CENTRAL UNIVERSITY OF SOUTH BIHAR

SCHOOL OF LAW AND GOVERNANCE

TOPIC:

“Settlement Of Industrial Dispute Under Industrial Dispute Act, 1947”

Under the Supervision of:

Dr. DIGVIJAY SINGH

Submitted by

SHIVAM SAKET

B.A.LL.B. (7th Sem.)

CUSB1513125043

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ACKNOWLEDGEMENT

An enterprise of such a magnitude as this research on the topic “Settlement Of Industrial

Dispute Under Industrial Dispute Act, 1947” could only fructify in such a short span of time
due to the coalescing of able guidance and support of many learned and able persons, whose
efforts and cooperation, I as the researcher, with a sense of gratitude, being duty bound too,
acknowledge in no particular order. My deepest gratitude and thanks to the Hon’ble Prof.
Digvijay Singh, Asst. Professor, Central University of South Bihar, an eminent professor and
scholar gave enough time and space for free exchange of ideas and, opinions greatly benefiting
me in augmentation and critiquing of many of the opinions which find their place in this work.

Despite the busy schedule and onerous academic responsibilities, he gave me ample time
whenever he was approached for his invaluable guidance. I am highly indebted to the library
staff to help me find the relevant books and journals, and other officials and office staffs, who
have also extended their help whenever needed. I would like to extend my sincere thanks to all of
my friends for their review and honest remarks. Last, but not the least my eternal gratitude is
due, to my loving Parents whose constant unflinching support, blessings and encouragement
both, temporal and emotional support, to meet any challenge with confidence including, of this
purposive academic exercise.

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CONTENT

SERIAL NUMBER TOPIC PAGE NUMBER

1. Introduction 4-5

2. Origin and history of Industrial 6

disputes in India
3. Major causes of Industrial 7-8
disputes in India
4. Procedure for settlement of 9-15
Industrial Disputes
5. Cases related to settlement of 16-17
Industrial Disputes
6. Conclusion 18

7. References 19

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INTRODUCTION
Section 2(j) of the Industrial Disputes Act, 1947 defines the term ‘industry’, as any business,
trade, undertaking, manufacture, calling of employers, and includes any calling, service,
employment, handicraft, industrial occupation or avocation of workmen.

The Courts have given different meaning to this concept at different times, and actually, the
interpretation has always depended on predictions of individual Judges 1.

For the first time such a situation arose in the case of Budge Municipality Vs P.R. Mukerjee2
when Mr. Justice Chandra Shekara Iyer of the Supreme Court was asked to decide whether the
Municipality is an industry within the meaning of the Industrial Disputes Act, 1947.

The fact of this case was that two employees of the Municipality who were the members of
Municipality Workers Union were suspended by the Chairman on the charges of the negligence,
insubordination and indiscipline. The workers were dismissed from the service saying that their
explanations were unsatisfactory. The union questioned the dismissal and the matter was referred
by the Government of West Bengal to the Industrial Tribunal for adjudication. The Tribunal
directed the workers reinstatement in their respective offices by making an award saying that
suspension of two employees was of victimization. The Municipality under Article 226 of the
Indian Constitution took the matter to the High Court. The petition was dismissed and leave was
granted under Article 132(1) of the Indian Constitution to make an appeal to the Supreme Court.

The definition of industry is in two parts. The first part says that ‘industry’ means any business,
trade, undertaking, manufacture or calling of employers and the second part of the definition of
‘industry’ says that it includes any calling, service, employment, handicraft, or industrial
occupation or avocation of workmen.

In the case of Madras Gymkhana Club, Employees Union Vs Management of Madras

Gymkhana Club3 , it was observed that “if the activity can be described as an industry with
reference to the occupation of the employers, the ambit of the industry, under the force of the
second part takes in the different kinds of activity of employees mentioned in the second part.
But the second standing alone cannot define industry. By the inclusive part of the definition the
labour force employed in any industry is made an integral part of the industry for the purpose of
industrial disputes although industry is ordinarily something which employers create or
undertake”.

In the case of workmen of I. S. Institution Vs I. S. Institution4, it was held that the “industry is
ordinarily something which employers create or undertake”. which is gradually yielding place to

1
Agarwal S.L: “labour Management Relations”, Indian Law Institute, 1978, P – 94.
2
1953, I. LLJ 195.
3
AIR, 1968 SC 554.
4
AIR, 1976 SC 145.

