. , K.C.P. LIMITED ' ' . ..., ·~ ' . . . . '• 'v. ' .-. '

'. THEJ~, RE§~DiNG OFFI.CER, f;\ND os. ··-· , l ,; I.

. ' : . . ·· -~ I . t ' ; . ,. . • . [AM. AHMAm; a., S.B. MAJMUDAR AND B.N: KlRPAL, JJ.]

• 1 , • • , •n ·~ . ~

Labour Law:

IndustlialDisputes Act, 1947: Sections 2(k) & (p), 2-A and 18(1).

Settlement-Otlwwise than in conciliation proceedings-Dispute between employer compal.ly and workmen-Resulted in dismissal of certain workmen-Sole recognised and representative trade u11ion pa,1Jic, ippf~4 , in conciliation proceedings on behalf of ail workmen including the dismissed ones who co1ttini1ed to be members of trade union-Conciliation proceediitgs ultimately f ailed-Pursua11t to which industlial dispute raised under S. 2(k)-No industlial dispute raised under S. 2-A by dismissed workmen- Dwing pe11de11cy of dispute before Labour Cowt, the said trade union and employer anived at settlemeni:-.Option either to accept reinstatement with co11tinuity in se1vice without back wages or accept a specified lwnpsum amount with other mo1ietmy be11efits-Some dismissed workmen did not approve settlement-But trade union entered into settlement on behalf of all dismissed workmen including the dissenting 011es-Howeve1; Labour Court declined to pass award iii tenns of settlement-Held : settlement was not ex facie, unjust or un.fai1~77ierefore, it was binding even on such dismissed workmen who did not approve the settlement-Hence, Labour Cowt should have passed an award in tenns of settlement and should not have continued the industdal dispute in relation to dismissed workmen who did not approve settlement.

Settlement-Othe1wise than in conciliation proceedings-Ce1tain dispute between employer company and workmen led to go slow, stdke and lock G out-Disciplina1y action against 29 workmen for va1ious acts of misconduct resulted i.u-tll.ejr dismissal-Subsequently, settlement anived at between employer anti-trade union-Option either to accept reinstatement with continuity in se1vice without back wages or accept a specified lwnpsum amount with other nwnet01y benefits-All stdking workmen other than dismissed ones H reinstated without back wages-Held : In the circumstances of the case, the 148

KC.P. LID. v. PRESIDING OFFICER 149

tenns oj seitlemen't relating to proposed reinstatement of dismissed workmen A without. back wages neither unfair nor unjust.

The appellant-Company had an Engineering Unit where it manufactured inachinery and employed about 500 workmen. Respondent No. 2 was the only recognised and a representative trade union of all the workmen in the said establishment. Certain disputes between the appellant and the workmen led to go slow, strike and lock out declared by the appellant-Company. Disciplinary action against 29 workmen for various acts of miscondut l'esulted in "their mmissal: The respondent No. 2trade union participated iri the concilation proceedings on behalf of all workmen

inclung the dismissed ones, which ultimately failed. An industrial dispute under SectiOn 2(k) of the Industrial Disputes Act, 1947 was raised by the rsl.iondent No:'. 2trade union on behalf of the said 29 workmen.

However, none of the said 29 workmen raised industrial dispute in their

• r,. • ·~ I f. ' .

~~ J • • ·-· • individual "capacity under Section 2-A of the Act.

 During the pendency of the said industrial dispute before the Labour D Court the said trade union entered into a settlement with the appellant- Company under Section 18(1) of the Act otherwise than in the course of conciliation proceedings on behalf of all the said 29 dismissed workmen giving option to either accept reinstatement with continuity of service without back wages or accept a specified lumpsum amount with other E monetary benefits. However, 12 workmen out of the said 29 workmen did not accept the aforesaid settlement. The Labour Courtdeclined to pass an award in terms -of the settlement on the ground that the 12 workmen had not approved the settlement and industrial dispute in respect of them would continue and proceed furthe1. However, out of the said 29 workmen, 17 workmen had agreed to abide by the terms or the settlement and were F reinstated in exercise of'theiroption. The 12 workmen were members of the respandent No. 2-trade union who were acting on their behalf and still continued to be members of the union.

; I The appellant-Company filed a writ petition before the High Court G challenging the decision of the Labour Court.to continue the dispute in connection with the said 12 workmen. The High Court dismissed the writ petition. Hence this appeal.

..jl I\ lt.l', • . . , On behalf of the appellant-Company it was contended that when respondent No. 2-Union had espoused the cause of all the 29 dismissed H

A workmen, and the reference was made under Section 2(k) of the Act, the union which represented all the workmen including the said 12 workmen was entitled to act on behalf of all of them and enter into a settlement;. and that under these circumstances individual workmen had no independent right to contest their dismissal orders and were bound by the settlement

B which was not in any way ex facie, unfair or unjust.

