Cooper Engineering Limited Vs. D. M.
Aney & Ors  INSC 116 (4 May 1973)
CITATION: 1973 AIR 2232 1974 SCC (3) 187
Industrial Disputes Act, 1947-Reference to
industrial tribunal of industrial dispute relating to dearness allowance etc. Competency
of reference in view of earlier Settlements between employer and workmen-State
Government's view that earlier settlements related to interim relief awaiting
final recommendations of Wage Board was a Possible view, and therefore
reference was competent.
On July 6, 1963 there was a settlement
between the appellant company and two unions of its workmen regarding dearness
allowance. On April 1, 1965. there was another settlement in respect of certain
demands but the workmen reserved their right to raise demands relating to wage
scales, adjustment and dearness allowance. On July 23 1966 the Central
Government accepted the recommendations made by the Wage Board-set up by it
with effect from April 1, 1966. On November 1, 1966 the appellant and one of
the unions of workmen (2nd respondent) entered into a settlement relating to
payment of interim relief as laid down by the Wage Board. The Union agreed not
to raise any demand for dearness allowance till the Wage Board made its final
recommendations. This position was reiterated in another settlement between the
2nd respondent and the appellant on May 13, 1967. On May 16, 1967 the third
respondent, another union of the appellant's workmen made certain demands regarding
dearness allowance. By notices given to the appellant company it terminated the
earlier settlements of 1963, 1965, 1966 and 1967 between the appellant and the
2nd respondent. Meanwhile on December 23, 1968/January 3, 1969, the Wage Board
made its final recommendations. Since the appellant did not accept the demands
of the third respondent and conciliation proceedings also failed the State
Government on January 25, 1969 referred the dispute to the Industrial Tribunal.
The appellant challenged the validity of the reference in a writ petition under
Art. 226 of the Constitution. The High Court dismissed the petition. In appeal
by special leave to this Court.
HELD The State Government's view that the
settlements related only to interim relief was a possible one in the
circumstances of this case. Hence it could not be said that the reference made
by the State Government was incompetent.
[244 F-G] None of the settlements entered
into by the appellant with its workmen gives any indication that the said
settlements were made in view of the statement made by the Minister for Labour,
State of Maharashtra. On the other hand every one of the settlements was
preceded by a demand made by the union concerned. It was really in the interest
of industrial peace that the appellant appeared to have entered into those
settlements. Therefore the decisions of this Court in Indo Afghan Agencies and
Century Spinning & Manufacturing Company Ltd. & Anr. did not apply to
[245G] Union of India & Ors. v. M/s
Indo-Afghan Agencies Ltd.
 2 S.C.R. 366 and Century Spinning
& Manufacturing Company Ltd. and Anr. v. The Ulhasnagar Municipal Council
and Anr.,  3 S.C.R. 854 held inapplicable.
The question whether there was discrimination
between the appellant and another company in the matter of referring the
industrial dispute to the Industrial Tribunal was not raised before the High
Court and this Court could not go into the question. [246C] In the result the
appeal must fail 241 [In respect of the question whether the third respondent
had the right to terminate the earlier settlement and whether it represented
the majority of workmen in the company, the Court observed that these questions
must be decided by the Tribunal.]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 554 of 1970.
Appeal by special leave from the judgment and
order dated July 31, and August 1, 1969 of the Bombay High Court in S.C.
Application No. 799 of 1969.
I. N. Shroff, for the appellant.
J. L. Hathi, K. L. Hathi and P. C. Kapur, for
respondent No. 2.
R. S. Kulkarni and S. C. Agarwala, for
respondent No. 3 M. C. Bhandare and S. P. Nayar, for respondent No. 4.
The Judgment of the Court was delivered by
VAIDIALINGAM, J.-By order dated January 25, 1969, the State of Maharashtra
referred to the Industrial Tribunal, Bombay, for adjudication three disputes
between the appellant and its workmen. The said disputes were registered by the
Tribunal as Reference (I.T.) No. 42 of 1969. The appellant filed in the Bombay
High Court Special Civil Application No.
