M/S. Agencia
E. Sequeira M/S. Fabril Gasosa Vs. Labour Commissioner & Ors [1997] INSC100
(31 January 1997)
A.S.
ANAND, S.B. MAJMUDAR
ACT:
HEADNOTE:
WITH
CIVIL
APPEAL NO. 565 OF 1997 (Arising out of SLP (C) NO. 23763 OF 1995)
DR.
ANAND, J.
Leave
granted in both special leave petitions.
The
appellants are sister concerns. Their Letters Patent Appeals were disposed of
by a common judgment and order dated 19.6.1995 upholding the judgment and order
passed by the learned Single Judge on 18.7.1994 dismissing the Writ Petitions
filled by the appellants. These appeals are directed against the common
judgment and order dated 19.6.1995.
On 9th
of December, 1986 a settlement was arrived at between the appellants and the
employees union relating to service conditions of the workmen for the period
1.1.86 to 30.6.88. The settlement inter alia provided that VDA (variable
dearness allowance) shall be paid at Rs. 2/- per point of rise per month beyond
AICPI 450 and the wages of the employees were linked with the VDA. The employees
union issued a notice of its intention to terminate the settlement with a view
to submit a fresh charter of demands on 1.7.88.
A
fresh charter of demands was submitted by the employees union demanding an
increase in the salary etc. on 17.7.88 but it was mentioned therein that the
service conditions in force would continue to remain unchanged unless
specifically agreed to otherwise. The employees union did not seek any change
in the charter of demands in so far as the rate of VDA was concerned. No fresh
settlement appears to have been arrived at between the parties but the
appellants relying upon the notice of termination and the new charter of
demands, unilaterlly freezed VDA with effect from 4.8.88.
Negotiations
between the employees union and the appellant, did not, however, produce any
fresh settlement. The employees union (respondent No. 3) issued a demand notice
to the employer on 21.1.91 demanding VDA with effect from 1.7.88. It was
claimed that the unilateral freezing of the VDA was illegal and that the
obligations in the settlement dated 9.12.1986 were in force and binding on the
parties.
The
employees union, it appears apart from filling an application before the
authorities under the payment of Wages Act alleging illegal deduction from
wages, also approached the State Government for issuance of the recovery
certificate for the arrears of VDA. The Labour Commissioner, on behalf of the
State Government, issued a notice to the appellants on the application filed by
the employees union with regard to the payment of VDA on 14.5.91. The
appellants were required by the Labour Commissioner to reply to the claims of
the respondent union. The appellants were required by the Labour Commissioner
to reply to the claims of the respondent union. The appellants took the stand
in their reply that the settlement of 1986 stood terminated and referred to the
letter of the employees union dated 1.7.88 conveying their intention to
terminate the settlement and the fresh charter of demands. The appellants
further resisted the claim of the union inter-alia by taking the plea that
there was an oral agreement arrived at between the parties to freeze the VDA at
June, 1988 point and therefore the claim of the employees union was untenable.
The appellants, however, produced no evidence in support of its plea of oral
agreement. The Labour Commissioner found that no oral agreement had been proved
and that obligation of the employer to pay the VDA under the 1986 continued to
be in force and with a view to ensure implementation of the settlement, a
notice of demand was issued to the appellants by the Labour Commissioner for
payment to the VDA to the workmen for the period 1.7.88 to 28.2.91. An order
for payment of Rs. 2,14,990.30 P. towards the VDA for the period 1.3.91 to
30.9.91 was also issued. Coercive process for recovery of Rs. 5,29,720/- as
arrears of VDA between 1.7.88 and 28.2.91 was initiated.
The
appellant filed writ petitions No. 37 and 38 of 1994 in the High Court of
Bombay challenging the notices dated 13.9.91 and 27.12.91 and certain other
notices and proceedings taken by the Labour Commissioner in connection with the
claim of the workmen regarding payment of VDA. The main Plea raised by the
appellants in the writ petitions was that the settlement dated 9.12.86 was time
bound till 30th June,
1988 and since it was
sought to be terminated by the Union through
their notice dated 1.7.88, the employees union could not maintain any
application 33C (1) of the Act.
