: 1 : wp.8505+(3)corrected vss IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.8505 OF 2009 N.R.C. Employees' Union & Ors. .. Petitioners V/s. The Government of Maharashtra Department of Industries, Energy & Labour & Ors. .. Respondents a/w WRIT PETITION NO.8574 OF 2009 Vasant Ellanna Dhanekar & Ors. .. Petitioners V/s. The Government of Maharashtra Department of Industries, Energy & Labour & Ors. .. Respondents Mrs.Meena Doshi with Mr.Ravindra Nair for Petitioner in WP/8505/2009 Ms.Gayatri Singh with Ms.Bhavna Mhatre for Petitioner in WP/8574/2009 Ms.Neha Bhide, `B' Panel AGP, for Resp. Nos.1 & 2 in both petitions Mr.K.S. Bapat I/b Desai & Desai Asso. for Resp. No.3 in WP/8505/2009 and for Resp. No.4 in WP/8574/2009 Mr.S.K. Talsania, Sr.Counsel with R.V.Paranjpe for Resp. Nos.4 & 5 in WP/8505/2009 and for Resp. No.5 in WP/8574/2009 CORAM: B.H. MARLAPALLE & SMT.NISHITA MHATRE, JJ. : 2 : wp.8505+(3)corrected JUDGEMENT RESERVED ON: OCTOBER 10 , 2011 JUDGEMENT DELIVERED ON: NOVEMBER 28, 2011 JUDGMENT (PER SMT.MHATRE, J.): 1. These two petitions raise identical issues based on the same set of facts. They have therefore been heard together. Writ Petition No.8505 of 2009 has been filed by the NRC employees union and some of its members (for the sake of convenience, the petitioners in this petition will be referred to as the `staff union'). Writ Petition No. 8574 of 2009 has been filed by individual workers employed in the factory of the respondent company for themselves and on behalf of 2083 workers whose names are listed in exhibit A to the Writ Petition. (for the sake of convenience, the petitioners in this petition will be referred as `individual workmen'). Both these writ petitions, have been filed to challenge the execution and implementation of settlements which the employer i.e. the NRC Limited (for short, hereinafter referred to as the `company') has arrived at with NRC Mazdoor Sangh (for short, `the Mazdoor Sangh'), which claims to be a recognised union under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (for brevity the 'MRTU an PULP Act'). The principal challenge in both these petitions is to the settlement which is purportedly signed on 5.9.2008 in conciliation on the ground : 3 : wp.8505+(3)corrected that the mandatory requirements of section 12 of the Industrial Disputes Act,1947 and Rule 11 of the Industrial Disputes (Bombay) Rules, 1957 have been breached and, it is therefore, not binding on either the staff union and its members or the individual workmen of the factory. The settlement has also been challenged on the ground that it violates the provisions of section 25O and section 25N of the Industrial Disputes Act. 2. In order to appreciate the challenge to the settlements in these petitions it would be necessary to set out a few facts. FACTS: 3. The Company was running three plants with a composite factory licence for the manufacture of nylon, rayon and chemicals in its factory at Mohane in District Thane. The factory was established over 442.55 acres of land. The individual workmen were engaged in the factory and were represented by the Maharashtra General Kamgar Union till 2001. Thereafter, the certificate of recognition was granted to Respondent No.3 union i.e. the Mazdoor Sangh on an application being filed by it u/s 14 of the MRTU & PULP Act. The staff employed by the company worked in the Head Office which was situated outside the : 4 : wp.8505+(3)corrected precincts of the factory and in Mumbai city. The staff union was accorded recognition in 1991 under the MRTU & PULP Act and continued to represent the staff employed by the company. Several settlements were signed by it with the company in respect of the service conditions of the staff employed by the company; the last of such settlements was dated 25.8.1993 which was in force till 1996. Thereafter, the staff union raised a charter of demands for revision of the service conditions of the staff. The demands were referred for adjudication to the Industrial Tribunal under Reference (IT) No.10 of 1997. The Company too raised its demands qua the service conditions of the members of the staff union which were also referred for adjudication being Reference (IT) No.12 of 1997. Both these references are pending before the Industrial Tribunal. 4. The staff was shifted from the Mumbai offices located in the Eros Building and in Ewart House to the factory premises in Mohane during the period from April 1995 to March 1996. The Mazdoor Sangh which claims to have obtained recognition under the MRTU & PULP Act in the place of the Maharashtra General Kamgar Union in 2001 did not file an application in either of the references being Reference Nos.(IT) Nos.10 of 1997 and 12 of 1997 to permit it instead of the staff union to : 5 : wp.8505+(3)corrected represent the workmen i.e. the staff before the Tribunal. 