ORDER [ENTITY], J.
Page 1735
1. The counsel for the parties were heard at length.
2. The brief facts of the case are as follows:
The petitioner, [ENTITY], is a co-operative society registered under the [ACT] (hereinafter referred to as the [ACT], for brevity). The Government of Karnataka holds 90% of the share capital in the said society. A ginning and pressing factory at Hubli, is a unit run by the petitioner. Respondent No. 1, the [ENTITY], is said to represent workmen engaged by the petitioner at the said unit.
The ginning factory, established in the year 1976, was intended to support cotton growers and traders in the area. The operation of the unit was seasonal, as it could operate only during the season when cotton was made available. Hence there was no need to employ a large contingent of permanent employees. When the unit was operational during the season, workmen were employed on daily wages and were paid once a week, for the number of days' of engagement.
Owing to adverse conditions, such as lack of raw material, increasing costs, labour unrest & adverse marketing conditions - the petitioner Page 1736 took a decision to close down the unit. Accordingly, the petitioner is said to have issued a notice of closure in terms of [SECTION] FFA of the [ACT], (hereinafter referred to as the [ACT]), declaring its intention to close down the unit with effect from 13-2-2002 as per notice dated 13-12-2001. According to the petitioner, at the relevant point of time, it had employed 17 permanent employees. And the total number of persons engaged by it during the preceding year, including daily wagers, was 73 in number. It is the petitioner's case that all those 73 workmen were paid closure compensation along with other benefits in accordance with [SECTION] FFF of the [ACT]. In this regard the petitioner had produced all the relevant material before the competent authority, for verification of satisfactory compliance with the requirements under the above provisions of law.
By way of a petition dated 29-1-2002 and a further representation dated 14-2-2002, the first respondent is said to have raised an industrial dispute, espousing the cause of the daily wage workers engaged by the petitioner as narrated above. In conciliation proceedings, before the Assistant Labour Commissioner & Conciliation Officer, the representatives of the workmen and the petitioner were able to resolve the dispute and entered into a settlement dated 28-5-2002, under [SECTION] of the [ACT] in the presence of the Conciliation Officer. The petitioner states that though it was legally obliged to address the demand of only the 73 workmen, engaged by it during the relevant time, the petitioner had also considered the claim of 159 other persons who had been engaged by it at a point of time even prior to the one year preceding closure of the unit. The petitioner had accordingly paid an additional sum of Rs. 5.40 lakh to be distributed amongst those 159 other persons. This act of the petitioner was only in order to give a quietus to the dispute.
It transpires that the first respondent had filed applications dated 21-10-2002 & 13-11-2002 claiming a sum of Rs. 9.02 lakh towards wages of 52 workmen for the period 11-1-2002 to 11-10-2002 and a sum of Rs. 7.80 lakh as wages in respect of 45 workmen for the same period as above, respectively. Upon receipt of notice from the second respondent in this regard the petitioner had opposed the applications while referring to the Settlement entered into earlier. The Second respondent has however, allowed the applications by orders dated 11-11-2003. The petitioner has approached this Court when the said amounts were sought to be recovered as arrears of land revenue, pursuant to the above orders.
3. The counsel for the petitioner raises the following contentions:
Firstly, that the very applications filed under [SECTION] of the [ACT] were not maintainable. The petitioner being a society governed under the provisions of the [ACT] and the first respondent Page 1737 having made a claim in respect of wages of employees on the ground that the closure was illegal - any such dispute would fall within the purview of [SECTION] of the [ACT]. The Registrar of Co-operative Societies has exclusive jurisdiction in respect of such disputes and there is an express bar on any other for exercising jurisdiction in respect of the same. Hence the impugned orders are wholly without jurisdiction.
