6. INDUSTRIAL DISPUTES ACT, 1947 1. Origin and History In the early days of industrialisation in U.K., industrial relations between the employer and his workmen were mainly governed by the mutual contractual obligation between the parties and the “Supply and Demand’ mostly regulated such relationship. In case of any dispute or difference between the employers ‘and workmen, the Service Contract entered into between the parties was applied and, thus, the policy of the Govt. was one of “laissez faire” and Govt. did not want to interfere between the dispute of the two parties, namely, ‘employer and workmen. Hence England mostly relied on and based its labour legislation on the concept of Collective Bargaining and settlement of disputes through negotiations. However, of late, it was realised that the settlement of dispute between the employers and workmen in terms of the Service Contract was mostly based on the imbalanced bargaining power of the parties and the employers, being strong due to their prerogatives and control over the means of production and employment, used to dictate their own terms and the workmen, being conscious of their weakness and dependence on the employer for want of their livelihood, were compelled by the economic necessity to accept the terms of the employers. When the settlement of dispute is not based on the basis of the merits of the case, but on the strength and weakness of the parties, the arm of the law has to interfere to render the relationship between the parties on equitable plane. Thus the State's intervention to regulate industrial relations and settle the industrial dispute was considered not only in the interest of production, but in the interest of national economy and of the public at large. ‘The State's intervention in the field of settlement of industrial dispute started for the first time by Australia through Common Wealth Conciliation and Arbitration Act of 1904 and therefore, Australia is considered as pioneer of industrial adjudication, However in India, State intervention for industrial adjudication started with the Trade Disputes Act, 1929, but government exercised its power under this Act only in selected cases and the Act was seldom used and the policy of the Govt. of India still continued to be one of laissez faire. But during the Second World War the emergency war situation in India resulted in chaos and frequent strikes and lockouts were witnessed. The national production was badly affected. Thus to overcome that situation and in order to save the production from being affected, the Govt. of India promulgated 16 y Ze gh 8FRR5Ch) Industrial Disputes Act, 1947 7 Rule 81-A under the Emergency Provisions of Defence of India Rules. By virtue of this Rule 81-A of DIR, the Govt. gave to itself the power to refer any Industrial Disputes to the industrial court constituted for this purpose and ‘get the Industrial Disputes adjudicated by the Industrial Court. The award given by the Industrial Court was compulsorily enforced upon the parties, ‘thus the process came to be known as ‘Compulsory adjudication’. ‘The working of Rule 81-A of DIR, encouraged the Govt. which found out an effective method in the form of compulsory adjudication, and therefore it extended the period of operation of Rule 81-A, which was due to expire in the month of October, 1946 for another period of six months. Meanwhile the Govt, of India enacted the Industrial Disputes Act, 1947 and incorporated the essential principle of Rule 81-A in Section 10 of the Industrial Disputes Act, 1947 and brought it into force w.e.. first of April, 1947, 2. The Preamble of the Act The preamble to the Industrial Disputes Act states that this is “An Act to make provision for the investigation and settlement of Industrial Disputes and for certain other purposes”. The words, “for certain other purposes” essentially refer and include prevention of Industrial Disputes also as is clear from the Statement of Objects and Reasons, thus, “The two institutions for the prevention and settlement of Industrial Disputes provided for in the Bill are the Works Committees consisting of representatives of employers and workmen, and Industrial Tribunals. (for settlement of Industrial Disputes). Thus the objects of the Industrial Disputes Act as are mentioned in the Statement of Objects & Reasons can be chronologically classified into the following, namely, (1) Firstly to provide for prevention of Industrial Disputes through ‘Works Committees; Secondly to provide for investigating the Industrial Disputes through Court of Inquiry; Thirdly to provide for the settlement of Industrial Disputes through a three tier system of LC/IT & NT. Fourthly to impose prohibition on commencement or continuation of strike and lock-out during specified period; Fifthly to provide for payment of compensation in case of lay-off, Retrenchment and Closure, and Sixthly to define and prohibit the unfair labour practices.Section 2(a) (a) Labour & Industrial Law - Appropriate Government “appropriate Government” means,— (i) in relation to any Industrial Disputes concerning [x x x] ‘any industry carried on by or under the authority of the Central Government [x x x] or by