LABOUR LAW PALLAVI BHOGLE

LABOUR LAW PALLAVI BHOGLE

The Trade Unions Act, 1926

REGISTRATION OF TRADE UNIONS

Explain the procedure and formalities for registration of a Trade Union.

[10]
05, Dec 03, 2K, Dec 99, Oct 98, Oct 97

Introduction: A Trade Union is a continuous association of wage earners for the purpose
of maintaining the conditions of their lives. Section 2(h) of the Trade Unions Act, 1926
defines ‘Trade Union’.

Mode of Registration of a Trade Union [S.4]

A Trade Union may be a registered, unregistered or a recognised Trade Union. There is

basic distinction between these different Trade Unions. The members of a recognised and
registered Trade Union enjoy such benefits as the members of an unregistered Trade
Union do not.

Any seven or more members of a Trade Union may apply for registration of the Trade
Union. All the members applying for registration must subscribe their names to the rules
of the Trade Union and also comply with the provisions of the Act relating to registration
of Unions:
• Provided that no Trade Union of workmen shall be registered unless at least ten
percent, or one hundred of the workmen, whichever is less, engaged or employed
in the establishment or industry with which it is connected are the members of
such Trade Union on the date of making of application for registration
• Provided further that no Trade Union of workmen shall be registered unless it has
on the date of making application not less than seven persons as its members who
are workmen engaged or employed in the establishment or industry with which it
is connected.

If more than half of the members who applied for registration of Trade Union, cease to be
members of the Trade Union or dissociate themselves from the application by giving a
notice in writing to the Registrar before the registration is granted to the Trade Union, the
application shall be deemed to have become invalid. In all other cases when only half or
less than half of the members cease to be members of the Union or dissociate themselves
from the application as aforesaid, the application for registration shall be valid.

Application of Registration [S. 5]

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According to the provisions of the Act a Trade Union may become a registered Trade
Union in the following manner:
1. An application should be sent to the Registrar in which seven or more members of
such Union must subscribe their names. At least seven members must subscribe
names to the rules of the Trade Union.
2. The application in form ‘A’ should be accompanied with a copy of rules of the
Trade Union and a statement of the following particulars:
(a) the names, occupations, and addresses of the members making the
application;
(aa) in the case of a Trade Union of workmen, the names, occupations and
addresses of the place of work of the members of the Trade Union making the
application;
(b) the name of the Trade Union and the address of its head office; and
(c) the titles, names, ages, addresses and occupations of the office bearers of
the Trade Union.
3. A general statement of the assets and liabilities of the Trade Union prepared in the
prescribed form and containing such particulars as may be required should be sent
with the application to the Registrar where a Trade Union has been in existence
for more than one year before the making of an application for its registration.

Provisions to be contained in the rules of a Trade Union. [S. 6]

Every registered Trade Union is required to have written rules dealing with certain matters
specified in Schedule II of the Central Trade Union Regulations, 1938. These rules generally
determine and govern the relationship between the Trade Union and its members. They also
provide guidance for the internal administration of the Trade Union. A Trade Union shall be
entitled to registration under this Act, if:
1. the executive of the Trade Union is constituted in accordance with the provisions of
this Act ; and
2. the rules of Trade Union provide for the following matters, namely:
(a) the name of the Trade Unions;
(b) the whole of the objects for which the Trade Union has been established;
(c) the whole of the purposes for which the general funds of the Trade Union shall
be applicable, all of which purposes shall be purposes to which such funds are
lawfully applicable under this Act;
(d) the maintenance of a list of the members of the Trade Union and adequate
facilities for the inspection thereof by the office bearers and members of the
Trade Union.
(e) the admission of ordinary members who shall be persons actually engaged or
employed in an industry with which the Trade Union is connected and also the
admission of the number of honorary or temporary members as office bearers
required udder section 22 to form the executive of the Trade Union;
(ee) the payment of a minimum subscription by members of the Trade Union
(f) the conditions under which any member shall be entitled to any benefit
assured, by the rules and under which any fine or forfeiture may be imposed on
the members;

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(g) the manner in which the rules shall be amended, varied or rescinded;
(h) the manner in which the members of the executive and the other office bearers
of the Trade Union shall be elected and removed;
(hh) the duration of period being not more than three years, for which the members
of the executive and other office-bearers of the trade Union shall be elected;
(i) the safe custody of the funds of Trade Union, and annual audit, in such manner
as may be prescribed, of the accounts thereof, and adequate facilities for the
inspection of the account books by the office bearers and members of the
Trade Union;
(j) the manner in which the Trade Union may be dissolved.

Conclusion: Under section 8 of the Act, the Registrar will register the Trade Union if he
is satisfied that the Trade Union has complied with all the requirements of this Act in
regard to registration. On registering the Trade Union, the Registrar shall issue a
certificate of registration, in the prescribed form, which shall be conclusive evidence that
the Trade Union has been duly registered under this Act.

Define Trade Union. Explain the powers of the registrar to reject the
application for registration and to cancel the registration of a Trade Union.
[10]
05, Dec 04, Dec 02

Discuss the duties and powers of the Registrar of Trade Unions under the
Trade Unions Act. [10]
99

Introduction: A Trade Union is a continuous association of wage earners for the purpose
of maintaining the conditions of their lives. Section 2 (h) defines ‘Trade Union’ which
can be analysed into the following ingredients:
Any combination whether temporary or permanent;
The combination should have been formed for the purposes of:
(a) regulating the relations between:
(i) workmen and employers; or
(ii) workmen and workmen ; or
(iii) employers and employers ; or

(b) imposing restrictive conditions on the conduct of any trade or business. But
this Act shall not affect:
any agreement between partners as to their business ; or

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LABOUR LAW PALLAVI BHOGLE

any agreement between an employer and those employed by him as to such

employment ;
any agreement in consideration of sale of the goodwill of a business or
instruction in any profession, trade or handicraft.

The appropriate Government shall appoint a person to be the Registrar of Trade Unions
for each State, under section 3of the Act.

Powers of Registrar regarding Application of Registration

Under section 5 an application for registration can be made. Every registered Trade
Union is required to have written rules dealing with certain matters specified in Schedule
II of the Central Trade Union Regulations, 1938 [S. 6]. These rules generally determine
and govern the relationship between the Trade Union and its members. They also provide
guidance for the internal administration of the Trade Union.

The Registrar will register the Trade Union, under section 8, if he is satisfied that the
Trade Union has complied with all the requirements of this Act in regard to registration.
The Registrar shall register the Trade Union by making necessary entries in the register,
to be maintained in such form as may be prescribed. The particulars relating to the Trade
Union contained in the statement accompanying the application for registration shall be
entered in the register.

The workmen of an industrial establishment can form as many Unions as they like. There
is nothing in the Act that bars the formation of rival Unions or requires a Union applying
for registration to give notice to all existing Unions. When a Union seeks registration, all
that it has to do is to ensure that the provisions of the Act, Rules and Regulations made
thereunder relating to registration of Trade Union have been complied with.

The Registrar also has the power to call for further particulars and to require alteration of
name [S. 7]. The registration of a Trade Union will be refused by the Registrar if the
name under which a Trade Union is proposed to be registered is identical with that of any
existing Trade Union or so nearly resembles such name as to be likely to deceive the
public or the members of either Trade Union. In such a case the Registrar may require the
persons applying for such registration to change the name of the Trade Union, and it shall
be registered only after such alteration.

The Registrar may also ask for further information, which he thinks necessary for the
purpose of satisfying himself that the application complies with the provisions of sections
5 and 6 of the Act. On application for registration being made the Registrar may call for
further information for the purpose of satisfying himself that the application complies
with the provisions of this Act. Such information may be asked for only from the
applicant and not from any other source.

It was held in IFFCO, Phulpur Karmchari Sangh v. Registrar of Trade Unions and
others, that once the trade union is registered by the Registrar of Trade Unions under

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LABOUR LAW PALLAVI BHOGLE

Section 8 of the Trade Unions Act, 1926, certificate of Registration continues to hold
good until it is cancelled. The action of the Registrar of Trade Unions registering the
change of names of office bearers of a union does not amount to registration of trade
union.

Where the Registrar takes no action on an application for more than three months, a writ
under Art. 226 can be issued commanding the Registrar to deal with the application.
Where different set of office bearers are filed by rival group in a Trade Union the
Registrar has no power to hold a quasi-judicial inquiry. He has no power for adjudication
although he is given quasi-judicial power in registering the Trade Union or in their
cancellation. He has an administrative duty to record changes in office bearers under
Section 8 read with Section 28. In exercising this function the Registrar can only
reasonably enquire to discover whether the changes to be recorded conform to actual
facts and rules. But this power cannot convert his inquiry into quasi-judicial proceeding
in which each side has the right to lead evidence and cross-examine witnesses. He can
hold a summary inquiry for his own satisfaction.

Functions of Registrar

The primary function of the Registrar is to examine the applications made to him for
registration and look at the objects of the Union for which it may be formed. On
compliance of statutory conditions as provided in the Act, he shall grant registration
certificate to the Union. As a matter of principle, the Registrar has no power to declare
the election of office bearers of a Union unconstitutional. But where the petitioner has
himself submitted to the jurisdiction of the Registrar by requesting him to make an
enquiry, he cannot subsequently be allowed to raise an objection that the Registrar acted
without jurisdiction, for once he had availed the opportunity of getting a favourable order
from the Registrar, he was estopped from challenging the jurisdiction of the Registrar if
the result of the inquiry happened to be against him. The Registrar shall be fully within
his jurisdiction if he makes an inquiry about the legality of the new election of the office
bearers of a Trade Union for the purpose of maintaining a register showing the name of
the office bearers who may, at the appropriate time, be required to comply with the
provisions of the Act. The acceptance or non-acceptance by the Registrar of the election
of the office bearers of a Union is legal only for the purpose of maintenance of records in
his office to facilitate the administration of the Act, but is open to challenge in the law
court.

Powers of Registrar regarding Cancellation of Registration

Under section 10, power to withdraw or cancel registration of a Trade Union is given to
the Registrar. The Registrar can exercise his power in the following cases:
1. On the application of the Trade Union to be verified in the prescribed manner.
2. If the Registrar is satisfied that the certificate of registration has been obtained by
fraud or mistake.
3. Where the Trade Union has ceased to exist.

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4. If the Union has willfully and after notice from the Registrar contravened any
provisions of this Act or allowed any rule to continue in force, which is
inconsistent with the provisions of the Act.
5. Where the Union has rescinded any rule providing for any matter provision for
which is required to be made by section 6.
6. According to clause (c) of Section 10 if the Registrar is satisfied that a registered
Trade Union of workmen ceases to have the requisite number of members, the
registration can be cancelled.

The Registrar on receiving an application from the Union for withdrawal or cancellation
of registration must before granting the prayer, satisfy himself that the withdrawal or
cancellation of registration was approved by a general meeting of the Trade Union or if it
was not so approved it had the approval of the majority of the members of the Trade
Union. For this purpose he may call for such further particulars as he thinks necessary
and may also examine any officer of the Union.

Except when the registration is withdrawn on an application by the Union itself, the
Registrar must give to the Trade Union not less than two months previous notice in
writing specifying the ground on which it is proposed to withdraw or cancel the
certificate of registration. It is quite clear from the provisions of section 10 of this Act
that no such notice as aforesaid by the Registrar to the Union is necessary, when the
registration is withdrawn or cancelled on an application by the Union itself.

It was held in Tata Electric Companies Officers Guild v. Registrar of Trade Unions, that
for cancellation of registration of a Trade Union willful contravention of provision of the
Act is necessary. Therefore where a Trade Union did not file return due to
misunderstanding of accounting year and the return was filed soon after receipt of show
cause notice from the Registrar, the cancellation of registration on the ground of non-
filing of return was held improper.

In Bombay Fire Fighters Services Union, Mumbai v. Registrar of Trade Unions, Bombay,
an appeal was filed by the Union challenging the order of Registrar canceling its
registration for continued contravention of Section 28 of the Trade Unions Act, 1926.
Setting aside the impugned order the High Court observed that the said order was in
violation of the mandatory provisions of Section 10 of the Act. The respondent, Registrar
had not addressed a previous show cause notice in writing to the appellant union at its
correct address. Therefore, the cancellation of registration was held illegal and improper.

Conclusion: The Registrar on registering a Trade Union shall issue a certificate of

registration in the prescribed form, which shall be conclusive evidence that the Trade
Union has been duly registered under this Act. [S.9]

A limited right of appeal from the decisions of the Registrar is granted by section 11 of
the Act. Any person aggrieved by the refusal of the Registrar to register a Trade Union or
by the withdrawal or cancellation of a certificate of registration has the right of appeal.
The appeal should be preferred within the prescribed period.

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Define Trade Union as defined under the Trade Union Act, 1926. What are
the advantages of registration of a trade union? [10]
Dec 05

Discuss the legal character of a registered trade union. [10]

02 (AE – 020), 98

Explain the effects of non-registration of a trade union. [10]

02

Introduction: A Trade Union is a continuous association of wage earners for the purpose
of maintaining the conditions of their lives. Section 2 (h) defines ‘Trade Union’ which
can be analysed into the following ingredients:
1. Any combination whether temporary or permanent;
2. The combination should have been formed for the purposes of:
(a) regulating the relations between:
(i) workmen and employers; or
(ii) workmen and workmen ; or
(iii) employers and employers ; or

(b) imposing restrictive conditions on the conduct of any trade or business. But
this Act shall not affect:
(i) any agreement between partners as to their business ; or
(ii) any agreement between an employer and those employed by him as to
such employment ;
(iii) any agreement in consideration of sale of the goodwill of a business
or instruction in any profession, trade or handicraft.

Incorporation of Registered Trade Union [S.13]

A Trade Union after registration becomes entitled to the following advantages:

It becomes a body corporate by the name under which it is registered.

By incorporation, the union is vested with a corporate personality, distinct from the
members who compose it.

An effect of incorporation is that the members and other persons shall be a body
corporate capable forthwith of exercising all the functions of an incorporated company
and having perpetual succession and common seal. Thus the trade union becomes a body
corporate, which is capable immediately of functioning as an incorporated individual.

It gets perpetual succession and common seal.

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An incorporated trade union never dies. It is an entity with perpetual succession. In spite
of the total change in membership, the union will be the same entity, with the same
privileges and immunities, estates, and possessions. Perpetual succession, therefore,
means that the membership of a union may keep changing from time to time, but that
does not affect the union’s continuity.

It can acquire and hold both movable and immovable property.

A trade union, being a legal person, is capable of owning, enjoying and disposing of
property in its own name. The union becomes the owner of its capital and assets. A
member does not even have an insurable interest in the property of the union. Thus,
incorporation helps the property of the union to be clearly distinguished from that of its
members. The property is vested in the union as a body corporate, and no changes of
individual membership affect the title.

It can contract through agents.

It can sue and be sued in its registered name.

A trade union, being a body corporate, can sue and be sued in its own name. It can file
criminal complaint but a natural person must represent it. It is not necessary that the same
person should act as a representative throughout.

An unregistered Trade Union could not be sued in Tort by suing a member thereof in a
representative capacity. The proper course in such a case was to sue a member for any
cause of action that lay against that member and it was not intended anywhere that such a
suit, would in any way be improper. Therefore an unregistered Trade Union is only a
voluntary association of individuals having no corporate existence. It is not a legal entity.
An unregistered Trade Union cannot be sued and any appearance of officials on its behalf
before the Court is not right. Therefore any person aggrieved by a wrong committed by
the members of such a Union should bring an action against all persons personally who
were members of the Union at the time of the commission of alleged wrong; or in case
the members are large in number, leave to sue them through a few to represent them may
be obtained under the Civil Procedure Code provided they have common interest in
resisting the claim.

Conclusion: A Trade Union may be a registered, unregistered or a recognised Trade

Union. There is basic distinction between these different Trade Unions. The members of
a recognised and registered Trade Union enjoy such benefits as the members of an
unregistered Trade Union do not.

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LABOUR LAW PALLAVI BHOGLE

RIGHTS AND LIABILITIES OF REGISTERED TRADE UNIONS

Explain the purposes for which a General fund of a Trade Union can be
utilized? [10]
06, 03 (AE – 965), 2K, Dec 99

Introduction: A Trade Union is a continuous association of wage earners for the purpose
of maintaining the conditions of their lives. Section 2(h) of the Trade Unions Act, 1926
defines ‘Trade Union’.

Section 15 of the Act is in the form of general restraint against expenditure of the general
funds of a Trade Union. The general funds of a registered Trade Union shall not be spent
on any other objects than the following, namely:
(a) the payment of salaries, allowances and expenses to office bearers of the Trade
Union;
(b) the payment of expenses for the administration of the Trade Union including audit
of the accounts of the general funds of the Trade Union;
(c) the prosecution or defence of any legal proceeding to which the Trade Union or
any member thereof is a party, when such prosecution or defence is undertaken
for the purpose of security or protecting any rights of the Trade Union as such or
any rights arising out of the relation of any member with his employer or with a
person whom the member employs.
(d) the conduct of the trade disputes on behalf of the Trade Union or any member
thereof;
(e) the compensation of members for loss arising out of trade disputes;
(f) the allowances to members or their dependants on account of death, old age,
sickness accidents or unemployment of such members;
(g) the issue of, or the undertaking of liability under policies of assurance on the lives
of members, or under policies insuring members against sickness, accident or
unemployment;
(h) the provision of educational, social or religious benefits for members (including
the payment of the expenses of general or religious ceremonies for deceased
members) or for the dependants of members;
(i) the upkeep of a periodical published mainly for the purpose of discussing
questions affecting employers or workmen as such;
(j) the payment in furtherance of any of the object on which the general funds of the
Trade Union may be spent, of contributions to any cause intended to benefit
workmen in general, provided that the expenditure in respect of such
contributions in any financial year shall not at any time during that year be in
excess of one-fourth of the combined total of the gross income which has upto
that time accrued to the general funds of the Trade Union during that year and of
the balance at the credit of those funds at the commencement of that year; and

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(k) subject to any conditions contained in the notification, any other object notified
by the appropriate Government in the Official Gazette.

Thus it will be illegal to spend the Union funds for any purpose other than those stated
above. It is illegal to devote Union funds in support of an illegal strike or lockout and a
Union can be restrained by injunction from applying its funds for any unlawful purpose,
because such an expenditure shall be ultra vires of the Act.

In Mario Raposo v. H.M. Bhandarkar and others, the petitioner as well as the
respondents were members of a Union called V.C.O. Bank Employees' Association
Nagpur. The office bearers of the union purchased shares of U.T.I. in their individual
names out of the Union General Fund. It was held that purchase of shares cannot be
termed as investment under section 15 of the Act but is a speculative activity. Section 15
of the Act does not allow the Union to spend its funds on speculative activity.

Conclusion: Section 15 of the Act is in the form of general restraint against expenditure
of the general funds of a Trade Union. The general funds of a registered Trade Union
cannot be spent on any other objects than the ones given above.

State the purposes for which the political funds of a Trade Union can be
spent. [10]
03, Oct 2K, Dec 99, 97

Write a note on political fund of a Registered Trade Union. [6]

Dec 05

A registered trade union supports a political party candidate contesting for

a seat in the Assembly and spends its general funds for his election
campaign. Is it valid? [6]
Dec 03

Introduction: A Trade Union is a continuous association of wage earners for the purpose
of maintaining the conditions of their lives. Section 2(h) of the Trade Unions Act, 1926
defines ‘Trade Union’.

A Trade Union can have such civic and political objects as are not inconsistent with its
primary object. To pursue such objects it can raise separate funds. Section 16 provides
that a registered Trade Union may constitute a separate fund from contributions
separately levied for or made to that fund. Out of this fund payments may be made for the
promotion of civic and political interests of its members in furtherance of any civic or
political objects enumerated in section 16 of the Act. It is noteworthy that no expenditure
for political purposes, out of the general fund is permitted. The interests on investments,

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which constitute the political fund will belong to that fund, and that fund may be lawfully
swelled by donations, subscriptions and so forth.

Section 16(2) declares the following as civic and political objects:

the payments of any expenses incurred, either directly or indirectly by a candidate or

prospective candidate for election as a member of any legislative body constituted
under the Constitution or of any local authority, before, during, or after election in
connection with his candidature or election ; or
the holding of any meeting or the distribution of any literature or documents in support of
any such candidate or prospective candidate; or
maintenance of any person who is member of any legislative body constituted under the
Constitution or of any local authority ; or
the registration of electors or the selection of a candidate for any legislative body
constituted under Constitution or for any local authority ; or
the holding of political meetings of any kind, or the distribution of political literature or
political documents of any kind.

Para (a) above refers mainly to election expenses and is so wide that it covers all
expenses from the stage of preparation to the incidental expenses incurred
after election.
Para (b) permits expenditure for holding of any meeting or distribution of any
literature or document in support of a candidate or prospective candidate for
election as a member of any legislative body, whether the nature of literature
or document is political or not. Therefore, any expenses incurred on a journal
or a newspaper containing matter in support of such candidate will also be
covered.
Para (c) is meant to maintain members of legislative bodies, and not to support
candidates. It authorises expenses for housing, clothing, payment of
allowances etc. to persons actually holding an office in a legislative body.
Para (d) covers an expenditure on issue of notices, circulars and posters with a
view to canvass registration of electors. So also expenditure on account of
holding of selection conference for the purpose of selecting or securing the
election of a candidate is also authorised under this para.
Under para (e) any money spent on distribution of political literature whether to
the members of the Union or to the general public is also covered.

