69

CHAPTER III

THE CONCEPT OF INDUSTRIAL AND TRADE DISPUTES

3. 1. Introduction

The labour problems are associated with industries and the

industrialization. When a single person brings the raw material, works on it,

produces the consumer product like a self employed person (in the modem sense

of the term) there would not arise any labour problem. It is only when a person

works for another the problem arises. Industries need huge capital investment,

which cannot be supplied by labour. So the capitalists invest and establish the

industry and look forward for the labour. The required labour is supplied by the

workers in return for a consideration. Labour in its abstract sense means any

physical or mental work undertaken for a monetary consideration. A worker sells

his labour and the employer purchases the labour. Labour and capital are the

necessary and the main ingredients of an industrial activity. Each can not exist

without the other. Both are interdependent. The co-operation and co-ordination of

both are sine-quo-non for the industrial development.

In the case of any commodity sold in the market the seller fixes the sale

price which is based on material cost, over-head cost, labour cost and includes
 70

the taxes if any and the marginal profit which one aims to earn. But in case of

labour price, the labour cannot be subjected to quantification in terms of money

in as much as it is not easily possible to estimate the quantum of labour one

renders in a particular given period say one hour, which again differs from

worker to worker and also circumstances such the tools used, the facilities

afforded, the quality of guidance, the expertise and the personal intelligence of

the worker etc., A person’s labour in the afternoon hours or late hours may not

be the same as that of morning hours when he was fresh. The speed with which

one person regularly performs a job may again differ from others. Each person’s

approach to a particular job again differs. The intelligence required for the job

also differs from person to person. The job knowledge often may not be to the

same level in all the persons. The sustenance to hard work differs between

persons. The level of obedience to rules sincerity to job, faithfulness, loyalty

towards the employer, the sense of belongingness are some of the traits which

differ from person to person and are independent of the industrial factors and are

influenced by factors like sociological, philosophical, religious, economic,

literacy, morality etc.,

The quantification of labour in terms of money with accuracy and

standardization is not possible. In the quest to earn more profit the employer

always naturally tries to purchase labour at as much low price as possible.

 71

Similar as in case of the commodity market the determinant forces like demand

and supply also work in labour market. The more the industrialization develops

the more would be the cut throat competition among the producers. The

customers search for the cheaper articles in the market. The traders also like to

purchase the raw materials at cheaper rate to face the competition in the market.

Thus the pressure is developed ultimately on the producers, i.e. the industrialists.

To stay in the competition every employer/ industrialist is forced to produce at a

cheaper rate. Like the employer, the labour also tries always to get as much more

price for his labour as possible. Although the employer has many options like

reducing the cost of materials, reducing the expenditure on ‘over head account’,

reducing the cost by assiduous handling of the finances etc., to reduce the

production cost, where as the labour has no other option except to protect their

interest by resisting the employers from taking any drastic action affecting the

labour. The labour has to face another most important problem of unemployment

which forces the available labour in the labour market to offer at even starvation

wages. Thus one side the unemployment problem gives rise to cheaper labour

and the other side the commodity market forces put pressure on the employers to

produce at cheaper rates to stay in the market thus giving rise to cheaper labour.

The workers and the employers cannot live isolated. They have to live in the
 72

society. Hence the changes occurring in the society also affect both the workers

and the employers.

There is an inherent conflict in both the interest of capital and the labour.

Both are diagonally opposite. The political philosophy prevailing in the society

also makes an impact on labour problems. Democratic philosophy leads men to

expect the society to treat them politically equal and also access to equal

economic opportunities. Besides the wages certain psychological issues like pride

of job, self satisfaction, sense of importance, better working atmosphere, better

health facilities, educational and recreational facilities etc. taken important place

in labour expectations. Thus the expectations of the labour from the capital are

ever raising and differ from society to society, country to country and time to

time and depend on socio, economic and political wave present in a particular

region. Concessions granted to workers in one industry are being demanded by

the workers of other industries and so in one country are being demanded in other

countries. Labour problems constituted a serious menace to the Society, and

needed solution, if not to eradicate then at least to mitigate them in the very

beginning. Employers paid their sole attention to the maintenance of machines

and the improvement of the technical know how to the utter neglect of the human

hands employed to man the machines because they were readily available and
 73

i c ___

could be easily replaced . Thus the labour problems attain international

character. There is no definite solution that can be applied in resolving the labour

problems as they are heterogeneous and dynamic in nature. Both the labour and

capital have to work under the same roof. It would be utopian to expect conflict

free industrial society. Here the definition of the term ‘industrial dispute’ attains

importance with the object of resolving and to maintain industrial peace and

harmony.

