Case: N.R.C. Employees' Union &amp; Others Vs. The Government of Maharashtra Department of Industries, Energy &amp; Labour &amp; Others

3. The Company was running three plants with a composite factory licence for the manufacture of nylon, rayon and chemicals in its factory at Mohane in District Thane. The factory was established over 442.55 acres of land. The individual workmen were engaged in the factory and were represented by the Maharashtra General Kamgar Union till 2001. Thereafter, the certificate of recognition was granted to Respondent No.3 union i.e. the Mazdoor Sangh on an application being filed by it u/s 14 of the MRTUPULP Act. The staff employed by the company worked in the Head Office which was situated outside the precincts of the factory and in Mumbai city. The staff union was accorded recognition in 1991 under the MRTUPULP Act and continued to represent the staff employed by the company. Several settlements were signed by it with the company in respect of the service conditions of the staff employed by the company; the last of such settlements was dated 25.8.1993 which was in force till 1996. Thereafter, the staff union raised a charter of demands for revision of the service conditions of the staff. The demands were referred for adjudication to the Industrial Tribunal under Reference (IT) No.10 of 1997. The Company too raised its demands qua the service conditions of the members of the staff union which were also referred for adjudication being Reference (IT) No.12 of 1997. Both these references are pending before the Industrial Tribunal.4. The staff was shifted from the Mumbai offices located in the Eros Building and in Ewart House to the factory premises in Mohane during the period from April 1995 to March 1996. The Mazdoor Sangh which claims to have obtained recognition under the MRTUPULP Act in the place of the Maharashtra General Kamgar Union in 2001 did not file an application in either of the references being Reference Nos.(IT) Nos.10 of 1997 and 12 of 1997 to permit it instead of the staff union to represent the workmen i.e. the staff before the Tribunal.5. It appears that the company was declared a sick company in 1987. As its net worth increased, by an order dated 10.1.1994 the Board for Industrial and Financial Reconstruction (for short, `BIFR) discharged the company from the purview of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, `SICA). According to the Company, it undertook several measures in order to reduce the losses which it had incurred. However, in the financial yearthere was a gradual erosion of the working capital of the company and consequently it was faced by a financial crunch. It appears that the Company decided to dispose off surplus land owned by it in the factory precincts inin order to raise funds for the financial restructuring of the company. On 1.3.2007 it entered into an agreement to sell approximately 344 acres of land to K.Raheja Universal Ltd. On obtaining no objection certificates from its secured creditors, namely, several nationalised banks. The production activities in the nylon plant were discontinued by the company in November 2007. According to the company, it was required to undertake multifarious measures for restructuring its finances and while doing so, it entered into a settlement with the Mazdoor Sangh on 5.9.2008, which included a clause for an early retirement scheme. The company claims that out of the total strength of 3725 employees, including the clerical staff, , about 577 opted for the scheme. The operations in the Rayon plant were stopped in July 2008. An application was submitted by the company to the BIFR u/s 15(1) of the SICA. It was declared a sick company u/s 17(3) of the SICA by the BIFR on 16.7.2009. An appeal was filed by the company before the AAIFR. The AAIFR reversed the findings of the BIFR and, therefore, writ petitions were filed in this Court by the company as also by the NRC Employees Union and the NRC Mazdoor Sangh. This Court disposed off those writ petitions by judgement and order dated 29.7.2011. The order passed by the appellate authority was set aside and the order passed by the BIFR was confirmed in those petitions by the Division Bench of this court to which one of us (Marlapalle, J.) was a party.6 The staff union became aware of the settlement between the company and the Mazdoor Sangh which claimed to represent the individual workmen and other manual workers as well as the staff only when an application was submitted before the Tribunal by the company in the aforesaid references on 12.12.2008. In its application, the company requested the Tribunal to dispose off the references since it had entered into a settlement in conciliation on 5.9.2008 with the recognised union, namely, the Mazdoor Sangh. The staff union has opposed this application submitted by the company on 12.12.2008. No orders have been passed as yet on that application. A lockout notice dated 15.11.2009 was issued by the company. That lockout has not been lifted as yet.7. Three settlements have been challenged in these petitions i.e. the settlement of 5.9.2008, which the company claims is a settlement in conciliation and the subsequent settlements dated 10.12.2008 and 17.1.2009 signed u/s 2(p) by the company with the Mazdoor Sangh, extending the period within which the settlement dated 5.9.2008 was to take effect.

