have committed unfair labour practice under Item 9 of Schedule IV of the Act.
3) The respondents are hereby directed to cease and desist from the proved
unfair labour practice and to take affirmative action by implementing the
Settlement, dated 03.01.1996 and to pay the benefits of the Settlement to the
Complainants.
4) Sixty days time from the date of the receipt of this order is granted to the
respondents to implement the Order passed by this Court.
6. The aforesaid order passed by the Industrial Court was assailed by the KDMC
by filing the Writ Petitions in question, which came to be dismissed by the learned
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7. The contentions urged by the KDMC before the learned Single Judge were
hereinabove. While dismissing the Writ Petitions filed by the KDMC, the learned
relying upon sub-section (1) of Section 18 but also on the plea of limitation thereby
concurring with the findings recorded by the Industrial Court that the settlement was
called upon it, to implement the same. The learned Single Judge observed that it to
be a settled principle of law, as held by the Full Bench of this Court in the case of
Regional Manager, Maharashtra State Road Transport Corporation, Nagpur and Anr.
vs. Regional Secretary, Maharashtra State Transport Kamgar Sanghatana, Karanja 1 as
Divisional Controller, Bhandara vs. Premlal s/o. Khatri Gajbhiye 2 that when a
settlement is in force and remains unimplemented due to an unfair labour practice,
the employees would have every right to approach the Industrial Court at any time so
long as the settlement remains unimplemented. The learned Single Judge held that
the KDMC's plea of applicability of Section 18(1) of the Industrial Disputes Act,
1947 (for short "I.D. Act") was unacceptable, as sub-section (3)(d) of Section 18
would govern the acceptance of the complainants' plea for grant of benefits under the
settlement dated 3 January 1996, for the reason that the said settlement was arrived
1984 LAB. I.C. 1721
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during the conciliation proceedings. To fortify such conclusion, the learned Single
Judge referred to the decision of this Court in Hill Son & Dinshaw Ltd. vs. P.G.
Pednekar & Ors.3 and the decision of the Supreme Court in P. Virudhachalam vs.
Management of Lotus Mills & Ors. 4 and Walchandnagar Industries Ltd. vs.
Dattusingh Lalsing Pardeshi & Ors.5. The relevant observations made by the learned
"Para - 7 A bare perusal of the above quoted section would show that whereas a
settlement arrived at by agreement between the employer and the workmen
otherwise than in the course of conciliation proceeding is binding only on the
parties to the agreement, a settlement arrived in the course of conciliation
proceeding under the Act is binding not only on the parties to the settlement but
also on other persons specified in Clauses (b), (c) and (d) of subsection (3) of
section 18 of the Act. Therefore, it the settlement arrived at between the employer
and the workmen, otherwise than in the course of conciliation proceedings, with
which we are concerned in this case, it shall be binding on the parties to the
settlement. The phrase "parties to the settlement" includes both employer and an
individual employee or the union representing the employees. If the settlement is
between the employer and workmen it would be binding on that particular
employee and the employer, if it is between a recognized union of the employees
and employer, it will bind all the members of the union and the employer. That it
would be binding on all the members of the union is a necessary corollary of
collective bargaining in the absence of allegation of mala fides or fraud. Merely
because an individual employee or some of the employees do not agree to the
terms of the settlement entered into between a recognized union and the
employer, he/they can not be permitted to contend that it is not binding on
him/them."
2002 (4) BCR 541
1998(2) LLJ 389
2005(6), BCR-733
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"Para - 8 The aims and objects of the provisions of the Industrial Disputes Act
include industrial peace which is essential to the industrial development and
economy of the nation. Great emphasis is, therefore, laid on the settlements as
they set at rest all the disputes and controversies between the employer and the
employees. In the case of [Herbertsons Limited v. The Workmen of Herbertsons
Ltd. and others], 1976(4) S.C.C. 736, the Supreme Court considered the effect of
the settlement arrived at by the recognized union of majority workers. It was
observed by Goswami, J., speaking for the Court that when a recognized union
negotiates with an employer, the workers as individuals do not come into the
picture. It is not necessary that each individual worker should know the
implications of the settlement since a recognized union, which is expected to
protect the legitimate interests of labour enters into a settlement in the best
interests of labour. This would be the normal rule. There may be exceptional cases
where there may be allegations of mala fides, fraud or even corruption or other
inducements. But in the absence of such allegations a settlement in the course of
collective bargaining is entitled to due weight and consideration."
