Gujarat High Court
New India Industries Ltd vs Vadodara Kamdar Union on 11 March, 2022
Bench: A.S. Supehia
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO.23927 of 2005
With
R/SPECIAL CIVIL APPLICATION NO.15025 of 2005
With
R/SPECIAL CIVIL APPLICATION NO.19164 of 2005
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ? NO
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy
of the judgment ? NO
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution NO
of India or any order made thereunder ?
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NEW INDIA INDUSTRIES LTD
Versus
VADODARA KAMDAR UNION & 28 other(s)
================================================================
Appearance:
SPECIAL CIVIL APPLICATION NO.23927 of 2005:
APPEARANCE DELETED for the Respondent(s) No. 1
MR SJ GAEKWAD(3434) for the Respondent(s) Nos.2-28
SPECIAL CIVIL APPLICATION NO.15025 of 2005:
APPEARANCE DELETED for the Respondent(s) No. 1
MR HARDIK D. MEHTA, AGP for the Respondent(s) No. 2
MR SJ GAEKWAD(3434) for the Respondent(s) No.3-33
SPECIAL CIVIL APPLICATION NO.19164 of 2005:
MR SJ GAEKWAD(3434) for the Petitioner(s) No.2-29
MR HARDIK D. MEHTA, AGP for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
Date : 11/03/2022
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
(1) Since the issues raised in the captioned writ
petitions are interconnected, the same are
decided by this common judgement and order.
FACTS
(2) The petitioner-Company having its industrial
Unit at Jetalpur Road, Vadodara was engaged in
manufacturing parts of textile machinery. It
is the case of the petitioner-Company that in
the month of August, 2000 due to serious
labour unrest and damage to properties,
production activity of the petitioner-Company
was totally stopped. The industrial dispute
between the management and workers was taken
up in conciliation by the Conciliation Officer
at the Office of Labour Commissioner,
Vadodara. During the conciliation proceedings
on 02.05.2001, an understanding was prepared
suggesting broad terms for Voluntary
Retirement Scheme (VRS) for an amount of
Rs.8.5 crores, subject to further negotiations
to be held on 09.05.2001. Therefore, on
11.08.2001, a further understanding was
reduced in writing mentioning exchange of
drafts and about the payment of gratuity.
(3) The respondent-Union filed Special Civil
Application No.10800 of 2001 before this Court
seeking a direction against the petitioner-
Company and against the Deputy Labour
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
Commissioner as well as the Assistant Labour
Commissioner for enforcement of the
understanding dated 02.05.2001.
3.1) One Mr.K.S.Gill, Assistant Labour Commissioner
filed an affidavit in Special Civil
Application No.10800 of 2001 indicating that
Memorandum of Understandings (MoU) dated
02.05.2001 and 09.05.2001 were required to be
noted in form of 2(p) settlement and for that
purpose drafts were exchanged. It appears that
the petitioner-Company did not come forward
with the settlement formula.
3.2) On 05.08.2002 the new management and the
respondent-Union initiated fresh negotiations
during the pendency of Special Civil
Application No.10800 of 2001 and the
management agreed for ad hoc payment of
Rs.15,000/- to each worker, which was to be
adjusted in final settlement of account.
3.3) On 19.12.2002 the respondent-Union and the
petitioner-Company submitted terms of
consensus in Special Civil Application
No.10800 of 2001, by which, amongst other
conditions, it was agreed to start
negotiations before the Conciliation Officer
from the stage where it was left.
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
3.4) On 19.12.2002 this Court passed an order
recording the terms of consensus by giving
appropriate directions to start negotiations
etc. and Special Civil Application No.10800
of 2001 was disposed of by this Court vide
order dated 19.12.2002 by directing the
Conciliation Officer to restart the
conciliation proceedings from the stage where
it was left and proceed in accordance with
law.
3.5) However, it appears that no fruitful results
were achieved in the negotiations and
therefore a failure report was submitted by
the Conciliation Officer and the Assistant
Labour Commission,which culminated into
Reference (I.T.) No.90 of 2003. The said
refernce was rejected vide order dated
21.04.2004 by holding that the Union had a
remedy to enforce the understanding under the
provision of section 33C(1) of the Industrial
Disputes Act, 1947 (I.D. Act). However, while
rejecting the said reference, it appears that
the Industrial Tribunal made an observation
that the Understanding dated 02.05.2001 is
held to be a 'settlement' binding to the
respective parties. Being aggrieved, the
petitioner-Company has challenged the said
order to that extent in the captioned Special
Civil Application No.23927 of 2005.
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
3.6) The Union did not challenge the award, but
filed the captioned Special Civil Application
No.19164 of 2005 challenging the action of the
petitioner-Company stopping production and
seeking a direction to pay monthly wages etc.
3.7) Thereafter, the Union filed Recovery
Application no.128 of 2004. The Labour Court,
Vadodara passed the order dated 07.04.2005 of
recovery under section 33C of the I.D. Act of
Rs.7,96,61,000/- on the basis of the
understanding/settlement dated 02.05.2001. The
captioned Special Civil Application No.15025
of 2005 has been filed by the petitioner-
Company challenging the impugned order dated
07.04.2005 in Recovery Application No.128 of
2004.
