"Justice delayed is Justice denied" is the only cluster of words often heard in
case of judicial proceedings, but the current state of the ratio of pending
cases in the Courts of Law considered to be the 'Temples of Justice' clearly
exudes that this rule is of seldom concern by the responsible practitioners of
the same. A learned justice once said that "Judiciary was the last resort for
justice for the common man".
One of the many reasons for such a delay may be the
overburdened judicial system and the consequent delay in justice delivery. In
order to tackle the issue, an Alternate Dispute Resolution system was introduced
consisting of a set of dispute settlement mechanisms outside the courts of which
Arbitration is one of the most popular mechanisms.
The decision of these systems
is legally binding on the parties so involved. Industrial Disputes play a
crucial role as any disturbance would altogether affect the effective
functioning of the industries, thus the government introduced the system of
Voluntary Arbitration for dispute resolution in industries. Unfortunately, this
concept has not reached the deserved standards and certain reforms would resolve
the existing drawbacks.
The research methodology of the study is a critical analysis of the crucial
aspects ensuing inefficiency in the Arbitration System being followed in case of
Industrial Disputes via reviewing certain ad rem articles with special reference
to the legal provisions. The study figures out the existing drawbacks in the
procedure being executed in the industries and subsequently offers certain
necessary suggestions in order to actively contribute towards the resolution of
the issue in place.
The aim of conducting the study is to critically analyse the potential
determinants causing hindrance to the effective application of the statutory
provisions concerned to the Voluntary Reference of Disputes to Arbitration as
specified under the Industrial Disputes Act, 1947, thereby resulting in the
existing gap between the Law and the actual Reality of the matters in this
In view of the existing burdened state of the Nation's Judicial System and that
of the Litigation Procedure which can often be expensive as well as
time-consuming, an effective Dispute Resolution Mechanism was considered
necessary. A response to this very need is the initiation of the Alternate
Dispute Resolution (ADR) Procedure. Being a known fact that time is the most
crucial factor and any delay in the resolution of disputes may be detrimental to
the interest of the parties.
While considering the aspect of Industrial Disputes which on a general basis
concerned with the individuals who work on regular wages in order to earn a
living, thus such disputes demand speedy settlement. Therefore, the system
of Voluntary Reference of Disputes to Arbitration is considered to be the
efficient alternative for the settlement of disputes thereby serving the
Though the theoretical aspects of the subject matter stated supra hold
appropriate in every concerned manner, the results of its application in the
actual scenarios have not reached the required standards as yet, despite the
existence of incredible potential in the process involved. This is the main
objective for conducting a meticulous analysis of the subject matter herein.
Legal Framework of the Concept:
The system of 'Arbitration' is an Alternative Dispute Resolution Form by way of
which disputes are resolved outside the courts. In simple terms, arbitration is
a procedure in which a dispute is referred to a set of persons who act
as 'Arbitrators' who thereby hear the facts and arguments of both parties and
solve the dispute by delivering their decision for the same.
The point to be
noted is that, though the settlement of dispute occurs outside the court, the
decision so obtained in the matters concerned will be legally binding on both
the parties who have mutually agreed to submit the dispute for settlement and
such a decision will be enforceable in the Court of Law. The method of
arbitration is less formal and less expensive when compared to a courtroom
hearing or trial.
Arbitration in Industrial Disputes:The term 'Industrial Dispute' has been defined under section 2 (k) of the
Industrial Disputes Act, 1947 as:
"Industrial Dispute means any dispute or difference between employers and
employers, or between employers and workmen, or between workmen and workmen,
which is connected with the employment or non-employment or the terms of
employment or with the conditions of labour, of any persons;
The definition stated supra can be analysed and discussed under the following
- There should exist a dispute or difference;
- The dispute or difference should be between:
- Employer and employer;
- Employer and workmen; or
- Workmen and workmen
- The dispute or difference should be connected with:
- the employment or non-employment, or;
- terms of employment, or
- the conditions of labour of any person;
- The dispute should relate to 'industry' as defined under Section 2(j) of
The Industrial Disputes Act, 1947.
