Bombay High Court
N.R.C. Employees' Union & Ors vs The Government Of Maharashtra on 28 November, 2011
Bench: B.H. Marlapalle, Nishita Mhatre
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vss
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.8505 OF 2009
N.R.C. Employees' Union & Ors. .. Petitioners
V/s.
The Government of Maharashtra
Department of Industries,
Energy & Labour & Ors. .. Respondents
ig a/w
WRIT PETITION NO.8574 OF 2009
Vasant Ellanna Dhanekar & Ors. .. Petitioners
V/s.
The Government of Maharashtra
Department of Industries,
Energy & Labour & Ors. .. Respondents
Mrs.Meena Doshi with Mr.Ravindra Nair for Petitioner in WP/8505/2009
Ms.Gayatri Singh with Ms.Bhavna Mhatre for Petitioner in
WP/8574/2009
Ms.Neha Bhide, `B' Panel AGP, for Resp. Nos.1 & 2 in both petitions
Mr.K.S. Bapat I/b Desai & Desai Asso. for Resp. No.3 in WP/8505/2009
and for Resp. No.4 in WP/8574/2009
Mr.S.K. Talsania, Sr.Counsel with R.V.Paranjpe for Resp. Nos.4 & 5 in
WP/8505/2009 and for Resp. No.5 in WP/8574/2009
CORAM: B.H. MARLAPALLE &
SMT.NISHITA MHATRE, JJ.
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JUDGEMENT RESERVED ON: OCTOBER 10 , 2011
JUDGEMENT DELIVERED ON: NOVEMBER 28, 2011
JUDGMENT (PER SMT.MHATRE, J.):
1. These two petitions raise identical issues based on the same
set of facts. They have therefore been heard together. Writ Petition
No.8505 of 2009 has been filed by the NRC employees union and
some of its members (for the sake of convenience, the petitioners in
this petition will be referred to as the `staff union'). Writ Petition No.
8574 of 2009 has been filed by individual workers employed in the
factory of the respondent company for themselves and on behalf of
2083 workers whose names are listed in exhibit A to the Writ Petition.
(for the sake of convenience, the petitioners in this petition will be
referred as `individual workmen'). Both these writ petitions, have been
filed to challenge the execution and implementation of settlements
which the employer i.e. the NRC Limited (for short, hereinafter referred
to as the `company') has arrived at with NRC Mazdoor Sangh (for
short, `the Mazdoor Sangh'), which claims to be a recognised union
under the Maharashtra Recognition of Trade Unions and Prevention of
Unfair Labour Practices Act, 1971 (for brevity the 'MRTU an PULP Act').
The principal challenge in both these petitions is to the settlement
which is purportedly signed on 5.9.2008 in conciliation on the ground
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that the mandatory requirements of section 12 of the Industrial Disputes
Act,1947 and Rule 11 of the Industrial Disputes (Bombay) Rules, 1957
have been breached and, it is therefore, not binding on either the staff
union and its members or the individual workmen of the factory. The
settlement has also been challenged on the ground that it violates the
provisions of section 25O and section 25N of the Industrial Disputes
Act.
2.
In order to appreciate the challenge to the settlements in these
petitions it would be necessary to set out a few facts.
FACTS:
3. The Company was running three plants with a composite
factory licence for the manufacture of nylon, rayon and chemicals in its
factory at Mohane in District Thane. The factory was established over
442.55 acres of land. The individual workmen were engaged in the
factory and were represented by the Maharashtra General Kamgar
Union till 2001. Thereafter, the certificate of recognition was granted to
Respondent No.3 union i.e. the Mazdoor Sangh on an application being
filed by it u/s 14 of the MRTU & PULP Act. The staff employed by the
company worked in the Head Office which was situated outside the
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precincts of the factory and in Mumbai city. The staff union was
accorded recognition in 1991 under the MRTU & PULP Act and
continued to represent the staff employed by the company. Several
settlements were signed by it with the company in respect of the
service conditions of the staff employed by the company; the last of
such settlements was dated 25.8.1993 which was in force till 1996.
Thereafter, the staff union raised a charter of demands for revision of
the service conditions of the staff.
ig The demands were referred for
adjudication to the Industrial Tribunal under Reference (IT) No.10 of
1997. The Company too raised its demands qua the service conditions
of the members of the staff union which were also referred for
adjudication being Reference (IT) No.12 of 1997. Both these
references are pending before the Industrial Tribunal.
4. The staff was shifted from the Mumbai offices located in the
Eros Building and in Ewart House to the factory premises in Mohane
during the period from April 1995 to March 1996. The Mazdoor Sangh
which claims to have obtained recognition under the MRTU & PULP Act
in the place of the Maharashtra General Kamgar Union in 2001 did not
file an application in either of the references being Reference Nos.(IT)
Nos.10 of 1997 and 12 of 1997 to permit it instead of the staff union to
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represent the workmen i.e. the staff before the Tribunal.
5. It appears that the company was declared a sick company in
1987. As its net worth increased, by an order dated 10.1.1994 the
Board for Industrial and Financial Reconstruction (for short, `BIFR')
discharged the company from the purview of the Sick Industrial
Companies (Special Provisions) Act, 1985 (for short, `SICA'). According
to the Company, it undertook several measures in order to reduce the
losses which it had incurred. However, in the financial year 2005-2006,
there was a gradual erosion of the working capital of the company and
consequently it was faced by a financial crunch. It appears that the
Company decided to dispose off surplus land owned by it in the factory
precincts in 2005-2006 in order to raise funds for the financial
restructuring of the company. On 1.3.2007 it entered into an agreement
to sell approximately 344 acres of land to K.Raheja Universal Ltd. on
obtaining no objection certificates from its secured creditors, namely,
several nationalised banks. The production activities in the nylon plant
were discontinued by the company in November 2007. According to
the company, it was required to undertake multifarious measures for
restructuring its finances and while doing so, it entered into a settlement
with the Mazdoor Sangh on 5.9.2008, which included a clause for an
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early retirement scheme. The company claims that out of the total
strength of 3725 employees, including the clerical staff, , about 577
opted for the scheme. The operations in the Rayon plant were stopped
in July 2008. An application was submitted by the company to the BIFR
u/s 15(1) of the SICA. It was declared a sick company u/s 17(3) of the
SICA by the BIFR on 16.7.2009. An appeal was filed by the company
before the AAIFR. The AAIFR reversed the findings of the BIFR and,
therefore, writ petitions were filed in this Court by the company as also
by the NRC Employees Union and the NRC Mazdoor Sangh. This
Court disposed off those writ petitions by judgement and order dated
29.7.2011. The order passed by the appellate authority was set aside
and the order passed by the BIFR was confirmed in those petitions by
the Division Bench of this court to which one of us (Marlapalle, J.) was
a party.
6 The staff union became aware of the settlement between the
company and the Mazdoor Sangh which claimed to represent the
individual workmen and other manual workers as well as the staff only
when an application was submitted before the Tribunal by the company
in the aforesaid references on 12.12.2008. In its application, the
company requested the Tribunal to dispose off the references since it
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had entered into a settlement in conciliation on 5.9.2008 with the
recognised union, namely, the Mazdoor Sangh. The staff union has
opposed this application submitted by the company on 12.12.2008. No
orders have been passed as yet on that application. A lockout notice
dated 15.11.2009 was issued by the company. That lockout has not
been lifted as yet.
7. Three settlements have been challenged in these petitions i.e. the
settlement of 5.9.2008, which the company claims is a settlement in
conciliation and the subsequent settlements dated 10.12.2008 and
17.1.2009 signed u/s 2(p) by the company with the Mazdoor Sangh,
extending the period within which the settlement dated 5.9.2008 was to
take effect.
