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Sajipur Bogha Nagar Palika Octroi Karmachari Mandal and anr. Vs. Ahmedabad Municipal Corporation and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Application No. 1362 of 1986 and Special Civil Application No. 991 of 1989
Judge
Reported in(1991)2GLR956; (1994)IIILLJ431Guj
ActsIndustrial Disputes Act, 1947 - Sections 17 and 18(3); Bombay Provincial Municipal Corporation Act, 1949 - Sections 452A
AppellantSajipur Bogha Nagar Palika Octroi Karmachari Mandal and anr.
RespondentAhmedabad Municipal Corporation and anr.
Appellant Advocate T.R. Mishra, Adv.
Respondent Advocate B.P. Tanna, Adv.
Cases ReferredVijay Textile and Anr. v. Union of India and Ors.
Excerpt:
labour and industrial - applicability of award - section 452a of bombay provincial municipal corporation act, 1949 and sections 17 and 18 (3) of industrial disputes act, 1947 - award of labour court giving permanent appointment to workers of municipality - award passed prior absorption municipality to another municipality - nothing to prove illegality in award - absorbing municipality never challenged award - absorbing municipality bound by such award - absorbing municipality not entitled to ignore such award on account of provisions in section 452a. - - the dispute was capable of being finally and effectively adjudicated without any other party being joined to the reference. therefore, it was not necessary to join respondent-corporation in the reference for finally and effectively.....ravani, j.1. is there any valid ground on the basis of which the respondent-municipal corporation can refuse to abide by the direction given in the award passed by the industrial tribunal in reference (it) no. 152 of 1985 decided on december 21, 1985? this and some other related questions arise in these petitions.at the request and with the consent of the learned advocates appearing for the parties both the matters are ordered to be heard together and they are being disposed of by this common judgment and order.2. special civil application no. 1362 of 1986 is filed by a trade union called saijpur bogha nagar palika octroi karmachari mandal and by one of the members of the union who is also an employee of saijpur bogha nagar palika. the petition pertains to 89 employees whose names are.....
Judgment:

Ravani, J.

1. Is there any valid ground on the basis of which the respondent-Municipal Corporation can refuse to abide by the direction given in the award passed by the Industrial Tribunal in Reference (IT) No. 152 of 1985 decided on December 21, 1985? This and some other related questions arise in these petitions.

At the request and with the consent of the learned Advocates appearing for the parties both the matters are ordered to be heard together and they are being disposed of by this common judgment and order.

2. Special Civil Application No. 1362 of 1986 is filed by a Trade Union called Saijpur Bogha Nagar Palika Octroi Karmachari Mandal and by one of the members of the Union who is also an employee of Saijpur Bogha Nagar Palika. The petition pertains to 89 employees whose names are mentioned at Serial No. 1 to 89 in Annexure 'A' to the petition. In respect of employees at Serial No. 90 to 343 at Annexure 'B' the petition is not pressed. One employee (Serial No. 49) named Parmar Hareshbhai C. has expired during the pendency of the petition. After the dispute was referred to the Industrial Tribunal and decided by it, Saijpur Bogha Nagar Palika merged with the respondent Ahmedabad Municipal Corporation. By this petition it is prayed that the aforesaid employees who were working in Saijpur Bogha Nagar Palika in respective time scale of pay be declared as permanent employees of the respondent Municipal Corporation and the respondent Municipal Corporation has no right to reduce the wages or convert their status to that of daily rated casual employees and that wages cannot be changed from time-scale of pay to minimum wages.

3. Special Civil Application No. 991 of 1989 is filed by the same individual employees whose names appear in Annexure 'B' to Special Civil Application No. 1362 of 1986. It relates to an award passed by Arbitrator conferring certain benefits on employees of Ahmedabad Municipal Corporation. The petitioner pray for a declaration that the Award Part III passed by the Arbitrator on July 31, 1987 is applicable to them and for direction to the respondent Corporation for payment of the amount of wages with 18% interest with effect from July 1, 1986 as per the award. The petitioners have also claimed equality of service conditions with other employees of respondent Corporation and have also prayed that respondent-Corporation be directed to pay arrears of bonus, leave encashment, dress allowance, etc., as per award.

Facts in brief :

4. In the outskirts of the City of Ahmedabad there was a Municipality for the town limits of Saijpur Bogha, which was governed by the provisions of the Gujaral Municipalities Act, 1963. In the year 1984 the employees working in the Octroi department of the Municipality raised an industrial dispute demanding regular status and conferment of benefits of bonus and regular pay scales to various categories of employees. They also demanded house rent allowance, medical allowance, leave travel concession and other benefits which were available to the permanent employees of the State Government of Gujarat. According to the petitioners as they raised demands and disputes, the management of the Municipality retaliated by terminating the services of about 24 employees. The workmen concerned filed Special Civil Application : No. 3758 in this High Court and challenged the order of termination of their services. The petition was rejected on September 5, 1984 by learned Single Judge. The workmen preferred Letters Patent Appeal No. 421 of 1984, which was admitted by this Court and the Court granted stay against the order of termination of their services. Thus the employees concerned continued to be in service.

