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Home / Articles / All about Industrial Disputes Act, 1947 By: Megha Ahuja

All about Industrial Disputes Act, 1947 By: Megha Ahuja

October 6,2018:

All about Industrial Dispute Act, 1947 By Megha Ahuja (Download PDF)

The Author, Megha Ahuja, is a 3rd year student of Amity Law School Delhi. She is currently interning with LatestLaws.com.

Introduction

The Industrial Disputes Act, 1947 talks about disputes that occurs in an industry. Dispute may arise between 2 or more industries. It also makes provision for the investigation and settlement of disputes that may hamper the peace of the industry. It ensures harmony and cordial relationship between the employers and employees. It also provides various committees and offices for resolution of such disputes that arise among the industries. The Act provides self-contained code to compel the parties to resort to industrial arbitration for the resolution of disputes. It also provides statutory norms besides helping in the maintaining of cordial relation among the employers and employees reflecting socio-economic justice.

Industrial Disputes Act
Industrial Disputes Act    Pic Source: Bloomberg

Ques. 1: What are the objectives of the Industrial dispute act, 1947?

Ans. The objective of the Industrial Disputes Act 1947 is to secure industrial peace and harmony by providing machinery and procedure for the investigation and settlement of industrial disputes by negotiations. This act deals with the retrenchment process of the employees, procedure for layoff, procedure and rules for strikes and lockouts of the company.

Ques. 2: What is the definition of industry and industrial dispute under Industrial dispute act, 1947?

Ans. As per section 2(J) of industrial dispute act 1947, Industry mean any systematic activity carried on by cooperation between an employ and his work man for the production supply or distribution of goods and services with a view of satisfying human wants or needs.

According to Section 2A: Where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, any dispute or difference between that workman and his employer connected with, or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to be an industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the dispute.

Industrial Disputes have adverse effects on industrial production, efficiency, costs, quality, human satisfaction, discipline, technological and economic progress and finally on the welfare of the society. A discontent labor force, nursing in its heart mute grievances and resentments, cannot be efficient and will not possess a high degree of industrial morale. Hence, the Industrial Dispute Act of 1947, was passed as a preventive and curative measure.

Ques. 3: What are the types of industrial dispute?

Ans. There are four types of industrial dispute:

  1. Interest dispute: Interest dispute arise out of deadlocks in negotiation for collective bargaining.
  2. Grievance dispute: Grievance dispute pertains to discipline, wages, working time, promotion, rights of supervisors etc. It is also called as interpretation disputes.
  3. Unfair labor practices: Unfair labor practices are those arising out of right to organize, acts of violence, failure to implement an award, discriminatory treatment, illegal strikes and lockouts.
  4. Recognition disputes: Recognition disputes are disputes over the rights of a Trade Union to represent class or category of workers.

Ques. 4: What are the dispute settlement authorities under the act, their power and duties?

Ans. The following authorities are for Investigation and Settlement of industrial disputes:

  1. WORKS COMMITTEE (Section 3):

The works committee is a committee consisting of representatives of employers and workmen (section3). The works committee is a forum for explaining the difficulties of all the parties. The main objective of the works committee is to solve the problems arising in the day-to-day working of a concern and to secure industrial harmony. The function of the working committee is to ascertain the grievances of the employees and to arrive at some agreement. The committee is formed by general or special order by the appropriate Government in an industrial establishment in which 100 or more workmen are employed or have been employed on any day in the preceding 12 months. It consists of the representatives of employers and workmen engaged in the establishment. It shall be the duty of the working committee to promote measures for securing and preserving amity and good relations between the employers and workmen.

  1. CONCILIATION OFFICER (Section 4):

For promoting and settlement of industrial disputes the appropriate Government may by notification in the Official Gazette, appoint such number of conciliation officer as it thinks fit. The main objective of appointing conciliation officer is to create congenial atmosphere within the industry and reconcile the disputes of the workers and the employers. He may be appointed for a specified area or for specified industries in a specified area or for one or more specified industries and either permanently or for a limited period.

The duty of the conciliation officer is not judicial but administrative. He has to hold conciliation proceedings, investigate the disputes and do all such things as he thinks fit for the purpose of inducing the parties to arrive at a fair settlement of the disputes. The conciliation officer is entitled to enter an establishment to which the dispute relates, after reasonable notice and also to call for and inspect any document which he consider relevant. He has to send a report and memorandum of settlement to appropriate Government. The report by the conciliation officer has to be submitted within 14 days of the commencement of the conciliation proceeding or shorter period as may be prescribed by the appropriate Government.

