Punjab-Haryana High Court
Pyare Lal And Others vs State Of Haryana And Others on 26 February, 2013
Author: Rajiv Narain Raina
Bench: Rajiv Narain Raina
CWP No.15640 of 2009 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CWP No.15640 of 2009
Date of Decision: 26.02.2013
Pyare Lal and others ..... Petitioners
Versus
State of Haryana and others ...... Respondents
CORAM:- HON'BLE MR. JUSTICE RAJIV NARAIN RAINA
1. To be referred to the Reporters or not?
2. Whether the judgment should be reported in the Digest?
Present: Mr. H.S. Sirohi, Advocate for the petitioners.
Ms. Tanisha Peshawaria, D.A.G. Haryana.
Mr. Ajay Kaushik, Advocate for respondent No.4.
Mr. Alok Mittal, Advocate for respondents No.7 to 11.
RAJIV NARAIN RAINA, J.
The 126 petitioners before this Court in this petition accepted benefits of Voluntary Retirement Scheme (for short "VRS") through a settlement dated 26.8.2008 arrived at under Section 12(3) of the Industrial Disputes Act, 1947 (for short "the Act"). Having accepted VRS they challenge before this Court directly under Articles 226 and 227 of the Constitution the settlement which they allege was a result of fraud, misrepresentation and as one which was actuated by mala fides. The settlement they say has caused wrongful financial loss to them. A writ of mandamus is sought commanding the official respondents to re-do the settlement amicably with Tilda Riceland Pvt. Ltd. successor-in-interest of the added twelfth respondent-The Shakti Bhog Foods Ltd., Karnal, the present management.
CWP No.15640 of 2009 2
It appears that Tilda Riceland Pvt. Ltd. (for short Tilda) ran into business losses of great magnitude leading to serious disputes with its workers touching on industrial peace and harmony. Retrenchments were either in the offing or had taken place. The worker's Union raised industrial disputes by submitting a charter of demands on the management and to the designated Labour-cum-Conciliation Officer, Karnal. Conciliation proceedings were initiated by the area Conciliation Officer. Several meetings and parleys were held between the workers and representatives of the management within the conciliation process. The management expressed its willingness to settle the matter in terms of the Act and through its activated beneficial machinery. A settlement was arrived at on 22.8.2008 with Dhiraj Patel, General Manager of the Company and R.S. Seshadri, a Director of the Company representing the Board of Directors. The following settlement by resolution was tentatively arrived at in writing:
"As per our discussion with you on telephone regarding settlement amount, we are ready on this format. This settlement amount excluding gratuity, leave encashment, PF, compensation as per ID Act, Bonus, Medical, LTC, 15% increment arrear and notice period as per ID Act:
Minimum Amount: 75000 (Seventy five thousand rupees only) Maximum Amount : 2,00,000/- (Two lac rupees only) Base Calculation : 14000 per year As per discussion all benefits will be calculated on CTC."
The abbreviation CTC stands for "Cost to Company". It is stated in para 9 of the petition that components of CTC include Basic salary + 20% Bonus + 5% Medical + PF (Company Part) + LTC + GSLI (Company Part).
The above was an offer and just a draft settlement. Four days after the proposal dated 22.8.2008, a draft settlement dated 26.8.2008 under Section 12(3) of the Act was circulated to the workers' Union. The office CWP No.15640 of 2009 3 bearers of the Union representing the community of workers in the respondent establishment are alleged by the present petitioners to have signed on papers other than the settlement deed under Section 12(3) of the Act and before the petitioners could react or understand the import of the settlement, they were paid full and final dues under the settlement and this is how the allege that fraud was practiced by the management on the poor workers. Their main objection, however, against the settlement dated 26.8.2008 is against Sub-Clause (a) and (b) of Clause 5 and Clause 8 of the settlement which read as under:
"a) Payment of VRS compensation equal to 15 days salary for every completed year. Salary includes Basic, HRA, LTA, Medical.
b) Notice of two and half months of pay."
