UNIVERSITY OF PETROLEUM & ENERGY STUDIES

SCHOOL OF LAW

BA.LLB. (HONS) LABOUR/CRIMINAL/CONSTITUTIONAL LAW (B2) 2016-2021

ACADEMIC YEAR: 2018-19

SESSION: JANUARY-MAY

PROJECT OF

LABOUR LAW I

ON

AWARDS AND JUDICIAL REVIEW

UNDER SUPERVISION OF: PROF. MONIKA RANI

NAME: NISHA NANDINI SINGH

ROLL NO: R450216060

SAP ID: 500055215

INTRODUCTION

Award is the end product of the adjudicatio process. In order to have a complete and clear
picture of adjudication, as a method of settlement of industrial disputes, it is necessary to
study the meaning and definition of award.

Sec. 2(b) of the I.D. Act defines the term as follows “award” means an interim or final
determination of any industrial dispute or of any question relating thereto by any Labour
Court, Industrial Tribunal or National Industrial Tribunal and includes an arbitration award
made under Sec. 10-A

Sec. 17 (2) I.D. Act declares “Subject to the provisions of Section 17-A, the award published
under sub-sec. (1) shall be final and shall not be called in question by any court in any
manner whatsoever”

This provision, first, seeks to oust the jurisdiction of the civil courts against the awards of
adjudicators under the Act. Secondly, it implies that there is no appeal or revision against the
awards. Although the finality contemplated has the effect of ousting the jurisdiction of civil
courts, cases do not want where the civil courts did not hesitate to set-aside the award as null
and void on the ground that such awards are not the awards contemplated by the Act. It is
well established that whatever may be the width of an outer or privative clause in a statute;
the civil courts still enjoy powers to interfere in cases of gross violations of law.

Save such exceptional cases, the general rule is that the civil courts have no jurisdiction to
entertain any suits questioning the validity of awards. Therefore, for all practical purposes,
the only remedies available to the parties aggrieved by the awards are the Constitutional
remedies. The language used in Sec. 17(2) has no effect of excluding the Constitutional
remedies and so the High Courts and the Supreme Court have power to test the legal validity
of the awards.
JUDICIAL REVIEW OF AWARDS UNDER ARTICLES 136 OF
CONSTITUTION OF INDIA

In 1956, a new provision, Section 10A, was added to the Industrial Disputes Act of 1947
providing an option to the parties to refer their industrial dispute to an arbitration of their
choice.

Voluntary reference of dispute to arbitration:

(1) Where any industrial dispute exists or is apprehended and the employer and the
workmen agree to refer the dispute to arbitration, they may, at any time before the dispute
has been referred under Section 10 to a Labour Court or Tribunal or National Tribunal, by a
written agreement, refer the dispute to arbitration and the reference shall be to such person
or persons (including the presiding officer of a labour court or tribunal or national tribunal)
as an arbitrator or arbitrators as may be specified in the arbitration agreement.

(2) An arbitration agreement referred to in sub-section (1) shall be in such form and shall be
signed by the parties thereto in such a manner as may be prescribed.

(3) A copy of the arbitration agreement shall be forwarded to the appropriate Government
and the conciliation officer and the appropriate Government shall, within fourteen days from
the date of the receipt of such copy, publish the same in the official Gazette.

(4) The arbitrator or arbitrators shall investigate the dispute and submit to the appropriate
Government the arbitration award signed by the arbitrator or all the arbitrators, as the case
may be.

(5) Nothing in the Arbitration Act, 1940, shall apply to arbitrations under this section.

The question arises whether a decision of an arbitrator is subject to judicial review.

Recently, the Supreme Court has, in Engineering Mazdoor Sabha v. Hind Cycles Ltd.1,
held that an arbitration under section 10A of the Act is not a tribunal for the purpose of
Article 136 of the Constitution. Hence the Court cannot entertain an appeal under Article 136
from a decision of the "arbitrator".

