Kerala High Court
Travancore Cochin Chemicals Limited vs E V Hariharan (Late) on 3 April, 2025
Author: Amit Rawal
Bench: Amit Rawal
WA Nos.2095/2024 and conctd. Cases 1
2025:KER:32922
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE AMIT RAWAL
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
THURSDAY, THE 3RD DAY OF APRIL 2025 / 13TH CHAITHRA, 1947
WA NO. 2095 OF 2024
AGAINST THE JUDGMENT IN WP(C) NO.32905 OF 2018 OF HIGH
COURT OF KERALA
APPELLANT(S)/PETITIONER:
TRAVANCORE COCHIN CHEMICALS LIMITED
UDYOGAMANDAL - 683 501 REPRESENTED BY ITS MANAGING
DIRECTOR., PIN - 683501
BY ADVS.
M.GOPIKRISHNAN NAMBIAR
JOSON MANAVALAN
K.JOHN MATHAI
KURYAN THOMAS
PAULOSE C. ABRAHAM
E.K.NANDAKUMAR (SR.)(N-23)
RESPONDENT(S)/RESPONDENT:
1 T.S.GEORGE
S/O. SIMON, THOTTIL PALLIKKARA HOUSE, PATHALAM,
UDYOGAMANDAL - 683 501., PIN - 683501
2 THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF
GRATUITY ACT, 1972
DEPUTY LABOUR COMMISSIONER) KAKKANAD-682030., PIN -
682030
WA Nos.2095/2024 and conctd. Cases 2
2025:KER:32922
3 THE APPELLATE AUTHORITY UNDER THE PAYMENT OF
GRATUITY ACT, 1972
(REGIONAL JOINT LABOUR COMMISSIONER), KAKKANAD-
682030., PIN - 682030
4 ADDL. R4 ANTONY EDIN
S/O LATE T S GEORGE, C/O AUGUSTINE T.F, THOTTIYIL
(H), VATTEKUNNAMKARA, EDAPALLY NORTH, KOCHI-682024.
(ADDL.R4 WAS IMPLEADED AS PER ORDER DATED
01/02/2019 IN IA.NO.01/2019), PIN - 682024
OTHER PRESENT:
SRI JAI MOHAN
SRI C S AJITH PRAKASH
THIS WRIT APPEAL HAVING BEEN HEARD ON 03.04.2025, ALONG
WITH WA.2088/2024, 2111/2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
WA Nos.2095/2024 and conctd. Cases 3
2025:KER:32922
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE AMIT RAWAL
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
THURSDAY, THE 3RD DAY OF APRIL 2025 / 13TH CHAITHRA, 1947
WA NO. 2088 OF 2024
AGAINST THE JUDGMENT IN WP(C) NO.32886 OF 2018 OF HIGH
COURT OF KERALA
APPELLANT(S)/PETITIONER:
TRAVANCORE COCHIN CHEMICALS LTD.
UDYOGAMANDAL - 683501, REPRESENTED BY ITS MANAGING
DIRECTOR. NEW ADDRESS TRAVANCORE COCHIN CHEMICALS
LIMITED, UDYOGAMANDAL, REPRESENTED BY ITS MANAGING
DIRECTOR, PIN - 683501
BY ADVS.
M.GOPIKRISHNAN NAMBIAR
JOSON MANAVALAN
K.JOHN MATHAI
KURYAN THOMAS
PAULOSE C. ABRAHAM
E.K.NANDAKUMAR (SR.)(N-23)
RESPONDENT(S)/RESPONDENT:
1 CHANDRAN.V
S/O. VELAYUDHAN, PAITHRUKAM, KAITHARAM P.O., NORTH
PARAVUR - 683519., PIN - 683519
WA Nos.2095/2024 and conctd. Cases 4
2025:KER:32922
2 THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF
GRATUITY ACT, 1972
(DEPUTY LABOUR COMMISSIONER) KAKKANAD- 682030., PIN
- 682030
3 THE APPELLATE AUTHORITY UNDER THE PAYMENT OF
GRATUITY ACT, 1972
(REGIONAL JOINT LABOUR COMMISSIONER) KAKKANAD-
682030., PIN - 682030
BY ADVS.
