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Cooper Engineering Ltd., Bombay Vs. D.M. Aney and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Application No. 799 of 1969
Judge
Reported in(1970)72BOMLR201; (1971)ILLJ613Bom
ActsIndustrial Disputes Act, 1947 - Sections 2, 10, 10(1), 18, 18(1), 19, 19(1), 19(2), 19(7), 23 and 24(1)
AppellantCooper Engineering Ltd., Bombay
RespondentD.M. Aney and ors.
Excerpt:
industrial disputes act (xiv of 1947), sections 18, 10 - industrial disputes (bombay) rules, 1957--agreement by acquiescence without writing whether settlement under act--representations made by government, binding nature of.;an agreement by acquiescence of the workmen and without a writing being signed by or on their behalf cannot be held to be a settlement under section 18 of the industrial disputes act, 1947, and is not binding on them. ;ordinarily, as a matter of estoppel and/or equity, representations made by the government affecting the rights and obligations of the parties would be binding on the government. the observations of the supreme court in union of india v. anglo afghan agencies [1968] a.i.r. s.c. 718, however, have not the effect of conferring any right on the government.....k.k. desai, j.1. in this petition under article 226 of the constitution the petitioner company, employers (hereinafter referred to as 'the company') has challenged the legality of the order or reference dated january 25, 1969, made by the state government under s. 10(1)(d) of the industrial disputes act, 1947, in respect of the disputes nos. 1 and 2 mentioned in the order. 2. the facts leading to the institution of the petition may be shortly stated as follows :- the company has business of a factory at chinchwad near poona where it is engaged in production and manufacture of machine tools of different types and classes. about 800 workmen are working in the factory. prior to july 6, 1963, the 3rd respondent trade union represented the majority of the workman at the factory and made an.....
Judgment:

K.K. Desai, J.

1. In this petition under Article 226 of the Constitution the petitioner company, employers (hereinafter referred to as 'the Company') has challenged the legality of the order or reference dated January 25, 1969, made by the State Government under S. 10(1)(d) of the Industrial Disputes Act, 1947, in respect of the disputes Nos. 1 and 2 mentioned in the order.

2. The facts leading to the institution of the petition may be shortly stated as follows :-

The company has business of a factory at Chinchwad near Poona where it is engaged in production and manufacture of machine tools of different types and classes. About 800 workmen are working in the factory. Prior to July 6, 1963, the 3rd respondent trade union represented the majority of the workman at the factory and made an agreement dated July 6, 1963, in connection with dearness allowance payable to the workmen. In the agreement the payment of dearness allowance was linked with the cost of living index prevalent at Sholapur, as at that date the Poona cost of living index was not fixed by any authority. On ar about December 12, 1964, the Government of India constituted a Wage Board for the engineering industries consisting of a Chairman and two independent members and with equal representatives on behalf of the employers and employees. The terms of reference, inter alia related to the determination of categories of employees to be brought within the scope of the proposed wage fixation and to work out a wage structure based on the principles of fair wage in connection with workmen in engineering industrial. Having regard to an expectation that the question of interim relief and/or payment (pending the report to be made by the Wage Board) was likely to be decided first by the Wage Board and thereupon by the Central Government, certain meetings whereat the Hon'ble Minister for Labour, the officials of the Indian Engineering Association, Western Region and the Engineering Association of India, Western Region, and the Union representing the engineering workmen were present took place. At the meeting held sometime in September, 1965, the Hon'ble Minister appears to have stated that the Government would not refer disputes about wages and allowances to adjudication in case of engineering establishments covered by the Wage Board if the employers agreed to implement the recommendations, interim or final, of the Wage Board as accepted by the Government of India.

3. On July 23, 1966, the Central Government by its resolution of that date referred to the fact that the Wage Board had not been able to arrive at an agreed solution as regards the interim relief to be given and that the Wage Board had no February 12, 1966, by majority vote, decided to recommend to the Government a scheme for interim relief. The Government recorded the difference of opinion between the representatives of the employers and the labour in connection with the question of interim relief. The Government declared that it had decided to accept the majority recommendations and mentioned them in the scheme of relief appearing in Appendix 1 which was annexed to the Government resolution. By the resolution the Government requested the employers in engineering industries to implement the recommendations as contained in the scheme of interim relief mentioned in the Appendix 1. It appears that the membership of the 3rd respondent Union decreased and the membership of the 2nd respondent Trade Union of workman of the company increased and about January, 1965 the majority of the workmen of the company belonged to the 2nd respondent Union and that Union was recognised by the company. The 2nd respondent Union had prior to the date of the above Government resolution submitted its charter of demands dated August 3, 1965, demanding fixation of wage scale and that the dearness allowance should be linked with the Poona cost of living index which had been for the first time fixed in June, 1965. The 2nd respondent Union had also made certain small demands by submitting two further charters of demands dated January 22, 1966 and February 26, 1966.

4. In connection with these demands, the company and the 2nd respondent Union made two agreements respectively dated November 1, 1966 and May 13, 1967. By the first agreement, copy whereof is annexed as Ex. B to the petition, in substance, the company agreed to pay to the workmen increased wages as recommended by the above Government resolution by way of interim relief in accordance with the proportions mentioned in the agreement. In the arguments advanced by parties, particular reliance has been placed on clauses (10) and (12) of this agreement which we will quote whilst dealing with the arguments advanced. By clause (11) the 2nd respondent Union agreed to treat the charter of demands regarding wage scales and dearness allowance made by it in its letter dated August 3, 1965, as withdrawn. The second agreement, copy whereof is annexed as Ex. C to the petition, relates to extra wages for work done on normal weekly holidays, but reliance has been placed on the second clause in this agreement which relates to other demands. By this clause, the 2nd respondent Union withdrew all other demands made by it in the previous charters of demands relating to wage scales classification, dearness allowance and certain other matters, pending the deliberations and the final recommendations of the Wage Board in view of the agreement dated November 1, 1966.

