SHUKLA MANSETA INDUSTRIES PVT. LTD. versus THE WORKMEN EMPLOYED UNDER IT

SHUKLA MANSETA INDUSTRIES P'LT. LTD.

THE WORKMEN EMPLOYED UNDER IT

August 2, 1977

[V. R. KRISHNA IYER AND P. K. GOSWAMI JJ.]

Industrial Disputes Act, 1947-S. 19(2)-Scope of-Eniployers and e1n-p/fJyees arrived at se1tlen1ent to be operath·e for three years--Eniployecs gave 11olt'ce of tennination two u1011tlls before the expiry of the period of three years-Vaf it!ity of notice.

Section 19(2) of the Industrial Disputes Act, 1947 provides that settle-ment shall be binding on the parties for such period as is agreed up-0n 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 notice in writing. of an intention to terminate the settlement is given by one of thr, parties to the other party Of parties to the settlement.

The appellant·employers and the respondent·worker5 agreed that the settle-ment 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 date of notice. Demands raised by the workmen on August l, 1973 we.re. referred to an Industrial Tribunal. The employers' preliminary objection that the reference was incompetent since there ~·as no legal and valid termination of the settlement undtr s. 19(2) was rejected l:Jy the Tribunal.

Dismissing the employers' appeal to this Court

HELD : There is no legal bar to give advance intimation about the intention to terminate thl.": settlement on the expiry of the agreed period and to start negotiation for more favourable settlement immediately thereafter. The only condition to be fulfilled by such notice is that the period of two month5 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 Clver the matters covered by 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 tenninus quo and tenninus ad qutn1. If in settlement there is no tin1e limit agreed upon between the parties the period of operation is 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 Jaw until the expiry of the requisite period of two months by clear \Vritten notice. [253C-D]

(2) Jn an industrial matter this Court is not prepared to subject notice under s. 19(2) to thl.": irksome vagaries or tyranny of technicalities of notice under s. 106 of the Transfer of Property Act. [256Bl

(3) Notice under s. 19(2) or under s. 19(6) is only for intimation of an ~ntenti~n to terminate settlement or an award respectively. There is no legal impediment to give advance intimation of the aforesaid intention provided the r.ontractual or statutory period of settlement is not thereby affected or curtailed. J253FJ

Manage111e11t of Bangalore Woollen, Cotton & Silk Mills Co. Ltd. v. The l'Vork1nen fl968J I SCR 581; Indian Link Chain Manufactures Ltd v. Their 'fVork1nen fl972] I SCR 790; National Carbon Co. (India) l.Jd. v. 'i\1, N. Gan. Judge, Labour Appellale Tribunal & Ors A.I.R. 1957 Cal. 500; Deccan Tile Works v. Their Workn1en (Tile Fnctorirs Workers' Union, Sa1nalkot (1960] 2 !.LJ. 298 held inapplicable.

India Reconstruction Corporation Ltd. 1953 L.A.C. 563 (Crtl.) cli:.:approYcd. 5-768SCT/77

(4) Section 19(2) does not entitle party to 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 power in the Government to i;;xtend the period of_ an a\vard notice of termination prior to the date of expiry of the award cannot be conteniplated under the law and since this is the position regarding an award, settlement cannot be treated differently, has no force. Even if an advance notice is given in the case of an award, provided B. 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 given case, such notice '\vould be infructuous and inoperative under the la'\v. The extension of the award by the Government in exercise of statutory po'\ver would prevail upon the action of the party to terminate the award by notice. It is only if notice under s. 19(2) or 19(6) expires within the period of o~ration of the a"'ard or settlement, such 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 dispute during the period of settlement or an award without the same being terminated under the law \viii be invalid. [255B-C; GJ

Patna Municipal Corporation v. The Workn1en of Patna Municipal Corpora· tion & Ors. [1970] Labour Industrial Cases 1236 held inapplicable.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1324 of 1977.

