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PETITIONER: COOPER ENGINEERING LIMITED

       Vs.

RESPONDENT: D.   M. ANEY AND OTHERS

DATE OF JUDGMENT04/05/1973

BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. GROVER, A.N.

CITATION:  1973 AIR 2232            1974 SCC  (3) 187

ACT: Industrial   Disputes  Act,  1947-Reference  to   industrial tribunal   of  industrial  dispute  relating   to   dearness allowance  etc.Competency  of reference in view  of  earlier Settlements between employer and workmen-State  Government’s view  that  earlier settlements related  to  interim  relief awaiting final recommendations of Wage Board was a  Possible view, and therefore reference was competent.

HEADNOTE: On July 6, 1963 there was a settlement between the appellant company  and  two unions of its workmen  regarding  dearness allowance.   On April 1, 1965. there was another  settlement in respect of certain demands but the workmen reserved their right  to raise demands relating to wage scales,  adjustment and  dearness  allowance.   On  July  23  1966  the  Central Government  accepted  the recommendations made by  the  Wage Board-set  up  by  it with effect from April  1,  1966.   On November  1,  1966 the appellant and one of  the  unions  of workmen (2nd respondent) entered into a settlement  relating to payment of interim reliefas  laid  down  by  the   Wage Board.  The Union agreed not to raise any demandfor dearness  allowance  till  the Wage  Board  made  its  final recommendations. This position was reiterated in  another settlement  between the 2nd respondent and the appellant  on May 13, 1967.  On May 16, 1967 the third respondent, another union  of  the  appellant’s  workmen  made  certain  demands regarding  dearness  allowance.   By notices  given  to  the appellant  company it terminated the earlier settlements  of 1963, 1965, 1966 and 1967 between the appellant and the  2nd respondent.  Meanwhile on December 23, 1968/January 3, 1969, the  Wage Board made its final recommendations.  Since  the appellant did not accept the demands of the third respondent and   conciliation   proceedings  also  failed   the   State Government  on January 25, 1969 referred the dispute to  the Industrial Tribunal.  The appellant challenged the  validity of  the reference in a writ petition under Art. 226  of  the Constitution.   The High Court dismissed the  petition.   In appeal by special leave to this Court. HELD    The  State  Government’s view  that  the  settlements related  only  to interim relief was a possible one  in  the circumstances of this case.  Hence it could not be said that the reference made by the State Government was  incompetent.

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[244 F-G] None  of the settlements entered into by the appellant  with its  workmen gives any indication that the said  settlements were made in view of the statement made by the Minister  for Labour,  State of Maharashtra.  On the other hand every  one of  the  settlements was preceded by a demand  made  by  the union   concerned.   It  was  really  in  the  interest   of industrial peace that the appellant appeared to have entered into  those  settlements.  Therefore the decisions  of  this Court in Indo Afghan Agencies and Century Spinning &  Manu- facturing  Company  Ltd. & Anr. did not apply to  the  case. [245G] Union  of  India  & Ors. v. M/s  Indo-Afghan  Agencies  Ltd. [1968]  2  S.C.R. 366 and Century Spinning  &  Manufacturing Company  Ltd. and Anr. v. The Ulhasnagar  Municipal  Council and Anr., [1970] 3 S.C.R. 854 held inapplicable. The  question whether there was discrimination  between  the appellant and another company in the matter of referring the industrial dispute to the Industrial Tribunal was not raised before  the High Court and this Court could not go into  the question. [246C] In the result the appeal must fail  241 [In respect of the question whether the third respondent had the right to terminate the earlier settlement and whether it represented  the  majority of workmen in  the  company,  the Court  observed that these questions must be decided by  the Tribunal.]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION  :  Civil  Appeal   No.   554 of 1970. Appeal  by special leave from the judgment and  order  dated July 31, and August 1, 1969 of the Bombay High Court in S.C. Application No. 799 of 1969. I.   N. Shroff, for the appellant. J.   L.  Hathi, K. L. Hathi and P. C. Kapur, for  respondent No. 2. R.   S. Kulkarni and S. C. Agarwala, for respondent No. 3 M.   C. Bhandare and S. P. Nayar, for respondent No. 4. The Judgment of the Court was delivered by VAIDIALINGAM, J.-By order dated January 25, 1969, the  State of Maharashtra referred to the Industrial Tribunal,  Bombay, for  adjudication three disputes between the  appellant  and its  workmen.   The  said disputes were  registered  by  the Tribunal as Reference (I.T.) No. 42 of 1969.  The  appellant filed in the Bombay High Court Special Civil Application No. 799 of 1969 under Article 226 of the Constitution to,  quash the order of reference.  The High Court by its judgment  and order  dated 31st July/1st August, 1969, dismissed the  Writ Petition  holding  that  the  reference  made  by-the  State Government  was  valid.  The appellant has filed  the  above appeal,  by special leave, challenging the decision  of  the High Court. The facts leading up to the filing of the Writ Petition  may now  be  stated.  On July 6, 1963, there  was  a  settlement between  the  appellant and the workmen represented  by  the Secretaries of two unions-the Chemical Engineering and Metal Workers  Union,  Poona add the  Association  of  Engineering Workers,  Poona.   Under clause 1 of  this  settlement,  the appellant  agreed to pay dearness allowance on the basis  of 75  %  neutralisation of the Sholapur Cost of  Living  Index computed  for a month of 26 working days in substitution  of

