Bharat Kumar v State of Kerala AIR 1997 Ker 292

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  • The court agreed with the contentions of the petitioners and held that no political party or organization can claim that it is entitled to paralyze the industry and commerce in the entire State or Nation and is entitled to prevent the ‘citizens not in sympathy with its view point, from exercising their fundamental rights or from performing their duties. Such a claim is unreasonable and could not he accepted as a legitimate exercise of a fundamental right by a political party. Calling of bundhs therefore is unconstitutional.
  • This order was appealed in the SC and the SC fully agreed with the HC ruling and upheld it.

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Balmer Lawrie Workers Union, Bombay v. Balmer Lawrie & Company (1984 SC)

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 The Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act 1971 provides for recognition of a union if it complies with certain conditions specified in the Act. The Act also enumerated the rights of a recognized Union, which included an exclusive right of the recognized union to represent workmen of an undertaking in disputes and make the decision made in such proceedings binding on all the employees.
 The facts are that after a strike, the employer entered into a settlement in respect of a number of pending industrial disputes with its union, which was recognized under the 1971 Act. Clause 17 of the Settlement provided that the company shall deduct an amount equivalent to 15% of the gross arrears payable under the Settlement to each employee towards contribution to the fund of the recognized union.
 The appellant, a non-recognized union challenged before the High Court the constitutional validity of Clause 17 of the Settlement on the grounds, inter alia. (i) that Clause 17 permits a compulsory deduction not warranted by the Payment of Wages Act from workmen who are not the members of the recognized union; (ii) that the 1971 Act is unconstitutional, since (a) it denies to the workman who are not members of a recognized union, the fundamental freedom guaranteed under by compelling the Workmen to join the union which has acquired the status of a recognized union even if it followed a socio-economic or socio-political philosophy contrary to the philosophy of non-members; (b) it denies to the unrecognized union, the right to effectively participate in any proceeding concerning the workmen of an industrial undertaking, some of whom have formed a separate trade union and (c) it does not treat all the unions at par as the members of non-recognized union are compelled to be bound by the action of the recognized union.
 The High Court dismissed the petition and the Supreme Court agreed with the High Court. The SC reviewed the Scheme of the 1971. It observed that upon the advent of industrial revolution which aimed at mass production of commodities, large scale industrial units came to be set up resulting in concentration of workmen at one place under one employer. Trade union movement representing the organized labour developed as an adjunct of political party. The organized Labour as a vote bank was wooed by political parties. Every political party with a view to controlling vote banks set up its labour wings. Combinations and fragmentations of politics] parties had an adverse effect on trade unions. Multiplicity of political parties led to multiplicity of trade unions seeking to represent workmen in an industrial undertaking. The fall out of the multiplicity of unions was inter union and intra-union rivalry which threatened peaceful working of the industrial undertaking.
 Each union, tried to over-reach the rival by occasionally making untenable demands. The emerging situation led to conflict and confrontation disturbing industrial peace and harmony directly affecting production. Therefore, a need was felt that where there are multiple unions seeking to represent workmen in an undertaking or in an industry, a concept of recognized union must be developed. In fact, even amongst trade union leaders there was near unanimity that the concept of recognized union as the sole bargaining agent must be developed in the larger interest of industrial peace and harmony. Then the question arises as to the method of ascertaining which amongst various unions must be accorded the status of a recognized union. Initially it was the view that the union which represents the largest number of workmen working in the undertaking must acquire the status as that would be in tune with the concept of industrial democracy.
 A recognized union has an exclusive right to represent workmen in any proceeding under the IDA. However, an individual workman, who has his individual dispute with the employer arising out of his dismissal, discharge, retrenchment or termination of service will not suffer any disadvantage if any recognized union would not espouse his case and he will be able to pursue his remedy under the IDA. Once this protection is assured, the question is whether the status to represent workmen conferred on a recognized union to the exclusion of any individual workman or one or two workmen and who are not members of the recognized onion would deny to such workmen the fundamental freedom guaranteed under Article 19. The court held that the restriction on the right to appear and participate in a proceeding, of a workman who is not prepared to be represented by the recognized union, in respect of a dispute not personal to him alone does not deny him the freedom of speech and expression or to form an association. Conferring the status of a recognized union on the union satisfying certain pre-requisites which the other union is not in a position to satisfy does not deny the right to form association.
 A recognized union has an exclusive right to represent workmen in any proceeding under the IDA. However, an individual workman, who has his individual dispute with the employer arising out of his dismissal, discharge, retrenchment or termination of service will not suffer any disadvantage if any recognized union would not espouse his case and he will be able to pursue his remedy under the IDA. Once this protection is assured, the question is whether the status to represent workmen conferred on a recognized union to the exclusion of any individual workman or one or two workmen and who are not members of the recognized onion would deny to such workmen the fundamental freedom guaranteed under Article 19. The court held that the restriction on the right to appear and participate in a proceeding, of a workman who is not prepared to be represented by the recognized union, in respect of a dispute not personal to him alone does not deny him the freedom of speech and expression or to form an association. Conferring the status of a recognized union on the union satisfying certain pre-requisites which the other union is not in a position to satisfy does not deny the right to form association.
 When a settlement is reached in a proceeding under the IDA in which a representative union has appeared, the same is to be binding on all the workmen of the undertaking. However, the representative union has the obligation to act in a manner as not to discriminate between its members and other workmen of the undertaking who are not its members. Both the benefits, advantages, disadvantages or liabilities arising out of a settlement by a representative union shall be equally applicable to each workman in the undertaking.
 No deduction could be made from the wages and salary payable to a workmen governed by the Payment of Wages Act unless authorized by that Act. However, a settlement arrived at on consent of parties can permit a deduction as it is the outcome of understanding between the parties even though such deduction may not be authorized under the Payment of Wages Act.
 Through the settlement, all workers are getting rights as well as liabilities. Making the settlement applicable in its totality has to be understood in the context of strengthening the trade union movement There is nothing objectionable in Clause 17 of the Settlement which directs the employer to make a deduction under the settlement as contribution to the trade union funds. Thereby the workman is not subscribing to the philosophy of rival union but he is merely paying the price of the advantage obtained. Therefore deduction clause of the Settlement would not be invalid despite the lack of consent of the workmen who are members of the unrecognized union. The settlement having been made by the representative union, its right to represent all workmen would imply the consent of the members of the rival union.