17. Even in the matter of P. Virudhachalam v/s. Management of Lotus Mills &
Others, reported in 1998 (2) LLJ, 389, the Apex Court held that the settlement rendered
during the conciliation proceedings is binding not only on the members of the signatory
union but also on workmen, whose union have participated in the proceedings, but
refused to sign the settlement. Paragraph 7 read thus:
"Para 7 The aforesaid relevant provision of the Act, therefore, leave no room for
doubt that once a written settlement is arrived at during the conciliation
proceedings such settlement under Section 12(3) has a binding effect not only on
the signatories to the settlement but also on all parties to the industrial dispute
which would cover the entire body of workmen, not only existing workmen but
also future workmen. Such a settlement during conciliation proceedings has the
same legal effect as an award of Labour Court, or Tribunal or National Tribunal or
an Arbitration award, They all stand on part. It is easy to visualise that settlement
contemplated by Section 12(3) necessarily means a written settlement which
would be based on a written agreement where signatories to such settlement sign
the agreement. Therefore, settlement under Section 12(3) during conciliation
proceedings and all other settlements contemplated by Section 2(p) outside
conciliation proceedings must be based on written agreements. Written
agreements would become settlements contemplated by Section 2(p) read with
section 12(3) of the Act when arrived at during conciliation proceedings or even
outside conciliation proceedings. Thus, written agreements would become
settlements after relevant procedural provisions for arriving at such settlements are
followed. Thus, all settlements necessarily are based on written agreements
between the parties. It is impossible to accept the submissions of learned counsel
for the appellants that settlements between the parties are different from
agreements between the parties. It is trite to observe that all settlements must be
based on written agreements and such written agreements get embedded in
settlements. But all agreements may not necessarily be settlements till the aforesaid
procedure giving them status of such settlements gets followed. In other words,
under the scheme of the Act, all settlements are necessarily to be treated as binding
agreements between the parties but all agreements may not be settlements so as to
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have binding effect as provided under Section 18(1) or (3) if the necessary
procedure for giving them such status is not followed in given cases. On the
aforesaid scheme of the Act, therefore, it must be held that the settlement arrived
at during conciliation proceedings on May 5, 1980 between Respondent No.1
Management on the one hand and the four out of 5 unions of workmen on the
other, had a binding effect under Section 18(3) of the Act not only on the
members of the signatory unions but also on the remaining workmen who were
represented by the fifth union which, though having taken part in conciliation
proceedings, refused to sign the settlement. It is axiomatic that if such settlement
arrived at during the conciliation proceedings is binding to even future workmen
as laid down by Section 18(3) (d), it would ipso facto bind all the existing
workmen who are all parties to the industrial dispute and who may not be
members of unions that are signatories to such settlement 12(3) of the Act".
18. Even in the matter of Walchandnagar Industries Ltd., v/s. Dattusingh Lalsing
Pardeshi & Others, reported in 2005(6), BCR733, the Division Bench of our High Court
held that section 18, 25G & 2(oo), settlement is binding even on nonmember workers of
the Union. Therefore, considering these two authorities and the fact that the settlement
dated 3rd January, 1996 is neither set aside nor new settlement came into existence, I hold
that the Respondent-Original Complainant can take benefit and file complaint under
Industrial Disputes Act for implementing the settlement dated 3rd January, 1996, though
they were not parties to that settlement. As the Respondent-Original Complainants are
working in the said organization in which one of the recognized union entered into
settlement with the Petitioner and the said settlement is still in existence, Respondent-
Original Complainants have right to file dispute under the Industrial Disputes Act for
implementing the said settlement. Therefore, objection raised by the Petitioner about the
maintainability of the complaint filed by the Respondent-Original Complainant for not
implementing the settlement dated 3rd January, 1996 on the ground that Respondents were
neither parties to the settlement nor members of the Union with whom the settlement was
arrived at, is not tenable."
8. It is on the aforesaid backdrop, the present Letters Patent Appeals are filed.
We may observe the the Letters Patent Appeals were earlier dismissed by a co-
ordinate Bench of this Court by an order dated 19 October, 2011. Against the said
order, Review Petitions were filed, which came to be dismissed by an order dated 2
March, 2012. The orders dismissing the Letters Patent Appeals as well as the Review
Petitions were assailed by the KDMC before the Supreme Court. The Special Leave
Petitions were disposed of by an order dated 22 November, 2013, whereby the
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Supreme Court directed the KDMC to approach this Court by filing Review
Petitions, to be decided on their own merits. Accordingly, the Review Petitions were
considered by a Division Bench of this Court and were allowed by an order dated 28
April, 2014. By a further order dated 10 August, 2015, the Letters Patent Appeals
were admitted by the co-ordinate Bench of this Court.
