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PETITIONER: SHUKLA MANSETA INDUSTRIES PVT.  LTD.

       Vs.

RESPONDENT: THE WORKMEN EMPLOYED UNDER IT

DATE OF JUDGMENT02/08/1977

BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. KRISHNAIYER, V.R.

CITATION:  1977 AIR 2246            1978 SCR  (1) 249  1977 SCC  (4)  31  CITATOR INFO :  RF         1980 SC2181  (135)

ACT: Industrial  Disputes Act, 1947-S.  19(2)-Scope  of-Employers and  employees  arrived at settlement to  be  operative  for three years-Employees gave notice of termination two monthes before  the expiry of the period of three years Validity  of notice.

HEADNOTE: Section 19(2) of the Industrial Disputes Act, 1947  provides that  a settlement shall be binding on the parties for  such period  as is agreed upon by them and shall continue  to  be binding after the expiry of the period until the expiry  of two months from the date on which a notice in writing of  an intention  to  terminate the settlement is given by  one  of tile   parties  to  the  other  party  or  parties  to   the settlement. The  appellant-employers and the  respondent-workers  agreed that  the  settlement reached by them in 1970 should  be  in force  for three years till 5th July, 1973.  On May 6,  1973 the workers gave notice terminating the settlement after the expiry of two months from the dated of notice.Demands raised by  the  workmen  on  August 1, 1973  were  referred  to  an Industrial  Tribunal.  The employers’ preliminary  objection that the reference was incompetent since there was no  legal and  valid termination of the settlement under s. 19(2)  was rejected by the Tribunal. Dismissing the employers’ appeal to this Court HELD  :  There is no legal bar to  give  advance  intimation about  the  intention  to terminate the  settlement  on  the expiry  of the agreed period and to start negotiation for  a more favorable settlement immediately thereafter.  The  only condition  to  be  fulfilled by such a notice  is  that  the period of two months from the date of notice must end on the expiry of the settlement and not before it. [255H] (1)The  policy  of the Act is to ban agitations  over  the matters  covered by a settlement or by an award  during  the period  specified under s. 19(2) and s. 19(6)  respectively. To  avoid  uncertainty and speculation s.  19  prescribes  a terminus  a quo and a terminus ad quem.  If in a  settlement there  is no time limit agreed upon between the parties  the

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period  of operation is a space of six months from the  date of signing of the settlement and will last until the  expiry of  two  months from the date of receipt of  the  notice  of termination  of the settlement.  If the period is  fixed  it commences  from the date as specified in the settlement  and will theoretically end as agreed upon, but shall continue to operate  under  the law until the expiry  of  the  requisite period of two months by a clear written notice. [253C-D]  (2)  In an industrial matter this Court is not prepared  to subject  a notice under s. 19(2) to the irksome vagaries  or tyranny  of technicalities of a notice under s. 106  of  the Transfer of Property Act. [256B] (3)Notice  under  s. 19(2) or under s. 19(6) is  only  for intimation  of an intention to terminate a settlement or  an award  respectively.  There is no legal impediment  to  give advance  intimation of the aforesaid intention provided  the contractual or statutory period of settlement is not thereby affected or curtailed. [253F] Management  of  Bangalore Woollen, Colton & Silk  Mills  Co. Ltd.  v.  The Workmen [1968] 1 SCR 581;  Indian  Link  Chain Manufactures Ltd v. Their Workmen [1972] 1 SCR 790; National Carbon  Co.  (India)  Ltd.  v.  M.  N.  Gan,  Judge,  Labour Appellate  Tribunal & Ors A.I.R. 1957 Cal. 500; Deccan  Tile Works  v.  Their  Workmen  (Tile  Factories  Workers  Union, Samalkot [1960] 2 LL.J. 298 held inapplicable. India Reconstruction Corporation Ltd. 1953 L.A.C. 563 (Cal.) disapproved. 5-768SCI/77 250 (4)Section 19(2) does not entitle a party to a  settlement to repudiate the settlement while the same is in  operation. Giving  advance  notice within the ambit of the law  is  not repudiation of the settlement. [255A] (5)The  appellant’s argument that since there is a power  in the Government to extend the period of an award a notice  of termination prior to the date of expiry of the award  cannot be contemplated under the law and since this is the position regarding   an  award,  a  settlement  cannot   be   treated differently,  has  no force.  Even if an advance  notice  is given  in the case of an award, provided the period  of  two months expires on the usual expiry of the award permitted by law  and  Government in exercise of its  power  extends  the award  in a given case, such a notice would be in  fructuous and  inoperative under the law.  The extension of the  award by  the  Government in exercise of a statutory  power  would prevail upon the action of the party to terminate the  award by  notice.  It is only if a notice under s. 19(2) or  19(6) expires  within  the  period of operation of  the  award  or settlement, such a notice will be invalid under the law.  In that  event the settlement or the award will continue to  be in  operation and any reference by Government of  a  dispute during the period of settlement or an award without the same being terminated under the law will be invalid. [255B-C; G] Patna   Municipal  Corporation  v.  The  Workmen  of   Patna Municipal Corpora tion & Ors. [1970] Labour Industrial Cases 1236 held inapplicable.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION, : Civil Appeal No.  1324  of 1977. Appeal  by Special Leave from the Award dated  22-2-1977  of the  Industries Tribunal, Maharashtra in Reference (IT)  No. 168 of 1974 published in the Maharashtra Government  Gazette