Allowing the appeal, this Court

HELD : 1.1. The settlement arrived at by the respondent No. 2-union with the appellant-company was not in the course of conciliation proceed- C ings. Therefore, it would be binding under Section 18(1) of the Industrial Disputes Act, 1947 to the parties to the agreement, namely, the appellantcompany on the one hand and respondent No. 2-union representing all the 29 dismissed employees, who were its members and on whose behalf it had raised the industrial dispute under Section 2(k) of the Act, on the other. The D settlement was duly signed by both the parties. Under these circumstances, respondent Nos. 3to14 (in all 12 workmen) also would be ordinarily bound by this settlement entered into by thefr representative union \'tith the company unless it is shown tl)at the said settlement was ex-facie, unfair unjust or malafide. No. such case could be even alleged much less made out by the dissenting respondent Nos. 3 to 14 before the trial court. The entire in- E dustrial dispute was raised by respondent No. 2-union on behalf of all the 29 dismissed workmen and as it was not an industrial dispute covered by Section 2A of the Act whereunder individual dismissed workman could come in the arena of contest, it could not be held, as wrongly assumed by the Labour Court that this settlement was not entered into under Section 18(1) F of the Act by these dissenting workmen when the respondent-union did represent them from beginning to-end and is still representing them as they are members of the union at present. Tue terms of the settlement cannot be considered to be in any way ex-facie, unjust or unfair and that the said settlement consequently must be held to be binding on these contesting workmen also. Hence, the entire industri.al dispue should have been dis- G posed of in the light of this settlement and an award in terms of the settlement should have been passed by the first respondent-court in the case of respondents 3 to 14 also. [157~C-D; 157-F-H]

Ram Prasad Vishwakanna v. The Chaimian, Industrial Tribunal, H [1961] 3 SCR 196; lferbertsons Ltd. v. The Workmen of Herbertsons Ltd. &

KC.P. LID. v. PRESIDING Ofl!CER [S.B. MAJ MUD AR, J.] 151

Ors., AIR (1977) SC 322 and Banmi Refilwy Pragatisheel Shannik Parishad A

v. Indian Oil C01poration, [1991) 1 SCC 4, relied on.

1.2. The relief of reinstatement without back wages could not be said to be unreasonable as all other workmen also lost their back wages only because they they supported the cause of these 29 colleagues of theirs and

/ I

I B hence there was no reason why the workmen who indulged in the acts or misconduct and who were also to be taken in service should not also lose, their wages. Relief of reinstatement was made available to respondents 3 to 14 on the same line as it was made available to their 17 remaining colleagues who were covered by the very same settlement and who accepted the same. Such a package deal entered into by respondent No. 2 in the best C interest of these workmen could not be said to be unfair or unjust from any angle. On the contrary, if the back wages were given to them, then the remaining workmen against whom there was no disciplinary action or any alleged misconduct and who had also lost wages only because they were in sympathy with these 29 dismissed workmen would have stood discriminated against. Consequently, it is not possible to agree with the contention of the respondent Nos. 3 to 14 that the said settlement was in any way unfair or unjust. [162-F-H; 163-A; BJ

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11944 of 1996.

From the Judgment and Order dated 4.4.95 of the Madras High Court in W.A. No. 1186 of 1993.

N.B. Shetye, V. Balaji and A.T.M. Sampath for the Appellant.

V.G. Pragasam, M.A. Krishnamoorthy and M.A. Chinnasamy for the Respondents.

The Judgment of the Court was delivered by

S.B. MAJMUDAR, J. Leave granted.

This appeal by special leave arises out of the judgment and order dated 4th April, 1995 of the High Court of Judicature at Madras in Writ Appeal No. 1186 of 1993. A Division Bench of the High Court dismissed

the appeal of the appellant company and confirmed the judgment and order of the learned Single Judge in writ petition No. 611 of 1993 dismiss- H

A ing the sanie'.

'I '

A few relevant facts leading to this appeal deserve to , be noted at the ''. . ;. •. ; .• .1

- -1..,'. z : ' • , ; 'I' j • .. •.1. ~1 t'-, I -'~I :-; I • • ; • : 1 c. : outset. The appellant ts havmg an Engmeering Umt at Tiruvottiyur, Madras

,. . . • -·,-.: • ~. 1 '

- .. ' ,.- i ... ... ~ I I , tlhl IJ ;';" ":i"d-n .. •t"•,)f"l'" , •• ol where it manufactures machinery for sugar, cement and alhed industries

~-~.1< .· , ... ; .. . ,'.;'. ~11i:. . .. tj; _1;;.a,_, Jr~!~· Jq[ffl~~'. f'-1!' t".Hl ', f'!l.b; v B' '. ad ~pl9~~ bu, t ?op,:-; o.~¥en. R, sp,?~?f~~I~~·. ,~~J~~~; o~~¥/; fpll~§:?iii

and a representar1ve umon of all th~ workm, en orkmg .m the said, estab- ••. ~. :1 .-: Sn 1 .( .. ·, .. . -.• ·.r.-... ·~ J•L .1:.l ;. 4~• p:!.t ... •r':l.'°'' dl.J Dt•r !~}Ul)."j• 1 .. uh hshment. In the past alJ mdustnal disputes were settled by the appellant c6m~~~

1 6~· i~~ 'asi~' 'qi '1ng th~~ 'settl~~~t~· ~i

1 i~d

iht~ 'th'ie: ?~ii

retn<leiit unio~~ 'ike lasl

1 of\'.¥1lih'~~~· dtd

1 Qce~et3(( 1991.!dl ... " t;~Hf~ '..~·. nt::t '.h.c nnLi "".' 'h.tit~(", n'j .. !fl .d l)-: t: IV<J .... Jll ; if'! .-''JU:,;~·Jh1) c') 1"''

1 Ikseptembe~: l990 When' tHe 1ihue 1of Bb'b'uido~· tlil fina6cia'i'ye~¥j;

1989-9o''"was'