C.S. AJITH PRAKASH
T.K.DEVARAJAN(K/253/1993)
BABU M.(K/1324/2019)
ANCY THANKACHAN(K/1704/2019)
XAVIER K.K.(K/000036/2024)
KRISHNENDU.D(K/001297/2021)
THIS WRIT APPEAL HAVING BEEN HEARD ON 03.04.2025, ALONG
WITH WA.2095/2024 AND CONNECTED CASES, THE COURT ON THE SAME
DAY DELIVERED THE FOLLOWING:
WA Nos.2095/2024 and conctd. Cases 5
2025:KER:32922
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE AMIT RAWAL
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
THURSDAY, THE 3RD DAY OF APRIL 2025 / 13TH CHAITHRA, 1947
WA NO. 2111 OF 2024
AGAINST THE JUDGMENT IN WP(C) NO.32888 OF 2018 OF HIGH
COURT OF KERALA
APPELLANT(S)/PETITIONER:
TRAVANCORE COCHIN CHEMICALS LIMITED
UDAYOGAMANDAL REPRESENTED BY ITS MANAGING DIRECTOR,
PIN - 683501
BY ADVS.
M.GOPIKRISHNAN NAMBIAR
K.JOHN MATHAI
JOSON MANAVALAN
KURYAN THOMAS
PAULOSE C. ABRAHAM
E.K.NANDAKUMAR (SR.)(N-23)
RESPONDENT(S)/RESPONDENTS:
1 E V HARIHARAN (LATE)
S/O VELAYUDHAN EDAKKATTIL HOUSE, EDAYAR
BINANIPURAM, PIN - 683502
2 THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF
GRATUITY ACT,1972
DEPUTY LABOUR COMMISSIONER CIVIL STATION, KAKKANAD,
ERNAKULAM, PIN - 682030
WA Nos.2095/2024 and conctd. Cases 6
2025:KER:32922
3 THE APPELLATE AUTHORITY UNDER THE PAYMENT OF
GRATUITY ACT,1972
REGIONAL JOINT LABOUR COMMISSIONER CIVIL STATION,
KAKKANAD, KERALA, PIN - 682030
4 VIMALA HARIHARAN
W/O LATE EV HARIHARAN EDAKKATTIL HOUSE, PALAKKAL,
EDAYAR BINANIPURAM PO, ALUVA, PIN - 683110
5 HAJITHE.H
S/O LATE EV HARIHARAN EDAKKATTIL HOUSE, PALAKKAL,
EDAYAR BINANIPURAM PO, ALUVA, PIN - 683110
6 ADDL.R6 HAJESH E.H,
S/O LATE E V HARIHARAN, EDAKKATTIL (H), PALAKKAL,
EDAYAR, BINANIPURAM PO, ALUVA-683110. (ADDL.R4 TO
R6 ARE IMPLEADED AS PER ORDER DATED 01/02/2019 IN
IA.NO.01/2019), PIN - 683110
BY ADVS.
C.S. AJITH PRAKASH
T.K.DEVARAJAN(K/253/1993)
ANCY THANKACHAN(K/1704/2019)
BABU M.(K/1324/2019)
XAVIER K.K.(K/000036/2024)
KRISHNENDU.D(K/001297/2021)
THIS WRIT APPEAL HAVING BEEN HEARD ON 03.04.2025, ALONG
WITH WA.2095/2024 AND CONNECTED CASES, THE COURT ON THE SAME
DAY DELIVERED THE FOLLOWING:
WA Nos.2095/2024 and conctd. Cases 7
2025:KER:32922
JUDGMENT
[WA Nos.2095/2024, 2088/2024, 2111/2024] Amit Rawal, J.
This order shall dispose of three (3) Writ Appeals bearing Nos. 2088, 2095 and 2111 of 2024 arising out of the common judgment of the Single Bench in various writ petitions (WP(C) No.32886/2018, 32905/2018 and 32888/2018, wherein the appellant-petitioner was not successful in laying challenge to the order of the Controlling Authority dated 29.5.2015 whereby the claim for gratuity of the respondents-claimants from 1979 submitted before the Controlling Authority on retirement has been accepted and the appeal preferred against the same, vide order dated 17.7.2018, was also dismissed.
