STANDING ORDER by SACHAN

Introduction

The SO is a special kind of collective contract arrived at through a tripartite procedure involving
employers, trade unions and the officials of the state labour department, viz. the certifying
officers (CO) and the appellate authorities (AA).The IESOA required employers covered by it to
define with “sufficient precision” conditions of employment formally in a Standing Order (SO)
and communicate the same to workers.

The SO covers regulations concerning the category of employees that an employer must recruit
(permanent, temporary, casual, fixed-term employment, etc.) and specifies the definitions and
conditions governing each category (e.g. tenure of probationers and conditions for their
regularisation), shift working, types of leave and their application and sanction, stoppages of
work and their consequences for workers, conditions to be followed by both employers and
employees concerning termination of employment, specific acts of misconduct, contemplated
disciplinary procedure and types of proposed punishment, means of redress for workers against
unfair treatment and wrongful exactions by employers, among others. Thus, the SO regulates
with clarity a variety of collective conditions of service. As a result, both employers and
employees cannot deviate from them at their will.

Objectives

The Act was enacted to curb the powers of the employer to offer such conditions of service as
would result in exploitation and bring about uniformity in conditions of service amongst
employees working in different industrial establishments in the same industry. The Act imposes
an obligation on the employer to explain and state the terms and conditions of service before a
person accepts the employment.

It seeks to define the terms and conditions of employment of all categories of employees who
discharge the same or similar work in an industrial establishment and to make those terms and
conditions widely known to all workmen before they could be asked to express their willingness
to accept the employment.

Standing orders
The Act applies to every industrial establishment wherein 100 or more workmen are employed,
or were employed on any day of the preceding 12 months. Several states have 'extended the
application of the Act to establishments employing 50 or more persons. Section 2(g) of the Act
states that “standing orders” are the rules relating to matters set out in the Schedule.

Standing Orders should be reasonable

Section 4 of the Act declares the conditions upon the fulfilment of which, a standing order can be
certified. It thereby requires a standing order to provide for all the matters set out in the Schedule
of the Act and be in conformity with the provisions of this Act. The proviso to Section 4 of the
Act, as amended by Act 56 of 1956, necessitates the Certifying Officer or appellate authority to
adjudicate upon the fairness or reasonableness of the contents of such Draft Standing Order in
order to proceed with its certification.

KC Sharma v Delhi Stock Exchange (2005)

Facts

Appellant was general manager of Delhi stock exchange. Due to certain internal affairs and ill
relation with the board members, he was terminated from his services. He challenged this
termination and Delhi high court adjudged this termination as malafide and illegal. HC ruled that
the appellant should be reinstated at the job. Now, this reinstatement was challenged by the
respondents in Supreme court stating that it was done due to loss of confidence in the services
rendered by the GM.

ISSUES

1. Whether the issue relating to the termination of service of the General Manager is purely
in the realm of contract and, therefore, not amenable to writ jurisdiction ?

2. Whether the termination of contract of employment of the General Manager of Delhi

Stock Exchange by the Board of Directors after taking into account the material on record
which leads to loss of confidence is not valid in law ?

3. Whether in case where the Stock Exchange has lost confidence in its General Manager
who was holding the post of trust should be reinstated on the Stock Exchange or is it not
 appropriate to grant him compensation in lieu of reinstatement as per the ratio of
judgment of Supreme Court in the case of O.P. Bhandari v. ITDC, AIR 1987 SC 111 ?

Held –

On the First question, the Division Bench came to the conclusion that the appellant was a
permanent employee. Having regard to the fact that the provision corresponding to clause (4) of
his letter of appointment has been held ultra vires in a series of judgments of this Court, the
Division Bench was of the opinion that the appellant's service could not have been dispensed
with by relying on or on the basis of the provisions contained in paragraph 4 of the letter of
appointment.

Question Nos. 2 to 4 were considered together by the Division Bench, which did not disagree
with the findings of the learned single Judge that the termination of the services of the appellant
was illegal and arbitrary. In fact, the Division Bench observed: "the fact, however, remains that
loss of confidence was not a ground for termination of service. The order terminating the service,
ex facie, was not stigmatic. The Division Bench concluded that such allegations and counter
allegations of serious nature were themselves a pointer to the fact that there was bad blood
between the parties and hence it would not be advisable to direct reinstatement irrespective of the
fact that loss of confidence had not been pleaded or proved.

It found that the allegation and counter-allegation made by both sides indicated a bad blood
between the parties. In such cases where reinstatement would not be proper with regard to the
relation of the parties and doing so will cause irreparable loss to the business, court can order
compensation to be paid. In exceptional circumstances, the court can suo moto award
compensation instead of reinstatement without any plea from employer.

D.K. Yadav vs J.M.A. Industries Ltd

Facts: The respondent-company terminated the appellant's services on the ground that since he
had willingly absented from duty continuously for more than 5 days from December3,1980,
without leave or prior information of intimation or previous permission of the management, he
had been deemed to have left the service of the company on his own and lost the lien and the
appointment with effect from December 3, 1980. It relied on clause 13(2) (iv) of the Certified
Standing Order in support of its action.

Clause 13 (2) (iv) standing order reads thus:

"If a workman remains absent without sanctioned leave or beyond the period of leave originally
granted or subsequently extended, he shall lose his lien on his appointment unless.

(a) he returns within 3 calander days of the commencement of the absence of the expiry of leave
originally granted or subsequently extended as the case may be; and

(b) explains to the satisfaction of the manager/management the reason of his absence o r his
inability to return on the expiry of the leave, as the case may. The workman not reporting for
duty within 8 calander days as mentioned above, shall be deemed to have automatically
abandoned the services and lost his lien on his appointment. His name shall be struck off from
the Muster Rolls in such an eventuality."

The appellant's plea that despite his reporting to duty onDecember3, 1980 and every day
continuously thereafter,hewas prevented entry at the gate and was not allowed to
signtheattendance register and that he was notpermittedtojoin duty without assigning any
reasons, was not accepted.

Labour Court: TheLabour Court upheld the termination order as legal and valid. It held that the
appellant had failed to prove his case that the action of the respondent wasinaccordancewiththe
Standing Orders and it was not a termination norretrenchment under the Industrial Disputes Act
and that theappellantin terms of Standing Orders lost his lien on hisappointment and was not
entitled to reinstatement.

Supreme Court: Allowing the appeal of the employee, this Court held that the action of the
management in terminating the appellant's service is violative of the principles of natural justice.
Under clause 13 (2) (iv) of Certified Standing Orders, on completion of eight calendar days'
absence from duty an employee shall be deemed to have abandoned the services and lost his lien
on his appointment. Thereafter, the management is empowered to strike off the name from the
Muster Rolls. But it is not correct to say that expiry of eight days' absence from duty brings
about automatic loss of lien on the post and nothing more need be done by the management to
pass an order terminating the service and per force termination is automatic. The principles of
natural justice must be read into the Standing Order No. 13 (2) (iv). Otherwise, it would become
arbitrary, unjust and unfair violating Article 14.

The Supreme Court held that the principles of natural justice are mandates of Articles 14 and 21.
In view of this, the Court ruled that the principles of natural justice must be read wherever the
standing orders provide for automatic termination of service for absence without leave.

The court held: “Article 21 of the Constitution clubs life with liberty, dignity of person with
means of livelihood without which the glorious content of dignity of person would be reduced to
animal existence. When it is interpreted that the colour and content of procedure established by
law must be in conformity with the minimum fairness and processual justice, it would relieve
legislative callousness despising opportunity of being heard and fair opportunities of defence.
The order of termination of the service of an employee/workman visits with civil consequences
of jeopardising not only his/ her livelihood but also career and livelihood of dependents.
Therefore, before taking any action putting an end to the tenure of an employee/workman, fair
play requires that a reasonable opportunity to put forth his case is given and domestic enquiry
conducted complying with the principles of natural justice.”

Aligarh Muslim University And Ors vs Mansoor Ali Khan

The Court considered the judgment in M.C. Mehta v. Union of India wherein it has been held
that an order passed in violation of natural justice need not be set aside in exercise of the writ
jurisdiction unless it is shown that non- observance has caused prejudice to the person concerned
for the reason that quashing the order may revive another order which itself is illegal or
unjustified. The Court came to the conclusion that a person complaining non-observance of the
principles of natural justice must satisfy that some real prejudice has been caused to him for the
reason that there is no such thing as a merely technical infringement of natural justice.

Kapila Hingorani v. State of Bihar

The court adopting a very humane approach and held that the corporate veil can be pierced when
the corporate personality is found to be opposed to justice, convenience and interest of the
revenue or workmen or against public interest. The court while passing the order held that the
employees have a human right as also a fundamental right under Article 21 which the states are
bound the protect and not by way of an enforcement of their legal right to arrears of salaries.The
court directed the HC to dispose of all liquidation proceedings in respect of government
corporations owned and controlled by the state government as expeditiously as possible and pass
interim orders for the sale and disposal of the properties thereof for utilization of the same
towards payment of salaries of the employees.

West Bengal State Electricity Board v DeshBandhu Ghosh (1985)

The regulation gave power to the Board to terminate the services of the employee by three
months’ notice or pay in lieu of it. The SC named this power as “naked hire and fire rule” and
declared it to be violative of Art. 14. The Board being an instrumentality of the State has to act in
consonance with Art. 14.

• OP Bhandari v Indian Tourism Development Corporation (1986)

Rule 31(v) of the ITDC rules which provides for termination of the services of the employees of
the corporation simply by giving 90 days' notice or by payment of salary for the notice period in
lieu of such notice was quashed as being violative of Art. 14 and 16(1).The tenure of service of a
citizen who takes up employment with the State cannot be made to depend on the pleasure or
whim of the competent authority unguided by any principle or policy, nor his services allowed to
be terminated on an irrational ground arbitrarily orcapriciously.

When granting relief, reinstatement would be a rule and compensation in lieu thereof would be a
rare exception. However, if the Court is satisfied that ends of justice so demand, it can direct the
employer the option not to reinstate provided the employer pays reasonable compensation as
indicated by the Court.

• DTC v DTC Majdoor Congress (1991)

Regulation 9(b) gave unbriddledpower on the authority to terminate the service of an

employee,including a permanent employee, without any reason whatsoever. The power was held
to be in contravention of Art. 14 of the Constitution and S. 23 of the Contact Act.The
audialterampartem rule enforces the equality clause in Art. 14 is applicable not only to quasi-
judicial orders but toadministrative orders affecting prejudicially the party-in question. The
principles of natural justice supplement the rules and regulation and not supplant it.

• Syndicate Bank v General Secretary (2000)

The employee was absent was over 90 days. He was sent a notice to explain himself which was
returned on non-acceptance (rejection) of the notice. Thereafter, he was removed from the
services. SC held the termination to be not violative of principle of natural justice as they have
been applied in good faith. The requirement of the principle are:

1. Workman should know the nature of the complaint.

2. He should be given an opportunity to represent himself.

3. The action of the management should be just, fair and reasonable.

• Aligarh Muslim University v Mansoor Ali Khan (2000)

The employee was on leave for long period of time and was claiming extensions at the end of
each term. The university gave him a final extension. At the end of final term, he sought another
extension which was denied and the university informed him of the possible vacancy of his post
in case he fails to show up. He failed to join and he was removed. The same was challenged. The
Court held that such termination did not violate the principles of natural justice. Too much
reliance on the principle would cause miscarriage of justice.

END
 LABOUR LAW AND CONSTITUTION- by JUNAID

Indian constitution provides numerous safeguards for the protection of labour rights. These
safeguards are in the form of fundamental rights and the Directive principle of State policy. Part
III of the Constitution of India is the benchmark for labor laws in India. There was two division
in Supreme Court Journey towards labour laws. Before 1990s, the courts were incline towards
labour class. After 1990, the courts are inclined towards the concept of globalization. Courts are
now shifting its stand.

Article 14

Equality before the law which is interpreted in labor laws as “Equal pay for Equal work”. It does
not mean that article 14 is absolute. There are a few exceptions in it regarding labor laws such as
physical ability, unskilled and skilled labors shall receive payment according to their merit.

Article 19 (1) (C)

Constitution guarantees citizens to form a union or association. The Trade Union Act, 1926
works through this Article of the Constitution. It allows workers to form trade unions. Trade
Unions provide the power to raise voice against atrocities done to the workers. Unionization
brings power to the laborers. Trade Unions discuss various labor-related problems with the
employers, they conduct strikes, etc.

