Trade Union Act, 1926 - 1

Introduction

• Before large-scale industrialisation, workers and employers had personal agreements.
• Therefore, there was no need for formal rules to govern their relationship until industrialisation began.
• With the rise of the modern factory system, this relationship changed because large-scale industrialisation pushed employers to cut production costs to survive fierce market competition and increase profits by using advanced technology.
• This shift led to the emergence of a new class of workers entirely dependent on wages, altering the previous employer-employee dynamic where exploitation was common.
• The resulting conflict between workers and employers, along with worker hardships, triggered the growth of various trade unions.
• A trade union is an organised group of workers who aim to support workers on issues such as fair wages, good working conditions, working hours, and other entitled benefits.
• They act as a bridge between management and workers.
• Though relatively new, trade unions have become a powerful force due to their direct impact on workers' social and economic lives.
• To regulate trade unions, specific laws are necessary.
• In India, the Trade Unions Act, 1926 is the main law that governs the registration and activities of trade unions.
• This article explains various aspects of this Act.

History Of Trade Unionism In India

• Trade unions in India have become a vital platform for addressing workers' demands.
• They also act as influential pressure groups aiming to shape government policies in favour of workers without seeking political power.
• Trade unionism took a definite shape in India after World War I.
• Indian trade unions emerged mainly due to modern industrialisation and did not evolve from earlier social institutions.
• The need for organised trade unions was first recognised in 1875 by philanthropists like Shri Sorabji Shapurji Bengali and Shri N.M. Lokhandey, who helped establish unions such as the Printers' Union of Calcutta (1905) and the Bombay Postal Union (1907).
• The establishment of textile and mill industries in Bombay, Madras, and Calcutta in the early 19th century encouraged the formation of industrial worker associations.
• The Bombay Mill-Hands Association, founded in 1890 by N.M. Lokhande, was India's first labour association.
• Other unions followed, including the Madras Labour Union, the first officially registered trade union, founded by B.P. Wadia in 1918.
• In 1920, the Ahmedabad Textile Labourer's Association formed under Mahatma Gandhi's leadership and became one of India's strongest unions due to its unique methods of arbitration and conciliation.
• Following Gandhi's principles of truth and nonviolence, this union peacefully resolved worker grievances without disrupting social harmony.
• The same year, the first trade union federation, the All India Trade Union Congress (AITUC), was established.
• This was influenced by the International Labour Organisation's findings on the negative effects of political interference in trade unions on economic growth.
• Nationalist leaders like Mahatma Gandhi recognised the importance of organised trade unions.
• Gandhi introduced the concept of trusteeship, promoting cooperation between workers and employers.
• This concept suggested that financially secure individuals should use their property not only for personal benefit but also for the welfare of less fortunate workers.
• Each worker should see themselves as a trustee for others and protect their interests.
• Several commissions supported the development of trade unions in India.
• For example, the Royal Commission on Labour (Whitley Commission) of 1929-30 noted that problems caused by industrialisation in India were similar to those elsewhere, and strong trade unions were the key to improving workers' conditions and reducing exploitation.

Development Of Trade Union Law In India

• Labour legislation in India plays a crucial role in shaping industrial relations.
• All labour laws aim to establish social justice.
• The International Labour Organisation's efforts to improve labour conditions worldwide encouraged India to develop comprehensive labour laws.
• Internal factors like the Swaraj movement (1921-24) and the Royal Commission on Labour also influenced the creation of these laws and prompted the Constitution framers to include labour protections.
• Under the Indian Constitution, labour falls under the concurrent list, allowing both central and state governments to enact labour laws.
• Key labour laws include:
• The Apprentices Act, 1961: Promotes new skilled workers and improves existing skills through practical and theoretical training.
• The Contract Labour (Regulation and Abolition) Act, 1970: Regulates contract labour employment and allows abolition in certain cases.
• The Employees' Provident Funds and Miscellaneous Provisions Act, 1952: Regulates wage payments and guarantees social security to employees.
• The Factories Act, 1948: Ensures the health and safety of workers in specified industries.
• The Minimum Wages Act, 1948: Sets minimum wage rates for certain occupations.
• The Trade Unions Act, 1926: Provides for trade union registration and defines laws related to registered unions.

Provisions Of The Trade Unions Act, 1926

• Workers in unorganised sectors often lack bargaining power, making them vulnerable to exploitation.
• Only registered trade unions have the right to collective bargaining.
• India has laws regarding trade union recognition but no single law exclusively governs trade union registration.
• To address this, the Indian Trade Union (Amendment) Act of 1947 introduced Chapter III-A to the Trade Unions Act, 1926, outlining mandatory recognition conditions.
• However, this amendment was never enforced, so mandatory recognition is not currently established by law.
• The phrase "except the State of Jammu and Kashmir" was removed by the 1970 Amendment Act 51, making the Trade Unions Act applicable throughout India.

