JUDGMENT <NAME>, J.

1. This is a reference under section 256(1) of the Income-tax Act, 1961, made at the instance of the assessee. The question referred to us for our determination in the reference is as follows :

"Whether, on the facts and in the circumstances of the case, in computing the income of the assessee, the sum of Rs. 4,400 was rightly added ?"

2. The relevant facts lie within a narrow compass. The relevant assessment year is 1962-63, for which the relevant previous year is the accounting year March 25, 1961, to March 31, 1962. The assessee is a registered firm doing business mainly in cloth. The assessee secured a licence for importing automobile spare parts. The assessee then entered into a contract to import and sell to <ORG> 3,100 capacitors at a profit of 50 per cent. on C. I. F. value. There was a further condition in the contract that the purchaser was to bear all the expenses, including customs duty, etc. Pursuant to this agreement, the assessee placed an order for capacitors with a foreign exporter and the goods, namely, capacitors, were eventually imported. But it was found that the goods did not conform to some of the specifications in the licence and the customs authorities confiscated the goods but gave an option to the assessee to pay a penalty of Rs. 4,400 and clear the goods. The assessee exercised that option and cleared the goods by paying the penalty. The assessee debited the amount of the penalty to the trading account. In valuing the closing stock, the penalty was included. It was in the next year that the sale of the goods to <ORG> took place. The penalty was paid in the accounting year relevant to the assessment year. The Income-tax Officer concerned disallowed the claim of the assessee for deduction of the amount of penalty and added back the amount of penalty. The Income-tax Officer found, on verification, that the penalty as such had not been recovered by the assessee from <ORG> but the amount of penalty, it appears, was taken into account in determining the price at which the said goods were sold to <ORG>. On an appeal by the assessee to the Appellate Assistant Commissioner, he held that the penalty was levied on the appellant and the mere fact that the appellant had billed the vendee in such a manner that the penalty was recovered from the vendee did not change the character of a disallowable item into an allowable one. The Appellate Assistant Commissioner further pointed out that the bill sent to <ORG> did not specifically mention the basis on which it was prepared. The Appellate Assistant Commissioner agreed with the view of the Income-tax Officer that the assessee's claim in respect of penalty was not one which could be allowed under section 28 of the Income-tax Act, 1961. The assessee then preferred a second appeal to <ORG>. The <ORG> came to the conclusion that the assessee had contravened some of the conditions or specifications of the licence and the penalty was levied upon the assessee and not the purchaser. The assessee had rightly debited the penalty to the trading account and the assessee was not right in contending that the debit in respect of the penalty in the trading account was wrongfully made by the assessee. What the purchasers, <ORG>, had paid to the assessee was not the penalty but the sale price of the goods purchased by them which had been fixed by taking into account the amount of penalty. In view of these findings, the <ORG> agreed with the conclusion of the Appellate Assistant Commissioner that the amount of penalty could not be allowed as a deduction and upheld the order passed by the Income-tax Officer. The question set out above has been referred to us from the decision of the <ORG>.

3. The submission of Mrs. <NAME>, learned counsel for the assessee, is that in this case, on the facts found, the assessee must be regarded as a mere nominal licence-holder and the penalty was really levied on <ORG> to whom the goods had been sold as aforesaid. It was argued by her that, in these circumstances, the assessee should be allowed to claim the amount of penalty paid by the assessee as a deduction in the computation of profits under section 28 of the Income-tax Act, 1961. She placed strong reliance on the decision of a Division Bench of this court in <CITATION> .  67 ITR 667. We shall deal with this case after setting out our own views. In the present case, the facts found by the <ORG> clearly show that it was the assessee who had got the import licence. It was the assessee who imported the goods in question, and it was the fault of the assessee if the goods in question imported did not conform to the specifications of the licence. In these circumstances, there is no escaping the conclusion that the penalty was levied on the assessee for the default of the assessee itself and not on the ground of any other person's default. Nor is this a case in which the assessee can be regarded in any sense as a nominal licence-holder. It is not as if the assessee gave its licence to <ORG> for importing the goods in question and <ORG> imported the goods. The licence was utilised by the assessee-firm itself and that fact cannot be altered by the circumstance that they had agreed to sell the goods to be imported by them to <ORG>. It is well settled that if an assessee has to pay a penalty to the customs authorities in respect of goods imported by the assessee on account of its own default, the amount of that penalty cannot be deducted in the computation of taxable profits of the assessee.

4. Coming to the case of Pannalal Narottamdas & Co. [1968] 67 ITR 667 (Bom) cited by Mrs. <NAME>, the facts in that case were altogether different. In that case, in the course of its business, the assessee had purchased bills of lading and other shipping documents from certain parties in respect of some consignments of goods imported by them from a foreign country. When the goods arrived in India and were sought to be cleared through the customs by the assessee on the basis of the documents purchased by it, it was found that the imports were unauthorised and the goods were liable to be confiscated and a penalty was liable to be imposed under section 167(8) of the Sea Customs Act, 1878. The assessee paid the penalty for saving the goods from being confiscated. The <ORG> took the view that the assessee was entitled to plead that it had purchased the documents of title in good faith and had paid consideration thereon, and, thereafter, it had to pay the penalties in order not to lose the goods which had become its property and, in these circumstances, the penalty could be legitimately regarded as part of the cost of the goods. It was held by <ORG> that, on the facts and circumstances, the actual cost of the goods to the assessee was not only what it had paid to the importers but in addition thereto what it had to pay by way of penalty in order to save the goods from being confiscated and lost to it. It is significant that the observations of <ORG> set out at page 672 of the aforesaid report show that <ORG> clearly took the view that in cases where penalty had to be incurred because of the fault of the assessee himself, as for instance, by reason of his having carried on his business in an unlawful manner or in contravention of certain rules and regulations, the penalty paid by the assessee for such conduct thereof could not be regarded as wholly laid out for the purpose of the business, and, in support of this conclusion, the decision of <ORG> in <ORG> v. CIT [196l] 41 ITR 350, was cited. This decision, in our view, does not advance the argument of Mrs. <NAME>, and, in fact, the aforesaid observations pointed out by us lend considerable support to the view which we have taken.

5. The question referred to us is, therefore, answered in the affirmative and in favour of the <ORG>.

6. The assessee to pay the costs of this reference to the Commissioner.


<NAME>, J.M.

The short but interesting question arising out of this appeal is whether the following amounts of income can be said to have been derived from the industrial undertaking for the purpose of claiming deduction under section 80-I :

Rs.

Rs.

Rs.