5. It appears that the company was declared a sick company in 1987. As its net worth increased, by an order dated 10.1.1994 the Board for Industrial and Financial Reconstruction (for short, `BIFR') discharged the company from the purview of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, `SICA'). According to the Company, it undertook several measures in order to reduce the losses which it had incurred. However, in the financial year 2005-2006, there was a gradual erosion of the working capital of the company and consequently it was faced by a financial crunch. It appears that the Company decided to dispose off surplus land owned by it in the factory precincts in 2005-2006 in order to raise funds for the financial restructuring of the company. On 1.3.2007 it entered into an agreement to sell approximately 344 acres of land to K.Raheja Universal Ltd. on obtaining no objection certificates from its secured creditors, namely, several nationalised banks. The production activities in the nylon plant were discontinued by the company in November 2007. According to the company, it was required to undertake multifarious measures for restructuring its finances and while doing so, it entered into a settlement with the Mazdoor Sangh on 5.9.2008, which included a clause for an : 6 : wp.8505+(3)corrected early retirement scheme. The company claims that out of the total strength of 3725 employees, including the clerical staff, , about 577 opted for the scheme. The operations in the Rayon plant were stopped in July 2008. An application was submitted by the company to the BIFR u/s 15(1) of the SICA. It was declared a sick company u/s 17(3) of the SICA by the BIFR on 16.7.2009. An appeal was filed by the company before the AAIFR. The AAIFR reversed the findings of the BIFR and, therefore, writ petitions were filed in this Court by the company as also by the NRC Employees Union and the NRC Mazdoor Sangh. This Court disposed off those writ petitions by judgement and order dated 29.7.2011. The order passed by the appellate authority was set aside and the order passed by the BIFR was confirmed in those petitions by the Division Bench of this court to which one of us (Marlapalle, J.) was a party. 6 The staff union became aware of the settlement between the company and the Mazdoor Sangh which claimed to represent the individual workmen and other manual workers as well as the staff only when an application was submitted before the Tribunal by the company in the aforesaid references on 12.12.2008. In its application, the company requested the Tribunal to dispose off the references since it : 7 : wp.8505+(3)corrected had entered into a settlement in conciliation on 5.9.2008 with the recognised union, namely, the Mazdoor Sangh. The staff union has opposed this application submitted by the company on 12.12.2008. No orders have been passed as yet on that application. A lockout notice dated 15.11.2009 was issued by the company. That lockout has not been lifted as yet. 7. Three settlements have been challenged in these petitions i.e. the settlement of 5.9.2008, which the company claims is a settlement in conciliation and the subsequent settlements dated 10.12.2008 and 17.1.2009 signed u/s 2(p) by the company with the Mazdoor Sangh, extending the period within which the settlement dated 5.9.2008 was to take effect. GROUNDS ON WHICH THE SETTLEMENTS ARE CHALLENGED: 8. The principal grounds on which these settlements have been challenged in Writ Petition No.8505 of 2009 filed by the Staff Union are: (i) the Mazdoor Sangh could not enter into a settlement with respect to the staff as it did not represent the staff; (ii) the settlement dated 5.9.2008 is not a settlement signed in conciliation as the provisions of : 8 : wp.8505+(3)corrected the Industrial Disputes Act and the Rules framed thereunder have been violated; (iii) the settlement cannot be said to be binding on the staff when historically the service conditions of the staff have always been different from the factory workmen; (iv) the recognition accorded to the staff union in 1991 does not automatically come to an end because their workplace is shifted; (v) the settlements are in breach of section 33(1) of the Industrial Disputes Act as no permission has been obtained from the Industrial Tribunal where the aforesaid references are pending, before effecting a change in the working conditions of the staff by the three settlements challenged in the petition and (vi) these settlements have changed the service conditions, without issuing a notice of change under Section 9-A of the Industrial Disputes Act. 9. The individual workmen have challenged these settlements in the writ petition filed by them being writ petition No.8574 of 2009 on the grounds that: (i) no charter of demands was raised by the Mazdoor Sangh in respect of the terms of the settlement; (ii) the demands of the management which were admitted in conciliation were with respect to enhancing the production norms and reduction of 1800 persons through an early retirement scheme; (iii) the settlement violates the provisions of section 25-O, 25-M and 25-N of the Industrial Disputes Act and, : 9 : wp.8505+(3)corrected therefore, cannot be binding on the individual workmen; (iv) the conciliation officer has abdicated his statutory duties while terming the settlement of 5.9.2008 as a settlement signed in conciliation; (v) demands which were not admitted into conciliation could not be a part of a settlement in conciliation. 