"8 ++++++ the workers will have no right over the job of the company and nothing will remain due from the company. Along with this, the right of reinstatement on the job of the workers stands finish. Thereafter, there will be no financial dispute and claim over the job of the workers against their employers. Relationship of Employer-worker will finally and completely be treated as stopped and any case for reinstatement in the job/settlement of accounts filed before any authority/count shall not be entertained and any case filed individually shall be treated satisfied and rejected under this settlement. ++++++"
It has been averred in paragraph 11 of the petition as follows:
"In the salary company included only Basic, HRA, LTA, Medical, out of which HRA was never paid earlier nor counted now it was a eye wash only Basic, LTA, Medical, were counted in salary in stead of CTC. Notice period was also wrongly reduced from 3 month to 2.5 months and reduced the benefit of 15 days pay, which is against provisions of Industrial Dispute Act."
In short what is argued is that the draft settlement of 22.8.2008 was more beneficial than the ostensible final settlement allegedly signed by the parties during conciliation proceedings as against the settlement dated CWP No.15640 of 2009 4 26.8.2008. The present petition has been filed directly without resorting to alternative remedies.There is another aspect to the present petition with respect to the allegations of coercion, duress and fraud levelled viz a viz the settlement. A prayer has been made in the petition that the matter should be investigated by the police and by the Central Bureau of Investigation. I am not inclined to accept such prayer without any valid basis.
Mr. Sirohi, learned counsel for the petitioners would argue that in terms of Section 12(3) of the Act a settlement arrived at in the course of conciliation proceedings are equivalent to an award of a Labour Court and therefore, a writ petition is maintainable against the settlement which operates as an award of the Labour Court. He relies on one sentence (underlined for emphasis) in Barauni Refinery Pragatisheel Shramik Parishad v. Indian Oil Corporation Ltd. and others; AIR 1990 SC 1801 found in paragraph 8 of the report which reads as follows:
"8. Since the High Court has answered the first point in the affirmative i.e. in favour of the workmen, we do not consider it necessary to deal with that aspect of the matter and would confine ourselves to the second aspect which concerns the binding character of the settlement. Section 2(p) of the Industrial Disputes Act, 1947 defines a settlement as a settlement arrived at in the course of conciliation proceedings 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 the parties thereto in such manner as may be prescribed and a copy thereof has been sent to the officer authorised in this behalf by the appropriate Government and the Conciliation Officer. Section 4 provides for the appointment of Conciliation Officers by the appropriate Government. Section 12(1) says that where any industrial dispute exists or is apprehended the Conciliation Officer may, or where the dispute relates CWP No.15640 of 2009 5 to a public utility service and a notice under Section 22 has been given, shall, hold conciliation proceedings in the prescribed manner. Sub-section (2) of Section 12 casts a duty on the Conciliation Officer to investigate the dispute and all matters connected therewith with a view to inducing the parties to arrive at a fair and amicable settlement of the dispute. If such a settlement is arrived at in the course of conciliation proceedings, sub-
section (3) requires the Conciliation Officer to send a report thereof to the appropriate Government together with the memorandum of settlement signed by the parties to the dispute. Section 18(1) says that a settlement arrived at by agreement between the employer and the workmen otherwise than in the course of the conciliation proceedings shall be binding on the parties to the agreement. Sub-section (3) of Section 18 next provides as under:
"A settlement arrived at in the course of conciliation proceedings under this Act or an arbitration award in a case where a notification has been issued under sub-section (3-A) of Section 10-A or award of a Labour Court, Tribunal or National Tribunal which has become enforceable shall be binding on--
(a) all parties to the industrial dispute:
(b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the Board, arbitrator, Labour Court, Tribunal or National Tribunal, as the case may be, records the opinion that they were so summoned without proper cause:
(c) where a party referred to in clause (a) or clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates: (d) where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part." CWP No.15640 of 2009 6
It may be seen on a plain reading of sub-sections (1) and (3) of section 18 that settlements are divided into two categories, namely, (i) those arrived at outside the conciliation proceedings and (ii) those arrived at in the course or' conciliation proceedings. A settlement which belongs to the first category has limited application in that it merely binds the parties to the agreement but the settlement be- longing to the second category has extended application since it is binding on all parties to the industrial dispute, to all others who were summoned to appear in the conciliation proceedings and to all persons employed in the establishment or part of the establishment, as the case may be, to which the dispute related on the date of the dispute and to all others who joined the establishment thereafter. Therefore, a settlement arrived at in the course of conciliation proceedings with a recognised majority union will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. To that extent it departs from the ordinary law of contract. The object obviously is to uphold the sanctity of settlements reached with the active assistance of the Conciliation Officer and to discourage an individual employee or a minority union from scuttling the settlement. There is an underlying assumption that a settlement reached with the help of the Conciliation Officer must be fair and reasonable and can, therefore, safely be made binding not only on the workmen belonging to the Union signing the settlement but also on others. That is why a settlement arrived at in the course of conciliation proceedings is put on par with an award made by an adjudicatory authority. The High Court was, therefore, right in coming to the conclusion that the settlement dated 4th August, 1983 was binding on all the work- men of the Barauni Refinery including the members of Petroleum and Chemical Mazdoor Union." Though a settlement arrived at under Section 18(3) of the Act may be elevated to the status of an award as defined in Section 2(b) to be an interim or a final determination of an industrial dispute yet the judgment is CWP No.15640 of 2009 7 not determinative of the question whether a settlement arrived at in the course of conciliation proceedings is open to judicial review directly under Article 226 of the Constitution of India per se though ordinarily writ jurisdiction would reach injustice wherever it may be found. In exercise of that jurisdiction regard would be had to whether reasons for undoing of a settlement are based on admitted or disputed questions of fact, in case of the latter the writ Court is ill equipped to decide the same. Therefore, the judgment is of no help to Mr. Sirohi and is distinguishable.
