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Project Report

On:

Trade Unions its Provisions and


Liabilites

Submitted to : Dr.Kusum

Submitted by :

UILS PU CHD

Harjot singh
65/10 , Sec B

ACKNOWLEDGEMENT

It is a matter of great pleasure and privilege for me to express my gratitude and indebtness to
my highly esteemed teacher Dr. Kusum for her constant inspiration, co-operation, guidance
and

meticulous advice which rendered possible the successfull accomplishment of this

project.

INDEX

1. Trade Union : An Introduction


2. Procedure for Registration of a Trade Union
3. Provisions to be contained in the Rules of a Trade Union
4. Procedure for Amalgamation
5. Cancellation of Registration
6. Liabilities of a Registered Trade Union
7. Rights and Priviliges of a Registered Trade Union
8. Immunities available to a Registered Trade Union

Trade Union
An Introduction:
A trade union for an average man signifies an association of workers which is engaged in
securing certain economic benefits for its members and a trade union is commonly regarded
as an association to help its members in getting collectively better terms of employment,
wages etc. The statutory definition of trade union, however permits even employers
organizations to get themselves registered as a trade union.
According to chambers Encyclopedia A trade union is an association of wage earners or
salary earners, formed primarily for the purpose of collective action for the forwarding or
defence of its professional interests
Sidney and Beatrice Webbs have defined a trade union: A continuous association of wage
earners for the purpose of maintaining or improving the conditions of their working lives.
Webbs definition of trade union does not include the association of employers and of white
collar employees which are generally regarded by English and Indian law as trade unions.
But in the popular sense of the term the definition of trade union given by Webbs is still valid.
Trade unions, as generally, understood, are combinations of workmen of some trade or of
several allied trades for the purpose of securing by united action, the most favourable
conditions as regards wages, hours of labour etc. for its members. The essence of trade union
is found in the solidarity among its rank and file as a security against the right of hire and fire
of the employee28.
According to V.V.Giri the trade unions are voluntary organizations of workers formed to
promote and protect their interest by collective action. Once the workers join trade union,
they must be welded together in a united front for the good of the whole group rather than for
promotion of any selfish individual motive or interest. In fact strength lies in the unity it
functions effectively on the solemn belief that united we stand divided we fall.
One can understand that trade union as commonly understood is a voluntary organization of
workers constituted for promoting, advancing and protecting their interests by means of
united action formed with a view to secure maximum benefits, rights, privileges and welfare
of the working class.
G.D.H.Cole went further and said that the objects of trade unions are ultimate control of
industry.

In the Soviet Union, trade union was defined as association of producers, in which citizens
employed for remuneration in state, cooperative and private undertakings, institutions and
business are organized. The union acts for its members in all negotiations with the various
state institutions and represents them at a conclusion of agreements and contracts and in all
discussions of questions relating to labour and social welfare29. To Karl Marx in Germany, a
trade union was first and foremost an organizing centre. It provides focus for collecting the
forces of working classes. The trade unions developed out of spontaneous attempts of the
workers to do away with this competition, or at least to restrict it for the purpose of obtaining
at least such contractual conditions as would raise them above the status of bare slaves.
Lenin characterized a trade union as an educational organization, a school of administration,
a school of economic management and a school of communism.

Statutory definition of trade union


The statutory definition of the term trade union in India is borrowed from the British Trade
Union Acts of 1871, 1875 and 1913.
According to section 2(h) of the Indian Trade Unions Act 1926, trade union means any
combination whether temporary or permanent, formed primarily for the purpose of regulating
the relations betweenworkmen 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 any
federation of two or more trade unions.
Provided this Act shall not affect
(i) Any agreement between partners as to their own business
(ii) Any agreement between an employer and those employed by him as to such employment
(iii) Any agreement in consideration of the sale of the goodwill of a business for instruction in
any profession, trade or handicraft.
The analysis of the definition of the trade union clearly shows that the purpose of trade union
is to maintain balance, harmony in the relations of the persons involved in industrial activity
such as process and production. The purpose of the trade union is not only to secure harmony

