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Judgment
T. Raja, J.—The petitioner seeks for issuance of a writ of certiorari to quash the common order passed by the first respondent/the Presiding
Officer, Labour Court, Salem, in C.P. Nos. 412, 414, 416, 418, 421, 422, 433, 434, 435, 438, 445, 447, 448, 449, 450, 455, 456 and 457 of
2005, dated 28.02.2005, by calling for the records connected thereto. Mr. S. Ravindran, learned counsel appearing for the petitioner submitted
that the petitioner/Cotton Mills situated at Vembadithalam in Salem District, has employed more than 100 employees including the respondents 2
to 19, and all of them are members in three recognised Unions, namely, INTUC, LPF and ATP. Whileso, a settlement was reached u/s 12(3) of
the Industrial Disputes Act (in short ""Act"") between the workmen and the management on 02.01.1995 and the same came to an end on
31.12.1999. As per the said settlement, the petitioner management had agreed to grant variable Dearness Allowance (DA) at the rate of 32 paise
for the first two years and 33 paise in the third year and 34 paise in the fourth year on every increased point over and above 5000 points (Madras
Consumer Costs of Living Index Point). Clause 22 of the said settlement also made it clear that the said settlement is for five years and the same
will be in force till replaced by new settlement. Whileso, three unions functioning in the Mill went on strike from 18.10.1998 till June 2000.
Thereafter, the issue relating to the temporary closing down was taken before the Deputy Commissioner of Labour, who, in turn, held various
discussion and thereby advised the petitioner management to pay the last drawn salary plus variable DA as on the date of commencement of the
strike. After the advise of the Deputy Commissioner of Labour, the mill was reopened and hence, the advise of the Deputy Commissioner of
Labour is binding upon the Unions and therefore, they cannot ask for variable DA as per the expired 12(3) settlement, he pleaded. However, the
Unions filed claim petitions u/s 33(c)(2) of the Act with a prayer to compute the arrears of variable DA for the period from 16.08.2000 to
28.02.2005. Adding further, it is contended that as per the 12(3) settlement reached on 02.01.1995 expired on 31.12.1999, the petitioner
management has also been paying the salary, bonus @ 8.33%, incentive @ 4% on the basic pay, DA and VDA. etc. to the employees, therefore,
the claim made by the Unions to pay the salary and the bonus on the basis of the previous settlement reached u/s 12(3) dated 02.01.1995, was
unfair and unjustified, since two 18(1) settlements reached on 27.04.2001 and 31.10.2005 have superseded the earlier settlement reached u/s
12(3) dated 02.01.1995. But, the learned Labour has completely failed to see as to how the old settlement reached u/s 12(3) dated 02.01.1995 is
still inforce.
Further, it was contended that when there has been a legal dispute on the issue whether the 12(3) settlement dated 02.01.1995 is valid or 18(1)
settlements dated 27.04.2001 and 31.10.2005 are valid, the same should be resolved before deciding the issue raised in the claim petitions filed
u/s 33(c)(2) of the Act. But, the learned Labour Court, without deciding whether there was any existing right, wrongly allowed the claim petitions
on the basis of the expired 12(3) settlement dated 02.01.1995, by directing the petitioner management to grant DA as per the 12(3) settlement.
Adding further, it is stated that the reasoning given by the Labour Court in the impugned order, holding that since 12(3) settlement dated
02.01.1995 has not been modified or changed, the workers are entitled to claim variable DA, is absolutely against the provisions of the Act.
In support of his submissions, he has also relied upon a judgment of the Hon''ble Apex Court in the case of Management of Gordon Woodroffe
Agencies Pvt. Ltd. Vs. Presiding Officer, Principal Labour Court and Others, to contend that, while finding the closure of the establishment as
legally justifiable and thereupon all the statutory dues are paid, further direction for payment of additional sum to workmen by way of ex-gratia
payment is without jurisdiction for yet another the reason that the same is not contemplated under the statute, therefore, the Labour Court had no
authority in law to direct the payment of additional sum by way of ex-gratia payment, otherwise than what is provided under the law.
