SCA/13702/2006 1/32 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 13702 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE H.K.RATHOD ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= INGERSOLL RAND AND OTHER INDUSTRIES EMPLOYEES UNION & 1 - Petitioner(s) Versus STATE OF GUJARAT & 8 - Respondent(s) ========================================================= Appearance : MR SHALIN N MEHTA for Petitioner(s) : 1 - 2. MS PANDIT, A.G.P. for Respondent(s) : 1, None for Respondent(s) : 2 - 9. ========================================================= CORAM : HONOURABLE MR.JUSTICE H.K.RATHOD Date : 17/07/2006 ORAL JUDGMENT 1. Heard the learned advocate Mr. Shalin N. Mehta appearing on behalf of the petitioners and learned A.G.P. Ms. Pandit appearing on behalf of Respondents No.1 to 3. SCA/13702/2006 2/32 JUDGMENT 2. Before dealing with this matter, it is necessary to consider the prayer made by the petitioner in the present petition, therefore, para 28 prayer 'A' to 'O' which are quoted as under : “Para 28 (A) : Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction, commanding the respondents No.1 to 3 herein not t o recognise or approve any Settlement / Agreement that may be entered into or signed by the respondent Company with the old office bearers of the petitioner Union, and to recognise and approve only those Settlements / Agreements that are signed by the respondent Company with the newly appointed office bearers of the petitioner Union who have assumed office on and from 29.4.2006; Para 28 (B) : Your Lordships may be pleased to issue a writ of certiorary or any other appropriate writ, order or direction, to quash the Settlement / Agreement dated 31.5.2006 entered into by the respondent Company with the old office bearers of the petitioner Union in the course of conciliation; Para 28 (C): Your Lordships may be pleased to SCA/13702/2006 3/32 JUDGMENT declare that the Settlement / Agreement dated 31.5.2006 entered into by the respondent Company with the old office bearers of the petitioner Union is void ab initio and of no legal effect; Para 28 (D) : Your Lordships may be pleased to pass a cease and desist order to restrain the respondent Company from committing unfair labour practices in collusion with the old office bearers of the petitioner Union against the workmen of the respondent Company; Para 28 (E) : Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction, commanding the respondents No.1 to 3 herein to initiate prosecution under the provisions of the Industrial Disputes Act, 1947, against the respondent Company and the old office bearers of the petitioner Union (respondents No.7 to 9 herein), for committing unfair labour practice against the workmen of the respondent Company; Para 28 (F) : Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction, commanding the respondent Company to collectively bargain in future with the newly SCA/13702/2006 4/32 JUDGMENT elected office bearers of the petitioner Union and not with the old office bearers of the petition Union, the respondents No.7 to 9 herein; Para 28 (G) : Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction, commanding the Federation of Ingersoll Rand Employees (FIRE), the respondent No.6 herein to disallow the participation of the old office bearers of the petitioner Union in the activities and business of FIRE, more particularly, while holding negotiations with the respondent Company; Para 28 (H) : Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction, commanding the respondents No.1 to 3 herein to refer the industrial dispute raised by the petitioner Union with regard to the illegal lock out declared by the respondent Company on 2.5.2006 through 31.5.2006, to the concerned Labour Court / Industrial Tribunal for adjudication; Para 28 (I) : Your Lordships may be pleased to declare that the lock out declared by the respondent Company against its workmen on 2.5.2006 through 31.5.2006 is illegal and SCA/13702/2006 5/32 JUDGMENT violative of Sections 22 and 23 of the Industrial Disputes Act, 1947; Para 28 (J) : Pending admission and final hearing of the present petition, Your Lordships may be pleased to stay the operation and implementation of Settlement / Agreement dated 31.5.2006 (Annexure-E); Para 28 (K) : Pending admission and final hearing of the present petition, Your Lordships may be pleased to direct the respondents No.1 to 3 herein to refer the industrial dispute raised by the petitioner Union with regard to the illegal lock out declared by the respondent Company against its workmen on 2.5.2006 through 31.5.2006, to the concerned Labour Court / Industrial Tribunal for adjudication; Para 28 (L) : Pending admission and final hearing of the present petition, Your Lordships may be pleased to restrain the respondents No.7 to 9 herein from pausing themselves as office bearers of the petitioner Union or as members of the Federation of Ingersoll Rand Employees (FIRE) with effect from 29.4.2006; Para 28 (M) : Pending admission and final hearing of the present petition, Your SCA/13702/2006 6/32 JUDGMENT Lordships may be pleased to restrain the respondent Company from entering into Settlement / Agreements with the old office bearers of the petitioner Union; Para 28 (N) : Pending admission and final hearing of the present petition, Your Lordships may be pleased to direct the respondent Company to collectively bargain with the newly elected office bearers of the petitioner Union who are the authorised representatives of the workmen of the respondent Company on and from 29.4.2006 through this date; Para 28 (O) : Your Lordships may be pleased to pass any other appropriate order, as deemed fit, in the interest of justice;“ 3. In view of the above prayers, this Court has to consider as to whether writs should have to be entertained by this Court while exercising the power under Article 226 of the Constitution of India. 