• Legis Scriptor

Dissolution of Trade Union

Authored by - Ashish Nagpal

Keywords - Industrial development, trade union, factory workers, organized agitation, Trade Union Act.


The Industrial Development in the Western Countries started reflecting upon our vast country, but the pace of it was slow. The Trade Union movement in India although has emerged due to the Industrial Revolution, which was a result of the growing problems and the complexities of the economic structure of our country. Due to the slow pace of Industrial Development before the First World War, our country has seen a very slow growth of the important Trade Union Movements in India. Further, Instability in labour forces, lack of leadership quality and deprivation of the freedom of expression during the British rule were some of the primary reasons for the slow rate of growth of Trade Union Movements in India. The first organized labour movement in India was led in 1884 by N.M.Lokhande, who was an ordinary factory worker employed in Bombay who further organized agitation and moved on convening a conference of workers whose main reason was to make representations to the Factory Commission appointed by the then British Government to study the conditions of the working class in factories.


A trade union is defined as an outcome of industrialization. It is based on the principles of a quote which is “United we stand and divided we fall’. Generally, it is viewed that an organization consisting of employees for the main purpose of securing various benefits for them as a whole is known to be a trade union. The traditional outlook of the labour management relationship has changed remarkably due to the introduction of the Industrial Revolution. It is also seen that the relationship between Employer and Employee disappeared with the introduction of the Modern Factory system. Various social and economic evils, however, made it compulsory on the part of workers to devise some effective means in dealing with the Employers which is described in the form of Trade Unions. The growth of Trade Union in India was the major result of a number of strikes, the ever-deteriorating economic conditions of the workers, low wages which could not keep pace with rising prices of commodities which have been exploiting them and the shortage of labour in different sectors too. Until the beginning of the 20th Century, the activities of trade unions were considered to be unlawful though. Finally, The Madras High Court in 1920, in the case of “Madras Textile Labour Union v. Binni &Co., “allowed an injunction restraining the union officials. The leaders of the trade union were prosecuted in this case and it was a landmark case as to the conditions of workers and strengthening the position of Trade Unions in India.

Trade Union Act, 1926

The main objective of the Trade Union is of providing machinery of the registration, regulations and protection of the various rights of the Trade Unions Act. The term used “trade union” which is the basis of the Act does not solely consist of the Worker’s Union but may also include the trader’s association as well. This Act also provides for the various purposes on which the Trade Unions can spend their funds on and creation of a separate fund for political reasons too. The members of the trade unions are further immune to various civil and criminal liabilities and also have various rights under the Act.

This Act further consists of a total of 5 chapters and 33 Sections in total.

Trade Union

Further defined as a combination in its meaning which can be either temporary or permanent. Trade unions are primarily focused on the purpose of regulating the relations between:-

1. Workmen and Employers

2. Between Workmen and Workmen

3.Between Employers and Employers

4. For imposing Restrictive Conditions on any trade or business

And it further includes in itself any federation of two or more trade unions.

It is the object of the association or combination that determines whether it is a trade union or not. For example:- A society of authors, publishers and other owners of copyright meant to protect their copyright in music and songs was not meant to be a trade union by the House of Lords.

Tamil Nadu NGO Union Vs. Registrar, AIR 1962 , Madras HC

In this case, Tamil Nadu NGO union, which was an association of sub magistrates of the judiciary, tehsildar's etc. was not a trade union because these people were engaged in sovereign and regal functions of the state where it's alienable functions.

Exceptions of Trade Union

It is provided that this Act shall not effect

1. Any agreements between partners as to their business

2. Any agreement between an employer and those employed by him as to such employment

3. Any agreement in consideration of the sale of the goodwill of a business or of instruction in any profession, trade or handicraft

Registration of Trade Union

The Registration of Trade Union is not necessary. However, upon registration, a trade union gets several benefits including some immunities that are not available to an unregistered Trade Union.

Section 13 specifies that upon registration, a trade union gets a legal entity due to which:-

1. It has perpetual succession and a common seal

2. Can acquire and hold movable as well as immovable properties

3. Can contract through agents

4. Can sue and can be sued too

MT Chandrasenan Vs. Sukumaran AIR 1974

In this case, the SC held that if a member fails to pay the prescribed subscription fees, then he cannot be considered a member of the trade union. However, subscriptions cannot be refused under some pretext which results in the denial of the membership.

Further, under Section 8, upon satisfaction of all the requirements, the registrar of the Trade Union if deemed fit will further register the trade union. It is mandatory for the Registrar to register a Trade Union if the union satisfies all the requirements of this Act.

Under Section 9, the registrar will issue the Certificate in the prescribed form, Which shall be conclusive of the fact that the trade union is registered under this Act.

