IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. CWP No.8022/2010 alongwith CWPs No. 8023, 8024, 8026, 8030, 8031, 8033,8035, 8049 and 8099 of 2010. Reserved on: 3.8.2011 Decided on:22.9. 2011 _____________________________________________ CWPs No.8022, 8023, 8024, 8026, 8030, 8031, 8033, 8035, 8049 and 8099 of 2010 Federal Mogul Bearing India Ltd. …Petitioner. Versus State of H.P. and others. …Respondents. _______________________________________________________ Coram: Hon’ble Mr. Justice Kurian Joseph, Chief Justice. Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 (in all the petitions) For the petitioner(s): Mr. Rahul Mahajan, Advocate. For the Respondents: Mr. R.K. Bawa, A.G. with Mr. J.K. Verma, Dy. A.G. for respondents No. 1 to 3. Mr. V.D. Khidta, Advocate for respondent No.4. ____________________________________________________ Per Justice Rajiv Sharma, Judge. Since common questions of law and facts are involved in all these petitions, the same were taken up together for hearing and are being disposed of by a common judgment. However, in order to maintain the 1 Whether reporters of the local papers may be allowed to see the judgment? 2 clarity, the facts of CWP No. 8023/2010 have been taken into consideration. The only distinguishable facts of this petition vis-à-vis other petitions are that therein the workmen had also entered into settlements with the Management. 2. The core issue involved in this petition is: whether the reference dated 13.10.2010 made by respondent No.2 to the Labour Court-cum-Industrial Tribunal to the following effect is legal: “Whether voluntary retirement taken as per ‘Voluntary Retirement Scheme’ dated 2.3.2009 by Sh. Ashok Kumar Sharma S/O Sh. Inder Sen Sharma, Operator from the Management of M/s Federal Mogul Bearings India Ltd. Plot No.5, Sector-2, Parwanoo, District Solan, H.P. is legally maintainable and justified? If not, to what back wages, service benefits and relief the above named worker is entitled to from the above Employer/Management? If not, what are its legal effects?” 3. Petitioner-company is a public limited company duly registered under the Companies Act, 1956. Petitioner-company is having its registered office at Mumbai and having its production unit at plot No.5, Parwanoo, District Solan, H.P. Petitioner- company is into manufacturing of Automobiles Engine Parts. The company due to Global Meltdown took a conscious decision to bring down the fixed cost and 3 reduce its strength of employees. In order to restructure its man power by reducing the existing strength of employees, the petitioner-company framed a Voluntary Retirement Scheme (hereinafter referred to as ‘scheme’ for brevity sake), which came into force with effect from 2.3.2009. It had to remain in operation till 15.5.2009. The scheme was made applicable to all the permanent workmen/staff whose names were on the muster roll of the company as on 2.3.2009 and who had attained the age of 40 years or had put in a continuous service of 10 years or more in the permanent employment of the company. According to the scheme, the workmen, who had attained the age of 40 years or had completed 10 years continuous service, were entitled to lump sum payment equivalent to last monthly basic + fixed dearness allowance + special allowance + house rent allowance + washing allowance + conveyance allowance + study allowance + medical allowance multiplied by number of remaining months of service subject to maximum of ` 2,20,000/-. According to the scheme, no request for withdrawal was to be entertained from the employee who had once resigned under the scheme. Similarly, once the acceptance was given to the resignation by the 4 management, and the workmen once retired under the scheme was ceased to have right to raise any kind of dispute in future either for his willingness to retire or for the benefits available under the scheme. 4. Respondent No.4 who was engaged as Operator in the petitioner-company in the year 1986 submitted an application seeking voluntary retirement on 12.3.2009. The text of letter dated 12.3.2009 reads thus: “Sub: Application for retirement from the services of the Company under Voluntary Retirement Scheme. Dear Sir, With reference to the Voluntary Retirement Scheme of the Company, I wish to give resignation of my services voluntarily on my own free well and accord. I hereby declare that the said Voluntary Retirement Scheme has been fully explained to me/read by me and that I fully understood the Scheme. I wish to voluntarily retire from the services of the Company. You are, therefore, requested to kindly accept my resignation and relieve me from the services of the Company at earliest. I also request you that the benefits under the VRS may please be granted to me.” 5. The same was accepted by the company on 14.3.2009 with effect from 26.3.2009. The text of letter dated 14.3.2009 reads thus: “Sub: Voluntary Retirement Scheme of the Company 5 Ref: Your application dtd.12.3.2009 for voluntary retirement from the services of the Company under Voluntary Retirement Scheme. Dear Sir, We are in receipt of your application dtd. 12.3.2009 for voluntary retirement from the