The Industrial Disputes Act, 1947 Preliminary

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The Industrial Disputes Act, 1947


The Industrial Disputes Act, 1947 extends to whole of India. It came into operation on the first day of April, 1947. This Act replaced the Trade Disputes Act of 1929. The Trade Disputes Act imposed certain restraints on the right of strike and lockout in Public Utility Services. But no provision was existing for the settlement of Industrial Disputes, either by reference to a Board of Conciliation or to a Court of Inquiry. In order to remove this deficiency, the Industrial Disputes Act, 1947 was passed.

Scope and Objects (Sec. 1) ,

The objects of the industrial relation's legislation in general are to maintain

industrial peace and, to achieve economic justice. . .

The prosperity of any industry very much depends upon its growing production. Production is possible when the industry functions smoothly without any disturbances. This means industrial peace through harmonious relationship between labour and management. Therefore every industrial relations legislatiqn necessarily aims at providing conditions congeniel to the industrial peace.

Economic justice is another objective of industrial legislation. Almost all industrial interuptions in production are due to industrial disputes. Dissatisfaction with the existing economic conditions is the root cause of industrial disputes. The labour demands for fair return is expressed in varied forms; e.g. increase in wages, resistance to decrease in wages and grant of allowance and benefits etc. If a labourer wants to achieve these gains individually, he fails because of his weaker bargaining power against the sound economic footing of the management. Therefore, the economic struggle of labour with capital can be fought collectivity by organised labours. It is with this object to provide economic justice by ensuring fair return to the labour, the State, being the custodian of public interest, intervenes by 'State legislation' Economic justice has also been ensured to the people of India by our Constitution.

Thus the main object of all labour legislation is to ensure fair wages and to prevent disputes so that the production might not be adversely affected2. The principal objects of Industrial Disputes Act as analyzed and interpreted by the Supreme Court are as follows.3

(1) The promotion of measures for securring and preserving amity and good relations between employers and workmen;

(2) Investigation and settlement of industrial dispute between employers and employers, employers and workmen, or between workmen and workmen with a right of representation by a registered Trade Union or . Federation of Trade Unions or Association of Employers or a Federation of Association of Employers.

(3) The prevention of illegal strikes and lock-outs;

(4) Relief to workmen in the matter of lay-oft, retrenchment and closure of

an undertaking. .

(5) Collective bargaining.

Main Features or Characterstics of the Act::

Some of the important features of the Act may be summearised as below:

1. Any industrial dispute may be referred to an industrial tribinal by mutual

consent of paries to dispute or by the State Government, if it deems expedient to do so.

2. An award shall be binding on both the parties to the dispute for the

operated period, not exceeding one year;

3. Strike and lockouts are prohibited during:

(a) The pendency of conciliation and adjudication proceedings;

(b) the pendency of settlements reached in the course of conciliation

proceedings, and .

(c) the pendency of awards of Industrial Tribunal declared binding by

the appropriate Government.

4. In public interest or emergency, the appropriate Government has power to declare the transport (other than railways), coal, cotton textiles, food stuffs and iron and steel industries to be public utility services for the purpose of the Act, for a maximum period of six months.

5. In case of lay-oft or retrenchment of workmen, the employer is requested to pay compensation to them. This provision stands in the case of transfer or closure of an undertaking.

6. A number of authorities (Works Committees, Conciliation Officers, Board of conciliation, Courts of Inquiry, Labour Courts, Tribunal and National Tribunal) are provided for settlement of Industrial disputes. Although the nature of powers, functions and duties of these authorities differ from each other, everyone plays important role in ensuring industrial peace.

Definitions (Sec.2) :

(a) Appropriate Government: The Central Government as well as the State Government are vested with various powers and duties in relation to matters dealt with in this Act. In relation to some industrial disputes the Central Government and in relation to some others, the State Government concerned are the appropriate Government to deal with such disputes.

Under sub-section [(i) (a)] and [(i)(b)] of the Act, Companies/Corporations/

Trusts/Boards/ Authorities, etc. established under the Act of Parliament; the Central Government is the Appropriate Authority.

In all other cases, the Appropriate Government is the State Government within whose territory the industrial dispute aries Sub-section (ii).

(aa) Arbitrator - Arbitrator includes an umpire.

(aaa) Average Pay - "Average Pay" means the average of the wages payable to a workmen, Average pay in the case of workmen means:

(i) In the Case of monthly paid workman- The average of monthly

wages payable in three complete calendar months.

(ii) In the case of weekly paid workman - the average of the weekly

wages payable in four complete weeks.

