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CASE NO.: Appeal (civil)  4553 of 2006

PETITIONER: M.D., M/s. Hindustan Fasteners Pvt. Ltd

RESPONDENT: Nashik Workers Union

DATE OF JUDGMENT: 19/10/2006

BENCH: S.B. Sinha & Dalveer Bhandari

JUDGMENT: J U D G M E N T [Arising out of S.L.P. (C) No. 24626 of 2004]

S.B. SINHA, J :

       Leave granted.                  Interpretation of a settlement arrived at by and between the parties  hereto falls for consideration in this appeal which arises out of a judgment  and order dated 8.12.2000 passed by the High Court of Judicature at  Bombay in First Appeal No. 521 of 1992.

       Appellant herein is engaged in engineering activities.  Respondent No.  1 is a trade union registered under the Trade Unions Act.  Appellant was a  sick unit as envisaged under the Sick Industrial Company (Special  Provision) Act, 1985.  A settlement was arrived at on 11.5.1990 by and  between the parties hereto in regard to the demands raised on behalf of the  workmen.  The period covered by the settlement was 1.01.1989 to  30.12.1992.  The workmen thereafter went on strike.  Several demands were  also raised.  A second settlement was arrived on 24.5.1993.  In the preamble  of the said settlement, it was stated:

"\005The company has enforced lockout of its  employees on and from 14.1.93 for the reasons  mentioned in the company’s lock out notice dated  28.12.90 and the said lockout is still continuing.  In  view of the long duration of the lockout and  protracted court proceedings in the Industrial  Court, Nashik and elsewhere the parties to the  settlement felt a need to find out long term solution  to the problems faced by them.  The parties also  sought the assistance of the Deputy Commissioner  of Labour, Nashik and in view of the discussions  between the parties the acceptable solution have  been found by them and they have settled the  entire disputes between them over the clauses of  the lock-out i.e. still continuing and the Charter of  Demands of the Union served on behalf of the  workmen\005"

       Clause 20 of the said settlement reads as under:   

"That this settlement is in package deal viz-a-viz  full demands raised by the Union under its charter  of demands dated 1st January, 1993 and as well as  elsewhere.  It is expressly understood that this  settlement is in full and final settlement of all the

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said demands and settles all demands of the Union/  Workmen made till date of whatsoever nature.   Such as of the demands as set out in the charter of  demands and elsewhere, referred to hereinabove  but not specifically dealt within this settlement are  hereby treated as having been withdrawn and/ or  not pressed by the Union and the workmen and  settled the same accordingly.  It is further agreed  that during the currency of this settlement, the  Union and the workmen shall not raise any fresh  demand whatsoever, whether covered by this  settlement or otherwise and whether involving  financial burden or not.  No other demands of  whatsoever nature shall be made by the Union or  the workmen either directly or indirectly.  Any  demand made shall have the effect of nullifying  this settlement."

       Paragraphs 11, 12 and 13 of Clause 23 and Clauses 27 and 28 of the  said settlement read as under:

"11.    The settlement shall encompass this  settlement as well previous settlement dated  11.5.90 and shall constitute a whole contract  between the parties.  These settlements have  rendered substantial benefits on the workmen and  in view of the same, it is agreed between the  partiers that there will be no work stoppage/ go  slow during the pendency of this settlement.  Any  breach of this settlement shall render the above  mentioned settlements as null and void.

12.     The parties expressly agree that the  definition of "wages" in various statutes in the  industrial field will be followed by them for the  purpose of their application, enforcement and  implementation in any event.  Payments under the  terms of their settlement agreed to be made and  accepted by the parties will not be affected and no  further and additional claims will be made or  canvassed by the workmen under these laws for  increase in benefits and if made shall deem as  covered and adjusted by this settlement or under  the terms of this settlement.

13.     Except to the extent expressly modified in  this settlement, all other existing rights, and  obligations and conditions of previous settlements  shall continue with full force and effect during the  operation of this settlement.

