Labour Law and Industrial Relations I Notes | B.A. LL.B. (Five Year Course) Semester 5 | Mumbai University | munotes

Repeal is the cancellation of an earlier Act by a later one. When an Act is repealed it ceases to be law for the future.

Savings are the provisions that decide what survives a repeal: which things done under the old Act still count, and which bodies set up under it keep working.

Substituted is what a footnote in a bare Act means when it says "Subs. by Act 1 of 2026". Parliament replaced the old text of a provision with new text. The footnote also gives the date from which the replacement operates, which need not be the date the amending Act was passed.

Section 1: what the Code is called, where it applies, and when it began

Section 1(1) gives the short title: the Industrial Relations Code, 2020.

Section 1(2): "It shall extend to the whole of India." There is no exception for any State or territory.

Section 1(3) is the provision that matters, and it is worth reading slowly:

It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint; and different dates may be appointed for different provisions of this Code and any reference in any such provision to the commencement of this Code shall be construed as a reference to the coming into force of that provision.

Three things are in that sentence.

The Code does not commence by itself. It waited for a notification. Between 28 September 2020 and 20 November 2025 this Code was on the statute book and was not the law of anything. Anyone who had written notes teaching it as operative law in that period would have been teaching a text that governed nobody.

Different dates may be appointed for different provisions. Parliament gave itself the power to switch a Code on in pieces. It used that power for the Code on Wages, which is why Module IV of this book needs a whole section on commencement. It did not use it here.

A reference to "the commencement of this Code" means the coming into force of that particular provision. This matters where a Code is switched on in pieces, because "commencement" then has no single meaning.

The notification, and why it is short

The Code was brought into force by S.O. 5320(E) dated 21 November 2025, issued by the Ministry of Labour and Employment. It is one sentence long. It carries no schedule, no list and no exception: it appoints the 21st day of November 2025 as the date on which the provisions of the said Code shall come into force.

So the whole Code is live, all 104 sections of it. Footnote 1 under section 1(3) of India Code's consolidated text says the same thing, and that footnote is the cheapest place to check it.

That short notification is unusual and you should notice it, because its neighbours are not short. The same day the Government issued S.O. 5319(E) for the Code on Social Security and S.O. 5322(E) for the Code on Wages, and both of those commence their Codes in numbered pieces. The Industrial Relations Code got the clean treatment.

Section 104: the repeal, and what it took with it

Section 104(1) is the reason this book exists in the form it does. As it now stands, substituted by Act 1 of 2026:

The following enactments shall stand repealed on and from the date appointed in the notification issued under sub-section (3) of section 1, namely:

(a) the Trade Unions Act, 1926 (16 of 1926);

(b) the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946); and

(c) the Industrial Disputes Act, 1947 (14 of 1947).

Three Acts, and between them they were this entire subject for the best part of a century.

Read the opening words of sub-section (1) carefully. The Acts stand repealed "on and from the date appointed in the notification issued under sub-section (3) of section 1". The repeal is not free-standing: it is tied to the commencement date. That is why the repeal took effect on 21 November 2025 and not on 28 September 2020.

Section 104(1A): the amendment almost nothing else records

The consolidated text of this Code carries a dated heading on its first page, "As on the 2nd April, 2026" in square brackets, not November 2025, and there is one footnote that explains why:

Subs. by Act 1 of 2026, s. 2, for sub-section (1) (w.e.f. 21-11-2025).

Parliament replaced sub-section (1) and, in doing so, added a new sub-section immediately after it, with effect from the very day the Code commenced. The new provision reads:

(1A) Notwithstanding such repeal under sub-section (1), the functioning of the Tribunals and statutory authorities functioning under the Acts so repealed shall continue to function till such Tribunals and other statutory authorities becomes functional under this Code.

The grammar is Parliament's, not ours, and it is quoted as it stands.

What the sub-section does is easy to state and easy to get wrong. The Industrial Tribunals and Labour Courts constituted under the Industrial Disputes Act 1947, and the certifying officers and appellate authorities under the Standing Orders Act 1946, and the Registrars appointed under the Trade Unions Act 1926, did not all stop on 21 November 2025. They go on working until the corresponding bodies under this Code are functional.

The wrong answer, and it is the natural one: "the Industrial Disputes Act 1947 was repealed on 21 November 2025, so from that date every Labour Court and Industrial Tribunal under it ceased to exist and every pending reference lapsed." That is wrong twice over. Sub-section (1A) keeps the forums running, and section 51 of the Code separately provides for the transfer of pending cases.

Why Parliament had to do this is worth a sentence, because it makes the provision memorable. A repeal that abolished the old forums overnight, before the new ones existed, would have left thousands of half-heard references with no tribunal to hear them and no successor to send them to. The amendment closes that gap, and it was made retrospective to the commencement date so that no gap ever opened.

Sections 104(2) and (3): what survives the repeal

Sub-section (2) is the general savings clause. Notwithstanding the repeal, anything done or any action taken under the repealed Acts, "including any rule, regulation, notification, nomination, appointment, order or direction made thereunder", is deemed to have been done or taken under the corresponding provisions of this Code, and remains in force to the extent it is not contrary to the provisions of this Code.

That last qualification is the whole of the sub-section's difficulty. An old rule survives only so far as it does not contradict the Code. Where it does contradict the Code, the Code prevails.

Sub-section (3) adds that, without prejudice to sub-section (2), section 6 of the General Clauses Act 1897 applies to the repeal. Section 6 of that Act is the standard rule that a repeal does not revive anything not in force, does not affect anything duly done, and does not affect any right, obligation or liability already acquired or incurred, or any legal proceeding in respect of it.

Put sub-sections (2) and (3) together and the practical answer is: the old law goes on governing the past, and the Code governs the future. A registration granted under the 1926 Act is still a registration, an award made under the 1947 Act is still an award, and a prosecution begun before the repeal goes on.

There is a specific illustration of this you will meet in a later chapter. Section 9(4) provides that every Trade Union registered under the Trade Unions Act 1926 and holding a valid registration immediately before the commencement of this Code is deemed to be registered under this Code, subject to filing a statement that its executive is constituted in accordance with the Code together with rules updated to match section 7. Unions did not have to register again.

A worked example

The facts. The Konkan Textile Workers' Union was registered under the Trade Unions Act 1926 in 1998. On 3 October 2025 it raised a dispute about the dismissal of a member, and the dispute was referred to the Industrial Tribunal constituted under section 7A of the Industrial Disputes Act 1947. The Tribunal had heard part of the evidence when 21 November 2025 arrived. In March 2026 the employer's advocate argued that the Tribunal had ceased to exist, that the reference had lapsed, and that the union was no longer a registered union because the Act it was registered under had been repealed.

Every limb of that argument fails, and here is the provision for each.

The union is still registered. Section 9(4) deems a Trade Union validly registered under the 1926 Act immediately before commencement to be registered under this Code. The union must file the statement and updated rules the proviso requires, and the Registrar amends his records; it does not apply afresh.

The Tribunal has not ceased to exist. Section 104(1A), inserted by Act 1 of 2026 with effect from 21 November 2025, keeps the Tribunals and statutory authorities functioning under the repealed Acts working until the corresponding bodies under this Code are functional.

The reference has not lapsed. Section 104(2) preserves anything done or action taken under the repealed Acts, and section 6 of the General Clauses Act 1897, applied by section 104(3), preserves legal proceedings in respect of rights and liabilities already accrued. Section 51 of the Code separately provides for the transfer of pending cases.

But the future is governed by the Code. If the union now wants to be the body that negotiates with the employer, it cannot rely on anything the 1926 Act said, because the 1926 Act said nothing about recognition at all. It must satisfy section 14 of this Code.

What this does NOT mean

It does not mean the old cases are worthless. This is the commonest overcorrection and it would cost a student badly. The Code re-enacts most of the old law in new words, and where the words are the same, the decisions construing them still tell you what they mean. What you must never do is cite a case as though it were decided on the Code. Say which Act it was decided under, and say why the reasoning still applies. Every case in this book is presented that way.

It does not mean nothing was left behind. Some things really are new: recognition of a negotiating union in section 14, the worker re-skilling fund in section 83, and a raised threshold in Chapter X are all changes rather than renumberings. Those chapters say so.

It does not mean State labour Acts are gone. Section 104(1) repeals three central Acts. The Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act 1971 is a State Act and is not in that list. It matters a good deal for a Mumbai student, and it comes back in the chapter on recognition.

It does not mean the Code on Wages commenced the same way. It did not. That Code was switched on in two instalments, five years apart, and Module IV explains it.

Limits, criticism and amendments

The five-year gap invited criticism, and the criticism is worth knowing because it is a fair short-note question. A Code passed in 2020 and commenced in 2025 left employers, unions and tribunals working for five years under Acts that everybody knew were going to disappear, without knowing when. State Governments had to frame rules under Codes that were not in force.

The amendment by Act 1 of 2026 is itself a criticism, in the sense that it repairs something the original section 104 had not thought through. That Parliament had to make the repair retrospective to the commencement date, only weeks after commencement, tells you the gap was noticed as soon as the Code began to operate.

And the drafting of sub-section (1A) is loose. "The functioning of the Tribunals ... shall continue to function" is not good English, and the sub-section does not say who decides when a Code Tribunal has become "functional".

Quick revision

• Act 35 of 2020. Assent 28 September 2020. Extends to the whole of India, section 1(2).
• In force 21 November 2025, by S.O. 5320(E) under section 1(3). One sentence, no exceptions: the whole Code.
• Section 104(1) repeals three Acts: Trade Unions Act 1926, Industrial Employment (Standing Orders) Act 1946, Industrial Disputes Act 1947.
• Section 104(1A), inserted by Act 1 of 2026 w.e.f. 21-11-2025: the Tribunals and authorities under the repealed Acts continue to function until the Code's own are functional.
• Section 104(2): things done under the old Acts are deemed done under the Code, so far as not contrary to it. Section 104(3): section 6 of the General Clauses Act 1897 applies.
• Section 9(4): unions registered under the 1926 Act are deemed registered under the Code.
• The Code still has 104 sections, not 25F and not 2(oo). Those numbers belong to a repealed Act.

Test yourself

1. The Industrial Relations Code received assent on 28 September 2020. Was it the law of India on 1 January 2021? No. Section 1(3) provides that it comes into force on such date as the Central Government appoints by notification. No notification had been issued by then. It became law on 21 November 2025, by S.O. 5320(E). Assent and commencement are different things, and only commencement makes an Act operate.

2. Which Acts does section 104(1) repeal, and from what date? The Trade Unions Act 1926, the Industrial Employment (Standing Orders) Act 1946 and the Industrial Disputes Act 1947. From the date appointed in the notification under section 1(3), that is from 21 November 2025.

3. An Industrial Tribunal constituted under the Industrial Disputes Act 1947 was hearing a reference on 20 November 2025. What is its position now? It continues to function. Section 104(1A), substituted into the Code by Act 1 of 2026 with retrospective effect from 21 November 2025, provides that the Tribunals and statutory authorities functioning under the repealed Acts shall continue to function until the corresponding Tribunals and authorities become functional under this Code.

4. A union registered in 1998 under the Trade Unions Act 1926 asks whether it must apply for fresh registration. Advise it. It need not. Section 9(4) deems every Trade Union that held a valid registration under the 1926 Act immediately before commencement to be registered under this Code. The proviso requires it to file with the Registrar a statement that the constitution of its executive accords with the Code, together with its rules updated in accordance with section 7, whereupon the Registrar amends his records.

5. Why does it matter that S.O. 5320(E) contains no schedule? Because section 1(3) permits different dates for different provisions, a notification commencing a Code may switch it on in pieces, and the reader then has to work out which pieces are live. S.O. 5320(E) has no schedule and no exception, so the whole Code came into force together. The Code on Wages, commenced the same day, was not treated that way.

6. A writer says "the Industrial Disputes Act 1947 is the governing law on retrenchment in India." Correct the statement and give the current position. The statement is wrong. That Act was repealed by section 104(1)(c) of the Industrial Relations Code 2020 with effect from 21 November 2025. Retrenchment is now governed by the Code: the definition is in section 2(zh) and the conditions precedent, procedure and re-employment right are in sections 70 to 72, with special provisions for larger establishments in Chapter X.

The workers' answer was arithmetic. One worker who refuses to work loses his job. A thousand workers who refuse to work at the same time stop the mill. Individually the worker has nothing the employer needs; collectively they have the only thing he needs. Combination converts a worthless bargaining position into a real one, and that, and nothing more elevated, is why trade unions exist.

Some words this chapter uses

Combination means an association of persons acting together. It is the word the statutes use, and it is deliberately wide: section 2(zl) of the Code still defines a Trade Union as "any combination, whether temporary or permanent".

Collective bargaining is negotiation between an employer and a body representing the workers, about wages and conditions, in place of negotiation with each worker separately.

Bargaining power is the capacity to make the other side worse off by refusing to agree. It is not a moral idea; it is a description of leverage.

Master and servant is the older name for the law governing employment, when it was treated purely as a contract between two individuals.

Industrial establishment is the Code's expression for the place where the work is done. It is defined in section 2(r).

How this happened in India

The Indian story runs about a century behind England's and it has its own causes.

Factory industry in India begins in the 1850s, with the cotton mills of Bombay and the jute mills near Calcutta. The workforce was drawn from villages, was largely illiterate, worked twelve or more hours, and had no security of any kind. There was no minimum wage, no limit on hours for adults, no compensation for injury and no notice of dismissal.

The earliest responses were not unions but philanthropy and agitation. Individual reformers pressed for factory legislation, and the first Indian Factories Act was passed in 1881, followed by another in 1891. Those Acts were about hours and the employment of children. They were something done for workers, not by them, and they left the bargaining position untouched.

Combinations proper appear at the end of the nineteenth century and grow rapidly after the First World War. The war years produced high prices, hard conditions and large profits, which is the classic combination of circumstances for organised labour. What follows is a period of intense strike activity, and the emergence of unions that were organisations with officers, funds and rules rather than temporary strike committees.

Two outside forces then pushed in the same direction. The International Labour Organisation was created in 1919 and India was a founder member, which committed India to a continuing international conversation about labour standards; that is the subject of two chapters of its own later in this Module. And the national movement drew labour into politics, so that unions grew up alongside political parties rather than apart from them.

That last point has a long consequence, and the Supreme Court itself has described it. In Balmer Lawrie Workers' Union v. Balmer Lawrie & Co. Ltd. the Court explained that the trade union movement representing organised labour "developed as an adjunct of political party", that every political party set up its labour wings to control the vote banks that organised labour represented, and that the combination and fragmentation of political parties therefore produced a matching multiplicity of trade unions in a single undertaking. That case is worked in the chapter on recognition, where its holding belongs, but the historical observation is what explains why India ends up with several unions competing inside one factory rather than one.

The point at which history becomes law

Combination on its own is not enough, because a combination that the law treats as a criminal conspiracy or as an unlawful restraint of trade is worse than useless to its members. The workers' arithmetic works only if the law lets them do the arithmetic.

That is the whole of the next chapter, and it is the second half of MU's topic 1.1. In India the answer came with the Trade Unions Act 1926, which for the first time gave a registered union a legal existence, a protected fund and immunity from certain civil and criminal proceedings. That Act was repealed on 21 November 2025 by section 104(1)(a) of this Code, and its work is now done by Chapter III of the Code, sections 5 to 27.

The case that explains what the Constitution did NOT do

A student who has read about the freedom of association naturally assumes that the Constitution of India solved this problem in 1950. It did not, and the leading case says so in terms.

All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, (1962) 3 SCR 269.

Facts. Section 34A of the Banking Companies Act 1949, inserted in 1960, allowed a banking company to refuse to produce or disclose documents that would reveal reserves not shown as such in its published balance sheet, and provided instead for the Reserve Bank to certify what amount an industrial adjudicator might take into account. The Association argued that this infringed the fundamental right guaranteed to trade unions by Article 19(1)(c) of the Constitution, because it shut out evidence that was important and relevant to the union's bargaining over wages and bonus before industrial tribunals, and that it also violated Article 14 because it applied only to banks operating in more than one State.

Held. Section 34A was constitutionally valid and infringed neither Article 19(1)(c) nor Article 14. The right guaranteed by Article 19(1)(c) does not carry with it a concomitant right that a union formed to protect the interests of labour shall achieve its object. The right extends only to the formation of an association or union. So far as the activities of the union are concerned, and the steps it may take to achieve its objects, those are subject to such laws as may be framed, and such laws are not tested against Article 19(4).

Why it matters here, and it matters more than any other case in this Module. The Constitution gives a worker the right to form a union. It gives no right to strike, no right to be recognised, and no right to bargain collectively. Everything a union can actually do comes from the statute. That is why Chapter III of the Code is the substance of this subject rather than a formality, and why the immunities in sections 16 to 18 are not technicalities: they are the source of the union's operative freedom, because the Constitution is not.

A worked example

The facts. Two hundred workers at a garment unit in Bhiwandi are paid below the rate paid at comparable units. Ravi, one of them, asks the manager for an increase. He is told that the rate is the rate, and that anyone who does not want the work need not come tomorrow. Ravi has a written contract of employment which he signed and which fixes his wage.

Ravi alone. His contract is valid, he agreed to the wage, and the law of contract gives him nothing. He may resign. His resignation costs the employer one day of one machine and costs Ravi his income. That is the whole of his bargaining power.

Ravi with the other one hundred and ninety-nine. If all of them decline to work until the rate is discussed, the unit stops. The employer's loss is now large and immediate, and the workers' collective loss, though real, is spread. For the first time there is something to negotiate about. That change, from nothing to something, is what combination produces, and it is why the workers organise.

But notice what the combination needs from the law before it is any use. The employer's first response will not be to negotiate. It will be to say that the two hundred have conspired to injure his business, that they have induced each other to break their contracts of employment, and that their own agreement to act together is void as a restraint of trade. Each of those is a real legal argument, each of them was once a winning argument, and each is answered by a section of this Code. That is the next chapter.

What this does NOT mean

It does not mean a trade union is only for strikes. The definition in section 2(zl) is about regulating the relations between workers and employers, and a union's ordinary work is negotiation, representation in disciplinary proceedings, and grievance handling. The capacity to withdraw labour is what makes the negotiation real, not what the union is for.

It does not mean combination is only of workers. Section 2(zl) covers a combination formed to regulate relations "between employers and employers" as well. Employers' associations are trade unions under this Code. Students routinely lose a mark by defining the term as though only workers could form one, and the chapter on the definition returns to this.

It does not mean the history is optional background. MU sets it directly, and the reason it can be examined is that the history explains the structure: it tells you why registration exists, why there are immunities, why recognition became necessary, and why the Code deals with strikes and lock-outs in the same breath.

Quick revision

• Workers combined because the individual contract of employment assumed two equal parties and the factory system made that assumption false.
• Three causes of the inequality: the worker owns nothing in the workplace; labour cannot be stored, so he must settle now; and there are many workers and few employers, so he is replaceable.
• Combination changes the arithmetic: one worker's refusal costs the employer a day, a thousand workers' refusal stops the mill.
• India: factory industry from the 1850s in Bombay and Calcutta; Factories Acts 1881 and 1891, done for workers not by them; combinations grow strongly after the First World War; ILO 1919, India a founder member; unions grew alongside political parties, which is why one factory can have several.
• The first statute to give unions legal existence was the Trade Unions Act 1926, repealed on 21 November 2025 by section 104(1)(a); its work is now Chapter III, sections 5 to 27.
• All India Bank Employees' Association, AIR 1962 SC 171: Article 19(1)(c) protects only the formation of a union, not the achievement of its objects. Everything else comes from the statute.

Test yourself

1. Why could the law of contract not protect an industrial worker? Because it assumes two parties of equal bargaining power freely negotiating terms. In a factory the worker owns none of the means of production, cannot store his labour and so must settle immediately, and is one of many competing for few positions. The employer therefore sets the terms and the worker accepts or leaves, yet the law of contract sees only a signed agreement and can find nothing wrong with it.

2. State the arithmetic that makes combination worth anything. Individually a worker has nothing the employer needs, because he is replaceable and his refusal costs the employer a single day. Collectively the same workers control the only thing the employer needs, because a simultaneous withdrawal of labour stops production. Combination converts a worthless bargaining position into a real one.

3. Trace the growth of combinations of workers in India in outline. Factory industry begins in the 1850s with the Bombay cotton mills and the Calcutta jute mills, drawing an illiterate village workforce into long hours without security. The first responses are protective statutes made for workers rather than by them, the Factories Acts of 1881 and 1891. Combinations proper appear at the end of the nineteenth century and grow rapidly after the First World War, when high prices, hard conditions and large profits produced sustained strike activity and permanent organisations with officers, funds and rules. Two external forces reinforced this: the founding of the International Labour Organisation in 1919, of which India was a founder member, and the national movement, which drew labour into politics so that unions grew as adjuncts of political parties. Legal recognition came with the Trade Unions Act 1926, whose work is now done by Chapter III of the Industrial Relations Code 2020.

4. Does Article 19(1)(c) of the Constitution give a trade union the right to bargain collectively? Give authority. No. In All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, the Supreme Court held that the right under Article 19(1)(c) extends only to the formation of an association or union, and carries no concomitant right that the union shall achieve its objects. The union's activities, and the steps it may take to achieve its objects, are subject to such laws as may be framed, and those laws are not tested under Article 19(4).

5. Why does the Supreme Court's observation in Balmer Lawrie about political parties matter to this subject? Because it explains why a single Indian undertaking commonly has several competing unions. The Court noted that the trade union movement developed as an adjunct of political parties, that parties set up labour wings to control vote banks, and that the multiplicity and fragmentation of parties produced a matching multiplicity of unions. That multiplicity is the problem that recognition under section 14 of the Code exists to solve.

6. A friend says "a trade union means an organisation of workmen." What is wrong with the definition? It is too narrow in two ways. Section 2(zl) defines a Trade Union as any combination, whether temporary or permanent, formed primarily for regulating the relations between workers and employers, between workers and workers, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and it includes a federation of two or more Trade Unions. So a combination of employers is a Trade Union, and a temporary combination is a Trade Union.

The answer is section 17 of the Code, which provides that no office-bearer or member of a registered Trade Union shall be liable to punishment under section 120B(2) of the Indian Penal Code in respect of any agreement made between the members for the purpose of furthering any object of the Trade Union specified in section 15, unless the agreement is an agreement to commit an offence.

And the limits of that answer were settled in the leading Indian case.

Jay Engineering Works Ltd. v. State of West Bengal, AIR 1968 Cal 407, a Full Bench of the Calcutta High Court.

Facts. Workers of the company's Calcutta sales office, together with retrenched employees, repeatedly surrounded the manager and other officers and confined them in the office: for thirty-three hours from 2 to 3 March 1967, again on 17 April 1967 until they were rescued on a magistrate's order, and again for over five hours on 29 May 1967. Food was allowed in only in nominal quantity, property was damaged, and slogans were shouted at the confined men. The police, acting on two State Government circulars, took no action. The company moved the High Court under Article 226.

Held. The Court defined gherao as a physical blockade of a target, by encirclement or forcible occupation, the target being a place or persons, usually the managerial or supervisory staff, invariably accompanied by wrongful restraint or wrongful confinement and often by assault, criminal trespass, mischief and unlawful assembly, its object being to compel those who control industry to submit without recourse to the machinery provided by law. On the immunity, the Court held that the protection in section 17 of the Trade Unions Act 1926 is of a limited nature: it provides only that an agreement to do things in furtherance of the objects in section 15 shall not amount to criminal conspiracy, and there is nothing in the Act which, apart from immunity from criminal conspiracy, gives immunity from any criminal offence. Wrongful restraint and wrongful confinement are not saved by it. Workers may strike peacefully, but have no right to resort to wrongful restraint, wrongful confinement or criminal trespass, all of which are cognizable offences.

Why it matters. It is the case that fixes the boundary. The immunity covers the agreement, not the acts. A union that agrees to stop work is protected; a union whose members lock a manager in a room is not, and the section it would have to rely on has nothing to say about wrongful confinement.

Impediment two: the civil action in tort

The criminal law was only half the employer's armoury, and in practice the smaller half. The larger threat was a civil suit, because a civil suit reaches the union's money.

Two torts were available.

Inducing a breach of contract. Every striking worker is, in the ordinary way, breaking his own contract of employment. Anyone who persuades him to do so, that is the union and its officers, commits the tort of inducing a breach of contract and is liable to the employer for the resulting loss. This was the standard weapon, and it was devastating, because the loss claimed was the whole value of the production lost.

Conspiracy. A combination of persons whose purpose is to injure another, causing damage, is actionable as a tort independently of whether the acts done would have been wrongful if done by one person alone.

The answer is section 16 of the Code, and it is drawn to meet those two torts precisely. Section 16(1) provides that no suit or other legal proceeding shall be maintainable in any civil court against a registered Trade Union or any office-bearer or member of it, in respect of any act done in contemplation or furtherance of an industrial dispute to which a member of the Trade Union is a party, on the ground only that such act induces some other person to break a contract of employment, or that it is an interference with the trade, business or employment of some other person, or with the right of some other person to dispose of his capital or of his labour as he wills.

How narrow that protection actually is was settled by the Supreme Court.

Rohtas Industries Ltd. v. Rohtas Industries Staff Union, AIR 1976 SC 425, (1976) 2 SCC 82.

Facts. In 1948 the workmen of Rohtas Industries went on a strike that was illegal under sections 23 and 24 of the Industrial Disputes Act 1947, the strike arising out of rivalry between unions. The workmen were not paid wages for the strike period and the employers lost profit. During conciliation the parties agreed to refer both claims, the workmen's claim for wages for the strike period and the employers' claim for compensation for the loss the strike caused, to the joint arbitration of two retired High Court judges and a retired member of a Labour Appellate Tribunal under section 10A of the 1947 Act. The arbitrators awarded the employers compensation. The union moved the High Court under Article 226.

Held. The employers' claim failed. The tort of conspiracy necessarily involves that the object of the combination be the infliction of damage on the plaintiff. A strike may be illegal, but if its object is to bring the employer to terms or to bully a rival union into submission, there is no actionable combination in tort; here the conceded object was inter-union rivalry, and the arbitrators had simply assumed that an illegal strike made the tort out. Further, an illegal strike is the creation of the statute, and the remedy for it must be sought within the statute; the employers' claim for compensation for loss of business is not an industrial dispute within section 2(k), so the arbitrators had no jurisdiction, and the consent of the parties could not create it. The Court also held the High Court wrong in supposing that section 18 of the Trade Unions Act 1926 gave strikers an implied immunity from all legal proceedings. Sabotage is expressly outside any protection: individuals who wilfully destroy plant and machinery are liable for the injury they cause.

Why it matters. It does three jobs at once. It shows how narrow the tort of conspiracy is when the defendants are workers pursuing their own interests. It shows that the statutory civil immunity is not a blanket one, which is the error the High Court had made. And it disposes of the employer's instinctive remedy, a suit for the profits an illegal strike cost him.

Impediment three: restraint of trade

The third impediment is the one students forget, and it is the most elegant of the three, because it did not attack the union from outside. It attacked the union from inside.

The doctrine. An agreement by which a person is restrained from exercising a lawful profession, trade or business is void. In India this is section 27 of the Indian Contract Act 1872.

Why it bit a trade union. A union's rules are an agreement among its members that they will not work below an agreed rate, or will not work on terms the union has not approved, or will stop work when the union decides. Every one of those is, on its face, a restraint on the members' freedom to dispose of their own labour. If section 27 applied, the union's rules were void, and a member who took work at a lower rate could not be held to anything he had agreed.

Notice what that does. It does not fine the union or imprison its officers. It quietly removes the union's ability to hold its own members together, which is the only thing that makes a combination work at all. A union whose rules are unenforceable is a debating society.

The answer is section 18 of the Code, which provides that notwithstanding anything contained in any other law for the time being in force, an agreement between the members of a registered Trade Union shall not be void or voidable merely by reason of the fact that any of the objects of the agreement are in restraint of trade. A proviso keeps the courts out of enforcing certain of those agreements, which is a different matter and belongs to that chapter.

The three impediments and the three answers

Read that table as the plan of the next three chapters, because it is. Sections 16, 17 and 18 sit together in the Code in that order for exactly this reason: they are three answers to three different attacks, and none of them would work without the other two.

