Case Note & Summary
The case arose from an industrial dispute concerning the non-employment of 29 dismissed workmen of The K.C.P. Limited, an engineering unit at Tiruvottiyur, Madras employing about 500 workmen. Respondent No. 2 was the only recognized and representative union of all workmen in the establishment. In September 1990, a dispute over bonus for the financial year 1989-90 led to go-slow tactics, alleged illegal strike, and a lockout declared by the appellant on October 30, 1990. The appellant chargesheeted 29 workmen for misconduct; inquiries were conducted by two retired District Judges from January 8, 1991 to August 21, 1992. Meanwhile, the Government of Tamil Nadu issued G.O. No. 487 under Section 10-B of the Industrial Disputes Act, 1947 directing lifting of the lockout and completion of inquiries. The 29 workmen were dismissed between August 23, 1991 and October 1, 1991. The union raised an industrial dispute under Section 2(k) of the Act on behalf of all 29 dismissed workmen, and the government referred the dispute for adjudication as I.D. No. 708 of 1992 before the Labour Court. On November 7, 1992, an understanding was reached between the appellant and the union offering the dismissed workmen either reinstatement without backwages or a lump sum of Rs. 75,000 with other benefits. Respondent Nos. 3 to 14, twelve of the dismissed workmen, did not accept the proposed settlement. Despite this, on December 14, 1992, the appellant and the union entered into a comprehensive settlement under Section 18(1) of the Act and filed a joint memorandum before the Labour Court requesting an award in terms of the settlement. The Labour Court by order dated December 28, 1992 declined to make an award for the twelve dissenting workmen, holding that the dispute in respect of those respondents would continue. The appellant filed Writ Petition No. 611 of 1993 before the Madras High Court; the Single Judge dismissed it on September 29, 1993, and the Division Bench dismissed the appeal on April 4, 1995. Hence the appellant appealed to the Supreme Court. The central legal issue was whether a settlement under Section 18(1) of the Industrial Disputes Act, 1947 entered into by a recognized union on behalf of workmen in a reference under Section 2(k) binds individual workmen who did not accept it. The appellant contended that the union had the authority to enter into collective bargaining and the settlement was binding on all workmen because the dispute was espoused by the union and not raised individually under Section 2A. The contesting respondents argued that they had not accepted the settlement and that it was unfair because they had to give up backwages and provide undertakings. The Supreme Court held that the industrial dispute was raised by the union on behalf of all 29 dismissed workmen, respondents 3 to 14 were members of the union and continued to be members, and the union had the authority to settle the dispute for all. The settlement was found not to be ex facie unjust or unfair. The Court emphasized the distinction between Section 2(k) and Section 2A references and noted that Section 18(1) makes a settlement binding on parties to the agreement; here the union represented the workmen, so they were bound. The Court allowed the appeal, set aside the orders of the Labour Court and the High Court, and held that the Labour Court should have acted upon the settlement and passed an award in terms thereof.
Headnote
A) Industrial Dispute - Collective Bargaining - Section 18(1) Industrial Disputes Act, 1947 - Settlement by recognized union in reference under Section 2(k) is binding on all workmen represented, including dissenting members, unless settlement is ex facie unfair or unjust - The union had espoused the cause of all 29 dismissed workmen and entered into a comprehensive settlement with the employer; individual workmen had no independent right to contest the settlement in a collective industrial dispute raised by the union - Held that the settlement was not ex facie unjust or unfair and therefore binding on the dissenting workmen; Labour Court erred in refusing to act upon it (Paras 1-10). B) Industrial Dispute - Distinction between Section 2(k) and Section 2A Industrial Disputes Act, 1947 - Individual workman cannot veto settlement in a union-sponsored reference - Since the reference was made under Section 2(k) by the union and not by the dismissed employees under Section 2A, the union had authority to enter into settlement on behalf of all members; the workmen continued to be members of the union and were bound by its actions - Held that the representative character of the union was decisive and individual non-acceptance did not invalidate the settlement (Paras 1-10). C) Labour Law - Settlement Binding Nature - Section 18(1) Industrial Disputes Act, 1947 - Settlement arrived at otherwise than in conciliation is binding on parties to agreement - The agreement was between the employer and the union, which represented the workmen, hence the workmen were parties through their union; unless the settlement was ex facie unjust, the Labour Court should have passed award in terms of settlement - Held that the terms giving reinstatement without backwages or lumpsum compensation were not ex facie unfair and the Labour Court's refusal was patently erroneous (Paras 1-10).
Issue of Consideration
Whether a settlement under Section 18(1) of the Industrial Disputes Act, 1947 entered into by a recognized union on behalf of workmen in an industrial dispute raised under Section 2(k) is binding on individual workmen who are members of the union but did not accept the settlement; and whether the Labour Court was justified in refusing to pass an award in terms of the settlement for those dissenting workmen.
Final Decision
Appeal allowed. The Supreme Court held that the settlement dated December 14, 1992 under Section 18(1) of the Industrial Disputes Act, 1947 was binding on all 29 dismissed workmen including respondents 3 to 14 who were members of the sponsoring union. The Labour Court's order refusing to pass an award in terms of the settlement was set aside, and the Labour Court was directed to act upon the settlement and pass an award accordingly.
Law Points
- Collective bargaining settlement under Section 18(1) of Industrial Disputes Act
- 1947 is binding on all workmen represented by a recognized union
- individual workmen cannot veto a settlement reached by their union in a reference under Section 2(k)
- settlement can be rejected only if ex facie unfair or unjust
- distinction between industrial dispute under Section 2(k) and individual dispute under Section 2A.