(iii) In the case of daily paid workman - the average of the wages for

twelve full working days.

(b) Award - 'Award' means an interim or final determination of any' industrial

dispute or of any question relating thereto. The determination must be

made by any Labour Court, Industrial Tribunal or National Tribunal.

Enforcement of an award - An award may be enforced in the following ways:

(1) The aggrieved party may apply to Appropriate Government for

prosecuting the defaulting party under Sec. 29 or 31 of this Act.

(2) Where the work man 'isto claim money from the employer, the

workman may move the Appropriate Government for recovery of

the money due to him under the award.

(3) The party in whose favour the award has been granted may file a suit and obtain a decree, which shall be enforced extension under provisions of the Civil Procedure Code.

Where the interim order did not determine any part of the industrial dispute or

any other question relating there to, but only determined whether the Industrial Tribunal has been properly constituted to which the industrial dispute could be referred for adjudication, such order cannot be said to be an award as defined in Sec. 2(b)2

(bb) Banking Company - 'Banking Company' means a banking company

as defined in Sec.5 of the Banking Companies Act, 1949.

(c) Board - 'Board' means a Board of Conciliation constituted under this Act.

(cc) Closure - 'Closure' means the permanent closing down of a place of

employment or part thereof

Penalty for closure (Sec. 25R)

1. Any employer who close down an undertaking without complying with the provisions of the Sub-Sec. (1) of Sec. 25-0 shall be punishable with imprisonment up to 6 months, or with fine up to Rs. 5,000 or with both.

2. Any employer, who contravenes a direction given under Sub-sec. (2) of Sec. 25-0 or Sec. 25-P, shall be punishable with imprisonment up to one year, or with fine up to Rs. 2,000 for every day during which the contravention continues after the conviction.

3. Any employer who contravenes the provisions of Sub Sec. 25-0 shall be punishable with imprisonment up to one month, or with fine up to Rs. 1000 or with both.

(d) Conciliation Officer - 'Conciliation Officer' means a conciliation officer appointed under the Act. .

(e) Conciliation Proceeding - 'Conciliation Proceeding' means any proceeding held by a Conciliation Officer or Board under the Act.

(ee) Controlled Industry - "Controlled Industry" means any industry the control of which, by the Union has been declared by any Central Act to the expedient in the public interest. That is, an industry which is controlled by the Central Government. But it must also be declared by the Central Act to be controlled by the Union.

(f) Court - "Court" means a Court of Inquiry constituted under this Act. (g) (g) Employer - "Employer" means, in relation to industries carried on by or under the authority of (i) Central Government, (ii) State Government, or (iii) Local Authorities.

(h) Executive - "Executive", in relation to a Trade Union means the body by whatever name called, to which by management of the affairs of the Trade Union is entrusted.

(i) Independent - Means, for the purpose of appointment of a person as Chairman or other member of a Board, Court or Tribunal. In order that a person may be eligible for his appointment to these bodies, he must possess the following qualifications:

(i) . He must be unconnected with industrial dispute in question, or.

(ii) He must be unconnected with any industry directly affected by such dispute.

(j) Industry - Industry means any business, trade, undertaking, manufacture

or any service, employment, handicraft or industrial occupation or

vocation of workmen.

In a Case In Banglore Water.Supply v. A Rajappa 1 a bench of the Supreme Court consisting of seven judges exclusively considered the scope of industry and laid down the following test which has practically reiterated as under:

"Where there is (i) systematic activity, (ii) organised by co-operation between employer and employee, (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes, prima facie, these is an "Industry" in that enterprise." This is known as Triple Test.

The Following points were also emphasised in the said case:

(1) Industry does not include spiritual or religious services or services geared to celestial bliss, e.g. making on a large scale, "parsed" or food.

(2) Absence of profit motive or gainful objective is irrelevant but, be the

venture in the public, joint, private or other sector.

(3) The true focus is functional and the decisive test is the nature of the

activity with special emphasis on the employer-employee relations.

(4) If the organisation is a trade or business, it does not cease to be one because of philanthropy animating the undertaking.Therefore, the consequences of the decision in this case are that professions, clubs, educational institutions, co-operatives research insthtions, charitable projects and other kind of adventures, if they fulfil the triple test stated above cannot be exempted from the scope of industry.'

(k) Industrial Disputes - Industrial Dispute is : (1) a dispute or difference between (a) employers and employers, or (b) employers and workmen,

(c) workmen and workmen; . .