  1. BOARDS OF CONCILIATION (Section 5):

The appropriate Government may by notification in the Official Gazette, constitute a Board of Conciliation for the settlement of industrial disputes. The Board shall consist of a chairman and 2 or 4 other members in equal numbers representing the parties to the disputes as the appropriate Government thinks fit. The Chairman shall be an independent person. A person is “independent” for the purpose of appointment to a Board, Court or Tribunal if he is uncommitted with the dispute or with any industry directly affected by such dispute. Where the appropriate Government is of the opinion that any industrial disputes exist in an industry, it may refer by order in writing to the Board of Conciliation for settling industrial disputes.

The Board of Conciliation has to bring about a settlement of the dispute. He has to send a report and memorandum of settlement to appropriate Government. He has to send a full report to the Appropriate Government setting for the steps taken by the Board in case no settlement is arrived at. The Board has to submit its report within 2 months of the date on which the dispute was referred to it within the period what the appropriate Government may think fit. The report of the Board shall be in writing and shall be signed by all the members of the Board.

  1. COURT OF INQUIRY (Section 6):

The appropriate Government may by notification in the Official Gazette, constitute a court of inquiry into any matter appearing to be connected with or relevant to settlement of industrial disputes having an independent person or of such independent persons as the appropriate Government may think fit. The court consists of two or more members one of whom shall be appointed by the Chairman. Within a period of 6 months, the court has to send a report thereon to the appropriate Government from the commencement of its any inquiry. This period is not mandatory and it may be extend.

It has the same powers as are vested in a Civil Court under the Code of Civil Procedure 1908, in the following matters—

  • enforcing the attendance of any person and examining him on oath,
  • compelling the production of documents and material objects,
  • issuing commissions for the examination of witnesses,
  • in respect of such other matters as may be prescribed.

The report of the Court must be signed by all the members. A member can submit a note of dissent. The Report together with the dissenting note must be published by the appropriate Government within 30 days from its report. A court of enquiry has no power to improve any settlement upon the parties.

  1. LABOUR COURT (Section 7):

The appropriate Government may by notification in the Official Gazette, constitute one or more labour court for adjudication of industrial disputes relating to any matters specified in the Second Schedule. A labour court consists of one person only to be appointed by the appropriate Government. The main function of the labour court is to hold its proceedings expeditiously and submit its award as the proceeding concludes.

A person shall be presiding officer of a labour court unless —

  • he is or has been, a Judge of the High court,
  • he has for a period of not less than three years, been a District Judge or an Additional District Judge or
  • he has held any judicial office in India for not less than seven years; or
  • he has been the presiding officer of a Labour Court constituted under any provincial Act or State Act for not less than five years.
  • he must be an “independent” person and must not have attained the age of 65 years.
  1. LABOUR TRIBUNALS (Section 7- A):

The appropriate Government may by notification in the Official Gazette, constitute one or more Industrial Tribunals for adjudication of industrial disputes. A Tribunal shall consist of one person to be appointed by the appropriate Government. The Appropriate Government may appoint two persons as assessors to advise the Tribunal. The person shall be not qualified unless—

  • he is, a Judge of the High court,
  • he has for a period of not less than three years, been a District Judge or an Additional District Judge.

The appropriate Government may, if it so thinks fit, may appoint two persons as assessors to advise the Tribunal in the proceeding before it.

The functions of the Tribunals are very much like those of a body discharging judicial functions, although it is not a Court. Its power is different from that of a Civil Court. The proceedings before an Industrial Tribunal are quasi-judicial in nature with all the attributes of a Court of Justice.

  1. NATIONAL TRIBUNALS (Section 7 B)

The Central Government may, by notification in the Official Gazette, constitute one or more National Industrial Tribunals for the adjudication of industrial disputes. National Industrial Tribunals are involve only in case of the questions of national importance or if they are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such industrial disputes. It consists of one person only to be appointed by the Central Government. The person shall not be qualified for appointment as the presiding officer unless he is, or has been, a Judge of a High Court. Beside these, the Central Government may, if it thinks fit, appoint two persons as assessors to advise the National Tribunal in the proceedings before it.

Ques. 5: What are definition of strike and lockout under Industrial dispute act, 1947?

