INDUSTRIAL ADJUDICATION IN INDIA AND IN USA: A

COMPARATIVE LAW PERSPECTIVE

Project report on Labour Law-I

Submitted To:
Assistant Prof. Sugato Mukherjee
Submitted By:
Shivani Jaiswal
B.B.A.LL.B (Hons.) VII Semester

MATS University
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MATS Law School, Raipur

ACKNOWLEDGEMENT
I express my sincere gratitude to Asst. Prof. Sugato Mukherjee, MATS Law School,
Raipur, and owe my foremost regards to him for giving me an opportunity to carry out this
project work under his guidance. This work would not have been possible without his invaluable
support and thought provoking comments.
I would also like to thank my batch mates who directly or indirectly helped me in making
this project.

DISCLAIMER
This project report is authored by student of 4th year under the five year BBA.LL.B (H) Program
in MATS Law School, Raipur. The report is purely academic in nature and shall not be treated as
a legal or business advice. The views expressed in this report are personal to the student and do
not reflect the view of law school or any of its staff or personnel. All the copyrights relating to
this work are vested in the author; the same shall not be exploited without their express
permission.

Shivani Jaiswal
4th Year, MATS Law school, Raipur

RESEARCH METHODOLOGY
I have adopted the mode of primary research source where I have refereed some books of
Industrial law to take information about this project report. So I have taken materials, references
and guide from books
I have also adopted the Doctrinal Research Methodology where the sources of the project are
solely based upon the materials collected from the websites and books. Certain other resources
for our project are several Articles collected from various journals and magazines as well as
several other commentaries and digests written and published by several eminent scholars who
have excelled in various fields of the managerial fraternity nationally and internationally.
OBJECTIVES OF RESEARCH:
The objectives of research are

To understand the concept of industrial adjudication in India under the Industrial Dispute

Act,1947
To understand the concept of industrial adjudication in USA
Further the researcher highlight the comparative analysis of industrial adjudication
between USA and India

TABLE OF CONTENT

INTRODUCTION........................................................................................................... 6
THREE METHOD FOR SETTLEMENT OF DISPUTE.........................................................7
ADJUDICATION PROCESS IN INDIA.............................................................................. 9
A COMPARISON OF INDIA AND THE UNITED STATES.................................................18
CONCLUSION AND SUGGESTION..............................................................................21
REFRENCES.............................................................................................................. 22

INTRODUCTION

The Industrial Disputes Act, 1947, reflects this very concern of the State and thus justifying a
strong need for the intervention of the State in modern industrial disputes. State intervention in
industrial relations is essentially a modern development. With the emergence of the concept of
welfare state, new ideas of social philosophy, national economy and social justice sprang up with
result that industrial relation no longer remains the concern of labour and management alone.
The concern of state in matters relating to labour is a product of its obligations to protect the
interest of industrial community, while at the same time fostering economic growth in almost all
countries. The state has assumed powers to regulate labour relations in some degree or the other.
In some, it has taken the form of laying down bare rules or observance by employers and
workers; in others, the rules cover a wider area of the rules. So far as our country is concerned,
State intervention in labour matters can be traced back to the enactment of the Employers and
Workmens Disputes Act 1860 which provided for the speedy disposal of the dispute relating to
the wages of workmen engaged in railways, canals and other public works by Magistrates. In
1947, the Government of India passed the Industrial Disputes Act under which machinery for the
preventions and settlement of the disputes was outlined. The Act as amended in 1956 has set up
machinery for settlement of disputes. The act provides the three methods for settlement of
industrial disputes are as follows Conciliation, Arbitration and Adjudication.

THREE METHOD FOR SETTLEMENT OF DISPUTE

Conciliation
In simple sense, conciliation means reconciliation of differences between persons. Conciliation
refers to the process by which representatives of workers and employers are brought together
before a third party with a view to resolve the dispute persuading them to arrive at an agreement
by mutual discussion between them. The alternative name which is used for conciliation is
mediation. The third party may be one individual or a group of people.
In view of its objective to settle disputes as quickly as possible, conciliation is characterized
by the following features:
i.
ii.

The conciliator or mediator tries to remove the difference between the parties.
He/she persuades the parties to think over the matter with a problem-solving

iii.

approach, i.e., with a give and take approach.

