H.M.T. LTD. v.

H.M.T. HEAD OFFICE EMPLOYEES' ASSOCIATION AND ORS.

OCTOBER 29, 1996

[J.S. VERMA AND B.N. KIRPAL, JJ.]

Labour Law:

Industrial Disputes Act, 1947: Sections 22(1) (d), 23(a) & (c), 23, 24 (3) and JO

Strike Illegal but justified-Wages for such strike period-Entitlement- National Industrial Tribunal found strike to be illegal, though justified, being in contravention of Ss. 22 (I) ( d) or 2 3 (a) or (c) of ID Act and awarded wages for such strike period-Held: Wages/or strike period, not payable-Even if strike was justified, no wages for strike period could have been awarded.

Lock out--Legality of-Illegal strike officially called off but workmen, though reported/or duty, continued their agitational, disruptive and violent activities from within the factory premises-Lock out declared without complying with the provisions of S.22-Wages for such lock out period- Entitlement-Held: In the circumstances of the case, although there was E non-compliance with S.22 the lock out is legal by virtue o/S.24(3)-Hence,

wages for such lock out period, not payable.

Section 2 (p )-Minimum wages-Settlement--Terms-Jnterpretation of-1978 settlement between management and unions of BEL, BEML, !TI, HAL and HMT-Term No. I provided unions' acceptance of pay and DA p offered by management without prejudice to unions' right to take up with Government of India the issue of revision of minimum wages and rate of neutralisation of DA beyond the specified point-Management, in case the Government accepted an improvement therein, agreed to revise the minimum wages and rate of neutralisation of DA in consultation with the unions- Held: Such a term does not give to the workmen any vested right of G enhancement of wages or pay scales in case of revision in any other public

undertaking.

Minimum wages-Settlement-Interpretation of-1978 settlement between management and unions of BEL, BEML, IT!, HAL and HMT provided modification of relevant clauses of minimum wages if minimum H 69

 A wages in any other Engineering Central Public Sector Undertaking such as BHEL were increased-BHEL revised its minimum wages to Rs. 500 p.111. w.e.f 1-9-1978-Therefore, the unions sought parity therewith and demanded addition of Rs. 30 to the existing pay sea/es-Consequently, a settlement dated 9-6-1981 was arrived at which (i) extended period of operation of 1978 settlement to 31-12-1982 (ii) workmen were entitled to B a lump sum of Rs. 700 and (iii) workmen were entitled to an adhoc allowance of Rs. 25 p.m. w.e.f 1-1-1981-Held: Demand of parity of minimum wages with BHEL stood concluded by the 1981 settlement-Demand of addition of Rs. 30 p.m. stood settled by the adhoc allowance of Rs. 25 p.m. provided for in 1981 settlement which is binding on the parties as it was reached in conciliation proceedings-Therefore, National Industrial Tribunal erred in C further enhancing the minimum wages to Rs. 500 p.m. on the ground that the 1981 settlement did not preclude the workmen from seeking revision of minimum wages consequent to the settlement in case of BHEL-But as leave under Art. 136 has not been granted to the management on this point, the increase granted by the Tribunal left unaltered-Further, the 1981 settlement does not contemplate adjustment of the ad hoc allowance D of Rs. 25 p.m. towards the increase granted by the Tribunal.

Settlement-Preamble-Expression "without prejudice to the contentions of either parry::..Ejfect of-Held : The said expression has to be read as a whole in the background of the demand raised by the unions- E Thus the said expression can refer only to such matters not specifically covered by the terms of the 1981 settlement.

Allowances-City Compensatoy Allowance-CCA was being paid only to employees of IT! since their DA was linked with All India Consumer Price Index which was lower than the Local Consumer Price Index with F which the DA of the employees of other public sector undertakings was linked-CCA was, therefore, paid to employees of IT! to remove this disparity-National Industrial Tribunal discontinued CCA to employees of IT! on the ground that the same was not being paid to employees of other public sector undertakings-Validity of-Held: In the circumstances G of the case, the direction of the Tribunal dispensing with the payment of CCA to IT! employees, uncalled for-Constitution of India, 1950, Arts. 14 .and 16.

Words and Phrases :

H "Without prejudice to the contentions of either party"-Meaning of

H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. 71

The minimum wages of the lowest category of workmen of five A public sector undertakings, namely, Bharat Electronics Ltd. (BEL), Bharat Earth Movers Ltd. (BEML), Indian Telephone Industries Ltd. {IT!), Hindustan Aeronautics Ltd. (HAL) and Hindustan Machine Tools Ltd. (HM'F) were the same. While fixing the minimum wages and Dearness Allowance (DA) of the lowest category of workmen, IT! linked the DA with the All India Consumer Price Index (AICPI) B whereas the other industries linked the DA with Local Consumer Price Index (LCPI). LCPI being higher than AICPI workmen of !Tl were granted city compensatory allowance (CCA) in order to remove this disparity. In Bharat Heavy Engineering Limited (BHEL), with whom parity of minimum wages was being claimed by the workmen of these five industries, a settlement was arrived at in the year 1980 C whereby BHEL revised its minimum wages at Rs. 500 p.m. w.e.f 1-1-

1978. Therefore, the workmen of these five industries while seeking parity with the minimum wages of BHEL raised an additional demand of Rs. 30 p.m. to the existing scales of pay. Accordingly, a settlement was arrived at in 1978 whereby Term No. I postulated the union' D acceptance of the pay and DA offered by the management without prejudice to the union' right to take up with the Government of India the issue of revision of minimum wages and rate of neutralisation of DA beyond the specified point and the management, in case ihe Government accepted an improvement therein, agreed to revise the minimum wages and the rate of neutralisation of DA in consultation E with unions.