(2) the dispute or difference should be connected with (a) employment or . non-employment, or (b) terms of employment, or (c) conditions of labour

of any person; .

(3) the dispute may be in relation to any workman or workmen or any other

person in whom they are interested as a body.

(ka) Industrial Establishment or Undertaking - It means an establishment or undertaking in which any industry is carried on; provided that, where several activities are carried on in an establishement or undertaking and only one or some of such activities is or are an industry or industries:

(kk) Insurance Company - According to this sub-section, an insurance is one, which company is defined in Sec. 2 of the Insurance Act, 1938, having branches or other establishments in more than one State.

(kka) Khadi - "Khadi" has the meaning assigned to it in clause ( d) of Sec. 2 of the Khadi and Village Industries Commission Act, 1956.

(kkb) labour Court.- It means a Labour.Court constituted under Sec. 7 of

the Industrial Disputes Act, 1947.

(kkk) lay Off - Means putting aside workmen temporarily. The duration of lay off should not be for a period longer than the period of emergency. The employer-employee relationship does not come to an end during the

period of lay-off but is merely suspended during the period of emergency.

Any such refusal or failure to employ a workman may be on account of:

(i) shortage of coal, power or raw materials or

(ii) the accumulation of stock; or

(iii) the breakdown of machinery; or

(iv) natural calamity; or

(v) any other connected reasons.

Prohibition of lay-off (as substituted by Amendment Act; 1984)

According to Sec. 25M of Industrial Disputes Act, 1947, no workman whose name is borne on the muster rolls of an industrial establishment shall be laid off by his employer except with the prior permission of the appropriate Government or such authority, as may be specified by that Government.

Recovery of money due from an employer (Sec. 33C)­

Where any money is due to a workman from an employer under a settlement or an award or for layoff or retrenchment, the workman himself or any other person authorised by him in writing in this behalf, or in the case of the death of the workman, his assignee or heirs may, without prejudice to any other mode of recovery, make an application, within one year from the date on which the money became due to the workman, to appropriate Government for the recovery of money due to him, and if the appropriate Government is satisfied that any money is due to him, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue.

Penalty for layoff without permission (Sec. 25Q)

Any member who contravenes the provisions of Sec. 25M shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to Rs. 1000, or with both.

(I) Lock out - Means the 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.

While strike is a weapon in the hands of the labour to force the management to accept their demands, lockout is a weapon in the hands of the management to coerce the labour to come down in their demand srelating to the conditions of employment.

Lockouts has been described by the Supreme Court as the antithesis of strike.1

Difference between lockout and lay-off:

(1) Lockout is an act on the part of the employer to pressurise the labour; while layoff is for trade reasons, beyond the control of the employer; i.e., it is not intentional act.

(2) Lockout is exercised due to an industrial dispute and continues during the period of dispute; layoff is not necessiorily concerned with dispute with workmen.
Difference between lock-out and retrenchment:
(1) Temporary or permanent: Lockout is temporary measure, while

retrenchment is permanent.

(2) Relationship: In lockout the relationship of employer and employee is

only suspended; it does not come to an end. In retrenchment such a

relationship is severed at the instance of the employer.

(3) Motive: Lockout is with a motive to coerce the workmen; the intention

of retrenchment is to dispense with surplus labour.

(4) Trade dispute: Lockout is due to an industrial dispute, whereas in

case of retrenchment, there is no such dispute
Difference between lock-out and closure

(1) Temporary/Permanent: Lockout is temporary measure, whereas closure is permanent. .

(2) Weapon of coercion: Lockout is a weapon of coercion in the hands of

employer; while closure is generally made for trade reasons.

(3) Trade Dispute: Lockout is declared during an industrial dispute, while

in case of closure, there need not be any dispute.

(Ia) Major Port: Means a port as defined in clause 8 of Sec. 3 of the Indian Port Act. 1903; which reads as follows:

"Any port which the Central Government may by notification in official Gazette declare or may by any law for the time being in force, have declared to be a major port".

(I b) Mine: Means a mine as defined in clause (j) of sub-section (1) of Sec. 2 of the Mines Act, 1952, Which reads as under:

"Mine means any excavation where any operation for the purpose of searching for or obtaining minerals has been, or is being carried on, and includes, (unless exempted by the Central Government by notification in the official Gazette) any premises or part thereof, on which any process ancillary to the getting, dressing or preparation for sale of mineral or of coke is being carried on :"

(II) National Tribunal: Means a National Tribunal constituted under Sec. 78 of

the Act.

