Awards and Settlements: Powers, Form, Operation and Recovery

Some words this chapter uses

Award, section 2(e), is the determination of an industrial dispute by a Tribunal or National Industrial Tribunal, and includes an arbitration award.

Enforceable means legally operative, so that non-compliance has consequences. An award becomes enforceable under section 55(3).

Comes into operation is a different question from enforceability, and section 55(6) keeps them apart: an award operates from the date specified in it, or from the date it becomes enforceable if none is specified.

Assigns, in section 57(3)(c), are persons to whom the employer has transferred the establishment.

Arrear of land revenue is a class of debt recoverable by the Collector using a summary statutory procedure, without a suit.

Interim relief is relief granted while the case is still going on.

Section 49: procedure and powers

49(1): subject to the Code and the rules, an arbitrator, conciliation officer, Tribunal or National Industrial Tribunal shall follow such procedure as it may deem fit.

49(2): a conciliation officer, or an officer authorised by the Tribunal or National Industrial Tribunal, may, for the purpose of inquiry into an existing or apprehended industrial dispute, after giving reasonable notice, enter the premises occupied by any establishment to which the dispute relates.

49(3): the conciliation officer, Tribunal and National Industrial Tribunal have the same powers as are vested in a civil court under the Code of Civil Procedure 1908 when trying a suit, in respect of:

• (a) enforcing the attendance of any person and examining him on oath;
• (b) compelling the production of documents and material objects;
• (c) issuing commissions for the examination of witnesses;
• (d) such other matters as may be prescribed;

and every inquiry or investigation by a Tribunal or National Industrial Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code.

The deeming in the closing words is worth a line. Sections 193 and 228 of the penal law deal with false evidence and with insult or interruption to a public servant sitting in a judicial proceeding. Making a Tribunal's inquiry a judicial proceeding for those purposes means a witness who lies to it can be prosecuted for perjury.

And note the freedom in sub-section (1). The forum follows such procedure as it deems fit. It is not bound by the Code of Civil Procedure generally; it is given specific civil court powers by sub-section (3) without being made a civil court.

Section 50: what the Tribunal may order in a dismissal case

50(1): where an application under section 53(6) relating to an industrial dispute involving discharge or dismissal or otherwise termination of a worker has been made to a Tribunal, or referred to a National Industrial Tribunal, and in the course of the proceedings the forum is satisfied that the order of discharge or dismissal or termination was not justified, it may, by its award:

• set aside the order of discharge, dismissal or termination and direct reinstatement of the worker on such terms and conditions, if any, as it thinks fit; or
• give such other relief to the worker, including the award of any lesser punishment in lieu of discharge, dismissal or termination, as the circumstances of the case may require.

50(2): the forum may, in the interest of justice, grant such interim relief to the worker during the pendency of the dispute as the circumstances require, provided that in any such proceeding it shall rely only on the materials placed before it.

Three features deserve emphasis.

The threshold is "not justified", not "illegal". The forum is not confined to procedural error. It asks whether the punishment was justified on the facts.

Reinstatement is discretionary and may be conditional. The words are "on such terms and conditions, if any, as it thinks fit". So the forum may reinstate with or without back wages, with or without continuity of service.

The power to substitute a lesser punishment is the practically important one. Without it a Tribunal faced with proved but minor misconduct punished by dismissal would have to choose between an excessive punishment and none at all. With it, it can confirm the misconduct and reduce the penalty, which is what most such cases actually need.

Section 55: the form of the award, and when it bites

55(1): the award of a Tribunal, delivered by a two-member bench or by a single Judicial or Administrative Member, or of a National Industrial Tribunal, shall be in writing and shall be signed electronically or otherwise by both members, or by the member by whom it is delivered.

55(2): every arbitration award and every award of a Tribunal or National Industrial Tribunal shall be communicated to the parties concerned and the appropriate Government.

55(3): an award becomes enforceable on the expiry of thirty days from the date of its communication under sub-section (2).