In consideration of the aforementioned definition of 'Industrial Dispute', it is
understood that there is a need for specific Dispute Resolution Machinery to
pursue the settlement of the disputes that occurred which are thereby concerned
with the effective functioning of the industry as a whole.
Thus, the Industrial
Disputes Act, 1947 provides for the following authorities for conducting the
necessary investigation and settlement of Industrial Disputes:
- Works Committee
- Conciliation Officers
- Boards of Conciliation
- Courts of Inquiry
The above-stated Stages of Adjudicating Authorities operate intra vires as per
the concerned legal provisions laid in the legislation.
Voluntary Arbitration under Section 10 -A:
Industrial Disputes Act, 1947 is the only legislation that allows arbitration in
the realm of labour law. Section 10-A has been added to The Industrial Disputes
Act, 1947 by way of the amendment of 1956, providing for the reference of an
industrial dispute to Voluntary Arbitration, which is stated in the Act
as "Voluntary Reference of Disputes to Arbitration".
When any of the adjudicating authorities fail to resolve the conflict/dispute,
the parties so involved can be advised to agree to refer their dispute
for Voluntary Arbitration for settlement of the same. According to Section
10-A(1) and section 10-A(2) of the Industrial Disputes Act, 1947 Parties may
mutually sign an arbitration agreement which is obligatory and follow the
arbitral procedure at any time before the dispute is referred to adjudication
under Section 10 or to a Labour Court, Tribunal or National Tribunal.
dispute is referred to a neutral third party/parties thereby acceptable to the
parties in dispute to act as arbitrators for their case (including the presiding
officer of the Labour Court, Tribunal or National Tribunal) as may be specified
in the agreement.
Nevertheless, before a reference may be made to the arbitrator, four conditions
must be met:
- Industrial Disputes must exist or be apprehended;
- The agreement made by the parties must be in writing;
- Under Section 10-A, the reference must be made before a dispute has been
referred to a labour court, tribunal or national tribunal;
- The name of the arbitrator(s) must be specified.
Voluntary Arbitration takes mainly two forms:
- Pre-Dispute Arbitration: There must be a contract between the parties
before the dispute arises through an arbitration clause.
- Post-Dispute Arbitration: There may not be an arbitration clause
beforehand, but the parties may enter into an agreement after the dispute
arises to resolve the dispute through arbitration.
Why Is Voluntary Arbitration Important? 
The importance of Voluntary Arbitration can be understood by way of the
- It is expected to take into consideration the realities of the situation.
- It is expected to meet the aspiration of the parties.
- It is based on 'voluntarism'.
- The fundamental position of the parties is not compromised; and finally
- It is expected to promote mutual trust.
As per Section 10-A (1-A) of the Industrial Disputes Act, 1947, When an
agreement provides for an even number of arbitrators, it will provide for the
appointment of another person as an umpire who shall decide upon the reference
if the arbitrators are divided in their opinion. The award of the umpire shall
prevail and shall be deemed to be the arbitration award for the purposes of the
As per Section 10 - A (3) and 10 - A (3-A) of the Industrial Disputes Act, 1947,
a copy of the arbitration agreement has to be forwarded to the 'Appropriate
Government' and the Conciliation Officer and the former shall within one
month from the date of receipt of such a copy publish the same in the Official
Gazette and if the government is satisfied that the parties, who have signed the
agreement for arbitration, represent the majority of each party, the Appropriate
Government shall issue a notification in such a manner as may be prescribed.
Where any such notification has been issued, the employer and workmen who are
not parties to the arbitration agreement, but are concerned in the dispute,
shall be given an opportunity to present their case before the arbitrator(s).
As per Section 10 - A (4) and section 10 - A (4-A) the arbitrator(s) shall
investigate the dispute and submit the Arbitration award signed by them to the
Under sub-section (4-A) where an industrial dispute has been referred for
arbitration and notification has been issued under sub-section (3-A), the
Government may by order prohibit the continuance of any strike or lockout in
connection with such dispute during the pendency of the arbitral proceedings.