(i)

(i) Sale of import licenses Sale of import licenses 3,93,740 3,93,740

(ii)

(ii) Sales-tax refund Sales-tax refund 8,28,010 8,28,010

(iii)

(iii) Claims from Insurance & Transport Claims from Insurance & Transport 7,79,642 7,79,642

(iv)

(iv) Duty drawback Duty drawback 1,02,301 1,02,301

(v)

(v) Difference in exchange Difference in exchange 7,73,407 7,73,407

(vi)

(vi) CCS CCS 2,88,740 2,88,740

(vii)

(vii) Amount received against IPRS Amount received against IPRS 6,29,369 6,29,369

2. The aforesaid amounts were included by the assessed in the profits of the industrial undertaking for claiming the deduction under section 80-I for assessment year 1992-93. However, the assessing officer was of the view that the words "derived from" used by the legislature in section 80-I has restricted meaning as compared to the expression "attributable to". Reliance was placed by him on the decision of <ORG> in the case of <CITATION> (1978) 113 ITR 84 (SC). Applying this legal position he was of the view that the aforesaid amounts of income could not be said to be income derived from the industrial undertaking. Accordingly the claim of the assessed to that extent was disallowed.

3. The matter was carried before the Commissioner (Appeals), who has allowed the claim of the assessed after following the decisions of Madras High Court in the case of <CITATION> (1981) 128 ITR 571 (Mad) and in the case of <CITATION> . (1987) 167 ITR 917 (Mad). Aggrieved by the same, the revenue is in appeal before the <ORG>.

4. The learned Departmental Representative on behalf of the revenue has vehemently assailed the order of the Commissioner (Appeals) by contending that the meaning of the words "derived from" has to be understood in the restricted sense as held by <ORG> in the case of <ORG> (supra). According to him, there must be a direct nexus between the income and the industrial undertaking. Proceeding further it was submitted that if the source of the income is something else than the industrial undertaking, then such income cannot be said to have derived from industrial undertaking. In this connection, he relied on the latest decision of <ORG> in the case of <CITATION> (1999) 237 ITR 579 (SC), wherein it has been held that income from the sale of import entitlements could not be treated as income derived from industrial undertaking since source of such income was the <ORG> scheme itself and not the industrial undertaking. Accordingly, it was argued by him that in the present case there was no direct nexus between the income and the industrial undertaking and, therefore, assessing officer was justified in excluding such income from the income of industrial undertaking for the purpose of computing deduction under section 80-I.

5. On the other hand the learned counsel for the assessed submitted before us that the word "from" has been used to single out the industrial undertaking from non-industrial undertaking and, therefore, if there is any connection between the income and the industrial undertaking then deduction under section 80-I must be allowed. He also tried to distinguish the decision of <ORG> in the case of <ORG> (supra) by submitting that in that case merely a right had accrued to the assessed under the scheme which had no value in itself. If the said entitlement was not sold then no income would accrue to the assessed. Hence there was no direct connection with the activity of industrial undertaking in that case but in the present case the items disputed have direct connection with the activity of the manufacturing and sale of manufactured goods. Proceeding further it was submitted by him that if any expenditure goes to the trading, manufacturing or profit and loss account of the assessed in any year and deduction is allowed for the same in computing the income of the industrial undertaking then reimbursement of such expenses would have direct connection with industrial undertaking and accordingly such income cannot be excluded while computing the profits derived from industrial undertaking. Consequently, it was argued by him that sales-tax refund, duty drawback as well as claim for insurance and transport must be held to be income derived from industrial undertaking. Proceeding further he drew our attention to the various schemes i e., cash subsidy scheme and International Price Reimbursement Scheme and argued that these are the trading receipts in view of the decision of the <ORG> in the case of <CITATION> (1997) 226 ITR 253 (SC) having originated from the industrial activity of export of the goods manufactured by assessed. According to him, the profits do not accrue on mere manufacturing but accrue on sale thereof. Therefore, if on the basis of such sales any incentive is received then it must be held to have derived from industrial undertaking. Proceeding further, it was submitted that the difference in exchange was also directly related to the activity of the industrial undertaking. At this stage, a query was raised from the <ORG> as to whether foreign exchange was utilised for operational activity of the assessed or for acquisition of capital asset. The learned counsel for the assessed was not able to answer this factual aspect and, therefore, submitted that if the <ORG> think fit than the matter may be restored for verification to the assessing officer. Regarding the income from sale of import entitlement he had nothing to say in view of the decision of the <ORG> in the case of <ORG> (supra).

6. Rival contentions of the parties as well as the case law referred to by them have been considered carefully. The controversy before us centers around the interpretation of the words 'derived from' used by legislature in section 80-I. This issue came up for consideration for the first time before <ORG> in the case of <CITATION> (1948) 16 ITR 325 (PC). The question before the court was whether the interest of arrears of rent payable in respect of land used for agricultural purposes could be treated as agricultural income. The meaning of the words "derived from" was also considered by <ORG> in the case of <CITATION> (1955) 27 ITR 1 (SC). In that case A was shareholder of various tea companies whose 60 per cent income was exempt from tax as agricultural income. The assessed also claimed 60 per cent of the dividend income as exempt from tax being agricultural income. The court was concerned with the interpretation of the words "revenue derived from land". It was held that the income must have direct association or relation with the land so that it may fall within the scope of the words "revenue derived from land". Dividend income was out of investment of funds in shares and, therefore, the same could not be treated as agricultural income. Again in the case of <ORG> (supra), <ORG> has held that the expression "attributable to" is wider in import than the expression "derived from". It was further held that whenever the legislature intended to give restricted meaning it has used the expression "derived from". The latest decision of <ORG> on this issue is in the case of <ORG> (supra) wherein it has been held that there must be direct nexus between the income and the activity of the industrial undertaking. The question before the court was whether the income from the sale of import entitlements could be said to have derived from the industrial undertaking. In this connection, following observations were made by their Lordships:

"We do not think that the source of the import entitlements can be said to be the industrial undertaking of the assessed. The source of the import entitlement can, in the circumstances, only be said to be <ORG> of <ORG> where under the export entitlements become available. There must be, for the application of the words "derived from", a direct nexus between the profits and gains and the industrial undertaking. In the instant case, the nexus is not direct but only incidental. The industrial undertaking exports processed sea food. By reason of such export, <ORG> applies. there under, the assessed is entitled to import entitlements, which it can sell. The sale consideration there from cannot, in our view, be held to constitute a profit and gain derived from the assessed's industrial undertaking."

