JUDGMENT
1. This is a writ petition under Articles 226 and 227 of the Constitution of India preferred by Mafatlal Engineering Industries Limited (hereinafter referred to as “the Company”). The Petition is directed against an order dated February 3, 1989 passed by the Member, Industrial Court, Thane in Complaint (ULP) No. 168 of 1986. The 1st Respondent Trade Union to this writ petition was the Original Complainant before the Trial Court and the 2nd Respondent to this Writ Petition was Respondent No. 5 to the proceeding before the Lower Court. Respondent No. 4 Mumbai Mazdoor Union was the recognised union within the framework of Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as “the M.R.T.U. and P.U.L.P. Act”) and has, therefore, been cited as a party-Respondent to this proceeding. The 4th Respondent has neither appeared before the Trial Court nor before this Court, nor are there any pleadings on it behalf. The contest is essentially between the 1st Respondent, which claims to have been the original representative of the employees in this particular industry and which, admittedly, is a registered trade union on the one hand, and the management of the Company supported by the 2nd Respondent, which claims to be the majority union, on the other. This litigation has had a rather long and cheques history.
2. It is the grievance of the 1st Respondent that a notice of change dated May 9, 1986 was published by the Company pursuant to which certain negotiations had taken place. Thereafter the matter was referred to conciliation and an agreement came to the signed before the Conciliation Officer, who is, in this case, is the Commissioner of Labour, Bombay, on May 30, 1986. The 1st Respondent contends that they came to know of the proposed notice of change whereby the Company desired to treat the May 1, 1986 as the cut-off date and to effectively retire with effect from that date, all those employees belonging to the categories of workmen and clerical employees who had completed 25 and 30 years respectively of service with the Company. The proposed step had farreaching consequences in so far as close to 1000 of the employees of the Company spread over both the categories would be treated effectively as having reached the age of superannuation by virtue of this change and would, consequently, have been retired, if the proposed action were to be sanctioned. The 1st Respondent contends that it had objected in writing through a letter dated May 27, 1986 and furthermore that one of their active members, Mr. D. R. Matondkar, independently through a letter dated May 29, 1986 addressed to the Conciliation Officer, recorded the fact that the proposed step should not be permitted. It is their case that they were not even aware of the venue of the conciliation proceeding and that they were not even aware of the fact that the Company signed a settlement before the Cancellation Officer on May 30, 1986. The 1st Respondent contends that they apprehended, for a variety of reasons, that such a settlement was imminent and that they would be presented with a fait accompli to the effect that the settlement would be made binding on them under the provisions of the Industrial Disputes Act, 1947, and that, therefore, they were entitled to challenge this course of action. The 1st Respondent was genuinely of the view that in the light of the existing Standing Orders, any such variation with regard to the age of superannuation would constitute an unfair labour practice to the extent that the Company was acting in breach of the Standing Orders which, according to them, constituted a valid and subsisting agreement. The 1st Respondent was also of the view that the Company had acted unfairly in so far as it had virtually discriminated between its employees to the extent that it was dealing with one union, namely, the 2nd Respondent, and, in so doing, that it was favouring that union which in turn could be categorised as an unfair labour practice, On this plea, the 1st Respondent moved the Labour Court at Thane, which is the designated authority under the M.R.T.U. and P.U.L.P. Act, and obtained an ad-interim injunction from that Court restraining the Company from taking further steps pursuant to the notice of change. The Court, in the first instance, granted ad-interim relief, but subsequently vacated the ad-interim orders when the Company appeared before the Court and pointed out that a settlement had already been signed on May 30, 1986, that is to say, one day prior to the institution of the proceedings, and that consequently it was under a mistaken notion that the Court had been requested to pass the ad-interim orders. On the ad-interim orders being vacated, the 1st Respondent moved this Court by way of a Writ Petition challenging the vacation of the ad-interim orders. That writ petition came to be rejected, after which the 1st Respondent filed a Special Leave Petition before the Supreme Court of India against the order of the Bombay High Court. The Company, in the meanwhile, had made a statement before the High Court that the members of the 1st Respondent were free to accept the financial benefits offered to them under the terms of the settlement without prejudice to their contentions. It was also clarified that they may do this without having to vacate the residential accommodation that they were occupying by virtue of their status as employees of the Company. The High Court also expedited the hearing of the proceeding before the Trial Court.
3. The 1st Respondent therefore moved the Supreme Court against the order of the Bombay High Court by way of a Special Leave Petition. The Supreme Court declined to entertain the Special Leaves Petition, pursuant to which the 1st Respondent applied to the Industrial Court for carrying out drastic amendments to their original complaint. It is necessary to record that the Company opposed this application very seriously on a number of grounds, and after hearing the parties, the Industrial Court permitted some of the amendments and disallowed a few of the others. The original complaint was accordingly amended, but the Company, being dissatisfied with this order, once again moved the High Court through another writ petition, being Writ Petition No. 4823 of 1986. A Division Bench of this Court, after hearing the parties, passed the following order :-
“Rejected.
It will be open for the petitioners to agitate the same points against the final order of the Industrial Court if the same is adverse to them. The Respondent No. 2 also joined Respondent No. 1 as a party to the complaints before the Industrial Court.”
The Original complainant was Respondent No. 2 before the High Court and as per the aforesaid directions, they took necessary steps to implead the Kamgar Utkarsha Sabha as a Respondent to the proceedings before the Industrial Court at Thane.
4. The hearing before the Industrial Court at Thane was a very protracted and hotly contested proceeding, in the course of which oral evidence of several witnesses came to be recorded and a number of documents were also produced by the respective parties. One fact stands out very clearly as far as this stage of the proceedings is concerned, namely, that the party who had acted as a sole representative of the employees of the Company at the time of the settlement, that is to say the 2nd Respondent, though made a party to those proceedings, virtually took no part in them. It is true that the record indicates that they filed a cryptic written statement containing some denials and that a few passing submissions were advanced on their behalf towards the conclusions of the proceedings, but for all intents and purposes the two contending parties were the 1st respondent to this writ petition and the Company. I shall presently deal with this aspect of the matter, because it is of considerable significance in the very unusual and exceptional facts of the present case. Moreover, this attitude of the 2nd Respondent union was not accidental but was deliberate and was in order to cover up a plethora of misdeeds which would otherwise have been exposed resulting thereby in hundreds of hours of the Court time being utilized, which could otherwise have been saved had the approach been more honest and straightforward.
5. The original complaint, which alleged the commission of an offence under the M.R.T.U. and P.U.L.P. Act got considerably expanded because a number of propositions touching various facets of the Industrial Law dealing with the Standing Order Act, the Industrial Disputes Act and a wide gamut of principles culled out from cases decided by different Court under various statutes touching labour laws came to be canvassed. Pursuant to this, the two contesting parties also assisted the Court by filing a detailed written submissions, and the Industrial Court in a very lengthy order running into as many as 168 pages was required to deal with the various heads that were argued in that proceeding. In substance, the Industrial Court held that it had jurisdiction to entertain the complaint in the manner in which it was presented, though there was a very strong and serious challenge to the very maintainability of the proceedings on certain points of law. The Industrial Court also came to the conclusion that the circumstances under which the settlement dated May 30, 1986 took place were shrouded in mystery and so holding, the Industrial Court virtually brushed aside the agreement or the settlement and upheld the contention of the Complainant that the action taken by the Company constituted unfair labour practices. As a necessary consequence of these conclusions the Industrial Court held that the retirement of the employees who numbered 889, to be exact, would have to be struck down and that they would have to be re-instated in service with full back wages. The Industrial Court also made certain consequential orders to the effect that the amounts of money that had been paid to those particular employees would have to be adjusted in a certain manner. It is this order dated February 3, 1989 that is the subject-matter of challenge in the present proceedings.
6. Another head of both significance and importance required to be dealt with at this stage is that the Company filed the present writ petition before the High Court challenging virtually every aspect of the order dated February 3, 1989, and consequently, contended that it was entitled to a blanket stay of the operation of that order. The 1st Respondent very strongly resisted any interim relief being granted in this writ petition, as a result of which I am informed at the Bar that the parties were heard by my brother Kurdukar, J. at considerable length, which is evident from the fact that the learned single Judge had passed a detailed speaking order at the stage of admission. While taking the view that the order of the Industrial Court certainly required re-examination, the Court also passed certain detailed directions while refusing to grant stay of re-instatement of the employees in question. Since this order is of some importance, I am reproducing the whole of that order in this Judgment for the additional reason that the present Petitioner had occasion to challenge that order before the Supreme Court by way of Civil Miscellaneous Petition No. 17129 of 1989.
“Oral Order :-
1. This Writ Petition under Article 227 of the Constitution of India is directed against the order dated February 3, 1989 passed by the Member, Industrial Court, Thane in Complaint (ULP) No. 168 of 1986. The Petitioner in this Writ Petition is the Company who has suffered the said impugned order. The first respondent Mafatlal Engineering Industries Employees Union, hereinafter referred to as complainant union filed, complaint (ULP) No. 168 of 1986 in the Industrial Court, Thane, alleging unfair labour practice against the petitioner company under Items 9 and 10 of Schedule IV and 2-B of Schedule II of the Maharashtra Recognition of Trade Union and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as the Act). Respondents 2 to 4 this Writ Petition are the other Unions out of which Respondent No. 4 is admittedly the recognised Union.
2. The dispute centers around the settlement dated May 30, 1986 arrived at between the Petitioner and the 2nd Respondent Kamgar Utkarsha Sabha (hereinafter referred to as the Sabha) which is admittedly a non-recognised union. This settlement was arrived at before the Conciliation Officer and by virtue of the said settlement service conditions of the workmen have been altered. The complainant Union therefore challenged the said settlement being illegal and contrary to the provisions of law.
3. It is no more in dispute that the age of superannuation of the workmen in Petitioner-company prior to the settlement was 58 and 60 as the case may be. The Petitioner-Company purporting to invoke the provisions of Section 9A of the Industrial Disputes Act, 1947 is alleged to have displayed on notice board the intention to effect the change as under :-
‘1. That all the workmen other than the staff (monthly rated) shall be retired from service on completion of 25 years of service in the Company as on May 1, 1986 or on their attaining the age of 58 years whichever is earlier.
2. That all the workmen in the staff category (monthly rated) shall be retired from the service on completion of 25 years of service in the Company as on May 1, 1986 or on their attaining the age of 60 years whichever is earlier.’
It is also no more in dispute that the complainant union was not partly to the said conciliation proceedings before the Labour Commissioner at Bombay or to the settlement dated May 30, 1986. Acting upon the alleged settlement dated May 30, 1986 arrived at between the Petitioner-Company and the second Respondent Kamgar Utkarsha Sabha, some of the workmen were made to retire and/or opted for voluntary retirement and also obtained retrial benefits under the said settlement without prejudice to their rights. The complainant union challenged this settlement by filing the Complaint (ULP) No. 168 of 1986 alleging unfair labour practice under Items 9 and 10 of Schedule IV and Item 2-B of Schedule II of the Act. The petitioner company filed its written statement to the said complaint. Respondents 2 to 4 also filed their written statement. After trying the various issues the learned Member of the Industrial Court held that the petitioner company has committed unfair labour practice under the items mentioned hereinabove and accordingly granted the relief as per the order (see operative portion of the order at page 512 of the compilation)
4. Mr. Ashok Desai, learned counsel appearing in support of this writ petition raised several questions of law in particular jurisdictional issue. In support of his sub missions he drew my attention to the reported judgment of this Court in Association of Chemical Workers v. Wahid Ali and Ors. (1980-I-LLJ-276). Mr. Desai urged that the Industrial Court had no jurisdiction to entertain the complaint and the only course left open, if any, to the complainant union was to raise a dispute under the Industrial Disputes Act. The impugned order is thus without jurisdiction and must be set aside. He also assailed the impugned judgment on several grounds.
