LABOR LAW I

Table of Contents
MODULE I: ORIGIN AND PURPOSE OF LABOUR..........................................................................................................3
Introductio
n
MODULE I: ORIGIN AND PURPOSE OF LABOUR........................................................................9
Introduction..............................................................................................................................9
Why Was Labour Law Introduced?.................................................................................................9
History and Evolution of Labour Laws..........................................................................................10
Different Theories Of Labour......................................................................................................11
1. Sinzheimer................................................................................................................11
2. Otto Kahn Freund......................................................................................................12
3. Deakin & Wilkinson...................................................................................................12
Evolution of Labour Laws in India................................................................................................13
MODULE II: OVERVIEW OF THE FOUNDATIONS OF LABOUR LAWS.........................................15
→ Constitutional Scheme Relating to Labour................................................................15
Constitutional Scheme Relating to Labour......................................................................................15
Air India v. Nargesh Meerza (1981)...............................................................................15
Indra Sawhney v. Union of India (1993).........................................................................15
State of Karnataka v. Umadevi (2006)............................................................................16
Dr. Balram Singh v. Union of India (2023).....................................................................16
Delhi Jal Board v. National Campaign for Dignity and Rights of Sewerage and Allied
Workers (2011)...............................................................................................................17
Kameshwar Prasad and Others v. The State of Bihar (1962).........................................17
Excel Wear v. Union of India (1978)...............................................................................18
Bharat Kumar v. CPI(M).................................................................................................19
Bank of India v. T............................................................................................................19
Olga Tellis v. State of Bombay........................................................................................19
Kapila Hinagorani v. State of Bihar (2003)....................................................................19
Badhua Mukti Morcha v. State of West Bengal (1997)..................................................21
People’s Union for Democratic Rights (PUDR) v. Union of India (important)................21
Wages...................................................................................................................................23
Labour..................................................................................................................................23
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International Labor Organization..................................................................................................24
MODULE III: COLLECTIVE BARGAINING AND TRADE UNIONS................................................26
Collective Bargaining: Right to Collective Bargaining and Prerequisites.................................................26
Concepts of Collective Bargaining................................................................................................27
Types of Collective Bargaining....................................................................................................27
Theories relating to Collective Bargaining......................................................................................27
Trade Unions Act, 1926.............................................................................................................28
Balakotiah v. Union of India (1958)................................................................................28
Devendrappa v. Karnataka Small Industries Development Corporation (1998)............28
Registration of Trade Unions.......................................................................................................28
TN NGO Union v. Registrar of Trade Unions.................................................................28
Recognition of Trade Unions.......................................................................................................29
Members of a Trade Union.........................................................................................................29
Jay Engineering Works v. State of West Bengal (important)..........................................30
Rohtas Industries v. Rohtas Industries Staff Union (important)....................................30
MODULE IV: DEFINITIONS UNDER INDUSTRIAL DISPUTES ACT..............................................32
The Industrial Disputes Act, 1947.................................................................................................32
1. Workmen of Dimakuchi Tea Estate v. Management.................................................32
Definition of Industry................................................................................................................32
2(j) “industry” means any business, trade, undertaking, manufacture or calling of
employers and includes any calling, service, employment, handicraft, or industrial
occupation or avocation of workmen;.............................................................................32
1947-1963: Many liberal judgments in favour of workmen.....................................................33
1963 – 1978: The approach of the Courts changed.................................................................33
1978: Important case of Bangalore Water Supply...................................................................33
1978 onwards: The State did not want to preserve the definition as provided in the BWS
case.......................................................................................................................................... 33
A. 1947-1963: [DAHN]................................................................................................33
1. DN Bannerjee v. PR Mukherjee (Budje Municipality case, 1950) [municipality –
undertaking, commercial objective, industrial peace, social evolution]..................................33
2. State of Bombay v. Hospital Mazdoor Sabha (1960) [activity systematically or habitually
undertaken, cooperation, satisfy material wants, organized, not casual or pleasure]............33
3. Corporation of City of Nagpur v. Its Employees (1960) [sovereign functions not included –
predominant nature test].......................................................................................................... 33
4. Ahmedabad Textile Industry and Research Association v. State of Bombay [research org –
commercial hence industry]..................................................................................................... 34
B. 1963-1978: [DGCS]................................................................................................34
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 1. University of Delhi v. Ram Nath [predominant nature test – university is not industry].....34
2. Madras Gymkhana Employee’s Association v. Madras Gymkhana (1967) [employer and
employee both standpoints to be taken – club not existence apart from members]..................34
3. Cricket Club of India v. Bombay Labour Union (1967) [recreational activity not industry]
35
4. Management of Safdar Jung Hospital v. Kuldip Singh Sethi [overruled HMS, TAI, FH
(research)................................................................................................................................. 35
5. Bombay Pinjrapole v. Workmen......................................................................................... 35
1978:...............................................................................................................................35
1. Bangalore Water Supply & Sewage Board v. A Rajappa [AIR 1978 SC 548]....................35
Criticisms of the BWS:....................................................................................................37
1978 onwards: [BT]........................................................................................................37
1. Bombay Telephones Canteen Employees Association v. Union of India...........................37
2. General Manager, Telecom v. Srinivas Rao......................................................................38
3. Coir Board, Ernakulam v. Indira Devi (1998)....................................................................38
Q. Is the BWS judgment a case of judicial overreach?...................................................38
Definition of Workmen [DCRA]..................................................................................................38
1. Dharangadhara Chemical Works Ltd v. State of Saurashtra (1956) [control test]...38
2. Chintaman Rao v. State of Madhya Pradesh (1950) [beedi rolling – no control]......39
3. Hussainbhai v. Alath Factory (1978).........................................................................39
4. Ram Singh v. Union Territory of Chandigarh (2004) [control test not enough, look at
features of relationship, written terms, actual nature]...................................................39
4. May & Baker, Western India Match Company Burmah Shell Company...................40
5. SK Verma v. Mahesh Chandra (1970).......................................................................40
6. HR Adyanthaya v. Sandoz.........................................................................................40
7. Anand Bazar Patrika v. Its Workmen [supervisors outside workmen]......................40
Specific Cases: SSABWuJ..........................................................................................................40
1. Divisional Manager, NIA Company v. A Sankaralingam (Part-time workers)..........40
2. Bharat Bhavan Trust v. Bharat Bhavan Artist Association (Artist)...........................40
3. MN Wadia Charitable Hospital v. Dr Umang (Doctors)............................................40
4. Sundarambal v. Government of Goa (Teachers).......................................................40
5. Management of Som Vihar Apartment Owners Housing Maintenance Society
v. Workmen (Domestic servants)...................................................................................41
6. Jamia Hamdard v. KS Durrany (Research fellow).....................................................41
Industrial Dispute.....................................................................................................................41

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 “any dispute or difference between employer and employers, or between workmen and
workmen, which is connected with the employment or non-employment or terms of
employment or conditions of labour, of any person.”A dispute or difference need not be
something already submitted to adjudication.................................................................41
• Parties to the dispute –.............................................................................................41
• Subject-matter –........................................................................................................41
• “OF ANY PERSON” [KDRvBD]..................................................................................42
Dispute Resolution under Labour Laws..........................................................................................43
1. Supreme Court..........................................................................................................43
MODULE V: TERMINATION OF EMPLOYMENT........................................................................44
Separation..............................................................................................................................44
Lay-Off [CCsp, KJUDF]...........................................................................................................44
1. Central India Spinning, Weaving and Manufacturing Co. Ltd. v. State Industrial
Court (1959)....................................................................................................................44
2. Management of Kairbettea Estate v. Rajamanickam (1960)....................................44
3. Joseph v. Loyal Textiles Mills....................................................................................45
4. RM Upadhaya v. Vinubhai M Mitre (1982)...............................................................45
5. Industrial Employees Union, Kanpur v. JK Cotton Spinning and Weaving Mills......45
6. Workmen of Dewan Tea Estate v. Management.......................................................46
7. Workmen v. Firestone Tyre and Rubber Co.:...........................................................46
8. Management of Kairbetta Estate v. Rajamanickam.................................................46
Retrenchment [BDSSM HAW PURS]............................................................................................47
1. Hari Prasad Shivshankar Shukla v. AD Divelkar......................................................47
2. Byram Pestonji Gariwala v. Union Bank of India......................................................47
3. SBI v. Sundara Money..............................................................................................47
4. Delhi Clove and Mills Co. Ltd. v. SN Mukherjee......................................................47
5. Santosh Gupta v. State Bank of Patiala (1980).........................................................48
6. Mohan Lal v. Management, Bharat Electronics Ltd. (1981)...............................48
7. Anand Bihari v. Rajasthan Road Transport Corporation..........................................48
8. Workmen v. Bangalore WC&S Mills.........................................................................48
Section 25F. Conditions Precedent to Retrenchment of Workmen.........................................................48
1. Workmen of Meenakshi Mills and Workmen of Subong Tea Estate v. Outgoing
Management of Subong Tea Estate and Another case, Behram Pestonji Gariwala v.
Union Bank of India (referred).......................................................................................48

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 2. SBI v. Sunder Money (wider)....................................................................................49
3. Punjab Land Development and Reclamation Corporation Ltd. Presiding Officer LC
49
4. RN Upadhaya v. Vinubhai M Mitre (cant set off LC against RC))............................49
5. Umesh Saxena v. Labour Court [temporary service of 240 days immediately before
– RC paid]........................................................................................................................49
6. Sarabhai Chemicals v. Subash N Panday (1984) [RC by cheque okay even if cheque
could not be encashed on the same day = simultaneous payment]...............................49
7. Hari Prasad Shiv Shankar Shukla v. AD Divelkar [25F not applicable on closed
industries]......................................................................................................................50
Section 25G. Procedure for Retrenchment.......................................................................................50
1. Workmen v. Jorhuat Tea Co. Ltd...............................................................................50
2. Swadesamitran Ltd. v. Workmen..............................................................................50
Section 25H. Re-employment of Retrenched Workmen......................................................................50
• It is only applicable on citizens of India....................................................................50
1. Hari Prasad Shiv Shankar Shukla.............................................................................50
Section 25FF. Compensation in case of Transfer of Undertakings.........................................................50
Section 25FFA. Sixty Days’ Notice to be Given of Intention to Close Down............................................51
Chapter VA............................................................................................................................51
Section 25G. Procedure for Retrenchment.......................................................................................52
Section 25FFF. Compensation to Workmen in case of Closing Down of Undertaking [Non unavoidable - SFLM]
...........................................................................................................................................52
1. Rameshwar Das v. State of Haryana (1987).............................................................52
Chapter VB. Special Provisions Relating to Lay-Off, Retrenchment and Closure in Certain Establishments.....52
Section 25K. Application of Chapter VB........................................................................................52
Section 25M. Prohibition of Lay-Off.............................................................................................53
1. Ashok Kumar Jain v. State of Bihar (1999)...............................................................54
2. Papanasam Labour Union v. Madura Coats Ltd. (1997)...........................................54
Section 25N. Conditions Precedent to Retrenchment of Workmen.........................................................54
Section 25O. Procedure for Closing Down an Undertaking..................................................................54
1. SG Chemicals & Dyes Trading Employees Union v. Management (1986)................55
Section 25Q. Penalty for layoff and retrenchment without previous permission.........................................55
Section 25R. Penalty for Closure..................................................................................................55
1. Workmen of Dewan Tea-Estate v Their Management AIR 1964..............................55

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 2. Workmen of Firestone Tyre and Rubber Co. v The Firestone Tyre and Rubber Co.
(1976)..............................................................................................................................55
3. Associated Cement Companies v Their Workmen AIR 1960....................................55
STRIKE AND LOCKOUT.........................................................................................................56
Lockout - Kair, Chavan, Express, ShriRam, Laxmi, BWS, Cera.........................................56
STRIKE - HUL, SBUN, PNB, BS, Rv.IMC, PepSM, Rv.R (absence), DJ (even short
stoppage), KP.....................................................................................................................57
MODULE VIII: OCCUPATIONAL SAFETY, CONTRACT LABOUR, BONDED LABOUR, INTERSTATE
MIGRANTS...........................................................................................................................62
The Factories Act, 1948.............................................................................................................62
Occupier................................................................................................................................63
The Contract Labour (Regulation and Abolition) Act, 1970 [SSPA GHM]...............................................69
1. What is contract labour?...........................................................................................69
CHAPTER II....................................................................................................................70
Section 3. Central Advisory Board..................................................................................70
Section 4. State Advisory Board.....................................................................................70
CHAPTER III HEALTH....................................................................................................70
Section 6. Appointment of registering officers.—...........................................................70
Section 7. Registration of certain establishments..........................................................71
Section 8. Revocation of registration in certain cases.—...............................................71
CHAPTER IV...................................................................................................................71
Section 11. Appointment of licensing officers................................................................71
Section 12. Grant of licences..........................................................................................71
Section 14. Revocation, suspension and amendment of licences...................................71
Section 15. Appeal..........................................................................................................72
CHAPTER V.....................................................................................................................72
Section 25. Offences by companies................................................................................73
Section 26. Cognizance of offences................................................................................73
Section 34. Power to remove difficulties........................................................................73
Reading: Thomas Paul, CONTRACT LABOUR : LIABILITY OF PRINCIPAL EMPLOYER,
........................................................................................................................................74
Following are its objectives:...........................................................................................75
Section 1: Applicability and non-applicability of the Act................................................75
Composition of central advisory board- Section 3..........................................................75
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 Composition of state advisory board- Section 4.............................................................75
Registration Process of Establishments- Section 7........................................................76
Section 8: Revocation of registration certificate............................................................76
Reading: “Contract Labor: Liability of Principal Employer”..........................................76
Inter-State Migrant Workmen (Regulation Of Employment And Conditions Of Service) Act, 1979...............76
Section 1: Application.....................................................................................................77
Section 3: The appropriate government can appoint registering officers for the
purposes of this chapter.................................................................................................77
Section 9: Grant of licenses............................................................................................77
The Bonded Labour System (Abolition) Act, 1976............................................................................80
CHAPTER V.....................................................................................................................82
BONDED LABOUR UNDER IPC.....................................................................................82
CASE SUMMARIES FROM THE CC..................................................................................84
1. PUDR v. UOI (1982):.................................................................................................84
2. Air India Statutory Corporation Vs. United Labour Union & Ors............................85
3. Steel Authority of India Ltd. and Ors. vs. National Union Water Front Workers and
Ors..................................................................................................................................88
4. Andhra Pradesh State Road Transport Corporation vs. G. Srinivas Reddy, (2006). 90
5. Gammon India Ltd. v. Union of India........................................................................91
6. Balwant Rai Saluja vs. Air India Ltd., (2014) 9 SCC 407..........................................98
7. Secretary State of Karnataka v. Umadevi.................................................................99
8. Gujarat Mazdoor Sabha v. State of Gujarat (2020)................................................100
............................................................................................................................................................................................. 3
Why Was Labour Law Introduced?.....................................................................................................................................3
History and Evolution of Labour Laws...............................................................................................................................4
Different Theories Of Labour..............................................................................................................................................5
Evolution of Labour Laws in India......................................................................................................................................7
MODULE II: OVERVIEW OF THE FOUNDATIONS OF LABOUR LAWS.....................................................................9
Constitutional Scheme Relating to Labour..........................................................................................................................9
Wages................................................................................................................................................................................17
Labour................................................................................................................................................................................17
International Labor Organization.......................................................................................................................................18
MODULE III: COLLECTIVE BARGAINING AND TRADE UNIONS............................................................................20
Collective Bargaining: Right to Collective Bargaining and Prerequisites.........................................................................20
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 Concepts of Collective Bargaining....................................................................................................................................21
Types of Collective Bargaining.........................................................................................................................................21
Theories relating to Collective Bargaining........................................................................................................................21
Trade Unions Act, 1926.........................................................................................................................................................22
Registration of Trade Unions............................................................................................................................................23
Recognition of Trade Unions.............................................................................................................................................23
Members of a Trade Union................................................................................................................................................24
MODULE IV: DEFINITIONS UNDER INDUSTRIAL DISPUTES ACT..........................................................................27
The Industrial Disputes Act, 1947.........................................................................................................................................27
Definition of Industry........................................................................................................................................................27
Definition of Workmen......................................................................................................................................................36
Industrial Dispute...............................................................................................................................................................40
Dispute Resolution under Labour Laws............................................................................................................................44
MODULE V: TERMINATION OF EMPLOYMENT..........................................................................................................46
Separation...............................................................................................................................................................................46
Lay-Off................................................................................................................................................................................... 46
Retrenchment.........................................................................................................................................................................49

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 Section 25F. Conditions Precedent to Retrenchment of Workmen..................................................................................52
Section 25G. Procedure for Retrenchment.......................................................................................................................54
Section 25H. Re-employment of Retrenched Workmen..................................................................................................54
Section 25FF. Compensation in case of Transfer of Undertakings..................................................................................55
Section 25FFA. Sixty Days’ Notice to be Given of Intention to Close Down any Undertaking......................................55
Chapter VA.......................................................................................................................................................................56
Section 25F.......................................................................................................................................................................56
Section 25G. Procedure for Retrenchment........................................................................................................................57
Section 25FFF. Compensation to Workmen in case of Closing Down of Undertaking...................................................57
Chapter VB. Special Provisions Relating to Lay-Off, Retrenchment and Closure in Certain Establishments 58
Section 25K. Application of Chapter VB.........................................................................................................................58
Section 25M. Prohibition of Lay-Off...............................................................................................................................58
Section 25N. Conditions Precedent to Retrenchment of Workmen.................................................................................60
Section 25O. Procedure for Closing Down an Undertaking.............................................................................................61
Section 25Q. Penalty for layoff and retrenchment without previous permission.............................................................61
Section 25R. Penalty for Closure......................................................................................................................................61
Lockout.................................................................................................................................................................................62
Strike..................................................................................................................................................................................... 64
Types of Strikes................................................................................................................................................................64
MODULE VIII: OCCUPATIONAL SAFETY, CONTRACT LABOUR, BONDED LABOUR, INTERSTATE
MIGRANTS..........................................................................................................................................................................66
The Factories Act, 1948........................................................................................................................................................66
Occupier............................................................................................................................................................................68
The Contract Labour (Regulation and Abolition) Act, 1970................................................................................................75
The Bonded Labour System (Abolition) Act, 1976..............................................................................................................90

Reference Books:

1. SC Srivastava, Industrial Relations and Labour Laws – New Delhi, Vikas Publishing House Pvt. Ltd., (2020)
2. Dr Avtar Singh and Prof (Dr) Harpreet Kaur, Introduction to Labour and Industrial Laws I (2022)
3. S.N. Mishra, Labour and Industrial Laws with latest Amendments, Central Law Publication, 29th Edition (2021)

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 MODULE I: ORIGIN AND PURPOSE OF LABOUR
→ Contract of Employment – Evolution, Issues and Termination
→ History and Evolution of Labour Laws
→ Different Theories – Sinzheimer, Otto Kahn Freund, Deakin & Wilkinson
→ Evolution of Labour Laws in India
→ Formal and Informal Labour

(all topics; no readings, skip theories; cover history and evolution of labour laws; formal and informal labour is
important)

Introduction
The Indian labour law regulates the formal economy. However, almost 92% of the population is outside the purview. For
example, sanitation workers are considered “labourers” and not “workmen”. If there are surplus workers and limited
resources: Can there be a layoff? This can be done for a certain period of time.

Why Was Labour Law Introduced?

• There are 4 factors of production – land, capital, entrepreneurship and labour.

• What is the difference between labour and other factors of production? The human element is a subjective element.
The rest are owned by the employer. The others can be bought with a worth of money. Labour is a separate legal
person.
• ‘Dull compulsion of economic necessity’ was given by Karl Marx. Labour is different since workers are given wages
in exchange for their time, skill and effort due to economic necessity.
• Within the employer-employee relationship, there is an inherent aspect of power of command.
• Employment contract has to be satisfied for successful market transaction.
• The commodification of labour is minimised.
• This is the dual purpose of labour law.
• Stimulation of wealth and protection of labourers
• Social justice and the role of government.
• Right for child care, maternity benefits, etc.
• In Western countries, state intervention is very little. Largely governed by contract law. The State adopts a non-
intervention approach.
• In India, the State takes an active role. The State plays an interventionist role

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• The employee (labour) provides services for wages on the basis of contract fixed by the employer. The relationship
encompasses a superiority position of the employer. This is essentially known as ‘dull compulsion of economic
necessity’. The labourer requires the wages to live. This makes the contact of employment less just. The employee is
in a subordinate position. This paved the way for the introduction of labour laws.
• The two major purposes of labour laws are:
1. To ensure the contract of employment is satisfied so that there is successful market transaction
2. There is no commodification of labours or exploitation of employees
• The working class mustn’t be exploited and market transactions are satisfied.
• ‘Industrial laws’ is another term.
• Labour laws – interpretation by court in favour of workers.
• After LPG, there was a case that questioned the LPG policies.

History and Evolution of Labour Laws

• Indian labour laws came up much later in the 1920s.

• In the UK, the first instance of labour relations was noted in Blackstone’s Commentaries. They deal with 4 labour
relations (4 classes):
1. Menial Servant – Stay with the family, not paid in cash, paid by food – they are in such a position that they aren’t
allowed to rise above their ranks. They do not have property for themselves. The cyclical system of family
relations happens here. The son takes on the job of the father.
2. Apprentice – Generally, craftsman. Usually employed for a period of 7 years. There is a provision that prevents
apprentices from becoming masters. There is a restriction on any combination or unions.
3. Labourer – paid in cash
4. Steward
• The hierarchy of class is always maintained. This system ensures that the status is maintained.
• The statute dealing with the same is the Statute of Artificers, 1561. There were 3 major issues.
1. It fixes the maximum wage. There is no minimum wage.
2. There is a provision which prevents apprentices from becoming masters.
3. There is a restriction on any combination or unions. This ensures that there are no mass revolutions.

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• Unions is where workers come together to protect their own rights.
• There were series of judgments which criticized the statute and protest calling for repeal of the same.

• In the 19th century, around 1860-1875, the industrial revolution reached its peak in UK. This translated to
mobilization of labour and liberalisation of economy. Pre-eminence of contractual relations in economic and social
parts. The era is known as the era of contract rise & fall. The progressive society changes from status to contract
[Henry Maine]. There were a large number of people who wanted to enter into contracts which did not involve the
families. This was due to industrialization. Fall of contract is constituted by the rise of welfare state. States were
becoming important. Social justice was to be maintained. AV Dicey – rule of law. There was intervention by the
State. The welfare state was also becoming a party. Public participation also increasing. People become more aware
of their rights and trade unions. Trade unions started gaining importance in UK. A lot of research was put into it. The
first paper was written by Sydney and Beatrice Webb on collective bargaining. This became an important aspect in
trade unions. This was without the interference of the state.

Different Theories Of Labour

(not important)

• After the Russian Revolution, Marx was the popular thought that was emerging.

1. Sinzheimer
• Hugo Sinzheimer was the founder of labour theories. He is also considered as the Father of Labour Laws. He meant
that in order to have a social democracy, our constitutions have to move from the political to economic side through
emancipation of workforce. He wasted to have a social democracy. Only then can complete democracy be achieved.
• The Indian Constitution states that all three – social, political and economic democracy go hand-in- hand. In the
country, what is accorded more importance – civil and political rights OR social, economic and cultural? It is a
paradox. A person who has necessities, the former is important. On the other hand, for people without necessities, the
latter becomes important.
• Hugo says that economic rights are important. This was the time of the Great Depression as well.
• He also called foreign institution outside employer-employee to regulate the same. Hence, it was assumed that the
State was made the regulatory body. For him, labour laws only applied to those whose material existence depends on
labour. This is their only way of earning wage. Dependent

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 labour is something the worker does that gives him no inherent/individual/social satisfaction; merely done for
external wages. Such work is only beneficial for the employer.
• Hugo was heavily inspired by Marx. He was probably the first to want a state intervention.

2. Otto Kahn Freund

• Otto Kahn Freund’s (1952) principle is called ‘collective laissez faire’. His first part is related to collective
bargaining. The second part is laissez faire. The employee can bargain with the employer through collective
bargaining. It is easier and flexible. This is to be retained with non-interference by the State.
• Between the two eras of the two theorists, ILO was established as the Treaty of Versailles. The Convention
recognized that labour was not a commodity. This is due to the separate legal personality.
• Why is collective laissez faire better? The labour movement loses its flexibility due to state intervention.
• There is a provision in labour laws that requires a state permission for labourers to sue the employer.
• The next 10 years – generally labor unrest all over the world. Huge lines of production affected.
• In India as well, a large number of cases relating to labour jurisprudence emerged.

3. Deakin & Wilkinson

• Simon Deakin and Frank Wilkinson – three different papers on labour laws – their theory is called ‘law of labour
market’. They were experimenting with their ?. They wrote in late 1970s – neo- classical theory. they were of the
opinion there must be no external intervention in the labour market. smooth movement of labour market – no external
intervention – state intervention. They say that if there is external intervention – low economic growth. Job security
and rise in std of living – no intervention.
• If we require an authority – autonomous authority is needed and not state authority. They tried to maintain this theory
but it didn’t work.
• “New institutional theory” – next theory. imperfections in economy even without external intervention – affecting
smooth market. There should be a regulatory body in such a way that it stimulates economic growth.
• In 1990s – economic development. Amartya Sen & Martha Nussbaum were gaining prominence.
• What is the difference between economic growth and development? growth is solely based on income. development
encompasses all aspects – holistic development (subjective).

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• New theory called “systemic approach”. They just modified the theory to include external intervention.
State intervention must be such that there is actual development in the country.
• In the last decade – labour laws is changing term. Ex: Swiggy and Uber. The definitions of employee and employers
and place of work have undergone changes.
• Contract of service and contract for service

Evolution of Labour Laws in India

• Similar repercussions in India – there was a lot of bonded labour – workers needed in tea and coffee plantations.
British introduced labour laws for British employees and not Indians. British Employees Regulation Act 1890 – if
there is a violation in the contract of employment – criminal penalty.
• In 1890s, recognition of people coming together. They figured that in industries – mostly employed are young persons
around 14-15 years working 14-15 hours a day. British passed Factories Act 1891 to regulate working conditions of
young persons. Provision for inspection of the factory. Employees could come together and make representations to
the government. some sort of a labour union was formed. The first form of unionization happened in Bombay – called
Bombay Millhands Association – more of a labour union and not trade union. Majorly emerged in Ahmedabad and
Madras as well. Indian Postal Union and Kamghar Union. Bal Gangadhar Tilak and Dadabhai Naoraji were major
leaders in this movement. INC emerged as a political theory. In 1920, All India Trade Union Congress emerged as a
wing of INC. This is different in other countries where labour unions are based on political parties. this is also
considered as a major problem.
• Mass unrest and the Madras HC judgment – injunction against union leader from talking to other. Major legislation –
Trade Unions Act 1926 – formally recognises trade unions and registration of the same – by the govt. they form an
important part of labour jurisprudence.
• Roy Commission on Labour – working conditions and trade union. Trade unions were not democratic – major
problem. In matters relating to disputes, trade unions must be given importance. The Trade Disputes Act came in
1929.
• The Trade Union Act, 1926, provides for the state recognition of trade unions but places no compulsion on the
employer to recognise the trade unions – if the employer is making a decision about the employees, they have no
compulsion to take into consideration the trade unions – this is one of the major problems of the Trade Union Act
which has still not been amended to date.

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• This led to multiple trade disputes – led to the formation of the Trade Dispute Act, 1929 (precursor to Industrial
Disputes Act, 1947).
• 1930s-1940s: Major economic unrest all over the world and in India as well. Defence of India Rules was passed by
the British Government to deal with the economic problems being faced – this can be considered to be a precursor to
the present-day emergency provisions in the Constitution. There were general layoffs happening, prohibitions on
strikes and protests etc. – this was also when revolutionary movements like the Quit India Movement were taking
place.
• Essential Services Maintenance Ordinance – if you are employed in an essential service, you cannot go on leave or go
on strike – compelled workers to act in a certain manner – this was relevant because later whenever government
employees go on strike, this ordinance was issued to justify their dismissal from their position – later when this was
challenged in court, the court took the side of the employer and it led to the dismissal of around 3.5 lakh employees.
• After independence, then PM Nehru recognised the concentration of wealth and the simultaneous abject poverty that
was present in India – this is why the Industrial Disputes Act was one of the first statutes to be passed in Independent
India.

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 MODULE II: OVERVIEW OF THE FOUNDATIONS OF LABOUR LAWS
→ Constitutional Scheme Relating to Labour
→ Labour and International Law: Right to Work, International Labour Standards
→ Present Scheme of Labour Regulations in India

Constitutional Scheme Relating to Labour

o List III (Concurrent List) includes “Trade unions; industrial and labour disputes” and “Welfare of labour”
o List I (Union List) includes “Regulation of labour and safety in mines and oilfields”
o The Preamble to the Constitution of India talks about social, political and economic liberty

Article 14. Equality before law – The State shall not deny to any person equality before the law or the equal
protection of the laws within the territory of India.

Article 16. Equality of opportunity in matters of public employment

(1) There shall be equality of opportunity for all citizens in matters relating to employment or appointment
to any office under the State,

(2) No citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of
them, be ineligible for, or discriminated against in respect of, any employment or office under the State.

Air India v. Nargesh Meerza (1981)

- The case challenged discriminatory practices in the workplace on the basis of gender.
- A pivotal landmark in Indian labour law, particularly concerning gender discrimination in the workplace. This
case addressed discriminatory employment practices that specifically targeted female flight attendants,
challenging the constitutionality of certain service regulations imposed by Air India.
Indra Sawhney v. Union of India (1993)

- The case upheld the ceiling of 50 per cent quotas, emphasised the concept of "social backwardness", and
prescribed 11 indicators to ascertain backwardness.
- A landmark judgment on aspects of reservation in India. “The Court interpreted the relation between Article 14
and Article 16. It was held that Article 16(1) is a facet of Article 14. Just as

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 Article 14 permits reasonable classification, so does Article 16(1). A classification may involve reservation of
seats or vacancies. The principle aims of Article 14 and 16 is equality and equality of opportunity and Clause (4)
of Article 16 is a means of achieving the very same objective. Both the provisions have to be harmonized keeping
in mind the fact that both are the restatements of the principle of equality enshrined in Article 14.”
- A landmark decision in Indian labour law, particularly concerning affirmative action and reservations for socially
and educationally backward classes (OBCs) in public employment. This case has profound implications for
labour rights, equality, and social justice in India.
State of Karnataka v. Umadevi (2006)

- There were casual and temporary workers who demanded regularisation. The Government was not allowing
regularisation of these workers but the High Court provided for the regularisation of these workers, going against
the policy of the Government. The Government then approached the Supreme Court.
- The SC said that if you have been appointed already through backdoor entry, you cannot demand for
regularisation; it can only be demanded if you are being appointed as per Articles 14 and 16. However, the Court
still provided for the absorption of all the workers (classic case where the ratio is different from the actual
judgement passed).
- A landmark judgment in Indian labour law that addressed the issue of regularization of temporary and contractual
employees in government service. The Supreme Court's ruling in this case has had a significant impact on labour
rights and employment policies in the public sector. By establishing clear guidelines for the regularization of
temporary employees and emphasizing the need for following due process in public employment, the Supreme
Court aimed to strike a balance between the rights of employees and the constitutional scheme of recruitment

Article 17. Abolition of untouchability

“Untouchability” is abolished and its practice in any form is forbidden. The enforcement of any disability
arising out of “Untouchability” shall be an offence punishable in accordance with law.

Dr. Balram Singh v. Union of India (2023)

- Latest judgement on manual scavenging where the Court issued orders to ask the organisation what they were
doing to minimise manual scavenging. It issued 14 directions to the respondents to ensure that manual scavenging
would not take place.