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dated the 7th April, 1977. I.   N. Shroff, for the Appellant. F.   D.  Damania,  P. H. Parekh, Miss Manju  Jetley  and  K. Vasude, for Respondents. The Judgment of the Court was delivered by GOSWAMI,  J.-The short but important question  which  arises for  decision in this appeal by special leave turns  on  the interpretation  of section 19(2) of the Industrial  Disputes Act,  1947 (briefly the Act).  Does law require that  notice of  termination  under section 19(2) has to  be  given  only after  the  date  of expiry of a settlement ?  That  is  the question.  We are informed that there is no direct authority of this Court on this point. There  was a settlement between the appellant, M/s.   Sbukla Manseta  Industries  Private  Limited  (hereinafter  to   be described  as  the employer) and their workmen  on  July  6, 1970.  The settlement came into force from July 6, 1970  and was to remain in force for a period of three years, that is, till  5th  July,  1973.  The  workmen  through  their  union (Shukla  Manseta Mazdoor Sangh) gave notice to the  employer on May 6, 1973, terminating the settlement after the  expiry of  the  period of two months from the date of  the  notice. Thus under the terms of the notice the settlement would also have stood terminated at the instance of the workmen on July 5,  1973,  which  was also the dare of  the  expiry  of  the settlement under the agreed terms. The  workmen thereafter raised certain demands on August  1, 1973  and the State Government, in due course, referred  the dispute under section 10(1) (d) of the Act to the Industrial Tribunal by an order dated June 25,1974. 251 The  employer  took  a  preliminary  objection  before   the Tribunal  that the reference was incompetent and invalid  in view  of  the  fact  that there  was  no  legal  and  valid termination  of  the  settlement  in  accordance  with   the provisions  of  section  19(2)  of  the  Act.   The  workmen resisted the claim.  The Tribunal over-ruled the preliminary objection  and  held  that  the notice  was  valid  and  the reference  was competent.  It is against the above order  of the  Tribunal  that the employer has come to this  Court  by special leave. We  may immediately turn our attention to section 19 of  the Act which reads as follows :-               "19.   (1)  A  settlement  shall   come   into               operation on such date               as  is  agreed  upon by  the  parties  to  the               dispute, and if no date is agreed upon, on the               date on which the memorandum of the settlement               is signed by the parties to the dispute.               (2)   Such  settlement  shall be  binding  for               such period as is agreed upon by the  parties,               and  if no such period is agreed upon,  for  a               period  of six months from the date  on  which               the memorandum of settlement is signed by  the               parties to the dispute, and shall continue  to               be binding on the parties after the expiry  of               the period aforesaid, until the expiry of  two               months  from  the date on which  a  notice  in               writing  of  an  intention  to  terminate  the               settlement  is given by one of the parties  to               the other party or parties to the settlement.               (3)   An   award   shall,   subject   to   the               provisions   of   this  section,   remain   in               operation  for a period of one year  from  the               date  on which the award  becomes  enforceable

