Beruflich Dokumente
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{
The Trade Unions Act, 1926, The Industrial Disputes Act, 1947, The Industrial Employment (Standing
Orders) Act, 1946
}
Primary objective of trade unions is to replace individual negotiation by collective bargaining with a
view to ensure uniform and reasonable terms of employment and conditions of labour between the
management and the representatives of trade unions in the interest of workers which ultimately lead
to lasting peace and harmony in the industry. The fundamentals of trade unionism are :-
(i) Right to form association (Guaranteed to workers and/or employers as a fundamental or an ordinary
right or both;
(ii) Right of a trade union to be recognized as sole bargaining agent for the workers at the plant local
or national level
(iii) Right to collective bargaining (as a statutory obligation to bargain in good faith on voluntary basis)
(iv) Right to permissible industrial action for bringing the parties to a negotiating table
(v) Prevention of unfair labour practices.
Article 19(4) Nothing in sub-clause (c) of the said clause shall affect the operation of any existing law
in so far as it imposes, or prevent the State from making any law imposing, in the interests of 4[the
sovereignty and integrity of India or] public order or morality, reasonable restrictions on the exercise
of the right conferred by the said sub-clause.
Article 33. Power of Parliament to modify the rights conferred by this Part in their application to
Forces, etc.
(1) T.K Rangarajan v. Govt of TN (2003) 6 SCALE 84 – Held Government servants have no right to go
on strike. In the year 2002, the Govt of TN terminated services of 2 Lakh employees’ u/ TN Essential
Services Maintenance Act, 2002 – Gov servants cannot hold society to ransom. - Held
(a) No fundamental right to go on strike.- Right to collective bargaining – Radhey Shyam Sharma v The
Post Master General Central Circle Nagpur – Contended that A3,4,5 of ESMA violative of A19(1)(a)&(b)
– Court rejected contention and held tht a perusal of A19(1)(a) shows that there is no FR2strike & all
that the Ordinance provided ws against illegal strike.
All India Bank employees association v National Industrial Tribunal – even very liberal reading of
A19(1)[c] cannot lead to conclusion that TUs hv a guaranteed right to an effective collective bargaining
or to strike either as a right to strike or otherwise.
SC cited CPI(M) v Bharat Kr (Kerala Bandh case, Ker HC)– 17 "No political party or organization can
claim that it is entitled to paralyse the industry and commerce in the entire State or nation and is
entitled to prevent the citizens not in sympathy with its viewpoints, from exercising their fundamental
rights or from performing their duties for their own benefit or for the benefit of the State or the
nation. Such a claim would be unreasonable and could not be accepted as a legitimate exercise of a
fundamental right by a political party or those comprising it."
(b) (No legal/statutory right to go on strike – (c) No Moral or equitable justification to go on strike.
(2) B.R. Singh v. UoI (1989) 4 SCC 710 – Fundamental right u/A 19(1)[c] recognized to confer certain
rights on TUs – Necessity to form union is obviously for voices the demands n grievances of labour. TUs
r mouthpieces of labour.
Definition of 'trade unions', workman and trade dispute - The Trade Unions Act 1926 - Ss 2(g) & (h), 3 to
13, 15, 22
“Trade Union means any combination, whether temporary or permanent, formed primarily
for the purpose of (a) regulating the relations between employer and workmen or between
workmen inter se or between employers inter se or (b) for imposing restrictive conditions on the
conduct of any trade or business and includes any federation of two or more unions.”
Section 2(g) reads (part 2 of the definition of trade dispute) : “Workmen” means all persons employed
in trade or industry whether or not in the employement of the employer with whom the trade dispute
arises.
The ITUA is based on British ITUA with a material difference that that it uses the work 'Combination'
whereas the British Act uses the word 'Association', former has a wider implication than the latter. The
act applies to every establishment which is engaged in an industry, sepcified in Schedule I (Trade
Dispute Act?) and in which 20 or more persos are employed.
'Trade' includes any gainful occupation. Any one from a dustman to a highly skilled professional workers
may enter into a contract in restraint of trade restricting the manner in which he can earn a living. The
word 'impose' in the definition of Trade Union, connotes an agreement and compulsion. 'Restrictive
conditions' would mean to enter into a contract in restraint of trade restricting the manner in which
one can earn a living. Any regulation of relations in employment would amount to imposing restrictive
conditions. Resgulation of employment, however is to be treated separately from restrictive conditions
on the conduct of trade or business.
Persons belonging to a number of trades or to no trade at all may constitute a trade union. There may
be a trade union which is cmposed neither of workman nor masters, although it may be a compination
to regulate the relations between wrokmen and workmen or workmen and masters. A union may consist
both of morkmen and employers. The test of the trade union is its objects and not its composition. The
emphasis in Sect 2(h) is on the purpose for which the Union is formed and not so much on the persons
who constitute the Union. (Hardei & Lane Ltd v Chillon (1928)).
(i) It is the principal object of a combination which determines whether the combination is a Trade
Union or not. The object must be one connected with the regulation of relations between workmen and
employer etc or imposition of restrictive conditions on the conduct of trade or business of its members.
(ii) However, it may noted that a union of any persons will not become a TU if they have the above
mentioned objects. IT is also necessary that the combination be formed either of 'workmen' or of
'employers', i.e. The persons are equally important, besides the object. The memebers of a TU must be
'wrokmen' of employer engaged in the conduct of any trade or business in a commercial undertaking,
otherwise the definition in sec2(g) and 2(h) could not apply to them and they could not raise a “trade
dispute” nor form a TU. In order to attract teh provisions of the Act both the conditions namely
workmen engaged or trade or business must be fulfilled.
Illustrationss /Cases
An association of authers and proprietors of a dramatic work, the primary obejct of which was to
acquire and deal with the interest of its membners in their work, i.e., to enforce the rights of members
but not to impose restrictive conditions on the conduct of their business was held not be TU
[Performing Society v. London Theatre of Varieties (1924)]
S2(g) “trade dispute” means any dispute between employers and workmen or between workmen and
workmen, or between employers and employers which is connected with the employment or non-
employment, or the terms of employment or the conditions of labour, of any person, and “workmen”
means all persons employed in trade or industry whether or not in the employment of the employer
with whom the trade dispute arises; and
S2(h) “Trade Union” means any combination, whether temporary or permanent, formed primarily for
the purpose of regulating the relations between workmen and employers or between workmen and
workmen, or between employers and employers, or for imposing restrictive conditions on the conduct
of any trade or business, and includes any federation of two or more Trade Unions
S8 Registration.
The Registrar, on being satisfied that the Trade Union has complied with all the requirements of this
Act in regard to registration, shall register the Trade Union by entering in a register, to be maintained
in such form as may be prescribed, the particulars relating to the Trade Union contained in the
statement accompanying the application for registration.
COMMENTS
Duty of Registrar
The duties of the Registrar were to examine the application and to look at the objects for which the
Union was formed. If those objects were objects set out in the Act, and if those objects did not go
outside the objects prescribed in the Act and if all the requirements of the Act and the regulations
made thereunder had been complied with, it was his duty, to register the Union; Inland Steam
Navigation Workers Union (in re:), 1936 IC 378.
Powers of Registrar
No provision of law provides for holding of election under the supervision of Registrar, Trade Unions.
Therefore, the petitioner is right in submitting that there is no legal authority for issuance of impugned
orders under which the internal disputes were referred for adjudication by the independent Board and
upon its recommendations, election is directed to be held under the supervision of Registrar of Trade
Unions; Tata Workers Union v. State of Jharkhand, 2002 LLR 806 (Jhar HC).
Question of fact or law
The Registrar is not a quasi-judicial authority and cannot, therefore, decide any disputed question of
fact or law; O.N.G.C. Workmen’s Association v. State of West Bengal, (1988) 57 FLR 522 (Cal).
Scope
Provisions of this section relate to only registration of a trade union. It is only a Civil Court which has
jurisdiction to decide that dispute since under the Trade Unions Act, there is no provision permitting or
empowering the Registrar to refer internal disputes relating to office-bearer for adjudication to any
other forum; R.N. Singh v. State of Bihar, 1998 LLR 645.
S9 Certificate of registration.
S11 Appeal.
S 12. Registered office
S 13. Incorporation of registered Trade Union.— Body corporate, perpetual succession
(a) the payment of salaries, allowances and expenses to 1[office-bearers] of the Trade Union;
(b) the payment of expenses for the administration of the Trade Union, including audit of the accounts
of the general funds of the Trade Union;
(c) the prosecution or defence of any legal proceeding to which the Trade Union or any member
thereof is a party, when such prosecution or defence is undertaken for the purpose of securing or
protecting any rights of the Trade Union as such or any rights arising out of the relations of any
member with his employer or with a person whom the member employs;
(d) the conduct of trade disputes on behalf of the Trade Union or any member thereof;
(e) the compensation of members for loss arising out of trade disputes;
(f) allowances to members or their dependants on account of death, old age, sickness, accidents or
unemployment of such members;
(g) the issue of, or the undertaking of liability under, policies of assurance on the lives of members, or
(under) policies insuring members against sickness, accident or unemployment;
(h) the provision of education, social or religious benefits for members (including the payment of the
expenses of funeral or religious ceremonies for deceased members) or for the dependants of members;
(i) the upkeep of a periodical published mainly for the purpose of discussing questions affecting
employers or workmen as such;
(j) the payment, in furtherance of any of the objects on which the general funds of the Trade Union
may be spent, of contributions to any cause intended to benefit workmen in general, provided that the
expenditure in respect of such contributions in any financial year shall not at any time during that year
be in excess of one-fourth of the combined total of the gross income which has up to that time accrued
to the general funds of the Trade Union during that year and of the balance at the credit of those funds
at the commencement of that year; and
(k) subject to any conditions contained in the notification, any other object notified by the
2[appropriate Government] in the Official Gazette.
State Amendment
S22 Proportion of office-bearers to be connected with the industry.—(1) Not less than one-half of the
total number of the office-bearers of every registered Trade Union in an unrecognised sector shall be
persons actually engaged or employed in an industry with which the Trade Union is connected:
Provided that the appropriate Government may, by special or general order, declare that the
provisions of this section shall not apply to any Trade Union or class of Trade Unions specified in the
order.
