INDUSTRIAL DISPUTE ACT, 1947

Definition of Industry:

As per Section 2(j) of the Act, "industry" means any business, trade, undertaking,
manufacture or calling of employers and includes any calling, service, employment,
handicraft, or industrial occupation or a vocation of workmen.

Section 2 (j) of the Industrial Disputes Act, 1947 can be divided into two components.
The first component enumerates as the statutory meaning of ‘industry’; the second
component provides as to what does an industry includes within its definition. This
definition is not exhaustive and cannot be treated as restricted in any sense. The
definition read as a whole denotes a collective enterprise in which employers and
employees are associated.

CASE LAWS:

State of Bombay vs. Hospital Mazdoor Sabha

Industry is a systematic activity carried on by the employer with the co-operation of his
workmen to produce goods or provide services with a view to satisfy material human
wants or needs.

Bangalore water supply vs. A.Rajappa [Triple test]

i) if it is a systematic activity,
ii) if it is organized by co-operation between employer and employees and
iii) if the underlying purpose is the production and or distribution of goods and
services calculated to satisfy human wants and wishes (not wants or wishes of a
spiritual or religious nature )
What all includes Industry/not?
1. Municipal Corporation
D.N.Banerjee vs. P.R.Mukherjee
Two employees were dismissed from service a Head Clerk and Sanitary Inspector on
the charges for negligence in subordination and indiscipline. Trade union questioned
the same and contended that it amounts to Industrial Dispute and filed case before the
Industrial Tribunal. Tribunal passed the orders in favor of the union and ordered to
reinstatement.

The same was challenged on the ground that its duties being connected with the local
self-government it is not the industry and the dispute is not industrial dispute.

SC held that the definition in the Act was apparently intended to include within its
scope what might not strictly be called a trade or business Neither investment of capital
nor profit making motive is essential to constitute an industry as they are generally
necessary in a business. A public utility services such as railways telephones and supply
of power light or water to public utility services may be carried on by private companies
or business corporations and if these utility services are carried on by local bodies like
a Municipality they do not seize to be an industry. For the above stated reasons,
Municipal Corporation was held to be an industry.

2. Nagar Palika

Premanand Vs Nagar Palika Dehradun and others

A was dismissed for gross negligence in collecting Taxes. Trade Union took up the
matter and as per the Nagpur Corporation Vs Its Employees it pleaded for considering
the dispute as Industrial Dispute.SC held that the activity of Nagar Palika in any of its
department except those dealing with levy of house Tax etc, Falls within the definition
of Industry un UP Industrial Dispute Act 1947.
3. Hospitals

State of Bombay vs. Hospital Mazdoor Sabha & BWSSB vs. Rajappa

2 employees of the hospital were retrenched and the trade union was insisting to
reinstatement of those 2 employees through writ petition The State Government stated
that Hospitals were not Industry. The hospitals were run by the state for giving medical
relief to citizens and imparting medical education.

Management of Hospitals, Orissa vs. Their workmen

It was held that hospital run by the government as part of its function is not an industry.
The mere fact that payment is accepted in respect of some beds cannot lead to the
inference that the hospitals are run as a business in a commercial way. Primarily the
hospitals are meant as free service by the govt. to the patients without any profit motive.

4. Government Departments

State of Rajasthan vs. Ganeshi Lal

The Supreme Court held that the Law department of govt. could not be considered as
Industry.

5. Club

Madras Gymkhana Club Employees Union vs. Management

It was held that club was a member’s self-serving institution and not an industry but
this was overruled by Bangalore water supply case. It was held that both the cricket club of
India and Madras cricket club would be now an industry because they fulfill triple test.
Both are systematically organised with the co-operation of employer and employee for
distribution of services to satisfy human wants.
6. Educational Institutions

University of Delhi vs. Ramnath

The SC held that the work of imparting education is a mission and a vocation than
profession or trade and thus, it is not an industry. But the SC on the basis of triple test
laid down in the Bangalore Water supply case held that, it is an industry.

7. Temple

Mahamadhka Gajika vs. Manager

SC held that the Jain Temple is not an industry.

STRIKES AND LOCKOUTS:

Section 2(q) of the Act defines strike as a collective stoppage of the work by workmen
undertaken in order to being pressure upon those who depend on the sale or use of the
products of work. It is a weapon in the hands of workers and is generally a labour’s last
resort in connection with industrial controversies.

Section 2(l) of the Act defines Lock-out, in this an employer shuts down his place of
business as a result of reprisal, or as a mode of exerting pressure upon the employees
with a view to dictate his won terms to them.

