UNIT II

INDUSTRIAL DISPUTES ACT, 1947

Historical background and Introduction to the Industrial Disputes Act, 1947

Industrial disputes are the disputes which arise due to any disagreement in an
industrial relation. Industrial relation involves various aspects of interactions between
the employer and the employees. In such relations whenever there is a clash of
interest, it may result in dissatisfaction for either of the parties involved and hence
lead to industrial disputes or conflicts. These disputes may take various forms such as
protests, strikes, demonstrations, lock-outs, retrenchment, dismissal of workers, etc.

Industrial Disputes Act, 1947 provides machinery for peaceful resolution of

disputes and to promote harmonious relation between employers and workers. The
Act is a benign measure which seeks to pre-empt industrial tensions, provide the
mechanics of dispute resolutions and set up the necessary infrastructure so that the
energies of partners in production may not be dissipated in counterproductive battles
and assurance of industrial may create a congenial climate. The Act enumerates the
contingencies when a strike or lock-out can be lawfully resorted to, when they can be
declared illegal or unlawful, conditions for laying off, retrenching, discharging or
dismissing a workman, circumstances under which an industrial unit can be closed
down and several other matters related to industrial employees and employers. Under
the Act various Authorities are established for Investigation and settlement of
industrial disputes. They are Works Committee; Conciliation Officers; Boards of
Conciliation; Court of Inquiry; Labour Tribunals; Industrial Tribunals and National
Tribunals. The knowledge of this legislation is a must for the students so that they
develop a proper perspective about the legal frame work stipulated under the
Industrial Disputes Act, 1947.

The first enactment dealing with the settlement of industrial disputes was the
Employers’ and Workmen’s Disputes Act, 1860. This Act weighed much against the
workers and was therefore replaced by the Trade Disputes Act, 1929. The Act of 1929
contained special provisions regarding strikes in public utility services and general
strikes affecting the community as a whole. The main purpose of the Act, however,
was to provide a conciliation machinery to bring about peaceful settlement of
industrial disputes. The Whitely Commission made in this regard the perceptive
observation that the attempt to deal with unrest must begin rather with the creation of
an atmosphere unfavourable to disputes than with machinery for their settlement. The
next stage in the development of industrial law in this country was taken under the
stress of emergency caused by the Second World War. Rule 81-A of the Defence of
India Rules was intended to provide speedy remedies for industrial disputes by
referring them compulsorily to conciliation or adjudication, by making the awards
legally binding on the parties and by prohibiting strikes or lock-outs during the
pendency of conciliation or adjudication proceedings and for two months thereafter.
This rule also put a blanket ban on strikes which did not arise out of genuine trade
disputes.

With the termination of the Second World War, Rule 81-A was about to lapse
on 1st October, 1946, but it was kept alive by issuing an Ordinance in the exercise of
the Government’s Emergency Powers. Then Industrial Disputes Act, 1947 enacted.
The provisions of this Act, as amended from time to time, have furnished the basis on
which industrial jurisprudence in this country is founded.

OBJECT AND SIGNIFICANCE OF THE ACT

The Industrial Disputes Act, 1947 makes provision for the investigation and
settlement of industrial disputes and for certain other purposes. It ensures progress of
industry by bringing about harmony and cordial relationship between the employers
and employees. Definitions of the words ‘industrial dispute, workmen and industry’
carry specific meanings under the Act and provide the framework for the application
of the Act.

In the case of Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate,

AIR 1958 S.C. 353, the Supreme Court laid down following objectives of the Act:

(i) Promotion of measures of securing and preserving amity and good

relations between the employer and workmen.
(ii) Investigation and settlement of industrial disputes between
employers and employers, employers and workmen, or workmen
and workmen with a right of representation by registered trade
 union or federation of trade unions or an association of employers or
a federation of associations of employers.
(iii) Prevention of illegal strikes and lock-outs.
(iv) Relief to workmen in the matter of lay-off and retrenchment.
(v) Promotion of collective bargaining.

This Act extends to whole of India. The Act was designed to provide a self-
contained code to compel the parties to resort to industrial arbitration for the
resolution of existing or apprehended disputes without prescribing statutory norms for
varied and variegated industrial relating norms so that the forums created for
resolution of disputes may remain unhampered by any statutory control and devise
rational norms keeping pace with improved industrial relations reflecting and
imbibing socio-economic justice. This being the object of the Act, the Court by
interpretative process must strive to reduce the field of conflict and expand the area of
agreement and show its preference for upholding agreements sanctified by mutuality
and consensus in larger public interest, namely, to eschew industrial strife,
confrontation and consequent wastage (Workmen, Hindustan Lever Limited v.
Hindustan Lever Limited, (1984) 1 SCC 728).

Important Definitions under Industrial Disputes Act, 1947

Definition of Industry:

Section 2(j) defines industry, industry" means any business, trade,

undertaking, manufacture or calling of employers and includes any calling, service,
employment, handicraft, or industrial occupation or avocation of workmen.

This definition is in two parts. The first says that industry means any business,
trade, undertaking, manufacture or calling of employers and the second part provides
that it includes any calling, service, employment, handicraft, or industrial occupation
or avocation of workmen. "If the activity can be described as an industry with
reference to the occupation of the employers, the ambit of the industry, under the
force of the second part takes in the different kinds of activity of employees
mentioned in the second part. But the second part standing alone cannot define
industry. By the inclusive part of the definition the labour force employed in any
industry is made an integral part of the industry for the purpose' of industrial disputes
although industry is ordinarily something which employers create or undertake".
However, the concept that "industry is ordinarily something which employers create
or undertake" is gradually yielding place to the modern concept which regards
industry as a joint venture undertaken by employers, and workmen, an enterprise
which belongs equally to both. Further it is not necessary to view definition of
industry under Section 2(j) in two parts.

The definition read as a whole denotes a collective which employers and

employees are associated. It does not consist either by employers alone or by
employees alone. An industry exists only when there is relationship between
employers and employees, the former engaged in business, trade, undertaking,
manufacture or calling of employers and the latter engaged in any calling, service,
employment, handicraft or industrial occupation or avocation. There must, therefore,
be an rise in which the employers follow their avocations as detailed in the
defamation and employ workmen. Thus, a basic requirement of 'industry' is that the
employers must "Be" ""carrying on any business, 'trade, undertaking, manufacture or
calling of employers'. There is next much difficulty in ascertaining the meaning of the
words business, trade, manufacture, or calling of employers in order to determine
whether a particular activity carried on with the co-operation of employer and
employees is an industry or not but the difficulties have cropped up in defining the
word 'undertaking'.

"Undertaking" means anything undertaken, any business, work or project

which one engages in or attempts, or an enterprise. It is a term of very wide
denotation have been evolved by the Supreme Court in a number of decisions which
But all decisions of the Supreme Court are agreed that an undertaking to be within the
definition in Section 2(j) must be read subject to a limitation, namely, that it must be
analogous to trade or business.1 Some working principles furnish a guidance in
determining what are the attributes or characteristics which will indicate that an
undertaking is analogous to trade or business. The first principles was stated by
Gajendragadkar, J. in Hospital Mazdoor Sobfefl case as follows :

"As a working principle it may be stated that an activity systematically or

habitually undertaken for the production or distribution of goods or for the rendering
of material services to the community at large or a part of such community- with, the
help of employees is an undertaking. Such an activity generally involves the co-
operation of the employer and the employees; and its object is the satisfaction of
material human needs. It must be organized an arranged in a manner in which trade or
business is generally organized or arranged. It must not be casual, nor must it be for
one's self nor for pleasure. Thus the manner in which the activity in question is
organized or arranged, the condition of the co-operation between the employer and
the employee necessary for its success and its object to render material service to the
community can be regarded as some of the features which are distinctive of activities
to which Section 2(j) applies."

In Bangalore Water Supply v. A. Rajappa, a seven Judges' Bench of the

Supreme Court exhaustively considered the scope of industry and laid down the
following test which has practically reiterated the test laid down in Hospital Mazdoor
Sabha case.

Triple Test:

Where there is (i), systematic activity, (ii) organised by cooperation between

employer and employee (the direct and substantial element is chimerical), (iii) for the
production and/or distribution of goods and services calculated to satisfy human
wants and wishes, prima facie, there is an "industry" in that enterprise. This is known
as tripple test. The following points were also emphasized in this case:

1. Industry does not include spiritual or religious services or services geared to

celestial bliss, e.g., making, on a large scale, prasad or food. It includes
material services and things.
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 relations.
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 fulfill the triple test stated above cannot be
exempted from the scope of Section 2(j) of the Act.

Dominant nature test:

Where a complex of activities, some of which qualify for exemption, others

not, involve employees on the total undertaking some of whom are not workmen or
some departments are not productive of goods and services if isolated, even then the
predominant nature of the services and the integrated nature of the departments will
be true test, the whole undertaking will be "industry" although those who are not
workmen by definition may not benefit by status.

Exceptions:

A restricted category of professions, clubs, co-operatives and even gurukulas

and little research labs, may qualify for exemption if in simple ventures, substantially
and, going by the dominant nature criterion substantively, no employees are
entertained but in minimal matters, marginal employees are hired without destroying
the non-employee character of the unit. If in pious or altruistic mission, many employ
themselves, free or for small honorarium or like return, mainly drawn by sharing in
the purpose or cause, such as lawyers volunteering to-run a free legal services, clinic
or doctors serving in their spare hours in a free medical centre of ashramites working
at the bidding of the holiness, divinity or like central personality, and the services are
supplied free or at nominal cost and-those who serve are not engaged for
remuneration or on the .basis of 'master and servant relationship, then, the institution
is not an industry even if stray servants, manual or technical are hired. Such
elementary or like undertakings alone are exempt not other generosity, compassion,
developmental passion or project.

Sovereign functions, strictly understood, (alone) qualify for exemption, not the
welfare activities or economic adventures undertaken by Government or statutory
bodies. Even in departments discharging sovereign functions, if there are units which
are industries and they are substantially severable, then they can be considered to
come within Section It was further observed that : "Undertaking must suffer a
contextual and associational shrinkage as explained in D.N. Barterjee v. P.R.
Mukherjee, so also, service calling and the like. This yields to the inference that all
organised activities possessing the triple elements abovementioned, although not trade
or business, may still be industry provided the nature of the activity,, viz. the
employer-employee basis, bears resemblance to what is found in, trade or business.
This takes into the fold of "industry" undertaking, callings and services, adventures
analogous to the carrying on of trade or business. All features other than the
methodology of carrying on the activity, viz., in organizing the co-operation between
employer and employee, may be dissimilar. It does not matter if on the employment
terms there is analogy".

The Supreme Court in Management of Safdarjung Hospital, Delhi v. Kuldip

Singh counter to the principles enunciated in Bangalore Water Supply v. A. Rajappa
case and overrule its decision.

Whether Municipal corporation can be regarded as an industry

This question was decided by the court in D.N. Banerjee v. P.R. Mukherjee. In
this case the Budge Municipality dismissed two of its employees, Mr. P.C. Mitra, a
Head clerk and Mr. P.N. Ghose a Sanitary Inspector on charges for negligence,
insubordination and indiscipline. The Municipal Workers Union of which the
dismissed employees were members questioned the propriety of the dismissal and the
matter was referred to the Industrial Tribunal. The Tribunal directed reinstatement and
the award was challenged by the Municipality on the ground that its duties being
connected with the local self-government it was not an industry and the dispute was
not an industrial dispute and therefore reference of the dispute to the tribunal was bad
in law.

The Supreme Court observed that in the ordinary or non-technical sense

industry or business means an undertaking where capital and labour co-operate with
each other for the purpose of producing wealth in the shape of goods, tools etc. and
for making profits. In the opinion of the Court every aspect of activity in which the
relationship of master and servant or employer and employees exists or arises does
not become an industry It was further observed that 'undertaking' in the first part and
industrial occupation or avocation in the second part of Section 2(j) obviously mean
much more than what is ordinarily understood by trade or business.
 The definition was apparently intended to include within its scope what might
not strictly be called a trade or business. Neither investment of capital nor profit
making motive is essential to constitute an industry as they are generally, necessary in
a business, A public utility service such as railways, telephones, and the supply of
power, light or water to the public may be carried on by private companies or business
corporations and if these public utility services are carried on by local bodies like a
Municipality they do not cease to be an industry, for the reasons stated above
Municipal Corporation was held to be an industry.

In Permanand v. Nagar Palika, Dehradun and others the Supreme Court held
that the activity of a Nagar Palika in any of its department except those dealing with
levy of house tax etc, falls within the definition of industry in U.P. Industrial Disputes
Act, 1947.

Whether hospital is an industry:

The question whether hospital is an industry or not has come for determination
by the Supreme Court on a number of occasions and the uncertainty has been allowed
to persist because of conflicting judicial decisions right from Hospital Mazdoor Sabha
case to the Bangalore Water Supply v. A. Rajappa.

In State of Bombay v. Hospital Mazdoor Sabha case, the Hospital

MazdoorSabha was a registered Trade Union of the employees of hospitals in the
State of Bombay, The services of two of its members were terminated by way of
retrenchment' by the Government and the Union claimed their reinstatement through a
writ petition. It was urged by the State that the writ application was misconceived
because hospitals did not constitute an industry. The group of hospitals were run by
the State for giving medical relief to citizens and imparting medical education.

The Supreme Court held the group of hospitals to be industry and observed as
follows :

1. The State is carrying on an 'undertaking' within Section 2(j) when it runs a

group of hospitals for purpose of giving medical relief to the citizens and for
helping to impart medical education.
2. An activity systematically or habitually undertaken for the production or
distribution of goods or for the rendering of material services to the
 community at large or a part of such community with the help of employees is
an undertaking.
3. It is the character of the activity in question which attracts the provisions of
Section 2(j), who conducts the activity and whether it is conducted for profit
or not make a material difference.
4. The conventional meaning attributed to the words, 'trade and business' has lost
some of its validity for the purposes of industrial adjudication...it would be
erroneous to attach undue importance to attributes associated with business or
trade in the popular mind in days gone by. Hospital run by the Government as
a part of its function is not an industry.

Hospitals run by the State of Orissa are places where persons can get treated.
they are run as departments of Government. The mere fact that payment is accepted in
respect of some beds cannot lead to the inference that the hospitals are run as a
business in a commercial way. Primarily, the hospitals are meant as free service by
the Government to the patients without any profit motive". But in view of the decision
of the Supreme Court in Bangalore Water Supply v. A. Rajappa Dhanrajgiri Hospital
case has been overruled and all hospitals fulfilling the test laid down in Bangalore
Water Supply case will be industry.

Thus on an analysis of the entire case law up to Bangalore Water Supply case
on the subject it can be said that such hospitals as are run by the Government as part
of its sovereign functions with the sole object of rendering free service o the patients
are not industry. But all other hospitals, both public and private; whether charitable or
commercial would be industry if they fulfil the triple test laid down in Bangalore
Water Supply v. A. Rajappa.

Whether University and Educational Institutions:

In University of Delhi v. Ram Nath, the respondent Mr. Ram Nath was
employed as driver by University College for women. Mr. Asgar Mashih was initially
employed as driver by Delhi University but was later on transferred to the University
College for women in 1949. The University of Delhi found that running the busess for
transporting the girl students of the women's college has resulted in loss. Therefore it
decided to discontinue that facility and consequently the services of the above two
drivers were terminated.
 The order of termination was challenged on the ground that the drivers were
workmen and the termination of their services amounted to retrenchment. They
demanded payment of retrenchment compensation under Section 25-F of the Act by
filing petitions before the Industrial Tribunal. The Tribunal decided the matter in
favour of the drivers and hence the University of Delhi challenged the validity of the
award on the ground that activity carried on by the University is not industry. It was
held by the Supreme Court that the work of imparting education is more a mission
and a vocation than profession or trade or business and therefore University is not an
industry. But this case has been overruled by the Supreme Court in Bangalore Water
Supply case and in view of the triple test laid down in Bangalore Water Supply case
even a University would be an industry although such of its employees as are not
workmen within the meaning of Section 2(s) of the Act, may not get the desired
benefits to which a workman in an industry may be entitled to.

In Brahma Samaj Education Society v. West Bengal College Employees'

Association, the society owned two colleges. A dispute arose between the society and
non-teaching staff of the colleges. It was pleaded that the society was purely an
educational institution and not an industry because there was no production of wealth
with the co-operation of labour and capital as is necessary to constitute an industry.
The Calcutta High Court observed that our conception of industry has not been static
but has been changing with the passage of time. An undertaking which depends on the
intelligence or capacity of an individual does not become an industry simply because
it has a large establishment. There may be an educational institution to which pupils
go because of the excellence of the teachers; such institutions are not industry. On the
other hand, there may be an institution which is so organized that it is not dependent
upon the intellectual skill of any individual, but is an organization where a number of
individuals join together to render services which might even have a profit motive.
Many technical institutions are run on these lines. When again we find these
institutions also do business by manufacturing things or selling things and thereby
making a profit they certainly come under heading of "industry". These being the
tests, it is clear that it will be a question of evidence as to whether a particular
institution can be said to be an industry or not.