4
the modern concept which regards industry as a joint venture undertaken by employers, and
workmen, an enterprise which equally belongs to both. Here it is not necessary to view definition
of industry under section 2(j) of the Industrial Dispute Act in two parts.

Industrial dispute [section 2(k)]:

The important objective of the Industrial Disputes Act, 1947 as pointed out in the preamble is “to
make provision for the investigation and settlement of industrial disputes”. Therefore the
definition of “industrial dispute” has got special significance.

The following are the important elements to constitute an industrial dispute:

1.) A dispute or difference between

a) employers and employers, or

b) employers and workmen, or

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 workmen or workmen or any other person in whom
they are interested as a body.

The expression “of any person” appearing in the last line of section 2(k) means that he may not
be a workman but he may be someone in whose employment, terms of employment or conditions
of labour the workman as a class have a true and substantial interest5.

Industrial dispute is not restricted to dispute between employer and recognized majority union it
also means difference between employer and workmen including a minority union6.

5
Workmen of Dimakuchi Tea Estate Vs Management of Dimakuchi Tea Estate, AIR, 1958 SC
353.
6
Tata Chemicals Vs Workmen, Tata Chemicals AIR, 1978 SC 828

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Origin and History of Industrial Dispute Act, 1947
The legislative history of industrial disputes can be traced from the year 1890. The earliest
legislation in India was Bengal Regulation VII of 1819. Under this legislation the breach of
contract treated as criminal offence and this was also followed by Merchant Shipping Act (I of
1859) and the Workmen’s Breach of Contract Act, 1860. However, the development and growth
of central legislative measures to govern industrial legislation in India can be examined and
studied from employers and Workmen’s Disputes Act, 1860 to the present Industrial Dispute
Act, 1947 which is being followed now. There were violent disturbances and conflicts and death
of one of the contractors took place in the year 1859 consequent to disputes or differences
between European Railway Contractors and their workmen in Bombay Presidency relating to the
failure and delay in payment of wages. In this connection on the request of the Bombay
Government, the Government of India enacted the Employers and Workmen’s (Disputes) Act,
1860. According to this Act certain summery procedures were prescribed relating to wages
pertaining to the workers engaged in the construction of Railways, Canals and other public
works. For the extension of this Act to their territories the Local Governments were given the
powers. This step was considered the first legislative venture for governing industrial disputes
with a limited objective.

In course of time the Indian Trade Unions Act, 1926 guaranteed the workers, the right to
organize and gave them a legal status and immunized them from civil and criminal liability. The
Act had been amended several times to suit the changing circumstances. The Trade Disputes Act,
1929 was codified for five years as an experimental measure.

The main object of the Act was to make provisions for establishment of Courts of Inquiry and
Boards of Conciliation with a view to investigate and settle trade disputes. The Act prohibited
strikes or lock-outs without notice in public utility services; it also made any strike or lock-out
illegal which had any object other than the furtherance of a trade dispute within the trade or
industry in which the strikers or the employers locking out were engaged, and was designed or
calculated to inflict severe, general and prolonged hardship upon the community and thereby
compel Government to take or abstain from taking any particular course of action. The Act was
amended in 1932 and was made permanent by the Trade Disputes (Extending) Act, 1934.

Since 1937 the scope of trade disputes legislation was considerably extended both at the Centre
and in a number of provinces, and substantial progress was made building up a permanent
machinery for the speedy and amicable settlement of industrial disputes. The Trade Disputes
Amendment Act of 1938 provided for the appointment of conciliation officers charged with the
duty of mediating in or promoting the settlement of trade disputes.

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Major Causes of Industrial Disputes in India
Industrial disputes arise in a myriad of ways. A dispute could arise as a result of any demand
raised by the workers to which management does not agree, irrespective of the nature of the
demand. Therefore, even highly unreasonable demands made by unions, for example “all
workers should be given cars,” will be the subject matter of an industrial dispute, since they are
connected, however remotely, to terms and conditions of employment. Demands made by unions
prior to negotiating a long term contract are a common cause of major industrial disputes.