Section 22 of the Act:

It deals with prohibition of strikes and lock-outs. This section applies only to the
industries carrying public utility services. This section doesn’t absolutely prohibit the
strikes and lock-outs, there are certain conditions specified that has to be fulfilled by
the employees before going for strike or employers before going for lock-outs. The
intention of the legislature to safeguard against sudden strike or lock-out in public utility
services as it would not only cause inconvenience to the other party of the dispute but
also to the general public and the society.
Section 22(1) provides that no person employed in a public utility service shall go on
strike in breach of contract:
(a) without giving to the employer notice of strike, as hereinafter provided, 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 conditions before going on strike. Further, it only
applies to public utility services but not to non-public utility services.

Section 22(2) lays down that no employer carrying on any public utility service shall
lock-out any of his workmen—
(a) without giving them notice of lock-out as hereinafter provided, within six weeks
before locking out; or
(b) Within fourteen days of giving such notice; or
(c) before the expiry the date of lock-out 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

Section 22(3) provides that the notice of strike or lock-outs as provided in the sub-
section (1) & (2) may in certain cases be dispensed with:
1. No notice of strike is necessary when there is already an existence of Lock-out in the
public utility services.
2. No notice of lock-out is necessary when there is already an existence of strike in the
public utility services.
In the case of Madura Coats Ltd. vs. Inspector of Factories Madurai, the workmen
went on strike without serving notice under Section 22. They claimed wages for national
holiday which fell in strike period. The Supreme Court held that they were not entitled
to wages because they have themselves brought about a situation by going on strike
without giving a notice whereby the management was deprived of their right to take
work from them.

Section 23 of the Act:

The prohibition against strikes and lock-outs contained in Section 23 is general in
nature. It applies to both public utility as well as non-public utility establishments. 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—
(a) during the pendency of conciliation proceedings before a Board and seven days after
the conclusion of such proceedings;
(b) During the pendency of proceedings before 1 [a Labor Court, Tribunal or National
Tribunal] and two months after the conclusion of such proceedings;
(bb) 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
(c) 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.

The object of these provisions seem to ensure a peaceful atmosphere to enable a

conciliation or adjudication or arbitration proceedings to go on smoothly.

Difference between Section 22 and 23:

 Section 22 Section 23

Public utility concern only Both public as well as non-public utility

Doesn’t prohibit strike or lock-out during It does so

the pendency of conciliation proceedings

Notice is necessary Not necessary

Section 24 of the Act:

A strike or a lock-out shall be illegal if—
(i) it is commenced or declared in contravention of section 22 or section 23; or
(ii) it is continued in contravention of an order made under sub-section (3) of section
10 1 [or sub-section (4A) of section 10A].

Section 24(2) provides that where a strike or lock-out in pursuance of an industrial

dispute has already commenced and is in existence at the time of reference of the
dispute to a Board, an arbitrator, a labor Court, Tribunal or National Tribunal, the
continuance of such strike or lock-out was not at its commencement in contravention
of the provisions of this Act or the continuance thereof was not prohibited under
Section 10(3) or sub-section 4-A of Section 10-A.

According to Section 24(3) a lock-out declared in consequence of an illegal strike or

strike declared in consequence of an illegal lock-out shall not be declared to be illegal.

Punishment for illegal strikes: The workers have right if not fundamental right to go
on strike. If a strike is illegal the party guilty of the illegality is liable to punishment under
Section 26 of the Act.
Section 25 of the Act:
It prohibits financial aid to illegal strikes and lock-outs. It says that no person shall
knowingly spend or apply any money in direct furtherance or support of an illegal strike
or lock-out. This section has following ingredients:
1. Spend or apply any money;
2. Spend or apply any money in direct furtherance of support of any illegal strike or
lock-out.
3. the strike or lock-out is actually illegal
4. knowledge on the part of the person spending or applying any money in direct
furtherance of support of any illegal strike or lock-out.

Difference between Strike and Lock-out:

Strike Lock-out

strike as a collective stoppage of the work Lock-out, in this an employer shuts

by workmen undertaken in order to being down his place of business as a result of
pressure upon those who depend on the reprisal, or as a mode of exerting pressure
sale or use of the products of work. upon the employees with a view to dictate
his own terms to them.

It is a weapon which is made use of the It is a weapon of employers

labor class

It entails the full ceasing of work by the It entails the temporal shut down of the
workers until their demands are met by place of work , suspension of the work or
the employees. refusal to employ
 Reasons are often economic Reasons could be both economic and
non-economic.

