Q- Define and explain the term “industry” as per the Industrial Disputes Act, 1947 along with

relevant case laws?

Ans:

Introduction

During post-independence era we have witnessed the development of a new jurisprudence, namely
the 'Industrial Law'. The Industrial Law in pre-independence days was in a rudimentary form. But
later, with the development of industry, the Industrial Law developed side by side. The growth of this
law was slow in the beginning but gained its pace in the recent years as is evident from the bulk of
the cases before the Supreme Court on Industrial law matters. A large section of the Indian
population is affected by Industrial Laws. Some like industrialists and their workmen are directly
affected and many others are unconsciously affected by these laws. The economic growth of a
country depends upon the industrial development. Therefore, the progress of a country being
dependent upon the development of industry, the Industrial Laws play an important role in the
national economy of a country.

Objectives:
The object of all labour legislations is to ensure fair wages and to prevent disputes so that production
might not be adversely affected. The principal objects of the Act as analyzed by the Supreme Court
are as follows:
1. The promotion of measures for securing amity and good relations between the employer and
workmen;
2. An investigation and settlement of industrial disputes between employers and employers,
employers and workmen or workmen and workmen with a right of representation by a registered
Trade Union or Federation of Trade Unions or Association of employers or a federation of association
of employers;
3. The prevention of illegal strikes and lock-outs;
4. Relief to workmen in the matter of lay-off, retrenchment and closure of an undertaking;
5. Collective bargaining.
The Industrial Disputes Act is a progressive measure of social legislation aiming at the amelioration of
the conditions of workmen in industry.

Main Features of the Act:

Some of the distinguishing features of the Industrial Disputes Act, 1947 may be summarized as under:
1. Any industrial dispute may be referred to an industrial tribunal by an appropriate government for
adjudication if the appropriate government deems it expedient so to do.
2. An award shall be binding on both the parties to the dispute for the specified period not exceeding
one year. It shall be normally enforced by the Government.
3. Strike and lock-outs are prohibited: (i) during the pendency of conciliation and adjudication
proceedings; (ii) during the pendency of settlements reached in the course of conciliation
proceedings; and (iii) during the pendency of awards of Industrial Tribunal declared binding by the
appropriate Government.
4. In public interest or emergency the appropriate Government has power to declare the transport
(other than railways), coal, cotton textiles, foodstuffs and iron and steel industries to be a public
utility service for the purposes of this Act, for a maximum period of six months.
5. In case of lay off or retrenchment of workmen the employer is required to pay compensation to
them.
6. Provision has also been made for payment of compensation to workmen in case of transfer or
closure of an undertaking.
7. A number of authorities such as, Works Committee, Conciliation Officers, Board of Conciliation,
Courts of Inquiry, Labour Courts, Tribunal and National Tribunal are provided for settlement of
industrial disputes. The nature of powers, functions and duties of these authorities differ from each
other but each one of them plays an important role in ensuring industrial peace.

According to Sec 2(j) of Industrial Disputes Act, 1947 Industry means any business, trade,
undertaking, manufacture or calling of employers and includes any calling, service, employment,
handicraft, or industrial occupation or avocation of workmen. This definition is in two parts:

1) Industry means any business, trade, undertaking, manufacture or calling of employers.

2) Provides that it includes any calling, service, employment, handicraft, or industrial occupation or
avocation of workmen.
But the second part standing alone cannot define industry. The concept that “industry is ordinarily
something which employers create or undertake” is gradually yielding place to the modern concept
which regards industry as a joint venture undertaken by employers and workmen, an enterprise
which belongs equally to both. An industry exists only when there is relationship between employers
and employees, the former engaged in business, trade, undertaking, manufacture or calling of
employees and the later engaged in any calling, service, employment, handicraft or industrial
occupation or avocation.

Thus, there must be an enterprise in which the employers follow their avocations as detailed in the
definition and employ workmen.

‘Undertaking’ means anything undertaken, any business, work or project which one engages in or
attempts, or an enterprise. But all decisions of the Supreme Court are agreed that an undertaking to
be within the definition in Section 2(j) must be read with subject to a limitation, namely, that it must
be analogous to trade or business.

The first principle was stated in Hospital Mazdoor Sabha case as follows:

As a working principle it may be stated that an activity systematically or habitually undertaken for the
production or distribution of goods or for the rendering of material services to the community at
large or a part of such community with the help of employees is an undertaking. Such an activity
generally involves the co-operation of the employer and the employees; and its object is the
satisfaction of material human needs. It must be organized or arranged in a way trade or business is
generally organized or arranged. It must not be casual, nor must it be for one is self nor for pleasure.

Thus the manner in which the activity in question is organized or arranged, the condition of the co-
operation between the employer and the employee necessary for its success and its object to render
material service to the community can be regarded as some of the features which are distinctive of
activities to which
Section 2(j) applies."
In Bangalore Water Supply v. A. Rajappa a seven Judges' Bench of the Supreme Court exhaustively
considered the scope of industry and laid down the following test which has practically reiterated the
test laid down in Hospital Mazdoor Sabha case:
Triple Test.-Where there is (i) systematic activity, (ii) organized by co-operation between employer
and employee (the direct and substantial element is chimerical), (iii) for the production and/or
distribution of goods and services calculated to satisfy human wants and wishes, prima facie, there is
an "industry" in that enterprise. This is known as tripple test.
The following points were also emphasised in this case:
(1) Industry does not include spiritual or religious services or services geared to celestial bliss, e.g.,
making, on a large scale, prasad or food. It includes material services and things.
(2) Absence of profit motive or gainful objective is irrelevant, be the venture in the public, joint,
private or other sector.
(3) The true focus is functional and the decisive test is the nature of the activity with special emphasis
on the employer-employee relations.

(4) If the organisation is a trade or business it does not cease to be one because of philanthropy
animating the undertaking.

Therefore the consequences of the decision in this case are that professions, clubs, educational
institutions co-operatives, research institutes, charitable projects and other kindered adventures, if
they fulfil the triple test stated above cannot be exempted from the scope of Section 2(j) of the Act.

Dominant nature test.-Where a complex of activities, some of which qualify for exemption, others
not, involve employees on the total undertaking some of whom are not workmen or some
departments are not productive of goods and services if isolated, even then the predominant nature
of the services and the integrated nature of the departments will be true test, the whole undertaking
will be "industry" although those who are not workmen by definition may not benefit by status.2

Exceptions.-A restricted category of professions, clubs, co-operatives and even gurukulas and little
research labs, may qualify for exemption if in simple ventures, substantially and, going by the
dominant nature criterion substantively, no employees are entertained but in minimal matters,
marginal employees are hired without destroying the non-employee character of the unit.

Cases overruled-The decisions of Supreme Court in Management of Safdarjung Hospital, Delhi v.

Kuldip Singh, N.U.C. Employees v. Industrial Tribunal? Madras Gymkhana Club Employees Union v.
Management, University of Delhi v. Ram Nath, Dhanrajgiri Hospital v. Workmen 10 and such other
rulings whose ratio runs counter to the principles enunciated in Bangalore Water Supply v. A.
Rajappa case have been overruled.

Is Municipal Corporation an Industry.-

Nagpur Corporation v. Its Employees is another important judicial decision on the point. In this case
the question for consideration was the meaning of the expression "analogous to the carrying on of a
trade or business" and the issue whether all the departments of a Municipal Corporation are induced
in the definition of industry. Answering the first question Supreme Court explained that as far the
meaning of 'analogous to the carrying on of a trade or business' is concerned the emphasis was more
on "the nature of the organized activity implicit in trade or business than to equate the other
activities with trade or
business."
The following important observations were made by the Supreme Court :

(1) A Corporation is an "industry". But "industry" cannot include what are called the regal or
sovereign functions of the State. The regal functions described as "primary and inalienable
functions of the State" though delegated to a Corporation are necessarily excluded from the
purview of the definition.' Such regal functions shall be confined to legislative power,
administration of law and judicial
power.
(2) The definition cannot be confined to trade or business or activities analogous to trade or
business. If a service performed by an individual is an industry, it will continue to be so even if it is
undertaken by a Corporation. It is not necessary that the service must
be trade in a different garb.
(3) Neither the investment of capital, nor the existence of profit making motive is a necessary
element in the modern conception of industry? Monetary consideration for service is, therefore,
not essential characteristic of industry in a modern State.
(4) If a service rendered by a Corporation is an "industry" the employees in that department
connected with the service whether financial, administrative or executive, would be entitled to
the benefit of the
Act.
(5) If a department of a municipality discharges many functions, some pertaining to industry as
 defined in the Act, and others non-industrial activities, the predominant functions of the
department shall be the criterion for the purposes of this Act.

