State of
Karnataka Vs. The Management of Ksrtc & ANR
[1999] INSC 40 (18
February 1999)
S.B.Majmudar,
U.C.Banerjee JUDGEMENT S.B.Majumdar.J.
Leave
granted in these special leave petitions being S.L.P.(c) Nos. 19982-19983 of
1997 and S.L.P.(C) Nos. 22370-22371 of 1997. By consent of learned counsel of
the contesting parties, the appeals were heard finally and are being disposed
of by this common judgment. The Management of Karnataka State Road Transport
Corporation has filed the first two appeals arising out of Special Leave
Petition Nos. 19982 and 19983 of 1997 being aggrieved by the common judgment
& order rendered by the Division Bench of the High Court of Karnataka in
Writ Appeal Nos. 8635 and 8491 of 1996, while the other two appeals arising out
of Special Leave petition Nos. 22370 and 22371 of 1997 are filed by the State
of karnataka, also aggrieved by the aforesaid common judgment & order in
the very same two writ appeals.
The
appellants have the common cause of complaint against the impugned judgment of
the Division Bench, while the respondent KSRTC Staff and Workers Federation,
which is the common respondent in all these appeals, is the only contesting
respondent, being the original writ petitioner whose writ petition was allowed
by the learned Single Judge of the High Court and which judgment came to be
confirmed by the impugned judgment of the Division Bench. We shall refer to the
appellant - Management of Karnataka State Road Transport Corporation, the
original Respondent No. 1 in the writ petition, as the Corporation, the
appellant State of Karnataka in other two appeals, being original Respondent
No. 2 in the writ petition as the 'State', while the contesting Union, Respondent No.1 in these appeals in writ petition
as the 'Union' for the sake of convenience in the
latter part of this judgment. The question involved in these appeals in as to
whether the order passed by the State on 10th Sept., 1993 and the consequential
order passed by the Corporation on 21st September, 1993 were legal and valid.
Both these orders came to be set aside by the learned Single Judge in the writ
petition filed by the Union and as noted above, the said order
of the learned Single Judge came to be confirmed by the Division Bench in the
impugned common judgment. The order dated 10th Sept. 1993 of the State
instructing the Corporation to withdraw the Pay Roll Check-off Facility given
to the Union and the consequential order dated 21st Sept., 1993 issued by the
Corporation withdrawing this facility came to be challenged on various grounds
in the writ petition which as noted above, succeeded in the hierarchy of
proceedings before the Karnataka High Court. The short question therefore which
falls for our consideration is whether the impugned orders of the State and the
consequential order issued by the Corporation could be sustained in law? In
order to appreciate the rival contentions centering round the aforesaid
controversy between the parties, it is necessary to note a few relevant facts
leading to these proceedings.
INTRODUCTORY
FACTS :
The
Corporation is formed under Section 3 of the Road Transport Corporation Act,
1950 (for short the 'Corporation Act'), for providing efficient, economical and
properly co-ordinated transport services to the travelling public and the KSRTC
has framed Service Regulations by deriving powers under Section 45(2) (c) of
the Corporation Act. At the relevant time the Union was the sole bargaining agent for the employees of the
Corporation. On 11th
December, 1987 a
referendum was held to choose the collective bargaining agent on behalf of the
employees of the Corporation. The Union
was elected as the recognised agent with 53% of the votes polled by way of
official memorandum dated 24th December, 1987. The Corporation thus granted recognition to the Union as sole bargaining agent a Memorandum of Settlement
under Section 18(1) read with Section 2(p) of the Industrial Disputes Act 1947
(hereinafter referred to as the ID Act) was entered into by the Corporation and
the Union on 28th July, 1988. Under this settlement it was agreed between the parties
that the Corporation shall deduct the subscription the members of the Unions
affiliated to the respondent Federation from their wages on obtaining
individual authorisations. The said settlement was agreed to be followed till
the recognition accorded to the Federation lasted or until both the parties
terminated the terms by mutual consent earlier. This system was popularly known
as Pay Roll Check off Facility. A Memoradum of Settlement regarding the wages
payable to the employees was also entered into on 1st January, 1988 between the Corporation and the Union. the settlement was for a period of four years
commencing from 1st
January, 1988 till 31st December, 1991. As the recognition given to the
Federation had come to an end, election had to be conducted again to choose the
sole bargaining agent by way of referendum. The Union emerged successful as the sole bargaining agent and was
chosen as such. The Corporation by its order dated 16th July, 1992 accorded recognition to the Union as the sole bargaining agent as per the Memorandum.
