31 The Trade Unions Act 1926: Background, Registration, Rights and Liabilities, Immunities (Sections 17 and 18), General and Political Funds, and the Position under the IR Code 2020
31.1 Why a Separate Statute?
Before 1926, a trade union in India had no formal legal personality. Members could be prosecuted for criminal conspiracy simply for combining to seek higher wages, and any union activity that “restrained trade” could be sued for civil damages. The Trade Unions Act 1926 gave registered unions legal personality, immunity from these old common-law actions, and a framework for internal governance. For nearly a century, it was the spine of Indian trade-union law. The Industrial Relations Code 2020 subsumes the 1926 Act but carries forward most of its core provisions — and adds a new statutory recognition framework.
31.2 1 · Background — The Buckingham Mills Case
In 1920, B. P. Wadia led a successful strike at the Buckingham and Carnatic Mills, Madras. The mill owners filed a civil suit against him for damages caused by inducing breach of employment contracts. The Madras High Court ruled in favour of the mill owners — confirming that a trade union, as a common-law combination “in restraint of trade”, had no immunity from suit.
The case showed Parliament that without a statute, even peaceful trade-union activity could ruin its leaders. N. M. Joshi moved a Bill in the Central Legislative Assembly in 1921; after several rounds of consultation, the Indian Trade Unions Act was passed in March 1926 and came into force on 1 June 1927. (The word “Indian” was dropped in 1964 — it is now simply the Trade Unions Act 1926.)
31.3 2 · Object and Scope
| Aspect | Detail |
|---|---|
| Object | To provide for the registration of trade unions and to define the law relating to registered trade unions |
| Extent | The whole of India |
| Applicability | Trade unions of workmen and of employers |
| Definition of trade union (Section 2(h)) | Any combination, whether temporary or permanent, formed primarily for regulating relations between workmen and employers, between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade |
31.4 3 · Key Definitions — Section 2
| Term | Section | Meaning |
|---|---|---|
| Trade dispute | 2(g) | Dispute between employers and workmen, between workmen and workmen, or between employers and employers, connected with employment, non-employment or terms and conditions of work |
| Trade union | 2(h) | (As above) |
| Registered trade union | 2(e) | A trade union registered under this Act |
| Registrar | 2(f) | The Registrar of Trade Unions for the state |
| Office-bearer | 2(b) | Includes any member of the executive but not an auditor |
| Executive | 2(a) | The body to which the management of the union is entrusted |
31.5 4 · Registration of a Trade Union
31.5.1 Conditions — Sections 4 to 9
| Section | Provision |
|---|---|
| Section 4(1) | Any seven or more members of a union may apply for registration; at least 10% or 100 workmen (whichever is less), subject to a minimum of seven, must be members on the date of application (introduced by 2001 amendment) |
| Section 5 | Application to the Registrar, accompanied by a copy of the rules and other prescribed particulars |
| Section 6 | Rules of the union must contain prescribed matters — name, objects, office-bearers, subscription, audit, etc. |
| Section 7 | Registrar may call for further information |
| Section 8 | On being satisfied, the Registrar shall register the union |
| Section 9 | Issue of registration certificate, conclusive evidence of registration |
31.5.2 Section 6 — Compulsory Provisions in Union Rules
The rules of every registered union must specify:
- The name of the union.
- The whole of its objects.
- The purposes for which the general fund may be applied.
- The maintenance of a list of members and the facilities for inspection.
- The admission of ordinary members and honorary / temporary members.
- The conditions of becoming an office-bearer.
- The subscription — minimum prescribed.
- The manner in which rules may be amended, varied or rescinded.
- The safe custody of funds, an annual audit, and inspection of the books.
- The dissolution of the union.
31.5.3 Minimum Subscription — Section 6(ee) (2001 amendment)
| Category | Minimum subscription per annum |
|---|---|
| Rural workers | Rs 1 |
| Unorganised sector workers | Rs 3 |
| Workers in other cases | Rs 12 |
31.5.4 Cancellation of Registration — Section 10
The Registrar may withdraw or cancel registration:
- On the application of the trade union for cancellation.
- If registration was obtained by fraud or mistake.
- If the union has ceased to exist.
- If it has wilfully contravened any provision of the Act or rules.
- If its rules conflict with the Act.
Cancellation may be appealed under Section 11.
