Case: Herbertsons Limited Vs. Workmen Of Herbertsons Limited And Ors

was bound to take some time must have influenced both the par- ties to come to some settlement. The settlement has to be taken as a package deal and when labour has gained in the matter of wages and if there is some reduction in the matter of dearness allowance so far as the award is concerned, it cannot be said that the settlement as a whole is unfair and unjust.There are three categories of workers, permanent workers, listed casual workmen and certain other casual workmen. It is said that the third category of workmen are employed seasonally for a period of 20 days or so. Their number is also said to be not more than 20 or 30. The terms and conditions relating to this category of casual workmen were left, under the settlement, to be mutually decided by the parties. It is because of this feature in the settlement that the Tribunal held that the settlement was incomplete. We are, however, informed that as a matter of fact by mutual agreement some terms have been settled even for this third category of casual workmen. At any rate, because no decision was arrived at with regard to this small number of seasonal workmen, it cannot be said that the settlement is bad on that account. 13. The Tribunal next dealt with the principles applicable in granting dearness allowance to workers. It is while dealing with this part of the Tribunals award that Shri Damania for the 2nd respondent sought to make a strong plea in favour of sustaining the award by disregarding the settlement. According to counsel the wage level of the workers is more or less at subsistence level and, therefore, cent per cent neutralisation of the cost of living or, at any rate, 95% neutralisation should have been allowed while setting dearness allowance. Since the Tribunal has rightly taken that settle d principle into consideration and the settlement has departed from it, the same should be held as unjust and unfair to the workmen. 14. We should point out that there is some misconception about this aspect of the case. The question of adjudication has to be distinguished from a voluntary settlement. It is true that this Court has laid down certain principles with regard to the fixation of dearness allowance and it may be even shown that if the appeal is heard the said principles have been correctly followed in the award. That, however, will be no answer to the parties agreeing to a lesser amount under certain given circumstances. By the settlement, labour has scored in some other aspects and will save all unnecessary expenses in uncertain litigation. The settlement, therefore, cannot be judged on the touchstone of the principles which are laid down by this Court for adjudication.There may be several factors that may influence parties to come to a settlement as a phased endeavour in the course of collective bargaining. Once cordiality is established between the employer and labour in arriving at a settlement which operates well for the period that is in force, there is always a likelihood of further advances in the shape of improved emoluments by voluntary settlement avoiding friction and unhealthy litigation. This is the quintessence of settlement which courts and tribunals should endeavour to encourage. It is in that spirit the settlement has to be judged and not by the yardstick adopted in scrutinising an award in adjudication. The Tribunal fell into an error in invoking the principles that should govern in adjudicating a dispute regarding dearness allowance in judging whether the settlement was just and fair.15. Mr. Damania has drawn our attention to several authorities of this Court with regard to the principles of fixation of dearness allowance including the recent decision of this Court in Killick Nixon Limited v. Killick &Allied Companies Employees Union ([1975] Supp. S.C.R. 453.) and earnestly submitted that there is a peremptive necessity to grant cent per cent or at any rate 95% neutralisation of the cost of living as dearness allowance (5th principle of Killick Nixon Limited supra). Even the Tribunal has relied upon the above decision. But, as we have pointed out, that is not the correct way to decide whether a settlement voluntarily arrived at by the parties is just and fair. The matter would have been absolutely different if on the face of it the settlement was highly unconscionable or grossly unjust. Even according to the Tribunal, the reduction of the dearness allowance to 85% and 871/2% from cent per cent is the only objectionable feature to enable it to hold that that part of the settlement is unjust and unfair. The Tribunal found that all other terms of the settlement were fair, just and reasonable.It is not possible to scan the settlement in bits and pieces and hold some parts good and acceptable and others b ad. Unless it can be demonstrated that the objectionable portion is such that it completely outweighs all the other advantages gained the Court will be slow to hold a settle- ment as unfair and unjust. The settlement has to b e accepted or rejected as a whole and we are unable to reject it as a whole as unfair or unjust. Even before this Court the 3rd respondent representing admittedly the large majority of the workmen has stood by this settlement and that is a strong factor which it is difficult to ignore. As stated elsewhere in the judgment, we cannot also be oblivious of the fact that all workmen of the company have accepted the settlement. Bes ides, the period of settlement has since expired and we are informed that the employer and the 3rd respondent are negotiating another settlement with further improvements. These factors, apart from what has been state d above, and the need for industrial peace and harmony when a union backed by a large majority of workmen has accepted a settlement in the course of collective bargaining have impelled us not to interfere with this settlement.