M J Antony: Sore points in labour law reforms

OUT OF COURT

How urgent the need for labour law reforms is can be gauged from a survey of some of the important judgements of the Supreme Court delivered this year. Earlier this year, it decided in State of UP vs Jai Bir Singh to reconsider a 1978 judgement that started the confusion about the definition of industry in the Industrial Disputes Act. The definition of industry, as it stands now is, according to the court, not "comprehensive, clear and conclusive". The 1978 judgement in the case of Bangalore Water Supply expanded the definition of industry to include all establishments where there is an employer-employee relationship. Even doctors, lawyers and architects were affected by this trend. At one stage, the Supreme Court warned that it would kill private enterprise.

One judgement said: "The problem is far too policy-oriented to be satisfactorily settled by judicial decisions. Parliament must step in and legislate in a manner which will leave no doubt as to its intention." Some amendments were made in 1982, but they have not been notified until today. Therefore, the court felt that it could not wait any longer and decided to evolve a foolproof definition. But caught within its own web of problems, it has not been able to set up a nine-judge bench to take up the matter.

Another judgement of this year (Oswal Agro Furane Ltd vs Workers' Union) which highlighted the necessity for urgent modifications in the law referred to the right of the employer to close down his establishment. The court dealt with Section 25-O of the Industrial Disputes Act, which deals with the problem. This provision has been amended so often that they are numbered from A to O. In Excel Wear vs Union of India (1978), the Supreme Court ruled that the employer has a fundamental right not to carry on his business. But in the Meenakshi Mills case of 1992, a constitution bench of the court laid down more complex propositions. The Oswal Agro case further added that any settlement with workers should not contravene the provisions of Chapters VA and VB of the Act. None of the governments over the years has been able to clarify or substantially amend the provisions to settle the issue, as it would immediately see a titanic clash between politics and economics.

The priority accorded to workers' dues during winding up proceedings of a company did a somersault this year. In Allahabad Bank vs Canara Bank, while interpreting Sections 529 and 529A of the Companies Act, the Supreme Court emphasised the preferential payments due to the employees of the company facing closure. But soon thereafter, another judgement was delivered in Andhra Bank vs Official Liquidator declaring that the law laid down in the earlier judgement was not correct. The latter judgement said: "Such an observation was neither required to be made keeping in view the fact situation, nor does it find support from the clear and unambiguous language contained in Section 529A."

The doctrine of "equal pay for equal work", which is a directive principle of state policy in the Constitution, was raised to the level of a fundamental right by the Supreme Court in 1982 (Randhir Singh vs Union of India). However, the court itself has found that there are innumerable difficulties in applying the theory in individual cases. In a judgement last month ( State of Haryana vs Charanjit Singh), the court discussed the complexities in this field and almost dropped the canon it had propounded. It is for Parliament to clarify how far this basic rule can be made enforceable.

Then there are numerous other issues that crop up more often. Last week, the Supreme Court dealt with a multiple question in UP State Brassware Corporation vs Udit Narain. It revolved around retrenchment and payment of back wages. Connected with these contentious problems was another cause for endless litigation over decades "" the legal fiction in Section 25B(2)(a) of the Industrial Disputes Act that if a worker had actually worked under the employer continuously for more than 240 days during a period of 12 calendar months, he shall be deemed to have been in continuous service with all the consequences. The high courts and the Supreme Court itself have not been consistent in their approach when these aspects have risen in the facts of the cases before them. In this case, the Supreme Court allowed the appeal of the corporation in part and did not allow full back wages as a matter of right though the retrenchment itself was questionable.

The court remarked: "Industrial courts, while adjudicating on disputes between the management and workers, must take such decisions which would be in consonance with the purpose the law seeks to achieve. When justice is the buzzword it would be wholly improper for the superior courts to make them apply the cold letter of the statutes to act mechanically." However, such general propositions would not solve the basic predicament of the times, which is a clear and updated set of laws to govern the management-labour relationship.