The Arbitration Award as specified under sub-section (4) as stated supra has
powers of a civil court order (i.e., adjudication award of Labour Court or
Industrial tribunal) which thereby becomes enforceable and is binding on all
parties to the agreement and all other parties summoned to appear in the
proceedings as parties to dispute.
If the arbitration agreement is not notified in the Official Gazette under
Section 10-A, then it is only applicable to the parties who have agreed to refer
the dispute for arbitration.
Voluntary Arbitration In Relation To Its Jurisdiction:
The jurisdiction of the arbitrators is derived from the agreement of the parties
under Section 10-A when an arbitrator is appointed by the parties. An
arbitrator(s) act beyond the jurisdiction when they decide a matter not referred
to them by the parties.
In Raza Textile Labour Union vs. Maharaja Shri Umaid Mills Ltd.
court quashed the decisions in three matters. This was because the award given
in those three matters was not covered by the 167 disputes that were referred to
him. Therefore, the court said that he had acted beyond his jurisdiction.
In Vaikuntam Estate vs. Arbitrator
, the arbitrator exceeded the terms
of reference. So the Madras High Court quashed the interim award of the
arbitrator as he acted beyond his jurisdiction.
Thus, it is important to note that, an arbitrator ceases to have jurisdiction
after the expiration of the time period that was mentioned in the agreement. The
court as well stated that if the parties themselves do not raise any objections
against the expiration of the time limit thereof of the arbitrator that was
mentioned in the agreement then they cannot, later on, challenge the decision of
the arbitrator under Article 226 of the Constitution.
It is important to understand that Arbitration is considered to be an efficient
alternative to the adjudication procedure, and most importantly, both these
dispute resolution mechanisms cannot be used simultaneously. In the ambit of
Industrial Disputes, it is voluntary and is at the discretion of the parties to
The arbitrator (s) is considered to be a quasi-judicial body and thus hereby is
an independent individual and possessed all the attributes of a statutory
arbitrator. An arbitrator is expected to be neutral and operate intra vires by
following arbitration procedure and not indulging in any such practices which
would result in the violation of the principles of Natural Justice.
The key element to section 10-A is sub-section 10-A (5), which states that
provisions of the Arbitration Act, 1940 shall not be applicable to arbitrations
under the section.
It was held in the case of Kingfisher Airlines vs. Captain Prithvi Malhotra and
Ors, wherein an application under Section 8 of the Arbitration and
Conciliation Act, 1996 (ANC Act) was filed to initiate arbitral proceedings, but
the court stated that the procedure to be followed here would not be that of the
ANC Act, but rather that of the Industrial Disputes Act.
The Labour Courts accepted arbitration application under Section-8 , but, in
the case of Rajesh Korat vs. Innoviti
, the High Court of Karnataka
held that the procedure specified under the Industrial Disputes Act, 1947 should
apply to the proceedings and no application of the ANC Act would be permitted.
Despite the judicial precedents, there is still a necessity for the legislature
to make an amendment to the Act in place thereby issuing clarity over the stance
of the ANC Act in this regard. The main reason is, Section 10-A (5) of the
Industrial Disputes Act, 1947, only bars the application of the Arbitration Act,
1940 and not of the latest legislation.
In view of the aspects discussed in the earlier sections as yet, the
Essentials Of Voluntary Arbitration can be inferred as under:
- Submission of the dispute to the arbitrator must be voluntary,
- Investigation and examination of witnesses.
- The decision is not necessarily binding on the parties
- Disputes arising out of agreements between the parties.
The ambiguity in the statutory provisions stated supra is one of the reasons
for the inefficient execution of arbitration procedure in case of industrial
disputes, along with other factors which thereby determine the result so
obtained, which will further be discussed in the following sections of the
The Reality of Arbitration in Industrial Disputes: The Need for a Critical
Voluntary Arbitration has been strongly recommended by the government and given
a place in law. It was even held in the case of Karnal Leather Karamchari
Sangathan vs. Liberty Footwear Co
., that arbitration is the most
efficient and effective way of settling disputes under the Industrial Disputes
For the reason that it resolves disputes in less than one year period and is
less expensive in comparison with the other modes of dispute settlement. The
existence of the fact along with various other advantages that lesser or no
right to appeal against the arbitral awards gives arbitration an edge over
litigation thereby making it the best settlement mechanism for industrial
But however, the experience shows that although the step has been strongly
initiated by the government for over thirty years now, it is yet to take root.
