PETITIONER: M/S. SWADESHI COTTON MILLS CO.,LTD., KANPUR Vs. RESPONDENT: RAJESHWAR PRASHAD AND ORS. DATE OF JUDGMENT: 14/11/1960 BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. SARKAR, A.K. WANCHOO, K.N. CITATION: 1961 AIR 429 1961 SCR (2) 359 ACT: Industrial Dispute--Compromise during pendency of appeal--- Validity--Procedure--The U. P. Industrial Disputes Act, 1947 (U. P. XXVIII of 1947), ss. 6-c, 2(t)--U. P. Industrial Disputes Rules, 1957, r. 5(1)--Payment of Wages Act, 1936 (Act 4 of 1936), s. 23. HEADNOTE: While this appeal by special leave, relating to an industrial dispute was pending in this Court a Director of the appellant employer and a representative of the respondents employees made an application to the Court praying that an order might be passed in terms of a compromise since an agreement was alleged to have been entered into by the appellants and the respondents. Some of the respondents contested this compromise and the court sent issues to the Tribunal for finding whether the alleged com- promise actually took place between the parties, and if so, was it valid. The Tribunal returned findings to the effect that the compromise did actually take place and was valid. Those findings were contested in the appeal. Held, that a compromise agreement seeking to settle an industrial dispute which was still pending decision in this Court would not contravene the provisions of S. 23 of the Payment of Wages Act which contemplated rights not likely to be modified or reversed in any judicial proceedings. The procedure prescribed by s. 6-C of the U. P. Industrial Disputes Act and the provisions thereof did not affect the powers of this Court, or the competence of the parties, to amicably settle a dispute pending before it. The procedure for obtaining an order in terms of the com- promise entered into between the parties pending the appeal in this Court is prescribed by its own rules and the provisions of S. 2(t) of the U. P. Industrial Disputes Act and rule 5(1) of the Rules made thereunder have no application to such case. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 53 of 1958.
Appeal by special leave from the Decision dated February 28,
1957, of the Labour Appellate Tribunal, Bombay, in Appeal
No. 111-160 of 1956.
S. P. Varma, for the appellants.
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L. K. Jha, Janardan Sharma, R. C. Prasad and Maqbool Ahmad
Khan, for the respondents.
1960. November 14. The Judgment of the Court was delivered
by
GAJENDRAGADKAR, J.-This appeal by special leave arises from
an industrial dispute between the appellant Messrs.
Swadeshi Cotton Mills and the respondents, its employees,
and the short preliminary question which is raised for our
decision is whether an order should not be passed in this
appeal in terms of the compromise agreement alleged to have
been reached between the appellant and the respondents. It
appears that on December 28, 1955, an industrial dispute
between the parties was referred by the Government of Uttar
Pradesh to the Industrial Tribunal, U. P., Allahabad, for
adjudication under ss. 3, 4 and 8 of the U. P. Industrial
Disputes Act, 1947 (U.P. Act XXVIII of 1947) and in
pursuance of the provisions of cl. 11 of G. O. No. U-
464(LL)/XXXVI-B-257 (LL)/1954 issued on July 14, 1954. The
dispute thus referred was whether the existing rates of
wages of jobbers mentioned in the annexure employed in the
weaving department of the appellant need any revision; if
so, with what details and from what date ? The Tribunal
tried this issue and came to the conclusion that no case for
revision had been made out by the respondents. Against this
decision of the Tribunal the respondents preferred an appeal
before the Labour Appellate Tribunal. Their appeal
succeeded and the Appellate Tribunal directed that the award
of the original Tribunal should be set aside, and that the
appellant ” shall introduce from the date of reference a
uniform rate of two annas in both the old and new sheds
irrespective of the number of looms assigned to the line
jobbers “. It would be noticed that as a result of this
decision the existing rates have been revised and the
revision has been ordered to take effect retrospectively
from the date of reference. It is against this decision of
the Labour Appellate Tribunal that the appellant has
preferred the present appeal by special leave.
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Pending this appeal in this Court the appellant purported to
enter into a compromise with the respondents and the terms
of the compromise were reduced to writing, and in pursuance
of the said compromise an application was made to this Court
on February 26,1958, signed by Mr. Bagla, on behalf of the
appellant in his capacity as a Director of the appellant,
and Mr. Maqbool Ahmad Khan, for the respondents, in his
capacity as the General Secretary of the Suti Mill Mazdoor
Sabha, Kanpur. This application set out the material terms
of the compromise. One of the terms of the compromise is
that the revised rate should take effect not from December
28, 1955, which is the date of reference but from July 1,
1957. Certain other modifications have also been made in
the decision under appeal.
Before the appeal could be placed on the Board for passing
orders in terms of this compromise an application was made
on behalf of some of the respondents alleging that the
General Secretary Mr. Khan had no authority or power to
enter into any compromise as a representative of the
respondents, and that the compromise alleged to have been
entered into by him with the appellant was not acceptable to
the respondents. In support of this case the application
referred to a resolution passed by the General Council of
the Mazdoor Sabha whereby it was declared that no office
bearer could conclude an agreement with an employer about an
industrial dispute without the consent of the General
Council, and reliance was also placed on the relevant
provisions in the constitution of the Mazdoor Sabha.
