Rights and Liabilities of a Registered Trade Union Explained

By | May 24, 2020
Rights and Liabilities of a Registered Trade Union

Rights and Liabilities of a Registered Trade Union Explained | Overview

The rights and liabilities of a registered Trade Union are dealt with in Chapter III of the Trade Unions Act, 1926. The Trade Union Act inter alia provides for registration of a trade union and the rights and liabilities of a registered trade union.

A “trade union” is defined under the Trade Union Act to mean “any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes federation of two or more trade unions”.

Rights and liabilities of a registered trade union

Under Section 4 (1) of the Act, any seven or more persons who want to form a trade union can apply for its registration to the Registration of Trade Unions. Provided that there are 100 or 10% whichever is less is employed.

The following are the rights and liabilities of a registered Trade Union,

Section 13 of the Trade Unions Act, 1926 reads as follows,

“Every registered trade union is a body corporate by the name under which it is registered and shall have perpetual succession and a common seal with a power to sue and to be sued.”

As per section 13, a registered Trade Union gets the following rights,

  1. Right to acquire and hold movable and immovable property
  2. Right to enter into contracts through its agents
  3. Right to sue and be sued (A registered trade union is a juristic person and hence it can sue the employer or any other person.  It can argue before any labor courts, authorities, Courts on behalf of itself, and on behalf of its members.)

In Chemosyn Pvt. Ltd v Kerala Medical and Sales Representative’s Associaiton[1], the court held that,

“A registered Trade Union is not a statutory body. It is not created by statute or incorporated in accordance with the provisions of a statute. In other words, a registered trade union is neither an instrumentality nor an agency of the state discharging public functions or public duties.

The court in East India Coal Co. Ltd v East India Coal Co. Ltd Workers’ Union[2], held that

“A registered trade union is an entity distinct from the members of which the trade union is composed. It has a power to contract and to hold property-both moveable and immovable and to sue and be sued by the name in which it is registered. It can institute a suit in forma pauperis within the meaning of Order XXXIII Rule 1 of the Civil Procedure Code. It continues to remain just a private body and all disputes relating to election of such a private body cannot b canvassed or challenged in a writ petition.”

Chapter III of the Trade Unions Act provides the rights and liabilities of a registered Trade Union

The provision of rights and liabilities to the registered Trade Unions in Chapter III of the Trade Unions Act, 1926 go hand in hand.

1. Right to establish a general and political fund

Under Section 15 and Section 16, a registered trade union has a right to establish and maintain a general fund and a separate fund for political purposes respectively. Subscription to this fund is not necessary for a member. At the same time, the Unions are bound to utilize the funds only for the purposes specified in the Act.

Objects on which general funds may be spent (Sec.15)- The general funds of a registered Trade Union shall not be spent on any other objects than the following.-namely:–

  1. Payment of salaries, allowances and expenses to office-bearers of the Trade Union
  2. Payment of expenses for the administration of the Trade Union, including an audit of the accounts of the general funds of the Trade Union;
  3. Payment of charges arising out prosecution or defence of any legal proceeding of the Trade Union or any member thereof when such prosecution or defence is for the purpose of securing or protecting, any rights of the Trade Union as such or any rights arising out of the relations of any member with his employer or with a person whom the member employ.
  4. Conduct of trade disputes on behalf of the Trade Union or any member
  5. Compensation of members for loss arising out of trade disputes
  6. Allowances to members or their dependants on account of death, old age, sickness, accidents or unemployment.
  7. Issuance of policies of assurance on the lives of members, or policies insuring members against sickness, accident or unemployment
  8. Provision of education, social or religious benefits for members (including the payment of the expenses of funeral or religious ceremonies for deceased members) or for the dependants of members
  9. Providing for publication of periodicals for the use of which is intended for the member’s benefit.
  10. Any other object that may be notified by the appropriate Government in the Official Gazette. 

If funds are spent for any purposes other than the above, such expenditure is treated as unlawful and the Trade Union can be restrained by the Court for applying its funds in any other purposes.

