The binding nature of awards means that once an award is issued, it has legal force and must be complied with by the parties involved. This ensures that the decisions made by labour tribunals or arbitration panels are implemented. Binding awards create a sense of certainty and finality in resolving labour disputes, promoting stability and predictability in the employment relationship.
When an award is binding, it means that the parties must adhere to its terms and conditions. This includes complying with any monetary compensation ordered, implementing changes in employment terms or conditions, or rectifying any breaches of labour laws. Failure to abide by a binding award can result in legal consequences, such as fines, penalties, or further legal action.
The binding nature of labour law awards is crucial for several reasons. Firstly, it provides a fair and efficient mechanism for resolving disputes between employers and employees. Ensuring that both parties are bound by the decision, it encourages them to reach a settlement and avoid further litigation.
Secondly, the binding nature of awards helps maintain a level playing field in labour relations. It prevents employers from unilaterally imposing unfair or arbitrary decisions on employees, as they are legally obliged to comply with the awarded terms. This promotes a balance of power and protects workers from potential exploitation or mistreatment.
Moreover, the binding nature of labour law awards contributes to the overall stability of the labour market. Providing a clear framework for resolving disputes reduces uncertainty and potential disruptions caused by prolonged conflicts between employers and employees. This stability is essential for fostering a favourable business environment and maintaining harmonious labour relations.
The binding nature is fundamental in upholding the rights of workers, ensuring fair treatment, and maintaining social and economic balance in the workplace. By adhering to the terms of labour law awards, employers and employees contribute to a more equitable and harmonious working environment.
A commonly used term alongside ‘award’ is ‘settlement’. “Settlement” means a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorized in this behalf by the appropriate Government and the conciliation officer.[1]
The primary difference between an award and a settlement is the process through which they are reached. An award is a decision made by an impartial third party, while a settlement is an agreement that is negotiated and agreed upon by the parties involved. Awards are generally used when negotiations or conciliation efforts have failed, while settlements are often preferred as they provide a quicker resolution to the dispute without the need for lengthy legal proceedings.
According to the procedure outlined in Section 16 of the Industrial Dispute Act, the board’s or court’s final report must be in written and signed by all members, depending on the circumstances. A Labour Court or Tribunal’s or National Tribunal’s decision must be in writing and contain the presiding officer’s signature.
Section 17 of the act discusses the publication method for the award decided following the due course. The section’s clause (1) states that ” Every report of Board or Court together with any minute of dissent recorded therewith, every arbitration and every award of a Labour Court, Tribunal or National Tribunal shall within a period of thirty days from the date of its receipt by the appropriate Government, be published in such manner as the appropriate Government thinks fit.” In order to prevent further delays in the announcement of the award, the second clause of the same provision grants immunity from any legal procedures.
Section 17-A of the statute describes the commencement of the award. An award, including an arbitration award, becomes enforceable with the passing of the thirty-day period following the date of publication under Section 17A. But if the Central Government believes that, in any situation where the National Tribunal’s decision will make it impractical for economic or social reasons to implement the entire or any portion of the decision, as the case may be, the Central Government may, by notification in the Official Gazette, declare that the decision will not be enforceable after the aforementioned thirty days have passed.
Section 18 provides for the enforceability of the awards and makes it binding[2].
(1) A settlement arrived at by agreement between the employer and workman otherwise than in the course of conciliation proceeding shall be binding on the parties to the agreement.
(2) Subject to the provisions of sub-section (3), an arbitration award which has become enforceable shall be binding on the parties to the agreement who referred the dispute to arbitration.
(3) A settlement arrived at in the course of conciliation proceedings under this Act or arbitration award in a case where a notification has been issued under sub-section (3-A) of section 10-A or an award of a Labour Court, Tribunal or National Tribunal which has become enforceable shall be binding on –
(a) All parties to the industrial dispute;
(b) All other parties summoned to appear in the proceedings as parties to the dispute, unless the Board arbitrator Labour Court, Tribunal or National Tribunal, as the case may be, records the opinion that they were so summoned without proper cause.
(c) Where a party referred to in clause (a) or clause (b) is an employer his heirs, successors or assigns in respect of the establishment to which the dispute relates.
(d) Where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.[3]
An award may be enforced in one of the following ways:
(a) Where any money is payable by the employer to a workman, the workman may move the Appropriate Government for recovery of the money due to him under award;
(b) The party in whose favour the award has been granted may file a suit and obtain a decree, which shall be enforced by execution under provisions of CPC;
(c) The aggrieved party may apply to the Appropriate Government for prosecuting the defaulting party under section 29 or section 31 of Industrial Disputes Act.[4]
Cases that highlight the binding nature of awards in labour law:
- Bharat Petroleum Corporation Ltd. v. N.R. Vairamani and Others (2004)[5]:
In this case, the Supreme Court emphasized the binding nature of labour law awards. The court held that once an award is made by a labour tribunal, it becomes final and binding on the parties involved, and it cannot be challenged in a civil court unless there is a jurisdictional error or violation of natural justice.
- Orissa Textile Mills Ltd. v. State of Orissa (1992)[6]:
In this case, the Supreme Court reiterated that labour law awards have a binding effect on the parties. The court held that unless an award is set aside by a competent court or authority, it must be obeyed and implemented by the parties involved. Non-compliance with a binding award can lead to contempt of court proceedings.
- Hindustan Petroleum Corporation Ltd. v. Darius Shapur Chenai (2005)[7]:
In this case, the Supreme Court reiterated the binding nature of labour law awards and emphasized that the parties have a legal obligation to comply with the terms of the award. The court held that parties cannot unilaterally deviate from the award, and any such attempt would be a violation of the law.
- West Bengal State Electricity Board v. Desh Bandhu Ghosh (1985)[8]:
In this case, the Calcutta High Court emphasized the binding nature of labour law awards and stated that they have the same effect as a decree of a civil court. The court held that once an award is made, it becomes enforceable as a decree, and the parties are bound to comply with it.
- Fertilizer Corporation Kamgar Union (Regd.), Sindri v. Union of India (1981)[9]:
In this case, the Supreme Court reiterated that labour law awards have a binding effect and that parties cannot disregard or modify the terms of the award without following the due process of law. The court held that the binding nature of awards is essential for maintaining industrial peace and resolving labour disputes.
These precedents highlight the consistent stance of the Indian High Courts and the Supreme Court regarding the binding nature of labour law awards. They emphasize that once an award is made, it must be followed and implemented by the parties involved unless set aside by a competent authority or court. The binding nature of awards is crucial for maintaining the integrity of the labour dispute resolution process and ensuring compliance with labour laws.
Hence, the binding nature of awards is essential in ensuring compliance and upholding the integrity of labour law. Once an award is made, it carries legal weight and becomes enforceable on the parties involved. It establishes obligations and rights, dictating the terms and conditions that must be adhered to. Non-compliance with a binding award can result in legal consequences, emphasizing the importance of honouring these decisions.
Author – Dimpal Khotele
BBA LLB, Amity University Chhattisgarh
[1] The Industrial Disputes Act, 1947, §2(p)
[2] See, Ninad Shah ,A study to analyze provision of arbitration and conciliation in labour legislations in India, SSRN, 21.02.2021
[3] The Industrial Disputes Act, 1947, §18
[4] Supra (note 2)
[5] Civil Appeals No. 7467 of 2003
[6] (1995) ILLJ 673 Ori
[7] Appeal (civil) 2254 of 2005
[8] 1985 SCC (3) 116
[9] 1981 AIR 344