M/S Heavy Engineering Corporation ... vs Their Workmen on 10 August, 2016

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Jharkhand High Court

M/S Heavy Engineering Corporation ... vs Their Workmen on 10 August, 2016

Award dated 28.02.2004 in Reference Case No. 1 of 1998 was challenged in W.P.(L) No. 5729 of 2005 by the appellantwrit petitioner (hereinafter referred to as petitioner). Aggrieved of dismissal of the writ petition the petitionerM/s Heavy Engineering Corporation Limited (in short HEC) has preferred the present Letters Patent Appeal.

2. During pendency of the Letters Patent Appeal, the Court was informed by the petitioner that a joint agreement has been signed between the Management of M/s Heavy Engineering Corporation Limited and Hatia Project Workers Union, which is the new union recognized by the petitionercompany. The Court issued notice to Hatia Project Workers Union, which appeared in the present proceeding through Sri O. P. Tiwari, the learned counsel. Order dated 01.05.2012 indicates that individual workmen who signed the agreement dated 2 24.08.2009 were required to file their individual affidavits stating whether they want to challenge the agreement dated 24.08.2009 or to take benefits under the said agreement; the remaining workmen were also permitted to submit their affidavits on the aforesaid lines.

3. Heard.

4. Mr. Shresth Gautam, the learned counsel for the petitionerHEC confined his argument to the agreement dated 24.08.2009, to contend that the award passed in Reference Case No. 1 of 1998 would be deemed to be substituted by the said settlement. Elaborating his argument, the learned counsel submitted that the agreement dated 24.08.2009 is a settlement in terms of Section 18(1) of the Industrial Disputes Act, 1947 and since it is entered by the Union representing majority of workmen, settlement dated 24.08.2009 is binding on all the workmen covered under Reference Case No. 1 of 1998. In support of his contentions, the learned counsel relied on decisions in "Herbertsons Limited Vs. the Workmen of Herbertsons Limited and others" reported in (1976) 4 SCC 736 and "P. Virudhachalam and Others Vs. Management of Lotus Mills and Another" reported in (1998) 1 SCC 650.

5. Answering the aforesaid argument founded on Section 18(1) of the Industrial Disputes Act, 1947, Mr. Babban Lal, the learned Senior counsel, appearing for the first respondentEngineering Mazdoor Panchayat Union, submitted that unless the award is terminated by issuing notice under Section 19(6), it remains binding on the parties. It is contended that the respondent no. 1Engineering Mazdoor Panchayat Union which represented all 44 workmen before the Central Government Industrial Tribunal, irrespective of its derecognition by HEC, has locus to resist the alleged settlement and oppose the challenge thrown by HEC to the award dated 28.02.2004. Raising serious doubts over the claim made by the rival union that 37 workmen have signed the agreement, the learned Senior counsel submitted that the affidavits filed by 25 workmen, who allegedly 3 support the settlement, are vague and not in prescribed format; while others have denied and challenged the alleged agreement dated 24.08.2009.

6. Before examining the rival contentions, brief facts of the case are recorded hereunder;

(i) HEC Employees Consumers Cooperative Stores was formed by the employees of HEC and registered under the Bihar and Orrisa Cooperative Society Act, 1935. The Cooperative Stores opened markets and grinding flour mills within the vicinity of HEC township for meeting the requirement of regular supply of ration items and consumer goods at government control price to the employees of HEC. Subsequently, on account of huge losses in business, the Cooperative Stores could not succeed and fearing retrenchment, the employees approached the Management of HEC through their union. A Tripartite Agreement involving the Management of HEC, HEC workers' union and employees of Cooperative Stores was signed on 19.06.1970 in respect of 69 workmen. It appears that 44 employees of the Cooperative Stores who were appointed after the Tripartite Agreement dated 19.06.1970 was signed, raised a demand for their absorption and regular appointment, which was finally referred to by the appropriate Government for adjudication.

(ii) The reference made by the appropriate Government to the Industrial Tribunal for adjudication was, in the following terms;

"Whether the workman Sri N. K. Pandey and 43 others are entitled for regular employment, payscales according to work and other benefits in Heavy Engineering Corporation (HEC), Dhurwa, Ranchi? If so, since when?"

(iii) The reference dated 23.01.1998 was answered in favour of the workmen, and under award dated 28.02.2004 the workmen were held entitled for regular employment and payscale with other benefits from their respective dates of engagement in HEC.

