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Labour Laws - Notes based on previous year question papers

Labour Laws (Karnataka State Law University)

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Labour Laws
Notes by Praveen Kumar

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Contents
UNIT 1 ..................................................................................................................................................... 4
1. What is Industrial Dispute? Explain the essential requisites of an Industrial Dispute?.............. 4
2. Causes/Essential requisites of industrial Disputes: .................................................................. 11
3. Explain the factors which were responsible for departure from the old theory of “Master and
Servant”. ........................................................................................................................................... 13
4. Outline the impact of industrial jurisprudence on labour welfare legislations. ....................... 16
5. Explain the provisions of the Industrial Disputes Act, 1947 relating to award......................... 22
6. Labour Policy in India ................................................................................................................ 30
7. Labour Problems ....................................................................................................................... 32
8. “Industry is an organised or occupied activity carried on with the cooperation of employer
and employee to meet its object”. Justify with aid of Bangalore water supply vs Rajappa case..... 34
9. Principles of Labour Legislation ................................................................................................ 40
10. Strike and Lockout................................................................................................................. 44
11. Explain the term ‘workman’.................................................................................................. 48
12. Explain ‘Industrial Dispute’. When does an individual dispute become an Industrial
Dispute? ............................................................................................................................................ 54
13. Write a Note on Settlement.................................................................................................. 57
14. Lay Off ................................................................................................................................... 58
15. Explain the provisions relating to recovery of money due from the employer under
Industrial Dispute Act........................................................................................................................ 60
16. Explain the provisions relating to closure of an undertaking under Industrial Disputes Act,
1947 62
17. Discuss briefly the Authorities set up for the investigation of Industrial Disputes. ............. 64
18. Conditions of service, etc., to remain unchanged ................................................................ 71
19. Termination of service of workman by the employer for any reason whatsoever amounts
to retrenchment. Explain with the help of decided cases. .............................................................. 76
20. Unfair Labour Practice .......................................................................................................... 80
21. Explain the role of arbitration in resolving industrial dispute. ............................................. 85
22. Write note on notice of change. ........................................................................................... 87
23. Registration of Trade Unions under the Trade Union Act 1926 ........................................... 91
24. Discuss the liability of the employer to pay compensation under the Workmen
Compensation Act............................................................................................................................. 99
25. Benefits under Employees State Insurance Act 1948 ......................................................... 108
26. Contributions, Employees State Insurance Act................................................................... 116
27. Pension................................................................................................................................ 124
28. Discuss the mode of Recovery of Moneys due from the employer under the EPF Act, 1952
126

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29. How to determine the contribution towards provident fund ? ......................................... 128
30. State the procedure of employees insurance claims under the Employees State Insurance
Act, 1948. ........................................................................................................................................ 129
31. Discuss the salient features of the various schemes formulated under the Employees
Provident Fund Act, 1952. .............................................................................................................. 140
32. “All workmen are employees but all employees are not work men”. Explain with the help
of decided cases .............................................................................................................................. 146

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UNIT 1
1. What is Industrial Dispute? Explain the essential requisites of an Industrial
Dispute?

According to Sec. 2(k) of the Industrial Dispute Act, 1947,

“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”

The above definition of industrial disputes brings out the following essential ingredients:
1) There should be a disputes or difference;
2) The disputes or difference may be between:
a) employer and employer, or
b) employer and workman, or
c) workman and workman.

3) The disputes or difference may be connected with:


a) employment, or
b) non employment, or
c) the terms of employment, or
d) conditions of labour of any person, and

4) The disputes should relate to an industry.

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.

Definitions of industry (section 2)


Section 2(J) of the act defines industry as follows:
“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.
From the above definition, industry appears to mean:

1) A business, such as merchandising,


2) A trade, such as cutler,
3) A manufacture, such as flour milling
4) An undertaking, such as an electricity company,
5) A calling, such as architect,
6) A services, such as transporter, or
7) An employment, which is a general term covering. Perhaps, the rest of the vocations.

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Definition of workman section 2(s)


“workman” means any person (including an apprentice) employed in any industry to do any manual,
unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the
terms of employment be express or implied, and for the purposes of any proceeding under this Act
in relation to an industrial dispute, includes any such person who has been dismissed, discharged or
retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge
or retrenchment has led to that dispute, but does not include any such person-
(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the
Navy Act, 1957 (62 of 1957); or
(ii) who is employed in the police service or as an officer or other employee of a prison, or
(iii) who is employed mainly in a managerial or administrative capacity, or
(iv) who being employed in a supervisory capacity, draws wages exceeding one thousand six
hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or
by reason of the powers vested in him, functions mainly of a managerial nature.]

The definition of workman has three essential parts:


1. Statutory meaning of workman;
2. Legal fiction, and
3. Categories of persons excluded.

Broadly speaking, the definition of “Industrial Dispute” may be analysed under four heads:
1. Factum of Industrial dispute
2. Parties to the dispute
3. Subject matter of the dispute
4. Origin of the dispute

Factum of Industrial Disputes


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.

In Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd (1984), the Court observed:
The expression “Industrial Dispute” has been so widely defined as not to leave anything out of its
comprehension and purview involving the area of conflict that may develop between employer and
the workmen and in respect of which a compulsory adjudication may not be possible.

When does an Industrial Dispute come into existence?


When parties are at a variance, and the dispute or difference is connected with the employment or
non-employment or the terms of the employment or with the conditions of labour, there comes into
existence an Industrial Dispute.

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?

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1963:
In Bombay Union of Journalists v. The Hindu (1963) it was held that the Industrial dispute must be in
existence or apprehended on the date of reference. The net effect of the principle is that even if the
demand was not made earlier before the management and rejected by them and is raised at the
time of reference or during conciliation proceedings, the dispute may be an “industrial dispute”.

1968:
In Sindhu Resettlement Corporation Ltd v. Industrial Tribunal (1968) the 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.

1978:
In Shambhunath Goel v. Bank of Baroda(1978), The court observed:
….to read into the definition the requirement of a written demand for bringing into existence an
industrial dispute would be tantamount to rewriting the section.

Summary:
1993:
In M/s Village Paper Pvt. Ltd v State of Himachal Pradesh (1993), the court made the following
observations:

1. A mere demand made to the Government cannot become an Industrial dispute without it
being raised by the workmen with their employer.
2. If such a demand is made to the Government, it can be forwarded to the management and if
rejected, becomes an Industrial dispute.
3. Though it is apparent for a dispute to exist, there must be a demand by the workmen or the
employer, this demand need not be in writing, unless the matter pertains to a public utility
service, in view of the provisions of section 22 of the Industrial Dispute Act 1947.
4. The demand need not be sent directly to the employer nor is it essential for it to be made
expressly. It can even be implied or constructive e.g., by way of filing an appeal or refusal of
an opportunity to work when demanded, by the workmen. A demand can be made through
the conciliation officer, who can forward it to the management and seek its reaction. If the
reaction is negative or not forthcoming and the parties remain at loggerheads, a dispute
exists and a reference can be made.
5. Whether a dispute exists has to be decided in each case and is dependent on the facts and
circumstances of that case. The critical time for this examination is the date of making this
reference; material which comes into existence after the reference has been made is not
relevant.
6. Only that dispute which exists or is apprehended can be referred. If there is a different kind
of demand made before the management and the reference pertains to some other
demand, then the reference is incompetent, e.g., reference pertains to reinstatement
whereas the demand pertains to retrenchment compensation.

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7. The jurisdiction of the labour court/Industrial Tribunal is limited to the points specifically
referred and matters incidental thereto. Since the scope of its jurisdiction and power is
circumscribed by the order of reference, it is not permissible for it to go beyond the terms of
reference.
8. Thus, if a reference is made without any demand having been made on the employer either
expressly or impliedly, there is no occasion for the employer to point out the nature of the
dispute so as to facilitate the government for making an appropriate reference of the
dispute.

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 in the Industrial Disputes
Act 1947 to widen its scope and ambit. The disputes between employers and employers may arise in
respect of wage matters in an area where labour is scarce or disputes of similar character.

Employers and Workmen


Bangalore WC and Mills Co v Their workmen (1968)
Trade unions as such are not mentioned in the definition of Industrial Dispute because they act on
behalf of the workmen and therefore, when a trade union raises a dispute, the workmen are
deemed to be parties to the dispute.

Due to the absence of an employer-employee relationship between a contract worker and principal
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 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).

Workmen and Workmen


This includes the disputes between them directly or through their trade unions. Such a dispute may
be a demarcation dispute for example.

Subject-matter of Disputes
A dispute or difference must relate either to:
Employment or
Non-employment or
Terms of employment or
The conditions of labour of any person.

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The legislature used these phrases in the definition of Industrial Dispute so that all aspects of labour
problems may be resolved through the industrial relations machinery provided under the Industrial
Disputes Act 1947.

Employment
Employment brings in the contract of service between the Employer and Employed. The concept of
employment involves three ingredients:
1. The employer
2. The employee and
3. The contract of employment
The employer is one who employs, i.e., one who engages the services of other persons.
The employee is one who works on hire basis.
The employment is the contract of service between the employer where under the employee agrees
to serve the employer, subject to control or supervisions.

Unemployment
Unemployment is the opposite of employment. It is the positive or negative act of the employer that
leads to unemployment. It may relate to an existing fact of unemployment or a contemplated
unemployment.

Four illustrations cited by the federal court in Western Indian Automobiles Association v Industrial
Tribunal are:
With respect to Employment:
1. An employer has already employed a person and a trade union says “Please do not employ
him”.
2. An employer gives notice to a union saying that he wishes two particular persons. The union
says “No”

With respect to Unemployment:


1. An Employer may dismiss a man, or decline to employ him.
2. An Employer contemplates turning out those who are already in his employment.

The expression unemployment is sufficiently elastic to include all cases of


1. Termination of service either voluntarily or by act of parties.
The instances of this kind are dismissal, discharge, retrenchment, compulsory retirement
etc. It also includes temporary unemployment, e.g., suspension, layoff, compulsory leave,
lockout, strike etc. Further, it would include within its scope the words arising out of
unemployment, e.g., reinstatement, reemployment, compensation, and back wages for
wrongful termination of service.

Terms of employment
The expression Terms of employment generally cover basic wages, Dearness Allowances and
other allowances, wages on promotion, wages on demotion, wages on transfer out of town,
wages for overtime work, wages for work on holiday, payment of wages, recovery of wages,
bonus, retiral benefits, e.g., pension, provident fund, gratuity, pension etc.

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Conditions of Labour
The expression conditions of Labour is much wider in scope and refers to the conditions of
service under which they work and the amenities provided or to be provided to them. This
expression may include hours of work, holidays, leave, health, safety and welfare of labour.

Apart from above, the following are also included based on decided cases:
1. Alteration of conditions of service of employees
2. Demand for modification of standing orders
3. Disputes regarding Contract Labour
4. Dispute on Lockout in disguise of Closure
5. Dispute of workmen whose cases are left unsettled
6. Transfer of workmen from one place to another

Origin of Industrial Dispute /Meaning: “Any Person"


The scope of the expression “Any Person” occurring in the last part of the definition of Industrial
Dispute has been a subject matter of Controversy. If construed literally, it may mean and include
both natural and artificial persons. On the contrary, if interpreted narrowly, the expression of any
person may be equated with workmen.

Prior to the Supreme court decision in Dimakuchi Tea estate (1958), there was no unanimity of
opinion with regards to the scope of the expression “Any Person”. Three views were discernible:
1. The first view emphasised the literal meaning and held that employment or non-
employment or terms of employment or conditions of labour of any person whether that
person is a workman or not could form the subject matter of Industrial Dispute. According to
them, if the intention of the legislature was to restrict the scope of the expression of
Industrial Dispute as a dispute between employers and workmen relating to the terms of
employment of workmen alone, there was no need to use the wider expression of “Any
Person”.
2. The second view equated the word person with that of workman. According to the
supporters of this view, unless the person was a workman within the meaning of section 2(s)
of the Industrial Dispute Act 1947, a dispute concerning him could not be an Industrial
Dispute under section 2(k).
3. The third view adopted a middle course namely that the concerned person need not
necessarily be a workman within the meaning of the act; it was enough if the present
workmen of the employer were interested in such a person and the employer had the
capacity to grant the requested demand. The supporters of this view emphasised that
merely because such a dispute would become an Industrial dispute, it did not follow that the
demand would be accepted.

Case Law: Workmen Of Dimakuchi Tea Estate vs The Management Of Dimakuchi tea ... on 4
February, 1958
The question for decision in this appeal was whether a dispute raised by the workmen' relating to a
person who was not a workman could be an industrial dispute as defined by S. 2(k) of the Industrial
Disputes Act, 1947, as it stood before the amendments Of 1956.

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The appellants, who were the workmen of Dimakuchi Tea Estate, espoused the cause of one
Dr. K. P. Banerjee, Assistant Medical Officer, who had been dismissed unheard with a month's salary
in lieu of notice but who had accepted such payment and left the garden and the dispute raised was
ultimately referred by the Government for adjudication under s. 10 of the Act. Both the Tribunal and
the Appellate Industrial Tribunal took the view that as Dr. Banerjee was not a workman within the
meaning of the Act, the, dispute was not an industrial dispute as defined by S. 2(k):

Held, (per Das, C. J., and S. K. Das, J., Sarkar, J., dissenting), that the expression 'any person' occurring
in S. 2(k) of the Industrial Disputes Act, 1947, cannot be given its ordinary meaning and must be read
and understood in the context of the Act and the object the Legislature had in view. Nor can it be
equated either with the word 'workman' or 'employee'.

The two tests of an industrial dispute as defined by the section must, therefore, be -
(1) the dispute must be a real dispute, capable of being settled by relief given by one party to the
other, and
(2) 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 (as the case may be), the parties to the
dispute have a direct or substantial interest, and this must depend on the facts and circumstances of
each particular case.

“Can it be said that workmen as a class are directly or substantially interested in the employment,
non-employment, terms of employment, or conditions of labour of persons who belong to the
supervisory staff and are, under the provisions of the Act, non-workmen and for whose
representation the act makes no provision? The answer is No”

Applying these tests, the dispute in the present case which was in respect of a person who was not
a workman and belonged to a different category altogether, could not be said to be a dispute within
the meaning of S. 2(k) of the Act and the appeal must fail.

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2. Causes/Essential requisites of industrial Disputes:


The phenomenon of industrial disputes is inherent in the industrial system. This is because of the
nature of industrial work, i.e., it involves division of labour, it is group work, and it is carried under
control.

As the late Dr. Radha Kamal Mukherjee observed, “The development of a capitalistic industry which
means the control of the tools of production by a small entrepreneur class has brought to the force
the acute problem of friction between management and labour throughout the world”.

Cause-wise Industrial Disputes in India

Compared to the situation prevailing in early 1980s, it is noted from Table 25.1 that causes like
wages bonus and allowances, leave and hours of work are much less important now, while causes
like indiscipline and violence have become more responsible for industrial sickness.

The important causes of industrial disputes in India are summarized below:


The percentage distribution of disputes by causes from 1973 onwards has been shown in Exhibit 2
reveals the following causes of industrial disputes:

1. Wages and Allowances:


Since the cost of living has generally showed an increasing trend, the workers have been fighting for
higher wages to meet the rising cost of living and to increase their standard of living. 34.1% of the
industrial disputes in 1973 were due to demand for higher wages and allowances. This percentage
was 36.1% in 1974. During 1985, 22.5% of the disputes were due to wages and allowances. Wages
and allowances accounted for 25.7% of disputes in 1986, 26.6% in 1992, 25.0% in 1996 and 20.2% in
2000.

2. Personnel and Retrenchment:


Personnel and retrenchment causes have also been important. During 1973, 24.3% of the industrial
disputes were because of dismissals, retrenchment, etc. as compared to 29.3% in 1961. In 1979,
personnel and retrenchment topped the list of causes of industrial disputes with 29.9%. The number
of disputes because of personnel and retrenchment was 32.0% in 1971, 23.1% in 1985 and 19.8% in
1996. In 2000, about 12.1% of the disputes occurred due to dismissals, layoffs, retrenchments, etc.

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3. Bonus:
Bonus has been an important factor in the industrial disputes, 10.3% of the industrial disputes in
1973 were because of bonus as compared to 6.9% in 1961. 13.8% and 15.2% of the disputes were
due to bonus during 1976 and 1977 respectively. It is worth noting that during 1982 only 4.7% of the
disputes were due to bonus as compared to 7.3% in 1985. This percentage was 4.2 in 1992, 3.6 in
1996 and 8.5 in 2000.

4. Indiscipline and Violence:


The number of disputes because of indiscipline and violence among the workers has been
significant. During 1987, 15.7% of the disputes were because of indiscipline and violence as
compared to only 5.7% in 1973. During 1985, 16.1% of industrial disputes were caused by
indiscipline and violence and during 1996, about 21.6% of the industrial disputes arose due to
indiscipline and violence in industrial undertaking. This shows that indiscipline and violence have
continued to be a serious problem in industry during the past two decades.

5. Leave and Hours of Work:


Leave and hours of work have not been so important causes of industrial disputes. During 1973,
1.5% of the causes were because of leave and hours of work. Their percentage share in the industrial
disputes was 2.2% in 1977, 1.8% in 1985, 2.2% in 1996 and 0.9% in 2000.

6. Miscellaneous Causes:
Miscellaneous causes include modernisation of plant and introduction of computers and automatic
machinery recognition of union political factors, etc. These factors have caused a significant number
of industrial disputes in the country, 24.1% of the industrial disputes in 1973 were due to
miscellaneous causes. They accounted for 19.5% of the industrial disputes in 1977, 29.2% in 1985,
27.8% in 1996 and 33.2% in 2000.

Miscellaneous causes of industrial disputes are as follows:


(a) Workers’ resistance to rationalisation, introduction of new machinery and change of place of
factory.
(b) Non-recognition of trade union.
(c) Rumours spread out by undesirable elements.
(d) Working conditions and working methods.
(e) Lack of proper communication.
(f) Behaviour of supervisors.
(g) Trade union rivalry etc.
Thus, industrial disputes do not arise only when workers are dissatisfied on economic grounds, they
also arise over issues which are of non-economic nature. Instances may be quoted when strikes
where successfully organised to protest against the management’s decision to change the location
of the plant from one state to another. Similarly, even causes like behaviour of supervisor and trade
union rivalries may give rise to industrial disputes.
The whole concept of industrial relations revolves around the principle of friction dynamics which is
the key to the establishment of harmonious relations between labour and management. We cannot
think of any society completely oblivious of some sort of friction between labour and management.

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3. Explain the factors which were responsible for departure from the old theory
of “Master and Servant”.

During the twentieth century a new branch of jurisprudence known as Industrial Jurisprudence has
developed in our country. Industrial jurisprudence, is a development of mainly post-independence
period although its birth may be traced back to the industrial revolution.

Before independence it existed in a rudimentary form in our country. The growth of industrial
jurisprudence can significantly be noticed not only from increase in labour and industrial legislations
but also from a large number of industrial law matters decided by the Supreme Court and High
Courts.

It affects directly a considerable population of our country consisting of industrialists, workmen and
their families. Those who are affected indirectly constitute a still larger bulk of the country's
population.

This branch of law modified the traditional law relating to master and servant and had cut down the
old theory of laissez faire based upon the 'freedom of contract' in the larger interest of the society
because that theory was found wanting for the development of harmonious and amicable relations
between the employers and employees.

Individual contracts have been in many respects substituted by a standard form of statutory contract
through legislation and judicial interpretation. The traditional right of an employer to hire and fire
his workmen at his will has been subjected to many restraints. Industrial Tribunals can by their
award make a contract which is binding on both the parties creating new rights and imposing new
obligations arising out of the award. There is no question of the employer agreeing to the new
contract, it is binding even though it is unacceptable to him. The creation of new obligations is not
by the parties themselves. Either or both of them may be opposed to it, nevertheless it binds them.
Thus, the idea of some authority making a contract for the workmen and employer is a strange and
novel idea and is foreign to the basic principle of the law of contract.

Similarly, there is change in the concept of master and servant. One who invests capital is no more a
master and one who puts in labour is no more a servant. They are employer and employees, the
former may hire the latter but he can no more fire them at his will. The interest of the employees is
in many respects protected by legislation. Both are now parties in an enterprise without one yielding
to the higher status of another but as co-sharers in a partnership. The right of labour participation in
management has been given legislative recognition to the utter despair of the capitalist. Most of the
benefits claimed by a workman are not part of his bargain with the employer when the latter
employed him or are not due to them on account of any contract but of "status". The industrial
society all over the world has been moving during the present century from contract to status and
this status is a politico-socio-economic juristic status.

What were the factors that led to this departure from the old theories of the law of contract, and
the law of Master and Servant? Industrialisation in India, as in other countries, brought with it some

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new socio-economic problems. Those who control the industry have a natural tendency of
multiplying their wealth and if this tendency is not checked the rich grow richer and the poor
become poorer day by day. The gap between the rich and the poor ultimately grows on to the extent
that it develops into two distinct classes in any industrial society, a few of whom are 'Haves' and
others are 'Have-nots'. This economic disparity leads to a struggle between 'Haves' and 'Have-nots',
the latter exploited.

Although this situation continues for some time and it had continued to be so in our country too, but
gradually the workmen realised that they could put a better fight if they get united. This realisation
was closely followed by a period of industrial unrest leading to strikes and lock-outs. In conditions so
disturbed, the world has witnessed the horrors of two world wars resulting in spiral rise in the cost
of living. With the rise in the cost of living there has been consistent demand from labour for
increase in wages. Democratic ideas have also grown simultaneously with the growth of
industrialisation in our country. These democratic ideas have pleaded for and have also helped in
mass awakening and consciousness for greater power amongst the working class. Out of the struggle
between workers, demanding for better share in the production and profit of the industry and the
employers' hesitation to part with it beyond a certain limit, have grown the recognition of certain
principles which are considered to be fundamental in almost all developed countries of the world.

The basic principles are:


(1) The right of workmen to combine and form associations or unions.
(2) The right of workmen to bargain collectively for the betterment of their conditions of service.
(3) The realisation that economic struggle is inevitable because it is but natural that labour agitate
for better conditions.
(4) A shift from the doctrine of Laissez Faire to a Welfare State.
(5) Tripartite Consultations i.e., solution of the industrial or labour disputes through the participation
of the workers, employers and the Government.
(6) The State can no more be a neutral onlooker but must interfere as the protector of the social
good.
(7) Minimum standards must be guaranteed through State Legislation.

The concept of industrial jurisprudence in our country only developed after independence. Until
Independence the change in attitude of the government and the benevolent labour legislation only
aimed at amelioration of the conditions of labour and it could hardly be said to be a deal in social
justice to the working class. The birth of industrial jurisprudence in our country may be ascribed to
the Constitution of India' which made more articulate and clear the industrial relations philosophy of
the Republic of India. This philosophy has afforded the broad and clear guidelines for the
development of our industrial jurisprudence and has thus taken India one step forward in her quest
for industrial harmony.' The Parliament and the Supreme Court have helped in shaping industrial
jurisprudence, the former through legislation and the latter as interpreter of the labour laws.

Industrial jurisprudence is of great importance to all developed or developing countries of the world
because it is concerned with the study of problems relating to human relations arising out of a large
scale development of a factory system which has emerged in consequence of industrial revolution.

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Proper regulation of employer-employee relationship is a condition precedent for planned,


progressive and purposeful development of any society. As an instrument of social policy in the
present day body-politic the role of industrial jurisprudence has still gained importance, Industrial
workers and their families are directly concerned with it.

In spite of its widening scope it cannot be forgotten that its application is limited in certain respects.
For example, there are still a vast majority of the people who in their relationship are still governed
by the ordinary law of contract based on laissez faire doctrine. Industrial jurisprudence is a
developing concept. It derives its main strength from social justice which is dynamic and changing.
The concept of social justice itself changes with the social, economic and political changes in society.
Therefore, it has yet to take its final shape.

Industrial jurisprudence cannot, with all its high ideals, displace general jurisprudence just as no
amount of social justice can abrogate altogether the concept of legal justice. Even while dispensing
social justice the Courts, tribunals and arbitrators, whoever it may be, cannot ignore the law.
Therefore, it would be correct to say that industrial jurisprudence is a species of the same genus
jurisprudence and industrial jurisprudence in relation to industrial society stands in the same way
just as general jurisprudence in relation to the total society.

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4. Outline the impact of industrial jurisprudence on labour welfare legislations.

Introduction
The requisites for an efficient working unit are:
An amicable environment,
Cooperation between the workers and the employers,
Reasonable remuneration and
Proper working conditions.
From the laissez faire to the ‘welfare state’, the socio-economic conditions have faced drastic
changes, not only in India but also across the world.

The industrial position that prevailed in the pre-independence era of India was not pristine. The
industrial revolution in India brought with it certain inhumane as well as unjust aspects of the
colonial era.

To cope with these problems, industrial legislations were enacted in India. To keep pace with the
changing socio-economic conditions in India, the Legislature as well as the Courts had to check the
unfavourable growth of the industrial legislations.

Industrial legislation finds its origin from industrial jurisprudence, which is a development of the 20th
century world. In India, industrial jurisprudence prevailed before Independence, but it was in
rudimentary form.

The Industrial revolution was the emanating factor behind the growth of the industrial
jurisprudence. The Industrial revolution brought with it the most inhumane aspects of human life. It
saw the exploitation of man by man. The maximization of profit, even at the cost of the lives of the
labourers, was the paramount goal of the employer. ‘Freedom of contract’ was the evident result of
laissez faire. The employer was free to fire an employee arbitrarily. Thus the employees were always
at the loss. To protect the interest of the employees, the legislature and courts in India took a giant
step forward to give birth to Industrial Jurisprudence in India – the former through enactments and
the latter through judgments.

The scope of industrial jurisprudence not only covers the protection of interests of the employees
but it also aims at securing a cordial relationship between the employers and employees in a
working unit.

The evil impact of the industrial revolution on India.


As per the economic policy of the British government, they never wanted to make India an industrial
base, rather they wanted to make India a supplier of raw materials for their industries. Instead of
promoting industries in India, they continued to de-industrialise and ruralise the Indian economy.
Further with the advent of the industrial revolution in England, the British government revved up its
efforts to further exploit the Indian economy. As a result, in 1947, when the British left, India
represented a ruined economy, a sick society and the evil effects of neo-colonialism. However, the
evil impact of industrial revolution can be classified into Social Evils and Economic Evils, which are
discussed as below:

Economic Evils.
1.The artisans lost the psychological satisfaction that they derived in producing goods themselves. In
the industries, they had to produce only a part of the finished goods.

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2.The labourers were underpaid. They could just earn from hand to mouth. The wages were
sufficient to provide them with daily bread, but at the cost of other necessities of life.

3.The term of employment was not secure. The employers were free to exercise their arbitrariness
in sacking the labourers. The factory workers had to suffer from the periodic unemployment and
under-employment.

Social Evils.
1.The overcrowded cities, due to the large-scale immigration of the village population in the cities
led to the industrial slums and acute housing problems. It had its adverse impact on the health of the
workers and also led to the sanitation problems in the cities.

2.The working condition in the factories were hazardous. Moreover, the long hours of duty, with no
rest and no facilities of recreation marred the welfare of the workers. The machines were taken care
of by the factory owners, with little regard for the safety of the workers.

3.Workers were exposed to serious accidents caused by the improperly managed machines in the
factory. These accidents were not taken seriously by the factory owners. The victims of such
accidents did not have any right to compensation.

4.Due to the inadequate wages, the wives and children of the workers were exposed to the
exploitation by the factory owners. They were employed at low wages without regard to their
physical conditions.

Labour problems in India.


The factory owners paid their sole attention towards the maintenance of the machines irrespective
of the health and working conditions of the workers. The employers neglected the conditions of the
workers as the manual labour was abundantly available to them. The workers were underpaid. They
could not raise their voice. They were illiterate and poor, so were ignorant of their rights. Taking the
advantage of this situation, the employers dictated their own terms. The government also did not
interfere in the matter as it was deemed to be a freedom of contract. The situation worsened
further. The government could not just see it as a neutral player and it had to interfere. Moreover,
some of the philanthropic agencies like the Servants of India Society and Social Service League raised
voice against these problems. Later some industrial social workers also raised their voices against
these problems. Initially, they lacked the resources and bargaining power but they were successful in
mobilising the public voice against these problems. Later, the factory owners also realised the
seriousness of the problem and also that a contended worker will add to the productivity of the
factory. Later the Government also, could not confine itself as a neutral spectator. The Government
also realised that it was in the interest of the national economy as well as the labourers that
constitute a bulk of population in India. Thus the drive for the welfare of the labourers and for the
protection of the Indian economy compelled the Government to intervene in the situation.

Evolution of industrial jurisprudence in India.


The evolution of Industrial Jurisprudence in India can be traced back to the period of post-
Independence. Before the Independence, the industrial jurisprudence existed in a rudimentary form.
The paramount concern of the Pre-independence industrial jurisprudence was the amelioration of
the working conditions of the workers at the factories. There was hardly any deal with social justice
to the working class. It was only after the commencement of our Constitution, that adequate
provisions for social justice to the workers were inserted. Before Independence, India was not only a
great agricultural country, but also a manufacturing country. But the British Government, as a
matter of their policies always tended to discourage the Indian industries. This led to widespread

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nationalism in India, which laid emphasis on the boycott of foreign goods. Further a non-cooperation
movement saw its birth called the swadeshi movement, which emphasized on the use of indigenous
goods and boycott of foreign goods. The aspect of industrialization in India was based on the
program of planning, which was accepted after thirties. It is important to take into consideration
that the plantation industry of Assam was the first to attract industrial legislation. The situation
there was that the employers exercised hard practices against the employees. The employees were
not allowed to leave the tea gardens. A number of Acts were passed from 1863 onward, but they
only protected the interests of the employers. But the Workmen’s Compensation Act, 1923 was a
landmark Act protecting the interests of the Employees.

Indian constitution and social justice.


Industrial Jurisprudence was not in a much developed form before the commencement of the
Constitution of India. Before Independence, the paramount concern of the Government was to
ameliorate the working conditions of factory workers. It was after the commencement of the
Constitution that the paramount concern of the Government shifted towards social justice for the
labourers, who constituted the bulk of the population.

The Indian Constitution enshrines the idea of social justice as one of the objectives of the State.
Some of those provisions are as follows:

1. The State shall strive to promote the welfare of the people by securing and protecting as
effectively as it may, a social order in which justice; social, economic and political, shall prevail.

2. The State shall, in particular, strive to minimise the inequalities in income, and endeavour to
eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also
amongst groups of people residing in different areas or engaged in different vocations.

3. The State shall, in particular, direct its policy towards securing -

a. That the citizens, men and women equally, have the right to an adequate means of livelihood;

b. That the ownership and control of material resources of the community are so distributed as best
to sub serve the common good;

c. That the operation of the economic system does not result in the concentration of wealth and
means of production to the common detriment;

d. That there is equal pay for equal work for both men and women;

e. That the health and strength of workers, men and women, and the tender age of children are not
abused and that citizens are not forced by economic necessity to enter avocations unsuited to their
age or strength;

f. That children are given opportunities and facilities to develop in a healthy manner and in
conditions of freedom and dignity and that childhood and youth are protected against exploitation
and against moral and material abandonment.

Some important labour enactments in India.


The salient features of the Central and State Labour Acts in force in the district are given hereunder:

1. The Indian Factories Act of 1948 provides for the health, safety and welfare of the workers.

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2. The Punjab Shops and Commercial Establishment Act, 1958, regulates the conditions of work and
terms of employment of workers engaged in shops, commercial establishments, theatres,
restaurants, etc.

3. The Punjab Maternity Benefit Act, 1943, provides for the grant of cash benefits to women workers
for specified periods before and after confinements.

4. The Employment of Children Act, 1938, prohibits the employment of young children below the
age of 15 years in certain risky and unhealthy occupations.

5. The payment of wages Act, 1936, regulates the timely payment of wages without any
unauthorized deductions by the employers.

6. The Minimum Wages Act, 1948, ensures the fixation and revision of minimum rates of wages in
respect of certain scheduled industries involving hard labour.

7. The Industrial Disputes Act, 1947, provides for the investigation, and settlement of industrial
disputes by mediation, conciliation, adjudication and arbitration. There is scope for payment of
compensation in cases of lay-off and retrenchment.

8. The Industrial Employment (Standing Orders) Act, 1946, requires employers in Industrial
establishments to define precisely the conditions of employment under them and make them known
to their workmen. These rules, once certified, are binding on the parties for a minimum period of six
months.

9. The Workmen’s Compensation Act, 1923, provides for compensation to injured workmen of
certain categories and in the case of fatal accidents to their dependants if the accidents arose out of
and in the course of their employment. It also provides for payment of compensation in the case of
certain occupational diseases.

10. The Indian Trade Unions Act, 1926, recognizes the right of workers to organise into trade unions,
when registered, have certain rights and obligations and function as autonomous bodies.

11. The Employees’ State Insurance Act, 1948, provides for sickness benefit, maternity benefit,
disablement benefit and medical benefit.

12. The Employees’ Provident Fund Act, 1952, seeks to make a provision for the future of industrial
worker after he retires or in case he is retrenched, or for his dependents in case of his early death.

13. The Punjab Industrial Housing Act, 1956, provides for the administration allotment, realization of
rent, etc., in connection with quarters constructed under the Subsidized Industrial Housing Scheme.

Recent trends in labour law.


The experience in India during the last 50 years has been that the Supreme Court of India, various
High Courts, Industrial Tribunals and Labour Courts have enriched the country with a variety of
precedents of labour demands by their sweat and toil and missionary research from almost a barren
and fallow field of labour jurisprudence. They have handed down to the world community
jurisprudence, as living as dynamic, as valid as sound, which has redeemed the lost faith of industrial
masses in law and justice. Their contribution to the development of labour law and redemption of
social values of law and justice, is unparalled in the world history of jurisprudence, far exceeding the
contribution made by Equity in England. Adjudication of industrial demands being a complicated
task, the Tribunals have to go into the merits of each issue which necessarily means examination,

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analysis and appreciation of the labour economics, the sociological approach and the relevant
technical aspects of every issue. The demands concerning labour problems have often been
subjected to expert studies and researches by high powered bodies of International Labour
Organization, Indian Labour Conference, Labour Investigation Committees, Wage Boards, Pay
Commissions and various Government bodies, etc. In fact, these Reports and Recommendations
have often been adopted by the Supreme Court, High Courts and Industrial Tribunals as guidelines.
According to Section 10 of the Industrial Disputes Act 1947, the appropriate government is
empowered to refer a dispute to the Tribunal. This power of the appropriate government is
independent of the fact whether conciliation proceedings have been held or not. However, in
practice, a dispute is referred to the Tribunal/ Labour Court for adjudication by the appropriate
government after considering the failure of conciliation report received from the conciliation officer.

Role of labour courts in settlement of industrial disputes.


Adjudication has dug deep roots in the field of labour. Though collective bargaining caters to long-
term peace and organised trade unions and established concerns prefer to bargain and amicably
settle labour demands, failure to settle amicably often makes adjudication the preferred trial of
strength. Except for a handful who resort to strikes and lockouts, exceptions which only prove the
general rule, labour has come to cultivate the habit of adjudication. This confidence in adjudication
has been inspired by the benefits earned by labour through this system. Employers in the country
have found adjudication beneficial to them in as much as it not only curbs the habit of labour to
direct action but also serves as a powerful check and control on the extravagances of the demands
and costs of labour. The State can hardly find a better substitute for effecting social and economic
justice through rule of law in the labour field. Industrial adjudication has, therefore, very much come
to stay in our country. The technique of industrial adjudication is a dynamic and revolutionary
process of transforming traditional jurisprudence — which has proved wholly ineffective and
impotent in protecting the poor industrial masses from social injustice and economic exploitation
(resulting from industrial revolution) — into a progressive and flexible legal institution of social
regeneration and economic justice. It has, to some extent, redeemed the infamy of individualistic
legal systems and demonstrated that with the injection of right doses of progressive social
philosophy, law and jurisprudence can become potential agents of social and economic progress.

Competence and Jurisdiction of Labour Courts/Industrial Tribunals


Under Section 7 of the Industrial Disputes Act 1947, a Labour Court constituted by the appropriate
government is competent to adjudicate and render awards on the matters mostly relating to rights,
such as:

1. Discharge or dismissal of workmen, including reinstatement of, or grant of relief to, workmen
wrongfully dismissed;

2. Withdrawal of any customary concession or privilege;

3. Illegality or otherwise of a strike or lockouts; and

4. All matters other than those specified in Schedule Ill.

Industrial tribunals.
Industrial Tribunals under Section 7A of the Industrial Disputes Act 1947 have also been constituted
to adjudicate upon the issues falling within Schedules II and III, i.e. rights disputes and interests
disputes.

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Under Sections 7,8 of the Industrial Disputes Act 1947, the Central Government may also constitute
a national Tribunal to adjudicate the disputes if it involves any question of national importance or it
is of such nature that industrial establishments situated in more than one State are likely to be
interested or affected by such disputes whether or not it is the appropriate government in relation
to that establishment. Labour courts or industrial tribunals are also competent to inquire into and
investigate industrial disputes referred to them and upon adjudication, render awards which are
binding on the parties. The Labour Courts and Industrial Tribunals also act as forum of appeal under
Section 11A in the matter of discharge, dismissal or termination of employment.

Conclusion.
Industrialisation creates a number of social and economic problems like employment of women and
children, minimum wages, trade unions, unsanitary living quarters and deplorable working
conditions in the factories, etc. Labour laws are, therefore, enacted to facilitate their solutions, as
ordinary civil laws are inadequate to meet them. The State has adopted a progressive policy, and is
keeping pace with the labour policy of the Government of India and the standard laid down by the
International Labour Organisation. This has produced a plethora of legislation and their
administration. These laws also deal with the regulation of industrial relations between the
management and the workers. Both the Legislature as well as the Judiciary in India have played their
due role in shaping the Labour Legislation in India.

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5. Explain the provisions of the Industrial Disputes Act, 1947 relating to award.