5. It appears that the membership of the 3rd respondent Union again increased and between April and December, 1967 the membership increased from 279 workers to 355 workers. Admittedly, the workmen in the factory were about 800 in number and as the membership of the 3rd respondent Union was increasing in the above manner, the 2nd respondent Union could not be definitely described to be a Union representing the majority of workmen after December 1967 in any event.

6. The 3rd respondent Union made demands for fixation of dearness allowance and linking up the same with the Poona cost of living index. The first such demand was made on May 16, 1967. In that connection an application signed by 304 workmen dated July 10, 1967, was served by the 3rd respondent Union on the company. A notice of strike dated July 12, 1967, was also served by the 3rd respondent Union on the company and the Labour Commissioner made efforts for conciliation and preliminary discussions were held on August 3, 1967. In connection with raising a dispute which could be referred to Industrial Tribunal, the 3rd respondent Union appears to have thought it necessary to terminate the agreements made by the 2nd respondent Union which we have referred to above. By a notice dated October 3, 1967 (part of Ex. E collectively to the petition), the 3rd respondent Union terminated the agreement dated July 6, 1963. By another notice dated October 3, 1967 (part of Ex. E collectively to the petition), the 3rd respondent Union terminated, inter alia, the two agreements dated November 1, 1966 and May 13, 1967, referred to above. The 3rd respondent Union thereafter again submitted charters of demands dated December 9, 1967 (Ex. F to the petition), October 2, 1968 (Ex. M to the petition), and November 29, 1968 (Ex. R to the petition). The demand made in December, 1967 was for payment of dearness allowance at the rate of 6 paise per day for every point of rise over 17 points of the Poona consumer price index number with effect from 1-1-1967. Thereafter, a number of strikes took place. The first strike was one day's strike on August 10, 1968. On September 4, 1968, there was slogan shouting for strike from September 14, 1968. A notice of strike dated September 9, 1968, was served and the workmen struck work on September 14, 1968, and October 3, 1968. On September 25, 1968, 17 workmen who took part in strike were suspended and charge-sheeted. The demand in the notice dated October 2, 1968, was for withdrawal of suspension orders against these 17 workmen. Fourteen of these workers were dismissed on November 19, 1968. Again, one day's strike was observed on October 12, 1968. By the charter of demands dated November 29/30, 1968 three demands were made. These are the three demands which were by the impugned order of reference dated January 25, 1969, referred to the Industrial Tribunal for adjudication. Of these three demands, the Conciliation Officer admitted only the third demand into conciliation in December 1968. There was continuous strike from December 11, 1968 to January 3, 1969.

7. It appears that in the meanwhile the Wage Board made its report dated December 23, 1968, to the Central Government. The report, admittedly, was in three sets, viz., one by independent members, the other by the representatives of employers and the third by the representatives of labour. On behalf of the respondents it is stated that from these three reports no common principle or formula can be derived. Admittedly, the Central Government has not been able to make up its mind as to what should be done as a result of the above report dated December 23, 1968, made by the Wage Board.

8. Thereafter, by the impugned order of reference dated January 25, 1969 the Government referred the three demands made by the 3rd respondent Union by the charter of demands dated November 29/30, 1968, for adjudication to the Industrial Tribunal consisting of Shri D. M. Aney. It would not be correct to reproduce all the details of the disputes referred to the Industrial Tribunal here. It is sufficient to state that the first dispute is that the monthly-rated staff mentioned in item I of the disputes should be paid dearness allowance with effect from the date fixed by the Tribunal on the basis of the rate of 5 paise per day for rise of every point over 25 of the consumer price index of working class of Poona on the basis mentioned in the demand. The second dispute referred was that 'all the daily rated workmen should be paid dearness allowance at the rate of ...... with effect' from the date fixed by the Tribunal. The third demand was for reinstatement of 14 dismissed workmen with payment of back wages from the date of their suspension till reinstatement.

9. Mr. Bhabha appearing for the company has made three contentions before us for challenging the legality of the impugned order of reference as regards the disputes one and two only. The first contention was that the order of reference is made without any jurisdiction. The argument was that the 2nd respondent Union being a majority union had made agreements dated November 1, 1966, and May 13, 1967, as regards the matters referred to the Tribunal by the impugned order of reference and these agreements were subsisting and operating and binding on all the workmen. That was so because these agreements had not been validly terminated on behalf of the workmen. The submission was that the purported termination of these agreements by the 3rd respondent Union was not legal and valid, because the 3rd respondent Union was, under the scheme of S. 19 of the Industrial Disputes Act and the Rule 83 prescribing procedure for termination of agreements, not a proper union and had no authority to terminate the agreements. The submission was that the agreements were binding on the majority of the workmen who were represented at the dates of the agreements by the 2nd respondent Union. On behalf of these workmen who were bound by the agreements due notices of termination could only be served by the 2nd respondent Union. The 2nd respondent Union had never served such notices and the agreements were continuously operating till the date of the order of reference. The further submission was that the benefits of the provisions in this agreement had been accepted by the remaining workers who are now represented by the 3rd respondent Union. They had received payment in accordance with the scheme fixed by these agreements after the copies of the agreements had been put up on the notice board. These workers knew the policy of the Government mentioned above regarding not making a reference when interim relief was paid by the company as requested by the Central Government by the resolution mentioned above. These workers also knew that the matter of final fixation of wage scales and other relevant matters were being considered by the Wage Board. The agreements provided for payment of back wages as fixed by the agreements from April, 1966. The payment of back wages and further payments were continuously received by all these workmen in accordance with the terms fixed by the agreements without protest. They, therefore, with knowledge of all relevant facts had acquiesced into receiving the payments and had thereby consented to accept these agreements as binding on them. On the above basis, the further submission was that since the 2nd respondent Union had not terminated the agreements and the termination of these agreements by the 3rd respondent Union was not legal and the agreements were in operation, there was in respect of matters settled by the agreements no jurisdiction in the State Government to make reference to the Industrial Tribunal under S. 10(1)(d). These submissions were made on the footing that there was clear provision in these agreements in connection with the disputes 1 and 2 referred to the Industrial Tribunal under the above order.

