The Code Of Discipline In Industry, 1958

INTRODUCTION
1. The historical development of trade union movement in lndia
revealsthat law at the very outset viewed the labour movement unfavouraMe
for the industrial peace. It was the riSe of social conscience that forced the
law to recognisethe social needs of labour. Thus, apart from law, the social
accept ability of the claims of labour has a very significant role in maintaining
industrial harmony in the society. The down of this realisationis apparent in
the labour policy of the Government of lndia commencingfrom the Fiieenth
IndianLabour Conference, held in July 1957which in many respects can be
said to be historic event in the field of labour and industry. This labour
conference discussed the question of discipline in industry at length and
laid down certain general principles to be followed by both labour and
management for mutual interest as also for the common interest of the
society and the nation.

2. Despitethe fact that alarge number of labour enactments have been
passed, and the Indian labour scene crowded with various complex judicial
formalities and legalities and the courts in lndia have played a considerable
significant role in providingjustice in industrial scene has not been peaceful.
Discipline has ceased to exit. Labour-management relations have been
shattered and the expected workers involvement has not been adequately
achieved. As has been rightly stated: he legislation itself has provided
many substantivebenefiistq industrial workers the delays of labourjudiciary
have reduced the effectiveness of these benefits."' The need for some
measuredother than legislativewas, therefore, felt both by.themanagement
and the workers. The Government of India, while preparing the documents
of the Second Five-Year Plan, stressed this need and stated: 'The whole
issue of industrial discipline in its various aspects should be examined and
in the meantime the parties should see that tendencies to incflscipiine are

* Professor, Faculty of Law, M.D. University, Rohtak.
** Lecturer, Faculty of Law, M.D. University, Rathak.
1. Dr. C.B. Memoria, Dynamics of lndustiral Relations, 439 (1985).
68 CENTRAL INDIA LAW QUARTERLY [I 995

sternly discounten~ed.~

3. A Sub-Committee ap~ointed the Govt. of India considered the
by
general principles of. the Fieenth Indian Labour Conference and after
certain m da n
of t s
co
ii therein, the Code of Discipline was evolved in 1958.
Thisspaper is devoted to examine critically am-e of the aspects of the Code
of Discipline in Industry particulatiy in relationto nature, objectives, scope,
effects and limitations. The necessary conclusions from the discussion of
the certainaspects of the Code have beendrawn and form a significant part
of this research paper.

THE tNDUSTRIAL DfSClPUNE
4. Cordial Industrial relatians in country like ours can be maintained
only through collective bargaining3 mutual understandingand goodwill on
the part of capital and labour. Peace, harmony and efficiency cannot be
registered on by decree or command. The tremendous responsibility for
peaceful labour relations, optimum production and stable economy,
therefore, lies on the shoulders of those people who are responsible for the
conduot of the industry. Recognition by both labour and capital of its
responsibility to get along together without government intervention is of
over-rtding importance. It is true that "in industrial negotiations perfectionof
machinary counts for far less than good faith and goodwill.4 The correct
scientific approach towards the problem o industrial relations appears to
f
be the realization of the dignity of labour as a human being and the fact that
labour is not a commod'&y and a worker remains a human being first and
last. "Until the.spirii of-partnershipbecomes the spirit of industrial relations,
conflict as to the division of the existing product of industry obscures the
needfor apwation towards productivii out of which alone can come a real
advance in prosper~y.~

2. Government of India, Planning Commission, Second Five Year plan, 578 (1956).
3. Ludwing TeUer atatea the definitionof collective bargaining in these terms. "It may be
boradly defined . an agreement belween a single employers or an association of
s *
dmplopOS on one hend and a Iabou[ union on the other, which regulates the terms '
and conclitionr of employment".See Labog# Disputes and Collective Bargaining. Vol.
I, ! h Q t i ~ n
154
4. AC. Pigou, Economias of Welfare. Part HI, Chapter-1, p. 414.
5. H.S. KirkUdy. The Spirit of hdurtrial Relations, pp 5-6. Also see Dr. T.N. Bhagoliwal
Economics of Lebour and Industrial Relations, 295 (1982).
Vol. Vlll:l] THE CODE OF DISCIPLINE 69