Explanation.—For the purposes of this section, “unorganised sector” means any sector which the
appropriate Government may, by notification in the Official Gazette, specify.
(2) Save as otherwise provided in sub-section (1), all office-bearers of a registered Trade Union, except
not more than one-third of the total number of the office-bearers or five, whichever is less, shall be
persons acutally engaged or employed in the establishment or industry with which the Trade Union is
connected.
Explanation.—For the purposes of this sub-section, an employee who has retired or has been
retrenched shall not be construed as outsider for the purpose of holding an office in a Trade Union.
(3) No member of the Council of Ministers or a person holding an office of profit (not being an
engagement or employment in an establishment or industry with which the Trade Union is connected),
in the Union or a State, shall be a member of the executive or other office-bearer of a registered Trade
Union.]
COMMENTS
Object and scope
The returning officer is not a statutory authority but an ordinary person in matter of election of office
bearers; O.P. Gupta v. Union of India, 2001 LLR 125 (Raj).
Members of Registered and Recognized TU enjoy such benefits as is not enjoyed by unregistered TU.
(v) Under the provisions of the Act, at least 1/2 of the office bearers must be persons actualy engaged
or employed in the plant/ industry with which the Union is concerned.
(vi) The workmen of an establishment form as many Unions as they like. There is nothing in the act
that bars the formation of rivals Unions or requires a Union applying for registration to give notice to
all existing Unions. (Kehsarayon Workers Union v Registrar (1967)).
When the Union seeks registration, all that it has to do is to ensure that the provisions of the Act, Rules
and Regulations made thereunder relating to registration of TU has been complied with by the body of
workers applying for registration.
The registration will be refused by the Registrar if the name under which a Trade Union is proposed to
be registered is identical with that of any existing TU or so nearly resembles such name as to be likely
to deceive the public or the members of the either TU. In such a case, the Registrar may require ther
persons applying for such registration to change the name of Union, and it shal be registered only after
such alteration. The Registrar may also ask for further information which he thinks necesary for the
purpose of satisfying himself that the application complies with teh provision of Sec.5 and 6 of the Act
(Sec.7).
Section 8 imposes a statutory duty upon the Registrar to register the TU on being satisfied that the TU
has complied with the requirements of the Act. If the registration is unreasonably delayed (viz. No
action taken on applicaiton for more thatn 3 months), a writ under At. 226 of the Constitution can be
issued (ACC Ranjanka Lime Stone Quarries Mazdoor Union v Registrar (1958)).
As a matter principle Registrar has no power to declare the election of office bearer of a Union
unconstitutional. But where the petitioner has himself submitted to the jurisdiction of the Registrar by
requesting him to make an enquiry, he cannot subsequently be allowed to raise an objection that the
Registrar acted without jurisdiction (Mukund Ram v SI Raza, Registrar).
Thus, a non-commercial undertaking would come within the scope of that enactment. However
industrial peace and the ohject of the TU Act is to render lawful the organization of labour and to
enable collective bargaining the benefits conferred by the TU Act are to be enjoyed by a clearly
defined category of unions.
It is therefore doubtful whether the two acts can be read as pari materia (as forming one system and
interpreting one in the light of another). The definition of industry in the TDA should not be used be
used in interpreting the provisions of the TU Act.
(iii) Two distinctive features of an industry are (a) the employer as well as the employees should be
engaged in the industry, and (b) there should be cooperation between both of them for achieving the
particular result. Further, there can be no industry where the employer is not engaged in common with
the employees with the definite objective of the achievement of the material needs of humanity and
that in an organised manner.
In the present case, it cannot be said that there was co-operation between the employer and
employees for the purpose of a trade or business. The services rendered by the employees of the
RajBhawan were of a personal nature since the employer was not carrying on any trade or business. A
mere personal service however much it might have been organised, would possible be an undertaking
within the meaning of the Act. The order of the Registrar of TU rejecting the application of the
petitioner is therefore correct.
Similarly persons employed in Palace Administration Board Hospital, members club and domestic
servants emplyed by private individuals have been held as not workmen.
(4) The Tamil Nadu Non-Gazetted Govt Offrs Union, Madras vs The Registrar of Trade Unions, AIR
1962 Mad 234
IN this case the Tamil Nadu Non-gazzetted Govt. Officer's Union (Amongst its members were sub-
magistrates, Tehsildars, sub-Treasuries, etc.) applied for registration under the TUA. The Registrar
refused registration on the ground that such an Associaton of ministerial employees of the
Administrative Departments of Govt. Offices could not claim to be trade union at all. The Madras High
Court also held that the Govt. Servants cannot form a TU.
(5) Registrar of Trade Unions v. Govt Press Employees Union (1976) Lab IC 280 (Mad.)
In Registrar of TU v Mihir Kumar(1963) it was held that TU of employees of Employees State Insurance
Corp., can get registration under the Act. Similarly, employees working in a Government Press carrying
on business of printing have been held as workmen and allowed to get their Union registered on the
ground that printing press is an industry (Registrar, TU v Govt. Press Employee's Union Pondicherry
(1976) ).
(6) Tirumala Tirupati Devasathanam vs Commissioner of Labour (1995) Supp. (3) SCC 653
held that the persons employed in TT Devastha, a public religios institution, administered under the AP
Charitable and Hindu Religious Institution and Endowment Act 1966 can register themselves into a TU.
It was held that though the essential character of Insitution is religious, it has to maintain several
departments such as Electricity and water Department to cater to the needs of the pilgrims, such
departments being Industry.
(11) Chairman SBI vs All Orissa State Bank Offrs Associaion, AIR 2002 SC 2279
Indian Penal Code S120A. Definition of criminal conspiracy. S120B. Punishment of criminal conspiracy
Additional Notes: Complete immunity has been provided from civil proceedings and tortious acts to a
registered TU, its office bearers and its members, of the offence of deliberately bringing abut a breach
of contract of employment between the employer and employee. Similarly a union is protected from
being sued for the offence of inducing a person to break his contract of employment or interfering with
the trade, business or employment of some other person provided such inducement is in contemplation
or in furtherance of a trade dispute [Sec 18(1)].
The immunity extended to Union for acts done by office bearers and members of Union only if done in
contemplation of furtherance of a trade dispute in the general interest of the working class who are
permitted legally to organise themselves into Tus. Further, Inducement procurement or interference
must be by lawful means. And not by means which would be illegal or wrongful by other provisions of
law [RBI v Ashis Kusum (1969)].
If acts done in furtherance of a TD involve any violence etc., then the immunity will no longer be
available. Protection under Sec.18 does not extend to libel actions.
Sec. 18(2) protects the Union for tortious acts done in contemplation or furtherance of a TD by an
agent of the TU without the knowledge or contrary to the express instructions given by the executive
of the TU. This protects the corporate funds of the TU.
What actions are covered by Section 18 depend upon the facts and circumstances in each case: -
1. Peaceful picketing are protected. Picketing described as “Marching to and fro before the premises of
an establishment involved in a dispute, generally accompanies by the carrying and display of a sign or
banner, etc. Picketing may be accompanied by a polite request asking workers not to assist in the
running of that establishment or customers not to patronize that establishment (D Ganesh v Shate
(1961)
2. Picketing ceases to be peaceful the moment it results in a private or public nuisance. Intimidation or
indulging in Gherao or wrongful confinement of officer’s o the managerial staff or other members of
the public in premises of that establishment will be unlawful.
3. Any show or threat of violence or any other unlawful threat likely to create fear in the mind of a
reasonable man will render picketing unlawful. Pickets cannot force people to listen to them. They
cannot obstruct the passage of customers goods vehicles etc. Thus the right to picket is closely limited
by the equal right of others to go about their lawful affairs free form obstruction molestation or
intimidation (Simpson & Group Co. Workers Union v Amco batteries(1992))
(13) Rohtas Industries Staff Union vs State of Bihar AIR 1963 Pat 170
Question before Patna HC was: Whether the employers have any right to claim damages against the
employees participating in an illegal strike and threby causing loss to production and business?
Due to non-payment of bonus and non-implementation of an existing award, the workers struck work.
Withdrew the strike on agreement to refer the matter to arbitration. Arbitrator inter alia awarded that
the strike was illegal and so the Union will not get any immunity under Sec.18 of the Act and company
entitled to compensation. HC however set aside the award.
HC held that Conspiracy as a tort would become actionable if the real purpose of the combination was
to inflict damage as distinguished from serving the bonafide and legitimate interest of those who so
combine. If the object is of improving wage prospects it will not become actionable even if it may
affect the interest of the employer.
The right of the workmen to strike is an essential element in the concept of collective bargaining and if
the predominant purpose of strike is lawful protection of any legitimate interest of the combiners, it is
not tortious conspiracy, even though it causes damage to the employer.
Even though the strike may be illegal under Sec.24 of the Industrial Dispute Act 1947, still workers are
entitled to immunity under Sec.18 of the TUA 1926. Legality or Illegality of the strike has no bearing on
the question of immunity furnished under Sec.18. The workers demonstration are protected so long as
they are peaceful.
(14) Std Chartered Bank vs Chartered Bank Employees Union (1997) 68 DLT 391 (Omitted from syllabus)
The plaintiff bank filed a suit against to get a decree of perpetual injunction to restrain defendant
employees from instigating and abetting other employees and to resort to strike, holding of
demonstations, shouting slogans, resorting dharnas, gheraos and putting up loudspeaker, within radius
of 500 meters of the Bank. The HC decreed the suit by restraining defendant union from hoding
demonstations, etc., within a 50 meters from the suit property. The court observed: Even assuming the
union is entitled to go on strike, it cannot exercis the saids right to casue nuisance to the employer.
The freedom of speech and right to form association granted by the Constitution did not confer a right
to hold meeting and shout slogans at premises, legally occupied by others.
(15) Common Cause vs UoI (1996) 1 C.C.C 242 (NCDRC) (Omitted from syllabus)
(b) any activity relating sales or business or both establishment. to the carried promotion on by of an
but does not include--
(1) any agricultural operation except where such agricultural operation is carried on in an integrated
manner with any other activity (being any such activity as is referred to in the foregoing provisions of
this clause) and such other activity is the predominant one.