1
1962- II- LL. J. 760 (S.C)
For invoking Art. 136 (1) two conditions must be satisfied. First, the proposed appeal must be
from a judgment, decree, determination, sentence or order (it must not be against purely
executive or administrative order) i.e., the determination or order should be a judicial or
quasi- judicial determination or order. Secondly, the said determination or order must have
been made or passed by any court or tribunal in the territory of India. Regarding first, it is
beyond controversy that an award of an arbitrator under section 10A is a quasi-judicial act.
The Supreme Court in the instant case has also conceded " that the decisions of the arbitrators
to whom industrial disputes are voluntarily referred under S. 10A of the Act are quasi-
judicial decisions and they amount to determinations or orders under Article 136(1).

The real controversy hangs on the second, i.e., whether an arbitration under Section 10A is a
tribunal. As to the requisites of a tribunal the court stated in the Engineering Mazdoor Case 2:
"The Tribunals which are contemplated by Art. 136 (1) are clothed with some of the powers
of the Courts. They can compel witnesses to appear, they can administer oath, they are
required to follow certain rules of procedure, the proceedings before them are required to
comply with the rules of natural justice, they may not be bound by the strict and technical
rules of evidence, but nevertheless, they must decide on evidence, adduced before them; they
may not be bound by other technical rules of law, but their decisions must, nevertheless, be
consistent with the general principles of law. In other words, they have to act judicially and
reach their decisions in an objective manner and they cannot proceed purely administratively
or base their conclusions on subjective tests or inclinations.

The qualifications of a tribunal for the purpose down by the Supreme Court in the passage
quoted by the 'arbitrator' under S. 10A of the Act. Section 10A is also clothed with some of
the powers compel witnesses to appeal, administer oath, follow certain rules of procedure and
natural judicially and he decides a dispute objectively. The has further pointed out that "
having regard contained in the Act and the rules framed thereunder, appointed under S. 10A
cannot be treated to private arbitrator to whom a dispute has been arbitration agreement under
the Arbitration Act, be possible to describe such an arbitrator, as statutory arbitrator.

after the decision of the Supreme Court in Bharat Bank Ltd v. Employees of Bharat Bank
Ltd. it was established that the order and awards of industrial adjudicators are subject to
judicial review by the Supreme Court directly

2
1963 AIR 874
under the special leave appellate jurisdiction under Art. 136 of the Constitution. In this case
the Supreme Court held that the ad judicatory authorities under the Act would fall within the
meaning of the term “tribunal” in Art. 136 of the Constitution, as these authorities have “all
the trappings of a court” and “perform functions which cannot but be Regard as judicial.”

The court lends support to the view of the High Courts, that a writ under Art. 226 lies to an
arbitrator functioning under Section 10A of the Act though it did bay High Court with regard
to Art. 227. However, it us refused to entertain the appeal under Art. 136 on the ground that is
wider than Art. 136 of the Constitution. "In our opinion art 226 which is writ of certiorari can
be issued in an appropriate case, is in an Art. 136, because the power conferred on the High
certain writs is not conditioned or limited by that the said writs can be issued only against or
tribunals. Under Art. 226(1), an appropriate to any person or authority, including in
appropriate government, within territories prescribed. Therefore, arbitrator appointed under
S. 10A is not a tribunal in a proper case, a writ may lie against his 226 "

But even a statutory arbitrator, according to does not fulfil the requirement of a tribunal Art.
136. What is more fundamental to constitute meaning of Art. 136, on which the court has
finally should be constituted by the State and should be invested with the States' inherent
judicial power". It would mean that " a distinction lies between judicial power on the one
hand and judicial conduct in the arbitral power on the other ". The main hurdle in treating the
arbitrator under S. 10A as a tribunal, according to the Court, is that he is appointed by the
agreement of the parties and he derives his power to adjudicate from that agreement of the
parties whereas industrial tribunals derive it from the statutory provisions themselves.

