JUDGMENT
Satyabrata Sinha, J.
1. This appeal is directed against a judgment and order dated May 17, 2000 passed by a learned single Judge of this Court whereby and whereunder the writ petition filed by the appellant herein questioning an order passed by the appellate authority affirming the order of the controlling authority under the Payment of Gratuity Act, 1972 (hereinafter called and referred to for the sake of brevity as the said Act) was dismissed.
2. The basic fact of the matter is not in dispute. The respondent No. 3 herein was an employee of Oriental Machinery and Civil Construction Limited (hereinafter referred to as OMCC). The said establishment having regard to certain labour disputes declared a lock-out in October, 1978. A closure was declared in relation to the said industry with effect from January 1, 1979. Negotiations were held by and between the management of the said OMCC and the appellant herein at the instance of the West Bengal for transfer of the said industry, pursuant to or in furtherance whereof, the appellant took over the said industry on or about March 3, 1983. On the same date i.e. March 3, 1978 a tripartite agreement was executed by and between the petitioner herein, the OMCC and all the workmen of the erstwhile undertaking represented by a registered Trade Union known as Oriental Electric & Engineering Company Workers Union.
3. Allegedly the aforementioned tripartite agreement was executed at the intervention of the Labour Commissioner, Government of West Bengal. Pursuant to or in furtherence of the said tripartite agreement the petitioner herein agreed to offer fresh employment to the permanent workmen of OMCC who were on its role on the date of closure. As regard the liability of payment of gratuity to the concerned workmen it was agreed that such liability till the date of closure notice would be taken over by the petitioner, the amount in relation whereto, however, would be payable to the concerned workmen as and when they reach the age of superannuation together with the amount of gratuity which would become due and payable by the petitioner herein for their fresh employment.
4. A deed of transfer of the said undertaking was executed by the parties on September 1, 1983 although the possession thereof, as indicated hereinbefore, had been handed over in March, 1983. The respondent No. 3 herein retired on January 3, 1989. The petitioner paid his gratuity dues for his services with the OMCC from February 11, up to the date of closure as also for the period of his service with the petitioner from January 3, 1989. The respondent No. 3 being not satisfied, filed an application before the Controlling Authority in terms of the provision of the said Act praying therein that he may be held to be in continuous service and, thus, is entitled to the gratuity for the entire period of his service. The said application was allowed by an order dated July 8, 1981 by the Controlling Authority. Being aggrieved by and dissatisfied therewith the petitioner herein preferred an appeal which was dismissed by the Appellate Authority in terms of an order dated January 13, 1987 here against the writ application was filed. By reason of the impugned order the learned trial Judge dismissed the said writ application.
5. Mr. Partha Sarathi Sengupta, the learned counsel, appearing on behalf of the appellant, inter alia, submitted that the learned trial Judge went wrong in so far as he failed to take into consideration, the fact that in terms of the aforementioned settlement dated March 3, 1983 the respondent No. 3 was not entitled, to a declaration of continuous service without break. It was contended that in any event, the petitioner being a transferee, the provision of Section 25-FF of the Industrial Disputes Act would be attracted and not Section 25-FFF as amended by the State of West Bengal whereupon reliance has been placed by the authorities under the said Act as also by the learned trial Judge. In an event, the remedy of the petitioner, if any, would have been to file an application under Section 33-C(2) of the Industrial Disputes Act. Mr. Sengupta would further urge that non-compliance of Section 25-FFA does not affect the validity of closure.
6. A settlement within the meaning of Section 2(p) of the Industrial Disputes Act contends Mr. Sengupta is binding upon all concerned and in that view of the matter, the third respondent herein could not have taken a stand contrary thereto or inconsistent therewith. Reliance in this connection has been placed on Bank of India & Ors. v. Kalyan Kumar Sarkar reported in 1999-I-LLJ-904 (Cal-DB).
