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Judgment
D. Raju, J.—The above writ appeals have been filed against the common order of a learned single Judge of this Court dated July 11, 1997,
in W.P. Nos. 6452 and 6453 of 1997, whereunder the learned Judge was pleased to allow the writ petitions filed by the employees'' unions
relating to two establishments, seeking for the relief of mandamus directing the appellant/management not to discontinue the existing benefits, viz.,
regular fixed monthly payment covered under the settlement dated November 27, 1992, without giving prior notice under Sec. 9-A of the
Industrial Disputes Act (hereinafter referred to as ""the Act""), at the same time leaving liberty with the management and the workmen unions to
negotiate and arrive at a reasonable settlement, in accordance with law. The appeals could be dealt with together inasmuch as, not only the learned
Single Judge also dealt with the same similarly, but even before us, submissions have been made by counsel appearing on either side, in common.
The sum and substance of the claim of the respondent-unions is that since the appellant-companies have been making enormous profits and the
workmen are outside the purview of the Payment of Bonus Act. Consequently, the management was said to have offered a fixed monthly payment
to the workmen, who were outside the purview of the Payment of Bonus Act, and in those circumstances, a settlement dated November 27, 1992,
appears to have been arrived at u/s 18(1) of the Act between the appellant-management and the various unions, providing for fixed monthly
payment of 56.5 percent of wages of April, 1992, every month, for the period from April 1, 1991, to March 31, 1997, along with monthly wages.
It is also stated that Rs. 500 from the aforesaid amount has been agreed to be treated as fixed dearness allowance and provident fund, gratuity,
over-time and medical reimbursement benefits are to be given on the said amount of Rs. 500, treating it as fixed dearness allowance. The said
settlement was said to have been in operation from April 1 1991, to March 31, 1997, and on the eve of the expiry of the term, the union gave a
notice dated December 31, 1996, terminating the settlement dated November 27, 1992, u/s 19(2) of the Act, and thereupon, the management
sent a letter dated March 5, 1997, with reference to the said letter terminating the settlement, stating that the continuation of the settlement would
have been in the best interests of both the workmen and the management and since the unions terminated the settlement, the monthly payment
hitherto made under the settlement, will cease to be paid from April 1, 1997. The unions, at that stage, raised a charter of demands dated March
15, 1997, demanding revision in the monthly payment from 56.5 percent to 120 percent and talks were said to have been held in the connection
on many days with no positive response or willingness on the part of the management to increase the quantum of monthly payment, which the
workmen were said to be receiving from April 1, 1991 onwards. The management appears to have taken the stand from the beginning, as also
before us, that since the settlement was terminated and ceased to exist from April 1, 1997, the liability to pay the monthly fixed payment as above,
also ceased. In view of the above, the workers claimed that the action of the management discontinuing the existing benefits, particularly the
monthly fixed payment, amounts to alteration of conditions of service to the disadvantage of the workmen, resulting in reduction in the wages of the
workmen and this is opposed to Section 9-A of the Act, particularly when the same is sought to be effected without giving notice to the workmen
likely to be affected, in the prescribed manner. It is also claimed that though there is a prohibition on the workmen as well as the management to
seek a fresh settlement during the currency of the settlement in force, and the parties have to terminate the settlement on its expiry, u/s 16(5) of the
Act, before seeking fresh settlement, the management is bound to pay the benefits and continue to pay such sum due under the settlement, even
after its period of expiry/termination, until a new settlement or award replacing the earlier one comes into force. Hence, the workmen/unions
prayed for necessary direction for the continuance of the existing benefits covered under the settlement dated November 27, 1992.
The appellant-management filed separate but almost identical counters contending mat the writ petitions are not maintaining against the
appellant-management, which is said to be a private employer, not felling within the meaning of the definitions of ""State and, therefore, not
amenable to the writ jurisdiction of this Court under Article 226 of the Constitution of India. Without prejudice to the said objection regarding the
maintainability, it was also contended that mere has been no change in the service conditions of the members of the respondent-unions and,
consequently, mere is no question of applying or claiming any relief based on Section 9-A of the Act, besides further contending that the
respondent-unions, if aggrieved, have to approach the Labour Court by availing of only remedies envisaged under me Industrial Disputes Act. On
the merits of the claims, the management contended mat since there were disruptions of work arising out of the bonus dispute and inasmuch as me
management proposed that though they would be obliged to strictly implement me provisions of the Payment of Bonus Act, the management would
at the same time grant bonus so mat the workmen who were enjoying the benefits of the Act, till such time as their salary exceeded the limit
prescribed by the Bonus Act, would not be affected monetarily, as mere was an amicable arrangement, resulting thereby a long-term settlement to
be effective from April 1, 1991, onwards, and the same was accepted between the parties. It was also stated, that the monthly allowance in lieu of
me amount determined as bonus, would be integral part of this arrangement and it was former decided mat me management would give certain
amount exclusively as a long-term arrangement, from me commencement of the settlement, for the period from April 1, 1991, to March 31, 1997.
