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PETITIONER: M/S.  SWADESHI COTTON MILLS CO.,LTD., KANPUR

       Vs.

RESPONDENT: RAJESHWAR PRASHAD AND ORS.

DATE OF JUDGMENT: 14/11/1960

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. SARKAR, A.K. WANCHOO, K.N.

CITATION:  1961 AIR  429            1961 SCR  (2) 359

ACT: Industrial Dispute--Compromise during pendency of  appeal--- Validity--Procedure--The U. P. Industrial Disputes Act, 1947 (U.   P. XXVIII of 1947), ss. 6-c, 2(t)--U.   P.  Industrial Disputes  Rules, 1957, r. 5(1)--Payment of Wages  Act,  1936 (Act 4 of 1936), s. 23.

HEADNOTE: While   this  appeal  by  special  leave,  relating  to   an industrial  dispute was pending in this Court a Director  of the   appellant  employer  and  a  representative   of   the respondents  employees  made  an application  to  the  Court praying  that  an  order  might be  passed  in  terms  of  a compromise  since  an  agreement was alleged  to  have  been entered into by the appellants and the respondents.  Some of the respondents contested this compromise and the court sent issues to the Tribunal for finding whether the alleged  com- promise actually took place between the parties, and if  so, was it valid.  The Tribunal returned findings to the  effect that  the compromise did actually take place and was  valid. Those findings were contested in the appeal. Held,  that  a  compromise agreement seeking  to  settle  an industrial dispute which was still pending decision in  this Court  would not contravene the provisions of S. 23  of  the Payment of Wages Act which contemplated rights not likely to be modified or reversed in any judicial proceedings. The  procedure prescribed by s. 6-C of the U. P.  Industrial Disputes  Act and the provisions thereof did not affect  the powers  of this Court, or the competence of the parties,  to amicably settle a dispute pending before it. The  procedure for obtaining an order in terms of  the  com- promise entered into between the parties pending the  appeal in  this  Court  is  prescribed by its  own  rules  and  the provisions  of S. 2(t) of the U. P. Industrial Disputes  Act and  rule  5(1)  of  the  Rules  made  thereunder  have   no application to such case.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 53 of 1958.

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Appeal by special leave from the Decision dated February 28, 1957,  of the Labour Appellate Tribunal, Bombay,  in  Appeal No. 111-160 of 1956. S.   P. Varma, for the appellants. 360 L.   K. Jha, Janardan Sharma, R. C. Prasad and Maqbool Ahmad Khan, for the respondents. 1960.  November 14.  The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal by special leave arises  from an   industrial  dispute  between  the   appellant   Messrs. Swadeshi  Cotton Mills and the respondents,  its  employees, and  the short preliminary question which is raised for  our decision  is whether an order should not be passed  in  this appeal in terms of the compromise agreement alleged to  have been reached between the appellant and the respondents.   It appears  that  on December 28, 1955, an  industrial  dispute between the parties was referred by the Government of  Uttar Pradesh  to the Industrial Tribunal, U. P.,  Allahabad,  for adjudication  under ss. 3, 4 and 8 of the U.  P.  Industrial Disputes  Act,  1947  (U.P.  Act  XXVIII  of  1947)  and  in pursuance  of  the  provisions of cl. 11 of  G.  O.  No.  U- 464(LL)/XXXVI-B-257 (LL)/1954 issued on July 14, 1954.   The dispute  thus  referred was whether the  existing  rates  of wages  of jobbers mentioned in the annexure employed in  the weaving  department of the appellant need any  revision;  if so,  with  what details and from what date  ?  The  Tribunal tried this issue and came to the conclusion that no case for revision had been made out by the respondents.  Against this decision of the Tribunal the respondents preferred an appeal before   the  Labour  Appellate  Tribunal.    Their   appeal succeeded and the Appellate Tribunal directed that the award of  the original Tribunal should be set aside, and that  the appellant  "  shall introduce from the date of  reference  a uniform  rate  of two annas in both the old  and  new  sheds irrespective  of  the number of looms assigned to  the  line jobbers  ".  It would be noticed that as a  result  of  this decision  the  existing  rates have  been  revised  and  the revision  has  been ordered to take  effect  retrospectively from the date of reference.  It is against this decision  of the  Labour  Appellate  Tribunal  that  the  appellant   has preferred the present appeal by special leave. 361 Pending this appeal in this Court the appellant purported to enter  into a compromise with the respondents and the  terms of the compromise were reduced to writing, and in  pursuance of the said compromise an application was made to this Court on  February 26,1958, signed by Mr. Bagla, on behalf of  the appellant  in his capacity as a Director of  the  appellant, and  Mr.  Maqbool Ahmad Khan, for the  respondents,  in  his capacity  as the General Secretary of the Suti Mill  Mazdoor Sabha, Kanpur.  This application set out the material  terms of  the compromise.  One of the terms of the  compromise  is that  the revised rate should take effect not from  December 28,  1955, which is the date of reference but from  July  1, 1957.   Certain other modifications have also been  made  in the decision under appeal. Before  the appeal could be placed on the Board for  passing orders  in terms of this compromise an application was  made on  behalf  of  some of the respondents  alleging  that  the General  Secretary  Mr. Khan had no authority  or  power  to enter  into  any  compromise  as  a  representative  of  the respondents,  and that the compromise alleged to  have  been entered into by him with the appellant was not acceptable to the  respondents.  In support of this case  the  application