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Bokajan Cement Corpn. Employees’ Union v. Cement Corpn. of India Ltd. (2004 SC)

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  • The question for determination here is whether an employee would lose his right to continue as a member of the trade union if he ceases to be an employee. The High Court held that the employee cannot continue as a member and the appeal is before the SC.
  • The High Court held that the membership of a trade union is not a benefit that accrues to the employee so as to claim its continuance even after he ceases to be in employment.
  • The Supreme Court on the other hand stated that there is no specific provision in the Act which provides for automatic cessation of membership of the trade union. However, the Act requires that the rules of the trade union should provide for admission of members who shall be persons actually engaged or employed in an industry with which the trade union is connected.
  • The Supreme Court assessed the provisions of the TUA and the constitution of the trade union and ruled that membership related provisions provided for the criteria for the admission of members. Furthermore, they also set down scenarios in which the membership of a person would be liable to be cancelled, which include non-payment of dues, misconduct etc. The SC felt that if automatic cessation of membership upon cessation of employment was the intent of the legislature, it would have been so provided under the Act. However, in the absence of such provision, it cannot be held that any such automatic cessation should happen.

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A. Rangaswami v. Registrar of Trade Unions (1962 Madras High Court)

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  • This stems from a petition seeking to set aside the order of the Registrar of Trade Unions, Madras refusing to register the union of employees of the Madras Raj Bhavan as a trade union.
  • At Raj Bhavan in Ooty and in Guindy, there are various employees employed to look after the governor and state guests.
  • There are two categories of employees: (1) those whose services are of a domestic nature. They number 102. The services of these persons are pensionable and are governed by certain rules framed by the Governor of Madras; and (2) maistries and gardeners. There are 33 such persons employed at Guindy and 35 at Ootacamund. Their duties consist of maintaining the gardens. Their service is not pensionable but they would be entitled to gratuity at certain rates.
  • With the object of securing better service conditions and to facilitate collective bargaining with the employer, the employees formed themselves into a union called the Madras Raj Bhavan Workers’ Union and applied to the Registrar of Trade Unions, Madras for registration of their union.
  • The Registrar was of the view that before a union can be registered, the members must be connected with a trade or industry or business of an employer, and that condition not being fulfilled in the present case to entitle them to the registration. The application for registration was rejected. The basis was that the work they were engaged in was domestic in nature and therefore can’t be seen as connected with a trade of industry.
  • Refer to the definition of “industrial dispute”.
  • The applicants did not claim before the Registrar that the employees were engaged in either trade or an industry. The claim was that their services could not be held to be purely domestic services and that therefore their union would be entitled to the benefits of registration.
  • The workers argued that the Act refers to workmen employed in an industry. Although there is no definition of the term industry in the Act itself, the definition of the term given in the Industrial Disputes Act could be adopted for ascertaining its meaning. The term “industry” is defined to include an undertaking would be comprehensive enough to cover the case of employees like these engaged in services at the Raj Bhavan who systematically do material service for the benefit of not merely the members of the Governor’s household but also to visitors and guests as well.
  • The High Court however disagreed with this proposition. It said that the definition of “trade dispute” explains that “Workman means all persons employed in trade or industry whether or not in the employment of the employer with whom the trade dispute arises.“ The court opined that the manner in which the concept if encapsulated is different from the definition of “industry” under the IDA. It is intended only for interpreting the term “trade dispute”. It is obvious that the industry should be one as would amount to a trade or business, i.e. a commercial undertaking.