Since mala fides have been alleged and that the petitioners were low paid workers of Tilda they were laymen to the technicalities of accounts and were unable to locate the fraud committed by all the respondents, they would need to be adverted to. When fraud was discovered, the petitioners contend they approached the respondent-authority with representations dated 4.9.2009 (Annexure P-7) and 9.11.2009 (Annexure P-8). This was followed by a legal notice served through counsel on respondents No.4 to 11 denying allegations of fraud etc. The written representations were followed by request to Director General of Police, Haryana, Senior Superintendent of Police, Karnal and Director Central Bureau of Investigation, New Delhi requesting intervention to undo the settlement and to make it compatible with the draft settlement dated 22.8.2008. The allegations of mala fides set out in the writ petition against the respondents are in the following terms:
"10. That but respondents No.7 to 11 and other higher officials of the company with mala fide intention to cause the wrongful loss to poor workmen and wrongful benefit to company, conspired with the intention to cheat/deceive the poor workmen and dfafted a settlement deed u/s 12(3) of the Industrial Disputes Act 1947, totally contrary to settlement dated 22.8.2008 and letter dated 10.7.2008. In the settlement deed u/s 12(3) CWP No.15640 of 2009 8 dated 26.8.2008 company had given the benefits on Basic Salary not on CTC, it was also mentioned in the settlement that the employees shall have no claim on the job and shall not have any right to reinstate on his job if the posts arise in future. Which is contrary to settlement dated 22.8.2008 and letter dated 10.7.2008. no worker could judge that such thing can happen with in four days i.e. between date 22.8.08 to 26.8.2008.
11. That Company had also with intention to deceive and cheat poor workers, manipulated and with connivance taken undue favour from labour officer as well as lured the president and some other office bearer of workers union in their favour, who all also tolled the workers that the draft of settlement deed u/s 12(3) dated 26.8.2008 is as per the settlement dated 22.8.2008 and letter dated 10.7.2008 and the workers need not to worry. Under good faith some workers signed on settlement dated 26.8.2008 along with office bearers of union and signatures of other employees were later on taken by the president and other office bearer of workers union on separate papers and those workers had not even seen the settlement deed u/s 12(3) and neither they were able to understand that settlement. Company also immediately paid the dues and got their signatures on full and final payment Before the poor worker could ascertain the truth. In this way company committed fraud with poor workers."
The estimated financial loss caused to the 126 workers has been calculated in para 12 to be Rs 1.6 lacs odd qua each worker.