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 - It addresses the issue of manual scavenging and hazardous cleaning in India. The Supreme Court's judgment in
this case has important implications for the rights of workers engaged in these practices and the implementation
of relevant laws. The Court emphasized the need for complete eradication of manual sewer cleaning in a phased
manner, in line with the provisions of the Prohibition of Employment as Manual Scavengers and Their
Rehabilitation Act, 2013. A significant development in the ongoing struggle to eradicate manual scavenging and
protect the rights of workers engaged in hazardous cleaning practices in India. By linking these practices to forced
labor and untouchability, the Supreme Court has underscored the need for a comprehensive approach to
rehabilitation and the protection of worker rights. The judgment serves as a reminder of the urgent need to address
structural discrimination and ensure the effective implementation of labor laws to safeguard the dignity and well-
being of all workers.
Delhi Jal Board v. National Campaign for Dignity and Rights of Sewerage and
Allied Workers (2011)
- This was the case that first abolished manual scavenging.
- The ruling has strengthened the legal framework protecting the rights of sewerage and sanitation workers,
emphasizing their right to safe working conditions and fair compensation. By mandating safety measures and
protective gear for sewer workers, the judgment has set a precedent for enhancing occupational safety standards
in hazardous jobs across various sectors.

Article 19. Protection of certain rights regarding freedom of speech, etc.

(1) All citizens shall the right –

(c) to form associations or unions or co-operative societies;

Kameshwar Prasad and Others v. The State of Bihar (1962)

- There is no fundamental right to strike in India

- The Supreme Court upheld the High Court's ruling that the freedoms guaranteed under Articles 19(1)(a) and 19(1)
(c) did not extend to government employees in the context of strikes and demonstrations. The ruling reinforced
the notion that workers, including government employees, have the right to express their grievances and
sentiments through peaceful demonstrations. This marked a significant step in the legal recognition of labour
rights in India. The decision highlighted the need to balance individual rights with the operational needs of

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 government services. It established a precedent for evaluating the legality of restrictions imposed on workers'
rights in the context of public service.
BHARAT KUMAR V. CPI(M) (1998)

- The Supreme Court in this appeal case, upheld the judgement of the Kerala High Court which declared that the
calling of or enforcing of a bandh by any association/organisation or political party is unconstitutional and illegal
and is violative of Articles 19(1)(a), (d) and (g) along with Article 21 of the Constitution.
- The Supreme Court agreed that bandhs violate the fundamental rights of citizens, particularly the right to freedom
of movement and the right to carry on any trade or business. The Court noted that bandhs often involve acts of
vandalism and destruction of public property, which cannot be considered a protected right under Article 19. The
judgment established that while workers have the right to strike, this right is not absolute. Strikes that violate the
fundamental rights of others or involve the destruction of public property can be restricted. The case highlighted
the need to balance the rights of workers to protest with the rights of the general public to carry on their daily
activities without disruption.
-
Article 19. Protection of certain rights regarding freedom of speech, etc.

(1) All citizens shall the right –

(g) to practise any profession, or to carry on any occupation, trade or business.

Excel Wear v. Union of India (1978)

- Fundamental right to practise a profession also means that you have the fundamental right to close down the
business – the only restriction to this is public interest.
- There is a provision in labour law which requires approval of government for closing down any business. The
Court held that there is a FR to close down the business as well. The only restriction is public interest.
- The Court recognized the right to close a business as an integral part of the right to carry on a business under
Article 19(1)(g). It emphasized that this right should not be arbitrarily restricted by the State.
o The liberty jurisprudence relating to formation of unions has gone through a change in India. Liberty can be restricted
on reasonable basis.

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 o At first, it was said that there was a FR to strike in India. However, this was taken away by TK Rangarajan v.
State of TN
Bharat Kumar v. CPI(M)

- FR to form unions doesn’t mean that it can affect someone performing professional duties or closing down work
places. Relating to harthals and bandhs.
Bank of India v. T

- If employees are present at the workplace but work in a manner that adversely affects the production – the Court
recognized this as a form of strike – called ??? – wages were allowed to be affected

Article 21. Protection of life and personal liberty

No person shall be deprived of his life or personal liberty except according to procedure established by law.

Olga Tellis v. State of Bombay

- Established the right to livelihood and shelter as intrinsic to the fundamental right to life under Article 21 of the
Constitution
- The Supreme Court in this case ruled that the right to life under Article 21 of the Constitution includes the right to
livelihood. This means that depriving someone of their livelihood is a violation of their fundamental right to life.
The Court mandated that evictions must be conducted with due process, including providing alternative
accommodation. This ensures that workers, especially those in the informal sector like pavement dwellers, are not
arbitrarily deprived of their means of livelihood without proper procedures being followed.
Kapila Hinagorani v. State of Bihar (2003)

- Government employees worked for more than 10 hours – not paid wages for 6 weeks. Reported in newspaper that
many were committed suicide. Suo moto case initiated. The State took the stand that there were a lot of financial
constraints for the state and they were not in a state of pay. The Court held that the ground of financial constraints
is not valid and if employed, the workers have a right to be paid wages. This set as a precedent for a lot of other
cases where PSUs were not paying their workers. The Court ensured payment of atleast minimum wages to the
workers – monetary allowance held to be part of Art. 21.

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 - Pivotal in the context of labour laws in India, primarily due to its focus on the rights of employees in public sector
undertakings and the state's obligations towards them. The Supreme Court emphasized that the right to livelihood
is an integral part of the right to life under Article 21 of the Constitution. The ruling established that non-payment
of salaries to employees of government-owned corporations could lead to severe human rights violations,
including starvation and distress, thus constituting a violation of their fundamental rights.
Vishaka v. State of Rajasthan (1997) (important)

- A landmark decision in Indian labour law, particularly concerning the protection of women's rights in the
workplace. The Supreme Court's ruling established comprehensive guidelines, known as the Vishaka Guidelines,
to address sexual harassment at the workplace. This was a crucial step in filling the legal vacuum regarding
workplace harassment, as prior to this case, there was no specific law addressing the issue in India.
- The judgment recognized sexual harassment as a violation of fundamental rights guaranteed under Articles 14
(Right to Equality), 19 (Right to Freedom of Speech and Expression), and 21 (Right to Life and Personal Liberty)
of the Constitution. This acknowledgment was significant in affirming women's rights in the workplace and
ensuring that they could work in an environment free from harassment and intimidation.
- The guidelines laid down by the Supreme Court served as a precursor to the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013. This Act formalized the principles established
in the Vishaka case, providing a statutory framework for addressing sexual harassment at work, thereby
enhancing the legal protections available to women.

Article 23. Prohibition of traffic in human beings and forced labour

(1) Traffic in human beings and beggar and other similar forms of forced labour are prohibited and any
contravention of this provision shall be an offence punishable in accordance with law.

(2) Nothing in this article shall prevent the State from imposing compulsory service for public purpose, and
in imposing such service the State shall not make any discrimination on grounds only of religion, race, caste
or class or any of them.

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Badhua Mukti Morcha v. State of West Bengal (1997)

- The Supreme Court recognized the concept of Public Interest Litigation (PIL) in this case, allowing individuals or
groups acting in the public interest to approach the court for the enforcement of rights, particularly for
marginalized and disadvantaged sections of society. This broadened access to justice for labour rights advocacy
without the need for direct personal injury.
- The case addressed the prevalent issue of bonded labour in various sectors, particularly in agriculture and brick
kilns. The Court highlighted the plight of bonded labourers, often trapped in cycles of debt and exploitation. Its
intervention was crucial in bringing attention to the need for effective enforcement of laws against bonded labor.
- The Supreme Court emphasized that the right to live with dignity is part of the right to life under Article 21 of the
Constitution. By recognizing the rights of bonded labourers, the judgment reinforced the notion that labour rights
are integral to human rights. This perspective has been pivotal in subsequent labour law cases and legislation.
People’s Union for Democratic Rights (PUDR) v. Union of India (important)

- Migrant workers who were building infrastructure for the Asian Games were not paid adequate wages – lesser
than minimum wages. The Court put liability on the principle employer i.e., the State to pay minimum wages. The
compulsion of poverty and hunger, want or destitution which makes them to work for wages below minimum
wages can be considered as forced labour. Forced labour was given a liberal interpretation.
- The judgment reinforced that violations of labor laws constitute violations of fundamental rights under the
Constitution, particularly Articles 21 (Right to Life) and 24 (Prohibition of Employment of Children in Hazardous
Employment). The Court held that the right to live with dignity includes the right to decent working conditions
and fair remuneration, thereby linking labor rights to human rights. The Supreme Court emphasized the obligation
of the state and its agencies to ensure compliance with labor laws, not only by governmental bodies but also by
private contractors. This established a precedent for holding the state accountable for labor rights violations,
reinforcing the idea that the government must actively protect the rights of workers.
- A cornerstone case in labor law that significantly advanced the protection of workers' rights in India. It
established the importance of PILs in labor matters, linked labor rights to fundamental human rights, and
reinforced the state's responsibility to enforce labor laws, thereby shaping the landscape of labor rights and
protections in the country.

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 Article 24. Prohibition of employment of children in factories, etc. –

No child below the age of fourteen years shall be employed to work in any factory or mine or engaged in
any other hazardous employment.

- Biggest paradoxes in India

- We allow for child labour – there is no distinction between child labour and child work. One of the major
exceptions to child labour is working in family business. Child labour is prohibited only in hazardous places.
• Universal Basic Income (UBI) – A periodical payment in cash provided without any conditions and usually given to
individuals and not concentrating on households.
• Indian counterpart relating to UBI – MNREGA, Indira Gandhi Vikas Yojna, Pradhan Mantri Jan Dhan Yojna (direct
benefit bank transfer). It is difficult for India to implement this fully because of lack of resources.
• UBI can be connected with DPSPs.

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 Wages

• Generally divided into 3 – Minimum Wage, Fair Wage and Living Wage.
• Minimum Wages Act, 1948 – The underlying principle/concept is that if the employer cannot pay the minimum
wages, such an industry mustn’t be allowed to exist. The minimum wage is fixed by the State based on geographical
location.
• Generally, this Act places an obligation on the State to fix the minimum wages. However, it does obligate the
employer to pay the minimum wages.
• Fair wage – slightly above minimum wage. It is considered as the mean of minimum wage and living wage.
• General wage structure exists higher than minimum wage but lower than the lowest part of fair wage.
• Different definitions of fair wage – frugal comfort. Taking into consideration the living condition, ensuring sanitation,
education for children and health insurance is considered as frugal comfort.
• Living wage is the aim of a country. This is an ideal. Generally, no fixed amount for living wage.
• State aim is to have a living wage. Not quantifiable. Something the State aspires to be. The term is provided under
DPSPs.

Living Wages

Fair Wages

• This hierarchy was given in the case of Hindustan Times v. Workmen.

Minimum Wages
• Living wage is the ideal – All India Bank Employees Association v. RBI

Labour

• Labour is a subject matter under the Concurrent List. This is because major provisions relating to trade union
disputes and industrial disputes comes under the Concurrent List. Both Centre and States can legislate on it.
• Maharashtra is the only state that recognizes trade unions. It has several legislations relating to the same.
• Labour Courts is generally under Union List, hence, any labour disputes in courts are also governed by the Centre.
• The major legislations are Industrial Dispute, 1947; Trade Unions, 1926; SO; CLRA; ISMW; BL; FA.

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 International Labor Organization

• Came in 1990 after the Treaty of Versailles. It created the League of Nations. It is considered as a War Guilt Treaty.
• ILO is the only tripartite organization under the UN. International Labour Conference, Governing Body and
International Labour Office – all three of them are responsible for fixing international labour standards.
• India has been a founding member of the ILO.
• The ILO fixes the minimum labour standards.
• 4 principles – FRs of the employee, ensure ‘equal pay for equal work irrespective of gender’, effective coverage for
social protection, ensure the tripart set. These are the 4 parts of Decent Work Agenda.
• Major principle – Decent Work Agenda
• ILO’s conventions and regulations are the international labour standards.
• Conventions are treaties that require the ratification of member states while regulations are general directions that the
Members may or may not follow.
• There are 8 core conventions.
• India has ratified 4 conventions –
1. Forced Labour Convention, 1930 (No. 29)
2. Abolition of Forced Labour Convention, 1957 (No. 105)
3. Equal Remuneration Convention, 1951 (No. 100)
4. Discrimination (Employment and Occupation) Convention, 1958 (No. 111)
• The ones India hasn’t ratified are:
1. Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87) – India did not ratify
this since we already have a FR relating to the same. There is no need for a separate legislation.
2. Right to Organize and Collective Bargaining Convention, 1949 (No. 98) – we did not accept this since the
government is a party to the negotiations. We accept trade unions – active negotiation party. There is no
fundamental right to strike and the same cannot be guaranteed by the Indian government.
3. Minimum Age Convention, 1973 (No, 138) – we already have child labour prohibition act (1986) where children
below 14 years are not allowed to work in hazardous industries. The distinction between child work and child
labour requires a socio-economic policy which India doesn’t have at the moment.

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 4. Worst Forms of Child Labour Convention, 1999 (No. 182) – most important conventions – recognizes the worst
forms of child labour – slavery and child trafficking, using of children in war, procuring children for prostitution
and pornography, procuring children in drug trafficking or any other work which is likely to affect health, safety
or morals of children. India adopted this in 2015 – but did not bring any amendment with these provisions.
• India has ratified 41 conventions – relating to wage fixation, immigration, etc.

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 MODULE III: COLLECTIVE BARGAINING AND TRADE UNIONS
→ Collective Bargaining: Right to Collective Bargaining, Prerequisites
→ Reality of Collective Bargaining, Advantages and Disadvantages of Collective Bargaining
→ Trade Union Act, 1926: Registration of Trade Unions, Recognition of Trade Unions, Funds of Trade Union
→ Immunities of Trade Union: Immunity from Criminal Conspiracy and Immunity from Civil Suits
→ Changes brought by Industrial Relations Code, 2020 on bipartite forums, recognition

(all topics; no readings)

Collective Bargaining: Right to Collective Bargaining and Prerequisites

• Sydney and Beatrice Webb coined the term ‘collective bargaining’.

• It is a form of negotiation where both the employer and the employee (represented by a trade union) come together to
make a joint decision. This is bipartisan.
• This is not recognised in India since we formally have a system of tripartisn.
• Collective bargaining use peaceful methods of discussions that translates to non-disruption of industrial
activities. There are no instances of strike, lock outs, etc.
• The Webbs defined collective bargaining as “an economic institution, with trade unionism acting as a labour cartel by
controlling the entry to the trade.”
• This can be translated as a power relationship between the employer and the employee.
• Trade union ensures that there is a power balance.
• It is a mode of determining terms and conditions. Ex: working hours. This eventually affects the future of the
employee and the employer.
• Max Weber called CB – ‘institutionalized expression of class struggle’ and ‘social control within the industry’
• Collective Bargaining Convention, 1981 (No. 154) – Art. 2 defines CB – “It extends to all negotiations which takes
place between employers and employees or a group of employers or workers organizations for determining work
conditions and terms of employment, any other relations between employer and workers, with respect to relations
between the employers and the workers unions”.
• There are different view points relating to labor

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 Concepts of Collective Bargaining
1. Marketing concept – CB is a principle by which labour is bought and sold in the market. it is considered as an
economic and exchange relationship focusing on the substantive content of collective agreements.
2. Government concept – rule making concept – CB as a concept of rule-making process. Relationship seen from
power perspective or political perspective.
3. Industrial relations viewpoint – generally a participated decision making.

Types of Collective Bargaining

1. Distributive – generally about resolving conflicts. One party eventually loses. There is no satisfaction for both
parties. ex: bargaining with respect to wages
2. Cooperative/Indemnity – both use cohesive power to the maximum. Generally, resolving the problems by coming
together. Ex: improving condition of the industry.

Theories relating to Collective Bargaining

1. Walton & McKersie Theory – To have a successful CB, there have to be 4 sub-processes – distributive bargaining,
cooperative bargaining, attitudinal structuring (interact and improve trust between the parties) and intra-organizational
bargaining between the union and the management. The 4 sub-processes come together to reach a final outcome
2. AC Pigou – The only reason they come together is to resolve conflict. Bargaining Range theory states that the only
reason employer and employee come together is to resolve conflicts.
3. Chamberlain Model – The model suggests that CB has to be based on the ability to secure the opponent’s agreement
to your terms. They use a mathematical method based on perceived cost of agreement and disagreement.
4. Hicks Bargaining Model – any disagreement has to reach a point where there is work stoppage/strike/lockout. When
this is reached, they discuss the issue and resolve the same.
• The International Labour Standard with respect to Collective Bargaining is fixed by 3 conventions – No. 87 and No.
98

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 Trade Unions Act, 1926

• Generally, a group of workers coming together to ensure that the employer is promoting a social welfare measure.
• Section 2(h) defines a ‘trade union’:
(h) “Trade Union” means any combination, whether temporary or permanent, formed primarily for the
purpose of regulating the relations between workmen and employers or between workmen and workmen,
or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or
business, and includes any federation of two or more Trade Unions:
(i) Provided that this Act shall not affect—
(i) any agreement between partners as to their own business;
(ii) any agreement between an employer and those employed by him as to such employment; or
(iii) any agreement in consideration of the sale of the goodwill of a business or of instruction in
any profession, trade or handicraft.
• It can be either a temporary or permanent body for regulating relations between workmen and employer or employer
and employer and can impose restrictive conditions on trade and business. But it can in no way affect an agreement
between the two parties.
• It cannot affect an agreement on the sale of goodwill.
• S. 9 talks about transfer of goodwill. This concept is similar to M&A. You cannot question the merger in itself. but in
the process if any issues come up, the workers can challenge the same
• Art. 19(1)(c) of the Constitution protects the formation of trade unions.

Balakotiah v. Union of India (1958)

- Few employees of a PSU formed a trade union under the banner of CPI. There were riots happening. They were
removed from service for forming said association. The case questioned the dismissal and not the formation of the
union. The Court took the stand that as per the Civil Service Rules, the dismissal was correct. This case led a
string of cases that restricted formation of unions within an organization.
Devendrappa v. Karnataka Small Industries Development Corporation (1998)

- The Court dissented from the Balakotiah case. The Court held that even if one is a government service, the
freedom to form association cannot be curtailed. It mustn’t affect their efficiency while discharging a public
service.
Registration of Trade Unions
o Section 4: Any 7 or more members can come together and file for an application for the formation of a trade union
provided they have the backing of at least 10% of the workforce or 100 workmen, which is lesser.
o The application is made to the Registrar of Trade Unions. Here, the role of the State is important
o Registration is granted once the qualifications are met – Section 8 and cancellation under section 10.
o A registered trade union has a juristic personality

TN NGO Union v. Registrar of Trade Unions

- Non-Gazetted governmental officers formed a trade union which was subsequently registered by the State. The
employer filed a suit against this trade union. The Court said that there was no restriction on the meaning of
workmen under the Act. This category of persons was excluded from forming trade unions. Their registration was
cancelled.

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TT Devastanam v. Commissioner of Labour (important)

-Similar reasoning as above. If we read in association with other labour laws, these people mustn’t be allowed to
form trade unions. This was challenged before the SC.
- A technicality of the Act says that cancellation has to be made by a member of the trade union in itself. The SC
held that the registration cannot be cancelled.
o Now, the rule is that if the technical principles are followed, trade union can be allowed.
o Cancellation is only allowed in cases of fraud and misrepresentation.

Recognition of Trade Unions

o Registration might allow them a place on the table during negotiations. However, this may or may not be completely
representational of the workforce.
o The employer is not bound or under obligation to listen to the registered trade union
o Recognition is not a statutory provision. But once the Trade Unions Act came into force, the Courts have recognised
the same provisions as integral.
o Maharashtra and Rajasthan have their own legislations relating to recognition.
o Recognition is mentioned under Joint Commission of Labour, Report of 1999 – Employer has to recognise the
trade union in negotiating any matters affecting the common interests of the employee. The employer accepts the
trade union as a forefront representing all issues affecting the workforce.
o Code of Discipline, 1958 was brought out. This is not a statute. The 16th Labour Conference brought this out not as
an obligation, but as discretionary on the part of the Government to recognise the same. It said that if there is only one
trade union in an industry, it can be considered as a negotiating party, provided that they have the backing of at least
15% of the workforce.
o One which has the largest backing, in case of multiple trade unions, becomes the sole negotiating trade union.
o This is generally followed in public enterprises. This is not necessarily followed in private enterprises.
o Industrial Code of 2020 – Section 14 – mandates recognition of trade unions. 3 criteria:
1. If there is only one registered trade union in an enterprise, it will be the sole negotiation union.
2. If there are more than one registered trade unions, the one with a supporting of more than 51% of workforce,
will be the sole negotiating union.
3. If any trade union does not have 51% of backing, then a negotiating council is formed – all those trade union
which have a minimum 20% backing of workforce, through proportional voting, will form the negotiating
council.
o Recognition is granted for a period of 3 years.
o It puts an obligation on the Centre and the States, to recognize trade unions at Centre and State levels, if they deem
fit.
• An individual dispute can only become an industrial dispute if espoused by the trade union.
• S. 14 of the Industrial Disputes Code puts an obligation upon the employer to recognise the trade union – it remains
for the next three years upon recognition
• Generally in India, the trend is that employers recognise those trade unions that are affiliated to political parties – this
is peculiar to India.

Members of a Trade Union

• Anyone can be a member of a trade union – there is no provision saying that a member has to be an employee – the
provision only says that a person, even a minor above the age of 15 years, can be a member of a trade union.
• The Act is silent on who can be office bearers – someone who is not even associated with that industry can be an
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 office bearer – the Act only gives certain disqualifications (below the age of 18, convicted of fraud etc.)
• Section 22 – If you are making a trade union in an unorganised sector, one third of the office bearers need to be
working in that particular establishment.

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 • Section 15 – General Fund – registration fee of Rs. 1 to claim benefits from the general fund
• Section 16 – Separate Fund – to be used for the political interests of the trade union –
• Section 17 – Criminal Immunity
• Section 18 – Immunity from civil suits in certain cases

Jay Engineering Works v. State of West Bengal (important)

- Instead of a strike, the workers organised a gherao (trapping the employer within the office premises – this is now
prohibited in India and recognised as a coercive practice) – this was done repeatedly.
- This gherao led to a huge revolution within the industry – the matter was referred to the Industrial Tribunal but it
said that the police must not interfere in such labour measures.
- The matter went to the Calcutta HC – the trade unions claimed immunity under Section 17 of the Trade Unions
Act – the court said that although gherao is not an offence under the IPC and is peculiar to industrial
establishments, it involves wrongful restraint or wrongful confinement and criminal trespass, an offence under S.
339 of the IPC.
- It was held that Section 17 of the TUA provides immunity only in those cases under Section 120B of the IPC –
this is why the trade union was barred from claiming immunity under S.17
- The act they committed was an offence and they are not entitled to claim immunity from the same.
- The court went on to declare gherao as an unfair labour practice and the damages could be claimed by the
employer.

Rohtas Industries v. Rohtas Industries Staff Union (important)

- There was a dispute between the employer and workmen on the matter of enhancement of wages – the union went
on strike when the employer refused their demand.
- The provision for a strike is that 14 days of notice has to be given – this notice period was not given and hence,
the strike was considered to be illegal.
- During this time, the employers and the workers reached an agreement that they would send the dispute for
conciliation – this was not satisfactory and the workers went on strike again. There was a provision saying that
once conciliation proceedings are going on, parties could not initiate a strike – this made the second strike illegal
as well.
- There was a huge loss to the employer during this time and the workers were not paid their wages either – during
a legal strike, the workers are entitled to wages but in this case, the workers were not entitled to wages.
- The matter went for arbitration and the arbitrator declared this strike to be illegal – the workers were asked to pay
Rs. 80,000 to the employer.
- The matter went to the Patna HC – the court looked into the matter on the aspect of technicality – the court said
that there is no provision available for the employer to take civil action against the workers.
- The SC held that the English principles of torts in labour disputes do not apply in India – even if a strike is
considered to be illegal, damages cannot be claimed by the employer since there are no provisions for the same
under the TUA. The only remedy they have is to cut the wages of the workers during the strike (which they did) –
they could not claim damages.
• Important cases (according to Rudra Ma’am):
1. All India Bank Employees' Association v. N.I.T., [1961 II LLJ 385 (396) (SC)], per Rajagopala Ayyangar, J.
2. Balmer Lawrie Workers' Union v. Balmer Lazvrie & Co. Ltd., [1985 I LLJ 314 (SC)], per Desai, J.
3. Dalmianagar Mazdoor Seva Sangh v. State of Bihar, [1973 II LLJ 35 (Pat.)], per Untwalia and Hussain, JJ.
4. Gopal Upadhyaya & Ors., v. UOI & Ors., AIR 1987 SC 413, per Reddy, J.

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5. Jay Engineering Works v. State of West Bengal, (AIR 1968 Cal. 407), per Sinha, CJ.
6. Ous Kutilingal A. Nair v. Union of India, (AIR 1976 SC 1179), per Sarkaria, J.
7. Paradip Port Trust v. Workmen, [1976 II LLJ 409 (416-7) (SC)], per Goswami, J.
8. Standard Vacuum Refining Co. of India Ltd. v. Workmen, AIR 1961 SC 895, per Gajendragadkar,
J.
9. T.C.C. Thozhilali Union v. Travancore-Cochin Chemicals Ltd., [1982 I LLJ 425 (Ker.)], per Vedakkel, J.

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 MODULE IV: DEFINITIONS UNDER INDUSTRIAL DISPUTES ACT
→ Definition of Industry
→ Definition of Workman
→ Definition of Employer
→ Changing dimensions of basic definitions: Industry, Workmen and Employer
→ Industrial Dispute v. Individual Dispute
→ Instruments of Economic Coercion: Strike and Lockout

(all topics; no readings; no case laws)

The Industrial Disputes Act, 1947

• Industrial Disputes Act, 1947 talks about who is a workman, difference between layoff, retrenchment, on what
grounds can lay off be brought about, the procedural requirement for reasonable dismissal, transfer of undertaking.
• The purpose of the Act or its interpretation was explained in the case of:

1. Workmen of Dimakuchi Tea Estate v. Management

- This is a classical case dealing with the objective of the Act. It talks about when a dispute becomes an industrial
dispute. As of now, the objectives of the Act as laid down in this case are:
1. Generally, to promote good relations between workmen and employer
2. Adjudication of industrial disputes
3. Prevention of illegal strikes and lock-outs
4. Giving relief for workmen in case of lay-off and retrenchment
5. Promotion of collective bargaining
- This case went on to describe that in matters relating to industrial disputes, purposive interpretation
must be used.
• Definitions:

Definition of Industry

• Section 2(j) defines an industry:

2(j) “industry” means any business, trade, undertaking, manufacture or calling of
employers and includes any calling, service, employment, handicraft, or industrial
occupation or avocation of workmen;

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 • The question was whether the industry must have capital gains or synonymous to trade and business. The importance
of the ambit of the definition of ‘industry’ is that the workmen must be bought under the definition to avail any
benefits under the Act.
• The definition underwent a metamorphosis in 4 phases:
1947-1963: Many liberal judgments in favour of workmen
1963 – 1978: The approach of the Courts changed
1978: Important case of Bangalore Water Supply
1978 onwards: The State did not want to preserve the definition as provided in the BWS case.

A. 1947-1963: [DAHN]

1. DN Bannerjee v. PR Mukherjee (Budje Municipality case, 1950) [municipality – undertaking, commercial

objective, industrial peace, social evolution]

- A sanitary worker and inspector were removed from service. They were part of a trade union. They wrote an
application towards the State of WB for initiation of an industrial dispute. The State transferred the case to the
Industrial Tribunal. Their dismissal was revoked and they were reinstated. Against this decision of the Tribunal,
the Municipality filed a writ of certiorari. The Municipality is considered as an industry and hence, wrongful
termination can result in reinstatement of the aggrieved employees. The SC for the first time addressed whether a
municipality comes under the definition of “industry”. The Court said that if there is production of goods and
services, the interpretation must be such that it is given a wide definition of “undertaking”. The object need not be
commercial; there is a need for production of goods and services. This interpretation is to (i) maintain industrial
peace and harmony; and (ii) ensuring that social evolution is happening. The Court went on to say that wide
interpretation has to be given to “undertaking”. From a worker’s point of view, the understanding of
“undertaking” is beyond a business and trade.
2. State of Bombay v. Hospital Mazdoor Sabha (1960) [activity systematically or habitually undertaken,
cooperation, satisfy material wants, organized, not casual or pleasure]

- Important aspects of the definition discussed; served as forerunner to the BWS case. A government undertaking
hospital terminated the employment of certain workers. They filed a writ petition before the HC. The hospital
contended that they provide services to public and hence, not an industry. The HC held that hospital workers form
part of an industry and must be reinstated. Justice Gajendragadkar said that the conventional meaning of trade and
business has no validity in industrial adjudication.
- In matters relating to industrial disputes, (i) the current socio-economic thought so as to recognize the modern
welfare state; (ii) sovereign functions can be excluded from the purview of ‘industry’. The Supreme Court
defined what constitutes an industry.
- They gave a definition of ‘industry”:
- (i) any activity systematically or habitually undertaken for the production of goods and services or for rendering
material service to the community at large; (ii) such an activity has to involve cooperation between employer and
employee; (iii) to satisfy material wants; (iv) should be an organized activity; (v) it must not be casual or for
pleasure. Clubs, research institutes, charitable institutions, etc. were not considered as part of an ‘industry’. The
Court in a way provided an exhaustive definition which was much criticized.
-
3. Corporation of City of Nagpur v. Its Employees (1960) [sovereign functions not included – predominant
nature test]

- The question was whether a ‘corporation’ can be considered as an industry.

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 i. The Court looked at the literal part of the definition – the first part of the definition is from the standpoint
of the employer and the second part of the employee. If an activity falls in either of the part, the same can
be considered an industry.
ii. In the history of the Industrial Disputes Act, recognizes that an activity has to be an riticize one and
personal and private employments can be excluded. Dependent contractor or dependent entrepreneur are
included here.
iii. It is a service rendered by an industry. There are employees are in all departments, regardless whether
financial, administrative or executive, can avail benefits under the Act.
iv. The Court differentiated between sovereign and non-sovereign functions – sovereign functions are the
inalienable functions of the State and can be excluded from the purview of the definition. In certain cases,
the authority discharges many functions where half of it pertains to an industry and the other non-
industrial functions. In such a case, the predominant functions has to be considered for branding whether
it is an industry or not. Here, the predominant nature test came into existence.
4. Ahmedabad Textile Industry and Research Association v. State of Bombay [research org – commercial hence
industry]

- A textile industry had a research organization as well. The question was whether the research association working
under the textile industry constituted an industry? The Court looked at the commercial nature of the industry. It
said that the research association’s major function is to discover ways and means to obtain larger profits for the
company. Thus, giving it a very commercial character. Hence, it constitutes an industry.

B. 1963-1978: [DGCS]
→ Hospitals were put under the definition of industry as well. If the working of a particular activity falls within
either the first part of the second part of the definition, it would constitute an industry.
→ This is the period of narrow interpretation.