9. We have heard Mr. Talsania, learned senior counsel, along with Mr. Rao for
the appellant-KDMC and Mr. Pendse, learned counsel for the respondents-
complainants.
10. Mr. Talsania, in assailing the impugned order passed by the learned Single
Judge, has limited submissions. His first submission is that the settlement dated 3
January, 1996 would not confer any legal right or any benefit on the complainants
for the reason that they were not parties to the settlement. In supporting such
submission, the Court's attention is drawn to the provisions of sub-section (1) of
Section 18 of the I. D. Act. It is submitted that in the present case, settlement (supra)
was not arrived "in the course of the conciliation proceedings" and/or the settlement
being otherwise than in the course of the conciliation proceedings, no plea under the
said settlement could have been raised by the complainants in their respective
complaints filed before the Industrial Court. To buttress such submission, Mr.
Talsania has placed reliance on the decision of the Supreme Court in the case of Bata
Shoe Co. (P) Ltd vs. D. N. Ganguly & Others 6. Mr. Talsania would next submit that
AIR 1961 1158
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the settlement was arrived at on 3 January, 1996 whereas the complaints in question
were filed in the year 2008, hence, the complaints, filed after a delay of 12 years were
barred by limitation, and hence were not maintainable. Mr.Talsania has submitted
that the complaints ought to have been filed within the prescribed limitation period
of 90 days as provided for in Section 28 of the MRTU & PULP Act.
11. On the other hand, Mr. Pendse, learned counsel for the complainants, in
opposing the submissions as advanced by Mr. Talsania, has drawn our attention to
the contents of the Settlement Agreement to submit that the settlement in question
in fact was arrived, in the course of conciliation proceedings. He submits that it is
not in dispute that the complainants as well as the KDMC were before the
Conciliation Officer who in the course of conciliation proceedings, recorded the
settlement and also signed the Settlement Agreement, thereby according his
approval. It is hence his submission that the KDMC's plea that the settlement was
not arrived in the course of conciliation proceeding is ex facie untenable. It is
submitted that in any event, such contention was not raised by the KDMC in the
manner as contended before the Industrial Court. Mr. Pendse further submits that
after the filing of the complaints, the settlement was in fact acted upon, inasmuch as
certain categories of employees, namely, Pharmacists, were granted the benefit of the
settlement. According to him, this fact is relevant for both the issues raised on behalf
of the KDMC. On the plea of limitation as urged by Mr. Talsania is concerned, Mr.
Pendse submits that there are concurrent findings against the KDMC on such issue
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that the complaints were filed well within the prescribed limitation, since the
decision to give effect to the revised pay scales of the 5 th Pay Commission itself was
taken after the filing of the complaints before the Industrial Court. In this context,
he submits that the settlement dated 3 January, 1996, at all material times, was legal,
valid, subsisting and binding on the KDMC. It is his further submission that it was
never the case of the KDMC that the settlement had ceased to exist. Mr. Pendse
would thus urge that the appeals deserve to be dismissed.
Analysis
12. Having heard learned counsel for the parties and upon perusal of the record, it
appears to be not in dispute that the complainants, at all material times, were
employees of the KDMC although not being members of the signatory unions. It is
also not in dispute that the Settlement Agreement dated 3 January, 1996 was arrived
between the KDMC and the two Unions (supra). Further, the KDMC had not
resiled from granting the benefit of the settlement to those who fell within its scope,
including Pharmacists, which fact has not been disputed by Mr. Talsania on behalf of
KDMC. Thus, the question before the Industrial Court as also before the learned
Single Judge, which has been concurrently answered against the KDMC, was that
the complainants were entitled to the benefit under the settlement. The
complainants have succeeded before both such forums.
13. Having noted the rival contentions, we first advert to the question as posed by
Mr. Talsania that the complaints were not maintainable considering the provisions of
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of Section 18(1) of the ID Act on the ground that the settlement was not arrived in
the course of conciliation proceedings. On the other hand, the contention of the
respondents/complainants is otherwise relying on the provisions of sub-section 3(d)
of Section 18. For convenience, the said provision, as it stood on the date of the
decision of the Industrial Court dated 29 April, 2010, is required to be extracted,
which reads thus:
Section 18 - Persons on whom settlements and awards are binding.