Per contra, Mr. N.G.R. Prasand, learned counsel appearing for the respondents-workmen submitted that the Clause 22 of the settlement
reached u/s 12(3) dated 02.01.1995 made it clear that the said settlement will be in force for a period of five years and the same will be replaced
by a new settlement, however, when the majority of the employees of the Unions have signed agreement by accepting the advise of the Deputy
Commissioner of Labour, there was no reference regarding the payment of variable DA for two years after opening the Mille either in settlement
dated 27.04.2001 or 31.10.2005 and again, in the said 18(1) settlements, there was no specific Clause made for waiving the variable DA payable
as per 12(3) settlement dated 02.01.1995, therefore, only in these contexts, the Labour Court has rightly calculated the quantum of variable DA as
per the earlier 12(3) settlement dated 02.01.1995. Hence, on that basis, he pleaded for no interference in the impugned order passed by the
Labour Court.
Supporting the impugned order passed by the labour Court, he has also relied upon a judgment of Hon''ble Apex Court in the case of Life
Insurance Corporation of India Vs. D.J. Bahadur and Others, to contend that the earlier settlement dated 02.01.1995 reached u/s 12(3) would
continue to operate even after the service of notice and lapse of two months subsequent thereto, therefore, the Labour Court has rightly allowed
the claim petitions. When it is settled law that the settlement or award does not cease to be operative, the award passed by the labour Court
granting certain little benefits to the employees working in the petitioner management need not be disturbed. With these submissions, he prayed for
dismissal of the writ petition.
Heard both sides.
It is an admitted fact that, initially, there was a settlement reached between the workmen and the management u/s 12(3) of the Act on
02.01.1995. Clause 22 of the said settlement made it clear that the validity of the said settlement is only for five years and the same will be in force
till it is replaced by a new settlement. Clause 6 of the settlement shows that the management had agreed to grant variable DA at the rate of 32
paise for the first two years and 33 paise in the third year and 34 paise in the fourth year on every increased point over and above 5000 points
(Madras Consumer Cost of Living Index Point). But, when the Mill was temporarily closed from 1998 to June 2000 due to the strike by workers
for bonus, the issue was taken before the Deputy Commissioner of Labour for amicable settlement. The said Deputy Commissioner of Labour,
after considering the prejudice caused to the management and the workmen due to the prolonged strike, directed the petitioner management to pay
the consolidated wages to the workmen from the date of reopening of the Mills i.e. from 12.06.2000. It was further advised that from August,
2002, the variable DA will be paid by calculating the points by taking into account the difference of points of increase in variable allowance
between July 2002 and August 2002 based on the cost of living index points. When the said advise was accepted by both sides, subsequent to the
advise, the employees of the Unions had received the salary for the period of two years from the date of reopening of the Mills. Thereafter, two
more settlements dated 27.04.2001 and 31.10.2005 were reached u/s 18(1) of the Act and the parties to the settlements had also acted upon the
same.
From the above admitted facts, it is clear that although a settlement u/s 12(3) dated 02.01.1995 was reached, Clause 22 of the said settlement
states that the terms of the settlement will be in force till a next settlement is reached and moreover, Clause 7 of the settlement also says that the
settlement will be in force only from 01.01.1995 to 31.12.1999 only, however, in the meanwhile, on 12.06.2000, when the dispute was brought
by way of conciliation before the Deputy Commissioner of Labour for amicable settlement, the Deputy Commissioner of Labour, by taking note of
the prolonged illness caused to the industrial peace on account of the strike resorted by the workmen, advised the petitioner management to pay
the consolidated wages to the workmen from the date of reopening of the Mills, namely, 12.06.2000, and equally, the Unions were also advised to
give up or waive their claims enured u/s 12(3) dated 02.01.1995. The Labour Court also in paragraph 14 of the order clearly recorded this fact
that the majority of the Unions and the members have signed accepting the advise given by the Deputy Commissioner of Labour. When the said
advise given by the Deputy Commissioner of Labour to waive or to give up the claims made u/s 12(3) dated 02.01.1995 was acted upon by both
parties and subsequently, both parties had also entered into fresh settlement u/s 18(1) on 27.04.2004 and thereafter one another settlement u/s
18(1) on 31.10.2005, the claim petitions filed by the respondents seeking variable DA from 16.08.2000 to 28.02.2005 are not legally
maintainable, as it is clear that the previous settlement reached u/s 12(3) dated 02.01.1995 automatically comes to an end after the new
settlements were reached u/s 18(1) dated 27.04.2001 and 31.10.2005. Hence, the argument of the learned counsel for the respondents-workmen
that the 12(3) settlement dated 02.01.1995 is still continuing to be in operation, cannot be accepted by this Court.