The aforesaid demands received no response from the management whereupon the workmen went on strike. Later on the strike was withdrawn. However, the management of a11 the five units F declared a lock out on the ground that the workers continued the strike and they also carried out violent activities inside the factories.

Therefore, conciliation proceedings were commenced, the lock out was lifted and a settlement was arrived at between the management and the unions. The terms of the settlement were as follows:

(i) The period of operation of the 1978 settlement was extended up to 31-12-1982.

(ii) The workmen were entitled to a lump sum of Rs. 700

p.m.

A (iii) The Workmen were entitled to an ad hoc allowance of Rs. 25 p.m. w.e.f 1-1-1981.

Even after the aforesaid settlement dated 9-6-1981, the workmen continued to press for wage parity of the minimum wages With BUEL w.e.f 1-1-1978. On writ petitions being filed by the unions the High B Court directed the State Government to make a reference of the industrial dispute to the appropriate tribunal under Section 10 of the Industrial Disputes Act, 1947. This reference was accordingly made to the State Industrial Tribunal. As similar references were made in three States, the Central Government made a reference to the National Industrial Tribunal. The terms of reference were in respect of parity C with the employees of BUEL and about the illegality of strike and the lock out.

The conclusions arrived at by the Tribunal were as follows:

(a)

(b)

(c)

(d)

(e)

(f)

(g)

The settlement dated 9-6-1981, although signed in the course of conciliation proceedings under Section 12(3) of the Industrial Disputes Act, 1947, was without prejudice to the right of the workmen to ask for parity of wages with BUEL.

The workmen were entitled to a minimum wage of Rs. 500 p.m.

Although the strike commenced by the workmen was illegal being in contravention of Section S 22 (1) (d) or 23(a) or (c) but it was justified.

The lock out declared by the management was justified.

The employees were to be paid 35% of the wages for the strike and lock out periods.

Adjustment of ad hoc allowance of Rs. 25 p.m. was not allo .ved to be set off.

Discontinuance of City Compensatory Allowance to the employees of ITI on the ground that the same was not being paid to the employees of other public sector

H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. 73

undertakings.

The management of the five public sector undertakings and the unions challenged before this Court the aforesaid award of the Tribunal. Special Leave was granted by this Court limited to the following questions :

(a) Payment of 35% wages for the period of strike and lock out.

(b) Set off of Rs. 25 p.m. claimed by the management, which was disallowed by the Tribunal.

(c) Discontinuance of CCA with regard to the employees of

!TI.

Disposing of the appeal, this Court

HELD : I. The National Industrial Tribunal has held that the strike, although justified, was illegal being in contravention of Section 22(a) of the Industrial Disputes Act, 1947. Therefore, when the strike was illegal but justified no wages for the strike period could have been awarded in favour of the workers. [86-D-EJ

Syndicate Bank v. Umesh Nayak, [1994) 5 SCC 572, followed.

2. Although the illegal strike was officially called off the Tribunal held that the workmen reporting for duty continued their agitational, disruptive and violent activities from within the factory premises. In F such circumstances, declaring a lock out by the management without complying with Section 22 of the Act is legal by virtue of Section 24(3) of the Act. Hence, the workmen would not be entitled to any wages in respect of the period of such lock out. [82-F-G)

G Syndicate Bank v. K. Umesh Nayak, [1994) 5 SCC 577, followed.

3. Term No. I in the 1978 agreement does not postulate revision of pay scales in the event of higher wages being paid to the employees of BHEL or employees of any other public sector undertaking. This clause gives to union only a right to take up the issue regarding the H

A minimum wages and enhancement of rate of neutralisation of DA with the Government of India if the Government agreed to the improvement in the minimum wages or the DA neutralisation rate.

At best, this clause only gives a right to the union to make a reference to the Government of India for revision of minimum wages but does not give any vested right of enhancement of wages or pay scales in the B event of there being a revision in any other public sector undertaking.

187-GH 88-AJ

4.1. The demand of parity of minimum wages with BHEL stood concluped by the settlement dated 9-6-1981. The additional demand of Rs. 30 p.m. to the existing scales of pay is more or less conceded C ina3much as Rs. 25 p.m. were agreed to be paid w.e.f 1-1-1981. The

ettlement of 1981 was arrived at during the conciliation proceedings and, therefore, was binding on the parties under Section 18(3) read with Section 19(2) of the Act. Therefore, the Tribunal erred in further increasing the minimum wages to Rs. 500 p.m. on the ground that the 1981 settlement did not preclude the workmen from asking for a D revision in the minimum wage consequent on the settlement having been arrived at in the case of BHEL. However, as leave under Article 136 has not been granted to the management on this point, the decision of the Tribunal reviewing the minimum wages at Rs. 500 p.m. cannot be altered. Bui the payment of Rs. 25 p.m. as contemplated by the settlement, is payable to all the workers in different scales of pay and E the settlement does not contemplate the said amount being adjusted in any manner. [90-C-G)

4.2 The expression "without prejudice to the contentions of either party" which is used in the preamble of the 1981 settlement has to be read as a whole in the background of the demand which was raised by F the unions. The use of these words can refer to only such other points or aspects which were not specifically covered by the terms of settlement which were arrived at on 9-6-1981. [90-A-B[

5. It is an indisputable fact that city compensatory allowance (CCA) is being paid only to the employees of !TI because their DA G was linked with the all India Consumer Price Index which was lower than the Local Consumer Price Index with which the DA of the employees of other public sector undertakings was linked. Therefore, CCA was paid to employees of IT! to remove this disparity. The Tribunal while directing that CCA will not be paid to the !Tl employees because it is not paid to the employees of other public sector H undertakings overlooked the fact that the local consumer price index

H.M.T.LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, J.] 75

was admittedly always higher than the All India Consumer Price Index. A Therefore, the direction of the Tribunal dispensing with the payment of CCA to ITI employees was uncalled for. [91-C-E]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 122 of 1990 Etc. Etc.