799 of 1969 under Article 226 of the
Constitution to, quash the order of reference. The High Court by its judgment
and order dated 31st July/1st August, 1969, dismissed the Writ Petition holding
that the reference made by-the State Government was valid. The appellant has
filed the above appeal, by special leave, challenging the decision of the High
The facts leading up to the filing of the
Writ Petition may now be stated. On July 6, 1963, there was a settlement
between the appellant and the workmen represented by the Secretaries of two
unions-the Chemical Engineering and Metal Workers Union, Poona add the
Association of Engineering Workers, Poona. Under clause 1 of this settlement,
the appellant agreed to pay dearness allowance on the basis of 75 % neutralisation
of the Sholapur Cost of Living Index computed for a month of 26 working days in
substitution of the rate of. dearness allowance that was then being paid.
On July 7, 1964, a charter of demands was
submitted by the workmen represented by the General Secretary, Association of
Engineering Workers, Poona. The demands related to various items including wage
scales and dearness allowance. On April 1, 1965, the, appellant and the said
Association entered into a settlement. From the said settlement, it is seen
that though the company conceded certain demands, it was not agreeable to
accede in respect of the wages and dearness allowance, on the ground that the
Poona Working Class Consumer-Price Index was likely to be introduced at an
early date, when a change in the wage pattern and dearness allowance in the
region will be effected. Another reason given by the appellant was that the
demands, as made by the union, involved heavy financial liability. The
Association agreed that all demands-made by it on July 7, 1964, in respect of
which no settlement has been reached, will be 242 treated as withdrawn for the
time being. Liberty was reserved to the Association to raise those demands
again after the Poona Working Class Consumer Price Index was declared. With
this reservation, came the demand for wage, scales, adjustment and dearness
On January 23, 1965, the Association, the 2nd
respondent, was recognised by the appellant under the code of discipline. In
June 1965, the Poona Working Class Consumer Price Index was declared. The
second respondent again raised a demand on August 3, 1965. Demand No. 2 related
to dearness allowance. The demand was that the then existing Sholapur Working
Class Consumer Cost of Living Index Number should be replaced by the Poona Working
Class Consumer Cost of L iving Index Number and the linking of old and new
series, its multiplier and its rate should be jointly decided between the
management and the Association. The Association further required that after
such a ,decision, the workmen should be given 100% neutralisation of the Poona
It should be stated at this stage that on
December 12, 1964, the 'Central Government had set up the Central Wage Board
for engineering industries. After the Wage Board was set up, the labour agitated
for grant of interim relief.
Accordingly the Wage Board recommended to the
Government a scheme of interim relief. The Central Government also accepted, by
its resolution dated July 23, 1966, the majority recommendations of the Wage
Board regarding the grant of interim relief with effect from April 1, 1966. The
Central Government further requested all the employers in the engineering
industries to implement the recommendations of the Wage Board regarding the
interim relief with effect from April 1, 1966.
When the Government's acceptance of the
recommendations of the Wage Board was known, the second respondent made a
demand on July 28, 1966, for payment of the interim relief.
After mutual discussions, the appellant and
the second respondent entered into a settlement on. November 1, 1966.
The entire settlement related to the payment
of the interim relief, as laid down by the Wage Board. It was further provided
that the interim relief granted shall be adjustable in any rise in Wages as a
result of the final recommendations made by the Wage Board in due course.
Clauses 11 and 12 of this settlement were as
follows :-.lm15 "11. The Union agrees to treat as withdrawn the Charter of
demands regarding wage scales and/or Dearness Allowance made by it under its letter
dated 3rd August 1965.
12.The Union further agrees that pending the
deliberations and the final recommendations of the Wage Board it will not raise
any dispute regarding wages and/or Dearness Allowance." On August 3, 1965,
the second respondent again submitted a charter of demands regarding wage
scales, dearness allowance and various other matters. After negotiations, the
appellant and the second respondent entered into a settlement on May 13, 1967.
There is a reference 243 to the settlement of November 1, 1966. Under clause
(2) of the settlement, the Association withdrew all demands made under its
charters of demands dated August 3, 1965, January.
22, 1966 and February 26, 1966 relating to
wage scales, dearness allowance and certain other matters. The Association
further agreed not to raise any demands regarding wage scales and/or dearness
allowance pending the deliberations and the final recommendations of the Wage
Board in View of the settlement dated November 1, 1966, already entered into
between the parties.