7. Mr. Banerjee, the learned counsel, appearing on behalf of the respondent 3, on the other hand submitted that the Payment of Gratuity Act is a self-contained Code. It was submitted that as closure has been effected without payment of any compensation, the same must be held to be illegal in the eye of law and, thus, the third respondent was continuing in his service. Reliance in this connection has been placed on the definition of Continuous Service as contained in Section 2-A of the Payment of Gratuity Act, 1972.
8. As regard the effect of the tripartite settlement our attention has been drawn to the fact, that therein references have been made to the assets of the OMCC as the entire industrial undertaking has been taken over thereby for providing gainful employment to the workmen. The said agreement having been entered into for the benefit of the workmen, it was urged that the petitioner herein now cannot resile therefrom. It has been submitted that from the course of conduct of the erstwhile employer and successor-in-interest, it would be evident that January 1, 1971 was not treated to be the date of closure and in that view of the matter, the said date cannot be held to be a date of termination of his client’s contract of employment. The learned counsel submitted that the said Act is a complete Code in itself and in support of the said contention reliance has been placed on State of Punjab v. Labour Court, Jullundhur, . It was also submitted that a settlement arrived at in violation of law may be ignored. Reliance in this connection has been placed on Workmen of Delhi Cloth General Mills v. Management, reported in AIR 1970 SC 1851 : 1969 (3) SCC 303 : 1972-I-LLJ-99. It was urged that Payment of Gratuity Act is a special statute containing a non-obstante clause having a wide amplitude and for the purpose of computing the benefit of continuous services as provided for in Section 2-A of the Act closure or lock-out of the factory will have no role to play. Reliance in this connection has been placed on CRAIES ON INTERPRETATION OF STATUTE, 6th Edition, page 106. It was urged that Payment of Gratuity Act being a social legislation, a wider meaning must be attached to the expressions used therein so as to subserve the aims and objects of the statute. Reliance in this connection has been placed on Municipal Committee, Thanfar, District Kurukhetra v. A Wathi and Ors. reported in 1998-III-LLJ(Suppl)-1230 (P&H-DB). According to the learned counsel the conduct of the parties would show that merely closure was lifted by reason of the aforementioned agreement dated March 3, 1983.
9. Before adverting to the questions raised by the learned counsel for the parties, the relevant provision of the said Act as also the Industrial Disputes Act may be noticed.
The said Act was enacted to provide for a scheme for Payment of Gratuity to employees engaged in factories, mines, oil-fields, plantations, ports, railway companies, shops or other establishments and for matters connected therewith or incidental thereto.
Section 2(e) of the said Act defines 'employee' to mean any person engaged in the establishment specified therein. 'Employer' has been defined in Section 2(f) of the said Act, the relevant portion whereof reads thus: "Section 2(f). 'employer' means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop- (i) ..................
(ii) in any other case, the person, who or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person.”
Continuous Service has been defined in Section 2-A. Section 4 provides for payment of gratuity to an employee on termination of his service if he has rendered continuous service of not less than 5 years.
10. Section 7 provides for the mode and manner of determination of the amount of gratuity which, inter alia, includes within its fold sending of a written application to the employer by the person who is eligible for payment of gratuity. Sub-section (2) of Section 7 postulates determination of the amount of gratuity by the employer and payment thereof. Non-compliance of the said provision makes the employer liable to pay interest. In case of any dispute as regards quantum or otherwise, the matter is to be referred to the Controlling Authority.
11. The fact that the respondent No. 3 was employed on and from February 11, 1960 is not in dispute. It is also not in dispute that a lock-out was declared on October 16, 1978 and the erstwhile management declared closure during the period of lock-out allegedly on the ground of financial constraints on January 1, 1979. The said respondent pursuant to or in furtherance of the aforementioned agreement resumed his duties on April 1, 1983.
12. Section 25-FF of the Industrial Disputes Act provides for compensation to workmen in case of transfer of undertakings. The amount of such compensation is to be computed in accordance with the provision of Section 25-F as if he had been retrenched. Proviso appended to Section 25-FF however, reads thus:
“Provided that nothing in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if-
(a) the service of the workman has not been interrupted by such transfer;
(b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and
(c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer.”