Although it is true to some extent that the arbitrator under section 10 A derives his power of
adjudication from an agreement of the parties, yet once appointed he functions and
adjudicates within the framework of the Industrial Disputes Act and is bound by the
provisions of the Act and the rules framed thereunder. The only difference appears to be that
he is not paid by the State. The Supreme Court has relied on the observation of Mahajan, J.,
in Bharat Bank case 3that "the condition precedent for bringing a tribunal within the ambit of
Art. 136 is that it should be constituted by the State', and "a tribunal would be outside the
ambit of Art. 136 if it is not invested with any part of the judicial function of the State but
discharges purely administrative and executive duty". In fact, in Bharat Bank case, the Court
was only pointing out the difference between tribunal exercising judicial functions and

3
Bharat Bank v. Employees ' of Bharat Bank, A.I.R. 1950 S.C 188
tribunal exercising purely administrative and executive functions. It may be pointed out that
under Section 10A sub-clause (5), the Arbitration Act, 1940, does not apply to arbitration
under Section 10A. That provision was made intentionally by the legislature to treat the
award of an arbitrator and that of a tribunal on the same footing and for that purpose Section
2 (a) was amended to include an award of the arbitrator functioning under S. 10A of the Act
into the definition of Award. But the Court seems to suggest that the legislature by
incorporating S. 10A (5) wanted to treat arbitration proceedings something distinct from
tribunal proceedings.

JUDICIAL REVIEW OF AWARDS WITH REFERENCE TO A&C ACT

It is necessary to understand ambit of award to be defined for judicial review. The court left
open the question whether the order granting interim relief by the adjudicator would be a
ward, within the meaning of Sec. 2 (b).

This question assumes importance in view of the law that if it is an award, it requires
publication by the appropriate Government under S.17 as a condition precedent for its
enforceability. There is a conflict of opinion on this question among various High Courts.
The Patna4Punjab 5Delhi6and Calcutta7 High Courts had taken the view that an order granting
interim relief must take the form of an award, requiring publication under S. 17 of the Act.
But the High Court of Karnataka held that “interim relief like a direction to pay subsistence
allowance to a dismissed workman during the pendency of a dispute concerning the validity
of his dismissal, or any other interim relief which the Tribunal/Labour Court has the power to
grant, need not and should not be made in the form of an award".

Voluntary reference of dispute to arbitration8

4
Punjab National Bank Ltd. v. A. N. Sen, AIR 1952 Punj 143
5
Mehr Singh v. Delhi Administration, ILR (1973) I Delhi 732
6
Jeevanlal (1929) Ltd. v. State ofWest Bengal, (1975) Lab. I. C. 1162 (Cal)
7
Jeevanlal (1929) Ltd. v. State ofWest Bengal, (1975) Lab. I. C. 1162 (Cal)
8
Section 10 IDA act 1947
The arbitrability of labour disputes first arose in Kingfisher Airlines v. Captain Prithvi
Malhotra and others 9(“Captain Prithvi Malhotra”). This case arose out of various labour
recovery proceedings instituted by pilots and other staff members of the now defunct
Kingfisher Airlines, Kingfisher filed an application invoking Section 8 of the Arbitration and
Conciliation seeking reference to arbitration in terms of the employment agreements. The
labour court rejected the application and retained jurisdiction over the proceedings.

Kingfisher thereafter moved the Bombay High Court to challenge the correctness of the order
passed by the labour court. The Bombay High Court affirmed the order of the labour court
and held that labour disputes were not arbitrable under the Arbitration and Conciliation Act,
1996. The Court holds that the inquiry is not solely whether the claim being urged is in
personem or in rem (as was held by the Supreme Court in Booz Allen & Hamilton v. SBI
Home Finance10), but whether the resolution of the claim has been exclusively reserved for
adjudication by a particular court or tribunal for public policy reasons. The Court holds that
the resolution of labour and industrial disputes has been reserved for resolution before the
judicial fora constituted under the Industrial Disputes Act, 1947. By drawing upon the
preamble of the Act as well as the scheme of resolution of labour disputes, the Court holds
that strong public policy reasons support such a conclusion.