What the Constitution did not do

It is natural to think that all of this was settled in 1950 by Article 19(1)(c), which guarantees to all citizens the right to form associations or unions. It was not, and this is where the previous chapter's case does its second job.

In All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, the Supreme Court held that the right guaranteed by Article 19(1)(c) extends only to the formation of an association or union, and does not carry with it a concomitant right that the union shall achieve its objects; the union's activities, and the steps it may take to achieve its objects, are subject to such laws as may be framed, and such laws are not tested against Article 19(4).

So the Constitution removed none of the three impediments. It guarantees that the two hundred workers may form their union. It says nothing about whether their agreement is a conspiracy, whether their officers may be sued, or whether their rules are void. Those questions are answered by sections 16, 17 and 18 of this Code and by nothing else, which is why a subject that looks like background history is in fact the foundation of the statute.

A worked example

The facts. The two hundred garment workers of the previous chapter form the Bhiwandi Garment Workers' Union and register it under Chapter III. They serve notice, and after the notice period expires they stop work over the wage rate. Production halts for nine days. The employer, Shalini, takes advice.

Shalini's first idea: prosecute the office-bearers for criminal conspiracy. They agreed together to stop the work; that is an agreement to cause loss. Answer: section 17. No office-bearer or member of a registered Trade Union is liable to punishment under section 120B(2) of the penal law for an agreement made between the members to further an object of the union specified in section 15. Regulating relations with the employer over wages is such an object. The prosecution fails, and it fails because the union is registered.

Shalini's second idea: sue the union for the nine days' lost production. Every striker broke his contract of employment and the union induced them to. Answer: section 16(1). No suit lies against a registered Trade Union or its office-bearers or members in respect of an act done in contemplation or furtherance of an industrial dispute to which a member is a party, on the ground only that the act induces another to break a contract of employment or interferes with the employer's trade or business. And on the tort of conspiracy, Rohtas Industries answers her directly: the object of the combination must be the infliction of damage on the plaintiff, and the object here is a wage increase.

Shalini's third idea: persuade forty workers to come back at the old rate, and rely on section 27 of the Contract Act to say the union cannot hold them. Answer: section 18. An agreement between the members of a registered Trade Union is not void or voidable merely because some of its objects are in restraint of trade.

But now change the facts. On the sixth day thirty members lock the supervisor in the store room for eleven hours, and two of them break the cutting machines. Section 17 does not help, because on Jay Engineering Works the immunity is from the charge of conspiracy and gives no immunity from any substantive offence; wrongful confinement is an offence and the section says nothing about it. Section 16 does not help those two, because on Rohtas Industries sabotage is outside the protection and individuals who wilfully destroy plant and machinery are liable for the injury caused. The union's protection is a protection of the strike, not of everything done during it.

What this does NOT mean

It does not mean the immunities protect an unregistered combination. Every one of sections 16, 17 and 18 speaks of a registered Trade Union. That is what registration is worth, and it is why the registration chapters follow this one.

It does not mean the immunities are three ways of saying the same thing. They answer three different attacks and are drawn differently: section 16 is about civil suits, section 17 about a criminal charge, and section 18 about the validity of the union's own agreements. An answer that treats them as interchangeable will lose marks on any question that asks about one of them.

It does not mean the impediments were unreasonable when they arose. The doctrine of conspiracy, the tort of inducing a breach of contract and the rule against restraints of trade are all sensible rules of general application. They caused harm here because they were applied to a relationship that was not the arm's length bargain they assumed.

Limits, criticism and amendments

The immunities are narrow, and deliberately so. Nothing in them protects violence, wrongful confinement, trespass, damage to property or defamation, and both leading cases in this chapter say so.

Section 17 of the Code still cites the Indian Penal Code 1860. The Code was passed in 2020 and the penal law has since been replaced by the Bharatiya Nyaya Sanhita 2023, but the text of section 17 continues to refer to "sub-section (2) of section 120B of the Indian Penal Code (45 of 1860)". The reference is read, in the ordinary way, as a reference to the corresponding provision of the law now in force, but a student should quote the section as it stands rather than silently modernising it.

The criticism most often made is that the protections stop where they are most needed. An immunity that covers the agreement to strike but not the acts by which a strike is made effective leaves a great deal to the discretion of the police and the criminal courts, which is exactly the complaint made in Jay Engineering Works about the State circulars there.

Quick revision

• Three impediments, and the whole of Chapter III's protective sections answer them.
• Criminal conspiracy, section 120A and section 120B of the penal law: the agreement to act together was itself an offence. Answered by section 17.
• Tort, inducing breach of the contract of employment and conspiracy: the employer sued the union for the production lost. Answered by section 16.
• Restraint of trade, section 27 of the Indian Contract Act 1872: the union's own rules were void, so it could not hold its members. Answered by section 18.
• Jay Engineering Works, AIR 1968 Cal 407: the immunity is "of a limited nature"; it covers the agreement, and gives no immunity from any substantive offence. Definition of gherao.
• Rohtas Industries, AIR 1976 SC 425: the tort of conspiracy needs the object of the combination to be the infliction of damage; an employer's claim for loss of business is not an industrial dispute; the civil immunity is not a blanket immunity from all legal proceedings; sabotage is outside it.
• All India Bank Employees' Association, AIR 1962 SC 171: Article 19(1)(c) covers only formation, so the Constitution removed none of the three impediments.
• All three immunities are given to a registered Trade Union.

Test yourself

1. Name the three legal impediments to combinations of workers and the section of the Code that answers each. Criminal conspiracy, answered by section 17; the civil action in tort for inducing a breach of the contract of employment and for conspiracy, answered by section 16; and the rule that an agreement in restraint of trade is void, section 27 of the Indian Contract Act 1872, answered by section 18.

2. Why was the restraint of trade doctrine more dangerous to a union than it first appears? Because it did not attack the union from outside but from within. A union's rules are an agreement among members not to work below an agreed rate or otherwise than as the union directs, which is on its face a restraint on their freedom to dispose of their own labour. If those rules were void, the union could not hold its own members together, and a combination that cannot hold its members is of no use at all.

3. Workers gherao the manager for twenty hours during a lawful strike. Can they claim the immunity in section 17? No, so far as the confinement is concerned. On Jay Engineering Works Ltd. v. State of West Bengal, AIR 1968 Cal 407, the immunity is of a limited nature: it provides only that an agreement to further the union's objects shall not amount to criminal conspiracy, and there is nothing in the statute which, apart from immunity from criminal conspiracy, gives immunity from any criminal offence. Wrongful restraint and wrongful confinement are offences and are not saved.

4. An employer sues a registered union for the profits lost during an illegal strike. Advise him, with authority. The claim will fail. On Rohtas Industries Ltd. v. Rohtas Industries Staff Union, AIR 1976 SC 425, the tort of conspiracy requires that the object of the combination be the infliction of damage on the plaintiff, and where the object is to bring the employer to terms or to overcome a rival union there is no actionable combination. An illegal strike is the creation of the statute and the remedy must be sought within the statute; a claim for compensation for loss of business is not an industrial dispute, so it cannot be referred to adjudication or arbitration under the industrial law, and consent cannot create that jurisdiction. Section 16 of the Code separately bars a civil suit against a registered union on the ground only that the act induced a breach of a contract of employment or interfered with the employer's business.

5. Does registration matter to the immunities? Say why. Yes, decisively. Sections 16, 17 and 18 each confer their protection on a registered Trade Union and its office-bearers and members. An unregistered combination has none of them, and is exposed to prosecution for conspiracy, to a suit in tort, and to the argument that its own rules are void. Registration is the price of the protection.

6. "Article 19(1)(c) makes the immunities unnecessary." Comment. The statement is wrong. In All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, the Supreme Court held that Article 19(1)(c) extends only to the formation of a union and carries no concomitant right that it shall achieve its objects; its activities and the steps it takes are subject to such laws as may be framed. The Constitution therefore guarantees that the union may exist and says nothing about whether its agreement is a conspiracy, whether its officers may be sued, or whether its rules are void. Those questions are answered only by sections 16, 17 and 18.

Some words this chapter uses

Tripartite means made of three parts. Applied to the ILO it means that each member State is represented not by its government alone but by its government, its employers and its workers, each speaking for itself.

Convention, in ILO usage, is an international treaty adopted by the Conference which a member State may ratify, and which binds that State in international law once ratified.

Recommendation is an instrument adopted by the Conference which is not open to ratification and which is not binding. It offers guidance, and it is used, in the words of article 19(1)(b), where the subject or an aspect of it is not considered suitable or appropriate at that time for a Convention.

Ratification is a State's formal act of accepting a treaty as binding on it.

The competent authority is the body within a State whose function it is to legislate on the subject. In India it is Parliament, or a State legislature, depending on the subject.

Specialised agency is the status an international organisation holds when it is brought into relationship with the United Nations under the UN Charter while keeping its own constitution and membership.

Where the ILO came from

1919: Part XIII of the Treaty of Versailles. The Organisation was created as part of the peace settlement at the end of the First World War, in the same instrument that created the League of Nations. India was among its founding members, which matters for the next chapter.

1944: the Declaration of Philadelphia. At Philadelphia on 10 May 1944, with a second war ending, the Conference adopted a Declaration restating the aims and purposes of the Organisation in far broader terms than 1919 had used. Its most quoted propositions are that labour is not a commodity; that freedom of expression and of association are essential to sustained progress; that poverty anywhere constitutes a danger to prosperity everywhere; and that all human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity.

1946: the Declaration is written into the Constitution. The Constitution was amended at Montreal in 1946, and article 1(1) as amended now establishes the permanent organisation "for the promotion of the objects set forth in the Preamble to this Constitution and in the Declaration concerning the aims and purposes of the International Labour Organisation adopted at Philadelphia on 10 May 1944 the text of which is annexed to this Constitution." The Declaration is therefore not a speech about the Constitution. It is part of it.

The same amendment brought the Organisation into the United Nations system, replacing the references to the League of Nations that the 1919 text carried. Under article 1(2) as amended, the Members are the States that were Members on 1 November 1945, together with such other States as become Members under the following paragraphs.

What makes the ILO different from every other international organisation

Tripartism. This is the answer to any question that asks what is special about the ILO, and it is found in article 3(1) of its Constitution:

The meetings of the General Conference of Representatives of the Members shall be held from time to time as occasion may require, and at least once in every year. It shall be composed of four representatives of each of the Members, of whom two shall be Government delegates and the two others shall be delegates representing respectively the employers and the workpeople of each of the Members.

Read the arithmetic in that sentence, because it is the point.

In every other international organisation, a State speaks with one voice, its government's. Here it speaks with three, and two of the three are not the government at all. The employers' delegate and the workers' delegate are not instructed by their government, and article 4(1) confirms the consequence: each delegate is entitled to vote individually on all matters before the Conference. An Indian workers' delegate may vote against the Indian Government, and does.

Article 4(2) has a sanction that makes the tripartism real. If a Member fails to nominate one of the non-Government delegates it is entitled to nominate, the other non-Government delegate is entitled to take part in the discussions of the Conference but is not entitled to vote. So a government which leaves out the workers' delegate does not gain the employers' vote; it loses it.

Article 3(2) adds that each delegate may be accompanied by advisers, not exceeding two for each item on the agenda, and provides that when questions specially affecting women are to be considered, at least one of the advisers should be a woman.

The three organs

The International Labour Conference is the deliberative organ, composed as article 3 describes and meeting at least once a year. It adopts Conventions and Recommendations, adopts the budget, and admits new Members. It is sometimes called the international parliament of labour.

The Governing Body is the executive organ. Under article 7 it is tripartite in the same way, drawn from Government, employers' and workers' representatives, and it settles the agenda of the Conference, elects the Director-General and supervises the work of the Office. The number of persons composing it has been altered by later amendments to the Constitution, and this book deliberately does not print a figure, because the copy of the Constitution available to us is the text as amended in 1946 and that figure has since changed.

The International Labour Office is the permanent secretariat, headed by the Director-General. It prepares the documents for the Conference, carries out research, publishes, and receives the reports member States are required to send.

Article 19: how a standard is made, and what a State must then do

This is the operative article of the whole Constitution for our purposes, because it is where an international decision starts to press on a national legislature.

Article 19(1): the Conference chooses the instrument. When the Conference has decided on the adoption of proposals with regard to an item on the agenda, it rests with the Conference to determine whether those proposals should take the form of (a) an international Convention, or (b) a Recommendation, to meet circumstances where the subject, or an aspect of it, is not considered suitable or appropriate at that time for a Convention.

Article 19(2): the majority. In either case a majority of two-thirds of the votes cast by the delegates present is necessary on the final vote for adoption.

Article 19(3): the developing-country clause, and it matters to India. In framing any Convention or Recommendation of general application, the Conference shall have due regard to those countries in which climate, the imperfect development of industrial organisation, or other special circumstances make the industrial conditions substantially different, and shall suggest such modifications as it considers may be required to meet the case of such countries.

Article 19(5): the obligation, and this is the paragraph to learn. Where the instrument is a Convention:

• (a) the Convention is communicated to all Members for ratification;
• (b) each Member undertakes to bring the Convention, within one year from the closing of the session of the Conference, or where exceptional circumstances make that impossible then as soon as possible but never more than eighteen months, before the authority or authorities within whose competence the matter lies, for the enactment of legislation or other action;
• (c) Members shall inform the Director-General of the measures taken to bring the Convention before that authority, with particulars of the authority regarded as competent and of the action taken by it;
• (d) if the Member obtains the consent of the competent authority, it will communicate the formal ratification to the Director-General and take such action as may be necessary to make the provisions of the Convention effective;
• (e) if the Member does not obtain that consent, no further obligation rests upon it, except that it shall report to the Director-General at appropriate intervals.

Now read (b) and (e) together, because between them they define exactly how much power the ILO has over a national legislature.

Paragraph (b) is a real and unconditional obligation, and it is an obligation of process. Every member State must place every Convention before its own law-making authority, within a fixed time, whether or not the government likes the Convention and whether or not it intends to ratify. It cannot quietly bury an instrument it dislikes.

Paragraph (e) is the limit. If the legislature says no, that is the end of it. There is no further obligation beyond periodic reporting.

So the ILO cannot legislate for any country. What it can do is force the question onto the table, in public, on a timetable, in a forum where that country's own employers and workers were part of the decision. That is a weaker power than legislation and a much stronger one than persuasion, and it is the mechanism by which the influence described in the next chapter actually operates.

Article 22 completes the machinery: a Member that has ratified a Convention must make annual reports to the Office on the measures it has taken to give effect to it. Ratification is therefore not the end of the process but the beginning of a supervised one.

A worked example

The facts. The Conference adopts a Convention on the maximum weight a single worker may be required to carry. India's delegation at the session consisted of two Government delegates, one delegate nominated after consultation with the central employers' organisations, and one nominated after consultation with the central workers' organisations. The workers' delegate voted for the Convention; the Government delegates abstained. The Convention was adopted by more than two-thirds of the votes cast.

Is the Convention validly adopted despite the Government's abstention? Yes. Article 4(1) gives each delegate the right to vote individually on all matters before the Conference, and article 19(2) requires only a two-thirds majority of the votes cast by delegates present. India's Government does not control India's vote, because India does not have one vote.

Is India now bound by the Convention? No. A Convention binds a State only on ratification. Adoption at the Conference creates no substantive obligation.

Then what must India actually do? Article 19(5)(b): it must bring the Convention before the authority within whose competence the matter lies, for the enactment of legislation or other action, within one year of the closing of the session, or exceptionally as soon as possible and never later than eighteen months. Under 19(5)(c) it must tell the Director-General what it did, which authority it treated as competent, and what that authority decided.

Suppose Parliament declines to legislate. Article 19(5)(e): no further obligation rests upon India, except that it must report to the Director-General at appropriate intervals. The Convention does not become Indian law, and no sanction follows.

Suppose instead Parliament consents and India ratifies. Article 19(5)(d): India must communicate the formal ratification and take such action as may be necessary to make the provisions of the Convention effective, which in practice means legislating. Article 22 then requires an annual report on the measures taken.

What this does NOT mean

It does not mean an ILO Convention is part of Indian law. It is not, unless and until Parliament legislates. India follows the dualist position: a treaty binds India in international law on ratification, and changes the rights of individuals in Indian courts only when a statute says so.

It does not mean a Recommendation is a lesser Convention. It is a different instrument, used deliberately where the Conference thinks the subject is not ripe for a binding treaty. It is not open to ratification at all.

It does not mean the ILO enforces anything. There is no ILO court that can strike down a national law, and no penalty for declining to ratify. The Organisation works by standard-setting, supervision, reporting and publicity.

It does not mean the tripartite delegates are a formality. The non-Government delegates vote independently, and article 4(2) penalises a government that tries to leave one of them out by disqualifying the other from voting.

Limits and criticism

Ratification is voluntary and uneven. A Convention adopted by an overwhelming majority may be ratified by very few States, and the Organisation's own standards therefore apply patchily.

The obligation in article 19(5)(b) is procedural. It guarantees that the question is asked. It guarantees nothing about the answer.

Supervision depends on self-reporting. Articles 19 and 22 work through reports made by the very governments whose compliance is in issue.

And the tripartite structure assumes something that is not always true, namely that there exist, in each member State, employers' and workers' organisations free enough to choose their own delegates. Where they do not, the two non-Government seats can be filled by the government in substance if not in form.

Quick revision

• Founded 1919, by Part XIII of the Treaty of Versailles. Now a specialised agency of the United Nations, after the 1946 amendment made at Montreal.
• Preamble: universal and lasting peace can be established only if based on social justice; and one nation's failure to adopt humane conditions of labour obstructs other nations that wish to improve their own.
• Declaration of Philadelphia, 10 May 1944, is annexed to and part of the Constitution by article 1(1). Labour is not a commodity; poverty anywhere is a danger to prosperity everywhere.
• Tripartite, article 3(1): four representatives per Member, two Government, one employers', one workers'. Article 4(1): each delegate votes individually. Article 4(2): fail to nominate one non-Government delegate and the other loses the vote.
• Three organs: International Labour Conference (deliberative, meets at least yearly), Governing Body (executive, tripartite), International Labour Office (secretariat, Director-General).
• Article 19(1): Convention or Recommendation. 19(2): two-thirds of votes cast. 19(3): due regard to countries whose industrial conditions differ.
• Article 19(5)(b): bring every Convention before the competent authority within one year, exceptionally never more than eighteen months. 19(5)(e): if consent is refused, no further obligation beyond reporting.
• Article 22: annual reports on ratified Conventions.

Test yourself

1. What is the ILO's own stated reason for existing? Its Preamble gives two. First, that universal and lasting peace can be established only if it is based upon social justice, conditions of labour involving injustice and privation producing unrest that imperils the peace and harmony of the world. Second, that the failure of any nation to adopt humane conditions of labour is an obstacle in the way of other nations desiring to improve conditions in their own countries, so that no country can safely raise its standards alone.

2. What is meant by saying that the ILO is tripartite, and where is it in the Constitution? Article 3(1) provides that the General Conference shall be composed of four representatives of each Member, of whom two shall be Government delegates and the two others delegates representing respectively the employers and the workpeople. Each Member is therefore represented by its government, its employers and its workers rather than by its government alone, and by article 4(1) each delegate votes individually, so the non-Government delegates may and do vote against their own government.

3. Distinguish a Convention from a Recommendation.

4. India's Parliament declines to enact a Convention that India's delegation voted for. What are India's obligations? India must still have brought the Convention before the competent authority within one year of the closing of the session, or exceptionally as soon as possible and never more than eighteen months, under article 19(5)(b), and must have informed the Director-General of the measures taken, the authority treated as competent and the action taken, under article 19(5)(c). Since the consent of the competent authority was not obtained, article 19(5)(e) provides that no further obligation rests upon India except that it shall report to the Director-General at appropriate intervals.

5. Why does article 19(3) matter particularly to India? Because it requires the Conference, in framing any Convention or Recommendation of general application, to have due regard to countries in which climate, the imperfect development of industrial organisation or other special circumstances make industrial conditions substantially different, and to suggest such modifications as may be required to meet their case. It is the provision that allows a universal standard to be framed so that an industrialising economy can accept it.

6. "The ILO can compel India to change its labour law." Comment. The statement is wrong. The ILO cannot legislate for any member State and has no court that can strike down a national law. What article 19(5)(b) compels is a process: every Convention must be placed before the competent law-making authority within a fixed time, whatever the government thinks of it. If that authority refuses its consent, article 19(5)(e) leaves no further obligation beyond periodic reporting. The influence is real but it operates through obligation to consider, supervision, reporting and publicity, not through compulsion.

What that does to a government is easy to underestimate. A government which regards a proposed standard as premature cannot simply ignore it. It must place it before Parliament, on a timetable, and then report internationally on what happened. The subject is put on the domestic agenda by an external timetable rather than a domestic one, and it is put there in public.

And the pressure is not only external. The Indian delegation that voted at Geneva included an Indian workers' delegate and an Indian employers' delegate, each voting individually under article 4(1). When the Convention comes home, the domestic debate already has two organised Indian constituencies that took a position on it. The ILO's method therefore manufactures a domestic lobby as a by-product of the international vote.

India's participation is old, and a court has noticed its effect.

Jay Engineering Works Ltd. v. State of West Bengal, AIR 1968 Cal 407, a Full Bench of the Calcutta High Court.

Facts. Workers of the company's Calcutta sales office, with retrenched employees, repeatedly surrounded and confined the manager and other officers, for thirty-three hours in March 1967 and again in April and May, while the police took no action under two State Government circulars. The company moved the High Court under Article 226. Because the case required the Court to decide whether such conduct was lawful in an industrial dispute, it began by tracing how India came to have industrial legislation at all.

Held, on that historical question. Before the First World War there was no industrial legislation in India and the idea of settling industrial disputes by legislation was not known, the ordinary principles of master and servant governing the relations of employer and employee. During the war manufacturers made phenomenal profits and there was a significant increase in the employment of industrial labour. The holding of the International Labour Conference at Washington in 1919, in which India participated, raised the consciousness of labour to their own plight. The spasmodic occurrences of strikes then led to an important amendment of the Factories Act in 1922.

Why it matters here. It is a court's own account of the ILO as a cause of Indian labour legislation, which makes it the safest single authority for this topic. The case is worked at length for its holding on the limits of the criminal immunity in [The Legal Impediments: Conspiracy and Restraint of Trade]; it is cited here for its history.

Channel two: the tripartite method, imported wholesale

The ILO's most transferable idea was not any particular standard. It was the way the standard is made: government, employers and workers in one room, each speaking for itself.

India adopted that method domestically. The Indian Labour Conference is India's own tripartite forum, and its consensus has repeatedly preceded legislation rather than followed it.

There is a documented instance of this in one of the very Acts this Code repealed, and it is worth quoting because it is primary material rather than commentary. The Industrial Employment (Standing Orders) Act 1946, in its own introduction, explains its origin in these terms: that the economic law of demand and supply had been assumed to secure fair terms, that the working of that law belied the assumption, that workers accordingly organised themselves in trade unions and insisted on collective bargaining, and that, recognising the rough deal being given to workers by employers who would not define their conditions of service, the legislature intervened. It then says, of the central idea of the Act:

Discussion on the subject at the tripartite Indian labour Conference revealed a consensus of opinion in favour of standing orders in all industrial establishments employing one hundred or more workers.

Read what that sentence actually records. The statutory requirement that an employer must define and certify the conditions of service, which is the whole of what is now Chapter IV of the Code, was settled at a tripartite conference before it was settled in Parliament. The threshold, one hundred workers, came out of the same discussion. That is the ILO's method operating on Indian soil and producing an Indian statute.

The same method produced the Codes themselves. The Statement of Objects and Reasons of the Code on Wages 2019 records that the Second National Commission on Labour, which reported in June 2002, recommended that the existing set of labour laws be broadly amalgamated into groups covering industrial relations, wages, social security, safety, and welfare and working conditions; and that in pursuance of those recommendations and of the deliberations made in the tripartite meeting comprising the Government, employers' and industry representatives, it was decided to bring the proposed legislation. The four Labour Codes of 2019 and 2020, including the Industrial Relations Code this book teaches, are the direct product of that grouping.

Channel three: the Constitution of India adopted the ILO's aims

This is the channel students most often miss, and it is the one that gives the influence permanence.

The Constituent Assembly wrote into Part IV of the Constitution, as Directive Principles of State Policy, a set of obligations that read like the Declaration of Philadelphia turned into domestic constitutional language. They are not enforceable in a court, but they are, in the Constitution's own words, fundamental in the governance of the country and it is the duty of the State to apply them in making laws.

Article 43A repays attention, because it dates the influence rather than merely illustrating it. It was inserted by the Constitution (Forty-second Amendment) Act 1976, with effect from 3 January 1977. Worker participation in management is an ILO preoccupation of long standing, and India wrote it into its Constitution in the 1970s. The Code's own bi-partite forums, the Works Committee in section 3 and the Grievance Redressal Committee in section 4, are what article 43A looks like once it reaches a statute.

Two other constitutional provisions belong in the answer.

Articles 23 and 24 are fundamental rights, not directives, and they are enforceable. Article 23 prohibits traffic in human beings and forced labour. Article 24 prohibits the employment of a child below fourteen years in any factory or mine or in any other hazardous employment. Those subjects, forced labour and child labour, are the oldest items on the ILO's agenda, and in India they are not policy but constitutional prohibition.

Article 51(c) provides that the State shall endeavour to foster respect for international law and treaty obligations in the dealings of organised peoples with one another. It is the general constitutional warrant for taking international obligations seriously.

And article 19(1)(c), the right to form associations or unions, is the constitutional footing of the whole of Chapter III of the Code. Its limits were settled in All India Bank Employees' Association, worked in an earlier chapter: it protects the formation of the union and not the achievement of its objects.

The mechanism, in one diagram of words

Geneva. The Conference adopts a Convention by a two-thirds majority. India's four delegates vote individually; the Indian workers' and employers' delegates have taken public positions.

Within twelve to eighteen months. India must place the Convention before the competent authority, article 19(5)(b), and report what happened, article 19(5)(c).

Domestically. The question is now on the table with two organised Indian constituencies already committed. It goes to the tripartite Indian Labour Conference, which is India's own copy of the ILO's method.

In the Constitution. Whatever Parliament decides in the particular case, the general programme has already been written into Part IV as a standing direction, so the argument for legislating is constitutional and not merely international.

In the statute book. The result appears as an Act, and eventually as a Code.

That is the answer to the exam question, and notice that at no point did the ILO make law for India. It set an agenda, supplied a method, and lent a vocabulary.

A worked example

The facts. Suppose the Conference adopts a Convention requiring that a worker facing dismissal be given a written statement of the ground and an opportunity to answer it. India's Government delegates abstain; India's workers' delegate votes in favour.

Step one. Within one year of the closing of the session, and at the outside eighteen months, the Union Government must bring the Convention before Parliament, because that is where competence over this subject lies, and must inform the Director-General which authority it treated as competent and what that authority did. Article 19(5)(b) and (c). Abstention at Geneva does not excuse it.

Step two. If Parliament declines to legislate, article 19(5)(e) leaves India with no further obligation beyond reporting at appropriate intervals. India is not in breach.

Step three, and this is the part that matters. Even if Parliament does nothing, the subject has been debated, the Indian workers' organisations have a position on record, and the matter goes to the Indian Labour Conference. That is how the Standing Orders Act's own hundred-worker threshold came to be settled before it reached Parliament.

Step four. The domestic argument for acting is not only "we promised at Geneva". It is article 42 of the Constitution, just and humane conditions of work, which is a direction to the Indian State that exists whether or not any Convention was ever adopted.

Now look at where the example lands in the Code. Chapter IV requires an employer to have certified standing orders which, among other matters, define the conditions of service and the disciplinary procedure, and section 38 fixes a time limit for completing disciplinary proceedings together with a liability to pay subsistence allowance while they run. That is the substance of the imagined Convention, arrived at domestically.

What this does NOT mean

It does not mean every Indian labour statute implements an ILO Convention. Many do not, and matching a particular Act to a particular numbered Convention is a claim that has to be checked against India's ratification record before it is made. This book does not make such claims, and a student writing in the exam should describe the mechanism and the constitutional reception rather than asserting numbered pairings they have not verified.