3.8) During the pendency of the captioned writ
petitions, it appears that this Court passed
orders in Civil Application Nos.12914 of 2005
and 9961 of 2007. This Court passed order
dated 30.07.2008 in Civil Application No.9961
of 2007 with the consent of the parties on
various conditions stipulated therein
recording that 70% of the amount as per list
of the workers prepared by the Assistant
Labour Commissioner, Vadodara shall be paid as
full and final settlement. The Resolution of
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
the respondent-Union dated 09.09.2008 was also
produced on record by the respondent-Union
duly signed by 121 workers. For the rest of
the workers, who did not avail the benefit,
this Court ordered the amount to be deposited
before the Registry of this Court. It appears
that approximately 136 workers have accepted
the settlement. Thus, 136 workers have settled
the dispute with the petitioner-Company.
However, it appears that the claim only
remains for 30 or 32 workers.
SUBMISSIONS
(4) Learned Advocate Mr.S.J.Gaekwad appearing for
the workmen has filed the written submissions.
(5) Learned advocate Mr.R.D.Dave, has submitted
that the Labour Court erred in not
appreciating the fact that there is no
established vested right of the workers with
respect to claim against any amount based on
the so-called understanding dated 02.05.2001
made before the Conciliation officer and,
therefore, in absence of any established
settled rights, recovery application under
section 33C of the I.D. Act is not
maintainable. It is further submitted that the
Labour Court erred in not appreciating that
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
there is no Voluntary Retirement Scheme
applicable to the workers of the petitioner-
Company and there is no concluded agreement
between the parties for payment of any amount
or towards VRS and, therefore, such claim
cannot be enforced under section 33C(1) of the
I.D. Act before the Labour Court.
5.1) Learned advocate Mr.R.D.Dave has asserted that
that the Labour Court committed serious error
in not appreciating the fact that previous
management has specifically disputed the
settlement dated 02.05.2001 having binding
effect or have concluded contract. It is
submitted that the Conciliation Officer and
Assistant Labour Commissioner in his affidavit
before this Court also clearly stated that
understanding dated 02.05.2001 is not a
"settlement" within the meaning of section
2(p) of the I.D. Act and is not binding as per
section 18 of the I.D. Act and such
understanding cannot be enforced under section
33C of the I.D. Act. It is submitted that the
understating was not made as per Rule 62 of
the Industrial Disputes (Gujarat) Rules, 1966,
and hence, the same cannot be enforced.
5.2) Learned advocate Mr.R.D.Dave also submitted
that the Labour Court erred in not
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
appreciating that on 03.12.2002, the
petitioner-Company and the representatives of
the respondent-Union clearly agreed that the
ad hoc payment of Rs.15,000/- is as per the
understanding in this Court on 05.08.2002 and
unpaid dues will be finalized in the joint
meeting between the union leader and the
management. Thus, it is submitted that when
the parties agreed for negotiations for
determining the amount to be paid to the
workers as a result of negotiations, the so-
called understanding dated 02.05.2001 does not
survive, as fresh negotiations had taken
place. It is submitted that the Labour Court
erred in not appreciating the fact that in
view of the consensus before this Court in
Special Civil Application No.10800 of 2001
also, the understanding dated 02.05.2001 does
not survive as the parties agreed for the
negotiations in respect of the amount to be
arrived at by the settlement and, therefore,
upon failure of the negotiations and having
rejected the reference of the respondent, the
Labour Court ought not to have granted the
claim of the respondent-Union.
5.3) Learned advocate Mr.R.D.Dave, while referring
to the affidavit-in-rejoinder filed in the
writ petition - Special Civil Application
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
No.15025 of 2015, submitted that the reference
was made to the Industrial Tribunal on the
issue as to whether the understanding dated
02.05.2001 should be implemented immediately
or not. It is submitted that the same covered
three issues - (i) payment of VRS and wages of
Rs.8.5 crores; (ii) Rs.8.5 crores will be
subject to Rs.10,00,000/- plus/minus
adjustment; and (iii) amount of gratuity/bonus
will be payable over and above the said
amount. Thus, it was submitted that the order
of reference proceeded on the footing and it
is pre-supposed that there is understanding
dated 02.05.2001, which has been categorically
disputed by the petitioner-Company and,
therefore, the Industrial Tribunal has
traveled beyond the scope of reference by
deciding particular issues about the
understanding dated 02.05.2001 while rejecting
the reference in toto.
5.4) Learned advocate Mr.R.D.Dave, while referring
to the further affidavit filed in the writ
petition - Special Civil Application No.15025
of 2015, submitted that in fact 55% gratuity
was already paid to the workers, which is now
admitted by the respondent. It was submitted
that the management has also paid advance
amount of Rs.33,500/- to each of the workers,
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
which is also an undisputed fact. It was
submitted that considering the admitted fact
that it is apparent that all 136 workers and
others, who have received money from Registry
of this Court is in excess to their
eligibility. It is submitted that 70% amount
of the VRS paid to the workers is more than
what is payable, even after including the
remaining amount of gratuity. It was submitted
that as regards 32 workers, who are disputing
the settlement with Union of 70% amount of VRS
as per the said order dated 30.07.2008 and
insisting on payment of VRS as per the
impugned order of the Labour Court, this class
of workers is not eligible to claim any amount
of VRS since there is no settlement, as
contemplated under section 2(p) of the I.D.
