1999 Supreme(SC) 219

1999(2) Supreme 150
Supreme Court of India
(From Karnataka High Court)
S.B. Majmudar & U.C. Banerjee, JJ.
Management of Karnataka State Road Transport Corporation etc. -Appel­lants
versus
KSRTC Staff & Workers’ Federation & Anr. etc. -Respondents
Civil Appeal Nos. 928-29 of 1999
(Arising out of SLP (C) Nos. 19982-19983 of 1997)
With
Civil Appeal Nos. 930-31 of 1999
(Arising out of SLP (C) Nos. 22370-22371 of 1997)
Decided on 18-2-1999

Important Point
Pay Roll Check-off facility given to the Union by Management under a settlement reached, could not be withdrawn by the management unilater­ally during the subsistence of the settlement.

Headnote:Industrial Disputes Act, 1947-Section 19(2)-Settlement between Union and Management providing Pay Roll Check-off Facility to Union -Agree­ment to subsist as long as Union recognised as sole nego­tiating agent or termination of agree­ment by mutual agreement-Manage­ment is Govern­ment Corporation-Subsequent agreement with regard to service condi­tions-Agreement providing saving clause that all existing benefits and facilities to continue-Settlement was to subject to approval by Government-Government approving settlement but ordering Management to withdraw facility of Pay Roll Check-off - Management’s order with­draw­ing facility-Whether correct no-Government order directing withdraw­ing Pay Roll Check-off Facility ex facie ultra vires-Consequent order of Management not valid-Pay Roll Check-off Faci­lity not subject matter of settlement in question-Pay Roll Check-off Facility covered by earlier subsisting settlement-Not cancelled by mutual agreement between Management and Union nor came to an end as Union continued to be recognized as sole negotiating agent-Unilateral termination of binding settlement violative of mandatory requirement of Section 19(2)-Pay Check-off Facility would continue to be available to the Union-(Issue regarding Government’s authority under Section 34 of the Road Trans­portation Act, 1950 to issue impugned order/direction kept open for consideration in appropriate case).

       Held : The Pay Roll Check-off Faci­lity was made available to the respondent-Union by a binding settlement between the parties dated 28th July, 1988. This settlement was current when the Memorandum of Understanding dated 10th May, 1993 came to be entered into between the respondent Union and the Corporation. The said Memorandum of Understanding dealt with various demands including revision of pay scales. They are listed at item Nos. 1 to 23. In none of these demands, there is any whisper about the then existing Pay Roll Check-off Facility covered by the settlement of 28th July, 1988. Paragraph 24 of the Memorandum is relevant to adjudicate the dispute. The caption of paragraph 24 clearly indicates that it provides a saving clause. Meaning thereby, it seeks to continue the benefits and facilities which might have been available to the workmen and their Union under the earlier settlements. It is obvious that the demands for which Memorandum of Understanding was reached between the parties were pertaining to the workmen for whom they were raised by their Union and the benefits of the understanding about these demands were to be made available to the workmen concerned. It has to be kept in view that the earlier settlement of 1988 between the parties regarding facility of Pay Roll Check-off was not a benefit to the workmen but was a facility given to the Union to directly get its membership contribution from the member-workers’ wages by their consent. This facility imposed no additional burden on the workmen nor gave any additional benefit to them but grant of this facility only resulted into an easy method made available to the Union to collect its sub­scription from its members through the intervention of the Corpora­tion. To illustrate the point, if a member-employee was to get hundred rupees by way of monthly wages and if he agreed with the Corporation that out of hundred rupees payable to him, five rupees may be deducted at the source and paid over to his Union for discharging of his obli­gation to pay monthly membership fee, the Corporation would not suffer any additional financial burden thereby as it had the obligation to pay full hundred rupees by way of wages to the workmen having taken work from him for the month. Similarly, the workmen also would not get any benefit thereby as he had earned rupees hundred in full and on his own request five rupees were to go directly to the Union by way of membership fee which, otherwise, he would have been required to pay from his wages after receiving Rs. 100/-. Therefore, the scheme of Pay Roll Check-off Facility conferred a facility to the Union of workmen without conferring any extra benefit to the workmen or imposing any greater financial burden on the Corporation. In the light of the aforesaid scheme, the Pay Roll Check-off Facility was made available to the respondent Union pursuant to the binding settlement of 28th July, 1988 by way of a tripartite agreement amongst the Union, worker Member concerned and the Corporation. We have to see as to what is the scope and ambit of aforesaid clause 24 of the Memorandum of Under­standing dated 10th May, 1993 vis-a-vis this scheme. The first part of clause 24 deals with benefits already granted under earlier settlements but expecting those covered by the settlement at hand, namely, the Memorandum of Understanding. These benefits were to be continued for the employees who were in the service of the Corporation on the date of signing of the settlement. They were obviously benefits already made available to the workmen under any earlier settlements. Pay Roll Check-off facility, as noted earlier, cannot be considered to be a benefit available to the workmen. At the most, it will be a facility to the Union to get an ensured method of securing membership fees from its members on regular basis. The first part of paragraph 24 states that facilities continuing by way of conventions and or practice will be continued. It is obvious that such facilities may include any of the then available facilities to the Union or even to workmen. However, facility given to the Union of getting benefit of the scheme of Pay Roll Check-off is obviously not a facility available to workmen. It is available only to the Union, that too under a binding settlement and not by way of convention or practice. Such a facility will not be covered by latter part of first paragraph of clause 24 as the facility contemplated therein refer to only those which were continuing by way of conven­tions and or practice. Hence, this facility was not contemplated even by the first part of paragraph 24 of the Memorandum of Understanding. If that is so, the second part of paragraph 24 also would be out of picture so far as Pay Roll Check-off facility available to respondent Union under the agreement of 28th July, 1988 was concerned. The second part of paragraph 24 provides for an understanding which had been reached on the earlier mentioned points in anticipation of approval of the Board of Directors or the State Government. It is difficult to appreciate how it could be said that any understanding was reached on Pay Roll Check-off Facility covered by any of the points mentioned in the Memorandum of Understanding. Understanding reached on the points mentioned in second part of paragraph 24 naturally referred to the points mentioned from paragraphs 1 to 23 of the Memorandum of Under­standing. It cannot refer to the saving clause mentioned in the very same paragraph 24. We, therefore, cannot accept the contention of learned senior counsel Shri Sanghi that the phrase “the above men­tioned points” as referred to in second part of paragraph 24 of the Memorandum of Understanding would also cover the first part of para­graph 24. But even that apart, assuming that what Shri Sanghi contends is right, even then the first part of paragraph 24 does not cover any understanding regarding the Pay Roll Check-off Facility given to the Union by settlement as seen earlier. Thus, neither first part of paragraph 24 nor its second part can apply to the question of Pay Roll Check-off Facility. For all these reasons, therefore, reliance placed on paragraph 24 of the Memorandum of Understanding dated 10th May, 1993 by Shri Sanghi, learned senior counsel for the Corporation, for subjecting the earlier granted Pay Roll Check-off facility to the future approval of the State is not of any avail. (Para 10)

