MAHARASHTRA NATIONAL LAW UNIVERSITY, MUMBAI

MID-SEMESTER EXAMINATION ASSIGNMENTS

LABOUR LAW

SEMESTER VI

Submitted To: Prof. Rohit Jadhav Enrolment No.: - 2017043 Submitted By: Sakshi Salunke

Q.1) Can Trade Unions be considered an effective means to achieve labour

empowerment?

Ans) Unions in India have been preoccupied with protecting the interests of the workers. The
government worked in tandem with the unions in setting up labour standards. In the process
unions became strong and began asserting themselves not by contributing to the economic
performance but by organizing a large number of strikes at the national and the enterprise
levels. The globalization process, since 1991, has adversely affected labour. There has been
jobless growth for many years. Most of the additional employment has been of an informal
nature, even in the formal sector. At the enterprise level, management’s quest for a lean and
mean organization has led to a reduction in workforce, replacement of permanent workers with
causal or contract workers. The employer is also merrily into union bashing or resisting the
formation of unions and taking a tough posture in collective bargaining. Unions are, therefore,
up in arms against the inaction of the government and unfair practices of the management.
Trade union is an outcome of industrialization. It is based on ‘united we stand, divided we fall’.
It is generally viewed that an organization of employees for the purpose of securing various
benefits for them is a trade union. The traditional outlook in the labour management
relationship has changed due to industrial revolution. The relationship between employer and
employee disappeared with the introduction of modern factory system. Various social and
economic evils made it compulsory on the part of workers to devise effective means to deal
with the employers in the form of trade unions. The growth of trade union was the result of a
number of strikes, the deteriorating economic conditions of workers, low wages which could
not keep pace with soaring prices and the shortage of labour. Trade unionism in India is passing
through a critical phase and facing unprecedented challenges in the liberalized, privatized and
global economy. Labour is being pushed from the organized sector to unorganized sector
leading to an increase in casual and contract labour. Downsizing, organizational restructuring,
labour laws, the apathetic attitude of government, and gap in the knowledge and skill-base are
the major factors responsible for this state of affair while reviewing the evolution of industrial
relations divided the era into four phases. Traditionally, the function of trade unions in India
was limited largely to collective bargaining for economic considerations. However, over time,
trade unions have begun to play various other roles as well. Besides aiming to improve the
terms and conditions of employment, trade unions now play a critical role in employee welfare
activities, such as through organization of cooperative credit societies, cultural programs, and
banking and medical facilities and by creating awareness through education of members and
publication of periodicals and newsletters. Trade unions provide a forum to help facilitate better
industrial relations and improve productivity. nt. However, they are operating from a weaker
platform and the management in tandem with the government is asserting itself. Thus, this
throws light over trade union law and its effect over labour management relations. It clears the
concept, meaning of trade union like it is a voluntary organization of workers and it acts
collectively. It protects the interests and promotes welfare of workers. Its purposes are to secure
employment, foster equity and industrial democracy, provide social security. It works as
negotiation machinery. The growth of trade union movement viz period of social welfare, of
left-wing trade unionism of trade unity, of second World War and period of after independence.
The current status of trade unions movement is that it has come to a stay and has become
permanent feature of the industrial society. The unions have achieved an outstanding status and
their voices are heard by the employers and the government. Further, we examine the Trade
Unions Act, 1926. There are several aims of TU Act such as to increase the number of workers,
to empower the Registrar of TU to report the matter to the Central Govt. regarding verification
of membership of registered TUs. TU Act further defines several important terms viz Registrar,
trade union, trade dispute, workmen etc. It further evaluates the registration of trade unions,
mode of registration, application for registration along with required copies, it prescribes the
time period of registration of trade unions, it empowers the Registrar to inquire the statements
mentioned in the application for registration. This Act further imposes conditions over trade
unions to keep minimum numbers of members. It tells about certification of registration and
the evidentiary value of such certificate, i.e., to be conclusive evidence. It further examines the
funds of TU, i.e., general and political funds and their purposes and uses. It further analyses
that the subscription to a TU is only voluntary. In case of non-contribution of any member, he
shall not be excluded in any way from the benefits of the TU. This further critically analyses
the privileges of a registered TU such as exemption from criminal conspiracy, exemption from
civil suits and exemption from tortuous liability. In the end, it examines the role of High Court
to cancel the registration. It views the provisions of appeal and second appeal regarding
registration of TU. It further views the minor’s right to membership, disqualification of office-
bearers along with their transfer provisions, amalgamation, name change and dissolution of
trade unions. Finally, we appraise that the movement of trade unionism in India are suffered
from a number of problems like politicization of unions, intra-union rivalry, small number of
membership, lack of welfare facilities, weak bargaining power, dependence on outside
leadership, multiplicity of unions, financial weakness and weak bargaining power. This has
been the vicious circle which has adversely affected the trade unions, status and their
bargaining power. The creation of a sound trade union needed due attention. First, there was
need to create competent, full time and well-disciplined trade unions with leaders of sound
trade union education. Second, there was also need that the union must play a vital role in
improving the living conditions of the workers. Greater interests must be evinced for the
