Dispute Settlement Under the Industrial Disputes Act, 1947

Introduction

Absence of disputes implies a harmonious relationship between labour and management. Therefore, every industrial relations legislation necessarily aims at providing conditions congenial to industrial peace. Almost all interruptions are due to industrial disputes. Dissatisfaction with the existing economic conditions is the root cause of industrial disputes. The history of labour struggle is nothing but a continuous demand for fair return to labour expressed in varied forms. The object of all labour legislations around the world is to ensure fair wages and to prevent disputes. The Industrial Disputes Act (I.D. Act), 1947, first of all, seeks to pre-empt an industrial dispute, but if it arises, then a mechanism is provided to resolve it. The very preamble shows that the Act was enacted to provide machinery and forum for the investigation of an industrial dispute and the settlement thereof. The Act also seeks to promote measures of securing amity and good relations between the employer and workmen. The Act is a progressive measure of social legislation aiming at the amelioration of the conditions of workmen in industry.

Investigation and Settlement of Industrial Disputes

A. Authorities for Settlement and Adjudication of Industrial Disputes

Chapter II of the I.D. Act enumerates various authorities who are empowered for investigation and settlement of disputes. They are:

Works Committee (Sec. 3).
Conciliation Officers (Sec. 4).
Board of Conciliation (Sec. 5).
Courts of Inquiry (Sec. 6).
Labour Courts (Sec. 7).
Industrial Tribunals (Sec. 7A).
National Tribunals (Sec. 7B).

Under the I.D. Act, the settlement of disputes is achieved in three ways. (Modes of Settlement of Disputes):

By direct negotiation through Works Committees (at shop floor level)
By mediation or conciliation (at the government level), by appointing a Court of Inquiry (only when necessary), a Conciliation Officer, and a Board of Conciliation.
By arbitration (voluntary) or
Adjudication through Labour Court, Industrial Tribunal, and National Tribunal when voluntary efforts fail.

The adjudication of industrial and individual disputes had to be kept out of the jurisdiction of the municipal courts so that efforts may be made through Conciliation Officers, Court, or other agencies that have been framed to allow for settlement of human concerns. The view is that the Works Committee is the beginning of negotiation and settlement. The Act has been preferred for adjudication.

The appropriate government (State or Central) has the choice to choose one or the other authority for investigation and settlement of the disputes. The rationale behind this is that developing countries cannot afford to suffer from loss of production due to strikes and lockouts. Further, the trade union movement is yet to long-drawn and mature enough to adopt and rely on only collective bargaining for protecting the interests of and rely on only collective bargaining for protecting the interests of the workers. Therefore, the necessity for intervention by the government is felt. Thus, the appropriate government does it by making reference of the dispute to the adjudicating machinery.

B. Scheme of Settlement of Disputes

The scheme of settlement of disputes under the I.D. Act includes:

At first, the Works Committees constituted under the Act aim to resolve the industrial disputes amicably by providing for direct negotiations between the employer and workmen. They are normally concerned with the problems arising in the industry and in which the concern. Their role is advisory and in the day-to-day working of arises only when the Works Committee is persuasive. The dispute arises only when the Works Committees fail to achieve the end.
Secondly, the Conciliation Officers are appointed to mediate and promote the settlement of disputes. The appropriate government may appoint the Board of Conciliation when the issue involved is complex.
The appropriate government is vested with the power to set up a Court of Inquiry before referring the dispute to the Board of Conciliation. However, it is like a ‘fact-finding body. ’ The object of establishing the court of enquiry is only to make an investigation into facts. It has nothing to do with mediation in, or with the promoting of a settlement of an industrial dispute.
If conciliation fails to achieve the settlement, then and as a last resort, the dispute is referred to a judicial forum for adjudication. The adjudication is given to the Labour Court and Industrial Tribunal. Neither is superior to the other. Undoubtedly, the small matters like dismissal of individual workman are assigned to the Labour Court, and the serious matters like adjudication on general demands of workmen are assigned to Tribunals.
The National Tribunals can only be constituted by the Central Government. They are constituted for the adjudication of industrial disputes, which in the opinion of the Central Government, involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in or affected by such disputes.