Award [Section 2(b)]


The expression 'Award' is a determination of -
• An industrial dispute, or
• A question related to an industrial dispute.
Award includes -
• A Final as well as an Interim determination, or
• An arbitration award made under Section 10-A (Voluntary reference of disputes to
arbitration.)
The awards are made by any Labour Court, Industrial Tribunal, National Industrial Tribunal or an
Arbitrator/ Arbitrators.

Interim Award:
The legislature has not defined the word interim award occurring in Section 2(b) of the
Industrial Disputes Act, 1947. The courts and the tribunals adopted the dictionary meaning of
the term 'interim' in determining the interim award.

For instance, in Thakur Yugal Kishor Sinha v. State of Bihar the High Court of Patna adopted the
meaning given in the Oxford Dictionary, a temporary or provisional arrangement, adopted in
the “meanwhile”. The Court accordingly held that 'manifestly, the word 'interim' in such a
context must mean provisional or temporary arrangements made in a matter of urgency and
subject to a final adjustment or complete determination of the dispute, for example, a payment
on account pending final settlement of the amount in the present case.

In this regard the following principles are noteworthy:


(1) An interim award is not the final determination of some of the points involved in an
industrial dispute. It is a provisional or temporary arrangement made in a matter of urgency
and subject to a final adjustment on the final determination of a dispute.
(2) Interim relief is granted in aid of the final relief to be granted. If final relief itself cannot be
granted no temporary relief of the same nature can be given. While awarding interim relief, the
final adjustment to be made at the time of the award must be kept in mind.

Limitation on power to make award.


The Court and Tribunal are to function within the limit imposed by the statute. The powers are
exercised not in an arbitrary or absolute fashion. The Labour Tribunals should confine themselves to
pleadings and issues and to ascertain the real disputes between the parties to narrow the area of
conflict and to see where the two sides differed.

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Res Judicata
Where an award in respect of an industrial dispute, has been given by a competent Tribunal,
adjudicating on the dispute between the parties, the principle of res judicata as provided in Section
11 of the Civil Procedure Code does not apply, but it can definitely be said that reagitation of the
same point is not in the interest of the industry and because the question has already been
adjudicated upon there is no bona fide dispute for adjudication.

Power of the High Court to interfere with award.


In Workmen C.S. W.F.Mysore v. Ind. Tribunal the award given by the Tribunal on the basis of
settlement arrived at between the management and one of the two rival groups of office-bearers of
a registered trade union representing the workmen was challenged under Article 226 before the
High Court. The office-bearers of the rival group though present when the settlement was filed and
evidence was recorded took no part in the proceedings before the Tribunal. It was held on the
particular facts and circumstances of the case that the High Court was justified in refusing to
interfere with the award, particularly in view of the fact that the award was beneficial to a
substantial body of workmen of the factory.

Power of Tribunal to grant interim relief.


Where the reference concerning several matters such as fixation of wage scales, classification, etc.,
was pending for a long time, the Tribunal has the power to grant interim relief to workmen without
prejudice to the right of the parties to have their full say at the time of passing of final award.

Section 15. Submission of an award.


Section 15 enjoins the labour court, tribunal or national tribunal to
1. Hold its proceedings expeditiously and
2. As soon as practicable on conclusion thereof, submit its award to appropriate government.

The non-submission would render the award inoperative. The provisions of the Section are
inadequate for several reasons:

First, a perusal of various reported decisions, however, reveals that despite the requirement of the
Act to submit the award as soon as it is practicable on the conclusion of the proceedings, the time
taken by the tribunal is quite long. Further, instances are not lacking where the tribunals have taken
over 3 years.

Second, Section 23 prohibits strikes and lockouts during the pendency proceedings before an
arbitrator, labour court, tribunal or national tribunals and 2 months after the conclusion of such
proceedings.

Since the parties cannot exercise legal strike or lockout during the pendency of proceedings before a
labour court, tribunal, national tribunal or an arbitrator, the need for the prescribed time limit within
which the adjudication/arbitration authorities may submit their award is significant.

Third, under Section 33, the management is debarred from exercising its prerogative during the
pendency of proceedings before a labour court, tribunal, national tribunal or arbitrator. This

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provision also requires that the time limit under section 15 should be certain.

Fourth, for industrial peace and harmony which is the avowed objective of the IDA 1947, it is essential
that disputes must be settled at an early date. Under the circumstances, it is suggested that Section
15 should be amended and the-time limit should be prescribed for the submission of the award.

Section 16. Form of report and award.


The report of a Board of Conciliation or Court of Inquiry, or the award of any Labour Court, Industrial
Tribunal or National Tribunal shall be in a writing.

The Board or Court may consist of more than one person. Therefore, the report of a Board or Court
must be signed by all the members.

Proviso to Section 16(1) says that any member of the Board or Court may record any minute of
dissent from a report or from any recommendation made therein. Even a dissenting member must
put his signature over the report. Unless every member signs over the report, it shall not be valid.

The award of the Labour Court, Industrial Tribunal and National Tribunal should be signed by
Presiding Officer.

Section 17, Publication of report and award


Section 17 (1) of the Industrial Dispute Act, 1947 which deals with publication of the award by
the appropriate government provides:
....... every arbitration award and every award of the labour court, tribunal or national
tribunal shall, within a period of thirty days from the date of its receipt by the
appropriate government, be published in such manner as the appropriate government
thinks fit.
The aforesaid provisions raise several issues:
(i) Whether the provisions of Section 17 are mandatory or directory?
(ii) What will be the effect of withholding the publication of the award?
(iii) Whether the publication of the award after the expiry of statutory period of 30 days
would make the award invalid or unenforceable?
(iv) Does the interim award need to be published?
(v) Whether the award will be taken to have been published on the date of notification of
the government or on the date on which such notification appeared in the gazette?

(i) Section 17 is couched in mandatory form making it obligatory on the Appropriate


Government to publish the award within thirty days.

The Judicial Response.


(ii) Withholding the publication of industrial award.
In Sirsilk ltd v . Government of Andhra Pradesh, the Supreme Court was faced with the
problem as to what would happen in a situation where the settlement was arrived at
between the parties to a dispute on which an award had been given by the industrial tribunal
but was not published. The Supreme Court solved this problem by directing the government
to withhold the publication of the award in view of the settlement.

(iii) Effect of Non-publication of the Industrial Award within the Prescribed period

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The Supreme Court' decision in Remington Rand of India . v The WorkJmen, throws light on this
question. In this case, the award was made by the industrial tribunal on October 1966. It was received
by the appropriate government on 14 October 1966. But it was published in the Kerala Gazette on
15 November 1966. On these facts, the appeal was referred against the award of industrial tribunal.
The appellant raised an objection, inter Alia, that the award was inoperative and unenforceable as it
was published after the expiry of the period fixed by Section 17 (1) of the Industrial Disputes Act,
1947. The Supreme Court, it appears, in an attempt to justify the delay in the publication of the
award overruled the objection. Speaking for the court, Justice Mitter observed:
Section 17(1) makes it obligatory on the government to publish the award. The limit of
time has been fixed as showing that the publication of the award ought not to be held
up. But the fixation of the period of 30 days mentioned therein does not mean that the
publication beyond that time will render the award invalid .....

The court accordingly held that the provision as to the time limit in section 17(1) was
merely directive and not mandatory.

(iv) Publication of Interim Award.


There is no provision in the Industrial Disputes Act, 1947, dealing specifically with the
publication of an interim award. As already stated, Section 17 deals with the publication of
the award and since the award has been defined to include an interim determination of any
industrial dispute or a question relating thereto by the tribunal, the question arises whether
the interim award should be published? This question has been the subject matter of
controversy before tribunals and courts.
In Allen Berry & Co. Ltd v . Their Workmen, the labour appellate tribunal was called upon to
decide the question whether interim awards are required to be published under the Industrial
Disputes Act 1947. The labour appellate tribunal answered the question in the negative. It
rationalized:

Section 15 of the Act required the tribunal to submit its award to the appropriate government on
the conclusion of the proceedings. The word 'proceedings' in this section, in our judgement, means
the whole proceedings that is to say, all that had been referred to the tribunal by the appropriate
government for adjudication. It is, therefore, in our judgement not obligatory on a tribunal to
submit an interim award to the appropriate government before the final award is made and if it
chooses not to submit it before that time a fortiori the question of publication of such an award by
the appropriate government does not arise.
It accordingly held that the interim award need not be published under section 17.

Date of Award.
The question came up for consideration of the Supreme Court in Lloyds Bank Ltd v. Lloyds Bank
Union Staff Association
In this case, the award was published under Section 17 of the Industrial Disputes Act, 1947, by the
appropriate government notification of the Ministry of Labour on 17 January i950, but the
notification appeared in the Gazette on 28 January 1950 The question, inter alia, for the
consideration of the Supreme Court was on which date the award will be taken to have been
published. Answering question, the Supreme Court held that the award must be taken to have been
published 17 January 1950 and not on 28 January 1950.

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Commencement of the Period. Section 17 A (4) of the Industrial Disputes Act, 1947, provides:

Subject to the provisions of Sub-section (1) and Sub-section (3) regarding the enforceability of an
award, the award shall come into operation with effect from such date as may be specified therein,
but where no date is specified, it shall come into operation on the date when the award becomes
enforceable under Sub-section (1), or Sub-section (3), as the case may be.

The aforesaid provisions indicate that


There is difference between 'enforceability' of award and its 'operation';
If for any reasons an award does not become 'enforceable', it can never come into 'operation'; and
That the date on which an award comes into operation may, or may not be the date on which it
becomes 'enforceable'.
A tribunal may direct the grant of the benefits of its award from a date:

A date anterior to the date on which the demand was first made (See Jhagrakhand Collieries (Pvt.)
Ltd v. Central Government Industrial Tribunal, (1960) 2 LLJ 71 (SC)).

A date On which the demand was first made. (Inder Singh & Sons Ltd v. Their Workmen, (1961) 2
LLJ 89 (SC). Sarua Shramik Sangh v. Indian Hume Pipe Co. Ltd, (1993) Lab, IC 8 0 (SC)).

A date Posterior to the date on which the demand was first made but anterior to the date of
reference. United Collieries Ltd v. Its Workmen, (~61) 2 LLJ 75 (SC)

A date On which the reference was made. (269Hindustan Times Ltd v. Their Workmen, (1%3) 1 LLJ
108 (SC))

A date Posterior to the date of refer nee but anterior to the date of the submission of the award.
(Raj Kamal Kalamandir (Pvt.) Ltd v. Indian Motion Picture Employees Union, (1963) 1 LLJ 318 (SC),
Wenger & Co. Ltd v. Their Workmen, (196~ 2 LLJ 403 (SC).

vi) A date On which the award is submitted

vii) A date Posterior to the date of submission of the award but anterior to the date on
which it becomes enforceable

(viii) A date On which the award becomes enforceable

(ix) A date Posterior to the date on which the award becomes enforceable

In a series of cases, the Supreme Court has emphasized that under section 17 A (4) the tribunal is
empowered to indicate the date an award Shall come into operation and that date can be any of the
dates mentioned above. Where, however, a tribunal without specifying the date on which an award
shall come into operation, directs grant of benefits from a specific date, the Supreme Court is of the
view that an award comes into operation from that date.

Finality and Enforceability of Award Section 17 A provides:


1) An award (including an arbitration award) shall become enforceable on the expiry of thirty
days from the date of its publication under Section 17:
Provided that:
(a) if the appropriate government is of opinion, in any case where the award has been given
by a labour court or tribunal in relation to an industrial dispute to which it is a party; or

(b) if the Central Government is of opinion, in any case where the award has been given by
a national tribunal,

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that it will be inexpedient on public grounds affecting national economy or social justice to give
effect to the whole or any part of the award, the appropriate government or as the case may be,
the Central Government may, by notification in the official gazette, declare that the award shall
not become enforceable on the expiry of the said period of thirty days.

(2) Where any declaration has been made in relation to an award under the proviso to Sub- section
(1), the appropriate government or the Central Government may, within ninety day from the
date of publication of the award under Section 17, make an order rejecting or modifying the
award and shall on the first available opportunity, lay the award together with a copy of the order
before the legislature of the state, if the order has been made by a state Government, or before
parliament, if the order has been made by the Central Government.

(3) Where any award as rejected or modified by an order made under Sub-section (2) is laid before
the legislature of a state or before Parliament, such award shall become enforceable on the expiry
of fifteen days from the date on which it is so laid and where no order under Sub-section (2) is
made in pursuance of a declaration under the proviso to Sub-section (I), the award shall become
enforceable on the expiry of the period of ninety days referred to in sub-section (2),

(4) Subject to the provisions of sub- section (1) and sub-section (3) regarding the enforceability of an
award, the award shall come into operation with effect from such date as may be specified
therein, but where no date is so specified, it hall come into operation on the date when the
award becomes enforceable under sub- section (1) or sub-section (3), as the case may be.

Section 18. Persons on whom settlements and awards are binding.


Section 18 of the Act enumerates persons on whom settlements and awards are binding. For this
purpose, settlements are classified in two categories,
namely-
(i) settlement arrived at otherwise than in the course of conciliation proceedings, i.e., without the
aid of statutory agency, and
(ii) settlement arrived at in the course of conciliation proceedings, i.e., with the aid of statutory
agency.

In the former case a settlement under Section 18(1) arrived at by agreement between the employer
and workmen otherwise than in the course of conciliation proceedings shall be binding on the
parties to the agreement. But any such settlement in order to be binding must be signed by the
parties thereto in the manner prescribed by rule and a copy of it must also be sent to the
Appropriate Government.

Section 18(2) which is made subject to the provisions of Section 18(3) provides that an arbitration
award which has become enforceable shall be binding on the parties to the agreement who referred
the dispute to the arbitration.
Sub-section (3) provides that-
(i) A settlement arrived at in the course of conciliation proceedings under this Act: or

(ii) An arbitration award in a case where a notification has been issued under sub-section (3-A)
of Section 10-A or

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(iii) an award of a Labour Court, Tribunal or. National Tribunal which has become enforceable
shall be binding on:

a) all parties to the industrial dispute,

(b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the
Board, Arbitrator, Labour Court, Tribunal or National Tribunal as the case may be, record the
opinion that they were so summoned without proper cause,

(c) where a party referred to is an employer, his heirs, successors or assigns in respect of the
establishment to which the dispute relates,

(d) where a party referred to in Clause (a) or Clause (b) is composed of workmen, all persons who
were employed in the establishment or part of the establishment, as the case may be, to which the
dispute relates on the date of the dispute and all persons who subsequently become employed in
that establishment or part thereof.

Section 19. Period of operation of settlements and awards.


Section 19 of the Act deals with the period of operation of settlement and awards.

Sub-sections (1) and (2) deal with commencement and period of operation of settlements arrived at
in the course of proceedings before a Conciliation Officer or Board.

Sub-sections (3) to (7) deal with the period of operation of award.

Period of operation of settlements


For the purpose of operation, settlements are classified in two categories, namely:
(i) Settlements in which the date of operation is fixed; and
(ii) Settlements in which no date of operation is fixed.

In the former case, the settlement shall come into operation on the date agreed upon by the parties
to the dispute.
In the latter case, it shall come into operation on the date on which the memorandum of the
settlement is signed by parties to the dispute.

Sub-section (2) says that the settlement shall be binding for such period as is agreed upon by the
parties. If no period is agreed upon it shall be binding for a period of six months from the date on
which the memorandum of settlement is signed by the parties to the dispute. The settlement shall
continue to be binding after expiry of the entire period as aforesaid and until the expiry of further
period of two months from the date on which a notice in writing of an intention to terminate the
settlement is given by one of the parties to the other party or parties to the settlement.

Period of operation of awards.


Section 19(3) provides that an award shall remain in operation for a period of one year from the date

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on which the award becomes enforceable under section 17-A provided that this period may be
reduced by the appropriate Government, which may fix the period of operation as it thinks fit. The
said period of one year may also be extended by the appropriate Government. Any such extension
must be made before the expiry of the period of operation. Extension shall be for a period of one
year at a time. But in no case the total period of operation of any award shall exceed three years
from the date on which it came into operation.

Sub-section (4) provides for those circumstances where there has been a material change in the
circumstances in which the award was made. Where the appropriate Government, whether of its
own motion or on the application of any party bound by the award, considers that after the award
was made, there has been material change in the circumstances on which the award was based, the
appropriate Government may again refer the award, or part of it. If the previous award was made by
a Labour Court a reference as aforesaid shall be made to Labour Court. If the previous award was
made by an Industrial or National Tribunal, a fresh reference shall also be made to Tribunal. The
reference shall be for decision whether the period of operation should be shortened because of the
change in the circumstances. The decision of the Labour Court or the Tribunal on such reference shall
be final.

Sub-section (5) provides that provisions of sub-section (3) dealing with the period of operation of
an award shall not apply to any award which by its nature, terms or other circumstances does not
impose, after it has been given effect to, any continuing obligation on the parties bound by the
award.

Sub-section (6) lays down that the award, notwithstanding the expiry of the period of operation
under sub-section (3), shall continue to be binding on the parties untill a period of two months has
elapsed from the date on which notice is given by any party bound by the award to the other party
or parties intimating its intention to terminate the award. The overriding effect on the sub-section is
that once an award is made, it shall continue to bind the parties so long as one of the parties does
not decide, not to be bound by the award. In such a case the party deciding not to be bound shall
give a notice to the party or parties of its intention to terminate the award and until after the expiry
of two months from the date of notice, all the parties shall be bound by the award.

Sub-section (7) provides that no notice given under sub-section (2) or sub-section (6) shall have effect
unless it is given by a party representing the majority of persons bound by the settlement or award,
as the case may be.

Enforcement of an award (Bharat Bank Ltd vs their employees, 1950)


An award may be enforced in the following ways:
(1) The aggrieved party may apply to the Appropriate Government for prosecuting the
defaulting party under Section 29 or Section 31 of this Act.
(2) Where any money is payable by the employer to a workman, the workman may move the
Appropriate Government for recovery of the money due to him under the award.
(3) The party in whose favour the award has been granted may file a suit and obtain a decree,
which shall be enforced by execution under the provisions of the Civil Procedure Code.

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6. Labour Policy in India


After independence it was largely felt that the labour policy must emphasise upon self-reliance on
the part of the workers. Since independence till 1954, the period when V.V. Girl was the Labour
Minister, all official pronouncements emphasised that labour should become self-reliant.

An equally forceful view had been to prefer reliance upon the Government. This cross-current of
approach to the labour policy gave place to a new approach known as "Tripartism". Thus 'Tripartism'
became the central theme in the so-called "Nanda-period" that began in 1957. During this period the
Government paid reliance on three party approach, namely the trade union representing the
workers, the employers, and the Government. In this kind of approach, the representatives do not
decide anything but their role is mainly advisory. They meet together, discuss the points in dispute
and strive to reach a consensus and if they agree they make recommendations. Out of the three, the
role of the Government is more important.

Annual Labour Conferences and the permanent standing Labour Comittees served as the chief
instrument of Tripartism. These conferences advocated, amongst many things; workers' participation
in management, workers' education, works committees, and minimum wage legislations.

At the sixteenth conference held in 1958 a momentous advancement was made by adopting a Code
of Discipline in industry. The Code pledged the parties to avoid strikes and lock-outs without notice,
and to eschew unilateral actions, and to rely on settlement of disputes by discussion by voluntary
arbitration or by adopting to such measures as the law may provide. It also pledged them to avoid
coercion and victimisation, to avoid partial strikes and lock-outs, and to follow grievance procedure.

Tripartism is an approach which lays stress on the identity of interests between labour and capital
i.e., they are the partners in the maintenance of production and the building up of the national
economy. The labour policy has proceeded on a realisation that the community as a whole, as well
as individual employers are under an obligation to protect the welfare of workers and to secure to
them their due share in the gains of economic development. This led to enacting of the Payment of
Bonus Act, 1965 which aimed at providing for the payment of bonus 0n the basis of profits or on the
basis of production or productivity.

The main postulates of labour policy may be summed up as follows:

(1) Recognition of the State as the custodian of the interests of the community, as the catalyst
of "change" and welfare programmes.
(2) Recognition of the right of workers to peaceful direct action if justice is denied to them.
(3) Encouragement to mutual settlement, collective bargaining and voluntary arbitration.
(4) Intervention by the State in favour of the weaker party to ensure fair treatment to all
concerned.
(5) Primacy to maintenance of industrial peace.
(6) Evolving partnership between the employer and employees in a constructive endeavour to
promote the satisfaction of the economic needs of the community in the best possible
manner.

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(7) Ensuring fair wage standards and provisions of social security.


(8) Co-operation for augmenting 'production' and increasing 'productivity' .
(9) Adequate enforcement of legislation.
(10) Enhancing the status of the worker in industry.
(11) Tripartite consultation.

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7. Labour Problems

Labour problems constituted a serious menace to the society, and needed a solution, if not to
eradicate then at least to mitigate them in the very beginning. Employers paid their sole attention to
the maintenance of machines and the improvement of the technical know-how to the utter neglect
of the human hands employed to man the machines because they were readily available and could
be easily replaced. Workers were illiterate and poor and therefore unconscious of their rights. The
socio-economic status of the workers was far below the status of their employers. As such they
could not exercise their free will in negotiating with the employers for employment. The employers
taking advantage of the poor condition of the workers dictated their own terms and conditions with
regard to wages, hours of work, leave, etc. The workers were left with no choice but to accept such
terms because service was the sole means of earning their livelihood.

Neither the Government nor the law courts took special notice of these problems because they laid
too much emphasis on the policy of non-interference and freedom of contract, Thus, with the lapse
of time the situation turned out to be so worse and the society became so much adversely affected
that the Government was compelled to take some action to remedy these problems.

Ultimately some philanthropic agencies like Servants of India Society, Social Service League and
some industrial social workers raised their voice against these problems. They were successful in
mobilising the public opinion in support of their view point. Workers also started to form their own
organisation to fight against exploitation at the hands of the industrialists. In the beginning the effort
of the workers was not very successful because of their weak bargaining power and lack of resources
on which they could rely for their livelihood in the absence of wages.

Some employers also realised the seriousness of the problem and the necessity of mitigating these
evils for they affected the production of the industry, they felt that investment on labour welfare
was a policy worth pursuing because a contended worker would produce better yields and would
increase the efficiency.

The Govemrnent too later on realised the gravity of the problem and could not remain a spectator
for the workers constituted a large section of the society. Moreover, the government had to
intervene to settle the disputes in the interest of national economy and the welfare of the society at
large. If some key industry is thrown out of gear, the whole system is paralysed. Frequent break
downs of even a part of the economic system tend to impoverish the community. The prevention of
industrial strife thus assumes an important role in national policy and the State, therefore, cannot
afford to remain indifferent to the problems leading to industrial conflict.

After independence the national government paid much attention to the improvement of the
conditions of labour in industry, for the prosperity of a country depends upon the development and
growth of industry. No industry can flourish unless there is industrial peace and co-operation.
Industrial peace is possible only with the co-operation of labour and capital. To ensure better co-
operation the wage earner who is a partner in the production should be allowed to have his due
share-of the profit for increased production. Therefore, we have to shape our economic policy in
such a manner as to give a labourer his due status by offering him reasonable working conditions
and due share in production. That means social justice and social security has to be restored to the
labourer. Our Constitution guarantees social justice to the people of India. Social justice means

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achievement of socio-economic objectives. Labour legislation is one of the most progressive and
dynamic instruments for achieving socio-economic progress. "There is no other branch of law which
embraces such a wide and effective role in social engineering and social action. It is here that the
industrial law distinguishes itself from other branches of law and awaits the development of wholly
different jurisprudence to explain and expound it".

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8. “Industry is an organised or occupied activity carried on with the cooperation


of employer and employee to meet its object”. Justify with aid of Bangalore
water supply vs Rajappa case.

In the Bangalore Water Supply case, a seven-judge bench was constituted especially to examine the
definition of “industry” and lay down the law on the subject. The Bench was presided over by Justice
V. R. Krishna Iyer who assumed the role of a crusader-legislator and drafted a new definition of the
term “industry”. Their ruling was a result of the various disputes arising in establishments that are
not manufacturing industries but belong to categories of hospitals, educational and research
institutions, Governmental departments, public utility services, professionals and clubs. The
definition was accordingly expanded to cover those establishments which involved an employer-
employee relationship, irrespective of the objectives of the organization in question.

2(j) Industry
"Industry" means any business, trade, undertaking, manufacture or calling of employers and includes
any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.

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

"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 part 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".

However, the concept that "industry is ordinarily something which employers create or undertake" is
gradually yielding place to the modem concept which regards industry as a joint venture undertaken
by employers, and workmen, an enterprise which belongs equally to both.

Further it is not necessary to view definition of industry under Section 2(j) in two parts. The definition
read as a whole denotes a collective enterprise in which employers and employees are associated. It
does not consist either by employers alone or by employees alone. An industry exists only when there
is relationship between employers and employees, the former engaged in business, trade,
undertaking, manufacture or calling of employers and the latter engaged in any calling, service,
employment, handicraft or industrial occupation or avocation. There must, therefore, be an
enterprise in which the employers follow their avocations as detailed in the definition and employ
workmen. Thus, a basic requirement of 'industry' is that the employers must be 'carrying on any
business, trade, undertaking, manufacture or calling of employers'. There is not much difficulty in
ascertaining the meaning of the words business, trade, manufacture, or calling of employers in order
to determine whether a particular activity carried on with the co-operation of employer and

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employees is an industry or not but the difficulties have cropped up in defining the word 'undertaking'.

"Undertaking" means anything undertaken, any business, work or project which one engages in or
attempts, or an enterprise. It is a term of very wide denotation. But all decisions of the Supreme Court
are agreed that an undertaking to be within the definition in Section 2(j) must be read subject to a
limitation, namely, that it must be analogous to trade or business. Some working principles have been
evolved by the Supreme Court in a number of decisions which furnish a guidance in determining what
are the attributes or characteristics which would indicate that an undertaking is analogous to trade or
business. The first of such principles was stated by Gajendragadkar, J. in Hospital Mazdoor Sabha case"
as follows:
"As a working principle it may be stated that an activity systematically or habitually undertaken for
the production or distribution of goods or for the rendering of material services to the community at
large or a part of such community with the help of employees is an undertaking. Such an activity
generally involves the co-operation of the employer and the employees; and its object is the
satisfaction of material human needs. It must be organised or arranged in a manner in which trade or
business is generally organised or arranged. It must not be casual, nor must it be for one's self nor for
pleasure. Thus the manner in which the activity in question is organised or arranged, the condition of
the co-operation between the employer and the employee necessary for its success and its object to
render material service to the community can be regarded as some of the features which are
distinctive of activities to which Section 2(j) applies."

In Bangalore Water Supply v. A. Rajappa a seven Judges' Bench of the Supreme Court exhaustively
considered the scope of industry and laid down the following tests which has practically reiterated
the test laid down in Hospital Mazdoor Sabha case :

Triple Test.
Where there is
(i) systematic activity,
(ii) organised by co-operation between employer and employee (the direct and substantial
element is chimerical),
(iii) for the production and/or distribution of goods and services calculated to satisfy human
wants and wishes, prima facie, there is an "industry" in that enterprise.

This is known as triple test.

The following points were also emphasised in this case:


(1) Industry does not include spiritual or religious services or services geared to celestial bliss,
(2) Absence of profit motive or gainful objective is irrelevant, be the venture in the public, joint, private
or other sectors.
(3) The true focus is functional and the decisive test is the nature of the activity with special emphasis
on the employer-employee relations.
(4) If the organisation is a trade or business it does not cease to be one because of philanthropy
animating the undertaking.

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Therefore, the consequences of the decision in this case are that professions, clubs, educational
institutions co-operatives, research institutes, charitable projects and other kindred adventures, if
they fulfil the triple test stated above cannot be exempted from the scope of Section 2(j) of the Act.

Dominant nature test


(a) Where a complex of activities, some of which qualify for exemption, others not, involves
employees on the total undertaking, some of whom are not 'workmen' as in the University of
Delhi Case or some departments are not productive of goods and services if isolated, even then,
the predominant nature of the services and the integrated nature of the departments as explained
in the Corporation of Nagpur, will be true test. The whole undertaking will be 'industry' although
those who are not 'workmen' by definition may not benefit by the status.

Exceptions.
1. Casual activities (because they are not systematic).
2. Small clubs, co – operatives, research labs, gurukuls which have an essentially non-employee
character.
3. Single door lawyer taking help from clerk (because there is no organized labour).
4. Selfless charitable activities carried on through volunteers e.g. free legal or medical service.
5. Sovereign functions – strictly understood, i.e., maintenance of law and order, legislative functions
and judicial function.

Cases overruled
The decisions of Supreme Court in Management of Safdarjung Hospital, Delhi v. Kuldip Singh, N.U.C.
Employees v. Industrial Tribunal, Madras Gymkhana Club Employees Union v. Management,
University of Delhi v. Ram Nath, Dhanrajgiri Hospital v. Workmen and such other rulings whose ratio
runs counter to the principles enunciated in Bangalore Water Supply v. A. Rajappa case have been
overruled.

Conclusion:
To sum up it can be said that the definition of “industry” for the purposes of the Industrial Disputes
Act was expanded to cover those establishments which involved an employer-employee relationship
including hospitals, educational and research institutions, Governmental departments, public utility
services, professionals and clubs, irrespective of the objectives of the organization in question.

Charitable Institutions
These fall into three categories –

(a) Those that yield profit, but the profits are not siphoned off for altruistic purposes;

(b) Those that make no profit but hire the service of employees as in any other business, but the
goods/ services which are the output, are made available at a low or no cost to the indigent poor;
and

(c) Those that are oriented on a humane mission fulfilled by men who work, not because they are
paid wages, but because they share the passion for the cause and derive job satisfaction.

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The first two categories are industries, but not the third, on the assumption that they all involve co-
operation between employers and employees.

Hospitals
In State of Bombay v. Hospital Mazdoor Sabha, the Supreme Court held the State is carrying on an
‘undertaking’ within Sec. 2(j) when it runs a group of hospitals for purpose of giving medical relief to
the citizens and for helping to impart medical education. The court observed as follows:

An activity systematically or habitually undertaken for the production or distribution of goods or for
the rendering of material services to the community at large or a part of such community with the
help of employees is an ‘undertaking.

It is the character of the activity in question which attracts the provisions of Sec. 2 (j), who conducts
the activity and whether it is conducted for profit or not, do not make a material difference.

Thus, activities that have no commercial implications, such as hospitals carried on with philanthropic
motives would be covered by the expression ‘undertaking’. The mere fact that Government runs
such activity is immaterial.

In Management of Safdarjung Hospital v. Kuldip Singh, it was held that a place of treatment of
patients run as a department of the government was not an industry because it was a part of the
functions of the government. Charitable hospitals run by Government or even private associations
cannot be included in the definition of industry because they have not embarked upon economic
activities analogous to trade or business. If hospitals, nursing home or a dispensary is run as a
business in a commercial way, there may be elements of industry.

In Dhanrajgiri Hospital v. Workmen, the main activity of the hospital was imparting of training in
nursing and the beds in the hospital were meant for their practical training. It was held not to be an
industry, as it was not carrying on any economic activity in the nature of trade or business.

In Bangalore Water Supply v A. Rajappa, the Supreme Court overruled Safdarjung Hospital and
Dhanrajgiri Hospital cases, and approved the law laid down in Hospital Mazdoor Sabha case. It was
held that hospital facilities are surely services and hence industries. The government departments
while undertaking welfare activities cannot be said to be engaged in discharging sovereign functions
and hence outside the ambit of Sec.2(j) of the Act.

Therefore, a charitable hospital run by a private trust, offering free services and employing a
permanent staff is an industry as there is a systematic activity, a co – operation between employer
and employees and rendering of services which satisfies human wants and wishes. Further, the
services of employees are hired as in any other business.

Legal Firm
In National Union of Commercial Employees v. M.R. Meher, it was held that a solicitor’s firm is not
an industry, although specifically considered, it is organized as an industrial concern. The court held
that a person following a liberal profession does not carry on his profession in any intelligible sense
with the active co-operation of his employees, and the principal/sole capital which he brings into his
profession is his special and peculiar intellectual and educational equipment. Subsidiary work which
is purely incidental type and which is intended to assist the solicitor in doing his job has no direct
relation to the professional service ultimately rendered by the solicitor. There is, no doubt, a kind of

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co-operation between the solicitor and his employees, but that co-operation has no direct or
immediate relation to the advice or service which the solicitor renders to his client.

However, this was overruled by Bangalore Water Supply case, wherein it was held that in view of the
infrastructure of the offices of professional persons, the contribution to the success of the institution
comes not merely from the professional or specialist but from all those whose excellence in their
respective spheres makes for total proficiency.

Thus functional cooperation between employer and employees is essential for the total quality of
service. But in the categories of such and allied professions when such co-operation is missing they
are not industries.

A legal consultant firm employing two law graduates’ stenographer and a peon is an industry.

Educational Institutions
In University of Delhi v. Ram Nath the respondent Mr. Ram Nath was employed as driver by
University College for women. Mr. Asgar Mashih was initially employed as driver by Delhi University
but was later on transferred to the University College for women in 1949. The University of Delhi
found that running the busses for transporting the girl students of the women's college has resulted
in loss. Therefore, it decided to discontinue that facility and consequently the services of the above
two drivers were terminated. The order of termination was challenged on the ground that the
drivers were workmen and the termination of their services amounted to retrenchment. They
demanded payment of retrenchment compensation under Section 25-F of the Act by filing petitions
before the Industrial Tribunal. The Tribunal decided the matter in favour of the drivers and hence
the University of Delhi challenged the validity of the award on the ground that activity carried on by
the University is not industry. It was held by the Supreme Court that the work of imparting education
is more a mission and a vocation than profession or trade or business and therefore University is not
an industry. But this case has been overruled by the Supreme Court in Bangalore Water Supply case
and in view of the triple test laid down in Bangalore Water Supply case even a University would be
an industry although such of its employees as are not workmen within the meaning of Section 2(s) of
the Act, may not get the desired benefits to which a workman in an industry may be entitled to.

In Brahmo Samaj Education Society v. West Bengal College Employees' Association/ the society
owned two colleges. A dispute arose between the society and non-teaching staff of the colleges. It
was pleaded that the society was purely an educational institution and not an industry because
there was no production of wealth with the co-operation of labour and capital as is necessary to
constitute an industry. The Calcutta High Court observed that our conception of industry has not
been static but has been changing with the passage of time. An undertaking which depends on the
intelligence or capacity of an individual does not become an industry simply because it has a large
establishment. There may be an educational institution to which pupils go because of the excellence
of the teachers; such institutions are not industry. On the other hand, there may be an institution
which is so organised that it is not dependent upon the intellectual skill of any individual, but is an
organisation where a number of individuals join together to render services which might even have a
profit motive. Many technical institutions are run on these lines. When again we find these
institutions also do business by manufacturing things or selling things and thereby making a profit
they certainly come under heading of "industry". These being the tests, it is clear that it will be a
question of evidence as to whether a particular institution can be said to be an industry or not.

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In Osmania University v. Industrial Tribunal Hyderabad/ a dispute having arisen between the
Osmania University and its employees, the High Court of Andhra Pradesh, after closely examining
the Constitution of the University, held the dispute not to be in connection with an industry. The
correct test, for ascertaining whether the particular dispute is between the capital and labour, is
whether they are engaged in co-operation, or whether the dispute has arisen in activities connected
directly with, or attendant upon, the production or distribution of wealth.

In Ahmedabad Textile Industry's Research Association v. State of Bombay, an association was formed
for founding a scientific research institute. The institute was to carry on research in connection with
the textile and other allied trades to increase efficiency. The Supreme Court held that "though the
association was established for the purpose of research, its main object was the benefit of the
members of the association, the association is organised, and arranged in the manner in which a
trade or business is generally organised; it postulates co-operation between employers and
employees; moreover the personnel who carry on the research have no right in the result of the
research. For these reasons the association was held to be "an industry".

But a society which is established with the object of catering to the intellectual as distinguished from
material needs of men by promoting general knowledge of the country by conducting research and
publishing various journals and books is not an industry. Even though it publishes books for sale in
market, when it has no press of its own the society cannot be termed even an 'undertaking' for
selling of its publication was only an ancillary activity and the employees were engaged in rendering
clerical assistance in this matter just as the employees of a solicitor firm help the solicitors in giving
advice and service.

University of Delhi v. Ram Nath has been overruled by the Supreme Court in Bangalore Water Supply
v. A. Rajappa the present position is that the: educational institutions including the university are an
industry in a limited sense. Now those employees of educational institutions who are covered by the
definition of workman under Section 2(s) of the Industrial Disputes Act, 1947 will be treated as
workmen of an industry.

It has been reaffirmed by the Punjab and Haryana high Court in Sumer Chand v. Labour Court,
Ambala and Another that university is an industry and carpenters employed in the university are
'workmen'. The labour Court has jurisdiction to decide the dispute relating to the termination of
such a person.

It has been held in Suresh Chandra Mathe v. Jiwaji University, Gwalior and others that a University is
an industry and a clerk of the University is a workman.

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9. Principles of Labour Legislation

Labour legislation in any country should be based on the principles of social justice, social equity,
international uniformity and national economy.
Social justice
Social justice implies two things. First equitable distribution of profits and other benefits of industry
between industry owner and workers. Secondly, providing protection to the workers against harmful
effects to their health, safety and morality.

In the beginning, the position of a worker was that of a daily wage-earner, which means he was paid
only for the days he actually worked. A workman was expected to accept all the hazards connected
with his work as incidental to his employment. Until the passing of Workmen's Compensation Act,
1923 no compensation was paid in case of an accident taking place in the course of employment. But
the Workmen's Compensation Act 1923 guarantees to workmen compensation for any injury caused
by an accident arising out of and in the course of employment. The Minimum Wages Act, the Factories
Act and the Payment of Wages Act are a few other legislations based on the principle of social justice.
These legislations fix the hours of work, make provision for payment of over-time, leave rules, safety,
health and welfare of labour in industry. Labour welfare in our country has a special significance for
our Constitution provides for the promotion of welfare of people, for humane conditions of work and
securing to all workers full employment of leisure and social and cultural opportunities. The word
'social justice' is neither defined in any of the labour legislations nor does it occur in any of them except
the Industrial Disputes Act, 1947.