welfare programmes of the members such as literacy, health and family planning, education,
cultural and recreational activities. The government should also grant financial aid to those
trade unions which are inclined to promote personal and environmental hygiene and other
welfare activities for their members. These constructive activities will help the trade unions in
supplementing the interests of their members. The forces of liberalisation unleashed in early
90s have strengthened the hands of employers in closing down unviable units. The new
corporate ‘mantras’ productivity, performance, efficiency, survival of the fittest have virtually
pushed them to the wall-where their very survival looks uncertain. It is worth to note that trade
union activities are mostly concentrated in the large-scale industries and particularly to manual
labour only. The supreme centre for all labour activities has been in cotton industries where a
number of labour leaders have guided the destinies of labour movement in India. However, the
development of the trade union among the white-collar workers has remained unsatisfactory.
In small scale enterprises and agricultural labourers, there are hardly trade union activities. In
rural sector, the workers are scattered, hence, there is also lack of labour organization. The
number of trade unions has considerably increased in India but the membership per union is
declining day by day. The government policy framework helped the workers in getting better
working conditions and participation in management. The government encouraged formation
of unions in the public sector. It also set standards for minimum and fair working conditions
and other benefits. The ILC remained crucially an important tripartite body dealing and
debating issues related to labour. It met regularly on an annual basis initially. Central and
Industry wise wage boards were set up which had the involvement of the trade unions. The
industrial policy of developing clusters allowed large concentration of enterprises at one place
thus helping the unions to form a base and increase its membership. Also, as these clusters
developed, large trade unions were established because workers could easily associate
themselves in these industrial zones. The government consulted unions and gave due
consideration to their views on important legislations and matters pertaining to labour. The
small size unions cannot effectively bargain with their employers for their welfare and other
facilities. Therefore, the yearly per capita income was very low because the total expenditure
of these unions was in lakhs. The reason for weak financial position is also that large amount
of subscription remains unpaid by the labour workers. These members are neither expelled nor
cease to be members of the union. Due to inadequate members, the subscription cannot be
collected on the pay day. However, through the check off system, this problem can be solved,
i.e., the deduction may be made from the wages paid by the employer and the employer hands
over the same to the union. Due to lack of adequate funds, most of the unions don’t pay office-
bearers. Many activists of trade unions work on honorary basis. Therefore, a limited time and
energy is devoted for union activities. Moreover, the political leaders also dominate the union
due to absence of full-time union workers. The lack of knowledge on the part of office-bearers.
regarding principles and practices of trade unions also invites the interference of outside
leadership. The existence of multiple unions in an industry is the result of political leaders who
want to increase their political influence. Therefore, the existence of rival organizations is
largely responsible for unhealthy and inadequate growth of trade union movement. Within a
single organization we see a number of groups comprising newcomers, outsiders and insiders.
In the Indian context, collective bargaining has largely led to higher wages and benefits for
workers in the public sector without any surge in productivity and in the private sector there is
no clear indication. After the independence, in 30 years, union’s attitude to demand surge in
remuneration with other benefits irrespective of the workers contribution to productivity and
other several work norms of the enterprise. More union management agreements The extent of
casteism, Southerners and Northerners, radical and moderates have also adverse effects on
trade union movement. In many ways, the solidarity and the strength of the workers is
undermined due to inter-union rivalry. The rival unions sometimes go the extent of mutual
accusation and obstructing the normal activities of trade union on different please. The strike
is opposed merely on the grounds that it is against the interests of the workers, it is unnecessary,
uncalled and it is antinational. It happens where an anti-union employer gets a chance to play
one against the other and adopt the policy of divide and rule. The rivals indulge in wild
accusations which discourages the workers’ faith in trade union itself. To make a trade union
movement successful and achieve labour empowerment, the members should take keen interest
in the union activities and chalk out the needs and demands of the labour force amicably. They
should be well-versed with the demands of the workers and activities of the unionism on
individual level. A large number of workers do not join any union and the attendance in the
general meetings is also very low. This gives rise to the cessation of unions’ functions in a
democratic way. The remedy of this problem is literacy among the workers and developing a
sense of responsibility in them. The trade unions generally give little attention to peaceful
methods for the fulfilment of their demands and settlement of disputes. Frequently, the trade
unions resort to demonstrations which affect the public interests. Traditionally, unions in India
did not come up to promote efficiency and productivity. They were born, like in other countries,
to check exploitation of labour. Unlike in other countries, however, neither the Indian
government because of its socialistic orientations till 1991 nor the private sector enterprises
thought of them as an instrument of increasing productivity of workers. The purpose of
industrial relations around which a large number of laws were formulated was industrial peace.
The Industrial industry dispute, 1947, the most important protecting the interests of the
workers, does not have any clause on productivity but lays stress on employment, working
conditions and the machinery of settlement of industrial disputes which will surely play as to
be effective in achieving labour empowerment in India.