       We, accordingly hold that paragraph 24 of the Memorandum of Under­stand­ing did not touch or cover in its sweep the Pay Roll Check-off Facility available to the respondent Union as per the binding settlement of 28th July, 1988. If that is so, there was no occasion for the State in the light of the aforesaid Memorandum of Understand­ing to pass the impugned Government Order dated 10th September, 1993, on a wrong assumption that it was called upon to make any observations or convey its decision whether it approved or did not approve the grant of Pay Roll Check-off Facility to the respondent Union. The proceedings of the Government of Karnataka which are at page 110 of Vol. I of the paper book clearly mentioned as its subject, List of demands submitted by KSRTC Staff and Workers Federation and also referred to the D.O. Letter dated 13th July, 1993 from the Chairman and Managing Director of the Corporation. The Preamble of the impugned G.O. issued by the State recites that the Memorandum of Understanding arrived at between the Chairman and Managing Director of the Corpora­tion, and the Management of Corporation and KSRTC Staff and Workers Federation had been signed on 10th May, 1993 in anticipation of approval of the Board of Directors of the Corporation and the Govern­ment. It is in that light that the scope of the Government Order dated 10th September, 1993 is to be appreciated. It states that after exam­ining in detail the proposal of the Corporation, the Government had accorded approval to the understanding between the parties with modi­fications and subject to the conditions mentioned in the said order. It becomes at once clear that even the State of Karnataka thought that it was called upon to consider whether to approve or not to approve the settlement on various demands as proposed in the Memorandum of Understanding dated 10th May, 1993. Twenty two such items are listed in the Govt. Order dated 10th September, 1993. Nowhere we find a whisper about the Pay Roll Check-off Facility which was already made available to the respondent Union by the binding settlement of 28th July, 1988. However, when we come to conditions mentioned in the impugned Govt. Order dated 10th September, 1993, we find Condition No. 2, to the effect that the Management shall not take the responsibility of collecting donations or monthly subscriptions from the employees on behalf of the recognised Federation or Unions. Condition No. 2 as mentioned in the impugned Govt. Order dated 10th September, 1993, to say the least, was clearly uncalled for and dehors the very scheme and ambit of the Memorandum of Understanding dated 10th May, 1993 as the said Memorandum, as noted earlier, had nothing to do with the Pay Roll Check-off Facility already made available to the Union by a binding settlement between the Corporation and the Union and it was holding the field at least by the time the order dated 10th September, 1993 saw the light of the day. It must, therefore, be held that Condi­tion No. 2 as imposed in the impugned Govt. Memo dated 10th September, 1993 was totally ultra vires and uncalled for and that the State had no occasion to lay down such a condition in connection with existing binding Pay Roll Check-off Facility. Once this conclusion is reached, it becomes obvious that the aforesaid condition contained in the impugned Memo must be held to be null and void and inoperative at law. Consequently, it is not necessary for us to examine the wider question canvassed by learned Advocate General for the State of Karnataka whether the State could issue such general directions under Section 34 of the Corporation Act. The decision of the learned Single Judge as confirmed by the Division Bench can be sustained on the short ground that the Govt. Order dated 10th September, 1993 laying down the aforesaid impugned Condition No. 2 in connection with Pay Roll Check-off Facility was ex-facie uncalled for and, therefore, the said Govt. Memorandum in so far as it referred to Condition No. 2 was not required to be acted upon by the Corporation. (Para 11)

