Mechanisms For Settlement Of Industrial Disputes

By | May 31, 2020
Mechanisms For Settlement Of Industrial Disputes

Mechanisms For Settlement Of Industrial Disputes | Overview

The article deals with the various mechanisms for settlement of Industrial Disputes, thus providing an alternative for the adjudication of justice. The process and remedy involved work clearly in favour of reducing the already cumbersome tasks of the Apex court of our country. In this article, the main focus would be on the settlement of the industrial dispute. Settlements are an important and favourable method of dispute resolution.

Mechanisms For Settlement Of Industrial Disputes

The Industrial Disputes Act 1947, hereinafter referred to as the ID Act, provides for three mechanisms for the resolution of industrial disputes. These are as follows:

  1. Settlement of Industrial Dispute
    1. Bipartite Settlement, i.e. “Collective Bargaining” (relevant provisions are Sections 2(p), 18, and 29 of the ID Act)
    2. Tripartite Settlement, which involves consists of a third party (relevant provisions are Sections 4, 5, 12 and 13 of the ID Act)
  2. Investigating the Industrial Dispute by setting up Court of Inquiry (relevant provisions are Sections 6 and 14 of the ID Act)
  3. Adjudication of the Industrial Dispute by the following:
    1. Labour Court (relevant provisions are Sections 7, 11 and 11A of the ID Act)
    2. Industrial Tribunal (Section 7A of the ID Act)
    3. National Tribunal (Section 7B of the ID Act)
    4. Arbitrator (Section 10A of the ID Act)

In this article, the main focus would be on the first point, i.e. the settlement of the industrial dispute. Settlements are an important and favourable method of dispute resolution.

In P. Virudhachalam v The Management of Lotus Mills,[1] the Supreme Court had called settlements to be “livewires for securing peace and prosperity”. However, other mechanisms will also be discussed briefly.

I. Bipartite Settlement

Section 2(p)[2] lays down the definition of “settlement”. From the definition given, it can be understood that it talks about two kinds of settlement, one which is bipartite and is an agreement which has been arrived at between the workmen and the employer without using the help of conciliation proceedings, and the other is tripartite and has been entered into during the course of conciliation proceedings with the help of a Conciliation Officer.

Keeping our focus on the first kind, i.e. the bipartite settlement, the following conditions must be satisfied for such an agreement:

  1. It must be a written agreement.
  2. It must have been signed by both the parties.
  3. A copy of the agreement must be sent to the authorised officer.

“Collective Bargaining”, very simply, refers to negotiation. It is highly desirable because it provides the workmen an opportunity to attain industrial democracy. Here, the disputing parties sit together and make an attempt to resolve the dispute in a peaceful and dignified way.

When workers come together to bargain collectively with their employer, it provides them with the dignity and autonomy they deserve by giving them a chance to control an important part of their life, i.e. their work. It is a flexible, dynamic, and continuous process which helps to maintain a stable relationship between the disputing parties.

In the process of collective bargaining, the legitimate expectations of both sides are paid heed to, and it helps to maintain equality between the workmen and the employer, something which would not be possible in the case of an individual worker.[3]

Section 18 of the ID Act recognises collective bargaining, as it provides that a bipartite settlement agreement shall be binding on both parties.[4] Section 29 also provides for the punishment which will be incurred if the settlement is breached by any of the parties.

Collective bargaining has been recognised by the courts in India as well. In Ram Prasad Viswakarma v. Industrial Tribunal,[5] it was observed that before ‘collective bargaining’, the workmen were definitely at a disadvantaged position with respect to achieving reasonable terms for contracts of service. With the development of trade unions and the increasing popularity of collective bargaining as a tool for negotiating, the employers found it easier and much more convenient to deal with the representatives of workmen, rather than individual workmen.

In Bharat Iron Works v. Bhagubhai Balubhai Patel[6], it was held that collective bargaining is “the order of the day in a democratic, social welfare State”. Further, such activities are understood to be based on mutual cooperation, and should not be “considered as irksome” by the employer, as a dialogue with the representative of the workmen helps in creating and maintaining a “balance in adjustments and settlement of various contentious claims and issues.” These definitions bring out the basic element in the concept i.e., civilized confrontation between employers and employees with the whole process being regulated by statutory provisions.

