1999 Supreme(SC) 1408

1999(10) Supreme 344
Supreme Court of India
(From Rajasthan High Court)
S.B. Majmudar, D.P. Wadhwa and A.P. Misra, JJ.
National Engineering Industries Ltd. -Appellant
versus
State of Rajasthan & Ors. -Respondents
Civil Appeal No. 16832 of 1996
Decided on 1-12-1999
Counsel for the Parties :
For the Appellant : G.B. Pai, Sr. Advocate, K.N. Tripathy, D. Mohanty, K.K. Mahalik, Janaranjan Das, Advocates.
For the Respondents : Aman Hingorani, Ms. Reema Bhandari, Advocates for M/s. Hingorani & Associates Advocates.

Important point
1. A settlement arrived at in the course of conciliation proceedings with a recognized majority union will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. Reference u/s 10, in such a case, a the instance of an unrecognised union would be bad in law.
2. There is no bar under the Industrial disputes Act 1947 in having conciliation proceedings on a holiday and to arrive at a settlement.

Headnote:Industrial Disputes Act, 1947-Section 10(1)-Reference-Validity of-Several unions submitting charter of demand-Settlement arrived at with recognised representative union-An unrecognised union seeking reference-Inaction on part of Govt.-Writ Petition by union-Govt. making reference during pendency of writ petition-Writ directing Government to take decision after hearing parties afresh-Management seeking Govt. to recall reference and take fresh decision in terms of writ-Refusal by Govt.-Writ petition thereagainst High Court holding management to raise all contentions before Tribunal-Reference itself was bad in law as settlement reached between recognised union and management would bind members of other unions as well further Govt. ought to have brought to notice of Court while writ petition was pending, its intention to make reference-Tribunal cannot got into question of validity of reference-Reference notification quashed.

       Held : High Court has jurisdiction to entertain a writ petition when there is allegation that there is no industrial dispute and none apprehended which could be subject matter of reference for adjudication to the Industrial Tribunal under Section 10 of the Act. Here it is a question of jurisdiction of the Industrial Tribunal, which could be examined by the High Court in its writ jurisdiction. It is the existence of the industrial tribunal which would clothe the appropriate Government with power to make the reference and the Industrial Tribunal to adjudicate it. If there is no industrial dispute in existence or apprehended appropriate government lacks power to make any reference. A settlement of dispute between the parties themselves is to be preferred, where it could be arrived at, to industrial adjudication, as the settlement is likely to lead to industrial adjudication, as the settlement is likely to lead to more lasting peace then an award. Settlement is arrived at by the free will of the parties and is a pointer to there being goodwill between them. When there is a dispute that the settlement is not bona fide in nature or that it has been arrived at on account of fraud, misrepresentation or concealment of facts or even corruption and other inducements it could be subject matter of yet another industrial dispute which an appropriate Government may refer for adjudication after examining the allegations as there is an underlying assumption that the settlement reached with the help of the Conciliation Officer must be fair and reasonable. A settlement which is sought to be impugned has to be scanned and scrutinised. Sub-sections (1) and (3) of Section 18 divide settlements into two categories, namely, (1) those arrived at outside the conciliation proceedings and (2) those arrived at in the course of conciliation proceedings. A settlement which belongs to the first category has limited application in that it merely binds the parties to the agreement but the settlement belonging to the second category has extended application since it is binding on all the parties to the industrial disputes, to all others who were summoned to appear in the conciliation proceedings and to all persons employed in the establishment or part of the establishment, as the case may be, to which the dispute related on the date of the dispute and to all others who joined the establishment thereafter. A settlement arrived at in the course of conciliation proceedings with a recognized majority union will be binding on all workmen of the establishment, even those who belong to the minority union which had objected to the same. Recognized union having majority of members is expected to protect the legitimate interest of labour and enter into a settlement in the best interest of labour. This is with the object to uphold the sanctity of settlement reached with the active assistance of the Conciliation Officer and to discourage an individual employee or minority union from scuttling the settlement. When a settlement is arrived at during the conciliation proceedings it is binding on the members of the Workers’ Union as laid down by Section 18(3)(d) of the Act. 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. Act is based on the principle of collective bargaining for resolving industrial disputes and for maintaining industrial peace. “This principle of industrial democracy is the bedrock of the Act”, as pointed out in the case of P. Virudhanchalam & Ors. v. Management of Lotus Mills & Anr. (supra). In all these negotiations based on collective bargaining individual workman necessarily recodos to the background. Settlements will encompass all the disputes existing at the time of the settlement except those specifically left out. (Para 19)