Conclusion: It has to be borne in mind that no member shall be compelled to contribute

to the political fund. Any member who does not contribute to the political fund of the
Union shall not be excluded from any benefits of the Trade Union. He cannot be placed
directly or indirectly under any disability or at any disadvantage in comparison to other
members of the Trade Union, who have contributed to political fund. In other words no
discrimination on the ground of a member having contributed or not to the political funds
of the Trade Union shall be made. Further, contribution to the political fund cannot be
made a condition for admission of a person to the Trade Union. However, the control of
management of the political funds can exclusively be vested in the hands of only those

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members who have contributed to political funds. Non-contribution does not render a
member ineligible for any office involving control or management but such a right cannot
by pressed.

Discuss the extent of protection given to the office bearers of a registered

trade union against civil and criminal conspiracy under the Trade Unions Act,
1936. [10]
Oct 2K

Explain the immunities of a registered Trade Union with the help of decided
cases. [16]
06, 03, 03 (AE – 965), Oct 98, 97

Discuss the criminal immunity of a registered trade union. [6]

Dec 04

Introduction: A Trade Union is a continuous association of wage earners for the purpose
of maintaining the conditions of their lives. Section 2(h) of the Trade Unions Act, 1926
defines ‘Trade Union’.

Criminal Conspiracy in Trade Disputes

Section 17 of the Act confers immunity from liability in case of criminal conspiracy
under section 120-B of the Indian Penal Code committed by an office bearer or member
of a registered Trade Union. The protection provided to members or office bearers of a
registered Trade Union is partial in the sense that the immunity is available only in
respect of agreements made between the members for the purpose of furthering any
legitimate object of the Trade Union as provided in section 15 of the Act. If the
agreement is an agreement to do an act, which is an offence, no immunity can be
claimed. The effect of section 17 of the Act, is that an agreement or combination of two
or more members of the registered Trade Union to do or cause to be done any act in
furtherance of a Trade dispute shall not be punishable as a conspiracy unless such act, if
committed by an individual, constitutes an offence. Registered Trade Unions have certain
rights to do in furtherance of their trade disputes, such as to declare strike and for that
purpose to persuade their members to abstain from their work.

In West India Steel Company Ltd. v. Azeez, a Trade Union leader obstructed work in the
factory for five hours protesting against deputation of workman to work in another
section. It was held that a worker inside the factory is bound to obey the reasonable
instructions given by his superiors and carryout the duties assigned to him. The mere fact
that such worker is a Trade Union leader does not confer on him any immunity in that

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regard, A trade union leader has no right in law to share managerial powers and he cannot
dictate any worker individually or to the workmen generally about the manner in which
they have to do their work or discharge their duties. A Trade Union can espouse the cause
of the workers and can resort to lawful agitations for conducting their rights but officials
of the Trade Union are not entitled to order a workman to stop his work or otherwise
obstruct the work of the establishment. Where officials of a Trade Union obstruct the
work the management is justified in proceeding against such worker and deal with him
effectively.

Immunity from Civil Suits in Certain Cases

Section 18 of the Trade Unions Act deals with the immunity from civil proceedings
afforded to a registered Trade Union, and to its members or office bearers. A person is
liable in Torts for deliberately bringing about a breach of contract of employment
between the employer and the employee. But a registered Trade Union, its members or
office bearers are protected from being sued for inducing a person to break his contract of
employment or for interfering with the trade, business or employment of some other
person, provided such inducement is in contemplation or furtherance of a trade dispute.

Section 18(1) of the Act provides that no suit or other legal proceeding shall be
maintainable in any Civil Court against any registered Trade Union or any office bearer
or member thereof in respect of any act done in contemplation or furtherance of a trade
dispute to which a member of the Trade Union is a party on the ground only that such act
induces some other person to break a contract of employment, or that it is an interference
with the trade, business or employment of some other person or with the right of some
other person to dispose of his capital or of his labour as he wills. In this sub-section
emphasis is on the word ‘only’ which means the protection is limited only to the grounds
of actionability provided in this sub-section, and a registered union, its members or office
bearers shall be liable for any act not covered by this clause. There shall be no immunity
if threats, violence or other illegal means are employed.

Section 18 (2) of the Act provides that a registered Trade Union shall not be liable in any
suit or other legal proceeding in any Civil Court in respect of any tortious act done in
contemplation or furtherance of a trade dispute by an agent of the Trade Union if it is
proved that such person acted without the knowledge of, or contrary to, express
instructions given by the executive of the Trade Union.

It was held in Ram Singh and others v. Mis. Ashoka Iron Foundary and others, that a suit
for perpetual injunction restraining the workmen from indulging in unfair labour practice
is deemed as one of civil nature and hence cognizable under Section 9 of the Civil
Procedure Code. Therefore, where the court has barred the workmen from holding'
meeting, dharna and interfering in the rights of a company, such a restraint does not
curtail the just trade union activities of the workers. It cannot be construed as unjust und
the workmen are at liberty to carryon legitimate trade union activities peacefully.

THE TRADE UNIONS ACT, 1926 14

LABOUR LAW PALLAVI BHOGLE

Rohtas Industries Staff Union v. State of Bihar, is the leading case on this section. In this
case the question for determination was, whether the employers have any right to claim
damages against the employee participating in an illegal strike and thereby causing loss
of production and business. It was held that the employers have no right of civil action,
for damages against the employees participating in an illegal strike within the meaning of
section 24(1) of the Industrial Disputes Act. It was further held that the striking workmen
are not prevented from taking recourse to the protection of section 18 of the Trade
Unions Act, 1926 mainly because the strike is illegal under section 24(1) of the Industrial
Disputes Act, 1947. It is the duty of the court to see that the strike is undertaken in
contemplation or furtherance of a trade dispute.

Conclusion

Can a minor be admitted as a member of a Trade Union? [6]

03 (AE – 965)

Introduction: A Trade Union is a continuous association of wage earners for the purpose
of maintaining the conditions of their lives. Section 2(h) of the Trade Unions Act, 1926
defines ‘Trade Union’.

Under section 21, any person who has attained the age of fifteen years may be a member
of a registered Trade Union. Any such member, subject to the rules of Trade Union, shall
enjoy all the rights of a member and execute all instruments and give all acquaintances
necessary to be executed or given under the rules. Although a person on attaining the age
of fifteen years may become a member of the Trade Union, but in view of the
disqualification laid down in section 21-A he cannot be an office bearer of the Trade
Union until he attains the age of 18 years.

The Trade Union being a voluntary association is free either to admit or to refuse a
person as its member. The right of society to admit any person as its member is exercised
in accordance with its regulations, and until so admitted, no right exists which the court
can be called upon to protect or enforce. The courts have no power to require the Trade
Union to admit a person when such admission has been refused. Therefore, an application
to join the Trade Union and an undertaking to abide by the rules of the Trade Union, its
acceptance by the Union is all the nature of an offer and acceptance resulting in a contract
between the members and the Union. The rights and liabilities of the members of a Trade
Union are generally determined by the constitution of such Union, which forms the basis
of the contract.

Ordinary members of a Trade Union must be the persons actually engaged in the Industry
with which the Trade Union is concerned. A Trade Union has not only the right to admit
a person as its member, but also to expel any of its members provided the rules of the

THE TRADE UNIONS ACT, 1926 15

LABOUR LAW PALLAVI BHOGLE

Trade Union provide for such expulsion. Even where a provision is made in the
constitution of a Trade Union whereby a member can be expelled by the Trade Union,
such member must be given fair and adequate opportunity of being heard. The courts can
interfere with the discretion of a union to expel any of its members for violation of rules
either on the ground of the expulsion being not expressly authorised by the Union rules or
the decision of expulsion by the Union being in violation of the principles of natural
justice. Generally the rules of the Union make a remedial provision to be sought by an
aggrieved member by way of appeal to domestic Tribunals because it is an internal matter
of the Union itself. Where a provision for such remedy is made in rules, the courts have,
before granting a remedy to see that the aggrieved member had sought such remedy but
failed to get justice.

Conclusion

Explain the provisions relating to amalgamation of trade union and dissolution

of trade union. [10]
Dec 05, 04, 98, 97

Explain the procedure for change of name and amalgamation of trade unions.
[10]
Dec 99

Explain how the name of a registered trade union can be changed and the
procedure for amalgamation of trade unions. [10]
02 (AE – 020)

Introduction: A Trade Union is a continuous association of wage earners for the purpose
of maintaining the conditions of their lives. Section 2(h) of the Trade Unions Act, 1926
defines ‘Trade Union’.

Change of name [S. 23]

Section 7(2) of the Act provides that no Trade Union shall be registered under the name
identical with the name of any other existing Trade Union. Section 23 of the Act provides
that any registered Trade Union may, with the consent of not less than two-thirds of the
total number of its members and subject to the provisions of section 25 of the Act, change
its name.

Amalgamation of Trade Unions [S. 24]

The method, for amalgamation of two or more Unions is provided for in section 24 of the
Act. Any two or more registered Trade Unions may become amalgamated together as one

THE TRADE UNIONS ACT, 1926 16

LABOUR LAW PALLAVI BHOGLE

Trade Union with or without dissolution or division of the funds of such Trade Unions.
But to support any amalgamation the votes of at least one-half of the members of each
and every such Trade Union entitled to vote must be recorded and also that at least sixty
per cent of the votes recorded must be in favour of the proposal of amalgamation.

Section 25 of the Act requires that notice in writing of every amalgamation signed by the
Secretary and by seven members of each and every Trade Union, which is a party thereto,
shall be sent to the Registrar. Where the head office of the amalgamated Trade Union is
situated in a different State, notice of amalgamation shall be sent to the Registrar of such
State.

The Registrar of the State in which the head office of the amalgamated Trade Union is
situated, shall, if he is satisfied that the provisions of this Act in respect of amalgamation
have been complied with and the Trade Union formed thereby is entitled to registration
under section 6, register the Trade Union in the manner provided in section 8 of the Act.
The amalgamation shall have effect from the date of registration.

Notice of Change of Name or Amalgamation [S. 25]

Section 25(l) of the Act requires that notice in writing of every change of name signed by
the Secretary and seven members of\the Trade Union changing its name shall be sent to
the Registrar. It should further be stated in the notice whether the consent of the members
was obtained by referendum or by resolution of a general meeting. On receipt of a notice
for change of name, the Registrar must satisfy himself that the provisions of the Act in
respect of change of name are complied with. If the proposed name is identical with that
by which any other existing Trade Union has been registered or in the opinion of the
Registrar, so nearly resembles such name as to be likely to deceive the public or the
members of either Trade Union, the Registrar shall refuse to register the change of name.

The Registrar shall, if he is satisfied that the provisions of this Act in respect of change of
name have been complied with, register the change of name in the register referred to in
section 8. The change of name shall have effect from the date of such registration.

Effect of Change of Name [S. 26(1)]

The change in the name of a registered Trade Union shall not affect any rights or
obligations of the Trade Union. It shall also not render ineffective any legal proceeding
by or against the Trade Union. Any legal proceeding, which might have been continued
or commenced by or, against a Trade Union by its former name may be continued or
commenced by or against its new name.

Effect of Amalgamation [S. 26(2)]

Section 26(2) of the Act provides that an amalgamation of two or more registered Trade
Unions shall not prejudice any right of any of such Trade Unions or any right of a
creditor or any of them.

THE TRADE UNIONS ACT, 1926 17

LABOUR LAW PALLAVI BHOGLE

An amalgamation shall have effect only after it has been registered. But registration of
amalgamation by itself is not the conclusive proof of the validity of the amalgamation.
The amalgamation may be declared invalid on the ground that the votes of fifty per cent
of the members had not been recorded.

Conclusion

COLLECTIVE BARGAINING AND TRADE DISPUTES

Define ‘Collective Bargaining’. Analyse the reasons for its failure in India.
[10]
Dec 04

Discuss how collective bargaining agreements help in smooth industrial relations. [10]
02

Explain the factors, which are helpful in the success of collective bargaining.
[10]
Dec 02 (OE – 2731)

Discuss the problems of multiplicity of trade unions and consequent intra-

union rivalry in India. [10]
04, Dec 02 (OE – 2731)

Explain the various levels of collective bargaining. [6]

Dec 04

State the methods of collective bargaining. [6]

02

Discuss the advantages of maintaining discipline in the industry and state

the role of trade unions in maintaining discipline in an industry. [16]
02

THE TRADE UNIONS ACT, 1926 18

LABOUR LAW PALLAVI BHOGLE

Introduction: An individual is free to bargain for himself and safeguard his own interest.
If an individual workman seeks employment he stands in a weaker position before his
master, who having command over wealth stands in better position to dictate his own
terms. However the position becomes different if a bargain is made by a body or
association of workmen. They can negotiate and settle their terms with the employer in a
better way and secure better wages, better terms of employment and greater security. The
object of collective bargaining is to harmonise labour relations, promote industrial peace
by creating equality of bargaining power between the labour and the capital. Collective
bargaining can exist only in an atmosphere of political freedom. Any conditions of
service like wages, hours of work, leave, gratuity, bonus, allowances and other like
privileges can all be settled by negotiation between the body of workmen and employer.
Thus, ‘collective bargaining’ is that arrangement whereby the wages and conditions of of
employment of workmen are settled through a bargain between the employer and the
workmen collectively whether represented through their Union or by some of them on
behalf of all of them.

Meaning and Definition

The Encyclopaedia of social sciences treats collective bargaining as a process of

discussion and negotiation between two parties, one or both of whom is a group of
persons acting in concert. More specifically, it is the procedure by which an employer or
employers and a group of employees agree upon the conditions of work. Ludwig Teller
defines collective bargaining as an agreement between a single employer or an
association of employers on the one hand and a labour Union on the other, which
regulates the terms and conditions of employment.

‘The Encyclopaedia Britannica’, defines collective bargaining as ‘negotiation between an

employer or group of employers and a group of work people to reach agreement on
working conditions. If negotiations are between an employer and a group of his work
people the dependence of the work people on the employer for their job weakens their
bargaining power, and therefore collective bargaining is more usually understood to be
negotiation between one or more Trade Unions and an employer or group or association
of employers. Trade Union organisation gives the work people greater strength to
providing means for the expert presentation of demands by skilled officials not dependent
on the employers for their jobs. Further a Union has funds and means of obtaining
information outside anyone undertaking and can secure for the work people at anyone
firm the support of their fellows in other firms.’

In the present day collective bargaining has become a general feature in all industry. Any
agreement collectively arrived at is generally observed by both the employers and
workmen who are not a party to it. Of course the Trade Union movement in India has not
been able to reach that standard which its counterpart, in other developed countries could,
yet it has done much. The object of any labour movement at all times is ‘to seek an ever
rising standard of living, which means not only more money but more leisure and a richer
cultural life.’ Collective bargaining is not a means of seeking a voice in management. It

THE TRADE UNIONS ACT, 1926 19

LABOUR LAW PALLAVI BHOGLE

is, no doubt, a method adopted by Trade Unions in championing the cause of their
members.

Large concentration of economic power in the hands of the employer due to modern
technological development has placed individual in a weaker position in so far as
contractual bargaining relating to the terms and conditions of employment or settlement
of disputes is concerned. It was to protect the interest of individual labour against the
capitalist employer that the Trade Union movement gave birth to the principle of
collective bargaining. The principle of collective bargaining presupposes the right of
workmen to be represented collectively by a Trade Union. This right has received
statutory recognition. A Trade Union can raise or sponsor a trade dispute and represent
on behalf of its members in legal proceedings in consequence of an industrial dispute.
But a Trade Union cannot represent a workman who is not its member. It does not mean
that the workman himself cannot, where a Trade Union has right to represent his case,
pursue or represent his own case in a legal proceeding. Provisions of section 36 of the
Industrial Disputes Act, 1947 are only permissive. A workman can either himself
represent his case or his case can be sponsored and represented by a Trade Union of
which such workman is a member.

The rights of an unregistered Trade Union are different from a registered Trade Union.
The employer can negotiate with an unregistered Trade Union. The management will be
bound to recognize any Trade Union, which has enrolled a majority of its employees as
its member. A Union whether registered or unregistered commanding allegiance of a
majority of the workmen has a better claim to negotiate with the employer on behalf of its
workmen in preference to a registered Trade Union presenting a minority of the
workmen. To accept a principle other than this would, in the opinion of the Madras High
Court, give room for abuse and lead to inconvenient results.

Methods of Collective Bargaining

The process of collective agreements normally takes one or the other of the forms,
namely negotiation, mediation and arbitration, voluntary or compulsory.

Negotiation is the process of settling the differences by face-to-face round table talks
between the representatives of the employees and employers. In case of failure of the
negotiating machinery there is the option to resolve the difference by mutual discussions
and understanding, a third party intervention to secure settlement of labour disputes by
way of mediation is often resorted to. The mediator functions not as a judge, but assists
the parties in dispute to reach an agreement by persuading them to resume or continue
their bargaining efforts. Arbitration is an act of settling labour disputes through the
medium of a neutral third party. The parties to a dispute may either agree amongst
themselves to submit for settlement by a third person and abide by his award or a dispute
might be submitted to the arbitrator under the provisions of a statute. In the former case it
is voluntary arbitration, in the latter it would be compulsory arbitration. In case of
voluntary arbitration the selection of arbitrator entirely rests with the parties to the
dispute. The award is binding on the parties and is also enforceable in the courts.

THE TRADE UNIONS ACT, 1926 20

LABOUR LAW PALLAVI BHOGLE

The Trade Unions in India could not contribute to the settlement of industrial disputes to
the desired extent because the labour is divided and the employers are well organised.
Further there is lack of proper labour leadership and the majority of workmen are
illiterate and as such unable to participate in mutual discussions. There are a number of
labour organisations, namely, All India Trade Union Congress, Indian National Trade
Union Congress etc. These Unions take a stand different from the other on many issues
because of their intra-Union rivalry.

The rule of collective bargaining has been incorporated in the Industrial Disputes Act,
1947, wherein the provision is made for appointment of Conciliation Officers, charged
with the duty of mediation in and promoting the settlement of industrial disputes. On a
reference of a dispute to the Conciliation Officer, a Conciliation Board is constituted
consisting of the representatives of employees and employer with the Conciliation
Officer as its chairman. The memorandum of settlement duly signed by the parties is sent
to the appropriate Government for publication. The main task of the Conciliation Officer
is to go from one camp to the other and find out the greatest common measure of
agreement to investigate the dispute and do all such things as he thinks fit to arrive at a
fair and amicable settlement of the dispute. A settlement arrived at by agreement between
the employer and workmen otherwise than in the course of Conciliation proceedings shall
be binding on the parties to the agreement. A settlement comes into operation on such
date and is binding for such period as agreed upon by the parties.
The principle of collective bargaining has been recognised by the International Labour
Organisation also. The Industrial Labour Conference held in 1951 adopted a resolution
recommending collective agreements which provided that

Machinery appropriate to the conditions existing in each industry should be

established by means of agreement or laws or regulations as may be
appropriate under national conditions, to negotiate, conclude, revise and
review collective agreements, or to be available to assist the parties in the
negotiations, conclusions, revision, and renewal of collective agreements.
The organisation, methods of operation and function of such machinery should be
determined by agreements between the parties or by national laws, or
regulations as may be appropriate under national conditions.

Conclusion

REMAINING QUESTIONS
Define a trade union. Discuss whether civil servants can form a trade union.
[10] - 02, 01, Oct 97

THE TRADE UNIONS ACT, 1926 21

LABOUR LAW PALLAVI BHOGLE

Introduction: A Trade Union is a continuous association of wage earners for the purpose
of maintaining the conditions of their lives. Section 2(h) of the Trade Unions Act, 1926
defines ‘Trade Union’.

Section 2 (h) defines ‘Trade Union’ which can be analysed into the following ingredients:
Any combination whether temporary or permanent;
The combination should have been formed for the purposes of:
(a) regulating the relations between:
(i) workmen and employers; or
(ii) workmen and workmen ; or
(iii) employers and employers ; or
(b) imposing restrictive conditions on the conduct of any trade or business. But this Act
shall not affect:
any agreement between partners as to their business ; or
any agreement between an employer and those employed by him as to
such employment ;
any agreement in consideration of sale of the goodwill of a business or
instruction in any profession, trade or handicraft.

A Trade Union is a continuous association of wage earners for the purpose of maintaining
the conditions of their lives. But the statutory definition given in the Trade Unions Act,
1926 uses the expression ‘combination’ instead of ‘association’ used in Sydney's
definition. The word ‘combination’ carries a very wide meaning. Whatever may be the
‘combination’ if it is for one or the other of the statutory objects (as provided in this Act)
it is Trade Union. It is the primary object of an association, which determines its nature.
A society consisted of authors, publishers and other owners of copyright and was formed
for the protection of copyright in music and songs. There were also certain rules which
could be regarded as imposing certain restrictions on the trade of the individual music
publishers who became members of the association. The society was held by the House
of Lords to be not a Trade Union because the principal object of the society was the
protection of the copyright. It was further held that, to come within the statutory
definition, restrictive conditions imposed must be in respect of trade or business in
general and imposition of such conditions on particular members of a trade or business
will not suffice. Tamil Nadu N.G.O. Union included among its members Sub-Magistrates
of the Judiciary, Tahsildars, officers incharge of Treasuries and Sub-Treasuries, officers
of Civil Court establishment, and the Home-Department of Government. Their union
could not be recognised as a Trade Union for these persons were civil servants engaged
in the task of the sovereign and regal aspects of the Government, which were its
inalienable functions.

Other Questions

Discuss the historical evolution of the trade union legislation. [10]

THE TRADE UNIONS ACT, 1926 22

LABOUR LAW PALLAVI BHOGLE

Dec 02

What is the object behind the enactment of the Trade Unions Act, 1926? What role can a
Trade Union play in nation building? [10]
97

Trade Disputes [4]

95

Who is a ‘protected workman’ under the Trade Unions Act, 1926? Discuss the problem
of outsiders in a trade union. [10]
02 (AE – 020)

Discuss whether teachers of a university can register their association under the Trade
Unions Act. [10]
?