5. The spirit of discipline on the part of both labour and capital is not
only in the interest of industry as a whole but provides rights and obligations
on all sides. The discipline to observe the 'rules of game' is an attitude of
mind and requires, apart from legislative sanctions, persuasion on a moral
plane. Several developments madeinthe yeab beforethe SecondF eYear i
plan, such as inadequacy of governmental machinery for implementation,
instancesof non observance of awards on the side of some employers, and
indisciplineamong all contributed to the following statement in the Second
Five Years Plan:

"While the observanceof stricterdiscipline, bothon the part
of labour and management, is a matter which cannot by
imposed by legislation, it has to be achieved by
organizations of employers and workers by evolvhg
suitable sanctions of their own some steps, legislative or
otherwise, in casqof rank indisciplinerequireto be thought
, of?

6. The Government of India in 1957 shifted its emphasis from
legislation to voluntary agreements for bringing home to the parties
government, workers and employers an awareness of their obligations
under the labour legislations and also creating in them an attitude o willing
f
acceptance of their responsibilitiis and a rehdiness to discharge them. It
was in this context that the question of descipline in the industry was
discussed at length by the Indian Labour Conference held in July, 1957. The
following general principles were laid down;

There should be no lockout or strike without notice.
No unilateral action should be taken in connection with any
industrial matter.
There should be no recourse to go slow tactics.
\
No deliberate damage should be caused to plant or property.

Acts of violence, intimidation, coercion, or instigation should
not be resorted to.
6. Supra n. 2
70 CENTRAL,INDIA LAW QUARTERLY [I 995

(9 The existing machinery for settlement of disputes should be
utilised.
(g) Awards and agreements should be speedly implemented.
(h) Anyacti9n which disturbs cordial industrial relations should be
avoided.
7. In order to consider these aspects and the rele.vant matters, a
Tripartite Sub Committee was appointed and on vJhose report,
recommending a Code of Discipline, was accepted with certain
m~difications.~ Code of Discipline in lnduhy, thus evolved, was
The
accepted in March 1958 after due discussion, came into force on 1st of June,
1958.

NATURE O r THE CODE
8. The Code of Discipline is a set of self imposed and mutually agreed
1
voluntary principles of discipline and relations between the management
and workers in the industry. It is a code of conduct both for workers and
managements and provides for the voluntary and mutual settlement of
disputes, through mutual negotiations, voluntary arbitrations and
conciliationswithout the interference of an outside agency. While it refrains
both the parties from unilateral action, it induces them to make the best use
of the existing machinery for th,e settlement of disputes. Thus the code
compels both the parties not to indulge in any strike or lock out without
exploring the avenues for the voluntary, mutual settlement of any possible
misunderstanding or disputes. In nutshell, it lays emphasis on the
atmosphere of mutual regard and respedt.

9. The Code also stimulatesthe managements to give up unfair labour
practices. Similarly, it prevails upon the trade unions not to indulge in
coercive measures. Mutual agreement is preferred to compulsory arbitration
of adjudication. It prescribes a set of mutually agreed principles to be
followed inthe industry so that a constructive co-operation betweenworkers

7. V.P. Michael, Industrial Relations in India and Workers lnvdvementin Management, 28
(1979).
8. It was clarified that as the Code came into effect from June, 1, 1958, it would not be
correct to apply sanction crf the Code to case of infringementsthat occured prior to the
date. i
Vbl. V111:l] THE CODE.OF DISCIPLINE 71

and management is encouraged. Under any circumstanceswork should not
suffer by go slow tactics and the grievance procedure should be followed
according to the set rules. Any action that stands in the way of cordial
relations and is against the spirit of the Code on the part of both
managements and trade unions should be avoided. It applies to both public
and private sectors and may fail when the people concerned fail to comply
with it. Hence, the Code is voulntary, spontaneous and moral in nature and
has been evolved as a result of tripartite efforts.

