Disputes Covered by a Settlement | Labour and Industrial Law - CLAT PG PDF Download

Disputes Covered by a Settlement or a Previous Award

Madras District Automobile and General Employees Union v. State of Madras

• In this case, it was ruled that referring an industrial dispute covered by a settlement, as defined in Section 2(p) of the Act, is invalid during the settlement's operational period.
• When a dispute is resolved through a settlement, no dispute remains for arbitration or adjudication.
• If a binding settlement exists and is not terminated according to the Act's procedure, no industrial dispute can be raised regarding the settlement's subject matter.
• Such matters cannot be subject to conciliation proceedings under Section 12 or reference under Section 10 of the Act.

Supreme Court and High Courts' Approach

• The Supreme Court and High Courts compel the Appropriate Government to make a reference, potentially exercising appellate jurisdiction over the Government's discretionary order.
• This approach is justified from an administrative law viewpoint and welcomed from a labor law perspective.
• The Supreme Court is concerned about abnormal delays in government references, sometimes exceeding a decade.
• The Court considers that the Appropriate Government has determined questions of fact and law that should be decided by the Tribunal after adjudication.
• Adjudication of industrial disputes by Tribunals is seen as a quasi-judicial remedy for industrial workmen's grievances, especially concerning discharge, dismissal, retrenchment, or termination of services.
• Civil Courts' jurisdiction is impliedly barred by the Act, and while disputes related to employment contracts may go to Civil Courts, they cannot order reinstatement.
• The Act provides the only remedy for workmen, and if the Appropriate Government exercises discretion not to refer disputes, it undermines the Act's objectives and social justice principles.

Analysis of the Term "May at Any Time" in Section 10

• The Appropriate Government has the power to make references for adjudication under Section 10(1).
• The phrase "at any time" indicates the legislature's intent for the Government to have discretion in referring disputes when it deems necessary for maintaining industrial peace.
• The interpretation of "at any time" raises four questions:

(i) Are Conciliation Proceedings a Precondition for Reference?

• The Act mandates conciliation proceedings by a Conciliation Officer to promote settlement, but this does not prevent the Appropriate Government from making a reference for adjudication.
• The phrase "at any time" signifies that a reference can be made before, during, or after conciliation proceedings.
• In Western India Match Co. Ltd. v. Western Match Co. Workers Union, it was emphasized that the Government can decide to refer a dispute for adjudication even if conciliation proceedings have not started or are ongoing.
• Section 10 does not require the Appropriate Government to wait for the Conciliation Officer's failure report.
• This is further clarified by Section 20 of the Act, which states that conciliation proceedings are deemed concluded when a reference is made to a Court of Inquiry, Labour Court, Tribunal, or National Tribunal.

(ii) Can a Reference Be Made During Section 33 Proceedings?

• In ITC Ltd. v. Government of Karnataka, the Karnataka High Court addressed whether the Appropriate Government could refer a dispute for adjudication under Section 10(1) while proceedings under Section 33(2)(b) for approving dismissal penalties against a workman were ongoing.
• The court held that decisions under Section 33 are not final and do not preclude remedies provided under Section 33(2)(b) proceedings. Therefore, a dispute can be referred for adjudication under Section 10(1) even if Section 33 proceedings are pending.

(iii) Can the Appropriate Government Reconsider a Reference Refusal?

• If the Government previously refused to refer a dispute for adjudication, it is not barred from reconsidering the matter and deciding to make a reference under Section 10(1) at a later date.
• The Supreme Court in Western India Match Co. v. Western India Match Co. Workers Union clarified that the words "at any time" do not impose a limitation period, and a previous refusal does not prevent a subsequent reference.
• The Court explained that when the Government refuses to make a reference, it is not exercising its power but declining to do so. Therefore, the power to refer remains intact even after a refusal.
• The Government may reconsider a reference due to new facts, misunderstandings of existing facts, or other relevant considerations, including pressure from unions.
• In Binny Ltd. v. Their workmen, the Supreme Court upheld a Government reference despite prior refusals. In Avon Services (Production) Agencies Ltd. v. Industrial Tribunal, Haryana, the Court clarified the Appropriate Government's power to refer a dispute after initial refusal without needing fresh material, emphasizing the maintenance of industrial peace.
• The Supreme Court also stated that a Government refusal to make a reference does not indicate an exercise of power under Section 10(1). The exercise of power involves making a reference, while refusal does not resolve the dispute.
• Refusing to make a reference does not imply the dispute is resolved and may exacerbate tensions, leading to direct action, prompting the Government to reconsider and make the reference.