He/she only persuades the disputants to reach a solution and never imposes his/her

iv.

own viewpoint.
The conciliator may change his approach from case to case as he/she finds fit
depending on other factors.

Arbitration:
Arbitration is a process in which the conflicting parties agree to refer their dispute to a neutral
third party known as Arbitrator. Arbitration differs from conciliation in the sense that in
arbitration the arbitrator gives his judgment on a dispute while in conciliation, the conciliator
disputing parties to reach at a decision.
The arbitrator does not enjoy any judicial powers. The arbitrator listens to the view points of the
conflicting parties and then gives his decision which is binding on all the parties. The judgment
on the dispute is sent to the government. The government publishes the judgment within 30 days
of its submission and the same becomes enforceable after 30 days of its publication. In India,
there are two types of arbitration: Voluntary and Compulsory.
Adjudication:
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The ultimate legal remedy for the settlement of an unresolved dispute is its reference to adjudication by the government. The government can refer the dispute to adjudication with or without the
consent of the disputing parties. When the dispute is referred to adjudication with the consent of
the disputing parties, it is called voluntary adjudication. When the government herself refers the
dispute to adjudication without consulting the concerned parties, it is known as compulsory
adjudication.
The difference between arbitration and adjudication is that in the case of arbitration the
parties to the dispute agree to refer the dispute for the decision of the arbitrator. In the case of
adjudication, the dispute is referred for adjudication by the Government. In the case of arbitration
the parties to the dispute can choose the arbitrators. In the case of adjudication the Presiding
Officer of the Labour Court/Industrial Tribunal are appointed by the Government.

ADJUDICATION PROCESS IN INDIA

The preamble to the Industrial Disputes Act, 1947 mentions that this Act makes provision for the
investigation and settlement of Industrial Disputes and certain other purposes. The preamble of
the act provides for the settlement of industrial disputes through a three tier system of Labour
Courts, Industrial Tribunals and National Tribunals 1, which comes under this adjudication
process. The Labour Court/Industrial Tribunal gets the jurisdiction to decide an industrial only if
the Government makes a reference of that dispute to it. The proceedings before the Labour
Court/Industrial Tribunal are called adjudication proceedings.
LABOUR COURT:

Labour Court2 is one of the adjudication authorities set up by the appropriate Government
by notifying in the official Gazette, may constitute Labour Court for adjudication of the
industrial disputes. The labour court consists of one independent person who is the presiding
officer or has been a judge of a High Court, or has been a district judge or additional district
judge for not less than 3 years, or has been a presiding officer of a labour court for not less than 5
years. The labour court deals with the matters specified in the second schedule of the Industrial
Disputes Act, 1947, which includes the matter as follows:
1. The property or legality of an employer to pass an order under the standing orders.
2. The application and interpretation of standing orders.
3. Discharge or dismissal of workers including reinstatement or grant of relief to workmen
wrongfully dismissed.
4. Withdrawal of any statutory concession or privilege.
5. Illegality or otherwise of a strike or lockout.
1 A critical analysis on efficacy of mechanism to industrial disputes resolution in India by M.J.Arputharaj* and R.
Gayatri.

2 Section 7 of the Industrial Disputes Act, 1947

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6. All matters other than those reserved for industrial tribunals.

INDUSTRIAL TRIBUNAL:
An Industrial Tribunal may be set up by the appropriate Government on a temporary or
permanent basis for a specified dispute for industry. As a whole the Tribunal comprises of one
person only. The qualifications for appointment as Presiding Officer of an Industrial Tribunal are
that the candidate should have been a judge of a High Court or has held the post of Chairman or
Labour Appellate Tribunal for not less than two years or he has been judge or Additional District
judge for a period not less than three years. Generally, industrial disputes of major importance or
industrial disputes which are important to the industry as a whole are referred to the industrial
tribunals.
The appropriate Government may constitute one or more Industrial tribunals for the adjudication
of industrial disputes. Compared to labour court, industrial tribunals have a wider jurisdiction. 3
An industrial tribunal is also constituted for a limited period for a particular dispute on an adhoc
basis.
The matters that come within the jurisdiction of an industrial tribunal include the
following:
a. Wages, including the period and mode of payment.
b. Contribution paid or payable by the employer to any provident or pension fund or for the
benefit of the workmen under any law for the time being in force;
c. Compensatory and other allowances.
d. Hours of work and intervals.
e. Leave with wages and holidays.
f. Starting alteration or discontinuance.
g. Classification by grades;
3 Section 7A of the Industrial Dispute Act
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h. Withdrawal of any customary concession or change usage;