As against this Mr. Cama appearing for the complainant-union and Mr. Singhvi appearing for the third respondent urged that none of these contentions requires any reconsideration in as much as the law on the subject is well settled and complaint was perfectly maintainable. On merits they urged that there is no error in any of the findings recorded by the Industrial Court.
Mr. Shrikrishna learned advocate for Respondent No. 2 supported the petitioner.
After hearing counsel for the parties at length I am prima facie of the opinion that a second though by this Court called for in as much as this writ petition is against the final order passed on complaint. In these circumstances the writ petition, in my opinion, cannot be rejected at the threshold. Consequently rule to issue.
5. Now comes the question of interim relief. Mr. Desai urged that assuming complaint was tenable there is no infirmity much less any illegality in the settlement and, therefore, the learned Member of the Industrial Court was clearly in error while setting at naught the settlement dated May 30, 1986. He also urged that the Company is facing financial crisis and in fact some winding-up petitions are also filed in this Court. He also urged that the financial institutions are not prepared to advance any further loan unless sizable number of workers i.e. 1000 is reduced and/or retrenched. It is in these circumstances he urged that in order to allow the company to survive and also protect the interest of retained workmen, the impugned order deserves to be stayed. Mr. Cama and Mr. Singhvi appearing for Respondents 1 and 3 respectively opposed interim relief on various grounds. In my opinion this is not a fit case where interim relief should be granted to the petitioner company for the following reasons :-
(a) The notice of change dated May 9, 1986 is claimed to have been displayed on the notice board. But it is common ground that no individual notices were issued either to the workmen or to other registered unions although not recognised but are very much active in the company.
(B) The Petitioner-Company on April 15, 1986 made an application to the State Government under Section 25N of the Industrial Disputes Act seeking permission to retrench 1000 workmen and the said application, I am told, is pending.
(c) On April 18, 1986 the petitioner company claims to have displayed on the notice board about the conciliation proceedings before Labour Commissioner, Bombay in regard to notice of change. The notice of the conciliation proceedings was given only to Kamgar Utkarsha Sabha and not to the complainant union. The justification put forth by the petitioner company was that Respondent No. 4 Mumbai Mazdoor Union informed the company that the members of their union have joined the Respondent No. 2 Kamgar Utkarsha Sabha is a representative union. This Kamgar Utkarsha Sabha is again admittedly not the recognised union. Except filing the written statement and contesting the proceedings before the Labour Court, the Kamgar Utkarsha Sabha did not lead any evidence to show that they represent a seizable number of workmen. If this be so, one fails to understand why the Petitioner company in fairness should not have given notice of conciliation proceedings to the complainant union. Conduct of the company prima facie is not free from suspect.
(d) Notice dated May 18, 1986 displayed on the notice board states that the conciliation proceedings will be held on May 19, 1986 and in fact discussions took place before the conciliation officer in the presence of the Petitioner-Company, Kamgar Utkarsha Sabha and other officers of the Petitioner Company. Time factor again speaks for itself apart from non-issuance of notice of conciliation proceedings to the complainant union.
(e) On May 27, 1986 the complainant union wrote to the petitioner company and forwarded copy thereof the Deputy Commissioner, labour, Thane, objecting to the notice of change. But since the conciliation proceedings were held before the Labour Commissioner at Bombay of which the complainant union had no knowledge they could not participate before the conciliation officer. Consequently on May 30, 1986 the settlement came to the signed between the petitioner company and the Kamgar Utkarsha Sabha.
From these dates prima facie, it appears to me that the proceedings before the conciliation officer including the signing of the settlement were conducted in undue haste with a view to side-track the complainant union from the said forum. In these circumstances prima facie, I am of the opinion that the learned Member of the Industrial Court cannot be said to be unjustified in observing that the settlement is suspect.
(f) The petitioner company was aware that the complainant union was very much in the field and in fact the petitioner company had signed certain settlement with the complainant union, prior to the conciliation proceedings. The last of such settlements was signed on December 24, 1984. Ordinarily therefore in fairness the petitioner company ought to have given notice of conciliation proceedings to the complainant union. Prima facie not issuing the notice of conciliation proceedings to the complainant union needs no further comments at this stage.
(g) Complainant union thus had no opportunity whatsoever to participate in the conciliation proceedings.
(h) The settlement virtually effects a material change in the service conditions without following the procedure prescribed under the Standing Order Act, 1947.
(i) The Learned Member of the Industrial Court also on evidence held that no notice of conciliation proceedings was displayed on board and observed at page 477 of compilation “notice of change and settlement shrouded with suspicious circumstances.” Prima facie I am in agreement with these observations.
(j) If the service conditions governed by the Standing Orders prior to the settlement and after the settlement are compared, in my opinion the settlement had affected the service conditions prejudically to the workmen without following the procedure prescribed under the Standing Orders Act, 1947. There is also breach of statutory provisions contained in Section 9A(b) of the Industrial Disputes Act.
6. Apart from these glaring circumstances the learned Member of the Industrial Court has pointed out in his detailed and exhaustive judgment various other circumstances which show how the settlement is illegal. Prima facie I am in agreement with these findings.
7. As regards the financial aspect, the learned Member of the Industrial Court in paragraph 62 (page 481) of the compilation) of his judgment has discussed the various aspects put forth before him, and on an appraisal of evidence has disagreed with the contentions raised on behalf of the petitioner company. During the course of hearing the petitioner company also filed an additional affidavit indicating the financial position and accumulated losses which run into a few crores. At this stage I may only say that there may be some substance and/or there may be some financial constraints, but that by itself will not justify the settlement dated May, 30, 1986, which prima facie appears to be shrouded with suspicious circumstances. But at the same time some workable order will have to be made to enable the petitioner company to get some breathing time to come out of the financial difficulties. While refusing the stay of the impugned order and bearing in mind the financial aspect of the Petitioner-company some workable order as regards back wages needs to be passed. It is common ground that as a result of settlement some workmen were made to retire and some opted for voluntary retirement. They were also paid retrial benefits. Since the impugned order is not stayed the petitioner company will take back into service from May 1, 1989 such of the workmen/employees who were made to retire and/or opted for voluntary retirement pursuant to the settlement dated 30, 1986.
8. As regards back wages of workmen, the petitioner company to pay 50% of the backwages in 4 quarterly equal installments and first of such quarterly installments be paid to each workman on or before October 31, 1989 and the balance in equal instalments payable at the end of every three months. Remaining 50% of backwages shall be subject to the result of the writ petition.
9. As regards workmen who have opted for voluntary retirement pursuant to the settlement dated May 30, 1986 they may be re-instated if they want to join provided they refund the excess amount if they have received under the said settlement had they not been retired. The amount of refund be recovered from such workmen in quarterly equal instalments on the same footing as set out in para 8 after ascertaining the total amount due and recoverable from them. Interim relief is accordingly refused. It is, however, made clear that the observations and findings recorded hereinabove are based on prima facie conclusions and they are tentative.
On the application of Mr. Desai, operation of the order contained in paragraph 5 onwards and also operation of the order passed by the Industrial Court on February 3, 1989 is stayed till June 12, 1989.
Petitioner-company through their counsel undertakes to give clear 7 days notice to the respondents as and when they move the Higher Court for interim relief.”
7. The Supreme Court of India on appeal disposed of the Civil Miscellaneous Petition on July 10, 1989 with the following order :-
“In the facts and circumstances of the case, we do not consider it fit and proper to interfere with the interlocutory order. However, the parties agree that the Writ Petition pending before the High Court may be heard at an early date. Having regard to the controversy involved in this case, we hope the High Court will dispose of the petition expeditiously by the end of the year.
The petition is accordingly dismissed.”
As a result of this order, it will have to be noted that both the learned single Judge of this Court as also the Bench of the Supreme Court, after hearing the parties at some length, were of the view that the order re-instating the 889 employees did not deserve to be stayed. It has come on record that in the month of May 1989, that is to say, between the passing of these two orders, the Company virtually ceased operations and the unit stopped functioning.
8. Mr. Pawaskar, learned Counsel appearing on behalf of the petitioner, at the very outset, pointed out that it was with a sense of regret and as a measure of last resort that his client, namely, the Company was forced to take the unpleasant step of deciding to retire a large number of workmen. He stated that the record will indicate that this particular Company had been facing financial problems right from the year 1981 as will be evident from the various balance-sheets and records. The business of the Company essentially consisted of manufacturing machinery for the textile industry. When the textile industry was virtually crippled by industrial nest and by a long strike, the Company faced the consequential economic fall-out of this situation and even though the management did its best, matters were steadily going downhill. He stated that for some time thereafter the weak position of the Company was further aggravated by the employees themselves, who started changing their loyalty from one union to another; that this was accompanied by inevitable acts of violence and various other features that are in such situations common, resulting in the unit having to be closed for approximately 13 months at one point of time. He stated that it was not as though the management had sprung a surprise on the workmen all of a sudden but that the case history will itself indicate that the financial difficulties of the Company had been placed before the employees and there were times when the company was virtually unable to pay even the wages that were due and that it is also a matter of record that the employees had agreed to accept as little as 50% of the wages at a certain point of time. Forced with this desperate situation, the only recourse of the management was to turn to the financial institutions, such as the Industrial Credit & Investment Corporation of India Limited (hereinafter referred to as “the I.C.I.C.I”) and to request them to save the Company from virtual liquidation. According to Mr. Pawaskar, the liquidity position of the Company was so bad that they were desperate for solution as the survival of the entire Company was at stack. The I.C.I.C.I., according to him, had agreed to a virtual nursing programme, but, as was to be expected, they had laid down a large number of terms and conditions. According to Mr. Pawaskar, this was the one and only means of survival for the Company and, consequently, in this situation the Company was left within virtually no option except to abide by every one of the conditions laid down by the I.C.I.C.I. According to him, as was to be expected, the financial institution had evaluated the circumstances under which the Company could be revived and put on a viable footing. The I.C.I.C.I. had stipulated that one of the necessary requirements was to reduce the number of employees by 1000 as the unit was labour intensive. He stated that since this stipulation had come from the I.C.I.C.I., left with no other option, the Company applied to the State Government on April 30, 1986 for permission to retrench 1000 of its employees. Having regard to the magnitude of the problem and the prospect of a large number of the employees being rendered jobless, the State Government considered this case at the highest level. It appears that discussions took place between the representatives of the Company, the representatives of the I.C.I.C.I. and the representatives of the 2nd Respondent. I shall presently deal with the circumstances under which the 2nd Respondent came to represent the employees at this stage of the proceedings. Suffice it to say that they were the only representatives of the employees present at that point of time. There is no documentary record of what transpired at this meeting except for certain references in the course of the evidence of witnesses which seem to suggest that the request of the company for retrenchment of 1000 employees was not viewed favourably by the State Government. It, however, appears, which is probably the true position of the matter, that the Secretary of the Department and other high-ranking officers suggested to the parties before them that some other solution be found out that this particular aspect of the case. The references are rather vague, but they connote some other solution. Coupled with the fact that in the course of the several meetings no permission came to be granted, one is left with the irresistible conclusion that at the end of those negotiations the view of the State Government was that the retrenchment of 1000 employees should not take place.
9. As indicated earlier, the Company, after re-considering the matter, issued the notice of change dated May 9, 1986. It is Mr. Pawaskar’s case that though the permission for retrenchment had not been acceded to by the State Government, undoubtedly, no order of refusal had been passed. He states that the Company which was on the brink of submergence and desperately required to find a solution to the problem, after mature consideration, was of the view that the employees who had completed 25 years of service with the Company should be retired under a voluntary retirement scheme. What was proposed to be done is set out below :-
“(1) That all the workmen other than the staff (monthly rated) shall be retired from service on completion of 25 years of service in the Company as on May 1, 1986 or on their attaining the age of 58 years whichever is earlier.