1. University of Delhi v. Ram Nath [predominant nature test – university is not industry]

- UoD had buses that took students to and from certain places. A bus driver and a conductor were terminated from
employment. The Tribunal decided that the university was an industry and the employees cannot be removed
without following due procedure.
- The Supreme Court said that the predominant nature of activity happening within the university is imparting
education which is a service to the entire community. Since the predominant function was imparting education,
the university cannot be held to be an industry.
→ There are other similar cases such as Osmania University. The employees of any university come together to carry
out the predominant function of the university. However, the above case was riticized since there are two classes
of employees working – professors and other people integral to the functioning of a university. The former are not
considered employees under the Industrial Disputes Act, but the latter are. Till date there are no conclusive
judgments conclusively decided on the same.
2. Madras Gymkhana Employee’s Association v. Madras Gymkhana (1967) [employer and employee both
standpoints to be taken – club not existence apart from members]

- Madras Gymkhana was a club which also had a part serving food where around 100 employees worked who were
generally making food. In 1962, there was a clamour for bonus, where bonus was claimed as a basic right. The
employees of Madras Gymkhana claimed bonus along the same lines. Only if an industry is gaining profit, they
had to pay their employees as well. Madras Gymkhana argued that they were not an industry. Before the
Industrial Tribunal, it was held that it was not an industry. An appeal was placed before the Supreme Court. Club
as an industry was not held to be an industry, because –
i. An activity cannot be a standalone activity. One part cannot be standalone from another. As a
definition of industry is of two parts – standpoint of employee and standpoint of employer. A club is
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 not manufacturing goods and services.
ii. While going through the first part of the definition, activities inside a club cannot be described as trade or
business and the club has no existence apart from its members. It is a self-serving institution for the
members. The
material needs or wants of the particular community would be satisfied and there is no production
of goods and services. they cannot be brought under the definition of industry. There is no
commercial character there. The activity doesn’t fall under either parts of the definition.
3. Cricket Club of India v. Bombay Labour Union (1967) [recreational activity not industry]

a. This case is a forerunner to BCCI. The same interpretation was given. Doing a recreational activity or
activities relating to encouragement of cricket cannot fall under the definition and cricket club is not an
industry.
4. Management of Safdar Jung Hospital v. Kuldip Singh Sethi [overruled HMS, TAI, FH (research)

a. This case overruled the Hospital Mazdoor Sabha case. Three different appeal were heard together. KSS was
a lower division worker. The hospital were changing pay scale, however, the revision was not applicable to
KSS. the ground that there is discrimination in the payment of wages, he files a suit before the Industrial
Tribunal. It was held that hospital is an industry and are entitled to provide damages.
b. The second appeal pertained to Tuberculosis Association of India – A hospital also working as research
institution. People were admitted as in-patients as well. There was no revision of the workers, who
approached the Tribunal. The hospital claimed that they are more of a research institution i.e., university
and not a hospital.
c. The third appeal pertained to a family hospital which conducted research. There was a disciplinary action
against an employee which was appealed to the Tribunal. The hospital claimed to be a research institute and
not hospital. The SC all three matters together and formulated a test to determine whether it is an industry or
not:
An industry can mean only trade, business, manufacture to any other undertakings which is analogous to
any trade or business for the production material goods or wealth. It also includes material services which
are not services which depend wholly or largely on the contribution of professional knowledge or skill but
should involve an activity carried out through a cooperation between employee and employer and should
provide something to the community at large. Emphasis has to be placed on the productivity of the
services organizes and the commercial scalability of the particular enterprise. The commercial character
of the enterprise is something which describes the nature of an industry.
d. The judgment ruled that the first one was an industry while the second and third appeals were held to be a
research institution.
e. The Act in itself says that military is not a part of industry. There was a dispute whether paramilitary
forces were an industry.
f. Later, in BWS case, this judgment was overruled and the court said that the commercial character of
the establishment is not required to be looked into.
5. Bombay Pinjrapole v. Workmen

a. The plaintiffs are a charitable institution, which also had a wing that took care of sick and disabled cows.
They have also set up a dairy farm in association with a particular enterprise. There was a question relating
to the payment of wages where higher pay scales were not given. The Tribunal held this to be an industry.
The Supreme Court held that the major character is that of a charitable institution where there is no
production of goods and services. hence, cannot be considered as an industry.
→ In BWS case, the Court decided whether there was a complete ban on charitable institutions being considered as
an industry. An example is the Tirupati Temple. The Court evolved the predominant nature of function test.

1978:

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 1. Bangalore Water Supply & Sewage Board v. A Rajappa [AIR 1978 SC 548]

→ There was a misconduct by employees. S. 33 allows employers to fire the employees. The same was imposed
without following the principles of natural justice. Against which, the employees first approached the conciliation
group. They took the stand that they were a statutory body performing sovereign functions and hence, cannot be
considered an industry. This was overruled and they were held to be an industry. This was appealed before the
Supreme Court.
→ A 3-judge bench referred it to a 7-judge bench. 6-7 questions were framed:
i. Can charitable institutions without profit motives be considered as industries?
ii. Can undertakings which are no-profit and no-loss making be considered as industries?
iii. Can clubs be considered as industries?
iv. What should be the inalienable element of being an industry?
v. Can a lawyers’ chambers or doctors’ clinic or any other liberal profession be considered an industry?
vi. Can universities and research institution be called an industry?
vii. How inclusive is the definition of Section 2(j) relevant to the determination of an industry?
viii. What is the immunity of instrumentalities of the government?
ix. In determining the nature of an activity what constitutes dominant nature?
→ Two tests formulated by Justice Krishna Iyer:
→ Triple Test:
It is similar to the Hospital Mazdoor Sabha case.
1. When there is a systematic activity carried on by cooperation between employer and employee to the
production or distribution of goods and services to satisfy human wants and wishes. It should not be spiritual
or religious but inclusive of material things or services geared to celestial bliss. [Production of prasad is an
example of production of goods for celestial bliss constituting an industry].
Absence of a profit motive or any gainful object is irrelevant even if the undertaking is public or private. [Profit
making is irrelevant]
The focus must be on the functionality and the decisiveness in the nature of activity. Just because the undertaking has
a philanthropic activity, it doesn’t cease to be an industry.
2. The terms in Section 2(j) must be interpreted in the widest ambit but not allowed to be overstretched. All
activities fulfilling the triple test even if it is not a trade or business, will still be considered an industry.
Provided, the nature of the activity resembles to what we find in trade and business.
3. The objective of the Act: The ideology behind the Act is to maintain industrial peace and to ensure that
industrial disputes have to be solved between the employer and the employee. This has to be the statutory
ideology and this must conform to the reach of the statutory definition.
→ Dominant Nature Test:
A corporation undertakes several functions.
a. When a complex of activities, some of which can qualify for an exemption, but the undertaking involves
cooperation of employer and employee, the nature of the department will be the true test in determining
whether it is an industry or not. For example, Bhabha Atomic Research may have a canteen serving food to
the employees.
b. The sovereign functions qualify for exemption but welfare activities or economic functions by the
government or statutory bodies will not come under the exemption.
c. If there is a department discharging sovereign functions in an industry. If the functions of the department are

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 substantially severable, the entire activity can be considered an industry severing the part performing the
sovereign functions.

→ Only if the triple test is satisfied is the dominant nature test undertaken.
→ The Court goes into detail of each function –
1. Sovereign function – If the functions of the department are substantially severable, the entire activity can be
considered an industry severing the part performing the sovereign functions.
2. Municipalities – Similar to sovereign function. Generally, municipalities and corporations are industries and
only those performing sovereign functions are severed.
3. Hospitals – They are service-oriented, absence of commercial character and profit-making. This was
reversed here. They replied that hospitals are also an industry. The cooperation of employer and employee is
there and they systematically undertake functions to provide serve. Profit-making is irrelevant.
4. Liberal professions – The Court said that if it is a solicitor’s firm, it works through the cooperative operation
of all specialists. There is a cooperation between the employer and specialists. An exception given to them is
unwarranted. A single lawyer or a rural medical practitioner are outside the purview of an industry.
5. Universities – When the triple test is satisfied, universities, research institutes and coaching institutes are
considered an industry. What is important is not the predominant employees but the predominant activities.
Here, the University of Delhi case was overruled.
6. Charitable Institutions – The Court divides them into three –
i. Firstly, if a substantial portion of profits is given or diverted for charitable purposes. Even if profits are
given for charitable purposes, economic activity is taking place due to cooperation between employer and
employee for the production of goods and services and the employees are not concerned with the
charitable purposes. Hence, it is an industry.
ii. Secondly, a slight modification of the first. The goods and services are given to individual consumers.
the Court says that industrial law is not concerned with how the product us being utilized. It merely
regulates the relation between employer and employee. From the pov of the employee, they have already
done an activity which results in the production of goods and industry. This case is also considered as
industry.
iii. Thirdly, as Justice Iyer puts it, Ashram – There are no employers or employees and there is no wage basis
for such employees. They are generally doing a voluntary participation in
the production of not goods and services per se. they are giving their services for the lofty ideals of the
particular ashram. The nature of the relation is not an industry.
[In the Gandhi Marg case of 2022, it was held that people who go around and spread the ideals of
Mahatma Gandhi are not employees]
7. Research Institutes – Also considered as industries even if they run without profit motive. If the triple test
is satisfied, even if it is not profit-run, it is an industry.
8. The judgment excludes single lawyers, rural-run clinic, domestic workers, sovereign functions of the State,
manual scavengers.
In 1982, there was an amendment proposed to the Section 2(j) defining an ‘industry’. The Triple Test provided in the
BWS case was the basis for this definition. However, the amendment wasn’t passed and the initial definition stands.

Criticisms of the BWS:

- Most government organizations work similar to the Triple Test and this arose a lot of liabilities of the State, such
as the Telegraph Office, etc.
- Many women came together for handicrafts or other small-scale industries, who were included within the ambit
and increased their liabilities.
-

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1978 onwards: [BT]

1. Bombay Telephones Canteen Employees Association v. Union of India

- The Court openly said that if the doctrine in BWS is applied, the consequences are catastrophic for the State. The
Telecom Department was not brought under the definition of industry. This was later on reversed in the case of:
2. General Manager, Telecom v. Srinivas Rao

- There were a huge number of litigations against the State and it wasn’t easy for the State.

3. Coir Board, Ernakulam v. Indira Devi (1998)

- The issue pertained to the women employed in the Coir industry. The workmen were not given their wages
and Indira Devi went to the Court for the Board to be declared as an industry. The Supreme Court said that
bringing everything within the meaning od industry could affect the economic prosperity and the subsequent
decisions after BWS brought huge uncertainty. The definition given in BWS is vague and it has to be reexamined.
Incidentally, this was a three-judgebench and BWS judgment could not be relooked into. An appropriate
bench was never constituted to relook into the BWS case. As of now, the definition stands.
• Section 2(p) of the Industrial Relations Code, 2020, defines what is an ‘industry’. This is similar to the definition
provided in the BWS case. The exceptions are:
1. Charitable institutions or philanthropic organizations;
2. Sovereign functions including all activities carried on by the departments of the Central Government
dealing with defence research, atomic energy and space;
3. Domestic service; or
4. Any other such activity as notified by the Central Government.

Q. Is the BWS judgment a case of judicial overreach?

The major issue is with respect to the public-private divide. The judgment is violative of the basis of this divide. The
Court unnecessarily experimented with the definition and made it too general. Another set of scholars say that this was an
example of judicial activism.

Definition of Workmen [DCRA]

• Section 2(s) of the Industrial Disputes Act, 1947:

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

(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act,
1957 (62 of 1957); or
(ii) who is employed in the police service or as an officer or other employee of a prison; or
(iii) who is employed mainly in a managerial or administrative capacity; or
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 (iv) who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per
mensem or exercises, either by the nature of the duties attached
to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
• This led to a string of cases:

1. Dharangadhara Chemical Works Ltd v. State of Saurashtra (1956) [control

test]

o The Court laid down the ‘Control Test’ in this case.

o The facts of the case are that the Plaintiff are a salt-manufacturing company. They had a lease agreement with
the government on the basis of which certain grants were provided. The land was divided into agarias. There is
no other aspect of control. The agarias make salt from rainwater. If the salt is not of good quality, it is rejected by
the company. The agarias are not allowed to sell the salt elsewhere. The Salt Superintendent looks after the
quality of the salt. There are no other controls. The agarias live on the plot of land. There is no contract between
the company and the agarias. They only stayed on the land during monsoons.
o Around 1950s, there was a dispute regarding the conditions of services. The matter was referred to the Industrial
Tribunal. The Company claimed that the agarias are not workmen and are hence, not entitled to benefits. This
was rejected by the Tribunal.
o The Company preferred a Writ Petition before the HC. The HC upheld the Tribunal’s order.
o An appeal was preferred to the Supreme Court. The Court held there should be a relationship between the
employer and the employee and the principle on the basis of which this relationship is determined is the
existence of the right of control in respect to the manner in which the work is to be done. If they are not
controlling it, it is a contract for service. Halsbury’s Law of England is referred to, which says that the prima
facie test is the existence of the right in the master to supervise and control the work done by the servant not
restricted to directing him about the nature of work.
o This judgment was considered to be problematic since all contractual workers and dependent entrepreneurs were
outside the purview of ‘workmen’. Even though the Control Test was laid down here, it rendered a lot of
dependent entrepreneurs as legal orphans.
2. Chintaman Rao v. State of Madhya Pradesh (1950) [beedi rolling – no
control]

o Reiteration of the Dharangadhara Chemical Works. It is the first administrative case where the proportionality
test was used.
o The issue was whether the beedi rolling employees were ‘workmen’
o The Court held that by application of the Control Test, they were not workmen since there was no supervisory
control carried on by the parent enterprise.
3. Hussainbhai v. Alath Factory (1978)

o The Court improvised on the Dharangadhara case

o They expanded the definition of ‘workmen’ to include dependent entrepreneurs as well
o The judgment was written by Justice Krishna Iyer.
o The Court said that in determining someone as a workman, if the employer exercises economic control over the
workers' subsistence, skill and continued employment, they can be considered as workmen.
o The second part of the judgment says that if someone is employed through an intermediate contractor with whom
alone the workers have an immediate relationship is of no consequence that on lifting the veil, the real employer
is the management.
4. Ram Singh v. Union Territory of Chandigarh (2004) [control test not
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 enough, look at features of relationship, written terms, actual nature]

o The Court remarked that the Control Test is one of the important tests but it cannot be the sole determining test.
All other relevant factors and circumstances must be considered while determining the relationship. There must
be an integrated approach in determining the employer-employee relations. This has to be a question of fact.
The question of fact can be determined by looking into:
i. The features of the relationship
ii. Written terms of employment
iii. The actual nature of employment
iv. The questions relating to this can only be proved to an industrial adjudication.
• There arose cases where the question was whether those outside the purview of the exceptions could be considered as
“workmen”?
4. May & Baker, Western India Match Company Burmah Shell Company
(1964-71)
- In the above cases, it was held that the work must satisfy the nature of the work as provided by the definition to
be considered as ‘workmen’.
5. SK Verma v. Mahesh Chandra (1970)
- The Court categorically said that what is required is that if the employee is outside the purview of the exceptions,
he is a ‘workman’ as per the definition.
• Thus, there were two opposing viewpoints. This was referred to the Constitutional Bench in the case of:
6. HR Adyanthaya v. Sandoz

- The Court said that for a person to be a workman under the definitions, he must be employed to do any of the
categories – manual, skilled, unskilled. It is not enough that it is covered by neither of the 4 exceptions. As of
now, the test stands that – firstly, whether the person outside the purview of the exceptions and secondly, whether
the nature for the work satisfies the definition. The SK Verma judgment was held to be per incuriam.
7. Anand Bazar Patrika v. Its Workmen [supervisors outside workmen]

- The case related to supervisory nature of the work. The person was the senior-most clerk. There were 4 people
subordinate to him. He was asked to allocate work to the junior clerks. He also had the power to grant leave. The
SC went into the nature of the duty and held that the post on which you are appointed, you need to look into the
nature of the work relating to that. If that work is of supervisory nature, then he will not get the term of
‘workmen’. Generally, supervisors are outside the purview of ‘workmen’.
[Supervisory employees who earn more than Rs. 10,000 are outside the purview of the definition]

Specific Cases: SSABWuJ

1. Divisional Manager, NIA Company v. A Sankaralingam (Part-time workers)

- It was held that part-time employees are considered to be workmen on the ground that the definition doesn’t
make distinction between part-time and full-time employees.

2. Bharat Bhavan Trust v. Bharat Bhavan Artist Association (Artist)

- Even if the place of employment form an industry, artists are outside the purview of workmen.
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 3. MN Wadia Charitable Hospital v. Dr Umang (Doctors)

- Doctors even though employed for an industry, cannot be considered as workmen. Even if the second part of the
definition is satisfied, doctor is not considered as workmen.

4. Sundarambal v. Government of Goa (Teachers)

- This case is also related to gratuity. Whether teachers can be brought under the definition of workmen. The Court
held that teachers are not ‘workmen’. Even though a university can be considered as an industry, the same is not
applicable to a teacher. The Court was of the opinion that teaching is a noble profession and there is no
production of goods and services. It gave a direction to the Government of Goa to make an appropriate legislation
for the teacher’s welfare. They were held to have a right to gratuity.

5. Management of Som Vihar Apartment Owners Housing Maintenance

Society v. Workmen (Domestic servants)
- As per the definition, they are outside the purview of workmen. The reasoning was that domestic servant is purely
a personal matter.

6. Jamia Hamdard v. KS Durrany (Research fellow)

- Research fellows/scholars are outside the purview of workmen since there is no employer- employee
relationship.

Industrial Dispute

• Section 2(k) deals with the definition of an industrial dispute. It is defined as:
“any dispute or difference between employer and employers, or between workmen
and workmen, which is connected with the employment or non-employment or
terms of employment or conditions of labour, of any person .”A dispute or
difference need not be something already submitted to adjudication
• When does an individual dispute become an industrial dispute?
• Nature of dispute or difference –
o This was explained in the case of Workmen of Dimakuchi Tea Estate (aka. Assam Karmachari Cha Sangh)
v. Dimakuchi Tea Estate. They went into detail difference between the two. The Court held that such a dispute
must be a real and substantial difference having an element of persistency and continuity till resolve and if not
adjudicated, it might endanger the industrial peace. An apprehension can also lead to an industrial dispute
o If a mere demand is made to the government, can this considered as an industrial difference? This was settled in
the case of Sindhu Resettlement Cooperation Ltd. v. The Industrial Tribunal of Gujarat. it was held that a
mere demand raised to the government by the worker without raising the same to the employer, then it is not an
industrial dispute. If the same is raised by the government to the employer and the same is rejected, then it
becomes an industrial dispute.
• Parties to the dispute –
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 o The term ‘workmen’ is used and not ‘employee’. The person must fall under the definition of ‘workmen’.
o The same applied to consideration of issues by the trade unions.
• Subject-matter –
o The definition clearly mentions that it must be related to “employment or non-employment or terms of
employment or conditions of labour”.
o There are certain cases that define each term. However, they are not conclusive.
o Bilash Chandra v. State of West Bengal – The case was related to ‘non-employment’. It was held that failure or
refusal by the employer to employ a person and the act includes discharge, dismissal, retrenchment, suspension,
layoff, compulsory leave and lockout. All those matters related to reemployment, reinstatement and back wages in
case of wrongful termination can be included under ‘non-employment’. There are certain provisions dealing with
compensation, reinstatement and back-wages in case of wrongful termination. These are also covered.
o “Terms of employment” – PEERLESS INN V. 4TH IT – All matters related to wages, dearness allowances and
other allowances, matters related to promotion, transfer, overtime work, bonus, pension, provident fund, gratuity,
compassionate appointment, disciplinary proceedings, come under the broad ambit of ‘terms of employment’.

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 o Workmen of Hindustan Lever Ltd. v. Hindustan Lever Ltd. – Defined what is conditions of labour.
Generally all those conditions of service provided by the employer right from working days to working hours to
leaves, holidays, safety.
o The subject-matter is largely based on facts. the cases merely provide help with interpretation of the terms.
• “OF ANY PERSON” [KDRvBD]
o Kanpur Rural Mills v. Kanpur Mazdoor Congress case held that a literal interpretation must be taken.
o The second aspect was that only a ‘workman’ is included under ‘of any person’ and any other person’s dispute is
considered an individual dispute.
o In the Dimakuchi Estate case, it was held that it relates to a ‘concerned person’.
o The facts of the case were than Dr. Bannerjee was appointed as a Medical Officer in the Tea Estate. He was
appointed for 1 year and had 3 months of probation. He was terminated after 3 months. The legality of his
termination was questioned. The Trade Unions took up the matter. The IT held that it was not an industrial
dispute but was an individual dispute relating to the doctor. The matter went to the Supreme Court. The Court
held that the dispute was not an industrial dispute since it had crucial limitations on the terms. The Court said
that:
1. The dispute must be a real dispute between the parties so as to be capable of adjudication or
settlement resulting in an award. Conciliation is also considered under labour laws. This must lead to an
award.
2. A person regarding whom a dispute is raised must be the one in whose employment or non-
employment or terms of conditions of labour, the parties raising the dispute have a substantial or
direct interest. The dispute of the individual can be espoused by the trade union but the trade union
themselves must have a real and substantial dispute.
o Kays Construction Co. v. Its Workmen – A co. was transferred to another co. the transferee co. did not
absolve all the employees, only half of them absorbed and new recruitments were made. the other half were laid-
off. The existing workmen raised a dispute on behalf of the laid-off ones. The question was as to the nature of
the dispute. It was held that it was not an industrial dispute as it was not real and substantial. The Court said that
‘industrial dispute’ must be interpreted liberally to cover any dispute raised by workmen in regard to non-
employment of other, who might not be workmen in that material time.
o Standard Vacuum Refining Company v. Its Workmen – The case more important for contract labour.
The issue was that the workmen raised an industrial dispute relating to contract labourers regarding the security
if tenure of the contract labourers. They were of the opinion that the contract employment must be abolished and
must be employed as regular employees. The Court said that regular employees have a community of interest
and there is a substantial interest in the subject-matter of the dispute which in general sense, is going to affect the
workmen. It was held that regular employees can raise a dispute on behalf of contract employees.
• Generally, there are three ways of interpretation – literal, limited to ‘workmen’ & the interpretation in the Dimakuchi
case – “concerned person”
• There needs to be a real dispute which results in adjudication and award. The trade union, while espousing a
workman’s matter, must have a direct and substantial interest.
o All India Reserve Bank Employees v. RBI – This case brought up with the concept that the person espousing
the matter must have a ‘vital interest’. If there is a dispute regarding employment, non-employment or terms of
employment in which the workmen or the trade union has vital interest, then they may be able to raise an
industrial dispute. But the workmen cannot take an industrial dispute in respect of a class of employees who are
not workmen. In most matters, they have no direct interest. What is direct interest, is a question of fact.
o Workmen v. Crompton – Generally, ‘direct and substantial interest’ is used synonymous to ‘vital interest’.
There is clarity as to the correct phrase to be used.
o With respect to individual dispute of a workman, the principle is that – if the trade union espouses the matter, the
same can be considered as an industrial dispute. The same was held in the case of Central Provinces
Transport Services v. Raghunath. The case
categorically laid down that if a dispute between an employer and a single employee is not an industrial dispute

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 and is an individual dispute. If the same dispute is espoused by the trade union, it can be considered as an
industrial dispute.
o What if there is a group of employees, not considered as workmen, whose dispute is taken up by the trade union?
Ex: journalists. Bombay Union of Journalists v. The Hindu – A journalist was removed from employment.
The trade union brought up an industrial dispute. The issue was whether it can be an industrial dispute. The
Court said that since they are not workmen, the matter cannot be considered as an industrial dispute.
o This case was overruled in the case of Dharampal Prem Chand v. Its Employees – It was held that the
employees working for Prem Chand were outside the purview of workmen. There was a transfer of the company
on the basis of which a lot of them lost their jobs. The Union brought a case against the Appellant. The precedent
to this case held that only workmen could raise industrial dispute. The Court said that it would be unreasonable
to hold that a dispute
doesn’t become industrial just because it is not a union entirely or exclusively of workmen. This was a
problematic judgment since it went beyond the employer-workmen relationship. However, this decision stands
as of now.
o If a dispute is raised by a number of workmen (more than 15%), it is still considered as an industrial dispute. The
same industrial dispute must be espoused by a substantial number of workmen.
o In 1965, there was an Amendment brought to the Industrial Disputes Act, 1947, under Section 2A. If an
employee is dismissed, discharged or retrenched or is otherwise terminated, any difference or dispute that
concerns or arises out of such dismissal, shall be considered as an industrial dispute. This section is very
important.
o Section 2B says that if a matter is pending before conciliation and more than 45 days has elapsed, and if the
matter before the Labour Court or Industrial Tribunal by reference or any either application, then the
adjudication will be done as that of an industrial dispute.

Dispute Resolution under Labour Laws

1. Supreme Court
2. High Court
3. National Industrial Tribunal – Industrial disputes concerning two or more States.
4. Industrial Tribunal – Quasi-statutory body.
5. Labour Court – A State-Government machinery. Once the Labour Codes come into picture, these will be
abolished.
6. Board of Conciliation/Conciliation Officer – Similar to Work Committee, with equal members and one or two
members from the State. The legislation provides for a Conciliation Officer and not ‘Board of Conciliation’.
7. Works Committee – Every industry has one, where the employer and the employee sit together and discuss. This
is not necessarily an adjudicatory body. The members are equal in number.
Parallel body of Arbitration – The principles of Arbitration and Conciliation Act do not apply here. The appropriate
government fixes up this matter and it is not a right of the employer or employee.

o McKinnon McKenzie v. LM Lassk – The question was with respect to the interpretation of Section 2(k).
They said that the section is not restricted to bare dismissal, discharge or
retrenchment but all those disputes and differences concerned with such terminations or connected to it, will
be deemed to be an industrial dispute.
o Section 2A is only concerned with dismissals. Section 2(k) is with respect to all disputes, if the same is espoused
by the trade union. This is one of the major limitations of Section 2A.
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o This is important considering that most labour disputes are based upon the facts of the case.

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 MODULE V: TERMINATION OF EMPLOYMENT
→ Lay-off: Definition, Right to Lay-off and consequences, difference between Lay-off and Lock-out
→ Retrenchment: Definition, Conditions Precedent, Procedure, Rights of Retrenched and Laid-off Workers
→ Transfer
→ Closure

Reading: Shashi K. Sharma and K.K. Uppal, Retrenchment And The Supreme Court: An Overview, Journal of the Indian
Law Institute, October-December 1984, Vol. 26, No. 4 (October-December 1984), pp. 573-583.
(all topics)

Separation

• A situation wherein the employee is separated from employment. Termination is considered as a synonym for
separation.
• For example, retirement is a permanent separation. Retirement can be due to completion of time period of service or
voluntary retirement. Other examples are lay-off, retrenchment, suspension, etc.
• As per the Industrial Disputes Act, 1947, the terms lay-off and retrenchment are distinct.

Lay-Off [CCsp, KJUDF]

• Layoff and Retrenchment -Chapter V-A of ID Act, 1947

• Under Section 2(kkk) of the Industrial Disputes Act, 1947, lay-off has been defined. It is the failure, refusal and
inability of an employer and the reasons are innumerable. The shortage of material can be raw material, power or
accumulation of stock, machinery breakdown or natural calamity, or any other reason for the four.
• Apart from this, the workman or employee must be on the muster-roll of the employer. It is an official record of
attendance, under Section 25D. It is the responsibility of the employer to maintain the same. The employee or the
workman must not be retrenched.
• Layoff is a temporary unemployment.
• If a workman is made to wait for more than 2 hours by the employer, he is considered as laid off. He is entitled to
layoff compensation. If the workman was made to wait the whole day without work, it si not a case of layoff but
would be entitles to full wages for that day.
• Labour is a subject-matter of the Concurrent List.
• The definition under the Industrial Relations Code, 2020, is similar.

1. Central India Spinning, Weaving and Manufacturing Co. Ltd. v. State

Industrial Court (1959)
- The Bombay HC emphasised that the unemployment is not because of the actions of the workers.
The reasons are beyond the control of the employer.

2. Management of Kairbettea Estate v. Rajamanickam (1960)

- The Supreme Court tried to explain ‘other connected reasons’. The characteristics of the 4 already-stated reasons
must be the essence of the term in question. It must be beyond the control of the employer. This is also one of the
key points in the definition of layoff that the employer is not willingly giving the unemployment.
• Chapter VA deals with lay-off and retrenchment.

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• Any establishment having more than 50 employees in the preceding calendar month, will face the applicability of
Section 25C to 25E.
• Section 25A provides for those establishments for which the provisions wouldn’t apply.
• If there have been less than 50 employees in the preceding month, the provisions are not applicable.
Seasonal work establishments are also outside the purview.
• Appropriate government has the power to decide whether the work is seasonal in nature or not.
• When a person is laid off, he is provided layoff compensation. There are certain qualifications for the same:
- He/she must have completed one year of continuous service. Section 25B provides for the same. If there is
interruption of the continuous service, like medical illness, accident, legal strike, lock- out, or any stoppage, then
it is still continuous employment.
- A workman is deemed to be in continuous employment if he/she has been in employment for 1 year. If the
workman has completed 190 days in mines/underground work or 240 days in fields/ above the ground work.
• Section 25C talks about right of workmen laid off for compensation. There are 3 conditions:
- He/she must have completed one year of service
- He/she must not be badli worker/casual worker
- He/she must be on the muster-roll
• If a badli worker completes 1 year of continuous service, does it result in deemed worker? It was held in:
3. Joseph v. Loyal Textiles Mills

- If a badli worker has completed 240 days, then he is entitled to layoff compensation.
• Computation of layoff compensation – 50% of (Basic Wages + Dearness Allowance).
• A person can only be laid off for 45 days, beyond this, it is considered as retrenchment. Section 25F will come into
picture. Henceforth, it becomes a case for retrenchment and not layoff.
• There is another option for the employer to continue paying layoff compensation even after 45 days.

4. RM Upadhaya v. Vinubhai M Mitre (1982)

- It was held that if someone is laid off for 45 days and the employer retrenches the employee, they cannot balance
one compensation against another. The Bombay HC held that deduction of layoff compensation from the amount
payable under retrench compensation is not permissible.
• Other duties of the employer:
- Layoff must happen only for the reasons mentioned in the definition.
• In what cases under Section 25E, are workmen not entitled to compensation? Refer Section 25E.
• Go slow is where workmen deliberately work slowly. In such cases, layoff compensation
• There are two modes of collective bargaining – strike by the employee and lock-out by the employer.
They are anti-thesis to each other.
• There are certain conditions for the fulfilment of alternative employment – same establishment, same wages, same
employer or it must be within 5 miles radius. There must not be requirement of any special skills. All these conditions
must be met. If the workman fails to accept the alternative employment, he is not considered as laid off.
• Section 25E – alternative employment – one of the conditions was that the workman must not be forced to come up
with a different set of skills.
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 5. Industrial Employees Union, Kanpur v. JK Cotton Spinning and Weaving
Mills
• This was held in the case of Industrial Employees Union, Kanpur v. JK Cotton Spinning and Weaving Mills
(1956). The skilled workman, as
an alternative employment, was allotted the work of a coolie. This was not held valid since the two are not similar
employments.

6. Workmen of Dewan Tea Estate v. Management

• There is no inherent right to compensation just for being laid off. Section 25C will come into play, which talks about
the right of the workmen who are laid off. (important case)
• In Dewan Tea Estate, it was held that if the layoff satisfies Section 2(kkk) as per standing orders, then Section 25C
directly applies for compensation. However, in the Firestone case, it was held that if the reasons for the layoff
standing orders aren’t given, it must be in accordance with Section 2(kkk). If the standing order is passed without the
power to layoff, the compensation is not provided as per layoff, and the complete wages are to be given. If the
standing orders give the management the right to layoff, there are further considerations – whether the establishment
fulfils Chapter VA conditions, Section 25C comes into picture. If there are lesser than 50 employees, compensation is
given as per the terms of employment of the establishment.
• Lockout is mentioned under Section 2(l) of the IDA, 1947. This is the antithesis to strike.

