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

Respondents retired from the services of the Andhra Pradesh State Electricity Board (in short the Board) on 30.4.1990 after attaining the age of superannuation. The Transmission Corporation of Andhra Pradesh Ltd. (in short the Corporation), is the successor company of the Board which came into existence with effect from 1.2.1990 by virtue of the Andhra Pradesh State Electricity Reforms Act, 1998 (in short the Reforms Act). The pay scales of the employees were revised with effect from 1.7.1990 by which time the respondents herein were drawing maximum pay in the concerned scale. The rational of fixing the date with effect from 1.7.1990 was that employees who retired prior to 1.7.1990 are entitled to D.A. at the rate of 38% on the pension whereas the D.A payable to pensioners retired on or after 1.7.1990 is 12.4% but, not before the date of issue of the order. The revised pay scales permitted grant of three annual increments beyond the time scale in regard to those who had reached or crossed the maximum pay as on 1.7.1986. However, in respect of the respondents herein the additional amount was shown as personal pay and the stagnation increments were adjusted towards the said additional amount3. Questioning correctness of the action of the Corporation and its functionaries the respondents herein filed writ a petition. Prayer was to direct the appellants herein to fix their pension and other terminal benefits at par with other UDCs. retired on or after 1.7.1990 and to pay all the arrears of pensions and other terminal benefits. Learned Single Judge having regard to the intended purpose of the scheme held that the respondents have been discriminated while calculating the pension on the ground that they had retired prior to the introduction of the scheme. Stand of the employer in essence was that the Boards proceedings Ms. No. 481 dated 4.2.1991 had application only to those who were on its rolls as on 1.7.1990. In view of the fact that the respondents retired on 30.4.1990 the said scheme has no application to them. In any event the scheme was introduced keeping in view the settlement dated 29.1.1991 entered into between the Wage Negotiation Committee and the Board before the Joint Commissioner of Labour and State Commission Officer in terms of Section 12(3) of the Industrial Act, 1947 (in short the Act) and the same cannot be the subject matter of interpretation in the writ petition. In the Appeal its stand before learned Single Judge was reiterated before the Division Bench. Stand of the writ petitioners was that the learned Single Judge was justified in its conclusion

Court's reasoning:
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."