In Osmania University v. Industrial Tribunal Hyderabad, a dispute having

arisen between the Osmania University and its employees, the High Court of Andhra
Pradesh, after closely examining the Constitution of the University, held the dispute
not to be in connection with an industry. The correct test, for ascertaining whether the
particular dispute is between the capital and labour, is whether they are engaged in co-
operation, or whether the dispute has arisen inactivities connected directly with, or
attendant upon, the production or distribution of wealth.

In Ahmedabad Textile Industry's Research Association v. State of Bombay an

association was formed for founding a scientific research institute. The institute was
to carry on research in connection with the textile and other allied trades to increase
efficiency. The Supreme Court held that "though the association was established for
the purpose of research, its main object was the benefit of the members of the
association, the association is organised, and arranged in the manner in which a trade
or business is generally organised; it postulates cooperation between employers and
employees; moreover the personnel who carry on the research have no right in the
result of the research. For these reasons the association was held to be "an industry".
But a society which is established with the object of catering to the intellectual as
distinguished from material needs of men by promoting general knowledge of the
country by conducting research and publishing various journals and books is not an
industry. Even though it publishes books for sale in market, when it has no press of its
own the society cannot be termed even an 'undertaking' for selling of its publication
was only an ancillary activity and the employees were engaged in rendering clerical
assistance in this matter just as the employees of a solicitor'firm help the solicitors in
giving advice and service.

Since University of Delhi v. Ram Nath has been overruled by the Supreme
Court in Bangalore Water Supply v. A. Rajappa the present position is that the
educational institutions including the university are industry in a limited sense. Now
those employees of educational institutions who are covered by the definition of
workman under Section 2(s) of the Industrial Disputes Act, 1947 will be treated as
workman of an industry.

Is Government Department an industry?

In State of Rajasthan v. Ganeshi lal, the Labour Court had held the Law
Department of Government as an industry. This view was upheld by the Single Judge
and- Division Bench of the High Court. It was challenged by the State before
Supreme Court. It was held that the Law Department of Government could not be
considered as an industry. Labour Court and the High Court have not indicated as to
how the Law Department is an industry. They merely stated that in some cases certain
departments have been held to be covered by the expression industry in some
decisions. It was also pointed out that a decision is a precedent on its own facts.
Courts should not place reliance on decisions without discussing as to how the factual
situation fits in with the fact situation of the decision on which reliance is placed.

Whether Club is an industry:

Clubs or self-service institutions or non-proprietary member's club will be

industry provided they fulfill the triple test laid down in Bangalore 'Water Supply v,
A. Rajappa.1 The Cricket Club of India case and Madras Gymkhana Club case
(discussed below) which were the two leading cases, on- the point so far have been
overruled by Bangalore Water Supply case.

In Cricket Club of India v. Bombay Labour Union the question was whether
the Cricket Club of India, Bombay which was a member's club and not a proprietary
club, although it was incorporated as a company under the Companies Act was an
industry or not. The club had membership of about 4800 and was employing 397
employees. It was held that the club was a self service institution and not an industry
and it was wrong to equate the catering facilities provided by the club to its members
or their guests (members paying for that), with a hotel. The catering facility also was
in the nature of self service by the club to its members. This case has now been
overruled.

Madras Gymkhana Club Employees' Union v. Management; is another case on

this point. This was a member's club and not a proprietary club with a membership of
about 1200. Its object was to provide a venue for sports and games and facilities for
recreation and entertainment. It was running a catering department which provided
food and refreshment not only generally but also on special occasion. It was held that
the club was a member's self-serving institution and not an industry. No doubt the
material needs or wants of a section of the community were catered but that was not
enough as it was not done as part of trade or business or as an undertaking analogous
to trade or business. This case has also been overruled. Now it is not necessary that
the activity should be a trade or business or analogous to trade or business It may,
therefore, be submitted that both Cricket Club of India and Madras Gymkhana Club
would now be an industry because they fulfill the triple test laid down in Bangalore
Water Supply case. Both are systematically organized with the co-operation of
employer and employee for distribution of service to satisfy human wishes.

Whether Agricultural Operation is an industry:

The carrying on of agricultural operations by the company for the purposes of

making profits, employing workmen who contribute to the production of the
agricultural commodities bringing profits to the company was held to be an industry
within the meaning of this clause. Where a Sugar Mill owned a cane farm and used its
produce for its own consumption and there was evidence that the farm section of the
mill was run only to feed the mill, it was held that the agricultural activity being an
integral part of industrial activity, the farm section was an industry.

Whether Solicitor’s Firm or Lawyer’s Office are industries:

In N.N.U.C. Employees v. Industrial Tribunal31; the question was whether a

solicitor’s firm is an industry or not. It was held that a solicitor’s firm carrying on
work of an attorney is not an industry, although specifically considered it is organized
as an industrial concern. There are different categories of servants employed by a
firm, each category being assigned by separate duties and functions. But the service
rendered by a firm, each category being assigned separate duties or functions. But the
service rendered by a solicitor functioning either individually or working together
with parties is service which is essentially individual; it depends upon the professional
equipments, knowledge and efficiency of the solicitor concerned. Subsidiary work
which is purely incidental type and which is intended to assist the solicitor in doing
his job has no direct relation to the professional service ultimately rendered by the
solicitor. The work of his staff has no direct or essential nexus or connection with the
advice which it is the duty of the solicitor to give to his client. There is, no doubt, a
kind of cooperation between the solicitor and his employees, but that cooperation has
no direct or immediate relation to the professional service which the solicitor renders
to his client. This case has been overruled again in Bangalore Water Supply case and
now a solicitor’s firm employing persons to help in catering to the needs of his client
is an industry.
Amended definition of ‘industry’ under the Industrial Disputes (Amendment)
Act, 1982

2(j) “Industry” means any systematic activity carried on by co-operation

between an employer and his workmen (Whether such workmen are employed by
such employer directly or by or through any agency, including a contractor) for the
production, supply or distribution of goods or services with a view to satisfy human
wants or wishes (not being wants or wishes which are merely spiritual or religious in
nature), whether or not:

i. any capital has been invested for the purpose of carrying on such activity; or
ii. such activity is carried on with a motive to make any gain or profit, and
includes:

(a) any activity of the Dock Labour Board established under Section 5A of the
Dock Workers (Regulations of Employment) Act, 1948, (9 of 1948);

(b) Any activity relating to the promotion of sales or business or both carried on
by an establishment, but does not include:

1. Any agricultural operation except where such agricultural operation is carried

on in an integrated manner with any other activity (being any such activity as
is referred to in the foregoing provisions of this clause) and such other activity
is the predominant one. Explanation: For the purpose of this sub-clause,
“agricultural operation” does not include any activity carried on in a plantation
as defined in clause (f) of Section 2 of the Plantations Labour Act, 1951; or
2. hospitals or dispensaries; or
3. educational, scientific, research to training institutions; or
4. institutions owned or managed by organisations wholly or substantially
engaged in any charitable, social or philanthropic service; or
5. khadi or village industries; or
6. any activity of the Government relatable to the sovereign functions of the
Government including all the activities carried on by the departments of the
Central Government dealing with defence research atomic energy and space;
or
7. any domestic service; or
 8. any activity, being a profession practised by an individual or body of
individuals, if the number of persons employed by the individuals or body of
individuals in relation to such profession is less than ten; or
9. any activity, being an activity carried on by a co-operative society or a club or
any other like body of individuals, if the number of persons employed by the
co-operative society, club or other like body of individuals in relation to such
activity is less than ten.

Definition of Workman:

Under sec 2(s) of the Act “Workman” means any person (including an
apprentice) employed in any industry to do any manual, unskilled, skilled, technical,
operational, clerical or supervisory work for hire or reward, whether the terms of
employment be expressed or implied and for the purposes of any proceeding under
this Act in relation to an industrial dispute, includes:

a) any such person who has been dismissed, discharged or retrenched in

connection with, or as a consequence of that dispute, or
b) any person whose dismissal, discharge or retrenchment has led to that dispute,
but does not include any such person:
i. who is subject to the Army Act, 1950, or the Air Force Act, 1950 or
the Navy Act, 1957; or
ii. who is employed in the police service or as an officer or other
employee of a prison; or
iii. who is employed mainly in a managerial or administrative capacity; or
iv. who is employed in a supervisory capacity drawing more than Rs.
1,600 per month as wages; or
v. who is exercising either by the nature of the duties attached to the
office or by reason of the powers vested in him, functions mainly of a
managerial nature.

Some of the expressions used in the definition of “workman” have been the
subject of judicial interpretation and hence they have been discussed below: (a)
Employed in “any industry” To be a workman, a person must have been employed in
an activity which is an “industry” as per Section 2(j). Even those employed in
operation incidental to such industry are also covered under the definition of
workman.

(a) Employed in “any industry”

To be a workman, a person must have been employed in an activity which is

an “industry” as per Section 2(j). Even those employed in operation incidental to such
industry are also covered under the definition of workman.

In the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. L.A.T.,
AIR 1964 S.C. 737, the Supreme Court held that ‘malis’ looking after the garden
attached to bungalows provided by the company to its officers and directors, are
engaged in operations incidentally connected with the main industry carried on by the
employer. It observed that in this connection it is hardly necessary to emphasise that
in the modern world, industrial operations have become complex and complicated and
for the efficient and successful functioning of any industry, several incidental
operations are called in aid and it is the totality of all these operations that ultimately
constitutes the industry as a whole. Wherever it is shown that the industry has
employed an employee to assist one or the other operation incidental to the main
industrial operation, it would be unreasonable to deny such an employee the status of
a workman on the ground that his work is not directly concerned with the main work
or operation of the industry.

(b) Person employed

A person cannot be a workman unless he is employed by the employer in any

industry. The relationship of employer and workman is usually supported by a
contract of employment which may be expressed or implied. This is also a must for
regarding an apprentice as a worker (Achutan v. Babar, 1996-LLR-824 Ker.). But
such a question cannot be derived merely on the basis of apprenticeship contract
(R.D. Paswan v. L.C., 1999 LAB 1C Pat 1026). The employee agrees to work under
the supervision and control of his employer. Here one must distinguish between
contract for employment or service and contract of employment or service. In the
former, the employer can require what is to be done but in the latter, he can not only
order what is to be done, but also how it shall be done. In the case of contract for
employment, the person will not be held as a ‘workman’ but only an ‘independent
contractor’. There should be due control and supervision by the employer for a master
and servant relationship (Dharangadhara Chemical Works Ltd. v. State of Saurashtra).
Payment on piece rate by itself does not disprove the relationship of master and
servant. Even a part time employee is a worker (P.N. Gulati v. Labour
Commissioner). Since he is under an obligation to work for fixed hours every day,
jural relationship of master and servant would exist. A casual worker is nonetheless a
workman.

(c) Employed to do skilled or unskilled etc.

Only those persons who are engaged in the following types of work are covered
by the definition of “workman”:

(i) Skilled or unskilled manual work;

(ii) Supervisory work;
(iii) Technical work;
(iv) Clerical work.
Where a person is doing more than one work, he must be held to be employed
to do the work which is the main work he is required to do (Burma Shell Oil Storage
& Distributing Co. of India v. Burma Shell Management Staff Association, Manual
work referred in the definition includes work which involves physical exertion as
distinguished from mental or intellectual exertion. A person engaged in supervisory
work will be a workman only if he is drawing more than Rs. 1,600 per month as
wages. The designation of a person is not of great importance, it is the nature of his
duties which is the essence of the issue. If a person is mainly doing supervisory work,
but incidentally or for a fraction of the time, also does some clerical work, it would
have to be held that he is employed in supervisory capacity; and conversely, if the
main work done is of clerical nature, the mere fact that some supervisory duties are
also carried out incidentally, will not convert his employment as a clerk into one in
supervisory capacity. In other words, the dominant purpose of employment must be
taken into account at first and the gloss of additional duties to be rejected, while
determining status and character of the job. The work of labour officer in jute mill
involving exercise of initiative, tact and independence is a supervisory work. But the
work of a teller in a bank does not show any element of supervisory character.
Whether teachers are workmen or not

After amendment of Section 2(s) of the Act, the issue whether “teachers are
workmen or not” was decided in many cases but all the cases were decided on the
basis of definition of workman prior to amendment. The Supreme Court in
Sunderambal v. Government of Goa held that the teachers employed by the
educational institution cannot be considered as workmen within the meaning of
Section 2(s) of the Act, as imparting of education which is the main function of the
teachers cannot be considered as skilled or unskilled manual work or supervisory
work or technical work or clerical work. The Court in this case also said that manual
work comprises of work involving physical exertion as distinct from mental and
intellectual exertion. The teacher necessarily performs intellectual duties and the work
is mental and intellectual as distinct from manual.

A person doing technical work is also held as a workman. A work which

depends upon the special training or scientific or technical knowledge of a person is a
technical work. Once a person is employed for his technical qualifications, he will be
held to be employed in technical work irrespective of the fact that he does not devote
his entire time for technical work. Thus, the person doing technical work such as
engineers, foreman, technologist, medical officer, draughtsman, etc., will fall within
the definition of “workman”. A medical representative whose main and substantial
work is to do convassing for promotion of sales is not a workman within the meaning
of this Section (1990 Lab IC 24 Bom. DB). However, a salesman, whose duties
included manual as well as clerical work such as to attend to the customer, prepare
cash memos, to assist manager in daily routine is a workman (Carona Sahu Co. Ltd. v.
Labour Court 1993 I LLN 300). A temple priest is not a workman (1990 1 LLJ 192
Ker.).

Person employed mainly in managerial and administrative capacity:

Persons employed mainly in the managerial or administrative capacity have

been excluded from the definition of “workman”. Development officer in LIC is a
workman (1983 4 SCC 214). In Standard Vacuum Oil Co. v. Commissioner of
Labour, it was observed that if an individual has officers subordinate to him whose
work he is required to oversee, if he has to take decision and also he is responsible for
ensuring that the matters entrusted to his charge are efficiently conducted, and an
ascertainable area or section of work is assigned to him, an inference of a position of
management would be justifiable. Occasional entrustment of supervisory, managerial
or administrative work, will not take a person mainly discharging clerical duties, out
of purview of Section 2(s).

Industrial Dispute:

Industrial Dispute “Industrial Dispute” means any dispute or difference

between employers and employers, or between employers and workmen, or between
workmen and workmen, which is connected with the employment or non-employment
or the terms of employment or with the conditions of labour, of any person. [Section
2(k)]

The above definition can be analyzed and discussed under the following
heads:

1. There should exist a dispute or difference;

2. he dispute or difference should be between:
(a) Employer and employer;
(b) Employer and workmen; or
(c) Workmen and workmen.
3. The dispute or difference should be connected with (a) the employment or
non-employment, or (b) terms of employment, or (c) the conditions of labour
of any person;
4. The dispute should relate to an industry as defined in Section 2(j).
1. Existence of a dispute or difference

The existence of a dispute or difference between the parties is central to the

definition of industrial dispute. Ordinarily a dispute or difference exists when
workmen make demand and the same is rejected by the employer. However, the
demand should be such which the employer is in a position to fulfill. The dispute or
difference should be fairly defined and of real substance and not a mere personal
quarrel or a grumbling or an agitation. The term “industrial dispute” connotes a real
and substantial difference having some element of persistency, and likely, and if not
adjusted, to endanger the industrial peace of the community. An industrial dispute
exists only when the same has been raised by the workmen with the employer. A mere
demand to the appropriate Government without a dispute being raised by the
workmen with their employer regarding such demand, cannot become an industrial
dispute.

However, in Bombay Union of Journalists v. The Hindu, the Supreme Court

observed that for making reference under Section 10, it is enough if industrial dispute
exists or is apprehended on the date of reference. Therefore, even when no formal
demands have been made by the employer, industrial dispute exists if the demands
were raised during the conciliation proceedings. When an industrial dispute is referred
for adjudication the presumption is that, there is an industrial dispute.

Unless there is a demand by the workmen and that demand is not complied
with by the management, there cannot be any industrial dispute within the meaning of
Section 2(k). Mere participation by the employer in the conciliation proceedings will
not be sufficient.

2. Parties to the dispute

Most of the industrial disputes exist between the employer and the workmen
and the remaining combination of persons who can raise the dispute, has been added
to widen the scope of the term “industrial dispute”. So the question is who can raise
the dispute? The term “industrial dispute” conveys the meaning that the dispute must
be such as would affect large groups of workmen and employers ranged on opposite
sides. The disputes can be raised by workmen themselves or their union or federation
on their behalf. This is based on the fact that workmen have right of collective
bargaining. Thus, there should be community of interest in the dispute.

