The Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947

1. The Industrial Disputes Act, 1947
Preliminary:
The Industrial Disputes Act, 1947 extends to whole of India. It
came into operation on the first day of April, 1947. This Act replaced the
Trade Disputes Act of 1929. The Trade Disputes Act imposed certain
restraints on the right of strike and lockout in Public Utility Services.
But no provision was existing for the settlement of Industrial Disputes,
either by reference to a Board of Conciliation or to a Court of Inquiry. In
order to remove this deficiency, the Industrial Disputes Act, 1947 was
passed.
Scope and Objects (Sec. 1) ,
The objects of the industrial relation's legislation in general are to
maintain
industrial peace and, to achieve economic justice. . .
The prosperity of any industry very much depends upon its
growing production. Production is possible when the industry functions
smoothly without any disturbances. This means industrial peace through
harmonious relationship between labour and management. Therefore
every industrial relations legislatiqn necessarily aims at providing
conditions congeniel to the industrial peace.
Economic justice is another objective of industrial legislation.
Almost all industrial interuptions in production are due to industrial
disputes. Dissatisfaction with the existing economic conditions is the
root cause of industrial disputes. The labour demands for fair return is
expressed in varied forms; e.g. increase in wages, resistance to decrease
in wages and grant of allowance and benefits etc. If a labourer wants to
achieve these gains individually, he fails because of his weaker
bargaining power against the sound economic footing of the
management. Therefore, the economic struggle of labour with capital
can be fought collectivity by organised labours. It is with this object to
provide economic justice by ensuring fair return to the labour, the State,
being the custodian of public interest, intervenes by 'State legislation'
Economic justice has also been ensured to the people of India by our
Constitution.
Thus the main object of all labour legislation is to ensure fair
wages and to prevent disputes so that the production might not be
adversely affected2. The principal objects of Industrial Disputes Act as
analyzed and interpreted by the Supreme Court are as follows.3
(1) The promotion of measures for securring and preserving amity
and good relations between employers and workmen;
(2) Investigation and settlement of industrial dispute between
employers and employers, employers and workmen, or between
workmen and workmen with a right of representation by a registered

2. Trade Union or . Federation of Trade Unions or Association of
Employers or a Federation of Association of Employers.
(3) The prevention of illegal strikes and lock-outs;
(4) Relief to workmen in the matter of lay-oft, retrenchment and
closure of
an undertaking. .
(5) Collective bargaining.
Main Features or Characterstics of the Act::
Some of the important features of the Act may be summearised
as below:
1. Any industrial dispute may be referred to an industrial tribinal by
mutual
consent of paries to dispute or by the State Government, if it deems
expedient to do so.
2. An award shall be binding on both the parties to the dispute for
the
operated period, not exceeding one year;
3. Strike and lockouts are prohibited during:
(a) The pendency of conciliation and adjudication
proceedings;
(b) the pendency of settlements reached in the course of
conciliation
proceedings, and .
(c) the pendency of awards of Industrial Tribunal declared
binding by
the appropriate Government.
4. In public interest or emergency, the appropriate Government
has power to declare the transport (other than railways), coal,
cotton textiles, food stuffs and iron and steel industries to be
public utility services for the purpose of the Act, for a
maximum period of six months.
5. In case of lay-oft or retrenchment of workmen, the employer is
requested to pay compensation to them. This provision
stands in the case of transfer or closure of an undertaking.
6. A number of authorities (Works Committees, Conciliation
Officers, Board of conciliation, Courts of Inquiry, Labour
Courts, Tribunal and National Tribunal) are provided for
settlement of Industrial disputes. Although the nature of
powers, functions and duties of these authorities differ from
each other, everyone plays important role in ensuring
industrial peace.
Definitions (Sec.2) :
(a) Appropriate Government: The Central Government as well as