2. The controversy involved in these cases is common; therefore are being decided together by a common judgment. Respondents-claimants alleged to be the employees of the appellant from 1979. On retirement in the year 2010 filed a claim petition before the controlling authority claiming the gratuity from 1979 though the gratuity from period 1989 had already been paid by the appellant. The payment of the gratuity for the period in controversy was denied by the appellant on the ground that there WA Nos.2095/2024 and conctd. Cases 8 2025:KER:32922 was a settlement between the Unions of which the respondents- claimants are the members whereby not only their services were regularized but it was clarified that the gratuity will be payable with effect from 24.10.1989. No dispute in respect of the settlement dated 10.5.1991 was ever raised. In other words, the respondents-claimants were absorbed on company rolls from 1.4.1991. The period of regularization was never assailed at any point of time during the period of service till the age of superannuation. On superannuation appellant besides other retirement benefits also released the gratuity by taking their services from the year 1989 on the rolls of the appellant. However, the claim set up before the Controlling authority was that as per the seniority list produced on record, concededly the respondents-claimants have been shown on the rolls of the appellant since 1979 ie., date of joining.
3. The plea of the appellant with regard to the implementation and compliance of the terms and conditions of the settlement was neither accepted by the controlling authority or in the appeal before the appellate authority.
4. When the matter was taken up before the Single Bench, the learned Single Bench though in paragraph 15 did not dispute the WA Nos.2095/2024 and conctd. Cases 9 2025:KER:32922 reference to the sanctity of the settlement Ext.P2 but pointed out that the settlement cannot over ride the provisions of the statute ie., provisions of Section 14 of the Payment of Gratuity Act providing an overriding effect regarding the instrument or contract to the contrary. It is in that background, the intra court appeal has been preferred on behalf of the appellant.
5. Sri. E.K Nandakumar, learned Senior counsel assisted by Sri.jaimohan in support of the memorandum of appeal has raised multifarious arguments which are enumerated in the following manner:
a. The terms and conditions of the settlement Ext.P2, particularly clause 5 and the last paragraph of it reflect that the (53) canteen workers shown in Annexure A have been taken on the company rolls of the canteen subject to the medical finesses with a condition that their work will be on temporary basis for the period of one year from the date of the option ie., from 1.4.1991 with a clarification that their services in the canteen as specified in Annexure C will be reckoned.
b. Annexure C attached to the aforementioned Exhibit provides the name of the employee, date of birth, WA Nos.2095/2024 and conctd. Cases 10 2025:KER:32922 qualification, date of joining etc. Name of the respondents-
claimants are also figuring there. An employee or a person bound by the settlement cannot be permitted to adopt dichotomous approach by approbating and reprobating much less fragmenting the settlement to the suitability. In other words, there was no assailment or challenge with regard to the regularization on the employment of the management with effect from 1989 but as regards the gratuity, the question was raked up only on retirement. In other words, the claimants are estopped to challenge the claim viz-a-viz the gratuity from the date of the retirement. In support of the contentions, relied upon the judgment of the Full bench of this Court in R. Parasurama Iyer and ors. v. State Bank of Travancore (2016(3) LLN 164) and reference has been made to paragraphs 62, 66 to 69. Though the claim in the aforementioned cases was extension of benefit of gratuity from different dates as compared to the revision of the pay scale. It was next contended that the execution of the settlement between the employees and on behalf of the Union is recognized in law. In support of the contentions relied upon the judgment of the Single Bench of this Court dated 5.7.2023 in WP(C) No.27399 of 2011 and National WA Nos.2095/2024 and conctd. Cases 11 2025:KER:32922 Engineering Industries Ltd. v. State of Rajasthan & Ors (2000) 1 SCC 371.
c. Section 14 Payment of Gratuity Act would not have an over riding effect in view of the provisions of sub Section 5 of Section 4 of the Payment of Gratuity Act and as well as the judgment of the Supreme Court in Balwant Rail Saluja & Anr. v. Air India Ltd. & Ors. (JT 2014 (9) SC 562). As per the provisions of Section 46 of the Factories Act, if there are more than 250 workers, the management is required to provide the facility of the canteens. Availment of the facility of the canteen though of course would be covered under the factories Act but such employees for the purpose of claiming the other benefits would be governed by different statutes and not as per the provisions of 46 of the Factories Act, 1948. Meaning thereby, even for the gratuity also, the provisions of the Gratuity Act will apply. Prior to the regularization of the services the employees were working under the contractors and had agreed for regularization by coming on the rolls of the management since 1989.