For a layman ‘industrial dispute’ is nothing but a difference between the

workmen and their employers, which may relate to the terms of employment as

the case may be. But from the legal point of view it is some thing more not just

confined to one single instance.

3.2, Statutory Definition of ‘Industrial Dispute’ and ‘Trade Dispute’

The Trade Unions Act, 1926 and the Industrial Disputes Act, 1947 defined

the terms ‘trade dispute’ and the ‘industrial dispute’. Though the nomenclatures

slightly differ, the ultimate object and the substance of both the definitions are

one and same.

35
Giri.V.V, “Labour problems in Indian Industry” (Bombay: Asia Publishing House, 1965), at
116.
 74

The Trade Unions Act, 1926 has been enacted to make provisions for the

registration of the trade unions and in certain respects to define the law relating to

regulation of the functioning of registered trade unions and where as the object of

the Industrial Disputes Act, 1947 is to make provision for the investigation and

settlement of industrial disputes and for certain other purposes.

The statutory object of formation of a trade union is to regulate the

relations between workmen and workmen or between employers and employers

or between workmen and employers or to impose restrictive condition on conduct

of trade or business. The trade unions for this purpose when registered under the

Trade Unions Act, 1926 have been given certain rights, immunities and also are

subject to certain liabilities/duties. The rights and immunities can be enjoyed by a

trade union only for the acts done in contemplation or furtherance of a ‘trade

dispute’. The Industrial Disputes Act, 1947 provides the machinery to investigate

and resolve the ‘industrial disputes’. Hence both the Trade Unions Act, 1926 and

the Industrial Disputes Act, 1947 are complimentary to each other with the sole

object to maintain the industrial peace and harmony, which is essential for the

economic and industrial growth of the country. This highly laudable object can

be achieved only when the industries are free from conflicts. These conflicts
 75

many a time are between labour and the capital. It would be utopian to expect

conflict free society. Conflicts are inherent where two or more diverging interests

are working, each depending on the other for its existence.

3. 2. 1. Definition of ‘Industrial Dispute’ under the Industrial Disputes Act,

1947

The Industrial Disputes Act, 1947 defines ‘industrial dispute’ as “any

dispute or difference between employers and employers or between employers

and workmen or between workmen and workmen which is connected with the

employment or non-employment or the terms of employment or with the

conditions of labour of any person. ”36

3.2.2. Definition of ‘Trade Dispute’ under the Trade Unions Act, 1926

The Trade Unions Act, 1926 has christened the “industrial dispute” as

“trade dispute” and defines as under:

‘Trade Dispute ’ means “any dispute between employers and workmen or

between workmen and workmen or between employers and employers which is

connected with employment or non-employment or the terms of employment or

36 See Section 2 (k) of the Industrial Disputes Act, 1947

 76

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. ”

3.2.3. Definition of ‘Trade Dispute’ and ‘Industrial Dispute’ - An Analysis

The nomenclature differs under both the Acts. The Trade Unions Act, 1926

calls it as ‘trade dispute’ whereas the Industrial Disputes Act, 1947 calls it as

‘industrial dispute’. Both the definitions are almost identical.

It is pertinent to note that Trade Unions Act was enacted in 1926 and after

21 years the Industrial Disputes Act was enacted i.e. in 1947. The Industrial

Disputes Act, 1947 is surely a development based on the Trade Disputes Act

1929. Hence the definition under the Industrial Disputes Act, 1947 has very wide

ramifications and takes in practice with in its fold many differences between the

workmen and the employers.