In Mario Raposo v. H M Bhandarkar and others[3], the court held that the money invested from general funds into shares of UTI by the office bearers of a trade union to be invalid considering it to be a speculative investment.

Construction of separate fund for political purposes [Section. 16]

Apart from the primary objects, a Trade Union may have certain other political objects. As per Section 16 a registered union may constitute a separate fund in addition to the general fund and the payment of such a fund shall be utilized for serving the civic and political interest of its members.

According to Section 6(2) the political funds may be utilized for the following purposes,

  1. Payment of any expenses incurred, either directly or indirectly, by a candidate or prospective candidate for election as a member of any legislative body constituted under the Constitution or of any local authority
  2. Holding of any meeting or the distribution of any literature or documents in support of any such candidate or prospective candidate; or
  3. Maintenance of any person who is a member of any legislative body constituted under the Constitution or for any local authority; or
  4. Registration of electors or the selection of a candidate for any legislative body constituted under the Constitution or for any local authority; or
  5. Holding of political meetings of any kind, or the distribution of political literature or political documents of any kind.

Effect of Non-subscription

 The subscription for political funds is only voluntary and a member of the trade union cannot be excluded in any way from the benefits of the trade union nor can any condition be imposed for his admission to the trade union.

The second National Commission on Labour has also allowed to continue and appropriately include it in the law. The Commission has also advised that due care must be taken to ensure that the general funds must not be used for political purposes.

2. Immunity from certain criminal and civil proceedings

The employers were given damages and the unions were made responsible for illegal conspiracies in the case of Bukinghum and Carnatic mills. The Trade Unions Act, 1926 has made provisions for the members and office-bearers of a registered trade union from criminal and civil conspiracies during the strikes and causing any financial loss to the employer.

Under Sections 17, 18, and 19 the Trade Unions Act, 1926 a registered trade union gets immunity in certain criminal, civil, and contractual proceedings.

(i) Exemption from Criminal Conspiracy

Section 17 confers immunity from liability in the case of criminal conspiracy under section 120-B of IPC, committed by an office bearer or a member. However, this immunity is partial and is available only:

  • to office-bearers and members of registered trade unions;
  • for agreement between the members;
  • such agreement that may further any such trade union object as is specified in Section 15 of the Act; and
  • such agreements are not to commit an offence.

In Jay Engineering[4], the Court while interpreting the provisions of Section 17 observed that,

No protection is available to members of a trade union for any agreement to commit an offence … When a group of workers, large or small, combine to do an act for the purpose of one common aim or object, it must be held that there is an agreement among the workers to do the act and if the act committed is an offence, it must similarly be held that there is an agreement to commit an offence.”

(ii) Exemption from Civil Suits

 An exemption is granted under section 18 of the Trade Unions Act, 1926 to registered trade unions from civil suits.

A registered trade union is not liable in any suit or other legal proceeding in any civil Court in respect of any tortuous act done in contemplation or furtherance of a trade dispute by an agent of the trade union if it is proved that such person acted without the knowledge of, or contrary to, express instructions given by the executive of the trade union. However, the trade union, its office-bearers and the members are liable for acts of violence or vandalism or any act of deliberate trespass.

In the case of Reserve Bank of India v. Ashis[5], the Calcutta High Court held that

“In order to secure immunity from civil liability under Section 18, inducement or procurement in breach of employment in furtherance of trade dispute must be by lawful means and not by means which would be illegal or wrong under any other provisions of the law.”

The above section does not afford immunity to the members or office-bearers of a trade union for an act of deliberate trespass. The immunity also cannot be availed by them for an unlawful or tortuous act. Further, such immunity is denied if they indulge in an illegal strike or gherao.[6]

Significance of granting immunity

“Section 18 helped in maintenance of union funds, howsoever meagre. The real significance is in rejecting the application of the common law doctrines of restraint of trade and criminal conspiracy in so far as they encroach on the field of labour management relations.” [7]

Thus, Section 17 & 18 of the Indian Trade Unions Act grant certain exemptions to members of a Trade Union, but there is no exemption against either an agreement to commit an offence or intimidation, molestation or violence, where they amount to an offence.