(2) That all the workmen in the staff category (monthly rated) shall be retired from the service on completion of 25 years of service in the Company as on May 1, 1986 or on their attaining the age of 60 years whichever is earlier.”
The Company addressed the notice of change dated May 9, 1986 to the Secretary, Kamgar Utkarsha Sabha, that is to say, the Secretary of the 2nd Respondent, and forwarded a copy as was required to be done to the Deputy Commissioner of Labour and Conciliation Officer, Thane.
10. I will, at this stage, set at rest the controversy that was generated before the Trial Court regarding the service of the copy of this letter on the concerned Authority at Thane. It was forcefully contended before the Trial Court by learned counsel appearing on behalf of the 1st Respondent that the letter was never forwarded to the Conciliation Officer by the Company and that the letter which contains the rubber-stamp of the office of the Deputy Commissioner of Labour, Thane, along with the endorsement dated May 9, 1986, was a fabricated document. The submission was to the effect that it was physically impossible for the Company to have obtained an endorsement dated May 9, 1986 on a letter forwarded to the Deputy Commissioner of Labour on May 11, 1986. The 2nd Respondent substantiated their charge through the evidence of a witness from the office who deposed that the Inward Register of that office does not indicate such a letter having been received by the office at all. To may mind, this controversy was unnecessary and inconsequential. Mr. Pawaskar is justified in his submission that if the records and registers of the office of the Deputy Commissioner of Labour are in a state of confusion, a serious charge of fabrication cannot be levelled against the company. In any event, nothing much turns on this because, admittedly, the letter did reach the concerned authorities and, admittedly, certain conciliation proceedings were held. Furthermore, even as far as the case of the 1st Respondent is concerned, their heads of challenge are far more substantial than this entirely trivial aspect of the matter. The learned Member of the Industrial Court, having regard to the vehemence with which the allegations and counter-allegations were made and the material produced in support thereof, has devoted considerable amount of time in several pages of the order to arrive at a finding which is wholly inconsequential to the merits of the main dispute.
11. At this stage, Mr. Pawaskar has dealt with one of the most crucial aspects of the present case. These facts, according to Mr. Pawaskar, are not unusual but exceptional in so far as the recognised union – the 4th Respondent to those proceedings, namely, Mumbai Mazdoor Union, as on April 1986 were on paper and on the record continued to be shown as the recognised union. This confers on the 4th Respondent the privileged status within the meaning of the M.R.T.U. and P.U.L.P. Act and, on an examination of the case law, also confers on them a special position to the exclusion of the other union in several matters. Suffice it to say that over the years when it was found extremely difficult in negotiations and otherwise to deal with a number of parties who come to represent different segments or fragments of the working force, that the Legislature in its wisdom finally decided that an enactment be brought about under which a designated authority would examine the rival claims and will finally nominate the union which, for all intents and purposes, could be categorised as an official representative and it is to this union that the recognition status is given. Normally, through such a procedure, the problems hitherto faced of having to deal with more than one representative union were expected to be eliminated, but we have in the present instance, as Mr. Pawaskar rightly stated, an exceptional situation where the 4th Respondent continued on paper to be the recognised union, but it, in fact, abdicated its status. Mr. Pawaskar points out that on April 18, 1986, the President of the 4th Respondent addressed the following letter to the Company :-
“We are surprised to read the contents of the above referred letter mentioning our Mumbai Mazdoor Union as a recognised union, probably because technically it is so, whereas factually our union does not represent a single workman from your factory, ever since Kamgar Utkarsha Sabha stepped in and your workmen have become members of that union.”
This letter dated June, 18, 1986 was in response to the Company’s letter dated April 15, 1986 pointing out to the recognized union that a situation had come up whereby it was essential to effect a retrenchment of a certain number of workmen. In sum and substance, Mr. Pawaskar contends that the effect of this letter virtually meant that when the Company adopted the correct procedure of going to the recognised union and informing that union of its proposed course of action the union in question officially informed the Company that it had virtually become defunct vis-a-vis this Company in so far as it did not have a single member and further that it was pointed out to the Company officially that all the members had gone over to the 2nd Respondent-union. In other words, according to Mr. Pawaskar, the recognised Union told them that they had been replaced by the 2nd Respondent. Mr. Pawaskar further contends that he has pointed out in the Petition, which fact is undisputed, that pursuant to the entry of the 2nd Respondent into their Company, the Company had appointed the respective representatives of the 2nd Respondent in each and every one of the Company’s Departments and that at no stage had the 1st Respondent – Union raised any objection to this procedure. He further contended that it is relevant to point out that even though the 1st Respondent – Union contends that it represents a certain number of workmen, that number was virtually insignificant and, in any event, was very much less than the number which could be categorised as a majority. In substance, what Mr. Pawaskar contends in that, in the month of April – May 1986, he was justified in having addressed the notice of change to the 2nd Respondent on May 9, 1986 and that he was also justified in having participated in the negotiations at the Government level as also at the stage of conciliation and in having signed a settlement with the 2nd Respondent because, according to him, they de facto represented the majority of the workmen. It is his case, therefore, that the grievance made by the 1st Respondent regarding their objections and their non-representation are of no consequence because, under the scheme of the Industrial Law, it is well-settled that the consent of the majority is what is of consequence and that alone is required to be taken into account. He has supported his argument by submitting that if one examines the procedure prescribed for recognition under the provisions of the M.R.T.U. and P.U.L.P. Act that the process of verification, which is required to be undertaken by the officer only involves a process of arriving at a conclusion as to which of the contesting parties represented the largest number of workmen and that it is this factor alone that governs the principle of recognition. He, therefore, submitted that in the unusual and exceptional situation with which the Company was presented with, namely, that the recognised union had become de facto extinct and only continued on paper; whereas the de facto majority union was not the recognised union. In this strange and exceptional situation, according to Mr. Pawaskar, there was substantial compliance with the law and with the provisions of the M.R.T.U. and P.U.L.P. Act in the Company having dealt with the 2nd Respondent to the exclusion of the others.
12. Mr. Pawaskar was, therefore, highly critical of the first important finding of consequences recorded by the Industrial Court which was to the effect that regardless of the facts or circumstances, the Company was obliged in law to deal with, negotiate and settle only with the recognised union and with nobody else. Mr. Pawaskar contended that this puts the Company in an impossible position and that it virtually results in a situation of total absurdity in so far as it would mean that the Company while dealing with a matter of such great importance concerning the retirement of nearly 1000 workmen would virtually have to deal with a single man who himself admits that he does not represent even a single workman. In passing, Mr. Pawaskar contended that in the light of the mala fides alleged against the Company he would like to clear the position by establishing that, in fact, the Company did act honestly. He, therefore, contends that this action in dealing with the 2nd Respondent is a circumstance of good faith and it is indicative of the Company’s genuine desire to negotiate with the representatives of the largest body of workmen and that consequently the Industrial Court was wrong in concluding that he could not negotiate with them and that the settlement signed by him with the 2nd Respondent – Union is bad in law.
13. Mr. Kochar, learned Counsel appearing on behalf of the 2nd Respondent, supported this submission of Mr. Pawaskar and re-inforced his argument by pointing out that at no point of time right through the lengthy evidence that was led before the Trial Court was the present 1st Respondent able to dislodge the position that the 2nd Respondent, in fact, had the following of the largest number of workmen, even though it may not have been legally designated as a recognised union. In addition to these submission, both Mr. Pawaskar and Mr. Kochar have vehemently contended that, as far as the procedure under the Industrial Disputes Act is concerned, the requisite notice under Section 9A of the Industrial Disputes Act was sent to the 2nd Respondent on May 9, 1986, but apart from this, the notice had been displayed on the Notice Board of the Company. A serious controversy has been raised by the 1st Respondent with regard to this aspect of the case. They have gone to the extent of contending that if the Company desired genuinely to negotiate with its employees in the absence of dealing with the recognised union that it was obliged in law to deal with all segments of the employees and not with the largest segments alone. They contend that the only situation in which the minority voice can be disregarded is the one contemplated whereby the negotiations are between the Company and the recognised union, because the law prescribes that the minority is not required to be heard. When that procedure is not being followed, they contend that it was obligatory on the notice being sent to them and that the fact that the notice was not sent to them, according to the 1st Respondent is a deliberate act and they further contend that this was done because the Company was aware that they would never agree to any settlement which involved cessation of employment of a number of workmen. The 1st Respondent, therefore, holds this as a circumstance of mala fides against the Company and they are supported by the fact that, according to them, the mere display of some notice on the Notice Board in a matter of such gravity and importance could never be construed as notice to the body of workmen. It is possible, according to them, that in the short time between the notice having been put up and the subsequent developments that very few of the workmen might have even seen this notice and it is their contention that it was at a late stage or proceeding that they came to know of the proposed charges to which they raised their protest. The substantial limb of their argument is that if the Company desired honestly and genuinely to resolve the dispute in conciliation, nothing prevented the Company from inviting them to those sessions because it can never be contended by the Company that it was unaware of their existence. It may be true that even though at an earlier point of time they were a minority union and were dealing with the Company officially and had even entered into agreements and settlements with the Company, that in the course of the subsequent years their membership had dwindled, but it is their case that they have established before the Lower Court that they were the representative body with a following of over 900 workmen. This position is not accepted either by Mr. Pawaskar or by Mr. Kochar, both of whom contend that the finding of the Industrial Court to this effect is wholly erroneous and that it is an unwarranted conclusion on the basis of mere oral evidence. They have pointed out that whereas at one point of time the claim was that the 1st Respondent represented approximately 300 workmen, at another point of time their claim rose to 900 and that, in any event, even the Industrial Court has not examined the documentary evidence in support of this claim and that, consequently, neither of the two figures can be accepted.
14. The proceedings before the Industrial Court with which we are concerned, were not proceedings relating to the recognition of a trade union. In the course of the disputes, it was incidentally contended by the 1st Respondent that they represented a certain percentage of the workman. Their exact following is what was disputed by the other side. The irresistible conclusion from the record is that the 1st Respondent did represent a substantial number of employees and it, therefore, needs to be examined as to whether it was either obligatory, and secondly, whether it was desirable that the 1st Respondent should have been a party to the various proceedings that culminated in the settlement. The Industrial Court merely stopped with the finding that the Company was obliged to deal with the recognised union and nobody else. In the facts and circumstances of this case, that conclusion was certainly erroneous. A Court adjudicating a dispute of this magnitude and this seriousness could not have prescribed a merely theoretical conclusion while it was fully conscious of the fact that the party with whom he company had been permitted to enter into discussions and negotiate was virtually non-existent. Mr. Pawaskar is, therefore justified in his submission that this finding of the Industrial Court would have to be set side. What remains to be seen, however, is the question as to whether the Industrial Court was justified in not examining this aspect of the case to a deeper extent, particularly in the light of the serious charge made by the 1st respondent that non-constitution with the 1st Respondent constituted an act of deliberately sidelining the union and amounted to an unfair labour practice. The Industrial Court was obliged, therefore to record as conclusion with regard to this aspect of the case.