4. The counsel would further contend, that without prejudice to the above preliminary objection, the second respondent has overlooked the fact that proceedings under [SECTION] are in the nature of execution proceedings and it is only when an employee has an existing right under a settlement or an award that the authority can proceed to compute the benefit that may be due thereunder and issue a certificate and not otherwise. There was no such settlement or award whereby the petitioner was required to pay the amounts as now sought to be recovered. The main contention of the first respondent in the applications was that the closure of the factory was without compliance with [SECTION] of the [ACT]. The petitioner had met this allegation by demonstrating that it had never employed more than 100 workmen on an average working day in the preceding 12 months prior to the proposed closure by producing the relevant records. In fact the maximum number of workmen engaged had only been 73, hence it was required to follow the procedure laid down in [SECTION] and not in [SECTION] for effecting closure. In any event the petitioner having disputed the application of the said [SECTION] it was impermissible for the authority to adjudicate thereon.
5. It is contended that the applications were also not maintainable in view of the settlement dated 28-5-2002, under which the workmen had received their due. The second respondent had, after taking note of the said circumstance, erroneously opined that since under the settlement, 159 persons had been paid monies, the provisions of [SECTION] were attracted.
6. The counsel places reliance on the following authorities:
Municipal Corporation of Delhi v. [ENTITY] and Anr. : In that case the claim of the workmen who were daily rated workers to be paid at the same rate as the regular workers had not been earlier settled by adjudication or recognition by the employer without which the stage for computation of that benefit could not reach. The apex court held, the dispute relating to entitlement is not incidental to the benefits claimed and would hence be outside the scope of a proceeding under [SECTION] of the Act. It is only when the entitlement has been earlier adjudicated or recognized by the employer and thereafter for the purpose of implementation or enforcement thereof some ambiguity requires interpretation that the interpretation is treated as incidental to the Labour court's power under Page 1738 [SECTION] like that of the Executing court's power to interpret the decree for the purpose of its execution.
[PRECEDENT]. : While following the ratio laid down in [ENTITY]'s case - the apex court has held that when the maintainability of an application under [SECTION] is questioned, the same has to be determined at the threshold - it is only if the application is found to be maintainable that the question of examining the claim on merits would arise.
[PRECEDENT]
While interpreting the scope of [SECTION] of the [ACT], has held as follows:
The Legislature in consonance with the laudable objective to provide cheap and speedy remedy to the working class has enacted [SECTION] providing a procedure to enable an individual workman to a speedy remedy to enforce his individual right without recourse to the provisions of [SECTION] of the Act or without having to wait for the Trade Union to which he belongs to espouse his cause. [SECTION] provides both a forum and the procedure for computing both monetary as well as non-monetary benefits in terms of money and further provides machinery for recovery of such claims. [SECTION] applies to cases where money is due to a workman from an employer under an award or settlement under the provisions of [SECTION] or [SECTION] of the Act already calculated and ascertained and, therefore, there is no dispute about its computation. [SECTION] is a provision in the nature of execution proceedings and it contemplates that if money is due to a workman under a settlement or an award or under the provisions of [SECTION] or [SECTION] of the Act, he is not compelled to take recourse to the ordinary course of execution in a Civil Court, but may adopt a summary procedure prescribed by [SECTION]. The provision of [SECTION] enables a workman to make an application to the "appropriate Government" for issue of certificate for any money due to him under an award or a settlement or under the provisions of [SECTION] or [SECTION] of the Act to the Collector for its recovery as arrears of land revenue. If, on such application being made under [SECTION], the appropriate Government is satisfied that a specific amount is due to the workman, then, it will issue a certificate to the Collector for recovery of the amount under the [ACT]. It is not essential that the claim Page 1739 which can be brought before the Government or its delegate like the Commissioner under this provision must always be for a predetermined sum. The Government or its delegate may satisfy itself about the exact amount and then take action under this [SECTION]. It is verification of the claim to money within [SECTION] and not determination in terms of money of the value of a benefit. In other words, where the amount to be executed is worked out in an award or settlement, or where it may be worked out without any dispute, [SECTION] will apply. The satisfaction of the "appropriate Government" or its delegate, which sub-section (1) speaks of, is the prima facie satisfaction when a claim is made by any workman before it for issuance of a certificate by the Collector for realisation of the amount due. If the appropriate Government or its delegate finds that the amount claimed by the workman is due and there is no such dispute which need any adjudication by the Labour Court under [SECTION] and the claim is bona fide, then, the Government or its delegate shall issue a certificate for the amount due, to the Collector, who shall proceed to recover the same in the manner as an arrear of land revenue. But, the appropriate Government or its delegate in the grab of the power conferred under [SECTION] cannot undertake adjudication of disputed claims. [SECTION] is not meant to establish a right; rather, it is meant to enforce an established right. In that view of the matter, we hold that, the Commissioner of Labour has exceeded his jurisdiction in granting the certificate sought by the workmen when their claim to lay-off compensation is seriously disputed by the Management. The entitlement of the workmen to lay-off compensation cannot be decided in an application filed under [SECTION] of the Act.