Is hospital an industry.-

The question whether hospital is an industry or not has come for determination by the Supreme
Court on a number of occasions and the uncertainty has been allowed to persist because of
conflicting judicial decisions right from Hospital Mazdoor Sabha case to the Bangalore Water Supply
v. A. Rajappa. In State of Bombay v. Hospital Mazdoor Sabha case, the Hospital Mazdoor Sabha was a
registered Trade Union of the employees of hospitals in
the State of Bombay. The services of two of its members were terminated by way of retrenchment by
the Government and the Union claimed their reinstatement through a writ petition. It was urged by
the State that the writ application was misconceived because hospitals did not constitute an industry.
The group of hospitals were run by the State for giving medical relief to citizens and imparting
medical education. The Supreme Court held the group of hospitals to be industry and observed as
follows:
(1) The State is carrying on an 'undertaking' within Section 2(j) when it runs a group of hospitals for
purpose of giving medical relief to the citizens and for helping to impart medical education.
(2) An activity systematically or habitually undertaken for the production or distribution of goods or
for the rendering of material services to the community at large or a part of such community with the
help of employees is an undertaking.
(3) It is the character of the activity in question which attracts the provisions of Section 2(j). Who
conducts the activity and whether it is conducted for profit or not make a material difference.
(4) The conventional meaning attributed to the words, 'trade and business' has lost some of its
validity for the purposes of industrial adjudication...it would be erroneous to attach undue
importance to attributes associated with business or trade in the popular mind in days gone by.
Applying the above principles an Ayurvedic College of Pharmacy manufacturing medicines for sale
and for benefit of students of the college besides other activities of the college was held to be an
industry.
Hospital Mazdoor Sabha case was overruled by Safdarjung Hospital case. But Safdarjung Hospital and
Dhanraj Giri Hospital cases have now been overruled in Bangalore Water Supply v. A. Rajappa and
Hospital Mazdoor Sabha case has been rehabilitated.
Educational Institutions.-

In University of Delhi v. Ram Nath the respondent Mr. Ram Nath was employed as driver by
University College for women. Mr. Asgar Mashih was initially employed as driver by Delhi University
but was later on transferred to the University College for women in 1949. The University of Delhi
found that running the busess for transporting the girl students of the women's college has resulted
in loss. Therefore it decided to discontinue that facility and consequently the services of the above
two drivers were terminated. The order of termination was challenged on the ground that the drivers
were workmen and the termination of their services amounted to retrenchment. They demanded
payment of retrenchment compensation under Section 25-F of the Act by filing petitions before the
Industrial Tribunal. The Tribunal decided the matter in favour of the drivers and hence the University
of Delhi challenged the validity of the award on the ground that activity carried work of imparting
education is more a mission and a vocation than profession n by the University is not industry. It was
held by the Supreme Court that the or trade or business and therefore University is not an industry.
But this case has been overruled by the Supreme Court in Bangalore Water Supply case and in view of
the triple test laid down in Bangalore Water Supply case even a University would be an industry
although such of its employees as are not workmen within the meaning of Section 2(s) of the Act,
may not get the desired benefits to which a workman in an industry may be entitled to.

But a society which is established with the object of catering to the intellectual as distinguished from
material needs of men by promoting general knowledge of the country by conducting research and
publishing various journals and books is not an industry. Even though it publishes books for sale in
market, when it has no press of its own the society cannot be termed even an 'undertaking' for
selling of its publication was only an ancillary activity and the employees were engaged in rendering
clerical assistance in this matter just as the employees of a solicitor firm help the solicitors in giving
advice and service.
Since University of Delhi v. Ram Nath has been overruled by the Supreme Court in Bangalore Water
Supply v. A. Rajappa the present position is that the educational institutions including the university
are industry in a limited sense. Now those employees of educational institutions who are covered by
the definition of workman under Section 2(s) of the Industrial Disputes Act, 1947 will be treated as
workman of an industry.
Is government department an industry-

In State of Rajasthan v Ganeshi Lal, the Labour Court had held the Law Department of Government as
an industry. This view was upheld by the Single Judge and Division Bench of the
High Court. It was challenged by the State before Supreme Court. It was held that the Law
department of Government could not be
considered as an industry. Labour Court and the High Court have not indicated as to how law
department is an industrt. They merely stated that in some cases certain departments have been
held to be covered by the expression industry in some decisions. It was also pointed out that a
decision is a precedent on its own facts. Courts should not place reliance on decisions without
discussing as to how the factual situation fits in with the fact situation of the decision on which
reliance is placed.

Clubs.-

Clubs or self-service institutions or non-proprietary member's club will be industry provided they fulfil
the triple test laid down in Bangalore Water Supply v. A. Rajappa.2 The Cricket Club of India case and
Madras Gymkhana Club case (discussed below) which were the two leading cases, on the point so far
have been overruled by Bangalore Water Supply case. In Cricket Club of India v. Bombay Labour
Union3 the question was whether the Cricket Club of India, Bombay which was a member's club and
not a proprietary club, although it was incorporated as a company under the Companies Act was an
industry or not. The club had membership of about 4800 and was employing 397 employees. It was
held that the club was a self service institution and not an industry and "it was wrong to equate the
catering facilities provided by the club to its members or their guests (members paying for that), with
a hotel. The catering facility also was in the nature of self service by the club to its members". This
case has now been overruled.

Madras Gymkhana Club Employees' Union v. Management,5 is another case on this point. This was a
member's club and not a proprietary club with a membership of about 1200. Its object was to
provide a venue for sports and games and facilities for recreation and entertainment. It was running a
catering department which provided food and refreshment not only generally but also on special
occasion. It was held that the club was a member's self-serving institution and not an industry. No
doubt the material needs or wants of a section of the community were catered but that was not
enough as it was not done as part of trade or business or as an undertaking analogous to trade or
business. This case has also been overruled. Now it is not necessary that the activity should be a trade
or business or analogous to trade or business."
It may, therefore, be submitted that both Cricket Club of India and Madras

Gymkhana Club would now be an industry because they fulfil the triple test laid down in Bangalore
Water Supply case. Both are systematically organised with the co-operation of employer and
employee for distribution of service to satisfy
human wishes.1

Solicitor's Firm or Lawyers Office.-

In N.N.U.C. Employees v. Industrial Tribunal, the question was whether a solicitor's firm is an industry
or not. It was held that a solicitor's firm carrying on the work of an attorney is not an industry,
although specifically considered it is organised as an industrial concern. There are different categories
of servants employed by a firm, each category being assigned separate duties or function. But the
service rendered by a solicitor functioning either individually or working together with parties is
service which is essentially individual; it depends upon the professional equipment, knowledge and
efficiency of the solicitor concerned. Subsidiary work which is purely incidental type and which is
intended to assist the solicitor in doing his job has no direct relation to the professional service
ultimately rendered by the solicitor. The work of his staff has no direct or essential nexus or
connection with the advice which it is the duty of the solicitor to give to his client. There is, no doubt,
a kind of co-operation between the solicitor and his employees, but that co-operation has no direct
or immediate relation to the professional service which the the solicitor renders to his client. This
case has been overruled in Bangalore Water Supply case3 and now a solicitors' firm employing
persons to help in catering to the needs of the clients is an industry.*

Amended definition of Industry

Industry means any systematic activity carried on by

co-operation between an employer and his workmen (whether such workmen by are employed by
such employer directly or by or through any agency, including a contract) for the production, supply
or distribution of goods or services with a view to satisfy human wants or (wishes not being wants or
wishes which are merely spiritual or religious in nature), whether or not,—
(i) any capital has been invested for the purpose of carrying on such activity; or
(ii) such activity is carried on with a motive to make any gain or profit,
and includes-
(a) any activity of the Dock Labour Board established under Section 5-A of the Dock Workers
(Regulation of Employment) Act, 1948: (b) any activity relating to the promotion of sales or business
or both carried on by an establishment,
but does not include-
(1) any agricultural operation except where such "agricultural operation" is carried on in an
integrated manner with any other activity (being any such activity as is referred to in the foregoing
provisions of this clause) and such other activity is the predominant one.
Explanation. For the purposes of this sub-clause "agricultural operation" does not include any activity
carried on in a plantation as defined in clause (f) of Section 2 of the Plantation Labour Act, 1951; or
(2) hospitals or dispensaries; or
(3) educational, scientific, research or training institutions; or
(4) institutions owned or managed by organisation wholly or substantially engaged in any charitable,
social or philanthropic
service; or
(5) khadi or village industries; or
(6) any activity of the Government relatable to the sovereign functions of the Government including
all the activities carried on by the departments of the Central Government dealing with defence
research, atomic energy and space; or
(7) any domestic service; or
(8) any activity, being a profession practised by an individual or body of individuals, if the number of
persons employed by the individual or body of individuals in relation to such profession is less than
ten; or

(9) any activity, being an activity carried on by a co-operative society or a club or any other like body
of individuals, if the number of persons

employed by the co-operative society, club or other like body of individuals also in relation to such
activity is less than ten.
The Industrial Disputes (Amendment) Act, 1982 enacts altogether a new definition of Industry. This
amended definition has not been enforced till now. It nullifies the effect of many judicial decisions
and attempts to clarify the conflicting views arising out of different interpretations of the word
'industry' adopted by the Supreme Court in various cases. On account of conflicting judicial decisions
it had become difficult to understand the meaning of the word industry. The amended definition
mostly incorporates the views of the Supreme Court expressed in Bangalore Water Supply v. A.
Rajappa.

