Case: Workmen Of M/S. Delhi Cloth And General Mills Vs. Management Of M/S. Delhi Cloth And General Mills Ltd

2. The facts necessary for the purpose of this appeal may now be briefly stated. The Chief Commissioner, Delhi by means of an order dated September 9, 1965 referred the dispute in controversy to the Additional Industrial Tribunal, the order of references being in the following terms:Where as from a report submitted by the Conciliation Officer, Delhi under section 12 (4) of the Industrial Disputes Act, 1947, it appears that an industrial dispute exists between the management of M/s. Delhi Cloth and General Mills, Ltd., Bara Hindu Rao, Delhi and its workmen and Shri Shibban Lal and the said dispute has been take up by the D. C. M. (City Shop) Karamchari Union, 1121, Chatta Madan Gopal, Maliwara, Chandni Chowk, Delhi3. Before the Additional Industrial Tribunal the Management had raised various preliminary objections including the objection that Kapra Karamchari Sangh (hereafter called the Sangh) was not competent to take up the case of Shri Shibban Lal, and that the D. C. M. (City Shop) Karamchari Union (hereinafter called the Union), which had originally taken up the cause of workmen, having agreed by the settlement dated June 9, 1965 not to prosecute his case, withdrew its support to his cause with the result that the dispute relating to the dismissal of Shibban Lal was not an industrial dispute. It was further averred that Shibban Lal was bound by the act of his representatives who has made the settlement dated June 9. 1965, and was, therefore, estopped from challenging the same4. On issue No. 1, the Tribunal held that although the Sangh had been (On these objections four issues were framed - Ed.) and were taken up for decision in the first instance1. Has the Kapra Karamchari Sangh no locus standi to file the statement of claim?2. Is the reference incompetent because of settlement dated June 9, 1965 between the D. C. M. (City Shop) Karamchari union and Management?3. Is the dispute not an industrial dispute?4. Is Shibban Lal estopped from raising the present dispute?5. On issue No. 1, the Tribunal held that although the Sangh had been merely authorised to represent Shibban Lal and was not a party entitled to file the statement of claim in its own right, neverthless the claim filed by it was to be deemed to be on behalf of Shibban Lal who had agreed to be represented by the Sangh. Issues Nos. 2 and 4 were discussed together and the Tribunal held that the settlement dated June 9, 1965, which was signed on behalf of workmen by the Secretary and Vice-President of the Union was not arrived at by unauthorised persons. The said settlement was, therefore, held binding on persons who were parties thereto and Shibban Lal being a member of the Union was bound by it. In force of that settlement, the Tribunal felt that there was no industrial dispute which could be referred for adjudication on the date of reference.

Court's reasoning:
7. We are unable to upheld the preliminary objection. It is clear from the record that the Union originally took up Shibban Lals clause. On June 18, 1965 the Conciliation Officer submitted his failure report to the Government. It is apparent that till then the Conciliation Officer was not informed by either of the parties that a settlement had been arrived at in the matter of the dispute in question. Indeed the record show that Shri Jai Bhagwan Sharma, was (who-Ed.) represented the workman in the conciliation proceedings had informed the Conciliation Officer that no settlement had been reached. The settlement D/- June 9, 1965 appears to have been filed before the Conciliation Officer on June 30, 1965, long after the submission of the failure report. The Additional Industrial Tribunal after taking congnizance of the dispute issued notice to the parties on September 16, 1965 fixing October 5, 1965 for filing the statement of claim. The case was, however, taken up in October 6, 1965 because October 5, 1965 was declared a gazetted holiday. On October 6, 1965, the written statement was filed by the Management. The Sangh also filed a statement of claim on behalf of Shibban Lal through Jai Bhagwan, General Secretary of the Sangh with an application for substituting the Sangh in place of the Union as mentioned in the reference, it being averred in the application for substitution that consequent upon the Union having entered into a settlement with the Management not to contest Shibban Lals claim, 53 out of 88 workers of D. C. M. (City Shop) had requested the Sangh to take up Shibban Lals case and the Sangh thereupon unanimously decided to take up his cause. The dispute, it was added, concerned all workmen. The Management was given an opportunity to file objections to this application. On October 28, 1965 the Management opposed the application of the Sangh for being impleaded in place of the Union. While opposing the prayer of the Sangh the Management expressed ignorance about the averments that 53 out of 88 workers of D. C. M. (City Shop) had requested the Sangh to take up the cause of Shibban Lal. It was added that espousal by the Sangh at that stage was illegal as the matter had already been referred by the Government. Espousal, according to this plea could only be at the stage of conciliation proceedings and not after the reference. It was also denied that the dispute