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PETITIONER: BROOKE BOND INDIA LTD.

       Vs.

RESPONDENT: THE WORKMEN

DATE OF JUDGMENT22/07/1981

BENCH: GUPTA, A.C. BENCH: GUPTA, A.C. PATHAK, R.S. REDDY, O. CHINNAPPA (J)

CITATION:  1981 AIR 1660            1982 SCR  (1)  29  1981 SCC  (3) 493        1981 SCALE  (3)1041

ACT:      Industrial  Disputes   Act,  1947   Section  2(p),   S. Settlement-Meaning of,  S.18 (1),  Settlement if  binding on "parties to the agreement".      Industrial Disputes  (Bombay) Rules,  1957, Rule 62 (2) (b), signing of memorandum of Settlement-Meaning of.

HEADNOTE:      Two Trade  Unions of  Workmen function  at  appellant’s factory. The  State Government  made a  reference under  the Industrial  Dispute   Act,  1947   for  adjudication  of  an Industrial Dispute  between the  appellant and  its  workmen regarding their demands.      A joint  charter of  Demands was later submitted by the Unions raising  certain other  demands. On  behalf of one of the union  a negotiation  committee was  formed composed  of some of  the office  bearers of that union to participate in the negotiations  for a  settlement. Ultimately a memorandum of settlement  was signed.  The members  of the  negotiation committee of  aforesaid union  who  happened  to  be  office bearers of that union signed the settlement for their union. The  settlement   covered  the  disputes  mentioned  in  the reference  and  also  certain  other  disputes  between  the management and  workmen. A  joint petition  for  passing  an award in  terms of  the  settlement  was  filed  before  the tribunal.      A  few  days  later  the  executive  committee  of  the aforesaid Union  rejected the  agreement on  the ground that the agreement  had given  rise to discontent among a section of the  workers whose  problems had  not been satisfactorily solved.  The  question  was  whether  the  agreement  was  a settlement  within  the  meaning  of  section  2(p)  of  the Industrial Disputes  Act from  which  the  Union  could  not resile. 30      The Tribunal  by its  award held that the agreement was not a  settlement within  the meaning of section 2(p) of the Act. Hence this appeal by special leave.      It was  argued on  behalf of the appellants that as the agreement was  signed  in  the  manner  prescribed  by  rule 62(2)(b) of the Industrial Disputes (Bombay) Rules, 1957 and

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as the  requirements of  rule 62(4) have been complied with, the agreement  must be  accepted as  a settlement within the meaning of  section 2(p) of the Industrial Disputes Act, and as such  was binding on the Union under Section 18(1) of the Act.      Dismissing the appeal, ^      HELD: 1. In this case it has been found that the office bearers who signed the agreement were not competent to enter into a  settlement with the company and as such it cannot be said that  an agreement was reached between the employer and the workmen represented by the Union. [35 E-F]      2. What is binding as a settlement under section 18 (1) of the  Industrial Disputes  Act is an agreement between the employer and  workmen and  the Tribunal found that there was no agreement between the Management and the Union. [35 E-F]      Workmen  of   M/s  Delhi   Cloth  &  General  Mills  v. Management of  M/s Delhi  Cloth & General Mills [1970] 2 SCR 886 referred to.      3. The  procedure prescribed  by either  rule 58 of the Central Rules  or Rule  62 of  the Bombay Rules pre-supposes the existence  of a valid settlement. But neither rule 58 of the Central  Rules nor  rule 62 of the Bombay Rules contains anything to suggest that any officer of a trade union who is entitled to  sign a  settlement reached  between the parties must be  deemed to  have had the authority to enter into the settlement. Rule  62 only  prescribes the form of memorandum of settlement  and by  whom it  should  be  signed  and  the question whether  the procedure  has been complied with will arise only  if there is in existence a valid settlement. [36 F-H]      The Sirsilk  Ltd. and others v. Govt. of Andhra Pradesh JUDGMENT: 31      Hindustan Housing  Factory Ltd.  v.  Hindustan  Housing Factory Employees’  Union &  Others [1969]  Lab.  I.C.  1450 approved.