10. In support of these contentions, reliance was placed on the decision of the Supreme Court in the case of Bangalore Woollen, Cotton and Silk Mills Co. v. Workmen, : (1968)ILLJ555SC . The submission was that the Supreme Court clearly held in this case that when there was a subsisting award binding on the parties the Industrial Tribunal would have no jurisdiction to consider the same points in the reference before it. In connection with the question of acquiescence and the resulting consent, reliance was placed on Article 1175 in Halsbury's Laws of England, Volume 14. As regards the validity of termination, reliance was placed on the scheme of the Act and the rules particularly to be found in Ss. 18(1) and 19(1), (2) and (7) and Rr. 62 and 83 made under the Act. In that connection reference was made so the definition section 2(p) and the main section authorising the Government to make a reference, i.e., S. 10 and particularly clause (d) of sub-section (1).

11. On behalf of the Unions, it was sought to be argued that under these provisions in the Act and the rules, the 3rd respondent Union was proper union entitled to terminate the above two agreements dated November 1, 1966, and May 13, 1967. The further submission was that the scheme of S. 10 authorised the Government to make a reference wherever an industrial dispute existed or was apprehended and agreements made between the parties did not deprive the Government of the powers to make a reference thereunder. On the facts the contention was that since at the date of the notice of termination dated October 3, 1967, the 3rd respondent Union had 387 workmen as its members, it was a Union representing the majority of workmen. The 2nd respondent Union then did not represent a majority of workmen. The only proper party who could validly terminate the agreements was, therefore, the 3rd respondent Union. In that connection, reference was made to the decision of the Supreme Court in the case of Associated Cement Companies v. Their Workmen : (1960)ILLJ491SC . On the basis of that decision, the contention was that even a minority union was in law entitled to terminate the agreements made by an employer company through a majority union. The further submission was that as admittedly these agreements were not binding on the workmen who were not members of the 2nd respondent Union in November, 1966 and May, 1967, the demands such as fixation of wage scales and the rate of dearness allowance were such as could be made by the minority of workmen. These demands related to matters for which there must be uniformity and singleness in respect of all the workmen of the company. When such demands could be made even by a minority of workmen, there was jurisdiction in the Government to refer those disputes and demands for adjudication to Industrial Tribunal as regards not only the minority of workmen but also as regards the majority of workmen who might be bound by previously made agreements. The submission was that the questions raised would be of general importance and if minority succeeded in the adjudication to get demands settled at rates higher than fixed by the agreements, the law did not intend that the majority should lose such benefit. The submission was that such was the true effect of the provisions in S. 10 entitling the Government to refer industrial disputes for adjudication by Industrial Tribunal.

12. In connection with these contentions, it is necessary to notice the contents of the relevant sections of the Act and the rules mentioned above. The 'industrial dispute' is defined in S. 2(k) to mean, inter alia, any dispute or difference between employers and workmen connected with conditions of labour and/or terms of employment. 'Settlement' is defined in S. 2(p), inter alia, to mean 'a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by parties thereto' in the manner prescribed. The section 10 provides :

'10(1) Where the appropriate Government is of opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing :-

(a) ..................; or

(b) ........................; or

(c) refer the dispute or any matter appearing to be connected with, or relevant to the dispute, ........; or

(d) refer the dispute or any matter appearing to be connected with or relevant to the dispute, whether it relates to any matter specified in the Second or Third Schedule, to a Tribunal for adjudication : ..................................................... .......................................................'

The Section 18 relates to persons on whom settlements and awards are binding. Sub-section (1) provides : 'A settlement arrived 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'. This sub-section was added to the Act in 1956 and came into operation as from October 7, 1956. Admittedly, prior to the introduction of this sub-section therein, the Act did not recognise a private settlement (of industrial disputes) by agreement of parties. The sub-section (1), (2) and (7) of S. 19 (which relates to period of operation of settlements and awards) run as follows :

'19(1) A settlement shall come into operation on such date as is .........

(2) Such settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of six months .......... and shall continue to be binding on the parties after the expiry of the period aforesaid, until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement.

........................................

(7) No notice given under sub-section (2) or sub-section (6) shall have effect, unless it is given by a party representing the majority of persons bound by the settlement or award, as the case may be.'

Sub-rule (2) of Rule 62 relating to memorandum of settlement provides that :-

'(2) The settlement shall be signed by -

(a) .....................;

(b) in the case of workmen either by the President or Secretary ................. as may be authorised by the Executive Committee of the Union in this behalf, or by five representatives of the workmen duly authorised .......'.

The Rule 83 relates to notice for termination of award or settlement and inter alia provides that where the employer of an establishment intends to terminate a settlement, he must serve a notice thereof by registered post to the President or Secretary of the trade union where the majority of workmen are members of trade union and also provides that the notice shall be exhibited on the notice board. The sub-rule (3) inter alia provides that the notice for termination shall be signed in the case of workmen :

'(i) Where the majority of the workmen bound by the ............ settlement are members of a trade union or where a majority of the workmen has authorised in writing a trade union to terminate the ................... settlement, by the President or Secretary of such union .................;

(ii) in other cases, by such representatives, not exceeding five, of the workmen intending to terminate the award or settlement as may be duly authorised in this behalf at a meeting of a majority of the workmen held for the purpose.'

