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ARBITRATiOn OF LABOUR DISPUTES


O. P. Malhotra *
THE ENTIRE adjudicatory and ancillary machinery of the Industrial
Disputes Act, 1947 revolves around the 'industrial dispute', as defined
in section 2(k). But the expression 'industrial dispute' is a misnomer,
because it does not deal with the law relating to industry as enterprise.
The expression 'industrial law' with respect to an industrial enterprise
would, apart from tile law relating to labour employment, comprehend
other branches of law such as corporate laws and fiscal and commercial
laws as well. The Parliament, therefore, advisedly proposed the word
'Labour' in preference to the word 'Industrial', in the Labour Bill 1997,
which lapsed with the dissolution of the Parliament in 1999. Furthermore,
the use of the word 'Labour law' also accords well with international
comity as it is in usage in the western countries instead of the word
'industrial' as used in India. For instance, the American renowned jurist
Ludwig Teller had used the word 'Labor dispute' in his treatise 'Labor
Disputes and Collective Bargaining '. Keeping this in view, the word
'Labour' is being used instead of the word 'Industrial' in the caption
and discussion in this Paper.
The Industrial Disputes Act, 1947 was enacted with the object of
making provision for investigation and settlement of industrial disputes
and for other ancillary purposes. It provides a novel approach
untrammeled by normal court procedures for settlement of 'industrial
disputes'. For this purpose, it provides a three-fold machinery for
settlement of 'industrial disputes':
1. Negotiation-Collective Bargaining;
2. Mediation-Conciliation and
3. Adjudication-Arbitration.
The main theme being focused is arbitration of labour disputes, but
the discussion will not be complete without cursorily touching on
negotiation-collective bargaining and mediation-conciliation as well.
1. Negotiation-Collective Bargaining
Negotiation involves direct contact between the disputing parties or
their representatives and requires the parties' willingness to communicate

Senior Advocate, Supreme Court of India.


28 LABOUR ADJUDICATION IN INDIA

about their disputes and usually their willingness to compromise. A


negotiated agreement is, in fact, far superior to conciliation, arbitration,
adjudication or shut down of the plant. In industry, important
communications take place in face to face relationships. In a medium
for getting one another understood and for grasping the thought processes
of others, there is no substitute for direct word. The one who aspires to
succeed in the art of negotiation and persuasion must soak his heart in
sincerity and dip his tongue in honey.
Negotiation is a communication process used to put deals together
or resolve conflicts. It is voluntary, non-binding, and a process in which
the parties control the outcome as well as the procedures by which they
will make an agreement. Because most parties place very few limitations
on the negotiation process, it allows for a wide range of possible
solutions, maximizing the possibility of joint gains.
For this purpose, the Act provides for constitution of works
committees I in industrial establishments for creating an amicable
atmosphere to secure industrial peace and harmony. The basic object, in
creating a works committee, is promotion of amity and good relations
between the employers and the employees so that any disputes or
differences between them in the matters concerning the establishment
are ironed out by mutual discussion. It is essential for the authorities
who undertake formation of such works committee to see that it achieves
the purpose for which it is created and not a committee to subserve
certain exclusive sectional interest-. The role of a works committee is
palliative and not decisive.
In Northbrook Jute Co. Ltd:v, Their wor/cmen 3, the Supreme Court
spelt out the nature and functions of a works committee in the following
words:

The language used by the Legislature makes it clear that the


Works Committees were not intended to supplant or supersede
the unions for the purpose of collective bargaining; they are not
authorised to consider real or substantial changes in the
conditions of service; their task is only to smooth away frictions
that might arise between the workmen and the management in
day-to-day work. By no stretch of imagination can it 'be said
that the duties and functions of the Works Committee included
the decision on such an important matter as the alteration in the
conditions of service by rationalisation.

I. Section,. 3.
2. M.D. 'Ram.alcrishnan v:, Tamil Nadu Electricity Board. 1971 I LLJ 433.
435-36 (Mad), per Ramaprasada Rao, J.
3. 1960 I LLJ 580, 5U se, Per Das Gupta, J.
ARBITRATION OF LABOUR DISPUTES 29

Collective Bargaining

It is a trite saying that the fight between an individual employee and


a industrial establishment is a fight between a pigmy and a giant. An
individual employee has no strength or skill to bargain in the face of
unabashed injustice. This has given rise to the process of collective
bargaining. The entire labour forces through a trade union or otherwise
takes a stand against the employer for acceding to their demands. The
strength of the employers wealth and organisation, coupled with
weapons of lay off, lock-out and shut down is counter balanced by the
workers man-power and agitational weapons of strike, go slow, boycott,
black-ban etc. The possibility of the labour being economically oppressed
to the starving point is counter-balanced by the possibility of industrial .
dislocation with all its attendant hardships and evil, the occurrence of
which is regarded as one of the powerful levers to bring about settlement.
The trade unions with sufficient strength of manpower are able to bargain
far more effectively than individual workman. For instance, under such
pressure tactics, the minimum and maximum limits for payment of bonus
under the provisions of the Bonus Act of 1965 have been given a
complete go-by in collective-bargaining agreements.
Sometimes, the very threat of strike is enough to make the employer
concede to the demands of the union. An interesting instance of the
effect of the threat of strike, is provided in the decision of the House of
Lords in Rookes v. Barnard4. One Douglas Edwin Rookes was employed
for many years in BOAC as a skilled draughtsman at London Airport.
He was a member of a trade union, viz., the Association of Engineering
and Ship-Building Draughtmen to which all who were employed in the
drawing office of BOAC belonged. He and another man became
dissatisfied with the conduct of the union and resigned from it. The
Union was very anxious to preserve the position that no non-member
should be employed in that office and they took energetic steps to get
Rookes rejoin. On the refusal of Rookes, the union threatened him.
Under this threat, the BOAC was induced first to suspend and then to
terminate the employment of Rookes.
This right of the labour force has been recognised in almost all-
democratic countries. The effect of the collective bargaining has been
graphically stated by Professor Mathews in the following language:

The strike is itself a part of the bargaining process. It tests the


economic bargaiping power of each side and forces each to face
squarely the need it has for the others contribution. As the
strike progresses, the workers savings chsappen the Union

4. [ 19641 1 All ER 367 ( H L ) .


30 LABOUR ADJUDICATION IN INDIA

treasury dwindles, and management faces mounting losses.


Demands are tempered, offers are extended, and compromises
previously unthinkable become acceptable. The very economic
pressure of the strike is catalyst which makes agreement possible.
Even when no strike occurs, it plays its part in the bargaining
process, for the very prospects of the hardship which the strike
will bring, provides a prod to compromise. Collective bargaining
is a process of reaching agreement and strikes are an integral
and frequently necessary part of that process.

The process of reaching a collective agreement by collective


bargaining is highly complicated one. It involves complex interchange
of ideas combining argument, horse-trading, bluff, cajolery and threats.(
By its very nature, it is a rough, tough undertaking. Its essence is the
reluctant exchange of commitments, both parties want to yield less and
get more. It is not qualitatively different from a business deal in which
both negotiators have something less than 100 per cent trust in one
another. Nor is it much different from the practice of diplomacy.
The best justification for collective bargaining is that it is a system
based on bipartite agreements, and as such, superior to any arrangement
involving third party intervention in matters which essentially concern
employers and workers.8 The concept of collective bargaining though,
to a limited extent, was introduced in the Industrial Disputes Act, 1947,
by inserting the words and includes a written agreement in the
definition of settlement in section 2 (p) of the Act, in the year 1956.9
Over the years, the popularity, utility and effectiveness of collective
bargaining have visibly increased. Both employers and unions have
acquired more sobriety and maturity not only in understanding one
anothers point of view but also the ground realities of the situation.O
Negotiation requires the parties willingness to communicate about
their dispute and usually their willingness to compromise. Making the
necessary concessions may be difficult.
Negotiation is usually possible where : I

5. R.E. Mathew, Laboicr Relations and the Law 563 ( 1 956).


6. Van D. Kennedy, Utiions. eniployers and Governnieiii 1 17 ( 1 966).
7. Neil W. Chamberlain, Soiirce Book on Labour 3 1 ( 1 964).
8. Report of the National Comniissiott 011 Laboicr 325 et seq (1969).
9. Section 3 , Amending Act 36 of 1956.
10. For detailed discussion on the subject see Malhotra, The Law of /tidusfria/
Disputes Vol. 1 , F(5th Edn., 1998).
I 1. Adapted from Christopher W. Moore, The Mediation Process (San Francisco.
Jossey Bass, Inc. 1986).
ARBITRATION OF LABOUR DISPUTES 31

(a) the parties must cooperate to meet their goals;


(b) the parties can influence each other to act in ways that provide
mutual benefit or avoidance of harm;
(c) the parties are affected by time constraints;
(d) the parties recognize that alternative procedures or outcomes
are not as desirable as negotiation which allows them to
determine the outcome;
(e) the parties can identify and agree on what issues are in dispute;
(f) the interests, goals, and needs of the parties are not entirely
incompatible; and
(g) external constraints such as reputation, cost, and risk of an
adversarial decision encourage participation in a private,
cooperative process.