Comment on the politicization of trade unions in India. [6]

Dec 02 (OE – 2731)

THE TRADE UNIONS ACT, 1926 23

LABOUR LAW PALLAVI BHOGLE

Workmen’s Compensation Act, 1923

PRELIMINARY

Explain the object of the Workmen’s Compensation Act, 1923 [10]

02

Introduction: In any industrial society the problem of labour management relations

becomes so important that some sort of social insurance becomes necessary to provide
adequate protection from losses caused to the labourers by accidents. With a view to
improve the condition of the workmen some social insurance legislations have been
enacted. The Workmen's Compensation Act, is one of the earliest measures adopted to
benefit the labourers. It was passed in 1923 and enforced on 1st July, 1924. Since then a
number of amendments have been made from time to time so as to suit the changing
needs and conditions of the workmen.

The object of the Act was to make provision for the payment of compensation by certain
class of employers to their workmen for injury by accident. The reasons that compelled
the initiation of the Bill were attributed to the growing complexity of industry with the
increasing use of machinery and consequent danger to workmen along with the
comparative poverty of workmen themselves that rendered it advisable that they should
be protected as far as possible from hardships arising from accidents.

The Workmen's Compensation Act was framed with a view to provide for compensation
to workmen incapacitated by an injury from accident arising out of and in the course of
employment. It is a guarantee against hazards of employment to which n workman is
exposed because of his employment. The main object of the Act was to make provision
for payment of compensation to a workman only, (i.e, the concerned employee himself in
case of his surviving the injury in question and to his dependants in the case of his death)
in view of section 2 (1) (n) of the Act. But compensation is not the only benefit flowing
from this Act ; it has important effects in furthering work on the prevention of accidents,
in giving workmen greater freedom from anxiety and in rendering industry more
attractive.

This Act extends to the whole of India except the State of Jammu and Kashmir. Unlike
the English Act, this Act is not applicable to air workmen. It is applicable to workmen of
certain industries. It affords protection to a workman from loss or injury caused by
accident arising out of and in the course of his employment. It is not necessary that the
accident should have been caused by some wrongful act of the employer. Compensation
is payable only when the conditions provided by section 3 are fulfilled and the procedure
prescribed by section 10 has been adopted in making a claim to compensation. Any claim

WORKMEN’S COMPENSATION ACT, 1923 24

LABOUR LAW PALLAVI BHOGLE

for compensation must be made within two years of the occurrence of the accident or in
case of death within two years from the date of death.

The rights and liabilities of the parties stand crystallized on the date of the accident under
sections 3 and 4 of the Act. Where the schedule is amended it must have prospective
operation unless the Schedule is made expressly retrospective. Therefore, compensation
would be payable at rates applicable on the date of the accident.

Main Features of the Act

The Workmen's Compensation Act is modelled on the British pattern. Under the Act
payment of compensation has been made obligatory on all employers whose
employees ore entitled to claim benefit under the Act.
The workman or his dependants may claim compensation if the injury has been
caused by accident arising out of and in the course of employment and in case of
injury not resulting in death if such accident cannot be attributed to the workman
having been at the time of accident under the influence of drink or drugs or if it is
not caused die to willful disobedience of rule or orders or disregard of safety
devices.
The various classes of workmen have been specified in the definition of ‘Workman’
in section 2 (1)(n) and in Schedule II. Persons employed in administrative or
clerical capacity and earning more than Rs. 1,600/- per month (except railway
servants) were excluded from the benefit of the Act. But now the condition of
average monthly wage limit of Rs. 1,600/-has been abolished.
The amount of compensation payable depends in case of death on the average
monthly wages of the deceased workman and in the case of an injured workman
both on the average monthly wages and the nature of disablement.
The term ‘wages’ for the purposes of this Act includes over-time pay and the value of
any concessions or benefit in the form of food, clothing, free quarters, etc.
Whenever the compensation payable to any workman has to be worked out, first
of all his monthly wages are determined and the amount of compensation is
decided by reference to section 4 and Schedule IV, where in the method for
determining the amount of compensation for death, and permanent disablement is
given.
In order to protect the interest of dependants in case of fatal accidents the following
provisions are made
All cases of fatal accident are to be brought to the notice of the Commissioner;
If the employer admits his liability the amount of compensation payable is to be
deposited with the Commissioner;
If the employer admits his liability and at the same time there are grounds for
believing compensation to be payable, the dependants get the information
necessary to enable them to judge if they should make a claim or not.
A sub-contractor may indemnify his contractor if he has had to pay compensation
either to a principal or to a workman.
The Commissioner may deduct a sum of Rs. 50/- from the amount of compensation
and pay the same to the person who has incurred funeral expenses of the deceased

WORKMEN’S COMPENSATION ACT, 1923 25

LABOUR LAW PALLAVI BHOGLE

workman.
The Act is administered by the Commissioner for Workman's Compensation
appointed by the State Government.

Conclusion

Partial disablement [5]

Oct 97, 95

Permanent disablement [5]

Dec 03, 01, Oct 97, 95

Introduction: Section 2(1)(g) defines partial disablement Such disablement is of two

kinds:
Temporary partial disablement.
Permanent partial disablement.

The test of such disablement is the reduction in the earning capacity of the workman. If
the earning capacity of a workman is reduced in relation to the employment he had been
at the time of the accident resulting in such disablement, it is temporary partial
disablement. If the injury caused by an accident results in the reduction of the earning
capacity in respect of employment which the workman was capable of undertaking at the
time of accident it is permanent partial disablement. Any injury specified in part II of
Schedule I shall be deemed to result in permanent partial disablement. Compensation
under the Act is payable only if the injury caused by an accident results in workman's
disablement exceeding three days.

To determine whether the injury is permanent or temporary the courts have to see
whether the injury has incapacitated the workman from every employment which he was
capable of undertaking at the time of accident or merely from the particular employment
in which he was at the time of the accident resulting in disablement. In the former case
the disablement is partial but permanent, in the latter case it is temporary.

Loss of earning capacity or the extent of it is question of fact. It has to be determined by

taking into account the diminution or destruction of physical capacity as disclosed by the
medical evidence and then it is to be seen to what extent such diminution or destruction
would reasonably be taken to have disabled the affected workman from performing the
duties which a workman of his class ordinarily performs.

The following propositions are helpful in deciding the nature of disablement:

(i) Earning is not the same as earning capacity. There is difference between
earning of a person and his capacity to earn.
(ii) Rise in earning may be because of various factors and rise in wages is not

WORKMEN’S COMPENSATION ACT, 1923 26

LABOUR LAW PALLAVI BHOGLE

decisive of no loss of earning capacity.

(iii) Loss of physical capacity is not co-extensive with loss of earning capacity.
(iv) Loss of physical capacity or physical incapacity may be relevant in assessing
to what extent there is loss of earning capacity for every employment which
the workman was capable of undertaking at that time or the employment in
which he was engaged at the time of the accident as the case falls for
consideration.
In Upper Doaba Sugar Mills Ltd. v. Daulat Ram a blacksmith had lost the index and
middle finger, the rest of the hand, namely, thumb and other two fingers could be utilized
in work. The test laid down in this case to determine the nature of disablement was that:
"It is not enough if it is found that the workman is disabled from performing his duties of
a blacksmith fitter; the Court should consider whether he has been incapacitated from
undertaking any employment and whether in that other employment the rest of the hand
could be utilized.

In General Manager G.R.P Railway, Bombay v. Shankar, a railway servant working on

A-I post lost one eye and two teeth as a result of collision between two engines. He was
declared by the Medical Officer as unfit for A-I and B jobs but fit for C-2 job because of
his defective vision. Class C-2 job was offered to him by the railway administration. He
refused the offer and claimed compensation on the basis of total disablement. It was held
that "the workman was entitled to compensation not on the basis of total but partial
disablement". Obviously in this case there appears only reduction in earning capacity as
an alternative employment was offered to the workman by the employer himself.

In a case where a workman suffered an injury by accident which did not in fact reduce his
capacity to work but stamped him with a visible mark of physical deficiency or deformity
as dissuaded the likely employers from employing him he would be deemed incapacitated
for work in the sense that his earning capacity would clearly be altogether destroyed.

Total Disablement

‘Total disablement’ is defined in section 2(1)(1) of the Act. When a workman is

incapacitated of doing any work which he was capable of performing at the time of
accident resulting in such disablement, it is total disablement. Incapacity for all work is
different from the incapacity for the work which a workman was doing at the time of
accident. It is further provided in the Act that permanent total disablement shall be
deemed to result from every injury specified in Part I of Schedule I. It may also result
from any combination of injuries in Part II of Schedule I, where the aggregate percentage
of the loss of earning capacity, as specified against those injuries amounts to one hundred
percent or more.

It was held in National Insurance Co. Ltd. v. Mohd. Saleem Khan and another that if the
workman is incapacitated to do all the work which he was capable of performing at the
time of accident it is a case of total disablement. It may be that in view of the injuries the
workman is capable enough to render some other sort of work, but still when there is

WORKMEN’S COMPENSATION ACT, 1923 27

LABOUR LAW PALLAVI BHOGLE

incapacity to do the work which he was capable of performing by the date of the accident
it is a case of total disablement. The certificate of the doctor of physical impairment and
loss of physical function is not material in deciding the question of total disablement.

If the incapacity is of such a nature that a workman cannot get employment for any work
he can undertake, it would be total permanent' disability. The expression ‘incapacitates a
workman for an work’ does not mean any and every work which he may do but means
such work as is reasonably capable of being sold in the market. In other words, it does
not mean capacity to work or physical incapacity. In case of total disablement there must
be incapacity for all work resulting in hundred percent loss of earning capacity. The
Workmen's Compensation Act is not concerned with physical injury as such, nor with the
mere effect of such injury on the physical system of the workman. It is concerned only
with the effect of such injury or of the diminution of physical power caused thereby, on
the earning capacity of the affected workman. The loss of earning capacity is not a matter
for medical opinion but the extent of it is a question of fact. It has got to be determined by
taking into account the diminution or destruction of physical capacity as disclosed by the
medical evidence and then it is to be seen to what extent such diminution or destruction
could reasonably be taken to have disabled the affected workman from performing the
duties which a workman of his class ordinarily performed and from earning the normal
remuneration paid for such duties.

The court must take into consideration the nature of injury, the nature of the work which
the workman was capable of undertaking and its availability to him. The employer's
willingness to employ him in any other alternative employment may also have some
relevance in determination of the extent of disablement.

In Hutti Gold Mines Co. v. Ratnam it was held that, "where an employee was discharged
by the employer as if his injury rendered him unfit for any kind of work, it is clear proof
that there was total disablement. The Court should not accept the explanation which is
tendered for the first time before it that the employer did not partake any offer to the
employee of any other employment since no such employment was possible or available.
The proper inference in such a case would be that not even that employer had in mind
any doubt that there was no employment which such employee could hold after the
injury. It would be, in such a case, for the employer to suggest in the course of
proceedings that the employee could obtain suitable employment commensurate with his
physical condition after the injury sustained by him. If, there was no such suggestion by
the employer, it was surely unnecessary for the employee to produce evidence that he
went from one place to another in search of employment but could find none agreeable to
employ him.

The definition of ‘total disablement’ speaks of ‘incapacity for all work’ and not
‘incapacity to work.’ The use of preposition ‘for’ instead of ‘of’ makes it amply clear that
it is the incapacity to get employment which is relevant and not the physical incapacity to
undertake any work. If because of his apparent physical defects caused by an injury no
one will employ a workman, however, efficient he may be, in fact, he has lost the power
to earn wages as completely as if he was paralysed in every limb. Where there is no

WORKMEN’S COMPENSATION ACT, 1923 28

 LABOUR LAW PALLAVI BHOGLE

longer any earning power remaining in the workman who was injured whatever may be
his physical power to perform a duty in any sphere of activity, so long as no one could be
persuaded to offer him any such employment the incapacity is complete.

Conclusion

Discuss how the term ‘Workman’ is defined under the Workmen’s

Compensation Act, 1923 [10]
01, 99, 98

Introduction: According to section 2(1)(n) workman means any person who is:

A railway servant as defined in Clause (34) of Section 2 of the Railways Act, 1989 except
those who are permanently employed in any administrative district or sub-divisional
office of a railway. Out of this class also if a person is employed in any capacity as is
specified in Schedule II he will be a workman.

(ia) Any person who is

(a) a master, seaman or other member of the crew of a ship;
(b) a captain or other member of the crew of an aircraft ;
(c) a person recruited as driver, helper, mechanic, cleaner or in any other capacity in
connection with a motor vehicle,
(d) a person recruited for work abroad by a company, and who is employed outside India
in any such capacity as is specified in Schedule II and the ship, aircraft or motor vehicle,
company, as the case may be, is registered in India, or;

(a) Any person who is employed in any such capacity as is specified in Schedule II, whether
the contract of employment was made before or after the passing of this Act and
whether such contract is express or implied, or oral or in writing.
(b) Where the workman is dead any reference to a workman shall include his
dependants as defined in this Act.

The following are not workman:

Any person working in the capacity of a member of the Armed Forces of the Union of
India.

To determine whether a person other than a railway servant is a workman or not, a

reference to Schedule II, is necessary. The following conditions must be fulfilled before a
person can be said to be a workman under this Act:
the employment must be of the nature mentioned in Schedule II of the Act.

WORKMEN’S COMPENSATION ACT, 1923 29

LABOUR LAW PALLAVI BHOGLE

Conclusion

WORKMEN’S COMPENSATION
Explain the circumstances under which the employer would be liable to pay
compensation to the workman under the Workman’s Compensation Act, 1923.
[10]
05, 02, Dec 99, Dec 99, Oct 98

Explain the circumstances under which a workman can claim compensation

under the Workman’s Compensation Act, 1923. [10]
03, 01, 97

Write a note on ‘occupational disease.’ [6]

06

Accident [10]
02

Explain the defences available to the employer under S. 3 of the Workman’s

Compensation Act, 1923. [6]
Dec 05

Introduction: The liability of an employer to pay compensation is limited and is subject

to the provisions of the Act. Under of section 3 (1) the liability of the employer to pay
compensation is dependent upon the following four conditions:
Personal-injury must have been caused to a workman;
Such injury must have been caused by an accident;
The accident must have arisen out of and in he course of employment;
The injury must have resulted either in death of the workman or in his total or partial
disablement for a period exceeding three days.

The employer shall not be liable to pay compensation in the following cases:
If the injury did not result in total or partial disablement of the workman for a period
exceeding three days;
In respect of any injury not resulting in death or permanent total disablement the
employer can plead:
that the workman was at the time of accident under the influence of drinks or
drugs;
that the workman willfully disobeyed an order expressly given or a rule expressly

WORKMEN’S COMPENSATION ACT, 1923 30

LABOUR LAW PALLAVI BHOGLE

framed for the purpose of securing safety of workmen; and

that the workman having known that certain safety-guards or safety devices are
specifically provided for the purpose of securing the safety of workman,
willfully disregarded or removed the same.
The employer can succeed in his plea only if he can establish that the injury was
attributable to anyone of the above factors.

Employer's Liability in case of Occupational Diseases

Section 3(2) deals with the payment of compensation in case of an injury resulting from
occupational diseases. The list of the occupational diseases is contained is Schedule III of
the Act. Schedule III is divided into three parts, A, B and C. The disease contracted must
be an occupational disease peculiar to the employment specified in Schedule III. In
respect of every such disease mentioned as occupational disease in Schedule III, a list of
a number of employments is given. To support any claim for compensation in case of
occupational disease in Part A no specified period of employment is necessary; for
diseases in Part B the workman must be in continuous employment of the same employer
for a period of six months in the employment specified in that part; and for diseases in
Part C the period of employment would be such as is specified by the Central
Government for each such employment whether in the service of one or more employers.
The contracting of any disease specified in Schedule III shall be deemed to be an injury
by accident arising out of and in the course of employment unless the contrary is proved.

Part A of Schedule III

The employer shall be liable to pay compensation for an injury resulting from an
occupational disease mentioned in Part A of Schedule III, if a workman employed in any
employment specified in Part A of Schedule III contracts any disease specified therein as
an occupational disease peculiar to that employment. The contracting of the disease shall
be deemed to be an injury by accident and unless the contrary is proved the accident
would be deemed to have arisen out of and in the course of employment.

Part B of Schedule III

In case of contracting of any disease mentioned in Part B of Schedule III the employer
shall be liable if a workman while in the service of an employer in whose service he has
been employed for a continuous period of not less than six months in any employment
specified in Part B of Schedule III contracts any disease specified therein as an
occupational disease peculiar to that employment. The contracting of the disease shall be
deemed to be an injury by accident within the meaning of this section, and unless
contrary is proved, the accident would be deemed to have arisen out of and in the course
of the employment.

Part C of Schedule III

WORKMEN’S COMPENSATION ACT, 1923 31

LABOUR LAW PALLAVI BHOGLE

Where a workman contracts any disease specified in Part C of Schedule III the employer
shall be liable:
1. If a workman was in the service of one or more employers in any employment
specified in Part C of Schedule III for such continuous period as the Central
Government may specify in respect of each such employment; and
2. If he contrasts any disease specified therein as an occupational disease peculiar to
that employment.

If the above two conditions are fulfilled, the contracting of the disease shall be deemed to
be an injury by accident within the meaning of section 3 of the Act and unless contrary is
proved the accident shall be deemed to have arisen out of and in the course of the
employment.
According to the first proviso to sub-section (2) of section 3 if it is proved:
(a) that a workman while in service of one or more employers in any employment
specified in Part C of Schedule III has contracted a disease specified therein, as an
occupational disease peculiar to the employment during a continuous period
which is less than the period specified under sub-section (2) of section 3 for that
employment, and
(b) that the disease has arisen out of and in the course of employment; the contracting
of such disease shall be deemed to be an injury by accident within the meaning of
section 3 of the Act.

Personal Injury

Injury ordinarily refers to a physiological injury. Personal injury does not mean only
physical or bodily injury but includes even a nervous shock, a mental injury or strain
which causes a chill. It is a term wider than bodily injury. In Indian News Chronicle v.
Mrs. Lazarus, a workman, employed as an electrician had frequently to go to a heating
room from a cooling plant, was attacked by pneumonia and died after a short illness of
five days. The Court held that the injury caused by an accident is not confined to physical
injury and the injury in the instant case was due to his working and going from a heating
room to a cooling plant as it was his indispensable duty.

Incase of personal injury caused to a workman by an accident arising out of and in the
course of employment unless the right to compensation is taken away under section 3(5),
the employer becomes liable to pay the compensation as soon as the aforesaid personal
injury is caused to the workman.

Mere vague offer to keep and continue the workman in the employment even after the
injury and the resultant disablement is not sufficient to disqualify the workman’s claim
under section 3 of the Act.

Accident

The expression "accident" has not been defined in the Act. It means any unexpected
mishap, untoward event, or consequence brought about by some unanticipated or

WORKMEN’S COMPENSATION ACT, 1923 32

LABOUR LAW PALLAVI BHOGLE

undesigned act which could not be provided against. The basic and indispensable
ingredient of the accident is the unexpectation. Whether a particular occurrence is
accident or not, it must be looked upon not only from the point of view of the person who
causes it but also from the point of view of the person who suffers it. Although an
accident means a particular occurrence which happens at a particular time but it is not,
necessary that the workman must be able to locate it in order to succeed in his claim.
There would be cases, where a series of tiny accidents, each producing some
unidentifiable results and operating cumulatively to produce the final condition of injury
constitute together an accident within the meaning of this section.

Employer not liable to pay compensation

Willful disobedience of orders or safety devices, etc

In order to disown any claim for compensation the employer has to show not only
disobedience of rules and safety devices but such disobedience must be willful and the
order must be' express. The burden of proving intentional disobedience on the part of the
employee would be on the employer who claims the benefit of the proviso. Mere
disobedience is not sufficient because it may be due to forgetfulness or the result of the
impulse of the moment. The plea of willful disobedience of the workman to any order
expressly given is not available in case of death of the workman but only in cases of
injury not resulting in death. Where the death of a workman was caused by an accident
arising out of and in the course of employment it is not a defence to plead that there was
willful disobedience of any order expressly given or rules framed for the purpose of
securing the safety of the workman.

In Arya Muni v. Union of India, a workman met with an accident while working in the
factory on June 5, 1954. The workman lost his right eye due to an injury caused by a
spark rushing into his eye. A notice in English directing all the workers to use goggles
while at work was put up on the notice board. Therefore, it was contended that the
workman himself, was negligent in so far as he disobeyed the instructions by not using
the goggles. Neither did he ever ask for goggles nor it was supplied by the supervisor.
The supervisor admitted that the goggles were in the stock but were not asked for by the
workman. It was further contended that the workman understood what was in the notice.
The workman stated in the evidence that he had asked for goggles but the same was not
given to him. It was argued on behalf of the employer that since the appellant had stated
that he knew about the goggles, it should be presumed that he knew about the instruction
that had been issued and thus about the contents of the aforesaid notice.

Compensation under Agreement

It was held in Roshan Deen v. Preeti LaI, that an agreement by a workman to relinquish
any right to compensation for personal injury arising out of and in the course of
employment would he null and void. The removal or reduction of liability of a person to
pay compensation under the Workman’s Compensation Act by any such agreement is not
permitted. In this case it was held that the order of Commissioner, dismissing claim of

WORKMEN’S COMPENSATION ACT, 1923 33

LABOUR LAW PALLAVI BHOGLE

injured workman as settled by agreement was obtained by fraud and as such the matter
was directed to be heard by Commissioner without further delay.

Conclusion

Explain the phrase ‘accidents arising out of and in the course of employment’
with reference to decided cases? [16]
Dec 05, 06, 04, Dec 02, Oct 2K, Oct 97, ?

