Pratyush Hari


In a bid to improve India’s Ease of Doing Business, the Central Government has decided to consolidate all 44 of India’s labour legislations into four distinct codes in 2019. The codes consolidate various legislations into four broad aspects of labour law: (i) wages (ii) industrial relations (iii) social security and (iv) occupational health, safety and working conditions.

The Industrial Relations Code, 2019 (“the Code”) will subsume and replace three existing labour legislations, namely the Trade Unions Act, 1926, The Industrial Disputes Act, 1947 and The Industrial Employment (Standing Orders) Act, 1946. The amalgamation of these legislations seeks to remove multiplicity of definitions and authorities, without sacrificing on public welfare and benefits.

Section 55 of the Code gives power to the Central Government to modify or reject an Industrial Tribunal award if it is of the opinion that enforcing that award will be inexpedient on public grounds affecting ‘national economy’ or ‘social justice’. This power has also been given to the Central Government under the present regulatory framework, under Section 17A of the Industrial Disputes Act, 1947 (“the Act”).

However, Section 17A of the Act has since been struck down as being unconstitutional on various grounds by multiple High Courts in India. Therefore, it begs the question- why has the Central Government been given this power even after it has been struck down by multiple High Courts? This post aims to shed light on the regulatory framework and jurisprudence behind this unjust power, and also scrutinize its inclusion under the Code.

Existing Law and Jurisprudence

The Act empowers the appropriate government to constitute Industrial Tribunals for the adjudication of industrial disputes pertaining to any matter. Additionally, the Act allows the Central Government to establish National Industrial Tribunals for the adjudication of industrial disputes that, in the opinion of the Central Government, involve questions of national importance.

Under Section 17A of the Act, an award rendered by these tribunals will become enforceable on the expiry of 30 days after its publication. However, the Central Government has been given the power to modify or reject this award, if it is of the opinion that it is inexpedient on public grounds affecting national economy or social justice to give effect to the award.

This power conferred to the Central Government was first challenged in 1997 in Telugunadu Workcharged Employees vs. Government of India (“Telugunadu”). The petitioner’s main contention was that Section 17A of the Act is ultra vires of the Indian Constitution, as an executive authority cannot modify or annul the order of a competent judicial authority.

Before analysing the constitutionality of Section 17A, the Andhra Pradesh High Court (“AP HC”) sought to consider whether an Industrial Tribunal set up under Section 7A of the Act can be considered a judicial authority for all intents and purposes. The Supreme Court of India (“SC”) had answered this question in the affirmative in Bharat Bank vs Employees of Bharat Bank, wherein it held that an Industrial Tribunal has all the necessary attributes of a court of law, and has similar functions to that of an ordinary court.

After establishing that Industrial Tribunals qualify as judicial authorities, the AP HC cited a plethora of cases emphasizing the importance of the Separation of Powers principle. It was finally held that judgments rendered by courts and tribunals (even those created through legislation) cannot be made nugatory or redundant through any executive action. These orders ought to be enforced with the same finality and rigour as those orders issued by a High Court or the SC. Unhesitatingly, the AP HC struck down Section 17A of the Act as being ultra vires of the Indian Constitution and violative of the judicial powers of the state.

In Union of India v. Textile Technical Tradesmen Association, the Tamil Nadu High Court (“TN HC”) concurred with the rationale used in Telugunadu and struck down Section 17A of the Act on grounds of being violative of the Indian Constitution. However, the TN HC only briefly delved into the merits of the case. Major reliance was placed on the case of Kusum Ingots & Alloys Ltd. vs Union of India (“Kusum Ingots”), wherein the SC addressed the territorial applicability of a High Court judgment under Article 226 of the Indian Constitution. The relevant paragraph is reproduced as follows:

The Court must have requisite territorial jurisdiction. An order passed on a writ petition questioning the constitutionality of a parliamentary legislation, whether interim or final keeping in view the provisions contained in clause (2) of Article 226 of the Constitution of India, will have effect throughout the territory of India subject of course to the applicability of the Act.”

Through the inclusion of this paragraph, the SC essentiallyrenders any High Court judgement on the constitutionality of a parliamentary legislation binding throughout the territory of India. While this reasoning may prove to be problematic for various reasons, it is the subject of a whole other debate altogether.

The TN HC had no problem in citing Kusum Ingots to state that Section 17A of the Act was unenforceable as on the date of the petition by virtue of Telugunadu being a prior High Court judgment rendered on the constitutionality of a parliamentary legislation. Consequently, the TN HC dismissed the state’s appeal, and held that Section 17A of the Act was no longer in force.

Food for Thought

Regardless of the rationale used by the High Courts, Section 17A has transgressed fundamental constitutional limitations and violated principles enshrined under basic structure doctrine. In essence, the Central Government’s opinion has been placed at a higher pedestal than that of a tribunal created under the law. Therefore, it is safe to say that the system of checks and balances as envisioned by the constitution, has been significantly infringed. While there has not been a SC verdict on the constitutionality of Section 17A, due consideration must be given to the two separate High Court judgments on the issue. Remarkably, these High Court judgments have been ignored during the formulation of the Code.

What is even more concerning is that Industrial Tribunals are the primary forum for adjudication of industrial disputes. Their verdicts now, for all intents and purposes, are only applicable if they are in tandem with what the Central Government feels is an appropriate outcome. The objective behind constituting an Industrial Tribunal under the Act was to provide a degree of finality and impartiality to its verdict. It is, therefore, appropriate to say that the power granted to the Central Government in this regard renders a judicial verdict futile.

In the event that the workers/employees want to question a Central Government order under Section 55 of the Code, their only recourse would be a writ petition to a High Court, or the SC as allowed under the Indian Constitution. However, it is often overlooked that the bargaining power of workers/employees is manifestly lopsided. The workers/employees may not always have the time and financial backing to indefinitely scrutinize a Central Government order. While certain recourses under the Indian Constitution exist, legislators cannot expect the workers/employees in an industry to follow this lengthy and tedious route to justice.

It is true that the Central Government has only been permitted to use this power when the tests of harm to ‘national economy’ or ‘social justice’ have been satisfied. However, the Central Government is bound to utilize these powers liberally and apply Section 55 of the Code even in circumstances that do not warrant it. In case the Central Government truly feels that an order of the Industrial Tribunal is inexpedient to the ‘national economy’ or ‘social justice’, it may utilize its requisite recourses under the appeal mechanism. Giving the Central Government this power to modify/quash an Industrial Tribunal order will inevitably hamper dispute resolution for all parties concerned. Ironically, its inclusion within the Code abruptly delays and denies social justice itself.

Pratyush Hari, a fifth year law student at JGLS, Sonipat.

Picture Credits: Business Today

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