Besides,
an oral agreement between the parties which had varied the terms of the
settlement particularly to freeze the VDA after the expiry of the time bound
settlement dated 9.12.86 was also pleaded and it was canvassed that the
employees union could take recourse to seeking a reference under Section 10(1)
of the Act or to file an application Sec.(2) of the Act ut not to the
provisions of Section 33C (1) of the Act. It was asserted that a settlement
arrived at under the provisions of the Industrial Disputes Act ceased to be a
settlement as defined under the Act, on its termination and turns itself into a
mere contract between the parties and, therefore, on termination of such
settlement, the rights recognised by the settlement cannot be enforced in the
manner prescribed under Section 33C(1) of the Act but only as contractual
obligations. The learned Single Judge rejected the plea that there had been an
oral agreement between the parties which had in turn varied the terms of the
settlement of 1986 were subsisting between the parties inspite of the time
bound settlement and as such no fault could be found with the exercise of
jurisdiction by the Labour Commissioner under Section 33C (1) of the Act.
The
Learned Single Judge also rejected the argument that in the facts and
circumstances of the case, the employees union could only prefer a claim either
under Section 33C (2) of the Act or seek a reference under Section 10(1) of the
Act for recovery of the arrears of VDA. It was held that the application filed
by the employees union under Section 33C(1) was maintainable and the obligations
flowing from the settlement regarding payment of VDA could be enforced under
the provisions of Section 33C (1) of the Act and that those obligations flowing
from the 1986 settlement were not contractual in nature. The writ petitions
were accordingly dismissed on 18.7.1994. The Letter Patent Appeals also failed
since the Division Bench also found that there had been no oral agreement
varying the terms of the 1986 settlement and that with the expiry of the period
of time bound settlement, the obligations under the settlement did not cease
and went on to opine that with the expiry of the period of settlement, only a
stage was set for fresh negotiations to take place and till the settlement of
1986 was superseded by a fresh settlement, the obligations flowing from the
settlement of 1986 were binding on the parties and were enforceable under
Section 33C (1) of the Act.
In
these appeals by special leave, learned counsel for the appellants has once
again canvassed the same grounds which had been unsuccessfully raised before
the learned single Judge and the Division Bench. Learned counsel in support of
the assertions that the terms of the settlement stood varied by an oral
agreement and could not be enforced as terms of the settlement but only as a
contract, laid emphasis on the fact that for over two years the workmen had not
demanded payment of the VDA after it was freezed with effect from 1.7.88 and
their silence went to establish the existence of an oral agreement as alleged
by the appellants.
Plea
regarding the non-maintainability of the petition under Section 33C (1) of the
Act was also reiterated on the same grounds which were canvassed in the High
Court.
Learned
counsel for the respondents on the other hand countered these submission by
urging that on facts no oral settlement at all had been arrived at between the
parties and that the Labour Commissioner as well as the High Court had rightly
found that there was no oral settlement, which had superseded the terms of the
earlier settlement. With regard to the maintainability of the application under
Section 33C (1) of the Act, learned counsel for the respondents submitted that
verification of the claim of money which stood determined under the 1986
settlement squarely falls within the scope of Section 33C (1) of the Act and
therefore it was not obligatory on the part of the employees union to file any
proceedings either under Section 10(1) or Section 33C (2) of the Act.
For
what follows, we have not been persuaded to take a view different than the one
taken by the Labour Commissioner and the High Court.
The Labour
Commissioner, on the basis of the material on the record found that there had
been no oral understanding or agreement superseding the 1986 settlement and
therefore the obligations under the old settlement, even after the expiry of
the period of its operation, would continue in force till fresh negotiations
take place and a new settlement is arrived at. The learned Single Judge agreed
with the Labour Commissioner and observed:- " In the facts and circumstances
of the case I am inclined to hold that the so called oral understanding whereby
the workmen are purported to have given up or deferred their right to be paid
VDA in exchange for some extra benefits till the finalisation of another
settlement in place of the terminated one is ex-facie bad and apparently
without any authority of law which nowhere provides for this type of oral
agreements as valid and legally sufficient to modify the terms and conditions
of a contract which is deemed to operate and subsist consequent upon the
termination of the old settlement." The learned Single Judge also examined
the effect of the letter of the employees union dated 1.7.88 and held that the
terms and conditions of the settlement of 1986 were subsisting and the right of
the workmen to receive VDA was not effected in any manner. Dealing with the
submission of the appellants, that the silence of the workmen to claim VDA till
1991, was indicative of the fact that the parties had agreed to the freezing of
the VDA with effect from 4.8.88.