7. Workmen v. Firestone Tyre and Rubber Co.:

• Section 25A explains the industries to which lay off provisions would not be applicable to – those establishments with
lesser than 50 workmen, seasonal/irregular work, and those falling under Chapter VA. In such cases, the terms of
employment and the standing orders of the company come into picture. What happens in cases where the standing
orders do not provide for a reason for layoff? Only the reasons provided under Section 2(kkk) will be considered as valid.
(important case)

8. Management of Kairbetta Estate v. Rajamanickam

• In the case of Management of Kairbetta Estate v. Rajamanickam, the manager was assaulted by the workmen to
the extent of several injuries. The staff was also assaulted by the workmen. The management decided to close down
the lower division. The workmen went to Court for compensation for layoff. The Labour Court agreed with the
workmen and order layoff compensation. The management approached the Supreme Court. The Court held that we
need to make a distinction between two things – whether the situation was a layoff or lockout. They then held that the
closure which happened. It was held that it was not a case of layoff, but one of lockout. The workmen were out of
control and did not agree with the management, which forced the management to resort to layoff. Hence, the
workmen are not entitled to layoff compensation.

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 Retrenchment [BDSSM HAW PURS]

• Before 1953, there was no mention of the term in the Industrial Disputes Act, 1947. Through Amendment in 1953, the
term was introduced. The rules for compensation if a workman was retrenched was laid down. Before this, the
principles of social justice and equity was applied.
• This term is defined under Section 2(oo) of the Industrial Disputes Act, 1947. The termination by the employer of the
service of workmen for any reason whatsoever except in cases where the workmen is being punished through
disciplinary action or in certain situation that the law specifically excludes.
• Section 2(kkk) uses the term ‘worker’ rather than ‘workmen’.
• The definition of ‘retrenchment’ – termination of employment for any reason whatsoever, except any punitive action.
if the person was asked to leave because he/she did something wrong, it doesn’t amount to retrenchmene.t
• 4 instances were excluded from retrenchment – voluntary retirement, retirement on reaching age of
superannuation, non-renewal of contract, continued ill-health,
•
• This must not be a punitive action or a punishment resulting in retrenchment. It excludes voluntary retirement,
retirement when the workman reached age of superannuation, non-renewal of contract, continued ill health. Punitive
dismissal due to varied reasons are also not taken into consideration.
1. Hari Prasad Shivshankar Shukla v. AD Divelkar
• In the case of Hari Prasad Shivshankar Shukla v. AD Divelkar (1957), workmen were terminated due to closure.
The Court was to decide whether this amounts to retrenchment or not. Since this resulted due to closure, this is not
retrenchment. The Court decided that closure did not amount to retrenchment.
• This case is important since it led to the introduction of two now provisions in the Act – Section 25ff and 25fff. The
former talks about compensation in cases of transfer and the latter about compensation in cases of closure.
• Section 25ff and 25fff were incorporated into the Act. Section 25ff talks about cases the rights of workmen in cases of
change in ownership. Section 25fff talks about compensation in cases of retrenchment. Before 1976, Courts had taken
a different stance on retrenchment. However, after 1976, there was a shift in the interpretation. Retrenchment on the
basis of surplus of labour was the only criteria prior to 1976. After 1976, the Court interpreted retrenchment in a
broad manner.
•
• Interestingly, when it comes to the definition of retrenchment, there was a ruling in 1976. Before this, the
interpretation was different. If there was a surplus of labour which could be justified by the employer, this allowed for
lawful retrenchment. This was held in the case of Byram Pestonji Gariwala v. Union Bank of India.
2. Byram Pestonji Gariwala v. Union Bank of India.
• The SC restricted the definition of retrenchment and said that if the termination of employment is due to surplus of
labour, then it amounts to retrenchment.
3. SBI v. Sundara Money
• In 1976, in the case of SBI v. Sundara Money, they took a broad interpretation of the definition of retrenchment –
“any reason whatsoever”. The workman was terminated prior to the end of the contract and claimed for retrenchment
compensation. Non-renewal of contract was not part of retrenchment when this case approached the Court. The Court
took a very broad interpretation.
• Sundara Money’s termination upon the expiry of contract was challenged as retrenchment. In 1976, this would have
amounted to retrenchment. On the basis of retrenchment, he was awarded compensation.
• In 1984, non-renewal contract was included in the list of circumstances not amounting to retrenchment.
• Section 2(00)(bb) was added in 1984.
• Henceforth, all cases have adopted a broad interpretation to ‘for any reason whatsoever’, except for reasons
specifically excluded in the statute.
4. Delhi Clove and Mills Co. Ltd. v. SN Mukherjee

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• there was a worker of the organization who was absent for 8 days consequently. He was terminated from employment.
The Court was to decide whether such termination was retrenchment or not. In this case as well, the Court took the
stand that any reasons whatsoever except the specifically provided, was held to be retrenchment. Hence, in this case,
the termination of employment was held to be retrenchment.
• Under Section 25F, compensation which a workmen will get was discussed.

5. Santosh Gupta v. State Bank of Patiala (1980)

• The plaintiff was to pass a confirmation test for continuing in her employment, within a stipulated period of time. She
failed the same and her employment was terminated. She challenged the same on the basis that she was entitled to
compensation for retrenchment. The Court held this to be retrenchment. The confirmation test was considered outside
the ambit of the exceptions. She was held to be entitled to compensation under Section 25F of the Industrial Disputes
Act, 1947.

6. Mohan Lal v. Management, Bharat Electronics Ltd. (1981)

• The plaintiff was on probation period. His employment was terminated and was asked to leave. He challenged the
same. He claimed compensation on the basis of retrenchment. The Court held that it is not one of the reasons
explicitly excluded in the definition of retrenchment. It was held to be retrenchment and he was held to be entitled to
compensation
7. Anand Bihari v. Rajasthan Road Transport Corporation
• The plaintiff was a driver who has a certain issue with his eyesight. He was terminated. The Court was to decide
whether this was retrenchment. It was held that it was not retrenchment and the person is not entitled to compensation.
The reason provided was sub-normal eyesight.
8. Workmen v. Bangalore WC&S Mills
• The Court said that the termination of services due to any general closure, takeover of the establishment or discharge
due to continued ill-health is not retrenchment.
Section 25F. Conditions Precedent to Retrenchment of Workmen

• Conditions
1. Notice – The workman must be provided notice atleast a month before. In cases of immediate retrenchment,
the workman must be provided full wages for one month. If the employer fails to provide one month notice,
then full wages must be given.
2. There is a prescribed manner in which the appropriate government is informed about the retrenchment.
3. The computation of the compensation if the retrenchment satisfies the definition under Section 2(oo), the
compensation will be (15 days of average wages x every completed year). If the additional time period is
more than 6 months, it is included as one year in the calculation. [OR ANY PART THEREOF IN EXCESS OF
SIX MONTHS]
• The workmen should have completed atleast one year of complete service, as mentioned under Section 25B.
• Apart from this, a person is deemed to be in employment for one year, if the worker is employed with the
establishment for 12 months and:
- Completed 190 days in the case of underground/mines
- Completed 240 days in other cases above the ground.
• The person will be entitled to layoff compensation or retrenchment compensation, as the case may be.
• Prior to 1976, the definition of retrenchment was given a narrow interpretation.
• The Court held closure of business not to amount to retrenchment.
1. Workmen of Meenakshi Mills and Workmen of Subong Tea Estate v.
Outgoing Management of Subong Tea Estate and Another case, Behram
Pestonji Gariwala v. Union Bank of India (referred)
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 • In Workmen of Meenakshi Mills case, the advocate invoked the principle of statutory construction wherein the
language of the law is not written in a radical way, there is no intent for it to be interpreted in a broad manner. The
advocate sought to justify the interpretation of “discharge of surplus labour”. They adopted the observations of the
Court in the case of Workmen of Subong Tea Estate v. Outgoing Management of Subong Tea Estate and
Another (1963). A Company can lay off employees or workers only for good reasons. This can be surplus labourers
post- rearrangement. In the case, discharge of surplus labour was held to be retrenchment.
• Behram Pestonji Gariwala v. Union Bank of India (1991) was referred to in the case of Meenakshi Mills.

2. SBI v. Sunder Money (wider)

• In 1976, SBI v. Sunder Money led to the beginning of the broad interpretation of retrenchment, barring the
exceptions.
• After this case, Santosh Mills and Mohan Lal cases followed the above interpretation. they took a stand that when it
comes to retrenchment, a broad interpretation must be adopted.
3. Punjab Land Development and Reclamation Corporation Ltd. Presiding
Officer LC
• In 1990, a Constitution Bench in Punjab Land Development and Reclamation Corporation
Ltd. Presiding Officer LC (1990), the Bench confirmed that the term retrenchment includes any reason whatsoever
except the explicitly mentioned reasons.
• Section 25C talks about layoff compensation. It says that you can lay off a workman for a maximum of 45 days. And
beyond 45 days, you can either continue paying them the layoff compensation or if there is an agreement between the
employer and the employee, the compensation amount can be stopped.
• Beyond 45 days, if the employer decides to retrench him, the layoff compensation can be set off against the
retrenchment compensation.
•
4. RN Upadhaya v. Vinubhai M Mitre (cant set off LC against RC))
• In RN Upadhaya v. Vinubhai M Mitre (1982), it was laid down that it is not permissible to set off the layoff
compensation amount against the retrenchment compensation.
• Basic differences between retrenchment, closure and layoff:
- Retrenchment – the business is still running, only a small section of workmen are terminated from employment.
- Closure – the business is no longer running.
- Layoff – temporary termination of workmen. Short period of suspension.
• Section 25F talks about conditions precedent to retrenchment:
• The workmen should have completed atleast one year of continuous service
1. The employer must give notice to the workman atleast one month prior citing reasons for retrenchment. If the
employer wished to retrench the employee immediately, the workman is entitled to wages for a period of one
month.
2. 15 days of average wages for every year that the worker was in service. If the period is more than 6 months, it
is considered as one year for calculation
3. The appropriate government or any other authority must be given notice in the prescribed manner.

5. Umesh Saxena v. Labour Court [temporary service of 240 days

immediately before – RC paid]
• If the worker is on ad hoc basis or temporary service for 240 days immediately before retrenchment, he is entitled to
retrenchment compensation/benefits.

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 6. Sarabhai Chemicals v. Subash N Panday (1984) [RC by cheque okay
even if cheque could not be encashed on the same day = simultaneous
payment]
it was held that if retrenchment is happening, and a cheque is provided for retrenchment compensation, if the
workman is not able to encash the cheque on the same day, it is still a valid compensation. “Payment of
retrenchment
compensation by cheque along with the order of termination even though the cheque could not be encashed on the same
day, satisfied the requirement of simultaneous payment”.

7. Hari Prasad Shiv Shankar Shukla v. AD Divelkar [25F not applicable

on closed industries]
Section 25F is not applicable on closed or dead industries. This case is important because after this, the Parliament
had to intervene and Sections 25FF and 25FFF were inserted. They said that the two sections will be considered
retrenchment, without changing the definition of retrenchment.

Section 25G. Procedure for Retrenchment

• How is it decided as to who shall be retrenched? The procedure for retrenchment is provided under the section.
• Last come, first go: This is the commonly used procedure.
• But, it is not applicable in two cases –
1. If a person is not a citizen of India
2. If there is an agreement between employer and employee.
• If the management has a valid reason to not follow this, they will have to justify the same.
• Suppose there is a new person who has joined and doing good work and another old worker who has reduced
efficiency. How does an employer make a decision? If the management has a valid reason, there is no requirement to
follow the last come, first go rule.
1. Workmen v. Jorhuat Tea Co. Ltd
• In Workmen v. Jorhuat Tea Co. Ltd (1980), it was held that there can be a departure from the rule of last come,
first come, provided there are justifiable and valid grounds. The burden is on the management to prove the existence
of such grounds.

2. Swadesamitran Ltd. v. Workmen

• Swadesamitran Ltd. v. Workmen (1960) – If the employer believes that on the basis of efficiency and trust, the
older workmen is not upto the mark, this may be taken into consideration. The employer may take into account
consideration of efficiency and trust-worthy character of workmen and if he is satisfied that the person with the long
service is inefficient, unreliable, habitually irregular in discharge of duties, it would be open to the employer to
retrench his services.

Section 25H. Re-employment of Retrenched Workmen

• Re-employment of retrenched workmen

• The section provides that the person who were retrenched are given a preference or chance to be reemployed
whenever the employer decides to employ people within the establishment. This is only preference in terms of giving
a chance.
• It is only applicable on citizens of India.
• Merely preferential treatment for reemployment and not reinstatement with same wages.
1. Hari Prasad Shiv Shankar Shukla
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 Section 25FF. Compensation in case of Transfer of Undertakings

• If there is a transfer of ownership, the workmen are entitled to notice and compensation.
• The compensation to be given, must satisfy certain conditions:
1. The transfer should have happened either by agreement or operation of law.
2. The worker should have completed one year of continuous service, immediately before transfer of
undertaking.
• If there two conditions are fulfilled, the worker will be entitled to notice and compensation as if they were retrenched
under Section 25F. The workman is given retrenchment-like benefits.
• There are certain cases where such compensation is not given:
(a) the service of the workman has not been interrupted by such transfer;
(b) the terms and conditions of service applicable to the workman after such transfer are not in any way less
favourable to the workman than those applicable to him immediately before the transfer; and
(c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in
the event of his retrenchment, compensation on the basis that his service has been continuous and has not been
interrupted by the transfer.
• The service was not interrupted, the legal liability on new employer to pay for subsequent retrenchment and the terms
and conditions of employment are similar – in these three cases, compensation is not provided.
• Suppose A, the previous employer, was transferred to B, the subsequent employer, based upon an agreement. If a
workman, who has completed one year of service, is retrenched after the transfer, who pays the retrenchment
benefits? The old employer will give the compensation, if there is no such terms in the transfer agreement itself.

Section 25FFA. Sixty Days’ Notice to be Given of Intention to Close Down

any Undertaking

• This talks about 60 days-notice on occasion of closure of undertaking.

• This talks about the 60 days-notice in case the person has intention to close the undertaking. The notice must be given
to the appropriate government stating the reasons for closure, in the prescribed manner.
• This notice will not apply to certain organizations:
1. Where there are less than 50 workers or less than 50 workers on average in the preceding 12 months; and
2. The establishment is in the business of constructing buildings, dams, bridges, roads, canals or for any
other construction work or project
• In case of exceptional circumstances, any establishment may be exempted from application of this provisions –
accident in the undertaking or death of the employer or the like. This cannot be done for a definite period of time.
• If any establishment violated the provision, Section 30A comes into picture. It says that there will either be 6 months
of imprisonment or fine of Rs. 5000, or both.
Section 30A. Penalty for closure without notice.—Any employer who closes down any undertaking without
complying with the provisions of section 25FFA shall be punishable with imprisonment for a term which
may extend to six months, or with fine which may extend to five thousand rupees, or with both.

Chapter VA

Section 25F

• Conditions precedent to retrenchment.

• For any retrenchment to be legal, there are three conditions to be met:
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 1. One year continuous service
2. One month prior notice to the workmen stating the reasons why he/she is being retrenched. If the employer
wants to retrench the workmen immediately, one month prior notice may not be possible, in such cases, one
month wages must be paid in lieu of the notice.
3. Retrenchment compensation – the amount is average pay of 15 days for every completed year of service. If
the workman has completed more than 6 months, that time is also incorporated in the time period
calculation.
4. Notice to the appropriate government
• Layoff compensation is provided under section 25C. If the layoff happens for more than 45 days, the employer may
retrench the worker. Once the workman is retrenched, section 25F comes into picture. Before meeting the 3 conditions
under section 25F, the worker should have completed one year on continuous service. It is then considered a valid
retrenchment.

Section 25G. Procedure for Retrenchment

• Provides for the procedure for retrenchment.

• The commonly followed procedure is ‘last come, first go’. However, the management must depart from this. The
responsibility is of the management to prove the same.
• This procedure is not applicable on workers who are not citizens of India and if there is some agreement between
the employer and the workman which determines the terms and conditions of employment.

Section 25FFF. Compensation to Workmen in case of Closing Down of Undertaking [Non unavoidable - SFLM]
• The workman should have completed one year of continuous service
• This section provides the compensation that workmen will receive in case of closure of undertaking.
This includes notice and 15 days of average pay.
Closure – unavoidable circumstances – not exceed 3 months average pay
• In certain unavoidable circumstances, if closure takes place, the maximum compensation to the worker should not
exceed average pay of 3 months.
• There are certain instances that cannot be considered as unavoidable circumstances:
1. Accumulation of undisposed stocks
2. Financial difficulties, including financial losses.
3. Expiry of period of lease or license
4. In case of mining operations, the minerals have exhausted.
• If the employer was aware of the above 4 conditions, he wouldn’t have had to close down his undertaking.
1. Rameshwar Das v. State of Haryana (1987)
The expression ‘unavoidable circumstances beyond the control of the employer’ comprehends a situation of continuous
industrial strife, strikes, lawlessness, violence and negligence by workmen over a course of years resulting in heavy loss.
Any situation with continuous chaos for a substantial period of time and the employer has incurred heavy losses, this
situation is interpreted as unavoidable circumstances beyond the control of the employer.

• In case of establishments which are involved in the construction of dams, roads, bridges and similar projects, if
the undertaking is closed within 2 years, compensation is not given. In case it continues beyond 2 years, and then
closure happens, the benefits are given as if the workmen were retrenched under section 25F.

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(layoff, definition of retrenchment, compensation in case of transfer and closure) Chapter VA is
only applicable on certain kinds of establishments:
Chapter VB talks about lay-off, retrenchment and closure in larger undertakings.
The number has been increased from 100 in the new Labour Codes. The Government has also decided to set up a
retrenchment fund, that the employers will have to contribute towards.

• Section 25FFF – if there are certain unavoidable circumstances beyond the control of the employer, the maximum
compensation shall not exceed 3 months of wages.

•
Chapter VB. Special Provisions Relating to Lay-Off, Retrenchment and Closure in Certain Establishments

Section 25K. Application of Chapter VB

• Chapter VB is applicable on industries having not less than 100 workmen in the preceding 12 months. The
establishment should not be of seasonal nature or irregular work. The decision of appropriate government regarding
seasonal nature or irregular work is final.
• States have amended this provision according to their needs and ground situation. In some cases, they have increased
the number of employees from 100 to 300.
• In the New Labour Codes, the number of employees has been changed to 300.

Section 25M. Prohibition of Lay-Off

• Section 2(kkk) defines layoff as “the failure, refusal or inability of an employer on account of shortage of coal,
power or raw materials or the accumulation of stocks or the break- down of machinery or natural calamity or
for any other connected reason, to give employment to a workman whose name is borne on the muster rolls of his
industrial establishment and who has not been retrenched.”
• Layoff is the temporary termination of employment.
• The employee must be present on the muster roll and must not be retrenched.
• In order to layoff somebody on the muster roll of the establishment, there are certain conditions
that must be followed by the employer:
1. Natural calamity
2. Shortage of power
3. In case of mines, fires, explosion, excess of inflammable gas or flood.
• An employee cannot layoff a workman, unless the reasons are for the above mentioned 3.
• The employer is required to seek the permission of the appropriate Government, stating the reasons to layoff the
worker. A copy of the same must be served to the workman.
• After receiving the application, the appropriate Government may:
1. Conduct necessary inquiry
2. Shall give reasonable opportunity of being heard to the employer, the worker and interested parties
• After considering all the factors, they may pass an order in writing. They can either grant the permission or
refuse the permission.
• A copy of the order is shared with the employer and the workman.
• If there is no communication for a period of 60 days regarding whether the permission was granted or refused, it is
deemed to be granted.

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 • The employer must seek permission from the appropriate Government, stating the reasons for layoff. A copy of the
same must be provided to the employer as well.
• The appropriate government will make the appropriate inquiry. The employer, the employee and all interested parties
are allowed to represent their interests. After hearing all parties, the appropriate Government takes a decision.
• If within 60 days, there is no response from the side of the appropriate Government, it is considered as deemed
permission.
• The decision of the appropriate Government is final and binding on all parties and shall remain in force for 1 year.
• The appropriate Government by its own motion or the employer/employee by way of application, they can either
review their decision or refer it to the Tribunal. The Tribunal is supposed to pass the award within 30 days.
Two cases:

A. Application not filed

B. Refusal of permission
• If they still move ahead with the layoff, it is not lawful and the employee will be entitled to all the benefits. In certain,
the employer can be exempted from seeking permission from the appropriate Government. The two exceptional
circumstances are:
1. Accident in the establishment
2. Death of the employer
• The appropriate Government may exempt permission for an appropriate period of time.
• If the permission has been granted and the employer is laying off the workman, the workman is entitled to
compensation under Section 25C. The provision provided for 50% the sum of basic wages and dearness allowance of
the worker who is being laid off. the worker must not be a badli or casual worker. If the employer offers alternative
employment to the workmen, the worker will not be entitled to layoff compensation.
1. Ashok Kumar Jain v. State of Bihar (1999)

- Statutory permission has to be taken before layoff.

2. Papanasam Labour Union v. Madura Coats Ltd. (1997)

- Layoff without permission or despite refusal of permission is deemed to be illegal.

Not deemed layoff:

1. Alternative employment – same wages, same conditions, within such distance as not involve hardship, no
special skill or experience

Section 25N. Conditions Precedent to Retrenchment of Workmen

• One of the conditions is that the worker should have completed atleast one year of continuous service.
• In this case, the workman has to be given 3 months of notice indicating the reason for retrenchment
• The employer will have to seek permission from the appropriate Government or authority.
• When the employer seeks permission, he is supposed to state the reasons as well as serve a copy of the same to the
workman.
• After the appropriate Government receives the application:
1. May conduct a necessary inquiry

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 2. Give reasonable opportunity to all parties to be heard
3. After judging all the factors, they may either grant the permission or refuse the permission. A copy of the decision
is shared with the employer and the workman.
• If not communicated within 60 days, the permission is deemed to have been granted. The decision is binding on all
parties for 1 year. The appropriate Government by either its own motion or by an application may review its decision
or refer the same to the Tribunal. The Tribunal must decide within 30 days.
• If the employer proceeds with the retrenchment without valid permission, it shall deemed to be unlawful
retrenchment.
• The employer may be exempted from seeking permission for a specific period of time.
• The compensatory amount is 15 days average pay for every year of continuous service. Any period more than one
year is also computed.

Section 25O. Procedure for Closing Down an Undertaking

• Prior permission from appropriate Government atleast 90 days before the intended closure stating clearly the reasons
for retrenchment.
• The provision is not applicable to an undertaking set up for the construction of buildings, bridges, roads, canals,
dams or for other construction work.
• The appropriate Government may conduct a necessary inquiry and give all interested parties reasonable opportunity
of being heard. After judging all factors, they may either grant permission or refuse. They are to share a copy of the
order to the employer and the workmen. If they fail to decide within 60 days, it is deemed to have given permission.
• The appropriate Government may, either on its own motion or on the application made by the employer or any
workman, review its order granting or refusing to grant permission under sub- section (2) or refer the matter to a
Tribunal for adjudication: Provided that where a reference has been made to a Tribunal under this sub-section, it shall
pass an award within a period of thirty days from the date of such reference.
1. SG Chemicals & Dyes Trading Employees Union v. Management (1986)

- Where more than one undertaking constitutes a single industrial establishment and employ not less than 100
workmen, a closure of even one of them employing less than 100 workmen will attract section 25O instead of
section 25FF.

Section 25Q. Penalty for layoff and retrenchment without previous permission

• If the employer wants to layoff or retrench workmen, but haven’t sought permission from the appropriate
Government, a certain permission is prescribed. 25M or 25N violated – onemonth imprisonment and 1000 rupees fine

Section 25R. Penalty for Closure

• When the employer has violated section 25O, Rs. 5000 fine or 6 months imprisonment or both.

CASE SUMMARIES UNDER CC

1. Workmen of Dewan Tea-Estate v Their Management AIR 1964
2. Workmen of Firestone Tyre and Rubber Co. v The Firestone Tyre and
Rubber Co. (1976)
3. Associated Cement Companies v Their Workmen AIR 1960

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 STRIKE AND LOCKOUT
Lockout – 2(l): temporary closing of a place of employment or suspension of work or refusal by an employer to continue to
employ any number of persons employed by him

Lockout - Kair, Chavan, Express, ShriRam, Laxmi, BWS, Cera

1. Management of Kairbetta Estate v. Rajamanickam: conflict, injuries, closure, not because of reasons under
2(kkk). Hence, not a layoff so no layoff compensation. This is a lockout.
2. Gen Labour Union (Red Flag), Bombay v. Chavan : 3 elements of lockout. temporary cessation, demand, if
demand accepted, intention to reopen. Imposing and continuing a lockout that is deemed to be illegal under the act is
an unfair labour practice
3. Express Newspaper v. Workmen: place not business
4. Shreeram Silk Mills Ltd v. Workmen: close of business and termination of services is not lockout.
5. Shri Ramchandran Spinning Mills v. State of Madras : But, for a lockout, there has to be a temporary closure.
Ingredients:
a. Temporary closure of work
b. Suspension of work
c. Motivated by some coercion – the employer is forced to have this closure.
d. Related to an industrial establishment
e. There should be an existence of ID
6. Laxmidas Sugar Mills Ltd. v. Pandit Ram Swaroop : 76 workmen went on a strike in support of a co-worker. The
management took initiative to resolve the issue but the workmen didn’t listen. The SC gave decision in favour of the
company by saying that the conduct of the company did not meet the definition of a lockout and even if we consider
that this was a lockout, it was in consequence of an illegal strike.
7. Bangalore Water Supply v. A. Rajappa: talking about the rights of the employees. It has expanded the horizon of
the term – ‘industry’. Here, a group of employees were employed by the BWSSeverageBoard and they were fined on
charges of misconduct. Because of which petition was filed under the labour court saying that the penalty imposed on
them was without complying the principles of natural justice so the board raised a preliminary objection saying that
they do not fit in the definition of industry. Herein, SC says that the term industry has to be expanded and the board
would come under the definition of industry. The court said that lockout can be conducted but it is not an absolute
right, since it is subjected to restrictions, it is an implied right that arises from the right to hire and fire the workers.
The workers are entitled to a reasonable notice and also an opportunity to negotiate.
8. Cera Sanitaryware LTd v. State of Gujarat 2022

A dispute arose because there were changes in the incentive schemes. The union called for multiple strikes in 2020. The
company made efforts to call off the strike. In response to this, the union mentioned that the company declared a lockout. Guj
HC observed that the efforts made by the employers, and issuing notice, in no sense amounted to a lockout. It was in
accordance with the law. The workers were not prevented from entering into the premises of the company.

Difference between Lay-off and Lock-out

1. Lay-off, employer refuses to give employment due to some specified reasons. In Lockout there is a deliberate closure
of place of business and the employer locks out the workers not due to any such reasons.
2. In layoff the business continues while in the case of lockout the place of business is closed.
3. If layoff is legal then employer has to pay compensation under section 25C, while in the case of lock-out till the point
it is legal there is no wages or compensation.
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 4. Layoff is the result of trade reasons and lockout is a means of collective bargaining by employer like strike being
used by workmen.
5. Layoff is not subject to restrictions and penalties but lockout s subjected to restrictions and penalties.
6. However, both layoff and lockout are both of temporary nature, in both the contract of employment is not terminated
rather it is in temporary suspension.

STRIKE: 2(q), cessation of work, acting in combination or a concerted refusal or a refusal under a common understanding
to continue to work or to accept employment.

STRIKE - HUL, SBUN, PNB, BS, Rv.IMC, PepSM, Rv.R (absence), DJ

(even short stoppage), KP
TYPES OF STRIKE

The main object of the ID Act is to provide alternative mechanisms then to go on strike.

Strike is only a last resort weapon and therefore it must be sparingly used.

The intention behind the enactment of the ID Act is to overcome the defects of the Trade Unions Act. ID act provides the
legal right to strike but it has to be used as a last resort.

1. Hindustan Lever Ltd v. Its Workmen– Desai J. Peace and harmony in production being the demand of the time, it
is wise to resort to arbitration and a necessary corollary to avoid trial which is wasteful from a national interest point
of view. Govt ensures that the preliminary stages are resorted to first before approaching the court.
2. Syndicate Bank v. K Umesh Nayak – Sawant J. defines a strike as a weapon, it was evolved by workers as a form
of direct action during the long struggle with the employer. It involves the withdrawal of labor, disrupting production,
and running of the enterprise.
3. PNB LTD. v. All India PNB Employee’s Federation: Sit down, Stay in, Pen down or pool down
4. Bharat Sugar mills Ltd. v. Jai Singh : go slow is not a strike but a serious misconduct more harmful than strike.
Sasa Musa Sugar Mills Ltd v. Shobrati Khan
5. Ramalingam v. Indian Metallurgical Corp (IMC) Madras : Sympathetic strike. For another employer, this
employer is not involved so disciplinary action allowed.
6. Pepariach Sugar Mills Ltd. v. Workmen: Hunger Strike. Depends – no cessation of work then no strike.
7. Ramswaroop v. Rex: Not a strike? Mere absence. Show evidence that absence was a concerted effort to refuse to do
work.
8. Tisco v. Workmen: work on substituted holiday – refusal – not strike
9. State of Bihar v. Devdas Jha, Patiala Cement Company v. Workmen: even short stoppage can be strike, duration
is immaterial.
10. Kameshwar Prasad v State of Bihar: strike is a legal right of workers

1. Stoppage of work
2. Refusal to work for the employer.
3. Demand can be for higher wages
4. Employers listen more carefully.

Causes of strike

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 1. Wrongful discharge or dismissal
2. Dissatisfaction with the company’s policy
3. Salary, increments
4. Withdrawal of any concession or privilege
5. Rest intervals, holidays, hours of work

Kinds of strike

1. General Strike – strike by all or most of the union members in a region or industry, purpose is to force the demands
common to all the workers. Intends to create political pressure on ruling govt rather than employers. It can be an
extension of a sympathetic strike to express generalised protest by workers.
2. Sit-down strike – Workers are not absent from their place of work; they just keep control over the production facility
but do not work. Also known as pen-down strike or tool down strike.
3. Slow down strike – The purpose is not to stop the work but to deliberately slow down the process of production, in
order to cause loss. No cessation of work but pretence of being involved in work.

Legal Status of Strike –

Sec 22 prohibits strikes in public utility services.

Sec 23 states that generally stress is prohibited in any industrial establishment. Sec 22 and 23 are making strikes illegal. But
under the situations covered by section 24, strikes won’t be illegal.

Illegal –

1. If it violates the contract of employment

2. If it occurs in public utility services
3. If the pre-requisite i.e., giving 14 days of prior notice is not fulfilled.
4. If the strike begins during the award or settlement period. If matter is referred by govt then during that period there
shall not be any strike.
5. If it begins during or within 7 days of completing conciliation proceedings
6. If it begins during or within 2 months of completing adjudication.

Legal –

Serving a notice is the first step.

After this and the expiry of 14 days, if the employer has failed to respond then workers can go on strike. This is when strikes
become legal.

After the expiry of the notice, you have 6 weeks to go on strike. After a passing of 6 weeks, you cannot go on strike. [for
public utility services]

Section 22 –

No person employed in a public utility service shall go on strike in breach of contract

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 1. without giving to the employer notice of strike, as hereinafter provided, within 6 weeks before striking
2. within fourteen days of giving such notice; or
3. before the expiry of the date of strike specified in any such notice as aforesaid; or
4. during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion
of such proceedings.

Other than a public utility service, there is no time limit like 6 weeks in other industries.