GROUNDS ON WHICH THE SETTLEMENTS ARE CHALLENGED:
8. The principal grounds on which these settlements have been
challenged in Writ Petition No.8505 of 2009 filed by the Staff Union are:
(i) the Mazdoor Sangh could not enter into a settlement with respect to
the staff as it did not represent the staff; (ii) the settlement dated
5.9.2008 is not a settlement signed in conciliation as the provisions of
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the Industrial Disputes Act and the Rules framed thereunder have been
violated; (iii) the settlement cannot be said to be binding on the staff
when historically the service conditions of the staff have always been
different from the factory workmen; (iv) the recognition accorded to the
staff union in 1991 does not automatically come to an end because
their workplace is shifted; (v) the settlements are in breach of section
33(1) of the Industrial Disputes Act as no permission has been obtained
from the Industrial Tribunal where the aforesaid references are pending,
before effecting a change in the working conditions of the staff by the
three settlements challenged in the petition and (vi) these settlements
have changed the service conditions, without issuing a notice of change
under Section 9-A of the Industrial Disputes Act.
9. The individual workmen have challenged these settlements in the
writ petition filed by them being writ petition No.8574 of 2009 on the
grounds that: (i) no charter of demands was raised by the Mazdoor
Sangh in respect of the terms of the settlement; (ii) the demands of the
management which were admitted in conciliation were with respect to
enhancing the production norms and reduction of 1800 persons through
an early retirement scheme; (iii) the settlement violates the provisions
of section 25-O, 25-M and 25-N of the Industrial Disputes Act and,
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therefore, cannot be binding on the individual workmen; (iv) the
conciliation officer has abdicated his statutory duties while terming the
settlement of 5.9.2008 as a settlement signed in conciliation; (v)
demands which were not admitted into conciliation could not be a part
of a settlement in conciliation.
10. At the hearing of these two petitions, Mr. Talsania, the learned
Counsel appearing for the Company, and Mr. Bapat, appearing for the
Mazdoor Sangh, raised two preliminary issues, namely, that the writ
petitions challenging the settlement in conciliation were not
maintainable and that the petitioners in either petition did not have the
locus to challenge the settlement, as the Mazdoor Sangh was the
recognised union.
MAINTAINABILITY OF THE WRIT PETITIONS -
11. It has been submitted on behalf of the respondents that once a
settlement is signed in conciliation the only remedy which the union or
individual workmen may have is to challenge that settlement by raising
an industrial dispute. According to the learned Counsel appearing for
the respondents, the present individual workmen or the staff union
would have to raise an industrial dispute in respect of the settlement
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dated 5.9.2008 in order to have it set aside and the High Court cannot
do so in exercise of its powers under Articles 226 and 227 of the
Constitution of India. Reliance is placed by the learned Counsel for the
respondents on the judgements of the Supreme Court in the case of
K.C.P. Ltd. v/s Presiding Officer & ors., (1996) 10 SCC 446; National
Engineering Industries Ltd. vs. State of Rajasthan, (2000) 1 SCC 372;
State of Uttaranchal vs. Jaipal Singh, (2005) 8 SCC 49; Jaihind
Roadways vs. Maharashtra Rajya Mathadi and Transport General
Kamgar Union & Ors., (2005) 8 SCC 511 and Captain S.C. Adhikari &
Ors. vs. Air India (through its Managing Director) & Ors., 2001 LLN
1119 decided by a Division Bench of this Court in support of this
submission.
12. It has been urged by Mrs. Doshi, learned Counsel appearing for
the staff union, that this issue had been raised by the respondents
when the petitions were heard for admission and it was only after the
Court was satisfied that the petitions were maintainable that Rule was
issued in both the petitions. According to her, the respondent company
had approached the Supreme Court by way of Special Leave Petitions
challenging the interim order passed by this Court while admitting the
petition. Grounds with regard to the maintainability of the petition were
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raised before the Supreme Court by the Respondents. The Special
Leave Petitions were dismissed and, therefore, the respondents cannot
raise the issue regarding the maintainability of the petition at this stage
again, urged the learned Counsel. She has submitted that since there
is a breach of section 12 of the Industrial Disputes Act and Rule 11 of
the Industrial Disputes (Bombay) Rules while recording the settlement
of 5.9.2008 as a "settlement in conciliation" the only remedy available to
the staff union is to file the present petition.
13. Ms. Singh, appearing in the petition filed by the individual
workmen reiterated the submissions advanced by Mrs. Doshi regarding
the maintainability of the writ petition. She also submitted that a
settlement could be signed by a recognised union only with respect to
an industrial dispute and not regarding any and every dispute.
According to her, some workmen including the petitioners who have
been terminated from service as a consequence of the settlement of
5.9.2008 have challenged their respective termination orders on the
ground that individual disputes cannot be settled by a recognised union
when they are in respect of the suspension or the termination of service
of the individuals, by way of discharge, dismissal, retrenchment, etc.
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14. The Division Bench of this Court while admitting the present
petitions and granting interim relief has observed thus:
7. In our opinion, prima facie even assuming
that the representative Union has entered into a settlement it can
only be in respect of dispute which would partake of an
industrial dispute and in respect of individual dispute
which it has raised. It will not be open to the
recognised union under the guise of settlement either to
settle the disputes which are not industrial dispute and/or
individual disputes which have been raised by the
individual workmen in their personal capacity and are
pending before the industrial forum for rights which they are
entitled to under the existing service conditions or other
settlements.
15. These observations of the Division Bench were obviously prima
facie. However, they have been confirmed by the Supreme Court while
dismissing the SLPs and, therefore, it would not be open to the
respondents to agitate this issue again. We have however, considered
the judgements cited by Counsel for the respondents and in our
opinion, these judgements do not in any way indicate that the present
writ petitions are not maintainable. In K.C.P. Ltd. (supra), the Supreme
Court was concerned with the issue as to whether a settlement entered
into between an employer and a trade union, otherwise than in
conciliation proceedings, would bind dissenting members of the trade
union. A number of workmen employed with K.C.P. Ltd. were
dismissed. The conciliation proceedings with respect to their
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termination from service were initiated by the sole recognized and
representative union on being authorized by other workmen including
the dismissed persons who continued to be its members. As the
conciliation proceedings failed, the dispute was referred to the Labour
Court for adjudication under Section 2(k) read with Section 10. The
demand for reinstatement of the dismissed workmen was espoused by
the trade union on their behalf. The dismissed workmen did not raise
disputes individually and, therefore, the demand of each workman for
reinstatement with continuity of service and back wages was not
referred under Section 2-A of the Industrial Disputes Act. By an
agreement between the union and the management, the dismissed
workmen were provided an option either to avail of compensation with
other monetary benefits or to accept conditional reinstatement. The
dismissed workmen repudiated the settlement. The management and
the union representing the workmen sought an award in terms of the
settlement in the pending references. The Labour Court refused to
pass such an award as 12 of the dismissed workmen had not accepted
the settlement. In these circumstances, the Supreme Court observed
that since the dispute was espoused by the union on behalf of the
dismissed workmen, it was an industrial dispute as defined under
Section 2(k) and not a dispute as envisaged under Section 2A of the
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Industrial Disputes Act. As the settlement was fair and just, the
Supreme Court observed that the Labour Court ought to have passed
an award in terms of the settlement instead of continuing the reference
in relation to the dismissed workmen who had repudiated the
settlement. The Counsel for the respondents attempted to draw an
analogy by submitting that the Mazdoor Sangh which was the
recognised union was well within its rights in signing a settlement with
the company, in conciliation, which was binding on every workmen
employed by the company. This judgement, in our opinion, has no
application to the facts of the present case. The references and/or
complaints pending before the Industrial Tribunal/Labour Court in
respect of the individual workmen in the present case have been
initiated at the instance of the workmen themselves. Their cause has
not been espoused by any trade union, much less the Mazdoor Sangh.
In any event, the proviso to Section 18(1) of the Industrial Disputes Act
in no uncertain terms provides that an agreement in respect of the
dismissal, discharge, removal, retrenchment, termination of service, or
suspension of an employee cannot bind the employee concerned after
the agreement is signed between a recognised union and the
management. Similarly, the proviso to Section 36(1) of the Industrial
Disputes Act also enables a workman who challenges the legality or
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propriety of an order of dismissal, discharge, removal, retrenchment,
termination of service, or suspension to be represented either by a legal
practitioner with the consent of the management and with the leave of
the court or through an office bearer of any trade union, despite the
presence of a recognized union in the establishment. Complaints with
respect to the dismissal or discharge of a workman filed under the
M.R.T.U. & P.U.L.P. Act can be prosecuted by individual workmen.