From the Judgment and Order dated I 0.11.89 of the National Industrial Tribunal at Bombay in R.No. NTB-1 of 1984

N.B. Shetye, (Hardev Singh) Jitender Sharma Tripurari Ray, Vineet Kumar, Ms. Madhu Moolchandari, M.C. Narsimhan, Ms. Gunwant Dara,

B.K. Pal, K.C. Gupta and Ms. Sheela Goel for the appearing parties.

The Judgment of the Court was delivered by

KIRP AL, J. Leave granted.

The award of the National Industrial Tribunal Bombay (hereinafter D

referred to as 'the Tribunal') adjudicating on the demands of the unions of five Bangalore based public sector undertakings for parity in minimum wage with the minimum wage payabie to the employees of another public sector undertaking namely; Bharat Heavy Electricals Limited (hereinafter referred to as 'BHEL ') is challenged by the managements as well as the E workmen in these appeals.

The minimum wage of the lowest cagetory of workmen of five Bangalore based public sector undertakings namely; Bharat Electronics Limited (hereinafter referred to as'B.E.L.'), Bharat Earth Movers Limited (hereinafter referred to as 'B.E.M.L. '), Indian Telephone Industries F Limited (hereinafter referred to as 'LT.I.'}, Hindustan Aeronautics Limited (hereinafter referred to as 'H.A.L.') and Hindustan Machine Tools Limited (hereinafter referred to as 'H.M.T.') was the same in all these public sector undertakings. By settlements entered into on various dates in 1974 between the managements and the workmen of these five undertakings except LT.I., G the minimum wage of the lowest category of workmen was fixed at Rs. 300 consisting of basic pay of Rs. 200 + Dearness Allowance of Rs 100 which was linked with Local consumer Price Index. The minimum wage in LT.I. was also fixed at Rs. 300 As dearness allowance was linked with All India Consumer Price Index, on the basis of the Index prevailing as on

1.12.1973, the Dearness Allowance payable on the baisc wage of Rs. 200 H

A came to Rs. 91 and, hence in order to bring uniformity in the minimum wage, the employees of the LT.I. were paid city Compensatory Allowance (hereinafter referred to as 'C.C.A.') of Rs. 9/- at 4 1/2% of the basic pay.

The settlements in these five undertakings were to be in force till 31.12.1976.

B In BHEL, with whom parity was being claimed by the workmen of these five industries, an agreement dated 17/18.9.73 had been entered into whereby the minimum wage was fixed at Rs. 258. 70 comprising of basic pay of Rs. 200/- and Dearness Allowance of Rs. 58 at the All India Consumer Price Index of 200 points for industrial workers with 1960 base. A revision was effected by agreement dated 17/18.1.1974 and the C minimum wage of the workers of BHEL was fixed at. Rs. 300/- This minimum wage, and the wage structure constructed on this basis, came into force with effect from J.9.1973 and was to be in force for a period of four years. This agreement expired at the end of August 1977 and negotiations for the review and revision of the same w.e.f. 1.9.1977 were commenced between the management and the workers in March, 1978. A D final agreement between the management and the workers was reached on

8/9.1.1980. By this agreement, the wages as on 1.1.1978 for an unskilled employee in BHEL at the lowest level was fixed at Rs. 500/- per month at

 all India Consumer Price Index of 327 points. This agreement Was to be effective from 1.1.1978 and was implemented in April, 1980.

The 1974 settlements between the managements of B.E.L. l.T.I., H.A.L., and B.E.M.L. expired on 31.12.1976 and hence the workmen unions submitted charters of demands in early part of 1977. Conciliation proceedings were held between the managements of five public sector undertakings and their workmen and amicable settlements were arrived at F between the parties on 25.5.1978. Term number I of these settlements was uniform and is as follows:

"The Union agrees to accept the offer of the management with regard to pay scales, quantum ofDeamess Allowance and Fitment benefits and method of fixation of pay in the revised pay scales as detailed in Annexure-1. This, however, is without prejudice to th~ Union's right to take up the issues ofrevision of minimum wages and the enhancement of the rate of neutralisation of • Dearness Allowance beyond Rs. 1.30 per point with the Government of India and if the Government of India agrees to the improvement in the minimum wages or the Dearness

H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, J.] 77

Allowance neutralisation rate the management agrees to make A necessary modification to the minimum wages and Dearness Allowance neutralisation rate and consequential adjustment in the wage structure in consultation with the unions."

The said settlements dated 25.5.1978 did not settle all the demands of the workmen. Conciliation proceedings continued which, therefore, B resulted in different memorandum of settlements which were entered into in case of H.A.L on 30.8.1978, in B.E.M.L. on 31.8.1978, in LT.I. on 1.9.1978, in H.M.T. on 2.9.1978 and in B.E.L. on 3.9.1978.

These settlements contained different, though somewhat similar, terms C with regard to revision of wages. In the settlement of B.E.L., term Nos. 1.0 and I. I. were as follows:

"1.0 This agreement is without prejudice to the Union's right to take up the issues of revision of minimum wages and the D enhancement of the rate of neutralisation of Dearness Allowance at Rs. 1.30 per point rise/fall in the local CPI, with the Government and if the Government of India agrees to improve the minimum wage or the neutralisation rate beyond Rs. 1.30 per point, the Management agrees to make necessary modifications to the minimum wage, D.A. neutralisation rate E and consequential adjustments in the wage structure in consultation with the Unions.