Section 23 – Prohibitions

No workman who is employed in any industrial establishment shall go on strike in breach of contract and no employer of any
such workman shall declare a lock-out.

a) during the pendency of conciliation proceedings before a Board and seven days after the conclusion of such
proceedings;
b) during the pendency of proceedings before 1 [a Labour Court, Tribunal or National Tribunal] and two months after
the conclusion of such proceedings;

(bb) during the pendency of arbitration proceedings before an arbitrator and two months after the conclusion of such
proceedings, where a notification has been issued under sub-section (3A) of section 10A; or]

c) during any period in which a settlement or award is in operation, in respect of any of the matters covered by the
settlement or award

Section 24. Illegal strikes and lock-outs.- [3 points]

(1) A strike or a lock-out shall be illegal if-

(i) it is commenced or declared in contravention of Section 22 or Section 23; or
(ii) it is continued in contravention of an order made under sub-section (3) of Section 10 or sub-section (4-A) of
Section 10-A
(2) Where a strike or lock-out in pursuance of an industrial dispute has already commenced and is in existence at the time
of the reference of the dispute to a Board, an arbitrator, a Labour Court, Tribunal or National Tribunal, the
continuance of such strike or lock-out shall not be deemed to be illegal, provided that such strike or lock-out was not
at its commencement in contravention of the provisions of this Act or the continuance thereof was not prohibited
under sub-section (3) of Sec.10 or sub- section 4(A) of Section 10-A.
(3) A lock-out declared in consequence of an illegal strike or a strike declared in consequence of an illegal lock-out shall
not be deemed to be illegal.

If a strike is illegal and in response to that there is a lockout, then that would be legal. If a strike is legal and in response to
that there is a lockout, then that would be illegal.

Consequences of Illegal Strike

1. Penalty – Under section 26, 27, 28, 29, 30, 30A, 31 [section 26-31]
2. Disciplinary action
3. Wage cut
4. Dismissal
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SANDEEP DESAI: RIGHT TO STRIKE: A CONCEPTUAL AND CONTEXTUAL ANATHEMA
T.K. Rangarajan v. State of T.N.: no fundamental right to strike, also not a legal or a moral right to strike. Not a precedent.
AIBEA v. National Industrial Tribunal – legal right to strike but not a fundamental right. Corollary would be employer’s
right to lockout which is absurd. Justice ayanggar observed art 19 +26, 29, 30 - associations and unions and confined to
citizens individually. Conventions 151, 98, 154 of ILO Convention (different countries have adopted various legislations). SC
has said that it is a legal right but not a fundamental right
Reiterated in Kameshwar Prasad v. State of Bihar and Radhey Shyam v. Post Master General.

 Supreme Court in Communist Party of India (M) v. Bharat Kumar, 51 while approving Bharat Kumar K.
Palicha v. State of Kerala, held thus: "There cannot be any doubt that the fundamental rights of the people as a
whole cannot be subservient to the claim of fundamental right of an individual or only a section of the people. It is on
the basis of this distinction that the high court has rightly concluded that there cannot be any right to call or enforce a
'bundh' which interferes with the exercise of the fundamental freedoms of other citizens, in addition to causing
national loss in many ways..."
 VR Singh v. UOI: Justice Ahmedi says that trade unions with sufficient men are able to bargain more effectively
with the management. The bargaining strength would be considerably reduced if there are no other methods.
 Gujarat Steel Tubes v. Majdoor Sabha: Justice Bhagwati says that right to strike is integral to collective
bargaining and this is recognised by jurisprudence.
 Kairbitta Estate v. Rajamanickam (1960): Gajendragadkar said in the struggle between capital and labour, the
weapon of strike is available to labour and is often used as is the weapon of lockout available to employer and can be
used by him.

Conventions 151, 98, 154 of ILO Convention (different countries have adopted various legislations).

Art 8 of ICESCR: state parties should ensure right to strike is exercised in accordance with laws of particular country

Art 2(1): achieve progressively rights recognized-- all appropriate means. India is bound to provide for the right to strike.
These should not be read casually as done in TK Ranjarajan case. Blanket ban on right to strike violates this.

ILO Conventions

 Convention No. 87 (freedom of association)

 Convention No. 98 (right to organise and collectively bargain)
 Convention No.154 (collective bargaining convention)

Something related to international conventions.

India is a founding member of ILO

Directive principles in the Indian Constitution

Since India is a member of ILO, irrespective of whether it has ratified these conventions, it has to implement these
conventions in its territory. India is a member of ILO since 1991- even if members have not ratified these conventions, they
have to implement these by virtue of their membership and recognize these as fundamental rights, in tune with Article 48 and
51(c) of DPSP [respect international treaties]. Article 38- the principles laid down under DPSP are fundamental to the
governance of the country.

1. In Vishaka v. State of Rajasthan, any international convention not inconsistent with fundamental rights and in
harmony with the constitution- Article 253 read with entry 14 of Union List of Schedule VII. Any international
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 convention that is not inconsistent with the FRs and in harmony with its spirit must be read within the constitution,
Art 51(c).
2. In PUDR v. UOI- The Court followed the ICCPR, ICESCR, UDHR to expand the ambit of Article 21.
3. LIC v. Consumer Education and Research Centre – FR are subject to directives enshrined in Part 4 and UDHR
and other international treaties, right to strike as contemplated by these conventions and covenants, they have in some
or other way provided for this right.
4. Ex-captain Harish Uppal v. UOI – Advocates have no right to strike. In the rarest of rare cases where the dignity,
integrity and independence of the bar are at strike then the courts may ignore it.
5. Bharat Kumar K Palicha v. State of Kerala – Justice Balasubramanian in this case, is talking about the term
Bandh/Bundh. In bandh, the entire establishment and premises is locked out. In strike establishment is open, just the
employees continuing the strike in absenteeism. Bandh is a Hindi word meaning closed or locked, the expression
conveys the idea that everything has to be closed or locked. Therefore, when the organisers call for a bandh then they
expect all the activities to come to a stoppage.

MODULE VI: DISPUTE RESOLUTION PROCESS

1.“Appropriate Government”

2. Steel Authority of India Ltd. case (refer

CA2 notes)

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 MODULE VIII: OCCUPATIONAL SAFETY, CONTRACT LABOUR, BONDED LABOUR, INTERSTATE
MIGRANTS
→ The Factories Act, 1948:
1. Health safety and working conditions
2. Welfare measure
3. Hours of work and leave policy
4. Special provision relating to employment of women
→ The Contract Labour (Regulation and Abolition) Act, 1970;
→ The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979;
→ The Bonded Labour System (Abolition) Act, 1976 Readings:
1. ANIBEL FERUS-COMELO, Migration and Precariousness: Two Sides of the Contract Labour Coin,
Economic and Political Weekly, SEPTEMBER 6, 2014, Vol. 49, No. 36(SEPTEMBER 6, 2014), pp. 39-47.
2. Suresh C. Srivastava, Impact Of The Supreme Court Decision On Contract Labour: (Steel Authority of
India Ltd. v. National Union Water Front Workers) Journal of the Indian Law Institute, October-
December 2001, Vol. 43, No. 4 (October- December 2001), pp. 531-549.
3. Thomas Paul, Contract Labour: Liability of Principal Employer, Journal of the Indian Law Institute,
APRIL-DECEMBER 1997, Vol. 39, No. 2/4 APRIL-
DECEMBER 1997), pp. 465-469

(all topics; all readings; all cases)

The Factories Act, 1948

• The Act came into force in 1981.

• The purpose was to regulate the working conditions of workers.
• It laid down various provisions relating to health, safety, working conditions, etc.
• India was slowly moving towards industrialization and capitalization was emerging. The workers who were employed
in industries, there were no specific provisions for their well-being. In 1981, the Act contained many ambiguities.
• The Act was amended many times, 1891, 1911, 1934 and 1948. The 1948 Act is more comprehensive than the
previous ones.
• It talked about minimum wages for the first time, leave with pay, etc.
• The prior Acts before 1948 were based on the provisions of the Factories Act of the UK. Similar provisions were
followed. In 1937, the Factories Act of the UK was adopted.
• Earlier, the terms ‘factory’ and ‘industry’ were used interchangeably without distinction.
• The term ‘industrialization’ talks about the continuous process of the development of the economy. Factory is a place
where all equipment is kept and the production of goods and services takes place. In the prior Acts, there was no
difference between the terms. Hence, a need for separate definition was felt.
• The Bhopal Gas Tragedy in 1980 prompted people to think about pollution and other industrial hazards. Therefore, it
made the Government necessary to take important steps to facilitate amendments in this Act. Prior to this, the
provisions only talk about welfare and safety measures. After this tragedy, the implementation of the safety measures
were noticed to not be enough.
• After 1984, they incorporated multiple parameters to define factories. The important features are in terms of guarding
of machines, health and cleanliness, dispensaries, first aid drinking water, washing utilities, lunch rooms and other
special provisions, in places where more than 500 workmen are employed. Where 50+ women are working, there
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 shall be a retch?? in such industries.
• The important problem of the Factories Act is the implementation. India became a member of ILO and other
Conventions. In 1919, the ILO was formed and India was one of the first countries to join. It incorporated the
principles in the Constitution and different enactments. There were still implementation issues with the Act. In 1987,
important amendments were introduced.
• There was a slow impact of the industrialization in India.
• The first cotton textiles factory was set up in Bombay in 1854. Backdrop for the Revolt of 1857. The pace accelerated
by 1870, many industries set up in Nagpur, Kanpur, Madras. The first steel and metal industry. Spinning wheels in
1890. In 1881, there were 5000 power houses in Bengal. Several other leather and tanneries were set up in Kanpur
since 1891.
• Women and child labour was not specifically addressed in the Act. The excessive hours of work were also not
incorporated. 30 minutes were provided to women for lunch and rest. Special provisions were provided for child
labour.
• By the year 1850, there was a great urge to have labour protection enactments. The working conditions of children
and women was not good. Therefore, in 1878, there was Shashipad Bannerjee who laid the foundation of Bara
Bazaar Organization. For the first time, there was a strike in 1877 for lack of welfare legislations.
• 1760s-1820s witnessed labour agitation in UK. A larger impact was felt in Africa and India. A major transition in
the setting up of factories. There were different techniques of production in farmingand industries for production of
goods and services. The steam engine for railways was introduced. Production of electricity and windmills and
construction of dams. More focus was on the production of electricity. In the process of industrialization, education
was also emerging.
• The importance of capital was noticed. All the power of generating income in accumulated in a few hands in a
capitalist economy. They decide on the distribution of goods and services. it is just opposite to social welfare.
• With the advent of industrialization, we saw the emergence of two classes – capitalist accumulating income and poor
and marginalised working class. The problem here was that the working class was uneducated, untrained and
unorganized. They weren’t paid adequate wages. Hence, education was important. The literacy rates in India was less.
With the efforts of different philanthropists and workers, and measures taken by Annie Besant and so on, had a very
strong impact against the British-centric legislations.
• In 1881 Act was hence inadequate.
• Narain Meghaji Lokhande, a disciple of Jyotibai Phule, emerged as the first labour leader in India. He devoted his
life for the protection of labourers in the country. He presented a petition to the Labor Commission in 1884. An Act
was passed in 1891 on the basis of the recommendation of the commission. With this help, the definition of factory
was amended to include premises where 50 or more workmen were employed. Here, the local government of the State
was empowered to extend the application of the Act where 20 or more workmen worked. Women were provided
lesser working hours with rest time.
• The Act was amended from time to time. A major event around this time were the World Wars. Labourers were
forced to participate in the wars as soldiers leading to loss in income and livelihood. The First World War and the
Russian Revolution of 1970 impacted the labour movements. ILO set up in 1919. The Factories Act was amended
form time to time. They tried to incorporate welfare provisions here.
• Section 2(m) of the Factories Act defines factory. It shall be involved in the manufacturing process that leads to
production. But the term factory doesn’t includes mines because there is a separate Act, Mines Act, 1852. It would
also not include railway running sheds, any hotels, restaurant because these eating, leisure places are not involved in
manufacturing process.
• Manufacturing process is defined under Section 2(k).
• Section 2(l) talks about worker. It doesn’t incorporate members of the armed forces.

Occupier

• Section 2(n) defines the same

• Section 6 also talks about occupier
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• The occupier makes an application to the government, or the chief inspector with all the formalities under the Act, for
the approval of the factory. It is sent by registered post.
• There is a 3 months limitation period.
• If the application is rejected, it shall be liable to be appealed to the government within 30 days of the date of rejection.
• Section 7 deals with notice by the occupier.

1. Notice by occupier.—

(1) The occupier shall, at least 15 days before he begins to occupy or use any premises as a factory, send to the Chief
Inspector a written notice containing—
(a) the name and situation of the factory;

(b) the name and address of the occupier;

(bb) the name and address of the owner of the premises or building (including the precincts thereof) referred to in
section 93;
(c) the address to which communications relating to the factory may be sent;

(d) the nature of the manufacturing process—

(i) carried on in the factory during the last twelve months in the case of factories in existence on the date of the
commencement of this Act; and
(ii) to be carried on in the factory during the next twelve months in the case of all factories;
(e) the total rated horse power installed or to be installed in the factory, which shall not include the rated horse power of
any separate stand-by plant;
(f) the name of the manager of the factory for the purposes of this Act;
(g) the number of workers likely to be employed in the factory;
(h) the average number of workers per day employed during the last twelve months in the case of a factory in existence
on the date of the commencement of this Act; (i) such other particulars as may be prescribed.

• The notice would contain certain particulars.

• It must be furnished before the Chief Inspector.
• General duties of occupier under Section 7A
1. The very purpose of the Act – ensure health, safety and welfare of all the workers
2. The duty of every occupier to prepare a written statement with respect to policy
3. The statement and revision pertaining to the statement
• There shall also be an inspecting staff appointed by the State Government.
• The District Magistrate is the Inspector of the District.
• Every inspector is deemed to be a public servant. The powers of the inspectors are prescribed under section 9 of the
Act.
Section 9. Powers of Inspectors.—Subject to any rules made in this behalf, an Inspector may, within the local limits for
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which he is appointed,—
(a) enter, with such assistants, being persons in the service of the Government, or any local or other public authority,
1[or with an expert] as he thinks fit, any place which is used, or which he has reason to believe is used, as a factory;
2[(b) make examination of the premises, plant, machinery, article or substance;

(c) inquire into any accident or dangerous occurrence, whether resulting in bodily injury, disability or not, and take on
the spot or otherwise statements of any person which he may consider necessary for such inquiry;
(d) require the production of any prescribed register or any other document relating to the factory;
(e) seize, or take copies of, any register, record or other document or any portion thereof, as he may consider necessary
in respect of any offence under this Act, which he has reason to believe, has been committed;
(f) direct the occupier that any premises or any part thereof, or anything lying therein, shall be left undisturbed (whether
generally or in particular respects) for so long as is necessary for the purpose of any examination under clause (b);
(g) take measurements and photographs and make such recordings as he considers necessary for the purpose of any
examination under clause (b), taking with him any necessary instrument or equipment;
(h) in case of any article or substance found in any premises, being an article or substance which appears to him as
having caused or is likely to cause danger to the health or safety of the workers, direct it to be dismantled or subject it to
any process or test (but not so as to damage or destroy it unless the same is, in the circumstances necessary, for
carrying out the purposes of this Act), and take possession of any such article or substance or a part thereof, and detain it
for so long as is necessary for such examination;
(i) exercise such other powers as may be prescribed.

• Because the DM is also vested with judicial powers, he is authorized here to make inspection and the production of
documents and seizure of articles and documents
• Certifying surgeon is provided under section 10
• Qualified medical practitioners
• The duties are provided under Section 10(4)
• Health provisions are given under section 11 to 20 of the Act
• They discuss cleanliness (section 11), disposal of wastes and effluents (section 12), ventilation and temperature
(section 13), dust and fume (section 14), artificial humidification (section 15) , overcrowding (section 16), lighting
(section 17), drinking water (section 18), latrines and urinals (section 19)
• “at least 14.2 cubic metres of space for every worker” – no account shall be taken of any space which is more than 4.2
metres above the level of the floor of the room. This is in terms of circumference and not height.
• Safety measures are dealt with under section 21 to 41
• Section 21 talks about proper fencing among the dangerous parts of the machinery to avoid mishaps.
• Section 22 deals with machinery in motion. Women are not allowed to be employed here
• Section 23 restricts the employment of young persons on dangerous machines. Young persons is also defined under
the Act.
• If a new machine is to be installed, it has to carefully be grounded in the premises. It should be guarded in such a way
that it shall not move at any cost. Only a specialist must be involved in the process of installation.
• Section 28 deals with hoists and lifts.
• Under this Act, the State Government has certain powers to make rules under section 41.
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• Welfare is from section 42 to 50 [Chapter V]
• The entire Act can be summed up as:

Health Sections 11-20

Safety Sections 21-42
Welfare Section 42-50

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• Under welfare, multiple issues are taken care of.
• Section 49 – Welfare Officers – for every 500 workers, there shall be a Welfare Officer to take care of their welfare
officers
• There shall be a creches where there are 30 or more female workers
• Restrooms, shelter and lunch rooms for every 150 workmen
• For canteen and drinking water facility, every 250 workers
• There shall be a lady Welfare Officer, if there are women workers in large numbers.
• Chapter VI talks about working hours for adults.
• The occupier shall make proper rules as to it.
• The working hours cannot be more than 48 hours of the week
• The first day of a week is Sunday, and shall be a holiday.
• No adult shall be made to work more than 9 hours a day.
• They can work continuously for 5 hours and then are entitled to rest for half an hour.
• For night shifts, if the shift extends beyond midnight, then he shall be liable to have one holiday of continuous 24
hours.
• There shall be no overlap of shifts.
• If any worker is working overtime, there shall be provisions for extra wages.
• A register of adult workers shall be maintained by the Manager of the group and the register shall be available for
inspection at all times
• Chapter VII deals with employment of young persons
• Certificate of fitness is issued by the certifying surgeon. This certificate is valid for 12 months only, subject to review.
• Section 71 talks about 4 and half hours as working hours of children
• Section 75 deals with power to require medical examination.
• Sections 92 to 106
• Any minor or fatal accident which occurs in a factory has to be immediately reported in prescribed form of Form 18 –
within 72 hrs of accident. In case of fatal accidents, it has to be reported within 12 hrs to Inspector of factory, DM or
Sub divisional magistrate, officer in charge of nearest police station and family/relatives of the injured.
• Section 90: Accident is required to be investigated by police to find out cause if the accident. If any fault is found on
part of occupier or employer, they will be held liable.
• Schedule 1: Industries involving hazardous processes – 29 listed – for example, fertilizer industry, rubber industry,
leather tanning industry, ferrous industry, electroplating industry, chemical industry, plastic industry, power
generation industry, drugs & pharmaceutical industry etc.
• For the industries involving hazardous processes, there are specific obligations on part of employer/occupier.
Preparation of on-site emergency plan, health & safety policy, Safety Committee, occupational health standards,
periodical staff safety audits.
• Sec 92-106 deals with penalties.
• Sec 92: General Penalty for offences - occupier and manager of the factory shall each be guilty of an offence and
punishable with imprisonment for a term which may extend to 2 [two years] or with fine which may extend to 3 [one
lakh rupees] or with both, and if the contravention is continued after conviction, with a further fine which may extend
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 to 4 [one thousand rupees] for each day on which the contravention is so continued.
• Sec 94: Enhanced penalty after previous conviction - he shall be punishable on a subsequent conviction with
imprisonment for a term which may extend to 3 years or with fine [which shall not be less than 10,000] but which
may extend to 2 lakhs rupees or with both.
• Sec 105: Cognizance of offences – No Court shall take cognizance of any offence under this Act except on complaint
by, or with the previous sanction in writing of, an Inspector [r/w S. 109 CrPC
• Sec 106: Limitation of prosecution – complaint should be made within 3 months. Can be extended to 6 months where
the offence consists of disobeying a written order made by an Inspector
• Sec 107: Appeals – manager/occupier may file - period of appeal is 30 days of service of the order.
• Sec 108: Display of notices - in English and in a language understood by the majority of the workers in the factory-
shall be displayed at some conspicuous and convenient place at or near the main entrance to the factory - shall be
maintained in a clean and legible condition.
• Sec 112: General power to make rules
• Sec 113: Powers of Centre to give directions
• Sec 115: Publication of rules
• Sec 118: Restrictions on disclosure of information
• Sec 87: Dangerous operations - The processes which are defined as dangerous – strict prohibition on employment of
women & adolescents, & also of people who are not “fit” as per certificate. Specific protective equipment & clothing;
additional welfare facilities to be provided to the workers employed. Disposal of waste – specific mechanism so that it
is not anti-environment. Factory shall be outside vicinity of city area. If any kind of poisoning or disease – notice of
same shall be served via Form 18 to the chief inspector, certifying surgeon & administrating medical officer.
• Sec 89: Notice of certain diseases.

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 The Contract Labour (Regulation and Abolition) Act, 1970 [SSPA GHM]
1. What is contract labour?

• A system of contracting or employing labours through a contract by an employer for a specific time period. The work
is assigned by a contractor, with or without the knowledge of the principal employer.
• Two important aspects:
1. The form of employment is indirect employment
2. The wages provided to the labourers are daily wages.
• All the calculations are made at the end of the month and the labourers are provided wages.
• Before the Act came into force, the system of bonded labour existed which infringed upon the fundamental and
statutory rights of such labourers. To avoid this system of bonded labour, this Act came into force in 1970.
• The major characteristics of contract labourers:
1. Poor wages
2. Lack of security
• It came into force on 10 February, 1971 to regulate the adequate functioning of CL and to limit their exploitation on
the part of the management.
• The primary objectives of the Act:
1. To prevent the exploitation of CL
2. To provide proper and habitable working conditions
3. To regulate the functioning of the Advisory Boards.
4. To lay down rules and regulations regarding establishments employing contract labour, procedure
prescribing licensing of contracts
5. To provide some penal provisions in case of infringement of any of the provisions of the Act
• Section 1(4) talks about the applicability and non-applicability of the Act. The Act is applicable:
1.Where 20 or more workmen are employed; and they have been employed for the part preceding 12 months.
2. The Act is applicable to every establishment where CL as employed.
• Section 2(b) – A workmen is deemed to be employed as CL when he is hired or in connection with such work
• Section 1 (5)
(a) It shall not apply to establishments in which work only of an intermittent or casual nature is
performed.
(b) If a question arises whether work performed in an establishment is of an intermittent or casual nature, the appropriate
Government shall decide that question after consultation with Central Board or, as the case may be, a State Board, and its
decision shall be final.
Explanation.—For the purpose of this sub-section, work performed in an establishment shall not be deemed to be of
an intermittent nature—
(i) if it was performed for more than 120 days in the preceding 12 months, or (ii) if it is of a seasonal character and is
performed for more than 60 days in a year.
If the person is employed in managerial or advisory capacity, the Act is not applicable since he is not a CL.
(i) “workman” means any person employed in or in connection with the work of any establishment to do any skilled,
semi-skilled or un-skilled manual, supervisory, technical or clerical any such person— (A) who is employed mainly
in a managerial or administrative capacity; or (B) who, being employed in a superviory capacity draws wages
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 exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by
reason of the powers vested in him, functions mainly of a managerial nature; or (C) who is an out-worker, that is to
say, a person to whom any articles or materials are given out by or on behalf of the principal employer to be made up,
cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purposes of
the trade or business of the principal employer and the process is to be carried out either in the home of the out-
worker or in some other premises, not being premises under the control and management of the principal employer.
CHAPTER II

• There is certain establishment and composition of Central and State Advisory Boards
• The functions of the Boards are to advise the Central and State Government concerning the administration of
the CL.
Section 3. Central Advisory Board

• Composition:

Section (2) The Central Board shall consist of—

(a) a Chairman to be appointed by the Central Government;

(b) the Chief Labour Commissioner (Central), ex officio;

(c) such number of members, not exceeding seventeen but not less than eleven, as the Central Government may
nominate to represent that Government, the Railways, the coal industry, the mining industry, the contractors, the
workmen and any other interests which, in the opinion of the Central Government, ought to be represented on the
Central Board. [11-17 members]
(3) The number of persons to be appointed as members from each of the categories specified in sub-section (2), the
term of office and other conditions of service of, the procedure to be followed in the discharge of their functions
by, and the manner of filling vacancies among, the members of the Central Board shall be such as may be
prescribed:
Provided that the number of members nominated to represent the workmen shall not be less than the number
of members nominated to represent the principal employers and the contractors.
Section 4. State Advisory Board

• Composition:
(2) The State Board shall consist of—
(a) a Chairman to be appointed by the State Government;
(b) the Labour Commissioner, ex officio, or in his absence any other officer nominated by the State Government
in that behalf;
(c) such number of members, not exceeding eleven but not less than nine, as the State Government may nominate
to represent that Government, the industry, the contractors, the workmen and any other interests which, in the
opinion of the State Government, ought to be represented on the State Board. [9-11 members]
(3) The number of persons to be appointed as members from each of the categories specified in sub-section (2),
the term of office and other conditions of service of, the procedure to be followed in the discharge of their
functions by, and the manner of filling vacancies among the, members of the State Board shall be such as may be
prescribed:
Provided that the number of members nominated to represent the workmen shall not be less than the number of
members nominated to represent the principal employers and the contractors.
CHAPTER III HEALTH
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 • Registration of establishments employing contract labourers provided under Section 6 and Section 7 provides for the
procedure
Section 6. Appointment of registering officers.—

The appropriate Government may, by an order notified in the Official Gazette—

(a) appoint such persons, being Gazzetted Officers of Government, as it thinks fit to be registering officers for the
purposes of this Chapter; and
(b) define the limits, within which a registering officer shall exercise the powers conferred on him by or
under this Act.
Section 7. Registration of certain establishments

(1) Every principal employer of an establishment to which this Act applies shall, within such period as the
appropriate Government may, by notification in the Official Gazette, fix in this behalf with respect to
establishments generally or with respect to any class of them, make an application to the registering officer in the
prescribed manner for registration of the establishment:
Provided that the registering officer may entertain any such application for registration after expiry of the period
fixed in this behalf, if the registering officer is satisfied that the applicant was prevented by sufficient cause from
making the application in time.
(2) If the application for registration is complete in all respects, the registering officer shall register the
establishment and issue to the principal employer of the establishment a certificate of registration containing such
particulars as may be prescribed.
Section 8. Revocation of registration in certain cases.—

If the registering officer is satisfied, either on a reference made to him in this behalf or otherwise, that the
registration of any establishment has been obtained by misrepresentation or suppression of any material fact, or
that for any other reason the registration has become useless or ineffective and, therefore, requires to be revoked,
the registering officer may, after giving an opportunity to the principal employer of the establishment to be heard
and with the previous approval of the appropriate Government, revoke the registration
CHAPTER IV

LICENSING OF CONTRACTORS

• Requirements and procedure for licensing of contractors

Section 11. Appointment of licensing officers

The appropriate Government may, by an order notified in the Official Gazette,— (a) appoint such persons, being
Gazetted Officers of Government, as it thinks fit to be licensing officers for the purposes of this Chapter; and (b)
define the limits, within which a licensing officer shall exercise the powers conferred on licensing officers by or
under this Act.
• The section provides for the powers and duties of the licensing officers. Such licensing officers act as the Gazetted
Officers.
Section 12. Grant of licences

(1) Every application for the grant of a licence under sub-section (1) of section 12 shall be made in the prescribed
form and shall contain the particulars regarding the location of the establishment, the nature of process, operation
or work for which contract labour is to be employed and such other particulars as may be prescribed.
(2) The licensing officer may make such investigation in respect of the application received under sub-section (1)
and in making any such investigation the licensing officer shall follow such procedure as may be prescribed.

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 (3) A licence granted under this Chapter shall be valid for the period specified therein and may be renewed from
time to time for such period and on payment of such fees and on such conditions as may be prescribed.
Section 14. Revocation, suspension and amendment of licences

(1) If the licensing officer is satisfied, either on a reference made to him in this behalf or otherwise, that—
(a) a licence granted under section 12 has been obtained by misrepresentation or suppression of any material fact,
or
(b) the holder of a licence has, without reasonable cause, failed to comply with the conditions subject to which the
licence has been granted or has contravened any of the provisions of this Act or the rules made thereunder,
then, without prejudice to any other penalty to which the holder of the licence may be liable under this Act, the
licensing officer may, after giving the holder of the licence an opportunity of showing cause, revoke or suspend the
licence or forfeit the sum, if any, or any portion thereof deposited as security for the due performance of the
conditions subject to which the licence has been granted.
(2) Subject to any rules that may be made in this behalf, the licensing officer may vary or amend a licence
granted under section 12.
Section 15. Appeal

(1)Any person aggrieved by an order made under section 7, section 8, section 12 or section 14 may, within thirty
days from the date on which the order is communicatedto him, prefer an appeal to an appellate officer who shall be
a person nominated in this behalf by the appropriate Government:
Provided that the appellate officer may entertain the appeal after the expiry of the said period of thirty days, if he is
satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.
(2) On receipt of an appeal under sub-section (1), the appellate officer shall, after giving the appellant an
opportunity of being heard, dispose of the appeal as expeditiously as possible.
• The appellate authority is created by the government itself.
• Payment of wages is the responsibility of the contractor to pay the required wages to each worker employed as CL
before the expiry of the period for which he is employed. Upon failure, the principal employer is liable to pay the
wages
• In the cases of CL, the wages are fixed by the Commissioner of Labour.
• The current rate of minimum wages is (find out)

CHAPTER V

WELFARE AND HEALTH OF CONTRACT LABOUR

• It is the duty of the principal employer to provide for these facilities

Section 16. Canteens.—
(1) The appropriate Government may make rules requiring that in every establishment—
(a) to which this Act applies,
(b) wherein work requiring employment of contract labour is likely to continue for such period as may be prescribed,
and
(c) wherein contract labour numbering 100 or more is ordinarily employed by a contractor, one or more canteens
shall be provided and maintained by the contractor for the use of such contract labour.
(2) Without prejudice to the generality of the foregoing power, such rules may provide for— (a) the date by which the
canteens shall be provided; (b) the number of canteens that shall be provided, and the standards in respect of
construction, accommodation, furniture and other equipment of the canteens; and (c) the foodstuffs which may be
served therein and the charges which may be made therefor.
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 Section 17. Rest-rooms.—
(1) In every place wherein contract labour is required to halt at night in connection with the work of an establishment
—
(a) to which this Act
applies, and
(b) in which work requiring employment of contract labour is likely to continue for such period as may be prescribed,
there shall be provided and maintained by the contractor for the use of the contract labour such number of rest-
rooms or such other suitable alternative accommodation within such time as may be prescribed.
(2) The rest-rooms or the alternative accommodation to be provided under sub-section (1) shall be sufficiently lighted
and ventilated and shall be maintained in a clean and comfortable condition.

Section 18. Other facilities.—It shall be the duty of every contractor employing contract labour in connection with
the work of an establishment to which this Act applies, to provide and maintain— (a) a sufficient supply of wholesome
drinking water for the contract labour at convenient places; (b) a sufficient number of latrines and urinals of the
prescribed types so situated as to be convenient and accessible to the contract labour in the establishment; and (c)
washing facilities.

Section 19. First-aid facilities.—There shall be provided and maintained by the contractor so as to be readily
accessible during all working hours a first-aid box equipped with the prescribed contents at every place where
contract labour is employed by him.
CHAPTER VI

PENALTIES AND PROCEDURE

Section 23. Contravention of provisions regarding employment of contract labour.—

• Whoever contravenes any provision of this Act or of any rules made thereunder prohibiting, restricting or regulating
the employment of contract labour, or contravenes any condition of a licence granted under this Act, shall be
punishable with imprisonment for a term which may extend to three months, or with fine which may extend to one
thousand rupees, or with both, and in the case of a continuing contravention with an additional fine which may extend
to one hundred rupees for every day during which such contravention continues after conviction for the first such
contravention.
Section 25. Offences by companies
(1) If the person committing an offence under this Act is a company, the company as well as every person in
charge of, and responsible to, the company for the conduct of its business at the time of the commission of the offence
shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves
that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission
of such offence.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a
company and it is proved that the offence has been committed with the consent or connivance of, or that the
commission of the offence is attributable to any neglect on the part of any director, manager, managing agent or any
other officer of the company, such director, manager, managing agent or such other officer shall also be deemed to
be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the
purpose of this section—
(a) “company” means any body corporate and includes a firm or other association of individuals; and
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 (b) “director”, in relation to a firm, means a partner in the firm.

