Case: Cooper Engineering Limited, Bombay Vs. D.M. Aney and Others


Decision reasoning: 0[ds](13) IT first requires to be noticed that the above two agreements dated November 1, 1966 and may 13, 1967, are agreements made otherwise than in the course of conciliation proceedings and are of the nature referred to in(1) of S. 18 Admittedly, these agreements were not signed on behalf of the workmen who were were not members of the 2nd respondent Union. At the date of the first agreement made in November, 1966, only about 500 workers out of 800 and odd were members of the 2nd respondent Union. The first agreement was accordingly not binding on about 300 workmen of the company. Apparently, these workmen being not bound by the agreement would never require to terminate the agreement for making demands in respect of matters which wereof the agreement. The majority of workmen being about 500 and who were member of the 2nd respondent Union in November 1966 were bound by the terms of the agreement and having regard to the provisions in(2) of S. 19, the agreement would be continuing to operate against them for the period agreed upon by the agreement and thereafter till the expiry of the period of two months from the date on which they served a notice in writing of their intention to terminate the agreement in the prescribed manner. There is substance in the case made on behalf of the 3rd respondent Union that a group of the workmen who belonged to the 2nd respondent Union in November, 1966 had shifted their allegiance and the 3rd respondent Union had accordingly gathered in October, 1967 several of these workmen as members of the 3rd respondent union. This is so because we will have to accept the statement made in paragraph 14 of the affidavit made by Mrs. S. A. Vaidya (an Under Secretary to the government) on behalf of the State Government that in October, 1967, 362 workmen were members of the 3rd respondent Union. It is even so not clear as to whether the 3rd respondent union had as its members the majority of workmen bound by the agreement and for that reason was entitled under(i) of item (b) of(3) of Rule 83 to serve a notice of termination of the agreement on behalf of workmen who were bound by the agreement. It must at once be stated on the facts as disclosed on affidavits it is difficult to ascertain as to whether the workmen who were represented by the 2nd respondent Union have continued to be the members of that Union and had not become members of the 3rd respondent Union in October, 1967 when the notice of termination dated 3rd October was given by that Union. It is also not clear whether the majority of the workmen who were bound by the agreement continued to be members of the 2nd respondent Union at all relevant times. It is difficult to hold that on the facts disclosed the provisions in thisule (3) (b) of Rule 83 were applicable in connection with the termination of the above two agreements. Admittedly, the notices dated October 3, 1967, have not been authorised by meeting of the majority of the workmen within the meaning ofule (3) (b) of Rule 83. It is, therefore, difficult to hold that a notice of termination of these agreements has been tendered on the company on behalf of the workmen who became bound by these agreements made by the 2nd respondent Union. The facts disclosed would not justify a finding that on their behalf the agreements have beenAS already stated, the 300 and odd workmen who were not members of the 2nd respondent union at the dates of these agreements never directly became bound by the contents of the agreements and they did not need to terminate the agreements for the purposes of having a reference under S. 10 of the Act and enforcing their demands against the company. We are unable to accept Mr. Bhabhas contention that these workmen consented to be bound by these agreements because of the various facts which had come to their notice and which have all been summarised whilst stating the arguments advanced by Mr. Bhabha. The reason for this finding is that these workmen had not agreed to accept the terms contained in the agreements and that their demand was for payment of much more than what was being offered by the terms agreed to by others and recorded in the agreements. These workmen could not be aware that whilst accepting the lesser amounts that were being paid to them in accordance with the agreements they must record that they were accepting the payments "under protest" and "without prejudice". The payments related to an interim period and were being made as interim relief. The hope of these workmen was that in an adjudication which might be made by the Government they would receive larger and better amounts by way of interim payments. These workmen could not be and were not conversant with the legal proposition that when they received payments their cause for better demands and larger payments would be prejudiced unless they used in that connection the phrases "without prejudice" and "under protest". After the agreement of November, the first payment of all arrears of increased wages as due under the conditions fixed by the agreement retrospectively from April 1, 1966, was made on november 7, 1966. Mr. Bhabha emphasised that the payments were received by the 300 and odd workers who were not bound by the agreement. For this main reason and for the reason that even subsequently payments were continuously received by these workers who were not bound by the agreement, he insisted that these workers had acquiesced into accepting and accordingly consented to be bound by the conditions fixed by the agreement. Now, there is no substance in this contention because only about six days before the payment on November 7, 1966, was made, this block of workers had emphatically refused to agree to be bound by the agreement which was signed on November 1, 1966. These workers further