13. It first requires to be noticed that the above two agreements dated November 1, 1966 and May 13, 1967, are agreements made otherwise than in the course of conciliation proceedings and are of the nature referred to in sub-section (1) of S. 18 Admittedly, these agreements were not signed on behalf of the workmen who were were not members of the 2nd respondent Union. At the date of the first agreement made in November, 1966, only about 500 workers out of 800 and odd were members of the 2nd respondent Union. The first agreement was accordingly not binding on about 300 workmen of the company. Apparently, these workmen being not bound by the agreement would never require to terminate the agreement for making demands in respect of matters which were subject-matter of the agreement. The majority of workmen being about 500 and who were member of the 2nd respondent Union in November 1966 were bound by the terms of the agreement and having regard to the provisions in sub-section (2) of S. 19, the agreement would be continuing to operate against them for the period agreed upon by the agreement and thereafter till the expiry of the period of two months from the date on which they served a notice in writing of their intention to terminate the agreement in the prescribed manner. There is substance in the case made on behalf of the 3rd respondent Union that a group of the workmen who belonged to the 2nd respondent Union in November, 1966 had shifted their allegiance and the 3rd respondent Union had accordingly gathered in October, 1967 several of these workmen as members of the 3rd respondent union. This is so because we will have to accept the statement made in paragraph 14 of the affidavit made by Mrs. S. A. Vaidya (an Under Secretary to the Government) on behalf of the State Government that in October, 1967, 362 workmen were members of the 3rd respondent Union. It is even so not clear as to whether the 3rd respondent Union had as its members the majority of workmen bound by the agreement and for that reason was entitled under sub-item (i) of item (b) of sub-rule (3) of Rule 83 to serve a notice of termination of the agreement on behalf of workmen who were bound by the agreement. It must at once be stated on the facts as disclosed on affidavits it is difficult to ascertain as to whether the workmen who were represented by the 2nd respondent Union have continued to be the members of that Union and had not become members of the 3rd respondent Union in October, 1967 when the notice of termination dated 3rd October was given by that Union. It is also not clear whether the majority of the workmen who were bound by the agreement continued to be members of the 2nd respondent Union at all relevant times. It is difficult to hold that on the facts disclosed the provisions in this sub-item (i) of sub-rule (3)(b) of Rule 83 were applicable in connection with the termination of the above two agreements. Admittedly, the notices dated October 3, 1967, have not been authorised by meeting of the majority of the workmen within the meaning of sub-item (ii) of sub-rule (3)(b) of Rule 83. It is, therefore, difficult to hold that a notice of termination of these agreements has been tendered on the company on behalf of the workmen who became bound by these agreements made by the 2nd respondent Union. The facts disclosed would not justify a finding that on their behalf the agreements have been terminated.

14. As already stated, the 300 and odd workmen who were not members of the 2nd respondent Union at the dates of these agreements never directly became bound by the contents of the agreements and they did not need to terminate the agreements for the purposes of having a reference under S. 10 of the Act and enforcing their demands against the company. We are unable to accept Mr. Bhabha's contention that these workmen consented to be bound by these agreements because of the various facts which had come to their notice and which have all been summarised whilst stating the arguments advanced by Mr. Bhabha. The reason for this finding is that these workmen had not agreed to accept the terms contained in the agreements and that their demand was for payment of much more than what was being offered by the terms agreed to by others and recorded in the agreements. These workmen could not be aware that whilst accepting the lesser amounts that were being paid to them in accordance with the agreements they must record that they were accepting the payments 'under protest' and 'without prejudice'. The payments related to an interim period and were being made as interim relief. The hope of these workmen was that in an adjudication which might be made by the Government they would receive larger and better amounts by way of interim payments. These workmen could not be and were not conversant with the legal proposition that when they received payments their cause for better demands and larger payments would be prejudiced unless they used in that connection the phrases 'without prejudice' and 'under protest'.

After the agreement of November, the first payment of all arrears of increased wages as due under the conditions fixed by the agreement retrospectively from April 1, 1966, was made on November 7, 1966. Mr. Bhabha emphasised that the payments were received by the 300 and odd workers who were not bound by the agreement. For this main reason and for the reason that even subsequently payments were continuously received by these workers who were not bound by the agreement, he insisted that these workers had acquiesced into accepting and accordingly consented to be bound by the conditions fixed by the agreement. Now, there is no substance in this contention because only about six days before the payment on November 7, 1966, was made, this block of workers had emphatically refused to agree to be bound by the agreement which was signed on November 1, 1966. These workers further through the 3rd respondent Union submitted a charter of demands on May 16, 1967, demanding that the dearness allowance should be linked up with the Poona cost of living index and made it known once again to the company that this block of workers had never agreed to and were not agreeable to accept the terms fixed by the agreement of November 1, 1966. The 275 of these workers forwarded a signed application in connection with their demand on July 10, 1967, to the company. A notice of strike was delivered to the company on July 12, 1967. The matter of their demand was considered by the Conciliation Officer in pursuance of the notice dated July 25 on August 3, 1967. It is abundantly clear that the company was throughout aware that this block of workers had not agreed to and had not acquiesced into accepting and had not consented to be bound by the terms contained in the agreement of November 1, 1966.