Article 23

Constitution prohibits forced labor. When the Britishers ruled over India, forced labor was
prevalent all over India. They were made to work against their will and weren’t paid according to
their work. The Government at that time were infamous for forced labor and the landlords were
also involved in forced labor.In current times, forced or bonded labor is an offense which is
punishable under the law. The Bonded Labor (Abolition) Act, 1976 prohibits all kinds of bonded
labor and is declared illegal.

Article 24
Constitution prohibits all forms of child labor. Nobody can employ a child under the age of 14 to
work. Child labor was a massive problem of our country in the earlier times and it still is
happening but at a lower scale. The penalization of article 24 is severe.

Relevancy of Part IV (Article 36 – 51) on Labor Laws

Part IV of the Constitution of India, which is also known as the “Directive Principles of State
Policy” aims to work toward the welfare of its citizens. DPSP cannot be enforced in the court of
law, but it provides a guideline to the legislature for making labor laws in India.

Article 39 (a)

“The State shall, in particular, direct its policy towards securing; That the citizens, men and
women equally, have the right to an adequate means of livelihood. It means that every citizen of
the country has the right to earn a livelihood without getting discriminated on the basis of their
sex.

Article 39 (d)

Constitution says that “The State shall, in particular, direct its policy towards securing; that there
is equal pay for equal work for both men and women. Wages will not be determined on the basis
of sex rather it will be according to the amount of work done by the worker.

Article 41

Constitution provides “ Right to Work” which means that every citizen of the country has the
right to work and the state with the best of its abilities will secure the right to work and
education.

Article 42

Provides for the upliftment of the working conditions for workers. It talks about creating a
suitable and Humane workplace. This article also talks about maternity relief, i.e leave provided
to women when they are pregnant.

Article 43
Talks about the “living wage” for its citizens. Living wage not only includes the “bare necessities
of life” but also the social and cultural upliftment of the person. It also includes education and
insurances for a person.

The State shall constantly try to create opportunities in the fields of Agriculture and Industries
with special reference to cottage industries.

 PEOPLE UNION FOR DEMOCRATIC RIGHTS V. UNION OF INDIA

In Asiad case the Supreme Court examined whether there was any violation of fundamental right
in this petition and observed:
“The complaint of violation of Art.24 based on the averment that children below the age of 14
years are employed in the construction work of the Asiad projects, is clearly a complaint of
violation of a fundamental right. So also when the provisions allege non-observance of the
provisions of the Equal Remuneration Act, 1976 it is in effect and substance a complaint of
breach of the principle of equality before the law enshrined in Art 14. Then there is the complaint
of non-observance of the provision of the Contract Labour (Regulations &Abolition) Act 1970
and the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service)
Act, 1979 and this is also in our opinion a complaint relating to violation of Art.21.”

Further it was added:

“Now the rights and benefit on the workmen employed by a contractor under the provisions of
the Contract Labour (Regulation and Abolition) Act, 1970 and the Inter-State Migrant Workmen
(Regulation of Employment and Conditions of Service) Act, 1979 are clearly intended to ensure
basic human dignity to the workmen and if the workmen are deprived of any of these rights and
benefits to which they are entitled under the provisions of these two pieces of social welfare
legislation, that would clearly be a violation of Article 21 by the Union of India, the Delhi
Administration and the Delhi Development Authority which, as principal employers, are made
staturily responsible for securing such rights and benefits to the workmen. That leaves for
consideration the complaint in regard to non payment of minimum wages to the workmen under
the Minimum Wages Act, 1948. We are of the view that this complaint is also one relating to
breach of a fundamental right and for reasons which we shall presently state, it is the
fundamental right enshrined in Article 23 which is violated, by non-payment of minimum wage
to the workmen.”

 CENTRAL INLAND WATER TRANSPORT V. BROJO NATH

FACTS:

Plaintiffs worked in a company which was dissolved by Court’s order and they were then
inducted into defendant Corporation upon latter’s T&C. After years of serving Corporation,
plaintiffs were arbitrarily kicked out of the Corporation by virtue of Rule 9(i) of said T&C which
provided for termination of employees’ services on three months’ notice on either side upon
which three months’ salary to be paid by Corporation. Plaintiffs requested Court to quash Rule
9(i) on grounds of unconscionability.

For brief understanding- The term Public Policy' was first questioned in the case
of Renusagar Power Co Ltd v. General Electric Co, wherein it was adjudged that public
policy is a term which is somewhat open-textured and flexible. A similar line of thinking was
applied by the judges of the Supreme Court in the case of Central Inland Water Transportation
Corporation Ltd v. Brojo Nath Ganguly, wherein it was held that public policy constitutes some
matters which concern public good and public interest and it was held that the heads of public
policy can never be closed, and must be opened when justice so demands.[6]

Ratio Decidendi of the Case: for detailed understanding

 The court, dismissing the appeal, held that the term ‘state’ has various meanings
depending on its interpretation. The existence of word ‘includes’ under Article 12 is
prima facie (based on first impression) and extensive in contrast to the restrictive term
‘mean.’

 The corporation is state under Article 12 being instrumentality of state. The action of
these state instrumentalities will be State actions. Such actions are to be adjusted with
Part 3 and Part 4 of the Constitution. Moreover, these actions shall not be in accordance
with Part 3 only but also conform to part 4 as well.

 The court referred the case of Sukhdev Singh v. Bhagatram Sardar Singh
Raghuvanshi[8], in which it was clarified that the state, being an abstract, acts through its
instrumentalities. As per this, “for Article 12, the Court must necessarily lift the corporate
veil in order to establish if the face of the agency or instrumentality is present behind that
veil. If there exists an agency of the State which has presumed the garb of a Government
Company, it thereby ceases to be an agency. This judgement was marked as a test to
determine the subject matter.” In this case, it was concluded that the corporation falls
under the defined concept.

 It was validated that the corporation operated for government activities and functions that
were necessary for public importance. Also, it was justified that it would be unreasonable
 to not consider the corporation as agency just because it didn’t possess monopoly of
inland water transportation.

 In response to next issue, it was perceived that the contention the contract made between
the corporation and the employees was similar to other contracts entered in the course of
its trading activities was unacceptable. The Court evaluated that the employees cannot be
compared with the goods which are available for sale or which are bought and sold, and
similarly a contract of employment cannot be equated with a transaction between
businessmen.

 Consequently, Rule 9 (i) of the Corporation’s Service, Discipline and Appeal Rules was
declared void under Section 23 of the Indian Contract Act, 1872 [9] and was
considered ultra vires as per Article 14 of the Constitution to the extent that it lays on the
Corporation the right to dismiss the employment of a permanent employee by giving
three months prior notice or pay. These conditions were held unjust, unreasonable and
opposed to public policy.

 Also, the Hon’ble Court found Rule 9 (i)[10] to be discriminatory because it allows the
Corporation to discriminate between the employee and the employer. It was considered
against right and unacceptable because the parties entering into the contract have a great
inequality of bargaining power. Such clause can affect the public at large and is harmful
as it creates a sense of insecurity in the minds of those on whom the clause can be
implemented.

 The High Court, as per the Supreme Court, was unsuccessful to notice that Rule 9 (i) also
included rights of a permanent employee to resign from the corporation. This was a
necessary part of this clause as any employee cannot be deprived of his right to resign.
The order passed by the High Court was therefore modified to the extent of restoring the
statement given by it;

 KAPILA HINGORANI V. STATE OF BIHAR

Facts- It was around January 1992 from when the employees of the state owned corporations of
Bihar were deprived of their salaries. It took more than ten years for the judiciary to take notice
only when a public spirited citizen and a Supreme Court lawyer Kapila Hingorani filed a writ
petition under Art.32 of the constitution of India. According to the petitioner, a newspaper report
showed that hundreds of employees of various State- owned corporations, public undertakings or
other statutory bodies in Bihar had died due to starvation or committed suicide owing to acute
financial crisis resulting in acute financial crisis resulting from non- payment of salaries for a
long time. There were nineteen such state- owned sick corporations.

Analysis- The term ‘life’ used in Article 21 of the Constitution of India has a wide and far-
reaching concept. It includes livelihood and so many other facets thereof. “Life”, means
something more than mere animal existence and the inhibition against the deprivation of life
extends to all those limits and faculties by which life is enjoyed. Hence, though the State Govt. is
not directly or vicariously liable to pay salaries remuneration of the employees of the public
sector undertakings or the Government companies in all situations the State cannot escape its
liability when a human rights problem involving the starvation deaths and/or suicide by the
employees has taken place by reason of non-payment of salary to the employees of Public Sector
Undertaking for such a long time. Financial stringency may not be a ground for not issuing
requisite directions when a question of violation of fundamental right arises. The State thus, has
made itself liable to mitigate the sufferings of the employees of the public sector undertakings or
the government companies. It is now well-settled that the corporate veil can in certain situations
be pierced or lifted. The principles behind the doctrine is a changing concept and it is expanding
its horizon. The corporate veil indisputably can be pierced when the corporate personality is
found to be opposed to justice, convenience and interest of the revenue or workman or against
public interest. The matter may be considered from another angle. While the State expects the
industrial houses and multi-national companies to take such measures which would provide a
decent life to the persons living in the society in general and to their employees in particular and
in that premise it is too much to ask the State to practise what it preaches. This gives rise to
another question. Can the State be so insensitive to the plight of its own citizens in general and
the employee of the public sector undertakings in particular. The Court in a situation of this
nature is obligated to issue necessary directions to mitigate the extreme hardship of the
employees involving violation of human rights of the citizens of India at the hands of the State
Govt. and the government companies and corporations fully owned or controlled by it. A right to
carry on business is subject to compliance of constitutional obligations as also limitations
provided for in the Constitution.

 VISHAKHA v. STATE OF RAJASTHAN (Recognition)

The court observed that it is a fundamental right of a functioning woman under Article 14, 19(1)
(g), and 21 of the constitution to carry on any work, trade, or profession but it should be ensured
that employer should provide a safe working environment at workplace. It was of the remark that
the fundamental right to carry on any kind of occupation, trade, or profession depends on the
ease of use of a “safe” working environment. The right to life means life with dignity and
strength. The Supreme Court ruled that at all workplaces there should be a sexual code and there
should be a proper mechanism to enforce cases, which fall under the ambit of this sexual
harassment code. The main purpose of this aim is to facilitate the sexual characteristics of
equality and to avoid discrimination for women at the workplace. The court in lack of any
enacted commandment was called upon to deliver for effective enforcement of basic human
rights of gender equality and prevention against sexual harassment. Supreme Court made the
definition of sexually determined behavior in a wider sense by including any kind of acts which
include bodily contact, call for sexual favours, sexual comments, showing pornography, oral or
physical conduct of a sexual nature with women. The Supreme Court stated that the guidelines
for the sexual code at every workplace are to be treated as a declaration of law in accordance
with Article 141 of the constitution. And these rights should not be based on prejudices any right
available under the protection of the Human Rights Act 1993.

DILUTION IN JUDICIAL APPROACH

 ALLAHABAD JAL SANSTHAN v. DAYASHANKAR

The basic fact of the matter is The Respondent was appointed purely on a temporary basis. The
appointment letter stipulates that the said appointment could be terminated at any time without
any prior notice. The services of the Respondent were terminated by the State in terms of an
office order. An industrial dispute was raised. An ex parte award came to be passed by the
Labour Court reinstating the Respondent with full back wages holding that the order of
termination was invalid in law. The writ petition filed by the Appellant herein questioning the
legality of the said award came to be dismissed by reason of the impugned judgment.

Court to highlight that earlier in the event of an order of dismissal being set aside, reinstatement
with full back wages was the usual result. But now with the passage of time, it has come to be
realized that industry is being compelled to pay the workman for a period during which he
apparently contributed little or nothing at all, for a period that was spent unproductively, while
the workman is being compelled to go back to a situation which prevailed many years ago when
he was dismissed. It is necessary for us to develop a pragmatic approach to problems dogging
industrial relations. However, no just solution can be offered but the golden mean may be arrived
at. In view of the fact that the Respondent had been reinstated in service and the interest of
justice would be sub-served if the Respondent is directed to be paid 50% of back wages.

 STATE OF KARNATAKA V. UMA DEVI

The exception to the Uma Devi principles formulated by the Supreme Court is a great measure of
social justice to several employees who were employed prior to April 10,2006. The principles
may be stated as follows.-
(i) Appointments made without following the due process or rule relating to appointment did not
confer any right on the appointees; -

(ii) In such appointments, the Courts should not direct their regularization, absorption or re-
engagement or make their services permanent;

(iii) Such appointments are treated as 'illegal' and any interference by the Courts would upset the
economic arrangement" of the State or its instrumentalities

(iv) Courts should not lend themselves to be instruments to facilitate the by passing of the
Constitutional and Statutory mandates; and

v) A temporary, contractual, casual or a daily wage employee has no legal right to be made
permanent, unless he has been appointed in terms of relevant rules

It is not open to the court to prevent regular recruitment at the instance of temporary employees
whose period of employment has come to an end or of ad hoc employees who by the very nature
of their appointment do not acquire any right. High Courts acting under article 226 of the
Constitution of India, should not ordinarily issue directions for absorption, regularisation, or
permanent continuance unless the recruitment itself was made regularly and in terms of the
constitutional scheme.

