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Power of Labour Courts and Tribunals

Info: 4059 words (16 pages) Law Essay
Published: 12th Aug 2019

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Jurisdiction(s): Indian law

The law relating to labour and employment in India is primarily known under the broad category of “Industrial Law”. Industrial law in this country is of recent vintage and has developed in respect to the vastly increased awakening of the workers of their rights, particularly after the advent of Independence. Industrial relations embrace a complex of relationships between the workers, employers and government, basically concerned with the determination of the terms of employment and conditions of labour of the workers.

The original colonial legislation underwent substantial modifications in the post-colonial era because independent India called for a clear partnership between labour and capital. The Industrial Disputes Act [1] repealed the Trade Disputes Act 1929.

The Industrial Disputes Act, 1947 and other analogous State statutes provide the machinery for regulating the rights of the employers and employees for investigation and settlement of industrial disputes in peaceful and harmonious atmosphere by providing scope for collective bargaining by negotiations and mediation and, failing that, by voluntary arbitration or compulsory adjudication by the authorities created under these statutes with the active participation of the trade unions. With the aid of this machinery, industrial law covers a comprehensive canvas of state intervention of social control through law to protect directly the claims of workers to wages, bonus and retirement benefits such as gratuity, provident fund and pension, claims, social security measures such as workmen’s compensation, insurance, maternity benefits, safety welfare and protection of minimum of economic well-being. Job security has been particularly protected by providing industrial adjudication of unfair discharges and dismissals and ensuring reinstatement of illegally discharged or dismissed workmen [2] .

The principal techniques of dispute settlement provided in the I.D. Act are collective bargaining, mediation and conciliation, investigation, arbitration and adjudication. Adjudication means a mandatory settlement of Industrial Disputes by Labour Courts, Industrial Tribunals or National Tribunals under the Act or by any other corresponding authorities under the analogous state statutes. By and large, the ultimate remedy of unsettled dispute is by way of reference by the appropriate government to the adjudicatory machinery for adjudication. The adjudicatory authority resolves the Industrial Dispute referred to it by passing an award, which is binding on the parties to such reference [3] . Adjudication of labour disputes by these courts and tribunals has also been criticised by those seeking to reform labour laws, as they fail to work in the desired manner, or are just too ineffective.


S. 11A [4] of the Industrial Disputes Act speaks of the “Powers of Labour Court, Tribunals and National Tribunals to give appropriate relief in case of discharge or dismissal of workmen.

Indian Iron and Steel Co. Ltd. v. Their Workmen [5] was the first time that reference was made to the power of the tribunal to interfere with the management’s decision to dismiss, discharge or terminate the services of a workman. In this particular case the Supreme Court in its judgement while describing the nature of this particular power of the tribunal said that this did not in fact confer a power to the tribunal to act as an appellate body and pass its own judgement overruling the decision of the management but the tribunal shall only be allowed to interfere when in fact there is a clear case of absence of good faith, victimisation, unfair labour practice or in short only if mala fide can be shown on part of the management [6] .

The ILO recommended that any worker if he has been terminated from his employment and is aggrieved thereof has the right to appeal against such termination. This recommendation made by the ILO is a very clear example of the efforts on part of the organization to protect the interest of the worker and provide some sort of security in his employment to him especially against arbitrary termination of employment. The recommendation further goes on to state that the appeal that the worker may issue against such termination be in fact in a neutral body so as to provide a fair and level playing field for both the parties i.e. the worker and the management. The neutral body may in fact be an arbitrator, court or similar body and that such body be empowered to examine the reasons given for termination and other pertinent circumstances, and to render a decision on the justification of the termination. [7]

Under Sec 11A, the tribunals have been given the power to set aside the order of discharge and dismissal of workers in whichever cases it thinks fit and the tribunals have also been given the powers to in fact order direct reinstatement of the workers on such terms and conditions that it thinks fit and if not that then to provide any other relief to the workers. This relief may even consist of an award of a lesser punishment in stead of discharge and dismissal, however the provisions clearly state that the decision in this regard is strictly subjective and completely at the discretion of the tribunals on a case to case basis. [8] Hence it has been held that the provision was inserted in the act to in fact confer power on the adjudicators to “reappraise the evidence adduced in the domestic enquiry and to grant proper relief to workmen, powers which the Tribunal did not possess earlier,” [9]

Although it is expressly provided that any workman aggrieved by the discharge or dismissal or termination of his services may in fact appeal and the tribunal may subsequently override the management’s decision, there is however a limitation with regards to the scope of the particular section as observed by the 2nd National Commission on Labour: ‘where a worker has been dismissed or removed from service after a proper and fair enquiry on charges of violence, sabotage, theft or assault and if the labour court comes to the conclusion that the grave charges have been proved then the court will not have the power to order reinstatement of the delinquent worker.’ [10]