1uiideVonsiderktio'i{ th~ ; wokin'en ''af the''irihHlb~·orziili' 1 '

respoiiaht uniort"resorte~ to go ~16w' insisting tlie app'e1i~Ht i~ i paHhoie'" bonus

1eveii though''as coritende(l by' tii'e' appllan(tirtdef'lii~ prdvisiciil~ Sf th'e, faYfueiit1 of 'B.otius

1 A1<:i: "only 'diinirilliili. bonus

1 ohi'.33% '<Wriib"b.riici' ; j' ..-sh i~·~~·:f .. ... :-r t1.r-· •. ·: '1..~ •• t h'l .. "' ~. •tl !'' j • jt .:t.i,, 1.;~, +:.i:1t wages was payable for he financial year 1989-90. The go slow resorted to D . b{the

1\ori<Ihen reuitd iri'totai' stoppag~'fw6ritalid

1~H

1 ~1i'egd

iiibg~I '

•. • ... i .. • ). • ·• , t ,,... ~,., • ; • :~ ·. .• '- .t. , .... ~---; ill •1 0~11•u""'~t1, > strike on 'and'from OCtober 26,' 1990. It is. the case of .the appellant tliat iii view of the deteriorating situa'tio'n 'ad 'tith: ·~; ~J\J'; to" prtet

11pesbh1'' securi}Y qf th.e §upervisory anl Mn;;1.eil, s~ff, t 1_h<; tg: ~~ ~, t; clar7 , a1 lock out on October 30, 1990. The appellant also chargesheeted 29 workmen , E including respondents 3 to 14 herein on November 5, 1990 for various acts of misconduct allegedly committed by them between eptemher 25, .1990 and October 29, 1990 when the workmen had resorte~ to go slow and other '- alleged violent acts of misconduct.

; . . i

I ..

• 1 The explanation given by 29 workmen having not been found satis-

F .

') d

factory, the appellant. decidedto hold 'inquiry~ into' .-the ; charges inv61ved against the said 29 workmen. Inquiries were conducted by the two 'tetired'.>' District Judges and during the inquiries all the 29 workmen participated in the inquiry proceedings which contii1ued froni .i'itnuary8,1991 to August 21, 1992.

, On October 31, 1990 the Government of Tamil Nadu intervened and

!~;:·-f_' :

<. •,::,•,':J!': ·~ 1 I

.J~. '_'r., '. '.; I .1 !

JI f' ·~( 1 , .. '~ p .t I

imti~e~. co.ncihation pr9, cedings to. bring, about s..ettlem, ent , in_ !e&P.ect. of

!t.""•,·.· 1 .,.l•a.1 . .,.-.,.~.~ .• ·, (·, lt.H, l .• 1 • j,, l~ .• 0JiL+..01"t1 the pending dispqtes including lock out .. As no settlement could take .place durii{g' concilitiOn ~~ceedings, .the Cocititio~ Office~ submlttd report:

L~\ ·, , lt' 1! ..

I ,• .

J;,; f. ; i;._· l,•jfj: If , I ; .'! c I .~ i .i a ·. 1 . J to t~i !,\pptoprate q?v.erner-t '.op,. Amil 9,, .19~L On ¥, y 7, .~9?1 .~~~., H Government of Tamil Nadu issued three different orders referring certain

KC.P. LTD. v. PRESIDING OFFICER [S.B. MAJMlIDAR, J.] 153

, - indu_strial disputes for adjudication. G.O. No. 485 was in respect of revision A of scale of pay, revision of dearness allowance, revision of house rent allowance etc. By G.O. No. 486 the Government of Tamil Nadu declined to refer cerin disputes .such as leave facility, housing scheme, medical facilities etc. for adjudication. by giving.reasons in: the said G.O. No. 486.

The third G.O. , No. 487 was issued under Section 10-B of the Industrial Disputes -Act, 1947 (hereinafter referred to s 'the Act') . directing the appellant to lift lock out on or before 13.5.1991 and allow all except 29 ·, workmen to resume work. In the. said G.O. No. 487 the appellant was

directed to maintain status quo obtaining prior to the date of.the lock out.·• in regard to the terms and conditions of service and the appellant was further directed to complete inquiry proceedings against 29 workmen on or before 10.6.1991 a:hd: to pay 'them full wages during the' periodof disciplinary proceedings. In the saio G.O. No. 487 the workmen •were directed to niallitain norinal'production which they whe giving prior to -the ! date of the High Court order an'd also to maintain dicipline in the-fcf6ry.

- i '

By August 19, 1991 inquiries' in respect of all the 29 workmen were completed and on the basis of the findings by the Inquiry Officer and other extenuating circllmstances, the 29 workmen were dismissed from service betweellK 23.8."t991 to 1~16.1991.

