Interpretation of the Industrial Dispute Act

A controversy or dispute is a matter of opinion over which parties actively disagree, argue, or debate. Controversies can range in size from private disputes between two individuals to large-scale disagreements between societies. [1] Collective bargaining is a way of distributing organizational rents (i.e., economic profits) among workers and employers. While the size of organizational rents constitutes the scope of bargaining, the relative shares of two parties are determined by a number of factors such as union power, skills of bargaining, labour laws and regulatory framework. In an actual process of bargaining, parties sometimes deliberately pull out from a negotiation for some strategic reasons and such strategic negotiations are generally followed by strikes, lock-outs and other types of agitations which are called industrial disputes. [2] Therefore, an industrial dispute is the conflicts between employers and employees (labor) about pay or conditions at work. Such disputes or differences are normally resolved by economic power, or by bargaining if the two sides are of roughly equal power. Sometimes, however, one or both sides attempt to enforce their position by violence. Such type of violence may be management violence or union violence. Since the situations involve conflict, descriptions of events are frequently polemical rather than accurate, and the facts of who instigated what violence against whom are often difficult to ascertain. [3]

For settling of the industrial disputes, a number of industrial disputes legislations were created which can be traced back to 1860, yet it was not till after the First World War that any significant movement was registered in that direction. In 1859, the violent conflict between the European Railways and their employees in Bombay Presidency led to the Employers and Workmen’s Dispute Act in 1860. This provided for speedy and summery disposal of disputes by magistrates. By 1870s the Act was extended to many provinces, but was repealed in 1932. The appointment of Royal Commission also led to several recommendations for legislation including the Trade Disputes Act of 1929. This was refurbished and expanded to become the Industrial Disputes Act, 1947. [4] The main objective of the Act was-

To make provisions for the investigation and settlement of industrial disputes.

To promote measures for securing and preserving amity and good relations between employer and employees.

To prevent illegal strikes and lock-outs.

To provide relief to workmen during lay-off or after retrenchment, wrongful dismissal or victimization.

To provide conciliation, arbitration and adjudication facilities. [5]

Industrial disputes tend to reduce economic profits and inflict damages on both employer and employee side. Disputes pose problems for rationalizing labour and capital. Moreover, the industry looses man-day per employee for the disputes. [6] It also creates problem in the production and financial profit of the industry. This ultimately affects the economy of the country. Today most of the countries especially, India, are dependent upon foreign investment and under these circumstances it is necessary to keep some safeguards in the industrial laws as well as labour laws. [7]

Therefore, maintaining industrial peace and harmony is important for a worker as it is for an employer as it postulates the existence of understanding co-operation and a sense of partnership between the employers and employees. [8]

HYPOTHESIS

Whether an individual dispute is an industrial dispute within the meaning of S. 2(k) of Industrial Disputes Act is a matter of great controversy. Previously an individual dispute could not per se be an industrial dispute. With several judicial decisions the researcher would like to show in this project that at present an individual dispute is recognized as an industrial dispute only when it is espoused by a union of workmen or by substantial number of workmen employed in the industry. Without such espousal the dispute cannot be treated as an industrial dispute and therefore cannot be referred to Labour Court. [9]

CHAPTERIZATION

CHAPTER 1: NATURE AND SCOPE : INDUSTRIAL DISPUTES

Meaning : “Industrial Disputes”

The term “Industrial Dispute” has been defined in Section 2(k) of the Industrial Disputes Act 1947 as follows;

“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 person” [10]

It has remained unamended since then. This definition is taken from the definition of “trade dispute” u/s 2 (j) of the repealed Trade Disputes Act 1929 which was in turn a reproduction of S.8 of the Industrial Courts Act 1919 of United Kingdom. As per this Act,

“Any dispute or difference between employers and workmen or between workmen and workmen, connected with the employment or non-employment or the terms of employment, or with the condition of labour of any person” [11]

The definition of “industrial dispute” in Industrial Disputes Act 1947 is a modified form of the above definition and adds to the list of disputes the one between the employers and employers. [12] Therefore the definition is comprehensive and wide enough to include all disputes or differences between employers and employers or employers and workmen or workmen and workmen for employment and non-employment or terms of employment or conditions of labour of a person. [13]

The definition does not refer to “industry”. But the grammar of the expression indicates that it is a dispute in an industry. Moreover, the use of the expressions “workmen” and “employers” in the definition shows the requirement of “industry”.