5. Pursuant to demands raised by the Union representing the workmen, the Government made Reference (IT) No. 152 of 1985 as per order dated February 18, 1985. The Municipality appeared before the Tribunal in the proceedings of the reference and initially resisted the claims of the employees. Ultimately on December 10, 1985 settlement was arrived at between the parties, which was placed on record. The Tribunal considered the same and found it reasonable and proper. Hence the Tribunal passed award in terms of settlement on December 21, 1985. The award has been published by the Government as provided under Section 17 of the Industrial Disputes Act 1947 (for short 'the I.D. Act') as per Notification dated February 3, 1986.

6. The terms of settlement pursuant to which award has been passed inter alia read as follows;

'(1) The Municipality agreed to confirm all the clerks and peons working in the Octroi department with effect from November 1, 1985 and also agreed to place the clerks in the time scale of pay of Rs. 260-400 and the peons in the time scale of pay of Rs. 196-232.

(2) The Municipality also agreed to pay arrears arising out of the said time scale of pay within a period of one month and also agreed that regular wages, in the aforesaid time-scale of pay as per Desai Pay Commission be paid to the employees from December 1985 in January 1986 onwards.

(3) The Union representing the workmen agreed to withdraw other demands raised in the reference.

(4) It was a package deal and the Union representing the workmen agreed not to raise any demand or dispute in respect of any issue raised in the reference for a period of three years from the date of the award. The Union also agreed to withdraw the Letters Patent Appeal No. 421 of 1984 pending in this High Court.

(5) The settlement also provided that the seniority of the staff members was to be reckoned from the date of their appointment. However they were not to claim any other monetary benefits'.

The aforesaid award became enforceable one month after its publication. It was published on February 3, 1986. It became enforceable from March 4, 1986 onwards.

Development as regards alteration of city limits of respondent-Municipal Corporation :

7. On the other hand since the city limits of respondent-Ahmedabad Municipal Corporation were to be extended the Government issued Notification dated November 15, 1985 under the provisions of Section 3(3) of the Bombay Provincial Municipal Corporation Act, 1949 (hereinafter for short 'the Corporation Act') inviting suggestions and objections from all persons likely to be affected by the proposed extension of the limits of the respondent-Corporation. As per the notification, the area of Saijpur Bpgha Municipality was to be included in the limits of respondent-Corporation. Thereafter by another notification dated February 5, 1986 issued under Section 3(3) of the Corporation Act it was directed that on and with effect from February 23, 1986 the existing limits of City of Ahmedabad shall be altered so as to include therein the areas specified in Schedule 'A' to the Notification, which also included the area of Saijpur Bogha Municipality.

8. As per Notification dated February 22, 1986 issued under the provisions of Section 452 of the Corporations Act, provision has been made for transfer of the assets, rights and liabilities of the specified local authorities (i.e. the local authority of which the areas were to be included in the city limits of the Corporation). The notification also provided with respect to the transfer of the employees of the local authority, taxes and other matters. Thus on and with effect from February 23, 1986 the specified local authority, i.e. Saijpur Bogha Nagar Palika in the instant case, merged with respondent-Corporation. The Municipality ceased to have its separate existence. By operation of the Act, the respondent Corporation became the successor of Saijpur Bogha Nagar Palika, the specified local authority.

Disputes and the contentions :

9. According to the petitioners, the concerned employees became permanent employees of the specified local authority as per award passed by the Tribunal in Reference (IT) No. 152 of 1985 on December 21, 1985. The Corporation did not recognise this award and treated these employees as daily-rated casual labourers entitled to claim only minimum wages. Therefore the petition (Special Civil Application No. 1362 of 1986) praying that the Corporation had no right to change the status of the employees who had become permanent by virtue of the award to daily rated casual employees. The petitioner also claimed that the employees covered by the award were entitled to claim time-scale of pay and all other benefits. In short it is claimed by the petitioners that the Corporation being successor of the specified local authority it was bound by the award passed on December 21, 1985.

10. It is not disputed by the respondent -Corporation that it is the successor of the specified local authority. However, it is contended that the Corporation would be liable to abide by the terms and conditions of the services of the employees as they existed on November 5, 1985. According to the Corporation whatever happened between November 5, 1985 and February 22, 1986 (i.e. the date of draft notification and the date of final notification) was not binding to the Corporation. Even if the award were passed by the Tribunal during this period, it would be nullity and, therefore, not binding to the Corporation. It is also contended that the Corporation was not a party to the reference and the award was collusive and, therefore, also, it is not binding to the Corporation.

Examination of the contentions raised : Is the award nullity ?

11. The contention that the award is nullity and not binding upon the respondent-Corporation is based on the wordings of notification dated February 22, 1986 issued by the State Government under the provisions of Section 452-A(1) of the Corporation Act. The section empowered the State Government to make suitable provisions by issuing orders of alteration of limits of a city. The relevant part of Section 452-A(1)(iv) and (vi) and Sub-section (2) reads as follows:

'452-A.(1) Where by a notification under Sub-section (3) of Section 3 the limits of any City are altered so as to :

(a) include any area therein, or

(b) exclude any area therefrom.

the State Government may notwithstanding anything contained in this Act or any other law for the time being in force, by order published in the Official Gazette, provide for all or any of the following matters, namely:

(i) ...............