through the 3rd respondent union submitted a charter of demands on May 16, 1967, demanding that the dearness allowance should be linked up with the Poona cost of living index and made it known once again to the company that this block of workers had never agreed to and were not agreeable to accept the terms fixed by the agreement of November 1, 1966. The 275 of these workers forwarded a signed application in connection with their demand on July 10, 1967, to the company. A notice of strike was delivered to the company on July 12, 1967. The matter of their demand was considered by the Conciliation Officer in pursuance of the notice dated July 25 on August 3, 1967. It is abundantly clear that the company was throughout aware that this block of workers had not agreed to and had not acquiesced into accepting and had not consented to be bound by the terms contained in the agreement of November 1,THE respondents are right in their contention that the "settlement" as defined in the Act makes it impossible that an agreement by acquiescence and without a writing being signed could come into existence between the workmen and the employer. The scheme of S. 18 and Rule 62 has the effect of providing that an agreement made otherwise than in the course of conciliation proceedings to be a settlement within the meaning of the Act must be a written agreement signed in the manner prescribed by Rule 62. Even if the workmen not represented by the 2nd respondent union became bound by the agreement of November 1, 1966, and the agreement of May 13, 1967, by acquiescence and accordingly by implicit consent these would never be "settlements" under the Act and would not require to be terminated. The agreement by acquiescence being not recognised by the Act was at no time binding on the workmen. Such alleged agreement of acquiescence could not continue to be binding on any workmen at any time and under such alleged agreement the company as employers never acquired any rights against this block ofIN connection with the question of termination of the agreements of November 1, 1966, and may 13, 1967, a serious question of law was raised on behalf of the respondents that it was within the power of the 3rd respondent Union to terminate the same. Much can be said about this contention, but as we will presently point out, we do not find it necessary to decide this question of law. This is so, because, on a reading of these two agreements and the order of reference, it is clear that theof these two agreements are different from and not the same as theof the disputes referred to arbitration under the impugned order of reference. The other reason is that the agreements record settlement of disputes by way of interim relief only and accordingly contain provisions that the terms contained therein will not continue to operate at any time beyond the period fixed by the agreements. In connection with this question, it is convenient to quote here the relevant parts of theview of the clear language in these two agreements, the submission must be negatived. It is abundantly clear on a reading of each one of the clauses in the operative parts of these agreements that the settlement recorded in the agreements relating to the rights of the workmen to payment of wages including dearness allowance had the character of an interim relief. There was no agreement of any kind between the parties that the final recommendations of the Wage Board will be accepted by the workmen as suggested on behalf of the company. On the contrary, the true effect of the language in clauses (10) and (12) is that the workmen were not agreeable and had not agreed to accept as binding the recommendations made by the Central government in pursuance of the recommendations and/or report of the Wage Board. The workmen had kept their right to make a demand in respect of the matters agreed to by these two agreements as if nothing was in that connection settled between the parties on permanent basis. The intention of the parties in making the agreements was unambiguous and clear that it should be an interim arrangement pending the deliberations and the final recommendations of the Wage board. It is true that the negative covenant which the workmen gave by clause (12) of the agreement was that they would not raise a demand in connection with the matter of wage scales and dearness allowance pending the final recommendations of the Wage Board. It requires to be repeated that there is not a single term in either of these two agreements which provided for any binding scheme regarding wage scale including dearness allowance of any permanent nature between the workmen on the one hand and the company on the other. This finding has the direct effect of the further finding that since the disputes 1 and 2 referred to adjudication by the impugned order of reference relate to demands made not for interim relief but for a scheme of a permanent settlement of the question of wages including dearness allowance, theof these two agreements is not the same asof the disputes referred by the impugned order of reference for adjudication. The continuity of these agreements, therefore, could never have the effect of depriving the Government of jurisdiction to refer the disputes regarding a permanent scheme for adjudication under S. 10 of the Act. In this connection, it is not necessary to quote here the disputes mentioned in items 1 and 2 of the order of reference, because it is not the contention of any of the parties that the demands and disputes made in these items 1 and 2 are claims for interim relief by the workmen. It is clear that the true effect of the provisions in clause (12) quoted above was that there was nothing in these two agreements which was to continue in operation and be binding between the parties after the date of the final recommendations made by the Wage Board. In other words, the