IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 02.02.2007 THE HONOURABLE MR.JUSTICE P.JYOTHIMANI W.P.No.34938 of 2006 Axles India Workers' Union (Regd.No.CPT/952) Rep.by its Secretary, 3, Kambar Street, Gandhi Nagar, Sriperumbudur, Thiruvallur District. ... Petitioner Vs. 1. The Government of Tamil Nadu, Rep.by its Secretary to Government, Labour & Employment Department, Fort St.George, Chennai 600 009. 2. The Commissioner of Labour, Labour Welfare Building, D.M.S.Compound, Chennai 600 006. 3. The Joint Commissioner of Labour, Labour Welfare Building, D.M.S.Compound, Chennai 600 006. 4. The Management of Axles India Ltd. Singaperuperumal Koil Road, Sriperumbudur 602 105. 5. Tamil Nadu National Engineering Employees Union, (I.N.T.U.C.), I.N.T.U.C.Bhavan, Rep.by its General Secretary, No.270, M.T.H.Road, Sidco Estate, Ambattur, Chennai 600 098. ... Respondents PRAYER: This writ petition is filed under Article 226 of the Constitution of India to issue a writ of declaration declaring the impugned settlement dated 17.05.06 arrived at under Section 12(3) of the Industrial Disputes Act, 1947 before the 3rd respondent between respondents 4 and 5 is binding only on the members of the 5th respondent Union and not the members of the petitioner union. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner : Ms.R.Vaigai for Mr. K.M.Ramesh For Respondents R1 to R3 : Mr.D.Srinivasan G.A. Mr.A.L.Somajee, S.C. for Mr.N.Balasubramanian for R4 Sairaj Associates for R5 O R D E R The writ petition is filed for a declaration that the settlement entered under Section 12(3) of the Industrial Disputes Act, dated 17.05.2006 before the third respondent between 4th and 5th respondents, is binding only on the members of the 5th respondent union and not on the petitioner union. 2. According to the petitioner union, the petitioner union is representing the workmen employment in the 4th respondent management in factory at Sreeperumpudur with membership of 61 workmen and 18 workmen in Gumidipundi out of the total number of workmen numbering 170. The 4th respondent management has transferred 23 workers on 12.09.2001 working in Sreeperumpudur factory to Gumidipundi factory, at the time, when the 4th respondent was not having factory at Gumidipundi at all and the transfer was only for victimization. When the 4th respondent management has withdrawn "on duty permission" granted to workmen, which was protested, they have announced a scheme for voluntary retirement, those who were not opting for voluntary retirement scheme were transferred to far of places like TATA Nagar, Jamshedpur and other places. There was also alteration of service condition which was protested and the 4th respondent management has issued memo to 16 workmen in respect of the said alteration of service condition in fixing the norms to its new products called R.A.109. 3. The 4th respondent management issued show-cause notice to 16 workmen for not giving production and imposed lockout in respect of them and the matter was referred to the Industrial Tribunal, Chennai, which has passed award in favour of workmen. However, the 4th respondent has challenged the same and it is pending before this Court. The 5th respondent union was started in the year 2003 at the instance of the 4th respondent in which 14 permanent workers were members. However, the 4th respondent has neglected the petitioner union, which is a majority and recognized union and entered 18(1) settlement on 03.09.2003 with the 5th respondent, for increasing production by nearly double the existing production. The said settlement, which was entered with the members of the 5th respondent union, which is binding upon the 15 permanent workers, has been insisted by the 4th respondent management, to be followed in respect of the petitioner union also. https://hcservices.ecourts.gov.in/hcservices/ 4. The petitioner union has raised a dispute about the transfer of 23 workmen from Sreeperumpudur to Gumidipundi. The Government has referred the dispute only regarding transfer and not relating to unfair labour practice, committed by the 4th respondent and therefore, the petitioner union has filed the Writ petition, which is pending. The petitioner union entered a settlement on 01.09.1999 with 4th respondent, which was to be in force for 3 years period. It was in those circumstances, no fresh demands were made due to the conduct of the management. After the agreement with the 5th respondent dated 03.09.2003 with the minority members, the 4th respondent has entered another agreement under Section 18(1) with the 5th respondent union on 04.02.2004 and 02.01.2004 in line with the earlier settlement dated 03.09.2003. The 4th respondent has also regularized the service of some of the apprentice in order to strengthen the 5th respondent union, by which the membership of the 5th respondent has increased. 