It is not mandatory that the dispute should be raised by a registered Trade

Union. Once it is shown that a body of workmen either acting through their union or
otherwise had sponsored a workmen’s case, it becomes an industrial dispute. The
dispute can be raised by minority union also. Even a sectional union or a substantial
number of members of the union can raise an industrial dispute. However, the
members of a union who are not workmen of the employer against whom the dispute
is sought to be raised, cannot by their support convert an individual dispute into an
industrial dispute. In other words, persons who seek to support the cause must
themselves be directly and substantially interested in the dispute and persons who are
not the employees of the same employer cannot be regarded as so interested. But
industrial dispute can be raised in respect of non-workmen. Industrial dispute can be
initiated and continued by legal heirs even after the death of a workman;

Individual dispute whether industrial dispute?

Till the provisions of Section 2-A were inserted in the Act, it has been held by
the Supreme Court that an individual dispute per se is not industrial dispute. But it can
develop into an industrial dispute when it is taken up by the union or substantial
number of workmen. This ruling was confirmed later on in the case of Newspaper
Ltd. v. Industrial Tribunal. In the case of Workmen of Dimakuchi Tea Estate v.
Dimakuchi Tea Estate, the Supreme Court held that it is not that dispute relating to
“any person” can become an industrial dispute. There should be community of
interest. A dispute may initially be an individual dispute, but the workmen may make
that dispute as their own, they may espouse it on the ground that they have a
community of interest and are directly and substantially interested in the employment,
non-employment, or conditions of work of the concerned workmen. All workmen
need not to join the dispute. Any dispute which affects workmen as a class is an
industrial dispute, even though, it might have been raised by a minority group. It may
be that at the date of dismissal of the workman there was no union. But that does not
mean that the dispute cannot become an industrial dispute because there was no such
union in existence on that date. If it is insisted that the concerned workman must be a
member of the union on the date of his dismissal, or there was no union in that
particular industry, then the dismissal of such a workman can never be an industrial
dispute although the other workmen have a community of interest in the matter of his
dismissal and the cause for which on the manner in which his dismissal was brought
about directly and substantially affects the other workmen.

The only condition for an individual dispute turning into an industrial dispute,
as laid down in the case of Dimakuchi Tea Estate is the necessity of a community of
interest and not whether the concerned workman was or was not a member of the
union at the time of his dismissal. Further, the community of interest does not depend
on whether the concerned workman was a member or not at the date when the cause
occurred, for, without his being a member the dispute may be such that other
workmen by having a common interest therein would be justified in taking up the
dispute as their own and espousing it. Whether the individual dispute has been
espoused by a substantial number of workmen depends upon the facts of each case.

If after supporting the individual dispute by a trade union or substantial

number of workmen, the support is withdrawn subsequently, the jurisdiction of the
adjudicating authority is not affected. However, at the time of making reference for
adjudication, individual dispute must have been espoused, otherwise it will not
become an industrial dispute and reference of such dispute will be invalid.

DISMISSAL ETC. OF AN INDIVIDUAL WORKMAN TO BE DEEMED TO

BE AN INDUSTRIAL DISPUTE

According to Section 2-A, where any employer discharges, dismisses,

retrenches or otherwise terminates the services of an individual workman, any dispute
or difference between the workman and his employer connected with or arising out of,
such discharge, dismissal, retrenchment or termination shall be deemed to be an
industrial dispute notwithstanding that no other workman nor any union of workmen
is a party to the dispute.

The ambit of Section 2-A is not limited to bare discharge, dismissal,

retrenchment or termination of service of an individual workman, but any dispute or
difference between the workman and the employer connected with or arising out of
discharge, dismissal, retrenchment or termination is to be deemed industrial dispute. It
has to be considered whether the claim for gratuity is connected with or arises out of
discharge, dismissal, retrenchment or termination of service. The meaning of the
phrase “arising out” of is explained in Mackinnon Mackenzie & Co. Ltd. v. I.M.
Isaak. A thing is said to arise out of another when there is a close nexus between the
two and one thing flows out of another as a consequence. The workman had claimed
gratuity and that right flowed out of the termination of the services. Whether he is
entitled to gratuity is a matter for the Tribunal to decide. It cannot be accepted that the
claim of gratuity does not arise out of termination.

3. Subject matter of dispute

The dispute should relate to employment or non-employment or terms of

employment or conditions of labour of any person. The meaning of the term
“employment or non-employment” was explained by Federal Court in the case of
Western India Automobile Association v. Industrial Tribunal. If an employer refuses
to employ a workman dismissed by him, the dispute relates to non-employment of
workman. But the union insists that a particular person should not be employed by the
employer, the dispute relates to employment of workman. Thus, the “employment or
non-employment” is concerned with the employer’s failure or refusal to employ a
workman. The expression “terms of employment” refers to all terms and conditions
stated in the contract of employment. The expression terms of employment would
also include those terms which are understood and applied by parties in practice or,
habitually or by common consent without ever being incorporated in the Contract.

The expression “condition of labour” is much wider in its scope and usually it
was reference to the amenities to be provided to the workmen and the conditions
under which they will be required to work. The matters like safety, health and welfare
of workers are also included within this expression. It was held that the definition of
industrial dispute in Section 2(k) is wide enough to embrace within its sweep any
dispute or difference between an employer and his workmen connected with the terms
of their employment. A settlement between the employer and his workmen affects the
terms of their employment. Therefore prima facie, the definition of Industrial dispute
in Section 2(k) will embrace within its sweep any fraudulent and involuntary
character of settlement. Even a demand can be made through the President of Trade
Union (1988 1 LLN 202). Dispute between workmen and employer regarding
confirmation of workman officiating in a higher grade is an industrial dispute.

Employer’s failure to keep his verbal assurance, claim for compensation for
loss of business; dispute of workmen who are not employees of the Purchaser who
purchased the estate and who were not yet the workmen of the Purchaser’s Estate,
although directly interested in their employment, etc. were held to be not the
industrial disputes. Payment of pension can be a subject matter of an industrial
dispute.

4. Dispute in an “Industry”

Lastly, to be an “industrial dispute”, the dispute or difference must relate to an

industry. Thus, the existence of an “industry” is a condition precedent to an industrial
dispute. No industrial dispute can exist without an industry. The word “industry” has
been fully discussed elsewhere. However, in Pipraich Sugar Mills Ltd. v. P.S.M.
Mazdoor Union, it was held that an “industrial dispute” can arise only in an “existing
industry” and not in one which is closed altogether. The mere fact that the dispute
comes under the definition of Section 2(k) does not automatically mean that the right
sought to be enforced is one created or recognised and enforceable only under the
Act. Where the right of the employees is not one which is recognised and enforceable
under the Industrial Disputes Act, the jurisdiction of the Civil Court is not ousted.

“Definition of Appropriate Government”

According to Section 2 (a) of the Act, the term ‘Appropriate Government’ to

include both the Central and State Government and lays down their respective
dominions in relation to industrial disputes. The Constitution of India also envisages
jurisdiction of both the Central and State Government on all matters of labour and
industrial disputes in respect of both legislative and executive powers.
The definition of Appropriate Government under Section 2(a), the Act is
exhaustive. To facilitate the meaning it may be divided in following six headings.
(i) Industrial disputes concerning any industry carried on by or under authority of
the Central Government, the Central Government is an Appropriate
Government. For example, Defense Factories, Central Government printing
press, mint houses and press for currency notes, opium factory etc.
(ii) Industrial disputes concerning any industry carried on by Railway Company,
the Central Government is an Appropriate Government; and
(iii) Industrial disputes concerning any industry which is a controlled industry, the
Central Government is an Appropriate Government. It has two ingredients i.e.
the industry must be a controlled industry and the same must be specified that
the Appropriate Government under Section 2(a) would be the Central
Government.
The provision has been clarified by Hon’ble Apex Court in Bijay Cotton Mills
Ltd. v. Its workman, and in Management of Vishnu Sugar Mills Ltd. v. Workmen, and
held that “it is not enough that the industry is controlled industry, but it must be
specified also under Section 2 (a) of the Act that the Appropriate Government for
such controlled industry would be the Central Government”.
 (i) Industrial disputes concerning any industry which are established under the
provisions of any Central legislation, the Central Government is an
Appropriate Government.
(ii) Industrial disputes concerning some other industries which are specified by the
Central Government not covered under above categories under its wisdom and
authority which are, the Industrial Finance Corporation of India Ltd. formed
and registered under the Companies Act, an Air Transport Service or a
Banking or an Insurance Company, Mine, an oil field, a Cantonment Board or
a major port, the Appropriate Government would be the Central Government;
and
(iii) In relation to any other industrial disputes, Appropriate Government would be
the State Government.
If the Government refers a dispute for adjudication is not the Appropriate
Government within the meaning of this definition, the Tribunal to which the dispute is
referred would not acquire jurisdiction to adjudicate upon the dispute and even if an
award is rendered, it would be invalid. Therefore, the parties in certain cases exploited
this legal position by challenging the awards on the ground that the Government that
referred the dispute for adjudication was not the Appropriate Government.

A controversy arose on the phrase “under the authority of Central

Government”. In construing the phrase ‘carried on by or under the authority of the
Central Government,’ the word authority must be construed according to its ordinary
meaning and, therefore must mean a legal power given by one person to another to do
an act. The words ‘under the authority of’ mean pursuant to the authority, such as
where an agent or servant acts under such authority of his principal. These words
mean much the same as ‘on behalf of’. This phrase must, therefore, mean and is
intended to apply to industries carried on directly under the authority of the Central
Government.

The expression ‘carried on by or under the authority of the Central

Government’ involves a direct nexus with the industry, through servants or agents of
the Central Government. In Bharat Glass Works Pvt. Ltd. v. State of West Bengal, the
appellant carried on an industry in the manufacture of glass and ceramics. Their
contention was that it was a ‘controlled industry’ and as such the Central Government
being the Appropriate Government the reference made by the Government of West
Bengal was bad. It was held that “an industry mentioned in the first schedule of the
Industries (Development and Regulation) Act, 1951 is a ‘Controlled Industry’, but it
is not necessarily an industry carried on by or under the authority of the Central
Government. For an industry to be carried on under the authority of the Central
Government it must be an industry belonging to the Central Government i.e. its own
undertaking”.

In Shri Sankara Allom Ltd.v. The State of Travancore, Cochin, it was held
that, “merely because the manufacture of salt was carried on by the company under a
license from Government, it cannot become a Government business or one carried on
under authority of the Government”.

The Kerala High Court in India Naval Canteen Control v. Industrial

Tribunals, held that, “the question as to whether an industry is carried on by or under
the authority of the Central Government, is essentially a question of fact depending on
the circumstances of each case”. As such a business carried on by a Naval Canteen
Control Board was held not to be carried on by or under the authority of Central
Government even if the trust was constituted by the Central Government.
In the light of the above two cases, simply because an industry is a controlled
industry or the license is granted by the Central Government, industry is not
necessarily one carried on by or under the authority of the Central Government. The
Act requires that, not only the industry should be a controlled industry but also that
Central Government must specify in this behalf that the industry concerned is a
controlled industry. In other words, the specification must be taken by the Central
Government by reference to and for the purpose of this Act, in order that the Central
Government may itself become the Appropriate Government in such industry under
this provision.
In Administrative officer Central Electro Chemical Research Institute
Karaikudi v. State of Tamilnadu, the question was whether the Central or State
Government was the Appropriate Government in respect of the National Laboratory
setup by its parent body i.e. Council of Scientific and Industrial Research (CSIR). It
was held that the Central Electro Chemical Research Institute as well as the CSIR was
functioning under the authority of the Central Government notwithstanding the fact
that CSIR was held not an authority of the Central Government within the meaning of
Article 12 of the Constitution. The Court’s conclusion was supported by the
notification of the Central Government wherein it has been stated that CSIR is a
Society owned and controlled by the Central Government. The award was quashed
because the reference was made by the State Government.
According to the interpretation of this provision, no industry carried on by a
private person or a limited company can be a business carried on by or under the
authority of the Government. ikewise, industries which are carried on by incorporated
commercial corporations, which are governed by their own constitutions for their own
purposes cannot be described as carried on by or under the authority of the Central
Government as these corporations are independent legal entities and run the industries
for their own purposes.
The Second part of the Section 2(a) which declares that the State Government
is the Appropriate Government in relation to all other industrial disputes, also gave
scope for much of litigation in case of concerns having establishments in more than
one State. All industrial disputes which are outside the industrial purview of sub-
clause (i) are the concerns of the State Government under sub-clause (ii). Thus, the
employee would be referred for adjudication by the State Government, except in the
cases falling under Section 2 (a) (i) of the Act.
While interpreting the provision, the Courts have generally relied upon the
principles governing the jurisdiction of Civil Courts to entertain actions or
proceedings. In Lalbhai Tricumlal Mills Ltd. v. D.M. Vin, Chagla C.J. observed that
“Applying the well known principles of jurisdiction, a court or tribunal would have
jurisdiction if the parties reside within its jurisdiction or if the subject matter of the
dispute substantially arises within its jurisdiction. And, therefore, the correct approach
to the question is to ask ourselves – where did the dispute substantially arise?”
In Indian Cable Company Ltd. v. Its Workmen, the Supreme Court echoing the
voice of the Chagla C.J. observed that, “As the Act contained no provision bearing on
the question, it must consequently be decided on the principles governing the
jurisdiction of courts to entertain actions or proceedings. The court extracted the
above quoted passage from Lalbhai Tricumlal Mills case and held that “these
principles are applicable for deciding which of the states has jurisdiction to make a
reference under Section 10 of the Act.”
The principle established in the above two cases was followed by the Supreme
Court in workmen of Sri Rangavilas Motors (P) Ltd. v. Sri Rangavilas Motors (P)
Ltd., and later in Hindustan Aeronautics Ltd. v. their workmen, In Sri Rangavilas
Motors case the Court laid down a test “where did the dispute arise?. Ordinarily, if
there is a separate establishment and the workman is working in that establishment,
the dispute would arise at that place, there would clearly be some nexus between the
dispute and the territory of the State and not necessarily between the territory of the
State and the industry concerning which the dispute arose”.
But ambiguity still persist on the question, whether the existence of a separate
branch or establishment in State other than the State in which the head quarters of the
industry is situate, is necessary to consider the former as the Appropriate Government
with respect to disputes concerning the workmen employed in that State. In other
words, for the application of the above principle, whether “the existence of a separate
branch” is part of the ratio of the above mentioned Supreme Court decisions.
In Association of Medical Representatives v. Industrial Tribunal, the M.P.
High Court held that, “in respect of a dispute relating to a workman employed in the
State of M.P., where there is no separate establishment of the company, the
Appropriate Government was the State of Maharashtra in which the head quarters are
situated”. But in Paritosh Kumar pal v. State of Bihar, a full Bench of the Patna High
Court considered that, “the existence of a separate establishment is not a necessary
part of the ratio and therefore, in respect of dispute relating to a workman employed in
Bihar, where there was no separate establishment of the company, the Appropriate
Government was the State of Bihar and not the State of West Bengal in whose
territories the head quarters of the company situated”.
This ambiguity is further confounded by a new principle enunciated by some
of the High Courts, according to which there can be two Appropriate Governments for
the same dispute and a reference by either of them can be valid. Although most of
them are obiter dictums, Delhi High Court in Gesterner Duplicators (P) Ltd. v. D.P.
Gupta, had specifically taken this view and applied this principle to the facts in this
case by validating reference made by the Delhi Administration, where the Appropriate
Government was, as per the principle enunciated earlier by the Supreme Court, the
Karnataka State Government. The pragmatic approach of these courts deserves to be
appreciated. But a separate line of cases exist where some other High Courts had
entirely rejected this theory of two Appropriate Government on purely technical and
legalistic considerations.
In J and J Dechane Distributors v. State of Kerala, Golanan Nambiya J.
observed that: “It seems reasonable and fairly clear that there can be only one
Government which can be regarded as the Appropriate Government for the purpose of
making a reference of industrial dispute. The consequences of holding that more than
one Government can refer the same industrial dispute for adjudication appear to us to
be startling.”
In spite of various decisions of High Courts, it is really painful that after a
lapse of sufficient time spent on adjudication of dispute and the award was rendered,
the courts quash the award on jurisdictional grounds because the Government which
initially referred the dispute for adjudication was not the Appropriate Government in
the opinion of those courts. Until the definition is suitably amended to provide for
such situations, it is better that the principle of simultaneous jurisdiction of two
Appropriate Governments is recognized, so that awards made by the tribunals shall be
quashed on such technical grounds.