&      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1757 of 1980.      From the  judgment and order dated 11th September, 1980 of the  Industrial Tribunal  at Nagpur in Reference (II) No. 22/78.      Y.S. Chitale,  R.K. Thakur,  O.C. Mathur  and K.J. John for the Appellant      H.W. Dhabe and A.G. Ratanaparkhi for Respondent 1.      G.L. Sanghi,  V.A. Bobde,  A.K. Sanghi and Miss Vasudha Sanghi for Respondent 2.      The Judgment of the Court was delivered by      GUPTA J.  During the pendency of a reference before the Industrial  Tribunal  at  Nagpur,  a  written  agreement  in settlement of  the disputes covered by the reference as also certain  other  disputes  between  the  management  and  the workmen  was   signed;  on   behalf  of   the  trade  unions representing the  workmen the  agreement was signed by their office bearers.  A few days later the executive committee of one of  the Unions rejected the agreement on the ground that the agreement  had given  rise to discontent among a section of the  workers whose  problems had  not been satisfactorily solved. A  question then  arose, whether the agreement was a settlement within  the meaning  of  section  2  (p)  of  the Industrial Disputes Act, 1947 from which the Union could not

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resile. The  Tribunal by  its award  held that the agreement was not  a settlement  binding on the union: the validity of this award  is challenged  in this  appeal by  special leave preferred by the management.      The relevant  facts are  those. The  appellant,  Brooke Bond India  Limited, a  Company incorporated  and registered under the  Indian Companies  Act, hereinafter referred to as the company,  have a  factory at Kanhan, District Nagpur, in Maharashtra. Two  trade unions  of workmen  employed by  the company function in the 32 Kanhan factory;  one is  known as Bharatiya Swatantra Brooke Bond Chaha  Karamchari Sangh (Bharatiya Union for short) and the  other  is  called  M.P.  Rashtriya  Brooke  Bond  Chaha Karamchari Sangh  (Rashtriya Union  for brevity’s  sake). In this case  we are  concerned with  the Rashtriya  Union.  On September  27,   1975  Government   of  Maharashtra  made  a reference  under  section  10  (1)  (d)  of  the  Industrial Disputes Act,  1947 for  the adjudication  of an  industrial dispute between  the company and the workmen in respect of 4 demands set  out in  the schedule to the order of reference. Subsequently on June 11, 1977 a joint charter of demands was submitted by  the workmen  through the aforesaid two unions; this charter  included 26  demands.  At  a  meeting  of  the executive committee  of the  Rashtriya Union  held on August 19, 1977  several resolutions  were passed of which two only appear to be relevant for the present purpose. By one of the resolutions a  negotiation committee composed of six members including some  of office  bearers of  the union  was formed "for a discussion to be held with the management". The other resolution related  to the 26 demands mentioned above and it said that  "a proper decision" regarding these demands would be taken  after "due consideration of the proposals given by the  members   and  after   placing  the   same  before  the negotiation committee  of both  the unions".  Thereafter two more charters of demands, one by each union, were submitted. At a  meeting of  the executive  committee of  the Rashtriya Union held  on January  8, 1978  the office  bearers of  the union put  it on  record that  in respect  of the  4 demands pending  before  the  Tribunal  the  union  would  accept  a satisfactory settlement and that the executive committee had granted permission to the negotiation committee for carrying on discussion  with the  company and  the Bharatiya Union as regards the pending demands. Subsequently the resignation of some  of  the  office  bearers  of  the  union  led  to  the reconstitution of  the negotiation committee at a meeting of the executive  committee of  the union  held on February 18, 1978. On  the subject  of the  proposed  settlement  it  was disclosed at  this meeting  that the  company had  agreed to obtain clarification  from the head office on several points including the  absorption in company’s employment of workers employed in  loading and  unloading job  and confirmation of casual workers. The general secretary of the Rashtriya Union by a letter dated March 9, 1978 informed the factory manager that the  members of the reconstituted negotiation committee "will participate  in the  negotiations to be commenced from 13th March, 1978 for arriving at an agreement". On March 16, 1978 a 33 memorandum of  settlement was  signed. The  following office bearers of  the Rashtriya  Union signed  the memorandum, the working president,  two vice-presidents,  general secretary, joint secretary and the organizing secretary. They were also members of  the negotiation  committee along with others. On the next  day, March  17, a  joint petition was filed before