15. In the instant case, Mr. Pawaskar has contended that the proceeding with which we are effectively concerned is the conciliation proceeding. He has submitted, as stated earlier, that at the prior stage there was substantial compliance, according to him, with the requirements of law and that he was re-inforced in this belief by the fact that the 1st Respondent – Union did not appear before the Conciliation Officer. He has drawn my attention, apart from their letter and the letter of Mr. D. R. Matondkar, to the averments in the pleadings relating to the proceedings before the High Court where there can be no dispute about the fact that the 1st Respondent – Union was aware of the conciliation proceedings. He has further relied on the notice relating to the conciliation proceedings from the Commissioner of Labour, which, admittedly, was displayed on the Company’s Notice Board. He states that the charge against the Company is that they attempted to hustle through the conciliation proceedings in collusion with the 2nd Respondent behind the back of the 1st Respondent and that this was so done in a clandestine manner is totally belied by this circumstance alone, namely, that they displayed the notice of the conciliation proceedings on the Company’s Notice Board. These facts speak for themselves and it is equally true to state that the 1st Respondent did come to know in any event, on their own admission, in the week of May 21, 1986 about the conciliation proceedings in spite of which they did not appear before the Authority. There is a vague reference in the evidence to the effect that one of their active workmen, Mr. D. R. Matondkar, appeared before the Labour Commissioner, but the manner in which the statement appears does not signify much. Whether Mr. D. R. Matondkar appeared or not would not change the complexion of the matter because position still remains that the 1st Respondent having notice of the proceedings did not appear before the Conciliation Officer. It is true that in not having appeared before the Conciliation Officer, the 1st Respondent forfeited their right to place before that Authority their objections. It is not known as to what view the Commissioner of Labour would have taken of the matter had the 1st Respondent appeared before him, but the fact remains that they remained absent. To this extent, Mr. Pawaskar is right in stating that if the 1st Respondent decided to remain absent in spite of having knowledge of the proceedings, then they cannot thereafter allege an unfair labour practice on the part of the Company by contending that they were deliberately excluded from the proceedings and that the Company preferred the other union by sidelining the 1st Respondent. While dealing with the question as to whether the unfair labour practice is established or not, I shall indicate my conclusions with regard to this aspect of the matter.
16. Unfortunately, the issue does not rest there, Had the 1st Respondent contended before the Commissioner of Labour that its representatives should be heard and that the conciliation agreement is bad in law or that it is unfair to its members or that vis-a-vis the 1st Respondent it is to be treated as an ex parte preceeding, perhaps the submission of Mr. Pawaskar would have been justified and the Authority would have been within his rights to have refused to review or interfere with the proceedings that had concluded before him on the ground that having knowledge of the conciliation proceedings, the 1st Respondent had not appeared. To my mind, however, the aspect of the case which is of consequence in the light of certain developments in these proceedings is the issue as to whether the Conciliation Officer was under an obligation to have issued notice to the 1st Respondent. It is now a well-settled principle of jurisprudence in all proceedings that were culmination of those proceedings is likely to result in prejudice to an employee or to a set of employees that they should be given a reasonable and fair opportunity of being heard. The rule of audi alteram partem has been translated into several judicial decisions in leading cases on the point by the Supreme Court, and it will now have to be construed as an integral part of judicial proceedings, more so of proceedings of the present type under the Industrial Disputes Act. In Central Inland Water Transport Corpn. Ltd. v. Brojo Nath., (1986-II-LLJ-171) the Supreme Court, while dealing with the principles embodied in Articles 14, 39(a), 41 of the Constitution of India, has very clearly stated that the rule will strictly apply in all such proceedings.
17. It would be useful to reproduce the observations made in some of the judgments by the Supreme Court in relation to the spirit of the Directive Principles of State Policy as embodied in the Constitution :
“Hedge and Mukherjee, JJ.
The Fundamental Rights and the Directive Principles constitute the ‘conscience’ of our Constitution. The purpose of the Fundamental Rights is to create an egalitarian society, to free all citizens from coercion or restriction by society and to make liberty available for all. The purpose of the Directive Principles is to fix certain social and economic goals for immediate alignment by bringing about a non-violent social revolution. Through such a social revolution the Constitution seeks to fulfill the basic needs of the common man and to change the structure of our society. It aims at making the Indian masses free in the positive sense. Without faithfully implementing the Directive Principles, it is not possible to achieve the Welfare State contemplated by the Constitution.
Ray, J.
The Directive Principles are also fundamental. They can be effective if they are to prevail over Fundamental Rights of a few in order to subserve the common goods and not to allow economic system to result to the common detriment.
Chandrachud, J .
Our Constitution aims at bringing about a synthesis between ‘Fundamental Rights’ and the ‘Directive Principles of State Policy’, by giving to the former a pride of place and to the letter a place of permanence. Together, not individually, they constitute its true conscience. .”
Under Article 39 of the Constitution, there is a reference to the principle that citizens, men and women, equally shall have the right to an adequate means to livelihood. Article 41 of the Constitution embodies that the State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work. We are not concerned with the often-debated issue that concerned the enforceability of these provisions, but we are, as of necessity, required to take note of and respect of the principles enunciated therein. It is also a well-settled law, since the decision of the Supreme Court in the Menaka Gandhi (1978) SC. 248 and the International Airports Authority of India case (1979-II-LLJ-217) that a principle of fairness must guide and that it must be apparent in all the Departments of State action. It is in the light of these well-settled principles that it is very necessary to examine the question as to whether it was obligatory on the part of the Authority before whom the conciliation proceedings took place to ensure that all segments of the workmen were represented in the proceedings before him.
18. Mr. Pawaskar has vehemently argued that the notice regarding the conciliation proceedings was displayed in the Company and that this notice constituted an invitation to all those workmen or unions, who represented them, that they were entitled to take part in those proceedings and conversely that, if they did not respondent to the notice, it was not for the Company virtually to request them to come and attend the proceedings. It would have to be presumed, therefore that they had nothing to say. Mr. Kochar supports this argument and re-inforces it by stating that the majority union was represented before the Authority and that point of the proceedings. He reiterated Mr. Pawaskar’s argument that a party who deliberately stays away is deemed to convey its assent to whatever may be decided in that proceeding and is consequently bound by the result.
19. As against this, Mr. Cama has alleged serious mala fides in relation to what transpired before the Conciliation Officer. To summarise his arguments, which are extensively based on pleadings and considerable oral evidence, he contended that in substance a deliberate effort was made by the Company acting under the knowledge that the 2nd Respondent would agree to their scheme, but that the 1st Respondent would oppose this scheme. Effectively, Mr. Cama alleges that the Company was acting in collusion with the 2nd Respondent and he states that it was for this reason that the letters of protest, which were addressed to the Authority and which admittedly came to the notice of the Conciliation Authority, were ignored. He basically contends that a Conciliation Authority can append his signature to an agreement provided it is a total meeting of minds of the representatives of the parties which presupposes the fact that all areas of oppositions have been resolved through the process of negotiations. Effectively, therefore, it would mean that according to Mr. Cama even if one of the parties before the Conciliation Officer refused, for whatever reasons, to agree to a proposed settlement, the only option open to the Authority is to report a failure and the Authority is totally precluded from ignoring that area of opposition and appending his signature to a document signifying a settlement between the parties.
20. For the purposes of resolving this issue, it would be necessary to look at the scheme of Section 18 of the Industrial Disputes Act. It is true that the Industrial Disputes Act does not define specifically any of the functions of a Conciliation Officer, nor does it set out the procedure that he is required to follow in a conciliation proceedings. However, there is a reference to Section 11 of the Industrial Disputes Act. One may certainly conclude that the Conciliation Officer is not expected to perform the role of a silent spectator or the role of a mediator alone. In areas of friction, Conciliation Officer is certainly required to use his good offices to bring about a possible solution. Section 11 of the Act, however, invests the Conciliation Officer with the powers that are analogous to those vested in the Civil Court under the Code of Civil Procedure. Section 11(4) of the Industrial Disputes Act specially states that a Conciliation Officer may enforce the attendance of any person, witnesses, inspect documents etc. It is quite clear, therefore, that the Conciliation Officer is required to play a function both of importance and of significance is so far as he is required to examine the correctness and genuineness of the contentions and issues that arise in that proceeding. This would be necessary because at this point of time where certain rival contentions are canvassed or disputed questions of fact arise, the Authority must be vested with the power to duly investigate into them and of finding out the true and right position. Again, it is necessary to observe that under the scheme of the Industrial Disputes Act having regard to the fact that a settlement arrived at in the course of conciliation proceedings would virtually be binding on all persons in the establishment, the fundamental duty of examining whether all the terms of the settlement are just and fair to the entire body of employees on whom that settlement is binding rests squarely on the shoulders of the Conciliation Officer.
21. To my mind, therefore, even if the Company was not obliged to take any steps to ensure proper representation before the Conciliation Officer, it was definitely obligatory on his part to have ensured the presence of the 1st Respondent before him. When the 1st Respondent had protested in writing, and more so when there was a second letter from Mr. Matondkar objecting to the terms of the proposed changes, the Conciliation Officer ought to have issued notice in exercise of the powers vested in him under Section 11(4) of the Industrial Disputes Act to these Respondents informing them of the conciliation proceedings and calling upon them of the conciliation proceedings and calling upon them to appear before him. If the parties thereafter remained absent, the Conciliation Officer would have been justified in ignoring their protests. I shall presently deal with this aspect further while making my observations with regard to the justness and fairness of the settlement that was arrived at, as also with the time factor that relates to the present case. Where as on the one hand we are informed that it was an extremely serious and important case because it concerned the lives and careers of almost 1000 workmen, that it went for consideration of the highest authority of the State Government, namely, the Minister and the Secretary for Labour and that it was for this reason that the conciliation was directed to the highest officer of the Department, namely, the Commissioner of Labour, the gravity of the matter suddenly diluted after that stage and in the course of three short meetings, of which significantly no record whatsoever is available, a settlement of such immense and far – reaching consequences has been hastily signed. In the light of these circumstances, it will have to be held that there existed a definite obligation on the part of the Conciliation Officer to have summoned the 1st Respondent or to have at least issued a notice to them giving them a reasonable opportunity of remaining present before him. Significantly, whereas many cryptic aspects of the case have been referred to in the document of settlement, there is a total absence of the mention of the fact that certain other parties had objected to the proposed changes. This obligation, to may mind, is in keeping in with the well – defined principles of law and that if the action culminating in the settlement is not to be constructed as being both arbitrary and high – handed that it must embody all ingredients of fairness, namely, the fact that reasonable notice was given to all parties who would be affected by the outcome of those proceedings and that they should be given an opportunity of being heard. To my mind the last protest could be construed to mean one and only one conclusion, namely, that the part concerned desired that they be afforded an opportunity to place before the Conciliation Authority the grounds on which they proposed to object to the proposed action. With this background, the further conclusion that the 1st Respondent – Union was deliberately kept out of the conciliation is also justified.