Dispute Resolution Machineries:

The Act provides for following Authorities for Investigation and settlement of
industrial disputes:

1. Works Committee.
2. Conciliation Officers.
3. Boards of Conciliation.
4. Court of Inquiry.
1. Works Committee

Section 3 of the Act provides that the appropriate Government may by general
or special order require the employer to constitute in the prescribed manner a Works
Committee in industrial establishments, where 100 or more workmen are employed or
have been employed on any working day in the preceding 12 months. The Works
Committee will be comprised of the representatives of employers and workmen
engaged in the establishment.

It shall be the duty of the Works Committee to promote measures for securing
and preserving amity and good relations between the employer and workmen and, to
that end, to comment upon matters of their common interest or concern and endeavour
to compose any material difference of opinion in respect of such matters [Section
3(2)].
 2. Conciliation Officers

With the duty of mediating in and promoting the settlement of industrial

disputes, the appropriate Government may, by notification in the Official Gazette,
appoint such number of Conciliation Officers as it thinks fit under Sec 4 of the Act.
The Conciliation Officer may be appointed for a specified area or for specified
industries in a specified area appointing the Conciliation Officers, by the appropriate
Government, is to create congenial atmosphere within the establishment where
workers and employers can reconcile on their disputes through the mediation of the
Conciliation Officers. Thus, they help in promoting the settlement of the disputes.

Sec 12 provides that where any industrial dispute exists or is apprehended, the
conciliation officer may, or where the dispute relates to a public utility service and a
notice under Section 22 has been given, shall, hold conciliation proceedings in the
prescribed manner.

The Conciliation Officer shall, for the purpose of bringing about a settlement
of the dispute, without delay, investigate the dispute and all matters affecting the
merits and the right settlement thereof and may do all such things as he thinks fit for
the purpose of inducing the parties to come to a fair and amicable settlement of the
dispute.

If a settlement of the dispute or of any of the matters in dispute is arrived at in

the course of the conciliation proceedings the conciliation officer shall send a report
thereof to the appropriate Government 5[or an officer authorized in this behalf by the
appropriate Government] together with a memorandum of the settlement signed by
the parties to the dispute.

If no such settlement is arrived at, the conciliation officer shall, as soon as

practicable after the close of the investigation, send to the appropriate Government a
full report setting forth the steps taken by him for ascertaining the facts and
circumstances relating to the dispute and for bringing about settlement

3. Boards of Conciliation

For promoting the settlement of an industrial dispute, the appropriate

Government may, as occasion arises, constitute by a notification in the Official
Gazette, a Board of Conciliation. A Board shall consist of a Chairman and two or four
other members as the appropriate Government thinks fit.

Under sec 13 of the Act it shall be the duty of Board to endeavor to bring
about a settlement of the dispute and for such purpose it shall, without delay,
investigate into the dispute and all matters affecting the merits and the right
settlement. The Board may also do all such things which may be considered fit by it,
for including the parties to come for a fair and amicable settlement of the dispute. In
case of settlement of the dispute, the Board shall send a report thereof to the
appropriate Government together with a memorandum of settlement signed by all the
parties to the dispute. In case no settlement is arrived at, the Board shall forward a
report to appropriate Government enlisting therein the steps taken by the Board for
ascertaining the facts and circumstances related to the dispute and for bringing about a
settlement thereof. The Board will also enlist the reasons on account of which in its
opinion a settlement could not be arrived at and its recommendations for determining
the disputes. (Section 5)

4. Courts of Inquiry

According to Section 6 of the Act, the appropriate Government may as

occasion arises, by notification in the Official Gazette constitute a Court of Inquiry
into any matter appearing to be connected with or relevant to an industrial dispute. A
Court may consist of one independent person or of such number of independent
persons as the appropriate Goverment may think fit and where a Court consists of two
or more members, one of them shall be appointed as the Chairman. It is the duty of
such a Court to inquire into matters referred to it and submit its report to the
appropriate Government ordinarily within a period of six months from the
commencement of the inquiry. The period within which the report is to be submitted
is not mandatory and the report may be submitted even beyond the period of six
months without affecting the legality of the inquiry.

Voluntary Arbitration under Sec 10A

When Conciliation Officer or Board of Conciliation fails to resolve
conflict/dispute, parties can be advised to agree to voluntary arbitration for settling
their dispute. For settlement of differences or conflicts between two parties,
arbitration is an age old practice in India. The Panchayat system is based on this
concept. In the industrial sphere, voluntary arbitration originated at Ahmedabad in the
textile industry under the influence of Mahatma Gandhi. Provision for it was made
under the Bombay Industrial Relations Act by the Bombay Government along with
the provision for adjudication, since this was fairly popular in the Bombay region in
the 40s and 50s. The Government of India has also been emphasizing the importance
of voluntary arbitration’ for settlement of disputes in the labour policy chapter in the
first three plan documents, and has also been advocating this step as an essential
feature of collective bargaining. This was also incorporated in the Code of Discipline
in Industry adopted at the 15th Indian Labour Conference in 1958. Parties were
enjoined to adopt voluntary arbitration without any reservation. The position was
reviewed in 1962 at the session of the Indian Labour Conference where it was agreed
that this ‘step would be the normal method after conciliation effort fails, except when
the employer feels that for some reason he would prefer adjudication. In the Industrial
Trade Resolution also which was adopted at the time of Chinese aggression, voluntary
arbitration was accepted as a must in all matters of disputes. The Government had
thereafter set up a National Arbitration Board for making the measure popular in all
the states, and all efforts are being made to sell this idea to management and
employees and their unions.
In 1956 the Government decided to place voluntary arbitration as one of the
measures for settlement of a dispute through third party intervention under the law.
Sec. 10A was added to the Industrial Disputes Act, and it was enforced from 10th
March, 1957.

Reference of Disputes for Arbitration

Where a dispute exists or is apprehended, it can be referred for arbitration if

the parties to the dispute agree to do so by submitting a written agreement to that
effect, mentioning the person acceptable to them as arbitrator and also the issues to be
decided in arbitration - proceedings, to the Government and the Conciliation Officer
concerned before it is referred for adjudication to Labour Court or Tribunal. The
Agreement must be signed by both the parties. Both under Sec. 10A and 10(2)
reference is obligatory.

Where an agreement provides for even number of arbitrators, it will provide

for the appointment of another person as an Umpire who shall decide upon the
reference if the arbitrators are divided in their opinion. The award of the Umpire shall
be deemed to be the arbitration award for the purposes of the Act.
The appropriate Government shall within one month from the date of the
receipt of the copy of the arbitration agreement publish the same in the Official
Gazette if the Government is satisfied that the parties, who have signed the agreement
for arbitration, represent majority of each party; otherwise it can reject the request for
arbitration.
Where any such notification has been issued, the employer and workmen who
are not parties to the arbitration agreement, but are concerned in the dispute, shall be
given an opportunity to present their case before the arbitrator or arbitrators.
The arbitrator shall investigate the dispute and submit to the Government the
Arbitration Award signed by him. Where an industrial dispute has been referred for
arbitration and notification has been issued, the Government may by order prohibit
the continuance of any strike or lock-out in connection with such dispute, which may
be in existence on the date of reference.
The arbitration award which is submitted to the Government and becomes
enforceable, is binding on all parties to the agreement and all other parties summoned
to appear in the proceedings as parties to ‘dispute. Such an award is also binding on
all, employees at the time of award, or to be employed subsequently even if they are
not party to the initial agreement. If the arbitration agreement is not notified in the
Official Gazette under Sec. 10A, it is applicable only to the parties who have agreed
to refer the dispute for arbitration. Arbitration Award is enforceable in the same
manner as the adjudication award of Labour Court or Industrial Tribunal.
Arbitration is an alternative-to adjudication and the two cannot be used
simultaneously. It is voluntary at the discretion of the parties to a dispute. Arbitrator is
a quasi-judicial body. He is an independent person and has all the attributes of a
statutory arbitrator. He has wide freedom, but he must function within the limit of his
powers. He must follow due procedure of giving notice to parties, giving fair
hearings, relying upon all available evidence and documents. There must be no
violation of the principles of natural justice.

Acceptance of Arbitration

Voluntary arbitration has been recommended and given place in law by the
Government. Experience, however, shows that although the step has been strongly
pressed by the Government for over thirty years it has yet to take roots. During the
last decade not even 1% of the disputes reported were referred for arbitration. The
National, Commission on Labour examined the working of arbitration as a method of
settling disputes, and found that it was yet to be accepted by the parties, particularly
by the ‘employers, unreservedly.

The main hurdles noticed yet are, the Choice of suitable arbitrator acceptable
to both parties and payment of-arbitration-fees-Unions can seldom afford to share
such costs equally with management. Apart from these, it appears that arbitration
under the Act is not correctly understood by the employers and trade unions. When
arbitration is suggested, the impression often is that matter is to be left to the sole
decision of an individual who can act in any manner he likes. The sanctity of the
decision by an arbitrator is also held in doubt. The fact that law covers voluntary
arbitration and places it almost parallel to adjudication, is not appreciated or known
widely.

Power of Appropriate Government to refer Industrial Dispute

The State sponsored conciliation and adjudication are the hall mark of the law
of industrial dispute resolution in India. The Act is the principal Central law which
provides the mechanism for and conditions subject to which, the conciliation and
adjudication powers are to be exercised. Under the Act, adjudication cannot be
demanded by a disputant party as of right; it is the discretion of the “Appropriate
Government” to refer or not to refer an industrial dispute collective or individual for
adjudication by an adjudicatory body. If the disputants are not able to arrive at a
“settlement” or if they are disinclined to refer their disputes to an Arbitrator, then, the
ultimate legal remedy for the unresolved dispute is its reference to adjudication by the
Appropriate Government.
The Act envisages the exclusive power of the Appropriate Government to
refer disputes for adjudication there by rendering the adjudication conditional on its
discretion except applications under Sec 33, 33-A, 33(C)(2) all other matters will have
to come before the adjudicatory authorities only through an order of reference by the
Appropriate Government. But, now in some States like Karnataka, Tamilnadu and
Andhra Pradesh in case of individual disputes relating to discharge, dismissal,
retrenchment or termination of services, a workman may directly approach a Labour
Court for the adjudication of such disputes under the relevant State amendments to the
Act. This power of the Government disables the trade unions or the workmen to make
use of the adjudicatory forums for the settlement of disputes and as an effective
remedy for their grievances. There has been a constant demand by the trade union to
provide them and to the workers direct access to these adjudicatory authorities.
Further, the controversy about the Government power arises in the context of misuse
of this discretionary power for partisan ends with political motives. How and on what
considerations should the reference power of the Government be exercised? Delay in
reference of disputes and Government’s reluctance to refer disputes to which it is a
party.

Scope of Section 10 - Nature of Government Power

To say something with certainty about the powers of the Appropriate
Government under Section 10(1) of the Act, to invariably refer a dispute for
adjudication is a risky one and the exercise is rather like skating on the thin ice. This
all has been there in spite of the fact that our Supreme Court is probably the strongest
in the world and usually delivers the verdicts which are full of rare jurisprudential
vision. It does not mean that there are no black spots and sometimes various decisions
of the Supreme Court on the very same subject rather observe a proposition
conceptually, nationally and imaginatively. This is on account of the fact that Apex
Court has not become an absolute viable instrument. The views of the Supreme Court
are changed with the change in the composition of its various benches. This is what
had happened as regards the powers of the Appropriate Government in matters of
reference of disputes.
Section 10(1) Act states that, where the Appropriate Government is of opinion
that any industrial dispute exists or is apprehended it may at anytime; by order in
writing refer the dispute to a Board or Court of Inquiry or Labour Court or to an
Industrial Tribunal for adjudication. From the above provision, it is evident that the
Appropriate Government can only refer a dispute to any adjudicatory body provided if
it is satisfied that there exists an industrial dispute or apprehension of such dispute but
not otherwise.
It shows that the foremost object of the Act is to provide for economical and
expeditious machinery for the decision of all industrial disputes by referring them to
adjudication, and avoid industrial conflict resulting from frequent lock-outs and
strikes. It is with that object the reference is contemplated not only in regard to
existing industrial disputes but also in respect of disputes which may be apprehended.
This section confers wide and even absolute discretion on the Government either to
refer or to refuse to refer an industrial dispute as therein provided. Naturally this wide
discretion has to be exercised by the Government bona fide and on a consideration of
relevant and material facts.
On the construction of this Section the Supreme Court in a number of
decisions explained that this power of the Appropriate Government is purely of an
‘administrative nature’, as the expression is understood in contradiction to quasi
judicial or judicial power. This implies that it is a discretionary function of the
Appropriate Government to form an opinion about the existence and apprehension of
industrial dispute. This decision is based on subjective satisfaction of the
Government, only the order of refusal to make a reference needs to be communicated
and the order must record the reasons for refusing to make a reference. It is only an
administrative order and not a quasi judicial order. There is no need to issue any
notice to the employer or to hear the employer before making a reference or refusing
to make a reference.
Further, implication of holding it an administrative power is that, when the
Government makes a reference of a dispute for adjudication by a Labour Court or a
Tribunal it does not decide any question of fact or law. The fact that it has to formed
an opinion as to the factual existence of a dispute as a preliminary step to discharge of
its function does not make it any the less administrative character. The expression ‘at
any time’ empowers the Appropriate Government to review its earlier decision and
refer a dispute which was earlier refused. It can reconsider its earlier decision in the
light of new facts and circumstances.
The restriction on the Government is that it should exercise the power
bonafide after application of its mind to the matter before it. It should take all relevant
matters into consideration and leave out all irrelevant consideration. In other words,
the discretion must be exercised according to law as established by courts in various
cases. The discretionary power should be exercised to promote statutory objects and
that a discretionary decision founded upon irrelevant factors or grounds would be
subject to judicial considerations.
In State of Madras v. C.P. Sarathy, the Apex Court held that “the Government
should satisfy itself on the facts and circumstances brought to its notice in its
subjection opinion that an industrial dispute exists or is apprehended. The factual
existence of the dispute or its apprehension and the expediency of making a reference
are matters entirely for the Government to decide”. It was further observed that “the
order of reference passed by the Government cannot be closely examined by a writ
under Article 226 of the Constitution to see if the Government had material before it
to support the conclusion that the dispute existed or was apprehended”.
But later, the Supreme Court in Western India Match Co. v. Western India
Match Co. Workers Union and in Shambunath Goyal v. Bank of Baroda, Jullundur
insisted that, the Appropriate Government should satisfy itself on the basis of the
material available before it that an industrial dispute exists or is apprehended and it
was held that such a satisfaction of the Government is a condition precedent to the
order of reference. In other words, if there is no material before Government that an
industrial dispute exists or is apprehended, the Government has no power to make a
reference of cause, the court observed that “the adequacy or sufficiency of the
material on which the opinion was formed is beyond the pale of Judicial Scrutiny.
Once the Government forms an opinion with respect to the existence of an industrial
dispute or its apprehension, the next question of expediency i.e. whether to refer the
dispute for adjudication or not is left to the subjective satisfaction of the
Government”. However, where the Appropriate Government refuses to make a
reference on receipt of a failure report of a conciliation officer under Section 12(4),
the Government is bound to give reasons for its refusal and communicate the same to
the parties concerned.
The exercise of power by the Government or refusal to do so is subject to the
well recognized principles regarding the exercise of administrative discretion. The
discretionary power must be exercised honestly and not for any corrupt or ulterior
purposes and the Appropriate Government must apply its mind to the relevant
material before it and decide the question of expediency of referring the dispute in the
interests of maintaining industrial peace in the concerned industry. It will be an absurd
exercise of discretion, if for example the Government forms the requisite opinion on
account of pressure by any political party, within these narrow limits, the Government
opinion is not conclusive and can be challenged in a court of law. The well known
grounds for challenging the exercise of administrative discretion like malafide,
irrelevant considerations, not taking relevant considerations into account, improper
purpose, acting mechanically or under dictation are also available for challenging the
improper exercise of power by the Appropriate Government under Section 10(1) of
the Act.
The Supreme Court of India has pointed out on many occasions that the
question as to whether a statute is mandatory or directory depends upon the intent of
the Legislature and not upon the language in which the intent is clothed. The meaning
and intention of the Legislature must govern, and these are to be ascertained not only
from the phraseology of the provision, but also by considering its nature, its design
and the consequences which would follow from construing it the one way or the
other.
It is well settled that the use of word ‘may’ in a statutory provision would not
by itself show that the provision is directory in nature. In some cases the legislature
may use the word ‘may’ as a matter of pure conventional courtesy and yet intent a
mandatory force. In order, therefore, to interpret the legal import of the word ‘may’,
the Court has to consider various factors, namely the object and the scheme of the
Act, the context and the background against which the words have been used, the
purpose and the advantages sought to be achieved by the use of this word, and the
like. It is equally well-settled that where the word ‘may’ involves a discretion coupled
with an obligation or where it confers a positive benefit to a general class of subjects
in a utility Act, or where the court advances a remedy and suppresses the mischief, or
where giving the words a directory significance would defeat the very object of the
Act, the word ‘may’ should be interpreted to convey a mandatory force.
In D.A. Koregaonkar v. the State of Bombay, Chagla, C.J. observed that,“One
of the important tests that must always be employed in order to determine whether a
provision is mandatory or directory in character is to consider whether the non-
compliance of a particular provision causes inconvenience or injustice and if it does
then the Court would say that that provision must be complied with and that it is
obligatory in its character”.