13. Section 25-FFF of the Industrial Disputes Act reads thus:
“Section 25-FFF. Compensation to workmen in case of closing down of undertakings. – (1) Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of Sub-section (2), be entitled to notice and compensation in accordance with the provisions of Section 25-F, as if the workman had been retrenched:
Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under Clause (b) of Section 25-F, shall not exceed his average pay for three months.”
However an amendment was made in the said provision by the State of West Bengal, the relevant portion whereof reads thus:
“prior payment of compensation to the workman shall be condition precedent to the closure of any undertaking.”
14. Section 2(p) of the Industrial Disputes Act defines ‘settlement’ to mean:
“Settlement means a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to (an officer authorised in this behalf by) the appropriate Government and the conciliation officer.”
15. The effect of such settlement has been proved for in Section 18 thereof which is as follows:
“Section 18. Persons on whom settlements and awards are binding. –
(1) A settlement arrived at by agreement-between the employer and workman otherwise than in the course of conciliation proceeding shall be binding on the parties to the agreement.
(2) Subject to the provisions of sub-section (3), an arbitration award which has become enforceable shall be binding on the parties to the agreement who referred the dispute to arbitration.
(3) A settlement arrived at in the course of conciliation proceedings under this Act or an arbitration award in a case where a notification has been issued under Sub-section (3-A) of Section 10-A or an award of a Labour Court, Tribunal or National Tribunal which has become enforceable shall be binding on-
(a) all parties to the industrial dispute;
(b) all other parties summoned to appear in the proceedings as parties to the dispute unless the Board, Arbitrator, Labour Court, Tribunal or National Tribunal, as the case may be, records the opinion that they were so summoned without proper cause;
(c) where a party referred to in Clause (a) or Clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates;
(d) where a party referred to in Clause (a) or Clause (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.”
The effect of such settlement is well-known.
16. In Association of Chemical Workers v. Wahid Ali and Ors., reported in 1980-I-LLJ-276 (Bom-DB), the Bombay High Court considered the role of concliation officer and observe that the conciliation officer would intervene when he finds that the settlement would be fair and reasonable and had been arrived at bonafide. Negotiations between the parties were admittedly held so that by reason of such closure, the employment opportunities of the workmen may not come to an end. No industrial dispute was raised although one existed. The backdrop of events, thus, has to be considered for the purpose of construction of the agreement.
17. By reason of the said settlement the concerned workmen were offered fresh employment by the petitioner. They were to be placed, after proper test and assessing their scale giving due regards to their erstwhile categories with OMCC, in grades as per the tripartite wage settlement in Engineering Industry in West Bengal. The relevant provisions of the said settlement are:
“(a)…………….
(c) The management of Texmaco Ltd. has agreed to take over OMCC’s liability towards gratuity payable under the Payment of Gratuity Act, 1972, due to its workmen up to the date of Closure Notice. Accordingly, the workmen being employed by Texmaco Ltd. will be issued a certificate by Texmaco Ltd. of the amount of gratuity so payable on account of their service tenure with OMCC as stated above. The said gratuity amount would be payable to the workmen as and when they retire from the service of Texmaco Ltd. along with the gratuity which would become due to them under the Gratuity Act for the period of their fresh employment with Texmaco Ltd. The gratuity under the Gratuity Act of the workmen who are not employed by Texmaco Ltd. on account of any reason whatsoever will be paid by Texmaco Ltd. on behalf of OMCC upto the date of the Lockout/Closure of the said industrial undertaking. Except gratuity no further amount will be payable on any other account.
(d) It is declared and agreed that save and except gratuity liability as stated above, the workmen have no other claims whatsoever against Texmaco Ltd.
The liability of pending bonus, accumulated leave salary and overtime payment if any (as per the records of OMCC) upto the date of closure of the industrial undertaking will be discharged by OMCC. It is declared and agreed that save and except for these outstanding payments of pending bonus, accumulated leave salary and over-time payment, if any, there are no other claims of the workmen against OMCC.”