i. Introduction of new rules of discipline or alteration of existing rules, except in so far as they
are provided in standing orders;
j. Rationalization, standardization or improvement of plant or techniques which is likely to lead
retrenchment of workmen.
k. Any increase or reduction in the number of persons employed or to be employed in any
occupation or department or shift not occasioned by circumstances over which the employer has
no control;
NATIONAL TRIBUNAL4:
This is the third one man adjudicatory body appointed by the Central Government by notification
in the Official Gazette. They are to be constituted for the adjudication of the industrial disputes,
which in opinion of the Central Government involve questions of national importance or such a
nature that industrial establishments situated in more than one State are likely to be interested in
or affected by, such disputes.
The Central Governments can made a reference to the National Tribunal. Where any reference is
made to National Tribunal, then notwithstanding anything contained in the Act, no Labour Court
or Tribunal has jurisdiction to adjudicate upon any matter which is under adjudication of national
tribunal. If the mater under adjudication of National Tribunal is pending before a Court or
Tribunal the proceedings relating to that matter which are pending before them will be deemed to
have been quashed. State Governments are debarred from referring the matter under adjudication
of National Tribunal to any Labour Court or Industrial Tribunal.
The National Tribunal consists of one person only to be appointed by the Central Government. A
person who is qualified for appointment as the Presiding Officer of a National Industrial
Tribunal. He is or has been a judge of a High Court. He has held the office of the chairman or
any other member of the Labour Appellate Tribunal constituted under the Industrial Disputes
Act, 1947 for a period of not less than two years.
4 Section 7B of the Industrial Dispute Act,1947
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The Central Government may also appoint two assessors to advise the National Tribunal. The
Presiding Officers of Labour Courts, Tribunals or National Tribunals should be independent
persons, below the age of 65 years and with no interest in the industry whose dispute be heard.

REFERENCE OF DISPUTES TO ADJUDICATION AUTHORITIES:

The appropriate Government may refer the dispute to a Labour Court Tribunal or National
Tribunal for adjudication. The Labour Court is empowered to adjudicate upon matter specified in
Second Schedule and an Industrial Tribunal on those specified in Second or Third Schedule.
Thus, any matter which is important for the industry as a whole and is listed in schedule ii or
schedule iii maybe referred for adjudication to a Tribunal or Industrial.
However, where a dispute relates to a matter specified in the third schedule, and is not likely to
affect more than one hundred workmen, the appropriate Government may refer it to a Labour
Court.
In case a dispute involves any question of national importance or is of such nature that industrial
establishment situated in more than one state or likely to be interested in or affected by the
dispute, the Central Government may at any time refer the dispute or any relevant matter related
to the dispute to the National Tribunal.
If the parties to an industrial dispute make a request in the prescribed manner to refer the dispute
to a Labour Court, Tribunal or National Tribunal the appropriate Government is required to make
such reference, but it may refuse to do so, if it is satisfied that the persons applying for the
reference do not represent the majority of the party.

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ADJUDICTAION PROCESS IN USA

Adjudication is a procedure for resolving disputes as a fast track dispute resolution introduced in
the UK in 1996 by the Housing Grants, Construction and Regeneration Act (Construction Act).
The HGCRA does not define the term adjudication, but it is generally understood to be a
process in which third party will make a potentially binding decision on the issue of entitlement
or liability. That sounds similar to arbitration.
Adjudication is a quick process that attempts to accelerate the cash flow of a construction project
by enforcing a judgment on the parties within 28 days of the dispute being filed.. 5 Originally the
intention of the Construction Act was that the process would be fairly informal. However, it has
developed into a formal process with parties serving detailed submissions, witness statements
and often even expert reports.
THE ADJUDICATION MECHANISM
The legislation was contained in section 108 of the Housing Grants, Construction and
Regeneration Act 1996. The final Act is not well drafted; the original Bill was even worse.
The way the legislation works is as follows:
The adjudication process begins when the party referring the dispute to adjudication gives
written notices of its intention to do so. The Notice of Adjudication is the first formal step in the
adjudication procedure. The Scheme for Construction Contracts provides that this Notice of
Adjudication should briefly set out the following:

a description of the nature of the dispute and the parties involved;

details of where and when the dispute arose;

the nature of the remedy being sought;