In a meeting held before the Joint Comll).issioner of Labour on E October 4, 1991 between the appellant and the 2nd respondent, an agreement was reached on the quatum of increase in wages: recoverable advance and issue of bonus for the years 1989-90 and 1990-91. It was fur, ther agreed that th~

1 issue of 'nc)n-employment of 29 dismissed workmen wouta be' discussed sepaately and on that basis all workinn except the F saia 29 workmin ~eed to resume work in a phased manne~ _not later than October 12, 1991 although the lock out was lifted on May 13, l991. - ' ·

1; ,, Subsequer1tly, a settlemell.t was _arrived at between the appellant a¥d

'"\

the 2i; id responc1ent nder Section 12(~) of the Act wherein it was agreed G ' '

tht the isue of, non; mployment of 29 d_ismis&ed workmen w_ould _be . discussedip. the. prceeciip.gs to be initiated by the Joint Labour C::ommissioner as arly as possible. Te- J9int Labour Commissioner held metings, bety.; een !uary 8, 199~ and March 6, 19_9~ ap.d as no settlement coµld , be, reached report with regard to failure of t}ie conciliation proceedings '¥as submitted to the Government of Tamil Nadu which by order dated H

13.5.1992 referred the issue of non-employment of 29 workmen for adjudication to the 1st respondent. The said reference was registered as l.D.

No. 708 of 1992 on the file of the 1st respondent.

~- The said industrial dispute was referred for adjudication pursuant to the demand espoused by all the workmen and raised by the 2nd respondent union under Section 2(k) of the Act. All the said 29 workmen who were members of the union had also authorised the 2nd respondent to represent them before the Conciliation Officer whereafter reference was made to the 1st respondent. None of the said 29 workmen raised industrial dispute in their individual capacity under Section 2A of the Act.

It appears that thereafter the appellant company on the one hand and second respondent - union on the other held discussions regarding non-employment of 29 workmen: Ultimately on 7th November, 1992 an understanding was reached between the appellant and the 2nd respondent

- union that option would be given to the said 29 workmen either to accept D reinstatement without backwages or a lumpsum amount of Rs. 75,000 with other monetary benefit may be accepted by the concerned workmen:

Respondent Nos. 3 to 14 (in all 12 workmen) out of these 29 workmen did not accept the proposed settlement and accordingly addressed a letter to the Commissioner of Labour on 2nd December, 1992.

Thereafter, the 2nd respondent entered into a settlement with the appellant company under Section 18(i) of the Act on behalf of all the 29 workmen whose industrial dispute with regard to non-employment was espoused and raised by it under Section 2(k) of the Act. On 14th December, 1992 a comprehensive settlement was arrived at and signed by the appellant and the 2nd respondent - union. Copies of the said settlement were also forw2.rded to various authorities as contemplated under the provisions of the Act and Ru'le thereunder.

A joint memorandum signed by respondent No. 2 and the appellant company was filed before the Presiding Officer. First Additional Labour G Court, Madras, respondent No. 1 herein, before whom the industrial dispute was pending for adjudica!ion. It was requested that an award in terms of the settlement may be passed in the pending industrial dispute reference No. 708of1992. However, respondent No. 1, by his order dated 28th December, 1992 declined to make an award in terms of the settlement H dated 14th December, 1992 on the ground that the respondent Nos. 3 to

K.C.P. LTD. v. PRESIDING OFFICER [S.B. MAJMUDAR, J.] 155

14 had not approved the settlement and therefore industrial dispute in A respect of these respondents will continue and proceed further. It may be stated that out of the 29 dismissed workmen in connection with . whose dismissal, respondent No. 2 - union had raised the industrial dispute under Section 2(k} of the Act., 17 workmen had already agreed to abide by the terms of the settlement and had got reinstated in exercise of their option.

Only the remaining 12 dismissed workmen, respondent Nos. 3 to 14 herein. proceeded with the dispute and did not agree to the terms of the settlement even though admittedly they were members of the respondent No. 2 - union who wa.s acting on their behalf and even till date they have continued to

be the members of the said union.

As the 1st respondent decided to continue the reference in connection with respondent Nos. 3 to 14, the appellant company filed Writ Petition No. 611 of 1993 before the Madras High Court. As seen earlier,

the learned Single Judge by his Judgment and order dated 29th September. 1993 dismissed the said Writ petition. The appellant thereafter moved the D Division Bench of the High Court in appeal which also got dismissed on 4th April, 1995 an"d that is how the appellant company has moved this appeal on special leave.

Learned counsel for the appellant company vehemently submitted that when respondent No. 2 - union had espoused the cause of all the 29 E dismissed workmen, and the reference was got made by it under Section 2(k) of the Act, the union which represented all the workmen including the dismissed respondents 3 to 14 was entitled to act on behalf of all of them by way of collective bargaining and could legitimately enter into the settlement which was for the benefit of all concerned workmen. Under these F circumstances, individual workmen had no independent right to contest their dismissal orders and were bound by the settlement which was not shown by them to be in any way ex-facie, unfair or unjust; that it was a package deal entered into by respondent No. 2 - union with the appellant company and in such a collective industrial bargaining there was always G give and take; that there were no exceptional grounds for rejecting such a settlement which was for the benefit of all concerned workmen and the Labour Court ought to have acted upon the same. Consequently, the order of the Labour Court refusing to act upon the said settlement so far as respondent Nos. 3 to 14 are concerned, was patently erroneous in law and hence, the order of the learned Single Judge of the High Court confirming H

such order of respondent No. 1 and 'further order of the Divisio~ B~~hl also equally suffered from patnt errors of l~~. ln ~pport of thes~, sub~ , missions, various decisions of this Court' 'were 'died to which we wili

rfe~

1 . . ~-' . :• . ' ( .,/ -. ; ~. . . u a little later.

H Learned counsel fO'r respondent Nos'. j to 14 ori' tlie otldr 'hand .