Explanation.--For the purposes of this sub-clause, "agricultural operation" does not include any activity
carried on in a plantation as defined in clause (f) of section 2 of the Plantations Labour Act, 1951 (69 of
1951); or
(9) any activity, being an activity carried on by a co-operative society or a club or any other like body
of individuals, if the number of persons employed by the co-operative society, club or other like body
of individuals in relation to such activity is less than ten;
2(j) Industry means any business, trade, undertaking, manufacture or calling of employers and includes
any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.
Industry is something that the employers create, or undertake. However that concept is gradually
giving way to the modern concept which regards industry as a joint venture undertaken by employers
and workmen, an enterprise which belongs equally to both. An industry exists only when there is
relationship between employers and employees, the former engaged in business, trade, undertaking,
manufacture or calling of employers and the latter engaged in any calling, service, employment,
handicraft, or industrial occupation or avocation.
No problem AFA ascertaining the meaning of the words ' business, trade, manufacturing or calling of
employers; is concerned. Difficulties cropped in giving meaning to ' Undertaking', a term of very wide
denotation. ‘Undertaking’ means anything undertaken, any business, work or project which one
engages in or attempts, or an enterprise. But all decisions of the SC agree that an undertaking to be
within the definition of Sec.2 (j) must be read subject to a limitation, namely it must be analogous to
trade or business. “As a working principle, it ay be stated that an activity systemically or habitually
undertaken for the production or distribution of goods or for the rendering of material service to the
community at large or a part of such community with the help of employees is an undertaking
(Hospital Mazdoor Sabha Case 1960).
Municipal Undertakings are generally engaed in services which are of public utility in nature but some
of the activities may also be of thpe which are discharged by severign bodies. In case the difficulties
crop up in determination.
In D.N. Banerjee v PR Mukherjee (1953) it was held that a public utility service or undertaking run by
Municipal Corporation constitute an industry even though it is carried on the with the aid of taxation
and no immediate mateial gain by way of profit is envisaged., because there is co-operation between
capital and labour and rendering of material service to the public.
In Corporation of City of Nagpur v Its Employees(1960) it was held that municipal functions are
analogous to business or trade and hence municipal functions held to be industry.
The court also made distinction between the Regal functions and Municipal functions. The courts laid
down the following principal:
(i) The regal/ sovereign function described as primary and inalienable function. Such functions
confined to excercise of Legislative power, administration of law and judicial power. Welfare activities
of the Government not excluded from the definition of Industry.
(ii) If service rendered by a an individual or a private person would be classified as industry, in the
hands of the Government also this service would be an industry.
(iii) If a service rendered by a corporation is an industry the employees in the department connected
with the service, whether financial, adiminstrative or executive would be entitled to the benefits of
the Act.
(iv) If a department of the Municipality discharges many functions, some of which could be classified as
industry and other non industrial activities, the predominant functions of the department shall be the
criterial for the purpose of deciding whether that department is industry or not.
Electricity, Fire Brigade Department held to be industry but Octroi department not held to be an
industry.
Supreme court in BWSS case approved the law laid down in Corpn. Of the City of Nagpur case.
Clubs
Voluntary organisation formed by the members for entertainment and pleasure. The functioning of such
clubs are governed by their bye laws framed for the purpose to regulate its mangement. Employ large
number of people also.
THE Cricket Club of India v Bombay Labour Union (1969) held not to be an industry. Not carrying any
trade or Business.
(a) An activity systematically or habitualy undertaken for the production or distribution of of goods or
for the rendering material services to the community at large or a part of such community with the
help of employees is an undertaking.
(b) It is the character of the activitiy in question which attracts the provision of Sec2(j) who conducts
the activity and whether it is for profit or not do not make a material difference.
Thus activities which have no commercial implications such as hospitals carried on with pholanthropic
motives would be industry. It does not matter if Government runs it.
Safadarjung Case: Held that a place of treatment of patients run as a department of the Govt not an
industry because it is part of the functions of the Government.
Charitable Hospitals run by Govt or Private associations cnnot be included inthe definition of industry.
In Dhanrajgiri Hospital v Workmen (1975) it was held that the main activity of the Hospital was to
impart training to nurses and the beds in Hospital were meant for their practical training. It was held
not be an industry.
In National Union of Commercial Employees v MR Meher(1962) held that Solicitor's firm not an industry
as the court held that in a person in liberal profession does not carry out his profession in any
intelligible sense with the cooperation of his employees. Cooperation has to be immediate and direct.
Research Insitutes
In Ahmedabad Textile Industry's Research Association v State of Bombay(1961), - an association for
founding a scientific research institute. The SC held that though the Institute established for research
its main object was the benefit of the members of its association. It is managed and organised in a
manner analogous to trade and business. It postulates co-operation between employers and employees.
Moreover the personnel who carry on research have no right in the result of the research. Held to be an
Industry.
In Asiatic Society v State of WB Asiatic Society was not held to be an industry, even though it was
publishing books for sale in the market, it did not have a printing press of its own. Further printing of
books was an anciliary activity. It was catering to the intellectual needs of the society and not the
material needs.
ISRO held not to be an industry in Harshit Takkar (1990) case having bearing on the Sovereign functions.
However in National Remote Sensing Agency held to be an industry as it does not perform any sovereign
function. Some important function of the Agency relate to consultancy.
Other Activities
A society formed for the pupose of protection, care and treatment of old, inform, and injured cows
etc., also engaged in activity of selling milk was held to be an industry. (Bombay Panjarapole V The
workmen (1971).
A place of worship (mandir) where worship is done by Pujari on a regular wage basis and where it
appars from teh balance sheet that there remains a large surplus in the fund after expenses are paid
for making of Prasad, it is clear that the enterprise is of commercialnature and for this reason, Mandir
is an industry ( Workmen of Baikuntha Nath Debasthan Trust V State of WB (1991).
Panchayat not industry but Panchayat Samity providing drinking water by istalling hand pumps and
arranging repairs etc were held to be industry. Even a Trade Union Dattatray Gopal Paranjape v
Rashtriya Mill Mazdoor Sangh (1995) held to be a industry.
Is Hospital an Industry
In state of Bombay v Hospital Mazdoor Sabha (1960) SC held that the State is carrying on an
undertaking when it runs a group of Hospitals for purpose of givnign medical relie to the citizens and
for helping medical education.
Court Observed:
In Brahmo Samah Education Society case the Calcutta HC observed that an under taking tat depends on
the intelligence or capacity of an individeal does not become an indutry. (overruled by BWSS)
(16) Bangalore Water Supply and Sewarage Board vs A Rajappa, AIR 1978 SC 548
A seven judge bench approved the Test laid down in the State of Bombay v Hospital Mazdoor Sabha
Case (1960). Held as follows:
(ii) Industry as defined in Sec.2(j) of the Act has a wide import.
(iii) Triple Test – where there is
(i) Systematic activity
(ii) organized by the co-operation between employer and employee,
(iii) for the production / distribution of goods and services calculated to satisfy human wants and
wishes, prima facie, there is an industry in that enterprise.
(iv) Absence of profit motive is irrelevant, be the venture be in public or private, joint or other sector.
It makes no difference whether the motive is profit or not or the public service rendered by the
undertaking is in public interest or not.
(v) The true focus is functional and the decisive test is nature of the activity with sepcial emphasis on
the employer-employee relations.
(vi) If the organizations a trade or business it does not cease to be one because of philanthrophi]y
animating the undertaking.
(vii) Although the section defining the concept of industry, viz Sec.2(j) used the words of wide
amplitude in its two limbs, their meaning cannot be magnified to over-reach each other.
The word undertaking must suffer contextual and associational shrinkage, so also must service, calling
and the like. The inference is that all organized activity possessing the triple elements although not
trade or business may still be industry provided the employer -employee relations, bear resemblance to
what we find in trade or business.
(viii) The ideology of the Act being industrial peace, regulation and resolution of industrial disputes
between employer and workmen, the range of this statutory ideology must inform the reach of
statutory definitions.
1. The consequences are:
(i) Professions
(ii) Clubs
(iii) Educational institutions,
(iv) Cooperatives
(v) Research Institutions
(vi) Charitable Projects
(vii) other adventures, if they fulfill the triple test, cannot be exempted from scope of definition of
indusry under S 2(j).
(ix) The dominant nature test – The dominant character of the enterprise is the sole criterion in the
above categories of enterprises to decide whether they are industries or not. Further, were a complex
of activites some of which may be industrial in nature and other not, involve employees of the total
undertaking some of whom are not workmen or some departments are not productive or goods and
services if isolated, even then the predominant nature of the services and integrated nature of the
department will be true test, the whole undertaking will be industry although those who are no
workmen by definition may not benefit by the statute.
Similarly the activities that are dominated by charitable motives are not excluded from the definition
if the dominant character is industrial and the relationship of employer and employees result in the
production of material goods and rendering of material services/
(x) Exceptions – A restricted category of professions, clubs co-operatives, and even gurukuls and little
research laboratories may qualify u for exemption, if no employees are employed but minimal
employees are hired without destroying the non-employee character of the unit.
If in a pious or altruistic mission, many employ themselves free or for small honorarium, mainly drawn
by sharing in the purpose or cause, such as lawyers volunteering to run free legal services or doctors
serving in their spare hours in a free medical centre or ashramites working at the bidding of the
holiness, and the services are supplied free or at at nominal cost and those who serve are not engaged
for remuneration or on the basis of master – servant relationship, then the institution is not an industry
even if stray servants are hired.
Sovereign functions strictly understood alone qualify for exemption, not the welfare activities or
economic activities undertaken by the Government or statutory bodies. Department discharging
sovereign function, having units under them which are industries, and they are substantially severable
then they can come within the definition of industry.
Constitutional and competently enacted legislative provisions may well remove from the scope of IDA
categories which otherwise may be covered thereby.
SC expressed difficulty in defining Industry and said that it cannot be strictly defined but can be
described. Such a rule however leaves too wide a door open for speculation and subjective notions as
to what is describable as an industry. It is best to look for a rough rule of guidance by considering what
the concept of industry must exclude.