(iv) Is There a Limitation on Making a Reference?

• The Appropriate Government's power to make a reference to Labour Courts and Industrial Tribunals is administrative in nature, with no prescribed time limit.
• The reference can be made at any time as long as there is an existing or apprehended industrial dispute.
• The phrase "at any time" reflects the legislature's intention, and there should be no restrictions on the Government's power to make a reference.
• Unlike Civil Courts, Industrial Tribunals are not bound by limitation laws, but it is reasonable for the Government to refer disputes within a reasonable time after being notified of their existence.
• The Government's power to make a reference is broad, but it must act fairly, justly, and in good faith to avoid arbitrariness, aligning with Article 14 of the Constitution.
• In Shalimar Works Ltd. v. Its workmen, the Supreme Court emphasized timely references, especially in cases of worker discharge. In Western India Watch Company v. Western India Watch Company Workers Union, the Court ruled that the Government should not be swayed into making references for old or stale disputes.

Authorities for Reference by the Appropriate Government

• The Appropriate Government can make references under Section 10(1) to a Board of Conciliation or a Court of Inquiry, but this study focuses on adjudication through Labour Courts, Industrial Tribunals, and National Tribunals.
• Labour Court: The Appropriate Government may refer disputes related to matters specified in the Second Schedule to the Labour Court for adjudication. Second Schedule matters involve disputes of rights nature, where workmen raise claims regarding their existing legal rights. Such references should be routine unless the workmen's claims are deemed frivolous or vexatious. Generally, matters in the Third Schedule are referred to Industrial Tribunals. However, if a Third Schedule dispute is not expected to affect more than 100 workmen, the Appropriate Government can refer it to a Labour Court.
• Industrial Tribunal: The Appropriate Government can refer disputes under Section 10(1)(d) to an Industrial Tribunal, whether the matter is in the Second or Third Schedule. Third Schedule matters, such as wages, allowances, bonus, and hours of work, are interest disputes and can only be referred to Industrial Tribunals. This gives Tribunals greater jurisdiction than Labour Courts.
• National Tribunal: According to Section 10(1A), the Central Government may refer a dispute to a National Tribunal for adjudication if it involves national importance or affects industrial establishments in multiple States. The Central Government can refer the dispute or related matters to a National Tribunal, regardless of being the Appropriate Government for that dispute.
• The only requirement for Section 10(1) is that the order of reference be in writing. There is no prescribed form, and the order should clearly indicate the existence of a dispute and its referral to the Tribunal. Since the Tribunal's jurisdiction is limited to the points specified in the order of reference, it is crucial to draft the order carefully to avoid unnecessary litigation.
• In Express News Papers Ltd. v. Their workmen, it was noted that hastily or casually drawn orders of reference can lead to unnecessary disputes and prolong industrial litigation. Therefore, the Government should take care in formulating the points of dispute clearly and avoid ambiguity in the order.

Power of the Appropriate Government to Withdraw, Cancel, Supersede, or Amend the Order of Reference

• The Supreme Court in State of Bihar v. D.N. Ganguly ruled that the Government lacks the express or implied power to cancel or withdraw a reference once it has been made under Section 10 of the Act. The Court rejected the Government's argument that the General Clauses Act allows a power to make an order to include a power to cancel it.
• The Appropriate Government under Section 10 can correct clerical or typographical errors but cannot supersede the reference. The key principle is to determine whether the amendment introduces new material or merely corrects a clerical error.
• If the same relief claimed by the aggrieved party in the original notification can be granted in the amended notification, it is a clerical mistake. If not, the original notification is canceled and replaced, which the Government cannot do.

Constitutional Validity of Section 10(1)

• The Supreme Court upheld the constitutional validity of Section 10(1) of the Act in Nirmala Textile Finishing Mills Ltd. v. Industrial Tribunal, Punjab. It concluded that the provisions of Section 10 are not unconstitutional and do not infringe fundamental rights under Articles 14, 19(1)(f), and 19(1)(g) of the Constitution. The Court noted that the Government's discretion is guided by criteria within the Act itself.
• In A. Sundarambal v. Governor of Goa, Daman and Diu, it was ruled that the Government's refusal to refer a dispute for adjudication does not violate Article 14 of the Constitution, even if the Government had referred a similar case earlier. If the Government is justified in refusing a reference, Article 14 does not apply.

