1997 Supreme(SC) 1624

1997(10) Supreme 389
SUPREME COURT OF INDIA
(From Madras High Court)
S.B. Majmudar & M. Jagannadha Rao, JJ.
P. Virudhachalam & Ors. -Appellants
versus
The Management of Lotus Mills & Anr. -Respondents
Civil Appeal No. 4852 of 1989
Decided on 9-12-1997
Counsel for the Parties :
For the Appellant : Ms. Chandan Ramamurthi, Advocate.

Headnote:(i) Industrial Disputes Act, 1947-Sections 12(3), 18(3) and 25C-Claim of lay off compensation u/s 25C-Maintainability-Textile mill-Remained closed due to financial crisis from 8.8.1976 to 31.1.1978-Dispute pertaining to lay off for the period-Conciliation proceedings-Settlement-Out of five unions representing workmen of the mill, four unions signed settlement-Union representing appellants did not sign it-Appellants were permanent employees of the mill and did not belong to any of the excluded categories mentioned in the settlement-Whether they would be bound by the settlement and terms regarding payment of retrenched lay off compensation ?-(Yes) - Appellants application u/s 33C(2) for computing appropriate lay off compensation u/s 25(c) of the Act-Whether maintainable ?-(No)-Such application was incompetent.

       Held that settlement contemplated by Section 12(3) necessarily means a written settlement which would be based on a written agreement where signatories to such settlement sign the agreement. Therefore, settlement under Section 12(3) during conciliation proceedings and all other settlements contemplated by Section 2(p) outside conciliation proceedings must be based on written agreements. Written agreements would become settlements contemplated by Sections 2(p) read with Section 12(3) of the Act when arrived at during conciliation proceedings or even outside conciliation proceedings. Thus, written agreements would become settlements after relevant procedural provisions for arriving at such settlements are followed. Thus, all settlements necessarily are based on written agreements between the parties. It is impossible to accept the submission of learned counsel for the appellants that settlements between the parties are different from agreements between the parties. It is trite to observe that all settlements must be based on written agreements and such written agreements get embedded in settlements. But all agreements may not necessarily be settlements till the aforesaid procedure giving them status of such settlements gets followed. In other words, under the scheme of the Act, all settlements are necessarily to be treated as binding agreements between the parties but all agreements may not be settlements so as to have binding effect as provided under Section 18(1) or (3) if the necessary procedure for giving them such status is not followed in given cases. On the aforesaid scheme of the Act, therefore, it must be held that the settlement arrived at during conciliation proceedings on 5.5.1980 between Respondent No. 1-Management on the one hand and the four out of 5 unions of workmen on the other, had a binding effect under Section 18(3) of the Act not only on the members of the signatory unions but also on the remaining workmen who were represented by the fifth union which, though having taken part in conciliation proceedings, refused to sign the settlement. It is axiomatic that if such settlement arrived at during the conciliation proceedings is binding to even future workmen as laid down by Section 18(3)(d), it would ipso facto bind all the existing workmen who are all parties to the industrial dispute and who may not be members of unions that are signatories to such settlement under Section 12(3) of the Act. (Para 7)

       If there is a binding settlement embodying an agreement on behalf of a class of workmen through their union in connection with lay-off compensation it would obviously be binding on all the members of the union and if such settlement based on agreement is arrived at during conciliation proceedings it would be binding to the entire class of workmen covered by the industrial dispute regarding lay-off compensation. The individual workman can raise his grievance under Section 25C only if his statutory right of lay-off under Section 25C is not hedged in by any binding effect of an agreement entered into by its own union with the management, whether in or outside conciliation proceedings or even by other unions that may arrive such settlement during the course of conciliation proceedings. Then only individual workman can have full play under Section 25C for vindicating his right of lay-off compensation. (Para 9)

       An agreement restricting the claim of lay-off compensation beyond the available period of 45 days can be said to be arrived at between the workman on the one hand and the employer on the other as there is such an agreement embedded in a binding settlement which has a legal effect of binding all the workmen in the institution as per Section 18(3) of the Act. Such binding effect of the embedded agreement in the written settlement arrived at during the conciliation proceedings would get telescoped into the first proviso to Section 25C(1) and bind all workmen even though individually they might not have signed the agreement with the management or their union might not have signed such agreement with the management on behalf of its member-workmen. The first proviso to Section 25C(1) clearly lays down that if there is an agreement for not paying any more lay-off compensation beyond 45 days between the workman and the employer, such an agreement has binding effect both on the employer and the workman concerned. Such binding force gets clearly attracted in the case of the appellants by virtue of operation of Section 12(3) read with Section 18 of the Act emanating from the settlement arrived at during the conciliation proceedings. (Para 12)

       The appellants would remain bound by the settlement which would be treated as an agreement binding on them as contemplated by the said proviso. Once that conclusion is reached no fault can found with the High Court taking the view on the scheme of the Act that additional benefits which the appellants claimed under the settlement arrived at under Section 12(3) read with Section 18 of the Act could not be computed under Section 33C(2) of the Act and such application was, therefore, rightly held incompetent. (Para 15)