The concept of social justice, according to Bhagwati, J., does not emanate from the fanciful notions of
any particular adjudication but must be founded on a more solid foundation. In the opinion of Justice
Gajendragadkar: "The concept of social and economic justice is a living concept of revolutionary
import, it gives sustenance to the rule of law and meaning and significance to the idea of welfare
State". The Indian Constitution enshrines the concept of social justice as one of the objectives of the
State. Article 38 of the Constitution provides that "the State shall strive to promote the welfare of the
people by securing and protecting as effectively as it may, social order in which justice, social,
economic and political, shall inform all the institutions of the national life". Article 39 ordains that it
shall be the duty of the State to apply certain principles of social justice in making laws.

Social justice is justice according to social interest.


So far as the application of the doctrine of social justice in the sphere of adjudication is concerned, it
is subordinate to the fundamental rights and law contained in the Constitution.
Secondly, it is also subservient to the statutory Industrial law.
Thirdly, social justice cannot be done in disregard of law laid down by the Supreme Court.

Social justice does not mean doing everything for the welfare of labour to the utter disregard of the
employer. The balance of social justice leans neither side. The labour policy of a country should, in the
national interest, prevail over the rival economic policies in cases of conflicts.
"Social justice" is designed to undo the injustice of unequal birth and opportunity, to make it possible
that wealth should be distributed as equally as possible and to provide that men shall have the

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material things of life should be guaranteed to each man. President Roosevelt has rightly said that
"there are some whose adverse circumstances made them unable to obtain the mere necessities of
existence without the aid of others. To these less fortunate men and women, aid must be given by
government not as a measure of charity but as social duty". This duty is to be performed by the society
through the State. Social Justice, therefore, is dealing equitably and fairly not between individuals
but between classes of-society; the rich and the poor.

The concept of social justice has become an integral part of industrial law. It is founded on the basic
idea of socio-economic equality and its aim is to assist the removal of socio-economic disparities and
inequalities. The constitution of India has also assumed social and economic justice to all its citizens.
Although a number of legislations have been passed with that end in view but still some more
important measures need to be taken. Provisions relating to fundamental rights and Directive
Principles of State Policy provide sufficient guarantee against exploitation. Social justice has thus been
made object of State policy and governmental action. Social Justice though not declined in our
Constitution, means attainment of the socio-economic objectives by removing existing evils and
enacting new legislation to achieve these objectives.

The concept of social justice is not narrow or limited to a particular branch of legislation or
adjudication although it is more prominent and conspicuous in industrial legislation and adjudication.
Its sweep is comprehensive and is founded on the basic ideal of socio-economic equality and it aims
at assisting the removal of socio-economic disparities and inequalities of birth and status and
endeavours to resolve the competing claims especially between employers and workers by finding a
just, fair and equitable solution to their human relation’s problems so that peace, harmony and co-
operation of the highest order prevails amongst them which may further the growth and progress of
nations.
Social justice is different from legal justice. The difference is not of objective but aim at dispensing
justice. The difference is due to two reasons:
(i) Social justice aims at doing justice between classes of society, and not between individual,
(ii) The method which it adopts is unorthodox compared to the methods of municipal law. Justice
dispensed according to the law of Master and Servant, based upon the principle of absolute
freedom of contract and the doctrine of laissez faire, is legal justice. Social justice is something
more than mere justice, it is a philosophy super-imposed upon the legal systems.

Social equity
Any legislation which is based on social justice prescribes a definite standard for adoption in future.
Such a standard is fixed after taking into account the past and present circumstances. Once a standard
is so fixed by legislation it remains in force until it is changed or modified by another legislation passed
in conformity with the legislative procedure. No discretion is given to change such law to the authority
administering such law. However, where it is felt that the law should be flexible and should be changed
as the circumstances and conditions change, the law empowers the Government to make such
changes. This is generally done by giving the Government rule making power under the provisions of
the Act. When power under the Act is given to the Government the rules may be modified to suit the
changed conditions. Such legislation is said to be based on social equity.

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Social Security
The mutual conflict between the employer and the employees over the question of adequacy of their
respective shares in social produce, constitutes the crux of the labour problem, of which collective
bargaining and industrial conflict are the two most important aspects. As industrialisation advances
the worker is increasingly alienated from his previous socio-cultural world and thus faces various
insecurities with regard to income and employment in addition to the natural ones (i.e., sickness,
maternity and old age) for which the new order does not have structural provision. This is how the
problem of social security arises and revolution has meant urbanisation. In ancient times if a person
was unable to work on a particular day, he was cared for by the village community or by the members
of his family. But now urbanisation has so deeply uprooted these values that in times of sickness,
unemployment, old age and other similar contingencies a worker has nothing to fall back upon. In
modem times social security is influencing both social and economic policy. Social security is the
security that the State furnishes against the risks which an individual of small means cannot, today,
stand up to by himself even in private combination with his fellows.

"Social security envisages that the members of a community shall be protected by collective action
against social risks causing undue hardship and privation to individuals whose private resources can
seldom be adequate to meet them. It covers through an appropriate organisation, certain risks to
which a person is exposed". "These risks are such that an individual of small means cannot effectively
provide for them by his own ability or foresight alone or even in private combination with his
colleagues".

The concept of social security is based on ideals of human dignity and social justice. The underlying
idea behind social security measures is that a citizen who has contributed or is likely to contribute to
his country's welfare should be given protection against certain hazards.

Social security means a guarantee provided by the State through its appropriate agencies, against
certain risks to which the members of the society may be exposed. Social assistance scheme provides
benefit for persons of small means granted as of right in amount sufficient to meet a minimum
standard of need and financed from taxation, and social insurance scheme provides benefits for
persons of small earnings granted as of right in amounts which combine the contributory effort of the
insured with subsidies from the employer and the State.

Social security measures are significant from two viewpoints:


First, they constitute an important step towards the goal of a welfare State.
Secondly, they enable workers to become more efficient and thus reduce wastage arising from
industrial disputes.
Lack of social security impedes production and prevents formation of a stable and efficient labour
force. Therefore, social security measures are not a burden but a wise investment which yields good
dividends.' According to the report of the National Commission on labour "social security has become
a fact of life and these measures have introduced an element of stability and protection in the midst
of the stresses and strains of modem life. It is a major aspect of public policy today and the extent of
its prevalence is a measure of the progress made by a country towards the idea of a welfare State. It
is an incentive for development, substituting as it does hope for fear in the process improving the

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efficiency of the working force".


Freedom from want and security against economic fear is the minimum that has to be secured to its
people in the country. Its importance has been expressed by the Universal Declaration of Human
Rights in the following words:
"Everyone as a member of the society has the right to social security and is entitled to realisation
through national efforts and international co-operation and in accordance with the organisation and
resources of each state of economic, social and cultural rights indispensable for his dignity and the
free development of his personality".

"Everyone has the right to a standard of living adequate for the health and well-being of himself and
of his family, including food, clothing, housing and medical care and necessary social services and the
right to security in the event of unemployment, sickness, disability, widowhood, old age, or other lack
of livelihood, or circumstances beyond his control.
The role of International Labour Organisation in certain standards of social insurance has been
significant. The Social Security (Minimum Standards) Convention adopted in 1952 embodies
universally accepted basic principles and common standards of social security. The application of
these principles has guarded developments of this field throughout the world.

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10. Strike and Lockout

Section: 2(q) IDA 1947

Meaning
Indian Iron and Steel Co. Ltd. v. Its Workmen, (1967) I LU 381 (pat).
Strike means the stoppage of work by a body of workmen acting in concert with a view to bring
pressure upon the employer to concede to their demands during an industrial dispute. The workmen
must be employed in any industry. Mere cessation of work does not come within the purview of strike
unless it can be shown that such cessation of work was a concerted action for the enforcement of an
industrial demand.

Thus a Strike means:


(1) Cessation of work by a body of persons employed in any industry acting in combination; or
(2) A concerted refusal of any number of persons who are or have been employed in any industry to
continue to work or to accept employment; or
(3) A refusal under a common understanding of any number of persons who are or have been
employed in industry to continue to work or to accept employment.

Duration of cessation of work


Patiala Cement Co. Ltd. v. Certain Workers, (1955) Il LU 57 (LAT).
As pointed out in this clause a cessation of work or refusal to work is an essential element of strike.
There can be no strike if there is no cessation of work. However, the duration of cessation of work is
immaterial. Cessation of work even for half an hour amounts to a strike.

Absence from work


Ram Sarup and another v. Rex, AIR 1949 All 218.
What is required, therefore, is actual cessation of work for howsoever short a period it may be. Mere
absence from work is not enough but there must be concerted refusal to work, to constitute a strike.'

Standard Vacuum Oil Co., Madras v. Gunaseelam, M.G., (1954) Il LU 1956


The workers of a company wanted to celebrate "May Day". They requested the employer of company
to declare that day a holiday. They were also ready to compensate the loss of work by working on a
Sunday. On the Company's failure to declare 'May Day' as a holiday the workers enbloc applied for
leave. It was held that there was no "cessation of work" or concerted refusal to work and the action
of the employees to apply for casual leave enbloc did not amount to strike.

Kinds of Strike
There are mainly three kinds of strike, namely,
(1) General strike;
(2) Stay-in-strike; and
(3) Go slow.

(1) General Strike


A General strike is one, where the workmen join together for a common cause and stay away from

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work, depriving the employer of labour needed to run the factory.


Token strike is also a kind of general strike. Token strike is for a day or a few hours or for a short
duration because its main object is to draw the attention of the employer by demonstrating the
solidarity and co-operation of the employees.
General strike is for a longer period. It is generally resorted to when employees fail to achieve their
object by other means including a token strike which generally precedes a general strike.

(2) Stay-in-Strike
A 'Stay-in-Strike' is also known as 'tools-down-strike' or 'pens-down-strike'. It is that form of strike
where the workmen report to their duties, occupy the premises but do not work. The employer is thus
prevented from employing other labour to carry on his business.

Punjab National Bank Ltd. v. Their Workmen, AIR 1960 SC 160.


The presence of excited labour in the factory is a great threat and danger. The Supreme Court has held
that refusal under common understanding to continue to work is a strike and if in pursuance of such
common understanding the employees entered the premises of the Bank and refused to take their
pens in their hands that would no doubt be a strike under Section 2(q).

Criminal Trespass
Mysore Machinery Manufacturers v. Stale, AIR 1966 Mys 51.
Where dismissed workmen were staying on premises and refused to leave them it was held not to
amount to stay in strike but an offence of criminal trespass.

(3) Go-Slow
Sasa Musa Sugar Works' (Private) Ltd. v. Shobrati Khan and others, AIR 1959 SC 923.
In a "go-slow" strike, the workmen do not stay away from work, they do come to their work and work
also, but with a slow speed in order to lower down the production and thereby cause loss to the
employer. Go-slow strike is not a "strike" within the meaning of the term in the Act, but is serious
misconduct which is insidious in its nature and cannot be countenanced.

In addition to these three forms of strikes which are frequently resorted to by the industrial workers,
a few more may be cited although some of them are not strike within the meaning of section 2(q).

(i) Sympathetic Strike


A sympathetic strike is resorted to in sympathy of other striking workmen. Its aim is to encourage or
to extend moral support to or indirectly to aid the striking workmen. The sympathisers resorting to
such strike have no demand or grievance of their own.

It was held in Kambalingam v. Indian Metallurgical Corporation, Madras that when the workers in
concert absent themselves out of sympathy to some cause wholly unrelated to their employment or
even in regard to condition of employment of other workers in service under other managements,
such absence could not be held to be strike as the essential element of the intention to use it against
the management is absent.

The management would, therefore, be entitled to take disciplinary proceedings against the workmen

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for their absence on the ground of breach of condition of service.

(ii) Hunger Strike


In hunger strikes a group of workmen resort to fasting on or, near the place of work or the residence
of the employer with a view to coerce the employer to accept their demands.

In Piparaich Sugar Mills Ltd. v. Their Workmen, certain employees who held key positions in the Mill
resorted to hunger strike at the residence of the Managing Director, with the result that even those
workmen who reported to their duties could not be given work. It was held that the concerted action
of the workmen who went on hunger strike amounted to strike within the meaning of this sub-section.

(iii) Work to rule


The employees in case of "work to rule" strictly adhere to the rules while performing their duties which
ordinarily they do not observe. Thus strict observance of rules results in slowing down the tempo of
work, causes inconvenience to the public and embarrassment to the employer. It is no strike because
there is no stoppage of work at all.

Lockout:
Lock-out
"Lock-out" means the closing of a place of employment, or the suspension of work, or the refusal by
an employer to continue to employ any number of persons employed by him.

Strike is a weapon in the hands of the labour to force the management to accept their demands.
Similarly, lock-out is a weapon in the hands of the management to coerce the labour to come down in
their demands relating to the conditions of employment. Lock-out is the keeping of labour away from
work by an employer with a view to resist their claim. There are four ingredients of a lock-out:
(i) Temporary closing of a place of employment by the employer, or
(ii) Suspension of work by the employer, or
(iii) Refusal by an employer to continue to employ any number of persons employed by him;
(2) The above-mentioned acts of the employer should be motivated by coercion;
(3) An industry as defined in the Act; and
(4) a dispute in such industry.

Supreme Court
Kairbetta Estate Kotagiri v. Raja ManicbJm, AIR 1963 SC 893.
Lock-out has been described by the Supreme Court as the antithesis of strike.

Madras High Court


Shri Ramdiandra Spinlling Mills . Stale of Madras, AIR 1956 Mad 241.
In view of Madras High Court, whatever be the circumstances in which the employer may find
himself placed and whatever be the strength of the agencies which forced on him the step and
however impotent he may be to avoid the result, if an employer closes the place of employment or
suspends work on his premises, a lock-out would come into existence. It was further held that in
the constant tussle of employees and employer the strike is the weapon of the employees. Lock-
out is the corresponding weapon in the armoury of the employer. If the employer shuts down his

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place of business as a means of reprisal or as an instrument of coercion or as a mode of exerting


pressure on the employees or generally speaking when his act is what may be called an act of
belligerency, there would be a lock-out.

Obligation to work.
Workmen of Itakhoolie Tea Estate v. The Management, 1952 LAC 343.
In case of lock-out the workmen are asked by the employer to keep away from work, and, therefore,
they are not under any obligation to present themselves for work.

Payment Of Wages
Indian paper Pulp Co. Ltd. v. Indian Paper Pulp Workers' Union, AIR 1949 J
The question whether the lock-out by the employer is justified would be an industrial dispute under
the Act, and therefore, the question of the payment of wages during the period of a lock-out would
also be an industrial dispute.

Difference between lock-out and lay-off


(l) Lock-out is an act on the part of the employer taken to coerce or pressurise the labour;
lay-off is for trade reasons beyond the control of the employer, i.e., it is not an intentional act.
Lock-out is due to an industrial dispute and continues during the period of dispute;
lay-off is not concerned with a dispute with the workmen.

Difference between lock-out and retrenchment


(l) Lock-out is temporary, retrenchment is permanent.
(2) In lock-out the relationship of employer and employee is only suspended, it does not come to an
end; in retrenchment such a relationship is severed at the instance of the employer.
(3) Lock-out is with a motive to coerce the workmen; the intention of retrenchment is to dispense
with surplus labour.
(4) Lock-out is due to and during an industrial dispute, whereas in case of retrenchment, there is no
such dispute.

Difference between lock-out and closure


(l) Lock-out is temporary; closure is permanent.
(2) Lock-out is a weapon of coercion in the hands of the employer; closure is generally for trade
reasons.
(3) Lock-out is during an industrial dispute; while in case of closure there need not be any dispute.
Above-mentioned differences may provide some clue as to difference between lock-out and closure
but these are not precise differences. In order to determine whether the employer has imposed lock-
out or closed the establishment it is not necessary that the closure has to be irrevocable, final and
permanent and the lockout temporary or for a period. True test to be applied on the basis of evidence
is whether the closure was a device or pretence to terminate services of the workmen or whether it
was bona fide and for reasons beyond the control of the employer. Duration of closure may be
significant fact to determine the intention and bona fides of the employer at the time of closure but
is not decisive of the matter.'

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11. Explain the term ‘workman’.

Section 2(s) of the Industrial Disputes Act, 1947, defines 'workman' to mean:

Any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled,
technical, operational, clerical or supervisory work for hire or reward, whether the terms of
employment be express or implied, and for the purposes of any proceeding under this Act in relation
to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched
in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or
retrenchment has led to that dispute, but does not include any such person –

(i) who is subject to the Air Force Ad, 1950, or the Army Act, 1950, or the Navy Act, 1957; or

(ii) who is employed in the police service or as an officer or other employee of a prison; or

(iii) who is employed mainly in a managerial or administrative capacity; or


(iv) who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per
mensem or exercises, either by the nature of the duties attached to the office or by reason of the
powers vested in him, functions mainly of a managerial nature. Industrial Disputes (Amendment) Act,
2010 has raised the wage limit to Rs. 10,000

Broadly speaking, the definition requires that 'workman' must be:

(a) person,
(b) employed,
(c) in any industry,
(d) to do the specified type of work,
(e) for hire or reward, but excludes certain specified categories of persons.

The scope of the aforesaid expression has been the subject-matter of judicial interpretation in a series
of decided cases. Let us turn to examine the scope of the aforesaid expressions.

A. Person
'Workman' includes:
Any person employed in an industry,
An Apprentice,
Any person who has been dismissed, discharged or retrenched in connection with,
or as a consequence of, that dispute,
or whose dismissal, discharge or retrenchment led to that dispute

B. Employed

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The word' employed', however, is susceptible to two meanings:


(a) in a broader sense, it synonym of 'engaged' or 'occupied' and
(b) in a restricted sense, it involves the connotation of the master-servant relationship.

A question, therefore, arises as to which of these meanings provides the key to the interpretation of
the phrase 'person employed in industry '. The Supreme Court in Dharangadhra Chemicals Works Ltd
v. State of Saurashtra however, interpreted the term 'workman' in the restricted sense.

PETITIONER:
DHARANGADHARA CHEMICAL WORKS LTD.

VS.

RESPONDENT:
STATE OF SAURASHTRA.

Act:
Industrial Dispute Act 1947, Section 2(s)

Case:
The appellants were lessees holding a license for the manufacture of salt on the demised lands. The
salt was manufactured by a class of professional labourers known as agarias from rain water that got
mixed up with saline matter in the soil. The work was seasonal in nature and commenced in October
after the rains and continued till June. Thereafter the agarias left for their own villages for cultivation
work. The demised lands were divided into plots called Pattas and allotted to the a-arias with a sum
of Rs.400/- for each Patta to meet the initial expenses. Generally, the same patta was allotted to the
same aigaria every year and if a patta was extensive in area, it was allotted to two agarias working in
partnership. After the manufacture of salt, the agayias were paid at the rate of 5 or 6 pies per maund.
At the end of each season the accounts were settled and the agarias paid the balance due to them.
The agarias who worked themselves with the members of their families were free to engage extra
labour on their own account and the appellants had no concern therewith. No hours of work were
prescribed, no muster rolls maintained, nor were working hours controlled by the appellants. There
were no rules as regards leave or holidays and the agarias were free to go out of the factory after
making arrangements for the manufacture of salt.

Question
The question for decision was whether in such circumstances the agarias could be held to be workmen
as defined by S. 2(s) Of the Industrial Disputes Act of 1947, as found by the Industrial Tribunal and
agreed with by the High Court or they were independent contractors.

Ruling:
Held, that the finding of the Industrial Tribunal that the agarias were workmen within the meaning of
S. 2(S) of the Industrial Disputes Act of 1947 was correct and the reference was competent.

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Discussion:
The approach, is to consider whether, having regard to the nature of the work, there was due control
and supervision of the employer.
A person could be a workman even though he did piece-work and was paid not per day but by the job
or employed his own labour and paid for it.
The broad distinction between a workman and an independent contractor was that while the former
would be bound by agreement to work personally and would so work the latter was to get the work
done by others. A workman would not cease to be so even though he got other persons to work with
him and paid and controlled them.

Conclusion:
As in the instant case the agarias, who were professional labourers and personally worked with the
members of their families in manufacturing the salt, were workmen within the meaning of the Act,
the fact that they were free to engage others assist them and paid for them, could not affect their
status as workmen.

A summary of Court cases:


1. A person appointed as head clerk, with no evidence that he was doing managerial or
supervisory work is a workman.
2. A driver of an area manager appointed by the manager using his personal allowances given
by the bank is not a workman.
3. A part time workman is a workman if he works under the control and supervision of an
employer
4. Designation alone is not important to determine whether a person is working in a supervisory
capacity or as a workman. The test to decide whether an employee is a workman is to take
into account his basic or primary duties and the dominant purpose of his employment. An
incidental performance of supervisory duty will not make the character of employment
supervisory.
5. A clerk who has been given the assistance of a peon cannot be said to be working in a
supervisory capacity.

Nature of work:
In order to be a 'workman', a person must be employed in an industry to do any
(i) skilled and unskilled manual work;
(ii) supervisory work;
(iii) technical work; and
(iv) clerical work.

Those who though 'employed in an industry' are not engaged in the aforesaid of work are beyond
the scope of 'workman'.
Essentially, the emphasis is on the nature work done by an employee, the degree of his
responsibility.
The nature of industry and the organizational set up of a particular unit.
However, merely because anyone of aforesaid types of work done by a person is incidental to and

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not the main duty which a person is doing and if the main duty is not covered in anyone of the four
specified nature of the work, such a person would not be a 'workman’.

1. Manual Work.
Manual work under Section 2(s) refers to work done by physical effort as distinguished from mental
or intellectual effort. The work may be done with hands or with any other part of the body.
Accordingly, jamadar of watch and ward staff, persons handling pieces of cloth, measuring them
and cutting into pieces according to the requirements of a customer have been held to be persons
doing 'manual 'Work' under Section 2(s).

On the contrary work of an artiste, chemical analyst in an advertising concern, chemist mainly
carrying out chemical analysis in a sugar mill, doctor and his compounder and others in charge of
watch and ward and fire fighting department of a sugar mill (whose primary duty was to supervise
the duty of watchmen and jamadars and to look after the security of the factory have not been held
to be persons doing 'manual Work' under Section 2(s).

2. Skilled Or unskilled.
The scope of the expression 'any skilled or unskilled manual, supervisory, technical or clerical work'
has been the subject-matter of controversy.
In S K Verma v. Mahesh Chandra, a dispute arose whether a development officer of a corporation is
a 'workman'. The tribunal held that the development officer was not a 'workman' and therefore,
the reference was incompetent. On dismissal of the writ petition, the petitioner appealed to the
Supreme Court. The court examined the scope of the expression 'any skilled or unskilled workman'
and held that the term 'workmen' takes into account the entire labour force excepting managerial
work. The court then examined the nature of the duty of the development officer and came to the
conclusion that he was not engaged in any administrative or managerial work. The Court
accordingly held that the development officer was a 'workman' under the Act.

Ejusdem Generis
By the rule of ejusdem generis the Supreme Court excluded Sales representatives from the
definition of 'workman'

Supervisory Capacity
Tests for Determination of Supervisory Capacity
The Bombay High Court in Union Carbide (India) Ltd v. D Samuel and others summarized the tests
laid down by the Supreme Court in various decisions as follows:
1. Designation is not material but what is important is the nature of work;
Find out the dominant purpose of employment and not any additional duties the employee
may be performing;
3. Can he bind the company/ employer to some kind of decisions on behalf of the company /
employer; -
4. Has the employee the power to direct or oversee the work of his subordinates;
5. Does he have the power to sanction leave or recommend it; and
6. Does he have he the power to appoint, terminate or take disciplinary action against workmen.

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Technical Work.
The word 'technical' was inserted in Section 2(s) by amending Act 36 of 1956. Broadly speaking, a
work which depends upon the special training or scientific or technical knowledge of a person,
constitutes technical work.

In Marugalli Estate v. Industrial Tribunal, Madras, a person was employed as a medical officer for a
plantation estate on a monthly salary exceeding Rs.500. His duties were:
(i) management and running of a central hospital staff;
(ii) supervision of work of the hospital staff:
(iii) supervision of dispensaries;
(iv) inspection of lines and quarters;
(v) malaria control work; and
(vi) supervision of creches.

On these facts, the Court concluded that the main function for which he was appointed may not
occupy as much time as the medical attendance on patients. All these show that it is a technical
employment for a particular purpose, because of the particular qualifications and should not be
lost sight of in determining the character of employment.

Test:
The Court also laid down a test to determine whether work done by any person is technical or
supervisory:
The test to be applied to my mind, to cases of technical employment such as in this case, should be
the purpose for which the employment is made, irrespective of whether the performance of the
duties mayor may not occupy the entire time of the employee. That is because the employment is
made on the basis of the particular level of professional efficiency and technical qualifications. If an
employee is found suitable for supervisory work, because of those reasons, it cannot be said that
the functions are mainly those of a medical attendant, as on account of his professional
qualification, he happened to be engaged in that capacity as well. The Court, therefore, opined that
the employee concerned was not at all entrusted with supervisory work.

Clerical Work.
In general connotation, 'a clerk is one employed as writer, copyist, account keeper or correspondent
in the office. Clerical work 'implies a stereotyped work, without the power of control or dignity or
creativeness.

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In Anameinuger Development Corporation Ltd v. Second Industrial Tribunal, the management


employed the appellant as a typist-cum-clerk. Thereafter, he was appointed an officer to make
purchases, attend to sales tax authorities and transport. On these facts, a question arose whether
he was a 'workman' under section 2(s) of the Act. The division bench of the Calcutta High Court
answered the question in the affirmative and observed that mere designation would not govern the
nature of the work. The Court also held that he was receiving low emoluments and was not an
officer, therefore, he fell within the category of 'workman' under Section 2(s) of the Act.

Hire and Reward


The expression 'for hire or reward' which is frequently used to denote contractual relationship has
been used in Section 2(s). Only those persons are 'workmen' who are employed for 'hire or reward'.
The expression 'hire and reward' is wider than 'wages'. Legislature was, however, alive of this situation
and, therefore, preferred to adopt the former expression rather than the latter to include those who
are not technically getting 'wages'. There is, however, a difference between 'hire and reward'. While
the former refers to payment or receipt of compensation, as distinguished from a gratuitous or non-
remunerative service, the latter implies something given in return for good or evil done or received
and does not necessarily mean money or a thing in itself of pecuniary value.

E. Persons Excluded
The act is insufficient as it does not include any person:
Who is employed as an officer or member of the Railway Protection Force constituted under
Section 3 of the Railway Protection Force Act, 1957 or the Border Security Force constituted
under Section 4 of the Border Security Force Act,1968 or the Central Industrial Security Force
constituted under Section 3 of the Central industrial Security Force Act, 1968.

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12. Explain ‘Industrial Dispute’. When does an individual dispute become an


Industrial Dispute?

Individual Dispute:
Is a dispute between an individual workman and his employer an 'industrial dispute' under Section
2 (k) of IDA? This question has evoked considerable conflict of opinion. Prior to the Supreme Court
decision in Central Provinces Transport Services v. Raghunath Gopal Patwardhan disclosed three
different views as to the meaning of the expression lndustrial dispute.
They are
(i) A dispute between an employer and a single workman cannot be an 'industrial dispute,
(ii) It can be an industrial dispute and
(iii) It cannot per se be an industrial dispute but may become one if taken up by a trade union or
a number of workmen.

In Central Province Transport Services Ltd v. Raghunath Gopal Patwardhan, the Court, after
referring to the divergent opinions expressed by tribunals and courts as to its applicability in the
case of a dispute between an employer and a single workman was in favour view number 3.

In Workmen of Indian Express Ltd v Management of Indian Express Ltd. a question arose whether
the cause of two workmen in a particular establishment in an industry could be sponsored by Delhi
Union of Working Journalists, which was not a union of workmen of the establishment but a union
in a similar or allied trade. Dealing with the contention, the Supreme Court observed:

... where the workmen of an establishment have no union of their own and some or all of them
have joined a union of another establishment belonging to the same industry, if such a union takes
up the cause of the workmen working in an establishment which has no union of its own, the
dispute would become an industrial one if such a union can claim a representative character in a
way that its support would make the dispute an industrial dispute.

The aforesaid decisions indicate that an individual dispute per se is not an industrial dispute unless
it is espoused by:
(I) trade union or
(ii) appreciable number of workmen. It is, therefore, necessary to examine the aforesaid
requirement in detail.

1. Requirement of Appreciable Number:


It has been seen that courts insist that in order to convert an individual dispute into industrial
dispute, the dispute must be espoused by 'appreciable number' either of the entire labour force
in the establishment or at least in particular section thereof to which the dispute relates. But
courts at the same time have admitted that the expression 'appreciable number' does not
necessarily mean majority of workmen in the establishment or, indeed, even in the section in
which the aggrieved workman was employed. But then, they have also declined to categorically
delineate the limits of that illusive requirement. Thus, the task of defining the expression has been
left for case to case determination.

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The following tests have been applied by the Court in determining as to when an individual dispute
would be converted into an 'industrial dispute'.

(a) If the cause of aggrieved workmen is taken up by an appreciable number of workmen or the union
of workmen (either registered or not or whether recognized or unrecognized or whether
majority or minority union) or in the absence of any union of workmen by union of similar or
allied trade and there is a concerted demand by the workmen for redress.

(b) If the workmen espousing it have a community of interest and are directly or substantially
interested in the employment, non-employment, terms of employment or condition of labour of the
concerned workman/workmen.

(c) If such an interest on the part of workman or substantial number of workmen exists on the date
of reference and need not necessarily exist on the date on which the cause occurs.

(d) A dispute would not cease to be an 'industrial dispute' on subsequent support or withdrawal of a
cause of individual dispute previously espoused by a workmen or union.

The net effect of the aforesaid decisions is that an individual worker, unsupported by 'appreciable
number' of workmen or the union, has no remedy under the Industrial Dispute Act, 1947,
particularly when no dispute is pending before authorities under the Industrial Disputes Act, 1947.

Legislative Response: Insertion Of Section 2A


It has been seen that before the introduction of Section 2A as a result of judicial legislation, an
individual workman who was discharged, dismissed, retrenched or whose service was otherwise
terminated or who had been transferred, suspended or was subject to any other punishment, had no
remedy under the Industrial Disputes Act, unless his case was sponsored by his fellow workmen or by
a trade union. In such a situation, he had been left with no alternative but to approach the civil court
and involve himself in lengthy and expensive civil remedy. Section 2A of the Industrial Disputes
(Amendment) Act, 1965 attempts to mitigate some of the hardships caused as a result of judicial
pronouncements. Section 2A came into force on 1 December 1965.

Section 2A provides: where an employer discharges, dismisses, retrenches or otherwise


terminates the services of an individual workman, any dispute or difference between an
individual workman and his employer connected with, or arising .out of such discharge,
dismissal, retrenchment or termination shall be deemed to be an "industrial dispute'
notwithstanding that no other workman nor any union of workmen is a party to the dispute.

The net effect of Section 2A is that by legislative action, such a dispute is deemed to be an industrial
dispute even where it is not espoused by a trade union or appreciable number of workmen. Thus,
the result of insertion of Section 2A was that, what was not an 'industrial dispute' as per the
interpretation of the Supreme Court, would be deemed to be an 'industrial dispute'. But there is a
difference between an individual dispute which is deemed to be an industrial dispute under Section
2A of the Industrial Disputes 1947 on one hand and an industrial dispute espoused by the union in

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terms of Section of the said 1947 Act. An individual dispute which is deemed to be an industrial
dispute under Section 2A concerns discharge, dismissal, retrenchment or termination whereas an
industrial dispute under Section 2(k) covers a wider field.

Section 2A does not cover every type of dispute between an individual working and his employer.
It applies only to disputes relating to discharge, dismissal, retrenchment or termination of service
of an individual workman. It does not cover other kinds of disputes such as bonus, wages, leave
facilities, etc. and does not apply in case of dispute arising from the transfer or promotion or the
refusal or failure to promote the employee or any punishment (excluding dismissal, discharge
retrenchment or other termination of service) 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. Thus, in cases not
covered by Section 2A, the principle laid down by the Supreme Court as to when individual dispute
becomes 'industrial dispute' is still applicable and thereby causes hardship to the individual
workman. This is not a very happy situation.

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13. Write a Note on Settlement

The definition of the term "settlement" as given in Section 2(p) of the Act may be analysed into
the following ingredients:
(1) It is a settlement arrived at in the course of a conciliation proceeding. A conciliation
proceeding may be held by a conciliation officer or Board of Conciliation under this Act.

(2) It also includes a written agreement between the employer and workman arrived at
otherwise than in the course of conciliation proceeding. Such a written agreement must be
signed by the parties to the agreement in the prescribed manner. A copy of the agreement
must also be sent to an officer authorised in this behalf by the Appropriate Government and
the Concilation Officer.
Tata Chemicals v. Workmen Tata Chemicals:
The definition of settlement envisages two categories of settlements. One is a settlement which
is arrived at in the course of a conciliation proceedings and the second is a written agreement
between employer and workmen arrived at otherwise than in the course of conciliation
proceeding.

The workmen of Motor Industries Company lid. v. The Management of Motor Industries
Co.Ltd
Where a settlement was arrived at between the management and the association of workmen in
presence of the conciliation officer, the settlement must be regarded as one made by the
association in its representative character and, therefore, was binding on the workmen.

Brooke Bond India lid. v. Workmen.


Unless the office bearers who signed the agreement were authorised by the Executive Committee of
the union to enter into a settlement or the constitution of union contained a provision that one or more
of its members would be competent to settle a dispute with the management, no agreement between
any office bearer of the union and the management can be called a settlement.

Balmer Lawrie Worker's Union Bombay and another v. Balmer Lawrie and Company ltd.
A representative union acts in a manner as not to discriminate between its members and other
workmen of the undertaking who are not its members. When a settlement is reached in a proceeding
the Industrial Disputes Act in which a representative union has appeared, the same is binding on all
the workmen of the undertaking. This would mean that neither the representative union nor the
employer can discriminate between members of the representative union and other workmen who are
not members.

The benefits, advantages and disadvantages or liabilities arising out of a settlement in any proceeding
under the Industrial Disputes Act, to which the representative union is a party shall be equally
applicable to each workman in the undertaking. There shall not be a slightest trace of discrimination
between members and non-members both in regard to the advantages, and as regard the obligations
and liabilities.

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14. Lay Off

Section 2(kkk)
The following are salient features of layoff:
(1) An employer, who is willing to employ, fails or refuses or is unable to provide employment for
reasons beyond his control.

(2) Any such failure or refusal to employ a workman may be on account of:
(i) Shortage of coal, power, or raw materials, or
(ii) The accumulation of stock, or
(ill) The breakdown of machinery, or
(iv) Natural calamity, or
(v) Any other connected reasons.

(3) A workman who is so deprived of employment must be such whose - name is borne on the muster
rolls of his industrial establishment.

(4) The workman must not have been retrenched.


Explanation:
The explanation attached to the sub-section lays down that every workman whose name is borne on
the muster rolls of the industrial establishment and who presents himself for work at the establishment
at the time appointed for the purpose during normal working hours on any day and is not given
employment by the employer within two hours of his so presenting himself shall be deemed to have
been laid-off for that day within the meaning of this clause.
If the workman, instead of being given employment at the commencement of any shift for any day is
asked to present himself for the purpose during the second half for the day and is given employment,
then, he shall be deemed to 'have been laid-off only for one-half of that day.
If he is not given any such employment even after so presenting himself, he shall not be deemed to
have been laid-off for the second half of the shift for the day and shall be entitled to full basic wages
and dearness allowance for that part of the day.

Meaning of lay-off
"Lay-off' means putting aside workmen temporarily.
The duration of lay-off should not be for a period longer than the period of emergency. The employer-
employee relationship does not come to an end but is merely suspended during the period of
emergency.

Failure, refusal or inability


In Central India Spinning, Weaving and Manufacturing Co. Ltd., Nagpur v. State Industrial Court)
the Bombay High Court held that the key to the definition is to be found in the words "the failure,
refusal or inability of an employer". These words make it clear that the unemployment has to be on
account of a cause which is independent of any action or inaction on the part of the workmen
themselves.

For any other reason

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The expression "for any other reason" appearing in this sub-section has to be construed ejusdem
generis. Any other reason must be of the kind, as the other reasons stated in the clause. The common
feature of all these reasons is that the workmen are laid off for reasons beyond the control of the
employer. Therefore, the expression "for any other reason" must also denote similar characteristics.

Right and obligations resulting from lay-off

M.A. Veiyra v. CiP. Fernandes and another:


Lay-off is not a right conferred but an obligation imposed on the employer for the benefit of the
workmen.
Far from laying off of an employee' being a right, it is really an obligation.
The very essence of a lay-off is that it is a temporary stoppage and that within a reasonable period of
time the employer expects that, the business or industry would continue and his employees who have
been laid-off will be restored to their full rights as employees.
Further, in the definition of lay-off there is no indication whatever that it should continue for a
particular period of time.

In Nutan Mills Ltd., Ahmeadbad v. Employees' State Insurance Corporation


the question for consideration was, whether on the employee being laid-off the relation of master and
servant continues and the mutual rights and obligations which flow from such relationship also
continue. The High Court of Bombay was of the opinion that the relationship of master and servant
did not continue but was suspended during the period of lay-off and the employee entitled to any
wages. It was further held that:
"If the contract is not suspended and if the mutual obligation between the employer and the employee
continues, then the mere fact that the employee is not given work or cannot render service to the
employer will not derogate from his right to receive wages from the employer. A subsisting contract
of employment results in there being certain obligations upon the employer and also upon the
employee and also certain rights as between the employer and the employee. The obligations are that
the employer is bound to pay wages and the employee is bound to serve. The rights are that the
employer is entitled to claim from employee that he should render services. The right of the employee
is that if he is prepared to serve he would have the right to receive the wages stipulated. But if the
contract of employment is suspended, then there is no obligation upon the employee to serve the
employer, nor is there a reciprocal obligation upon the employer to pay wages."

In S.A.E. Mazdoor Union v. Labour Commissioner, Indore and others


the Trade Union challenged the order of the Labour Commissioner granting permission to the
employer to lay-off on the ground of accumulation of stock sought under Section 25M of the Industrial
Disputes Act, 1947. It was held that the fact that accumulation of stock would become inevitable if
workmen were not laid off would fall within the scope of reasons of Section 25M read with Section
2(kkk) of the Industrial Disputes Act, 1947. Under the circumstances, the application for permission
to lay-off reflected a ground on the basis of which the Labour Commissioner could objectively
consider the case for granting the said permission. Therefore, the permission for lay-off granted by
the Labour Commissioner was not assailable.