B submitted 'that though these respondents w~}e admittedly fhemBers f ! te L

respondiri(~ ufliort, tlief haH Ii.or acreptd iilhgrms' of th:e'!eit16eiit'ano 1 ' the said sttlemh.t '\v'as'Mt biAciing on'ihenr;' that iH; fa

1tt:lb&'irmh1{t6 'tlie' ie.l:rnb<l cc1unseVa 0s1etttetneirt\Jas arrivea' 1at by'VepOn'lterir N'<r2,. uiiion not on behalf of these contesting workmen'lhit only fck the 'iefuaffiing 17 C workmen who had ac:ceptd the settlemep.t by givirg it in wr, iting to the

i:_ 1' l ,..., 11, rf 1 ,'.Li'J1i; i"' .. t~,,~,.,.,. .. !

Preside11t of respondent No, 2 uniori. He also tried to suomit that in any

j~ >\• ' ' ! 1 • ll""'I -'"! I }..: (}!

Cl~· 1;~ l '

!:, O case, the settlement was ncit fafr 'and just as the workmen were: required to givb 'up" all the bac.:k wages ~eri tliough tngy were gi~n r6instateinent with

i.'• • ,·· I, 1,. ~

'-, J~. !i 11' i~", I, '~ 1'1'1 ,,. 'i J •f, ,. continuity of service and t:J:iey were' farther' required to give a letter in 'I 1 ·, - "t~ (~ j-', i' • t fll\r/'~)r _f.1 f ' _ . j D t f wrj, tin~· t? the Manageent, fat~g t~?t .trey,_wa, u~~ ~qujt themselves in an orderly manner and would assure that they would not give a room for any

m1scnuct and disl.plinay acti6~ i~· future: It wa~'s'ubWiitted that under these circumstances the contesting respondents were e~'titled to insist that ; their dispute should be adjudicated on merits by the Labour Court.

., j:J•, •.1, ' , j •' ' t I lj • • (! .1 l '• •' I

- ' E H:aiing given our aniious consideration to these rival submissiOris, we find thafthe 'terink of th~ settlement cann6t beconsidered to be' in any way

exfdi:ie; tlnjbst .or unfair and that the'said 'settleili.ent 'consequently must b~ held to be biu'Ciing dn thes.e contesting workmen a:lso. - ·. '1' ' • .!

i '~: ; : 1 j ! f i ,, ~. • ~: ' • ... . ' 1

:It has to be; I<ept in. view that the :industriai dispute was ta:is'ed 'Dy .

F respo'rident Nd. 2 ri Jnioii on behalf of all 'th-e 29 wokm:en ·\vho were , disinlsse<l fioni service by 'the appltaiit" company: It \Jas an iiiaristrial' 7

dispute' as defined::by Sectioh.2.(k)ofthe Act'taised by the uniotl:\)ii behalf of its n1embers. Respondent Nos. r3 tiV1:'4"were . at 'the, 'tekvaht tihl'e,;,•1 ; 1members of the union and even till date they cciritinue 'to be 1 te :members ' G ofthe sponsoring union. This was not a reference risd'by a disissed.

employee as persecti6n'2A. of tKe :Act. Conseque'ntly, as pe'r'Setfoii 36

{ • 1 .. , , • • . • , j-.. .• -- ,_ -· . • , i • '. u. -; 1 , , 1 of . the Act, it was respondent No. 2 union which was. 'in charge of tlie

• "~ n ·. -" ·· ·, Jii! ;,~-

I•. ' :·- Ur l{

_; I "\ 1 •• ·••. t' procee<l, gs_ari.d could represnt an the29, dismissed.workmen on whose .

l .... liJ. ~,, •, !"' •.••.' ! ; -. f~. r. ~~

1; '.I , , f.i 1 _, 1 rt;.J H be~ll~~1 dip)lte ~~~ rais>ed by tJYh~~ 1 fh~ said, 11ni9n}1a, yi11g; c9nsi?eed .

H the pros and cons of the situation, entered into the settlement on behalf of

l(.C, P.LID. v. PRESIDINGOFFICER[S.B.MAJMUDAR, J.J 157 I, • ,

~ all the workmen for whom it had taken cudgels unless the said settlement A < , l , ' ,,,

I ( , was found.to exfacie, unjust or unfair it could not be gone behind by these respo~?ents who, can' e said to be parties t~ the same through their representative union - respondent No. 2. In this connection a reference is , also ~qired to be made t.o Se, ction 18(1) of the Act which lays down as under: B

"A settleent arrivd at by agreement between the employer and workman. otherwise than in the course of conciliation proceeding shall be binding on. the parties to the agreement."

It is not in dispute that the settlement arrived at by respondent No. C 2 - union with the appellant company was not in the course of conciliation proceedings. Therefore, it would' be binding to the parties to the agreement, namely, the appellant company on the one hand and respondent No. 2 union representing all the 29 dismissed employees, who were its members and on whose behalf it had raisea the industrial dispute under D Section2(k) of the Act, on the other.

f~ I } ; ' f 1 l~ ' : .!~ Section 2(p) of the Act .defines a settlement to mean a settlement arrived at in the course of_ conciliation proceedings and includes a written agreement between the employer and workmen arrived at otherwise than E in the course of conciliation proceedings where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof ha~ been. sent to an officer authorised in this behalf by the appropriate, Government and the Conciliati9n Officer.

