INDUSTRIAL RELATIONS LAW-MODULE-2

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INDUSTRY-Definition

• Section 2(j) of the industrial disputes Act defines-

• “industry” means any business ,trade, undertaking, or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.

• In the ordinary sense industry or business means an undertaking where capital and labour co-operate with each other for the purpose of producing wealth and for making profits.

• Nothing prevents the statute from giving a wider meaning.

• The I.D Act is intended to bring about industrial peace and harmony.

• Hence Industry is given a wider meaning.• The judiciary has interpreted Industry in a

number of cases.• They can be classified as fallows:

• 1st phase 1953 to 1962-wider meaning• 2nd phase 1963 to 1978- narrow meaning• 3rd phase BWSSB v A.Rajappa [AIR 1978 SC5

48] -reviewed the earlier cases and widest meaning was given

• 1978 Parliament Reacts and amends Industry- not brought in to effect so far

• 4th phase-Reservations about the correct ness of BWSSB case-Requested the CJI to constitute a larger bench than BWSSB case to explain what is industry- State of U.P v Jai Bir Singh [(2005) 5 SCC1]

• 1st phase1953 to 1962• D.N.Banerji v P.R. Mukherjee [AIR 1953 SC 58]

- The judiciary dealt with the question whether Municipality is an industry?

• The SC held though municipal activity could not be regarded as “business or trade” it would fall with in the scope of the expression “undertaking” and it is an industry.

• In Hospital Mazdoor Sabha v State of Bombay The SC held that Hospital comes under then term “undertaking” hence Industry

• Industry includes even activities which have no commercial implications.

• Activities carried on by Govt. or charitable organizations will also be industry.

• The SC in this case laid down a working principle:

“ an activity systematically or habitually undertaken for the production and or distribution of goods or for rendering of material services to the community with the help of employees is an undertaking”

• In this case it was also held that an undertaking to be an Industry must be analogous to trade or business.

• Sovereign or Regal activities are out side the scope of Industry.

• Corporation of the city of Nagpur v Its employees AIR1960 SC 675

• This case was under the C.P and Bearer I.D and Settlement Act, 1947

• Here unlike the definition of industry in the ID Act the word undertaking in this definition is qualified by the words manufacturing or mining.

• The Judiciary could not use the earlier cases and call Corporation as an Undertaking.

• In this case the SC said that municipal functions are analogous to “business or trade”

• Hence Corporation was held to be an industry.

• In Nagpur city corporation case there was another issue raised as to sovereign functions.

• Departments performing sovereign functions are excluded from the definition of Industry.

• If a department performs many functions, some pertaining to industry and other non industrial activities, the predominant functions of the department shall be the criteria for the purpose of deciding whether the department is industry or not.

• The Sovereign functions shall be confined to legislative power, administration of Law and Judicial power.

• Trend Between 1963 to 1978• In this period the trend was narrowing down the meaning

of the term industry.• University of Delhi-v-Ramanath AIR1963 SC 1873 the

SC held that University is not an industry-because:• Main scheme of an educational institution is imparting

education• Teaching is not with in the purview of industry as there is

no commercial motive• The subordinate staff play a minor or insignificant role in

the process of imparting education• Permitting the insignificant role of the subordinate staff to

lend the colour of industry is unreasonable.

• Cricket Club of India-v-Bombay Labour union AIR 1969 SC 276 The SC held that Cricket Club is not an Industry.

• The Clubs activity is basically promotion of the game of Cricket.

• It is a self serving institution• It is not carrying any trade or business.• In the course of promoting the game it has

incidentally earned some profits.• It is not set up for earning profits.

• In the Management of Sardarjung Hospital-v-Kuldipsingh Sethi AIR 1970 SC 1407, the SC held that Hospital is not an industry.

• They overruled the earlier Hospital mazdoor sabha case

• Hospitals run by the Government or Charitable institutions are not run on commercial lines.

• If an hospital or Nursing home is run on commercial basis then it may be an industry.

• The hospitals in question are not industry as they are not run on terms analogous to trade or business.

• Bangalore Water supply Sewerage Board-v-A.Rajappa AIR 1978 SC 548 This was a seven judge bench constituted to review all the earlier cases and explain what is the meaning of Industry.

• This case revived the pre 1962 cases and over ruled the post 1962 cases.

• The law developed in this case is an amalgamation of Hospital Mazdoorsabha case and Nagpur city Corporation case, with minor eloborations.

• The BWSSB case developed a working principle to determine whether an activity is an industry or not:

1. Systematic activity

2. organized by Co-operation between employer and employee

3. For the production and or distribution of goods or services;

• Such an activity is an industry• Absence of profit motive is irrelevant.• If the organization is trade or business it does not

cease to be one because of philanthropy animating the undertaking

• A restricted Category of professions, Clubs, co operatives and little research labs may qualify for exemption, if no employees are entertained but in minimal matters, marginal employees are hired without destroying the non employee character of the unit.