(ii) ...............

(iii) ...............

(iv) the transfer, in whole or in part,of the assets, rights and liabilitiesof the surrendering local authority(including the rights and liabilities under and contract made byit) to the absorbing local authorityor to the State Government, andthe terms and conditions for suchtransfer;

(v) .......

(vi) the transfer or re-employment of any employees of a surrendering local authority to or by the absorbing local authority or the termination of services of any employees of a surrendering local authority, and the terms and conditions applicable to such employees after such transfer or re-employment or termination;

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

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

(2) Where an order is made under this section transferring the assets, rights and liabilities of a surrendering local authority, then by virtue of that order, such assets, rights and liabilities of such local authority shall vest in, and be the assets, rights and liabilities of the absorbing local authority.'

In exercise of the powers conferred by Section 452-A, the Government has issued Notification dated February 22, 1986 providing inter alia for transfer of employees of the specified local authority to the Corporation. The relevant part of the Notification reads as follows:

'The Government of Gujarat hereby, (1) with effect on and from the 23rd February, 1986:

(a) Transfers, in whole, of all assets, rights and liabilities of the specified local authorities (including the rights and liabilities under any contract made by any of the specified local authorities) to the Municipal Corporation of the City of Ahmedabad (hereinafter referred to as 'the said Corporation');

(b) Substitutes the Corporation for the relevant specified local authority or, as the case may be, adds the Corporation as a party to any legal proceeding to which a specified local authority is a party; and transfers all proceedings pending before any specified local authority or any authority or officer subordinate to any such specified local authority to the Corporation.

(c) Transfers all such employees of the specified local authorities, who were in the employment of the specified local authorities on the 5th November, 1985 and immediately before the 23rd February, 1986 continued to be so employed to the Corporation cm the same terms and conditions which governed them on the 5th November, 1985.

....'

Here it may be noted that Section 452-A was inserted in the Corporations Act by Gujarat Act 16 of 1970 and remained in force upto March 31, 1986. Thereafter the section has been repealed and Section 3-A has been inserted in the Act. However, with this change in the provisions of the Corporations Act we are not concerned.

12. On the basis of the provisions of Section 452-A read with the Notification dated February 22, 1986 it is contended that the employees of the specified local authority who were in the employment on November 5, 1985 and immediately before February 23, 1986 would stand transferred to the Corporation and will be 'continued to be so employed' on the same terms and conditions which governed them on the 5th of November, 1985'. It is submitted that the award has been passed by the Tribunal in Reference (IT) No. 152 of 1985 on December 21, 1985 i.e., after November 5, 1985 and before February 23, 1986. Therefore, the Corporation is not bound by the same. Hence the question : Can the phrase 'notwithstanding anything contained in this Act or any other law for the time being in force' occurring in Section 452-A(1) of the Corporations Act be interpreted to include even award, decree or order that may be passed by the competent Court

13. As provided under Section 17 of the Industrial Disputes Act, 1947 the award passed by the Tribunal is final. It cannot be called in question by any Court in any manner whatsoever. Of course, this finality is subject to the provisions of Articles 136, 226 and 227 of the Constitution of India. Therefore it may be argued that if the award is passed without jurisdiction, such plea would be available to the respondent-Corporation even in collateral proceedings. However, it is very ; much doubtful that the respondent-Corporation can take up such contention by way of collateral attack. Even so, we may proceed to examine the question as to whether the Tribunal was lacking in jurisdiction when it passed the award.

14. There is nothing to show that the award is without jurisdiction. The Tribunal is properly constituted. The Tribunal has acted within its power under the provisions of the I.D. Act. The reference was validly made to it by the appropriate Government. The Tribunal has performed its duties to adjudicate the disputes referred to it. It was the duty of the Tribunal to decide the dispute expeditiously. Simply because the Tribunal has passed the award during the period commencing from November 5, 1985 to February 22, 1986 it cannot be said that the Tribunal was lacking in jurisdiction.

15. The provisions of Section 452-A of the Corporations Act and the provisions made in the Notification dated February 22, 1986 are required to be read harmoniously with the provisions of the I.D. Act. Section 452-A of the Corporations Act empowered the State Government to make provisions inter alia for the transfer of employees of specified local authority to the absorbing local authority, i.e., the Corporation. By these provisions the legislature never intended to confer power upon the State Government to repeal the provisions of a Central Act or for that matter the provisions of any other Act validly enacted by the appropriate legislature. The power conferred by Section 452-A of the Corporations Act has got to be read so as to be consistent with the provisions of other statutes. The phrase 'notwithstanding anything contained in this Act or any other law for the time being in force' cannot be interpreted to mean that the State Government intended to confer power upon the executive so as to take away the jurisdiction of the validly constituted Tribunals or Courts under the appropriate provisions of the statutes.

16. The aforesaid phrase only means that if any contract is entered into or any decision is taken by specified local authority between November 5, 1985 and February 22, 1986, such contract or decision will have no binding effect on the Corporation if such contract or decision alters the terms and conditions of services of the employees. It is not the agreement/contract that has changed the terms and conditions of the services of the petitioners. It is the award passed by the validity constituted Tribunal which has brought about the changes in the terms and conditions of the services of the petitioners. The scope of the aforesaid provisions of Section 452-A of the Corporation Act cannot be extended to nullify me judgment, decree, order and awards that may be passed by the competent Court and the Tribunal during November 5, 1985 to February 22, 1986. If this provision is read even to include the judgment, decree, order and awards passed by the competent Courts or Tribunals during November 5, 1985 to February 22, 1986, it would amount to temporary repeal of some of the provisions of the I.D. Act.