11
The Court in Captain Prithvi Malhotra also goes further than merely determining the
arbitrability of labour disputes. It examines the scheme of the Industrial Disputes Act, 1947
and concludes that the Act provides for a unique process for arbitration of collective labour
claims. It therefore concludes that if there were to be adjudication of labour and industrial
claims outside of the courts and tribunals constituted under the Act, the reference to and
resolution by arbitration would have to be governed by the specific provisions of the
Industrial Disputes Act, 1947 (and the attendant rules made thereunder) and not the
Arbitration and Conciliation Act, 1996. The Court therefore concludes two crucial issues:
claims under the Industrial Disputes Act, 1947 are not arbitrable under Arbitration and
Conciliation Act, 1996 and by extension, where it is arbitrable, it must be in conformity with
the requirements and procedure under the Industrial Disputes Act. It is therefore important to

9
2013 (7) Bom CR 738
10
(2011) 5 SCC 532
11
Supranote 13
remember that labour and industrial claims are not per se non-arbitrable, but are instead only
arbitrable in the manner and to the extent permitted by the Industrial Disputes Act, 1947.

A similar question arose five years later in Rajesh Korat v. Innoviti 12

(“Rajesh Korat”)
before the Karnataka High Court. In this case, when an application for reference to arbitration
was made before the labour courts, the application was allowed and parties were referred to
arbitration in terms of the arbitration agreement (in contrast to Captain Prithvi Malhotra
where the labour court rejected the application and retained jurisdiction).

The reasoning in Rajesh Korat greatly resembles the reasoning in Captain Prithvi Malhotra.
The Court concludes that there are strong and compelling public policy reasons to ensure that
labour and industrial disputes are exclusively resolved by courts and tribunals under the
Industrial Disputes Act. In Rajesh Korat, the Court goes slightly further in concluding that the
Industrial Disputes Act is a self-contained code, and to that extent the Arbitration and
Conciliation Act, does not have any application to matters governed by the Industrial
Disputes Act. Although it does not expressly address this question, Rajesh Korat impliedly
endorses the proposition that any arbitration of labour disputes would have to be in
conformity with the procedure under the Industrial Disputes Act, 1947 and not the Arbitration
and Conciliation Act, 1996.

Captain Prithvi Malhotra and Rajesh Korat are both decided correctly and they independently
reach the right conclusion. Both decisions examine the nature and larger scheme of the
Industrial Disputes Act and pay close attention to the various categories of judicial and quasi-
judicial fora established under the Act. After undertaking this analysis both decisions
correctly conclude that labour and industrial claims are non-arbitrable under the Arbitration
and Conciliation Act, 1996, and where they can be submitted to arbitration, such reference
and resolution must be in compliance with the procedure under the Industrial Disputes Act.

12
7 IJAL (2018) 120
CONCLUSION

The holding of the Supreme Court under Article 136 will definitely forfeit the purpose for
which the provision of voluntary arbitration was added in the Industrial Disputes Act. It
would create not only practical difficulties but develop a no-man's land - a wrong for which
no remedy might be available.

Decisions of Captain Prithvi Malhotra and Rajesh Korat are attentive in bargaining power
inherent in labour disputes. In large part the Industrial Disputes Act (and labour legislation
generally in India), are meant to address this issue. Part of this remedial function is achieved
through the creation of specialized courts and tribunals under the Industrial Disputes Act,
1947. A closer reading of both Captain Prithvi Malhotra and Rajesh Korat would reveal that
the Court was persuaded in large part by the consequences of relegating labour disputes to
private arbitral tribunals.

If these cases were decided the other way and labour disputes were held to be arbitrable, it
would mean that individual and collective labour disputes would have to be resolved by way
of private arbitration where employers would potentially have the sole authority to appoint
arbitrators, employers could refuse to participate in the appointment process forcing
13
employees to follow the procedure under Section 11 of the Act and/or could also have the
power to designate arbitral institutions, which would beyond the reach and means of
industrial workers. In sum, the Courts seem convinced that holding labour disputes to be
arbitrable would place undue burdens on aggrieved workers in accessing and thereafter
participating in private arbitral proceedings under the Arbitration and Conciliation Act, 1996.
The public policy arguments for holding these categories of disputes non-arbitrable, is then
both compelling and on the face of it, accurate.

In the end it is easy to approach supreme court for challenge of awards for judicial review as
compared to under Arbitration and conciliation act, though this act expressly barred from
applying, eventually court agreed to enforce Arbitration and Conciliation act to the
consonance of IDA act, challenging awards for judicial review must be in consonance to IDA
act.

13
IDA act 1947