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referred  to a resolution passed by the General  Council  of the  Mazdoor  Sabha whereby it was declared that  no  office bearer could conclude an agreement with an employer about an industrial  dispute  without  the  consent  of  the  General Council,  and  reliance  was also  placed  on  the  relevant provisions in the constitution of the Mazdoor Sabha. Thereafter  the  petition for compromise was  placed  before this  Court  for hearing on April 10, 1960,  and  the  Court directed  that the application for recording  compromise  as well as the appeal itself should both be placed together for hearing  before the Court as soon as the parties file  their respective  statements  of the case.  After  the  statements were  filed the appeal and the petition were  placed  before this Court on May 5, 1960, and the Court by an interlocutory judgment 46 362 sent two issues to the Tribunal with a direction that the  Tribunal should hear the parties on those issues and  make        its findings thereon.  The two issues were: (1)  Has         the compromise  set up by the appellant taken place between  the parties; (2) If yes, is the compromise valid ? In  pursuance of this order the Tribunal has recorded evidence, heard  the parties  and  made its   findings.  It has  found  that  the compromise  in  fact  has  taken place  as  alleged  in  the petition made before this Court in that behalf, and that the said  compromise  is  valid.   In  dealing  with  the  first question  of fact the Tribunal has considered  the  evidence exhaustively  in the light of the background of the  dispute between the parties; it has found that negotiations went  on between  the  parties for a fairly long  time  during  which period  the  parties  discussed the pros  and  cons  of  the compromise,  that  during these negotiations  Mr.  Khan  was watchful  of  the  interests of the  respondents,  that  the compromise had been approved by the workmen concerned,  that on  the whole it is to their advantage and does not  at  all militate  against  the  accepted  principles  of  industrial adjudication,  and what is more it has been acted  upon  and has not remained a mere paper transaction.  It has explained that  the  opposition  to  the  compromise  proceeded   sub- stantially from the dispute between Mr. Khan, the Secretary, and  Mr.  Bajpai, the President, and the  Tribunal  felt  no doubt  that  the  compromise was the  result  of  bona  fide attempt  on  the  part of both the  parties  to  settle  the dispute  amicably  in  order  to  create  goodwill  and  co- operation amongst the employer and the employees. On  the  question  of law raised by  the  second  issue  the Tribunal  has held that the compromise is  perfectly  valid. It   has   considered  the  relevant   provisions   of   the constitution  of  this  Sabha, the  practice  prevailing  in regard  to  such compromises and to  several  agreements  of compromise entered into consistently with the said practice. It  was  urged before the Tribunal that  the  compromise  is invalid  under s. 6-B of the U.P. Industrial  Disputes  Act, 1947, as well as s. 2(vi). (c)     of  the Payment of  Wages Act, 1936 (Act 4 of 1936). 363 These  contentions have been rejected by the  Tribunal.   In the  result the findings recorded on both the issues are  in favour of the compromise. After  these  findings  were received in  this  Court,  the’ appeal  and the compromise petition have now come before  us for  final  disposal.  The finding of fact recorded  by  the Tribunal  on  the  first issue has not been  and  cannot  be challenged  before us.  It must( therefore be taken to  have