2. Conciliation-Mediation

Though in some jurisdictions there is slight variance in the concept


of 'mediation' and 'conciliation', by and large these two expressions
are used interchangeably. As the Act uses the word 'conciliation' this
word is used here as comprehending both the expressions.
In its simplest form, conciliation is negotiation facilitated by a third-
party. It is a process whereby a dispute is referred to a third person,
who hears the facts and arguments, forms his opinion, and attempts to
persuade the parties to accept it. The role of the conciliator is to endeavor
to bring the parties in dispute together and to assist them to reconcile
their differences. The conciliator attempts to provide an environment in
which the parties can communicate constructively and will assist the
parties in overcoming obstacles to settlement. Though he can suggest
terms upon which a 'settlement' can be arrived at, he cannot impose a
settlement conceived by him on the parties. Unlike the active role of an
arbitrator or judicial role of an adjudicator, the role of the conciliator is
an advisory catalytic agent not creative or decisive.
The Act has given statutory dress to the conciliation process by
providing for appointment of conciliation officers'! and constitution of
boards of conciliation. 13 It further sets out the duties of such conciliation
officers'" and boards of conciliation. IS

12. Section 4.
13. Section 5.
14. Section 12.
15. Section 13.
32 LABOUR ADJUDICATION IN INDIA

The conciliation process involves a somewhat diplomatic procedure


by assisting parties to come to a voluntary settlement of the dispute or
difference between them. Settlement is the decision of the parties arrived
at during the course of arbitration proceedings with the aid and assistance
of the conciliator. He may furnish information or advice to the parties
to help them in evaluating the principal consequences. If the parties
come to a settlement of the dispute in the course of conciliation
proceedings, the conciliator'is required to send 'a report along with a
memorandum of settlement signed by them, to the appropriate
government. If no such settlement is arrived at, he is required to send a
full report of the proceedings stating the steps taken by him for
ascertaining the facts and circumstances relating to the dispute and for
bringing about a settlement together with a full statement of the facts
and circumstances and the reasons on account of which settlement could
not be arrived at. At the end of the game, it is a no profit no loss
situation.
The conciliation machinery provided in the Act can take note of the
existing as well as apprehended disputes either on its own or on being
approached by either of the parties to the dispute. The Act further makes
conciliation compulsory in all disputes in 'public utility services' and
optional in other industrial establishments. In the words of the National
Commission on Labour, "over the years the optional provision appears
.to be acquiring compulsory status in non-public utilities also".16
The success of the conciliation machinery as provided in the Act to
begin with was 'not quite unsatisfactory' but now it is quite 'not
satisfactory'. It is, by and large, treated as a routine step between the
point at which the management rejects the demands and claims of the
workmen and the reference to arbitration or adjudication. More often than
not hardly any settlement is arrived at in the course of conciliation
proceedings particularly where the disputes are of complex nature. It is
relevant to note that though conciliation process in this country has not
been successful, in many other countries conciliation has worked
remarkably well. For instance, in Sweden the contending parties meet in
a spirit of determination to agree and they consider failure to agree almost
a disgrace}?

3. Adjudication-Arbitration
(1) Adjudication

Harmonious employer-employee relationship in industry and


uninterrupted production is essential both for the industry and the labour

16. Report of the National Commission on Labour 322 ( 1969).


17. Foenander, Industrial Arbitration in Australia 95 (1959).
ARBITRATION OF LABOUR DISPUTES 33

to prosper. To achieve this objective, "the concept of compulsory


adjudication of industrial disputes was statutorily ushered in with a
view to providing a forum and compelling the parties to resort to the
forum for arbitration so as to avoid confrontation and dislocation in
industry". 18
Adjudication means a mandatory settlement of industrial disputes
by labour courts, industrial tribunals or national tribunals under the Act
or by any other corresponding authorities under the analogous State
statutes with specialised jurisdiction in the labour management filed.
The line between the industrial 'adjudication' and 'arbitration' in this
country is wafer-thin. The central theme of the Act is adjudication.
From its scheme, it is clear that the Act does little than mere lip-service
to collective bargaining, relegates the conciliation to the position of a
mere stepping stone to adjudication and gives step-motherly treatment
to voluntary arbitration. By and large, the ultimate remedy of unsettled
disputes is by way of reference by the appropriate government to
adjudication.
Sections 7, 7A and 7B deal with the constitution of the adjudicatory
authorities, viz., labour courts, tribunals and national tribunals,
respectively; and section 7C disqualifies certain persons from being
appointed to or from continuing as presiding officers of the labour courts,
tribunals or national tribunals. Section 8 prescribes the mode of filling
of vacancies created in the offices of these authorities. Section 10
empowers the appropriate government to refer industrial disputes to
labour courts, tribunals and national tribunals and proscribes strikes and
lock-outs during the pendency of adjudicatory proceedings before these
authorities. Section 12 (5) further requires the appropriate Government
to record and communicate to the parties concerned, its reasons for
refusal to make a reference of the dispute to adjudication where on
consideration of the failure report of the conciliation under section 12
(4) it refuses to make the reference of the dispute. This requirement is
aimed at judicial scrutiny of the order of the government refusing to
refer a dispute to adjudication. If the reasons do not take into account
the report of the conciliation officer or are irrelevant, extraneous or not
germane to the question in dispute or tantamount to adjudication or are
malafide, the order refusing to make the reference will be liable to be
quashed on a writ of certiorari.
Section 11 prescribes the procedure of adjudication before the labour
courts, tribunals or national tribunals. Section ll-A empowers the
adjudicatory authorities to give appropriate relief in cases of unfair and
illegal discharge or dismissal of workmen. Section 15 requires a labour

18. Workmen ofHindustan Lever Ltd. v. Hindustan Lever Ltd., 1984 Lab. IC 276
(286-87) (SC), per Desai, J.
34 LABOUR ADJUDICATION IN INDIA

court, tribunal and national tribunal to hold the adjudication proceeding


expeditiously and to submit its award to the appropriate government as
soon as may be practicable, on the conclusion thereof. Section 16 (2)
prescribes the form of the award of such authorities. Section 17 lays
down the requirement of publication of the award and Section 17A
deals with the enforcement of the awards. Section 18 makes the award
binding on the parties mentioned in sub-section (3) and section 19
prescribes the period of operation of the award. Section 20 lays down
the points of time at which the adjudication proceedings are deemed to
have commenced and concluded before these adjudicatory authorities.
Section 21, inter alia, enjoins the adjudicatory authorities to keep certain
matters confidential.
Section 33 makes provisions for protecting service conditions of the
workmen during the pendency of conciliation and adjudication
proceedings. These provisions also involve judicial process in case of a
breach of its requirements. Section 33A makes further special provision
for adjudication where conditions of service are changed during the
pendency of proceedings. Lastly section 33C makes provision for
enforcement of awards and settlements and also for recovery of any
money due to a workman from the employer under a settlement or an
award or under the provisions of Chapters V-A and V-B. Section 29
prescribes penalties for the breach of the terms of a settlement or an
award.

(2) Arbitration

Arbitration is the most traditional form of private dispute resolution.


Like conciliation, arbitration involves a third-party's intervention in a
conflict resolution process. However, in arbitration, the third-party
intervenes with the agreement of the parties and with the power to make
a decision. Because of the power to make a decision, arbitration may be
classified with litigation as an adjudicatory process. Arbitration differs
from litigation, however, in that it may take place outside the court
system and may not be subject to courtroom procedures such as rules of
evidence or appeal.
.Section lOA of the Act provides for voluntary reference of an existing
or apprehended 'industrial dispute' between an employer and workmen
by mutual consent at any time before the dispute has been referred for
adjudication under section 10. The 'arbitration agreement', however,
has to be in writing and in the form as prescribed under the rules,
specifying the person or persons to be arbitrator or arbitrators. It is not
necessary that arbitral reference is made only to a private person or
persons. Such reference can be made even to the presiding officers of
labour courts or tribunals or national tribunals.
ARBITRATION OF LABOUR DISPUTES 3S

This section also makes further provisions in connection with the


arbitration. Like adjudication, provision has also been made to prohibit
strikes and lockouts during the pendency of arbitral proceedings. The
arbitrator is required to investigate the dispute and submit the award to
the appropriate government like the adjudication award.
The application of the Arbitration Act of 1940, has 'been expressly
excluded by section lOA (5) of the Industrial Disputes Act, 1947 to
"voluntary reference of disputes to arbitration" under it, which has now
been repealed by the Arbitration and Conciliation Act of 1996. 19 Section
2 (4) of that Act says that the provisions of Part-I shall apply to "every
arbitration under any other ei.actment for the time being in force". The
Act of 1996 is a latter statute while, the Industrial Disputes Act of 1947
is a special statute. Therefore, the question as to the provisions of which
of the two Acts should prevail is a moot question. It can only be resolved
either by a judicial pronouncement or a Legislative amendment
substituting the words "the Arbitration and Conciliation Act, 1996 (26
of 1996)" for the words "the Arbitration Act,' 1940 ( 10 of 1940)" in
section lOA (5) of the Industrial Disputes Act, 194i. Of the two, the
legislative amendment is preferable, as it would obviate the possibility
of conflict of judicial opinion.
The Supreme Court stated the advantages of 'voluntary arbitration'
in the area of industrial jurisprudence, in Kamal Leather Karamchari
Sanghatan v. Liberty Footwear Co.lO, in the following words:

The 'voluntary arbitration' is a part of the infrastructure of


dispensation ofjustice in the industrial adjudication. (It] appears
to be the best method for settlement of industrial disputes. The
disputes can be resolved speedily and in less than a year, typically
in a few months. The Tribunal's adjudication of reference under
Section IO(1) often drags on for several years, thus defeating
the very purpose of the industrial adjudication. Arbitration is
also cheaper than litigation with less legal work and no motion
practice. It has limited document discovery with quicker hearings
and is less formal than trials. The greatest advantage of
arbitration is that there is no right of appeal, review or writ
petition. Besides, it may as well reduce company's litigation
costs and its potential exposure to ruinous liability apart from
redeeming the workmen from frustration.