Arbitration (voluntary) as a mode of settlement of disputes has also been specifically laid down in the I.D. Act. Almost all the State governments and Union Territory administrations have either set up Arbitration Promotion Boards or made some other similar arrangements to popularise voluntary arbitration.

Though the Act provides for two-tier adjudication machinery, the Supreme Court and the High Courts have appellate and superintending jurisdiction in labour matters under Arts. 136, 226, and 227 of the Constitution of India.

Settlement of Disputes Through Negotiation: Works Committees

Section 3 of the I.D. Act, 1947 lays down the procedure, appointment, and the object of ‘Works Committee’. It is the first Committee constituted under the Act to resolve the industrial disputes amicably by providing for direct negotiations between the employer and workmen. The works committee is constituted with the representatives of the employer and employees. The Act requires the appropriate government to direct the industrial establishment to constitute a Works Committee. The number of representatives of workmen on the Committee shall not be less than that of the employer. Further, the representatives of workmen shall be chosen in the prescribed manner from among the workmen engaged in the establishment and in consultation with their registered trade union as per Section 3(1).

Section 3(2) lays down that, it shall be the duty of the Works Committee to promote measures for securing and preserving amity and good relations between the employer and workmen and, to that end, to comment upon matters of their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters.

The object and purpose of the constitution of Works Committee lies in the principle of “Prevention is better than cure”. The object of the I.D. Act is “not only to make provisions for investigation and settlement of industrial disputes, but also to secure industrial peace so that it may result in more production and improve national economy”. Sec. 3 is a step to achieve this goal. Besides such object, the framers of the Act also intended to achieve the goal of labour participation in management. Works Committee fulfills both these objects.

Scope of The Works Committee

The institution of the Works Committee has been provided in the rules framed under the I.D. Act to look after the welfare and interest of the workmen. They are normally concerned with the problems arising in the day-to-day working of the concern, and the function of the Works Committee is to ascertain the grievances of the employers and to arrive at some agreement when the occasion so arises.

The decision of the Committee carries great weight but is not conclusive, as per the case of Kemp & Co. case (1955) (SC). The employer is not bound to implement the findings of such Committees. The decision of the Committee is neither agreement nor compromise. It is neither binding on the parties nor enforceable under the I.D. Act.

The performance of Works Committee in India is not very encouraging. A high object and functions are entrusted to it. But practically, it has remained merely recommendatory or advisory. Its functions are vague. The only weapon available to it to make itself useful is its ability to achieve results by persuasion.

There are several difficulties noted in the functioning of these Committees:

Lack of appreciation on the part of both parties.
Illiteracy and lack of understanding amongst the workers.
Disinclination of the workers’ representatives of the Works Committee to participate in the deliberations of the Committee.
Workers’ representatives became unpopular because of the failure to satisfy the high expectations of the workers.
Lack of co-operation of the leaders.

Thus, to make the Works Committee more effective, there should be cooperation between the management, workers, and Trade Unions. The management should be sympathetic and encouraging towards these committees so that the workers may put their grievances and suggestions. Workers need to be educated so that they may understand the issues. The worker’s representatives should have confidence so that their suggestions are given due weight. Lastly, there should be whole-hearted implementation of the recommendations of the Works Committee.

Settlement of Disputes Through Mediation: Conciliation Proceedings

The word ‘Conciliate’ means to bring together; to overcome, as distrust or hostility, by smoothing or pacifying means. Conciliation is a process in the industries to bring employers and employees together by pacifying means. Sec. 2(e) defines ‘Conciliation proceeding’, which means any proceeding held by a conciliation officer or board under this Act. The primary object of the conciliation proceedings is to get a fair and amicable agreement between the parties to the dispute.