services of the Company under Voluntary Retirement Scheme of the Company. In this connection we wish to inform you that your application for Voluntary Retirement has been accepted by us and you will be relieved from the services of the Company with effect from 26.3.2009 after duty hours. Please note that the benefits under the scheme alongwith other legal dues will be paid on the same day.” 6. Respondent No.4 was paid a sum of ` 3,96,830/- by way of cheque. He withdrew the same as is evident from Annexure P-6. He has also applied for the release of provident fund, fixation of family pension etc. He issued a demand notice to the petitioner-company on 4.12.2009. According to respondent No.4, the management had forced him to seek voluntary retirement. According to him, his job has been wrongly terminated and he was entitled to be reinstated in job with back wages and other benefits with interest @ 12% per annum. In sequel to the demand notice, the Labour Officer-cum-Conciliation Officer sent a notice to the management on 14.12.2009 to settle the matter amicably. The management was 6 directed to file reply to the demand notice within one week. Management filed reply to the same vide Annexure P-9 dated 11.1.2010. It was reiterated that respondent No.4 has sought voluntary retirement vide application dated 12.3.2009 and the same was accepted by the management on 14.3.2009. According to the management, the petitioner has been paid all the wages, allowances, leave encashment, L.T.A. V.R.S. compensation, gratuity, welfare fund contribution bonus ex-gratia, ex-gratia under Voluntary Retirement Scheme through cheque dated 26.3.2009. He has also applied for the withdrawal of provident fund and accumulation and fixation of pension under family pension scheme. Respondent No.4 filed rejoinder to the reply filed by the management on 21.1.2010. However, on the basis of the failure report, submitted by the Labour-cum-Conciliation Officer, respondent No.2 referred the matter to the Labour Court-cum-Industrial Tribunal, Shimla on 13.10.2010. 7. Notices were issued to the respondents. Respondents No.1 and 2 have filed detailed reply. Respondents No.3 and 4 have not chosen to file any reply. Stand of respondents No.1 and 2 is that all the facts and circumstances were taken into consideration 7 while referring the matter to the Labour Officer-cum- Conciliation Officer on 13.10.2010. According to the reply, the management had resorted to illegal lock out. The lock out was lifted after the intervention of Labour Commissioner on 31.10.2008. The management had called respondent No.4 in the Cabin and pressurized him to opt for voluntary retirement scheme. He was forced to sign many blank papers of the voluntary scheme. His services were illegally terminated. The management has filed rejoinder to the reply filed by respondents No.1 and 2 and reiterated its stand taken in the main petition. 8. Mr. Rahul Mahan has strenuously argued that once respondent No.4 had sought the voluntary retirement and the same has been accepted, master and servant relationship had come to an end. According to him, respondent No.4 after seeking voluntary retirement ceased to be workman under section 2 (s) of the Industrial Disputes Act, 1947 (hereinafter referred to as the “Act” for short). He then argued that no industrial dispute was either apprehended or existed and thus the reference could not be made by the Labour Court. According to him, respondent No.4 has encashed the cheque amounting 8 to ` 3,96,830/- and has also withdrawn the amount of his general provident fund. He then argued that application of respondent No.4 was accepted on 14.3.2009 and he has served the demand notice on 14.12.2009, which according to Mr. Rahul Mahajan was after thought to pressurize the management. According to him, the issuance of demand notice was abuse of process of law. According to him, the action of respondent No.4 seeking retirement was voluntary. He has further contended that respondents-workmen had also entered into settlement with the management and the same is binding between the parties as per section 18 of the Industrial Disputes Act, 1947 (hereinafter referred to as the “Act” for brevity sake). He lastly contended that respondent No.2 has not applied his mind to all the facts and circumstances of the case while referring the matter to the Labour Court-cum-Industrial Tribunal. 9. Mr. R.K. Bawa, learned Advocate General and Mr. V.D. Khidtta have supported the issuance of Annexure P-11 dated 13.10.2010 whereby the matter has been referred to Labour Court-cum-Industrial Tribunal. Mr. R.K. Bawa has also argued that respondent No.2 has applied his mind after taking into 9 consideration the failure report of the Labour-cum- Conciliation Officer while referring the matter to the Labour Court-cum-Industrial Tribunal. Mr. V.D. Khidtta has argued that the management had pressurized his client to seek voluntary retirement. He further argued that the master and servant relationship has not come to an end even if the offer of his client seeking voluntary retirement was accepted. 10. We have heard the learned counsel for the parties and have perused the pleadings carefully. 