Voluntary arbitration as contemplated in this Act is 'arbitration' in


name only. In reality, it is another name of adjudication under the Act

19. Section 85.


20. 1990 Lab rc 301 (3078), per Jagannath Shetty, J.
36 LABOUR ADJUDICATION IN INDIA

albeit a consensual adjudicator called 'arbitrator'. The object of


arbitration, as compared with adjudication, in the area of labour
jurisprudence is to assure maximum party autonomy and expeditious
disposal at minimal expense. The only liberty the parties have is that
they can make a consensual reference of the dispute to an arbitrator of
their choice. After the reference has been made, there is little difference
between 'voluntary arbitration' and compulsory adjudication. The
arbitrator has to follow the procedure as by any other adjudicator as
prescribed in section II. No wonder that voluntary arbitration as provided
in the Act has not acquired popularity. It is no exaggeration to say that
hardly any resort is made to this method of dispute resolution by the
parties.
In other countries voluntary arbitration is used to supplement
collective bargaining. The parties select their Arbitrator' by agreement,
or they accept one appointed/by an agreed third party.21 In the United
States of America, the system of voluntary arbitration is highly
developed. The parties to labour disputes generally select arbitrators
from businessmen, lawyers, Judges, sociologists, priests and clergymen.
University Professors with training in law or industrial engineering, or
industrial relations, in Economics or Sociology are also frequently
appointed as arbitrators. 22
A scheme somewhat analogous to the scheme under the Indian Act,
for settlement of industrial disputes, operating in Australia was severely
criticized, as early as 1929 by a British Economic Commission in that it
tended to consolidate the contesting parties in two opposing camps.
This criticism was reverberated by the ILO, when in 195 I, it
recommended voluntary arbitration as a better mode of settlement of
labour disputes.
In India, the emphasis is mainly on compulsory adjudication and
"the voluntary arbitration" has not taken root in spite of the influential
advocacy for it in different policy making forums. 23 Therefore, the Code
of Discipline, 1958 emphasized the need for voluntary arbitration and
exhorted the employers and unions to resort to arbitration for resolving

2 J. Updegraff & MacCoy, Arbitration ofLabour Disputes 67 (1961).


22. Williams. Labour Relationship and the Law, 802 (1965).
23. Report of the National Commission on Labour 324 (1969). The Commission
on the basis of the evidence before it has recorded the following factors which have
contributed to the slow progress of arbitration in India:
Wei) easy availability of adjudication in case offailure of negotiations; (ii) dearth
of suitable arbitrators who command the confidence of both parties; (iii) absence of
recognised unions which could bind the worker to common agreements; (iv) legal
obstacles; (v) the fact that in law an appeal was competent against an Arbitrator's
award; (vi) absence of a simplified procedure to be followed in voluntary Arbitration;
and (vii) cost to the parties, particularly workers".
ARBITRA TION OF LABOUR DISPUTES 37

their disputes. The matter has been discussed for a decade at tripartite
forums but the progress has been marred due to indifference of the
parties.
The Indian Labour Conference in August 1962 reiterated the need
for a wider acceptance of 'voluntary arbitration'. This Conference was
of the view that "whenever conciliation fails, arbitration will be the
next normal step except in cases where the employer feels that for some
reason he would prefer adjudication".24 A proviso was also added by
the Conference to this Resolution to the effect that the parties concerned
must fully explain the reasons for refusal to agree to arbitration in each
case and the matter be brought up for consideration by the
implementation machinery. In the same year, the Industrial Truce
Resolution (November 1962) while reemphasising 'voluntary arbitration'
specified that complaints pertaining to dismissal, discharge, victimisation
and retrenchment of individual workmen which could not be settled by
mutual negotiation should be settled by voluntary arbitration.
The Third Five-Year Plan went a step further in suggesting that
"voluntary arbitration" should be the normal practice in preference to
recourse to adjudication. To make "voluntary arbitration" more
acceptable to the industrial employers and workers with a view to co-
ordinating efforts for its promotion, the Government of India has set up
a National Arbitration Promotion Board (NAPB) with a tripartite
composition. The function of this Board will be to examine and review
the factors inhibiting wider acceptance of this procedure and suggest
measures to make it more popular. The NAPB was also to evolve
principles, norms and procedure for the guidance of arbitrators and
parties. It would look into the causes of delay and expedite arbitration
proceedings wherever necessary and also specify from time to time the
types of disputes which would normally be settled by arbitration in the
light of tripartite decisions. All these efforts have been fruitless.
Arbitration has not gained any ground.

4. Jurisdiction and Relief

The jurisdiction of an 'arbitrator' appointed under Section lOA and


the adjudicatory authorities, namely a labour court, tribunal or the
national tribunal, established under section lOA for settling the disputes
referred to them and to give appropriate relief is governed by the same
principles. The principles to be borne in mind in settling the industrial
disputes and giving relief being the self-same, it is appropriate to use
the expressions 'adjudication' and 'arbitration' interchangeably, in the
further discussion.

24. Reproduced in the Report of National Commission on Labour 324 (1969).


38 LABOUR ADJUDICATION IN INDIA

The sweep of industrial adjudication has been stated by, Ludwig


Teller in the following words:24a
Industrial arbitration may involve the extension of an existing
agreement, or the making of a new one, or in general the creation
of new obligations or modifications of old ones, while
commercial arbitration generally concerns itself with
interpretation of existing obligations and disputes relating to
existing agreements.
The jurisprudence of 'industrial dispute' settlement in India has
been structured on this celebrated statement. In Western India Automobile
Association v, Industrial Tribunal,25 the Federal Court cited this
statement with approval and further said that: "adjudication does not, in
our opinion, mean adjudication according to strict law of master and
servant. The award of the tribunal may contain provision for settlement
of a dispute which no Court could order if it was bound by ordinary law
but the tribunal is not fettered in any way by these limitations". This
holding was reverberated by the Supreme Court in Bharat Bank Ltd. v.
Employees ofBharat Bank Ltd.,26 in the following words:
In settling the disputes between the employers and the workmen,
the function of the tribunal is not confined to administration of
justice in accordance with law. It can confer rights and privileges
on either party which it considers reasonable and proper, though
they may not be within the terms of any existing agreement. It
has not merely to interpret or give effect to the contractual
rights and obligations of the parties, it can create new rights and
obligations between them which it considers essential for keeping
industrial peace.
Then in Rohtas Industries Ltd. v. Brijnandan Pandey,27 the Court
said:
A court of law proceeds on the footing that no power exists in
the courts to make contracts for people; and the parties must
make their own contracts. The courts reach their limit of power
when they enforce contracts, which the parties have made. An
Industrial Tribunal is not so fettered and may create new
obligations or modify contracts in the interest of industrial peace,
to protect legitimate trade union activities and to prevent unfair
practice or victimisation.

240. Ludwig Teller, Labour Disputes alld Collective Bargaining, vol. J 476 (1940).
25. 1949 J LLJ 245, 256 (FC), per Mahajan, J.
26. 1950 J LLJ 921, 948 (SC), per Mukherjea, J.
27. 1956 II LLJ 444, 449 (SC), per Das, J.
ARBITRATION OF LABOUR DISPUTES 39