INDUSTRY- BY HARSHIT

The literal meaning of the Industry is ‘economic activity concerned with the processing of raw
materials and manufacture of goods in factories.’ As per Section 2(j) of the industrial disputes
Act defines “Industry” means any business, trade, undertaking, or calling of employers and
includes any calling, service, employment, handicraft, or industrial occupation or avocation of
workmen. The definition of industry is adapted from the Australian legislation, The Conciliation
and Arbitration Act 1904.
The definition of the term ‘industry’ in section 2 (j) is both exhaustive and inclusive. It is in two
parts. The first part lays down that industry “means any business, trade, undertaking,
manufacture or calling of employers” and second part specifies that it “includes any calling,
service, employment, handicraft or industrial occupation or avocation of workmen.” Thus, while
the first part defines it from the standpoint of the employer, the second part visualises it from the
employees

DN Banerjee v PR Mukherjee (Liberal Approach)

Relevant Issue: (b) Whether the Industrial Disputes Act is applicable to disputes with
Municipalities?

In this case the court observes that the activity by the institution must be similar in the nature to
the organization of business. The court also held that the activity must fall within the ambit of
first part of the definition of industry, and the second part will indicate what is included for the
workmen from the perspective of second part of the definition.

" Undertaking " in the first part of the definition and " industrial occupation or avocation " in the
second part obviously mean much more than what is ordinarily understood by trade or business.
The definition was apparently intended to include within its scope what might not strictly be
called a trade or business venture.

The definitions in our Act include also disputes that might arise between municipalities and their
employees in branches of work that can be said to be analogous to the carrying out of a trade or
business.The Court answered in affirmative.

 The Corporation Of The City of Nagpur ... vs Its Employees

In Corporation of the city of Nagpur vs. Its employees4, the question raised in this case was
whether the court had to consider the corporation would be an industry within the meaning of
section 2(j) of industrial dispute act, 1947. Therefore the court could not press the expression
‘undertaking’ into service. But the municipal activity was brought within the ambit of words
‘business’ or ‘trade’ and distinction was drawn between the legal and municipal functions of the
municipal bodies. The Supreme Court in this case made very significant observations while
holding that court in this case made very significant observations while holding that corporation
is an industry while engaged in the non-regal functions but while discharging regal functions of
sovereign nature the position is totally different. The regal functions described as ‘primary’ and
inalienable functions of the state, though delegated to the corporation, are necessarily excluded
from the purview of the definition of industry.

 State of Bombay v. The Hospital MazdoorSabha

Facts: The writ petition filed by the respondents alleged that the retrenchment of respondents 2
and 3 was void as it did not comply with the mandatory provisions of ss. 25F and 25H of the
Industrial Disputes Act, 1947 (14 of 1947) (hereinafter called the Act) and it claimed a writ of
mandamus directing the appellant to reinstate them in their posts. It was argued that the writ
application was wholly misconceived inasmuch as the J. J group of Hospitals did not constitute
an industry and so the relevant provisions of the Act were inapplicable to the respondent's case.

It is not disputed that under s. 2(j) an activity can and must be regarded as an industry even
though in carrying it out profit motive may be absent. It is also common ground that the absence
of investment of any capital would not make a material difference to the applicability of s. 2(j).
Thus, two of the important attributes conventionally associated with trade or business are not
necessarily predicated in interpreting s. 2(j).

It would be possible to exclude some activities from s. 2(j) without any difficulty. Negatively
stated the activities of the Government which can be properly described as regal or sovereign
activities are outsidly the scope of s. 2(j). These are functions which a constitutional Government
can and must undertake for governance and which no private citizen can undertake. This position
is not in dispute.

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 oneself nor for pleasure. Thus the manner in which the activity in question is organised or
arranged, the condition of the co-operation between 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 s. 2(j) applies.

Judged by this test there would be no difficulty in holding that the State is carrying on an
undertaking when it runs the group of Hospitals in question. In deciding the question as to
whether any activity in question is an undertaking under s. 2(j) the doctrine of quid pro quo can
have no application.

LalitHariAyurvedic College vsLalit Hart Ayurvedic College

the appellant had terminated the services of Mr. Mahesh Chandra Sharma, a clerk in its
employment and the case of this clerk was taken up by the respondent on the ground that the
termination of his services was unjustified and illegal. The tribunal held that the dispute between
the parties was an industrial dispute and overruled the objection raised by the appellant that the
activity carried on by it was not an industry under Section 2(j) of the Industrial Disputes Act.

The plea raised by the appellant before appellate tribunal that the hospital activity did not amount
to an industry was rejected, and the contention urged by the appellant that the Pharmacy and the
hospital were run for the benefit of the students was also rejected. It found that the primary
object of the Pharmacy was to manufacture Ayurvedic medicines for sale in the market. It is on
these findings that the appellate tribunal confirmed the conclusion of the original tribunal and
held that the Pharmacy was an industry.

Relying on State of Bombay v. The Hospital MazdoorSabha, the Court concluded that
conducting hospitals is an industry under Section 2(j).

 University of Delhi v Ramnath

In University of Delhi v Ram Nath, the court narrowed the concept of service. I t held that
educational institutions would not fall within the meaning of ‘industry’ because their aim was
education and teachers’ profession was primarily carried on with the help of teachers who were
not covered by the definition of “workmen” and, therefore, educational institutions like the
University of Delhi were not ‘industry’.

 Madras Gymkhana club Employees' Union vs. Gymkhana club

The court in this case was faced with the question whether the activities of the Madras
Gymkhana Club which was a members’ club fell within the definition of ‘industry’. The Court
held that, though the activity of the club might be falling in the second part of the definition
inasmuch as the work of the club was conducted with the aid of employees who followed a
‘calling’ or an ‘avocation’, it could not be described ‘trade’, ‘business’, ‘manufacture’ or
‘calling’ of the members of the managing committee of the club. It was also held that the activity
of the club was not an ‘undertaking’ ‘analogous to trade or business’ as this element was
completely missing in a members’ club. This non-propriety club, therefore, has held to be not
‘industry’.

 Management of Safdurjung Hospital v Kuldeep Singh

The Court in this case held that the definiotn had to be read as a whole and when so read it
denoted a collective enterprize in which employers and employees were associated. It only
existed only when there was a relationship between employers and employees, the former
engaged in ‘business, trade, undertaking, manufacture or calling of employers’ and the the later
engaged in ‘calling, service, employment, handicraft or industrial occupation or avocation’. This
brought a sharp bend in the development of law.

The Court while holding hospitals not to be industries, said, that there was no evidence that
Safardjung Hospital is more than a place where persons can be treated. It was found to be a part
of the government function.

The judgement lacked the appropriate reasoning to clarify the position, making the law more
confusing on the issue. The Water Board Supply Caser, therefore, helped in putting the correct
exposition of law forward.

Bangalore Water Supply and Sewerage Board V. R. Rajappa

The appellant Board raised a preliminary objection before the Labour Court that the Board, a
statutory body performing what is in essence a regal function by providing the basic amenities to
the citizens, is not an industry within the meaning of the expression under section 2(j) of the
Industrial Disputes Act, and consequently the employees were not workmen and the Labour
Court had no jurisdiction to decide the claim of the workmen.

Whether Bangalore Water Supply and Sewerage Board will fall under the definition of
‘Industry’ and what is an ‘Industry’ under Section 2(j) of the Industrial Dispute Act?

It held that the Bangalore Water Supply and Sewerage Board will fall under the definition of the
industry and by justifying this it gave an elaborating definition of industry. ‘Industry’, as defined
in Section 2(j) and explained in Banerjee, has a wide import.

(a) Where (i) systematic activity, (ii) organized by cooperation 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 (not spiritual or religious but
inclusive of material things or services geared to celestial bliss e.g. making, on a large scale,
Prasad or food), prima facie, there is an ‘industry’ in that enterprise.

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

(c) The true focus is functional and the decisive test is the nature of the activity with special
emphasis on the employer employee relations.

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

Although Section 2(j) uses words of the widest amplitude in its two limbs their meaning cannot
be magnified to overreach itself.

After the Bangalore Water supply case the Supreme Court came up with a working principle
called as ‘triple test’.

* There should be systematic Activity.

* Organised by Cooperation between employer and employee.

* For the production and/or distribution of goods and services calculated to satisfy human wants
and wishes10.
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 sector.

3. The true focus is functional and the decisive test is the nature of the activity with special
emphasis on the employer employee relationship.

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

Therefore the consequences of the decision in this case are that professions, clubs, educational
institutions cooperatives, 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.
 APPROPRIATE GOVERNMENT-by SYED ANMOL FAROOQUI

Appropriate government plays a very important role in solving industrial disputes. The
appropriate government under the ID act enjoys a wide power for reference of disputes to
Boards, Courts or Tribunals. The term is defined under section 2(a) of the Act as the “central
government in relation to any industrial dispute concerning any industry carried on by or under
the authority of the central government, any industry carried on by a railway company, any
controlled industry specified by the Central Government and in relation to any other industrial
dispute the appropriate government is the state government.”
The appropriate government is invested with discretion to choose one or the other authority for
the purpose of investigation and settlement of industrial disputes, and its choice depends upon 'its
appraisement of the situation of a particular industrial dispute.

Role of the appropriate government

When the conciliation could not be held or no settlement could be made then the appropriate
government comes to play. An application is to be given to the appropriate government. The
appropriate government appoints conciliation officers and also the judges of the labour court.
These are two parallel wings that is the Ministry of labour at central and state on one hand while
on the other hand there are labelled labour commissioners. There can be designated
commissioners for specific disputes. There are assistant commissioners, deputy commissioners
and regional commissioners. Labour court can have designated officers for specific dispute or
permanent officer while the tribunal's are generally made for specific disputes by appropriate
government. Then we say that tribunal has been constituted. The judge of the labour court or the
judges of the High Court or district court or even labour commissioners.
The conciliation officer has to submit a failure report to the appropriate government with his own
view for reference within 14 days. The appropriate government after proper examination of
the failure report refers it either to the labour court or industrial tribunal for promoting
settlement of the dispute.
In any case, the power of the government to refer industrial dispute for adjudication is not
subject to failure of conciliation proceedings. The government even without conciliation
proceedings can make a reference order. The subjective satisfaction of the appropriate
government cannot be challenged, only what can be challenged is that there does not exist an
industrial dispute. This administrative discretion is able to be struck down if the exercise the
discretion is violation of the act, non-applicability of mind, exercising improperly.
The discretionary power of the government to make or refuse to make a reference order implies
that the government will have to consider whether or not there is a prima facie case fit for
reference. While considering this issue the government will have to go into the question of
merits of the dispute to some extent. But this considerational examination is a very limited one
because the government, in doing so, does not and indeed cannot go to the extent of deciding the
dispute on its merits. In Bombay Union of Journalists v The State of Bombay, the Supreme Court
has laid down that such an examination cannot be said to be foreign to the enquiry which the
government is entitled to make in dealing with the dispute under section 10.

Under section 10 of the industrial disputes act the appropriate government enjoys discretionary
power to refer an industrial dispute to the court or tribunal. The law prescribes five major
provisions for the reference to a dispute.
By the first proviso, the appropriate government has been granted with the liberty to make the
reference to a labour court if the matter comes under schedule II.
Secondly the government has been granted with further power of referring the dispute to labour
court even if it comes under schedule one of the act provided that dispute relates to less than
hundred workers.
Thirdly, where the dispute relates to public utility services and a strike notice under section 22
has been given; if the appropriate government after examination, thinks fit, can make a reference
of the dispute to the court.
Fourthly where the parties to an industrial dispute apply in the prescribed manner either jointly
or separately to the appropriate government for a reference of the dispute to the Board, Court,
then the government can refer the same to the board court or tribunal.
Fifthly if there is a strike or lockout is in existence at the time of reference of the dispute to
labour court or tribunal the appropriate government may by order prohibit the continuance of any
strike or lockout in that industry.
Besides this, if any industrial dispute exist or is apprehended the employer and the workman can
enter into an agreement and submit it to the appropriate government for reference of the dispute
duty arbitrator. In this case the appropriate government has to refer the same to the arbitrator
chosen by them.
The reference order issued by the appropriate government under section 1O(I) has to be in
writing and it starts the process of settlement of the industrial dispute through the method of
adjudication. This order gives the spark o f life for the commencement of adjudication
proceedings by the labour court (set up under section 7A with a presiding officer) or by the
tribunal (set up under section 7A with a presiding officer)

Further, section 10(1) vests an absolute and discretionary power on the appropriate
government to refer or not to refer for adjudication an industrial dispute. This power is
absolute as no other body or authority can refer an industrial dispute for adjudication under the
Industrial Disputes Act.