The management submitted that after the period of five years, it was to be deemed mat the workers would not be entitled to any amount under the
settlement, if terminated. According to the management, the amounts so agreed to be paid under the settlement in question were paid only towards
bonus and not as wages and it is incorrect for the workmen to contend mat they were enjoying the benefits of the settlement as wages and not as
bonus.
On the above claims and counter-claims, the learned single Judge came to the conclusion that the writ petitions were maintainable and mat on
merits, the ratio of the decision in Life Insurance Corporation of India Vs. D.J. Bahadur and Others, and the latest decision M/s. Fabril Gasosa Vs.
Labour Commissioner and others, would squarely apply, and, consequently, even though the earlier settlement expired on March 31, 1997, at the
instance of the workmen, it would not affect the enforcement or binding nature of the same, or to keep intact obligations flowing from me earlier
settlement till it is replaced or substituted by a fresh settlement. Aggrieved, the management Has filed the above appeals.
Mr. Sanjay Mohan, learned counsel for the appellant/management, strenuously contended that with the expiry of the terms of the settlement in
question, the liability of the management to pay in accordance with the terms of the settlement also ceased and came to an end and the learned
single Judge was in error in coming to a contra conclusion. On the question of maintainability of the writ petitions, though in the grounds it has been
raised that the learned single Judge was in error in the view taken by him, learned counsel invited our attention to an earlier decision of this Court
dated December 2, 1997, in W.P. No. 11862 of 1996 V. Sadasivan v. Binny Ltd. 1998 I LLJ 349 (Mad) and admitted that the same would
govern the issue relating to the maintainability against the appellant and it would be too late also for him to take an extreme stand that no writ
petition as such could be maintained. Mr. K. Chandru, learned senior counsel appearing for the respondent/ workmen, unions, placed strong
reliance upon the earlier decision of the Division Bench and contended that when there is a violation of mandatory statutory provision, in this case
the provisions of the Industrial Disputes Act, which protected the rights and interests of the workmen, a writ could be maintained. On a careful
consideration of the respective submissions of learned counsel appearing on either side in this regard and on going though the relevant decisions
which have been adverted to in the decision rendered in Binny''s case, (supra), we are of the view that the stand taken for the appellant that there is
no monstrous situation to warrant this Court''s interference in exercise of its jurisdiction under Article 226 of the Constitution of India cannot be
countenanced. If a patent violation of the mandatory provisions of the Industrial Disputes Act, which would constitute unfair labour practice, and
alteration of conditions of services without following the procedure laid down u/s 9-A of the Act read with the Fourth Schedule to the Act, is
demonstrated to the existence of the powers of this Court to come to the rescue of the victimised workmen, cannot be seriously disputed. In our
view, the ratio of the decision in Binny''s case, (supra), in W.P. No. 11862 of 1996 would equally apply to the case on hand and the learned single
Judge could not be said to have committed any error in choosing to exercise his discretion in the matter by entertaining the writ petition under
Article 226 of the Constitution of India. The contention urged for the management to the contra, has no merit of acceptance and shall stand
rejected.
So far as the contention raised for the management that the settlement was only for the period between April 1, 1991, and March 31, 1997 and
thereafter, the liability of the. management to the workmen automatically ceased and comes to an end on account of the expiry of the period or
term of the settlement is concerned, learned counsel on either side invited our attention to some of the decisions, to which a reference has also been
made before the learned single Judge. In Life Insurance Corporation of India v. D.J. Bahadur, (supra), the Apex Court, after an exhaustive analysis
of the principles to be applied in this regard, has held as follows:
As soon as the settlement is concluded and becomes operative, the contract embodied in it takes effect and the existing terms and conditions of
the workmen are modified accordingly. Unless there is something to the contrary in a particular term or condition of the settlement the embodied
contract enures indefinitely, continuing to govern the relation between the parties in the future, subject, of course, to subsequent alteration through a
fresh settlement, award or valid legislation. I have said that the transaction is a contract. But it is also something more. Conceptually, it is a
''settlement''. It concludes or ''settles'' a dispute. Difference which had arisen and were threatening industrial peace and harmony, stand resolved in
terms of a new contract. In order that the new contract be afforded a chance of being effectively worked out, a mandate obliging the parties to
unreservedly comply with it for a period of time, is desirable. It was made ''binding'' by the statute for such period. Section 19(2) was enacted. The
spirit of conciliation, the foundation of the settlement, was required by law to bind the parties for the time prescribed. Immediate reagitation in
respect of matters covered by the settlement was banned. Section 23(c) prohibited strikes by the workmen in breach of the contract and lock-outs
by the employer in respect of such matters. A breach of any term was made punishable by Section 29. Certainty in industrial relations is essential
to industry, and a period of such certainty is ensured by Section 19(2). On the expiry of the period prescribed in the sub-section, the conceptual
quality of the transaction as a ''settlement'' comes to an end. The ban lifts. The parties are no longer bound to maintain the industrial status quo, in
respect of matters covered by the settlement. They are at liberty to seek an alteration of the contract. But, until altered, the contract continues to
govern the relations between the parties in respect of the terms and conditions of service.