31.6 5 · Rights of a Registered Trade Union
31.6.1 Legal Personality — Section 13
A registered trade union becomes a body corporate with:
- Perpetual succession — continues despite changes in membership.
- A common seal.
- Power to acquire and hold property.
- Power to enter into contracts.
- Power to sue and be sued in its own name.
31.6.2 Immunities — Sections 17 and 18
The Act’s most powerful protections.
| Section | Immunity | Scope |
|---|---|---|
| Section 17 — Criminal conspiracy | No office-bearer or member of a registered union is liable to criminal conspiracy under Section 120-B(2) of the IPC for any agreement made to further the legitimate objects of the union — unless the agreement is an agreement to commit an offence | |
| Section 18 — Civil suit | A registered union, its office-bearers or members are not liable to be sued for any tortious act done in contemplation or furtherance of a trade dispute — protects from suits for inducing breach of contract or interfering with another’s trade |
Section 17 = immunity from CRIMINAL conspiracy. Section 18 = immunity from CIVIL suit in tort. NTA stems frequently pair the two sections with the wrong type of liability.
The two immunities together overturned the Buckingham Mills outcome — peaceful trade-union action could no longer be punished as conspiracy or sued as restraint of trade.
31.6.3 Other Rights of a Registered Trade Union
- Section 14 — certain Acts (Companies Act, Cooperative Societies Act, Societies Registration Act) do not apply to a registered trade union.
- Section 19 — agreements between members of a registered trade union are not void merely because they are in restraint of trade.
- Section 20 — right of any member, including a minor of 15+ years, to inspect the books.
31.7 6 · General Fund and Political Fund — Sections 15 and 16
31.7.1 General Fund — Section 15
The general fund of a registered union may be spent only on the purposes listed in Section 15. The principal heads include:
- Payment of salaries, allowances and expenses to office-bearers.
- Payment of expenses for the administration of the union.
- Prosecution or defence of legal proceedings for the union or any member.
- Conduct of trade disputes on behalf of the union or members.
- Compensation to members for loss arising out of trade disputes.
- Allowances on death, old age, sickness, accidents, unemployment.
- Insurance, education and welfare of members and their families.
- Publication of materials for trade-union purposes.
- Contribution to a federation of trade unions.
- Any other object notified by the appropriate government.
31.7.2 Political Fund — Section 16
A registered union may constitute a separate political fund for furthering civic and political interests of its members. Key conditions:
- Voluntary contribution — no member can be compelled to contribute.
- Non-contributors must not be discriminated against in benefits or rights.
- The fund may be applied for objects listed in Section 16(2) — including payment of expenses incurred by candidates to legislative bodies, political meetings, holding of political meetings, distribution of literature, and so on.
The political-fund contribution under Section 16 is strictly voluntary. A union cannot expel or disadvantage a member who declines to contribute. NTA frequently tests this safeguard.
31.8 7 · Returns, Amalgamation, Dissolution
| Section | Provision |
|---|---|
| Section 21 | Persons aged 15 years and above may be members of a registered union |
| Section 21A | Disqualifications for office-bearers (added 2001) — under 18, convicted of moral-turpitude offence in past five years |
| Section 22 | Proportion of outside office-bearers — originally up to 50%; 2001 amendment varied limits (one-half or one-third depending on category) |
| Section 24 | Change of name |
| Section 25 | Amalgamation of two or more registered unions |
| Section 27 | Dissolution of a registered union to be notified to the Registrar |
| Section 28 | Annual returns to be sent to the Registrar |
| Section 29-30 | Power to make regulations / rules |
| Section 31-32 | Penalties for default in supplying returns or for furnishing false information |
31.8.1 Section 22 — Outside Office-Bearers
| Establishment type | Permissible outside office-bearers |
|---|---|
| Organised sector | Up to one-third of total or five (whichever is less) — post-2001 amendment |
| Unorganised sector | Up to one-half of total office-bearers |
31.8.2 2001 Amendment — Significant Changes
The Trade Unions (Amendment) Act 2001 introduced:
- Minimum membership threshold for registration (10% or 100 workmen, whichever is less; minimum 7).
- Minimum subscription rates (Rs 1 / 3 / 12).
- Limits on outside leadership (Section 22).
- Disqualifications for office-bearers (Section 21A).
- Provisions for registered federations.