Clause No. 27: Bonus

       Bonus for the year 1990-91, 1991-92 will be  8.33%.  No bonus is due and payable for the year  1992-93 and as the workmen did not work during  this period.  Bonus for the year 1993-94 will be  9%.  Bonus for the years 1994-95 and 1995-96 will  be 10% and for the year 1997-98 will be 12%.   Further, it is provided that the management on its  own shall review the balance sheet and decide  about the quantum of bonus payable to the  workmen and in the event of any upward revision  is necessitated under the provisions of Payment of  Bonus Act, 1965 excess amount minus agreed

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bonus shall be paid to the employee.  In any  circumstances the workmen will not raise any  dispute about the quantum of bonus.  The  management decision shall be final.  In case the  company balance sheet shows accumulated losses  in the above years, the amount paid in excess of  statutory min. will be by the way of ex-gratia for  the purpose of industrial peace, productivity and  shop floor discipline.  Bonus for the year 1990-91  will be paid in August and for the year 1991-92  will be paid in October, 1993.

Clause No. 28

       That the various clauses of the agreement/  settlement form one package agreement/  settlement and none of the clauses in this  agreement/ settlement in separable from the  remaining clauses of the agreement/ settlement."

       However, an industrial dispute was raised in the following terms:

"Whether the lock out effected by the management  w.e.f. 14.1.1992 is justified?  If not, what relief the  workers are entitled for?

       The said industrial dispute was referred to for adjudication by the  appropriate government before the Industrial Court, Nashik.  Appellant  herein in its written statement inter alia raised the question as regards  maintainability of the said reference relying on or on the basis of the said  settlement dated 24.5.1993 stating:

"2.     The reference is not tenable and  maintainable as there was no dispute in existence  after the settlement dated 24.5.1993 arrived  between Nashik Workers Union and the Company,  Hindustan Fasteners Pvt. Ltd., hence the reference  is immature in the eyes of law\005 4.      The reference is also not maintainable in  view of the settlement dated 24.5.1993 as per the  Clause No. 20 of the said settlement.  It was full  and final settlement and all the demands were  settled.  It was also made clear that all other  demands and claims were relinquished by the  workmen and the Union and as such the reference  is to be rejected"

It was further stated:

"39.  The Employer Company welcome any  investigation that the Hon’ble Tribunal may  undertake, since it would definitely conclude that  the lockout was justified and its prolongation was  due to the illegal tactics of the Nashik Workers  Union."

       A dispute, thus, existed between the parties as regards applicability of  the said settlement to the reference..

       The Tribunal made an award in the said reference on 19.1.2001  stating:

"19. I have gone through the said settlement but  the said settlement nowhere makes any reference

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regarding the wages to be paid to the workers for  lock out period.  But the said settlement is  regarding other demands.  If the issue regarding  the payment of lock out period would have been  discussed between the parties then, certainly the  said issue could have been mentioned in the  settlement.  It is further the contention of the  company that in view of the Clause 20 of the  settlement all the demands between the parties  were settled\005"

       The Tribunal in its award further stated:

"20. After perusal of the Clause 20 referred above  it makes clear the demand should be raised which  will directly involve financial burden on the  company, but it is permanent to note here that no  such demand is raised by the Union, on the  contrary, the present reference is referred by the  Government in view of P.A.M.S. proceeding  pending before the Dy. Commissioner of Labour  prior to signing the said settlement.  The company  as well as the Second Party workers both were  aware about P.A.M.S. proceedings pending before  the Dy. Commissioner of Labour regarding the  lock out.  Therefore, they ought to have been  mentioned the same in the present settlement so as  to resolve the dispute.  But, as the said issue is not  taken into the present settlement referred above by  stretch of imagination could not be said that the  said issue was settled finally in view of settlement  dated 24.5.1993 signed between the parties.   Therefore, the contention of First Party Company  that present reference is not maintainable could not  be accepted.  Hence, I answer the issue in the  negative."

