This article has been written by Oishika Banerji, from Amity Law School, Kolkata. This is an exhaustive article dealing with the mechanism of settling disputes under the Industrial Dispute Act. 


Disputes are always a drawback for any industry. A dispute arises for several reasons, the most common being the relation between the labourers and their wages. It is the conflict of interests between two parties that give rise to a dispute. The parties involved in an industrial dispute are the employer and the employee. Traditionally speaking, the employees have always been placed on the lower ladder of the society by the employer presenting a dominating self-being in the position of authority. This inequality that has been existing in the industrial domain for a long time now requires settlement on the part of both the employer and the employee having an equal opportunity to present their wants.

An employee has the right to be provided with wages depending on the amount of work he delivers. It is the responsibility on the part of the employer to provide his employees with a reasonable amount of wages along with other conditions that are necessary for a person to earn his livelihood. The founder of the Australian system of arbitration and conciliation, Mr Justice Higgins had correctly pointed out that the conflict between wage earners and the profit creators will always be existing with us in our everyday life. It is therefore always necessary to settle the disputes arising between two parties under the Industrial Dispute Act,1947 in order to prevent the industry from facing loss or sufferings.

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All disputes arising in an industry cannot be resolved in the same manner and therefore comes the concept of the mechanism of settling disputes under the Industrial Dispute Act,1947. Some of the mechanisms that are commonly utilized are adjudication, conciliation, an inquiry by the court of law etc. These mechanisms help in settling the disputes by investigating the matter and in to successfully carry out the process, available mechanisms are utilized.

It is to be remembered that industrial dispute is different from any other kind of dispute on grounds that it is something more than just getting compensated for the loss suffered. Rather it is a constant fight against oppression on the part of those who are employed for providing welfare among other sections of the society and not being subjected to similar kind of welfare due to the authoritative rule on the part of the employer. It is correct that the disputes settlement mechanisms can provide relief for a temporary period only, these settlement mechanisms, if used effectively, can provide long term services also. Therefore what is necessary is the correct application of the mechanisms available for settling disputes.

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Industrial Dispute Act,1947

The Industrial Dispute Act,1947 is an Act that was formulated to guarantee fair and equal terms between the employer and the employee. The act aims to settle the disputes that arise through negotiations. By doing so it promotes industrial harmony and peace. The Industrial Dispute Act,1947 regulates the labour law in India as far as the same relates to trade unions. Section2(k) of the Act,1947 lays down the meaning of an industrial dispute. The parties that can be involved in an industrial dispute includes employers and workmen, two employees, employer and workmen. The provision also lays down the grounds that need to be abided by in order to term a dispute as an industrial dispute. These grounds are provided hereunder:

  1. The mere difference of opinion will not constitute an industrial dispute instead of a factum of dispute will.
  2. The date of commencement of the dispute should be provided in writing by the union otherwise the same reference will be declared invalid. It was in the case of Union of Journalists v. The Hindu where the court observed that for a dispute to be claimed under industrial dispute, the same should be existing or apprehending on the date that has been referred. Therefore what the court meant by these observations is that if the demand by the employees were not brought before the management under which they work, and similar demands were raised during the time of the proceedings, the dispute will still be considered as an industrial dispute and proceed further with settlement mechanisms. Similar kind of view was made by the court in the case of Shambhu Nath Goel v Bank of Baroda also.
  3. The dispute should be such that it affects the well-being of the majority of workmen and not a single work-man.
  4. The dispute that has arisen should be in relation with an individual workman or workmen in whom they being a body is or are interested in.

To maintain a cordial relation between the employer and the employee, the Act lays down settlement mechanisms as well that can be of some help. The authorities on whom the Act confers authority to carry out settlement and investigation purposes for an industrial dispute are mentioned below:

  1. Conciliation officer under Section 4 of the Act,1947
  2. Works committee under Section 3 of the Act,1947
  3. Labour court under Section 7 of the Act,1947
  4. Boards of conciliation under Section 5 of the Act, 1947
  5. Labour Tribunal under Section 7A of the Act, 1947
  6. National tribunal under Section 7B of the Act, 1947

In the case of State of Bihar v. D.N.Ganguli, the Supreme Court decided that if a dispute which has already been settled amicably by the parties have been brought before the tribunal with an assumption that the same will be reconsidered by the tribunal then it would be very unreasonable to do so. As soon as the matter is settled before the tribunal, the reward as compensation for the dispute will be provided by the tribunal itself. if the Further the Act under Section 10 provides that if there arises any industrial dispute, that might be referred by the appropriate government for adjudication to the Conciliation Board, Court of inquiry, labour court, national tribunal or industrial tribunal. The different types of disputes that come under the ambit of an industrial dispute are:

  1. Individual disputes, under which the disputes of termination, discharge, promotion of workmen, security measures available to the workers, retirement benefits come in. Disputes coming under individual disputes are either legal or rights disputes by nature. In the case of Central Provinces Transport Services Ltd., v. R.G. Patwardhan the court opinionated that if a dispute arises between an employer and a workman, then that cannot be termed as an industrial dispute unless the dispute is taken up by the trade union or a collective group of workmen claiming that a legal dispute has taken place. Therefore, in this case, the Supreme Court extended its support towards the trade union so that an individual dispute can be treated as an industrial dispute and settlement can be done.
  2. Collective disputes are those disputes which involve a group of workmen whose rights and interests have been contravened with by the employer. This dispute is referred to as the most important industrial dispute which if not resolved leads to a stoppage of work by the workers that can be detrimental for the industry as a whole.
  3. Disputes of rights and interest is another kind of industrial dispute. Disputes of rights are also referred to as legal disputes that deal with the rights of the workmen that are already existing. When there is a violation of the legal rights of the workers, disputes arise regarding the same.

The Act does not provide any provision for settling disputes by means of bilateral negotiations. If the parties fail to negotiate mutually between themselves then the only way of resolving an industrial dispute is by adjudication on the reference of the appropriate government. Therefore the role of voluntary arbitration is necessary on the basic grounds for the parties involved in the dispute to resolve the same easily. If the same is not done then there are also other ways of resolving the disputes. The best way of resolving disputes is by means of collective bargaining which symbolises plurality of workmen working in the industry. If collective bargaining fails, then other mechanisms of settlement involve conciliation, arbitration and voluntary arbitration. These methods are considered to be the appropriate alternatives for collective bargaining.

Mechanism of Settlement disputes under the Industrial Dispute Act

Certain machinery is existing under the methods of settling industrial disputes which helps in regulating the settlement and handling of the dispute in a just and fair manner for the parties involved in the dispute and thereby ensure or guarantee a normalised situation under which the employer and the employee can exist and work in a friendly manner which is required for the growth of the industry. The common mechanisms for settlement of disputes under the Industrial Dispute Act,1947 have been explained in detail below.

Conciliation and Mediation

One of the most familiar ways to carry out the settlement of disputes under the Industrial Dispute Act,1947 is conciliation which is also well-known by the name of mediation. It is not only restricted to India but this method of dispute settlement is used all across the world. Conciliation is the procedure in which there is an involvement of a third party who provides assistance to the parties in dispute to carry out negotiation between them. The two types of machinery that are available for executing the conciliation functions are:

  1. By the conciliation officers who work in the department of labour
  2. The Conciliation Board is a body of several members consisting of a chairman, two to four members as the representatives of the employers and the employees. These members are to be appointed by the government on parties recommendation.

Section 4 of the Industrial Dispute Act, 1947 lays down the function of a conciliation officer which is to create a kindred atmosphere within the industry which will help the parties to settle the disputes between them. This is a function with an administrative nature and not a judicial one.

A conciliation officer is required to hold proceedings, carry out investigations regarding the dispute in a fair manner to help the parties arrive at a settlement. They are appointed to regulate settlement disputes for a specified area either for a temporary time period or permanently. While Section 11 of the Industrial Dispute Act, 1947 lays down the powers vested upon a conciliation officer, Sections 12 and 13 are meant for dealing with the duties of the conciliation officer.

After the government agrees that there is a failure in the report, to his satisfaction he can send the matter to the Board of Conciliation or any other adjudicating body to look after the same. If such a step is not preferred, then the government directly communicates the matter to the parties involved in the dispute. The usage of conciliation as a settlement dispute mechanism is indeed effective as have been revealed by the statistical study. The parties while being a part of the conciliation proceeding do not reveal the entire dispute matter with the thought that if the proceedings are not effective enough to settle the dispute then the same can be tried by other legal remedies that are available also. It is when the conciliation officers are not able to handle the disputed matter, the matter gets passed on to the tribunals. This is also cited as a reason for the failure of conciliation.