Introduction: The liability of an employer to pay compensation is limited and is subject

to the provisions of the Act. Under of section 3 (1) the liability of the employer to pay
compensation is dependent upon the following four conditions:
Personal-injury must have been caused to a workman;
Such injury must have been caused by an accident;
The accident must have arisen out of and in he course of employment;
The injury must have resulted either in death of the workman or in his total or partial
disablement for a period exceeding three days.

Accident

The expression "accident" has not been defined in the Act. It means any unexpected
mishap, untoward event, or consequence brought about by some unanticipated or
undesigned act which could not be provided against. The basic and indispensable
ingredient of the accident is the unexpectation. Whether a particular occurrence is
accident or not, it must be looked upon not only from the point of view of the person who
causes it but also from the point of view of the person who suffers it. Although an
accident means a particular occurrence which happens at a particular time but it is not,
necessary that the workman must be able to locate it in order to succeed in his claim.
There would be cases, where a series of tiny accidents, each producing some
unidentifiable results and operating cumulatively to produce the final condition of injury
constitute together an accident within the meaning of this section.

Arising out of and in the course of employment

The expression ‘arising out of’ suggests the cause of accident and the expression ‘in the
course of’ points out to the place and circumstances tinder which the accident takes place
and the time when it occurred. A causal connection or association between the injury by
accident and employment is necessary. The onus is on the claimant to prove that accident
arose out of and in the course of employment. The employment should have given rise to
the circumstances of injury by accident. But a direct connection between the injury
caused by an accident and the employment of the workman is not always essential.
Arising out of the employment does not mean that personal injury must have resulted

WORKMEN’S COMPENSATION ACT, 1923 34

LABOUR LAW PALLAVI BHOGLE

from the mere nature of employment and is also not limited to cases where the personal
injury is referable to the duties which the workman has to discharge. The words 'arising
out of employment' are understood to mean that "during the course of the employment,
injury has resulted from some risk incidental to the duties of the service which unless
engaged in the duty owing to the master it is reasonable to believe the workman would
not otherwise have suffered. There must be a causal relationship between the accident
and employment. If the accident had occurred on account of a risk which is an incident of
the employment; the claim for compensation must succeed unless of course the workman
has exposed himself to do an added peril by his own imprudence. This expression applies
to employment as such, to its nature, its conditions, its obligations and its incidents and if
by reason of any of these, a workman is brought within the zone of special danger and so
injured or killed, the Act would apply. The employee must show that he was at the time
of injury engaged in the employer's business or in furthering that business and was not
doing something for his own benefit or accommodation. The question that should be
considered is whether the workman was required or expected to do the thing which
resulted in the accident though he might have imprudently or disobediently done the
same. In other words, was the act which resulted in the injury so outside the scope of the
duties with which the workman was entrusted by his employer as to say that the accident
did not arise out of his employment.

In the course of employment refers to the period of employment and the place of work. It
is neither limited to the period of actual labour nor includes acts necessitated by the
workman's employment. “Another important question”, as pointed out by Francis H.
Bohlen, is, “how far a servant is entitled to go outside his appointed sphere in obedience
to the orders of a superior. Of course, if such superior has the power to fix the spheres of
labour for the workman, a workman, by obeying them, merely passes into a new "course
of employment", but even if he has not, it seems that the servant is justified if he honestly
believes that such superior is authorised to employ him. An injury received within
reasonable limits of time and space, such as while satisfying thirst or bodily needs, taking
food or drink is to be regarded as injury received in the course of employment."

In State of Rajasthan v; Ram Prasad and another, the workman died due to natural
lightning while working at the site. It was held by the Supreme Court that in order that
the workman may succeed in his claim for compensation it is no doubt true that the
accident must have causal connection with the employment and arise out of it but if the
workman is injured as a result of natural force of lightning though it in itself has no
connection with employment of deceased Smt. Gita, the employer can still be held liable
if the claimant shows that the employment exposed the deceased to such injury. In the
present case the deceased while working on the site and would not have been exposed to
such hazard of lightning had she not been working so. Therefore the appellant was held
liable to pay compensation.

In Jyothi Ademma v. Plant Engineer, Nellore, the deceased workman was suffering from
a heart disease. His job was only to switch on or off in the thermal station where he was
employed. The Supreme Court observed that there was no scope for any stress or strain in
his duties. His death due to heart attack was, therefore, rightly held as not caused by

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LABOUR LAW PALLAVI BHOGLE

accident arising out of and in the course of his employment. Therefore, the judgment of
the High Court holding the appellant not entitled to compensation for death of her
husband was affirmed by the Supreme Court though the amount already paid to the
appellant was directed not to be recovered from her.

Conclusion

Explain the principle of ‘notional extension of time and space’ of employer’s

promise with the help of decided cases. [16]
05, 03, 03, ?, 97, 95

Introduction: Ordinarily a man's employment does not begin until he has reached the
place where he has to work and does not continue after he has left the place of his
employment. The period of going to or returning from employment are generally
excluded and are not within the course of employment. Traveling to and from is prima
facie not in the course of employment. But there may be reasonable extension in both the
time and place and a workman may be regarded as in the course of his employment even
though he had not reached or had left his employer's premises. It has been recognized
time and again that the sphere of a workman's employment is not necessarily limited to
the actual place where he does his work. If in going to or coming from his work he has to
use an access which is part of his employer's premises, or which he is entitled to traverse
because he is going to or coming from his work, he is held to be on his master's business
while he is using that access. The question is how far the employer is liable in case of an
injury caused by accident, taking place outside the normal place of employment.
This problem has been discussed by the House of Lords in St. Helens Colliery Co. Ltd. v.
Hewlston. In this case a workman working in a colliery was injured while traveling in a
special collier's train. The railway company had by an agreement with the colliery
company agreed to arrange for such a special train running between the colliery and the
place of residence of the workmen. Each workman was provided with a pass and the
amount of fare was deducted from his wages. It was held that the injury did not arise in
the course of employment within the meaning of the English Workmen Compensation
Act, 1906 for the following reasons:
1. There was no obligation on the workmen to use the train. The workmen had a
right to travel by such train but were not bound to travel by such train. They could
have traveled by any other alternative means. Any workman of colliery was free
to avail of the privilege or not. Had he been bound by the contract of his service to
travel by such train, he would have been in the course of employment:
2. If the physical features of the locality had been such that the means of transit
offered by the employer would have been the only means of transit to transport
the workman to his work, there may in the workman's contract of service be
implied a term that there was an obligation on the employer to provide such
means and a reciprocal obligation on the workman to avail himself of them.
3. A workman in a colliery is not in the course of his employment, when he is riding
in a vehicle provided by his employer unless, by the terms of his contract, he is

WORKMEN’S COMPENSATION ACT, 1923 36

LABOUR LAW PALLAVI BHOGLE

bound to travel in that vehicle.

What may be called environmental accidents i.e. accidents resulting from the
surroundings in which the workman is employed or through which he has to reach his
place of work in order to carry out his obligations to his employer also fall within the
scope of the phrase, ‘arising out of and in the course of employment.’

This rule is subject to the exception that where the accident occurs in a public place and
the risk faced by the workman is not due to his employment but to his being on the spot
as a member of the public, the employer will be liable to pay compensation only if the
presence of the workman on the spot can be found traceable to an obligation imposed
upon him by the employer.

Conclusion

Notice and Claim of the accident [10]

05, 04, 02, 01

Introduction: Under S. 10, a workman who is injured by an accident must give a notice
of it in writing. This has to be done as soon as practicable after the occurrence of the
accident. No hard and fast rule can be laid down in regard to what is meant by "as soon as
practicable". It depends upon the individual circumstances. A notice given two months
after the accident may, if the victim of accident is continuously in the hospital, beheld to
be one given as soon as practicable. The notice must contain:
the name and address of the workman injured;
the date of the accident;
the cause of the injury.

The notice has to be served upon the employer or on anyone of the several employers or
upon any person who is responsible to the employer for the management of the branch of
trade or business where the injured workman was employed. It may be delivered to the
person concerned by hand or sent by registered post addressed to the residence or any
office or place of business of the person to whom it is addressed. The State Government
has been empowered to direct any prescribed class of employers to maintain at their
premises where workmen are employed a notice book in the prescribed form. Such a
notice should be readily accessible at all reasonable times to any person acting bona fide
on behalf of the injured workman. An entry in this book would be considered to be
sufficient notice of the accident to the employer.

Any claim for compensation must be made within two years of the occurrence of the
accident or in case of death, within two years from the date of death.

WORKMEN’S COMPENSATION ACT, 1923 37

LABOUR LAW PALLAVI BHOGLE

Where the accident results in any physical or bodily injury, the date of a accident can be
easily ascertained. In case of occupational diseases specified in Schedule III it would not
be possible to know exactly the date on which the disease contracted. It has, therefore,
been provided that in the case of an occupational disease, the first day of the period
during which the workman was continuously absent from work in consequence of the
contracting of such a disease, should be considered as the date of the accident.

In case of partial disablement due to the contracting of any occupational disease which
does not compel such workman to absent from duty, the period of two years for the
purposes of making any claim for compensation shall be counted from the day the
workman gives notice of the disablement to his employer.

Where a person, who has been in employment for a continuous period specified under
Section 3(2) in respect of that employment, ceases to be so employed develops symptoms
of an occupational disease peculiar to that employment, within two years of the cessation
of employment, the accident shall be deemed to have occurred on the day on which the
symptoms were first detected.

The object of giving such a notice is to enable the employer to check the fact of the
accident having occurred to the workman in the course of his employment and also to
enable the employer to take such steps as he may think fit to mitigate the consequence in
the accident.

No claim for compensation shall be turned down want of defect or irregularity in the
notice in the following cases:
(a) Where the claim for compensation is made in respect of the death of the workman
resulting from an accident which occurred on the employer’s premises or at any place
under the employer's control at the time of the accident and the workman died on
such premises or at place or premises belonging to employer or died without having
left the vicinity of the premises or place where the accident occurred;
(b) Where the employer or anyone of the several employers or any person responsible to
the employer for the management of any branch of the trade or business in which the
injured workman was employed had knowledge of the accident from any other source
at or about the time it occurred.

The Commissioner for Workmen's Compensation is empowered to condone any failure to

give notice or prefer the claim if he is satisfied that the failure had been for sufficient
cause. He may then proceed on to entertain and decide any claim to compensation. In
justification of the power given to the Commissioner to condone any failure to give
notice or prefer a claim, the Royal Commission on Labour in India had observed: "The
dependants of a deceased workman in many cases lived hundreds of miles away from the
industrial area and too often they communicated only at long intervals with workman and
that on occasions they must be ignorant of his whereabouts and may not hear of his death
until sometime had elapsed."

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LABOUR LAW PALLAVI BHOGLE

It was with a view to ensure against such difficulties that the notice of fatal accidents are
to be given by the employer.

Conclusion

Medical examination [5]

Dec 03, 02, 01, 01

Introduction: Under section 11, a workman who is injured and has given notice of an
accident to the employer shall submit himself for medical examination if offered by the
employer.

Any such offer made by the employer must be free of charge and made within three days
from the time at which service of the notice has been effected. So also any workman who
receives half monthly payment shall submit himself for medical examination if and when
required by the employer. Any workman shall be required to submit himself for
examination by a medical practitioner only in accordance with the rules made under this
Act and at such intervals as prescribed by these rules.

If a workman refuses to submit himself for examination by a qualified medical

practitioner as required either by the employer or the Commissioner, his right to
compensation shall be suspended for the period of refusal or obstruction. In these cases
he will be entitled to full compensation only if he can show that he was for some
sufficient cause prevented from submitting himself. If any such refusal or obstruction by
the workman leads to the aggravation of injury he shall be entitled to compensation for
only such disablement which would have resulted if the injury would have been properly
treated. Difficulty arises where the medical treatment results in deterioration of the injury.
If the intervening act is the direct or foreseeable consequence of the defendant's act then
the doctrine novus actus interveniens does not apply, nor does it apply where the
intervening actor is not fully responsible or if his act is intentionally procured by the
plaintiff.

If a workman before the expiry of the period within which he is liable under sub-section
(1) to be required to submit himself for medical examination voluntarily leaves without
having been so examined the vicinity of the place in which he was employed, his right to
compensation shall be suspended until he returns and offers himself for such
examination. Such medical examination has to take place within seventy-two hours after
the workman has offered himself or medical examination.

Where the workman whose right to compensation has been suspended under sub-sections
(2) and (3) of Section 11, dies without having submitted himself for medical examination

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LABOUR LAW PALLAVI BHOGLE

as required, the Commissioner may, if he thinks fit, direct the payment of compensation
to the dependants of the deceased workman. But no compensation in such cases shall be
payable in respect of the period of suspension and if the period of suspension commences
before the expiry of the waiting period referred to in clause (d) of sub-section (1) of
Section 4, the waiting period shall be increased by the period during which the
suspension continues.

The aggravation of any injury shall, not be taken into consideration in the assessment of
compensation in the following cases under Section 11(6):
(i) where an injured workman has-refused to be attended by a qualified medical
practitioner whose services have been offered to him by the employer free of
charge; or
(ii) where the injured workman has deliberately disregarded the instructions given
by a qualified medical practitioner:

Provided it is proved that such refusal, disregard or failure was unreasonable in the
circumstances of the case.

In such a case compensation would be paid for injury caused by accident at the original
stage and any aggravation shall be ignored. Where the injury was aggravated due to the
fault of the workman of ignoring medical instructions, he would suffer for it and shall not
get compensation for aggravated injury. Under Section 11 of the Act the onus lies upon
the employer to prove that he had offered services of a medical practitioner free of charge
to workman and that in spite of such offer the workman had refused to take treatment of
such medical practitioner or that such treatment was taken but the workman had
disregarded the instructions of such medical practitioner.

The purpose of medical examination is to prevent a dishonest worker having an

opportunity of concealing the nature of his injury from any impartial observer and the
certificate or evidence given by the employer's doctor cannot, however be considered to
be conclusive. In case the employer doubts the bona fide of the workman, he may get him
examined by a competent medical practitioner free of cost but he cannot demand of the
worker a medical certificate.

Conclusion

COMMISSIONERS

Workmen’s Compensation Commissioner [10]

Dec 04

WORKMEN’S COMPENSATION ACT, 1923 40

LABOUR LAW PALLAVI BHOGLE

Explain the powers of the authority to hear workmen’s compensation claims.

[6]
02

State and explain the powers of the Workmens Compensation Commisioner

under the Workmen’s Compensation Act, 1923. [10]
Oct 98

Discuss the functions of the Workmen’s Compensation under the Workmen’s

Compensation Act, 1923. [10]
Dec 99

Introduction: Section 19 talks of reference to a Commissioner. Any Commissioner of an

area concerned shall have the power to decide and settle all questions as to the liability of
any person to pay compensation. In default of an agreement between the parties to arrive
at a conclusion in respect of any claim to compensation, the Commissioner has
jurisdiction to decide inter alia,
(i) The question as to whether a person injured is a workman.
(ii) The liability of .any person to pay compensation.
(iii) The amount and duration of compensation.
(iv) The nature or extent of disablement.

Section 19 provides for settlement by the Commissioner of any question regarding

liability of any person to pay compensation or the amount or duration of compensation, in
default of any agreement, if such question arises in any proceeding under the Act. The
question does not have the effect of suspending the liability of an employer to pay
compensation under Section 3 till after the settlement contemplated under Section 19.

The Commissioner has jurisdiction to decide the loss of earning capacity of an injured
workman. The medical evidence, being only opinion, would not be decisive of the
question and that the Commissioner had independently to give a finding as to extent of
the loss of the earning capacity. If with the consent of the parties, the Commissioner
refers any matter for decision of the Medical Board or some other agency, it should be
held that he acted extra cur sum curiae and the parties would be bound by the opinion of
the reference. None of the two parties would have a right to complain if the opinion goes
against him. In such a case there would be no right to appeal. Apart from the objection to
the assessment of the loss of earning capacity by the Medical Board, there is no other
objection to the assessment of compensation by the Commissioner. A Commissioner has
no power to set aside a previous order for compensation made by him under a mistake.
No addition or alteration shall be made to the judgment other than the correction of
clerical or arithmetical mistake arising from an accidental slip or omission.

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LABOUR LAW PALLAVI BHOGLE

Section 19 refers to a liability arising by virtue of this Act. The liability adjudicated upon
by Claims Tribunal under the Motor Vehicles Act is a liability founded in tort and thus
falls outside the scope of this section.

The Commissioner acting under the Workmen's Compensation Act is a tribunal and not a
Civil court. He constitutes an independent tribunal. His function is to judge and decide
and not merely to enquire and advise and in judging and deciding the matters before him,
he has to proceed judiciously and not arbitrarily. .

In Oriental Fire and Gen. Ins. Co. Ltd. v. Moola Singh, the compensation awarded by
Motor Accidents Claims Tribunal was sought to be recovered from Insurance Company
and objection to decree was raised by the Insurance Company before the Commissioner
on the ground that its liability under the Act was limited to Rs. 3000/- and that it was not
liable to pay Rs. 6000/-. It was held that the Insurance Company was entitled to raise
objection although it was not a party to decree.

Appointment of Commissioner [Section 20]

Far the purposes of deciding the question of the liability of any person to pay
compensation under the Act, the State Government has been authorized to appoint any
person as the Commissioner Workmen’s Compensation. The appointment must be
notified by the State Government in the Official Gazette. The area of jurisdiction of a
Commissioner must be specified by the Government by such notification. If more than
one Commissioner have be appointed far the same area, the State Government may by
general or special order regulate the distribution of business between them. The
Commissioner may take the assistance of the services of any person who is an expert in
the matter referred to him for decision. Any such person shall assist the Commissioner in
holding the inquiry. Every Commissioner shall be deemed to be a public servant within
the meaning of this word under the Indian Penal Code. Now the question is how far the
Commissioner shall take cognizance of any opinion expressed by the expert, whom he
himself called for assistance. Where the Commissioner asked a medical expect to assist
him in the adjudication, the examination by such expert took place in the presence of the
Commissioner, the opposite party, find the applicant's pleader, but applicant's pleader not
only did not raise any objection as to the procedure, but actually acquiesced to, it was
held that the applicant could not raise any objection in appeal.

Two modes are prescribed by the Act far the assessment of compensation. One is the
award by the Commissioner and the other by an agreement between the parties.

Powers and Procedure of Commissioners [Section 23]

The Commissioner, is authorized by Section 23 of the Act to exercise powers under the
Civil Procedure Code, 1908, for the following purposes:
1. For the purposes of taking evidence on oath,

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LABOUR LAW PALLAVI BHOGLE

2. For enforcing the attendance of witnesses, and

3. For compelling the production of documents and material objects.

The Commissioner is deemed to be a Civil Court for purposes of Section 195 and of
Chapter XXVI of Criminal Procedure Code, 1973. The Commissioner may vary the
procedure prescribed by the rules and orders as may be necessary or proper to adopt them
in the matter before him. He may also ignore such rules of procedure provided he is
satisfied that the interest of the parties will not thereby be prejudicially affected.

The effect of Section 23 is that only certain provisions of Civil Procedure Code and not
others have been made applicable to proceeding under the Act. Order 22 of the CPC
which deals with legal representation in cases where parties to proceeding die is
conspicuous by its absence from Rule 14 and lends further strength to the conclusion that
such representation is not contemplated in, cases falling under the Compensation Act.

A Commissioner acting under the Act has no jurisdiction or power to issue a commission
to examine a witness and the answers given by the witness to interrogatories furnished to
him cannot be received as legal evidence, more particularly so, when the answers are not
recorded before any court or any officer examining the witness on commission and are
not given on oath. Although it is not obligatory but the Commissioner may, if he thinks it
necessary, hold a preliminary inquiry and if he feels that there is no case of the relief
claimed he may dismiss the application with a brief statement of his reasons for so doing.

Where an application for compensation was dismissed in default and later on restored
after showing good cause the applicant was entitled to cross-examine the witness
examined by the opposite party in his absence. The Commissioner's order that the
applicant was entitled to take part in the proceedings only from the point at which the
application for restoration was allowed was held to be wrong.

It was held in Surendra Kumar Shanna v. State of V.P. and another, that Commissioner
for Workmen's Compensation should be person having legal background. In support of
this order various reasons were given some of them were:
(i) In view of Article 50 of the Constitution of India, persons trained in having
knowledge of relevant rules would inspire confidence in the public; and
(ii) Under Section 23 of the Workmen's Compensation Act, the Commissioner has
powers of a. civil court and was deemed to be such for purposes of Section
195 of the Code of Criminal Procedure, 1973.

Conclusion

Other Questions

Detail the procedure laid down in the Workmen’s Compensation Act, 1923 regarding the
mode and method of paying compensation. [10]

WORKMEN’S COMPENSATION ACT, 1923 43

LABOUR LAW PALLAVI BHOGLE

98

Discuss the meaning of the term Doctrine of added peril. [10]

03, 03 (AE – 965), ?, 95

WORKMEN’S COMPENSATION ACT, 1923 44

LABOUR LAW PALLAVI BHOGLE

The Employees State Insurance Act, 1948

PRELIMINARY

Examine the provisions with regard to Dependant [5]

Oct 98

Introduction: The purpose of the Employees’ state Insurance Act, 1948 is not to provide
solatium to a relative of a deceased insured person but to make good the actual loss which
he or she has suffered. Whether a relative of the deceased is dependant or not, is the
question or fact to be decided in relation to particular circumstances of each case.
Normally when the earning of the deceased workman was hardly sufficient for his
maintenance and no balance was left which would contribute to the family fund the
parent cannot be said to be a dependent. In a later case it has been pointed out that in case
of poor working families, particularly those living jointly, all the earnings come into a
common pool and it may often happen that the common pool is actually quite insufficient
to maintain the members at a bare standard of existence. But it is extremely difficult to
lay down any hard and fast rule about what is sufficient for the maintenance of an
individual person and to work out an excess out of his earnings available for the father,
mother, and the other members of his family to enjoy. In case of those relatives who have
to be in fact wholly or in part dependent upon the earning of the deceased insured person,
they must be so dependent at the time of his death.