6. On the other hand, Mr.Ajith Prakash, learned counsel appearing on behalf of the respondents-claimants supported WA Nos.2095/2024 and conctd. Cases 12 2025:KER:32922 the findings of the authority ie., the controlling authority, appellate authority as well as the Single Bench and buttressed his arguments that the gratuity has to be payable as per the provisions of the Gratuity Act by relying upon Section 14 of the Gratuity Act which contains a non-obstante clause and cannot prevent the employee to claim the gratuity available under the Act dehore of any contract or agreement ie., the settlement in the instant case. In support of the contentions, also relied upon the judgment of the Supreme Court in Bakshish Singh v. M/s Darshan Engineering Works and Others (1994 KHC 716) to contend that the requirement of minimum service condition of the employees providing a gratuity of the employees on retirement or resignation after continuous service of 5 years cannot be violative of Article 19(1)(g) of the Constitution of India. In other words, as regards the employee with 5 years of continuous service, the employer would be liable to pay the gratuity. The documentary evidence placed on record which has been seen by this Court by summoning the record reveals that Ext.P1, the seniority list of the workers dated 8.6.1989, showing the name of the applicants to be on the rolls of the department. In other words, their employment has been reflected from WA Nos.2095/2024 and conctd. Cases 13 2025:KER:32922 1979. If at all there was an employment through a contractor, there would not have been any seniority list in the department. Therefore by the terms of the settlement dated 10.5.1991, the employee cannot be treated to have joined on 24.10.1989, i.e.the cut off date fixed by the management. It was next contended that the learned Single Judge while exercising the power of judicial review had examined the document and as well as the orders under challenge much less the judgments in extenso, formed an opinion that the settlement deed cannot be considered to be a magna carta for reckoning the length of service of the respondents in the petitioner-appellant's company. The judgments cited before this Court were also cited before the Single Bench and after having pondered, found to be not applicable to the facts and circumstances of the case.
7. In rebuttal, Ld senior counsel for the appellant submitted that the learned Single Bench has relied upon the judgment of the Madras High Court in Indian Overseas Bank v. Regional Labour Commissioner (C) & Appellate Authority, Payment of Gratuity Act (2009 SCC Online Mad 3205) , which has been over ruled by the Supreme Court in Indian Overseas Bank v. Regional Labour Commissioner (C) & WA Nos.2095/2024 and conctd. Cases 14 2025:KER:32922 Appellate Authority, Payment of Gratuity Act (2019 (14) SCC 737).
8. We have heard the learned counsel for the parties and appraised the paper book. The pith and substance of the judgment cited on behalf of the appellant leaves no manner of doubt that fixing of a cut of date has been a well accepted principle. It cannot be termed to be unilateral or a forceful imposition on the employee to agree to certain terms and conditions. Had it been so, the affected employees would not have accepted the regularization from the date reckoned in the aforementioned settlement ie., 1989 instead of 1979. The seniority list in these circumstances would pale into insignificance. We would be failing in duty in not extracting the relevant portion of the judgment of the Supreme Court in Indian Overseas Bank (supra).
10. The judgment of this court in the case of Central Bank (supra) has also referred to the judgment of the Kerala High Court with approval in paragraph 5 of the judgment. Although learned counsel for the appellant is correct in his submission that no further consideration has been made in the said judgment, the judgment of this Court in the case of Central Bank (supra) has clearly upheld fixation of cut-off date for different purposes, which is clear from paragraph 8 of the judgment. Paragraph Nos. 5 and 8 of the judgment in Central Bank of India (supra) are as follows:-
"5. We find that during the pendency of the matters before this Court, a Full Bench of the High Court of Kerala, having WA Nos.2095/2024 and conctd. Cases 15 2025:KER:32922 regard to the divergent views taken by Division Benches of the said Court, has considered this issue, leading to the judgment dated 3-3-2016 in R. Parasurama Iyer v. State Bank of Travancore, (2016) 2 KLJ 105 and it has been held that fixation of cut-off date for extending the benefit of gratuity from a different date as compared to revision of pay- scale can neither be said to be arbitrary, discriminatory or violative of Articles 14 and 16 of the Constitution of India. The Full Bench has also placed reliance on the decisions of this Court in State Govt. Pensioners' Assn. v. State of A.P., (1986) 3 SCC 501, State of A.P. v. A.P. Pensioners' Assn., (2005) 13 SCC 161 and State of Bihar v. Bihar Pensioners Samaj, (2006) 5 SCC 65.
8. Fixing of the cut-off date has been a well-accepted principle and we do not find that the same needs to be supported by any judgment since it has been the consistent view taken by this Court. In State of Punjab v. Amar Nath Goyal, (2005) 6 SCC 754, which was subsequently followed in State of A.P. v. N. Subbarayudu, (2008) 14 SCC 702, this Court has referred to all the judgments in that regard. In the peculiar facts of this case, having regard to the background of the regularisation making process, we are of the view that the cut-off date fixed by the appellants in the regularisation was not arbitrary, unjust or unfair."