It does not mean a ratified Convention is enforceable in an Indian court. India is dualist. A treaty binds India in international law on ratification, and gives an individual rights in an Indian court only when Parliament has legislated.

It does not mean the Directive Principles are enforceable. They are not. Their force is that they are fundamental in the governance of the country and a duty on the State in making laws, and that courts read ordinary statutes in their light.

It does not mean the influence has been one way. Article 19(3) of the ILO Constitution requires the Conference to have due regard to countries whose climate, imperfect development of industrial organisation or other special circumstances make industrial conditions substantially different, and to suggest modifications for them. India has been one of the principal reasons that clause exists and is used.

Limits and criticism

Ratification lags behind adoption. Placing a Convention before Parliament is compulsory; ratifying it is not, and reporting on a refusal costs nothing.

A large part of the Indian workforce is outside the reach of any of this. The standards, the Codes and the constitutional directions operate mainly on organised industrial employment. The Code itself acknowledges this obliquely: section 23 makes special provision for Trade Unions in what section 2(zp) calls the unorganised sector.

The tripartite method assumes representative organisations. Where the employers' and workers' bodies consulted are not genuinely representative, the tripartite consensus is a consultation between the government and two of its own invitees.

And the Directive Principles have been criticised as a way of postponing. Article 41 is expressly qualified by the words "within the limits of its economic capacity and development", which is an argument for delay written into the direction itself.

Quick revision

• Three channels, and the answer needs all three: the obligation to lay the Convention, the tripartite method, the Constitution's adoption of the aims.
• Article 19(5)(b) of the ILO Constitution: bring every Convention before the competent authority within one year, exceptionally never more than eighteen months, whether or not the government likes it. 19(5)(e): if consent is refused, no further obligation but reporting.
• Jay Engineering Works, AIR 1968 Cal 407: before the First World War there was no industrial legislation in India and the master-and-servant principles governed; the 1919 Washington Conference, in which India participated, raised the consciousness of labour to their own plight.
• The Standing Orders Act 1946's own introduction: the standing-orders idea and its hundred-worker threshold came from a consensus at the tripartite Indian Labour Conference.
• The Code on Wages' Statement of Objects and Reasons: the Second National Commission on Labour, reporting June 2002, recommended amalgamating labour laws into five groups, and the Codes followed that plus tripartite deliberation.
• Constitution of India: article 19(1)(c) form unions; articles 23 and 24 forced labour and child labour, enforceable; Directive Principles 39, 41, 42, 43; and 43A, worker participation in management, inserted by the 42nd Amendment w.e.f. 3 January 1977; article 51(c) respect for treaty obligations.
• India is dualist: a ratified Convention is not by itself Indian law.

Test yourself

1. Discuss, in outline, the influence of the ILO on Indian labour legislation. It operates through three channels rather than through any power to legislate. First, article 19(5)(b) of the ILO Constitution obliges India to bring every Convention adopted by the Conference before its competent law-making authority within one year, or exceptionally not more than eighteen months, and to report to the Director-General what that authority did; the subject is therefore placed on the domestic agenda on an external timetable, in public, and with India's own employers' and workers' delegates already publicly committed by their individual votes at Geneva.

Second, India adopted the Organisation's tripartite method domestically in the Indian Labour Conference; the Industrial Employment (Standing Orders) Act 1946 records in its own introduction that the standing-orders requirement and its hundred-worker threshold came from a consensus reached at that tripartite conference, and the Statement of Objects and Reasons of the Code on Wages 2019 records that the four Codes followed the Second National Commission on Labour of June 2002 together with tripartite deliberation.

Third, the Constitution of India received the Organisation's aims into Part IV, in articles 39, 41, 42, 43 and 43A, and into Part III in articles 23 and 24, so that the case for labour legislation in India is constitutional and not merely international. Judicial notice of the influence was taken in Jay Engineering Works Ltd. v. State of West Bengal, AIR 1968 Cal 407, where the Calcutta High Court recorded that the 1919 Washington Conference, in which India participated, raised the consciousness of labour to their own plight.

2. Does India have to legislate whenever the Conference adopts a Convention? No. It must place the Convention before the competent authority within the article 19(5)(b) time limit and report under 19(5)(c). If the competent authority does not consent, article 19(5)(e) leaves no further obligation except periodic reporting. The obligation is one of process, not of outcome.

3. Which article of the Constitution directs worker participation in management, and when was it inserted? Article 43A, inserted by the Constitution (Forty-second Amendment) Act 1976 with effect from 3 January 1977. It directs the State to take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organisations engaged in any industry. Sections 3 and 4 of the Industrial Relations Code, the Works Committee and the Grievance Redressal Committee, are its statutory expression.

4. Distinguish the constitutional provisions on labour that are enforceable from those that are not. Articles 23 and 24 are fundamental rights in Part III and are enforceable: article 23 prohibits traffic in human beings and forced labour, and article 24 prohibits the employment of a child below fourteen in any factory or mine or other hazardous employment. Articles 39, 41, 42, 43 and 43A are Directive Principles in Part IV and are not enforceable by a court; their force is that they are fundamental in the governance of the country, a duty on the State in making laws, and a guide to the interpretation of statutes.

5. Give one documented instance of tripartite consultation producing an Indian statutory rule. The Industrial Employment (Standing Orders) Act 1946 states in its own introduction that discussion at the tripartite Indian Labour Conference revealed a consensus of opinion in favour of standing orders in all industrial establishments employing one hundred or more workers. Both the requirement and its threshold were therefore settled tripartitely before they were enacted.

6. Why is it wrong to answer this question with a list of Indian Acts and their dates? Because the question asks about influence, which is a causal claim, and a list asserts the conclusion without showing the mechanism. The ILO has never legislated for India and cannot. An answer must show how an organisation with no legislative power changed the statute book: by compelling the question to be laid before Parliament on a fixed timetable, by supplying a tripartite method that India copied domestically, and by furnishing aims that the Constitution then adopted as standing directions to the State.

Federation is an organisation whose members are themselves unions rather than individuals.

Executive, defined in section 2(n), means the body, by whatever name called, to which the management of the affairs of a Trade Union is entrusted.

Office-bearer, defined in section 2(zb), includes any member of the executive of a Trade Union, but does not include an auditor.

Registered Trade Union, defined in section 2(zf), means a Trade Union registered under this Code. Note what that tells you: a Trade Union and a registered Trade Union are two different things, and the Code keeps them apart deliberately.

Trade Union dispute, defined in section 2(zm), means any dispute relating to a Trade Union arising between two or more Trade Unions or between the members of a Trade Union inter se. Inter se means among themselves. This is not the same as an "industrial dispute", which is a dispute with the employer and is defined separately in section 2(q).

The definition, broken down

Section 2(zl) has four elements and one extension. A body is a Trade Union if it satisfies the first three and any one of the fourth.

Element one: it is a combination. Nothing more is required. No registration, no writing, no minimum membership. An unregistered group is still a Trade Union; it simply has none of Chapter III's benefits.

Element two: temporary or permanent. The definition says so expressly. A strike committee formed for one dispute and dissolved when it ends is within the definition.

Element three: formed primarily for the purpose. The purpose must be the main one. A cricket club whose members occasionally discuss their wages is not a Trade Union; a body formed to bargain about wages which also runs a cricket team is.

Element four: one of four purposes. This is where the width is, and it is worth setting out as a list because students routinely remember only the first.

• regulating the relations between workers and employers;
• regulating the relations between workers and workers;
• regulating the relations between employers and employers;
• imposing restrictive conditions on the conduct of any trade or business.

The extension: "and includes any federation of two or more Trade Unions." A federation is itself a Trade Union for the purposes of the Code, and section 8(1)(d) accordingly provides its own registration requirement for a federation or central organisation.

The three things students get wrong

A Trade Union need not be permanent. The words "whether temporary or permanent" are in the section. A combination formed for a single dispute qualifies.

A Trade Union need not be of workers. The third purpose is regulating relations "between employers and employers". An employers' association is a Trade Union under this Code, and may be registered as one. This is the single most commonly missed point in the definition, and it is why the Code's other provisions carefully say "Trade Union of workers" whenever they mean only that: section 6(2) and section 6(4), which fix the membership arithmetic, and section 14(2) to (4), which deals with recognition, all use those words.

A Trade Union need not have workers and employers on opposite sides. The second purpose, regulating relations between workers and workers, covers a body whose function is to settle demarcation between groups of workers.

The proviso, and what it actually does

The proviso to section 2(zl) reads:

Provided that the provisions of Chapter III of this Code shall not affect:

(i) any agreement between partners as to their own business; or

(ii) any agreement between an employer and those employed by him as to such employment; or

(iii) any agreement in consideration of the sale of the goodwill of a business or of instruction in any profession, trade or handicraft.

Read the opening words with care, because the proviso is regularly misdescribed. It does not say that these agreements are not Trade Unions. It says that the provisions of Chapter III shall not affect them.

Why the proviso is there. All three are ordinary commercial or employment agreements that contain restrictions on trade, and all three would otherwise be caught by the fourth limb of the definition, "imposing restrictive conditions on the conduct of any trade or business". A partnership deed restricting what the partners may do outside the firm, a contract of employment restricting what the employee may do, and a covenant given by the seller of a business not to compete are all restrictive conditions on the conduct of a trade.

And the reason it matters is section 18. Section 18 provides that an agreement between the members of a registered Trade Union is not void merely because its objects are in restraint of trade. Without the proviso, Chapter III might have been read as rescuing an ordinary non-compete covenant from section 27 of the Indian Contract Act 1872 simply by calling the parties a combination. The proviso stops Chapter III from reaching into ordinary commercial bargains.

The outer edge of the definition: two cases

The definition is wide, but it is not unlimited. Both limits were drawn by the Madras High Court, and both cases are about the same question: can people employed by the State in its governmental capacity register as a trade union?

Rangaswami v. Registrar of Trade Unions, AIR 1962 Mad 231, (1961) 1 LLJ 599.

Facts. Employees of the Madras Raj Bhavan, the Governor's household, formed the Madras Raj Bhavan Workers' Union with the object of securing better service conditions and making collective bargaining possible. On 9 February 1959 seven of them applied to the Registrar of Trade Unions, Madras, for registration under the Trade Unions Act 1926. The members were the domestic and menial staff of the Governor's household. The Registrar refused registration.

Held. The refusal was correct and the petition was dismissed with costs. A trade union under the Act presupposes an employer and employees engaged in the conduct of a trade or business. The Raj Bhavan carries on no trade or industry; its work is part of the household and regal functions of the Governor. Persons so employed are therefore not workmen within the Act, and their combination cannot be registered as a trade union however genuine its objects.

Why it matters. It is the cleanest demonstration that the definition has an outer edge. Students learn that a trade union is "any combination of workers" and stop; this case shows that the combination must be connected with a trade or industry, and that the Registrar may and must refuse where it is not.

Tamil Nad Non-Gazetted Government Officers' Union v. Registrar of Trade Unions, AIR 1962 Mad 234, (1962) 1 LLJ 753, a Division Bench.

Facts. The union was a recognised service association whose membership was open, under rule 7 of its constitution, to all non-gazetted government officers employed under the Government of Madras, other than the executive officers of the Police and Prisons departments and last-grade servants. It applied for registration as a trade union. Registration was refused, a single judge upheld the refusal, and the union appealed.

Held. The appeal was dismissed. The core of the civil services is integrated with the inalienable and regal functions of government, and those activities cannot be an industry, nor can such civil servants be workmen. The Court drew the line expressly: independent corporations that are quasi-government agencies, and subsidised undertakings that are purely industrial in character, stand on a different footing from the administrative machinery of the State itself.

Why it matters. It is the companion to Rangaswami and it states the principle where Rangaswami gave the illustration. It supplies the distinction a student is most often asked to draw: government as sovereign is outside; government as an employer carrying on an industry is inside.

Both cases were decided under the Trade Unions Act 1926, which section 104(1)(a) of the Code repealed on 21 November 2025. They are cited for the boundary they draw, not for the wording of the repealed Act. The same boundary is built into the present law, because section 6 requires the applicants to be workers engaged or employed in the industrial establishment or industry with which the union is connected, and because the Code's own definition of "industry" in section 2(p) turns on the same sovereign-functions distinction. That definition is Module II's topic 2.1 and is worked in the chapter on the conceptual analysis of industry, which is not yet written.

Distinctions

A worked example

The facts. Consider four bodies in Thane.

(a) The Thane Powerloom Workers' Union, four hundred workers across eleven units, formed to negotiate rates. A Trade Union. Its primary purpose is regulating relations between workers and employers, the first limb of section 2(zl).

(b) The Thane Powerloom Owners' Association, thirty owners, formed to agree common rates and common terms of purchase. Also a Trade Union, under the third limb, relations between employers and employers, and under the fourth limb, imposing restrictive conditions on the conduct of a trade. It may apply to be registered under Chapter III, and the phrase "Trade Union of workers" in section 6(2) does not apply to it.

(c) A committee of nine workers formed on Monday to press one demand and dissolved on Friday when it was met. A Trade Union, because the definition covers a combination "whether temporary or permanent". It is not a registered Trade Union, and it has no immunity under sections 16, 17 or 18, which is a serious practical difference.

(d) A partnership deed between two brothers running a dyeing unit, by which each agrees not to carry on a competing business. Not touched by Chapter III at all. It is an agreement between partners as to their own business, and clause (i) of the proviso to section 2(zl) provides that Chapter III shall not affect it. Its validity is decided by the ordinary law of contract, including section 27 of the Indian Contract Act 1872, and section 18 of this Code cannot be used to save it.

Now change (a). Suppose the four hundred are not powerloom workers but the domestic staff of the Raj Bhavan. On Rangaswami the Registrar must refuse, because there is no trade or business with which the combination is connected. Suppose instead they are the clerical staff of a State-owned manufacturing corporation. On Tamil Nad Non-Gazetted Government Officers' Union they are on the other side of the line, because a quasi-government agency or subsidised undertaking that is industrial in character is not the regal machinery of the State.

What this does NOT mean

It does not mean an unregistered combination is unlawful. It is a Trade Union and it may exist and act. What it lacks is registration and everything registration carries.

It does not mean the definition decides who may register. It decides who is a Trade Union. Whether a particular Trade Union may be registered is decided by sections 6 and 7, and those add real conditions: seven or more members subscribing to the rules, the membership arithmetic in section 6(2) and 6(4), and the twelve matters the rules must provide for under section 7.

It does not mean "office-bearer" includes everyone who holds a post. Section 2(zb) includes any member of the executive but excludes an auditor, and that exclusion is examinable.

It does not mean a Trade Union dispute is an industrial dispute. They are separately defined and go to different places. A quarrel between two unions over which of them represents the workers is a Trade Union dispute under section 2(zm), decided by the Tribunal under section 22, and section 22(2) bars every other civil court from entertaining it.

Limits, criticism and amendments

The definition is essentially the 1926 definition, with "workers" put where "workmen" stood and the federation extension carried over. A student who has read older material will find the substance familiar; what must change is the section number, which is now 2(zl) and not section 2(h) of a repealed Act.

The width of the definition is criticised from both directions. Employers say it lets a combination of nine people formed on a Monday claim the name and, once registered, the immunities. Workers say the width is illusory, because everything of value is attached not to being a Trade Union but to being a registered one, and registration is controlled by the arithmetic in section 6.

And the inclusion of employers' associations is criticised as untidy, since almost every operative provision of the Code that follows has to say "Trade Union of workers" to exclude them again.

Quick revision

• Section 2(zl): any combination, temporary or permanent, formed primarily for regulating relations between workers and employers, workers and workers, or employers and employers, or for imposing restrictive conditions on the conduct of any trade or business; includes a federation of two or more Trade Unions.
• Three traps: it may be temporary; it may be of employers; it includes a federation.
• Proviso: Chapter III shall not affect (i) an agreement between partners as to their own business, (ii) an agreement between an employer and those employed by him as to such employment, (iii) an agreement in consideration of the sale of goodwill or of instruction in a profession, trade or handicraft. It is a saving, not a carve-out from the meaning.
• Section 2(zf) registered Trade Union; 2(zm) Trade Union dispute, between unions or members inter se; 2(zb) office-bearer, includes an executive member, excludes an auditor; 2(n) executive.
• Rangaswami, AIR 1962 Mad 231: Raj Bhavan household staff, registration refused, no trade or business.
• Tamil Nad NGO Union, AIR 1962 Mad 234: the core of the civil services performs regal functions and is outside; quasi-government agencies and subsidised industrial undertakings are inside.

Test yourself

1. Define a Trade Union under the Code. Section 2(zl) defines it as any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workers and employers or between workers and workers, 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.

2. Is an association of mill owners a Trade Union? Give the limb you rely on. Yes. Section 2(zl) includes a combination formed primarily for regulating the relations between employers and employers, and also one formed for imposing restrictive conditions on the conduct of any trade or business. An employers' association satisfies both. It may be registered under Chapter III, though the provisions that speak of a "Trade Union of workers", such as section 6(2) and section 14, do not apply to it.

3. Nine workers form a committee for the duration of one dispute. Is it a Trade Union? Does it have the immunities? It is a Trade Union, because the definition expressly covers a combination whether temporary or permanent. It does not have the immunities. Sections 16, 17 and 18 confer their protection on a registered Trade Union, and this committee is not registered.

4. What does the proviso to section 2(zl) do, and why is it needed? It provides that the provisions of Chapter III shall not affect an agreement between partners as to their own business, an agreement between an employer and those employed by him as to such employment, or an agreement in consideration of the sale of the goodwill of a business or of instruction in a profession, trade or handicraft. It is needed because all three are ordinary agreements containing restrictions on trade which the fourth limb of the definition would otherwise catch, and because section 18 would then have been available to save an ordinary non-compete covenant from section 27 of the Indian Contract Act 1872. It is a saving for those agreements, not a statement that they are not Trade Unions.

5. Can the domestic staff of a Governor's household register a trade union? Give authority. No. In Rangaswami v. Registrar of Trade Unions, AIR 1962 Mad 231, the Madras High Court upheld the Registrar's refusal to register the Madras Raj Bhavan Workers' Union, holding that a trade union presupposes an employer and employees engaged in the conduct of a trade or business, that the Raj Bhavan carries on no trade or industry because its work is part of the household and regal functions of the Governor, and that persons so employed are therefore not workmen. The same boundary operates under the Code, because section 6 requires the members to be workers engaged or employed in the industrial establishment or industry with which the union is connected.

6. Distinguish a Trade Union dispute from an industrial dispute. A Trade Union dispute, section 2(zm), is a dispute relating to a Trade Union arising between two or more Trade Unions or between the members of a Trade Union among themselves, typically about registration, administration, management or the election of office-bearers; it is adjudicated by the Tribunal on an application under section 22, and section 22(2) bars every other civil court. An industrial dispute, section 2(q), is a dispute connected with employment between employers and workers or between those groups among themselves, and it goes to the machinery in Chapters II, VI and VII.

Subscribing their names to the rules means signing the rules as members, which is the act by which the applicants adopt them.

Industrial establishment or undertaking is defined in section 2(r). It is, broadly, the place or unit where the work is carried on.

Unorganised sector, for the purposes of section 23, means any sector which the appropriate Government specifies by notification. The Explanation to section 23(1) says so.

Executive, section 2(n), is the body, by whatever name called, to which the management of the affairs of the union is entrusted.

Honorary or temporary member is a member who is not a worker in the establishment or industry concerned. Section 7(e) contemplates them, and section 21 controls how many of them may be office-bearers.

Section 5: who registers, and where

Section 5(1) provides that the State Government may, by notification, appoint a person to be the Registrar of Trade Unions for the State. Registration is therefore administered at State level, not centrally.

Two consequences follow and both appear later in this Module.

Communications go to the head office as entered in the register. Section 11(1) requires all communications and notices to a registered Trade Union to be sent, in the prescribed manner, to the address of the head office as entered in the Registrar's register. Keeping that address current is the union's responsibility under section 11(3).

Where a union crosses State lines the Registrars have to talk to each other. Section 24(3) requires notice of a change of name or of an amalgamation to be sent to the Registrar, and where the head office of the amalgamated union is in a different State, to the Registrar of that State as well; section 24(6) then makes the Registrar of the State in which the amalgamated union's head office is situated the one who registers the amalgamation.

Section 6: the criteria, and the arithmetic that carries the marks

This section has four sub-sections and they do four different jobs. Take them in order.

Section 6(1): who may apply

Any seven or more members of a Trade Union may, by subscribing their names to the rules of the Trade Union and by otherwise complying with the provisions of this Code with respect to registration, apply for registration of the Trade Union under this Code.

Seven is the number of applicants, not the size of the union. The sub-section is about who signs the application. It says nothing about whether the union will be registered.

Section 6(2): the membership test, and this is the one that is examined

No Trade Union of workers shall be registered unless at least ten per cent. of the workers or one hundred workers, whichever is less, engaged or employed in the industrial establishment or industry with which it is connected are the members of such Trade Union on the date of making of the application for registration.

Four features, and each of them is a mark.

"Whichever is less" and not "whichever is more". The test is satisfied by the smaller of the two figures. That is favourable to unions in large establishments, and students reverse it constantly. Work it through:

The requirement is capped at one hundred. Once an establishment has a thousand workers, the number needed never rises again. A union in a factory of eight thousand needs the same hundred members as a union in a factory of a thousand.

"On the date of making of the application". The test is applied at a fixed moment. What happened before or after does not decide it, subject to sub-section (3).

It applies to a "Trade Union of workers" only. An employers' association, which is a Trade Union under section 2(zl), is outside sub-section (2) altogether.

Section 6(3): applicants who fall away

Where an application has been made under sub-section (1) for registration of a Trade Union, such application shall not be deemed to have become invalid merely by reason of the fact that, at any time after the date of the application but before the registration of the Trade Union, some of the applicants, but not exceeding half of the total number of persons who made the application, have ceased to be members of the Trade Union or have given notice in writing to the Registrar dissociating themselves from the application.

This sub-section exists because of a specific abuse. An employer who learns that seven of his workers have applied to register a union has an obvious response: persuade some of them to withdraw, and the application collapses. Sub-section (3) draws a line: losing applicants does not invalidate the application so long as not more than half of them go.

Note the two ways an applicant can fall away, because the sub-section covers both: ceasing to be a member, and giving the Registrar written notice dissociating from the application.

And note the limit. More than half, and the protection is gone.

Section 6(4): the union must keep its numbers up

A registered Trade Union of workers shall at all times continue to have not less than ten per cent. of the workers or one hundred workers, whichever is less, subject to a minimum of seven, engaged or employed in an industrial establishment or industry with which it is connected, as its members.

This is a continuing obligation, not a one-off test, and the words "at all times" are what make it so.

The floor of seven is new information and it belongs in the arithmetic. Take a very small establishment of twenty workers. Ten per cent. is two, and two is less than a hundred, so section 6(2) would be satisfied by two members. Section 6(4) then says that a registered union must never fall below seven. So in small establishments the effective figure is seven, and in establishments above seventy it is ten per cent. until the cap of one hundred bites.

Two other sections attach to this duty. Section 11(2) requires the Trade Union itself to inform the Registrar if its membership falls below the figure. Section 9(5)(iii) allows the Registrar to cancel the certificate of registration if he is satisfied that it has. So the union must report the very fact that can cost it its registration.

Section 7: the twelve matters the rules must provide for

Section 7 opens by requiring two things together: the executive must be constituted in accordance with the Code, and the rules must provide for the listed matters. Both are conditions of entitlement to registration.

The twelve matters are:

• (a) the name of the Trade Union;
• (b) the whole of the objects for which it has been established;
• (c) the whole of the purposes for which its general funds shall be applicable, all of which must be purposes to which such funds are lawfully applicable under the Code;
• (d) the maintenance of a list of members and adequate facilities for its inspection by the office-bearers and members;
• (e) the admission of ordinary members, irrespective of their craft or category, who shall be persons actually engaged or employed in the industrial establishment, undertaking or industry, or units, branches or offices of an industrial establishment, with which the union is connected, and also the admission of such number of honorary or temporary members, who are not such workers, as are not permitted under section 21 to be office-bearers to form the executive;
• (f) the payment of a subscription by members, from such members and others, as may be prescribed;
• (g) the conditions under which a member is entitled to a benefit assured by the rules, and under which a fine or forfeiture may be imposed on a member;
• (h) the annual general body meeting, the business to be transacted at it, including the election of office-bearers;
• (i) the manner in which the members of the executive and the other office-bearers shall be elected once in a period of every three years and removed, and the filling of casual vacancies;
• (j) the safe custody of the funds, an annual audit in the prescribed manner, and adequate facilities for inspection of the account books by office-bearers and members;
• (k) the manner in which the rules shall be amended, varied or rescinded;
• (l) the manner in which the Trade Union may be dissolved.

Read the list for its theme and it becomes easy to remember. Clauses (a) and (b) are identity. Clauses (c), (f), (g) and (j) are money. Clauses (d), (e), (h) and (i) are membership and internal democracy. Clauses (k) and (l) are the union's own end.

Clause (i) deserves separate attention because it fixes a period: office-bearers must be elected once in every three years. That is a check on office-bearers entrenching themselves, and it pairs with section 14(6), which makes a recognition or a negotiating council valid for three years in the first instance.

Clause (c) is drawn narrowly on purpose. The rules must state the whole of the purposes for which the general funds are applicable, and every one of them must be a purpose to which the funds are lawfully applicable under the Code. Section 15(1) then provides that the general funds shall not be spent on any objects other than such objects as may be prescribed. The rules cannot enlarge what the Code permits.

The case on clause (e), and it decides a question students get backwards

Bokajan Cement Corporation Employees' Union v. Cement Corporation of India Ltd., AIR 2004 SC 245, (2004) 1 SCC 142, Sabharwal and Agrawal JJ.

Facts. The short question was whether an employee, as a result of the cessation of his employment, loses the right to continue as a member of the trade union. The High Court, reversing a single judge, had held that he does. It relied on section 6(e) of the Trade Unions Act 1926, the predecessor of what is now section 7(e), which requires a union's rules to provide for the admission of ordinary members who are persons actually engaged or employed in the industry with which the union is connected, and on clause 5 of the union's own constitution, which made any worker employed by the company eligible for membership. Clause 9 of that constitution dealt with cessation of membership and listed non-payment of subscription for three months, death and withdrawal, but not the ending of employment. The union appealed.

Held. The appeal was allowed, the High Court's judgment set aside and the single judge's restored. Section 6(e) provides for the admission of members, not for the cessation of membership. There was no provision in the Act for automatic cessation of membership on cessation of employment, and none in the union's own constitution either. In the absence of any such provision, a member does not cease to be a member merely because he ceases to be employed.

Why it matters. It answers a question most students assume has the opposite answer, and it teaches the habit that matters more than the answer: read the statute, then read the union's own rules, because between them they decide the point. It also explains something practical, that a retrenched or dismissed worker can go on being represented by his union in the very proceedings about his dismissal, which would be impossible if his membership ended with his employment.

It was decided under the Trade Unions Act 1926, repealed by section 104(1)(a) on 21 November 2025. The reasoning applies unchanged, because section 7 of the Code is drawn the same way: it lists what the rules must contain, clause (e) is about admission, and the Code says nothing about automatic cessation. What the Code adds, and the 1926 Act did not have, is the membership arithmetic in section 6, which the case does not touch. There is also an express aid in the Code pointing the same way: the Explanation to section 23(2) provides that an employee who has retired or has been retrenched shall not be construed as an outsider for the purpose of holding office in a Trade Union.

And the outer edge of who may be a member at all is the subject of the two Madras cases worked in the previous chapter. Rangaswami v. Registrar of Trade Unions, AIR 1962 Mad 231 and Tamil Nad Non-Gazetted Government Officers' Union v. Registrar of Trade Unions, AIR 1962 Mad 234 both turn on the same point that section 6(2) now makes explicit: the members must be workers engaged or employed in an industrial establishment or industry, so a combination of the Governor's household staff, or of the core civil service performing regal functions, cannot be registered.

A worked example

The facts. Meera works at a packaging unit in Wada employing 640 workers. She and eight colleagues draw up rules, sign them, and apply to the Registrar. On the date of the application the union has 61 members.