Act read with Rule 62 of the Industrial
Disputes (Gujarat) Rules, 1966 and, therefore,
the order of the Labour Court is patently
illegal and without jurisdiction.
(6) Per contra, learned advocate Mr.S.J.Gaekwad
appearing for the workmen in his written
submissions has averred that though the
petitioner-Company floated VRS and the
understanding/agreement dated 02.05.2001 was
reached between the parties for making payment
of VRS and other dues as per the details given
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
in the agreement dated 02.05.2001, the
petitioner-Company did not honour it. It was
submitted that the petitioner-Company was
closed down without following the proper
procedure and without obtaining the permission
from the Government and hence, the Union filed
Special Civil Application No.10800 of 2001
before this Court for necessary directions. It
was submitted that the parties submitted the
terms of consensus in the court and on the
basis of the same, this Court disposed of the
matter vide order dated 19.12.2002 and
directed the Conciliation Officer to restart
the conciliation proceedings from the stage
where it was left and proceed with the matter
in accordance with law. It was submitted that
the petitioner-Company admitted the agreement/
understanding dated 02.05.2001 and submitted
the terms of consensus before this Court. It
is submitted that relying on the terms of
consensus, this Court gave direction to the
Assistant Labour Commissioner to further
proceed with the conciliation proceedings in
which time and mode of payment was to be
decided.
6.1) Learned advocate Mr.S.J.Gaekwad has submitted
that the original settlement dated 02.05.2001
was not disturbed but simply directions were
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
given to the Conciliation Officer to restart
the proceedings from the stage where it was
left and proceed with the matter in accordance
with law. It was submitted that there was no
substitution of new contract for the
understanding/settlement dated 02.05.2001. It
was submitted that the petitioner-Company,
relied on the said settlement, made a partial
payment towards the implementation of the said
settlement. It was submitted that in view of
the order passed by this Court in Special
Civil Application No.10800 of 2001, the
conciliation proceedings were restarted.
However, the management of the petitioner-
Company did not honour the settlement and,
therefore, the industrial dispute was raised.
Learned advocate further submitted that the
same was referred to the Industrial Tribunal,
Vadodara, which was registered as Reference
(I.T.) No.90 of 2003 and vide order dated
21.04.2004 the said reference was decided. It
was submitted that while deciding the said
reference, the Industrial Tribunal recorded
the finding that there was a complete
settlement, as per law, between the parties
and hence, the Tribunal did not entertain the
reference since there was no industrial
dispute in existence. It was submitted that
the Tribunal in Reference (I.T.) No.90 of 2003
observed that there is a complete valid
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
settlement between the parties and, therefore,
the only remedy available to the Union is to
file recovery application under section 33C(1)
of the I.D. Act.
6.2) It is contended that the Labour Court decided
Recovery Application No.128 of 2004 on merits
vide order dated 07.04.2005 and taking into
consideration certain amount paid to the
workers towards the implementation of the
settlement dated 02.05.2001, the Labour Court
issued Recovery Certificate for the amount of
Rs.7,96,61,000/- (Rupees Seven Crores Ninety
Six Lakhs Sixty One Thousand only) and
directed the District Collector, Vadodara to
recover the amount from the property of the
petitioner-Company situated at Jetalpur Road,
Vadodara. It was submitted that the
petitioner-Company challenged the said order
passed by the Labour Court in the recovery
proceedings by way of Special Civil
Application No.15025 of 2005 on 08.07.2005
before this Court. It was submitted that the
petitioner-Company participated in the
recovery proceedings and after the recovery
application was decided, the petitioner-
Company challenged the order passed by the
Industrial Tribunal in Reference (I.T.) No.90
of 2003 by filing Special Civil Application
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
No.23927 of 2005 before this Court on
10.10.2005.
6.3) Learned advocate Mr.S.J.Gaekwad has submitted
that during the course of hearing of Special
Civil Application No.15025 of 2005, certain
members of the Union and the management
declared before this Court that the matter was
settled on certain terms and they filed Civil
Application No.9961 of 2007 for appropriate
directions. It was submitted that accordingly,
this Court passed an order dated 30.07.2008 in
Civil Application No.9961 of 2007 in Special
Civil Application No.15025 of 2005, wherein
this Court observed that the acceptance of 70%
of the amount of VRS shall be paid towards the
full and final settlement of all dues from the
petitioner-Company in respect of those workers
who accepted 70% of the amount. It was
submitted that while admitting Special Civil
Application No.15025 of 2005 this Court stayed
the implementation of the order passed by the
Labour Court in Recovery Application No.128 of
2005. Subsequently, by the order dated
22.08.2008 passed in Civil Application No.9961
of 2007 in Special Civil Application No.15025
of 2005, this Court vacated the interim relief
on the condition that the petitioner-Company
would deposit approx. Rs.1.30 crores in the
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
Court, which amount is deposited in this
Court. It was submitted that some of the
workers have not accepted 70% of the amount as
per the order dated 30.07.2008 and their
rights have been kept open to contest in
respect of their claims.