17. If such interpretation is given, it would mean that the executive wing of the State Government by exercising power under Section 452-A of the Corporations Act can temporarily repeal the provisions of the Central Act. It would also mean that it can also temporarily freeze the functioning of the Labour Courts, Industrial Tribunals or close down such institutions for temporary period. If the same logic is further extended it would also mean that the decision affecting the terms and conditions of service of the employees taken by any other Court including High Court or the Supreme Court, in a list pending between the specified local authority and its employees during the period in question, i.e. November 5, 1985 and February 22, 1986, would not be binding to the Corporation. This would amount to even temporarily repealing the provisions of Articles 136, 226 and 227 of the Constitution of India. Such absurd interpretation cannot be given to the provisions of Section 452-A of the Corporations Act.

18. Nothing is pointed out to us showing that the award passed by the Tribunal is without jurisdiction. It is only argued that the award has been passed between two dates, i.e., November 15, 1985 and February 22, 1986. Therefore, it is contended, the award by which the terms and conditions of the services of the employees of the erstwhile Municipality (Saijpur Bogha Nagar Palika) have been changed is without jurisdiction. For the reasons stated hereinabove it is not possible to agree with the contention raised by the learned counsel for the respondent. Hence if fails.

Can the award be challenged by way of collateral attack ?

19. It is evident that the Industrial Tribunal constituted under the provisions of the I.D. Act performs judicial functions. The validly constituted Tribunal has rendered the award. It has become final under the provisions of the I.D. Act. It is very much doubtful that such an award can be challenged by way of collateral attacks. In this connection reference may be made to the following observations by de Smith in Judicial Review of Administrative Action (Fourth Edition) at page 77.

'A judicial decision made within jurisdiction is binding and conclusive insofar as it cannot be impeached in collateral proceedings, and it cannot, in general, be rescinded by the Tribunal itself.

Again at page 107 of the same book it is inter alia observed:

'A judicial determination may be valid and binding even though erroneous in law or fact; that is to say, provided that the decision was made within jurisdiction, it will have legal efficacy for all purposes till set aside on an appeal or in the exercise of the supervisory jurisdiction of the Courts, and it will be immune from collateral or indirect challenge (e.g. in enforcement proceedings, or in declaratory proceedings purporting to determine the same issue, or in an action for a civil wrong.')

It is further observed by the learned author that whenever a Judicial Tribunal is empowered or required to inquire into a question of law or fact, for the purpose of giving a decision on it, its findings thereon cannot be impeached collaterally or on an application for certiorari but are binding until reversed on appeal.

20. As provided under Section 18(3)(c) of the I.D. Act the award is also binding to successors or assigns of the establishment to which the dispute relates. By operation of law, the Corporations has become successor of the specified local authority. Therefore it is bound by the award as successor of the Municipality. As indicated hereinabove on the basis of the provisions of Section 452-A of the Corporation Act and on the basis of the Notification dated February 22, 1986 the Corporation cannot ignore or avoid the award.

21. The term 'award' as defined in Section 2(b) of the I.D. Act means an interim or final determination of any industrial dispute or any question relating thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal. As provided under Section 17 of the I.D. Act once the award is published it becomes final. It cannot be called in question by any Court in any manner whatsoever. Such award becomes enforceable on expiry of 30 days from the date of its publication (see Section 17-A). In the instant case the award has been published on February 3, 1986. Therefore it has become enforceable from March 4, 1986 onwards.

22. It may also be noted that as provided in the award it becomes operative from November 1, 1985. Therefore, even on the basis of the Notification dated February 22, 1986 it cannot be argued by the Corporation that the terms and conditions of service of the employees concerned on November 5, 1985 were not as per the award. As per the award, the employees concerned had become permanent and were the employees in regular time-scale of pay from November 1, 1985. Therefore, on November 5, 1985 these employees were to be treated in the time-scale of pay as regular employees. There is nothing in Section 452-A or the Notification dated February 22, 1986 which can forestall or prevent the operation of the award passed by validly constituted Industrial Tribunal.

23. In view of the aforesaid position of law, the plea taken by the Corporation that the award is not binding to it cannot be entertained in these proceedings. If the Corporation felt that the award was not binding to it, it ought to have challenged the legality and validity, of the same by taking appropriate proceedings either by filing writ petition under the provisions of Article 226/227 of the Constitution of India or by approaching the Supreme Court under Article 136 of the Constitution of India.

Was the respondent-Corporation required to be joined in the reference ?