between employers and workmen but also it is intended to improve peaceful relations
between employers and employees.
The definition indicates that it is an association of workmen or employers based on mutual
confidence, understanding and co-operation for safeguarding common interests.
It need not be permanent combination, it can be formed for a shorter period.
The definition further indicates that the trade union is formed primarily for the following two
purposes.
Firstly for regulating the relations between
(a) workmen and employers, or
(b) workmen and workmen, or
(c) employers and employers.
Secondly, for imposing restrictive conditions on the conduct of any trade or business of its
members.
The word impose connotes an agreement and not compulsion31. Restrictive conditions
would mean to enter into a contract restricting the manner in which one can earn a living.
Any regulation of relations in employment would amount to imposing restrictive conditions.
However, it is to be treated separately from restrictive conditions on the conduct of trade or
business32.
The Act confers civil and criminal immunities to the workers under sections 17, 18 of Trade
Unions Act. No employer can sue for damages on the basis of conspiracy on the part of a
trade union, even though damage is caused, provided the means adopted are not unlawful.
The law relating to civil conspiracy will have no application and it will not be necessary to
prove that their acts are justified in the same manner. It was perfectly legal for the employer
to seek a monopoly and to employ such tactics as boycott or black list etc. but the same were
branded as unlawful if they were adopted by union. After a protected struggle the interests of
trade unions have today been placed on par with those employers in trade. The courts are no
more required to investigate if the trade dispute exists or is apprehended that the acts were
done in furtherance of their purpose or to injure the other party.
The use of the word primarily in the Trade Unions Act suggests that trade union can have
secondary objectives as well. A trade union may provide for other objectives also and it
cannot be refused registration simply on this ground. But the secondary objectives should not

be inconsistent with the primary objects. These ancillary objects must not be opposed to any
law or opposed to public policy.
We can distinguish three classes of objectives which a trade union can have. The first may be
classified as purely economic objectives i.e., those which relate to questions concerning
wages, hours of work, working and living conditions. The second one viz. benefit purpose,
which includes dispensation of various benefits like sickness and unemployment. The third
group consists of social and political objectives33.
The words trade or business are not defined in the Trade Unions Act. However these words
can have a wide variety of meaning, indeed trade is not only in the etymological or dictionary
sense, but as legal usage, a term of widest scope. It is connected originally with the word
trade and indicates a way of life or an occupation. Persons belonging to a number of trades or
to no trade at all may constitute a trade union whose members may not be members of any
one trade. There may be trade union which is composed neither of workmen nor masters
although it may be a combination to regulate the relations between workmen and workmen or
workmen and employers or employers and employers. What matters is the object of the union
and not its composition. A union may consist of both workmen and employers.
In ordinary usage it may mean the occupation of small keeper equally with that of a
commercial magnate. Trade includes generally speaking, any gainful occupation. Any one
from a dustman to highly skilled professional worker may enter into contract in restraint of
trade restricting the manner in which he can earn a living.
However wide the term trade might be, the Supreme Court approved the dictum that those
activities of the government which should be properly described as legal or sovereign
activities are outside the scope of industry1.
In the same manner when Madras Raj Bhavan Workers Union applied for registration under
Trade Unions Act the Registrar rejected on the ground that the members were not connected
with a trade or industry or business of the employer.
With regard to word workmen it has not been independently defined in the Trade Unions
Act. But in the definition of the term trade dispute in section 2(g) the definition of the
workmen is found which runs.

1 State of Bombay Vs Hospital Mazdoor Sabha (1960) ILLJ 251 SC

All persons employed in any trade or industry, whether or not in the employment of the
employer with whom the trade disputes arise.
Another term employer also was not defined in Trade Union Act 1926, However section
2(g) of the Industrial Disputes Act, 1947 defines an employer to mean (i) in relation to an
industry carried on by or under the authority of any department of the central government or a
state government the authority prescribed in this behalf or where no authority is prescribed
the head of the department (ii) in relation to an industry carried on by or on behalf of a local
authority, the Chief Executive Officer of that authority.
Appropriate Government [Sec. 2]: In relation to Trade Unions whose objects are not
confined to one state 'the appropriate Government' is the Central Government. In relation to
other Trade Unions, the 'appropriate Government' is the State Government.
Executive [Sec. 2(a)]: Executive means the body of which the management of the affairs of a
Trade Union is entrusted.
Trade Dispute [Sec. 2(g)]: A trade dispute means any dispute between the employers and
workmen, the workmen and workmen and the employers and employers which is connected
with the employment or non-employment, or the terms of employment, or the conditions of
labour of any person. 'Workmen' mean all persons employed in trade or industry whether or
not in the employment of the employer with whom the trade dispute arises.