11. One more judgment of this court, which is relevant for the issue, which has arisen in the present appeal is judgment of this Court in State of Bihar and Others Vs. Bihar Pensioners Samaj, (2006) 5 SCC 65. The State of Bihar has taken a Resolution on 19.04.1990 for revising certain benefits of its employees, including the revision regulating family pension, death-cum-retirement gratuity. Paragraph No.2 of the judgment refers to the Resolution of the Government, which is to the following effect:-
"2. A notification, Resolution No. PCI-Id/S7- 1853- F dated 19-4-1990, was issued by the State Government relating to the provisions regulating pension and death-cum-retirement gratuity pursuant to the recommendations of a special committee known as "Fitment-cum-Pay Revision Committee". The notification declared that after considering the recommendations of the aforesaid Committee the State Government, after due deliberations, had decided to revise the WA Nos.2095/2024 and conctd. Cases 16 2025:KER:32922 provisions regulating pension, family pension and death-cum-retirement gratuity of the State Government employees "to the effect and extent indicated in the subsequent paragraphs". That certain benefits were made available under the said notification is common ground. However, the effective date of the notification was fixed as 1-1- 1986, although the notification declared that, the financial benefits of revision of pension would be admissible only with effect from 1-3-1989 and no arrears would be paid for the period 1-1-1986 to 28-2-1989. Para 1 of the said notification is relevant and reads as under:
"1. (i) Date of effect.--The revised provisions as per these orders shall apply to government servants, who retire/die in harness on or after 1- 1-1986. The revision of pension with effect from 1-1-1986 shall be merely notional as the financial benefit of revision of pension will be admissible only with effect from 1-3-1989, to it, no arrears accruing from revision of pension during the period from 1-1-1986 to 28-2-1989 shall be paid to the pensioners.
(ii) Where pension has been provisionally sanctioned in cases occurring on or after 1-1-
1986, the same shall be revised in terms of these orders. In cases where pension has been finally sanctioned under the pre-revised orders, the same shall be revised in terms of these orders, provided such revision is to the advantage of the pensioner (sic)."
12. The Association of Employees filed a Writ Petition in the Patna High Court, which writ petition was allowed on 21.08.1996. Notifications in questions were quashed and Government was directed to reconsider the matter in accordance with law. The judgment was although challenged in this Court but the special leave petition was summarily dismissed by this Court on 20.01.1997. The Governor of Bihar issued an Ordinance namely "the Bihar State Government Employees Revision of Pension, Family Pension and Death-cum-Retirement Gratuity (Validation and Enforcement) Ordinance, 2000", which was subsequently replaced by the Bihar Act 3 of WA Nos.2095/2024 and conctd. Cases 17 2025:KER:32922 2001. The Act validated the revision of pension and gratuity in accordance with earlier two resolutions dated 19.04.1990. A writ petition was filed in the High Court challenging the Ordinance, which was struck down by the High Court.
13. The challenge to the Ordinance and the Act on the ground of violation of Article 14, i.e. cut-off date for payment of the pensionary benefits w.e.f. 01.03.1989 was repelled by this Court. In Paragraph No. 17, this Court held:-
17. ...............The only ground on which Article 14 has been put forward by the learned counsel for the respondent is that the fixation of the cut-off date for payment of the revised benefits under the two notifications concerned was arbitrary and it resulted in denying arrears of payments to certain sections of the employees. This argument is no longer res integra. It has been held in a catena of judgments that fixing of a cut-off date for granting of benefits is well within the powers of the Government as long as the reasons therefor are not arbitrary and are based on some rational consideration."
Thus, this Court held that the fixation of date for payment of financial benefits, w.e.f. 01.03.1989, does not suffer from any infirmity, even though the effective date of the notification was fixed as 01.01.1986. The above ratio fully supports the view, which we have taken above.
14. In view of the aforesaid, we are of the view that the Division Bench judgment of the High Court is unsustainable. In the facts of the present case, looking to the quantum of amount which is only Rs.85,400/- which was directed to be paid to the respondent No.3 more than a decade ago, the appellant-Bank shall not take any step for recovery of the said amount, in case the amount has already been paid to respondent No.3. Subject to the above, the appeal is allowed. No costs.