Industrial disputes could also arise as a result of a union grievance alleging that the employer is
not following or adhering to the terms of the contract. There have been many disputes pertaining
to the non implementation of contract terms, even after the contract has been signed7.

A major source of industrial disputes relates to recognition of unions. There is no law mandating
union recognition in India; furthermore, there is no provision in any law providing that in any
unit or establishment, there can be but a single bargaining unit. Consequently, there are a number
of unions in each factory and non regulation of any union will lead to an industrial dispute.
Despite the fact that there is no law on recognition of unions, there exists a code of discipline
entered into by representatives of employers and employees in 1956 that gives guidelines on
recognition8. Under the terms of the code, a union that is formed must remain in existence for
one year and must have membership corresponding to at least fifteen percent of the total
workforce in the unit to be eligible for recognition.

Frequently, unilateral changes in various existing practices in the factory may give rise to an
industrial dispute raised by the union. The unions tend to argue that certain practices which were
in existence at the time of signing the contract cannot be changed without due notice and
discussion during the lifetime of the contract9. Unless there is a specific clause in the contract
giving management the right to change practices, work schedules, etc., any such change can be
the subject matter of an industrial dispute. These practices could be related to: period and mode
of wage payment, allowances, leave granting procedures, alteration of work and shift timings and

7
In many cases, after a long term contract has been signed, it may not be possible for the employer to
immediately implement terms of the contract that are not directly related to wages and benefits.
8
In 1956, due to the problem of multiplicity of unions, the government initiated an agreement between the
employers association and the trade unions regarding union recognition for bargaining purposes. Under the code,
a newly formed union must have been in existence for a period of one year and must represent at least fifteen
percent of the workforce of the factory or establishment to achieve recognition at the end of the year. During the
year of review, the union presents grievances affecting its members, but it is not allowed to sign a collective
bargaining agreement.
9
Industrial Disputes Act (Act XIV of 1947) § 9(A), 22 INDIA A.I.R. MANUAL 590 (1979); see also 2 V.
SUBRAMANIAN,supra note 13, at 47 (discussing Shakti Eletro Mechanical Industries Pvt. Ltd. v. F.N. Lala, decided in
1974).

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schedules, classification of jobs by grades, withdrawal of any customary concession, privilege, or
change in usage of such custom or privilege10.

Employers tend to adopt the view that these are basically the rights and responsibilities of
management subject to any worker’s right to raise a grievance, yet this accounts for many
industrial disputes. Disputes would also arise if there is a change in labor law, and the employer
or workmen do not agree or implement the provisions of the new law11. Most of the latest labor
law changes have been favorable to labor12, and since employers often appeal against the law,33
they prefer to wait for a decision on their appeal before implementing the law. Trade unions will
demand immediate implementation and this may be another reason for an industrial dispute.

10
Industrial Disputes Act (Act XIV of 1947) § 9(a), 22 INDIA A.I.R. MANUAL 590 (1979); see also K. SRIVASTAVA, THE
INDUSTRIAL DISPUTES ACT, 1947 at 452 (1966).
11
The Indian government has tended to enact protective labor legislation. When such legislation is enacted,
employers tend to challenge the validity of the legislation if they feel it impinges on their rights. Consequently,
employers may choose to file a petition in the courts in order to postpone the implementation of the legislation.
Unions, on the other hand, will demand immediate compliance with the legislation and will raise noncompliance as
an industrial dispute. In other cases, employers may seek clarifications of the legislation before it is implemented.
This will also cause a delay. Even in this situation, the unions are likely to raise the delay as a dispute.
12
See, e.g., Workmen’s Compensation (Amendment) Act (Act XXII of 1984), 35 INDIA A.I.R. MANUAL 1128 (1985).