  • The object behind the IDA is to secure industrial peace and speedy remedy for labour discontent or unrest. A comprehensive meaning of the term “industry” was thought necessary by the legislature in regard to IDA. But the same thing cannot be said of the Trade Unions Act. The history and object of that enactment show that it was intended purely to render lawful, organization of labour to enable collective bargaining. The provisions of the Act contemplate the admission of even outsiders as members and participation in political activities. I am very doubtful whether at all it could be said that the IDA and the TUA form a system or codes of legislation to be read together and interpret one in the light of another.
  • It cannot be said that the employer in the present case is having such a trade or business.
  • The services rendered to the State guests are personal services to them and indirectly to the employer. They would not amount to a trade or business. The mere fact that employees serve the visitors and State guests of Raj Bhavan, would show that there was co-operation between the employer and the employees for the purpose of a trade or business.

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Trade Union – Registration – Labour Law I – Law School Notes

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  • Section 4 – Mode of registration – Any seven or more members of a Trade Union may, by subscribing their names and complying with the provisions of this Act with respect to registration, apply for registration of the Trade Union.
  • Section 5 – Every application for registration of a Trade Union shall be made to the Registrar of Trade Unions, and shall be accompanied by a copy of the rules of the Trade Union and a statement of the following particulars, namely:– (a) the names, occupations and addresses of the members 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 of the Trade Union.
  • Section 6 – Among other things, the rules should provide for the following matters –
    • the whole of the objects for which the Trade Union has been established;
    • the admission of ordinary members who shall be persons actually engaged or employed in an industry with which the Trade Union is connected;
    • the manner in which the rules shall be amended, varied or rescinded;
    • the manner in which the members of the executive and the other office-bearers of the Trade Union shall be appointed and removed;
  • Section 8 – The Registrar, on being satisfied that the Trade Union has complied with all the requirements of this Act in regard to registration, shall register the Trade Union by entering in a register the particulars relating to the Trade Union contained in the statement accompanying the application for registration, and issue a certificate of registration.
  • Section 10 – The certificate can be cancelled / withdrawn if the registrar finds that it was obtained through fraud or if the union becomes non-compliant with the registration requirements etc. A notice of two months with reasons in writing for cancellation need to be provided to the office bearers.
  • Unions are body corporates with perpetual succession and a common seal – just like a company. They can be amalgamated with other unions, dissolved, need to maintain account books that are open for inspection and can admit members in accordance with the Act.
  • The manner in which a Union may spend its funds corpus is specified under the Act (Section 15).
  • Section 17 – Criminal conspiracy in trade disputes. – No office-bearer or member of a registered Trade Union shall be liable to punishment for criminal conspiracy under the IPC, in respect of any agreement made between the members for the purpose of furthering any object of the Trade Union, unless the agreement is an agreement to commit an offence.
  • Section 18 – Immunity from civil suit in certain cases – No suit or other legal proceeding shall be maintainable in any Civil Court against any registered Trade Union or any office-bearer; or member thereof in respect of any act done in contemplation or furtherance of a trade dispute to which a member of the Trade Union is a party on the ground only that such act induces some other person to break a contract of employment, or that it is in interference with the trade, business or employment of some other person.
  • Section 21A – Disqualifications of office-bearers of Trade Unions. – A person shall be disqualified for being a member of the executive or any other office-bearer of a registered Trade Union if– (i) he has not attained the age of eighteen years, (ii) he has been convicted by a Court in India of any offence involving moral turpitude and sentenced to imprisonment, unless a period of five years has elapsed since his release.
  • Section 22 – Proportion of office-bearers to be connected with the industry. – Not less than one-half of the total number of the office- bearers of every registered Trade Union shall be persons actually engaged or employed in an industry with which the Trade Union is connected.