Section 26. Cognizance of offences

No court shall take cognizance of any offence under this Act except on a complaint made by, or with the previous
sanction in writing of, the inspector and no court inferior to that of a Presidency Magistrate or a magistrate of the
first class shall try any offence punishable under this Act.
Section 34. Power to remove difficulties

If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order
published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act, as appears
to it to be necessary or expedient for removing the difficulty
• The constitutionality of Section 34 of the Act was challenged in the case of Grammar India Ltd.
v. Union of India (1974). It was stated that the provisions granted unrestricted power were violative of Article 14 and
15 of the Constitution on the grounds of excessive delegation of power.
The SC held that section 34 was an application for the internal functioning of the administrative machinery. It gives
effect to the other provision of the Act. Hence, it doesn’t amount to excessive delegation. The petition was dismissed
and it was held that the Act doesn’t violate the constitutional provision of Article 14 and 15. (read this case)
• Read:
- Steel Authority of India Ltd. v. UoI
- PUDR v. UoI
- Air India Statutory Corporation v. United Labour Union

Reading: Thomas Paul, CONTRACT LABOUR : LIABILITY OF PRINCIPAL

EMPLOYER,
Journal of the Indian Law Institute , APRIL-DECEMBER 1997, Vol. 39, No. 2/4 (APRIL- DECEMBER 1997), pp.
465-469
The principal employer and labourers entered into an agreement that they would provide some money to the contractor
and the contractor would provide wages to the labourers. However, the two wages were different.
In Hindustan Steel Works Construction v. Commissioner of Labour – they are pondering over the question.
Facts – the Appellant was a government company. The contractor was a licensed contractor under section 12. They
entered into an agreement wherein the contractor agreed to supply security guards to the PE for wages and perks and
benefits – specified terms and conditions. The contractor paid to the labourers the same money but at a very low rate. An
inspection was conducted by the Commissioner of Labour and he noticed a different between the two. He filed a petition
under Rule 25 of AP Labour Rules. He held that the appellant was the principal employer and the respondent was the
contract labourers. Therefore, the Commissioner held that Rule 25(v)(a) of the AP Rules would apply and the matter went
before appeal to the single-judge bench of the AP HC, a second appeal was preferred to the DB. Which examined the
legality of the agreement itself which had been entered into between the principle employer and the contractor. Such an
agreement was held to be ultra vires. Being a state instrumentality, it couldn’t enter into an agreement as per Article 12 of
the Constitution. Equal wages have to be paid to the contract labourers as directed by employers. The matter went before
the SC. The SC said that the term wages under the Act had the same meaning as under Payment of Wages Act, 1936. The
responsibility of the payment wages under Section 21 was upon the contractor. The Court further said that only in those
cases where the contactor fails to make wages, the principle employer would be liable to pay, can be recovered from the
contractor. The conditions laid under the Rule 25 of the AP
Rules. It is the contractor alone who is liable to the contract wages. Section 21(4) doesn’t apply to such cases. The Court
did not pronounce upon the right of the CL. The PE is not liable to pay the wages. There is no question of additional

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payments.
Here, the author is calling it a disturbing judgment. The casual approach of the Court could lead to gross consequences. It
should not let the PE let off so easily. The intent of the Act was to end the exploitation of the labourers. There should not
be any exploitative conditions imposed upon them. The entire purpose of the enactment was culled out. The Rules under
the CLA by different State Governments are for the benefit of the parent legislation. The Rules are enabling provisions to
make implementation of the primary Act easier. It is a mandatory condition.
MC Mehta v. State of Tamil Nadu

(she’s basically reading out from the article at this point)

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 CONTRACT LABOR (REGULATION & ABOLITION ACT), 1970

• Contract labour is a system of contracting labors through a contract by a contractor for a particular period of time,
with or without the knowledge of the principal employer. The kind of employment is indirect employment, where the
principal employer is not in direct contact with the such labor. The wages provided are in the form of daily wages and
not monthly salary.
• Prior to this act, a system of bonded laborers existed facing exploitation of fundamental and statutory rights.
• The following situation gave rise to the act:
1. Poor conditions of workers
2. Casual nature of employment
3. Lack of job security
• The above led to the enactment of this act and it came into force on 10th February, 1971, to regulate the functioning
of contract laborers and prevent their exploitation.
Following are its objectives:

o To provide proper and habitable working conditions.

o To regulate the functioning of the advisory boards.
o To lay down the rules and procedures of employing contract labor.
o To lay down the procedure prescribing licensing of contracts.
o To provide for some penal provisions, in case of infringement of any of the provisions of the act.

Section 1: Applicability and non-applicability of the Act

• Applies to establishment with 20 or more workers and those workers have been working in the establishment for
the preceding 12 months.
• Section 2(b): A worker shall be deemed to be employed as contract labor, if he is employed for such work, with or
without knowledge of the principal employer.
• S. 1(4) states that it would not be applicable to:
i. Work of intermittent (less than 120 days) or casual or seasonal nature.
ii. Managerial or supervisory position.

• Such establishments having contract laborers shall establish central and state advisory boards to advise the central and
state governments on matters concerning the administration of the act- Chapter II.
Composition of central advisory board- Section 3

1. 1 chairman.
2. Chief Labor Commissioner.
3. Central government may nominate 11 to 17 members to represent the government form railways, coal industry,
mining etc. There shall be equal number for workers and employers’ interests.
Composition of state advisory board- Section 4

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 1. Chairman
2. Labor Commissioner of the state. In case there is no Labor Commissioner, state government can nominate any
person to act as such.
3. State government may nominate 9 to 11 members to represent the government, industry, contractors etc.
Registration Process of Establishments- Section 7

• A registering office shall be created by central or state government and its limits shall be demarcated. Principal
employer has to make an application to this office in the prescribed manner. It is necessary to have a registration
certificate.
Section 8: Revocation of registration certificate

• The registering officer can revoke with the approval of appropriate government, if it is satisfied that registration was
received through misrepresentation, suppression of material facts or any other reason.
Section 11: Appointment of licensing officers Section 12:
Licensing of contractors
Section 13: Grant of licenses

Section 14: Revocation, suspension and amendment of licenses Section 15: Appeal
Chapter V: Welfare & Health of contract laborers
Section 23: Contravention of provisions for employment of contract labor GAMMON INDIA LTD. V.
UOI, 1974
The constitutional validity of Section 34 was challenged- it confers arbitrary and unguided powers that violates Articles
14 and 15, since it leads to extra delegation of powers to the central government. Section 34 was held to be for the
application for the internal functioning of the administrative machinery and it gives effect to other provisions of this act.
Therefore, SC held it not be of excessive delegation and not violative of Articles 14 and 15.
Refer to “Contract Labor: Liability of Principal Employer”

1. Steel Authority case

2. PUDR v. UOI case
3. Air India Statutory Corporation case

Reading: “Contract Labor: Liability of Principal Employer”

• Hindustan Steelworks v. Commissioner of Labour- principal employer was supposed to provide wages to the
contractor and the contract laborers were given different wages for the same amount of work performed by the regular
employees. The appellant was a government company- inspection was conducted by assistant commissioner of labor
and he found that there was a difference in the wages paid. He complained to the AP labor commissioner- Rule 25.
The appellant corporation, being an instrumentality of the state, cannot enter into an agreement to the contrary of
equal pay for equal work under the constitution. SC held that the term ‘wages’ under the contract labor act and
payment of wages act have the same meaning- it is the contractor alone, who is liable to pay wages to the contractors
and merely because contractor had entered into an agreement with the principal employer to pay lower wages does not
shift the liability to the principal employer. The contractor should have paid equal wages under Rule 25.
• The author, Thomas Paul, calls this judgement to be grossly decided. The rules crafted by state governments are to aid
the principal enactment and cannot go contrary to it- these rules are only enabling provisions. Rule 25 is for the
beneficial purposes of the primary enactment of 1971. The court, by completely absolving principal employer’s
liability, has done injustice to this act.
• MC Mehta v. State of TN: children were allowed to work in matchbox industry, which is hazardous.
• Reading the above two cases, the contract laborers should have been made a party to the litigation.
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 Inter-State Migrant Workmen (Regulation Of Employment And Conditions Of Service) Act, 1979

• The reasons for passing this act: at an international level, there was increasing demand for labor supply for oil fields
in Saudi Arabia. A lot of workers were employed from different countries, including Southeast Asia. There were a lot
of difficulties in this job, like lack of permanency, hazardous nature etc. Workers from South Asia accepted the lower
wages, faced conditions that were not healthy and safe. In India as well, different laborers from different states started
migrating within.
• Therefore, this 1979 Act was brought in- necessity was felt for abolition of contract labor, as well, which was the
primary focus of this legislation. The definition of ‘workmen’ was expanded. It focussed on the establishment of
any industry that employs workmen from other states.
Section 1: Application

1. Every establishment having 5 or more inter-state migrant workmen employed, this Act would apply.
2. Every contractor who employs 5 or more workmen in the preceding 12 months.

Section 2(e) defines inter-state migrant workmen. Those who are recruited by or through a contractor in one state under
an agreement for employment in another state, with or without the knowledge of the principal employer.
Section 3: The appropriate government can appoint registering officers for the
purposes of this chapter.
Section 4: Every establishment shall be registered- the principal employer shall make an application in such form
and manner, with prescribed fee. It is mandatory to register the establishment- allows the industry to acknowledge the
employment of inter-state migrant workmen. Within 1 month, the registering officer shall grant certificate, if the
application is complete in all respects, or return the application, if incomplete. If the registering officer does not grant it
within 1 month or does not return, he shall register it within 15 days of receipt of application from the principal employer.
Section 5: Revocation of registration due to misrepresentation or suppression of any material fact.
Section 6: No employment of inter-state migrant workmen, without obtaining the certificate.
Section 7: Appropriate government may appoint licensing officers.

Section 8: Licensing of contractors. Only contractors who have obtained license from the government can employ
such laborers.
Section 9: Grant of licenses

Section 10: Revocation, suspension and amendment of licenses

Section 12: Duties of contractors- furnish particulars of workmen within 15 days from date of employment; issue a
passbook to every workman.
Section 13: Wage rates

Section 14: Displacement allowance – 75 rupees or 50% of monthly wages whichever is higher

Section 15: Journey allowance - to and fro fare + wages as if employed

Section 16: Other facilities – regular payment of wages, equal pay for equal work, suitable work conditions,
accommodation, medical facilities – accidents,

Section 17: Responsibility for payment of wages – contractor, certified by a representative of principal emmployer

Section 18: Vicarious liability of principal employer – violation of 14, 15, 16, 17 – recoverable from the contractor
example through deduction of payment
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Section 19: Past liabilities – no outstanding debt of the workmen after the completion of the employment period
Section 20: Inspectors

Sections 21, 22

Chapter VII
Miscellaneous
21. Inter-State migrant workmen to be deemed to be in employment from date of recruitment for the purposes of certain
enactments.—
For the purposes of the enactments specified in the Schedule, an inter-State migrant workman shall, on and from the date of
his recruitment, be deemed to be employed and actually worked in the establishment or, as the case may be, the first
establishment in connection with the work of which he is employed.
22. Provisions regarding industrial disputes in relation to inter-State migrant workmen.—
(1)Notwithstanding anything contained in the Industrial Disputes Act. 1947 (14 of 1947), any dispute or difference in
connection with the employment or non-employment or the terms of employment or the conditions of labour, of an inter-State
migrant workman (hereafter in this section referred to as the industrial dispute), may,—
(a)if the industrial dispute is relatable to an establishment referred to in sub-clause (i) of clause (a) of sub-section (1)
of section 2, be referred under the provisions of the said Act, by the Central Government to any of the authorities
referred to in Chapter II of that Act (hereafter in this section referred to as the said authorities),—
(i)in the State wherein the establishment is situated;

(ii)in the State wherein the recruitment of such workman was made if he makes an application in that
behalf to that Government on the ground that he has returned to that State after the completion of his
employment;

(b)if the industrial dispute is relatable to an establishment referred to in sub-clause (ii) of clause (a) of sub-section (1)
of section 2,—

(i)be referred under the provisions of the said Act, by the Government of the State wherein the
establishment is situated, to any of the said authorities in that State; or

(ii)be referred under the provisions of the said Act, by the Government of the State wherein the
recruitment of such workman was made to any of the said authorities in that State, if he makes an
application in that behalf to that Government on the ground that he has returned to that State after the
completion of his employment:
Provided that—
(a)no application referred to in sub-clause (ii) of clause(a)or sub-clause (ii) of clause (b) shall be entertained after the expiry
of a period of six months from the date of his return to the State wherein the recruitment was made after the completion
of his employment, unless the Government concerned is satisfied that the applicant was prevented by sufficient cause
from making the application within that period;
(b)no reference under the said sub-clause (ii) of clause (b) shall be made except after obtaining the concurrence of the
Government of the State wherein the establishment concerned is situated.

(2)Without prejudice to the provisions of section 33B of the Industrial Disputes Act, 1947 (14 of 1947), where during the
pendency of any proceeding in respect of an industrial dispute under that Act before any of the said authorities in the
State wherein the establishment is situated, an application is made to that authority by an inter-State migrant workman
for the transfer of such proceeding to a corresponding authority in the State wherein his recruitment was made on the
ground that he has returned to that State after the completion of his employment, that authority shall forward the
application to the Central Government, or, as the case may be, to the Government of the State wherein such recruitment
was made and transfer such proceeding in the prescribed manner to such authority as may be specified in this behalf by
that Government:

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 Provided that in a case where no authority has been specified by the Government concerned within the prescribed period,
the authority before which the proceeding is pending shall, on a request being made by the inter-State migrant workman
and after obtaining the previous approval of the Government which referred the dispute to that authority, forward such
proceeding to the Government concerned for reference of such dispute to an authority in the State wherein such
recruitment was made.

(3)Without prejudice to the provisions of sub-section (2), if the Central Government is satisfied that it is expedient in the
interests of justice so to do, it may, by order in writing and for reasons to be stated therein, withdraw any proceeding in
respect of any industrial dispute relating to an inter-State migrant workman pending before an authority in the State in
which the establishment concerned is situated and transfer the same to such authority in the State wherein the
recruitment of such workman was made as may be specified in the order.

(4)The authority to which any proceeding is transferred under this section may proceed either de novo or from the stage at
which it was so transferred.

Section 26: Offences

Section 27: Offences by companies:

(1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was
committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the
company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the
offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such
offence.
(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a
company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any
neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or
other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(3) Explanation.—For the purposes of this section,— (a) “company” means any body corporate and includes a firm or other
association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm.

Critical analysis of Interstate Migrant Workmen Act 1979

 The current unhappy situation of migrant workers as a result of the shutdown has exposed the shortcomings of their
welfare system. Even though this legislation was passed by both houses of the state legislature in 2017, and despite its
inclusion of language allowing it to be used against any non-compliant entity, there is still no indication that it has
been implemented.
 Another consequence of poor implementation is the lack of government preparedness to put such well-intentioned but
unworkable legislation into effect, as mandated, requiring not simply the maintenance of interstate worker records but
also all other conditions relating to remuneration allowances, housing and medical care to be met.
 As a result, this legislation must be rationalised and made practical enough so that employers and contractors have
incentives to come forward and register workers without being scared of harsh penalties or onerous social safety
requirements.
Scope of Improvement in Inter-State Migrant Workmen Act, 1979
 Migrant workers should be given the same benefits as other local people so that they may avoid spending more
money on food grains and kerosene.
 For general public information and verification, every state government should operate an internet portal that lists the
registered principal employers, contractors, businesses, and interstate workmen. The details of interstate workers must
be supplied promptly by the main employers and contractors. Non-compliance by the primary employers or
contractors is treated as a violation of the ActAct, and they are liable for punishment.
 All employers/contractors in a state shall be audited by the state government authorities on an annual basis to ensure
that interstate workers are deployed lawfully and submit an annual compliance status or implementation report to the
state legislature for review.

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  Within this framework, the following are some of how social protection architecture should be developed:
Additionally, a mechanism for transferring services like PDS, health insurance, and education must be established to
guarantee easy and equal access for migrants.
Conclusion:
Despite its increasing tendency of around 4.5% each year between states, migrants in destination places continue to face
difficulties in sustaining themselves there. Certainly, the present situation of these migrants as a result of the shutdown
exposes that this legislation has been ineffective in mitigating the social and economic marginalisation of migrant labourers.
The obvious conclusion derived from this sorry episode casts doubt on the overall success of the Interstate Migrant Workmen
(Regulation of Employment and Conditions of Service) Act, 1979 (ISMW), as well as its role. This was the complete guide.

The Bonded Labour System (Abolition) Act, 1976

• The Indian Constitution under Article 23, prohibits forced labour which is nothing but bonded labour in the form of
human trafficking and begging.
• What is Bonded Labour? The Act defines ‘bonded labour system’ under Section 2(e) "bonded labour" means any labour
or service rendered under the bonded labour system;
• What conditions can be construed as bonded labour? The person may/may not have any kind of debt. Suppose A,
a businessman, brings a woman, B, from his village to work as a maid at his home for Rs. 1,000.
• Convention 29 of ILO, 1930, provided for the definition of forced labour: “All work or service which is extracted
from any person under the threat of penalty and for which the person has not offered himself voluntarily.”
• What was the need for the Act? Many people employed others forcefully because of poverty and lack of education.
Bonded labour was declared illegal through this Act. It is important to identify and rehabilitate bonded labourers.
• The purpose of the Act was to formulate schemes and committees at the district level. It also prescribed punishment
for up to 3 years with fine or both. Any debt related to bonded labour is deemed to have freed from such attachment.
• What situational work can be construed for bonded labour? If the person is working in any agricultural land, brick
kiln, mining, vineyard, factory, etc which doesn’t belong to him and the land is owned by someone else. If the person
working is not provided adequate wages, he is considered as a bonded labour.
• It is very important to look at the definitions from Section 2(d) to (g):
1. “bonded debt”: Section 2(d) – “bonded debt” means an advance obtained, or presumed to have been obtained,
by a bonded labourer under, or in pursuance of, the bonded labour system;
2. “bonded labour”: Section 2(e) – “bonded labour” means any labour or service rendered under the bonded
labour system;
3. “bonded labourer”: Section 2(f) – “bonded labourer” means a labourer who incurs, or has, or is presumed to
have, incurred, a bonded debt;
4. “bonded labour system”: Section 2(g) – “bonded labour system” means the system of forced, or partly forced,
labour under which a debtor enters, or has, or is presumed to have, entered, into an agreement with the
creditor to the effect that,—
(i) in consideration of an advance obtained by him or by any of his lineal ascendants or descendants
(whether or not such advance is evidenced by any document) and in consideration of the interest, if
any, due on such advance, or
(ii) in pursuance of any customary or social obligation, or
(iii) in pursuance of an obligation devolving on him by succession, or
(iv) for any economic consideration received by him or by any of his lineal ascendants or
descendants, or
(v) by reason of his birth in any particular caste or community, he would—
(1) render, by himself or through any member of his family, or any person dependent on him,
labour or service to the creditor, or for the benefit of the creditor, for a specified period or for
an unspecified period, either without wages or for nominal wages, or

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 (2) forfeit the freedom of employment or other means of livelihood for a specified period or
for an unspecified period, or
(3) forfeit the right to move freely throughout the territory of India, or
(4) forfeit the right to appropriate or sell at market value any of his property or product of his
labour or the labour of a member of his family or any person dependent on him,
and includes the system of forced, or partly forced, labour under which a surety for a debtor
enters, or has, or is presumed to have, entered, into an agreement with the creditor to the effect
that in the event of the failure of the debtor to repay the debt, he would render the bonded
labour on behalf of the debtor.
Explanation.—For the removal of doubts, it is hereby declared that any system of forced, or partly
forced labour under which any workman being contract labour as defined in Section 2(1)(b) of the
Contract Labour (Regulation and Abolition) Act, 1970, or an inter-State migrant workman as defined
in Section 2(1)(e) of the Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979, is required to render labour or service in circumstances of the nature mentioned in
sub-clause (1) of this clause or is subjected to all or any of the disabilities referred to in sub-clauses (2)
to (4), is “bonded labour system” within the meaning of this clause;

• “obligation by succession” – If a father had taken some money from a person and was unable to repay, the son is
asked to work on his behalf and fulfill the obligation. This is also a kind of bonded labour.
• If a person is not allowed to undertake a particular occupation or profession because of his caste or other disability, it
is considered as bonded labour.
• “forfeit the right to move freely throughout the territory of India” – this aspect was talked about in the Sabarimala
judgment as well.
• Therefore, there are many ingredients to the understanding of bonded labour system.
• Nominal wages are defined under Section 2(i) as:
“nominal wages”, in relation to any labour, means a wage which is less than,—
(a) the minimum wages fixed by the Government, in relation to the same or similar labour, und er any law
for the time being in force, and
(b) where no such minimum wage has been fixed in relation to any form of labour, the wages that are
normally paid, for the same or similar labour, to the labourers working in the same locality;
• Section 9, 16, 17, 18, 19 and 20 are penalizing sections.
Section 9. Creditor not to accept payment against extinguished debt.—

(1) No creditor shall accept any payment against any bonded debt which has been extinguished or deemed to
have been extinguished or fully satisfied by virtue of the provisions of this Act.
(2) Whoever contravenes the provisions of sub-section (1) shall be punishable with imprisonment for a term
which may extend to three years and also with fine.
(3) The court, convicting any person under sub-section (2) may, in addition to the penalties which may be
imposed under that sub-section, direct the person to deposit, in court, the amount accepted in contravention of
the provisions of sub- section (1), within such period as may be specified in the order for being refunded to the
bonded labourer.
Section 16. Punishment for enforcement of bonded labour.—Whoever, after the commencement of this Act,
compels any person to render any bonded labour shall be punishable with imprisonment for a term which may
extend to three years and also with fine which may extend to two thousand rupees.
Section 17. Punishment for advancement of bonded debt.—Whoever advances, after the commencement of this
Act, any bonded debt shall be punishable with imprisonment for a term which may extend to three years and
also with fine which may extend to two thousand rupees.

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 Section 18. Punishment for extracting bonded labour under the bonded labour system.—Whoever enforces,
after the commencement of this Act, any custom, tradition, contract, agreement or other instrument, by virtue
of which any person or any member of the family of such person or any dependant of such person is required
to render any service under the bonded labour system, shall be punishable with imprisonment for a term which
may extend to three years and also with fine which may extend to two thousand rupees; and, out of the fine, if
recovered, payment shall be made to the bonded labourer at the rate of rupees five for each day for which the
bonded labour was extracted from him.

Section 19. Punishment for omission or failure to restore possession of property to bonded labourers.—
Whoever, being required by this Act to restore any property to the possession of any bonded labourer, omits or
fails to do so, within a period of thirty days from the commencement of this Act, shall be punishable with
imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees,
or with both; and, out of the fine, if recovered, payment shall be made to the bonded labourer at the rate of
rupees five for each day during which possession of the property was not restored to him.

Section 20. Abetment to be an offence.—Whoever abets any offence punishable under this Act shall, whether
or not the offence abetted is committed, be punishable with the same punishment as is provided for the offence
which has been abetted. Explanation,—For the purpose of this Act, “abetment” has the meaning assigned to it
in the Indian Penal Code (45 of 1860).
• Sections 10, 11, 12
CHAPTER IV IMPLEMENTING AUTHORITIES
Section 10. Authorities who may be specified for implementing the provisions of this Act.—The State Government
may confer such powers and impose such duties on a District Magistrate as may be necessary to ensure that the
provisions of this Act are properly carried out and the District Magistrate may specify the officer, subordinate to
him, who shall exercise all or any of the powers, and perform all or any of the duties, so conferred or imposed and
the local limits within which such powers or duties shall be carried out by the officer so specified.
Section 11. Duty of District Magistrate and other officers to ensure credit.—The District Magistrate authorised by
the State Government under section 10 and the officer specified by the District Magistrate under that section shall,
as far as practicable, try to promote the welfare of the freed bonded labourer by securing and protecting the
economic interests of such bonded labourer so that he may not have any occasion or reason to contract any further
bonded debt.

Section 12. Duty of District Magistrate and officers authorised by him.—It shall be the duty of every District
Magistrate and every officer specified by him under section 10 to inquire whether, after the commencement of this
Act, any bonded labour system or any other form of forced labour is being enforced by, or on behalf of, any person
resident within the local limits of his jurisdiction and if, as a result of such inquiry, any person is found to be
enforcing the bonded labour system or any other system of forced labour, he shall forthwith take such action as
may be necessary to eradicate the enforcement of such forced labour.
• Rehabilitation Schemes under the Act are also provided.
• The task of rehabilitation is provided under the Centrally Sponsored Scheme for Rehabilitation of Bonded Labour
launched in May 1978. In 2016, the Central Sector Scheme for Rehabilitation of Bonded Labourers was introduced.
the kind of financial assistance will be from Rs. 20,000 to 1 lakh per adult male beneficiaries, Rs. 2 lakhs for special
category such as children, orphans, and for woman, it is Rs. 3 lakhs. The Government provides Rs. 4.5 lakhs to every
District to undertake survey on bonded labourers. Once a person is identified, he is paid his rehabilitation amount
accordingly.
CHAPTER V

VIGILANCE COMMITTEES

• The Act requires the State Government to constitute vigilance committee in every district under section 13.
• The functions are provided under section 14.
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 • Vigilance committee at district and sub-divisional level, headed by a DM or Sub-divisional magistrate respectively or a person
appointed by him.
• The district and subdivisional magistrate shall provide procedural and other assistance to the vigilance committee.
• Functions of the vigilance committee:
o Advising DM and other officials concerning implementation of the Act
o Social and economic rehabilitation of bonded laborers.
o Monitor functions of banks in respective sectors, conduct surveillance and defend suits instituted against
bonded laborers.
 Burden of proof – Section 15 – is on the creditor to prove it is not a bonded debt.
BONDED LABOUR UNDER IPC

• There are certain provisions in the IPC related to bonded labour as well.
• Section 370, 378, 374 IPC [BNS Section 144]
• If the body parts of any person are cut off or maimed for the purposes of begging, it is punishable under the Act.
Human trafficking is also a crime under the Act.
• A recent amendment where the punishment for human trafficking has been increased.
• There are certain other Acts that deal with bonded labour system:
1. The Indian Penal Code, 1850
2. The Protection of Children from Sexual Offences Act, 2012
3. The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989
4. Weekly Holidays Act, 1942
• Important judgments relating to Bonded Labour

Case Laws relating to Bonded Labour [PBNSPD]

1. People’s Union for Civil Liberties v. Tamil Nadu – Here, the SC advised the NHRC to be involved for the
purposes of:
i. monitoring the pace and progress of the Bonded Labour Act
ii. to frame certain national policy and
iii. to prepare the programme of action in consonance with the directives/guidelines provided by the SC in this
judgment.
The SC also held that where a person provides labour or service for remuneration which is below the limit of the
Minimum Wages Act.
2. Badhua Mukti Morcha v. Union of India – A PIL was brought against the working conditions of labourers in
stone quarries. In 1984, the SC had laid several guidelines. The petition asked various states to have certain
guidelines pertaining to such labourers. The SC observed that the bonded labour must not only be forced to
provide service but may also have received certain advance which he is repaying by providing such service. The
Court further held that residence must be provided to the labourer within the nearby vicinity of the working site,
including permanent housing, water facility, recreational facilities, hospitals, medical facilities, etc.
3. Neerja Chowdary v. State of Madhya Pradesh – The SC held that Art. 21 and 23 dealing with bonded
labour, must be identified and released, and on release they must be suitably rehabilitated. Similar guidelines
must be laid down for rehabilitation – residency, reemployment, providing basic amenities to family of
labour, maintain details in a prescribed manner. The Court further said that any failure in action on the part of the
State Government under the Act would be a clear violation of Art. 21 and 23.

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4. Shankar Mukherjee v. Union of India (1990) – The SC held that the Contract Labour Act is a welfare
legislation which must be interpreted liberally inn favour of labourers and the system of contract labour is a form
of bonded labour and must be abolished at all costs.
5. PUDR v. Union of India (1982) – The Court held that giving wages blow the limits of the Minimum Wages Act
would amount to bonded labour.
6. Dharamvir v. State (1979) – The prisoners are entitled to fair wages when they are performing any kind of work
in the jails. And any kind of free labour by prisoners is violative of Art. 23 of the Constitution.
Simple imprisonment v. rigour imprisonment – In the former, the prisoner has to merely serve imprisonment
without harsh labour for the punishment prescribed by the Court. For such work, there are no wages. In the latter,
he has to perform hard labour, at times working in mines, stones and bricks factory, etc. Here, any hard labour
utilised, wages are provided. This is based on the minimum wages.

