Delhi High Court to Decide if Uber/Ola Drivers are Employees :: ECJ Advocate-General’s Opinion on Uber as a Transport Service

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This Monday, the Delhi High Court issued notice in Delhi Commercial Driver Union vs Union of India, in a petition requesting it to direct the Union of India, the Labour Department, and the Transport Department, to set up a Committee for the monitoring of the implementation of labour and social welfare laws with respect to the relationship between Uber/Ola, and their drivers (as well as looking into pay and work conditions, and framing guidelines for compensation in cases of injury or death on the road). The next date of hearing is August 10.

The premise of the petition is that Uber and Ola drivers are “workmen”, and fall within the legal category of “employees” – because it is only if these conditions are satisfied will the range of labour laws cited in the Petition – such as the Industrial Disputes Act – be applicable. These labour laws regulate the relationship between employers and employees on a range of issues, including hire/fire, changes in service conditions, and so on, and also establish a dispute resolution machinery that can be activated at the instance of either party.

Consequently, what is at stake in this petition is the threshold question of whether India’s labour law regime will apply to the relationship between Uber/Ola and their drivers, or whether – as Uber/Ola are likely to argue – these taxi aggregators are merely playing the role of online conduits, connecting drivers to customers through a mobile app (and charging a commission for this service). If the Court was to hold in favour of Uber/Ola, then the legal relationship between them and their drivers would be solely governed by the contract that is entered into between them.

In fact, the Petitioner – who claims to represent 1,50,000 drivers throughout the National Capital Region – makes the precise argument that Uber/Ola arbitrarily alter their drivers’ pay and service conditions to their detriment without notice (something that is specifically prohibited by the Industrial Disputes Act).

While this case is in its earliest days at the moment, it is clear that it will present novel and difficult issues for the Court; this is perhaps the first time that complex questions involving the legal regulation of the “gig economy” are coming before the Indian Courts. The question of what constitutes a relationship of employment in Indian labour law has evolved incrementally over the last sixty years (see Section C1 for an evolution of the case law) in the context of the physical world. Taking as its paradigm the factory and the shop floor, the Courts have fashioned a jurisprudence where an employment relationship depends upon the degree of control exercised by the “principal employer” over the workmen claiming employee status. Control, of course, is a multi-faceted phenomenon (and there is some dispute over what the law, at present, precisely requires by way of control), and includes the power to fix wages, the power to hire and fire, the power to take disciplinary action, the power to direct not just the outcome of the work, but the manner in which it shall be done, and so on. The question before the Delhi High Court will be how to apply this concept of control to a non-manufacturing service relationship that exists almost entirely in the online domain, and involves three parties: the driver, the customer, and the online aggregator (Uber/Ola).

In its petition, for example, the the Petitioner argues that its drivers have no control over fares, no control over the routes, and no control over accepting or denying ride requests. It argues that applicants must undergo an “extensive verification process” before they are hired. Vehicles must be less than ten years old, and white in colour. Drivers who decline more than three trips are “logged off” the system, as are those whose “ratings” fall below a certain threshold. Consequently, Petitioner argues that Uber/Ola’s claim that they are merely “platforms”, designed to “facilitate” the direct relationship between customers and drivers, is not borne out by reality. Petitioner relies upon recent judgments by the California Labour Commissioner and the U.K. Employment Tribunal to substantiate its case. And in response, Uber and Ola are likely to argue what Uber has been arguing in Courts throughout the world – that its role is purely that of an online conduit: the drivers are self-employed, individual “entrepreneurs”, simply making use of an electronic service to better reach their customers.

The case has come to the High Court at a particularly interesting time. The legal relationship between cab aggregators and their drivers is being litigated in Courts across the world. The dispute possesses similar contours: drivers agitate for better work and pay conditions on the basis that they are Uber’s employees, and within the regime of relevant employment law, which is designed with a view to mitigating the harshness of contract law in the interests of labour welfare; Uber argues, on the other hand, that (for the reasons discussed above), labour or employment law is inapplicable, and its relationship with its drivers ought to be governed purely by the contract they have entered into.

In fact, just yesterday – on May 11 – the Advocate-General of the European Court of Justice delivered an opinion on whether Uber was an “information society service” or a “transport service”. The question was referred to the ECJ by the Commercial Court of Barcelona, which was hearing an unfair competition dispute between one of the traditional taxi associations, and Uber. Leaving to one side complex issues of EU law, the case was referred because the Court’s jurisdiction to adjudicate it depended upon whether Uber was a “transport service” or an “information technology service.”

The Advocate-General recommended that Uber be treated as a transport service. His reasoning is of some interest.

An “Information Society Service”, under the relevant EU Directive, was defined as “any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.” As the Advocate-General correctly noted, Uber’s was “a composite service, since part of it is provided by electronic means while the other part, by definition, is not.” (paragraph 28) Now, since the purpose of this Directive was “liberalising information society services, liberalisation confined to the electronic component alone must have a real impact on the possibility of pursuing the activity.” (paragraph 31) In other words, the part of the service provided by electronic means would have to be “economically independent” of the part of the service provided by non-electronic means (as in the case, for instance, online sale of goods – the delivery of the goods (non-electronic part) was incidental and economically independent).

The Advocate-General then asked:

“What is Uber? Is it a transport undertaking, a taxi business to be blunt? Or is it solely an electronic platform enabling users to locate, book and pay for a transport service provided by someone else?” (paragraph 41)

He then observed:

“In its written observations, Uber claims that it simply matches supply (the supply of urban transport) to demand. I think, however, that this is an unduly narrow view of its role. Uber actually does much more than match supply to demand: it created the supply itself. It also lays down rules concerning the essential characteristics of the supply and organises how it works. ... Uber makes it possible for persons wishing to pursue the activity of urban passenger transport to connect to its application and carry out that activity subject to the terms and conditions imposed by Uber, which are binding on drivers by means of the contract for use of the application. There are numerous terms and conditions. They cover both the taking up and pursuit of the activity and even the conduct of drivers when providing services.” (paragraphs 43 – 44)

The Advocate-General then went on to detail the terms and conditions, including roadworthiness of the car, the possession of a license, no criminal record, Uber’s ability to tailor its supply to its demand, control over quality (through the ratings mechanism), and price-setting (through an algorithm). Consequently, the Advocate-General found that:

Thus, Uber exerts control over all the relevant aspects of an urban transport service: over the price, obviously, but also over the minimum safety conditions by means of prior requirements concerning drivers and vehicles, over the accessibility of the transport supply by encouraging drivers to work when and where demand is high, over the conduct of drivers by means of the ratings system and, lastly, over possible exclusion from the platform. The other aspects are, in my opinion, of secondary importance from the perspective of an average user of urban transport services and do not influence his economic choices. Uber therefore controls the economically significant aspects of the transport service offered through its platform.” (paragraph 51)

(As an aside, it is interesting to note that in Hussainibhai’s Caseoverall economic control was one of the tests laid down for determining whether a relationship of employment existed).

Importantly, immediately after this, the Advocate-General linked his finding with the traditional concept of control in the “real world”, drawing an analogy with the physical shop floor:

“While this control is not exercised in the context of a traditional employer-employee relationship, one should not be fooled by appearances. Indirect control such as that exercised by Uber, based on financial incentives and decentralised passenger-led ratings, with a scale effect… makes it possible to manage in a way that is just as — if not more — effective than management based on formal orders given by an employer to his employees and direct control over the carrying out of such orders.” (paragraph 52)

Consequently, he found:

“… Uber’s activity comprises a single supply of transport in a vehicle located and booked by means of the smartphone application and that this service is provided, from an economic standpoint… by Uber or on its behalf. The service is also presented to users, and perceived by them, in that way. When users decide to use Uber’s services, they are looking for a transport service offering certain functions and a particular standard of quality. Such functions and transport quality are ensured by Uber.” (paragraph 53)

The Advocate-General was careful to clarify that this finding had no bearing on the question of whether drivers were employees of Uber, since a transport service could just as well be provided on a contractual basis (paragraph 54). What it did imply, however, was that Uber could not simply be treated as an “intermediary” between drivers and passengers:

“Drivers who work on the Uber platform do not pursue an independent activity that exists independently of the platform. On the contrary, the activity exists solely because of the platform… without which it would have no sense.” (paragraph 56)

Consequently, because “the supply whereby passengers and drivers are connected with one another is therefore neither self-standing, nor the main supply, in relation to the supply of transport. Consequently, it cannot be classified as an ‘information society service’.” (paragraph 62)

Although – as pointed out above – the Advocate-General specifically stated that his finding on whether Uber was a “transport service” or an “information society service” had no bearing on the question of whether there existed a relationship of employment between Uber and its drivers, there is little doubt that there exists a significant degree of overlap between the two, as was evidenced by the Advocate-General’s own concession that what his finding did imply was that Uber was not a mere “intermediary”. Other overlapping issues are evident from the excerpts cited; it now remains to be seen how the Delhi High Court will eventually analyse the issue.