24. It was argued that the Corporation ought to have been joined as a party in the reference before the Tribunal. The reference was made by the appropriate Government in respect of the disputes of the workmen engaged by the specified local authority i.e., Saijpur Bogha Nagar Palika. When the reference was made on February 18, 1985 the workmen were not at all concerned with the respondent-Corporation. Simply because the notification inviting objection as regards the extension of the city limits of respondent-Corporation was issued on November 5, 1985 the petitioner-Union was not required to join the Corporation as party to the reference pending before the Industrial Tribunal. The dispute covered by the reference was between the specified local authority and its workmen. The dispute was capable of being finally and effectively adjudicated without any other party being joined to the reference. The reference has been decided on December 21, 1985, i.e., prior to the date when the city limits of respondent-Corporation were extended. Therefore, it was not necessary to join respondent-Corporation in the reference for finally and effectively deciding the disputes referred to the Tribunal.

25. The award becomes binding upon the Corporation not on the ground that it was a party to the reference or that it was deemed to be a party to the reference. It becomes binding to the Corporation on account of the provisions of Section 18(3) of the I.D. Act The Section Inter alia provides that the award shall be binding to the successor or assigns of the establishment to which the disputes relate. It is not even disputed that the Corporation is the successor of Saijpur Bogha Nagar Palika, which was a party to the reference. In this view of the matter the argument that the respondent-Corporation was necessary party to the reference has no substance and the same is rejected.

Is the award collusive

26. In the affidavit-in-reply running into about 12 typed pages there is not a word referring to the award passed by the Tribunal. Everywhere reference is to agreement between petitioner-Union and the office bearers of the specified local authority. The Corporation has proceeded on the footing that there is only agreement between the parties and by virtue of an agreement between the parties the terms and conditions of employment have been changed. But that is not the case. The matter does not rest at the stage of settlement between the parties. The settlement was arrived at in pending reference which was made on February 18, 1985. It was placed before the Tribunal on December 10, 1985. The Tribunal has considered the justness and propriety of the consent terms. The consent terms have been admitted and accepted by the signatories thereto. Thereafter the award in terms of the consent terms is passed by the Tribunal. Such award cannot be treated on par with agreement between two parties. As indicated hereinabove, the award becomes enforceable as provided under Section 17-A of the I.D. Act. Such an award cannot be challenged by way of collateral attack even on the ground of fraud or collusion.

27. In fairness to the learned counsel for the respondent- Corporation it needs to be stated that during the course of argument he has referred to the award and not the agreement. It was argued that the award was obtained by collusion. Therefore although it is not open to the respondent-Corporation to challenge the award on ground of fraud or collusion, by way of collateral attack, the argument may be examined.

28. In properly initiated proceedings, the superior Courts have inherent jurisdiction to set aside orders and convictions made by inferior Tribunals if such orders or convictions have been procured by fraud or collusion. Where fraud is alleged 'the Court will decline to quash unless it is satisfied that the fraud was clear and manifest and was instrumental in procuring the order impugned. (See de Smith's Judicial Review of Administrative Action - Fourth Edition P. 408 ). Therefore it should be shown that fraud or collusion is clear and manifest and that it was instrumental in procuring the order impugned. Hence the question:

(a) Was there collusion between the workmen and the office bearers of the specified local authority ?

(b) If yes, was it clear and manifest ?

(c) Was it instrumental in procuring the award

Learned Counsel for the respondent has referred to the averments made in Paras 5, 6, 7 and 8 of the affidavit-in-reply filed on behalf of the Corporation. On this basis it is submitted that the award is collusive.

29. Some time in May 1985 the State Government issued notification declaring its; intention to alter the city limits of the Corporation. It is also submitted that even prior to the date of this notification there were negotiations with regard to the alteration in the city limits of the Corporation. Some time in September 1985 the Government had taken tentative decision to include the areas of specified local authorities within the limits of the Corporation and the Government issued draft notification on November 5, 1985 for extension of the city limits of respondent-Corporation. After referring to these dates it is averred in Para 5 of the affidavit-in- reply that the agreement entered into and the order signed after the declaration of the intention of the Government, and the manner and time in which these orders are passed or the manner and the method by which the alleged agreements were signed, smacks of the collusive behaviour between the elected representatives on the one hand and the employees who were to be benefited by such agreement and orders on the other.

30. Except the aforesaid vague allegations about the collusion, nothing concrete is alleged in the affidavit-in-reply. It is true that the settlement has taken place between the Union representing the workmen on the one hand and the Chief Officer and the President of the Municipality on the other on December 10, 1985. But this was in a reference which was made by the Government on February 18, 1985. The reference was pending in respect of the claims of the workmen who were engaged by the Municipality some time in December, 1982 and January, 1983. Only few of them were appointed in February, March and June 1983. Industrial dispute was raised by making demand some time in the year 1984. The settlement was produced before the Tribunal on December 10, 1985. The Tribunal considered the same on December 21, 1985 and passed order directing that the award be passed in terms of the settlement.

31. In this connection some other dates and events be noted. The Director of Municipalities by letter dated January 1, 1985 and January 25, 1985 has instructed the specified local authority that since the question of extension of the city limits of the Corporation was under consideration the Municipality should not unnecessarily make addition in its permanent or temporary establishment and should not unnecessarily add* financial burden. The officer of the Municipality may be presumed to be conscious about such directions. The appropriate State Government made reference to the Industrial Tribunal in respect of the demands raised by the employees in February 1985. Thus even after the Director of Municipalities had issued the aforesaid direction to the Municipality, the reference was made by the State Government itself. The office bearers of the Municipality initially adopted a stern stance. They sacked off about 24 employees. A Division Bench of this Court in Letters Patent Appeal filed by the employees protected them. After such recalcitrant attitude adopted initially, the office bearers of the Municipality might have been (seen) the reasonableness of the demands made by the employees.