LAY-OFF

The Industrial Dispute Act, 1947 as originally enacted made no provision for the
payment of lay-off or retrenchment compensation to the laid-off or retrenched
workmen. In the absence of statutory provisions for paying compensation, the
authorities had taken into consideration various factors in determining the amount of
compensation. Therefore, there were no uniform rules determining the compensation.
In order to overcome the situation the President of India promulgated the Industrial
Disputes (Amendment) Ordinance, 1953. The said Ordinance was repealed and
replaced by Industrial Disputes (Amendment) Act, 1953 and Sections 25Ato 25J were
added.

The SC in the case of Hariprasad Shiv Shankar Shukla vs. A.D. Divakar, held that
retrenchment means the discharge of surplus labour or staff by the employer for any
reason whatsoever, otherwise than on punishment inflicted by way of disciplinary
action, and it has no application where the services of all workmen have been
terminated by the employer on a real and bonafide closure of business or where the
services of all workmen have been terminated by the employer on the business or
undertaking being taken over by another employer.

The term ‘lay-off’ has been defined under section 2 (kkk) of the Industrial Disputes
Act, 1947, thus lay-off means the failure, refusal or inability of an employer on account
of the shortage of coal, power or raw materials or the accumulation of stocks or the
breakdown of machinery or natural calamity or for any other unconnected reason to
give employment to a workman whose name is borne on the muster rolls of his
industrial establishment and who has not been retrenched.
Thus, the essentials are:

(i) There must be failure, refusal or inability on the part of the employer to give
employment to a workman.
(ii) The failure, refusal or inability should be on account of shortage of coal, power or
raw materials or accumulation of stocks or breakdown of machinery, or natural
calamity, or any other connected reason.
(iii) The workman’s name should be on the muster rolls of the industrial establishment.
(iv) The workman should not have been retrenched.

Section 25-A of the Act:

Section 25 A of the Act provides clearly that the provisions of the Industrial Disputes
Act, 1947 relating to lay- off and retrenchment compensation do not apply to the
following three types of industrial establishments:
(a) An industrial establishment in which less than fifty workmen on an average per
working day have been employed in the preceding calendar month
(b) Industrial establishments which are of a seasonal character or in which work is
performed only intermittently
(c) Industrial establishments to which chapter V-B applies as inserted by the Industrial
Disputes Amendment Act, 1976.

Further, Sub-clause (2) of Section 25-A provides that “If a question arises whether an
industrial establishment is of a seasonal character or whether work is performed therein
only intermittently, the decision of the appropriate Government thereon shall be final.”
The appropriate government has jurisdiction to decide any such dispute, and it exercises
the function of quasi-judicial authority.

As per Explanation, the Industrial establishment means:

1. Factory under Factories Act, 1948

 2. Mines under Mines Act, 1952
3. Plantation under Plantations labour Act, 1951

Section 25-B of the Act:

Section 25 B defines what amounts to continuous service. A workman is said to be in

continuous service if he is for that period in uninterrupted service. Interruption on
account of sickness, authorized leave, an accident, a strike which is not illegal, a lock
and a cessation of work which is not due to the fault of the workman should not be
taken into consideration for calculating the period of continuous service.

Even if a workman has not been in continuous service for a period of one year,
he shall be deemed to be in continuous service for the period of one year if he
satisfies the following two conditions:
Case 1: (i) He was in employment for twelve calendar months preceding the date with
reference to which calculation is to be made, and
(ii) During such twelve months, he actually worked for not less than (a) one hundred
and ninety days in the case of employment in a mine, and (b) two hundred and forty
days in any other case.
Case 2: for a period of six months, if the workman, during a period of six calendar
months preceding the date with reference to which calculation is to be made, has
actually worked under the employer for not less than—
(i) ninety-five days, in the case of a workman employed below ground in a mine; and
(ii) one hundred and twenty days, in any other case.

According to the explanation of this section, for the purpose of calculating the
number of days on which a workman has actually worked under an employer,
the following days shall be included:
(a) The days on which he has been laid-off under an agreement or standing orders or
under this Act or under any other law applicable to the industrial establishment
(b) The days on which he has been on earned leave
(c) The days on which he has been absent due to temporary disablement due to an
accident arising out of and in the course of his employment
(d) In the case of a female worker, the days on which she has been on maternity leave,
not exceeding twelve weeks.

Section 25-C of the Act:

According to Section 25 C of the Industrial Disputes Act, a workman who is laid-off is

entitled to compensation equivalent to 50 per cent of the total basic wages and dearness
allowance for the period of lay-off.