3. 3. 1. The fundamental characteristic features of ‘Trade Dispute’ and

‘Industrial Dispute’

(i) It must be a ‘dispute’ or ‘difference’

The Supreme Court in Shambu Nath Goyal .v. Bank of

Baroda38 held that the term ‘industrial dispute’ connotes a real and

37 See Section 2 (h) of the Trade Unions Act, 1926

 77

substantial difference having some element of persistency and

continuity till resolved and likely if not adjusted to endanger

industrial peace of the undertaking or community. When parties are

at variance and the dispute or difference is connected with

employment or non-employment or with the conditions of labour,

there come into existence an industrial dispute.

The Madras High Court in C.P.Sarathy .v. State of Madras39

observed that for an industrial dispute to come into existence it is

necessary that there must be some difference between the parties i.e.

demands by one party should have been raised before the other and

such other party should have refused to accept those demands. There

can be no dispute by the unilateral action of one party, which means

the demand must be communicated to the other party. No trade

dispute can be said to have arisen unless an opportunity to the other

party is given to express any view or indicate any positive or

negative relation there to. However, Supreme Court in Shambu Nath

Goyal .v. Bank of Baroda40 observed that a written demand is not

38 (1978) 2 SCC 353

39 AIR 1951 Mad. 191
40 Supra n 4
 78

necessary for bringing into existence an industrial dispute unless it is

concerning to a public utility service.

The Delhi High Court in Fedders Lloyd Corporation Ltd .v. Lt

Governor, Delhii41 held that to bring an industrial dispute into

existence the party raising the dispute must first make a demand on

the other party thus giving the other party an opportunity to either

accept or reject the demand. Giving an opportunity to consider the

demand is very essential for bringing into existence any industrial

dispute. The demand must however, be raised on the management of

the establishment and rejected by them. Making of such demand to

conciliation officer and its communication by the conciliation officer

to the management, who reject the same is not sufficient to

constitute an industrial dispute.

(ii) Parties to the ‘Dispute’

The ‘dispute’ or ‘difference’ must be between employers and

workmen or between workmen and workmen or between employers

41. AIR 1970 Delhi 60.

 79

and employers. The expression ‘workmen’ used indicates that the

‘dispute’ or ‘difference’ must have community of interest that is the

whole body of ‘workmen’ as a force or at least majority of

‘workmen’ are interested in resolution of the ‘dispute’ or the

‘difference’.

Thus the individual disputes would not per se be industrial

disputes unless community of interest can be traced in i.e. majority

of workmen are interested in the resolution of the dispute. The

Supreme Court in Workmen of Sri Ranga Vilas Motors (P) Ltd .v.

Sri Ranga Vilas Motors (P) Ltd42 held that when an individual

dispute is espoused by the union it (individual dispute) becomes an

‘industrial dispute’. Further the apex Court in News Papers Ltd .v.

U.P .State Industrial Tribunal43 observed that it is not necessary that

a registered body of workmen (union) should sponsor a workman’s

case and in Associated Cement Co .v. Their Workmen44 further it

was observed that a minority union or minority group of workmen

can raise an ‘industrial dispute’. With regard to the existence of the

42 AIR 1967 SC 1040

43 AIR 1960 SC 1328
44 AIR 1960 SC 111
 80

trade union espousing it was held by the Supreme Court in Workmen

of Jamadoba Colliery of Tata Iron and Steel Co. v. Jamadoba

Colliery of Tata Iron and Steel Co45 that for the purpose of espousal

it is not necessary that trade union which espoused should be in

existence at the time of the cause of the dispute. Where the union

which took up the cause of the dismissed workmen itself came into

existence after the date of dismissal and the dismissed workman

joined the union there after, it would be a valid industrial dispute.

But the espousing trade union must be one connected with the

industry with which the dispute is connected. However, regarding

the relationship of the trade union and the industrial dispute the

Supreme Court in Motor & Machinery Manufacturers Ltd. vs.