3. the State Government are vested with various powers and
duties in relation to matters dealt with in this Act. In relation
to some industrial disputes the Central Government and in
relation to some others, the State Government concerned are
the appropriate Government to deal with such disputes.
Under sub-section [(i) (a)] and [(i)(b)] of the Act,
Companies/Corporations/
Trusts/Boards/ Authorities, etc. established under the Act of
Parliament; the Central Government is the Appropriate
Authority.
In all other cases, the Appropriate Government is
the State Government within whose territory the industrial
dispute aries Sub-section (ii).
(aa) Arbitrator - Arbitrator includes an umpire.
(aaa) Average Pay - "Average Pay" means the average of the
wages payable to a workmen, Average pay in the case of
workmen means:
(i) In the Case of monthly paid workman- The average of monthly
wages payable in three complete calendar months.
(ii) In the case of weekly paid workman - the average of the weekly
wages payable in four complete weeks.
(iii) In the case of daily paid workman - the average of the wages for
twelve full working days.
(b) Award - 'Award' means an interim or final determination
of any' industrial
dispute or of any question relating thereto. The determination must be
made by any Labour Court, Industrial Tribunal or National
Tribunal.
Enforcement of an award - An award may be enforced in the
following ways:
(1) The aggrieved party may apply to Appropriate Government for
prosecuting the defaulting party under Sec. 29 or 31 of this Act.
(2) Where the work man 'isto claim money from the employer, the
workman may move the Appropriate Government for recovery of
the money due to him under the award.
(3) The party in whose favour the award has been granted
may file a suit and obtain a decree, which shall be enforced
extension under provisions of the Civil Procedure Code.
Where the interim order did not determine any part of the industrial
dispute or
any other question relating there to, but only determined whether the
Industrial Tribunal has been properly constituted to which the industrial
dispute could be referred for adjudication, such order cannot be said to
be an award as defined in Sec. 2(b)2
(bb) Banking Company - 'Banking Company' means a banking
company

4. as defined in Sec.5 of the Banking Companies Act, 1949.
(c) Board - 'Board' means a Board of Conciliation constituted
under this Act.
(cc) Closure - 'Closure' means the permanent closing down of a place of
employment or part thereof
Penalty for closure (Sec. 25R)
1. Any employer who close down an undertaking without
complying with the provisions of the Sub-Sec. (1) of Sec. 25-
0 shall be punishable with imprisonment up to 6 months, or
with fine up to Rs. 5,000 or with both.
2. Any employer, who contravenes a direction given under Sub-
sec. (2) of Sec. 25-0 or Sec. 25-P, shall be punishable with
imprisonment up to one year, or with fine up to Rs. 2,000 for
every day during which the contravention continues after the
conviction.
3. Any employer who contravenes the provisions of Sub Sec. 25-
0 shall be punishable with imprisonment up to one month, or
with fine up to Rs. 1000 or with both.
(d) Conciliation Officer - 'Conciliation Officer' means a
conciliation officer appointed under the Act. .
(e) Conciliation Proceeding - 'Conciliation Proceeding' means
any proceeding held by a Conciliation Officer or Board under the
Act.
(ee) Controlled Industry - "Controlled Industry" means any
industry the control of which, by the Union has been declared
by any Central Act to the expedient in the public interest. That
is, an industry which is controlled by the Central Government.
But it must also be declared by the Central Act to be
controlled by the Union.
(f) Court - "Court" means a Court of Inquiry constituted under this
Act. (g) (g) Employer - "Employer" means, in relation to
industries carried on by or under the authority of (i) Central
Government, (ii) State Government, or (iii) Local Authorities.
(h) Executive - "Executive", in relation to a Trade Union means
the body by whatever name called, to which by management
of the affairs of the Trade Union is entrusted.
(i) Independent - Means, for the purpose of appointment of a
person as Chairman or other member of a Board, Court or
Tribunal. In order that a person may be eligible for his
appointment to these bodies, he must possess the following
qualifications:
(i) . He must be unconnected with industrial dispute in
question, or.
(ii) He must be unconnected with any industry directly affected
by such dispute.
(j) Industry - Industry means any business, trade, undertaking,