Ans. Strike [Sec. 2 (q)]: Strike means “a cessation of work by a body of persons employed in any industry acting in combination or a concerted refusal under a common understanding of any number of persons who are or have been so employed, to continue to work or to accept employment”. Mere stoppage of work does not come within the meaning of strike unless it can be shown that such stoppage of work was a concerted action for the enforcement of an industrial demand.

Lockout [Sec. 2(1)]: Lockout means “the temporary closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him”. Lockout is the antithesis of strike.

It is a weapon of the employer while strike is that of the workers. Just as a strike is a weapon in the hands of the workers for enforcing their industrial demands, lockout is a weapon available to the employer to force the employees to see his points of view and to accept his demands. The Industrial Dispute Act does not intend to take away these rights. However, the rights of strikes and lockouts have been restricted to achieve the purpose of the Act, namely peaceful investigation and settlement of the industrial disputes. In the case of General Labour Union v. B.V. Chavan and Ors, Supreme Court of India held “Imposing and continuing a lockout deemed to be illegal under the Act is an unfair labour practice.”

Ques. 6: What are the procedures of strike and lockout?

Ans. PROCEDURE OF STRIKES

According to Sec. 22(1) No person employed in a public utility service shall go on strike in breach of contract-

(a) without giving to the employer notice of strike, as hereinafter provided, within six weeks before striking; or

(b) within fourteen days of giving such notice; or

(c) before the expiry of the date of strike specified in any such notice as aforesaid; or

(d) during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings.

PROCEDURE OF LOCKOUTS

According to Sec. 22(2), No employer carrying on any public utility service shall lock-out any of his workman

(a) without giving them notice of lock-out as hereinafter provided, within six weeks before locking-out; or

(b) within fourteen days of giving such notice; or

(c) before the expiry of the date of lock-out specified in any such notice as aforesaid; or

(d) during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings.

Legal strikes and Lockouts

A strike or a lockout shall be illegal, if employers or worker who ever disobeys or fails to follow [Sec 22, 23, 10(3), 10-A (4-A)] for commencing strikes or lockout, those strikes and lockout are said to illegal.

Section 22 provides Prohibition of strikes and Lockouts (Notice is mandatory in public utility services) and Section 23 provides General prohibition of strikes and Lockouts (if said matter is pending before board, a Labour Court, Tribunal or national tribunal or arbitrator as mentioned under Sec 10 & 10A or settlement or about is in operation)

Section 24 (3) says that a lock-out declared in consequence of an illegal strike or a strike declared in consequence of an illegal lock-out shall not be deemed to be illegal.

Ques. 7: What are the penalties for illegal strikes and lockouts under the act?

Ans. Penalty for illegal strikes and lock-outs.- (1) Any workman who commences, continues or otherwise acts in furtherance of, a strike which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to fifty rupees, or with both.

(2) Any employer who commences, continues, or otherwise acts in furtherance of a lock-out which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to one thousand rupees, or with both.

Ques. 8: What are lay-off and retrenchment and their essentials?

Ans. The term ‘lay-off’ has been defined under section 2 (kkk) of the Industrial Disputes Act, 1947, thus lay-off means the failure, refusal or inability of an employer on account of the shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or natural calamity or for any other unconnected reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.

Thus, the following are the essentials of lay-off:

(i) There must be failure, refusal or inability on the part of the employer to give employment to a workman.

(ii) The failure, refusal or inability should be on account of shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery, or natural calamity, or any other connected reason.

(iii) The workman’s name should be on the muster rolls of the industrial establishment.

(iv) The workman should not have been retrenched.

Retrenchment is something akin to downsizing. When a company or government goes through retrenchment, it reduces outgoing money or expenditures or redirects focus in an attempt to become more financially solvent. Many companies that are being pressured by stockholders or have had flagging profit reports may resort to retrenchment to shore up their operations and make them more profitable.

Section 2 (oo) of the Industrial Disputes Act, 1947 defines Retrenchment as –

” the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include –

(a) voluntary retirement of the workman, or

(b) retirement of the workman on reaching the age of superannuating if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or

(b) termination of the service of the workman as a result of the non-removal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or

(c) termination of the service of a workman on the ground of continued ill-health;

The definition of retrenchment was not included in the Industrial Disputes Act, 1947 in its original form. It was inserted by Amendment to the Act in 1953.

