Section 18 of Industrial Disputes Act 1947: Persons Bound by Settlements and Awards
Section 18 of the Industrial Disputes Act, 1947 determines who is legally bound by settlements and awards arising from industrial disputes. Its scope differs according to whether a settlement is privately negotiated, reached during conciliation, or whether the matter results in an enforceable arbitration or adjudicatory award.
Section 18 - Statutory text
18. Persons on whom settlements and awards are binding.
(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 an arbitration award in a case where a notification has been issued under sub-section (3A) of section 10A 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, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.
Meaning and scope of Section 18
The central distinction in Section 18 is between a settlement made outside conciliation and a settlement reached in the course of statutory conciliation. A private settlement under sub-section (1) binds the parties to that agreement. By contrast, sub-section (3) gives a qualifying conciliation settlement or enforceable award a wider binding effect extending to the categories expressly listed in clauses (a) to (d).
| Instrument | Persons bound under Section 18 |
|---|---|
| Settlement outside conciliation | Parties to the agreement. |
| Enforceable arbitration award under sub-section (2) | Parties to the agreement who referred the dispute to arbitration, subject to sub-section (3). |
| Settlement in conciliation | Persons and classes specified in Section 18(3)(a) to (d). |
| Arbitration award covered by Section 10A(3A) | Persons and classes specified in Section 18(3)(a) to (d), once the statutory requirements apply. |
| Enforceable Labour Court, Tribunal or National Tribunal award | Persons and classes specified in Section 18(3)(a) to (d). |
Important legal terms
Settlement
Section 2(p) defines "settlement" to include a settlement arrived at in the course of conciliation proceedings and a written agreement between the employer and workmen arrived at otherwise than in conciliation, where the statutory conditions concerning signing and forwarding of copies are satisfied.
Award
Section 2(b) defines "award" as an interim or final determination of an industrial dispute or a question relating to it by a Labour Court, Industrial Tribunal or National Industrial Tribunal, and includes an arbitration award made under Section 10A.
Conciliation proceeding
Section 2(e) defines "conciliation proceeding" as a proceeding held by a conciliation officer or Board under the Act.
Industrial dispute
Section 2(k) defines "industrial dispute" in relation to disputes or differences between employers and employers, employers and workmen, or workmen and workmen connected with employment, non-employment, terms of employment or conditions of labour of any person.
Why Section 18(3) has wider binding effect
Clauses (c) and (d) expressly extend the statutory binding effect beyond the immediate participants. In the case of an employer, the provision includes relevant heirs, successors and assigns. Where the party is composed of workmen, it includes persons employed in the establishment or relevant part on the date of the dispute and persons who subsequently become employed there.
Relationship with Sections 17, 17A and 19
Section 17 deals with publication of reports and awards. Section 17A deals with enforceability and commencement of awards. Section 19 governs the period of operation of settlements and awards. These provisions should be read together when determining when an award becomes enforceable, whom it binds and how long it operates.
Maharashtra State amendment
The source page records a Maharashtra amendment to Section 18 made by Maharashtra Act No. 1 of 1972. It adds a proviso concerning undertakings having a recognised union and also modifies sub-section (3) in relation to an arbitration award where there is a recognised union. The recorded proviso excludes agreements concerning dismissal, discharge, removal, retrenchment, termination of service or suspension of an employee from the specified recognised-union arrangement. State amendments should be checked against the applicable official State legislation before reliance in a particular matter.
Official legal sources
For authoritative statutory material, refer to the official India Code portal and the Ministry of Labour and Employment Acts and Policies portal.