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Every one has heard the saying 'Prevention is Batter then Cure' best believe that in employee relation scenario 'Prevention is the only Cure'  In the open and liberalized Indian market economy the issue of Productivity, Quality and Globalization are the ones which are currently under a lot of focus, and secondly Labour Legislation or for that matter the dispute resolution machinery is not up to speed on such important point therefore progressive industries are moving away from the legal peripheral issues. There is a need of the industry to distinguish between Law and Management, as the focus has changed from just fulfilling the bare minimum legal requirement to doing much more so that the focus shifts from just complying with the laws, but the same energy is being focused on transformation of employee mindset towards becoming world class. 

The tragic incident at the Union Carbide Plant in BhopalIndia has focused international attention on some of the problems of industrialization in developing countries. Of particular interest has been the issue of whether the cases filed against Union Carbide should be tried in India or American courts. Disputes of this nature indicate the increasing necessity for world-wide comprehension of the laws and regulations governing industry in developing countries, particularly for the developed economies that invest in countries with developing economies.[1]


The developing economy of India recently opened its doors to international investment.[2] Considerable incentives have been given to attract foreign investors into the country.[3] Consequently, there have been a plethora of technical collaborations.  Including foreign investment in plant and machinery for large factories.[4] It has therefore become important, especially for potential investors outside India, to have a basic understanding of Indian industrial law.

The Indian industrial scenario has seen rapid transition in the last decade. From a traditional factory based mindset the Indian industry has moved on to become world class large conglomerate. Indian industry has moved on beyond the Indian borders and is spreading it’s footprint across the globe. Indian family owned businesses are today an epitome of professionally run multinational organization. Indian Family run businesses now employ Expert, CEOs and employees to run their profit ventures. Clearly the business mindset the way we were used to conducting business of our industries has undergone a sea change.

In the late nineties, Indian manufacturing sector has undergone an economic slowdown. This resulted in closure of many well known businesses. People working in these industries were rendered jobless. In order to survive, the industry resorted to various cost cutting initiatives, which included rationalizations of its employee force. The Trade Unions raised this as a big issue as one of the basic principles of the constitution of the Trade Unions, protection of jobs, was being shaken. That was the time when the industrial Managements embarked upon the journey of building effective and transparent communication channels to win over the partnership, collaboration and working trust of the Unions. The downturn was long enough to enable these efforts to stabilize. The Trade Unions became effective partners in progress and actively participated in cost elimination drives, manpower rationalization drives and many more.

Historical Background

The concern of state in matters relating to labour is a product of its obligations to protect the interests of industrial community, while at the same time fostering economic growth in almost all countries. State has assumed powers to regulate labour relations in some degree or the other. In some, has taken the form .of laying down bare rules for observance by employers and workers; in others, the rules cover a wider area of relationship and there is equally greater supervision over the enforcement of these rules.[5] So far as our country is concerned, State intervention in labour matters can be traced back to the enactment of the Employers and Workmen's Disputes Act 1860 which provided for speedy disposal of the disputes relating to the wages of workmen engaged in railways, canals/and other public works, by Magistrates. After World War-I however, State intervention in dispute resolution became more systematic and effective. The Trade disputes Act 1920 was passed providing for constituting courts of Inquiry and Conciliation Boards and forbidding strikes in public utility services without notice. The Act 1920 was replaced by the Trade Disputes Act 1929 incorporating provisions relating to general strikes as well. Thereafter Bombay Trade Disputes (Conciliation) Act 1934 was passed providing for permanent Cadre of conciliators in selected industries. In the year 1938, Trade Dispute Act 1929 was amended authorizing Central and Provincial Govts. to appoint Conciliation Officers. In the same year, Bombay Industrial Disputes Act 1938 was passed providing for setting up of anIndustrial Court and prohibiting strikes and lockouts under certain conditions. Thereafter, during the emergency caused by World War II, under Rule 81A of the Defence of India Rules, power was given to the appropriate Govt. to appoint industrial tribunals and enforce the awards passed by them.

Later on Bombay Industrial Disputes Act was replaced by the Bombay Industrial Relations Act 1946. Little later in the year 1947, the Industrial Disputes Act 1947 (here after referred as the Act) was passed providing for appointing / constituting conciliation officers, boards of conciliation, courts of inquiry and industrial tribunals.

The Act was amended in the year 1956 providing for constituting labour courts and national industrial tribunals. The subject “labour” having been in the concurrent list of the Constitution of India, both the centre and states have the power to legislate on labour matters. Several states have amended the Central Act 1947 so as to suit to them while others have enacted their own Acts.