In Madras Gymkhana Club Employees’ Union v. Gymkhana Club [14] case, Supreme Court said that the definition contains two limitations-

The term “industrial” relates to the dispute of industry only

It expressly states that not all disputes and differences but only those which bear upon the relationship of employers and workmen regarding employment and non-employment, terms of employment and conditions of labour are contemplated. [15]

Thus the definition if “industrial disputes” u/s 2(k) of the Industrial Disputes Act 1947 has the following components:

Factum of Industrial Disputes

Parties to Dispute

Subject-matter of Disputes

Factum of Industrial Disputes

The key words of the definition of ‘industrial disputes’ are ‘dispute or difference’. In Beetham v. Trinidad Cement Ltd. [16] Lord Denning observed,

“By definition, a ‘trade dispute’ exists wherever a ‘difference’ exists and a ‘difference’ can exist long before the parties become locked in a combat. It is not necessary that they should have come to blows. It is sufficient that they should be sparring for an opening”.

The expression ‘dispute or difference’ connotes a real and substantial difference having some elements of persistency and likely, if not adjusted, to endanger the industrial peace of the community. Therefore, it means a controversy, fairly definite and of real substance, connected with the employment or non-employment, with the terms of employment or with the conditions of labour of any person and is one in which the contesting parties are directly interested in maintaining their respective contentions. The definition further shows that certain type of disputes can never fall within its ambit. For e.g. disputes between a government and an industrial establishment or between workmen and non-workmen. [17] There is divergence of opinion on the issue whether a mere demand to the appropriate government or to the Conciliation Officer without a dispute being raised by the workmen with the employer regarding such demand can be called an industrial dispute? In the earlier decisions SC held that the industrial dispute must be inexistence or apprehended on the date of preference. The net effect of the principle is that even if the demand is not made earlier before the management and rejected by them and is raised at the time of reference or conciliation proceedings, the dispute may be an industrial dispute. This view was followed in Shambhunath Goel v. Bank of Baroda [18] . In Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd [19] Maharashtra Government referred a dispute between Hindustan Lever Ltd and its employees for adjudication to the Industrial Tribunal. The employers objected that the reference was incompetent because the dispute raised by the workmen and referred by the government was not an industrial dispute. This contention was accepted by Industrial Tribunal but rejected by SC by saying that ‘the expression of industrial dispute has been widely defined and any that may develop between the employer and its workmen cannot go outside the purview of the definition.’ [20] In Sindhu Resettlement Corporation Ltd v. Industrial Tribunal [21] SC said that if there is no dispute raised by the workmen with the management, any request sent by them to the government would only be a demand. A mere demand to the government without a dispute being raised cannot become an industrial dispute. [22] In Fedders Lloyd Corporation Pvt Ltd v. Lieutenant Governor [23] the Delhi High Court went a step further by saying that a demand by the workmen must be raised first on the management and rejected by it before an industrial dispute can be said to arise.

Parties to Dispute

S.2 (k) of the Act considered a dispute to be an industrial dispute only if it takes place between-

Employers and Employers

Employers and Workmen

Workmen and Workmen

Employers and Employers- The term ‘employers and employers’ have been included in the definition to widen its scope and ambit, the eventualities in certain types of disputes connected with the employment- or non-employment, terms of employment or conditions of labour of any person in which there may be some interest. [24]