10. At the hearing of these two petitions, Mr. Talsania, the learned Counsel appearing for the Company, and Mr. Bapat, appearing for the Mazdoor Sangh, raised two preliminary issues, namely, that the writ petitions challenging the settlement in conciliation were not maintainable and that the petitioners in either petition did not have the locus to challenge the settlement, as the Mazdoor Sangh was the recognised union. MAINTAINABILITY OF THE WRIT PETITIONS - 11. It has been submitted on behalf of the respondents that once a settlement is signed in conciliation the only remedy which the union or individual workmen may have is to challenge that settlement by raising an industrial dispute. According to the learned Counsel appearing for the respondents, the present individual workmen or the staff union would have to raise an industrial dispute in respect of the settlement : 10 : wp.8505+(3)corrected dated 5.9.2008 in order to have it set aside and the High Court cannot do so in exercise of its powers under Articles 226 and 227 of the Constitution of India. Reliance is placed by the learned Counsel for the respondents on the judgements of the Supreme Court in the case of K.C.P. Ltd. v/s Presiding Officer & ors., (1996) 10 SCC 446; National Engineering Industries Ltd. vs. State of Rajasthan, (2000) 1 SCC 372; State of Uttaranchal vs. Jaipal Singh, (2005) 8 SCC 49; Jaihind Roadways vs. Maharashtra Rajya Mathadi and Transport General Kamgar Union & Ors., (2005) 8 SCC 511 and Captain S.C. Adhikari & Ors. vs. Air India (through its Managing Director) & Ors., 2001 LLN 1119 decided by a Division Bench of this Court in support of this submission. 12. It has been urged by Mrs. Doshi, learned Counsel appearing for the staff union, that this issue had been raised by the respondents when the petitions were heard for admission and it was only after the Court was satisfied that the petitions were maintainable that Rule was issued in both the petitions. According to her, the respondent company had approached the Supreme Court by way of Special Leave Petitions challenging the interim order passed by this Court while admitting the petition. Grounds with regard to the maintainability of the petition were : 11 : wp.8505+(3)corrected raised before the Supreme Court by the Respondents. The Special Leave Petitions were dismissed and, therefore, the respondents cannot raise the issue regarding the maintainability of the petition at this stage again, urged the learned Counsel. She has submitted that since there is a breach of section 12 of the Industrial Disputes Act and Rule 11 of the Industrial Disputes (Bombay) Rules while recording the settlement of 5.9.2008 as a “settlement in conciliation” the only remedy available to the staff union is to file the present petition. 13. Ms. Singh, appearing in the petition filed by the individual workmen reiterated the submissions advanced by Mrs. Doshi regarding the maintainability of the writ petition. She also submitted that a settlement could be signed by a recognised union only with respect to an industrial dispute and not regarding any and every dispute. According to her, some workmen including the petitioners who have been terminated from service as a consequence of the settlement of 5.9.2008 have challenged their respective termination orders on the ground that individual disputes cannot be settled by a recognised union when they are in respect of the suspension or the termination of service of the individuals, by way of discharge, dismissal, retrenchment, etc. : 12 : wp.8505+(3)corrected 14. The Division Bench of this Court while admitting the present petitions and granting interim relief has observed thus: 7. In our opinion, prima facie even assuming that the representative Union has entered into a settlement it can only be in respect of dispute which would partake of an industrial dispute and in respect of individual dispute which it has raised. It will not be open to the recognised union under the guise of settlement either to settle the disputes which are not industrial dispute and/or individual disputes which have been raised by the individual workmen in their personal capacity and are pending before the industrial forum for rights which they are entitled to under the existing service conditions or other settlements. 