(1) A settlement arrived at by agreement between the employer and workman
otherwise than in the course of conciliation proceeding shall be binding on the
parties to the agreement.
Provided that, where there is a recognized union for any undertaking under
any law for the time being in force, than such agreement (not being an agreement
in respect of dismissal, discharge, removal, retrenchment, termination of service, or
suspension of an employee) shall be arrived at between the employer and the
recognized union only; and such agreement shall be binding on all persons referred
to in clause (c) and clause (d) of subsection (3) of this section].
(2) Subject to the provisions of sub-section (3), an arbitration award which has
become enforceable shall be binding on the parties to the agreement who referred
the dispute to arbitration.
(3) A settlement arrived at in the course of conciliation proceedings under this Act
or an arbitration award in a case where a notification has been issued under sub-
section (3A) of section 10A or an award of a Labour Court, Tribunal or National
Tribunal which has become enforceable shall be binding on--
(a) all parties to the industrial dispute;
(b) all other parties summoned to appear in the proceedings as parties to the
dispute, unless the Board, arbitrator, Labour Court, Tribunal or National
Tribunal, as the case may be, records the opinion that they were so summoned
without proper cause;
(c) where a party referred to in clause (a) or clause (b) is an employer, his heirs,
successors or assigns in respect of the establishment to which the dispute
relates;
(d) where a party referred to in clause (a) or clause (b) is composed of
workmen, all persons who were employed in the establishment or part of the
establishment, as the case may be, to which the dispute relates on the date of
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the dispute and all persons who subsequently become employed in that
establishment or part."
(emphasis supplied)
14. It is seen that Section 18 makes a provision qua persons on whom settlements
and awards are binding. Thus, when an industrial dispute is raised and is resolved by
settlement or by an award, the same would accordingly stand governed by the
provisions of Section 18 of the ID Act. Sub-section (1) of Section 18 contemplates
that if a settlement is arrived by virtue of an agreement between the employer and
the workmen, otherwise, than in the course of the conciliation proceedings, the same
shall be binding on the parties to the agreement only and not otherwise. Sub-section
(3)(d) creates a distinct situation whereby a settlement becomes binding on the
persons who were employed in the establishment or part of the establishment, as the
case may be, to which the dispute relates on the date of the dispute, as well as all
persons who subsequently become employed in that establishment or who were part
thereof, provided the settlement is arrived at in the course of conciliation
proceedings. Thus, the legislative policy behind Section 18(3) is to confer an
extended operation of the settlement to those who are not actual signatories to a
settlement agreement, if the settlement agreement, is arrived during the course of
conciliation proceedings on the principles of parity and fairness. In such event, the
fact that a workman was not a member of the Union is immaterial and does not
affect the binding force of the settlement on employees.
15. In Bata Shoe Co. (P) Ltd vs. D. N. Ganguly & Others (supra), the Supreme
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Court was concerned with an issue on the competence of a reference in the context
of an agreement dated 2 September, 1954, being projected as a settlement in the
context of the applicability of Section 18 of the I.D. Act. Analyzing the purport of
sub-section (1) and sub-section (3)(d) of Section 18, the Court explained the manner
in which the settlement can be said to be a settlement in conciliation proceedings.
The Supreme Court held as follows:
7. The question thus posed raises the question as to what is meant by
the words "in the course of conciliation proceedings" appearing in
Section 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 Section 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.
8. Reading these two provisions along with Section 18 of the Act, it
seems to us clear beyond doubt that a settlement which is made binding
under Section 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 Section
18."
16. The exposition of law in the aforesaid decision, in our opinion profoundly
applies to the present case, as it is not the KDMC's case that it disputed the
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settlement agreement or that the parties were not before the Conciliation officer, who
has endorsed the settlement.
17. We may also refer to the decision of a learned Single Judge of the Calcutta
High Court in Anthony Gomes vs. State of West Bengal & Ors. 7 on the
interpretation placed on sub-section (1) and (3) of Section 18 of the I.D. Act,
wherein the following observations were made:
"5. Under Sub-sec. (1), a settlement arrived at by agreement between the
employer and workmen otherwise than in the coarse of conciliation proceeding
shall be binding on the parties to the agreement Under Sub-sec. (3), a settlement
arrived at in the course of conciliation proceedings under the Act or an
arbitration award in a case where a notification has been issued under Sub-sec.