OBJECTIVES OF THE CODE
10. The Code i s aimed at establishing cordial relations between
managements and workers on a voluntary basis. It has been expected to
facilitate the industrial harmony and t6 put an end to industrial unrest.
Objectives of the Code are:

(i) to emphasise upon the employers and employees to
recognise each other's rights and obligations;

.
(ii) to promote constructive criticism between the parties
concerned at all levels;
(iii) To maintain discipline in the industry;
(ii) To avoid work stoppages and litigation;
'
(v) To,eliminateall forms of coercion, intimidation and violence in
industrial relations;
(vi) To facilitate the free growth of trade unioys; and
(vii) To secure settlement of disputes and grievance8 by mutual
negotiation, conciliation and voluntary arbitration
11. The Code thus, aims, at bringing about greater industrial harmony
and as such expects:

"a just recognition by employers and workers of the rights
and responsibilities of either party as defined by law and
agreements (including bipartite, agreements arived at all
leavels from time to time) an4.a proper and willing

9. Supra n. 7 p. 30.
72 CENTRAL INDIA LAW QUARTERLY I1995

discharge by either party of its obligations consequent on
such recognition. The Central and State Governments, on
their part will arrange to examine and set right any
shortcomings in the machinery they constitute for the
administrationof labour laws."'0

SCOPE OF THE CODE
12. The Code of Discipline prepares a ground for employees to meet
their employers and discuss their problems. It enables the workers and trade
unions to be nominated to the grievance committee constituted under the
grievance procedure. It creates effective liaison between the workers and
the management and enables the recognised unions to get certain rights,

to put or cause to be put up a notice board on the premises of
the undertaking which its members are employed and afix or
cause to be affixed thereon notice relating to. mettings,
statements of accounts of its income and expenditure and
other announcements which are not abusive, indecent or
inflammatory or subverise of discipline or otherwise contrary
to the Code;
to raise issue and enter into collective agreements with
employers or general questions concerning the terms of
employment and conditions of service of workers in an
establishment or in the case of a representative union, in an
industry in a local area;
to collect membership fees/subscriptions payable by
members to the union within the premises of the undertaking;
(a) to hold discusions with the employees who are
members of the union at a suitable place or places
within the premises of officelfactory/establishment
as a mutually agreed upon,

(b) to meet and discuss-withan employer of any person '
appointed by him for its purpose, the grievances of

10. The Code of Discipline in Industry, 1958, Also See Dr. S.N. Dhyani, Trade Unions and
the RTghtto Strike: A Comparative Sodo-legal Study in Labour Management Relations,
p ~276-77.
.
THE CODE OF PlSClPLlNE 73

its members empioyed in the undertaking,

(5) to nominate its representatives on nonstatutory bipartite
committees, e.g., production committees, welfare .
committees, canteen committees, houses allotment
committees, etc. set up by the management;
(6) to nominate its representative on joint Management Councils'
and '

(7) to nominate its representative on the Grievance Committee
constituted. yyder the Grievance Procedure in an
establsihment.
13. At the sametime, when there exists any misunderstandingbetween
the partiesthe Codetries to amicably settle differences. The Third FiveYears
Plan outline has, therefore, laid emphasis on the mutual discussion and
arbitrations as the obligations of the Code on the parties in the following
words:

"The Code lays down specific obligations for the
management and the workers with the object of promoting
constructive co-operation between their representatives at
all levels, avoiding stoppages as well as litigation, securing
settlement of grievances by mutual negotiations,
conciliation and voluntary arbiitation, facilitating the growth
of trade unions and eliminating all forms of coercion and
violence in industrial relations." l2

14. Thus, in order to maintain peace, harmony and discipline in
industry, the code provides certain provisions f ~ management and trade
r
unions in this regard. Accordingly, the management interalia agrees" not to
support encourage any unfair practice such as. l3

1 I.Supri n. 7 p. 30.
12. Government of India, Third Fba Year Plan Outline. Labour Policy, Para 3.
13. Clause Ill (II), W e of Discipline in Industry, 1958.
CENTRAL INDIA LAW QUARTERLY [I 995

"(a) interference with the right of the employees to enroll or
continueas union members; (b) discrimination, restraint or
coercion against any employees because of recognised
activity of trade unions and (c) victimization of any
employee and abuse of authority in any form. The unions
agree14 to discourage unfair labour practice, such as, (a)
negligence of duty, (b) careless o&ration, (c) damage to
property, (d) interference with or distrubance to normal
work, and (e) insubordination".