The Circumstances in which the Power of Reference is Mandatory

Protecting Public Interest and Service Continuity

• The Act includes provisions to safeguard public interest and ensure the continuity of public utility services during sudden strikes or lockouts.
• Certain sections of the Act mandate the Government to refer industrial disputes for adjudication to prevent disruption of essential services.

Key Provisions for Mandatory Reference

• Section 20(1): Conciliation proceedings are considered to have started when a notice of strike or lockout is received by the Conciliation Officer.
• Second Proviso to Section 10(1): In cases involving public utility services, the Government must refer the dispute unless it deems the notice frivolous or vexatious.
• Section 10(2): When parties apply for a reference to a board, Labour Court, Tribunal, or National Tribunal, the Government is obligated to make the reference if the applicants represent the majority.

Section 20(1): Conciliation Proceedings

• Conciliation proceedings are officially considered to have commenced when the Conciliation Officer receives a notice of strike or lockout as per Section 22 of the Act.

Second Proviso to Section 10(1): Public Utility Services

• When a dispute pertains to a public utility service and a notice of strike or lockout is issued, the Appropriate Government is required to make a reference under Section 10(1).
• This is mandatory unless the Government believes the notice is frivolous, vexatious, or that it would be inexpedient to do so.

Section 10(2): Reference by Parties

• If parties to an industrial dispute apply for a reference to a board, Labour Court, Tribunal, or National Tribunal, the Appropriate Government must make the reference if the applicants represent the majority of their respective parties.
• The Government is obligated to refer the dispute without considering the existence of an industrial dispute or the expediency of the reference.

Central Government's Special Powers

• Power under Third Proviso to Section 10(1): The Central Government can refer disputes to Labour Courts or Industrial Tribunals constituted by State Governments, not just those it has established.
• Power under Section 10(1-A): The Central Government can refer industrial disputes of national importance or affecting multiple states to a National Tribunal, regardless of whether it is the Appropriate Government for the dispute.

Process of Reference Making by Government under Section 10

• The Government's process of making references under Section 10 has been criticized for being defective.

No Direct Access to Authorities

• Parties to industrial disputes cannot directly approach authorities for adjudication; the Government controls which disputes go for adjudication.
• This discretion can lead to large-scale industrial unrest and delays in justice.
• Past proposals aimed to liberalize this policy were not enacted, maintaining the Government's power over references.
• Changes are necessary to allow individual workmen direct access to Labour Courts for rights disputes.

Delay in Reference Affects Justice

• Delays in making references undermine the goal of speedy justice in industrial law.
• Conciliation proceedings often take longer than the stipulated 14 days, affecting reference decisions.
• Empirical studies show significant delays in references, sometimes taking over a year.
• The Government’s delay in making references after receiving failure reports from Conciliation Officers is a common issue.
• Studies in various regions indicate average times for references range from months to years.
• Delays can lead to political pressure on the Government and impact the fairness of reference decisions.
• The Supreme Court has intervened in cases pending for over a decade, highlighting the issue.

Discriminatory Treatment by Government

• The government's power to refer industrial disputes can be exercised in a discriminatory manner.
• Trade unions affiliated with the ruling political party may receive preferential treatment in dispute references, while those aligned with opposition parties may be treated unfavorably.
• This perceived bias is not uncommon in practice, despite appearing to be trivial.
• The government's discretion in referring disputes involving state agencies may lack impartiality, leading to favoritism.
• Corruption and favoritism can influence reference decisions, with lower-level administrative staff potentially swayed by bribes.
• A shrewd employer could manipulate the reference process by bribing administrative staff to scuttle or defer dispute references.
• While Labour Courts and Industrial Tribunals make final determinations on disputes, their authority depends on the government's referral.
• Disputes not referred by the government cannot be adjudicated, making the referral process crucial.
• The government's decision to refer or not affects the rights and interests of parties involved in the dispute.
• To ensure fairness, the government should hear aggrieved parties before exercising referral powers.
• Adhering to principles of natural justice in the referral process would align with the rule of law and control unchecked discretionary power.
• To expedite dispute resolution, the government's discretion in referrals should be curtailed.

Lack of Expertise in Reference Decisions

• Decisions on references are made by bureaucratic or political administrations lacking expertise in labor issues.
• Bureaucrats and politicians are not better equipped to handle labor matters compared to experienced presiding officers of Labour Courts and Tribunals.
• Top positions in the Labour Department are held by different bureaucrats and politicians over time, leading to a lack of expertise.
• In contrast, labor adjudicators are constantly engaged in studying case law and legal enactments in labor law.
• Independent Industrial Relations Commissions, as recommended by the first National Commission on Labour, would be more suitable for exercising referral powers.
• Direct access for aggrieved workers in individual disputes and recognized unions in collective disputes, as suggested by the second National Commission on Labour, should be considered seriously.