6.4) Learned advocate Mr.S.J.Gaekwad submitted that
all the above facts indicate that the
settlement was complete and the petitioner-
Company acted upon and accepted the said
settlement and made certain payments for the
implementation of the settlement, however,
full amount, as per the settlement was not
paid to the workmen. It was submitted that
simply the agreement entered into between the
parties before this Court to certain extent
will not affect their rights to claim the
salary since the closure was illegal and the
petitioner-Company is under a statutory
obligation to make payment to the employees.
It was submitted that the law is settled that
the settlement arrived at between the employer
and the workmen in course of conciliation
proceedings within the meaning of Section 2(p)
read with section 18(3) of the I.D. Act would
not prevail over the statutory requirements
under sections 25N and 25O of the I.D. Act. It
was submitted that under the circumstances,
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
the petitioner-Company is bound to pay to the
workmen the salary since the closure is
illegal or to pay the amount as per the
understanding dated 02.05.2001.
6.5) Learned advocate Mr.S.J.Gaekwad submitted that
so far as the amount of gratuity is concerned,
that amount cannot be denied by the
petitioner-Company since it is not exempted
under section 5 of the Gratuity Act by the
appropriate Government. It was submitted that
no other authorities can exempt the
petitioner-Company from claiming the amount of
gratuity. It was submitted that in this view
of the matter, the applicants are entitled to
recover the amount of VRS, as agreed by the
petitioner-Company along with other statutory
liabilities like gratuity, which cannot be
denied.
CONCLUSION
(7) As noticed hereinabove, the dispute is only
confined to 30 or 32 workmen. It is the case
of the workmen that they are entitled to the
benefits arising out of the settlement and as
per the order dated 07.04.2005 passed by the
Labour court in Recovery Application No.128 of
2004 directing recovery of an amount of
Rs.7,96,61,000/- on the basis of the
understanding/ settlement dated 02.05.2001.
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
The workmen had filed the writ petition being
Special Civil Application No.19164 of 2005
challenging the action of the respondent-
Company of stopping the production and
depriving them from work and also seeking a
direction to pay to all the workers full wages
from 2000. Whereas, the petitioner-Company has
filed the writ petitions being Special Civil
Application No.15025 of 2005 challenging the
order dated 07.04.2005 passed by the Labour
Court in Recovery Application No.128 of 2004
and the writ petition being Special Civil
Application No.23927 of 2005 challenging the
order dated 21.04.2004 passed in Reference
(I.T.) No.90 of 2003 to the extent that it
declares the understanding dated 02.05.2001 as
having being enforceable under section 33C of
the I.D. Act.
(8) The genesis of all the writ petitions lies in
the Voluntary Retirement Scheme (VRS) floated
by the petitioner-Company in the month of
August, 2000, which led to series of unrest.
The dispute with regard to the same was
referred to conciliation was taken by the
Conciliation Officer at the office of the
Labour Commissioner, Vadodara and it appears
that, during the conciliation proceedings on
02.05.2001, an understanding was prepared that
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
the amount of Rs.8.5 crores will be paid in
view of the VRS to the workmen and further
meeting was held with regard to the
disbursement of the aforesaid amount and the
meeting was adjourned to 09.05.2001. The Court
has perused the understanding dated
02.05.2001. The same is translated and
incorporated as under:-
"Settlement Date : 02.05.2001
The production work of The New India Industries Ltd.,
Jetalpur Road, Vadodara is stopped since long time. It
is not in the condition to be started. Due to which
several meetings were held between the Representative
of Labor Union and Managing Director of the Company.
After several prolonged discussions held between them,
below mentioned settlements were made to give the
amount of 8 V.R.S. and payable Salary to the labors.
1) The Company shall have to pay Rs. 8.5 Crores
(Rupees Eight Crores Fifty Lacs only) to the labors as
the amount of payable salary and V.R.S.
2) The decision regarding payment of the
aforementioned amount will be made after having
discussion in the next meeting.
3) The aforementioned amount of Rs. 8.5 Crores shall
be liable to be adjusted within 10 lacs +/- (plus or
minus).
4) Next meeting with the Company is kept on 09/05/2001
at Vadodara.
5) The amount of Gratuity, Bonus and Earned Leave
shall be given in addition to the above amount.
Sd/- Thakor Shah
General Secretary
Vadodara Labor Union
'
Sd/- Sd/- illegible Sd/- illegible
illegible illegible illegible
illegible
True Copy
Genral Secrtary / Secretary
Vadodara Labor Union "
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
Thus, Clause 2 of the understanding states
that the disbursement of the aforesaid amount
will be discussed in the next meeting.
(9) It appears that, on 11.08.2001, a draft was
prepared. The same is translated and
incorporated as under:-
"Explanation / Settlement Date : 11/08/2001
Today, below mentioned settlement is made in the
meeting of New India Industries Ltd., Vadodara with
the Labor Commissioner.