a railway company or concerning any such controlled industry as may be specified in this behalf by the Central Government [x x x] or in relation to an Industrial Dispute concerning a Dock Labour Board established under Section 5-A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948), or the Industrial Finance Corporation of India Limited formed and registered under the Companies Act, 1956, or the Employees’ State Insurance Corporation ‘established under Section 3 of the Employees’ State Insurance Act, 1948 (34 of 1948), or the Board of Trustees constituted under Section 3-A of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or the Central Board of Trustees and the State Board of Trustees constituted under Section 5-A and Section 5-B, respectively, of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (19 of 1952), [x x x] or the Life Insurance Corporation of India established under Section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956) or the Oil and Natural Gas Corporation Limited registered under the Companies Act, 1956 (1 of 1956) or the Deposit Insurance and Credit Guarantee Corporation established under Section 3. of the Deposit Insurance and Credit Guarantee Corporation ‘Act, 1961 (47 of 1961), or the Central Warehousing Corporation established under Section 3 of the Warehousing Corporations Act, 1962 (58 of 1962) or the Unit Trust of India established under Section 3 of the Unit Trust of India Act, 1963 (52 of 1963), or the Food Corporation of India established under Section 3, or a Board of Management established for two or more contiguous States under Section 16 of the Food Corporations Act, 1964 (37 of 1964), or the Airports Authority of India constituted under Section 3 of the Airports Authority of India Act, 1994 (55 of 1994), or a Regional Rural Bank established under Section 3 of the Regional Rural Banks Act, 1976 (21 of 1976), or thecompany or as may be Government [x x concerning a ‘Section 5-A of the t) Act, 1948 (9 ion of India ‘Companies Act, Corporation ‘Employees’ State Board of Trustees ‘Mines Provident Act, 1948 (46 of and the State Section 5-A and * Provident Act, 1952 (19 of ion of India Life Insurance if and Natural the Companies ‘and Credit Section 3 of Corporation Warehousing 3 of the ‘of 1962) or the Section 3 of the fer two or more 16 of the Food ‘or the Airports tion 3 of the of 1994), or a Section 3 of the ef 1976), or the Industrial Disputes Act, 1947 79 Export Credit and Guarantees Corporation Limited or the Industrial Reconstruction Bank of India Limited ; or the Banking Service Commission established under Section 3 of the Banking Service Commission Act, 1975, or an air transport service, or a banking or an insurance compan a mine, an oil-field, a Cantonment Board, or a ![major port, any company in which not less than fifty-one per cent, of the paid-up share capital is held by the Central Government, or any corporation, not being a corporation referred to in this clause, established by or under any law made by Parliament, or the Central public sector undertaking, subsidiary companies set up by the principal undertaking and autonomous bodies owned or controlled by the Central Government, the Central Government, and] 2{(ii)in relation to any other industrial dispute, including the State public sector undertaking, subsidiary companies set up by the principal undertaking and autonomous bodies owned or controlled by the State Government, the State Government: Provided that in case of a dispute between a contractor and the contract labour employed through the contractor in any industrial establishment where such dispute first arose, the appropriate Government shall be the Central Government or the State Government, as the case may be, which hds control over such industrial establishment] ‘Commentary ‘The expression "appropriate Government” under the Act is used in a significant manner that may refer to Central Government in certain cases, and in other cases to State Government Since the striking feature of the Industrial Disputes Act is the State’s intervention in the matters relating to industrial disputes between employer and workmen with a view to avoid stoppage of production either by strike or by lock-out. The Act imposes onerous responsibility of the Government to implement the Industrial Disputes Act, 1947, by defining appropriate Government depending upon the nature of Industrial Disputes and the Industry involved. ‘As a general rule, in respect of an Industrial Disputes relating to an industry carried on by or under the authority of Central Government like most 1. Subs, for "major por, the Central Government, and™ by Act No. 24 of 2010, weet 15-9- 2010, vide Not. No. §.0. 2278 (E), dated 15-9-2010. 2. Subs. for sub-clause (i) "in relation to any other Industial Dispute, the State Government.” by Act No. 4 of 2010, wes 15-9-2010, vide Not. No. $.0. 