A simple reading of section 10 (1) of the Act suggests that the government is also vested with
the discretion to choose anyone of the authorities, as specified, for the purpose of
investigation and settlement of industrial disputes; and that once the reference order is issued
to a board of conciliation or to a court of inquiry, then the government would be precluded from
referring the same dispute subsequently to a labour court or industrial tribunal for adjudication as
its power to do so would get exhausted or consumed.

Judicial Review
Western India Match Co. Ltd., v. Western India Match Co. Workers Union and Ors. -
There was contention about section 4(k) of IDA, which required the interpretation of the term
used in the section ‘at any time’. Here the court said that the expression “at any time”, though
seemingly without any limits, is governed by the context in which it appears. Court also stated
that ordinarily the question of making a reference would arise in the cases where the conciliation
proceedings have failed. However, if in the interest the industrial peace government feels that it
is expedient to refer the dispute without going through such procedure it is free for the
government to refer any such dispute ‘at any time’. The only requirement for reference is that an
industrial dispute exists or is apprehended. It is possible for the government to refer the matter
even if it has refused it earlier on the ground that certain new fact have come up or the
government has failed to understood the earlier facts. Consequently, the power to make reference
is not exhausted merely because the government has failed to refer the dispute at an earlier stage.

State of Bombay v K.P.Krishnan - In the present case there were certain disputes between the
employee and the employer regarding the payment of bonus, however only two of the demands
of the company were admitted for the conciliation. The conciliation process was futile and the
report was submitted to government under section 12(4) of the IDA. The government refused to
refer the dispute to industrial adjudication. The reason given by the government stated “for the
reason that the workmen resorted to go slow during year 1952-53″ the HC issued writ of
mandamus stating that the reasons given by the court were extraneous. Now in the present case
the prime matter under consideration was that on the basis of what materials the government can
refuse the material.
The court held that ‘reference cannot be under section 12(5) independently of section 10(1). On
the point on which the government is to base its decision, the court stated that the report given by
the conciliation officer would be very relevant for making the reference. But that does not
suggest that report would be only relevant material. It would be open for the government to
consider other relevant material on which government can base its conclusion.
Avon Services Production Agencies (P) Ltd.v Industrial Tribunal, Haryana and Ors - The
issue here was pertaining to the government’s power of ordering reference is as to what are the
restrictions on the power i.e. if the appropriate government once refuses to refer the dispute can it
refer the dispute later on. The Hon’ble court while dealing with these contentions retreated the
position laid down by SC in the C.P.Sarathy and held that the government’s power referring the
dispute ‘at any time’ was a discretionary power. Merely because the government has refused to
refer the dispute does not proves the fact that there is no dispute existing, and if at a later stage
the government is satisfied that the reference is required for the purpose of protecting industrial
peace it may make the reference at later stage. The expression “at any time” is Section 10(1) will
clearly negative the contention that once the Government declines to make a reference the power
to make a reference under Section 10(1) in respect of the same dispute gets exhausted.
Ram Avtar Sharma and Ors. v. State of Haryana and Anr - the government has refused to
refer the dispute here on the grounds that it was satisfied that the punishments inflicted on the
workers were according to the rules and regulations. Dealing with the situations in which the
court are armed with the power to review the order of refusal of reference the court held that the
Government performs an administrative act while either making or refusing to make a reference
under Section 10(1), it cannot delve into the merits of the dispute and take upon itself the
determination of lis. That would certainly be in excess of the power conferred by Section 10.
Section 10 requires the appropriate Government to be satisfied that an industrial dispute exists or
is apprehended. This may permit the appropriate Government to determine prima facie whether
an industrial dispute exists or the claim is frivolous or bogus or put forth for extraneous and
irrelevant reasons not for justice or industrial peace and harmony. If the administrative
determination is based on the irrelevant, extraneous or grounds not germane to the
exercise of power it is liable to be questioned in exercise of the power of judicial review.

Conclusion
The order of reference of a dispute to an industrial dispute is essentially the administrative
function of the government and the court does not sit into appeal to decide upon the veracity of
the decision. However, if the party to dispute impugns the order he is free to challenge the
decision. Also it needs to be mentioned that on certain grounds on which if the government
refuses to issue an order of reference a writ of mandamus can be issued by the courts in case it
feels that the order of the government was based on totally extraneous consideration and is not
germane to the dispute.

LAYOFF-by RATHI

Introduction and Definition

Lay-off is a measure to cope with the temporary inability of an employer to offer employment to
a workman to keep the establishment as going concern. It results in immediate unemployment
though temporary in nature. It does not put an end to the employer-employee relationship, nor
does it involve any alteration in the conditions of service. Further, lay-off occurs only in a
continuing business. When the industrial establishment is closed permanently or it lock-out is
declared by the employer, the question of lay-off has no relevance. Lay-off is justified only when
it is in conformity with the definition given under Section 2 (kkk) of the Industrial Disputes Act
which contains the following essentials –

(i) There must be failure, refusal or inability on the part of the employer to give employment to a
workman.

(ii) The failure, refusal or inability should be on account of shortage of coal, power or raw
materials or accumulation of stocks or breakdown of machinery, or natural calamity, or any other
connected reason.

(iii) The workman’s name should be on the muster rolls of the industrial establishment.

(iv) The workman should not have been retrenched.

The explanation given to this section further provides that if a worker whose name is borne on
the muster roll of’ the industrial establishment and who presents himself for work during normal
hours on any day, and he is not given employment within two hours of his so presenting himself,
he is said to be laid-off for the day.

But if he is asked to present himself during the second half of the shift and is given employment,
he is deemed to be laid-off for half the day. However, if the workman is not given employment
even after presenting himself at the commencement of the second half of the shift, he is deemed
to have been laid-off for the full day.

Previously, lay-off was a practice that had no provision for compensation. However, in 1953, the
President promulgated the Industrial Disputes (Amendment) Ordinance which made a provision
for payment of compensation for lay-off. This ordinance was repealed and replaced by Industrial
Disputes (Amendment) Act, 1953.
Applicability of Provisions relating to lay off

Section 25 A of the Act provides clearly that the provisions of the Industrial Disputes Act,
1947 relating to lay- off and retrenchment compensation do not apply to the following three
types of industrial establishments:

(a) An industrial establishment in which less than fifty workmen on an average per working day
have been employed in the preceding calendar month
(b) Industrial establishments which are of a seasonal character or in which work is performed
only intermittently

(c) Industrial establishments to which chapter V-B applies as inserted by the Industrial Disputes
Amendment Act, 1976. Chapter VB makes provisions regarding lay off in cases of industrial
establishments in which not less than 100 workmen were employed on an average per working
day for the preceding calendar month.

Continuous service

The right to compensation under the Act accrues to a workman only if he has put in atleast‘one
year of continuous service.’ Section 25 B defines what amounts to continuous service. A
workman is said to be in continuous service if he is for that period in uninterrupted service.

Interruption on account of sickness, authorised leave, an accident, a strike which is not illegal, a
lock and a cessation of work which is not due to the fault of the workman should not be taken
into consideration for calculating the period of continuous service.

Even if a workman has not been in continuous service for a period of one year, he shall be
deemed to be in continuous service for the period of one year if he satisfies the following
two conditions:

(i) He was in employment for twelve calendar months preceding the date with reference to which
calculation is to be made, and

(ii) During such twelve months, he actually worked for not less than (a) one hundred and ninety
days in the case of employment in a mine, and (b) two hundred and forty days in any other case.

According to the explanation of this section, for the purpose of calculating the number of
days on which a workman has actually worked under an employer, the following days shall
be included:

(a) The days on which he has been laid-off under an agreement or standing orders or under this
Act or under any other law applicable to the industrial establishment

(b) The days on which he has been on earned leave

(c) The days on which he has been absent due to temporary disablement due to an accident
arising out of and in the course of his employment

(d) In the case of a female worker, the days on which she has been on maternity leave, not
exceeding twelve weeks.

In the computation of the period under 25B(2), Sundays and holidays should be taken into
account : G Yadi Reddy v Brook Bond India Ltd, 1994 LIR 328 (AP).

Rights of workmen for lay off Compensation:

According to Section 25 C of the Industrial Disputes Act, a workman who is laid-off is entitled
to compensation equivalent to 50 per cent of the total basic wages and dearness allowance for the
period of lay-off.

This right of compensation is, however, subject to the following conditions:

(i) He is not a badli or a casual workman.

(ii) His name should be borne on the muster rolls of the establishment.

(iii) He should have completed not less than one year of continuous service under the employer.

A badli workman means a workman who is employed in place of another workman whose name
is borne on the muster rolls of the establishment. However, such a workman ceases to be a badli
workman on his completion of one year of continuous service in the establishment.

A workman is entitled to lay-off compensation at the rate equal to fifty per cent of the total of the
basic wage and dearness allowance for the period of his lay off except for weekly holidays which
may intervene. Compensation can normally be claimed for not more than forty-five days during
any period of twelve months.
Therefore, to claim lay off compensation, two conditions must be fulfilled : (1) the workmen
must have been laid for reasons contemplated by section 2(kkk) and (2) requirements as provided
by section 25C must be fulfilled. It may be noted that provisions for payments of lay off
compensation does not mean that the employer can pay compensation and declare lay off.
Payment of compensation is not a condition precedent to lay off. Further, compensation cannot
be awarded in advance of actual lay off and on grounds of social justice [KT Rolling mills v MR
Meher, (1962) 2 LLJ 667 (Bom.)]

Duties of the Employer in Connection with Lay-Off:

The following duties are laid down for the employer in connection with a lay-off:

(a) The employer must maintain a muster roll of workmen and to provide for the making of
entries therein by workmen who may present themselves for work at the establishment at the
appointed time during normal working hours notwithstanding that workman in any industrial
establishment have been laid off. {sec 25D}

(b) The lay-off must be for the reasons specified in Section 2(kkk).

(c) The period of detention of workmen if stoppage occurs during working hours should not
exceed two hours after the commencement of the stoppage.

(d) The compensation for lay-off must be at the rate and for the period specified in Section 25-C
of the Industrial Disputes Act.

Cases in which a Workman is not Entitled to Lay-Off Compensation:

The provisions of Section 25-E provide certain exceptions to the general rule for the payment of
lay-off compensation. In other words even if the workman is laid off, he will be disentitled to
claim compensation if his case falls within any of the three clauses of this section. In the
following cases, a worker who is laid-off will not be entitled to claim compensation.

1. Refusal to Accept Alternative Employment:

If a laid off workman refuses to accept alternative employment provided that such
alternative employment is:

(a) In the same establishment from which he has been laid-off or

(b) In any other establishment belonging to the same employer situated in the town or village
within a radius of five miles from the establishment to which he belongs,

(c) In the opinion of the employer the alternative employment does not call for any special skill
or previous experience and can be done by the workman and

(d) It carries the same wages which would normally have been paid to the workman in his
original employment.
2. Absence From the Establishment:

If the workman does not present himself at the appointed time during normal working hours at
least once a day.

3. Strike or Go Slow:

If such laying-off is due to a strike or slowing down of production on the part of workmen in
another part of the establishment.

Special Provisions relating to Lay off [Section 25M]

Section 25M in Chapter 5Bof the Act further points out that prior approval from the “appropriate
government” is required to lay-off a workman when the industrial establishment (not being of a
seasonal character or in which work is performed only intermittently), has more than hundred
(100) workmen employed on an average per working day for the preceding twelve (12) months.
The appropriate government has the final authority to decide whether the establishment is in fact
seasonal or not and such decision shall be final. It also provides stringent penalties for
contravention of the provisionsof Chapter 5 B along with providing compensation to the
workman for any “illegal” lay off.