the
learned Single Judge observed:
"
Therefore if the terms and conditions of the settlement of 1986 are to be held
as subsisting inspite of its valid termination, obviously the right of the
workmen to claim the overdue VDA could not have been disputed by the
petitioner, bearing in mind that this was one of the items agreed and inserted
in the earlier settlement which could not have been thus disturbed even after
it ceased to operate unless replaced by any other one or by a contract with the
same force and authority of fresh settlement. Similarly the fact of the workmen
having abstained from demanding its payment fro all this period of more than
two years following the cessation of the settlement ostensibly during the
period of negotiations of anew agreement need not be also construed as a waiver
of their right to press for its demand or as an indication of the existence of
a fresh concluded agreement whereby the terminated settlement stood modified
with regard to the terms and conditions of the pre-existing contract deemed to
operate after the termination of the settlement of 1986.
and
dismissed the writ petitions filed by the appellants.
The
Division Bench while deciding the Letter Patent Appeals agreed with the dindings
recorded by the learned Single Judge and observed:
"The
employers contend that there was an oral understanding between the parties
whereby the workmen agreed to freeze the dearness allowance calculated as on
the Ist July, 1988 and had agreed not to claim VDA in accordance with the
formula set out in the settlement dated 9th December, 1986. The learned Single
Judge has rightly rejected the contention of the employers on this aspect of
the unnecessary controversy raised on behalf of the petitioners. The alleged
oral understanding has not been proved in law. There could not be any oral
understanding in law so as to modify a written settlement." Thus, we find
that on facts, it has been found by the Labour Commissioner and the High Court
and in our opinin rightly, that there was no oral understanding or agreement as
pleaded by the employer to give up or defer the payment of VDA by the employees
union. The findings are based on proper appreciation of material on the record.
Even otherwise, no oral agreement could be pleaded to vary, modify or supersede
a written settlement.
Section
2(p) of the Industrial Disputes Act, 1947 reads as under :
"Settlement"
means a settlement arrived at in the course of conciliation proceeding and
includes a written agreement between the employer and workmen arrived at
otherwise than in the course of conciliation proceeding where such agreement
has been signed by the parties thereto in such manner as may be prescribed and
a copy thereof has been sent to an officer authorised in this behalf by the
appropriate Government and the conciliation officer." (Emphasis Supplied)
A bare reading of the above definition of `settlement' shows that the
settlement contemplated by the above provision excludes any oral understanding
or agreement to supersede an earlier written agreement or settlement. In this
connection a reference to Rule 58 of the Industrial Disputes (Central) Rules,
1957 would also be relevant. That Rule to the extent relevant reads :
58.
Memorandum of settlement :- (1) A settlement arrived at in the course of
conciliation proceedings or otherwise, shall be in Form `H'.
(2)
The settlement shall be signed by - (a) in the case of an employer, by the
employer himself, or by his authorised agent, or when the employer is an
incorporated company or other body corporate, by the agent, manager or other
principal officer of the corporation:
(b) in
the case of the workmen, by any officer of a trade union of the workmen duly authorised
in this behalf at a meeting of the workmen held for the purpose:
(c) in
the case of the workman in an industrial dispute under Section 2-A of the Act,
by the workman concerned.
..................
(3)
Where a settlement is arrived at in the course of conciliation proceeding the
conciliation Officer shall send a report thereof to the Central Government
together with a copy of the memorandum of settlement signed by the parties to
the dispute.
(4)
Where a settlement is arrived at between an employer an his workmen otherwise
than in the course of conciliation proceeding before a Board or a Conciliation
Officer, the parties to the settlement shall jointly send a copy thereof to the
Central Government, the Chief Labour Commissioner (Central), New Delhi, and the
Regional Labour Commissioner (Central) concerned." A conjoint reading of
Section 2(p) of the Act and Rule 58(supra) unmistakably shows that the
settlement contemplated by the said provisions is a written settlement and not
an oral settlement. It is not in dispute that the 1986 settlement was a written
settlement arrived at between the parties. It could not, therefore, be varied
or modified except by a written settlement or by a written memorandum duly
signed by the parties incorporating the terms of the so called understanding.
