LABOUR LAW PSDA

SUBMITTED TO:
DR. KAVITA SOLANKI

SUBMITTED BY:
HARSHIT MAHALWAL

BBA LLB (H)

4TH YEAR

01116503515 (11)
 INDUSTRIAL DISPUTE SETTLEMENT MECHANISM – A
COMPREHENSIVE VIEW1

ABSTRACT

The aim of the paper is to study and highlight the various dispute settlement machineries
provided under the Industrial Disputes Act, 1947. The paper highlights the relationship between
workers and employers which contributes to the development of a nation and how any unrest
between the two can be resolved. In this paper, I have also traced the historical development of
modes of dispute settlement, and how the advocacy of socialist doctrines by workmen led to
emergence of various statues which ultimately resulted in the development of dispute settlement
machineries. The paper, thus discusses various conciliatory and adjudicatory remedies available
to the employees and employers under the said Act. These remedies which are in the form of
dispute settlement machineries can be put in force by any of the parties or by the “appropriate
government”. However, the process of arbitration can be put in motion more easily as compared
to other methods as it can be initiated at any time, irrespective of the fact whether there exist an
arbitration agreement or not. The paper also covers recent judicial developments in the arena of
industrial dispute settlement. Finally, the paper concludes with summarizing as to how the
disputes can be settled more efficiently without causing prejudice to the interest of the parties.

Key Words: Development, Dispute, Settlement, Adjudication, Conciliation, Arbitration, Judicial

Developments

1
HARSHIT MAHALWAL, BBA LLB(H) , 7th Semester, 01116503515 (11)

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 INTRODUCTION

The workers and the employers are two important pillars of nation’s economy. The relationship
between workers and employers is one of the partnerships that contribute in the maintenance of
production and building up national economy. However, in human transaction and interaction,
dispute is inevitable. Thus, proper regulation of employer-employee relationship is a condition
precedent for smooth functioning and progressive development of society. The need for State
intervention and involvement in resolving industrial disputes is now admitted by everyone. This
is because no nation can hope to survive in the Modern age, unless it is wedded to industrial
development and technological progress. Economic advancement is tied up with industrial
harmony for the simple reason that it leads to greater co-operation between the employers and
the employees resulting in higher productivity and all round national prosperity.

In the medieval period industrial justice was administered through courts. Morality and good
conscience were the tests to decide a dispute. Still then no strict codification of industrial dispute
legislation is to be found. The first legislation with regard to industrial dispute was passed in
1860. The Employers and Workmen (Dispute) Act. 18602 is the basic foundation in this regard.
It provided for speedy and summary settlement of trade disputes relating to wages of workmen
employed in the construction of railway canals and other public works.

Until Second World War, no other advance was made to reduce industrial strife. During the
Second World War there was constant strife between the employers and employees, due to
which there were industrial unrest and fall in production. Further economic structure underwent a
drastic change during this period: strike and lockouts forced the Government to pass Defence of
India Rules in 1942. Rule 81A of Defence of India Rules, 1942 gave powers to the Government
to intervene in industrial disputes and made general or special orders to prohibit strike or lock-
outs, refered any dispute for conciliation or adjudication, required employers to observe such
terms and conditions of employment as might be specified, and enforce the decisions of the
adjudications. Rule 8IA was to lapse on 1st October, 1946, but was kept alive by recourse to
Government's Emergency Provisions (Continuance) Ordinance, 1946. After this India became
independent and the Industrial Disputes Bill was introduced by the Government of India in the

2
The said Act was repealed in 1932 by Employer and Workmen (Dispute) Repealing Act, 1932.

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Legislative Assembly on the 28th October, 1945. The Bill embodied the essential principles of
Rule 81A of the Defence of India Rules and also certain provisions of the Trade Disputes Act,
1929 concerning industrial disputes. The Select Committee of the Legislative Assembly gave its
Report on 3rd February 1947, which with some amendments was passed in March, 1947 and
became the law from Ist April, 1947.3

DISPUTE SETTLEMENT MACHINERY

One of the principal aims of the Industrial Disputes Act is to harmonize the
conflicting interest of employers and employees engaged in industrial
establishments as defined in the Act. For this the Act has made provision for
investigation and settlement of disputes. Chapter II of the Act enumerates the
various authorities who are empowered for investigation and settlement of
disputes. These authorities settle dispute through (i) Conciliation (ii) Adjudication
or (iii) Arbitration.