Registered Trade Union [Sec. 2(e)]: A registered Trade Union means a 'Trade Union'
registered under the Act.

Procedure of Registration

Section 3 (Appointment of the Registrar) :

The government will appoint a person to be a Registrar.

The government will appoint required number of person as the Addition and deputy
Registrar of the Trade Unions. These office will be under the Registrar of the Trade
Union

Section 4 (Mode of registration) says that to register a Trade Union,

an application must be sent to the Registrar of Trade Unions appointed by an


appropriate government.

the application must be made by seven or more persons who are engaged in the trade
or industry in connection to which the Trade Union is to be formed.

all the applicants must subscribe their names to the rules of the Trade Union and
comply with the provisions of this act regarding registration.

there must be at least 10% or 100, whichever is less, members who are engaged or
employed in the establishment or industry to which it is connected.

there must be not be less than seven members who are engaged or employed in the
establishment or industry to which it is connected.

If more that half of the persons who applied for the registration cease to be members of the
union or expressly disassociate themselves from the application, the application will be
deemed

to

be

invalid.

Section 5 (Application of Registration) gives the details of the application. It says


that the application should be sent to the registrar along with the copy of the rules of the trade
union and a statement of the following particulars

The name, occupation, and addresses of the applicants.

The name of the trade union and the address of its head office.

The titles, names, ages, addresses, and occupations of the office bearers of the trade
union.

If the trade union has been in existence for more than 1 yr, a general statement of its
assets and liabilities.

Section 6 (Provisions to be contained in the rules of a Trade


Union) specifies the provisions that should be contained in the rule book of the trade union.
A copy of this rule book must be supplied along with the application for registration of the
trade union. This rule book details the internal administration of the trade union and also
determines and governs the relationship between the trade union and its members. It must
contain the rules for the following matters:
1. name of the trade union
2. the whole object of the trade union
3. the whole purposes for which the general funds can be used.
4. the maintenance of the list of members and adequate facilities to inspect it by the
members of the trade union.
5. the membership of ordinary members who are actually engaged or employed in an
industry with which it is connected as well as the membership of the honorary or
temporary members.
6. the appointment of members of the executive body.
7. the membership or subscription fee, which shall not be less that 25 paisa per member
per month
8. the conditions under which a member can get the benefits or has to pay fines.

9. the safe custody of funds and provisions for inspecting or auditing the statements, or
other documents of the trade union.
10. dissolution of the trade union.
In the case of M T Chandersenan vs Sukumaran AIR 1974, SC held that if a member fails
to pay subscription fee, he cannot be considered a member of the trade union. However,
subscriptions cannot be refused under some pretext which results in the denial of
membership.

In the case of Bokajan Cement Corporation Employees Union vs Cement


Corporation of India, 2004, SC held that membership of the union does not
automatically

cease

upon

termination

of

the

employment.

Under section 7: Power to call for further particulars and to


require alteration of name-

If Registrar is not satisfy with information provided by the members of the Trade
Union going to be registered, Registrar is having power to call its members for
submitting the additional and required information for registering the Trade Union.

If the Name of the Trade Union is already existed or similar to other Trade Unions
names, registrar is having power to order for changing of the name.

Under section 8 : Registration:

upon satisfaction of all the requirements, the

Registrar of the Trade Unions will register the trade union. It is mandatory for the registrar
to register a trade union if the union satisfies all the technical requirements of this act.
In the case of re Indian Steam Navigation Workers Union AIR 1936 SC held that a
Registrar only has to see whether all the technical requirements are being fulfilled and not
whether it could be described as unlawful.