Voluntary arbitration

Before dealing with the concept of voluntary arbitration as a whole, it is preferred to refer them separately for a better understanding. Arbitration means a procedure which involves a third party in the form of a single arbitrator or a board of arbitrators who are assigned with the duty to resolve the dispute between the parties. Voluntary symbolises self willingness and consent. Therefore voluntary arbitration means that the parties who are involved in the dispute willfully agree to the decision taken by the arbitrator or the board of arbitrators without any outside compulsion. 

Section 10A of the Industrial Dispute Act, 1947 provides the provision for voluntary arbitration which in a real-world is completely carried out by adjudication. Arbitration and adjudication have a very thin line of difference between them. While in the former the judge is decided by the parties involved in the dispute, whereas in the latter the judge is appointed by the State.

The origin of voluntary arbitration in India dates back to the issue of plague bonus in the Ahmedabad Textile Mills under the leadership of the father of the nation, Mahatma Gandhi.  To make voluntary arbitration compulsory, The Trade Unions & Industrial Disputes (Amendment) Bill, 1988 was brought in laying down restrictions on legal strikes by the employees. According to the bill, legal strikes can be carried out by the parties only after either of the parties has rejected the offer of arbitration that had been provided to the parties to settle the dispute. Although several efforts have been put to effect by the Indian government, voluntary arbitration still remains in shadows as have been reflected by the statistics.

It was in the case of Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha, the apex court inform judicial legislation vested on the arbitrator the powers of a labour tribunal for cases of discharge of workmen as a form of punishment. This provided the arbitrator with appellate jurisdiction using which the arbitrator can oppose the decision of an employer regarding his employees. These exceptional powers were conferred by the Supreme Court of India on the arbitrator.


It is not that adjudication replaces conciliation totally but rather the matter is if conciliation fails to settle the dispute between the parties in the industry, adjudication takes charge in carrying out the job which the conciliation mechanism was assigned to do. It is just another legal remedy that can be adopted if the necessity arises. The ultimate remedy for resolving an industrial dispute is by adjudication.

Adjudication can also be termed as the compulsory settlement of the industrial dispute in concern by labour courts, industrial tribunals, and national tribunal as provided by the Industrial Dispute Act,1947. The terms adjudication and arbitration have minute differences if placed in our country.

It is on the government to decide whether to refer to the party or not before proceeding with the adjudication mechanism. If the parties are involved by the government then that type of adjudication will be referred to as voluntary adjudication. Whereas if the government does not feel it to be necessary to involve the parties in the adjudication mechanism then that kind of adjudication will be called compulsory adjudication.

Adjudication of the industrial dispute will take place by a three-tier system which will be inclusive of the following:

  1. Labour court- The Industrial Dispute Act, 1947 under Section 7 provides for the constitution of a labour court. The appropriate government in the form of notification in the official gazette can lead to the constitution of a labour court for resolving the disputes in an industry. The labour court consists of one person who is an independent judge or a judge of the High court or the District court. The judge can also be a former judge of the labour court itself with an experience of about 5 years. The matters handled by the labour court are provided in the second schedule of the Industrial Dispute Act, 1947 which consists of:
    1. The legality in the order passed by the employer under the orders that are standing
    2. The implications of the standing orders
    3. Granting of relief that should be available to the workmen in the industry which has been dismissed from them.
    4. Withdrawal of any privilege that a workman is subjected to
    5. All matters other than that coming under the purview of the industrial tribunal.
  2. Industrial tribunal- The provision for the industrial tribunal is provided under Section 7A of the Industrial Dispute Act, 1947. One or more industrial tribunals can be set up by the government according to his desire with the courts being provided with wider jurisdiction in comparison with the labour court. It is not to be considered as a permanent body but body set up for temporary purpose for hearing on an ad-hoc basis only. As the courts are having wider jurisdiction, the issues that will be taken into consideration by the courts will also be large in number. Broadly the issues handled by the industrial tribunal have been listed below:
    1. Wages of the employee which included the mode of payment of wages also
    2. Bonus and provident funds that are provided
    3. Working hours of the employees
    4. Rationalisation
    5. Leaves that are granted to the employees inclusive of the wages received and the holidays provided to them
    6. Rules associated with the maintenance of discipline in the industry among the employees.
    7. Any other matter which may be considered to be heard and discussed necessarily.
  3. National tribunal- A national tribunal is formed by the Central Government by an official gazette for adjudication of the industrial disputes that are considered to be of national importance. Two people according to the choice of the government are appointed to the role of an assessor in the national tribunal. If a dispute between two parties of an industry reaches the national tribunal, then both the labour court and the industrial tribunal loses its jurisdiction over the matter.