Cases overruled: Decision of SC in Management of Safdarjung Hospital v Kuldip Singh ( 1970), NUC
Employees v Industrial Tribunal (1962), University of Delhi v Ram Nath (1963), Gymkhana Club
Employees Union v Management(1968).
Indian Parliament reacting to the Rajappa's Case (Bangalore Watersupply case) amended the definition
of Industy in 1982. The amended definition has borrowed the triple test laid in Rajappa's Case, but has
excluded many activities like hospitals, dispensaries, educational Institutions, etc. As amended
definition has not been brought into effect till date, definition as laid down in Rajappa's case continues
to be valid. Since 1978, courts have been consistently following it as a precedent. The great merit of
Rajappa's case lies in settling law on the issue and giving certainty.
The SC overruled the decision in the Theyyam Joseph Case (1996) in which it was held that the
functions of Postal Department are part of the Sovereign functions of the State and therefore it is not
an industry. Bombay Telephone Canteen Employees Association (1997) decision was also overruled in
which it was held that the Telephone Nigam is not an industry.
(18) Coir Board Ernakulam vs Indira Devi, PS(I), AIR 1998 SC 2801
SC held that the Purpose of the Board is to promote coir industry, open markets for it and provide
facilities t make the coir industry's products more marketable. It is not set up to run any industry itself.
Looking to the predominant purpose of which it is set up, it could not be called an industry. However if
one were to apply the triple test as laid down by Bangalore Water Supply Case, then it will have to be
called an industry.
Court concluded “We do not think that such a sweeping test was contemplated by the ID Act, nor do
we think every organization which does useful service and employs people can be labelled as Industry”.
A bench of three Judges of SC, after reconsidering the matter observed: The judgment delivered by a
seven Judge bench of this court in Bangalore Water Supply Case does not in our opinion require any
reconsideration on a reference being made by a two judge bench of this court, which is bound by the
Judgment of the larger bench.
(19) Coir Board Ernakulam, Kerala State vs Indira Devi PS(II) (2000) 1 SCC 224
(20) M.G.T of Som Vihar Apartment Owners Housing Maintanence Society Ltd vs Workmen AIR 2002
SC 2530
Question was whether a Society formed to maintain the cleanliness in the apartments and to render
certain services personally to the appartment owners is an industry. Contentions: A separate entity
aprt from the apartment owners. It is not taking servvice for itself. Services are rendered to owners.
That the workers receive salary and work under their control and supervision. And therefore the
activities should entitle them for an Industry Tag.
SC observed: The whole purpose of the IDA is to focus on resolution of Industrial Disputes and
regulations would not meddle with every little carpenter or a blacksmith etc. The rationale which all
along the line applies to small profession would also apply to those engaged by a group of flat owners
for rendering personal services even if that group is not amorphous but crystallised into an association
or society. It is clear that when personal services are rendered to the members of Society and that
society is constituted only for the purpose of those members to engage the services of such employees,
such activities could not be treated as an industry.
In this case interpretation of the definition of industry as given by seven Judge bench in the Rajappa's
case was in issue. Apex court observed that there are compelling reasons more than one, before the SC
for making a reference onthe interpretation of the definition of industry in Sec.2(j) of the IDA to a
larger Bench and for reconsideration by it, if necessary, of the decision in Bangalore Water Supply Case
(BWSS)
It is therefore for the larger bench to consider interpretation of the definition clause in the present
context with the experience of all these years, and keeping in view the unenforced amended definition
of industry.
S2(k) “Industrial dispute” means any dispute or difference between employers and employers, or
between employers and workmen, or between workmen and workmen, which is connected with the
employment or non-employment or the terms of employment or with the conditions of labour, of any
persons;
S2A Dismissal, etc., of an individual workman to be deemed to be an industrial dispute. Where any
employer discharges, dismisses, retrenches or otherwise terminates the services of an individual
workman, any dispute or difference between that workman and his employer connected with, or
arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to be an
industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the
dispute.]
2["(2) Notwithstanding anything contained in Section 10, any such workman as is specified in sub-
section (1) may, make an application direct to the Labour Court or Tribunal for adjudication of the
dispute referred to therein after the expiry of forty-five days from the date he has made the
application to the Conciliation Officer of the appropriate Government for conciliation of the dispute,
and in receipt of such application the Labour Court or Tribunal shall have powers and jurisdiction to
adjudicate upon the dispute, as if it were a dispute referred to it by the appropriate Government in
accordance with the provisions of this Act and all the provisions of this Act shall apply in relation to
such adjudication as they apply in relation to an industrial dispute referred to it by the appropriate
Government.
(3) The application referred to in sub-section (2) shall be made to the Labour Court or Tribunal before
the expiry of three years from the date of discharge, dismissal, retrenchment or otherwise termination
of service as specified in sub-section (1)."]
Sec.2(k)
“Industrial Dispute”. Any dispute or difference between employers and employers, employers and
employees or employees and employees which is connected with employment or non-employment or
terms of the employment or with conditions of labour of any person.
(a) Factum or real and substantial dispute: There should be a dispute or difference.
(b) Parties to the Dispute – The dispute should be between employers and employers or between
employers and workmen or workmen and workmen.
(c) Subject matter of the dispute should connected with the employment or non-employment or terms
of employment or conditions of employment of any person. Any person in the definition means that the
person may not be a workman but he may be some one in whose employment, terms of employment or
conditions of labour the workmen as a class have a true and substantial interest.
The term industrial dispute connotes a real and substantial difference having some element of
persistency and continuity till resolved and likely if not adjusted, to endanger the industrial peace of
the undertaking or the community. Shambha Nath v Bank of Baroda(1978).
Key Words: PERSISTENCY and CONTINUITY
Any difference between employers and employees which give rise to the occasion to move the
machinery for resolving the difference is covered by the definition of ID. Justification or other wise of
the controversy is a secondary consideration as the difference can arise when a demand is made which
may not be justified, or may be considered wholly unjustified by the employers but nevertheless the
machinery is put into action to resolve the controversy. (Safdarjung Case)
Key Words: Justification or otherwise
Demand before the Management and its rejection. Cannot directly refer to Conciliator and then claim
that it is an industrual Dispute
Refusal to participate by an employ does not make a difference to the status as Industrial Dispute
Union came into existence after the dismissal of the workman and dismissed workman joined
it later, the dispute was held to be an Industrial Dispute
Even if a Union withdraws support to the workman whose cause they were espousing, the dispute
remains an Industrial Dispute.
Subject matter of the Industrial Dispute may be bonus, DA, any matter connected with the conditions
of employment, or some general questions on which group is bound. Employment /Non employment
covers a wide range of subject which can form the subject of the dispute.
All disputes relating to thte matters specified in Sch.I and Sch.II
Disputes regarding the workers employed by the contractor also ID
ID cannot exist between employer and the person seeking employment.
(22) Workmen of Dimakuchi Tea Estate vs Management of Dimakuchi Tea Estate AIR 1958 SC 353
Dr KP Banerjee Asst Medical Officer. – Discharged given no reason – Q whether Dr ws a workman?
SC held as folows:
Having regard to the scheme and object of the Act, and its other provisions, any person in Sec.2(k)
must be read subject to limitation and qualification as arise from CONTEXT
(i) One such limitation is dispute must be real and substantial. Any person therefore cannot mean a
person w.r.t whom the employer is in no position to give any relief.
(ii) Principle of Solidarity of labour movement. Can raise a dispute about a person only in employment
or non-employment who have direct and substantial interest. Workman need not be necessarily a
workman,
(iii) Community of interest cannot exist unless the person is a past or present workman.
(iv) Ordinarily it is the aggrieved party who can raise a dispute but an ID is put on collective basis,
because it is now settled law that an industrial dispute not espoused by others of the class to which the
aggrieved party belongs is not ID within the meaning of the Sec.2(k).
Held that Dr KP Banerjee was not a workman within the meaning of the act. Hence dispute not an
industrial dispute within the meaning of the act.
(23) Bongolgaon Refinery & Petrochemicals Ltd vs Samijuddin Ahmed AIR 2001 SC 3507
‘ benevolent employment scheme’ of employment to candidates whose land had been acquired by the
company – got job concealing the fact that his 2 brothers had already been given employment by the
company – fact became known before joining of appellant and appointment was cancelled & joining
refused – SC – the respondent had not entered the employment of the appellant hence referring a
dispute u/ IDA based on assumption that the respondent had entered the service of the appellant and
was removed from service suffered from material infirmity and was therefore vitiated.
(24) Municipal Corporation of Delhi vs Female Workers (Muster Roll) AIR 2000 SC 1274: (2000) 3 SCC 224
Demand for maternity leave – MCD contended such leave only available to regular female workers & not
daily wagers as per Maternity Benefit Act, 1961. SC held that activity of MCD wud fall under the def of
industry – the workmen or for that matter those employed on muster roll for carrying on these
activities would therefore be workmen and the dispute between them and the MCD to be tackled as an
industrial dispute.
(i) Who is subject to the Air Force Act, 1950 (45of l950),or the Army Act, 1950 (46 of 1950), or the Navy
Act, 1957 (62 of 1957); or
(ii) Who is employed in the police service or as an officer or other employee of a prison; or
(iii) Who is employed mainly in a managerial or administrative capacity; or
(iv) Who, being employed in a supervisory capacity, draws wages exceeding 55[ten thousand rupees]
per mensem or exercises, either by the nature of the duties attached to the office or by reason of the
powers vested in him, functions mainly of a managerial nature.].