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Procedure for Settlement of Industrial Disputes
The Industrial Disputes Act, 1947 provides procedure for settlement of industrial disputes, which
must be followed in all “public utility service”, has been defined in section 2 (n) of the Act so as
to include “any railway, postal, telegraph or telephone service that supplies power, water and
light to the public, any system of public conservancy or sanitation, any section of an industrial
establishment on the working of which the safety of the establishment or the workmen employed
therein depend and any industry which keeping in view the public emergency has been declared
as such by the appropriate Government”. As laid down in the Act a dispute should first go
through the process of conciliation before it could be referred to the appropriate authorities for
adjudication13. Where any industrial dispute exists or is apprehended, the Conciliation Officer
may or where the dispute relates to a public utility service and a notice under Section 22 has been
given shall hold conciliation proceedings in prescribed manner. Conciliation proceedings can be
stated in case of dispute that actually exists or when there is reasonable ground to apprehend that
an industrial dispute is likely to come into existence unless something is done to prevent or
where both parties to dispute approach the Government separately for conciliation. Conciliation
proceedings are deemed to have been started from the date on which a notice issued to the parties
to appear before the conciliation officer who may meet them jointly or separately.

The Conciliation Officer must submit his report to the Government within fourteen days of the
starting of conciliation proceedings. During this period he tries to bring about a fair and amicable
settlement between the parties to dispute.

If a settlement arrived at, the Conciliation Officers will send a report to the Government along
with a memorandum of settlement duly signed by both parties. This settlement come into force
from the date agreed upon by the parties to dispute or in its absence the date on which it was
signed by them and is binding for a period of six months unless agreed upon otherwise, and after
the period afore said, until expiry of two months from the date on which a notice in waiting of
the intention to terminate the settlement is given by one of the parties to the other party or
parities to the settlement . Such a settlement is binding on all parties to the industrial dispute, to
the employer, his heirs, successors or assignees and to the workmen employed in the
establishment on the date of the dispute and all the persons who subsequently become employed
therein. If no settlement is reached by the parties, the conciliation officer will submit his report to
the appropriate Government stating the reasons for which he thinks no settlement could be
arrived at as well as the facts of the case.

Action by the Government:

On receipt of the report from the Conciliation Officer, the Government will come to a decision
on whether the circumstances and the facts of the case as such to justify a further reference. The

13
Ajay Kumar Samantaray ; Some reflections in Industrial Jurispedence ; the scope of section 10
(1) of I.D. Act 1947; when a reference of Industrial dispute could be treated as invalid.

9
Government has to arrive at ‘prima facie’ conclusion that the nature of the dispute justifies a
further reference. If in the opinion of the Government, there is a scope of arriving at a settlement
by further conciliation efforts, it may refer the case to the Board of Conciliation.

In view of this, the Industrial Disputes Act, 1947 provides for five major industrial dispute
settlement machinery:

1.) Works Committee (Section 3):

In the case of an industrial establishment in which 100 or more workmen are employed, the
appropriate Government may require the employer to constitute a 'Work Committee'. It consists
of equal number of representatives of employers and workmen engaged in the establishment. The
representatives of the workmen shall be chosen from amongst the workmen engaged in the
establishment and in consultation with the registered trade union, if any. Works committee deals
with the workers problem arising day to day in the industrial establishment.

2.) Conciliation:

Conciliation, a form of mediation refers to the act of making a passive and indirect effort in order
to bring two conflicting parties to a compromise. It is the “practice by which the services of a
neutral party are used in a dispute as a means of helping the disputing parties to reduce the extent
of their differences and to arrive at an amicable settlement of agreed solution.”

The conciliator or mediator tries to remove the difference between the parties by persuading the
parties to rethink over the matter with a give and take the approach but does impose his or her
own viewpoint. The conciliator is at liberty to change his or her approach from case to case as he
or she deems fit depending on other factors.

The Industrial Disputes Act, 1947 provides for conciliation, and can be utilised either by the
appointment of conciliation officers; permanently or for a limited period or via the constitution
of a board of conciliation. This conciliation machinery is at liberty to either take note of the
dispute or apprehend dispute on its own or when approached by a party.

In order to expedite proceedings, time-limits have been prescribed. It is 14 days in the case of
conciliation officers and 2 months for a board of conciliation. The settlement so arrived upon
during the course of conciliation is binding upon the parties for the period that has been agreed
upon by the parties or for the period of 6 months. It shall continue to be binding until revoked by
either of the parties. During the pendency of the conciliation proceedings, before a Board and for
seven days after the conclusion of such proceedings, the Act prohibits strike and lock-out.

 Conciliation Officer: Under Section 4 of the Industrial Disputes Act, 1947, the
appointment of a number of persons as is deemed fit by the appropriate government.