Definition Clause

• Section 2(h) defines a trade union as any combination, temporary or permanent, formed mainly to regulate relations between workers and employers, workers and workers, or employers and employers, or to impose restrictions on trade or business practices.
• This definition includes any federation of two or more trade unions.
• The Act excludes:
  • (i) Agreements between partners about their own business;
  • (ii) Agreements between employers and their employees regarding employment;
  • (iii) Agreements related to the sale of goodwill or training in a profession, trade, or craft.
• A trade union is usually a voluntary organisation of workers in a specific trade or industry formed to collectively protect professional interests.
• Key elements of a trade union include:
  • A combination of employers and workers;
  • Connection to a specific trade or business;
  • The primary aim of regulating employer-employee relations and restricting trade or business conduct.
• The definition under Section 2(h) is broad, covering both employers' and workers' unions.
• In National Organisation of Bank Workers' Federation of Trade Unions v. Union of India (1993), it was held that a federation is not a trade union under Section 2(h) unless it is registered under the Act.
• Federations consist of two or more unions; unregistered federations cannot represent employees legally.
• The Madras High Court, in Registrar of Trade Unions, Union Territory of Pondicherry v. Government Press Employees Union (1975), ruled that workers in industrial establishments, such as government presses, are entitled to benefits under the Trade Unions Act.

Registration Of Trade Unions

• Registration encourages unions to develop steadily and permanently.
• Registered trade unions receive certain protections and benefits, motivating members to register under the Trade Unions Act, 1926.
• Sections 3 to 14 of Chapter 2 of the Act, along with the Central Trade Union Regulations, 1938, govern the registration process, detailing about 17 rules and forms A, B, and C.
• While registration is not mandatory, it is preferred because it grants legal advantages and immunities.
• Members of registered unions enjoy certain rights and protections from civil and criminal liabilities.
• However, personal disputes become industrial issues only when represented by groups or unions, registered or not.
• In Tamil Nadu N.G.O Union v. The Registrar of Trade Unions (1962), the Madras High Court rejected registration of a union for public servants, as the Act applies only to workers in trade, business, or industry, excluding civil servants.
• The Calcutta High Court, in Registrar of Trade Unions, West Bengal v. Mihir Kumar Gooha (1962), held that workers of the E.S.I. Corporation qualify as workmen and can register as union members.

Section 3: Appointment Of Registrars

• Section 3 authorises the appropriate government to appoint a registrar for trade unions.
• The government may also appoint additional or deputy registrars as needed to perform the Act's functions.
• The government specifies the powers, duties, and territorial limits of such registrars.

Section 4: Mode Of Registration

• Section 4 allows any group of seven or more trade union members to apply for registration, subject to two conditions:
  • At least seven members must be employed in the establishment at the time of application.
  • At least 10% or 100 members (whichever is less) of the establishment's workforce must be part of the union.

Section 5: Application For Registration

• Section 5 requires every registration application to be submitted in writing to the registrar.
• The application must include a copy of the union's rules and state:
  • The names, occupations, and addresses of the applicants;
  • The trade union's name and headquarters address;
  • The names, ages, addresses, occupations, and titles of the union's office bearers.
• The union's executive must be organised according to the Act's rules before registration.

Section 6: Provisions To Be Contained In The Rules Of A Trade Union

• Section 6 specifies that a union will not be recognised unless it has an executive committee formed as per the Act.
• The union's rules must include:
  • The trade union's name;
  • The purpose of forming the trade union;
  • How the union's funds will be used;
  • A list of members, accessible to office bearers and members;
  • Criteria for ordinary members, who must be actively employed in the related industry;
  • Conditions for receiving benefits and rules for imposing fines or forfeitures;
  • Procedures for amending, varying, or rescinding rules;
  • Methods for electing and removing office bearers and their alternates;
  • Safe custody of funds, annual audits, and provisions for members to inspect accounts;
  • Procedures for dissolving the union.
• The Supreme Court in M. T. Chandrasenan v. Sukumaran (1974) ruled that members who do not pay subscriptions cannot be considered union members, but membership cannot be refused on unreasonable grounds.
• In Bokajan Cement Corporation Employees Union v. Cement Corporation of India (2004), the Supreme Court held that union membership does not end immediately when employment ceases.

Section 7: Power To Call For Further Particulars And Require Alteration Of The Name

• Section 7 allows the registrar to request additional information to ensure applications comply with Sections 5 and 6.
• The registrar can reject applications lacking required information.
• The registrar can also order a union to change its name if it is identical or very similar to an existing union's name to avoid public or member confusion.
• The Bombay High Court, in All India Trade Union Congress v. Deputy Registrar of Trade Unions (2005), cancelled a registration that duplicated an existing union's name, emphasising the importance of avoiding public deception.