From the foregoing discussion, the scope of the Code, in
nutshell.can be stated as under: l5

The Code of Disciplineenjoins uponthe partiesto refarainfrom
taking unlateralactionin connectionwith any industrialmatter,
to utilise the existing machinery for settlement of disputes with
atmost expedition and to adjuron strikes and lock-out without
notice and without exploring all avenues of settlement.

It also discourages recourse to litigation and recommends
that disputes not mutually settled should be resolved through
voluntary arbitration.

The employers are required to recognisethe majority union in
all establishment or industry and set-up a mutually-agreed
grievance procedure.

The workers are not to resort to go-slow, coercion a ~ d
intimidation, etc.

Unfair labour practices are to be given up, whether on the part
of the employer or workers

Both employers and unions are required to take appropriate
action against their officers and members found iridulging in
action against the spirit of the Code". -I

14. Clause N (IV), Id.
15. See Dr. N.D. Sharma and V.C. Kochar,. Law, Labour and Management,58 0980).
Vol. VIII:l] THE CODE OF DISCIPLINE

EFFECTS OF THE CODE
16. The Code of discipline made an impact on the industrial relations
scene in the beginning of its introduction.jSoth management and workers
accepted it with open heart. As a result of this, the number of industrial
disputes of workers involved and of the mendays lost was considerably
reduced from 1958 onwards, as compared to 1957. The total number of
disputes had not exceeded the 1957-level upto 1963. B t after 1963, the
,
u
magnitude of disputes skyrocketed more than ever before. The table X
shows the trend of disputes from 1951 to 1978 and the connected factors
being treated as index variables indicate the effect of Code of discipline in
the industry. The following table gives the information relating to industrial
disputes in India from 1951 to 1978.

17. The table indicates that as soon as the Code of Discipline was
introduced, it generated positive impact on the industries disputes: the
industrialdisputes began to. show a downward trend. Disputes declined by
over6.5 per cent in 1958 as compared to 1975. Even though after 1958 a
little growth was negligible and the total number of disputes never reached
the 1953 level till 1963; compared to 1957, the number of disputes marked
in annual decline of one percent upto 1963. Similarly the mandays lost
marked a decline at an average annual rate of about 5 per cent from 1958
to 1963. This decline of industrial unrest can be directly associated with the
variable introductionof Code of Discipline. Butoverthrowing all the previous
expectations, industrial unrest boosted up from 1964 onwards, provingthat
the effect of the Code of Discipline was temporary. On close analysis of the
facts and figures, it can be stated that a litfle impact made by the Code was
quite temporary and it failed to work well in the long run. The failure of the
Code to make any long run impact has been highlighted by the National
Commission on Labourin the fdlowlng words:

'Thus the Code of Discipline which was Introduced with
very high expectations has ceased to exist at present." l6

16. Report of the National Commission on Labour 345 (1969).
76 CENTRAL INDIA LAW QUARTERLY

INDUSTRIAL DISPUTES IN INDIA FROM 1951 TO 1978
Year No No. of workers No of mandays
disputes involved('000) lost (in million)
1951 1071 691 3.8
1952 963 809 3.3
1953 772 467 3.3
1 954 840 477 33
.
1955 1166 % 528 5.6
1956 1203 75
1 6.9
1957 1630 889 6;4
1958 1524 929 77
.
1959 1531 . 694 ' 5.6
1960 1583 986 6.5
1961 1357 512 4.9
1962 1491 705 61
.
1 963 1741 5 3.2
1 964 2151 1003 7.7
1965 1 835 991 6.4
1 966 '2556 1410 13.8
1967 2 15
8 1490 1.
71
1968 2776 1669 17.2
1969 >627 1827 1.
91
1970 2889 1827 20.6
1791 2752 1615 1.
65
1972 2924 1593 1.
79
1973 2924 2102 17.8
1974 .2601 2347 31.6
1975 1493 1143 21.9
1 976 ' 1459 737 12.7
1977 3 17
1 2193 25.3