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]9. Before we proceed further it is necessary to appreciate the implication of the order of this Court passed on December 19, 1974, set out earlier. This order was passed after hearing the parties for some time when the appeal was first called for hearing on December 19, 1974. From the recitals in the order it is apparent that the parties were prepared to abide by the settlement if the same was fair and just. We are not pre pared to accept the position, as urged by the 2nd respondent, that even if the settlement is binding on the parties executing the document, namely, the company and the 3rd respondent representing a large majority of the workmen, since the same is not binding on the members of the Mumbai Majdoor Sabha Union, howsoever small the number, under section 18 (1) of the Industrial Disputes Act, the appeal should be heard on merits. On the other hand, we take the view that after hearing the parties this Court was satisfied when it had called for a finding of the Tribunal that if the settlement was fair and just it would allow the parties to be governed by the settlement substituting the award. The wording of the issue sent to the Tribunal for a finding clearly shows that there was an onus on the 2nd respondent to show how many workers of the appellant were the ir members upon whom they could clearly assert that the settlement was not binding under section 18(1) of the Indus- trial Disputes Act. It cannot be assumed that the parties were not aware of the implications of section 18(1) of the Industrial Disputes Act when the Court passed the order of December 19, 1974. This Court would not have sent the case back only to decide the legal effect of section 18(1) of the Industrial Disputes Act. Since a recognised and registered union had entered into a voluntary settlement this Court thought that if the same, were found to be just and fair that could be allowed to be binding on all the workers even if a very s mall number of workers were not members of the majority union. It is only in that context that after hearing the parties the case was remanded to the Tribunal for a finding on the particular issues set out above.The numerical strength of the members of the 2nd respondent, who are workers of the company, would also have an important bearing as to whether the settlement accepted by the majority of the workmen is to be considered as jus t and fair. In that view of the matter we are unable to appreciate that the 2nd respondent did not choose it fit to produce evidence to show the actual number of the workers of the company having membership of the 2nd respondent. It is rather odd that not a single worker of the company claimed before the Tribunal to be a member of the 2nd respondent and to assert that the settlement was not fair and just. This is particularly so when all the workers of the company have accepted the settlement and also received the arrears and emoluments in accordance with the same.10. The Tribunal thought that the question of the quantum o f membership of the 2nd respondent did not call for a finding at all in view of 1his Courts order. As observed above that was not a correct assumption. On the other hand, we feel that this view of the Tribunal ha s led it to approach the matter in an entirely erroneous manner. The Tribunal is, rightly enough, conscious that under section 18 (1) of the Industrial Disputes Act the settlement was binding on the company and t he members of the 3rd respondent union. Even so, the Tribunal devoted nearly half of its order in scanning the evidence given by the company and respondent No. 3 to find out whether the terms of the settlement had been explained by the President of the union to the workmen or not and whether the workers voluntarily accepted the settlement knowing all the consequences. This to our mind is again an entirely wrong approach.11. When a recognised union negotiates with an employer the workers as individuals do not come into the picture. It is not necessary that each individual worker should know the implications of the settlement since a recognised union, which is expected to protect the legitimate interests of labour, enters into a settlement in the best interests of labour. This would be the normal rule. We cannot altogether rule out exceptional cases where there may be allegations of mala fides, fraud or even corruption or other inducements. Nothing of that kind has been suggested against the President of the 3rd respondent in this case. That being the position, prima facie, this is a settlement in the course of collective bargaining and, therefore, is entitled to due weight and consideration.It is true that in the course of evidence given by the President as also by two workmen and other officers of the company the Tribunal has found certain discrepancies. For example, the President in the course of cross-examination stated that since the workers had already agreed he only tried to improve upon the settlement by negotiating .with the company for 85% and 871/2% dearness allowances instead of 80% earlier agreed to by the workers on their own. We do not think that this admission by the President would reduce the efficacy of the settlement or affect its validity. It may be that negotiations had been going on for some time and even some important workers had been individually approached by the management, but it is clear that the President of the union had taken upon himself the responsibility for the settlement upon which he. on his own turn, succeeded in making some effective improvements beneficial to the Workmen. The Tribunal further made some observations that Shri Pandit was actually unaware of the consequences that would ensure to the workmen as a result of the settlement Reading the evidence of Shri Pandit as a whole. we, however find hat it cannot be said that he was unaware of the consequences. We are also unable to hold that he had knowingly and deliberately suppressed the fact about the importance of the consequences to the workers if the settlement were accepted. As a matter of fact it has been stated by the workmen who were examined, that Shri Pandit did mention that they would lose Rs. 12/- to Rs. 15/- in dearness allowance if the settlement superseded the award. Mathematically this may not be correct as perhaps, on account of the rise of consumer price index, the loss in dearness allowance could have been even double the figure given by the President. That, however, per se, does not make the settlement unfair or unreasonable.It is found by the Tribunal that in the matter of wages the settlement has given better terms and that the same cannot be said t o be unfair. The Tribunal has stated in more than one place that the only objection to this