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the Industrial Tribunal signed by the factory manager of the company, the  general Secretary  of the  Bharatiya Union and the General Secretary of the Rashtriya Union praying that an award in terms of the settlement be passed.      About a  week later, on March 24, 1978 a meeting of the executive committee of the Rashtriya Union was held in which "it was  unanimously resolved to withdraw from the agreement dated March 16, 1978" in view of the "discontent amongst the workers about  the  agreement".  On  April  1,  1978  at  an emergent meeting of the executive committee of the Rashtriya Union, after an elaborate discussion on the agreement it was "resolved to  reject the  agreement as  the problems  of the workers were not satisfactorily solved". On April 7, 1978 an application was  made to  the  Tribunal  on  behalf  of  the Rashtriya Union praying that the agreement be rejected.      The Tribunal  heard the  question as to the validity of the settlement  so far  as the Rashtriya Union was concerned as a preliminary issue. The Tribunal rejected the contention raised on  behalf of  the Rashtriya Union that the agreement signed on March 16, 1978 was only a draft agreement and held that it  was intended  to  be  a  settlement.  The  Tribunal however came  to the conclusion that it could not be treated as a  settlement within  the meaning of section 2 (p) of the Industrial Disputes Act.      It cannot  be disputed  that unless  the office bearers who signed  the agreement  were authorised  by the executive committee of  the Union  to enter  into a  settlement or the constitution of  the Union contained a provision that one or more of  its members  would be competent to settle a dispute with the  management, no agreement between any office bearer of the  Union and  the management can be called a settlement as defined  in section  2 (p)  There is  no provision in the constitution of  the Rashtriya  Union authorising any office bearers of  the Union  to enter  into a  settlement with the management. We have referred above to the proceedings of the executive  committee.   As  the  Tribunal  points  out,  the resolutions passed by the 34 executive committee  do  not  support  the  claim  that  the Negotiation  Committee   was  empowered   to  enter  into  a settlement without  seeking ratification  from the executive committee. The  Tribunal held,  in our opinion rightly, that the fact that the agreement was signed by the office bearers of  the  Union  does  not  clinch  the  matter  because  the executive committee  at no stage had accepted the agreement. In fact  no meeting  of the  executive  committee  was  held before the  agreement  was  signed  on  March  16,  1978  to consider whether the agreement was acceptable.      Section 2  (p) of  the Industrial  Disputes Act defines "settlement";-           "Settlement" means  a settlement arrived at in the           course of  conciliation proceeding  and includes a           written agreement between the employer and workmen           arrived  at   otherwise  than  in  the  course  of           conciliation proceeding  where such  agreement has           been signed  by the parties thereto in such manner           as may  be prescribed  and a copy thereof has been           sent to  an officer  authorised in  this behalf by           the appropriate  Government and  the  conciliation           officer;" In the  present case the purported settlement was arrived at not in  the course  of conciliation  proceedings. Section 18 (1) of the Act provides:           "Section 18  . Persons  on  whom  settlements  and awards are binding:

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    (1)  A settlement  arrived at  by agreement between the           employer and  workmen otherwise  than in  cause of           conciliation proceeding  shall be  binding on  the           parties to the agreement :"      It is also necessary to refer to rule 62 (2) (b) of the Industrial Disputes (Bombay) Rules, 1957. Rule 62 (2) (b) is as follows:      "62. Memorandum of Settlement:-      ...       ...       ...       ...       ...       ... 35      (2) The settlement shall be signed by:      (a)  ...       ...       ...       ... ..         ... .      (b)  in the case of workmen, either by the President or           Secretary (or  such other officer of a trade union           of  the  workmen  as  may  be  authorised  by  the           Executive Committee of the Union in this behalf ),           or by  five representatives  of the  workmen  duly           authorised in  this behalf  at a  meeting  of  the           workmen held for the purpose." Sub-rule  (4)  of  rule  62  requires  the  parties  to  the settlement to  send copies thereof jointly to the prescribed authorities. That  this was  done in the present case is not disputed. It  was argued  on behalf of the appellant that as the agreement was signed in the manner prescribed by rule 62 (2) (b)  and as  the requirements  of rule  62 (4) have been complied  with,   the  agreement   must  be  accepted  as  a settlement within  the meaning  of  section  2  (p)  of  the Industrial Disputes Act and as such binding on the Rashtriya Union under  section 18  (1) of the Act. But, as pointed out by the  Tribunal rule  62 only  prescribes the  form of  the memorandum of  settlement and  by whom  it should be signed, and the question whether the procedure prescribed by rule 62 has been  complied with  will arise  only  if  there  is  in existence a  valid settlement between the parties concerned. In this  case it  has been found that the office bearers who signed the  agreement were  not competent  to enter  into  a settlement with  the company  and as  such it cannot be said that an  agreement was  reached between the employer and the workmen represented  by the Rashtriya Union. What is binding as a  settlement under  section 18  (1)  of  the  Industrial Disputes Act  is  an  agreement  between  the  employer  and workmen. Here the Tribunal found that there was no agreement between management  and the  Rashtriya Union.  Reliance  was placed on  behalf of  the appellant  on the decision of this Court in  Workmen of  M/s. Delhi  Cloth and General Mills v. Management of M/s. Delhi Cloth and General Mills.(1) In that case among  other matters rule 58 of the Industrial Disputes (Central)  Rules,   1957  made   under  section  38  of  the Industrial Disputes  Act, 1947  came up  for  consideration. Rule 58  (2) (b)  of the  Central Rules  which is similar to rule 62 (2) (b) of the Bombay Rules reads: 36      "85. Memorandum of settlement:      (1) x               x              x      (2) the settlement shall be signed           (a)  x              x              x           (b)  In the  case of  workmen, by any officer of a                trade   union   of   workmen   or   by   five                representatives of workmen duly authorised in                this behalf  at a meeting of the workmen held                for the purpose." It was held that the rule must be fully complied with if the settlement is  to have  a binding  effect  on  all  workmen. Section 18  (3) of  the  Industrial  Disputes  Act  makes  a settlement  which  has  become  enforceable,  binding  among

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others, on  all parties to the industrial dispute. It is not clear why  this decision  was considered  relevant. Possibly this case  was referred  to for the observation occurring on page 897  of the  report: "We  may observe here that we were not impressed  by the  appellant’s argument  that r. 58 rub- rule (2)  (b) required  that the officer of a trade union of workmen must  also be  duly authorised.  We, however, do not express any  considered opinion in view of our conclusion on other points".  Reference to  this observation may have been intended as  a reply to the construction sought to be put on rule 62  (2) (b)  of the  Bombay  Rules  on  behalf  of  the Rashtriya Union that the words "duly authorised" applied not only to the five representatives of workmen" but also to the office bearers  mentioned in the rule to enable them to sign the settlement;  on such  construction it was contended that the office  bearers of  the Union  who signed  the agreement were not specifically authorised to do so. This construction of rule 62 (2) (b) was rightly rejected by the Tribunal. But neither rule  58 of  the Central  Rules nor  rule 62  of the Bombay Rules  contains anything  to suggest that any officer of a  trade union  who is entitled to sign a settlement must be deemed  to have  had the  authority to  enter  into  this settlement. The  procedure prescribed  by either  rule 58 of the Central Rules or rule 62 of the Bombay Rules presupposes the existence  of a  valid settlement,  and the  question in this case  is whether  there was  such a settlement. Another case relied  on by  the appellant  is The  Sirsilk Ltd.  and others v.  Government of  Andhra Pradesh and another.(1) The facts of that case 37 are that  after the proceedings before the Tribunal had come to an  end and the Tribunal had sent its award to government the parties  concerned in  the dispute came to a settlement. Section 17 (1) of the Industrial Disputes Act lays down that every award  shall within  a period  of thirty days from the date  of  its  receipt  by  the  appropriate  government  be published in  such  manner  as  the  appropriate  government thinks fit.  Section 18  (1) makes  a settlement  arrived at between the  employer and  workmen  otherwise  than  in  the course of conciliation proceedings binding on the parties to the agreement.  Under section  18 (3) an award of a Tribunal on publication  shall be  binding  on  all  parties  to  the industrial dispute.  In Sirsilk  case difficulty was felt in giving effect  to the  settlement  because  the  proceedings before the  tribunal had ended and the tribunal had sent its award to  the government  before the  settlement was arrived at. This Court held:           "The only  way in our view to resolve the possible           conflict which  would arise  between a  settlement           which is  binding under  s. 18  (1) and  an  award           which may  become  binding  under  s.  18  (3)  on           publication is  to withhold the publication of the           award  once   the  Government  has  been  informed           jointly by  the parties  that a settlement binding           under s.  18 (1)  has been  arrived at.. In such a           situation we  are of  opinion that  the government           ought not to publish the award under s. 17 (1) and           in cases  where government is going to publish it,           it can  be directed  not to  publish the  award in           view of  the binding settlement arrived at between           the parties  under s.  18 (1)  with respect to the           very matters  which were  the  subject  matter  of           adjudication under the award." We think  this decision was relied on only to emphasize that a settlement  reached between  the parties  concerned in the

