10. Explain the law relating to reference to industrial disputes to the authorities for its settlement.

Significance of Industrial Dispute Settlement

Industrial disputes are disagreements between employers and employees, or between groups of employees, relating to employment, wages, conditions of work, or termination of service. Such disputes, if unresolved, can escalate into strikes, lock-outs, or other forms of industrial unrest, disrupting production and the economy. India’s labour law framework, particularly the Industrial Disputes Act, 1947, provides statutory mechanisms for settlement of disputes. One of the most important provisions is the reference of industrial disputes to appropriate authorities, such as Labour Courts, Industrial Tribunals, or National Tribunals, to ensure impartial and effective resolution. Understanding the legal procedure for reference is crucial for employers, employees, and labour law practitioners.

Meaning of Industrial Dispute

An industrial dispute is defined under Section 2(k) of the Industrial Disputes Act, 1947 as:

“Any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with employment, non-employment, terms of employment, or conditions of labour, whether current or future.”

The scope is broad, covering individual grievances, collective disputes, and matters affecting wages, retrenchment, bonus, or working conditions. Not all disputes automatically qualify for legal adjudication; only those referred to the appropriate authorities under the Act fall within the statutory mechanism of resolution.

Authorities for Settlement of Industrial Disputes

The Industrial Disputes Act, 1947, provides for different authorities for settlement:

1. Conciliation Officers (Section 4): Appointed by the appropriate government to mediate and promote voluntary settlement between the parties.
2. Board of Conciliation: Constituted when a conciliation officer requires additional assistance for a dispute involving multiple employers or complex issues.
3. Labour Courts (Section 7): Quasi-judicial bodies to adjudicate disputes relating to dismissal, retrenchment, or termination of service, generally affecting individual or small groups of workmen.
4. Industrial Tribunals (Section 7A): Deal with larger or more complex disputes affecting multiple employees or entire industries.
5. National Tribunals (Section 7B): Set up by the Central Government for disputes of national importance or disputes crossing state boundaries.

The referral of disputes to these authorities ensures impartiality, fairness, and adherence to legal procedures.

Legal Procedure for Reference of Industrial Disputes

1. Initiation of Dispute

When a dispute arises, the first step is usually internal negotiation between the employer and workmen. If unresolved, it can be escalated:

• Step 1: Parties notify a conciliation officer appointed by the appropriate government.
• Step 2: The conciliation officer attempts mediation and reports to the government whether a settlement has been reached.

2. Failure of Conciliation

If the conciliation officer cannot resolve the dispute within the prescribed period (usually 1–3 months under Section 12(3)), the officer submits a report to the appropriate government. The government then considers whether the dispute requires reference to a judicial or quasi-judicial authority.

3. Reference by Government

Under Section 10(1) of the Industrial Disputes Act, 1947:

“The appropriate government may refer any industrial dispute to a Labour Court, Industrial Tribunal, or National Tribunal if it appears that the dispute cannot be settled by conciliation.”

The government issues a notification specifying:

• The authority to which the dispute is referred
• The nature and scope of the dispute
• Territorial jurisdiction and time frame for adjudication

Reference is often made after evaluating the dispute’s complexity, scale, or impact on industrial peace.

4. Adjudication by Authorities

Once the reference is made:

• Labour Courts: Deal with disputes listed in the Second Schedule, such as dismissal or retrenchment cases.
• Industrial Tribunals: Handle disputes listed in the Second and Third Schedule affecting larger groups of employees or entire industries.
• National Tribunals: Deal with disputes crossing state boundaries or of national importance.

The authority examines evidence, hears parties, and delivers an award. Awards are binding and enforceable as per Section 17 of the Act.

Role of Government in Reference

The appropriate government plays a central role:

1. Evaluation: Determines if conciliation has failed and whether judicial intervention is necessary.
2. Notification: Officially refers the dispute to the appropriate authority.
3. Monitoring: Ensures that awards are implemented and industrial peace is maintained.

In Workmen of Bharat Heavy Electricals Ltd. v. BHEL (1988), the court emphasized that government discretion in reference must be exercised fairly, considering both employer and workmen interests.

Judicial Interpretation

1. Bharat Electronics Ltd. v. Their Workmen (1975) – The Supreme Court held that the government must ensure disputes referred to tribunals are genuine industrial disputes and not trivial individual grievances.
2. State of U.P. v. Rajendra Prasad (1980) – Courts emphasized that the referral should be made only after conciliation is attempted, ensuring voluntary settlement is prioritized.
3. Hindustan Aeronautics Ltd. v. Workmen (1967) – The Court clarified that the tribunal has full power to examine facts, evidence, and law to deliver a fair award once a reference is made.

These cases highlight the importance of procedural compliance and government discretion in maintaining industrial harmony.

Practical Illustration

Consider a large automobile manufacturing plant employing 2,000 workers. Disputes arise regarding sudden changes in wage policy. Attempts at internal negotiation fail. The matter is escalated to the conciliation officer, who conducts discussions with management and employee representatives. When no settlement is achieved within 45 days, the conciliation officer submits a report to the State Government. The government refers the dispute to an Industrial Tribunal. The tribunal examines evidence, conducts hearings, and issues an award directing partial revision of wages and compliance with statutory guidelines. This example illustrates the stepwise procedure from conciliation to reference and adjudication.

Importance of Reference Mechanism

1. Ensures Impartiality: Reference to Labour Courts or Tribunals ensures neutral adjudication, reducing employer-employee conflicts.
2. Promotes Industrial Peace: Structured legal mechanisms prevent strikes, lock-outs, and unrest.
3. Legal Certainty: Decisions by Labour Courts or Tribunals provide binding, enforceable awards.
4. Encourages Fair Negotiation: Prior conciliation ensures that parties have an opportunity to resolve disputes voluntarily before judicial intervention.
5. Protects Workers’ Rights: Reference mechanisms safeguard workmen from arbitrary employer actions and ensure statutory entitlements.

Key Features of the Law

1. Stepwise Mechanism: Conciliation → Reference → Adjudication → Award.
2. Government Discretion: Only the appropriate government can refer disputes after evaluating conciliation outcomes.
3. Binding Nature of Awards: Awards are enforceable under law and act as precedents for future disputes.
4. Judicial Oversight: Courts have clarified procedural safeguards and powers of authorities.
5. Scope: Applicable to disputes relating to wages, conditions of service, retrenchment, layoffs, or collective grievances.

Mnemonic to Remember the Answer

“C-R-A-A”

C – Conciliation by Conciliation Officer
R – Reference by Appropriate Government
A – Adjudication by Labour Court / Industrial Tribunal / National Tribunal
A – Award is binding and enforceable

Tip: The process follows C-R-A-A from conciliation to binding award.

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