Case: Brooke Bond India Ltd Vs. The Workmen

The appellant, Brooke Bond India Limited, a company incorporated and registered under the Indian Companies Act, hereinafter referred to as the Company, have a factory at Kanhan, District Nagpur, in Maharashtra. Two trade unions of workmen employed by the Company function in the Kanhan factory; one is known as Bharatiya Swatantra Brooke Bond Chaha Karamchari Sangh (Bharatiya Union for short) and the other is called M. P. Rashtriya Brooke Bond Chaha Karamchari Sangh (Rashtriya Union for brevitys sake). In this case we are concerned with the Rashtriya Union. On September 27, 1975 Government of Maharashtra made a reference under Section10(1) (d) ofthe Industrial Disputes Act, 1947 for the adjudication of an industrial dispute between the Company and the workmen in respect of four demands set out in the schedule to the order of reference. Subsequently on June 11, 1977 a joint charter of demands was submitted by the workmen through the aforesaid two unions; this charter included twenty-six demands. At a meeting of the executive committee of the Rashtriya Union held on August 19, 1977 several resolutions were passed of which two only appear to be relevant for the present purpose. By one of the resolutions a negotiation committee composed of six members including some of office bearers of the union was formed "for a discussion to be held with the management". The other resolution related to the twenty-six demands mentioned above and it said that "a proper decision" regarding these demands would be taken after "due consideration of the proposals given by the members and after placing the same before the negotiation committee of both the unions". Thereafter two more charters of demands, one by each union, were submitted. At a meeting of the executive committee of the Rashtriya Union held on January 8, 1978 the office bearers of the union put it on record that in respect of the four demands pending before the Tribunal the union would accept a satisfactory settlement and that the executive committee had granted permission to the negotiation committee for carrying on discussion with the Company and the Bharatiya Union as regards the pending demands. Subsequently the resignation of some of the office bearers of the union led to the reconstitution of the negotiation committee at a meeting of the executive committee of the union held on February 18, 1978. On the subject of the proposed settlement it was disclosed at this meeting that the Company had agreed to obtain clarification from the head office on several points including the absorption in companys employment of workers employed in loading and unloading job and confirmation of casual workers. The General Secretary of the Rashtriya Union by a letter dated March 9, 1978 informed the factory manager that the members of the reconstituted negotiation committee "will participate in the negotiations to be commenced from March 13, 1978 for arriving at an agreement". On March 16, 1978 a memorandum of settlement was signed. The following office bearers of the Rashtriya Union signed the memorandum : the working president, two vice-presidents, general secretary, joint secretary and the organizing secretary. They were also members of the negotiation committee along with others. On the next day, March 17, a joint petition was filed before the Industrial Tribunal signed by the factory manager of the company, the General Secretary of the Bharatiya Union and the General Secretary of the Rashtriya Union praying that an award in terms of the settlement be passed.3. About a week later, on March 24, 1978 a meeting of the executive committee of the Rashtriya Union was held in which "it was unanimously resolved to withdraw from the agreement dated March 16, 1978 in view of the "discontent amongst the workers about the agreement". On April 1, 1978 at an emergent meeting of the executive committee of the Rashtriya Union, after an elaborate discussion on the agreement it was "resolved to reject the agreement as the problems of the workers were not satisfactorily solved". On April 7, 1978 an application was made to the Tribunal on behalf of the Rashtriya Union praying that the agreement be rejected.4. The Tribunal heard the question as to the validity of the settlement so far as the Rashtriya Union was concerned as a preliminary issue. The Tribunal rejected the contention raised on behalf of the Rashtriya Union that the agreement signed on March 16, 1978 was only a draft agreement and held that it was intended to be a settlement. The Tribunal however came to the conclusion that it could not be treated as a settlement within the meaning of Section2(p) of the Industrial Disputes Act.

Court's reasoning:
5. It cannot be disputed that unless the office bearers who signed the agreement were authorised by the executive committee of the union to enter into a settlement or the constitution of the union contained a provision that one or more of its members would be competent to settle a dispute with the management, no agreement between any office bearer of the union and the management can be called a settlement as defined in Section 2(p). There is no provision in the constitution of the Rashtriya Union authorising any office bearer of the union to enter into a settlement with the management. We have referred above to the proceedings of the executive committee. As the Tribunal points out, the resolutions passed by the executive committee do not support the claim that the negotiation committee was empowered to enter into a settlement without seeking ratification from the executive committee. The Tribunal held, in our opinion rightly, that the fact that the agreement was signed by the office bearers of the union does not clinch the matter because the executive committee at no stage had accepted the agreement. In fact no meeting of the executive committee was held before the agreement was signed on March 16, 1978 to consider whether the agreement wasdefinition of "settlement" in Section2(p) of the Act also states that "settlement" means a settlement arrived at "between the employer and the workmen". So, normally in order that a settlement between the employer and the workmen may be binding on them, it has to be arrived at by agreement between the employer and the workmen. Where the workmen are represented by a recognised Union, the settlement may be arrived at between the employer and the Union. If there is a recognised Union of the workmen and the constitution of the Union provides that any of its office-bearers can enter into a settlement with the Management on behalf of the Union and its members, a settlement may be arrived at between the employer and such office-bearer or bearers. But, where the constitution does not so provide specifically, the office-bearer or bearers who wish to enter into a settlement with the employer should have the necessary authorisation by the executive committee of the Union or by the workmen. A reading of Rule 58 clearly shows that it presupposes the existence of a settlement already arrived at between the employer and the workmen, and it only prescribes the form in which the Memorandum of settlement should be, and by whom it should be signed. It does not deal with the entering into or arriving at a settlement. Therefore, where a settlement is alleged to have been arrived at between an employer and one or more office-bearers of the Union, and the authority of the office-bearers who signed the Memorandum of Settlement to enter into the settlement is challenged or disputed, the said authority or authorisation of the office-bearers who signed the Memorandum of Settlement has to be established as a fact, and it is not enough if the employer merely points out and relies upon the fact that the Memorandum of Settlement was signed by one or more of the office-bearers of the Union".In our opinion the above extract from the judgment of the Delhi High Court states correctly the law on the point.