(3A) of S. 10A or an award of a Labour Court, Tribunal or National Tribunal
which has become enforceable shall be binding on all persons who were
employed in the establishment, or part of the establishment, as the case may be,
to which the dispute relates on the date of the dispute and all persons who
subsequently become employed in that establishment or part. ...... The
distinction between Sub-sec. (1) and Sub-sec. (3) of the Act is that while under
Sub-sec. (1) if a settlement is arrived at by agreement between the employer and
workmen otherwise than in the course of a conciliation proceeding, it shall be
binding only on the parties to the agreement but under Sub-sec. (3), while such a
settlement is arrived at in the course of a conciliation proceeding it will be
binding upon all the workmen. The fact that the petitioner was not a member of
the union is quite immaterial and does not affect the binding force of the
settlement upon all employees. This view finds support from a decision of the
Supreme Court in the case of Ramnagar Cane and Sugar Company, Ltd. v. Jatin
Chakraborty [A.I.R. 1960 S.C. 1012]. It has been held by the Supreme Court that
in order to bind the workmen, it is not necessary to show that the said workmen
belonged to the union which was a party to the dispute before the conciliator and
that the whole policy of S. 18 of the Act appears to give an extended operation to
the settlement arrived at in the course of conciliation proceedings and that is the
object with which the four categories of persons bound by such settlement are
specified in Sub-sec (3) of S. 18. In a subsequent decision of the Supreme Court
in the case of Bata Shoe Company (Private), Ltd. v. Ganguly (D.N.) [A.I.R. 1961
S.C. 1158] the same view has been expressed."
18. Adverting to the aforesaid clear position in law qua the applicability of either
sub-section (1) or sub-section (3)(d) of Section 18, we may observe that in the
(1974) 2 LLJ 94
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present case, the settlement dated 3 January, 1996 was arrived at, in the course of the
conciliation proceedings, which is evident from the bare perusal of the Settlement
Agreement (supra) which expressly refers to the conciliation proceedings before the
Conciliation Officer, in which both the parties to the settlement agreement
participated. There is no denial of these recitals in the settlement agreement.
Furthermore, what is of most significance is that the Conciliation Officer accorded
his imprimatur to the settlement agreement by endorsing his signature on the
settlement agreement, as underscored by us. Thus, the legal character of the
settlement in question is clearly of a settlement in the course of the conciliation
proceedings. Hence, from the plain purport of the Settlement Agreement, there is no
scope for the KDMC to contend that the settlement was not arrived during the
course of conciliation proceedings. Per contra, sub-section (1) of Section 18 of the
ID Act contemplates a settlement arrived at by an agreement between the employer
and the workmen "otherwise than in the course of conciliation proceedings", which
would be binding only on the parties to the agreement. This is clearly not the
situation in the present case, wherein the settlement is indisputedly arising in the
course of the conciliation proceedings, and to that effect not only recitals are
incorporated but also the settlement agreement bears the signature of the
Conciliation Officer. In such circumstances, a clear legal consequence as envisaged
under sub-section (3)(d) of Section 18 necessarily follows, namely, that the
settlement qua the complainants becomes binding on KDMC. We, accordingly,
reject Mr. Talsania's submission of the complaints being not maintainable on the
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basis of Section 18(1) of the ID Act.
19. Insofar as Mr. Talsania's contention on limitation is concerned, the same
deserves to be rejected considering the clear facts, that the dispute raised by the
complainants was to implement the recommendations of the 5 th Pay Commission as
agreed under the settlement. When such decision, in fact, was taken by the KDMC
in September, 2008, i.e., after the workman/respondents lodging the complaints in
question, which were filed sometime in January/February, 2008. Thus, until the
KDMC implemented the recommendations of the 5 th Pay Commission in the
manner agreed in clause (1) of the Settlement Agreement (supra), there existed a
continuing cause of action, entitling the workmen to seek enforcement thereof, as
rightly held by the learned Single Judge, the complaints were filed within the
prescribed period of limitation.
20. As a result of the aforesaid discussion, we find that no case is made out by the
appellants to interfere with the impugned judgment and order passed by the learned
Single Judge, confirming the findings of the Industrial Court on facts and law. The
appeals are accordingly dismissed. No costs.
(AARTI SATHE, J.) (G. S. KULKARNI , J.)
16 January, 2026
Signed by: Vidya S. Amin
Designation: PS To Honourable Judge
Date: 16/01/2026 20:21:37