It is
not in dispute between the parties that as four years period expired with
effect from 16th July,
1996 a fresh
referendum had to be held for finding out as to whether the Union still commanded majority membership of workmen so as
to be re-designated as a recognised Union.
But the said referendum has still not been held because of writ petitions
pending in the present proceedings.
During
the time, admittedly, the Union was
functioning as a recognised Union it
submitted a charter of demands on various disputed items concerning service
conditions of the employees. Consequently, negotiations were held between the
Corporation and the Union and on 10th May, 1993 a Memorandum of Understanding was reached. The same was
subject to approval by the Board of Directors and the State Government. the
Board of Directors of the Corporation accepted the Memorandum and thereafter it
was submitted to the Govt. for its approval. The State by its order dated 10th Sept. 1993, accorded approval to the
Memorandum of Understanding suggesting certain alterations to the service
conditions subject to other terms and conditions. One of such conditions was
that the Management of the Corporation would not take up the responsibility of
collecting donations or monthly subscriptions from the employees on behalf of
the recognised Federation or Union of
employees. It was pursuant to the aforesaid Government Order that the
Corporation issued a Notification dated 21st Sept. 1993 withdrawing the Pay Roll Check off
Facility. As noted earlier, the aforesaid G.O. issued by the State and the
consequent Notification issued by the Corporation were brought in challenge in
the writ petition by the Union. The said writ petition was filed
on 21st Sept. 1993. The learned Single Judge, who
heard the writ petition having considered the rival contentions of the parties
took the view that there was no occasion for the Government to issue such a
direction under Section 34 of the Corporation Act on 10th Sept. 1993. Hence, the consequential
Notification issued by the Corporation could not survive. It was also held that
the said Notification of the Corporation was violative of the provisions of
Section 19(2) of the ID Act.
By his
order dated 25th July 1996 the learned Single Judge held that the settlement
dated 28th July, 1988 occupied the field as authoritative settlement under
Section 18(1) of the ID Act and was binding on the parties. It was also held
that the exercise of power by the State under Section 34 was not proper.
Consequently, the order of the State dated 10th Sept. 1993 and the subsequent Notification by
the Corporation withdrawing Pay Roll Check off Facility on 21st Sept. 1993 were held to be invalid. The writ
petition was accordingly allowed. As noted earlier, the aforesaid order of the
learned Single Judge was made the subject matter of two separate appeals, one
by the State and another by the Corporation and both these appeals were
dismissed by the Division Bench by the impugned judgment and order and that is
how the Corporation and the State are before us in these appeals on grant of
Special Leave to appeal under Article 136 of the Constitution of India.
RIVAL
CONTENTIONS:
Shri G.L.Sanghi,
learned senior counsel appearing for the Corporation, vehemently contended that
the settlement of 28th July, 1988 could not survive after 16th July, 1996 when
the Union ceased to be a recognised Union of employees and till a new
bargaining agent emerged by way of recognition, the respondent Union could not rely
upon the terms of the earlier settlement of 28th July, 1988. It was next
contended that in any case the said settlement had ceased to operate and was
validly terminated by the Corporation by the impugned Notification dated 21st Sept., 1993 as the State had already directed
the Corporation to withdraw the Pay Roll Check of Facility given to the Union by the earlier agreement dated 28th July 1988. It was alternatively contended
that in any case the said earlier settlement dated 28th July, 1988 ceased to operate
also on the ground that subsequent to the said Notification a second settlement
was arrived at between the parties on the subject matter on 8th Sept. 1994 and
later on 5th Dec. 1994 and even thereafter in the light of the latter
settlements between the parties on 16th Feb. 1995, 10th Oct., 1995 and 27th
Dec.
1995.
Because of these settlements the parties agreed to get clearance and approval
from the State on the question of continuance of Pay Roll Check-off Facility to
be given to the members of the Union and as such approval was not forthcoming,
the earlier right flowing from the Settlement of 28th July, 1988 to the Union
did not survive any further.
The
State did not approve the continuance of the said Pay Roll Check off Facility
to the respondent Union.
Consequently,
there remained no binding settlement between the parties on the subject. Hence
the writ petition was required to be dismissed and was wrongly allowed by the
learned Single Judge and the said decision was erroneously confirmed by the Division
Bench of the High Court. It was also contended by Shri Sanghi that after 1996
the Corporation itself got trifurcated into three independent statutory
Corporations and hence also the earlier settlement of 1988 did not survive any
further.
