High Court Kerala High Court

M/S. Vaigai Thread Processors Ltd vs J.T.M. Labour Union on 16 March, 2010

Kerala High Court
M/S. Vaigai Thread Processors Ltd vs J.T.M. Labour Union on 16 March, 2010
       

  

  

 
 
  IN THE HIGH COURT OF KERALA AT ERNAKULAM

WA.No. 963 of 2004()


1. M/S. VAIGAI THREAD PROCESSORS LTD.,
                      ...  Petitioner

                        Vs



1. J.T.M. LABOUR UNION, REPRESENTED BY ITS
                       ...       Respondent

2. LABOUR COMMISSIONER, GOVERNMENT OF

3. ADDITIONAL LABOUR COMMISSIONER,

4. MADURA COATS WORKERS UNION,

5. MADURA COATS EMPLOYEES UNION,

6. J & P COATS STAFF ASSOCIATION,

7. STATE OF KERALA, REPRESENTED BY ITS

8. MINISTER FOR LABOUR, GOVERNMENT OF

                For Petitioner  :SRI.ANIL.D.NAIR

                For Respondent  :SRI.G.JANARDHANA KURUP (SR.)

The Hon'ble MR. Justice K.BALAKRISHNAN NAIR
The Hon'ble MR. Justice P.N.RAVINDRAN

 Dated :16/03/2010

 O R D E R
          K.BALAKRISHNAN NAIR & P.N.RAVINDRAN, JJ.
                ----------------------------------------
                         W.A.No.963 of 2004
                ----------------------------------------
                       Dated 16th March, 2010

                              JUDGMENT

Balakrishnan Nair, J.

The first respondent in the Writ Petition is the appellant.

The first respondent herein was the writ petitioner. The brief facts of

the case are the following. The first respondent is one of the trade

unions of the workmen working under the factory of the appellant at

Koratty. Respondents 4 to 6 are also registered trade unions of the

workmen of the industrial establishment. The terms of employment of

the workmen are governed by settlements signed between the

management and the workmen from time to time. Ext.P1 was the

settlement concluded on 15.2.1996. The next settlement was Ext.P4

dated 6.4.2002. It was a conciliation settlement. In the conciliation

proceedings, the management and all the trade unions participated.

But, at the time of concluding the settlement, the first respondent

herein declined to sign it on the ground that its representatives do not

have the mandate of its general body. Other unions signed the

settlement. The Conciliation Officer also signed the settlement, taking

the view that its terms are just and fair and the unions who were

parties to the settlement represent the majority of the workers in the

establishment.

W.A.No.963/2004 2

2. Challenging Ext.P4, the first respondent herein filed the

Writ Petition. Various contentions were raised to attack the

settlement. The appellant and some of the trade unions filed separate

counter affidavits supporting the settlement. The learned Single Judge

after hearing both sides declared that Clauses 2 and 9 of Ext.P4

settlement have no existence, as according to the learned Judge, those

clauses were unconscionable and shocking to judicial conscience.

Feeling aggrieved by the said judgment, the management preferred

this Writ Appeal. According to them, a conciliation settlement cannot

be challenged under Article 226 of the Constitution of India. The only

remedy is to raise another dispute concerning its validity. Other

contentions are also raised.

3. We heard the learned counsel on both sides. The

learned counsel for the appellant relied on the decision of the Apex

Court in National Engineering Industries Ltd. v. State of

Rajasthan (2000 (1) LLJ 247) in support of his submission. The

learned counsel for the respondents on the other hand submitted that

the agreement was not in fact signed by the unions. According to him,

no discussion was held regarding the work norms mentioned in Clause

2. Further, there was no annexure to Ext.P4. If Clause 9 is allowed to

stand, an agreement cannot be given retrospective effect and it will

W.A.No.963/2004 3

operate only prospectively. In view of the above position, the learned

Single Judge rightly interfered with those clauses, it is submitted.

4. We considered the submissions made at the Bar and

also perused the materials on records. An agreement between two

parties may be nullified by a Civil Court if its terms are unconscionable

or against public policy in the light of Section 23 of the Contract Act.

But, under writ jurisdiction, the High Court cannot set aside an

agreement or terms thereof on the ground that its terms are

unconscionable or against public policy. Normally, an agreement

between parties binds only them. But, a conciliation settlement

concluded under section 12(3) of the Industrial Disputes Act will have

extended binding effect in view of the provisions of section 18 of the

said Act. Such a provision is enacted to ensure industrial peace and

obedience to a settlement, which is signed in the presence of a

Conciliation Officer with his involvement, on the presumption that its

terms will be just and fair and therefore, it can be made applicable to

all workers in the establishment whether their unions have signed the

settlement or not. So, if a Conciliation Officer signs a settlement

arbitrarily, even though the terms of the settlement concerned are

highly arbitrary or illegal, then his action in this regard may be

challenged before this Court and a declaration can be obtained that the

W.A.No.963/2004 4

action of the said officer is ultra vires. The consequence will be that

the terms of such a settlement will only have the effect of a bipartite

settlement and not of a conciliation settlement and therefore, it only

binds the parties thereof who have actually signed it. So, the

contention of the management that a conciliation settlement cannot be

challenged may be broadly correct. But, that principle does not stand

in the way of the affected person attacking the endorsement made in

that settlement by a Conciliation Officer, who is a statutory authority.

5. In view of the above legal position, the validity of

quashing of two clauses of the settlement have to be examined. The

clauses quashed by the learned Single Judge read as follows:

“2. All individual worker will give production norms
in annexure.

9. When a long term settlement is made it will be
for a period of prospective 3 years.”

The parties are free to arrive at any settlement. Sitting under Article

226 of the Constitution of India, the learned Single Judge could not

have interfered with them and declared that they are unconscionable.

Clause 2 provides that the worker will have to conform to the

production norms in the annexure. According to the learned counsel

for the appellant, there was no annexure to the settlement. But, we

notice that the learned Single Judge did not interfere with the said

W.A.No.963/2004 5

clause for the reason that there was no annexure to the settlement.

But, the learned Judge noticed that there was an annexure and it

provides for wage cut whenever the worker concerned did not attain

the production target. When production norms are agreed to by the

majority of the workmen, the same cannot be described as unjust or

unfair. Therefore, interference of the learned Single Judge with the

said condition is unsupportable. We, in this context, notice the

submission of the learned counsel for the first respondent that all the

unions did not sign the settlement. But, we find that in the Writ

Petition, other unions do not have such a case. They support the

management and oppose the challenge against Ext.P4 made by the

first respondent. Therefore, that contention also could not be

accepted.

6. Clause 9 of Ext.P4 deals with the period of the

settlement. Now, it is a practice in the industrial area to give effect to

a settlement for three years or five years prospectively. But, at the

same time, the settlement will take effect notionally, from the date of

expiry of the last settlement. Clause 9 only states about prospectivity

of a settlement. The same does not stand in the way of giving

retrospectivity to the settlement. On that point, Clause 9 is silent.

Therefore, we find that there is no arbitrariness or irrationality in that

W.A.No.963/2004 6

clause. Further, it being a clause of the present settlement, it can be

modified in the next settlement. Therefore, approval of the Conciliation

Officer for that clause also cannot be contended as ultra vires.

In the result, the judgment under appeal is reversed. The

Writ Petition is dismissed. The Writ Appeal is allowed as above.

K.BALAKRISHNAN NAIR
Judge

P.N.RAVINDRAN
Judge

TKS