• Regal functions the approach fallowed in Nagpur city corporation was fallowed

• Sovereign functions strictly understood alone qualify for exemption, not the welfare activities or economic adventures undertaken by government or statutory bodies.

• Parliamentary reaction-1982• Amendment to section 2(j)- industry• Amendment barrowed the definition as given in the

BWSSB case- Clarified the situation further by stating that employer – employee relation includes employees employed through contractor.

• The definition excludes certain categories of employment from the definition.

• Coir board-v- Indiradevi (2000)1 SCC 224• State of U.P-v-Jai Bir Singh (2005)5SCC1 a

constitutional bench decision.• Now it has been referred to 9 judge bench

Definition of Workman-Section 2(s)

• Workman means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, Technical, Operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied

• It includes industrial disputes arising out of dismissal, discharge or retrenchment

• It excludes persons subject to defence forces, police force and prison service

• It excludes persons who are mainly employed in managerial or Administrative capacity

• The definition does not differentiate between permanent, temporary etc workers

• Conflicting judicial decisions as to the interpretation of the definition

• Burmah shell storage Distribution Co; of India ltd-v-Management staff association(1970)2LLj590

• May and Baker(I) ltd-v-Workmen(1961)2LLJ94• Sundarambal-v- Govt of Goa(1989)1LLJ61• The above three decisions gave literal

interpretatio as per the words used in th definition

• S.K.Verma-v-Mahesh Chandra(1983)Lab.I.C1483 SC gave a beneficial interpretation to the definition by holding that if an employee employed in an Industry is not expressly excluded from the definition of workman then he is included in the definition.

• H.R.Adyanthaya-v-Sandoz(India)ltd (1995)1LLJ303 SC- Constitutional bench decision held that earlier trend of decisions are correct and over ruled S.K.Verma case

• Distinction between workman and independent contractor

• Workman does the work by himself where as an independent contractor gets the work done by others

• Workman is subject to supervision and control of the employer where as independent contractor is not

• Workman is hired by the employer and can be terminated. In case of contractor there is a contract.

• Hussainbai-v- Alath Factory union AIR1978 SC 1410• The workers employed under a contractor• The work was done for the principal employer• The work was carried at the principal employers

premises• The raw materials were supplied by the principal

employer• The workers raised a dispute that they are the workmen

of the principal employer• The I.T adjudicated that the workmen are the employees

of the principal employer• The S.C up holds the decision of the tribunal and held

that the contractor is a sham

Industrial Dispute and individual dispute

• Industrial dispute means any dispute or difference between employers and employers, or between employers and workmen or between workmen and workmen, which is connected with employment or non-employment or the terms of employment or with the conditions of labour of any person.

• The dispute has to be between plurality of workman and employer

• Individual workman cannot raise an industrial dispute

• A trade union or a number of workmen must rise the dispute

• What number of workmen are required to rise an industrial dispute

• The SC has said that substantial number of workmen will have to rise the dispute

• The Sc has said that substantial number is not majority

• It must however be such number as to lead an inference that the dispute is one which affects the workmen as a class.

Individual dispute deemed as industrial dispute

• 1965 amendment to I.D ACT and insertion of 2A.• Where any employer discharges, dismisses,

retrenches or otherwise terminates the services of an individual workman, any dispute or difference between that workman and his employer…….shall be deemed to be an industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the dispute.

• This definition is not applicable to disputes short of termination

• Any person used in the definition• Workmen of Dimakuchi Tea estate-v- Dimakuchi

Tea estate (1958)1LLJ500S.C The Court held that the word any person in the definition means a person in whose employment or non employment or terms of employment or conditions of labour the workmen as a class have a direct and substantial interest

• Whether such direct and substantial interest has been established in a particular case will depend on its facts and circumstances

• Standard Vacuum refining co; of India ltd-v-the workmen (1960)2LLJ233SC

• this case labour was employed for cleaning and maintenance through contractor

• The regular employees raised a dispute for regularising the contract labour

• The regular workmen have direct and substantial interest in the contract workers

INDUSTRIALDISPUTES

Compulsory Adjudication LC, IT, NT

Award Sec. 18(3) of ID Act

Publication of award

Judicial review - Art. 226 orArt. 136

Voluntary Arbitration – 10-A

Award – 18(2) & 18(3)

Judicial review - Art. 226 orArt. 136

Conciliation (if successfulSettlement)

Sec. 18(3) of The I D act

Collective Bargaining –If successful – settlement

Sec. 18(1) of ID Act

Reference by theAppropriate Government

Sec. 10(1)

S. 2-A, 33-A

Collective bargaining

• It is resolving Industrial disputes by negotiation between the workmen and Employer.