 

 

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Equal Pay for Equal Work: Statute and Constitution

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On March 28, a two-judge bench of the Supreme Court remanded Chemical Mazdoor Panchayat vs Indian Oil Corporation for a fresh decision by the High Court of Gujarat. The original decision under appeal, Indian Oil Corporation vs Chief Labour Commissioner – raised a crucial question of the interplay between the constitutional principle of equal pay for equal work, and the statutory guarantee contained in Rule 25(2)(v) of the Contract Labour (Regulation and Abolition) Rules of 1971, framed under the Contract Labour (Regulation and Abolition Act) of 1970.

Before the High Court of Gujarat, the issue, briefly, was whether various contract labourers, including cooks, sweepers, and gardeners, who were working in the premises of the Indian Oil Corporation, were entitled to equal wages, on parity with permanent employees. The Gujarat Mazdoor Panchayat – the representative union of the workmen – made their first reference to the Labour Commissioner on this issue in 1994. After a few rounds of litigation, in 1992, the Labour Commissioner found that the work done by the contract labourers, and the permanent employees, was “same or similar”, and consequently, Rule 25(2)(v) of the CLRA Rules was applicable. This order was challenged, and eventually, in 2013, a division bench of the Gujarat High Court issued notice, observing that the Commissioner was wrong in taking into account only the nature of work:

“… if only apparent work is to be seen without ignoring the quality and capability of the person concerned, based on his qualification, experience, etc., such would frustrate the basic requirement. The essential purpose of Rule 25 is to ensure that there is no exploitation by the principal employer by engaging person through contract labourer, but that does not mean that the other requirements of qualification, experience, quality of work, nature of the work, responsibility and the accountability for the work are to be done away.”

Subsequently, on 8th May 2014, the High Court set aside the order of the Labour Commissioner, holding that the source, mode of recruitment/appointment, nature of work, value judgment, responsibility etc. – and not only similarity in designation or quantum of work – was relevant for equating two sets of employees. In this case, the regular employees were recruited through a written examination, and were required to have certain qualifications, which the contract labourers didn’t. Consequently, there was no obligation of equal pay. It was against this judgment that the labour union approached the Supreme Court, and the case – as observed above – has now been remanded on the question of the status of the contract labourers.

The issue, however, is an important one. Let us look closely at Rule 25(2)(v) of the CLRA Rules. This Rule states:

“In cases where the workmen employed by the contractor perform the same or similar kind of work as the workmen directly employed by the principal employer of the establishments, the wage rates, holidays, hours of work and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directly employed by the principal employer of the establishment on the same or similar kind of work.”

It is obvious that, under the CLRA Rules, parity between contract labourers and regular employees is dependent only on whether they perform “the same or similar kind of work.” Where then does the High Court get “mode of recruitment”, qualifications, and the like from? The answer, paradoxically, lies in the constitutional jurisprudence of equal pay for equal work.

The Supreme Court first constitutionalised the right to equal pay for equal work – which is Directive Principle 39(d) in the Constitution – in a 1982 judgment called Randhir Singh vs Union of Indiathe Supreme Court grounded equal pay for equal work in Article 14 of the Constitution, and observed that in cases where all “relevant considerations are the same“, the government could not deny equal pay simply by performing the bureaucratic manoeuvre of splitting the workforce into different posts, or different departments. In that case, because “there cannot be the slightest doubt that the drivers in the Delhi Police Force perform the same functions and duties as other drivers in service of the Delhi Administration and the Central Government“, equal pay for equal work was attracted.

The focus on the “same functions and duties” resembles the language of the CLRA – “same or similar work“. However, in the years after Randhir Singh, the Supreme Court progressively walked back on the broad principles that it laid down in 1982. In a number of judgments in the 1990s and the 2000s, the Court effectively gutted the principle of equal pay for equal work, incorporating into it the multiple additional aspects referred to by the Gujarat High Court – including mode of recruitment, qualifications etc (see e.g., State of Haryana vs Charanjeet Singh). Equality of work was no longer about the manner or character of the work, but much more about the relative positions of the workers. In other words, the Supreme Court effectively converted equal pay for equal work from a constitutional principle requiring effective equality, to a service law principle that focuses on the prerogative of employers to create hierarchies of posts in their workforce, by splitting it up into different cadres, departments, etc.

Rule 25 of the CLRA Rules, however, remained in its original form, still using the phrase “same or similar kind of work.” This leads to the following paradoxical position: Rule 25 of the CLRA Rules – textually – embodied a broader idea of equal pay for equal work, then did the Constitution (through Articles 14 and 39(d)). The Gujarat High Court resolved the contradiction by holding that Rule 25 had to be read in light of the Constitution, and that consequently, despite its focus on the character of work, it would be the constitutional understanding of equal pay for equal work – that took into account both the work and the worker – that would apply even to Rule 25. The Gujarat High Court relied upon the one Supreme Court judgment on the point – U.P. Rajya Vidyut Utpadan Board vs U.P. Vidyut Mazdoor Sangh. In that case, while discussing whether contract labourers at a filtration plant were entitled to equal pay with permanent employees, the Supreme Court held, with respect to Rule 25:

Nature of work, duties and responsibilities attached thereto are relevant in comparing and evaluating as to whether the workmen employed through contractor perform the same or similar kind of work as the workmen directly employed by the principal employer. Degree of skill and various dimensions of a given job have to be gone into to reach a conclusion that nature of duties of the staff in two categories are on par or otherwise. Often the difference may be of a degree. It is well settled that nature of work cannot be judged by mere volume of work; there may be qualitative difference as regards reliability and responsibility.” (paragraph 10)

This paragraph, however, is ambiguous at best. “Degree of skill” could be taken to refer to the skill required to do the job (qualifying “work”), or the level of skill that is a pre-condition for permanent employment (qualifying “worker”). In the case itself, there was no controversial issue over differential recruitment qualifications; the Court’s decision was based on the fact that the Labour Commissioner, in mandating equal pay for equal work, had failed to take into account the evidence presented before him; this evidence, referred to in paragraph 12 of the judgment, included differences in both the nature of the work, and the recruitment qualifications. After extracting this, the Court noted, in paragraph 13, that:

“Despite such a specific case set up by the present appellants before the Labour Commissioner to show that the contract labour in filtration plant engaged through the contractors do not perform the same or similar kind of work as is done by the employees employed directly by the employer in main plant, the Labour Commissioner did not advert to these aspects at all. The Labour Commissioner ought to have adverted to the nature of duties of the staff in the two categories, degree of skill and dimensions of the job for reaching the conclusion that the work done by the contract labour in the second filtration plant is same or similar to the kind of work done by the employees employed by the principal employer directly in the main plant. There is no discussion at all by the Labour Commissioner as to how he arrived at the conclusion about similarity of work. The evidence let in by the parties and the material placed by them seem to have not at all been considered by the Labour Commissioner.” 

Here, in fact, the Court seems to be leaning more towards the similarity of work, than that of the workers. Consequently, UP Rajya Vidyut Utpadan Board is not authority for the Gujarat High Court’s view that Rule 25 of the CLRA Rules is to be read “in light” of the Constitution, and of its view that the constitutional jurisprudence of equal pay for equal work is to be imported into Rule 25.

Independent of precedent, however, the question remains: was the Gujarat High Court right in doing what it did? In my view, it was not. Of course, it is a very standard principle of interpretation that statutes are to be construed “in light” of constitutional principles and values. There are two reasons, however, while that interpretive technique ought not to be applied in interpreting Rule 25. The first is that the constitutional jurisprudence of equal pay for equal work is grounded in Article 14 of the Constitution, which lays down the abstract concept of equality. The concept of equality is consistent with many separate, more concrete, conceptions of what equality might require in a specific fact situation. In terms of parity of pay, one conception is that of the Supreme Court, which focuses on both the nature of the work, and the character of the worker. The other is that of Rule 25, which focuses only on work. Both these are equally valid conceptions of the principle of equality, as applied to “equal pay for equal work”. Consequently, importing the Supreme Court’s constitutional jurisprudence of equal pay for equal work into Rule 25 is not so much as reading the latter “in light” of the Constitution, but substituting the Court’s specific conception of what equal pay for equal work and equality require, with the legislature/executive’s equally valid conception of the same abstract principle.