concerned all workmen. An agreement having been entered into by the Union, representation by the Sangh was described to be an abuse of the process of law. The dispute, pleaded the Management, had been settled forever and Shibban Lal was a party to the said settlement. Shibban Lal filed an affidavit on November 3, 1965, affirming that, on December 26, 1964, the Union had properly resolved to contest his claim and that on December 28, 1964 the statement of claim, regarding Shibban Lals proposed retirement on December 31, 1964, was filed before the Conciliation Officer10. The validity of the statement of claim filed by the Sangh was mooted and pressed in one of the preliminary objections which gave rise to preliminary issue No. 1, reproduced earlier in this judgment. On this issue, as already observed, the Tribunal decided that the claim filed by the Sangh should be deemed to have been filed on behalf of Shibban Lal. The respondents counsel did not challenge the correctness of this view of the Tribunal and it was not the respondents submission before us that there was no proper statement of claim on behalf of Shibban Lal. In this Court also special leave application is supported by an affidavit sworn by Shibban Lal, the workman concerned. The special leave application and the appeal must, therefore, be held to have been filed in this Court by the Sangh as representing Shibban Lal, who apparently agreed to be so represented by the Sangh. On the facts and circumstances of this case, we do not think that the present appeal can be considered to be unauthorised and legally incompetent on the technical ground urged on behalf of the respondent and we do not find any cogent ground to reject the appeal on the basis of the preliminary objectionWe do not think the Management and the Union can when a dispute is referred to the Conciliation Officer, claim absolute freedom of contract to arrive at a settlement in all respects binding on all workmen, to which no objection whatsoever can ever be raised by the workmen feeling aggrieved. The question of a valid and binding settlement in such circumstances is, in our opinion, governed by the statute and the rules made thereunder.Reliance was next placed on S. 18 (1) to support the binding character of the settlement. This sub-section for its proper construction must be read with the other sub-sections and the relevant rules, in the light of the definition of settlement as contained in S. 2 (p) of the Industrial Disputes Act. Settlement as defined therein means 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 the appropriate Government and the Conciliation Officer.In the light of these provisions we do not think that section 18 (1) vests in the Management and the Union unfettered freedom to settle the dispute as they please and clothes it with a binding effect on all workmen or even on all member workmen of the Union. The settlement has to be in compliance with the statutory provisions17. We are not impressed by this submission. On reference having been made by the Government to the Tribunal, if the respondent wanted to show that this reference was invalid because of a lawful settlement, then it was incumbent on the party relying on such a settlement to prove that it was lawful and valid, rendering the reference illegal. This was particularly so when we find that Shibban Lal had in his affidavit expressly asserted that the settlement relied upon had not been filed before the Conciliation Officer prior to June 18, 1965 when he sent his failure report and also that the two persons entering into the settlement had no authority either from the Union or from the members thereof to enter into a binding agreement. Section 38 of the Industrial Disputes Act empowers the appropriate Government to make rules for the purpose of giving effect to the provisions of the Act. Rules made by the Central Government have to be laid before each House of Parliament while in session for a period of 30 days and the Houses of Parliament are given an opportunity of not only modifying them but even of deciding that the rules should not be made at all. These rules thus appear to us to have full force of law of which judicial notice has to be taken. It was therefore incumbent on the Tribunal to satisfy itself that the settlement relied upon by the respondent in support of the plea of its legality of the reference, which vitally affected its jurisdiction, was in accordance with the provisions of both Industrial Disputes Act and the relevant statutory rules. This was all the more so in view of the pleas contained in Shibban Lals affidavit produced before the Tribunal to which reference has already been made in this judgment. Though no reference was specifically made to Rules 58, the facts affirmed were reasonably clear to attract the attention of the Tribunal to the question of legality of the settlement. Bearing in mind the object of the Industrial Disputes Act and the important public purpose which it is designed to serve, the Tribunal, in our view, had an obligation to make a deeper probe into the validity of the settlement and not to accept it casuallyThis letter quite clearly does not amount to compliance with the rule. Keeping in view its object and purpose, this rule does seem to demand full compliance in order to clothe the settlement with a binding character on all workmen