Section 92 of the Evidence Act, 1872 also lays down that when the terms of any
contract, grant or settlement, as are required by law to be reduced to the form
of a document, have been proved as per the provisions of Section 91 of the
Evidence Act, no evidence of any oral agreement or settlement shall be admitted
as between the parties to any such instrument or their representatives in
interest for the purpose of contradicting varying adding to or subtracting from
its items. Thus, both on facts of the instant case as well as on the
interpretation of law, the conclusion arrived at by the High Court that there
was no oral understanding between the parties and that the so called oral
agreement pleaded by the appellants could not in any case vary the terms of the
1986 settlement is unexceptionable.
Coming
now to the second submission of the learned counsel for the appellants
regarding the maintainability of the application under Section 33C(1) of the
Act. According to the learned counsel for the appellants, the obligations which
flow the 1986 settlement, after the expiry of the period of settlement, could
be examined only through a reference under Section 10(1) of the Act or by the labour
court under Section 33C(2) of the Act and recourse to the provisions of Section
33C (1) of the Act was not permissible. According to the learned counsel for
the respondent on the other hand, the claim for money due, which only was
required to be calculated and not determined, could be made under Section 33C
(1) of the Act and the workmen were not obliged to take recourse to either
Section 10(1) or Section 33C (2) of the Act.
To
appreciate the submission of the learned counsel for the parties, it would be
advantageous at this stage to notice Sections 33C (1) and (2) of the Act to the
extent relevant. Those provisions read thus :
33C.
Recovery of money due from an employer - (1) Where any money is due to a
workman from an employer under a settlement or an award or under the provisions
of Chapter V-A or Chapter V-B the workman himself or any other person authorised
by him in writing in this behalf, or, in the case of the death of the workman,
his assignee or heirs may, without prejudice application to the appropriate
Government for the recovery of the money due to him, and if the appropriate
Government for is satisfied that any money is so due, it shall issue a
certificate for that amount to the Collector who shall proceed to recover the
same in the manner as an arrear of land revenue :
...........................
...........................
(2)
Where any workman is entitled to receive from the employer any money or any
benefit which is capable of being computed in terms of money and if any
question arises as to the amount of a money due or as to the amount at which
such benefit should be computed, then the question may, subject to any rules
that may be made under this Act, be decided by such Labour Court as may be
specified in this behalf by the appropriate Government within a period not exceding
three months :
............................
(3)
........................
(4)
........................
(5) ........................
In the
instant case the period of earlier settlement of 1986 had expired but the
expiry of that period would not affect the enforcement of the binding
obligations flowing from the earlier settlement till substituted by a fresh
settlement. The obligations arising from the earlier settlement would continue
to remain in force, though as a contract and not as a binding settlement, but
that would make no difference to the maintainability of a claim petition under
Section 33C (1) of the Act so long as the requirements of that sub-section are
satisfied and the obligations sought to be enforced flow from an earlier
settlement or an award or under chapter VA or VB of the Act.
That
the rate of VDA had been agreed to and provided for in the 1986 settlement is
not in dispute. It is also not in dispute that the claim petition filed by the
employees union under section 33C (1) of the Act was for the recovery of the
VDA at the rate agreed to between the parties as per the terms of the 1986
settlement for the period for which the same had ben withheld by the employer.
Thus, both the rate of VDA and the period for which it was payable were not in
dispute could the employees union, therefore, not maintain an application under
Section 33C (1) of the Act for the recovery of the VDA arrears? Section 33C is
in the nature of execution proceedings designed to recover the dues to the
workmen. Vide Section 83C (1) and (2), the legislature has provided a speedy
remedy to the workmen to have the benefits of a settlement or award which are
due to them and are capable of being computed in terms of money, be recovered
through the proceedings under those sub-sections. The distinction between
sub-section (1) and sub-section (2) of Section 33C lies mainly in the procedural
aspect and not with any substantive rights of workmen as conferred by these two
sub- sections. Sub-section (1) comes into play when on the application of a
workman himself or any other person assignee or heirs in case of his death, the
appropriate Government is satisfied that the amounts so claimed are due and
payable to that workman. On that satisfaction being arrived at, the Government
can initiate action under this sub-section for recovery of the amount provided
the amount is a determined one and requires no `adjudication'. The appropriate
Government does not have the power to determine the amount due to any workman
under sub-section (1) and that determination can only be done by the Labour Court under sub-section (2) or in a
reference under Section 10(1) of the Act. Even after the determination is made
by the Labour Court under sub-Section (2) the amount so
determined by the Labour
Court, can be
recovered through the summary and speedy procedure provided by sub-section (1).