Several complications under the statute and huge differences of proceedings
under the Industrial Disputes Act, 1947 and the ANC Act, could never garner
arbitration the popularity it potentially is to gain.
During the last decade, not even 1 % of the disputes reported were referred for
arbitration. The National Commission on Labour examined the working of
arbitration as a method of settling disputes and found that it was yet to be
accepted by the parties, particularly by the employers unreservedly.
The major and most crucial hindrances in this regard as yet include the
- Choice of Suitable arbitrator acceptable to both parties;
- Payment of arbitration fees - Unions can seldom afford to share such
costs equally with the management;
- The Sanctity and credibility of the decision by an arbitrator are also
held in doubt;
- Issues of transparency in arbitral proceedings.
Lack of required awareness and ample understanding of the system by the
employers and trade unions.
Arbitration in the Industrial Disputes Act, 1947 is very stringent and the fact
that law covers voluntary arbitration and places it almost parallel to
adjudication though it is barely different. As aforementioned as one of the
hindrances for the ineffective execution of the Voluntary Arbitration procedure
in case of Industrial Disputes.
It mostly appears that arbitration under the legislation is not correctly
understood by the employers and trade unions, this is one of the reasons why it
is rarely put to usage.
Unlike the system in the United States where arbitration is well developed and
allows the parties to autonomously conduct proceedings and hence trained
professionals and specialists are appointed as arbitrators who are better at
making decisions in the matters concerned than the judges or officers of the
There were instances of trials made by India to promote Voluntary Arbitration.
The need for wider acceptance of the same was emphasised during the Indian
Labour Conference, 1962 and the same was reiterated in the Report by the
National Commission on Labour (refer to page 324) in the year 1969.
Thereby stating that parties need to be less dubious about the arbitration
system and give it chance so as to see the result which thereby creates a
platform to make necessary corrections if required. It was even suggested in
the Third FYP  that Voluntary Arbitration should be the norm and have an
advantage over adjudication.
Taking all the said and discussed facts into consideration, despite the efforts
and initiatives to necessarily promote it, voluntary arbitration has
effortlessly exuded a seldom recognition or has failed to gain the potential it
actually deserves. Arbitration under Industrial Disputes Act, 1947 in its
current state is nothing but a mere provision. However, the proper application
of arbitration to labour law outshines the actual potential of the proceedings.
The existing provisions of Arbitration under the Industrial Disputes Act are
technically obsolete which thereby requires reconsideration in light of the
recent developments witnessed by the system of arbitration.
Proper implications of voluntary arbitration in industrial disputes, would lay a
platform with certain vital merits such as speedy delivery of justice and
cost-efficient procedure and thereby intends to promote premises for fair
settlement of disputes, while simultaneously reducing the burden on the courts
and thereby both management and labour may get their due share out of the
results of their combined efforts and the industrial development and progress of
the community do not suffer adversely due to labour unrest thus providing for a
better system of grievance redressal for the workmen.
There are certain challenges that lie ahead in the path of applying arbitration
in labour law for industrial disputes, but as a known fact that nothing is
impossible, similar is the case with the issue in the current context, thus
desired results can be definitely achieved by taking certain serious and clear
steps, thereby making the provision of Voluntary Arbitration a potential
The following suggestions are opinions developed out of the observations
gathered from the study conducted:
List Of Acronyms And Abbreviations:
- Voluntary Arbitration is included in the Industrial Disputes Act, 1947
by way of an amendment in the year 1956 when the only legislation relating
to arbitration was the Arbitration Act, 1940, which itself has several
shortcomings. Thus, there is a need to revisit the current statutes and
latest legislations relevant to the subject matter in a broader dimension as
well as consider their effective and efficient application in Labour Law.