3. Right to a peaceful strike

Registered Trade Unions have certain rights to do in furtherance of their trade disputes such as calling for a strike, persuading members.

In India unlike America right to strike is not expressly recognized by the law. The trade union Act, 1926 for the first time provided limited right to strike by legalizing certain activities of a registered trade union in furtherance of a trade dispute which otherwise breaches of common economic law. A trade union has the right to go on strike provided the strike is legal under the provisions of the ID Act (i.e. after giving of a statutory notice).

Members of a trade union may resort to peaceful strike, that is to say, cessation of work with the common object of enforcing their claims. Such strikes must be peaceful and not violent and there is no exemption when an offence is committed. Therefore, a concerted movement by workmen by gathering together either outside the industrial establishment or inside, within the working hours is permissible when it is peaceful and does not violate the provisions of law. But when such a gathering is unlawful or commits an offence then the exemption is lost.[8]

In the leading case of Rohtas Industries Staff Union v. State of Bihar[9], the matter was referred to the arbitration as the question had arisen whether the employers had any right of a civil suit for the loss against the workers. The arbitrator held that

“the workers, who participated in an illegal and unjustified strike, were jointly and severally liable to pay damages.”

The Patna High Court quashed the order of arbitrator and held that

“employers had no right of civil action for damages against the employees participating in an illegal strike within the meaning of Section 24 of the Industrial Disputes Act, 1947.”

The Supreme Court affirmed the decision of the High Court. Therefore, it is evident that section 18 of the Act, grants a civil exemption to members in respect of strikes by the trade unions.

In the case of Simpson & Group Companies Workers & Staff Union vs Amco Batteries Ltd 1992 Karn., it was held that,

“physical obstruction of movement of management officials, contractors, goods, or vehicles carrying raw materials, is not a trade union right or a fundamental right under art 19. Immunity under section 18 cannot be claimed for such activities.”

4. Right to enforce agreements

Under Section 19 an agreement between the members of a registered Trade Union is not void or voidable merely for the reason of the fact that any of the objects of the agreement are in restraint of trade. It is important to note that this right is available only to registered trade unions. An unregistered trade union must follow the principles of general contract law.

Provided that nothing in this section shall enable any Civil Court to entertain any legal proceeding instituted for the express purpose of enforcing or recovering damages for the breach of any agreement concerning the conditions on which any members of a Trade Union shall or shall not sell their goods, transact business, work, employ or be employed.

The court in Tulsidas Paul v. Second Labour Court[10] held that,

“The net effect of the section is to validate agreement which is invalid being in restraint of trade under Section 27 read with Sections 23 and 24 of the Contract Act, 1872.”

5. Right to inspect books

Under Section 20 of the said Act, the account books of a registered trade union and the list of members must be made available to inspection by an office-bearer or member of the trade union at such times as may be provided for in the rules of the trade union.

6. Rights of minors to membership of trade unions

Section 21 allows minors above the age of 15 to be a member of a registered trade union subject to any rules of the trade union to the contrary. He may enjoy all the rights of a member and execute all instruments and give all acquaintances necessary to be executed or given under the rules. However, such minors cannot hold office.

7. Right to change the name

Any registered trade union may change its name with the consent of not less than two-thirds of the total number of members under Section 23 of the Act.

Notice of change of name 

According to Section 25 of this Act, the following has to be kept in name while changing the name of the registered trade union,

  1. A written notice of the change of name signed by the secretary and 7 member of the Trade Union needs to be sent to the registrar of the Trade Union.
  2. The new name should be a unique one and should not match with the other Trade Unions name.
  3. If Registrar is satisfied with all requirements provided by the members of Trade Union, Registrar will change the name and the same will be entered in the register.

Effects of change of name

According to Section 26 of the Act, the change in the name of a registered Trade Union shall not affect any rights or obligations of the Trade Union or render defective any legal proceeding by or against the Trade Union, and any legal proceeding which might have been continued or commenced by or against it by its former name may be continued or commenced by or against it by its new name.