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15. Explain the provisions relating to recovery of money due from the employer
under Industrial Dispute Act

Section 33-C. Recovery of money due from an employer


Section 33-C (1)
Sub-section (1) of Section 33-C deals with the procedure for recovery of money due to a workman
from an employer under a settlement or an award or under the provisions of Chapter V-A or Chapter
V-B.

The application for recovery of money due may be made to the appropriate Government and if the
Government is satisfied that the claim is genuine, it shall issue a certificate for that amount to the
Collector. The Collector shall recover the amount as shown in the recovery certificate as an arrear of
land revenue. The application for recovery of money due may be made to appropriate Government
either by the workman himself or by any other person authorised by him in writing, or in case of death
of a workman by his assignee or heirs. Every such application shall be made within one year from the
date on which the money become due to the workman from the employer. It is further provided that-
any such application may be entertained after the expiry of the said period of one year, if the appropriate
Government is satisfied that the applicant had sufficient cause for not making the application within
the said period.

Section 33-C (2)


This sub-section deals with the jurisdiction of a Labour Court, which is subject to the fulfilment of
the following two requirements:
(i) A workman must be entitled to receive from the employer any money or benefit which is capable
of being computed in terms of money; and
(ii) A question should have arisen about the amount of money due, or as to the amount at which such
benefit should be computed.
These questions may be decided by the Labour Court as may be specified by the appropriate
Government within a period not exceeding three months:
Provided that where the presiding officer of a Labour Court considers it necessary or expedient
so to do, he may, for reasons to be recorded in writing, extend such period by such further period as he
may think fit.
Therefore, the Labour Court has jurisdiction to decide not only the right of a workman to receive
from the employer any money or benefit capable of being computed in term of money but also the
exact amount of it. However, the provisions of this sub-section are subject to any rules made under this
Act.

N.B. Corpn. v. Pritam Singh.


This sub-section should be construed so as to take within its fold a workman, who was employed during
the period in respect of which he claims relief, even though he is no longer employed at the time of the
application. In other words the term "workman" includes all-persons whose claim, requiring
compensation under this sub-section, is in respect of an existing right arising from his relationship as
an industrial workman, with his employer.

In Union of India v. D.P. Singh and others, a chowkidar posted to take care of a vacant building claimed
over-time wages by invoking Section 33-C(2). The claim was resisted by the Union of India on the
ground that the Ministry of Defence is not an industry and the employees concerned are not workmen.
It was held that the questions whether the department was industry and the employees were workmen
and as such whether they are entitled for over-time wages has to be determined by a regular reference
under Section 10(1). It is only an award given after such a reference which can be implemented by an
application under Section 33-C (2) of the Act. A workman cannot make a claim under Section 33-C
(2) of the Act in respect of a relief which was not based on an existing right and which could be
appropriately the subject-matter of an industrial dispute requiring a reference under Section 10 of the
Act.

Section 33-C (3)

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This sub-section provides that the Labour Court while acting under sub-section (2) may if it so thinks
fit, appoint a Commissioner for the purpose of computing the money value of a benefit. The
Commissioner shall, after taking such evidence as may be necessary, submit a report to the Labour
Court. Then the Labour Court shall determine the amount after considering the report of the
Commissioner and other circumstances of the case. Provision is made regarding the appointment, power
and procedure of such Commissioner in Rules 63 to 70 of the Industrial Disputes Act, 1947.

Section 33-C (4)


The Labour Court shall forward its decision regarding the amount of money due or the amount at which
the benefit should be computed to the appropriate Government. Any amount found due by the Labour
Court may be recovered in the manner provided for in sub-section (1) as an arrear of land revenue.

Section 33-C (5)


This sub-section enables any number of such workmen, employed under the same employer, as are
entitled to receive from the employer any money or any benefit capable of being computed in terms of
money, to take a single application for the recovery of amount due on behalf of or in respect of any
number of such workmen. But any such application may be made subject to the rules made in this behalf
by the appropriate Government.

Explanation
The expression "Labour Court" for purposes of this section includes not only a Labour Court constituted
under Section 7 of this Act, but any Court constituted under any law relating to investigation and settlement
of industrial disputes in force in any State.

Money due
Sawatram Ramprasad Mills Co. Ltd. v. BaIiram Ukandaji
‘Money due’ means money which has been ascertained and become payable. It is not essential that the
claim which can be brought before the Government or its delegate under Section 33-C (1) must always
be for a predetermined sum. Therefore, a claim for lay-off under Chapter V-A of Act, is a claim for
money due.The Government or the Labour Court may satisfy itself about the exact amount and then
take action under Section 33-C(1).

Recovery certificate
Yelayudhan (M.) v. Stale of Kerala
The appropriate Government may issue a recovery certificate if it is satisfied that money is due to a
workman. Before issuing a recovery certificate the Government must afford an opportunity to the party
against whom recovery certificate is issued to plead his case; failure to do so would render the certificate
invalid.

Who can make an application?


An application can be made by or on behalf of a workman as provided in Section 33-C (1). Even a
discharged or dismissed workman may make an application, for it is not necessary that the workman
making application should be in service on the date on his application but he must have been in service
during the period in respect of which claim is made. If a workman was not in service at the time of a
dispute in reference to settlement or an award entitling him to any money or benefit was given, he will
not have a claim under Section 33-C (2) of the Act.

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16. Explain the provisions relating to closure of an undertaking under Industrial


Disputes Act, 1947

Section 25-0.
Procedure for closing down an undertaking
(l) An employer who intends to close down an undertaking of an industrial establishment to which
this Chapter applies shall in the prescribed manner, apply, for prior permission at least ninety days
before the date on which the intended closure is to become effective, to the appropriate
Government, stating clearly the reasons for the intended closure of the undertaking and a copy of
such application shall also be served simultaneously on the representative of the workmen in the
prescribed manner :

Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of
buildings, bridges, roads, canals, dams or for other construction work.

(2) Where an application for permission has been made under sub-section (I), the appropriate
Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of
being heard to the employer, the workmen and the persons interested in such closure may, having
regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the
general public and all other relevant factors, by order and for reasons to be recorded in writing,
grant or refuse to grant such permission and a copy of such order shall be communicated to the
employer and the workmen.

(3) Where an application has been made under sub-section (1) and the appropriate Government
does not communicate the order granting or refusing to grant permission to the employer within a
period of sixty days from the date on which such application is made the permission applied for shall
be deemed to have been granted on the expiration of the said period of sixty days.

(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to
the provisions of sub-section (5) be final and binding on all the parties and shall remain in force for
one year from the date of such order.

(5) The appropriate Government may, either on its own motion or on the application made by the
employer or any workmen, review its order granting or refusing to grant permission under sub-
section (2) or refer the matter to a Tribunal for adjudication:

Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an
award within a period of thirty days from the date of such reference.

(6) Where no application for permission under sub-section (1) is made within the period specified
therein, or where the permission for closure has been refused, the closure of the undertaking shall
be deemed to be illegal from the date of closure and the workmen shall be entitled to all the
benefits under any law for the time being in force as if the undertaking had not been closed down.

(7) Notwithstanding anything contained in the foregoing provisions in this section, the appropriate
Government may, if it is satisfied that owing to such exceptional circumstances as accident in the
undertaking or death of the employer or the like it is necessary so to do by order, direct that the
provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be
specified in the order.

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(8) Where an undertaking is permitted to be closed down under sub-section (2) or where permission
for closure is deemed to be granted under sub-section (3), every workman who is employed in that
undertaking immediately before the date of application for permission under this section, shall be
entitled to receive compensation which shall be equivalent to fifteen days average pay for every
completed year of continuous service or any part thereof in excess of six months.

It was held in Vazir Glass Works Ltd. v. Maharashtra General Kamgar Union & another, that
reference to the Industrial Tribunal for adjudication of the application for permission to close an
industrial unit is made under Section 25-0(5) of the Industrial Disputes Act and not under Section
10(1) of the said Act.

It was held by the Supreme Court in Hindalco Industries Ltd. v. Union of India and others, that even
though the closure of an undertaking was not a planned and voluntary closure by the company
section 25.0 of the Act would be applicable. It was also pointed out that even if an undertaking is
closed for reasons beyond its control section 25.0 would be applicable and the conditions imposed in
the order of the Government granting permission for the closure were valid and binding on the
appellant company. Further the plea of appellant that closure being due to unavoidable
circumstances it was liable to pay compensation only under section 25FFF of the Act was also
rejected because about 211 employees had been retrenched and as such section 25-0 was the only
relevant provision.

Section 2S-R.
Penalty for closure
(l) Any employer who closes down an undertaking without complying with the provisions of sub-
section (1) of Section 25-0 shall be punishable with imprisonment for a term which may extend to six
months, or with fine which may extend to five thousand rupees or with both.

(2) Any employer, who contravenes an order refusing to grant permission to close down an
undertaking under sub-section (2) of Section 25-0 or a direction given under Section 25-P, shall be
punishable with imprisonment for a term which may extend to one year, or with fine which may
extend to five thousand rupees, or with both, and where the contravention is a continuing one, with
a further fine which may extend to two thousand rupees for every day during which the
contravention continues after the conviction.

(3) Any employer who contravenes the provisions of sub-section (3) of Section 25-0 shall be
punishable with imprisonment for a term which may extend to one month, or with fine which may
extend to one thousand rupees, or with both.

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17. Discuss briefly the Authorities set up for the investigation of Industrial
Disputes.

The main object of the Industrial Disputes Act is investigation and settlement of industrial disputes.
With that object in view various authorities have been created by the Act. The Works Committee,
Conciliation Officer, Board of Conciliation and Courts of Inquiry endeavour to settle the difference
before it may be adjudicated upon by the Labour Court or the Industrial Tribunal. They all aim at
amicable settlement of an industrial dispute. The various modes of settlement of disputes provided
by the Act may broadly be classified under three heads:

(1) Conciliation;
(2) Adjudication; and
(3) Arbitration.

Those authorities that make use of conciliation as the sole method of settlement of disputes are the:

(1) Works Committee,

(2) Conciliation Officer, and

(3) Board of Conciliation.

The Labour Court, Tribunal and National Tribunal are adjudicating authorities that decide any
dispute referred under the Act.

Apart from the above, provision has also been made for the constitution of a Court of inquiry whose
main function is to inquire into any matter appearing to be connected with or relevant to an
industrial dispute.

Section 3. Works Committee


The Works Committee is an authority under the Act. The following are the duties of the Works
Committee:

(a) to promote measures for securing and preserving amity and good relations between the
employers and workmen;

(b) to achieve the above object, it is their duty to comment upon matters of common interest or
concern of employers and workmen;

(c) to endeavour to compose any material difference of opinion in respect of matters of common
interest or concern between employers and workmen.

The main purpose of creating the Works Committee is to develop a sense of a partnership between
the employer and his workmen. It is a body which aims to promote good-will and measures of
common interest. This section is applicable only to such industrial establishment in which one
hundred or more workmen are employed, or to an establishment in which a minimum of one
hundred workmen have been employed on any day in the preceding twelve months. The word
'workmen' in this section is used in the same sense in which it appears in Section 2(s) of the Act. It

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means there must be one hundred workmen and not one hundred employees working in the
establishment for many categories of employees are excluded from the definition of workmen.

The Appropriate Government under Section 3(1) is authorised by general or special order, to require
the employer to constitute in the prescribed manner a Works Committee. The Committee shall
consist of representatives of employers, workmen engaged in the establishment. The number of
representatives of workmen on the Works Committee shall not be less than the number of
representatives of the employer. The representatives of workmen shall be chosen in the prescribed
manner from among the workmen engaged in the establishment and in consultation with their
Trade Union, if any, registered under the Indian Trade Union's Act, 1926.

It was held in Kemp and Co. Ltd. v. Their Workmen, that the institution of the Works Committee has
been provided in the rules framed under the Industrial Disputes Act in order to look after the
welfare and interest of the workmen. They are normally concerned with the problems arising in the
day-to-day working of the concern and, function of the Works Committee is to ascertain the
grievances of the employees and to arrive at some agreement when the occasion so arises. It is for
that reason, the Works Committee airs the grievances of workmen and endeavours to seek amicable
settlement.

The recommendations of the Works Committee, where the workmen are not fairly represented are
of no value; the decision of the Works Committee carries great weight but is not conclusive. The
decision of Works Committee can be challenged if it is not fairly constituted or the workmen are not
fairly represented on it.

The number of members constituting the Works Committee shall be fixed so as to afford
representation to the various categories, groups and classes of workmen engaged in and to the
sections, shops or department of establishment. But the total number shall not exceed twenty.

The representatives of the employer shall be nominated by the employer and as far as possible, shall
be officials in direct touch with or associated with the working of the establishment.

The workmen's representative on the Committee shall be elected in two groups, namely:

(1) Those to be elected by the workmen of the establishment who are members of the registered
Trade Union or Unions; and

(2) Those to be elected by the workmen of the establishment who are not members of the
registered Trade Union.

Section 4. Conciliation Officer


The Appropriate Government may by notification in the Official Gazette, appoint conciliation
officers. These officers are charged with the duty of mediating in and promoting the settlement of
industrial disputes. The Appropriate Government may appoint one or more conciliation officers, as it
thinks fit. A conciliation officer may be appointed for a specified area or for specified industries in a
specified area, or for one or more specified industries. The appointment may be made either
permanently or for a limited period. The jurisdiction, powers and other matters in respect of the
conciliation officer shall be published in the Official Gazette.

Section 5. Boards of Conciliation


The provision for appointment of Boards of Conciliation is made under the Act to bring the two
parties to a dispute to sit together and thrash out their differences and to find out ways and means

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to settle them. Section 5 of the Act provides that the Appropriate Government may, by notification
in the Official Gazette, constitute a Board of Conciliation. The object of appointing the Board is
promotion of settlement of an industrial dispute. A Board shall consist of a Chairman and two or four
other members, as the Appropriate Government thinks fit.

The Chairman shall be an independent person and the other members shall be persons appointed in
equal numbers to represent the parties to the dispute. Any person appointed to represent a party
shall be appointed on the recommendation of that party. If any party fails to make a
recommendation within the prescribed time, the Appropriate Government shall appoint such
persons as it thinks fit to represent that party. A Board, having the prescribed quorum may act even
though the Chairman, or any of its members is absent or there is any vacancy in its number. But, if
the Appropriate Government notifies the Board that the services of Chairman or of any other
member have ceased to be available, the Board shall not act until a new Chairman or member, as
the case may be, has been appointed.

It is to be noted that the Chairman must be an "independent person" which means a person
unconnected with the industrial dispute or with the industry affected by such dispute. Of course the
Appropriate Government is vested with the discretion to appoint the Board of Conciliation,
whenever there is an occasion for such appointment on the arising of industrial dispute. The Board
as stated above is appointed with a view to promote the settlement of industrial dispute.

The appointment of the Conciliation Board together with the names of the persons constituting the
Board shall be notified in the Official Gazette. If the Central Government proposes to appoint a
Board, it shall send a notice to the parties asking them to nominate within reasonable time persons
to represent them on the Board. The notice to the employer shall be sent to him personally or if the
employer is an incorporated Company or a body Corporate, to the agent, manager, or other
principal Officer of such company or body.

The notice to the workmen shall be sent:

(a) in the case of workmen who are members of a Trade Union, to the President or Secretary of the
Trade Union; and

(b) in the case of workmen who are not members of a Trade Union to anyone of five representatives
of the workmen who have attested the application made under Rule 3 and in this case a copy of the
notice shall also be sent to the employer who shall display copies thereof on notice boards in a
conspicuous manner at the main entrance to the premises of the establishment.

Section 6. Courts of Inquiry


If any matter is referred to a Court by the Appropriate Government, it shall inquire and make a
report ordinarily within a period of six months from the Commencement of inquiry. Section 6(1)
points out that if "occasion arises" the Appropriate Government may constitute a Court of Inquiry.
The purpose of constitution of court of Inquiry is to Inquire into any matter appearing to be
connected with or relevant to an industrial dispute. The constitution of the Court has to be notified
in the Official Gazette. Thus it is clear that the proper occasion for appointment of a Court of Inquiry
will be arising of an industrial dispute and necessary inquiry into any matter connected with or
relevant to such dispute. The Court shall not inquire into the industrial dispute itself.

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Section 6(2) says that a Court may consist of one independent person or such number of
independent persons as the Appropriate Government thinks fit.

Where a Court consists of two or more members, one of them shall be appointed as a Chairman. If
the court has the prescribed quorum it may act. The fact that the Chairman or any other member is
absent or the existence of any vacancy in the Court shall not debar the Court from functioning
provided the quorum exists. But if the Appropriate Government notifies the Court that the services
of the Chairman have ceased to be available the Court shall not act until a new Chairman has been
appointed. The appointment of a Court together with the names of persons constituting it shall be
notified in the Official Gazette.

On a perusal of the relevant sections relating to the Court, specially Sections 22, 23 and 33 of the Act
it may be seen that during the pendency of a proceeding before a Court of inquiry, the following
rights remain unaffected, namely:

(i) the right of a workman to go on strike;

(ii) the right of an employer to lock-out his business; and

(iii) the right of employer to dismiss or otherwise to punish the workmen in certain cases under
Section 33.2

The idea of the Court is borrowed from English Law where the report of the Courts of Inquiry is given
wide publicity, and is placed before the Houses of Parliament, with a view to prevent and rectify any
rash and precipitate action such as strike or lockout by the disputants for fear of public
condemnation.

Section 7. Labour Court


The power of appointment of a Labour Court under Section 7 of the Act is vested with the
Appropriate Government. The Appropriate Government may constitute one or more Labour Courts.
The constitution of the Labour Court together with names of persons constituting the Labour Court
should be notified in the Official Gazette. The functions of the Labour Court as provided in the Act
are:

(i) adjudication of industrial disputes relating to any matter specified in the Second Schedule;

(ii) performing of such other functions as may be assigned to them under this Act.

The following matters are specified in the Second Schedule, namely:

(i) The propriety or legality of any order passed by an employer under the Standing Orders;

(ii) The application and interpretation of Standing Orders;

(iii) Discharge or dismissal of workmen, including reinstatement of, or grant of, or relief to, workmen
wrongfully dismissed;

(iv) Withdrawal of any customary concession or privilege;

(v) Illegality or otherwise of a strike or lock-out;

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(vi) All matters other than those specified in the Third Schedule.

According to Section 7(2) a Labour Court shall consist of one person only, who shall be appointed by
the appropriate Government. The qualifications of a person who can be appointed as presiding
officer of the Labour Court are mentioned in sub-section (3) of Section 7 as follows:

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

(b) he has, for a period of not less than three years, been a District judge or an Additional District
Judge; or

(c) omitted.

(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 not less than 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 seven years' experience in the labour
department including three years of experience as Conciliation Officer:

Provided that no such Deputy Chief Labour Commissioner or Joint Labour Commissioner shall be
appointed unless he resigns from the service of the Central Government or State Government, as
the case may be, before being appointed as the presiding officer; or

(g) he is an officer of Indian Legal Service in Grade ill with three years' experience in the grade.

Section 7-C prescribes disqualifications of the presiding officer of a Labour Court. In The Statesman
(P) Ltd. v. H.R. Deb, the question was whether a magistrate holds a judicial office. 'The fact that the
duties of a magistrate are partly judicial and partly other do not detract from the position that while
acting as a magistrate he is a judicial officer. The phrase 'holding a judicial office' postulates that
there is an office and that office is primarily judicial.

Haryana Co-operative Transport Ltd. v. State of Punjab,

But where Registrar to Pensions Appeal Tribunal was appointed as presiding officer of a Labour
Court it was held that the appointment was void ab initio because the office of the Registrar is
administrative and not judicial in nature.

The expression "holding a judicial office” in section 7(3)(d) signifies more than discharge of judicial
functions while holding some other office.

Workmen. Calcutta D.L. Board v. Employers,


The removal from service during detention of workers solely on the basis of their detention under
the Defence of India Rules without giving them an opportunity to show cause why their services
should not be terminated, is improper. Therefore, the workers so removed shall be entitled to back
wages from the date when they offered to resume duty after their release to the date of their
reinstatement.

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Section 7-A. Tribunals


In our country the Industrial Tribunals were for the first time created by the Industrial Disputes Act,
1947.

J.K. Iron and Steel Co., Kanpur v. Iron and Steel Mazdoor Union,
Commenting upon the status of these tribunals the Supreme Court has observed that the tribunals
under the Act are invested with many trappings of a Court but do not have the same status as
Courts. These Tribunals need not follow the strict technicalities of law in adjudication of industrial
disputes.

The power to constitute Industrial Tribunal is conferred upon the Appropriate Government. The
appointment of an Industrial Tribunal together with the names of persons constituting the Tribunal
shall be notified in the Official Gazette. Further, one or more than one tribunals may in the
discretion of Appropriate Government, be constituted. It is the duty of the Tribunal to adjudicate
upon any industrial dispute relating to any matter, whether specified in the Second Schedule or the
Third Schedule. These tribunals shall perform such other functions as may be assigned to them
under this Act.

The Tribunal shall consist of one person' only, who shall be appointed by the State Government. Any
person having one of the following qualifications may be appointed as the presiding officer of the
Industrial Tribunal, namely:

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

(aa) if he has for a period of not less than three years, been a District Judge or an Additional District
Judge.

(b) 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 seven years' experience in the labour
department including three years of experience as Conciliation Officer: Provided that no such
Deputy Chief Labour Commissioner or Joint Labour Commissioner shall be appointed unless he
resigns from the service of the Central Government or State Government, as the case may be, before
being appointed as the presiding officer; or

(c) he is an officer of Indian Legal Service Grade III with three years’ experience in the grade.

It is provided by Section 7-A(4) that the appropriate Government, if it thinks fit, may appoint two
persons as assessors to advise the Tribunal in the proceedings before it.

These Tribunals are important for many practical reasons. First, only experienced persons of high
integrity can be appointed as presiding officer of the Tribunal as stated above. Secondly, almost any
important matter can be submitted for adjudication to the Tribunal including questions relating to
wages, bonus, provident fund, gratuity and dismissal, etc. Thirdly, the Tribunals enjoy unlimited
powers so long as they act within the scope of their authority.

Powers
In Vishwamitra Press (Kaiyalaya) Kanpur v. Their Workmen, it was held that Industrial Tribunal is a
judicial body or at any rate a quasi-judicial body.

Indian Mining Association and others v. Koyla Mauloor Panchait and others established, a Tribunal
must serve notice upon the parties of the reference by name and any award made without serving
such notices is fundamentally wrong.

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M.K. Ranganathan and another v. The Madras Electric Tramways Ltd.,


It could make a suitable award for bringing about harmonious relation between the employers and
workmen and can direct reinstatement of workman if it is necessary in the interest of industrial
peace.

Electro-mechanical Industries Ltd. v. Tribunal.


The Tribunal while arriving at a finding in a matter may rely on data available to it otherwise than
from evidence adduced on behalf of the parties.

Section 7-B. National Tribunals


(l) Unlike the other authorities under the Act the National Tribunals can only be constituted by the
Central Government. The power is to be exercised by issuing of notification in the Official Gazette.
The name of the person constituting the National Tribunal shall also be notified in the Official
Gazette. The Central Government may constitute one or more Tribunals. National Industrial
Tribunals are constituted for the adjudication of an industrial dispute, which in the opinion of the
Central Government

(i) involves question of national importance or

(ii) are of such a nature that the industrial establishments situated in more than one State are likely
to be interested in or affected by such dispute. It is sole discretion of the Central Government to
decide that the industrial dispute involves a question of national importance or industrial
establishments situated in more than one State are interested in or affected by the dispute.

(2) A National Tribunal shall consist of one person to be appointed by the Central Government.

(3) A person shall not be qualified for appointment as the presiding officer of National Tribunal
unless he is or has been a Judge of a High Court.

(4) The Central Government may, if it thinks fit, appoint two persons as assessors to advise the
National Tribunal in the proceeding before it.

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18. Conditions of service, etc., to remain unchanged

Section 33. Conditions of service, etc., to remain unchanged


The purpose of Section 33 is to maintain status quo during the pendency of certain
proceedings under this Act. It ensures against victimisation of workman by the employer.

Section 33(1) applies during the pendency of the following proceedings, namely: -
(a) conciliation proceedings before a conciliation officer or a Board;
(b) any proceeding before an arbitrator; and
(c) any proceeding before a Labour Court, Tribunal or National Tribunal.

The above proceedings must be in respect of an industrial dispute. While any such proceeding is
pending, the employer is prohibited to take the following actions, except with express permission in
writing of the authority before which the proceeding is pending:

(a) The employer shall not in regard to any matter connected with the dispute, alter to the prejudice
of the workmen concerned in such dispute, the conditions of service applicable to them immediately
before the commencement of such proceeding; or

(b) The employer shall not discharge, dismiss or otherwise punish for any misconduct connected with
the dispute any workmen concerned in such a dispute.

It is not every alteration in the conditions of service of workmen concerned in the dispute, but an
alteration in regard to any matter connected with the pending dispute which is prohibited.

For application of Section 33(1)(a) the following conditions must be fulfilled: -


(i) Some proceeding under the Act must be pending before anyone of the authorities mentioned
therein;
(ii) There must be some alterations in the conditions of service of workmen;
(iii) The alteration must be in the conditions of service as were applicable to the workmen concerned
immediately before the commencement of such proceedings;
(iv) The alteration must be to the prejudice of the workmen concerned in such dispute (i.e., if the
alteration made is in favour of the workmen, it shall be valid);
(v) The alteration should be in regard to any matter connected with the pending dispute;
(vi) The workman, who can claim protection under this section, should not only be a workman within
the meaning of Section 2(s) but should also be a workman connected with the pending dispute;
(vii) The action should have been taken without the express permission in writing of the authority
before which proceeding is pending.

For application under Section 33(l)(b) the following conditions must be fulfilled: -
(i) Some proceeding should be pending before one of the authorities under this Act;
(ii) The workman claiming protection under this section should not only be a workman within the
meaning of Section 2(s), but should also be a workman connected with the pending dispute;
(iii) The action taken should be discharge or punishment by way of dismissal or otherwise;

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(iv) Such discharge or punishment should 'be for any misconduct connected with the pending dispute;
(v) The action should have been taken without the express permission in writing of the authority
before which the proceeding is pending.

Section 33(2) provides that the employer may take the following actions during the pendency of any
proceeding in respect of an industrial dispute: -
(a) he may alter, in regard to any matter not connected with the dispute, the conditions of service
applicable to that workman immediately before the commencement of such proceeding;
(b) he may discharge or punish, whether by dismissal or otherwise, that workman for any misconduct
not connected with the dispute.

The right of the employer to take action is subject to the following conditions:
(i) the action taken should be in accordance with the Standing Orders applicable to workman
connected in such dispute; or
(ii) where there are no standing orders, the action taken should be in accordance with the terms of
the contract, whether express or implied, between the employer and the workmen;
(iii) where a workman is discharged or dismissed he shall be paid wages for one month; and
(iv) in case of discharge or dismissal an application should have been made by the employer to the
authority before which the proceeding is pending, for approval of the action taken by the employer.

Section 33(3) deals with the right of "protected workman". The employer shall not take the following
action against a 'protected workman' in regard to any matter not connected with the pending dispute:

(i) The employer shall not alter to the prejudice of protected workman the conditions of service
applicable to him immediately before the commencement of such proceedings;
(ii) The employer shall not discharge, or punish, whether by dismissal or otherwise such protected
workman.

It is further provided that the prohibition operates during the pendency of any proceedings in respect
of an industrial dispute. No alteration in the conditions of service, discharge or dismissal, etc., can be
made without the express permission in writing of the authority before which the proceeding is
pending.

For the application of Section 33(3) the following conditions must be fulfilled:
(1) Some proceeding should be pending before anyone of the authorities under this Act;
(2) The workman claiming protection should not only be a workman within the meaning of Section
2(s), but should be a protected workman and a workman concerned in the pending dispute;
(3) There should be alteration in the conditions of service applicable before the commencement of
the proceeding or discharge or punishment by way of dismissal or otherwise of such protected
workman;
(4) The alteration in the conditions of service should be to the prejudice of protected workman;
(5) The action taken may be even in regard to any matter not connected with the pending dispute;
(6) The action should have been taken without the express permission in writing of the authority
before which the proceeding is pending.

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Protected workman
Explanation to Section 33(3) defines a protected workman. The definition is for the purposes of this
sub-section only. In relation to an establishment protected workman means;
(i) a workman who is a member of the executive or other office bearer of a registered trade union
connected with the establishment and
(ii) who is also recognised as 'protected workman' under the rules applicable to the establishment.

Section 33(4) provides that in every establishment the number of recognised protected workmen shall
be one per cent of the total number of workmen employed therein. But there shall be a minimum of
five and a maximum of one hundred 'protected workmen'. The appropriate Government is
empowered by this sub-section to make rules for choosing and recognising the protected workman.
It is also empowered to make rules for distribution of protected workmen among various trade unions
connected with the establishment.

Section 33(5) deals with the disposal of an application made by the employer for approval of the action
taken by him to Conciliation Officer, Board, an arbitrator, Labour Court, Tribunal or National Tribunal.
The authority shall without delay hear the application and dispose it within a period of three months
from the date of receipt of such application. It means that a proper order in respect of such application
should be passed as expeditiously as possible on the application: (Tata Iron and Steel Co. Ltd. v. S.N.
Modak)
Provided that where any such authority considers it necessary or expedient so to do, it may, for
reasons to be recorded in writing extend such further period as it may think fit:
Provided further that no proceedings before any such authority shall lapse merely on the ground that
any period specified in this sub-section had expired without such proceedings being completed.

During the pendency of


The period between the commencement and conclusion of conciliation, adjudication or arbitration
proceeding is the period of pendency of such proceeding. Section 20 of the Act deals with the
commencement and conclusion of proceeding under this Act. Provisions of this section would be
attracted if any orders as prohibited by this Act is made during the pendency of such proceedings; it
is not necessary that the order should also be communicated to the workmen. A workman was
dismissed from service on 12th November, 1963, by an order of the Managing Director, Syndicate
Bank Limited for wilful disobedience of his transfer order. An appeal against the order was made on
17th December, 1963. The appeal was dismissed on 20th March, 1964. A dispute was referred by the
Central Government on 8th January, 1964, to Industrial Tribunal. The workman made a complaint on
4th June, 1964, on the ground of violation of Section 33(2)(b) of the Act. The Tribunal held that the
dismissal order became effective on 20th March, 1964, but the Supreme Court in appeal held that on
reasonable and natural interpretation of Section 33, the order of dismissal is the original order passed
on 12th November, 1963, and as there was no dispute pending on that date, there was no
contravention of Section 33 as alleged - Syndicate Bank LId. v. Ram Nath v.K. Bhatt,

Dismissal for misconduct


In Delhi Transport Corporation v. Sardar Singh,.
conductors of Delhi Transport Corporation were absent from duty for long periods without obtaining

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leave in advance as required by the standing order of the corporation. Consequently, they were
dismissed/removed from service and the corporation sought approval of dismissal or removal as there
was a pending dispute. The Tribunal refused the approval. The Supreme Court observed that absence
from duty without sanctioned leave for long period prima facie showed lack of employees' interest in
work and such unauthorised absence could be treated as misconduct. It was also made clear that
treating of unauthorised absence from duty as leave without pay is not the same as sanctioned leave.

Alteration in conditions of service


Only such alteration in the conditions of service as are prejudicial to the interest of a workman are
restricted. Any reduction or cut in the wages of 'a workman' or a lay-off exceeding the period provided
in the standing order," or refusal to provide work to a casual workman who reported for work after
his recovery from illness caused by an injury sustained by him while on duty," are all a change in the
conditions of service of the workman.
In Bhaonagar Municipality v. A. Karimbhai, the Municipality retrenched its daily rated worker in its
Water Works section during the pendency of an industrial dispute before the Tribunal without
obtaining prior permission of the Tribunal. The subject-matter of dispute was directly connected with
conversion of the temporary employment of such workers into permanent. It was held that the
retrenchment amounted to a change in the conditions of service. The alteration was in regard to a
matter connected with the pending industrial dispute. There was a contravention of Section 33(1)(a)
on the part of the Municipality.

Suspension of workmen before obtaining permission


The right of an employer to suspend an employee after holding proper enquiry pending proceedings
under Section 33, without taking permission of the authority before which the proceedings are
pending was reviewed by the Supreme Court in Hotel Imperial v. Hotel Workers' Union. A number of
disputes between the Hotel lmperial and their workmen were under consideration by the Central
Government. In the meantime, the management sought approval for dismissal of 22 workmen, which
led to a strike. The management on October 3, 1955, issued notices directing the workmen to report
to their duties within 3 hours failing which action would be taken against them. The workers ignored
the directive and the management issued another notice on the same day asking them to show cause
why disciplinary action should not be taken against them. The workers in the meantime were
suspended. On 7th October the management informed them of its decision to dismiss them and to
continue their suspension pending permission to dismiss by the authority concerned. The workmen
challenged the management's right to suspend without pay. On special appeal the Supreme Court laid
down the following principles governing the question of suspension before permission of the Tribunal:

(1) The common law right of the master to dismiss his servant has been subjected by Section 33 to a
ban. The statutory ban under this section can be removed by obtaining prior permission of the
Authority concerned. Pending permission the master can, after holding a proper enquiry, temporarily
terminate the relationship of master and servant by suspending his employee.

(2) The ordinary law of master and servant as to suspension has been modified in view of the
fundamental change introduced by Section 33 and a term should be implied in the contract of
employment that if the master has held a proper enquiry and came to the conclusion that the servant
should be dismissed and in consequence suspends him pending the permission required under Section

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33, he has the power to order such suspension, thus suspending the contract of employment
temporarily, so that there is no obligation on him to pay wages and obligation on the servant to work.

(3) The existence of such an implied term does not bar the Tribunal to grant interim relief if it has the
power to do so under the Act but such relief should not be the whole relief which the workman will
get if he finally succeeds.

The following principles laid down by the Supreme Court in different cases are also relevant in this
connection: -

(1) Suspension of a workman pending departmental enquiry or pending permission of the authority
before which the proceedings might be pending is not punishment even though it is without pay for
an indefinite period - Lakshmi Devi Sugar Mills Ltd. v. Ram Sarup

(2) Where the employer came to the conclusion, after proper enquiry that dismissal was the proper
punishment and applied for permission to dismiss the concerned employee, the permission if granted
would relate back to the date when the decision was taken by the employer to dismiss and the
application has been made for permission – Kalyani PH v Air France.

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19. Termination of service of workman by the employer for any reason whatsoever
amounts to retrenchment. Explain with the help of decided cases.

(00) Retrenchment
Piparaich Sugar Mills LId. v. Piparaich Sugar Mills Mazdoor Union,
Retrenchment connotes in its ordinary acceptation that the business itself is being continued, but that
a portion of the staff of labour force is discharged as surplusage.

Harprasad Shiv Shanker v. A.D. Diwekar,


It means the discharge of surplus labour or staff by the employer for any reason whatsoever.

The order of termination must be actuated with a motive of economy. Section 2(00) which
defines the term "retrenchment" may be analysed as follows:

(1) Retrenchment means the termination by the employer of the service of a workman;
(2) The termination may be for any reason whatsoever;
(3) But the termination should not be as a measure of punishment by way of disciplinary action.

The following are not retrenchment:


(a) voluntary retirement of a workman, or
(b) retirement of a workman on reaching the age of superannuation if the contract of employment
between the employer and the workman concerned contains a stipulation in that behalf; or
(bb) termination of the service of a workman as a result of the non-renewal of the contract of
employment between the employer and the workman concerned on its expiry or of such contract
being terminated under a stipulation in that behalf contained therein, or
(c) termination of the service of a workman on the ground of continued ill-health.

For any reason whatsoever


Piparaich Sugar Mills Lid. v. Piparaich Sugar Mills Mazdoor Union
Action taken by the employer may be for any reason. When a portion of the staff or labour force is
discharged as surplusage in a running or continuing business, termination of service which follows
may be due to a variety of reasons, e.g., economy, rationalisation in industry, installation of a new
labour saving machinery etc.

Stale Bank v. N.S. Money, AIR 1976 SC 1111; Hindustan Steel v. Labour Courts Orissa,
It does not matter why the employer is discharging the surplusage. If other requirements of the
definition are fulfilled, then it is retrenchment. "For any reason whatsoever" are the key words. Every
termination spells retrenchment. A termination takes place where a term expires either by the active
step of the master or the running out of the stipulated term.

State of Gujrat v. P.R. Manked,


The termination of service on account of superannuation at a particular age which is prescribed by the
rules which constitute the condition of service cannot be regarded as retrenchment.

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Duryodhan Naik v. Union of India,


Retrenchment means the discharge of surplus labour by the employer for any reason whatsoever,
otherwise than as a punishment inflicted by way of disciplinary action. It has no application where the
service of all workmen have been terminated by the employer on a real and bona fide closure of
business or on the undertaking being taken over by another employer.

Surjit Kantha v. Union of India,


The discharge of surplus labour must be in running industry. The termination of service in accordance
with rules of service is not retrenchment.

D. Marcopolo and Co. (Private) LJd. v. Their Employees' Union,


For what reasons and at what time the employer would discharge the surplus labour, is entirely his
discretion. If a reorganisation scheme has been adopted by the company for reasons of economy and
convenience, the discharge and retrenchment of some of the workmen would have been considered
as an inevitable though very unfortunate consequence of the reorganization scheme which the
employer acting bona fide was entitled to adopt.

In D.C. & G. Mills v. Shambhu Nath, the respondent was working as a Motion-Setter at the relevant
time. There was some reorganisation in the establishment and the post of Motion Setter was
abolished. Thereafter the respondent would have been retrenched but in terms of a settlement
between the management the workmen, no employee was retrenched. The management agreed to
offer work “on any other suitable post". Therefore, the respondent was offered an alternative job
without loss of wages. He was found unfit for that job even after extension of probation. Thereafter,
he was offered another job on the same wages, which he did not accept. Instead he requested the
management to give him one more chance to show his efficiency. His name was struck-off as the
management did not accept his request. It was held that the striking off name of the respondent
amounted to retrenchment.