Effect of laws inconsistent with Chapter VA

Case laws

1. The workmen of Firestone tyre and rubber co. v. the firestone tyre and rubber co.

Facts –Firestone tyre and rubber co. has its Head Office at Bombay and a Distribution office at
Delhi. There was a strike in the Bombay factory from 3rd March, 1967 to 16th May, 1967 and
again from 4th October, 1967. As a result of the strike, there was a short supply of tyres etc. to
the Distribution Office. In the Delhi Office, there were 30 employees at the relevant time. 17
workmen out of 30 were laid-off by the management as per their notice dated the 3rd February.
1968.
The lay-off of the 17 workmen whose names were mentioned in the notice was recalled by the
management on the 22nd April, 1968. The workmen were not given their wages or compensation
for the period of lay-off.
Issue - "Whether the action of the management to 'lay-off' 17 workmen with effect from 5th Feb.
1968 is illegal and/or unjustified, and if so, to what relief are these workmen entitled.

The Presiding officer of the Additional Industrial Tribunal, Delhi held that the workmen were
not entitled to any layoff compensation.

Held - The simple dictionary meaningaccording tothe concise oxford Dictionaryof the term
"lay-off' is"period duringwhich a workman is temporarily discharged". Strictly speaking, it is
not so. It ismerely a fact of temporary unemployment of the workman inthe work of the
industrialEstablishment. Mere refusal orinability to give employment to the workman when he
reportsfor duty on one or more grounds mentioned in cl. (kkk) of s.

2 is not a temporary discharge of the workman.

The power to lay-off a workman is inherentin the definition in cl. (kkk) of s. 2 is not correct,
sinceno words in the definition clause to indicate the confermentof anypower on the employer
to lay-off a workman can befound. His failure or inability to give employment,
byitself militates against the theory of conferment of power.No section inChapter VA in express
language or by necessaryimplication confers any power, even on the management of
theIndustrial Establishment to which the relevant provisionsare applicableto lay-off a
workman. There is no provisionin theAct specifically providing that an employer would
beentitled to lay-off his workmenfor the reasons prescribed by s. 2 (kkk). Such a
power,therefore, must be found out from the terms of contract of

service or the Standing orders governing the Establishment.In the instant case, the number of
workmen beingonly 3, there being no Standing orders and there being no contract of
serviceconferring any such right of lay-off, the inescapable conclusion is that the
workmen were laid-off withoutanyauthority of law or the power in the management under
thecontract of service.

If the terms of a contract of service or thestatutory terms engrafted in the Standing orders
do not givethe power to lay-off to the employer, the employer would bebound to pay
compensation for the period of lay-off whichordinarily and general would be equal to the full
wages of the concerned V workman. If, however, the terms ofemployment confer a right of
lay-off on the management thenin the case of an Industrial Establishment which is governedby
Chapter VA, compensation will be payable in accordance with the provisions
containedtherein. But compensation orno compensation will be payable in the case of an
IndustrialEstablishment to which the provisions of Chapter VA do not apply and it will be so
as per the terms of employment.

In a reference under s. 10(l) of the Act. it isopen to the tribunal or court to award
compensation whichmay not be equal to the full amount of basic wages and dearness
allowance. But no such power exists in the LabourCourt under s. 33C(2) of the Act. Only the
money due has tobe quantified.If the lay-off could be held to be in accordance with the
terms of contract of service. Nocompensation at all could be allowed under s. 33C(2) of
theAct, while in the reference some compensation could be allowed.

In the instant case as regardsthe workmen in the Delhi case. the court held 75% of the
basic wages anddearness allowance would be the adequate compensation for the lay-off
period.

2. Papnasam Labour Union vs Madura Coats Ltd, 1995 SCC (1) 501

In Papnasam Labour Union V. Madhura Coats Ltd. And another the constitutionality of Section
25-M of Industrial Disputes Act, 1947 was challenged on the ground that the section as amended
by the Amendment Act of 1976 imposed unreasonable restrictions in so far as it required prior
permission to be obtained to effect lay-off and as such it was ultra vires and void.

It was held that the object of Section 25-M is to prevent avoidable hardship to the employees
resulting from lay-off and maintain higher production and productivity by preserving industrial
peace and harmony. It was further pointed out that the legislature has taken care in exempting the
need for prior permission to lay-off in Section 25-M if such lay-off is necessitated on account of
power of failure or natural calamities because such reasons being grave, sudden and explicit, no
further scrutiny is called for. Therefore, in the greater public interest for maintaining industrial
peace and harmony and to prevent unemployment without just cause, the restriction imposed
under sub-section (2) of Section 25-M cannot be held arbitrary, unreasonable or far in excess of
the need for which such restriction has been sought to be imposed. Criminal cases need not be
pursued, not only within the ambit of Section 482 of Criminal Procedure Code but in special
facts of the case will also secure the ends of justice.
 EMPLOYEES COMPENSATION ACT, 1923 by GAURAVand MISHRA

2018. Elaborate upon the conditions required to be met with under the Employees
Compensation Act, 1923 for payment of compensation to an employee.

2018. Write a note on the concept of contracting under ECA, 1923. (Short)

2017. Discuss that the amount of compensation under the Employees’ Compensation Act
1923 is dependent upon the gravity of injury and nature of disablement.

INTRODUCTION

The Employees Compensation Act, 1923 is a piece of social security and welfare legislation. The
law was enacted with a dominant purpose. The main objective of the Act was to impose an
obligation upon the employers to pay compensation to workers for accidents arising out of and in
the course of employment. The Act applies to any person who is employed otherwise than in a
clerical capacity, in railway, factories, mines, plantations, vehicles propelled by steam or other
mechanical power or by electricity or in connection with loading and unloading work,
construction, maintenance and repairs of roads and bridges, electricity generation, cinemas,
catching or trading of wild elephants, circus, and other hazardous occupations and other
employments specified in Schedule II to the Act. Under section 2(3) of the Act, the State
Governments are empowered to extend the scope of the Act to any class of persons whose
occupations are considered hazardous after giving three months' notice in the Official Gazette.

‘ACCIDENT’ AND ‘PERSONAL INJURY’

Section 3 of the Employees Compensation Act, 1923 provides for Employer’s liability in cases
of personal injury. For an employer to be liable, the following conditions should be fulfilled

a. The workman must have sustained personal injury

b. The personal injury must have been caused by an accident;

c. The accident may have arisen out of and in the course of employment; and
 d. The personal injury caused to the workman must have resulted either in the total or
partial disablement of the workman for a period exceeding three days or it must have
resulted in the death of the workman.

The employee concerned is seen to be entitled to receive the compensation, considering

definition of the term 'employee', 'employer' and 'managing agent'.

NATURE OF LIABILITY

An employee who is putting in great efforts in the work, would desire to get some benefits in
return. When the principle of vicarious liability is applied, the employer is liable to pay
compensation irrespective of employee’s negligence. Employer anticipates it as damages payable
to the employees but it is actually a relief for the employees. An employer becomes liable when
employees have sustained injuries by any accident or unavoidable situations during the course of
employment. An employee who is a part-time worker would still be entitled to get the benefits
under the Act.

To be eligible for the benefits under the Employees’ Compensation Act, the following
requirements need to be fulfilled:

1. The person must be an employee of the Company or Organisation.

2. The person must have been injured at the workplace in the course of employment.

Employer’s liability for payment of Compensation

Under Section 3(1) of the Employees Compensation Act, 1923, if personal injury is caused to an
employee by accident arising out of and in the course of his employment, his employer shall be
liable to pay compensation.

Under this Section, an employee who dies or suffers partial or total disablement for more than 3
days or permanent total disablement due to accident is entitled to get compensation from
employer.

As per Section 3(1) of the act, the following conditions must necessarily be satisfied in order to
qualify for compensation:
 1. He must be an employee within the meaning of this Act.

2. Occupational disease/Personal injury caused to the employee.

3. The injury must have been caused by accident.

4. The accident must have arisen out of and in the course of employment.

5. The injury caused by the accident must have resulted in the employee‟s death or
permanent total disablement or temporary disablement.

Concept of ‘Arising out of Employment’

The phrase "arising out of employment" isn’t merely confined to the nature of the employment.
The phrase applies to conditions, obligations and incidents of employment as well. If by reason
of any of these factors the workman is under danger and suffers injury, then the injury would be
one which arises "out of employment."

In Lancashire and Yorkshire Railway Co. v. Highley(1917) A.C. 352, the following test was
laid down for determining whether an accident "arose out of the employment":

1) Was it part of the injured person's employment to hazard, to suffer, or to do that which
caused his injury? If yes, the accident arose out of his employment. If nay, it did not,
because, what it was not part of the employment to hazard, to suffer, or to do, cannot
well be the cause of an accident arising out of the employment.

2) To ask if the cause of the accident was within the sphere of the employment, or was one
of the ordinary risks of the employment, or reasonably incidental to the employment, or
conversely was an added peril and outside the sphere of the employment, are all different
ways of asking whether it was a part of his. employment,

3) The workman should have acted as he was acting or should have been in the position in
which he was, whereby in the course of that employment he sustained injury.

In Oriental Fire and General Insurance Company Limited v. SunderbaiRamji(1999) IIILLJ

265 Guj, the Gujarat High Court determined the scope of the expression ‘accident arising out of
employment’ occurring under Section 3 of the Act. In this case, the deceased labourer was doing
work involving hard labour and strenuous physical exertion. One morning after 3 hours of work,
he had suffered chest pain and subsequently fainted. He was declared dead at Hospital.

The Commissioner found that deceased was involved in a very heavy and hard labour work,
which undoubtedly would affect the physical efficiency and health, and inferred that the labourer
died because of the nature of his job. It means he died due to an accident arising out of
employment covered under Section 3 of the Act

On appeal the High Court upheld the conclusion of the learned Commissioner that the deceased
died of an accidental injury arising out of and in the course of his employment is fully justified.
The personal injury resulting into death has direct and proximate nexus with employment.

Concept of ‘in the course of his employment’

The phrase "in the course of the employment" means in the course of the work which the
workman is employed to do and which is incidental to it.

The Doctrine of Notional Extension provides the scope of the phrase “in the course of the
employment. As a rule, the employment of a workman does not commence until he has reached
the place of employment and does not continue when he has left the place of employment. The
journey to and from the place of employment is excluded. However, as per the Notional

Extension theory there could be reasonable extension of course of employment in terms of time
and place and a workman may be regarded as in the course of his employment even though he
had not reached or had left his employer's premises.

There is a notional extension of both the entry and exit of work place by time and space. The
scope of such extension must necessarily depend on the circumstances of a given case. An
employment may end or may begin not only when the employee begins to work or leaves his
tools but also when he uses the means of access and egress to and from the place of employment.

In General Manager, B. E. S. T. Undertaking, Bombay v. Mrs. AgnesAIR 1964 SC 193, a

public utility transport service run by the Bombay Municipal Corporation, owned a number of
buses and employed a staff, including bus drivers, for conducting the said service. The deceased
driver finished his work for the day. After leaving the bus in the depot, he boarded another bus in
order to go to his residence. Bus collided with a parked lorry. As a result of the said collision, the
he was thrown out on the road and got injured. Later he died in the hospital. His widow, filed an
application in the Court of the Commissioner for compensation.

The Supreme Court stated that in view of the long distances to be covered by the employees, the
Corporation, as a condition of service, provides a bus for collecting all the drivers from their
houses so that they may reach their depots in time and to take them back after the day's work.
They are given that facility as a right because efficiency of the service demands it. The Court
observed that,

“The employment does not necessarily end when the "down tool" signal is given or when the
workman leaves the actual workshop where he is working. There is a notional extension at both
the entry and exit by time and space. The scope of such extension must necessarily depend on the
circumstances of a given case. The doctrine of notional extension of employment developed in
the context of specific workshops, factories or harbours, equally applies to such a bus service
which provided to employees to get to job on time and reaching their home without further strain
contributing to their overall efficiency. The bus service is used as a privilege and matter of right.
Their workplace gets notionally extended by virtue of this service.”

The Supreme Court held that when a driver when going home from the depot or coming to the
depot uses the bus, any accident that happens to him is an accident in the course of his
employment.

Doctrine of Added Peril

When an employee performs something which is not required in his duty and which involves
extra danger, the employer cannot be held liable to pay compensation for the injuries caused. The
doctrine of added peril disentitles an injured worker from compensation on the ground that he
had taken a greater risk than he had been required by his employer to assume. Therefore, where
the injury is not caused to workman by an accident arising out of employment, he/she is not
entitled to get any benefit or compensation.

Doctrine of added peril can be used as a defence by the employer for pleading non-liability for
the compensation. (DevidayalRalyaram v. Secretary of State, (AIR) 1937 Sind 288) In
Lancashire and Yorkshire Railway Co. v. Highley the court laid down the doctrine of added peril
as an exception to the imperative of injury arising out of employment.