Industrial Tribunal - Delhi46 held that where the cause of workmen

was espoused by a union which has absolutely nothing to do with

the establishment from which the workman comes, it is not an

industrial dispute for it has no community of interest.

Hence for an individual dispute to take the form of an

industrial dispute it should be espoused by a body of workmen,

45 (1967) IILLJ 663

46 (1963) I LL.J 222
 81

either through a trade union or as a group, when it is through an

union, such an union may be either a registered or un- registered or

it may be either majority or even it may be a minority union, and the

union might have been in existence at the time of arising of the

dispute or formed after that but such union or body of workmen who

espouse the cause of an individual workman should be connected

with the industry in which the dispute aroused. The parties to the

‘dispute’ must have real and substantial interest in the resolution of

the dispute. The espousing workmen should have direct and

substantial interest in the dispute of an individual which they

espoused. The Supreme Court in Workmen ofDimakuchi Tea Estate

.vs. Management of Dimakuchi Tea Estate47 held where the

workmen of tea estate raised a dispute regarding the termination of

service of a person belonging altogether to different category from

them, that there was no industrial dispute with in the meaning of the

law as the appellant workmen have no direct or substantial interest

in his employment or non-employment even if he was a member of

the trade union.

47
AIR 1958 SC 353
 82

In order to mitigate the practical difficulties, the law was

amended accordingly in the year 1965 and a new section namely

Section 2A48 was inserted. Section 2A of the Industrial Disputes

Act, 1947 acts as a protection to the individual workman who may

not be a member of any trade union and also that he does not enjoy

the support of any trade union or fails to get the espousal of the body

of workmen. Some times it does happens that the trade union/

unions may not be interested in or the action of the trade union may

even be vengeful towards a particular individual workman who may

not be member of the union with the object to teach a lesson the

others that the union support cannot be taken for granted. And at the

same time the disputes relating to an individual workman, which are

not specifically covered by Section 2A namely, arbitrary transfer,

denial of increment or promotion etc. such disputes in order to deem

them as industrial disputes, the ratio of the apex Court stand valid in

situations.

48 Section 2A of the Industrial Disputes Act, 1947 provides that 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.
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(iii) Subject matter of ‘Dispute or Difference’

The ‘dispute’ or ‘difference’ according to Section 2 (g) of the

Trade Unions Act, 1926 and Section 2(k) of the Industrial Disputes

Act, 1947 must be connected with employment or non-employment

or the terms of employment or with the conditions of labour of any

person.

(a) A dispute regarding reinstatement of dismissed workmen

A ‘dispute’ regarding reinstatement of a workman, who has

been dismissed, is covered by the expression dispute connected with

the non-employment of ‘any person’ used in the definition of

‘industrial dispute’ in Section 2(k) of the Industrial Disputes Act,

1947. The Delhi High Court in Fedders Lloyd Corporation Ltd. V

.Lt .Governor Delhi49 held that non employment includes

retrenchment as well as refusal to reinstate.

49
AIR 1970 (Delhi) 60
 84

(b) Dispute relating to Workmen employed by the Contractor

The Supreme Court in Standard Vacuum Refining Company

ofIndia Ltd vs. Their workmen & another50, dealt on the question of

a dispute raised by the permanent workmen relating to abolition of

contract labour system and their regularization. The Standard

Vacuum Refining Company of India Ltd. was regularly giving

annual contract for the maintenance of the plant and premises. 67

persons were employed in 1970 and in the next year, the number 67

were brought down to only 40. Threatened by the insecurity of job,

the workmen raised a ‘dispute’ demanding abolition of contract

labour system. The Court held that, the dispute to be an industrial

dispute on the reason that there was a real and substantial interest

involved between the company and the workmen on the question of

employment of contract labour for the work of the company. The

fact that the workmen were employed by contractor would not alter

the nature of the ‘dispute’ so long as the party raising the ‘dispute’

has a direct interest in the subject matter of the ‘dispute’.