Secondly, reading statutes “in light” of the Constitution has a specific purpose: ordinary statutes (as well as common law, for that matter, as was held by the Supreme Court in Rajagopal) ought not to set a lower bar for protection of rights than what the Constitution requires. However, the Constitution only establishes a floor for rights-protection, not a ceiling. It is surely open for Parliament to go beyond the Constitution, and establish a higher threshold for rights-protection than what the Constitution requires. This is exactly what Rule 25 does: by limiting the enquiry to the nature of work, it ensures that contract labourers who are claimants for equal pay have to demonstrate only that they are engaged in substantially similar work to that of the permanent employees; correspondingly, the wiggle room for employers is substantially limited, by ensuring that they cannot get around the obligation by simply stating that the contract labourers have come through a different recruitment process.

In fact, any other reading of Rule 25 would defeat its very purpose, because contract labourers, by definition, are engaged through a contractor, and not through the main recruitment process. If the Supreme Court’s reading of the “constitutional jurisprudence of equal pay for equal work” is imported into Rule 25, then claimants for equal pay will first have to show that the contract was a sham and a fraud, and that they are effectively permanent employees; however, if that was the burden upon such claimants, then a separate Rule 25, guaranteeing equal pay for similar work, would be more or less redundant.

For these reasons, it is submitted that the Gujarat High Court was arguably incorrect in reading Rule 25 of the CLRA Rules as importing the “work plus worker” formulation of the Supreme Court. That reading refers to equal pay for equal work as a specific interpretation of Article 14 of the Constitution, and has nothing to do with the textual standard set by Rule 25, which is more favourable to contract labourers. While the remand to the Gujarat High Court has been on the issue of the status of the workers (contractual or otherwise), the position of law remains open.

 

Collective Bargaining Agreements and Minority Unions: The Judgment of the South African Constitutional Court in AMCU vs Chamber of Mines

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Yesterday, the South African Constitutional Court handed down an important judgment at the interface of collective bargaining agreements, majority and minority unions, and the right to strike. From a comparative perspective, this judgment is interesting, because it reveals certain structural similarities as well as dissimilarities between South African and Indian labour law, the different nature of the problems that arise therefrom and, consequently, the shape of the judicial response to those problems.

Facts

The dispute arose out of the mining industry which, as the Court acknowledged at the beginning of the opinion, was the site of “the grievous struggle for better wages and conditions for the generations of mineworkers who have laid the foundations for this country’s wealth.” The facts were simple enough: in 2013, the Chamber of Mines of South Africa, on behalf of its members (various gold mining companies) entered into a collective bargaining agreement with three trade unions that represented a majority of the miners in the mining sector (these were the National Union of Mineworkers, Solidarity, and United Association of South Africa). The Association of Mineworkers and Construction Union (AMCU) – a relatively new union with a swiftly rising membership – was invited to join the negotiations; however, it refused to sign on to the collective bargaining agreement. The agreement was made applicable to all the company’s employees, including non-members of the unions.

While AMCU was not a majority union in the mining sector as a whole, it was a majority union in certain specific mines. Consequently, and regarding itself not bound by the collective bargaining agreement that it had never signed on to, AMCU gave a notice of strike at the five gold mines where it was the majority union. The strike was interdicted by the Labour Court, a decision that was upheld by the Labour Appeal Court.At issue was Section 23(1)(d) of the South African Labour Relations Act, which authorised employers and unions to make a collective agreement binding on non-parties (to that agreement) if, inter alia, the trade unions party to the agreement “have as their members the majority of employees employed by the employer in the workplace”. Workplace was defined under the LRA as “the place or places where the employees of an employer work“, with the proviso that “if an employer carries on or conducts two or more operations that are independent of one another by reason of their size, function or organisation, the place or places where employees work in connection with each independent operation, constitutes the workplace for that operation”.

The lower courts found that for the purposes of the gold mining industry, separate mines did not constitute separate workplaces. Consequently, under Section 23(1)(d), AMCU was bound by the majority unions’ decision to make the collective bargaining agreement binding on all workers. And therefore, the provisions of S. 65 of the LRA – which prohibited striking by anyone who “is bound by any arbitration award or collective agreement that regulates the issue in dispute” – were applicable, and AMCU was statutorily indicted from striking in the five gold mines.

AMCU then approached the Constitutional Court. The issues, as summed up by the Constitutional Court in paragraph 10 of its judgment, were as follows:

“The question is whether the agreement bound AMCU members at the five mines where it was in the majority. If it did, the statute prohibited its members from striking. If it didn’t, they were statutorily at liberty to strike. It all turns on what “workplace” means in the statute and, more specifically, in section 23(1)(d). Does it mean all the mines of the Chamber member companies overall – where AMCU was in the minority? Or the individual goldmines – where it had a majority? And if it was all the mines of the member companies overall, thus snatching away from AMCU members at the individual mines their right to strike, does the statutory provision withstand constitutional challenge?”

Meaning of “Workplace” 

The Constitutional Court began by noting that “two things are immediately notable about the way the statute defines “workplace”. The first is its focus on employees as a collectivity. The second is the relative immateriality of location. Both signal that “workplace” has a special statutory meaning.” (paragraph 24)

The Court analysed these two aspects in the broader context of the purpose of labour legislation, which was “the promotion of orderly bargaining by workers, collectively.” (para 25). For this reason, the definition of “workplace” was to be understood in the context of the statute’s focus on workers “as a collectivity“. From this, it followed that “location is not primary: functional organisation is.” (para 26) What of the proviso? Here, the Court noted that what constituted an “independent” workplace was also to be determined by applying the test of functional organisation. Since the “Labour Court and the Labour Appeal Court both found, in conclusory terms, that the individual AMCU-majority mines did not constitute independent operations“, and since AMCU had failed to demonstrate an alternative to the geographical interpretation of “workplace”, the Constitutional Court upheld the findings of the courts below. Consequently:

“It follows that the agreement was validly extended to AMCU members at the five AMCU-majority mines. The question now is whether the statutory provision that allowed this withstands constitutional scrutiny.” (paragraph 40)

Constitutionality: The Right to Strike

The South African Constitution – unlike the Indian – contains a fundamental right to strike. AMCU argued that the interpretation of S. 23(1)(d) privileged the principle of majoritarianism in the workplace, which – effectively – stifled dissident unions’ freedom of association and the right to strike. This is, of course, a core question, that goes to the heart of the idea of industrial democracy. And as the Court correctly noted, [this] challenge is freighted with history, and burdened by recent clashes between unions in many workplaces, including in the mining industry.” (paragraph 42) Referring to precedent and the scheme of the LRA, the Court noted that majoritarianism was its guiding principle: for example, “it is majoritarianism that underlies the statute’s countenancing of both agency shop agreements (deductions for majority union fees from all employees, both members and non-members),41 and closed shop agreements (collective agreement may oblige all employees to be members of the majority trade union).” (paragraph 43) The reason for this, according to the Court, was that “for orderly and productive collective bargaining, some form of majority rule in the workplace has to apply. What section 23(1)(d) does is to give enhanced power within a workplace, as defined, to a majority union: and it does so for powerful reasons that are functional to enhancing employees’ bargaining power through a single representative bargaining agent.” (paragraph 44)

The key question was whether this enhanced power vested in the majority union violated the constitutional scheme. Of course, as the Court correctly noted, AMCU was itself advocating a form of majoritarianism – one that operated on a mine-by-mine basis. Nonetheless, the Court considered the question of whether the constituency that was the site for majority rule – that is, the “workplace, determined from the point of view of collectivity, subject only to functionally-determined independence of operation” (paragraph 48) was constitutional. The Court held that it was. Among the many models of possible majoritarianism, the legislature had selected one, on the basis of its judgment that it “benefits orderly collective bargaining.” Now, in a previous case called Bader Bop, the Court had held that the LRA had to be interpreted so as to “allow minority unions to co-exist, to organise members, to represent members in relation to individual grievances and to seek to challenge majority unions.” (paragraph 52) Under the LRA, minority unions – including AMCU – retained their organisational rights, recruitment rights, deduction rights, shop steward rights, and bargaining rights. In this context, the loss of the right to strike had to be viewed in context of the fact that “the LRA, though premised on majoritarianism, does not make it an implement of oppression. It does not entirely suppress minority unions.” (paragraph 55) Consequently, the Court held:

“The limitation a section 23(1)(d) agreement imposes on the right to strike is strictly circumscribed – in both ambit and time. A collective agreement extended to non-parties does not apply to them indefinitely. It applies only for the duration of the agreement and regarding the specific issues it covers. Section 23(1) does not countenance indefinite or far-reaching extension. It directly ties the limitation of the right to strike to the outcome of the collective bargaining. It is narrowly tailored to the specific goal – orderly collective bargaining. Given the carefully circumscribed ambit of the limitation and the importance of its purpose, it is reasonable and justifiable.”