[PRECEDENT] : The questions that arose for consideration in the above case were:
a) Whether the jurisdiction of the Labour court under the [ACT] was barred by [SECTION] of the [ACT], with reference to co-operative societies and if so, from when.
b) Even if the Labour court had jurisdiction, whether the workman was entitled to file an application under [SECTION] of the [ACT] in respect of a cause of action which occurred in 1978.
The apex court, after examining the "metamorphosis" of [SECTION] of the [ACT] and on examination of the decided cases found that the decision of a Division Bench of this Court in [PRECEDENT] in laying down that once a specific procedure and effective remedy is provided under the [ACT], it ipso facto excluded the settlement of disputes under [SECTION] of the [ACT] had overlooked the fact that [ACT], ( by which Clause (d) was inserted in [SECTION], and which provided that Page 1740 any dispute between a co-operative society and its employees (past or present) in regard to terms of employment, working conditions and disciplinary action will be deemed to be a dispute to be decided by the Registrar of Societies under [SECTION], had not received the assent of the President of India. The apex court has opined, that therefore the jurisdiction of the Registrar under [SECTION] as expanded by [SECTION], could not prevail over the provisions of the [ACT]. If the amendment to [SECTION] by [ACT] should be read or construed as having the effect of enabling [SECTION] of [ACT] to prevail over the provisions of the [ACT], then the said [ACT]) would have required the assent of the President under [SECTION] of the [ACT]. There was no such assent.
The apex court has also held that the above view in [PRECEDENT] (supra) has been approved and reiterated by a Full Bench of this Court in the case of [PRECEDENT]. In view of the above infirmity, the Supreme court has overruled both the decisions.
The resultant legal position is summarized as under:
(a) Even though Clause (d) was added in [SECTION] with effect from 20.1.1976, [SECTION] did not exclude or take away the jurisdiction of the Labour Courts and Industrial Tribunals under the [ACT] to decide an industrial dispute between a Society and its employees. Consequently, even after insertion of Clause (d) in [SECTION] with effect from 20.1.1976, the Labour Courts and Industrial Tribunals under the [ACT], continued to have jurisdiction to decide disputes between societies and their employees.
(b) The jurisdiction of Labour Courts and Industrial Tribunals to decide the disputes between co-operative societies and their employees was taken away only when [SECTION] and [SECTION] were amended by [ACT] and the amendment received the assent of the President on 18.3.2000 and was brought into effect on 20.6.2000.
(c) The jurisdiction to decide any dispute of the nature mentioned in [SECTION] of the [ACT], if it answered the definition of industrial dispute, vested thus:
(i) exclusively with Labour Courts and Industrial Tribunals till 20.1.1976;
(ii) concurrently with Labour Courts/Industrial Tribunals under INDUSTRIAL DISPUTE Act and with Registrar under [SECTION] of the [ACT] between 20.1.1976 and 20.6.2000; and
(iii) exclusively with the Registrar under [SECTION] of the [ACT] with effect from 20.6.2000.
The counsel would therefore pray that the appeal be allowed.
