Disputes, Change of Name, Amalgamation and Dissolution

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.