8. Right to amalgamate

Under Section 24, two or more registered Trade Unions have the right to be amalgamated together as one Trade Union with or without dissolution or division of the funds of such Trade Unions or either or any of them.  However, the votes of at least one-half of the members of each or every such Trade Union entitled to vote needs to be recorded, and that at least 60% of the votes should be recorded in favour of the proposal.

Notice of amalgamation

According to Section 25 of this Act, a written notice of an amalgamation signed by the secretary and 7 members of the Trade Union must be sent to the registrar of the Trade Union. If Registrar satisfies with all requirements provided by the members of Trade Unions, Registrar will validate amalgamation and register the same according to Section 8 of this Act.

Effect of amalgamation

According to Section 26 of the Act, an amalgamation of two or more registered Trade Unions shall not prejudice any right of any of such Trade Unions or any right of a creditor of any of them.

9. Right to dissolve the trade union

Under Section 27 a registered Trade Union may be dissolved.  A notice of the dissolution signed by 7 members and by the Secretary of the Trade Union has to be sent to the Registrar within fourteen days of the dissolution. If the registrar is satisfied that the dissolution has been effected in accordance with the rules of the Trade Union, he may register it and the dissolution shall have effect from the date of such registration.

 When the dissolution of a registered Trade Union has been registered and the rules of the Trade Union do not provide for the distribution of funds of the Trade Union on dissolution, Section 27 (2) gives the power of distribution of funds amongst the members to the Registrar.

10. Right to negotiate

Under section 28-F, the executive of a registered trade union has a right to negotiate with the employer the matters of employment or non-employment or the terms of employment or the condition of labour of all or any of the members of the trade union and the employer shall receive and send replies to letters and grant interviews to such body regarding such matters. It further provides that the executive is entitled to post notices of the trade union meant for its members at any premises where they are employed and that the employer shall provide reasonable facilities for that.

11. Right to represent

A trade union can make a representation on behalf of the employee or individual dispute if such employee gives written authorization. With that authorization, a Trade union can make presentation before any consolation officer, Industrial Tribunal, or Labour Court.

A workman who is a party to an industrial dispute is entitled to be represented in any proceeding under the ID Act by any member of the executive or other office-bearer of a registered trade union of which he is a member.

In All India Uco Bank Staff Federation case, the Hon’ble High Court laid down:

“There is no Common Legal right of a trade union to represent its members whether for purposes of collective bargaining or individual grievances of members if the workman is not willing to take its recourse.”

In the case of West India Steel Company Ltd. v. Azeez[11], the court held that,

“A trade union leader or any worker does not have any right by law to share managerial responsibilities. A trade union can espouse the cause of workers through legal ways but officials of a trade union cannot direct other workers individually or in general about how to do their work. They do not have the right to ask a worker to stop his work or otherwise obstruct the work of the establishment.”

Other important rights and liabilities of registered Trade Union,

  1. Under section 21-A, a trade union cannot appoint a person who has not attained the age of 18 years or a person who has been convicted of a crime involving moral turpitude and has been imprisoned for 6 months or more within last 5 years.
  1. As per section 22, at least half of the office bearers of a trade union of workers of unorganized sector must be engaged or employed in an industry to which the trade union is connected. Also, while a union has a right to remove any office bearer, this power must be used judiciously and rules of natural justice must be followed.
  2. Under section 28, a general statement, audited in a prescribed manner, of all income and expenses must be sent to the registrar every year.
  3. A registered trade union is empowered to appear or make an application before the Commissioner appointed under the WC Act for workmen’s compensation.
  4. While an employer is not legally bound to recognise a trade union or encourage collective bargaining, a registered trade union can enter into collective bargaining agreements with the employer for better wage and service conditions.

