Back
1993 Supreme(Bom) 563
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.L. PENDSE, M.L. DUDHAT, JJ.
Automotive and Allied Industries (Private), Ltd. – Appellant
Versus
Regional Provident Fund Commissioner and others – Respondents
Appeal No. 103 of 1992, in Writ Petition No. 403 of 1986
Decided on : 16-12-1993
For the Appellants : Sri S.K. Talsania.
For the Respondents: Sri S.M. Shah and Sri Sudhir Shah.
A party who has entered into consent terms waiving all claims against another party is estopped from subsequently making further claims, including statutory claims, arising out of the same subject matter.
Headnote:
EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - SECTION 17 - CONSENT TERMS - FULL AND FINAL SETTLEMENT - WAIVER OF PROVIDENT FUND CLAIMS - VALIDITY - PROVIDENT FUND COMMISSIONER - JURISDICTION TO ENROLL EMPLOYEE AFTER CONSENT TERMS - ESTOPPEL - PRINCIPLE OF APPROBATE AND REPROBATE.
Fact of the Case:
The appellant company and respondent 2, a former director and employee of the company, entered into consent terms resolving disputes and terminating respondent 2's employment. Clause 8 of the consent terms stated that the amounts paid to respondent 2 were in full and final settlement of all claims against the company, including claims for loss of office or otherwise. Despite this, respondent 2 approached the Provident Fund Commissioner claiming enrollment as a member of the provident fund. The Commissioner directed the company to enroll respondent 2, prompting the company to challenge the order in the High Court.
Finding of the Court:
The High Court allowed the company's appeal, holding that respondent 2 had waived his claim to provident fund by entering into the consent terms. The court found that the language of Clause 8 was broad enough to encompass all claims arising out of the employment, including statutory claims like provident fund. The court also held that respondent 2 was estopped from making further claims against the company after accepting the benefits under the consent terms.
Issues: 1. Whether respondent 2, by entering into consent terms with the company, had waived his claim to provident fund? 2. Whether the Provident Fund Commissioner had jurisdiction to enroll respondent 2 as a member of the fund after the consent terms had been entered into?
Ratio Decidendi: 1. The court held that Clause 8 of the consent terms, which stated that the amounts paid to respondent 2 were in full and final settlement of all claims against the company, including claims for loss of office or otherwise, was broad enough to encompass all claims arising out of the employment, including statutory claims like provident fund. 2. The court held that respondent 2 was estopped from making further claims against the company after accepting the benefits under the consent terms. The court applied the principle of approbate and reprobate, which prevents a party from taking advantage of both sides of an agreement.
Final Decision: The High Court allowed the company's appeal and set aside the order of the Provident Fund Commissioner directing the company to enroll respondent 2 as a member of the fund.
JUDGMENT :
PENDSE, J.:
The appellant company was incorporated on 23 January 1948, and the founder members were D.S. Kalyanpur and his two brothers J.S. Kalyanpur and original respondent 2 S.S. Kalyanpur. One Ambala Patel was also a founder member but retired in the year 1954. D.S. Kalyanpur was governing director of the company till his demise in the year 1956. The entire share holding of the appellant-company was held by the members of Kalyanpur family. The registered office and Bombay sales office of the company are situated in Bombay. In the year 1950 the company opened a branch office at Madras and original respondent 2 was appointed to manage the affairs of Madras office. The company also set up a factory at Lonavala to manufacture grease nipples, grease guns, oil guns etc., and the distribution of these articles in the Southern States, i.e., Tamil Nadu, Andhra Pradesh, Karnataka and Kerala was entrusted to original respondent 2.
In addition to being a director and in control of the company, original respondent 2 entered into an agreement with the company whereby original respondent 2 was shown as, an employee entitled to draw a monthly remuneration of Rs. 450 with effect from 1 August 1957. It is not in dispute that in addition to the salary respondent 2 was entitled to a commission of 2 per cent on the annual net sales of the Madras branch of the company. The agreement of employment was terminable by three months' notice in writing by the other party. Though the agreement was to remain in operation for a duration of one year, the agreement was neither renewed nor terminated.
2. In or about year 1976 difference arose between respondent 2 and other Directors of the company and in pursuance thereof on 15 December 1976, the company addressed a letter calling upon respondent 2 to resign as a Director. The company also served three months' notice upon respondent 2 and terminated appointment as a Director-in-charge of Madras office. Respondent 2 on 31 December, 1976, instituted Suit No. 27 of 1977 in the City Civil Court, Bombay, against the company to challenge the removal as a Director and termination of service as a Director-in-charge of Madras office. Another Suit being Suit No. 306 of 1977 was filed on 20 January 1977, for a mandatory injunction requiring the company to register the transfer of certain shares from the names of respondent 2 to the names of his three sons. During the pendency of the suits, the parties reached compromise and consent terms were drawn on 2 March 1977. The consent terms inter alia provided that respondent 2 ceased to be a Director of the company and so also the share-holder. Respondent 2 gave up his claim to be a Director-in-charge of Madras office. The company agreed to pay to respondent 2 Rs. 15,000 towards gratuity and in addition a sum of Rs. 10,000. The company also agreed to pay pension at the rate of Rs. 750 per month. In addition the company agreed to pay Rs. 4850 being the amount of salary, conveyance allowance and house rent allowance, Rs. 1,500 towards the unpaid holiday allowance and Rs. 2,425 being the salary in lieu of leave of one month claimed by respondent 2. The company further agreed to pay Rs. 1,411.65 towards the balance of the commission for the year ending 31 July 1976. The company in the consent terms accepted that respondent 2 had paid Rs. 30,000 which were deposited in the bank as fixed deposit. Clause 8 of the consent terms reads as follows:
“Agreed and declared that amount payable by the defendant to the plaintiff in the manner hereinabove provided for are in full and final settlement and satisfaction of all claims of the plaintiff against the defendants including claims for compensation for loss of office or otherwise howsoever.”
Respondent 2 in pursuance of the consent terms agreed to withdraw the two suits filed in the City Civil Court and Company Petition No. 1073 of 1977 filed in this Court against the company and the Directors. In accordance with the consent terms, t
