Case: Transmission Corpn., A.P. Ltd.  Vs. P. Ramachandra Rao

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 scrutinizing an award in adjudication". 13. The line of enquiry whether settlement was unfair and unjust in K.C.P. Ltd. vs. Presiding Officer (1996) 10 SCC 446 ) was adopted by a three-Judge Bench of this Court speaking through Majumdar, J. It was observed at SCC p. 451, paragraph 21 that: "Under these circumstances, Respondents 3 to 14 also would be ordinarily bound by this settlement entered into by their representative Union with the Company unless it is shown that the said settlement was ex facie, unfair, unjust or mala fide." 14. The Court came to the conclusion that the settlement cannot be characterised to be unfair or unjust. It was further observed that "once this conclusion is reached it is obvious that the entire industrial dispute should have been disposed of in the light of this settlement". It was reiterated in the case of Tata Engg. and Locomotive Co. Ltd. vs. Workmen (1981) 4 SCC 627 ) that: "A settlement cannot be weighed in any golden scales and the question whether it is just and fair has to be answered on the basis of principles different from those which come into play when an industrial dispute is under adjudication." 15. Earlier, it was observed: "If the settlement had been arrived at by a vast majority of the concerned workers with their eyes open and was also accepted by them in its totality, it must be presumed to be just and fair and not liable to be ignored while deciding the reference merely because a small number of workers (in this case 71 i.e. 11.18 per cent) were not parties to it or refused to accept it, or because the Tribunal was of the opinion that the workers deserved marginally higher emoluments than they themselves thought they did." 16. These aspects were highlighted in ITC Ltd. Workers Welfare Association and Anr. vs. Management of ITC Ltd. and Another (2002) (3) SCC 411 ). 17. Exclusion of workmen retiring before the date fixed is no good ground to characterize settlement as unjust or unfair. In fact in the instant case there is no challenge to the legality of the settlement. 18. As the settlement into in the course of conciliation proceedings assumes crucial importance in the present case, it is necessary for us to recapitulate the fairly well-settled legal position and principles concerning the binding effect of the settlement and the grounds on which the settlement is vulnerable to attack in an industrial adjudication. Analysing the relative scope of various clauses of Section 18, this Court in the case of Barauni Refinery Pragatisheel Shramik Parishad vs. Indian Oil Corpn. Ltd. (1991) 1 SCC 4 ) succinctly summarized the position thus: "Settlements are divided into two categories, namely, (i) those arrived at outside the conciliation proceedings (Section 18(i) and (ii) those arrived at in the course of conciliation proceedings (Section 18(3). A settlement which belongs to the first category has limited application in that it merely binds the parties to the agreement. But a settlement arrived at in the course of conciliation proceedings with a recognised majority union has extended application as it will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. To that extent it departs from the ordinary law of contract. The object obviously is to uphold the sanctity of settlements reached with the active assistance of the Conciliation Officer and to discourage an individual employee or a minority union from scuttling the settlement. There is an underlying assumption that a settlement reached with the help of the Conciliation Officer must be fair and reasonable and can, therefore, safely be made binding not only on the workmen belonging to the union signing the settlement but also on the others. That is, why a settlement arrived at in the course of conciliation proceedings is put on par with an award made by an adjudicatory authority." 19. As observed by this Court in Tata Engineerings case (supra) a settlement cannot weigh in any golden scales and the question whether it is just and fair has to be answered on the basis of principles different from those which comes into play when an industrial dispute is under adjudication. If the settlement had been arrived at by a vast majority of concerned workers with their eyes open and was also accepted by them in its totality, it must be presumed to be just and fair and not liable to be ignored while deciding the reference made under the Act merely because a small number of workers were not parties to it or refused to accept it or because the Tribunal was on the opinion that the workers deserved marginally higher emoluments than they themselves thought they did. The decision in Herbertsons Ltd.s case (supra) was followed. 20. As noted above there was no challenge to the settlement which was the foundation for the Boards decision. A copy of the Memorandum of the Settlement under Section 12(3) of the Act before the Joint Commissioner and Labour and State Conciliation Officer, Government of Andhra Pradesh, Hyderabad was placed on record. On the basis of the settlement, the Boards decision was taken. Paragraph 2 of the proceedings is very significance and read as follows: "A Wage Negotiation Committee was therefore constituted by the Board in the B.P. sixth read above. The committee held detailed discussions with the representatives of the unions and finally reached a negotiated settlement with the recognized union under the code of discipline on 29.1.1991 before the Joint Commissioner of Labour and State Conciliation Officer under Section 12(3) of I.D. Act." 21.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]17. Exclusion of workmen retiring before the date fixed is no good ground to characterize settlement as unjust or unfair. In fact in the instant case there is no challenge to the legality of the settlement18. As the settlement into in the course of conciliation proceedings assumes crucial importance in the present case, it is necessary for us to recapitulate the fairly well-settled legal position and principles concerning the binding effect of the settlement and the grounds on which the settlement is vulnerable to attack in an industrial adjudication. Analysing the relative scope of various clauses of Section 18, this Court in the case of Barauni Refinery Pragatisheel Shramik Parishad vs. Indian Oil Corpn. Ltd. (1991) 1 SCC 4 ) succinctly summarized the position thus:"Settlements are divided into two categories, namely, (i) those arrived at outside the conciliation proceedings (Section 18(i) and (ii) those arrived at in the course of conciliation proceedings (Section 18(3). A settlement which belongs to the first category has limited application in that it merely binds the parties to the agreement. But a settlement arrived at in the course of conciliation proceedings with a recognised majority union has extended application as it will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. To that extent it departs from the ordinary law of contract. The object obviously is to uphold the sanctity of settlements reached with the active assistance of the Conciliation Officer and to discourage an individual employee or a minority union from scuttling the settlement. There is an underlying assumption that a settlement reached with the help of the Conciliation Officer must be fair and reasonable and can, therefore, safely be made binding not only on the workmen belonging to the union signing the settlement but also on the others. That is, why a settlement arrived at in the course of conciliation proceedings is put on par with an award made by an adjudicatory authority."19. As observed by this Court in Tata Engineerings case (supra) a settlement cannot weigh in any golden scales and the question whether it is just and fair has to be answered on the basis of principles different from those which comes into play when an industrial dispute is under adjudication. If the settlement had been arrived at by a vast majority of concerned workers with their eyes open and was also accepted by them in its totality, it must be presumed to be just and fair and not liable to be ignored while deciding the reference made under the Act merely because a small number of workers were not parties to it or refused to accept it or because the Tribunal was on the opinion that the workers deserved marginally higher emoluments than they themselves thought they did. The decision in Herbertsons Ltd.s case (supra) was followed20. As noted above there was no challenge to the settlement which was the foundation for the Boards decision. A copy of the Memorandum of the Settlement under Section 12(3) of the Act before the Joint Commissioner and Labour and State Conciliation Officer, Government of Andhra Pradesh, Hyderabad was placed on record. On the basis of the settlement, the Boards decision was taken. Paragraph 2 of the proceedings is very significance and read as follows:"A Wage Negotiation Committee was therefore constituted by the Board in the B.P. sixth read above. The committee held detailed discussions with the representatives of the unions and finally reached a negotiated settlement with the recognized union under the code of discipline on 29.1.1991 before the Joint Commissioner of Labour and State Conciliation Officer under Section 12(3) of I.D. Act."