Appeal by Special Leave frnm tbe Award dated 22-2-1977 of the Industries Tribunal, Maharashtra in Reference (IT) No. 168 of 1974 published in the Maharashtra Government Gazette dated the 7th April, 1977.

I. N. Shroff, for tbe Appellant.

F. D. Damania, P. H. Parekh, Miss Manju Jelley and K. Vasude, for Respondents. The Judgment of the Court was delivered by

GosWAMl, 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 settlement ? That is the question. We are informed that there is no direct authority of this Court on this point.

There was settlement between the appellant, M/s. Shukla Manseta Industries Private Limited (hereinafter to be described as the employer) and their workmen on Jniy 6, 1970. The settlement came into force from July 6, 1970 and was to remain in force for 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 Jnly 5, 1973, :which was al~o the date of the expiry of the settlement under the agreed terms.

The workmen thereafter raised certain demands on Angust 1, 1973, and the State Government, in due course, referred tbe dispute under section 10(1) (d) of the Act to the Industrial Tribunal by an order dated June 25, 1974.

The employer took 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. (I) 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 ou 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 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 notice in writing of an intention to termi-nate 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 sec-tion, remain in operation for period of one year from the date on which the award becomes en[orccable under section 17 :

Provided that the appropriate Government may reduce the said period and fix such period as it thinks fit :

Provided fu,rther that. the appr.opriate Government may, before. the exprry of_ the said penod, extend the period of ()Per;it1on by any penod not exceedmg one year at time as 1t thmks 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.

(5) Nothing contai~ed in ?uh-section (3) shall apply to any award which by its nature, terms or other cir-cumstances does n~t i!llpose, .aft~r it has been given effect to, any contmmng obhgatwn on the parties bound by the award.

( 6) Notwithstanding the expiry of the period of operatioo. under sub-section (3), the award 'shall continue tG be binding on the parties until period of two months has elapsed from the date on which notice is gi\'ett by any party bound by the award to the other party or parties intimating its intention to terminate t1te award. (7) No notice given under sub-section (2) or sub·sectioa ( 6) shall have effect, unless it is given by party representing the majority of per'sons bound by the settlement or award, as the case may be".

We may also note the definition of settlement given und~r >ection 2(p) of the Act :

"2. (p) 'Settlement' means settlement arrived at in :lie course of conciliation proceeding and include• 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 pres-cribed and copy thereof has been sent to an officer authorised in this behalf by the appropriate GoYCf'.1-ment 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 sectiDn 19(2) it is clear that >ettlement shall be binding for ·such period as is agreed upon by the parties and if there is no period mentioned in the agreement, for period of 'ix months from the date on which the settlement is signed by the parties. With regard to the period of operation of lhe settlement; section 19 (2) confers statutory continuity of the settl.ement even after th~ expiry of the period agreed upon until the expiry of two months fron\ the date on which written notice of the intention to terminate the settle-F ment is given by one party to the other. It is, therefore, clear that when_ period is fixed in ·settlement, the settlement remains in opera-tion for the entire period and also thereafter until one or the other party gives written intimation of the intention to terminate the settle-ment and until expiry of two months from the date of such intim.1tion.The object of the above provision under section 19(2) is to ensure that once 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 dead end freezing all m:inner of aspirations of labour or even, may be, sometime, hardship suffered by the employer on account of settlement. There is an optioa gi\'en to either party to terminate the settlement by 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 tl1e principal object underlying tbe provisions of the Act.

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, 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 impon-derables 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 settlement or by an award during the period specified under ·section J 9 (2) and section 19 ( 6) respectively. To avoid uncertainty and speculation section 19 prescribed terminus quo and t£rminus ad quem. If in settlement there is no time limit agreed upon between the parties the period of operation is space of six months from the date of signing of the settlement and will also last until the expiry of two momhs 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 shail continue to operate under the law until the expiry of the requisite period of two months by clear written notice.

