JUDGMENT

VENKATARAMIAH, J.:— This appeal by special leave is filed against the judgment and order dated Nov. 10, 1983 passed by the Industrial Court, Madhya Pradesh at Indore in Appeal No. 25/PWA/81 modifying the order dated April 29, 1981 passed by the Authority under the Payment of Wages Act (Labour Court No. 2), Bhopal in case No. 1/PWA/96. The facts of the case are briefly these. In the course of conciliation proceedings under the provisions of the Industrial Disputes Act, 1947 a settlement was arrived at on June 29, 1973 between the management of the Security Paper Mill, Hoshangabad, the appellant herein, and the S. P. M. Employees Union, Hoshangabad. In the Memorandum of Settlement arrived at as per S. 12(3) of that Act one of the terms related to the incentive benefit. Clause 2(c) and (d) of the Memorandum of Settlement which relates to incentive benefit reads as follows :

"2.(c) The settlement on revised group incentive base of 6 M. T. a day will be treated as ad hoc regardless of merits of the case and will remain close and localised to S. P. M. and will not serve as precedent for norms of production in other departmental industrial undertakings.

(d) The revised base of 6 M. T. a day and the existing norms of the processing sections will be temporary and remain valid till Government take final decision on the basis of the revision and recommendations of the Expert Review Committee set up under letter No. F8(6)/73 Cy dated 5th April, 1973."

2. The above settlement was entered into on behalf of all the workmen and other non-operative officers and staff of the Security Paper Mill at Hoshangabad. When the above Settlement was in force the Government of India by its letter dated December 29, 1975 reduced the rate of incentive benefit payable by ordering that the entitlements of the non-operative officers and staff to the group incentive benefit shall be as under :

(i) All Gazetted Officers in charge of non-operative Sections (like Administrative and Chief Accounts Officers, Accounts Officers, Medical Officer and Junior Medical Officer) will be entitled to Group Incentive at 25 per cent of the rate applicable to industrial workmen.

(ii) All non-gazetted non-industrial staff and supervisor officers in non-operative sections such as office (Accounts, Establishment, Administration and General Sections), Dispensary, Estate etc. will be entitled to group Incentive at 50 per cent of the rate applicable to industrial workmen.

3. It was directed that the above order dated December 29, 1975 would be effective on the incentives to be drawn from January 1, 1976. The above order dated December 29, 1975 was challenged before the Central Government Industrial Tribunal-cum-Labour Court and that authority held that the modification of the incentive benefit made by the Government of India was illegal. After that the management entered into an agreement with one of the trade unions named S. P. M. Employees Union on April 11, 1979 reducing the rate of incentive benefit to 50 per cent to the non-operative employees i.e. administrative staff, accounts staff, estate employees and dispensary staff. After that the appellant paid the benefit at the reduced rates as per that agreement to the non-operative employees. The said agreement was not entered into during the course of any conciliation proceedings and in fact there were no conciliation proceedings pending at the time when the agreement was entered into. The respondents who were the non-operative staff and were not the members of the Union and parties to the agreement challenged the validity of the agreement before the Authority under the Payment of Wages Act on the basis of the Settlement of the year 1973. The claim before that Authority was in respect of the period between May 1, 1979 to April 30, 1980 and the total amount claimed was Rs. 1,93,357.85. The management filed a statement of objections before the Authority under the Payment of Wages Act stating that the S. P. M. Employees Union was the