Court's reasoning:
14. The Division Bench of this Court while admitting the present petitions and granting interim relief has observed thus:7. In our opinion, prima facie even assuming that the representative Union has entered into a settlement it can only be in respect of dispute which would partake of an industrial dispute and in respect of individual dispute which it has raised. It will not be open to the recognised union under the guise of settlement either to settle the disputes which are not industrial dispute and/or individual disputes which have been raised by the individual workmen in their personal capacity and are pending before the industrial forum for rights which they are entitled to under the existing service conditions or otherlearned Single Judge had issued a declaration that the settlement was not one arrived at in the course of conciliation proceedings u/s 12(3) of the Act and, therefore, was void and would have no effect qua the petitioner workmen. On behalf of the company, it was submitted that the question raised before the learned Single Judge ought to have been adjudicated upon by raising an industrial dispute and not in the exercise of powers under Article 226 of the Constitution of India. The Division Bench observed that when certain features of the settlement established that there were gross violations of the mandate of law, a writ petition was maintainable and there was no need to dismiss the writ petition on this ground. We respectfully agree with this reasoning of the Madras High Court and in our opinion, the present writ petitions are maintainable and, therefore, we are deciding them onregards the staff union, it has been submitted that although it was a recognised union for the undertaking situated in the Eros building and at Ewart House in Mumbai upto 1996, the recognition came to an end when the staff was shifted to the factory premises in 1996. The recognised union for the factory in 1996 was the Maharashtra General Kamgar Union (MGKU) and, therefore, no other union could be considered as the recognised union although the workmen may have been members of a union recognised for a particular establishment at an earlier point of time. It was submitted that the recognition which is accorded by the Industrial Court under the MRTUPULP Act is relates to the premises of an industry. Therefore, according to the learned Counsel, there cannot be a recognised union separately for the staff and individual workmen when they operate in the same premises. According to the learned Counsel for the Respondents, therefore, the petitioners in both the petitions have no locus to file thethe cancellation can be effected only for the specific grounds mentioned in s.13. Shifting of the location of the work place of the members of the recognised union is not one such ground. Neither is there any concept of merger as the counsel for the respondents would have us believe. The recognition of one union cannot merge into the recognition of another. The members of one would have to resign and join the union which is in existence at the new workplace. Admittedly in the present case the members of the staff union have not forsaken it and joined the Mazdoor Sangh. Therefore the staff union would still continue as the recognised union for its members although the staff is now located in another unit. Moreover the recognition accorded to MGKU was only in respect of the workers employed in the factory and not for the staff. Mazdoor Sangh has been recognised in place of the MGKU as it filed an application under s.14 in 1994. The application was allowed in 2001 after verification of the membership for the six months between October 1994 and March 1995. The staff was shifted only inand therefore could never have been considered while ascertaining the membership. The submission of the learned counsel for the respondents is therefore untenable and withoutis true that the Mazdoor Sangh was accorded recognition under the MRTUPULP Act in place of the Maharashtra General Kamgar Union in 2001 when the members of the MGKU became members of the Mazdoor Sangh. However, it must be borne in mind that although the recognised union has precedence over all other unions and individual workmen when an issue is raised regarding the service conditions, this embargo on the appearance of other unions and individual workmen does not operate with respect to disputes regarding termination of service by way of retrenchment, dismissal, discharge, suspension, etc. On a perusal of the settlement of 5.9.2008, it is clear that the settlement speaks about the automatic termination of the services of individual workmen who do not accept the terms of the settlement. Clauses 6 and 7 envisage a reduction of 1500 workers from the complement of workers employed by the Company. These clauses provide for automatic termination of services of those workmen who do not resign under the early retirementthese circumstances, although section 18(1) r/w 18(3) and the proviso to section 36(1) restrict any other union representing the workmen or individual workmen representing themselves when a recognised unionis in existence in an establishment, the embargo will not operate in the present case. As a consequence of the impugned settlement the workmen would have to face termination of service without the due process of law being followed. The law laid down in the case of Oswal Agro Furane Ltd.anr. Vs Oswal Agro Furane Workers UnionOrs., (2005) 3 SCC 224   , would permit the workmen to challenge the settlement though signed before the Conciliation Officer. In our opinion, the writ petition filed by both the staff union as well as individual workmen are maintainable and they have the locus to file thethe present case, admittedly no such report has been submitted by the conciliation officer. Therefore, in our opinion, the settlement cannot be termed as one signed in conciliation. Rule 11 requires the conciliation officer to give a formal intimation in writing to the parties concerned declaring his intention to commence conciliation proceedings from such date as may be specified. Unless the conciliation officer indicates his intention to intervene in the dispute and calls the parties for conciliation, the conciliation proceedings do not commence. Before deciding to intervene in any matter after the receipt of the justification statement from the party who has raised the industrial dispute, the conciliation officer may call the parties individually for a meeting to assess whether an industrial dispute in fact exists or is apprehended. It is only when the intimation of the intention of the conciliation officer to intervene and commence conciliation proceedings is sent to the parties and they appear before the conciliation officer that it can be said that conciliation proceedings have commenced. A settlement signed after the conciliation officer decides to intervene in the industrial dispute in order to bring about a resolution of the dispute can be considered as a settlement signed in conciliation.27. But in the present case the demands were admitted in conciliation on 5.9.2008 and the settlement was signed on the same day. A settlement in conciliation would require the active assistance of the conciliation officer to ensure that parties resolve their disputes and enter into settlement. The conciliation officer in the case before us, took no part in the discussions before the settlement was arrived at and merely appended his signature to the document. The only demands which the Mazdoor Sangh had raised were that production should be started in the factory and the workers should be paid their legal dues. This demand was raised on 20.8.2008. Similarly, the company merely put forth its own terms and conditions for restarting the production in the factory. The parties were invited by the conciliation officer for considering whether to the admit the demands in conciliation on 5.9.2008. It appears that on that day, the parties, i.e., the company and the Mazdoor Sangh appearing before the conciliation officer, produced a settlement dated 5.9.2008 signed by the respective parties and requested that it be recorded as a settlement in conciliation. There is no dispute that the demands were not admitted in conciliation at any time prior to 5.9.2008.An affidavit in reply has been filed by the Assistant Commissioner of Labour, Kalyan who has appended his signature to the settlement dated 5.9.2008. The affidavit devoid of any details as to when he received a copy of the demands raised by the Company or the Mazdoor Sangh, the date of admission of the demands in conciliation, the efforts made by him to induce parties to settle their disputes. There is no averment as to whether he had ascertained the fairness and reasonableness of the settlement. He has not stated whether he has complied with Rule 11 of the Industrial Disputes (Bombay) Rules by giving adequate notice to the workmen including the staff. Further, he has not stated whether a report was submitted by him to the appropriate government in accordance with section 12(3). Undoubtedly, the Assistant Commissioner has been remiss in performing his role as stipulated in section 12 of the Industrial Disputes Act r/w Rule 11 and in fact has abdicated his duties.30. Apart from this, the terms of settlement indicate that the settlement is not wholly regarding industrial disputes. The conciliation officer could not have been party to a settlement which did not deal with industrialwe have seen already no union, whether recognised or not, can decide or settle the disputes relating to the termination of service by whatever means or suspension of an individual employee, unless authorized specifically to do so by the individual workmen. Therefore, in our opinion, a settlement which deals with aspects other than an industrial dispute as defined under section 2(k) of the Industrial Disputes Act cannot be termed as a settlement in conciliation. We have no manner of doubt that the settlement dated 5.9.2008 is not a settlement in conciliation.In Oswal Agro Furane Ltd.anr. vs. Oswal Agro Furane Workers UnionOrs., (2005) 3 SCC 224   , the Supreme Court considered whether the settlement arrived at between the employer and the workmen would prevail over the mandatory statutory requirements contained in section5O of theIndustrial Disputes Act. The employer in that case contended that a notice for closure of the undertaking had been issued in terms of sectionof the Industrial Disputes Act to the State Government and to the workmen employed by it. A settlement was arrived at with the workmen in terms of section 12(3) of the Industrial Disputes Act under which the workers had agreed to the closure without waiting for the appropriate government to grant permission for the closure.The provisions of section 25N and sectionof the Actare mandatory. The judgement in Oswal Agro Furane Ltd.. vs. Oswal Agro Furane Workers UnionOrs. (supra), clearly stipulates