true effect of the provisions in clause (12) was that the parties had agreed that the interim relief arrangement as contained in these two agreements was to exhaust itself and come to an absolute end on the date when final recommendations were made by the Wage Board. Admittedly, the Wage Board made its final recommendations on December 23, 1968. Having regard to the language of clause (12), it is impossible, in spite of provisions in R. 83 and S. 19, to hold in the matter of these two agreements that they continued to be operative between the parties after December 23, 1968. There was nothing in these two agreements which could be operative after December 23, 1968. The result is that having regard to the contents of clause (12), it was absolutely unnecessary for any of the workmen of the company to give notice of termination so as to make conditions of employment contained in these two agreements terminated. These conditions, it requires to be repeated, came to an end as they were interim. It is quite clear that where agreements of this kind are made for interim relief in spite of provisions in S. 19 and Rule 83 it would not be necessary by either of the parties to give notice of termination in connection with the conditions contained in suchTHE order of reference was made on January 25, 1969 at which date, the arrangement made by the above two agreements was not operative. (This is not to state that if arrears were allowed to grow in respect of payments due upto December 23, 1968, the workmen could not take proper proceedings for enforcement of such payments). The discussion completely deals with the first contention made on behalf of the company that the State Government had no jurisdiction under s. 10 of the Act because the agreements dated November 1, 1966, and May 13, 1967, were subsisting and binding. As these agreements had ceased to be in operation altogether and as there was nothing in these agreements which continued to be operative after December 23, 1968, the first contention must fail. It requires to be repeated that in that connection it was unnecessary for the 2nd respondent Union to give a notice of termination in the prescribed manner and it was at no time necessary for the workers who were not bound by these agreements to give any notice of termination in thatcompany had made the agreement on the basis of the policy declaration that until the Wage Board made its recommendations finally and until these recommendations were with or without modification finally accepted by the Central Government, the State Government would not make any reference of disputes relating to wage scales or dearness allowance under S. 10 of the Act. In accordance with the policy statement of the Labour Minister, by the 1st agreement dated november 1, 1967, the company agreed to be bound and implemented the Wage Boards recommendations as accepted by the Central Government. The company further agreed to pay additional wages retrospectively as from March 31, 1966, by way of interim relief. It is because of this policy declaration that the company had made the agreement and continued to make payments and thereby suffered prejudice against itself continuously. In the result, the State government was estopped from making a reference under S. 10 of disputes relating to wage scale and dearness allowance not only till the date of the final recommendations made by the wage Board on December 23, 1968 but till these recommendations were finally accepted by the central Government with or without modification. The submission was that the Central government had not made any final decision in respect of the Wage Boards report dated december 23, 1968. As that date had not expired the State Government was estopped from making the impugned order dated January 25, 1968. Reliance in this connection was placed on the decision of the Supreme Court in the case of Union of India v. Anglo Afghan Agencies, a. I. R. 1968 S. C. 718, where in paragraph (23), in connection with the default made by the central Government in implementing its promises made to traders under the export promotion scheme framed and declared by the Central Government, the Supreme Court observed :"under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it can not on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstance in which the obligation has arisen. . . . . . . . . . .paragraph (19) reference was made to the decision in the case of Municipal Corpn. of the city of Bombay v. Secy. of State, (1905) I. L. R. 29 Bom. 580, and the case of Ramsden v. Dyson, (1866) L. R. 1 H. L. 129 at p. 170, referred to in the Municipal Corporations case, (1905) I. L. R. 29 Bom. 580. The Supreme Court approved of the observations in the above two cases and at paragraph (20) observed :"this case is, in our judgment, a clear authority that even though the case does not fall within the terms of S. 115 of the Evidence Act, it is still open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it even though the promise is not recorded in the form of a formal contract as required by the Constitution. "On this question the respondents contended that equity and estopped which may have arisen in favour of the company against the Government must be held to be entirely insufficient to prevent the Government from exercising its jurisdiction and discretion under S. 10 to make a reference in respect of demands made by the workmen being third parties. The further submission was that in so far as 300 and odd workers of the company had refused to accept the Governments policy declaration and in pursuance thereof to agree to an arrangement of interim relief as requested by the Labour Minister, a settlement as desired by the Labour Minister had not been arrived at by all the workmen of the company. The Governments policy was not carried out and could not be under the circumstances carried