Case Note & Summary
The matter arose from a writ petition under Article 226 of the Constitution filed by Ceat Ltd. challenging an order of the Industrial Court, Mumbai, dated 29 March 2001. The Industrial Court had held Ceat Ltd. guilty of unfair labour practices under Items 6 and 9 of Schedule 4 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (MRTU & PULP Act), directing the company to grant permanency and settlement benefits to certain workmen along with interest. The dispute concerned workmen who were originally employees of Norwest Electronics Ltd., which performed maintenance and repair work for Murphy Ltd. After Murphy merged with Ceat Ltd. in 1989, the workmen resigned from Norwest on 30 January 1991 and were absorbed by Ceat as fresh employees—initially on temporary basis from 1 February 1991 and then on probation from 1 May 1991. The workmen complained that they were paid very low wages, denied minimum wage, overtime, and holidays, and were not given the benefits enjoyed by other permanent workmen under a settlement dated 29 April 1991 arrived at between Ceat and the recognized union. That settlement contained a clause stating it would apply to permanent workmen on the company's roll as on 31 December 1990. Ceat argued that since the complainant workmen became permanent after that date, the settlement did not cover them. Additionally, Ceat contended that Model Standing Order 4A (deemed permanency) did not apply because the Parel unit where the workmen were engaged had fewer than 50 employees, thus falling outside the ambit of Section 38B of the Bombay Shops and Establishments Act, 1948. The Industrial Court rejected these contentions and ruled in favour of the workmen. Before the High Court, the employer reiterated the two submissions. On the first issue, the court examined the proviso to Section 18(1) of the Industrial Disputes Act, 1947, inserted by Maharashtra Act 1 of 1972. The proviso mandates that where a recognized union exists, any settlement (except those concerning dismissal, discharge, etc.) must be arrived at only with that union and such settlement is binding on all persons referred to in clauses (c) and (d) of Section 18(3). Clause (d) covers all workmen employed in the establishment on the date of the dispute as well as those who subsequently become employed. Consequently, the settlement with the recognized union acquired the same binding character as a conciliation settlement, extending to future employees. The court also noted intrinsic evidence within the settlement—clauses 7, 8, and 10 dealt with probation, confirmation, and new recruits, indicating it was intended to apply to persons who became permanent after its execution. Therefore, the restrictive cut-off clause could not limit the statutory mandate. The High Court held that the Industrial Court committed no error in finding that the employer had committed unfair labour practices by denying the settlement benefits. On the second submission regarding the applicability of Model Standing Orders, the court found no merit and dismissed the petition in its entirety, upholding the Industrial Court's direction to grant permanency and all attendant benefits with 12% compound interest.
Headnote
A) Industrial Disputes - Settlement - Binding Nature - Industrial Disputes Act, 1947 (Maharashtra Amendment), Section 18(1) proviso, Section 18(3)(c), (d) - The settlement dated 29-04-1991 with the recognized union contained a clause restricting its application to permanent workmen on roll as on 31-12-1990. The court held that the proviso to Section 18(1) (Maharashtra Act 1 of 1972) elevates such settlement to the same binding status as a conciliation settlement, making it applicable to all persons employed on the date of the dispute and those who subsequently become employed under Section 18(3)(d). Therefore, the clause could not exclude the complainant workmen who became permanent after the cut-off date. The Industrial Court's order holding unfair labour practices under Items 6 and 9 of Schedule 4 of the MRTU & PULP Act, 1971, was upheld. (Paras 6-8)
Issue of Consideration
Whether the clause in the settlement dated 29 April 1991 restricting its applicability to permanent workmen on roll as on 31 December 1990 excludes the complainant workmen who became permanent after that date; and Whether the workmen are entitled to deemed permanency under Model Standing Order 4A of the Model Standing Orders framed under the Industrial Employment (Standing Orders) Act, 1946
Final Decision
The High Court dismissed the writ petition, holding that the Industrial Court was not in error. The settlement clause did not exclude the complainant workmen because the proviso to Section 18(1) of the Industrial Disputes Act, 1947, read with Section 18(3)(d), made the settlement binding even on subsequently recruited workmen. The workmen were entitled to the benefits of the settlement and deemed permanency. The petition was dismissed.
Law Points
- proviso to Section 18(1) of Industrial Disputes Act
- 1947 (Maharashtra amendment) makes settlement with recognized union binding on all workmen including subsequently employed
- collective bargaining principle
- settlement cannot override statutory binding effect
- Model Standing Order 4A grants deemed permanency on completion of probation
- Section 38B of Bombay Shops and Establishments Act
- 1948 extends application of Industrial Employment (Standing Orders) Act to establishments with 50 or more employees
