PETITIONER: WORKMEN OF M/S. DELHI CLOTH AND GENERAL MILLS Vs. RESPONDENT: MANAGEMENT OF M/S. DELHI CLOTH AND GENERAL MILLS LTD. DATE OF JUDGMENT: 17/10/1969 BENCH: DUA, I.D. BENCH: DUA, I.D. RAMASWAMI, V. CITATION: 1970 AIR 1851 1970 SCR (2) 886 1969 SCC (3) 302 CITATOR INFO : D 1981 SC1660 (7) ACT: Industrial Disputes Act (14 of 1947) s. 18(1) and Industrial Disputes (Central) Rules, 1957 r. 58 (4)-Non-compliance with rule-Settlement between management and union if binding on workmen. HEADNOTE: In conciliation proceedings before the Conciliation Officer, D.C.M. (City Shop) Karamchari Union espoused workman Shibban Lal's cause. On June 18, 1965 the Conciliation Officer submitted his failure report to the Government. On June 9, 1965 a settlement had been arrived at between the Union and the management of the D.C. & G. Mills Ltd. The Conciliation Officer was not informed of this settlement before the sub- mission of his report. The settlement dated June 9, 1965 was filed before the Conciliation Officer on June 30, 1965. Pursuant to the Conciliation Officer's report the industrial dispute was referred by the Government to the Additional Industrial Tribunal. On October 6, 1965 written statement was filed by the management before the Tribunal. The Kapra Karamchari Sangh also filed a statement of claim on behalf of workman Shibban Lal through its General Secretary along with an application for substituting the Sangh in place of the Union. It was stated in the application that since the Union had entered into a settlement with the management not to contest Shibban Lal's case, 53 out of 88 workers of D.C.M. (City Shop) had requested the Sangh to take up this worker's case and the Sangh had thereupon unanimously decided to take up his cause. The management opposed this application. It was finally decided that the Sangh should represent Shibban Lal workman without its being substituted for the Union. The management then pressed its objection to the validity of the settlement of claim filed by the Sangh. The Tribunal held that the claim filed by the Sangh should be deemed to have been filed on behalf of Shibban Lal. On appeal in this Court the correctness of this view was not challenged on behalf of the respondent. The special leave application in this Court was supported by an affidavit sworn by Shibban Lal. On a preliminary objection raised on behalf of the respondent to the competency of the appeal presented in this Court by the Sangh on the ground that the Sangh was neither a party to the industrial dispute before the Tribunal nor did it espouse Shibban Lal's cause in the proceedings against him. HELD : (1) On the facts and circumstances of this case the special leave application and the appeal must be held to have been filed in this Court by the Sangh as representing Shibban Lal who had agreed to be represented by the Sangh. The appeal filed by the Sangh, therefore, cannot be considered to be unauthorised and legally incompetent on the ground urged. [891 G-H] (2) Rule 58 (4) of the Industrial Disputes (Central) Rules, 1957 made under s. 38 of the Industrial Disputes Act has full force of law of 887 which judicial notice can be taken. This rule must be fully complied with if the settlement is to have a binding effect on all workmen. [896 A] (3) When a dispute is referred to the Conciliation Officer the management and the workers' Union cannot claim absolute freedom of contract to arrive at a settlement in all respects binding on all workmen. An agreement to be valid and binding must comply with the provisions of the Statute and the Rules made thereunder. The settlement in the present case did not comply with r. 58(4) which is mandatory. Therefore, under s. 18(1) of the Act read with the other sub-sections in the light of the definition of "Settlement" contained in s. 2(p) there is no unfettered freedom in the management and the Union to settle the dispute as they please so as to clothe the settlement with a binding effect on all workmen or even on all member-workmen of the Union. [895 B-D] (4) Though the plea of non-compliance with r. 58(4) was not raised by the appellant before the Tribunal if the respondent wanted to show that the reference was invalid because of a lawful settlement then it was incumbent on the party relying on such a settlement to prove that it was lawful and valid, rendering the reference illegal. It was also incumbent on the Tribunal to satisfy itself that the settlement was in accordance with the Act and Statutory Rules. [896 A-B] [The case was accordingly remanded to the Tribunal for adjudication upon the dispute on the merits.] JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2006 of
1966.