1.1 If the minimum wages, comprising of pay and Dearness Allowance, or ifthe rate ofneutralisation of Dearness Allowance is altered to a higher rate than agreed to in this settlement in any F other Engineering Central Public Sector Undertaking such as BHEL, H.M.T. etc., the Management agrees to make necessary modifications in the relevant clauses and consequential adjustments, in consultation with the Unions."

Similar terms were incorporated in the settlements in the cases of B.E.M.L. and H.A.L. in the cases of LT.I. and H.M.T., however, there

was no term similar to 1.0 or I. I of the B.E.L. settlement but the above mentioned term 1 of the settlement dated 25.5.78 was reiterated in the preamble of their settlements. At the time when these settlements took place in 1978, negotiations were taking place between the managements H

A and the workers of BHEL which had not resulted in a final settlement. It is for this reason that in the aforesaid clause I. I reference was made to the settlement which mighttake place between the management and the workers of BHEL and which could result in certain modifications being made in the relevant clauses of the settlement.

B After the settlement was arrived at between the management and the workers of BHEL on 819.1.80 which had resulted in the revision of wage at the lowest level of an unskilled employee to Rs. 5001p.m. w.e.f. I .9. 78, the unions representing the workmen in the five Bangalore based public sector undertakings raised the question of revision of minimum wage in these industries as per the minimum wage as settled in BHEL. A joint C action forum (hereinafter referred to as 'JAF') of the unions of five public sector undertakings at Bangalore and Kolar Gold Fields (which was a unit of BHEL) was formed. On 12.9.1980, this JAF formulated a common proposal for submission to the management and accordingly, the negotiating unions submitted common demands to the respective undertakings in the matter of revision of wages. These demands primarily related to the claim D for addition of Rs. 30 to the existing scales of pay.

The aforesaid demands received no response whereupon the negotiating unions gave notices to the respective managements of their decision to go on indefinite strike any day after I0.12.1980. Conciliation E proceedings between the managements and the unions then commenced and the strike was postponed to 26.12.1980 on which date the workmen of all the five undertakings struck work after they rejected an offer which had been made by the managements just before the commencement of the strike. After the commencement of the strike conciliation proceedings again started on 27.12.1980. On 5.2.1981, when no agreement could be arrived F at, the conciliation officer submitted his failure report.

The strike in the H.M.T. watch factory was called off on 6.3.1981 and thereafter, the J.A.F. took a general decision on 12.3.1981 to withdraw the strike. The strike was, accordingly, withdrawn on 14/15116.3.1981 G and the workers resumed work on subsequent dates. No negotiations for settlement of the demands commenced and thereupon, a decision was taken by J.A.F. to launch an indefinite hunger strike which commenced on 29.4.1981 and continued till 10.5.1981. The Managements of B.E.L., B.E.M.L., LT.I. and H.A.L. declared a lock out in all their units located at Bangalore w.e.f 6.5.1981 on the ground that the strike had in fact not H been withdrawn and that the workers continued the strike and they also

H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, l.] 79

carried out violent activities inside the factory. Lock out was also declared A at Kolar Gold Fields for the same reason w.e.f. 8.5.1981. Thereafter, fresh conciliation proceedings were commenced and the lock out was lifted w.e.f. 2/3.6.81 and a settlement dated 9.6.1981 was arrived at between the managements and the unions. The terms of settlement in the cases of all the five Bangalore based public sector undertakings were identically worded and these terms of settlement were as under : B

"(i) The wage settlements dated 3rd and 4th September, 1978 which are to expire on 30.6.1981 are extended upto 3 l.l 2.1982.

(ii) The workmen on the rolls of the company as on the date of this settlement will be paid a lump sum of Rs. 700 (Rupees C Seven Hundred only).

(iii) With effect from 1.1.1981, for the period they are entitled to wages, they would also be paid an ad hoc allowance of Rs. 25 per month. This amount will count as a pay for all purposes D except for pay fixation.

(iv) All other terms and conditions relating to pay, allowances and other monetary benefits in terms of the settlements dated 3rd September and 4th September, 1978 will continue for the extended period of the settlement.

(v) The Union assures the Management that they will assist in the maintenance of discipline, improving productivity and ensuring smooth production in the factory."

Even after the aforesaid settlement dated 9.6.1981, the workmen F continued to press for wage parity of the minimum wage with BHEL w.e.f 1.l.1978 on the ground that the settlement of9.6.1981 did not settle the demands made by the unions on 12.9.1980. On writ Petitions being filed by the unions against B.E.L., LT.I., B.A.L and B.E.M.L., the Karnataka High Court vide its decision dated 9.8. I 982 directed the G Government of Karnataka to make a reference of the industrial dispute to the appropriate tribunal under Section l 0 of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the Act'). This reference was accordingly, made to the State Industrial Tribunal by order dated 23.4.1983. Two questions were referred to the said Tribunal; one was in respect of parity with employees of the BHEL and the second was about the illegality of H

A strike and the lock out. It appears that the Governments of West Bengal and Maharashtra had also made similar references to the respective State Tribunals. Faced with this situation, where references had been made to the tribunals in three different states, the managements approached the Central Government and thereupon reference was made to the National Industrial Tribunal by the Central Government on 10/30.5.1984. To this B reference the unions of five Bangalore based public sector undertakings, which were situated outside Bangalore, were not made parties and a writ petition was filed in the Karnataka High Court, which by order dated 20.2.1985, directed the Central Government to consider the question of including the State unions in the said reference. Accordingly, by order dated 3.5.1985 reference in respect of all the units, all regional and sales C offices of five undertakings was made. The terms of the reference were as follows :

"Are the workmen justified in demanding revision of wages bringing their wages on par with BHEL in view of the relevant clauses in the 1978 settlement?