If any industrial dispute arises, it has to be resolved by mediation or conciliation first. In no case, the stage of conciliation can be bypassed. It is a stepping-stone to approach the courts. Upon admitting an industrial dispute to conciliation, the conciliating authority informs, advises, and uses its powers and skill to chisel out a settlement. If no settlement is arrived at the conciliation, the conciliation authority submits the Failure Report to the appropriate government.

The conciliation machinery provided under the Act can take note of existing as well as apprehended disputes. The Conciliation machinery can be initiated by any party by approaching the conciliating authority. The authority suo motu (on its motion) takes all the necessary steps to call the parties to a negotiating table. Thus, the act does not require any formal approach for moving the conciliation machinery, and it almost automatically comes into action.

The conciliation is either by a person, i.e., the Conciliation Officer, or by several persons, i.e., the Conciliation Board. While Section 4 of the Act authorizes the appropriate government to appoint the Conciliation Officer, Section 5 authorizes the government to constitute a Board of Conciliation. The Board is usually appointed when the issue involved is complex. The Conciliation Boards are rarely constituted.

A. Conciliation Officers

Section 2(d) of the I.D. Act says that the “conciliation officer” means a conciliation officer appointed under this Act. Sec. 4 lays down that the appropriate Government may, by notification in the Official Gazette, appoint such number of persons as it thinks fit to be conciliation officers, charged with the duty of mediating in and promoting the settlement of industrial disputes. Sec. 4(2) prescribes that a conciliation officer may be appointed for a specified area or specified industries in a specified area or for one or more specified industries and either permanently or for a limited period.

Sec. 11 of the Act enumerates certain powers and functions of a conciliation officer:

A conciliation officer can enter any premises of any establishment (in which the dispute relates) after giving reasonable notice under Sec. 11(2). However, the absence of a notice does not affect the jurisdiction of a conciliation officer, as held in the case of State of Bihar v Kripa Shankar Jaiswal AIR 1961 SC 304. Moreover, as he does not adjudicate upon the rights of the parties, he need not serve any notice on the parties.

His functions are purely administrative. But he has certain powers of a civil court under the Code of Civil Procedure, 1908, for the following purposes:

to enforce the attendance of any person to examine such person.
to call for and inspect any documents which he has ground for considering to be relevant to the dispute; or
to be necessary for verifying the implementation of any award or carrying out any other duty imposed on him under the Act [Sec. 11(4)].

It may be noted that a conciliation officer does not have the authority to summon and examine witnesses on oath. The procedure employed by him is quite informal.

A conciliation officer shall be deemed to be ‘public servant’ within the meaning of Sec. 2(28) of the B.N.S., 2023.

Board of Conciliation

Section 5 of the Act provides that the Appropriate Government may, by notification in the Official Gazette, constitute a Board of Conciliation for promoting the settlement of an industrial dispute. A Board shall consist of a Chairman and two or four other members, as the appropriate government thinks fit.

It may be noted that, unlike a conciliation officer, the Board may not be a permanent body and can be set up by the appropriate government as occasion arises. The Boards are usually constituted if a dispute is of a complicated nature and the issues involved are important.

A Board, having the prescribed quorum, may act even though the Chairman, or any of its members, is absent or there is any vacancy in its number. But, if the appropriate government notifies the Board that the services of Chairman or of any other member have ceased to be available, the Board shall not act until a new Chairman or member has been appointed.

Section 11 lays down the procedure and powers of the Conciliation Boards. Section 13 provides for the duties of Boards. However, the same are no different than those prescribed for the Conciliation Officer, except in certain respects, including:

