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Report No. 122

Appendix I

(Para. 1.8)

Law Commission of India Working Paper (Questionnaire) On Forum for National Uniformity in Labour Adjudication Questionnaire


The Government of India had resolved to set up a Commission to study examine and recommend judicial reforms. One of the terms of reference was:-

"The need for decentralisation of the system of administration of justice by-(iii) establishing other tiers or systems within the judicial hierarchy to reduce the volume of work in the Supreme Court and the High Courts".

While examining this aspect, it was indicated that provisions contained in Part XIV A of the Constitution permitting establishment of tribunals may be kept in view. The ultimate aim was to translate the object underlying Article 39A of the Constitution into reality. Article 39A provides that 'the State shall secure that the operation of the legal system promotes justice, on a basis, of equal opportunity, and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities'.

2. Ultimately, the Government of India assigned this task of studying and recommending judicial reforms to the present Law Commission. Accordingly the Law Commission drew up a comprehensive programme of restructuring justice delivery system in all its limbs.

The Law Commission has by now dealt with litigation emanating from rural areas, structuring and strengthening subordinate judiciary in States, setting up an all-India judicial service as envisaged by Article 312 of the Constitution, imparting training to members of the judiciary at all levels and setting up Central Tax Court for both direct and indirect taxes as well as for resolving disputes in the field of import and export of commodities.

The twin objects behind restructuring judicial system are to make the justice delivery system resilient, effective, time-bound, inexpensive and deprofessionalised so as to reduce arrears and to remove the backlog of cases. The second object is to make access to justice easy, inexpensive and non-technical.

3. Even in the hoary past it was felt that the Civil and Criminal Courts, as operating in this country since the colonial days, would be ill-equipped to deal with labour/ industrial disputes in which the approach is to expand distributive justice. Integral to this was the other belief that a developing country like ours can ill-afford the luxury of confrontation in commerce and industries which affects production and retards development and therefore, it must have an effective machinery for resolution of labour/ industrial disputes.

Compulsory adjudication was devised as an alternative to strikes and confrontation. Ignoring the earlier stray efforts, such as Employers and Workmen (Disputes) Act, 1860, the Indian Trade Disputes Act, 1929, Bombay Industrial Disputes Act, 1937, the first major step was taken by enactment of the Industrial Disputes Act, 1947.

The provisions of the 1947 Act did not seek to confer any specific benefits on the workmen but it merely provided a forum for adjudication of industrial disputes by conferring power on the Government to compel the parties to avoid confrontation and to resort to adjudication. Broadly stated, it was an act for industrial arbitration. Some later amendments to this Act did confer some specific benefits on the workmen and also imposed some liabilities on the employers. For the present purpose, this part is hardly relevant.

4. It may be mentioned here that a number of States have enacted legislation for acquiring power to compel parties to resort to industrial adjudication and to curb the strikes. Some of them, such as the Bombay Industrial Relations Act, are quite comprehensive in character. Some others, like the U.P. Industrial Disputes Act, more or less adopt the Central Act as a model. In this questionnaire, the scheme of the Central Act is kept in view.

The questionnaire has a very limited aim, namely to devise a forum intermediate between labour Courts/Industrial Tribunals on the one hand and High Courts/Supreme Court of India on the other so as to remove the jurisdiction of High Courts and interpose a tribunal with all-India jurisdiction. The enquiry is related to term of reference extracted in para. 1.

5. Industrial Disputes Act, 1947, was enacted to make provision for investigation and settlement of industrial disputes. It envisages setting up of a Labour Court for adjudication of industrial disputes relating to any matter specified in the second schedule (section 7);

Industrial Tribunals for the adjudication of industrial disputes to any matter as specified in the second or the third schedule, and for performing such other functions as may be assigned to them under that (section 7A);

National Tribunals for 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 (section 7).

It also envisages setting up of Courts of Enquiry for inquiring into any matter appearing to be connected with or relevant to an industrial disputes (section 6). It further envisages setting up of a Grievance Settlement Authority for settlement of industrial/disputes connected with an individual workman employed in the establishment (section 9C).

6. Section 10 confers power on the appropriate Government as defined in the Act to refer any industrial dispute which either exists or is apprehended to a Board, Court of Inquiry, Labour Court, or an Industrial Tribunal, as the case may be, for adjudication thereof. Section 10(1A) confers power on the Central Government to refer an industrial dispute of the nature therein specified or any matter appearing to be connected with, or relevant to, the disputes to a National Tribunal for adjudication. Sub-section (2) of section 10 obligates the appropriate Government to refer an industrial dispute to a Board, Court, Labour Court, Tribunal or National Tribunal, as the case may be, where the parties to such an industrial dispute apply in the prescribed manner. The Body, to which a reference is made, shall adjudicate upon the dispute and give an award. The award has to be submitted to the appropriate Government and the appropriate Government has to publish the same within thirty days from the date of its receipt.

7. The scheme relevant to the provisions for adjudication of an industrial dispute, would show that there is no provision for an appeal against an award, by a Board, Court, Labour Court, Industrial Tribunal or National Tribunal. It is assumed that the decision by any of the aforesaid authorities would be flawless and acceptable to the parties whatever be the outcome of the dispute. In all other jurisdictions, ordinarily every decision can be appealed against.

There will be an appeal on facts; there will be a second appeal on a question of law; there will be an appeal to the Supreme Court of India under Article 136 of the Constitution. Even under such socially beneficent laws such as for introducing agrarian reforms, the relevant statutes provide for one or two appeals. It is only in the field of labour adjudication that the statute under which adjudication could be or ordered did not provide for any appellate forum.