11. Voluntary Retirement Scheme has come into force with effect from 2.3.2009. It was made applicable to all the workmen, who had completed 40 years of age and had put in ten years or more service. The benefits payable to the workmen have been duly enumerated in the scheme. The workmen had been put to caveat as per the recitals in the scheme that no request for withdrawal will be entertained from the employee who has once resigned under the scheme and the workman shall cease to be in the employment of the company. His name was to be deleted from the muster roll of the company. Petitioner has submitted application as per Annexure P-3 dated 12.3.2009 seeking voluntary retirement; it was duly accepted by 10 the management on 14.3.2009. He has withdrawn a sum of ` 3,96,830/- and has also withdrawn the retiral benefits, including general provident fund etc. Though respondent No.4 has sought voluntary retirement on 12.3.2009, he has raised demand notice on 14.12.2009. The delay between 12.3.2009 to 14.12.2009 has not been explained. The stand of the management before the Labour Court-cum-Industrial Tribunal was that respondent No.4 has sought voluntary retirement and the same was accepted by the management on 14.12.2009 and his dues have been paid. 12. Mr. V.D. Khidtta has argued that his client has been forced to sign the documents. In case respondent No.4 had been forced to sign the documents after pressurizing him in the Cabin, it was always open to him to take recourse to law. His normal reaction would have been to file an application against the management before the Labour-cum- Conciliation Officer or it was open to him to raise issue through the Union. He has remained silent with effect from 12.3.2009 to 14.12.2009. He was estopped from raising the demand after accepting the compensation 11 and other retiral benefits. His conduct does not inspire confidence. 13. As far as the powers of the Labour Court- cum-Industrial Tribunal under section 10 of the Act are concerned, these are administrative in nature. However, it is well settled law by now that the Labour Commissioner has to apply his mind after taking into consideration all the facts and circumstances of the case. He has to ensure that the person, who is seeking reference, is workman within section 2 (s) of the Act. In the case in hand, once respondent No.4 has accepted his dues after the acceptance of voluntary retirement, he is ceased to be workman within the meaning of section 2(s) of the Act. The relationship of master and servant has been severed and neither any actual industrial dispute existed nor apprehended at the time when the Labour Commissioner has decided to refer the reference to Labour Court-cum-Industrial Tribunal. 14. Their Lordships of the Hon’ble Supreme Court in National Engineering Industries Limited versus State of Rajasthan and others, (2000) 1 SCC 371 have held that existence or apprehension of an industrial dispute is a condition precedent for making 12 a reference. Their Lordships have further held that High Court can entertain a writ petition impugning a reference on the ground of non-existence of an actual or apprehended industrial dispute. Their Lordships have held as under: “24. In Workmen Employed by Hindustan Lever Ltd. v. Hindustan Lever Ltd. (1984) 4 SCC 392 : (AIR 1981 SC 1683 : 1984 Lab IC 1573) this Court said as under (para 4) : "Section 10(1) confers power on the appropriate Government to refer an existing or apprehended industrial dispute, amongst others, to the Industrial Tribunal for adjudication. The dispute therefore, which can be referred for adjudication of necessity, has to be an industrial dispute which would clothe the appropriate Government with power to make the reference, and the Industrial Tribunal to adjudicate it." 25. 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 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 13 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 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 the active assistance of the 14 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.” 15. Their Lordships of the Hon’ble Supreme Court in Nedungadi Bank Limited versus K.P. Madhavankutty and others, 2000 (2) SCC 455 have held that the power of reference should be exercised reasonably and in a rational manner and not in a mechanical fashion. Their Lordships have held as under: “6. Law does not prescribe any time limit for the appropriate Government to exercise its powers under Section 10 of the Act. It is not that this power can be exercised at any point of time and to revive matters which had since been settled. Power is to be exercised 15 reasonably and in a rational manner. There appears to us to be no rational basis on which the Central Government has exercised powers in this case after lapse of about seven years of order dismissing the respondent from service. At the time reference was made no industrial dispute existed or could be even said to have been apprehended. A dispute which is stale could not be the subject-matter of reference under Section 10 of the Act. As to when a dispute can be said to be stale would depend on the facts and circumstances of each case. When the matter has become final, it appears to us to be rather incongruous that the reference be made under Section 10 of the Act in the circumstances like the present one. In fact it could be said that there was no dispute pending at the time when the reference in question was made. The only ground advanced by the respondent was that two other employees who were dismissed from service were reinstated. Under what circumstances they were dismissed and subsequently reinstated is nowhere mentioned. Demand raised by the respondent for raising industrial dispute was ex facie bad and incompetent.” 