1) At present Rs. 78 Lacs is lying with you - with the
Trust as the amount of Gratuity. The Company shall
carry out necessary procedure so that this amount
shall be given to the labors immediately. The Company
shall make necessary arrangements that this payment is
made within 15 days.
2) The Institution shall make such arrangements so
that the 11 employees of Watch and Board who are
continue in the service shall regularly get Rs.2500/-
per month. The lump-sum amount shall be paid against
due salary.
3) The Company shall forward reply on 16/08/2001
regarding the amended Draft which has been given by
the Unions to the Company in the meeting.
Sd/- illegible
General Secretary
Dt.
(10) It was decided in the said understanding that
an amount of Rs.78,00,000/- will be paid
within 15 days and for 11 employees, who are
presently working, an amount of Rs.2,500/-
will be paid to them regularly. Clause 3 of
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
the said understanding refers that an amended
draft has been given by the Union to the
petitioner-Company and accordingly, the
petitioner-Company will reply to the same on
16.08.2001. It appears that, thereafter the
Union filed Special Civil Application No.10800
of 2001 before this Court seeking a direction
against the petitioner-Company to enforce the
understanding dated 02.05.2001. The
Conciliation Officer, Mr.K.S.Gil, who was
Assistant Labour Commissioner, filed an
affidavit dated 05.02.2002 before this Court
that in view of the series of meetings of the
Union and the Company, two Memorandum of
Understandings are arrived at between the
parties on 02.05.2001 and 09.05.2001 for the
purpose of payment to be made to the workers
and the amount agreed to be paid is of Rs.8.05
crores. It is also stated in paragraph no.5 of
the affidavit that the said proposed drafts
were exchanged between the parties in his
presence and they are required to be noted in
form 2(p) settlement under the provisions of
the I.D. Act. The respondent-Company did not
come forward with the settled formula and did
not turn up on 16.08.2001 and further meeting
could not be held. Thus, the affidavit, which
is filed by the Conciliation Officer before
this Court, in clear terms suggest that the
Understandings dated 02.05.2001 and 09.05.2001
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
were at the draft stage and they were not
reduced in the form 2(p) settlement, as
required under the provisions of the I.D. Act.
Thereafter, Terms of Consensus was filed in
the said writ petition on 19.12.2002 signed by
the Chairman of the Company and the General
Secretaries as well as the representatives of
the Union. It appears that, during the
intervening period, another settlement or
understanding dated 05.08.2002 was arrived at,
which is recorded in the Terms of Consensus.
The same reads as under:-
".....It is taken on record that as per
previous undertaking/ understanding/ settlement
dated 5.8.2002 the Industry has paid Rs.15000/-
per workman lump-sum which is to be adjusted
against final accounts of the concerned workman."
Finally, in the Terms of Consensus, it is
observed thus:-
" In view of the above consensus the Asst.
Commissioner of Labour Vadodara may be directed to
issue notice to the parties and start negotiations
from the stage where it was left, and proceed with
the matter in accordance with law.
It may be made clear that this Honourable
Court may not express any opinion on merits of the
matter, and the same be disposed off in terms of
above said directions only, without prejudice to the
rights and contentions of all parties."
From the Terms of Consensus, it is
manifest that it was agreed between the
parties to start negotiations from the stage
where it was left.
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
(11) By the order dated 19.12.2002, the writ
petition being Special Civil Application
No.10800 of 2001 was disposed of by issuing
following directions:-
"3. In view of the above, the terms of consensus
signed and admitted by signatories therein, as
pointed out above is accepted. Respondent no.2, as
prayed in the consensus is directed to issue notice
to the parties and start negotiations from the stage
where it was left and proceed with the matter in
accordance with law. As agreed by the signatories to
this consensus, they shall abide by the other terms
of this consensus. The above directions to the
respondent No.2 is without prejudice to the rights &
contentions of the parties.
4. In view of the above, nothing further is required
to be done in the petition, and the petition is
disposed of as not surviving. Interim relief if any
shall stand vacated. Notice discharged."
Thus, this Court, has disposed of the
matter in terms of the consensus by observing
that the respondent no.2 is directed to issue
notice to the parties and start negotiations
from the stage where it was left without
prejudice to the rights and contentions. It
appears that, no fruitful results were
achieved in the negotiations and, therefore, a
failure report was submitted by the
Conciliation Officer, which culminated into
Reference (IT) No.90 of 2003. By the order
dated 21.04.2004, the Industrial Tribunal,
Vadodara rejected the reference by holding
that the Union had a remedy to enforce the
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
understanding under the provisions of Section
33C(1) of the I.D. Act. Pursuant to the said
order, the Union filed Recovery Application
No.128 of 2004. The Union did not challenge
the said order. The petitioner-Company
challenged the said order to the extent that
it was observed by the Industrial Tribunal to
the extent that the understanding dated
02.05.2001 is enforceable under section 33C of
the I.D. Act. The said award is challenged in
the captioned writ petition being Special
Civil Application No.19164 of 2005. In the
Recovery Application No.128 of 2004, the
Labour Court, Vadodara, passed an order dated
07.04.2005 of awarding an amount of
Rs.7,96,61,000/- on the basis of the
understanding/settlement dated 02.05.2001. The
captioned Special Civil Application No.15025
of 2005 has been filed by the petitioner-
Company and the impugned order dated
07.04.2005 passed in Recovery Application
No.128 of 2004 is assailed.