On May 16, 1967, the third respondent, Serva
Shramik Sanghatana, through its General Secretary, made a demand that all
workmen should be paid dearness allowance at the rate 6 paise per day for every
point of rise over 17 points of the Poona Consumer Price Index Number with
effect from January 1, 1967. On October 3, 1967, the third respondent issued
two notices to the appellant-company by the, first notice, it terminated the
settlement dated July 6, 1963, entered into between the appellant and the
Chemical Engineering and Metal Workers Union and the second respondent,
representing the workmen. The second notice terminated the settlements dated
February 4, 1965, April 1, 1965 November 1, 1966 and May 13, 1967 entered into
between the appellant and the second respondent. Both the notices stated that
the previous settlements are terminated under section 19(2) read with rule 83
of the Industrial Disputes Act, 1947. It was also mentioned that the letters of
October 3, 1967, are to be treated as two months notice. It will be seen that
by these two notices, the settlements dated July 6, 1963, November 1, 1966 and
May 13, 1967 have been terminated.
Conciliation proceedings appear to have been
initiated. The appellant in its letter to the Deputy Commissioner of Labour
dated July 2, 1968, has stated that the interim relief granted by the Wage
Board has been already implemented by the appellant. 'It gave a further
assurance that it will implement the final recommendations of the Wage Board,
as accepted by the Central Government. On November 30, 1968, fresh demands for
dearness allowance were made by the third respondent. The Wage Board made its
final recommendations to the Central-Government. The exact date is not very
clear, but it is given differently as December 23, 1968 or January 3, 1969. As
the appellant did not comply with the demands of the third respondent and as conciliation
proceedings failed, the State Government referred the dispute for adjudication
on January 25, 1969. Item I related to the dearness allowance to be paid to the
monthly rated staff. Demand No. 2 related to the dearness allowance regarding
the daily rated workmen. The third question referred related to the dismissal
of the fourteen workmen mentioned in the order and payment of dearness
allowance to them.
It was this order of reference that was
challenged by the appellant before the High Court in proceedings under Article
226. We have fairly exhaustively given the details about the various
settlements to give the background of the dispute between the appellant and its
workmen. The first contention of Mr. Shroff, learned counsel for the appellant,
was that the third respondent, which represents only a minority of the workmen,
has no right to terminate agreements dated November 1, 1966 and May 13, 1967,
entered into by the Association, the second 244 respondent, representing the
majority of the workmen. As these agreements were subsisting and operating and
were binding on all the workmen, they can be terminated only as contemplated
under section 19(7) of the Industrial Disputes Act, 1947 (hereinafter to be
referred to as the Act). When the settlements were, subsisting, the order
passed by the State Government referring the disputes covered by those
settlements, is invalid.
On behalf of the State, Government, Mr.
Bhandare, learned counsel, has stated that the question whether the third
respondent represented, on the relevant date, the majority of the workmen bound
by the settlements, can be investigated only by the Tribunal. The State
Government had taken the view that the entire settlement relates only to the
interim relief and, therefore, the, question of terminating the agreements by
any union does not arise. The counsel further pointed out that the view taken
by the State Government regarding the nature of the settlements was a possible
view and, therefore, it had power to refer the disputes for adjudication under
section 10(1) of the Act.
Though there has been a very elaborate
consideration by the High Court regarding the competency of the, third
respondent to terminate the settlements, its ultimate decision is rested on a
construction of the two settlements dated November 1, 1966 and May 13, 1967.
According to the High Court, it is abundantly clear on a reading of the various
clauses in the two settlements that they related to payment of wages including
dearness allowance, which had the character of an interim relief, as awarded by
the Wage Board. It is the further view of the High Court that when the, final
recommendations of the Wage Board are made, the workmen were at liberty to
raise demands regarding wages and dearness allowance legally payable to them.
The agreement, if at all, was not to raise any dispute pending the final
recommendations of the Wage Board.
We have ourselves gone through the various
clauses in the two settlements and we are in entire agreement with the view of
the High Court. As there has been a very elaborate discussion by the High Court
and-as we entirely agree with its reasoning, we do not propose to cover the
ground over again. As we are now on the. limited question regarding the
competency of the State Government to make the reference, it must be held that
the, State Government's view that, the settlements related only to the interim
relief is a possible one in the circumstances of this case. Hence, we cannot
say that the reference made by the State Government was incompetent.