Rule of Law

AMCU raised a fascinating argument that Section 23(1)(d) was unconstitutional because in allowing an unsupervised extension of the collective bargaining agreement to non-members, it vested unsupervised public power upon private bodies. The Court, however, rejected any facile division of the public and the private, noting that history, as well as the constitutional scheme, was keenly aware of the interpenetration of the two domains. Consequently, the key issue was that:

“When legislation authorises private parties to exercise public power the question is thus how to ensure a rational relationship between their exercise of power and the attainment of legitimate legislative ends.”  (paragraph 70)

Here, there was clearly a rational relationship between the section, and the “legitimate legislative end” of promoting collective bargaining. Consequently, ex facie, the Section itself was not unconstitutional. However, the Court also noted that under accepted legal tests – following Justice O’Regan’s opinion in AAA Investments vs Micro Finance Regulatory Council – Section 23(1)(d) did vest public power in private bodies:

“The decision by private parties to invoke the power section 23(1)(d) affords them to extend their collective agreement to parties entirely alien to it has a coercive effect: it binds non-parties to the agreement, willy-nilly. And, as AMCU rightly points out here, the statute empowers contracting parties to do this with just about industry-wide effects. The extension of the agreement also has extensive implications for members of the public. For its duration, non-member employees are bound. Even more, they forfeit the right to strike if the collective agreement regulates the issue in dispute.”  (paragraph 78)

This meant that a Section 23 agreement would be subject to judicial scrutiny, under the principles of legality, lawfulness and non-arbitrariness. However, since the AMCU’s challenge was to the provision itself, and not to the specific agreement in the present case, it failed on this ground as well.

Interesting Features

The Constitutional Court’s judgment in AMCU vs Chamber of Mines raises issues that have comparative interest. For example, the Court’s decision to interpret the term “workplace” not in its ordinary linguistic sense (i.e., geographically and spatially) but in a non-geographical sense, based on the purpose of the LRA (the “collectivity” principle) is reminiscent of the Indian Supreme Court’s repeated holding on the meaning of the word “industry”, which it has interpreted in the context of the Industrial Disputes Act’s overall purpose of peaceably resolving labour disputes through a tripartite adjudicatory process.

Secondly, the Court’s focus on collective bargaining as the principle that is at the heart of the LRA demonstrates how South African labour law is based upon a model of trade union empowerment that goes beyond the Industrial labour regime. Under the Industrial Disputes Act, collective bargaining agreements between management and a union are not binding upon non-members, on the basis that non-members to a contract cannot be bound by its terms (subject to one exception in the ID Act, and subject to exceptions in various state labour laws, which provide for circumstances in which recognised “representative” unions can bind everyone in the establishment). As we have discussed before on this blog, the Indian labour regime is based on the idea that the State acts as a neutral arbiter of the competing interests of capital and labour, and the strength of trade unions is accordingly diluted. The South African model, on the other hand, seems to favour stronger trade unions, and thus overrides the principle of privity of contract in the interests of – as the Constitutional Court puts it – the “collectivity”.

And lastly, of course, the Court’s examination of the public nature of the power exercised under Section 23 speaks to a point that the Indian Supreme Court has also made repeatedly: labour legislation lies at an interface of the private and the public; the workplace is not to be considered as immune from the infusion of public law norms. Of course, which norms apply to the workplace, and how, remains a controversial question in both jurisdictions.

Radical Common Sense: A Review of Justice A.M. Bhattacharjee’s ‘Matrimonial Laws and the Constitution’

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Matrimonial Laws and the Constitution emerged out of Justice A.M. Bhattacharjee’s Ashutosh Lectures, delivered at the University of Calcutta, in 1996. Justice Bhattacharjee – who served as a judge at the High Courts of Calcutta and Bombay – advances a sustained argument for the unconstitutionality of significant chunks of India’s matrimonial laws. A brief look at the laws governing marriage in India – which are contained in separate statutes governing Hindus, Muslims, Christians, and Parsis, as well as uncodified “personal law” in the case of Muslims – would indicate that this is a fairly straightforward argument. Not only are many of the matrimonial laws skewed against women (with a few exceptions that cut the other way), but also, laws governing different religious communities accord different rights to their constituents. The case for unconstitutional discrimination on the basis of both sex and religion (under Article 15) seems to be unanswerable.

What makes the argument radical, however, is that the post-Constitutional Indian judiciary has often gone out of its way to uphold the validity of these laws. In order to get around their plainly discriminatory character – and I use the word ‘discriminatory’ in its simplest sense – according unequal benefits and burdens to men and women within the marital relationship – the Supreme Court and the High Courts have created various legal devices. First, in State of Bombay vs Narasu Appa Mali, the Bombay High Court held that uncodified “personal law” was not subject to Part III of the Constitution. This was subsequently endorsed by the Supreme Court. Secondly, when faced with discriminatory provisions contained in statute law, the Courts held that the use of the word “only” in Article 15 – “the State shall not discriminate on grounds only of… sex” implied that if a non-sex based justification could be shown for a discriminatory law, it would survive Article 15 scrutiny. Thirdly, when faced with laws that ostensibly discriminated in favour of women – no matter what the justification – the Courts simply invoked Article 15(3) (“Nothing in this article shall prevent the State from making any special provision for women and children…“), without any further reasoning. And fourthly, when faced with discriminatory matrimonial laws across statutes (for instance, abolition of bigamy for Hindus while maintaining it for Muslims), the Court justified this by holding that it was for the legislature to initiate piecemeal, community-wise reform, based upon its own judgment of which religious communities were “ready” for it.

In Matrimonial Laws and the Constitution, Justice Bhattacharjee undertakes a thoroughgoing critique of each of these devices from a legal perspective, arguing that fifty years of sedimented judicial practice (that is, in 1996 – now it is seventy years) is misconceived, and needs to be discarded for a fresh constitutional vision that links matrimonial norms and constitutional law. Once that ground is clear, he can then argue that the fifteen-odd discriminatory pieces of matrimonial legislation (listed on pp. 145 – 146), which form the backbone of the community-differentiated marriage laws, must all be struck down for violating Articles 14 and 15. Some might call it an extreme argument; other might think of it has following an argument to its logical conclusion, and exhibiting the courage of one’s convictions.

The Wrongness of Narasu Appa Mali

Justice Bhattacharjee advances five rebuttals against the five strands of reasoning in Narasu Appa MaliFirst, he focuses on the term “laws in force”, used in Article 13 of the Constitution, which defines all that which is subject to fundamental rights. He argues that the Bombay High Court, in holding that “laws in force” could not include personal law, failed to notice the 1941 judgment of the Federal Court in United Provinces vs Atiqua Begum, which, while construing “laws in force” in the Government Of India Act, 1935, had held that it included “all laws, inclduing even personal laws…” Secondly, the Court’s reference to Article 44 – the Directive Principle requiring the State to “endeavour” to legislate a Uniform Civil Code – as an indication that the Constitution “permitted” group-differentiated personal laws was incorrect, because there was already a specific Constitutional article – 372 – that provided for the continuation of pre-constitutional law. ThirdlyNarasu App Mali’s reasoning that if Article 13 was held to include personal laws, constitutional provisions such as Article 17 – which prohibited untouchability –  would become redundant, clearly assumed too much; it was just as likely that the framers inserted Article 17 by way of abundant caution, or more simply, as an emphatic restatement of the prohibition of untouchability. In fact, under a strict redundancy analysis, Article 13 itself was probably unnecessary, given that Article 245 only empowered Parliament and the State assemblies to make laws “subject to the provisions of this Constitution.” Fourthly, the Bombay High Court’s reliance upon the Government of India Act, 1915, which had used the term “personal law or custom having the force of law” to reason that “personal law” in itself did not have the “force of law” ignored – once again – the 1935 Government of India Act, which used the phrase “all laws in force“, and had been interpreted by the Federal Court in Atiqua Begum to include personal laws. And lastly, the High Court’s opinion that there was a clear-cut distinction between “personal law” and “custom” was simply historically incorrect. It ignored a number of colonial pieces of legislation that had directed the application of Hindu or Muslim law “as such law has been modified by custom.” Custom was not – as the High Court believed – an occasional departure from personal law, but actually a part of personal law.