Malkhail Singh v. Union of India,


Retrenchment would include termination of services of a temporary railway servant on one month's
notice.

In Morinda Co-op. Sugar Mills Ltd. v. Ram Kishan & others, workmen were employed in sugar mills
during crushing season only and consequent to closure of season, they ceased to work. It was held
that such cessation of work would not amount to retrenchment since it is only a seasonal work.

In Managing Director, Kamaiaka Handloom Development Corporation Ltd. v. Sri Mahadeva Laxman
Raval, respondent was appointed for fixed periods as an expert weaver to train weavers. His services
were discontinued after the expiry of the contract period. He raised a dispute and the Labour Court
directed his reinstatement. The award of Labour Court was confirmed by High Court. Hence the
corporation preferred an appeal in the Supreme Court.
Allowing the appeal the Supreme Court observed that the respondent was aware that his appointment
was purely contractual. His appointment stood automatically terminated on completion of the
stipulated period. The Supreme Court held that the terms of appointment show that the respondent
was not a worker but employed on contract basis in a time barred scheme. The Court held that section

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2(00) of the Industrial Disputes Act, 1947 was not attracted and discontinuance of respondent's
service was not retrenchment as defined in Section 2(00) of the Act.

In Kamlesh Kumar Rajanikant Mehta v. Presiding Officer Central Government Industrial Tribunal No.1
and others, the question was: where the services of an employee is terminated for loss of confidence,
will it amount to retrenchment. It was held that retrenchment is merely the discharge of surplus labour
staff in a running or continuing business or industry, for certain reasons, viz., cutting down of
expenditure or wanting to introduce labour saving device. If the termination is for any other reason
say for loss of confidence, it is not retrenchment. It would be a mistake to hold that loss of confidence
could be included in the expression "for any reason whatsoever" and termination on that score would
amount to retrenchment.

In Santosh Gupta v. State Bank of India, an employee of the bank was discharged on the ground that
she failed to pass the prescribed test provided for confirmation in service. She had put in more than
240 days service in a year (although with breaks). The Tribunal held that the termination did not
amount to retrenchment. The Supreme Court directing her reinstatement with full back wages held
that such termination of service would amount to retrenchment. The expression "termination of
service for any reason whatsoever" is wide enough so as to include every kind of termination of service
of a workman by act of the employer excepting those which are expressly excluded by the proviso to
the definition of the word 'retrenchment'.

Management Karanataka State Road Transport Corpn., Bangalore v. Shek Abdul Khader
and others,
Termination of service of an employee either during the initial period of probation or during the
extended period of probation on the ground that they were not found suitable amounts to
retrenchment.
But this view has been overruled by the Supreme Court in M. Venugopal v. L.I.C. of India, A.P. and
another, wherein the Supreme Court held that the termination of service of the probationer cannot
be said to be a retrenchment within the meaning of Section 2(00) because his confirmation was
dependant on fulfilment of minimum business guarantee and the employee failed to fulfil the norm
prescribed. He was asked to improve his performance before the expiry of extended period of
probation. Since he failed to fulfil the minimum prescribed, the L.l.C. was justified in terminating his
service without complying with the provisions of the Act relating to retrenchment.

In M/s. Gammon India Ltd. v. Sri Niranjan Dase) the services of senior clerks were terminated due to
reduction in the volume of business of the Company as a result of recession in work. It was held to be
a case of retrenchment because the termination does not fall in any of the three excluded categories.

In L. Robert D'Souza v. Executive Engineer Southern Railway, it was held that the termination for
unauthorised absence from duty by workman amounted to retrenchment.

In Mithilesh Kumar Singh v. State of Bihar and others, the services of a workman working in Public
Works Department was terminated on the ground that the initial appointment was not legal and valid.
It was held that termination even on the ground that the initial appointment was not legal and valid

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amounts to retrenchment because such a termination is not included in the exception to


retrenchment under Section 2(00) of the Industrial Disputes Act.

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20. Unfair Labour Practice

Section 25- T. Prohibition of unfair labour practice


No employer or workman or a Trade Union, whether registered under the Trade Unions Act, 1926,
or not, shall commit any unfair labour practice.

Section 25-U. Penalty for committing unfair labour practices


Any person who commits any unfair labour practice shall be punishable with imprisonment for a
term which may extend to six months or with fine which may extend to one thousand rupee or with
both.

Unfair Labour Practices


A new Schedule V has been added by the Industrial Disputes (Amendment) Act, 1982. In this
schedule unfair labour practices have been defined. It contains a list of such practices as are treated
unfair on the part of the employers or their Trade Unions, or on the part of workmen and their Trade
Unions.

I. Unfair Iabour practices on the part of employer and trade unions of employers.
1. To interfere with, restrain from, or coerce, workmen in the exercise of their rights to organise,
form, join or assist a Trade Union or to engage in concerted activities for the purposes of collective
bargaining or other mutual aid or protection, that is to say-

(a) threatening workmen with discharge or dismissal, if they join a trade union;

(b) threatening a lock-out or closure, if a trade union is organised;

(c) granting wage increase to workmen at crucial periods of the union organisation, with a view to
undermining the efforts of the trade union at organisation.

2. To dominate, interfere with or contribute support, financial, or otherwise, to any trade union, that
is to say: -

(a) an employer taking an active interest in organising a trade union of his workmen; and

(b) an employer showing partiality or granting favour to one of several trade unions attempting to
organise his workmen or to its members where such a trade union is not a recognised trade union.

3. To establish employer sponsored trade unions of workmen.

4. To encourage or discourage membership in any trade union by discriminating against any


workman, that is to say: -

(a) discharging or punishing a workman, because he urged other workmen to join or organise a trade
union;

(b) discharging or dismissing a workman for taking part in the strike (not being a strike which is
deemed to be an illegal strike under this Act);

(c) changing seniority rating of workmen because of trade union activities;

(d) refusing to promote workmen to higher posts on account of their trade union activities;

(e) giving unmerited promotions to certain workmen with a view to creating discord amongst other
workmen, or to undermine the strength of their trade union;

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(f) discharging office-bearers or active members of the trade union on account of their trade union
activities.

5. To discharge or dismiss workmen-

(a) by way of victimisation;

(b) not in good faith, but in the colourable exercise of the employer's right;

(c) by falsely implicating a workman in a criminal case on false evidence or on concocted evidence;

(d) for patently false reasons;

(e) on untrue or trumped up allegations of absence without leave;

(f) in utter disregard of the principles of natural justice in the conduct of domestic enquiry or with
undue haste;

(g) for misconduct of a minor or technical character, without having any regard to the nature of the
particular misconduct or the past record or service of the workman, thereby leading to a
disproportionate punishment.

6. To abolish the work of a regular nature being done by workmen, and to give such work to
contractors as a measure of breaking a strike.

7. To transfer a workman mala fide from one place to another, under the guise of following
management policy.

8. To insist upon individual workmen, who are on a legal strike to sign a good conduct bond, as a
pre-condition to allowing them to resume work.

9. To show favouritism or partiality to one set of workers regardless of merit.

10. To employ workmen as 'badlis', casuals or temporaries and to continue them as such for years
with the object of depriving them of the status and privileges of permanent workmen.

11. To discharge or discriminate against any workmen for filing charges or testifying against an
employer in any enquiry or proceeding relating to any industrial dispute.

12. To recruit workmen during a strike which is not an illegal strike.

13. Failure to implement award, settlement or agreement.

14. To indulge in acts of force or violence.

15. To refuse to bargain collectively, in good faith with the recognised trade unions.

16. Proposing or continuing a lock-out deemed to be illegal under this Act.

II. Unfair labour practices on the part of workmen and trade unions of workmen
1. To advise or actively support or instigate any strike deemed to be illegal under this Act.

2. To coerce workmen in the exercise of their right to self-organisation or to join a trade union or
refrain from joining any trade union, that is to say -

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(a) for a trade union or its members to picketing in such a manner that non-striking workmen are
physically debarred from entering the work places;

(b) to indulge in acts of force or violence or to hold out threats of intimidation in connection with a
strike against non-striking workmen or against managerial staff.

3. For a recognised union to refuse to bargain collectively in good faith with the employer.

4. To indulge in coercive activities against certification of a bargaining representative.

5. To stage, encourage or instigate such forms of coercive actions and wilful 'go slow', squatting on
the work premises after working hours or 'gherao' of any of the members of the managerial or other
staff.

6. To stage demonstrations at the residences of the employers or the managerial staff members.

7. To incite or indulge in wilful damage to employer's property connected with the industry.

8. To indulge in acts of force' or violence or to hold out threats of intimidation against any workman
with a view to prevent him from attending work.

It is difficult to define and lay down an exhaustive test of unfair labour practice, but it may be said
that any practice, which violates the directive principles of State policy contained in Article 43 of the
Constitution and such other Articles as deal with the decent wages and living conditions for
workmen amount to unfair practice.

In Devendra Kumar C. Solanki v. State of Gujarat and Others, Gujarat High Court has held that the
work done by the concerned workmen was same as that of permanent workmen and they also
worked for similar number of hours. But, discrepancy in payment of wages between permanent and
non-permanent workmen is alarming, same to be construed as unfair labour practice as defined
under Section 2(ra) of the Act.

In Eveready Flash Light Company v. Labour Court Bareilly, the company appointed a workman on
daily rate basis on 18th January, 1958 after trying him for four days. On April 12, 1958 he was
appointed on probation for 6 months which could be further extended by the company at its
discretion. He was elected a member of the working committee of the union on September 9, 1958.
On 10th September the management served him with a notice of warning that in spite of repeated
warnings he had shown no improvement in his work. The warning was repeated on 11th October.
On November 21, 1958 his service was terminated. The Union raised an industrial dispute and the
Labour Court found no justification for putting the workman on probation after he had been tried
and that the condition of putting him on probation as communicated by letter of 12th April was just
to delay making him a permanent employee. The Company preferred a petition in the Allahabad
High Court. It was held that "a condition of employment which is designed to invest the employer
with arbitrary power to keep the workmen at his mercy as regards his chance of being made
permanent, and to eventually lead to deprive him of such chance would amount to unfair labour
practice". It was further observed that it is not necessary that there must be numerous transactions
before the employer could be branded guilty of unfair labour practice and that he could be held
guilty of such practice in respect of one contract of employment only.

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In L.H. Factories and Oil Mills, Pilibhit v. State of U.P., some of the workers were promoted to the
rank of driver-cum-assistant-fitter. Other ten workers who were senior in service and also better
qualified but were not so promoted raised an industrial dispute alleging discrimination in the matter
of promotion. They alleged that they were victimised for their trade union activities. The Labour
Court was of the view that "promotions were not given on merits but were given to pamper one
association at the cost of the rival association". The company filed a writ in the Allahabad High Court.
It was held that the promotions were made to please one trade union and strengthen it against the
rival union and to which the disputing workmen were members. It was observed that any systematic
attempt by the employer to use his powers of management to disrupt the trade union of his
employees amounts to unfair labour practice. Unjust dismissal, unmerited promotion, partiality
towards one set of workers regardless of merits are some illustrations of unfair labour practice.

In Bengal Bhatdee Coal Co. v. Singh, thirteen workmen during strike obstructed other workers who
were willing to work from doing their work by sitting down between the tramlines. The Company
served charge-sheets on them. The welfare officer of the Company conducted domestic enquiry and
recommended their dismissal. The Supreme Court observed that looking at the nature of the offence
committed by these workmen it cannot be said that the punishment inflicted was grossly out of
proportion or was in conscionable. Therefore, the action taken by the Company in dismissing these
employees did not amount to victimization. Although the relations between the Company and the
union to which these workmen were members were not happy but this fact would by itself be no
evidence to prove victimization for if that were so, it would mean that the active workers of a union
with which the employer is not on good terms would have a carte blanche to commit any
misconduct and get away with it on ground that relations between the employer and the union were
not happy.

In Hind Construction and Engineering Company, it was a custom that when a holiday fell on Sunday,
the next day was declared a holiday. In 1961, January 1, fell on Sunday but the company refused to
declare the 2nd January a holiday. Eleven permanent employees refused to work on that day. They
were suspended, charge-sheeted and dismissed after holding a domestic enquiry. The union raised
an industrial dispute. The Industrial Tribunal held that the punishment of dismissal for one day's
absence was unjustifiably severe and amounted to victimization. In a special leave to appeal the case
was considered by the Supreme Court wherein it was observed that "where the punishment is
shockingly disproportionate, regard being had to the particular conduct and the past record or is
such that no reasonable employer would ever impose it in like circumstances, the Tribunal may treat
the imposition of such punishment as itself showing victimization or unfair labour practice". In the
present case the punishment was such that no reasonable employer would have imposed it in like
circumstances unless it served some other purpose. The absence of eleven workmen on a particular
day was an act of misconduct for which a lesser punishment of warning, fine or treating the same as
leave without pay might be imposed.

Chief Conservator of Forests & another v. Jagannath Maruti Kondhare,


If badlis, casuals or temporary workers are continued for long years, the object is manifestly to deprive
them of the status of permanent employees and this amounts to unfair labour practice on the part of
the employer.

Victimization
National Tobacco Co. of India LId. v. Fourth Industrial Tribunal,
Victimization means one of two things. One is when the workman concerned is innocent and yet
he is punished because he has in some way displeased the employer. For example, by being an

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active member of a Union of workmen who were acting prejudicially to the interests of the
employer.

Hind Construction and Engineering Co.Ltd v Their workmen


The second instance is where an employee has committed an offence but is given a punishment
quite out of proportion to the gravity of the offence, simply because he has incurred the
displeasure of the employer, or where the Punishment is shockingly disproportionate to the
misconduct or is sum as no reasonable employer would impose under the circumstances.

Sridharan Motor Service v Industrial Tribunal


If an employer Punishes an employee for a wrong which someone else has committed, it would
be right to infer that the employee is victimized by being made a scope-goat to him.

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21. Explain the role of arbitration in resolving industrial dispute.

Section 10-A. Voluntary reference of disputes to arbitration


Section 10-A of the Act differs from Section 10 of the Act mainly in one respect. Section 10 of the Act
provides for reference of an industrial dispute by the Government either on its own or on an
application having been made to it by the parties to the dispute. The arbitrator under Section 10 is
appointed by the Government making such reference. But Section 10-A of the Act authorises the
parties to a dispute themselves to choose their own arbitrator, including a Labour Court, Tribunal or
National Tribunal.

Section 10-A (1) provides that where any industrial dispute exists or is apprehended and the
employer and the workmen agree to refer the dispute to arbitration, they may refer the dispute to
arbitration. Such reference by agreement may be made at any time before the dispute has been
referred under Section 10 to a Labour Court, Tribunal or National Tribunal. The agreement, between
the parties to an industrial dispute, to make a reference must be in writing. The reference shall be
made to such person or persons (including the presiding officer of a Labour Court, Tribunal or
National Tribunal) as an arbitrator or arbitrators as may be specified in the arbitration agreement.

Section 10-A (1-A) provides that where an arbitration agreement provides for reference of the
dispute to an even number of arbitrators, the agreement shall provide for the appointment of
another person as umpire who shall enter upon the reference, if the arbitrators are equally divided
in their opinion. The award of the umpire shall prevail and shall be deemed to be an arbitration
award for the purpose of this Act.

Section 10-A (2) provides that an arbitration agreement referred to in sub-section (1) shall be in such
form and shall be signed by the parties thereto in such manner as may be prescribed.

Under Section 10-A (3) a copy of the arbitration agreement shall be forwarded to the Appropriate
Government and the conciliation officer, and the Appropriate Government shall within one month
from the date of the receipt of such copy publish the same in the Official Gazette.

Sub-section (3-A) provides that where an industrial dispute has been referred to arbitration and the
Appropriate Government is satisfied that the persons making the reference represent the majority
of each party, the Appropriate Government may, within one month from the date of the receipt of
such copy, issue a notification in the prescribed manner. When any such notification is issued the
employers and workmen who are not parties to the arbitration agreement but are concerned in the
dispute, shall be given an opportunity of presenting their case before the arbitrator or arbitrators.

Under Section 10-A (4) the arbitrator or arbitrators shall investigate the dispute and submit to the
Appropriate Government the arbitration award signed by the arbitrator or all arbitrators as the case
may be.

Under sub-section (4-A) where an industrial dispute has been referred to arbitration and a
notification has been issued under sub-section (3-A), the Appropriate Government may prohibit the
continuance of any strike or lock-out in connection with such dispute which may be in existence on
the date of the reference. The Appropriate Government shall do so by issuing an order.

Sub-section (5) provides that nothing in the Arbitration Act, 1940 shall apply to arbitration under this
section.

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In Management N.P.C. Corporation v. Their Workmen the appellant was engaged in execution of
certain projects. There were three categories of workmen in these projects:

1) regular staff,

(2) work charged staff, and

(3) casual labour borne on muster roll.

By a settlement, the question of pay scales of the muster roll workmen was decided and certain
other questions regarding other categories of workmen were referred to an Industrial Tribunal.

The Tribunal gave an award allowing 25 per cent increase in the wages of all labour including muster
roll workmen and allowed project allowance. As regards the project allowance, Tribunal took the
view that mere fact that the work charged staff and the muster roll staff are appointed for a
particular work and some of them happen to be local people should not stand in the way of their
getting project allowance and those of these two classes of workmen who come from distant places,
should be given this allowance in the same way as the members of the regular staff.

In appeal the Supreme Court held that "the question of pay scales of the muster roll workmen was
decided as a result of the settlement and that was not one of the questions referred to the
arbitrator. By the award they would be getting double benefit. Therefore, the award in so far as it
granted 25 per cent wage increase to the muster roll workmen beyond its jurisdiction was invalid
and was liable to be set aside". The Supreme Court found no jurisdiction for interfering with the
award relating to project allowance even though it may be difficult to work it in practice.

Rohtas Industries v. Its Union,


An arbitrator functioning under Section 10-A of the Act is a Statutory Tribunal. Award of an
arbitrator can be upset in case of an error of law apparent on its face.

In a case where the employer claims compensation for losses arising out of an illegal strike, the
question whether compensation is to be awarded involves a question of law.

Rajinder Kumar Kindra v. Delhi Administration,


An arbitrator appointed under Section l0-A can re-appraise the evidence led in the domestic inquiry
and satisfy himself whether the evidence led by the employer established misconduct against the
workman by virtue of the jurisdiction conferred by Section ll-A of the Act. It cannot be contended
that the arbitrator has only the power to decide whether the conclusions reached by the enquiry
officer were plausible one, deducible from the evidence led in the enquiry and not to appreciate the
evidence itself and to reach the conclusion whether the misconduct alleged against the workman
has been established or not.

It was held in Kamal L.K.. Sanghatan v. Liberty Footwear Company, that when a dispute is referred
for arbitration under an agreement under Section 10-A, the requirement of publication of
agreement under sub-section (3) of Section 10-A is mandatory before the arbitrator considers the
merits of the dispute. Non-compliance of the requirement of publication would render the award
invalid and unenforceable.

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22. Write note on notice of change.

Section 9-A. Notice of Change


Section 9-A of the Act forbids the employer to make any change in the conditions of service of any
workman in respect of the matters specified in the Fourth Schedule. The conditions of service for
change of which notice is to be given as enumerated in Schedule IV are:

(1) Wages, including the period and mode of payment;

(2) Contribution paid or payable, by the employer to any provident fund, pension fund or for the
benefit of the workmen under any law for the time being in force;

(3) Compensatory and other allowances;

(4) Hours of work and rest intervals;

(5) Leaves with wages and holidays;

(6) Starting, alteration or discontinuance of shift working otherwise than in accordance with
Standing Orders;

(7) Classification by grades;

(8) Withdrawal of any customary concession or privilege or change in usage;

(9) Introduction of new rule of discipline, or alteration of existing rules, except so far as they are
provided in Standing Orders;

(10) Rationalisation, standardisation or improvement of plant or technique which is likely to lead to


retrenchment of workmen;

(11) Any increase or the reduction (other than casual) in the number of persons employed or to be
employed in any occupation or process or department or shift, not occasioned by circumstances
over which the employer has control.

However, this section provides two conditions to be fulfilled before the employer can effect any
change in the conditions of service applicable to any workman. The two conditions are:

(a) The employer should give notice to the workmen likely to be affected by such change. The notice
must be given in the prescribed manner and must state the changes proposed to be effected.

(b) The employer must wait, after giving such notice for twenty-one days. Any change effected
before the expiry of the said period of twenty-one days shall be invalid.

In view of the proviso no notice as aforesaid need to be given in the following cases-

(a) where the change is effected in pursuance of any settlement or award.

(b) where the workmen likely to be affected by the change are persons to whom the following Rules,
Regulations or Code, as the case may be, apply-

(i) Fundamental and Supplementary Rules;

(ii) Civil Service (Classification, Control and Appeal) Rules;

(iii) Civil Services (Temporary Service) Rules;

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(iv) Revised Leave Rules;

(v) Civil Service Regulations;

(vi) Civilians in Defence Service (Classification, Control and Appeal) Rules;

(vii) The Indian Railway Establishment Code; or

(viii) Any other rules or regulations that may be notified in this behalf by any Appropriate
Government in the Official Gazette.

A.M. Co. v. Sen,


The object and purpose of Section 9-A is to afford an opportunity to the workmen to consider the
effect of a proposed change and, if necessary to present their view on the proposal.

In case a change of the date of a holiday on a request by the majority of workmen even if we assume
that the alteration amounts to change in the conditions of service, there is no question of
contravention of Section 9-A when the majority of the workmen themselves requested the employer
to make the alteration.

Tata Iron and Steel Co. v. Workmen,


Fixation of Sunday as weekly rest day having been founded on an usage and treated as a customary
privilege, changing it to some other day of rest would fall within item 8 of the Fourth Schedule.
Therefore, for effecting any change in weekly rest day a notice under Section 9-A would be
necessary and change without such notice would be ineffective.

Oil and Natural Gas Commn, v. Workmen,


When there is nothing to show either in the conditions of service or in the appointment letter of an
employee that he would work for certain hours only, any increase in the working hours with the
limits prescribed by the statute will be within the competence of the management.

The mere fact that the employees worked for certain hours for about six months, when the factory
was in the process of being constructed, will not make it a condition for their service.

Hindustan Lever Ltd. v. R.M. Ray,


Whether any particular practice or allowance or concession had become a condition of service
would always depend upon the facts and circumstances of each case.

L. Robert D'Souza v. Executive Engineer, Southern Railway,


When a workman is retrenched it cannot be said that change in his conditions of service is effected.
The conditions of service are set out in Fourth Schedule and no item in that schedule covers the case
of retrenchment. Since retrenchment does not constitute change in conditions of service in respect
of any item mentioned in Fourth Schedule, Section 9-A would not be attracted and no notice is
necessary.

Haribhan Bhinde v. Industrial Tribunal Bombay,


Where adjudication has not previously taken place and terms and conditions of service have not
been fixed by awards, the right of an employer to alter the terms and conditions of service may be
exercised in accordance with the provisions of Sections 9-A and 33(1)(a). Where conditions of service
are once settled by an award they cannot be altered by contract, settlement or award made in a
reference under Section 10 of the Act.

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In IO Corporation v. Its Workmen, the management of Assam Oil Refineries, Gauhati took a
voluntary decision in September 1959 to grant to all its employees Compensatory Allowance on the
basis of Central Government Circular, although the Circular was not binding on them. The allowance
was not granted through any standing order or circular.

In 1960 the Central Government issued another circular whereby employees in receipt of the Assam
Compensatory Allowance were given an option to choose the house rent allowance or
compensatory allowance. It was provided that they will not be entitled to draw both.

The management thought that the circular was binding on the company also, therefore, they
unilaterally, without giving any notice to the workers, withdrew the concession of the compensatory
allowance granted in 1959 with effect from July, 1960.

It was held that:

(1) the grant of the Assam Compensatory Allowance was an implied condition of service; and

(2) by withdrawing this allowance the employer sought to effect a substantial change which
adversely and materially affected the service conditions of the workmen for all times to come; and

(3) as Section 9-A was applicable and it had not been complied with the withdrawal of the
concession of compensatory allowance was illegal.

In the Workmen of the Food Corporation of India v. M/s. Food Corporation of India, the corporation
introduced the system of direct payment of wages in 1973 which was discontinued in February 1975
and the system of payment of wages through contractor was introduced. No notice was issued to
the workers under Section 9-A of the Act.

On these facts it was held that after introducing the direct payment system agreed between the
parties, if the employer wanted to introduce a change in respect of any of the matters set out in 4th
Schedule it was obligatory to give a notice of change. Item I in the 4th Schedule provides "wage
including the period and mode of payment". By cancelling the direct payment system and
introducing the contractor, both the wages and the mode of payment was altered to the
disadvantage of the workmen. A notice of change was, therefore, a 'must' before introducing the
change otherwise it would be an illegal change. Any such illegal change invites a penalty under
Section 31(2) of the Industrial Disputes Act.

In Ramaratnam K.S. v. Labour Court and another, the petitioner was employed in the package
division of the company-the second respondent. After long years of service, in 1991 the service of
the petitioner who was aged 62 years was terminated by the second respondent without informing
about the closure of the package section.

Later on somebody else was appointed in his vacancy. The High Court set aside the termination
order on the ground that the mandatory provisions of Section 9-A of the Industrial Disputes Act,
1947 were not followed and notice of retrenchment or rationalisation was not given to the
petitioner. Since somebody else was appointed after termination of service of the petitioner,
therefore, this proves that there was no closure at all. Further under Section 2(cc) of the Industrial
Disputes Act, 1947 closure means closure of business and not a particular place of business.

Section 9-B. Power of Government to exempt

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Section 9-B of the Act confers powers on the Appropriate Government to exempt certain class of
industrial establishments or class of workmen employed in any industrial establishment from the
application of the provisions of Section 9-A of the Act.

What class of industrial establishments or workmen should be exempted, is the sole discretion of
the Appropriate Government. The exemption may be granted if the Appropriate Government is of
the opinion that the application of the provisions of Section 9-A to any class of industrial
establishment or to any class of workmen employed in any industrial establishment-

(i) affect the employers in relation thereto so prejudicially that such application may cause serious
repercussion on the industry concerned; and

(ii) that public interest so requires.

The exemption must be notified in the Official Gazette. Further, it may be directed by the
notification that the provisions of Section 9-A shall not apply or shall apply subject to such
conditions, which must be specified in the notification itself. Thus the exemption granted may either
be absolute or limited but in any case, the limitations must be specified in the notification.

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23. Registration of Trade Unions under the Trade Union Act 1926

Sec. 3. Appointment of Registrars


The appropriate Government shall appoint a person to be the Registrar of Trade Unions for each
State. The appropriate Government is also authorised to appoint Additional and Deputy Registrars of
Trade Unions. They shall work under the superintendence and direction of the Registrar. The
Appropriate Government shall by an order specify and define the local limits within which any
Additional or Deputy Registrar shall exercise and discharge his powers and functions. The Additional
and Deputy Registrar shall exercise and discharge such powers and functions of the Registrar as may
be specified by an order issued by the appropriate Government. If any such Additional or Deputy
Registrar is appointed and exercises and discharges the powers and functions of a Registrar in an
area within which the registered office of a Trade Union is situated, he shall be deemed to be
Registrar in relation to the Trade Union for the purposes of this Act.

Sec. 4. Mode of Registration


A Trade Union may be a registered, unregistered or a recognised Trade Union. There is basic
distinction between these different Trade Unions. The members of a recognised and registered
Trade Union enjoy such benefits as the members of an unregistered Trade Union do not.

Any seven or more members of a Trade Union may apply for registration of the Trade Union. All the
members applying for registration must subscribe their names to the rules of the Trade Union and
also comply with the provisions of the Act relating to registration of Unions :

Provided that no Trade Union of workmen shall be registered unless at least ten percent, or one
hundred of the workmen, whichever is less, engaged or employed in the establishment or industry
with which it is connected are the members of such Trade Union on the date of making of
application for registration:

Provided further that no Trade Union of workmen shall be registered unless it has on the date of
making application not less than seven persons as its members who are workmen engaged or
employed in the establishment or industry with which it is connected.

If more than half of the members who applied for registration of Trade Union, cease to be members
of the Trade Union or dissociate themselves from the application by giving a notice in writing to the
Registrar before the registraton is granted to the Trade Union, the application shall be deemed to
have become invalid. In all other cases when only half or less than half of the members cease to be
members of the Union or dissociate themselves from the application as aforesaid, the application for
registration shall be valid.

Sec. 5. Application of Registration


According to the provisions of the act a Trade Union may become a registered Trade Union in the
following manner:

(1) An application should be sent to the Registrar in which seven or more members of such Union
must subscribe their names. At least seven members must subscribe names to the rules of the Trade
Union.

(2) The application in form "A" should be accompanied with a copy of rules of the Trade Union and a
statement of the following particulars:

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(a) the names, occupations, and addresses of the members making the application;

(aa) in the case of a Trade Union of workmen, the names, occupations and addresses of the place of
work of the members of the Trade Union making the application;

(b) the name of the Trade Union and the address of its head office; and

(c) the titles, names, ages, addresses and occupations of the office bearers of the Trade Union.

(3) A general statement of the assets and liabilities of the Trade Union prepared in the prescribed
form and containing such particulars as may be required should be sent with the application to the
Registrar where a Trade Union has been in existence for more than one year before the making of an
application for its registration.

Sec. 6. Provisions to be contained in the rules of a Trade Union


Every registered Trade Union is required to have written rules dealing with certain matters specified
in Schedule II of the Central Trade Union Regulations, 1938.

These rules generally determine and govern the relationship between the Trade Union and its
members. They also provide guidance for the internal administration of the Trade Union. A Trade
Union shall be entitled to registration under this Act, if: -

(1) the executive of the Trade Union is constituted in accordance with the provisions of this Act; and

(2) the rules of Trade Union provide for the following matters, namely:

(a) the name of the Trade Unions;

(b) the whole of the objects for which the Trade Union has been established;

(c) the whole of the purposes for which the general funds of the Trade Union shall be applicable, all
of which purposes shall purposes to which such funds are lawfully applicable under this Act;

(d) the maintenance of a list of the members of the Trade Union and adequate facilities for the
inspection thereof by the office bearers and members of the Trade Union.

(e) the admission of ordinary members who shall be persons actually engaged or employed in an
industry with which the Trade Union is connected and also the admission of the number of honorary
or temporary members as office bearers required under section 22 to form the executive of the
Trade Union;

(ee) the payment of a minimum subscription by members of the Trade Union which shall not be less
than-

(i) one rupee per annum for rural workers;

(ii) three rupees per annum for workers in other unorganised sectors; and

(iii) twelve rupees per annum for workers in any other case;

(f) the conditions under which any member shall be entitled to any benefit assured by the rules and
under which any fine or forfeiture may be imposed on the members;

(g) the manner in which the rules shall be amended, varied or rescinded;

(h) the manner in which the members of the executive and the other office bearers of the Trade
Union shall be elected and removed;

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(hh) the duration of period being not more than three years, for which the members of the
executive and other office-bearers of the trade Union shall be elected;

(i) the safe custody of the funds of Trade Union, and annual audit, in such manner as may be
prescribed, of the accounts thereof, and adequate facilities for the inspection of the account books
by the office bearers and members of the Trade Union; and

G) the manner in which the Trade Union may be dissolved.

In M.T. Chandersenan v. Sukumaran, it was held that if subscriptions are not paid in accordance with
the bye-laws of the Trade Union, persons who have failed pay cannot be considered as members of
the Union. But subscriptions should not be refused under some pretext which results in denial of
membership.

It was held by the Supreme Court in Bokajan Cement Corporation Employees’ Union v. Cement
Corporation of India Ltd, that an employee would not automatically cease to be a member of the
Trade Union on termination of his employment because there was no such provision either in Trade
Union Act or in the constitution of the union.

In Indian Oxygen Ltd. v. Their Workmen, the dispute regarding workmen of one factory represented
by their Union and company was referred to the Tribunal. The membership of the Union was limited
to workmen of that factory. It was alleged that the Constitution of the Union was amended so as to
embrace workmen of other factories of the company and the name of the Union was changed
before reference. But the amendment was not effected according to the provisions of the Act. It was
held that the award of the Tribunal could not extend to workmen of other factories.

In B.S. V. Hanumantha Rao & another v. Deputy Registrar of Trade Union and Deputy Commissioner
of Labour & others: the rules of Hyderabad Allwyn Workers' Union were amended to provide for
making the President of the Union as election authority, empowering him to nominate all office
bearers and denying authority to the general body to remove the President from office before expiry
of his term. These amendments were registered by the Registrar. It was held that the amendments
were contrary to the letter and spirit of the Trade Union Act. The President who is vitally interested
in the conduct of elections cannot be the person who can be entrusted with the authority to prepare
the voters list, appoint Returning Officer and conduct elections. It is a case of a person being given
the authority to perpetuate himself in office. Such a procedure amounts to constituting a person a
judge in his own cause.

Sec. 7. Power to call for further particulars and to require alteration of name
The registration of a Trade Union will be refused by the Registrar if the name under which a Trade
Union is proposed to be registered is identical with that of any existing Trade Union or so nearly
resembles such name as to be likely to deceive the public or the members of either Trade Union. In
such a case the Registrar may require the persons applying for such registration to change the name
of the Trade Union, and it shall be registered only after such alteration.

Kondal Rao v. Registrar, Trade Unions,


The Registrar may also ask for further information which he thinks necessary for the purpose of
satisfying himself that the application complies with the provisions of sections 5 and 6 of the Act. On
application for registration being made the Registrar may call for further information for the purpose
of satisfying himself that the application complies with the provisions of this Act. Such information
may be asked for only from the applicant and not from any other source.

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Sec. 8. Registration
The Registrar will register the Trade Union if he is satisfied that the Trade Union has complied with
all the requirements of this Act in regard to registration. The Registrar shall register the Trade Union
by making necessary entries in the register, to be maintained in such form as may be prescribed. The
particulars relating to the Trade Union contained in the statement accompanying the application for
registration shall be entered in the register.

Keshoram Rayon Workers Union v. Registrar of Trade Unions,


The workmen of an industrial establishment can form as many Unions as they like. There is nothing
in the Act that bars the formation of rival Unions or requires a Union applying for registration to give
notice to all existing Unions.

A.C.C. Rajanka Limestone Quarries Mazdoor Union v. Registrar of Trade Union,


Where the Registrar takes no action on an application for more than three months, a writ under Art.
226 can be issued commanding the Registrar to deal with the application.

In Chemosyn (P) Ltd. & others v. Kerala Medical and Sales Representatives Association, it was held
that a Trade Union registered under the Act is not a statutory body. It is not created by statute or
incorporated in accordance with the provisions of a statute. The activities of the Trade Union are not
closely related to Governmental functions and are not of public importance. Therefore a Trade
Union is not amenable to writ jurisdiction as it is not covered by "other authorities" in Article 12 of
the Constitution.

In Fateh Solanki and others v. Rashtriya Mill Mazdoor Sangh and others, two rival groups claimed to
be office bearers of Union. It was held that the dispute is not a trade dispute under Section 2 (g) and
it is in the nature of a private dispute which can be adjudicated upon by the Civil Court only and not
by the Registrar under the Act. He can only make a reasonable inquiry within the scope of Sections 8
and 28 of the Act to ascertain as to who are the elected office bearers and to register their names.
The Registrar under Section 28 does not discharge any quasi-judicial functions but he discharges only
administrative functions.

Sec. 9. Certificate of registration


The Registrar on registering a Trade Union shall issue a certificate of registration in the prescribed
form which shall be conclusive evidence that the Trade Union has been duly registered under this
Act.

Functions of Registrar
The primary function of the Registrar is to examine the applications made to him for registration and
look at the objects of the Union for which it may be formed. On compliance of statutory conditions
as provided in the Act, he shall grant registration certificate to the Union.

Mukund Ram Tonti V. S.I. Raw, Registrar, Trade Unions, Bihar,


As a matter of principle, the Registrar has no power to declare the election of office bearers of a
Union unconstitutional. But where the petitioner has himself submitted to the jurisdiction of the
Registrar by requesting him to make an enquiry, he cannot subsequently be allowed to raise an
objection that the Registrar acted without jurisdiction, for once he had availed the opportunity of
getting a favourable order from the Registrar, he was estopped from challenging the jurisdiction of
the Registrar if the result of the inquiry happened to be against him.

The Registrar shall be fully within his jurisdiction if he makes an inquiry about the legality of the new
election of the office bearers of a Trade Union for the purpose of maintaining a register showing the

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name of the office bearers who may, at the appropriate time, be required to comply with the
provisions of the Act. The acceptance or non-acceptance by the Registrar of the election of the office
bearers of a Union is legal only for the purpose of maintenance of records in his office to facilitate
the administration of the Act, but is open to challenge in the law court.

In North-Eastern Railway Employees' Union and others v. Third Addl. District Judge Farrukhabad and
others, the Supreme Court held that the High Court cannot designate the General Manager of a
railway as the authority to hold the elections. The Registrar of unions is the proper authority charged
with the duty of supervising the elections or administering the provisions of the Act.

It was held in North Eastern Railway Employees Union, Gorakhpur and others v. Deputy Labour
Commissioner, Deputy Registrar Trade Unions, Gorakhpur and others that the rights conferred
under the Trade Unions Act are neither fundamental rights nor common law rights. Elections held in
pursuance of the scheme of Trade Unions Act are not subject to any challenge under any provisions
of the Statute, namely, Trade Unions Act. It is clear that the statute does not provide any machinery
for challenging the elections held under the Act and Registrar has absolute right, authority or
jurisdiction to adjudicate upon any election set up by any of the rival factions or any other person.
The powers of Registrar are purely administrative. The Registrar of the Union has not been conferred
with the power of holding elections of the Trade Unions, superintendence of elections of Trade
Unions or conduct of election of the Trade Unions. Therefore, filing of a civil suit is the only remedy
and since that remedy is available, the High Court refused to interfere in the matter.

In Telco Workers Union v. State of Jharkhand, the High Court has held that there is no provision in
the Trade Unions Act, 1926 which confers a power on the Registrar, Trade Unions to adjudicate the
inter se dispute between the parties. The Registrar has no power under the Act to entertain
grievances of private members of the Trade Unions though, a complaint may become a source of
information to the Registrar, for forming an opinion for issuing show cause notice under Section 10
of the Act.