2. If so, what should be the quantum and the period for which such quantum is to be paid in view of the BHEL settlement subsisting till the end of August, 1982?

3. Are the workmen of Hindustan Machine Tools Ltd., Bangalore, (ii) Bharat Earth Movers Ltd., Bangalore and Kolar Gold Fields, (iii) Indian Telephone Industries, Banglore (iv) Bharat Electronic Ltd., Bangalore and (v) Hindustan Aeronautics Ltd., Bangalore justified in going on strike w.e.f. 26.12.1980?

If so, to what relief are the workmen entitled?

4. Are the managements of (i) Hindustan Machine Tools Ltd., Banglore; (ii) Bharat Earth Movers Ltd., Banglore and Kolar Gold Fields, (iii) Indian Telephone Industries Banglore, (iv) Bharat Electronic Ltd., Bangalore and (v) Hindustan Aeronautics Ltd., Bangalore justified in declaring lock outs of their establishments with effect from 8/9.5.81 to 4.6.1981 at Kolar Gold Fields and 7.5.1981to2/3.6.1981 at Bangalore? If not, are the workmen entitled to wages for the lock out period or to any other relief?"

H In the common statement of claim filed by the unions, it was

....

H.M.T. LTD. v. H.M. T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, J.] 81

contended that the workmen were justified in demanding that wages and A wage structure be revised so as to bring the minimum wages on par with that obtaining in BHEL. It was a contention of the unions that the relevant clause in 1978 settlement gave liberty to the workmen to raise the question of wage revision as and when there was a final settlement in BHEL or as and when the Government of India communicated a change of attitude in the matter of wage fixation. The unions contended that in view of the B settlement dated 8/9.1.1980 in BHEL, the relative difference in the minimum wage of the unskilled workmen in BHEL and the workmen in the units of H.A.L., B.E.L., B.E.M.L. and at Kolar Gold Fields was as follows:

BHEL

BEL

BEML

HAL

Basic wage Rs. 335.00 Rs. 305.00

Dearness Allowances Rs. 165.00 Rs. 125.00

House Rent Allowance Rs. 39.00 Rs. 35.00

City Compensatory Allowance Rs. 15.60 Rs.-

Rs. 554.60 Rs. 465.00

In addition in BHEL settlement there was provision for giving one more increment in revised scale to all workmen on the roll of the company on the date of the settlement.

With regard to quantum of increase of wages, the unions' claim was as follows:

"!. The existing scale of pay should be restructured by adding Rs. 30.00 at the minimum and at all stages in each scales.

2. (a) The irreducible minimum D.A. For KGF as on 1.9.1978 should be revised to Rs. 133 as against Rs. 128.

(b) For the purpose of computation of variable D.A. All India H

Consumer Price Index figures should be adopted instead of local consumer price index.

3. For the existing employees, basic pay should be fixed in the following manner:

(a) Add Rs. 30.00

(b) Add one increament.

(c) Add one more increament in lieu of 'next higher Stage' (to avoid anomalies) and to provide for consequential adjustments benefits.

4. City compensatory Allowance should be paid at the rate of 6% of the basic wages.

5. The fitment benefit which is not extented to the employees joining after the date ofagreement should be extended to them."

The managements in their reply refuted the said demands. The main contention; in this regard, was that when the demand had been raised for revision of pay after the settlement in BHEL had been arrived at, then the E disputes had been settled with the payment of ad-hoc amount of Rs.700

and an additional ad-hoc payment of Rs 25 p.m. from 1. l.l 981 and, therefore, the question of wage parity with BHEL did not survive any longer. It was also contended that the strike of the workmen was unjstified and illegal and, therefore, the workmen were not entitled to any wages during the strike period. The further contention on behalf of the F managements was that even after the strike had been called off, the workers had resorted to various acts of intimidation, go-slow, beating up of the willing workers who had attended factory during the strike period and the workmen also resorted to other forms of indiscipline including destroying of company property thereby making it impossible to run the factory under G normal conditions. In substance the strike conditions were continued from inside the factory which culminated in very serious violent activities which led to the declaration of lock-out. The said lock out, it was submitted, was justified and legal and, therefore, the workers were not entitled to wages for the period during which the lock-out subsisted.

H The Tribunal gave its award on 10.11.1989. While it did not

H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, J.] 83

separately deal with the issues which had been framed, it considered the A contentions of the rival parties. In brief, the conclusions arrived at by the - Tribunal were as follows:

(a) The scope of reference in respect of parity with BHEL was only with regard to minimum wage payable to the unskilled workmen of the lowest category and, there was no reference for B revising the pay-scales during the operation of the earlier settlements.

(b) The relevant clause of the settlement of 1978 had given a right to the employees to ask for parity with BHEL in respect c of minimum wage for the lowest category and, therefore, there was no reason why there should not be any parity during the period covered by the settlement of 1978.

( c) The workmen were entitled to the minimum wage of Rs. 500 p.m. w.e.f. 1.9.1978.

(d) The settlement dated 15.6.1981 did not operate at par to the present reference on the question of parity with BHEL because the settlement dated 15.6.1981, although signed in the course of conciliation proceedings under Section 12 (3) of the Industrial Disputes Act, 1947, was without prejudice to the contentions of E the employees to give parity in respect of minimum wage for the lowest category of BHEL. By the settlement of 15.6.1981, only an interim arrangement had been arrived at and the payments were thereunder described by the Tribunal as ad-hoc payments, could not be adjusted towards the minimum wage of Rs. 500 p.m.