Further, a judgment cited by the learned counsel for the respondents-workmen in Life Insurance Corporation of India''s case (cited supra) is
completely ruling against the respondents-workmen, for, while resolving the dispute raised herein, the Apex Court has held clearly in the above
said judgment that the operation of earlier settlement will get terminated when it is replaced by the another settlement. Paragraphs 45 and 47 of the
said judgment are extracted hereunder:
The catena of cases we have briefly catalogued discloses an unbroken stream of case-law binding on this Court, the ratio whereof, even
otherwise, commends itself to us. The award or settlement under the ID Act replaces the earlier contract of service and is given plenary effect as
between the parties. It is not a case of the earlier contract being kept under suspended animation but suffering supersession. Once the earlier
contract is extinguished and fresh conditions of services are created by the award or the settlement, the inevitable consequence is that even though
the period of operation and the span of binding force expire, on the notice to terminate the contract being given, the said contract continues to
govern the relations between the parties until a new agreement by way of settlement or statutory contract by the force of an award takes its place.
If notice had not been given, the door for raising an industrial dispute and fresh conditions of service would not have been legally open. With action
u/s 9-A, Section 19(2) or (6), the door is ajar for disputes being raised and resolved. This, in short, is the legal effect not the lethal effect of
invitation to industrial trial of strength with no contract of service or reversion to an obsolete and long ago ''dead'' contract of service.
At this stage I may record my firm conclusion that for the reasons already given the settlement under the ID Act does not suffer death merely
because of the notice issued u/s 19(2). All that is done is a notice ""intimating its intention to terminate the award"". The award even if it ceases to be
operative qua award, continues qua contract. Therefore, if the ID Act regulates the jural relations between the LIC and its employees - an ''if'' we
will presently scan --- then the rights under the settlements of 1974 remain until replaced by a later award or settlement.
The above observation of the Apex Court clearly shows that the rights accrued from the settlement will remain only till it is replaced by a later
settlement. In the present case, as highlighted above, when the subsequent settlements dated 27.04.200 and 31.10.2005 reached u/s 18(1)
between the management and the workmen came into force, the earlier settlement dated 02.01.1995 reached u/s 12(3) automatically stood
replaced, therefore, the respondents are not entitled fall back on the previous settlement while getting the benefits from the later settlements. If the
argument of the learned counsel for the respondents-workmen is accepted, then the petitioner management will be compelled to pay not only the
benefit given to the employees in the later settlements, but also from the previous settlement and in that event, the management would not think of
going into the subsequent settlements. Further, when the general rule states that the prior settlements are automatically held to be replaced by
implication by subsequent settlement, the employees, who are enjoying in getting the consolidated pay upto June, 2004 through subsequent
settlements, cannot be allowed to ask for other benefits from the expired settlement reached u/s 12(3) dated 02.01.1995 i.e. variable Dearness
Allowance (DA) at the rate of 32 paise for the first two years and 33 paise in the third year and 34 paise in the fourth year on every increased
point over and above 5000 points (Madras Consumer Costs of Living Index Point). This vital legal aspect having been overlooked by the Labour
Court, the same is liable to be interfered.
Therefore, for the reasons stated above, the impugned order passed by the labour Court is set aside. Consequently, the writ petition stands
allowed. No Costs. Consequently, connected miscellaneous petitions are closed.