22. Much significance was attributed by Mr. Pawaskar to the fact that the 2nd Respondent for all intents and purposes was being considered by the company as the representative of the majority of the workmen. It is, therefore, necessary to examine the correctness of this approach on the part of the Company. I have already set out the grounds on which, according to Mr. Pawaskar, the Company came to this conclusion. These grounds, to my mind, may have given the Company a prima facie opinion or conclusion that the 2nd Respondent represented the greater part of its employees. In a proceeding of this seriousness and magnitude, the Company was not justified in merely proceeding on the basis of this airy conclusions. The reason for it is that the Company is this case is an old and established public limited company, a company that has seen over several decades a considerable volume of litigation in relation to employees’ problems and industrial disputes. The Company was aware of the status of a recognised union and the need for obtaining such status. The Company, according to Mr. Pawaskar, had suffered because of the fact that the entry of the 2nd respondent into the Company was accompanied by acts of large-scale violence and strong-arm tactics, and consequently if, according to Mr. Pawaskar, the 2nd Respondent had virtually displaced the recognised union, the first obligation on the part of the company was that they should have insisted on the 2nd Respondent getting due certification under the M.R.T.U. and P.U.L.P Act designating them as the recognised union. There may be some justification in Mr. Pawaskar’s contention that he was not obliged to apply to the Court for de-recognition of the 4th Respondent because any such stem might have been misunderstood. Assuming that this argument is acceptable, in the circumstances in which the Company was placed, there was no justification for them to have treated the 2nd Respondent for all intends and purposes as a recognised union without having insisted on their obtaining a certificate to that effect. To my mind, this procedure was a condition precedent. It has been submitted by Mr. Pawaskar, and again perhaps with justification, that the exigencies of the situation were such that the Company required an urgent and immediate solution to the problems and that the procedure under the M.R.T.U. and P.U.L.P. Act for recognition is a time – consuming one and that consequently time being of the essence, the Company could not be expected to wait for that period of time. It is not as though that the Company had no option except to deal with the 2nd Respondent. In the light of the very exceptional and unusual situation that had arisen whereby the 4th Respondent had virtually become defunct and, therefore, was not available as an effective negotiating party, the option available to the Company was the have dealt with the workmen directly. In fact, in reply to Mr. Cama’s very vehement contention that the condition authority could not have under any circumstances appended its signature to a document whereby the Company had signed a settlement with an unrecognised union, Mr. Pawaskar pointed out that whereas Section 18(1) of the Industrial Disputes Act enjoins upon the management to deal with only the recognised union, that under Section 18(3) of the Industrial Disputes Act there is no such restriction placed on a conciliation proceeding. A plain reading of the Section does indicate that this can obviously be for good reasons. Where at a domestic level the management desires to arrive at a private settlement with its employees, the law makes it incumbent that the settlement can be signed by none other than the recognised union. On the other hand, in the case of conciliatory proceedings, the law has widened its scope whereby it is open to a management to arrive at a settlement in conciliation with its employees without the stipulation that it is only a recognised union which can sign a settlement. It will, therefore, have to be held that the Legislature in its wisdom was of the view that where a settlement is arrived at under the supervisory jurisdiction of the conciliation Officer, the authority will ensure that the parties are duly and adequately represented, that the interests and objections of all the concerned parties will be taken into account, and if it is possible to arrive at a settlement embodying all this that it is still permissible under Section 18(3) of the Industrial Disputes Act. In this view of the matter, and applying these principles to the facts of the present case, the conclusion is irresistible that the absence of the 1st Respondent at the conciliation proceeding is a serious lacuna of the part of the Conciliation officer and the effect of this on the validity of the settlement will, therefore, have to be examined.
23. I shall, in passing, deal with the contentions canvassed by Mr. Cama with regard to the provisions Section 22 of the M.R.T.U and P.U.L.P Act. Mr. Cama drew my attention to several judgments in support of his submission that an unrecognised union does not have the right, according to him, to represent the employees before a Conciliation Officer. He has contended that apart from the limited situation set out in Section 22 of the M.R.T.U. and P.U.L.P. Act that an unrecognised union is wholly debarred from representing workmen in conciliation proceedings. Mr. Cama has referred to the judgment of Sawant, J. in the case of Mazdoor Congress v. S. R. Shinde 1992 (45) F.L.R. page 243, wherein this Court took the view that it is not permissible to deal with an unrecognised union even though the situation required urgent action. In this case, the contention was that the recognised union had lost the majority following and it was, therefore, contended that since the earlier settlement was coming to an end, it was very necessary that the unrecognised union which admittedly commanded a majority should be permitted to represent the workmen. In that case, Sawant, J. held that the majority union could neither terminate nor negotiate a settlement with the Company even if the recognised union could not undertake these functions and the agreement was coming to an end. This view was upheld by a Division Bench of this Court in the decision reported in the case of Maharashtra General Kamgar Union v. Mazdoor Congress 1983 L.I.C. 1034. It is necessary to note that the Court took this view in spite of the fact that it would result in a total stalemate. In another decision relating to Mumbai Mazdoor Sabha v. Bombay Dyeing & Mfg. Co. Ltd. 1982 L.I.C. 1533 Dharmadhikari, J. (as he then was) had occasion to consider the same point when this Court took the view that the refusal to deal with an unrecognised union does not constitute an unfair labour practice. In another decision of this Court pertaining to M. S. R. T. Corpn. v. M. M. Kamgar Federation, Nagpur, 1986 L.I.C. 253, this Court took the view that the recognised union is given a status of sole bargaining for the employees to the exclusion of all other unrecognised unions.
24. On the basis of these and other decisions, a contention was canvassed by Mr. Cama that the settlement would have to be struck down on the ground that it was signed by the 2nd Respondent which, admittedly, was not a recognised union, and consequently, that it has no authority to bind all the employees of the Company through such a settlement. It is necessary to note, and as correctly pointed out by Mr. Pawaskar, that in all these decisions the recognised union was still very much in the fray and it was a situation whereby a rival union was vying for the status of a recognised union and, therefore, the real dispute with regard to the respective claims concerning majority following was yet to be adjudicated upon. The Court very rightly took the view that merely because another party claims majority, the Authority cannot accept that position because the sole determining authority under the law was the one constituted under the M.R.T.U. and P.U.L.P. Act. The present case is, therefore, distinguishable on facts, because it is an exceptional one. The ratio of the aforesaid judgments would, therefore, not strictly be applicable to the facts and circumstances of the present case. It would also not be permissible to uphold the contention of Mr. Cama that an unrecognised union in the facts of the case would be legally precluded from being a party to a conciliation settlement. On the peculiar facts of the present case if a fair and just settlement in the circumstances that passed the test of correctness and fairness and compliance with the law is arrived at before the Conciliation Officer, to which the representative union or representatives of the workmen may be signatories, it could never be contended having regard to the provisions of Section 18(3) of the Industrial Disputes Act that such a settlement would be bad in law.
25. Mr. Pawaskar has raised an issue of considerable importance touching the jurisdiction of the Industrial Court with regard to the entertainment of the present dispute. He has attacked the very basis of the jurisdiction on a number of heads. To support that, Mr. Pawaskar has submitted that the 1st Respondent approached the authority constituted under the M.R.T.U. and P.U.L.P. Act. He has drawn my attention to Section 5 of the said Act which spells out the duties of the Industrial Court as set out in Section 5 of the Act and the powers of the Industrial Court as set out in Section 30 of the Act. It is the basic contention of Mr. Pawaskar that if the 1st Respondent was aggrieved by the action of the Company and its consequences, the only option open to it was to have raised a dispute and followed the procedure prescribed under the Industrial Disputes Act for obtaining appropriate reliefs. It was his submission that, admittedly, the settlement that was arrived at under Section 18(3) of the Industrial Disputes Act bound all the employees of that Company. If any part was aggrieved by that settlement, it was necessary to challenge it within the frame work of that statute as otherwise it would result in an incongruous situation. According to Mr. Pawaskar, a challenge of the present type, if permitted, would virtually mean that the Industrial Court is being asked to sit in judgment or that it is being asked to sit in appeal over the proceedings that have culminated in the settlement. Relying on the definition of “industrial dispute” as set out in Section 2(k) of the Industrial Disputes Act, Mr. Pawaskar contended that the 1st Respondent’s grievance could only have been agitated by it through a procedure prescribed under this Act and that the present complaint is wholly misconceived an, furthermore, that it was addressed to an authority which did not have jurisdiction to deal with a dispute of that type. This submission has been supported by Mr. Kochar, who insists that the action of the Company constituted only a reduction of workmen and that it could never have been Categorised as a case of retrenchment, nor could it be called any variation or amendment to the existing Standing Orders and that, consequently, a dispute touching the validity or otherwise of the Company’s action could have gone to no forum other than the Authority under the Industrial Disputes Act. Both learned Counsel have, therefore, contended that the exercise of jurisdiction by the Authority was wholly misconceived and, consequently, that the order would have to be set aside on this ground itself. It is only necessary to refer, in passing, to the fact that this contention goes to the very root of the matter and that it is a contention which has been canvassed by the Company right from the inception of the dispute. This contention was canvassed both in the pleadings and in the oral arguments at the earlier point of time, not only before this Court but also before the Supreme Court. Undoubtedly, at that stage the Courts have not disposed of the Petitions through detailed speaking orders, but it is relevant to point out that there was one more round of litigation on the part of the Company after the amendment was permitted which came before a Division Bench of this Court where again this contention was raised and it is necessary to take note of the fact that even though the very jurisdiction on a point of law of the Industrial Court to entertain the present complaint was questioned and vehemently challenged by the Company, none of the Courts while dealing with the earlier proceedings thought it fit to uphold that contention. This, however, does not mean that the issue was conclusively decided by those Courts, but is a factor of some relevance because the proceeding was allowed to continue before the Industrial Court which would not have been done even if prima facie it appeared that the Court had no jurisdiction.
26. Mr. Pawaskar has placed reliance on the decision of the Supreme Court in the case of Sirsilk Ltd. v. Govt. of Andhra Pradesh (1963 – II L.L.J. Page 647). In that case, the Supreme Court did take the view that where the question arose as to the binding nature of a settlement and a dispute was raised the same constituted a separate industrial dispute which had to be enquired into and that the government was not justified in publishing the award in the meanwhile. This decision of the Supreme Court pertaining to the year 1963 will not further the submission of Mr. Pawaskar because the real issue in the present case is as to whether the Industrial Court at Thane, acting as the authority under the M.R.T.U. and P.U.L.P. Act, could have entertained the present complaint. It is common ground between the parties, and Mr. Cama has admitted in so many words, that one of the courses open to his clients, undoubtedly, was to raise an industrial dispute, but it is his contention that the option of choosing any other legal remedy open to him lay entirely with the litigant, namely with his clients and unless it is pointed out that the course of action adopted by him is barred by law that it is not for the Company to insist on his having followed a particular course of action. To this extent, Mr. Cama’s contention will have to be upheld because as pointed out by him just as there was a degree of urgency pleaded by the Company, there was equally a degree of urgency as far as the relief which the 1st Respondent desired at that point of time. The settlement had been signed on May 30, 1986, which was to be implemented forthwith under the compulsion that it was binding on all parties by virtue of the provisions of Section 18(3) of the Industrial Disputes Act, and, therefore, the futility of the course of action suggested by Mr. Pawaskar would be self-evident. To have expected the 1st Respondent to raise the industrial dispute and thereafter to follow the lengthy procedure of getting the matter referred to the Court and waiting for an adjudication would have totally disentitle them from a speedy and efficacious remedy under which they desired to approach a judicial authority and obtain interim orders at the earliest point of time. Unless, therefore, it can be demonstrated that the course of action adopted by the 1st Respondent was barred by the provisions of law, jurisdiction of the Industrial Court to have entertained these proceedings cannot be called in question. I shall presently deal with some of the other heads under which that jurisdiction was questioned.
27. Mr. Pawaskar has drawn my attention to a decision of the Supreme Court in the case of B. R. Pragatisheel Shramik Parishad v. I. O. C. I. Ltd. 1990 II CLR 217, wherein the principle has been enunciated by the Supreme Court that a settlement takes on the character of overall supremacy as far as the pending disputes are concerned and that the case of an individual or minority who does not agree with what has been done or is unhappy with it will have to be ignored. I do not see how the decision in question applies to the facts of the present case, because the dispute is not with regard to the majority or minority, but the challenge of the 1st Respondent preceeds on the basis of a challenge to the very legality of the settlement itself. It is not their case that even if they were in a minority that their views should have overridden the views of the majority.