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Trade Unions – Labour Law I – Law School Notes

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  • Right to form trade union in India Article 19(1)(c) of the Constitution
  • Article 19(1)(c) of the Constitution guarantees to all citizens the right to form associations and unions.
  • However, such right can be restricted by making suitable legislation under Art. 19 to protect public order and morality.
  • Fulfilment of every object of an association formed is also a protected right, but not a fundamental right.
  • Article 19 does not carry with it a fundamental right in the union to achieve every object for which it was formed or guaranteed effective collective bargaining or to go on strike etc. These rights can be controlled by appropriate industrial legislations (e.g. IDA) but never the right to form Unions.
  • Trade union Sections 2(h), 22, 15, 16, 21A
  • Trade dispute Section 2(g)
  • Section 2(h) – “Trade Union” means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions.
  • Section 2(g) – “trade dispute” means any dispute between employers and workmen or between workmen and workmen, or between employers and employers which is connected with the employment or non-employment, or the terms of employment or the conditions of labour, of any person, and “workmen” means all persons employed in trade or industry whether or not in the employment of the employer with whom the trade dispute arises.
  • Is similar to the definition of “industrial dispute”

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Rohtas Industries v Union (1976) 2 SCC 82

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 During the year 1948, workmen went on illegal strike on account of Trade Union rivalry. The workmen were not paid wages for the strike period and the appellants lost their profit during the period. The employers and the workmen entered into an agreement during the pendency of the conciliation proceedings and referred the claims of workmen for salaries during the strike period and the claims of the employers for compensation for loss due to the strike to the arbitration.
 The arbitrators delivered their award and held that the workmen participating in the strike were not entitled towages for the strike period, the strike being illegal. The arbitrators however, awarded huge compensation to the employers against the workmen for the losses incurred by the employers during the strike period.
 The workmen challenged the award as illegal and void. The High Court upheld that part of the award which directed that the workmen participating in the strike were not entitled to wages. The High Court however, quashed the part of the award which directed payment of compensation by the workers to the management.
 According to the arbitrators, the strike was illegal being in violation of the Act. The illegal strike was animated by inter-union power struggle and that it inflicted loss on the management by forced closure and that the loss flowing from the strike was liable to be recompensed by award of damages.
 Here the question of law whether an illegal strike causing loss of profit justifies award of damages is involved. The SC held that arbitrator held in the affirmative and according to us it is an error of law. After coming to the conclusion that the strike was illegal they held that compensation follows based on the rule of English common law on the basis of tort of conspiracy and loss of business.
 The workmen challenged the award as illegal and void. The High Court upheld that part of the award which directed that the workmen participating in the strike were not entitled to wages. The High Court however, quashed the part of the award which directed payment of compensation by the workers to the management.
 According to the arbitrators, the strike was illegal being in violation of the Act. The illegal strike was animated by inter-union power struggle and that it inflicted loss on the management by forced closure and that the loss flowing from the strike was liable to be recompensed by award of damages.  Here the question of law whether an illegal strike causing loss of profit justifies award of damages is involved. The SC held that arbitrator held in the affirmative and according to us it is an error of law. After coming to the conclusion that the strike was illegal they held that compensation follows based on the rule of English common law on the basis of tort of conspiracy and loss of business.

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Lay-off v. lock-out – Management of Kairbetta Estate v. Rajamanickam AIR 1960 SC 893

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  • Management of Kairbetta Estate Rajamanickam AIR 1960 SC 893 – The Supreme Court has discussed the two concepts bringing out their differences.
  • lay-offs: in continuing business; lock-outs: temporary closure
  • lay-offs: relates to inability to employ due to certain reasons; lock-outs: concept doesn’t relate to any specific reason
  • lay-offs: compensation is payable; lock-outs: consequences flow from legality or illegality, no compensation
  • Lay-offs can also result in imprisonment if the compensation / approval provisions are not followed for identified ‘industrial establishments’
  • The company manager was violently attacked by             its workmen as a result of which he sustained serious  The  workers  in  the lower  division  also threatened the company staff working in that division that they would murder them if they         worked there.   The company was therefore compelled to notify that the division would be closed until further notice. Subsequently, the division was opened      again as a  result  of conciliation. The workers made a claim for lay-off compensation for the period during which the lower division   was closed on the footing that the management for their  own reasons      did not choose to run the division            during that period.
  • The company’s answer was that the closure         of the division amounted to a lock-out which  under the  circumstances was perfectly justified and the workers were not entitled to claim any lay-off compensation.
  • It was held that the concept of a lock-out is        essentially different  from that of a lay-off and where the            closure  of business  amounts  to  a  lock-out, it  would  be impossible to bring it within the scope  of  a lay-off. The lock-out which was justified on the facts of the  case, was not a lay-off and therefore the workmen        were not entitled to claim any lay-off compensation.
  • The difference between retrenchment and closure is similar.
  • Retrenchment relates to dismissal from a continuing establishment.
  • Discontinuance of service on account of closure of an undertaking on the other hand is not included within the meaning of retrenchment.