In the case of Amalgamated Coffee Estates Ltd. v. Workmen[7], it was held by the Supreme Court that “the process of negotiated settlements is at the heart of the solution of the collective disputes”, and that, a bipartite settlement with a majority union will be considered to be binding if it was a fair and reasonable one. Similarly, in Central Provinces Transport Services v. Patwardhan[8], it was held that the Industrial Disputes Act essentially deals with collective disputes.

II. Tripartite Settlement

A tripartite settlement refers to one where there is a third party or an outsider, i.e. the Conciliation Board or the Conciliation Officer is involved. As we have seen in Section 2(p), a tripartite settlement has been envisaged in the ID Act. There are other provisions as well which explain the process in greater detail.

Section 4[9] talks about the appointment of Conciliation Officers, while Section 5[10] talks about constituting a Conciliation Board, which involves constituting an independent Chairman, and two or four other members, as per the discretion of the appropriate government.

Both of these tasks are done by the appropriate government. The Officer has the duty of mediating the dispute and promoting the settlement of disputes. Sections 12 and 13 talks about the duties of Conciliation Officers and Conciliation Boards respectively. These sections also clarify what the procedure is.

As per Section 12, a Conciliation Officer shall hold conciliation proceedings where there is an existing industrial dispute, or where an industrial dispute is apprehended, or a notice for a strike or a lock-out has been given by workmen working in a public utility service.

The Officer then has to investigate the dispute and matters, which affect it, and work towards bringing about an amicable settlement. If a settlement happens, then the Officer has to send a report to the appropriate government or any other authorised officer along with a memorandum of settlement signed by all disputing parties.

Even if a settlement does not happen, the Officer still has to send a report to the appropriate government, detailing the steps they took and the reason, in their opinion, of their failure. On the basis of the report which the Officer sends if settlement has failed, the appropriate government may refer the dispute to a tribunal or a labour court. The conciliation officers do not have the authority to impose upon the parties a solution of or to dispute.

With respect to Conciliation Boards, in the first instance, industrial disputes are referred to Boards by the appropriate government under Section 10. Once the dispute is referred, the Board too shall investigate it and try its best to bring about an amicable settlement. If the settlement takes place, then a corresponding report will be sent to the appropriate government, and the same will be done if a settlement does not take place, and the report will contain all the facts and circumstances of the dispute, the findings of the Board, the reason for failure to achieve a settlement, and its recommendations. In the latter case, the appropriate government may refer the dispute to a tribunal or a labour court.

Thus, the procedure is more or less the same. However, while the Officer has to submit their report within fourteen days, the Board has a time of two months.

In P. Virudhachalam v. The Management of Lotus Mills,[11] the Supreme Court had held that a settlement arrived during the course of conciliation proceeding shall cover all signatories to the settlement, all parties to the dispute, and all workmen i.e. existing and future workmen.

In National Engineering Industries Ltd. v. State of Rajasthan[12] it was similarly held that a settlement arrived during the course of conciliation proceeding with a recognised majority union will also cover the minority union, i.e. all worker will be covered.[13]

III. Voluntary Arbitration (Section 10A)

The ID Act also provides for voluntary arbitration under Section 10A. Here, where an industrial dispute exists or is apprehended, the dispute may be referred for arbitration. However, the following things need to be followed to go for voluntary arbitration:

  1. The consent of both the workmen and the employer is required to refer the dispute to arbitration.
  2. Reference to arbitration has to be done before the dispute has been referred under Section 10 to a Labour Court or Tribunal.
  3. There has to be a written agreement between the workmen and the employer to refer the dispute to arbitration.
  4. A copy of the arbitration agreement will be sent to the appropriate Government and the Conciliation Officer as well, and it shall be published in the Official Gazette within one month by the appropriate government.

If the majority of each party sign the arbitration agreement, then the government may issue a notification which will allow the employers and workmen who are not parties to the arbitration agreement but are concerned in the dispute, an opportunity of presenting their case before the arbitrator or arbitrators.

The arbitrator(s) shall carry out an investigation of the dispute, and submit the arbitration award to the government, which shall be signed by all arbitrator(s).