(Kennedy, Milligan, McCluskey, and Cattanach, 2010a)

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 Names and addresses of the parties to the contract, including addresses where documents
may be served.
The Act sets out eight features of a compliant adjudication scheme;
If a construction contract does not contain a compliant procedure, then the terms of the statutory
Scheme for Construction Contracts (a piece of subordinate legislation) cut in by way of statutory
implication.
The eight compliance points are as follows:
1. The contract must enable a party to give notice at any time of his intention to refer a
dispute to adjudication;
2. The contract must provide a timetable with the object of securing the appointment of the
adjudicator and referral of the dispute to him within 7 days of such notice;
3. The contract must require the adjudicator to reach a decision within 28 days of referral or
such longer period as is agreed by the parties after the dispute has been referred;
4. The contract must allow the adjudicator to extend the period of 28 days by up to 14 days,
with the consent of the party by whom the dispute was referred;
5. The contract must impose a duty on the adjudicator to act impartially ;
6. The contract must enable the adjudicator to take the initiative in ascertaining the facts and
the law;
7. The contract shall provide that the decision of the adjudicator is binding until the dispute
is finally determined by legal proceedings, by arbitration (if the contract provides for
arbitration or the parties otherwise agree to arbitration) or by agreement;
8. The contract shall also provide that the adjudicator is not liable for anything done or
omitted in the discharge or purported discharge of his functions as adjudicator unless the
act or omission is in bad faith, and that any employee or agent of the adjudicator is
similarly protected from liability.

APPOINTMENT OF THE ADJUDICATOR

Under the system parties in the USA have complete freedom to choose their adjudicator or, if
they prefer, their nominating body. In practice, it is rare for the parties to name their chosen
14

adjudicator in their contract. In many cases, the parties will agree on their adjudicator when a
dispute arises on a better the devil you know principle. In large cases, they will often choose a
construction specialist solicitor, but in smaller valuation cases, a quantity surveyor or other
construction professional is much more usual.
Following service of the Notice of Adjudication, the next step is to appoint an
adjudicator. The appointment of an adjudicator must be secured within seven days from service
of the Notice of Adjudication. The parties can agree on an individual to act as the adjudicator or,
if agreement cannot be reached, the party who referred the dispute to adjudication may make an
application to an Adjudicator Nominating Body (ANB). This is usually done by completing a
form and paying the required fee. On receipt of a request to nominate an adjudicator, the ANB
should communicate their selection to the party who referred the dispute to adjudication within
five days of the request. In the event that an ANB fails to do this the whole process must begin
again.
THE REFERRAL NOTICE
The referral notice must be served within seven days of service of the Notice of Adjudication.
This is the document that sets out in detail the case of the party who is referring the dispute to
adjudication and it should be accompanied by documentation in support of the claim together
with expert reports (if any) and witness statements. It is important to ensure that the referring
party is in a position to serve this notice - there have been instances where the ANB has
appointed an adjudicator 24 hours before the seven-day period expires, in which case the
adjudicator will need the notice within a day. A copy should be sent to the other party at the same
time.
TIMETABLE INVOLVED
The Construction Act sets out a tight timetable of within 28 days of service of the referral notice
for submission of a response and for the adjudicator's ultimate decision. However this may be
extended with the consent of the adjudicator. The rationale behind the process was to obtain
quick and cost effective results which are of a binding nature unless reviewed by litigation or
arbitration. This relies on timescales being tight.
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RESPONDING PARTY'S RESPONSE