• Though it has been quite common the law recognised only from 1956

• The amended definition 2(p) of the I.D.Act recognises settlements other than Conciliation settlements

• Section 18(1) recognises bilateral settlements to be binding on the parties to the settlements

• Tata Chemicals-v-Workmen(AIR1978SC828)• Unfair labour practices recognises that it is illegal to refuse with a

recognised trade union.• In the process of Bilateral negitiations the parties can use the

Weapons of strikes and Lock outs in order to make the opposite party behave reasonably

• 2(q) Strike means cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal, under a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment.

• The definition does not speak about the purpose of strike• So a strike can be pursuant to an I.D or even otherwise.• The law regulating strikes also does not say that a strike

has to be pursuant to an I.D only• Judiciary has classified strikes in to justified and un-

justified strikes• A strike for purposes other than I.D is unjustified• The facts and circumstances determine whether a strike

is justified or un justified.

• 2(L) defines Lock out as the temporary closing of a place of employment or the suspension of work or refusal by an employer to continue to employ any number of persons employed by him.

• It is an act of belligerency as opposed to Lay-off• Lockout is also classified as justified and

unjustified based on the circumstances of the case

• The labour Court decides the justifiability or other wise of the strikes or lockouts.

• Wages for the period of strikes and lockouts –Syndicate Bank-v- Umesh Nayak 1995 SC

• Go Slow• Not a strike• Considered as a serious form of misconduct• Bharath Sugar Mills ltd-v- Jai singh –How the

Supreme Court considered it as a serious misconduct

• Go slow is likely to be much more harmful than

a strike

Conciliation

• It is facilitated negotiation• Conciliation and Board of conciliation• Conciliation by the conciliation is quite popular• It is compulsory in public utility services• Among other services any section of an industrial

establishment on the working of which the safety of the establishment or the workmen employed there in depends is also a public utility service.

• In public utility services notice has to be given before going on strike.

Binding nature of conciliation settlement

• Binding on parties to the dispute• All other parties summoned to appear in the proceedings

as parties to the dispute• Where a party referred to above is an employer, his heirs

successors or assigns in respect of the establishment to which the dispute relates

• Where a party referred to above relates to workmen, all persons who were employed in the establishment or part of the establishment as the case may be to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment

• In reality how Bi-lateral settlements are converted in to conciliation settlements!

Appropriate Government

• Sec 2(a) of the I.D Act defines• Industries carried on by or under the authority of the

Central Govt –central govt is the appropriate govt• Industries listed in the definition central Govt is the

appropriate Govt• For other industries State Govt is the appropriate Govt• Meaning of carried on by the C.G• Meaning of carried under the authority of the C.G

Appropriate Govt case law

• Heavy Engineering Mazdoor Union-v-State of Bihar 1969(1)SCC 765

• HAL-V-Workmen AIR 1975 SC 1737• Air India Statutory Corporation-v-United Labour

Union(1997)1LLJ 111 SC• SAIL-V-National Union Water Front Workers AIR 2001SC 3527• Workmen of Sri Rangavilas Motors (P) ltd-v-

Rangavilas Motors (p) ltd(1967)2LLJ 12 SC

Government power of Reference

• It is discretionary• Subject to judicial Review• Exercised at any time• Not when arbitration has started or notification is issued• Nirmal singh-v- state of punjab case• State amendments with reference to 2A disputes• Recommendations of Rajasthan Road transport

corporation-v-Krishna kant• Punishment short of termination requires reference

Compulsory Adjudication

• Western India Automobiles-v- Industrial tribunal(1949)1LLj245 FC

• Industrial adjudication is not according to the strict law of master and servant

• Industrial tribunals have powers to do justice by applying principles of equity

• They create rights and duties in favor of the parties• They can create contract for the parties which can be

enforced by coercion• Mismatch between the expectations and the

qualifications•

Section 11-A of the I.D Act

• Proviso- In case of any proceedings under this section, the L.C;I.T shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter

• Workmen of Firestone Rubber Co. of India Ltd-v- Management (1973)1LLJ278SC held-Materials on record means-

• Evidence taken at the inquiry and the proceedings of the enquiry

• The above and any additional evidence led before the tribunal

• Evidence placed before the tribunal for the first time in support of action taken by an employer as well as the evidence adduced by the workman contra

Voluntary Arbitration Sec10A

• Agreement between the workmen and the Management• Send copy to the Govt and conciliation officer• Publication of the agreement• KarnalLeather Karmachari Sanghatan –v-Liberty foot

wear (1989)$SCC448-Publication of the arbitration agreement is a must before arbitration

• Notification by the Govt if majority workmen are parties to the dispute

• Binding nature of the award-18(2) or 18(3)• Rohtas Industries Ltd-v-Rothas industries staff union –

Arbitration subject to judicial review

Publication of awards

• Publication is must• Time duration of 30 days is directory• Award comes in to operation 30 days after

publication• Remington Rand of India Ltd-v-

Workmen(1962)1LLJ287SC• Grindlays bank-v-CGIT(1980)SuppSCC420-

Power of the Tribunal to recall the award