32. The workman were clamouring for their legitimate rights since 1984. They were ready to enter into a sort of package deal. In fact as stated in Clause 5 of the terms of settlement, it is a package deal. Little give and take on both sides is evident. Workmen agreed not to raise any demand or dispute in respect of the issues raised in the reference for a period of three years. Workmen agreed to withdraw Letters Patent Appeal filed by them in this Court. These terms of settlement have been considered reasonable and proper by the Tribunal. Everything has been done openly without there being any secret deal whatsoever. No secret deal or understanding is even alleged in the affidavit-in-reply filed on behalf of the respondent-Corporation. Therefore it is difficult to hold that there was collusion between the petitioner-Union and the officers of the specified local authority.

33. As observed by the Supreme Court in the case of Nagubhai v. B. Shama Rao reported in AIR 1956 SC 593 'collusion in judicial proceedings is a secret arrangement between two persons that the one should institute a suit against the other in order to obtain the decision of a Judicial Tribunal for some sinister purpose'. In such proceedings, the claim put forward is fictitious, the contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the object of confounding third parties. The same observation is reiterated by the Supreme Court in the case of Gupta v. Raghuvanashi (P) Ltd. reported in AIR 1964 SC. 1889.

34. In a Division Bench judgment of this Court in the case of Chanchal v. Ganpatram, reported in 1964 V GLR 1009 it is inter alia observed that a decree may be declared to be nullity if the other side is prevented from putting his case before the Court. In such a situation it may amount to fraud on Court because the Court then would be prevented from knowing the case of the other side while deciding the matter. In other words, it is held that there should be fraud on Court. On the same line even if there is collusion such should be instrumental and should have induced the Court to pass the award or decree as the case may be.

35. In the instant case the roots of the reference are to be found in the demand raised in the year 1984. It is not even the case of the respondent-Corporation that the demand raised was unreal. Again it may be noted that the reference was made by the appropriate Government in February 1985 after being satisfied that there was a genuine dispute between the parties. The terms of settlement do not disclose the undue benefits have been conferred upon the workmen. On the contrary, it discloses a package deal by which the workmen were also required to give up certain demands.

36. All that has happened is that the workmen who were in the employment of the specified authority as daily wagers since December 1982 and January 1983 (only a few of them were in employment since February, March and May, 1983) have been conferred benefits of permanency. Thus, it appears that a long standing dispute has been resolved amicably. While resolving such disputes little give and take on either side is necessary. Again the Industrial Tribunal has considered the terms of settlement just and reasonable. It is not even the allegation that the dispute referred to was sham and bogus. In the entire proceeding before the Industrial Tribunal there was nothing secret. Everything has been done openly. The terms of settlement between the parties were signed by the parties on December 10, 1985 and were also produced on the same day. The Tribunal passed order thereon on December 21, 1985. The award has been published by the Government on February 3, 1986. There is not even trace of collusion in the entire proceedings. Therefore the argument that the award is collusive has no merits and the same is rejected.

In this petition, was it necessary to join other workmen ?

37. Learned Counsel for the respondent submitted that the workmen of the respondent-Corporation and other workmen employed by different specified local authorities who have now become the employees of the Corporation should have been joined as parties. Since these workmen have not been joined as parties in this petition, it is contended that me petition is not maintainable. We do not see any merit in this contention. All that the petitioners contend is, 'give us benefits flowing from the award passed by the Tribunal in our favour'. The petitioners do not say that by implementing the award the respondent-Corporation may rob off the benefits which may be available to other workmen employed by the Corporation and/or by other specified local authorities. However, on account of the benefits being conferred upon the petitioners, if other workmen may also be in a position to assert their rights, it would be a different matter. But the petitioners do not claim that other workmen should be deprived of their benefits. Therefore the contention that other workmen should have been joined in the petition has no merits and the same fails.

Consideration of case law cited by the Counsel for the petitioners:

38. Learned Counsel for the petitioners has cited several decisions of the Supreme Court and that of different High Courts in support of the contention that the respondent-Municipal Corporation was the successor of the specified local authority, i.e., Saijpur Bogha Nagar Palika. However, in our opinion it is not necessary to discuss any of these decisions since the provisions of Section 18(3) of the I.D. Act are clear and unambiguous. Even the learned Counsel for the respondent has not disputed the position that the respondent-Municipal Corporation would be the successor of the specified local authority. His contention was cased on the provisions of Section 452-A of the Corporations Act and the notification dated February 22, 1986. On this basis it was contended that the respondent-Corporation was bound to absorb the employees of specified local authority as per the terms and conditions as on November 5, 1985. This contention has already been dealt with hereinabove. Hence it is not necessary to refer to any of the decisions cited by the learned Counsel for the petitioners.