(26) Dharangadhra Chemical Works Ltd vs State of Saurashtra AIR 1957 SC 264
Facts: Appellants were lessees holding a license for the manufacture of salt on the demised lands. The
salt was manufactured by a class of professional labourers known as agarias from rain water that got
mixed up with saline matter in the soil. The work was seasonal in nature and commenced in October
after the rains and continued till June. Thereafter the agarias left for their own
villages for cultivation work. The demised lands were divided into plots called Pattas and allotted to
the a-arias with a sum of Rs. 400/- for each Patta to meet the initial expenses. Generally the same
patta was allotted to the same aigaria every year and if a patta was extensive in area, it was allotted
to two agarias working in partnership. After the manufacture of salt the agayias were paid at the rate
Of 5 as. 6 pies per maund. At the end of each season the accounts were settled and the agarias paid
the balance due to them. The agarias who worked themselves with the members of their families were
free to engage extra labour on their own account and the appellants had no concern therewith. No
hours of work were prescribed, no muster rolls maintained, nor were working hours controlled by the
appellants. There were no rules as regards leave or holidays and the agarias were free to go out of the
factory after making arrangements for the manufacture of salt. The question for decision was
whether in such circumstances the agarias could be held to be workmen as defined by S. 2(s) Of the
Industrial Disputes Act of 1947, as found by the Industrial Tribunal and agreed with by the High Court
or they were independent contractors and the reference for adjudication made by the Government
competent under s. 10 of the Act.
Held, that the finding of the Industrial Tribunal that the agarias were workmen within the meaning of
S. 2(S) of the Industrial Disputes Act of 1947 was correct and the reference was competent.
Supreme Court held that the test of supervision and control may be taken as prima facie test for
determining the relationship of employment. Since the nature or extent of control varied from business
to business it became impossible to precisely define the extent of control and supervision. The judicial
dicta therefore suggested that correct method of approach, would be to consider whether having
regard to the nature of work, there was due control and supervision by the employer. It means the
greater the amount of direct control exercised over the persons rendering services by the persons
contracting for them, the stronger would be the logic for holding it to be a contract of service.
Held that where the manufacturer or TM holder himself employs labour there is direct relationship of
master & servant & therefore liability attracted by reason of that relationship – there cannot be any
question of unreasonableness in such a case – when the manufacturer or TM holder engages contract
labour through a contractor he becomes the principal employer – though such labour may be engaged
by a contractor with or without the knowledge of the manufacturer or TM holder this contract labour is
engaged for the principal employer who happens to be the manufacturer or TM holder – This contractor
being an agent of the principal employer for manufacturing beedis is amenable to the control of
principal employer – Thus principal employer is the real master of the business. He has real control of
the business – He is held liable because he exercises the supervision & control over the labour
employed for and on his behalf by the contractor. – It’s only when the contractor employs labour for or
on his own behalf and supplies the finished goods to the manufacturer that he will be the principal
employer (independent contractor) in relation to such labour and the manufacturer will not be
responsible for implementing the provisions of the Act with regard to such labour employed by the
contractor. The court clarified that if the right of rejection rests with the manufacturer or TM holder
then in such a case the contractor who prepares beedis through the contract labour will find it difficult
to establish that he is the ‘independent contractor’. If it is a genuine sale transaction by the contractor
to the manufacturer or TM holder it will point in the direction of an independent contractor.
(28) Indian Banks Association vs Workmen of Syndicate Bank, AIR 2001 SC 946: (2001) 3 SCC 43
Deposit collectors of banks were not regular employees but held to be workmen under the act –
Commission received by them were held to be ‘wages’ and the master servant relationship existed
between them and the bank – S/10 of Banking regulation act did not bar employment of persons on
commission – the proviso allowed commission to non employees – No question of absorption of Deposit
collectors as regular employees – held beyond the scope of the case as there was no demand for the
same.
If the livelihood of the workmen substantially depends on labour rendered to produce goods and
services for the benefits and satisfaction of an enterprise, the absence of direct relationship or the
presence of dubious intermediaries or the make-believe trappings of detachment from the Management
cannot snap the real-life bond. The story may vary but the inference defies ingenuity. The liability
cannot be shaken off.
Of course, if there is total dissociation in fact between the disowning management and the
aggrieved workmen, the employment is, in substance and in real-life terms, by another. The
Management's adventitious connections cannot ripen into real employment. Here, on the facts, the
conclusion is correct and leave must be refused. Appeal dismissed.
(30) A Sundarambal vs Govt of Goa, Daman & Diu AIR 1988 SC 1700
Imparting of education which is the main function of teachers cannot be considered as skilled
or unskilled manual work or supervisory work or technical work or clerical work. Imparting of education
is in the nature of a mission or a noble vocation. A teacher educates children; he moulds their
character, builds up their personality and makes them fit to become responsible citizens. Children
grow under the care of teachers. The clerical work, if any they may do, is
only incidental to their principal work of teaching. We agree with the reasons given by the
High Court for taking the view that teachers cannot be treated as 'workmen' as defined under the Act.
It is not possible to accept the suggestion that having regard to the object of the Act, all employees
in an industry except those falling under the four exceptions (i) to (iv) in section 2(s) of the
Act should be treated as workmen. The acceptance of this argument will render the words 'to do any
skilled or unskilled manual, supervisory, technical or clerical work’ meaningless. A liberal construction
as suggested would have been possible only in the absence of these words. Held that teacher is not a
workman even though school is an industry.
(32) S.K Maini vs M/s Carona Sahu Co Ltd (1994) 3 SCC 510
Shop Manager/In-charge of a local shop of a big company discharging duties of administrative and
managerial nature. He is not a workman though either incidentally he is required to do some clerical
work and is not vested with power to appoint or discharge employees under him. It should be home in
mind that an employee discharging managerial duties and functions may not, as a matter of course, be
invested with the power of appointment and discharge of other employees. It is not unlikely
that in a big set-up such power is not invested to a local manager but such power is given to some
superior officers also in the management cadre at divisional or regional level. The unit in a
local shop may not be large but management of such small unit may fulfill the
requirements and incidences of managerial functions.
(33) GB Pant University of Agriculture & Technology, Pant Nagar, Nanital vs St of UP (2000) 7 SCC
109(Omitted from syllabus)
S2(l) “Lock-out” means the 40[temporary closing of a place of employment], or the suspension of work,
or the refusal by an employer to continue to employ any number of persons employed by him
S10(3) Where an industrial dispute has been referred to a Board, 6[Labour Court, Tribunal or National
Tribunal] under this section, the appropriate Government may by order prohibit the continuance of any
strike or lock-out in connection with such dispute which may be in existence on the date of the
reference.
S10A(3A) Where an industrial dispute has been referred to arbitration and the appropriate Government
is satisfied that the persons making the reference represent the majority of each party, the
appropriate Government may, within the time referred to in sub-section (3), issue a notification in such
manner as may be prescribed; and when any such notification is issued, the employers and workmen
who are not parties to the arbitration agreement but are concerned in the dispute, shall be given an
opportunity of presenting their case before the arbitrator or arbitrators
(2) No employer carrying on any public utility service shall lock-out any of his workman-
(a) Without giving them notice of lock-out as hereinafter provided, within six weeks before locking-out
; or
(b) Within fourteen days of giving such notice; or
(c) Before the expiry of the date of lock-out specified in any such notice as aforesaid ; or
(d) During the pendency of any conciliation proceedings before a conciliation officer and seven days
after the conclusion of such proceedings.
(3) The notice of lock-out or strike under this section shall not be necessary where there is already in
existence a strike or, as the case may be, lock-out in the public utility service, but the employer shall
send intimation of such lockout or strike on the day on which it is declared, to such authority as may be
specified by the appropriate Government either generally or for a particular area or for a particular
class of public utility services.
(4) The notice of strike referred to in sub-section (1) shall be given by such number of persons to such
person or persons and in such manner as may be prescribed.
(5) The notice of lock-out referred to in sub-section (2) shall be given in such manner as may be
prescribed.
(6) If on any day an employer receives from any person employed by him any such notices as are
referred to in sub-section (1) or gives to any persons employed by him any such notices as are referred
to in sub-section (2), he shall within five days, thereof report to the appropriate Government or to such
authority as that Government may prescribe the number of such notices received or given on that day.
S25 Prohibition of Financial aid to illegal strikes and lock-outs: No person shall knowingly expend or
apply any money in direct furtherance or support of any illegal strike or lock-out.
S25A Application of Sections 25C to 25E not to apply to factory – mines - plantation
S25B Definition of Continuous service - includes service interrupted by sickness, authorized leave,
accident or strike which is not illegal, or lock-out or cessation of work which is not due to fault of
workman.
S25FFA Sixty Day's notice to be given of intention to close down any undertaking
(1) An employer who intends to close down an undertaking shall serve, at least sixty days before the
date on which the intended closure is to become effective, a notice, in the prescribed manner, on the
appropriate Government stating clearly the reasons for the intended closure of the undertaking:
Provided that nothing in this section shall apply to-
(a) An undertaking in which-
(i) Less than fifty workmen are employed, or
(ii) Less than fifty workmen were employed on an average per working day in the preceding twelve
months,
(b) An undertaking set up for the construction of buildings, bridges, roads, canals, and dams or for
other construction work or project.
(2) Notwithstanding anything contained in sub-section (1), the appropriate Government, may, if it is
satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the
employer or the like it is necessary so to do, by order, direct that provisions of sub-section (1) shall not
apply in relation to such undertaking for such period as may be specified in the order.]
S25L Definitions
Insdustrial estb = factory – mine – plantation – n/w anything in SubCl(ii) of Cl(a) of S2 in relation to any
company where Gov has > 51% share. In relation to any corporation not being a corporation referred to
in sub-clause (i) of clause (a) of section 2 established by or under any law made by Parliament, the
Central Government shall be the appropriate Government.
(3) Where the workmen (other than badli workmen or casual workmen) of an industrial establishment,
being a mine, have been laid-off under subsection (I) for reasons of fire, flood or excess of inflammable
gas or explosion, the employer, in relation to such establishment, shall, within a period of thirty days
from the date of commencement of such lay-off, apply, in the prescribed manner, to the appropriate
Government or the specified authority for permission to continue the lay-off.
(4) Where an application for permission under sub-section (1) or subsection (3) has been made, the
appropriate Government or the specified authority, after making such enquiry as it thinks fit and after
giving a reasonable opportunity of being heard to the employer, the workmen concerned and the
persons interested in such lay-off, may, having regard to the genuineness and adequacy of the reasons
for such lay-off, the interests of the workmen and all other relevant factors, by order and for reasons
to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be
communicated to the employer and the workmen.