Q- Explain in detail the procedure for registration of the Trade Unions?

Ans:

Introduction:

The contribution of the capital and labour in any industry is equally important. Therefore, the
prosperity of an industry depends upon the co-operation of its two components—the capital and the
labour. As disputes between the capital and labour are inevitable so the object of any industrial
legislation is to ensure smooth relationship between the two and to strive for settlement of any
dispute by resorting to negotiation and conciliation. The importance of Trade Union lies in the fact
that they encourage such collective bargaining as ensures better terms and conditions of
employment to the labour, and at the same time endeavours for maintenance of good relations
between employer and employees. In their endeavour to secure better working conditions, privileges
and amenities to the labour, the Trade Unions adopt certain methods, namely, legislation, collective
bargaining, mutual insurance, and strike.

Indian Trade Union (Amendment) Act, 1947:

The following provisions were made in the Amending act-

1) Recognition of Trade Unions by employers. Any dispute regarding recognition was to be decided
by the Labour court set up under the act.
2) Recognition was to be granted if the Union applying for such recognition was representative of all
workers in the concerned establishment or industry.
3) If a registered trade union has applied for recognition to the employer, but failed to get
recognition within three months, it could apply to the labour court set up for the formal
recognition by the employer. The required particulars were to be furnished along with any such
 application. If the labour court, after necessary investigation is satisfied that the Union fulfils all
the conditions necessary for recognition by the employer, it shall pass an order directing such
recognition.
4) The executive of a recognised Trade Union has the right of negotiation with the
employer in respect of any matter connected with the employment, non-employment, terms of
employment, conditions of work of all or any of its members.
5) Certain acts amounting to unfair labour practices on the part of the Trade Unions and certain
others on the part of the employers were declared in the Act. The Act further refrains both the
Trade Union and the employer to desist from unfair practices. The recognition of any Trade Union
found guilty of unfair practice can be withdrawn on an application by the employer to the
Registrar. In case of an employer found guilty of unfair practice a fine upto Rs. 1000/- may be
imposed by the Registrar on an application by the Trade Union.
6) Some of the acts which were declared to be unfair practices are as follows;
(i)participation, support, or instigation of an irregular strike;
(ii)submission of returns containing false statement;
(iii)discharge or discrimination against any officer of a recognized Trade Union.
(iv)interference with the formation or administration of a Trade Union.

Trade Union. –

Section 2 (h) defines “Trade Union" analyzed into the following ingredients: which can be
(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 the sale of the goodwill of a business or instruction in any
profession, trade, or handicraft.
Sec. 14. Certain Acts not to apply to registered Trade Union. —

The following Acts shall not apply to any registered Trade Union, and the registration of any such
Trade Union under any such Act shall be void. The Acts
are as follows: -
(i) The Societies Registration Act, 1860;

(ii) The Co-operative Societies Act, 1912;

(iii) The Companies Act, 1956.

REGISTRATION OF TRADE UNIONS

Sec. 3. Appointment of Registrars. -

The appropriate Government shall appoint a person to be the Registrar of Trade Unions for each
State. The appropriate Government is also authorized to appoint Additional and Deputy Registrars of
Trade Unions. They shall work under the superintendence and direction of the Registrar. The
Appropriate Government shall by an order specify and define the local limits within which any
Additional or Deputy Registrar shall exercise and discharge his powers and functions. The Additional
and Deputy Registrar shall exercise and discharge such powers and functions of the Registrar as may
be specified by an order issued by the appropriate Government. If any such Additional or Deputy
Registrar is appointed and exercises and discharges the powers and functions of a Registrar in an area
within which the registered office of a Trade Union is situated, he shall be deemed to be Registrar in
relation to the Trade Union for the purposes of this
Act.

Sec. 4. Mode of Registration. -

A Trade Union may be a unregistered or a recognized Trade Union. There is basic distinction between
registered, these different Trade Unions. The members of a recognized 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.

Sec. 5. Application of Registration. -

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.

Sec. 6. Provisions to be contained in the rules of a Trade Union. -

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 under section 22 to form the executive of the Trade
Union;
(ee) the payment of a minimum subscription by members of the Trade Union which shall not be less
than-
(i) one rupee per annum for rural workers;
(ii) three rupees per annum for workers in other unorganized
sectors; and
(iii) twelve rupees per annum for workers in any other case;

(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;
(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; and (j) the manner in which the Trade Union
may be dissolved.

Sec. 7. Power to call for further particulars and to require alteration of name-

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.

Sec. 8. Registration-

The Registrar will register the Trade Union if he is 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.
Sec. 9. Certificate of registration. -

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.

Sec. 9A. Minimum requirement about membership of a Trade Union-

A registered Union of workmen shall always continue to have not less than ten per cent. or one
hundred of the workmen, whichever is less, subject A minimum of seven, engaged or employed in an
establishment or industry with which it is connected, as its members.

Sec. 10. Cancellation of Registration. -

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.
(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 most 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.
Sec. 11. Appeals. -

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 I
cancellation of a certificate of registration has the right of appeal. The appeal should be preferred
within the prescribed period. The proceedings by way of appeal must be started within sixty days of
the date on which the Registrar
passed the order against which appeal is made.

The expression "High Court" used in section 11 of the Indian Trade Unions Act means and includes
the High Court in its original as well as appellate jurisdiction. The appeal shall be made :-
(a) where the head office of the Trade Union is situated within the limits of a Presidency town to the
High Court; or
(aa) where the head office is situated in an area, falling within the jurisdiction of a Labour Court or an
Industrial Tribunal, to that Court or Tribunal, as the case may be.
(b) where the head office is situated in any other area, to such court, not inferior to the court of an
additional or assistant judge of a principal Civil Court of original jurisdiction, as the appropriate
Government may appoint in this behalf for that area.

The appellate court may dismiss the appeal or pass an order directing the Registrar to register the
Union and to issue a certificate of registration. It may also set aside the order for withdrawal or
cancellation of the certificate. The Registrar shall comply with any such order passed by the appellate
Court.

Sec. 12. Registered office. -

All communications and notices to a registered Trade Union may be addressed to its registered office.
Notice of any change in the address of the head office shall be given within fourteen days of such
change to the Registrar in writing. The change in address shall be recorded in the
register referred to in section 8 of the Act.
Benefits after registration:
Sec. 13. Incorporation of registered Trade Union. -

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

(1) It becomes a body corporate by the name under which it is registered, (2) It gets perpetual
succession and common seal.
(3) It can acquire and hold both movable and immovable property,
(4) It can contract through agents.
(5) It can sue and be sued in its registered name.

Q- Define strike and lockout along with appropriate provisions of Industrial Dispute Act, 1947 and
supporting case laws?

Ans:

Strike-

Introduction:

Every right comes with its own duties. Most powerful rights have more duties attached to them.
Today, in each country of globe whether it is democratic, capitalist, socialist, give right to strike to the
workers. But this right must be the weapon of last resort because if this right is misused, it will create
a problem in the production and financial profit of the industry. This would ultimately affect the
economy of the country. Today, most of the countries, especially India, are dependent upon foreign
investment and under these circumstances it is necessary that countries who seeks foreign
investment must keep some safeguard in their respective industrial laws so that there will be no
misuse of right of strike. In India, right to protest is a fundamental right under Article 19 of the
Constitution of India. But right to strike is not a fundamental right but a legal right and with this right
statutory restriction is attached in the industrial dispute Act, 1947.

