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3

Labour Courts: Does Nature of Dispute Affect Extent of Delay?

Shruthi Naik

Introduction

Jobs play an integral role in society; they provide people with a means for sustenance and contribute to the socio-economic prosperity of society. The regulation of labour and employment, therefore, is an important function of the state as it has a direct bearing on the welfare of society. The Constitution of India provides the central government and the state governments the power, under List III of the Seventh Schedule, to enact laws regarding ‘trade unions; industrial and labour disputes’, ‘social security and social insurance; employment and unemployment’, and ‘conditions of work, provident funds, employers’ liability, workmen’s compensation, invalidity and old age pensions and maternity benefits’.1 These legislations enacted by the government determine the functioning of industries in so far as they regulate the manner in which the industries can utilise labour, by stipulating minimum wages, conditions of work, employee benefits, etc.

Labour and employment, as with all aspects of life, is not free from conflict. Disputes often arise with respect to matters like the benefits that workers are entitled to, poor working conditions, unfair labour practices, strikes, layoffs, payment of compensation, etc. The timely resolution of such conflicts plays an important role in ensuring the smooth flow of work and continuity in the means of production without adversely affecting the workers, employers, society, or the economy.

This chapter seeks to understand the landscape of labour litigation through a focused study of labour litigation in the labour and industrial courts in the state of Maharashtra. Through the use of case-related data in these courts, the chapter will analyse the nature of disputes that come before the courts for adjudication, the average amount of time a litigant can expect such cases to remain pending in court, the average life cycle of a case, and if the nature of the dispute has a bearing on the life cycle or the nature of disposal (whether the case was contested or uncontested) of the case. The chapter also analyses the time taken for adjudication of these disputes in the backdrop of statutorily prescribed time limits to understand if there is any delay in the resolution of such disputes. Further, the chapter examines the impact of labour and industrial litigation by highlighting the likely socio-economic impact of such litigation.

Maharashtra Industrial and Labour Courts

In order to understand the nature of labour litigation, this section of the chapter analyses data related to cases from the industrial and labour courts of Maharashtra as available in the DAKSH database.2 As the nature of labour disputes and the legislation governing them could vary from state to state, this chapter focuses on analysing labour and industrial disputes in the state of Maharashtra alone. In Maharashtra, the Industrial and Labour Courts (ILC) have been set up under Sections 9 and 10 of the Bombay Industrial Relations Act, 1947 (BIR) which was enacted to regulate relations between employers and employees, as well as provide for a mechanism for the settlement of industrial disputes in Maharashtra. The jurisdiction of the ILC is as follows:

  1. Labour courts: Section 78 of the BIR provides labour courts the power to decide matters like the legality of an employer’s order passed under a standing order, the interpretation of a standing order, whether a strike or lock-out is illegal, etc. The powers of the labour courts are, however, not limited to such matters, and other legislations provide courts with the jurisdiction to adjudicate matters such as deciding complaints relating to unfair labour practices, and offences punishable under the Maharashtra Mathadi, Hamal and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969.
  2. Industrial courts: The industrial courts, under Section 87 of the BIR, have been given the jurisdiction to decide cases such as appeals on specific matters where an order has been passed by the Registrar under the BIR, decide appeals from decisions of the Commissioner of Labour, industrial disputes, questions relating to the interpretation of the BIR, any matter referred to it by a civil or criminal court, and appeals from the labour courts. Industrial courts are also given the power to decide a variety of matters under Section 5 of the Maharashtra Recognition of Trade Union and Prevention of Unfair Labour Practices Act, 1971.

In order to understand the functioning of the ILC, a sample of 1,76,390 cases collected in the DAKSH database from across the various ILC in Maharashtra3 have been analysed. The sample consists of 49,621 pending cases4 and 1,26,769 disposed cases. Of both the pending and disposed data sets, 36–37 per cent of the cases is from the industrial courts, while 63–64 per cent is from the labour courts. Looking at the proportion of cases filed in the ILC (Table 3.3.1), it can be seen that the top seven regions with the highest proportion of cases that come before the ILC are regions with a high population density.

