Authorities/lndustrial Dispute Resolution Machinery | Labour and Industrial Law - CLAT PG PDF Download

Dispute Resolution Machineries

• Works Committee
• Conciliation Officers
• Boards of Conciliation
• Court of Inquiry

Works Committee

• Definition: A Works Committee is a body formed in industrial establishments with 100 or more workers to promote good relations between employers and employees.
• Formation: The appropriate Government can order the constitution of a Works Committee in specific industrial establishments.
• Composition: The committee includes representatives from both employers and workers.
• Responsibilities: The Works Committee aims to secure and preserve amity between the employer and workmen, addressing matters of common interest and resolving differences.

Conciliation Officers

• Role: Conciliation Officers are appointed by the Government to mediate and promote the settlement of industrial disputes.
• Appointment: The appropriate Government appoints Conciliation Officers through an official notification.
• Function: They investigate disputes and encourage parties to reach a fair and amicable settlement.
• Reporting: If a settlement is reached, the officer reports it to the Government; if not, they provide a detailed report of their efforts.

Boards of Conciliation

• Establishment: The Government can constitute a Board of Conciliation to facilitate the settlement of industrial disputes.
• Composition: A Board consists of a Chairman and two or four other members as deemed fit by the Government.
• Responsibilities: The Board investigates disputes and works towards achieving a settlement, reporting outcomes to the Government.

Courts of Inquiry

• Formation: The Government can establish a Court of Inquiry to investigate matters related to industrial disputes.
• Composition: A Court may have one or more independent members, with one designated as Chairman.
• Reporting: The Court submits its findings to the Government, typically within six months, although this timeline is not strict.

Voluntary Arbitration under Sec 10A

• When efforts by a Conciliation Officer or Board of Conciliation to resolve a conflict or dispute fail, the involved parties may be encouraged to agree to voluntary arbitration as a means of settling their disagreement.
• Voluntary arbitration has deep historical roots in India, with practices like the Panchayat system being based on this concept. In the industrial context, voluntary arbitration gained prominence in Ahmedabad's textile industry under Mahatma Gandhi's influence.
• The Bombay Industrial Relations Act, introduced by the Bombay Government, included provisions for voluntary arbitration alongside adjudication, reflecting its popularity in the region during the 1940s and 1950s.
• Over the years, the Government of India has emphasized the significance of voluntary arbitration in labor policy, advocating it as a crucial aspect of collective bargaining. This was reinforced in various discussions, including the Indian Labour Conference and the Code of Discipline in Industry.
• In 1956, voluntary arbitration was officially recognized as a measure for settling disputes through third-party intervention under the law. Sec. 10A was added to the Industrial Disputes Act and came into effect on March 10, 1957.

Reference of Disputes for Arbitration

• When a dispute is either existing or anticipated, it can be referred for arbitration if both parties involved in the dispute mutually agree to do so. This agreement must be documented in writing and submitted to the Government and the relevant Conciliation Officer before the dispute is escalated for adjudication to the Labour Court or Tribunal.
• The arbitration agreement should specify the chosen arbitrator and the issues to be resolved in the arbitration proceedings. It must be signed by both parties. This requirement applies to both Sec. 10A and 10(2) where reference is mandatory.
• If an agreement stipulates an even number of arbitrators, it should also include the appointment of an Umpire. The Umpire's role is to make a decision when the arbitrators are unable to reach a consensus. The Umpire's decision will be considered the arbitration award for the purposes of the Act.
• The appropriate Government is responsible for publishing the arbitration agreement in the Official Gazette within one month of receiving a copy of the agreement. This is contingent on the Government being satisfied that the parties who signed the agreement represent the majority of each side. If this condition is not met, the Government can deny the request for arbitration.
• Once a notification has been issued, any employer or workman not party to the arbitration agreement but involved in the dispute will be given an opportunity to present their case before the arbitrator(s).
• The arbitrator is tasked with investigating the dispute and submitting the Arbitration Award, signed by them, to the Government. In cases where an industrial dispute has been referred for arbitration and a notification has been issued, the Government may order the cessation of any strike or lock-out related to the dispute that was ongoing on the date of reference.
• The Arbitration Award submitted to the Government and made enforceable is binding on all parties to the agreement and any other parties summoned to appear in the proceedings as parties to the dispute. This award is also applicable to all employees at the time of the award or those to be employed in the future, even if they were not part of the initial agreement.
• If the arbitration agreement is not notified in the Official Gazette under Sec. 10A, it is only applicable to the parties who agreed to refer the dispute for arbitration. The Arbitration Award is enforceable in the same manner as the adjudication award issued by the Labour Court or Industrial Tribunal.
• Arbitration serves as an alternative to adjudication, and both processes cannot be employed simultaneously. The choice of arbitration is voluntary and rests with the parties involved in the dispute. The arbitrator acts as a quasi-judicial body, functioning independently and possessing the characteristics of a statutory arbitrator. While the arbitrator has considerable discretion, they must operate within the scope of their authority and adhere to due process, including providing notice to parties, ensuring fair hearings, and relying on all available evidence and documents. It is essential to uphold the principles of natural justice throughout the arbitration process.