28. The next case relied on by Mr. Pawaskar is a decision of the Supreme Court in the case of Herbertsons Ltd. v. Workmen 1977 L.I.C. Page 162, wherein the Supreme Court had laid down the well-settled principle of law that it is the intrinsic justness and fairness of the settlement that has got to be examined. Undoubtedly, when a settlement is arrived at, there is a process of scaling down both as far as the rival contentions and demands are concerned and it would always be open to a party to say that something for the better ought to have been achieved. The principle enunciated by the supreme Court, which is a salutary principle, is not at all in dispute; whereas, on the other hand, Mr. Cama has contended that he himself relied on this principle which has been enunciated not only in this decision but in a series of decisions, some of which were referred to by him, and it is his case that on the facts and circumstances, the present settlement would have to be struck down as being seriously wanting both as far as justness and fairness are concerned.
29. Heavy reliance was placed by Mr. Pawaskar on the decision of the Bombay High Court in the case of Billion Plastics Pvt. Ltd. v D. & C Wor. Union 1983 Mh. L.J. 572. In this decision, Dharmadhikari, J. was dealing with a dispute pertaining to a strike and laid down the proposition that in the M.R.T.U. and P.U.L.P. Act proceedings, the question of justifiability cannot be gone into. Relying on this decision, Mr. Pawaskar contended that the jurisdiction of the Industrial Court was barred because it could not examine the question of justifiability. I am afraid that the ratio of this case appears to have been misconstrued by Mr. Pawaskar in so far as what is questioned in the present proceedings is the aspect of legality and not the question of justifiability, which was the issue before the Court in Billion Plastics’ case. In support of this head of the argument, Mr. Pawaskar contended that the 2nd Respondent, which represented according to him not the majority but a bulk of the employees, has not only willingly accepted the settlement but that it has never questioned it. I shall presently have occasion to demonstrate the utterly dubious and for from honest role played by the 2nd Respondent in these entire proceedings and the fact that it is most regrettable that a trade union, which was invested with the sacred duty of safeguarding the interest of the workmen, appears to have very casually and very willingly bartered away those rights and interest of the poor employees. It would be too much to expect this Court to believe that this happened through negligence. Having regard to this aspect of the matter, it is not at all surprising that the 2nd Respondent had gone hand in had with the Company and has never questioned the settlement, but has, on the other hand, wholly supported the Company through the entire litigation before the Lower Court, before the High Court and even before the Supreme Court. That, to my mind, is not the real test. The party having entered into a settlement and signed it will undoubtedly, support it. Mr. Pawaskar was rather strong in his criticism regarding the roll of the 1st Respondent whom he categorised as a bunch of disgruntled persons who are bound to play the role of trouble – shooters by saying that the well-intentioned settlement was unfair and illegal and that it should never have been entered into. He states that this is the typical behavior of a party which has lost its majority, and is now trying fish in troubled waters. That aspect of the matter is again irrelevant because if it were merely a case of hurt-feelings or another point of view being projected by the 1st Respondent, the Industrial Court and this Court would have certainly told the 1st Respondent, howsoever unfortunate it may seem, that its demands cannot be acceded to. In the present case, however, the challenge is far more substantial and it is a challenge which has been upheld by the Industrial Court on almost all grounds. To my mind, therefore, the role of the 1st Respondent cannot be dismissed, least of all on the basis of the terminology used by Mr. Pawaskar. The 1st Respondent in this case has been virtually fighting with its back to the wall over a very protracted litigation that has gone more than once to the highest Court of this Country. In the light of the very unfortunate performance of the 2nd Respondent, which Union has abdicated its responsibility towards its members and towards the other employees of the company, the 1st Respondent deserves to be commended for having taken up the issue which vitally concerns almost a thousand workmen and for having seen it through all these lengthy proceedings.
30. Adverting slightly at this juncture, it is necessary to examine the contention put forth by the Company and the 2nd Respondent that it had a majority of the employees of the Company in these proceedings. Mr. Pawaskar has contended that the 1st Respondent has not conclusively established before the Industrial Court as to what is its exact membership. A reference to the record, as I have stated earlier, seems to indicate that the Industrial Court has accepted the position that the 1st Respondent represented nowhere around 900 employees. As indicated by me earlier, this issue is entirely and wholly irrelevant because even if the 1st Respondent represented only 50 to 100 workmen, as long as it was a registered trade union belonging to that Company, it had every right to file the complaint. the real issue and the one which was consistently by-passed by the Company and by the 2nd Respondent for obvious reasons was the thorny question as to what was the status of the 2nd Respondent right through these proceedings. In a hotly contested dispute of the present type, no Authority was justified in having by-passed this cardinal and vital aspect of the matter. To compound that situation, the evidence of the Company’s own witnesses indicates that the Company had not at any stage carried on any process of verification to establish conclusively or for that matter to establish on the record as to what was the exact membership or the following of the 2nd Respondent. This evidence, therefore, indicates that no verification was done by the Company. there is a casual reference made by the Commissioner of Labour in the document of settlement, which states :
“And whereas the Sabha claims to be representing almost all the workmen employed in the Company’s factory and other establishments; And whereas the Sabha’s contention is supported from the Mumbai Mazdoor Union, a recognised union, in which it is stated that the said union has no membership and that all workmen have become members of the Sabha.”
From this, it is evident that the 2nd Respondent made a claim before the Conciliation Officer that it represented a majority of the workmen and that the Conciliation Officer accepted this claim and the only basis for such acceptance was the letter dated April 18, 1986 from the recognised union, which mentions that its employees had gone over to the 2nd Respondent. Under normal circumstances, perhaps the Commissioner of Labour may have been justified in accepting a contention of this type, particularly since it was supported by the Company. There is a vague reference in the oral evidence of the Company’s witnesses that the Commissioner of Labour is alleged to have carried out some process of verification before arriving at a decision that the 2nd Respondent represented the majority of the employees. This position is obviously incorrect because the Commissioner of Labour himself has not mentioned any such process of verification in the document of settlement, but, apart from this, there is a very important piece of evidence produced by the 1st Respondent in the present proceedings. The 1st Respondent has pointed out that it has made an application before the Authorities under the M.R.T.U. and P.U.L.P. Act for granting the status of recognition to its union and that in those enquiry proceedings, the 2nd Respondent was called upon to produce evidence of its membership. The 2nd Respondent, in these proceedings, filed a detailed statement, a certified copy of which has been filed by the 1st Respondent alongwith its affidavit. This statement, which starts at page 542 and ends at page 595 and spans over as many as 53 pages, sets out the names of the employees, the department, the token number, the receipt number, the entry fee, subscription, and in the last column the date of joining. Mr. Cama has relied heavily on this document which is a record produced by the 2nd Respondent itself before a judicial authority and, not strangely enough, in the entire statement spanning 53 pages, there does not appear the name of a single employee who has joined the union prior to March 14, 1987. The document, in fact indicates that almost all the members were enrolled only on March 14, 1987. In any event, we are concerned with the proceedings in the month of may 1986, and it will have to be conclusively established from this document that in law the 2nd Respondent cannot claim that it had any members in the month of May 1986. This position appears to be startling and it was for this reason, even though the arguments had been concluded, that I requested Shri Kochar, learned Counsel appearing on behalf of the 2nd Respondent, to put forth any plausible explanation that the 2nd Respondent could advance for this shocking state of affairs. All that Mr. Kochar was able to submit was that this record pertained to the recognition proceedings and that, therefore, his client will explain the position before that Authority. This explanation is wholly unsatisfactory, to say the least, and coupled with the fact that the 2nd Respondent has not filed any affidavit in the present proceedings dealing with this document would leave this Court with no option except to hold that the claim made by the 2nd Respondent in the month of May 1986 that a majority of the workmen of the Company were their members was a false claim. Having regard to the extreme seriousness of this aspect of the case, I requested Mr. Pawaskar, learned Counsel appearing on behalf of the Company, to explain what the Company had to say with regard to this state of affairs. The only reply that was forthcoming was that the document pertained to the 2nd Respondent and that the Company cannot be held responsible. It is not the responsibility of the Company that we are concerned with, but the question is as to how and under what circumstances the Company solemnly dealt with the 2nd Respondent before the State Government in its private negotiations and thereafter before an official Authority, namely, the Conciliation Officer, and furthermore how the Company could have entered into a settlement with this union which had no membership on that date. That matter does not stop there because having held that the claim of the 2nd Respondent made in May 1986 that it represented a majority of the workmen was false, it will also, as a necessary consequence, have to be concluded that the 2nd Respondent totally misrepresented the position both to the Company and to the Conciliation Officer. While considering the legality of the settlement, which has been called in question, this aspect of misrepresentation will assume significance.
31. The challenge put forth by the 1st Respondent before the Industrial Court has been summarised by its learned Counsel in so far as, according to it, they allege that the settlement arrived at on May 30, 1986 and the notice of change that preceded it as also the conduct of the Company constituted an unfair labour practice. It is necessary to note that the 1st Respondent contended that the Standing Orders which according to it are a crystallized embodiment of the settlement between the employer and the employee, must be construed as a subsisting agreement and that a variation to those Standing Orders in any manner other than the one prescribed under the Industrial Employment Standing Orders Act, 1946, would constitute an unfair labour practice. According to the Respondent the original Standing Orders are sacrosanct and the Company cannot act in any manner that is in conflict with those Standing Orders, even in the fact of an agreement or settlement of the type that has been pleaded. Mr. Cama contended that the Act in question is a self-contained Code, as is evident from an examination of that statute, and that if the Company desired to change the age of retirement, or if the Company desired to vary the age of superannuation, the one and only method open to them was to have amended the Standing Orders and that the Company could not have acted in the present manner without such amendment having been carried out. Mr. Cama goes to the extent of stating that there were two options open to the Company, the first of them being whereby after consultations with its employees the parties could have jointly approached the Certifying Officer with an application for amendment whereupon the certifying Officer after examining the proposed amendment could have granted it and thereafter the Company could have taken action under the amended Standing orders. According to Mr. Cama, if the employees did not agree, the Company could have still got the matter adjudicated by the concerned authority who is empowered to hear the parties and who is empowered to grant the draft amendment if it passes the test of scrutiny regardless of whether one party agrees to it or not. Mr. Cama basically contends that under the Standing Orders, no such application has been made and consequently, he further contends that if according to the Company the Standing Orders stood amended by virtue of the binding settlement arrived at on May 30, 1986 by virtue of operation of law, that it was still a mandatory requirement that the Company do apply to the Certifying Officer under this Act and get the Standing Orders amended before seeking to implement the same. It was stated by Mr. Cama that the Company did, at a subsequent point of time in the year 1987, make such an application to the Certifying Authority and that the Authority did not grant the same.
32. It is necessary at this stage to point out that Mr. Kochar contended that the settlement arrived at on May 30, 1986 is a parallel proceeding under the Industrial Disputes Act and that the proceedings in question did not require either the approval or certification of the Authority, because no amendment has been made to the Standing Orders. He contended that the Company’s notice of change itself, which has merged into a settlement, and the facts and circumstances of the case, undisputedly, indicated that it was nobody’s intention to amend the Standing Orders or vary them and that this was the one-time operation for which notice under Section 9A of the Industrial Disputes Act was given because it is clearly covered by the item 11 of the Fourth Schedule to the Industrial Disputes Act, 1947, which reads as follows :-
“Any increase or reduction (other than casual) in the number of persons employed or to be employed in any occupation or process or department of shift, (not occasioned by circumstances over which the employer has no control).”
It is, therefore, the contention of Mr. Kochar that the action is wholly outside the ambit of the Industrial Employment (Standing Orders) Act, 1946, and has nothing to do with it. The contention of Mr. Pawaskar is at slight variance in so far as Mr. Pawaskar’s contentions was that Model Standing Order 27 clearly gave the Company an authority to make certain internal modifications without any amendment being necessary to the Standing Orders. Model Standing Order 27 reads as follows :-
“27. The age for retirement or superannuation of the workmen may be sixty years or such other age as may be agreed upon between the employer and the workmen by any agreement, settlement or award which may be binding on the employer and the workmen under any law for the time being in force.”