Appeal by special leave from the Award dated February 17,
1966 of the Industrial Tribunal, Delhi in I.D. No. 176 of
1965.
D. R. Gupta and H. K. Puri, for the appellants.
C. K. Daphtary, D. R. Thadani and A. N. Goyal, for the
respondent.
The Judgment of the Court was delivered by
Dua, J. The Workmen of M/s. Delhi Cloth and General Mills,
Bara Hindu Rao, Delhi, have appealed to this Court by
special leave from the award of the Additional Industrial
Tribunal, Delhi dated February 17, 1966 holding that Shibban
Lal was bound by the settlement dated June 9, 1965 and,
therefore, there was no industrial dispute on the date of
reference which could be referred for adjudication.
The facts necessary for the purpose of this appeal may now
be briefly stated. The Chief Commissioner, Delhi by means
of an order dated September 9, 1965 referred the dispute in
controversy to the Additional Industrial Tribunal, the order
of reference being in the following terms :
“Whereas from a report submitted by the
Conciliation Officer, Delhi under section
12(4) of the Industrial Dispute Act, 1947, it
appears that an industrial dispute
888
exists between the management of M/s. Delhi
Cloth & General Mills, Ltd., Bara Hindu Rao,
Delhi and its workmen and Shri Shibban Lal and
the said dispute has been taken up by the
D.C.M. (City Shop) Karamchari Union, 1121,
Chatta Madan Gopal, Maliwara, Chandni Chowk,
Delhi.”
Before the Additional Industrial Tribunal the Management had
raised various preliminary objections including the
objection that Kapra Karamchari Sangh (hereafter called the
Sangh) was not competent to take up the case of Shri Shibban
Lal, and that the D.C.M. (City Shop) Karamchari Union
(hereafter called the Union), which had originally taken up
the cause of workmen, having agreed by the settlement dated
June 9, 1965 not to prosecute his case, withdrew its support
to his cause with the result that the dispute relating to
the dismissal of Shibban Lal was, not an industrial dispute.
It was further averred that Shibban Lal was bound by the act
of his representatives who had made the settlement dated
June 9, 1965, and was, therefore, estopped from challenging
the same.
On these preliminary objections the following
four issues were framed and were taken up
for decision in the first instance.
(1) Has the Karpra Karamchari Sangh no locus-
standi to file the statement of claim ?
2. Is the reference incompetent because of
settlement dated June 9, 1965 between the
D.C.M. (City Shop) Karamchari Union and
Management ?
3. Is the dispute not an industrial
dispute?
4. Is Shibban Lal estopped from raising the
present dispute ?
On issue No. 1. the Tribunal held that although the Sangh
had been merely authorised to represent Shibban Lal and was
not a party entitled to file the statement of claim in its
own right, nevertheless the claim filed by it was to be
deemed to be on behalf of Shibban Lal who had agreed to be
represented by the Sangh. Issues Nos. 2 to 4 were discussed
together and the Tribunal held that the settlement dated
June 9, 1965 which was signed on behalf of workmen by the
Secretary and Vice President of the Union was not arrived at
by unauthorised persons. The said settlement was,
therefore, held binding on persons who were parties thereto
and Shibban Lal being a member of the Union was bound by it.
In face of that settlement, the Tribunal felt that there was
no industrial dispute which could be referred for
adjudication on the date of reference.