2278 (E), dated 15-9-2010.80 Labour & Industrial Law [Ch.6 of the public corporations etc., Central Government is declared as appropriate Government and in respect of other Industrial Disputes concerning industries ‘other than those falling within the jurisdiction of Central Government the State Government is declared as appropriate Government. Section 2(a) clause (i) has mentioned all such industries in respect of which Central Government is declared as appropriate Government whereas vide clause (ii), in respect of all other Industrial Disputes, State Government is declared as appropriate Government. ‘The definition acquires importance on the ground that all the powers ‘exercisable under the Industrial Disputes Act has to be ascertained only with reference to the fact as to whether the particular Government invoking Industrial Disputes Act is “appropriate” in respect of the Industrial Disputes being dealt with or not. In fact a considerable number of case law has come up on this issue where the reference of Industrial Disputes or any other action of the Government under the Act has been challenged in the Court of Law on the ‘ground that the particular Government is not the ‘appropriate Government’ for that particular Industrial Disputes or industry. A brief reference to the relevant ‘case law on the subject would explain the nature and scope of the definition of apprupriate Government. A careful study of the definition would reveal that the words used in the definition create confusion particularly with regard to such industry that is ‘carried on or by or under the authority of the Central Government. These ‘words are expected to include only such industries within the jurisdiction of the Central Government which are directly carried on by the Central Government ‘or by some other body or person authorised by the Central Government in this behalf. But such other industries like incorporated commercial corporations which are governed by their rules and regulations cannot be considered as falling within the jurisdiction of the Central Government. Even if all the share capital is held by the Central Government but the industry is working under its ‘own constitution or character, this fact cannot alone be considered as a determining factor that the Central Government is appropriate Government in respect of that industry. ‘The National Commission on Labour! has pointed out that thus, “Sometimes difficulties arise in determining as to which Government is the appropriate Government when a concer has establishment in more than one State, The ‘Act contains no provisions bearing on this question nor does it contemplate @ joint reference by two States.” This question cannot resolve with reference to the ‘cause of action’ also. However in such a case the issue can be resolved with reference to the jurisdiction of the Courts/Tribunal. ‘A more serious area of ‘conflict of jurisdiction” in this regard is pointed ut by the Commission’, thus “Minerals like Iron Ore, mica, manganese etc. are Report of the National Commission on Labour, 1969 p. 484Industrial Disputes Act, 1947 81 found in mines. For ‘mines’ the appropriate Government is the Central Government but factories processing the minerals found in the mines fall under the sphere of the State Government concemed. In industries like cement, iron and steel, fertilizers, oil refineries etc., a partis subjected to control of Central Government and another of State Government. In our view, there is a case for bringing these two wings of the same industry under the jurisdiction of the authority - Central or State.” (aa) “Arbitrator” includes an umpire; (aaa) “arrange pay" means the average of the wages payable 10 a ‘workman— (i) im the case of monthly paid workman, in the three complete calendar months. i) in the case of weekly paid workman, in the four complete weeks, (iii) in the case of daily paid workman, in the twelve full working days, preceding the date on which the average pay becomes payable if workman had worked for three complete calendar months or four complete weeks or twelve full working days, as the case may be, and where such calculation cannot be made, the average pay shall be calculated as the average of the wages payable to a workman during the period he actually worked ; () “award” means an interim or a final determination of any Industrial Dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal and includes an arbitration award made under Section 10-A. (bb) "banking company” means a banking company as defined in Section 5 of the Banking Companies Act, 1949 (10 of 1949), shaving branches or other establishments in more than one State, and includes the Export-Import Bank of India, the Industrial Reconstruction Bank of India, the National Housing Bank, established under Section 4 of the National Housing Bank Act, 1987 (53 of 1987) the Small Industries Development Bank of India established under Section 3 of the Small Industries Development Bank of India Act, 1989 (39 of 1989) the Industrial Development Bank of India, the Reserve Bank of India, the State Bank of India, a corresponding new bank constituted under Section 3 of the Banking CompaniesLabour & Industrial Law [Ch.6 (Acquisition and Transfer of Undertakings) Act, 1970, a corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of undertakings) Act, 1980, and any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959); (©) "Board" means a Board of Conciliation constituted under this Act. (cc) “Closure” means the