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For undertakings that employ 20 or more persons, the Commissioner/ Additional Commissioner/
Deputy Commissioner is appointed as the Conciliation Officer. But at the State level, some
officers from the Central Labour Commission office are appointed as conciliation officers, in the
case of Central Government. The conciliation officer enjoys the powers of a civil court, and he is
expected to give a judgment within 14 days of the commencement of the conciliation
proceedings. This judgment that is given by him is binding upon the parties to the dispute.

 Board of Conciliation (Section 5):

In case Conciliation Officer fails to resolve the differences between the parties, the government
has the discretion to appoint a Board of Conciliation. The Board is tripartite and ad hoc body,
consisting of a chairman and two or four other members.

The administrator is to be an autonomous individual, and different individuals are assigned in

equivalent number by the Board tin view of the question. Conciliation procedures before a Board
are like those that may occur before the Conciliation Officer. The Government has yet another
choice of alluding the proceedings to the Court of Inquiry rather than the Board of Conciliation.

The apparatus of the Board is gotten under way when a debate alludes to it. As it were, the Board
does not hold the pacification procedures voluntarily. On the debate being alluded to the Board,
it is the obligation of the Board to do all things as it supposes fit with the end goal of initiating
the gatherings to go to a reasonable and neighborly settlement. The Board must present its
answer to the legislature inside two months of the date on which the debate alluded to it. This
period can be further stretched out by the administration by two months.

3.) Court of Inquiry (Section 6):

If there should be an occurrence of the disappointment of the conciliation procedure to settle a
question, the administration can choose a Court of Inquiry to enquire into any matter associated
with or significant to debate. The court is mandated upon to present its report inside of six
months and may comprise of at least one people to be chosen by the proper government.

The court of enquiry is required to present its report inside a time of six months from the
initiation of enquiry. This report is therefore distributed by the administration within 30 days of
its receipt. Not at all like amid the time of pacification, labourers’ entitlement to strike,
businesses’ entitlement to a lockout, and bosses’ entitlement to reject labourers, and so forth stay
unaffected amid the procedures in a court to an enquiry.

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A court of enquiry is different from a Board of Conciliation. While the Board’s basic objective is
to promote the settlement of an industrial dispute, a court of enquiry is primarily fact-finding
machinery that aims at inquiring into and revealing the causes of an industrial dispute.

4.) Voluntary Arbitration:

On the disappointment of placation procedures, the conciliation officer may persuade the parties
to refer the dispute to a voluntary arbitrator wherein the arbitrator alludes to getting the question
settled since he is an autonomous individual picked by the parties included commonly and
willfully.

As such, assertion offers an open door for an answer of the debate through an authority together
delegated by the gatherings to the question. The procedure of intervention spares time and cash
of both the gatherings which is generally squandered if there should be an occurrence of settling.

This form of voluntary arbitration became a popular method a settling differences between
workers and management due to the advocacy of Mahatma Gandhi, who had himself applied it
extremely effectively and successfully in the Textile Industry of Ahmadabad. However,
voluntary arbitration received legal identity only in 1956 when the Industrial Disputes Act, 1947
was amended in order to include a provision relating to it.

This provision for voluntary arbitration was provided keeping in mind the lengthy legal
proceedings and formalities and resulting delays that is involved in adjudication. But it is
pertinent to note that the arbitrator is not vested with any judicial powers. He only derives his
powers to settle the dispute at hand from the agreement entered into by the parties of opting to
refer the dispute to the arbitrator. The arbitrator is required to submit his award to the
government who shall then publish it within 30 days of such submission, and the award shall be
enforceable only upon the expiration of 30 days of its publication.

Intentional intervention is one of the most democratic ways for settling industrial disputes and
conflicts. It is the best technique for determining modern clashes and is a reasonable and fair
supplement to aggregate bartering. It not just gives an intentional technique for settling industrial
disputes, but on the other hand is a faster method for settling them14.

This is because it depends on the idea of self-government in industrial disputes. Moreover, it

abridges the extended procedures orderly on arbitration, suggests a solid demeanour and a

14
www.managementstudyhq.com

12
created viewpoint; helps with fortifying the exchange union development and contributes for
working up sound and cheerful modern relations.