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 CASE SUMMARIES FROM THE CC
1. PUDR v. UOI (1982):
Facts
1. It was a prestigious moment for India to host Asian Games 1982, and to complete its undertaking the
Government of India has to accomplish various construction projects such hotels, stadiums, etc. as per
international standards.
2. Various authorities were entrusted with project, relevant here are Delhi Development authority, New Delhi
Municipal Committee and Delhi Administration.
3. These authorities engaged Contractors as Principal Employers U/S 7 of The Contract Labour (Regulation
and Abolition) Act, 1970 for execution of their projects.
4. These Contractors entered into contract with Jamadarsto heir workmen for construction purposes.
5. Workmen from different parts of the country were hired especially from Rajasthan, Uttar Pradesh and
Orissa.
6. Men at Rs. 9.25/- per day, women at Rs. 7/- per day and children even below the age of 14 year were
employed as workmen and above that Rs. 1/- was deducted from their wages by Jamadars as their
commission.
7. Workmen were not given equal wages and were not even entitled to their minimum wages and were forced
to work at feverish place and often beyond the working hours.
1. Children were dying of mal-nutrition and due to working in hazardous condition were frequently becoming
victims of serious accidents and some were dying.
2. The terrible working and living conditions of these workers were first brought to public notice by a fact-
finding team of the People’s Union for Democratic Rights (PUDR) which visited some of the major sites in
July and August 1981 and interviewed the workers as well as their employers.
3. PUDR address a letter to Bhagwati J. about the same who later treated it as PIL and the case was filed on
16th Nov, 1981.
Petitioner’s Arguments
1. Women are not been given equal wages which is contrary to the provisions of Equal Remuneration Act, 1976.
2. Workers are not even entitled to their minimum wages as Rs. 1 was one deducted by Jamadars causing violation of
Minimum Wages Act, 1948, which was admitted by Union of India in its reply affidavit but was denied by other
three respondents.
3. It was argued that Article 24 of Constitution was violated and the provisions (Sec 3(3)) of Employment of Children
Act, 1938 were breached as children below 14 were engaged in construction works.
4. Alleged violation of various provisions of Contract Labour (Regulation and Abolition) Act, 1970 by Contractors
which resulted in deprivation and exploitation of workers such as they were deprived proper living conditions,
medical and other facilities.
5. Contractors were not implementing the provisions of Inter-State Migrant Workmen (Regulation of Employment and
Conditions of Service) Act, 1979 though the Act has already been brought in force on 2nd Oct, 1980.
Respondents Arguments
1. Contented that present petition under Art 32 of Indian Constitution is liable to be dismissed since; there is no
violation of Fundamental Rights of workers but of merely various labour laws.
2. It was argued that the respondents are miss-joined and are liable to be deleted from the array of parties because the
violation (if any) is caused by private contractors and not the State since; workmen are the employees of Contractors
and not of respondents.
3. The respondents clearly denied the allegations of petitioner and on contrary stated that as far as Equal Remuneration
Act, 1976 and Contract Labour (Regulation and Abolition) Act, 1970 they were complying with the provisions with
utmost care and when any matter brought to them, they take action against Contractors by way of prosecution.
4. It was conceded that Jamadars might be deducting Rs. 1 from minimum wages payable to workers whereas UOI
clearly admitted this fact.
5. It was contended that provisions of Employment of Children Act, 1938 are not applicable in this case since;
construction work is not specified as hazardous workplace in its Schedule so there is no breach of Sec 3(3) as well
as of Art 24 of Indian Constitution.
6. With regard to Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, it
was argued that since, power to enforce the provisions is delegated to Administrator of Delhi on 14 th July, 1981 but

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 they could not be enforced as rules to be made under Act were not finalized until 4th June, 1982.
Issues framed
1. Whether petitioner organisation is entitled to maintain the petition on behalf of labourers?
2. Whether this petition is maintainable against Union of India, Delhi Administration and Delhi Development
Authority when in actual the offending parties are private contractors?
3. Whether this petition is maintainable as there is no breach of fundamental rights of labourers but of ordinary rights
under labour laws?
4. Whether the Court can pass directions under Article 32 against private contractors?
Judgment
 While dealing with first issue, it was held that petitioner organisation has locus standi to approach to this Court on
behalf of poor, ignorant, illiterate people because firstly, they were working in a bona-fide faith and secondly the
traditional rule of standing of judicial process which only allows those people to approach to court to whom legal
injury has been caused has now been jettisoned by this Court through the Case of Judges’ Appointment and Transfer
case[1] and revolutionised the concept considering the prevailing socio-economic conditions.
 With respect to second issue, it was held that although the workmen were employed under Contractors but it was the
respondent authorities who entrusted the Asiad project to Contractors and therefore, they cannot escape from their
obligation of the observance of various labour laws. Also, Respondent authorities being Principal Employers were
bound by Sec 20 and 21 of Contract Labour (Regulation and Abolition) Act, 1970 and by Sec 17 & 18 of Inter-
State Migrant Workmen Act, 1979 to provide amenities and allowances to workmen. And as far as, employment
of children below 14 is concerned then it is clearly provided under Article 24 of Indian Constitution which bars the
same and is enforceable against everybody.
 The court did not accept the plea of respondents that there is no violation of FR. Since, the petition includes the
violation of Article 24 due to employment of children below 14 and also violation of provisions of following labour
laws amounts to violation of following FR’s–
 Inter-State Migrant Workmen Act, 1979 and Contract Labour Act, 1970 – Article 21 – after the judgement
of Maneka Gandhi v. Union of India[2] and Francis Coralie Mullin V. Administrator and ors.[3] Art 21 has been
given new dimensions which includes right to live with basic human dignity and here the two beneficial legislation
were intended to ensure the labourers the basic human dignity of which they remain deprived by respondents.
 Minimum Wages Act, 1948 – Article – 23 – The nature and scope of Article 23 has been discussed, and held that
labour which is not rendered willingly but as a result of force or compulsion is ‘forced labour’. Also, when a person
provides services for remuneration which is less than the minimum wage, said service will fall under Forced
Labour.
 Equal Remuneration Act, 1976 – Article 14 – Not giving equal wages to both men and women for their equal
amounts to violation of right to equality.
Therefore, it was held that non-observance of labour laws by respondents have resulted into violation of FR’s of
labourers.

2. Air India Statutory Corporation Vs. United Labour Union & Ors
Facts of the Case
A Notification dated 9th December, 1976 was issued by the Central Government for abolition of contract labour who
were carrying out the perennial activity of sweeping, cleaning, dusting and watching of the building under the
authority of Contract Labour (Regulation and Abolition) Act, 1970. The instant Respondents (Labour Union) had
filed writ petition before the Bombay High Court seeking a direction of absorption into the instant Appellant
company carrying out public function, stating that as soon as the Contract Labour was abolished the union of labours
automatically got employed under the organisation and must have been regularised into the organisation by
absorption. This prayer was granted by the Single judge of the Bombay High Court and later the appeal before the
Divisional bench of Bombay High Court was not allowed. The Appellant thus filed a Special Leave Petition (SLP)
before the Supreme Court to adjudicate the automatic absorption rule. The Appellant contended, that after the
notification of 1976, a new Advisory Council had formed in the year 1986 and had advised the Central Government
not to abolish the contract labour engaged by the Appellant organisation and also contending that Government had
issued new notification declaring non-abolishment thus the earlier issued notification must be held to be nullified.
Issues of the Case
The following issues were framed:

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  What is the meaning of the word “appropriate government” under Section 2(1) (a) of the Act, Whether the Central
government was authorised to issue Notification in the first place?
 Whether on abolition of the contract labour the Union Labours are entitled to be automatically absorbed into the
Appellant Company?
 Whether the High Court under Article 226 has power to direct their absorption ?
 Whether it is necessary to make a reference under Section 10 of the ID Act for adjudication of dispute qua
absorption of the contract labour?
 Whether the view taken by this Court in Dena Nath is correct in law ?
Arguments from Appellants
 It was contended by the appellants that the industry was incorporated into a Company and was carrying on
commercial activities and therefore could not be covered under “industry” as per the Contract Labour (Regulation
and Abolition) Act, 1970.
 It was also contented further that the Central Government could not have issued such abolition given the fact that
only in 1986 the amendment to the parent Act endowed the power upon central government prospectively to issue
such notifications.
 Appellant contended that the Central Government had issued new notification declaring non-abolishment of
contract labour in the year 1986 had a nullifying effect upon the previous notification of 1976.
 The Appellant contended that only the Supreme court under Article 32 had an authority to entertain the petition for
direct absorption of contract labourers and not the High Court under Article 226.
Arguments from Respondents
 The Respondent Union contended that Appellant should be considered an industry carried on or under authorities of
the Central Government, since the company has been derived from the statutory body International Airports
Authority of India Act, 1971.
 The Respondent Union contended that the “appropriate government” under section 2(1)(a) should be the Central
Government.
 The Respondent Union contended that the notification of 1976 was issued after following the due process provided
by the statute and therefore could not be cancelled by a subsequent notification.
 The Respondent Union contended that the authority of Supreme court under Article 32 is pari materia with the
Article 226 where the High Court has much wider jurisdiction so as to provide suitable directions for direct
absorption of contract labourers.
Judgment Held
 In analysing the meaning of the word “appropriate government” under Section 2(1) (a) of the Contract Labour
(Regulation and Abolition) Act, 1970 the Supreme Court taking into consideration the amendment made to the above
said Act in the year 1986 interpreted that if any industry is carrying out its activities by or under the authority of
Central Government, then the “appropriate government” would be the Central Government.
 Hence the Supreme Court went forward and elaborated that interpretation of labour welfare legislations must be made
under public law principle and not common law principle. The principles evolved for interpreting the term “state
agency” under Article 12 of the Constitution of India was evolved through a catena of judgements leading to the Ajay
Hasia judgement where six essential criterions were carved out to interpret an institution into the term “other
authorities of the state”.
 The Appellant was a erstwhile statutory corporation now incorporated into a Company, carrying on commercial
activities, yet in the instant case the Supreme Court held that the Appellant would be considered an industry carried
on or under authorities of the Central Government. The Supreme Court reading in the socialist morals of the
constitution propounded that deep and pervasive control of the Central Government is not the sole criteria to declare
an enterprise as Government run. The Appellant Company’s activities would thus be subjected to the tests of the Part
III and Part IV of the Constitution of India to balance the interest of the public at large.
 Therefore the Supreme Court taking into consideration the judgements pertaining to the interpretation of the term
“other authorities” as enshrined under Article 12, held that the current personality of the Appellant being a company
has been derived from the statutory body International Airports Authority of India Act, 1971 and also it was noted
that the Central Government had a substantial control over the said Appellant enterprise. Therefore it was held that
the “appropriate government” under the section 2(1)(a) would be the Central Government and the Appellant
Company must thus adhere to the constitutional morals of welfare of the labour.
 It was further propounded by the Supreme Court that the Contract Labour (Regulation and Abolition) Act, 1970 was
enacted with an object to bring social welfare for the labour class of the society and the provisions of the enactment
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 must be interpreted in the light of public law principles. Also taking into consideration the Articles 14, 15, 21, 38, 39,
43a, 39a, 46 and 51a of the Constitution of India endowing upon the citizens the right to equality, and also a duty
upon the state to provide equal treatment towards employment. The Directive Principles of State Policy enshrined in
the Constitution of India, by the founding fathers, when read with the fundamental rights of the citizens imposes
special duty upon the government to function in the favour of the public at large.
 In the process of abolition of contract labour as provided under the Contract Labour (Regulation and Abolition) Act,
1970, section 10 and section 2(1)(a) of the Act was followed by the Government of India. Therefore the Central
advisory board was formed to address the problems of contract labour persisting in the Appellant organisation and
based upon the recommendation of the above said advisory board the Central Government being appropriate
government issued a notification abolishing the contract labour. It was thus propounded that taking into consideration
the legislative framework the abolition of the Contract Labour disconnected the intermediary role of the contractor,
who was supplying the the labours for the perennial services required by the organisation, therefore now the principal
employer became directly responsible for the welfare of the contract labour associated with the organisation . The
Supreme Court declared the validity of the notification issued by the Central Government in the year 1976 whereby it
validated Central Government’s jurisdiction to issue such notification and also declared that the process followed by
Central Government while issuing the notification abolishing the Contract labour was valid. The Supreme Court came
to the conclusion that the contention of the Appellant that the Central Government had issued new notification
declaring non-abolishment of contract labour had a nullifying effect upon the previous notification of 1976 held no
water. The Supreme Court further took into consideration the welfare objective of the 1976 notification, Supreme
Court concluded that subsequent advisory recommendation for non-abolishment of the contract labour was against the
spirit of the socialist democratic ingrained in the Indian Constitution. The Supreme Court declared that under the law
the Central Government was denied its power to accept subsequent recommendations of another committee for non-
abolishment of the Contract Labour system in Appellant’s establishment.
 It was also contended that the relationship between the contract labourers and the instant Appellant organisation was
formed through a contractual understanding between the organisation and the contractor supplying the aforesaid
laborers. It was stated that as per application of the private law or the common law interpretation, the scope of
employment must be limited to the language of the contract and must not be interpreted in a broader sense. It was
further contended that the High Court had no authority to order the organisation to absorb the contract labourers given
the fact that the relationship between the Appellant organisation and the respondent labour Union was formed by the
help of a contract. The Supreme Court shunning these contention propounded that principal legislation empowering
the Central Government to abolish the contract labour was a social welfare legislation, its was further stated, that the
aim of the notification was to provide socio economic empowerment to the workers and therefore taking into
consideration the innate socialistic nature of the Constitution of India the interpretation of the notification requires a
broader construction in the light of public law principles and must not be narrowly interpreted in the light of the
private law or the common law application which would leave the weaker section unable to protest against the whims
of the the principal employer.
 The Supreme Court while analysing the contention that High Court was not authorised to pass the order against the
organisation directing absorption of the contraction labour, took into consideration the case of RK Panda vs Steel
Authority of India, where contractual labourers working in Rourkela plant of Steel Authority of India, were
regularised by the order of the Supreme Court of India while interpreting similar notifications passed by the Central
Government on abolition of the contract labour under the authority of section 10 of the Contract Labour (Regulation
and Abolition) Act, 1970. The Supreme Court, in the instant case went on to suggest that the authority of Supreme
court under article 32 is pari materia with the Article 226 where the High Court has much wider jurisdiction so as to
provide suitable directions taking into consideration the factual background. It was therefore propounded that the
decision given by the Bombay High Court was valid under law.
 The Supreme Court decided that all the contractual labourers must be absorbed into the organisation by creation of
the appropriate “level D” employment by the Appellant organisation and further propounded that any dispute
regarding the duration and term of the contractual labour must be determined by the industrial dispute law.
Critical Analysis
o The Supreme Court of India while analysing this situation and considering the plea of the contract labourers came
to conclusion, that it is the socialist responsibility of the Courts to allow the remedy of absorption of the contract
labours in to the organisation when a writ petition under article 226 is filed before any of the high court or the
same is filed before the Supreme Court under article 32.

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o The Supreme Court by this case overruled the earlier decided Dena Nath judgement which was the earlier
precedent holding the ground, in relation to the matter of automatic absorption of contract labourers in the event
of notification abolishing the contract labour issued by the appropriate government. The earlier judgement of the
Supreme Court which was overruled by this judgement had declared that no provision having express automatic
absorption of the contract labours could be found in the legislative language of the enactment in question. This
judgement by constructive interpretation thus differentiated the previously decided catena of the Supreme Court
judgements favouring the non-binding duty of the principal employer to absorb the contractual labourers in
pursuance to the abolition notification issued by the appropriate government.
o It is thus pertinent to note that this diversion existing on the legal issue of automatic absorption was referred to a
constitutional bench by a divisional bench of the Supreme Court. The constitutional bench of the Supreme Court
of India in the matter of SAIL v National Union Water Front Workers and others, overruled this judgement
which mandates automatic absorption of the contract labourers and restored the Dina Nath (supra) judgment
upon the issue of automatic absorption.

3. Steel Authority of India Ltd. and Ors. vs. National Union Water Front
Workers and Ors.

Facts:
 Appellants, a Central Government Company, entrusts the work of handling the goods in the stockyards to
contractors after calling for tenders in that behalf. Government of West Bangal issued notification dated July
15, 1989 under Section 10(1) of the CLRA Act (hereinafter, 'the prohibition notification') prohibiting the
employment of contract labour in four specified stockyards of the appellants at Calcutta.
 On the representation of the appellants, the Government of West Bangal kept in abeyance the said
notification initially for a period of six months, and thereafter extended that period from time to time, but not
beyond August 31, 1994.
 First respondent/Union representing the cause of 353 contract labourers filed writ petition in the Calcutta
High Court seeking a direction to the appellants to absorb the contract labour in their regular establishment
in view of the prohibition notification of the State Government dated July 15, 1989 and further praying that
the notification dated August 28, 1989, keeping the prohibition notification in abeyance, be quashed.
 High Court allowed the writ petition, set aside the notification dated August 28, 1989 and all subsequent
notifications extending the period and directed that the contract labour be absorbed and regularized from the
date of prohibition notification.
 Assailing the said judgment, appellant filed writ appeal and challenging the prohibition notification of July
15, 1989 they filed writ petition in the Calcutta High Court.
 While these cases were pending before the High Court, Supreme Court delivered judgment in Air India
Statutory Corporation v. United Labour Union MANU/SC/0163/1997 holding, inter alia, that in case of
Central Government Companies the appropriate Government is the Central Government. It thus upheld the
validity of the notification dated December 9, 1976 issued by the Central Government under Section 10(1) of
the CLRA Act prohibiting employments of contract labour in all establishments of the Central Government
Companies.
 On July 3, 1998, a Division Bench of the High Court dismissed the writ appeal as well as the writ petition
filed by the appellants taking the view that on the relevant date "the appropriate Government" was the State
Government. The legality of this judgment and order was challenged in present appeals.
Issues:
(i) What is the true and correct import of the expression "appropriate government" as defined in Section 2(1)(a) of
the CLRA Act?
(ii) Whether the notification dated December 9, 1976 issued by the Central Government under Section 10(1) of the
CLRA Act is valid and applies to all Central Government companies?
(iii) Whether automatic absorption of contract labour, working in the establishment of the principal employer as
regular employees, follows, on issuance of a valid notification under Section 10(1) of the CLRA Act, prohibiting
the contract labour in the concerned establishment?
Laws:

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  Contract Labour (Regulation and Abolition) Act, 1970 - Section 2(1)(a) - Defines the term 'appropriate
Government'.
 Contract Labour (Regulation and Abolition) Act, 1970 - Section 2(1)(b) - Defines 'contract labour' to mean a
workman, in or in connection with the work of an establishment, when he is hired in or in connection with
such work by or through a contractor, with or without the knowledge of the principal employer.
 Contract Labour (Regulation and Abolition) Act, 1970 - Section 10 - Stipulates prohibition of employment
of contract labour.
Contentions:
Appellants
(i) State Government is the appropriate Government in respect of the establishments of the Central Government
companies in questions.
(ii) An omnibus notification like the notification dated December 9, 1976 issued by the Central Government would
be contrary to the requirements of Section 10 of the CLRA Act and is illustrative of non application of mind.
(iii) CLRA Act is a beneficial legislation, the benefits which the Parliament thought it fit to confer on the contract
labour, are specified in the Act and the Court by way of interpretation cannot add to those benefits.
(iv) If the Court were to hold that automatic absorption should follow a notification prohibiting employment of
contract labour, it would be adding a sub-section to Section 10 of CLRA Act prescribing for automatic
absorption on issuance of notification under Section 10(1) of CLRA Act, which would be impermissible.
Respondents
(i) For all Central Government Undertaking which fall within the meaning of "other authorities" in Article 12 of
Constitution are agents or instrumentalities of the State functioning under the authority of the Central
Government, and as such the Central Government will be the appropriate Government.
(ii) A contract employing contract labour for any work of an establishment would, in law, create relationship of
master and servant between the establishment and the labour.
(iii) CLRA Act provided for absorption of the contract labour on issuing abolition notification by necessary
implication and provided penal consequences to prevent exploitation and abuse, of the contract labour.
(iv) Section 10 of CLRA should be interpreted to hold that as a result of issuance of prohibition notification, the
contract labour working in an establishment at that time should stand absorbed automatically.
Analysis:
Expression "appropriate government" in Section 2(1)(a) of CLRA Act - Meaning of
(i) Central Government will be the appropriate Government in relation to an industrial dispute concerning -
a. any industry carried on by or under the authority of the Central Government, or by a railway company; or
b. any such controlled industry as may be specified in this behalf by the Central Government; or
c. the enumerated industries.
In relation to any other establishment, the Government of the State, in which the establishment in question is
situated, will be the appropriate Government.
(ii) An industry being carried on under the authority of the central Government cannot be equated with any industry
carried on by the Central Government itself.
Any industry carried on under the authority of the Central Government implies an industry which is carried on by
virtue, of, pursuant to, conferment of, grant of, or delegation of power or permission by the Central Government
to a Central Government Company or other Government Company / undertaking.
(iii) Instrumentality of a Central/State Government or being State within the meaning of Article 12 of the
Constitution cannot be determinative of the question as to whether an industry carried on by a Company/
Corporation or an instrumentality of the Government, by or under the authority of the Central Government, for
the purpose of or within the meaning of the definition of appropriate Government in the CLRA Act.
Criterion is whether an undertaking instrumentality of Government is carrying on an industry under the authority of
the Central Government and not whether the undertaking is instrumentality or agency of the Government for
purposes of Article 12 of the Constitution, be it of Central Government or State Government.
Notification dated December 9, 1976 issued by the Central Government under Section 10(1) of CLRA Act - Validity
of
(i) Before issuing notification under Section 10(1) of CLRA Act, an appropriate Government is required to -
a. consult the Central Board / State Board;
b. consider the conditions of work and benefits provided for the contract labour,
c. take note of the factors such as mentioned in Clauses (a) to (d) of Section 10(2) of CLRA Act.
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 (ii) Notification in question makes it manifest that with effect from March 1, 1977, it prohibits employment of
contract labour for sweeping, cleaning, dusting and watching of buildings owned or occupied by establishment in
respect of which the appropriate Government under the said Act is the Central Government.
 This clearly indicates that the Central Government had not adverted to any of the essentials, referred to
above, except the requirement of consultation with the Central Authority Board. Consideration of the factors
mentioned above has to be in respect of each establishment, whether individually or collectively, in respect
of which notification under Section 10(1) of CLRA Act is proposed to be issued.
 Impugned notification apart from being an omnibus notification does not reveal compliance of Section 10(2)
of CLRA Act. Impugned notification dated December 9, 1976 issued by the Central Government is not
legally sustainable.
 Absorption of contract labour - Whether automatic on issuance of a valid notification under Section 10(1) of
CLRA Act
(i) Consequence of prohibition notification under Section 10(1) of the CLRA Act prohibiting employment of contact
labour, is neither spelt out in Section 10 nor indicated anywhere in the Act. Consequences shall be -
a. contract labour working in the concerned establishment at the time of issue of notification will cease to function;
b. the contract of principal employer with the contractor in regard to the contract labour comes to an end:
c. no contract labour can be employed by the principal employer in any process, operation or other work in the
establishment to which the notification relates at any time thereafter;
d. the contract labour is not rendered unemployed as is generally assumed but continues in the employment of the
contractor as the notification does not sever the relationship of master and servant between the contractor and the
contract labour;
e. the contractor can utilize the services of the contract labour in any other establishment in respect of which no
notification under Section 10(1) has been issued where all the benefits under the CLRA Act which were being
enjoyed by it, will be available;
f. if a contractor intends to retrench his contract labour he can do so only in conformity with the provisions of the ID
Act.
(ii) Automatic absorption of contract labour working in an establishment is not implied in Section 10 of the CLRA
Act.
(iii) Parliament, by enacting CLRA Act, intended to create a bar on engaging contract labour in the establishment
covered by the prohibition notification, by a principal employer so as to leave no option with him except to
employ the worker as regular employees directly.
(iv) No implicit requirement of automatic absorption of contract labour by the principal employer in the concerned
establishment on issuance of notification by the appropriate Government under Section 10(1) of CLRA Act
prohibiting employment of contract labour in a given establishment.
Conclusions:
(i) In the case of a Central Government company/ an instrumentality of the Government, carrying on an industry, the
criteria to determine whether the Central Government is the appropriate Government within the meaning of the
CLRA Act, is that the industry must be carried on by or under the authority of the Central Government and not
that the company/undertaking is an instrumentality or an agency of the Central Government for purposes of
Article 12 of the Constitution.
(ii) Notification dated December 9, 1976 issued by the Central Government under Section 10(1) of CLRA Act,
prohibiting the contract labour in the concerned establishment, is not valid.
(iii) Neither Section 10 of the CLRA Act nor any other provision in the Act, whether expressly or by necessary
implication, provides for automatic absorption of contract labour on issuing a notification by appropriate
Government under Section 10(1) prohibiting employment of contract labour.
Important Precedents:
(i) Air India Statutory Corporation & Ors. v. United Labour Union & Ors. MANU/SC/0163/1997
(ii) Dena Nath and Ors. v. National Fertilisers Ltd. and Ors. MANU/SC/0077/1992

4. Andhra Pradesh State Road Transport Corporation vs. G. Srinivas Reddy,

(2006)
 In the absence of any notification under CL (Regulation and Abolition) Act prohibiting contract workers, their

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 absorption will not be justified.
 For seeking relief by absorption of the contract labour by the principal employer, the workers have to raise an
industrial dispute.
 The High Court could not have directed absorption of employees of the contractor by assuming that the contract
labour system was only a camouflage.
 When there was a finding that the contract system was sham and camouflage, the High Court cannot direct
absorption of contract labour by principal employer.

5. Gammon India Ltd. v. Union of India

Facts
 Petitioners in construction business challenged the validity of several provisions of the Contract Labour
Act.
Issues before the Supreme Court:
Following issues came before the court to determine and adjudicate upon:
1. Whether the petitioners come within the definition of “contractors” as mentioned under section 2 (c) of the Act?
2. Whether the application of the Act to the pending contract imposes unreasonable restrictions violating article 19 (1)
(g) of the Constitution?
3. Whether the fees prescribed for registration, licences, or renewal of licences amount to levy of a tax which are,
therefore, beyond the rule-making powers of the Central and State Government?
4. Whether the provisions (those contended by the petitioners) of Act are unconstitutional and unreasonable?
5. Whether section 34 of the Act empowering the Central government to make any provisions for removal of difficulty
is excessive delegation thereby making it unconstitutional?

Contentions of the Petitioners:

1. Petitioners contended that establishment means any place where any industry, trade, business, manufacture or
occupation is carried on and, therefore, the workmen employed by the petitioners are not contract labour because they
are not employed in connection with the work of the establishment. The work of the establishment is, according to the
petitioners, not only at the place where the business, trade, industry of the establishment is carried on but also the
actual business or trade or industry of the establishment. The entire emphasis is placed by the petitioners on the words
"work of any establishment." By way of illustration it is said that if a banking company which is an establishment
which carries on its business at Delhi employs the petitioners to construct a building at Allahabad the building to be
constructed is not the work of the bank. It is said that the only work of the bank as an establishment is banking work
and, therefore, the work of construction is not the banking work of the establishment. Therefore, the petitioners
contend that the workmen employed by the petitioners are not workmen in connection with the work of the
establishment and petitioners are not “contractors” as defined in the Act.

2. The application of the Act to pending contracts amounts to unreasonable restrictions on the right of contractors under
article 19 (1) (g) of the constitution and is therefore, unconstitutional.

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 3. The fees prescribed for registration, licenses and renewal of licenses amount to levy of taxes which is essential
legislative and cannot be delegated. Hence, such a delegation goes beyond the rule making power of the Central and
State government.

4. Following provisions were contended to be unconstitutional:

 Provisions in regard to canteens, rest rooms, latrines and urinals as contemplated by sections 16 to 18 of the Act
read with Central Rules 40 to 56 and rule 25(2) (vi) are incapable of implementation and enormously expensive as
to amount to unreasonable restrictions within the meaning of Article 19 (1) (g).
 Central Rule 25 (2) (v) (b) were challenged to be unreasonable as it confers a discretionary power on the Chief
Labour Commissioner and there is no provision of appeal regarding his decision.
 Provisions in section 14 with regard to forfeiture of security are unconstitutional.
 The validity of rule 24 which requires deposit of Rs. 30/- per workmen is challenged as void under Articles 14
and 19 (1) (f) both on the ground that the same is arbitrary and also because there is no obligation on the
Government to pay to the workmen or to utilise for the workmen any part of the security deposit so forfeited.

5. It was also contended that section 34 of the Act which empowers the Central Government to make any provision not
inconsistent with the provisions of the Act for removal of difficulty is unconstitutional on the ground of excessive
delegation.

Provisions of law in question:

1. Section 2 (c) which defines a "contractor" in relation to an establishment to mean “a person who undertakes to
produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such
establishment, through contract labour or who supplies contract labour for any work of the establishment and includes
a sub-contractor.”
2. Section 2 (e) defines "Establishment" as “(i) any office or department of the Government or a local authority, or (ii)
any place where any industry, trade, business, manufacture or occupation is carried on.”
3. Section 2 (g) defines "Principal employer" as “(i) in relation to any office or department of the Government or a local
authority, the head of that office or department or such other officer as the Government or the local authority, as the
case may be, may specify in this behalf, (ii) in a factory, the owner or occupier of the factory and where a person has
been named as the manager of the factory under the Factories Act, 1948, the person so named, (iii) in a mine, the

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 owner or agent of the mine and where a person has been named as the manager of the mine, the person so named, and
(iv) in any other establishment, any person responsible for the supervision and control of the establishment.”
4. Section 2 (i) defines “Workman" to mean, any person employed in or in connection with the work of any
establishment to do any skilled, semi-skilled or unskilled manual, supervisory, technical or clerical work for hire or
reward, whether the terms of employment be express or implied.
5. Section 2 (b) of the Act states that a workman shall be deemed to be employed as "contract labour" in or in
connection with the work of an establishment, when he is hired in or in connection with such work by or through a
contractor, with or without the knowledge of the principal employer.
6. Section 16 Canteens.-
(1) The appropriate Government may make rules requiring that in every establishment-- (a) to which this Act applies, (b)
wherein work requiring employment of contract labour is likely to continue for such period as may be prescribed, and
(c) wherein contract labour numbering one hundred or more is ordinarily employed by a contractor, one or more
canteens shall be provided and maintained by the contractor for the use of such contract labour.
(2) Without prejudice to the generality of the foregoing power, such rules may provide for—
(a) the date by which the canteens shall be provided;
(b) the number of canteens that shall be provided, and the standards in respect of construction, accommodation, furniture
and other equipment of the canteens; and
(c) the foodstuffs which may be served therein and the charges which may be made thereof.
7. Section 17 Rest-rooms.-
(1) In every place wherein contract labour is required to halt at night in connection with the work of an establishment—
(a) to which this Act applies, and
(b) in which work requiring employment of contract labour is likely to continue for such period as may be prescribed, there
shall be provided and maintained by the contractor for the use of the contract labour such number of rest-rooms or such
other suitable alternative accommodation within such time as may be prescribed.
(2) The rest rooms or the alternative accommodation to be provided under subsection (1) shall be sufficiently lighted and
ventilated and shall be maintained in a clean and comfortable condition.
8. Section 18 Other facilities- It shall be the duty of every contractor employing contract labour in connection with the
work of an establishment to which this Act applies, to provide and maintain—
(a) a sufficient supply of wholesome drinking water for the contract labour at convenient places;
(b) a sufficient number of latrines and urinals of the prescribed types so situated as to be convenient and accessible to the
contract labour in the establishment; and
(c) washing facilities.
9. Rule 25 (2) (v) (a) In cases where the workmen employed by the contractor perform the same or similar kind of work
as the workmen directly employed by the principal employer of the establishment, the wage rates, holidays, hours of
work and other conditions of service of the workmen of the contractor shall be the same as applicable to the workman
directly employed by the principal employer of the establishment on the same or similar kind of work

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 Pleaded that in the case of any disagreement with regard to the type of work the same shall be decided by the Chief Labour
Commissioner (Central)
10. Rule 25 (2) (v) (b) in other cases the wage rates, holidays, hours of work and conditions of service of the workmen of
the contractor shall be such as may be specified in this behalf by Chief Commissioner (Central).
11. Section 14 Revocation, suspension and amendment of licences.-
(1) If the licensing officer is satisfied, either on a reference made to him in this behalf or otherwise, that—
(a) a licence granted under section 12 has been obtained by misrepresentation or suppression of any material fact, or
(b) the holder of a licence has, without reasonable cause, failed to comply with the conditions subject to which the licence
has been granted or has contravened any of the provisions of this Act or the rules made thereunder, then, without
prejudice to any other penalty to which the holder of the licence may be liable under this Act, the licensing officer may,
after giving the holder of the licence an opportunity of showing cause, revoke or suspend the licence or forfeit the sum,
if any, or any portion thereof deposited as security for the due performance of the conditions subject to which the
licence has been granted.
(2) Subject to any rules that may be made in this behalf, the licensing officer may vary or amend a licence granted under
section 12.

12. Rule 24 of the Central Rules provides that the security amount of Rs. 30/- for each of the workmen is to be deposited
as security for the due performance of the conditions of licence and compliance with the provisions of the Act or the
rules made thereunder.
13. Section 34 Power to remove difficulties-
If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the
Official Gazette, make such provisions not inconsistent with the provisions of this Act, as appears to it to be necessary
or expedient for removing the difficulty.