that any settlement to the contrary would not be binding on the workmen. The clauses of the settlement dated 5.9.2008 in our opinion have far reaching consequences. The parties to that settlement have in fact agreed to bypass sectionN of the Industrial Disputes Act which is apparent on scanning its terms. This is impermissible and illegal. Merely because no termination of service has been effected under the settlement as yet, as contended by Mr. Talsania, it would not mean that the settlement is legal. The provisions of section 12(3) read with section 18(3) of the Industrial Disputes Act cannot be used to circumvent the provisions of Chapters VA and VB of the Industrial Disputesa scrutiny of the demands which have been referred for adjudication and the demands which have been settled under the settlement of September, 2008, it is obvious that there is no reference at all in the settlement to the demands raised by the staff or the company in 1996 and which are pending adjudication. Thus, unless the demands raised and referred for adjudication are settled between the parties, the question of disposing off the references does not arise. As noted by us earlier, no application has been filed by the Mazdoor Sangh to dispose off the references although it is now claimed before us that no other union can appear before the Tribunal except the Mazdoor Sangh in the aforesaidis trite that once a Reference is made for adjudication of a dispute, the Reference can either be allowed wholly or in part or it can be rejected. The Reference has to be answered. It cannot be disposed off merely because there is a settlement. If there is a settlement, the Tribunal is expected to consider whether the settlement deals with the demands which are referred for adjudication before it. If it comes to the conclusion that the settlement does indeed cover the demands referred for adjudication it can then assess whether the settlement is fair and reasonable. On finding the settlement to be fair and reasonable, the Industrial Tribunal may proceed to make an award in terms of the settlement. The contention of the company that because it has entered into a settlement in conciliation with the Mazdoor Sangh, the demands referred for adjudication before the Tribunal no longer survive is fallacious. Unless the references are answered by the Industrial Tribunal the disputes referred still exist and must be adjudicated upon. Therefore, the Tribunal cannot dispose off the references merely on the application of theis no dispute that the Rayon plant has been locked out from 15.11.2009 and the lockout is the subject matter of a complaint pending before the Industrial Court, Thane. Clause 13 provides that the company is entitled toor retrench the workmen or close any plant or department or section of any establishment without any objection being raised by the Mazdoor Sangh and it would result in termination of the services of the employees. The references pending before the Industrial Tribunal are with respect to wage adjudication, leave and various other demands. The terms and conditions of service governing the workmen covered by the reference would include their statutory rights under ChaptersVA and VB of the Industrial DisputesAct. The service conditions of the workmen are sought to be changed by the employer through the instrument of a settlement when the references are pending. The settlement alters the service conditions applicable to the staff immediately prior to the commencement of the reference.40. Admittedly no permission has been obtained from the Industrial Tribunal before whom the references are pending before effecting such changes and therefore there is a breach of section 33(1). The service conditions of the individual workmen were governed by the settlement dated 3.7.2002 which have been sought to be changed by the settlement of 5.8.2009. It has been argued by the learned Counsel appearing for the respondents that section 33(1) has no applicability in the present case as the alteration in the service conditions have been made with the consent of the recognised union. According to them, it is only when the employer unilaterally changes the service conditions that the section comes into play. It is true that section 33 stipulates that no employer shall alter to the prejudice of the workmen concerned in a reference their conditions of service without the permission of the Tribunal. However, in the present case, since the settlement itself cannot be said to be binding on the staff union, it is the employer which has unilaterally changed the service conditions of the staff to their detriment while the references are pending before the Industrial Tribunal and, therefore, there has been a breach of section 33(1) of the Industrial Disputes Act.41. Mr.Talsania as a last resort submitted that there is no need for this court to interfere in these writ petitions since an overwhelming majority of the workmen had accepted the settlements. However, from the material on record it does not appear that this statement is true. The Company has filed a statement showing that out of a total number of 2633 workmen which included 62 clerical staff, 653 persons had applied for the Early Retirement Scheme. 13 of these 653 workmen were clerical staff. However, only 122 of the manual workmen i.e. the factory staff have been paid and relieved after they opted for the Early Retirement Scheme. In these circumstances it is not possible to accept this submission.