I. CONCILIATORY BODIES

The method of conciliation is not new or alien to our system. The International Labour
Organisation has defined conciliation as:

"The practice by which the services of a neutral third party are used in a dispute as a means of
helping the disputing parties to reduce the extent of their differences and to arrive at an amicable
settlement or agreed solution. It is a process of rational and orderly discussion of difference
between the parties to the dispute under the guidance of the conciliator”.4

As soon as an industrial dispute arises or is expected to arise, a notice of strike has to be given
for a period of 14 days, after which and before the expiry of 6 weeks, a strike can take place. 5 On
the receipt of such notice by the employer, the conciliatory bodies come to play.Works

3
Dr. H. K. Saharay, Labour and Industrial Law , 5 TH Edition
4
ILO
5
Industrial Disputes Act, 1947, § 22.

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committee, conciliation officers and boards of conciliation are the authorities which settle
dispute through conciliation.

WORKS COMMITTEE6

According to Section 3(1) in case an industrial establishment employing 100 or more workmen
is quired to constitute a Works Committee in such a manner that the representatives of workmen
are not less than those of the employer.The Works Committee will consist of representatives of
employers and workmen engaged in the establishment, so however that the number of
representatives of workmen in the Committee shall not be less than the number of representatives
of the employer. The role of works committee to safeguard and protect the interest of workmen.
Th functions of works committee is only advisory in nature.

In Kemp and Co. Ltd. v. Their Workmen7, it was said that the duty of a Works Committee is to
smooth away frictions that arise in day to day work.

CONCILIATION OFFICERS8

This is the second authority related to conciliation proceedings.It is generally approached when
the efforts of the works committee fails 9 . Section 4(1) lays down that the appropriate
Government may, by notification in the Official Gazette, appoint such number of persons as it
thinks fit, to be conciliation officers, charged with the duty of mediating in and promoting the
settlement of industrial disputes." Sub-section (2) of Section 4 prescribes that "a conciliation
officer may be appointed for a specified area or for specified industries in a specified area or for
one or more specified industries and either permanently or for a limited period."

In order to bring about an amicable settlement of disputes a conciliation officer is given wide
discretion. Although it is obligatory on the parties to the dispute to appear before him, if
summoned, the parties are not bound to accept his point of view. The main task of conciliation

6
Industrial Disputes Act, 1947, § 3
7
(1955) I LLJ 48
8
Industrial Disputes Act, 1947, § 4
9
AVTAR SINGH AND HARPREET KAUR, INTRODUCTION TO LABOUR AND INDUSTRIAL LAW (3rd
ed., 2015).

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officer is to go from one camp to another and find out the greatest common measure of
agreement.10

BOARD OF CONCILIATION11

This is the third authority created by the Act for promoting the settlement of industrial disputes.
Unlike a conciliation officer, the Board of Conciliation may not be a permanent body and can be
set up by the appropriate Government by notification in the Official Gazette as occasion arises.
The Board shall consist of a chairman and two or four other members, as the appropriate
Government thinks fit. The Chairman shall be an independent person and other member shall be
persons appointed in equal numbers to represent the parties to the dispute. It is set up for the
purpose of promoting settlement of an industrial dispute. So, the appropriate government cannot
set up this board for the purpose of referring criminal proceedings.12

COURTS OF INQUIRY13

The "Court" means a Court of Inquiry under the Industrial Disputes Act, 1947 By Section 6 of
the Act the appropriate Government may, as occasion arises by notification in the Official
Gazette, constitute a Court of Inquiry. The object with which the Court is set-up is to enquire
into any matter appearing to be connected with or relevant to an industrial dispute. The Court is
composed of one independent person or of such number of independent persons as the
appropriate Government may think fit. If the Court consists of two or more members, one of
them must be appointed as a Chairman.

The primary duty of a Court is to enquire into the matters referred to it and to report thereon to
the appropriate Government ordinarily within a period of six months from the commencement of
its inquiry14. The time of commencement of inquiry by the Court will be deemed to be that date
on which reference of a dispute is made to it by the appropriate Government

10
Workers of Buckingham and Carnatic Co. v. Commisioner of Labour, AIR 1994 Mad 538
11
Industrial Disputes Act, 1947, §5
12
Provat Kumar Kar v. William Trevelyan Curites Parker, AIR 2003 Cal 116
13
Industrial Disputes Act, 1947, § 4
14
Industrial Disputes Act, 1947, § 14

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 II. ADJUDICATORY BODIES

LABOUR COURT

Compulsory adjudication of industrial dispute is the curtailment of the freedom of the employer
and the workmen in indirect process to stick to their own ideas and principles. In this process
collective bargaining does not get as much importance as it deserves.

A. Classes of Machinery for Adjudication

The Industrial Disputes Act provides for three classes of machinery industrial disputes through
judicial process. These are namely labour court, industrial tribunal and national tribunal.