Judgement and analysis of Reasoning given by the Court:

Issue 1
The court rejected the contention of the petitioner with respect to them not been covered in the definition of “contractors” as
given in the Act. Petitioners gave two reasons for their exclusion, first, the work of the petitioners is not any part of the work
of the principal employer nor is it the work "in connection with the work of the establishment", namely, principal employer
and second, the work of the petitioners is normally not done in the premises of the "establishment" of the principal employer.
While relying upon the definitions provided in the Act the petitioner placed a great reliance on the words “work of the
establishment” and suggested that since the workmen employed by the petitioners are not employed in connection with the
work of establishment, they are not contract labours. The work of the establishment is, according to the petitioners, not only at
the place where the business, trade, industry of the establishment is carried on but also the actual business or trade or industry
of the establishment.
The contention of the petitioner was held to be unsound. The court held that when the banking company employs the

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petitioners to construct a building, the petitioners are in relation to the establishment, contractors who undertake to produce a
given result for the bank. The petitioners are also persons who undertake to produce the result through contract labour. The
petitioners may appoint sub-contractors to do the work. Hence, all the requirements of section 2 (c) are fulfilled.
The court looked at the context and object of the words given the definition clauses of the Act to interpret it in such a way as
to include the work done on a work site away from the existing premises of the business for the benefit of business or its
expansion, as “work of the establishment”. The harmonious meaning that arose out of the definitions of contractors, workman,
contract labour, establishment, principal employer all implied that the “work of the establishment” includes the work site of
the establishment where a building is constructed. The work of construction was held to be the work of establishment. The
expression "employed in or in connection with the work of the establishment" does not mean that the operation assigned to the
workmen must be a part or incidental to the work performed by the principal employer. According to the Act, the contractor is
employed to produce the given result for the benefit of the principal employer in fulfilment of the undertaking given to him.
Therefore, the employment of the contract labour, namely, the workmen by the contractor was held to be in connection with
the work of the establishment. The petitioners were declared contractors within the meaning of the Act and their contentions
were rejected.

Issue 2

With regard to second issue, the court observed that there is no unreasonableness in application of the provisions contained in
the impugned Act to pending contracts. In fact, pendency of contract was held to be an irrelevant consideration by the court as
the subject matter of the Act is not the contract but the contract labourers. Hence, there is no question of retrospective
operation.

Further, since the petitioners did not produce sufficient evidence to show that they will be adversely affected by the provisions
of the Act. Interest of the workmen were given the utmost eminence and since they are remedied by the objects of Act, the
court held that it should be applied to all contract labourers with any prejudice of pendency contention. The protection of
labourers’ interests are minimum labour welfare and there is no unreasonableness in its application.

Issue 3

While dealing with the third issue, the court looked into the merits of petitioner’s contention and the object of the Act.
Power to impose tax is considered an essential legislative function and is recognized as inherent power of State. Under Article
265 of the Constitution no tax can be levied or collected save by authority of law, and here ‘law’ means law enacted by the

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competent legislature and not made by the executive. The Supreme Court has held in its various judgment that though the
power to levy tax is an essential legislative function and as such cannot be delegated. However, some of it can still be
delegated subject to limitation that the essential legislative functions are performed by the legislative itself, which is to lay
down the policy and the guidelines for the imposition of taxes.

The court held that, the fees prescribed for registration, licence and renewal of licences do not amount to a levy of tax. The
Government has to bear expenses for the scheme of registration, licence. The Government gives service in regard to licences
and registration and the fees charged for that service cannot be considered as imposition of tax.

Further it was held that there is no arbitrary power or excessive delegation of legislative authority with regard to grant of
licence. The Act and the Rules provide ample guideline as to the grant and terms and conditions of licence. Section 15 of the
Act confers a right of appeal on any person who is aggrieved by any order refusing a licence or if there is revocation or
suspension of licence. Similarly, when there is revocation of registration of an establishment or there is refusal to grant
registration, there is a right of appeal.

Hence, petitioners’ contentions with regard to this issue were also refuted by the apex court.

Issue 4

Various provisions of the Act were challenged by the petitioners on different grounds thereunder, which were dealt by the
court one by one.

Firstly, the provisions of section 16 to 18 read with Central Rules 40 to 56 were challenged on the grounds that
implementation of these provisions in impossible and impracticable. These provisions mandates the contractor to provide
reasonable working conditions to protect the dignity of Contract Labourer. The court held that, condition of contract labour
has been engaging the attention of various committees for a long time. The benefits conferred by the Act and the Rules are
social welfare legislative measures. The various measures which are challenged as unreasonable namely, the provisions for
canteens, rest rooms, and facilities for supply of drinking water, laterines, urinals, first aid facilities are amenities for the
dignity of human labour. The measure is in the interest of the public. There is a rational relation between the impugned Act
and the object to be achieved and the provision is not in excess of that object. There is no violation of Article 14. The
classification is not arbitrary. The legislature has made uniform laws for all contractors.
These facilities are necessary to protect the labourer from exploitation and were held to be reasonable.

Secondly, the provisions contained in Central Rule 25 (2) (v) (b) were challenged as unreasonable. The contention against this

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Rule was that there is no provision of appeal and the decision of Labour Commissioner is final. The court observed in this
regard that it is not difficult to determine and decide cases of this type. The Commissioner of Labour has special knowledge.
Further explaining, it was held that it will be a question from statute to statute, from fact to fact as to whether absence of a
provision for appeal makes the statute bad. The provisions contained in Rule 25 (2) (v) (b) refer to wages, hours of work and
conditions of service in similar employment.
Since the issue involved in these cases is simple, a long drawn procedure may, as the court held, exceed the duration of
employment of the workmen, thereby prejudicing the parties involved. A proper standard is laid down in the explanation to
Rule 25 (2) (v) (b). The absence of a provision for appeal is not unreasonable in the context of provisions here. The
Commissioner can reasonably expected to have due regard to the wages of workmen in similar employment. The parties are
heard and the Commissioner of Labour who is specifically acquainted with the conditions, applies the proper standards.
Hence, it was held that there is no unreasonableness in the Rules.

Thirdly, constitutional validity of section 14 was challenged by the petitioners. The court held that section 14 of the impugned
Act is constitutionally valid as it provides for forfeiture in the case of non-compliance without any reasonable cause. Further,
provision of giving an opportunity of showing cause in contained the provisions of the section and hence there is no arbitrary
conferment of powers. Such forfeiture provision act as deterrent for compliance and is constitutionally valid.

Finally, Rule 24 mandating deposition of Rs.30 per worker as a security was contented to be unconstitutional as it offends
article 14 and article 19 (1) (f). The court rejected this contention citing reason that the classification is not arbitrary as it is
relatable to big and small contractors according to the number of workers employed by them. Further, the argument that
government is not under obligation to use this security for the benefit of labourers makes it violative of the constitutional
provisions is incorrect as the forfeiture of this sum is an “administrative penalty” which is to ensure the compliance of the
conditions upon which the license was given. Hence, the said rule was held to be reasonable and constitutionally valid.

Issue 5

Section 34 of the impugned Act relates to provision which is known as Henry VIII clause in legal terminology. Henry VIII
clause is basically delegation of power to remove difficulties to the executive for smooth implementation of the Act. Section
34 empowers the Central Executive to make rules, which are not inconsistent to the provisions of the Act for removal of
difficulty.

Petitioner challenged Section 34 of the impugned Act as unconstitutional on ground of excessive delegation. Reliance was
placed by the petitioner on the Supreme Court ruling, Jalan Trading Co. v Mazdoor Union1, whereby the Supreme Court
was called upon to decide the legality of such a clause. Section 37 (1) of the payment of Bonus Act 1965 empowered the

1
AIR 1967 SC 691
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central government to make such orders, not inconsistent with the purpose of the act, is might be necessary or expedient for
the removal of any doubts or difficulties. Section 37 (2) made the order passed by the central government under sub section
(1) final. The court by a majority of 3:2 held section 37 ultra vires on the ground of excessive delegation in as much as the
government was made the sole judge of whether any difficulty or doubt had arisen, whether it was necessary to remove such
doubt or difficulties and whether the order made was consistent with the provisions of the act. Again, the order passed by the
central government was 'final'. Thus, in substance, legislative power was delegated to executive authority, which was not
permissible.

The minority, however, took a liberal view and held that the functions to be exercised by the central government was not
legislative functions at all but were intended to advance the purpose which the legislature had in mind. In the words of
Hidayatullah, J. "Parliament has not attempted to set up legislation. I have stated all that it wished in the subject of bonus in
the act. Apprehending, however, that in the application of the new act doubts and difficulty might arrive and not leaving there
solutions to the court with the attendant delays and expense, parliament have chosen to give power to the central government
to remove doubt and difference by a suitable order."

It is submitted that the minority view is correct and after Jalan trading company 2, the Supreme Court adopted the liberal
approach in the present case where it held section 34 as provision for giving effect to the Act. The refused to accept that such
delegation amounts to excessive delegation by interpreting it to be the provision for internal functioning of the administrative
machinery. It was held that difficulties can only arise in implementing the rules and hence, section 34 does not amount to
excessive delegation.
6. Balwant Rai Saluja vs. Air India Ltd., (2014) 9 SCC 407.
The brief facts of the present case are as follows:
1. Air India had contracted the Hotel Corporation of India, a wholly-owned subsidiary of Air India, (“HCI”) to run a canteen
on its corporate premises, under the mandate of the Factories Act, 1948. As per the contract between Air India and HCI, HCI
had absolute responsibility to run the canteen and they had provided employees towards
the same. The employees which were engaged were employed on a casual/temporary basis by HCI which was acting as the
contractor for running and operating the said canteens.
2. The claim of the employees was that they should be regarded as deemed employees of Air India’s management as they
worked in the canteen which worked for the benefit of Air India’s employees and was established on Air India’s premises.
3. The employees presented their claim before the Industrial Tribunal-cum-Labour Court post which they approached the
High Court of Delhi and subsequently the Supreme Court, appealing the decisions of the lower courts.
ISSUE
Whether workers, engaged on a casual or temporary basis by a contractor (HCI) to operate and run a statutory canteen, under
the provisions of the Factories Act, 1948, on the premises of Air India, can be said to be the workmen of the said corporation.
Relevant statutory provisions applicable in the present case are as follows:

2
Ibid.
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Section 46 of the Factories Act, 1948;
Rules 65 to 70 of the Delhi Factory Rules, 1950;
Section 9 of the Companies Act, 2013;
Section 34 of the Companies Act, 1956

REASONING
The employees argued that they were workmen under the provisions of the Factories Act and they were working in a canteen
which was established under the provisions of the statute, and since they were working in a canteen which was under the
control of Air India, for whose benefit the canteen was being run, they weren’t under the control and management of the
contractor. It was further argued that as HCI functioned under Air India’s management, the employees also worked under Air
India’s management. The concept of control was put forth
by the employees by citing precedents wherein the courts had analyzed control exercised by the principle employer, Air India
in the present case, as a relevant test. The court also referred to cases wherein complete administrative control of the
management over the contract workers sourced from a contractor had been examined along with certain judgements from
the English courts wherein employer-employee relationships on a contractual basis were analyzed. With respect to
the relationship between Air India and HCI, issues regarding the economic dependence of the subsidiary role in
management and maintenance of the canteen premises, representation of workers, modes of appointment and termination as
well as resolving disciplinary issues among workmen were also considered.
The court noted that an integrated approached should be adopted to adjudicate the present case whereby it should be examined
as to whether the concerned employees were completely integrated into the employer’s business or were they independent
despite being attached with the business to a certain extent.
ANALYSIS
While analyzing the present facts and circumstances, the court observed that the running of the concerned canteens and
control over its functioning was managed by HCI which included aspects regarding appointment, payment of wages,
dismissal from service and disciplinary action on staff. Despite that, however, it was observed that Air India did exercise
supervision over aspects such as quality of food and services, performance of the staff, and other related operations.
However, going by the integrated approach, the court held that HCI’s employees stood on a different footing as HCI was a
separate legal entity and carried on a different business. Further, the court held that Air India did not exercise absolute and
effective control over HCI’s employees.
CONCLUSION
The court thus held that the test of employer-employee relationship was not satisfied with respect to Air India and HCI’s
employees. Therefore, HCI’s employees could not be considered as deemed employees of Air India.
The approach of the Supreme Court of applying an integrated approach while adjudicating the dispute herein is noteworthy as
the court did not merely analyze the traditional test of control in the present case, but took a holistic approach of
examining all the facts and circumstances of the case.

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 7. Secretary State of Karnataka v. Umadevi
Issue addressed in State of Karnataka vs Umadevi
The main question which was addressed in this case was -
o Whether the respondents working under different services as a temporary daily wages worker are entitled for
regularisation?
o Whether the daily wage workers are entitled to get equal pay for equal work ?
o Whether the State can make any laws regarding employment under Article 309 of the Constitution?
Legal Provisions involved in State of Karnataka vs Umadevi
Article 14 of the Constitution of India
Article 14 deals with equality before law. It states that the state shall not deny to any person equality before the law or the
equal protection of the laws within the territory of India.
Article 16 of the Constitution of India
Article 16 guarantees equality of opportunities in public employment. It provides-
1. There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office
under the State.
2. No citizen shall on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be
ineligible for, or discriminated against in respect of, any employment or office under the State.
3. Nothing in this article shall prevent Parliament from making any law prescribing, in regard to a class or classes of
employment or appointment to an office under the Government of, or any local or other authority within, a State or
Union territory, any requirement as to residence within that State or Union territory prior to such employment or
appointment.
4. Nothing in this article shall prevent the State from making any provision for the reservation of appointments or posts
in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the
services under the State.
4A. Nothing in this article shall prevent the State from making any provision for reservation in matters of promotion, with
consequential seniority, to any class or classes of posts in the services under the State in favour of Scheduled Castes and the
Scheduled Tribes which in the opinion of State are not adequately represented in the services under the State.
Article 309 of the Constitution of India
Article 309 of the Constitution gives the Government the power to frame rules for the purpose of laying down the conditions
of service and recruitment of persons to be appointed to public services and posts in connection with the affairs of the Union
or any of the States. It empowers the President or Governor to control the recruitment and terms of services of people
appointed in the public services.
Judgment and Impact of State of Karnataka vs Umadevi
In this case, the Supreme Court addressed two primary issues in the appeals. The High Court regarding the Commercial Taxes
Department directed that daily wage workers should be paid wages equivalent to regular employees in the same cadre starting
from their appointment dates. The Supreme Court in this case modified this order and stated that wages should be aligned
with the lowest grade of government employees from the date of the decision of the High Court and not from the date of
appointment. The Court also waived the age restrictions for recruitment and gave weightage to those who had been working
in the department for a significant time period.
In another set of appeals, the Supreme Court held that appointments made against government directives were not
permissible. Therefore, no relief was granted to the appellants.
The Court highlighted that public employment must comply with constitutional and legal provisions to ensure equality of
opportunity. Temporary or daily wage employment which are permissible under certain conditions should not replace the
regular recruitment process.
The Court explained that the regularisation of temporary employment does not equate to permanent status. In this case, the
doctrine of legitimate expectations was also discussed and it was noted that employees cannot claim regularisation based on
past decisions without formal assurances from the authorities.
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Conclusion
The decision in State of Karnataka vs Umadevi, 2006 asserted that the employees appointed on a temporary basis do not have
a fundamental right to claim permanent employment or equal pay with regular employees. Regular appointments must follow
constitutional procedures and temporary employment does not hold permanent status. The Court held that the principles of
equality of opportunity and fairness in public employment ensured that permanent status cannot be granted only on the basis
of temporary employment.

8. Gujarat Mazdoor Sabha v. State of Gujarat (2020)

Facts of the case
On 24 March 2020, a nationwide lockdown was declared by the central government to prevent the spread of COVID-19
pandemic. Due to this nationwide lock down the economic activities that were going on came to a standstill. This lock down
was further extended many times like the second time the lockdown was imposed on 14 April 2020.
On 17 April 2020, there was a notification issued by the labour and employment department of the state of Gujarat under
section.5 of the Factories Act. This notification exempted all the factories registered under the act from various provisions
relating to weekly hours, daily hours, intervals for rest etc., for adult workers. This notification was from 20 April 2020 till 19
July 2020.
The notification that was issued on 17 April was for a period of four months, but the state government of Gujarat again issued
another notification on 20 July 2020, this notification too had similar content and intended to extend the exemption granted to
the factories from 20 July 2020 till 19 October 2020.
Issue raised before the court
1. Whether the notification issued by the state government under section.5 of the Factories Act, 1948 was valid or not?
Arguments from the Appellant’s side
 The learned counsel from the appellant’s side contends that the notifications issued by the state government under
section.5 of the Factories Act or invalid. Sec.5 of the said act can only be invoked if there is a situation of ‘Public
Emergency’. Sec.5 itself have the explanation for ‘Public Emergency’ as a ‘Grave Emergency’, which threatens the
security of India or any part of the territory by war, external aggression or internal disturbance.
 The counsel further contends that the ‘Pandemic’ or ‘lockdown’ cannot be included in the meaning of ‘Public or
Grave Emergency’. Although sec.5 of the Factories Act and ar.352 of the Constitution, both have the expression
‘Internal disturbance’ but are significantly different as in ar.352 of the Constitution, the involvement of the President
is required but on the other hand in sec.5 of the Factories act, it can be exercised during the objective conditions
mentioned and should in turn make the conditions better.
 The counsel alleges that the notification exempted all the factories under sec.5 of the Factories Act, 1948 but instead
sec.65 (2) states the suspension of sections 51, 52, 54 and 56 when there is exceptional pressure of work and this
condition was not existing at the time of the lockdown as the state exempted all the factories without knowing what
kind of work these factories are doing or what type of manufacturing work is required to be done by the labourers and
took all the factors in one blanket only doing injustice to all the labourers.
 The counsel from the appellant side highlighted the point of payment of wages during overtime. The wages to be paid
during overtime are the double of the normal wages as the labourers are putting in extra work and doing more from
the hours that are fixed, yet the notification proportionate the overtime wages to the existing wages which violates the
fundamental rights of the labourers under article 23, 21 and 14 of the Constitution and also fails the minimum wages
act, 1948 as it amounts to forced labour.
Arguments from the respondent side
 The counsel from the respondent’s side contends that the notification issued by the state government under sec.5 of
the Factories Act is valid and neither have they violated the fundamental rights under articles 23, 21 and 14 of the
Constitution. The notification issued by the government under sec.5 of the Factories Act states that the state me
exempt any factory or class of factories from all or any provisions of the act in a ‘Public Emergency’.
 Continuing the previous argument, the counsel justifies the term ‘Public Emergency’ in context with the COVID-19
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 pandemic. The pandemic is a public emergency as it has disrupted the “social order of the country.” Emergency
measures were introduced so that the existence and integrity of the state can be protected.
 The counsel further highlights that the notification was issued under sec.5 of the factories act so that the minimum
production levels in the factors were observed. There is no exceptional pressure of work in the factory so sec.65 (2) is
not the basis for issuance of the notification.
 The counsel from the respondent side further alleges that the labourers were only allowed to work three additional
hours and employers were also going to proportionally compensate them for the same. It also observed that the
employers are also facing financial problems due to this lockdown so, the conditions are being applied.
 The counsel further gives a reference of the Pfizer Private Limited, Bombay vs. workmen[1] stating that during the
time of the emergency, all the important steps should be taken so that the industrial production of the nation can be
enhanced.
Related provisions
1. Constitution of India, 1950
Ar.352: (Proclamation of Emergency) – (1) If the President is satisfied that a grave emergency exists whereby the security of
India or of any part of the territory thereof is threatened, whether by war or external aggression or armed rebellion, he may, by
Proclamation, made a declaration to that effect [in respect of the whole of India or of such part of the territory thereof as may
be specified in the Proclamation.
[Explanation.- A Proclamation of Emergency declaring that the security of India or any part of the territory thereof is
threatened by war or by external aggression or by armed rebellion may be made before the actual occurrence of war or of any
such aggression or rebellion, if the President is satisfied that there is imminent danger thereof.]
(2) A Proclamation issued under clause (I) may be or revoked by a subsequent proclamation.
(3) The President shall not issue a Proclamation under clause (I) or a Proclamation varying such Proclamation unless the
decision of the Union Cabinet (that is to say, the Council consisting of the Prime Minister and other Ministers of Cabinet rank
under Article 75) that such a Proclamation may be issued has been communicated to him in writing.
(4) Every Proclamation issued under this article shall be laid before each House of Parliament and shall, except where it is a
Proclamation revoking a previous Proclamation, cease to operate at the expiration of one month unless before the expiration
of that period it has been approved by resolutions of both Houses of Parliament.
Provided that if any such Proclamation (not being a Proclamation revoking a previous Proclamation) is issued at a time when
the House of the People has been dissolved, or place during the period of one month referred to in this clause, and if a
resolution approving the Proclamation has been passed by the Council of States, but no resolution with respect to such
Proclamation has been passed by the House of the People before the expiration of that period, the Proclamation shall cease to
operate at the expiration of thirty days from the date on which the House of the People first sits after its reconstitution, unless
before the expiration of the said period of thirty days a resolution approving the Proclamation has been also passed by the
House of the People.
(5) A Proclamation so approved shall, unless revoked, cease to operate on the expiration of a period of six months from the
date of the passing of the second of the resolutions approving the proclamation under clause (4);
Provided that if and so often as a resolution approving the continuance in force of such a Proclamation is passed by both
Houses of Parliament the Proclamation shall, unless revoked, continue in force for a further period of six months from the
date on which it would otherwise have ceased of operate under this clause.
Provided further that if the dissolution of the House of the People takes place during any such period of six months and a
resolution approving the continuance in force of such Proclamation has been passed by the House of the People during the
said period, the Proclamation shall cease to operate at the expiration of thirty days from the date on which the House of the
People first sits after its reconstitution unless before the expiration of the said period of thirty days, a resolution approving the
continuance in force of the proclamation has been also passed by the House of the People.
(6) For the purpose of clause (4) and (5), a resolution may be passed by either House of Parliament only by a majority of the
total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting.
(7) Notwithstanding anything contained in the foregoing clauses, the President shall revoke a Proclamation issued under
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clause (l) or a Proclamation varying such Proclamation if the House of the People passes a resolution disapproving, or, as the
case may be, disapproving the continuance in force of, such Proclamation.
(8) Where a notice in writing signed by not less than one-tenth of the total number of members of the House of the People has
been given of, their intention to move a resolution for disapproving, or, as the case may be, for disapproving the continuance
in force of, a Proclamation issued under clause (l) or a Proclamation varying such Proclamation, – (a) to the Speaker, if the
House is in session; or
(b) To the President, if the House is not in session, a special sitting of the House shall be held within fourteen days from the
date on which such notice is received by the Speaker, or as the case may be, by the President, for the purpose of considering
such resolution.
(9) The power conferred on the President by this article shall include the power to issue different Proclamations on different
grounds, being war or external aggression or [armed rebellion] or imminent danger of war or external aggression or [armed
rebellion], whether or not ‘here is a Proclamation already issued by the President under clause (l) and such Proclamation is in
operation.[2]
Ar.142: (Enforcement of decrees and orders of Supreme Court and unless as to discovery, etc) – (1) The Supreme Court in the
exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or
matter pending before it, and any decree so passed or orders so made shall be enforceable throughout the territory of India in
such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in
such manner as the President may by order prescribe.
(2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respects the whole of
the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the
discovery or production of any documents, or the investigation or punishment of any contempt of itself.[3]
Ar.355: (Duty of the Union to protect States against external aggression and internal disturbance) –It shall be the duty of the
Union to protect every State against external aggression and internal disturbance and to ensure that the government of every
State is carried on in accordance with the provisions of this Constitution.
Ar.356: (Provisions in case of failure of constitutional machinery in State)- (I) If the President, on receipt of report from the
Governor of the State or otherwise, is satisfied that a situation has arisen in which the government of the State cannot be
carried on in accordance with the provisions of this Constitution, the President may be Proclamation- (a) assume to himself all
or any of the functions of the Government of the State and all or any of the powers vested in or exercisable by the Governor or
anybody or authority in the State other than the Legislature of the State;
(b) Declare that the powers of the Legislature of the State shall be exercisable by or under the authority of Parliament;
(c) make such incidental and consequential provisions as appear to the president to be necessary or desirable for giving effect
to the objects of the Proclamation, including provisions for suspending in whole or in part the operation of any provisions of
this constitution relating to anybody or authority in the State.
Provided that nothing in this clause shall authorize the President to assume to himself any of the powers vested in or
exercisable by a High Court, or to suspend in whole or in part the operation of any provision of this Constitution relating to
High Courts.
(2) Any such Proclamation may be revoked or varied by a subsequent Proclamation.
(3) Every Proclamation issued under this article except where it is a Proclamation revoking a previous Proclamation, cease to
operate at the expiration of two months unless before the expiration of that period it has been approved by resolutions of both
Houses of Parliament. Provided that if any such Proclamation (not being a Proclamation revoking a previous Proclamation) is
issued at a time when the House of the People is dissolved or the dissolution of the House of the People takes place during the
period of two months referred to in this clause, and if a resolution approving the Proclamation has been passed by the Council
of States, but no resolution with respect to such Proclamation has been passed by the House of the People before the
expiration of that period, the Proclamation Shall cease to operate at the expiration of thirty days from the date on which the
House of the People first sits after its reconstitution unless before the expiration of the said period of thirty days a resolution
approving the Proclamation has been also passed by the House of the People.
(4) A Proclamation so approved shall, unless revoked, cease to operate on the expiration of a period of six months from the
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date of issue of the Proclamation: Provided that if and so often as a resolution approving the continuance in force of such a
Proclamation is passed by both Houses of Parliament, the Proclamation shall, unless revoked, continue in force for a further
period of six months from the date on which under this clause it would otherwise have ceased to operating, but no such
Proclamation shall in any case remain in force for more than three years:
Provided further that if the dissolution of the House of the People takes place during any such period of six months and a
resolution approving the continuance in force of such Proclamation has been passed by the Council of States, but no
resolution with respect to the continuance in force of such Proclamation has been passed by the House of the People during
the said period, the Proclamation shall cease to operate at the expiration of thirty days from the date on which the House of
the People first sits after its reconstitution unless before the expiration of the said period of thirty days a resolution approving
the continuance in force of the Proclamation has been also passed by the House of the People.
(5) Notwithstanding anything contained in clause (4), a resolution with respect to the continuance in force of a Proclamation
approved under clause (3) for any period beyond the expiration of one year from the date of issue of such proclamation shall
not be passed by either House of Parliament unless- (a) a Proclamation of Emergency is in operation, in the whole of India or,
as the case may be, in the whole or any part of the State, at the time of the passing of such resolution, and
(b) The Election Commission certifies that the continuance in force of the Proclamation approved under clause (3) during the
period specified in such resolution is necessary on account of difficulties in holding general elections to the Legislative
Assembly of the State concerned:
Provided that in the case of the Proclamation issued under clause (1) on the 6th day of October, 1985 with respect to the State
of Punjab, the reference in this clause to “any period beyond the expiration of two years”.[4]
Ar.23 🙁 Prohibition of traffic in human beings and forced labour) – (1) Traffic in human beings and begar and other similar
forms of forced labour are prohibited and any contravention of this provision shall be an offence punishable in accordance
with law.
(2) Nothing in this article shall prevent the State from imposing compulsory service for public purpose, and in imposing such
service the State shall not make any discrimination on grounds only of religion, race, caste or class or any of them.[5]
Ar.21: (Protection of life and personal liberty) –No person shall be deprived of his life or personal liberty except according to
procedure established by law.[6]
Ar.14: (Equality before law) – The State shall not deny to any person equality before the law or the equal protection of the
laws within the territory of India, Prohibition of discrimination on the grounds of religion, race, caste, sex or place of birth.[7]
 Factories Act, 1948
Sec.5: (Power to exempt during public emergency) –In any case of public emergency the State Government may, by
notification in the Official Gazette, exempt any factory or class or description of factories from all or any of the provisions of
this Act 20[except section 67] for such period and subject to such conditions as it may think fit: PROVIDED that no such
notification shall be made for a period exceeding three months at a time.
[Explanation: For the purposes of this section “public emergency” means a grave emergency whereby the security of India or
of any part of the territory thereof is threatened, whether by war or external aggression or internal disturbance.][8]
Sec.51: (Weekly hours) –No adult worker shall be required or allowed to work in a factory for more than forty-eight hours in
any week.[9]
Sec.54: (Daily hours) –Subject to the provisions of section 51, no adult worker shall be required or allowed to work in a
factory for more than nine hours in any day:
[PROVIDED that, subject to the previous approval of the Chief Inspector, the daily maximum specified in this section may be
exceeded in order to facilitate the change of shifts.][10]
Sec.55 🙁 Intervals for rest) –(1) [The periods of work] of adult workers in a factory each day shall be so fixed that no period
shall exceed five hours and that no worker shall work for more than five hours before he has had an interval for rest of at least
half an hour.
[(2) The State Government or, subject to the control of the State Government, the Chief Inspector, may, by written order and
for the reasons specified therein, exempt any factory from the provisions of sub-section (1) so however that the total number
of hours worked by a worker without an interval does not exceed six.][11]
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Sec.56: (Spread over) –The periods of work of an adult worker in a factory shall be so arranged that inclusive of his intervals
for rest under section 55, they shall not spread over more than ten and a half hours in any day:
PROVIDED that the Chief Inspector may, for reasons to be specified in writing, increase the spread over up to twelve hours].
[12]
Sec.65 (2): ( Power to make exempting orders) –(2) The State Government or, subject to the control of the State Government,
the Chief Inspector may, by written order exempt, on such conditions as it or he may deem expedient, any or all of the adult
workers in any factory or group or a class or description of factories from any or all of the provisions of section 51, 52, 54 and
56 on the ground that the exemption is required to enable the factory or factories to deal with an exceptional press of work.
[13]
Judgement
The honourable court stated that, “this court is cognizant that the respondent aimed to ameliorate the financial exigencies that
were caused due to the pandemic and the subsequent lockdown. However, financial losses cannot be offset on the weary
shoulders of the labouring workers who provide the backbone of the economy. Sec.5 of the Factories Act could not have been
invoked to issue a blanket notification that exempted all factories from complying with human working conditions and
adequate compensation for overtime. As a response to a pandemic that did not result in an internal disturbance of a nature that
post a grave emergency whereby the security of India is threatened. In any event no factory/classes of factory could have been
exempted from compliance with provision of the Factories Act unless an internal disturbance causes a grave emergency that
threatens the security of the state so as to constitute a public emergency within the meaning of sec.5 of the Factories Act.”
The court further stated that, “as a consequence of the judgement and in the interest of doing complete justice under
article.142 of the Constitution, we direct that over time wages shall be paid in accordance with the provision of section.59 of
the Factories act to all eligible workers who have been working since the issuance of the notification.” The court while
delivering the judgement referred to a case in relation with the ‘internal disturbance’ ‘public emergency’ and ‘public order’. In
case of Naga People’s movement of human right vs. union of India [14] it was held there in that, “thought an internal
disturbance is a cause for concern, it does not threaten the security of the country or a part thereof unlike an armed rebellion
which could pose a threat to the security of country or a part thereof.”
In another case of Anuradha Bhasin vs. union of India [15], a three Judge Bench of this court considered the definition of the
expression ‘public emergency’ and interpret this as situations pertaining to ‘sovereignty and integrity of India’, ‘friendly
relations with foreign states’, ‘public order’ and ‘preventing incitement’ to the commission of an offense, which is not present
in the definition of ‘public emergency’ in the sec.5 of the Factories Act, 1948. The court further pointed out a case represented
by the respondent’s counsel of the Pfizer private limited Bombay vs. workman.[16] The court expressed that the dispute was
between the employer and workmen, which was concerned with the problem of onerous working condition by the factory
owner. The case was a private dispute and don’t coincide with the sec.5 emergency under the Factories Act, 1948.
The notification issued by the labour and employment department of the Gujarat State was quashed as the writ petition was
allowed; along with this the employers had to pay the wages for the extra hours put in by the labourers.
Conclusion
It is very clear that the applicant were treated as forced labour without giving the extra wages for the overtime they have put
in. As a result, the decision was in the favour of the appointment, and they were granted those extra wages and the notification
was also quashed. According to me, the decision of the learned court should be appreciated, as during the time of the
lockdown the most affected strata of the society were labourers. As these labourers leave their hometown and go to urban
areas for work. These labourers were adversely affected by this lockdown due to COVID-19 but still they were working for
their employers. Those extra hours put in by the labourers were also putting extra strain on the health of the labour, so the
award of this hard work was given to them, which is very well deserved by them.

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