Is the application competent? Yes. Section 6(1) requires seven or more members to subscribe their names to the rules and apply. Nine did.

Does the union satisfy the membership test? Yes, but only just. Ten per cent. of 640 is 64; one hundred is 100; whichever is less is 64. The union had 61 on the date of the application, so it is four short and section 6(2) is not satisfied. The Registrar must refuse.

Change the facts: the union had 66 members on the date of the application. Section 6(2) is satisfied, because 66 exceeds 64, and the test is applied on the date of the application.

Now, after the application and before registration, three of the nine applicants resign from the union and a fourth writes to the Registrar dissociating himself. Four of nine have fallen away. Section 6(3) protects the application so long as the number who cease to be members or dissociate does not exceed half of the total who applied. Half of nine is four and a half, so four is within the protection: the application is not invalid.

Change that too: six of the nine fall away. Six exceeds half of nine, and the protection in section 6(3) is lost.

A year after registration the unit sheds workers and the union's membership drops to 45 while the workforce falls to 520. Ten per cent. of 520 is 52; the requirement is 52; the union has 45. Section 6(4) is breached, and two things follow: section 11(2) requires the union itself to inform the Registrar, and section 9(5)(iii) permits the Registrar to cancel the registration on being satisfied that membership has fallen below the figure. He must give not less than sixty days' previous notice in writing specifying the grounds, under the proviso to section 9(5), and the union may appeal to the Tribunal under section 10.

Finally, the union's rules say that a member ceases to be a member on ceasing to be employed, and it uses that rule to expel a retrenched worker. Here the rule is the union's own, and Bokajan does not save the worker: the Supreme Court's reasoning was that there was no such provision in the Act or in the union's constitution. Where the constitution does provide for it, the position is different. Advise the union, however, that the Explanation to section 23(2) treats a retired or retrenched employee as not an outsider for the purpose of holding office, which sits awkwardly with a rule expelling him from membership.

What this does NOT mean

It does not mean seven members are enough to be registered. Section 6(1) is about who may apply. Section 6(2) is the test for registration, and in an establishment of 640 workers it requires 64 members, not seven.

It does not mean the ten per cent. is calculated on the union's own membership. It is ten per cent. of the workers engaged or employed in the industrial establishment or industry with which the union is connected.

It does not mean an employers' association must satisfy section 6(2). That sub-section applies to a "Trade Union of workers".

It does not mean membership ends with employment. On Bokajan it does not, unless the union's own rules so provide.

It does not mean the Registrar may impose conditions of his own. His function under section 9(1) is to register on being satisfied that the union has complied with the requirements of Chapter III. What he may do if he is not satisfied is call for further information under section 8(3) and refuse until it is furnished.

Limits, criticism and amendments

The membership threshold is the most criticised provision in the Chapter, and from both sides. Employers argue that ten per cent. is too low in a large factory, where a hundred members out of eight thousand can register and claim the immunities. Unions argue that in a workforce that can be dismissed, requiring ten per cent. to declare themselves on the date of the application exposes exactly those workers to identification and pressure, and that section 6(3) protects the application but not the applicants.

The continuing obligation in section 6(4) is a real change from the 1926 Act and it makes registration conditional rather than permanent. Combined with the union's own duty to report a fall under section 11(2), it puts the union in the position of having to disclose the fact that may end it.

Section 7's three-year election requirement is a genuine democratic advance over a regime in which office-bearers could continue indefinitely, and it is one of the few provisions in the Chapter that regulates the union's internal life for the benefit of its own members.

Quick revision

• Section 5: the State Government appoints the Registrar of Trade Unions by notification.
• Section 6(1): seven or more members may subscribe their names to the rules and apply.
• Section 6(2): no Trade Union of workers shall be registered unless ten per cent. of the workers or one hundred, whichever is LESS, engaged in the establishment or industry are members on the date of the application.
• Section 6(3): the application does not become invalid if applicants fall away, so long as not more than half of them cease to be members or dissociate in writing.
• Section 6(4): a registered union must at all times keep that number, subject to a minimum of seven. Section 11(2) makes the union report a fall; section 9(5)(iii) lets the Registrar cancel for it.
• Section 7: twelve matters the rules must provide for. Identity (a, b); money (c, f, g, j); membership and democracy (d, e, h, i); the union's own end (k, l). Office-bearers elected once every three years, clause (i).
• Bokajan, AIR 2004 SC 245: clause (e) governs admission, not cessation; membership does not end automatically when employment ends, absent a provision in the Act or in the union's own rules. Appeal allowed.

Test yourself

1. A factory employs 900 workers. How many members must a union have to be registered, and how many to stay registered? Ten per cent. of 900 is 90; one hundred is 100; whichever is less is 90. So section 6(2) requires 90 members on the date of the application. Section 6(4) requires the union to continue at all times to have that same figure, subject to a minimum of seven, so 90 again unless the workforce changes.

2. A workshop employs 30 workers. How many members must its union have to stay registered? Ten per cent. of 30 is 3, which is less than 100, so section 6(2) would be satisfied by 3 members on the date of the application. But section 6(4) requires a registered union to have that number subject to a minimum of seven, so it must keep at least seven.

3. Eleven members apply for registration. Before the union is registered, five of them write to the Registrar dissociating themselves. Is the application invalid? No. Section 6(3) provides that the application shall not be deemed to have become invalid merely because some of the applicants, not exceeding half of the total who applied, have ceased to be members or have given written notice to the Registrar dissociating themselves. Half of eleven is five and a half, so five is within the protection.

4. State the twelve matters section 7 requires the rules to provide for, in groups. Identity: the name of the union, and the whole of the objects for which it is established. Money: the whole of the purposes for which the general funds are applicable, all being purposes lawfully applicable under the Code; the payment of subscriptions; the conditions of benefits, fines and forfeitures; and the safe custody of funds, an annual audit and facilities for inspecting the account books. Membership and internal democracy: maintaining a list of members with facilities for inspection; the admission of ordinary members actually engaged or employed in the establishment or industry, irrespective of craft or category, and of honorary or temporary members; the annual general body meeting and its business including the election of office-bearers; and the manner in which the executive and other office-bearers are elected once in every three years, removed, and casual vacancies filled. The union's own end: the manner of amending the rules, and the manner of dissolution.

5. Does a worker lose his union membership when he is dismissed? Give the authority and the reasoning. Not automatically. In Bokajan Cement Corporation Employees' Union v. Cement Corporation of India Ltd., AIR 2004 SC 245, the Supreme Court allowed the union's appeal and held that the provision requiring the rules to provide for the admission of ordinary members who are persons actually engaged or employed in the industry deals with admission, not cessation; that there was no provision in the Act for automatic cessation of membership on cessation of employment; and that there was none in the union's own constitution, whose clause on cessation listed other grounds. In the absence of any such provision the member continues. The Code is drawn the same way, and the Explanation to section 23(2) reinforces the point by providing that a retired or retrenched employee is not to be construed as an outsider for the purpose of holding office.

6. Why does section 6(3) exist, and what abuse does it answer? Because an employer who learns that his workers have applied to register a union has an obvious counter, which is to induce enough of the applicants to withdraw so that the application collapses. Section 6(3) provides that the application is not invalidated by applicants ceasing to be members or dissociating in writing, so long as the number who do so does not exceed half of the total who applied. It protects the application; it does not protect the applicants from being identified, which is the criticism made of section 6(2)'s requirement that the membership be shown on the date of the application.

Deemed means treated as, by force of the statute, whether or not it is so in fact. Section 9(4) uses it for unions registered under the repealed Act.

Section 8: what the application must contain

Section 8(1) requires every application for registration to be made to the Registrar electronically or otherwise, and to be accompanied by four things:

• (a) a declaration by affidavit in the prescribed form and manner;
• (b) a copy of the rules of the Trade Union, together with a copy of the resolution by the members adopting those rules;
• (c) a copy of the resolution authorising the applicants to make the application;
• (d) where the Trade Union is a federation or a central organisation of Trade Unions, a copy of the resolution adopted by the members of each of the member Trade Unions, meeting separately, agreeing to constitute the federation or central organisation.

The Explanation to clause (d) puts the same point beyond doubt: for the purposes of that clause, a resolution adopted by the members of the Trade Union means, in the case of a federation or central organisation, the resolution adopted by the members of each of the member Trade Unions meeting separately.

The words "meeting separately" are doing real work. A federation cannot be created by a joint meeting at which delegates from several unions vote together. Each constituent union must decide, in its own meeting, that it agrees to join. That protects the internal democracy of each union against being carried into a federation by a bloc vote.

Section 8(2): unions older than a year. Where the Trade Union has been in existence for more than one year before the application is made, a general statement of the assets and liabilities, in the prescribed form and containing the prescribed particulars, must be delivered to the Registrar with the application.

Why that requirement exists. A body that has been operating for a year has collected money and may owe money. Registration will turn it into a body corporate under section 12, and the members and the Registrar are entitled to know what the corporate body is inheriting.

Section 8(3): the Registrar may ask for more. He may call for further information for the purpose of satisfying himself that the application complies with the Code and that the Trade Union is entitled to registration, and may refuse to register the Trade Union until such information is furnished.

Read the words of that refusal carefully. It is a refusal until the information is furnished. It is a suspension of the process, not a rejection on the merits, and the union cures it by answering.

Section 8(4): deceptive names. If the proposed name is identical with that of an existing registered Trade Union, or in the Registrar's opinion so nearly resembles the name of an existing Trade Union that it is likely to deceive the public or the members of either Trade Union, the Registrar shall require the applicants to alter the name, and shall refuse to register until the alteration has been made.

Three features are examinable. The test has two limbs, identical or nearly resembling. The mischief is deception of the public or the members of either union, so it protects the existing union's members and the incoming union's members alike. And the Registrar's duty is mandatory: the section says "shall", twice.

The same test reappears in section 24(4) for a change of name, where the Registrar shall refuse to register the change on the same ground.

Section 9: registration, the certificate, and cancellation

Section 9(1) and (2): the duty to register, and the certificate

Section 9(1) provides that the Registrar shall, on being satisfied that the Trade Union has complied with all the requirements of Chapter III in regard to registration, register the Trade Union by entering the particulars in a register maintained in the prescribed form.

The duty is mandatory once he is satisfied. He has no residual discretion to refuse a union that meets the requirements because he thinks it undesirable.

Section 9(2): where the Registrar makes an order for registration he shall issue a certificate of registration in the prescribed form, which shall be the conclusive evidence that the Trade Union has been registered under this Code.

Section 9(3) requires him then to enter the name and other particulars in a register maintained in that behalf in the prescribed form.

Section 9(4): the transitional provision

Every Trade Union registered under the Trade Unions Act 1926 and having valid registration immediately before the commencement of this Code shall be deemed to have been registered under this Code.

The proviso attaches a condition. Such a union shall file with the Registrar a statement that the constitution of its executive is in accordance with this Code, along with its rules updated in accordance with section 7, and the Registrar shall amend his records accordingly.

So an existing union does not re-apply. It updates. This is the provision that answers the question every union in India had to ask on 21 November 2025, and it is worked as part of the example in [The Code, and the Day the Law Changed].

Section 9(5): the three grounds of cancellation

The certificate may be withdrawn or cancelled by the Registrar:

• (i) on the application of the Trade Union, verified in the prescribed manner; or
• (ii) on information received by him regarding the contravention by the Trade Union of the provisions of the Code, or the rules made under it, or its constitution or rules; or
• (iii) if he is satisfied that the members in a Trade Union falls below ten per cent. of the total workers or one hundred workers, whichever is less.

Ground (ii) is wider than it first looks, because it covers contravention of the union's own constitution or rules, not only of the Code. A union that has not held the election that section 7(i) requires its rules to provide for is in breach of its own rules, and that is a ground.

Ground (iii) is the enforcement end of section 6(4), the continuing membership obligation. Note that it uses the section 6(2) figure and does not repeat the floor of seven.

The proviso: sixty days, in writing, with the grounds

Provided that not less than sixty days previous notice in writing specifying the grounds on which it is proposed to cancel the certificate of registration of a Trade Union shall be given by the Registrar to the Trade Union before the certificate of registration is cancelled otherwise than on the application of the Trade Union.

Four elements, and each is a mark. The notice must be not less than sixty days; it must be previous, that is before cancellation; it must be in writing; and it must specify the grounds. The only case in which no notice is required is a cancellation on the union's own application, which is ground (i).

Section 9(6): the Registrar shall cancel the certificate where a Tribunal has made an order for cancellation of the registration. Here he has no discretion at all; he is executing an order.

Section 9(7): while cancelling, the Registrar shall record the reasons for doing so and communicate the same in writing to the Trade Union concerned.

Sub-sections (5) and (7) together are what makes an appeal possible. A union that has been told the grounds in advance and given the reasons afterwards has something to appeal against.

Section 10: the appeal to the Tribunal

Section 10(1): any person aggrieved by the refusal of the Registrar to grant registration under section 9, or by the cancellation of a certificate under section 9(5), may within such period as may be prescribed prefer an appeal to the Tribunal.

The proviso allows the Tribunal to entertain an appeal after the prescribed period if the appellant satisfies it that the delay was caused by sufficient reason or unavoidable circumstances.

Section 10(2): the Tribunal may, after giving the parties concerned an opportunity of being heard, either dismiss the appeal, or pass an order directing the Registrar to register the Trade Union and issue a certificate, or set aside the order of cancellation; and it shall forward a copy of its order to the Registrar.

Notice where the appeal goes. Under the repealed Trade Unions Act 1926 an appeal lay to a civil court or a High Court depending on the place. Under the Code it lies to the Industrial Tribunal constituted under section 44, which is defined as "Tribunal" by section 2(zn). The subject has been taken out of the ordinary courts and given to the specialist forum, which is consistent with section 22(2) barring civil courts from Trade Union disputes and with section 97 barring their jurisdiction generally.

Rangaswami v. Registrar of Trade Unions, AIR 1962 Mad 231 is the illustration of a refusal being tested on appeal, and its facts are worked in [What a Trade Union Is: The Definition]. In short: the Registrar refused to register the Madras Raj Bhavan Workers' Union; the members brought a petition under section 11 of the Trade Unions Act 1926, the appeal provision of that Act; and the Madras High Court dismissed it with costs, holding that a trade union presupposes an employer and employees engaged in a trade or business and that the Raj Bhavan carries on no trade or industry. The case shows both that a refusal is challengeable and that the challenge fails where the union is outside the Act. Under the Code the same challenge would go to the Tribunal under section 10 rather than to the High Court.

Section 11: staying on the register

Section 11(1): all communications and notices to a registered Trade Union shall be sent, in the prescribed manner, to the address of the head office of the union as entered in the register maintained by the Registrar.

That is a rule with teeth. Service at the registered address is good service. A union that has moved and not told the Registrar can be validly served at an address it has left.

Section 11(2): the Trade Union shall inform the Registrar if its members fall below ten per cent. of the total workers or one hundred workers, whichever is less.

Section 11(3): the Trade Union shall inform the Registrar of any change in the particulars given in its application for registration and in its constitution or rules, in the prescribed manner.

Sub-section (2) is the uncomfortable one, and it is worth saying plainly why: it obliges the union to report the very fact that is a ground of cancellation under section 9(5)(iii). A union that fails to report is additionally in contravention of the Code, which is itself a ground under section 9(5)(ii).

A worked example

The facts. The Wada Packaging Workers' Union, eight applicants, applies electronically on 4 March. It encloses an affidavit in the prescribed form, a copy of its rules with the resolution adopting them, and a resolution authorising the eight to apply. The union has existed since January of the previous year. Its proposed name is "Wada Packaging Karmachari Sangh", and a registered union at a neighbouring unit is already called "Wada Packaging Kamgar Sangh".

Is the application complete? Not quite. The union has been in existence for more than one year before the application, so section 8(2) required a general statement of assets and liabilities to be delivered with it. The Registrar may call for it under section 8(3) and refuse to register until it is furnished.

The name. Under section 8(4) the Registrar must consider whether the proposed name so nearly resembles the existing one that it is likely to deceive the public or the members of either union. If he forms that opinion, he shall require an alteration and shall refuse to register until it is made. His duty is mandatory, and the union's remedy if it disagrees is the appeal under section 10.

The union alters the name and files the statement. The Registrar is satisfied. Under section 9(1) he shall register it; under section 9(2) he shall issue a certificate, which is conclusive evidence of registration; under section 9(3) he enters the particulars.

Eighteen months later the union has held no election. Its own rules, as section 7(i) requires, provide for the election of office-bearers once in every three years, so no breach has yet occurred. Suppose instead four years pass with no election. The union is now contravening its own rules, which is a ground under section 9(5)(ii).

The Registrar proposes to cancel. He must give not less than sixty days' previous notice in writing specifying the grounds, under the proviso to section 9(5). If he cancels, he must record his reasons and communicate them in writing to the union, under section 9(7).

The union wants to challenge the cancellation. It appeals to the Tribunal under section 10(1), within the prescribed period; if it is late, the proviso allows the Tribunal to entertain the appeal on being satisfied that the delay was caused by sufficient reason or unavoidable circumstances. Under section 10(2) the Tribunal, after hearing the parties, may dismiss the appeal or set aside the cancellation, and forwards a copy of its order to the Registrar.

Suppose instead the Tribunal itself orders the registration cancelled in some other proceeding. Section 9(6) then requires the Registrar to cancel: he has no discretion and the sixty-day notice has no application, because he is executing an order and not forming an opinion.

What this does NOT mean

It does not mean the Registrar may refuse registration on his own view of the merits. Section 9(1) obliges him to register once satisfied that Chapter III's requirements are met. His powers to refuse are the specific ones: until further information is furnished, section 8(3), and until a deceptive name is altered, section 8(4).

It does not mean the certificate proves the union is properly constituted. It is conclusive evidence that the union has been registered, no more. Whether the union is now complying with the Code is a separate question, and section 9(5) exists precisely because a registered union may stop complying.

It does not mean sixty days' notice is required for every cancellation. The proviso excepts a cancellation on the union's own application under ground (i), and section 9(6) cancellation on a Tribunal's order is the execution of an order rather than the Registrar's own decision.

It does not mean an existing union had to re-register in November 2025. Section 9(4) deems it registered, subject to filing the statement and the updated rules.

It does not mean an appeal lies to a civil court. It lies to the Tribunal under section 10, and section 22(2) and section 97 keep civil courts out of this territory generally.

Limits, criticism and amendments

The whole procedure is now electronic-capable, section 8(1) saying "electronically or otherwise", which is a modernisation over the repealed Act.

The appeal has been moved from the courts to the Tribunal. That is defensible, since the Tribunal is the specialist forum, but it depends on Tribunals actually being constituted and functional, which is why section 104(1A), inserted by Act 1 of 2026, had to keep the old forums working in the meantime.

The prescribed period for an appeal is not in the Code. Section 10(1) leaves it to the rules, so a student cannot state a number, and should say so rather than inventing one.

And the duty in section 11(2) is criticised as self-incriminating. A union whose membership has fallen must report the fact, and the fact reported is a ground for cancelling its registration.

Quick revision

• Section 8(1): application to the Registrar, electronically or otherwise, with an affidavit, the rules plus the resolution adopting them, the resolution authorising the applicants, and for a federation or central organisation a resolution of each member union meeting separately.
• Section 8(2): union in existence more than one year, add a statement of assets and liabilities.
• Section 8(3): Registrar may call for further information and refuse until it is furnished. Section 8(4): identical or deceptively similar name, he shall require alteration and shall refuse until made.
• Section 9(1): on being satisfied he shall register. 9(2): certificate is conclusive evidence of registration. 9(3): enter in the register.
• Section 9(4): unions registered under the 1926 Act are deemed registered, on filing a statement that the executive accords with the Code and rules updated to section 7.
• Section 9(5): cancellation on (i) the union's own application; (ii) contravention of the Code, the rules, or the union's own constitution or rules; (iii) membership falling below the section 6(2) figure. Proviso: not less than sixty days' previous notice in writing specifying the grounds, except on the union's own application.
• Section 9(6): cancel where the Tribunal so orders. 9(7): record reasons and communicate them in writing.
• Section 10: appeal to the Tribunal, within the prescribed period, with a proviso for sufficient reason or unavoidable circumstances; the Tribunal may dismiss, direct registration, or set aside cancellation, after hearing the parties.
• Section 11: notices go to the head office as entered in the register; the union must report a fall in membership and any change in its particulars, constitution or rules.

Test yourself

1. What must accompany an application for registration? Under section 8(1), a declaration by affidavit in the prescribed form; a copy of the rules together with a copy of the resolution of the members adopting them; a copy of the resolution authorising the applicants to apply; and, where the union is a federation or central organisation of Trade Unions, a copy of the resolution adopted by the members of each member union meeting separately. Under section 8(2), where the union has been in existence for more than one year, a general statement of its assets and liabilities as well.

2. Why does section 8(1)(d) insist that the member unions meet separately? Because a federation must be constituted by the decision of each constituent union taken in its own meeting, not by a joint meeting at which delegates vote together. The requirement protects the internal democracy of each union against being carried into a federation by a bloc vote, and the Explanation to the clause puts it beyond doubt.

3. What is the legal effect of a certificate of registration? Section 9(2) makes it conclusive evidence that the Trade Union has been registered under the Code. That means no proceeding may go behind it to dispute the fact of registration. It does not certify continuing compliance, which is why section 9(5) provides for cancellation.

4. On what grounds, and with what procedure, may a certificate be cancelled? Section 9(5) gives three grounds: the union's own verified application; information of a contravention by the union of the Code, the rules made under it, or its own constitution or rules; and the Registrar's satisfaction that membership has fallen below ten per cent. of the total workers or one hundred, whichever is less. Except where the union itself applied, the proviso requires not less than sixty days' previous notice in writing specifying the grounds. On cancelling, section 9(7) requires the Registrar to record his reasons and communicate them in writing. Section 9(6) separately obliges him to cancel where a Tribunal has so ordered.

5. A Registrar refuses registration. What is the remedy, and to whom does it lie? An appeal under section 10(1) to the Tribunal, that is to the Industrial Tribunal constituted under section 44, by any person aggrieved, within the prescribed period; the proviso allows the Tribunal to entertain a late appeal where the delay was caused by sufficient reason or unavoidable circumstances. Under section 10(2), after giving the parties an opportunity of being heard, the Tribunal may dismiss the appeal or direct the Registrar to register the union and issue a certificate, and forwards a copy of its order to the Registrar. The illustration is Rangaswami v. Registrar of Trade Unions, AIR 1962 Mad 231, where the refusal was challenged and upheld, though under the repealed Act that challenge lay to the High Court.

6. A registered union's membership falls below the required figure. What must it do, and what may follow? Section 11(2) requires the union itself to inform the Registrar. The fall is a ground of cancellation under section 9(5)(iii), and a failure to report is a contravention of the Code and therefore a further ground under section 9(5)(ii). Before cancelling on either ground the Registrar must give not less than sixty days' previous notice in writing specifying the grounds, and on cancelling must record and communicate his reasons; the union may appeal to the Tribunal under section 10.

Common seal is the corporate body's formal signature, historically an actual seal pressed into wax.

Movable and immovable property: immovable property is land and things attached to the earth; movable property is everything else.

Office-bearer, section 2(zb), includes any member of the executive but does not include an auditor.

Moral turpitude is conduct that is inherently base or depraved, as distinct from an offence that is merely technical or regulatory.

Office of profit is a position under the Union or a State carrying remuneration.

Casual vacancy is a vacancy arising between elections, for instance on a death or resignation.

Section 12: what the union becomes

Every registered Trade Union shall be a body corporate by the name under which it is registered, and shall have perpetual succession and a common seal with power to acquire and hold both movable and immovable property and to contract, and shall by the said name sue and be sued.

Six attributes are packed into that sentence, and it is worth taking them one at a time because an exam answer that lists them scores.

Two consequences deserve to be spelt out, because they are what a problem question turns on.

The funds are the union's, not the members'. A member who resigns takes nothing with him. That is why section 25(2) has to provide expressly for what happens to the funds on dissolution: if the rules do not provide for their distribution, the Registrar divides them among the members in the prescribed manner. Without perpetual succession that provision would be unnecessary; with it, it is indispensable.

Suing in its own name protects the officers. Where a union is sued for an act done in furtherance of an industrial dispute, section 16(1) protects the union and its office-bearers and members. But even without immunity, incorporation means the plaintiff's judgment is against the union's assets rather than against the secretary's house.

Section 13: the four Acts that do not apply

The provisions of the following Acts, namely:

(a) the Societies Registration Act, 1860 (21 of 1860);

(b) the Co-operative Societies Act, 1912 (2 of 1912);

(c) the Multi-State Co-operative Societies Act, 2002 (39 of 2002);

(d) the Companies Act, 2013 (18 of 2013); and

(e) any other corresponding law relating to co-operative societies for the time being in force in any State,

shall not apply to any registered Trade Union and the registration of any such Trade Union under any of the aforementioned Acts shall be void.

The section has two limbs and the second is the sharp one. The first says those Acts do not apply. The second says that registration of a registered Trade Union under any of them shall be void.

Why Parliament bothered. Every one of those statutes is a general law for associations of persons, and a trade union answers each of their descriptions well enough to be arguable. A union is a society of persons associated for a common object; it collects subscriptions and pays benefits like a co-operative; and it is an association of more than a handful of persons carrying on an activity, which brought the older company law's provisions about unregistered associations into view.

If a union could be registered under one of those Acts, the whole of Chapter III could be circumvented in either direction. An employer-sponsored body could take the form of a society and claim to be the workers' organisation without meeting the section 6 membership test. Conversely a genuine union could be dragged into company or co-operative regulation designed for quite different bodies.

Section 13 therefore makes the Code the exclusive route. A registered Trade Union is a body corporate under section 12, not under the Companies Act, and it is governed by this Code alone.

Sections 19 and 20: the rights of members

Section 19: the right to inspect. The books of account of a registered Trade Union and the list of members shall be open to inspection by an office-bearer or member of the union at such times as may be provided for in the rules.

Two limits are built in. The right is given to office-bearers and members, not to the public or the employer. And it is exercisable "at such times as may be provided for in the rules", which is why section 7(d) requires the rules to provide for the list of members and adequate facilities for the inspection thereof, and section 7(j) requires them to provide adequate facilities for inspection of the account books. The Code confers the right; the rules make it workable.

Section 20: minors. Any person who has attained the age of fourteen years and is employed in a non-hazardous industry may be a member of a registered Trade Union, subject to any rules of the union, and may, subject as aforesaid, enjoy all the rights of a member and execute all instruments and give all acquittances necessary to be executed or given under the rules.

Read the conditions, because there are three. The person must be at least fourteen; the industry must be non-hazardous; and membership remains subject to the union's own rules, which may set a higher age.

And read the consequence, which is the point of the section. A minor member is not a second-class member. He enjoys all the rights of a member, and he has the capacity to execute the instruments and give the receipts that membership requires, notwithstanding the ordinary law about a minor's contractual capacity. Without the section, a fourteen-year-old member could not validly give a receipt for a benefit paid to him.

This section must be read with Article 24 of the Constitution, which prohibits the employment of a child below fourteen years in any factory or mine or in any other hazardous employment. Section 20's two conditions, fourteen years and a non-hazardous industry, track that prohibition.

Section 21: who may not be an office-bearer

Section 21(1) disqualifies a person for being chosen as, and for being, a member of the executive or any other office-bearer of a 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 an offence involving moral turpitude and sentenced to imprisonment, unless a period of five years has elapsed since his release;
• (iii) the Tribunal has directed that he shall be disqualified for being chosen or for being an office-bearer of a Trade Union for a period specified in the direction.

Note the double phrase "for being chosen as, and for being". The disqualification bites both at election and continuously afterwards. A person who is convicted while in office becomes disqualified then and there.

Ground (ii) has three cumulative elements and students routinely drop one: a conviction by a court in India; of an offence involving moral turpitude; and a sentence of imprisonment. A fine alone does not disqualify. And the disqualification is not permanent: it lifts five years after release.

Section 21(2) adds a separate disqualification: no member of the Council of Ministers, and no person holding an office of profit in the Union or a State, shall be a member of the executive or other office-bearer of a Trade Union. There is an important exception inside the parenthesis: an engagement or employment in an establishment or industry with which the Trade Union is connected is not an office of profit for this purpose.