(5) Where an application for permission under sub-section (1) or subsection (3) has been made and the
appropriate Government or the specified authority does not communicate the order granting or
refusing to grant permission to the employer within a period of sixty days from the date on which such
application is made, the permission applied for shall be deemed to have been granted on the
expiration of the said period of sixty days.
(6) An order of the appropriate Government or the specified authority granting or refusing to grant
permission shall, subject to the provisions of subsection (7), be final and binding on all the parties
concerned and shall remain in force for one year from the date of such order.
(7) The appropriate Government or the specified authority may, either on its own motion or on the
application made by the employer or any workman, review its order granting or refusing to grant
permission under sub-section (4) or refer the matter or, as the case may be, cause it to be referred, to
a Tribunal for adjudication :
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an
award within a period of thirty days from the date of such reference.
(8) Where no application for permission under sub-section (1) is made, or where no application for
permission under sub-section (3) is made within the period specified therein, or where the permission
for any lay-off has been refused, such lay-off shall be deemed to be illegal from the date on which the
workmen had been laid-off and the workmen shall be entitled to all the benefits under any law for the
time being in force as if they had not been laid-off.
(9) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate
Government may, if it is satisfied that owing to such exceptional circumstances as accident in the
establishment or death of the employer or the like, it is necessary so to do, by order, direct that the
provisions of sub-section (1), or, as the case may be, sub-section (3) shall not apply in relation to such
establishment for such period as may be specified in the order.]
3[10] The provisions of section 25C (other than the second proviso thereto) shall apply to cases of lay-
off referred to in this section.
Explanation.
For the purposes of this section, a workman shall not be deemed to be laid-off by an employer if such
employer offers any alternative employment (which in the opinion of the employer does not call for
any special skill or previous experience and can be done by the workman) in the same establishment
from which he has been laid-off or in any other establishment belonging to the same employer, situate
in the same town or village, or situate within such distance from the establishment to which he belongs
that the transfer will not involve undue hardship to the workman having regard to the facts and
circumstances of his case, provided that the wages which would normally have been paid to the
workman are offered for the alternative appointment also.
(a) The workman has been given three months’ notice in writing indicating the reasons for
retrenchment and the period of notice has expired, or the workman has been paid in lieu of such
notice, wages for the period of the notice; and
(b) The prior permission of the appropriate Government or such authority as may be specified by that
Government by notification in the Official Gazette (hereafter in this section referred to as the
specified authority) has been obtained on an application made in this behalf.
(2) An application for permission under sub-section (1) shall be made by the employer in the prescribed
manner stating clearly the reasons for the intended retrenchment and a copy of such application shall
also be served simultaneously on the workmen concerned in the prescribed manner.
(3) Where an application for permission under sub-section (1) has been made, the appropriate
Government or the specified authority, after making such enquiry as it thinks fit and after giving a
reasonable opportunity of being heard to the employer, the workmen concerned and the person
interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons
stated by the employer, the interests of the workmen and all other relevant factors, by order and for
reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order
shall be communicated to the employer and the workmen.
(4) Where an application for permission has been made under sub-section (1)and the appropriate
Government or the specified authority does not communicate the order granting or refusing to grant
permission to the employer within a period of sixty days from the date on which such application is
made, the permission applied for shall be deemed to have been granted on the expiration of the said
period of sixty days.
(5) An order of the appropriate Government or the specified authority granting or refusing to grant
permission shall, subject to the provisions of subsection (6), be final and binding on all the parties
concerned and shall remain in force for one year from the date of such order.
(6) The appropriate Government or the specified authority may, either on its own motion or on the
application made by the employer or any workman, review its order granting or refusing to grant
permission under sub-section (3) or refer the matter or, as the case may be, cause it to be referred, to
a Tribunal for adjudication :
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an
award within a period of thirty days from the date of such reference.
(7) Where no application for permission under sub-section (1) is made, or where the permission for any
retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on
which the notice of retrenchment was given to the workman and the workman shall be entitled to all
the benefits under any law for the time being in force as if no notice had been given to him.
(8) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate
Government may, if it is satisfied that owing to such exceptional circumstances as accident in the
establishment or death of the employer or the like, it is necessary so to do, by order, direct that the
provisions of sub-section (1) shall not apply in relation to such establishment for such period as may be
specified in the order.
(9) Where permission for retrenchment has been granted under subsection (3) or where permission for
retrenchment is deemed to be granted under sub-section (4), every workman who is employed in that
establishment immediately before the date of application for permission under this section shall be
entitled to receive, at the time of retrenchment, compensation which shall be equivalent to fifteen
days’ average pay for every completed year of continuous service or any part thereof in excess of six
months.]
Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of
buildings, bridges, roads, canals, and dams or for other construction work.
(2) Where an application for permission has been made under sub-section (1) the appropriate
Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of
being heard to the employer, the workmen and the persons interested in such closure may, having
regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the
general public and all other relevant factors, by order and for reasons to be recorded in writing, grant
or refuse to grant such permission and a copy of such order shall be communicated to the employer and
the workmen.
(3) Where an application has been made under sub-section (1) and the appropriate Government does
not communicate the order granting or refusing to grant permission to the employer within a period of
sixty days from the date on which such application is made, the permission applied for shall be deemed
to have been granted on the expiration of the said period of sixty days.
(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to
the provisions of sub-section (5), be final and binding on all the parties and shall remain in force for
one year from the date of such order.
(5) The appropriate Government may, either on its own motion or on the application made by the
employer or any workman, review its order granting or refusing to grant permission under sub-section
(2) or refer the matter to a tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an
award within a period of thirty days from the date of such reference.
(6) Where no application for permission under sub-section (1) is made within the period specified
therein, or where the permission for closure has been refused, the closure of the undertaking shall be
deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits
under any law for the time being in force as if the undertaking had not been closed down.
(7) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate
Government may, if it is satisfied that owing to such exceptional circumstances as accident in the
undertaking or death of the employer or the like, it is necessary so to do, by order, direct that the
provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be
specified in the order. (8) Where an undertaking is permitted to be closed down under sub-section (2)
or where permission for closure is deemed to be granted under subsection (3), every workman who is
employed in that undertaking immediately before the date of application for permission under this
section, shall be entitled to receive compensation which shall be equivalent to fifteen days’ average
pay for every completed year of continuous service or any part thereof in excess of six months.]
S25P Special provision as to restarting of undertakings closed down before commencement of The
Industrial Disputes (Amendment) Act, 1976
If the appropriate Government is of opinion in respect of any undertaking or an industrial
establishment, to which this Chapter applies and which closed down before the commencement of the
Industrial Disputes (Amendment) Act, 1976 (32 of 1976)-
(a) That such undertaking was closed down otherwise than on account of unavoidable circumstances
beyond the control of the employer;
(b) That there are possibilities of restarting the undertaking;
(c) That it is necessary for the rehabilitation of the workmen employed in such undertaking before its
closure or for the maintenance of supplies and services essential to the life of the community to restart
the undertaking or both; and
(d) That the restarting of the undertaking will not result in hardship to the employer in relation to the
undertaking,
It may, after giving an opportunity to such employer and workmen, direct, by order published in the
Official Gazette, that the undertaking shall be restarted within such time (not being less than one
month from the date of the order) as may be specified in the order.
S25Q Penalty for Lay-Off and retrenchment without previous permission (1 mon or INR 1000 fine or
both)
S25S Certain Provisions of Chapter V-A to apply to an Industrial establishment to which this Chapter
Applies
The provisions of sections 25B, 25D, 25FF, 25G, 25H and 25J in Chapter VA shall, so far as may be,
apply also in relation to an industrial establishment to which the provisions of this Chapter apply
S25T Prohibition of Unfair Labour Practice No employer or workman or a trade union, whether
registered under the Trade Unions Act, 1926 (16 of 1926), or not, shall commit any unfair labour
practice.
S25U Penalty for Committing unfair Labour Practices (6 months imprisonmen + or fine upto INR 1000 or
both)
S27 Penalty for Instigation, Etc. (6 months imprisonmen + or fine upto INR 1000 or both)
S28 Penalty for giving Financial Aid to Illegal Strikes and Lock-Outs (6 months + fine up to INR 1000 or
both)
(35) Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha (1980) 2 SCC 593: 1980 1 LLJ
137 (SC)
The appellant manufactures steel tubes in the outskirts of Ahmedabad city. It started its business in
1960, went into production since 1964 and waggled from infancy to adulthood with smiling profits and
growling workers, punctuated by smouldering demands, strikes and settlement until there brewed a
confrontation culminating in a head-on collision following upon certain unhappy happenings. A total
strike ensued whose chain reaction was a whole-sale termination of all employees followed by
fresh recruitment of workmen defacto breakdown of the strike and dispute over restoration of the
removed workmen.
As per the last settlement between the management and the workmen of 4th August, 1972, it was not
open to the workmen to resort to a strike till the expiry of a period of five years; nor could the
management declare a lock out till then. Any dispute arising between the parties, according to the
terms arrived at were to be sorted out through negotiation or, failing that by recourse
to arbitration. The matter was therefore, referred to an arbitrator and the arbitrator by his
award held the action cf the management warranted. The respondent challenged the decision of
the arbitrator under Article 226/227 of the Constitution and the High Court of
Gujarat reversed the award and substantially directed reinstatement. Hence the appeals
both by the Management and the workmen.
Dismissing the appeals and modifying the awards substantially, the Court Held
(i) The basic assumption is that the strike was not only illegal but also unjustified.
(ii) The management did punish its 853 workmen when it discharged them for reasons of misconduct
set out in separate but integrated proceedings; even though with legal finesse, the formal order was
phrased in harmless verbalism.
(iii) The action taken under the general law or the standing orders, was illegal in the absence of
individualized charge sheets, proper hearing and personalized punishment if found guilty. None of
these steps having been taken, the discharge orders were still born. But, the management could, as in
this case it did, offer to make out the delinquency of the employees and the arbitrator had, in such
cases, the full jurisdiction to adjudge de novo both guilt and punishment.
(iv) Section 11A of the Industrial Disputes Act, 1947 does take in an arbitrator too, and in this case,
the arbitral reference, apart from section 11A is plenary in scope.