889
In this Court on behalf of the respondent, the Management of
M/s. Delhi Cloth and General Mills Ltd. a preliminary
objection was raised to the competency of the present
appeal. It was contended by Shri Daphtary that the appeal
was presented in this Court by the Sangh which was neither a
party to the industrial dispute before the Tribunal, nor did
it espouse the cause of Shibban Lal’s dismissal. Shibban
Lal, according to the submission, being a party affected
could certainly appeal but not the Sangh. It was added that
Shibban Lal being the solitary employee of the respondent,
who was the member of the Sangh the latter was not only
disentitled to espouse Shibban Lal’s cause but as a matter
of fact it did not so; the Sangh, the counsel argued, merely
undertook to represent Shibban Lal before the Tribunal.
We are unable to uphold the preliminary objection. It is
clear from the record that the Union originally took up
Shibban Lal’s cause. On June 18, 1965 the Conciliation
Officer submitted his failure report to the Government. It
is apparent that till then the Conciliation Officer was not
informed by either of the parties that a settlement had been
arrived at in the matter of the dispute in question. Indeed
the record shows that Shri Jai Bhagwan Sharma, who
represented the workman in the conciliation proceedings had
informed the Conciliation Officer that no settlement had
been reached. The settlement dated June 9, 1965 appears to
have been filed before the Conciliation Officer on June 30,
1965, long after the submission of the failure report. The
Additional Industrial Tribunal after taking cognizance of
the dispute issued notice to the parties on September 16,
1965 fixing October 5, 1965 for filing the statements of
claim. The case was, however, taken up on October 6, 1965
because October 5, 1965 was declared a gazetted holiday. On
October 6, 1965 the written statement was filed by the
Management. The Sangh also filed a statement of claim on
behalf of Shibban Lal through Shri Jai Bhagwan, General
Secretary of the Sangh, with an application for substituting
the Sangh in place of the Union as mentioned in the
reference, it being averred in the application for
substitution that consequent upon the Union having entered
into a settlement with the Management not to contest Shibban
Lal’s claim, 53 out of 88 workers of D.C.M. (City Shop) had
requested the Sangh to take up Shibban Lal’s case and the
Sangh thereupon unanimously decided to take up his cause.
The dispute, it was added, concerned all workmen. The
Management was given an opportunity to file objections to
this application. On October 28, 1965 the Management
opposed the application of the Sangh for being impleaded in
place of the Union. While opposing the prayer of the Sangh
the Management expressed ignorance about the averment that
53 out of 88 workers of D.C.M. (City Shop) had
890
requested the Sangh to take up the cause of Shibban Lal. It
was added that espousal by the Sangh at that stage was
illegal as the matter had already been referred by the
Government. Espousal, according to this plea, could only be
at the stage of conciliation proceedings and not after the
reference. It was also denied that the dispute concerned
all workmen. An agreement having been entered into by the
Union, representation by the Sangh was described to be an
abuse of the process of law. The dispute, pleaded the
Management, had been settled for ever and Shibban Lal was a
party to the said settlement. Shibban Lal filed an
affidavit on November 3, 1965, affirming that, on December
26, 1964, the Union had properly resolved to contest his
claim And that on December 28, 1964 the statement of claim,
regarding Shibban Lal’s proposed retirement on December 31,
1964, was filed before the Conciliation Officer. It was
further affirmed in this affidavit : (i) that during the
pendency of the dispute before the Conciliation Officer, the
Management retired him and he was not allowed to join duty
with effect from January 1, 1967, (ii) that in the absence
of any valid authority either from the Union or from the
parties, pursuant to a resolution to that effect, passed by
the workmen of the establishment, Shri Musaddi Lal and Shri
Babu Ram had no authority to enter into any settlement in
respect of deponent’s dispute, (iii) that no settlement was
ever brought to the notice of the Union or the workmen, (iv)
that on June 14, 1965 the Union of the workmen opposed the
said settlement, was resolved that the Union did not agree
to any settlement whatsoever regarding the deponent’s
retirement, including settlement in respect of the
conciliation proceedings, (v) that on July 25, 1965 the
Union of the workmen opposed the said settlement, (vi) that
the settlement had been filed by the conciliation Officer on
June 24, 1965 whereas the failure report of the said officer
had even reached the Government on June 18, 1965, (vii) that
the settlement had not been verified by the Conciliation
Officer, (viii) that the deponent had also written a letter
to the Union challenging the authority of the signatories on
its behalf, and even the authority of the Union itself, to
enter into the said settlement without appropriate and valid
authority, (ix) that the deponent could not read or write
Hindi or English except that he could sign his name in
English and (X) that out of 88 employees 53 had authorised
the Sangh to take up the deponent’s case with the result
that espousal by his co-employee workers was continuous.