That exception is what makes the sub-section workable. A worker employed in a State-run undertaking holds his job from the State. Without the parenthesis he could not be an office-bearer of his own union.

And note the age contrast with section 20, because it is a favourite short question. Fourteen to be a member. Eighteen to be an office-bearer.

Section 23: how many outsiders may hold office

This section restricts the proportion of office-bearers who are not themselves workers in the establishment or industry concerned. It has two limbs with different arithmetic.

Section 23(1), the unorganised sector. Not less than one-half of the total number of office-bearers of every registered Trade Union in an unorganised sector shall be persons actually engaged or employed in an establishment or industry with which the union is connected.

A proviso allows the appropriate Government, by special or general order, to declare that the section shall not apply to any Trade Union or class of Trade Unions specified in the order.

An Explanation defines "unorganised sector" for this sub-section as any sector which the appropriate Government may, by notification, specify.

Section 23(2), everywhere else. Save as provided in sub-section (1), all office-bearers of a registered Trade Union, except not more than one-third of the total number of the office-bearers or five, whichever is less, shall be persons actually engaged or employed in the establishment or industry with which the union is connected.

Work the arithmetic, because "whichever is less" appears again and is again reversed by students.

So the number of outsiders is capped at five, however large the executive.

The Explanation to section 23(2) is the provision to remember, and it connects this chapter to the last: for the purposes of the sub-section, an employee who has retired or has been retrenched shall not be construed as an outsider for the purpose of holding office in a Trade Union.

That Explanation and Bokajan point the same way. In Bokajan Cement Corporation Employees' Union v. Cement Corporation of India Ltd., AIR 2004 SC 245, the Supreme Court allowed the union's appeal and held that the provision requiring the rules to provide for admission of members actually engaged or employed in the industry governs admission and not cessation, so that in the absence of a provision in the Act or in the union's own constitution a member does not cease to be a member on ceasing to be employed. That case was decided under the Trade Unions Act 1926, which section 104(1)(a) repealed on 21 November 2025, and the Code's section 7(e) is drawn the same way. The Explanation to section 23(2) now says expressly, for office-holding, what Bokajan reasoned for membership: the man who has lost his job is not thereby an outsider to his union.

Why the law tolerates outsiders at all is worth a sentence, because MU has asked it. A workforce that is illiterate, or in fear of dismissal, may have nobody within it able to negotiate, keep accounts or conduct litigation. Permitting a limited number of outsiders, typically lawyers or full-time union organisers, supplies that capacity. The criticism is the mirror image: outsiders may have political interests of their own, which is the phenomenon the Supreme Court described in Balmer Lawrie and which is worked in [Recognition: The Negotiating Union and Negotiating Council].

A worked example

The facts. The Wada Packaging Workers' Union is registered. Its executive has twelve members. Two of them are practising advocates who have never worked at the unit; one is Sudhir, a worker retrenched last year; one is Farhan, aged seventeen, employed at the unit; and one is Anil, convicted three years ago of an offence involving moral turpitude and sentenced to four months' imprisonment, released two years and eight months ago. The unit is not in a sector notified as unorganised.

The outsider arithmetic. Section 23(2) applies. One-third of twelve is four; five is five; whichever is less is four. So up to four office-bearers may be outsiders and at least eight must be persons actually engaged or employed in the establishment or industry.

Is Sudhir an outsider? No. The Explanation to section 23(2) provides that an employee who has retired or has been retrenched shall not be construed as an outsider for the purpose of holding office. So the outsiders are the two advocates, which is within the permitted four.

Farhan, aged seventeen. He may be a member: section 20 permits any person of fourteen or more employed in a non-hazardous industry to be a member and to enjoy all the rights of a member. He may not be an office-bearer: section 21(1)(i) disqualifies a person who has not attained eighteen. His election to the executive is bad, and he must be replaced, the rules having to provide for the filling of casual vacancies under section 7(i).

Anil. Section 21(1)(ii) disqualifies a person convicted by a court in India of an offence involving moral turpitude and sentenced to imprisonment, unless a period of five years has elapsed since his release. Two years and eight months have elapsed. He is disqualified, and the words "for being chosen as, and for being" mean he cannot continue in office either. He becomes eligible again five years after his release.

A member asks to see the accounts. Section 19 gives an office-bearer or member the right to inspect the books of account and the list of members, at such times as the rules provide. The union must have such rules, because section 7(d) and (j) require them.

The union wants to buy a small office. It may. Section 12 gives it power to acquire and hold immovable property, in its own registered name, and the property will not be affected by changes in membership because the union has perpetual succession.

The union's treasurer suggests also registering it as a society, to look more respectable to a bank. He must be told plainly: section 13 provides that the Societies Registration Act 1860 does not apply to a registered Trade Union and that registration under it shall be void.

What this does NOT mean

It does not mean the union cannot be dissolved. Perpetual succession means membership changes do not end its existence. Section 25 provides how it is dissolved, and section 9(5) how its registration is cancelled.

It does not mean members own the union's property. They do not. That is why section 25(2) has to provide for the funds to be divided on dissolution, by the rules or, failing that, by the Registrar in the prescribed manner.

It does not mean a fourteen-year-old can be a secretary. Fourteen is the age for membership under section 20; eighteen is the age for office under section 21(1)(i).

It does not mean every conviction disqualifies. Section 21(1)(ii) requires a conviction by a court in India of an offence involving moral turpitude and a sentence of imprisonment, and the disqualification ends five years after release.

It does not mean outsiders are forbidden. They are limited: to not more than half in the unorganised sector under section 23(1), and elsewhere to not more than one-third or five, whichever is less, under section 23(2).

It does not mean the right of inspection is open to anyone. Section 19 gives it to an office-bearer or a member.

Limits, criticism and amendments

The outsider limits are the most debated provision in the Chapter. Restricting outsiders is defended as keeping unions in the hands of the workers whose interests they exist to serve, and attacked as depriving weak workforces of the professional help they most need. The Code's answer is a compromise: a stricter proportion where capacity is likely to be scarce, the unorganised sector, and a hard cap of five elsewhere.

The Explanation to section 23(2) is a genuine improvement over a position in which a retrenched worker was arguably an outsider in his own union at the very moment he most needed it.

Section 13's list will date. It names the Co-operative Societies Act 1912 and the Companies Act 2013 by year, and clause (e) catches corresponding State co-operative laws, but a new general statute for associations would need to be added by amendment.

And section 21(2) is drawn widely. Excluding every holder of an office of profit under the Union or a State from union office is a substantial restriction, softened only by the parenthesis that preserves employment in the establishment or industry the union is connected with.

Quick revision

• Section 12: a registered Trade Union is a body corporate by its registered name, with perpetual succession, a common seal, power to acquire and hold movable and immovable property, power to contract, and it sues and is sued in that name.
• Section 13: the Societies Registration Act 1860, Co-operative Societies Act 1912, Multi-State Co-operative Societies Act 2002, Companies Act 2013 and corresponding State co-operative laws do not apply, and registration under any of them is void.
• Section 19: books of account and the list of members open to inspection by an office-bearer or member, at the times the rules provide.
• Section 20: fourteen years and a non-hazardous industry to be a member, with all the rights of a member and capacity to execute instruments and give acquittances.
• Section 21(1): disqualified for being chosen as and for being an office-bearer if under eighteen; if convicted in India of an offence involving moral turpitude and sentenced to imprisonment, until five years after release; or if the Tribunal has so directed. 21(2): no Minister and no holder of an office of profit, but employment in the establishment or industry concerned is excepted.
• Section 23(1), unorganised sector: not less than one-half insiders; proviso allows exemption by order; the sector is what the appropriate Government notifies. 23(2), elsewhere: outsiders limited to one-third or five, whichever is less. Explanation: a retired or retrenched employee is NOT an outsider.

Test yourself

1. What does a union gain by being registered? List the attributes conferred by section 12. It becomes a body corporate by the name under which it is registered, with perpetual succession, a common seal, power to acquire and hold both movable and immovable property, power to contract, and the capacity to sue and be sued in that name. Practically this means the funds and property are the union's rather than the members', the union survives every change in its membership, and litigation is by and against the union instead of by and against named individuals.

2. Why does section 13 exist, and what is the effect of registering a trade union under the Companies Act 2013? It exists because a trade union answers the general description of a society, a co-operative and an association of persons well enough for those statutes to be arguable, and if a union could be registered under one of them the Chapter III scheme, in particular the membership test in section 6, could be circumvented. Section 13 makes the Code the exclusive route: those Acts do not apply to a registered Trade Union, and registration under any of them is void.

3. Distinguish the age for membership from the age for office. Section 20 permits a person who has attained fourteen years and is employed in a non-hazardous industry to be a member of a registered Trade Union, subject to the union's rules, and to enjoy all the rights of a member. Section 21(1)(i) disqualifies a person who has not attained eighteen years for being chosen as, and for being, a member of the executive or any other office-bearer.

4. A union's executive has fifteen members. How many may be outsiders, and does a retrenched worker count as one? Under section 23(2) the permitted outsiders are not more than one-third of the total or five, whichever is less. One-third of fifteen is five and five is five, so the permitted number is five, and at least ten must be persons actually engaged or employed in the establishment or industry. A retrenched worker does not count as an outsider: the Explanation to section 23(2) provides that an employee who has retired or has been retrenched shall not be construed as an outsider for the purpose of holding office.

5. When does a criminal conviction disqualify a person from union office? Under section 21(1)(ii), when he has been convicted by a court in India of an offence involving moral turpitude and sentenced to imprisonment, and the disqualification lasts until five years have elapsed since his release. All three elements are required, so a fine without imprisonment does not disqualify, and the bar is temporary rather than permanent. The words "for being chosen as, and for being" mean the disqualification operates both at election and while in office.

6. Can a member of a State Council of Ministers hold office in a trade union? Can a worker in a State-owned mill? A member of the Council of Ministers cannot: section 21(2) excludes him, as it excludes any person holding an office of profit in the Union or a State. A worker in a State-owned mill can, because the parenthesis in section 21(2) excepts an engagement or employment in an establishment or industry with which the Trade Union is connected, and without that exception no worker in a public undertaking could hold office in his own union.

Some words this chapter uses

General fund is the union's ordinary fund, made up of the subscriptions and other receipts, out of which its ordinary work is paid for.

Prescribed, defined in section 2(zc), means prescribed by rules made under the Code. When a section says "as may be prescribed", the detail is in delegated legislation and not in the Act.

Separate fund is the second fund permitted by section 15(2), constituted from contributions separately levied for or made to it.

Civic and political interests is the expression section 15(2) uses for what the separate fund may promote. "Civic" is wider than "political": it reaches the members' interests as citizens, for example in a municipal matter, as well as in party politics.

Disability here means a legal disadvantage, something a member is barred from doing.

Levy means a contribution demanded from members, as distinct from the ordinary subscription.

Section 15(1): the general fund

The general funds of a registered Trade Union shall not be spent on any objects other than such objects as may be prescribed.

This is a prohibition, not a permission, and the drafting shows it: the fund "shall not be spent on any objects other than" the prescribed ones. Anything not prescribed is forbidden.

Where the permitted objects actually live. They are in the rules made under the Code, not in the section. This is a real change of technique from the repealed Trade Unions Act 1926, which printed a list of permitted objects in the section itself, and it has three consequences a student should be able to state.

First, the answer to "what may the general fund be spent on?" is "the objects prescribed by the rules made under the Code". That is the accurate answer, and it is the one to give. Reciting the old statutory list as though it were section 15 is the error this chapter exists to prevent.

Second, the union's own rules must reproduce those objects. Section 7(c) requires the rules of a Trade Union, as a condition of registration, to provide for the whole of the purposes for which the general funds shall be applicable, and adds that all of which purposes shall be purposes to which such funds are lawfully applicable under this Code. So the rules must state the purposes, and may not state a purpose the Code does not allow. The union cannot enlarge its own spending power by writing a wider rule.

Third, spending outside those objects is a contravention with a serious consequence. It is a contravention of the Code and of the union's own rules, and section 9(5)(ii) makes contravention of either a ground on which the Registrar may cancel the certificate of registration, after not less than sixty days' previous notice in writing specifying the grounds.

Three other provisions guard the same money. Section 7(f) requires the rules to provide for the payment of subscriptions. Section 7(g) requires them to provide the conditions under which a member is entitled to a benefit and under which a fine or forfeiture may be imposed. Section 7(j) requires them to provide for the safe custody of the funds, an annual audit in the prescribed manner and by the prescribed person, and adequate facilities for the inspection of the account books by office-bearers and members. Section 19 then gives the individual member the right to inspect the books of account and the list of members, at the times the rules provide, and section 26(1)(a) requires an audited annual general statement of receipts, expenditure, assets and liabilities to be sent to the Registrar.

Section 15(2): the separate fund

A registered Trade Union may constitute a separate fund, from contributions separately levied for or made to that fund, from which payments may be made, for the promotion of the civic and political interests of its members, in furtherance of such objects as may be prescribed.

Four features, and each of them is examinable.

It is permissive. "May constitute". No union is obliged to have a political fund.

It must be separate. Not a separate ledger entry in the general fund but a separate fund.

Its money must be separately raised. The words are "from contributions separately levied for or made to that fund". Two routes are contemplated: a levy demanded for the fund, and voluntary payments made to it. What is excluded is a transfer from the general fund, because that money came from subscriptions paid by members who may not support the object.

Its purpose is the promotion of the civic and political interests of its members, in furtherance of such objects as may be prescribed. Notice that even this fund is not at large: the objects are prescribed.

Section 15(3): the protection of the dissenting member

This is the sub-section to learn by heart, because it is a favourite short note and because every clause of it does separate work.

No member shall be compelled to contribute to the fund constituted under sub-section (2) and a member who does not contribute to the said fund shall not be excluded from any benefits of the Trade Union, or placed in any respect either directly or indirectly under any disability or at any disadvantage as compared with other members of the Trade Union (except in relation to the control or management of the said fund) by reason of his not contributing to the said fund; and contribution to the said fund shall not be made a condition for admission to the Trade Union.

Break it into its four rules.

The single exception is inside the parenthesis, and it is fair. A non-contributor may be excluded from the control or management of the said fund. He has not paid into it, so he does not vote on how it is spent. He loses nothing else.

The words "directly or indirectly" are the ones that make the sub-section effective. A union cannot achieve by practice what it may not do by rule. Quietly leaving non-contributors off the list of members the union will represent is an indirect disadvantage and is caught.

Section 15(4): subscriptions

The subscriptions payable by the members of the Trade Union shall be such as may be prescribed.

Short, and again the technique is prescription by rules rather than a figure in the Act. Section 7(f) separately requires the union's own rules to provide for the payment of a subscription by members "from such members and others, as may be prescribed".

The link to section 17 that most notes miss

Section 15 looks like a chapter about money. It is also, indirectly, a chapter about criminal liability, and the connection is worth making explicitly because it is the kind of link that turns a good answer into a very good one.

Section 17 provides that no office-bearer or member of a registered Trade Union shall be liable to punishment under section 120B(2) of the Indian Penal Code in respect of any agreement made between the members for the purpose of furthering "any such object of the Trade Union as is specified in section 15", unless the agreement is an agreement to commit an offence.

So the objects in section 15 are the measure of the immunity. An agreement to further one of them is protected from the charge of criminal conspiracy; an agreement to further something outside them is not. That is why the prescribed objects matter beyond bookkeeping, and it is why the immunity chapter, [Immunity from Criminal Conspiracy], has to send the reader back here.

A worked example

The facts. The Wada Packaging Workers' Union has 90 members paying a monthly subscription. Its general secretary proposes four things at the annual general body meeting.

Proposal one: pay the legal fees of a member whose dismissal the union is contesting before the Tribunal. This is the union's ordinary work. Whether it may be paid from the general fund depends on whether it falls within the objects prescribed under section 15(1) and reproduced in the union's rules under section 7(c). Contesting members' dismissals is the paradigm case of a union's purpose, and the rules should state it. If the rules do not, the answer is to amend the rules under section 7(k) and inform the Registrar under section 11(3), not to make the payment and hope.

Proposal two: lend two lakh rupees from the general fund to a member's brother to start a business. This is outside anything a union's general fund is for. It is a contravention of section 15(1) and of the union's own rules, and section 9(5)(ii) makes contravention of either a ground for cancelling the registration, subject to the sixty-day notice in the proviso. The proposal must be refused.

Proposal three: transfer fifty thousand rupees from the general fund to support a candidate at the municipal election. This fails for two separate reasons and a good answer gives both. It is not a permitted object of the general fund under section 15(1). And it defeats the separation section 15(2) requires, because the political fund must be constituted "from contributions separately levied for or made to that fund", not from a transfer of money subscribed for general purposes.

Proposal four: constitute a political fund by a levy of thirty rupees a month, and expel any member who refuses to pay it. The fund is lawful: section 15(2) permits a separate fund from contributions separately levied, for the promotion of the civic and political interests of members, in furtherance of prescribed objects. The expulsion is unlawful in every respect. Section 15(3) says no member shall be compelled to contribute; a non-contributor shall not be excluded from any benefits; and he shall not be placed directly or indirectly under any disability or at any disadvantage compared with other members.

A member, Meera, declines to pay the levy. She keeps her membership, her strike pay, her right to be represented, her vote at the general body meeting and her right under section 19 to inspect the books. The only thing she loses is any part in the control or management of the political fund, which is the exception in the parenthesis.

Six months later the union quietly stops putting non-contributors' grievances forward. That is an indirect disadvantage imposed by reason of not contributing, and section 15(3) forbids it in those very words. It is a contravention of the Code and so a ground under section 9(5)(ii).

A new worker is told he may join only if he agrees to the political levy. Section 15(3) closes with the words "and contribution to the said fund shall not be made a condition for admission to the Trade Union". The condition is void.

What this does NOT mean

It does not mean a union may not engage in politics. It may. Section 15(2) expressly contemplates the promotion of the civic and political interests of its members. What it may not do is fund that activity out of the general subscriptions or coerce members into paying for it.

It does not mean the general fund and the political fund are equally regulated. The general fund is limited to prescribed objects and is audited and reported under sections 7(j) and 26. The political fund is separately raised, and the protection attached to it is the protection of the member who refuses to pay, not a set of spending limits of the same kind.

It does not mean "political" only means party politics. The expression in section 15(2) is "civic and political interests", which reaches matters affecting members as citizens.

It does not mean the objects are printed in the section. They are prescribed by rules. A student who writes out the old list from the Trade Unions Act 1926 is describing a repealed Act.

It does not mean a non-contributor has a say in the political fund. He does not, and that is the one lawful consequence of not paying.

Limits, criticism and amendments

The move from a printed list to prescription by rules is the biggest change here, and it cuts both ways. It lets the permitted objects be updated without amending the Code, which is sensible. It also moves a matter that determines the reach of a criminal immunity, through section 17, out of the statute and into delegated legislation, which is a real objection.

Section 15(3) is often described as a complete protection and it is not quite. It protects the member from compulsion, from exclusion from benefits and from disability or disadvantage. It does not protect him from the ordinary social pressure of a small workplace, and enforcing it requires him to complain, which identifies him.

And the separation of funds depends on honest bookkeeping. The guards are the audit and inspection requirements in section 7(j), the member's right of inspection in section 19, and the annual audited statement to the Registrar under section 26(1)(a). Those are the provisions to cite when asked how the separation is enforced.

Quick revision

• Section 15(1): the general funds shall not be spent on any objects other than such objects as may be prescribed. The objects are in the rules, not in the section.
• Section 7(c): the union's rules must state the whole of the purposes for which the general funds are applicable, and every one must be lawfully applicable under the Code. The rules cannot enlarge the Code.
• Section 15(2): a union may constitute a separate fund, from contributions separately levied for or made to it, for the promotion of the civic and political interests of its members, in furtherance of prescribed objects.
• Section 15(3): no compulsion to contribute; a non-contributor is not excluded from any benefits; not placed directly or indirectly under any disability or disadvantage; and contribution is not a condition of admission. The one exception: he has no part in the control or management of that fund.
• Section 15(4): subscriptions are as prescribed.
• Guards on the money: 7(f) subscriptions, 7(g) benefits, fines and forfeitures, 7(j) safe custody, annual audit and inspection facilities, 19 the member's right of inspection, 26(1)(a) the audited annual statement to the Registrar.
• Sanction: spending outside the objects contravenes the Code and the rules, a ground for cancellation under section 9(5)(ii), subject to sixty days' notice.
• The link to section 17: the criminal immunity covers an agreement to further "any such object of the Trade Union as is specified in section 15", so these objects also measure that immunity.

Test yourself

1. On what may the general funds of a registered Trade Union be spent? Only on such objects as may be prescribed. Section 15(1) provides that the general funds shall not be spent on any objects other than those, and section 2(zc) defines "prescribed" as prescribed by rules made under the Code. The union's own rules must, under section 7(c), state the whole of the purposes for which the general funds are applicable, all of which must be purposes to which the funds are lawfully applicable under the Code, so the rules may reproduce but not enlarge the permitted objects.

2. What is the political fund, and how must it be raised? It is the separate fund a registered Trade Union may constitute under section 15(2) for the promotion of the civic and political interests of its members, in furtherance of prescribed objects. It must be constituted from contributions separately levied for or made to that fund, so it cannot be funded by a transfer out of the general fund, whose subscriptions were paid for general purposes.

3. A union's rules provide that a member who does not pay the political levy shall not receive strike pay. Is the rule valid? No. Section 15(3) provides that a member who does not contribute to the political fund shall not be excluded from any benefits of the Trade Union, nor placed in any respect directly or indirectly under any disability or at any disadvantage as compared with other members by reason of his not contributing. Withholding strike pay is exclusion from a benefit and the rule is bad.

4. What is the only disadvantage a non-contributing member may lawfully suffer? Exclusion in relation to the control or management of the political fund. That is the sole exception, stated in the parenthesis in section 15(3). He keeps every other right and benefit of membership.

5. May a union require a new member to join the political fund as a condition of admission? No. Section 15(3) ends with the express words that contribution to that fund shall not be made a condition for admission to the Trade Union.

6. Why does section 15 matter to the immunity from criminal conspiracy? Because section 17 measures that immunity by section 15. It protects an office-bearer or member from punishment under section 120B(2) of the penal law in respect of an agreement made between the members for the purpose of furthering "any such object of the Trade Union as is specified in section 15", unless the agreement is one to commit an offence. So the objects that define what the general fund may be spent on also define how far the protection from a conspiracy charge extends.

Held. The appeal was dismissed. Reviewing the scheme of the 1971 Act, the Court explained why recognition exists. On the advent of industrial revolution, large units concentrated workmen at one place under one employer. The trade union movement representing organised labour developed as an adjunct of political parties, and every political party, with a view to controlling vote banks, set up its labour wings; the combination and fragmentation of political parties therefore had a pernicious effect on trade unions, and the multiplicity of parties spilled over into a multiplicity of unions seeking to represent workmen in one undertaking. The consequence was inter-union and intra-union rivalry threatening the peaceful working of the undertaking, each union trying to overreach its rival by making occasionally untenable demands, leading to conflict and confrontation which disturbed industrial peace and directly affected production. A need was therefore felt for the concept of a recognised union where multiple unions seek to represent workmen, and there was near unanimity, including from the National Commission on Labour, that such a union should be clothed with the powers of sole bargaining agent; the only question was the method of ascertaining which of the rival unions should have that status, and it was agreed that the union representing the largest number of workmen in the undertaking should acquire it, as being in tune with industrial democracy.

Why it matters. Twice over for a Mumbai student. It is the Supreme Court's own explanation of why a legal system picks one union to bargain, which is exactly what section 14 of the Code now does nationally; and it was decided on the Maharashtra Act that still governs recognition and unfair labour practices in this State.

Some words this chapter uses

Recognition means the employer's obligation to treat a particular union as the body it negotiates with. It is not the same as registration.

Negotiating union, defined together with negotiating council in section 2(z), is the union recognised under section 14 for negotiating with the employer.

Sole negotiating union is the union recognised under section 14(2) or (3) as the only one the employer negotiates with.

Negotiating council is the body constituted under section 14(4) where no union has the required support, made up of representatives of the qualifying unions.

Muster roll is the employer's register of the workers employed. Section 14(3) and (4) measure support against the workers on the muster roll of the industrial establishment.

Verified in such manner as may be prescribed means the support has to be established by a procedure the rules lay down, not merely asserted by the union.

Sole bargaining agent is the expression the Supreme Court used in Balmer Lawrie for a union clothed with the exclusive right to represent the workmen.

Section 14, sub-section by sub-section

14(1): the duty to have one

There shall be a negotiating union or a negotiating council, as the case may be, in an industrial establishment having registered Trade Union for negotiating with the employer of the industrial establishment, on such matters as may be prescribed.

Two things are established at once. There shall be such a body wherever there is a registered Trade Union in the establishment, so the machinery is compulsory and not optional. And what it negotiates about is prescribed by the rules, so the Code does not itself list the negotiable matters.

14(2): one union in the establishment

Where only one Trade Union of workers registered under the provisions of this Chapter is functioning in an industrial establishment, then, the employer of such industrial establishment shall, subject to such criteria as may be prescribed, recognise such Trade Union as sole negotiating union of the workers.

The employer "shall" recognise. There is no discretion, subject only to the prescribed criteria. Notice also that the union must be functioning in the establishment and registered under this Chapter.

14(3): more than one union, and one of them has 51 per cent.

If more than one Trade Union of workers registered under this Code are functioning in an industrial establishment, then, the Trade Union having fifty-one per cent. or more workers on the muster roll of that industrial establishment, verified in such manner as may be prescribed, supporting that Trade Union shall be recognised by the employer of the industrial establishment, as the sole negotiating union of the workers.

The threshold is fifty-one per cent. or more, measured against the workers on the muster roll and not against union membership, and it must be verified in the prescribed manner.

Support, not membership. The sub-section speaks of workers "supporting that Trade Union". A worker may support a union in a verification exercise without being a subscribing member.

14(4): more than one union, and none has 51 per cent.

Where more than one registered Trade Union is functioning and none has fifty-one per cent. or more support verified as prescribed, the employer shall constitute a negotiating council consisting of the representatives of those registered Trade Unions which have the support of not less than twenty per cent. of the total workers on the muster roll, so verified, and such representation shall be of one representative for each twenty per cent. and for the remainder after calculating the membership on each twenty per cent.

The arithmetic needs an example, because the closing words are compressed. Take an establishment of 1,000 workers, so each 20 per cent. is 200.

Two rules produce that table. A union is in the council only if it has not less than twenty per cent.; C, on 19 per cent., is out. A union that qualifies gets one representative for each full twenty per cent. and one for the remainder.

14(5): how the council decides

Where any negotiation on the matters referred to in sub-section (1) is held between an employer and a negotiating council constituted under sub-section (4), consequent upon such negotiation, any agreement is said to be reached, if it is agreed by the majority of the representatives of the Trade Unions in such negotiating council.

A majority of the representatives, not of the unions and not of the workers. On the table above the council has five representatives, so three of them agreeing makes an agreement. Union A alone, with three of the five, can carry it.

14(6): how long recognition lasts

Any recognition under sub-section (2) or (3), or a negotiating council constituted under sub-section (4), is valid for three years from the date of recognition or constitution, or such further period not exceeding five years in total as may be mutually decided by the employer and the Trade Union.

Read the arithmetic of that carefully, because it is easy to misstate. The base period is three years. It may be extended by mutual decision, and the total may not exceed five years. So the maximum extension is two further years, and it requires agreement on both sides.

Three years is also the period in section 7(i), which requires the rules to provide for the election of office-bearers once in every three years. The two periods are deliberately aligned.

14(7): facilities

The facilities to be provided by the industrial establishment to a negotiating union or negotiating council shall be such as may be prescribed.

Section 27: recognition at the Central and State level

Section 14 works inside a single industrial establishment. Section 27 does something different: it lets a union or federation be recognised as a Central Trade Union or a State Trade Union.

Section 27(1): where the Central Government is of opinion that it is necessary or expedient that a Trade Union or federation of Trade Unions be recognised as a Central Trade Union at the Central level, it may recognise it in such manner and for such purpose as may be prescribed; and any dispute in relation to such recognition shall be decided by such authority in such manner as the Central Government prescribes.