       It was further found that although Appellant sought to justify the lock- out declared by it but in support of the said plea, no witness was examined  on its behalf.  In the aforementioned premise, by reason of the said award,  the Industrial Tribunal directed:

"2.     The lock out declared by the Company  w.e.f. 14.1.1992 is unjustified. 3.      The workers are entitled for the wages for  lock out for period from 14.1.1992 to 2.6.1993. 4.      The First Party Company is directed to pay  the wages to the concerned workers in the period  of 14.1.1992 to 2.6.1993 within two months from  the date of the publication of the Award."

       A writ petition was filed thereagainst.  A learned Single Judge of the  High Court in its judgment dated 23.04.2002 noticed the contentions of  Appellant herein that when the settlement was arrived at, reference had  already been made by the appropriate authority.  However, it was opined  that the said settlement did not contain any provision as to whether the  workmen had given up their rights of wages during the period the factory  was under lock-out.  The writ petition was dismissed.  An intra-court appeal  filed thereagainst by Appellant was also dismissed by reason of the  impugned judgment stating that under the aforementioned settlement the  workmen had not given up their rights of wages.

       Mr. Shekhar Naphade, learned senior counsel appearing on behalf of  Appellant, raised a short contention in support of this appeal.  It was urged

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that the settlement was to be read in its entirety.  So read, the learned counsel  would contend, it would be apparent that all disputes and differences  between the parties and all demands raised by reason of the Charter of  Demands dated 1.01.1993 and all other demands having been resolved, the  question of directing payment of any wages during the period for which the  factory was under lock-out did not and could not arise.

       Mr. Colin Gonsalves, learned senior counsel appearing on behalf of  Respondent, on the other hand, would submit that the Charter of Demands  was in relation to the specific issues as, for example, bonus, festival  allowance, pay scale, etc.

       The purport and object of a settlement arrived at by and between the  management and the workmen is undisputedly required to be construed  keeping in view its salutary effect.  It is aimed at maintenance of industrial  peace and harmony.  A settlement, therefore, although is required to be read  for upholding the validity thereof like any other agreement, it should be read  in its entirety so as to ascertain the intention of the parties behind the same.   It is true that in the said settlement, not only the Charter of Demands served  on the management on or about 1.01.1993 was referred to, but the exchange  of letters between the parties had also been referred to, but the intention of  the parties is to be gathered having regard to the circumstances attending  thereto.   

       There had been a lock-out and a protracted court proceeding.  A long  term solution was to be found out.  The settlement was in relation to the  purported causes of the lock-out.  It was still continuing.  A Charter of  Demands of the Union was served on behalf of the workmen.  It did not  relate to wages of the workmen during the period of lock-out.  Clause 20 of  the said settlement must, therefore, be read keeping in view the  aforementioned backdrop of events.  But, before we embark upon the said  question, we may notice the Charter of Demands dated 1.01.1993.  The  demands of workmen referred to pay scale, classification, dearness  allowance, leave, various allowances including travelling allowance,  washing allowance and various other allowances as specified therein e.g.,  uniform, festival advance, etc.

       Correspondences entered into by and between the parties were in  relation to the aforementioned demands.  It did not speak of the claim of  wages, although when the settlement was arrived at, the industrial dispute  was pending.   

       Had, thus, the intention of the parties been to settle their disputes also  in relation to legality or otherwise of the lock-out declared by the  management, it was expected to have been stated so explicitly therein.  It  was also expected that the parties would file the said settlement before the  Industrial Tribunal so that an award could be passed in terms thereof.   Clause 20 of the said settlement provides for a package deal vis-a-vis all the  demands raised by the Union.  The package deal was in relation to the  Charter of Demands dated 1.01.1993 and any other document including the  letters exchanged between the parties pursuant thereto or in furtherance  thereof.  The subject matter of settlement was ’all demands of whatever  nature’ in terms whereof the workmen might not have been able to make any  other demand, but, on a bare perusal of the said settlement, it is apparent that  the expression which has repeatedly been used was the ’Charter of  Demands’.   