In the case of Re Indian Steam Navigation Worker Union vs The State of MP, AIR 1936 ; the court held that a Registrar only has to see whether all the technical requirements are being fulfilled or not and he doesn't have the power to declare anything unlawful

Rights of a Trade Union

The Various rights of a Trade Union are discussed as below:-

1. Right of Representation:- A Trade Union can represent the employees in any industrial dispute and in case of an individual dispute, with the written authorization of the employee. Once the authorization is given, the trade union can represent before any labour court, conciliation officer etc.

2. Right to Contract:- A registered Trade Union being a legal entity can enter into contracts and agreements in its own name

3. Right of Admission:- Although admission is not an absolute right, it still can be used by the trade unions as a right provided to them. A registered trade union can impose certain Obligations and Restrictions as to provisions of the Trade Unions Act

4. Right of Inspecting Books:- This right to the Trade Union is given under Section 20 of the Trade Unions Act, 1926. In accordance with this right the office bearer or the members can inspect the books of such books they may think fit and is covered under the rules of the Act. However, they don’t have the right of making copies of such books

5. Right to Own Property:- This is one important right given to the trade unions, according to this the Trade Unions can purchase either movable or immovable property in its own name.

Dissolution of Trade Unions

The dissolution of a registered trade union is defined under Section 27 of the Trade Unions Act, 1926. For a registered trade union, the rules of such a registered trade union must fall under Section 6 (j) of the Act, which consists of various provisions for the dissolution of that trade union. A registered trade union can be dissolved at any given time. The Notice of such dissolution although should be signed by the Secretary and any other 7 members of the trade union and later on, must be submitted to the Registrar of Trade Unions within the upcoming 14 days of such dissolution initiated. The Registrar after being totally satisfied with the dissolution and should also make sure that the dissolution is effected in accordance with the rules laid down for the trade union. Upon the fulfillment of the required conditions, the registrar will then register the fact of dissolution in the register and considers it to be dissolved from then.

The dissolution will then come to effect from the date when such registration of dissolution has been registered by the Registrar of Trade Unions in the respective register. In the case, where the rules of the registered trade union further do not have any of the provisions relative to the distribution of the various funds relating to the trade union on its dissolution. The Registrar of Trade Unions may upon his discretion divide the funds among the various members however he thinks fit. Although, In any case where the rules of the registered trade union may have any provisions for division of funds, then the division of funds will be done in accordance with the provisions in those rules. In case of any unregistered trade union where there are not any rules for the provisions for dissolution, then such trade union can be dissolved with the consent provided for all the members of the trade union, or an order given by a competent court can also result in the dissolution of the Trade Union.

Various Types of Dissolution

There can be various types of dissolution which are considered by the International Labour. These are defined as below:-

1. Voluntary Dissolution

The situation where the decision of trade union is taken was freely taken by the respective committee convened in a further manner for all the workers concerned. It was considered here that this dissolution or any consequences resulted from it would not be considered as an infringement of the Trade Union Rights

2. Insufficient Membership

There is a legal provision that requires the dissolution of the Trade Union if it’s membership falls below a required number of 20 or 40 which further depends on whether it’s a work union and occupational union. Further, all the necessary conditions should be considered to avoid any abusive interpretation of the provision i.e the right of appeal to the court of law.

In the case where the reduction in the number of employees to the legal minimum of age of 25 years as a consequence of anti-trade union and dismissals, it was considered by the court that in this case where the minimum number of people is due to the reason of pressure from the leaders or any outside force then such dissolution will not be affected

3. Administrative Authority

There can also be some cases where the dissolution of a company is affected by the virtue of an order of an administrative authority, where there have been some serious infringements of the freedom of the association.


The Trade Unions Act, 1926 has been considered as important welfare legislation whose main focus was on providing for the provisions for registration, strict regulations, benefits and also for the protection for these trade unions. As such legislations envisage the welfare of workers, these are called ‘welfare legislation”. In India, agreements between the Trade Union and employers are enforceable under Section 18 of the Industrial Disputes Act, 1947 by filing a petition in the Labour Court or Industrial Tribunal. This has been proved to be essential for the Trade Union Act. Further, the dissolution which has been talked about in the latter part also has quite an impact on these laws.


1. DR. H.K. SAHARAY, Textbook on Labour & Industrial Law, Universal Law Publishing (6d ed. 2014). PIYALI GHOSH, Industrial Relations and Labour Laws, Mc Graw Hill Education (ed.2017).

2. Registration of Trade Unions- Trade Unions Act 1926, ACT 16 of 1926 (25-03-1926).

3. Rights and Liabilities of Registered Trade Unions – Trade Unions Act 1926, ACT 16 of 1926 (25-03-1926).

4. Dissolution and Suspension of Organizations, International Labour Organization (Nov 2018).,P70002_HIER_LEVEL:3946569,1.