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been established that at the relevant time Mr. Khan was  the General Secretary of the respondents Sabha, and as such  was entitled to represent them and did represent them during the course of the present adjudication proceedings, and that the compromise  reached  between him and the  appellant  is  the result  of mutual discussions carried on for some  time  and its  terms on the whole are beneficial to  the  respondents. The practice prevailing in this Sabha and a large number  of precedents  which  are  consistent with  the  said  practice indicate  clearly  that  the  Secretary  of  the  Union  who represents  the  workmen in industrial disputes  has  always been  authorised and has exercised his authority  to  settle such  disputes when it was thought reasonable and proper  to do  so.  As we have often indicated it is  always  desirable that industrial disputes should be amicably settled  because such  settlement conduces to happy  industrial  relationship and  encourages co-operation between the parties.   That  is why  when industrial disputes are brought before this  Court under  Art.  136 of the Constitution  this  Court  generally appreciates  attempts made to settle disputes amicably,  and in  proper cases encourages such settlements.  Mr. Jha,  for the  respondents,  however, contends  that  though  amicable settlement   of   industrial  disputes  may   otherwise   be desirable, in law such settlement or compromise is  illegal. If  we come to the conclusion that compromise of  industrial disputes  pending  an  appeal is prohibited by  law,  or  is otherwise  inconsistent  with  such  provisions  it  may  be necessary to hold that the present compromise is bad in  law however much amicable settlement of industrial disputes  may otherwise be desirable.  Therefore the question which arises for our 364 decision  on  the  present compromise petition  is:  Is  the contention raised by Mr. Jha correct that the compromise  is invalid in law ? The first point urged by Mr. Jha in support of this argument is that the present compromise is prohibited by a. 23 of the Payment of Wages Act.  This Act has been passed to  regulate the payment of wages to certain classes of persons  employed in  industry,  and  there is no doubt  that  the  wages as revised by the Labour Appellate Tribunal in the present case would constitute wages under s. 2 (vi) of this Act.  Section 23  provides  that any contract or agreement,  whether  made before  or  after the commencement of this Act,  whereby  an employed person relinquishes any right conferred by this Act shall  be null and void in so far as it purports to  deprive him  of  such right.  The relevant provisions  of  this  Act require  the fixation of wage periods, provide for the  time of  payment  of wages, authorises  certain  deductions,  and permits  the  imposition  of  fines  only  subject  to   the conditions specified in that behalf.  Section 15 of the  Act provides  for  the determination of claims  arising  out  of deduction of wages or delay in payment of wages and penalty for  malicious or vexatious claims.  Section  16  prescribes for the making of an application in which such claims can be set  up;  and  a.  18  provides  for  the  powers  for   the authorities appointed under the Act.  Mr. Jha contends  that the revised wage structure directed by the Labour  Appellate Tribunal  entitles the respondents to claim  the  respective amounts  there indicated as their wages, and the  effect  of the   impugned  compromise  is  that  the  respondents   are relinquishing a part of their right in that behalf.  Mr. Jha con. tends that in giving up their claim for the  retrospec- tive  operation  of  the decision of  the  Labour  Appellate Tribunal  for  a  substantial part of the  period  the  res-