50
(1960) II LL.J 233 (SC)
 85

In Workmen of Hindustan Lever Ltd. Vs Hindustan Lever

Ltd51 the workmen raised a demand to confirm the services of

certain employees. The employer rejected the demand and refused to

confirm the employees in the acting capacity. Further the employer

advanced the defense that the demand to confirm the employees in

the acting capacity would not come within the purview of the

definition of ‘industrial dispute’. The Supreme Court held that a

demand of the workmen to confirm employees employed in an

acting capacity in a grade would unquestionably be an ‘industrial

dispute’.

The expression ‘terms of employment’ would ordinarily

include not only the contractual terms and conditions but those terms

which are understood and applied by the parties in practice or

habitually or by common consent without ever being incorporated in

the contract of employment.

(c) Dispute relating to privileges or concessions

The privileges and concessions granted by the employer to the

workmen or a trade union of workmen would not be a matter

51
(1984) II LL.J SC 391
 86

pertaining to conditions of service. The Madras High Court in

Workmen of Indian Bank vs. Management of Indian Bank held

that where privilege given to an office bearer of a trade union in the

form of duty relief is withdrawn by the management which has

granted the privilege, it cannot be said that an ‘industrial dispute’

has arisen there by. The legal status of the duty relief is only that of

a concession and not a matter pertaining to conditions of service.

Where the concession provided is withdrawn, the beneficiary cannot

complain that a condition of service is affected. However, one

should go to the genesis of the privilege or the concession. If the

privilege or the concession in question is granted by the employer as

a matter of good will gesture with the main object to keep the

workmen satisfied and on his (employer’s) own then withdrawal of

such a privilege or concession would not give rise to an industrial

dispute. On the hand if the privilege or the concession has been

granted or enjoyed by the workmen pursuant to the conditions of

service then any withdrawal or alteration to the disadvantage or

detriment of the workmen would definitely come within the purview

of the definition ‘industrial dispute’.

52
(1985) I LL.J Mad 6
 87

(d) Disputes relating to the Contractual Relationship

In Management of Safdar Jung Hospital, New Delhi vs.

Kuldip Singh53 the Supreme Court held that to bring in to existence

an ‘industrial dispute’ the parties to the ‘dispute’ must have

contractual relationship with the employer following trade, business

or manufacture and the workmen following any calling, service or

employment in aid of employer’s enterprise. To raise an industrial

dispute it must first be established that there exists the relationship

of employer and employee associating together, the former

following a trade or business, etc,. However, it is not necessary that

there must be a profit motive. But the enterprise must be analogous

to trade or business in a commercial sense. The ‘dispute’ must relate

to the existing industry and not a dead one or one which is proposed

or not even in existence.

(e) Disputes relating to Ideology or of Religious Nature

Disputes relating to ideology not being materialistic in nature

or pertaining to religion or philosophical issues are not ‘industrial

53
A.I.R.1970 S.C. 1407
 88

disputes’ even though raised by majority of the workmen or a trade

union, for the reason that they are not connected with employment

or non-employment or terms of employment or conditions of

service.

3. 4. Ramifications of Industrial Disputes

Albeit no one like any industrial dispute to exist or continue on the

industrial front disturbing industrial peace and harmony, but still some time

industrial conflicts surface and continue for quit a long period unresolved

jeopardizing the industrial production. The capital employs labour, labour serves

for capital, and it is the society which employs both capital and the labour.

Hence in this perspective society also suffers from industrial unrest.

The impact of the existence of the industrial disputes has far reaching

consequences. The industrial disputes affect the economic, social and political

life of a country in any given situation. They retard the industrial growth of a

country. Industrial disputes results in loss of production days and precious man

days for ever. Employers as well as the labour suffer from industrial conflicts

this leads to suffering of the society at large. Labour/ man days are perishable,

once lost are lost for ever unless workers with the cooperation of the employer
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recoup by working extra hours after the resolution of the industrial conflict. Such

over hours working on Indian scenario is very rare aspect where as in the

industrially developed countries it is very common. Sometimes industrial unrest

also leads to law and order problems thus putting the society in vulnerable

position.