15. These observations of the Division Bench were obviously prima facie. However, they have been confirmed by the Supreme Court while dismissing the SLPs and, therefore, it would not be open to the respondents to agitate this issue again. We have however, considered the judgements cited by Counsel for the respondents and in our opinion, these judgements do not in any way indicate that the present writ petitions are not maintainable. In K.C.P. Ltd. (supra), the Supreme Court was concerned with the issue as to whether a settlement entered into between an employer and a trade union, otherwise than in conciliation proceedings, would bind dissenting members of the trade union. A number of workmen employed with K.C.P. Ltd. were dismissed. The conciliation proceedings with respect to their : 13 : wp.8505+(3)corrected termination from service were initiated by the sole recognized and representative union on being authorized by other workmen including the dismissed persons who continued to be its members. As the conciliation proceedings failed, the dispute was referred to the Labour Court for adjudication under Section 2(k) read with Section 10. The demand for reinstatement of the dismissed workmen was espoused by the trade union on their behalf. The dismissed workmen did not raise disputes individually and, therefore, the demand of each workman for reinstatement with continuity of service and back wages was not referred under Section 2-A of the Industrial Disputes Act. By an agreement between the union and the management, the dismissed workmen were provided an option either to avail of compensation with other monetary benefits or to accept conditional reinstatement. The dismissed workmen repudiated the settlement. The management and the union representing the workmen sought an award in terms of the settlement in the pending references. The Labour Court refused to pass such an award as 12 of the dismissed workmen had not accepted the settlement. In these circumstances, the Supreme Court observed that since the dispute was espoused by the union on behalf of the dismissed workmen, it was an industrial dispute as defined under Section 2(k) and not a dispute as envisaged under Section 2A of the : 14 : wp.8505+(3)corrected Industrial Disputes Act. As the settlement was fair and just, the Supreme Court observed that the Labour Court ought to have passed an award in terms of the settlement instead of continuing the reference in relation to the dismissed workmen who had repudiated the settlement. The Counsel for the respondents attempted to draw an analogy by submitting that the Mazdoor Sangh which was the recognised union was well within its rights in signing a settlement with the company, in conciliation, which was binding on every workmen employed by the company. This judgement, in our opinion, has no application to the facts of the present case. The references and/or complaints pending before the Industrial Tribunal/Labour Court in respect of the individual workmen in the present case have been initiated at the instance of the workmen themselves. Their cause has not been espoused by any trade union, much less the Mazdoor Sangh. In any event, the proviso to Section 18(1) of the Industrial Disputes Act in no uncertain terms provides that an agreement in respect of the dismissal, discharge, removal, retrenchment, termination of service, or suspension of an employee cannot bind the employee concerned after the agreement is signed between a recognised union and the management. Similarly, the proviso to Section 36(1) of the Industrial Disputes Act also enables a workman who challenges the legality or : 15 : wp.8505+(3)corrected propriety of an order of dismissal, discharge, removal, retrenchment, termination of service, or suspension to be represented either by a legal practitioner with the consent of the management and with the leave of the court or through an office bearer of any trade union, despite the presence of a recognized union in the establishment. Complaints with respect to the dismissal or discharge of a workman filed under the M.R.T.U. & P.U.L.P. Act can be prosecuted by individual workmen. Section 21 of this Act places an embargo on the appearance of an individual workman in a complaint filed in respect of unfair labour practices under Items 2 and 6 of Schedule IV of the MRTU & PULP Act. A complaint regarding dismissal or discharge of an employee would fall within Item 1 of Schedule IV of the MRTU & PULP Act. Therefore, the judgement of the K.C.P. Ltd. (supra) has no application to the present case. The contention that it is only the Mazdoor Sangh which could represent the individual employees and that the individual employees are bound by the settlement of 5th March, 2008 although it deals with their automatic termination from service and its consequences, is untenable and without merit. 