Source Dr. T. N. Bhaaolial, Economics of Labour and Social Welfare 316 (1982). Also
See statistical outline of India.
THE CODE OF DISCIPLINE 77

Among the factors mentioned as responsiblefor this are: l7

the absence of genuine desire for and limited support to
self-imposedvoluntary restraintson the part of employers' and
workers' organisation:

the worsening economic situation which eroded the real wage
of workers;

the inability of some employers to implement their obligations;

a disarry among the labour representativedue to rivalries;

conflicts between code and the law above all;

the state of discipline in the body politic.

18. A remark made by Viren J. Shah reveals the present mentality of
both trade unions and managements towards each other. "We are
wintnessing around us the emergence of a deplorabletrend towardsa Mafia
type gangsterism in trade union movement in which both labour and
management become grist to the mil union bosses" ambition to esatblish
an expendingsphere of influence. The year 1977-78was a nightmare in this
respect."18thus, it can be stated that the recent trends revealthat the Code
of Discipline has failed to achieve its obectives in the full sense otthe term.

LIMITATIONS OF THE CODE
19. As already mentioned, the Code of discipline does not have legal
sanction. It solgly depends on the voluntary approach of both the
managements and workers. In case any of the parties fails to have a proper
approach, the Code ceases to work. In course of time both managements
and workers have turned cold face against the Code. Especially some of the
union leaders who view everything through personal gains and vested
- interestsfeel that the Code is deterimentalto their self-interest.Even, though
a Central Evaluation and Implementation Cell comprising the

17. lbid p. 346.
18. Shah Viren J. Industrial Unrest, Business India, Nov- 13-16, 1978, p. 47.
1
78 CENTRAL INDIA LAW QUARTERLY . [ I995

representatives of Central Organisations of Workers, Employers and
Government was set up in June 1958, under the Chairmanshipof the Union
Labour Minister, ceased to function in course of time. As there was no
compulsion or legal binding on the part of the industrial units and the
individual workers organisations they have interpreted the Code according
to their whims and fancies.

20. The Central Organisations, at the same time did not take any action
against anybody, which apparently they did not want. Thus in course dtime
the Code of Discipline became an element of only historical importance
without any practical implication or application. Moreover, the cases
subjected to implementation of the Code and did not receive proper
attention both by the managements and the workers unions. Out of the 609,
696.306,226 and 171 cases reported in 1969, 1970, 1971, 1972 and 1973
respectively, only34,9,13,21 and 12cases respectively receivedconcetrate
attention. The trade unions instead of complying with the Code resorted to
direct action rather.
I

CONCLUSIONS
21. The above discussion leads us to the coflclusion that the Code of
discipline have developed an attitude of inmerence from the parties to the
disputes. It can stimulate industrial peace provided its drawbacks are
eliminated. This is possiMe only wh& a legal sanction to the important
provisions of the Code like recognition of trade unions, grievance
procedure, unfair labour practices, etc is accprded. Our conclusion,
therefore, is while that part of the code which enjoins the strict observance
of obligations and respondbititiesunder various labour laws may be left to
the normal process of implementation and enforcement by labour.
administrationmachinary. Some other needsto beformalised bythem. They
are. lg

(a) Recognitionof union as bargaining agetns;

(b) Setting up of a grievance machinery;

1 . Supra n. 16 p. 347.
9
.a
Vol. VIII:l] THE CODE OF DISCIPUNE 79

(d) penalties for unfair labour practice;

(e) Provisionof voluntary arbitration.