Again, in Premier Automobiles Ltd. v. Kamlakar Shantaram


Wadke,28 it reiterated:
The powers of the authorities deciding industrial disputes under
the Act are very extensive-much wider than the powers of a
civil court, while adjudicating a dispute which may be an
industrial dispute. The Labour Courts and the Tribunals to whom
industrial disputes are referred by the appropriate Government
under S. 10 can create new contracts, lay down new industrial
policy for industrial peace, order reinstatement of dismissed
workmen, which ordinarily a civil court could not do.
Within the parameters of this jurisdiction of industrial adjudication,
the Labour Appellate Tribunal29 developed the labour dispute settlement
jurisprudence. It created new contracts between the employers and
employees by awarding bonus and gratuity schemes. It modified the
existing contracts by restructuring the existing wage structures keeping
in mind the movement of wages from minimum wage towards the living
wage in the context of winds of change in the modem times. It introduced
various types of allowances including the dearness allowance and
incentive payments. The law relating to bonus and gratuity has already
been given legislative dress while wage-structure has become clearly
crystallised without being confined to the limitations of a statue. It has
also awarded new service conditions in industrial establishments as
required by the exigencies of situations. It deviated from the law of
specific performance by awarding relief of reinstatement with continuity
of service in cases of unfair or illegal retrenchment, discharge, or
dismissal. Particularly in cases where termination of service is as a
measure of disciplinary punishment for an act of misconduct on the part
of a delinquent workman, it has introduced the requirement of domestic
inquiry into the act of misconduct after serving the charge sheet on the
.workman. Such enquiry postulates that the delinquent should be given
fair opportunity of being heard by an unbiased person, in accordance
with the rules of natural justice.
To the curves and contours thus given by the Appellate Tribunal to
industrial adjudication, the Supreme Court and some of the high courts
have provided refinement and cosmetics. Alas! This tribunal lived only
a short span of six years when it was sacrificed at the altar of expediency.
This tribunal could have been of much more use and relevance by
serving as a buffer between industrial tribunals and the Supreme Court.
After abolition of the Appellate Tribunal, there is little contribution by
the tribunals, to further development of law.
28. 1975 II LLJ 445. 450 (SC), per Untwalia, J.
29. Constituted under the Industrial Disputes (Appellate) Tribunal Act, 1950.
40 LABOUR ADJUDIeA TION IN INDIA

The adjudicators in the course of adjudication, must of course


determine the 'rights' and 'wrongs' of the claims made, and in so doing
they are undoubtedly free to apply the principles of justice, equity and
good conscience, without attaching undue importance to legal
technicalities and keeping in view the further principle that their
jurisdiction is invoked not for the enforcement of mere contractual
obligations but for preventing unfair labour practices and for restoring
industrial peace on the basis of collective bargaining.P'' It is for this
reason that the industrial tribunals are armed with extraordinary powers
and have been entrusted with duties of adjudicating disputes of a peculiar
character. Therefore, the rights of an employer to hire and fire labour,
to fix wages, dearness allowance, bonus and gratuity, to grant leave
facilities, housing accommodation and other amenities have been
controlled and regulated by well recognised limits placed upon the
contractual rights of the employers by the industrial adjudication.'!
But, howsoever wide or flexible the scope of industrial adjudication
and the power of the adjudicator may be, all the same it is not an
arbitrary jurisdiction.F No doubt, an industrial adjudicator can substitute
a new contract if it is indeed essential for industrial peace, but "it would
be arrogating too much power if the tribunal were to make an award
altering a statutory provision'V! The industrial adjudication, therefore,
has to proceed on the basis of certain broad guidelines. The powers of
the tribunal are derived from the statutes, which are the rules of the
game, and it has to decide according to these rules.
The powers conferred upon the tribunal have the sanction of law
behind it and are not exercisable by reason of discretion vested in it. 34

30. Niemla Textile Finishing Mills Ltd. v. Second Punjab Tribunal, 1957 1 LLJ
460 (SC). per Bhagwati, J. See also Assam Chah Karmachari Sangha v. Assam Co.
Ltd., 1956 I LLJ 157 (LAT).
31. See for instance. Rai Bahadur Diwan Badrt Das v, Industrial Tribunal,
Punjab, 1962 II LLJ 366, 370 (SC), per Gajendragadkar, J.; JK Cotton Spinning
and WeaVing Mills Co. Ltd. v, Labour Appellate Tribunal. 1963 IJ LLJ 436. 444
(SC), per Gajendragadkar, J.; Patna Electric Supply Co. Lid. v. Patna Electric
Supply Co. Wokers' Union, [1959] II LLJ 366 (SC), per Gajendragadkar. J.
32. Punjab National Bank Ltd. v. Industrial Tribunal, 1957 I LLJ 455. 458 (SC).
per Das, J.
33. General Secretary. Madras Harbour Workers' Union v. lndustrlal Tribunal,
1972 I LLJ 8, 14 (Mad). per Palaniswamy. 1. Malabar Motor Transpori Co-operative
Society Ltd. for Ex-Servicemen v. Malabar M. T. Co-operative Society Ltd. for Ex-
Servicemen Employee Association. 1980 Lab. IC 324, 325 (Ker) DB). per Gopalan
Nambiyar, CJ reversing the decision of the singal Judge in Malabar Motor Transport
Co-operative Society Ltd. for Ex-Servicemen v. Their Employees. 1979 II LLJ 468
(Ker) per Bashkaran, J.
34. Bharat Bank Ltd. v, Employees of Bharat Bank Ltd., supra note 26 at 932.
ARBITRATION OF LABOUR DISPUTES 41

In other words, a tribunal has to function within the limits imposed by


the statute that created it and to act according to its provisions. The Act
invests the tribunal with many 'trappings' of a court, thus depriving it
of arbitrary or absolute discretion and power. 35 The exercise of discretion
itself means that something is to be done according to rules of reason
and justice, not according to private opinion but according to law, and
not humor. It cannot be arbitrary, vague and fanciful but must be legal
and regular. 36
The tribunal cannot also ignore altogether the existing obligations
without any rhyme or reason.I? In New Maneckchowk Spinning and
Weaving Co. Ltd. v. Textile Labour Association;38 striking a note of
restraint, Wanchoo, J. said:
There is no doubt, therefore, that it is open to an industrial
Court in an appropriate case to impose new obligations on the
parties before it or modify contracts in the interests of industrial
peace or give awards which may have the effect of extending
existing agreement or making a new one. This, however, does
not mean that an industrial Court can do anything and everything
when dealing with an industrial dispute. This power is
conditioned by the subject-matter with which it is dealing and
also by the existing industrial law and it would not be open to it
while dealing with a particular matter before it to overlook the
industrial law relating to that matter as laid down by the
legislature or by this Court.
Industrial adjudication is, therefore, always a matter of making
adjustment between the two competing claims.l? In these matters there
are no absolutes and no formula can be evolved which would invariably

35. Ibid., see also J.K. Iron & Steel Co. Ltd. v, Iron & Steel Mazdoor Union,
1956 J LLJ 227 (SC), per Bose, J. and Walford Transport Ltd. v, First Industrial
Tribunal, 1961 II LLJ 25 (Cal.), per Ray, 1.
36. Sussanah Sharp v. Wakefield, [1891] AC 173 (179), per Lord Halsbury, LC.
37. Supra note 27.
38. 1961 I LLJ 521, 526 (SC). These limitations were adumbrated by the majority
of the court consisting of Gajendragadkar, Sarkar, Wanchoo, and Madholkar, JJ.,
but Subba Rao, J., dissented and did not subscribe to the majority view. He took the
view that, "an industrial tribunal can extend an existing agreement or make a new
one, if, for good reasons it comes to the conclusion that such extension promoted
industrial peace". Even accoridng to Subba Rao, J., existing contracts can be interfered
with by the tribunal's though only "for good reasons". But the scope of "good
reasons" mentioned by Subba Rao, J. apears to be different from the limitations
suggested by the majority.
39. Rai Bahadur Diwan Badri Das v: Industrial Tribunal, Punjab, and JK
Cotton Spinning & Weaving Mills Co. Ltd. v. Labour Appellate Tribunal, supra
note 31.
42 LABOUR ADJUDICATION IN INDIA

give answer to different problems which may be posed in different


cases on different facts. In the branch of law relating to industrial
relations, in the words of Shah. J. "the temptation to be crusaders instead
of adjudicators must be firmly resisted".40 It cannot be, therefore, too
strongly stated and restated that every industrial dispute depends upon
its own peculiar circumstances. In sailing the sea of industrial
adjudication, more ships of justice have gone down for failure to sense
the treacherous reefs of generality than for any other reason. "In order
that industrial adjudication should be completely free from the tyranny
of dogmas or the sub-conscious pressures of preconceived notions, it is
of utmost importance that the temptation to lay down broad principles
should be avotded"."! For, "vague and indefinite directions instead of
fostering harmony, are likely to open up vistas for future bickerings and
disputes in their implementation't.V
The approach of industrial adjudication, therefore, has necessarily
to be pragmatic, and the tests, which it applies and the considerations
on which it relies would vary from case to case and would not admit of
any rigid or inflexible formula. In attempting to solve industrial disputes,
industrial adjudication is generally to be reluctant to lay down any hard
and fast rules or adopt any test of general or universal application.t! It
should, therefore, refrain from enunciating any general principles or adopting
any doctrinaire considerationsf" and should avoid formulating and
adopting abstract generalisations.P In the words of K.C. Das Gupta, J:

Nor can the tests and the principles that have been laid down be
applied mechanically or by way of syllogism. A mechanical or