In the case of ACC Rajanka Limestone Quarries Worker's Union vs Registrar of Trade
Unions, AIR 1958, it was held that if the registrar does not register the trade union within 3
months of application, an appeal can be made to the High Court under art 226.

Under section 9: Certificate of Registration-

the registrar will issue the

certificate of registration in the prescribed form, which shall be a conclusive evidence that the
trade union is registered under this act.
Minimum requirement about membership of a Trade Union. [Sec 9A]
A registered Trade Union of workmen shall at all times continue to have not less than 10% or
100 of the workmen, whichever is less, subject to a minimum of seven, engaged or employed
in an establishment or industry with which it is connected, as its members.

Procedure for amalgamation


Section 24 says that any two or more registered trade unions may become amalgamated
together into one trade union with or without dissolution or division of the funds of such trade
unions or either or any of them, provided that votes of at least one half of the members of
each trade union are recorded and at least 60% of the votes of each trade union are in favor of
the proposal.
The notice of such amalgamation, signed by the secretary and seven members of each of the
trade unions, should be sent to the registrar of the state where the head office of the
amalgamated trade union is to be located. If the registrar is satisfied that all the provisions of
this act have been complied with and the trade union formed thereby is entitled to registration
under section 6, he will register the new trade union under section 8 and the amalgamation
will take effect from the date of registration.

Cancellation of Registration
Under section 10, the Registrar of Trade Unions has the power to cancel the registration of a
trade union in the following conditions:
1. On the application of the trade union to be verified in the prescribed manner.

2. If the registrar is satisfied that registration was obtained by fraud or mistake.


3. If the trade union has ceased to exist.
4. If the trade union willfully, upon notice of the registrar, has contravened or allowed
any rule to continue in force, which is inconsistent with the provisions of this act.
5. If the trade union rescinds any rule providing for any matter, provision for which is
required to be made in section 6.
6. If the registrar is satisfied that a trade union of workmen has ceased to have the
requisite number of members.
In the case of Tata Electric Companies Officer's Guild vs Registrar of Trade Unions,
1994, Bombay HC held that for a registrar to cancel the registration, willful neglect of the
notice is a must. If the trade union sends the account statement upon notice of the registrar,
the registrar cannot cancel the registration on the ground that the account statement was not
filed earlier.
Under section 27, upon dissolution of a trade union, seven or more members must send a
notification to the registrar within 14 days of dissolution and the registrar shall register it after
verifying that the dissolution has been done as per the provisions of this act. Further, if the
rules of the trade union do not provide for distribution of the funds upon dissolution, the
registrar may distribute the funds in such manner as may be prescribed.

Appeal against the decision of Registrar


Section 11 grants a limited right to appeal the decisions or orders passed by the registrar.
An appeal may be made to
1. the high court, if the head office of the trade union is located in a presidency town.
2. the labour court or industrial tribunal, if the head office of the trade union is located
in its jurisdiction.

3. if the head office of the trade union in any other location, to such court, not inferior
to the court of an additional or assistant judge of a principal civil court of original
jurisdiction, as the appropriate govt. may appoint in this behalf for that area.
An appeal must be made within 60 days of the date on which registrar passed the order
against which the appeal is made.
In the case of Registrar of Trade Unions, West Bengal vs Mihir Kumar Guha 1963, Cal,
it was settled that a trade union whose head office is in a presidency town has only a single
chance of appeal against the decision of the registrar, which is to the high court while a trade
union whose head office is in muffasil has two chances of appeals, first in the local court and
second in the high court.

Liabilities of a registered Trade Union


A registered trade union must follow the provisions of the Trade Unions Act 1926. In
particular, the following are some restrictions in a registered trade union:
A Trade Union cannot spend the funds on anything the office bearers want. It can
spend funds only on the activities specified in Section 15. These include:
1. salaries of the office bearers.
2. expenses required for the administration of the trade union
3. compensation to workers due to loss arise of any trade dispute.
4. welfare activities of the workers including housing, clothing, or any such
activity.
5. benefits to the workers or their dependents in the case of unemployment,
disability, or death.
6. publishing material for creating awareness in the workers.
7. legal expenses required for defending or bringing a suit.

8. education of workers or their dependents.


