IMPORTANT POINT
A Memorandum of Settlement must be read in the context in which the same was made.

Headnote:Industrial Employment (Standing Orders) Act, 1946—Section 18(1)—Bombay Shops and Commercial Establishment Act, 1948—Industrial Disputes (Bombay) Rules—Rule 62—Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971—Memorandum of Settlement arrived at between the parties—Interpretation of—Murphy Company was a manufacturer of Radio and Television sets—Norwest Electronics Ltd., running a servicing centre, was a sister concern of Murphy company—It was an establishment within the meaning of provisions of 1946 Act—Concerned workmen were on the rolls of Norwest—Murphy became a sick company and it was referred to the Board of Industrial and Financial Reconstruction—Merger of Murphy company with appellant company—Some of the workmen of Norwest, who were represented by the Union had been assured that they would be provided with employment on permanent basis by the appellant—They were issued fresh appointment letters—Termination of services of the said workmen after they had been kept on probation for about 5 years—A Memorandum of Settlement was entered into for resolution of disputes arising out of a Charter of Demands—Whether workmen were entitled to the status of permanent workmen—(Yes).
       Held : The preamble of the settlement refers to the Charter of Demands served upon the appellant on 27.02.1989 in respect of the shop floor and office of the company situated at Thane and Parel relating to wage scale, classification, dearness allowance, leave facilities, leave travel allowance, transports etc. Supplementary demands were also raised. The parties reached a package settlement covering the service conditions and terms of employment applicable to the workmen at Thane and Head Office. The said settlement was to cover all terms and conditions of service of various categories of permanent workmen; and was to apply to all permanent workmen who were on the rolls of the company as on 31.12.1990. The said Memorandum of Settlement, indisputably, was entered into on 29.04.1991. Does it apply only to those workmen who were on the rolls of the company as on 31.12.1990 is the question. If the said settlement was only to apply to the permanent workmen, who were on the rolls of the company as on 31.12.1990, evidently it would not have contained any provision for appointment of apprentices, payment of stipend and probation or confirmation or their fitment. A Memorandum of Settlement must be read in the context in which the same was made. If the said settlement is given a narrow meaning, as has been contended by Mr. Andhyarujina, the same would defeat the purpose thereof. It may be true that by reason of a settlement, a cut-off date may be provided or the benefits be given only to a class of employees but with a view to give a proper meaning to the terms of the settlement, the court would be entitled to notice the source of the dispute. The workmen of Norwest were not on the rolls of the company, they became its employees only with effect from 01.02.1991. Their terms and conditions were already governed by the Certified Standing Orders. A Code of Conduct was required to be evolved only as regard the workmen who came on the rolls of the company after 31.12.1990.(Paras 28 to 32)
       The provisions relating to probation and confirmation of the workmen would not fit in with the concept of applicability of the settlement only to those who were on the permanent rolls of the company as on 31.12.1990. Evidently, thus, the said settlement not only covers those who were permanent workmen as on the said date and had ceased to be workmen but also those who were to be appointed at a later date.(Para 34)
       In this case, whether the period of probation was three months or six months is not of much significance; as the workmen had been kept on probation by an order dated 01.05.1991 with retrospective effect from 01.02.1991. Evidently they were, thus, entitled to the status of permanent workmen on completion of six months period if not three months. They were kept on probation till 1996 and, thus, they had admittedly completed the period of six months. Once they had successfully completed the period of probation, they were entitled to the status of permanent workmen, the consequences whereof would be that they became entitled to all the benefits and privileges in terms of the settlement as permanent employees.(Para 38)

JUDGMENT

S.B. Sinha, J.—Leave granted.

INTRODUCTION

2. Interpretation of a settlement arrived at by and between the parties herein is in question in this appeal which arises out of a judgment and order dated 11.01.2005 passed by a learned Single Judge of the High Court of Judicature at Bombay in Writ Petition No. 1785 of 2001.

ADMITTED FACTS

3. Murphy India Ltd. (Murphy) was a manufacturer of Radio and Television sets. Norwest Electronics Ltd. (for short, ‘Norwest’), which was running a servicing centre, was a sister concern of Murphy India Ltd. It had been carrying out maintenance and repair works of the products of Murphy at its Thane factory. It was an establishment within the meaning of the provisions of the Industrial Employment (Standing Orders) Act, 1946, (1946 Act). The concerned workmen were on the rolls of Norwest. The Provident Fund and E.S.I.C. Code Number of both the companies were the same. Some workmen working in the said Norwest were its permanent employees. Murphy became a sick company. It was referred to the Board of Industrial and Financial Reconstruction (BIFR). Pursuant to a scheme made by it on or about 31-08-1990 Murphy merged with the appellant-company. It undertook the maintenance and repair works carried out at the factory of Murphy situated at Parel. Some of the workmen of Norwest, who were represented by the Union herein, had been assured that they would be provided with employment on permanent basis by the appellant herein. 45 workmen had applied for employment with its Electronics Division. They were issued fresh appointment letters with effect from 01.02.1991. They were initially appointed on temporary basis at Parel Unit of the appellant, wherein sales and service of the Radios and Televisions used to be carried out. Indisputably, the said establishment was registered under the Bombay Shops and Commercial Establishment Act, 1948 (for short, ‘the 1948 Act’).

4. Although initially existence of the Certified Standing Orders was denied by the appellant, a copy thereof was produced before the High Court, in terms whereof, the employees appointed on probation were to get the permanent status on the expiry of six months from the date of joining the service; whereas in terms of the Model Standing Orders, such permanent status was to be conferred on the workmen on the expiry of three months of their being placed on probation.

5. After Murphy was referred to the BIFR and its consequent merger with the appellant, appointments had been given to 45 workmen on and from 01.02.1991. Although they had been appointed on temporary basis, they were put on probation by an order dated 01.05.1991 with effect from 01.02.1991. They had been kept on probation till 1996 and their services had been terminated thereafter. Termination of the services of the said workmen had given rise to another industrial dispute and it is stated at the bar that an award had been passed in favour of the workmen. The said matter, however, is pending adjudication before the Bombay High Court and the execution of the award has been stayed.

PROCEEDINGS:

6. On or about 29.04.1991, a Memorandum of Settlement was entered into between the Electronics Division of the appellant herein and the respondent Union, which was recognized in terms of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act. 1971 (for short, ‘the 1971 Act’) for resolution of the disputes arising out a Charter of Demands made on 27.10.1989 in respect of the workmen working in the shop floor and office of the company situated at Thane and Parel.

7. On or about 06.10.1992, a complaint was filed by the respondent-Union about the violation of the terms of the said settlement, alleging unfair labour practices as contained in Item Nos. 1(a) and 4(g) of the Second Schedule and Item Nos. 6 and 9 of the Fourth Schedule appended to the said Act. A prayer for payment of the same wages as are paid to the permanent workmen of the company as also a declaration that th

Click Here to Read the rest of this document

2006 Supreme(SC) 388

IMPORTANT POINT A Memorandum of Settlement must be read in the context in which the same was made.

IMPORTANT POINT
A Memorandum of Settlement must be read in the context in which the same was made.