Employers and Workmen- An employer-workmen relationship needs to exist in order to consider an it an industrial dispute. Here, ‘employer’ means an industrial employer and the ‘workmen’ should satisfy the conditions u/s 2(s) of the act. Due to the absence of an employer-employee relationship between a contract worker and principle employer, a dispute between them regarding the regularization of the service of contract workers cannot be called an industrial dispute. In Rajaji Nagar Co-op Bank Ltd v. PO, LC [25] a Division Bench of Karnataka High Court held that a dispute between the employees of a Co-operative Society and the management of the society relating to their employment is clearly excluded from the purview of the definition of industrial dispute u/s 2(k). [26] In K.K. Thilakan v. FACT Ltd [27] , 26 persons were employed by the contractor, Pigee Agencies in connection with the work of the respondent, a public sector undertaking. After about 10 years of service, they claimed to be absorbed in the service under respondent no.1. It was held that the petitioners were never workmen under the respondent but were only now seeking employment. An industrial dispute cannot exist between an employer and a person only seeking employment. Here the petitioners were employed by the contractor employed under respondent no.1. That cannot confer on them any preferential claim to be appointed in its service. [28]

Workmen and Workmen- A dispute between two sets of workmen also falls within the ambit of industrial dispute. The dispute must be between the workmen for whom the trade unions act as representative capacity but a dispute between trade unions is a pure-inter union dispute and cannot be an industrial dispute. In English Law controversy between two unions which was not connected with employment or non- employment does not fall within the meaning of ‘trade dispute’ but a dispute springing out of the rivalry of one union with another is a trade dispute. In India there is no decision of High Court or Supreme Court with respect to dispute between workmen and workmen. [29]

1.4 Subject-matter of Disputes

A dispute or difference must relate to either employment or non-employment or terms of employment or the conditions of labour of any person. Unless a dispute is connected with these matters, it will not satisfy the requirements of law and will not fall within the ambit of ‘industrial dispute’. Thus the subject matters are-

employment

non-employment

terms of employment

the conditions of labour

Various matters may give rise to industrial dispute has been enumerated in the second and third schedules of the Act. ‘Employment and non-employment’ has the widest amplitude amongst the other subject-matters. These words have not been defined in the Act but ‘employment’ refers to a condition in which a man is kept occupied in executing any work and it means not only an appointment to an office for the first time but also continuity of the appointment. The concept of employment brings in the contract of service between the employer and employee. In Chinataman Rao v. State of Madhya Pradesh [30] Subba Rao J. said the concept of employment has 3 ingredients-

Employer- one who employs

Employee-one who works for another for hire

Contract of Employment

Non- employment is the negative of employment. It is the positive or negative act of the employer that leads to the employment or non- employment or it may relates to an existing fact of non- employment. The failure to employment or refusals to employment are actions in the part of the employer which falls under non-employment. Though refusal to employ is not specified in the second or third schedules of the Act, it will be covered by the residuary items in the second schedule in item number-6(all matters other than those not specified in third schedule). Hence a tribunal have jurisdiction to adjudicate a matter on industrial dispute arising out of refusal to employ by an employer. [31] In Western India Automobile Association v. Industrial Tribunal [32] Federal Court observed that –any dispute connected with employment or non- employment would cover all matters that require settlement between workmen and employers whether those matters concern the cause of their being out of service or any other question and it would also include within its scope the relief necessary for bringing about harmonious relations between the employer and workers. The following subject-matter were considered by the court in different cases as industrial dispute-

Allegation of wrongful termination of service, compulsory retirement of employee, claim for reinstatement of dismissed workmen, dispute connected with minimum wages, dispute etc. [33]