Table 3.3.1.Percentage of Cases Filed per Region

As seen in Table 3.3.1, cases filed before the ILC in Mumbai, Thane, Nagpur, Pune, Aurangabad, Nashik, and Kolhapur account for 60 per cent of the cases filed on average over the last five years. As per the Population Census of 2011, these regions also had the highest population density (that is, the number of persons per square meter).5 Further, as per statistics from the Ministry of Micro, Small, and Medium Enterprises (MSME), Government of India, it was also found that the regions of Mumbai, Thane, and Pune have the highest number of MSMEs.6

A look at how long it takes for a case to be disposed and how long a case remains pending in the ILC throws light on how these cases progress through the ILC. From the data analysed, it was found that cases take 1,138 days (3.1 years) on average to be disposed, and similarly remain pending for 1,144 days on average. An often-noticed phenomenon in the Indian judicial system is that cases take fewer days to be disposed, while the average number of days that the cases remain pending is significantly higher.7 One of the possible reasons for this is that cases which fail to be disposed quickly, often end up remaining pending in the system for a long duration, and thereby increase the average pendency of a case. This phenomenon does not, however, appear to be the case with the ILC as the pendency time and time taken for disposal of a case are both around three years. However, a closer look at the pendency time and time taken for disposal shows that there is a difference in the amount of time taken in the various ILC, as shown in Figure 3.3.1.

As seen in Figure 3.3.1, 19 ILCs have a higher average number of pendency days as compared to the average number of days to disposal, while 26 ILCs have a higher average number of days to disposal than the average pendency days. It is interesting to note that a closer look shows that most labour courts (58 per cent), have a higher average of pendency days as compared to the days to disposal, whereas only 21 per cent of the industrial courts have a higher average of pendency days. This could mean that a litigant before the labour courts could expect their cases to remain pending for longer than the average time taken to dispose a case, as opposed to the industrial courts where most litigants could expect to see their cases disposed within the average disposal time for cases in that court.

figure 3.3.1.Average Pendency Days and Average Disposal Days in the ILC

Turning to an understanding of the age of labour and industrial disputes, a look at which age bracket has a higher proportion of cases shows that the industrial courts and labour courts are similarly situated in terms of the proportion of cases in each age bracket for disposed cases. However, it is seen that a higher proportion of cases have been pending for longer (more than five years) in the labour courts when compared with the industrial courts, as set out in Table 3.3.2.

Table 3.3.2.Age of Cases

As per a report by the Ministry of Labour and Employment in 2007 that studied the disposal of 6,657 disputes by the ILC, the highest proportion of disposed cases (44 per cent), in ILC in Mumbai, took more than five years to be disposed.8 The reason attributed to such a delay was that the statements of claims by the workers or unions were not filed in a timely manner. However, looking at Table 3.3.2, it can be seen that a study of cases disposed by the ILC as of now shows that only 25 per cent of the disposed cases took over five years to be disposed; this is an encouraging sign showing, perhaps, that the average time taken to dispose cases in the ILC has been reducing over the years.

A closer look at the proportion of cases based on the year they were filed and the time period over which they were disposed (Table 3.3.3) can help us further understand the manner in which cases are disposed.

Table 3.3.3.Proportion of Cases Disposed Based on the Year of Filing

Table 3.3.3 displays an interesting trend in the manner in which cases have been disposed over a five-year period. It shows that not more than 22 per cent of the cases filed in any given year were disposed in the same year; for example, of the cases filed in 2016 in the industrial courts, only 22 per cent of them had been disposed in the same year. Another point to note from Table 3.3.3 is that there is a slight rise in the proportion of cases disposed in the year after the filing year, before the proportion of cases belonging to that particular year then begin to drop; for example, 14 per cent of the cases filed in the industrial courts in 2014 were disposed in 2014, the proportion of cases filed in 2014 and disposed in 2015 increased to 22 per cent, and then went on to gradually drop to 15 per cent, 13 per cent, and 11 per cent in the subsequent years. This shows that most often, the highest proportion of cases get disposed in the year after the filing year, and then the proportion gradually drops.