Employer’s liability when contractor is engaged (Sec 12)

Sometimes, employer may engage a contractor instead of employing his own employee for the
purpose of doing any work in respect of his trade or business. Such a contractor then executes the
work with the help of the employee engaged by him. If any injury is caused by an accident to any
of these employees, the employer cannot be held liable because they are not employed by him
and hence are not his employees.

Section 12(1) makes the employer liable for compensation to such employees hired by the
contractor under following circumstances: (a) The contractor is engaged to do a work which is
part of the trade or business of the employer (called principal). (b) The employee were engaged
in the course of or for the purpose of his trade or business. (c) The accident occurred in or about
the premises on which the principal employer has undertaken or undertakes to execute the work
concerned.

Section 12(2), where the principal is liable to pay compensation under this section, he shall be
entitled to be indemnified by the contractor or any other person from whom the employee could
have recovered compensation and where a contractor who is himself a principal is liable to pay
compensation or to indemnify a principal under this section, he shall be entitled to be
indemnified by any person standing to him in relation of a contractor from whom the employee
could have recovered compensation and all questions as the right to and the amount of any such
indemnity shall, in default of agreement, be settled by the Commissioner.

The above provision, however, does not prevent an employee from recovering compensation
from the contractor instead of the employer, i.e., the Principal. (Section 12(3))

This section shall not apply in any case where the accident occurred elsewhere than on, in or
about the premises on which the principal has undertaken, or usually undertakes, as the case may
be to execute the work or which are otherwise under his control or management. (Section 12(4))

A Municipal Board entrusted the electrification work of the town to State employees. A
employee received injuries while performing his work. Held, it is the State and not the Board,
liable to pay compensation because execution of electrical project is not the ordinary business of
the Municipal Board (A.I.R. 1960 All 408).

A contractor was entrusted with the repairs of a defective chimney. A employee engaged by him
was injured while carrying out repairs. Held, mill was not liable for compensation as the
repairing of chimney is not the part of company’s trade or business, whether ordinarily or
extraordinarily.

A cartman was engaged by a Rice Mill to carry rice bags from mill to railway station. The
cartman met with an accident on a public road while returning back from railway station and this
resulted in his death. There was no evidence to show that employee was engaged through a
contractor. In a suit for compensation against the mill owner, it was observed that Section 12 is
not applicable where the accident arise out of and in the course of employment. Even assuming
that the deceased was in the employment of contractor engaged by the employer, the liability of
the owner was clear from Section 12(1) and it had not been excluded by reason of Section 12(4).

DISABLEMENT

The Act does not define the word “disablement”. It only defines the partial and total disablement.
It may be understood as loss of earning capacity by an injury which depending upon the nature
of injury and percentage of loss of earning capacity will be partial or total. The Act has
classified disablement into two categories, viz. (i) Partial disablement,and (ii)Total disablement

Partial Disablement (Sec 2(1)(g))

Partial disablement can be classified as temporary partial disablement and permanent partial
disablement.

(a) Where the disablement is of a temporary nature: Such disablement as reduces the earning
capacity of an employee in the employment in which he was engaged at the time of the accident
resulting in the disablement; and

(b) Where the disablement is of a permanent nature: Such disablement as reduces for all time his
earning capacity in every employment which he was capable of undertaking at the time. But
every injury specified in Part II of Schedule I shall be deemed to result in permanent partial
disablement. Schedule I contains list of injuries deemed to result in Permanent Total/Partial
disablement.

If after the accident a worker has become disabled, and cannot do a particular job but the
employer offers him another kind of job, the worker is entitled to compensation for partial
disablement. (General Manager,G.I.P.Rly. v. Shankar,A.I.R. 1950 Nag. 307)

Total Disablement (Sec 2(1)(l))

Total disablement can also be classified as temporary total disablement and permanent total
disablement.

“Total disablement” means, such disablement whether of a temporary or permanent nature,

which incapacitates an employee for all work which he was capable of performing at the time of
accident resulting in such disablement. Provided further that permanent total disablement shall
be deemed to result from every injury specified in Part I of Schedule I or similarly total
disablement shall result from any combination of injuries specified in Part II of Schedule I,
where the aggregate percentage of loss of earning capacity, as specified in the said Part II against
these injuries amount to one hundred per cent or more.

In an injury the workman, had amputated his left arm from elbow, who was a carpenter. It was
held by the Supreme Court in PratapNarain Singh Deo v. Sriniwas Sabata,1976 ILab.L.J.235,
that it is a total disablement as the carpenter cannot carry his work with one hand and not a
partial permanent disablement.

Where the workman, a driver of bus belonging to the employer was involved in an accident
which resulted in an impairment of the free movement of his left hand disabling him from
driving vehicles, it was held that this is not one of the injuries mentioned in the 1st Schedule
which are accepted to result in permanent total disablement. In the present case the workman was
also capable of performing duties and executing works other than driving vehicles. Nature of
injury to be determined not on the basis of the work he was doing at the time of accident.
(Divisional Manager KSRTC v.Bhimaiah, 1977 II L.L.J. 521)

Calculation of Compensation
  In the case of Death Amount of compensation = 50% of monthly wages ×Relevant
factor/Rs.120000/- which ever is more.

 Permanent Total Disablement Amount of compensation = 60% of monthly wages

×Relevant factor/Rs.140000/- which ever is more.

 Permanent Partial Disablement Amount of compensation = 60% of monthly wages

×Relevant factor.

 Temporary Disablement Amount of compensation = 25% of monthly wages.

When Employer is not Liable to pay compensation? (Sec 3)

If the injury does not end in the entire or partial disablement of the employee for a period
exceeding three days.

If the injury, not leading in death or permanent total disablement, is caused by an accident which
is directly attributable to:

a) The employee having at the time of the accident is under the influence of drink or drugs;

b) The willful disobedience of the employee to an order if the rule is expressly given or
expressly framed, for the purpose of securing the safety of employees; or

c) The willful removal or disregard by the employee of any safety guard or other device
which has been provided for the purpose of securing the safety of employees.

Thus, where a employee dies due to an accident arising out of and in the course of employment,
it cannot be pleaded that death was due to any of the reasons stated from (a) to (c). (R.B.
Moondra& Co. v. Mst. Bhanwari,AIR, 1970 Raj. 111)

If calculation asked in detail - https://securenow.in/insuropedia/amount-compensation-workers-

entitled-under-workmen-compensation-act/
 STRIKE AND LOCKOUT-BY ARPIT

Introduction (Isme se thoda bahut)

Strikes and lockouts are the last resort actions taken by employees and employers respectively to
ensure that both get what they are demanding for. They are said to be the last resort after
conciliation measures have deemed unfruitful.

Strikes happen when employees agree to stop working as a way of compelling the employer to
hid to their demands while lockouts happen when employers close down the workplaces to bar
employees from working with aim of getting employees to adjust to their demands as well.

The law gives room for strikes and lockouts to take place in industries on condition that they are
peaceful; causing no harm to the society and no vandalism to public or industrial property by the
Industrial Disputes Act, 1947. However, strikes and lockouts cannot just take place whenever
employers or employees feel like.

They are often results of dissatisfaction in economic factors for the employees and dissatisfaction
in both economic and non-economic factors for the employers. Both acts see the parties compel
the other to come into the terms being demanded.

Definition of Strikes S.2 (Q)

A strike is the ceasing of work by employees of an industry with the objective of forcing an
employee to meet particular demands. It is a mutual understanding between workers to cease
work or even employment all with the motive of drawing the attention of the management
concerning their various demands.

In order for a strike to take place, the following components should be in place according to the
Act:

 There has to be an industry.

  Work must stop.

 It must be a combined action of individuals.

 A relationship between the parties must be strictly of employment.

 It should be a planned refusal of work.

Definition of Lockouts S.2 (1)

A lockout is the act of employers that entails closing the workplace temporarily, suspending
work or cutting short the employment of any number of individuals initially employed. A
lockout is a strategic weapon that employers hold when in lock heads with the employees.

A lockout has to have the following in order to be counted as a lockout:

 There has to be a temporal shut down of the area of employment. It could also be a
temporary suspension of workers or holding back of work from the workers.

 The employer has to have a demand that leads him to initiate the lockout.

 The lockout touches any number of workers employed within the industry.

On the other hand, there are some actions that do not count as lockouts. For instance:

 When an employer stops late-comers from working on that day.

 Preventing employees whose services have been ceased from going to the place of work.

Types of strikes-

Workers in the industrial world have resolved to various types of strikes. The strikes differ in
their mode of actions they come along with. Some strikes produce different impacts on the
industry at stake though they all aim at the same results.

The various types of strikes include:

General Strike-

A General Strike is said to be a legal strike since it follows all the protocols as stated in the Act
of Industrial Disputes. Employees begin by giving a strike notice to the management of the
industry they work for. If the management fails to settle the dispute within the given time in the
strike notice, the strike will be launched after the expiry of the notice. All trade unions linked to
the demand at hand participate in the General Strike.

Case-

KAMESHWAR PRASAD AND OTHERS VS. STATE OF BIHAR AND UNION OF

INDIA (AIR 1962 SC 1166 SCR 369)

Bihar Government Servants’ Conduct Rules, 1956 had a rule, Rule 4-A that prohibited workers
from demonstrating or initiating any strike. The petitioners and other employees in the State of
Bihar filed a case before the High Court concerning the rule. The High Court made a judgment in
favor of the employees and petitioners saying that strike is the workers’ right though not
fundamental.

Sit-down Strike

This kind of strike involves employees reporting for duty in their workplaces normally, take their
positions in their various areas of work but here comes the game changer; they simply sit and do
nothing.

They might also choose to just hang around the industry’s premises. The objective of this strike
is to cripple production. The industry ends up incurring huge losses due to no work being done at
all.It is also of great pain and shame to the employers since the rate of production is going down
in the presence of workers who have reported for duty to work which they eventually end up not
doing.

Case-

Sadul Textile Mills Limited Vs. Their Workmen (1958) II L.L.J. 638 Raj.)
The Supreme Court ruled that a sit-down strike is not justified by any means even if it does not
involve violence since it is an infringement of the employers’ rights.

Pen/Tool down Strike

This type of strike shares some similarities with the sit down strike. For the pen down, it mostly
takes place among people with white-collar jobs or rather people who work in offices. Tool
down is for workers in production industries like factories to be specific. This type of strike
qualifies to be a strike since the members drop down their items of work in unison and refuse to
work.

Go-slow Strike

The Go-slow Strike is aimed at showing the employers how offended the employees are. The
employees report for duty as usual and could even get to work but with only one distinction; they
don’t actually do anything productive. The delay in all that they do and the outcome turns into
little or no production at all.

The unique thing about this strike is that at the end of the day, the employees demand for their
wages. This aspect makes the Go-slow Strike the most harmful strike compared to the total
dissertation of work like in the General Strike. No production has been made but the workers
have to be paid because they are demanding for it.

The Supreme Court ruled that a go-slow strike is a major form of misconduct when it comes to
labor in the case of “Bharat Sugar Mills Ltd. Vs. Jai Singh (1961) II L.L.J. 644 SC”

Go-speed Strike

It is not a common type of strike but it has also proven to bear results. Unlike the Go-slow strike,
the workers of the industry give a notice to the employers in advance stating various demands
that they have. They go ahead to give a duration of time to the management to look into those
demands. By any chance, if the management fails to meet the stated demands in the time given,
the workers resolve to a strike.

A kind of a strike that sees them work harder hence making a greater level of production in the
industry. The increase in production is meant to channel their discontentment with the
management. The unique strike sees the workers working on overtime which in turn causes the
employer to feel humiliated.

The overproduction brings about a problem in the distribution of raw materials, storing and
keeping stock of the finished and unfinished products and so forth – generally causing an
economic collision. The employer is then forced to meet the demands of the workers.

Boundaries of strikes and lockouts (Ss. 22 AND 23)

To prevent strikes and lockouts from being misused, boundaries have been made by the
Industrial Dispute Act. These boundaries are rules stating when individuals are not allowed to go
on strike or establish a lockout.

Boundaries of strikes:

Strikes are not allowed to take place when:

 The employer has not given a notice of the strike within six weeks before commencing
the strike; or

 Before the end 14 days after giving the notice.

 The duration of time stated in the notice has not expired.

 The conciliation process before a Conciliation Officer is still pending.

 A duration of 7 days passes after the settling of the conciliation proceedings.

Boundaries of lockouts:

Lockouts are not allowed to take place when:

I. The employer has not given a prior notice about the lockout within six weeks before the
lockout; or

II. Before the end of 14 days after giving the notice.

III. The duration of time stated in the notice has not expired.
IV. The conciliation process before a Conciliation Officer is still pending

V. A duration of 7 days passes after the settling of the conciliation proceedings.

The notice of a lockout, however, shall not be necessary when there is a strike already in
progress.