(v) Article 226 of the Constitution, however restrictive in practice Is a power wide enough in all
conscience, to be a friend in need when the summons comes in a crisis from a victim of injustice; and
more importantly this extra-ordinary reserve power is unsheathed to grant final relief without
necessary recourse to a remand. What the Tribunal may in its discretion do the High Court too under
Article 226, can, if facts compel so.
(vi) The Award, in the instant case, suffers from a fundamental flaw that it equates an illegal and
unjustified strike with brazen misconduct by every workman without so much as identification of the
charge against each, after adverting to the gravamen of his misconduct meriting dismissal. Passive
participation in a strike which is both illegal and unjustified does not ipso facto invite dismissal or
punitive discharge. There must be active individual excess such as master-minding the unjustified
aspects of the strike, e.g., violence, sabotage or other reprehensible role. Absent such gravamen in the
accusation, the extreme economic penalty of discharge is wrong. An indicator of the absence of such
grievous guilt is that the management, after stating in strong terms all the sins of workmen, took back
over 400 of them as they trickled back slowly and beyond the time set, with continuity of service,
suggestive of the dubiety of the inflated accusations and awareness of the minor role of the
mass of workmen in the lingering strike. Furthermore, even though all sanctions short of punitive
discharge may be employed by a Management, low wages and high cost of living, dismissal of several
hundreds with disastrous impact on numerous families is of such sensitive social concern that, save in
exceptional situations, the law will inhibit such a lethal step for the peace of the industry, the welfare
of the workmen and the broader justice that transcends transient disputes. The human dimensions
have decisional relevance. The discharge orders though approved by the Arbitrator are invalid.
(38) Essorpe Mills Ltd vs PO; Labour Court(2008) 7 SCC 594 (Omitted from syllabus)
‘Closure’ means permanent closing down of a place of employment or part thereof. [section 2(cc)]
’Lay off’ means failure, refusal or inability of employer on account of shortage of coal, power or raw
materials or accumulation of stock or break down of machinery or natural calamity; to give
employment to a workman on muster roll. ‘Lay off’ means not giving employment within two hours
after reporting to work. - - Lay off can be for half day also. In such case, worker can be asked to come
in second half of the shift. Section 2(kkk)
S2(oo) “Retrenchment” means the termination by the employer of the service of a workman for any
reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action but does not
include-
(a) Voluntary retirement of the workman; or
(b) Retirement of the workman on reaching the age of Superannuation if the contract of employment
between the employer and the workman concerned contains a stipulation in that behalf; or
46[(bb) Termination of the service of the workman as a result of the non-renewal of the contract of
employment between the employer and the workman concerned on its expiry or of such contract being
terminated under a stipulation in that behalf contained therein; or]
(c) Termination of the service of a workman on the ground of continued ill-health;]
(39) Mohan Lal vs The Management of M/s Bharat Electronics Ltd AIR 1981 SC 1253
The appellant was employed with the respondent as Salesman at its Delhi Sales Depot on a salary of
Rs. 520/- per month from 8th December, 1973. His service was abruptly terminated by letter dated
12th October, 1974 with effect from 19th October, 1974. Consequent upon his termination, an
industrial dispute was raised and referred to the Labour Court, Delhi, on 24th April, 1976.
Held: The termination of service of the appellant was ab initio void and inoperative. His case not being
covered by any of the excepted or excluded categories referred to under section 2(oo) and he has
rendered continuous service for one year, the termination of his service would constitute
retrenchment. The pre-condition for a valid retrenchment has not been satisfied in this case and
therefore he will be entitled to all benefits including back wages etc.
Termination by the employer of the service of a workman for any reason whatsoever in section 2(oo) of
the Industrial Dispute Act, would constitute retrenchment except in cases excepted in the section
itself. The excepted or excluded cases are where termination is by way of punishment inflicted by way
of disciplinary action, voluntary retirement of the workman, retirement of the workman on reaching
the age of superannuation if the contract of employment between the employer and the workman
concerned contains a stipulation in that behalf, and termination of the service of a workman on the
ground of continued ill health.
(40) Punjab Land Development and Reclamation Corporation Ltd vs Presiding Officer, Labour Court
(1990) 3 SCC 682
Whether retrenchment under the act meant termination of services of workmen as surplus labour for
any reason whatever or it meant termination by the employer of services of workmen for any reason
whatsoever otherwise than as punishment inflicted by way of disciplinary action and those expressly
excluded by the definition? Scope & ambit.
Retrenchment means the termination by the employer of the service of a workman for any reason
whatsoever except those expressly excluded in the section. Section 2(oo) (bb) should be harmoniously
construed with Sections 25-F, 25-G and 25-H.
Wide literal meaning is more preferable to the natural, contextual and narrow meaning viz. discharge
of surplus labour.
Even if the wide literal interpretation may result in affecting the employer’s rights u/ Standing Order
or under the contract of employment, in respect of termination of service, that would be justified by
reason of social policy involved in S2(oo) r/w S25F imposing additional social obligation.
When the appointment is for a fixed period, unless there is finding that power under clause (bb) of
Section 2 (oo) was misused or vitiated by its mala fide exercise, it cannot be held that the termination
is illegal. In its absence, the employer could terminate the services in terms of the letter of
appointment unless it is a colourable exercise of power. Unfortunately, neither the learned single
Judge nor the Division Bench recorded any finding in this behalf. Therefore, where the termination is in
terms of letter of appointment saved by clause (bb), neither reinstatement or fresh appointment could
be made. Since the appellant has not filed any appeal against the order of the learned single Judge and
respondent came to be appointed afresh on June 27, 1992, he would continue in service, till the
regular incumbent assumes office as originally ordered. The question then is whether the respondent is
entitled to payment of back wages. Since the order is found to be in terms of letter of appointment,
respondent is not entitled to back wages. The Division Bench was incorrect in directing payment of
back wages.
The Tribunal, by its Award dated 21st July, 1992, held that the termination of services of respondent 1
amounted to "Retrenchment" within the meaning of Section2(oo) of the Industrial Disputed Act and
since all other legal requirements had not been followed, the termination was bad and consequently
she was entitled to reinstatement as also fifty per cent of back wages from the date of termination till
reinstatement.
This Award was challenged by the petitioner through a Writ Petition in the Allahabad High Court
(Lucknow Bench) and the High Court, by the impugned judgment dated 28.10.1997, dismissed the writ
petition upholding the findings of the Tribunal that termination of respondent's services was
"retrenchment". The High Court further held that while invoking the provisions of Clause
17(g) of the Certified Standing Orders, the petitioner ought to have been given an opportunity of
hearing to respondent.
SC observed “It would be seen that the respondent was a permanent employee of the petitioner. There
was no fixed-term contract of service between them. There was, therefore, no question of services
being terminated on the expiry of that contract. In the absence of a fixed-term contract between the
parties, the question relating to the second contingency, namely, that the termination was in
pursuance of a stipulation to that effect in the contract of employment, does not arise.
The contract of employment referred to in the earlier part of Clause (bb) has to be the same as is
referred to in the latter part. This is clear by the use of words "such contract" in the earlier part of this
Clause. What the clause, therefore, means is that there should have been a contract of employment
for a fixed-term between the employer and the workman containing a stipulation that the
services could be terminated even before the expiry of the period of contract. If such contract, on the
expiry of its original period, is not renewed and the services are terminated as a consequence of that
period, it would not amount to "Retrenchment". Similarly, if the services are terminated even before
the expiry of the period of contract but in pursuance of a stipulation contained in that contract
that the services could be so terminated, then in that case also, the termination would not amount to
"retrenchment". This view finds support from a decision of this Court in Escorts Ltd. vs.
Presiding Officer, (1997) 11 scc 521.
This case does not fall in either of the two situations contemplated by Clause (bb). The `Rule of
exception', therefore, is not applicable in the instant case & consequently the finding recorded by the
Tribunal on "retrenchment" cannot be disturbed.
For the reasons stated above, we find no merit in this petition which is dismissed at the SLP stage.
(43) S.M. Nilajkar vs Telecom District Manager Karnataka (2003) 3 SCALE 533
A number of workers were engaged as casual labourers for the purpose of expansion of telecom
facilities in the district of Belgaum, Karnataka, during the years 1985-86 and 1986-87. The services of
these workers were utilized for digging, laying cables, erecting poles, drawing lines and other
connected works. It appears that the services of these workmen were terminated sometime during the
year 1987 and they were not engaged on work thereafter.
SC Observed: Government as a welfare State floats several schemes and projects generating
employment opportunities, though they are short-lived. The objective is to meet the need of the
moment. The benefit of such schemes and projects is that for the duration they exist, they provide
employment and livelihood to such persons as would not have been able to secure the same but for
such schemes or projects. If the workmen employed for fulfilling the need of such passing-
phase-projects or schemes were to become a liability on the employer-State by too liberally
interpreting the labour laws in favour of the workmen, then the same may well act as a disincentive to
the State for floating such schemes and the State may opt to keep away from initiating such schemes
and projects even in times of dire need, because it may feel that by opening the gates of welfare it
would be letting-in onerous obligations entailed upon it by extended application of the labour laws.
Sub-clause (bb) in the definition of retrenchment was introduced to take care of such like- situations
by Industrial Disputes (Amendment) Act, 1984 with effect from 18.8.1984.
'Retrenchment' in its ordinary connotation is discharge of labour as surplus though the business or work
itself is continued. It is well- settled by a catena of decisions that labour laws being beneficial pieces
of legislation are to be interpreted in favour of the beneficiaries in case of doubt or where it is possible
to take two views of a provision. It is also well-settled that the Parliament has employed the
expression "the termination by the employer of the service of a workman for any reason whatsoever"
while defining the term "retrenchment", which is suggestive of the legislative intent to assign the term
'retrenchment' a meaning wider than what it is understood to have in common parlance. There are four
exceptions carved out of the artificially extended meaning of the term 'retrenchment', and therefore,
termination of service of a workman so long as it is attributable to the act of the employer would fall
within the meaning of 'retrenchment' de hors the reason for termination. To be excepted from within
the meaning of 'retrenchment' the termination of service must fall within one of the four excepted
categories. A termination of service which does not fall within the categories (a), (b), (bb) and (c)
would fall within the meaning of 'retrenchment'.