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7. Shri. [ENTITY], Senior Advocate, appearing for the counsel for the respondents, would contend that the ginning and processing factory at Hubli, is a manufacturing unit of the petitioner Corporation. Though it is situated at Hubli, it is a part of the petitioner and there is functional integrality. It can therefore be said that there are more than 200 workmen, as defined under the [ACT]. The claim of the petitioner that they have closed the establishment at Hubli, would be valid only if there is compliance with the provisions of [SECTION] of the [ACT]. Admittedly, there was no application filed by the Management seeking permission for closure. Hence, there is no valid and legal closure. The consequence is that [SECTION] of the [ACT] would come into play. This, read with [SECTION] creates a right in the workmen for wages. The second respondent having been satisfied with the claim made by the workmen, has passed the impugned order. The main ground on which the petitioners seek to rest their case is that there was a settlement and it is from the very settlement that the authority has gleaned that there were more than one hundred workmen on the petitioner's rolls and in the absence of any material to indicate that the provisions of [SECTION] are not applicable to the petitioner's establishment, the authority has proceeded to pass the order. The added circumstance that 95% of the workmen were women and illiterate, could not be foisted with a so-called settlement, depriving them of their due. It was a fraud played by the Management on the workmen in collusion with a private party, who was a money lender for the workmen and who was in the fore-front, to ensure that he extracted money from the workmen in the name of a settlement and the counsel would submit that such a settlement which is opposed to public policy, would be void in law.
8. In so far as the contention that the authority had no jurisdiction to pass an order under [SECTION] of the [ACT] in view of [SECTION] of the [ACT], is concerned, this is also not tenable. In any event, this contention was not raised before the authority and it is for the first time that it is so contended before this Court. It is a contradiction in terms for the petitioner to claim that a settlement has been arrived at under the provisions of the [ACT], while also contending that any dispute would have to be resolved in terms of [SECTION] of the [ACT]. The Senior Advocate would contend, that for enforcement of a collective dispute pertaining to an illegal closure and payment of wages, could only be in terms of [SECTION] of the Act and the contentions to the contrary are untenable. He would place reliance on the following authorities:
[PRECEDENT]. : An industrial dispute arose between several Co-operative banks and their workmen, the Government having referred the dispute to the Industrial Tribunal under [SECTION] of the [ACT], it was contended before the Tribunal that the reference Page 1742 was invalid because such disputes were required to be referred for decision to the Registrar of Cooperative Societies under the provisions of the [ACT]. The Tribunal dealing with this contention as a preliminary issue, rejected the contention. That decision was challenged unsuccessfully by way of a writ petition before the High Court. And the appellants were before the apex court. The court held that the dispute related to alteration of a number of conditions of service of the workmen which relief could only be granted by an Industrial Tribunal. The Registrar could not possibly have granted the relief, because of the limitations placed on his power. The meaning given to the expression "touching the business of the society", in the relevant section conferring the power of adjudication of the dispute by the Registrar, would not extend to the power of alteration of conditions of service of employees. The laying down of the conditions of service of its employees is not an act where the Society can be said to be acting in the course of its business. And hence a dispute relating to conditions of service of the workmen of the Society cannot be held to be a dispute touching the business of the society. And that it is the Industrial Tribunals which have the right even to vary conditions of service between the employer and the employees which jurisdiction can never be exercised by a civil court or a Registrar acting under the [ACT].
[PRECEDENT]: The Apex court has held that [SECTION] & [SECTION] of the [ACT] are imperative in character and would prevail over the right of parties to arrive at any settlement. And further, any such settlement must conform to the statutory conditions laying down a public policy. A contract which may otherwise be valid, however, must satisfy the test of policy not only in terms of the above provisions but also in terms of [SECTION] of the [ACT]. The consequences flowing from such mandatory requirements as contained in [SECTION] & [SECTION] must therefore be given fall effect. A settlement arrived at between an employer and workmen in the course of conciliation proceedings within the meaning of [SECTION] [SECTION] of the [ACT] would not prevail over the statutory requirements under the above said provisions.