(e) Although the strike commenced by the employees in all the five Bangalore Based public sector undertakings were illegal but the Tribunal held that this strike was justified as the Union of India did not agree to the demand of the employees with G parity in respect of minimum wage of lowest category with ::::iiV'

BHEL.

(£)The lock out declared by the managements of the companies, except in the case of HMT where no lock was declared, was justified.

(g) The employees of the companies at Bangalore should be paid 35% of the wages for the strike and lock out periods.

The aforesaid Award of the Tribunal has been challenged by the managements of the five undertakings and the unions. The undertakings filed special leave petitions impugning that part of the decision of the B Tribunal which had awarded a minimum wage of Rs. 500 p.m. and had also not allowed the adjustment of Rs. 25 p.m. even though the minimum wage was fixed at Rs. 500 p.m. Further more, the challenge was also to the award of 35% of the wages to the workmen during the strike and lock out periods.

C Special Leave was granted by this Court on 2.4 .. 1990 limited to the

three questions which were:

Payment of 35% wages for the period of strike;

Payment for the period of lock out; and

Set-off of Rs. 25 p.m. claimed by the management, which was disallowed by the Tribunal.

The grievance of the workmen, which led to the filing of these appeals E by special leave, was on three counts:

(i) That there had been inadequate increase of wages at higher grades;

(ii) The Tribunal had ordered discontinuance of C.C.A. with regard to the employees of Indian Telephone Industry;

(iii) 100% wages for strike and lock out period should have been awarded.

G It was contended by Mr. Narayan B. Shetye, learned counsel on behalf of the managements, that the Tribunal having come to the conclusion that the strike was illegal, could not have awarded any wages in respect of the strike period. Similarly, as the Tribunal had held that the lock out was justified, if then could not have awarded 35% of the wages for this period to the workmen. Mr. Jitendra Sharma, learned counsel for respondents, H however contended that the strike was not illegal and in any event, as the

H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, J.] 85

said strike had been called off, no lock out could have been declared. In A ..... the alternative, it was submitted that for the period of lock out, which should have been declared to be illegal, the workmen were entitled to full wages.

On the basis of the evidence which was led before the Tribunal it held, as already noted, that the lockout was justified because the demand B of the workmen, which had been raised in terms of the settlement of 1978, had not been agreed to by the Government. The strike was, however held to be illegal because J.T.I, H.A.L. and H.M.T. were declared to be public utility services and no notice as contemplated by Section 22 (a) of the Act had been given. After taking note of the fact that conciliation proceedings between the managements and the workmen were going on when the strike c commenced, the Tribunal concluded as follows:

"The strike in the public utility services and in other undertakings was illegal because it was commenced during the pendency of the conciliation proceedings before the Conciliation Officer. As mentioned above, at about the same time when the strike notices D were given conciliation proceedings in respect of the demands of the workmen were commenced and had not come to an end .when the strike was actually commenced on 26.12.1980.,

Admittedly, by that time the conciliation officer had not rhade any failure report. The strike in the public utility services viz. !Tl, HAL and HMT Hyderabad was thus in contravention of E clause ( d) of sub-section ( l) of Section 22, while the strike in the other undertakings contravened sub-section (a) of Section 23 of the Industrial Disputes Act, 1947. There is also substance in the contention urged on behalf of the managements that the strike was illegal also because it was in contravention of sub- F section (c) of Section 23. The strike was not only for breach and non-implementation of some of the clauses in the l 978 settlements but it was in respect of all the demands made by the workmen by the notice dated 12.9.1980 and some of these demands were in respect of matters covered by the 1978 settlements which were in force." G ...

Mr. Jitendra Sharma, learned counsel for the workmen, has not been able to persuade us to hold that the aforesaid conclusion arrived at by the Tribunal with regard to illegality of the strike is in any way incorrect. It is quite obvious from the facts on record that the workmen had resorted to illegal strike. Without going into the question as to whether the strike was H

A justified or not, and even assuming that the Tribunal was right in coming to the conclusion that the workmen were justified in going on strike, the question as to whether the workmen would be entitled to get any wages during the period of illegal strike is no longer res integra.

A Constitution Bench of this Court in Syndicate Bank v. K. Umesh B Nayak, [ 1994] 5 sec 572 has held that the workmen would be entitled to wages for the strike period if the strike was both legal and justified. In other words, if the strike was only legal and not justified or if the strike was illegal and justified, the workers were not entitled to wages for the strike period. It was observed that "Whether the strike was legal or illegal and justified or unjustified, were issues which fell for decision within the C exclusive domain of the industrial adjudicator under the Act and it was not primarily for the High Court to give its findings on the said issues. The said issues had to be decided by taking the necessary evidence on the subject."

D In view of the aforesaid decision and inasmuch as the strike in the present case in all the five undertakins at Bangalore has been held to be illegal, therefore, no wages for the strike period could have been awarded in favour of the workers.

As regards lock out is concerned, even if it is assumed that there was E non-compliance with the provisions of Section 22 of the Act at the time when the lock out was declared, the conclusion of the Tribunal that the lock out, in the instant case, was legal is not incorrect. From the facts which have been stated hereinabove, and as found by the Tribunal, it is clear that the provisions of Section 24 (3) of the Act are attracted to the F present case. The workmen had gone on illegal strike and even when the strike was officially called off, they continued to disrupt the working of the factories while being within the factory premises.

The Tribunal held that :

"The managements have placed on record sufficient evidence to substantiate their contentions that even though the strike was formally withdrawn and the workmen reported for duty, the workmen continued their agitational disruptive and violent activities from within and thus in fact continued their illegal strike."