       There can be many splinter groups each forming a separate trade union. Under Section 4 of the Trade Union Act, 1926 any seven or more members of a trade union can get the trade union registered under the Act. If every trade union having few members is to go on raising a dispute and the State Government making reference again and again the very purpose of settlement is defeated. Once there is a representative union, which in the present case, is the Labour Union, it is difficult to see the role of the Workers Union. If there are number of trade unions registered under the Trade Union Act, 1926 not entitled to be registered as representative unions and they raise disputes, industrial peace would be a far cry. Under Section 2(0000)’ of the Rajasthan Act ‘representative union’ means a union for the time being registered as a representative union under the Rajasthan Act (Rajasthan Act XXXIV of 1950). Under Section 9-D 10 of the aforesaid Rajasthan Act any Union which has for the whole of the period of at least three months during the period of six months immediately preceding the calender month in which it so applies under this section a membership of not less than fifteen per cent of the total number of workmen employed in unit of an industry may apply in the prescribed form to the Registrar for registration as a Representative Union. Then under Section 9-F11 registration of a representative union can be cancelled on various grounds mentioned therein and one of such grounds is if, after holding such an inquiry, if any, as the Registrar deems fit he is satisfied that the registered union is being conducted not bona fide in the interest of the workmen but in the interest of the employers to the prejudice of the interest of the workmen. We have already quoted SEction 9-E as to how a representative union is to be registered. Proviso to that Section makes it clear that if there are two or more unions fulfilling the criteria laid down in Section 9-D and apply for registration then the union having the largest membership of the employees has to be registered. As to what is representative union is not defined in the Act but in common parlance it would mean that it represents all the workers. It is not the case of the Workers’ Union that registration of the Labour Union is liable to be cancelled on any ground whatsoever. Notice given by Workers’ Union under sub-section (2) of Section 19 of the Act is obviously invalid as it did not represent majority of the persons bound by the settlement nor it is a representative union. (Para 20)

       Industrial Tribunal is the creation statute and it gets jursidiction on the basis of reference. It cannot go into the question on validity of the reference. Question before the High Court was one of jurisdiction which it failed to consider. A tripartite settlement has been arrived at among the management, Labour Union and the Staff Union. When such a settlement is arrived at it is a package deal. In such a deal some demands may be left out. It is not that demands, which are left out, should be specifically mentioned in the settlement. It is not the contention of Workers’ Union that tripartite settlement is in any way mala fide. It has been contended by the Workers Union that the settlement was not arrived at during the conciliation proceedings under Section 12 of the Act and as such not binding on the members of the Workers Union. This contention is without any basis on the recitals to the tripartite settlement clearly show that the settlement was arrived at during the conciliation proceedings. (Para 22)

       State Government failed to give due consideration to the direction of the High Court in its judgment dated March 23, 1989. State Government also failed in its duty to bring the notice of the High Court of its notification dated March 17, 1989 making the impugned reference. It appears to us that the reference had occasioned while the judgment had been reserved by the High Court. In any case it was expected of the State Government to bring to the notice of the High Court before making a reference its decision to make the reference. After the judgment had been announced and directions issued by the High Court to hear the appellant it was incumbent of the State Government, in the circumstances of the case, to recall the reference. It could not direct the appellant to raise its objection to reference before the Industrial Tribunal for which Industrial Tribunal certainly lacked jurisdiction. State Government before making the reference did not consider all the relevant considerations which would clothe it with the power to make the reference under Section 10 of the Act. Wholesale reference of all the disputes in the charter of demands of Workers Union for adjudication was also bad inasmuch as many of such disputes were already the subject matter of tripartite settlement. This also shows non-application of mind by the State Government in making the reference. Reference in itself was bad as the tripartite settlement did bind the members of the Workers’ Union as well. (Paras 23 & 24)

       Industrial Disputes Act, 1947-Section 12-concilian-Settlement-Settlement arrived at on a holiday-Cannot be held to be invalid-No bar in having conciliation proceedings on a holiday and to arrive at a settlement. (Para 21)