' I

It, is .. also o~ in dispute that parties to the settlement were the t F 1.appellant conipany on th~ one hand and respondent No. 2 - . union on

tl}e. other,_ which acted_ on .qehalf of all .the 29. dismissed workmen for

.• horn refenmce,.w._a~ pending in the, I.abour C, qurt I_t was duly .signe, d by both these parties. Under these circumstances, respondent Nos, 3 to 14 also would be ordinarily bound by this settlement entered into by their: ' G

r_epreseptath:'e.u11i911: ti! te compa!J, y it.is shown that the said settlement

was..: ex-facie, unfair,· , unjust or malafide. No such case could .. be even alleged , much less, made.out by the.dissentng respondent Nos. 3 tgi 14 before the..trial, court.. It is interesting to note. that.before the Labour

.·. CoutHhe, only argument put forward.on behalf of respondent Nos. 3 to' H

158 SUPREME CoURT REPORTS [1996) SUPP. 6 S.C.R.

A 14 was that they were not parties to the settlement and therefore, it was not binding on them. Once it is kept in view thii.t the entire industrial dispute was raised by respondent No. 2 union on behalf of all the 29 dismissed workmen and as it was not an industrial dispute covered by Section 2A whereunder individual dismissed workman could come in the B arena of contest, it could not be held, as wrongly assumed by the Labour Court that this settlement was not entered into •mder Section 18(1) of the Act by these dissenting workmen when the respondent - union did represent them from beginning to end and is still representing them as they are members of the union even at present. In the case of Ram Prasad C Vishwakanna v. The Chainnan, lndustlial Tlibzmal, [1961) 3 SCR 196 a Bench of three Hon'ble Judges of this Court had an occasion to consider the effect of a settlement entered into by the union of workmen which had espoused the cause of its members by raising an industrial dispute under Section 2(k) of the Act and the further question whether under D these circumstances an individual workman had any independent locus standi in proceedings before the reference court. Rejecting the contention on behalf of the individual workman, it was observed by oas Gupta., J. speaking for the Court that the concerned workman was not entitled to separate representation when already represented by the Secretary of the union which espoused his cause. A dispute between an individual E workman and an employer cannot be an industrial dispute as defined in Section 2(k) of the Act unless it is taken up by a union of orkmen or by a considerable number of workmen. When an individu.al workman becomes a party to a dispute under the Act he is a party, not independently of the union which has espoused his cause. It was further observed that although no general rule can be laid down in the matter, the ordinary rule should be that representation by an officer of the trade union should continue throughout the proceedings in the absence of exceptional circumstances justifying other representation of the workman concerned.

It is true that the said decision was rendered prior to the insertion of Section 2-A in the Act by which individual workmen were also given a fight to raise industrial dispute in case of discharge, dismissal or retrenchment or otherwise termination of service. It is also true that the present H controversy has arisen after the coming into operation of Section 2-A but

KC.P. LTD. v. PRESIDING OFFICER [S.B. MAIMUDAR, J.] 159

as noted earlier the industrial dispute raised for 29 dismissed workmen was A raised by the union - respondent No. 2 under Section 2(k) of the Act and there was no reference under Section 2-A of the Act, so far as respondent nos. 3 to 14 are concerned.

In the case of Herbe1tsons Ltd. v. 771e Workmen of Herbensons Ltd. and Ors., AIR (1977) SC 322 another Bench of three learned Judges of this Court considered the effect of a settlement arrived at by recognised union of majority of workers pending appeal to Supreme Court. It was observed by Goswami, J., speaking for the Court that when a recognised union negotiates with an employer the workers as individuals do not come into the picture. It is not necessary that each individual worker should know the implications of the settlement since a recognised union, which is expected to protect the legitimate interests of labour enters into a settlement in the

best interests of labour. This would be the normal rule. There may be exceptional cases where there may be allegations of ma/a fides, fraud or even corruption or other inducements. But in tl1e absence of such allega- D tions a settlement in the course of collective bargaining is entitled to due weight and consideration.

In connection with the justness and fairness of the settlement it was observed that this has to be considered in the light of the conditions that were in force at the time of the reference. When, therefore, negotiations lake place which have to be encouraged. particularly between labour and employer in the interest of industrial peace and well-being, there is always give and take. The settlement has to be taken as a package deal and when labour has gained in the matter of wages and if there is some reduction in the matter of dearness allowance so far as the award is concerned, it cannot be said that the settlement as a whole is unfair and unjust. It was further observed that it is not possible to scan the settlement in bits and pieces

and hold some parts good and acceptable and others bad. Unless it can be demonstrated that the objectionable portion is such that it completely outweights all the other advantages gained the Court will be slow to hold G a settlement as unfair and unjust. The settlement has to be accepted or rejected as a whole.