The adjudication of industrial disputes under the Act, is based on the concept
of compulsory adjudication and hence, the Appropriate Government has to refer the
industrial dispute and the adjudicator is bound to adjudicate on the referred industrial
dispute and thereafter to give its decision in writing in the form of an award.
Power of Courts to direct the Government to make a reference of Industrial
Disputes:

In Pratap Singh v. State of Punjab, the Supreme Court observed that, “the
Court is not an appellate forum where the correctness of the order of the Government
could be canvassed. It has no jurisdiction to substitute its own view for entirely of the
power, jurisdiction and discretion vested by law in Government the only question
which could be considered by the Court is, whether the authority vested with the
power has paid attention to or taken into account, circumstances, events or matter
wholly extraneous to the purpose which the satisfying a private or personal grudge of
the authority”.
Power of reference under Section 10 (1) is undoubtedly an administrative
function of the ‘Appropriate Government’ based upon its own opinion with respect to
the existence or apprehension of an industrial dispute and its subjective satisfaction as
to whether it would be expedient to make a reference or not. Though the earlier
thinking was that such an order cannot be interfered with at all by the courts, the
recent trend of judicial thinking is that though in a very limited field, the order of
reference is amenable to judicial review under certain circumstances.
The question of referring a industrial dispute for adjudication arises after the
Government has received the failure report from the Conciliation Officer. According
to Section 12(5), if on a consideration of the failure report by a conciliation officer,
the Appropriate Government is satisfied that there is a case for reference, it may make
such a reference. Where the Appropriate Government does not make such a reference
it shall record and communicate to the parties concerned its reasons therefore. Similar
obligation to record reasons for non reference and communicating the same to the
parties concerned arises under Sec 13(4) of the Act where the failure report is
submitted by a Board of Conciliation only in case of Public Utility Services.
In State of Bombay v. K.P. Krishnan, the Appropriate Government on
consideration of the failure report refused to refer the dispute and the reason given by
the Government was that the workmen resorted to go slow during the year 1952-53
for which year the workmen claimed bonus. The Supreme Court held that the
Government had taken into consideration altogether an irrelevant matter in refusing to
refer the dispute and therefore a writ of mandamus was issued to the Government
directing it to reconsider the matter by ignoring the irrelevant consideration. While
holding so the Court observed, the order passed by the Government under Section
12(5) may be an administrative order and the reasons recorded by it may not be
justifiable in the sense that their propriety, adequacy or satisfactory character may not
be open to judicial scrutiny; in that sense it would be correct to say that the Court
hearing a petition for mandamus is not sitting in appeal over a decision of the
Government, nevertheless, if the Court is satisfied that the reasons given by the
Government for refusing to make a reference are extraneous and not germane then the
Court can issue and would be justified in issuing a writ of mandamus even in respect
of such administrative order.
The Supreme Court in Bombay Union of Journalists v. State of Bombay,
further discussed the question. Although it is difficult somewhat to reconcile this
decision with that of K.P. Krishnan, the Supreme Court clearly pointed out that while
the Government is not precluded from considering the prima facie merits of the case
before deciding as to whether a reference should be made or not, it cannot take final
decisions on questions of law or disputed questions of fact which are within the
jurisdiction of the Tribunal. The Supreme Court then reiterated its earlier stand that in
entertaining an application for a writ of mandamus against an order made by the
Appropriate Government under Section 10(1) read with Section 12(5), the Court is
not sitting in an appeal over the order and is not entitled to consider the propriety,
adequacy or the satisfactory character of the reasons given by the said Government.
The combined reading of the above two cases, no exhaustive or final criteria
emerges as to on what grounds an administrative order is amenable to judicial review.
Nor any such exhaustive or final criterion is possible in a growing branch of law like
the administrative law. However, some broad heads under which an order of reference
may be reviewable are as follows.
(i) When the Government does not act bonafide
In any enactment which creates powers, there is a condition implied that the
powers shall be used bonafide for the purpose for which they are conferred. Exercise
of power of reference is said to be malafide if it is made for achieving an alien
purpose. No public body can be regarded as having statutory authority to act in bad
faith or from corrupt motives and any action purporting to be that of the body but
proved to be committed in bad faith or from corrupt motives would certainly held to
be in operative. However, such bad faith will be a matter to be established by a party
propounding bad faith or malafide. He should affirm the set of acts and it would not
be sufficient merely to allege the facts but they will have to be proved. In State of
Bihar v. D.N. Ganguli, while dealing with a case of cancellation of a notification of
reference, the Supreme Court reiterated the same view and said that if validity of
cancellation of notification making an order of reference is challenged on the ground
of malafide, it may be relevant and material to inquire into the motive of the
Government. Thus, if the Court finds that the Government was actuated by malafide
motives in making an order of reference, the reference shall be invalid.
(ii) Improper opinion of the Government
With respect to the existence or apprehension of an industrial dispute, the
Government is the sole arbitrator and its opinion is final Likewise the determination
of the question whether it is expedient to make a reference or not depends upon the
discretion of the Appropriate Government and this discretion should be exercised
reasonably or else it is reviewable by a High Court in its writ jurisdiction under
Article 226 of the Constitution. The opinion of the Government may be assailable for
the following reasons:
(a) No material
In Orient Paper Mills Sramik Congress v. State of Orissa, the Court opined
that the formation of opinion cannot import an arbitrary or irrational state of affairs;
the opinion must be grounded on materials which are of rational and probative value.
In forming the opinion if the Government had no material before it, the order of
reference will be liable to be quashed.
(b) Omitted vital material from consideration
While exercising the power of reference under Section 10 of the Act, the
Government did not take into account some vital material which is ought to have
considered and refuses to refer the dispute for adjudication then the reference will be
liable to be quashed.
(c) Irrelevant Consideration
If, in forming the opinion, the Appropriate Government looks into any
extraneous or irrelevant consideration which had no rational connection with the
question of making the reference, hence, order would be beyond the scope of the
power of the Government under Section 10(1) of the Act. In such a case the order of
reference will be bad even if the authority has acted bonafide and with the best of
intention.
 (d) Non-application of mind
The Appropriate Government before forming an opinion to the questions
whether there is an industrial dispute existing or apprehended and whether it will be
expedient to refer the dispute on the basis of material before it. If the order of
reference challenged on the above ground the Government will have to satisfy the
Court by filing an affidavit to show that it had material before it and the reference was
made after consideration of relevant factors, the absence of such evidence may make
the reference vulnerable on the lack of material or non-application of mind.
(iii)The activity carried on is not an ‘Industry’ and no ‘Industrial Dispute’
The term ‘industrial’ in the definition of ‘industrial dispute’ relates to the
dispute in an ‘industry’ as defined in Sec 2(j) of the Act. Unless the dispute is related
to an industry it will not be an industrial dispute. Therefore, if the reference is made of
a dispute which relates to any activity which is not an industry it will not be a valid
reference.
In Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor union, Justice
Venkatarama Ayer opines that“The definition of industrial dispute presupposes
continued existence of industry and hence the dispute should be in a live industry and
not in a closed industry, because closed industry or establishment would not fall
within the definition of industry. The reference of an industrial dispute which arises
after the establishment becomes dead on account of closure shall therefore be invalid
as the provisions of the Act will apply only to an existing or live industry”.
The power of the State to make a reference is to be determined with reference
not to the date on which it is made but with reference to the date on which the right,
which is the subject matter of the dispute arises and the machinery provided under the
Act would be available for working out the right which accrued prior to the
dissolution of the business. There is thus a clear distinction between the two classes of
cases namely:
(i) Those in which the cause of action arose at the time when the business had
been closed; and
(ii) Those in which the cause of action arose at the time when the business was
being still carried on.

There can be no ‘industrial dispute’ in respect of the first category of cases

because the real subject matter of the dispute had ceased to exist when the dispute
arose. But in regard to the second category, where the dispute actually arises before
the closure of the business, it does not cease to be an industrial dispute merely
because subsequently the industry is closed. If the dispute related to a period when the
industry was in existence the reference even after the closure of the industry can be
validity made.

The dispute with respect to the existence or apprehension of which the

Appropriate Government is to form its opinion must be an industrial dispute as
defined in Section 2 (k) of the Act. According to this, “any dispute or difference
between employers and employers and between employers and workmen or between
workmen and workmen, connected with the employment or non employment or the
terms of employment or with the conditions of labour of any person”.
In Shambhunath v. Bank of Baroda, Supreme Court held that the term
‘industrial dispute’ connotes a real and substantial difference having some element of
persistency and continuity till resolved and likely, if not adjusted to endanger the
industrial peace of the undertaking or the community. The definition of industrial
dispute expressly states that not dispute or difference of all sorts but only those which
bear upon the relationship of employers and employers, employers and workmen or
between workmen and workmen and if it is connected with grounds provided there
under are contemplated and the Appropriate Government before exercising its power
under Section 10, the industrial dispute must be in existence or apprehended on the
date of reference i.e. a demand has been made by the workmen and it has been
rejected by the employer before the date of reference, whether directly or through the
conciliation officer, it would constitute an industrial dispute. If there is no industrial
dispute in existence or apprehended the Appropriate Government lacks power to
make any reference.
(iv) Reference Contrary to Law:
The order of reference should be made to the authorities in accordance with
the provisions of Section 10(1). If the order is contrary to these provisions in the
matter of selecting the appropriate authority, the order shall be invalid. Likewise
where an order of reference covering some items of industrial disputes is pending
adjudication a further order of reference covering the same subject matter would be
invalid. In Rashtriya Hair Cutting Saloon v. Maharashtra Kamgar Sabha, held that a
reference of dispute the subject matter of which is covered by the provisions of
special enactments like Contract Labour (Regulation and Abolition) Act, 1970,
Payment of Gratuity Act, 1972 etc. being a self contained code, cannot be validly
referred or be adjudicated upon by the adjudicatory authorities under the Act.

Disputes covered by a Settlement or a previous Award

In Madras District Automobile and General Employees Union v. State of

Madras, held that reference of an Industrial Dispute the subject matter of which is
covered by a Settlement as defined in Section 2 (p) of the Act would be invalid during
the period of operation of such a Settlement because when once a dispute is resolved
by a Settlement in the course of Conciliation or otherwise no dispute remains to be
resolved by Arbitration or Adjudication. The Law is well settled that if there is a
binding settlement which has not been terminated in accordance with the procedure
laid down in the Act, no industrial dispute can be raised with regard to the items
which form the subject matter of the settlement. Such matters cannot be the subject
matter of conciliation proceedings under Section 12 or of reference under Section 10
of the Act.

From the analysis of above all cases the approach of the Supreme Court and
High Courts in compelling the Appropriate Government to make a reference which
may virtually amount to exercising appellate jurisdiction over the discretionary order
of the Government is justified or not from a strict administrative law view point, the
activists in these decisions is quite welcome from the point of view of labour law.
In justification of the above decision of the Supreme Court, it may be stated
First, that the Supreme Court is very much concerned about abnormal delay at the
stage of reference by the Government, in many of these cases the delay was more than
a decade. Although the Supreme Court was satisfied that case for reference was made
out, the Court stand was considered to be patently unreasonable. Secondly, the Court
in these cases also took into account the fact that the Appropriate Government had
decided for itself the questions of fact and law which ought to be determined by the
Tribunal after adjudication. Thirdly, the Court was considering that the adjudication
of industrial disputes by the Tribunals should be considered as a quasi judicial remedy
provided to the industrial workmen for the resolution of their grievances and demands
which lead to disputes. This is of particular importance if it is relating to discharge,
dismissal, retrenchment or the termination of services of workmen and therefore the
jurisdiction of Civil Courts is impliedly barred by the Act. Although disputes strictly
relating to contract of employment may be taken before the Civil Courts for
enforcement of contractual rights the Civil Courts have no power to order
reinstatement even in cases of illegal termination of service, not to speak of the delay
or expense that go with the Civil Suits.
Under these circumstances the remedy available to workmen is only under the
Act and if the Appropriate Government takes the stand that it has discretion whether
to refer or not to refer such disputes the workmen who are deprived of their livelihood
would be at the many of the Government for justice and this would hindrance the very
object of the Act and social justice principle under the Constitution.

Analysis of the term may “at any time” refer under Section 10

Under the Act it is the Appropriate Government which has the power to make
the reference for adjudication. The words “at any time” preceded by the word “may”
in Section 10(1) indicate the intention of the legislature that the Government has
discretion to refer dispute at any time, if it is of opinion that an industrial dispute
exists or is apprehended and that it considers expedient to do so in the interests of
maintaining industrial peace in the concerned industry. The interpretation of the term
“at any time” under Section 10 of the Act gives rise to four questions namely,
(i) Whether the conciliation proceedings are a condition precedent in the
making of the order of reference?

The Act casts a duty on Conciliation Officer to hold conciliation

proceedings and try to promote settlement between the parties and the procedure for
promoting settlement cannot come in the way of the Appropriate Government making
reference for adjudication. The significance of the words “at any time” is that the
reference can be made at any time even before or during the pendency or after the
conciliation proceedings. In other words, though as a matter of practice conciliation
proceedings by a conciliation officer are held before the Government decides to refer
a dispute for adjudication it is not a condition precedent. In Western India Match Co.
Ltd. v. Western Match Co. Workers Union, Shelat, J.M. JJ observed that,“Ordinarily
the question of making a reference would arise after the conciliation proceedings have
been gone through and the conciliation officer has made a failure report. But the
Government need not wait until such a procedure has been completed. In an urgent
case, it can “at any time” i.e. even when such proceedings have not begun or are still
pending, decide to refer the dispute for adjudication. The expression “at any time”
thus takes in such cases where the Government decides to make a reference without
waiting for conciliation proceedings to begin or to be completed”.

Section 10 not suggests that the Appropriate Government has to wait for the
failure report of Conciliation officer. This position is amply made clear by Section 20
of the Act which states that the conciliation proceedings shall be deemed to be
concluded, among others, when a reference is made to a Court of Inquiry, Labour
Court, Tribunal or National Tribunal.

(ii) Whether during the pendency of the proceedings under Section 33 a

reference of the dispute can validly be made for adjudication?

In ITC Ltd. v. Government of Karnataka, a question raised before the High

Court of Karnataka that during the pendency of proceeding under Section 33(2)(b) of
the Act for ‘approval’ of the imposition of penalty of dismissal from service against a
workman. Whether the Appropriate Government is competent to refer the dispute for
adjudication relating to dismissal under Section 10(1) of the Act? It was held that any
decision under Section 33 is not final and therefore cannot yield to a remedy provided
under Section 33(2)(b) proceedings. Therefore, notwithstanding that a proceeding
under Section 33 is pending, a dispute can be referred to adjudication under Section
10(1) of the Act.

(iii) Whether once having refused to make a reference the Appropriate

Government can subsequently make a reference of the same matter?

Refusal of the Government to refer dispute for adjudication on a previous

occasion does not prevent it from reconsidering the matter afresh at a later date and
deciding to refer the same under Section 10(1) of the Act. The Supreme Court in
Western India Match Co. v. Western India Match Co. Workers Union stated that the
words “at any time” do not admit any period of limitation and that previous refusal is
no bar for a subsequent reference. The Court explained the law on this aspect in the
following words: “When the Government refuses to make reference it does not
exercise its power, on the other hand it refuses to exercise its power. Consequently,
the power to refer cannot be said to have been exhausted when it has declined to make
a reference at an earlier stage”.

The Court further pointed out that the Government may reconsider the matter
either because some new facts had come to light or because it had misunderstood the
existing facts or for any other relevant consideration with regard to too old claims or
the extraneous consideration like, pressure from unions etc. The Court said, “there is
no reason to think that the Government would not consider the matter properly or
allow itself to be stampeded into making references in cases of old or stale disputes or
reviving such disputes on the pressure of unions”.