To Justice Bhattacharjee’s excellent legal analysis, we can add a broader point. In Narasu Appa Mali, Justices Chagla and Gajendragadkar relied extensively upon colonial sources to draw bright-line distinctions between “custom” and “personal law”, and to understand personal law as emanating from religious communities. Writing in 1954, they did not have the benefit of the extensive critical historiography that we now do in 2017, which establishes clearly that, far from being a pristine expression of religious communities, “personal law” was influenced, modified, and even constituted by the intervention of the colonial State. It was the colonial State that embarked upon codification projects, that designated certain individuals as authoritative expositors of “personal law”, and in whose courts the content of “personal law” was often adjudicated. Consequently, the underlying philosophical justification of Narasu Appa Mali – that State-made law is subject to the Constitution, but community law isn’t – is based upon a historical premise that is simply false.

“On grounds only of…”

Some of Justice Bhattacharjee’s most progressive – and evolved – arguments are made in his critique of the Courts’ repeated upholding of discriminatory personal laws on the ground that they do not discriminate only on the basis of sex, but on something else as well (for instance, assumptions about the differential abilities of men and women to manage property) (see here for a chronological account). At its heart, Justice Bhattacharjee’s argument is startlingly simple. All these judgments, he states, are incorrect simply because they follow the wrong legal test for adjudicating when “discrimination” has taken place under Article 15(1). These judgments assume that if the object, or purpose, of a law can be explained without reference only to sex, then it does not constitute discrimination on “grounds only of… sex.” That position, however, is contrary to well-established Indian legal jurisprudence, starting with the judgment of the Privy Council in Punjab Provinces vs Daulat Singh, continuing through the Constitution Bench in State of Bombay vs Bombay Education Society, and culminating in the judgment of the eleven-judge bench in R.C. Cooper vs Union of India, all of which hold that the test is not whether the law aims to violate a fundamental right, but whether that is its effect (and Bombay Education Society is particularly apposite, because the constitutional provision at issue there – Article 29(2) – also uses the form “on grounds only of…“).

Consequently, in Justice Bhattacharjee’s view, the motivations behind discriminatory legislation are simply irrelevant to judging its constitutionality. When, for instance, Justice Gajendragadkar held, in Narasu Appa Mali, that polygamy for men and compulsory monogamy for women did not violate Article 15(1) because polygamy was justified on “social, economic and religious grounds“, and that, more broadly, marriage rules were based on “obvious natural differences between the sexes“, not only was he indulging in ahistorical stereotyping, but he was barking up the wrong tree altogether. Whether or not there are “obvious and natural differences between the sexes” is just not the point: if a law allocates unequal benefits and burdens to men and women, it violates Article 15(1), and must fall (unless saved by 15(3)).

This is a radical argument. Not only does it repudiate legal arguments that justify discrimination based on stereotypes dressed up as “natural differences” between the sexes, but it also closes the door on any kind of argument that attempts to track legal difference to “actual” difference. It is a pure, textual reading of Article 15(1), that takes the commandment “The State shall not discriminatein the manner that the language suggests: an absolute.

An endorsement of the effects-based test also allows Justice Bhattacharjee to deflect another common legal device based upon the word “only“. Legislation within religious communities is often shielded from constitutional scrutiny on the basis that it is not differentiating only on the basis of sex, but on the basis of sex and religion (or, to put it another way, discriminatory matrimonial laws are saved because they do not discriminate only on the basis of sex, but on the basis of sex and marital status). In this way, the word “only” effectively destroys the possibility of intersectional claims. However, by rigorously applying the effects test, Justice Bhattacharjee is able to get around this linguistic problem. The fact that the Muslim Dissolution of Marriages Act discriminates against Muslim women does not save it because it discriminates against only those women who happen to be Muslim. Thus, although Justice Bhattacharjee never uses the word “intersectionality”, it is effectively what he accomplishes.

Article 15(3)

This – unfortunately, is the least developed part of the book. Justice Bhattacharjee is – correctly – uncomfortable with how the Courts have used Article 15(3) as a carte blance to justify any law that ostensibly benefits women. He gets to the root of the problem when he observes that despite the seemingly unqualified nature of the phrase “special provisions”, Article 15(3) remains part of the broad Articles 14 – 15 – 16 equality code – and consequently, there must be some relationship between a provision that is sought to be justified under Article 15(3), and equality. However, Justice Bhattacharjee ends by unsatisfactorily concluding that the law must meet the test of reasonableness and non-arbitrariness under Article 14. Unsatisfactory, because as is well-known by now, Article 14 “arbitrariness” is a more or less empty vessel. The last step of the argument – that laws ostensibly benefiting women are justifiable as long as they advance substantive equality and remove structural barriers to women’s participation in the public sphere, but must not be based on the very stereotypes and assumptions that were responsible for gender discrimination all these years, is not spelt out.

Inter-Community Discrimination

The effects-based test that Justice Bhattacharjee uses to great effect in his critique of discriminatory matrimonial laws within religious communities, becomes an equally potent weapon to challenge the constitutionality of the unequal marital rights and liabilities that are spread across communities (e.g., only Muslim men are allowed polygamy and extra-judicial divorce; Christian law allows the husband to divorce his wife only on grounds of adultery, while under Hindu law, there exist “cruelty” and other grounds, etc.). Once again, Justice Bhattacharjee argues that the Courts’ justification for upholding these laws – that the State can decide when and at what pace to “reform” religious communities – is legally misconceived, because – again – it’s based on the incorrect “object of legislation test”. Under the effects-test, the outcome is simple: my belonging to a certain religion affords me different – and often, disadvantageous – rights and remedies in marriage, especially if I’m a woman. This, in effect, is discrimination on grounds of “religion”.

Conclusion

Matrimonial Laws and the Constitution does two things with great skill. First, through a detailed, forensic examination of Hindu, Muslim, Christian and Parsi matrimonial laws – both codified and uncodified – it shows that these laws are strongly discriminatory against women in multiple respects: whether it is conditions of marriage, conditions of divorce, rights to maintenance etc. And secondly – and perhaps even more importantly – it shows that the various legal fictions and devices that the Courts have created to uphold the constitutional validity of these laws simply dissolve on closer scrutiny. Not only is the reasoning unconvincing, but it is actually at odds with well-established constitutional principles, such as the effects test to determine fundamental rights violations.

In normal circumstances, these would be common sense. But in the context of our existing jurisprudence on personal laws and fundamental rights, it is truly radical common sense.

The BWSSB Referral – II: Why BWSSB was Rightly Decided

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In the previous post, I argued that the decision  of the seven-judge bench of the Supreme Court to refer the correctness of Bangalore Water Supply and Sewage Board vs Rajappa [“BWSSB”] to a nine-judge bench was incorrect. In particular, the high threshold for referral – i.e., that the decision up for reconsideration be manifestly wrong – was not met, either in the five-judge referral order in State of U.P. vs Jai Bir Singh, or in the two-paragraph seven-judge order. In this post, I shall argue that not only is there nothing “manifestly wrong” with the reasoning in BWSSB, but also, Justice Krishna Iyer J.’s majority opinion laid down law that was entirely correct. Consequently, when the nine-judge bench is eventually assembled, it ought to uphold the BWSSB verdict.

Recall that the only question in BWSSB was the scope of the term “industry” under the Industrial Disputes Act, 1947. The question is extremely important, because the panoply of rights that workers can avail under industrial law exist only if they work in an “industry”. Consequently, any widening or narrowing of the definition would end up including or excluding a very large number of workers within the ambit of industrial law and its accompanying rights and protections.