5. manufacture
or any service, employment, handicraft or industrial
occupation or
vocation of workmen.
In a Case In Banglore Water.Supply v. A Rajappa 1 a bench of the
Supreme Court consisting of seven judges exclusively considered the
scope of industry and laid down the following test which has practically
reiterated as under:
"Where there is (i) systematic activity, (ii) organised by co-operation
between employer and employee, (iii) for the production and/or
distribution of goods and services calculated to satisfy human wants
and wishes, prima facie, these is an "Industry" in that enterprise." This
is known as Triple Test.
The Following points were also emphasised in the said case:
(1) Industry does not include spiritual or religious services or services
geared to celestial bliss, e.g. making on a large scale, "parsed" or
food.
(2) Absence of profit motive or gainful objective is irrelevant but, be the
venture in the public, joint, private or other sector.
(3) The true focus is functional and the decisive test is the nature of the
activity with special emphasis on the employer-employee relations.
(4) If the organisation is a trade or business, it does not cease to be one
because of philanthropy animating the undertaking.Therefore, the
consequences of the decision in this case are that professions, clubs,
educational institutions, co-operatives research insthtions, charitable
projects and other kind of adventures, if they fulfil the triple test stated
above cannot be exempted from the scope of industry.'
(k) Industrial Disputes - Industrial Dispute is : (1) a dispute or
difference between (a) employers and employers, or (b)
employers and workmen,
(c) workmen and workmen; . .
(2) the dispute or difference should be connected with (a)
employment or . non-employment, or (b) terms of
employment, or (c) conditions of labour
of any person; .
(3) the dispute may be in relation to any workman or workmen or
any other
person in whom they are interested as a body.
(ka) Industrial Establishment or Undertaking - It means an

6. establishment or undertaking in which any industry is carried on;
provided that, where several activities are carried on in an
establishement or undertaking and only one or some of such activities is
or are an industry or industries:
(kk) Insurance Company - According to this sub-section, an
insurance is one, which company is defined in Sec. 2 of the
Insurance Act, 1938, having branches or other establishments
in more than one State.
(kka) Khadi - "Khadi" has the meaning assigned to it in clause (
d) of Sec. 2 of the Khadi and Village Industries Commission Act,
1956.
(kkb) labour Court.- It means a Labour.Court constituted under
Sec. 7 of
the Industrial Disputes Act, 1947.
(kkk) lay Off - Means putting aside workmen temporarily. The
duration of lay off should not be for a period longer than the
period of emergency. The employer-employee relationship
does not come to an end during the
period of lay-off but is merely suspended during the period of
emergency.
Any such refusal or failure to employ a workman may be on
account of:
(i) shortage of coal, power or raw materials or
(ii) the accumulation of stock; or
(iii) the breakdown of machinery; or
(iv) natural calamity; or
(v) any other connected reasons.
Difference between lock-out and retrenchment:
(1) Temporary or permanent: Lockout is temporary measure,
while
retrenchment is permanent.
(2) Relationship: In lockout the relationship of employer and employee
is
only suspended; it does not come to an end. In retrenchment
such a
relationship is severed at the instance of the employer.
(3) Motive: Lockout is with a motive to coerce the workmen; the
intention
of retrenchment is to dispense with surplus labour.
(4) Trade dispute: Lockout is due to an industrial dispute,
whereas in
case of retrenchment, there is no such dispute