9. Section 14 of the Payment of Gratuity Act and sub Section 5 of Section 4 of the Act read thus:
Section 14. The provisions of this Act or any rule made there under shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or WA Nos.2095/2024 and conctd. Cases 18 2025:KER:32922 contract having effect by virtue of any enactment other than this Act.
Section 4(5). Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.
10. On conjoint reading of the aforementioned provisions of the Act, it is evident that Section 14 has an over riding effect on the applicability of the other laws meaning thereby, the contention which has weighed in the mind of the Single Bench that the settlement cannot take away the statutory right of an employee by taking the benefit of the provisions of the Gratuity Act, justified the order of the authority. Though the contents of the settlement paragraphs 5 and 6 have been extracted in the judgment but have not taken into consideration the dictum laid down in National Engineering Industries Ltd. (supra) . In paragraph 24 it was held as under:
It will be thus seen that High Court has jurisdiction to entertain a writ petition when mere is allegation that there is no industrial dispute and none apprehended which could be 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 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 appropriate government lacks power make any reference. A settlement of dispute between the parties WA Nos.2095/2024 and conctd. Cases 19 2025:KER:32922 themselves is to be preferred, where it could be arrived at, to industrial adjudication, as the settlement is likely to lead to more lasting peace then 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 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 scrutinized. 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 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 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 recognized 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. Recognized union having majority of members is expected to protect the legitimate interest of labour and enter into a settlement in the best interest of 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 minority union from scuttling the settlement.
When a settlement is arrived at during the conciliation proceedings 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 Act is based on the principle WA Nos.2095/2024 and conctd. Cases 20 2025:KER:32922 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. Virudhanchalam & Ors. v. Management of Lotus Mills & Anr., [1998] 1 SCC650. In all these negotiations based on collective bargaining individual workman necessarily records to the background Settlements will encompass all the disputes existing at the time of the settlement except those specifically left out.
11. On perusal of the aforementioned findings, it is evident that the settlement which has been impugned before the controlling authority by dividing the date of induction on the rolls of the department instead of 1989 to be as 1979. By taking the aid of the provisions of Section 18 of the Industrial Disputes Act, the conciliation officer has two remedies (i) those arrived at outside the conciliation proceedings (ii) those arrived at in the course of conciliation proceedings. A settlement which belongs to the first category has a limited application whereas in the second category, it binds the parties. Concededly, in the instant case, the settlement Ext.P2 was entered before the conciliation officer. Therefore, it has an extended application and binding on all the parties to the Industrial disputes and also others, who were summoned to appear in the conciliation proceedings much less the persons employed in the establishment or part of the establishment as the case may be. It would not lie in the mouth of the respondent without being the signatory to the settlement, WA Nos.2095/2024 and conctd. Cases 21 2025:KER:32922 to deny binding effect. In fact the second condition of Section 18 is more elaborative and has a binding nature, for, it is clear that any settlement arrived at in the course of conciliation proceedings with a recognized majority union, will be binding on 'all workmen' of the establishment, even those belonged to the minority union, even if objected.
12. The full bench of this Court in Parasurama Iyer (supra) was confronted with a ratio of entitlement of the gratuity on the basis of the pay revision. In paragraph 7 and 8, it was noticed as under:
7. Learned counsel for the petitioners in support of the Writ Petitions contended that benefit of Revision of Pay scale having been granted with effect from 1.7.1993 and the petitioners having received arrears on the Revised Pay Scale, the said Pay Scale ought to have been taken into consideration for computation of Gratuity. Since the emoluments which is the basis for computing Gratuity stood revised, the non-payment of Gratuity on the basis of Revised Pay Scale is arbitrary and discriminatory, there is no rationale for extending the benefit of revised Gratuity only with effect from 1.11.1994 and when the Pay Scale has been revised with effect from 1.7.1993, all benefits should have been extended from the aforesaid day. It is submitted that computation of Gratuity is based on statutory regulations, namely, the 1979 Regulations which Regulations provided for computation of Gratuity, hence by a Non-Statutory order/instrument, the statutory provisions of Regulations for computation of Gratuity cannot be modified. Pay Revision which was effected on the basis of an Agreement can in no manner affect any statutory Regulation. It is submitted that no material has been placed before the Court to the effect that the State Bank of Travancore has amended the Statutory Regulations in accordance WA Nos.2095/2024 and conctd. Cases 22 2025:KER:32922 with the Agreement arrived at, whereas the Agreement contemplated amendment in the Statutory Regulations of different Banks. It is submitted that non-payment of Gratuity to those who retired between 1.7.1993 and 31.10.1994 and payment of revised Gratuity to those, who retired after 1.11.1994 is without any rationale, it is discriminatory, arbitrary and violative of Article 14 of the Constitution of India.