The Bombay High Court, in State Bank of India v. Sundaramony held that wherein the court held that an analysis of the definition reveals four essential ingredients, namely

1) There must be a termination of the service of a workman.

2) The termination must be by the employer,

3) For any reason whatsoever, and

4) Otherwise than as by way of punishment inflicted by way of disciplinary action.

Ques. 9: What are the industrial establishments where provisions of Industrial dispute act, 1947 relating to lay-off and retrenchment compensation do not apply?

Ans. Section 25 A of the Act provides clearly that the provisions of the Industrial Disputes Act, 1947 relating to lay- off and retrenchment compensation do not apply to the following three types of industrial establishments:

(a) An industrial establishment in which less than fifty workmen on an average per working day have been employed in the preceding calendar month

(b) Industrial establishments which are of a seasonal character or in which work is performed only intermittently

(c) Industrial establishments to which chapter V-B applies as inserted by the Industrial Disputes Amendment Act, 1976.

Ques. 10: What is referred as continuous service in regard to lay-off compensation?

Ans. The right to compensation under the Act accrues to a workman only if he has put in at least ‘one year of continuous service.’ Section 25 B defines what amounts to continuous service. A workman is said to be in continuous service if he is for that period in uninterrupted service.

Interruption on account of sickness, authorized leave, an accident, a strike which is not illegal, a lock and a cessation of work which is not due to the fault of the workman should not be taken into consideration for calculating the period of continuous service.

Even if a workman has not been in continuous service for a period of one year, he shall be deemed to be in continuous service for the period of one year if he satisfies the following two conditions:

(i) He was in employment for twelve calendar months preceding the date with reference to which calculation is to be made, and

(ii) During such twelve months, he actually worked for not less than (a) one hundred and ninety days in the case of employment in a mine, and (b) two hundred and forty days in any other case.

According to the explanation of this section, for the purpose of calculating the number of days on which a workman has actually worked under an employer, the following days shall be included:

(a) The days on which he has been laid-off under an agreement or standing orders or under this Act or under any other law applicable to the industrial establishment

(b) The days on which he has been on earned leave

(c) The days on which he has been absent due to temporary disablement due to an accident arising out of and in the course of his employment

(d) In the case of a female worker, the days on which she has been on maternity leave, not exceeding twelve weeks.

Ques. 11: What are the provisions for Compensation for Lay-Off (Rights of Workmen) under Industrial dispute act, 1947?

Ans. According to Section 25 C of the Industrial Disputes Act, a workman who is laid-off is entitled to compensation equivalent to 50 per cent of the total basic wages and dearness allowance for the period of lay-off.

This right of compensation is, however, subject to the following conditions:

(i) He is not a badli or a casual workman.

(ii) His name should be borne on the muster rolls of the establishment.

(iii) He should have completed not less than one year of continuous service under the employer.

A badli workman means a workman who is employed in place of another workman whose name is borne on the muster rolls of the establishment. However, such a workman ceases to be a badli workman on his completion of one year of continuous service in the establishment.

A workman is entitled to lay-off compensation at the rate equal to fifty per cent of the total of the basic wage and dearness allowance for the period of his lay off except for weekly holidays which may intervene. Compensation can normally be claimed for not more than forty-five days during any period of twelve months.

Even if lay-off exceeds forty five days during any period of twelve months no compensation is required to be paid for the excess period if there is an agreement to that effect between the workman and the employer.

If the period of lay-off exceeds forty-five days, the employer has two alternatives before him, namely:

(i) to go on paying lay-off compensation for such subsequent periods

(ii) to retrench the workman.

In case the employer adopts the second alternative, he is bound to comply with the provisions of section 25F. In case of such retrenchment, the employer is enabled to adjust the amount of lay-off compensation paid during the preceding 12 months against retrenchment compensation payable under section 25-F.

The right of workmen to lay off compensation is designed to relieve the hardship caused by unemployment due to no fault of the employee. The provision for payment of compensation for lay-off does not mean that the employer can pay lay-off compensation and declare lay-off. Payment of compensation is not a condition precedent to lay-off

Where the lay-off is justified and it satisfies the requirements of the definition under Section 2(kkk), the only relief to which workmen laid off are entitled is the statutory relief prescribed by Section 25-C.

If the lay-off is malafide in the sense that it has been declared in order to victimize the workmen, it would not be lay-off justified under Section 2(kkk), and the relief provided to the laid-off workmen under section 25-C would not be the only relief to which they are entitled.