1.5 Meaning: “Any Person”

The dispute can be raised either for a workman or any person about whom the workmen have substantial interest in the employment or non-employment or terms of employment or conditions of labour. ‘Any person’ in the definition has not been equated with workmen and it has a wider connotation. But ‘any person’ is also subject to limitation under the process of judicial interpretation. Any person must have a direct relation with the workmen about whose employment or non-employment or terms of employment or conditions of labour workmen have direct and substantial interest. It means that any person must be an employee of the industry in which the workmen are employees. In The United Commercial Bank Ltd, Delhi v. Kedar Nath Gupta [34] it was held that any person only means workmen. But the Bombay High Court in Narendra Kumar Sen v. All India Bank Dispute [35] gave a broader interpretation of ‘any person’ by saying that any person is those about whom the workmen have substantial interest in the employment or non-employment or terms of employment or conditions of labour. This view has been approved by SC in Workmen of Dirakuchi Tea Estate v, Management of Dirakuchi Tea Estate [36] . The court said that the expression ‘any person’ in the definition clause means a person in whose employment or non-employment or terms of employment or conditions of labour, the workman as a class have a direct or substantial interest with whom they have under the scheme of the Act a community of interest. The court further said that only the aggrieved party can raise a dispute but in case of industrial dispute it is put in collective basis because it is settled that an industrial dispute not espoused by others of the class to which the aggrieved party belongs is not an industrial dispute. Thus from the above decision it can be said that ‘any person’ one about whom the workmen have substantial interest in the employment or non-employment or terms of employment or conditions of labour even though he does not fall within the definition of ‘workmen’ under the Act. [37]

1.6 Time of raising Industrial Disputes

Delay in raising industrial dispute is not a bar to the reference of a dispute. In Guest Keen, Williams Pvt. Ltd., Calcutta v. P.J. Sterling [38] SC said that if a dispute is raised after a considerable delay which is not reasonably explained, the Tribunal would definitely take that fact into account while dealing with the merits of the dispute. [39]

CHAPTER 2: INDIVIDUAL DISPUTES VIS-À-VIS INDUSTRIAL DISPUTES

Can individual disputes be considered as industrial disputes?

Is a dispute between individual workman and his employer an industrial dispute u/s 2(k) Act? This is a question of great controversy in Central Provinces Transport Service v. Raghunath Gopal Patwardhan [40] the court gave two views as to the meaning of the expression’ A Industrial Dispute’. They are

A dispute between an employer and a single workman cannot be an industrial dispute.

It cannot per se be an industrial dispute but may become one if taken up by a number of workmen or trade union.

In Newspapers Ltd v. State Industrial Tribunal [41] Tajammal Hussain, a lino typist was dismissed by the Newspapers on the ground of incompetence. His case was neither taken up by the Union of workers of the establishment or by any union of similar trade. His case was taken up by U.P Journalists Union with which the employee had no concern. The government referred the dispute to the Industrial Tribunal for adjudication. The Tribunal ordered reinstatement. The appellate Tribunal and High Court affirmed it. Appeal went to SC who held that Tajammal Hussain could not be termed as workmen and U.P Journalists Union is not his Union nor there any indication that the individual dispute has been transferred to industrial dispute. In Bombay Union of Journalists v. The Hindu [42] the scope of industrial dispute was further curtailed. In this case the dispute of a workman was taken up the Bombay Union of Journalists of which union the workman was a member. The Bombay Union of Journalists was a union not to employee of one employment but of all employees in the industry of journalism in Bombay. None of the employees of The Hindu were its members. SC held that it is an individual dispute and not an industrial dispute. In Workmen of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea Estate [43] SC gave two tests to determine whether a dispute is industrial or individual. They are-

The must be a real dispute capable of being settled by relief given by one party to other.

The person in respect of whom the dispute is raised must be one in whose employment, non- employment, terms of employment or conditions of labour, the parties to the dispute have a direct or substantial interest and this must depend on facts and circumstances of each particular case.

SC held that an individual dispute may be converted into an industrial dispute when- (1) it is espoused by trade union or (2) it is espoused by an appreciable number of workmen. So as per the first condition to make an individual dispute into an industrial dispute it must be taken up by a union of workers of the establishment and where there is no such union it may be espoused by any of the union of workmen employed in similar trades. As far as the second condition is concerned if an individual dispute of a workman is espoused by an appreciable number of workmen of the same establishment, then it is converted into an industrial dispute. The court has admitted that the expression “appreciable number” does not mean majority of the workmen. In Workmen of Dharampal Premchand v. M/S Dharampal Premchand [44] out of 45 workmen, 18 were dismissed. There was no union of workmen. The court said that this dispute is espoused by an appreciable number of workmen and therefore can be called as an industrial dispute. Thus SC relaxed the requirement of considering an individual dispute as an industrial dispute and thereby overruled Bombay Union of Journalists case.