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dispute must prevail if it is reached at any time before the publication of  the award.  That is  undoubtedly so, but the question before  us is different-which is, whether in fact a settlement within  the meaning  of  section  2  (p)  of  the Industrial Disputes  Act was  reached. Other  questions will arise  only  after  it  is  found  that  there  was  such  a settlement in  existence. Sirsilk  does not therefore afford any assistance  to the appellant. The tribunal in support of the view  taken by it relied on a decision of the Delhi High Court. In 38 Hindustan Housing  Factory Ltd. v. Hindustan Housing Factory Employees’ Union and others, the High Court held:           ".. the  contention on  behalf of  the petitioner-           company that  the  fact  that  the  Memorandum  of           settlement was  in the  prescribed  form  and  was           signed by one or more of the office-bearers of the           Union  is   by  itself   sufficient  to  make  the           settlement arrived  at between  the Management  of           the petitioner-company and the signatories binding           on the Union and all its members, is untenable...                The language  of s. 18 (1) clearly shows that           the  settlement  will  be  binding  only  "on  the           parties  to  the  agreement."  The  definition  of           "settlement" in  s. 2  (p) of  the Act also states           that "settlement"  means a  settlement arrived  at           "between  the   employer  and  the  workmen."  So,           normally in  order that  a settlement  between the           employer and  the workmen  may be binding on them,           it has  to be  arrived at by agreement between the           employer and  the workmen.  Where the  workmen are           represented by  a recognised Union, the settlement           may be  arrived at  between the  employer and  the           Union. If  there is  a  recognised  Union  of  the           workmen and the Constitution of the Union provides           that any  of its  office-bearers can  enter into a           settlement with  the Management  on behalf  of the           Union and its members, a settlement may be arrived           at between  the employer and such office-bearer or           bearers. But,  where the  Constitution does not so           provide  specifically,   the   officer-bearer   or           bearers who  wish to  enter into a settlement with           the   employer    should   have    the   necessary           authorisation by  the executive  committee of  the           Union or  by the  workmen. A  reading of  rule  58           clearly shows that it presupposes the existence of           a  settlement   already  arrived  at  between  the           employer and  the workmen,  and it only prescribes           the from  in which  the Memorandum  of  settlement           should be,  and by  whom it  should be  signed. It           does not  deal with  the entering into or arriving           at a settlement. Therefore, 39           where a settlement is alleged to have been arrived           at between  an employer  and one  or more  office-           bearers of  the Union,  and the  authority of  the           office-bearers  who   signed  the   Memorandum  of           settlement  to   enter  into   the  settlement  is           challenged or  disputed,  the  said  authority  or           authorisation of the office-bearers who signed the           Memorandum of  settlement has to be established as           a fact,  and it  is not  enough  if  the  employer           merely points  out and  relies upon  the fact that           the Memorandum  of settlement was signed by one or           more of the office-bearers of the Union."

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In our  opinion the  above extract  from the judgment of the Delhi High  Court states correctly the law on the point. The appeal is accordingly dismissed; in the circumstances of the case we direct the parties to bear their own costs. N.K.A.                                     Appeal dismissed. 40