It is also important to note that the Arbitration and Conciliation Act, 1940 does not apply to voluntary arbitrations in cases of industrial disputes.

IV. Investigating Industrial Disputes

Section 6 provides for setting up of Courts of Enquiry. It provides that the appropriate government has the discretion to appoint a Court of Enquiry for inquiring into any matter appearing to be connected with or relevant to an industrial dispute.

This shall be done by issuing a notification in the Official Gazette. The Court may consist of one or more members, as per the discretion of the government, and where there is more than one member, one will be appointed as the Chairman. As per Section 14, the Court has to present its report to the appropriate government within a period of six months from the commencement of its inquiry.

V. Adjudication of Industrial Disputes

Adjudication of industrial disputes is the most popular method of resolving them. Under Section 10, the dispute can be referred to the Labour Court, Industrial Tribunal, or the National Tribunal by the appropriate government. Currently, there are 22 Labour Courts and Industrial Tribunals, and 2 National Tribunals (in Mumbai and Kolkata), all appointed by the appropriate government.

It is also very important to understand here that the remedy of voluntary arbitration under Section 10A and remedy of adjudication under Section 10 are alternate remedies, i.e. only one remedy can be adopted and if one remedy is chosen, then the parties cannot choose to adopt the other way of conciliation.

These Courts and Tribunals are in practicality the same institution and are headed by a presiding officer. Their composition, and the qualification of the members have been provided in Section 7A. While their subject matter for jurisdiction is an industrial dispute under Section 10, their territorial jurisdiction is defined by the appropriate government. There is no pecuniary jurisdiction for these courts and tribunals.

Labour courts do not have the power to reject or modify the terms of the reference which has been made by the appropriate government. They can only adjudicate on rights arising out of the contract of employment and not on other civil rights and issues. The procedure is quite informal and easy, and is regulated by the Industrial Disputes (Central) Rules 1957. The proceedings are also simple, and not very technical. These courts perform quasi-judicial functions. They have limited power to review and no power of enforcing their orders. Power of enforcement is with the appropriate government.


[1] 1998 1 SCC 650.

[2] Section 2(p): “Settlement” means a settlement arrived at in the course of Conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorized in this behalf by the appropriate Government and the Conciliation Officer.

[3] Benefits of Collective Bargaining Agreement, Briefing Note, International Labour Organisation, 30 September 2013, available at https://www.ilo.org/beirut/projects/WCMS_222595/lang–en/index.htm.

[4] Section 18(1), Industrial Disputes Act 1947.

[5] (1961) I LLJ 504.

[6] 1976 SCR (2) 280.

[7] 1965 II LLJ 110 SC.

[8]  (1956) SCR 956.,

[9] Section 4: (1) The appropriate Government may, by notification in the Official Gazette, appoint such number of persons as it thinks fit, to be Conciliation Officers, charged with the duty of mediating in and promoting the settlement of industrial disputes. (2) A Conciliation Officer may be appointed for a specified area or for specified industries in a specified area or for one or more specified industries and either permanently or for a limited period.

[10] Section 5: -(1) The appropriate Government may as occasion arises by notification in the Official Gazette, constitute a Board of Conciliation for promoting the settlement of an industrial dispute. (2) A Board shall consist of a Chairman and two or four other members, as the appropriate Government thinks fit. (3) The Chairman shall be an independent person and the other members shall be persons appointed in equal numbers to represent the parties to the dispute and any person appointed to represent a party shall be appointed on the recommendation of that party : Provided that, if any party fails to make a recommendation as aforesaid within the prescribed time, the appropriate Government shall appoint such persons as it thinks fit to represent that party.

[11] 1998 1 SCC 650.

[12] AIR 2000 SC 469.

[13] Deepanjan Dey, Tripartite Settlement: A Protective Shield, Business Manager, 1 October 2018, available at https://www.businessmanager.in/tripartite-settlement-a-protective-shield.php.


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Author: Nitya Bansal

She is a B.A.LLB (H) student at National Law University Delhi. She enjoys legal research and drafting, and is currently associated with the Centre for Communication Governance as a Research Assistant.

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