       The Govt. Order dated 10th September, 1993 in connection with the impugned Pay Roll Check-off Facility was neither legal nor valid and was totally uncalled for. The impugned Notification dated 21st September, 1993 issued by the Corporation was based solely on the State of Karnataka’s order dated 10th September, 1993. Once that order is held by us to be uncalled for and inoperative in law, the consequential Notification dated 21st September, 1993 issued by the Corporation must fall through as a logical corollary of our aforesaid decision. (Paras 16 & 17)

       It cannot be disputed that the settlement in question came into force on 28th July, 1988 when it was signed by both the parties. A question arises as to how far the binding effect of that settlement may contin­ue between the parties. As seen earlier, Section 19(2) clearly pro­vides that such settlement shall be binding for such period as is agreed upon by the parties. Para 7 of the said settlement, as seen earlier, lays down the period for the currency of the settlement as it clearly provides that the settlement would be valid till the recognition accorded to the Federation existed. As we have seen earlier, the recognition to the respondent Federation continued all throughout and as on date even it is not shown that its recognition has stood superseded by any recognition given to any rival and compet­ing recognised Union. In any case, by the time of the impugned Notifi­cation dated 21st September, 1993 that period had never ended. Similarly, there was no earlier termination of settlement by mutual consent. Till either of these eventualities occurred, there was no occasion for the Corporation to terminate the settlement under Section 19 sub-section (2) by any notice as it is clearly laid down therein that the settlement shall be binding between the parties for the agreed period and shall also continue to be binding even after the expiry of the period until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party. So, even assuming that the Corporation could have unilaterally terminated such settle­ment it could not have done so during the time the settlement was operative on its own terms, meaning thereby, till the recognition accorded to the Union continued or till any earlier termination by mutual consent. As seen earlier, by 21st September, 1993 none of these contingencies had occurred. Consequently, the so called unilateral termination of the settlement by the Notification of Corporation dated 21st September, 1993 must be held to be completely ultra vires the powers of the Corporation under Section 19 sub-section (2). But even that apart, it has to be observed that the Corporation had not given two month’s notice in any case as contemplated by Section 19 sub-section (2) for terminating the said binding settlement, though such an occasion had still not arisen for the Corporation as the binding effect of the settlement during the period provided therein as per clause 7 had not come to an end by then. Even on that ground the notification dated 21st September, 1993 fell foul on the touchstone of Section 19(2) of the ID Act, having not complied with the said provision. (Para 18)

       But even on an assumption that the aforesaid notification satisfied the requirements of Section 19 sub-section (2) for terminating the settlement dated 28th July, 1988, even then till a new settlement laying down fresh terms of settlement on the question of Pay Roll Check-off facility saw the light of the day, the binding effect of the 1988 settlement has to continue to bind the parties by way of contractual obligations. If any unilateral notice to terminate the binding settlement of 28th July, 1988 was issued by the Corporation which, on the facts of the present case, is found not to have been issued, even then till any new settlement on the question of grant of Pay Roll Check-off Facility was substituted by parties, the legally binding effects of the earlier settlement of 1988 would continue to operate and the Corporation will then be contractually bound to confer pay roll check-off facility to the Union. Consequently, there was no occasion for the Corporation to issue the impugned Notification dated 21st September, 1993 even on this ground as it was clearly violative of the mandatory requirement of Section 19 sub-section (2) and was contrary to the settled legal position as aforesaid. It was, therefore, a still-born Notification and was rightly set aside by the learned Single Judge on that ground and also by the Division Bench of the High Court. (Para 19)

       Note : The question whether the Government has lawful authority to interfere with the Settlement validly made between the petitioner and the Corpo­ration by issuing directions under Section 34 of the Act? kept open for consideration in appropriate case.