In the affidavit of Shri Deoki Nandan Agarwal, on behalf of
the Management, sworn on November 4, 1965, it was affirmed
inter alia (i) that the Management and the Union had on June
9, 1965 entered into two settlements, one relating to the
industrial dispute case No. 211 of 1962 and the other
relating to the age of
891
retirement including the case of Shibban Lal etc. pending
before the Conciliation Officer. The settlement relating to
the Industrial Dispute Case No. 211 of 1962 had been made an
award of the Court and the other settlement relating to the
age of retirement had been filed before the Conciliation
Officer, copies of both the settlements having been
forwarded to Government authorities, (ii) that Shibban Lal
being the President of the Union, at the time of settlement,
was bound by it and (iii) that the Sangh, having not
espoused the cause of Shibban Lal before September 2, 1965,
the date of reference, could not do so thereafter; nor could
any other member of the Union take up his cause after the
settlement dated September 6, 1965.
The application for substitution was finally heard oil
December 17, 1965 when Shri D. R. Gupta, on behalf of the
Sangh stated that he did not want the Sangh to be
substituted in place of the Union but he merely wanted it to
represent Shibban Lal, who was at that time its member.
Shri G. C. Bhandari, on behalf of the Management, did not
object to Shibban Lal being represented by the Sangh and he
confined his objection only to Shibban Lal’s cause being
espoused by the Sangh after the order of reference. The
Tribunal accordingly allowed the Sangh to represent Shibban
Lal. Up to that stage the Management did not press the
point that there was no valid statement of claim filed on
behalf of Shibban Lal and the validity of the claim filed by
the Sangh had been apparently assumed. The Management was
perhaps at that time only thinking of questioning the
existence of industrial dispute on the ground that Shibban
Lal’s dispute was an individual dispute, not being espoused
by any union of workmen.
The validity of the statement of claim filed by the Sangh
was mooted and pressed in one of the preliminary objections
which gave rise to preliminary issue No. 1 reproduced
earlier in this judgment. On this issue, as already
observed, the Tribunal decided that the claim filed by the
Sangh should be deemed to have been filed on behalf of
Shibban Lal. The respondent’s counsel did not challenge the
correctness of this view of the Tribunal and it was not the
respondent’s submission before us that there was no proper
statement of claim on behalf of Shibban Lal. In this Court
also special leave application is supported by an affidavit
sworn by Shibban Lal, the workman concerned. The special
leave application and the, appeal must, therefore, be held
to have been filed in this Court by the Sangh as
representing Shibban Lal, who apparently agreed to be so
represented by the Sangh. On the facts and circumstances of
this case, we do not think that the present appeal can be
considered to be unauthorised and legally incompetent on the
technical ground urged on behalf of the respondent and we do
not find any cogent ground to reject the appeal on the basis
of the preliminary objection.
892
We now turn to the merits of the controversy. The Tribunal
took the view that the dispute regarding retirement age of
Shibban Lal ceased to be an industrial dispute because of
the settlement dated June 9, 1965 and, therefore, it could
not be referred to it for adjudication. Support of his case
by the workers of any other
Union after reference could not in its view validate the
reference. The appellant’s learned counsel challenged this
view and drew our attention to r. 58 of the Industrial
Disputes (Central) Rules, 1957 made under S. 38 of the
Industrial Disputes Act, 1947. This rule reads as under :
“58. Memorandum of settlement:
(1) A settlement arrived at in the course of
conciliation proceedings or otherwise shall be
in form ‘H’
(2) the settlement shall be signed-
(a) in the case of an employee, by the
employer himself, or by his authorised agent,
or when the employer is an incorporated
company or other body corporate, by the agent,
manager or other principal officer of the
corporation;
(b) in the case of workmen, by any officer
of a trade union of workmen or by five
representatives of workmen duly authorised in
this behalf at a meeting of the workmen held
for the purpose.