permanent closing down of a place of ‘employment or part thereof ; (@ "Conciliation officer" means a conciliation officer appointed under this Act ; (©) "Conciliation proceedings” means any proceeding held by a conciliation officer or Board under this Act. (ee) "Controlled industry” means any industry the control of which by the Union has been declared by any Central Act to be expedient in the public interest: Commentary Any industry in order to be a controlled industry within the scope of the definition has to satisfy a dual test. Firstly the Central Govt. should declare such industry to be within its control and secondly, the Central Government should acquire such control on the ground of expediency in the public interest. (© “Court” means a Court of inquiry constituted under this Act. (g) “employer” means — (i) in relation io an industry carried on by or under the authority of any department of the Central Government or a State Government, the authority prescribed in this behalf or where no authority is prescribed, the head of the department; (ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority; Commentary ‘The definition of employer acquires significance in the sense that it isthe employer on whom several responsibilities are imposed under the Act and in almost all the disputes between employer and workmen, it is the employer against whom the grievance arises and it is the employer who is addressed for all practical purposes to give relief or to implement the order of the Court Therefore who exactly is the person answerable and liable in all such cases is thea & pes “meeGe KODE OTR ANORSRITRPIDPRBRS LTS ERAct, 1970, a ion 3 of the Transfer of as defined Act, 1959 (38 under this Ch.6} Industrial Disputes Act, 1947 83 the crucial question. As far as the definition under clause (g) herein is concerned, in respect of the Central Government or State Government, the term refers to any such person who is authorised by the respective Govt. in this regard. In absence of any such authorisation the term refers to the ‘head of the department’. In respect of an industry carried on by or on behalf of a local authority, the Chief Executive Officer (C.E.O.) of that authority is declared as employer. It may be noticed that the definition does not appear to be exhaustive enough to cover many other industries under the private employer or other than those mentioned in the definition. This nature of ‘incompleteness’ is also pointed by the Court in the case of Western India Automobile Association v. Industrial Tribunal’, Justice Mahajan, delivering the judgment posed a question as to “whether a Private Employer is an “Employer” within Section 2(g)? J. Mahajan explained, thus, “It was contended that as the association did not fall within the definition of the word ‘employer’ given in the Act (the definition being exhaustive), in its case there was no power to make a reference to the tribunal and that the scope of the Act was limited to cases of Government concerns or those in which a local authority was the employer. In our opinion, the definition given is neither exhaustive nor inclusive......”" However having regard to the words Central Government, State Government and local authority, used in the term, it is discernible that in such cases the authorities have a widespread existence and it is difficult in that vast area of authorities to search for a particular person to whom a reference of the term employer could be made. Therefore, to avoid confusion and in order to overcome this difficulty the definition clearly declares the Head of the department, Chief Executive Officer or any other officer authorised by Central/State Governments. However this argument gives rise to another important moot-point as to whether the term employer refers only to Central/State Governments or a local authority and does it mean that a private employer engaged in running a trade or business or any other employment is not covered within the ambience of the definition. If this argument is accepted then it follows that all private employers are excluded from the purview of the definition of employer and consequently for that matter even for the purview of the Industrial Disputes Act itself. Such an interpretation is neither rational nor tenable. In fact the Hon'ble Court has elaborated on this point and explained the term with reference to other provisions of the Industrial Disputes Act, for example, Section 18 of the Industrial Disputes Act, dealing with the parties bound by the award of the Court, lays that: “Where a party referred in clause (a) or clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates.” (Section 18 clause (c)). It is clear from this clause (c) thatthe term employer does not only refer to Central Governmenu/State Government oF a local authority, but includes in its application any private employer also. Furthermore, it must be noted that the Industrial Disputes Act, 1947 provides a 1. Federal Court, (1949) 1 LLI 245,84 Labour & Industrial Law [ch.6 very exhaustive machinery for the purpose of prevention, investigation and settlement of Industrial Disputes and also for regulating lay-off, retrenchment and closure, It also