One of the most basic yet interesting aspects of this provision is the applicability of the particular section. Not only is the applicability with regards to reason for discharge or dismissal in question but the very fact whether a particular act of termination of employment constitutes Discharge or Dismissal. [11] Although in common everyday language both may be used interchangeably, there is in fact a substantial difference between the two. Dismissal is clearly understood in industrial lingo to mean the termination of service of a workman as a measure of punishment. However the meaning of Discharge may in fact have 2 different meanings. Discharge may be of 2 kinds – Penal Discharge and what may be called as Discharge Simpliciter. Penal discharge is essentially the same as dismissal, however just a milder form of the same and the provisions of S.11A apply to it in the very same way, however the difference in application comes in when for example the employee was temporary and his services were no longer needed. In such a case the termination is not what may be called penal and hence it is what constitutes Discharge Simpliciter. In such cases, as is made very obvious by the language of the provision the tribunals will not in fact have the power to reinstate the workman or pass any other order with regards to the management’s decision thereof. [12]

Retrospective Effect

With regards to the retrospective effect of S. 11A the Supreme Court held that S. 11A can only be applied to disputes that are referred to adjudication after it came into force, and hence has no retrospective effect [13] . There was a clear reason for this by the Supreme Court. This was that by the introduction of this section there was an alteration of the law as laid down by the Supreme Court and that there was condensing of the right of the employer as it gave power to the Tribunal for the first time to differ both on a finding of misconduct arrived at by an employer as well as the punishment imposed by him. Therefore for all disputes that had in fact been referred to the tribunal before the introduction of this provision would continue to follow the law laid down by the Supreme Court earlier on this subject. [14]

However, in what can be considered to be a very strong thrust in the implementation of this provision and a bold one at that is that it was held in Workmen Employed in Engine Valves Ltd. v. Engine Valves Ltd [15] that it was not necessary that the workman should in fact plead the S.11A in his pleadings. Even if he has not mentioned the same in his pleadings, the onus lies on the tribunal or adjudicator thereof to incorporate the same and implement the very provision in its judgment. Hence all adjudicators became bound by law to apply the provisions of the section. [16]

Burden of Proof and S.11A

It has been well established that only penal discharges come under the ambit of the section. And those that fall under discharge simpliciter are not covered by the same. Considering that the substance of both is essentially the same i.e. discharge and they differ only in form and in the reasoning behind them, it is not difficult to envisage especially in a country like India that there would be several cases where misuse of the section would be attempted. Considering that this section is predominantly incorporated for the protection of the workmen, there definitely exists a possibility that employers would want to hide behind the curtain of Discharge Simpliciter or non penal discharge even in genuine cases of dismissal and hence avoid the applicability of this section and hence prevent the possibility of reinstatement of the dismissed workers [17] .

For this all the employers who have the best legal help at their disposal have to do is word the discharge orders conveniently in a manner that it seems a case of Discharge Simpliciter rather than Dismissal. Hence the tribunal in most cases has to go behind the attempted curtain and in fact deduce whether it was genuinely a case of discharge or just a camouflage to cover what is in fact actually an order of dismissal. To make the abuse of this section more difficult for the employer and to catch genuine cases of dismissal, it has been held in State Bank of India v. Union of India [18] that the onus lies on the employer to adducing evidence that it was not in fact an order of dismissal for workman’s misconduct. Hence this is a very essential aspect to this section and makes the position of the aggrieved workman even stronger. [19]

Arbitrator and S.11A

The language of S. 11A is not ambiguous and clearly vests jurisdiction in “Labour Court, Tribunal or National Tribunal” without much scope for expanded interpretation. However, the Supreme Court in Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha [20] held in a 2:1 verdict that an Arbitrator under S. 10A can be included within the meaning of Tribunal in S. 11A, thus giving an Arbitrator the same jurisdiction as a Labour Court, Tribunal or Labour Tribunal while adjudicating upon a dispute relating to disciplinary discharge or dismissal of a workman [21] .

This seems to be an absurd proposition as the language of the section could not be much clearer so as only to include labour courts, tribunals and national tribunals and has correctly been severely criticised. The granting of the same position to an arbitrator as that of a tribunal is in direct contravention to the I.D.Act as an Arbitrator under S. 10A [22] and Tribunal as defined in S. 2(r) [23] are two distinct and mutually exclusive entities [24] . If they start being treated at the same level then the appeal against an arbitral award will be allowed to lie in the Supreme Court, however as only cases disciplinary punishment are to be entertained by the tribunal, the arbitrator is supposed to gain parity with tribunals in some cases and not in those of discharge simpliciter and hence only some awards of the arbitrator may be appealed to the supreme court. This has been termed to be nothing short of absurd by many authors.

Only when the discharge or dismissal of a workman is found by the adjudicator to be unjustified and illegal does the question of exercising power under S. 11A to grant relief arise. However, if the adjudicator concludes from the material on record that the order of dismissal or discharge is not unjustified or illegal, then it is obviously not competent to award any relief and the only option left is to reject the reference. [25] Where the termination was illegal or unjustified though, S. 11A grants the Labour Court or Tribunal extremely wide ranging powers for granting relief. The relief generally granted by the Tribunal are reinstatement, any lesser punishment, or compensation in lieu of reinstatement, which is usually in the form of a lump sum. But the relief to be granted is wholly up to the discretion of the Tribunal, as is the option to award interest on the amount determined as compensation. However, the mostly widely granted relief is reinstatement with back wages [26] .