The proviso is the exception and it is narrow. If the appropriate Government is of opinion, where the award was given by a Tribunal in relation to an industrial dispute to which it is a party, or the Central Government is of opinion where the award was given by a National Industrial Tribunal, that it will be inexpedient on public grounds affecting national economy or social justice to give effect to the whole or any part of the award, that Government may by notification declare that the award shall not become enforceable on the expiry of the thirty days.

55(4): where such a declaration is made, the Government may, within ninety days from the communication of the award, make an order rejecting or modifying the award, and shall on the first available opportunity lay the award together with a copy of the order before the Legislature of the State, or before Parliament if the order was made by the Central Government.

55(5): where an award so rejected or modified is laid before the Legislature or Parliament, it becomes enforceable on the expiry of fifteen days from the date it is so laid; and where no order under sub-section (4) is made in pursuance of the declaration, the award becomes enforceable on the expiry of the ninety days.

55(6): subject to sub-sections (3) and (5), the award comes into operation from the date specified in it, and where none is specified, from the date it becomes enforceable.

The scheme deserves to be set out plainly because it is a favourite question. The ordinary rule is thirty days and nothing else happens. The exception requires three things at once: the Government must be a party to the dispute (or the award must be of a National Industrial Tribunal), it must form an opinion of inexpediency on public grounds affecting national economy or social justice, and it must act by notification. Even then, the award is not destroyed: the Government must act within ninety days, and whatever it does must be laid before the Legislature or Parliament, so the decision is answerable to the elected house. And if the Government does nothing after its declaration, the award becomes enforceable anyway when the ninety days expire.

Section 56: full wages pending an employer's appeal

Where a Tribunal or National Industrial Tribunal by its award directs reinstatement of a worker and the employer prefers any proceedings against that award in a High Court or the Supreme Court, the employer shall be liable to pay that worker, during the pendency of those proceedings, full wages last drawn by him, inclusive of any maintenance allowance admissible under any rule, if the worker had not been employed in any establishment during that period and an affidavit by the worker to that effect had been filed in that Court.

A proviso allows the Court, where it is proved to its satisfaction that the worker had been employed and had been receiving adequate remuneration during any such period or part of it, to order that no wages shall be payable for that period or part.

This section is the answer to a real abuse and a student should say so. A worker wins reinstatement after three years of litigation. The employer appeals, and the appeal takes another four. Without section 56 the worker is out of work and out of money for those four years while his victory is under challenge, and the employer has every incentive to appeal simply for the delay.

Three conditions must be satisfied, and each is examinable. The award must direct reinstatement. The proceedings must be by the employer, in a High Court or the Supreme Court. And the worker must not have been employed elsewhere, and must have filed an affidavit to that effect in that Court.

And the proviso keeps it honest. If the employer proves the worker was employed and receiving adequate remuneration, the Court may order that no wages are payable for that period.

Section 57: on whom settlements and awards are binding

57(1): a settlement arrived at by agreement between the employer and worker otherwise than in the course of conciliation proceedings is binding on the parties to the agreement.

57(2): subject to sub-section (3), an arbitration award which has become enforceable is binding on the parties to the agreement who referred the dispute to arbitration.

57(3): a settlement arrived at in the course of conciliation proceedings, or an arbitration award, or an award of a Tribunal or National Industrial Tribunal which has become enforceable, is binding on:

• (a) all parties to the industrial dispute;
• (b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the arbitrator or Tribunal records the opinion that they were summoned without proper cause;
• (c) where a party in (a) or (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates;
• (d) where a party in (a) or (b) is composed of workers, all persons who were employed in the establishment or part of it on the date of the dispute, and all persons who subsequently become employed in that establishment or part.

Compare sub-section (1) with sub-section (3) and the whole design appears. A private settlement binds only the people who made it. A settlement made in conciliation, or an award, binds the establishment.

Clause (c) prevents escape by transfer. An employer cannot defeat an award by selling the business; his successors and assigns are bound in respect of that establishment.

