Authors: Sudhasri Yadavalli and Sakshi Kothari are graduates of Jindal Global Law School
The Industrial Disputes Act, designed to protect workers’ rights and facilitate prompt resolution of labour conflicts, stands marred by the capricious provision of Section 10 of the Act. This situation is perhaps best evidenced in the case of M/s Avon Services Production Agencies Ltd. v. Industrial Tribunal, Haryana, which shows that the lack of time constraints in Section 10 can lead to bureaucratic delays, turning the process into a nightmare for labour organisations raising the dispute.
The following paper seeks to revisit Avon Services and the challenges it reveals, 45 years after of the pronouncement of the case. It discusses how Section 10 has deviated from its original goals due to inconsistent government implementation and advocates for imposing reasonable limits on governmental discretion under this section. Additionally, the paper proposes exploring overlooked methods for resolving disputes to enhance the effectiveness of dispute resolution under the Act.
The Industrial Disputes Act ( ‘the Act’) was envisaged as social welfare legislation that aimed at providing official channels for expeditious resolution of matters caused by and between employees and employers in the country. Section 10 of the Act is one of the best attempts to realize this aim, for it empowers the government to refer industrial disputes across a wide range of adjudicatory mechanisms formulated under the Act. However, this power is an administrative and discretionary and therefore not without its limitations. India’s labour law jurisprudence had the chance to witness these limitations in the case of M/s Avon Services Production Agencies Ltd. v. Industrial Tribunal, Haryana, 1979. The case saw certain employees who were retrenched by a company approach the authorities to assert their statutory rights. Unfortunately, they had to navigate the counterargument from the employer that the government had refused to raise their dispute for adjudication when it was first demanded by them, only to raise it eight months later. While the Supreme Court finally upheld the retrenchment relief provided to the employees, in the same breath it also upheld the power of the government to refer disputes at any time and sans judicial scrutiny. We will closely examine and analyze some of these points in the following paper.
As noted, Section 10(1) of the Act does not provide for a limitation on the power of the government to refer industrial disputes. The Court in Avon held that this section neither denies the existence of the dispute nor denudes the power of the government to refer it for adjudication. Therefore, if the appropriate government were to decide to refer the dispute at a later stage, as it did in Avon, it would not have to refer to any fresh or additional material. While this provision is beneficial because it provides flexibility for different parties to approach the courts for the resolution of industrial issues, it has created complex issues for Indian Courts to grapple with. In certain cases, like Nedungadi Bank Lid. v. K. P. Madhavankutty, disputes have been brought up before the court several years after the matter first arose and the courts have condoned this delay on being presented with reasonable grounds for which the matter could not have been brought for reference. Since this withdrawal is set against an acutely important set of executive obligations, we find ourselves agreeing with leading jurist, OP Malhotra when says, “Such a view militates against the very concept of administration of justice and the principles of natural justice”.[i] At the same time, lack of certainty also means the provision can be misused by political parties and governmental offices to delay or tamper with the final reference of the dispute, as was the recorded case in Shanti Theatres.[ii]These extenuating circumstances led the National Commission of Labour to comment in its Annual Report in 1969:
“On the procedural plane, we were told that adjudication is dilatory, expensive, and even discriminatory as the power of reference vests with the appropriate Government… there are certain procedural deficiencies in the present system which need to be remedied… We recognize that adjudication as it has developed in India has tended to prolong disputes, allegations of political pressures, though often without foundation, have been here. Discretion, through used by the appropriate Government in a fair manner, may appear to the workers/employers affected to have been unfairly used… We envisage that in a democratic system pressure on Government to intervene or not to intervene in a dispute may be powerful…”
The Court in Avon did not entertain or explore any of these factors in detail while arriving at its findings regarding the reference. To complicate matters further, the Court noted that the refusal to bring the parties to a talking table or before an adjudicatory body might even accentuate feelings of dissatisfaction amongst the parties, increase the threat to direct action, etc. which would, in any instance, motivate the government to finally refer the dispute for adjudication. This stance is not only contradictory to the relevance of Section 10 but also to the aim and purpose of the entire legislation, which is to protect the interests of different classes of persons involved in industries as well as disputes occurring between them. In Avon, while the parties jettisoned in time and the government referred the matter for adjudication before the Industrial Tribunal in eight months, the matter went through several appeals and the parties could get permanent relief only seven years after they first raised the issue. The rate at which labour issues get raised before employers as well as decided by adjudicatory bodies has not changed remarkably since then. Therefore, cases like Avon could have provided the court with an opportunity to fill such loopholes.
Undoubtedly, the power provided to the appropriate government under section 10(1) is wide and unchanneled. This leads one to question the role of the judiciary in being watchdogs of the government and keeping their powers in check. A common thread operating throughout the judgement was the court’s hesitance to comment upon the error of the appropriate government in not referring to the matter within an adequate framework of time. It is on these unformulated grounds that the court digressed from the holdings in Western India Match Company and Binny Ltd. V. their Workmen that had held that fresh material must be required to refer a dispute to adjudicatory bodies after the appropriate government had refused to do so in the first instance. This finding has the potential to present insights to the government’s decision to refer matters that should not have been dismissed so easily by the court.
The Act’s primary focus is on the adjudicatory model for resolving disputes. However, its central concern is also to assure the inspiration of trust between the employers and the workmen through constant legal interventions by the state, thereby making it a complete legal dialogue. The present case showcases that the appropriate government’s failure to exercise its referral power within a reasonable time creates disharmonious relations as well as vexatious interpretations for otherwise benefactory legislation. As emphasised by Galanter, “Justice is not found in official justice dispensing institutions. People experience justice not only in forums sponsored by the state but (also) at primary institution locations of their activity (like their workplace)”. The referral powers that are vested with the appropriate government under S. 10 of the Act need to be re-explored within the landscape of progressive strides taken towards non-adversarial models for preventing industrial unrest. For this to be effectuated, there should be limitations and standards placed on the use of powers by the appropriate government as well as entrusting the conciliation and mediation stages of industrial dispute resolution with more responsibilities.
[i] O P MALHOTRA, THE LAW OF INDUSTRIAL DISPUTES, 472, (7th ed. 2015).
[ii] Shanti Theatres Pvt Ltd, Madras v State of Tamil Nadu, (1979) FJR.
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