16. In the case of National Engineering Industries Limited (supra) three different unions had submitted separate charters of demands in : 16 : wp.8505+(3)corrected 1986 which were identical in most respects. Conciliation proceedings were initiated and though a failure report was submitted by the conciliation officer in respect of the demands of one union, a settlement in conciliation was arrived at with the other two unions. The settlement was to be in operation for three years. All employees, including the members of the union whose demands resulted in a failure report, accepted the benefits of the settlement. The demands were later referred for adjudication by the appropriate government. The company contended that there were no demands pending and the members of the union which had obtained the reference had already accepted the benefit of the settlement. Consequently, there was no pending dispute which could be referred for adjudication. It is in these circumstances that the court held that when a representative union enters into a settlement and the workmen or other unions oppose that settlement on the ground that it is actuated by fraud, misrepresentation or concealment of facts, it would be a subject matter of yet another industrial dispute which an appropriate government may refer for adjudication. The Court has observed thus: “24. …........... When there is a dispute that the settlement is not bona fide in nature or that it has been arrived at on account of fraud, misrepresentation or concealment of facts or even corruption and other inducements it could be subject matter of yet : 17 : wp.8505+(3)corrected another industrial dispute which an appropriate Government may refer for adjudication after examining the allegations as there is an underlying assumption that the settlement reached with the help of the Conciliation Officer must be fair and reasonable. …........” 17. These observations have been reiterated in the case of Jaihind Roadways vs. Maharashtra Rajya Mathadi and Transport General Kamgar Union & Ors. (supra). However, in the present petitions what has been challenged is a settlement purportedly arrived at in conciliation. The ground of challenge as we have mentioned earlier is mainly that the conciliation officer abdicated his role of an unbiased facilitator of a settlement and breached the provisions of section 12 of the Industrial Disputes Act r/w Rule 11 of the Industrial Disputes (Bombay) Rules. Exception has been taken by the Petitioners to the procedure adopted by the conciliation officer in order to arrive at a settlement in conciliation. While doing so, the petitioners have also brought to our notice the patent illegalities of the settlement. In our opinion, the facts in the present case are different from the facts in the aforesaid judgements cited by the respondents inasmuch as the process of conciliation or the role of the conciliation officer was not impugned in those cases. Therefore, the writ petitions are maintainable. : 18 : wp.8505+(3)corrected 18. In the case of Provisional Liquidator, Ramakrishna Industries (Pvt.) Ltd. & Ors. vs. Workers Jothi Mills & Ors., 1992 II LLJ 797 Mad., the prayer in the writ petition was that the settlement entered into u/s 12(3) of the Industrial Disputes Act be quashed and for further appropriate orders. The grounds raised in the petition were almost identical to the ones raised in the present petitions. The learned Single Judge of the Madras High Court had allowed the writ petition filed by the workmen. This decision was impugned before the Division Bench of the Madras High Court in the appeal filed by the company. The grounds raised in the writ petition as noted by the Division Bench were as follows: 5. the conciliation officer did not induce the parties to come to a fair and amicable settlement of the dispute. He merely and mechanically signed at the bottom of the settlement without any application of mind; (ii) the settlement was not in conformity with the provisions of sections 12(2) and 12(3) of the Industrial Disputes Act; (iii) the settlement was in breach of Chapter V-A and V-B of the Industrial Disputes Act patently containing arbitrary and unreasonable stipulations without any rhyme or reason. The learned Single Judge had issued a declaration that the settlement was not one arrived at in the course of conciliation proceedings u/s 12(3) of the Act and, therefore, was void and would have no effect qua the petitioner workmen. On behalf of the company, it was submitted : 19 : wp.8505+(3)corrected that the question raised before the learned Single Judge ought to have been adjudicated upon by raising an industrial dispute and not in the exercise of powers under Article 226 of the Constitution of India. The Division Bench observed that when certain features of the settlement established that there were gross violations of the mandate of