It is Mr. Pawaskar’s contention that the wording “as may be agreed upon between the employer and the workmen by any agreement, settlement or award which may be binding on the employer and the workmen under any law for the time being in force” clearly covers the Company’s action in the present case. He states that it was intrinsic as far as the Standing Orders were concerned that it was open to the Company to make a minor modification of the type that was been envisaged in the present case and that the same would not constitute an amendment to the Standing Orders and to this extent the entire argument of the 1st Respondent is misconceived. It is also the contention of Mr. Pawaskar that in the case of a situation of the present type where as a result of a legally binding and enforceable agreement or settlement or award, a consequent modification of a Standing Order may result that the procedure prescribed under the Act, as of necessity, does not have to be complied with. He further contends that in such a situation, it is only a matter of correction of record which the Certifying Authority is required to carry out on a copy of the requisite document being furnished to him. Effectively, what Mr. Pawaskar contends is that if by operation of legal process such amendment has taken place, then the procedure prescribed under Section 5 of the Industrial Employment (Standing Orders) Act, 1946 is wholly redundant. To this extent, Mr. Pawaskar is probable justified because the procedure prescribed under the said Act for modification presupposes a situation where a party approaches the Certifying Authority with the proposed amendment. In a case where some change has come about through a parallel legal process such as through proceedings under the Industrial Disputes Act, the typical position being where an award is made, that the order/award/settlement itself has the effect of amendment, and nothing in the Standing Orders Act prevents the Certifying Authority from action on the basis of the order incorporating the changes in question if it is filed before him by the parties. In fact, Mr. Pawaskar contends that this would be the correct procedure. The submission of Mr. Cama, therefore, that the Standing Orders are sacrosanct and enforceable regardless of the development in the parallel proceedings unless and until the necessary change has been certified by the Authority under this Act would be too technical an interpretation and would, therefore, not be acceptable. In the present case, however, considerable argument was advanced with regard to this aspect of the matter, but, to may mind, that issue is not particularly relevant having regard to the fact that the very validity of the document embodying the settlement on May 30, 1986 is seriously in doubt and everything revolves essentially on the answer to that question.
33. It was, of course, canvassed on behalf of the 1st Respondent that the basis of their having approached the Industrial Court was because they felt that everything that had taken place was manifestly unfair and that, therefore, they were legally and morally justified in approaching the Authority under the M.R.T.U. and P.U.L.P. Act. In an applicant approached this Authority with a prima facie case, the Authority is obliged to entertain that complaint and to examine it. A perusal of the original complaint and a perusal of the amendment subsequently carried out will, undisputedly, indicate that the 1st Respondent did approach the Authority with a series of grievances which were according to the (sic) constituted unfair labour practices. Whether they were ultimately justified or not would not be the test for deciding as to whether that Authority had jurisdiction to entertain the complaint and it would be, to my mind, an entirely wrong approach. The M.R.T.U. and P.U.L.P. Act itself specified in Section 32 that in a proceeding before that Authority, the Court shall have the power to decide all connected matters. Section 32 of the M.R.T.U. and P.U.L.P. Act reads as follows :-
“32. Notwithstanding anything contained in this Act, the Court shall have the power to decide all matters arising out of any application or a complaint referred to it for the decision under any of the provisions of this Act.”
34. The furious debate that was carried on before the Industrial Court and the number of decisions citied on either side on the basis of which it was finally decided by that Court that it had jurisdiction is an issue, to my mind, which does not require any re-examination. The Industrial Court was fully justified in having entertained the complaint in the manner in which it was filed for an additional reason. In the course of the arguments before this Court, Mr. Pawaskar cited a number of decisions, in all of which the Courts have not only equated a settlement with an award but have even gone to the extent, in a few decision, of observing that a settlement is the most desirable manner in which a dispute should be resolved and that it terms of equation it would, perhaps, have a higher status that even an award. Undoubtedly, this position is true, but it presupposes the fact that the settlement in question should be a fair and legal settlement. To quote the exact words of the different Courts, a settlement is required to be “just and fair”. To my mind, justness and fairness will have to be examined from the two entirely different angles, the first of them being the settlement itself and the second of them being the circumstances surrounding that settlement. In the present context, however, Mr. Cama has advances an interesting argument which was to the effect than an analysis of Section 18 of the Industrial Disputes Act will indicate the three modes whereby a dispute could be resolved/ended, the first of them being a bilateral settlement arrived at between the employer and the recognised union. At this point of proceedings, the law has prescribed that the recognised union alone shall be permitted to sign the settlement, the reason being obvious, namely, that there is no outside authority to supervise the correctness or fairness of such a settlement and the law, therefore, embodies the hope that the recognised union will not do anything that is against the interest of its members. Mr. Pawaskar sought to rely in this context on a decision in the case of Herbertsons Ltd. v. Workmen (supra) where the President of the union had signed a settlement accepting the terms which were slightly lower than what had been agreed upon earlier and where the members of the union themselves were unhappy and had questioned the legality of the settlement and the Court held that the settlement could not be dissected by the Court and as long as it represented the overall interest of the employees at that point of time that it would have to be upheld.
35. Adverting to Mr. Cama’s argument, he has pointed out that where a bilateral settlement does not take place the good offices of an independent authority, namely, the Conciliation Officer comes into the picture. It is assumed that since this Authority is present and the status of this Authority being that of a relatively high placed officer of the Government, the Authority will act as a further guardian in the matter of ensuring that there is no damage done to the rights and interests of the contraction parties. What Mr. Cama contends, however, is that since this stage of proceedings is still at an administrative level, the status of a settlement vis-a-vis an Award is on a slightly different plane. The distinction made by Mr. Cama is that whereas the settlement is conciliation is arrived at in the course of administrative proceedings the Award is the result of a judicial adjudication. This distinction, to my mind, is of some significance as far as the present case is concerned in answering even the basic question of jurisdiction canvassed by Mr. Pawaskar and by Mr. Kochar. If the dispute had culminated in an Award, undoubtedly, the 1st Respondent could not have gone to the Authority constituted under the M.R.T.U. and P.U.L.P. Act, even if they contended that the Award was bad in law and even if they contended that it was legally void because effectively before granting any relief that Authority would have to sit in appeal or in review over a judicial order. The same would not be the position as far as the present agreement arrived at in the course of a conciliation is concerned because, admittedly, in this case, no award came to be passed in terms of that settlement. It ended as a settlement in conciliation simpliciter and to that extent it was an agreement arrived at by two parties before the Designated Authority constituted by the Government. It is true that this settlement could have been questioned by raising an industrial dispute, but there was no bar to this being questioned in the present proceedings. To my mind, there was some additional justification because the manner in which the entire operation was hastily concluded in a short span of just a few days virtually behind their back genuinely gives rise to a feeling in the mind of the 1st Respondent that they had been subjected to unfairness and that this was the Authority to whom they should go with their grievance. Whether in law Industrial Court was justified in categorising what happened as an unfair labour practice is a slightly different issue which I shall come to after dealing with the question regarding the validity of the agreement.
36. Before dealing with that aspect of the case, it is necessary to dispose of one more submission canvassed by Mr. Pawaskar. It is his contention that Section 59 of the M.R.T.U. and P.U.L.P. Act provides a complete bar to the applicant’s invoking the jurisdiction of this Authority. Section 59 of the M.R.T.U. and P.U.L.P. Act reads as follows :-
“39. If any proceedings in respect of any matter falling within the purview of this Act, then no proceedings shall at any time be entertained by any authority in respect of that matter under the Central or, as the case may be the Bombay Act; and if any proceedings in respect of any matter within the Bombay Act, then no proceedings shall at any time be entertained by the Industrial or Labour Court under this Act.”
Mr. Pawaskar very strongly contended that where there is a statutory bar, that the jurisdiction of the Authority stands ousted and that, therefore, the present proceeding was still-born on a pure point of law. The argument has not been accepted by the 1st Respondent who contends that the complaint filed by them was one of several options available and that Section 59 of the M.R.T.U and P.U.L.P. Act did not prohibit them from approaching this Authority. A number of decisions were cited on either side and the Industrial Court has gone into those decisions and has recorded the finding that Section 59 of the M.R.T.U and P.U.L.P. Act does not prescribe a bar in the way of the 1st Respondent. It is necessary for me to re-enter into that debate because essentially the decisions cited before me were more or less the same as were cited before the Industrial Court. What is necessary, however, to point out is that Section 59 of the M.R.T.U and P.U.L.P. Act in letter and spirit has been put on the statute book with the sole objective of discouraging multiplicity of proceedings in respect of the same cause of action. Undoubtedly, where one or the other party has commenced or is in the process of prosecuting proceedings in respect of a certain set of facts, the law prohibits the same or the other party on the ground that it constituted a breach of the provisions of the law. To my mind, the entire argument is fallacious and ought not to have been canvassed in the first instance because, admittedly, on the facts, the two proceedings have followed each other in succession. The proceedings mere not simultaneously instituted, they were consecutively instituted, and there can be no dispute whatsoever of the fact that everything that constituted the first set of proceedings under the Industrial Disputes Act came to a point of finality on May 30, 1986 when the settlement came to be signed. That settlement was not the subject-matter of any review or appeal nor were any such proceedings pending on May 30, 1986 when the present proceedings were commenced. On a plain reading of the facts, therefore, the learned Member of the Industrial Court should have refused to entertain the lengthy debate that was canvassed and the number of decisions that were cited before him with regard to the question as to whether there existed a statutory bar to the proceeding instituted before him.
37. Coming now to the agreement or settlement that was arrived at on May 30, 1986, it is necessary to record that this particular settlement, apart from the fact that it would stand vitiated on the ground that the Company signed the agreement with the 2nd Respondent which union had misrepresented to the Company that it had a majority following which in legal terms constitutes membership, becomes highly suspect and virtually tainted for a variety of reasons.
38. In the first instance, the ground on which the Company desired to retrench 1000 workmen has been set out in a document produced before me, which is a letter dated June 6, 1986 from the I. C.I.C.I. By this letter, the I.C.I.C.I. has stated that it was willing to enter into a sort of nursing programme for the Company and one of the conditions was that the Government permission be obtained for retrenching 1000 employees. This document was not on record at the time when the negotiations took place or for that matter when the settlement took place. How and under what circumstances this document saw the light of the day a week after the settlement creates a higher degree of doubt. The evidence, on the other hand, indicates that some representative of the I.C.I.C.I. is supposed to have urges before the Government that this was one of their proposals. To may mind, this state of affairs must be characterised as being most dubious. It will have to be remembered that if the Company was on the verge of collapse and close-down and if the I.C.I.C.I. had decided after several rounds of negotiations, to assist in the process of nursing programme there would have been virtually a project report. What were the ground on which as many as 1000 workmen of the Company were to be divested of their jobs, why this particular number and not more or not less and above all were there not any other alternative proposals possible, whether any such alternatives were examined, are gery areas to which we find no answer. These questions ought to have been answered, to my mind, no by the Company but by the 2nd Respondents, who have miserably failed in their duty vis-a-vis their members and all the employees of the Company whom they sought to bind by entering into the conciliation settlement agreement on May 30, 1986. It is on record that the 2nd Respondent is supposed to have opposed the original notice of change. Mr. Cama made capital out of the fact that the so called opposition is supposed to have been oral and not in writing. It is quite inconceivable in a case of this magnitude where almost 1/3rd of the Company’s workmen were being asked to leave the Company and where the Company had in all solemnity issued a notice of change that the union which claimed to represent their interest would not have so much as sent a letter indicating the grounds on which they opposed the settlement. To my mind, this was not accidental but indicated the state of affairs which seriously impinges on the very credibility and honesty of the 2nd Respondent as far as their role during the entire proceedings is concerned.