5. According to the petitioner union, since the settlement didn't materialise at the instance of the 4th respondent, the 5th respondent has raised the Industrial Dispute before the 3rd respondent, about which the petitioner union was not aware and the third respondent has also not given notice regarding the conciliation. After several round of discussion on the said dispute, the third respondent has issued a notice to the petitioner union on 03.02.2006 as a formality fixing the date as 09.02.2006 at 11.30 a.m. That day was declared as holiday and no meeting was held. There was another notice dated 10.02.2006 fixing the date of meeting at 16.02.2006 at 4.00 p.m. On that day, the third respondent has assured that he would supply the copies of Industrial Disputes raised by the 5th respondent union and the matter was adjourned to 15.03.2006 and there was no meeting on the said date and the petitioner were informed that subsequent notice will be issued. It was thereafter another notice dated 19.04.2006 was received, fixing the meeting on 27.07.2006 at 4.00 p.m. When the petitioner has again requested the third respondent to supply the papers especially relating to the disputes raised by the 5th respondent, the third respondent has adjourned, saying that notice for further meeting will be intimated. A notice dated 12.05.2006 was sent by the 3rd respondent, which was received by the petitioner on 12.05.2006 fixing the meeting on 17.05.2006 at 4.00 p.m. On that day a letter from the petitioner union was submitted to the 3rd respondent, requesting the 3rd respondent to furnish the copies of the disputes raised by the 5th respondent and the comments made by the 4th respondent on dispute. The 3rd respondent has received the papers and asked the representative of the petitioner union to go. However, on 18.05.2006, the 4th respondent management has displayed in the notice board at Sreeperumpudur factory, a copy of the settlement said to have been signed on 17.05.2006 in the presence of the 3rd respondent between the 4th and 5th respondent. It was thereafter the petitioner union sent a detailed representation on 22.05.2006 to the third respondent stating that the said settlement is https://hcservices.ecourts.gov.in/hcservices/ illegal and arbitrary. As per the alleged settlement dated 17.05.2006 stated to have entered under section 12(3) of the Industrial Disputes Act, the 4th respondent has given a legal sanctity to the earlier settlement entered under Section 18(1) between the 4th and 5th respondents, in order to bind the entire work force of Sreeperumpudur and Gumidipundi of the 4th respondent management. 6. Thereafter, the third respondent has furnished a copy of the said settlement dated 17.05.2006, which has revealed that the 5th respondent has made a charter of demand on 24.03.2005. However, in respect of arriving at such settlement under Section 12(3) of the Industrial Disputes, there was no discussion with the petitioner union and the 3rd respondent has deliberately avoided the petitioner union. Therefore, the said 12(3) settlement is challenged on the ground that it is illegal, unfair, arbitrary and unjustified. It is also challenged on the ground that the 3rd respondent has exceeded its jurisdiction and the 3rd respondent has abdicated his powers and jurisdiction and committed grave illegality, apart from the contentions that the settlement has not been arrived at after proper discussion and the same was entered hastily and with oblique motive. 7. According to the petitioner, the 4th respondent management influenced the third respondent to convert 18(1) settlement in to that of 12(3) settlement so as to improperly make binding effect on all the workmen of the 4th respondent management. It is also the case of the petitioner union that the benefit of increased dearness allowance provided by the impugned settlement has not been extended to the members of the petitioner union. On the other hand, for not giving production as stipulated under the impugned settlement, the members of the petitioner union are facing wage-cut to the extent of Rs.1800 to 3500 per month. In view of the same the present Writ petition is filed. 8. The 4th and 5th respondents have filed the counter affidavit. The respondents would state that the writ petition is not maintainable, in view of the availability of alternative remedy under the Industrial Disputes Act. It is also the case of the respondents that the matter requires factual issues and that cannot be decided in a Writ petition. In addition to that the 4th respondent has also contraverted the various averments made by the petitioner in the Writ petition. 