Sub-section (1) does not control or affect the ambit and operation of
sub-section (2) which is wider in scope than sub-section (1). Besides the
rights conferred under Section 33C (2) exist in addition to any other mode of
recovery which the workman has under the law. an analysis of the scheme of
Sections 33C (1) and 33C (2) shows that the difference between the two
sub-sections is quite obvious. While the former sub-section deals with cases
where money is due to a workman from an employer under a settlement or an award
or under the provisions of Chapter V-A or V-B, sub-section (2) deals with cases
where a workman is entitled to receive from the employer any money or any
benefit which is capable of being computed in terms of money. Thus, where the
amount due to the workmen, flowing from the obligations under a settlement, is
per-determined and ascertained or can be arrived at by any arithmetical
calculation or simplicitor verification and the only inquiry that is required
to be made is whether it is due to the workman or not, recourse to the summary
proceedings under Section 33C (1) of the Act is not only appropriate but also
desirable to prevent harassment to the workmen. Sub-section (1) of section 33C
entitles the workmen to apply to the appropriate Government for issuance of a
certificate of recovery for any money due to them under an award or a
settlement or under the provisions of chapter-VA and the Government. If
satisfied, that a specific sum is due to the workmen, is obliged to issue a
certificate for the recovery of the amount due.
After
the requisite certificate is issued by the Government to the collector, the
collector is under a statutory duty to recover the amounts due under the
certificate issued to him.
The
procedure is aimed at providing a speedy, cheap and summary manner of recovery
of the amount due, which the employer has wrongfully withheld. It, therefore,
follows that where money due is on the basis of some amount predetermined like
the VDA, the rate of which stands determined in terms of the settlement an
award stands determined in terms of the settlement an award or under Chapter
V-A or V-B, and the period for which the arrears are claimed is also known, the
case would be covered by sub- section (1) as only a calculation of the amount
is required to be made.
A
Constitution Bench of this Court in Kays Construction Co. (P) Ltd. vs. State of
Uttar Pradesh and Others [ (1965) 2 SCR, 276 ] while considering the scope of
Section 6-H (1) and (2) of the U.P. Industrial Disputes Act, 1947, which
provisions are in pari materia to Section 33C (1) and (2) opined :
"
The contrast in the two sub- sections between "money-due" under the
first sub-section and the necessity of reckoning the benefit in terms of money
before the benefit becomes "money due" under the second sub-section
shows that mere arithmetical calculations of the amount due are not required to
be with under the elaborate procedure of the second sub- section. The appellant
no doubt conjured up a number of obstructions in the way of this simple
calculation. These objections dealt with the "amount due" and they
are being investigated because State Government must first satisfy itself that
the amount claimed is in fact due. But the antithesis between "money
due" and a "benefit which must be computed in terms of money"
still remains, for the inquiry being made is not of the kind contemplated by
the second sub-section but is one for the satisfaction of the State Government
under the first sub- section. It is verification of the claim to money within
the first sub-section and not determination in terms of money of the value of a
benefit." The law laid down by the Constitution Bench applies with full
force to facts of the instant case and in view of the stablished facts and
circumstances of this case, recourse to the proceedings under Section 33C (1)
of the Act by the union was just and proper.
The
Division Bench of the Bombay High Court was therefore, right in holding that
the recovery certificates issued by the Labour Commissioner for recovery of the
mounts claimed by the workmen in the proceedings under section 33C (1) of the
Act were perfectly valid, legally sound and suffered from no infirmity
whatsoever. We do not find any merit in these appeals and consequently dismiss
the same with costs. One of fee only in two appeals.
Before
parting with the judgment, we would, however, like to clarify that the
application which has been filed by the employees union before the Labour Court
under Section 33C (2) of the Act for recovery of benefits/amounts, other than
those claimed in their application under Section 33C (1) of the Act shall be
decided by the Labour Court on its own merits and the findings recorded by us
hereinabove shall be considered as confined only to the recovery certificates
issued by the Labour Commissioner under Section 33C (1) of the Act, which are
the subject matter of the appeals hereby disposed of by us.
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