7. In view of the above discussion, it is held that there must be direct nexus between the income and the industrial undertaking meaning thereby, the source of income must be the industrial undertaking. If the source of the income is other than the industrial undertaking than it cannot be said that such income was derived from the industrial undertaking.

8. In view of the above legal position let us examine the items of dispute before us. For the sake of convenience we first take up the item of duty drawback. In order to appreciate the contentions of the parties, we would like to refer the provisions of section 75(1) of Customs Act, 1962 under which duty drawback is allowed. The same is reproduced as below:

"75. Drawback on imported materials used in the manufacture of goods which are exported.-(1) Where it appears to <ORG> that in respect of goods of any class or description manufactured in India being goods which have been entered for export and in respect of which an order permitting the clearance and loading thereof for exportation has been made under section 51 by the proper officer a drawback should be allowed of duties of customs chargeable under this Act on any imported material of a class or description used in the manufacture of such goods, <ORG> may, by notification in the Official Gazette, direct that drawback shall be allowed in respect of such goods in accordance with, and subject to, the rules made under sub-section (2)."

We are informed that similar provisions are also made in Central Excise Act . Since in the present case duty drawback was received under the Customs Act , we are referring to the provisions of section 75(1) of Customs Act, 1962 only.

The perusal of section 75(1) clearly shows that the duty drawback is given by way of incentive to boost the export of goods manufactured in India. If any imported goods on which custom duty has been levied, has been used in the manufacture of any goods of any class or description and such manufacture goods have been exported out of India, the custom duty paid on imported goods is given back to the manufacturer by way of rebate. This duty drawback is given only to manufacturers making export as is apparent from sub-section (2) of section 75 . In other words, it is nothing but reimbursement of duty already paid. Whenever such duty is paid, it directly affects the profits of industrial undertaking in as much as it is debited to Manufacture & Profit and Loss account. Such payment of custom duty increases the cost of manufacturing but when the same is received back as drawback, it nullifies the affect of aforesaid increase in the cost of manufacturing. Therefore, in our opinion, the duty drawback is inextricably linked with the production cost of the goods manufactured by assessed. Accordingly, it is held that duty drawback is the trading receipt of the industrial undertaking having direct nexus with the activity of such industrial undertaking and accordingly, the same forms part of the income derived from such industrial undertaking. The order of Commissioner (Appeals) is, therefore, upheld with reference to this item.

9. For the similar reasons we are of the view that assessed is entitled to succeed in respect of claims received from insurance company and transporters. The reasons is obvious. The payment of freight charges to the transporter as well as the premium to the insurance company is directly connected with the activity of the industrial undertaking affecting the profits of the business and consequently, refund thereof has a direct nexus with such business activity. The details furnished before us clearly shows that amount received from transporters was on account of shortage of rubber and tyres transported. Further the claim from insurance company was on account of the damage of stock due to flood. So, in our view, there is direct nexus between the amount received from the transporter/insurance companies and the activity of the industrial undertaking. Accordingly it is held that such receipts form part of the profits derived from industrial undertaking. The order of Commissioner (Appeals) is, therefore, upheld on this aspect of the issue.

10. As far as income from sale of import entitlement is concerned, the issue is squarely covered against the assessed by the decision of <ORG> in the case of <ORG> (supra). Respectfully following the same it is held that the amount received on the sale of import entitlement shall not form part of profits derived from industrial undertaking.

11. As far as difference in foreign exchange is concerned, it is not clear from the facts of the case whether such foreign exchange was utilised in the field of capital or revenue. Therefore, order of Commissioner (Appeals) is set aside on this issue and the matter is restored to the file of assessing officer who shall ascertain the facts in this regard. He is directed to allow the claim of the assessed if it is found that foreign exchange was utilized in the revenue field. However, if it is found that it was utilised in the capital field then the assessing officer may not include the same in the business profits derived from industrial undertaking.

12. As far as sales-tax refund is concerned, the relevant provisions of Sales Tax Act under which refund was granted and the relevant facts which led to such refund were neither placed before the lower authorities nor before us. The only submission of the learned counsel for the assessed is that like duty drawback it is also reimbursement of the amount of sales-tax paid by the assessed. According to him, the payment of sales-tax is debited to the P&L account like custom duty or excise duty which affects the cost of production and, therefore, any amount refunded against such payment would be trading receipt and thus it would have a direct nexus with the activity of industrial undertaking. However, we do not find such submissions supported by any material or evidence. Normally sales-tax is paid by the dealer/manufacturer after collecting the same from customers. In such cases question of debiting the sales-tax payment to P&L account simply does not arise. However, if sales-tax collected and paid are transferred to P&L account it would not affect either the profit or loss of such undertaking. However, sometimes, the assessed may challenge the levy of sales-tax itself in writ petition before <ORG> and subsequently, may get the refund. Such cases have been considered by the courts as cases of unjust enrichment in as much as taxes are paid after collecting the same from the customers. In such cases, the sale-tax refund may constitute business receipts in view of the decision of <ORG> in the case of <CITATION> (1973) 87 ITR 542 (SC), but the same, in our opinion, cannot be considered as profits derived from industrial undertaking because there is no direct link between the activity of such undertaking and receipt of sales-tax. Further, copy of profit and loss account appearing at page 20 of the paper book does not show that any amount of sales-tax was debited to P&L account. It is also not the case of the learned counsel for the assessed that sales-tax paid on raw material is given back against the export/local sales of the goods manufactured out of such raw material as in the case of duty drawback. Therefore, the sales-tax refund cannot be considered at par with the duty drawback unless it is established that payment of sales-tax enhance the cost of production and same is received back by way of reimbursement. We are not aware of the circumstances under which the refund was granted to the assessed. The law is well-settled that whenever any deduction/relief is claim, the onus lies on the assessed to prove that the conditions for claiming such relief are fulfillled. Reference can be made to the decision of <ORG> in the case of <CITATION> . (1951) 19 ITR 191 (SC). Since such onus has not been discharged, the claim of the assessed regarding sales-tax refund is rejected. However, it is clarified that in some other appropriate case, the <ORG> may decide the issue in the light of sales-tax provisions and relevant material /evidence which may be brought before it. The decision of <ORG> reported as <ORG> case (supra) and <ORG> case (supra) relied upon by the learned Commissioner (Appeals) are quite distinguishable inasmuch as the <ORG> decided the issue in view of the wordings "attributable to" which are wider in scope than the words "derived from" as held by the <ORG> in the case of <ORG> (supra). In view of the above discussion, the order of Commissioner (Appeals) is reversed on this aspect of the issue and the order of assessing officer is restored. Consequently, it is held that the sales-tax refund was rightly excluded from the profits of the industrial undertaking for the purpose of deduction under section 80-I .

