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Section 16: Constitution of a separate fund for political purposes

The Industrial Relations Code, 2020 (Act No. 35 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter III: Trade Unions
Competent Labour Forum
Act No. 35 of 2020
Section 15 All 104 Sections of Industrial Relations Code, 2020 Section 17

Legal Commentary & Landmark Judgments: Section 16

Section 16 of the Industrial Relations Code, 2020 permits a registered Trade Union to constitute a separate political fund financed exclusively by voluntary member contributions, while guaranteeing absolute protection against discrimination, expulsion, or loss of union benefits for non-subscribing members.

  • Distinct Political Fund Architecture & Voluntary Levy: Section 16(1) enables a registered Trade Union to constitute a separate fund from contributions separately levied for the promotion of the civic and political interests of its members; general union subscriptions can never be merged with or diverted into the political fund.
  • Enumerated Political Objects: Section 16(2) confines political fund expenditure strictly to: (a) payment of expenses incurred by a candidate for election to legislative bodies or local authorities; (b) holding of political meetings or distribution of political literature; (c) maintenance of any member of Parliament, state legislature, or local body; and (d) registration of electors or selection of political candidates.
  • Absolute Immunity & Protection for Dissenting Members: Section 16(3) mandates that no member shall be compelled to contribute to the political fund; non-subscribing members cannot be expelled, placed under any disability, or disadvantaged in admission to union benefits, general funds, or collective representation.
Key Landmark Precedents:
  • Amalgamated Society of Railway Servants v. Osborne [1910] AC 87 (HL): The foundational House of Lords ruling establishing that compulsory political levies on union members violate freedom of conscience and the contractual baseline of trade unionism, forming the doctrinal basis for Section 16's strict separation.
  • Mario Raposo v. H.M. Bhandarkar 1994 Supp (3) SCC 694: The Supreme Court reiterated that union leadership cannot utilize general membership dues for partisan political activities, underscoring the mandatory segregation of political funds.
  • L.N. Mishra v. State of Bihar AIR 1969 Pat 282: The Patna High Court held that any employer check-off or automated wage deduction for political levies without affirmative, individual, written consent from each employee is illegal and violates wage payment statutes.
Courtroom Practice & Strategic Litigation Guidance:

Trade Unions wishing to maintain a political fund must open a completely separate bank account and issue separate contribution receipts clearly marked 'Section 16 Political Fund'. Employers operating payroll check-off systems must never deduct political contributions from wages, even if requested by a union resolution; deductions must be restricted strictly to regular union subscriptions authorized individually under the Code on Wages, 2019.

Section 15 All 104 Sections of Industrial Relations Code, 2020 Section 17