prohibits the commencement or continuation of strike or lock-out in certain specified conditions and requires the parties to give a notice of minimum fourteen days to the other parties and also serve a copy of such notice to the Conciliation Officer. Thus having regard to such an elaborate machinery, each assigned with a definite statutory duty to avoid stoppage of production, it cannot be argued that the term ‘employer’ does not include private employer. The Court finally concluded thus, “It is, in our opinion, not possible to argue that this elaborate machinery was devised for the benefit of industries run by the Government and local authorities only...” (gg) “executive” in relation to a trade union, means the body, by whatever name called, to which the management of the affairs of the trade union is entrusted ; (i) @ person shall be deemed to be “independent” for the purpose of his appointment as the chairman or other ‘member of a Board, Court or Tribunal, if he is unconnected with the Industrial Dispute referred to such Board, Court or Tribunal or with any industry directly affected by such dispute: Provided that no person shall cease to be independent by reason only of the fact that he is a share-holder of an incorporated company which is connected with, or likely 10 be affected by, such Industrial Dispute but in such a case, he shall disclose to the appropriate Government the nature and extent of the shares held by him in such company; Commentary The ordinary dictionary meaning of the word ‘independent’ refers to a person “not influenced by, or related to or affected by any other person or thing”. In the sphere of Industrial Disputes Act, the term is intended to ‘ensure the golden principle of natural justice, namely ‘impartiality’ of the authority, thus satisfying the demand of the principles of natural justice that “no one should be a judge in his own cause”. Therefore any person who can be appointed as Chairman, or member of Board of Conciliation or Court of Inquiry or as presiding officer of the LC/IT/NTiete. Therefore should be unconnected with the Industrial Disputes referred to any Board, Court or Tribunal or with any industry directly affected by such dispute. Further the proviso to the definition clarifies that no person shall cease to be independent by reason only of the fact that he is a shareholder of an incorporated company connected with such Industrial Disputes. However, such a person is required 1.0 “industry” Encyclopae thus, “the ¢ some part particular ¢ How the means ‘production lock-out, tt the expre: Newzealastigation and retrenchment of strike or give a notice 2 copy of such Ch) Industrial Disputes Act, 1947 to disclose to the appropriate Government the nature and extent of the shares held by him in such eompany. Section 2(j) - Industry (j) “Industry” means any business, trade, undertaking, manufacture or calling of employers and includes any calling service, employment handicraft, or industrial occupation or vocation of workmen. Commentary 1. Origin of the Definition:— Etymologically speaking, the word “industry” means the business of producing or making goods. But the Encyclopaedia Britannica described ‘industry’ in a more comprebensive manner thus, “the quality of steady application to work, diligence; hence employment in some particular form of productive work, especially of manufacture; or a particular class of productive work itself, a trade or manufacture.! However for the purpose of State’s Intervention through legislation, of the means of production and its distribution to the public at large and save the production from being affected and to avert stoppage of work due to strike and Jock-out, the Common Wealth Conciliation and Arbitration Act, 1904 of Australia, the expression ‘industry’ is defined in a significant and special manner. Newzealand Conciliation and Arbitration Act, 1894 is also one of the Premier legislations ensuring State's intervention through industrial adjudication. In India, the definition. of industry is taken from the Australian Act of 1904 referred to above. 2. Industry under Industrial Disputes Act:— A plain reading of the efinition would reveal the complex nature of the definition which contains ‘compendium of several words like business, trade, undertaking, manufacture or calling of employers. It does not end here but continues further to include any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. Thus few more words synonymous to the earlier group of words are added. By simply reading the definition, itis difficult to categorically state as to whether a particular activity is or is not an industry. This ambigoous nature of the definition has been pointed out By the Court itself in Pappamal Annachataram v. The Labour Cour wherein the Madras High Court said, thus “Having regard to such a wide scope it is difficult or perhaps impossible to evolve a formula and state a clear-cut and universally applicable principles and tests with reference to which any activity may be adjudged as industry. The question is therefore, to be decided in each case depending upon the circumstances. 1. Bncyelopaedia Britannica, 12th Vol. page 311 2196211 LLS 107 (IT) Madras