Section 21 of this Act places an embargo on the appearance of an
individual workman in a complaint filed in respect of unfair labour
practices under Items 2 and 6 of Schedule IV of the MRTU & PULP
Act. A complaint regarding dismissal or discharge of an employee
would fall within Item 1 of Schedule IV of the MRTU & PULP Act.
Therefore, the judgement of the K.C.P. Ltd. (supra) has no application
to the present case. The contention that it is only the Mazdoor Sangh
which could represent the individual employees and that the individual
employees are bound by the settlement of 5th March, 2008 although it
deals with their automatic termination from service and its
consequences, is untenable and without merit.
16. In the case of National Engineering Industries Limited (supra)
three different unions had submitted separate charters of demands in
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1986 which were identical in most respects. Conciliation proceedings
were initiated and though a failure report was submitted by the
conciliation officer in respect of the demands of one union, a settlement
in conciliation was arrived at with the other two unions. The settlement
was to be in operation for three years. All employees, including the
members of the union whose demands resulted in a failure report,
accepted the benefits of the settlement. The demands were later
referred for adjudication by the appropriate government. The company
contended that there were no demands pending and the members of
the union which had obtained the reference had already accepted the
benefit of the settlement. Consequently, there was no pending dispute
which could be referred for adjudication. It is in these circumstances
that the court held that when a representative union enters into a
settlement and the workmen or other unions oppose that settlement on
the ground that it is actuated by fraud, misrepresentation or
concealment of facts, it would be a subject matter of yet another
industrial dispute which an appropriate government may refer for
adjudication. The Court has observed thus:
"24. .............. When there is a dispute that the settlement is not
bona fide in nature or that it has been arrived at on account of
fraud, misrepresentation or concealment of facts or even
corruption and other inducements it could be subject matter of yet
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another industrial dispute which an appropriate Government may
refer for adjudication after examining the allegations as there is
an underlying assumption that the settlement reached with the
help of the Conciliation Officer must be fair and reasonable.
..........."
17. These observations have been reiterated in the case of Jaihind
Roadways vs. Maharashtra Rajya Mathadi and Transport General
Kamgar Union & Ors. (supra). However, in the present petitions what
has been challenged is a settlement purportedly arrived at in
conciliation. The ground of challenge as we have mentioned earlier is
mainly that the conciliation officer abdicated his role of an unbiased
facilitator of a settlement and breached the provisions of section 12 of
the Industrial Disputes Act r/w Rule 11 of the Industrial Disputes
(Bombay) Rules. Exception has been taken by the Petitioners to the
procedure adopted by the conciliation officer in order to arrive at a
settlement in conciliation. While doing so, the petitioners have also
brought to our notice the patent illegalities of the settlement. In our
opinion, the facts in the present case are different from the facts in the
aforesaid judgements cited by the respondents inasmuch as the
process of conciliation or the role of the conciliation officer was not
impugned in those cases. Therefore, the writ petitions are
maintainable.
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18. In the case of Provisional Liquidator, Ramakrishna Industries
(Pvt.) Ltd. & Ors. vs. Workers Jothi Mills & Ors., 1992 II LLJ 797 Mad.,
the prayer in the writ petition was that the settlement entered into u/s
12(3) of the Industrial Disputes Act be quashed and for further
appropriate orders. The grounds raised in the petition were almost
identical to the ones raised in the present petitions. The learned Single
Judge of the Madras High Court had allowed the writ petition filed by
the workmen. This decision was impugned before the Division Bench
of the Madras High Court in the appeal filed by the company. The
grounds raised in the writ petition as noted by the Division Bench were
as follows:
5. the conciliation officer did not induce the parties to come
to a fair and amicable settlement of the dispute. He merely and
mechanically signed at the bottom of the settlement without any
application of mind; (ii) the settlement was not in conformity with
the provisions of sections 12(2) and 12(3) of the Industrial
Disputes Act; (iii) the settlement was in breach of Chapter V-A and
V-B of the Industrial Disputes Act patently containing arbitrary and
unreasonable stipulations without any rhyme or reason.
The learned Single Judge had issued a declaration that the settlement
was not one arrived at in the course of conciliation proceedings u/s
12(3) of the Act and, therefore, was void and would have no effect qua
the petitioner workmen. On behalf of the company, it was submitted
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that the question raised before the learned Single Judge ought to have
been adjudicated upon by raising an industrial dispute and not in the
exercise of powers under Article 226 of the Constitution of India. The
Division Bench observed that when certain features of the settlement
established that there were gross violations of the mandate of law, a
writ petition was maintainable and there was no need to dismiss the writ
petition on this ground. We respectfully agree with this reasoning of the
Madras High Court and in our opinion, the present writ petitions are
maintainable and, therefore, we are deciding them on merits.
LOCUS OF THE PETITIONERS:
19. It has been argued by the learned Counsel appearing for the
respondents that since the settlement was signed by the company with
a recognised union, no other union or individual workmen, whether
members of the recognised union or not, had any locus to challenge the
settlement. It was pointed out that under the proviso to section 18 of
the Industrial Disputes Act, only a recognised union for any undertaking
has the right to arrive at a settlement with the employer in respect of all
other disputes except a dispute relating to the dismissal, discharge,
removal, retrenchment, termination of service or suspension of an
employee. Such a settlement is binding on all the persons referred to
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under clause (c) and (d) of subsection 3 of section 18. They have also
submitted that the settlement of 5.9.2008 deals with various conditions
of service and not merely about the dismissal, discharge, retrenchment
or suspension of individual workmen and, therefore, the individual
workmen of the factory had no right to challenge the settlement. As
regards the staff union, it has been submitted that although it was a
recognised union for the undertaking situated in the Eros building and
at Ewart House in Mumbai upto 1996, the recognition came to an end
when the staff was shifted to the factory premises in 1996. The
recognised union for the factory in 1996 was the Maharashtra General
Kamgar Union (MGKU) and, therefore, no other union could be
considered as the recognised union although the workmen may have
been members of a union recognised for a particular establishment at
an earlier point of time. It was submitted that the recognition which is
accorded by the Industrial Court under the MRTU & PULP Act is relates
to the premises of an industry. Therefore, according to the learned
Counsel, there cannot be a recognised union separately for the staff
and individual workmen when they operate in the same premises.
According to the learned Counsel for the Respondents, therefore, the
petitioners in both the petitions have no locus to file the petitions.