3. 4. 1. Causes of Industrial Disputes

Capital employs labour and labour contributes to the Capital. So out of

necessity each one is depending upon the other. The interest of each one is again

diametrically opposite in as much as labour always strives to get more wages and

facilities from the industry, where as the employer tries to cut down the wage bill

as much as possible to inflate his profit. Some times even the market forces

which depend on the principle of demand and supply also work on both the

employers and the labour class. The causes for industrial disputes are many.

However, they may be grouped in to three categories i.e. Employment oriented,

Administration oriented, Society/ Government oriented and miscellaneous

causes.
 90

3. 4. 2 Employment oriented causes of industrial disputes

The factors relating to employment, non-employment, conditions of

service and terms of employment come under this category of causes. The loss of

value of money resulting from galloping prices of essential commodities, the

availability of huge number of unemployed youth force, the cut-throat

competition among the industrialist, the better awareness among the working

class resulting from rise in educational levels, the ever rise in the aspirations and

the expectations of the common man, the rise in the standards of living in the

society compelling the workers also to live with that standard, the growth of trade

unionism are coming with in this category.

3. 4. 3. Administration centered causes of industrial disputes

Such disputes which arise due to un- reasonable, arbitrary, high

handedness of the employer or their representatives many a time disturbs

industrial peace. Unwillingness of the administration of the industry to talk to the

labour trade union representatives leads to the birth of rather more serious

industrial problems than what the administration had tried to avoid by not willing

to speak to the labour. The capricious attitudes of the representatives of the

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employers often result in industrial conflicts, disturbing industrial peace. Mostly

such causes arise due to lack of appreciation of the importance of the contribution

of the labour by the employer’s representatives. It may also be due to lack of

recognition of labour as one of the most essential resources necessary for the very

existence of the industry.

3. 4. 4. Society/Government centered causes of industrial disputes

The changes in the society, surrounding and the neighbouring industries

also bring in to existence industrial disputes. The policy of the Government

especially relating to Globalization, Privatization and Liberalization seriously

affects the interests of the working class.

The ineffectiveness of some of the labour laws or their ineffective and

unsatisfactory way of implementation and their loss of relevance to the changed

industrial scenario leads to industrial conflicts by the workers trying to influence

the Government to bring in favourable legislations. There is another area where

the Government is again responsible for existence of industrial disputes that is

the inadequate dispute resolving Government agencies.

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3. 4. 5. Other causes of industrial disputes

The growth of trade unionism also brought along with it certain amount of

negative aspect which is affecting the industrial peace. The Trade Unions Act,

1926 also provides impetus by failing to check the indiscriminate growth of trade

unions. There is no Central legislation till today which can provide for

compulsory recognition of the trade unions for the purpose of collective

bargaining as a collective bargaining agent. Every attempt made by the

legislature in the context remained a futile exercise. All these factors gave rise

to inter and intra union rivalry which many a time ends up with aggressive trade

union activities to show one up-man-ship. Depending upon the political

development in the country the political parties also use the affiliated trade

unions to engineer industrial disputes to create industrial unrest solely for

political purposes. The unbridled corruption in the industry and in public life

generally, the permissive attitude of the society, the degeneration of moral

values, the lack of commitment of the trade union leaders towards productions

and development of work culture among the working class besides the employers

also leads to the growth of industrial disputes.

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For economic growth of the Nation and attaining the cherished goal of

self-sufficiency it is sine-quo-non to maintain the wheel of the industries moving

without interruption on what so ever ground may be; in this context the industrial

peace and harmony plays an important role. The disputes are endemic where two

divergent interest work due to necessity of each other and cannot be totally

eliminated as the resolution of dispute today does not mean that such a dispute

would never come up again, the same dispute may come up again when there are

changes in the circumstances and in out look as well as in the surroundings.

However, it is pertinent to note that the industrial disputes are in majority related

to the conditions of service, hence in this context the Industrial Employment

(Standing Orders) Act, 1946 plays an important role in pre-empting the birth of

the industrial disputes by requiring the employer to define with precision all

matters relating to the conditions of service of his workmen.