In National Engineering Industries Ltd. v. State of Rajasthan and others; (2000) 1 SCC 371, it has been held in para 24 of the report as follows:
"24. It will be thus seen that the High Court has jurisdiction to entertain a writ petition when there is an allegation that there is no industrial dispute and none apprehended which could be the subject-matter of reference for adjudication to the Industrial Tribunal under Section 10 of the Act. Here it is a question of jurisdiction of the Industrial Tribunal, which could be examined by the High Court in its writ jurisdiction. It is the existence of the Industrial Tribunal (sic dispute) which would clothe the appropriate Government with power to make the reference and the Industrial Tribunal to adjudicate it. If there is no industrial dispute in existence or apprehended the appropriate Government lacks power to make any reference. A settlement of dispute between the parties themselves is to be CWP No.15640 of 2009 9 preferred, where it could be arrived at, to industrial adjudication, as the settlement is likely to lead to more lasting peace than an award. Settlement is arrived at by the free will of the parties and is a pointer to there being goodwill between them. When there is a dispute that the settlement is not bona fide in nature or that it has been arrived at on account of fraud, misrepresentation or concealment of facts or even corruption and other inducements it could be the subject-matter of yet another industrial dispute which an appropriate Government may refer for adjudication after examining the allegations as there is an underlying assumption that the settlement reached with the help of the Conciliation Officer must be fair and reasonable. A settlement which is sought to be impugned has to be scanned and scrutinised. Sub-sections (1) and (3) of Section 18 divide settlements into two categories, namely, (1) those arrived at outside the conciliation proceedings, and (2) those arrived at in the course of conciliation proceedings. A settlement which belongs to the first category has a limited application in that it merely binds the parties to the agreement but the settlement belonging to the second category has an extended application since it is binding on all the parties to the industrial disputes, to all others who were summoned to appear in the conciliation proceedings and to all persons employed in the establishment or part of the establishment, as the case may be, to which the dispute related on the date of the dispute and to all others who joined the establishment thereafter. A settlement arrived at in the course of conciliation proceedings with a recognised majority union will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. The recognised union having the majority of members is expected to protect the legitimate interest of the labour and enter into a settlement in the best interest of the labour. This is with the object to uphold the sanctity of settlement reached with the active assistance of the Conciliation Officer and to discourage an individual employee or a minority union from scuttling the settlement. When a settlement is arrived at during the conciliation proceedings it is binding on the members of the Workers' Union as laid down by Section 18(3)(d) of the Act. It would ipso facto bind all the existing workmen who are all parties to the industrial dispute and who may not be members of unions that are signatories to such settlement under Section 12(3) of the Act. The Act is based on the principle of collective bargaining for resolving industrial disputes and for maintaining industrial peace. "This principle of industrial democracy is the bedrock of the Act," as pointed out in the case of P. Virudhachalam v. Lotus Mills. In all these negotiations based on CWP No.15640 of 2009 10 collective bargaining the individual workman necessarily recedes to the background. Settlements will encompass all the disputes existing at the time of the settlement except those specifically left out."
The question remains as to what relief can be granted to the petitioners in the present petition. They collectively allege fraud and mala fides in the making of settlement dated 26.8.2008. These allegations have been denied by the respondents in the replies to the representations of the petitioners seeking to undo the alleged unfair settlement. Coercion, fraud, malice and mala fides are issues which require to be determined on facts regard being had to the nature of allegations levelled. There is no dispute that the petitioners accepted the benefits under the impugned settlement and thereafter have tried to resile from that settlement.
I do not think that the writ court can resolve seriously disputed questions of fact agitated in the present petition which have been rebutted with equal force in the written statements filed in response to notices issued by this Court. Since it will not be fair to comment on the issues of coercion, fraud etc. in the present proceedings and prejudice either party and to proceed to determine those issues, it would be just, fair and reasonable, in the considered opinion of this court, to relegate the petitioners to their alternative remedies under the Industrial Disputes Act, 1947 by giving them liberty to seek a reference to the Industrial Tribunal which is an alternative remedy for the purposes of writ jurisdiction as held by the Full Bench of this Court in Manohar Lal v. State of Punjab and another; ILR (1983) 2 P&H
576. In paragraphs 4,5 and 7 of the report it has been opined:
" As is evident, the question is not as to what is the scope of jurisdiction of this Court under Article 226 of the Constitution of India but the question is whether claiming a reference under Section 10 of the Act can be regarded as an alternate remedy or not. There can be no gain-saying that for the redress of the grievance, an aggrieved person is entitled to claim a CWP No.15640 of 2009 11 reference under the Act, meaning thereby that it is certainly a remedy available to him under the Act. That being so, I fail to understand as to how will it cease to be a remedy simply because the matter of reference depends upon the opinion of the Government. Further, it would not be correct to say that the remedy cannot be asked for as a matter of right under Section 10 of the Act because where any industrial dispute exists or is apprehended, a reference can be claimed by the aggrieved person on showing relevant facts in that respect and on consideration of the entire material if it is found that an industrial dispute exists or is apprehended and that it is expedient to refer a dispute for adjudication, the appropriate Govt. is bound to refer the dispute for adjudication. In case a contrary opinion is formed, the reference may be declined. While declining the reference the Government is required to apply its mind and act reasonably and not capriciously or arbitrarily nor according to shims or fancies. It would be pertinent to observe that if the Government does not choose to refer the dispute to any one of the authorities, it is obligatory on the Government to record its reasons for that and communicate the same to the parties as required under Section 12(5) of the Act. An aggrieved party then is entitled to approach this Court and show that the action of the Government in declining the reference is not legally sustainable. A little scrutiny of the provisions of the Act makes it abundantly clear that through the intervention of the appropriate Government, of course not directly, a very extensive machinery has been provided for settlement and adjudication of industrial disputes. In case the proposition propounded by the learned counsel for the petitioner is accepted, then the object of the Government in providing for an extensive machinery for settlement and adjudication of industrial disputes would be frustrated. Thus, the remedy provided to a workman giving him right to claim a reference under Section 10 of the Act for the redress of his grievance is certainly an alternate remedy and does ordinarily bar the filing of a writ petition.