Q.2) What is the scope of 'Industry'? Explain with the help of the situation that prevailed
pre and post Bangalore Water Supply case.

Ans) The Industrial Disputes Act, 1947 is an important legislation in the direction of attaining
fair treatment of labour and industrial peace, which are the sina qua non for sustained economic
growth of any country. There was no definition of ‘industry’ in the Trade Disputes Act, 1929.
The present definition continues to be as originally enacted in the 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. The present definition continues to be as originally enacted in the Industrial disputes
Act 1947. Though this definition has not undergone any amendment, it has undergone
variegated judicial interpretations. The definition of ‘industry’ is both exhaustive and inclusive
and is ambivalently comprehensive in scope. It is in two parts. The first says that it means any
business, trade, undertaking, manufacture or calling of employers” and then goes on to say that
it includes any calling, service, employment, handicraft or industrial occupation or vocation of
workmen”. Thus, one part defines it from the standpoint of the employers: the other from the
standpoint of the employees. The first part of the definition gives the statutory meaning of
industry. Whereas, the second part, deliberately refers to several other items of industry and
brings them in the definition in an inclusive way. The first part of the definition determines an
industry by reference of occupation of employers in respect of certain activities. The activities
are specified by five words namely, ‘business’, ‘trade’, ’undertaking’, ‘manufacture’, or
‘calling’. These words determine what an industry is and what the cognate expression
‘industrial is intended to convey. An activity whether it is ‘trade’ or ‘business’ will be an
industry because both have been included in the definition of industry. Then comes in the
history of labour jurisprudence a landmark judgment rendered by the Supreme Court in
Bangalore Water Supply and Sewerage Board, v. A Rajappa and Others, which apparently put
an end to the unending controversy with regard to the interpretation and application of the
definition, but the case has not ended. The background reason for referring the Bangalore Water
Supply case, was due to the apparent conflict posed by the Supreme Court in The Workmen of
the Indian Standards Institution v. The Management of the Indian Standards Institution.

The dominant nature test: Where a complex of activities, some of which qualify for exemption,
others not, involves employees on the total undertaking, some of whom are not 'workmen' as
in the University of Delhi Case 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 as explained in the Corporation of Nagpur, will be true test. The whole
undertaking will be 'industry' although those who are not 'workmen' by definition may not
benefit by the status. Notwithstanding the previous clauses, sovereign functions, strictly
understood, alone qualify for exemption, not the welfare activities or economic adventures
undertaken by government or statutory bodies. Even in departments discharging sovereign
functions, if there are units which are industries and they are substantially severable, then they
can be considered to come within Section 2(j). Constitutional and competently enacted
legislative provisions may well remove from the scope of the Act categories which otherwise
may be covered thereby.” These observations reveal the difference of thought among different
Judges who gave the diverse reasoning in the earlier rulings and the ones who gave the decision
in the Bangalore Water Supply case, where to sum up it can be said that the definition of
“industry” for the purposes of the Industrial Disputes Act was expanded to cover those
establishments which involved an employer-employee relationship including hospitals,
educational and research institutions, Governmental departments, public utility services,
professionals and clubs, irrespective of the objectives of the organization in question.