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Is there a common law right or a statutory right to lay-off?

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Workmen of Dewan Tea Estate v. The Management (SC 1963)

  • The workers raised a dispute against the employer for a lay-off declared by them in the estates. The lay-off lasted for 45 days and the workers’ contention was that the lay-off was not justified and they were entitled to full wages for the period of the lay-off. The employer resisted the claim on the ground that the lay-off was justified.
  • The facts are that there were tea estates situated in Cachar District and had to face a long period of depression in trade by reason of poor prices for the tea produced by them. In 1959, the management faced a very difficult financial position and took the view that in the interests of the employees and its own business, it would be appropriate to lay off the workmen for a certain period in order to avoid closure of business. The circumstances which caused financial depression were beyond the control of the management and lay-off was, therefore, inevitable and fully justified.
  • The workers argued that there were other tea estates in the district of Cachar which had to face similar problems. The labour costs incurred by the respondent were not higher than the other tea estates, the burden of taxes was the same and the quality of the tea produced was the same. The difficulty faced by the employer was a result of its mismanagement and neglect. They pleaded that the workmen had been promised continuous work throughout the year and the declaration of lay off for such a long period as 45 days exposed them to the risk of semi-starvation.
  • The workers also argued that depression in trade or financial difficulties which may be characterized as trade reasons did not justify the lay off under the Standing Orders, and so they justified their claim for full wages during the period of the lay off.
  • The Tribunal held that the Standing Orders justified the lay off. The trade reasons resulting from the depression in trade and financial liabilities fell within the scope of the Standing Order.
  • In the alternative, the Tribunal thought that even if the lay off was not justified by the Standing Orders, the respondent had a common law right to declare a lay off and this right was recognized by S. 25C of the Act. According to the Tribunal, s. 25 C recognizes this common law right and since it is a statutory provision, it over-rides the relevant clause in the Standing Order.
  • The Supreme Court however disagreed with the Tribunal and held that it was not right in holding that S. 25C of the Industrial Disputes Act recognizes the inherent right of the employer to declare lay-off for reasons which he may regard as sufficient or satisfactory.
  • No such common law right can be spelt out from the provisions of S. 25C. When the laying off of the workmen is referred to in S. 25C, it is laying off as defined by S. 2 (kkk), and so, workmen who can claim the benefit of S. 25C must be workmen who are laid off for the reasons contemplated by S. 2(kkk).
  • Lay-off will necessarily be governed by the provisions of the Act, and lay-off would be permissible only where one or the other of the factors mentioned by S. 2(kkk) is present, and for such lay-off compensation would be awarded under S. 25C.

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Meaning of “lay-off” – Labour Law I – Law School Notes

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  • Lay-off means the failure, refusal or inability of employer on account of contingencies mentioned in Section 2(kkk) to give employment to a workman whose name is borne on the Muster Rolls. It has been called a temporary discharge of the workmen or a temporary suspension of his contract of service. Strictly speaking, it is not so. It is merely a fact of temporary unemployment of the workman in the work of the industrial establishment. Mere refusal or inability to give employment to the workman when he reports for duty is not temporary discharge of the workman.
  • There is no provision in the Act specifically providing that an employer would be entitled to lay-off his workmen. Such power therefore must be found out from the terms of contract of service or the Standing orders governing the Establishment.
  • In this case, there being no Standing orders certified and there being no contract of service conferring any such right of lay-off, the inescapable conclusion is that the workmen were laid-off without any authority of law or  the power in the management under the contract of service. If the terms of a  contract of service or the statutory terms engrafted in the Standing orders do not give the power to lay-off to the employer, the employer would be bound to pay compensation for the period of lay-off which ordinarily and general would be equal to the full wages of the concerned workman.

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