       While keeping the industrial dispute pending, Respondents had not  raised any fresh demand.   

       Clause 21 refers to the previous settlement also.  The rights of the  workmen under the existing settlement were not adversely affected.  If they  have worked, they would be entitled to wages.  If they have reported for  duties during the period of lock-out which was illegal, they were entitled to

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the wages for the said period.

       In furtherance of the said Charter of Demands, the parties entered into  several other correspondences.  In terms of the settlement, the parties settled  their disputes in relation to the demands raised.  The wages to be paid to the  workmen which they had claimed as of right was not and could not have  been the subject matter of any payment or settlement.  Whereas the concept  of a demand must be held to be relating to a right higher than the existing  right, the workmen were entitled to raise a claim in relation to their existing  right and in that view of the matter financial implication therefor cannot be a  ground for refusal thereof.  If a claim is to be withdrawn by reason of a  settlement, the same must find a specific mention therein.

       Subject, of course, to the parties acting on the settlement, the  workmen had promised that they would not go for ’work stoppage’ or ’go  slow’ but then in terms of Paragraph 12 of Clause 23 of the said settlement,  it had categorically been reiterated that the expression "wages" shall be  given the same meaning as obtaining in the statute.  The right to enforce the  claim for wages both in the first settlement as also the second settlement  was, therefore, not given up.  It was further stated that no additional claims  would be made for increase of benefits.  Paragraph 13 of Clause 23 of the  said settlement also refers to existing rights and obligations subject, of  course, to the modification made therein.  By reason of the said settlement,  the workmen surrendered their rights of bonus.  We have noticed  hereinbefore that the management, although questioned the legality and/ or  validity of the reference, but at the same time also welcomed the same  stating that thereby they had got an opportunity to establish that the lock-out  declared by them was not illegal.  But, then no witness was examined to  prove the said fact.

       The parties, therefore, made it clear that the claim of wages raised on  behalf of the workmen on the premise that the lock-out was illegal was not  the subject matter of the settlement.  The Tribunal, in our opinion, is right in  arriving at the finding that the intention of the parties must be gathered from  the attending circumstances; one of them being that although the parties  were aware that the industrial dispute was pending but no reference thereto  was made in the settlement.

       It is difficult to accept the contention of Mr. Naphade that in the facts  and circumstances of this case, provisions of Section 92 of the Evidence Act  would have any role to play.  It is not the contention of Respondents that the  settlement was not to be read as a full or final settlement between the parties  but the same must be read as meaning that the settlement was only in respect  of the Charter of Demands and other demands made by the Union from time  to time in its various letters.

       Construction of a document so as to ascertain the intention of the  parties is in no way controlled by the provisions of Sections 91 or 92 of the  Evidence Act.  The document has to be interpreted applying the known  principles of construction and/ or canons.   

       In fact, in the special leave petition, Appellant itself has contended:

"(VI)   That because the Hon’ble High Court should  have appreciated the fact that at the time of  reference the contesting parties were negotiating  the Settlement.  So in view thereof it was the duty  of the Conciliation Officer under Section 12(2) and  12(3) of the Industrial Disputes Act for bringing  about a settlement of the dispute without delay and  investigate the dispute and all such matters  affecting the merits and the settlement thereof.   Further, it is pertinent to state that the Conciliation  Officer has enough powers to investigate the cause  of dispute and enforce a settlement."

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       If that was the stand of Appellant before the Conciliation Officer, they  could have asked him to close the conciliation proceedings.  They did not do  so.

       Applying the principles of interpretation of a document and having  regard to the circumstances attending thereto, we are of the opinion that the  findings of the tribunal and the High Court cannot be faulted with.   

       For the reasons aforementioned, we do not find any merit in this  appeal which is dismissed accordingly with costs.   Counsel’s fees assessed  at Rs.10,000/-.