out by the company with reference to this block of workers. The governments request by its policy declaration was not only to the employers but also to the workmen, but this block of workmen were not willing to accept such request. As regards these workmen, the Government was bound to consider their demands not only with reference to interim relief but for permanent relief in respect of wage scale and dearness allowance and in that connection to exercise its jurisdiction and discretion under S. 10 of the Act. The submission was that the nature of the jurisdiction conferred under S. 10 on the Government for making references where industrial disputes existed or were apprehended was such that it could not be abdicated by making mere policy declarations. The true effect of such policy declarations must be of the nature of good hope of the Government that if workmen adopted scheme of interim relief as fixed by the central Government, it would not be necessary to make references under S. 10 of the Act. Such good hopes expressed by the Government could not be treated by any employers or workmen as binding representations, on the basis whereof, if any prejudice was caused, the Government should be held to be estopped from exercising jurisdiction under S.AGAIN, after certain policy declarations are made in connection with exercise of powers under S. 10, the circumstances may alter so appreciably after passage of time that in law there may be no justification in making a finding that such declarations continue to be binding on the government. In ordinary circumstances where disputes may be of minor character and agreements may have been made between all workmen on the one hand and the company on the other, the Government may not be called upon to exercise its jurisdiction under S. 10. The question is as to whether in law declarations of the kind relied upon by the petitioner company which may be prejudicial to the claims and demands of the workmen could be permitted to be made by the Government and could be held to be binding for a long period of time as might be decided by the Government. Now it appears to us that in the present case the agreements in question were made by the company with about 500 workmen represented by the 2nd respondent union mainly for its own interest and to avoid continuance of unhappy conditions in the working of the companys factory. The interim recommendations made by the Central Government were accepted not because the Labour Minister had stated that the Government would not make reference. This might have been one of the very insignificant reasons which induced the company to make its own peace with its workmen. This was so insignificant that it could not be held to be cause of any prejudice suffered by the company. In our view, the main purpose and consideration of the agreements was the necessity of the company to make peace with its workmen by responding to the charter of demands which had been submitted earlier on the company by the 2nd respondent Union. No equity had arisen in favour of the company in consequence of the policy declarations made by the Minister. The Government is right when it has stated that the situation of industrial dispute which had arisen between the company and its workmen by continuous strikes which had occurred was not foreseen by the Government and this situation along with the important fact that the Poona cost of living index had been for the first time fixed in June, 1965 were sufficient reasons for the Government not to follow in ordinary course in the present case the policy that it had declared. As already stated about 376 workmen who were members of the 3rd respondent Union were not bound by the agreements made and had not accepted the policy declaration made by the Minister as binding. Following upon that declaration, they had not made any agreement even for interim relief with the company. These circumstances were such as made it necessary for the Government to exercise its powers under S. 10 in spite of the policy declaration that was made. We are, therefore, unable to accept the contention that the Government was estopped from exercising its powers under S. 10. The second contention, therefore,strikes were illegal because agreements dated November 1, 1966, and May 13, 1967 were operating and binding and had not been validly terminated. The strikes were in respect of matters covered by the agreements. The strikes were accordingly in contravention of the provisions in(c) of S. 23 and, therefore, illegal under item (i) of(1)of S. 24. The submission was that when strikes were held in respect of the matters covered by the agreements and the strikes were illegal, the Government could not exercise powers under S. 10 for industrial disputes arising out of these strikes. In this connection, strong reliance was placed on the observations of the Supreme Court in the case of State of Bombay v. K. P. Krishnan, a. I. R. 1960 S. C. 1223, at paras 17 and 18. In this case the Government refused to make a reference under S. 10 for the reason that the workmen of the company had adoptedtactics. The main question which arose for consideration was whether these tactics adopted by the workmen were relevant for refusal of a reference under S. 10 and the conclusion of the Court was that this reason was extraneous and not germane and/or irrelevant and for that reason, the government had no jurisdiction to refuse to make a reference. In arriving at that conclusion, in the discussion at paragraph (17) the Court noted the argument that the object of the Act was, inter alia, to secure industrial peace, so that it may lead to more production and help national economy. The Court observed that". . . . . . . . . . . . . . it would not be open to the Government to introduce and rely upon wholly irrelevant or extraneous considerations under the guise of expediency. It