Sec. 9A. Minimum requirement about membership of a Trade Union


A registered Union of workmen shall at all times continue to have not less than ten per cent or one
hundred of the workmen, whichever is less, subject to a minimum of seven, engaged or employed in
an establishment or industry with which it is connected, as its members.

Sec. 10. Cancellation of Registration


Power to withdraw or cancel registration of a Trade Union is given to the Registrar. The Registrar can
exercise his power in the following cases:

(1) On the application of the Trade Union to be verified in the prescribed manner.

(2) If the Registrar is satisfied that the certificate of registration has been obtained by fraud or
mistake.

(3) Where the Trade Union has ceased to exist.

(4) If the Union has wilfully and after notice from the Registrar contravened any provisions of this
Act or allowed any rule to continue in force which is inconsistent with the provisions of the Act.

(5) Where the Union has rescinded any rule providing for any matter provision for which is required
to be made by section 6.

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(6) According to clause (c) of Section 10 if the Registrar is satisfied that a registered Trade Union of
workmen ceases to have the requisite number of members, the registration can be cancelled.

The Registrar on receiving an application from the Union for withdrawal or cancellation of
registration must before granting the prayer, satisfy himself that the withdrawal or cancellation of
registration was approved by a general meeting of the Trad Union or if it was not so approved it had
the approval of the majority of the members of the Trade Union. For this purpose he may call for
such further particulars as he thinks necessary and may also examine any officer of the Union.

Except when the registration is withdrawn on an application by the Union itself, the Registrar must
give to the Trade Union not less than two months' previous notice in writing specifying the ground
on which it is proposed to withdraw or cancel the certificate of registration. It is quite clear from the
provisions of section 10 of this Act that no such notice as aforesaid by the Registrar to the Union is
necessary, when the registration is withdrawn or cancelled on an application by the Union itself.

It was held in Tata Electric Companies Officers Guild v. Registrar of Trade Unions, that for
cancellation of registration of a Trade Union wilful contravention of provision of the Act is necessary.
Therefore, where a Trade Union did not file return due to misunderstanding of accounting year and
the return was filed soon after receipt of show cause notice from the Registrar, the cancellation of
registration on the ground of non-filing of return was held improper.

In Bombay Fire Fighters Services Union, Mumbai v. Registrar Trade Unions, Bombay, an appeal was
filed by the union challenging the order of Registrar cancelling its registration for continued
contravention of Section 28 of the Trade Unions Act, 1926. Setting aside the impugned order the
High Court observed that the said order was in violation of the mandatory provisions of Section 10 of
the Act. The respondent, Registrar had not addressed a previous show cause notice in writing to the
appellant union at its correct address. Therefore, the cancellation of registration was held illegal and
improper.

Sec. 11. Appeals


A limited right of appeal from the decisions of the Registrar is granted by section 11 of the Act. Any
person aggrieved by the refusal of the Registrar to register a Trade Union or by the withdrawal or
cancellation of a certificate of registration has the right of appeal. The appeal should be preferred
within the prescribed period. The proceedings by way of appeal must be started within sixty days of
on which the Registrar passed the order against which appeal is made.

Mihir Kumar Guha v. Registrar of Trade Unions, West Bengal, Calcutta,


The expression "High Court" used in section 11 of the Indian Trade Unions Act means and includes
the High Court in its original as well as appellate jurisdiction.

The appeal shall be made:

(a) where the head office of the Trade Union is situated within the limits of a Presidency town to the
High Court; or

(a a) where the head office is situated in an area, falling within the jurisdiction of a Labour court or
an Industrial Tribunal, to that Court or Tribunal, as the case may be.

(b) where the head office is situated in any other area, to such court, not inferior to the court of an
additional or assistant judge of a principal Civil Court of original jurisdiction, as the appropriate
Government may appoint in this behalf for that area.

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The appellate court may dismiss the appeal or pass an order directing the Registrar to register the
Union and to issue a certificate of registration. It may also set aside the order for withdrawal or
cancellation of the certificate. The Registrar shall comply with any such order passed by the apellate
Court.

For the purpose of an appeal under sub-section (1) of section 11 an Appellate Court shall, so far as
may be, follow the same procedure and have the same powers as it follows and has when trying a
suit under the Code of Civil Procedure, 1908. The Appellate Court may also direct by whom the
whole or any part of the costs of the appeal shall be paid and such costs shall be recovered as if they
had been awarded in a suit under the Civil Procedure Code, 1908. These powers include the power
to summon witnesses, compel production of documents, of making order for discovery and
inspection and so on. In the event of the dismissal of an appeal by some local court exercising
original jurisdiction, the person aggrieved shall have a right of appeal to the High Court. When an
appeal is so made to the High Court, it shall have all the powers of an Appellate Court stated above.

There is some anomaly in the provisions of section 11 of the Trade Unions Act, 1926. It is clear from
the provisions of this section that a Trade Union having its head office situated within limits of a
Presidency Town shall have only one right of appeal against the decision of the Registrar refusing to
register such Trade Union. But a Trade Union having its head office situated within the mufassil, shall
have two rights of appeal against the decision of the Registrar. It cannot go directly to the High
Court, but shall first move the local court exercising original jurisdiction and then prefer an appeal
against the decision of the local Court to the High Court.

Judicial notice of above position was first taken by the Calcutta High Court in Registrar of Trade
Unions, West Bengal v. Mihir Kumar Guha, wherein an appeal was made against an order of a single
Judge allowing an appeal under section 11 (1) (a) of the Indian Trade Unions Act, 1926, against the
order of the Registrar of Trade Unions, West Bengal, cancelling the certificate of registration granted
to the Employee's State Insurance Corporation Employees' Union. The respondents raised three
objections, namely:

(i) no appeal from the decision of a single Judge is provided under section 11 (1) (a) of the Act; and

(ii) the judgment pronounced by the single Judge was itself in the exercise of appellate jurisdiction.
Therefore, it was not appealable; and

(iii) the case was not declared by the Judge as fit one for appeal.

The Court fully agreed with the contention of the respondent that second appeal is not provided for
in the Trade Unions Act, 1926, but held the appeal to be competent under the provisions of clause
15 of the Letters Patent.

In Mukand Iron & Steel Works Ltd. v. V.G. Deshpande, Registrar of Trade Unions Bombay, the
registration of the Trade Union was cancelled for contravention of the provisions of section 28 by
failing to send annual return.

Later on, Registrar of Trade Unions withdrew the cancellation of registration on the ground that
returns have been submitted subsequently.

Therefore, the question for consideration was whether the Registrar had the power to withdraw the
cancellation of registration. It was held that a Trade Union whose registration has been cancelled has
remedies in the form of an appeal or in the form of an application for fresh registration. If the appeal
succeeds the order of cancellation could be held to be void ab initio and the union would continue as

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if order of cancellation has not been passed. If fresh registration is permitted it would operate from
the date thereof. Once the Registrar cancels or withdraws the registration of a Trade Union he has
no power to review it and he cannot withdraw that order because of subsequent events. Hence the
order of the Registrar withdrawing the cancellation order is without jurisdiction.

Sec. 12. Registered 0ffice


All communications and notices to a registered Trade Union may be addressed to its registered
office. Notice of any change in the address of the head office shall be given within fourteen days of
such change to the Registrar in writing. The change in address shall be recorded in the register
referred to in section 8 of the Act.

Sec. 13. Incorporation of registered Trade Union


A Trade Union after registration becomes entitled to the following advantages:

(1) It becomes a body corporate by the name under which it is registered.

(2) It gets perpetual succession and common seal.

(3) It can acquire and hold both movable and immovable property.

(4) It can contract through agents.

(5) It can sue and be sued in its registered name.

Hardie and Lane Ltd. v. Chilton,


An unregistered Trade Union could not be sued in Tort by suing a member thereof in a
representative capacity. The proper course in such a case was to sue a member for any cause of
action that lay against that member and it was not intended anywhere that such a suit, would in any
way be improper.

Therefore an unregistered Trade Union is only a voluntary association of individuals having no


corporate existence. It is not a legal entity. An unregistered Trade Union cannot be sued and any
appearance of officials on its behalf before the Court is not right.

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24. Discuss the liability of the employer to pay compensation under the Workmen
Compensation Act.

Section 3. Employer's liability for Compensation


The liability of an employer to pay compensation is limited and is subject to the provisions of the
Act. Under sub-section (1) of section (3) the liability of the employer to pay compensation is
dependent upon the following four conditions:

(1) Personal injury must have been caused to an employee;

(2) Such injury must have been caused by an accident;

(3) The accident must have arisen out of and in the course of employment; and

(4) The injury must have resulted either in death of the employee or in his total or partial
disablement for a period exceeding three days.

The employer shall not be liable to pay compensation in the following cases:

(a) If the injury did not result in total or partial disablement of the employee for a period exceeding
three days;

(b) In respect of any injury not resulting in death or permanent total disablement the employer can
plead:

(i) that the employee was at the time of accident under the influence of drinks or drugs;

(ii) that the employee wilfully disobeyed an order expressly given or a rule expressly framed for the
purpose of securing safety of employees; and

(iii) that the employee having known that certain safety-guards or safety devices are specifically
provided for the purpose of securing the safety of employee, wilfully disregarded or removed the
same.

The employer can succeed in his plea only if he can establish that the injury was attributable to
anyone of the above factors.

Employer's Liability in case of occupational diseases


Sub-section (2) of section 3, deals with the payment of compensation in case of an injury resulting
from occupational diseases. The list of the occupational diseases is contained in Schedule III of the
Act. Schedule III is divided into three parts, A, B and C. The disease contracted must be an
occupational disease peculiar to the employment specified in Schedule III. In respect of every such
disease mentioned as occupational disease in Schedule III, a list of a number of employments is
given.

To support any claim for compensation in case of occupational disease in Part A no specified period
of employment is necessary; for diseases in Part B the employee must be in continuous employment
of the same employer for a period of six months in the employment specified in that part; and for
diseases in Part C the period of employment would be such as is specified by the Central
Government for each such employment whether in the service of one or more employers. The
contracting of any disease specified in Schedule III shall be deemed to be an injury by accident
arising out of and in the course of employment unless the contrary is proved.

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Part A of Schedule III


The employer shall be liable to pay compensation for an injury resulting from an occupational
disease mentioned in Part A of Schedule III, if an employee employed in any employment specified in
Part A of Schedule III contracts any disease specified therein as an occupational disease peculiar to
that employment. The contracting of the disease shall be deemed to be an injury by accident and
unless the contrary is proved the accident would be deemed to have arisen out of and in the course
of employment.

Contracting of an occupational disease after discontinuance of service


If any such disease as is mentioned in Part A of Schedule III develops after an employee has left the
employment, no compensation shall be payable to him.

Part B of Schedule III


In case of contracting of any disease mentioned in Part B of Schedule III the employer shall be liable
if an employee while in the service of an employer in whose service he has been employed for a
continuous period of not less than six months in employment specified in Part B of Schedule III
contracts any disease specified therein as an occupational disease peculiar to that employment. The
contracting of the disease shall be deemed to be an injury by accident within the meaning of this
section, and unless contrary is proved, the accident would be deemed to have arisen out of and in
the course of employment.

Contracting of an 0 occupational disease after discontinuance of service


The employer shall be liable to pay compensation to an employee where an employee contracts any
disease as aforesaid after he has left his employment in the following conditions:

1. If an employee has served under any employer in any employment specified in Part B of Schedule
III for a continuous period of six months.

2. If an employee has after cessation of his service contracted any disease specified in Part B of
Schedule III as an occupational disease peculiar to that employment.

3. If it is proved that such disease arose out of the employment.

The contracting of the disease shall then be deemed to be an injury by accident within the meaning
of this section.

Part C of Schedule III


Where an employee contracts any disease specified in Part C of Schedule III the employer shall be
liable:

(1) If an employee was in the service of one or more employers in any employment specified in Part
C of Schedule III for such continuous period as the Central Government may specify in respect of
each such employment; and

(2) If he contracts any disease specified therein as an occupational disease peculiar to that
employment.

If the above two conditions are fulfilled, the contracting of the disease shall be deemed to be an
injury by accident within the meaning of section 3 of the Act and unless contrary is proved the
accident shall be deemed to have arisen out of and in the course of the employment.

According to the first proviso to sub-section (2) of section 3 if it is proved:

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(a) that an employee while in service of one or more employers in any employment specified in Part
C of Schedule III has contracted a disease specified therein as an occupational disease peculiar to the

employment during a continuous period which is less than the period specified under sub-section (2)
of section 3 for that employment, and

(b) that the disease has arisen out of and in the course of employment; the contracting of such
disease shall be deemed to be an injury by accident within the meaning of section 3 of the Act.

Contracting of an occupational disease after discontinuance o/service


Where an employee contracts an occupational disease after discontinuance of his service the
employer shall be liable to pay compensation:

(1) If it is proved that the employee has served under one or more employers in any employment
specified in Part C of Schedule III for such continuous period as the Central Government may specify
in respect of each such employment;

(2) If he has after cessation of his service contracted any disease specified in Part C of Schedule ill as
an occupational disease to that employment; and

(3) If it is proved that such disease arose out of the employment.

The contracting of the disease shall be deemed to be an injury by accident within the meaning of this
section.

Section 3(2-A)
In case of any employment mentioned in Part C of Schedule III where there are more than one
employers, sub-section, (2-A) of section 3 authorises the Commissioner to fix up the extent of
responsibility of different employers in respect of the amount of compensation payable to an
employee.

Section 3(3)
The Central Government or the State Government after giving, by notification in the Official Gazette,
not less than three months’ notice of its intention so to do, may by a like notification, add any
description of employment to the employments Specified in Schedule III and shall specify in the case
of employments so added the diseases which shall be deemed for the purposes of this section to be
occupational disease peculiar to those employments respectively and thereupon provisions of sub-
section (2) shall apply in the case of a notification by the Central Government, within the territories
to which this Act extends or, in case of a notification by the State Government within the State as if
such diseases had been declared by this Act to be occupational diseases peculiar to those
employments.

Section 3(4)
The employer is liable to pay compensation only if the disease can be directly attributed to a specific
injury by accident arising out of and in the course of his employment. Exceptions to this rule are the
cases covered by sub-sections (2), (2-A) and (3) of section 3.

Employment
Chintaman Rao v. State of M.P.,
The concept of employment implies three elements: an employer, an employee and a contract of
employment between them. In other words, employment means a contract of service between the
employer and employee wherein the employee agrees to serve the employer under his control and
supervision.

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Employment under the present Act is not limited to actual work or place of work but extends to all
things which the employee is entitled by the contract of employment expressly or impliedly to do. To
justify any claim for compensation existence of a contract of employment express -or between the
employer and the injured employee is necessary.

Personal injury
Injury ordinarily refers to a physiological injury. Personal injury does not mean only physical or bodily
injury but includes even a nervous shock, a mental injury or strain which causes a chill. It is a term
wider than bodily injury. In Indian News Chronicle v. Mrs. Lazarus, an employee, employed as an
electrician had frequently to go to a heating room from a cooling plant, was attacked by pneumonia
and died after a short illness of five days. The Court held that the injury caused by an accident is not
confined to physical injury and the injury in the instant case was due to his working and going from a
heating room to a cooling plant as it was his indispensable duty.

Pratap Narain Singh v. Shrinivas,


In case of personal injury caused to an employee by an accident arising out of and in the course of
employment unless the right to compensation is taken away under section 3(5), the employer
becomes liable to pay the compensation as soon as the aforesaid personal injury is caused to the
employee.

Jaybharat Saw Mill v. Babulal Ambalal Sodh Parmar,


Mere vague offer to keep and continue the employee in the employment even after the injury and
the resultant disablement is not sufficient to disqualify the employee's claim under section 3 of the
Act.

Accident
The expression "accident" has not been defined in the Act. It means any unexpected mishap,
untoward event, or consequence brought about by some unanticipated or undesigned act which
could not be provided against.

Bai Shakri v. New Manekchowk Mills Co.,


The basic and indispensable ingredient of the accident is the unexpectation. Whether a particular
occurrence is accident or not, it must be looked upon not only from the point of view of the person
who causes it but also from the point of view of the person who suffers it. Although an accident
means a particular occurrence which happens at a particular time but it is not necessary that the
employee must be able to locate it in order to succeed in his claim. There would be cases, where a
series of tiny accidents, each producing some unidentifiable results and operating cumulatively to
produce the final condition of injury constitute together an accident within the meaning of this
section.

Arising out of and in the course of employment


M/s. Chowgule and Co. (Pvt.) Ltd. v. Smt. Felicidade,
The expression "arising out of” suggests the cause of accident and the expression "in the course of”
points out to the place and circumstances under which the accident takes place and the time when it
occurred. A causal connection or association between the injury by accident and employment is
necessary. The onus is on the claimant to prove that accident arose out of and in the course of
employment.

Central Glass Industries v. Abdul Hussain,

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The employment should have given rise to the circumstances of injury by accident. But a direct
connection between the injury caused by an accident and the employment of the employee is not
always essential. Arising out of the employment does not mean that personal injury must have
resulted from the mere nature of employment and is also not limited to cases where the personal
injury is referable to the duties which the employee has to discharge.

Notional extension of Employer's Premises


L Netherton v. Coles,
Ordinarily a man's employment does not begin until he has reached the place where he has to work
and does not continue after he has left the place of his employment. The period of going to or
returning from employment are generally excluded and are not within the course of employment.
Travelling to and from is prima facie not in the course of employment.

S.S. Mafg v. Bai Vatu Raja,


But there may be reasonable extension in both the time and place and an employee may be
regarded as in the course of his employment even though he had not reached or had left his
employer's premises.

In T.N.C.S Corporation Ltd. v. S. Poomalai an employee was murdered in communal riot when he was
on his way to the place of work. Death was held to be in relation to his employment and in the
course of employment entitling the wife of the deceased employee to compensation under the Act.

In brief the law relating to notional extension of employer's premises may be summed up as follows:

(i) There must be an obligation, express or implied, upon the employer to provide transport to and
from the workspot and a reciprocal obligation upon the employee to avail that transport.

(ii) The transport facility must not only be in the nature of a concession or privilege which the
employees are free to avail or not.

(iii) Where the means of transport provided by the employer, is not only the most convenient means
but also the only means to reach the place of work, there would be deemed to be an implied
obligation on the employer to provide that transport and a reciprocal- obligation on employee to
avail it.

(iv) In the case of an accident taking place on a public road, the employer would be liable only if the
employment of the employee required him to be there. The distance of the place of accident from
the place of work is immaterial in such cases.

Wilful disobedience of orders or safety devices, etc


Chaitram v. Steel Authority of India Lid. Bihar,
In order to disown any claim for compensation the employer has to show not only disobedience of
rules and safety devices but such disobedience must be wilful and the order must be express. The
burden of proving intentional disobedience on the part of the employee would be on the employer
who claims the benefit of the proviso.

R.B. Moondra and Co. v. Mst. Bhanwari


Mere disobedience is not sufficient because it may be due to forgetfulness or the result of the
impulse of the moment. The plea of wilful disobedience of the employee to any order expressly
given is not available in case of death of the employee but only in cases of injury not resulting in
death. Where the death of an employee was caused by an accident arising out of and in the course

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of employment it is not a defence to plead that there was wilful disobedience of any order expressly
given or rule framed for the purpose of securing the safety of the employee.

Compensation under Agreement


It was held in Roshan Deen v. Preeti Lal, that an agreement by an employee to relinquish any right to
compensation for personal injury arising out of and in the course of employment would be null and
void. The removal or reduction of liability of a person to pay compensation under the Employees'
Compensation Act by any such agreement is not permitted. In this case it was held that the order of
Commissioner, dismissing claim of injured employee as settled by agreement was obtained by fraud
and as such the matter was directed to be heard by Commissioner without further delay.

The question of compensation and negligence of employee


Contributory negligence on the part of the employee does not exonerate the master from his
liability to pay compensation. While disobedience of rules and safety devices, etc., is a ground for
exemption in case of injury other than death but mere negligence of an employee cannot be
regarded as wilful disobedience to an order expressly given.

Padam Debi v. Raghunath.


In a case where a motor driver running with a high speed dashed with a tree and was thereby killed
by accident the employer cannot escape from his liability simply because such an accident was
caused by rash and negligent driving. The driver might have been in excessive speed but dashing of
the vehicle with a tree cannot be said to have been brought with any previous design.

It was held that "an accident means some unexpected event happening without design even though
there may be negligence on the part of the employee who suffers from it. Hence, once it is proved
that the accident was caused in the course of employment, the question of negligence, great or
small, is irrelevant."

Alternative remedy under Section 3(5)


Under sub-section (5) of Section 3 no claim for compensation shall be maintainable by an employee
in respect of any injury if he has already instituted a civil proceeding for damages in respect of the
same injury against the employer or any other person. So also no suit for damages shall be instituted
by an employee in any court of law in respect of any injury in the following two circumstances :

(1) if such employee has made a claim to compensation in respect of such injury before a
Commissioner; or

(2) if the amount of compensation in respect of the injury has been settled by an agreement
between the employee and the employer in accordance with the provisions of the Act.

In case of an injury caused by an accident an employee has the following alternative remedies:

(i) he can claim compensation under this Act; or

(ii) he can claim damages in torts; or

(iii) he can claim under the Employer's Liability Act.

Section 3(5) imposes a bar on the recovery by the employee of compensation twice for the same
injury. It is not only a success to a claim that bars a subsequent claim to compensation, but if an
employee has brought even an unsuccessful claim against his employer he would be debarred from
making any alternative claim in respect of the same injury.

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S. Sappiah Chettiar v. Chinnathurai and another,


The word instituted in Section 3(5) of this Act, means, "setting on foot an enquiry " and it is more
than a mere filing of a claim. Where the employee has done nothing more than to file a claim and
withdrew it before the proceedings actually commenced and which commencement would only be
effective after giving notice to the opposite party there has been no such election as would debar
the employee's dependant from seeking any other alternative claim available to him.

Thus, although alternative remedies are available to an employee he cannot have the best of both
the worlds and put his employer in double jeopardy. The law protects the employer not only against
double payment but also against double proceedings.

Section 4. Amount of compensation


(l) Subject to the provisions of this Act, the amount of compensation shall be as follows, namely: -

(a) where death results from injury:

an amount equal to fifty per cent of the monthly wages of the deceased employee multiplied by the
relevant factor; or an amount of one lakh twenty thousand rupees, whichever is more;

(b) Where permanent total disablement results from the injury”

an amount equal to sixty per cent of the monthly wages of the injured employee multiplied by the
relevant factor; or an amount of one lakh forty thousand rupees, whichever is more;

Provided that the Central Government may, by notification in the Official Gazette, from time to time,
enhance the amount of compensation mentioned in clauses (a) and (b).

In Oriental Insurance Company v. Mohd. Nasir and Another, the employee who was a driver suffered
injury in an accident and he claimed compensation. It was held that in determining the amount of
compensation, several factors are required to be taken into consideration. Functional disability of an
employee has a direct relationship with loss of limb. In this case the Tribunal had held that there has
been a 15% disability but then there was nothing to show that he suffered 100% loss of earning
capacity. There is nothing on record to show that the qualified medical practitioner opined that
there was a permanent and complete loss of use of his right leg or that he totally became unfit to
work as a driver. Therefore, the High Court was not correct in determining the loss of income at
100%.

Section 5. Method of calculating Wages


The lump sum compensation in the case of permanent disablement and half monthly payments in
the case of temporary disablement is paid according to the wage group to which the employee
concerned belongs. It is, therefore, essential to see how the monthly wages are determined.
Monthly wages means any wages due to an employee in a month; may be that in actual practice
wages are paid by day, week, or any other period or at piece rate.

The monthly wages would be calculated as follows:

(a) Where the injured employee has been in the service of an employer during a continuous period
of not less than twelve months previous to the accident the monthly wages of the employee shall be
one-twelfth of the total wages which have fallen due for payment to him by the employer in the last
twelve months of that period.

(b) If the injured employee has been in continuous service of an employer for less than one month,
then monthly wages of that employee shall be the average monthly amount which during the twelve

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months immediately preceding the accident was being earned by an employee employed on the
same work. If there was no such employee, the average monthly amount which was being earned by
an employee employed on similar work in the same locality will be the monthly wages of the injured
employee.

(c) In other cases including those in which it is not possible for want of necessary information to
calculate the monthly wages under clause (b), the monthly wages shall be thirty times the total
wages earned in respect of last continuous period of service immediately preceding the accident
divided by the number of days comprising such period. The monthly wages of a worker is
determined by multiplying the daily wage by 30.

A period of service shall for the purposes of this section be deemed to be continuous which has not
been interrupted by a period of absence from work exceeding fourteen days.

Section 6. Review
Review of compensation has been provided by Section 6 of the Act. Since the nature of disablement
is temporary, it is, therefore, likely that the condition of the employee may either improve or
deteriorate. In either case the compensation being dependent upon the degree of disablement, it is
always open to review and adjustment.

Section 7. Commutation of Payments


Section 7 deals with commutation of half monthly payments. After the half monthly payments have
been made for six months, either the employer or the employee can get the recurring payments
commuted at any time to a single payment. Any such commutation can be effected either by an
agreement between the parties or by an application to the Commissioner.

Section 8. Distribution of Compensation


Section 8 of the Employee' Compensation Act deals with the distribution of compensation amongst
the dependants of deceased employee. All payments of compensation has to be made not directly
to the dependants but through the Commissioner for Employees' Compensation.

Section 9. Compensation not to be assigned, attached or charged


Case v. Colonial Wharves,
Section 9 is mainly designed to give protection to an employee, who has been granted lump sum or
half-monthly payment, from being deprived of the benefit of compensation. Compensation granted
to an employee cannot be assigned, charged or attached by any process of law. It cannot be passed
to any other person by operation of law and is also not liable to set off against any claim. An
employer who has been found liable to pay compensation by way of weekly payments under the Act
to an employee is not entitled to set off against those payments a sum awarded to him as costs
against an employee in an application for the diminution of the weekly payments.

Section 10. Notice and claims of the accident


An employee who is injured by an accident must give a notice of it in writing. This has to be done as
soon as practicable after the occurrence of the accident. No hard and fast rule can be laid down in
regard to what is meant by "as soon as practicable". It depends upon the individual circumstances. A
notice given two months after the accident may, if the victim of accident is continuously in the
hospital, be held to be one given as soon as practicable," The notice must contain:

(i) the name and address of the employee injured;

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(ii) the date of the accident; and

(iii) the cause of the injury.

The notice has to be served upon the employer or on anyone of the several employers or upon any
person who is responsible to the employer for the management of the branch of trade or business
where the injured employee was employed. It may be delivered to the person concerned by hand or
sent by registered post addressed to the residence or any office or place of business of the person to
whom it is addressed.

Any claim for compensation must be made within two years of the occurrence of the accident or in
case of death, within two years from the date of death.

Section 11. Medical Examination


An employee who is injured and has given notice of an accident to the employer shall submit himself
for medical examination if offered by the employer.

Any such offer made by the employer must be free of charge and made within three days from the
time at which service of the notice has been effected. So also any employee who receives half
monthly payment shall submit himself for medical examination if and when required by the
employer. Any employee shall be required to submit himself for examination by a medical
practitioner only in accordance with the rules made under this Act and at such intervals as
prescribed by these rules.

If an employee refuses to submit himself for examination by a qualified medical practitioner as


required either by the employer or the Commissioner, his right to compensation shall be suspended
for the period of refusal or obstruction.

Superintending Engineer KEB Hubli v. Kadappa Malappa,


The purpose of medical examination is to prevent a dishonest worker having an opportunity of
concealing the nature of his injury from any impartial observer and the certificate or evidence given
by the employer's doctor cannot, however be considered to be conclusive. In case the employer
doubts the bona fide of the employee, he may get him examined by a competent medical
practitioner free of cost but he cannot demand of the worker a medical certificate

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25. Benefits under Employees State Insurance Act 1948

Section 46. Benefits


The purpose of the Employees' State Insurance Act is to provide benefits as detailed in the Act
particularly in Section 46, to the insured persons or their dependants. The following benefits are
provided under Section 46.

1. Sickness benefit
It is in the form of periodical payment to any insured person, provided his sickness is certified by a
duly appointed medical practitioner, or any person having such qualifications and experience as may
be specified by regulations of the Corporation.

In Management of Diocesan Press v. Labour Court Madras, it was held that it was not possible to
accept the contention that since the employee has received sickness benefit under the Act, he is not
entitled to receive the wages for the period during which he was on sick leave. But the employer is
entitled to deduct the benefit received by the employee from the leave salary payable to him.

2. Maternity Benefit
This benefit is in the form of periodical payment available to an insured woman. It is payable in case
of-

(i) confinement; or

(ii) miscarriage; or

(iii) sickness arising out of pregnancy; or

(iv) premature birth of a child.

The grounds of eligibility of an insured woman to such payments must be certified by an Insurance
Medical Officer as provided by the regulations.

3. Disablement benefit
Any insured person shall be entitled to periodical payments if:

(i) he suffers from disablement;

(ii) the disablement results from an employment injury; and

(iii) he sustained the injury as an employee under conditions mentioned in the Act.

The disablement benefit is payable only when the injury is duly certified by an Insurance Medical
Officer.

In Krishnan Kutty Nair v. P.B. V. Regional Director, E.S.l. Corporation and Another, the appellant who
was a covered employee under the E.S.I scheme, met with an accident in the course of his
employment on June 15, 1990. The claimant suffered injury after he had ceased to be an employee.
Dismissing the appeal it was held that Section 46(c) of Employees' State Insurance Act, 1948
specifically provides for two cumulative conditions for its applicability:

(i) first the claimant must be an insured person; and

(ii) second that such an injury must be sustained when he was an employee. Hence, when

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the injury had been sustained by the employee when he ceased to be an employee, he would not be
entitled to the benefit of disablement though his contribution period and his status as insured
person continues.

4. Dependents benefit
This benefit is available to such dependents, of an insured person who dies as a result of an
employment injury sustained as an employee, as are entitled to compensation under this Act.

5. Medical benefit
Medical benefit is available to an injured person or to a member of his family, were such benefit is
extended to the members of his family. This benefit is in the following forms:

(i) out-patient treatment and attachment in the hospital or dispensary; or

(ii) by visits of the horne of the insured; or

(iii) as an in-patient in a hospital or other institution.

6. Funeral expenses
Funeral expenses are payable to the eldest surviving member of the family or to such person who
actually incurs funeral expenses. The amount of such payment shall not exceed such amounts as
may be prescribed by the Central Government. Any claim for the funeral expenses must be made
within three months of the death of the insured person or within such extended period as the
Corporation or any other competent official may allow.

Section 49. Sickness benefit


The qualification of a person to claim. sickness benefit, the conditions subject to which such benefit
may be given, the rates and period thereof shall be such as may be prescribed by the Central
Government.

Technological Institute of Textiles v. Its Work11len,


An award of seven days' sick leave on production of a medical certificate in addition to the benefits
under the Employees' State Insurance Act was held justified by the Supreme Court. The sickness
benefit shall be paid at the rates specified in the First Schedule.

Section 50. Maternity benefit


The qualification of an insured woman to claim maternity benefit, the conditions subject to which
such benefit may be given, the rates and period thereof shall be such as may be prescribed by the
Central Government.

Section 51. Disablement benefit


Subject to the provisions of this Act:

(a) a person who sustains temporary disablement for not less than three days (excluding the day of
accident) shall be entitled to periodical payment at such rates and for such period and subject to
such conditions as may be prescribed by the Central Government.

(b) a person who sustains permanent disablement whether total or partial, shall be entitled to
periodical payment at such rates and for such period and subject to such conditions as may be
prescribed by Central Government.

Section 51-A. Presumption as to accident arising in course of employment

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Section 51-A provides that if it is shown that the accident arose in the course of employment of an
employee, it would be presumed also to have arisen out of employment. But the presumption is a
rebuttable one and applied to this Act only.

Section 51B. Accidents happening while acting in breach of regulation


Section 51-B of the Act provides an explanation to the expression "out of and in the course of
employment". An accident shall be deemed to arise out of and in the course of employment if the
act is done for the purpose of and in connection with employer's trade or business unless:

(i) the employee is at the time of accident acting in contravention of the provisions of any law
applicable to him; or

(ii) the employee is acting in contravention of any order given by or on behalf of his employer; or

(iii) he is acting with instructions from his employer:

Provided the accident would have been otherwise deemed to arise ‘out of and in the course of
employment' in the absence of anyone of the above three contingencies.

Section 51-C. Accidents happening while travelling in employer's transport


Section 51-C of the Act incorporates the principle of notional extension of employer's premises. This
section lays down the liability of the employer for the payment of benefit for accident arising while
an employee is travelling in any transport provided by the employer while going to or coming from
work. The conditions for holding the employer liable are the following: -

(i) an employee must be travelling by any vehicle with the express implied permission of his
employer;

(ii) he must be going to or coming from his place of work;

(iii) the vehicle must be operated by or on behalf of his employer or some other person in pursuance
of an agreement made with the employer;

(iv) the vehicle is not being operated in the ordinary course of public transport service.

Under the circumstances the accident shall be deemed to arise out of and in the course of
employment even if there is no obligation on the employee to travel by that vehicle provided the
accident would have been so considered had there been an obligation on the part of the employee
to travel by that vehicle.

It is evident from the provisions of this section that a case of travelling by a vehicle which is operated
in the ordinary course of public transport is not covered by this section. Therefore, any accident
while travelling by such vehicle would not entitle the employee to claim compensation under the
Act.

Section 51-D. Accident happening while meeting emergency


An accident happening to an employee on the premises of his employment shall be deemed to arise
out of and in the course of his employment if: -

(i) the employee is on such premises employed for the purpose of his employer's trade or business;

(ii) the accident happens while he is taking steps to rescue, succour or protect person who might be
injured or imperilled;

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(iii) these steps may be taken to avert an actual or supposed emergency to persons. The steps may
also be taken to avert or minimise serious damage to property.

This section clearly overrides the principle of 'added peril performance of duty'. The principle of
'added peril performance of duty' means that no compensation shall be payable if a workman while
doing his master's work undertakes to do something which involves extra danger to him.

Section 51E. Accidents happening while commuting to the place of work and vice versa
An accident occurring to an employee while commuting from his residence to the place of
employment for duty or from the place of employment to his residence after performing duty, shall
be deemed to have arisen out of and in the course of employment if nexus between the
circumstances, time and place in which the accident occurred and the employment is established.

Section 52. Dependant's benefit


(l) If any insured person dies as a result of an employment injury sustained as an employee under
this Act (whether or not he was in receipt of any periodical payment for temporary disablement in
respect of the injury) dependant's benefit shall be payable at such rates and for such periods and
subject to such conditions as may be prescribed by Central Government to his dependants specified
in sub-clause (i), sub-clause (i-a) and sub-clause (ii) of clause (6-A) of Section 2.

(2) In case the insured person dies without leaving behind him the dependants as aforesaid, the
dependant's benefit shall be paid to the other dependants of the deceased at such rates and for
such period and subject to such conditions as may be prescribed by the Central Government.

In E.S.I. Corporation v. Sayeeda Khatoon Donawala & others: a workman standing in the queue
waiting for a bus provided by the employer to reach the factory was run over by the same bus. It was
held that the workman sustained employment injury and the doctrine of notional extension was
applicable. Recovery of compensation from the owner of the motor vehicle or from the Insurance
Company under the Motor Vehicles Act will not absolve the employer from making payment under
Section 52 of the Act.

Section 52-A. Occupational disease


The expression "occupational disease" has nowhere been defined in the Act, but a list of these
diseases along with the employments peculiar to them is given in the third schedule of the Act. Any
employee who contracts any such occupational disease while working in any of these employments
shall be deemed to have contracted an employment injury. The third schedule is divided into three
parts. For occupational disease mentioned in Part A no period of employment is necessary; but in
case of any disease mentioned in Part B of Schedule III, the insured person must have served in the
employment peculiar to that disease for a period of not less than 6 months. In case of an
occupational disease specified in Part C of that schedule the period of employment shall be such as
is specified by the Corporation in respect of that employment. The contracting of an occupational
disease peculiar to insured person's employment shall be deemed to be an employment injury
arising out of and in the course of employment.

The Central Government, State Government and the Corporation are empowered under sub-section
(2) to add to the third Schedule any occupational disease and the employment relating thereto. But
the Corporation before adding any employment or an occupational disease in relation to such
employment in the III rd Schedule, shall give notice in the Official Gazette. Any disease or
employment so added shall form part of the III rd Schedule and the provisions of this Act shall apply
to them. The exercise of power by the Central and the State Governments is expressly made subject
to the provisions of Section 3 (3) of the Workmens' Compensation Act.

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No disease other than the occupational diseases specified in Schedule III is recognized by the Act as
an employment injury. In case of contracting of any other disease no benefit shall be payable to an
employee in respect of any such disease unless the disease is proved to be directly attributable to a
specific injury by accident arising out of and in the course of his employment. Evidently, it would
always be a question of fact and the onus would lie upon the person claiming any such benefit to
prove the causal connection between employment and disease.

The provisions of Section 51-A shall not apply to the case to which Section 52-A applies.

Section 53. Bar against receiving or recovery of compensation or damages under any other law
This section enacts a kind of prohibition against the insured person or his dependants from receiving
or recovering any compensation or damages under:

(a) the Workmen's Compensation Act, or

(b) any other law for the time being in force or otherwise from:

(i) the employer, or

(ii) from any other person.

It may be noted that the insured person under the Act has no option to elect the kind of remedy.
The bar created under this section operates irrespective of the fact that the insured person has
received benefit under the Act or not.

In Deputy General Manager, Karnataka State Road Transport Corporation v. Gopal Mudaliar, a
workman while going on a bicycle met with a motor accident. This accident does not amount to an
employment injury and therefore, no benefits are payable under Section 53 and as such a remedy
under the Motor Vehicles Act is not barred. But if a person is entitled to the benefits under the E.S.I.
Act he is debarred from claiming any compensation under the Motor Vehicles Act.