40. Delhi Cloth & General Mills Ltd. v. Its Workmen. 1969 II LLJ 755. 767
(sq. The Court referred to statement of law by Douglas. J.. of Supreme Court of
the United States of America in United Steel Workers of America v. Enterprise
Wheel and Car Corporation, [1960] 363 US 593. But after citing the passage. the
Court immediately observed: "We may at once state that we are not for a moment
suggesting that the law of industrial relations developed in our country has proceeded
on lines parallel to the direction of the law in the United States".
41. R.B. Dewan Badri Das v. Industrial Tribunal, supra note 3 I.
42. Remington Rand of India Ltd. v. The Workmen. C.As. No. 856. 1475 and
21 19 of 1968 decided by the Supreme Court on 10.12.98, per Shelat, J. (unreported).
43. Workmen ofDharampal Premchand, (Saughandhi) v. Dharampal Premchand
(Saughandhi), 1965 J LLJ 668, 673 rsci per Gajendragadkar, C,J.
44. Hartnagar Cane Farm v. State of Bihar. 1963 J LLJ 692, 695 (SC). per
Gajendragadkar, J.; State of Bombay v. Hospital Mazdoor Sabha, 1960 J LLJ 251,
257 rsci, per Gajendragadkar. J.
45. State of Bombay v. Hospital Mazdoor Sabha, ibid., see also Harinagar Cane
Farm v, State of Bihar, tbtd., and University of Delhi v, Ram Nath, 1963 " LLJ
335, SC, per Gajendragadkar, J.
ARBITRATION OF LABOUR DISPUTES 43

syllogistic approach may appear to furnish the easiest way of


solving a complicated problem, but the allurement of the easy
way has to be resisted. For while such ways are beset with risks
of errors in all branches of law, they are even more unsafe and
inexpedient in industrial law, where sensitive problems of human
relations have to be solved in the mist of all the complexities of
modern industrial organisation. That is why in applying the well-
settled tests and principles on these problems, we have to bear
in mind that while all tests that are possible of application should
be applied, the value and importance to be attached to individual
tests will vary according to the nature of the industrial activities
and according to the nature of the disputes in which the problem
has arisen viz. whether it is in respect of lay-off, retrenchment,
production bonus, profit bonus of something else. 46

The tribunals, therefore, should not decide abstract questions of


law,47 nor should they be unduly influenced by academic questions of
law, but should make an attempt to deal with the merits of each case
according to its facts and circumstances.f
In Delhi Cloth and General Mills Co. Ltd. v.lts Workmen,49 speaking
of the futility of precedent in the field of industrial adjudication, Shah,
J. said:

We consider it right to observe that in adjudication of industrial


disputes settled legal principles have little play; the awards
made are often the result of ad hoc determination of disputed
questions, and each determination forms a precedent for
determination of other disputes. An attempt to search for
principle from the law built up on those precedents is a futile
exercise. To the Courts accustomed to apply settled principles
to facts determined by the application of the judicial process,
an essay into the unsurveyed expanses of the law of industrial
relations with neither a compass nor a guide, but only the
pillars of precedents is disheartening experience...and even

46. Westerll India Match Co. Ltd. v, Their Workmen, 1963 II LLJ 459, 463-64
(SC).
47. N.R. Mukherjee v. Arnold Hartman Just. AIR 1961 Cal 95 (DB), per Lahiri,
CJ
48. Workmen of Dahingeapar Tea Estate v. Dahingeapar Tea Estate. 1958 II
LLJ 498 (SC), per S.K. Das, J; Kays Construction Co. (P.) Ltd. v, Its Workmen,
1958 IJ lLJ 660, 665 (S.C.), per Gajendragadkar, J.
49. 1969 II LLJ 755, 767-68 (SC).
44 LABOUR ADJUDICA TION IN INDIA

generally in the settlement of disputes arising out of industrial


relations, there are no fixed principles, on the application of
which the problems arising before the tribunals or the courts
may be determined and often precedents of cases determined
ad hoc are utilized to build up claims or to resist them. It
would, in the circumstances, be futile to attempt to reduce the
grounds of the decisions given by the industrial tribunals, the
Labour Appellate Tribunal, and the High Courts to the
dimensions of any recognised principle.

An industrial tribunal is not a court of general or residuary


jurisdiction but a tribunal with specific jurisdiction circumscribed by
the terms of the orders of reference. In other words, it is an ad hoc
tribunal with ad hoc jurisdiction to determine specific industrial
disputes.so It should not base its conclusions on some airy view of what
it considers would be a good thing for workmen. 51 In other words, the
tribunal has to confine itself to the pleadings and the issues arising
therefrom and it is, therefore, not open to it to fly off at a tangent
disregarding the pleadings and reach any conclusion that it thought as
just and proper. 52 It is, therefore, "desirable that industrial adjudication
should deal with problems as and when they arise and confine its decision
to the points which strictly arise on the pleadings between the parties".S3
The best course, therefore, to adopt in dealing with an industrial dispute,
is "to consider the facts of the case, the nature of the demand made by
employees, the nature of the defence raised by the employer and decide
the dispute without unduly enlarging the scope of the enquiry".s4 If in
the decision of the dispute some working principles have to be evolved,
that must be done s5 but care must be taken not to evolve large principles
which may affect the facts and circumstances which are not before the
tribunal or which would tend to prejudice issues not directly raised in

50. Rifle Factory Co-operative Society Ltd. v. Fourth Industrial Tribunal. 1960
II LLJ 517, 521 (Cal), per P.B. Mukharji, J.
51. J.K. Iron & Steel Co. Ltd. v. Iron & Steel Mazdoor Union, supra note 35 at
234; Newspapers Ltd. v, State Industrial Tribunal, 1975 I LLJ 32 (All) (DB); N.R.
Mukherjee v. Arnold Hartman Just. supra note 47; Parry & Co. Ltd. v. P.e. Pal.
1970 II LLJ 429, 438 (SC), per Shelat, J.
52. Parry & Co. Ltd. v. P.C. Pal, 1970 II LLJ 429,438 rsci, per Shelat, J.
53. Harinagar Cane Farm v. State of Bihar, supra note 44.
54. Rai Bahadur Diwan Badri Das v, Industrial Tribunal Punjab, supra note 31
at 371; Harinagar Cane Farm v. State of Bihar, supra note 44.
55. State of Bombay v. Hospital Mazdoor Sabha, supra note 44., per
Gajcndragadkar, J. Rai Bahadur Diwan Badri Das v. Industrial Tribunal, Punjab,
supra note 31.
ARBITRATION OF LABOUR DISPUTES 4S

the case under adjudication.l" Nevertheless, it may not be irrelevant to


point out that in avoiding generalisations (however commendable), the
guidance afforded by the statute through its own dictionary cannot be
ignored.l?
Tedious indeed is the task of an industrial adjudicator. He has to
reconcile the head-on clash between the fundamental rights guaranteed
by the Constitution such as freedom of trade, freedom to practice any
profession or to carry on any occupation and the directive principles
enshrined in the Constitution which are fundamental in the governance
of the country. He has also the delicate task of balancing the conflicting
interests of employer, employee and the public on very basic policies,
such as, freedom and sanctity of contract, protection of business, right
to work, making training available to employees, earning livelihood for
oneself and family, utilisation of one's skill and talent, continued
productivity, betterment of one's status, avoidance of one's becoming a
public charge, encouragement of competition and development of
national and international trade and avoidance of monopoly, promotion
of collective bargaining and elimination of indiscipline in industry and
so on.
Industrial adjudication has also necessarily to be aware of the current
socio-economic thought around; it must recognise that in a modem
welfare state, healthy industrial relations are matters of paramount
importance and its essential function is to assist the state by helping in
the solution of industrial disputes which constitute a distinct and
persistent phenomenon of modem industrial state. 58 In the language of
Krishna Iyer, J: "Industrial jurisprudence does not brook nice nuances
and torturesome technicalities to stand in the way of just solutions
reached in a rough and ready manner. Grim and grimmy life-situations
have no time for the finer manners of elegant jurisprudence't.I? The
ultimate object of industrial adjudication is to help the growth and
progress of national economy and it is with that ultimate object in view

56. Rai Bahadur Diwan Badri Das v, Industrial Tribunal, Punjab, supra note
31: Harinagar Cane Farm v. State of Bihar. and State of Bomba)' v. Hospital
Mazdoor Sabha, supra note 44: See also notes and comments under the caption
"Scope of adjudication by Tribunals" under section 7 and also under section 1O(4).
57. The observation of Hidayatullah, 1. in Madras Gymkhana Club Employees'
Union v, Gymkhana Club, 1967 II LLJ 720 (SC) construing the definition of industry
in section 2(j); "The attempt to avoid generalisations (however commendable) has
one disadvantage...our task is to give meaning to the words which are intended to
lay down the full connotation.
58. State of Bombay v, Hospital Mazdoor Sabha, supra note 44.
59. Basti Sugar Mills Co. Ltd. v. State of UiP: 1978 /I LLJ 412, 419 (SC).
46 LABOUR ADJUDICATION IN INDIA

that industrial disputes are settled by industrial adjudication on principles


of fair-play and justice. 6o
In H.D. Singh v. Reserve Bank of Indta/" the Supreme Court
remorsefully deprecated the practice of the employers to stifle the efforts
of the workmen in their legitimate claims seeking benefits under the
industrial law by tiring them out in adjudication proceedings raising
technical and hyper-technical pleas and thus dragging on litigation for
years on such pleas. The court counselled the employers to meet the
case of the workmen squarely on merits and get them adjudicated quickly.
It also advised the employers to achieve industrial peace by evolving a
contented labour and the workmen should reciprocate to prevent
industrial unrest.
The primary duty of the industrial tribunal is to establish peace in
the industry between the employer and workmen but while settling an
industrial dispute with a view to establishing industrial peace, it should
not lose sight of the interest of the industry. Any settlement of a dispute
ignoring the interest of the industry is likely to have far-reaching and
detrimental effects on the workmen themselves. 62
During the past half century, industrial adjudication in India, on the
whole has served remarkably well. It is a striking testimony to the work
not only of those who framed the legislation, but also and to a greater
degree, of the Labour Appellate Tribunal, high courts and in particular
the Supreme Court whose duty it has been to interpret and apply it. But
it is precisely because of the considerations already mentioned that this
has been so. Refusing to lay down general principles because it has
always conceived its function to be the adjudication of issues properly
before it for decision and confining its judgement to the facts and
circumstances calling for its intervention in the dispute of the parties,
the industrial adjudication has maintained a steady adherence to the
determination of the law in its application to particular facts, avoiding
political or equally vague or ill-defined standards, unaffected by
considerations characterised as 'dynamic', yet contriving to a remarkable
degree, to infuse common sense and practical considerations into its
decisions.