Difference between lock-out and closure

7. (1) Temporary/Permanent: Lockout is temporary measure,
whereas closure is permanent. .
(2) Weapon of coercion: Lockout is a weapon of coercion in the
hands of
employer; while closure is generally made for trade reasons.
(3) Trade Dispute: Lockout is declared during an industrial
dispute, while
in case of closure, there need not be any dispute.
(Ia) Major Port: Means a port as defined in clause 8 of Sec. 3 of the
Indian Port Act. 1903; which reads as follows:
"Any port which the Central Government may by notification in
official Gazette declare or may by any law for the time being in
force, have declared to be a major port".
(I b) Mine: Means a mine as defined in clause (j) of sub-section (1) of
Sec. 2 of the Mines Act, 1952, Which reads as under:
"Mine means any excavation where any operation for the purpose
of searching for or obtaining minerals has been, or is being carried
on, and includes, (unless exempted by the Central Government by
notification in the official Gazette) any premises or part thereof,
on which any process ancillary to the getting, dressing or
preparation for sale of mineral or of coke is being carried on :"
(II) National Tribunal: Means a National Tribunal constituted under
Sec. 78 of
the Act.
(III) Office Bearer: In relation to a Trade union, it includes any member
of the
executive thereof, but does not include on auditor. (m) Prescribed:
Means prescribed by rules made under this act. (n) Public utility
services: The following are public utility services as laid down by the
Act :
(i) any railway service;
(ii) any transport service for the carriage of passengers or
goods by
air;
(iii) any service in or in connection with the working of any
major port
or dock;
(iv) any section of an industrial establishment, on the
working of which
the safety of the establishment or the workmen employed therein
. depends;
(v) any postal, telegraph or telephone service;
(vi) any industry which supplies power, light or water to the
public; (vii) any system of public conservancy or sanitation.
(viii) any industry specified in the First Schedule which the

8. appropriate
Government may, if satisfied that public emergency or
public interest so requires, by notification in the Official
Gazette declare to be a public utility service for the
purpose of this Act, for such period as may be specified
in the notification.
(0) Railway company - Means a Railway Company as defined in Sec.8
of the Indian Railway Act, 1890. Sec 3(5) of the Indian Railways
Act states, "Railway Company" includes any person whether
incorporated or not who are owners or lessees of a railway or
parties to any agreement for working a railway."Sec. 3(4) of the
Indian Railways Act defines the term "Railway" as. "Railway
means a railway, or any portion of a railway, for the public
carriage of passengers, animals or goods. and includes:
(a) all lines of rails, or branches worked over the purpose of or in
connection with a railway.
(b) all stations, Offices, Workhouses, Wherever, workshops, Fixed
plant
and machinery and other works constructed in connection with a
railway,
and
(c) all ferries, ships, boats and rafts which are used in inland waters
for the
purpose of traffic of railway and belong to or are hired or worked
by the authority administering the railways." .
(00) Retrenchment - Means the discharge of surplus labour or staff by
the employer
for any reason What-so-ever.'
The term "retrenchment" defines under the section 2(00) may be
analysed as:
(1) Retrenchment means the termination by the employer of the
services
of a workman.
(2) The termination may be for any reason what so ever.
(3) But the termination should not be as a measure. of punishment
by way
of disciplinary action.
Conditions of retrenchment:
According to Sec. 25F of the Act no workman employed in any
industry who has been in continuous service for not less than one year
under an employer shall be
retrenched by the employer until: .
(a) the workman has been given one month's notice in writing
indicating the reasons for retrenchment, or the workman has
been paid in lieu of such notice, wages for the period of
notice;

9. (b) the workman has been paid, at the time of retrenchment,
compensation which shall be equivalent to 15 days average
pay for every completed
year of continuous service or any part thereof, in excess of 6
months, and
(c) notice in the prescribed manner is served on the appropriate
Government or such authority as may be specified by the
appropriate Government by notification in the Official
Gazette.
Re-employment of retrenched workmen
According to Sec. 25H of the Act, where any workmen are
retrenched and the employer proposes to employ any persons, be shall,
in such manner as may be prescribed, give an opportunity to retrenched
workmen who are citizens of India offer themselves for the re-
employment, and the retrenched workmen who offer themselves for re-
employment, shall have preference over others. But this section cannot
be applied retrospectively [Case: R,S Ramdayal v. Labour Appellate
Tribunal (Sec. 567) -1964].