The Board (acting like a civil court) can examine any person on oath and issue summons for the examination of witnesses, besides enforcing the attendance of any person and compelling the production of documents or material objects under Section 11(3). The conciliation officer cannot do the latter activities.
Every proceeding of the Board shall be deemed to be a “judicial proceeding” within the meaning of Sec. 228 (giving or fabricating false evidence in a judicial proceeding) and Sec. 267 (intentional insult or interruption to a public servant sitting in any stage of a judicial proceeding) of the BNS, 2023.
The Board functions as a court, and therefore it follows the procedure prescribed for the courts. Section 11(1) provides that subject to any rules that may be made in this behalf, a Board, arbitrator, Court or Tribunal, etc. shall follow such procedure as it may think fit. However, such wide discretion must be exercised with care and caution, bearing in mind the principles of natural justice.
The conciliation officer can initiate proceedings in public utility services after notice is given under Section 22, and in any other case, he can hold the proceedings at his discretion. But the Board has to start acting only after it is specially constituted and a dispute is referred to it by the appropriate government.
The Board in the Failure Report, if it has to be submitted, has to give a detailed account about the steps taken by it. The report shall be accompanied by a full statement of such facts and circumstances, its findings thereon, and the reasons on account of which a settlement could not be arrived at. The Board shall also specify its recommendations for the determination of the dispute under Section 13(3).
If the Board arrives at a settlement, it has to be published under Section 17 of the Act within a period of 30 days. The report shall be signed by all the members of the Board (Section 16). It may be noted that the memorandum of settlement by a Conciliation Officer is not an Order. It is arrived at as the result of administrative action of the conciliation officer, and not the result of any judicial or quasi-judicial actions.
While the Conciliation Officer is required to submit his report within 14 days, under Section 13(3), the Board shall submit its report within two months of the date on which the dispute was referred to it or within such shorter period as may be fixed by the appropriate government. Further, the government may from time to time extend the time for the submission of the report by such further period not exceeding 2 months in the aggregate. Also, the time for the submission of the report may be extended by such period as may be agreed upon in writing by all the parties to the dispute.
Section 22 lays down that no person employed in a public utility during the pendency of any conciliation proceeding before a conciliation officer and 7 days after the conclusion of such proceedings shall go on strike. Similarly, no employer in public utility service shall lock out during the pendency of conciliation proceedings and 7 days thereafter. Section 23 prohibits strikes and lockouts during the pendency of conciliation proceedings before a Board and 7 days after conclusion of such proceedings.

Adjudication of Industrial Disputes

If conciliation fails to achieve the settlement, then and as a last resort, the dispute is referred to a judicial forum for adjudication. The conciliation is an extra extrajudicial remedy that tries to bring about reconciliation between the employer and workmen. The adjudication is the judicial remedy.

The adjudication is given to the Labour Court and Industrial Tribunal. Neither is superior to the other. Undoubtedly, the small matters like dismissal of individual workman are assigned to the Labour Court, and the serious matters like adjudication on general demands of workmen are assigned to Tribunals. Both, however, discharge quasi-judicial functions and work for and on behalf of the (appropriate) government.

A. Courts of Inquiry

Court of Inquiry is a temporary body, resembling with Board of Conciliation. However, it is like a “fact-finding body”. The object of establishing it is only to make an investigation into facts. It has nothing to do (directly) with mediation in, or with the promotion of a settlement of an industrial dispute. Thus, its function is neither conciliatory nor adjudicatory, but it is only investigatory.

According to Sec. 6(1), the appropriate government may, as occasion arises, by notification in the official gazette, constitute a Court of Inquiry for inquiring into any matter appearing to be connected with or relevant to an industrial dispute. Sec. 6(2) says that a Court may consist of one independent person or such number of persons as the appropriate government thinks fit. Where a Court consists of two or more persons, one of them shall be appointed as a Chairman. According to Sec. 6(3), a Court having the prescribed quorum may act notwithstanding the absence of Chairman or any of its members or any vacancy in its membership.

The report of the Court of Inquiry enables the appropriate government to decide to refer the industrial dispute for adjudication or not. The role of Court of Inquiry is so very much limited, and perhaps for this reason that the appropriate governments have very sparingly used and constituted such Courts.