This is essentially the other party's defence, and is required to be served within seven days of the
Referral Notice. Requests for this to be extended to 14 days are usually agreed. The HGCRA
does not demand a response or further submissions - the need for one is a matter for the
adjudicator.
THE DECISION
The adjudicator is required to reach his decision within 28 days of service of the referral notice.
This period can be extended by a further 14 days if the party who referred the dispute in the first
place agrees, or can be further extended if both parties agree.
The decision is final and binding, providing it is not challenged by subsequent arbitration or
litigation. The parties are obliged to comply with the decision of the adjudicator, even if they
intend to pursue court or arbitration proceedings. In the majority of adjudicators' decisions the
parties accept the decision, however if they choose to pursue subsequent proceedings the dispute
will be heard afresh - not as an 'appeal' of the adjudicator's findings. A party cannot adjudicate
the same issue in further adjudication proceedings.
COSTS
The Construction Act makes no mention of how costs should be dealt with. However changes to
the Act which come into force on 1 October 2011 provide that any contractual provision which
attempts to allocate the costs of an adjudication between the parties will be invalid unless it is
made after the adjudicator is appointed. This applies to agreements both as to the allocation of
the adjudicator's fees and expenses and agreements as to who is to bear the parties' own costs.
This provision seeks to prevent parties agreeing contractual terms which place all the costs risk
on one party.

ADJUDICATOR'S FEES AND EXPENSES

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The parties will be jointly and severally liable to pay the adjudicator a reasonable amount in
respect of fees for work reasonably undertaken and expenses reasonably incurred by him. This
means that both parties can be pursued for these fees, or that either party may be pursued for the
whole amount. The adjudicator may decide himself what sum is reasonable but, if there is any
dispute, an application can be made to the court for determination. This provision applies only to
adjudications which contain the required adjudication provisions set out in the Construction Act,
not to adjudications which rely on the provisions of the Scheme for Construction Contracts.
The Local Democracy, Economic Development and Construction Act provides that:

the parties may agree, in the construction contract, to confer power on the adjudicator to
allocate his fees and expenses between them - this agreement must be in writing;

if the parties agree, in the construction contract, to allocate liability for their own costs of
the adjudication that provision will be ineffective;

the parties are free to agree liability for their own costs of the adjudication after the notice
of intention to refer has been given - if they do so, this agreement must be in writing.

The Act does not address what will happen if a contract provision allocates liability for both the
parties' costs and the adjudicator's fees and expenses. It is arguable that in such a situation the
whole clause will be ineffective.
INTEREST
The adjudicator can only deal with interest on sums awarded if the contract contains a provision
dealing with interest, or alternatively if the parties agree.

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A COMPARISON OF INDIA AND THE UNITED STATES

Although labor laws in both the United States and India are derived primarily from British labor
legislation,6 there have been significant differences in the way the laws of the two countries have
evolved over time. American legislation has been largely influenced by the free enterprise
management philosophy, resulting in the fact that collective bargaining is not a compulsory but
an optional process. In the Indian situation, labor legislation was designed to prevent employeremployee conflicts from hindering rapid economic development."7In addition, the Indian
legislation is based on the assumption that labor unions are weak and will remain weak.
Consequently, the legislation and collective bargaining framework that have evolved are
designed to protect labor.
From my point of view the comparison as follows:
1. In India, parties have to choose the three tier system one by one if the parties is not
satisfied with the decision of negotiation, the parties may agree to voluntary arbitration
and the commission will help the parties in choosing an arbitrator mutually concept able
to them. Further, when the parties to the dispute do not agree to arbitration, then party
refer the case for adjudication under section 7 of the Industrial Dispute Act, 1947. But in
the country of USA does not follow the three tier system, the party can refer their case
directly for adjudication under section 180 of HCGRA, which is similar to the concept of
arbitration because in USA party can choose their adjudicator itself.
2. In terms of definition, The Labour Court/Industrial Tribunal gets the jurisdiction to
decide an industrial only if the Government makes a reference of that dispute to it. The
proceedings before the Labour Court/Industrial Tribunal are called adjudication
proceedings. But the HGCRA does not define the term adjudication, but it is generally
understood to be a process in which third party will make a potentially binding decision
on the issue of dispute. That sounds similar to arbitration.

6 Id.; See Also D. Twomey, Labor Law & Legislation 4-6 (6th Ed. 1980).
7 E. Ramaswamy & U. Ramaswamy, Industry and Labor: An Introduction 195 (1981).
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3.