Industrial Relations Code, 2019 on Registration of Trade union:

In India, labour falls under the Concurrent List of the Constitution.  Therefore, both Parliament and state legislatures can make laws regulating labour.   Currently, there are over 100 state and 40 central laws regulating various aspects of labour such as resolution of industrial disputes, working conditions, social security and wages.[12]

In this context, the Industrial Relations Code, 2019 was introduced in Lok Sabha by the Minister of Labour and Employment, Mr. Santosh Kumar Gangwar, on November 28, 2019.  It was referred to the Standing Committee on Labour on December 23, 2019. The standing committee has given its report on April 23, 2020.

Under IDA: For public service utilities, strikes or lock-outs cannot be conducted unless a notice of 14 days is provided.  The notice is valid for a maximum of six weeks.

This Industrial Relations Code allowed the same provisions on strikes and lock-outs to be extended to all establishments.  The validity period of the notice has been amended from six weeks to 60 days.

Recommendations by the standing committee

In its report, the standing committee has mentioned the following recommendations,

Recommendations with respect to the rights and liabilities of the trade unions,

  1. As per Clause 20any person who has attained the age of fourteen may be a member of a Registered Trade Union on the rationale that at the age of fourteen a person is legally allowed to work in non-hazardous industries/conditions”. The committee suggested to clarify in the Clause itself to the extent that persons of fourteen years of age, working in non-hazardous establishments, may be a member of the Trade Unions so as to quell any probable legal complications.
  2. The Committee suggested to bring clarity to Clause 27(1) and 27(2) which deal with the recognition of Trade Unions at the Central and State level so as to appropriately recognise and prudently involve the Trade Unions in all industrial activities with responsibilities and liabilities.

Recommendations with respect to strikes by the trade union:

  1. The Committee finds no plausible reason for expanding the ambit of this provision indiscriminately to all the industrial establishments as restrictions should not apply to all strikes and demonstrations which are meant to assure freedom of industrial actions. The Committee, therefore, desire that the requirement of fourteen days’ notice to go on strike be made applicable only to public utility services like water, electricity, natural gas, telephone and other essential services as well as matters of the disturbance of public tranquillity or breach of public order.
  2. The Committee is of the considered opinion that the entire process involving giving fourteen days strike notice, its referral to the conciliation process, again giving notice in the event of the failure of the conciliation process etc. is too complicated, cumbersome and time-consuming. In view of the desirability to ensure that the collective bargaining mechanism intended and outlined does not result in a collective escalation of the crisis, the Committee impress upon the Ministry to revisit the provision concerned so as to simplify the process and make it enforceable.”[13]

The Industrial Disputes Act, 1947 provides for mechanism and machinery for settlement of disputes through conciliation, Industrial Tribunals as well as provisions relating to strike, compensation/notice and permission before retrenchment, closure, layoff, etc. The Trade Unions Act, 1926 deals with registration of Trade Unions, their rights, obligations, etc. Thus these laws provide the various rights and liabilities of the Trade Unions and protect the workers from exploitation.

[1] 1988 Lab. IC 115.

[2] AIR 1961 Pat 51.

[3] (1994) IILLJ 680 Bom

[4] Jay Engineering Works Ltd. v. Staff, AIR 1968 Cal. 407.

[5] 73 CWN 388, (1969).

[6] Jay Engineering Works Ltd. v. Staff, AIR 1968 Cal. 407.

[7] Anandjee, “Impact of Labour Laws on Trade Union Movement,” a paper read at the All India Labour Economic Conference

[8] C.B. Mamoria & others, “Dynamics of Industrial Relations” (2014) p. 158, Himalaya Publishing House.

[9] AIR 1963 Patna 170; On appeal AIR 1979 SC 425.

[10]AIR 1963 Calcutta 624.

[11] 1990 (60) FLR 802, (1990) IILLJ 133 Ker

[12] “List of Central Labour Laws Under Ministry of Labour and Employment”, Ministry of Labour and Employment, https://labour.gov.in/sites/default/files/Central%20Labour%20Acts_0.pdf.

[13] Standing committee on labour, 8th report on Industrial Relations Code,2019 at p. 63

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