(12) As noticed hereinabove, during the pendency of
these writ petitions, by the interim orders
passed in Civil Application Nos.9961 of 2007
and 12914 of 2005, and with the consent of the
parties, 70% amount are disbursed to the
workers as per the list prepared by the
Assistant Labour Commissioner, Vadodara. This
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Court, by the interim orders, had directed to
prepare the list of all the workers, who would
be entitled to the aforesaid amount. As per
the order dated 30.07.2007 passed in the
aforesaid civil applications, the total amount
towards the VRS comes to Rs.4,58,29,112/-. The
relevant extract is as below:-
"(2) The applicant-Company will pay 70% of the
amount enlisted against each of the workers in the
said List which is reflected in the VRS column of
the List to the General Secretary of the opponent-
Union, who will approach the applicant-Company, as
the authorized representative of all the 181
workers of the Union who shall have the authority
to collect the cheques of the respective amounts on
behalf of each of the workers, as referred to in
the List submitted by the Assistant Commissioner of
Labour, Vadodara.
(3)xxxxx
(4)xxxxx
(5) It is made clear that the aforesaid amount
shall be treated as full and final settlement of
all the dues in respect of those workers who have
accepted the aforesaid amounts.
(6) After the said amount is accepted, it shall
not be open to the workers to raise any dispute in
respect of their claims against the applicant-
Company.
(7) The 70% of the VRS amount of those workers who
are not accepting the same will be deposited with
the Registry of this Court before 20thAugust,
2008.
(8) It shall be open to the workers, who have not
availed of the aforesaid scheme, to raise all
contentions at the time of final hearing of this
petition, so far as their claims qua the amount
other than what has been stated by the Assistant
Labour Commissioner, Vadodara in his Affidavit."
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
Thus, it appears that except 32 workmen,
all the other workers accepted the aforesaid
amount towards full and final settlement and
the issue is only confined to 32 workmen. The
entire claim of the workmen rests on the award
dated 07.04.2005 passed by the Labour Court in
the Recovery Application No.128 of 2004. The
Labour Court has awarded the amount of
Rs.7,96,61,000/- treating the understanding
dated 02.05.2001 as the final settlement.
(13) Accordingly, in the considered opinion of this
Court, looking to the attempts made by both
the respective parties and as recorded by this
Court in the order dated 19.12.2002 passed in
Special Civil Application No.10800 of 2001 and
the affidavit filed by the Conciliation
Officer in the said writ petition, it cannot
be said that the said understandings dated
02.05.2001 and 09.05.2001, were final
settlement. The affidavit filed by the
Conciliation Officer specifically states that
the settlement was not reduced as per the
provisions of section 2(p) of the I.D. Act and
further this Court, after recording the
contents of the affidavit filed by the
Conciliation Officer, had granted the liberty
to further start the conciliation proceedings
from the stage it had stopped/ left.
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
Thereafter, a further understanding was also
recorded on 05.08.2002, which was also not
final and ultimately, since the conciliation
proceedings failed, the same culminated into
Reference (IT) No.90 of 2003, which was
rejected by the order dated 21.04.2004 by
directing the Union to file appropriate
application to enforce the understanding under
the provisions of Section 33C(1) of the I.D.
Act.
(14) The Conciliation Officer has never recorded
that the settlement was final, and on the
contrary it was opined by him that the
settlement is required to be entered as per
the provision of section 2(p) of the I.D. Act.
The understandings dated 02.05.2001 and
09.05.2001 cannot be said to be settlement
under the provision of section 18 of the I.D.
Act since the provision of Rule 62 of the
Industrial Disputes (Gujarat) Rules, 1966,
which reads as follows was not complied:
"RULE 62 : Memorandum of settlement
(1) A settlement arrived at in the course of conciliation
proceedings or otherwise, shall be in Form XVI.
(2) The settlement shall be signed by -
(a) in the case-of an employer, by the employer
himself, or by his authorized agent, or where the
employer is an incorporated company or other body
corporate by the agent, manager or other principal
officer of such company or body;
(b) in the case of workmen, either by the President
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
or Secretary [or such other officer of a trade
union of the workmen as may be authorized by the
Executive Committee of the Union in this behalf],
or by five representatives of the workmen duly
authorized in this behalf at a meeting of workmen
held for the purpose.
(c) in the case of an individual workmen having an
industrial dispute under section 2-A, by the
workman himself.
(3) Where a, settlement is arrived at in the course of
conciliation proceedings, the Conciliation Officer or the
Board, as the case may be, shall send a report thereof to
the State Government together with memorandum of
settlement signed by the parties to the disputes.
(4) Where the settlement is arrived at between an
employer and is workmen other wise than in the course of
conciliation proceedings before a Conciliation Officer or
Board, the parties to the settlement shall jointly send a
copy thereof to [The Secretary to the Government of
Gujarat, Education and Labour Department, Ahmedabad. the
Commissioner of Labour, Ahmedabad, the Deputy
Commissioner of Labour, Ahmedabad] and the Conciliation
Officer concerned.