When the parties to the dispute do not agree to arbitration, either party shall notify the
Industrial Relations Commission (IRC) with a copy to the appropriate Government of the
failure of negotiation where upon the IRC should adjudicate upon the disputes. 8 While in
USA, there is no need to notify to any commission with a copy of the failure of previous
decision. Here, the party directly choose the mechanism of adjudication by giving a

notice with the intention to refer the dispute to adjudication.

4. Under the system of India party do not have right to choose their adjudicator. However in
India, one independent person is appointed with the different qualification as per the
hierarchy of the system which is given under the Industrial Dispute Act.
For example: The labour court consists of one independent person who is the presiding
officer or has been a judge of a High Court, or has been a district judge or additional
district judge for not less than 3 years, or has been a presiding officer of a labour court for
not less than 5 years. In this way the industrial tribunal and national tribunal have the
different qualification as per the Act.
But Under the system of USA the parties have complete freedom to choose their
adjudicator. The party who referred the dispute to adjudication may make an application
to an Adjudicator Nominating Body (ANB).The appointment of an adjudicator must be
secured within seven days from service of the Notice of Adjudication.
5. In India, labour court has the jurisdiction to entertain the dispute which is specified in the
second schedule of the Industrial Disputes Act, 1947. Industrial tribunal also do not have
same status as labour court because it refer the dispute which is specified in the second
schedule as well as third schedule of the Act. However , the National Tribunal are to be
constituted for the adjudication of the industrial disputes which involve questions of
national importance or are of such a nature that industrial establishments situated in more
than one State are likely to be interested in or affected by such disputes.
While in USA under the adjudication process the dispute is not referred in hierarchy
manner and there is not given the schedule for entertaining the specific matter or dispute
as per the court.

8 A critical analysis on efficacy of mechanism to industrial disputes resolution in India by

M.J.Arputharaj* and R. Gayatri.
19

6. In USA, the contract must require the adjudicator to reach a decision within 28 days of
referral or such longer period as is agreed by the parties after the dispute has been
referred;
Further it allow the adjudicator to extend the period of 28 days by up to 14 days, with the
consent of the party by whom the dispute was referred.
7. If we look at the Indian perspective, the dispute resolution machinery has increasingly
failed to bring about the decision on time due to which cases are pending in the court and
party get frustrated with the case proceeding but the USA adjudication system complete
within a month like 30 or 50 days.

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CONCLUSION

The following are few suggestions to make the settlement machinery more effective:
1. One average, around one-third of the disputes referred for conciliation failed. Of these,
about 60 to 90 per cent of cases were referred to adjudication. Only one per cent of the
cases were referred for arbitration. These underline the ineffectiveness of conciliation
machinery in settling industrial disputes. Thus, the existing machinery for the settlement
of industrial disputes, as provided under the Industrial Disputes Act, 1947, needs to be
strengthened. But in the same way adjudication has proved the most popular way of
settling industrial disputes in India. This is because adjudication is the last recourse for
disputing parties to settle their disputes.
2. One way to strengthen the adjudication machinery is to substitute it by setting up
Industrial Relations Commissions (IRCs), both at the Central and the State level, on the
lines suggested by the National Commission on Labour. The IRC should also be
empowered to oversee the working of the conciliation machinery.
3. The government should refrain from actively intervening in the matters of industrial
disputes unless it is must for her to intervene in the disputes.
4. As we have seen that in USA the parties has agree to choose their adjudicator if they want
because it has created a problems in practice, and has led to a couple of disadvantage to
the system as the it is not possible to provide a new adjudicator to number of parties due
to which the commercial interest of any Adjudicator Nominating Body is highly
increased, So the USA system should be changed.
But in India the parties do not have freedom to choose their adjudicator or officer,
the act itself provide the appointment and qualification of them as per their hierarchy for
the period not more than 5 or 3 years which is the best way of appointment.

21

REFRENCES

Labour and Industrial Laws by Professor P.K. Padhi, XLRI published by PHI learning

private limited ISBN 978- 81-203-2985-0

Labour Law Reporter H.L. Kumar, Advocate

A critical analysis on efficacy of mechanism to industrial disputes resolution in India by

M.J.Arputharaj* and R. Gayatri.

22