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             under section 17A : Provided that the appropriate Government may reduce the said period and fix such period as it thinks fit : Provided further that the appropriate Government may, before the  expiry  of  the  said  period,  extend  the  period  of operation by any period not exceeding one year at a time  as if  thinks  fit  so,  however,  that  the  total  period  of operation of any award does not exceed three years from  the date on which it came into operation.               (4)        x          x         x         x               (5)   Nothing  contained  in  sub-section  (3)               shall apply to any award which by its  nature,               terms or other circumstances does not               impose, after it has been given effect to, any               continuing obligation on the parties bound  by               the award.               2 5 2               (6)   Notwithstanding the expiry of the period               of operation under sub-section (3), the  award               ’shall  continue to be binding on the  parties               until a period of two months has elapsed  from               the date on which notice is given by any party               bound  by  the  award to the  other  party  or               parties intimating its intention to  terminate               the               award.               IL               (7)   No notice given under sub-section (2) or               sub-section               (6)   shall have effect, unless it is given by               a  party representing the majority of  persons               bound by the settlement or award, as the  case               may be".               We may also note the definition of  settlement               given under section 2(p) of the Act :               "2.   (p)  ’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". There  is no dispute that the settlement in  question  comes within the purview of section 2(p) of the Act. Under  the  provisions of section 19(2) it is clear  that  a settlement  shall be binding for ’such period as  is  agreed upon  by the parties and if there is no period mentioned  in the  agreement, for a period of six months from the date  on which the settlement is signed by the parties.  With  regard to the period of operation of the settlement, section  19(2) confers a statutory continuity of the settlement even  after the expiry of the period agreed upon until the expiry of two months  from  the  date on which a  written  notice  of  the intention to terminate the settlement is given by one  party to the other.  It is, therefore, clear that when a period is fixed in settlement, the settlement remains in operation for the entire period and also thereafter until one or the other party gives written intimation of the intention to terminate the settlement and until expiry of two months from the  date of such intimation. The object of the above provision under section 19(2) is  to

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ensure  that once a settlement is arrived at there  prevails peace, accord and cordiality between the parties during  the period agreed upon and if the settlement does not require to be  altered for some reason or the other the  ’same  climate prevails  ’by  extension of the settlement by  operation  of law.   Section 19 is not a dead end freezing all  manner  of aspirations  of labour or even, may be,  sometime,  hardship suffered by the employer on account of a settlement.   There is  an  option  given  to  either  party  to  terminate  the settlement  by a written intimation after the expiry of  two months from the date of such notice.  This is in accord with the policy of settlement of industrial disputes which is the principal object underlying the provisions of the Act.  253 Settlement  between  employers  and  workmen,  if  not  duly terminated, will operate as inviolable conditions of service of workmen.  Such settlements are only step-ups in  labour’s progressive  ascent  to the goal of  their  ultimate  Ideal, namely, a living wage with realisation of other  aspirations including  partnership  with employer.  How soon  that  goal will  be reached will depend upon so many factors and  other imponderables  in the process of the  nation’s  achievement, with  cooperation from all sectors, public and private,  but each  party  being  always  alive  to  the  larger  national interest  which includes thriving of the industry  of  which labour is an integral part. The policy of the Act is to ban agitations over the  matters covered  by  a settlement or by an award during  the  period specified   under   ’section   19(2)   and   section   19(6) respectively.  To avoid uncertainty and speculation  section 19  prescribed a terminus a quo and a terminus ad quem.   If in  a settlement there is no time limit agreed upon  between the parties the period of operation is a space of six months from  the  date of signing of the settlement and  will  also last until the expiry of two months from the date of receipt of  the  notice of termination of the ’settlement.   If  the period  is fixed it commences from the date as specified  in the settlement and will theoretically end as agreed upon but shall continue to operate under the law until the expiry  of the  requisite  period  of two months  by  a  clear  written notice. An award under section 19(3) of the Act has a longer  period of operation, to start with, namely, one year from the  date of the commencement of the award, which is on the expiry  of 30  days  from the date of publication of the award  by  the appropriate  Government.  As in the case of a settlement  so also  under  section 19(6) the award  continues  to  operate governing the conditions of service until the expiry of  two months from the date of receipt of notice of termination  of the  award.   Under the two provisos to sub-section  (3)  of section 19 Government hag the option to reduce or extend the period  of  operation of an award.  This will  be,  however, always subject to sub-section (5)  of section 19. Notice  under section 19(2) or under section 19(6)  is  only for intimation of an intention to terminate a settlement  or an award respectively.  There is no legal impediment to give advance  intimation of the aforesaid intention provided  the contractual or statutory period of settlement is not thereby affected or curtailed. It  is  submitted by Mr. Shroff on behalf of  the  appellant that  the  view taken by the Tribunal is  erroneous  and  he further  submits  that  there  is  a  decision  of   another Industrial  Tribunal in Maharashtra in his  support  against the impugned view.  He has also referred to two decisions of

