Case: National Engineering Industries Ltd Vs. State Of Rajasthan

(d) refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, whether it relates to any matter specified in the Second Scheduled or the Third Schedule, to a Tribunal for adjudication :Provided that where the dispute relates to any matter specified in the Third Schedule and is not likely to affect more than one hundred workmen, the appropriate Government may, if it so thinks fit, make the reference to a Labour Court under clause (c) :Provided also ................] read with Section 12(5) [12. Duties of conciliation officers. - (1) Where any industrial dispute exists or is apprehended, the conciliation officer may, or where the dispute relates to a public utility service and a notice under Section 22 has been given, shall, hold conciliation proceedings in the prescribed manner(2) The conciliation officer shall, for the purpose of bringing about a settlement of the dispute, without delay, investigate the dispute and all matters affecting the merits and the right settlement thereof and may do all such things as he thinks for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute(3) If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceedings the conciliation officer shall send a report thereof to the appropriate Government or an officer authorised in this behalf by the appropriate Government together with a memorandum of the settlement signed by the parties to the dispute(4) If no such settlement is arrived at, the conciliation officer shall, as soon as practicable after the close of the investigation send to the appropriate Government a full report, setting forth the steps taken by him for ascertaining the facts and circumstances relating to the dispute and for bringing about a settlement thereof, together with a full statement of such facts and circumstances, and the reasons on account of which, in his opinion, a settlement could not be arrived at(5) If, on a consideration of the report referred to in sub-section (4), the appropriate Government is satisfied that there is a case for reference to a Board, Labour Court, Tribunal or National Tribunal, it may make such reference. Where the appropriate Government does not make a such a reference it shall record and communicate to the parties concerned its reasons therefor(6) A report under this section shall be submitted within fourteen days of the commencement of the conciliation proceedings or within such shorter period as may be fixed by the appropriate Government :Provided that, subject to the approval of the conciliation officer, the time for the submission of the report may be extended by such period as may be agreed upon in writing by all the parties to the dispute] of the Industrial Disputes Act, 1947 (for short, the `Act) to adjudicate the disputes between the appellant and the National Engineering Industries Workers Union (for short, the Workers Union) in respect of the demands raised by the Workers Union. This notification is as under :6 Jaipur dated 17th March, 1989s an industrial dispute [(k) industral dispute means any dispute or difference between employers and employers, or between employer and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person] as described below has arisen between the Management of National Engineering Industries Ltd., Jaipur and President, National Engineering Industries Workers Union, B-4, M.L.A. Quarters, JaipurWhereas the Conciliation Officer, Jaipur has reported that no settlement was arrived at :Whereas the State Government after considering the report of the above Conciliation officer satisfied that the matter is fit to be referred to the Industrial TribunalIn the 24-point charter of demands made by the President National Engineering Industries Workers Union, B-4, M.L.A. Quarters before the Management of National Engineering Industries Ltd., Jaipur (Charter of demands annexed) is fair and properIf not to what the workmen are entitled ?Annexed : Charter of demandsBy Order of the GovernorSpecial Secretary to the Government2. It would be appropriate at this stage to know the background under which the reference came to be made3. Appellant is a company registered under the Companies Act with its registered officer at Calcutta. One of its factories is located at Khatipura Road, Jaipur in the State of Rajasthan. There are three unions with which we are concerned and these are : (1) National Engineering Industries Labour Union (for short, the `Labour Union); (2) National Engineering Industries Staff Union (for short, the `Staff Union); and (3) the Workers Union referred to above. It is stated that Labour Union has majority of the workers on its roll; is recognised, and is the representative union and registered as such under the provisions of the Act as amended by the Rajasthan Industrial Disputes Amendment Act, 1958. In 1983 all the three unions made their character of demands. A tripartite settlement [2(p) settlement means a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorised in this behalf by the appropriate Government and the conciliation officer] arrived at between the management, Labour Union and the Staff Union. In respect of demands made by the Workers Union failure report was submitted. Workers Union made representation to the State Government for referring their disputes for adjudication. This request was, however, declined by the State Government in view of the tripartite settlement already reached between the representative union, the Staff Union and the management. The settlement