60. J.X. Callan Spinning and Weaving Mills Co. Ltd. v. Labour Appl/ale Tribunal,
supra note 31.
61. 1985 Lab. IC 1733 (1738) (SC> per Khalid, J. See also: S.K. Verma v.
Mahesh Ohal1dra. 1983 Lab. IC 1483, 1484 (SC>, per Chinnappa Reedy, J.; D.P.
Mal,eshwari v. Delhi Administration, 1985 Lab. IC 1629 (SC), per Chinnappa Reddy,
J.; Cooper Engineering Ltd. v. P.P. MUI/dhe. 1975 II LLJ 379. 385 (SC>, per
Goswami, J.
62. Assam Chah Karmachari Sal/gila v. Assam Co. Ltd.. 1956 I LLJ 157 (LAT).
ARBITRATION OF LABOUR DISPUTES 47

Howsoever severe one may be in the criticism of industrial


adjudication, it cannot lie gain-said that the contribution of the industrial
adjudication to the development of industrial jurisprudence in this country
over the past half century has been remarkable. In the opinion of the
National Commission on Labour, "it has played a major role in giving a
more concrete shape to our progress towards the goal set by the
Constitution".63

5. Soela. Justice In Industria. Adjudication

"Social Justice" said Mr. Justice Holmes, "is an inarticulate major


premise which is personal and individual to every court and every judge".
Incensed by this dictum, Bhagwati, J. speaking for the Supreme Court,
in Muir Mills Ltd. v. Suti Mill Mazdoor,64 said: .....the concept of social
justice does not emanate from the fanciful notions of any particular
adjudicator but must be founded on a more solid foundation", This view
was reverberated by Vivian Bose, J., in J. K. Iron and Steel Co. Ltd, v.
Iron & Steel Mazdoor Union,6S In the same strain in Punjab National
Bank Ltd. v, Industrial Tribunal,66 S.K. Das, J. voiced, that ..... 'social
justice' does not mean that reason and fairness must always yield to the
convenience of a party-eonvenience of the employee at the cost of
employer as in this case-in an adjudication proceeding. Such one-
sided or partial view is really next-of-kin to caprice or humor".
But in later cases,67 the Supreme Court assigned a more positive
role to the concept of social justice in industrial adjudication.
Gajendragadkar, J. persistently emphasised that "social and economic
justice is the ultimate ideal of industrial adjudication",68 an~ "social
and economic justice has been given a place of pride in our

63. Report of the National Commission on Labour 56 (1969).


64. 1955 I LLJ 1(6) (sq. The Bench consisted of Mahajan, CJ, S.R. Das,
Bhagwati and Venkatarama Ayyar, JJ. The Court was considering the question
whether bonus should be paid on the ground of social justice to workmen by the
employer company who had suffered loss during the year in question. See also
Famous Cine Laboratory v. Their Workmen, 1953 I L.LJ. 466 (LAT).
65. 19561 LLJ 227, 234 (sq. The Bench consisted of Vivian Bose, Venkatarama
Ayyar and Chandrasekhara Ayyar, JJ.
66. 1957 1 LLJ 455, 458 (sq.
67, Crown Aluminium Works v. Their Workmen. 1958 I LLJ I, 6 (SC), 'pel'
Gajendragadkar, J.; State of Mysore v. Workers in Gold Mines. 1958 II LLJ 479,
484 (sq, per Gajendragadkar, J.; J.K. Cotton Spinning and Weaving Mills Ltd. v.
Labour Appel/ate Tribunal. supra note 31; Raj Bahadur Diwan Badri Das v.
Industrial Tribunal. Punjab.supra note 31 at 378.
68. Crown Aluminium Works v. Their Workmen. supra note 67.
48 UBOUR ADJUDICATION IN INDIA

constitution".69 In Rai Bahadur Diwan Badri Das v.Industrial Tribunal.


Punjab,70 speaking for the majority, he further emphasised that "the
doctrine of the absolute freedom of contract has thus to yield to the
higher claims for social justice...under the impact of the demand of
social justice the doctrine of absolute freedom of contract has been
regulated ...". In this case, the minority Judge, Mudholkar, J. echoed the
voice of Bhagwati, J. in Muir Mills case but then glossed that this does
not mean that social justice has no place in settlement of industrial
disputes."! According to HidayatuUah, J., "Social justice is not based
on contractual relations and is not to be enforced on the principles of
contract of service. It is something outside these principles, and is
invoked to do justice without a contract to back it. 72
In J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Labour
Appellate TribunalP Gajendragadkar, J vehemently elaborated the role
of social justice in industrial adjudication in the following language:
In our opinion, the argument that the considerations of social
justice are irrelevant and untenable in dealing with industrial
disputes, has to be rejected without any hesitation. The
development of industrial law during the last decade and several
decisions of this Court in dealing with industrial matters have
emphasised the relevance, validity and significance of the
doctrine of social justice...Indeed, the concept of social justice
has now become such an integral part of industrial law that it
would be idle for any party to suggest that industrial adjudication
can or should ignore the claims of social justice in dealing with
industrial disputes. The concept of social justice is not narrow,
or one-sided, or pedantic, and is not confined to industrial
adjudication alone. Its sweep is comprehensive. It is founded on
the basic idea of socio-economic equality and its aim is to assist
the removal of socio-economic disparities and inequalities.

69. State of Mysore v. Workers ill Gold Mines. supra note 67. Reference was
made to articles, 38 and 41 of the Constitution.
70. supra note 31. In the majority Judgment in this case and in the case noted in
the above footnote, no reference was made to the observations of Bhagwati, J., in
Muir Mills case, supra note 64.
71. Ibid at 378.
72. Rashtriya Mill Mazdoor Sallgh v. Apollo Mills Ltd., 1960" L.L.J. 263, 271
(SC). See also Western India Automobile Association v. Industrial Tribunal. 1949 I
LLJ 245, 256 (FC), per Mahajan, J. State of UP v. Muir Mills Co. Ltd., 1967 II LLJ
598, 60 I (All) (DB), per Jagdish Sahai, J.
73. Supra note 31; see also Hindustan Steel Ltd. v. State of Orissa, 1968" LLJ
526 (Ori) (DB), per S.K. Ray, J.
ARBITRATION OF LABOUR DISPUTES 49

But in conclusion he assigned a pragmatic role to social justice in


the following words:
Nevertheless, in dealing with industrial matters, it does not adopt
a doctrinaire approach and refuses to yield blindly to abstract
notions, but adopts a realistic and pragmatic approach. It,
therefore, endeavors to resolve the competing claims of
employers and employees by finding solution, which is just and
fair to both parties with the object of establishing harmony
between capital and labour and good relationship.
Echoing this note in Ahmedabad Manufacturing and Calico Printing
Co. Ltd. v. Ram Tahel Ramanandl'' Dua, J said:
This concept of social justice has a comprehensive sweep and it
is neither pedantic nor one-sided but is founded on socio-
economic equality. It demands a realistic and pragmatic approach
for resolving the controversy between capital and labour by
weighing it on an even scale with the consciousness that
industrial operations in modem times have become complex
and complicated and for the efficient and successful functioning
of an industry various amenities for those working in it are
deemed as essential for a peaceful and healthy atmosphere.
Thus, though industrial adjudication cannot and should not ignore
the claims of social justice-a concept based on socio-economic
equality-it has to resolve the conflicting claims of employers and
employees by finding not one sided but a fair and just solution."! This
pragmatic approach has, therefore, been adopted by the court
subsequently in industrial adjudication as stated by Hedge, J. in Burmah
Shell Oil Storage and Distributing Co. ofIndia Ltd. v. Their Workmen.'"
Social security for the weaker sections of our nation is of utmost
importance. But then we cannot forget the limitations under
which we are living. While we should not forget our social
goals, our purpose may be defeated if we do not approach our
problems in a pragmatic way. It is one thing to settle a dispute
by agreement, which affects only the interests of the parties to
the agreement; it is a quite different thing for this Court to lay
down a rule which will have a wider application.

74. 1972 II LLJ 165, 174 (SC).