4. In the present petition, petitioner having various prayers against the respondent which are based on disputed question of facts. The settlement dated 31st May 2006 is challenged by the petitioner to set aside the same. The dispute about lock out declared by the management adopting unfair labour practice by the management and inactive approach of SCA/13702/2006 7/32 JUDGMENT authority under the machinery of Industrial Disputes Act, 1947. Learned advocate Mr. Mehta submitted that settlement dated 31st May 2006 arrived at by the Management with old office bearers of the Union and not with new office bearer of the Union. He submitted that management was aware about new office bearer as well as a statutory authority was also aware about the existence of new office bearer, even though, new office bearers have been ignored by statutory authority and management. Therefore, he submitted that ignoring the new office bearer of Union is amounts to unfair labour practice adopted by the management. He relied upon Item No.1 and 2 of 5th Schedule with Section 25(T) which provided that in case of employer adopted any unfair labour practice or Union if adopted such practice, the penal provision are there for prosecution under the provisions of the Industrial Disputes Act ,1947. Learned advocate Mr. Mehta has submitted that in case of disputed questioned of facts as considered the documents are on record wherein neither statutory authority nor employer has given any reply. Therefore, it considered to be an admitted facts. He also submitted that disputed question of facts and alternative remedy should not come in his way as it is not absolute bar, Court may exercise discretionary power to entertain such petition under Article 226 of the Constitution of India. He referred the number of documents including the settlement dated 31st May 2006. The grievance of the petitioner is that management should have to discuss with the SCA/13702/2006 8/32 JUDGMENT petitioners and not allowed to discuss with other office bearers of the Union. Whether petitioner – Union with new office bearers has been recognised by the employer or not. He is not able to give any answer to that where the right of recognised Union has been arisen and under which provisions the right of recognition given to the Union. There is no reply to this question raised by this Court. Therefore, in light of this facts and considering the submission made by learned advocate Mr. Mehta that dispute about lock out by Union not refer so far for adjudication. Though failure report submitted by the conciliation officer to the appropriate Government. These are inactive approach of the authority , therefore, he submitted that this Court may entertain the petition filed by the petitioner. 5. Except refer above, no such submissions made by learned advocate Mr. Mehta before this Court. 6. The contention raised by learned advocate Mr. Mehta that settlement dated 31st May 2006 arrived at by the management before conciliation officer with old office bearers of the Union is illegal, contrary to law and therefore, same is required to be quashed and set aside. This contention has been examined by the Apex Court in case of State of Uttaranchal v. Jagpal Singh Tyagi reported in (2005) 8 SCC 49 and in case of Jaihind Roadways v. Maharashtra Rajya Mathadi Transport & General Kamgar Union and Others reported in (2005) 8 SCC 51. In both the decisions, SCA/13702/2006 9/32 JUDGMENT Apex Court has come to the conclusion that challenge of settlement which having binding effect on the ground of fraud, misrepresentation or concealment of facts, a writ is not maintainable but the same is maintainable only as the subject matter of another dispute. The Apex Court further observed that “there was nothing on record brought by the respondent employee to show that there was any pressure or undue influence was exercised.” Having obtained the benefit by the employees of the settlement which are in dispute, it was not open to the workers to contend that settlement is not fare or just. The relevant observations made in case of State of Uttaranchal v. Jagpal Singh Tyagi reported in (2005) 8 SCC 49 in Para 4 and 5 which are quoted as under : “Para 4 : We find that the approach of both the Labour Court and the High Court is clearly on wrong premises. If there was dispute on the question as to whether the settlement was bona fide or was obtained by fraud, misrepresentation or concealment of facts, the same can only be the subject matter of another industrial dispute. To substantiate the averments that such settlement could not have been arrived at, nothing was brought on record by the respondent employee to show that there was any pressure exercised or that he was subjected to undue influence. There is SCA/13702/2006 10/32 JUDGMENT also no material to show that the settlement was intended to frustrate the order passed by the High Court. At no point of time, the respondent employee raised any dispute as regards the fairness of the settlement. Having obtained the benefit, it was not open to him to turn down without justifiable reasons to contend that the settlement was not fair. Para 5 : In National Engg. Industries Ltd. v. State of Rajasthan it was observed as follows : (SCC p.24, para.393) “Settlement is arrived at by the free will of the parties and is a pointer to there being goodwill between them. 