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20. The submission of the learned Counsel for the respondents that
the staff union has lost its status as a recognised union for the staff
when the staff was shifted to the factory premises is fallacious. The
Mazdoor Sangh applied for registration as a recognised union of the
workmen in the factory in place of the MGKU in 1995 on the basis of
their membership in the factory between October 1994 and March
1995. It did not simultaneously make any application for clubbing the
concern at the factory with the concern at the office premises into one
undertaking as is permissible in law. It chose to restrict its application
made under s.14 of the MRTU and PULP act to the workmen in the
factory. S.11 of the MRTU Act provides that an application may be filed
by a union before the Industrial court for registering it as the recognised
union for an undertaking. The word "undertaking" has been defined in
the Act to mean any concern of the industry. "Concern" as defined in
the Act means any premises including the precincts thereof where an
industry is run. However while interpreting these words one cannot
restrict the meaning only to the physical space of the building or
premises in which the industry is run. It would have to mean and
include the workmen employed in the particular premises or concern of
the industry. Recognition of a union would have to be qua the workmen
working in the concern. Recognition of a union cannot be only in
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respect of a physical space. For example, if a union is granted
recognition in respect of a concern, meaning the physical space alone
and the employer shifts the workplace of these workmen to another
building it would be absurd to expect the union to apply for recognition
once again. That could never have been the legislative intent. In a
given case if an employer terminates the services of the employees in
one unit where union A was the recognised union and shifts the
workmen who were members of Union B (also recognised) to these
premises from their original place of work, it can hardly be said that
Union B would have to seek recognition again. Similarly when the
members of a recognised union are shifted to a unit where there is
already a recognised union of the workers in that unit in existence, the
former cannot automatically lose its recognition. In fact the Act does not
contemplate an automatic loss of recognition for any reason. It is only
on an application being made to the Industrial Court that the recognition
of a union can be cancelled. Even the cancellation can be effected only
for the specific grounds mentioned in s.13. Shifting of the location of the
work place of the members of the recognised union is not one such
ground. Neither is there any concept of merger as the counsel for the
respondents would have us believe. The recognition of one union
cannot merge into the recognition of another. The members of one
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would have to resign and join the union which is in existence at the new
workplace. Admittedly in the present case the members of the staff
union have not forsaken it and joined the Mazdoor Sangh. Therefore
the staff union would still continue as the recognised union for its
members although the staff is now located in another unit. Moreover
the recognition accorded to MGKU was only in respect of the workers
employed in the factory and not for the staff. Mazdoor Sangh has been
recognised in place of the MGKU as it filed an application under s.14 in
1994. The application was allowed in 2001 after verification of the
membership for the six months between October 1994 and March
1995. The staff was shifted only in 1995-96 and therefore could never
have been considered while ascertaining the membership. The
submission of the learned counsel for the respondents is therefore
untenable and without merit.
21. Moreover the company itself treated the staff as a distinct
workforce represented by the staff union. Admittedly, the staff union has
entered into several settlements with the company over the years. In
fact from April 1985 to March 1996, six settlements were signed
between the staff union and the company, the last of which was a
settlement dated 25.8.1993 which was in force till 1996. There is also
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no dispute that the staff was shifted to the factory premises during April,
1995 to March, 1996 in a phased manner. After the settlement of
25.8.1993 came to an end, the demands for changes in the service
conditions were raised in 1996 by the staff union while its members
were being shifted. The company raised demands simultaneously with
respect to the service conditions of the workmen represented by the
staff union alone, which have been referred to under reference (IT) No.
12 of 1997. There can be no dispute that the staff union represented
only the staff and not the workmen employed in the factory. If indeed
the Counsel for the respondents are correct that the staff union lost its
recognition on the staff being shifted to the factory premises, then the
company would certainly have raised this issue when it dealt with the
charter of demands raised by the staff union in 1996. Instead of doing
so, it raised its own demands with respect to only the staff represented
by the staff union, which have been referred for adjudication. Even in
the written statement filed by the company in the reference of the staff
union the company has not thought it fit to raise this issue. In fact in the
statement of claim filed by the Company in Reference (IT) No.12 of
1997, the Company has stated in para 2, "the above reference pertains
to the workmen employed at all places of the company. The total
number of staff employees affected by this Reference is 366". The
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Company has further described the distinction between the service
conditions of the staff and the factory workmen. In para 4, it has stated
thus:
"4. It is further submitted that the Maharashtra General Kamgar
Union is registered as a recognised union for the manual
workmen working in the factory of the Company at Mohone.
There is also another union, namely, NRC Mazdoor Sangh,
representing workmen working in the Factory. The NRC
Employees' Union though not registered as a recognised union at
Company's factory represents the staff workmen working in the
factory and at Corporate and Registered Office at Mumbai and
also the staff workmen working at Surat Branch Office of the
Company."
22. There is not a single pleading to the effect that the staff wherever
placed cannot be represented by the staff union. In fact it appears from
the statement of claim of the company that it wanted to bring parity in
the service conditions of the staff and the factory workmen. Therefore,
in our opinion, it is obvious that the respondents have merely tried to
create a bogey with respect to the locus of the staff union which has
questioned the procedure adopted while signing the settlement dated
5.9.2008.
23. Mr. Bapat appearing for the Mazdoor Sangh has drawn our
attention to section 36 of the Industrial Disputes Act to submit that as
the Mazdoor Sangh is the recognised union for the undertaking, no
workman in such an undertaking is entitled to be represented before
wp.8505+(3)corrected
the Tribunal by any other union, nor can he appear individually if the
proceeding does not pertain to the legality or propriety of an order of
dismissal or discharge or removal, suspension, etc. Significantly, the
Mazdoor Sangh which claims to have been accorded recognition under
the MRTU & PULP Act in 2001 did not care to apply to the court in the
aforesaid References which are pending to permit it to represent the
workmen in the References, to the exclusion of the staff union or
individual workmen. Therefore this submission of Mr. Bapat is an after
thought. Moreover the Mazdoor Sangh has not placed on record before
us the application filed by it u/s 14 of the MRTU & PULP Act for
cancellation of the recognition of MGKU and for being recognised in its
place. There is no material before us to suggest that the members of
the staff union had been included by the Mazdoor Sangh while seeking
recognition.
24. As regards the individual workmen, it has been argued on behalf
of the Respondents that since they are members of the recognised
union, they cannot file the present petitions. It is true that the Mazdoor
Sangh was accorded recognition under the MRTU & PULP Act in place
of the Maharashtra General Kamgar Union in 2001 when the members
of the MGKU became members of the Mazdoor Sangh. However, it
wp.8505+(3)corrected
must be borne in mind that although the recognised union has
precedence over all other unions and individual workmen when an
issue is raised regarding the service conditions, this embargo on the
appearance of other unions and individual workmen does not operate
with respect to disputes regarding termination of service by way of
retrenchment, dismissal, discharge, suspension, etc. On a perusal of
the settlement of 5.9.2008, it is clear that the settlement speaks about
the automatic termination of the services of individual workmen who do
not accept the terms of the settlement. Clauses 6 and 7 envisage a
reduction of 1500 workers from the complement of workers employed
by the Company. These clauses provide for automatic termination of
services of those workmen who do not resign under the early retirement
scheme. It has been argued by Mr.Talsania that these clauses have
not been acted upon and in fact the date of automatic termination has
been extended by the settlements of 10.12.2008 and 1.1.2009.
However, this submission does not in our opinion indicate that the
clauses do not relate to individual termination of services. Such issues
cannot be decided or settled upon by the recognised union. In these
circumstances, although section 18(1) r/w 18(3) and the proviso to
section 36(1) restrict any other union representing the workmen or
individual workmen representing themselves when a recognised union
wp.8505+(3)corrected
is in existence in an establishment, the embargo will not operate in the
present case. As a consequence of the impugned settlement the
workmen would have to face termination of service without the due
process of law being followed. The law laid down in the case of Oswal
Agro Furane Ltd. & anr. Vs Oswal Agro Furane Workers Union & Ors.,
(2005) 3 SCC 224, would permit the workmen to challenge the
settlement though signed before the Conciliation Officer. In our opinion,
the writ petition filed by both the staff union as well as individual
workmen are maintainable and they have the locus to file the same.
THE NATURE OF THE SETTLEMENT DATED 5.9.2008:
25. It has been argued on behalf of the petitioners in both the
petitions that the settlement of 5.9.2008 is not in fact a settlement in
conciliation as claimed by the respondents. Both Mrs. Doshi as well as
Ms. Singh has submitted that a settlement can be signed in conciliation
only when the demands raised by the workmen or by the company are
admitted in conciliation, and that demands were not admitted in
conciliation find place in the settlement. It is also pointed out that a
settlement in conciliation can be arrived at only with the conciliation
officer fulfilling his role u/s 12 of the Industrial Disputes Act. Since in the
present case, the conciliation officer had violated the provisions of
wp.8505+(3)corrected
section 12 as well as Rule 11 of the Industrial Disputes (Bombay)
Rules, according to the learned Counsel, the settlement was not one in
conciliation.