75. Indian Oxygen Ltd. v. Their Workmen, 1969 I LLJ 235. 242 (SC). per
Shelat, J.
76. 1970 I LLJ 363.366 (SC), per Hegde, J.
77. 1978 II LLJ 11. 12-13 (SC); Management ofAddison & Co. l.td. v. Presiding
Officer. Labour Court. Madras, 1979 I LLJ 465. 469 (Mad) (DB). per Mohan, J.
so LABOUR ADJUDICATION IN INDIA

But in Indian Express Newspapers (Bombay) Pvt. Ltd. v. Indian


Express Newspapers Pvt. Ltd. (Bombay) Employees Union.. 77 Krishna
Iyer, J. revolved against the pragmatism and said:
Industrial jurisprudence is not static, rigid or textually cold but
dynamic burgeoning and warm with life. It answers in emphatic
negative the biblical interrogation. "What man is there of you
whom ifhis son asks bread will give him a stone'? The Industrial
Tribunals of India in areas unoccupied by precise black letter
law, go by the constitutional mandate of social justice in the
claims of the 'little people'.
In Basti Sugar Mills Co. Ltd. v. State of Up.7S, he re-iterated the
same sentiment:
Social justice is made of rugged stuff...Where social justice is
the touchstone where industrial peace is the goal, where the
weak and the strong negotiate to reach workable formulae
unruffled by the rigidities and formalisms of the law of contracts,
it is impermissible to frown down the fair agreement reached by
the representatives of both the camps and accepted by the
employees in entirety" ...labour law is rough hewn and social
justice sings a different tune.

6. Procedure and Practice

(1) Arbitration Agreement

The first part of section lOA requires the parties to forward a copy
of the arbitration agreement to the appropriate government and the
conciliation officer and the second part further requires the appropriate
government to publish the agreement in the official gazette within "one
month" from the date of the receipt of such copy. In both the cases, the
legislature has used the imperative word 'shall'. In Kamal Leather
Karamchari Sanghatan v. Liberty Footwear Co.,79 the Supreme Court
has held that the 'arbitration agreement' must be published before the
arbitrator considers the merits of the dispute and noncompliance of this
requirement would be fatal to the arbitral award. In other words,
publication of the arbitration agreement in the official gazette is a
mandatory condition, non-compliance of which would invalidate the
arbitral proceedings and the award, while the requirement of publication

78. 1978 supra note 59.


79. 1990 Lab rc 301, 307 rsc), per Jagannath Shetty, J.
ARBITRATION OF LABOUR DISPUTES 51

within a period of one month from the date of the receipt of the agreement
by the government is merely directory. According to this holding the
award may be published at any time "before the arbitrator considers the
merits of the case".
(2) Practice
The jurisdiction of the industrial arbitrator stems from the' agreement
of arbitration' to adjudicate upon an industrial dispute. In other words,
the jurisdiction to entertain an industrial dispute is conferred on the
arbitrator by the specific agreement entered into by the parties to abide
by his decision. From the language of the section. it is evident that what
an arbitrator can adjudicate upon is "dispute". It is significant to note
that unlike section 10 (4), an arbitrator has no jurisdiction to adjudicate
upon any "matters incidental thereto". The arbitrator, therefore. has
strictly to confine his adjudication to the dispute as referred to him by
the agreement of the parties. There is a marked contradistinction between
section 10(4) and section lOA (4). Hence, an arbitrator is "bound to
adjudicate on the dispute as specifically referred in terms of the
agreement and could not go into any other matters whether connected
with or relevant or incidental to the dispute which was referred to him " !In
The reference under section lOA is not fettered by Schedule II or
Schedule III. Any 'industrial dispute' can be referred to an arbitrator
whether in Schedule II or Schedule III or otherwise. But once an
industrial dispute is before the arbitrator for arbitration. the scope of
adjudication is analogous to that of the industrial tribunal.U
The arbitration proceedings before an arbitrator are quasi-judicial
in character. The question whether such an award should state reasons
for its decision. has given rise to conflicting judicial dicta. A Division
Bench of the Punjab High Court. 82 though did not state as a general
proposition that an industrial arbitrator must record his reasons for
coming to his conclusion in the award, preferred the view that "the law
does not intend to confer on the arbitrator under the Act uncontrolled
and absolute power to make the award completely bare of reasons so as
to render it incapable of judicial scrutiny..." It was further observed that
"as an arbitrator had to decide a proposal and an opposition, in other
words, to determine. a lis, the decision which he had to give could not

80 D.CM Clerks Association v. Management of Delhi Cloth & General Mills


Ltd., C.W. No 1355 of 1981 decided by the High Court of Delhi on 14.10.1983.
per H.L. Anand. J. (unreported).
81. See notes and Comments under section 10(4) caption "Jurisdiction of
Tribunals".
82. Rohtak Delhi Transport (P) Ltd. v . Risal Singh. 1964 I LLJ 89, 96 (Punj)
(DB), per Grover and Dua, JJ. The award of the arbitrator awarding cornpensanon
without stating reasons was struck down by the court.
52 LABOUR ADJUDICATION IN INDIA

be devoid of any reference to the mode or manner by which the opinion


was formed.
A Division Bench of the Madhya Pradesh High Court 83 has
categorically stated that there is an implied statutory obligation on the
arbitrator to give reasons in support of the conclusions of fact and law
reached by him in the award. Though he is not required to write a
lengthy judgment, like a court, he must briefly indicate the working of
his mind, i.e., the process of reasoning which led him to decide the
dispute referred to him. Hence, his failure to state reasons, which is
obligatory, would constitute an error of law apparent on the fact of the
record.
On the other hand, a Division Bench of the Patna High Court 84
though noted the desirabiliry of stating the reasons for the decision of
the arbitrator, held that the "desirabiliry for giving the grounds on which
a decision is based, does not ipso facto lead to the conclusion that such
grounds must be given in the quasi-judicial decision of an
arbitrator...where there is no specific provision in the law itself to that
effect". It was further observed that "if the reference is made to a
Labour Court, a Tribunal or a National Tribunal, such Court or Tribunal
would be bound to give reasons for its findings in accordance with the
provisions of law. If, however, instead of making the reference to either
a Labour Court or a Tribunal or a National Tribunal, the parties
voluntarily choose a private person, it cannot necessarily follow that
such a person also would be bound to give reasons for the decision
arrived at by him".
For similar reasons a single judge of the Delhi High Court 85 also
held that the award of an industrial arbitrator will not be invalid merely
because he has not given the reasons for his decision because there is
no provision in the Act-mandatory or directory-that an arbitrator
must give reasons for his award. The view of the Paloa and the Delhi
High Courts does not appear to be correct. No doubt, there is no provision
in the Act, which requires a labour court, tribunal or national tribunal to
state reasons for its award. All that section 16(2) requires is that the
awards "shall be in writing and shall be signed by its presiding officer".
Similarly, sub-section (4) of section lOA requires that the award of an
industrial arbitrator shall be signed by him. Thus, in either case there is
no requirement of stating reasons. But in both cases, the requirement of

83. M.G. Pans v, S.K. Sanyal, 1980 Lab IC 524, 526-27, (MP) (DB), per G.P.
Singh, CJ.
84. Rohtas Industries Ltd. v, Workmen of Rohtas Industries Ltd., \968 \ LLJ
710, 715-716 (Pat) (DB), per Dutta, J.
85. Management ofDally Aljamiat v, Gopi Nath Aman, 197\ Lab IC 1353 (Del),
per Rohtagi, J.
ARBITRATION OF LABOUR DISPUTES S3

stating reasons is implied in order to enable the scrutiny of the judicial


review of such award.
It is now well-settled that the award of an industrial arbitrator is
amenable to judicial review. In Rohtas Industries Ltd. v. Rohtas
Industries Staff Union,86 the Supreme Court observed: "Suffice it to
say, an award under S.1O-A is not only invulnerable but more sensitively
susceptible to the writ lancet being a quasi-statutory body's decision".
The absence of reasons in support of the award will shut-out the judicial
scrutiny by making it "an inscrutable face of sphinx". The view of the
Patna and Delhi High Courts further loses sight of the fundamental
distinction between an industrial arbitration and commercial arbitration
which "is fine, but real". 87 Industrial arbitration is based altogether on
different principles and norms and the scope of arbitration is also not
like the civil arbitration. The analogy of civil arbitration adopted by the
Delhi High Court is, therefore, not apposite. The view of the Punjab
and the Madhya Pradesh High Courts is correct law.

(3) Award

An arbitrator is empowered to investigate and adjudicate upon an


'industrial dispute' referred to him under an arbitration agreement and
then to submit the award signed by him to the 'appropriate government'.
Such award is also to be published, like any other award under the Act,
by the appropriate government within a period of thirty days from the
date of its receipt, in accordance with the provisions of section 17 and it
is final after being published under section 17 (2). An award of the
arbitrator which is not published as required by section 17 (1) of the
Act, will be incapable of being enforced as postulated by section 17A
and as such will have no force of law. section 17A makes an award
enforceable on the expiry of thirty days from the date of its publication
under section 17. Section 18(2) makes an arbitration award, which has
become enforceable, binding on the parties to the agreement who referred
the dispute to arbitration. Section 18 (3) makes the enforceable arbitration
award, in case where a notification has been issued under sub-section
(3A) of section lOA, binding not only on all parties to the dispute but
also on all other parties summoned to appear in the proceedings, the
heirs, successors or assignees of the employer and all present and future
workmen. Under section 19 (3), the arbitral award remains in operation
for a period of one year from the date on which it becomes enforceable
subject to the powers of the 'appropriate government' to reduce or
extend the period of its operation. According to section 19 (6), such

86. 1976 I LLJ 274 rsci per Krishna lyer, J.