What is a strike?

A strike is a collective action taken by a group of workers, often organized by a labour union or
worker association, to stop working in protest against their employer’s policies, working conditions or
other labour-related issues.

Strikes are a way for employees to exert pressure on their employers to address their grievances,
negotiate better terms and improve working conditions.
While strikes can effectively lead to better working conditions, they can also have downsides for both
workers and employers. They can result in lost wages, disrupted production and harm to a company’s
reputation. Employers may respond to strikes by hiring replacement workers or pursuing legal action
against striking employees.

Definition of strike (Industrial Disputes Act, 1947):

According to Section 2(q) strike means:

1) Cessation of work by a body of persons employed in any industry acting in combination; or

2) A concerted refusal of any number of persons who are or have been employed in any industry to
continue to work or to accept employment; or
3) A refusal under a common understanding of any number of persons who are or have been
employed in industry to continue to work or to accept employment.

ESSENTIAL OF STRIKE

According to the definition stated to constitute strike, the following are to be embedded together-

1) In State of Bihar vs. Deodas Jha it was held that the length of the time of strike has nothing to do
with the meaning of strike, even stoppage or refusal to work for a short amount of time would
amount to strike.
2) In Kameswar Prasad vs. State of Bihar, the supreme court stated that the right to strike is not a
fundamental right, it is only a way of medium for the workmen to put forth their grievances in
front of the employers and to get them resolved.

The analysis of the definition would show that there are the following essential requirements for
the existence of a strike:

(1) There must be cessation of work.

(2) The cessation of work must be by a body of persons employed in any industry;

(3) The strikers must have been acting in combination;

(4) The strikers must be working in any establishment which can be called industry within the
meaning of Section 2(j); or

(5) There must be a concerted refusal; or

(6) Refusal under a common understanding of any number of persons who are or have been so
employed to continue to work or to accept employment;

(7) They must stop work for some demands relating to employment, non-employment or the terms
of employment or the conditions of labour of the workmen.

Types of Strike:

1) General Strike: This is the one, where workmen join together for common cause and stay away
from work, depriving the employer of their labour needed to run his factory.
A) Token Strike: It is for a day or a few hours or for a short duration because its main object is to
draw the attention of the employer by demonstrating the solidarity and co-operation of the
employees.
2) Stay-in-Strike: In this type of strikes, workers gather at their workplace but refrain from working
or leaving the premises. This situation can become complicated legally when workers refuse to
vacate the workplace, essentially squatting on the premises. This can be considered a form of
criminal trespass. Strikes, especially in banks, are sometimes intended to undermine the bank’s
reputation in the market. Prolonged strikes can harm the employer’s reputation and even lead to
negative incidents.
3) Go-Slow: A “go-slow” strike involves workers intentionally slowing down the production process
while pretending to be engaged in their work. This is considered a harmful practice that
dissatisfied and disgruntled workers may resort to. It can be seen as a form of dishonesty because
it results in delayed production, reduced output and often causes machinery to operate at a
lower speed, which can be detrimental to the equipment. Despite this deliberate slowdown,
workers are still entitled to their full wages, benefits, and other conditions of service that they
would normally receive. However, management does not achieve the expected level of
production for the salaries they pay in these types of strike.
4) Sympathetic Strike: A sympathetic strike is resorted to in sympathy of other striking workmen. Its
aim is to encourage or to extend moral support to or indirectly to aid the striking workmen. The
sympathisers resorting to such strike have no demand or grievance of their own.
5) Hunger Strike: In hunger strike a group of workmen resort to fasting on or near the place of work
or the residence of the employer with a view to coerce the employer to accept their demands.
6) Work to rule: The employees in case of “work to rule” strictly adhere to the rules while
performing their duties which ordinarily they do not observe. Thus, strict observance of rules
 results in slowing down the tempo of work, causes inconvenience to the public and
embarrassment to the employer. It is no strike because there is no stoppage of work at all.

Procedure of Strike (Strike Notice), Provision of Valid Strike:

Whenever employees want to go on a strike, they must follow the procedure provided by the act
otherwise their strike would deem to be an illegal strike.

Section 22(1) of the

Industrial Dispute
Act, 1947 put certain
prohibitions on the
right to strike. It
provides that no
person employed in
public utility service
shall go on strike in
breach of
contract:
(a) Without giving to
employer notice of
strike within six
weeks before
striking;
or
(b) Within fourteen
days of giving such
notice; or
(c) Before the expiry
of the date of strike
specified in any such
notice as
aforesaid; or
(d) During the
pendency of any
conciliation
proceedings before a
conciliation
officer and seven
days after the
conclusion of such
proceedings.
It is to be noted that
these provisions do
not prohibit the
workmen from going
on strike but require
them to fulfill the
condition before
going on strike.
Further
these provisions
apply to a public
utility service only.
The Industrial
Dispute Act,
1947 does not
specifically mention
as to who goes on
strike. However, the
 definition of strike
itself suggests that
the strikers must be
persons, employed
in any industry to do
work
Section 22(1) of the Industrial Dispute Act, 1947 put certain prohibitions on the right to strike. It
provides that no person employed in public utility service shall go on strike in breach of contract:

(a) Without giving to employer notice of strike within six weeks before striking; or

(b) Within fourteen days of giving such notice; or

(c) Before the expiry of the date of strike specified in any such notice as aforesaid; or

(d) During the pendency of any conciliation proceedings before a conciliation officer and seven days
after the conclusion of such proceedings.

It is to be noted that these provisions do not prohibit the workmen from going on strike but require
them to fulfil the condition before going on strike. Further these provisions apply to a public utility
service only.

Meaning of the terms “within six weeks before striking” and “within fourteen days of giving such
notice”-

Taking the two provisions together it means that a person employed in a public utility service may go
on strike on giving to employer notice of strike provided:

1) The strike takes place within 6 weeks of the giving of notice

2) 14 days have expired after such notice

This minimum period of fourteen days after notice in which workmen are prohibited to go on a strike
is prescribed with a view to give some time to the employer to investigate the charter of demands of
the workmen and to give some time to the Labour Department of Government to intervene to avoid
strike by finding out some compromise formula.

Prohibition of Strike or Lockout (Sec 23):

General prohibition of strike and Lock-out-

The provisions of section 23 are general in nature. It imposes general restrictions on declaring strike
in breach of contract in the both public as well as non- public utility services in the following
circumstances mainly: -

No workman who is employed in any industrial establishment shall go on strike in breach of contract
and no employer of any such workman shall declare a lock- out-

I. during the pendency of conciliation proceedings before a Board and seven days after
the conclusion of such proceedings;

II. during the pendency of proceedings before a Labour Court, Tribunal or National
Tribunal] and two months after the conclusion of such proceedings;

III. during the pendency of arbitration proceedings before an arbitrator and two months
after the conclusion of such proceedings, where a notification has been issued under
sub-section (3A) of section 10A; or] [10A. Voluntary reference of disputes to arbitration]

IV. during any period in which a settlement or award is in operation, in respect of any of the
matters covered by the settlement or award.

Illegal Strike and Lock-out (Sec 24):

Section 24 provides that a strike in contravention of section 22 and 23 is illegal. This section is
reproduced below:

(1) A strike or a lockout shall be illegal if,

(i) It is commenced or declared in contravention of section 22 or section 23; or

(ii) It is commenced in contravention of Section 23 in any industrial establishment.

(iii) It is continued in contravention of an order made by the appropriate government under section
10(3) or sub section (4-A) of section 10-A of the act.

Punishment of illegal strike, Result of illegal strike:

Sec 26

Penalty for illegal strike:

Any workman found guilty of participating in an illegal strike shall be punishable with imprisonment
for a term which may extend to one month or with a maximum fine of rupees fifty or with both.

Wages
Workmen participating in illegal strike shall not be entitled to wages. Supreme Court held that
workmen shall be entitled to wages for the period of stike only when the strike is valid and legal.

Dismissal
The workmen participating in illegal strike can be dismissed or discharged. The workman can be
reappointed ofter the termination of strike. It shall be depend upon the facts. Previous conduct of
workmen shall be considered before dismissing for illegal strike.

Lockout:

Introduction-

Lock-out is a weapon in the hands of the employer, like that of strike in the armoury of workmen
used for compelling persons employed by him to accept his terms or conditions of or affecting
employment. In lock-out an employer shuts down his place of business as result of reprisal, or as an
instrument of coercion or as a mode of exerting pressure upon the employees with a view to dictate
his own terms to them.