16. Their Lordships of the Hon’ble Supreme Court in ANZ Grindlays Bank Limited versus Union of India and others, (2005) 12 SCC 738 have held that interference though normally not proper while exercising powers under Article 226 of the Constitution of India, but in case of infirmity in/and where futility of reference can be demonstrated from bare reading of its terms and admitted facts, validity of the reference can be examined under Article 226 of the Constitution 16 of India, as no evidence is required to be considered for examining such issue raised. 17. Their Lordships of the Hon’ble Supreme Court in Moolchand Kharati Ram Hospital K. Union versus Labour Commissioner and others, 2001 LLR 1185 SC has held that though reference for adjudication is “administrative order”, however, if the authority has not taken into consideration all the relevant consideration, High Court can interfere under section 226 of the Constitution of India. Their Lordships have held as under: “4. In these appeals the contention put forth before us is that the order made by the Government, making reference to the Tribunal, is administrative in character and therefore, the High Court should not have interfered with the same. Even if, we proceed on the basis that the nature of the order, making a reference, is administrative in character, it is certainly open to the High Court to examine whether relevant considerations in making the reference had been taken note of or not. In the view of the High Court relevant considerations have not been taken note of by the Government and that finding cannot be seriously disputed.” 18. Now, the Court will advert to the general principles of Voluntary Retirement Scheme and the effect of acceptance of application for voluntary retirement and to see whether the master and servant 17 relationship comes to an end after the acceptance of offer. 19. Their Lordships of the Hon’ble Supreme Court in Bank of India and others versus O.P. Swarnakar and others, (2003) 2 SCC 721 have held that a person who has accepted part of benefits under the Voluntary Retirement Scheme could not be permitted to approbate and reprobate nor can they be permitted to resile from their earlier stand. Their Lordships have held as under: “115. The scheme is contractual in nature. The contractual right derived by the concerned employees, therefore, could be waived. The employees concerned having accepted a part of the benefit could not be permitted to approbate and reprobate nor can they be permitted to resile from their earlier stand. 116. In Lachoo Mai's (supra) the law is stated in following terms : "The general principle is that every one has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity which may be dispensed with or without infringing any public right or public policy. Thus the maxim which sanctions the nonobservance of the statutory provision is cuilibet licet renuntiare juri pro se introducto. (See Maxwell on Interpretation of Statutes. Eleventh Edition, pages 375 and 376). If there is any express prohibition against contracting out of a statute in it then no question can arise of any one entering into a contract which is so 18 prohibited but where there is no such prohibition it will have to be seen whether an Act is intended to have a more extensive operation as a matter of public policy. In Halsbury's Laws of England, Volume 8, Third Edition it is stated in Paragraph 248 at page 1432 : As a general rule, any person can enter into a binding contract to waive the benefits conferred upon him by an Act of Parliament, or, as it is said, can contract himself out of the Act, unless it can be shown that such an agreement is in the circumstances of the particular case contrary to public policy. Statutory conditions may, SC479 however, be imposed in such terms that they cannot be waived by agreement, and, in certain circumstances, the legislature has expressly provided that any such agreement shall be void." 20. Their Lordships of the Hon’ble Supreme Court in P .Lal versus Union of India and others, (2003) 3 SCC 393 have held that the moment the Government accepted the notice of voluntary retirement, the retirement became effective and relationship of master and servant stood severed. Their Lordships have held as under: “27. We have considered the submissions of both the parties. As has been set out, in Shambhu Murari's case and Bank of India's case, an employee can withdraw his application for voluntary retirement before the effective date. The effective date