Learned Counsel for the Petitioners in support of the arguments placed reliance on the Judgments of the Apex Court in D.S. Nakara v. Union of India, 1983 (1) LLN 289 (SC): 1983 (1) SCC 305; Chairman, Railway Board and others v. C.R. Rangadhamaiah, 1997 (4) LLN 7 (SC): 1997 (6) SCC 623; Syndicate Bank v. Celine Thomas, 2005 KHC 1841; and LIC of India v. Retired LIC Officers' Association, 2008 (3) SCC 321.
8. Learned Counsel appearing for the State Bank of Travancore refuting the submissions of the learned Counsel for the Petitioners contended that entitlement of Gratuity of the Petitioners is crystallized on the date of retirement and as per a Statutory Regulation, their Gratuity was computed and paid. Subsequent revision of Pay Scale which was enforced with effect from 1.7.1993 can have no effect on payment of Gratuity to the Petitioners since the Agreement itself fixed a date for extending the benefit of revised Gratuity, i.e., with effect from 1.11.1994. When the benefits of Revision of Pay Scale, Gratuity and other allowance have been given under a negotiated Settlement, it is not open for the Petitioners to claim benefit of part of the Agreement and negate another part of the Agreement. The entire Settlement has to be accepted in toto. It is submitted that benefit of the 1979 Regulations for computation of Gratuity has already been pressed into service while computing Gratuity of Petitioners and making payment of Gratuity to the Petitioners on the basis of the existing Pay Scale. There is no further right in the Petitioners to claim re-determination of the Gratuity, even if there is any subsequent enhancement in the Pay Scale. Learned Counsel for the State Bank of Travancore further contended that there was amendment also made in the 1979 Regulations incorporating the terms of Settlement. However, even if it is assumed that no amendments were carried out within the time, that shall not make any difference WA Nos.2095/2024 and conctd. Cases 23 2025:KER:32922 regarding the claim of Petitioners for revised Gratuity. Learned Counsel for the State Bank of Travancore relied on the Judgment of the Apex Court in State Government Pensioners' Association and others v. State of Andhra Pradesh, 1986 (2) LLN 1059 (SC) :
1986 (3) SCC 501; State of Punjab v. Amar Nath Goyal, 2005 (4) LLN 20 (SC): 2005 (6) SCC 754; State of A.P. v. A.P. Pensioners' Association, 2005 (13) SCC 161; and Sudhir Kumar Consul v. Allahabad Bank, 2011 (2) LLN 321 (SC): 2011 (3) SCC 486, and the Division Bench Judgment of this Court in State Bank of Travancore and others v. P. Gopinathan Nair and others, W.A. No.2185 of 2009 decided on 10th June 2011.
13. While dealing with the aforementioned contentions, in paragraphs 66 to 69, it was held as under:
66. There is one more reason due to which the challenge by the Petitioners cannot be accepted.
From the facts brought on record it is clear that benefits of Pay Revision and extension of other benefits were extended on the basis of the Joint Note and Settlement dated 23.6.1995 after series of discussion with IBAs and Officers of the Public Sector Banks and all having agreed for the said benefits and the manner of extension of such benefits, recommendation was made which was accepted by the Management and orders were issued thereunder. Although the Joint Note and Settlement dated 23.6.1995 cannot be said to be a "Settlement" within the meaning of the Industrial Disputes Act, 1947, the principles laid down with regard to the ground for challenge of a "Settlement" can also be applied to the Settlement entered between the IBA and Officers of the Public Sector Banks. The Apex Court in Herbertsons Limited v. The Workmen of Herbertsons Limited and others, 1976 (4) SCC 736, had occasion to consider the nature of Settlement entered into between the Workmen and Management under the Industrial Disputes WA Nos.2095/2024 and conctd. Cases 24 2025:KER:32922 Act, 1947. The Apex Court held that Settlement has to be taken as a package deal and when labour has gained in the matter of wages and if there is some reduction in the matter of Dearness Allowance so far as the Award is concerned, it cannot be said that the Settlement as a whole is unfair and unjust. The following observations were made in Paragraph 21:
"21. When, therefore, a negotiations take place which have to be encouraged, particularly between labour and Employer in the interest of general peace and well being there is always give and take. Having regard to the nature of dispute, which was raised as back as 1968, the very fact of the existence of a dispute, litigation with regard to the same matter which was bound to take some time must have influenced both the parties to come to some Settlement. The Settlement has to be taken as a package deal and when labour has gained in the matter of wages and if there is some reduction in the matter of dearness allowance so far as the award is concerned, it cannot be said that the Settlement as a whole is unfair and unjust."