26. In the backdrop of the facts before us it would be necessary to
examine the provisions of section 12, Rule 11 and Rule 63. Section 12
delineates the duties of a conciliation officer. The conciliation officer
may hold conciliation proceedings where an industrial dispute exists or
is apprehended. It is his duty to act as a facilitator to bring about a
settlement. He is expected to investigate the dispute and matters
affecting the merits and to take such steps as are necessary to induce
the parties to arrive at a fair and amicable settlement of the dispute.
The conciliation officer must consider whether the disputes raised are in
fact industrial disputes as defined in section 2(k) of the Industrial
Disputes Act. When he finds that they are in fact industrial disputes.
the conciliation officer must investigate the disputes by admitting the
demands in conciliation for the purposes of bringing about a
reconciliation between the parties. If the demands are not admitted in
conciliation the question of entering into a settlement in conciliation
does not arise. Any settlement arrived at prior to the demands being
admitted into conciliation would be a settlement as envisaged u/s 2(p)
wp.8505+(3)corrected
of the Industrial Disputes Act r/w section 18(1). It would not partake of
the colour of a settlement u/s 18(3). It is only when a settlement is
arrived at during the course of conciliation proceedings with the active
assistance of the conciliation officer that it can be termed as a
settlement in conciliation. The conciliation officer is expected to create
an atmosphere of conviviality to bring about a rapprochement between
the parties and induce them to sign a settlement in respect of their
disputes. The conciliation officer is required to record the steps taken
by him in order to bring about a reconciliation between the parties and
to submit a report to the appropriate government together with a
memorandum of settlement signed by the parties to the dispute. If no
such settlement is possible then, the report of the conciliation officer
must indicate the steps taken by him for assessing the facts and
circumstances relating to the dispute as also the reasons on account of
which in his opinion a compromise could not be worked out. A report
u/s 12 must be submitted by the conciliation officer within 14 days of
the commencement of the conciliation proceedings. In the present
case, admittedly no such report has been submitted by the conciliation
officer. Therefore, in our opinion, the settlement cannot be termed as
one signed in conciliation. Rule 11 requires the conciliation officer to
give a formal intimation in writing to the parties concerned declaring his
wp.8505+(3)corrected
intention to commence conciliation proceedings from such date as may
be specified. Unless the conciliation officer indicates his intention to
intervene in the dispute and calls the parties for conciliation, the
conciliation proceedings do not commence. Before deciding to
intervene in any matter after the receipt of the justification statement
from the party who has raised the industrial dispute, the conciliation
officer may call the parties individually for a meeting to assess whether
an industrial dispute in fact exists or is apprehended. It is only when
the intimation of the intention of the conciliation officer to intervene and
commence conciliation proceedings is sent to the parties and they
appear before the conciliation officer that it can be said that conciliation
proceedings have commenced. A settlement signed after the
conciliation officer decides to intervene in the industrial dispute in order
to bring about a resolution of the dispute can be considered as a
settlement signed in conciliation.
27. But in the present case the demands were admitted in conciliation
on 5.9.2008 and the settlement was signed on the same day. A
settlement in conciliation would require the active assistance of the
conciliation officer to ensure that parties resolve their disputes and
enter into settlement. The conciliation officer in the case before us,
wp.8505+(3)corrected
took no part in the discussions before the settlement was arrived at and
merely appended his signature to the document. The only demands
which the Mazdoor Sangh had raised were that production should be
started in the factory and the workers should be paid their legal dues.
This demand was raised on 20.8.2008. Similarly, the company merely
put forth its own terms and conditions for restarting the production in
the factory. The parties were invited by the conciliation officer for
considering whether to the admit the demands in conciliation on
5.9.2008. It appears that on that day, the parties, i.e., the company and
the Mazdoor Sangh appearing before the conciliation officer, produced
a settlement dated 5.9.2008 signed by the respective parties and
requested that it be recorded as a settlement in conciliation. There is
no dispute that the demands were not admitted in conciliation at any
time prior to 5.9.2008. It is therefore a misnomer to call the settlement
dated 5.9.2008 a "settlement signed in conciliation". In our opinion,
such a settlement cannot be termed as one in conciliation. Our view is
fortified by the decision in the case of Bata Shoe Co. (P) Ltd. v. D.N.
Ganguly & Ors., AIR 1961 SC 1158. The Supreme Court has
considered the import of the words "in the course of conciliation
proceedings" found in section 18 of the Industrial Disputes Act. In
paras 7 and 8, the Supreme Court has held thus:
wp.8505+(3)corrected
7. The question thus posed raises the question as to what is meant
by the words "in the course of conciliation proceedings" appearing in S.
18 of the Act. One thing is clear that these words refer to the duration
when the conciliation proceedings are pending and it may be accepted
that the conciliation proceedings with respect to these dismissals, which
began sometime before May 1, 1954, were certainly pending upto
September 6, 1954, and may be a little later, as is clear from the two
letters of the Labour Commissioner. But do these words mean that any
agreement arrived at between the parties during this period would be
binding under S. 18 of the Act? Or do they mean that a settlement
arrived at in the course of conciliation proceedings postulates that that
settlement should have been arrived at between the parties with the
concurrence of the conciliation officer? As we read this provision we feel
that the legislature when it made a settlement reached during the course
of conciliation proceedings binding not only on the parties thereto but
also on all present and future workmen intended that such settlement
was arrived at with the assistance of the conciliation officer and was
considered by him to be reasonable and therefore had his concurrence.
Sec. 12 of the Act prescribes duties of the conciliation officer and
provides that the conciliation officer shall for the purpose of bringing
about settlement of the dispute without delay investigate the dispute and
all matters affecting the merits and the right settlement thereof and may
do all such things as he may think fit for the purpose of inducing the
parties to come to a fair and amicable settlement of the dispute: (vide S.
12(2)). Then comes S.12(3), which provides, "If a settlement of the
dispute or of any of the matters in dispute is arrived at in the course of
the conciliation proceedings the conciliation officer shall send a report
thereof to the appropriate Government together with a memorandum of
the settlement signed by the parties to the dispute".
8.Reading these two provisions along with S. 18 of the Act, it seems to
us clear beyond doubt that a settlement which is made binding under S.
18 on the ground that it is arrived at in the course of conciliation
proceedings is a settlement arrived at with the assistance and
concurrence of the conciliation officer, for it is the duty of the conciliation
officer to promote a right settlement and to do everything he can to
induce the parties to come to a fair and amicable settlement of the
dispute. It is only such a settlement which is arrived at while conciliation
proceedings are pending that can be binding under S.18. In the present
case it is obvious that the Labour Commissioner took no steps to
promote the actual agreement which was arrived at between the
appellant and the union on September 2. The letter of August 31 made it
clear that the Labour Commissioner would take action under S.12(2) on
wp.8505+(3)corrected
September 3 if no mutual agreement was arrived at between the
appellant and the union. It seems that a mutual agreement was arrived
at between the appellant and the union without the assistance of the
Labour Commissioner and it did not receive his concurrence even later;
on the contrary evidence shows that the Labour Commissioner did not
approve of the settlement which excluded the reinstatement of a large
group of workmen and so he did not act under S.12(3). In the
circumstances such a mutual agreement could not be called a
settlement arrived at in the course of conciliation proceedings even
though it may be accepted that it was arrived at a time when conciliation
proceedings were pending. A settlement which can be said to be arrived
at in the course of conciliation proceedings is not only to be arrived at
during the time the conciliation proceedings are pending but also to be
arrived at with the assistance of the conciliation officer and his
concurrence; such a settlement would be reported to the appropriate
government under S. 12(3). In the present case the agreement of
September 2, 1954 was not arrived at with the assistance and
concurrence of the conciliation officer, namely, the Labour
Commissioner, which will be clear from his letter of September 3, 1954.
In the circumstances it is not a settlement which is binding under S.18 of
the Act and therefore will not bar a reference by the Government with
respect to these sixty workmen.