was to remain valid and operative till September, 1986. All the three unions made fresh charter of demands in 1986 which were identical in almost all respects. Conciliation proceedings were initiated and though failure report was submitted by the Conciliation Officer in respect of the proceedings regarding the Workers Union, conciliation settlement was arrived at with the Labour Union and the Staff Union. It was a conciliation settlement and was to be in operation for a period of three years ending September 30, 1089. It is not disputed that all the employees of the appellant including the members of the Workers Union accepted the benefits under this tripartite settlement4. On the character of demands raised by the Workers Union and on which the Conciliation Officer had submitted a failure report, the State Government did not make any order for reference of the disputes nor did it refuse to make reference. Workers Union then filed a writ petition in the High Court requiring the State Government to make reference of their disputes to the Industrial Tribunal under the provisions of the Act. This writ petition was decided by a Division Bench of the High Court on March 23, 1989 whereby it was directed to the State Government to decide the question on the failure report of the Conciliation Officer whether to make or not to make the reference. The State Government was required to decide the question within two months from the date of the judgment, i.e., March 23, 1989. High Court also observed that it would be open to the appellant to raise all the contentions before the State Government and the State Government would or would not make a reference only after hearing the parties. However, before the decision of the High Court, the State Government, in the meantime, issued the notification dated March 17, 1989 for reference of the disputes relating to the demands raised by the Workers Union. We have already set out above the notification dated March 17, 1989 making reference of the disputes to the Industrial Tribunal. Appellant thereafter submitted a representation dated April 3, 1989 to the State Government drawing its attention to the decision of the High Court and requesting that the State Government might withdraw the reference and take a fresh decision after hearing the appellant. This, it appears, was not acceded to. The fact that the State Government had already made a reference on March 17, 1989 was not brought to the notice of the High Court when it decided the writ petition of the Workers Union on March 23, 1989. Since the State Government did not accept the request of the appellant, it filed a writ petition in the High Court challenging the validity of the reference. As noted above, the writ petition was dismissed by the learned single Judge. The appeal filed by the appellant before the Division Bench also met the same fate. That is how the matter has come before us, after this Court granted leave to appeal against the judgment of the High Court.

Reasoning:
23. 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 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 the 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.s (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 recognized majority union will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. Recognized 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 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 workman 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 and others v. Management of Lotus Mills and another, 1998(1) SCC 650. In all these negotiations based on collective bargaining individual workman necessarily recedes to the background. Settlement will encompass all the disputes existing at the time of the time of the settlement except those specifically left outThere can be many splinter groups each forming a separate trade union. Under Section 4 of the Trade Union Act, 1926 any seven or more members of a trade union can get the trade union registered under that Act. If every trade union having few members is to go on raising a dispute and the State Government making reference again and again the very purpose of settlement is defeated. Once there is a representative union, which in the present case, is the Labour Union, it is difficult to see the role of the Workers Union. If there are number of trade unions registered under the Trade Union Act, 1926 not entitled to be registered as representative unions and they raise disputes, industrial peace would be a far cry. Under Section 2(oooo) [2(oooo) `Representative Union means a Union for the time being registered as a representative Union under this Act] of the Rajasthan Act `representative union means a union for the time being registered as a representative union under the Rajasthan Act (Rajasthan Act XXXIV of 1950). Under SectionAny Union which has for the whole of the period of at least three months during the period of six months immediately proceeding the calendar month in which is so applies under this section a membership of not less than fifteen per cent of the total number of workmen employed in unit of an industry may apply in the prescribed from to the Registrar for registration as a Representative Union] of the aforesaid Rajasthan Act any Union which has for the whole of the period of at least three months during the period of six months immediately preceding the calendar month in which it so applies under this Section a membership of not less than fifteen per cent of the total number of workman employed in