There are times strikes and lockouts are said to be illegal. This means that they are in progress
while the law forbids. A strike or lockout is deemed to be illegal if it contravenes the boundaries
of strikes.

Circumstances making strikes and lockouts illegal in an industrial establishment (S. 23) -

An employee working in an industrial establishment shall not go in strike contrary to the

agreements made in the contracts and no employer of any such employee shall initiate a lockout
when:The conciliation process before the Board of Conciliation is still pending and after 7 days
since the settlement of the conciliation. The conciliation before a Board is what is considered in
this case and not the conciliation before an Officer u/s 23.

The case before a Labour Court, National Tribunal or Industrial Tribunal is pending and after 2
months since the settlement of such a case. The case of arbitration before an arbitrator is still
pending and after 2 months since the closing of the case. A notification has to have been issued.
10-A (3-A). A settlement or award is still operational in reference to any of the issues under the
settlement or award.

Circumstances making strikes and lockouts illegal in public utility service (S.24) –

Strikes and lockouts shall also be declared illegal when:

They are done contrary to the contract stating the terms of employment.

A notice of the lockout is not given to the employees or notice of strike is not given to the
employers; within six weeks before the commencement of the lockout or strike.
Employees strike or employers lock out the employees before the end of 14 days after the notice
has been given. The employees commence a lockout or employers commence a strike while
conciliation proceedings are pending before the Conciliation Officer and before the end of 7 days
after the proceedings have been settled.

Circumstances under which strike or lockouts are not illegal

When the strike or lockout in pursuit of an industrial dispute has already begun and exist at the
reference time of the conflict to a Board, an arbitrator, a Labour Court and an Industrial or
National Tribunal. The strike or lockout shall therefore not be termed as illegal given that they
have not contravened the given statement of this Act.

When a lockout has been initiated as a result of an illegal strike or a strike initiated as a result of
an illegal lockout shall not be termed as illegal.

Consequences of illegal strikes and lockouts

Individuals who continue to run a strike or lockout contrary to the law are subject to punishments
and penalties in accordance to the Act. The consequences touch on both employers and
employees.

An employee who initiates or continues to run a strike which has been deemed as illegal by the
Act is subject to the extent of one-month imprisonment or a fine that may reach up to fifty rupees
or both.

An employer who initiates or continues to run a strike which has been deemed as illegal by the
Act is subject to the extent of one-month imprisonment or a fine that may reach up to one
thousand rupees or both.

According to the Case-law: Man Industrial Corpn. Ltd. Vs. IT (1985) they should be no pay
for the duration the strike took if the strike is termed to be illegal.

In Ramnagar Cane & Sugar Co. v. JatinChakravarty AIR 1960 SC 1012, it was said that in
the process of an ongoing conciliation between the public utility and its union, another union
went on a strike of the same issue, deemed, illegal.
In India General Navigation & Railway Co. V. Workmen, AIR 1960 Supreme Court, It was
ruled by the Supreme Court the lockout was not illegal since it was as a result of an illegal strike
which had already begun.

Justified and unjustified strikes-

A strike is said to be justified when the strike is legal and the reasons leading to the strike are
open and realistic. Reasons can vary from better wages to better working conditions and so forth.

Whereas an unjustified strike is a strike that has been commenced by the employees with the aim
of intimidating the employer. It should be noted that some circumstances may render a render a
legal strike unjustified

Differences between strikes and lockouts-

1. A strike is the ceasing of work by employees of an industry with the objective of forcing
an employee to meet particular demands. A lockout is the act of employers that entails
closing the workplace temporarily, suspending work or cutting short the employment of any
number of individuals initially employed.

3. Reasons leading to a strike are often economic. Reasons leading to a lockout could
be both economic and non-economic.

4. A strike is a weapon used by employees.A lockout is a weapon used by employers.

5. There are various types of illegal strikes. E.g.: pen down, go slow etc.Illegal lockouts do
not have varieties. There is only one.

Employees make use of strikes in order to enact industrial action upon employers about the
demands they have. Employers make use of lockouts as a weapon to compel their workers
to meet their work demands. Strikes and lockouts cannot take place just in any way and
thus, they have boundaries and circumstances that render them either legal or illegal.
Illegal ones have consequences.

Cases
 1. KT Rolling Mills Vs. Meher

The main purpose of the Act is to provide machinery for fair and equable solution of industrial
disputes inter alia by negotiation and conciliation and by adjudication by independent forums
and one of the objects is to discourage and as far as possible to prevent strikes and lockouts.

Apart from Chap. V which deals with strikes and lockouts, there was no express provision in the
Act governing any specified industrial dispute.

WORKMEN OF DIMAKUCHI TEA ESTATE v. THE MANAGEMENT OF

DIMAKUCHI TEA ESTATE

In this Case the Hon`ble court has also laid down the objectives of the act. The court has stated
that the Act attempts to promote good relations between the employer and workmen, secondly to
investigate and settle industrial disputes, between employers and employees, employers and
workmen or workmen and workmen, with a right of representation by registered trade union or a
federation of trade unions or an association of employees. Thirdly, the Act also aims at
preventing illegal strikes and lock outs and provides relief to workmen in the matter of lay-off
and retrenchment.

Strike as Right

https://blog.ipleaders.in/right-to-strike-under-industrial-dispute-act-1947/
 THE INDUSTRIAL DISPUTE ACT, 1947-BY ANAND AND DEEPAK

The aim of Industrial Disputes Act, 1947 is to settle the industrial disputes in peaceful and
harmonious way. The Act provides for the establishment of several authorities under Chapter
III for the purpose of settling industrial disputes and Chapter IV deals with the power and
duties of such authorities. The authorities have been divided into adjudicatory and non-
adjudicatory bodies.

DISPUTE SETTLEMENT MECHANISM:

Dispute settlement method under the ID Act can be divided into following- (Kundu sir)

(i) Preventive method - Works committee (S. 3)

(ii) Persuasive method - Conciliation (S.4), Board of Conciliation (S.5)

(iii) Voluntary method - Voluntary Arbitration (S.10A)

(iv) Coercive method - Labour Court (S.7), Industrial Tribunals (S. 7A) and National Tribunals
(S. 7B)

Dispute settlement machinery under the ID Act can be broadly categorised into three, i.e.,
conciliation, adjudication and arbitration. (book, avtarsingh)

CONCILIATION:

Conciliation is a process where the dispute between the employer and workmen are referred to a
third party and the third party helps them to come to an agreement. However he is not the
ultimate decision maker. He helps the disputants to come to a consensus. For the purpose of
conciliation, the appropriate governments appoint conciliation officers and constitute board of
conciliation. This process has come out successful in many industrialized countries. However it
has failed in some states too.

The conciliation proceedings generally commence from the reference of the disputes by the
appropriate government. During the pendency of the conciliation proceedings, strikes and
lockouts are prohibited.
A conciliation proceeding is deemed to have concluded in the following circumstances:

i) When the settlement is arrived and memorandum of settlement is signed by both the
parties

ii) When no settlement is arrived, then the report of the board is actually received by the
appropriate government and is published under sec.17

iii) When reference is made to a labour court, tribunal or national tribunal under sec.10

The settlement, as defined by sec.2 (p), includes a written agreement signed by the parties and a
copy is sent to the officer authorized by the appropriate government. The settlement shall come
into force on the date in which the memorandum of settlement is signed and agreed by the parties
and it can be terminated by written intimation after the expiry of two months’ notice (where the
notice is given after the expiry of 6 months after the memorandum of settlement is signed by
both the parties or any period prescribed thereof).

Settlement arrived in the course of conciliation proceedings is binding not only on the parties but
also:

i) On all the parties summoned to appear in the proceedings (summoned with proper clause
by board, arbitrator, courts and tribunals)

ii) party referred in cl.(a) and (b) i.e. an employer, his heirs, successors and assignees

iii) party referred in cl.(a) and (b) i.e. workmen or persons who were employed in the
establishment and the persons who would be subsequently employed in the
establishment.

It binds the existing workmen as well as the future workmen.

ADJUDICATION

Adjudication means a mandatory settlement of Industrial Disputes by labour courts, Industrial

Tribunals or National Tribunals under the Act. The adjudicatory authority resolves the Industrial
Dispute referred to it by passing an award, which is binding on the parties to such reference.
There is no provision for appeal against such awards and the same can only be challenged by
way of writ under Articles 226 and 227 of the Constitution of India before the concerned High
Court or before the Supreme Court by way of appeal under special leave under Article 136 of
the Constitution of India.

There are three adjudicatory bodies in India: Labour Courts, Industrial Tribunals and National
Tribunals. Disputes are generally referred by the appropriate government on the recommendation
of conciliation officers.

VOLUNTARY ARBITRATION

Arbitration is a process in which the conflicting parties agree to refer their dispute to a neutral
third party known as ‘Arbitrator’. Arbitration differs from conciliation in the sense that in
arbitration the arbitrator gives his judgment on a dispute while in conciliation, the conciliator
helps the disputing parties to reach at a decision/agreement. When negotiations fail, the parties
opt for voluntary arbitration. The decisions of the arbitrators are binding on the parties. Sec. 10A
(1) authorizes the parties to make reference to voluntary arbitrator.

The conditions are:

i) The industrial dispute must exist or be apprehended

ii) The agreement must be in writing.

AUTHORITIES UNDER ID ACT:

NON-ADJUDICATORY BODIES:

Works Committee [Section 3]

Section 3 provides for the composition of the Works Committee. In the case of an industrial
establishment in which 100 or more workmen are employed, the appropriate Government may
require the employer to constitute a 'Works Committee’. It consists of equal number of
representatives of employers and workmen. Works committee deals with the day to day problem
arising in the industrial establishment. They have been set up to promote good relations between
the employer and workmen.

Conciliation Officer (S. 4):

Sec.4 of ID Act, 1947, provides for the appropriate government to appoint such number of
persons as conciliation officers for settling the industrial disputes. Their decisions are not binding
on the parties. There are no qualifications prescribed for the conciliation officers. At state level,
for undertakings that employ 20 or more persons, the Commissioner/ Additional Commissioner/
Deputy Commissioner is appointed as the Conciliation Officer. At the Central level, some
officers from the Central Labour Commission office are appointed as conciliation officers. The
conciliation officer enjoys the powers of a civil court.

Section 12 prescribes the duties of Conciliation Officers as below:

i) If the employer and the workmen fail to arrive at a settlement through negotiations, The
Conciliation Officer may intervene to reconcile the differences of opinion.

ii) Intervention by the Conciliation Officer is mandatory in case where an Industrial Dispute
has arisen in a Public Utility Service and a notice of strike or lockout (Under Section 22)
has been served. Such date is taken as the date of commencement of the proceedings
under sec. 20(1).

iii) The Conciliation Officer shall investigate the dispute and may do all such things as he
thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement
of the dispute under sec.12(2).

iv) The Conciliation Officer shall send a report of proceedings to the Government within
fourteen days of the commencement of the conciliation proceedings. If a settlement is
arrived at as a result of Conciliation Proceedings, a memorandum of settlement is worked
out and it becomes binding on all the parties concerned for a period agreed upon as under
sec.12(3). If no settlement is arrived at, the Conciliation Officer shall send a full report to
the government, including the reasons on account of which a settlement could not be
reached.

Even if conciliation officer does not submit his report within 14 days then also conciliation
would be valid as held by Supreme Court. This decision of the court may have repercussion on
the rights of worker.
Section 2(q) of said Act defines the term strike, it says, strike means a cassation of work by a
body of persons employed in any industry. Whenever employees want to go on strike they have
to follow the procedure provided by the Act otherwise there strike deemed to be an illegal strike.
Section 22(1) of the Industrial Dispute Act, 1947 put certain prohibitions on the right to
strike. It provides that no person employed in public utility service shall go on strike in breach of
contract:

(a) Without giving to the employer notice of strike.

(b) After six weeks of before giving such notice ; or

(c) Within fourteen days of giving such notice; or

(d) Before the expiry of the date of strike specified in any such notice as aforesaid; or

(e) During the pendency of any conciliation proceedings before a conciliation officer and seven
days after the conclusion of such proceedings.

For eg. - On 22nd January notifications were issued by workers that they would go on strike. On
17 February conciliation proceedings was started. According to Sec. 22 of ID Act, 3rd March is
the limitation (6 weeks from the date of notice) after which workers can’t go on strike. On 5th
March Conciliation report was submitted, it was delayed due to some reasons. Now strike would
be invalid after 3rd March. So worker’s rights may be jeopardized in such situation but in reality
this delay hardly happens where Trade union is a powerful body.