28. In the case of Provisional Liquidator, Ramakrishna Industries
(Pvt.) Ltd. & Ors. (supra), as noted earlier by us, the Madras High Court
pronounced on when a settlement could be termed as one signed
during the course of conciliation proceedings. It appears that the Court
considered several judgements, which unfortunately have not been
mentioned in the order, and observed: "the uniform view is that the
settlement will not have the effect of a settlement u/s 12(3) of the Act
unless it is brought about with the assistance and concurrence of the
conciliation officer and he has got a significant role to play to see to it
wp.8505+(3)corrected
that the terms arrived at are fair to both the parties". The Division Bench
of the Madras High Court confirmed the view of the learned Single
Judge that a settlement which was contrary and violative of the
provisions of Chapter V-A and V-B of the Industrial Disputes Act could
not be termed as a settlement in conciliation.
29. An affidavit in reply has been filed by the Assistant Commissioner
of Labour, Kalyan who has appended his signature to the settlement
dated 5.9.2008. The affidavit devoid of any details as to when he
received a copy of the demands raised by the Company or the Mazdoor
Sangh, the date of admission of the demands in conciliation, the
efforts made by him to induce parties to settle their disputes. There is
no averment as to whether he had ascertained the fairness and
reasonableness of the settlement. He has not stated whether he has
complied with Rule 11 of the Industrial Disputes (Bombay) Rules by
giving adequate notice to the workmen including the staff. Further, he
has not stated whether a report was submitted by him to the
appropriate government in accordance with section 12(3).
Undoubtedly, the Assistant Commissioner has been remiss in
performing his role as stipulated in section 12 of the Industrial Disputes
Act r/w Rule 11 and in fact has abdicated his duties.
wp.8505+(3)corrected
30. Apart from this, the terms of settlement indicate that the
settlement is not wholly regarding industrial disputes. The conciliation
officer could not have been party to a settlement which did not deal with
industrial disputes. For instance, in the present case, clause 10 of the
terms of the settlement speaks of the eviction of employees from the
quarters occupied by them. It provides that the quarters would be
deemed to be automatically evicted on the expiry of 60 days from the
date of settlement. The demand for eviction of the employees from the
quarters was not raised either by the company or by Mazdoor Sangh or
any other union and, therefore, could not have been admitted in
conciliation or been a part of the settlement. A company which has
provided residential quarters to its workmen cannot withdraw those
quarters except by following the due procedure applicable, including by
invoking section 630 of the Companies Act. Similarly, clause 14 of the
settlement provides that individual cases would be disposed off in terms
of the settlement and all pending cases filed by individuals or unions
would be withdrawn as settled and that no new cases would be filed in
respect of any terms of the settlement. These terms also were not a
part of the demands raised by either side. The individual cases which
were pending before the Industrial Court/Tribunal or the Labour Court
wp.8505+(3)corrected
were with respect to their termination from service and the Mazdoor
Sangh had not filed these cases. As we have seen already no union,
whether recognised or not, can decide or settle the disputes relating to
the termination of service by whatever means or suspension of an
individual employee, unless authorized specifically to do so by the
individual workmen. Therefore, in our opinion, a settlement which deals
with aspects other than an industrial dispute as defined under section
2(k) of the Industrial Disputes Act cannot be termed as a settlement in
conciliation. We have no manner of doubt that the settlement dated
5.9.2008 is not a settlement in conciliation.
31. It will be interesting to note some of the offending terms of the
settlement dated 5.9.2008. Clauses 3, 6, 7, 11A(3) to 5, 12, 13, 14
read thus:
Clause No.3. It is agreed by Union and Management that certain
operations, including but not limited to Canteen, Civil House
keeping, Packing, Dispatches, Loading, Unloading, Shifting,
Charging, Maintenance (Preventive, periodic, breakdown major),
Cleaning etc. to be outsourced at the earliest opportunity and
workmen so released shall be deployed elsewhere in Rayon &
Chemical Plants, or else where as per requirement of the
Company, including being trained as a part of multi skill
development programme in order to take care of skill gaps
generated due to retirement or employees opting for ERS.
Similarly the workmen transferred from Nylon plant shall also be
deployed elsewhere in Rayon and Chemical Plants including
being trained as a part of multi skill development program to take
care of skill gaps generated due to retirement or employees
wp.8505+(3)corrected
opting for ERS or else where as per requirement of the Company.
6.After, transfer of employees from Nylon Plant and workmen
rendered surplus on account of outsourcing and keeping in mind
that only Rayon and Chemical Plant will be available for
production, it s agreed between the Union and management that
in order be viable, a base production level as shown in Annexure
"A" should be achieved and the strength of permanent employees
be reduced by 1500 workmen and they will be paid ERS, (Early
retirement scheme) by payment of their dues as if
resigned/retired.
7. Both the parties and specially the workmen and the union
therefore agree that at least about 1500 of the workmen
employed by the Company on permanent basis stand reduced as
if retired (ERS)/resigned, subject to paying them their legal dues
as if retired / resigned, such a earned wages, leave wages,
bonus, leave encashment, Gratuity, which process will be
completed within 60 days. In addition they would be paid their
balance earned wages also. In the event less than 1500
workmen opt for ERS, the running of the Company would not be
viable. It is, therefore, agreed between the parties that the
balance workmen's names will be decided by Management
depending on Company's requirements after informing the Union,
and these balance workmen stand resigned/retired automatically
on 31.10.2008. It is further agreed for achieving this the
Company also can adopt any other mode of achieving this, if
required under law. The Union further agrees that in future if the
Company requires further reduction in the permanent workmen in
the Company they can do so as per their requirement. (emphasis
added)
8. It is agreed by Union and Management that in order to be
viable in future, the total wage bill of the Company including
welfare expenses relating to all categories of workmen stands
reduced from current level to Rs.2.75 Cr. per month which will be
effected within next 60 days. The reduction in the wage bill be
achieved by (i) reduction in strength of at least 1500 permanent
workmen by offering them Early Retirement Scheme (ERS) by
payment of their dues as if resigned/retired; (ii) in case the
number of employees voluntarily opting for ERS is inadequate,
then by working out scheme for achieving the shortfall as per
wp.8505+(3)corrected
Clause 7; (iii) Reduction of wages; (iv) by any other means
suggested by Union.
11A(3) It is further agreed that workmen who have been
dismissed, terminated or are under suspension, including all ex
employees, have agreed with the Company's present condition
and in furtherance to clause 9 and 10 of this settlement have
accepted that they without any additional benefits, alternative
accommodation or monetary claim, also stand vacated from the
residential quarters presently occupied by them in order to enable
the Company to hand over the property to Raheja. The workmen
including ex workmen further agree to file joint pursuits before the
Court of law to set aside the order of the court, staying vacation of
quarters. All the workmen including ex workmen further agree
that these quarters were allocated to them as per their service
condition and therefore they were never tenants under law.
11A(4) The workmen further agree to strictly perform their
duty as required by the Company and be punctual with company's
timings. The workmen further agree to do any other work as
assigned to them by the Company.
11A(5) It is hereby agreed by and between the parties that
the 70 workmen, who were terminated in May 2008 stand
deemed resigned on that date. Besides, of these 70 workmen
there are few workmen, residing in the quarters in the colony
within the Plant and these few workmen agree that they are
deemed to have vacated their quarters with immediate effect but
they request the company to give them benefits of ERS and as a
special case treat them covered therein, which is agreed by the
Company.
12. Both the parties and specially the workmen and the Union
agree that if need be the Company can effect temporary shut
down of Rayon plant or any other plant with view to repair the
plant and thereby restart group-wise.
13. Both the parties and specially the workmen and the union
agree that they consent for the Company to effect lay off,
retrenchment as well as closure of the Nylon Plant and / or Rayon
Plant or any other plant/section/Department/Establishment, if
wp.8505+(3)corrected
required, by applying to the Appropriate Government Authorities,
for which they have no objection.