18. The reasons for said settlement, inter alia, were stated thus:
“Whereas, the Management of OMCC, the State of West Bengal and the Trade Union Leaders of the workmen approached the Management of Texmaco Ltd. for taking over the aforesaid industrial undertaking so that the workmen earlier employed by them could be provided gainful employment.
“WHEREAS, the Management of Texmaco Ltd. in the overall interest of. the workmen and the State of West Bengal has agreed to take over the industrial undertaking and employ its resources for providing gainful employment to the workmen.
WHEREAS, in trying to revive the aforesaid industrial undertaking of OMCC, all workmen and the Trade Unions are seized of the following facts:
(a) The aforesaid industrial undertaking is a very old unit suffering from a high degree of obsolescence in plant and equipment, workshop structure and material handling system.
(b) Due to long closure, even the existing buildings, plant and equipment are in an extremely deteriorated condition requiring major overhaul and maintenance expenditure to make them serviceable and suitable for undertaking production jobs.”
In the said settlement the factum of declaration of lock-out and closure had specifically been noticed. Apart from the Labour Commissioner, all the concerned parties were signatories to the said settlement. It is not in dispute that the third respondent herein would also be bound by the said settlement.
19. The question which would arise for consideration would be whether stage the workmen could be heard to say that he is not bound thereby ? The answer to the said question must be rendered in negative.
20. It may be true that no amount of compensation had been paid to the concerned workman by the erstwhile employer before declaring closure of its unit as is required under the proviso appended to Section 25-FFF. Such non-compliance of the provision of the Act would make the erstwhile employer liable and not the petitioner. For the purpose of interpretation of the provision of the said Act all the provisions thereof must be read in their entirety.
21. The definition of ’employer’ is of great significance. The liability to pay gratuity in terms of Section 7 of the Act is on the employer. In terms of the said settlement the parties had agreed as to how and in what manner the gratuity shall be paid. The liability of the petitioner in relation thereto had also been fixed. The third respondent at that point of time did not state that the concerned union was not representing his case. He took advantage of the said settlement. He was re-employed. Such benefit of re-employment had been taken by him with his eyes wide open. He, therefore, is estopped from taking a different plea. He cannot be permitted to probate and reprobate at the same time.
22. In terms of Section 18 of the Industrial Disputes Act, the said settlement was binding on him. The workmen thus in a body for their own interest must be deemed to have waived their right to get compensation on terms of the proviso appended to Section 25-FFF of the Act.
23. In Graphite India Ltd. and Anr. v. Durgapur Projects Ltd. and Ors., , the Apex Court relying on or on the basis of the decision in State Bank of Patiala v. S.K. Sharma, , categorically held:
“In State Bank of Patiala v. S.K Sharma this Court observed that even a mandatory requirement can be waived by the person concerned if such requirement is in his interest and not in public interest. This is how the Court said:
’33. (4)(b) In the case of violation of procedural provision, which is of a mandatory character, it has to be ascertained whether the provision is conceived in the interest of the person proceeded against or in public interest. If it is found to be the former, then it must be seen whether the delinquent officer has waived the said requirement, either expressly or by his conduct. If he is found to have waived it, then the order of punishment cannot be set aside on the ground of the said violation. If, on the other hand, it is found that the delinquent officer/employee has not waived it or that the provision could not be waived by him, then the Court or Tribunal should make appropriate directions (included the setting aside of the order of punishment), keeping in mind the approach adopted by the Constitution Bench in Managing Director, ECIL v. B. Karunakar. The ultimate test is always the same, viz., test of prejudice or the test of fair hearing, as it may be called. ‘
In Rajendra Singh v. State of M.P., this Court again affirmed that even a mandatory provision which is in the interest of the party can be waived by the party itself but if it is in public interest, it cannot be waived.”
24. Thus, the right to get compensation is merely a statutory right. Such a statutory right can be waived unless the same is contrary to the public interest. In the instant case the public interest has been subserved by reason of the said settlement.
25. In this view of the matter, in our opinion, it is idle to contend that as no amount of compensation has been paid, the same being illegal, the third respondent would be deemed to be continuing in service.