Section 2(j) of the Industrial Disputes Act defines “industry” as “any business, trade, undertaking, manufacture or calling of employees and includes any calling, service, employment, or industrial occupation or avocation of workmen.” In BWSSB, the majority laid down a three-part definition of “industry”: first, “an industry is a continuity, is an organized activity, is a purposeful pursuit – not an isolated adventure, desultory excursion or casual, fleeting engagement motivelessly undertaken”secondly, an “industry’ cannot exist without co-operative endeavour between employer and employee“; and thirdly, “an industry… is geared to utilities in which the community has concern… [that is] economic utilities – material goods and services…”

My argument shall proceed as follows. First, I will show that, far from being a radical legal innovation, BWSSB only restated the law that had been consistently laid down by the Supreme Court in its first five decisions dealing with the definition of “industry”. Secondly, the reason why BWSSB was necessary in the first place was that between 1964 and 1978, the various benches of the Supreme Court had qualified and tweaked the basic test to a degree that was causing serious confusion in the law. These tweaks – I shall argue – were not only incorrect, but also internally contradictory. BWSSB correctly identified the contradictions, and restored the test as it stood in 1964. Thirdly, while BWSSB is commonly understood to have brought clubs, universities and hospitals within the meaning of “industry” (which – it is argued – is much too radical a position), this is a wrong reading of the judgment. What BWSSB actually did was to hold that clubs, universities and hospitals cannot automatically be excluded from the definition of industry. The distinction is subtle, but hugely important. And lastly, the judgment in BWSSB makes sense in the broader context of Indian industrial relations law.

A. BWSSB as a Restatement of Law

Between 1954 and 1964, the Supreme Court decided five cases that dealt with the meaning of “industry”. In its first judgment, D.N. Bannerjee vs P.R. Mukherjee, the Court considered the question from first principles. While noting that there existed an intuitive definition of the word “industry”, the Court also held that the text and scheme of the Industrial Disputes Act – and the historical context in which it was enacted (i.e., to provide a method of peaceful resolution of disputes between capital and labour) – suggested that the statute contemplated a wider definition. The Court held that “industry” and “industrial dispute” would include situations which “affect large groups of workmen and employers ranged on opposite sides on some general questions on which each group is bound together by a community of interests-such as wages, bonuses, allowances, pensions, provident fund, number of working hours per week, holidays and so on.” The test was whether the enterprise in question was carrying on work that was “analogous to a trade or business.” 

After Bannerjee was followed in Baroda Borough Municipalitythe position of law was restated in State of Bombay vs Hospital Mazdoor SabhaHospital Mazdoor Sabha is particularly important, because the argument was made before the Court that a hospital could not, in any sense, be conceptualised as an industry. Rejecting this argument, the Court made it clear that “too much reliance cannot be placed on what are described as the essential attributes or features of trade or business as conventionally understood. The conventional meaning attributed to the words “trade and business” has lost some of it validity for the purpose of industrial adjudication.” So what was the meaning of “industry”? The Court answered it by explicating Bannerjee’s test of “analogous to a trade or business“, which, in its view, included “an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material services to the community at large or a part of such community with the help of employees is an undertaking.” 

In Hospital Mazdoor Sabha, therefore, we see the concrete explication of the three-part test: “systematic activity”, “production of goods or services”, and “employer/employee cooperation”. Notably, the Court draws this out of the principles that were laid down in Bannerjee: in particular, that the definition of industry under the statute is wider than its “intuitive” definition; that “industry” is to be understood in the context of the purpose of the Industrial Disputes Act, which was to provide a mechanism for reconciling disputes between capital and labour; and that an industry ought to be “analogous” to a trade or business. And Hospital Mazdoor Sabha was then followed and further restated in Corporation of the City of Nagpur vs Its Employees and Ahmedabad Textile Research Association vs State of BombayThe three-part test, therefore, was affirmed in three separate judgments of the Supreme Court. It was this three-part test that was expressly restored by the Court in BWSSB.

B. The Unjustified Departures from the Three-Part Test

The departures from the three-part test began in 1964, with National Union of Commercial Employees vs M.R. MeherThe Court held that a firm of solicitors did not constitute an industry. It did so by introducing a tweak to the third part of the three-part test: not only had there to be cooperation between employers and employees, but it had to have a “direct” nexus with the good or the service produced. The Court held that the work of a cleaner or an accountant in a solicitors’ firm did not have this “direct relationship”.

However, a little thought will reveal that the “direct nexus” test is subjective to the point of being unworkable. It the Court is trying to establish a causal relationship between the contribution of an employee to the final “product”, on what basis does it discount the work of the cleaner in maintaining the office in which the solicitors meet their clients, or the accountant who maintains the books? And if the “direct nexus” test has an underlying normative basis – as it must – the Court does not explain or justify it (for a more detailed critique of the underlying normative assumptions, see the Case Index on this blog).

The second departure took place the same year, in University of Delhi vs A.R. Ramnath. Here, the Court held that the University of Delhi was not an “industry” because a majority of its employees – teachers – did not qualify as “workmen” under the Industrial Disputes Act. This reasoning is as unconvincing as the “direct effect” test in Meher, because what it effectively does is to use one part of the Industrial Disputes Act – the definition of “workmen” to cut down the scope of an entirely different part – “industry” – without explaining how that textual move is justified. It also raises the strange situation where the scope of my rights as a workman under industrial law is solely determined by the work profile of my colleagues.

Four years later, the Supreme Court repudiated the “direct effect” test in Meher, but added a third wrinkle. In Madras Gymkhana, it held that the Gymkhana Club was not an “industry” because “viewed from… the employer’s occupation, [it] do[es] not satisfy the test.” In other words, But this, effectively, was precisely what the Court’s first five judgments had held could not be done: the Court could not substitute its own intuitive view of what was or wasn’t an industry.

A fourth and final departure was made in Safdarjung Hospital, where the Court held that the Safdarjung Hospital was not an industry on the basis of a distinction between the provision of “material” and “non-material” services and “commercial” and “non-commercial” services, neither of which it fleshed out or justified. In fact, it had been held in a consistent line of cases that the commercial aspect was not relevant in determining whether or not an enterprise constituted an industry. It is easy to see why: such a holding would take government-run enterprises entirely outside the scope of the Industrial Disputes Act. It also brings us back to the problematic view espoused in Ramnath: that my rights as a worker are made contingent upon something else: in this case, the motive with which my employer is carrying on his activity.

On the other hand, there were a number of judgments that restated the original three-part test, even after Safdarjung Hospital [see Case Index]. Consequently, the law stood in need of clarification. BWSSB clarified it by overruling Safdarjung Hospital, Madras Gymkhana, Ramnath, and Meher, and restoring Hospital Mazdoor Sabha and the cases before it. As I have argued above, the departures made in these cases from the three-part test could not be justified, either from the perspective of the scheme of the Industrial Disputes Act, or from its context and history. Consequently, BWSSB was correct in overruling them.

C. The Distinction Between Exclusion and Inclusion

In the public discourse, one criticism of BWSSB is that it expanded the definition of “industry” far too much, by bringing in clubs, hospitals and universities within the scope of the term. This reading of BWSSB is not correct. At no point during his Majority opinion does Krishna Iyer J. hold that clubs, hospitals and universities are in each and every circumstance industries. What he does hold is that there is nothing inherent in the nature of clubs, hospitals and universities that allows them to claim exemption from the Industrial Disputes Act simply by virtue of being clubs, hospitals and industries. In each specific case, one must apply the three-part test. If the enterprise meets the conditions of the three-part test, then it is an industry. If it doesn’t, it is exempted. As Krishna Iyer J. himself points out, small hobby clubs (for example) will almost never satisfy the three-part test, that requires a certain systemic activity on a certain scale. On the other hand, if you look at something like the Madras Gymkhana – which, at the time of the judgment, had 800 members and 194 employees – there is no reason why it should not fall within the definition of “industry”.