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this Court and some decisions of the High Courts but  admits that none of these is directly to the point which is  raised before us. In Management of Bangalore Woollen, Cotton & Silk Mills  Co. Ltd. v.   The-  Workmen & Anr.,(1) this Court has held  that when there is a subsisting award binding on the parties  the Tribunal has no jurisdiction (1)[1968] 1 S.C.R. 581. 2 54 to  consider the same points in a fresh reference.  In  that case  the  earlier  award  had  not  been  terminated   and, therefore,  the  reference  was held by  this  Court  to  be incompetent.  That was a case in which there was not only  a settlement  between  the parties but also an  earlier  award dealing,  inter  alia, with some common  items  of  dispute. While the settlement was terminated after its expiry by  the union, the earlier award which also had disposed of some  of the items of the dispute which were raised but abandoned  as a  package  deal in the subsequent settlement had  not  been terminated  in  accordance with law.  Indeed  there  was  an attempt in that case to show that the earlier award had been terminated  by a letter dated June 26, 1961 and if  so,  the award  would  have  expired  on  August  26,  1961.   Since, however,  the  settlement  disposing  of  common  points  of dispute was terminated by a letter dated August 14, 1961 and thereby the settlement stood terminated only on October  14, 1961,  the termination of the award by a letter  dated  June 26, 1961, during the operation of the settlement was held to be  invalid.  The facts of Bangalore Woollen, Cotton &  Silk MU&’  case (supra) are, therefore, entirely  different  from those with which we are concerned in this appeal. The   other   decision  namely,  the   Indian   Link   Chain Manufactures Ltd. v. Their workmen,(1) is also not  directly to the point raised in this case. Our  attention is drawn to a decision of the  Calcutta  High Court in the National Carbon Co. (India) Ltd. v. M. N.  Gan, Judge,  Labour Appellate Tribunal and  Others,(2)  wherefrom reading  paragraph 13 in the decision, Mr. Shroff sought  to derive   some  assistance.   We  find  that   although   the agreement,  there,  was ’statutorily  continuing  after  its expiry  on  August  26, 1952,  notice  for  terminating  the agreement was given on September 6, 1952 and the High  Court rightly  accepted the notice as valid.  The High Court  also rightly  disagreed  with the views of the  Labour  Appellate Tribunal in India Reconstruction Corporation Limited(3) that an  agreement with a fixed period expired by efflux  of  the period  and  was  not statutorily  continued.-  "The  period aforesaid" in s. 19(2) will include not only the contractual period  but also the statutory period of six  months.   This decision, therefore, leads no assistance to Mr. Shroff. Mr. Shroff also relied upon a decision of the Andhra Pradesh High  Court  in  Deccan Tile Works v.  Their  Workmen  (Tile Factories Workers’ Union, Samalkot) and two others(4)  which does not at all lead assistance to his submission.  Although the  facts are not very clear from the report we  find,  the High Court has observed that-               "obviously  the management was not within  its               rights   in   terminating   and   unilaterally               repudiating Ex.  A. I" (the agreement). (1)  (1972)1 S.C.R. 790. (2)  A.I.R. 1957 Cal. 500. (3)  (1953) Labour Appeal Cases 563 (Cal.). (4)  [1960] 2 L.L.J. 298. 255 Section  19(2) does not entitle a party to a  settlement  to