Section 8: Registration

• Section 8 states that if the registrar is satisfied with a union's compliance, they may register the union by recording its details as per the Act.
• Each registered trade union becomes a body corporate with perpetual succession.
• It has a common seal, the ability to own and manage movable and immovable property, and the capacity to sue or be sued in its registered name.
• The Supreme Court, in Re-Indian Steam Navigation Workers Union (1935), ruled that the registrar's role is to check technical compliance, not the legality of the union's objectives.
• In ACC Rajanka Limestone Quarries Workers Union v. Registrar of Trade Unions (1958), the Court held that a union can appeal to the High Court under Article 226 if the registrar fails to register it within three months.

Section 9: Certificate Of Registration

• Section 9 requires the registrar to issue a certificate of registration to any union registered under Section 8.
• This certificate serves as conclusive proof of registration.

Section 9A: Minimum Requirement Related To The Membership Of A Trade Union

• Section 9A specifies that a registered trade union must always have at least 10% or 100 workers (whichever is less), but not fewer than seven members employed in the connected institution or trade.

Section 10: Cancellation Of Registration

• Section 10 gives the registrar authority to cancel a union's registration in these cases:
  • Upon application by the union, verified as prescribed;
  • If the union obtained registration by fraud or deceit;
  • If the union no longer exists;
  • If the union wilfully violates the Act after receiving notice from the registrar;
  • If the union rescinds any rules required under Section 6.
• In Tata Electric Companies Officer's Guild v. Registrar of Trade Unions (1994), the Bombay High Court ruled that wilful non-compliance is necessary for cancellation.
• The registrar cannot cancel registration merely for late submission of accounts if the union complies after notification.
• In Bombay Fire Fighters Service Union v. Registrar of Trade Unions (2003), the Court held that failure to send proper notice to the union's updated address invalidates cancellation orders.

Section 11: Appeals

• Section 11 allows unions aggrieved by registration refusal or cancellation to appeal:
  • In the High Court if the union's head office is in a presidency town;
  • In a labour court or industrial tribunal if the union is in its jurisdiction;
  • Otherwise, in a court of competent jurisdiction comparable to a principal Civil Court.
• The Bombay High Court, in Mukand Iron & Steel Works Ltd. v. V.G. Deshpande (1986), stated that unions may appeal or apply for new registration after cancellation.
• If the appeal succeeds, the union continues as if cancellation never occurred; if new registration is granted, it applies from that date.
• After cancellation, the registrar loses authority over the union's registration status.
• In Philips Workers Union v. Registrar of Trade Unions (1989), the Calcutta High Court held that Section 11 does not prevent filing a writ petition under Article 226 of the Constitution.

Section 12: Registered Office

• Section 12 requires all union communications and notices to be sent to its registered office.
• If the union changes its registered office address, it must notify the registrar within fourteen days in writing.
• The registrar will then update the address in the register maintained under Section 8.

Section 13: Incorporation Of Registered Trade Union

• Section 13 states that every registered trade union shall:
  • Be a corporate body under its registered name;
  • Have perpetual succession and a common seal;
  • Have the power to enter contracts and own movable and immovable property;
  • Have the ability to sue and be sued in its registered name.

Rights And Liabilities Of Registered Trade Unions

• Sections 15 to 28 explain the rights and responsibilities of registered trade unions.

Section 15: Objects On Which General Funds May Be Spent

• Section 15 permits registered trade unions to spend their funds on:
  • Paying salaries to office bearers;
  • Administrative expenses of the union;
  • Compensation to workers for losses from trade disputes;
  • Worker welfare activities;
  • Benefits for workers in cases of unemployment, disability, or death;
  • Legal costs for suing or defending suits;
  • Publishing materials to inform workers;
  • Education for workers and their dependents;
  • Medical treatment provisions;
  • Insurance policies for worker welfare.
• This Section also states that contributions to the fund cannot be mandatory for union membership or admission.

Section 16: Constitution Of A Separate Fund For Political Purposes

• Section 16 allows trade unions to create a separate fund for political and civic activities using separately collected contributions.
• No member can be forced to contribute to this political fund.
• Registered unions cannot use general funds for political purposes; a distinct fund must be maintained for political activities.
• Examples of political fund uses include:
  • Recovering expenses related to candidature in government or local elections;
  • Supporting members who serve in local or legislative bodies;
  • Funding election campaigns or voter registration;
  • Organising political meetings or distributing political materials among members.

Section 17: Criminal Conspiracy In Trade Disputes

• Section 17 protects trade union members from liability for criminal conspiracy under Section 120B(2) of the Indian Penal Code when acting to promote lawful trade union interests.
• Criminal conspiracy, as defined in Section 120-A IPC, involves two or more persons agreeing to commit:
  • An illegal act, or
  • A legal act by illegal means.
• The Trade Unions Act grants immunity only for agreements to promote legitimate trade union objectives.
• Registered trade unions have the right to organise strikes and persuade members in industrial disputes.
• However, agreements to violate employment contracts or commit illegal acts are not protected.
• In West India Steel Company Ltd. v. Azeez (1988), it was held that workers must obey lawful instructions from management, and trade union leaders do not have managerial authority.