Dependant [S. 2 (6-A)]

As per S. 2 (6-A), there are three categories of dependants under the Act. In the first
category are included:
1. a widow;
2. a minor legitimate or adopted son;
3. an unmarried legitimate or adopted daughter;
4. a widowed mother.

For the above dependants it is not necessary that they should in fact be dependant upon
the earnings of the deceased insured person.

For the dependants included in the second category, it is necessary that they must in fact
be wholly dependant upon the earnings of the insured person at the time of his death. The
relatives are:
1. a legitimate or adopted son, who has attained the age of 18 years and is infirm;
2. a legitimate or adopted daughter who has attained the age of 18 years and is
infirm.

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LABOUR LAW PALLAVI BHOGLE

Dependants of the third category may claim benefit under the Act provided they are
wholly or in part dependant on the earnings of the deceased insured person at the time of
his death. These relatives are as follows:
1. a parent other than a widowed mother;
2. a minor illegitimate son,
3. unmarried illegitimate daughter,
4. legitimate daughter if married and minor,
5. adopted daughter if married and minor,
6. illegitimate daughter if married and minor,
7. legitimate daughter if widowed and minor,
8. adopted daughter if widowed and minor,
9. illegitimate daughter if widowed and minor,
10. a minor brother,
11. an unmarried sister,
12. a widowed sister if a minor,
13. a widowed daughter-in-law,
14. a minor child of a predeceased son,
15. a minor child of a predeceased daughter where no parents of the child is alive,
16. a paternal grand-parent if no parent of the insured person is alive.

Conclusion

Explain ‘Employment Injury’. [6]

Dec 05, 03, Dec 02

Introduction: The concept of employment implies three essential elements:

• Employer
• Employee
• The contract of service.
The employment is a contract of service between the employer and employee whereunder
the employee agrees to serve the employer subject to his control and supervision.
Employment is not confined to actual work or place of work. It extends to all things,
which the workman is entitled by the contract of employment expressly, or impliedly to
do.

Employment Injury [S. 2(8)]

The following are the ingredients of an Employment Injury:

1. The injury must be personal to an employee.
2. The injury must be caused by an

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LABOUR LAW PALLAVI BHOGLE

(i) accident; or
(ii) occupational disease.
3. The accident must arise out of and in the course of employment.
4. The employment must be insurable.

In Rajappa v. Employees' State Insurance Corporation, an employee of the KIMCO was

attacked by some persons and his left hand was cut off while he was on his way to home
after finishing the work in the factory. The corporation met all the expenses when he was
under treatment. It was held that where employment is not a contributing factor to create
any incident or accident, or to accelerate causes of death or personal injury of employee,
a claim cannot be made for compensation under the Act. The condition precedent to a
liability under the Act is causal connection or association between the employment and
injury caused by accident. The doctrine of notional extension has to be applied to the
factual situation pertaining to the particular case. In the present case there is no
relationship between the assault causing injury to the employee and the employment.

In Sheela v. E. S. I. Corpn. an employee of M/s. Electronic Product of India, Chandigarh

left his house at about 8.30 a.m. to join his duties at 9 a.m. He died at bus-stand while
waiting for the local bus. It was held that the employee died while he was going to his
place of work. the theory of notional extension will apply and the death occurred in the
course of employment.

Conclusion

Examine the provisions with regard to Employee [5]

Oct 98

Introduction: The definition of an employee as given under section 2(9) in the Act is
very comprehensive. The following are the ingredients of the definition of an 'employee'
under the Act:
1. The employment of the person must be for wages and it should be
(i) in an establishment;
(ii) in a factory;
(iii) in connection with the work of the factory including any work
connected with:
(a) administration of the factory or establishment or any part,
department or branch thereof;
(b) purchase of raw materials for the factory or establishment;
(c) distribution or sale of the product of a factory or establishment;

2. The employee also includes any person engaged as an apprentice, not being an
apprentice engaged under the Apprentices Act, 1961, or under the standing order
of the establishment.

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LABOUR LAW PALLAVI BHOGLE

3. The employee must be employed in any factory or establishment to which the Act
applies. The employment may be:
(i) directly with the principal employer;
(ii) by or through an immediate employer;
(iii) lent or let on hire by the principal employer.

4. In case of an employee directly employed by the principal employer, the

employment must be on any work of the factory or establishment or any work
(i) which is incidental or preliminary to;
(ii) connected with the work of the factory or establishment.
It is immaterial that the work is done in the factory or establishment or elsewhere.

5. In case of an employee, employed by or through an immediate employer, the

employment must be
(i) in the premises of the factory or establishment;
(ii) under the supervision of the principal employer or his agent on work
which is:
(a) ordinarily part of the work of the factory or establishment;
(b) preliminary to the work carried on in the factory or
establishment;
(c) incidental to the purpose of the factory or establishment.

6. In case an employee whose services are lent or let on hire to the principal
employer, the letting on hire must be by the person who has entered into a
contract of service with the person whose services are so lent or let on hire. The
employment of such a person by the principal employer must be in or in
connection with the work of a factory or establishment to which this Act applies.

7. The following are not employees:

(i) any member of the Indian Naval, Military or Air Force;
(ii) any person so employed whose wages (excluding remuneration for
overtime work) exceed such wages as may be prescribed by the
Central Government. Overtime pay shall not be included in wages. In
the term ‘remuneration’, employer's contribution to Provident Fund is
not included.

There is an exception to the above rule; namely an employee whose wages exceed such
wages as may be prescribed by the Central Government at any time after (and not before)
the beginning of the contribution period shall continue to be an employee until the end of
that period.

The definition of an employee under the Act has a wider meaning and it covers persons
who work outside the business premises but whose duties are connected with the
business. It also covers employees who are paid daily wages or employed on part time

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LABOUR LAW PALLAVI BHOGLE

wages such as persons employed by a firm carrying on business of playing music on

occasions like marriage, etc.

In Tara Chand Mohan Lal v. E.S.I. Corporation, labourers were working for a
considerable period in a factory, dealing in production of mustard oil and dal. These
labourers were employed through Sardars who were the immediate employer and the firm
Mohan Lal was the employer. They were working under the supervision of the principal
employer even if they were supplied, by the Sardars. These labourers were held to be
‘employees’ within the meaning of Section 2(9)(1) of the Act as they were directly
employed for wages by the principal employer in connection with the normal work of the
factory.

Conclusion

Manufacturing process [10]

02

Introduction: Manufacturing process is defined in the Factories Act, 1948.

Manufacturing process is a very wide term. It merely refers to the particular business
carried on and does not necessarily refer to the production of some article. As defined by
the Factories Act, manufacturing process means any process for:
(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing,
cleaning, breaking up, demolishing or otherwise treating or adapting any article or
substance with a view to its use, sale, transport, delivery or disposal;
(ii) pumping oil, water or sewage;
(iii) generating, transforming or transmitting power;
(iv) composing types for printing, by letter press, lithography, photogravure or other
similar process or book binding;
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or
vessels.

In Osmania University v. Regional Director, E.S.I.C. Andhra Pradesh, the question was
whether the provisions of Employees' State Insurance Act. 1948 are applicable in respect
of the employees working in the Department of Publications and Press of the Osmania
University. It was held that the said Department is engaged in the printing of text books,
journals, forms, stationary and other items and the activities are a manufacturing process
and therefore ‘factory’ within the meaning of Section 2(12) of the Act justifying the
application of the Act.

As per section 2 (14-AA) of the Employees’ State Insurance Act, 1948, a Manufacturing
Process is said to have the meaning assigned to it in the Factories Act, 1948.

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LABOUR LAW PALLAVI BHOGLE

It was held in Dessai Metal Works v. E.S.I.C & another that bringing boulders from one
place and crushing them into various smaller sizes with a view to its use and sale,
amounts to manufacturing process.

Conclusion

Explain the provisions relating to Partial and total disablement. [5]

Oct 2K

Introduction: The provisions of partial and total disablement are given under section
2(15-A) and 2(15-B) respectively.

Permanent Partial Disablement [S. 2(15-A)]

The definition given in the Act has the following ingredients:

1. partial disablement must be of a permanent nature;
2. the disablement must reduce the earning capacity of an employee;
3. reduction of earning capacity must be in every employment which he was
capable of undertaking at the time of the accident resulting in the
disablement.

What is permanent partial disablement is a question of fact. But every injury specified in
Part II of the Second Schedule shall be deemed to result in permanent partial
disablement. The test to determine permanent partial disablement has been discussed in
detail in the Workmen's Compensation Act.

The Courts have to see that the earning capacity of the workman has been reduced in
every employment which he was capable of undertaking at the time of accident and not
merely the particular employment in which he was engaged at the time of accident
resulting in disablement. The liability of the employer is not limited to cases of incapacity
to work but it extends to incapacity for work. If an injury to a workman caused by an
accident did not reduce his capacity to work but stamped him with such a marked
physical deficiency as would dissuade the likely employers from employing him, he
would be deemed incapacitated for work in the sense that his earning capacity would
clearly be altogether destroyed.

Permanent Total Disablement [S. 2(15-B)]

The definition contains the following ingredients:

1. the disablement resulting from injury must be permanent; and

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LABOUR LAW PALLAVI BHOGLE

2. the disablement must be of such a nature as renders the workman incapable for all
work which he was capable of performing at the time of accident resulting in such
disablement;
3. every injury specified in Part I of Schedule II shall be deemed to result in
permanent total disablement;
4. it shall also be deemed to result from any combination of injuries specified, in
Part II of Second Schedule where the aggregate percentage of the loss of earning
capacity, as specified against those injuries, amounts to one hundred per cent or
more.

In this case also ‘incapacity for work’ is not the same thing as ‘incapacity to work.’ There
is incapacity for work when a man has a physical defect, which makes his labour
unsaleable in any market reasonably accessible to him. The disablement is said to be
permanent and total if it results in such permanent loss of earning capacity of the
employee as makes him incapable for all work which he was capable of doing at the time
of accident. But if the disablement results only in the reduction of the earning capacity it
is only partial, not total disablement. The use of preposition ‘for’ makes it sufficient clear
that the incapacity for work as referred thereto is not merely physical incapacity to work
but incapacity to secure employment. Therefore, whatever may be the physical power of
the employee to do a duty in any sphere of activity, if there is no earning power
remaining in the workman so as to persuade an employer to offer him any employment
the incapacity is complete.

Conclusion

CORPORATION, STANDING COMMITTEE AND MEDICAL

BENEFIT COUNCIL

Explain the composition, powers and duties of E.S.I Corporation. [10]

Dec 05, Dec 02, Dec 02, 2K

Introduction: Section 3 of the Act provides that the Employees' State Insurance
Corporation shall be established by the Central Government by notification in the Official
Gazette. The Corporation shall be established with effect from such date as may be
notified by the Government. The function of the Corporation is the administration of the
Scheme of Employees' State Insurance in accordance with the provisions of this Act.

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LABOUR LAW PALLAVI BHOGLE

The following are main features of the Corporation:

1. It shall be a body corporate by the name of Employees' State Insurance
Corporation.
2. The Corporation shall have perpetual succession;
3. It shall also have a common seal.
4. It can sue and be sued in its own name.

Constitution of Corporation [Section 4]

The following office bearers and members shall constitute the Corporation:
(a) A Chairman to be appointed by the Central Government.
(b) A Vice-Chairman to be appointed by the Central Government.
(c) Not more than five persons to be appointed by the Central Government.
(d) One person each representing each of the States in which this Act is in force to be
appointed by the State Government concerned.
(e) One person to be appointed by the Central Government to represent the Union
Territories.
(f) Ten persons representing employers to be appointed by the Central Government
in consultation with such organizations of employers as may be recognized for the
purpose, by the Central Government.
(g) Ten persons representing employers to be appointed by the Central Government
in consultation with such organizations of employees as may be recognized for
the purpose, by the Central Government.
(h) Two persons representing the medical profession to be appointed by the Central
Government in consultation with such organizations of medical practitioners as
may be recognized for the purpose by the Central Government.
(i) Two members of the House of the People (Lok Sabha) elected by the members of
that House, and one member of the Council of State (Rajya Sabha) elected by the
members of that house.
(j) The Director General of the Corporation shall be ex-officio member of the
Corporation.

Insurance Medical Officer under Employees’ State Insurance Scheme is not an employee
of the State Government.

Powers of the Standing Committee [Section 18]

The Standing Committee is constituted to administer the affairs of the Corporation. It has
to function in accordance with the regulations framed by the Corporation. Its work and
activities are controlled and supervised by the Corporation. It has the following powers:
1. Power of administration of the Corporation, subject to the general
superintendence and control of the Corporation.
2. Subject to the general control of the Corporation it may exercise any of the
powers and perform any of the function of the Corporation.
3. It shall submit for consideration and decision of the Corporation all such cases
and matters as may be specified in the regulations made in this behalf.

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LABOUR LAW PALLAVI BHOGLE

4. The Standing Committee may in its discretion, submit any other case or matter for
the decision of the Corporation.

Corporation's Power to promote measures for health etc., of insured persons

[Section 19]

Section 19 of the Act empowers the Corporation to take steps for the benefit of insured
persons. These measures permitted to be taken by the Corporation tliC in addition to any
benefit scheme specified in this Act. These are as follows:
1. The Corporation may promote measures for the improvement of the health and
welfare of insured persons.
2. It shall promote measures for the reabilitation and re-employment of insured
persons who have been disabled or injured.
3. The Corporation may incur expenses in respect of such measures from its funds.
The limit of the expenditure shall be prescribed by Central Government.

In the Employees' State Insurance Corporation v. C. Saseendrum, the Supreme Court

held that the direction of the Employees' State Insurance Court that the appellant was
bound to find suitable employment to respondent workman disabled on account of
employment injury was in accordance with Section 19 of the Act and could not be
challenged. The Court however also stated that the direction had to be given effect to in
terms of a scheme already framed under Section 19 of the Act.

Duties of Medical Benefit Council [Section 22]

The Medical Benefit Council shall advise the Corporation and the Standing Committee
on matters relating to the administration of medical benefit, the certification for purposes
of the grant of benefits and other connected matters.

The Medical Benefit Council shall have such powers and perform such duties of
Investigation as may be prescribed in relation to complaints against medical practitioners
in connection with medical treatment and attendance.

The Medical Benefit Council shall perform such other duties in connection with medical
treatment and attendance as may be specified in regulations.

Conclusion

Medical Benefit Council [8]

Dec 03, 98

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LABOUR LAW PALLAVI BHOGLE

Introduction: Section 10 of the Act provides for the constitution of a Medical Benefit
Council by the Central Government. The Medical Benefit Council shall consist of the
following members and office-bearers:
1. The Director General Health Services shall be ex-officio Chairman.
2. The Medical Commissioner of the Corporation shall be ex-officio member of the
Council.
3. The following appointments shall be made by the Central Government to the
Medical Benefit Council:
(a) a Deputy Director-General, Health Services,
(b) three members representing employers to be appointed in consultation
with such organizations of employers as may be recognized for the
purpose by the Central Government,
(c) three members representing employees to be appointed in consultation
with such organizations of employees as may be recognized for the
purpose by the Central Government,
(d) three members representing the medical profession to be appointed in
consultation with such organizations of medical practitioners as may be
recognized for the purpose, by the Central Government.
No less than one of these members shall be a woman.
4. One representative from every State, other than the Union Territories, in which
this Act is in force shall be appointed by the State Government concerned.

Tenure of the members of the Medical Benefit Council

According to Section 10(2) the representatives of employers, employees and medical

profession in the Medical Benefit Council, shall hold office for a period of four years
from the date on which their appointment is notified. Any such member of the Medical
Benefit Council will continue to hold office even after the expiry of his term of four years
until the appointment of his successors is notified. Section 10(3) provides that the Deputy
Director General Health Services shall hold office during the pleasure of the Central
Government. Representatives of State shall hold office during the pleasure of their
respective State Government.

Duties of Medical Benefit Council [Section 22]

The Medical Benefit Council shall advise the Corporation and the Standing Committee
on matters relating to the administration of medical benefit, the certification for purposes
of the grant of benefits and other connected matters.

The Medical Benefit Council shall have such powers and perform such duties of
Investigation as may be prescribed in relation to complaints against medical practitioners
in connection with medical treatment and attendance.

The Medical Benefit Council shall perform such other duties in connection with medical
treatment and attendance as may be specified in regulations.

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LABOUR LAW PALLAVI BHOGLE

Resignation of membership [Section 11]

Any member of the following bodies may resign his office by notice in writing to the

Central Government and the seat shall be vacant only on acceptance of the resignation by

the Government:

(1) Employees' State Insurance Corporation.

(2) Standing Committee.
(3) Medical Benefit Council.

Cessation of Membership [Section 12]

Section 12 of the Act deals with the cessation of membership of the Corporation, the
Standing Committee, or the Medical Benefit Council. Any member who fails to attend
three consecutive meetings shall cease his membership of Corporation, Standing
Committee and the Medical Benefit Council. The said bodies may, subject to rules made
by the Central Government, restore the membership of any member.

Any representative of the employers, employees or medical profession, in the

Corporation, the Standing Committee and Medical Benefit Council may be declared by
the Central Government to have ceased his membership if he has in the opinion of the
Government ceased to represent his class. Any such declaration may be made by the
Central Government by a Gazette notification and shall be effective from the date
specified in the notification.

Any representative of Parliament to the Corporation shall cease to be its member when he
ceases to be a member of Parliament.

Disqualification [Section 13]

Section 13 of the Act lays down disqualification for membership or election to the
Corporation, the Standing Committee or the Medical Benefit Council. No person can be
chosen as or continue to be member of the above bodies if:
1. he is declared to be of unsound mind by a competent court; or
2. he is a discharged insolvent; or
3. he has directly or indirectly any interest, in a subsisting contract with, or in any
work being done for the Corporation. It is immaterial that he has such interest by
himself or by his partner. But this rule shall not apply to a medical practitioner or
a share-holder (not being a Director) of a company; or
4. he has been convicted of an offence involving moral turpitude whether such
conviction has been before or after the commencement of this Act.

The test for determining moral turpitude as laid down in Mangali v. Chakkilall is whether
the act leading to a conviction was such as could shock the moral conscience of the

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LABOUR LAW PALLAVI BHOGLE

society in general whether the motive which led to the act was a base one and whether on
account of the act having been committed the perpetrator could be considered to be a
depraved character or a person who was to be looked down by the society. Moral
turpitude is clearly an ingredient of the offence, where it consists of an act of giving false
information knowing it to be false in order to injure some one else.

Conclusion

FINANCE AND AUDIT

Employees State Insurance Fund [8]

Dec 03, 99

Introduction: Section 26 talks of the Employees Insurance Fund. All contributions paid
under the Employees' State Insurance Act and all other moneys received on behalf of the
Corporation shall be paid into the Employees' State Insurance Fund. The Employees'
State Insurance Fund shall be held and administered by the Corporation for the purposes
of this Act.

According to sub-section (2) the Corporation may accept grants, donations, and gifts
from the Central or any State Government, local authority, or any individual or body
whether incorporated or not, for all or any of the purposes of this Act.

All moneys accruing or payable to the Employees' State Insurance Fund shall be paid into
the Reserve Bank of India or such other bank as may be approved by the Central
Government, credited to the Employees' State Insurance Fund. This rule is subject to the
provisions of this Act and to any rules or regulations made under the Act.

Account of Employees' State Insurance Fund shall be operated on by such officers as

may be authorized by the Standing Committee with the approval of the Corporation.

Expenses from the fund [Section 28]

Section 28 of the Act deals with various purposes on which the fund may be spent. The
expenses detailed in this section are subject to the provisions of this Act and rules made
by the Central Government. The Employees' State Insurance Fund shall be spent for the
following purposes:
1. Payment of benefits and provision of medical treatment and attendance to insured
persons in accordance with the provisions of this Act;
2. Provisions of medical benefit to the families of the insured persons where such
benefit is extended to their families;

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LABOUR LAW PALLAVI BHOGLE

3. Defraying the charges and costs in connection with the medical treatment and
attendance to insured persons and their families where the benefit extends to
them;
4. Payment of fees and allowances to the members of the Corporation, the Standing
Committee and the Medical Benefit Council, the Regional Boards, Local
Committees and Regional and Local Medical Benefit Council;
5. Payment of salaries, leave and joining time allowance, traveling and
compensatory allowances, gratuities and compassionate allowances, pensions,
contributions to provident or other benefit fund of officers and servants of the
Corporation;
6. Meeting the expenditure in respect of officers and other service set up for
purposes of giving effect to the provisions of this Act;
7. Establishment and maintenance of hospitals, dispensaries and other institutions
and the provisions of medical and other ancillary services for the benefit of
insured person. These expenses can be incurred for the benefit of the families of
the insured persons, where such benefit extends to them;
8. Payment of contributions to any State Government, local authority or any private
body or individual towards
• the cost of medical treatment and attendance provided to insured persons
and to their families (where the benefit extends to them)
• cost of any building and equipment in accordance with any agreement
entered into by the Corporation;
9. Defraying the cost (including all expenses) of auditing the account of the
Corporation.
10. Defraying cost of the valuation of its assets and liabilities;
11. Defray the cost (including all expenses) of the Employees' State Insurance Courts
set up under this Act;
12. Payment of any sums under any contract entered into for the purpose of this Act
by the Corporation or the Standing Committee or by any officer, duly authorized
by the Corporation or the Standing Committee in that behalf;
13. Payment of sums under any decree, or award of any Court or Tribunal against the
Corporation or any of its officers or servants for any act done In the execution of
his duty or under a compromise or settlement of any suit or other legal proceeding
or claim instituted or made against the Corporation;
14. Defraying the cost and other charges of instituting or defending any civil or
criminal proceedings arising out of any action taken under this Act;
15. Defraying expenditure on measures for improvement of health and welfare of
insured persons. Expenditure on this head shall be permitted within the prescribed
limits only;
16. Defraying expenditure for the rehabilitation and re-employment of insured
persons who have been disabled or injured. The expenditure under this head is
also permitted only with the prescribed limits;
17. Such either expenses as may be authorized by the Corporation with the previous
approval of the Central Government

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LABOUR LAW PALLAVI BHOGLE

In Bai Malimabu v. State of Gujarat it was held by the Supreme Court that construction
of staff quarter for the employees of the dispensary and other employees working under
the State Insurance Scheme does not violate Section 28 of the Act. The Employees' State
Insurance Fund can be spent for such purposes under Clauses (i) and (iv) of Section 28
and if necessary by a special authorization by the Corporation In accordance with clause
(xii) of Section 28 because construction of quarters for employees is closely connected
with the working and implementation of this scheme.