The main object of the enactment of the Act is to ensure social justice to both the employees and employers and advance the progress of industry by bringing about the existence of harmony and cordial relationship between the parties so as to bring about industrial peace which would accelerate productive activity of the country. The Act provides for prevention and settlement of industrial disputes.

Types of Disputes

There are two types of disputes — interest disputes and rights disputes. Interest disputes relate to determination of new wage level and other conditions of employment while rights disputes on the other hand relate to interpretation and application of existing standards and usually involve an individual worker or group of workers. Under category of rights disputes, claim is made that the workmen have not been treated in accordance with the rules, individual contracts of employment, laws and regulations and as per collective agreements. Such disputes, are also described as “grievance disputes”. Such grievances may be regarding retrenchment, dismissal, payment of wages, working time, overtime, demotion, promotion, transfer, seniority, job classification, work rules and fulfillment of obligations relating to safety and health laid down in an agreement. The definition of “industrial disputes” as given in the Act has a wide coverage. All disputes relating to employment or non-employment, or the terms of employment or with the condition of labour are covered under the definition.


Methods for Settlements of Industrial disputes 

Procedure for settling labour disputes Negotiation, Conciliation and Mediation, Arbitration and Adjudication are well known methods for settlement of industrial disputes.

a. Negotiation: Negotiation is one of the principal means of settling labour disputes. However, due to lack of trust between the employers and workmen or their trade unions or inter-rivalry of the trade unions and the employers being in a commanding position, many a time negotiations fail. Through amendment in the Act by Act 46 of 1982 Chapter II B providing for reference of certain individual disputes to Grievance Settlement Authority has been inserted in the Act. Under this chapter, section 9 C has made it obligatory for the employers to make provision for Grievance Settlement Authority for settlement of industrial disputes connected with an individual workman employed in an establishment in which fifty or more working are employed or have been employed on any day In the preceding twelve months. This amendment however even inspite of having been made twenty one years back has not seen the light of the day.

b.  Conciliation & Mediation: Through Conciliation and Mediation a third party provides assistance with a view to help the parties to reach an agreement. The conciliator brings the rival parties together, discuss with them their differences and assist them in finding out solutions to their problems. Mediator on the other hand is more actively involved while assisting the parties to find an amicable settlement. Sometimes he submits his own proposals for settlement of their disputes.

Conciliation may be voluntary or compulsory. It is voluntary if the parties are free to make use of the same, while it is compulsory when the parties have to participate irrespective of whether they desire to do so or not. Section 4 of the Act provides for appointment of conciliation officers and Sec. 5 for constitution of Boards of Conciliation. While the former is charged with the duty of mediating in and promoting the settlement of. industrial disputes, the latter is required to promote the settlement of industrial disputes. The act generally allows registered trade unions or a substantial number of workers! employees and also in certain cases individual workman to raise disputes. Success of conciliation depends upon the appearance and their sincere participation in conciliation proceedings of the parties before the conciliation officers. Non-appearance and non-participation of the parties in conciliation proceedings poses a serious hindrance in this direction. On the attitude of the parties the National Commission on Labour observed “conciliation is looked upon very often by the parties as merely hurdle to be crossed for reaching the next stage. There is, therefore, casualness about it in the parties and a habitual display of such casualness conditions by the conciliator into that attitude. The representatives sent by the parties to appear before him are generally officers who do not have the power to take decisions or make commitments; they merely carry the suggestions to the concerned authorities on either side. This dampens the spirit of a conciliator. We have been told by the employer’s and workers, organizations alike that the conciliation machinery is weakened because of its falling into this type of disuse in recent years”[6] Sec. 11 of the Act has clothed the conciliation officers with the power to enter premises occupied by any establishment and also has been invested with the powers of civil court under the Civil Procedure code, 1908 when trying a suit for enforcing the attendance of any person and examining him on oath, compelling the production of documents and material objects and issuing commission for examination of witnesses for the purpose of inquiry into any existing or apprehended industrial dispute. These provisions are seldom enforced. Moreover, conciliators most often do not have requisite information on the employers and trade unions, upto date wage/productivity, information and relevant up- to-date case laws which affect his capability to conciliate effectively. The National Commission on Labour in this context laid emphasis for pre job and on the job training of conciliation officers. It was observed by the commission that there is need for certain other measures to enable the officers of the machinery to function effectively. Among these are:

(i) Proper selection of personnel

(ii) Adequate pre job training and periodic in service training through refresher courses, seminars and conferences.