(iv) Before the Industrial Tribunal, the workmen took the plea that Management of the Cooperative Stores was taken over by HEC in 1970 and a large number of employees working under Cooperative Stores were transferred to different units of HEC. A committee of high ranking officers of HEC was constituted in the year, 1973, which took over the affairs of the Cooperative Stores. The employees who continued to work under HEC in its various departments were provided medical facilities at par with the permanent employees and they were also paid annual bonus equivalent to the permanent employees. However, even after working for more than 20 years the workmen were not absorb in the permanent establishment and paid salary at par with the regular employees. The Management denied existence of employer and employee relationship and pleaded that the workmen under reference were essentially employees of Cooperative Stores which was altogether a separate entity. On the basis of the evidence led by the parties, the Tribunal recorded a finding that the workmen of Cooperative Stores, who were working in different departments of HEC and were transferred, posted and paid by the Management of HEC, were entitled for regular employment, payscale and other benefits.

7. As noticed above, the claim of the workmen was allowed vide, Award dated 28.02.2004.

8. Before the Writ Court, HEC took a plea that on humanitarian grounds it engaged the services of workmen of the Cooperative Stores and they were paid at par with the contract labourers engaged in the establishment of HEC, however, subsequently the company became sick and the work force of the company was reduced from 14,000 to 3,000 regular employees. The appointment/selection of the workmen of the Cooperative Stores was also challenged on the ground that it was not made in terms of relevant rules and procedures.

9. On the issue of illegal appointment, the Writ Court found that the workmen were engaged continuously for 20 years without any break, leading to a presumption that there were vacant posts against which they were working and they possess the requisite qualification. The writ petition was dismissed, holding that the aforesaid situation does create a legitimate expectation in the workmen that their services would be regularized and they would also be paid salary/wages similar to the regular employees of HEC.

10. In the aforesaid factual background, the petitionerHEC seeks substitution of award dated 28.02.2004 by agreement dated 24.08.2009.

11. Sections 2(p) and 18 of the Industrial Disputes Act, 1947 read as under :

Section 2 (p) "settlement" means 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 the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorized in this behalf by the appropriate Government and the conciliation officer.

Section 18. Persons on whom settlements and awards are binding -

(1) 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. (2) Subject to the provisions of subsection (3), an arbitration award] which has become enforceable shall be binding on the parties to the agreement who referred the dispute to arbitration. (3) 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 subsection (3A) of section 10A or an 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 6 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.

12. The settlement as defined under Section 2(p), no doubt, includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding, however, for a settlement to be valid, Section 2(p) provides certain conditions. The conditions incorporated under Section 2(p) are; (i) it shall be signed by the parties thereto, (ii) in the manner prescribed, and (iii) a copy of the settlement has been sent to the authorised officer and the conciliation officer.

13. It is an admitted position that the settlement arrived at between the Management of HEC and respondent no. 2 by signing agreement dated 24.08.2009 is not covered under Section 18(3), i.e., a settlement arrived at in the course of conciliation proceeding under 1947 Act. Section 18 (1) provides that a settlement arrived at by an agreement between the employer and workmen shall be binding on the "parties to the agreement".

14. Whether a settlement under Section 18(1) is binding on the parties to the agreement or it shall bind nonparties also, has been an issue debated before the Supreme Court in the last 50 years and the law on this issue is fairly wellsettled. In "The Jhagrakhan Collieries (P) Ltd. Vs. Shri G. C. Agrawal, Presiding Officer, Central Government 7 Industrial TribunalcumLabour Court, Jabalpur and others" reported in (1975) 3 SCC 613, the issue before the Supreme Court was whether a settlement arrived at in the course of conciliation proceeding, validity of which was challenged before the High Court and a finding returned by the High Court that the settlement was not a settlement arrived at in the course of conciliation proceeding under the Act, can be enforced against the employees by virtue of subsection (1) to Section 18. Before examining this issue, the Court discussed the scope of section 2(p) and observed as under;

11. "An analysis of the above definition would show that it contemplates only two kinds of settlements: (i) A settlement arrived at in the course of conciliation proceedings under the Act and (ii) a written agreement between the employer and the workmen arrived at otherwise than in the course of conciliation proceedings. But a written agreement of the latter kind in order to fall within the definition must satisfy two more conditions, namely: (a) it must have been signed by the parties thereto in the prescribed manner, and (b) a copy thereof must have been sent to the authorities indicated in Section 2(p)."

