1993 (12) TMI 240 - HC - Indian Laws

Trade Union Act: Limits on Speculative Activities by Office Bearers

Mario Raposo Versus H.M. Bhandarkar and Ors.

The court clarified that under Section 15 of the Trade Unions Act, 1926, trade unions cannot engage in speculative activities or profit-making ventures. ... - Issues:Interpretation of Section 15 of the Trade Unions Act, 1926 regarding spending of general funds by a union.Validity of purchasing shares by the office bearers of a union in their personal capacity.Compliance with the constitution of the union in relation to financial transactions.Applicability of principles of speculative activities and investment in the context of a trade union's funds.Analysis:Interpretation of Section 15:The judgment addresses the interpretation of Section 15 of the Trade Unions Act, 1926, which outlines the permissible objects on which the general funds of a trade union can be spent. The court emphasizes that the Act does not allow unions to engage in speculative activities, as the primary purpose of a union is the welfare of its members through collective bargaining and security. The court underscores that profit-making cannot be a union's objective, and any expenditure must strictly adhere to the provisions of Section 15. The judgment clarifies that the purchase of shares for profit-making purposes is outside the scope of a union's activities, as it conflicts with the principles of industrial jurisprudence and the philosophy behind trade unions.Validity of Share Purchase by Office Bearers:The case involves a challenge to the purchase of shares by the office bearers of a union, amounting to Rs. 75,000, in their personal capacity. The petitioner argues that this purchase was beyond the duties and powers of the office bearers, as it violated the principles of the Trade Unions Act. Conversely, the respondents defend the purchase, claiming it was a wise investment to enhance the economic viability of the union. However, the court rules that such speculative activities, including share purchases, are impermissible under the Act, as they deviate from the intended purpose of a union's funds. The judgment highlights that the shares were bought in individual names, contrary to the union's constitution, and criticizes the lack of justification for engaging in speculative activities.Compliance with Union's Constitution:The judgment scrutinizes the compliance of the union's financial transactions with its constitution, particularly Clause 14, which mandates the deposit of funds in approved banks and prohibits office bearers from keeping significant amounts for personal expenses. The court notes that the purchase of shares contradicted the constitution's provisions, as the funds were used for speculative activities instead of being deposited in scheduled banks as required. The court deems the action of purchasing shares in individual names as a clear violation of the constitution, emphasizing that such conduct is unacceptable for a trade union.Applicability of Speculative Activities and Investment:The judgment delves into the distinction between speculative activities and wise investments in the context of a trade union's financial decisions. It asserts that the purchase of shares for profit-making purposes constitutes speculation, which goes against the fundamental principles of trade unions. The court rejects the argument that the share purchase was a fruitful investment, emphasizing that such activities are impermissible under the Act. By highlighting the importance of adhering to the Act's provisions and the union's constitution, the judgment underscores the need to safeguard the contributions of union members and uphold the intended purpose of trade unions.In conclusion, the judgment sets aside the Industrial Court's order, deeming it illegal and incorrect, and directs a reevaluation of the application in light of the court's observations.