The Industrial Disputes Act 1947

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The Industrial Disputes Act is the primary legislation governing dispute resolution in India. This Act was passed to provide for the investigation and settlement of industrial disputes to prevent legal strikes and lockouts and to provide relief to workmen during a layoff or after retrenchment or wrongful dismissal. It also provides for the mechanism of conciliation, arbitration and adjudication to promote measures for mutually beneficial relations between employers and employees.

The policies governing dispute resolution form an important part of the labor law framework in any country, regardless of the level of economic development. This is because complaints and conflicts are inevitable in any working relationship and the purpose of the policy is aimed at providing a mechanism that directs these disputes effectively and quickly. At present, the use of voluntary mechanisms for example conciliation, arbitration and meditation, has become an important part of resolution policy.

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This is due to the lack of adversarial elements that ordinary litigation proceedings are characterized by and therefore have been effective in maintaining relationships during the process of dispute resolution.


It is important to understand the meaning and import of the terms industrial dispute and industry as defined in the statute in order to know the scope of the Industrial Disputes act 1947.

Section 2(K) of the Industrial Disputes Act says that the former describes any dispute or difference between employers and employees or between employers and workmen or among workmen which are related to the employment or non-employment or the terms of employment or with the condition of employment of any person.

Section 2 of this act defines the latter as any business, trade, manufacture, undertaking or calling of employers and includes any calling, employment, service, handicraft, industrial occupation or occupation of workmen.

First of all,  a dispute would have to occur in an establishment falling under the definition of the industry to attract the application of the act and also would have to involve one or more of the stakeholders mentioned in the definition of industrial disputes.

In other words, there is no scope for government interference and therefore the only resources are to approach the Courts or engage in alternative dispute resolution mechanisms.

It is important to know the definition of ‘Industry’ has been discussed extensively in case laws.

The supreme court laid down a three-pronged test to find out whether a particular activity was industrial in nature, in the landmark case of ‘Bangalore Water Supply and Sewerage Board Versus R. Rajappa.  If this activity involved systematic and organized activity, cooperation between employer and employee and was carried out for the production of services and goods then it would be considered industrial in nature.

In the determination of the above question, the elements of capital investment and profit motive were held to be immaterial. Also, the dominant nature test is applicable in the case of an undertaking engaging in multiple activities which might or might not be one of the core activities.

It directs whether a specific activity of any enterprise can be classified as industrial in nature by assessing the predominant nature of the activities performed by the enterprise and the integrated nature of the departments.

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