B. Labour Courts

Labour Court is one of the adjudicatory authorities, introduced by an Amending Act in 1956. Sec. 7 of the Act deals with the constitution of the Labour Court. The appropriate government may, by notification in the official gazette, constitute one or more Labour Courts for the adjudication of industrial disputes relating to any matter specified in the Second Schedule and for performing such other functions as may be assigned to them under the Act [Sec. 7(1)]. Thus, the setting up of a Labour Court is at the discretion of the appropriate government.

Jurisdiction and Powers of the Labour Court:

Second Schedule of the I.D. Act enunciates certain matters within the jurisdiction of the Labour Courts. Such matters are:

The propriety or legality of any order passed by an employer under the Standing Orders.
The application and interpretation of Standing Orders.
Discharge or dismissal of workmen, including reinstatement of, or grant of, or relief to, workmen wrongfully dismissed or privileged.
Withdrawal of any customary concession or privilege.
Illegality or otherwise of a strike or lockout.
All matters other than specified in the Third Schedule.

The jurisdiction of the Labour Court begins from the order of reference under Sec. 10 or Sec. 10A and continues until it makes an award. Sec. 10 empowers an appropriate government to refer a dispute to a Labour Court if it thinks that any industrial dispute exists or is apprehended. Once the Labour Court is seized of the jurisdiction or the terms of the order of reference made to it, it cannot be withdrawn subsequently by the parties or by the Government.

Sec. 15 provides that every labour court shall hold its proceedings expeditiously and shall, within the period specified in the order referring such industrial dispute or the further period extended, it shall submit its award to the appropriate government. Sec. 16 provides that the award shall be in writing and to be signed by the presiding officer. Sec. 17 lays down that every report of a court and award shall be published in such manner as the appropriate government thinks fit. Sec. 23 prohibits strikes and lockouts in the industry, while the proceedings are pending before the Labour Court.

C. Industrial Tribunals

Industrial Tribunals specialize in service matters, particularly involving employees and employers in industries. Industrial Tribunals were, for the first time, created by the I.D. Act, 1947. Tribunals are adjudicating authorities other than ordinary courts of law.

Industrial Tribunals are constituted under Section 7A of the Act, and these quasi-judicial bodies are specifically designed to adjudicate upon “industrial disputes” as defined by the Act, particularly those involving matters falling within the Second Schedule and Third Schedule. Unlike civil courts, Industrial Tribunals operate with a unique mandate, focusing not merely on strict legal rights but also on principles of social justice, fairness, and industrial peace. Their jurisdiction extends to a wide array of contentious issues, including wages, hours of work, conditions of service, disciplinary actions, retrenchment, and other terms of employment, thereby providing a specialized forum for resolving complex labor-management conflicts.

The role of Industrial Tribunals is pivotal in ensuring expeditious and equitable resolution of industrial disputes, thereby preventing prolonged industrial unrest. Their awards, once published by the appropriate government, become final and binding on all parties to the dispute, subject to judicial review by higher courts.

D. National Tribunals

Unlike other Tribunals under the Act, the National Government can, only in the appropriate cases, refer the dispute to a National Tribunal for adjudication. The Central Government may refer to a National Tribunal any dispute which involves questions of national importance or the dispute is of such a nature that industrial establishments situated in more than one State are likely to be interested in or affected by such disputes.

The duties of National Tribunal, like those of an Industrial Tribunal, are:

Where an industrial dispute has been referred to a National Tribunal for adjudication, it shall hold its proceedings expeditiously.
It shall, within the specified period, submit its award to the appropriate Government.
The award shall be in writing and shall be signed by the presiding officer of the National Tribunal.
It shall, within 30 days from the date of its receipt by the Central Government, be published in such manner as the government thinks fit.

Voluntary Adjudication/Arbitration

Indian Labour Conference in 1962 noted that “whenever conciliation fails, arbitration will be the next normal step, except in cases where the employer gives that for some reasons he would prefer adjudication.” The Industrial Truces Resolution, 1962, emphasised voluntary arbitration and specified certain issues that could be conveniently brought under its purview. These included: disputes pertaining to dismissal, discharge, victimisation, and retrenchment of individual workmen. The Industrial Disputes Act, 1947 provides (under Sec. 10A) for joint reference of disputes to arbitration.