Board of Conciliation (S. 5):

Whenever there arises a dispute of complicated nature and requires special handling, the
appropriate government constitutes the board of conciliation under sec.5 of ID Act. The Board of
Conciliation is not a permanent institution like conciliation officer. It is an ad hoc body
consisting of a chairman and two or four other members nominated in equal numbers by the
parties to the dispute. The Board enjoys the powers of civil court. It follows the same
conciliation proceedings as is followed by the conciliation officer.

The Board is expected to give its judgment within two months of the date on which the dispute
was referred to it.
The board has the duty to settle the disputes amicably without any delay as under sec. 12(1). If
the settlement has been arrived, a report along with the memorandum of settlement signed by the
parties should be send to the appropriate government under sec. 13(1). In case of failure of the
settlement, the board should send a full report to the government along with the recommendation
for the determination of the dispute under sec. 13(3) and the government may refer it to the
labour court or tribunals.

Courts Of Inquiry [Section 6]

The concept is borrowed from the British Industrial Courts Act, 1919. The government may
constitute a court of inquiry under sec. 6(1) of ID Act for the purpose of ‘enquiring into any
matter connected with or relevant to the industrial dispute’ and submit a report to the government
on the basis of inquiry. Such an arrangement is made when the situation requires an
investigation for the purpose of finding out the truth. It consists of two or more independent
members along with a chairman under sec. 6(2). The court has to and submit its report within 6
months from the commencement of the inquiry to the appropriate government. The report shall
be published within 30 days of its receipts (may be Official Gazette).

ADJUDICATORY BODIES:

Labour courts (sec.7):

The appropriate government under sec.7 (1) may constitute one or more labour courts. It consists
of only one person to be appointed as a presiding officer of the labour court by the appropriate
government who has been the judge of the High court or has been a district judge or additional
district judge for a period of not less than 3 years or…

Industrial Tribunals and National Tribunals (sec.7A and 7B):

The appropriate government may constitute one or more Industrial Tribunals (sec.7A) and
National Industrial Tribunals (sec.7B) for the purpose of adjudication of the industrial disputes.

The tribunals have the power to adjudicate matters specified in second and third schedule and
such other matters assigned to it.

Matters specified in 3rd schedule are:

 i) Wages

ii) Compensatory and other allowances

iii) Hours of work and rest intervals

iv) Leave with wages and holidays

v) Retrenchment of workmen and closure of establishment and

vi) Any other matter that may be prescribed.

There is no hierarchy among Labour Court, Industrial Tribunal and National Tribunal. They all
are at equal footing. Their jurisdiction is divided on the basis of issues. Labour Court deals with
matter specified in Schedule 2 and right issues. Industrial Tribunal deals with matter specified
in Schedule 3 and interest issue. National Tribunal deals with matter of national interest in a
state.

Rights and Interest Disputes

Depending upon the nature of issues involved, the industrial disputes are categorized as “rights
disputes” or “interests disputes”. The right disputes involve issues relating to existing rights of
workmen under the existing contract of employment or any other norms having the force of law,
such as court decisions or legislation. These disputes originate when there is violation of agreed
standards, there arise differences regarding the meaning or interpretation of these standards or
the application of those standards.

On the other hand, disputes concerned with the variation of existing standards so as to lay down
new and better standards are called “interests disputes”. These disputes arise when the workmen
of trade unions put forward their demands for a wage increase or increase in other allowances,
extra bonus, a pension fund, etc. and the employer has denied to concede these demands. The
workers have no right to such demands under the existing contract of employment or other legal
norms, but they only have an interest in them.

CRITICAL ANALYSIS OF DISPUTE SETTLEMENT MACHINERY

INDUSTRIAL DISPUTES AND INDIVIDUAL DISPUTES:

Certain conditions have to be fulfilled for the dispute to be referred by the appropriate
government to the dispute settling authorities.

i) The management involved in the dispute should be an industry under sec.2(j) which
defines ‘industry’ as ‘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 inclusive in nature and not
exhaustive.

ii) The dispute referred should come within the purview of ‘industrial dispute’ under
sec.2(k) where the dispute should be between the employer and employer, employer and
workmen and between workmen and workmen connected with the employment or non-
employment or the terms of employment.

The dispute between employer and a workman becomes industrial dispute only when the cause
of the workman is supported by the union or substantial number of workmen. Otherwise it
cannot be called as industrial dispute but those disputes come under sec.2A as individual
dispute.

Where the dispute is connected with the discharge, dismissal or termination of service of a
workman, is deemed to be an industrial dispute despite the union or workmen not supporting
his cause. Such disputes can be referred to the conciliation officers and on the expiry of 45 days
after applying to conciliation officer, the workman shall make an application to the labour court
or tribunal directly but before the expiry of 3 years after the date of such discharge, dismissal or
termination of service. And the court or the tribunal should treat that application in the same way
as referred by the appropriate government and apply the provisions of ID Act.

GRIEVANCE REDRESSAL MACHINERY:

Grievance redressal machinery is constituted to address the grievances of the individual

workman and make the solution readily accessible for him. The government under sec.9C
mandates any industrial establishment employing 20 or more workmen to have one or more
grievance redressal committees to solve the industrial disputes. The Grievance Redressal
Committee shall consist of equal number of members from the employer and the workmen and
such members cannot exceed 6 and for every two members there must be one woman member
and may be increased proportionately. This setup will not affect the right of the workman to raise
any industrial dispute and the committee completes its proceedings in 45 days.

NON-STATUTORY MACHINERIES:

There are several non-statutory machineries for dispute settlement. They are Joint management
council, Tripartite consultative machinery, Code of discipline.
 RETRENCHMENT by Rohan

It is common for corporates to carry out termination of employees who do not meet their
performance requirements, or are found wanting in their conduct or are incapable of working in
teams. The law relating to lay-offs and retrenchment is specifically expounded under Chapter
VA and Chapter VB of the Industrial Disputes Act, 1947. These two chapters in ID Act
elaborately delineates provisions relating to Retrenchment.

Sec 2(oo)- Retrenchment means the termination by the employer of the service of a workman
for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary
action, but does not include:

(a) voluntary retirement of the workman; or

(b) retirement of the workman or 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 the 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.

(c) termination of the service of workman on the ground of continued ill-health.

Thus, the definition contemplates following requirements for retrenchment:

(i) There should be termination of the service of the workman.

(ii) The termination should be by the employer.

(iii) The termination is not the result of punishment inflicted by way of disciplinary action.

(iv) The definition excludes termination of service on the specified grounds or instances
mentioned in it.

Haji Ismail Said and Sons Pvt. Ltd. v First Industrial Tribunal, 1966
Court held that all retrenchments are termination of services but all services are not
retrenchment. Termination without reason cannot be called retrenchment there must be a valid
and proper reason behind the retrenchment of workmen.

Workmen of Subong Tea Estate v. Subong Tea Estate, (1964) 1 L.L.J. 333, the SC laid down
following principles with regard to retrenchment:

1. The management can retrench its employees only for proper reasons, which means that it must
not be actuated by any motive of victimisation or any unfair labour practice.

2. It is for the management to decide the strength of its labour force, and the number of workmen
required to carry out efficiently the work in his industrial undertaking must always be left to be
determined by the management in its discretion.

3. If the number of employees exceeds the reasonable and legitimate needs of the undertaking, it
is open to the management to retrench them.

4. Workmen may become surplus on the ground of rationalisation or on the group of economy
reasonably and bona fide adopted by the management or of other industrial or trade reasons.

5. The right of the employer to effect retrenchment cannot normally be challenged but when
there is a dispute in regard to the validity of the retrenchment, it would be necessary for the
tribunal to consider whether the impugned retrenchment was justified for proper reasons and it
would not be open to the employer either capriciously or without any reason at all to say that it
proposes to reduce its labour for no rhyme or reason.

25F. Conditions precedent to retrenchment of workmen. - No workman employed in any

industry who has been in continuous service for not less than one year under an employer shall
be retrenched by that employer until—

(a) Notice- the workman has been given one month's notice in writing indicating the reasons for
retrenchment and the period of notice has expired, or the workman has been paid in lieu of such
notice, wages for the period of the notice.
(b) Compensation- the workman has been paid, at the time of retrenchment, 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

(c) Notice in the prescribed Manner- notice in the prescribed manner is served on the
appropriate Government or such authority as may be specified by the appropriate Government by
notification in the Official Gazette].

The notice specified in section 25F(a) is not necessary if the retrenchment is under the agreement
which specifies a date of termination of services. The employee is entitled to the protection of
second 25F if he is employed in industry and has been in continuous service for not less than one
year under the employer. The procedure under section 25F itself does not, by itself, confer any
right on the employer to retrench a workman.

S. 25N- The mandatory conditions precedent to a valid retrenchment. In other words, non-
compliance of these requirements will render the retrenchment illegal and in-operative in law
and the workmen shall be entitled to all the benefits which they are entitled to for the time being.

1. The employer has to decide and identify to retrench the workmen in various categories /
sections in his establishment.

2. Secondly, the employer is required by law to make an application to obtain permission of

the appropriate government or the specified authority as the case may be. The notice for
permission for retrenchment to be given by an employer under Clause (b) of sub-section
(1) of Sec.25N of the Act is to be given in form P-A prescribed by Rule 76A of the
Industrial Disputes (Central) Rules, 1957.

3. Once the application is made for permission, employer should wait till the permission is
given or the period of 60 days from the date of making the application has expired when
the permission will be deemed to have been granted.

4. In so far as requirement of giving notice to the workmen is concerned, it is open to the

employer to give such notice to the workmen, after taking the decision to retrench them,
at any time, before or after obtaining the permission. OR retrench them forthwith on
obtaining the permission by giving 3 months wages in lieu of the notice.
 5. Apart from giving such notice or paying wages in lieu of the notice, the employer is also
required by sub-section (9) to pay compensation to the workmen proposed to be
retrenched "at the time of retrenchment".

Challenges to the Validity of Sec 25N

The Validity sec 25N was challenged before the different high courts and there is conflict
decision and opinions among the High Courts a Division Bench of the Andhra Pradesh High
Court in I. L. D Chemicals Ltd v Gattiah up held the validity of Section 25 N of the Act. (1981)

The Madras High Court, in K.V. Rajendran v. Dy. Comm. of Labour, Madurai has taken a
contrary view to the decision of Andhra Pradesh High Court and hold that Section 25 N is
violative of the right guaranteed under Art 19(1)(g) of the constitution and it is nothing but
imposing unreasonable restrictions on the said right of the employer. (1981)

Workmen of Meenakshi Mills Ltd. and Ors. v. Meenakshi Mills Ltd. and Ors., 1994

In this case writ petitions were placed before the division bench of the supreme court raising the
question involving the Constitutional Validity of Section 25N of the Industrial Dispute Act and
the validity of the above stated provision was challenged on the ground that it is volatile of right
guaranteed under article 19(1)(g) of the Constitution and argued that it is not fall under the
reasonable restrictions under Art.19(6).

Issues Raised:

1. Is the right to retrench its workers an integral part of the employer's right to operate his
business guaranteed under Art. 19 (1) (g) of the Constitution?

2. Is the restriction imposed by S 25-N on the right of the employer to save the retrench
workers whether it is saved by Art. 19(6) as reasonable restriction in public interest?

Held:

The court proceeded on the assumption that the right to retrench the workmen is an integral part
of the fundamental right of the employee to carry on business under article 19(1)(g) and
addressed itself only to the question as to whether the restrictions imposed by section 25N can be
regarded as reasonable and in public interest and as such permissible under clause (6) of Article
19. The court further held that the S. 25N does not suffer from the vice of unconstitutionality on
the ground that it is volatile of the fundamental right guaranteed under Art. 19(1)(g) of the
Constitution and is not saved by Art. 19(6) of the Constitution. The court distinguishing between
sec 25N and sec 25-O, and held that it cannot be used for judging the validity of sec 25N. Under
sub-section (2) of section 25N, the appropriate government or authority was acquired to record in
writing the reasons for its order granting or refusing permission for retrenchment. There was no
such requirement to record reasons for refusal to grant permission to close down the undertaking
in section 25-O.

After distinguishing 25N from 25-O, the court held that the Management has the right to declare
the retrenchment under Section 25N of the Industrial Dispute Act, 1947 and under article 19(1)
(g) of the constitution whenever the owner declaring retrenchment, he will be subjected to the
constitutional mandated contained in the articles 38, 39A, 41 and 43. Therefore, the right under
article 19(1)(g) was held to be subject to the directive principles.