This right of compensation is, however, subject to the following conditions:

(i) He is not a badli or a casual workman.
(ii) His name should be borne on the muster rolls of the establishment.
(iii) He should have completed not less than one year of continuous service under the
employer.
A badli workman means a workman who is employed in place of another workman
whose name is borne on the muster rolls of the establishment. However, such a
workman ceases to be a badli workman on his completion of one year of continuous
service in the establishment.

A workman is entitled to lay-off compensation at the rate equal to fifty per cent of the
total of the basic wage and dearness allowance for the period of his lay off except for
weekly holidays which may intervene. Compensation can normally be claimed for not
more than forty-five days during any period of twelve months.
Even if lay-off exceeds forty five days during any period of twelve months no
compensation is required to be paid for the excess period if there is an agreement to
that effect between the workman and the employer.

If the period of lay-off exceeds forty-five days, the employer has two alternatives
before him, namely:
(i) To go on paying lay-off compensation for such subsequent periods
(ii) To retrench the workman.
In case the employer adopts the second alternative, he is bound to comply with the
provisions of section 25F. In case of such retrenchment, the employer is enabled to
adjust the amount of lay-off compensation paid during the preceding 12 months against
retrenchment compensation payable under section 25-F.

Where the lay-off is justified and it satisfies the requirements of the definition under
Section 2(kkk), the only relief to which workmen laid off are entitled is the statutory
relief prescribed by Section 25-C.

If the lay-off is malafide in the sense that it has been declared in order to victimize the
workmen, it would not be lay-off justified under Section 2(kkk), and the relief provided
to the laid-off workmen under section 25-C would not be the only relief to which they
are entitled.

Section 25-D of the Act:

It imposes duty upon the employer to maintain a muster roll for the purpose of this
Chapter. The employer shall also provide for making entries in the muster rolls by
workmen who may present themselves for the work at the appointed time during
normal working hours. Every worker who has been laid off is required to present
himself for work at the establishment on each working day at the appointed time. He
shall make entry in the muster rolls maintained by the employer. A workman does not
present himself and doesn’t sign on the muster roll shall not be entitled for the lay-off
compensation. The duty imposed under this section upon the employer is mandatory
and non-compliance will debar the employer to take advantage of Section 25-E.

Section 25-E of the Act:

The provisions of Section 25-E provide certain exceptions to the general rule for the
payment of lay-off compensation. In other words even if the workman is laid off, he
will be disentitled to claim compensation if his case falls within any of the three clauses
of this section. In the following cases, a worker who is laid-off will not be entitled to
claim compensation.

1. Refusal to Accept Alternative Employment: If a laid off workman refuses to

accept alternative employment provided that such alternative employment is:
(a) In the same establishment from which he has been laid-off or
(b) In any other establishment belonging to the same employer situated in the town or
village within a radius of five miles from the establishment to which he belongs,
(c) In the opinion of the employer the alternative employment does not call for any
special skill or previous experience and can be done by the workman and
(d) It carries the same wages which would normally have been paid to the workman in
his original employment.
2. Absence From the Establishment:
If the workman does not present himself at the appointed time during normal working
hours at least once a day.
3. Strike or Go Slow:
If such laying-off is due to a strike or slowing down of production on the part of
workmen in another part of the establishment.

RETRENCHMENT:
The term “Retrenchment” has been given a very wide meaning under Section 2(oo)
of the ID Act to include termination by the employer for any reason whatsoever, other
than a punishment given in disciplinary proceeding.

The provision further states that Retrenchment does not include:

1. Voluntary retirement;
2. Retirement on reaching age of superannuation;
3. Termination of service of workman as a result of non-renewal of contract of
employment;
4. Termination of workman due to continuous ill-health
A mere perusal of the aforesaid provision shows that the employer has been given wide
discretion for terminating an employee as it states that employer can terminate for any
reason whatsoever…

Section 25-F of the Act:

If the conditions or requirements given in this provision are not followed by the
employer, then the retrenchment of employee will be illegal and invalid.

According to this provision, a workman employed in any industry who has been in
continuous service for not less than one year under an employer cannot be retrenched
unless-

 The workman has been given one month’s notice in writing indicating the reasons
for retrenchment and the period of notice has expired, or the workman has been
paid in lieu of such notice, wages for the period of the notice;

 The workman has been paid compensation at the time of retrenchment;

 Notice in the prescribed manner is served on the appropriate Government

Hence, if aforesaid conditions have not fulfilled by the employee before retrenching
employee, then the employee can challenge the same.

The requirement of paying compensation is mandatory pre-condition for retrenchment

of a workman, therefore, its non-compliance will render a retrenchment invalid.