Clause (d) is the widest binding provision in the Code and it works forwards in time. A worker hired next year, who was not employed on the date of the dispute, who has never heard of the union that fought it, is bound by the award. Without it every new recruit would be outside the settlement and the employer could erode it simply by replacing staff.

And clause (b) has a safeguard. A party summoned to appear is bound, unless the forum records the opinion that he was summoned without proper cause. That prevents a party being dragged in and bound for no reason.

Section 58: how long they last

Settlements

58(1): a settlement comes into operation on the date agreed by the parties, and if no date is agreed, on the date the memorandum of settlement is signed.

58(2): it is binding for the period agreed by the parties, and if none is agreed, for six months from the date the memorandum is signed; and it continues to be binding after that period until the expiry of sixty days from the date on which a notice in writing of an intention to terminate the settlement is given by one party to the others.

Read sub-section (2) carefully, because it is drafted to prevent a cliff edge. A settlement does not simply lapse. Even after its period expires it goes on binding until somebody gives written notice to terminate and sixty days pass. So the parties always have two months in which to negotiate a replacement before the terms disappear.

Awards

58(3): an award remains in operation for one year from the date it becomes enforceable under section 55.

First proviso: the appropriate Government may reduce that period and fix such period as it thinks fit.

Second proviso: the appropriate Government may, before the expiry of the period, extend the period of operation by any period not exceeding one year at a time, so however that the total period of operation does not exceed three years from the date it came into operation.

58(4): where the appropriate Government, of its own motion or on the application of a party bound by the award, considers that since the award was made there has been a material change in the circumstances on which it was based, it may refer the award or part of it to the Tribunal for a decision whether the period of operation should be shortened, and the decision of the Tribunal on such reference shall be final.

58(5): sub-section (3) does not apply to an award which by its nature, terms or other circumstances does not impose, after it has been given effect to, any continuing obligation on the parties.

Sub-section (5) is the one students miss. An award reinstating a dismissed worker, once obeyed, imposes no continuing obligation: the worker is back. Such an award does not expire after a year, because there is nothing left to expire. The one-year rule applies to awards that fix a continuing state of affairs, such as a wage scale.

Section 59: getting the money

59(1): where any money is due to a worker from an employer under a settlement or an award, or under Chapter IX or Chapter X, the worker himself, or any person authorised by him in writing, or, in the case of his death, his assignee or heirs, may, without prejudice to any other mode of recovery, apply to the appropriate Government for recovery; and if that Government is satisfied that money is due, it shall issue a certificate for that amount to the Collector, who shall proceed to recover it in the same manner as an arrear of land revenue.

First proviso: every such application shall be made within one year from the date the money became due.

Second proviso: an application may be entertained after that year if the appropriate Government is satisfied that the applicant had sufficient cause for not applying within it.

59(2): where a worker is entitled to receive from the employer any money or any benefit capable of being computed in terms of money, and a question arises as to the amount due or the amount at which the benefit should be computed, that question may, subject to the rules, be decided by such Tribunal as may be specified.

Two things make this section powerful. Recovery as an arrear of land revenue is a summary process: no suit, no decree, no execution proceedings. And the words "without prejudice to any other mode of recovery" mean the worker does not lose his ordinary remedies by using this one.

Chapters IX and X, mentioned in sub-section (1), are lay-off, retrenchment and closure, which belong to Module III. Their compensation is recoverable by this route.

Section 61: confidentiality

There shall not be included in any report or award any information obtained by a conciliation officer, arbitrator, Tribunal or National Industrial Tribunal in the course of any investigation or inquiry as to a Trade Union or as to any individual business, whether carried on by a person, firm or company, which is not available otherwise than through the evidence given before that officer or forum, if the Trade Union, person, firm or company has made a request in writing that the information be treated as confidential; nor shall that officer, arbitrator, presiding officer, or any person present at or concerned in the proceedings disclose any such information without the consent in writing of the secretary of the Trade Union or of the person, firm or company.

The conditions are cumulative and a good answer lists them. The information must have been obtained in an investigation or inquiry; it must relate to a Trade Union or an individual business; it must not be available except through the evidence given in the proceedings; and a written request for confidentiality must have been made.