unit of an industry may apply in the prescribed form to the Registrar for registration as a Representative Union. Then under SectionThe Registrar shall cancel the registration of a Union(a) if after holding such an inquiry, if any, as he deems fit he is satisfied(iii) that the registered Union is being conducted not bona fide in the interests of workmen but in the interest of employers to the prejudice of the interest of workmen or;(b) If its registration under the Indian Trade Unions Act, 1926 (Central Act XVI of 1926) is cancelled] registration of a representative union can be cancelled on various grounds mentioned therein and one of such grounds is if, after holding such an inquiry, if any, as the Registrar deems fit he is satisfied that the registered union is being conducted not bona fide in the interest of the workman but in the interest of the employees to the prejudice of the interest of the workman. We have already quoted SectionE as to how a representative union is to be registered. Proviso to that Section makes it clear that if there are two are more unions fulfilling the criteria laid down in SectionD and apply for registration then the union having the largest membership of the employee has to be registered. As to what is representative union is not defined in the Act but in common parlance it would mean that it represents all the workers. It is not the case of the Workers Union that registration of the Labour Union is liable to be cancelled on any ground whatsoever. Notice given by Workers Union undern (2) of Section 19 of the Act is obviously invalid as it did not represent majority of the persons bound by the settlement nor it is a representative union. In this view of the matter it is not necessary for us to consider what were the demands raised by the Workers Union in its charter which were not covered by the tripartite settlement24. It has not been shown to us as to how a settlement arrived at on a holiday would be invalid. We do not think there is any bar in having conciliation proceedings on a holiday and to arrive at a settlement. On a holiday atmosphere is rather more relaxed. Learned single Judge in his judgment did not examine with reference to each of the demands raised by the Workers Union as to why it was not covered under the tripartite settlement and even the earlier settlement of 198325. Industrial Tribunal is the creation statute and it gets jurisdiction on the basis of reference. It cannot go into the question of validity of the reference. Question before the High Court was one of jurisdiction which it failed to consider. A tripartite settlement has been arrived at among the management, Labour Union and the Staff Union. When such a settlement is arrived at it is a package deal. In such a deal some demands may be left out. It is not that demands, which are left out, should be specifically mentioned in the settlement. It is not the contention of Workers Union that tripartite settlement is in any way mala fide. It has been contended by the Workers Union that the settlement was not arrived at during the conciliation proceedings under Section 12 of the Act and as such not binding on the members of the Workers Union. This contention is without any basis as the recitals to the tripartite settlement clearly show that the settlement was arrived at during the conciliation proceedings26. State Government failed to give due consideration to the direction of the High Court in its judgment dated March 23, 1989. State Government also failed in its duty to bring to the notice of the High Court of its notification dated March 17, 1989 making the impugned reference. It appears to us that the reference had occasioned while the judgment had been reserved by the High Court. In any case it was expected on the State Government to bring to the notice of the High Court before making a reference its decision to make the reference. After the judgment had been announced and directions issued by the High Court to hear the appellant it was incumbent of the State Government, in the circumstances of the case, to recall the reference. It could not direct the appellant to raise its objection to reference before the Industrial Tribunal for which Industrial Tribunal certainly lacked jurisdiction. State Government before making the reference did not consider all the relevant considerations which would clothe it with the power to make the reference under Section 10 of the Act. We find substance in the submissions of Mr. Pai. Wholesale reference of all the disputes in the charter of demands of Workers Union for adjudication was also bad inasmuch as many of such disputes were already the subject matter of tripartite settlement. This also showsn of mind by the State Government in making the reference27. When notice was issued on the special leave petition proceedings on the reference were stayed. Earlier also during the pendency of the writ petition before the High Court, which led to the impugned judgment proceedings, had been stayed. There has not been any progress before the Industrial Tribunal and all these years have passed. During the course of hearing we have been told that there have been even two more settlements and also that President of the Workers Union is now himself the President of the Labour Union. Even otherwise it would be futile to allow the reference to continue after lapse of all these years. This is apart from the fact that in our view reference in itself was bad as the tripartite settlement did bind the members of the Workers Union as well.