Acceptance of Arbitration

• Voluntary arbitration has been endorsed and incorporated into law by the Government. However, despite three decades of strong advocacy, it has not gained widespread acceptance. Over the past ten years, less than 1% of reported disputes were referred for arbitration.
• The National Commission on Labour evaluated arbitration as a dispute resolution method and found it lacking in acceptance, particularly among employers.
• The primary challenges identified include selecting a mutually acceptable arbitrator and sharing arbitration costs. Unions often struggle to equally share these expenses with management. Additionally, there is a general misunderstanding of arbitration under the Act by both employers and trade unions.
• When arbitration is proposed, there is a common perception that the matter is left to an individual's sole decision-making authority, without constraints. Doubts about the integrity of the arbitrator's decision are also prevalent.
• Many are unaware that voluntary arbitration is legally recognized and nearly aligned with adjudication in terms of importance. Efforts are ongoing to promote this understanding among management, employees, and unions.

Power of Appropriate Government to Refer Industrial Dispute

• The State-sponsored conciliation and adjudication are the hallmarks of the law of industrial dispute resolution in India. The Act is the principal Central law that provides the mechanism and conditions under which conciliation and adjudication powers are to be exercised.
• Under the Act, adjudication cannot be demanded by a disputant party as of right; it is at the discretion of the "Appropriate Government" to decide whether to refer an industrial dispute, whether collective or individual, for adjudication by an adjudicatory body. If the disputants cannot reach a "settlement" or are unwilling to refer their disputes to an arbitrator, the ultimate legal remedy for the unresolved dispute is its reference to adjudication by the Appropriate Government.

Exclusive Power of the Appropriate Government

• The Act grants the Appropriate Government exclusive power to refer disputes for adjudication, making adjudication contingent on its discretion.
• With the exception of applications under Section 33, 33-A, and 33(C)(2), all other matters must be brought before adjudicatory authorities through an order of reference by the Appropriate Government.

State Amendments

• In certain states like Karnataka, Tamil Nadu, and Andhra Pradesh, individual disputes related to discharge, dismissal, retrenchment, or termination of services allow a workman to directly approach a Labour Court for adjudication under relevant state amendments to the Act.

Trade Union Concerns

• The government's power to refer disputes for adjudication restricts trade unions and workers from utilizing adjudicatory forums for dispute resolution and as an effective remedy for grievances.
• Trade unions have consistently demanded direct access to adjudicatory authorities for themselves and workers.

Controversy Over Government Power

• The controversy surrounding the government's power arises from concerns about the misuse of this discretionary power for partisan purposes with political motives.
• Questions about how and on what grounds the government should exercise its reference power, along with issues of delay in dispute reference and the government's reluctance to refer disputes in which it is a party, are significant.

Scope of Section 10 - Nature of Government Power

Administrative Nature of Government Power

• The power of the Appropriate Government under Section 10(1) of the Act to refer a dispute for adjudication is considered administrative in nature, as opposed to quasi-judicial or judicial power.
• This means that the government has the discretion to form an opinion about the existence and apprehension of an industrial dispute based on subjective satisfaction.

Conditions for Exercise of Power

• The government can only refer a dispute to an adjudicatory body if it is satisfied that an industrial dispute exists or is apprehended.
• Once the government forms an opinion regarding the existence or apprehension of an industrial dispute, the decision of whether to refer the dispute for adjudication is left to the subjective satisfaction of the government.