14. Both the parties specially the workmen and the union agree
that due to paucity of funds, the Company agrees to pay off the
legal dues of the workmen who have earlier retired, resigned etc.,
and also of those workmen whose cases are pending before the
various courts or authorities, to be paid on complete receipt of
proceeds from the sale of land and both the parties further agree
to file the said settlement before the various courts as well as
other Authorities including before the Registrar of Societies and
other legal forums as well as those listed in Annexure "B" for
disposal of the cases in terms of the settlement. It is further
agreed that all pending cases filed by the individuals or Union till
date will be withdrawn as settled and further no new cases will be
filed in respect of any terms of this settlement. If there is no
specific settlement for any case, including past workmen's cases,
then the same would be automatically referred to the joint
decision of recognised union and Company. (Emphasis supplied)
These clauses in our opinion cannot form part of a settlement which is
sought to bind the individual workmen or the staff union. There is a
consensus to reduce the strength of the workmen by compelling them
to opt for what is euphemistically called the Early Retirement Scheme.
No additional benefits have been offered to workmen who accept this
scheme. They are to be paid only their legal dues. The parties have
also agreed to outsource work and have accepted that the services of
the workmen will be terminated as a consequence. This settlement is
obviously contrary to the mandatory provisions of law.
32. The Mazdoor Sangh has contended that the demands that it
wp.8505+(3)corrected
raised regarding the restarting of the factory and payment of dues has
been settled by virtue of this agreement. We are unable to appreciate
how a demand for restarting of the business can lead to an agreement
between the parties to violate the provisions of section 25-O, 25-M and
25-N of the I. D. Act which in effect has been agreed to under the
aforesaid settlement. The clauses of the agreement extracted above
in no uncertain terms permit the termination of service of the workmen,
in breach of the provisions of the Industrial Disputes Act.
33. In Gosalia Shipping Pvt. Ltd., Goa & Anr. vs. Regional P.F.
Commissioner & Ors., 1997 I CLR 44, a learned Single Judge of this
Court (Rebello, J., as he then was) has held that an understanding
between the employer and employees, contrary to the provisions of the
Employees Provident Fund (Miscellaneous Provision) Act, cannot be
binding on a statutory authority. Similarly in the case of Shree
Changdeo Sugar Mill and anr. V/s. Union of India & anr., 2001 I
CLR 701, the Supreme Court has held that an employer's agreement
with an employee not to deduct provident fund contributions does not
discharge the employer of his statutory obligations to make such
payment. The terms of the settlement which are contrary to the statute
and which provide that there shall be no deduction would only mean
wp.8505+(3)corrected
that the company has agreed to take on the liability of payment of the
employees' contributions as well.
34. In Oswal Agro Furane Ltd. & anr. vs. Oswal Agro Furane Workers
Union & Ors., (2005) 3 SCC 224, the Supreme Court considered
whether the settlement arrived at between the employer and the
workmen would prevail over the mandatory statutory requirements
contained in section 25-N and 25-O of the Industrial Disputes Act. The
employer in that case contended that a notice for closure of the
undertaking had been issued in terms of section 25-O of the Industrial
Disputes Act to the State Government and to the workmen employed by
it. A settlement was arrived at with the workmen in terms of section
12(3) of the Industrial Disputes Act under which the workers had agreed
to the closure without waiting for the appropriate government to grant
permission for the closure. The Court while considering whether such a
procedure was legal has held thus:
14.A bare perusal of the provisions contained in Sections 25-N and 25-O
of the Act leaves no manner of doubt that the employer who intends to
close down the undertaking and/or effect retrenchment of workmen
working in such industrial establishment, is bound to apply for prior
permission at least ninety days before the date on which the intended
closure is to take place. They constitute conditions precedent for
effecting a valid closure, whereas the provisions of Section 25-N of the
Act provides for conditions precedent to retrenchment; Section 25- O
speaks of procedure for closing down an undertaking. Obtaining a prior
wp.8505+(3)corrected
permission from the appropriate Government, thus, must be held to be
imperative in character.
15.A settlement within the meaning of Section 2(p) read with sub-section
(3) of Section 18 of the Act undoubtedly binds the workmen but the
question which would arise is, would it mean that thereby the provisions
contained in Sections 25-N and 25-O are not required to be complied
with? The answer to the said question must be rendered in the negative.
A settlement can be arrived at between the employer and workmen in
case of an industrial dispute. An industrial dispute may arise as regard
the validity of a retrenchment or a closure or otherwise. Such a
settlement, however, as regard retrenchment or closure can be arrived
at provided such retrenchment or closure has been effected in
accordance with law. Requirements of issuance of a notice in terms of
Sections 25-N and 25-O, as the case may, and/or a decision thereupon
by the appropriate Government are clearly suggestive of the fact that
thereby a public policy has been laid down. The State Government
before granting or refusing such permission is not only required to
comply with the principles of natural justice by giving an opportunity of
hearing both to the employer and the workmen but also is required to
assign reasons in support thereof and is also required to pass an order
having regard to the several factors laid down therein. One of the factors
besides others which is required to be taken into consideration by the
appropriate Government before grant or refusal of such permission is
the interest of the workmen. The aforementioned provisions being
imperative in character would prevail over the right of the parties to
arrive at a settlement. Such a settlement must conform to the statutory
conditions laying down a public policy. A contract which may otherwise
be valid, however, must satisfy the tests of public policy not only in terms
of the aforementioned provisions but also in terms of Section 23 of the
Indian Contract Act.
16.It is trite that having regard to the maxim "ex turpi causa non oritur
actio", an agreement which opposes public policy as laid down in terms
of Sections 25-N and 25-O of the Act would be void and of no effect. The
Parliament has acknowledged the governing factors of such public
policy. Furthermore, the imperative character of the statutory
requirements would also be borne out from the fact that in terms of sub-
section (7) of Section 25- N and sub-section (6) of Section 25-O, a legal
fiction has been created. The effect of such a legal fiction is now well-
known. [See East End Dwellings Co. Ltd. V. Finsbury Borough Council
(1951) 2 All ER 587, Om Hemrajani vs. State of U.P. and Another (2005)
1 SCC 617 and M/s Maruti Udyog Ltd. vs. Ram Lal & Ors. 2005 (1)
SCALE 585].
wp.8505+(3)corrected
17.The consequences flowing from such a mandatory requirements as
contained in Sections 25-N and 25-O must, therefore, be given full
effect. The decision of this Court in P. Virudhachalam (supra) relied upon
by Mr. Puri does not advance the case of the Appellant herein. In that
case, this Court was concerned with a settlement arrived at in terms of
Section 25-C of the Act. The validity of such a settlement was upheld in
view of the first proviso to Section 25-C of the Act. Having regard to the
provisions contained in the first proviso appended to Section 25-C of the
Act, this Court observed that Section 25-J thereof would not come in the
way of giving effect to such settlement. However, the provisions
contained in Sections 25- N and 25-O do not contain any such provision
in terms whereof the employer and employees can arrive at a
settlement."
35. The provisions of section 25N and section 25O of the Act are
mandatory. The judgement in Oswal Agro Furane Ltd. & anr. vs. Oswal
Agro Furane Workers Union & Ors. (supra), clearly stipulates that any
settlement to the contrary would not be binding on the workmen. The
clauses of the settlement dated 5.9.2008 in our opinion have far
reaching consequences. The parties to that settlement have in fact
agreed to bypass section 25-O and section 25-N of the Industrial
Disputes Act which is apparent on scanning its terms. This is
impermissible and illegal. Merely because no termination of service has
been effected under the settlement as yet, as contended by Mr.
Talsania, it would not mean that the settlement is legal. The provisions
of section 12(3) read with section 18(3) of the Industrial Disputes Act
cannot be used to circumvent the provisions of Chapters VA and VB of
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the Industrial Disputes Act.
SETTLEMENT VIS A VIS PENDING REFERENCES:
36. The references which are pending before the Tribunal relate to
the service conditions of the staff. The demands have been raised by
the staff union on behalf of its members and by the company with
respect to these workmen. The references do not deal with the service
conditions of individual workmen i.e. the Petitioners in Writ Petition No.