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 the subject-matter of yet 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.“ SCA/13702/2006 11/32 JUDGMENT 7. In case of Jaihind Roadways v. Maharashtra Rajya Mathadi Transport & General Kamgar Union and Others reported in (2005) 8 SCC 51 as referred above, the decision of State of Uttaranchal v. Jagpal Singh Tyagi as referred above has been considered by the Apex Court. The relevant observations made by the Apex Court in Jaihind Roadways's Case, Paras No.8 to 12 which are quoted as under : “Para 8 : The effect of settlement has been considered by this Court in several cases. In Sirsilk Ltd. v. Govt. of A.P. It was observed as follows : (SCR pp.453-54): “The contention on behalf of the appellant in the alternative is this. It is said that the main purpose of the Act is to maintain peace between the parties in an industrial concern. Where therefore parties to an industrial dispute have reached a settlement which is binding under S. 18 (1), the dispute between them really comes to an end. In such a case it is urged that the settlement arrived at between the parties should be respected and industrial peace should not be allowed to be disturbed by the publication of the award which might be different from the settlement. There is no doubt that a settlement of the dispute SCA/13702/2006 12/32 JUDGMENT between the parties themselves is to be preferred where it can be arrived at to industrial adjudication, as the settlement is likely to lead to more lasting peace that an award, as it is arrived at by the free will of the parties and is a pointer to there being goodwill between them. Even though this may be so, we have still to reconcile the mandatory character of the provision contained in S. 17 (1) for the publication of the award to the equally mandatory character of the binding nature of the settlement arrived at between the parties as provided in S. 18 (1). Ordinarily there should be no difficulty about the matter, for if a settlement has been arrived at between the parties while the dispute is pending before the tribunal, the parties would file the settlement before the tribunal and the tribunal would make the award in accordance with the settlement.” Para 9 : Similarly in State of Bihar v. D.N.Ganguly it was observed as follows : (SCR pp.1202-03) “It is, however, urged that if a dispute SCA/13702/2006 13/32 JUDGMENT referred to the industrial tribunal under Sec. 10 (1) is settled between the parties, the only remedy for giving effect to such a compromise would be to cancel the reference and to take the proceedings out of the jurisdiction of the industrial tribunal. This argument is based on the assumption that the industrial tribunal would have to ignore the settlement by the parties of their dispute pending before it and would have to make an award on the merits in spite of the said settlement. We are not satisfied that this argument is well- founded. It is true that the Act does not contain any provision specifically authorising the industrial tribunal to record a compromise and pass an award in its terms corresponding to the provisions of O. XXIII, R. 3 of the Code of Civil Procedure. But it would be very unreasonable to assume that the industrial tribunal would insist upon dealing with the dispute on the merits even after it is informed that the dispute has been amicably settled between the parties. We have already indicated that amicable settlements of industrial disputes which generally lead to SCA/13702/2006 14/32 JUDGMENT industrial peace and harmony are the primary objects of this Act. Settlements reached before the conciliation officers or boards are specifically dealt with by Ss. 12 (2) and 13 (3) and the same are made binding under Sec. 18. There can, therefore, be no doubt that if an industrial dispute before a tribunal is amicably settled, the tribunal would immediately agree to make an award in terms of the settlement between the parties. It was stated before us at the bar that innumerable awards had been made by industrial tribunals in terms of the settlements between the parties. In this connection we may incidentally refer to the provisions of Sec. 7 (2) (b) of the Industrial Disputes (Appellate Tribunal) Act, 1950, (XLVIII of 1950), which expressly refer to an award or decision of an industrial tribunal made with the consent of the parties. It is true that this Act is no longer in force; but when it was in force, in providing for appeals to the Appellate Tribunal set up under the said Act, the legislature had recognised the making of awards by the industrial tribunals with the consent of the parties. Therefore, we cannot accept SCA/13702/2006 15/32 JUDGMENT the argument that cancellation of reference would be necessary in order to give effect to the amicable settlement of the dispute by the parties pending proceedings before the industrial tribunal.” Para 10 : Whether the settlement is tainted or unfair has to be decided if specific reference is made on that aspect. In National Engg. Industries Ltd. v. State of Rajasthan SCC at pp.393-94 it was observed as follows : “It will be thus seen that High Court has jurisdiction to entertain a writ petition when there is allegation that there is no industrial dispute and none apprehended which could be subject matter of reference for adjudication to the Industrial Tribunal under Section 10 of the Act. Here it is a question of jurisdiction of the Industrial Tribunal, which could be examined by the High Court in its writ jurisdiction. It is the existence of the industrial tribunal which would clothe the appropriate Government with power to make the reference and the Industrial Tribunal to SCA/13702/2006 16/32 JUDGMENT adjudicate it. If there is no industrial dispute in existence or apprehended appropriate government lacks power to make any reference. A settlement of dispute between the parties themselves is to be preferred, where it could be arrived at, to industrial adjudication, as the settlement is likely to lead to more lasting peace than an award. Settlement is arrived at by the free will of the parties and is a pointer to there being goodwill between them. 