Case law cited by learned Counsel for the respondent:

39. Learned Counsel for the respondent has relied upon the decision of the Supreme Court in the case of Union of India v. G.M. Kokil and Ors. reported in 1984-II LLJ 20. It was a case pertaining to the non obstante clause in Section 70 of the Bombay Shops and Establishments Act, the Supreme Court has explained as to what non obstante clause means. However, in our opinion the decision is not at all relevant; for the purpose of interpreting the provisions of Section 452-A of the Corporations Act, and the notification dated February 22, 1986. As indicated hereinabove, the non obstante clause occurring in Section 452-A of the Corporations Act does not empower the Government to make provisions in respect of the employees so as to temporarily repeal the provisions of Section 17 of the I.D. Act. It only means that if there is any other provision in any of the Act or law in force providing that the Government shall not make any provision with regard to the transfer of employees of one specified local authority to the Corporation, such embargo ; is taken away. This non obstante clause cannot be interpreted to mean that the Government is empowered to nullify the award. So also it cannot be read to mean notwithstanding anything contained in judgment, decree or award passed by a Court or a Tribunal. Therefore this decision does not help the respondent-Corporation. Similarly the decision in the case of Builders Supply Corporation v. Union of India and Ors. reported in AIR 1965 SC 1061 which only explains as to what is the Maw in force' also does not help the respondent-Corporation.

Special Civil Application No. 991 of 1989:

40. Now another petition, i.e. Special Civil Application No. 991 of 1989. This petition is filed by 88 workmen whose names are mentioned in Schedule B to Special Civil Application No. 1362 of 1986. Out of 88 workmen, 53 of them are junior clerks and 35 of them are peons. It is the case of the petitioners that they have become the employees of the respondent-Municipal Corporation on and from February 23, 1986 as the specified local authority, i.e. Saijpur Bogha Nagar Palika merged with the respondent-Corporation. They further pray that an arbitrator was appointed by the Government as per order dated January 12, 1984 for resolving the disputes between the working of the Corporation and the Corporation. The learned Arbitrator has passed award Part III on July 31, 1987. The petitioners claim that in view of the provisions of Section 18 of the I.D. Act even the employees who may be subsequently employed by the establishment would be covered by the arbitration award.

41. Therefore the petitioners pray that it may be declared that the award Part III dated July 31, 1987 which is produced at Annexure 'D' to the petition is applicable to the petitioners and the respondent be directed to pay all the arrears of wages with effect from January 1, 1986 as per the award. The petitioners have also prayed for interest at the rate of 18 per cent per annum on the unpaid amount. It is further prayed that the amount of arrears of bonus as well as leave travel concession and dress allowance as per the award may be ordered to be paid to them.

42. The petition is filed on January 25, 1989 and admitted on February 7, 1989. Still, however, no affidavit-in-reply is filed. Learned counsel for the respondent-Corporation has fairly conceded that if Special Civil Application No. 1362 of 1986 is allowed and if the petitioners succeed in that petition, this petition also should be decided in their favour. Thus it is conceded that the success or failure of the petitioners depended upon the result of Special Civil Application No. 1362 of 1986. We have already held that the award passed by the Tribunal in Reference (IT) No. 152 of 1985 is binding upon the respondent-Municipal Corporation. In this background the petition be examined.

43. As shown in Annexure 'A' to the petition, 53 petitioners are working as junior clerks while 35 petitioners are working as peons. Peons are paid wages in the pay scale of Rs. 196-232 and clerks are being paid wages in the pay-scale of Rs. 260-400. As per award Part III dated July 31, 1987 the pay-scale of peons (Rs. 196-232) is revised to Rs. 750-12-870-EB-14-940, and the pay-scale of clerks (Rs. 260-400) is revised to Rs. 950-20-1150-EB-25-1500. It is directed in the award that the employees be paid wages in the revised scales with ret-respective effect from January 1, 1986. The petitioners have prayed in Para 10(B) of the petition that the delay in complying with the award was attributable to the respondents. Therefore they should be paid 18% interest for the delay in payment. As indicated hereinabove there is no affidavit-in-reply and, therefore, there is no denial of the averments made in the petition. In fact the learned Counsel for the respondents has conceded that if the petitioners succeed in Special Civil Application No. 1362 of 1986 the petitioners should succeed in Special Civil Application No. 991 of 1986.

Claim of Interest :

44. The claim of interest be examined. If an employee performs his part of the contract, i.e. he attends the duty, he would certainly be entitled to claim wages and he can legitimately ask the employer to pay the amount of wages regularly. If the employer fails to make payment of wages within a period of seven days from the date of the amount of wages falling due, he cannot escape the liability to pay interest on the delayed payment of wages. It is true that the interest would certainly be payable if there is a term regarding payment of interest in the contract or if there is custom or usage for claiming and paying interest. In the contract of employment, regular payment of wages is always an express term of contract. By necessary implication, the term with regard to payment of interest on the delayed payment of wages has to be read in all such contracts of employment. If such term is not read, only a simpleton or unwise employer would make payment of wages regularly. Unless it is shown that delay in payment of 'wages had occurred on account of the conduct of the workmen, the workmen cannot be denied the amount of interest on the delayed payment. The employer might be passing through financial stringency or he might be suffering hardship on account of certain, unforeseen events or circumstances beyond his control. One may say that the employer might have even become bankrupt. Even so the employer cannot get relieved from the liability to pay interest on the delayed payment of wages. Once the amount of wages falls due, it must be paid. If not paid, the employer will be saddled with the liability to pay interest on the amount of wages. If the amount advanced by the Bank is not paid, the employer does not get himself relieved of the liability to pay interest because he was overcome by unforeseen events and because he had become bankrupt due to circumstances beyond his control. The same logic and same principles as regard payment of interest would be applicable even with regards to the amount of wages payable to the employees/ workmen.