The reason for the section is the price of section 49(3). The forum can compel the production of documents and material objects. An employer required to disclose his accounts, or a union required to disclose its membership, would be seriously prejudiced if the material then appeared in a published award. Section 61 is the protection that makes the compulsion tolerable.

A worked example

The facts. Meera was dismissed. The union applied to the Tribunal under section 53(6). A two-member bench heard the case, as section 44(7)(b) requires.

The Tribunal finds the misconduct proved but the dismissal excessive. Under section 50(1) it may set aside the dismissal and direct reinstatement on such terms as it thinks fit, or give such other relief including the award of a lesser punishment in lieu of dismissal. It orders reinstatement without back wages and substitutes a written warning. It could also have granted interim relief during the pendency under section 50(2), relying only on the materials before it.

The award. It is in writing and signed by both members, section 55(1), and is communicated to the parties and the appropriate Government, section 55(2). It becomes enforceable on the expiry of thirty days from that communication, section 55(3), and since no date of operation is specified in it, it comes into operation on that same date, section 55(6).

Who is bound? Under section 57(3) the award binds all parties to the dispute; any other party summoned to appear, unless the Tribunal records that they were summoned without proper cause; the employer's heirs, successors and assigns in respect of that establishment; and all persons employed in the establishment on the date of the dispute and all persons who subsequently become employed in it.

The employer sells the plant. The buyer is bound, being an assign in respect of the establishment, section 57(3)(c).

A worker hired six months after the award argues it does not apply to him. It does, under section 57(3)(d): all persons who subsequently become employed in the establishment are bound.

The employer files a writ petition in the High Court against the award. Under section 56 he must pay Meera, throughout the pendency, full wages last drawn, inclusive of any maintenance allowance admissible under any rule, provided she has not been employed elsewhere and has filed an affidavit to that effect in that Court. If he proves she was employed elsewhere on adequate remuneration, the Court may order that no wages are payable for that period.

How long does the award last? Under section 58(3) an award remains in operation for one year from the date it becomes enforceable, extendable by the appropriate Government by not more than one year at a time and never beyond three years in total, and reducible by that Government. But note section 58(5): an award of reinstatement, once given effect to, imposes no continuing obligation, so the one-year rule does not apply to it.

Now suppose the dispute had ended in a settlement in conciliation, with no period agreed. Under section 58(2) it binds for six months from the signing of the memorandum, and continues to bind after that until sixty days from a written notice of intention to terminate.

Meera is reinstated but the employer does not pay the allowance the award directed. Under section 59(1) she, or a person authorised by her in writing, may apply to the appropriate Government within one year of the money becoming due, and if the Government is satisfied it shall issue a certificate to the Collector, who recovers it as an arrear of land revenue. If she is late, the second proviso allows the application to be entertained on sufficient cause. And if there is a dispute about how much is due, section 59(2) sends that question to the specified Tribunal.

A last point. During the hearing the employer was compelled to produce his costing records and asked in writing that they be treated as confidential. Under section 61 that information may not be included in the award, nor disclosed by anyone present at or concerned in the proceedings without his written consent, provided it was not available otherwise than through the evidence given.

What this does NOT mean

It does not mean the Tribunal must reinstate. Section 50(1) gives it a choice: set aside and reinstate on such terms as it thinks fit, or grant other relief including a lesser punishment.

It does not mean an award is enforceable at once. Thirty days from communication, section 55(3), and longer where the Government makes a declaration under the proviso.

It does not mean the Government can simply cancel an award. The power under the proviso to section 55(3) applies only where it is a party to the dispute (or the award is of a National Industrial Tribunal), requires an opinion of inexpediency on public grounds affecting national economy or social justice, must be exercised within ninety days, and the result must be laid before the Legislature or Parliament.

It does not mean every settlement binds the establishment. A settlement made outside conciliation binds only the parties to it, section 57(1). Only a settlement made in conciliation, and an award, carry the wide binding effect in section 57(3).