Un-canalized Discretionary Power under Section 10

• The discretionary power given to the government under Section 10 is broad and unregulated.
• If the appropriate government misuses this power, the aggrieved party can approach the court under Article 226.
• However, this leads to the question of how social and economic justice can be achieved if workers have to resort to legal action for every wrongful exercise of power by the government.
• This is especially concerning because proving malice in such cases is difficult.
• Workers may find themselves in a position where they have no remedy for the government's wrongful actions, leading to frustration and potential unrest.
• Even if a party successfully challenges the government’s reference decision in court, it takes a long time, often 3 to 5 years.
• Delays in reference decisions contradict the goals of speedy dispute resolution and social justice.
• The first National Commission on Labour recommended independent Industrial Relations Commissions to make reference decisions instead of the government.
• The second National Commission on Labour also suggested direct access to parties for adjudication in specific cases to reduce government involvement.

Right to Remedy vis-a-vis Discretionary Power

Extraordinary Powers of Adjudication Machinery:

• The adjudication machinery possesses extraordinary powers to grant appropriate relief to workmen, which are not available to ordinary Civil Courts.
• Civil Courts lack jurisdiction to entertain cases related to rights or obligations created by the Industrial Disputes Act.

Managerial Discretion and Job Security:

• The Act empowers adjudicators with appellate jurisdiction to intervene in managerial decisions regarding the punishment of workmen, including discharge or dismissal, to ensure job security for industrial workmen.
• This power is crucial for the enforcement of rights created by the Act and related laws.

Inconsistency in Government Discretion:

• There is an inconsistency in the Act's policy, as it confers crucial rights on workmen while making their enforcement dependent on Government discretion.
• If the Government refuses to make a reference, aggrieved workmen have limited remedies, often resorting to writ courts, which is not feasible for most ordinary workmen.

Recommendations for Change:

• Researchers and experts advocate for the removal of the Government's exclusive discretion in initiating industrial adjudication.
• It is suggested that individual parties should have the right to move Labour Courts and Tribunals for disputes listed under Schedule II of the Act.

Empirical Studies and Suggestions:

• Studies by scholars like Professor P.G. Krishnan propose eliminating the reference system and allowing parties to approach adjudicatory machinery directly.
• New provisions, such as Section 10-B, are recommended to enable parties to take disputes before adjudicating authorities if the Government fails to make a reference within a specified timeframe.

Constitution of IRCs and LRCs:

• Recommendations for the constitution of Industrial Relations Commissions (IRCs) and Labour Relations Commissions (LRCs) to decide on adjudication of interest disputes and direct reference of rights disputes by parties to Labour Courts.

Prohibition of Strikes and Lockouts After Order of Reference

• Strikes and lockouts are not considered fundamental rights under the Constitution but are regulated by the Industrial Disputes Act.
• Sections 22 and 23 of the Act impose restrictions on the commencement of strikes and lockouts.
• Section 23(b) prohibits strikes and lockouts during the pendency of adjudication proceedings and for two months after their conclusion.
• Once an adjudication award comes into operation, strikes and lockouts are prohibited for the duration of the award.
• The Appropriate Government has the power to prohibit the continuance of strikes or lockouts that were in existence on the date of reference.
• Section 10(3) of the Act allows the Government to prohibit the continuance of strikes or lockouts during the pendency of adjudication proceedings.
• The Supreme Court, in Delhi Administration v. Workmen of Edward Keventers, clarified that the Government could prohibit strikes or lockouts only in respect of demands referred for adjudication.
• The Kerala High Court viewed the power under Section 10(3) as quasi-judicial, requiring notice and hearing, while other High Courts considered it administrative.
• The Supreme Court upheld the constitutional validity of Section 10(3) for its role in ensuring peaceful settlement of industrial disputes.

Power to Include Similar Establishments in a Reference

• The Appropriate Government under Section 10(5) of the Industrial Disputes Act is empowered to include similar industrial establishments, groups, or classes of establishments in an order of reference.
• This inclusion can occur either at the time of reference or thereafter, but before the submission of the award.
• The establishments included should be of a similar nature and are likely to be interested in or affected by the dispute, regardless of whether a dispute exists or is anticipated at the time of inclusion.