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the  rate of. dearness allowance that was then  being  paid. On  July 7, 1964, a charter of demands was submitted by  the workmen represented by the General Secretary, Association of Engineering Workers, Poona.  The demands related to  various items  including  wage scales and  dearness  allowance.   On April  1,  1965,  the, appellant and  the  said  Association entered into a settlement.  From the said settlement, it  is seen  that though the company conceded certain  demands,  it was  not  agreeable to accede in respect of  the  wages  and dearness  allowance,  on the ground that the  Poona  Working Class Consumer-Price Index was likely to be introduced at an early  date, when a change in the wage pattern and  dearness allowance  in the region will be effected.   Another  reason given by the appellant was that the demands, as made by  the union, involved heavy financial liability.  The  Association agreed  that  all  demands-made by it on July  7,  1964,  in respect of which no settlement has been reached, will be 242 treated  as  withdrawn  for the  time  being.   Liberty  was reserved  to  the Association to raise those  demands  again after  the  Poona  Working Class Consumer  Price  Index  was declared.  With this reservation, came the demand for  wage, scales, adjustment and dearness allowance. On  January 23, 1965, the Association, the  2nd  respondent, was   recognised  by  the  appellant  under  the   code   of discipline.  In June 1965, the Poona Working Class  Consumer Price  Index  was  declared.  The  second  respondent  again raised a demand on August 3, 1965.  Demand No. 2 related  to dearness  allowance.  The demand was that the then  existing Sholapur Working Class Consumer Cost of Living Index  Number should be replaced by the Poona Working Class Consumer  Cost of  L iving  Index  Number and the linking of  old  and  new series,  its  multiplier  and its  rate  should  be  jointly decided  between  the management and the  Association.   The Association  further required that after such  a  ,decision, the workmen should be given 100% neutralisation of the Poona Index. It should be stated at this stage that on December 12, 1964, the  ’Central Government had set up the Central  Wage  Board for  engineering industries.  After the Wage Board  was  set up,  the  labour  agitated  for  grant  of  interim  relief. Accordingly  the Wage Board recommended to the Government  a scheme  of  interim  relief.  The  Central  Government  also accepted,  by  its  resolution  dated  July  23,  1966,  the majority  recommendations  of the Wage Board  regarding  the grant of interim relief with effect from April 1, 1966.  The Central  Government further requested all the employers  in the engineering industries to implement the  recommendations of  the Wage Board regarding the interim relief with  effect from April 1, 1966. When  the Government’s acceptance of the recommendations  of the  Wage  Board  was known, the second  respondent  made  a demand on July 28, 1966, for payment of the interim  relief. After  mutual  discussions,  the appellant  and  the  second respondent  entered into a settlement on. November 1,  1966. The entire settlement related to the payment of the  interim relief,  as  laid down by the Wage Board.   It  was  further provided that the interim relief granted shall be adjustable in   any   rise  in  Wages  as  a  result   of   the   final recommendations  made  by  the Wage  Board  in  due  course. Clauses 11 and 12 of this settlement were as follows :-- .lm15 "11.  The Union agrees to treat as withdrawn the Charter  of demands regarding wage scales and/or Dearness Allowance made by it under its letter dated 3rd August 1965.