The Aftermath: Criticism and Need for Review

The ruling by a five-judge Supreme Court Bench, recommending the setting up of a larger
Bench to review the definition of “industry” as interpreted in law since 1978, is a wakeup call
to the legislature and the executive. The crux of the issue before the court in State of Uttar
Pradesh v. Jasbir Singh taken up along with nine other civil appeals, was whether, for purposes
of application of the Industrial Disputes Act 1947, the Bangalore Water Supply case that
amplified the definition of “industry” should continue to be the law of the land. Employers in
many service establishments and Government departments, aggrieved by the ruling in the
Bangalore Water Supply case raised demands for their exclusion from the ambit of the IDA.
Parliament subsequently passed in 1982 an amendment to the IDA, which sought to exclude
many kinds of establishments from the definition. However, the amendment was never notified.
The latest order of the Bench headed by Justice N. Santosh Hegde holds that the Iyer Bench
order needs a review in view of the executive’s failure to notify and enforce the amended
restrictive definition of “industry”. The Government had explained before courts that the 1982
amendment was not notified in view of the fact that no alternative machinery for redress of
grievances of employees in establishments excluded by the amendment had been provided. The
Hegde Bench itself has pointed out that it was only in the absence of an unambiguous definition
of industry in the IDA that the apex court delivered its ruling in 1978, and that at the same time,
Justice Krishna Iyer had said that “our judgment has no pontifical flavour but seeks to serve
the future hour till changes in the law or in industrial culture occur”. No doubt, the question of
a differentiated piece of industrial relations legislation for service establishments is becoming
ever more relevant because the role of the service sector in the economy is growing. Services
are also becoming a subject of international trade negotiations and are being opened to foreign
capital. Many service activities such as health care, education, water and power supply, for
long either the obligation or the prerogative of governments, are now undertaken by private
entrepreneurs. There is a need, on the one side, to protect the legitimate interests and democratic
rights of workers in these sectors, and on the other, to minimize the scope for disruption of
industrial peace in these vital sectors to protect the interests of the public. All these reasons are
important enough to warrant a separate law for these services. However, some observations
made by the Hegde Bench in favour of a legal review of the 1978 ruling are on quite different
lines and highly debatable. The order says that there is an “overemphasis on the rights of
workers” in industrial law and that this has resulted in payment of “huge amounts as back
wages” to workers illegally terminated or retrenched and that these awards “sometimes take
away the very substratum of industry”. Justice Krishna Iyer had remarked in his ruling that the
“working class, unfamiliar with the sophistications of definitions and shower of decisions,
unable to secure expert legal opinion, what with poverty pricing them out of the justice market
and denying them the staying power to withstand the multi-decked litigative process, de facto
is denied social justice if legal drafting is vagarious, definitions indefinite and court rulings
contradictory”. These remarks were made in support of an expansive definition of “industry”.
The Hegde Bench ruling attributes what it calls “the inhibitions and the difficulties which are
being exercised by the legislature and the executive in bringing into force the amended
industrial law” to the interpretation of the definition of “industry” in the 1978 judgment. This
also ignores the explanation given by the Government for non-enforcement of the restrictive
amendment. The apex court says that “an over-expansive interpretation of the definition of
industry might be a deterrent to private enterprise in India where public employment
opportunities are scarce”. However, neither economic theory nor the decades of growth of the
market economy in developed countries testifies to protection of employees’ basic rights being
a hurdle to progress. Thus, the remarks on macroeconomic tendencies made by the latest ruling
seem to be no more than assumptions. The Supreme Court has restored judicial discipline and
thereby prevented an unnecessary court-initiated turmoil in the area of labour law by giving a
judgement in Bangalore Water Supply case. Seven Judges of the Apex Court had given a
widely ranging definition of “industry” under the Act and ever since, the case has been applied
as law throughout the country. The Parliament which had amended the definition of “industry”
in 1982 restricted the wide meaning given by the Bangalore Water Supply case. The new
definition sought to exclude institutions like hospitals, dispensaries, educational, scientific and
research or training institutes, institutions engaged in charitable, social philanthropic services.
It was also proposed to exclude sovereign functions of the Government including activities like
atomic energy, space and defense research. For all these institutions, a separate body was
proposed to be created to address grievances, but after this legislatives mandate, the successive
Governments have been reluctant to bring the said law into force by merely issuing a
notification. It remains a debatable point as to what the Apex Court would do if a petition
moved for the enforcement of this definition in terms of A. K. Roy v. Union of India where it
was held that a legislative mandate cannot be held in abeyance by the ruling politicians for an
unreasonable period. The wide definition of “industry” has given opportunity to both the
employer and the employee to raise issues i.e. one trying to pull out of this definition, to be out
of the clutches of the said Act, and the other bringing within it to receive benefits under it. Due
to the width of the periphery of the word “industry”, there is a tug-o-war between the two, in
spite of the various decision of the Court.