Thereafter the petition for compromise was placed before
this Court for hearing on April 10, 1960, and the Court
directed that the application for recording compromise as
well as the appeal itself should both be placed together for
hearing before the Court as soon as the parties file their
respective statements of the case. After the statements
were filed the appeal and the petition were placed before
this Court on May 5, 1960, and the Court by an interlocutory
judgment
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sent two issues to the Tribunal with a direction that the Tribunal
should hear the parties on those issues and make its
findings thereon. The two issues were: (1) Has the
compromise set up by the appellant taken place between the
parties; (2) If yes, is the compromise valid ? In pursuance
of this order the Tribunal has recorded evidence, heard the
parties and made its findings. It has found that the
compromise in fact has taken place as alleged in the
petition made before this Court in that behalf, and that the
said compromise is valid. In dealing with the first
question of fact the Tribunal has considered the evidence
exhaustively in the light of the background of the dispute
between the parties; it has found that negotiations went on
between the parties for a fairly long time during which
period the parties discussed the pros and cons of the
compromise, that during these negotiations Mr. Khan was
watchful of the interests of the respondents, that the
compromise had been approved by the workmen concerned, that
on the whole it is to their advantage and does not at all
militate against the accepted principles of industrial
adjudication, and what is more it has been acted upon and
has not remained a mere paper transaction. It has explained
that the opposition to the compromise proceeded sub-
stantially from the dispute between Mr. Khan, the Secretary,
and Mr. Bajpai, the President, and the Tribunal felt no
doubt that the compromise was the result of bona fide
attempt on the part of both the parties to settle the
dispute amicably in order to create goodwill and co-
operation amongst the employer and the employees.
On the question of law raised by the second issue the
Tribunal has held that the compromise is perfectly valid.
It has considered the relevant provisions of the
constitution of this Sabha, the practice prevailing in
regard to such compromises and to several agreements of
compromise entered into consistently with the said practice.
It was urged before the Tribunal that the compromise is
invalid under s. 6-B of the U.P. Industrial Disputes Act,
1947, as well as s. 2(vi). (c) of the Payment of Wages
Act, 1936 (Act 4 of 1936).
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These contentions have been rejected by the Tribunal. In
the result the findings recorded on both the issues are in
favour of the compromise.
After these findings were received in this Court, the’
appeal and the compromise petition have now come before us
for final disposal. The finding of fact recorded by the
Tribunal on the first issue has not been and cannot be
challenged before us. It must( therefore be taken to have
been established that at the relevant time Mr. Khan was the
General Secretary of the respondents Sabha, and as such was
entitled to represent them and did represent them during the
course of the present adjudication proceedings, and that the
compromise reached between him and the appellant is the
result of mutual discussions carried on for some time and
its terms on the whole are beneficial to the respondents.
The practice prevailing in this Sabha and a large number of
precedents which are consistent with the said practice
indicate clearly that the Secretary of the Union who
represents the workmen in industrial disputes has always
been authorised and has exercised his authority to settle
such disputes when it was thought reasonable and proper to
do so. As we have often indicated it is always desirable
that industrial disputes should be amicably settled because
such settlement conduces to happy industrial relationship
and encourages co-operation between the parties. That is
why when industrial disputes are brought before this Court
under Art. 136 of the Constitution this Court generally
appreciates attempts made to settle disputes amicably, and
in proper cases encourages such settlements. Mr. Jha, for
the respondents, however, contends that though amicable
settlement of industrial disputes may otherwise be
desirable, in law such settlement or compromise is illegal.
If we come to the conclusion that compromise of industrial
disputes pending an appeal is prohibited by law, or is
otherwise inconsistent with such provisions it may be
necessary to hold that the present compromise is bad in law
however much amicable settlement of industrial disputes may
otherwise be desirable. Therefore the question which arises
for our
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decision on the present compromise petition is: Is the
contention raised by Mr. Jha correct that the compromise is
invalid in law ?