15. The respondents are right in their contention that the 'settlement' as defined in the Act makes it impossible that an agreement by acquiescence and without a writing being signed could come into existence between the workmen and the employer. The scheme of S. 18 and Rule 62 has the effect of providing that an agreement made otherwise than in the course of conciliation proceedings to be a settlement within the meaning of the Act must be a written agreement signed in the manner prescribed by Rule 62. Even if the workmen not represented by the 2nd respondent Union became bound by the agreement of November 1, 1966, and the agreement of May 13, 1967, by acquiescence and accordingly by implicit consent these would never be 'settlements' under the Act and would not require to be terminated. The agreement by acquiescence being not recognised by the Act was at no time binding on the workmen. Such alleged agreement of acquiescence could not continue to be binding on any workmen at any time and under such alleged agreement the company as employers never acquired any rights against this block of workmen.

16. In connection with the question of termination of the agreements of November 1, 1966, and May 13, 1967, a serious question of law was raised on behalf of the respondents that it was within the power of the 3rd respondent Union to terminate the same. Much can be said about this contention, but as we will presently point out, we do not find it necessary to decide this question of law. This is so, because, on a reading of these two agreements and the order of reference, it is clear that the subject-matters of these two agreements are different from and not the same as the subject-matters of the disputes referred to arbitration under the impugned order of reference. The other reason is that the agreements record settlement of disputes by way of interim relief only and accordingly contain provisions that the terms contained therein will not continue to operate at any time beyond the period fixed by the agreements. In connection with this question, it is convenient to quote here the relevant parts of the agreements.

17. The clause (1) of the operative part of the agreement of November states : 'Workmen getting as on 31st March, 1966 wages ............. shall be paid interim relief as shown against each item in Col. II below with effect from 1-4-1966 ................'. The clauses (2), (3), (4), (5), (7), (8) and (9) all include the term 'interim relief' and provide for a scheme for calculation and ascertainment of the interim relief payable under clause (1). The clause (8) provides : 'Interim relief granted under the settlement shall not count for provident fund, E.S.I. contribution, gratuity, ...............'. The clause (10) and (12) provide :

'10. Interim relief granted under this settlement shall be adjustable in any rise in wages if available to workmen as a result of the final recommendations made by the Wage Board in due course.'

'12. The union further agrees that pending the deliberations and the final recommendations of the Wage Board it will not raise any dispute regarding wages and/or dearness allowance'.

The second agreement of 13th May 1967 relates to extra wages for work on a normal weekly holiday and the clause II in the operative part provides : 'The Union withdraws all other demands made under its Charters of Demands dated .......... and also agrees not to raise any demands regarding wage-scales and/or dearness allowance, pending the deliberations and the final recommendations of the Wage Board in view of the settlement dated 1-11-1966 already signed by the parties.'

18. Relying upon the phrase 'adjustable' contained in clause (10), Mr. Bhabha repeatedly sought to argue that these two agreements were not of the nature of interim relief and provided for complete adjustments of the rights of the workmen regarding wages. His submission amounted to this that the arrangement made in these two agreements was of the nature of a permanent agreement regarding the matter of wages including dearness allowance between the parties, the same being adjustable in accordance with the final recommendations made by the Wage Board. In view of the clear language in these two agreements, the submission must be negatived. It is abundantly clear on a reading of each one of the clauses in the operative parts of these agreements that the settlement recorded in the agreements relating to the rights of the workmen to payment of wages including dearness allowance had the character of an interim relief. There was no agreement of any kind between the parties that the final recommendations of the Wage Board will be accepted by the workmen as suggested on behalf of the company. On the contrary, the true effect of the language in clauses (10) and (12) is that the workmen were not agreeable and had not agreed to accept as binding the recommendations made by the Central Government in pursuance of the recommendations and/or report of the Wage Board. The workmen had kept their right to make a demand in respect of the matters agreed to by these two agreements as if nothing was in that connection settled between the parties on permanent basis. The intention of the parties in making the agreements was unambiguous and clear that it should be an interim arrangement pending the deliberations and the final recommendations of the Wage Board. It is true that the negative covenant which the workmen gave by clause (12) of the agreement was that they would not raise a demand in connection with the matter of wage scales and dearness allowance pending the final recommendations of the Wage Board. It requires to be repeated that there is not a single term in either of these two agreements which provided for any binding scheme regarding wage scale including dearness allowance of any permanent nature between the workmen on the one hand and the company on the other. This finding has the direct effect of the further finding that since the disputes 1 and 2 referred to adjudication by the impugned order of reference relate to demands made not for interim relief but for a scheme of a permanent settlement of the question of wages including dearness allowance, the subject-matter of these two agreements is not the same as subject-matter of the disputes referred by the impugned order of reference for adjudication. The continuity of these agreements, therefore, could never have the effect of depriving the Government of jurisdiction to refer the disputes regarding a permanent scheme for adjudication under S. 10 of the Act. In this connection, it is not necessary to quote here the disputes mentioned in items 1 and 2 of the order of reference, because it is not the contention of any of the parties that the demands and disputes made in these items 1 and 2 are claims for interim relief by the workmen. It is clear that the true effect of the provisions in clause (12) quoted above was that there was nothing in these two agreements which was to continue in operation and be binding between the parties after the date of the final recommendations made by the Wage Board. In other words, the true effect of the provisions in clause (12) was that the parties had agreed that the interim relief arrangement as contained in these two agreements was to exhaust itself and come to an absolute end on the date when final recommendations were made by the Wage Board. Admittedly, the Wage Board made its final recommendations on December 23, 1968. Having regard to the language of clause (12), it is impossible, in spite of provisions in R. 83 and S. 19, to hold in the matter of these two agreements that they continued to be operative between the parties after December 23, 1968. There was nothing in these two agreements which could be operative after December 23, 1968. The result is that having regard to the contents of clause (12), it was absolutely unnecessary for any of the workmen of the company to give notice of termination so as to make conditions of employment contained in these two agreements terminated. These conditions, it requires to be repeated, came to an end as they were interim. It is quite clear that where agreements of this kind are made for interim relief in spite of provisions in S. 19 and Rule 83 it would not be necessary by either of the parties to give notice of termination in connection with the conditions contained in such agreements.