Sub-rule (1) of the Rules mandates that
the settlement has to be in Form XVI, and as
per sub-rule (4) such settlement has to be
jointly sent to the Secretary to the
Government of Gujarat, Education and Labour
Department, Ahmedabad. The Commissioner of
Labour, Ahmedabad, the Deputy Commissioner of
Labour, Ahmedabad, and the Conciliation
Officer concerned. In the present case,
indubitably, the mandate of sub-rule (4) is
not followed, since the Conciliation Officer
has ultimately filed the failure report. Such
failure in the settlement culminated into
reference, which was rejected. The workmen did
not challenge the same, but filed an
C/SCA/23927/2005 CAV JUDGMENT DATED: 11/03/2022
application under the provisions of section
33C(2) of the I.D. Act.
(15) At this stage, I may with profit refer to the
judgment of the Apex Court in the case of
Workmen of Delhi Cloth and General Mills vs
Management of Delhi Cloth and General Mills
Limited, AIR 1970(3)SCC 1851. The Apex Court,
while examining section 18 of the I.D.Act, and
Rule 58 of the Industrial Disputes (Central)
Rules, 1957, which is pari materia to Rule 62
of Industrial Dispute (Gujarat) Rules, 1966
has held thus:
"11 We now turn to the merits of the controversy. The
tribunal took the view that the dispute regarding
retirement age of Shibban Lal ceased to be an industrial
dispute because of the settlement dated 9.06.1965 and,
therefore, it could not be referred to it for
adjudication. Support of his case by the workers of any
other Union after reference could not in its view
validate the reference. The appellant's learned counsel
challenged this view and drew our attention to Rule 58
of the Industrial Disputes (Central) Rules) 1957 made
under Section 38 of the Industrial Disputes Act, 1947 .
This rule reads as under:
" 11 We now turn to the merits of the controversy.
The tribunal took the view that the dispute regarding
retirement age of Shibban Lal ceased to be an
industrial dispute because of the settlement dated
9.06.1965 and, therefore, it could not be referred to
it for adjudication. Support of his case by the
workers of any other Union after reference could not
in its view validate the reference. The appellant's
learned counsel challenged this view and drew our
attention to Rule 58 of the Industrial Disputes
(Central) Rules) 1957 made under Section 38 of the
Industrial Disputes Act, 1947 . This rule reads as
under:
"58. Memorandum of settlement.-(1) A settlement
arrived at in the course of conciliation proceedings
or otherwise shall be in form 'H'. (2) the settlement
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shall be signed- (a) in the case of an employee, by
the employer himself, or by his authorised agent, or
when the employer is an incorporated company or other
body corporate, by the agent, manager or other
principal officer of the corporation ; (b) in the
case of workmen, by any officer of a Trade Union of
workmen or by five representatives of workmen duly
authorised in this behalf at a meeting of the workmen
held for the purpose. Explanation.-In this rule
"officer" means any of the following officers,
namely(a) the President; (b) the Vice-President; (c)
the secretary (including the General secretary) ; (d)
a Joint secretary ; (e) any other officer of the
Trade Union authorised in this behalf by the
President and secretary of the Union.
(3) Where a settlement is arrived at in the course of
conciliation proceeding the Conciliation Officer
shall send a report thereof to the central government
together with a copy of the memorandum of settlement
signed by the parties to the dispute.
(4) Where a settlement is arrived at between an
employer and his workmen otherwise than in the course
of conciliation proceeding before a Board or a
Conciliation Officer, the parties to the settlement
shall jointly send a copy thereof to the central
government, the Chief Labour Commissioner (Central)
New Delhi, and the Regional Labour Commissioner, New
Delhi, and to the Conciliation Officer (Central)
concerned."
Form 'H' may also now be reproduced :
"FORM FOR MEMORANDUM OF SETTLEMENT me of parties
Representing employer (s) Representing workmen:
Short recital of the case Terms of settlement
Witnesses : Signature of the parties. (1) (2)
Signature of Conciliation Officer, Board of
Conciliation.
Copy to: (1) Conciliation Officer
(Central)........ ....(here enter the office address
of the Conciliation Officer in the local area
concerned). (2) Regional Labour Commissioner
(Central)...... (3) Chief Labour Commissioner
(Central), New Delhi. ... .. (4) The secretary to the
government of India, Ministry of Labour, New Delhi."
12 The plain reading of the rule and the Form, according
to the appellant, clearly suggests its mandatory
character. It was contended that the settlement was not
entered into with the concurrence of the Conciliation
Officer nor was it entered during the conciliation
proceedings. Particular emphasis was laid on non-
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compliance with sub-rule (4). The settlement, in the
circumstances, was urged to be invalid and the reference
of the dispute quite in accordance with law. In this
connection the learned advocate referred to Section 18
of the Industrial Disputes Act, 1947 which is as follows
:
"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.
(2) Subject to the provisions of Ss. (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 Ss. (3-A)
of Section 10-A 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 the dispute and all
persons who subsequently become employed in that
establishment or part."