In order to understand the workload of the ILC to analyse their functioning, it is important to look at the nature of cases pending before the courts before we go on to analyse whether the age of a case varies based on the nature of the case, as in Figure 3.3.2.

As seen in Figure 3.3.2, a large majority of cases pending before the industrial courts pertain to cases of unfair labour practices, with other cases accounting for only 12.4 per cent of its workload. On the other hand, the labour courts have a significant proportion of cases regarding industrial disputes, unfair labour practices, gratuity payments, and employee compensation with cases of such nature accounting for 96 per cent of its workload.

An analysis of the cases based on their case types (Figure 3.3.3) shows that there is significant variance in how long the cases remain pending, or how long they take to be disposed, depending on the nature of the case.

figure 3.3.2.Proportion of Pending Cases as per Case Type9

figure 3.3.3.Pendency and Disposal Days as per Case Type10

As per time periods shown in Figure 3.3.3, cases with respect to the ECA, MRTU, and MHWA take longer than the time prescribed by these statutes for the disposal of cases, as follows:

  1. Cases regarding the ECA: Cases regarding the ECA take 704 days (23.5 months) on average to be disposed, which is well above the time period of three months provided to dispose matters relating to employee compensation under Section 25A of the ECA.
  2. Cases regarding the MRTU: Cases regarding the MRTU take 996 days (33.2 months) on average to be disposed, which is contrary to the time limits provided under the Act for disposing cases. Section 28(2) of the MRTU states that complaints relating to unfair labour practices must as far as possible be disposed by the court within a period of six months from the date of the complaint, and applications for the registration of a trade union under Section 11 or Section 14 of the MRTU are to be disposed by the industrial courts within a period of four months from the date of the application.
  3. MHWA cases: Section 17F of the MHWA provides that the ILC must endeavour to dispose cases filed under the MHWA within a period of three months. However, the data shows that the MHWA cases take 1,221 days (40 months) to be disposed.

With cases taking longer than their prescribed time limits to be disposed, it would be interesting to note whether these cases are heard frequently, as explored in Figure 3.3.4.

As seen in Figure 3.3.4, for most types of cases (barring cases regarding ULP and PGA), the average number of days between hearings is higher when the overall days to disposal are higher. It is, therefore, possible that the courts take longer to resolve these cases as they are heard less frequently.

figure 3.3.4.Average Number of Days between Hearings11

In order to get a better understanding of the average number of days required to dispose cases, this must be seen in the backdrop of the proportion of cases that get disposed as ‘contested’ and ‘uncontested’ as provided on the e-courts website. While the overall proportion of contested cases is 68 per cent and uncontested cases in 32 per cent, a look at the proportion of cases based on case types can provide a better understanding of how the court’s time is distributed, as in Figure 3.3.5.

figure 3.3.5.Proportion of Contested and Uncontested Cases as per Case Type

As seen in Figure 3.3.5, a higher proportion of labour and industrial disputes are disposed and marked as contested cases, rather than uncontested cases. It must also be considered if the nature of disposal of cases, that is, whether the cases disposed were contested or uncontested in court, plays in a role in the time taken for disposal. Figure 3.3.6 analyses this.

figure 3.3.6.Disposal Days Based on the Nature of Disposal12

It can be seen from Figure 3.3.6 that cases take over a year to be disposed, regardless of whether the cases were contested and uncontested. However, for most case types, the average number of days taken to dispose cases that were uncontested is lower than the average number of days taken to dispose contested cases.