Court of inquiry

The remedy in the form of a court of inquiry was first provided by The Trade Disputes Act, 1929 and was followed by the Industrial Dispute Act, 1947 also under Section 6. This mechanism of settling disputes has been out of use in the country now.  As the government of India could not figure out the benefit from this machinery in industrial dispute cases, the machinery has been eliminated completely by The Trade Unions & Industrial Disputes (Amendment) Bill, 1988 and is no more in use.

Landmark judgments

In the case of Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd, the court observed that for every industry there is a necessity to promote harmonious construction of the wants of both the employer and the employee of an industry for the industry and the labour force to grow and prosper in the long-term. In order to achieve this objective, the court laid down that there is a need for compulsory adjudication for resolving industrial disputes by means of a forum where the parties can resort for arbitration to avoid any kind of confrontation between them in the industry. The courts have repeatedly made it clear that although a lot of powers have been vested over an appropriate government, he cannot misuse such power in carrying out the procedure of settlement of disputes.

In the case of The Govt of India Vs. National Tobacco Company, the court held that the powers that have been vested in the appropriate government are discretionary in nature and not mandatory. Therefore if in any particular case the government carry out arbitrary actions which are contrary to the statute under which he is supposed to function and has been refusing to refer the dispute at hand to the tribunals or the labour court, then such grounds will be enough to file a writ petition against the government under Article 226 of the Constitution of India. From this case, it can be observed that the Act provides with no scope to misuse the powers that have been vested to any administrative body that can directly affect the dispute that is already existing and can further accelerate it as well creating more problems.

Adding more to this idea of restricting the use of arbitrary power, the court in the case of Hochtief Gammon v. the State of Orissa was of the opinion that the courts will have the authority to view that the action taken by the executive is not unlawful and unfair in nature and in this process the courts’ vests the duty of ensuring that the relevant matters of the dispute have been taken into concern in a large away while making a decision on the appropriate government.

It was in the well-known case of Mathura Refinery Mazdoor Sangh v. Union of India, the Supreme Court of India gave importance to the tribunals to deal with the industrial dispute and also directed the government to take consultancy from the tribunals itself. Thus in this way, the court separated the mechanism of settlement dispute under the Industrial Dispute Act,1947 as a separate entity altogether.

In another case named United Bleachers (P) Ltd. v. LC, the High Court at Madras was of the view that if any kind of delay happens on the part of the appropriate government to make a reference, then that will not be a valid ground to decline the relief that is to be granted to the labourers who are in the dispute and have relatively suffered from the same already. If there is a denial of the relief on this very ground then the same will be referred to as an unfair labour practice and thereby will be unlawful. Thus the judgments that are discussed above reflects that whatever be the dispute, the courts always intend to settle it providing justice to both the parties involved in the dispute.



Despite a lot of loopholes in the system, the interference of the Supreme Court and the High Courts have indeed been helpful in regulating the statute governing the industrial dispute. Settlement disputes under the Industrial Dispute Act, 1947 is indeed a way in which the chaos associated with industry can be removed. As India slowly develops with the introduction of several industries, it has become necessary to ensure the proper functioning of the industries in order to help develop the country economically. For the same the Industries Dispute Act, 1947 plays an essential role by not only providing the provisions as to how to regulate the working of an industry but also laying down settlement mechanisms that can help resolve disputes between the employee and employer. Coordination of both can help industry run smoothly and effectively. Some of the ways in which settlement machinery can function effectively are listed hereunder:

  1. The mechanism of conciliation should be regulated by the officers who are experienced in the field and are acknowledged with the issues that are majorly faced by industrial workers. This mechanism should also not be a subject-matter for the political and administrative influences in order to prevent the mechanism from being used in a wrong way which can affect the industrial dispute that is already at hand.
  2. Industrial Relations Commissions should be set up at both Central and provincial levels according to the guidelines of the National Commission of Labours in order to strengthen the framework of the available adjudicatory machinery.
  3. The arbitration procedure should be just and fair like all other court proceedings so that the decision taken as a conclusion to the industrial dispute that has arisen should be able to satisfy both the parties involved in the dispute.
  4. Government interference from any kind of industrial dispute should be avoided unless urgently required in order to deal with the matter effectively and independently without much influence as has been mentioned earlier as well. The arbitrators are supposed to take independent decisions so that the employers and the employees are treated equally and fairly.



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