7. As a result of the aforesaid discussion, I hold that the mode of redress provided to a workman by claiming a reference under Section 10 of the Act is a proper, efficacious alternative remedy which ordinarily would be a bar to the filing of a writ petition."
In Premier Automobiles Ltd. v. Kamlakar Shantaran Wadke and others; AIR 1975 SC 2238, the Supreme Court while dealing with jurisdiction of Civil Courts vis a vis the Labour Court in the context of alternative remedy opined as follows:
CWP No.15640 of 2009 12
"4. We do not find much force in either of the contentions. It is no doubt true that the remedy provided under the Act under Section 33C, on the facts and in the circumstances of this case involving disputes in relation to the two settlements arrived at between the management and the workmen, was not the appropriate remedy. It is also true that it was not open to the workman concerned to approach the Labour Court or the Tribunal directly for adjudication of the dispute. It is further well established on the authorities of this Court that the Government under certain circumstances even on the ground of expediency (vide State of Bombay v. K.P. Krishnan (9)) and Bombay Union of Journalists v. The State of Bombay (10), can refuse to make a reference. If the refusal is not sustainable in law, appropriate directions can be issued by the High Court in exercise of its writ jurisdiction. But it does not follow from all this that the remedy provided under the Act is a misnomer. Reference of industrial disputes for adjudication in exercise of the power of the Government under Section 10 (1) is so common that it is difficult to call the remedy a misnomer or insufficient or inadequate for the purpose of enforcement of the right or liability created under the Act. The remedy suffers from some handicap but is well compensated on the making of the reference by the wide powers of the Labour Court or the Tribunal. The handicap leads only to this conclusion that for adjudication of an industrial dispute in connection with a right or obligation under the general or common law and not created under the Act, the remedy is not exclusive. It is alternative. But surely for the enforcement of a right or an obligation under the Act the remedy provided uno flatu in it is the exclusive remedy. The legislature in its wisdom did not think it fit and proper to provide a very easy and smooth remedy for enforcement of the rights and obligations created under the Act. Persons wishing the enjoyment of such rights and wanting its enforcement must rest content to secure the remedy provided by the Act.
The possibility that the Government may not ultimately refer an industrial dispute under Section 10 on the ground of expediency is not a relevant consideration in this regard."
That apart from remedy under the Industrial Law, remedy under Section 9 of the Code of Civil Procedure, 1908 by way of filing suit would also remain open to them.
Resultantly, the petitioners would also remain free to avail remedy before the Civil Court, if elected or advised. In case such remedy is CWP No.15640 of 2009 13 availed Mr. Sirohi submits that the period spent litigating in this Court should be excluded from the period of limitation and the benefit of Section 14 of the Limitation Act be made available to the petitioners. This request appears to be just. It is ordered accordingly that the period from 25.8.2009 till the date of receipt of this order and 90 days thereafter shall remain excluded from period of limitation. In case resort is had to remedy under the industrial law which prescribes no limitition for reference of disputes even so, this period would also not stand in the way of the petitioners of a defence plea of delay and laches and disputes may be decided on merits to end the simmering discontent.
Disposed of in the above terms.
(RAJIV NARAIN RAINA) JUDGE February 26, 2013 rajeev