settlement levelled by the 2nd respondent is with regard to the quantum of dearness allowance. While the award has given the Revised Textile dearness allowance, the settlement has substituted 86% and 871/2% of the Revised Textile allowance for the first and the second period respectively. While the award is for one year, subject to the provisions of the Industrial Disputes Act, the settlement is for a period of three years. Having regard to the totality of the terms of the settlement we are unable to agree with the Tribunal that the terms are in any way un fair or unreasonable.12. Besides, the settlement has to be considered in the light of the conditions that were in force at the time of the reference. It will not be correct to judge the settlement merely in th e light of the award which was pending appeal before this Court. So far as the parties are concerned there will always be uncertainty with regard to the result of the litigation in a court proceedings. When, therefore, negotiations take place which have to be encouraged, particularly between labour and employer in the interest of general peace and well being, there is always give and take. Having regard to the nature of the dispute, which was raised as far back as 1968, the very fact the existence of a litigation with regard to the same matter which was bound to take some time must have influenced both the par- ties to come to some settlement. The settlement has to be taken as a package deal and when labour has gained in the matter of wages and if there is some reduction in the matter of dearness allowance so far as the award is concerned, it cannot be said that the settlement as a whole is unfair and unjust.There are three categories of workers, permanent workers, listed casual workmen and certain other casual workmen. It is said that the third category of workmen are employed seasonally for a period of 20 days or so. Their number is also said to be not more than 20 or 30. The terms and conditions relating to this category of casual workmen were left, under the settlement, to be mutually decided by the parties. It is because of this feature in the settlement that the Tribunal held that the settlement was incomplete. We are, however, informed that as a matter of fact by mutual agreement some terms have been settled even for this third category of casual workmen. At any rate, because no decision was arrived at with regard to this small number of seasonal workmen, it cannot be said that the settlement is bad on that account.The question of adjudication has to be distinguished from a voluntary settlement. It is true that this Court has laid down certain principles with regard to the fixation of dearness allowance and it may be even shown that if the appeal is heard the said principles have been correctly followed in the award. That, however, will be no answer to the parties agreeing to a lesser amount under certain given circumstances. By the settlement, labour has scored in some other aspects and will save all unnecessary expenses in uncertain litigation. The settlement, therefore, cannot be judged on the touchstone of the principles which are laid down by this Court for adjudication.There may be several factors that may influence parties to come to a settlement as a phased endeavour in the course of collective bargaining. Once cordiality is established between the employer and labour in arriving at a settlement which operates well for the period that is in force, there is always a likelihood of further advances in the shape of improved emoluments by voluntary settlement avoiding friction and unhealthy litigation. This is the quintessence of settlement which courts and tribunals should endeavour to encourage. It is in that spirit the settlement has to be judged and not by the yardstick adopted in scrutinising an award in adjudication. The Tribunal fell into an error in invoking the principles that should govern in adjudicating a dispute regarding dearness allowance in judging whether the settlement was just and fair.15. Mr. Damania has drawn our attention to several authorities of this Court with regard to the principles of fixation of dearness allowance including the recent decision of this Court in Killick Nixon Limited v. Killickd Companies Employees Union ([1975] Supp. S.C.R. 453.) and earnestly submitted that there is a peremptive necessity to grant cent per cent or at any rate 95% neutralisation of the cost of living as dearness allowance (5th principle of Killick Nixon Limited supra).Even the Tribunal has relied upon the above decision. But, as we have pointed out, that is not the correct way to decide whether a settlement voluntarily arrived at by the parties is just and fair. The matter would have been absolutely different if on the face of it the settlement was highly unconscionable or grossly unjust. Even according to the Tribunal, the reduction of the dearness allowance to 85% and 871/2% from cent per cent is the only objectionable feature to enable it to hold that that part of the settlement is unjust and unfair. The Tribunal found that all other terms of the settlement were fair, just and reasonable.It is not possible to scan the settlement in bits and pieces and hold some parts good and acceptable and others b ad. Unless it can be demonstrated that the objectionable portion is such that it completely outweighs all the other advantages gained the Court will be slow to hold a settle- ment as unfair and unjust. The settlement has to b e accepted or rejected as a whole and we are unable to reject it as a whole as unfair or unjust. Even before this Court the 3rd respondent representing admittedly the large majority of the workmen has stood by this settlement and that is a strong factor which it is difficult to ignore. As stated elsewhere in the judgment, we cannot also be oblivious of the fact that all workmen of the company have accepted the settlement. Bes ides, the period of settlement has since expired and we are informed that the employer and the 3rd respondent are negotiating another settlement with further improvements. These factors, apart from what has been state d above, and the need for industrial peace and harmony when a union backed by a large majority of workmen has accepted a settlement in the course of collective bargaining have impelled us not to interfere with this settlement.