Definition of Lock-out Sec 2(I):

Section 2(I) of The Industrial disputes act, 1947 defines lockout as a “temporary closing place of
employment, suspension of work, or the refusal to work by the employer to continue to employ any
number of persons employed by him during his course of employment.” A lockout is when an
employer temporarily closes a workplace or stops work. It’s different from permanently closing a
business. Before 1860, a lockout was referred to as a “turn-off.” A lockout serves as the employer’s
counterpart to a strike.

ESSENTIALS OF LOCKOUT

The following is to be satisfied to constitute a lockout-

1.(i) Temporary closing of place of employment by the employer or,

(ii) Suspension of work by the employer or,

(iii) Refusal by an employer to continue to employ any number of persons employed by him.

2. the above mentioned should be motivated by coercion.

3. an industry as per defined in the act.

4. a dispute in the industry.

Procedure of Lock-Out, Provision of Valid Lock-Out (Sec 22(2)):

Section 22 (2) of the Act provides that no employer carrying on any public utility service shall lock out
any of his workmen:

1) Without giving them notice of lockout as hereinafter provided, within six weeks before locking
out; or
2) Within 14 days of giving notice; or
3) Before the expiry of the day of lockout specified in any such notice as aforesaid; or
4) During the pendency of any conciliation proceedings before a Conciliation Officer and seven
days after the conclusion of such proceedings.

It makes clear that the employer has to comply with the same conditions before he declares lockout
in his industrial establishment which the workmen are required to comply with before they go on
strike. The conditions for both the parties are same.

In the case of General Labour Union (Red Flag) v/s B. V. Chavan And Ors on 16 November 1984, the
Supreme Court of India ruled that imposing and continuing a lockout that is deemed illegal under the
Act is an unfair labour practice.
 In Sri Ramchandra Spinning Mills v/s State of Madras, the Madras High Court included the deleted
portion in the definition to interpret the term “lockout.” According to the Court, even if a flood, fire,
or natural disaster causes the closure of the workplace or the suspension of work or the employer
refuses to continue employing previous workers, it would still be considered a lockout, subjecting the
employer to penalties under the Act. This demonstrates that the current definition does not fully
convey the concept of a lockout.

After this you must write sec 23 and sec 24 of these acts again which I have already written above.

Punishment for illegal Lock-out:

Sec 26(2):

An employer shall be punishable with imprisonment extending to one month or with a maximum fine
of rupees one thousand or with both if,

1) Such employer commences, continues, or otherwise acts in furtherance of a lock-out; and

2) Such lock-out is illegal under this act.

Additional Provisions Related to Strike and Lock-Out (Extra Penalties):

Sec 25 Prohibition of financial aid to illegal strikes and lock-outs-

No person shall knowingly spend any money in direct furtherance or support an illegal strike or lock-out.

Sec 27 Penalty for instigation etc-

Anyone who encourages, incites, or lures others to take part in illegal strikes or lockouts commits a
crime and can be punished with imprisonment for up to six months, a fine of up to one thousand
rupees, or both.

Sec 28 Penalty for giving financial aid to illegal strikes and lock-outs-

Any person who knowingly expends or applies any money in direct furtherance or support of any illegal
strike shall be punishable which may extend to six months imprisonment or one thousand rupees fine or
both.
Sec 31 Penalty for other offences-

In Bharat Petroleum Corporation Ltd. vs. Petroleum Employee’s Union and Others, (2003) III
L.L.J.229(Mad), the High Court of Madras determined that parties to a contract were bound by
conciliation proceedings and had to await a decision. As the conciliation proceedings were ongoing, the
prohibition in Section 22(1)(d) of the Industrial Disputes Act, 1947 came into effect. Thus, the
respondent’s strike was considered illegal under Section 24.

The Supreme Court, in India General Navigation and Railway Company Ltd and Another vs. Their
Workmen (AIR 1960, SC 219), held that when there’s an illegal strike, the workers wouldn’t be entitled
to any wages or compensation and they could be subject to punishment through discharge or dismissal.

Q- Define retrenchment and the provisions related to retrenchment under the Industrial Disputes Act,
1947?

OR

Explain the term retrenchment and elaborate rules for retrenchment under the provisions of the
Industrial Disputes Act, 1947?

What is Retrenchment?

Retrenchment refers to the termination of employees by an employer for economic reasons rather than
as a disciplinary action. It occurs due to surplus labor, financial constraints, or the restructuring of the
business. Retrenchment signifies the end of the employer-employee relationship. Retrenchment is the
permanent reduction of surplus employees due to economic and commercial conditions, not a dispute
between the company and the employee. The process requires consultation and government approval
and aims to ensure fairness, equality, and industrial justice.

Definition Sec 2(oo):

The term retrenchment means:

1) Retrenchment means the termination by the employer of the service of a workman;

2) The termination may be for any reason whatsoever;
3) But the termination should not be as a measure of punishment by way of disciplinary action.
Exceptions of Retrenchment:

1) Voluntarily retirement of a workman.

2) Retirement of a workman on reaching the age of superannuation if the contract of employment
between the employer and the workman concerned contains a stipulation in that behalf.
3) If the employer does not renew the employment contract and as a result, the employee cannot work
in the industry, it is not considered retrenchment in Labour Law.
4) Termination of the service of a workman on the ground of continued ill-health.

Continued ill-health means a person who is not free from infirmity or disease, or is not possessing a
sound health for active duties is said to be of ill-health. If this state of health continues for a long period,
he may be said to be suffering from continued ill-health.

The Objective of Retrenchment in Labour Law

The primary objective of retrenchment in labor law is to reduce the workforce when an establishment
faces financial difficulties, necessitating a downsizing of employees. This helps companies manage
surplus labor and cut down on human resource expenditure. Retrenchment aims to:

 Reduce outgoing expenses

 Cut down on overall expenditure

 Improve financial solvency

Retrenchment also occurs when an industry struggles to pay employee wages, compelling them to
reduce their workforce.

Reasons for Retrenchment in Labour Law

Retrenchment by an employer can be carried out for various reasons, if those reasons are just and legal.
Some common reasons for retrenchment in Labour Law include:

 Economic Difficulties: When a company faces financial challenges or a decline in

income, it may resort to retrenchment to reduce its workforce.

 Rationalization in the Industry: Companies often need to make their operations more
efficient as they evolve. This can involve structural or operational changes and if a
 department or unit becomes redundant, retrenchment may be used after careful
evaluation.

 Technological Changes: Industries frequently adopt new technologies to improve

efficiency. While this can reduce the need for employees, it may also require retraining.
If the new technology makes certain jobs obsolete, retrenchment may be necessary.

 Failure of Machinery: If a specific industry’s machinery breaks down or fails,

retrenchment in Labour Law may be used as a response.

Requirements for a Valid Retrenchment

in Labour Law
Section 25F of the Industrial Dispute Act, of 1947, outlines
the requirements for a valid retrenchment, applicable when an
employee has completed one year of service. These prerequisites
include:
 Notice to the Employees: Employers must issue a
written notice at least one month before retrenchment,
stating the reason for the action. Employees can only be
retrenched after receiving this notice.
 No Notice Required if Agreement Specifies
Termination Date: If an existing agreement specifies the
termination date, a prior notice is not required.
 Compensation for Retrenchment: If the employer fails
to provide notice, they must compensate the employees.
The compensation should be equivalent to fifteen days’
earnings for each year of continuous employment or any
part thereof exceeding six months.
 Notice to Appropriate Authority: Employers must
notify the relevant government or authority before
retrenching employees, adhering to the prescribed
manner stated in the official gazette.
 Adherence to Notice Regulations: The notice provided
must comply with Rule 76 of the Industrial Disputes
(Central) Rules, 1957, governing retrenchment notices in
labor law.
 Moreover, employers must also ensure that their actions are bona
fide, employees are not victimized, and all legal regulations are
followed while retrenching employees.

Procedure of Retrenchment in Labour Law:

The procedure for retrenching employees is governed by the principle of ‘last come, first go,’ as
specified in Section 25G of the Industrial Disputes Act, of 1947. The following factors provide
procedural protection to employees:

 Prescribed Qualification: The employee must have the appropriate qualifications as

defined in Section 2(s) of the Act.

 Citizenship: The employee must be an Indian citizen.

 Employment in an Industry: The employee must be employed in an industry as defined

by Section 2(j) of the Act.

 Specific Workforce Category: The employee must belong to a particular workforce

category within the establishment.

 Non-existence of a Retrenchment Contract: The employee must not have a prior

retrenchment agreement with the employer.