9. expenses for medical treatment of workers.
10. taking insurance policies for workers.
Mario Raposo vs H M Bhandarkar and others 1994 - Office bearers of a trade union
invested the money from general fund into shares of UTI. This was held invalid because it is
a speculative investment.

A trade union cannot force members to subscribe to political fund under section

16.
Under section 20 a trade union must make available all its record books of
accounts and list of membership for inspection upon request of any member or his

representative.
Section 21 Rights of minors to membership of Trade Unions- allows minors
more than 15 yrs of age to be members of a trade union. However, such minors

cannot hold office.


Under section 21-A, a trade union cannot appoint 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.


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.
Under section 28, a general statement, audited in a prescribed manner, of all
income and expenses must be sent to the registrar every year.

Disqualification: A person shall be disqualified for being chosen as, and for being a
member of, the executive or any other office-bearer or registered trade union if(i) he has not attained the age of eighteen years;
(ii) he has been convicted by a court in India of any offence involving moral turpitude and
sentenced to imprisonment, unless a period of five years has elapsed since his release.

Rights and Privileges of a registered Trade Union

As per section 13 Features of Registered Trade Union,-upon registration, a trade


union becomes a legal entity and as a consequence, it gets perpetual succession and a
corporate seal, it can acquire and hold movable and immovable property, contract
through agents, and can sue and get sued.
Under section 15 a registered trade union has a right to establish a general fund.
Under section 16 Construction of separate fund for political purposes - a
registered trade union has a right to establish a political fund. Subscription to this fund
is not necessary for a member.
The fund can be utilized for the following purposes:
1. Holding of any meeting or distribution of any literature or document in
support of any candidate for election as a member of legislative body
constituted under the constitution or of any local authority.
2. For maintenance of any person who is a member of any legislative body
constituted under the constitution.
3. For convening of political meeting of any kind or distribution of political
literature or documents of any kind.
4. The registration of electors for selection of a candidate for legislative body.
Under section 17, 18, and 19 a registered trade union gets immunity in certain
criminal, civil, and contractual proceedings.
Under section 24, trade unions have the right to amalgamate.
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 labor 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.

Immunites available to a registered Trade Union


1. 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 in the sense that it is available only with respect to the legal
agreements created by the members for the furtherance of valid objects of a trade
union as described in section 15 of the act. The immunity cannot be claimed for an act
that is an offence. Registered Trade Unions have certain rights to do in furtherance of

their

trade

disputes

such

as

calling

for

strike,

persuading

members.

In the case of West India Steel Company Ltd. vs Azeez 1990 Kerala, a trade union
leader obstructed work inside the factory for 5 hrs while protesting against the
deputation of a workman to work another section. It was held that while in a factory,
the worker must submit to the instructions given by his superiors. A trade union leader
has no immunity against disobeying the orders. 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. An employer may deal with a person causing obstruction in work
effectively.
2. Section 18 confers immunity from civil proceedings in certain cases to a trade union
or its office bears or members. In general, a person is liable in torts for inducing
another person to breach his contract of employment or for interfering with the trade
or business of another. However, a trade union, its officers, and its members are
immune from this liability provided that such an inducement is in contemplation
or furtherance of a trade dispute. Further, the inducement should be lawful. There is
no immunity against violence, threats, or any other illegal means.
In the case of P Mukundan and others vs Mohan Kandy Pavithran 1992 Kerala, it
was held that strike per se is not an actionable wrong. Further, it was held that the
trade union, its officers, and its members are immune against legal proceedings linked
with the strike of workmen by the provisions of section 18.

In the leading case of Rohtas Industries Staff Union vs State of Bihar AIR 1963, it
was held that employers do not have the right to claim damages against the employee
participating in an illegal strike and thereby causing loss of production and business.
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. Right to picket is a very intangible right and it
extends only up to the right of free movement of others. The methods of persuasion
are limited to oral and visual and do not include physical obstruction of vehicles or
persons.
3. Section 19 Enforceability of agreements - In India, an agreement in restraint
of trade is void as per section 27 of Indian Contract Act. However, such an agreement
between trade union members is neither void nor voidable. 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.