Section 56. Medical benefit


Under Section 55 of the Act medical benefit shall be given to an insured person or to a member of
his family where the benefit is extended to his family. This benefit shall be given to an insured
person or a member of his family, whose condition requires medical treatment and attendance.

According to section 56(2) Medical benefit may be given in the following form:

(i) outpatient treatment; or

(ii) attendance in a hospital, dispensary, clinic or other institution; or

(iii) by visits to the home of the insured person; or

(iv) treatment as inpatient in a hospital or other institution.

According to section 56(3) a person shall be entitled to medical benefit during any period:

(i) for which contributions are payable in respect of him; or

(ii) in which he is qualified to claim sickness benefit or maternity benefit; or

(iii) in which he is in receipt of such disablement benefit as does not disentitle him to medical benefit
under the regulations.

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Provided that a person in respect of whom contribution ceases to be payable under this Act may be
allowed medical benefit for such period and of such nature as may be provided under the
regulations:

Provided further that an insured person who ceases to be in insurable employment on account of
permanent disablement shall continue, subject to payment of contribution and such other
conditions as may be prescribed by the Central Government, to receive medical benefit till the date
on which he would have vacated the employment on attaining the age of superannuation had he not
sustained such permanent disablement:

Provided also that an insured person who has attained the age of superannuation, a person who
retires under a Voluntary Retirement Scheme or takes premature retirement, and his spouse shall be
eligible to receive medical benefits subject to payment of contribution and such other conditions as
may be prescribed by the Central Government.

Explanation
In this section "superannuation in relation to an insured "person, means the attainment by that
person of such age as is fixed in the contract or conditions of service as the age on the attainment of
which shall vacate the insurable employment or the age of sixty years where no such age is fixed and
the person is no more in the insurable employment.

Section 57. Scale of Medical Benefit


An insured person and his family (where such benefit is extended to his family) shall be entitled to
the medical benefit as provided below:

(1) medical benefit of such kind as may be provided by the State Government or the Corporation;

(2) medical benefit on such sale as may be provided by the State Government or the Corporation;

(3) only such medical treatment as is provided by the dispensary, hospital, clinic or other institution
to which the insured person or his family is allotted;

(4) such benefit as may be provided by regulations;

(5) no claim for reimbursement from the Corporation, of any expenses incurred in respect of any
medical treatment is allowed except as may be provided by regulations.

Section 58. Provisions of medical treatment by State Government


Section 58 of the Act makes the State Government responsible for providing medical treatment to
the insured person and to his family where such benefit is extended to his family. Medical treatment
to be provided by the State Government should be reasonable and shall consist of medical, surgical
and obstetric treatment.

With the approval of Corporation, the State Government may arrange for medical treatment at
clinics of medical practitioners. The scale, terms and conditions of medical treatment shall be
regulated by an agreement.

Where the amount of sickness benefit to insured person incurred in State exceeds the all India
average, the amount in excess of such average shall be shared between the Corporation and the
State Government in such proportion as may be fixed by agreement between them. The Corporation
has power to waive off the whole or any part of the share which is to be borne by the State
Government.

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The Corporation is further empowered to enter into an agreement with the State Government and
decide:

(i) the nature and scale of the medical treatment to be provided to insured persons and their
families;

(ii) the provision of buildings, equipment, medicines and staff;

(iii) the sharing of cost of the above benefits; and

(iv) sharing of any amount spent in excess of the all India average.

The above matters, in absence of an agreement between the Corporation and the State
Government, shall be determined by an arbitrator appointed by the Chief Justice of India.

A retired Judge of a High Court or any person working as a Judge of the High Court is qualified to be
appointed as an arbitrator under this section. The award of the arbitrator shall be binding on the
Corporation and the State Government.

The State Government may, in addition to the Corporation under this Act, with the previous
approval of the Central Government, establish such organisation (by whatever name called) to
provide for certain benefits to employees in case of sickness, maternity and employment injury:

Provided that any reference to the State Government in the Act shall also include reference to the
organisation as and when such organisation is established by the State Government.

The organisation referred to in sub-section (5) shall have such structure and discharge functions,
exercise powers and undertake such activities as may be prescribed.

Section 71. Benefit payable up to and including day of death


If a person dies during any period for which he is entitled to cash benefit under this Act, he shall be
paid that benefit in cash. Such benefit is payable for the period up to and including the day of death
of the person. The following are authorised to receive any such payment:

(i) any person nominated by the deceased person in writing in such form as may be prescribed in the
regulations; or

(ii) if there is no such nomination, to the heir or legal representative of the deceased person.

Section 72. Employer not to reduce wages


Irrespective of the liability of the employer to pay contribution under this Act, he cannot:

(a) reduce the wages to his employees, whether directly or indirectly; or

(b) discontinue or reduce benefits, payable to an employee under conditions of his employment,
which are similar to the benefits conferred by this Act, except as provided in regulations.

In Bareilly Holdings Ltd. v. Their Workmen, it was held that the object of Section 72 is to discourage
employers from using the benefits provided under the Act as excuse or justification for reducing or
discontinuing the benefit available to the workman under the conditions of service on the ground of
similarity between the two types of benefits.

Section 73. Employer not to dismiss or punish employee during period of sickness
Section 73 of the Act lays down that the employer shall not dismiss, discharge or reduce or
otherwise punish any employee:

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(1) during the period he or she is in receipt of sickness benefits or maternity benefit; or

(2) who is receiving disablement benefit for temporary disablement; or

(3) who is under medical treatment for sickness; or

(4) who is absent from work as a result of illness arising out of pregnancy or confinement.

The illness must be duly certified in accordance with the regulations. No notice of dismissal or
discharge or reduction given to an employee during the period mentioned above shall be valid or
operative.

Section 73(1) of the Act prohibits the employer to take punitive action during the period an
employee is in receipt of benefit mentioned therein. Any notice of punitive action given during the
aforesaid period to an employee shall be invalid. Reading all the sub-sections together it becomes
clear that the giving of notice during the specified period is prohibited not only when it is in regard
to dismissal, discharge or reduction in respect of sickness alone but includes any notice for any
misconduct. Thus the prohibition is not confined to punitive action on the basis of absence owing to
sickness but includes punitive action of all kinds of misconduct which justifies the imposition of
penalty. The object of such a prohibition seems to be to restrain all punitive actions during the
pendency of the employee's illness.

It was held in Management of Guest Keen Williams Ltd. v. Presiding Officer II Addl. Labour Court,
Bangalore, that any contravention of Section 73 would not only render the dismissal or discharge
invalid but would also expose the management itself to the peril of prosecution.

Buckingham Carnatic Mill Ltd. v. Venkatesh,


But where the termination of the employee's service follows automatically either from a contract or
from a standing order by virtue of the employee's absence without leave for the specified period
such termination, is not the result of any punitive act or order on the part of the employer, so to
such a termination the prohibition contained in Section 73(1) would be inapplicable.

Discussing the meaning of the expression "discharge" occurring in Section 73(1) their Lordships of
the Supreme Court held that termination of service under Standing Order 8(ii) is not covered by that
expression and does not, therefore, contravene the provisions of Section 73(1).

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26. Contributions, Employees State Insurance Act

Section 38. All Employees to be insured

All employees in factories or establishments shall be insured in the manner provided by this Act. For
an employee to be insured two conditions are provided: namely

(i) he must be employed in a factory or an establishment and

(ii) contributions must be either

paid or payable to him under the Act.

In Hyderabad Asbestos v. Employees' Insurance Court, the Supreme Court held that the words "all
employees in factories" do not mean the persons employed in factories only but also include
persons employed in connection with the work of the factory. The employees that are required to be
insured are not restricted only to those employed in factories defined under Section 2(19) of the Act.

Section 39. Contribution


The contribution payable under this Act in respect of an employee shall comprise the contribution
partly paid by the employer and partly by the employee. The contribution payable by the employer
is known as employer's contribution and that by the employee is known as the employee's
contribution. The contributions shall be paid at such rates as may be prescribed by the Central
Government:

Provided that the rates so prescribed shall not be more than the rates which were in force
immediately before the commencement of the Employees' State Insurance (Amendment) Act, 1989.

The wage period in relation to an employee shall be the unit in respect of which all contributions
shall be payable under this Act. The contribution shall ordinarily fall due on the last day of the wage
period. Where an employee is employed for part of the wage period, or is employed under two or
more employers during the same wage period, the contributions shall fall due on such day as may be
specified in the regulations.

According to Section 5(a) if any contribution payable under this Act is not paid by the principal
employer on the date on which such contribution has become due, he shall be liable to pay simple
interest at the rate of twelve per cent per annum or at such 'higher rate as may be specified in the
regulations till the date of its actual payment:

Provided that higher interest specified in the regulation shall not exceed the lending rate of interest
charged by any scheduled bank.

In Goetze (India) Ltd. v. Employees' State Insurance Corporation. it was held that the payment of
interest on delayed payment of contribution is statutory and therefore it cannot be waived. There is
no question of settlement or compromise in matter of payment of interest

According to Section 5(b) any interest recoverable under Clause (a) may be recovered as an arrears
of land revenue or under Section 45-C to Section 45-1.

Explanation
In this sub-section, "scheduled bank" means a bank for the time being included in the Second
Schedule to the Reserve Bank of India Act, 1934.

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It was pointed out by the Supreme Court in Hyderabad Asbestos v. Employees' Insurance Court, that
the contribution under Section 39 is not confined only to employees actually working in factories but
it extends to all who are employees within the meaning of Section 2(9) of the Act.

In E.S.I.C. v. Amalgamations Repco Ltd., Madras2 it was held that contribution is leviable under
Section 39 by which the management is liable to contribute on its own accord and such payment is
not made conditional on any demand by the E.S.I. Corporation. Where incentive bonus and night
shift allowance is payable in pursuance to an agreed scheme the contribution is leviable from the
date of enforcement of the production incentive bonus scheme and the night shift allowance.

It was held in the Reid-Co-Operative Timber Works Ltd. v. E.S.I. Corporation, that although there is
no express provision in the Act under which interest can be claimed on the arrears of employees'
contribution under the Act, but the Employees' State Insurance Court being a Civil Court can award
interest on such contribution.

In Employees State Insurance Corporation v. Distilleries and Chemical Mazdoor Union and others,
the contribution payable under the Employees' State Insurance Act was stayed by interim order of
High Court in writ petition and the matter remained pending for about 17 years. Employees were
getting medical facilities from employer. In this appeal before the Supreme Court the E.S.I.
corporation assailed interim orders of stay as well as the final orders passed by the High Court in writ
petition by the Mazdoor union. By the said order no deduction towards the E.S.I.C. contribution from
the members of the union (employees) or from the employer were to be deducted provided the
employer paid the medical allowance to its workmen. In the final order the High Court directed that
no contribution should be realised from the employer or employees till the date of judgment but
from that date onwards they had to start paying the contribution.

Dismissing the appeals the Supreme Court observed that the High Court was fully justified in passing
the judicious order by directing the employer and employees to make contribution for the future
and that they should not bear any liability for the past in as much as the employees had not availed
of any medical facilities from E.S.I. corporation. It was further pointed out that the stay against
deduction of contribution had continued for a period of 18 years till the disposal of the petition.
Passing of the final order directing payment of contribution from date of judgment did not amount
to postponing enforcement of notification.

Section 40. Principal employer to pay contribution in the first instance


Section 40 of the Act makes the employers responsible to pay the contribution in respect of all
employees, whether employed by him directly or by or through an immediate employer. The
contribution to be paid by the employer includes both the employer's as well as employee's
contribution from the wages payable to the employee if-

(i) the employee is not an exempted employee; and

(ii) the employee is directly employed by him.

The employer's right to deduct the employee's contribution from his wages is subject to the
provisions of the Act and regulations and also subject to the following conditions:

(i) the deduction shall be made from wages for that period or part of the period in respect of which
the contribution is payable; and

(ii) no deduction, in excess of the sum representing the employee's contribution for the period shall
be made.

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The employer or the immediate employer shall neither be entitled to deduct the employer's
contribution from the wages of employee, nor recover it from him in some other way, unless there is
a contract to the contrary.

Any deduction made by the employer from the wages of an employee shall be deemed to be
entrusted to him by the employee in relation to his contribution but the concept of such
entrustment cannot transgress the bounds of the Employees' State Insurance Act to form a
necessary ingredient of entrustment within Section 405 of the Indian Penal Code.' The principal
employer shall bear the expenses of remitting the contributions to the Corporation.

Nadir Ali Khan v. Union of India,


An order directing the employer to contribute towards insurance benefits on the basis of the wages
paid does not amount to deprivation of property as contemplated under Article 31 of the
Constitution.

In Birla Cotton Spinning and Weaving Mills v. Sumerchand, the legality of the deduction from the
wages of the authorised leave without pay was challenged and was held to be illegal. The
determination of the above question was dependent on the interpretation of the word 'period' in
the proviso to Section 40(2) of the Act. In the above case it was said that the 'period' must be taken
to be a week," Therefore, in view of Section 42(4) no contribution is payable in respect of any week
in which no services' are rendered by an employee and no wages are paid to him.

In Royal Talkies v. E.S.I. Corporation? the cinema manager had entered into an arrangement with a
contract to maintain a canteen and a cycle stand. The contractor employed, on his own, workers in
connection with the canteen and the cycle stand. It was held that the cinema manager was liable for
the contribution as the principal employer of the workmen although they were engaged
independently by the owner of the canteen or the cycle stand.

It was held in E.S.I. Corpn., Indore v. Kailash Chandra and others, that where the owner or occupier
of a factory is company, the Directors of a company cannot automatically be called as occupiers
unless anyone of them is so notified. Principal employer under Section 40(1) of the Act refers to
owner or occupier of the factory depending on the facts of each case. But the words owner or
occupier cannot be read as 'owner and occupier' and are to be read disjunctively otherwise it will
create uncertainty in attaching obligations to deduct and pay the contributions. When company is
owner of an establishment, company alone is liable to pay the contributions. The occupier,
Managing Director or Director of a company is not personally liable.

It was held in Employees' State Insurance Corporation' & another v. CN. Mathur & others) that the
inclusion of 'occupier' in the definition of "principal employer" does not render the occupier
personally liable for the employer's share of the contribution.

In E.S.I.C v. Hotel Kalpaka International, the Hotel was closed with effect from 31 March, 1988. But in
spite of a notice from the Corporation, the respondent did not pay the contribution with effect from
July 11, 1985 on plea of closure of business. The High Court held that the E.S.I.C. was not justified in
proceedings against the establishment after it was closed. But the Supreme Court rejecting the High
Courts' view held that the finding of the High Court if accepted would not promote the scheme, on
the contrary it would perpetuate the mischief. Any employer can easily vo d his liability and deny the
beneficial piece of social security legislation to the employees by closing the business before
recovery. It was further held that he cannot be allowed to contend that since he has not deducted
the employees' contribution from their wages, therefore, he cannot be compelled to pay.

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Section 41. Recovery of contribution from immediate employer


Section 41 deals with two sets of powers: Sub-section (1) deals with the powers of the principal
employer to recover the employee's contribution as well as the employer's contribution from the
immediate employer, in respect of employees employed by or through an immediate employer. This
provision was examined by the Kerala High Court in Hindustan Insecticides Ltd. v. T.M. Jaleel and
others, The Court held that under this provision the principal employer is entitled to recover the
amount of contributed by him from the immediate employer.

According to sub-section (I-A) the immediate employer shall maintain a register of employees
employed by or through him as provided in the regulations and submit the same to the principal
employer before the settlement of any amount payable under sub-section (1).

Sub-section (2) deals with the power of the immediate employer to deduct the employee's
contribution from the wages of the employees. But his right to recover the employee's contribution
is, subject to Section 40(2), limited to a deduction from the wages only to the period or part of a
period for which wages are paid.

The principal employer's power to recover the contribution paid by him from the immediate
employer is twofold, namely:

(i) by way of deduction from any amount payable to the immediate employer by the principal
employer under any contract, or

(ii) to treat the sum paid as a debt and recover it through a court of law.

Section 42. General provisions as to payment of contribution


The general provisions relating to the payment of contribution are as follows:

(1) No employee's contribution shall be payable by or on behalf of an employee whose average daily
wages are below such wages as may be prescribed by the Central Government. The average daily
wages of ail employee shall be calculated in such manner as may be prescribed by the Central
Government.

(2) The principal employer shall pay the employer's contribution and employee's contribution of
each wage period in respect of the whole or part of which wages are payable to the employee-and
not otherwise.

Section 43. Method of payment of contributions


Subject to the provisions of this Act, the Corporation may make regulations:

(1) for any matter relating or incidental to payment and collection of contribution payable under the
Act;

(2) for manner and times of payment of contribution;

(3) for payment of contribution by means of stamps;

(4) for the date by which Corporation is to be furnished with the evidence regarding the payment of
contribution;

(5) for entries in books or cards of contribution paid and benefit distributed; and

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(6) for issue, sale, custody, production, inspection and delivery of books or cards which have been
lost, destroyed or defaced.

Bhinka v. Charon Singh,


Section 43 does not save the Corporation's right to claim from the employer actuarial present value
of periodical payments to be made by it to the dependants of the deceased employee because this
right under the repealed Section 66 was a right to recover damages and not an obligation to pay
benefits as contemplated by Chapter V of the principal Act to the dependants of the deceased
employee.

Section 45-A. Determination of Contribution in certain cases


Section 45-A of the Act lays down the power of the Corporation to determine the amount of
contribution payable in respect of the employees of a factory or establishment on the basis of
information available to it where:

(1) no returns, particulars, register or records are submitted, furnished or maintained in accordance
with the provisions of Section 44 of the Act; or

(2) any Social Security Officer or other official of the Corporation referred to in sub-section (3) of
Section 45 is prevented in any manner by the principal or immediate employer, or any other _person
in exercise of his functions or discharging his duties under Section 45 of the Act.

But no order under sub-section (1) as above shall be passed by the Corporation unless the principal
or immediate employer or the person in charge of the factory or establishment has been given a
reasonable opportunity of being heard.

Provided further that no such order shall be passed by the Corporation in respect of the period
beyond five years from the date on which the contribution shall become payable.

An order made by the Corporation under sub-section (1) shall be sufficient proof of the claim of the
Corporation under Section 75 or for recovery of the amount determined by such order as an arrear
of land revenue under Section 45-B or the recovery under Sections 45-C to Section 45-1.

E.S.I. Corporation, Bhopal v. Central Press,


The Corporation should, in a case where there is omission on the part of the employer to maintain
records in accordance with the Section 44 of the Act determine the amount of contribution on the
strength of such information as it may collect and can then make a demand under this section.

Royal Talkies, Hyderabad v. E.S.I. Corporation,


Where the employer disputes his liability to pay contribution, he must be given by the Corporation
an opportunity of hearing before finally fixing his liability under this section.

Regional Director E.S.I. v. M/s. Fibre Bangalore (P) Ltd.,


In cases where the Corporation by an order made in accordance with Section 45-A determines the
amount of contribution payable and the employer disputes the claim, it would not be necessary for
the Corporation to seek resolution of that dispute before the Insurance Court. Such a claim is
recoverable as arrears of land revenue. If the employer disputes the claim, it is for him to move the
Insurance Court for relief.

In cases, other than where determination of the amount of contributions under Section 45-A is
made; the corporation if its claim is disputed by the employer, should seek an adjudication of the
dispute before the Insurance Court before enforcing the recovery.

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In A.P. Handloom Weavers Co-operative Society, Hyderabad v. E.S.l. Corpn., Hyderabad, it was held
that if an employer has not complied with the provisions of the Act for filing necessary returns and
produce the relevant registers, it would be competent for the Corporation to initiate proceedings
under Section 45-A of the Act by way of best judgment assessment. Before initiating best judgment
assessment, it is not necessary for the Corporation to issue prior show cause notice. Absence of such
notice does not vitiate the proceedings.

Hegde and Golay Limited v. E.S.I. Corporation,


The E.S.I. Corporation is under an obligation to hear the employer before determining the
contribution payable by him if the employer disputes his liability because the determination of
liability must be in conformity with the principles of natural justice.

Employees' State Insurance Corporation v. Asian Paint India Lsd.,


What should be nature of this opportunity of hearing must depend on the facts and circumstances of
each case.

In Bharat Heavy Electricals Ltd. v. E.S.I. Corporation, the respondent-E.S.I. Corporation issued a
notice under Section 45-A of the E.S.I. Act, 1948, that they had not deposited the Employees' State
Insurance Contribution. In response to this notice the appellant company prayed for impleading
contractors (immediate employers) as parties to the proceedings. The prayer was not granted and
the High Court did not give any relief either. Hence, the present appeal to the Supreme Court.

Allowing the appeal the Supreme Court observed that the determining authority did not give
opportunity of hearing to the appellant. The impugned judgment was, therefore, held not
sustainable. Hence, the matter was remitted to the E.S.I. Corporation for considering the matter
afresh.

In E.S.I.C. v. Ramdas Reddiar, it was held that the law of limitation will have no application in respect
of any claim arising under Section 45-A. The obligation to pay contribution imposed on the principal
employer and the right of the corporation to recover such contribution are creations of statute and
do not exist independent of the statute. The mode of recovery is prescribed in the statute itself. It is
either by resort to Section 45-B or by resort to Section 75 read with Section 78(4). Therefore, the
right to recover contribution would not be affected by any law of limitation otherwise than what is
provided in the statute itself, if there be any.

In South India Viscose Co-operative Stores Ltd. v. Regional Director, E.S.I. Corporation, it was held
that ability to pay contribution is not relevant and it cannot be pleaded as a ground against liability
imposed by the Act. If that were so everybody will escape liability by pleading financial inability to
pay contribution. Similarly, the plea that the employees of the establishment are not getting benefits
available under the Act cannot be accepted to avoid payment of contribution. Liability to pay
contribution is not made to depend on the benefits to be received by the members in respect of
whom the contribution is sought for.

It was held in the Employees State Insurance Corporation, Madras v. The Trichy District Co-operative
Milk Producers' Union Ltd., that before quantifying a contribution by the Authority, natural justice
requires that an opportunity of being heard must be given to the contributor. Such an opportunity is
sine qua non without the compliance of which, the authority constituted under the Act cannot
proceed with the quantification of the contribution or the recovery thereof.

In Sambunath Sen, Proprietor, East India Glass Industries v. Employees' state Insurance Corporation
and others, the petitioner had not filed returns as required under Section 44 of the Employees' State

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Insurance Act, 1948 and the Inspector visited the factory as well as residence of the petitioner for
reassessment but records could not be checked as no arrangement was made for production of
record. The petitioner did not reply to the letter whereby he was requested to clear off the dues.
Therefore, it was held by the High Court that the determination of amount under Section 45-A of the
Act was permitted in two contingencies, namely

(i) when no return is filed in accordance with Section 44 of the Act and

(ii) prevention of Inspector from discharging his duties. In this case both these contingencies were
found present. Hence the petition was dismissed and order of the corporation determining the
amount payable by the petitioner was found proper.

In Employees' State Insurance Corporation, Sub-Regional Office, Hubli v. A.P.S. Star Industries
Limited, Dharwad, the respondent Industry has, on account of facing severe financial crisis closed its
other units and was declared a sick unit by the B.I.F.R. on July 31, IS98. Wages of its employees have
not been paid from April, 1998 onwards and the respondent did not pay any contribution required
to be paid under the Employees' State Insurance Act, 1948. Dispute was raised by the union because
of non-payment of wages which was pending· In the meantime the Corporation issued notices to the
respondent to pay contribution due for the period from April, 1998 to September, 1999. The
respondent contested this demand. In appeal, the High Court held that the payment of Employees'
State Insurance Contribution was not made dependant on the factum of payment of wages
regarding the quantum whereof there was a pending dispute because of the respondent’s financial
crisis. The Legislature, under the Sick Industrial Companies (Special Provisions) Act, did not intend to
exempt a sick unit from such contribution. It was also made clear that the pendency of a conciliation
proceeding ipso facto does not prevent the Employees' State Insurance Corporation from passing an
order under Section 4S-A of the Act and the incapacity of the respondent to pay the contributions
had nothing to do with an order of the Employees' State Insurance Corporation under Section -A of
the Act.

In Employees' State Insurance Corporation v. Nutan Ayurvedic Kalyalaya (P') Ltd. and another, the
respondent was carrying on business of sale and manufacture of Ayurvedic medicines. No power
was used in manufacture of its goods. The State Government applied the Employees' State Insurance
Act with effect from February 1, 1987. The appellant in the present case asked the respondent No.1
to pay arrears of contribution for the period from April, 1983 to August, 1986 which was contested
by the respondent. The High Court held that the Employees' State Insurance Act, 1948 was
applicable retrospectively.

Section 45AA. Appellate authority


If an employer is not satisfied with the order referred to in Section 45A, he may prefer an appeal to
an appellate authority as may be provided by regulation, within sixty days of the date of such order
after depositing twenty-five per cent. of the contribution so ordered or the contribution as per his
own calculation, whichever is higher, with the Corporation:

Provided that if the employer finally succeeds in the appeal, the Corporation shall refund such
deposit to the employer together with such interest as may be specified in the regulation.

Section 45-B. Recovery of contributions


Section 45-B of the Act provides that any contribution payable under the Act may be recovered as an
arrear of land revenue. The following are the modes of recovery of land revenue, namely:

(1) by serving a writ of demand or a citation to appear on any defaulter;

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(2) by arrest and detention of his person;

(3) by attachment and sale of his movable property;

(4) by attachment and sale of other immovable property of the defaulter.

E.S.I.C v Malhotra
How long a factory or an establishment is bound to preserve its registers, records and books of
accounts, is not clearly provided in the Act. An employer got the licence of his factory in 1952, but
could not produce the registers and records prior to 1957 on demand by the Inspector. The
employer stated that he has not maintained all the papers and documents prior to the year 1957.
The Court said that there was no ground to hold that the employer failed to produce or show the
books of accounts and registers as required by the Inspector under Section 55 of the Act.

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27. Pension

Section 6-A. Employees' Pension Scheme


(l) The Central Government, may, by notification in the Official Gazette, frame a scheme to be called
the Employees' Pension Scheme for the purpose of providing for-

(a) superannuation pension, retiring pension or permanent total disablement pension to the
employees of any establishment or class of establishments to which this Act applies; and

(b) widow or widower's pension, children pension or orphan pension payable to the beneficiaries of
such employees.

(2) Notwithstanding anything contained in Section 6, there shall be established, as soon as may be
after framing of the Pension Scheme, a Pension Fund into which there shall be paid from time to
time, in respect of every employee who is a member of the Pension Scheme, -

(a) such sums from the employer's contribution under section 6, not exceeding eight and one-third
per cent of the basic wages, dearness allowance and retaining allowance, if any, of the concerned
employees, as may be specified in the Pension Scheme;

(b) such sums, as are payable by the employer of exempted establishments under sub-section (6) of
Section 17;

(c) the net assets of the Employees' Family Pension Fund as on the date of the establishment of the
Pension Fund;

(d) such sums as the Central Government may, after due appropriation by Parliament by law in this
behalf, specify.

(3) On the establishment of the Pension Fund, the Family pension Scheme (hereinafter referred to as
the ceased scheme) shall cease to operate and all assets of the ceased scheme shall end and shall
stand transferred to, and all liabilities under the ceased scheme shall be enforceable against, the
Pension Fund and the beneficiaries under the ceased scheme shall be entitled to draw the benefits,
not less than the benefits they were entitled to under the ceased scheme, from the Pension Fund.

(4) The Pension Fund shall vest in and be administered by the Central Board in such manner as may
be specified in the Pension Scheme.

(5) Subject to the provisions of this Act, the Pension Scheme may provide for all or any of the
matters specified in Schedule IlI

(6) The Pension Scheme may provide that all or any or its provisions shall take effect either
prospectively or retrospectively on such date as may be specified in that behalf in that scheme.

(7) A Pension Scheme, framed under sub-section (I), shall be laid, as soon as may be after it is made,
before each House of Parliament, while it is in session, for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of session
immediately following the session or the successive sessions aforesaid, both Houses agree in making
any modification in the scheme or both Houses agree that the scheme should not be made, the
scheme shall thereafter have effect only in such modified form or be of no effect, as the case may
be; so, however, that any such modification or annulment shall be without prejudice to the validity
of anything previously done under that scheme.

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In Smt. Kamla Bai v. Secretary, M.P. Electricity Board & others, the deceased husband of the
petitioner was an employee of the Electricity Board. Deductions were made from his wages towards
contribution to Family Pension Fund since April, 1971 till his death in 1979 except for the period of
August to November 1977. Under the Family Pension Scheme an employee was required to exercise
his option and in the present case he had not exercised his option. In case of claim of family pension
by the widow it was held that the determinants of entitlement to pension are provided in the
scheme and absence of formal option as required under the pension scheme cannot defeat
claimants right otherwise acquired. The acquiescence of the employee in the continued deduction
towards his contribution would be deemed exercise of his option. Therefore the widow was entitled
for family pension.

In Gitaben Arvind Kumar Seth v. Regional Provident Fund Commissioner & others, the E.P.F. Act was
made applicable to the establishment with effect from April 1, 1990. One of the employees died on
July 26, 1990. The legal heirs of the deceased were given benefit under the E.P.F. Scheme but were
denied benefit under Family Pension Scheme and Deposit-linked Insurance Scheme on the ground
that in view of circular of the Department, the deceased employee was not entitled because his
membership for Family Pension Scheme was below three months on the date of death. Family
Pension Scheme was made applicable to the establishment only from May 31, 1990. It was held that
the contribution to Provident Fund and Family Pension are not separate, but it is correlated and co-
existing with the contribution made by the employee and employer every month under Section 6 of
the Act to P.F. Scheme. Contribution is payable with effect from the date when the provisions of the
Act are applicable to any establishment. Section 6-A also links Family Pension Fund for the purpose
of implementing Family Pension Scheme with the contribution made to the fund. Since the deceased
employee became a member of the Provident Fund from April 1, 1990 and had contributed for more
than 3 months towards the Provident Fund he became a member and a contributor to the Family
Pension Scheme with effect from April 1, 1990. Hence the legal heirs would be entitled to family
pension.

In Union of India and Others v. Kamla Devi, the Supreme Court had by an order dated August 10,
1993 clarified that pension to non-statutory canteen employees would be paid to those of them who
had retired after October 1, 1991. But taking cue from another order, which dismissed a writ petition
of Federation of All India Central Government Canteen Employees, the respondent's husband who
had retired on July 12, 1990 obtained a direction from the Central Administrative Tribunal, as
affirmed by the High Court, issued to the Union of India, to grant the benefits to persons such as the
respondent as well. This direction was challenged in the present appeal. It was allowed.

It was observed by the Supreme Court that as far as the cut out date for non-statutory canteen
employees was concerned it stood concluded by the order of August 10, 1993. It was not open to
the respondent to seek variation of the same.

It was held in Rajasthan State Road Transport Corporation v. President Rajasthan Roadways Union
and Another, that if employee had not exercised the option to avail of benefit of family pension
scheme 1971 and his wife had received entire Provident Fund under E.P.F her claim for family
pension would be untenable.

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28. Discuss the mode of Recovery of Moneys due from the employer under the EPF
Act, 1952

Section 8. Mode of Recovery of moneys due from Employers


To invoke Section 8 of the Act, the employer must be under a legal liability to transfer the assets.
Any amount due may, if the amount is in arrear, be recovered in the manner specified in Sections 8-
B to 8-G. Recovery may be made from the employer in relation to an establishment to which any
Scheme or, the Insurance Scheme applies of any amount lying in arrear in respect of the following:

1. Any contribution payable to the Fund, or as the case may be, the Insurance Fund; or

2. Accumulations in any provident fund standing to the credit of the employees who become
members of the Fund or, as the case may be the Insurance Fund established under the Scheme or,
the Insurance Scheme; or

3. Accumulations to the credit of an employee exempted under Sections 17(1), 17 (I-A) and 17(2) of
the Act; or

4. Damages recoverable under Section 14-B; i.e., for default in the payment of any contribution to
the Fund, Family Pension Fund or the Insurance Fund or in the transfer of accumulations in any
provident fund or in the transfer of accumulations to the credit of an employee exempted under
Sections 17(1), 17(1-A) and 17(2) of the Act; or

5. Damages recoverable under Section 14-B for default in the payment of any charges payable under
other provisions of this Act or the Scheme or the Insurance Scheme or und r any of the conditions
specified under Section 17 of the Act.

Any charges payable by the employer under any other provisions of the Act or Scheme or the
Insurance Scheme.

Similarly, recovery may also be made, in the manner specified in Sections 8-B to 8-G from an
employer in relation to an exempted establishment, of any amount remaining in arrear in respect of
the following:

(1) Damages recoverable under Section 14-B, as stated above in paras 4 and 5 of this section.

(2) Any charges payable by the employer to the Appropriate Government under any provisions of
this Act or under any of the conditions specified under Section 17 or in respect of the contribution
payable by him towards the Family Pension Scheme under the said Section 17.

Ballarpur Collieries Co. v. Coal Mines P.F. Commr.,


But for the collection of any arrears the Provident Fund Commissioner must send the recovery
certificate to the Collector of the district or the place where his office is situated. The Collector and
not the Provident Fund Commissioner shall send the recovery certificate to the Collector of another
district.

State Bank of Indore v. R.P.F. Commr., Indore,


In a proceeding to recover the employer's contribution, the property of the employer attached by
the Court, which was mortgaged to a bank, can be sold by the Court, subject only to the burden of
the entire mortgage held by the Bank, notwithstanding the fact that the demand in respect of the
Employer's contribution accrued before the mortgage was executed by employer in favour of the
Bank.

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Loon Karam Sethiya v. Additional Collector, Agra,


But if the amount of the employer's contribution has not been determined, no proceedings for
recovery can be taken under this section.

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29. How to determine the contribution towards provident fund ?

Section 6. Contributions and matters which may be provided for in the scheme
Under Section 6 the contribution paid to the Fund by the employer shall be ten per cent of the basic
wages and the dearness allowance and retaining allowance and the contribution payable by the
employee shall be equal to the employer's contribution. However, if an employee so desires his
contribution shall be an amount exceeding ten per cent of his basic wages, dearness allowance and
retaining allowance (if any), subject to the condition that the employer shall not be under an
obligation to pay any contribution over and above his contribution payable under this section. Para
30 of the Employees' Provident Fund Scheme provides that the employer shall in the first instance
pay both the contributions payable by himself and also on behalf of the member employed by him:
Provided that in its application to any establishment or class of establishments which the Central
Government, after making such inquiry as it deems fit, may, by notification in the Official Gazette
specify, this section shall be subject to the modification that for the words "ten per cent" at both the
places where they occur, the words "twelve per cent" shall be substituted.

Where the amount of any contribution payable under this Act involves a fraction of a rupee the
scheme may provide for the rounding off of such fraction to the nearest rupee, half of a rupee or
quarter of a rupee. For the purposes of contribution to the Provident Fund under Section 6 dearness
allowance shall include also the cash value of any food concession allowed to the employee.
Similarly, "retaining allowance" means an allowance payable, for the time being, to an employee of
any factory or other establishment during any period in which the establishment is not working, for
retaining his services.

It has been provided in para 29 of the scheme that the contributions shall be calculated on the basis
of the basic wages and dearness allowance including the cash value of any food concession actually
drawn during the whole month whether paid on daily, weekly, fortnightly or monthly basis. Each
contribution shall be calculated to the nearest quarter of a rupee, 12.5 naye Paise or more to be
counted as the next higher quarter of rupee.

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30. State the procedure of employees insurance claims under the Employees State
Insurance Act, 1948.

Section 74. Constitution of Employees' Insurance Court


Section 74 of the Act authorises the State Government to constitute an Employees' Insurance Court.
The Insurance Court shall be constituted by issuing a notification in the Official Gazette. The local
area within which the Court shall, exercise its jurisdiction will be specified in the notification. The
number of Judges, as shall constitute the Court, shall be determined by the State Government. A
judicial officer or a legal practitioner of five years' standing is qualified for the appointment as a
Judge of the Employees' Insurance Court. The State Government may appoint the same Court for
two or more local areas, or two or more Courts for the same local area. Where there are more than
one Court in the same local area, the distribution of work amongst them may be regulated by
general or special order of the State Government.

In Jiyaji Rao Cotton Mills v. E.S.l.C. the following two questions were involved:

(1) Is it necessary to constitute an Employees' Insurance Court first and then to appoint a judge to
discharge the functions of that Court?

(2) Whether the State Government was bound to frame rules under Section 96 of the Act first before
it could exercise the power conferred on it by Section 74 of the Act?

It was held that there is nothing in the general law or in the specific provisions of Sections 75 and 96
suggesting that it was necessary for the State Government to have constituted an Employees'
Insurance Court first and thereafter appoint an officer as judge to discharge the functions thereof. In
Section 74 the word 'Court' is used in a compendious sense.

Further the State Government was not bound to frame rules under Section 96 before it could
constitute Employees' lnsurance Court in exercise of its powers under Section 74.

Section 96 is merely enabling in nature. Its provisions were never intended to place an embargo on
the other provisions contained in the Act. The only condition for the exercise of its powers by the
Government under Section 74 are to be found within the four-comers of that section. The exercise
of the power under Section 74 was not intended to be made subject to any rules that may be framed
by State Government under Section 96 thereof.

Section 75. Matters to be decided by Employees' Insurance Court


Any question or dispute subject to the provisions of sub-section (2-A) relating to the following
matters shall be decided by the Employee's Insurance Court:

(1) whether any person is an employee or is liable to pay the employee's contribution; or

(2) the rate of wages of average daily wages for the purpose of this Act; or

(3) the rate of contribution payable by the principal employer in respect of any employee; or

(4) the person who is or. was the principal employer in respect of any employee; or

(5) the right of any person to any benefit and the amount and duration of that benefit; or

(6) the direction issued by the Corporation under Section 55-A on a review of any payment of
dependant's benefits; or

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(7) any other matter which is in dispute between:

(i) a principal employer and the Corporation; or

(ii) a principal employer and an immediate employer; or

(iii a per n and the Corporation; or

(iv) an employee and a principal or immediate employer.

The dispute between the above parties may be in respect of:

(i) any contribution, benefit or other dues payable or recoverable under this Act;

(ii) any other matter required to be or which may be decided by the Employees' Insurance Court
under this Act.