Here again, BWSSB was simply restating an important principle. As the Supreme Court had held in Bannerjee, and then subsequently, the historical context in which the Industrial Disputes Act was passed, and the text of Section 2(j), implied a wider definition than the intuitive, common-sense meaning of “industry” would have. Consequently, there could be no a priori exclusion of enterprises that did not meet a particular judge’s visualisation of what an “industry” might look like. As the Court had pointed out in Hospital Mazdoor Sabha, the Industrial Disputes Act was a very conscious departure from the laissez faire approach to industrial relations that had held the field until then; consequently, “in construing the wide words used in s. 2(j) it would be erroneous to attach undue importance to attributes associated with business or trade in the popular mind in days gone by.” The basic idea – to repeat – is that workmen engaged in enterprises that have reached a certain scale and systematisation, are vulnerable to certain forms of exploitation, which the Industrial Disputes Act is meant to prevent. Whether that enterprise is a charity, or a hospital, or a university, that basic truth remains the same.

When seen from this perspective, BWSSB no longer appears to be a radical expansion of the meaning of “industry”. All that Krishna Iyer J.’s majority opinion did was to hold that the three-part test was to be applied across the board, with no exceptions.

D. The Broader Context

In 1982, soon after BWSSB, the legislature amended the definition of “industry” under the Industrial Disputes Act, taking agricultural, educational and certain other activities outside the scope of industrial law. This was a specific response to the judgment. However, the amendment was never notified by the Executive. Consequently, it has not yet come into force. During the five-judge referral hearings in 2005, the Court asked the Executive why it hadn’t notified the amendment. The Executive answered that this was because no alternative forum had been set up where the workmen who would be excluded by the new definition, could take recourse to rights-protective and dispute-resolution mechanisms.

The Executive’s response to the Court is particularly telling. To understand it in its full context, we need to go back to the 1940s. Broadly, there are two models of industrial dispute resolution. One model – call it the Trade Union model – aims at achieving a certain balance of power between the Management and the workforce. It does this by passing laws that strengthen collective bargaining organs such as trade unions, protects the right to strike, and so on. However, after creating a legislative framework that strengthens the collective bargaining power of employees, the legislature does not then interfere with the outcome of the employer-employee bargaining (subject, of course, to exceptional situations).

In the second model, a third party is introduced into the relations between employers and employees: the government. The government is supposed to be a neutral and impartial arbitrator between the competing interests. Such a legislative framework envisions a strong role for the government, by making it an active participant in the adjudicatory provisions set up to deal with labour disputes. This is accompanied by what is called a set of “floor level” rights for workers, which can be enforced against their employers, as compensation for the inevitable weakness of trade unions that this model involves.

In the 1940s and 50, India chose the second model. As numerous judgments have noted, the Industrial Disputes Act severely curtails the right to strike. Trade Unions continue to be regulated under a 1926 colonial law. On the contrary, under the Industrial Disputes Act, the government is involved at every level – at conciliation proceedings, in deciding which disputes to “refer” for adjudication, in granting permission for closures and retrenchments, etc. And, simultaneously, the Act provides a set of protective rights to workers in cases of closures, retrenchments etc. This is also the case in companions laws such as the Factories Act, the Minimum Wages Act etc.

Why is this relevant? It is relevant because in deciding to go with the tripartite government-employer-employee model, along with “floor rights”, at the expense of a model that would make collective bargaining its focus, Parliament created a legislative framework where the all-important thing was statutory coverage: that is, workers who were within the ambit of industrial law had access to a set of rights and remedies that workers who were outside its ambit didn’t have, and had no effective way of fighting for, either through their trade unions, or otherwise. And this is why the Executive’s refusal to notify the 1982 amendment until laws are passed that create an alternative forum makes perfect sense: if the 1982 amendment was simply notified, then many thousands of workers would lose the most basic legal protections, without any alternative.

Under the tripartite framework discussed above, it therefore makes sense for the judiciary to provide an expansive interpretation to the definitional provisions that will determine who can access rights under industrial law: that is, the definition of “industry”, the definition of “workman” etc (this is subject, of course, to the constraints placed by the text itself). This was what was understood by the Court in its earlier judgments, and what was emphasised once more in BWSSB.

E. Conclusion

BWSSB was correctly decided. It restated the law on the definition of “industry” by restoring the three-part test, which had been developed in earlier judgments, paying substantial attention to the scheme of the Industrial Disputes Act, and the historical context in which it had been enacted. It overturned judgments that had departed from the three-part test, and it was correct to do so, because these departures were both contradictory, and unjustified more broadly. It was not a radical judgment, but a conservative one, only holding that no enterprise could automatically claim exemption under the Industrial Disputes Act. And its reasoning was consonant with the overall statutory and philosophical framework that constitutes Indian industrial law.

It ought to be upheld.

(Disclaimer: The author was part of the legal team that appeared in State of UP vs Jai Bir Singh (2016) on behalf of the New Trade Union Initiative, arguing against referral).

2016 Trends in Canadian Labour Law

The Canadian law firm of Cassels Brock has put together a list of the “Top 10 Employment and Labour Law Cases and Trends in 2016.” (1), which talks about equating the status of dependant contractors with employees in the context of notice periods, (4), which deals with reinstatement, and (10), which is of termination of government employees, might be of particular interest.

The BWSSB Referral – I: A Flawed Order

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Yesterday, a seven-judge bench of the Supreme Court agreed to refer the case of State of U.P. vs Jai Bir Singh to a nine-judge bench. This case had its genesis in 2005, when a five-judge bench had doubted the correctness of Bangalore Water Supply and Sewage Board vs Rajappa (“BWSSB”), the 1976 judgment that had laid down the definition of “industry” under the Industrial Disputes Act (for a background to this case and its importance, see Section B1 in the Labour Law Case Index, on this blog). As required by convention, after a referral by a five judge bench, the case had to be placed before a seven-judge bench. However, since BWSSB was also decided by a bench of seven judges, the present seven-judge bench in Jai Bir Singh had to decide whether or not to refer it further to a nine-judge bench, which would then be free to uphold, modify or overrule BWSSB.

In the first part of this two-part series, I will argue that Court should have declined to refer the case to a nine-judge bench. Both referral orders – the five-judge referral order in 2005, and today’s order, authored by Chief Justice Thakur – fail to demonstrate that the high legal threshold for making a reference to a higher bench was satisfied in the present case. Particularly glaringly, this threshold was reiterated most recently by Justices Goel and Lokur in the NJAC Judgment,  who were also parties in today’s order in Jai Bir Singh, but concurred in the unanimous referral authored by the Chief Justice. In the second part, I will argue that BWSSB was correctly decided, and that therefore, when the nine-judge bench is eventually constituted, it should uphold it.

Let us first examine the standard for referral, which has been consistently endorsed by the Court since 1961. In Lt Col Khajoor Singh vs Union of India, the Supreme Court held that “unless there are clear and compelling reasons, which cannot be denied, we should not depart from the interpretation given in these two [previous] cases and indeed from any interpretation given in an earlier judgment of this Court, unless there is a fair amount of unanimity that the earlier decisions are manifestly wrong. This Court should not, except when it is demonstrated beyond all reasonable doubt that its previous ruling, given after due deliberation and full hearing, was erroneous…” Four years later, in Keshav Mills Co Ltd vs Commissioner of Income Tax, the Court noted that “It must be conceded that the view for which the learned Attorney-General contends is a reasonably possible view, though we must hasten to add that the view which has been taken by this Court in its earlier decisions is also reasonably possible.” In 1980, in Ganga Sugar Corporation vs State of Uttar Pradesh, the Court was clearer still, observing that:

“Enlightened litigative policy in the country must accept as final the pronouncements of this Court by a Constitution Bench unless the subject be of such fundamental importance to national life or the reasoning is so plainly erroneous in the light of later thought that it is wiser to be ultimately right rather than to be consistently wrong. Stare decisis is not a ritual of convenience but a rule with limited exceptions, Pronouncements by Constitution Benches should not be treated so cavalierly as to be revised frequently.”

All these cases were cited in the NJAC Judgment. Notice that in NJAC, there was a strong case for reference: what was at issue was The Second Judges Case,  which had invented the Collegium for the appointment of judges by interpreting the word “consultation” in Article 124 of the Constitution as “concurrence”. There was no precedent to support this reading, and there was certainly no precedent to support the existence of the collegium. Furthermore, the issue involved a question of core constitutional interpretation, where the bar for reference – according to the Supreme Court – is lower than where the question only involves statutory interpretation (BWSSB). To justify the non-referral, the Court cited the judgments mentioned above, the upshot of which was that there must exist a “manifest error” or a “plain error” or a mistake “beyond all reasonable doubt”, and that there must be “unanimity” about this. As long as it can be shown that the judgment under consideration is defensible, a mere disagreement – even a strong disagreement with its reasoning – is not a ground for a referral.