Judicial Scrutiny and Reference Orders

• The order of reference made by the government cannot be closely examined by a writ under Article 226 of the Constitution to determine whether the government had sufficient material to support the conclusion that a dispute existed or was apprehended.
• However, if the government refuses to make a reference based on a failure report from a conciliation officer under Section 12(4), it is obligated to provide reasons for its refusal and communicate them to the parties involved.

Discretionary Power and Judicial Review

• The exercise of power by the government, or the refusal to do so, is subject to the established principles regarding the exercise of administrative discretion.
• The discretionary power must be exercised honestly, without corrupt or ulterior motives, and the government must consider all relevant material before it in deciding the expediency of referring the dispute to maintain industrial peace.
• Grounds for challenging the improper exercise of power by the government under Section 10(1) include malafide motives, failure to consider relevant factors, and acting mechanically or under external pressure.

Mandatory vs. Directory Provisions

• The determination of whether a statute is mandatory or directory depends on the legislative intent, not just the language used.
• The Supreme Court has emphasized that the use of the word "may" in a statute does not automatically make the provision directory; the court must consider various factors, including the statute's object and scheme, to ascertain the legislative intent.

Compulsory Adjudication

• In cases of industrial disputes under the Act, the concept of compulsory adjudication applies, necessitating the Appropriate Government to refer the dispute for adjudication.
• The adjudicator is obligated to adjudicate on the referred industrial dispute and issue a written decision in the form of an award.

Reference of Dispute

• The Appropriate Government has the authority to refer a dispute for adjudication if it believes that an industrial dispute exists or is likely to occur.
• The reference can be made at any time and is intended to provide an effective mechanism for the resolution of industrial disputes.

Conclusion

• The power of the Appropriate Government to refer industrial disputes for adjudication is a significant aspect of the industrial dispute resolution framework in India.
• While the government has the discretion to make such referrals, the exercise of this power is subject to judicial scrutiny and must be based on relevant and material facts.
• The balance between the government's discretion and the rights of trade unions and workers to access adjudicatory forums is a crucial consideration in the effective resolution of industrial disputes.

Power of Courts to Direct the Government to Make a Reference of Industrial Disputes

Introduction

• The power of reference under Section 10(1) is an administrative function of the Appropriate Government, based on its opinion regarding the existence or apprehension of an industrial dispute.
• Judicial review of the order of reference is possible under certain circumstances, even though it was previously thought to be beyond the court's purview.

Judicial Oversight in Government Decisions

• Pratap Singh v. State of Punjab: The Supreme Court emphasized that the court does not have the authority to challenge the correctness of the Government's order. It can only determine if the Government considered relevant factors or if the decision was influenced by extraneous matters.
• State of Bombay v. K.P. Krishnan: The Supreme Court ruled that the Government's refusal to refer a dispute based on irrelevant considerations was subject to judicial review. If the Government's reasons for not making a reference are extraneous, the court can issue a writ of mandamus.

Criteria for Judicial Review of Reference Orders

• When the Government does not act bonafide: The exercise of power must be in good faith and for the intended purpose. Malafide actions, driven by ulterior motives, render the reference invalid.
• Improper opinion of the Government: The Government's opinion regarding the existence of an industrial dispute must be based on relevant material. If the opinion is arbitrary or lacks a rational basis, it is subject to review.
• Irrelevant consideration: If the Government considers extraneous factors in forming its opinion, the order of reference may be invalid.
• Non-application of mind: The Government must apply its mind to the relevant factors before making a reference. Lack of consideration of important aspects may render the reference vulnerable.

Industrial Dispute Definition and Reference Validity

• Industry and Industrial Dispute: The reference must pertain to a dispute within an 'industry' as defined in the Act. Disputes related to closed industries are not valid.
• Cause of Action Timing: The timing of the cause of action is crucial. If the dispute arises while the industry is operational, the reference is valid even if the industry closes later.
• Existence or Apprehension of Industrial Dispute: The Government must form an opinion regarding the existence or apprehension of an industrial dispute as defined in the Act. The dispute should involve a real and substantial difference between parties, affecting industrial peace.

Conclusion

Judicial oversight in the power of reference under Section 10(1) ensures that the Government's decisions are fair and based on relevant considerations. Courts can intervene if the Government acts in bad faith, makes improper decisions, or fails to consider essential factors. The definition of industrial dispute and its connection to an industry are crucial for the validity of references.