45. In the case of Satinder Singh v. Umrao Singh reported in AIR 1961 SC 908, the Supreme Court has upheld the claim of interest on equitable grounds on the delayed payment of amount of compensation in lieu of some property acquired. In the case of State of Rajasthan v. Raghubir Singh reported in AIR 1979 SC 852 the claim of interest made by a building contractor has been upheld by the Supreme Court on equitable grounds. In the case of Krishna Prasad Sinha v. State of Bihar reported in 1983 (2) LLJ 263 the Supreme Court directed the State Government to make payment of interest at the rate of 12% on the delayed payment of arrears of salary and subsistance allowance. Similarly in the case of State of Kerala v. M. Padmanabhan Nair reported in 1985-I LLJ 530 the Supreme Court recognised the claim of interest on the delayed payment of pension and gratuity.

46. A Division Bench of this High Court, in the case of Vijay Textile and Anr. v. Union of India and Ors. reported in 1979 XX GLR 944, has gone to the extent of recognising the claim of interest and awarded the same on the amount of refund of excise duty. Be it noted that later on in certain judicial pronouncements such claims of refund of excise duty have been labelled as 'unjust enrichment' and 'pick-pocketing under the cover of law'. Even in respect of such claims a Division Bench of this High Court directed the Government to pay interest at the rate of 12% on the amount of excise duty which was held to be unauthorisedly collected by the Government. (It is true that the decision of this High Court in the case of Vijay Textile & Anr. (supra) has been reversed by the Supreme Court on other points. Therefore, the fact remains that this Court did award interest on equitable grounds even on the amount of refund of excise duty, the burden of which could never have been borne by the manufacturer).

47. The amount of wages/salary is nothing but the price of labour sold or the service rendered. If the amount of interest can be claimed and also be upheld on equitable grounds in respect of claims of amount made by a building contractor, property holder and even in respect of manufacturer who has never suffered any injury or loss, it is difficult to understand how on any equitable or just ground the claim of interest that may be made by the workmen on the delayed payment wages can be denied by the Courts. If such legitimate claim of interest is denied, it may be that the Court may be exposed to the charge that the Courts are administering injustice in the name of upholding the law rather than administering justice according to law. In our opinion neither in law nor in equity the claim of interest by the workmen can be denied.

48. In view of the aforesaid settled legal position and in view of the implied term of contract which should be read by necessary implication in all contracts of employment, the employer should make payment of interest on the delayed payment of wages till the actual payment is made. It may again be noted that even if there is an express term of contract specifying that the amount of interest would not be paid on the delayed payment of wages such term of contract would be unlawful. It would be on the face of it unjust and unfair and, therefore, unlawful.

49. In facts of the case, we would not like to grant interest at the rate of 18% as claimed by the petitioners. Having regard to overall circumstances of the case and having regard to the market conditions, amount of interest at the rate of 15% on the delayed payment of wages and other monetary benefits would be just and proper.

Result in Special C.A. No. 1362 of 1986:

50. In the result Special Civil Application No. 1362 of 1986 is allowed. The respondent-Municipal Corporation is directed to abide by the directions given in the award passed in Reference (IT) No. 152 of 1985. As per this award the employees listed at Schedule B to the petition and whose names are mentioned at Serial No. 1 to 89 (except Serial No. 4-Parmar Hareshbhai C-who has unfortunately expired during the pendency of the proceedings) have become permanent employees and they are entitled to claim the time scale of pay. The respondent-Municipal Corporation is directed not to reduce the wages of these employees or to convert their status from the regularly employed permanent workmen in the time scale of pay to that of daily rated casual employees earnings minimum wages only. It is clarified that the heirs and legal representatives of deceased workman Parmar Hareshbhai C. would be entitled to claim difference in monetary benefits, if any, to which the said deceased workman would have otherwise been entitled to. Rule made absolute accordingly.

Result in Special C.A. No. 991 of 1989:

51. The petition is allowed. It is declared that the petitioners are covered by the award Part III dated July 31, 1987 produced at Annexure 'D' to the petition. The petitioners are entitled to claim benefits of revised pay-scales and all other benefits pursuant to the award with effect from January 1, 1986 as directed in the award. It is further directed that since the award is dated July 31, 1987 the amount of monetary benefits flowing from the award together with interest at the rate of 15% per annum shall be paid to the petitioners. Interest shall be calculated from August 15, 1987 onwards till the date of actual payment. On the amount of difference in salary, interest at the rate of 15% shall be paid. As the amount of difference in wages would have been paid periodically the amount of interest shall be calculated from eighth day of every month on the amount which might have fallen due for the preceding month. Interest shall be calculated accordingly till the monetary benefits flowing from the award are paid. Rule made absolute accordingly.


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