Conclusion

BENEFITS

Explain in brief the various benefits available under the Employee’s State
Insurance Act, 1948. [16]
05, Dec 04, Oct 2K, ?

Sickness Benefit [10]

Dec 05, 04, Dec 02, Dec 02, Oct 97

Maternity Benefit [5]

06, 01, Dec 99, Oct 97

Disablement Benefit [5]

01, 97

Funeral Benefit [5]

2K, 99, 97

Introduction: Freedom from economic fear is the basis of all social security legislation.
The various benefits conferred by the Act attack this fear and seek to remove it.

The Act provides for 6 types of benefits to which the insured persons, their dependants or
certain other persons are entitled. These benefits are as follows:

1. Sickness benefit.

2. Maternity benefit.

3. Disablement benefit.

4. Dependants ‘benefit.

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LABOUR LAW PALLAVI BHOGLE

5. Medical benefit.

6. Funeral expenses.

All these benefits except the medial benefits are monetary benefits. The rules regarding
these benefits are contained in Ss. 46 to 58.

Sickness Benefit

It is in the form of periodical payment to any insured person, provided his sickness is
certified by a duly appointed medical practitioner, or any person having such
qualifications and experience as may be specified by regulations of the Corporation.
Where provision is made for sick leave by standing order, the employer cannot require
the employee to seek sickness benefit provided under this sub-section.

In Management of Diocesan Press v. Labour Court Madras, it was held that it was not
possible to accept the contention that since the employee has received sickness benefit
under the Act, he is not entitled to receive the wages for the period during which he was
on sick leave. But the employer is entitled to deduct the benefit received by the employee
from the leave salary payable to him.

A person shall be qualified to claim sickness benefit for sickness occurring during any
benefit period, if the contributions in respect of him were payable for not less than 78
days of the corresponding contribution period (Rule 55).

Sickness to be certified: An insured person shall be entitled to sickness benefit only if his
sickness is certified by a duly appointed medical practitioner or by any person possessing
such qualifications and experience as the E.S.I Corporation may specify in this behalf
(Sec. 46 (1) (a).

The daily rate of sickness benefit, in respect of the insured person during any benefit
period, shall be the standard benefit rate (as per Rule 54) corresponding to the average
daily wages of that person during the corresponding contributions period.

Example: An employee earns between Rs. 300 and Rs. 310 daily. The standard benefit
rate in his case is Rs. 155 per day. The daily rate of sickness benefit will also be Rs. 155.

The insured person shall not, however, be entitled to sickness benefit for an initial
waiting period of 2 days. But if the spell of sickness recurs within 15 days he shall be
entitled to recover the benefit even for the first 2 days in the second or subsequent spell.
The sickness benefit is also not to be paid to any person for more than 91 days in any two
consecutive benefit periods.

Maternity Benefit

This benefit in the form of periodical payment available to an insured woman. It is

payable in case of
1. confinement;

THE EMPLOYEES STATE INSURANCE ACT, 1948 59

LABOUR LAW PALLAVI BHOGLE

2. miscarriage;
3. sickness arising out of pregnancy;
4. premature birth of a child.

The grounds of eligibility of an insured woman to such payments must be certified by an

Insurance Medical Officer as provided by the regulations.

Maternity benefit (Sec. 50 a substituted by the Amendment Act, 1989) the qualification
of insured women to claim maternity benefit: The conditions subject to which such
benefit may be given, the rates rate and period thereof shall be such as may be prescribed
by the Central Government.

The provisions of Rule 56 are as follows:

Claim: An insured woman shall be qualified to claim maternity benefit for a confinement
occurring or expected to occur in a benefit period. If the contributions in respect of her
were payable for not less than 70 days in the immediately proceeding two consecutive
contribution periods.

To obtain maternity benefit, the insured women must get certificates of pregnancy, of the
expected date of confinement and of actual confinement and send them to the Local
Office to which she is attached.

Disablement Benefit

Any insured person shall be entitled to periodical payments if :

(i) he suffers from disablement;
(ii) the disablement results from an employment injury ; and
(iii) he sustained the employment injury as an employee under condition
mentioned in the Act.
The disablement benefit is payable only when the injury is duly certified by an Insurance
Medical Officer.

In Krishnan Kutty Nair v. P.B. V. Regional Director, E.S.l. Corporation and Another, the
appellant who was a covered employee under the E.S.l. scheme, met with an accident in
the course of his employment on June 15, 1990. The claimant suffered injury after he had
ceased to be an employee. Dismissing the appeal it was held that Section 46(c) of
Employees' State Insurance Act, 1948 specifically provides for two cumulative
conditions for its applicability:
(i) first the claimant must be an insured person; and
(ii) second that such an injury must be sustained when he was an employee.
Hence, when the injury had been sustained by the employee when he ceased
to be an employee, he would not be entitled to the benefit of disablement
though his contribution period and his status as insured person continues.

Dependents Benefit

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This benefit is available to such dependents, of an insured person who dies as a result of
an employment injury sustained as an employee, as are entitled to compensation under
this Act.

If an insured person dies as a result of an employment injury sustained as an employee,

his dependants who are entitled to compensation under the Act, shall be entitled to
periodical payments referred to as dependants’ benefits (Sec. 46 (1) (d). Whether or not
he was in receipt of any periodical payment or temporary disablement in respect of the
injury, dependants benefit shall be payable to his dependants (specified in Sec. 2 (6-A)
(i), (ia), and (ii) at such rates and for such periods and subject to such conditions as may
be prescribed by the Central Government (Sec. 52 (1)].

In case the insured person dies without leaving behind him the dependants as aforesaid,
the dependants’ benefit shall be paid to the other dependants of the deceased at such rates
and for such periods and subject to such conditions as may be prescribed by the Central
Government (Sec. 52 (2).

Medical Benefit

Medical benefit is available to an injured person or to a member of his family, were such
benefit is extended to the members of his family. This benefit is in the following forms:
• out-patient treatment and attachment in the hospital or dispensary; or
• by visits of the home of the insured
• as an in-patient in a hospital or other institution.

A person shall be entitled to medical benefit during any period for which contributions
are payable in respect of him or in which he is qualified to claim sickness benefit or
maternity benefit or is in receipt of such disablement benefit as does not disentitle him to
medical benefit under the regulations (Sec 56 (3)].

An insured person in respect of whom contribution ceases to be payable under the Act
may be allowed medical benefit for such period and of such nature as may be provided
under the regulations (Proviso 1 to Sec. 56 (3)].

Sometimes an insured person may cease to be in insurable employment account of

permanent disablement. In such a case he shall continue to receive medical benefit till the
date on which he would have vacated the employment on attaining the age of
superannuation had he not sustained such permanent disablement. This is however
subject to payment of contribution and such other conditions as may be prescribed by the
Central Government (Proviso 2 to Sec. 56 (3).

Funeral Expenses

In case the insured person dies, the expenditure on his funeral, known as funeral
expense’, shall be payable to the eldest surviving member of the family. Where the
deceased person did not have a family or was not living with his family at the time of his
death, the funeral expense shall be payable to the person who actually incurs the

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LABOUR LAW PALLAVI BHOGLE

expenditure on the funeral of the deceased insured person (Sec. 46 (1) (f). The amount of
such payment shall not exceed the amount as may be prescribed by the Central
Government. The claim for such payment shall be made be prescribed by the Central
Government. The claim for such payment shall be made within 3 months of the death of
the insured person or within such extended period as the E.S.I. Corporation or any officer
or authority authorized by it in this behalf may allow.

The amount of funeral expenses prescribed with effect from 1-10-2000 is Rs. 2,500.

Conclusion

Occupational Disease [10]

Dec 03

Introduction: The term ‘occupational disease’ is not defined in the Act. Occupational
diseases (along with the employments peculiar to them) have, however, been specified in
the Third Schedule to the Act. This Schedule corresponds exactly with the Third
Schedule to the Workmen’s Compensation Act, 1923.

According to S. 52.A the contracting of any occupational disease specified in the Third
Schedule to the Act shall, unless the contrary is proved, be deemed to be an ‘employment
injury’ arising out of and in the course of employment:

(a) if an employee employed in any employment specified in Part A of the Third

Schedule contracts any disease specified therein as an occupational disease
peculiar to that employment, or

(b) If an employee employed in the employment specified in Part B of that

Schedule for a continuous period of not less than six months contracts any
disease specified therein as an occupational disease peculiar to that
employment, or

(c) If an employee employed in any employment specified in Part C of that

Schedule for such continuous period as the E.S.I. Corporation may specify in
respect of each such employment, contracts any disease specified therein as an
occupational disease peculiar to that employment (Sec. 52-A (1)].

It should be noted that for occupational diseases mentioned in Part A, no period of

employment is necessary: but in case of any disease mentioned in Part B the insured
person must have served in the employment peculiar to that disease for a period of not
less than six months. In case of an occupational disease specified in Part C the period of
employment is such as is specified by the E.S.I. Corporation in respect of that
employment.

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LABOUR LAW PALLAVI BHOGLE

Where the Central Government or A State Government, as the case may be, adds any
description of employment to the employments specified in the Third Schedule to the
Workmen’s Compensation Act, 1923 by virtue of the powers vested in it under Sec. 3 (3)
of the said Act. The said description of employment and the occupational diseases as
peculiar to that description of employment shall be deemed to form part of the Third
Schedule (Sec. 52-A (2) (i). Without prejudice to this provision, the E.S.I. Corporation
after giving, by notification in the Official Gazette, not less than 3 months notice of its
intention to do so, by a like notification, add any description of employment to the
employments specified in the Third Schedule. It shall specify in the case of employments
so added the diseases which shall be deemed for the purposes of Sec. 52-A to be
occupational diseases peculiar to those employments respectively. Thereupon the
provisions of the Employees State Insurance Act shall apply as if such diseases had been
declared by this Act to be occupational diseases peculiar to those employments (Sec. 52-
A 2 (ii).

Sec 52-A (3) further provides that no benefit shall be payable to an employee in respect
of any disease unless the disease is directly attributable to a specific injury by a accident
arising out of and in the course of his employment (Sec. 52-A (3)].

The provisions of Sec. 51-A shall not apply to the cases to which Sec. 52-A applies (Sec.
52-A (4)].

Conclusion

ADJUDICATIONS OF DISPUTES AND CLAIMS

Explain the constitution, powers and procedures of the E.S.I Courts. [16]
06, Dec 04, 04, 03, 03, Dec 02, Oct 2K, Dec 99, 95

Introduction:

Constitution of Employee Insurance court [S. 74]

S. 74 enjoins upon the State Government to constitute, by notification in the Official

Gazette, an Employees’ Insurance Court for such local areas as may be specified in the
notification (Sec. 74 (1). The Court shall consist of such number of judges as the State
Government may think fit (Sec. 74 (2)].

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LABOUR LAW PALLAVI BHOGLE

Any person who is or has been a judicial officer or is a legal practitioner of 5 years’
standing shall be qualified to be a Judge of the Employees ‘Insurance Court (Sec. 74 (3)].

The State Government may appointed the same Court for 2 or more local areas or 2 or
more Courts for the same local area (Sec. 74 (4)]. Where more than one Court has been
appointed for the same local area, the State Government may, by general or special order,
regulate the distribution of business between them (Sec. 74 (5).

Jurisdiction or Matters to be decided by Employees’ Issuance Court [S. 75]

Adjudication of questions or disputes: The Employees’ Insurance Court shall decide the
following questions or disputes;

(a) whether any person is an employees within the meaning of this Act or
whether he is liable to pay the employee’s contribution, or

(b) the rate of wages or average daily wages of an employees for the purposes of
this Act, or

(c) the rate of contribution payable by a principal employer in respect of any

employee, or

(d) the person who is or was the principal employer in respect of any employee,
or

(e) the right of any person to any benefit and as to the amount and duration
thereof, or

(f) any direction issued by the E.S.I. Corporation under sec. 55-A on a review of
any payment of dependants’ benefit or

(g) any other matter which is in dispute-

(h) between a principal employer and he E.S.I. Corporation, or

(i) between a person and the E.S.I. Corporation or

(j) between an employee and a principal or immediate employer.

The dispute may be in respect of any contribution or benefit or other dues payable or
recoverable under the Act or any other matter required to be decided or which may be
decided by the Employees’ Insurance Court under the Act.

These questions or disputes shall be decided by the Employees’ Insurance Court in

accordance with the provisions of the Act, and subject to the provisions of Sec. 75 (2-A)
(Sec. 75 (1)].

Powers of Employees’ Insurance Court [S. 78]

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LABOUR LAW PALLAVI BHOGLE

The Employee’s Insurance Court shall have all the powers of a Civil Court for the
purposes of –

(a) summoning and enforcing the attendance of witness;

(b) compelling the discovery and production of documents and material objects,
and

(c) administering oath and recording evidence.

The Employees’ Insurance Court shall have all the powers of a Civil Court for the
purposes of-

(a) Summoning and enforcing the attendance of witnesses;

(ii) Compelling the discovery and production of documents and material objects,
and

(iii) Administering oath and recording evidence.

The Employee’s Insurance Court shall be deemed to be a Civil Court within the meaning
of Sec. 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (Sec. 78 (1). It
shall follow such procedure as may be prescribed by rules made by the State Government
(Sec. 78 (2). Its order shall be enforceable as if it were a decree passed in suit by a Civil
Court (Sec. 78 (4). If there are no statutory rules prescribing the procedure, rules of
natural justice will be followed, i.e., the person indicated shall be given an opportunity of
being heard in his define and the decision shall be given in good faith.
All costs incidental to any proceedings before an Employee’s Insurance Court shall,
subject to such rules are may be made in this behalf by the State Government, be in the
discretion of the Court (Sec. 78)

Conclusion

OTHER QUESTIONS

Contributions

Examine the provisions with regard to functions of Inspectors [5]

98

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LABOUR LAW PALLAVI BHOGLE

The Minimum Wages Act, 1948

PRELIMINARY

What is the objective and the scheme behind passing of Minimum Wages
Act, 1948? [10]
Dec 03, Oct 2K, ?

Explain the salient features of The Minimum Wages Act, 1948 [16]
Dec 05, Dec 04, Oct 97

Introduction: The Minimum Wages Act, 1948 extends to the whole of India. It applies
to the employments, which are enumerated in the Schedule of the Act and in certain cases
may, in the discretion of the appropriate Government, be extended to any other
employment.

Object of the Act

The ‘Minimum Wages Act, 1948’ was passed for the welfare of labourers. This Act has
been enacted to secure the welfare of the workers in a competitive market by providing
for a minimum limit of wages in certain employments. The statement of object of Bill
points out: ‘The justification for statutory fixation of minimum wages is obvious. Such
provisions which exist in more advanced countries are even necessary in India, where
workers' organisations are yet poorly developed and the workers' bargain-power is
consequently poor.’

The Act provides for fixation by the Central Government of minimum wages for
employments detailed in the Schedule of the Act and carried on by or under the authority
of the Central Government.

The items in the Schedule are those where sweated labour is most prevalent or where
there is a big chance of exploitation of labour. More categories of employment can be
added under this Act. The object of the Act is directed against exploitation of the
ignorant, less organised and less privileged members of the society by the capitalists. The
anxiety of the State for improving the general economic condition of some of its less
favoured members appears to be in supersession of the old principle of absolute freedom
of contract and the doctrine of laissez faire and in recognition of the new principles of
social welfare and common good. The object of this Act is to prevent exploitation of the
workers and for this purpose, it aims at fixation of minimum wages which employer must
pay. The legislature undoubtedly intended to apply the Act to those industries or localities

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LABOUR LAW PALLAVI BHOGLE

in which, by reason of causes such as unorganised labour or absence of machinery for

regulation of wages, the wages paid to workers were in the light of the general level of
wages and subsistence level inadequate. Like other branches of labour legislation the
security of industrial peace and efficiency may be kept in view when giving effect to the
provisions of this Act.

In a developing country like ours which faces the problem of unemployment on a very
large scale it is not unlikely that labour may offer to work even on starvation wages. The
policy of the Act, therefore, is to prevent employment of sweated labour in the general
interest and, so, in prescribing the minimum wages rates, the capacity of the employer
need not be considered as the State assumes that every employer must pay the minimum
wages for the employee's labour.

The Act contemplates that minimum wages rates must ensure not only the mere physical
need of the worker which would keep him just above starvation but must ensure for him
not only his subsistence and that of his family but also preserve his efficiency as a
workman. It should, therefore, provide not merely for the bare subsistence of his life but
the preservation of the workers and so must provide for some measure of educational,
medical requirements and amenities.

Salient features of the Act

Some of the features are:

1. This Act provides for the fixation of:
(a) minimum time rate of wages;
(b) a minimum piece rate;
(c) a guaranteed time rate;
(d) an overtime rate, for different occupations, localities or classes of work
and for adults, adolescents, children and apprentices.
2. The minimum rate of wages under the Act may consist of:
(a) a basic rate of wages and a cost of living allowance; or
(b) basic rate of wages with or without the cost of living allowance and the
cash value of the concessions in respect of essential commodities supplied
at concessional rates; or
(c) an all-inclusive rate.
3. The Act requires that wages shall be paid in cash, although it empowers the
appropriate Government to authorize the payment of minimum wages, either
wholly or partly in kind in particular cases.
4. It lays down that the cost of living allowance and the cash value of concessions in
respect of supplies of essential commodities at concessional rates shall be
computed by the competent authority at certain interval. In case of undertakings
controlled by the Union Territories and the Central Government, the Director,
Labour Bureau is the competent authority.
5. The Act empowers the appropriate Government to fix the number of hours of
work per day, to provide for a weekly holiday and the payment of, overtime

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LABOUR LAW PALLAVI BHOGLE

wages in regard to any Scheduled employment in respect of which minimum rates

of wages have been fixed under the Act.
6. The establishments covered by this Act are required to maintain registers and
records in the prescribed manner;
7. The Act also provides for appointment of Inspectors and authorities to hear and
decide claims arising out of payment of wages at less than the minimum rates of
wages or remuneration for days of rest or of work done on such days or of
overtime wages.
8. The provision is also made in the Act for dealing with complaints made for
violation of the provisions of the Act and for imposing penalties for offences
committed under the Act.

Conclusion

Write a short note on ‘Scheduled Employment.’ [10]

06, 03 (AE – 965)

Introduction: The Minimum Wages Act, 1948 extends to the whole of India. It applies
to the employments, which are enumerated in the Schedule of the Act and in certain cases
may, in the discretion of the appropriate Government, be extended to any other
employment.

Section 2 of the Act, the Interpretation clause, gives the meaning and definition of certain
terms used in the Act.

Scheduled Employment

‘Scheduled Employment’ is defined under section 2(g) of the Act.

As per the section, ‘Scheduled employment’ means an employment specified in the

schedule, or any process or branch of work forming part of such employment.

The following are scheduled employment as provided in the Schedule. The Schedule is
divided in two parts.

PART I

1. Employment in any woolen carpet making or shawl-weaving establishment.

2. Employment in any rice mill, flourmill or dal mill.
3. Employment in any tobacco (including bidi making) manufactory.

THE MINIMUM WAGES ACT, 1948 68

LABOUR LAW PALLAVI BHOGLE

4. Employment in any plantation, that is to say, any estate, which is maintained for
the purpose of growing cinchona, rubber, tea or coffee.
5. Employment in any oil mill.
6. Employment under any local authority.
7. Employment on the construction or maintenance of roads or in building
operations.
8. Employment in stone breaking or stone crushing. It covers the breaking or the
crushing of stones incidental to the mining operation, but the stone breaking or
stone crushing operations, which are carried on in mines, are not included. The
minimum wages fixed for the employment of stone breaking and stone crushing
will not apply to the operation of quarrying 'Sahabad State'.
9. Employment in any lac manufactory.
10. Employment in any mica works.
11. Employment in public Motor Transport.
12. Employment in tanneries and leather manufactory.

PART II

Employment in agriculture, that is to say, any form of farming including the cultivation
and tillage of the soil, dairy farming, the production, cultivation growing and harvesting
of any agriculture or horticulture commodity, the raising of live-stock, bees or poultry,
and any practice performed by a farmer or on a farm as incidental to or in conjunction
with farm operation (including any forestry or timbering operations and the preparation
for market and delivery to storage or to market or to carriage for transportation to market
of farm produce.