Section 27(2) makes identical provision for a State Government and a State Trade Union.

What this recognition is for. It is not bargaining with an employer. It is status at the level of the country or the State, which is what determines whom the Government consults, and who sits in the tripartite bodies described in [The ILO's Influence on Indian Labour Legislation]. The purposes are prescribed rather than listed in the section.

Note that the power is discretionary in both sub-sections, "may recognise", and that the trigger is the Government's own opinion of what is necessary or expedient.

Registration and recognition distinguished

This table answers MU's topic 1.3 in one place, and it is worth reproducing in an answer.

The Maharashtra position, which a Mumbai student must know

Section 104(1) of the Code repeals three Acts and all three are central: the Trade Unions Act 1926, the Industrial Employment (Standing Orders) Act 1946 and the Industrial Disputes Act 1947. The Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act 1971, on which Balmer Lawrie was decided, is a State Act and is not in that list.

That Act did, at State level and decades earlier, what section 14 now does nationally. Its section 19 provides for the recognition of a union satisfying stated conditions, and its section 20 sets out the rights of a recognised union, including by section 20(2)(b) the exclusive right to represent the workmen of an undertaking in certain proceedings, with the decision binding on all employees, while denying that right to an individual workman except where the legality or propriety of a dismissal, discharge, removal, retrenchment, termination or suspension is under consideration.

In Balmer Lawrie the Supreme Court upheld that scheme against a constitutional challenge brought by an unrecognised union, and dismissed the appeal.

What a student should say, and should not say. Say that Maharashtra has had statutory recognition since 1971, that Balmer Lawrie upheld it, that the Code has now introduced recognition nationally through section 14, and that the 1971 Act is a State law untouched by section 104(1). Do not assert how the two operate together in any given case: that is a question of repugnancy under Article 254 of the Constitution which turns on the precise provisions and has not been settled here.

A worked example

The facts. A packaging plant in Wada has 1,200 workers on its muster roll. Four registered unions function there. Verification conducted in the prescribed manner shows support of: Union A 610, Union B 300, Union C 250, Union D 40.

Is there a sole negotiating union? Yes. Fifty-one per cent. of 1,200 is 612. Union A has 610, which is two short. So there is no sole negotiating union under section 14(3), and the employer must proceed under sub-section (4).

Change one fact: Union A has 615. That is 51.25 per cent., so Union A shall be recognised by the employer as the sole negotiating union. The others get nothing under section 14, whatever their size.

Back to the original figures. Who is on the negotiating council? Twenty per cent. of 1,200 is 240. Unions with not less than 240 qualify: A on 610, B on 300, C on 250. Union D on 40 does not.

How many representatives does each get? One for each full 240, and one for the remainder.

The council has seven representatives.

The employer offers a settlement. A's three representatives and C's two accept; B's two refuse. Under section 14(5) an agreement is reached if it is agreed by a majority of the representatives in the council. Five of seven agreed, so there is an agreement, and B's refusal does not prevent it.

How long does the council last? Three years from its constitution, under section 14(6), extendable by mutual decision between the employer and the Trade Union to a total not exceeding five years.

Union D, with 40 supporters, complains that it is registered and is being excluded. It is excluded, and lawfully. Registration gives it corporate status under section 12 and the immunities under sections 16 to 18; it does not give it a seat at the table. That is the whole distinction between registration and recognition, and it is what Balmer Lawrie upheld when an unrecognised union challenged the exclusive rights of the recognised one.

What this does NOT mean

It does not mean recognition follows from registration. They are separate, differently tested and differently conferred, and MU's topic names both because they are different.

It does not mean an unrecognised union has no rights. It keeps everything Chapter III gives: corporate personality, protected funds and the three immunities. What it loses is the right to negotiate. Note also, from Balmer Lawrie, that even under the Maharashtra Act the exclusive right of representation was not absolute: section 20 preserved the individual workman's position in proceedings about dismissal, discharge, removal, retrenchment, termination and suspension.

It does not mean fifty-one per cent. of the members. It is fifty-one per cent. of the workers on the muster roll, verified as prescribed.

It does not mean the council decides by union. It decides by a majority of the representatives, section 14(5), so a large union can carry a decision alone.

It does not mean recognition is permanent. Three years, extendable by mutual decision to five in total.

It does not mean the Maharashtra Act was repealed. Section 104(1) repeals three central Acts and no State Act.

Limits, criticism and amendments

The fifty-one per cent. threshold is high, and that is the principal criticism of section 14. In a workforce split among several unions, a threshold above half will rarely be met, so the negotiating council will be the norm rather than the exception. The council in turn produces a body in which agreement is by a majority of representatives, so a union with a large minority can be outvoted by a coalition of smaller ones, or, as in the worked example, a single large union can carry the council alone.

Twenty per cent. is a real exclusion. A registered union with nineteen per cent. of a large workforce, which may be several hundred people, has no seat at all.

Almost everything is left to the rules. The matters that may be negotiated, the criteria for recognition under sub-section (2), the manner of verification, and the facilities to be provided are all prescribed. A student should say this rather than invent detail.

And the Code provides no express appeal against recognition decisions, unlike section 10 for registration. That is a gap worth naming in an answer.

Against all that, the provision is a genuine advance. For ninety-nine years Indian law gave a union no right to be negotiated with at all, and the National Commission on Labour's recommendation, recorded by the Supreme Court in Balmer Lawrie, has finally been enacted nationally.

Quick revision

• Recognition is not registration. Registrar and status, sections 6 to 11; employer and bargaining rights, section 14.
• 14(1): there shall be a negotiating union or council wherever a registered union functions; the matters are prescribed.
• 14(2): only one union functioning, the employer shall recognise it as sole negotiating union, subject to prescribed criteria.
• 14(3): several unions, the one with fifty-one per cent. or more of the workers on the muster roll supporting it, verified as prescribed, is the sole negotiating union.
• 14(4): nobody at fifty-one per cent., the employer shall constitute a negotiating council of unions with not less than twenty per cent. support, one representative for each twenty per cent. and one for the remainder.
• 14(5): an agreement is reached if agreed by a majority of the representatives in the council.
• 14(6): valid three years, extendable by mutual decision to a total not exceeding five.
• 14(7): facilities as prescribed.
• Section 27: the Central and State Governments may recognise a union or federation as a Central or State Trade Union, in the prescribed manner and for prescribed purposes, disputes decided by the prescribed authority.
• Balmer Lawrie, AIR 1985 SC 311: appeal dismissed; multiplicity of unions came from the multiplicity of political parties; the need was felt for a recognised union as sole bargaining agent; the National Commission on Labour agreed, and the union with the largest number of workmen should have that status.
• The MRTU and PULP Act 1971 survives, being a Maharashtra Act and not among the three central Acts repealed by section 104(1).

Test yourself

1. Distinguish registration from recognition. Registration is the conferment of legal status on the union as a body, by the Registrar of Trade Unions appointed under section 5, on the tests in section 6 and the rules requirements in section 7; it makes the union a body corporate under section 12 and gives it the immunities in sections 16 to 18, and it continues until cancelled under section 9(5), with an appeal to the Tribunal under section 10. Recognition is the conferment of bargaining rights in a particular industrial establishment, by the employer, under section 14, on a test of verified support among the workers on the muster roll; it lasts three years, extendable by mutual decision to not more than five in total.

2. An establishment has 800 workers and three registered unions with verified support of 300, 260 and 200. What follows? Fifty-one per cent. of 800 is 408, and no union reaches it, so there is no sole negotiating union under section 14(3) and the employer must constitute a negotiating council under section 14(4). Twenty per cent. of 800 is 160, so all three qualify. Representation is one for each full 160 and one for the remainder: the union with 300 gets one for 160 and one for the remaining 140, so two; the union with 260 gets one for 160 and one for the remaining 100, so two; the union with 200 gets one for 160 and one for the remaining 40, so two. The council has six representatives, and under section 14(5) an agreement requires a majority of them.

3. Why was recognition introduced, according to the Supreme Court? In Balmer Lawrie Workers' Union v. Balmer Lawrie & Co. Ltd., AIR 1985 SC 311, the Court explained that industrialisation concentrated workmen under one employer; that the trade union movement developed as an adjunct of political parties, each party setting up labour wings to control vote banks, so that the multiplicity and fragmentation of parties produced a multiplicity of unions in one undertaking; that the result was inter-union and intra-union rivalry threatening the peaceful working of the undertaking, each union overreaching its rival with occasionally untenable demands, disturbing industrial peace and affecting production; and that the need was therefore felt for a recognised union clothed with the powers of sole bargaining agent, the National Commission on Labour agreeing that the union representing the largest number of workmen should acquire that status as being in tune with industrial democracy.

4. For how long does recognition last? Three years from the date of recognition or of the constitution of the council, under section 14(6), or such further period as may be mutually decided by the employer and the Trade Union, so long as the total does not exceed five years.

5. Does an unrecognised registered union lose its immunities? No. Sections 16, 17 and 18 attach to a registered Trade Union, and recognition is a separate matter. What an unrecognised union loses is the right to negotiate under section 14 and the facilities under section 14(7). Balmer Lawrie confirms that an exclusive right of representation in the recognised union is constitutionally permissible, and notes that even there the exclusivity was qualified: the individual workman's position was preserved in proceedings concerning dismissal, discharge, removal, retrenchment, termination or suspension.

6. What is the position of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act 1971 after 21 November 2025? It is not repealed. Section 104(1) of the Code repeals three Acts and all three are central: the Trade Unions Act 1926, the Industrial Employment (Standing Orders) Act 1946 and the Industrial Disputes Act 1947. The 1971 Act is a Maharashtra statute, it provided for recognition in this State decades before the Code did, and it is the Act on which Balmer Lawrie was decided. How its provisions operate alongside section 14 in any particular case raises a question of repugnancy under Article 254 of the Constitution, which is not settled here.

Some words this chapter uses

Collective bargaining is negotiation between an employer and a body representing the workers about the terms and conditions of employment.

Bi-partite means having two sides. A bi-partite forum has the employer on one side and the workers on the other, with nobody from outside. Tri-partite adds the Government as a third party, which is what the ILO is and what the Indian Labour Conference is.

Negotiating union or negotiating council, section 2(z), is the body recognised or constituted under section 14 to negotiate with the employer.

Settlement, section 2(zi), means a settlement arrived at in the course of a conciliation proceeding, and includes a written agreement between the employer and worker arrived at otherwise than in the course of a conciliation proceeding, where the agreement has been signed by the parties in the prescribed manner and a copy has been sent to an officer authorised by the appropriate Government and to the conciliation officer.

Sole bargaining agent is the expression the Supreme Court used in Balmer Lawrie for a union clothed with the exclusive right to represent the workmen.

The three levels at which the Code provides for it

The Code does not use the phrase "collective bargaining" as a heading, and a student should say so plainly rather than pretending otherwise. What it does is provide machinery at three levels.

Level one: inside the establishment, sections 3 and 4

Section 3, the Works Committee. In an industrial establishment in which one hundred or more workers are employed, or have been employed on any day in the preceding twelve months, the appropriate Government may by general or special order require the employer to constitute a Works Committee, in the prescribed manner, consisting of representatives of the employer and of the workers engaged in the establishment.

Two features of section 3 are examinable and both are about balance. The proviso requires that the number of representatives of the workers shall not be less than the number of representatives of the employer, so the workers can never be outnumbered. And section 3(2) requires the workers' representatives to be chosen from among the workers engaged in the establishment in consultation with their Trade Union, if any, registered under section 9, so the union is brought into the process even though the Works Committee is not itself a union body.

Its duty, under section 3(3), is to promote measures for securing and preserving amity and good relations between the employer and the workers, and to that end to comment upon matters of common interest.

Section 4, the Grievance Redressal Committee, is the companion body, and it deals with individual grievances rather than the general relationship. Both are treated fully in Module II's chapter on the bi-partite forums, which is not yet written; they appear here because they are the first rung of the bargaining ladder.

Level two: negotiating with the employer, section 14

This is the level at which collective bargaining proper happens, and it is the subject of [Recognition: The Negotiating Union and Negotiating Council]. In short: section 14(1) requires that there shall be a negotiating union or a negotiating council in any industrial establishment having a registered Trade Union, for negotiating with the employer on such matters as may be prescribed. A union with fifty-one per cent. or more of the workers on the muster roll supporting it is the sole negotiating union; where none has that, a negotiating council is constituted of the unions with not less than twenty per cent., and an agreement is reached if a majority of the representatives in the council agree.

Section 14 is the provision that converts collective bargaining from a practice into a legal process, because before the Code no employer was obliged to negotiate with anybody at all.

Level three: the agreement, and what makes it worth having

The product of successful bargaining is a settlement within section 2(zi). The definition covers two things, and the difference matters.

A settlement arrived at in the course of a conciliation proceeding, that is with a conciliation officer involved.

And a written agreement arrived at outside conciliation, provided it is signed by the parties in the prescribed manner and a copy is sent to an officer authorised by the appropriate Government and to the conciliation officer.

Those conditions on the second limb are the practical point of the definition. A private deal between an employer and a union is not a settlement in law unless it is written, signed as prescribed, and copied to the two officers. Get that wrong and the parties have a contract but not a settlement, and they lose what sections 57 and 58 give: the settlement's binding effect on the persons those sections specify, and a fixed period of operation. Those sections belong to Module II and are treated there.

What the Supreme Court has said about it

Balmer Lawrie Workers' Union v. Balmer Lawrie & Co. Ltd., AIR 1985 SC 311, 1984 Supp SCC 663.

Facts. After a strike the employer settled a number of pending industrial disputes with the union recognised under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act 1971. Clause 17 of that settlement required the company to deduct 15 per cent. of the gross arrears payable to each employee, members and non-members alike, as a contribution to the recognised union's fund. An unrecognised union challenged clause 17 and the validity of section 20 of the 1971 Act, which gives a recognised union the exclusive right to represent the workmen and denies that right to others except in proceedings concerning dismissal, discharge, removal, retrenchment, termination or suspension. A single judge and a Division Bench had both rejected the challenge.

Held. The appeal was dismissed. Reviewing the scheme of the 1971 Act, the Court explained that industrialisation had concentrated workmen under one employer; that the trade union movement developed as an adjunct of political parties, each party setting up labour wings to control vote banks, so that the multiplicity and fragmentation of parties produced a multiplicity of unions in one undertaking; that the result was inter-union and intra-union rivalry threatening the peaceful working of the undertaking, each union trying to overreach its rival by making occasionally untenable demands, disturbing industrial peace and directly affecting production; and that a need was therefore felt for the concept of a recognised union clothed with the powers of sole bargaining agent, the National Commission on Labour also favouring it, with the union representing the largest number of workmen acquiring that status as being in tune with industrial democracy.

Why it matters here. It is the Supreme Court's own explanation of why collective bargaining in India needed a legally chosen bargaining agent, and it is the authority for the disadvantage listed below: that where several unions compete, bargaining degenerates into rivalry.

All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, worked in [Why Workers Combined: The Historical Reasons], supplies the constitutional limit. The Supreme Court held that the right guaranteed by article 19(1)(c) extends only to the formation of an association or union and carries no concomitant right that it shall achieve its objects, the union's activities and the steps it may take being subject to such laws as may be framed. So there is no fundamental right to bargain collectively in India. Whatever right exists is what the Code gives, which is why section 14 matters so much.

Advantages and disadvantages

MU has set this as a full essay, so it is worth having in an ordered form rather than as a list of adjectives.

Advantages

It corrects the inequality of bargaining power, which is the reason the whole subject exists. The workers negotiate as one body and the employer is dealing with the loss of all his production.

It produces terms suited to the particular establishment. A statute fixes a floor for a whole industry or a whole State; bargaining fixes what this employer can afford and these workers need.

It buys industrial peace for a period. A settlement has a defined life under section 58, so both sides know where they stand and neither has to reopen the question every month.

It is cheaper and faster than adjudication. Litigation before a Tribunal takes years, costs money and produces a decision imposed on both sides. A settlement is made by the parties themselves.

It gives the parties ownership of the result. An award is imposed; a settlement is agreed, and an agreed outcome is far more likely to be observed.

It is a form of industrial democracy, and the Constitution endorses the idea: article 43A directs the State to take steps to secure the participation of workers in the management of undertakings.

Disadvantages

There is no fundamental right to it. On All India Bank Employees' Association, article 19(1)(c) protects only the formation of the union, so bargaining rests entirely on the statute.

It presupposes a union strong enough to bargain. Where the workforce is unorganised, casual, or afraid of dismissal, there is nobody with the strength to sit opposite the employer, and the process is a form without a substance.

Multiplicity of unions turns bargaining into rivalry. This is the disadvantage the Supreme Court itself described in Balmer Lawrie: competing unions overreach each other with untenable demands and industrial peace suffers. Section 14 is the answer, and its own thresholds are criticised in the recognition chapter.

The minority is bound by a bargain it did not make. Where one union is the sole negotiating union, or a council decides by a majority of its representatives under section 14(5), workers who supported neither are governed by the result. Balmer Lawrie upheld exactly that arrangement against an unrecognised union's challenge.

The bargaining power is unequal in a slump. When work is short the threat of withdrawing labour is worth little, so the process delivers most when it is needed least.

And it can settle only what the parties can settle. Matters outside the employer's control, or reserved to statute, are not negotiable however willing both sides are, and section 14(1) itself confines negotiation to "such matters as may be prescribed".

A worked example

The facts. A packaging plant in Wada employs 1,200 workers. Three registered unions function there, with verified support of 610, 300 and 250. The employer wants a three-year wage settlement.

Who does he negotiate with? Not with whichever union writes to him first. Fifty-one per cent. of 1,200 is 612 and no union reaches it, so under section 14(4) he shall constitute a negotiating council of the unions with not less than twenty per cent. support, that is 240. All three qualify, and the council is made up of their representatives, one for each full twenty per cent. and one for the remainder.

Is there also a Works Committee? There may be. The establishment employs more than one hundred workers, so under section 3(1) the appropriate Government may by general or special order require the employer to constitute one. If it does, the workers' representatives must not be fewer than the employer's, and they are chosen from among the workers in consultation with their registered union.

The council and the employer agree terms. Two of the three unions' representatives vote for it and one against. Under section 14(5) an agreement is reached if it is agreed by a majority of the representatives in the council, so there is an agreement. The dissenting union's members are bound by it, which is the minority problem set out above, and Balmer Lawrie is the authority that such an arrangement is permissible.

Is the agreement a settlement? Only if it satisfies section 2(zi). If it was reached with a conciliation officer involved, it is a settlement arrived at in the course of a conciliation proceeding. If it was reached privately, it is a settlement only if it is in writing, signed by the parties in the prescribed manner, and a copy is sent both to an officer authorised by the appropriate Government and to the conciliation officer. If the parties simply shake hands and issue a circular, they have an understanding and not a settlement, and they will not get what sections 57 and 58 give.

Two years later the employer refuses to talk to any union. Section 14(1) says there shall be a negotiating union or negotiating council for negotiating with the employer, so the machinery is compulsory. But note the limit of the answer: the Code obliges him to have a body to negotiate with and to negotiate on the prescribed matters. Neither the Code nor the Constitution obliges him to agree, and on All India Bank Employees' Association article 19(1)(c) gives the union no right to achieve its object.

What this does NOT mean

It does not mean there is a right to collective bargaining in the Constitution. All India Bank Employees' Association holds the opposite.

It does not mean every agreement with a union is a settlement. Section 2(zi) imposes conditions on an agreement reached outside conciliation: writing, signature in the prescribed manner, and copies to two officers.

It does not mean the Works Committee bargains. Its duty under section 3(3) is to promote amity and good relations and to comment on matters of common interest. Bargaining proper is section 14.

It does not mean bargaining is an alternative to the immunities. It depends on them. A union whose officers can be prosecuted for agreeing to act together, or sued for the production a strike costs, has nothing to bargain with.

It does not mean the Code uses the phrase. It does not, and an answer is stronger for saying so and then showing where the machinery actually is.

Limits, criticism and amendments

The single largest criticism is that the Code still does not impose a duty to bargain in good faith. Section 14 requires that there be a negotiating union or council, and prescribes the matters, but it does not oblige the employer to negotiate seriously or to justify a refusal, and it attaches no consequence to bad faith at the table.

The thresholds are high. Fifty-one per cent. for a sole negotiating union means that in a divided workforce the council will be the norm, and twenty per cent. excludes a union that may still represent several hundred people.

Almost everything is prescribed. The matters on which negotiation takes place, the manner of verification, and the facilities under section 14(7) are all in the rules, so the statutory right is only as wide as the rules make it.

Against that, section 14 is a real advance. For the ninety-nine years of the Trade Unions Act 1926 there was no national machinery of recognition at all, and an employer could lawfully refuse to speak to any union. The National Commission on Labour's recommendation, which the Supreme Court recorded in Balmer Lawrie in 1984, has finally been enacted.

Quick revision

• Collective bargaining is negotiation between an employer and a body representing the workers about terms and conditions, in place of a separate bargain with each worker.
• The Code never uses the phrase. Its machinery is at three levels: sections 3 and 4 inside the establishment, section 14 for negotiating with the employer, and section 2(zi) for the settlement that results, with sections 57 and 58 giving it force.
• Section 3: Works Committee where one hundred or more workers are or have been employed in the preceding twelve months; workers' representatives not fewer than the employer's; chosen from among the workers in consultation with their registered Trade Union; duty to promote amity and good relations and comment on matters of common interest.
• Section 14: there shall be a negotiating union or council; fifty-one per cent. for a sole negotiating union; twenty per cent. for a seat on a council; council decides by a majority of representatives.
• Section 2(zi): a settlement is one reached in conciliation, or a written agreement outside it signed as prescribed with copies to the authorised officer and the conciliation officer.
• Balmer Lawrie, AIR 1985 SC 311: multiplicity of unions bred rivalry; the need was felt for a recognised union as sole bargaining agent; the union with the largest number of workmen should have it.
• All India Bank Employees' Association, AIR 1962 SC 171: article 19(1)(c) protects formation only, so there is no fundamental right to bargain collectively.
• Advantages: corrects inequality of bargaining power; terms fitted to the establishment; industrial peace for a fixed period; cheaper and faster than adjudication; ownership of the result; industrial democracy, article 43A.
• Disadvantages: no fundamental right; needs a strong union; multiplicity breeds rivalry; the minority is bound; weak in a slump; only prescribed matters are negotiable.

Test yourself

1. Define collective bargaining and say where the Code provides for it. It is the process by which terms and conditions of employment are settled by negotiation between an employer and one or more organisations representing the workers, the resulting agreement governing all the workers covered by it. The Industrial Relations Code 2020 never uses the phrase, but provides machinery at three levels: sections 3 and 4 establish bi-partite forums inside the establishment; section 14 requires there to be a negotiating union or negotiating council for negotiating with the employer on such matters as may be prescribed; and section 2(zi) defines the settlement that results, with sections 57 and 58 fixing whom it binds and how long it operates.

2. What are the advantages of collective bargaining? It corrects the inequality of bargaining power that makes the individual contract of employment a form without a substance. It produces terms fitted to the particular establishment rather than a statutory floor for a whole industry. It buys industrial peace for a defined period, since a settlement has a fixed life. It is cheaper and faster than adjudication before a Tribunal. It gives the parties ownership of a result they agreed rather than one imposed on them. And it is a form of industrial democracy, which article 43A of the Constitution directs the State to secure.

3. What are its disadvantages? There is no fundamental right to it, since on All India Bank Employees' Association article 19(1)(c) protects only the formation of a union. It presupposes a union strong enough to bargain, which an unorganised or casual workforce does not have. Multiplicity of unions turns bargaining into rivalry, the very phenomenon the Supreme Court described in Balmer Lawrie, where competing unions overreach each other with untenable demands. The minority is bound by a bargain it did not make, whether by a sole negotiating union or by a majority of the representatives in a council under section 14(5). Bargaining power is weakest in a slump, when it is most needed. And only prescribed matters are negotiable at all.

4. Explain the Works Committee and its relation to bargaining. Under section 3(1), where one hundred or more workers are employed, or have been employed on any day in the preceding twelve months, the appropriate Government may by general or special order require the employer to constitute a Works Committee of representatives of the employer and of the workers. By the proviso the workers' representatives shall not be fewer than the employer's, and by section 3(2) they are chosen from among the workers in consultation with their registered Trade Union, if any. Its duty under section 3(3) is to promote measures for securing and preserving amity and good relations and to comment upon matters of common interest. It is the first rung of the ladder rather than the bargaining body itself; bargaining proper is under section 14.

5. An employer and a union sign a private wage agreement and issue a circular about it. Is it a settlement? Not on those facts. Section 2(zi) covers a settlement arrived at in the course of a conciliation proceeding, and includes a written agreement arrived at outside conciliation only where it has been signed by the parties in the prescribed manner and a copy has been sent to an officer authorised by the appropriate Government and to the conciliation officer. An agreement that is not signed as prescribed and copied to both officers is a contract between the parties but not a settlement, so it does not attract what sections 57 and 58 give.

6. "The Industrial Relations Code guarantees collective bargaining." Comment. The statement is too strong. Section 14(1) does require that there be a negotiating union or negotiating council in an industrial establishment having a registered Trade Union, for negotiating with the employer, which is a real advance on the Trade Unions Act 1926, under which an employer could lawfully refuse to speak to any union at all. But the Code imposes no duty to bargain in good faith, attaches no consequence to a refusal to move, confines negotiation to prescribed matters, and does not oblige the employer to agree to anything. And there is no constitutional backstop: on All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, article 19(1)(c) extends only to the formation of a union and carries no concomitant right that it shall achieve its objects.

Casual vacancy, in section 7(i), is a vacancy arising between elections.

Prejudice, in section 24(8), means to affect adversely.

Section 22: Trade Union disputes go to the Tribunal, and nowhere else

Section 22(1) lists four situations in which an application may be made, in the prescribed manner, to the Tribunal having jurisdiction over the area where the registered office of the Trade Union or Trade Unions is located, for adjudication:

• (a) where a dispute arises between one Trade Union and another;
• (b) between one or more workers who are members of the Trade Union and the Trade Union, regarding registration, administration or management or election of office-bearers of the Trade Union;
• (c) between one or more workers who are refused admission as members and the Trade Union;
• (d) where a dispute is in respect of a Trade Union which is a federation of Trade Unions, and an office-bearer authorised in that behalf by the Trade Union.

Take the four in turn, because they cover very different quarrels.

Clause (a) is union against union. The classic case is two unions each claiming to represent the same workers, which is the multiplicity problem described in [Recognition: The Negotiating Union and Negotiating Council].

Clause (b) is member against his own union, and it is limited by subject matter: registration, administration, management, or the election of office-bearers. It is the provision under which a member challenges a rigged or overdue election, and it pairs with section 7(i), which requires the rules to provide for elections once in every three years.

Clause (c) is the outsider knocking at the door. A worker refused admission may apply. This matters because membership carries real advantages, and because an executive that could refuse admission at will could keep the union in its own hands indefinitely.

Clause (d) deals with federations.

Section 22(2) is the sentence to quote, and it is short:

No civil court other than the Tribunal shall have power to entertain any suit or other proceedings in relation to any dispute referred to in sub-section (1).

Two features. The bar is total for the listed disputes: no other civil court may entertain any suit or other proceedings. And the Tribunal is the substitute, not merely an alternative, which is consistent with section 10 sending registration appeals to the Tribunal and with section 97 barring the jurisdiction of civil courts more generally.

Notice the difference from an industrial dispute. A Trade Union dispute, defined in section 2(zm), is one relating to a Trade Union arising between two or more Trade Unions or between members of a Trade Union inter se. It goes to the Tribunal under section 22 on an application. An industrial dispute, section 2(q), is a dispute with the employer and travels the machinery in Chapters II, VI and VII. Section 22 has nothing to do with the employer.

Section 24: change of name, and amalgamation

Change of name

Section 24(1): a registered Trade Union may, with the consent of not less than two-thirds of the total number of its members and subject to sub-section (3), change its name.

Two-thirds of the total number of members, not two-thirds of those present at a meeting. That is a high bar, and deliberately so: the name is the union's legal identity under section 12.