may for instance be open to the Government in considering the question of expediency to enquire whether the dispute raises a claim which is very stale, or which is opposed to the provisions of the Act, or is inconsistent with any agreement between the parties,. . . . . . . . . . .upon this last phrase, viz. , "is inconsistent with any agreement between the parties", the submission was that the observation of the Supreme Court had the effect of recording that where breach was being committed by parties of a binding agreement, the Government would be not justified on making a reference on the ground that such breach was being committed. The insistence was that the Supreme Court had finally held that in cases in which the workmen and/or the employer were committing breach of operative agreements, it was not permissible for the Government to make a reference on that ground. The argument was that illegal strikes by the workmen who were bound by the agreements were relied upon by the Government to make the impugned order of reference. That was a reason which had been held by the Supreme Court to be extraneous and irrelevant. In connection with this argument, the case of the respondents is that the agreements did not relate to any matters except of interim relief. The settlement contained in the agreements was not binding on a large block of workers and in any event the strikes related to demands which were not for interim relief and were not in respect of any of the matters covered by the agreements. The strikes were in fact not illegal. This is the true position as regards the workmen who were not bound and may not be true as regards those workmen who had under clause (12) of the agreement of 1st November, agreed not to raise any dispute regarding wages or dearness allowance pending the deliberations and the final recommendations of the Wage Board. It is, however, difficult to hold that 300 and odd workers who were not bound by the agreements whilst striking were joining legal strike and that the remaining workmen whilst striking were joining illegal strike. From its very nature a strike could be illegal for all or for none. This position justifies an argument that the settlement mentioned in clause (c)of S. 23 must like an award be a settlement binding on all the workmen. When a settlement is a private settlement and does not bind all workmen, apparently, the workmen not bound by the settlement would be entitled to resort to strike in respect of matters covered by the settlement and that strike could not be as regards those workmen illegal under the provisions of item (i) of S. 24 (1). This anomalous position arises only where settlement is a private settlement not binding on all the workmen of an employer. We are unable to accept the submission made by Mr. Bhabha that the strike that was legal for the workmen who were not bound by the agreement was illegal for the other block of workmen who were bound by the agreement. It is not necessary for us to decide this question, because, in our view, there is nothing in S. 10 which disentitles the government in connection with the exercise of its discretion thereunder which prevents the government to arrive at a conclusion that by reason of illegal strike industrial dispute exists in a factory. This question becomes insignificant because in fact at the date of the reference the Wage board had already made its recommendations and the agreements had ceased to be in operation. Whilst considering the necessity of making a reference in January, 1969, there was nothing to prevent the Government to consider the facts of legal and or illegal strikes that had existed in the factory as a relevant matter for exercising its jurisdiction under S. 10. The other fact relied upon was that the Government has repeatedly stated that the demand of the workers that the dearness allowance should be linked up with the Poona cost of living index was a strong new circumstance entitling the workmen to the reference made. The submission was that the Poona cost of living index had existed when the Government had made its policy declaration through the Minister in September, 1965. Three months had then expired from the date on which this index was fixed. The submission was that as this circumstance had existed in September, 1965, it could not be taken into consideration whilst exercising jurisdiction under S. 10 in January, 1969. We have found it extremely difficult to appreciate this argument. Admittedly the prior agreements for payment of dearness allowance were made by linking it with the Sholapur cost of living index. The demand of the workmen for linking dearness allowance with the Poona cost of living index was for the first time made by the 3rd respondent Union in May, 1967. This demand of the workmen could not be prejudiced merely because in September, 1965 a policy declaration had been made on behalf of the Government. The policy declaration did not relate to the engineering workers at Poona only, but related to all engineering workers all over the State of maharashtra. The separate question of the cost of living index having been fixed for Poona in june, 1965 may not have been at all present to the mind of the government and the Labour minister when policy declaration was made in September, 1965. It was an extraordinary and peculiar circumstance and could justifiably be considered by the Government under S. 10 whilst making the impugned order of reference. These were the only two grounds on which Mr. Bhabha contended that the reference was made for reasons which were extraneous and not germane. As we are unable to accept that contention, the third contention alsowe have held that these agreements have ceased to be in operation and did not require to be terminated, this contention must fail. We have already recorded reasons in that connection in the previous discussion.