Reinstatement means restoration of a dismissed or discharged workman to his original post, and is different from re-employment, since the workman is entitled to be put back in the same position as if he had never been dismissed or discharged, together with all back wages, allowances and other privileges, [27] such as continuity of service, right to promotion and entitlement to bonus, gratuity, pension and promotion as if there had been no break in employment. However, it has been held that order of termination is not nullified even if found illegal or wrongful, and continues to operate until set aside by appropriate adjudicator as was held in Punjab Beverages Pvt. Ltd. v. Suresh Chand, [28] Therefore, after setting aside the wrongful termination order, the adjudicator must issue a separate order of reinstatement. [29]

Where the Tribunal finds that there was misconduct on the part of the employee, but not so serious so as to warrant discharge or dismissal, it may award a lesser punishment such as the minor punishments mentioned above. This is in accordance with the fundamental principle of justice that punishment should be commensurate with the guilt. Such a lesser punishment may even take the form of ordering reinstatement without back wages, since reinstatement usually implies payment of back wages for the period of time for which the workman’s employment was terminated. [30]

In M/s. Mukund Engineering Works v Banshi Purshottam [31] it was held that when the alleged misconduct as been proved the workman must be bound to opt either for reinstatement without back wages or vice versa. [32]

In certain exceptional situations where reinstatement would be inexpedient or improper, the Tribunal has the discretion to award compensation in lieu of reinstatement. However, it has to exercise its discretion judicially and carefully examine circumstances of the case to decide if it is an exception to the general rule of reinstatement [33] . However, it is not an easy task, and the Tribunal must consider several factors like wages, length of service, loss of career prospects, circumstances of dismissal, age, nature of work and custom before determining the quantum of compensation, and it is awarded by the Tribunal less often. [34]

Judicial Review

Seeing as the powers of the industrial adjudicator are so vast under S. 11A, being able to grant almost any kind of relief, the question of judicial review naturally arises, to control arbitrariness on the part of the Tribunal. The discretionary power under S. 11A is indeed subject to judicially review by High Courts under Art. 226 and 227 or by the Supreme Court under Art. 136, though within limitations. [35] The reviewing Courts can examine whether the Tribunal has properly approached the matter for exercising or refusing to exercise its power under S. 11A. But when the award is well-reasoned and the Tribunal has stated the various considerations for making its award, it cannot be said to be illegal and void. [36] When the constitutional validity of S. 11A was challenged in Delhi Cloth & General Mills Co. Ltd. v. Shriram Fertilisers Karamchari Union, Chawani, Kota [37] a Division Bench of the Rajasthan High Court, while upholding its validity, said that for the purpose of granting relief under S. 11A, there was a clear indication that relief which was considered fit in the circumstances of the case was to be given after a conclusion was reached that the termination was unjustified. [38]

Therefore, there are sufficient guidelines for any authority discharging such functions and whenever a challenge is made to the decision of the Tribunal, correctness of the decision can be decided on the touchstone of these guidelines and in case of contravention of such guidelines, the remedies by way of writ petition under Art. 226 or appeal by special leave under Art. 136 to the Supreme Court are available. Hence, it cannot be said that wide powers conferred upon the Tribunal by S. 11A are arbitrary or in violation of Art. 14 of the Constitution. [39]


The Report of Task force on Employment Opportunities made some recommendations to reform the labour laws of the country. These included:

The provisions regarding dismissal after due process need to be streamlined. Section 11A of the Industrial Disputes Act which allows labour courts, Industrial Tribunals to interpose the state in matters that are best left to established internal processes.

At present there is no time limit for filing disputes under the Industrial Disputes Act. This encourages piling up of old disputes leading to delays in courts. A time limit of 3 years should be stipulated within which a dispute could be referred for adjudication

Compulsory adjudication may well have contributed to the weakening of the trade union movement in India, and complicated matters by bringing disputes before a centralised dispute resolution mechanism under the State’s authority, though they may be addressed just as well internally. At present, while it is difficult for labourers to secure their rights, even employers are restricted by the laws that reflect the socialist bent of governance of the period in which they were enacted, though these are hopelessly out of sync with contemporary realities. All the while, the government holds too firm a grip, especially over dispute resolution.

However, there is no viable alternative to this system. Stringent provisions, therefore are required for ensuring the time limit within which the orders /awards to be implemented and clothe the courts and tribunal with powers of contempt of court for non-implementation of orders /awards passed by them. It is submitted that the need of the day is to evolve the frame-work in which workers and the management perceive the need to co-operate. Bilateral regulation is the most effective method of evolving norms which enjoy wide acceptance [40] and till happens the situation of labour laws in India especially industrial dispute laws will not improve.

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