87. Id, at 279.
54 LABOUR ADJUDICATION IN INDIA

award further continues to be binding on the parties even after the


expiry of the period of its operation under section 19 (3) until a period
of two months have elapsed from the date on which either of the parties
intimates its intention to the other to terminate the award. By fiction of
section 20, proceedings before an arbitrator. under section lOA are
deemed to have commenced on the date of the reference for arbitration
and conclude on the date when the award becomes enforceable. Section
29 makes the breach of any terms of an award a penal offence. Section
30 provides for penalty in cases of unlawful disclosure of information
required to be kept confidential. Section 33C makes provision for
recovery of money or computation of any benefit capable of being,
computed in terms of money, due under an award from the employer.

7. Judicial Review

In R. v. Disputes Committee of National Joint Council for the


Craft of Dental Technicians 88 Lord Goddard, CJ. stated: "There is
no instance of which I know in the books, where certiorari or
prohibition has gone to any arbitrator, except a statutory arbitrator,
and a statutory arbitrator is a person to whom by a statute, the parties
must resort". This dictum gave rise to a conflict of judicial opinion
on the question; whether an Arbitrator functioning under section lOA
of the Industrial Disputes Act, 1947 was statutory arbitrator and
that his decision is binding on the parties as a "statutory arbitrator".
The Kerala High Court took the view that such an arbitrator is not a
'statutory arbitrator', because section lOA leaves the choice of
arbitration and arbitrator to the will of parties. 89 The same view was
taken by the Madras High Court. 90 On the other hand, the Bcmbay'"
and Patna92 High Courts took the view that the arbitrator contemplated

88. [1953] I All ER 327.


89. A.T.K.M. Employees' Association v. Musaliar Industries (P) Ltd., 1961 I LLJ
81 (Ker) per Velu Pillai, J., affirmed in appeal by a Division Bench in A.T.K.M.
Employees' Association v. Musa/iar Industries (P) Ltd., 1962 II L.L.J. 317 (Ker)
(D.B.), per M.S. Menon, CJ.
90. Anglo-American Direct Tea Trading Co. Ltd. v. Its Workmen, 1963 r LLJ
752 (Mad), per Srinivasan, J. In this the Madras High Court has followed the single
Judge decision of the Kerala High Court in 1961 I LLJ 81. But the attention of the
high court, in this case, does not appear to have been drawn to the decision of the
Supreme Court in Engineering Mazdoor Sabha v, Hind Cycle Ltd., 1962 " LLJ 760
(sq, per Gajendragadkar, J.
91. Air Corporations Employees' Union v. D.V. Vyas, 1962 I LLJ 31 (Bom)
(DB), per Chandrachud, J.
92. Rohtas Industries Staff Union v. State of Bihar, 1962 " LLJ 420 (Pat) (DB)
per Ramaswami. CJ, affirmed by the Supreme Court in Rohtas Industries Ltd. v.
Rohtas Industries Staff Union, supra note 86.
ARBITRATION OF LABOUR DISPUTES 55

by section lOA has all the attributes of a "statutory arbitrator", But


in Engineering Mazdoor Sabha v, Hind Cycles Ltd.,93 as an obiter,
the Supreme Court observed: "Art. 226 under which a writ of
certiorari can be issued in an appropriate case is, in a sense wider
than Art. 136, because the power conferred on the High Court to
issue certain writs is not conditioned or limited by the requirement
that the said writs can be issued only against the orders of Courts. or
Tribunals. Under Art. 226 (1), an appropriate writ can be issued to
any person or authority, including, inappropriate cases, any
Government, within the territories prescribed. Therefore, even if the
Arbitrator appointed under S.10A is not a Tribunal under Art. 136,
in a proper 'case, a writ may lie against his award under Art. 226".
Now, these obiter observations have been accepted as correct law by
the Supreme Court in Rohtas Industries Ltd. v. Rohtas Industries
Staff Union 94, where speaking for the court Krishna Iyer, J. observed:
"It is legitimate to regard such an arbitrator now as part of the
methodology of the sovereign's dispensation of justice, thus falling
within the rainbow of 'statutory tribunals' amendable to judicial
review.... Suffice it to say, an award under S.10-A is not only not
invulnerable but more sensitively susceptible to the writ lancet being
a quasi statutory body's decision". If, therefore, an arbitrator records
findings based on no legal evidence and the findings are either his
ipse dixit or based on conjectures and surmises or his findings suffer
from additional infirmity of non-application of mind, the award will
be quashable being perverse.f"
However, an arbitrator under this section is not a 'tribunal' within
the meaning of article 136 of the Constitution." Likewise, it is not a
'tribunal' within the meaning of article 227 of the Constitution.P? A
Division Bench of the Madhya Pradesh High Court in M. G. Panse v.
S.K. Sanyal,98 has expressed the view that after the decision of the
Supreme Court in Rohtas Industries,98a the earlier decision in

93. Supra note 90.


94. Supra note 86 at 279; Ramakrishna Kulwantrai Steels (P) Ltd. v, Their
Workmen. 1977 I LLJ 382, 384 (Mad.) (FB), per Ramaswami, J.; MG. Panse v.
S.K. Sanyal, supra note 83.
95. Rajinder Kumar Kindra v, Delhi Administration. 1984 II LLJ 517 (sc), per
Desai, J; Associaiton ofChemical Workers v, B.D. Borude' 1993 Lab. IC 711 (720)
(Born), per Kantharia, J.
96. Engineering Mazdoor Sabha v. Hind Cycles Ltd., supra note 90.
97. Ibid. The Supreme Court, overruled the view of the Bombay High Court in
Air Corporations Employees' Union v, D.V. Vyas. supra note 91, where it was held
that an arbitrator under section lOA is subject to the judicial superintendence of the
high court under article 227 of the Constitution.
98. Supra note 83.
98a. Supra note 94.
56 LABOUR ADJUDICATION IN INDIA

Engineering Mazdoor Sabha98b that an arbitrator functioning under


section lOA is not a 'tribunal' within the meaning of article 136 of the
Constitution, does not now hold the field.
The Mysore99, the Madhya Pradesh'P? and the Orissa'P! high courts
have taken the view that an arbitration award made under sub-section
(4) based on an 'arbitration agreement' which does not comply with the
requirements of sub-section (3) will be invalid and unenforceable. But a
Full Bench of the Madras High Court l02 has held that the 'arbitration
agreement' which does not comply with the requirements of sub-section
(3) will not be invalid. Hence, the award made on the basis of such
agreement will be valid. In taking this view, the Full Bench relied on
the above decisions of the three high courts. But none of those decisions
supports the view of the Full Bench. Apart from relying on these
decisions, the Full Bench has not given any reasons of its own. This
view is not correct law.
All these high courts appear to have got confused, perhaps in their
overenthusiasm, in connection with the jurisdiction under article 226.
An 'arbitration agreement' which does not comply with the
requirements of various sub-sections of section lOA cannot be deemed
to be an agreement under that section. Sub-section (5) excludes the
application of Arbitration Act, 1940 only to "arbitration under this
section". It is obvious that where the mandatory requirements of this
section have not been complied with, such agreement cannot be "under
this Section". Where an agreement is not under this section, the
application of the Arbitration Act, 1940 is not barred. Therefore,
arbitration agreement between the parties which does not comply with
the requirements of sub-section (3) will not be under section lOA and
shall be governed by the provisions of the Arbitration Act. Hence, a
petition under article 226 challenging the validity of such arbitration
agreement or of an award made under sub-section (4) based on such
an agreement will not be maintainable. The general principles of the
validity of an arbitrator's award apply to the award passed by an
arbitrator under this section. The award is vitiated if the arbitrator is
guilty of misconduct or exceeds his jurisdiction or does not hear the
parties or fails to determine an important question referred to him to

98b. Supra note 90.


99. Workmen o/Madras Woodlands Hotels v. K. Srinivasa Rao, 42 FJR 223, 226
(Mys) (DB), per Chandrasekhar. J.
100. K.P. Singh v. S.K. Gokhale, 1970 I LLJ 125. 128 (MP) (DB). per Tar, J.
10 I. Rasbehary Mohanty v. Labour Court, 1974 II LLJ 222, 226 (Ori) (DB), per
R.N. Misra, J.
102. Ramakrishna Kulwantrai Steels (P) Ltd. v, Their Workmen, supra note 94.
ARBITRATION OF LABOUR DISPUTES 57

be answered. However, the award cannot be challenged on any


procedural grounds or on the ground that the arbitrator has not kept in
view any particular criterion.P!

103. National Project Construction Corp. Ltd. v. Their Workmen, 1970 Lab. Ie
907 (913) (Pat) (DB), per Misra. CJ; affirmed by the Supreme Court in Management
of National Projects Construction Ltd. v. Their Workmen, 1976 I LLJ 86 (sq, per
Alagiriswami, J. But the decision of the high court was partly reversed on another
point.