The first point urged by Mr. Jha in support of this argument
is that the present compromise is prohibited by a. 23 of the
Payment of Wages Act. This Act has been passed to regulate
the payment of wages to certain classes of persons employed
in industry, and there is no doubt that the wages as
revised by the Labour Appellate Tribunal in the present case
would constitute wages under s. 2 (vi) of this Act. Section
23 provides that any contract or agreement, whether made
before or after the commencement of this Act, whereby an
employed person relinquishes any right conferred by this Act
shall be null and void in so far as it purports to deprive
him of such right. The relevant provisions of this Act
require the fixation of wage periods, provide for the time
of payment of wages, authorises certain deductions, and
permits the imposition of fines only subject to the
conditions specified in that behalf. Section 15 of the Act
provides for the determination of claims arising out of
deduction of wages or delay in payment of wages and penalty
for malicious or vexatious claims. Section 16 prescribes
for the making of an application in which such claims can be
set up; and a. 18 provides for the powers for the
authorities appointed under the Act. Mr. Jha contends that
the revised wage structure directed by the Labour Appellate
Tribunal entitles the respondents to claim the respective
amounts there indicated as their wages, and the effect of
the impugned compromise is that the respondents are
relinquishing a part of their right in that behalf. Mr. Jha
con. tends that in giving up their claim for the retrospec-
tive operation of the decision of the Labour Appellate
Tribunal for a substantial part of the period the res-
pondents are required to contract themselves out of their
legal rights conferred by the award and there. fore
referable to this Act, and that makes the compromise
invalid. This argument is misconceived because it
fallaciously assumes that the decision under appeal has
become final and that the rights accruing under
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the said decision would not be and cannot be affected by any
compromise. The most significant fact to remember in this
connection is that the decision on( which the alleged rights
are based is itself subject to an appeal before this Court,
and in that sense it is not a final decision at all; it is
liable to be reversed or modified, and that being so the
rights claimable under the said decision are also liable to
be defeated, or materially affected. In such a case the
industrial’ dispute would undoubtedly be pending before this
Court, and it would be idle for Mr. Jha to contend that an
attempt to settle such a dispute and not to invite a
decision of this Court contravenes the provisions of a. 23
of this Act. Just as an industrial dispute could have been
settled between the parties either before it was referred
for adjudication to the Industrial Tribunal, or after it was
referred and before the award was pronounced by the
Tribunal, so would it be open to the parties to settle the
dispute so long as it was pending either before the Labour
Appellate Tribunal or before this Court. The provisions of
s. 23 of this Act postulate certain definite rights which
are not likely or liable to be modified or reversed in any
pending judicial proceedings, and since this factor is
absent in cases where an appeal is pending before this Court
it would not be reasonable to rely on the said provisions
and contend that they in substance prevent or prohibit
amicable settlement of disputes.
The other argument urged against the validity of the
compromise is based on the provisions of s. 6-C of the U. P.
Industrial Disputes Act, 1947. This section corresponds
substantially to s. 19 of the Industrial Disputes Act XIV of
1947. It provides, inter alia, that an award shall in the
first instance remain in operation for the period of one
year or such shorter period as may be specified therein, and
gives the State Government power to extend the period of
operation from time to time if it thinks fit. It also
provides that the State Government, either on its own motion
or on the application of any party bound by the award,
shorten the period of its operation, if it is shown that
there has been a material change in the circumstances
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on which the award was based. The argument is that any
modification in the award can only be made by adopting the
procedure prescribed by s. 6-C. In our opinion there is no
substance in this argument. Section 6-C undoubtedly confers
upon the State Government certain powers to fix the duration
of the operation of the award, but there can be no doubt
that the section can have no bearing on the powers of this
Court in dealing with an industrial dispute brought before
it under Art. 136 of the Constitution. The award to which
s. 6-C refers is an award which has become final in the
sense that it is no longer subject to consideration by any
Tribunal or Court. So long as an award is pending before a
Tribunal or a Court the jurisdiction of the Tribunal or the
Court to deal with it in accordance with law is not affected
by s. 6-C, and the competence of the parties to settle their
dispute pending before the Tribunal or the Court is also not
affected or impaired by the said section. In other words,
what we have said about the argument based on the provisions
of s. 23 of the Payment of Wages Act applies with equal
force to the present argument as well.
Then it is contended that the impugned compromise is a
settlement within the meaning of s. 2(t) of the U. P.
Act and as such it can be executed only in the manner
prescribed by the Act. Section 2(t) defines a settlement as
one which is arrived at in the course of conciliation
proceedings and as including a written agreement between the
employer and the workmen arrived at otherwise than in the
course of conciliation proceedings when such an agreement
has been signed between the parties thereto in such manner
as may be prescribed and a copy thereof has been sent to the
State Government and the conciliation officer. Rule 5(1) of
the U. P. Industrial Disputes Rules, 1957, prescribes the
procedure for recording a settlement as defined by s. 2(t).
It is true that this procedure has not been followed, but it
is difficult to understand how s. 2(t) or the procedure
prescribed by r. 5(1) can have any application to a
compromise agreement which has been entered into between the
parties pending the
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appeal in this Court. The compromise in question is
intended to be filed in this Court for the purpose of
enabling the parties to request this Court to pass an, order
in terms of the said compromise. The procedure for
obtaining such an order which has to be followed is the
procedure prescribed by the rules of this Court, just as if
a compromise was reached before the Tribunal the procedure
to be followed before it would be, the procedure prescribed
by its rules. Therefore we have no doubt that the
compromise in question cannot attract the procedure
prescribed by r. 5(1).
The result is that the finding recorded by the Tribunal that
the compromise in question is valid is obviously right and
must be confirmed. Since it is found that the compromise in
fact has taken place and is otherwise valid, we have no
hesitation in directing that an order should be drawn in
terms of the said compromise in the present appeal.
Order accordingly.