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repudiate  the settlement while the ’same is  in  operation. Giving  advance  notice within the ambit of the law  is  not repudiation of the settlement. Mr.  Shroff next submits that section 19(2) should be  given the,  same  meaning  as  section  19(6)  since  both   these provisions  are on the same subject dealing with the  period of  operation of settlement and award respectively.   It  is submitted  that  so far as an award is concerned  under  the second  proviso  to  sub-section  (3)  of  section  19,  the appropriate Government may extend the period of operation by any  period  not exceeding one year at a time subject  to  a total period of operation not exceeding three years from the date on which it comes into operation.  According to counsel since  there  is  a power in the Government  to  extend  the period  of  the award a notice of termination prior  to  the date of expiry of the award cannot be contemplated under the law  and’, since this is the position regarding an award,  a settlement cannot be treated differently.  We are unable  to accede  to this submission.  Even if an- advance  notice  is given  in the case of an award, provided the period  of  two months expires on the usual expiry of the award permitted by law  and  Government in exercise of its  power  extends  the award  in a given case, ’such a notice would be  infructuous and  inoperative under the law.  The extension of the  award by  the  Government  in exercise of  statutory  power  would prevail upon the action of the party to terminate the  award by notice. Mr. Shroff relied upon a decision of the Patna High Court in Patna  Municipal,  Corporation  v.  The  Workmen  of   Patna Municipal  ,Corporation  and others(1) and read  to  us  the following observation from that decision               "A  party to the award cannot terminate it  so               long  it remains operative either  during  the               period  of  one year or  during  the  extended               period under sub-section (3) of section 19". We do not read the above observation as supporting the  sub- mission  of counsel that no advance notice can be  given  to terminate  a settlement or an award provided  the  requisite period of two months required under section 19(2) expires on thee   date  of  expiry  of  the  settlement  or  award   or thereafter.   It is only if a notice under section 19(2)  or 19(6) expires within the period of operation of the award or settlement, such a notice will be invalid under the law.  In that  event the settlement or the award will continue to  be in  operation and any reference by Government of  a  dispute during the period of settlement or an award without the same being terminated under the law will be invalid. In the instant case the notice under section 19(2) was given intimating  the  intention of the workers to  terminate  the award  on a date when the agreed period would  also  expire. To repeat, there is no legal bar to give advance  intimation about  the  intention  to terminate the  settlement  on  the expiry of the agreed period and to start negotiation for,  a more favorable settlement immediately thereafter.  The only (1)  [1970] Labour Industrial Cases 1236. 256 condition that has to be fulfilled by such a notice is  that the period of two months from the date of notice must end on the expiry of the settlement and not before it.  In a  given case  it may be even advantageous to the parties who do  not want  to  continue the settlement to strike  a  new  bargain without  loss  of time so that  unnecessary  bickerings  and resultant  industrial  unrest  do not  take  place.   In  an industrial  matter we are not prepared to subject  a  notice under  section 19(2) to the irksome vagaries or  tyranny  of

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technicalities of a notice under section 106 of the Transfer of Property Act. There is, therefore, no substance in the contention that the reference  is  incompetent  and  invalid.   The  appeal   is dismissed  with costs.  The Tribunal will try to dispose  of the case. expeditiously. P.B.R.                      Appeal   dismissed. 25 7