15. Answer to the question posed in the said case is reflected in these words:

14. ".....Can it be enforced against these respondents by virtue of subsection (1) of the section? This further narrows down into the issue: Were these respondents parties and signatories to the agreement between the management and the Panchayat?

The answer to this question is undoubtedly in the negative."

16. The scope of Section 18 of I.D. Act again came to be examined by the Supreme Court in "Barauni Refinery Pragatisheel Shramik Parishad Vs. Indian Oil Corporation Limited" reported in (1991) 1 SCC 4, wherein the Hon'ble Supreme Court has held as under;

8. ".....It may be seen on a plain reading of subsections (1) 8 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 of 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 belonging 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. ....".

17. The aforesaid interpretation of Section 18 has been reiterated by the Supreme Court in "National Engineering Industries Ltd. Vs. State of Rajasthan & Ors." reported in (2000) 1 SCC 371. The decision in these cases lays down that settlement under Section 18(1) of I.D. Act is not binding on nonparties.

18. The learned counsel for the petitionerHEC vehemently contended that the objection raised by the respondent no. 1Union which has since been derecognised by the company must be ignored and the settlement between the company and the respondent no. 2 which represents the majority of employees should be accorded judicial approval and the instant Letters Patent Appeal may be disposed of in terms of the settlement dated 24.08.2009.

19. This contention is liable to be rejected for more than one reason. In the first place, the petitioner is before us after having failed in its attempt to challenge award dated 28.02.2004 before the Writ Court. The settlement allegedly entered between the 9 petitionercompany and the second respondent has been challenged by the first respondent as invalid and not binding on the employees. Mr. Babban Lal, the learned Senior counsel contended that the first respondent is the Union which represented all the workmen before the Tribunal as well as before the Writ Court and, more than one year after filing of the present appeal a collusive agreement with second respondent has been signed by the company, which must be ignored and the award should be enforced forthwith.

20. Though, the second respondent claims that it has signed agreement with the company on behalf of 37 workmen, it was conceeded in the Court that only 25 employees have filed affidavits in support of the settlement. The affidavits of other employees term the settlement dated 24.08.2009 as illegal, fraudulent and not binding. A vital distinction which distinguishes the present case from the judgment in Herbertsons case, is that, neither the settlement has been examined by the Industrial Tribunal, for which the parties are required to lead evidence, nor there is any application by the company for deciding the instant Letters Patent Appeal in terms of agreement dated 24.08.2009, to which response of first respondent could have been taken and examined by us. The matter was heard and reserved for judgment at one point in time and thereafter, again posted for hearing, however, no effort was made by the petitioner inviting an order of the Court on the above aspect.

21. The validity of the settlement with the second respondent is seriously challenged by the first respondentUnion and about half of the workmen under reference have filed affidavits denying and disputing the alleged settlement. Many of the workmen who allegedly are members of second respondent have also challenged the settlement. It is an admitted position that no notice under subsection (6) to Section 19 was given by the company for substitution of the award dated 28.02.2004 by agreement dated 24.08.2009. Besides lapse on the part of the petitioner in not moving an appropriate application for 10 inviting a finding of the Tribunal on the settlement, in the aforesaid facts, obviously, the issue cannot now go back to the Tribunal.

22. The learned counsel for the petitioner submitted that in Herbertsons case, the Industrial Tribunal returned a finding that the settlement was not binding on the nonmembers and it was not just and fair, however, the Supreme Court reversed the finding of the Tribunal and held that settlement is binding on all. Referring to order dated 01.05.2012 and the affidavits filed by the individual workman, the learned counsel for the petitioner tried to impress upon the Court that validity of agreement dated 24.08.2009 may be examined by this Court. As noticed above, in view of the serious factual dispute on the number of employees who have voluntarily accepted settlement under agreement dated 24.08.2009 and noncompliance of conditions under Section 2(p), we must stay away from embarking upon an enquiry to test the validity of agreement dated 24.08.2009 on the touchstone of Article 14 of the Constitution.