B. Matters of Disputes Specified in Second Schedule

The constitution of a labour court is set out in Section 7 of the Industrial Disputes Act, 1947 as
amended in 1956 and 1961. The appropriate Government is empowered under this section to
constitute one or more labour courts for adjudication industrial disputes relating to any matters
specified in the Second Schedule, and for performing such other functions as may be assigned to
them under the Act. The said Schedule contains the following matters which are within the
jurisdiction of labour courts: (1) The competence of an employer to pass an order under the
standing orders (2) The application arid interpretation of standing orders (3) Discharge or
dismissal of workmen including reinstatement of or grant of relief to, workmen wrongfully
dismissed.

INDUSTRIAL TRIBUNAL15

It means a tribunal constituted under Section 7A and includes industrial tribunal constituted
before March 10, 1957 under IDA. In Bhagat Singh v. State of Rajasthan,16 it has been held that
the Industrial Tribunal is not a "Court" within the meaning of Section 86 of the Code of Civil

15
Industrial Disputes Act, 1947, § 7A
16
AIR 1964 SC 444

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Procedure. It is the appropriate Government which is empowered under Section 7A of the Act to
constitute one or more Industrial tribunal for adjudication of industrial disputes.

The Industrial tribunal can exercise Jurisdiction in respect of those matters which are specified
either in the Second Schedule or in the Third Schedule or other matters assigned to it under the
Act Though the matters included in the Second Schedule are specifically meant for me labour
court, but the generality of powers in respect of these matters are also vested in the industrial
tribunal, In short, there is a concurrent jurisdiction of the labour court and the industrial tribunal
in respect of any matter included in the Second Schedule.

NATIONAL TRIBUNAL17

A national tribunal is defined in Section 2(11) of the Industrial Disputes Act 1947 as amended
by Act 36 of 1956. It means a national industrial tribunal constituted under Section 7B of the
Act. The Central Government may constitute one or more national Industrial tribunal for
adjudication of industrial disputes. The notification in the Official Gazette on behalf of the
Central Government is necessary for constituting a national industrial tribunal. The Central
Government may refer to national industrial tribunal for adjudication of such industrial dispute
that (i) involves a question of national importance, or (ii) is of such a nature the industrial
establishment situated in more than one State is likely to be interested in or affected by such
dispute .

The duties of a national industrial tribunal are to hold proceedings of an industrial dispute
referred to it by the Central Government expeditiously, and to submit the award to the referer on
the conclusion thereof.18

17
Industrial Disputes Act, 1947, § 7B
18
Coimbatore workers Employed v. Management of Dhanlaxmi Mills AIR 2008 SC 212

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 III. ARBITRATION

Where any industrial dispute exists or is apprehended, it may be referred to arbitration before it
has been referred under Section 10 to any other authority. A written agreement is necessary to
refer an industrial dispute to arbitration under Section 10A of the Act. The agreement shall
provide for the appointment of an umpire when the even number of arbitrators is equally divided.
A copy of arbitration agreement shall be forwarded to the appropriate Government for
publication in the Official Gazette. The arbitrator or arbitrators shall investigate the dispute and
submit the award signed by the arbitrator or arbitrators, jointly, as the case may be, to the
appropriate Government. This kind of arbitration may be regarded as a statutory arbitration and
is not governed by the Arbitration and Conciliation Act, 1996.19

In Moorco (India) Ltd. v. Government of Tamil Nadu 20 , wherein the Arbitrator had not
submitted the arbitration award under Section MA4 of the Industrial Disputes Act to the
appropriate Government, it cannot be said to be an award within the purview of this Act.

Also, in Associated Cement v. P.N. Sharma it was held by the Supreme Court that an authority
or body deriving its power of adjudication From an agreement of the parties, such as private
arbitrator or a tribunal acting Under Section 10A of the Industrial Disputes Act does not satisfy
the test of a tribunal within Article 136 of the Constitution. It matters little that such a body or
authority is vested with the trappings of a court.21

Furthermore, in S. Dutt v. University of Delhi22 it was observed by the court that the proceedings
before the arbitrator or tribunal constituted under the Industrial Disputes Act cannot be said to be
arbitration proceedings nor is its decision an award in the sense they have been used in the
Arbitration and Conciliation Act, 1996. An award under the Industrial Disputes Act cannot be
filed in Court nor is there any provision for applying to court to set it aside. Considerations in
respect of award are different in the said two statutes.23

19
Industrial Disputes Act, 1947, §10A
20
1993 Lab IC 1663 (Mad)
21
AIR 1965 SC 1995
22
AIR 1976 SC 1050
23
Dr. H. K. Saharay, Labour and Industrial Law , 5 TH Edition