19. The order of reference was made on January 25, 1969 at which date, the arrangement made by the above two agreements was not operative. (This is not to state that if arrears were allowed to grow in respect of payments due upto December 23, 1968, the workmen could not take proper proceedings for enforcement of such payments). The discussion completely deals with the first contention made on behalf of the company that the State Government had no jurisdiction under S. 10 of the Act because the agreements dated November 1, 1966, and May 13, 1967, were subsisting and binding. As these agreements had ceased to be in operation altogether and as there was nothing in these agreements which continued to be operative after December 23, 1968, the first contention must fail. It requires to be repeated that in that connection it was unnecessary for the 2nd respondent Union to give a notice of termination in the prescribed manner and it was at no time necessary for the workers who were not bound by these agreements to give any notice of termination in that connection.

20. The second contention was that the policy statement which had been made by the Labour Minister had induced the company to make the agreement of November 1, 1966. The company had made the agreement on the basis of the policy declaration that until the Wage Board made its recommendations finally and until these recommendations were with or without modification finally accepted by the Central Government, the State Government would not make any reference of disputes relating to wage scales or dearness allowance under S. 10 of the Act. In accordance with the policy statement of the Labour Minister, by the 1st agreement dated November 1, 1967, the company agreed to be bound and implemented the Wage Board's recommendations as accepted by the Central Government. The company further agreed to pay additional wages retrospectively as from March 31, 1966, by way of interim relief. It is because of this policy declaration that the company had made the agreement and continued to make payments and thereby suffered prejudice against itself continuously. In the result, the State Government was estopped from making a reference under S. 10 of disputes relating to wage scale and dearness allowance not only till the date of the final recommendations made by the Wage Board on December 23, 1968 but till these recommendations were finally accepted by the Central Government with or without modification. The submission was that the Central Government had not made any final decision in respect of the Wage Board's report dated December 23, 1968. As that date had not expired the State Government was estopped from making the impugned order dated January 25, 1968. Reliance in this connection was placed on the decision of the Supreme Court in the case of Union of India v. Anglo Afghan Agencies, A.I.R. 1968 S.C. 718, where in paragraph (23), in connection with the default made by the Central Government in implementing its promises made to traders under the export promotion scheme framed and declared by the Central Government, the Supreme Court observed :

'Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it can not on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstance in which the obligation has arisen ...........'.

In paragraph (19) reference was made to the decision in the case of Municipal Corpn. of the City of Bombay v. Secy. of State I.L.R. (1905) Bom. 580, and the case of Ramsden v. Dyson (1866) L.R. 1 H.L. 129, referred to in the Municipal Corporation's case I.L.R. (1905) Bom. 580. The Supreme Court approved of the observations in the above two cases and at paragraph (20) observed :

'This case is, in our judgment, a clear authority that even though the case does not fall within the terms of S. 115 of the Evidence Act, it is still open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it even though the promise is not recorded in the form of a formal contract as required by the Constitution.'

On this question the respondents contended that equity and estopped which may have arisen in favour of the company against the Government must be held to be entirely insufficient to prevent the Government from exercising its jurisdiction and discretion under S. 10 to make a reference in respect of demands made by the workmen being third parties. The further submission was that in so far as 300 and odd workers of the company had refused to accept the Government's policy declaration and in pursuance thereof to agree to an arrangement of interim relief as requested by the Labour Minister, a settlement as desired by the Labour Minister had not been arrived at by all the workmen of the company. The Government's policy was not carried out and could not be under the circumstances carried out by the company with reference to this block of workers. The Government's request by its policy declaration was not only to the employers but also to the workmen, but this block of workmen were not willing to accept such request. As regards these workmen, the Government was bound to consider their demands not only with reference to interim relief but for permanent relief in respect of wage scale and dearness allowance and in that connection to exercise its jurisdiction and discretion under S. 10 of the Act. The submission was that the nature of the jurisdiction conferred under S. 10 on the Government for making references where industrial disputes existed or were apprehended was such that it could not be abdicated by making mere policy declarations. The true effect of such policy declarations must be of the nature of good hope of the Government that if workmen adopted scheme of interim relief as fixed by the central Government, it would not be necessary to make references under S. 10 of the Act. Such good hopes expressed by the Government could not be treated by any employers or workmen as binding representations, on the basis whereof, if any prejudice was caused, the Government should be held to be estopped from exercising jurisdiction under S. 10.

21. In connection with these contentions, the facts on which reliance has been placed can be found in what is recorded in the letter of the Indian Engineering Association dated September 24, 1965 (Ex. X to the petition) and the admissions contained in the affidavit of Mrs. S. A. Vaidya, Under Secretary to the State Government, dated July 17, 1969. In paragraph 26 of the affidavit the statement is :

'I say that it is true that the Government has followed a policy of ordinarily not referring the disputes regarding wages and dearness allowance to adjudication in case of engineering establishments which had agreed to implement the recommendations of the Central Wage Board for Engineering Industry.'

In the above letter of the Association the statement is :

'At our above meeting with you and the union representatives, you had explained that the Government of Maharashtra would not refer disputes on wages and/or allowances to adjudication in the case of engineering establishments covered by the Wage Board, if the concerned employer agreed to implement the recommendations, interim or final, of the Wage Board, as accepted by the Government of India.'