13. As far as cash compensatory support (hereinafter referred to as the CCS) is concerned, we find merit in the appeal of the revenue. The perusal of the scheme raised before us shows that CCS is a kind of subsidy given to a person who export goods either purchased or manufactured by him under a scheme formulated by <ORG>. Unlike duty drawback it is not reimbursement of any expenditure on input incurred by the assessed. Further for claiming such subsidy, the person need not carry on any industrial undertaking since it is available to any person making export out of India. It is simply an incentive granted to an exporter under a scheme. Therefore, it cannot be said that there is any nexus between the subsidy received and the activity of the industrial undertaking. The source of the subsidy is the scheme framed by the government and not the industrial undertaking. Hence the decision of <ORG> in the case of <ORG> (supra) would apply squarely to the present issue. It has been held in that case that receipts on sale of import entitlements had nexus with the scheme of government and not the industrial undertaking and, therefore, deduction under section 80HH could not be allowed. Respectfully following the same, it is held that CCS cannot form part of profits derived from industrial undertaking. The order of Commissioner (Appeals) is, therefore, reversed on this aspect of the issue and order of assessing officer is restored.

14. Now coming to International Price Reimbursement Scheme (IPRs), we find that a scheme was formulated by <ORG> under which exporters of engineering goods were allowed reimbursement of part of the price paid in the domestic market in respect of certain kinds of iron steel so that such exporters could compete in the international market. Payment of purchase price in respect of raw material certainly affects the profits of an industrial undertaking and, therefore, reimbursement thereof would directly affect such profits. In these circumstances, one can form the view that there is a direct nexus with the activity of the industrial undertaking. However, it has to be borne in mind that such reimbursement would not have been available to the assessed but for the scheme formulated by <ORG>. Therefore, the immediate source of such receipt has to be traced to such scheme and consequently, the decision of <ORG> in the case of <ORG> (supra) would apply, which is binding on us. Hence, the issue is decided in favor of the revenue. The order of Commissioner (Appeals) is, therefore, reversed on this aspect of the issue and the order of assessing officer is restored.

15. The next issue relates to the addition of Rs. 1,82,29,686 made by assessing officer on account of valuation of stock which has been deleted by Commissioner (Appeals).

16. The assessed was engaged in the manufacture and sale of cycle tyres and tubes as well as trading of fans, sewing machine etc. The assessed had been valuing the closing stock at market price. However, in the year under consideration the assessed changed the method of valuing the closing stock from market value to cost. The assessed was asked to explain as to why such change should not be disallowed. It was explained by the assessed that the method followed in the current year was a recognised method of valuation and the change was bona fide one since it was going to be followed regularly. Certain case laws were relied on by the assessed. After considering the explanation of the assessed, the assessing officer found the change as bona fide one and the same was permitted. Having done so, he went on to observe that it is the duty of the assessing officer to determine the true profit of the year. Reliance was placed on the decision of <ORG> in the case of <CITATION> . (1991) 188 ITR 441 (SC). He has also referred to the decision of Delhi High Court in the case of <CITATION> (1975) 99 ITR 574 (Del) for the proposition that opening stock cannot be valued in a manner different from the valuation of closing stock. Accordingly, the assessing officer worked out the loss to the revenue due to change in the method of valuation. Considering this fact, he reduced the opening stock by 25 per cent. As a consequence thereof, the net addition of Rs. 1,82,29,686 was made.

17. The matter was carried before the Commissioner (Appeals) before whom it was contended that in the case of change in the method of valuation, the opening stock cannot be disturbed because the closing stock of the preceding year has to be taken as opening stock of next year as per the settled position of law. In this regard three judgments were relied on, namely, decision of <ORG> in the case of <CITATION> . (1988) 173 ITR 347 (AP), the decision of Karnataka High Court in the case of <CITATION> . (1988) 174 ITR 616 (Karn) and the decision of <ORG> in the case of <CITATION> (1993) 202 ITR 789 (Bom). The Commissioner (Appeals) agreed with this contention of the assessed and further strengthened the same by referring to the decision of Hon'ble Supreme Court in the case of <CITATION> (1953) 24 ITR 481 (SC) wherein it has been held that valuation of closing stock must be taken as opening stock in the succeeding year. Following this legal position, the Commissioner (Appeals) deleted the addition made by assessing officer. Aggrieved by the same, the revenue is in appeal before the <ORG>.

18. After hearing both the parties, we do not find any merit in the appeal of the revenue. There is no dispute of the fact that the change in the method of valuation of closing stock was bona fide one and the same has been accepted by the assessing officer also. Having accepted the same, the question before the assessing officer was whether he could disturb the value of opening stock. In our opinion, the answer to this question is in the negative. It is settled position of law that value of the closing stock has to be taken as value of the opening stock of the succeeding year. Reference can be made to the judgment of the Honble <ORG> in the case of <NAME> (supra). This position has not been disturbed by any decision of <ORG> till date. The decision of Delhi <ORG> in the case of <ORG> (supra) and the decision of <ORG> in the case of <ORG> (supra) are distinguishable in as much as in none of the cases, there was change in the method of valuing the stock. Those were the cases where the method of valuing the stock was itself defective and contrary to the recognized principles of valuation. Accordingly, it was held that assessing officer was duty bound to adopt the correct method of valuation and in such process the opening stock as well as closing stock could be correctly valued in the similar manner. But there is no case available where there is a bona fide change in the method of valuation and the courts have allowed to disturb the opening stock which was done according to the recognised principles of valuation. On the contrary, the three decisions relied upon by the learned Commissioner (<NAME>) covers the issue before us. These decisions are in the cases of <ORG> (supra), <ORG> (supra) and <ORG> (supra). Therefore, in our opinion, the Commissioner (<NAME>) was justified in deleting the addition. Consequently, the order of Commissioner (<NAME>) is upheld on this issue.

19. In the result, appeal of the revenue is partly allowed.


CASE NO.: Special Leave Petition (civil) 15178 of 1999 PETITIONER: <ORG> WORKERS WELFARE ASSOCIATION & ANR. Vs. RESPONDENT: THE MANAGEMENT OF <ORG> & OTHERS DATE OF JUDGMENT: 29/01/2002 BENCH: D.P. Mohapatra & P. Venkatarama Reddi JUDGMENT:

<NAME>, J.

Leave granted and appeal taken up for hearing.