Explanation-In this rule “officer” means any
of the following officers, namely-
(a) the President;
(b) the Vice-President;
(c) the Secretary (including the General
Secretary);
(d) a Joint Secretary;
(e) any other officer of the trade union
authorised in this behalf by the President and
Secretary of the Union.
(3) Where a settlement is arrived at in the
course of conciliation proceeding the
Conciliation Officer Shall send a report
thereof to the Central Government together
with a copy of the memorandum of settlement
signed by the parties to the dispute.
(4) Where a settlement is arrived at between
an employer and his workmen otherwise than in
the course of conciliation proceeding before a
Board or a Concilia-
893
tion Officer, the parties to the settlement
shall jointly send a copy thereof to the
Central Government, the Chief Labour
Commissioner ( Central) New Delhi, and the
Regional Labour Commissioner, New Delhi, and
to the Conciliation Officer (Central)
concerned.”
Form ‘H’ may also now be reproduced
“Form for Memorandum of Settlement
Name of parties
Representing employer (s)
Representing workmen :
Short recital of the case
Terms of settlement
Witness
(1)
(2)
Signature of the parties
Signature of Conciliation Officer
Board of Conciliation
Copy to:
(1) Conciliation Officer (Central) (here
enter the office address of the Conciliation
Officer in the local area concerned).
(2) Regional Labour Commissioner (Central)....
(3) Chief Labour Commissioner (Central) New
Delhi
(4) The Secretary to the Government of
India, Ministry of Labour, New Delhi.”
The plain reading of the rule and the Form, according to the
appellant, clearly suggests its mandatory character. It was
contended that the settlement was not entered into with the
concurrence of he Conciliation Officer nor was it entered
during the conciliation proceedings. Particular emphasis
was laid on noncompliance with sub-rule (4). The
settlement, in the circumstances, was urged to be invalid
and the reference of the dispute quite in accordance with
law. In this connection the learned advocate referred to s.
18 of the Industrial Disputes Act, 1947 which is as follows
:
“Persons on whom settlements and awards are
binding
894
18. (1) A settlement arrived at by agreement
between the employer and workmen (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 became
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 be-en issued under sub-
section (3A) of section 10A 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 decision in The Bata Shoe Co. (P) Ltd. v. D. N.
Ganguly(l) was cited in support of the submission that a
settlement during the conciliation proceedings to be binding
must be arrived at with the assistance and concurrence of
the Conciliation Officer.
The respondent’s learned Advocate in reply obliquely sug-
gested in this connection that the Management and the Union
were free to arrive at a settlement of their dispute and if
they agreed to do so then the agreement could not but be
held to be
(1) [1960] 3.S.C.R. 308.
895
binding. We do not think the Management and the Union can,
when a dispute is referred to the Conciliation Officer,
claim absolute freedom of contract to arrive at a settlement
in all respects binding on all workmen, to which no
objection whatsoever can ever be raised by the workmen
feeling aggrieved. The question of a valid and binding
settlement in such circumstances, is in our opinion,
governed by the statute and the rules made thereunder.
Reliance was next placed on s.18(1) to support the binding
character of the settlement. This sub-section for its pro-
per construction must be read with the other sub-sections
and the relevant rules, in the light of the definition of
‘settlement’ as contained in s. 2(p) of the Industrial
Disputes Act. ‘Settlement’ as defined therein means
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 the
appropriate Government and the Conciliation Officer. In the
light of these provisions we do not think that s. 1 8 (1 )
vests in the Management and the Union unfettered freedom to
settle the dispute as they please and clothe it with a
binding effect on all workmen or even on all member workmen
of the Union. The settlement has to be in compliance with
the statutory provisions.