These are the allegations and statements as regards the policy declared by the State Government. The question is whether in making the impugned order of reference the State Government has committed breach of representations made by the above policy declarations. The further question is as to whether circumstances so altered that in law it was permissible for the Government to contend that the representations and/or the policy declared could not be binding on the Government and it was permissible for the Government under the altered circumstances to make the impugned order of reference. In this connection, strong reliance has been placed on behalf of the Government on the fact that the dearness allowance that was agreed to be continued to be paid to the workmen of the company was fixed on the basis of the Sholapur cost of living index. The Poona cost of living index was for the first time fixed in June, 1965. This was such a novel circumstance in connection with the workmen of the petitioner company that the policy declaration was not binding on the Government as regards the workmen of the petitioner company. Strong reliance was further placed on the fact that the workmen represented by the 3rd respondent Union had not made any interim agreement with the company in respect of the matters of the wage scale and dearness allowance as had been desired by the Government. These workmen had resorted to strikes from time to time from August 10, 1968, onwards. A continuous strike existed between December 11, 1968, and January 3, 1969. In connection with the strike held on September 14, 1968, and on certain dates thereafter, 14 workers had been first suspended and then dismissed. The 3rd respondent Union had made demand for reinstatement of the workmen. These factors existed when the Government took in hand the matter of the charter of demands of the 3rd respondent dated November 29/30, 1968. Representations and policy declarations made by the Government were not intended to and did not cover situation of this kind. An extraordinary difficult kind of industrial dispute had arisen between the workmen and the company which could not have been in the contemplation of the Government when the policy declaration was made. The contention on behalf of the other respondents was that no prejudice of any kind has been suffered by the company in consequence of the policy declaration made by the Government. The submission was that when the company made the agreements of November 1, 1966, and May 13, 1967, it was acting for its own benefit and not merely to avoid a reference by the Government under S. 10. Though the policy declaration of the Government may be one of the reasons why the company proposed to make the agreements in question the company in fact made the agreements only because there was incessant demand on behalf of the workmen for linking of the dearness allowance with the Poona cost of living index and for increase in wage scale and because in that connection charters of demands had been submitted by the 2nd respondent Union on August 3, 1965, and charters of further demands were submitted on January 22, 1966, and February 26, 1966. The true and substantial reason for making the settlements was to avoid the workmen's continuous agitation for enforcement of their demands and not because of the policy declaration made by the Government.

22. It must at once be recorded that in the findings which we are about to make in this connection we will be proceeding on the footing of law declared by the Supreme Court in the case of Union of India v. Anglo Afghan Agencies A.I.R. 1968 S.C. 718. Ordinarily as a matter of estoppel and/or equity representations made by the Government affecting the rights and obligations of the parties would be binding on the Government. The observations of the Supreme Court in the above case, however, have not the effect of conferring any right on the Government to barter away rights of third parties. In other words, where Government is the only party concerned and deals with a citizen in respect of enforceable rights in matters like rights to import or export licences, the Government could not be freed from representations made by it. Under S. 10 of the Act, jurisdiction and authority is conferred on the Government as third party in connection with industrial relations between employers and employees. The contention on behalf of the respondents that the questions of the existence of industrial dispute and apprehension of industrial dispute referred to in S. 10 in each individual case arise at different times is correct. Apparently, every employer may settle the demands made by its workmen in different manners at different dates. It is not possible that industrial dispute must come into existence and/or may be apprehended generally between all employers and employees at the same time. Individual employer and employee will thus be entitled to approach Government under S. 10 in individual circumstances on different dates. In respect of this right arising at different times in different circumstances Government cannot be entitled to make policy declarations defeating such right.

23. Again, after certain policy declarations are made in connection with exercise of powers under S. 10, the circumstances may alter so appreciably after passage of time that in law there may be no justification in making a finding that such declarations continue to be binding on the Government. In ordinary circumstances where disputes may be of minor character and agreements may have been made between all workmen on the one hand and the company on the other, the Government may not be called upon to exercise its jurisdiction under S. 10. The question is as to whether in law declarations of the kind relied upon by the petitioner company which may be prejudicial to the claims and demands of the workmen could be permitted to be made by the Government and could be held to be binding for a long period of time as might be decided by the Government. Now it appears to us that in the present case the agreements in question were made by the company with about 500 workmen represented by the 2nd respondent Union mainly for its own interest and to avoid continuance of unhappy conditions in the working of the company's factory. The interim recommendations made by the Central Government were accepted not because the Labour Minister had stated that the Government would not make reference. This might have been one of the very insignificant reasons which induced the company to make its own peace with its workmen. This was so insignificant that it could not be held to be cause of any prejudice suffered by the company. In our view, the main purpose and consideration of the agreements was the necessity of the company to make peace with its workmen by responding to the charter of demands which had been submitted earlier on the company by the 2nd respondent Union. No equity had arisen in favour of the company in consequence of the policy declarations made by the Minister. The Government is right when it has stated that the situation of industrial dispute which had arisen between the company and its workmen by continuous strikes which had occurred was not foreseen by the Government and this situation along with the important fact that the Poona cost of living index had been for the first time fixed in June, 1965 were sufficient reasons for the Government not to follow in ordinary course in the present case the policy that it had declared. As already stated about 376 workmen who were members of the 3rd respondent Union were not bound by the agreements made and had not accepted the policy declaration made by the Minister as binding. Following upon that declaration, they had not made any agreement even for interim relief with the company. These circumstances were such as made it necessary for the Government to exercise its powers under S. 10 in spite of the policy declaration that was made. We are, therefore, unable to accept the contention that the Government was estopped from exercising its powers under S. 10. The second contention, therefore, fails.