The first appellant which seems to be a representative body of the retired workmen of <ORG> of <ORG> and the second appellant who is a member thereof, have assailed the legality of the judgment of <ORG> in C.W.J.C. No. 5693 of 1995 dated 10.11.1997. By that judgment <ORG> upheld the award passed by <ORG>, Patna, in Reference No.3/92, following the earlier decision of <ORG> reported in 1997 (1) PLJ 934, wherein the identical issues were decided against the workmen. The Writ Petition out of which the appeal arises was filed by the second appellant herein challenging the award passed by <ORG> on 13.12.1994.

The 1st appellant sought leave of this <ORG> to file the SLP as it was not a party in the Writ Petition out of which this SLP arises. Leave has been granted by us. It may also be noticed that by an order of this <ORG> dated 31.08.2001 on IA 3 of 2001 the 2nd appellant herein, who was respondent No.3 in SLP, has been transposed as petitioner in the SLP.

At the outset, it may be stated that the present SLP was filed with a delay of 460 days. The delay in filing the SLP is sought to be explained in a very casual manner, the only ground stated being "paucity of funds" which on the face of it is as vague as it could be. In the normal course, we should have dismissed the <ORG> for condonation of delay and rejected the SLP summarily. However, as arguments have been advanced at length on the merits and as the grievance of retired employees is being projected, we do not consider it appropriate to dismiss the SLP on the ground of delay. Hence, leave has been granted and appeal decided on merits.

The following dispute between <ORG> Basudevpur, Munger and their workmen represented by <ORG> which is a recognised union was referred for adjudication by <ORG>:

"Whether to enforce Platinum Jubilee Scheme Pension Plan for the workers who retired from service on or after 24.8.1986 and to enforce other pension scheme for the workers retired before the 24.8.1986 and to give two types of benefits to both types of workers by the Management of I.T.C.

Ltd., <ORG> is legal and justified? If not, whether the workers who retired before 24.8.1986 from I.T.C. Ltd. <ORG> are also entitled for the benefits under Platinum Jubilee Pension Plan?"

The learned Presiding Officer answered the reference in favour of the Management and against the Union, having held that the workmen who retired before 24.8.1986 were not entitled to the benefits under <ORG>. By that scheme, the workmen who retired on or after the date afore-mentioned were made eligible to get life pension. It was the contention of the workers'-Union before the <ORG> and it is also the contention of the appellants that the benefits should be extended to all those workmen who retired during and after 1977 when the pension scheme was first introduced in this industrial establishment.

To have a proper background of the dispute, it is necessary to refer briefly to the pension scheme prevalent prior to the introduction of <ORG>. A settlement entered into on 27.6.1977 paved the way for the introduction of pension scheme for the first time. It applied to the permanent workmen on the rolls of the company who retired on or after 1.6.1977. Under that scheme, the pension was payable for a period of 10 years. By a subsequent settlement dated 22.4.1982, though the period of drawal of pension remained the same, the formula was revised and the maximum pension payable was enhanced to Rs.225/- per month. This benefit under the settlement dated 22.4.1982 governed the workmen who were on the Company's pay roll on the date of signing of the settlement. On the eve of commemoration of platinum jubilee of <ORG>, the Management decided to introduce a scheme known as Platinum Jubilee Pension Scheme. Under this scheme, eligible workmen will get the pensionary benefits till their life time and on their demise, part of the benefits go to their nominees or legal heirs. In order to implement the pension scheme, a fund named "Platinum Jubilee Pension Fund" was created under a trust deed dated 27.5.1987. As a follow up thereto, <ORG> scheme Rules were framed in the year 1988. While so, pursuant to discussions and negotiations held in the course of conciliation proceedings, there was a settlement under Section 12(3) of Industrial Disputes Act on 10.4.1988. As it was agreed that <ORG> should be made part of the service conditions of employees, the following provisions were incorporated in the settlement dated 10.4.1988 :-

"PENSION SCHEME In supersession of clause 14 Part I read with Annexure VII of Memorandum of Settlement dated 28.4.82, the following Pension Scheme shall apply :-

(i) The company has by a Deed of Trust dated 27.5.87 setup a Trust Fund entitled <ORG> for payment of pension to its workmen. With effect from the date of signing of this Memorandum of Settlement, all workmen on the rolls of the company as at 24th August, 1986 and thereafter will be eligible to become members of the aforesaid <ORG> and will be eligible to receive benefits in accordance with the aforesaid Trust Deed and <ORG> rules. A copy of the said Trust Deed and Rules is attached herewith as Annexure XII.

(ii) With effect from 1.4.88, the ITC Workmen's Pension Fund Scheme as contained in clause 14, Part I and Annexure VII of the Memorandum of Settlement dated 28.4.82 will cease to be applicable to workmen on the rolls of the company as at 24.8.86 and thereafter. It is expressly agreed and understood that such workmen will be governed only by the ITC Platinum Jubilee Pension Fund Deed and Rules.

(iii) It is clarified that workmen who were on the rolls of the company prior to 24.8.86 and who are in receipt of pension under the <ORG> workmen's Pension Scheme as contained in clause 14, Part I and Annexure VII of the Settlement dated 28.4.82 will continue to be governed by the rules of the <ORG> Workmen's Pension Scheme. The <ORG> Platinum Jubilee Pension Fund Deed and Rules will not be applicable to them."

Under the Trust Deed dated 27.5.1987, <ORG> constituted the ITC Platinum Jubilee Pension Fund to be administered by the trustees who are required to hold the fund in trust for the benefit of the members or other persons set forth in the Rules. The Fund shall be vested in the trustees who shall have the entire control of the funds. The Deed enjoins that no money belonging to the members in the hands of the trustees shall be recovered by the <ORG> nor shall the <ORG> have any lien or charge on the same. The trustees are required to arrange for the investment of the funds and payment of pension due to the members in accordance with the Rules. Clause 6 stipulates that the funds of the Trust shall consist of accumulations from the contributions received by the trustees in accordance with the Rules, securities or other investments, interest and other accretion arising out of the funds as reduced by payments and disbursements. The Trust Deed also provides for possible contingencies.