A comparison of Figure 3.3.5 and Figure 3.3.6 shows that three out of the five case types that have a high proportion of contested cases (IDA, BIR, and ESI) also take the highest average number of days to dispose contested cases of that nature. However, when looked at from the perspective of the court’s workload, it is only IDA cases that would take up a significant amount of time in the court’s workload, as the proportion of ESI and BIR cases are significantly low. IDA cases take 1,277 days (for uncontested cases) or 1,834 days (for contested cases) on average to be disposed; while the IDA does not stipulate a time period within which all cases filed under the IDA ought to be disposed, the proviso to Section 10(2A) prescribes that when the industrial disputes concerns an individual workman, the court must submit its award within three months. With the courts currently taking 42 or 61 months (for uncontested and contested cases respectively) on average to dispose IDA cases, this is well above the statutorily prescribed time limit. In order to understand the resulting effects of such delays in the adjudication of labour and industrial disputes, the following section of the chapter seeks to highlight the possible impact that judicial delay has on an employee, an employer, and the society.

Impact of Judicial Delay

There are three primary groups of people who will be impacted by delays in the judicial process, that is, the employees, the employers, and the society at large. This section of the chapter seeks to highlight the likely socio-economic effects of judicial delays in the resolution of industrial and labour disputes.

Employees

From the perspective of an individual, it is the employee in a labour or industrial dispute who is likely to face the most hardship from judicial delays in the resolution of their dispute. The effect of delay in adjudication of a labour dispute can be felt by the employees concerned in the form of time lost and lost wages. The cost of litigation in India will further increase the hardship for the employees by increasing their spending, and in some cases, even increasing their debt. However, in cases where an interim stay on a dismissal is granted, or when an employee is provided subsistence allowance under the Industrial Employment (Standing Orders) Act, 1946 during the period of litigation, the employee could be protected from the economic impact of litigation.

The effect of delays in litigation against the employer can also bring adverse social effects such as pressures to compromise on their entitlements and settle matters out of court or be threatened of consequences for initiating such litigation.

Employers

The reference to adjudication of any industrial or labour dispute will foremost adversely impact relations between an employer and its employees; therefore, any prolongation of such disputes due to judicial delay is likely to further heighten any existing hostility between the disputants. Further, such litigation exacerbates the effects of judicial delay and can even stall business operations, projects, and future growth plans of a company by requiring managerial personnel to work on ameliorating relationships between the management and labourers.

Society

As per the MOSPI, the number of workers in India affected due to industrial disputes (that result in stoppage of more for over 10 workers) in the year 2014 was 11,58,770 workers and the disputes resulted in a loss of 1,10,95,370 man-days.13 If any industry or a part of it has to remain ide on account of a strike or lockout for an extended period of time, the effect of it will be a loss of output in that industry. If the industry affected by the delay in dispute resolution is a supplier of raw materials, there can be a snowball effect felt on other industries that rely on the supply of such raw materials. Further, if industrial disputes fail to get resolved in a quick and efficient manner, the effect of such delays is also felt by consumers. In the event of a shortage of goods due to any on-going dispute, the resulting decrease in the supply of goods can lead to an increase in prices of the goods in the market and thereby affect consumers of products.14

Conclusion

A glimpse into the functioning of the ILC in Maharashtra shows that industrial and labour disputes that go through the process of adjudication in the ILC take a significant amount of time to be processed, and the disputes take longer than statutorily prescribed timelines to be disposed. This is the case with most disputes in the Indian judicial system as delays are no longer the exception but appear to be the norm. However, unlike other areas of the law, labour legislations provide for a multitier system of dispute resolution, as they advocate conciliation of disputes and adjudication by the ILC as the last resort. In this regard, a study on labour disputes suggests that adopting a conciliation process for labour disputes took lesser time for dispute resolution and had the effect of reducing claims as well as final payments to workers and thereby increased settlements through bargaining.15

With around 50,000 cases pending before the ILC in Maharashtra, and the ILC exceeding prescribed timelines for disposal of cases, it would be desirable for the state to strengthen its conciliatory mechanisms so as to encourage their use and successfully resolve disputes out of court wherever possible. The adverse impact of the current judicial delays in resolving labour and industrial disputes is not only felt by the individuals involved but can also have a large-scale impact on industry and society. Therefore, until such time that existing conciliatory mechanisms are further strengthened to encourage more out of court resolution of disputes, efforts must be made within the ILC to dispose long pending cases, and make a targeted attempt to hear cases in an efficient manner so as to resolve disputes on a timely basis and minimise the effects of judicial delay.

