
Reference accepted in part accordingly".

Cause of Dayananda, the workman was taken by the first respondent. The Award arose out of
following question, which was referred to the Tribunal for adjudication :- "Whether the action
of the management of Syndicate Bank in terminating the services of Sri D.K. Dayananda,
Clerk, Cottonpet branch of Syndicate Bank is justified ? If not, to what relief the workman is
entitled to?"

The court cited DK Yadav Case along with others and held that “two principles emerge from
the decisions (1) principles of natural justice and duty to act in just, fair and reasonable manner

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have to be read in Certified Standing Orders which have statutory force. These can be applied
by Labour Court and Industrial Tribunal even to relations between management and workman
though based on contractual obligations; and (2) where domestic inquiry was not held or it was
vitiated for some reason the Tribunal or Court adjudicating an industrial dispute can itself go
into the question raised before it on the basis of the evidence and other material on record.”

ALIGARH MUSLIM UNIVERSITY AND ORS VS MANSOOR ALI KHAN

Mr. Mansoor Ali Khan's case. He was working as a Laboratory Assistant and he applied for
two years' extraordinary leave for joining Al-Fatah University, Tripoli, Libya. The Vice-
Chancellor sanctioned leave for two years from 18-4-1979. Before the expiry of the period,
Mr. Khan applied on 18-4-1981 for extension of leave by 3 years. On 12-9-1981/23-9-1981,
the University granted extension only for one year from 18-4-1981. The leave stood thus
extended up to 18-4-1982. It was, however, clearly stated by the University, in its letter as
follows:"... You are required to resume duties by 18-4-1982. Please note that no further
extension in the period of your leave will be possible and you are advised to make preparation
for resuming duty positively by 18-4-1982." *

However, Mansoor took leave a longer duration leave. Since leave was unauthorized, Univ
sent a telegram informing him to join before a certain date failing which he would be deemed
to have "vacated" the post and cease to be in university service. Since he failed to return, the
University deemed that he had vacated his office. Mansoor claimed that the principles of
natural justice had not been followed.

The Court considered the judgment in M.C. Mehta v. Union of India & Ors (1999) 6 SCC 237
wherein it has been held that an order passed in violation of natural justice need not be set aside
in exercise of the writ jurisdiction unless it is shown that non- observance has caused prejudice
to the person concerned for the reason that quashing the order may revive another order which
itself is illegal or unjustified. The Court came to the conclusion that a person complaining non-
observance of the principles of natural justice must satisfy that some real prejudice has been
caused to him for the reason that there is no such thing as a merely technical infringement of
natural justice.

KAPILA HINGORANI V. STATE OF BIHAR

Facts: According to the petitioner, a newspaper report showed that hundreds of employees of
various State- owned corporations, public undertakings or other statutory bodies in Bihar had

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died due to starvation or committed suicide owing to acute financial crisis resulting in acute
financial crisis resulting from non- payment of salaries for a long time. There were nineteen
such state- owned sick corporations.

The petitioner contended that the State could not escape its liability in the matter of payment
of salaries to its own employees. The petitioner contended that in view of the deaths and the
commission of suicide by employees of the State owned corporations, the SC should issue
interim directions for payment of salaries to the employees. It was also contended that the govt.
companies should discharge their obligation under Art. 21.

The State contended that since most of the companies are constituted under the Companies
Act, 1956, the rights and liabilities of the shareholders would be governed by that act and the
liabilities of those companies cannot be passed on to the State by taking recourse to the doctrine
of lifting the veil. The State further contended that in view of the magnitude of the problem,
the liability should be apportioned to the extent of eighty percent and ten percent between the
Union of India and the State govt. respectively and the remaining part may be met by sale of
properties of the respective companies. The Union of India contended that it could not be
charged any kind of liabilities of the State.

The court adopting a very humane approach and held that the corporate veil can be pierced
when the corporate personality is found to be opposed to justice, convenience and interest of
the revenue or workmen or against public interest. The court while passing the order held that
the employees have a human right as also a fundamental right under Article 21 which the states
are bound the protect and not by way of an enforcement of their legal right to arrears of salaries.
The court directed the HC to dispose of all liquidation proceedings in respect of government
corporations owned and controlled by the state government as expeditiously as possible and
pass interim orders for the sale and disposal of the properties thereof for utilization of the same
towards payment of salaries of the employees.

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