Let us now advert to ITC Platinum Jubilee Pension Fund Rules. As already noticed, the fund shall be deemed to have come into operation on or from 24.8.1986 notwithstanding the date of the Trust Deed. Under the caption 'Membership', it is provided by Rule 8(a) that all confirmed and regular workmen of the <ORG> as defined in Rule 2(h) shall be eligible for membership of the fund. An employee who is eligible for the membership of the fund may make an application in the prescribed form and furnish the particulars of the nominees in another form to the trustees through the <ORG>. The <ORG>, on scrutiny of such application, has to forward the same to the trustees with whose approval the employee shall be admitted as a member. Under the heading 'Contribution', it is provided that the <ORG> may pay to the trustees in respect of the members an initial contribution as may be certified by the Actuary subject to Rule 88 of the Income Tax Rules. Under clause (b) of Rule 9, it is enjoined that the <ORG> shall pay to the trustee in respect of each member an ordinary annual contribution as may be certified by the Actuary subject to I.T. Rules 87 and 88. Under clause 11(b), the pension admissible as per the Rules shall be payable through out the life time of the member and shall be computed at the rate of 1/180 part of the pensionable salary for each year of pensionable service. The maximum pension payable shall be Rs.400/- per month and the minimum shall be Rs.100/- per month. Provisions for payment of pension to the widow for her life time in the event of demise of the member and for the payment of pension for a period of 10 years to his nominee if the member is unmarried or widower are also made.

Thus the salient features of <ORG> are that a separate fund is created for the purpose of payment of pension and the same is vested and controlled by the trustees; the eligible person should become member of the fund on an application submitted by him, the pension is payable during the life time of the member and in the event of demise of the member (retired workman), the pension at a stipulated rate is payable to the widow or to a beneficiary nominated by member in case of an unmarried or widower person. The ceiling limit has been raised to Rs.400/- per month. Thus, <ORG> is undoubtedly much more beneficial to the retired workmen. At this juncture, we may notice that there has been a controversy on the question whether the pension scheme introduced in 1988 is in substance a new scheme or it is a revised or liberalized scheme. But, it is unnecessary to resolve that issue.

The learned counsel for the appellants has reiterated the contentions advanced before <ORG> and <ORG> in the connected matter. While accepting that Article 14 as such has no application because <ORG> is not a 'State' or 'other <ORG>', the counsel, however, urged that on the analogy of Article 14 , the relevant clauses in the settlement are to be held to be arbitrary, unjust and irrational, that the prescription of cut-off date i.e. 24.8.1986 which has the effect of denying greater benefits under the scheme to the workmen who retired before that date is equally arbitrary, discriminatory and unjust and therefore the settlement entered into on 10.4.1988 cannot defeat the legitimate rights of the workmen who retired before 24.8.1986. It is further submitted that all the workmen drawing pension under the Company's Rules settlements belong to one class and there cannot be sub-classification amongst them by treating the workmen who retired between 24.8.1986 and 10.4.1988 as a different class. It is argued that when the benefit is given to the workmen who retired within the two dates afore-mentioned, the same benefit ought to have been extended at least to those who retired after the date of the settlement of 1982 i.e. 28.4.1982. It is then contended that the date 24.8.1986 has been fixed arbitrarily and the Management's contention that it coincided with the date of completion of 75 years of Company's existence is factually incorrect, in as much as 75 years would expire by 24.8.1985, the Company having been incorporated on 24.8.1910. It is also submitted that notwithstanding the settlement which according to the appellant's counsel is unjust and discriminatory, all the workmen retiring after 24th April, 1982, are entitled to the benefit of <ORG>.

The learned Senior counsel for the respondent-Company while drawing support from the reasoning and conclusions of <ORG> in the case reported in 1997 1 PLJR 934, has laid considerable stress on the fact that the employees of the Company existing or retired cannot invoke Article 14 and they as well as the Management and other workmen are only governed by the provisions of the Industrial Disputes Act . The settlement which was entered into under Section 12(3) as a result of conciliation proceeding was binding on all the workmen and no workman much less any individual workman or group of workmen can challenge the same, especially after the recognised <ORG> which espoused the cause of workmen and participated in the proceedings before the <ORG>, chose to accept the award. The learned senior counsel pointed out that the second petitioner is also a member of the recognised <ORG> and it is not open to him to assail the settlement or the award. He was not even the person who filed the Writ Petition in <ORG>. The present SLP filed after the delay of 460 days is liable to be dismissed in limine on the ground of unsatisfactory explanation for the delay. On the facts of the case highlighted by the <ORG>, there is no basis to hold that settlement is ex facie, unjust or arbitrary. Giving the benefit to the employees who retired about two years prior to the date of settlement does not invalidate the settlement on any ground known to law, but on the other hand, it is the concession shown by the Management on the occasion of celebrating Platinum Jubilee. It is further submitted that one clause in the settlement cannot be legitimately assailed and the settlement has to be viewed as a whole. When the settlement as a whole, has not been attacked as unfair or mala fide, it is not open to the <ORG> much less to the individual workmen who are not parties to assail one clause in the settlement dealing with the pension. It is submitted that an overall view has to be taken when the question of validity of settlement is put in issue.

Before proceeding further, we shall advert to the findings of <ORG>. At the outset, the <ORG> overruled the contention of the <ORG> that the reference was without jurisdiction for the reason that the retired employees on whose behalf the dispute was raised are not workmen. The learned Presiding Officer of the <ORG> then observed that all the issues including the one relating to life time pension with effect from the particular date were discussed threadbare by the office-bearers of the Union, <ORG>, the <ORG> representatives and the Joint Labour Commissioner and then the settlement was arrived at. The cut-off date i.e. 24.8.1986 was not picked up arbitrarily. It was the date on which the Company completed 75 years of its existence. The <ORG> after having referred to the various pronouncements of this Court then observed that the cut-off date was introduced after due deliberations and no material has been placed by the Union to show that the fixation of cut-off date was arbitrary or mala fide. Earlier the <ORG> clarified that the letter addressed by the Conciliation Officer-cum-Labour Commissioner subsequent to the settlement cannot be considered to be a binding direction but it was only an appeal to the <ORG> to take a compassionate view in the matter of extending benefits to other retired persons.

As already noticed, the learned single Judge affirmed the award of <ORG> and dismissed the Writ Petition filed by the 1st Petitioner herein following the earlier <ORG> judgment reported in <ORG> (1997 1 PLJR 934). To complete the narration, it is necessary to refer to the views expressed by the <ORG> in that case. The learned Judges concentrated on the issue whether the fixation of cut-off date was irrational and arbitrary, and answered the question in the negative. In reaching such conclusion, <ORG> inter alia took into account the fact that the scheme emanating from the settlement dated 10.4.1988 was entirely a new scheme and therefore, the ratio of the decision in Nakara's case has no application. "The present case is not one of liberalization of the existing pension scheme, but one of the introduction of a new scheme", <ORG> observed. Treating the Platinum Jubilee day as the cut-off date was held to be not an arbitrary decision.