In Chatturam Darsanram v. Union of India, a petition for quashing the notification dated
28th May, 1976 issued by the Central Government revising the minimum wages of the
workmen employed in the mica mines was filed. The question was whether workmen
working in mine were working in scheduled employment. It was held that item No. 10 of
Part I of the Schedule relates to employment in any 'mica works' and not 'mica mines'.
The connotations of 'mica mines' and 'mica works' are different. It would not be
reasonable to read 'mica mines' in the expression ‘mica works’. Thus 'mica mines' is not
included in the Schedule and as the inclusion of an employment in the Schedule is a
condition precedent for issuing any notification by the appropriate Government the
notification fixing minimum wages is ultra vires.

Conclusion

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LABOUR LAW PALLAVI BHOGLE

Fair Wage [10]

05, 04

What is minimum wage? Bring out the difference between Fair Wage and
Minimum Wage. [10]
Dec 03, 98

Explain the concept of fair wage, living wage and minimum wage. [10]
03, 01

Explain ‘Living Wage’. [6]

Dec 04

Introduction: ‘Wages’ means all remuneration, capable of being expressed in terms of

money, which would if the terms of the contract of employment, express or implied, were
fulfilled, be payable to person employed in respect of his employment or of work done in
such employment and includes house rent allowance.

Broadly speaking the wage structure can be divided into three categories. The basic
‘minimum wage’, which provides bare subsistence and is at poverty line-level, a little
above is the 'fair wage' and finally the 'living wage' which comes at a comfort level. It is
not possible to demarcate these levels of wage structure with any precision.

Certain principles on which wages are fixed have been stated by the Supreme Court in
Kamani Metals and Alloys v. Their Workmen. “Broadly speaking the first principle is
that there is a minimum wage which, in any event must be paid, irrespective of the extent
of profits, the financial condition of the establishment or the availability of workmen on
lower wages. This minimum wage is independent of the kind of industry and applies to
all alike big or small. It sets the lowest limit below which wages cannot be allowed to
sink in all humanity. The second principle is that wages must be fair, that is to say,
sufficiently high to provide a standard family with food, shelter, clothing, medical care
and education of children appropriate for the workmen but not at a rate exceeding his
wage earning capacity in the class of establishment to which he belongs. A fair wages is
thus related to the earning capacity and the workload. It must, however, be realized that
‘fair wage’ is not ‘living wage’ by which is meant a wage which is sufficient to provide
not only the essential above mentioned but a fair measure of frugal comfort with an
ability to provide for old age and evil days. Fair wage lies between minimum wage,
which must be paid in any event, and the living wage, which is the goal.”

Minimum Wages

The expression ‘minimum wages’ is not defined in the Act presumably because it would
not be possible to lay down a uniform minimum wages for all industries throughout the

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LABOUR LAW PALLAVI BHOGLE

country on account of different and varying conditions prevailing from industry to

industry and from one part of the country to another.

A minimum wage must provide not merely for the bare subsistence of life but for the
preservation of the efficiency of the worker and, so it must also provide for some measure
of education, medical requirements and amenities. The concept of minimum wage does
not mean a wage that enables the worker to cover his bare physical need and keep himself
just above starvation. The capacity of the employer to pay is irrelevant in fixing
minimum wage. Therefore, no addition shall be made to the components of the minimum
wage, which would take the minimum wage near the lower level of the fair wage. In
Unichay v. State of Kerala, it was held that “the Act contemplates that minimum wage
rates should be fixed in the scheduled industries with the dual object of providing
subsistence and maintenance of the worker and his family and preserving his efficiency
as a worker.”

It has been held that the employees are entitled to the minimum wage at all times and
under all circumstances. An employer who cannot pay the minimum wage has no right to
engage labour and no justification to run the industry.

In People's Union for Democratic Rights v. Union of India, it was held by the Supreme
Court that where children below the age of 14 years are employed in violation of the
Employment of Children Act, 1938 and minimum wages are denied either to such
children or to other persons who by reason of poverty or socially or economically
disadvantageous position are unable to approach the Court, legal redress may be sought
on their behalf by any member of public.

Fair Wages

There is difference between minimum wages and fair wages. In the case of fair wage,
besides the principle of industry-cum-region, the company's capacity to bear the financial
burden must receive due consideration. But mere hopeful observations made in the
director's annual report cannot be basis for awarding increased wages because such
observations are sometimes made to inspire hope and confidence in shareholders and they
cannot be a substitute for actual audited figures.

S.A.F.L. Works v. State Industrial Court, Nagpur, is a leading case on the point. In this
case the Supreme Court observed that in fixing the paying capacity the Tribunal will have
to fix the income as well as permitted deductions and allowances properly incurred.
There can be no dispute that expenses incurred for purchase of raw material, maintenance
of the factory, expenses incurred towards rent, public charges, maintenance of the
establishment and expensee incurred in marketing of the produce should be deducted.
These items are not exhaustive. As to whether a particular item of expenditure is liable to
be deducted or not have to be determined on the facts of the case. No deduction should be
allowed for payment of income tax or for allowances made for depreciation or for making
provision for reserve. So far as expenses incurred towards payment of age bill inclusive
of dearness allowances, bonus, gratuity, etc. are concerned they will have to be deducted.

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It was held in Transport Corpn. of India Ltd. v. State of Maharashtra & Others, that it is
not for the Labour Court or Tribunal to fix the minimum rates of wages. While fixing fair
rates of wages the courts or tribunals take into consideration the minimum rates of wages
and where the Government has not fixed the minimum rates of wages then the courts or
tribunals ascertain for themselves what would be the minimum rate of wages. In fact,
minimum rate of wages are fixed by the Government. Courts or tribunals merely
ascertain what are the minimum rates of wages for the purpose of deciding ‘fair wages’.

Living Wage

The Fair Wage Committee in its report published by Government of India, Ministry of
Labour in 1949 defined the ‘living wage’ as: “The Living wage should enable the male
earner to provide for himself and his family not merely the bare essentials of food,
clothing and shelter but a measure of frugal comfort including education for children,
protection against ill-health, requirements of essential social needs, and a measure of
insurance against the more important misfortunes including old age.”

Conclusion

FIXATION OF MINIMUM RATES OF WAGES, WORKING

HOURS AND DETERMINATION OF WAGES AND CLAIMS, ETC.

Explain the procedure for fixing and reviewing minimum wages under the
Minimum Wages Act, 1948. [10]
06, 04, Dec 02, Dec 02, 99, Oct 98, 95

Explain the provisions of the Minimum Wages Act, 1948 dealing with the
procedure for fixation and the revision of Minimum Wages. [16]
05

Introduction: The expression ‘minimum wages’ is not defined in the Act presumably
because it would not be possible to lay down a uniform minimum wages for all industries
throughout the country on account of different and varying conditions prevailing from
industry to industry and from one part of the country to another.

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A minimum wage must provide not merely for the bare subsistence of life but for the
preservation of the efficiency of the worker and, so it must also provide for some measure
of education, medical requirements and amenities.

Fixation of Minimum Rates of Wages

Section 3 lays down that that the appropriate Government shall be empowered to fix the
minimum rates of wages in the manner prescribed under this Act. It shall fix the
minimum rates of wages payable to employees employed in an employment specified in
Part I or Part II of the Schedule and in an employment added to either part by notification
under Section 27.

But the appropriate Government may, in respect of employees employed in an

employment specified in Part II of the Schedule, instead of fixing minimum rates of
wages under this clause for the whole State, fix such rates for a part of the State or for
any specified class or classes of such employment in the whole of the State or part
thereof.

The appropriate Government shall review the minimum rates of wages to fix and revise
the minimum rates, if necessary, at such intervals as it may think fit. The interval as
aforesaid shall not exceed five years. But where for any reason the appropriate
Government has not reviewed the minimum rates of wages fixed by it within an interval
of five years, the appropriate Government shall not be without power to review or revise
after five years. Until the minimum rates are so revised the minimum rates in force
immediately before the expiry of the said period of five years shall continue in force.

Sub-section (I-A) provides that the appropriate Government may refrain from fixing
minimum rates of wages in respect of any scheduled employment in which there are in
the whole State less than one thousand employees engaged in such employment. But if at
any time, the appropriate Government, comes to a finding after such enquiry as it may
make or cause to be made in this behalf that the number of employees In any scheduled
employment in respect of which it has refrained from fixing minimum rates of wages, has
risen to one thousand or more. It shall fix minimum rates of wages payable to employee
in such employment as soon as may be after such finding.

In Sahdeo Sahu v. State of M.P. and another it was held that Section 3(1-A) does not
prevent the appropriate Government from fixing the minimum rates of wage even if the
number of employees in that scheduled employment is less than one thousand. The word
'refrain' used in Section 3(1-A) would include jurisdiction to withdraw the minimum rates
of wages earlier fixed if the strength in the scheduled employment falls below 1000. The
power to rescind the wages once fixed without any express provision in that regard in
Section 3(1-A) can well be inferred with reference to Section 21 of the General Clauses
Act.

Procedure for Fixing and Revising Minimum Wages

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Section 5 lays down that in fixing minimum rates of wages in respect of any scheduled
employment for the first time under this Act or in revising minimum rates of wages so
fixed, the appropriate Government shall either:-
(a) appoint as many committees and sub-committees as it considers necessary to hold
enquiries and advise it in respect of such fixation or revision, as the case may be;
or
(b) by notification in the Official Gazette, publish its proposals for the information of
persons likely to be affected thereby and specify a date not less than two months
from the date of the notification on which the proposals will be taken into
consideration.

After considering the advice of the committees appointed, and all representations
received by it before the date specified in the Gazette notification, the appropriate
Government may by notification in the official Gazette, fix or revise the minimum rates
of wages in respect of each scheduled employment, which shall come into force after the
expiry of 3 months unless otherwise provided in the notification.

Where the appropriate Government proposes to revise the minimum rates of wages by the
mode specified in Section 5(1)(b), the appropriate Government shall consult the Advisory
Board also.

If the Advisory Board approves the notification regarding revision of wages without
discussing the objections raised, the action of the Board would be arbitrary because it
amounts to non-application of mind in granting approval.

The exercise of power to fix or revise the minimum wages under sub-section (2) of
Section 5 is limited only to employments specified in the schedule. Under section 27 of
the Act the appropriate Government may add any employment to the schedule. The
nature and extent of powers of the appropriate Government under Section 27 and Section
5(2) is separate and distinct and what can be done by the appropriate Government in
exercise of its power under Section 27 cannot be done by it in exercise of its powers
under Section 5(2) of the Act.

The power conferred upon the appropriate Government under Section 5(1) is neither
arbitrary nor unguided. Therefore sub-section (1) does not offend Article 14 of the
Constitution. In the matter of fixing minimum wages, the economic capacity of the trade
or industry is irrelevant, for, what alone is germane, is, the wage required by the
employees to survive. The fixation of minimum wages depends on the prevailing
economic conditions, the cost of living in a place, the nature of the work to be performed
and the conditions in which the work is performed. Where a notification is issued by the
Government authorizing the employer to deduct the sum mentioned in the notification
towards the cost of free meals supplied to the workers by him, it was held that the
notification gives only an option to the employer and does not impose an obligation upon
him. Supplying food is an amenity. The notification does not mean fixing of minimum
wages in kind. The power of the Government to prescribe minimum rates of wages or to
revise them does not include power to vary other terms of contract.

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In Muruga Home Industries v. Government of Tamil Nadu & another minimum wages of
Beedi workers were revised by the State Government by a notification issued after
consultation with the Advisory Board. It was held that the notification fixing minimum
wages should not be interfered with in writ proceedings except on most substantial
grounds. Advisory Board is well balanced since representation is given to employers and
employees. Work in Beedi industry is unorganized sector and condition of work and
wages of beedi workers are below subsistence level and minimum wages fixed is fair and
just and not arbitrary.

Conclusion

Explain the provisions of the Minimum Wages Act pertaining to overtime,

maintenance of registers and records. [10]
03

Introduction: The expression ‘minimum wages’ is not defined in the Act presumably
because it would not be possible to lay down a uniform minimum wages for all industries
throughout the country on account of different and varying conditions prevailing from
industry to industry and from one part of the country to another.

A minimum wage must provide not merely for the bare subsistence of life but for the
preservation of the efficiency of the worker and, so it must also provide for some measure
of education, medical requirements and amenities.

Overtime [S. 14]

Where an employee works on any day in excess of the number of hours constituting a
normal working day, the employer shall pay him overtime. An employee entitled to
overtime must be such whose minimum rate of wage is fixed under this Act by the hour,
by the day or by such a longer wage period as may be prescribed. The overtime shall be
payable for every hour or for part of an hour so worked in excess at the rate fixed under
this Act or under any law of the appropriate Government for the time being in force,
whichever is higher.

Nothing in this Act shall prejudice the operation of the provisions of Section 59 of the
Factories Act, 1948, in any case where those provisions are applicable.

It was held in Municipal Council, Hatta v. Bhagat Singh that section of the Minimum
Wages Act clearly provides for payment of overtime only to those employees who are
gelling minimum rate of wages under The Minimum Wages Act, 1948. It does not apply

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to those getting better wages in other statutory rules. In the present case Municipal
Council employees were receiving wages under Municipal Rules, which were much more
than minimum wages. Therefore, they are not entitled to benefit of Section 14 (i.e.
overtime) merely because employment under any Local Authority is listed as Item 6 in
the Schedule to the Act.

Maintenance of Registers and Records

Section 18 requires that every employer shall maintain such registers and records giving
such particulars of employees employed by him, the work performed by them, the wages
paid to them, the receipts given by them and such other particulars and in such form as
may be prescribed.

Every employer shall keep exhibited, in such manner as may be prescribed, in the
factory, workshop or place where the employees in the scheduled employment may be
employed or in the case of out workers, in such factory, workshop or place as may be
used for giving out-worker to them, notice in the prescribed form containing prescribed
particulars.

Under Section 18(3) the appropriate Government may, by rules made under this Act,
provide for the issue of wage books or wages slips to employees employed in any
scheduled employment in respect of which minimum rates of wages have been fixed. The
appropriate Government may prescribe the manner in which entries shall be made and
authenticated in such wage books or wages slips by the employer, or his agent.

Conclusion

MISCELLANEOUS

What is minimum wage? Can an employer escape the payment of minimum

wage? [10]
2K, Dec 99, 97

Introduction: ‘Wages’ means all remuneration, capable of being expressed in terms of

money, which would if the terms of the contract of employment, express or implied, were
fulfilled, be payable to person employed in respect of his employment or of work done in
such employment and includes house rent allowance.

Broadly speaking the wage structure can be divided into three categories. The basic
‘minimum wage’, which provides bare subsistence and is at poverty line-level, a little

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LABOUR LAW PALLAVI BHOGLE

above is the 'fair wage' and finally the 'living wage' which comes at a comfort level. It is
not possible to demarcate these levels of wage structure with any precision.

Certain principles on which wages are fixed have been stated by the Supreme Court in
Kamani Metals and Alloys v. Their Workmen. “Broadly speaking the first principle is
that there is a minimum wage which, in any event must be paid, irrespective of the extent
of profits, the financial condition of the establishment or the availability of workmen on
lower wages. This minimum wage is independent of the kind of industry and applies to
all alike big or small. It sets the lowest limit below which wages cannot be allowed to
sink in all humanity. The second principle is that wages must be fair, that is to say,
sufficiently high to provide a standard family with food, shelter, clothing, medical care
and education of children appropriate for the workmen but not at a rate exceeding his
wage earning capacity in the class of establishment to which he belongs. A fair wages is
thus related to the earning capacity and the workload. It must, however, be realized that
‘fair wage’ is not ‘living wage’ by which is meant a wage which is sufficient to provide
not only the essential above mentioned but a fair measure of frugal comfort with an
ability to provide for old age and evil days. Fair wage lies between minimum wage,
which must be paid in any event, and the living wage, which is the goal.”

Minimum Wages

The expression ‘minimum wages’ is not defined in the Act presumably because it would
not be possible to lay down a uniform minimum wages for all industries throughout the
country on account of different and varying conditions prevailing from industry to
industry and from one part of the country to another.

A minimum wage must provide not merely for the bare subsistence of life but for the
preservation of the efficiency of the worker and, so it must also provide for some measure
of education, medical requirements and amenities. The concept of minimum wage does
not mean a wage that enables the worker to cover his bare physical need and keep himself
just above starvation. The capacity of the employer to pay is irrelevant in fixing
minimum wage. Therefore, no addition shall be made to the components of the minimum
wage, which would take the minimum wage near the lower level of the fair wage. In
Unichay v. State of Kerala, it was held that “the Act contemplates that minimum wage
rates should be fixed in the scheduled industries with the dual object of providing
subsistence and maintenance of the worker and his family and preserving his efficiency
as a worker.”

It has been held that the employees are entitled to the minimum wage at all times and
under all circumstances. An employer who cannot pay the minimum wage has no right to
engage labour and no justification to run the industry.

In People's Union for Democratic Rights v. Union of India, it was held by the Supreme
Court that where children below the age of 14 years are employed in violation of the
Employment of Children Act, 1938 and minimum wages are denied either to such
children or to other persons who by reason of poverty or socially or economically

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LABOUR LAW PALLAVI BHOGLE

disadvantageous position are unable to approach the Court, legal redress may be sought
on their behalf by any member of public.

Exemption of employer from liability in certain cases [S. 23]

Where an employer is charged with an offence under this Act, he is entitled to file a
complaint against the actual offender. On his complaint the actual offender shall be given
notice and brought before the court at the time appointed for hearing the charge. Thus
both actual offender and the employer shall be tried, but the trial shall start on original
complaint and the onus to bring the charges at home shall be on the original complainant.
If the commission of the offence is proved, the employer shall be liable unless he proves
to the satisfaction of the court that
(i) he has used diligence to enforce the execution of this Act;
(ii) the said other person committed the offence in question without his
knowledge, consent or connivance.

If the employer succeeds in establishing the existence of one or the other of the two
circumstances, the actual offender shall be convicted of the offence and the employer
shall be discharged. The employer in seeking to prove his innocence may be examined on
oath. The employer or his witness shall be cross-examined by or on behalf of the person
whom the employer charges as actual offender by the prosecution.

Conclusion

Remaining Question

Explain the Subsistence theory of wages. [6]

03, Dec 02

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LABOUR LAW PALLAVI BHOGLE

The Payment of Wages Act, 1936

PRELIMINARY

Discuss the objects of the Payment of Wages Act, 1936. What is the
penalty for unlawful deductions? [10]
Dec 02

Substantiate your views on the comment – ‘The Payment of Wages Act, 1936
is a social welfare legislation.” [10]
02

Critically examine the scope of the Payment of Wages Act, 1936. [10]
Oct 98

Give an account of the salient features of the Payment of Wages Act, 1936
[10]
05, 03

The Payment of Wages Act tries to protect the wages of a worker from
unlawful deductions – Comment. [10]
Dec 02

Introduction: The need to protect the wages earned by the worker had been felt from the
early years of the twentieth century, but it was as early as 1925 that a Private Bill called
the ‘Weekly Payment Bill’ was for the first time introduced in the Legislative Assembly.
At that time different periods of payment of wages were prevalent. An attempt was made
to remedy some of the evils viz., delay in payment of wages, non - payment of wages,
deductions made from wages on account of fines imposed by the employer etc. The Bill
was, however, withdrawn on an assurance of the Government that the matter was under
consideration of the Government. Imposition of fines by employers on workers and
deduction of even double the amount of wages for absence period by way of fine was
very much customary in those days. The desirability of regulating the extent of fines and
other deductions, through legislation was felt by the Government in 1926.

The Royal Commission on Labour in India made some valuable recommendations. The
present Act is mostly based on those recommendations. The Commission was of the
opinion that legislation regarding deductions from wages and fines was essential. The
following recommendations are worth citing:

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LABOUR LAW PALLAVI BHOGLE

1. Children should be exempt from fine.

2. The minimum amount which could be deducted by way of fine should not exceed
in any month half an anna in the ruppee of the worker's earnings.
3. The sum realized as fine should be utilized for some purpose beneficial to the
employees as a class and should be approved by some recognized authority.
4. A notice specifying the acts and omissions in respect of which fines may be
imposed should be posted and any other fine should be deemed to be illegal.
5. Any deduction made for goods having been damaged should not exceed the
wholesale price of the goods damaged.
6. Deductions may be made on account of provision for housing accommodation
and of tools and raw materials.
7. Imposition of any fine and deduction made, which is not permitted by law, should
be made penal.

A Bill of Payment of Wages Act, based on the recommendations of the Royal

Commission on Labour was introduced in the Legislative Assembly in 1933 but could
not take the shape of the Act because of the dissolution of the Assembly. The Payment of
Wages Act was passed in 1936 and came into force on 21st March, 1937.

Object of the Act

The preamble of the Act states that the object of the Act is ‘to regulate the payment of
wages to certain classes of employed persons.’ The regulation contemplated by the Act is
twofold:
• First, the date of payment of wages
• Secondly, the deductions from wages whether as fine or otherwise.
To ensure payment of wages to persons covered by the Act certain provisions have been
made in this Act. The Bombay High Court in Aravind Mils Ltd. v. K.R Gadgil, observed
that “the general purpose of the Act is to provide that employed persons shall be paid
their wages in a particular form and at regular intervals without any unauthorized
deductions.” The use of the expression ‘certain classes of persons’ in the preamble is
important for the Act applies to persons drawing on an average wages less than one
thousand six hundred rupees a month. Any deduction from the wages or salaries of the
workmen governed by the Payment of Wages Act, unless authorized by the Act shall be
deemed to be illegal. Any deduction from the wages of the workmen, under a settlement
between representative Union and employer can, however, permit a deduction as it is the
outcome of an understanding between the parties even though such deduction may not be
authorized or legally permissible under the Act.

Application [S.1]

The Payment of Wages Act, 1936 extends to the whole of India. It came into operation on
21st March, 1937.