Section 24(3): notice in writing of every change of name, signed by the secretary and by seven members of the union changing its name, must be sent to the Registrar, in the prescribed manner. Where the head office of an amalgamated union is in a different State, notice must also go to the Registrar of that State.

Section 24(4): if the proposed name is identical with that of an existing registered union, or in the Registrar's opinion so nearly resembles it as to be likely to deceive the public or the members of either Trade Union, the Registrar shall refuse to register the change of name.

That is the same test as section 8(4) for a name at the point of first registration, and it is asked in exactly the same words.

Section 24(5): save as provided in sub-section (4), the Registrar shall, if satisfied that the Code's provisions about change of name have been complied with, register the change in the register referred to in section 9(3), and the change of name shall have effect from the date of such registration.

Amalgamation

Section 24(2): any two or more registered Trade Unions may be amalgamated in such manner as may be prescribed.

Section 24(3) requires notice of every amalgamation, signed by the secretary and by seven members of each and every Trade Union which is a party to it. So a merger of three unions requires the secretary and seven members of each of the three.

Section 24(6): the Registrar of the State in which the head office of the amalgamated Trade Union is situated shall, if satisfied that the Code's provisions about amalgamation have been complied with and that the Trade Union formed thereby is entitled to registration under section 9, register the Trade Union, and the amalgamation shall have effect from the date of such registration.

Two points in that sub-section repay attention. The registering authority is fixed by where the amalgamated union's head office is, which is why sub-section (3) requires notice to that State's Registrar as well. And the new body must itself be entitled to registration under section 9, so an amalgamation cannot be used to create a union that could not have been registered in the first place.

What survives a change of name or an amalgamation

Section 24(7): a change of name shall not affect any rights or obligations of the Trade Union or render defective any legal proceeding by or against it, 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.

Section 24(8): an amalgamation of two or more registered Trade Unions shall not prejudice any right of any such Trade Unions or any right of a creditor of any of them.

These two sub-sections are the reason the sections exist in this form. Without them, a union could shed a judgment debt by renaming itself, or three unions could merge and leave their creditors with nobody to sue. Sub-section (7) preserves proceedings and lets them go on under the new name; sub-section (8) protects the creditors of every constituent union.

Section 25: dissolution

Section 25(1): when a registered Trade Union is dissolved, notice of the dissolution signed by seven members and by the secretary shall, within fourteen days of the dissolution, be sent to the Registrar; and it shall be registered by him if he is satisfied that the dissolution has been effected in accordance with the rules of the Trade Union; and the dissolution shall have effect from the date of such registration.

Four elements to remember. Seven members and the secretary must sign. The notice must go within fourteen days. The Registrar's satisfaction is directed to one thing only, whether the dissolution was effected in accordance with the union's own rules, which is why section 7(l) requires the rules to provide for the manner of dissolution. And, as with a change of name and an amalgamation, the dissolution takes effect from registration, not from the members' resolution.

Section 25(2): where the dissolution has been registered and the rules do not provide for the distribution of funds on dissolution, the Registrar shall divide the funds amongst the members in such manner as may be prescribed.

This sub-section is the necessary consequence of section 12. Because the union is a body corporate, the funds are the union's and not the members'. When the union ceases to exist somebody must decide where its money goes. The rules decide it if they say anything, and section 7(c) required them to state the purposes for which the general funds are applicable; if they are silent on distribution, the Registrar divides the funds among the members in the prescribed manner.

Distinguish dissolution from cancellation. Cancellation under section 9(5) removes the union's registration, and with it the corporate status and the immunities; the combination of persons may go on existing as an unregistered Trade Union within section 2(zl). Dissolution under section 25 ends the union's existence. They are different events with different procedures, and a question that asks about one is not asking about the other.

Section 26: annual returns and inspection

Section 26(1)(a): every registered Trade Union shall forward annually to the Registrar, on or before the prescribed date, in the prescribed form, audited in the prescribed manner and by the prescribed person, a general statement containing particulars of all receipts and expenditure during the year ending on the 31st day of December next preceding the prescribed date, and of the assets and liabilities existing on that 31st December.

Section 26(1)(b): along with that statement, a statement showing changes of office-bearers made during the year to which it refers, together with a copy of the rules corrected up to the date of dispatch.

Section 26(2): a copy of every alteration made in the rules shall be sent to the Registrar within fifteen days of the making of the alteration.

Section 26(3): for the purpose of examining those documents, the Registrar or an officer authorised by him by general or special order may at all reasonable times inspect the certificate of registration, account books, registers and other documents relating to a Trade Union at its registered office, or may require their production at such place as he may specify, but no such place shall be at a distance of more than fifteen kilometres from the registered office.

The fifteen kilometre limit is a small provision worth remembering because it is the kind of concrete detail an examiner likes and because it has an obvious purpose: it stops a union's officers being required to carry their books across the State.

Section 26 completes the accountability scheme begun in section 7. Section 7(j) requires the rules to provide for safe custody, an annual audit and inspection facilities; section 19 gives an office-bearer or member the right to inspect the books of account and the list of members; and section 26 sends an audited statement to the Registrar every year and lets him inspect. The three provisions should be cited together whenever the question is how a union's funds are controlled.

A worked example

The facts. The Wada Packaging Workers' Union has 90 members. Four things happen in one year.

One: a member, Rakesh, says the executive has held no election for four years and asks the civil court to order one. The civil court has no jurisdiction. This is a dispute between a member and his Trade Union regarding the election of office-bearers, which is section 22(1)(b), and section 22(2) provides that no civil court other than the Tribunal shall have power to entertain any suit or other proceedings in relation to it. Rakesh must apply, in the prescribed manner, to the Tribunal having jurisdiction over the area where the union's registered office is located. On the merits, the union's rules must provide for election once in every three years under section 7(i), and a failure to hold one is also a contravention of the union's own rules, which is a ground for cancellation under section 9(5)(ii).

Two: a worker, Shabnam, is refused admission and wants to challenge it. Section 22(1)(c) covers a dispute between one or more workers who are refused admission as members and the Trade Union. She applies to the Tribunal, and again no civil court may entertain it.

Three: the union wants to rename itself "Wada Packaging Shramik Sangh". It needs the consent of not less than two-thirds of the total number of its members, so of 90 members it needs 60, and two-thirds of those attending a meeting will not do. Notice in writing signed by the secretary and seven members goes to the Registrar under section 24(3). If a registered union is already called "Wada Packaging Shramik Sanghatana", the Registrar must consider section 24(4) and shall refuse if in his opinion the name so nearly resembles it as to be likely to deceive the public or the members of either union. If he registers the change, it takes effect from the date of registration, section 24(5), and by section 24(7) a suit pending against the union in its old name may be continued against it in the new one.

Four: the union amalgamates with a union at a neighbouring unit whose head office is in a different State. Amalgamation is in the prescribed manner, section 24(2). Notice signed by the secretary and seven members of each union goes to the Registrar, and, the amalgamated union's head office being in another State, to that State's Registrar too, section 24(3). The Registrar of the State where the amalgamated union's head office is situated registers it if satisfied that the provisions have been complied with and that the new union is entitled to registration under section 9, and the amalgamation takes effect from that registration, section 24(6). A creditor of either original union is protected by section 24(8), which provides that the amalgamation shall not prejudice any right of a creditor of any of them.

Finally, suppose instead the members resolve to wind the union up on 3 April. Notice of the dissolution, signed by seven members and the secretary, must reach the Registrar within fourteen days, so by 17 April, under section 25(1). He registers it if satisfied the dissolution was effected in accordance with the union's rules, and it takes effect from that registration. The union has 40,000 rupees and its rules say nothing about distributing funds on dissolution: section 25(2) then requires the Registrar to divide the funds among the members in the prescribed manner. And the union must still have filed, for the preceding year, the audited general statement of receipts, expenditure, assets and liabilities under section 26(1)(a).

What this does NOT mean

It does not mean every dispute involving a union goes to the Tribunal under section 22. Only the four classes in sub-section (1). A dispute with the employer is an industrial dispute under section 2(q) and travels a different route entirely.

It does not mean a change of name creates a new union. It is the same body corporate with a different name, which is why section 24(7) preserves its rights, obligations and proceedings.

It does not mean dissolution and cancellation are the same. Cancellation under section 9(5) removes registration; dissolution under section 25 ends existence.

It does not mean the members own the funds on dissolution as of right. The rules govern; only if the rules are silent does the Registrar divide the funds among the members in the prescribed manner.

It does not mean two-thirds of a meeting can change the name. Section 24(1) requires the consent of not less than two-thirds of the total number of its members.

It does not mean the Registrar may summon the books anywhere. Section 26(3) caps the place of production at fifteen kilometres from the registered office.

Limits, criticism and amendments

Section 22 is a real improvement on the position under the repealed Trade Unions Act 1926, which left most internal union disputes to the ordinary civil courts, where they were slow enough to outlast the elections they concerned. Sending them to the Tribunal, and barring civil courts outright, is the sensible answer.

But section 22(1)(b) is limited by subject matter, to registration, administration, management and the election of office-bearers, and a member with a complaint outside those words has to fit himself into them.

The two-thirds requirement for a change of name is high, and it is calculated on total membership, which in a union with many inactive members can be difficult to reach.

The accounting year is fixed at 31 December by section 26(1)(a), which does not match the Indian financial year, so a union keeps its statutory records on one calendar and its tax affairs on another.

And much again is prescribed rather than stated: the manner of an application under section 22(1), the manner of amalgamation, the manner of dividing funds on dissolution, and the form, date, auditor and manner of the annual statement.

Quick revision

• Section 22(1): four classes go to the Tribunal where the registered office is: (a) union against union; (b) member against his union on registration, administration, management or election of office-bearers; (c) a worker refused admission; (d) a dispute in respect of a federation.
• Section 22(2): no civil court other than the Tribunal may entertain any suit or other proceedings in relation to those disputes.
• Section 24(1): change of name needs not less than two-thirds of the total number of members. 24(3): notice signed by the secretary and seven members, and by seven of each union in an amalgamation, to the Registrar, and to another State's Registrar where the amalgamated head office is there.
• Section 24(4): refuse a name identical or so nearly resembling an existing one as to be likely to deceive. Same test as section 8(4).
• Section 24(5) and (6): change of name and amalgamation take effect from registration; the amalgamated union must itself be entitled to registration under section 9.
• Section 24(7): a change of name does not affect rights, obligations or proceedings; proceedings continue in the new name. 24(8): an amalgamation does not prejudice any right of a creditor.
• Section 25(1): dissolution notice signed by seven members and the secretary, within fourteen days, registered if effected in accordance with the rules, effective from registration. 25(2): if the rules do not provide for distribution, the Registrar divides the funds among the members as prescribed.
• Section 26: annual audited general statement of receipts, expenditure, assets and liabilities for the year ending 31 December, plus changes of office-bearers and corrected rules; alterations of rules within fifteen days; inspection at the registered office or at a place not more than fifteen kilometres away.

Test yourself

1. A member says his union's election was rigged. Where does he go, and why not to a civil court? To the Industrial Tribunal, by an application in the prescribed manner under section 22(1)(b), which covers a dispute between one or more workers who are members and the Trade Union regarding the election of office-bearers, made to the Tribunal having jurisdiction over the area where the union's registered office is located. He may not go to a civil court because section 22(2) provides that no civil court other than the Tribunal shall have power to entertain any suit or other proceedings in relation to a dispute referred to in sub-section (1).

2. What consent is needed to change a union's name, and when does the change take effect? The consent of not less than two-thirds of the total number of its members, under section 24(1), calculated on total membership and not on those present at a meeting. Notice signed by the secretary and seven members goes to the Registrar under section 24(3), the Registrar must refuse under section 24(4) if the proposed name is identical with, or so nearly resembles, that of an existing registered union as to be likely to deceive the public or the members of either union, and under section 24(5) the change takes effect from the date of its registration.

3. Does a change of name affect a pending suit against the union? No. Section 24(7) provides that a change of name shall not affect any rights or obligations of the Trade Union or render defective any legal proceeding by or against it, and that 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.

4. State the procedure for dissolution and the position of the funds. Under section 25(1), notice of the dissolution signed by seven members and by the secretary must be sent to the Registrar within fourteen days of the dissolution; he registers it if satisfied that the dissolution was effected in accordance with the union's rules; and the dissolution takes effect from the date of that registration. Under section 25(2), where the dissolution has been registered and the rules do not provide for the distribution of the funds, the Registrar shall divide them among the members in the prescribed manner. The provision is necessary because, the union being a body corporate under section 12, the funds belong to the union and not to the members.

5. Distinguish dissolution from cancellation of registration. Cancellation under section 9(5) is the Registrar's withdrawal of the certificate of registration, on the union's own application, on contravention of the Code, the rules or the union's own constitution or rules, or on the membership falling below the required figure, and it requires not less than sixty days' previous notice in writing specifying the grounds. It removes the union's registered status and with it corporate personality and the immunities, but the combination may continue to exist as an unregistered Trade Union within section 2(zl). Dissolution under section 25 is the ending of the union's existence, effected in accordance with its own rules and registered by the Registrar.

6. What must a registered union file each year, and what may the Registrar inspect? Under section 26(1)(a), an annual general statement, in the prescribed form, audited in the prescribed manner and by the prescribed person, containing particulars of all receipts and expenditure for the year ending on the 31st December preceding the prescribed date and of the assets and liabilities existing on that date; and under section 26(1)(b), along with it, a statement of changes of office-bearers during that year and a copy of the rules corrected up to the date of dispatch. Under section 26(2), a copy of every alteration in the rules within fifteen days of its making. Under section 26(3), the Registrar or an authorised officer may at all reasonable times inspect the certificate of registration, account books, registers and other documents at the registered office, or require their production at a specified place, which may not be more than fifteen kilometres from the registered office.

And the Constitution does not solve this. In All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, the Supreme Court held that the right guaranteed by article 19(1)(c) extends only to the formation of an association or union and carries no concomitant right that the union shall achieve its objects; its activities, and the steps it may take to achieve them, are subject to such laws as may be framed, and those laws are not tested against article 19(4). Section 16 is therefore the source of the protection, and there is no other.

Some words this chapter uses

Tort is a civil wrong, other than a breach of contract, for which the remedy is damages.

Inducing a breach of contract is the tort committed by a person who knowingly persuades one party to a contract to break it, causing loss to the other party.

In contemplation or furtherance of an industrial dispute is the statutory formula fixing when the protection applies. "In contemplation of" covers acts done before the dispute breaks out, while it is being prepared; "in furtherance of" covers acts done to advance it once it exists.

Industrial dispute is defined in section 2(q). It is the dispute with the employer, and it is not the same as a Trade Union dispute under section 2(zm), which is a dispute between unions or among members.

Agent, in section 16(2), is a person acting on the union's behalf.

Executive, section 2(n), is the body to which the management of the union's affairs is entrusted.

Vicarious liability is the liability of one person for the wrong of another, typically an employer for an employee or a principal for an agent. Section 16(2) is a statutory limit on it.

Section 16(1): the three protected grounds

No suit or other legal proceeding shall be maintainable in any civil court against any registered Trade Union or any office-bearer or member thereof in respect of any act done in contemplation or furtherance of an industrial dispute to which a member of the Trade Union is a party on the ground only that such act induces some other person to break a contract of employment or that it is an interference with the trade, business, or employment of some other person or with the right of some other person to dispose of his capital or of his labour as he wills.

The sub-section has four conditions and three protected grounds. An answer that separates them scores; one that runs them together does not.

The four conditions

One: the defendant must be a registered Trade Union, or an office-bearer or member of one. An unregistered combination has nothing here, however genuine.

Two: the proceeding must be in a civil court. The protection is against civil liability. A prosecution is a different question and is answered by section 17.

Three: the act must be done in contemplation or furtherance of an industrial dispute. An act unconnected with any dispute is unprotected.

Four: the dispute must be one to which a member of the Trade Union is a party. So a union cannot pick up somebody else's quarrel and claim the immunity for it. A member of the union must be a party to the dispute.

The three grounds

The suit is barred on the ground only that the act:

• induces some other person to break a contract of employment; or
• is an interference with the trade, business or employment of some other person; or
• is an interference with the right of some other person to dispose of his capital or of his labour as he wills.

The first ground answers the tort of inducing a breach of contract, and notice its precision: it is a contract of employment. Inducing a breach of a contract of supply, say by persuading a haulier not to deliver to the employer, is not within these words.

The second and third grounds answer the wider economic torts. The third is worth reading twice: "the right of some other person to dispose of his capital or of his labour as he wills". It protects the union against a claim by the employer whose capital is idled, and against a claim by a worker who wanted to work and was prevented, so far as the ground of that claim is only interference with his freedom to dispose of his labour.

"On the ground only", and why it is the whole section

Those three words limit the immunity to the grounds listed. The section does not say a registered union cannot be sued. It says a suit cannot be maintained on the ground only that the act had one of the three listed characteristics.

So a claim founded on something else is untouched. If, during the same strike, pickets assault a manager, damage machinery, trespass or defame the employer, the suit is founded on those wrongs and not merely on inducement or interference. Section 16 does not bar it.

The Supreme Court has said this in terms, of the identically drawn predecessor.

Rohtas Industries Ltd. v. Rohtas Industries Staff Union, AIR 1976 SC 425, (1976) 2 SCC 82, Krishna Iyer, Chandrachud and A.C. Gupta JJ.

Facts. In 1948 the workmen of Rohtas Industries struck. The strike was illegal under sections 23 and 24 of the Industrial Disputes Act 1947, and it arose out of rivalry between unions. The workmen were not paid wages for the strike period and the employers lost profit. During conciliation the parties agreed to refer both claims, the workmen's claim to wages for the strike period and the employers' claim to compensation for the loss caused, to the joint arbitration of two retired High Court judges and a retired member of a Labour Appellate Tribunal under section 10A of the 1947 Act. The arbitrators awarded the employers compensation. The union moved the High Court under article 226.

Held. The employers' claim failed, and the Court gave several reasons, of which three matter here.

On the tort of conspiracy, the Court held that the tort necessarily involves that the object of the combination be the infliction of damage on the plaintiff. A strike may be illegal, but if its object is to bring the employer to terms with the employees, or to bully a rival trade union into submission, there is no actionable combination in tort. Here the conceded object was inter-union rivalry, and the arbitrators had assumed that an illegal strike made the tort out; that was a clear lapse in the law on the face of the award.

On the employer's claim generally, an illegal strike is the creation of the statute and the remedy for it and its fall-out must be sought within the statute and not outside it; the employers' claim for compensation for loss of business is not an industrial dispute within section 2(k), so the arbitrators had no jurisdiction, and the consent of the parties could not create it. Krishna Iyer J observed that claims by employers against the workmen on grounds of tortious liability have not found a place in the pharmacopeia of Indian industrial law.

And on the immunity itself, the Court held that the High Court's view was wrong in supposing that section 18 of the Trade Unions Act 1926 gave strikers an implied immunity from all legal proceedings.

The Court also fixed the outer limit: where individuals wilfully destroy plant and machinery to cause loss to the employer, they are liable for the injury so caused. Sabotage, in the Court's words, is no weapon in workers' legal armoury.

Why it matters. It does three jobs. It shows how narrow the tort of conspiracy is where the defendants are workers pursuing their own interests. It disposes of the employer's instinctive remedy, a claim for the profits an illegal strike cost him. And it states expressly that the civil immunity is not a blanket immunity from all legal proceedings, which is exactly what the words "on the ground only" mean.

The case was decided under the Trade Unions Act 1926 and the Industrial Disputes Act 1947, both repealed by section 104(1) on 21 November 2025. Section 16 of the Code re-enacts the civil immunity in the same terms as section 18 of the 1926 Act, and the common law of conspiracy the case applies is not statutory at all, so the reasoning stands. What has changed is the surrounding law: sections 62 and 63 of the Code make far more strikes illegal than sections 22 and 23 of the 1947 Act did, so the protection now operates across a wider field of illegal strikes. That is a point worth making in an answer, and it belongs to the chapter on strikes in Module III, which is not yet written.

Section 16(2): the union's protection against its own agent

A registered Trade Union shall not be liable in any suit or other legal proceeding in any civil court in respect of any tortuous act done in contemplation or furtherance of an industrial 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.

This sub-section does something quite different from sub-section (1), and students routinely treat them as one.

What the sub-section is for. Section 12 makes a union a body corporate, and a body corporate is ordinarily liable for the torts of those who act on its behalf. A union has hundreds of members and, in a strike, many people acting in its name across several sites. Without this sub-section a single agent's excess would fasten liability on the union itself.

The two escape routes are alternatives. The union escapes if the agent acted without the knowledge of the executive, or contrary to express instructions given by the executive. Either will do.

But the burden is squarely on the union. "If it is proved" means the union must establish it. And "express instructions" means express: a general exhortation to keep the strike peaceful may not be enough, whereas a recorded resolution of the executive directing that there be no obstruction of the gates is evidence of exactly the kind the sub-section contemplates.

Note also who is not protected by sub-section (2): the agent himself. The sub-section relieves the union. The agent remains personally liable for his own tort, subject only to whatever sub-section (1) gives him if he is a member or office-bearer and the suit is founded only on the three listed grounds.

A worked example

The facts. The Wada Packaging Workers' Union, registered, is in dispute with the employer over the wage rate. Members of the union are parties to the dispute. After notice, the workers strike. Five things then happen and the employer sues on each.

One: the union persuaded 90 workers to stop work, and each of them broke his contract of employment. The claim is founded only on the ground that the union's act induced other persons to break contracts of employment. Section 16(1) bars it. The union is registered, the act was done in furtherance of an industrial dispute, and members of the union are parties to it.

Two: the strike stopped production and cost the employer nine days' profit. Again the claim is founded only on interference with the employer's trade or business, and on interference with his right to dispose of his capital as he wills. Barred by section 16(1). And on Rohtas Industries the alternative framing in the tort of conspiracy also fails, because the object of the combination was to obtain a wage increase, not to inflict damage on the employer.

Three: two workers who wanted to work were persuaded not to. So far as their claim is founded only on interference with their right to dispose of their labour as they will, section 16(1) bars it, that being the third listed ground.

Four: on the sixth day pickets broke the gate lock and damaged two machines. Section 16(1) does not bar this. The claim is founded on damage to property, which is not one of the three grounds, and the words "on the ground only" therefore leave it untouched. On Rohtas Industries, individuals who wilfully destroy plant and machinery are liable for the injury caused.

Five: the same pickets are said to have been acting for the union, so the employer sues the union itself for the damage. Here section 16(2) is the union's answer, and it must prove its case: that the pickets were acting without the knowledge of the executive, or contrary to express instructions given by the executive. If the executive had passed and circulated a resolution directing members not to obstruct or damage anything, the union is likely to discharge that burden. If the executive knew and did nothing, it will not.

Change one fact. Suppose the union is not registered. It has none of section 16, and every one of the five claims proceeds on ordinary principles. That is the practical value of registration, and it is why [The Registrar and the Criteria for Registration] comes before this chapter.

Change another. Suppose the dispute is between two unions about which of them represents the workers, and the union's act induces workers to leave their jobs in the course of that quarrel. That is a Trade Union dispute under section 2(zm), not an industrial dispute under section 2(q), and section 16(1) protects acts done in contemplation or furtherance of an industrial dispute. The third condition fails.

What this does NOT mean

It does not mean a registered union cannot be sued. It means a suit cannot be maintained on the ground only that the act was one of the three listed things. Rohtas Industries holds expressly that the predecessor section did not give an implied immunity from all legal proceedings.

It does not protect violence, damage, trespass or defamation. Those found a claim on a different ground.

It does not protect an unregistered combination. Section 16 says "registered Trade Union".

It does not cover inducing a breach of any contract. The first ground is a contract of employment.

It does not give a right to strike. The right to strike, so far as it exists, is a matter of Chapter VIII, and All India Bank Employees' Association holds that article 19(1)(c) confers no such right. Section 16 removes a civil liability; it does not create a freedom.

It does not make the agent immune under sub-section (2). That sub-section relieves the union of liability for the agent's tort. The agent answers for his own.

Limits, criticism and amendments

The immunity is narrow by design and the criticism cuts both ways. Employers say that a union which calls a strike causing enormous loss cannot be made to pay for any of it, and that Rohtas Industries closed the alternative route as well by holding that such a claim is not an industrial dispute at all. Unions say the protection is illusory the moment a strike becomes effective, because effective picketing shades quickly into conduct founded on grounds outside the three, and the union then has to prove the section 16(2) defence.

The words "contract of employment" leave a real gap. Persuading a supplier or a transporter to withhold performance is a familiar industrial tactic and it is not within the first ground, though it may fall within the second.

The section is a re-enactment rather than a reform. It reproduces the substance of section 18 of the Trade Unions Act 1926, so the ninety-nine years of case law on that section continue to be the guide, provided the case is always cited as decided under the repealed Act.

And the surrounding law has moved against the protection. Because sections 62 and 63 of the Code make far more strikes illegal than the 1947 Act did, more industrial action now begins from a position of illegality, even though section 16 itself is unchanged.

Quick revision

• Section 16(1): no suit or other legal proceeding in any civil court against a registered Trade Union or its office-bearer or member, in respect of an act done in contemplation or furtherance of an industrial dispute to which a member of the union is a party, on the ground only that it (i) induces another to break a contract of employment, (ii) is an interference with the trade, business or employment of another, or (iii) is an interference with another's right to dispose of his capital or his labour as he wills.
• "On the ground only" is the whole section. A claim founded on assault, damage, trespass or defamation is untouched.
• Section 16(2): the union alone is not liable for any tortious act of an agent done in contemplation or furtherance of an industrial dispute if it is proved the agent acted without the knowledge of, or contrary to express instructions given by, the executive. The burden is on the union; the agent stays liable himself.
• Rohtas Industries, AIR 1976 SC 425: the tort of conspiracy needs the object of the combination to be the infliction of damage; an object of bringing the employer to terms or bullying a rival union is not actionable; an employer's claim for loss of business is not an industrial dispute, so arbitrators had no jurisdiction and consent could not create it; the High Court was wrong to find an implied immunity from all legal proceedings; and sabotage is no weapon in workers' legal armoury.
• All India Bank Employees' Association, AIR 1962 SC 171: article 19(1)(c) protects only formation, so the immunity is statutory or nothing.

Test yourself

1. State the protection in section 16(1) and its conditions. No suit or other legal proceeding is maintainable in any civil court against a registered Trade Union or any office-bearer or member of it, in respect of an act done in contemplation or furtherance of an industrial dispute to which a member of the union is a party, on the ground only that the act induces some other person to break a contract of employment, or that it is an interference with the trade, business or employment of some other person, or with the right of some other person to dispose of his capital or of his labour as he wills. The four conditions are that the defendant be a registered union or its office-bearer or member; that the proceeding be in a civil court; that the act be done in contemplation or furtherance of an industrial dispute; and that a member of the union be a party to that dispute.

2. Why are the words "on the ground only" the most important in the section? Because they confine the immunity to the three listed grounds. The section does not say a registered union cannot be sued; it says a suit cannot be maintained where the only ground relied on is one of those three. A claim founded on assault, damage to property, trespass or defamation is founded on a different ground and is not barred. Rohtas Industries states the point expressly, holding the High Court wrong to read the predecessor section as an implied immunity from all legal proceedings.

3. An employer sues a registered union for the profit lost during an illegal strike. Advise, with authority. The claim will fail. Section 16(1) bars a suit founded only on interference with the employer's trade or business or with his right to dispose of his capital as he wills. If the claim is reframed as the tort of conspiracy, Rohtas Industries Ltd. v. Rohtas Industries Staff Union, AIR 1976 SC 425, holds that the tort requires the object of the combination to be the infliction of damage on the plaintiff, and that where the object is to bring the employer to terms or to bully a rival union there is no actionable combination. The same case holds that an illegal strike is the creation of the statute so the remedy must be sought within it, and that an employer's claim for compensation for loss of business is not an industrial dispute, so it cannot be referred to adjudication or arbitration and consent cannot create that jurisdiction.