In answering the reference the industrial adjudicator has to keep in the forefront of his mind the settlement reached under Section 12(3) of the Industrial Disputes Act. Once it is found that the terms of the settlement operate in respect of the dispute raised before it, it is not open to <ORG> to ignore the settlement or even belittle its effect by applying its mind independent of the settlement unless the settlement is found to be contrary to the mandatory provisions of the Act or unless it is found that there is non-conformance to the norms by which the settlement could be subjected to limited judicial scrutiny. This is infact the approach of the <ORG> in the instant case. <ORG> which examined the issue from a different angle as well was, in our view, justified in affirming the award of the <ORG>.

As the settlement entered into in the course of conciliation proceedings assumes crucial importance in the present case, it is necessary for us to recapitulate the fairly well settled legal position and principles concerning the binding effect of the settlement and the grounds on which the settlement is vulnerable to attack in an industrial adjudication. Analysing the relative scope of various clauses of Section 18 , this <ORG> in the case of <CITATION> . (1991 (1) SCC 4) succinctly summarized the position thus:-

"Settlements are divided into two categories, namely, (i) those arrived at outside the conciliation proceedings ( Section 18(i) and (ii) those arrived at in the course of conciliation proceedings ( Section 18(3) ). A settlement which belongs to the first category has limited application in that it merely binds the parties to the agreement. But a settlement arrived at in the course of conciliation proceedings with a recognised majority union has extended application as it will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. To that extent it departs from the ordinary law of contract. The object obviously is to uphold the sanctity of settlements reached with the active assistance of the Conciliation officer and to discourage an individual employee or a minority union from scuttling the settlement. There is an underlying assumption that a settlement reached with the help of the conciliation Officer must be fair and reasonable and can, therefore, safely be made binding not only on the workmen belonging to the union signing the settlement but also on the others. That is why a settlement arrived at in the course of conciliation proceedings is put on par with an award made by an adjudicatory authority."

<CITATION> (AIR 1986 SC 954), E.S. Venkataramiah, J. Speaking for the Court explained the rationale behind Section 18(3) thus :-

"Even though a Conciliation Officer is not competent to adjudicate upon the disputes between the management and its workmen he is expected to assist them to arrive at a fair and just settlement. He has to play the role of an adviser and friend of both the parties and should see that neither party takes undue advantage of the situation. Any settlement arrived at should be a just and fair one. It is on account of this special feature of the settlement sub-sec. (3) of S.18 of the Industrial Disputes Act, 1947 provides that a settlement arrived at in the course of conciliation proceeding under that Act shall be binding on (i) all parties to the industrial dispute, (ii) where a party referred to in clause (i) is an employer, his heirs, successors, or assigns in respect of the establishment to which the dispute relates and (iii) where a party referred to in clause (i) is comprised of workmen, all persons who were employed in the establishment or part of the establishment as the case may be to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part. Law thus attaches importance and sanctity to settlement arrived at in the course of a conciliation proceeding since it carries a presumption that it is just and fair and makes it binding on all the parties as well as the other workmen in the establishment or the part of it to which it relates as stated above."

Admittedly, the settlement arrived at in the instant case was in the course of conciliation proceedings and therefore it carries a presumption that it is just and fair. It becomes binding on all the parties to the dispute as well as the other workmen in the establishment to which the dispute relates and all other persons who may be subsequently employed in that establishment. An individual employee cannot seek to wriggle out of the settlement merely because it does not suit him.

The next principle to be borne in mind is that in a case where the validity of the settlement is assailed, the limited scope of enquiry would be, whether the settlement arrived at in accordance with sub-section (1) to (3) of S.12, is on the whole just and fair and reached bonafide. An unjust, unfair or malafide settlement militates against the spirit and basic postulate of the agreement reached as a result of conciliation and, therefore, such settlement will not be given effect to while deciding an industrial dispute. Of course, the issue has to be examined keeping in view the presumption that is attached to the settlement under Section 12(3) .

<CITATION> (1976 (4) SCC

736), this Court called for a finding on the point whether the settlement was fair and just and it is in the light of the findings of the <ORG> that the appeal was disposed of. <NAME>, J. speaking for the three-Judge Bench made it clear that the settlement cannot be judged on the touch stone of the principles which are relevant for adjudication of an industrial dispute. It was observed that the <ORG> fell into an error in invoking the principles that should govern the adjudication of a dispute regarding dearness allowance in judging whether the settlement was just and fair. The rationale of this principle was explained thus:-

"There may be several factors that may influence parties to come to a settlement as a phased endeavour in the course of collective bargaining. Once cordiality is established between the employer and labour in arriving at a settlement which operates well for the period that is in force, there is always a likelihood of further advances in the shape of improved emoluments by voluntary settlement avoiding friction and unhealthy litigation. This is the quintessence of settlement which courts and tribunals should endeavour to encourage. It is in that spirit the settlement has to be judged and not by the yardstick adopted in scrutinizing an award in adjudication."

The line of enquiry whether settlement was unfair and unjust in <ORG> Vs. Presiding Officer and others (1996 (10) SCC 446), was adopted by a three-Judge Bench of this Court speaking through <NAME>, J. It was observed at paragraph 21 that "under these circumstances, respondents 3 to 14 also would be ordinarily bound by this settlement entered into by their representative <ORG> unless it is shown that the said settlement was ex facie, unfair, unjust or mala fide". The Court came to the conclusion that the settlement cannot be characterised to be unfair or unjust. It was further observed that "once this conclusion is reached it is obvious that another industrial dispute should have been disposed of in the light of this settlement". It was reiterated in the case of <ORG> Vs. Their Workmen (AIR 1981 SC 2163), that "a settlement cannot be weighed in any golden scales and the question whether it is just and fair has to be answered on the basis of principles different from those which come into play when an industrial dispute is under adjudication". Earlier, it was observed :-

"If the settlement had been arrived at by a vast majority of the concerned workers with their eyes open and was also accepted by them in its totality, it must be presumed to be just and fair and not liable to be ignored while deciding the reference merely because a small number of workers (in this case 71, i.e., 11.18 per cent) were not parties to it or refused to accept it, or because the <ORG> was of the opinion that the workers deserved marginally higher emoluments than they themselves thought they did."

Another principle which deserves notice is the one firmly laid down in <NAME> case (supra). It was emphasised that the settlement has to be taken as a package deal and it should not be scanned 'in bits and pieces' to hold some parts good and acceptable and others bad. Then, it was observed "unless it can be demonstrated that the objectionable portion is such that it completely outweighs all the other advantages gained, the Court will be slow to hold a settlement as unfair and unjust. The settlement has to be accepted or rejected as a whole and we are unable to reject it as a whole as unfair or unjust."