(III) Office Bearer: In relation to a Trade union, it includes any member of the

executive thereof, but does not include on auditor. (m) Prescribed: Means prescribed by rules made under this act. (n) Public utility services: The following are public utility services as laid down by the Act :

(i) any railway service;

(ii) any transport service for the carriage of passengers or goods by


(iii) any service in or in connection with the working of any major port

or dock;

(iv) any section of an industrial establishment, on the working of which

the safety of the establishment or the workmen employed therein

. depends;

(v) any postal, telegraph or telephone service;

(vi) any industry which supplies power, light or water to the public; (vii) any system of public conservancy or sanitation.

(viii) any industry specified in the First Schedule which the appropriate

Government may, if satisfied that public emergency or public interest so requires, by notification in the Official Gazette declare to be a public utility service for the purpose of this Act, for such period as may be specified in the notification.

(0) Railway company - Means a Railway Company as defined in Sec.8 of the Indian Railway Act, 1890. Sec 3(5) of the Indian Railways Act states, "Railway Company" includes any person whether incorporated or not who are owners or lessees of a railway or parties to any agreement for working a railway."Sec. 3(4) of the Indian Railways Act defines the term "Railway" as. "Railway means a railway, or any portion of a railway, for the public carriage of passengers, animals or goods. and includes:

(a) all lines of rails, or branches worked over the purpose of or in connection with a railway.

(b) all stations, Offices, Workhouses, Wherever, workshops, Fixed plant

and machinery and other works constructed in connection with a railway,


(c) all ferries, ships, boats and rafts which are used in inland waters for the

purpose of traffic of railway and belong to or are hired or worked by the authority administering the railways." .

(00) Retrenchment - Means the discharge of surplus labour or staff by the employer

for any reason What-so-ever.'

The term "retrenchment" defines under the section 2(00) may be analysed as:

(1) Retrenchment means the termination by the employer of the services

of a workman.

(2) The termination may be for any reason what so ever.

(3) But the termination should not be as a measure. of punishment by way

of disciplinary action.

Conditions of retrenchment:

According to Sec. 25F of the Act no workman employed in any industry who has been in continuous service for not less than one year under an employer shall be

retrenched by the employer until: .

(a) the workman has been given one month's notice in writing indicating the reasons for retrenchment, or the workman has been paid in lieu of such notice, wages for the period of notice;

(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to 15 days average pay for every completed

year of continuous service or any part thereof, in excess of 6 months, and

(c) notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the Official Gazette.

Re-employment of retrenched workmen

According to Sec. 25H of the Act, where any workmen are retrenched and the employer proposes to employ any persons, be shall, in such manner as may be prescribed, give an opportunity to retrenched workmen who are citizens of India offer themselves for the re-employment, and the retrenched workmen who offer themselves for re-employment, shall have preference over others. But this section cannot be applied retrospectively [Case: R,S Ramdayal v. Labour Appellate Tribunal (Sec. 567) -1964].

The following cases are not retrenchment

(a) Voluntary retirement of a workman, or

(b) retirement of a 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

(bb) Termination of the service of a workman as a result of the non-renewal of the cortract of employment between the employer and the workman concerned on its expiry or of such contract being terminated.

Difference between retrenchment and closure

(1) Retrenchment affects only some of the workman, whereas closure

affects all workman.

(2) In retrenchment the trade or business remains uninterrupted as it

continues; while in closure the business itself is discontinued.

(q) Strike - Strike means (1) cessation of work by a body of persons employed in any industry acting in combination, or (2) a concerted refusal of any number of persons who are or have been employed in any industry to continue to work or to accept employment; or (3) to refusal under a common understanding of any number of persons who are or have been employed in industry to continue to work or to accept employment.

Features of strike

(1) It is the stoppage of work by a body of workmen acting in concert with

a view to bring pressure upon the employer to concede to their demands.

(2) The workmen must be employed in any industry.

(3) More cessation of work does not come within the preview of strike,

unless it can be shown that such cessation of work was a concerted action for the enforcement of an industrial demand1.

Kinds of strike

These are three kinds of strikes, namely: (1) General strike, (2) Stay-in-strike,

and (3) Go slow strike.

(1) General strike: A general strike is one, where the workmen join together

for common cause and stay away from work, depriving the employer of

their labour needed to run the factory.

(2) Stay-in-strike : A stay-in-strike is also known as "total-dawn-strike" or

'pen-dawn-strike". It is the form of strike where the workmen report to

their duties, occupy the premises, but do not work. The employer is

thus prevented from employing other labour to carryon his business.

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