As a part of training, persons recruited to the junior most technical posts in the inspector under any legislation should be made to spend some time with an office of an industrial association and a well organized office of a trade union. They should also acquire familiarity with the working of industrial establishments. At the senior level the officer should have arrangements to understand the broader perspective within which he has to establish his utility to the public. For the new incumbents in such positions, it may not be out of place where the parties have no objection to attend collective bargaining sessions, trade union meetings and discussions organized by trade unions and professional organizations like management associations, Indian Institute of Personnel Management/National Institute of Labour Relation, local productive councils and the like. Situations which an officer has to meet during the course of his work require to be lived with for their better comprehension. We have mentioned these by way of indicators to show how to equip the person for his work. Not only this but the unions position is also weak with the result that they prefer to refer all sorts of disputes to the adjudicating authorities in the hope that the workmen will get something irrespective of their bargaining power.

c. Arbitration: The resort to arbitration procedure may be compulsory or arbitrary. Compulsory arbitration is the submission of disputes to arbitration without consent or agreement of the parties involved in the dispute and the award given by the arbitrator being binding on the parties to the dispute. On the other hand in case of voluntary arbitration, the dispute can be referred for arbitration only if the parties agree to the same. Section 10A of the Act, however, provides only for voluntary reference, of disputes to arbitration. This system, however, has not been widely practiced so far. One of the main reasons for not gaining popularity of this procedure is lack of arbitrators who are able to command respect and confidence of the parties to the dispute. Inter union rivalry also sometimes makes it difficult in arriving at an agreement on selection of an arbitrator who is acceptable to all the trade unions in the industry.

The Apex court in case Kurnal Leather Employers Union v. Liberty Footwear Co.[7] has held that the remedy under section 10 k is voluntary and alternative for settlement of industrial dispute but if the parties to the dispute have agreed in writing for settlement of their disputes through arbitrator, then the Govt. cannot refer the dispute to the Tribunal for adjudication.

d. Adjudication: The Act provides for constitution of labour courts, industrial Tribunals and National Tribunals under section 7, 7A and under section 7 B respectively. Labour courts have been empowered to decide disputes relating to matters specified in the Second Schedule. These matters are concerned with the rights of workers, such as propriety or legality of an order passed by an employer under the standing orders, application and interpretation of standing orders, discharge or dismissal of workman including reinstatement of grant of relief to workman wrongfully discharged or dismissed, withdrawal of any customary concession or privilege and illegality or otherwise of a strike or lockout. The industrial tribunals are empowered to adjudicate on matters specified in both the Second and Third schedule i.e. both rights and interest disputes. The jurisdiction of the Industrial Tribunal is wider than the labour courts.

In case of disputes which in the opinion of the Central Govt. involve question of national importance or is of such nature that workers in more than one State are likely to be affected, the Act provides for constitution of National Tribunals.

Industrial adjudication has undoubtedly played a conclusive role in the settlement of industrial disputes and in ameliorating the working and living conditions of labour class. In this context the National Commission on Labour observed “the adjudicating machinery has exercised considerable influence on several aspects of conditions of work and labour management relations. Adjudication has been on of the instruments for the improvement of wages and working conditions and for securing allowances for maintaining real wages, bonus and introducing uniformity in benefits and amenities. It has also helped to avert many work stoppages by providing an acceptable alternative to direct action and to protect and promote the interest of the weaker sections of the working class, who were not well organized or were unable to bargain on an equal footing with the employer”[8]

The Act empowers the appropriate government to refer industrial disputes when the industrial disputes exist or are apprehended. The Apex court has also held in Shambhu Nath v. Bank of Baroda[9] that the power conferred by Sec. 10 (1) on the Govt. to make reference can be exercised not only when an industrial dispute exists but when it is also apprehended. In the case State of Madras v. C.P. Sarathi[10] and Secretary, India Tea Association v. Ajeet Kumar Bharat,[11] it was held that to make a reference is the administrative Act of the Govt. and the same view has been taken in case Telecom Conway Diveis Mazdoor Sangh & authorities v. State of Bihar[12] and in M/s Avon Services (Production Agencies) Pvt. Ltd. v. Industrial Tribunal Faridabad[13] with the result that the State Govt. has little choice in referring to make references of the disputes after failure of Conciliation proceedings. The adjudication system is not immune from its weakness. The adjudication is dilatory and expensive. The Apex Court in case Ajaib Singh v. Sirhind Co. Op. Marketing Cum Processing Service Society Ltd.[14]

Has also held that reference of industrial dispute to labour court is not subject to limitation under Article 137 of the Limitation Act. Thus no period of limitation having been prescribed under the Act during which the industrial disputes can be raised and referred for adjudication, sometimes state disputes which arose even 15 to 20 years back are referred for adjudication. Moreover the Labour Court, Tribunal and National Tribunal do not posses power of executing the orders / awards passed by them although they are presided over by highly qualified and experienced judicial officers such as District Judges and High Court judges with the result that generally workmen, weaker sections of the society suffer on account of non-implementation of the orders / awards. However, there is no viable alternative to this system. Stringent provisions, therefore, are required for ensuring the time limit within which the orders / awards to be implemented and clothe the courts and tribunals with powers of contempt of court for non-implementation of orders / awards passed by them.