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 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. A settlement which is sought to be impugned has to be scanned and scrutinized. Sub-sections (1) and (3) of Section 18 divide settlements into two categories, namely, (1) those arrived at SCA/13702/2006 17/32 JUDGMENT outside the conciliation proceedings and (2) those arrived at in the course of conciliation proceedings. A settlement which belongs to the first category has limited application in that it merely binds the parties to the agreement but the settlement belonging to the second category has extended application since it is binding on all the parties to the industrial disputes, to all others who were summoned to appear in the conciliation proceedings and to all persons employed in the establishment or part of the establishment, as the case may be, to which the dispute related on the date of the dispute and to all others who joined the establishment thereafter. A settlement arrived at in the course of conciliation proceedings with a recognised majority union will be binding on all workmen of the establishment, even those who belong to the minority union which has objected to the same. Recognised union having majority of members is expected to protect the legitimate interest of labour and enter into a settlement in the best interest of labour. This is with the object to uphold the sanctity of settlement reached with SCA/13702/2006 18/32 JUDGMENT the active assistance of the Conciliation Officer and to discourage an individual employee or minority union from scuttling the settlement. When a settlement is arrived at during the conciliation proceedings it is binding on the members of the Workers' Union as laid down by Section 18(3)(d) of the Act. It would ipso facto bind all the existing workmen who are all parties to the industrial dispute and who may not be members of unions that are signatories to such settlement under Section 12(3) of the Act. Act is based on the principle of collective bargaining for resolving industrial disputes and for maintaining industrial peace. "This principle of industrial democracy is the bedrock of the Act", as pointed out in the case of P. Virudhachalam v. Management of Lotus Mills (1998) 1 SCC 650 : (1998 AIR SCW 145 : AIR 1998 SC 554 : 1998 Lab IC 834). In all these negotiations based on collective bargaining individual workman necessarily recedes to the background. Settlements will encompass all the disputes existing at the time of the settlement except those specifically left out.” SCA/13702/2006 19/32 JUDGMENT Para 11 : The position was recently examined in State of Uttaranchal v. Jagpal Singh Tyagi. It was held as follows : (SCC p.50, Para.3) “3. Learned counsel for the appellant State submitted that there was nothing on record to show that there was any pressure put on the respondent employee or that undue influence was exercised. The conclusion was arrived at without pleadings in this regard. For the first time in the counter affidavit filed before the High Court, stand to that effect was taken. Without any material to support the contention, the High Court held that the settlement was not proper and in order to frustrate the order passed by the High Court, the same was arrived at. The effect of the affidavits and the undertaking was totally ignored.“ Para 12 : We find that there was really no issue raised regarding fairness of the settlement. The Tribunal as well as the High Court came to conclusions without any material that settlements were not fair. As noted in National Engg. Case and State SCA/13702/2006 20/32 JUDGMENT of Uttaranchal case there has to be a specific reference on this issue which was not there before the Tribunal and in any event no material was placed or any positive stand taken by any workman.” 8. The Apex Court has considered the question of disputed facts between the parties which required to pursue specific remedies appropriated therefore in law. The Apex Court has observed “a matter involved great deal of disputed question of fact cannot be dealt by the High Court in exercise of its power of judicial review. As the High Court or this Court cannot in view of the nature of the controversy as also the disputed question of facts go into the merits of the matter evidently no relief can be granted to the petitioner at this stage.” The above view expressed by the Apex Court in case of Sanjay Sitaram Khemka v. State of Maharashtra & Ors. reported in JT 2006 (11) SC 373. The relevant para 10 is quoted as under : “A writ petition, as has rightly been pointed out by the High Court, for grant of the said reliefs, was not the remedy. A matter involving a great deal of disputed questions of fact cannot be dealt with by the High Court in exercise of its power of judicial review. As the High Court or this Court cannot, in view of the nature of the SCA/13702/2006 21/32 JUDGMENT controversy as also the disputed questions of fact, go into the merit of