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12.The Union further agrees that pending the deliberations and the final recommendations of the Wage Board it will  not raise   any   dispute  regarding   wages   and/or   Dearness Allowance." On  August 3, 1965, the second respondent again submitted  a charter of demands regarding wage scales, dearness allowance and   various  other  matters.   After   negotiations,   the appellant   and  the  second  respondent  entered   into   a settlement on May 13, 1967.  There is a reference  243 to the settlement of November 1, 1966.  Under clause (2)  of the  settlement, the Association withdrew all  demands  made under its charters of demands dated August 3, 1965, January. 22,  1966  and February 26, 1966 relating  to  wage  scales, dearness   allowance   and  certain  other   matters.    The Association further agreed not to raise any demands  regard- ing  wage  scales  and/or  dearness  allowance  pending  the deliberations  and  the final recommendations  of  the  Wage Board  in  View of the settlement dated  November  1,  1966, already entered into between the parties. On  May  16,  1967,  the  third  respondent,  Serva  Shramik Sanghatana,  through  its General Secretary, made  a  demand that  all workmen should be paid dearness allowance  at  the rate 6 paise per day for every point of rise over 17  points of  the Poona Consumer Price Index Number with  effect  from January  1, 1967.  On October 3, 1967, the third  respondent issued two notices to the appellant-company.  By the,  first notice,  it  terminated the settlement dated July  6,  1963, entered   into  between  the  appellant  and  the   Chemical Engineering   and  Metal  Workers  Union  and   the   second respondent,  representing  the workmen.  The  second  notice terminated the settlements dated February 4, 1965, April  1, 1965 November 1, 1966 and May 13, 1967 entered into  between the  appellant and the second respondent.  Both the  notices stated  that the previous settlements are  terminated  under section  19(2) read with rule 83 of the Industrial  Disputes Act,  1947.   It  was also mentioned  that  the  letters  of October 3, 1967, are to be treated as two months notice.  It will  be  seen that by these two  notices,  the  settlements dated  July 6, 1963, November 1, 1966 and May 13, 1967  have been terminated. Conciliation proceedings appear to have been initiated.  The appellant in its letter to the Deputy Commissioner of Labour dated  July  2,  1968, has stated that  the  interim  relief granted  by the Wage Board has been already  implemented  by the  appellant.  ’It gave a further assurance that  it  will implement  the final- recommendations of the Wage Board,  as accepted  by the Central Government.  On November 30,  1968, fresh demands for dearness allowance were made by the  third respondent.   The Wage Board made its final  recommendations to  the  Central-Government.   The exact date  is  not  very clear,  but it is given differently as December 23, 1968  or January  3, 1969.  As the appellant did not comply with  the demands   of  the  third  respondent  and  as   conciliation proceedings  failed,  the  State  Government  referred   the dispute  for  adjudication  on January  25,  1969.   Item  I related to the dearness allowance to be paid to the  monthly rated staff.  Demand No. 2 related to the dearness allowance regarding  the  daily  rated workmen.   The  third  question referred  related to the dismissal of the  fourteen  workmen mentioned in the order and payment of dearness allowance  to them. It  was this order of reference that was challenged  by  the appellant before the High Court in proceedings under Article 226.   We have fairly exhaustively given the  details  about

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the  various  settlements  to give  the  background  of  the dispute  between the appellant and its workmen.   The  first contention of Mr. Shroff, learned counsel for the appellant, was  that  the  third respondent, which  represents  only  a minority   of  the  workmen,  has  no  right  to   terminate agreements dated November 1, 1966 and May 13, 1967,  entered into by the Association, the second 244 respondent,  representing the majority of the  workmen.   As these  agreements  were subsisting and  operating  and  were binding  on all the workmen, they can be terminated only  as contemplated under section 19(7) of the Industrial  Disputes Act, 1947 (hereinafter to be referred to as the Act).   When the  settlements were, subsisting, the order passed  by  the State  Government  referring the disputes covered  by  those settlements, is invalid. On  behalf of the State, Government, Mr.  Bhandare,  learned counsel,  has  stated that the question  whether  the  third respondent  represented, on the relevant date, the  majority of the workmen bound by the settlements, can be investigated only  by the Tribunal.  The State Government had  taken  the view that the entire settlement relates only to the  interim relief  and,  therefore, the, question  of  terminating  the agreements by any union does not arise.  The counsel further pointed  out  that the view taken by  the  State  Government regarding the nature of the settlements was a possible  view and,  therefore,  it  had power to refer  the  disputes  for adjudication under section 10(1) of the Act. Though there has been a very elaborate consideration by  the High Court regarding the competency of the, third respondent to  terminate  the  settlements, its  ultimate  decision  is rested  on  a  construction of  the  two  settlements  dated November  1, 1966 and May 13, 1967.  According to  the  High Court,  it is abundantly clear on a reading of  the  various clauses in the two settlements that they related to  payment of  wages  including  dearness  allowance,  which  had   the character  of  an  interim relief, as awarded  by  the  Wage Board.   It is the further view of the High Court that  when the, final recommendations of the Wage Board are made,  the workmen were at liberty to raise demands regarding wages and dearness allowance legally payable to them.  The  agreement, if  at all, was not to raise any dispute pending  the  final recommendations of the Wage Board. We  have ourselves gone through the various clauses  in  the two settlements and we are in entire agreement with the view of  the  High  Court.  As there has been  a  very  elaborate discussion  by the High Court and-as we entirely agree  with its  reasoning, we do not propose to cover- the ground  over again.  As we are now on the. limited question regarding the competency of the State Government to make the reference, it must  be  held that the, State Government’s view  that,  the settlements related only to the interim relief is a possible one in the circumstances of this case.  Hence, we cannot say that  the  reference  made  by  the  State  Government   was incompetent. We  express no opinion on the question, regarding the  right of  the third respondent to terminate the two agreements  in question  because there is a controversy as to  whether,  at the  relevant  date, the third  respondent  represented  the majority  of  the workmen bound by  these  agreements.   The claim  of  the third respondent is that it  represented  the majority of such workmen.  The Tribunal, when it adjudicates the  dispute  will  have to investigate  the  question  when considering the points covered by the settlements as well as the  question whether those settlements have  been  properly