The Central Bank of India Ltd v. P.S. [ENTITY] : That was a case in which the question of maintainability of proceedings under [SECTION] of the Act was considered in a claim made by the workmen on the basis of the Sastry Award. The employer disputed the claim of the workmen on several grounds including the applicability of [SECTION] of the Act. It was urged that since the applications involved a question of interpretation of the Sastry Award, they were outside the purview of [SECTION] because interpretation of awards Page 1743 or settlements have been expressly provided for by [SECTION] This objection was rejected. It was pointed out that there is a difference in the scope of [SECTION] and [SECTION]. The former is not concerned with the implementation or execution of the award whereas that is the sole purpose of [SECTION]; and whereas [SECTION] deals with cases of implementation of individual rights of workmen falling under its provisions, [SECTION] deals merely with a question of interpretation of the award where a dispute arises in that behalf between the workmen and the employer and the appropriate Government is satisfied that the dispute deserves to be resolved by reference under [SECTION] In this context, the apex court also indicated that the power of the Labour Court in a proceeding under [SECTION] being akin to that of the Executing Court, the Labour Court is competent to interpret the award or settlement on which a workman bases his claim under [SECTION] like the power of the Executing Court to interpret the decree for the purpose of execution. But the power does not extend to determination of the dispute to entitlement or the basis of the claim if there be no prior adjudication or recognition of the same by the employer.
The [PRECEDENT] : The apex court has laid down the principles applicable to the jurisdiction of the Civil Courts in relation to an industrial dispute, thus:
(1) If the dispute is not an industrial dispute, nor does it relate to enforcement of any other right under the Act the remedy lies only in the Civil Court.
(2) If the dispute is an industrial dispute arising out of a right or liability under the general common law and not under the Act, the jurisdiction of the Civil Court is alternative, leaving it to the election of the suitor concerned to choose his remedy for the relief which is competent to be granted in a particular remedy.
(3) If the industrial dispute relates to the enforcement of a right or an obligation created under the Act, then the only remedy available to the suitor is to get an adjudication under the Act.
(4) If the right which is sought to be enforced is a right created under the Act such as [SECTION] then the remedy for its enforcement is either [SECTION] or the raising of an industrial dispute, as the case may be.
The senior advocate would hence contend that the appeal be dismissed.
9. On these rival contentions the questions that arise for consideration are
a) When the claim of respondent No. 2 was disputed, whether the same could be decided in proceedings under [SECTION] of the [ACT]. Especially since the petitioner is a Society governed under the [ACT].
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b) Whether the petitioner was required to comply with the provisions of [SECTION] or [SECTION] in proceeding to close the factory run by it.
In answering these questions the settled legal position as to the scope of [SECTION] of the [ACT] as laid down in [ENTITY]'s case supra may be kept in view, namely, that the power of the Labour court, under the Section, extends to interpretation of the award or settlement on which the workman's right rests like the executing court's power to interpret the decree for the purpose of execution, where the basis of the claim is referable to the award or settlement, but it does not extend to determination of the dispute of entitlement or the basis of the claim if there be no prior adjudication or recognition of the same by the employer. And further, as held in National Textile Corporation (APKK & M) supra, by a division bench of this Court, that for an application to be made under [SECTION] of the [ACT], it is not essential that a claim brought before the Government or its delegate like the Commissioner must always be for a pre-determined sum. The Government or its delegate may satisfy itself about the exact amount and then take action under this sub-section. It is the verification of the claim to money and not determination in terms of money or the benefit.
10. Not withstanding the above legal position the argument canvassed by the respondent is that when there was breach of a mandatory requirement of compliance with [SECTION] of the [ACT], [SECTION] would operate and a right is created in the aggrieved workmen upon such breach. Such a right is a preexisting one as on the date of application under [SECTION]. The sum of money payable is merely subject to verification. There is no determination warranted, either of the right or the sum of money claimed.
11. But as rightly contended by the counsel for the petitioner, there is a breach only if the provisions of [SECTION] are made applicable. Since on facts it is borne out by material on record that the petitioner had not employed more than 100 workmen at any time in the one year preceding the date of proposed closure, [SECTION] was not attracted. In any event, if this was a disputed question, it was not capable of being adjudicated before the Second respondent. Whether such a dispute can be resolved before the Registrar of Co-operative Societies in terms of [SECTION] of the [ACT] or by recourse to an industrial dispute under the provisions of the [ACT], is kept open.
12. The writ petition is allowed. Annexures M & N are quashed. No costs.
13. The writ petition in [CASE NUMBER] which involves identical circumstances but pertaining to a different period of the very petitioner, is also allowed. Annexures "C" and "D" are quashed. No costs.