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pondents  are required to contract themselves out  of  their legal  rights  conferred  by  the  award  and  there.   fore referable  to  this  Act,  and  that  makes  the  compromise invalid.    This   argument  is  misconceived   because   it fallaciously  assumes  that the decision  under  appeal  has become final and that the rights accruing under 365 the said decision would not be and cannot be affected by any compromise.   The most significant fact to remember in  this connection is that the decision on( which the alleged rights are based is itself subject to an appeal before this  Court, and  in that sense it is not a final decision at all; it  is liable  to  be reversed or modified, and that being  so  the rights claimable  under the said decision are also liable to be  defeated,  or materially affected.  In such a  case  the industrial’ dispute would undoubtedly be pending before this Court,  and it would be idle for Mr. Jha to contend that  an attempt  to  settle  such  a dispute and  not  to  invite  a decision  of this Court contravenes the provisions of a.  23 of this Act.  Just as an industrial dispute could have  been settled  between the parties either before it  was  referred for adjudication to the Industrial Tribunal, or after it was referred  and  before  the  award  was  pronounced  by   the Tribunal,  so would it be open to the parties to settle  the dispute  so long as it was pending either before the  Labour Appellate Tribunal or before this Court.  The provisions  of s.  23 of this Act postulate certain definite  rights  which are  not likely or liable to be modified or reversed in  any pending  judicial  proceedings,  and since  this  factor  is absent in cases where an appeal is pending before this Court it  would not be reasonable to rely on the  said  provisions and  contend  that  they in substance  prevent  or  prohibit amicable settlement of disputes. The  other  argument  urged  against  the  validity  of  the compromise is based on the provisions of s. 6-C of the U. P. Industrial  Disputes  Act, 1947.  This  section  corresponds substantially to s. 19 of the Industrial Disputes Act XIV of 1947.   It provides, inter alia, that an award shall in  the first  instance  remain in operation for the period  of  one year or such shorter period as may be specified therein, and gives  the  State Government power to extend the  period  of operation  from  time  to time if it thinks  fit.   It  also provides that the State Government, either on its own motion or  on  the  application of any party bound  by  the  award, shorten  the  period of its operation, if it is  shown  that there has been a material change in the circumstances 366 on  which  the award was based.  The argument  is  that  any modification  in the award can only be made by adopting  the procedure prescribed by s. 6-C.  In our opinion there is  no substance in this argument.  Section 6-C undoubtedly confers upon the State Government certain powers to fix the duration of  the  operation of the award, but there can be  no  doubt that  the section can have no bearing on the powers of  this Court  in dealing with an industrial dispute brought  before it  under Art. 136 of the Constitution.  The award to  which s.  6-C  refers is an award which has become  final  in  the sense  that it is no longer subject to consideration by  any Tribunal or Court.  So long as an award is pending before  a Tribunal or a Court the jurisdiction of the Tribunal or  the Court to deal with it in accordance with law is not affected by s. 6-C, and the competence of the parties to settle their dispute pending before the Tribunal or the Court is also not affected  or impaired by the said section.  In other  words, what we have said about the argument based on the provisions

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of  s.  23 of the Payment of Wages Act  applies  with  equal force to the present argument as well. Then it is contended that the impugned compromise is   a settlement within the meaning of s. 2(t) of the  U.    P. Act  and  as  such it can be executed  only  in  the  manner prescribed by the Act.  Section 2(t) defines a settlement as one  which  is  arrived at in  the  course  of  conciliation proceedings and as including a written agreement between the employer  and the workmen arrived at otherwise than  in  the course  of conciliation proceedings when such  an  agreement has  been signed between the parties thereto in such  manner as may be prescribed and a copy thereof has been sent to the State Government and the conciliation officer.  Rule 5(1) of the  U. P. Industrial Disputes Rules, 1957,  prescribes  the procedure for recording a settlement as defined by s.  2(t). It is true that this procedure has not been followed, but it is  difficult  to understand how s. 2(t)  or  the  procedure prescribed  by  r.  5(1)  can  have  any  application  to  a compromise agreement which has been entered into between the parties pending the 367 appeal  in  this  Court.   The  compromise  in  question  is intended  to  be  filed in this Court  for  the  purpose  of enabling the parties to request this Court to pass an, order in  terms  of  the  said  compromise.   The  procedure   for obtaining  such  an order which has to be  followed  is  the procedure prescribed by the rules of this Court, just as  if a  compromise was reached before the Tribunal the  procedure to be followed before it would be, the procedure  prescribed by  its  rules.   Therefore  we  have  no  doubt  that   the compromise   in  question  cannot  attract   the   procedure prescribed by r. 5(1). The result is that the finding recorded by the Tribunal that the  compromise in question is valid is obviously right  and must be confirmed.  Since it is found that the compromise in fact  has  taken place and is otherwise valid,  we  have  no hesitation  in  directing that an order should be  drawn  in terms of the said compromise in the present appeal. Order accordingly.