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 RECENT JUDICIAL PRECEDENTS

In Jayant Bhagwantrao Satam v. State of Maharashtra and Ors. 24 , the petitioners sought
declaration that the strike by the employees of the State Transport Corporation is “illegal and
unconstitutional” and seek mandatory relief, to direct the employees of the State Transport
Corporation to resume their duties forthwith. The petitioners would contend that, the strike has
caused immense inconvenience to the residents of the State of Maharashtra and has largely
affected the day-to-day life of the rural population. The court held that:

“That since the services of the Corporation are in the nature of public utility and since the strike
has caused immense inconvenience to the rural population and since the respondent, Union is
not willing to have a resort to the machinery provided by the State i.e. constitution of high-
powered Committee this Court is of the view that the strike by the employees of the State
Transport Corporation of Maharashtra is, prima-facie, illegal and hence the following order :-

(i)The strike by the employees of the State Transport Corporation is hereby recalled.

(ii)the respondent, Unions are directed to inform its employees that the Court has directed them
to resume their duties forthwith.

(iii)the State is directed to constitute a high- powered Committee consisting of five members
instead of four members by Monday, 23rd October, 2017 and draw a terms of reference and
communicate the same to the respondent, Unions on 24th October, 2017.”

The Hon'ble Apex Court in the case of T.K. Rangarajan v. Government of T.N. and Others25

“Apart from statutory rights, government employees cannot claim that they can take the society
at ransom by going on strike. Even if there is injustice to some extent, as presumed by such
employees, in a democratic welfare State, they have to resort to the machinery provided under
different statutory provisions for redressal of their grievances. Strike as a weapon is mostly
misused which results in chaos and total maladministration. Strike affects the society as a whole
and particularly when two lakh employees go on strike en masse, the entire administration

24
PUBLIC INTEREST LITIGATION (ST) NO. 29788 OF 2017, Bombay High Court
25
(2003) 6 SCC 581

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comes to a grinding halt. In the case of strike by a teacher, the entire educational system suffers;
many students are prevented from appearing in their exams which ultimately affects their whole
career. In case of strike by doctors, innocent patients suffer; in case of strike by employees of
transport services, entire movement of the society comes to a standstill; business is adversely
affected and number of persons find it difficult to attend to their work, to move from one place to
another or one city to another. On occasions, public properties are destroyed or damaged and
finally this creates bitterness among the public against those who are on strike.”

In Sharad Kumar v. Govt. of N.C.T of Delhi and others26, the Supreme Court observed the
following:

“16. It was not disputed before us that the jurisdiction vested in the appropriate Government to
make a reference or refuse to do so is administrative in nature and depends on the opinion
formed by it on perusal of the report and the materials received from the Conciliation Officer.
The question on answer of which the decision in this case depends is what is the scope and extent
of the power to be exercised by the appropriate government in such a matter?

29. We are of the view that determination of the question requires examination of factual matters
for which materials including oral evidence will have to be considered. In such a matter the
State Government could not arrogate on to itself the power to adjudicate on the question and
hold that the respondent was not a workman within the meaning of section 2(s) of the Act,
thereby terminating the proceedings prematurely. Such a matter should be decided by the
Industrial Tribunal or Labour Court on the basis of the materials to be placed before it by the
parties. Thus the rejection order passed by the State Government is clearly erroneous and the
order passed by the High Court maintaining the same is unsustainable.”

26
AIR 2002 SC 1724

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 CONCLUSION

The answer to the question as to which of the following methods is the most viable one, lies in
the fact and circumstance of the case. However, as a general note, it can be said, that in practice
arbitration proves out to be the most viable one due to its certain advantages with respect to
flexibility, time and process. The choice of method also varies due to factors such as nature of
industry, place of industry. Compulsory arbitration is limited to public utilities and other
industries in some countries conciliation is usually compulsory in countries where there is
compulsory arbitration, such as in Germany, Sweden, Australia, New Zealand, Venezuela as
well as in some Latin American countries. In Australia parties in dispute should initially fall back
upon the process of conciliation before resorting to the system of compulsory arbitration. Many
collective agreements provide negotiation fails to settle the dispute between the employees and
employers, it shall be referred to the board of conciliation and in the last resort to arbitration
machinery set-up by the parties or to state arbitration tribunals. British Government policy is not
generally to press for arbitration unless there is an agreed arrangement to that effect within the
industry. Therefore , whatever be the medium of dispute resolution, the object and the aim of
every resolution mechanism must be to protect the interest of parties without causing any undue
and unjust prejudice to the opposite party.

**********

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