Notes

  1. Entries 22, 23, and 24, List III, Seventh Schedule, Constitution of India, 1950.
  2. The DAKSH database: The DAKSH database collects case information from courts across the country in order to make possible large-scale analyses of court data to understand the problems of pendency and delay in the Indian judicial system.
  3. As per the list of ILC in Maharashtra: As available on e-courts.
  4. Pending cases in the ILC: Cases that were pending in the ILC as of 1 December 2018. Therefore, data regarding cases in the ILC in the month of December 2018 has not been considered in this chapter.
  5. Districtwise Area and Population Density: See Directorate of Economics and Statistics, Government of Maharashtra. 2016. Handbook of Basic Statistics of Maharashtra State. Mumbai: The Director of Economics and Statistics, pp. 16, 17.
  6. MSME Development Institute: MSME Development Institute. 2017. Industrial State Profile of Maharashtra. Mumbai: Ministry of MSME, Government of India, p. 42, available online at Maharashtra Industrial State Profile 2016-17 (accessed on 12 April 2019).
  7. Arunav Kaul: 2017. ‘Performance Indicators: Working of Magistrates’ Courts in India’, in Shruti Vidyasagar, Harish Narasappa, and Ramya Tirumalai (eds), Approaches to Justice in India: A Report by DAKSH, p. 102. Lucknow: EBC Publishing Pvt. Ltd.
  8. Ministry of Labour and Employment: 2007. ‘Report No. 15 of 2007: Implementation of Industrial Disputes Act, 1947 and Contract Labour (Regulation and Abolition) Act, 1970’, available online at Implementation of Industrial Disputes Act, 1947 (accessed on 27 January 2019).
  9. Case types in Figure 3.3.2: The case types shown in Figure 3.3.2 pertain to the nature of cases under various legislations. The abbreviations stand for cases with respect to the following legislations:
    • BIR—Bombay Industrial Relations Act, 1946
    • ECA—Employee’s Compensation Act, 1923
    • ESI—Employees’ State Insurance Act, 1948
    • IDA—Industrial Disputes Act, 1947
    • MHWA—Maharashtra Mathadi Hamal and other Manual Workers Regulation of Employment and Welfare Act, 1969
    • MRTU—Maharashtra Recognition of Trade Union And Prevention of Unfair Labour Practices Act, 1971
    • PGA—Payment of Gratuity Act, 1972
    • ULP—Maharashtra Recognition of Trade Union And Prevention of Unfair Labour Practices Act, 1971
  10. Case types with large data sets: Only case types with a data set of over 100 pending cases and 100 disposed cases have been considered for this analysis.
  11. The average number of days between hearings: The average number of days between hearings has been calculated based on a sample set of 60,801 disposed cases and 8,86,983 hearings.
  12. Only case types with large data sets: Only case types with a data set of over 100 contested cases and 100 uncontested cases have been considered for this analysis. MW stands for cases related to the Minimum Wages Act, 1948; and PWA stands for cases related to the Payment of Wages Act, 1936.
  13. 32.17 – Industrial Disputes, Labour and Employment: Ministry of Statistics and Programme Implementation. 2018. Statistical Year Book India 2018. New Delhi: Government of India.
  14. M.J. Arputharaj and R. Gayatri: 2014. ‘A Critical Analysis on Efficacy of Mechanism to Industrial Disputes Resolution in India’, International Journal of Current Research and Academic Review, 2(8): 332.
  15. Rahul Sapkal: 2016. ‘How Law and Law Enforcement Affect Labour Markets in Developing Countries: An empirical evidence on India’. Unpublished thesis, Erasmus University Rotterdam; Sadaf Modak. 2018. ‘8,142 Cases Pending in Mumbai Labour Courts’, The Indian Express, 4 February.