H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KlRPAL, J.] 87

The view of this, the Tribunal rightly held that the declaration of A lock out must, therefore, be regarded as being in consequence of illegal strike and, therefore, the lock out would not be deemed to be illegal even if the provisions of Section 22 of the Act were not complied with by the managements. This being so and applying the ratio of the Constitution Bench decision in SYNDICATE BANK (Supra), the workmen would not be entitled to any wages in respect of the period of lock out. The award of B the Tribunal to this extent is, therefore, liable to be set-aside.

It was submitted by Mr. Shetye that the Tribunal having increased the minimum wage to Rs. 500/- it ought not to have directed that the payment of Rs. 25/- p.m. may not be set-off. It was contended that by increasing the wages to Rs. 500/- p.m. and also allowing the workmen to C retain Rs. 25/- p.m. w.e.f 1.9.1978, the effect would be that the wages of these workmen would be more than the wages of the lowest rank of workmen in BHEL. As this conteution relates to the construction and effect of the settlement dated 9.6.1981, it would be appropriate, at this stage, to also consider the contention of Mr. Sharma on behalf of the workmen to the effect that the Tribunal ought to have revised the lowest D scale and bring it at par with BHEL's scale of pay and thereafter, if should have revised the higher scales as well. This submission was based on the premise that the settlement of 1978 allowed the workmento ask for revision of pay scale consequent on a settlement taking place in the case of any other public sector undertaking such as BHEL. When the settlement in E BHEL had taken place in January, 1980, the workmen of these five public sector undertakings were entitled to contend and demand that their paystructure should be revised so as to bring them at par with the revised scales of pay which were in existence in BHEL and that the settlement dated 9.6.1981 was without prejudice to this right and could not preclude the workers from demanding the said parity.

In the case of HMT and lll, the clause relating to revision of pay was the one which was incorporated in the settlement dated 25.5.1978.

Term no. 1 in the agreement dated 25.5.1978 does not postulate revision of pay scales in the even of higher wages being paid to the employees of G _,, BHEL or employees of any other public sector undertaking. This clause gives to union only a right to take up the issue regarding the minimum wages and enhancement of rate of neutralisation of dearness allowance with the Government oflndia ifthe Government agrees to the improvement in the minimum wages or the dearness allowance neutralisation rate. At best, this clause only gives a right to the union to make a reference to the H

A Government of India for revision of minimum wages but does not give any vested right of enhancement of wages or pay scales in the event of there being a revision in any other public sector undertakings. In the case of three other public sector undertakings namely; BEL, BEML and HAL and additional clause in the settlement was inserted. In BAL The clause was I. I in BEML, the clause was as follows : B

"If any comparable engineering industry in the Central Public Sector Such.as BHEL etc., revises the minimum pay and D.A. as well as the D.A. neutralisation rate beyond what is agreed to in this settlement, the issues will be negotiated bilaterally and consequential adjustment made in the wage structure."

In the case of HAL the clause was as follows:

"If a higher minimum wage or higher rate of neutralisation of CPI is agreed to in any comparable engineering industry such as BHEL in the Central Public Sector, the management agrees to review the corresponding provisions in this settlement and make consequent adjustment in the wage structure in consultation with the Union."

The clause in BEML contemplated bilateral negotiations in case of revision taking place in the minimum pay of BHEL. In clause I. I of E BEL, the management agreed to make necessary modifications in consultation with the union and in the case of HAL the management agreed to review the provisions of the settlement consequent on a higher rate being paid in BHEL. The latter three settlements no doubt make a reference to a revision of pay scales in case of revision of pay in BHEL but no such F reference is contained in the settlements of HMT and !Tl. The unions of these five public sector understaings were taking a joint action. They raised the demand for the revision of wages after the settlement of BHEL had arrived at injune, 1980. The demands were raised by the joint action front on 12.9.1980 and the same were in the following terms:

"I. The existing scales of pay should be restructured by adding Rs. 30 at the minimum and at all stage in each case.

2. The irreducible minimum D.A. for Banglore as on 1.9.1978 should be revised to Rs. 130 as against Rs. 125.

3. For the existing employees, basic pay should be refixed in

H.M.T. LTD. v. H.M.T. HEADOFFICEEMPLOYEES' ASSN. [KIRPAL, J.] 89

the following manner : A

(a) Add Rs. 30/-

{b) Add one increment.

{c) Add' one more increment in lieu of next higher stage (to B avoid anomalies) and to provide for consequential adjustment benefits.

4. City Compensatory Allowance should be paid at the rate of 6% (in all places).

5. The _Fitment Benefit which is not extended to the employees joining after the date of agreement should be extended to them.

6. The arrears on account of the above should be worked and paid with effect from 1.1.1979."

The settlement of 9.6.1981 specifically dealt with the claim of the revision of scale demanded by the workers. The demand was for a revision

at the rate of Rs. 30 p.m. w.e.f 1.9.1978. In view of this, in the settlement dated 9.6.1981. it was agreed between the workmen and the managements that all the workers on the pay rolls of the companies as on 9.6.1981 would be paid a lump sum of Rs. 700. This clause contained a benefit E which was more than what the unions were asking for. The demand of the unions was for payment at the rate of Rs. 30 w.e.f. 1.1.1979 which would have meant that the employees who had worked for a longer period would have got more than those who had joined the service later. Clause (ii) of the settlement dated 9.6.1981 gave a lump sum payment of Rs. 700 to all the employees irrespective of length of the service who were on the rolls F of the Companies as on 9 .6.1981. Calculated at the rate of Rs. 25 p.m., this sum of Rs.700 would amount to payment in respect of 28 months i.e. w.e.f 1.9.1978 to 31.12.1980. From 1.1.1981, the workmen were given an ad-hoc allowance of Rs. 25 p.m. it is thus evident that the claim which was raised by the unions in their letter of demand dated 12.9.1980 relating G to revision of pay scale stood concluded by the settlement of 9.6.1981.