23. The sheetanchor of the petitioner's plea is Herbertsons case. In the said case, the industrial dispute between D & P Products (Private) Limited, Bombay and their workmen was referred for adjudication under Section 10(1)(d) of I.D. Act. During pendency of the dispute the company was amalgamated with Herbertsons Limited by an order of Bombay High Court. Before the Tribunal, the second respondentMumbai Mazdoor Sabha had filed written statement. The award was challenged before the Supreme Court and in the meantime, rival union namely, Bombay General Kamgar Sabha claimed that all the workers of the company resigned from Mumbai Mazdoor Sabha and joined the third respondentBombay General Kamgar Sabha. The company derecognised Mumbai Mazdoor Sabha and granted recognition to Bombay General Kamgar Sabha. Subsequently, it entered into a memorandum of settlement with Bombay General Kamgar Sabha, in substitution of the award which was pending Appeal before the Supreme Court. In the proceeding before the Supreme Court, 11 Bombay General Kamgar Sabha was added as third respondent. M/s Herbertsons Limited submitted a petition before the Supreme Court to decide the appeal in terms of the memorandum of settlement dated 18.10.1973. The Supreme Court remitted the matter to the Tribunal, to examine, whether the said settlement was valid and binding on the members of second respondent and whether the settlement was fair and just. The Industrial Tribunal, Maharastra returned a finding that the disputed settlement is not valid and binding on the members of the second respondent and it was not fair, just and reasonable to the extent the scheme of DA effected workmen at or just above the subsistence level. Before holding the settlement binding on the members of the second respondent Union also, the Supreme Court summarized the purport and effect of order passed by it, whereunder the matter went back to the Industrial Tribunal, Maharastra, in these words;

15. "......... On the other hand, we take the view that after hearing the parties this Court was satisfied when it had called for a finding of the tribunal that if the settlement was fair and just it would allow the parties to be governed by the settlement substituting the award. The wording of the issue sent to the tribunal for a finding clearly shows that there was an onus on the second respondent to show how many workers of the appellant were their members upon whom they could clearly assert that the settlement was not binding under Section 18(1) of the Industrial Disputes Act. It cannot be assumed that the parties were not aware of the implications of Section 18(1) of the Industrial Disputes Act when the Court passed the order of December 19, 1974. This Court would not have sent the case back only to decide the legal effect of Section 18(1) of the Industrial Disputes Act. Since a recognised and registered union had entered into a voluntary settlement this Court thought that if the same were found to be just and fair that could be allowed to be binding on all the workers even if a very small number of workers were not 12 members of the majority union. It is only in that context that after hearing the parties the case was remanded to the tribunal for a finding on the particular issues set out above."

24. During the course of hearing, to a pointed query from the Court whether the benefits under the agreement dated 24.08.2009 are similar to the award of the Tribunal, the learned counsel for the petitioner admitted that under the agreement dated 24.08.2009 the employees get less than what has been granted under the award, however, the learned counsel contended that considering the uncertainty of any litigation in a court proceeding, settlement of dispute by negotiation is encouraged and once a settlement is accepted by majority of workmen it shall bind all the workmen covered under the award, even though under the settlement they get "a little less"

than what has been awarded to them by the Tribunal. To this, the least we can observe, is that, this contention is seriously abrogated by the fundamental object behind the Industrial Disputes Act, 1947. Maintenance of industrial peace is not achieved by ignoring the invalidity of a settlement.

25. In Herbertsons case, the settlement arrived between the company and the Union representing the majority of workmen was affirmed by the Supreme Court for the reason that the matter was remitted back to the Industrial Tribunal on an understanding that if the settlement is found just and fair it will bind all. Herbertsons case is not an authority to the proposition that a settlement entered with the Union representing majority of the workmen would be binding under Section 18(1) of I.D. Act, 1947, also upon the workmen who are not parties to the agreement. At this stage, it needs to be mentioned that the decision in Herbertsons case has been distinguished by the Supreme Court in "Indian Oxygen Ltd. Vs. Workmen as Represented by Indian Oxygen Karamchari Union" reported in (1979) 3 SCC 291. In the said case substantial number of workmen were not satisfied with the settlement, as in the present case. Reference of Herbertsons case in 13 "P. Virudhachalam and others Vs. Management of Lotus Mills and another" reported in (1998) 1 SCC 650, is in the context of weight which a settlement carries compared to an award passed after adjudication. In fact, P. Virudhachalam case deals with binding effect of settlement under Section 18(3), and not under Section 18(1). The contention founded on Herbertsons case ultimately turns out a flogged plea.