67. Further the Apex Court held that the Settlement cannot be Judged on the touchstone of the principles which are laid down by the Supreme Court for adjudication. The following was stated in Paragraph 24:
"24 The Settlement, therefore, cannot be judged on the touchstone of the principles, which are laid down by this Court for adjudication."
68. Lastly, the Apex Court held that the Settlement cannot be in bits and pieces and the Settlement has to be accepted or rejected as a whole. The following was observed in Paragraph 27:
WA Nos.2095/2024 and conctd. Cases 25
2025:KER:32922 "27. It is not possible to scan the Settlement in bits and pieces and hold some parts good and acceptable and others bad. Unless it can be demonstrated that the objectionable portion is such that it completely outweighs all the other advantages gained the Court will be slow to hold a Settlement as unfair and unjust. The Settlement has to be accepted or rejected as a whole and we are unable to reject it as a whole as unfair or unjust......
69. The Apex Court in Reserve Bank of India v. C.N. Sahasranaman, 1986 (2) LLN 778 (SC): 1986 (supp) SCC 143, has held that Settlement of disputes by direct negotiations or Settlement through collective bargaining is always to be preferred. The following was laid down in Paragraph 60:
"60. It is well to bear in mind the fact that Settlement of disputes by direct negotiations or Settlement through collective bargaining is always to be preferred for it is best suited for industrial peace which is the aim of legislation for Settlement of Labour disputes. See the observations in New Standard Engineering Co. Ltd. v. N.L. Abhyankar, AIR 1978 SC 982 at P. 984: 1978 (2) SCR 798. This view has again been reiterated by this Court in Tata Engineering and Locomotive v. Their Workmen, AIR 1981 SC 2163: 1982 (1) SCR 929. The Order of this Court dated 2nd May 1984 and the referendum and the result thereof have been set out hereinbefore."
70. The Division Bench Judgment of this Court in State Bank of Travancore and Others v. P. Gopinathan Nair and others, W.A. No.2185 of 2009 decided on 10th June 2011 had also taken the view that invocation of Article 14, in the context of WA Nos.2095/2024 and conctd. Cases 26 2025:KER:32922 negotiated Settlement was uncalled for and on the aforesaid ground it did not agree with the earlier Division Bench Judgment in Syndicate Bank v. Celine Thomas, 2005 KHC 1841.
71. In view of the foregoing discussion, we are of the opinion that extending the benefit of Gratuity only with effect from 1.11.1994 to the Officers of the Banks can neither be said to be arbitrary, discriminatory nor violative of Articles 14 & 16 of the Constitution of India.
72. We thus hold that the Division Bench Judgment in Syndicate Bank v. Celine Thomas, 2005 KHC 1841, does not lay down the correct law and the Judgment of the Division Bench in State Bank of Travancore and others v. P. Gopinathan Nair and others, W.A. No.2185 of 2009 decided on 10th June, 2011, lays down the correct law and is approved.
14. Thus for all intents and purposes, it is clear that the fixation of cut off date for extending the benefit of gratuity from a different date as compared to the revision of pay scale was not held to be arbitrary, discriminatory or violative of Article 14 and 16 of the constitution of India. All these factors, if looked into cumulative, leaves manner of doubt that once the settlement entered into between the management and the major union during conciliation proceedings, as per the provisions of Section 18 of the Industrial Disputes Act, would be binding on all WA Nos.2095/2024 and conctd. Cases 27 2025:KER:32922 workmen. The workmen like the claimants-respondents in the instant case cannot be permitted to adopt a dichotomous approach by accepting the regularization from 1989 and volte face/estopped for the purpose of gratuity by taking a different reckoning date as 1979. For the reason aforementioned, we allow the writ appeal by setting aside the judgment under challenge as well as the order of the controlling authority and the appellate authority (Exts.P5 and P7).
sd/-
AMIT RAWAL JUDGE sd/-
sab K. V. JAYAKUMAR
JUDGE