The demand of the union was more or less conceded inasmuch as Rs. 25 p.m. were agreed to be paid w.e.f 1.1.1981 instead of an additional Rs. 30 p.m.

It was submitted by Shri Sharma that the terms of the settlement H

SUPREMECOURTREPORTS [1996] SUPP. 8 S.C.R.

A dated 9.6.1981 specifically mentioned that this was "without prejudice to the contention of either party" an expression which is used in the preamble of the said settlement. This settlement dated 9.6.1981 in our opinion has to be read as a whole. It has to be read in the background of the demand which was raised by the unions in their letter dated 12.9.1980. The main claim of additional amount of Rs. 30 p.m. at the minimum and at all B stages in each case, as demanded by the workmen clearly stood settled with a lump sum payment of Rs. 700 and ad-hoc allowance of Rs. 25 w.e.f 1.1.1981 as agreed to in the settlement of 9.6.1981. The use of words "without prejudice to the contentions of either party" can refer to only such other points or aspects which were not specifically covered by the terms of settlement which were arrived at on 9.6.1981. c The settlement of 1978 was with regard to pay scales, allowance and other monetary benefits. The settlement of9.6. l 98 i brought about a change whereby a sum of Rs. 25 was given w.e.f 1.1.1981 in addition to lump sum payment of Rs. 700 Clause (iv) of the settlement dated 9 .6.1981 stated in no uncertain terms that all other conditions relating to pay D allowances and other monetary benefits were to "continue for the extended period of the settlement" i.e. up to 31.12.1982. This would clearly show that the original settlement of 1978 with regard to payscales as well as . allowances and other monetary benefits were to continue upto 3.1.12.1982 subject to the increase of Rs. 25 p.m. plus lump sum payment of Rs. 700 This settlement of 9.6.1981 was arrived at during the conciliation E proceedings and, therefore, was binding on the parties under Section 18

(3) read with Section 19(2) of the Act. The term of settlement dated 9.6.1981 did not contemplate thatthe payment of Rs. 25 p.m. w.e.f 1.1.1981 was liable to be adjusted in any manner. It is no doubt true that the Tribunal by the impugned award has increased the minimum wage to Rs. 500 p.m. because the tribunal came to the conclusion that the settlement dated F 9.6.1981 did not preclude the workmen from asking for a revision in the minimum wage consequent on the settlement having been arrived at in the case of BHEL. This conclusion of the Tribunal, in our opinion, was incorrect but as leave had not been granted to the management on this point, the decision of the Tribunal reviewing the minimum wage at the G lowest rank of Rs. 500 p.m. cannot be altered. However the payment of Rs. 25 p.m. as contemplated by the settlement, is payable to all the workers in different scales of pay and the settlement does not contemplate the said amount being adjusted in any manner. This being so the contention of Mr. Shetye for adjustment of this amount cannot be accepted.

H The last question which remains for consideration is with regard to

H.M.T. LTD. v. H.M.T.HEADOFFICEEMPLOYEES' ASSN. [KIRPAL, J.] 91

city compensatory allowance to the workmen of LT.I.. It is not in dispute A that prior to the impugned award, C.C.A. @ 4% was being paid to the workmen of LT.I. By the impugned award the Tribunal increased the minimum wage to Rs. 500 p.m. in respect of BEL, BEML, H.A.L. and H.M. T. The break up of this amount was basic pay of Rs. 335/- irreducible D.A. of Rs. 129.90+ variable D.A. of Rs. 35.10. It was stated in the Award that in respect of these four companies, the variable D.A. shall be B at the local consumer price index prevailing as on 1.19.1978 at different units, with quarterly adjustments at the rate of 1.30 per point or rise or fall in the local indices. It is not disputed that in the existing wage structure, city compensatory allowance was not being paid to the workmen of abovementioned four companies because the local consumer price index used to be higher than the All India Consumer Price Index. In view of this difference C in the price indices, C.C.A. was being paid to the employees of LT.I. whose rise and fall in dearness allowance was controlled by the All India Consumer Price Index. The Tribunal while directing that city compensartory allowance will not be paid to the LT.I. employees because it is not paid to the employees of other public sector undertakings at Bangalore, overlooked the fact that the local consumer price index was admittedly always higher D than All India Consumer Price Index. It is for this reason that the city compensatory allowance was being paid to the employees of LT.I. Mr.

Shetye frankly conceded that if city compensatory allowance is not paid to the employees of LT.I. then over a period of time, the salary of workmen of LT.I. would be less than the salary of the workmen ofother companies because the variable dearness allowance of employees ofB.E.L., B.E.M.L. E and H.M.T. will increase at a higher rate than the variable dearness allowance of LT.I. employees which is linked with the rise or fall in All India Consumer Price Index. In our opinion, therefore, the direction of the Tribunal dispensing with the payment of city compensatory allowance to LT.I. employees was uncalled for.

F From the aforesaid discussion, we conclude that the workmen would not be entitled to receive any wages during the period of illegal strike and lock out; the payment of Rs. 25/- as a result of settlement dated 9.6.1981 is not adjustable and the direction of the Tribunal not to allow demand of city compensatory allowance to the workmen of LT.I. was not correct.

The award of the Tribunal directing payment of 35% of the wages during G the period of illegal strike and lock out and the decision with regard to non-payment of city compensatory allowance to LT.I. is accordingly, modified to that extent. The appeals are disposed of in the aforesaid terms.

Parties to bear their own costs.

V.S.S.

Appeals disposed of. H