With the removal of these provision from the Code t ghre a legal form, the
o
code will have no useful function to perform.
22. It can be hoped that the unions and employers would rise to the
occasion in sinking their past prejudices and contribute positively in
establishing new dimenSions of understanding in labour-management
relations.

(ANNEXURE) \

THE CODE OF DISCIPLINE IN INDUSTRY, 1958
(Both inpublic and private sectors)
1. To MAINTAIN DISCIPLINE IN INDUSTRY there has to be (9 a just
recognition by employers and workers of the rights and responsibilities of
either party, as defined by the laws and agreements (inducting bipartite and
tripartite agreement arrived at all levels from time to time), and (it) a proper
and willing discharge by either party of its obligations consequent on such
recognition.

The Central and State Governments, on their part, will arrange to
examine and set right any shortcomings in the machinery they constitute
for the administration of labour laws.

To ensure better discipline in industry

11. MANAGEMENT AND UNION (S) AGREE

(i) that no unilateralaction should be taken in connectionwith any
industrial matter and that disputes should be settled at
appropriate level;
(ii) that the existing machinery for settlement of disputes should
be utilisedwith the utmost expedition;
' CENTRAL INDIA-LAW QUARTERLY [I 995

(ii) that affrming their faith in democratic principles, they bind
themselves to settle all future differences, disputes and
grievances by mutual negotiation, conciliation and voluntary
arbitration; \

(v) that neither party will have recourse to (a) coercion. (b)
intimidation. (c) victimisation. or (d) go-slow;
(vi) that they will avoid (a) litigation. (b) sit-down and stay- in
strikes, and (c) lock-outs;
(vii) that they will promote constructive co-operation betweentheir ,
representatives at all levels and as between workers
themselves and abide by the spirit of agreements mutually
entered into;
(yiii) that they will establish upon a mutually agreed basis, a
grievance procedure which will ensure a speedy and full
investigation leading to settiement;
(ix) that they will abide by various stages in the grievance
procedure and take no arbitrary action which would bypass
this procedure; and
(x) that they will educate the management personneland workers
regarding their obligation to each'other.
Ill. MANAGEMENT AGREE

(i) not to increase work-loads unless agree upon or settled
otherwise;
(ii) not to support or encourage any unfair labour practice, such
as, (a) interference with the right of employees to enrol or
continue as union members, (bl discrimination, restraint or
coercionagainstany employeebecauseof recognised activity
of trade unions, and (c) victimisation of any employee and
'
abuse of authority in any form;
(iii) to take prompt action for (a) settlement of grievances, and (b)
implementation of settlements. awards, decisions and orders;
(ii) to display in conspicuous places in the undertaking the
provisions of this Code in local language (5);
(v) to distinquish between actions justifying immediatedischarge
and those where discharge must be preceded by a warning
reprimand, suspension o some other form of disciplinary
r
action and to arrange that all such disciplinary action and to
THE CODE OF DISCIPLINE 81

arrange that all such disoiplinary action should be subject to
an appeal through normal grievance procedure;
(vi) to take approprate disciplinary action against its officers and
members in cases where enquiries reveal that they were
responsible for precipitate action by workers leading to
indiscipline, and
(vii) to recognise the union in accordance with the criteria evolved
at the 16th session of the Indian Labour Conference held in
May, 1958.
IV. UNION (S) AGREE

(i) not to engage in any form of physical duress;
(ii) not to permit demonstrationswhich are not peaceful and not
to permit rowdyism in demonstration;
(iii) that their members will not engage or cause other employees
to engage in any union activity during working hours, unless
as provided for by law, agreement or practice;
(iv) to discourageunfair tabour practices, such as, (a) negligence
of duty, (b) &reless operation, (c) damage to property (d)
interference with or disturbance to normal work, and (e)
insubordination;
'

(v) to take prompt action to implement awards, agreements,
settlements and decisions;
(vi) to display in conspicuous places in the union officers, the
provisions of this Code in the lad language (s); and
(vii) to express disapproval and to take appropriate action against
office bearers and membersfor indulging In action against the
spirit of this Code.