8574 of 2009 or the factory workmen. An application has been made
by the company to the Industrial Tribunal to dispose of the references in
terms of the settlement dated 5.9.2008 which according to the company
is a settlement signed in conciliation. The references have been sought
to be disposed off by the company on the ground that no disputes are
pending now between the workers and itself and therefore the
references need not be decided. On a scrutiny of the demands which
have been referred for adjudication and the demands which have been
settled under the settlement of September, 2008, it is obvious that there
is no reference at all in the settlement to the demands raised by the
staff or the company in 1996 and which are pending adjudication. Thus,
unless the demands raised and referred for adjudication are settled
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between the parties, the question of disposing off the references does
not arise. As noted by us earlier, no application has been filed by the
Mazdoor Sangh to dispose off the references although it is now
claimed before us that no other union can appear before the Tribunal
except the Mazdoor Sangh in the aforesaid references.
37. The References cannot be disposed off by the Tribunal as
submitted by the company on the basis of a settlement. The settlement
deals with issues which are foreign to the demands referred for
adjudication and, therefore, the demands pending before the Tribunal
will have to be adjudicated. It is trite that once a Reference is made for
adjudication of a dispute, the Reference can either be allowed wholly or
in part or it can be rejected. The Reference has to be answered. It
cannot be disposed off merely because there is a settlement. If there is
a settlement, the Tribunal is expected to consider whether the
settlement deals with the demands which are referred for adjudication
before it. If it comes to the conclusion that the settlement does indeed
cover the demands referred for adjudication it can then assess whether
the settlement is fair and reasonable. On finding the settlement to be
fair and reasonable, the Industrial Tribunal may proceed to make an
award in terms of the settlement. The contention of the company that
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because it has entered into a settlement in conciliation with the
Mazdoor Sangh, the demands referred for adjudication before the
Tribunal no longer survive is fallacious. Unless the references are
answered by the Industrial Tribunal the disputes referred still exist and
must be adjudicated upon. Therefore, the Tribunal cannot dispose off
the references merely on the application of the company.
38. It has been urged by Mr. Talsania that the settlements are binding
on the staff union and the individual workmen by placing reliance on the
judgements of the Supreme Court in the cases of Barauni Refinery
Pragatisheel Shramik Parishad vs. Indian Oil Corporation Ltd., 1991
SCC 4 and P. Virudhachalam and Ors. vs. Management of Lotus Mills,
AIR 1998 SC 554. In the case of Barauni Refinery (supra), the apex
court held that when a settlement is signed with the assistance of the
conciliation officer the underlying assumption is that it is fair and
reasonable and therefore can be safely made binding not only on the
workmen of the union which signs the settlement but also on others. A
settlement in conciliation has been equated with an award passed by
an adjudicating authority by the supreme court. There can be no
dispute about the proposition of law enunciated by the supreme court.
However, as we have observed earlier the settlement of 5.9.2008 is
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neither fair nor reasonable and the conciliation officer has not
considered this factor at all while affixing his signature to the
settlement. The case of P.Virudachalam has been distinguished on
facts by the supreme court while dealing with Oswal Agro Furane's
case (supra). It has no application to the present case as the facts here
are similar to the facts in the latter case.
SETTLEMENT CONTRARY TO S.33(1) OF THE I. D. ACT
39. The clauses in the settlement unmistakably indicate that the
service conditions of the employees including the staff have been
changed to their detriment without the permission of the Industrial
Tribunal before whom the references are pending. Section 33(1) of the
I. D. Act provides that conditions of service of employees must remain
unchanged during the pendency of any conciliation proceedings or
proceedings before the Labour Court or Tribunal or National Tribunal in
respect of the industrial dispute. An employer is not permitted to alter
to the prejudice of the workmen concerned in the dispute the conditions
of service applicable to the workmen immediately before the
commencement of the proceedings. The demand raised by the
Mazdoor Sangh was that the company should restart its factory.
Instead of resolving that dispute the conditions of service applicable to
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the workmen immediately prior to the commencement of the
conciliation proceedings were altered to their prejudice by the
settlement of 5.9.2008. Under the settlement, the Mazdoor Sangh has
agreed that the company should outsource various operations thereby
rendering surplus the employees engaged in those operations. The
possibility of retrenchment of such employees in view of clause 3 of the
settlement cannot be ruled out. Furthermore, clauses 6 and 7 deal with
the reduction of the complement of workmen by 1500 on account of
outsourcing. These workmen would be paid dues as if they had
resigned or retired. Clause 12 grants a charter to the company to close
down its Rayon plant. There is no dispute that the Rayon plant has
been locked out from 15.11.2009 and the lockout is the subject matter
of a complaint pending before the Industrial Court, Thane. Clause 13
provides that the company is entitled to lay-off or retrench the workmen
or close any plant or department or section of any establishment
without any objection being raised by the Mazdoor Sangh and it would
result in termination of the services of the employees. The references
pending before the Industrial Tribunal are with respect to wage
adjudication, leave and various other demands. The terms and
conditions of service governing the workmen covered by the reference
would include their statutory rights under Chapters V-A and V-B of the
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Industrial Disputes Act. The service conditions of the workmen are
sought to be changed by the employer through the instrument of a
settlement when the references are pending. The settlement alters the
service conditions applicable to the staff immediately prior to the
commencement of the reference.
40. Admittedly no permission has been obtained from the Industrial
Tribunal before whom the references are pending before effecting such
changes and therefore there is a breach of section 33(1). The service
conditions of the individual workmen were governed by the settlement
dated 3.7.2002 which have been sought to be changed by the
settlement of 5.8.2009. It has been argued by the learned Counsel
appearing for the respondents that section 33(1) has no applicability in
the present case as the alteration in the service conditions have been
made with the consent of the recognised union. According to them, it is
only when the employer unilaterally changes the service conditions that
the section comes into play. It is true that section 33 stipulates that "no
employer shall" alter to the prejudice of the workmen concerned in a
reference their conditions of service without the permission of the
Tribunal. However, in the present case, since the settlement itself
cannot be said to be binding on the staff union, it is the employer which
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has unilaterally changed the service conditions of the staff to their
detriment while the references are pending before the Industrial
Tribunal and, therefore, there has been a breach of section 33(1) of the
Industrial Disputes Act.
41. Mr.Talsania as a last resort submitted that there is no need for this
court to interfere in these writ petitions since an overwhelming majority
of the workmen had accepted the settlements. However, from the
material on record it does not appear that this statement is true. The
Company has filed a statement showing that out of a total number of
2633 workmen which included 62 clerical staff, 653 persons had
applied for the Early Retirement Scheme. 13 of these 653 workmen
were clerical staff. However, only 122 of the manual workmen i.e. the
factory staff have been paid and relieved after they opted for the Early
Retirement Scheme. In these circumstances it is not possible to
accept this submission.
42. Several judgements, other than the ones referred to above have
been cited by the parties before us. After considering them, we have
referred only to those judgements which are apt, apposite and relevant
for the purposes of this judgement.
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43. In the result, we are of the view that the petitions are
maintainable. The petitioners have locus to file the petitions. The
settlement dated 5.9.2008 is not a settlement in conciliation as it has
been arrived at in breach of s.12 of the I. D. Act r/w Rule 11 of the I. D.
(Bombay) Rules. It is not binding on the staff union for the reasons we
have stated. The settlement provides for automatic termination of
service and affects the rights of the individual workmen with regard to
their termination from service, whether by retrenchment, automatic
termination from service or otherwise and hence cannot bind them.
The settlement is opposed to public policy and is illegal as it contracts
out of the provisions of the Industrial Disputes Act by contravening
section 25-O and 25-N of the Act. Clauses 4, 6, 7, 8, 11A and 14 are
therefore not binding on the individual workmen.
44. The Writ Petitions are allowed. Rule made absolute accordingly in
both the petitions. No order as to costs.
45. In view of the disposal of the Writ Petition, nothing remains in Civil
application No.942 of 2011 and the same is disposed of as such.
(SMT.NISHITA MHATRE, J.) (B.H. MARLAPALLE, J.)