26. By reason of the aforementioned settlement the third respondent agreed to become re-employed. Such re-employment was also not automatic. The very fact that the third respondent had to be re-employed upon fulfilling the criteria as contained in the settlement, the relationship of employer and employee between him and his erstwhile employer ceased to have any effect. The terms and conditions of his employment under the petitioner thus continued afresh.
27. Section 2-A of the said Act would be applicable where the service is an uninterrupted one except in the case of sickness, accident, leave, absence from duty without leave whereby the same may be treated as break in service. In this case the very fact that the third respondent was re-employed categorically goes to show that there had been a break in service. In Bank of India and Ors. v. Kalyan Kumar Sarkar (supra), this Court held:
“It has, therefore, to be assumed that before a person can be appointed to a new post having a higher scale of pay, he has to relinquish the post which he was holding. In that view of the matter, we are of the opinion that Sub-regulation (2) of Regulation 20 of the said regulations may not have any application in the facts of the case. Furthermore, there cannot be any doubt whatsoever that the petitioner having accepted the new offer must be held to have waived his right, if any. The petitioner at the time of filing of his application for the post of Industrial Relation Officer was aware of the contents of the circular, which was a condition precedent for consideration of his candidature. Knowing fully well the conditions laid down therein, he filed such an application, and in that view of the matter while he was selected for the said post, the appellant bank was entitled as a matter of right to enforce the conditions laid down therein. Sub-regulation (2) of Regulation 20 as noticed hereinbefore, contains a proviso providing for reduction in the period of notice as also oral remission thereof. If the bank had taken recourse to such a procedure and had exercised the said power, no legal infirmity can be drawn by reason thereof.”
28. For the purpose of this case, we would assume that the closure of the Industrial Undertaking was illegal. However, as noticed hereinbefore, even if an Industrial Dispute was raised the same could have been resolved by reason of a settlement. Such settlement having been arrived at and the same being binding on all the workmen, the question of the matter being, reopened and the instance of the controlling authority does not arise.
29. Even in a case of this nature the controlling authority would have no jurisdiction to arrive at a conclusion that the settlement is illegal. The findings of the authority under the said Act have a wide repercussions. It may be true that the said Act contains a non-obstante clause but so does Industrial Disputes Act.
30. Procedures have been laid down under the Industrial Disputes Act to resolve an Industrial Dispute and even forums therefor have been provided. Thus, for resolution of an Industrial Dispute only the machinery provided for in the said Act must be taken recourse to. No other Court or Tribunal has any jurisdiction in this regard. If the Controlling Authority is held to have jurisdiction to resolve an Industrial Dispute, a great deal of confusion would arise. We may however, hasten to add that there may be certain exceptions to the aforementioned rule e.g. when an order of the employer is ex facie illegal.
31. Furthermore, a distinction between the provisions of Sections 25-FF and 25-FFF vis-a-vis Section 25-F is well-known. See Hathising Manufacturing Company, Ltd. and Ors. v. Union of India and Ors., , Avon Services (Production Agencies) Pvt. Ltd. v. Industrial Tribunal, Haryana, Faridabad and Ors. , Walford Transport Ltd. v. State of West Bengal and Ors., reported in 1978-II-LLJ-110 (Cal).
32. In A.C.A.&I. Society v. Workmen, , it has clearly been held that unless the transfer falls under the proviso, the employees of the transferred cases are entitled to claim compensation is against the transfer and they cannot make any claim for unemployment against the transferee of the undertaking.
33. For reasons stated hereinbefore, we are of the opinion that the learned trial Judge must be held to have erred in dismissing the writ petition of the appellant. It is set aside accordingly. The writ petition of the appellant is allowed and the orders of the Appellate Authority and the Controlling Authority are set aside.
34. The appeal is, thus, allowed, but in the facts and circumstances of this case there shall be no order as to costs.
35. Prayer for stay of operation is considered and refused.
36. Urgent xerox certified copy of this judgment delivered today, if applied for, be supplied on priority basis.
Pratap Kumar Ray, J.
I agree.