An award under section 19 ( 3) of the Act has longer period of operation. to start with, namely, one year from the date of the com-mencement of the award, which is on the expiry of 30 days from the date oi publica!ion of the award by the appropriate Government. As in the Cii5c of settlement so also under section 19(6) the award con-tinues t(• operate governing the condition's 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 Govem;nent has 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 settlement or an award re·s-pective1y. 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 i!: 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 decision of another Industrial Tribunal in Maharashtra in his suppo1t again.st the impugned view. He has also referred to two decisions 1:>f this Court and some decisions of the High Courts but admits ihat none of these is directly to the point which is raised before us.

In Management of Bangalore Woollen, Cotton & Silk MUls Co. Ltd. v. The Workmen & Anr.,('l) this Court ha·s held that when there is subsisting 1award binding on the parties the Tribunal has no jurisdiction

(l) [1%8] 1 S.C.R. 581.

to consider the same points in 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 case in which there was not only settlement between the parties but also an earlier award dealing, initer a/ia, 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 package deal in the subsequent settlement had not been terminated in accordance with law. Indeed there wa·s an attempt in that case to show that the earlier award had been tenninated by letter dated June 26, 1961 and if so, the award would have expired on August 26, 1961. Since, however, the settle-ment disposing of common points of dispute was terminated by letter dated August 14, 1961 and thereby the settlement stood termi-C nated 'only on October 14, 1961, the termination of the award by letter dated June 26, 1961, during the operation of the settlement was held to be invalid. The facts of Bangalore Woollen, Cotton & Silk Miffs' case (supra) are, therefore, entire1y different from those with which we are concerned in thi's 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 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 w:as· 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 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, lends no assistance to Mr. Shroff. ·

Mr. Shroff also relied upon decision of the Andhra Prade3h High Court in Deccan Tile Works v. Their Workmen (Tile Factories Workers' Union, Samalkot) and two othe.rs(<f) which does not at all lead assiSt-ance 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. 1" (the agree-ment).

(I) (1972) I 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.

Section 19 ( 2) does not entitle party to 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. .

Mr. Shroff next submits that section 19(2) should be given tlie same meaning a·s section· 19 ( 6) sirice both these provisions are on the same subject dealirig 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 time subject to total period of operation not exceeding three years from the date on which it comes into operation. According to counsel since there is power in the Government to extend the period of the award notice of termination prior to the date of expiry of the award cannot be contemplated under the law and sirice this is the position regarding an award, settlement cannot be treated differently. We are unable to accede to this sub-mission. Even if an advance notice is given in the case of an award, provided the period of two nionths expires on the usual expiry of the award permitted by law and Government in exercise of its power ex-tends the award in given ·case, ·such 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 decision of the Patna High Court in Patna Municipal Corporation v. The TV orkmen of Patna Municipal Corporation and others(') and read .to us the following observation from that decision :

"A party tci the award cannot terminate it so long it re-mains operative either during the period of one year or dnring 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 settlement or an award provided the. requisite ~eriod of two months required under section 19(2) expires on the <fate of expiry of the settlement or award or thereafter. It is only if notice under section 19(2) or 19(6) expires within the period of operation of the award or settlement, such 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 dispute during the period of settlement or an award without the same being terminated under the law will be invalid·.

In the instapt case the notice under section· 19(2) wa·s given inti-mating the intention of the workers to terminate the award on 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 more favourable settlement im111ediately thereafter. The only

The only

(I) [1970] Labour Industrial Cases 1236.

condition that has to be fulfilled by such 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 given case it may be even advan-tageous to the parties who do not want to continue the ·settlement to strike new bargain without loss of time so that unnnecessary bicker-ings and resultant industrial unrest do not take place. In an industrial matter we are not prepared to subject notice under section 19(2) to the irksome vagaries or tyranny of technicalities of notice under 'section I 06 of the Transfer of Property Act.