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terminated,  when  the  reference  was  made  by  the  State Government.  245 In  this  view,  we  are  not  referring  to  the   relevant provisions  of  the Act; nor do we deal with  the  decisions cited on both sides. The further contention that is taken by Mr. Shroff is  based upon the decisions of this Court in Union of India & Ors. v. M/s Indo-Afghan Agencies  Ltd.(1)  and  Century  Spinning  &   Manufacturing Company.  Ltd. and Anr. v. The Ulhasnagar Municipal  Council and  Anr.  (2)  According to Mr. Shroff,  the  Minister  for Labour  of  Maharashtra, at a meeting of the  employers  and representatives of the employees, held on September 9, 1965, stated :               "The Government of Maharashtra would not refer               disputes  on wages and dearness  allowance  to               adjudication  in  the  case,  of   engineering               establishments  covered by the Wage Board,  if               the concerned employer agreed to implement the               recommendations, interim as well as final,  of               the  Central  Wage Board, as accepted  by  the               Government of India." On  the  basis  of  this  statement  of  the  Minister,  the appellant  implemented the interim relief and  also  assured the  authorities concerned that it will implement the  final commendations of the Wage Board.  As the appellant has acted on   the  representations  made  by  the  Minister  to   its prejudice,  the reference of the, dispute  for  adjudication was  not  justified.  Mr. Shroff referred us to  the  letter dated September 24, 1965, written to the concerned  Minister for  Labour by the Indian Engineering  Association  (Western Region)  and  Engineering  Association  of  India   (Western Region) Bombay.  This letter refers to the statement made by the  Minister  on September 9, 1965.  He  also  invited  our attention  to the letter dated July 2, 1968, written by  the appellant  to the Deputy Commissioner of Labour, Poona.   In that  letter,  the appellant had stated that it  had  agreed with its workers to implement the interim relief granted  by the Wage Board.  The appellant gave an assurance to the  De- puty Commissioner of Labour, Bombay, that it will  implement the  recommendations  of  the  Wage  Board  for  engineering industries, as accepted by the Central Government. The  Act  gives  power to the State Government  to  refer  a dispute for    adjudication.   As to how far, by a  Minister making a statement, the  Government  can be relieved of  its obligation  under the Act, is a debatable question.  It  is, however, not necessary for us to go into this aspect in this particular  case.  None of the settlements entered  into  by the appellant with its workmen gives any indication that the said  settlements were being made in view of  the  statement made  by the Minister.  On the other hand, we  have  already pointed out that every one of the settlements is preceded by a demand made, by the union concerned.  It is really in  the interest  of industrial peace that the appellant appears  to have  entered into those settlements.  Therefore, the  deci- sions relied on by Mr. Shroff do not apply in this case. Lastly,  Mr.  Shroff  contended that  the  State  Government declined to make a reference in the case of the Indian  Hume Pipe  Co.  Ltd.  specifically on the ground  that  the  said company had implemented the in- (1) [1968] (2) S. C. R. 366. (2) [1970] (3) S. C. R. 854. 246 terim recommendations of the Wage Board and that it was also

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prepared to implement its final recommendations.  But in the case  of  the  appellant,  the  State  Government  made  the reference and as such there has been discrimination. It  is no doubt true that in the letter dated June 8,  1968, sent  by the State Government to Indian Hume Pipe Co.  Ltd., the  Government  states that it is not  making  a  reference regarding  the.  dispute between the said  company  and  its Workmen.   The reason for not making the reference  is  also stated  to  be  the implementation by  the  company  of  the interim   recommendations   of  the  Wage  Board   and   its preparedness to implement the final recommendations also. We  find, however, from the judgment of the High Court  that this  question of discrimination with special  reference  to the Indian Hume Pipe company Ltd. has not been argued by the appellant.  ’The inference under such circumstances is  that such  a  contention was not pressed before the  High  Court. Hence we decline to go into that question. In  the  result, the appeal fails and is  dismissed.   There will  be no order as to costs.  As the Reference is  of  the year  1969,  the,  Tribunal is directed to  dispose  of  the matter expeditiously. G.C. Appeal dismissed. 247