It does not mean every award expires after a year. Section 58(5) excepts an award which by its nature, terms or other circumstances imposes no continuing obligation once given effect to.

It does not mean section 56 pays a worker who has found other work. The section requires that he had not been employed in any establishment during the period and had filed an affidavit to that effect, and the proviso lets the Court disallow wages where he was employed on adequate remuneration.

It does not mean the recovery route is exclusive. Section 59(1) says it operates without prejudice to any other mode of recovery.

Limits, criticism and amendments

The Government's power under the proviso to section 55(3) is the most criticised provision in Chapter VII, because it lets a Government that is itself a party to the dispute declare the award against it unenforceable. The safeguards are real, an opinion confined to public grounds affecting national economy or social justice, a ninety-day limit, and the obligation to lay the award and the order before the elected house, but the power exists and it is exercised by an interested party.

Section 56's protection depends on the worker's own affidavit and on his remaining unemployed, which is a hard condition for a person with no income; and it applies only where the employer takes the matter to a High Court or the Supreme Court, not to proceedings elsewhere.

Section 58(3)'s one-year period is short for an award that settles a wage structure, and extension depends on the appropriate Government acting before the period expires.

And section 59's one-year limitation runs from the date the money became due, which for a worker who does not know what he is owed can expire before he discovers it. The second proviso's "sufficient cause" is the only answer.

Against that, the Chapter contains three genuinely strong worker protections: the power to substitute a lesser punishment in section 50, which prevents the all-or-nothing choice; the forward-looking binding rule in section 57(3)(d), which stops an award being eroded by staff turnover; and recovery as an arrear of land revenue in section 59, which is faster than any suit.

Quick revision

• 49: procedure as the forum deems fit; power to enter premises after reasonable notice; civil court powers as to attendance on oath, production of documents and material objects, and commissions; inquiries deemed judicial proceedings for sections 193 and 228 of the penal law.
• 50: on an application under section 53(6) about discharge, dismissal or termination, if satisfied the order was not justified, the forum may set it aside and reinstate on such terms as it thinks fit, or give other relief including a lesser punishment; and may grant interim relief on the materials before it.
• 55: award in writing and signed; communicated to the parties and the Government; enforceable after thirty days. Proviso: where the Government is a party (or the award is of a National Industrial Tribunal), and it is inexpedient on public grounds affecting national economy or social justice, it may declare the award not enforceable; then within ninety days it may reject or modify, and must lay it before the Legislature or Parliament; enforceable fifteen days after laying, or on the expiry of the ninety days if no order is made. 55(6): operation from the date specified, else from enforceability.
• 56: award of reinstatement plus an employer's proceedings in a High Court or the Supreme Court equals full wages last drawn during pendency, on the worker's affidavit that he was not employed elsewhere; proviso where he was employed on adequate remuneration.
• 57(1): settlement outside conciliation binds the parties only. 57(3): settlement in conciliation, an arbitration award, or a Tribunal award binds all parties; those summoned, unless summoned without proper cause; the employer's heirs, successors and assigns; and all persons employed on the date of the dispute AND all who subsequently become employed.
• 58(1), (2): settlement operates from the agreed date or the date of signing; binds for the agreed period, else six months, and thereafter until sixty days from a written notice to terminate. 58(3): an award operates for one year, reducible, extendable by not more than a year at a time, never beyond three. 58(4): on a material change of circumstances the Government may refer it to the Tribunal to shorten the period, whose decision is final. 58(5): no expiry for an award imposing no continuing obligation.
• 59: money due under a settlement, an award, or Chapter IX or X, recovered on application to the appropriate Government, which certifies to the Collector, who recovers it as an arrear of land revenue; within one year, extendable on sufficient cause; without prejudice to any other mode; disputes about amount go to the specified Tribunal.
• 61: information about a Trade Union or an individual business, not available except through the evidence given, is excluded from any report or award and may not be disclosed, where a written request for confidentiality was made.