Now there is a considerable body of legal opinion that where the statute setting up an administrative or quasi-judicial tribunal does not provide for an appellate forum, the decision of the tribunal is challenged in the High Court invoking Article 226 of the Constitution. Petition is generally entertained on the specious plea that there is no alternative efficacious remedy. Extending this principle to the situation where the statute provides for an appeal or revision, the High Court raises the question whether alternative remedy under the statute is an efficacious remedy.

Where the statute levying tax provides for an appeal against the decision of an assessing authority and makes deposit of assessed tax, a condition precedent to the entertaining of appeal, the. Supreme Court has held that the alternative remedy is not efficacious or adequate.1 Same view was adopted while examining the scheme of Employees State Insurance Act. It was observed that High Court was right in holding that the remedy under the Act should have been pursued before approaching the High Court under Article 226 2.

1. Himmatlal Harilal Mehta v. State of Madhya Pradesh, 1954 SCR 1122 (1128).

2. Basant Kumar Sarkar v. Eagle Rolling Mills Ltd., (1964) 6 SCR 913 (918).

The fall out of a total absence of any provision for appeal under Industrial Disputes Act may induce an instinctive reaction and Article 226 may be freely invoked. What is the fall out? The fall out is that every award of a Labour Court, Industrial Tribunal, or a National Tribunal, one can question in a certiorari proceeding before the High Court under Articles 226 and 227 of the Constitution and before the Supreme Court of India under Article 136 of the Constitution.

The more ugly feature of the fall out is that where a preliminary contention is raised that there reference is either incompetent or bad in law, a writ of prohibition is sought under Articles 226 and 227 before the High Court or under Article 136 before the Supreme Court. Occasionally, Article 32 was invoked on the specious plea that such invalid and illegal proceedings contravene the fundamental right of the employer to carry on any occupation, trade or business guaranteed by Article 19(1)(g).

And cases are not known where the High Courts and the Supreme Court have entertained the writ petition at an interlocutory stage and stayed further proceedings with the result that a final adjudication of the dispute suffered inordinate delay. The Courts while entertaining such proceedings indicated that in the absence of a corrective forum in the form of an appeal, it is inevitable for enforcement of the Rule of Law that extraordinary jurisdiction conferred by the constitution has to be invoked.

8. The powers that we were not unaware of this distinct possibility since the introduction of the Constitution. Accordingly, in the year 1950, Labour Appellate Tribunal was set up under a statute called. The Industrial Disputes (Appellate Tribunal) Act, 1950 providing for an appeal against the awards of the Labour Courts/Industrial Courts in respect of specified topics.

9. The Labour Appellate Tribunal had two-fold function to perform:-

(i) It would be a correctional forum against human fallibility; and

(ii) it would bring about a national synthesis in conflicting and differing awards all over the country.

It was all the more necessary in the case of industrial establishments having inter-State operations. The establishment of Labour Appellate Tribunal was, in fact, a natural response to the need for a measure of uniformity of underlying principles and norms to govern the awards of different industrial tribunals for maintaining industrial peace and stability in the interest of uninterrupted production.

10. Somehow, this Labour Appellate Tribunal fell foul with the workmen. A country-wide movement voicing its grievances against the Labour Appellate Tribunal swept the country. The movement received its powerful support from the Indian National Trade Union Congress. The governing consideration in support of the demand for abolition of the Labour Appellate Tribunal was, according to the standards of those days, the inordinate delay in the disposal of appeals with consequent prolonged litigation and hardship.

The award may have given some monetary benefit. As soon as the employer appealed, ordinarily interim stay would follow; the staying power of the workers being weak, they could ill-afford the extended period of litigation while the employers used the appellate forum with a view to thwarting the aspirations of the workmen and exhaust them. Experience of working of courts and especially superior courts in India that any legislative process becomes a hand maid of the wealthy and the financially affluent section of the society and a tool for unfair use of courts.

Another argument was that the adjudicatory process with an added appellate forum would thwart trade union activity and convert the trade union office into a solicitor's forum thereby weakening the trade union movement. The battle cry as it appeared then was that where the appellate tribunal reversed the award by which some monetary benefit was granted, it left bitterness and led to mutual recrimination widening the gulf between the employers and the employees and thereby threatening industrial peace.

Different Central Trade Unions articulated different approaches in this behalf, but the cry was common that the labour appellate tribunal should be abolished. One of the grievances voiced on behalf of the Indian National Trade Union Congress was that the personnel manning the Labour Appellate Tribunal was drawn from the cadre of retired High Court Judges who, in their active days, had hardly dealt with labour matters and were ill-equipped of deal with distributive justice or social justice, as .the case may be, and because of their training and up-bringing, their approach was mechanical and legalistic.

Probably, the Full-Bench formula on Bonus fuelled the fire. Avoiding going into the various objections to the continuance of the Labour Appellate Tribunal, the one that was to be in the forefront was that the delay it entailed in finally implementing the award, and adding to the uncertainty of the situation. The voice of the labour prevailed and finally the Labour Appellate Tribunal was abolished in September, 1956.

The situation returned to square one as it existed prior to the setting up of the Labour Appellate Court. Every award, both at the intermediate and final stage, more of less, came to be questioned before the High Court under Articles 226, 227 and before the Supreme Court under Article 136 and also under Article 32 of the Constitution.

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