Having noted that the only objectionable feature of the settlement as found by the <ORG> was reduction of dearness allowance from cent per cent to 85 per cent, it was held that, that part of the settlement cannot be held to be invalid or inoperative. This proposition laid down in <NAME> case was reiterated in <ORG> case (supra), approvingly citing the said decision. The passages in <NAME> case were quoted in extenso and approved by the three-Judge Bench in <ORG> case (supra) as well.

What follows from a conspectus of these decisions is that a settlement which is a product of collective bargaining is entitled to due weight and consideration, more so when a settlement is arrived at in the course of conciliation proceeding. The settlement can only be ignored in exceptional circumstances viz. if it is demonstrably unjust, unfair or the result of mala fides such as corrupt motives on the part of those who were instrumental in effecting the settlement. That apart, the settlement has to be judged as a whole, taking an overall view. The various terms and clauses of settlement cannot be examined in piecemeal and in vacuum.

Viewed in the light of these principles, it cannot be said that the settlement in the present case which is otherwise valid and just suffers from any legal infirmity merely for the reason that one of the clauses in the settlement extends the benefits of life pension scheme only to the employees retiring after a particular date i.e. 24.8.1986. Exclusion of workmen retiring before that date is no ground to characterise the settlement as unjust or unfair. Of course, the allegations of mala fides such as corrupt motives have not been levelled against anyone and that aspect becomes irrelevant here.

<ORG> proceeded to consider whether even that particular clause in the settlement dealing with the pension is per se arbitrary or discriminatory and reached a conclusion that it is not so for the reason that a new scheme for pension has been introduced by the impugned settlement and that the question of arbitrariness in fixing the cut-off date does not therefore arise. <ORG> further held that the fixation of cut-off date for the purpose of entitlement of life pension cannot be said to be arbitrary or irrational as such fixation becomes imperative from financial point of view and moreover the date coincided with the Platinum Jubilee Celebrations of the Company. The date was not 'picked up from the hat', <ORG> observed. <ORG> approached the issue more from the angle of Article 14 and referred to the decisions in which the State's action in making the classification for the purpose of extending the pensionary benefits or additional benefits fell for consideration of this Court. Strictly speaking, such approach is not apt and appropriate. The present case is one where Article 14 cannot be applied as the respondent is not 'State' or 'other Authority'. On this, there is practically no dispute. If so, the approach should be as we indicated earlier; that is to say, whether the settlement can be said to be unjust, unfair or vitiated by mala fides. No mala fides is imputed to anyone. What remains to be considered is whether it is fair and just, viewed from a broader angle and taking a holistic view of the matter. It is true that certain considerations germane to Article 14 may also be germane while deciding the issue whether the settlement is just and fair. But, it does not follow that the doctrine of classification and the principles associated with it should be projected wholesale into the process of consideration of justness and fairness of the settlement. There may be some overlapping and there may be some facets which apply in common to determine the crucial issue whether the settlement on the whole is just and fair, but that is not to say that the settlement is liable to be tested on the touchstone of Article 14 , more so when it has no application in the instant case. Keeping this distinction in mind and considering the grounds of attack on the particular clause of settlement, we are unable to hold that it is vulnerable to challenge on any well- recognised grounds. The facts on record do not establish that the settlement which was reached was palpably unjust or unfair from the point of view of the entire body of workmen. The preponderence of circumstances and the material on record do not in our view, displace the presumption attached to the settlement arrived at in the course of conciliation.

Firstly, it is to be borne in mind that there was no challenge at any time to any of the terms of the settlement other than the clause relating to pension in so far as it confines the benefit of life-long pension only to those who retire on or after 24.08.1986. Secondly, we must give due weight to the fact that the settlement was reached as a result of collective bargaining and with the assistance of <ORG> officer. Invariably, there would be an element of give and take in the deal leading to the settlement. Granting the benefit of life-long pension prospectively or with limited retro-active effect does not make the settlement unjust or unfair. It is certainly beneficial to the workmen in service and those who retired few months earlier. The mere fact that the <ORG> did not go the whole hog to extend the benefit to all the retired employees does not impart an element of unjustness or unreasonableness to the settlement. Financial implications apart, the benefits granted to workmen under various other clauses of settlement have to be kept in view. This particular clause relating to pension cannot be considered in isolation. The learned senior counsel for the petitioners argued that there was no justification in making a sub-classification amongst the retired employees by giving the benefit to those who retired only between 24.08.1986 and the date of settlement. In our view, conferment of such additional benefit to workmen who retired after the date of platinum jubilee celebration and before the date of culmination of settlement, far from making it unjust or irrational, tantamounts to extending benefit to some more workmen who would not have got it otherwise, if the decision was implemented prospectively. Apparently, such decision was taken to arrive at an amicable settlement and to comply with the demands of the workmen to the extent feasible and practicable. The argument that either all the retired employees should be given the benefit or none at all cannot cut ice if the principles of collective bargaining and justness of the settlement viewed as a whole is kept in view. There is nothing which is palpably unjust or irrational in giving the benefit only to those who retired during and after the platinum jubilee year. Though there was some dispute as to the correctness of the date on which the platinum jubilee falls, no material has been placed before us excepting the date of incorporation of the <ORG> to establish the version of the appellants in this regard. Picking up that date by going a little backwards from the date of settlement cannot be regarded as a whimsical or arbitrary step, more so when it was done with the consent of large majority of workmen. The <ORG> while adjudicating the dispute and <ORG> while exercising its jurisdiction under Art. 226 /227 should be circumspect and cautious in disturbing the terms of settlement founded on collective bargaining and conciliation. The adjudicator of industrial dispute could not have directed the benefit to be extended to all the retired employees by substituting its own views to those reflected in the settlement, on an application of the usual principles governing industrial adjudication.

Another factor to be taken into account is that the recognised union of workmen which espoused the cause of the retired employees and contested the issue before <ORG> did not pursue the matter further obviously because they felt that in the larger interests of maintaining industrial harmony and peace, the matter should be left off at that stage. A member of that recognised union had taken up the issue before <ORG>.

Considering all these factors, we find no legal infirmity in the award of the <ORG> which has been affirmed by <ORG> and we say so without going into the subtle question whether the scheme is a new one for all practical purposes or only a revision or liberalization of the pre-existing pensionary benefits.

In the view we have taken it is not necessary to dwell on the contention raised by the learned senior counsel for the respondent regarding the maintainability of the writ petition and SLP at the instance of the appellants.

We see no merit in the appeal and it is hereby dismissed. No costs.

<NAME>

(<NAME>) .J.

(<NAME>) January 29, 2002.