The net effect of the aforesaid decisions is that an individual worker unsupported by an appreciable number of workmen or union has no remedy under the Industrial Disputes Act, 1947. [45]

Legislative Responses: Insertion of S. 2A

Before the introduction of S. 2A, as a result of judicial interpretation an individual workmen who has been discharged, suspended etc from the work had no remedy under the Industrial Dispute Act 1947 unless his case was sponsored by his fellow workmen or trade union. His only remedy was to approach the civil court. This new section was inserted by the Amendment Act 1965. S.2A provides that dispute or difference between an individual workman and his employer connected with discharge, dismissal, retrenchment or otherwise termination of service of a workman shall deemed to be an industrial dispute even though it has not been sponsored by his fellow workmen or trade union. But the scope of S.2A is limited. It does not apply in case of dispute arising from transfer or promotion or refusal or failure to promote the employee or any punishment imposed on such employee or dispute or difference as to money due to such employee from the employer or as to any amount at which a benefit which is capable of being computed in terms of money is to be computed. In Chemicals and Fibers of India Limited v. D.S.Bhoir [46] SC said that what will not be an industrial dispute u/s 2(k) is deemed to be an industrial dispute u/s 2A. The constitutional validity of the section was challenged. Delhi, Punjab, Haryana, Madras and Mysore High Court upheld the constitutional validity of the section whereas the Calcutta High court said that it is ultra vires to the constitutional provisions. SC also upheld the constitutional validity of the provision. A question arose whether the Parliament has legislative competency to make law on individual dispute. It was stated that the Parliament has legislative competency under Entry 97 of List I. In P. Janardhana Shetty v. Union of India [47] it was contended that S.2A should be struck down as it is violative of Art.14 of the Constitution as it discriminates between individual workmen who has been discharged, dismissed or retrenched and an individual workman who had any other grievances. In this respect the court said that it is open to the legislature to recognize different degrees of harm and to provide for different remedies in respect of them. The legislature may provide a remedy for harm or an evil of bigger magnitude and may not provide for a remedy for a harm or an evil of smaller magnitude. By doing so it does not violate Art.14 and therefore, the section is not violating Art.14. [48]

Even assuming that the scope of S.2A is adequate, the Act does not confer any right on individual workman to raise dispute connected with discharge, dismissal, retrenchment or otherwise termination of service. The Act confers such right on appropriate government alone and in the exercise of this discretion the appropriate government may or may not refer such a dispute for adjudication. Therefore, SC in Krishna Distt. Co-operative Marketing Society Ltd. v. N.V. Purnachandra Rao [49] expressed a need for amendment of S.2A making it possible for individual workman to seek redress in an appropriate forum regarding illegal termination of service which may take the form of dismissal, discharge etc. This will make the law simpler and also will reduce the delay in adjudication of industrial disputes. [50]

CONCLUSION

In a democratic society an individual is the unit of the society. But the Hon’ble Supreme Court in the process of interpretation has limited the scope of the definition although it is the admitted position that the definition includes individual disputes but the scheme of the Act contemplates community interest. Is it true that by excluding individual disputes from the purview of the definition, Supreme Court is rendering social justice? In our society labour is the weaker party and they cannot dictate terms on their employer but is exploited, suffers a lot at the hand of the employer and has become the most vulnerable and unprotected section of the population. Apart from this, when under General Clauses Act a singular includes plural there is no legal justification to restrict the definition by judicial interpretation. Legislature tried to solve the problem by inserting S. 2A within the Act, partially because only dismissed or discharged or terminated employees have a legal status to raise the dispute whereas an individual in employment has been deprived of his legal status. As per Supreme Court decisions, workmen as a class have a legal status whereas an individual workman has no legal status. Collectivism or community is inconsistent with the concept of democracy based on atomic individual. [51] So the researcher is of the view that the Supreme Court decision in this concept of individual dispute vis-à-vis industrial dispute needs revision and thereby giving legal status to each individual and not restricting their right by judicial interpretation.