5.) Adjudication:

A definitive solution for the settlement of industrial disputes is its reference to arbitration by a
labour court or tribunals when conciliation fails to achieve a settlement with respect to the
dispute or conflict. Arbitration comprises of settling debate through intercession by the outsider
delegated by the legislature. The law gives the mediation to be directed by the Labour Court,
Industrial Tribunal of National Tribunal.

A debate can have alluded to arbitration if the business and the recognized trade union consents
to do as such. A question can likewise be alluded to arbitration by the Government regardless of
the possibility that there is no consent of the parties in which case it is called ‘mandatory
arbitration’. As has been mentioned before, the dispute may be referred to any of three sorts of
tribunals relying upon the nature and certainties of the question in inquiries. This includes:

 Labour courts (Section 7) - The appropriate Government is empowered to constitute

one or more Labour Courts. Its function is the adjudication of industrial disputes relating
to any matter specified in the Second Schedule.

MATTERS WITHIN THE JURISDICTION OF LABOUR COURTS.

SECOND SCHEDULE

1. The propriety or legality of an order passed by an employer under the standing orders;
2. The application and interpretation of standing orders;
3. Discharge or dismissal of workmen including reinstatement of, or grant of relief to,
workmen wrongfully dismissed;
4. Withdrawal of any customary concession or privilege;
5. Illegality or otherwise of a strike or lock-out; and

 According to [Sec 10 (1) (c)] matters specified in THIRD SCHEDULE, dispute not
effecting more than 100 workers can be referred to labour court.

 According to [Sec 10 (2)] when parties in the industrial dispute apply to the government
to refer dispute to the labour court and if government satisfies it shall make the reference
to the labour courts.

13
  According to [Sec 10 (6)] no Labour Court or Tribunal shall have jurisdiction to
adjudicate upon any matter which is under adjudication before the National Tribunal.

A Labour Court consists of one person only. A person is qualified to be appointed as presiding
officer of a Labour Court, if:

(a) he is, or has been a judge of a High Court, or

(b) he has been a District judge or an Additional District judge for at least three years, or

(c) he has held the office of the chairman or any other member of the Labour Appellate Tribunal
or of any Tribunal for at least two years, or

(d) he has held any judicial office in India for not less than seven years, or

(e) he has been the presiding officer of a Labour Court constituted under any Provincial Act or
State Act for at least five years.

(f) he is or has been a Deputy Chief Labour Commissioner (Central) or Joint Commissioner of
the State Labour Department , having a degree in law and at least 7 years’ experience in the
labour department after having acquired degree in law including three years of experience as
Conciliation Officer:

(g) as the case may be, before being appointed as the presiding officer; or (g) he is an officer of
Indian Legal Service in Grade III with three years’ experience in the grade.”

 Industrial tribunals (Section 7A) - The appropriate Government may, by notification in

the Official Gazette, constitute one or more Industrial Tribunals for the adjudication of
industrial disputes relating to any matter, whether specified in the Second Schedule or the
Third Schedule and for performing such other functions as may be assigned to them
under this Act.

SECONDSCHEDULE

1. The propriety or legality of an order passed by an employer under the standing orders;
2. The application and interpretation of standing orders;
3. Discharge or dismissal of workmen including reinstatement of, or grant of relief to, workmen
wrongfully dismissed;

14
4. Withdrawal of any customary concession or privilege;
5. Illegality or otherwise of a strike or lock-out; and

THIRD SCHEDULE

1. Wages, including the period and mode of payment;

2. Compensatory and other allowances;
3. Hours of work and rest intervals;
4. Leave with wages and holidays;
5. Bonus, profit sharing, provident fund and gratuity;
6. Shift working otherwise than in accordance with standing orders;
7. Classification by grades;
8. Rules of discipline;
9. Rationalisation;
10. Retrenchment of workmen and closure of establishment; and
11. Any other matter that may be prescribed.

 According to [Sec 10 (2)] when parties in the industrial dispute apply to the government
to refer dispute to the industrial tribunal and if government satisfies it shall make the
reference to the industrial tribunal.

 According to [Sec 10 (6)] no Labour Court or Tribunal shall have jurisdiction to

adjudicate upon any matter which is under adjudication before the National Tribunal.