According to sub-section (4) this Act applies in the first instance to the payment of wages
to:

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LABOUR LAW PALLAVI BHOGLE

(i) persons employed in any factory;

(ii) persons employed (otherwise than in factory) upon any railway by a
railway administration, or either directly or, through a sub-contractor, by a
person fulfilling a contract with a railway administration; and
(iii) persons employed in an industrial or other establishment specified in sub-
clauses (a) to (g) of clause (ii) of Section 2 of this Act.

Sub-section (5) empowers the appropriate Government to extend the application of the
whole or part of the Act to payment of wages to any class of persons employed in the
establishment or class of establishments specified by the appropriate Government under
sub-clause (h) of clause (ii) of Section 2.

The exercise of power by the appropriate Government is subject to two conditions:

• issue of three months prior notice of its intention to do so
• a notification of the extention in the official Gazette
Provided that in relation to any such establishment owned by the Central Government, no
such notification shall be issued except with the concurrence of that Government.

This Act applies to wages payable to an employed person in respect of a wage period if
such wages for that wage period do not exceed six thousand five hundred rupees per
month or such other higher sum which, on the basis of figures of the Consumer
Expenditure Survey published by the National Sample Survey Organisation, the Central
Government may, after every five years, by notification in the Official Gazette, specify.

In Indian Statistical Institute v. State of West Bengal & others, the Indian Statistical
Institute employed about 2000 persons in various departments or in connection with its
work. It was held that in Osmania University case, the Supreme Court has held that
Factories Act was applicable to the press of the University. This principle applies to
Indian Statistical Institute also and it will be covered by the Payment of Wages Act.

Conclusion

Define and explain the term ‘wages’ as defined under the Payment of Wages
Act, 1936. [10]
Dec 05

What are the components of the definition of wages under the Payment of
Wages Act, 1936? [10]
02

Explain the different concepts of wages. [10]

02

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 LABOUR LAW PALLAVI BHOGLE

Introduction: Wages, as defined under S. 2(vi) means all remuneration, whether by way
of salaries, allowances or otherwise, expressed in terms of money or capable of being so
expressed which would, if the terms of employment, express or implied were fulfilled, be
payable to a person employed in respect of his employment or of work done in such
employment

'Wages' includes:
(a) any remuneration payable under any award or settlement between the parties or
order of a Court;
(b) any remuneration to which the person employed is entitled in respect of overtime
work or holidays or any leave period;
(c) any additional remuneration payable under the terms of employment, whether
called a bonus or by any other name;

The definition of wages is not limited to remuneration payable under an agreement or

contract. The amended definition would apply to all kinds of remuneration, whether
arising from a contract, an award, a settlement or under a statute;
(d) any sum which by reason of the termination of employment of the person
employed is payable under any law, contract or instrument which provides for the
payment of such sum, whether with or without deductions, but does not provide
for the time within which the payment is to be made;
(e) any sum to which the person employed is entitled under any scheme framed under
any law for the time being in force.
Wages does not include:
1. any bonus (whether under a scheme of profit sharing or otherwise) which does not
form part of the remuneration payable under the terms of employment or which is
not payable under any award or settlement between the parties or order of a Court;
The bonus payable under the Payment of Bonus Act, 1965 amounts to wages within the
definition in this sub-section 2.
2. the value of any house accommodation, or of the supply of light, water, medical
attendance or other amenity or of any service excluded from the computation of
wages by a general or a special order of the State Government;
3. any contribution paid by the employer to any pension or provident fund, and the
interest which may have accrued thereon;
4. any traveling allowance or the value of any traveling concession;
5. any sum paid to the employed person to defray special expenses entailed on him
by the nature of his employment; or
6. any gratuity payable on the termination of employment in cases other than those
specified in clause (d) of section 2(vi).

The definition of the word "wages" under this Act does not appear to have undergone any
change subsequent to the passing of Payment of Bonus Act in 1965. Statutory bonus of
eight and one-third per cent is payable whether there are profits to the accounting year or
not. After coming into force of the Payment of Bonus Act, bonus has become an implied
term of employment not dependent upon the profits and therefore comes under the

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category of remuneration. Viewed in this light the wages as a general term would include
bonus.

The amount of retrenchment compensation payable to the employees, under Section 25-
F(b) of the Industrial Disputes Act, 1947 are sums payable to the employee on the
termination of the services and are, therefore, wages within the meaning of Payment of
Wages Act, 1936.

The amount of lay-off compensation under Section 25-C of the Industrial Disputes Act,
1947, does not come within the definition of wages as given in this Act. Where the rule
framed under the Motor Transport Workers Act, 1961 provided that each member of
certain class of staff is entitled, as a part of a uniform, two pairs of Pathani chappals a
year, the claim relating to value of Pathani chappals would fall within the definition of
wages.

Having regard to the object, which the legislature had in mind in widening the scope of
the definition, it would not be unreasonable to hold that the word ‘instrument’ has a wider
denotation in the context and cannot be confined only to documents executed as between
the parties. The scheme of the definition and the context or sub-clause (d) read with sub-
clause (6) seems to suggest that the word 'instrument' would include awards made by
Industrial Courts of competent jurisdiction.

When an award is made and it prescribes a new wage structure, in law the old contractual
wage structure becomes inoperative and its place is taken by the wage structure
prescribed by the award. When industrial disputes are decided by industrial adjudication,
and awards are made, the said awards supplant contractual terms in respect of matters
covered by them and are substituted for them. Therefore, the term 'wages' as defined in
Section 2(vi), of the Payment of Wages Act, 1936, as it stood prior to its amendment in
1957, includes wages fixed by an award. Though it is well settled that awards have on
many occasions the effect of altering or modifying the contractual terms of employment
between an industrial employer and his employees, it would be difficult to hold that the
award as such is a contract.

Conclusion

PAYMENT OF WAGES AND DEDUCTIONS FROM WAGES

Define wages as used in the Payment of Wages Act, 1936. What is the time
and mode of payment of wages under the Payment of Wages Act, 1936? Who
is responsible for payment of wages? [10]
Dec 03, 2K, 99, Oct 97

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LABOUR LAW PALLAVI BHOGLE

Introduction: Wages, as defined under S. 2(vi) means all remuneration, whether by way
of salaries, allowances or otherwise, expressed in terms of money or capable of being so
expressed which would, if the terms of employment, express or implied were fulfilled, be
payable to a person employed in respect of his employment or of work done in such
employment

'Wages' includes:
(f) any remuneration payable under any award or settlement between the parties or
order of a Court;
(g) any remuneration to which the person employed is entitled in respect of overtime
work or holidays or any leave period;
(h) any additional remuneration payable under the terms of employment, whether
called a bonus or by any other name;

The definition of wages is not limited to remuneration payable under an agreement or

contract. The amended definition would apply to all kinds of remuneration, whether
arising from a contract, an award, a settlement or under a statute;
(i) any sum which by reason of the termination of employment of the person
employed is payable under any law, contract or instrument which provides for the
payment of such sum, whether with or without deductions, but does not provide
for the time within which the payment is to be made;
(j) any sum to which the person employed is entitled under any scheme framed under
any law for the time being in force.

Responsibility for payment of wages [S. 3]

1. Every employer shall be responsible for the payment of all wages required to be
paid under this Act to persons employed by him and in case of persons employed,

(a) in factories, if a person has been named as the manager of the factory
under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948
(b) in industrial or other establishments, if there is a person responsible to the
employer for the supervision and control of the industrial or other
establishments;
(c) upon railways (other than in factories), if the employer is the railway
administration and the railway administration has nominated a person in
this behalf for the local area concerned;
(d) in the case of contractor, a person designated by such contractor who is
directly under his charge; and
(e) in any other case, a person designated by the employer as a person
responsible for complying with the provisions of the Act,
the person so named, the person responsible to the employer, the person nominated or the
person so designated, as the case may be, shall be responsible for the payment

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2. Notwithstanding anything contained in sub-section (1), it shall be the

responsibility of the employer to make payment of all wages required to be made
under this Act in case the contractor or the person designated by the employer fail
s to make such payment.

In Agarwala P.C. v. Payment of Wages Inspector, M.P. and Others, Jiyajirao Cotton
Mills became a sick company. It owed to its workmen wages for certain periods. Payment
of Wages Inspector initiated action under Section 15 of the Payment of Wages Act, 1936
against the Directors of the Company. The authorities under the Act held the Directors
personally liable to pay the wages. That was affirmed by the High Court. The Directors
filed appeal challenging the judgment of the High Court. They were allowed and the
appeals filed by the functionaries under the Act were dismissed.

Fixation of Wage Period [S. 4]

The person responsible for payment of wages under Section 3 shall fix wage periods in
respect of which wages shall be payable. Such wage period shall not in any case exceed
one month.

Time of payment of wages [S. 5]

If the number of persons employed upon or in any railway, factory or industrial or other
establishment is less than one thousand persons, wages shall be paid before the expiry of
the seventh day after the last day of the wage period. The wages of every person
employed upon or in any other railway, factory or industrial or other establishment shall
be paid before the expiry of the tenth day of the last day of the wage period in respect of
which the wage is payable.

Provided that in the case of persons employed on a dock, wharf, or jetty or in a mine, the
balance of wages found due on completion of the final tonnage account of the ship or
wagons loaded or unloaded, as the case may be, shall be paid before the expiry of the
seventh day of such completion.

In case of the termination of employment of an employee, the wages earned by him shall
be paid before the expiry of the second working day from the day on which employment
is terminated. If the employment of a person in an establishment is terminated due to the
closure of the establishment for any reason other than a weekly or other recognized
holiday the wages earned by him shall be paid before the expiry of the second day from
the day on which his employment is so terminated. All payments of wages shall be made
on a working day.

Section 5(3) provides that the State Government may to such an extent and subject to
such conditions as may be specified in the order exempt the person, responsible for the
payment of wages to persons employed upon any railway (otherwise than in a factory) or
to persons employed as daily rated worker in the Public Works Department of the Central

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Government or the State Government, from the operation of Section 5 in respect of the
wages of any such persons or class of such persons. In the case of persons employed as
daily rated workers as aforesaid, no such order shall be made without consultation of the
Central Government.

Conclusion

What are deductions? Explain the various kinds of deductions under the
Payment of Wages Act, 1936. [16]
Dec 04, 01, Dec 99

Enumerate the authorized deductions from wages under the Payment of

Wages Act, 1936 [6]
05, 95

Introduction: Section 7(1) of the Act provides that wages for employed person shall be
paid to him without deductions of any kind except, those authorized by or under this Act.
Thus Section 7(1) lays down a general prohibition against any deductions from the wages
of a worker. Sub-section (2) enumerates deductions, which are permissible and shall be
made in accordance with the provisions of this Act.

Deduction

Explanation No. 1 to Section 7(1) says that every payment made by the employed person
to the employer or his agent shall, for the purposes of this Act, be deemed to be a
deduction from wages. Explanation No. 2 lays down that any loss of wages resulting
from the imposition, upon a person, of the following penalties shall not be deemed to be a
deduction from wages:
(i) the withholding of increment or promotion including the stoppage of
increment at any efficiency bar;
(ii) the reduction to a lower post or time scale or to a lower stage in a scale;
(iii) suspension

But these penalties shall not be deemed to be deductions provided the rules framed by the
employer for the imposition of any such penalty are in conformity with the requirements,
if any, which may be specified in this behalf by the State Government by notification in
the Official Gazette.

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Reasons for Deductions

Deductions for absence from duty

Clause (b) of Section 7(2) permits deductions for absence from duty.

In the Bank of India, Bombay and another v. T.S. Kelawala Bombay and others, the Bank
employees demanded wage revision and pending acceptance of demand decided to go on
4 hours strike daily. Bank issued a circular to deduct full day’s wages of such employees
who participated in the strike. It was held that strikes and demonstrations are legitimate
forms of protest and they are not banned in the country. By an administrative circular the
legitimate mode of protest allowed and recognized by law cannot be stifled.

It was further held that Payment of Wages Act is regulatory. Section 7(2) read with
Section 9 of the Act provides the circumstances under which and the extent to which
deduction can be made. It is only when the employer has right to make deduction, resort
should be had to the Act to ascertain the extent to which the deduction can be made. No
deduction exceeding the limit provided by the Act is permissible even if the contract so
provides. There cannot be any contract contrary to or in terms wider than the import of
Sections 7 and 9 of the Act. Therefore wage deduction cannot be made under Section
7(2) of the Payment of Wages Act if there is no such power to the employer under the
terms of contract.

Deductions for recovery of loans made from any fund

Clause (ff) of sub-section (2) of Section 7 provides that deduction may be made for
recovery of loans made from any fund constituted for the welfare of labour in accordance
with the rule approved by the State Government, and the interest due in respect thereof.
According to clause (fff) of Section 7(2) deductions are permitted for recovery of loans
granted for house building or other purposes approved by the State Government and the
interest due thereon.

Income tax payable by the employed person may be deducted from his wages according
to clause (g) of sub-section (2) of Section 7. It may be recovered in monthly installments.

Clause (h) of Section 7(2) lays down that deductions, required to be made by order of a
Court or other authority competent to make such order may be made from the wages of
an employed person.

Clause (j) of Section 7(2) lays down that deductions for payments to co-operative
societies approved by the State Government or any officer specified by it in this behalf or
to a scheme of insurance maintained by the Indian Post Office may be made from the
wages of an employed person.

Clause (k) of Section 7(2) provides that deductions may be made with the written
authorization of the person employed for payment of any premium on his life insurance

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policy to the Life Insurance Corporation of India established under the Life Insurance
Corporation Act, 1956; or for the purchase of securities of the Government of India or
any State Government or for being deposited in any Post Office Savings Bank in
furtherance of any saving scheme of any Government.

According to clause (kk) of Section 7(2) deduction may be made, with written
authorization of the employed person for the payment of his contribution to any fund
constituted by the employer or a trade union registered under the Trade Union Act, 1926
for the welfare of the employed persons or the members of their families, or both and
approved by the State Government or any officer specified by it in this behalf during the
continuance of such approval.

Clause (kkk) of Section 7(2) provides that deduction may be made, with the written
authorization of the employed person, for payment of the fees payable by him for the
membership of any trade union registered under the Trade Union Act, 1926.

Deduction for recovery of losses

Clause (m) of Section 7(2) authorizes deduction for recovery of losses sustained by a
railway administration on account of acceptance by the employed person of counterfeit or
base coins or mutilated or forged currency notes

Clause (n) of Section 7(2) authorizes deduction for recovery of losses sustained by
railway administration on account of the failure of the employed person to invoice, to
bill, to collect, or to account for the appropriate charges due to that administration,
whether in respect of fares, freight, demurrage, wharfage and carriage or in respect of
sale of food in catering establishment or in respect of sale of commodities in grain shops
or otherwise.

Clause (o) of Section 7(2) allows deductions for recovery of losses sustained by a railway
administration on account of any rebates, or refunds incorrectly granted by the employed
person where such loss is directly attributable to his neglect or default.

But no such deductions under clause (m), (n) or (o) as aforesaid shall be made without
giving the employed person an opportunity of showing cause against the deduction. Any
such deduction shall only be made in accordance with such procedure as may be
prescribed for the making of deductions.

Clause (p) of Section 7(2) permits any deduction to be made with the written
authorization of the employed person, for the contribution to the Prime Minister's
National Relief Fund or such other Fund as the Central Government may, by notification
in the official Gazette specify.

According to Clause (q) of Section 7(2) deductions may be made for contributions to any
insurance scheme framed by the Central Government for the benefit of its employees.

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Deduction by order of court

In Municipal Corporation v. N.L. Abhyankar, a representative, Union requested the

employer to collect levies from the employee and remit the same to it. The employer
refused to do so and the Union made an application to the Labour Court requesting the
Court to order the employer to accept their request. The Labour Court ordered the
employer to collect the levy as requested by the Union.
In appeal the employer's contention was that no deductions other than those permissible
under the Act can be made. It was held that while it is correct that no deductions can be
made from the wages of an employee, other than those deductions, which have been
specifically set out in Section 7(2) of the Act, clause (h) of sub-section 2 of section 7
clearly allows deductions ‘required to be made by order of a Court or other authorities
competent to make such order.’ In view of this the Labour Courts are competent to make
the order for deduction.

Deduction with consent

In Monsukh Gopinath Jadhav v. W.M. Bapat, it was held that there is nothing illegal in
the action of the employer or the representative union in arriving at a settlement and the
clause in the settlement providing for deduction of certain amount and paying it to the
employees union. Such a settlement does not contravene Section 7 of the Act because this
section permits deduction with the consent of the employees.

Conclusion

State the circumstances under which an employer can impose a fine on any
worker under the Payment of Wages Act, 1936. [10]
Oct 2K

Explain how fines are deducted from wages. [6]

Dec 03, 02

Introduction: In view of Section 7(2) deductions from the wages of an employed person
shall be made only in accordance with the provisions of this Act, and may be in the form
of fines.

Fines [S. 8]

Section 8 lays down the general requirements for imposition and deductions of fines.
Section 8(1) provides that fines shall be imposed on any employed person in respect of
any such acts and omissions on his part as the employer, with the previous approval of

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the State Government or of the prescribed authority, may have specified by notice under
Section 8(2).

A notice specifying such acts and omissions shall be exhibited in the prescribed manner
on the premises in which the employment is carried on or in the case of persons
employed upon a railway (otherwise than a factory) at the prescribed place or places. No
fine shall be imposed on any employed person until he has been given an opportunity of
showing cause against the fine, or otherwise than in accordance with such procedure as
may be prescribed for the imposition of fines.

The total amount of fine which may be imposed in any wage period on any employed
person shall not exceed an amount equal to three percent of the wages payable to him in
respect of the wage period. No fine shall be imposed on any employed person who is
under the age of fifteen years. No fine imposed on any person shall be recovered from
him by installments or after the expiry of ninety days from the day on which it was
imposed. Every fine shall be deemed to have been imposed on the day of the act or
omission in respect of which it was imposed.

All fines and all realizations of the fine shall be recorded in a register to be kept by the
person responsible for the payment of wages under Section 3, in such form as may be
prescribed. All realizations of fine shall be applied only to such purposes beneficial to the
persons employed in the factory or establishments as are approved by the prescribed
authority.

Conclusion

AUTHORITIES UNDER THE ACT

Explain the appointment and powers of the ‘Authorities’ under the Payment
of Wages Act, 1936. [16]
06, 98

Explain the appointment, power and procedure of the authority to hear

claims under the Payment of Wages Act, 1936. [16]
04, 03

Write a note on powers and functions of inspectors under Section 14(4) of

the Payment of Wages Act, 1936. [6]

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Dec 05, Dec 02, 97

Introduction: Section 14 of the Act makes provision for three kinds of Inspectors which
are as follows:
(1) An Inspector of factories appointed under Section 8(1) of the Factories Act shall
be an Inspector for the purposes of this Act in respect of all factories within the
local limits assigned to him.
(2) In respect of all persons employed upon a railway otherwise than in a factory, to
whom this Act applies, the State Government is empowered to appoint Inspector
for the purposes of this Act.
(3) The State Government is further empowered to appoint such other persons, as it
thinks fit, as Inspectors for the purposes of this Act in respect of persons
employed in case of factories and industrial or other establishment as specified by
such Government by a Gazette notification. The State Government shall also
define the local limits within which such inspectors shall exercise their functions.

Powers of the Inspectors

Section 14(4} lays down that an Inspector may:

(a) make such examination and inquiry as he thinks fit in order to ascertain whether
the provisions of this Act or rules made thereunder are being observed;
(b) enter, inspect and search any premises of any railway, factory or industrial or
other establishment at any reasonable time for the purposes of carrying out the
objects of this Act. They have power to take any assistance which they think
necessary for any of the above purposes;
(c) supervise the payment of wages to persons employed upon any railway or in any
factory or industrial or other establishment;
(d) require by a written order the production at such place, as may be prescribed, of
any register or record maintained in pursuance of this Act. He can also take on the
spot or otherwise statement of any persons which he considers necessary for
carrying out the purposes of this Act;
(e) seize or take copies of such registers or documents or portions thereof as he may
consider relevant in respect of an offence under this Act which he has reason to
believe has been committed by an employer;
(f) exercise such other powers as may be prescribed.

But according to sub-section (4) of Section 14 no person shall be compelled to answer

any question or make any statement tending to incriminate himself. The provisions of the
Code of Criminal Procedure, 1973 shall, so far as may be, apply to any search or seizure
under this sub-section as they apply to any search or seizure made under the authority or
a warrant issued under Section 94 of the said Code. Every Inspector shall be deemed to
be public servant within the meaning of the Indian Penal Code, 1860.

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Authority to hear claims [S. 15]

The appropriate Government may, by notification, in the official Gazette, appoint

(a) any Commissioner for Workmen’s Compensation

(b) any officer of the Central Government exercising functions as
(i) Regional Labour commissioner
(ii) Assistant Labour Commisioner with at least two years’ experience
(c) any officer of the State Government not below the rank of Assistant Labour
Commissioner with at least two years' experience;
(d) a presiding officer of any Labour Court or Industrial Tribunal, constituted under
the Industrial Disputes Act, 1947, or under any corresponding law relating to the
investigation and settlement of industrial disputes in force in the State;
(e) any other officer with experience as a Judge of a Civil Court or a Judicial
Magistrate.

as the authority to hear and decide for any specified area all claims arising out of
deductions from the wages, or delay in payment of the wages, of persons employed or
paid in that area, including all matters incidental to such claims:

Provided that where the appropriate Government considers it necessary so to do, it may
appoint more than one authority for any specified area and may, by general or special
order, provide for the distribution or allocation of work to be performed by them under
this Act.

The State Government is further empowered to appoint more than one authority for the
same specified area, and where it so appoints it shall, by general or special order, provide
for the distribution or allocation of work to be performed by them under this Act.

Conclusion

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