Was this case made out by the five judge bench and then the seven judge bench in Jai Bir Singh? Let us first examine the seven-judge bench order. It is a brief – almost laconic – two paragraph order, which only says:

“Having given our anxious consideration to the contentions urged at the bar and the serious and wide ranging implications of the issue that fall for determination as also the fact that serious doubts have been expressed in the reference order about the correctness of the view taken in Bangalore Water Supply’s case (supra), we are of the opinion that these appeals need to be placed before a Bench comprising Nine-Judges to be constituted by the Chief Justice.”

Notably, the seven-judge bench did not provide any independent reasoning demonstrating that the high threshold for reference was satisfied. It only mentioned the “serious doubts” that were expressed by the five-judge bench. Let us therefore examine the 2005 five-judge referral order. That order provided six reasons for referral (paragraph numbers are from the SCC version):

  1. That Krishna Iyer J.’s majority opinion in BWSSB was incorrectly premised on the assumption that the Industrial Disputes Act was solely a worker-oriented legislation, whereas in fact, the Industrial Disputes Act was meant to take into account the interests of employers, employees, and the public at large (paragraph 33)
  2. That in the decades after the judgment in BWSSB, difficulties have arisen, such as a huge number of industrial and labour claims (paragraph 35)
  3. That the judgment of Krishna Iyer J. was incorrect in holding that the government’s “welfare functions” could fall within the scope of “industry”; rather, all functions directed towards securing the goals listed in Part IV of the Constitution qualified as “sovereign functions” (paragraph 38)
  4. That the Executive has been “inhibited” from notifying the amendment to the Industrial Disputes Act, that was passed by Parliament in 1982, because of the judgment in BWSSB (paragraphs 39 – 40)
  5. That the judgments of this Hon’ble Court in the Safdarjung Hospital and Madras Gymkhana cases were correct in their interpretation of the meaning of the word “industry”, and that therefore, BWSSB was wrong to overrule them (paragraph 41).
  6. That hospitals and educational institutions perform services to the community, and therefore cannot be subjected to “strikes” and “lock-outs” (paragraph 42).

None of these reasons, however, meet the legal threshold for reference – in fact, quite a few of the six are not legal reasons at all. The first, apart from being entirely vague (what, precisely, is a “worker-oriented approach”? The judgment did not explain) also omits to cite Krishna Iyer J.’s own words in BWSSB, in particular in paragraph 29, where he observed that “… a developing country is anxious to preserve the smooth flow of goods and services, and interdict undue exploitation and, towards those ends, labour legislation is enacted and must receive liberal construction to fulfil its role.” In other words, Krishna Iyer J. mentioned the precise interests that the referral order mentioned as well; and if the referral order was of the opinion that the actual reasoning of the judgment was one-sided towards workers, and so badly one-sided that it merited a referral, it made no effort to explain.

The second reason is purely in the domain of public policy. The referral order referred to “burdensome awards” that caused employers with “moderate assets” to “close down”, which in turn caused harm to the general public. It also referred to how the interpretation might be a “deterrent to private enterprise”, and might be taken to be a “hurdle” by professionals. To start with, the Court provided no evidence for these claims. More importantly, however, the question of which regulatory framework can suitably protect the interests of employees while keeping in mind the interests of employers are contested is a question of contested economic and social policy. It does not even remotely show that BWSSB’s legal interpretation of the definition of “industry” was incorrect. And furthermore, when these reasons were cited by a two-judge bench of the Supreme Court in its earlier referral order in Coir Board vs Indira Devai, the referral was refused by a three-judge bench of the Court.

The third reason is a particularly strange one, because it not only goes against BWSSB, but goes against every judgment on the meaning of “industry” ever decided by the Supreme Court, starting from 1954 (see Case Index for details). Right from the beginning, the Supreme Court had drawn a distinction between “regal or sovereign functions” (i.e., national defence) and “welfare functions”, and had consistently held that when the government was performing welfare functions, it was subjected to the constraints of industrial law. The referral order attempted to demonstrate a disagreement between the majority opinion of Krishna Iyer J and the concurring opinion of Beg CJI on this issue, but entirely misconstrued it: as a matter of fact, Beg CJI, in his brief concurrence, wanted to go even further than Krishna Iyer J., and abolish the sovereign/welfare functions altogether in favour of the expanded application of industrial law.

Furthermore, if the reasoning of the referral order was to be accepted, then it would basically mean that government workers would lose all their protections under industrial law, since no government enterprise could now be classified as an “industry”. This would be a particularly twisted reading of the Industrial Disputes Act!

The fourth reason is even more baffling. In 1982, the Parliament passed an amendment to the Industrial Disputes Act, narrowing the definition of “industry”. The Executive never notified the amendment, and so it has still not come into force. On being asked by the Court why it had not done so, its reason was that until an alternative forum for dispute redressal could be provided for employees who would lose protections under the narrower definition of “industry”, it would not notify the amendment. The Court, however, chose to ignore the express statement made by the Executive, and instead held that the BWSSB judgment was inhibiting the legislature from coming forward with a “more comprehensive legislation” to meet the demands of employers and employees in the public and private sectors. The reasoning behind this statement is impossible to understand, because at least since Indira Gandhi vs Raj Narain, it is beyond cavil that the Parliament can override any judicial decision by passing a law, subject to the constraints of the Constitution and the basic structure.

The fifth reason is precisely what has been held to not be a good enough reason to make a reference: mere disagreement with a previous judgment, and agreement with a different line of cases. As I shall demonstrate in my next post, there were two lines of judgments that the Court in BWSSB was called upon to decide between. What the Court effectively did was to reinstate an older line of cases, which had first laid down a three-part definition of industry, and overrule subsequent cases that had departed from this test in ways that were often inconsistent with each other.

And lastly, the sixth reason – again – is no legal reason at all. Not only is the question of “strikes” or “lock-outs” irrelevant for the interpretive question of what constitutes industry under the Industrial Disputes Act (and again, a primarily legislative question), but there are other laws that allow the State to prohibit strikes and lock-outs in certain spheres (such as the Essential Commodities Act).

One may agree or disagree with Justice Krishna Iyer’s interpretation of the word “industry” in BWSSB. However, in accordance with the Supreme Court’s own consistent precedent, disagreement with a previous judgment is no ground to refer a case to a higher bench for reconsideration. At no point did either the five-judge or the seven-judge benches, in Jai Bir Singh, demonstrate (or even come close to demonstrating) the existence of a manifest error in BWSSB. As I shall argue in the next post, they could not have done so, because BWSSB, at its core, merely restated existing law.

It remains to be noted, lastly, that a mere fifteen months before, in the NJAC judgment, Justices Lokur and Goel had, in ringing terms, refused a prayer for reference on the grounds of preserving interpretive stability, and had endorsed all the previous cases that laid down the high threshold of “manifest error”. Furthermore, on the same day of the seven-judge referral order – that is, 2nd January, 2017 – and as part of the same seven judge bench, Justices Chandrachud, Goel and Lalit had authored a dissenting opinion in Abhiram Singh vs C.D. Commachen (the “election judgment”). In paragraph 46 of their dissent, Justice Chandrachud noted:

“A change in a legal position which has held the field through judicial precedent over a length of time can be considered only in exceptional and compelling circumstances.”

In paragraphs 47 to 49, Justice Chandrachud then considered the NJAC Judgment, and went over the opinions of Justices Lokur, Goel and Kurien Joseph, all of which had restated the high threshold discussed above.

Consequently, four out of the seven judges in the Jai Bir Singh reference order – i.e., Justices Lokur, Chandrachud, Goel, and Lalit – had either authored or written judgments emphasising the sanctity of established precedent, and the “exceptional circumstances” required to overturn judgments that had stood the test of time. And yet, all four judges signed on to a two-paragraph referral order that made no independent argument, and only referred to a prior five-judge bench order that had utterly failed to demonstrate “exceptional circumstances.”

What explains this 180-degree volte face? And did not judicial responsibility and intellectual consistency require at least the learned judges to write concurring opinions explaining why BWSSB merited a referral, but NJAC didn’t?

(Disclaimer: The author was part of a team of lawyers representing the New Trade Union Initiative, interveners before the seven-judge bench, arguing against a referral).