Trade Union Immunities, Rights, Funds & Penalties — Labour Law I Notes

Immunities of a Registered Trade Union

If two people agree to stop work to raise wages, is that a criminal conspiracy? If a strike costs the employer money, can he sue the union in tort? Without protection, every union act would be a lawsuit. So the law grants the union a shield — but a shield with edges.

The two immunities

A registered trade union enjoys two statutory immunities for acts done in furtherance of a trade dispute:

Immunity from criminal conspiracy (s.17 TU Act / s.22 IR Code). No office-bearer or member is liable for the offence of criminal conspiracy for any agreement to do an act in furtherance of a trade dispute, unless the agreement is to commit an offence.
Immunity from civil suit in tort (s.18 TU Act / s.23 IR Code). A union or its members cannot be sued in tort for any act done in contemplation or furtherance of a trade dispute merely because it induces a breach of employment contract or interferes with another’s trade or business.

Section 18(1), Trade Unions Act, 1926 (close paraphrase; now s.23 IR Code): “No suit or other legal proceeding shall be maintainable in any Civil Court against any registered Trade Union or any office-bearer or member thereof in respect of any act done in contemplation or furtherance of a trade dispute … on the ground only that such act induces some other person to break a contract of employment…”

The limits (do not overstate the shield): the immunity covers only legitimate trade-union activity in furtherance of a trade dispute. It does not protect:

an agreement to commit a crime;
acts of violence, intimidation, or a gherao (wrongful confinement);
purely personal vendettas unconnected with a trade dispute.

🧩 WORKED EXAMPLE — suit for loss from an illegal strike

Facts. A registered union’s members declare an illegal strike; the employer suffers loss and sues the union for compensation.

Rule. s.18 (s.23 IR Code) immunises acts in furtherance of a trade dispute from tort suits, even if they induce breach of employment contracts; but immunity is confined to legitimate trade-union activity and does not cover illegal means or criminal acts.

Apply. A simple work-stoppage in furtherance of a trade dispute is within the immunity even if the strike is “illegal” for want of notice; but if the strike used violence, intimidation or a gherao, that conduct falls outside the shield.

Conclusion. For a peaceful (even illegal-for-notice) strike, the tort suit generally fails on s.18 immunity; for violence/gherao the union is liable.

flowchart TD
    ROOT["Registered union - immunities"]:::root
    ROOT --> A["Criminal conspiracy immunity (s.17/s.22)"]:::good
    ROOT --> B["Civil (tort) immunity (s.18/s.23)"]:::good
    A --> C{"But limited to acts in a TRADE DISPUTE"}:::leaf
    B --> C
    C --> D["No cover for crime, violence, gherao, personal spite"]:::bad
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef good fill:#E8F5E9,stroke:#1B5E20,color:#000;
    classDef bad fill:#FFEBEE,stroke:#B71C1C,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

Jay Engineering Works Ltd v State of West Bengal (1968) — a gherao (wrongful confinement) is not protected trade-union activity; it is a criminal offence.
Principle: the immunities are confined to acts done in furtherance of a genuine trade dispute; they do not extend to acts done for a purpose unconnected with such a dispute.
West India Steel Co. Ltd v Azeez (1990) — a union has no immunity for obstructing work by force inside the workplace.

Rights, Liabilities & the General and Political Funds

A union collects money from members. Can it spend that money backing a political party? Only if it keeps that spending in a separate pot — and no member can be forced to contribute a paisa to it. This separation is the heart of union finance.

Rights and liabilities

A registered union may acquire and hold property, contract, and sue and be sued in its registered name. It must keep proper accounts, submit annual returns, and spend its funds only on lawful objects. Members have the right to inspect books and participate in the union’s affairs.

The two funds

General Fund (s.15 TU Act / s.16 IR Code). Built from members’ subscriptions, it may be spent only on the objects listed in s.15 — salaries of office-bearers, administration, legal expenses, benefits to members (compensation, education, funeral), a labour publication, and conduct of trade disputes. It may not be spent on political objects.
Political Fund (s.16 TU Act / s.17 IR Code). To promote civic and political interests (funding a candidate’s election expenses, political meetings, registration of voters), the union must maintain a separate political fund. Two iron rules: contribution to it is voluntary, and no member may be compelled to contribute or be placed at any disadvantage for not contributing.

Section 16, Trade Unions Act, 1926 (political fund — close paraphrase; now s.17 IR Code): “A registered Trade Union may constitute a separate fund … from which payments may be made for the promotion of the civic and political interests of its members … No member shall be compelled to contribute to the fund; and a member who does not contribute shall not be excluded from any benefits of the Trade Union…”

In Simple Terms: ordinary union money (general fund) pays for running the union and helping members; political spending needs a separate fund, and paying into it is each member’s free choice.

🧩 WORKED EXAMPLE — suspended for not paying the political fund

Facts. A union member refuses to contribute to the political fund; the union suspends his membership. He challenges the suspension.

Rule. s.16 (s.17 IR Code) — contribution to the political fund is not compulsory, and a non-contributing member cannot be excluded from benefits or disadvantaged.

Apply. Suspending the member because he did not pay the political fund is exactly the disadvantage the section forbids.

Conclusion. The suspension is invalid; the member’s challenge succeeds.

flowchart TD
    ROOT["Union funds"]:::root
    ROOT --> G["GENERAL FUND (s.15/s.16)<br/>admin, legal, member benefits, disputes"]:::good
    ROOT --> P["POLITICAL FUND (s.16/s.17)<br/>separate; contribution VOLUNTARY"]:::leaf
    P --> X["No member compelled or disadvantaged"]:::good
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef good fill:#E8F5E9,stroke:#1B5E20,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

All India Bank Employees Association v National Industrial Tribunal (1962) — the scope of union rights under Art. 19(1)(c); political activity is regulated, not a guaranteed union right.

Disqualification of Office-Bearers; Penalties

Not everyone may run a union. A minor, a person of unsound mind, or someone recently convicted of a serious crime is kept out — to protect the members’ trust and money.

The grounds

Under s.21A of the Trade Unions Act, 1926, a person is disqualified from being an office-bearer or member of the executive of a registered union if he:

has not attained 18 years of age;
has been convicted of an offence involving moral turpitude and sentenced to imprisonment, unless five years have elapsed since release; or
is otherwise disqualified under the Act.

Penalties attach for defaults such as failure to submit returns, providing false information, or acting contrary to the Act (fines under the penalty provisions of the Act / IR Code Chapter on penalties).

In Simple Terms: to hold union office you must be an adult of good standing; minors and those recently convicted of morally serious offences are barred, and breaches of the Act carry fines.

flowchart TD
    ROOT["Eligible to be an office-bearer?"]:::root
    ROOT --> A["Under 18 = disqualified"]:::bad
    ROOT --> B["Convicted of moral-turpitude offence<br/>(within 5 years) = disqualified"]:::bad
    ROOT --> C["Adult, no such conviction = eligible"]:::good
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef good fill:#E8F5E9,stroke:#1B5E20,color:#000;
    classDef bad fill:#FFEBEE,stroke:#B71C1C,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

Principle (s.21A): a person hit by the age or moral-turpitude disqualification cannot validly hold union office; an appointment contrary to s.21A is void.

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