24. The third contention was that the reasons disclosed by the Government for making the impugned order of reference were extraneous and not germane to the purpose of S. 10 and the order was accordingly made for extraneous purposes and invalid. The main submission in this connection was that the Government had admitted that one of the reasons which induced the Government to make the reference was repeated strikes in the factory of the company by the workmen. The strikes were illegal because agreements dated November 1, 1966, and May 13, 1967 were operating and binding and had not been validly terminated. The strikes were in respect of matters covered by the agreements. The strikes were accordingly in contravention of the provisions in sub-section (c) of S. 23 and, therefore, illegal under item (i) of sub-section (1) of S. 24. The submission was that when strikes were held in respect of the matters covered by the agreements and the strikes were illegal, the Government could not exercise powers under S. 10 for industrial disputes arising out of these strikes. In this connection, strong reliance was placed on the observations of the Supreme Court in the case of State of Bombay v. K. P. Krishnan : (1960)IILLJ592SC , at paras 17 and 18. In this case the Government refused to make a reference under S. 10 for the reason that the workmen of the company had adopted go-slow tactics. The main question which arose for consideration was whether these tactics adopted by the workmen were relevant for refusal of a reference under S. 10 and the conclusion of the Court was that this reason was extraneous and not germane and/or irrelevant and for that reason, the Government had no jurisdiction to refuse to make a reference. In arriving at that conclusion, in the discussion at paragraph (17) the Court noted the argument that the object of the Act was, inter alia, to secure industrial peace, so that it may lead to more production and help national economy. The Court observed that '.............. it would not be open to the Government to introduce and rely upon wholly irrelevant or extraneous considerations under the guise of expediency. It may for instance be open to the Government in considering the question of expediency to enquire whether the dispute raises a claim which is very stale, or which is opposed to the provisions of the Act, or is inconsistent with any agreement between the parties, ...........'. Relying upon this last phrase, viz., 'is inconsistent with any agreement between the parties', the submission was that the observation of the Supreme Court had the effect of recording that where breach was being committed by parties of a binding agreement, the Government would be not justified on making a reference on the ground that such breach was being committed. The insistence was that the Supreme Court had finally held that in cases in which the workmen and/or the employer were committing breach of operative agreements, it was not permissible for the Government to make a reference on that ground. The argument was that illegal strikes by the workmen who were bound by the agreements were relied upon by the Government to make the impugned order of reference. That was a reason which had been held by the Supreme Court to be extraneous and irrelevant. In connection with this argument, the case of the respondents is that the agreements did not relate to any matters except of interim relief. The settlement contained in the agreements was not binding on a large block of workers and in any event the strikes related to demands which were not for interim relief and were not in respect of any of the matters covered by the agreements. The strikes were in fact not illegal. This is the true position as regards the workmen who were not bound and may not be true as regards those workmen who had under clause (12) of the agreement of 1st November, agreed not to raise any dispute regarding wages or dearness allowance pending the deliberations and the final recommendations of the Wage Board. It is, however, difficult to hold that 300 and odd workers who were not bound by the agreements whilst striking were joining legal strike and that the remaining workmen whilst striking were joining illegal strike. From its very nature a strike could be illegal for all or for none. This position justifies an argument that the settlement mentioned in clause (c) of S. 23 must like an award be a settlement binding on all the workmen. When a settlement is a private settlement and does not bind all workmen, apparently, the workmen not bound by the settlement would be entitled to resort to strike in respect of matters covered by the settlement and that strike could not be as regards those workmen illegal under the provisions of item (i) of S. 24(1). This anomalous position arises only where settlement is a private settlement not binding on all the workmen of an employer. We are unable to accept the submission made by Mr. Bhabha that the strike that was legal for the workmen who were not bound by the agreement was illegal for the other block of workmen who were bound by the agreement. It is not necessary for us to decide this question, because, in our view, there is nothing in S. 10 which disentitles the Government in connection with the exercise of its discretion thereunder which prevents the Government to arrive at a conclusion that by reason of illegal strike industrial dispute exists in a factory. This question becomes insignificant because in fact at the date of the reference the Wage Board had already made its recommendations and the agreements had ceased to be in operation. Whilst considering the necessity of making a reference in January, 1969, there was nothing to prevent the Government to consider the facts of legal and or illegal strikes that had existed in the factory as a relevant matter for exercising its jurisdiction under S. 10. The other fact relied upon was that the Government has repeatedly stated that the demand of the workers that the dearness allowance should be linked up with the Poona cost of living index was a strong new circumstance entitling the workmen to the reference made. The submission was that the Poona cost of living index had existed when the Government had made its policy declaration through the Minister in September, 1965. Three months had then expired from the date on which this index was fixed. The submission was that as this circumstance had existed in September, 1965, it could not be taken into consideration whilst exercising jurisdiction under S. 10 in January, 1969. We have found it extremely difficult to appreciate this argument. Admittedly the prior agreements for payment of dearness allowance were made by linking it with the Sholapur cost of living index. The demand of the workmen for linking dearness allowance with the Poona cost of living index was for the first time made by the 3rd respondent Union in May, 1967. This demand of the workmen could not be prejudiced merely because in September, 1965 a policy declaration had been made on behalf of the Government. The policy declaration did not relate to the engineering workers at Poona only, but related to all engineering workers all over the State of Maharashtra. The separate question of the cost of living index having been fixed for Poona in June, 1965 may not have been at all present to the mind of the government and the Labour Minister when policy declaration was made in September, 1965. It was an extraordinary and peculiar circumstance and could justifiably be considered by the Government under S. 10 whilst making the impugned order of reference. These were the only two grounds on which Mr. Bhabha contended that the reference was made for reasons which were extraneous and not germane. As we are unable to accept that contention, the third contention also fails.

25. One subsidiary contention that was raised was that we should in any event hold that the impugned order of reference cannot cover and should not cover the workers represented by the 2nd respondent Union who were bound by the above two agreements. As we have held that these agreements have ceased to be in operation and did not require to be terminated, this contention must fail. We have already recorded reasons in that connection in the previous discussion.

26. Under the circumstances, the petition is liable to be dismissed. Rule discharged with costs.


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