9. While it is admitted that in the Sreeperumpudur factory of the 4th respondent, there are 159 permanent workmen and the petitioner union consist of the workers of the 4th respondent, it is the case of the 4th respondent that the 5th respondent union has 112 members while the petitioner union has only 59 members. Therefore, according to the 4th respondent the 5th respondent union is the majority and recognized union and the monthly union subscription deducted in respect of the 112 members by the 4th respondent from the wages. According to the 4th respondent, the https://hcservices.ecourts.gov.in/hcservices/ petitioner union, has become minority and has lost its recognition. When the majority workers are working for 6 days a week in 3 shifts work pattern from March 2003, the petitioner union has refused for changing from 5 days a week in 2 shifts per day pattern to 6 days a week 3 shifts per day pattern. The working hours per week remains as 45 hours per week in both 5 days per week 3 shifts per day pattern and 6 days a week 3 shifts per day pattern. Majority of the members of the 5th respondent union were working on 6 days a week 3 shifts per day pattern and therefore, the system was introduced from November 2003, after prescribed form served under Section 9(A) of the Industrial Disputes Act, to the petitioner union and to the Government. Instead of complying with the request the petitioner union has approached this Court and filed W.P.No.22446 of 2004, which was dismissed, against which the Writ Appeal in W.A.No.3780 of 2004 was filed, which was also dismissed. 10. According to the 4th respondent, the petitioner union is indulging in go-slow production tactics. The factory production is line flow with 34 machines in a sequence operation and even if one machine fails to give the standard output, the entire flow line operation will be adversely affected and therefore, according to the 4th respondent it is relevant that the production is maintained in all 34 machines / operation uniformly for the purpose of maintaining optimum production. It was due to the slowing down attitude of the members of the petitioner union 49 percent of output is adversely affected resulting in financial loss to the 4th respondent. Due to the pressure from the customers, the 4th respondent had to maintain high quality of its products and timely deliver since it is a buyer market. By working 2 shifts per day for 5 days pattern a week, Sreeperumpudur factory had incurred a very huge loss amounting to 469 lakhs in 1997-1998, 373 lakhs in 1998-1999, 170 lakhs in 2000-2001, 224 lakhs in 2001-2002, 309.29 lakhs in 2002-2003 at the same time the 4th respondent second factory at Cheyyar working 3 shifts of 7.5 hours per shift 6 days per week was able to keep cost at required level. 11. According to the 4th respondent, the 5th respondent union which is majority union, has submitted a charter of demand for revision of wages and allowances on 24.03.2005 and the said union has also raised Industrial Disputes to the Joint Commissioner of Labour, the third respondent. There has to a bilateral discussion in order to arrive at settlement. According to the 4th respondent, the 3rd respondent has issued notice not only to the 4th and 5th respondent but also to the petitioner union on several days and therefore, according to the 4th respondent, the petitioner union was also a party to the conciliation proceedings held before the 3rd respondent and the petitioner union has deliberately refused to discuss the matter with the 4th and 5th respondents and refused to sign the conciliation proceedings, even though the petitioner union has attended the conciliation proceedings meeting. https://hcservices.ecourts.gov.in/hcservices/ 12. According to the 4th respondent, even as per the papers filed by the petitioner union, the petitioner union has issued notice to the third respondent and the petitioner union had been served with a copy of charter of demand dated 24.03.2005 submitted by the 5th respondent. Even though the 5th respondent has taken the reasonable stand according to the 4th respondent, the petitioner union has not acceded to the same. According to the 4th respondent, in those circumstances the 12(3) settlement was entered which was fair and reasonable and is binding upon the petitioner union also. The settlement entered between the petitioner union and the 4th respondent dated 01.03.1999, which was to be in effect upto 28.02.2002, was terminated by the petitioner union itself on 29.01.2002 and thereafter the petitioner union has not given any charter of demands. Therefore, the settlement entered between the petitioner union and the 4th respondent dated 01.09.1999 is no longer pending, since the same has been replaced by the impugned 12(3) settlement dated 17.05.2006, entered in the presence of the 3rd respondent. According to the 4th respondent, the third respondent has followed the provisions of the Industrial Disputes Act. 13. In respect of settlement entered between the employer and the workmen during the course of pendency of dispute, the procedures are contemplated by which the conciliation officer has sent the report to the appropriate Government and the same is binding not only to the parties to the settlement but also to all other employees working in the establishment unlike in cases of settlement entered under Section 18(1) of the Industrial Disputes Act, wherein the binding effect is only between the parties. According to the 4th respondent such settlement entered under Section 12(3) of the Industrial Disputes Act, by the employer with recognized majority union is binding upon even the members of the minority union, as it is laid down by the judicial precedent. According to the 4th respondent, the impugned settlement dated 17.05.2006 is for a period from 01.09.2005 to 31.08.2009 applicable to all workmen of the 4th respondent union and as per the settlement the wage increase had also been accepted on the condition of the required production by way of output by individual workmen. 