31.9 8 · Recognition Question Left Open
The 1926 Act provided only for registration — not for recognition as a bargaining agent. That gap was filled informally by the Code of Discipline (1958) (15% threshold) and then, statutorily, by the Industrial Relations Code 2020 (sole negotiating union at 51%; council of unions with 20%+).
31.10 9 · Continuation under the IR Code 2020
The Industrial Relations Code 2020 subsumes the Trade Unions Act 1926. The substantive provisions carried forward include:
- Registration framework (largely unchanged).
- Civil and criminal immunities (corresponding to Sections 17 and 18).
- General and political fund framework.
- Outside office-bearer limits.
- Recognition framework newly added at the statutory level.
The Code also introduces new concepts not in the 1926 Act — negotiating union, negotiating council, strike-notice extension to all establishments, Re-skilling Fund, fixed-term employment statutory status.
31.11 10 · The Lasting Significance of the 1926 Act
- First Indian statute to give a trade union legal personality.
- Resolved the Buckingham Mills problem of criminal conspiracy and civil suit.
- Set the basic framework of registration, internal governance and immunity that survives in modern Indian labour law.
- Inspired similar legislation in many Commonwealth countries.
- Provides the historical and conceptual foundation on which the IR Code 2020 builds.
31.12 Practice Questions
Section 17 of the Trade Unions Act 1926 confers immunity from:
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Section 18 of the Trade Unions Act 1926 confers immunity from:
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The Trade Unions Act was passed in:
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The 1920 Buckingham and Carnatic Mills (Madras) case, which catalysed the Trade Unions Act 1926, was led by:
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Under Section 4 of the Trade Unions Act 1926, the minimum number of members needed to apply for registration is:
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Following the 2001 amendment, the membership threshold for registration is:
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Contribution to the political fund of a registered union under Section 16 is:
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Under Section 6(ee), the minimum subscription per annum for a worker in the "other cases" category is:
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A registered trade union becomes a body corporate under:
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Match the section with its content:
| (i) | Section 17 | (a) | Outside office-bearer limits |
| (ii) | Section 18 | (b) | Criminal-conspiracy immunity |
| (iii) | Section 16 | (c) | Civil-suit immunity |
| (iv) | Section 22 | (d) | Political fund |
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After the 2001 amendment, the proportion of outside office-bearers permitted in an organised-sector union is at most:
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Under Section 21, the minimum age for a member of a registered trade union is:
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Cancellation of registration is provided for under:
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Which expense is not permitted out of the general fund (Section 15)?
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Amalgamation of two or more registered trade unions is provided for under:
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The Buckingham Mills outcome demonstrated that, before 1926, a trade union could be:
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A registered trade union has all the following except:
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Section 19 provides that agreements between members of a registered union are not void merely because they are in:
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A registered union must submit annual returns to the Registrar under:
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The Trade Unions Act 1926 has now been subsumed within:
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31.13 Quick Recall
- Trade Unions Act 1926 — born from the Buckingham & Carnatic Mills case (1920, B. P. Wadia); passed March 1926, in force from 1 June 1927.
- Section 2(h) defines trade union.
- Section 4 — minimum seven members; post-2001 amendment, also 10% or 100 workmen, whichever is less.
- Section 6 — compulsory matters to be included in union rules; 6(ee) — minimum subscription (Re 1 / Rs 3 / Rs 12).
- Section 10 — cancellation of registration; Section 11 — appeal.
- Section 13 — registered union is a body corporate with perpetual succession, common seal, power to acquire property, sue and be sued.
- Section 15 — general fund purposes (salaries, administration, legal proceedings, trade-dispute conduct, allowances, education, welfare).
- Section 16 — political fund — strictly voluntary; non-contributors must not be discriminated against.
- Section 17 — IMMUNITY FROM CRIMINAL CONSPIRACY (IPC Section 120-B).
- Section 18 — IMMUNITY FROM CIVIL SUIT for tortious acts in furtherance of a trade dispute.
- Section 19 — agreements between members not void merely as restraint of trade.
- Section 21 — minimum age of membership: 15 years.
- Section 22 — outside office-bearer limits: one-third or five (organised); one-half (unorganised) — post-2001.
- Sections 25/27/28 — amalgamation / dissolution / annual returns.
- 2001 amendment added 10% threshold, minimum subscription, outside-leader limits, Section 21A disqualifications.
- Subsumed in IR Code 2020 with most provisions carried forward and statutory recognition newly added (51% sole / 20% council).