 If these conditions are met, the employee is entitled to procedural protection under
Section 25G of the Act.

How Can Employers Handle Retrenchment Ethically?

Employers have a responsibility to manage retrenchment in an ethical manner, which includes:

1) Fair Process: Employers must ensure that retrenchment is conducted fairly and without bias.
Employees should be retrenched based on operational needs or performance metrics rather than
personal prejudices.
2) Transparency: Employers should communicate the reasons for retrenchment clearly and
transparently. Employees need to understand the rationale behind the decision, following the
principles of ‘first come, last go’ and ‘last come, first go.’
3) Advance Notice: Employers must provide advance notice to give employees time to prepare
themselves both physically and mentally. This helps soften the impact of losing their jobs
unexpectedly.
4) Severance and Support: Offering severance packages and support services such as counselling or
outplacement assistance is essential. This helps employees’ transition smoothly and supports
their well-being.
5) Opportunities for Retraining: Employers should provide retraining or reskilling opportunities to
help retrenched employees find new roles. Investing in employees’ future development is a moral
responsibility.

Rights of employees at the time of retrenchment

The employees are equipped with various rights during the retrenchment process to protect them
from exploitation by their employers. They are protected against the arbitrary actions of their
employers. To ensure fairness, the following rights are given to the employees:

 To get prior notice: It is the right of employees to get prior notice and compensation in
lieu of notice, which depends on the employment agreement made between employers
and employees.

 To receive counselling and support: In case of the retrenchment of many employees

from a company, they should be given support services like counselling or assistance for
job placement.

 To get severance pay: In case there is an employment agreement where the terms of
the contract say that the retrenched employees will get severance pay, the employees
are entitled to get retrenchment compensation or severance packages.
  Representation and consultation: In many regions or localities, the employees or their
representatives have the right to consultation regarding the process of retrenchment.

 To know the reason for retrenchment: The employees have the right to know the
reason for their retrenchment. They must be given the justification and rationale for the
retrenchment decision.

 To get access to grievance mechanisms: The employees must be given the right to
challenge the retrenchment decision if they think that they are being retrenched in an
unfair way. They are removed in an arbitrary manner, and their rights have been
violated.

 Retrenchment without personal biases: The employees must be retrenched based on

fair and justified grounds. No kind of personal bias or discrimination will be involved
while retrenching the employees by the employers.

 To get re-employment opportunities: If employers think of employing individuals for a

post, they should give priority to the retrenched employees. They should be provided
with re-employment opportunities or retraining opportunities within the company.

Essential Requirements of Retrenchment Compensation

When paying retrenchment compensation, employers should consider the following essential
requirements:

1) Basic Compensation: Retrenched employees should receive half of their average monthly salary
for each completed year of continuous service or any portion exceeding six months.
2) Additional Compensation: Employers may choose to provide additional compensation based on
the company’s nature, size, financial status, and the number of retrenched employees. This amount
should be higher than the basic compensation.
3) Extra Benefits: Employers can offer extra benefits, such as bonuses, gratuities, and any unpaid
wages or dues, to support retrenched employees.

Re-Employment of retrenched workmen: Sec 25 (H);

To claim preference in employment under this section a workman must satisfy the following
conditions:
1) He should have been retrenched prior to re-employment;
2) He should be a citizen of India;
3) He should offer himself for re-employment in response to the notice by the employer;
4) He should have been retrenched from the same category of service in the industrial

Criteria for Retrenchment of Workmen under Section 25 (N):

Section 25N of the Act outlines the conditions that must be followed before an employer can
retrench a worker. These conditions are as follows:

1) Notice to Worker: An employer can only retrench a worker who has been continuously employed
for at least one year in the industry. The employer must provide the worker with a notice stating
the reasons for retrenchment at least three months before the intended date of retrenchment.
Additionally, the worker must be paid their annual wages before the notice period.
2) Government Approval: Permission for retrenchment in Labour Law and the issuance of the notice
must be approved by the government or an appropriate authority.
3) Application for Approval: The employer is required to submit an application for retrenchment
approval to the government and the appropriate authorities in the prescribed manner. A copy of
the approval or refusal must be provided to the workers as specified in the official gazette.
4) Investigation and Decision: Upon receiving the application for retrenchment approval, the
government will investigate the matter. The employer is given a fair opportunity to present their
case. Subsequently, the government will either grant or refuse authorization, based on what it
deems appropriate. The decision will be communicated to both the employer and the worker.
The government must conduct the investigation following the principles of natural justice,
ensuring transparency and impartiality.
5) Timeframe for Decision: The government must issue the order within sixty days after receiving
the employer’s application for authorization. If the government does not issue the order within
this timeframe, it is presumed that authorization has been granted.
6) Finality of Order: The order issued by the government or the specified authority, whether it
approves or refuses retrenchment, is considered final and binding on all parties. It remains in
effect for one year from the date it was communicated to the parties.
7) Tribunal Adjudication: If the employer challenges the government’s order, it will be referred to
the tribunal for adjudication. The tribunal must pass judgment on the matter within thirty days.
8) Refusal by Government: If the government refuses the application for retrenchment permission,
it is considered illegal.

Penalty for Infringement

Under Section 25Q of the Industrial Dispute Act, of 1947, employers who violate retrenchment
provisions face penalties. If an employer does not comply with the Act’s provisions, they may be
subject to imprisonment for up to one month, a fine of up to one thousand rupees, or both.

Landmark Cases on Retrenchment in Labour Law

In the case of Laxmi Devi Sugar Mills Ltd. v. Ram Sagar Pandey (1957), the Supreme Court of India
outlined conditions for valid retrenchment. These include proving retrenchment due to financial
reasons, providing notice and compensation as per Section 25F of the Industrial Dispute Act, and
following the principle of ‘last come, first go’. The employer must also demonstrate the absence of
alternatives to retrenchment.

In the case of Workmen of Meenakshi Mills Ltd. v. Meenakshi Mills Ltd. and Anr. (1992), the
constitutional validity of Section 25N was challenged. The Supreme Court upheld the section,
emphasizing employers’ obligations and the right to raise industrial disputes.

In Managing Director of Karnataka Handloom Development Corporation Limited v. Sri Mahadeva

Laxman Raval (2006), the Supreme Court ruled that termination due to the expiry of a contractual
period does not constitute retrenchment if the contract specifies such terms.

Q- Define closure and procedure to obtain permission for closure under the Industrial Disputes Act,
1947?

OR

Define closure and procedure for closing down an undertaking?

Ans:

Closure:

Definition and History-

 The Industrial Disputes Act, 1947, originally does not contain the provisions relating to
the closure of an industry. The provisions relating to the law of closure were inserted in
 the year 1957 in view of the Supreme Court judgment in case Hariprasad Shivshankar
Shukla v/s. A.D. Diwelkar, AIR 1957 S.C 121

 Subsequently, over a period of years the law relating to closure has undergone a series
of amendments from time to time and thus was consolidated to the present position in
the year 1982.

 According to Section 2(cc) of the Industrial Disputes Act, Closure of an industry means
the permanent closing down of a place of employment or part thereof.

 Section 2(cc) of the Industrial Disputes Act was inserted by the Industrial Disputes
(Amendment) Act of 1982

Provisions Relating to Closure

Chapters VA and VB of the Industrial Disputes Act detail the provisions concerning the closure of
industrial establishments. The relevant sections are as follows:

Section 25FFA Sixty days’ notice to be given of intention to close down any undertaking-

(1) mandates that an employer intending to close an establishment must notify their workers and the
appropriate government authority at least sixty days before the closure date. This notice must clearly
state the reasons for the closure. However, this requirement does not apply to establishments
where:

 less than fifty workers are employed, or

 the average daily number of workers employed in the past twelve months is less than fifty.

Additionally, this section does not apply to establishments created for construction projects such as
dams, canals, bridges, buildings, roads, or similar projects. Under certain exceptional circumstances,
such as an accident, the employer’s death, or other pressing needs, the government authority may
waive the sixty-day notice requirement for a specified period (Section 25FFA (2)).

Section 25FFF Compensation to workmen in case of closing down of undertakings-

Section 25FFF outlines compensation for workers affected by the closure of an establishment.
According to subsection (1), when an establishment closes “for any reason whatsoever,” every
worker employed for at least one continuous year must receive compensation and notice as specified
in Section 25(F), which deals with retrenchment. If the closure is due to unavoidable circumstances
beyond the employer’s control, compensation is capped at an amount equivalent to the average of
three months’ wages (Section 25F(b)).

