Industrial Conflict and the Need for Legal Adjudication
Industrial development inevitably brings differences between employers and workmen. Issues relating to wages, dismissal, retrenchment, service conditions, or disciplinary action often give rise to conflicts that disturb industrial peace. To prevent such conflicts from escalating into strikes or lock-outs, Indian labour law provides a structured mechanism for dispute resolution. One of the most important stages in this mechanism is the reference of an industrial dispute to the Labour Court. Understanding the procedure for reference is essential, as a Labour Court can adjudicate a dispute only after a valid reference by the appropriate government under the Industrial Disputes Act, 1947.
Meaning of Reference of Industrial Dispute
The term reference refers to the formal act of the appropriate government sending an existing or apprehended industrial dispute to a Labour Court, Industrial Tribunal, or National Tribunal for adjudication. The statutory authority for reference is found in Section 10 of the Industrial Disputes Act, 1947. Without a reference, a Labour Court has no jurisdiction to decide an industrial dispute. Thus, reference acts as a gateway through which disputes enter the adjudicatory machinery of labour law.
What is an Industrial Dispute?
Before understanding the procedure of reference, it is essential to know what constitutes an industrial dispute. Under Section 2(k) of the Industrial Disputes Act, an industrial dispute means any dispute or difference between employers and employers, employers and workmen, or workmen and workmen connected with employment, non-employment, terms of employment, or conditions of labour. Further, Section 2A treats disputes relating to discharge, dismissal, retrenchment, or termination of an individual workman as industrial disputes even without union support. Only disputes falling within these definitions can be referred to a Labour Court.
Authorities Involved in the Reference Process
The key authority in the reference procedure is the “appropriate government”, defined under Section 2(a) of the Act. Depending on the nature of the industry, the appropriate government may be the Central Government or the State Government. The government exercises administrative discretion in deciding whether a dispute should be referred for adjudication. Other authorities involved include conciliation officers, Labour Courts (Section 7), and Industrial Tribunals (Section 7A).
When Can a Dispute Be Referred?
A dispute can be referred for adjudication when it exists or is apprehended. The Act does not require that the dispute must have already resulted in a strike or lock-out. Even the likelihood of industrial unrest is sufficient. Generally, disputes are referred after failure of conciliation proceedings, but in certain cases, the government may directly refer a dispute to a Labour Court without conciliation.
Step One: Raising of Industrial Dispute
The procedure begins when a dispute is raised by a workman, group of workmen, or trade union against the employer. In cases covered under Section 2A, an individual workman can directly raise the dispute concerning termination. The dispute must relate to matters falling within the Second Schedule if it is to be referred to a Labour Court, such as dismissal, discharge, retrenchment, or legality of disciplinary action.
Step Two: Conciliation Proceedings
Usually, once a dispute is raised, it is taken up by a Conciliation Officer appointed under Section 4 of the Industrial Disputes Act. The conciliation officer attempts to bring about an amicable settlement between the parties. If a settlement is reached, it is recorded and becomes binding under Section 18. If conciliation fails, the officer sends a failure report to the appropriate government under Section 12(4), detailing the reasons for failure.
Step Three: Government’s Consideration of the Dispute
Upon receiving the conciliation failure report, the appropriate government applies its mind to the facts and circumstances of the dispute. Under Section 12(5), the government must decide whether the dispute should be referred for adjudication. The government may either refer the dispute or refuse to do so. If it refuses, it must record and communicate reasons for such refusal to the parties concerned. This requirement ensures transparency and accountability in governmental discretion.
Step Four: Power of Reference under Section 10
The actual reference is made under Section 10(1) of the Industrial Disputes Act, 1947. The government issues a written order specifying:
- The parties to the dispute
- The issues referred for adjudication
- The authority (Labour Court or Tribunal) to which the dispute is referred
For matters listed in the Second Schedule, the dispute is referred to a Labour Court. Matters relating to wages, bonus, or working hours fall under the Third Schedule and are referred to Industrial Tribunals.
Step Five: Jurisdiction of Labour Court
Once a valid reference is made, the Labour Court derives jurisdiction to adjudicate the dispute. The court cannot travel beyond the terms of reference and must confine its decision to the issues specified by the government. Under Section 11, the Labour Court has powers similar to a civil court for summoning witnesses and examining evidence. The adjudication culminates in an award.
Reference Without Conciliation
In certain cases, especially those covered under Section 2A, the appropriate government may refer the dispute directly to the Labour Court without waiting for conciliation proceedings. This provision ensures speedy justice in cases of wrongful termination, where delay may cause undue hardship to workmen.
Limits on Government’s Power of Reference
Although the government has wide discretion, it is not absolute. Courts have held that the government cannot decide the merits of the dispute while considering reference. Its role is administrative, not judicial. In State of Bombay v. K.P. Krishnan, the Supreme Court held that the government must not act arbitrarily or mala fide while exercising its power under Section 10.
Effect of Reference on Parties
Once a dispute is referred, the parties are bound to participate in adjudication. During pendency of proceedings, restrictions apply on strikes and lock-outs under Section 23. The reference thus freezes the industrial situation and channels the conflict into a legal process, promoting industrial peace.
Importance of Reference Procedure
The reference procedure acts as a safeguard against frivolous disputes while ensuring genuine disputes receive legal redress. It balances industrial discipline with workers’ rights and prevents escalation of conflicts. By routing disputes through Labour Courts, the law ensures reasoned decisions based on evidence and principles of natural justice.
Practical Illustration
A workman is dismissed without a domestic enquiry. He raises an industrial dispute before the conciliation officer. Conciliation fails, and a failure report is sent to the State Government. After examining the report, the government refers the dispute to the Labour Court under Section 10. The Labour Court adjudicates the dispute and orders reinstatement with back wages. This example demonstrates the practical working of the reference procedure.
Mnemonic to Remember the Answer
“R.A.I.S.E – C.R.O.L.”
R – Raise dispute
A – Approach conciliation
I – Issue failure report
S – Scrutiny by government
E – Exercise power under Section 10
C – Court gets jurisdiction
R – Reference order issued
O – Only referred issues decided
L – Labour Court adjudicates
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