39. The additional ground for these conclusions is that the proceedings before the Lower Court in the course of a very vigorous contest had the result of an almost threadbare examination of every facet of this dispute. The 1st Respondent, both in the oral evidence and in their pleadings, have attacked the very premise on which the Company sought the retrenchment of 1000 workmen. It is their contention that there is absolutely no material on record to justify this “requirement” and merely because it is contended that an officer of the financial institution made such a recommendation no authority worth its credibility can accept such a situation without a thorough examination. In the course of the oral evidence, it was indicated that to case whatsoever had been made out before the Government for retrenchment and it was for this reason that the permission was not granted. It is true that the Government are most reluctant to grant permission for retrenchment and closure, but there is a valid justification for this policy in a set up such as the one which prevails in the Indian economy where the value of one’s job is almost synonymous with one’s existence. Apart from the tenets of the Directive Principles embodied in the Constitution of India, Government and all public authorities are over-conscious of the fact that in spite of the best efforts that there exists large-scale unemployment and under these circumstances any proposal resulting in the increase of such unemployment will have to be resisted as far as possible. It is not as though this is an inflexible rule, but what is required to be done is to explore every available alternative and invariably it is possible to find some alternative that is less harmful than the prospect of termination of employment, which virtually results in an economic death of the employee concerned. There was much debate before the lower authority as also before this Court about the fact that the Company has been quite fair and generous as far as the terms were concerned and that the object was to minimise the hardship. It was also sought to be contended that had an order for retrenchment simpliciter been passed, the younger of the employees and the junior – most who were at the start of their career would have been rendered unemployed and that the amount payable to them would have been limited to 15 days’ salary per year. In that event, the Company would have had to pay an extremely small amount because these employees were junior persons and the total quantum payable would have been much less. On the other hand, where the older persons were divested of their jobs after a career spanning over 25 years, it would clearly mean that they have to leave the employment a little earlier than normal for which the Company would compensate them to an extent that would virtually be double of what they would have got had they been merely retrenched. These arguments are hardly satisfactory or acceptable, because the first proceeds on the assumption that the hardship to an older person is of a lighter degree than when it is imposed on a younger person. This reasoning is totally fallacious and perverse. It is not ordinary hardship that we are concerned with but we are dealing with a situation resulting in the total loss of livelihood and, consequently, it is a hardship of the most extreme form and it was, therefore, enjoined upon the 2nd Respondent and Conciliation Officer the have explored every conceivable alternative possibility of saving the jobs before having permitted the present settlement which the Company and the 2nd Respondent were over – anxious to finalise.
40. Apart from the fact there is no document indicating the grounds on which the 2nd Respondent opposed the proposed settlement or the change, what is further significant is the fact that the proceedings before the Conciliation Officer concluded virtually without any degree of opposition at all. In the course of the cross-examination of the Company’s witnesses, they were asked to produce the Minutes of the Meeting before the Labour Commissioner. The answer was that no such Minutes are forthcoming. If the Minutes had been maintained, they would certainly have been produced, and the Minutes would have indicated as to on what ground the 2nd Respondent opposed the settlement. If the 2nd Respondent had, in fact, raised any opposition, such opposition even with regard to the terms proposed, undoubtedly, would have to be translated in terms of money. For the purposes of considering those proposals, considerable paper work was, undoubtedly, necessary because the Company had to take a decision involving liability running into crores of rupees and in the financial stress in which the Company was placed would have involved consultations with financial institutions, banks, etc. The fact that no Minutes have been maintained leads to a very disturbing conclusion, namely, that obviously no opposition was put up in the course of the so-called conciliation proceedings. That also explains how in the course of those two dates when the conciliation is supposed to have taken place the entire dispute running into liabilities crores of rupees is supposed to have been amicably settled between the Company and the 2nd Respondent. It is quite incredible under these circumstances to expect any Judicial Authority to hold that these negotiations were either fair or that they were aboveboard. It is necessary in this state of affairs to enter into any further discussion, except to express a very high degree of lament regarding the role played by the 2nd Respondent in this case. If their claim that they were representing majority of the workmen and that they were a responsible trade union is to be accepted, one would have justifiably required by them to have played an entirely different role and to have explored all possible means for the purpose of saving the jobs of their members. Unfortunately, there is not even a shred of evidence to indicate that any efforts along these lines were made and it is for this reason that the 1st Respondent had contended that the 2nd Respondent has acted dishonestly and in total collusion with the company. Unfortunately, this allegation appears to be justified. Mr. Cama made a caustic remark that the 2nd Respondent have indulged in “horsetrading” and that they have played the role of a trading agency and not of a trade union – the observation is not entirely misplaced.
41. In this view of the matter, the agreement entered into in the conciliation proceedings on May 30, 1986 will have to be set aside on the ground that, in the first instance, the agreement was vitiated by fraud and furthermore that the agreement in question, having regard to the facts and circumstances of the case, was neither fair nor just. What is fair and just is not an extraneous issue, but it is something that will have to be judged in the light of the several facts and circumstances of the particular case. I have no hesitation, for the reasons indicated by me above, in holding that the present agreement will have to be set aside on the grounds as indicated above.
42. Mr. Rajendra Sawant, learned Counsel appearing on behalf of the 3rd Respondent, has raised one more submission which is of considerable consequence. Mr. Sawant has contended that quite apart from the degree of responsibility with which the leaders of a trade union are required to function they are totally precluded from acting in a manner that is opposed to public policy. Relying on a decision of the Supreme Court in the case of Central Inland Water Transport Corpn. Ltd. v. Brojo Nath (supra), Mr. Sawant contended that an agreement of the present type which, regardless of the type of wording employed, has the effect and result of rendering almost a thousand employees unemployed, is certainly opposed to public policy and that on this ground alone the agreement is liable to be struck down. He further contended that in a situation such as this, the agreement is also open to attack as being rendered void under Section 23 of the Contract Act. It is unnecessary to enter into an examination of the law on this point, but suffice it to say that there is considerable force and justification in these submissions advanced by Mr. Sawant. Apart from the safeguard of interest, it is equally necessary for the contracting parties to act in consonance with the legal provisions before affixing their signatures to documents of the present type.
43. The Industrial Tribunal has come to the conclusion that the Company is guilty of having committed unfair labour practices with which they stood charged. The M.R.T.U and P.U.L.P. Act is a legislation involving penal consequences and it is well-settled law that the provisions of this legislation requires to be very strictly construed. The Industrial Tribunal had upheld the charges leveled against the Company to the effect that the action taken by the Company to retire 889 employees constituted a breach of the Standing Orders and that, consequently, it will have to be held that an unfair labour practice has been established. This conclusion, to my mind is unjustified because the Court has overlooked the all-important fact that at the time when the action was taken there existed an agreement that had been entered into on May 30, 1986. The agreement in question had been signed before a Conciliation Officer and the Company was justified in proceeding on the basis of that. The law entitled them to give effect to that agreement. It could, therefore, never have been held that the Company of its own volition has given a go-by to the Standing Orders and that it has committed an offence by breaching them. This important aspect of the case appears to have been overbooked by the Trial Court. The remaining heads under which the Company was held guilty of having committed unfair labour practices proceed on the same reasoning and, therefore, the part of the order of the Lower Court whereby the learned Member has recorded the finding to the effect that the Company has been guilty of unfair labour practices is necessarily required to be set aside.
45. In the result, the order passed by the Tribunal to this extent will have to be confirmed and the interim orders passed by the learned Single Judge dated April 27, 1989 re-instating these employees with effect from the date on which the orders were made effective would stand confirmed. As regards the question of back wages payable to the employees who are entitled to reinstatement is concerned, having regard to the lapse of time, I am informed that in all the cases the amount payable to them as and by way of back wages would be higher than the amount paid to them by the Company pursuant to the action taken in July 1986. In any event, by virtue of this order, the status quo ante stands restored and those employees who stood retired from the Company in July 1986 shall be treated as having been continued in service as and from that date and the Company shall proceed on that basis. It is, however, clarified that this order shall not compel any of the employees who desired to avail of the retirement scheme of the Company and do not desire re-instatement from either refunding the amount or taking up employment with the Company by virtue of this order.
46. On the question of cost, as indicated by me at a number of places in this Judgment, this is a case concerning an exceptional set of facts. Whereas it was the allegation of the 1st Respondent that the Company is entirely responsible for everything that happened since the month of April 1986, I am unfortunately unable to uphold that position because the Company was of the view that it should go by the advice of the financial institution. It was, therefore, wholly incumbent on the representatives of the employees to have taken all necessary steps to ensure that any damaging results do not ensue. On the basis of the findings indicated in this Judgment, I have already held that the 2nd Respondent not only abdicated their responsibility but that there is sufficient and cogent evidence on record to show that at all stages it acted entirely in furtherance of the interest of the Company and not of its members. In this view of the matter, and considering the fact that the 2nd Respondent has done nothing to either justify or redeem its position either before the Trial Court or in the several earlier proceedings the interests of justice would require that the 2nd Respondent should pay the costs of the 1st Respondent who are the applicants before the Trial Court for the entire proceedings. This is a case that has gone on for several years before the Trail Court. It is a case that has come upto the High Court on two or three occasions and also to the Supreme Court. Under these circumstances, the costs payable by the 2nd Respondent are quantified at Rs. 25,000/-. The payment of the costs shall be condition precedent as far as the 2nd Respondent is concerned before any further proceedings are adopted.
47. Mr. R. J. Kochar, learned Counsel appearing on behalf of the 2nd Respondent, advanced a strong plea that the 2nd Respondent should not be saddled with costs and that too exemplary costs in these proceedings. He pointed out that the 2nd Respondent has appeared in these proceedings throughout its learned Counsel and that the Court has been adequately assisted. He further submitted that the quantum of Rs. 25,000/- is abnormally heavy and that it would almost be a punitive order. It is, therefore, essential for me to point out that the award of costs is not on the basis of any defaults committed in the course of the proceedings or with the intention of punishment. The record indicated that the 2nd Respondent is a large trade union and a list of the establishments under its control runs into several pages, and is even graded categorywise. The record further indicates that considerable violence and the use of muscle-power accompanied the entry of the 2nd Respondent into the Company, which virtually bulldozed its way in. Thereafter it took it for granted that having physically taken the control, the requirements of law were irrelevant and that virtually might was right. On record, the 2nd Respondent was neither a recognized union nor did it have any membership in spite of which it abrogated to itself the status of a recognized union, took part in negotiations and even represented the employees and went to the extent of signing the agreement in question. The matter does not rest there because in the considerable litigation that ensued had the 2nd Respondent at any point of time the honesty to disclose to any of the Courts that it was masquerading in the position of a recognized union or a majority union when, in fact, it was neither, the necessity for either the Trial Court or this Court or the Supreme Court to have expended hundreds of hours of precious judicial time in the litigation spread over several years would have been eliminated. It is on these considerations that the figure of Rs. 25,000/- has been quantified which, to my mind, is neither excessive nor punitive, but in the circumstances of the case, both fair and correct.
48. In the result the writ petition succeeds and is partially allowed. The rule is made partially absolute accordingly.
49. Before parting with this Judgment, I would like to acknowledge that all learned Counsel appearing in these proceedings, notably, Mr. Pawaskar, Mr. Talsania, Mr. Cama, Mr. Pendse and Mr. Sawant as also Mr. R. J. Kochar, have done an admirable job in assisting the Court in this extremely complicated and difficult case.