It has to be kept in view that under the Scheme of labour legislations like the Act in the present case, collective bargaining and the principle of industrial democracy t>ermiate the relations between the management on H

, A the one hand and the union which resorts.to collective bargaining on behalf

'6('it~'

1 fuembersworkmen ith 'thelUcikaiJdierif'6n 'the' other. 'siich a . ' 'tblletiv~' bargaining whlc; h inay result

1 i~'

1 jtist 'all1d fir ''sbttlmn't would

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./ 1 , I ~1 11 ., ~

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• always be beneficial to the managemenca:s well as to the oody of workmen and society at large as there would b~ indtistril 'p'eace 1 'an~ ttlntjullity B pursuant to such settlement a.nd; wifi~W~I.~. ~~.oi? ~1!:?e~~s~~'Y social strife and tribulation on the one hand and promote industrial and commer- . , .' ,!l - ·~· ...-'1 l:; n;., f~.i '.:--~ It'\.·,~, _:nl1

1. .r cial development on tpe -ther ~~!1~·, Keepmg m, .ew , t\le aforesaid salient

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[_1(,.).I fl features of the Act the settlement. whidi is sought to, oe impugned has to be scanned and scrutinised: 'sitlgenr f '1ao

1 tfr '<li~utes 'by '<liiect negotiation and collective bargaini'1,1g is1layi t~ be pref6rred for 1t'ls' the c best guarantee of industrial peace' \Vhidl'is 'tl-i'e aim of aihegislatio~~ , for

f.

I ,. . settlement of labour disputes. In order to bring about such a settlement more easily and to make it more wci}k'able ifod effectiv~ ifniy"riO't'be always possible or necessary thgt\hcli\i settlement 'is hrfie

1d at %'the course of conciliation proceairibL~\thiCh my tie 'fhe

1first' step'ltoads D 'rsolvlng the industrial llisptc: \hitli _ niaY. 1 b'ti 'lingering 'between , the l : • employers and theit workmen 'tepresenteU' oy thih.iriions but' even if at that stage: such settlement dJes ..Vat. thke pfaee a:iid 'the industrial disj>Ute gets referred for adjudication, even pending such'disputes; thepar.ties fan arrive at amicable settlement which may be binding to the parties to the settlement unlike settlement l irived a'( Cluririg! !contili'ation pr'ohedings E which may be binding not 6'nl)it~ 'the 1

part'iesJt~· the shtt!ein'efit but' everi, to the entire labour force working in th'e coli'cerned''6rgahisatfon even tliough they may not be members of the uni6n' which might have entered into settlement during conciliation proceedings. The differe1we between the _

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I• ,..f , ' settlement arrived at under the Act during conciliation proceedings by F " partis and the settlement arr~e~}t_'o~ers(t~n. :.u, rig c?~'tlit.ion

proceedings has been succinctly br.ought ciut by the decision of thi's Court in Barauni Refi1\J,!y 'Pragatisheel' slt'/aiiiik Palishad Etc. Et~. V. b; didn Oil

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C01poidtion Ltd. tc. 'Etc.; [199~) 1 SCC, 4 wnerein Alimadi, J ... (as His ·~~'' i ....... '.)· _J '1."; ,.d'•lt:

4 ttt 1 ~.J)')!;4-i: ... ·/· •-';, ri.co1i1tJr~ Lordship then as) spoke for the Court to the followmg effect :

, liL"'h?.1 f1;1"..> l: ft,.r; J , l,.iJ' .. , n1i(t1·1rJ ·:; f{ILl1• L· (<J1; d 1 h.o11! t; JJ.lfr1.,, ra-; b --QL!tui IJ! ·, J<1f..- i !tf.t:t n ·,·; ) : i:i b..; IHt. 1-1 ~"'-';.h--lrhl:; t ... ;'; HJ1 · .. d~! t!h 1.;1l:H.1¥/J11"

L :r1 D'.lfj'J'.; .. 11 .~yHlm-.e1?-.~S W~1?Jyii9 i~~? so!~~!e~~i~J" ,.ip~lyJi) , h?se arrived at outside the conciliation proceedin~~ [~E<'.tip. i}§i))_ rd

(ii) those arrived at in the course of conciliation proceedings

r;, ,; , .:. ,1 .~Sc.:k~~ l8(~)r A. set!Jt:~P~.1Y4~!~~J?eongs; t~ .the; first, c:atgory has

i, ; ·, lr, -.... , .Nn}; it~~ 1ppli~~~!9µ, in Jht it1 IJl_erly _bn<!s thf .pjiri~~ ~~- tl, t~, agr_eei 1H~,, 1, r ,,, _,, plpt1 ~, Utra sgtcnwJJ:.t,_r.riveci at; jp, , tJi~ .sou~~; i9f S9ni!i_atipn

KC.P. LID. v. PRESIDING OFFICER [S.B. MAJMUDAR, J.] 161

proceedings with a recognised majority union has extended ap- A plication 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 B 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 Concilition 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 C at in the course of conciliation proceedings is put on par with an award made by an adjudicatory authority.'

As in the present case the settlement arrived at between the parties was not during conciliation proceedings, it would remain binding to parties D to the settlement as per Section 18(1) of the Act. But as we have seen above, respondent No. 2 union while entering into that settlement acted on behalf of all the 29 dismissed workmen who were its members including the present respondent nos. 3 to 14 who are also its members as noted earlier. We have also seen earlier that the Labour Court had erred in taking the view that respondents 3 to 14 were not parties to the said settlement as individually they had no locus standi and they were represented by their union respondent no. 2 which had signed the settlement on behalf of its members for whom the dispute was raised by the union. Nothing could be alleged by respondents 3 to 14 to the effect that the said settlement was in any way unjust or unfair or was a ma/a fide one. There were no exceptional circumstances to reject this settlement qua even the contesting respondents. However, as learned counsel for the respondent-workmen tried to faintly suggest to that effect we have carefully gone through the circumstances which are brought on record which had led to the settlement. It may be noted that about 500 workmen had gone on strike and that had resulted G in the lock-out by the appellant company and ultimately disciplinary action was initiated against 29 workmen who had indulged into various acts of misconduct. It is for these 29 workmen who were ultimately dismissed from service that the respondent-union had raised a dispute under Section 2(k) of the Act on their behalf. Earlier the remaining workmen had gone on H

A strike for nearly 5 months Ultimately. the strike was withdrawn; lock-out was lifted and broad understanding was reached between the appellant company and the workmen represented by their union whereby it was agreed that 29 workmen, who were dismissed, would be either given Rs. 75,000 as compensation or reinstatement with continuity of service without B back wages and the concerned workmen should express apology for misconduct and also assure good conduct in future.