 National tribunals (Section 7 B) - The Central Government may, by notification in the

Official Gazette, constitute one or more National Industrial Tribunals. Its main function is
the adjudication of industrial disputes which involve questions of national importance or
affecting the interest of two or more States15.

15
ipleaders.in

15
Cases related to settlement of industrial dispute

Management of Sufdarjang Hospital, Delhi Vs Kuldip Singh16, the Supreme Court observed
that “an industry exists only when there is relationship between employers and employees, the
former engage in business, trade, undertaking, manufacture or calling of employers and latter
engaged in any calling, service employment, handicraft or industrial occupation or avocation.
There must be an enterprise in which the employers will follow their avocations as detailed in the
definition and employ workmen. Therefore the basic requirement of ‘industry’ is that the
“employers must be carrying on any business, trade, undertaking, manufacture or calling of
employers”.

State of Bombay Vs. Hospital Mazdoor Sabha17, The Supreme Court of India held “hospital”
to be industry within the scope of Section 2 (j) and relied upon the “inclusive part” of the
definition and also the definition of employer under Sec. 2 (g) which includes an industry carried
on by or under the authority of any department of the Central Government or a State
Government.

Bangalore Water Supply Vs. A. Rajappa18, a seven Judges Bench of the Supreme Court
exhaustively examined and considered the scope of ‘industry’ and prescribed the Triple test
which has practically reiterated the test projected in Hospital Mazdoor Sabha case.

The Triple test laid down in the Bangalore Water Supply case are that where there is

a) systematic activity,

b) organized by co-operation between employer and employee (the direct and substantial element
is chimerical),

c) for the production and/or distribution of goods and services calculated to satisfy human wants
and wishes, prima facie, there is an “industry”.

i.) Absence of profit motive or gainful objective is irrelevant, be the venture in public, joint,
private or other sectors.

16
AIR 1970 SC 1407
17
AIR 1960 SC 610
18
AIR, 1978 SC 548

16
ii.) The true focus is functional and the decision test is the nature of the activity with special
emphasis on the employer and employee relations.

d) If the organization is a trade or business, it does not cease to be one because of philanthropy
animating the undertaking.

In view of the above points and the consequences of the decision given in the Bangalore Water
Supply case activities that such as professions, clubs, educational institutions, cooperatives,
Research institutes, charitable projects and other kindered adventures if they fulfill the above
Triple test, cannot be exempted from the scope of section 2(j) of the Industrial Disputes Act,
1947.

The decisions are Management of Sufdarjang Hospitals, Delhi Vs Kuldip Singh19, N. N. U.

C. Employees Vs Industrial Tribunal20, University of Delhi Vs Ramnath21, Dhanrajgiri
Hospital Vs Workmen22 and such other rulings whose ration runs counter evolved in Bangalore
Water Supply case have been over ruled.

19
AIR 1970 SC 1407
20
AIR, 1962 SC 1080
21
AIR, 1963 SC 187.
22
AIR, 1975 SC 2032

17
CONCLUSION
The objective of the Industrial Disputes Act 1947 is to secure industrial peace and harmony by
providing machinery and procedure for the investigation and settlement of industrial disputes by
negotiations. This act deals with the retrenchment process of the employees, procedure for
layoff, procedure and rules for strikes and lockouts of the company.

Whatever may be the cause of industrial disputes, the consequences are harmful to all
stakeholders-management, employees, economy, and the society. For management, disputes
result in loss of production, revenue, profit and even sickness of the plant.

Employees would be hard hit as the disputes may lead to lockouts and consequent loss of wages
and even jobs. Industrial establishments are pillars of the economy and the economy is bound to
collapse if industries are tom by industrial strife. The cumulative effect of all these is felt by
society. A dispute, therefore, needs to be settled as early as possible.

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References:
Books referred:
1.) S.C.Srivastava, Industrial relation and labour law

2.) K.M.Pillai, Labour and industrial laws

3.) S.N.Miahra, Labour and industrial law, 24th edition

4.) Dr. Avtar Singh, Introduction to labour and industrial law

Website referred:
1.) www.lawteacher.net

2.) www.yourarticledictionatry.com

3.) www.lawoctopus.com

4.) www.indiankanoon.com

5.) www.blogipleaders.in

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