The following cases are not retrenchment
(a) Voluntary retirement of a workman, or
(b) retirement of a workman on reaching the age of
superannuation if the
contract of employment between the employer and the
workman concerned contains a stipulation in that behalf; or
(bb) Termination of the service of a workman as a result of the
non-renewal of the cortract of employment between the
employer and the workman concerned on its expiry or of such
contract being terminated.
Difference between retrenchment and closure
(1) Retrenchment affects only some of the workman, whereas
closure
affects all workman.
(2) In retrenchment the trade or business remains uninterrupted as
it
continues; while in closure the business itself is discontinued.
(q) Strike - Strike means (1) cessation of work by a body of
persons employed in any industry acting in combination, or
(2) a concerted refusal of any number of persons who are or
have been employed in any industry to continue to work or to
accept employment; or (3) to refusal under a common
understanding of any number of persons who are or have been
employed in industry to continue to work or to accept
employment.

10. Features of strike
(1) It is the stoppage of work by a body of workmen acting in concert
with
a view to bring pressure upon the employer to concede to their
demands.
(2) The workmen must be employed in any industry.
(3) More cessation of work does not come within the preview of
strike,
unless it can be shown that such cessation of work was a
concerted action for the enforcement of an industrial demand1.
Kinds of strike
These are three kinds of strikes, namely: (1) General strike, (2) Stay-in-
strike,
and (3) Go slow strike.
(1) General strike: A general strike is one, where the workmen join
together
for common cause and stay away from work, depriving the employer of
their labour needed to run the factory.
(2) Stay-in-strike : A stay-in-strike is also known as "total-dawn-
strike" or
'pen-dawn-strike". It is the form of strike where the workmen
report to
their duties, occupy the premises, but do not work. The employer is
thus prevented from employing other labour to carryon his
business.
(3) Go-slow strike: In a 'Go Slow' strike, the .workmen do not
stay away from work, they do come to their work and work also, but
with a slow speed in order to lower down production, and thereby
cause loss to the employer.
In addition to these three forms of strike a few more may be
cited, although some of them are not strike within the
meaning of Sub-Section 2(q). Such forms are:
(i) Sympathetic strike: A sympathetic strike is resorted to in
sympathy of other striking workmen. Its aim is to encourage
or to extend moral support to or indirectly to aid the striking
workmen. The sympathisers resorting to such strike have no
demand of grievance of their own.
(ii) Hunger strike: In hunger strike, a group of workmen resort
to fasting on or near the place of work or the residence of the
employer with a view to coerce the employer to accept their
demands.
(iii) Work to rule : The employers in this case of "work to rule"
strictly adhere to rules while performing their duties which
ordinarily they do not observe. This causes the slowing down
the tempo of work. It is not a strike because there is no

11. stoppage of work at all.
(qq) Trade Union: Means a trade union registered under the Trade
Union
Act, 1926.
(r) Tribunal: Tribunal means an Industrial Tribunal constituted
under Sec.
7 -A of the Act. It also includes an Industrial Tribunal
constituted before 10th March, 1957 under this Act.
(ra) Unfair labour practice: It means any of the practices
specified in the
Fifth Schedule.
. (rb) Village Industries: It has the meaning assigned to it in
clause (h) of
Sec.2 of the Khadi and Village Industries Commission Act,
1956.
(rr) Wages: It means all remuneration capable of being expressed
in terms of money, which would, if the terms of payment,
expressed or implied were fulfilled, be payable to a workman
in respect of his employment or of work done in such
employment. Wages also includes(i) dearness allowance as
the workmen is for the time being entitled to; (ii) the value of
any house accommodation, or of the supply of light, water,
medical benefits or any concessional, supply of food grains or
other articles; (iii) any travelling concession; (iv) any
commission payable on sales promotion or business, or both.
However, the following are not wages:- (a) any bonus; (b)
any contribution paid or payable by the employer to any
pension fund or provident fund., (c) any gratuity payable on
the termination of service of workman.
(s) Workman: '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, .and for the purpose of
any proceeding under this Act. .
"Workman" does not include any such person - (i) who is
subject to the Air Force Act, 1950, or the Army Act, 1950, or
the Navy Act, 1957, or (ii) who is employed in the Police
Service or as an officer or other employee of a prison, or (iii)
who is employed mainly in a managerial or administrative
capacity, or (iv) who, being employed in a supervisory
capacity, draws wages exceeding Rs. 1600/- per mensem, or
exercises functions mainly of management nature.