13 The decision in The Bata Shoe Co. (P) Ltd. V/s. D. N.
Ganguly was cited in support of the submission that a
settlement during the conciliation proceedings to be
binding must be arrived at with the assistance and
concurrence of the Conciliation Officer.
14 The respondent's learned Advocate in reply obliquely
suggested in this connection that the Management and the
Union were free to arrive at a settlement of their
dispute and if they agreed to do so then the agreement
could not but be held to be binding. We do not think the
Management and the Union can, when a dispute is referred
to the Conciliation Officer, claim absolute freedom of
contract to arrive at a settlement in all respects
binding on all workmen, to which no objection whatsoever
can ever be raised by the workmen feeling aggrieved. The
question of a valid and binding settlement in such
circumstances is, in our opinion, governed by the statute
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and the rules made thereunder. Reliance was next placed
on Section 18(1) to support the binding character of the
settlement. This Ss. for its proper construction must be
read with the other Ss. and the relevant rules, in the
light of the definition of 'settlement' as contained in
Section 2 (p) of the Industrial Disputes Act.
'Settlement' as defined therein means settlement arrived
at in the course of conciliation proceeding and includes
a written agreement between the employer and workmen
arrived at otherwise than in the course of conciliation
proceeding where such agreement has been signed by the
parties thereto in such manner as may be prescribed and a
copy thereof has been sent to the appropriate government
and the Conciliation Officer. In the light of these
provisions we do not think that Section 18(1) vests in
the Management and the Union unfettered freedom to settle
the dispute as they please and clothe it with a binding
effect on all workmen or even on all member workmen of
the Union. The settlement has to be in compliance with
the statutory provisions."
(16) Thus, the Apex Court has held that the
question of a valid and binding settlement is
governed by the statute and the rules made
thereunder. It is also held that for giving
binding effect of a settlement, Section 18(1)
of the I.D. Act must be read with other
sections and the relevant rules, in the light
of the definition of 'settlement' as contained
in Section 2(p) of the I.D. Act. It is
asserted by the Apex Court that 'settlement',
as defined therein, means settlement arrived
at in the course of conciliation proceedings
and includes a written agreement between the
employer and workmen arrived at otherwise than
in the course of conciliation proceedings,
where such agreement has been signed by the
parties thereto in such manner as may be
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prescribed and a copy thereof has been sent to
the appropriate government and the
Conciliation Officer. Thus, the understandings
dated 02.05.2001 and 09.05.2001, which do not
comply with the requirements of the Act and
the Rules, cannot be enforced under section
33C of the I.D.Act.
(17) The Labour Court has no jurisdiction to issue
directions under the provisions of Section
33C(2) of the I.D. Act construing the
understandings dated dated 02.05.2001 and
09.05.2001 as final settlement. There was no
prior adjudication on the disputed claim. It
is well settled proposition of law, that where
the claims are disputed, the Labour Court has
no jurisdiction to entertain an application
filed under the provisions of section 33C(2)
of the I.D. Act. There was no final
settlement, and only in the proceedings before
this Court as recorded hereinabove in Civil
Application Nos.9961 of 2007 and 12914 of
2005, the most of the workmen have accepted
the full and final settlement. Thus, the said
understandings, which were arrived on
02.05.2001 and 09.05.2001, cannot in any
manner take the colour of settlement under
Section 2(p) of the I.D. Act and neither it
can be said to be a final settlement, which
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can be enforced under section 33C of the I.D.
Act.
(18) Hence, the writ petitions being Special Civil
Application Nos.15025 of 2005 and 23927 of
2005 succeed. The impugned order dated
07.04.2005 passed by the Labour Court,
Vadodara in Recovery Application No.128 of
2004 is quashed and set aside.
(19) So far as the prayers made in Special Civil
Application No.19164 of 2005 is rejected since
the Union had not challenged the order dated
21.04.2004 passed in Reference (IT) No.90 of
2003 by the Industrial Tribunal, Vadodara.
Even otherwise, the prayers made in the said
writ petition challenging the action of the
respondent-Company of stopping the production
and not granting the wages can only be
adjudicated in reference proceedings, which
was rejected and hence, the writ petition
fails.
(20) The Registry is directed to disburse the
amount with accrued interest, after due
verification to the rest of the concerned
workmen, who have not accepted the amount of
settlement as mentioned in the interim order
dated 30.07.2008 passed in Civil Application
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No.9961 of 2007 in Special Civil Application
No.15025 of 2005. It is clarified that they
are entitled to the amount as per the
directions and observation made in the order
dated 30.07.2008.
It is also clarified that the remaining 30% of
the amount with accrued interest, which is
deposited in the Registry of this Court shall
be refunded to the petitioner-Company.
(21) Rule is made absolute in the writ petitions
being Special Civil Application Nos.15025 of
2005 and 23927 of 2005. Rule discharged in
Special Civil Application No.19164 of 2005.
(22) Record and proceedings, if available, shall be
sent back to the concerned Labour Court
forthwith.
Sd/- .
[A.S.SUPEHIA, J]
***
Bhavesh-[pps]*