Later in Binny Ltd. v. Their workmen, the Supreme Court upheld the validity
of a reference by the Government though the Government refused to refer the same on
two earlier occasions. In Avon Services (production) Agencies Ltd. v. Industrial
Tribunal, Haryana, the Supreme Court clarified the nature of power of the
Appropriate Government when it subsequently refers the dispute after initial refusal
and about the need for any fresh material before the Government justifying the change
on its opinion. It was observed by Desai, J. that, “Merely because the Government
rejects a request for reference or declines to make a reference, it cannot be said that
the industrial dispute has ceased to exist, nor could it be said to be review of any
judicial or quasi judicial order or determination. The industrial dispute may
nevertheless continue to remain in existence and if at a subsequent stage the
Appropriate Government is satisfied that in the interest of industrial peace and for
promoting industrial harmony it is desirable to make a reference the Appropriate
Government does not lack power to do so under Section 10(1), nor it is precluded
from making a reference on the only ground that on an earlier occasion it had declined
to make a reference”.

The Supreme Court also held that “A refusal of the Appropriate Government
to make a reference is not indicative of an exercise of power under Section 10(1), the
exercise of power would be a positive act of making a reference. Refusal to make a
reference does not tantamount to saying that the dispute, if at all existed stands
resolved. On the contrary, the refusal to make a reference not compelling the parties
to come to dispute reasoning authorities would further accentuate the feelings and a
threat to direct action may become imminent and the Government may as well
consider the decision and make the reference”.

This holding of the Court seems to confer on the Government the power to
refer the dispute after a previous refusal and for such a reference the Government
need not have any fresh material before it and the only paramount consideration is the
maintenance of industrial peace. But such a blanket power may result in some absurd
situations or may put the employer in an embarrassing situation when he had already
arranged the affairs of his business on the basis of the Government’s refusal to make a
reference. It is also possible that such unlimited power may be abused or exercised
due to some extraneous factors like, political pressure.

In Mahavir Jute Mills Ltd. v. Shibbanlal Sexena, the Supreme Court itself
noted that between the dismissal of 800 workmen, which was the subject matter of
dispute and the hearing of the appeal by special leave nearly twenty years have
elapsed and an embarrassing situation had arises for the employer, as the workmen
employed in the place of the dismissed workmen had already put in twenty years of
service. Despite these facts, the Court upheld the order of reference following the
ratio of WIMCO case. In view of such possibilities, O. P. Malhotra suggests, that: “It
is therefore desirable that when the Government subsequent to its refusal to make a
reference decides to refer the same dispute for adjudication, it must state reasons,
showing that new facts had came to light or there was misunderstanding as to the
existing facts or there was any other relevant consideration including the threat to
peace in the order of reference. Alternatively these reasons may be stated in the
counter affidavit in reply to the writ petition challenging the order of reference”.

Further, a considerable contention is that in making a reference the

Government is performing an administrative function and not a judicial or a quasi
judicial function and audi alterem partem is not invokable has become untenable in
the light of the path breaking decision of the Supreme Court in State of Orissa v.
Binapani Devi, kraipak v. UOI, Mohinder Singh Gill v. Chief Election Commissioner.
The Supreme Court has observed that, “the dichotomy between administrative and
quasi-judicial functions vis-a-vis the doctrine of natural justice is presumably
obsolescent after kraipak case in India, In Binapani, the Supreme Court held that even
an administrative order, which involves civil consequences must be made consistently
with the principles of natural justice”.

(iv) Whether there is any limitation in making the order of reference?

The power of the Appropriate Government to make a reference to the Labour
Courts and Industrial Tribunals are administrative in character. No time limit is
prescribed and the power to make a reference can be exercised by it at any time. All
that matters is that there should be an industrial dispute existing or even apprehended.
The words “at any time” do not admit any such limitation. That is the express
intention of the legislature and there should be no such restrictions imposed on the
Government’s power. The laws of limitation which might bar any Civil Court from
giving a remedy in respect of lawful rights cannot be applied by Industrial Tribunals.
However, it is only reasonable that the Government shall refer disputes within a
reasonable time after the fact of the existence of the dispute is brought to its notice,
either through the parties directly or through the failure report of the Conciliation
Officer and incase of delay there should be sufficient explanation for it.
The Appropriate Government’s power to make a reference is unbridled. But
any discretionary power cannot be regarded as absolute because absolute discretion is
ground to breed arbitrariness and which shrikes at the roots of Article 14 of the
Constitution, which forbids discriminatory actions. The discretionary authority, is
therefore, is obliged to act fairly, justly and in good faith. In Shalimar Work Ltd. v. Its
workmen, the Supreme Court pointed out that though there is no period of limitation
prescribed in making a reference of dispute even so it is only reasonable that the
disputes should be referred as soon as possible after they have arisen and after
conciliation proceedings have failed particularly so when dispute relate to discharge
of workmen wholesale. In the case of Western India Watch Company v. Western India
Watch Company workers Union the Supreme Court even went a step forward and
held that while considering the expediency to refer or not to refer an industrial
dispute, the Government would consider the question of delay etc. properly and will
not allow itself to be tempted into making references in case of old or stale disputes or
review such disputes on the pressure of Union.
Authorities to whom Reference can be made by the Appropriate Government

Although a reference under Section 10(1) may be made to a Board of

Conciliation to promote settlement or to a Court of Inquiry for inquiring into matter
but as the present study is concerned with Adjudication, hence, the detailed provisions
pertaining to power of reference to a Labour Court, Industrial Tribunal and National
Tribunal for the purpose of investigation and settlement of Industrial disputes are
discussed herewith.
(i) Labour Court

The Appropriate Government Under Section 10(1)(c) may refer a dispute, if it

relates to any matter specified in the Second Schedule to the Labour Court for
adjudication. The Second Schedule matters are all disputes of rights nature or also
known as legal disputes when workmen raise disputes with regard to their existing
legal rights, the reference of such disputes by the Government should be a matter of
routine, unless the claims of workmen are found to be frivolous or vexatious.

Although, as a general rule, the matters enumerated in Third Schedule are

referred to Industrial Tribunals, the first proviso to Section 10(1) (d) provides that,
where the dispute relates to any matter specified in the Third schedule and is not
likely to affect more than one hundred workmen, the Appropriate Government has the
discretion to refer such a dispute to a Labour Court for adjudication.
(ii) Industrial Tribunal
The Appropriate Government may refer a dispute Under Section 10(1) (d),
whether it relates to any matter specified in the Second or Third Schedule, to a
Tribunal for adjudication. The Third schedule matters like wages, allowances, bonus,
hours of work etc. are all interest disputes and they can be referred only to Industrial
Tribunals. Thus the Tribunals enjoy greater Jurisdiction than the Labour Courts.
(iii) National Tribunal
Sec 10 (1A) provides that Central Government may refer the dispute to a
National Tribunal for adjudication, where it is of opinion that any industrial dispute
exists or is apprehended and the dispute involves any question of national importance
or is of such a nature that industrial establishments situated in more than one State are
likely to be interested in, or affected by, such dispute and that the dispute should be
adjudicated by a National Tribunal, then, the Central Government may, whether or
not it is the Appropriate Government in relation to that dispute, at any time, by order
in writing, refer the dispute or any matter appearing to be connected with, or relevant
to, the dispute, whether it relates to any matter specified in the Second Schedule or the
Third Schedule.
The only requirement of Section 10(1) is that the order of reference should be
in writing. No form is prescribed under the rules for making such order. It is sufficient
if the existence of a dispute and the fact that the dispute is referred to the Tribunal are
clear from the order. Since the Jurisdiction of the Tribunal is confined to the points
specified in the order of reference and matters incidental there to as per Section 21 of
the Act and it is necessary that the order of reference should be carefully drafted
without giving room for unnecessary litigation.
In Express News Papers Ltd. v. Their workmen, it was observed that “order of
reference hastily drawn or drawn in a casual manner often give rise to unnecessary
disputes and they prolong the life of industrial litigation, which must always be
availed”. Therefore, it is necessary that the Government must bestow great case so as
to formulate the points of dispute clearly and should be so worded as to avoid
ambiguity.
Appropriate Government power to withdraw, cancel, supersede or amend the
order of reference

On the question whether the power of reference under Section 10 of the Act
carries with it the power to cancel or supersede the reference, the Supreme Court in
State of Bihar v. D.N. Ganguly, ruled that the Government has no such express or
implied power to either cancel or withdraw a reference after it has made the order of
reference. The Court did not approve the contention of the Government that as per the
provisions of the General Clauses Act a power to make order includes in it a power to
cancel the order.

The Appropriate Government acting under Section 10 will have power to add
or amplify or correct any clerical or typographical errors. But the Government under
the guise amending or correcting cannot supersede the reference already made. The
cardinal principle in determining the question, whether the amendment amounts to a
mere correction of a clerical error or introduction of fresh material, whether the relief
claimed by the aggrieved party in the original notification can be granted in the
proceedings which are to take place in pursuance of the amended notification. If the
same relief can be granted, the mistake may be considered as clerical, which can be
corrected by an amendment. But if the same relief cannot be granted, then it means
that the original notification has been cancelled and another notification has been
issued in its place, which the Appropriate Government is not competent to do.

Constitutional Validity of Section 10(1)

In Nirmala Textile Finishing Mills Ltd. v. Industrial Tribunal, Punjab, the

Constitutional validity of Section 10(1) of the Act was upheld by the Supreme Court.
It held that, “the provisions of Section 10 are not unconstitutional, as there is no
infringement of the fundamental rights guaranteed under Articles 14, 19(1)(f) and (g)
of the Constitution. It was observed that the discretion conferred on the Government
was not unfettered or unguided, because the criteria for the exercise of such discretion
are to be found within the terms of Act itself”.
In A. Sundarambal v. Governor of Goa, Daman and Diu, it was held that “the
refusal of the Government to refer a dispute for adjudication would not amount to
infringement of Article 14 of the Constitution merely because the Appropriate
Government had in an earlier case referred the case of similar employer for
adjudication because of the repetition of an error, if there is one, is not needed for
complying with the principles of equality before law. If in law the Government
justified in refusing a reference, the applicability of Article 14 does not arise at all”.
The Circumstances in which the Power of Reference is Mandatory
In order to protect the interest of public and to avoid the dislocation of services
by the public utility services in case of sudden strikes or lockouts the Act contains
some special provisions in which the Government imperatively has to refer the
industrial disputes for adjudication i.e., under Section 20(1), second proviso to
Section 10(1) and Section 10(2).
According to Section 20(1) of the Act, Conciliation proceedings shall be
deemed to have commenced on the date on which the notice of strike or lockout under
Section 22 is received by the Conciliation Officer.
Under second proviso to Section 10(1), “where the dispute relates to a public
utility service and notice of strike or lockout under Section 22 is given, the
Appropriate Government shall unless it considers that the notice has been frivolously
or vexatiously given or that it would be inexpedient so to do, make a reference under
this Section notwithstanding that any other proceedings under this Act in respect of
the dispute may have commenced”.

As per the proviso it is mandatory for the Government to make a reference

subject to the two exceptions specified in the proviso itself. Since conciliation
proceedings are compulsory in case of public utility services on receipt of notice of
strike or lockout, practically in all such disputes the Government will have to either
refer the dispute or record its reasons for refusing to make a reference and
communicate the same to the parties concerned under Section 12(5). Although the
word used in this proviso is “shall” instead of “May” used in the main provision, the
Government has still the power to consider the question of expediency of making a
reference even in case of public utility services and therefore it is difficult to
distinguish this proviso with the main provision of the Section. In both cases the
Government has to consider the question of expediency before making a reference.
But the proviso by using the term ‘shall’ it has controlled the wide discretion of the
Government in case of public utility services as compared to other industries.

Thus, it is clear that in regard to cases falling under this proviso an

responsibility is imposed on the Government to refer the dispute unless of course it is
satisfied that the notice is frivolous or vexatious or that considerations of expediency
required that a reference should not be made. The proviso also makes it clear that
reference can be made even if other proceedings under the Act have already
commenced in respect of the same dispute. Thus, so far as discretion of the
Government to exercise its power of referring an industrial dispute is concerned it is
very wide under Section 10(1) but is limited under the second proviso to Section
10(1).

Section 10(2) of the Act provides “where the parties to an industrial disputes
apply in the prescribed manner, whether jointly or separately, for a reference of the
dispute to a board, Labour Court, Tribunal or National Tribunal, the Appropriate
Government if satisfied that the persons applying represent the majority of such party,
shall make a reference accordingly”.
Where the parties apply for a reference the discretion of the Government is
divested and it will be under an obligation to refer such dispute for adjudication. In
such cases, the Government need not consider the question of existence of an
industrial dispute or its expediency to refer. The only requirement is that Government
should satisfy itself that the parties to the application represent the majority of each
party. Thus, in dealing with this class of cases the only point on which the
Government has to be satisfied is that the persons applying represent the majority of
each party; once that test is satisfied the Government has no option but to make a
reference as required by the parties.
When on both sides of the dispute there are associations or unions, the
requirement of majority on both sides arises. But if the dispute is between a single
employer and his workmen, the question of majority with respect to the employer
does not arise and the Government will have to be satisfied only with respect to the
majority of workmen. In other words the trade union which makes such an application
will have to be a representative of majority of the workmen of that establishment. The
Appropriate Government before making a reference under this provision may hold
such inquiry as it thinks necessary to satisfy itself about the representative character
of the union, which is a party to the application.

Central Government Power to refer Industrial Disputes

The following special powers have been conferred on Central Government, for
settlement of industrial dispute namely:
(i) Power under third proviso to Section 10(1)
The Third proviso to Section 10(1), “where the dispute in relation to which the
Central Government is the Appropriate Government, it shall be competent for that
Government to refer a dispute to Labour Court or an Industrial Tribunal, as the case
may be constituted by the State Government.” According to this proviso, inserted by
1982 Amendment, it is not necessary that the Central Government shall refer disputes
only to Labour Courts and Industrial Tribunals constituted by it, Instead, it may refer
the disputes to a Labour Court or an Industrial Tribunal constituted by any State
Government. This is aimed at facilitating the Central Government not to constitute
separate adjudicatory authorities in areas where the dispute are not many in number,
but all the same refer them to the authorities constituted by state Governments in
those areas.
(ii) Power under Section 10 (1-A)
Under Section 10 (1-A), Central Government may, at any time, refer any
industrial dispute, if it is of opinion that the dispute involves questions of national
importance or is of such a nature that industrial establishments situated in more than
one state are likely to be interested in, or affected by such dispute and that the dispute
should be adjudicated by a National Tribunal, whether or not the Central Government
is the Appropriate Government in relation to such dispute and also whether the
dispute relates to any matter specified in Second Schedule or Third Schedule. For
adjudication of dispute of national importance or dispute in respect of interstate
industrial establishments, the Central Government has been empowered to invoke this
provision to refer such disputes to a National Tribunal for adjudication. To invoke this
provision, the Central Government need not be the Appropriate Government in
relation to such disputes.
Under Section 10(6), upon such reference being made by the Central
Government no Labour Court or Industrial Tribunal shall have jurisdiction to
adjudicate upon any matter contained in the reference to the National Tribunal. In any
such matter referred to National Tribunal is pending in any proceedings before a
Labour Court or Tribunal, such proceeding before the Labour Court or Tribunal shall
be deemed to have been quashed. It shall also not be lawful for the Appropriate
Government to refer any matter under adjudication before a National Tribunal to any
Labour Court or Tribunal for adjudication during the pendency of proceedings in
relation to such matters before the National Tribunal.
The analysis of both Sections 10(1-A) and 10(6) reveals that the Central
Government has an overriding power of reference to a National Tribunal, even with
respect to disputes which are already pending adjudication by a Labour Court or
Tribunal. Once the Central Government shall be divested of its functions under the
Act and thereafter the Central Government shall be deemed to be the Appropriate
Government in relation to that dispute for all legal purposes.

Process of reference making by the Government under Section 10-Defective?