The termination of service of a workman engaged in a scheme or project may not amount to
retrenchment within the meaning of sub-clause (bb) subject to the following conditions being
satisfied:-
(i) that the workman was employed in a project or scheme of temporary duration;
(ii) the employment was on a contract, and not as a daily-wager simplicitor, which provided inter alia
that the employment shall come to an end on the expiry of the scheme or project; and
(iii) the employment came to an end simultaneously with the termination of the scheme or project and
consistently with the terms of the contract.
(iv) the workman ought to have been apprised or made aware of the abovesaid terms by the employer
at the commencement of employment.
Held that the workers were not project employees as contended by the employer. The appointment
was not for any particular project and hence would not be governed by sub-clause (bb) of clause (oo)
of Section 2 of the Industrial Disputes Act. 1947. Of the workmen each had rendered a continuous
service within the meaning of Section 25B of the Act for a period over 240 days and, therefore, their
termination amounted to retrenchment which was invalid for non-compliance with Section 25F of the
Act. The workmen were, therefore, entitled to reinstatement.
(44) The Workmen of Fire Stone Tyre & Rubber Co Pvt Ltd vs Fire Stone Tyre & Rubber Co Pvt Ltd
(1976) 3 SCC 819: AIR 1976 SC 1775
The respondent-company manufacturing tyres in Bombay, due to the general strike in its factory
between the period 3rd March 1967 and 16th May 1967 and again from 4th October 1967 and due to the
consequent short supply of tyres had to lay-off 17 out of its 30 workmen in the Delhi distribution office
and also some out of its 33 workmen in its Madras distribution office. The workmen in the Delhi and
Madras offices were called back to duty on 22nd April 1968 and 29th April 1968 respectively. The
workmen were not given their wages or compensation for the period of lay-off. An industrial
dispute was raised and referred to the tribunal by the Delhi Administration even when the lay-
off was in operation. The Presiding officer of the Additional Industrial Tribunal, Delhi held that
the workmen were not entitled to any layoff compensation. The workmen in Madras filed
petitions under s. 33C(2) of the Industrial Disputes Act for computation of their wages for the
period of their lay-off. The Presiding officer of the Additional Labour Court,
Madras, holding that the lay-off was justified, dismissed their applications.
Gaya Cotton & Jute Mills Ltd. v. Gaya Cotton & lute Mills Labour Union [1952] II Labour Law Journal 37,
referred to.
(2)(i) That the power to lay-off a workman is inherent in the definition in cl. (kkk) of s. 2 is not correct,
since no words in the definition clause to indicate the conferment of any power on the
employer to lay-off a workman can be found. His failure or inability to give employment, by itself
militates against the theory of conferment of power. No section in Chapter VA in express language or
by necessary implication confers any power, even on the management of the Industrial Establishment
to which the relevant provisions are applicable, to lay-off a workman. There is no provision in
the Act specifically providing that an employer would be entitled to lay-off his workmen for the
reasons prescribed by s. 2 (kkk). Such a power, therefore, must be found out from the terms of
contract of service or the Standing orders governing the Establishment.
(ii) In the instant case, the number of workmen being only 3, there being no Standing orders certified
under the Industrial Employment (Standing orders) Act (Act 20 of 1946),1946, and there being no
contract of service conferring any such right of lay-off, the inescapable conclusion is that the
workmen were laid-off without any authority of law or the power in the management under the
contract of service.
(3) If the terms of a contract of service or the statutory terms engrafted in the Standing
orders do not give the power to lay-off to the employer, the employer would be bound to pay
compensation for the period of lay-off which ordinarily and general would be equal to the full wages
of the concerned V workman. If, however, the terms of employment confer a right of lay-off on the
management then in the case of an Industrial Establishment which is governed by Chapter VA,
compensation will be payable in accordance with the provisions contained therein. But
compensation or no compensation will be payable in the case of an Industrial Establishment to which
the provisions of Chapter VA do not apply and it will be so as per the terms of employment.
(4) In a reference under s. 10(l) of the Act. it is open to the tribunal or court to award compensation
which may not be equal to the full amount of basic wages and dearness allowance. But no such power
exists in the Labour Court under s. 33C(2) of the Act. Only the money due has to be quantified. If the
lay-off could be held to be in accordance with the terms of contract of service. no compensation at all
could be allowed under s. 33C(2) of the Act, while in the reference some compensation could be
allowed.
SC held: 75% of the basic wages and dearness allowance would be the adequate compensation for the
lay-off period.
(45) Orrisa Textile and Steel Ltd vs State of Orissa AIR 2002 SC 708
The constitutional validity of Section 25O of the Industrial Disputes Act, 1947, has been challenged in
this case alleging, inter alia, that the said provision is violative of the fundamental rights guaranteed to
a citizen under Article 19(1)(g) of the Constitution and, therefore, is ultra vires.
The petitioner's case is that the 'right to continue business' within the meaning of Article 19(1)(g) of the
Constitution includes right to close down a business and the very fact that the citizen cannot exercise
the said right, inasmuch as permission of the State Government is required under Section 25O before
closing ; down the business, infringes the right guaranteed under Article 19(1)(g) of the Constitution.
SC quoted decision of KarHC in Stump, Schule and Somappa Ltd. v. State of Karnataka
"In our conclusion, we are of the view that the present Section 25O of the Act is denuded of the
infirmities found in its predecessor. The provisions of Section 25O of the Act, as it now stands, require
the Government to give reasons for its order; the factors to be considered by the appropriate
Government are stated in Section 25O(2); an objective approach in arriving at the decision by the
Government, is now imperative; the factors stated in Section 25O(2) which are to be considered, are to
be understood in the light of the decision in the Excel Wear's case (supra), the appropriate Government
has to strive to strike a balance between the various interests involved, in the background of a
particular situation; any unreasonable order can be corrected by judicial review; the Government itself
may review its order or refer the matter for decision by a Tribunal for adjudication; the application of
the employer has to be considered by the appropriate Government and the order to be communicated
within sixty days from the date on which the application is made, failing which the permission is
deemed to have been granted; there is always an assumption that the Government would exercise its
power reasonably. In the Excel Wear's case (supra), the Supreme Court recognised that a law may
provide to deter reckless, unjust, unfair or mala fide closures; therefore, requirement of prior
permission for closure by itself cannot be an unreasonable restriction on the fundamental right of the
employer. In this view of the matter, we hold that, it is not possible to declare Section 25O of the Act
as violative of Article 19(1)(g) of the Constitution."
It is too well-settled that if the competent authority passed an order in exercise of his power under a
statute without conforming to the statutory requirements, then the order gets vitiated and can be
struck down if challenged before a court of law, but that does not make the statute itself
unconstitutional. The right to close a business is an integral part of the fundamental right to carry on
business and is guaranteed under Article 19(1)(g) of the Constitution. The closure of any industrial
undertaking is likely to have adverse impact on the interest of the working class and, therefore, the
Legislature enacted the provision of Section 25O of the Industrial Disputes Act to consider the interest
of the workers employed in a large industrial undertaking. The interest of the labour has not to be
ignored and, therefore, a balance has been struck by prescribing the manner of seeking permission for
closure and by providing for dealing with the said application by the competent authority and providing
guidelines for the exercise of such power. In view of the authoritative pronouncements of the
Karnataka High Court (1989-II-LLJ-4), Kerala High Court and Delhi High Court, (Supra) with which we
are in respectful agreement, as well as the observations of the Supreme Court in Meenakshi Mills' case
(Supra) we do not find any substance in the arguments of Mr. Mohapatra and we hold that the amended
provisions of Section 25O of the Industrial Disputes Act do not violate the fundamental right guaranteed
under Article 19(1)(g) of the Constitution.
(46) U.P State Brassware Corporation Ltd vs Uday Narain Pandey (2006) 1 SCC 479
Services of respondent workman, terminated on expiry of his tenure. ID raised by him that he was
entitled to back wages. Contended by appellant that since fixed period - S6-N(corresponding to S25-F
IDA) has no application – No work no pay principle – Hence grant of back wages by Labour court
unjustified.
The meaning of the word 'discharge' is somewhat vague. In this case, we have noticed that one of the
contentions of the Appellant was that the services of the Respondent had been terminated in terms of
its order dated 12/13.2.1987 whereby and whereunder the services of the Respondent herein was
approved till 31.3.1987.
The Industrial Disputes Act was principally established for the purpose of pre-empting industrial
tensions, providing the mechanics of dispute-resolutions and setting up the necessary infrastructure so
that the energies of partners in production may not be dissipated in counter- productive battles and
assurance of industrial justice may create a climate of goodwill. [See LIC v. D.J. Bahadur, (1981) 1 SCC
315]
Industrial Courts while adjudicating on disputes between the management and the workmen,
therefore, must take such decisions which would be in consonance with the purpose the law seeks to
achieve. When justice is the buzzword in the matter of adjudication under the Industrial Disputes Act,
it would be wholly improper on the part of the superior courts to make them apply the cold letter of
the statutes to act mechanically. Rendition of justice would bring within its purview giving a person
what is due to him and not what can be given to him in law.
A person is not entitled to get something only because it would be lawful to do so. If that principle is
applied, the functions of an industrial court shall lose much of its significance.
SC quoted Kendriya Vidyalaya Sangathan Case: When the question of determining the entitlement of a
person to back wages is concerned, the employee has to show that he was not gainfully employed. The
initial burden is on him. After and if he places materials in that regard, the employer can bring on
record materials to rebut the claim. In the instant case, the respondent had neither pleaded nor placed
any material in that regard."
Only question is whether the Respondent would be entitled to back wages from the date of his
termination of service till the aforementioned date. The decision to close down the establishment by
the State of Uttar Pradesh like other public sector organizations had been taken as far back on
17.11.1990 wherefor a GO had been issued. It had further been averred, which has been noticed
hereinbefore, that the said GO has substantially been implemented. In this view of the matter, we are
of the opinion that interest of justice would be subserved if the back wages payable to the Respondent
for the period 1.4.1987 to 26.3.1993 is confined to 25% of the total back wages payable during the said
period.