14. It is also the case of the 4th respondent that the factory is still running at Gumidipundi SIPCOT Industrial Estate and the 4th respondent is entitled to transfer workmen to any place as per certified standing orders and appointment issued to the said workmen. As stated above the writ petition filed in respect of transfer and that was dismissed by the learned single judge and also by the Division Bench. The voluntary retirement scheme announced by the 4th respondent in January 1999 was to tide over the financial crisis. It is also the case of the 4th respondent that the impugned settlement dated 17.05.2006 is not conversion of the earlier settlement entered under Section 18(1). It is not true that the petitioner union was kept out of discussion by the 3rd respondent. It is also the case of the 4th respondent that the 4th respondent is not https://hcservices.ecourts.gov.in/hcservices/ implementing the impugned settlement dated 17.05.2006 as against the workers of the petitioner union and on the other hand from 2004 onwards the 4th respondent is paying wages to the members of the petitioner union only based on the work done by the workers of the petitioner union on the same principle which is made applicable to the other workers belonging to the 5th respondent. If the workers fail to produce the norms prescribed by the management they will not qualify for full wages and they will be paid only pro-rata wages. Therefore, according to the 4th respondent it is not correct to state that under the impugned settlement dated 17.05.2006, deductions are made in wages. 15. Therefore, according to the 4th respondent, the wages of the workers individual workmen vary from month to month depending upon the production output. The settlement has been accepted by the majority of workers and has been implemented from 17.05.2006 and the members of the 5th respondent union are receiving the settlement benefits, however, the petitioner union is resorting to deliberate go-slow production. In the Annexure filed along with the counter affidavit, the 4th respondent has also stated about the particulars stating that in the settlement entered on 01.09.1999 between the 4th respondent and the petitioner union also it provided for minimum production norms to be achieved to earn wages and there has been change of dearness allowance and it is almost similar agreement which has been entered on 17.05.2006 under Section 12(3) of the Industrial Disputes Act, and therefore, there is no change. 16. The 5th respondent has also filed the counter affidavit in the same terms. The 5th respondent also would submit that the settlement was based on the productivity linked payment. According to the 5th respondent it is majority union with 112 members and the petitioner union is a minority union with 59 members. It is further stated that the petitioner union along with the 4th respondent has signed the settlement on 01.09.1999 under Section 18(1) of the Industrial Disputes Act, which also covers the wage revision and minimum production norms to be given by workmen with retrospective effect on 01.03.1999. After the said settlement was terminated on 29.01.2002 by the petitioner union itself, the petitioner union has not made any charter of demands. 17. According to the 5th respondent the impugned settlement itself is in the line of earlier settlement entered between the petitioner union and the 4th respondent, which was based on the minimum production norms. According to the 5th respondent the members of the 5th respondent union are fulfilling the production norms and standard fixed in the impugned settlement and monetary benefits received by them under the impugned settlement are much more than what they have earned from 01.09.1999 settlement and therefore, it is beneficial to the workmen. https://hcservices.ecourts.gov.in/hcservices/ 18. Ms.Vaigai, learned counsel appearing for the petitioner union would submit that the impugned settlement entered between the 4th and 5th respondents cannot be termed as having been entered during conciliation proceedings. There was no conciliation proceeding pending. Therefore, the impugned settlement is not binding on the persons who are not parties. According to her, till 2002 all settlements