Subject to the provisions of sub-section (2-A) the following claims shall be decided by the Employees'
Insurance Court:

(a) any claim for the recovery of contributions from the principal employer;

(b) any claim by a principal employer to recover contributions from any immediate employer;

(c) any claim against a principal employer under Section 68;

(d) any claim under Section 70 for the recovery of the value or amount of the benefits received by a
person when he is not lawfully entitled thereto; and

(e) any claims for the recovery of any benefit admissible under the Act.

Sub-section (2-A) provides that if in any proceedings before the Employees' Insurance Court a
disablement question arises, the decision of which, is necessary for the determination of any claim
or question pending before such Court, the Court shall direct the Corporation to get the disablement
question first decided by the Medical Board or Medical Appeal Tribunal in accordance with the Act.
Thereafter that claim shall be decided by the Employees' Insurance Court in conformity with the
decision of the Medical Board or Medical Appeal Tribunal. There is one exception to this rule. Where
an appeal has been filed before the Employees' Insurance Court under Section 54-A(2), the Court
may itself determine all the issues arising before it.

According to sub-section (2-B) no matter which is in dispute between a principal employer and the
Corporation in respect of any contribution or any other dues shall be raised by the principal
employer in the Employees' Insurance Court unless he has deposited with the Court fifty per cent of
the amount due from him as claimed by the Corporation:

Provided that the Court may, for reasons to be recorded in writing, waive or reduce the amount to
be deposited under this sub-section.

Sub-section (3) of Section 75 bars the jurisdiction of Civil Court in respect of any matter covered by
this section and to be decided by

(i) Medical Board, Medical Appeal Tribunal or

(ii) Employees' Insurance Court.

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Firm Radhey Krishna v. Ludhiana Municipality,


This sub-section is based on the principle that where the liability is created by a statute, party
aggrieved must pursue the special remedy provided by it. In such cases the jurisdiction of the Civil
Court is not completely ousted but is limited. A suit in a Civil Court will always lie to question the
order of a Tribunal created by a statute, even if its order is expressly or by necessary implication
made final, if the said tribunal abuses its power or does not act under the Act but in violation of its
provisions.

Amirchand v. E.S.I. Corporation,


The employer can question the determination and amount of employer's special contribution. It is
not correct to say that the Corporation has no jurisdiction to determine amount and recover it under
Section 73-D without first having recourse to Employees' Insurance Court.

Further, the contention that the employer can apply only after paying amount is also not correct.

R.L. Sharma v. E.S.I. Corporation,


Where the Corporation claimed employees' contribution but failed to state the names of the
employees in regard to whose wages contribution had been claimed in the application, the
proceedings were not bad on this account.

Employees' State Insurance Corporation, Hyderabad v. Andhra Pradesh State Electricity Board,
Himayatnagar,
A petition for claim filed before the Employees' Insurance Court is not a 'suit' for the purposes of the
Limitation Act and therefore the provisions of the Limitation Act do not apply to it.

Gemini Studios, Madras v. E. S. I. Corporation, Madras,


The Employees' Insurance Court has jurisdiction to decide the benefit to which a disabled employee
is entitled." It is also competent to decide the duration of such benefit. The determination of claim
under Section 75(1)(g) by Insurance Court is a condition precedent for issuing certificate to Collector
for recovery of arrears of employees' contribution.

In Kishore Lal v. Chairman, Employees' State Insurance Corporation, appellant was an employee
insured with the respondent corporation. He filed a complaint under the Consumer Protection Act,
1986 for negligence in the treatment of his wife by the E.S.1. dispensary. The District Consumer
Forum as well as the State and National Commissions dismissed his complaint. Hence he filed appeal
in the Supreme Court.

The Supreme Court dealt with two questions which arose in this appeal, One was whether the
jurisdiction of the Consumer Forum was ousted by Section 75 of the Employees' State Insurance Act,
1948. The Supreme Court held it was not and observed that Section 75(1)(a) to (g) did not include
damages claim for medical negligence like the present case.

In Regional Director, E.S.I. Corpn. v. S. Saravanam, it was held that where injury suffered by an
insured person is not one specified in the Schedule to the Act, the Medical Board, Medical Appeal
Tribunal or the Employees' Insurance Court has power to determine the extent of diminution or
reduction in the earning capacity for the purposes of payment of disablement benefit.

In South-India Granite Corporation v. Employees' S.I. Corporation, Hyderabad, the Corporation


determined the liability of the employer to pay contribution on the basis of report submitted by the
Inspector. It was argued that if a claim made under Section 45 of the Act is disputed it is for the

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Corporation to move the Employees' State Insurance Court to get the dispute adjudicated and the
employer is not obliged to file an application. Rejecting this contention, the High Court held that on a
reading of Section 45-A and Section 75, it is clear that positive power has been conferred on the
Corporation to determine the amount which the employer is liable to pay towards contribution
under the Act. If the employer feels aggrieved by the determination, he has to raise the dispute in
the Insurance Court for due adjudication. Otherwise the recovery of contribution will be effected
both under Section 45-A as well as under Section 45-B of the Act. The Employees' State Insurance
Corporation is not obliged to invoke jurisdiction of the Insurance Court.

E.S.I. Corporation v. Asian Paints India us.,


It is not obligatory on the part of the Corporation to approach the E.S.I. Court under Section 75 prior
to the determination of claim under Section 45-A.

Regional Director E.S.I. Trichur v. Marikka Engrs. Ltd.,


There is a little substance in the contention of the employer that usually because an order requiring
an establishment to pay contribution, as determined under Section 45-A is not acceptable to him, a
further duty is cost on the Corporation to make a reference to the Insurance Court to obtain its seal
of approval before steps for the realisation of the amount could be initiated invoking Section 45-A
(2) and Section 45-B of the Act. Section 75 provides remedy to the aggrieved party. Therefore, if the
employer feels aggrieved, he can approach the Insurance Court for its decision.

In Employees' State Insurance Corporation v. Hari Hazara, it was held that in case of injuries covered
by the Schedule, the extent of loss of earning capacity need not be investigated inasmuch as the
relevant item in the schedule would finally determine the question. But in case of injuries not
covered by the Schedule, the extent of loss of earning capacity is to be decided on evidence and the
opinion of the Medical Board in this regard will be final and binding between the parties and the
Tribunal must pass an award in conformity with the decision of the Medical Board.

In Hindustan Zinc Ltd. v. Union of India and Others/ the Constitutional validity of Section 75(2-B) of
the Employees State Insurance Act, 1948 was challenged. It was pleaded that deposit of 50% of
amount claimed by the E.S.I. corporation as a precondition for entertaining application under
Section 75 renders the remedy of employer as illusory and is violative of Article 14 of the
Constitution of India. The High Court referring to the statutory provisions and decisions held that
Section 75(2-B) of the E.S.I. Act, 1948 was intra-vires and not violative of Article 14 of the
Constitution of India.

E.S.I. Corporation v. Himatram Ramdas,


Section 75(3) bars jurisdiction of a Civil Court to deal with any matter which is to be decided by the
Insurance Court. The arrangement of Sections 74 and 75 clearly shows that the Insurance Court is to
be established first and the jurisdiction of the Civil Court is ousted in consequence of the
establishment of that Court. Thus, the existence of the Employees' Insurance Court is a necessary
condition precedent to bring into play the provisions of Section 75(3) so as to oust the jurisdiction of
the Civil Court.

In ESI Corpn., Pondicherry v. Pondicherry Agro Service and Industries Corpn. Ltd. and another,
Madras High Court has held that once an exemption is granted by the Government concerned
accepting ·the facts relating to the comparative benefits provided by the entity concerned and
acknowledging that such benefits are substantially similar or superior in nature, as compared to
those provided under the provisions of the Act, the said decision could only be challenged by
approaching the Employees' Insurance Court under Section 75 of the Act. As such, it is clear that if

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there is any dispute with regard to the claim relating to the comparative benefits, it would not be
open to the appellant corporation to contest the same without furnishing substantial evidence
contrary to the said claim.

In Kishore Lal v. Chairman, Employees' State Insurance Corporation/ the appellant was an employee
insured with the respondent Employees' State Insurance Corporation. He filed a complaint under the
Consumer Protection Act, 1986 for negligence in the treatment of his wife by the E.S.I. dispensary.
The District Consumer Forum as well as the State and National Consumer Forum dismised his
complaint. Hence, he preferred an appeal to the Supreme Court.

The Supreme Court dealt with two questions which arose in this appeal. One was whether the
jurisdiction of Consumer Forum was ousted by Section 75(3) of the E.S.1. Act, 1948. The Supreme
Court held it was not.

The Court observed that Section 75(1)(a) to (g) did not include damages claim for medical negligence
like the present one. The appeal was, therefore, allowed and the matter was remitted back to the
District Consumer Disputes Redressal Forum for decision in accordance with law laid down in this
case.

In Fertilizers and Chemicals Travancore Ltd. v. Regional Director, E.S.I.C. and others,4 the appellant
company contested the demand by respondent E.S.I. corporation for contribution mainly on the
ground that concerned persons were not its employees.

Allowing the appeal, the Supreme Court observed that the company did not implead workmen as
parties in the application under Section 75 of the Employees' State Insurance Act, 1948, made before
the E.S.I. Court.

It was further held that the E.S.1. Court should have itself passed orders for impleading the workmen
as they were necessary affected parties and decision given in their absence would be in violation of
natural justice.

Consequently, the matter was remanded to E.S.I. Court for impleading the workmen or their trade
union and then make a fresh decision.

Thus the ratio of the case is that in an application under Section 75 of the E.5.I. Act, 1948, employer
has to implead workmen or their trade union as parties when the contest of the employer was that
the concerned persons were not his employees.

It was held in Regional Director, E.S.I.C. Orissa v. Revenue Divisional Commissioner, Central Division,
Cuttack & others) that once the Insurance Court, on a dispute being raised before it, determines the
liability of the principal employer, both the Corporation and the employer would be bound by the
same subject to the decision reaching finality after appeal to the High Court. In the absence of such a
decision, the decision of the Sub-Divisional Judicial Magistrate would not be determinative of the
issue and would not oust the jurisdiction of the Corporation to levy liability.

In E.S.I. Corpn., Bhopal v. Central Press, it was held by the Supreme Court that in cases of the
omission by the employer to maintain records in accordance with Section 44 of the Act, the
Corporation should itself determine the amount of contributions and then make a demand under
Section 45-A of the Act. If the employer refuses to comply with the demand so made, the matter can
come up before the Employees' Insurance Court under Section 75 of the Act. The Court should give
the Corporation a direction to perform its duty where it considers that this should be performed by

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the Corporation. It cannot decline to perform its own duty because the Corporation has failed to
discharge its function.

In was held in Employees' State Insurance Corporation v. Surendra Sharma, that the power of review
was not an inherent power but had to be conferred by law either specifically or by necessary
implication. Under the Employees' State Insurance Act, 1948 no power was given to Employees'
Insurance Court to review its judgment and the application of the Code of Civil Procedure was
limited in proceedings under the said Act to matters mentioned in the section.

Section 76. Institution of proceedings


A11 proceedings shall be instituted in the Employees' Insurance Court appointed for the local area in
which the insured person was working at the time the question or dispute arose. The State
Government has the power to transfer any proceeding suo motu or on the motion of Employees'
Insurance Court from one Court to another.

If the Employees' Insurance Court is satisfied that any matter pending for decision before it can be
more conveniently decided by any other Employees' Insurance Court in the same State, it may
transfer that matter for disposal to that Court. Where any matter is so transferred that transferring
court shall send all relevant and connected records to that Court. The exercise of power of transfer
by the Employees' Insurance Court shall be regulated by the rules made by the State Government.

So, also the State Government may transfer any matter pending before any Employees' Insurance
Court to any such court in another State with the consent of the Government of that State. Any
court, to which any matter is transferred either by the Employees' Insurance Court or by the State
Government, shall deal with it in the same manner as if it has been originally instituted in it.

Section 77. Commencement of proceedings


Any proceeding before an Employees' Insurance Court shall be commenced by an application. Every
such application shall be made within three years from the date on which the cause of action arose.
The form of application if any, and particulars required to be furnished with the application shall be
prescribed by the State Government in consultation with the Corporation. The rules shall be framed
by the Government of each State.

The cause of action for a proceeding shall be deemed to have arisen according to the explanation
attached to Section 77 of the Act. Sub-section (I-A) and explanation attached thereto introduces the
principle of cause of action and the period of limitation for making an application before the
Employees' Insurance Court.

For the purposes of Section 77(I-A) a claim has to be made within a period of twelve months after it
became due. This rule applies in respect of-

(i) a claim for benefit by insured person; or,

(ii) a claim for dependant's benefit by the dependants of the injured person.

A claim after the said period can be made if the Employees' Insurance Court on reasonable grounds
allows it to do so.

For the purposes of sub-section (I-A) the cause of action in respect of a claim by the Corporation for
recovering contributions (including interest and damages) from the principal employer shall be
deemed to have arisen on the date on which such claim is made by the Corporation for the first
time. Provided that no claim shall be made by the Corporation after five years of the period to which
the claim relates. So also for the purposes of sub-section (I-A) the cause of action in respect

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of a claim by the principal employer for recovering contributions from an immediate employer shall
not be deemed to arise till the date by which the evidence of contributions having been paid is due
to be received by the Corporation under the regulations.

In Employee's State Insurance Corporation v. c.c. Santha Kumar: there were two set of appeals. In
the first one the E.S.1. corporation impugned the judgment of a Full Bench of the Kerala High Court.
The High Court in the impugned judgment held that the corporation could not claim E.S.I.
contribution for a period of more than 5 years as stated in the proviso to clause (b) of Section 77(t-A)
of the Employees' State Insurance Act, 1948. In the other set of appeals the appellant were
employers who failed before' the Madras High Court in their contest of claim for E.S.I. contribution
for a period of more than 5 years. The Supreme Court held the view of Madras High Court as correct
and that of the Kerala High Court as not correct.

The Supreme Court observed that the proviso to clause (b) of Section 77(I-A) of the E.S.1. Act, 1948
could not give any meaning without reference to the main provision of Section 77 which related to
commencement of proceedings before the E.S.1. Court. Therefore, the said proviso fixing five years
period for claim made by the corporation would apply only in respect of such claim made in the ES.I.
Court and to no other proceedings. The Supreme Court adverted to the concept of reasonable time
being read into the provision even though not specifically provided for.

Sub-section (2) provides that every such application shall be in such form and shall contain such
particulars and shall be accompanied by such fee, if any, as may be prescribed by rules made by the
State Government in consultation with the Corporation.

Sher Ali Mirdha v. Trap Ali,


The expression 'cause of action' means all the essential facts constituting the right and the
infringement.

It also means the fact or a combination of facts which gives rise to a right of action, which means the
right of suing in a court for relief.

The condonation of delay in instituting a proceeding on reasonable grounds is permitted under the
Act.

In K.K. Beri ,& Co. v. E.S.l. Co.2 the Punjab High Court has held that it is difficult to subscribe in an
unqualified manner to the view, that delay in Government offices can never, as a general rule,
constitute a relevant consideration in determining the sufficiency of cause for condoning delay, each
case must depend on its own circumstances and the court has to determine in a practical way as to
how far a litigant has been reasonably diligent in prosecuting his case. Thus to justify the failure or
omission to make, an application within the period of limitation and to make out a case for
condonation of delay, it is incumbent on the party to place cogent material on record. Discretion to
admit an application beyond the prescribed period of limitation is, as is' well established, judicial and
must be exercised on well recognised principles.

In Employees' State Insurance Corporation v. Nutan Ayurvedic Karyalaya (P.) Ltd. and another, it was
contended by the Corporation that the application of respondent No.1 before the Employees'
Insurance Court was not maintainable as it had been made beyond 3 years prescribed cinder Section
77 of the Act. It was held by the High Court that Section 5 of the Limitation Act along with the saving
clause of Section 29(2) was applicable to the Employees' State Insurance Act and the Employees'

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Insurance Court had condoned the delay. Hence, the application before the Employees' Insurance
Court was maintainable.

E. S. I. Corpon. v. Asian Paints India Ltd.,


Section 77 (I-A) only prescribes the period of limitation for an application under Section 75 and not
for all claims under the Act. This limitation period does not apply to an action under Section 45-A
because that has not been the intention of the legislature. Though Section 77(I-A) was introduced by
the same amending Act as Section 45-A but the legislature did not make it applicable to Section 45-
A.

Section 78. Power of Employees' Insurance Court


The Employees' Insurance Court 'shall have the powers of a Civil Court for the following purposes:

(i) summoning and enforcing the attendance of a witness,

(ii) compelling the discovery and production of documents and material objects,

(iii) administering oath and recording evidence.

The Employees' Insurance Court shall be deemed to be a Civil Court within the meaning of Section
195 of the Criminal Procedure Code. It shall follow the procedure prescribed by rules made by the
State Government. That means, it is not necessary that the same set of rules should be followed by
Employees' Insurance Court in different States. If there are no statutory rules prescribing the
procedure, the Court will follow the rule of natural justice.

All costs incidental to any proceeding before such Court shall, subject to the rules made by the State
Government, be in the discretion of the Court. The Court has power to allow cost incidental to
proceedings. Any order of the Employees' Insurance Court shall have the sanctity of a decree passed
by a Civil Court. In other words, it shall be enforceable in the same manner as a decree passed in a
suit by a Civil Court.

Natural Justice
It is difficult to explain the meaning of the expression 'natural justice', with sufficient precision. It has
different connotation in different context.' One of the principles of natural justice is that no decision
against a party can be made by a judicial or quasi-judicial authority without giving him an effective
opportunity of meeting the allegations made against him. In other words he must have a notice of
allegations made against him and also a reasonable opportunity to be heard in his defence. It implies
the following three principles, namely: -

(i) No person can be a judge in his own case. - . Moti Lol v. State of U.P.

(ii) No person can be condemned unheard - Horn v. Minister of Health

(iii) The decision must be made in good faith - Karunanidhi Naidu v. State of Madras.

The rules of natural justice are applied by the Employees' Insurance Courts only when there are no
statutory rules laying down the procedures for the guidance of these Courts. A good deal of the
provisions of the Civil Procedure Code are applicable to the Employees' Insurance Court.

Section 79. Appearance by Legal Practitioner


The following parties can appear on behalf of any person before the Employees' Insurance Court:

(i) a legal practitioner;

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(ii) an officer of registered Trade Union, authorised in writing by such person; or

(iii) any person authorised in writing with the permission of the Court.

But where a person is required to appear before such Court for the purpose of his examination as a
witness, he shall appear personally, and in all other cases he may be represented by any of the
parties as stated above.

Section 81. Reference to High Court


Section 81 of the Act authorises the Employees' Insurance Court to submit any question of law for
the decision of the High Court. Whenever any such reference is made, the matter involving the
determination of such question of law shall be kept pending before the Court. When the question of
law is considered and decided by the High Court the decision shall be communicated to the Court
making such reference, which shall decide that matter in conformity with the decision of the High
Court.

Section 82. Appeal


Clause (1) of Section 82, of the Act provides that there shall be no right of appeal from an order of an
Employees' Insurance Court except where appeal is allowed under this section. The right of appeal is
normally creature of a statute. There is no inherent right of appeal. Therefore, an appeal lies only
when a provision to that effect is expressly made in a statute.

E. S. I. Corporation, Madras v. A. Zackaria,


Under this section an appeal shall lie to the High Court from any decision of the Employees'
Insurance Court if it involves a substantial question of law. No appeal can be entertained under
Section 82(2) on a pure question of fact.

The period of limitation for an appeal is sixty days. It is further provided that the provisions of
Sections 5 and 12 of the Limitation Act, 1963 shall apply to appeals under Section 82 of the Act.

In E.S.I. Corpn., Hyderabad v. Southern Eastern Roadways', the respondent was a transport company
engaged in the business of transporting goods, with its head office at Calcutta and having its
branches all over India in different States. One of such branch offices was at Hyderabad. All the
branches were controlled administratively and financially by the head office at Calcutta. Each branch
is a separate and independent unit having no connection with other branches and at no time 20 or
more persons were employed for wages by the branch office at Hyderabad. Corporation issued
notice to the respondent company demanding contributions. It was held that each branch is an off-
shoot of the head office and cannot be considered to have an independent entity as all the
transaction ultimately funnel into head office. Each branch is a component of the main office and all
the branches are miniature of the main office and as such cannot be considered as separate and
independent units. Therefore, contribution was payable.

Appeal to Supreme Court


Article 136 of the Constitution empowers the Supreme Court to grant special leave to appeal from
any judgment decree, determination, sentence or order on any cause or matter passed or made by
any Court or Tribunal in the territory of India. Decisions of Employees' State Insurance Court are in
certain cases appealable to the High Court. But there is no provision for appeal from the decisions of
special Tribunal constituted under Section 73-B of the Act. Similarly, the appropriate Government
may in suitable cases exempt a particular person or class of persons and a factory or establishment
from the operation of this Act. The special Tribunal, constituted under Section 73-B and any

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Government doing an act in the exercise of powers conferred by Sections 87 and 88 of the Act is a
Tribunal. The Supreme Court can grant special leave to appeal from any such decision.

Before an appeal can be entertained by the Supreme Court under Article 136, two conditions have
to be satisfied: the order impugned must be an order of a judicial or quasi-judicial character and
should not be purely an administrative or executive order and the said order should have been
passed either by a Court or a Tribunal in the territory of India. It is difficult to lay down any definite
and precise test for determining the character of a body which is called upon to adjudicate upon
matter brought before it.

Employees' State Insurance Corporation v. Ameer Hasan,


In case of a finding of fact arrived at by the Employees' State Insurance Court and confirmed in
appeal by the High Court, the Corporation must not go in a special leave to appeal petition when no
substantial question of law is involved. The Supreme Court cautioned that a time has come to cry a
halt to this litigious mentality on the part of a public corporation set up to achieve the goals
enumerated in the Constitution.

In Indo-China Steam Navigation Co. v. Jasjit, it was said that sometimes in deciding such a question
courts enquire whether the body or authority whose status or character is the subject-matter of the
enquiry, is clothed with the trappings of a Court, can it compel witnesses to appear before it and
administer oath to them, is it required to follow certain rules of procedure, is it bound to comply
with the rules of natural justice as it is expected to deal with the matters before it fairly, justly and
on the merits and not be guided by subjective consideration; in other words, is the approach, which
it is required to adopt a judicial or quasi-judicial approach. If all or some of the important tests in
that behalf are satisfied the proceedings can be characterised as judicial proceedings and the test of
trapping may be said to be satisfied. Another test of importance is whether the body or authority
has been constituted by the State and the State has conferred on it its inherent judicial power. If it
appears that such a body or authority has been constituted by the Legislature and on it has been
conferred the State's inherent judicial power, that would be a significant, if not a decisive, indication
that the said body or authority is a tribunal.

In Associated Cement Co. Ltd. v. P.M. Sharma, it was held that in determining the status of an
authority dealing with the disputes it should be enquired whether the power conferred on the said
authority or body could be said to be judicial power conferred on it by the State by means of a
statute or statutory rule. In other words, the test in determining the status of any authority in the
context of Article 136(1) is whether or not inherent judicial power of the State has been transferred
to it. Judicial functions are exercised by the court also. It is not possible or even expedient to
attempt to describe exhaustively the features which are common to the Tribunals and the Courts,
and features which are distinct and separate. The basic and fundamental feature which is common
to both the Courts and the Tribunals is that they discharge judicial functions and exercise judicial
powers which inherently vest in a sovereign State. Therefore, anybody or authority that satisfies the
requirements of a Tribunal or Court is within the scope of Article 136 of the Constitution, and the
provisions of special leave to appeal under that Article shall apply to the decision of any such
authority.

Section 83. Stay of payment pending appeal


The provision to withhold the payment of compensation under Section 83 pending an appeal is very
limited. If the Corporation has appealed against an order of the Employees' Insurance Court, that
court has a discretion to withhold the payment of compensation directed to be paid by the order
appealed against. But if the High Court before which any such appeal is pending directs the

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Employees' Insurance Court to withhold the payment of compensation, that court shall have to
comply with the order because no discretion is conferred in that case. Thus the High Court may pass
any interim order that it thinks proper to meet the ends of justice, pending the decision of appeal.

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31. Discuss the salient features of the various schemes formulated under the
Employees Provident Fund Act, 1952.

Section 6-A. Employees' Pension Scheme


(l) The Central Government, may, by notification in the Official Gazette, frame a scheme to be called
the Employees' Pension Scheme for the purpose of providing for-

(a) superannuation pension, retiring pension or permanent total disablement pension to the
employees of any establishment or class of establishments to which this Act applies; and

(b) widow or widower's pension, children pension or orphan pension payable to the beneficiaries of
such employees.

(2) Notwithstanding anything contained in Section 6, there shall be established, as soon as may be
after framing of the Pension Scheme, a Pension Fund into which there shall be paid from time to
time, in respect of every employee who is a member of the Pension Scheme -

(a) such sums from the employer's contribution under section 6, not exceeding eight and one-third
per cent of the basic wages, dearness allowance and retaining allowance, if any, of the concerned
employees, as may be specified in the Pension Scheme;

(b) such sums, as are payable by the employer of exempted establishments under sub-section (6) of
Section 17;

(c) the net assets of the Employees' Family Pension Fund as on the date of the establishment of the
Pension Fund;

(d) such sums as the Central Government may, after due appropriation by Parliament by law in this
behalf, specify.

(3) On the establishment of the Pension Fund, the Family Pension Scheme (hereinafter referred to
as ceased scheme) shall cease to operate and all assets of the ceased scheme shall vest in and shall
stand transferred to, and all liabilities under the ceased scheme shall be enforceable against, the
Pension Fund and the beneficiaries under the ceased scheme shall be entitled to draw the benefits,
not less than the benefits they were entitled to under the ceased scheme, from the Pension Fund.

(4) The Pension Fund shall vest in and be administered by the Central Board in such manner as may
be specified in the Pension Scheme.

(5) Subject to the provisions of this Act, the Pension Scheme may provide for all or any of the
matters specified in Schedule III.

(6) The Pension Scheme may provide that all or any of its provisions shall take effect either
prospectively or retrospectively on such date as may be specified in that behalf in that scheme.

(7) A Pension Scheme, framed under sub-section (I), shall be laid, as soon as may be after it is made,
before each House of Parliament, while it is in session, for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of session
immediately following the session or the successive sessions aforesaid, both Houses agree in making
any modification in the scheme or both Houses agree that the scheme should not be made, the
scheme shall thereafter have effect only in such modified form or be of no effect, as the case may

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be; so, however, that any such modification or annulment shall be without prejudice to the validity
of anything previously done under that scheme.

In Smt. Kamla Bai v. Secretary, M.P. Electricity Board & others, the deceased husband of the
petitioner was an employee of the Electricity Board. Deductions were made from his wages towards
contribution to Family Pension Fund since April, 1971 till his death in 1979 except for the period of
August to November 1977. Under the Family Pension Scheme an employee was required to exercise
his option and in the present case he had not exercised his option. In case of claim of family pension
by the widow it was held that the determinants of entitlement to pension are provided in the
scheme and absence of formal option as required under the pension scheme cannot defeat
claimants right otherwise acquired. The acquiescence of the employee in the continued deduction
towards his contribution would b d med exercise of his option. Therefore, the widow was entitled
for family pension.

In Gitaben Arvind Kumar Seth v. Regional Provident Fund Commissioner & others, the E.P.F. Act was
made applicable to the establishment with effect from April 1, 1990. One of the employees died on
July 26, 1990. The legal heirs of the deceased were given benefit under the E.P.F. Scheme but were
denied benefit under Family Pension Scheme and Deposit-linked Insurance Scheme on the ground
that in view of circular of the Department, the deceased employee was not entitled because his
membership for Family Pension Scheme was below three months on the date of death. Family
Pension Scheme was made applicable to the establishment only from May 31, 1990. It was held that
the contribution to Provident Fund and Family Pension are not separate, but it is correlated and co-
existing with the contribution made by the employee and employer every month under Section 6 of
the Act to P.F. Scheme. Contribution is payable with effect from the date when the provisions of the
Act are applicable to any establishment. Section 6-A al 0 links Family Pension Fund for the purpose of
implementing Family Pension Scheme with the contribution made to the fund. Since the deceased
employee became a member of the Provident Fund from April 1, 1990 and had contributed for more
than 3 months towards the Provident Fund he became a member and a contributor to the Family
Pension Scheme with effect from April 1, 1990. Hence the legal heirs would be entitled to family
pension.

In Union of India and Others v. Kamla Devi, the Supreme Court had by an order dated August 10,
1993 clarified that pension to non-statutory canteen employees would be paid to those of them who
had retired after October 1, 1991. But taking cue from another order, which dismissed a writ petition
of Federation of All India Central Government Canteen Employees, the respondent's husband who
had retired on July 12, 1990 obtained a direction from the Central Administrative Tribunal, as
affirmed by the High Court, issued to the Union of India, to grant the benefits to persons such as the
respondent as well. This direction was challenged in the present appeal. It was allowed.

It was observed by the Supreme Court that as far as the cut out date for non-statutory canteen
employees was concerned it stood concluded by the order of August 10, 1993. It was not open to
the respondent to seek variation of the same.

It was held in Rajasthan State Road Transport Corporation v. President Rajasthan Roadways Union
and Another.' that if employee had not exercised the option to avail of benefit of family pension
scheme 1971 and his wife had received entire Provident Fund under E.P.F her claim for family
pension would be untenable.

Section 6-c. Employees' Deposit-linked Insurance Scheme

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(l) The Central Government may, by notification in the Official Gazette, frame a scheme to be called
the Employees' Deposit-linked Insurance Scheme for the purpose of providing Life Insurance
benefits to the employees of any establishment or class of establishments to which this Act applies.

(2) There shall be established, as soon as may be after the framing of the Insurance Scheme, a
Deposit-linked Insurance Fund into which shall be paid by the employer from time to time in respect
of every such employee in relation to whom he is the employer, such amount, not being more than
one per cent of the aggregate of the basic wages, dearness allowance and retaining allowance (if
any) for the time being pa able in relation to such employee as the Central Government may, by
notification In the Official Gazette, specify.

Explanation
For the purposes of this sub-section, the expression "dearness allowance" and "retaining allowance”
have the same meanings as in Section 6.

(3) Omitted.

(4) (a) The employer shall pay into the Insurance Fund such further sums of money, not exceeding
one-fourth of the contribution which he is required to make under sub-section (2), as the Central
Government may, from time to time, determine to meet all the expenses in connection with the
administration of the Insurance Scheme other than expenses towards the cost of any benefits
provided by or under that scheme.

(b) Omitted.

(5) The Insurance Fund shall vest in the Central Board and be administered by it in such manner as
may be specified in the Insurance Scheme.

(6) The Insurance Scheme may provide for all or any of the matters specified in Schedule IV.

(7) The Insurance Scheme may provide that any of its provisions shall take effect either prospectively
or retrospectively on such date as specified in this behalf in that Scheme.

Section 6-D. Laying of Schemes before Parliament


Every scheme framed under Section 5, Section 6-A and Section 6-C shall be laid as soon as may be
after it is framed, before each House of Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more successive sessions, and if, before
the expiry of the session immediately following the session or the successive sessions aforesaid,
both Houses agree in making any modification in the scheme or both Houses agree, that the scheme
should not be framed, the scheme shall thereafter have effect only in such modified form or be of no
effect, as the case may be, so, however, that any such modification or annulment shall be without
prejudice to the validity of anything previously done under that scheme.

Section 7. Modification of scheme


According to Section 7(1) the Central Government may, by notification in the Official Gazette, add
to, amend or vary either prospectively or retrospectively, the Family Pension Scheme or the
Insurance Scheme, as the case may be.

In view of sub-section (2) of Section 7 every notification issued under sub-section (1) shall be laid, as
soon as may be after it is issued, before each House of Parliament while it is in session, for a total
period of thirty days, which may be comprised in one session or in two or more successive sessions,
and if, before the expiry of the session immediately following the session or the successive sessions
aforesaid, both Houses agree in making any modification in the notification, or both Houses agree

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that the notification should not be issued, the notification shall thereafter have effect only in such
modified form or be of no effect, as the case may be, so, however, that any such modification or
annulment shall be without prejudice to the validity of anything previously done under that
notification.

http://www.employmentlawalliance.com/firms/trilegal/articles/employee-performing-
imaginative-and-creative-work-not-a-workman-under-the-i

Introduction
Workmen under the Industrial Disputes Act, 1947 (Act) are defined as employees who have been engaged to do
manual, unskilled, skilled, technical work but excludes people who are (a) employed in managerial or administrative
capacity; and (b) employed in supervisory capacity if their wages exceed Rs 10,000 per month. The question of
whether the work performed by an educated and highly skilled employee of an IT/ITES company would be ‘skilled,
manual, technical or unskilled’ for such an employee to be a workman under the Act, has taken significance in the
recent times.
Divyash Pandit vs. The National Council for Cement and Building Materials[1]
Recently, the Delhi High Court, in the case mentioned above, decided on the question of whether an engineering
graduate working as a scientist was a workman under the Act. In this case, the employee was an engineering
graduate who was carrying out research work in the process engineering field related to cement industry and had
special knowledge in this line of work. The court held that research work would not be skilled, unskilled, manual or
technical work and such an employee would not be a workman under the Act.
Analysis
The Delhi High Court in the above case held that “The very nature of scientific research, which the appellant was
carrying out, runs counter to his being a manual, unskilled, skilled, technical, operational or clerical worker within
the meaning of Section 2(s) of the Act. We fail to appreciate how a scientist, who is a qualified engineering graduate
and, is engaged in research work as well as supervising the work of other employees can be said to be a workman”.
The decision of the courts is based on the fact that research work, being very specialized and involving imagination

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and creativity would not be skilled, manual, technical or unskilled work. A similar view has been taken in the case
of Tata Sons Ltd. vs. S. Bandyopadhyay[2] where an employee providing consultancy services for risk management
and development of business for marketing purposes was not a skilled worker. The Court in this case held that the
nature of work clearly involved a considerable amount of mental inputs related to creativity and imagination and
that such work would not fall within the meaning of the terms manual, skilled, unskilled or technical.
Conclusion
As a result of these judgements there is now more ambiguity than ever in the already abstruse definition of
workman. The courts appear to be creating a distinction between skilled and highly skilled employees without
actually setting out clear parameters on how and when to classify them as such. While these judgments would
have persuasive value in the case of engineering graduates hired by IT/ITES companies, it would be crucial for
companies to demonstrate that the work performed by such employees are imaginative, creative and highly
specialized. In the case of employees performing routine software development and data management work, it
may be difficult to demonstrate that such work falls outside the definition.

use one side for the case name and the other for facts/outcome/legal principle.
note the Issue at hand, the Rule being applied, the Application of that rule, and the Conclusion of
the court.

Offer,

must be communicated:
Case: Taylor v Larid

Uniletteral offer:
Case: Carlic v Carbolic Smoke ball co.

.....etc..

Always write the answers based on case laws in the following format:

Facts of the case: Mention all the facts of the case briefly as given in the question.
Provisions of the law: Mention only what the law says. (In case you don't remember the section
number then start with this line…’As per the provisions of the income tax act, 1961 relating to
TDS…’
Relevant case law: Mention the name of the case law if you are really sure about the name….of
course don't create one. However if you don't remember the name of the case law then you can
start with this line….’The facts of this case is similar to that of a landmark case law in which the

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court held that…’


Conclusion: Write it briefly in a line or two as to what has been asked in the question, say for
example: The contention of the assessee is correct…

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32. “All workmen are employees but all employees are not work men”. Explain
with the help of decided cases

Introduction:
As per the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 2B
An Employee "means any person who is employed in an establishment to do any work for
remuneration;
An officer of a company is also an employee. However, as an officer, he/she has a higher level of
responsibility in the company. Larger companies have several levels of employees, ranging from entry
level up to officer level positions.

Workmen under the Industrial Disputes Act, 1947 (Act) are defined as employees who have been
engaged to do manual, unskilled, skilled, technical work but excludes people who are
(a) employed in managerial or administrative capacity; and
(b) employed in supervisory capacity if their wages exceed Rs 10,000 per month.

The question of whether the work performed by an educated and highly skilled employee of an IT
company would be ‘skilled, manual, technical or unskilled’ for such an employee to be a workman
under the Act, has taken significance in the recent times.

Divyash Pandit vs. The National Council for Cement and Building Materials on 29 March, 2012

Recently, the Delhi High Court, in the case mentioned above, decided on the question of whether an
engineering graduate working as a scientist was a workman under the Act. In this case, the
employee was an engineering graduate who was carrying out research work in the process
engineering field related to cement industry and had special knowledge in this line of work. The
court held that research work would not be skilled, unskilled, manual, or technical work and such an
employee would not be a workman under the Act.

Analysis
The Delhi High Court in the above case held that “The very nature of scientific research, which the
appellant was carrying out, runs counter to his being a manual, unskilled, skilled, technical,
operational or clerical worker within the meaning of Section 2(s) of the Act. We fail to appreciate
how a scientist, who is a qualified engineering graduate and, is engaged in research work as well as
supervising the work of other employees can be said to be a workman”.

The decision of the courts is based on the fact that research work, being very specialized and
involving imagination and creativity would not be skilled, manual, technical or unskilled work.

A similar view was taken in the case of Tata Sons Ltd. vs. S. Bandyopadhyay, 17 March, 2004 where
an employee providing consultancy services for risk management and development of business for
marketing purposes was not a skilled worker. The Court in this case held that the nature of work
clearly involved a considerable amount of mental inputs related to creativity and imagination and
that such work would not fall within the meaning of the terms manual, skilled, unskilled or technical.

Conclusion:
It can be seen that employees can be considered genus and workers the species.

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An employee is not a workman and is not included with the ambit of Industrial Dispute Act 1947,
when,

· The person is not employed in an industry,

· His work is not for hire or reward and is free of charge,

· He is not employed to do the type of work specified in the definition,

· There is no contractual relationship of master and servant. Such a relationship exists when the
workman is under supervision, direction and control of the master.

· A person employed in a supervisory work and drawing wages in excess of Rs. 10,000/- p.m.
(Industrial Disputes (Amendment) Act, 2010)

· He is within the specific category of employees as mentioned in section 2(s) of the Act.

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