Ques. 12: What are the Cases in which a Workman is not entitled to Lay-Off Compensation?

Ans. The provisions of Section 25-E provide certain exceptions to the general rule for the payment of lay-off compensation. In other words even if the workman is laid off, he will be disentitled to claim compensation if his case falls within any of the three clauses of this section. In the following cases, a worker who is laid-off will not be entitled to claim compensation.

1. Refusal to Accept Alternative Employment:

If a laid off workman refuses to accept alternative employment provided that such alternative employment is:

(a) In the same establishment from which he has been laid-off or

(b) In any other establishment belonging to the same employer situated in the town or village within a radius of five miles from the establishment to which he belongs,

(c) In the opinion of the employer the alternative employment does not call for any special skill or previous experience and can be done by the workman and

(d) It carries the same wages which would normally have been paid to the workman in his original employment.

2. Absence from the Establishment:

If the workman does not present himself at the appointed time during normal working hours at least once a day.

3. Strike or Go Slow:

If such laying-off is due to a strike or slowing down of production on the part of workmen in another part of the establishment.

Ques. 13: What are the Special Provisions Relating to Prohibition of Lay-Off?

Ans. Section 25 M (Chapter V B added to the Industrial Disputes Act, 1947 by the Industrial Disputes Amendment Act, 1976) places certain restrictions on the right of the employer to lay-off workers.

Section 25 M lays down that no workman, other than a badli or a casual workman, whose name is borne on the muster rolls of an industrial establishment to which this chapter applies shall be laid off by his employer unless such lay-off is due to shortage of power or natural calamity, and in the case of a mine such lay-off is due also to fire, Hood, excess of inflammable gas or explosion. He can lay-off the workman only with the prior permission of the appropriate government or such authority as may be specified by that government on an application made in this behalf (as amended by the Industrial Disputes Amendment Act, 1984).

An application for permission shall be made by the employer in the prescribed manner stating clearly the reasons for the intended lay-off. A copy of such application shall also be served simultaneously on the workmen concerned. Where the workmen other than badli workmen or casual workmen of a mine have been laid-off for reasons of fire, flood or excess of inflammable gas or explosion, the employer, shall within a period of thirty days from the date of commencement of such lay-off apply to the appropriate government or specified authority for permission to continue the lay-off. Where an application for permission has been made, the appropriate government or the specified authority shall make necessary enquiry as it thinks fit. It shall give a reasonable opportunity of being heard to the employer, the workmen concerned, and the persons interested in such lay off. The appropriate government, having regard to the genuineness and adequacy of the reasons for such lay-off, to the interest of the workmen, and all other relevant factors by order and for reasons to be recorded in writing, grant or refuse to grant such permission. A copy of the order of the appropriate government or prescribed authority shall be communicated to the employer and the workmen.

Ques. 14: What is the procedure for calculation of retrenchment compensation under Industrial dispute act, 1947?

Ans. While effecting retrenchment of the workmen, it is obligatory on the part of the employer to pay retrenchment compensation at the rate of 15 days wages (for every completed year) to be calculated at the last drawn salary of an employee. The calculation of compensation is to be based from the date of appointment and in case an employee has completed 240 days, he will be entitled to 15 days retrenchment compensation besides one month’s notice or salary in lieu thereof as if he has worked for one year. 240 days includes Sundays or off days as well as festival or national holidays.

In case an employee has worked for more than one year, the procedure is that in case the subsequent period of one year is less than six months then it will be counted as one year for calculation of compensation. While making calculations the period of notice is also to be taken into consideration.

Ques. 15: What are the condition precedent to retrenchment?

Section 25F provides the conditions precedent to retrenchment. According to this section the employer must satisfy the following conditions before retrenching an employee employed for a period of continuous period of not less than one year –

(a) the workman has been given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice:

(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days average pay [for every completed year of continuous service] or any part thereof in excess of six months; and

(c) notice in the prescribed manner is served on the appropriate Government [or such authority as may be specified by the appropriate Government by notification in the Official Gazette].

Calculation of average pay is done by dividing the last drawn monthly salary by 25 and then multiplying the dividend by 15 for every completed year of continuous work.

Ques. 16: What is the procedure of retrenchment provided under the Industrial dispute act, 1947?

Ans. Section 25G lays down the procedure of retrenchment. Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman. The employer is also required to maintain a seniority list of the workmen. The system of last in first out is to be followed in retrenching workmen.

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