The following defects have been found in the Act, namely,

1. No direct access to the Authorities under the Act:
The Policy of the Government insists, the intervention of the Government in
the settlement of industrial disputes through conciliation and adjudication. The
Government intervention in the adjudication is extensive because the Government
retains in its hands the ultimate control of deciding which disputes should go for
adjudication through its reference under Section 10 of the Act.
Parties to the industrial dispute have no freedom to take their grievances to the
adjudication directly, even in case of disputes of legal nature which includes dismissal
discharge, termination or retirement of workmen. The discretion vested in the hands
of Appropriate Government to refer dispute for adjudication will defeat the very
purpose of peaceful settlement of disputes through adjudication there by maintaining
industrial peace and harmony, which results in large scale industrial unrest. Over the
years it has been experienced that adjudication system is the only effective remedy
available to the aggrieved party. Therefore, it is quite objectionable as a matter of
policy to deny free access to these authorities for the parties concerned.
The Government in the year 1978 proposed Industrial Relations Bill and Trade
Unions and Industrial Disputes (Amendment) Bill for liberalization of Government
policy which enable the industrial workmen to approach Labour Courts directly in
cases of all individual disputes. But unfortunately the Bills could not be enacted into
law and absolute power of the reference in the hands of Government continued. So
necessary changes in law with regard to individual disputes under Section 2-A of the
Act are imperative as recommended by the Ramanujan Committee, 1990 and the
Second National Commission on Labour, 2002 regarding changes in law, on
following lines, namely:
(i) Individual workmen should have direct access to Labour Courts in case of all
individual disputes, which are by their very nature rights disputes.
(ii) A provision must be made for the recognition of a bargaining agent in each
industrial establishment and such agent should be given the option of taking
interests disputes directly to Tribunals for adjudication; and
(iii) Compulsory reference of industrial disputes for adjudication if there is no
settlement through collective bargaining or voluntary arbitration. With some
of these changes the proposed Labour Management Relations Bill was
recommended by Second NCC in 2002.
2. Delay in reference results in delayed Justice
The object behind enactment of industrial law and providing separate dispute
resolution mechanism is to provide speedy settlement and ensure speedy justice it is
contrary to the projected goal of the Act of expeditiousness in industrial justice, the
reference decision takes unduly longtime after the submission of the failure report.
Apart from prolonging the dispute resolution process, the delay in reference leads to
the exertion of extraneous pressure on the political executive for prejudicial exercise
of the reference power. The disputant parties perceive the conciliation officer
recommendation as most instrumental in reference decisions, but the actual exercise
of these decisions shows an attempt on the part of the Appropriate Government to
serve its own objective through its power.
The Government reference involves in it, conciliation of the dispute first by
the Conciliation Officer and the time specified under Section 12 (6) for completion of
the conciliation proceedings is 14 days but in practice the conciliation proceedings are
prolonged beyond a reasonable time; many times lasting up to 6 months or more. The
conciliation officer does this without officially commencing the conciliation on his
records. In addition to this delay, after receipt of the failure report from the
Conciliation Officer, the Appropriate Government very often takes a pretty longtime
before a reference is made.
An empirical study conducted in Kolhapur District of Maharastra State and the
data collected through opinion survey reveals that the average time taken for reference
of disputes is 10 to 12 months, another study by a labour law consultant in the State of
U.P. and he found that the time taken by the Government in many cases is more than
a year. He mentioned it is an irony that the Appropriate Government invariably takes
more than a year in making a reference after the Conciliation Officer submits his
report.
Yet in another study conducted by a Trade Union Leader at Dhanabad Coal
mines he found that the delay was quite unreasonable on the basis of his empirical
investigation he found on verification of 50 references randomly, which were made
by the Central Government to the Industrial Tribunal at Dhanabad with respect to coal
mines which is a public utility service for adjudication under Section 10 (1) of the
Act, it was found that 15 months to 3 year was ordinarily taken for getting the dispute
referred from the date of dispute raised by the union before the Conciliation Officer
till it was referred to Industrial Tribunals. The Central Government itself took one to
two years to make reference from the date of the receipt of the failure report by
Conciliation Officers.
Various empirical studies conducted in different States revealed that the
Government had taken 6 to 24 months for making a reference after receiving the
failure report from Conciliation Officer. A study conducted by researcher in the State
of Jammu and Kashmir, reveals that the average time taken by the Appropriate
Government to refer the dispute after receiving failure report from Conciliation
Officer was 9 months. Four out of Twenty cases it is between 15 to 20 months and in
Faridabad it reveals that out of 26 references 13 took more than 90 days, 6 references
took more than 150 days and the reference of one dispute APL (9), took 452 days
after the failure report.
It is already discussed in the earlier, where the Supreme Court had directed the
Government to refer the dispute for adjudication of the matter which was pending
before it for more than a decade.
It is submitted that, if the objective of vesting reference making discretion in
the Government was to ensure and facilitate speedy resolution of Labour issues,
Parliament has committed a stupendous error as well as miscalculation in this regard
because on an average, the time spent by the Labour Department in making reference
of an industrial dispute after receipt of the failure report of the Conciliation Officer
was highly unreasonable and in some matters the Government does not make a
reference at all and the aggrieved workmen are made to continue groping in the dark
to hanker after the elusive social justice as envisaged for them under the Act. Hence,
recommendations of Second NCL providing for direct approach of parties to the
Labour Court, Conciliation, Arbitration or to Labour Relations Commissions in
respect of all matters specified in Second Schedule of the I.D. Act is significant one.
As such it needs serious considerations by the law making authority.
3. Discriminatory treatment by Government in exercise of power of
reference under Section 10(1) of the Act
The answer to above question is ‘yes’ because of the following reasons:
(i) Inexpensive and quick resolving of industrial conflicts and thereby
providing speedy justice to the working class is the reason for the creation
of special procedure for the settlement of industrial disputes under the
Industrial Disputes Act, 1947. The reference making power has been
vested in the Government under the Act to ensure speedy settlement of
industrial disputes.

It is submitted that if the objective of vesting reference making discretion in

the Government was to ensure and facilitate speedy resolution of labour issues,
parliament has committed a stupendous error as well as miscalculation in this regard.
because on an average, the time spent by the labour department in making reference
of an industrial dispute after receipt of the failure report of the conciliation officer is
about 9 to 12 months. While in some others, the Government does not make a
reference at all and the aggrieved workmen are made to continue groping in the dark
to hanker after the elusive social justice as envisaged for them under the Act.

(ii) The power of the Government of referring industrial disputes for

adjudication is prone to be exercised in a discriminatory manner. It is well
known that various trade unions in the country have been affiliated with
different political parties. In such circumstances, it is quite natural that a
trade union affiliated to the political party in power shall get favored
treatment from the Government formed by such party in respect of
reference of disputes of that trade union for adjudication. On the contrary,
a trade union having alliance with a political party opposed to the party in
power is apt to get step-motherly treatment from the Government in
matters of referring disputes for adjudication. Although outwardly these
apprehensions appear to be hollow and banal remarks only, these are real
sometimes (if not often) in the world of reality.
(iii) We have adopted the concepts of mixed economy and Social Welfare
State, for the economic development of the country as well as social uplift
of the people. Under such a dispensation, the State is bound to be a major
employer, as most of the development and public undertakings are to be
controlled and carried on by the Government. As a result, the state
agencies would happen to be party to most of the industrial disputes with
their employees which may be adjudicated by the Labour Courts and
Industrial Tribunals. In those cases at least where an agency of the state is
a party to a dispute, the Government cannot be expected to conduct itself
with necessary measure of impartiality and fairness while exercising its
discretion whether such dispute is to be referred for adjudication or not.
(iv) Referring of industrial disputes by the Government for adjudication tends
to breed corruption and favoritism, allegations of this kind may seem to be
mendacious and stale on their face value. But, in the world of reality such
things cannot be entirely dismissed as untrue. Particularly there is a real
danger of political influence being wielded in some cases installing the
 reference of even a genuine dispute for adjudication or at any rate
deferring its reference.

Further, our low paid administrative staff is known for its corrupt proclivity.
These persons (i.e. those belonging to the lower echelon of administration) do not
hesitate as regards accepting a bribe from which ever source it may happen to come to
them. A shrewd and affluent employer in contrast to the economically weak
employees can easily win their sympathies by offering them a paltry sum of money.
They (administrative staff personnel) in their term may go the whole hog in scuttling
the reference of a dispute for adjudication. If their tactics work, they can easily dupe
and mislead their superiors and thereby succeed in circumventing the reference of a
dispute for adjudication.

(v) It is true that final determination of an industrial dispute is made by the

Labour Court or Industrial Tribunal to which the dispute is referred for
adjudication. But is it to suggest that the Labour Court or Industrial
Tribunal can adjudicate upon a dispute without its being referred to it?
What would be the fate of the industrial disputes which are not referred by
the Government for adjudication? Can a labour Tribunal adjudicate upon
such disputes?

On the contrary, the final adjudication of an industrial dispute is defendant on

its being referred by the Government for adjudication. Consequently, referring a
dispute or refusal to refer it by the Government for adjudication affects as much the
rights and interests of the parties to the dispute as the final determination of a dispute
made by the Industrial Tribunals or Labour Court. This being so, the Government
ought to accord hearing to the aggrieved parties before it decides to exercise or not to
exercise its power under Sections 10(1) and 12(5) of the Act.

Again, it would be in the interest of justice and helps in controlling the

absolute discretion of the Government, if the Government complies with the
principles of natural justice while exercising its power under Section 10(1) and 12(5).
It would also make the exercise of this discretion consists with principles of the rule
of law; one of its main objective is to control the exercise of unregulated discretionary
power. Alternately if adjudication of disputes is to be made really expeditious under
the Act discretion of the Government concerning referring of industrial disputes for
adjudication must be ended.

Hence, the First National Commission on Labour observed that, “There have
been complaints of political pressure and interference. And this aspect cannot be
entirely ignored in framing our recommendations. To get rid against this and to do
away with existing exclusive discretionary power of the Government the first NCL
recommended for Independent Industrial Relations Commissions which are to be
entrusted with the function of deciding to make references of interests disputes for
adjudication upon the failure of bipartite negotiations. As regards legal or rights
disputes, the NCL favoured the retention of Labour Court, where proceedings
instituted by parties asking for the enforcement of rights under the aforesaid
categories will be entertained by Labour Courts. Even the Second NCL also has
recommended for direct access to parties for adjudication in respect of matters
specified in second schedule of the Act and minimizes the role of Government in
settlement of disputes.
4. Lack of expatriation
The question of reference is ultimately decided under the present system by
the bureaucratic or political administration which lacks expert knowledge on labour
problems. By the stretch of any imagination, bureaucrats and politicians cannot be
treated as better repertories of expertise in labour matters than well trained and
experienced presiding officers of Labour Courts and Tribunals. It is more so in view
of the fact that top official positions in the Labour Department, as in other
departments of the Government, are manned by different bureaucrats and politicians
on different occasions. This process undeniably does not make for the conserving of
necessary expertise in industrial and labour matters. This is in stark contrast with the
devoted and constant engrossment of labour adjudicators with the study of varies case
law and legal enactment in the era labour law. The IRCs consisting of experts in the
area as recommended by the first NCL would be more appropriate body to exercise
such power and the recommendations of second NCL i.e. aggrieved worker in case of
individual disputes and by an recognized union in case of collective disputes within a
period of one year from the date of the cause of action arose. These are matters of
serious consideration by law making Authority.
 5. Un-canalized Discretionary power under Section 10
As already noticed earlier, the discretionary power conferred on the
Government is wide and un-canalized. It is true that if an Appropriate Government
makes an improper or malafide use of this power the aggrieved party can take
recourse to writ proceedings under Article 226. But where does all this lead to?. The
elusive concepts of social and economic justice would inevitably elude the destitute
workers if they are constrained to resort to writ proceedings for every malafide and
supercilious act of the Appropriate Government concerning the referring of disputes
for adjudication. It is more so in view of the courts repeated pronouncements to the
effect that malafide is easier to allege than to establish and the onus of proving it is on
the person making such allegation.
Therefore, malafide being a very tenuous and slippery ground for invoking the
jurisdiction of a court, the aggrieved workers will for all practical purposes be left
without any remedy for the cause of discretion by the Government. As a result, they
would be driven into a position of helplessness, which may result in giving vent to
their pent-up anger and spite against the unreasonable callous attitude of their
employer as well as that of the Government towards their grievances in the shape of
taking recourse to a direct action like strike or sometimes even if an aggrieved party is
able to canvass successfully against an improper exercise of reference making power
by the Government before a court of law, what would be the outcome of that? On an
average a High Court takes 3 to 5 years to dispose of a writ petition. In any case it
does not take less than three years for this purpose. If in a particular case, three years
are needed to make a reference of dispute for adjudication, how can this be reconciled
with the objects of speedy settlement of industrial disputes and dispensation of social
justice to the working class as enshrined in the Act.

Right to remedy vis-a-vis discretionary Power

The adjudication machinery has extra-ordinary powers to grant appropriate

relief to the workmen, which the ordinary Civil Courts do not have. Further, it is
established law that the Civil Courts have no jurisdiction to entertain cases where the
enforcement of a right or an obligation relates to those created by the Industrial
dispute Act. The Act, in addition to conferring many benefits on workmen in cases of
lay off, retrenchment, transfer of ownership or closure of an establishment, now
empowers the adjudicators with appellate jurisdiction to interfere with the managerial
discretion to punish a workmen by discharge or dismissal ,which power is considered
essential for ensuring the all essential job security of industrial workmen. Therefore, it
is absolutely essential that for enforcement of all rights created by the Act and other
related laws; the workmen should be able to approach the adjudicatory authorities
without the requirement of Government reference.
There is an obvious inconsistency in the policy of the Act, which confers
certain crucial rights on workmen and places the enjoyment of these rights at the
disposal of the Government which is often the party against whom the rights are
sought to be enforced. If the Government refuses to make reference, the aggrieved
workmen are left with no remedy except to move the writ Court and very few among
the ordinary workmen’s can even think of reaching the precincts of High Court for the
cost of litigation, which is not within the reach of any common man in this country. It
is significant to note that such a situation is not conducive to the maintenance of
industrial peace and harmony. There is almost unanimity among researchers,
academicians and industrial relations experts that it is high time that this exclusive
discretionary power of the Government is done away with.
After an exhaustive analytical study of Section 10 of the Act conducted by
wadegaonkar, researcher concluded that, “it is now time to do away with this sole
prerogative of the Government to initiate the industrial adjudication. It would be
desirable to give a right to move the Labour Courts and Tribunals to the individual
parties as regards the items under schedule II of the Act; these are items with which
individual workmen are vitally connected. As regards the items under schedule III it
would be appropriate to give the right to move the adjudicating authority to the
employer and the representative union of the employer as these is items with which
the workmen are connected as group”.
In the light of another empirical study conducted by professor P.G. Krishnan
of Delhi University a suggestion was made to the following effect. It is desirable that,
“the reference system as an intermediate stage is done away with and the parties be
enabled to take the matters directly before the adjudicatory machinery. In this regard a
new Section 10-B is to be enacted it must provide that where the Government fails to
make a reference within fifteen days of the submission of the failure report of the
conciliation officer the parties are entitled to take the dispute before any of the
adjudicating authorities competent to deal with it under the Act. In that case the
dispute must be deemed to have been validly referred to that authority”.
 Finally the recommendations of First, Second NCL and Ramanujan
Committee, 1990 for constitution of IRCs and LRCs who shall decide the question of
adjudication of interests disputes and for direct reference of rights disputes by the
parties to the Labour Court will be taken into consideration.
In view of the above discussion, it may concluded that the exclusive
Governmental discretion to refer the industrial disputes for adjudication should be
done away and incase of disputes by the workmen be given direct access to Labour
Courts and in case of recognized unions also have the option of taking the disputes
directly for adjudication, while the Government may continue to have the power to
refer disputes for adjudication in public interest for ensuring industrial peace.

Prohibit the Continuance of strikes and lockouts after the order of reference.

