IN THE HIGH COURT OF KERALA AT ERNAKULAM
WA.No. 963 of 2004()
1. M/S. VAIGAI THREAD PROCESSORS LTD.,
... Petitioner
Vs
1. J.T.M. LABOUR UNION, REPRESENTED BY ITS
... Respondent
2. LABOUR COMMISSIONER, GOVERNMENT OF
3. ADDITIONAL LABOUR COMMISSIONER,
4. MADURA COATS WORKERS UNION,
5. MADURA COATS EMPLOYEES UNION,
6. J & P COATS STAFF ASSOCIATION,
7. STATE OF KERALA, REPRESENTED BY ITS
8. MINISTER FOR LABOUR, GOVERNMENT OF
For Petitioner :SRI.ANIL.D.NAIR
For Respondent :SRI.G.JANARDHANA KURUP (SR.)
The Hon'ble MR. Justice K.BALAKRISHNAN NAIR
The Hon'ble MR. Justice P.N.RAVINDRAN
Dated :16/03/2010
O R D E R
K.BALAKRISHNAN NAIR & P.N.RAVINDRAN, JJ.
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W.A.No.963 of 2004
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Dated 16th March, 2010
JUDGMENT
Balakrishnan Nair, J.
The first respondent in the Writ Petition is the appellant.
The first respondent herein was the writ petitioner. The brief facts of
the case are the following. The first respondent is one of the trade
unions of the workmen working under the factory of the appellant at
Koratty. Respondents 4 to 6 are also registered trade unions of the
workmen of the industrial establishment. The terms of employment of
the workmen are governed by settlements signed between the
management and the workmen from time to time. Ext.P1 was the
settlement concluded on 15.2.1996. The next settlement was Ext.P4
dated 6.4.2002. It was a conciliation settlement. In the conciliation
proceedings, the management and all the trade unions participated.
But, at the time of concluding the settlement, the first respondent
herein declined to sign it on the ground that its representatives do not
have the mandate of its general body. Other unions signed the
settlement. The Conciliation Officer also signed the settlement, taking
the view that its terms are just and fair and the unions who were
parties to the settlement represent the majority of the workers in the
establishment.
W.A.No.963/2004 2
2. Challenging Ext.P4, the first respondent herein filed the
Writ Petition. Various contentions were raised to attack the
settlement. The appellant and some of the trade unions filed separate
counter affidavits supporting the settlement. The learned Single Judge
after hearing both sides declared that Clauses 2 and 9 of Ext.P4
settlement have no existence, as according to the learned Judge, those
clauses were unconscionable and shocking to judicial conscience.
Feeling aggrieved by the said judgment, the management preferred
this Writ Appeal. According to them, a conciliation settlement cannot
be challenged under Article 226 of the Constitution of India. The only
remedy is to raise another dispute concerning its validity. Other
contentions are also raised.
3. We heard the learned counsel on both sides. The
learned counsel for the appellant relied on the decision of the Apex
Court in National Engineering Industries Ltd. v. State of
Rajasthan (2000 (1) LLJ 247) in support of his submission. The
learned counsel for the respondents on the other hand submitted that
the agreement was not in fact signed by the unions. According to him,
no discussion was held regarding the work norms mentioned in Clause
2. Further, there was no annexure to Ext.P4. If Clause 9 is allowed to
stand, an agreement cannot be given retrospective effect and it will
W.A.No.963/2004 3
operate only prospectively. In view of the above position, the learned
Single Judge rightly interfered with those clauses, it is submitted.
4. We considered the submissions made at the Bar and
also perused the materials on records. An agreement between two
parties may be nullified by a Civil Court if its terms are unconscionable
or against public policy in the light of Section 23 of the Contract Act.
But, under writ jurisdiction, the High Court cannot set aside an
agreement or terms thereof on the ground that its terms are
unconscionable or against public policy. Normally, an agreement
between parties binds only them. But, a conciliation settlement
concluded under section 12(3) of the Industrial Disputes Act will have
extended binding effect in view of the provisions of section 18 of the
said Act. Such a provision is enacted to ensure industrial peace and
obedience to a settlement, which is signed in the presence of a
Conciliation Officer with his involvement, on the presumption that its
terms will be just and fair and therefore, it can be made applicable to
all workers in the establishment whether their unions have signed the
settlement or not. So, if a Conciliation Officer signs a settlement
arbitrarily, even though the terms of the settlement concerned are
highly arbitrary or illegal, then his action in this regard may be
challenged before this Court and a declaration can be obtained that the
W.A.No.963/2004 4
action of the said officer is ultra vires. The consequence will be that
the terms of such a settlement will only have the effect of a bipartite
settlement and not of a conciliation settlement and therefore, it only
binds the parties thereof who have actually signed it. So, the
contention of the management that a conciliation settlement cannot be
challenged may be broadly correct. But, that principle does not stand
in the way of the affected person attacking the endorsement made in
that settlement by a Conciliation Officer, who is a statutory authority.
5. In view of the above legal position, the validity of
quashing of two clauses of the settlement have to be examined. The
clauses quashed by the learned Single Judge read as follows:
“2. All individual worker will give production norms
in annexure.
9. When a long term settlement is made it will be
for a period of prospective 3 years.”
The parties are free to arrive at any settlement. Sitting under Article
226 of the Constitution of India, the learned Single Judge could not
have interfered with them and declared that they are unconscionable.
Clause 2 provides that the worker will have to conform to the
production norms in the annexure. According to the learned counsel
for the appellant, there was no annexure to the settlement. But, we
notice that the learned Single Judge did not interfere with the said
W.A.No.963/2004 5
clause for the reason that there was no annexure to the settlement.
But, the learned Judge noticed that there was an annexure and it
provides for wage cut whenever the worker concerned did not attain
the production target. When production norms are agreed to by the
majority of the workmen, the same cannot be described as unjust or
unfair. Therefore, interference of the learned Single Judge with the
said condition is unsupportable. We, in this context, notice the
submission of the learned counsel for the first respondent that all the
unions did not sign the settlement. But, we find that in the Writ
Petition, other unions do not have such a case. They support the
management and oppose the challenge against Ext.P4 made by the
first respondent. Therefore, that contention also could not be
accepted.
6. Clause 9 of Ext.P4 deals with the period of the
settlement. Now, it is a practice in the industrial area to give effect to
a settlement for three years or five years prospectively. But, at the
same time, the settlement will take effect notionally, from the date of
expiry of the last settlement. Clause 9 only states about prospectivity
of a settlement. The same does not stand in the way of giving
retrospectivity to the settlement. On that point, Clause 9 is silent.
Therefore, we find that there is no arbitrariness or irrationality in that
W.A.No.963/2004 6
clause. Further, it being a clause of the present settlement, it can be
modified in the next settlement. Therefore, approval of the Conciliation
Officer for that clause also cannot be contended as ultra vires.
In the result, the judgment under appeal is reversed. The
Writ Petition is dismissed. The Writ Appeal is allowed as above.
K.BALAKRISHNAN NAIR
Judge
P.N.RAVINDRAN
Judge
TKS