It was then contended by Shri Daphtary that non-compliance
with r. 8 8 (4) having not been pleaded by the appellant
before the Tribunal, no question of proof by the respondent
of compliance therewith arose. This plea, it was strongly
objected, should not be allowed to be raised at this late
stage in this Court.
We ‘are not impressed by this submission. On reference hav-
ing been made by the Government to the Tribunal, if the
respondent wanted to show that this reference was invalid
because of a lawful settlement, then it was incumbent on the
party relying on such a settlement to prove that it was
lawful and valid, rendering the reference illegal. This was
particularly so when we find that Shibban Lal had in his
affidavit expressly asserted that the settlement relied upon
had not been filed before the Conciliation Officer prior to
June 18, 1965 when he sent his failure report and also that
the two persons entering into the settlement had no
authority either from the Union or from the members thereof
to enter into a binding agreement. Section 38 of the
Industrial Disputes Act empowers the appropriate Government
to make rules for the purpose of giving effect to the
provisions of the Act. Rules made by the Central Government
have to be laid before each House of Parliament while in
session for a period of 30 days and the Houses of Parliament
are given an opportunity of not only modifying them but even
of deciding that the rules should not be made at all.
896
These rules thus appear to us to have full force of law of
which judicial notice has to be taken. It was therefore
incumbent on the Tribunal to satisfy itself that the
settlement relied upon by the respondent in support of the
plea of it legality of the reference, which vitally affected
its jurisdiction, was in accordance with the provisions of
both Industrial Disputes Act and the relevant statutory
rules. This was all the more so in view of the pleas
contained in Shibban Lal’s affidavit produced before the
Tribunal to which reference has already been made in this
judgment. Though no reference was specifically made to
r.58, the facts affirmed were reasonably clear to attract
the attention of the Tribunal to the question of legality of
the settlement. Bearing in mind the object of the
Industrial Disputes Act and the important public purpose
which it is designed to serve, the Tribunal, in our view,
had an obligation to make a deeper probe into the validity
of the settlement and not to accept it casually.
However, on the respondent’s argument that r.58 had not been
specifically relied upon by the appellant before the
Tribunal we felt inclined and indeed suggested to the
respondent during the course of arguments that the case
might be submitted to the Tribunal for the purpose of
deciding the question of compliance with the said rule,
particularly with sub-rule (4). But the respondent’s
learned Advocate with his usual fairness, frankly pointed
out that remand for this purpose would not be of much use
because this sub-rule had not been complied with in terms.
A faint suggestion thrown at once stage that it had been
substantially co ‘lied with was not seriously pressed though
our attention was drawn in that connection to a letter
written by the Management on July 16, 1965 to the Secretary,
Ministry of Labour, Government of India, enclosing a copy of
the settlement arrived at by the Management and the Union in
connection with the matters stated therein. The settlement
was said to contain the following
1. Age of retirement
2. Case of Shri Shibban Lal
3. Case of Shri Mansuka
4. Case of 7 Kahars
5. Case of reduction in pay of 12 workmen
6. Case of Shri Jagan Nath
7. Case of Shri Chiranjilal Pahalwan.
This letter quite clearly does not amount to compliance with
the rule. Keeping in view its object and purpose, this rule
does seem to demand full compliance in order to clothe the
settlement with a binding character on all workmen.
897
We may observe here that we were not impressed by the
appellant’s argument that r.58 sub-rule (2)(b) required that
the officer of a trade union of workmen must also be duly
authorised. We, however, do not express any considered
opinion in view of our conclusion on other points.
In the result this appeal must be allowed and the impugned
order set aside. As the respondents have conceded that
there is no compliance with r. 5 8 (4) the settlement in
regard to the dispute referred to the Tribunal, must,
therefore, be held to be illegal. The case, has, therefore,
to go back to the Tribunal for adjudication upon the dispute
on the merits. The respondent should pay the appellant’s
costs in this Court.
Y.P. Appeal allowed.
898