Test yourself

1. What relief may a Tribunal grant in a dismissal case? Under section 50(1), where an application under section 53(6) relating to discharge, dismissal or other termination has been made and the forum is satisfied that the order was not justified, it may by its award set aside the order and direct reinstatement of the worker on such terms and conditions, if any, as it thinks fit, or give such other relief to the worker, including the award of any lesser punishment in lieu of discharge, dismissal or termination, as the circumstances require. Under section 50(2) it may also, in the interest of justice, grant interim relief during the pendency of the dispute, relying only on the materials placed before it.

2. When does an award become enforceable, and can a Government stop it? Under section 55(3) an award becomes enforceable on the expiry of thirty days from the date of its communication under section 55(2). The proviso allows the appropriate Government, where the award was given by a Tribunal in relation to a dispute to which that Government is a party, or the Central Government where it was given by a National Industrial Tribunal, to declare by notification that the award shall not become enforceable on the expiry of that period, if it is of opinion that giving effect to the whole or part of it would be inexpedient on public grounds affecting national economy or social justice. Under section 55(4) it may then within ninety days make an order rejecting or modifying the award and must lay the award and the order before the State Legislature or Parliament; under section 55(5) the award becomes enforceable fifteen days after being so laid, or on the expiry of the ninety days if no order is made.

3. On whom is an award binding? Under section 57(3) an award of a Tribunal or National Industrial Tribunal which has become enforceable, an arbitration award, and a settlement arrived at in conciliation are binding on all parties to the industrial dispute; on all other parties summoned to appear in the proceedings as parties to the dispute, unless the forum records the opinion that they were summoned without proper cause; where such a party is an employer, on his heirs, successors or assigns in respect of the establishment to which the dispute relates; and where such a party is composed of workers, on all persons who were employed in the establishment or part of it on the date of the dispute and all persons who subsequently become employed in that establishment or part. By contrast, section 57(1) makes a settlement arrived at otherwise than in conciliation binding only on the parties to the agreement.

4. How long does a settlement last, and how long an award? A settlement comes into operation on the date agreed, or if none is agreed on the date the memorandum is signed, section 58(1); and it binds for the agreed period, or if none is agreed for six months from that signing, and continues to bind thereafter until the expiry of sixty days from a written notice of intention to terminate given by one party to the others, section 58(2). An award remains in operation for one year from the date it becomes enforceable, section 58(3), which the appropriate Government may reduce, or extend before expiry by not more than one year at a time subject to a total of three years. By section 58(5) that rule does not apply to an award which by its nature, terms or other circumstances imposes no continuing obligation once given effect to.

5. A worker has an award in his favour and the employer will not pay. What can he do? Under section 59(1) he, or any person authorised by him in writing, or on his death his assignee or heirs, may apply to the appropriate Government for recovery of the money due under the settlement or award or under Chapter IX or Chapter X, without prejudice to any other mode of recovery. If the Government is satisfied that money is due it shall issue a certificate for that amount to the Collector, who proceeds to recover it in the same manner as an arrear of land revenue. The application must be made within one year of the money becoming due, though it may be entertained later if the Government is satisfied there was sufficient cause. If a question arises as to the amount due, or as to the amount at which a benefit capable of being computed in money should be computed, section 59(2) sends it to the Tribunal specified for the purpose.

6. Explain section 56 and the mischief it addresses. Where a Tribunal or National Industrial Tribunal directs reinstatement and the employer prefers proceedings against the award in a High Court or the Supreme Court, section 56 makes the employer liable to pay the worker, during the pendency of those proceedings, the full wages last drawn by him, inclusive of any maintenance allowance admissible under any rule, if the worker had not been employed in any establishment during that period and had filed an affidavit to that effect in that Court; and by the proviso, where it is proved that he had been employed and receiving adequate remuneration during any period or part, the Court shall order that no wages are payable for it. The mischief is delay used as a weapon: without the section a worker who won reinstatement would be without work and without income for the years an appeal takes, and the employer would have an incentive to appeal for the delay alone.