4. Distinguish section 16(1) from section 16(2). Section 16(1) protects the union together with its office-bearers and members, but only against a suit founded on three specified grounds, and only where the four conditions are met. Section 16(2) protects the union alone, against liability for any tortious act done in contemplation or furtherance of an industrial dispute by an agent, and it applies only if the union proves that the agent acted without the knowledge of the executive or contrary to its express instructions. The burden under sub-section (2) is on the union, and the agent remains personally liable.

5. During a strike some members damage the employer's machinery. Is the union liable? Section 16(1) does not bar the claim, because it is founded on damage to property and not merely on inducement or interference, and on Rohtas Industries the individuals who wilfully destroy plant and machinery are liable for the injury caused. Whether the union is liable turns on section 16(2): the union escapes if it proves that those acting for it did so without the knowledge of the executive, or contrary to express instructions given by the executive. Evidence of a recorded executive resolution forbidding such conduct is the kind of proof contemplated.

6. Does section 16 give workers a right to strike? No. It removes a civil liability that would otherwise attach to acts done in contemplation or furtherance of an industrial dispute; it does not confer a freedom. Whether a strike is lawful is governed by Chapter VIII, sections 62 and 63. And in All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, the Supreme Court held that article 19(1)(c) of the Constitution protects only the formation of a union and carries no concomitant right that it shall achieve its objects, the union's activities being subject to such laws as may be framed.

Substantive offence means an offence complete in itself, such as wrongful confinement or assault, as opposed to the inchoate offence of agreeing to commit one.

Gherao is defined by the Calcutta High Court in the case worked below. It is not a statutory term.

Cognizable offence is one for which a police officer may arrest without a warrant and begin an investigation without an order of a magistrate.

Section 17, taken apart

No office-bearer or member of a registered Trade Union shall be liable to punishment under sub-section (2) of section 120B of the Indian Penal Code (45 of 1860) in respect of any agreement made between the members for the purpose of furthering any such object of the Trade Union as is specified in section 15, unless such agreement is an agreement to commit an offence.

The section has five elements and one exception. Every one of them limits it.

One: only an office-bearer or member is protected, and only of a registered Trade Union. An unregistered combination has nothing.

Two: the protection is only from punishment under section 120B(2). It is not a general criminal immunity, and it is not even a general immunity from conspiracy: the section names one sub-section of one offence.

Three: the protection attaches to an agreement, not to conduct. What is taken outside the offence is the making of the agreement.

Four: the agreement must be made between the members. An agreement with outsiders is not within the words.

Five: the purpose must be furthering an object of the union specified in section 15. This is the substantive limit, and it links this section to [The Funds of a Trade Union, and the Political Fund]. Because section 15 prescribes the objects by rules rather than printing them, the accurate statement is that the immunity extends to agreements furthering the objects prescribed under the Code, and a student should say that rather than reciting the list from the repealed 1926 Act.

The exception: "unless such agreement is an agreement to commit an offence." This is the sentence that decides most problems. An agreement to commit an offence is outside the section entirely, and the conspirators may be charged in the ordinary way.

The leading case, and the limits are the whole of it

Jay Engineering Works Ltd. v. State of West Bengal, AIR 1968 Cal 407, 72 CWN 440, a Full Bench of the Calcutta High Court.

Facts. The company had a sales office in Calcutta employing about 365 workmen, whose union was registered under the Trade Unions Act 1926. Eighteen employees were retrenched in January 1967. On 27 January the retrenched employees with about seventy others blockaded the premises, obstructing the passage of personnel and goods, including food for those confined inside. On 2 March about two hundred people gheraoed the manager and other officers from one in the afternoon; the gherao lasted thirty-three hours. On 17 April between one hundred and one hundred and fifty people did the same, and the confined men were rescued only at ten at night on 18 April on the order of the Chief Presidency Magistrate under section 100 of the Code of Criminal Procedure. On 29 May the officers were confined again for over five hours. Property was tampered with, insulting slogans were shouted, and food was allowed in only in nominal quantity at the besiegers' will. Information was given to the police each time and no action was taken, the police being immobilised by two State Government circulars. The company moved the High Court under article 226.

Held. The Court answered three questions, and two of them are the substance of this chapter.

On what a gherao is, the Court gave the definition that has been used ever since: a gherao is a physical blockade of a target, either by encirclement or forcible occupation; the target may be a place or a person or persons, usually the managerial or supervisory staff of an industrial establishment; the blockade may be complete or partial and is invariably accompanied by wrongful restraint, and or wrongful confinement, and occasionally by assault, criminal trespass, mischief to person and property, unlawful assembly and various other criminal offences; and the object is to compel those who control industry to submit to the demands of the workers without recourse to the machinery provided for by law and in wanton disregard of it, that is to achieve their object not by peaceful means but by violence.

On the immunity, the Court held that the protection given by section 17 of the Trade Unions Act 1926 is of a limited nature and must be clearly understood. What the section provides is that an agreement to do things in furtherance of the objects set out in section 15 will not amount to a criminal conspiracy. Adopting the reasoning it approved, the Court held that trade unions have the right to declare strikes and to do certain acts in furtherance of trade disputes, and are not liable civilly for such acts or criminally for conspiracy in furtherance of such acts as the Act permits, but there is nothing in that Act which, apart from immunity from criminal conspiracy, allows immunity from any criminal offence.

The Court then applied that to the facts in terms that answer any problem question. If a person or persons wrongfully restrain or wrongfully confine another, the matter comes under the penal provisions on wrongful restraint and wrongful confinement, and cannot be saved by section 17 of the Trade Unions Act 1926 or indeed any provision thereof. A combination of industrial workers cannot claim immunity from being charged with criminal conspiracy if they conspire to commit an offence; whether there was such a conspiracy is a question of fact. The commission of an offence is not excused by any other law. And though workers may go on peaceful strikes which are not illegal, they have no right to resort to coercive methods like wrongful restraint, wrongful confinement and criminal trespass, which are all cognizable offences, such methods being the more unwarranted because there is machinery set up by law to deal with industrial disputes.

The Court also drew a careful line about staying in a factory. Factory workers have a right to enter the factory; their staying in becomes criminal trespass when it appears that they intend to intimidate, insult or annoy the management or to commit any other offence. Staying in peacefully for the purpose of appealing to the management to grant some concessions would not be an offence, and the Court advised that police action be avoided in such cases.

Why it matters. It is the single most useful case on the limits of the immunities, and the limits are what an examiner asks about. It also supplies the accepted definition of gherao, which MU has set as a short note in its own right.

It was decided under the Trade Unions Act 1926, repealed by section 104(1)(a) on 21 November 2025. Section 17 of the Code reproduces the same protection in the same shape: immunity from a charge under section 120B(2) for an agreement between members made to further an object specified in section 15, unless the agreement is one to commit an offence. The reasoning that the immunity stops at conspiracy and never reaches a substantive offence is unchanged, and indeed the Code now says so expressly in the closing words of section 17, which the 1926 Act reached by construction.

The companion authority is Rohtas Industries. In Rohtas Industries Ltd. v. Rohtas Industries Staff Union, AIR 1976 SC 425, worked in [Immunity from Civil Suit], the Supreme Court held that the High Court had been wrong to suppose that the corresponding civil immunity gave strikers an implied immunity from all legal proceedings, and that individuals who wilfully destroy plant and machinery to cause loss to the employer are liable for the injury caused, sabotage being no weapon in workers' legal armoury. The two cases point the same way from opposite sides of the law: neither immunity is a general licence.

The penal law reference, and how to handle it

Section 17 refers to "sub-section (2) of section 120B of the Indian Penal Code (45 of 1860)". The Code received assent on 28 September 2020. The penal law of India has since been replaced by the Bharatiya Nyaya Sanhita 2023.

What a student should do about that is straightforward. Quote the section as it stands, because that is what the statute says, and note that the reference to the Indian Penal Code is read, in the ordinary way, as a reference to the corresponding provision of the law now in force. Do not silently substitute a Sanhita section number: that would be quoting a provision the Code does not contain, and this book's rule is that section numbers come from the text, never from recollection.

The same caution applies to the offences discussed in Jay Engineering Works. That judgment cites the Indian Penal Code sections on wrongful restraint, wrongful confinement and criminal trespass as they then stood, and this chapter quotes the case as the case put it.

A worked example

The facts. The Wada Packaging Workers' Union is registered. Its executive resolves at a meeting that the members will stop work from Monday until the wage rate is revised, and that members will stand at the gate to explain the dispute to anyone arriving. Four things then happen.

One: the employer complains that the executive agreed together to cause his business loss, and asks the police to charge them with criminal conspiracy. Section 17 answers it. They are office-bearers and members of a registered Trade Union; the agreement was made between the members; and its purpose was to further an object of the union within section 15, regulating relations with the employer over wages being the paradigm case. The agreement is not an agreement to commit an offence. No liability under section 120B(2).

Two: on the third day thirty members surround the manager in his office and keep him there for eleven hours, allowing him no food. This is a gherao on the Jay Engineering Works definition: a physical blockade of a target by encirclement, accompanied by wrongful restraint and wrongful confinement. Section 17 does not help. Wrongful confinement is a substantive offence and, in the Court's words, cannot be saved by section 17 or indeed by any provision of the statute; there is nothing which, apart from immunity from criminal conspiracy, gives immunity from any criminal offence.

Three: the employer says the thirty must have agreed among themselves before doing it, and asks that they be charged with conspiracy as well. Now the exception in section 17 bites from the other direction. The agreement was an agreement to commit an offence, so it falls within the closing words of the section, and the immunity does not apply to it at all. On Jay Engineering Works a combination of industrial workers cannot claim immunity from being charged with criminal conspiracy if they conspire to commit an offence, and whether they did is a question of fact on which the burden lies on the person alleging it.

Four: on the fifth day forty members sit inside the plant, peacefully, refusing to leave until the manager hears them, and do nothing else. Here the answer is more favourable and it comes from the same case. Factory workers have a right to enter the factory, and their staying in becomes criminal trespass only when it appears that they intend to intimidate, insult or annoy the management or to commit some other offence; staying in peacefully to appeal to the management for concessions would not be an offence, and the Court advised that police action be avoided in such cases.

Change one fact throughout: the union is not registered. Section 17 is unavailable in every one of the four situations, because it protects an office-bearer or member of a registered Trade Union. The first situation, the ordinary agreement to strike, would then have to be met on general principles.

What this does NOT mean

It does not mean members of a union cannot be prosecuted. They can, for any offence they commit. The immunity is from punishment under section 120B(2) for the agreement.

It does not mean every agreement a union makes is protected. The agreement must be between the members and must be for the purpose of furthering an object specified in section 15.

It does not protect an agreement to commit an offence. The closing words exclude it expressly.

It does not make a gherao lawful. On Jay Engineering Works a gherao is invariably accompanied by wrongful restraint or wrongful confinement, and those are offences that the immunity does not touch.

It does not mean peaceful staying-in is criminal trespass. On the same authority it is not, unless the intention is to intimidate, insult or annoy the management or to commit another offence.

It does not protect an unregistered combination.

And it does not give the same protection as section 16. Section 16 is about civil suits and lists three grounds; section 17 is about one criminal charge. They are answers to different attacks.

Limits, criticism and amendments

The immunity is narrow and the criticism is that it is narrow at the point of maximum need. An agreement to strike is protected; the acts that make a strike effective are not, and the line between vigorous picketing and wrongful restraint is drawn by the police in the first instance. Jay Engineering Works is itself a case about police inaction under State circulars, which shows how much practical weight falls on executive discretion rather than on the section.

The measurement by section 15 has become less transparent. The 1926 Act printed the permitted objects in the section, so a reader could see at once what the immunity covered. The Code prescribes them by rules, which means the reach of a criminal immunity now depends on delegated legislation.

The reference to the Indian Penal Code 1860 is a drafting artefact of a Code passed in 2020. It will need attention, and until it gets it a student must quote it as it stands.

Against that, the Code improved one thing. The closing words, "unless such agreement is an agreement to commit an offence", state expressly what the Calcutta High Court had to reach by construction in 1967, so the limit is now on the face of the section.

Quick revision

• Section 17: no office-bearer or member of a registered Trade Union is liable to punishment under section 120B(2) of the Indian Penal Code (45 of 1860) in respect of any agreement made between the members for the purpose of furthering any object specified in section 15, unless the agreement is an agreement to commit an offence.
• The immunity attaches to the agreement, not to the acts, and it names one offence.
• Measured by section 15, whose objects are prescribed by rules, not printed.
• Jay Engineering Works, AIR 1968 Cal 407 (FB): gherao is a physical blockade by encirclement or forcible occupation, target a place or persons, invariably accompanied by wrongful restraint or wrongful confinement, object to compel submission without recourse to the machinery provided by law. The immunity is "of a limited nature"; there is nothing which, apart from immunity from criminal conspiracy, allows immunity from any criminal offence; wrongful restraint and confinement cannot be saved by the section; a combination cannot claim immunity if they conspire to commit an offence; workers may strike peacefully but have no right to wrongful restraint, wrongful confinement or criminal trespass, all cognizable. Staying in peacefully to appeal to management is not an offence.
• Rohtas Industries, AIR 1976 SC 425: the civil immunity is likewise not an immunity from all legal proceedings, and sabotage is no weapon in workers' legal armoury.
• Quote the IPC reference as the section prints it; the penal law is now the Bharatiya Nyaya Sanhita 2023 and the reference is read as one to the corresponding provision.

Test yourself

1. State section 17 and identify what it does not cover. No office-bearer or member of a registered Trade Union is liable to punishment under sub-section (2) of section 120B of the Indian Penal Code in respect of any agreement made between the members for the purpose of furthering any such object of the Trade Union as is specified in section 15, unless the agreement is an agreement to commit an offence. It does not cover an unregistered combination; an agreement with persons who are not members; an agreement for a purpose outside section 15; an agreement to commit an offence; or any substantive offence actually committed.

2. What is a gherao, and is it protected? On Jay Engineering Works Ltd. v. State of West Bengal, AIR 1968 Cal 407, a gherao is a physical blockade of a target, either by encirclement or forcible occupation, the target being a place or persons, usually the managerial or supervisory staff, the blockade being complete or partial and invariably accompanied by wrongful restraint or wrongful confinement and occasionally by assault, criminal trespass, mischief and unlawful assembly, its object being to compel those who control industry to submit without recourse to the machinery provided by law. It is not protected. The Court held that wrongful restraint and wrongful confinement cannot be saved by the immunity or indeed by any provision of the statute, since there is nothing which, apart from immunity from criminal conspiracy, allows immunity from any criminal offence.

3. Workers agree among themselves to confine the manager until their demands are met. Can they claim the immunity for the agreement itself? No. Section 17 excepts an agreement which is an agreement to commit an offence, and confining the manager is an offence. Jay Engineering Works puts the same point directly: a combination of industrial workers cannot claim immunity from being charged with criminal conspiracy if they conspire to commit an offence, and whether there was such a conspiracy is a question of fact.

4. Forty workers sit peacefully inside the factory refusing to leave until management hears them. Is that criminal trespass? Not on those facts. On Jay Engineering Works, factory workers have a right to enter the factory, and their staying in becomes criminal trespass when it appears that they intend to intimidate, insult or annoy the management or to commit any other offence. Staying in peacefully for the purpose of appealing to the management to grant some concessions would not be an offence, and the Court advised that police action be avoided in such cases.

5. Why does section 15 matter to section 17? Because section 17 measures the immunity by section 15: it protects an agreement made for the purpose of furthering "any such object of the Trade Union as is specified in section 15". An agreement to further an object within section 15 is protected from the conspiracy charge; an agreement to further something outside it is not. Since section 15 prescribes the objects by rules rather than printing them, the objects that govern the union's general fund also fix the reach of this criminal immunity.

6. Compare the immunity in section 16 with that in section 17.

Section 18 is the answer, and it is why MU's topic 1.4, which names only "Criminal and Civil", nonetheless requires three sections to answer properly.

Some words this chapter uses

Restraint of trade means a restriction on a person's freedom to carry on his trade, profession or business, or here to dispose of his labour.

Void means of no legal effect at all; the agreement never had force. Voidable means valid until one party elects to avoid it.

Notwithstanding anything contained in any other law for the time being in force is a non obstante clause. It means the section prevails over any other law that would otherwise apply, which here is principally section 27 of the Indian Contract Act 1872.

Valid and enforceable are different. A valid agreement is one the law recognises. An enforceable agreement is one a court will compel performance of, or award damages for breaking. Section 18 makes certain agreements valid without making all of them enforceable.

Entertain, in the proviso, means to receive and deal with a proceeding. A court that may not entertain a proceeding must decline it at the threshold.

Section 18: the main provision

Notwithstanding anything contained in any other law for the time being in force, an agreement between the members of a registered Trade Union shall not be void or voidable merely by reason of the fact that any of the objects of the agreement are in restraint of trade.

Take the four elements.

The non obstante clause. "Notwithstanding anything contained in any other law for the time being in force" is what lifts the agreement clear of section 27 of the Indian Contract Act 1872, and of anything else to the same effect.

The agreement must be between the members of a registered Trade Union. Two limits are in those words. It must be an agreement between the members, so an agreement between the union and an outsider is not within the section. And the union must be registered, which is the same condition as in sections 16 and 17.

"Shall not be void or voidable." Both words are used, so the agreement is neither a nullity nor liable to be set aside at the election of a party.

"Merely by reason of the fact that any of the objects of the agreement are in restraint of trade." The word merely does the same work here that "on the ground only" does in section 16. The section removes one ground of invalidity. It does not validate an agreement that is bad for some other reason: an agreement between members which was procured by fraud, or which is unlawful on some other ground, remains bad, and section 18 has nothing to say about it.

Note also "any of the objects". It is enough that one object of the agreement is in restraint of trade; the agreement does not fail because that object sits alongside others.

The proviso, and the distinction that carries the marks

Provided that nothing in this section shall enable any civil court to entertain any legal proceedings instituted for the 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.

This is where most answers go wrong, and the error is always the same: treating the proviso as an exception that makes the agreement void again. It does not. Read what it actually says.

The proviso is about the COURT, not about the agreement. It says that nothing in the section shall enable any civil court to entertain proceedings of a certain kind. The agreement remains perfectly valid under the main provision; what the proviso withholds is the assistance of a civil court.

Which proceedings are withheld? Those instituted for the purpose of enforcing or recovering damages for the breach of an 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.

So the position after section 18, stated in one sentence, is this: the union's rules are valid, and they are not enforced through the civil courts.

Why the law arranges it that way, because an examiner may ask. Two reasons, and both are worth a line.

The first is that the union does not need a court. A union enforces its rules by its own machinery: a fine or forfeiture under the conditions its rules must contain by section 7(g), or ultimately expulsion under its rules. Its sanctions are internal and immediate, and they work better than litigation ever could among members earning daily wages.

The second is that the law is unwilling to lend the machinery of the State to compel a person to work, or not to work, on particular terms. An order enforcing an agreement about the conditions on which a person shall or shall not work comes uncomfortably close to compelling labour, and a court will not make one. Validity is one thing; the coercive power of the court is another.

And notice the symmetry. The list in the proviso covers agreements about whether members shall work or be employed, and equally about whether they shall employ. It applies as much to a registered employers' association, which is a Trade Union under section 2(zl), as to a union of workers.

How section 18 fits with the proviso to section 2(zl)

These two provisions are designed to work together, and seeing the pair is what turns a competent answer into a complete one.

Section 18 lifts a union's internal agreements clear of the restraint of trade doctrine. Left alone, that could be exploited. Any two parties whose bargain contained a restriction on trade could describe themselves as a combination, register, and claim that section 18 saved a covenant that section 27 of the Contract Act would otherwise void.

The proviso to section 2(zl) closes that door, by providing that the provisions of Chapter III shall not affect three kinds of agreement: an agreement between partners as to their own business; an agreement between an employer and those employed by him as to such employment; and an agreement in consideration of the sale of the goodwill of a business or of instruction in any profession, trade or handicraft.

All three are ordinary commercial or employment bargains containing restrictions on trade. By putting them outside Chapter III, the Code makes sure that section 18 rescues the union's rules and nothing else. The validity of an employer's non-compete covenant is decided where it always was, by section 27 of the Indian Contract Act 1872, and the parties cannot improve their position by registering as a Trade Union.

The three immunities, side by side

MU's topic 1.4 is answered completely only by all three. This table is the answer in one place.

Read down the last row of that table and the theme of the whole of MU's topic 1.4 appears: every one of the three immunities is limited, and the limit is where the marks are.

A worked example

The facts. The Wada Packaging Workers' Union is registered. Rule 14 of its rules, adopted by the members, provides that no member shall accept work at a rate below the rate fixed by the general body, and that a member who does so shall pay a fine of five hundred rupees. Rule 15 provides that no member shall take up work at a unit where a strike called by the union is in progress.

Are rules 14 and 15 void as restraints of trade? No. Both restrict how the members may dispose of their labour, so section 27 of the Indian Contract Act 1872 would ordinarily bite. Section 18 provides that an agreement between the members of a registered Trade Union shall not be void or voidable merely by reason that any of its objects are in restraint of trade, and the non obstante clause lifts it clear of the Contract Act. The rules are valid.

A member, Nitin, takes work at a lower rate. The union sues him in the civil court for damages for breaking rule 14. The suit cannot be entertained. The proviso to section 18 provides that nothing in the section shall enable any civil court to entertain proceedings instituted for the purpose of enforcing, or recovering damages for the breach of, any agreement concerning the conditions on which members shall or shall not work or be employed. Rule 14 is exactly such an agreement.

So has the union any remedy at all? Yes, but not from the court. It has its own machinery. Section 7(g) requires the union's rules to provide the conditions under which a fine or forfeiture may be imposed on a member, and rule 14 provides for a fine of five hundred rupees. The union may impose it under its rules. If Nitin says the fine was imposed irregularly, his remedy is not a civil suit either: a dispute between a member and his union regarding the administration or management of the union goes to the Tribunal under section 22(1)(b), and section 22(2) bars every other civil court.

Change the parties. The Wada Packaging Owners' Association, an employers' body registered as a Trade Union under section 2(zl), agrees among its members that none will pay above a stated rate. Section 18 applies to it in the same way, because it speaks of an agreement between the members of a registered Trade Union, and the proviso covers agreements about the conditions on which members shall or shall not employ.

Now a different agreement altogether. Two brothers running a dyeing unit make a partnership deed by which each agrees not to carry on a competing business. They register themselves as a trade union and argue that section 18 saves the covenant from section 27 of the Contract Act. The argument fails at the door. The proviso to section 2(zl) provides that the provisions of Chapter III shall not affect any agreement between partners as to their own business. Chapter III does not reach the deed at all, so section 18 cannot be used on it, and its validity is decided by the ordinary law.

The same answer, for the same reason, if an employer tries to use section 18 to save a non-compete clause in a contract of employment, that being an agreement between an employer and those employed by him as to such employment, and equally if a seller of a business tries to use it on a goodwill covenant.

What this does NOT mean

It does not mean the agreement is unenforceable in every sense. It is valid, and the union enforces it internally through the fines, forfeitures and expulsion its rules provide for under section 7(g). What the proviso withholds is the civil court.

It does not mean the proviso makes the agreement void. Validity and enforceability are different questions, and the section answers them differently on purpose.

It does not save an agreement bad on some other ground. The word is merely: section 18 removes one ground of invalidity and no other.

It does not apply to an unregistered combination. Like sections 16 and 17, it speaks of a registered Trade Union.

It does not apply to agreements with outsiders. It covers an agreement between the members.

It does not rescue ordinary commercial covenants. The proviso to section 2(zl) keeps partnership agreements, employment agreements and goodwill covenants outside Chapter III entirely.

Limits, criticism and amendments

The section is a re-enactment. It reproduces the substance of section 19 of the Trade Unions Act 1926, repealed on 21 November 2025, so the position has been the same for a century and there is little Indian authority on it, which is itself a sign that it works: a provision that removes a ground of invalidity is rarely litigated, because nobody bothers to take a point that is bound to fail.

The proviso is criticised as leaving the union without a remedy. That criticism is overstated once the union's own machinery under section 7(g) and section 22 is taken into account, but it has force where a member simply leaves the union after breaking the rule, since expulsion is then no sanction at all.

The section is silent about the union's agreements with the employer. A settlement with an employer is not an agreement "between the members", so section 18 does not touch it; settlements and awards are dealt with separately, in sections 57 and 58, and belong to Module II.

And the drafting of the proviso is dense. Five verbs, "sell their goods, transact business, work, employ or be employed", carry the whole of its scope, and a reader who skims them will not notice that the section covers employers' associations as squarely as it covers unions of workers.

Quick revision

• Section 18, main provision: notwithstanding any other law, an agreement between the members of a registered Trade Union shall not be void or voidable merely by reason that any of its objects are in restraint of trade.
• The non obstante clause lifts it clear of section 27 of the Indian Contract Act 1872.
• The proviso withholds the civil court, not the validity: no civil court may entertain proceedings to enforce, or recover damages for the breach of, an agreement concerning the conditions on which members shall or shall not sell their goods, transact business, work, employ or be employed.
• Valid but not enforceable through the courts. The union enforces internally: fines and forfeitures under section 7(g), and a dispute about administration or management goes to the Tribunal under section 22(1)(b), with civil courts barred by section 22(2).
• The proviso to section 2(zl) keeps three ordinary bargains outside Chapter III entirely: partners' agreements as to their own business; agreements between an employer and those employed by him; and agreements in consideration of the sale of goodwill or of instruction in a profession, trade or handicraft. So section 18 rescues the union's rules and nothing else.
• All three immunities require a registered union, and all three are limited: "on the ground only" in 16, "unless an agreement to commit an offence" in 17, "merely by reason" plus the proviso in 18.

Test yourself

1. What problem does section 18 solve? That a trade union's rules are, on their face, agreements in restraint of trade. The members agree not to work below a rate, not to accept unapproved terms, and to stop work when the union decides, each of which restrains their freedom to dispose of their labour. Under section 27 of the Indian Contract Act 1872 such agreements would be void, which would leave the union unable to hold its own members to anything, dissolving the combination from within. Section 18 provides that such an agreement between the members of a registered Trade Union shall not be void or voidable merely because any of its objects are in restraint of trade.

2. State the proviso and explain precisely what it takes away. The proviso is that nothing in the section shall enable any civil court to entertain any legal proceedings instituted for the 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. It takes away the assistance of the civil court, not the validity of the agreement. The agreement remains valid under the main provision; what the union cannot do is sue on it.

3. A member breaks a union rule about accepting work below the agreed rate. What can the union do? It cannot sue him in a civil court, because the proviso to section 18 prevents a civil court from entertaining proceedings to enforce, or recover damages for the breach of, an agreement concerning the conditions on which members shall or shall not work. It can use its own machinery: section 7(g) requires the union's rules to provide the conditions under which a fine or forfeiture may be imposed on a member, and the rules may also provide for expulsion. If the member disputes the way the union has proceeded, that is a dispute regarding the administration or management of the union, which goes to the Tribunal under section 22(1)(b), civil courts being barred by section 22(2).

4. Can an employer use section 18 to save a non-compete clause in a contract of employment? No. The proviso to section 2(zl) provides that the provisions of Chapter III shall not affect any agreement between an employer and those employed by him as to such employment. Chapter III, and therefore section 18, does not reach such an agreement at all, and its validity falls to be decided by the ordinary law, principally section 27 of the Indian Contract Act 1872. The same answer applies to a partnership agreement as to the partners' own business and to a covenant given in consideration of the sale of goodwill.

5. Why is it wrong to say the proviso makes the agreement void? Because validity and enforceability are distinct. The main provision makes the agreement valid by removing one ground of invalidity. The proviso is addressed to the court, saying that nothing in the section shall enable a civil court to entertain certain proceedings. An agreement that a court will not enforce is not thereby a nullity, and the union's internal sanctions operate on it perfectly well.

6. MU's topic says "Immunities in trade disputes: Criminal and Civil". How many sections does a complete answer need, and why? Three. Section 17 answers the criminal impediment, the offence of conspiracy. Section 16 answers the civil impediment in tort, the suit for inducing a breach of the contract of employment and for interference with trade or business. But there was a third impediment, and it was neither criminal nor tortious: the rule that an agreement in restraint of trade is void, which made the union's own rules unenforceable and so destroyed it from within. Section 18 answers that, and an answer that gives only two immunities has left out the one that attacked the union internally.