26. Lastly, Mr. Babban Lal, the learned Senior counsel contended that award dated 28.02.2004 which has been approved by the Writ Court does not require interference of this Court. We have carefully examined the award dated 28.02.2004 and approve the view taken by the Writ Court.

27. The judgment in "Maharashtra State Road Transport Corporation and another Vs. Casteribe Rajya Parivahan Karmchari Sanghatana" reported in (2009) 8 SCC 556 is a complete answer to the plea of illegal appointment of the workmen, wherein the Supreme Court has held as under :

35. "Umadevi (3) [ (2006) 4 SCC 1] is an authoritative pronouncement for the proposition that the Supreme Court (Article 32) and the High Courts (Article 226) should not issue directions of absorption, regularisation or permanent continuance of temporary, contractual, casual, daily wage or ad hoc employees unless the recruitment itself was made regularly in terms of the constitutional scheme.

36. Umadevi (3) does not denude the Industrial and Labour Courts of their statutory power under Section 30 read with Section 32 of the MRTU and PULP Act to order permanency of the workers who have been victims of unfair labour practice on the part of the employer under Item 6 of Schedule IV where the posts on which they have been working exist. Umadevi (3) cannot be held to have overridden the powers of the Industrial and Labour Courts in passing appropriate order under Section 30 of the MRTU and PULP 14 Act, once unfair labour practice on the part of the employer under Item 6 of Schedule IV is established."

28. The judgment in Maharashtra State Road Transport Corporation case has been considered and explained in "Hari Nandan Prasad and another Vs. Employer I/R to Management of Food Corporation of India and another" reported in (2014) 7 SCC 190 to emphasis that, "by empowering the adjudicator authorities under the Act to give reliefs such as reinstatement of wrongfully dismissed or discharged workmen, which may not be permissible in common law or justified under the terms of the contract between the employer and such workmen, the legislature has attempted to frustrate the unfair labour practices and secure the policy of collective bargaining as a road to industrial peace".

29. The Tribunal under the Industrial Disputes Act has been given vast powers and it is the beneficial nature of the legislation which permits the Tribunal to fix a condition of service which otherwise may not be in conformity with the statutory rules. In the case of "Bharat Bank Ltd. V. Employees of Bharat Bank Ltd." reported in (1950) LLJ 921(SC), the Hon'ble Supreme Court has observed as under ;

"In settling the disputes between the employers and the workmen, the function of the tribunal is not confined to administration of justice in accordance with law. It can confer rights and privileges on either party which it considers reasonable and proper, though they may not be within the terms of any existing agreement. It has not merely to interpret or give effect to the contractual rights and obligations of the parties. It can create new rights and obligations between them which it considers essential for keeping industrial peace."

30. The industrial disputes are settled by industrial adjudication on principles of fair play and justice. Interference with the findings of the Tribunal is permissible only in cases where the Tribunal has 15 committed error of jurisdiction or serious error in law or where the judgment is found not based on evidence led before the Tribunal. In "Nagendra Nath Bora and Another Vs. Commissioner of Hills Division and Appeals, Assam and Others" reported in AIR 1958 SC 398, it has been held that, "every error either of law or fact cannot be corrected by a superior Court in exercise of its power as a Court of appeal. The adequacy or sufficiency of evidence led on a point is within the exclusive jurisdiction of the Tribunal and the inference to be drawn from the facts pleaded is not a point which can be agitated before a Writ Court".

31. Considering the facts noticed hereinabove, we are of the opinion that impugned order dated 13.06.2008 passed in W.P.(L) No. 5729 of 2005 does not warrant interference in the instant Appeal. The Letters Patent Appeal, thus, stands dismissed.

I.A. No. 3672 of 2009

Mr. Babban Lal, the learned Senior counsel referring to I.A. No. 3672 of 2009 invited a direction of the Court to HEC to grant benefit of two years' service to the workmen who were allegedly forced to superannuate before attaining the extended date of superannuation. In view of the final conclusion arrived at in the Letters Patent Appeal, it needs no reiteration that the workmen who were made to retire prematurely, after the age of superannuation was enhanced, are entitled for the benefits which would naturally come to them, upon enhancement of the age of superannuation for the employees of HEC.

(Virender Singh, C.J.) (Shree Chandrashekhar, J.) Jharkhand High Court, Ranchi Dated: 10th August, 2016 Tanuj/.A.F.R.

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