were entered between the petitioner union and the 4th respondent employer, however, it was on 03.09.2003 for the first time a settlement was entered under Section 18(1) of the Industrial Disputes Act between the 4th and 5th respondents for the period upto 31.08.2006. According to her, when the said settlement was in existence upto 31.08.2006 between 4th and 5th respondents, the 5th respondent could not have raised any charter of demand before 31.08.2006. She would submit that the said settlement entered under Section 18(1) between the 4th and 5th respondents clearly states that the said settlement will be in effect upto 31.08.2006. She would also refer to one of the clauses in the said settlement, wherein it is specifically agreed that the union and the workmen agreed not to raise any demand during the period of settlement. 19. Therefore, according to her, when such settlement between the 4th and 5th respondents were in existence, the 5th respondents would not have raised any Industrial Disputes at all as it is falsely stated by the 4th respondent. According to her the conciliation proceeding, which was conducted by the 3rd respondent was not in accordance with law. She would also submit that the communication of the 3rd respondent dated 03.02.2006 states that it is a final settlement report. However, a reference to the said letter of the third respondent shows that even though it is stated as a final settlement report, it only calls for the parties to appear on 09.02.2006 at 11.30 a.m. 20. According to her the petitioner union has in fact complained to the labour commissioner on 10.03.2006 about the attitude of the 3rd respondent. She would also state that by communication dated 10.04.2006 the petitioner has informed the 3rd respondent that they were not supplied with any copies and requested third respondent not to proceed with any settlement. She would state that in the notice given by the 3rd respondent dated 05.05.2006 fixing the meeting on 10.05.2006, notice has been sent only to the petitioner union. 21. She would also submit that on 12.05.2006 there was another notice sent to the petitioner union as well as the 5th respondent calling upon the meeting on 17.05.2006 and on the same day the 12(3) settlement is stated to have been arrived at to which the petitioner union is not a party. It is also her contention that when the petitioner union was not even given the copies regarding the demands stated to have been raised by the 5th respondent, the 3rd respondent in the settlement stating as if the claim of the petitioner union has been considered is only unjustifiable and fictitious. https://hcservices.ecourts.gov.in/hcservices/ 22. According to her, the terms of the 12(3) settlement is almost the same as that of the 18(1) settlement entered between 4th and 5th respondent dated 03.09.2003 and therefore, the very idea of converting the contents of 18(1) settlement to that of 12(3) settlement is to see that all the employees who are not even parties to such settlement to be made liable for such terms. According to her, since the 3rd respondent himself has not filed any counter affidavit, mala fide attributed on the third respondent stands to be proved and therefore, the impugned settlement cannot be taken as a settlement under Section 12(3) of the Industrial Disputes Act. 23. The learned counsel for the petitioner would rely upon the Division Bench judgements of this Court reported in 1989(2) LLN 693 as also in 1992(2) LLJ 797 to substantiate her contention that when once section of workmen were excluded in a conciliation proceeding, it cannot be stated that the conciliation officer has discharged his function as mandatory under Section 12 of the Industrial Disputes Act. She would also rely upon the judgement of this Court rendered in 1983(1) LLJ 181 as confirmed by the Division Bench of this Court in 1984(1) LLJ 349, in respect of the legal effect of the settlement reached in the course of and outside conciliation proceedings under Section 12 and Section 18(3) of the Industrial Disputes Act. To substantiate her contention that during the operation of the previous settlement any subsequent settlement entered will become invalid, she would rely upon the judgement of the Hon’ble Supreme Court in 1977(2) LLJ 339. She would also rely upon another judgement of the Division Bench of this Court reported in 1989(1) LLJ 180 to support her case that no dispute can be validly raised by the parties wherein, there was already in existence a settlement and no reference could be made of any such dispute and according to her whether it is small number of workmen or larger number of workmen, the same is immaterial. 24. She would also rely upon the judgement of the Hon’ble Apex Court reported in 2000(1) SCC 371 to say that when there is any existence of settlement between the management and the recognized majority union, there is no question of any further settlement. According to her on