Out of 29 workmen for whom the industrial dispute was raised 17 workmen agreed and accepted this settlement and joined the service C Remaining 12 workmen (respondent Nos, 3 to 14) have not agreed to the said settlement. It is under these circumstances that the settlement arrived at by the union on behalf of all of them has to be scrutinised. It has clearly transpired on the record of this case that all the 500 workmen excluding 29 dismissed workmen had espoused the cause of these dismissed workmen and had struck the work. Ultimately, when they were reinstated in service D leaving aside the 29 workmen for whom industrial dispute lingered on, all the remaining workmen lost their wages from_20.10.1990 to 12.5.1991 and also from 13.5.1991 to 6.10.1991. They lost their wages because they were expressing sympathy for their 29 colleagues who were facing disciplinary action and even for these 29 workmen respondent no. 2 union entered into E a settlement so that they could be reinstated in service with continuity of service or could walk out from service with Rs. 75,000 and other monetary benefits. All that was agreed to by the union as a condition for reinstatement was that the workmen would give up back wages and had to sign a written undertaking to behave properly in future. In our view there was F nothing unreasonable or unfair in these terms of settlement. The relief of reinstatement without back wages could not be said to be unreasonable as for nearly 12 months all the other workmen lost their back wages only because they supported the cause of these 29 colleagues of theirs and hence there was no reason why the workmen who indulged in the acts of misconduct and who were also to be taken in service should not lose their wages G for 12 months. Relief of reinstatement was made available to respondents 3 to 14 on the same line as it was made available to their 17 remaining colleagues who were covered by the very same settlement and who accepted the relief of settlement without back wages or a lumpsum compensation of Rs. 75,000 and other monetary benefits in lieu of that. In our view H such a package deal entered into by respondent no. 2 in the best interest

K.C.P.LTD. v. PRESIDINGOFFICER(S.B.MAJMUDAR, J.] 163

of these workmen could not be said to be unfair or unjust from any angle. A On the contrary, it the back wages were given to them, then the remaining workmen against whom there was no disciplinary action or any alleged misconduct and who had also lost wages for 12 months only because they were in sympathy with these 29 dismissed workmen would have stood discriminated against. Consequently, it is not possible to agree with the B learned counsel for respondent nos. 3 to 14 that the said settlement was in any way unfair or unjust. Once this conclusion is reached it is obvious that the entire industrial dispute should have been disposed of in the light of this settlement and an award in terms of the settlement should have been passed by the first respondent-court in the case of respondents 3 to 14 also.

Consequently, the judgment and order of the Division Bench of the High C Court dated 4th April, 1995 and the order of learned Single Judge dated 29th September, 1993 are quashed and set aside. The writ petition filed by the appellant company will stand allowed with a direction to the first respondent-Labour Court to pass award in terms of the settlement dated 14th December, 1992 by treating it to be binding to respondent nos. 3 to D 14 also.

Learned counsel for these respondents ultimately submitted that the time during which the concerned workmen had to exercise their option as per the terms of the settlement is now over and the appellant company may not make available the said option to them. His apprehension on behalf of E the respondents was set at rest by learned counsel for the appellant company who stated that the appellant company iswilling to make available the option to these respondent nos. 3 to 14 to either accept reinstatement with continuity of service without back wages on their executing the writing as per the said settlement or to be paid Rs. 75,000 each in addition to F gratuity as per the payment of Gratuity Act, wages for unavailed leave and bonus, if any payable.

In view of this fair stand taken by the appellant company it is directed that if the respondent nos. 3 to 14 exercise their option as per the proce- G dure laid down in the settlement dated 14th December 1992 either to get reinstatement without back wages for the period of non-employment and with continuity of service or to accept a lumpsum monetary compensation as laid down in the settlement within a period of 8 weeks from today, the appellant company will ad upon the said option exercised by th~ said workmen and shall give appropriate benefit of the option as per the H

A settlement to the concerned workmen. As the period of lumpsum payment of Rs. 75,000 by instalments (as laid down by the settlement) is already over, it is directed that if any of the concerned workmen-respondents 3 to 14 exercises the option of receiving the lumpsum arnoun: of Rs. 75,000 in lieu of the reinstatement, a sum of Rs. 40,000 out of the said amount shall

B be paid to the concerned workmen within 15 days of the exercises of su<;:h option and the balance of the Rs. 35,000 with other monetary benefits as indicated in the settlement shall be paid to the concerned workmen within a further period of 2 months thereafter.

The appeal is allowed in the aforesaid terms. In the facts and C circumstances of the case, there shall be no order as to costs.

v.s.s .

Appeal allowed.