The right to strike or cessation of work is not the fundamental right recognized
by the constitution and would not come within the ambit article 19 (1) (c) of the
Constitution. However, strikes and lockouts are weapons in the armory of labour and
the employer in the process of collective bargaining all over the world and regulated
by the Act. Compulsory adjudication system is seen as an alternative to strikes and
lockout with a view to achieve the purpose of the Act. The rights of the workmen to
strike and the right of the employer to lockout have been subjected to restrictions
imposed by the Act, namely,
(i) Sections 22 and 23 prohibited the commencement of strike and lockouts in
the circumstances stated therein.
(ii) Section 23(b) prohibits any strikes and lockouts in any establishment
during the pendency of adjudication proceedings and for a period of two
months after the conclusion of such proceedings.
(iii) Once the award of the adjudication comes into operation strikes and
lockouts are prohibited by Section 23(1) during the period from which the
award is in operation in respect of any of the matters covered by the
award; and
(iv) If there is already strike and lockout in existence, the Appropriate
Government by referring the concerned disputes for adjudication will
acquire power to prohibit the continuance of any such strike or lockout.
Section 10(3) of the Act lays down “where an industrial dispute has been
referred to a Board, Labour Court Tribunal or National Tribunal under this Section,
the Appropriate Government may by order prohibit the continuance of any strike or
lockout in connection with such dispute which may be in existence on date of
reference”.
The object of Section 10(3) of the Act is to ensure the investigation and
settlement of disputes in peaceful atmosphere. Continuance of a strike or lockout even
though commenced before the order of reference, during the pendency of adjudication
proceedings is not conducive for effective adjudication of dispute. Therefore the
power conferred on the Government to prohibit the continuance of any strike or
lockout that may have been in existence on the date of reference and Section 24 of the
Act declares that the strikes and lockouts continued in contravention of an order made
by the Government under Section 10(3) shall become illegal.
The language used in the Sub-Section (3) of Section 10 gave risk to
interpretational difficulties. However, the Supreme Court in Delhi Administration v.
Workmen of Edward Keventers, reversing the decision of the Delhi High Court, held
that the Appropriate Government could prohibit Strikes or lockout only in respect of
the demands which were referred for adjudication. The strike in respect of those
demands, the Government can prohibit the continuance of the strike under this
provision only if it had referred all the demands for adjudication. In other words, if
the Government does not refer all those demands for adjudication, it cannot prohibit
the strike in respect of the demands which were not referred. The words “such
disputes which may be in existence on the date of reference” are read together as
relating to the disputes referred. It was held that the words “which may be in existence
on the date of reference” do not relate to strike or lockout but to the disputes. The
Kerala High Court took the view that the power under Section 10(3) is of a quasi-
judicial nature and therefore an order there under cannot be passed by the
Government without giving the notice and hearing to those who would be affected by
the order.
On the other hand the Delhi and A.P., High Courts were of the opinion that
this power of the Government was purely administrative and therefore there was no
need for the compliance with the principles of Natural Justice. The Supreme Court in
Nirmala Textile Finishing Mills Ltd. v. Industrial Tribunal Punjab, upheld the
Constitutional validity of this provision on the ground that the power is not arbitrary
because it provides for the exercise of discretion for attaining the object of the Act
Viz., peaceful settlement of industrial disputes.
Power to include similar establishments in a reference

The Appropriate Government under Section 10(5) of the Act, empowered to

include in an order of reference, either at the time of reference or thereafter but before
submission of award, any industrial establishment, group or class of establishments of
a similar nature which are likely to be interested in or affected by such dispute.
Whether or not at the time of such inclusion any dispute exists or is apprehended in
such establishments.

Compulsory Adjudication:

Constitute the Dispute Resolution Mechanism

In addition to constituting other industrial relations machinery like

Conciliation officer, Board of Conciliation and Court of Inquiry, the Appropriate
Government has the power to constitute the adjudication machinery i.e. Labour Court
and Industrial Tribunal and the Central Government has the power to constitute
National Tribunal.
(i) Labour Courts
According to Section 7(1) of the Act, “The Appropriate Government may by
notification in the official gazette constitute one or more Labour Courts for the
adjudication of industrial disputes relating to any matter specified in the second
schedule and for performing such other functions as may be assigned to them under
the Act”. Sec 7(2) states that “A Labour Court shall consist of one person to be
appointed by the Appropriate Government”.
Thus, under this provision both the Central and State Governments as
Appropriate Government have power to constitute one or more Labour Courts,
mainly, for the adjudication of matters prescribed in Second Schedule which are
generally rights disputes. If for any reason there occurs a vacancy in the office of the
presiding officer of a Labour Court, the Appropriate Government shall appoint
another to fill the vacancy.
(ii) Industrial Tribunal
According to Sec 7-A (1) of the Act “The Appropriate Government may, by
notification in the official Gazette constitute one or more Industrial Tribunals for the
adjudication of industrial dispute relating to any matter, whether specified in the
Second Schedule or the Third Schedule and for the forming such other functions as
may be assigned to them under the Act”. The Industrial Tribunal like the Labour
Court shall consist of only one person to be appointed as the presiding officer of the
Tribunal.
The Appropriate Government also has power, if it so thinks fit to appoint two
persons as assessors to advise the Tribunal in the proceedings before it. Under this
Section the Appropriate Government has the power to constitute Industrial Tribunals
for a limited time or for a particular case or number of cases or for particular area. In
other words, the Appropriate Government may constitute Tribunals on an ad-hoc
basis as and when the disputes arise and the Government decides to refer them to the
Tribunal.
(iii) National Tribunal
According to Sec 7-B (1) of the Act, “The Central Government may by
notification in the official gazette, constitute one or more National Tribunals for
adjudication of industrial disputes, which in the opinion of the Central Government
involve questions of national importance or are of such a nature that industrial
establishments situated in more than one state are likely to be interested in or affected
by such disputes. A National Tribunal shall consist of one person only to be appointed
by the Central Government. Further, only a person who is or has been a judge of a
High Court can be appointed as the presiding officer of a National Tribunal. The
Central Government may also appoint, if it so thinks fit, two persons as assessors to
advise the National Tribunal in the proceedings before it”.
This power of the Central Government to constitute National Tribunal is an
overriding power and under Section 10 (1-A) of the Act the Central Government has
power to refer such disputes to a National Tribunal whether or not the Central
Government is the Appropriate Government in relation to such disputes.
The object of this provision is twofold: namely,
(i) To get the disputes of national importance adjudicated upon by a
higher Tribunal, as only a person who is or has been a judge of a High
Court can be appointed as the presiding officer; and
(ii) As the Central Government need not be the Appropriate Government
in respect of industrial disputes relating to all India establishments, the
reference to National Tribunal can avoid reference by different State
Governments and it also overcomes the limitations of territorial
 jurisdiction of Industrial Tribunals constituted by the respective State
Governments.

Awards and Settlement:

The Industrial Dispute Act, 1947 which extends to the whole of India came
into operation on the first day of April 1947. As per Preamble of the said Act, it is
enacted to make a provision for the investigation and settlement of the dispute and
certain other purposes such as recovery of money from the employer in terms of
Settlement or Award by making an application to the appropriate government. The
purpose and aim of the Industrial Disputes Act 1947 is to minimize the conflict
between labour and management and to ensure, as far as possible, Economic and
Social Justice. The act has made comprehensive provisions both for this settlement of
disputes and prevention of disputes in certain Industries.

Method of settlement of Industrial Dispute:

In the interests of the industry in particular and the national economy in

general, cordial relations between the employer and employees should be maintained.
To ensure cordial labour management relations and to achieve industrial harmony, the
following methods of settlement of industrial disputes are provided under the Act.

1. Collective Bargaining:

Collective Bargaining or Negotiation is one of the methods for settlement of

an industrial dispute. It plays significant role in promoting labour management
relations and in ensuring industrial harmony Collective Bargaining is a
process/Method by which problems of wages and conditions of employment are
settled amicably, peacefully and voluntarily between labour and management. In
collective bargaining, the parties to the dispute I.e., the employer and the
employees/workmen settle their disputes by mutual discussions and agreements
without the intervention of a third party. Such settlements are called "bipartite
settlement". Therefore, settlement of labour disputes by direct Negotiation or
settlement through collective bargaining is always preferable as it is the best way for
the betterment of labour disputes. Collective Bargaining is recognized as a right of
social importance and greater emphasis is placed on it by India's five year plans. The
term 'Collective Bargaining' was coined for the first time by Sidney and Webb in their
famous book 'Industrial Democracy' published in 1897.

It means Negotiation between an employer and group of workers to reach

agreement on working conditions. N. W. Chamberlain (in his 'Source Book on
Labour: 1958 p. 327) described collective bargaining as "the process whereby
management and Union agree on the terms under which workers shall perform their
duties". In simple word, collective bargaining means "Bargaining between an
employer or group of employers and a bonafide Labour Union".

2. Conciliation:

Conciliation is a process, by which a third party persuades the parties to the

industrial dispute to come to an amicable settlement. Such third party is called
'Conciliation Officer' of Board of Conciliation. Sections 4 and 5 of the act provide for
the appointment of Conciliation Officer and the constitution of the Board of
Conciliation respectively.

3. Voluntarily Arbitration:

The expression 'Arbitration' simply means "the settlement or determination of

a dispute outside the court". Parties to the dispute, without going to the Court of law,
may refer the dispute/Matter to a person in whom they have faith, to suggest an
amicable solution. Such person, who acts as a mediator between the disputants to
settle the dispute is called "Arbitrator". The decision given by the parties, which is
binding on the parties, is called "Award". Therefore Arbitration is a judicial process
under which one or more outsiders render a binding decision based on the merits of
the dispute. Section 10-A of the industrial dispute act, 1947 confers on parties, power
to enter into Arbitration agreement. The agreement must be in prescribed form and
must specify the name/names of the arbitrator or arbitrators.

4. Adjudication:

When an industrial dispute could not be settle either through bipartite

negotiations or through the Conciliation machinery or through the voluntary
Arbitration, the final stage resorted to, for settlement of an industrial dispute is
Adjudication or compulsory Adjudication, which envisages Governmental reference
to statutory bodies such as Labour Court or Industrial Tribunal or National Tribunal.
Section 7, 7-A and 7-B of the Industrial disputes Act, 1947 provide for the
constitution of Labour Court, Industrial Tribunal and Labour Tribunal respectively.

Definition of Award

Section 2(b) of the Industrial Dispute Act, 1947 defines Award as follows -
According to Section 2(b) of the Industrial Disputes Act, 1947 Award means an
interim or a final determination of any Industrial Dispute or of any question relating
thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal and
includes arbitration award made under section 10A.

Ingredients of Award –

To constitute Award under Section 2(b) of the Industrial Dispute Act, 1947 the
following ingredients are to be satisfied-
a) An Award is an interim or final determination of an industrial dispute.
b) It is an Interim or final determination of any question relating to such dispute.
c) Such interim or final determination is made by any Labour Court, Industrial
Tribunal or National Industrial Tribunal.
d) Award of Arbitrators under section 10A is an award.

What is Settlement?
According to Section 2 (p) of the Industrial Dispute Act, 1947 Settlement
means a settlement arrived at in the course of conciliation proceeding and includes a
written agreement between the employer and workmen arrived at otherwise than in
the course of conciliation proceeding where such agreement has been signed by the
parties thereto in such manner as may be prescribed and a copy thereof has been sent
to an officer authorized in this behalf by the appropriate Government and the
conciliation officer.
Procedure for Settlement of Industrial Disputes The Industrial Disputes Act,
1947 provides procedure for settlement of industrial disputes, which must be followed
in all public utility service, has been defined in section 2 (n) of the Act so as to
include any railway, postal, telegraph or telephone service that supplies power, water
and light to the public, any system of public conservancy or sanitation, any section of
an industrial establishment on the working of which the safety of the establishment or
the workmen employed therein depend and any industry which keeping in view the
public emergency has been declared as such by the appropriate Government. As laid
down in the Act a dispute should first go through the process of conciliation before it
could be referred to the appropriate authorities for adjudication33. Where any
industrial dispute exists or is apprehended, the Conciliation Officer may or where the
dispute relates to a public utility service and a notice under Section 22 has been given
shall hold conciliation proceedings in prescribed manner.

Conciliation proceedings can be stated in case of dispute that actually exists or

when there is reasonable ground to apprehend that an industrial dispute is likely to
come into existence unless something is done to prevent or where both parties to
dispute approach the Government separately for conciliation. Conciliation
proceedings are deemed to have been started from the date on which a notice issued to
the parties to appear before the conciliation officer who may meet them jointly or
separately. The Conciliation Officer must submit his report to the Government within
fourteen days of the starting of conciliation proceedings. During this period he tries to
bring about a fair and amicable settlement between the parties to dispute. If a
settlement arrived at, the Conciliation Officers will send a report to the Government
along with a memorandum of settlement duly signed by both parties. This settlement
come into force from the date agreed upon by the parties to dispute or in its absence
the date on which it was signed by them and is binding for a period of six months
unless agreed upon otherwise, and after the period afore said, until expiry of two
months from the date on which a notice in waiting of the intention to terminate the
settlement is given by one of the parties to the other party or parities to the settlement.
Such a settlement is binding on all parties to the industrial dispute, to the employer,
his heirs, successors or assignees and to the workmen employed in the establishment
on the date of the dispute and all the persons who subsequently become employed
therein. If no settlement is reached by the parties, the conciliation officer will submit
his report to the appropriate Government stating the reasons for which he thinks no
settlement could be arrived at as well as the facts of the case.

Action by the Government:

On receipt of the report from the Conciliation Officer, the Government will
come to a decision on whether the circumstances and the facts of the case as such to
justify a further reference. The Government has to arrive at a prima facie conclusion
that the nature of the dispute justifies a further reference. If in the opinion of the
Government, there is a scope of arriving at a settlement by further conciliation efforts,
it may refer the case to the Board of Conciliation.

Collective Bargaining as a method of Settlement of Industrial Disputes

Collective bargaining as such is one of the most developed in Indian history

since independence, and deserves the attention of all who are concerned with the
preservation of industrial peace and implement of industrial productivity. In the
laissez faire the employers enjoyed unfettered rights to hire and fire. They had much
superior bargaining power and were in a position to dominate over the workmen.
There are some routine criticism of the adjudicatory Awards and Settlement i.e.,
delay, and expensive. Therefore the parties to the industrial dispute are coming
closure to the idea that direct negotiations provide better approach to resolving key
deference over wages and other conditions of employment.

The system of collective bargaining as a method of settlement of industrial

dispute has been adopted in industrially advanced countries. The common law
emphasis to individual contract of employment is shafted to collective agreement
negotiated by and with reprehensive groups. The Industrial Disputes Act, 1947 which
provides for the machinery for the settlement of industrial disputes.

On whom Awards and Settlements are binding

According to Section 18 of the Industrial Disputes Act, 1947 Awards and

Settlements are binding on the following persons - A settlement arrived at by
agreement between the employer and workman otherwise than in the course of
conciliation proceeding shall be binding on the parties to the agreement. Subject to the
provisions of sub-section (3), an arbitration award which has become enforceable
shall be binding on the parties to the agreement who referred the dispute to
arbitration.

A settlement arrived at in the course of conciliation proceedings and an award

of a Labour Court, Tribunal or National Tribunal shall be binding onAll parties to the
industrial dispute; All other parties summoned to appear in the proceedings as parties
to the dispute, unless the Board, arbitrator Labour Court, Tribunal or National
Tribunal, as the case may be, records the opinion that they were so summoned without
proper cause; Where a party referred to in clause (a) or clause (b) is an employer, his
heirs, successors or assigns in respect of the establishment to which the dispute
relates; All persons who were employed in the establishment or part of the
establishment on the date of the dispute and all persons who subsequently become
employed in that establishment or part.

Period of operation of Awards and Settlement

Section 19 of the Industrial Disputes Act 1947 provides for the period of
operation of Award and Settlement. A settlement shall come into operation on such
date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on
the date on which the memorandum of the settlement is signed by the parties to the
dispute.

Such settlement shall be binding for such period as is agreed upon by the
parties, and if no such period is agreed upon, for a period of six months from the date
on which the memorandum of settlement is signed by the parties to the dispute, and
shall continue to be binding on the parties after the expiry of the period aforesaid,
until the expiry of two months from the date on which a notice in writing of an
intention to terminate the settlement is given by one of the parties to the other party or
parties to the settlement.

An award shall, subject to the provisions of this section, remain in operation

for a period of one year from the date on which the award becomes enforceable under
section 17A. Provided that the appropriate Government may reduce the said period
and fix such period as it thinks fit: Provided further that the appropriate Government
may, before the expiry of the said period, extend the period of operation by any period
not exceeding one year at a time as it thinks fit so, however, that the total period of
operation of an award does not exceed three years from the date on which it came into
operation.

Where the appropriate Government, whether of its own motion or on the

application of any party bound by the award, considers that since the award was
made, there has been a material change in the circumstances on which it was based,
the appropriate Government may refer the award or a part of it to a Labour Court, if
the award was that of a Labour Court or to a Tribunal, if the award was that of a
Tribunal or of a National Tribunal, for decision whether the period of operation
should not, by reason of such change, be shortened and the decision of Labour Court
or the Tribunal, as the case may be on such reference shall be final.

A settlement is an agreement reached among the parties to a workers'

compensation claim. This includes you, your employer and the workers'
compensation insurer (unless your employer is self-insured). This is a type of
contract, and it may bar you from seeking further compensation for your injury.

An award, on the other hand, is granted to you by the workers' compensation

court. This may include medical benefits or other types of workers' compensation
awards based on the specifics of your injury. For example, a judge can order - or an
insurance company can admit for - temporary and permanent disability benefits. This
isn't a settlement. You don't have to sign away any rights to get these benefits.

If you need help determining whether you received an award or a settlement,

we can help. We can review your situation and help you understand your legal
options. We can also advise you before you accept an award or settlement. At every
stage of your case, we will work to ensure that you receive the full and fair benefits
you need under Colorado's workers' comp laws.

According to Section2 (p) of the Industrial Dispute Act, 1947 Settlement

means a settlement arrived at in the course of conciliation proceeding and includes a
written agreement between the employer and workmen arrived at otherwise than in
the course of conciliation proceeding where such agreement has been signed by the
parties thereto in such manner as may be prescribed and a copy thereof has been sent
to an officer authorized in this behalf by the appropriate Government and the
conciliation officer.