The section clarifies that closures due to financial difficulties, unsold stock, license or lease expiration,
or depletion of mining resources are not considered unavoidable circumstances. Sub-section (2)
specifies that workers in establishments created for construction projects (e.g., buildings, bridges,
roads, canals, dams) that close within two years of setup due to project completion are not entitled
to compensation. If the work extends beyond two years, workers are entitled to compensation and
notice as per the relevant provisions.

In Workmen v. Straw Board Mfg. Co., the Straw Board Manufacturing Company owned two units
known as the Straw Board Mill and the Regmal Mill. These two units were situated very close to each
other with only a railway line intervening. Each has a factory registered separately under the
Factories Act but one balance sheet and account was prepared for the company as a whole. The
Straw Board Mill was closed on account of shortage of raw materials and the services of the
workmen were terminated. It was held that the two units did not form part of one establishment and
therefore the closure of Straw Board Mill legitimate. The following principles were laid down in this
case was-
(1) The most important aspect relating to closure is whether one unit has such componential relation
that closing of one must lead to the closing of the other or the one cannot reasonably exist without
the other. That the other unit is capable of functioning in isolation is of very material import in the
case of closure.
(2) The workmen cannot question the motive of the closure, once closure has taken place in fact. The
matter may be different if under the guise of closure the establishment is being carried on in some
shape or form at a different place and the closure is only a ruse or pretense.
(3) An employer may close his establishment by stages.

(4) A claim under this section can be made not only under Section 33-C
of the Act but even an Industrial Tribunal may, in a reference, grant appropriate relief.

Proviso to this sub-section makes provision for payment of reduced compensation if it is proved that
the undertaking was closed down on account of unavoidable circumstances beyond the control of the
employer.2 A closure due to vis major or act of God or enemy act or an act of State are the
circumstances beyond the control of the employer.3 The closure of a bank under winding-up order of
the High Court was held on account of unavoidable circumstances beyond the control of the
employer.

In Kalinga Tubes Ltd. v. Their Workmen, the Kalinga Tubes Ltd. carried on the business of
manufacturing and selling iron pipes and poles. Its workmen demanded 20 per cent of their annual
salary or wages for the year 1966-67 as bonus. The management offered only 4 per cent. The
workmen raised a dispute and the District Labour Officer fixed 2nd October, 1967, for discussion. On
October 1, 1967 about 150 workmen assembled after 2 p.m. at the gates of the Administrative
Building in which about 40 to 47 members of the staff were present. They were not allowed to leave
the building till 5 a.m. of 2nd October, 1967. Factory remained closed on 2nd October on account of
Mahatma Gandhi birthday. On the morning of 3rd October, 1967, the management offered to pay
wages for one month in lieu of notice and reduced compensation under the proviso to sub-section (1)
of Section 25-FFF of this Act. The reference under the Industrial Disputes Act was made by the Orissa
Government for adjudicating whether the appellant company had declared lock-out by means of the
notice or it was closure. The Supreme Court held it to be the case of closure for any reason
whatsoever and observed as follows:-
(1) The closure of an undertaking cannot be limited or restricted only to financial, economic or other
considerations of like nature. The closure has to be genuine and bona fide in the sense that it should
be a closure in fact and not a mere pretence of the closure. It was not open to go into the question as
to the notice of the closure. The expression bona fide did not refer to the motive behind the closure
but to the fact of the closure. The essence of the matter is not the reason but the factum of closure
by whatever reasons motivated.
(2) The Court rejected the contention that the company must be wound up or there should have
been a transfer of the machinery or the factory before it could be said that the undertaking had been
closed down.
(3) The gherao of the members of the Administrative Staff and the apprehension of danger to the
personal safety which were likely to result, in deterioration of the relations between the
management and the workmen justify the decision to close down the factory. The
company was a profitable and going concern. These facts show that the management was faced with
a situation in which it could well take a decision to close down the undertaking.
(4) Compensation payable in case of closure of an undertaking due to unavoidable circumstances
beyond the control of the employer is different than the closure of an undertaking for any reasons
whatsoever. In the present case the closure was not due to any circumstances beyond the control of
the employer but compensation would be payable as if the undertaking was closed down "for any
reason whatsoever within Section 25-FFF (1) of the Act."
(5) The explanation appearing in the proviso gives some indication of the anxiety of the legislature to
expressly rule-out certain contingencies which ordinarily could have been pleaded by the employer as
unavoidable circumstances beyond his control. In the normal working of business of a commercial
undertaking financial losses or accumulation of undisposed stocks and the expiry of the lease or the
license can ordinarily go a long way in establishing that it has virtually become impossible to carry on
the business.

Section 25P Special provision as to restarting of undertaking closed down before commencement
of the Industrial Disputes (Amendment) Act, 1976-

Section 25P addresses the reopening of establishments that were closed before the 1976
Amendment to the Industrial Disputes Act. If the government authority believes that:

 The closure was not due to unavoidable or exceptional circumstances,

 There are prospects for re-establishing the business,

 Reopening is necessary for worker rehabilitation or essential community services, and

 Reopening would not impose undue hardship on the employer,

it can order the reopening of the establishment after allowing the employer and workers to be heard.
This order will be published in the Official Gazette. However, the government authority cannot legally
mandate the reopening of establishments closed after 1976.

Section 25R Penalty for closure-

Section 25R specifies penalties for non-compliance with closure procedures.

1) An employer who closes an establishment without following Section 25-O (1) can be punished with
imprisonment for up to six months, a fine of up to five thousand rupees, or both.
2) Violating an order denying closure permission (Section 25-O(2)) or a directive to reopen (Section
25P) can result in imprisonment for up to one year, a fine of up to five thousand rupees, or both. If
the violation continues, an additional fine of up to two thousand rupees per day may be imposed.

3) An employer who contravenes (Section 25-O(3)) can be punished with imprisonment for a term
which may extend to one month, or with fine which may extend to one thousand rupees, or with
both.

Section 30A Penalty for closure without notice-

Section 30A outlines the punishment for employers who close an establishment without complying
with Section 25(FFA). Such employers face imprisonment for up to six months, a fine up to five
thousand rupees, or both.

Constitutionality of old Section 25-0

In Excel Wear v. Union of India,2 it was held that Section 25-O of the Act as a whole and Section 25-R
in so far as it relates to the awarding of punishment for infraction of the provisions of Section 25-O
are constitutionally bad and invalid for violation of Article 19(1)(g) of the Constitution. Intrinsically no
provision of Chapter V-B suggests that the object of carrying on the production can be achieved by
the refusal to grant permission............. It is highly unreasonable to achieve the object by compelling
the employer not to close down in public interest for maintaining production.

It was further held that it is true that Chapter V-B deals with certain comparatively bigger
undertaking and of a few types only. But with all this difference it has not made the law reasonable. It
may be a reasonable classification for saving the law from violation of Article 14, but certainly it does
not make the restriction reasonable within the meaning of Article 19(6). Similarly, the interest of
ancillary industry cannot be protected by compelling an employer to carry on the industry although
he is incapacitated to do so. Nobody has got a right to carry on the business if he cannot pay even the
minimum wages to the labourer. He must then retire from business. But to tell him to pay and not to
retire even if he cannot pay is pushing the matter to an extreme.

In M/s. Orissa Textile and Steel Ltd. v. State of Orissa and others, the constitutional validity of
Section 25-O was challenged on the ground that the 'right to continue business' within the meaning
of Article 19(1)(g) includes right to close down the business and the fact that the citizen cannot
exercise this right inasmuch as the permission of the State Government is required under Section 25-
0 before closing down the business, infringes the right guaranteed under Article 19(1)(g). This
contention is based on the decision of the Supreme Court in Excel Wear etc. v. Union of India, but the
infirmities pointed out in this case were rectified by amendment of the year 1982.5 It was held that
the decision of the Supreme Court in Workmen of Meenakshi Mills Ltd. v. Meenakshi Mills Ltd."

Constitutionality of amended Section 25-0

In Orissa Textile and Steel Ltd. v. State of Orissa and others, the constitutional validity of Section 25
as amended in 1982 was considered. This section was struck down being unconstitutional in Excel
Wear v. Union of India?
In Workmen of Meenakshi Mills Ltd. v. Meenakshi Mills Ltd., the constitutional validity of Section
25-N was upheld by the Supreme Court. Therefore, there had been difference of opinion among the
High Courts on the validity of Section 25-0. It was held by the Supreme Court in the present case that
the amended Section 25-0 was not ultra vires the Constitution and it was saved by Article 19(6) of the
Constitution on the following grounds-
(i) Section 25-O had been enacted to give effect to the directive principles of the Constitution and was
in the interest of general public.