We express no opinion on the question,
regarding the right of the third respondent to terminate the two agreements in
question because there is a controversy as to whether, at the relevant date,
the third respondent represented the majority of the workmen bound by these
agreements. The claim of the third respondent is that it represented the
majority of such workmen. The Tribunal, when it adjudicates the dispute will
have to investigate the question when considering the points covered by the
settlements as well as the question whether those settlements have been
properly terminated, when the reference was made by the State Government.
245 In this view, we are not referring to the
relevant provisions of the Act; nor do we deal with the decisions cited on both
The further contention that is taken by Mr.
Shroff is based upon the decisions of this Court in Union of India & Ors.
M/s Indo-Afghan Agencies Ltd.(1) and Century
Spinning & Manufacturing Company. Ltd. and Anr. v. The Ulhasnagar Municipal
Council and Anr. (2) According to Mr. Shroff, the Minister for Labour of
Maharashtra, at a meeting of the employers and representatives of the
employees, held on September 9, 1965, stated :
"The Government of Maharashtra would not
refer disputes on wages and dearness allowance to adjudication in the case, of
engineering establishments covered by the Wage Board, if the concerned employer
agreed to implement the recommendations, interim as well as final, of the
Central Wage Board, as accepted by the Government of India." On the basis
of this statement of the Minister, the appellant implemented the interim relief
and also assured the authorities concerned that it will implement the final
commendations of the Wage Board. As the appellant has acted on the representations
made by the Minister to its prejudice, the reference of the, dispute for
adjudication was not justified. Mr. Shroff referred us to the letter dated
September 24, 1965, written to the concerned Minister for Labour by the Indian
Engineering Association (Western Region) and Engineering Association of India
(Western Region) Bombay. This letter refers to the statement made by the
Minister on September 9, 1965. He also invited our attention to the letter
dated July 2, 1968, written by the appellant to the Deputy Commissioner of
Labour, Poona. In that letter, the appellant had stated that it had agreed with
its workers to implement the interim relief granted by the Wage Board. The
appellant gave an assurance to the Deputy Commissioner of Labour, Bombay, that
it will implement the recommendations of the Wage Board for engineering
industries, as accepted by the Central Government.
The Act gives power to the State Government
to refer a dispute for adjudication. As to how far, by a Minister making a
statement, the Government can be relieved of its obligation under the Act, is a
debatable question. It is, however, not necessary for us to go into this aspect
in this particular case. None of the settlements entered into by the appellant
with its workmen gives any indication that the said settlements were being made
in view of the statement made by the Minister. On the other hand, we have
already pointed out that every one of the settlements is preceded by a demand
made, by the union concerned. It is really in the interest of industrial peace
that the appellant appears to have entered into those settlements. Therefore,
the decisions relied on by Mr. Shroff do not apply in this case.
Lastly, Mr. Shroff contended that the State
Government declined to make a reference in the case of the Indian Hume Pipe Co.
Ltd. specifically on the ground that the said company had implemented the in(1)
 (2) S. C. R. 366.
(2)  (3) S. C. R. 854.
246 terim recommendations of the Wage Board
and that it was also prepared to implement its final recommendations. But in
the case of the appellant, the State Government made the reference and as such
there has been discrimination.
It is no doubt true that in the letter dated
June 8, 1968, sent by the State Government to Indian Hume Pipe Co. Ltd., the
Government states that it is not making a reference regarding the. dispute
between the said company and its Workmen. The reason for not making the
reference is also stated to be the implementation by the company of the interim
recommendations of the Wage Board and its preparedness to implement the final
We find, however, from the judgment of the
High Court that this question of discrimination with special reference to the
Indian Hume Pipe company Ltd. has not been argued by the appellant. 'The
inference under such circumstances is that such a contention was not pressed
before the High Court.
Hence we decline to go into that question.
In the result, the appeal fails and is
dismissed. There will be no order as to costs. As the Reference is of the year
1969, the, Tribunal is directed to dispose of the matter expeditiously.