- As stated earlier, one of the main reasons for the unfortunate situation
of Voluntary Arbitration and its Application in Indian Industrial Disputes
is the lack of proper awareness and sufficient understanding of the dispute
settlement mechanism in place. Thus, there is an exigent need to amend the
agenda of industrial training at all levels with special importance on a
full-fledged awareness programme to impart all the necessary knowledge for
the effective and flawless execution of the steps involved in Voluntary
- The entire procedure of the arbitral proceedings must not be
confidential and frequent updates regarding the same must be given to the
parties involved without any form of bias.
- As mentioned in the earlier sections of the article, the United States
has a well-developed state of arbitral proceedings and as well maintains
specially trained professionals to act as arbitrators and serve the purpose.
Thus, as a part of the development of the STATE OF ARBITRATION SYSTEM in the
industrial disputes in India, crucial steps in this regard must be taken by
the government by degrees and appointment of a special team of officials to
act as arbitrators at the state levels specially trained in this field is a
must for experiencing expertise in the settlement procedure.
- A neutral third party acting as an arbitrator in an industrial dispute
referred for Voluntary Arbitration is an obligatory requirement. But
unfortunately, the existence of bias and lack of credibility in the decision
passed by the arbitrator is the reason for the non-preference of voluntary
arbitration for the reference of industrial disputes. Thus every official in
the special team (in suggestion stated supra) to act as arbitrator in case
of a dispute must essentially undergo a formal interview procedure in order
to understand the mindset and opinion mechanism of the arbitrator such that
the fundamental commitments of Industrial Law, i.e., achievement of
industrial peace and social justice can operate without any hurdles.
- Necessary steps must be taken for the systematic execution of arbitral
proceedings to ensure speedy delivery of justice to the dispute in place,
for the main objective of the arbitration is the development of ways which
further assist in reducing the burden on the courts to the maximum extent
possible while providing for a better system of grievance redressal for
|with effect from
|Five Year Plan
|Arbitration and Conciliation
|All India Reporter
|Supreme Court Reports
|Indic Legal Law Journal
|Bombay Cases Reporter
|Labour Law Reporter
|Indian Journal of Arbitration Law
- S.10-A, Industrial Disputes Act, 1947
- Industrial Disputes Act, (Act No. 14 of 1947) as amended by The Finance
Act, 2017 (7 of 2017) (w.e.f. 26.5.2017) (India).
- S.3, Industrial Disputes Act, 1947
- S.4, Industrial Disputes Act, 1947
- S.5, Industrial Disputes Act, 1947
- S.6, Industrial Disputes Act, 1947
- Suresh C. Srivastava, Voluntary Labour Arbitration: Law and
- Manohar Lal, Problems of Arbitration from Management Point of View, 1
Arbitration News 32 (1996).
- S.2 (a), Industrial Disputes Act, 1947
- S.N.Misra, Labour & Industrial Laws (27th ed. 2013).
- Maharaja Shri Umaid Mills Ltd., ... vs The Textile Labour Union (16
September 1957) AIR 1958 Raj 34, (1960) IILLJ 364 Raj (India)
- Vaikuntam Estate vs. Arbitrator, (1968) ILLJ 93 Mad (India)
- 2013 (7) Bom CR 738 (India).
- The Arbitration and Conciliation Act, 1996 (26 of 1996), as amended by
The Arbitration and Conciliation (Amendment) Act, 2019 (33 of 2019) and the
Jammu and Kashmir Reorganisation Act, 2019 (34 of 2019) (w.e.f. 31-10-2019).
- Rajesh Korat vs Management Innoviti Embedded 7 IJAL (2018) 120 (India).
- Karnal Leather Karamchari vs Liberty Footwear Company (Regd.) (1989)
990 AIR 247, 1989 SCR (3)1065
- Judgments of Supreme Court & High Courts on Employees' Provident Funds,
Vol XLII, LLR
- Third Five-Year Plan (1961-1966)
Award Winning Article Is Written By:
Amuktha Malyada Gudla, Student-
BBA LLB (Hons) - School of Law, GITAM University, Visakhapatnam
Dr J. Pratima,
Assistant Professor, School of Law, GITAM University, Visakhapatnam
Authentication No: JU317981916239-28-0623