Under the Act, an award made by the adjudication authority is final as there is no appeal. However in actual practice almost every award made against the employer is challenged in the High Court under Art 226 or 227 & in the Supreme Court under Art 136. It takes years before final orders are passed in writ petitions pending before the High Court / Supreme court. If the period taken before the adjudicating authority is counted, it does not take less than 10 to. 20 years before the protracted litigation could be disposed off. It is the weaker sections who are inconvenienced and handicapped the most, by the delay.


As I have mentioned above, due to the maturity of the team in an industrial organization, the complexion of industrial disputes has undergone a change. The small, individual or sometimes frivolous type of industrial disputes have reduced and more issue based disputes which affect larger population or the ones which challenge a question pertaining to interpretation of a policy or its clause are now becoming more in numbers.

The shift from Tripartite to Bipartite way is happening at a very fast pace. The Managements and the Unions have realized over a period that by way the dispute resolution process runs under the Tripartite based system, involving Government agencies it only results in delays and as they say justice (read Resolution) delayed is justice denied. Therefore, the Managements and the Unions now sit across the table and after hearing each other out are finding resolutions to their differences. The positive side effect of such type of resolutions is that they are respected more and thus are more long lasting.

The way the Government agencies have gone about resolving disputes, has left much to be desired and delivered. The approach in most of the cases has been enforcement than conciliation. The Indian Laws are by and large are labour protective. This was necessitated by the way earlier industrialists used to run the industries. This is not the case in India only but it has its roots in the ‘sweat shops’ of 19th century industrialized Europe. However, on one hand, like in other developed / developing nations, Indian industry too has embraced modernization and follow processes which are ergonomic, safe and produce world class quality products. On the other hand the Indian Industrial legislation still remains archaic. I would like to bring forward a point here that the Indian Trade Unionism took birth when India was not an independent country. The Trade Unionism took its roots in the fight for freedom, freedom struggle and this added a very strong favor to the recipe of Indian Trade Unionism. Then, the Indian industrialists,  the pioneers, the rest generation, have their industrial rooting in an Imperialistic & closed economic scenario

Govt. should set-up a time limit for raising disputes and for making reference of disputes under section 10(1) of the act. The Industrial Tribunals must be empowered to execute the awards. passed by them in order to carry out attachments of property, collection of fine imposed, execution of warrant of arrests and service of proclamations without which mere vesting of powers under CP.C. 1908 will not serve any useful purpose. Provision should be made for compulsory conciliation in respect of individual disputes in the place of  Tribunal or Labour Court at the beginning of adjudication for early disposal of the disputes by way of settlement.

The Act should be amended to provide direct access to Tribunals /Labour Courts by the dismissed, discharged, terminated or retrenched workman. Dipartite negotiation must be given priority and for this purpose services of social workers and trade union leaders may be availed of. The Govt. should take adequate steps to facilitate workers, participation in management for better industrial relations, which may be helpful in resolving the industrial disputes at the initial stage and for bringing harmony in relation between the management and labour.

 *Prof. Dr. R.K. Patni

**Dr. C.P. Gupta

*Dean Faculty of Law and Governance, Jayoti Vidya Peeth Women's University, Jaipur

** Department of Law, University of Rajasthan, Jaipur  

Email: drcpgupta97@gmail.com

[1] See Westbook, Theories of Parent Company Liability and the Prospects of an International Settlement, 20 Tex. Int'll.J., 321 (1985)

[2] See Encarnation, The Political Economy of Indian Joint Industrial Ventures Abroad, 36 Int'L Org. 31, 33 (1982

[3] EasonIndia Opens Import Doors, Nation's Bus., Aug. 1985, at 12

[4] Id

[5] Government of India Gazette (1969) Report of the National Commission on Labour p. 307.

[6] Govt. on India Gazette (1969) P. 323-446-7

[7] AIR 1990 SC 247

[8] Govt. of India Gazette (1969) P. 325

[9] AIR 1978 SC 1088

[10] AIR 1953 SC 53

[11] AIR 2000 SC 507

[12] 1989(59) AIR 73 SC

[13] 1978, LLN 503

[14] AIR 1999 SC 1351


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