(ii) Under the amended Section the order granting or refusing permission for closure had to be in
writing and reasons are to be recorded.

(iii) Even after permission to close being given, the employer had still to give notice and
compensation as specified in Section 25-N.
(iv) The other defect that no time limit has been fixed while refusing permission to close was now
cured by sub-sections (3), (4) and (5) of amended Section 25-0.
(v) The restrictions imposed under the amended section were reasonable and in the interest of
general public.
(vi) There is no substantive vice as the reason for refusal now shall be given in writing after inquiry
and giving opportunity of hearing. Thus, power of Government was quasi-judicial.
(vii) As far refusal in case of reasons being genuine is concerned the interest of public or other factors
might still justify refusal of permission, requiring that business be continued for some time.
(viii) The phrase "in the interest of general public" was not vague but was of a definite concept.
(ix) There was no excessive delegation of power to the executive as the guidelines had been set out in
Section 25-0.
(x) Section 25(0) was not discriminatory between, say, a firm of lawyers and a factory or mine.

(xi) The argument that the reasons given in Excel Wear case,' for striking down Section 25-O had been
considered in Meenakshi Mills, case and as such it was not open to the present bench to reconsider
those reasons was not acceptable to the Supreme Court. It observed that it was the duty of the
Constitution Court to form its own opinion about a given case instead of relying upon the gloss placed
on that case by some other decision.

Procedure of Closure (25-O)

When navigating the closure process of an establishment under the Industrial Disputes Act of 1947 in
India, it’s crucial to comprehend the nuanced procedures and requirements delineated by the law.
Here’s a comprehensive guide detailing the steps for closure based on the number of workers
employed and the specific circumstances surrounding the closure:

Closure with Less Than 50 Workers (Section 25(O))

1. Assessment of Workforce Size: Before initiating the closure process, ascertain whether
the establishment employs less than 50 workers. If it meets this criterion, the employer
can proceed with closure without seeking government permission.

2. Compensation Calculation: Calculate the compensation due to the workers, ensuring it

aligns with the legal requirements. According to Section 25(O), the compensation must
amount to 15 days’ average pay for each completed year of service.

3. Notice Issuance: Provide formal notice to both the appropriate government authority
and the workers employed in the establishment. This notice must be served at least 60
days before the intended closure date, allowing sufficient time for preparation and
adjustment.

Closure with 50 or More Workers (Section 25(N))

 1. Government Permission Requirement: If the establishment employs 50 or more
workers, the employer must obtain prior permission from the government before
proceeding with closure. This requirement is mandated by Section 25(N) of the
Industrial Disputes Act.

2. Advance Notice: Similar to closures involving fewer workers, issue a formal notice to
both the government authority and the employees at least 60 days prior to the planned
closure. This notification serves to inform stakeholders and facilitate necessary
arrangements.

3. Government Evaluation: Upon receiving the notice, the government assesses the
employer’s reasons for closure and evaluates the potential impact on the interests of
the workers. The decision to grant permission is contingent upon a thorough
examination of these factors.

Voluntary Retirement Scheme (VRS Scheme)

1. Proposal Presentation: Alternatively, the employer may propose a Voluntary

Retirement Scheme (VRS) as a means of facilitating the closure process. This scheme
typically entails offering eligible employees a package comprising compensation,
pension, and other benefits.

2. Agreement Formalization: Both the employer and the workers must mutually agree to
the terms outlined in the VRS proposal. Upon reaching a consensus, the terms are
formalized in a legally binding agreement, ensuring clarity and adherence to negotiated
terms.

Conciliation Process

1. Dispute Resolution Mechanism: In the event of disputes or disagreements arising

between the employer and the employees regarding the closure or associated
compensation, the Industrial Disputes Act provides for a conciliation process.

2. Appointment of Conciliation Officer: A conciliation officer may be appointed to

facilitate dialogue and mediation between the conflicting parties. This neutral third
party works towards achieving a mutually acceptable resolution, thereby mitigating the
escalation of tensions and fostering amicable settlements.
 3. Mediation and Settlement: Through the conciliation process, efforts are made to bridge
the gap between the differing perspectives and interests of the employer and the
employees. The goal is to reach a settlement that is fair and equitable to all parties
involved, thereby promoting harmony and stability within the workplace.

Undertakings Excluded from Prior Permission

Certain undertakings and establishments are exempt from the requirement of obtaining prior
permission before closure. Specifically, businesses engaged in construction projects are excluded
from the provisions of this section. Additionally, under exceptional circumstances such as accidents in
the workplace or the death of an employer, the concerned government authority may waive the
requirement for prior approval.

Seasonal Work (Exempted from Industrial Disputes Act)

Establishments involved in seasonal activities such as agriculture are exempt from the provisions of
the Industrial Disputes Act. While they are not obligated to obtain prior permission, they must still
adhere to the notice and compensation regulations outlined in the Act.

Grant and Refusal of Permission for Closure in Labour Law

Grant of Permission of Closure in Labour Law

1. Evaluation of Reasons: The government authority assesses the rationale provided by

the employer for closure. If deemed satisfactory and if the employer fulfills all Industrial
Disputes Act requirements, permission may be granted.

2. Notice Obligation: Should permission be granted, the employer must furnish a notice to
both the government authority and the workers at least 60 days before the intended
closure date.

Refusal of Permission of Closure in Labour Law

1. Criteria for Denial: If the government authority finds the reasons unsatisfactory or if the
employer fails to comply with Act requirements, permission may be withheld.

2. Legal Recourse: In the event of refusal, the employer retains the option to seek
resolution through the Labour Court or Industrial Tribunal. These entities may either
 uphold the government’s decision or mandate the reinstatement of workers with back
wages.

In essence, the decision to grant or deny closure permission lies within the discretion of the
government authority, contingent upon the employer’s rationale and consideration of workers’
interests. Employers are obligated to adhere to Industrial Disputes Act procedures to safeguard
workers’ rights during the closure process under labour law.

Deemed Grant of Permission of Closure in Labour Law

Under the Industrial Disputes Act, if an employer intends to close down an establishment with 50 or
more workers, they are required to obtain prior permission from the government authority.
However, if the government authority fails to respond within specified timeframes, permission for
closure is deemed to have been granted. Here are the time limits stipulated for such decisions:

Establishments with Less Than 100 Workers

The government authority must communicate its decision within 60 days of receiving the application
for establishments with less than 100 workers.

Establishments with 100 or More Workers

The government authority must communicate its decision within 90 days of receiving the application
for establishments with 100 or more workers.

Appeal Against Closure in Labour Law

Under the Industrial Disputes Act, if the government authority refuses permission for the closure of
an establishment, or if permission is granted but under unacceptable conditions, the employer has
the right to appeal to either the Labour Court or the Industrial Tribunal within 60 days of receiving
the order. Here is the process involved in filing an appeal:

Submitting the Appeal: Within 60 days of receiving the order from the government authority, the
employer must file an appeal to the Labour Court or Industrial Tribunal. The appeal must adhere to
the specified format and include all relevant documents.

Notification to the Opposing Party: The employer is required to inform the opposing party, which
could be the workmen or their representatives, within 7 days of filing the appeal.
Appeal Hearing on Closure in Labour Law

The Labour Court or Industrial Tribunal is mandated to conduct a hearing for the appeal within 45
days of its filing. During the hearing, both the employer and the workmen or their representatives
have the opportunity to present their arguments and provide evidence.

Reinstatement with Back Wages

Following the appeal hearing, the Labour Court or Industrial Tribunal may either uphold the decision
of the government authority or instruct the employer to reinstate the workmen with back wages. The
decision made by the Labour Court or Industrial Tribunal is considered final and binding on both
parties.

Illegal Closure

An illegal closure, which occurs when an employer shuts down an establishment without adhering to
the procedures outlined in the Industrial Disputes Act, can lead to significant consequences:

1. Reinstatement with Back Wages: Workmen affected by an illegal closure are entitled to
reinstatement with full back wages, as ordered by the Labour Court or Industrial Tribunal.
2. Penalties: If found guilty of an illegal closure, the employer may be required to pay a penalty
equivalent to up to three months’ wages of the affected workmen.
3. Criminal Prosecution: In severe cases, the employer may face criminal prosecution for an illegal
closure, which can result in imprisonment and/or fines.

These consequences underscore the importance of complying with the procedures and requirements
outlined in the Industrial Disputes Act to ensure fair treatment of workmen.