Voluntary adjudication/ arbitration is one of how the parties can settle disputes without any state intervention. Many industrial disputes are settled today through voluntary arbitration. Almost all the State governments and Union Territory administrations have either set up Arbitration Promotion Boards or made some other institutional arrangements to popularise voluntary arbitration.

If the parties feel that mutual negotiation will not succeed, they may decide to submit the dispute to a neutral person or a group of persons for arbitration. The arbitrator, after hearing the parties, may give his award, which is binding on the parties. Sometimes, however, the parties may agree to submit the dispute to an arbitrator but at the same time, reserve their right to accept or reject the award. In such a condition, voluntary arbitration loses its binding force.

Compulsory Adjudication/Arbitration

In compulsory adjudication/ arbitration, the government uses its power, or the parties are required by law to submit their dispute, to a tribunal or Court of Arbitration for adjudication. The main idea behind the imposition of compulsory arbitration is to maintain industrial peace by requiring the parties to refrain from causing work stoppages and providing a way for settling the dispute.

There are two principal forms of compulsory arbitration based upon the nature of reference and nature of the award: (i) Compulsory reference but voluntary acceptance of the award; (ii) Compulsory reference and compulsory acceptance of the award.

Under the compulsory reference but voluntary acceptance of the award, a dispute is referred to a tribunal or Court of Arbitration for adjudication. Either by the government or the parties may be required, by law, to submit their dispute for adjudication, though they are left free to accept or reject the award. However, in practice, the pressure of public opinion would lead them to accept the award.

Whereas in the case of compulsory reference and compulsory acceptance of the award, not only does the government have the power to refer the dispute for adjudication, but also, the parties are put under a legal obligation to abide by the award. Law forces the parties to appear before the adjudicator, and penalties are imposed on them for non-acceptance and non-implementation of the terms of the award.

Conclusion

The Industrial Disputes Act, 1947, stands as a testament to India’s commitment to industrial harmony and social justice. As evidenced by the detailed provisions for dispute resolution, the Act outlines a multi-tiered system aimed at preventing and settling industrial conflicts. From the foundational role of Works Committees in fostering direct negotiations, to the crucial intervention of Conciliation Officers and Boards of Conciliation in mediating amicable settlements, the initial emphasis is firmly placed on voluntary and consensual resolution. This pre-adjudication phase, while sometimes circumventing direct court access in its initial stages, is designed to encourage dialogue and reduce the adversarial nature of industrial relations, thereby upholding the Act’s preamble of promoting amity and good relations.

However, recognizing that not all disputes can be resolved through negotiation or mediation, the Act wisely provides for a robust adjudicatory mechanism. The establishment of specialized Labour Courts and Industrial Tribunals, alongside the National Tribunals for issues of national importance, ensures that unresolved disputes receive a fair and judicious hearing. These bodies, though quasi-judicial, wield significant powers to investigate, interpret, and even issue reliefs based on principles of social justice, thereby going beyond strict legal interpretations to achieve equitable outcomes. Furthermore, the inclusion of voluntary arbitration as a legitimate and encouraged mode of settlement highlights the Act’s flexibility and its continuous efforts to empower parties to resolve their differences outside the realm of compulsory adjudication, even while retaining the option for governmental intervention when necessary to maintain industrial peace.

In essence, the Industrial Disputes Act, 1947, through its comprehensive framework of investigation, conciliation, and adjudication, strives to strike a delicate balance between the rights of employers and workmen. While challenges persist in the practical implementation of certain mechanisms, particularly with Works Committees, the overarching scheme remains vital for mitigating industrial unrest and ensuring stable production. By providing a structured pathway for addressing grievances and resolving conflicts, the Act not only safeguards the interests of the workforce but also contributes significantly to the broader economic stability and progress of the nation, reinforcing the principle that industrial peace is fundamental to national prosperity.

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