Proceeding further, their Lordships of the Apex Court also held that when a notice intimating termination of an award or settlement is issued, the
legal import is merely that the stage is set for fresh negotiations or industrial adjudication and until either effort ripens in to a fresh set of conditions
of service, the previous award or settlement does regulate the relations between the employer and the employees.
In Fabril Gasosa y. Labour Commissioner, (supra) his Lordship Dr. A.S. ANAND J., speaking for the Bench, while dealing with the
maintainability of a claim petition u/s 33-C(1) of the Act to enforce a claim or benefit arising out of a time-bound settlement, had an occasion to
deal with a similar issue arising before us. The attempt of the learned counsel for the appellant to distinguish the case on the ground that it does not
directly concern the consequences of expiry of term of a, time-bound settlement, is not only a too technical distinction attempted, without any real
difference, but the principle decided therein would directly apply to the case on hand before us. If the stand of the appellant in these cases has to
be countenanced, it would mean that no obligation u/s 33-C(1) of the Act for enforcing such benefits arising out of a time-bound settlement after its
expiry is possible and the ratio underlying the decision of the Supreme Court could only be that the obligations arising even from such time-bound
settlement, even after the expiry of the postulated period, in the absence of a fresh settlement, continues to be in full force and effect and
enforceable as a contract, though not as a settlement.
So far as the case on hand is concerned, the relevant terms of the settlement stipulated that ""it is agreed to apply 56.5 percent to the annual
earnings between April 1, 1991 and March31, 1992, and pay as a separate monthly allowance based on attendance"". In another portion of the
settlement, it is stated that ""the 8.33 percent advance paid along with bonus hitherto will be withdrawn and the amount already paid for the year
1991-92 will be recovered from the arrears amount paid under the settlement"". The fact that the said settlement had been in force up to March 31,
1997, and the further fact that notice dated December 31, 1996, issued by the union, while bringing to the notice of the management the proposed
expiry of the settlement by the ending of March 31, 1997, emphasises the need for consideration of the revision with effect from April 1, 1997, is
not in controversy. Consequently, in the light of the principles of law declared by the Apex Court and the fact situation noticed (supra), it is not
permissible for the appellant/management to contend either disowning their liability to continue to pay the same fixed monthly payment, till then
paid, even for the period subsequent to April 1, 1997, till such time the said settlement in force until March 31, 1997, is replaced or substituted by
a fresh settlement and it is equally not open to contend for the management that a vacuum is created with the expiry of the earlier settlement and
that nothing shall be paid or will be paid till a new settlement is arrived at and is brought into force. Equally, we are unable to appreciate or
approve the stand taken for by (sic) the appellant/management that the principles engrafted in Section 9-A of the Act is not applicable to the case
on hand. The nature and character of the payment would show that the allowance payable at the fixed rate is of a recurring sum inevitably based on
attendance and, therefore, the same fructifies into a condition of service. Items Nos. 1 to 3 of the Fourth Schedule to the Act would squarely take
within its fold the nature of payment in question and consequently, the denial without following the procedure mandated u/s 9-A of the Act is
without the authority of law and opposed to Section 9-A of the Act also.
For all the reasons stated above, we are in entire agreement with the view taken by the learned Single Judge and we see no infirmity
whatsoever in the same to warrant our interference in these appeals.
The writ appeals, therefore, fail and shall stand dismissed. No costs. C.M.P. Nos. 9826 and 9827 of 1997 are also dismissed.
As the orders were being pronounced, it has been brought to our notice by the learned counsel for the appellant that in W.A. No. 848 of
1997, the union has accepted a settlement dated January 31, 1998, with the management, though, the same is denied by learned counsel appearing
for the union. Settlement, if any, entered during the pendency of this appeal or before the pronouncement of the judgment or after, it will have its
effect of consequences flowing from it, in accordance with law. Any opinion expressed in the judgment will not determine the rights of the parties
under the new settlement or consequences flowing from it. The parties will be at liberty to enforce or proceed with the same in accordance with the
law.