Shri S.Vijay
Shankar, learned Advocate General appearing for the State of Karnataka, in
support of the appeals of the State, contended that the learned Single Judge
had patently erred in law in taking the view that under Section 34 of the
Corporation Act, the State could not issue the impugned order dated 10th Sept.
1993 and that it was not the general order contemplated by the side section.
He
further submitted, placing reliance on various provisions of the Corporation
Act, that the State Govt. is the monitoring authority so far as the functioning
of the Corporation is concerned and it could not be said that the State had no
role to play in regulating the working of the Corporation or in issuing
appropriate instructions to the Corporation on relevant points to be placed for
consideration of the Corporation. He therefore, contended that the Govt. Order
dated 10th Sept., 1993 could not have been found fault
with by the High Court.
Shri M.C.Narsimhan,
learned counsel for the Union on the other hand, submitted that
once there is a binding settlement regarding the Pay Roll Check off Facility
holding the field between the parties from 28th July 1988 till the said settlement was
legally terminated as required by Section 19(2) of the ID Act it remains
binding on the Corporation. That whether the Corporation subsequently got
trifurcated or not becomes irrelevant as even to the successors of the
Corporation the settlement would be binding. It was next submitted that the
Notification of the Corporation dated 21st Sept. 1993 cannot be treated to be a notice as
contemplated by Section 19(2) of the ID Act. Even assuming that it was such a
notice, the binding effect of the settlement of 1988 would not come to an end
automatically till a fresh settlement on the topic is substituted by negotiations
between the parties, as was clearly laid down in the decision of three Judge
Bench of D.J.Bahadur & Ors. 1981(1) SCR 1083. It was then submitted that
the Memorandum of Understanding dated 10th May, 1993 was in connection with entirely
different demands put forward by the Union
for consideration of the Corporation.
That
it had nothing to do with the Pay Roll Check off Facility which was already
governed by a binding Settlement of 28th July, 1988. Consequently, there was no
occasion for the State to pass the impugned order dated 10th Sept. 1993 in connection with withdrawal of
the said facility by the Corporation. It was also contended that in any case
the said order could not be covered by Section 34 of the Corporation Act. That
the State had no power to direct the Corporation to commit breach of statutory
provisions of Sec. 19(2) of the ID Act. Nor could it issue any general
directions under Sec. 34 in connection with those industrial matters which were
already covered by binding settlements or awards under the ID Act. That such
general directions, if any, could be issued by the State for consideration of
the Corporation only on industrial matters which were not covered by any such
binding agreements or awards under the ID Act and when the field was open for
negotiations between the employees' Union and the Corporation wherein the
parties could take independent decisions in the first instance without
violating any of the provisions of the ID Act. It was, therefore, contended
that both the Govt. Order dated 10th Sept. 1993 and Notification dated 21st
Sept. 1993 were rightly set aside by the learned Single Judge and that decision
was rightly confirmed by the Division Bench of the High Court. It was also
submitted that the Union had not ceased to be the sole bargaining agent, as up
to 16th July 1996, it was already operating as a Union recognised by the
Corporation itself and thereafter it was not the case of the Corporation that
at any time by fresh referendum it had lost the majority of the membership of
the workers of the Corporation nor was it replaced by any other recognised
Union that the question of locus standi of the Union to maintain the
proceedings was neither raised before the learned Single Judge when he passed
the impugned judgment nor before the Division Bench which confirmed the
decision of the learned Single Judge.
In the
light of the aforesaid rival contentions the following points arise for our
determination:
1.
Whether the Union has locus standi to maintain the
writ petition as well as the present proceedings on behald of the workmen;
2. If
it has, whether the Govt. Order dated 10th Sept.
1993
was legal and valid and/or was uncalled for;
3.
Whether the impugned Notification issued by the Corporation on 21st Sept. 1993 was legal and valid; and
4.
What final order? We shall deal with these points seriatim.
Point
No.1:
So far
as the locus standi of the Union in the
present proceedings is concerned, it must be kept in view that the Corporation
itself by its order dated 24th December, 1987 granted recognition to the Union
as the sole bargaining agent for its members. It was noted by office memorandum
of the Corporation dated 24th
Dec. 1987 that the
Federation having secured 53.04% of the votes polled at the Corporation level
in the referendum held on 11th Dec. 1987,
the Corporation was pleased to accord recognition to the respondent Federation
as sole bargaining agent at the Corporation level. However, this was subject to
the conditions stipulated under Notification dated 30th April, 1987 which prescribed four years' period from the date of such
concerned. It is also not in dispute between the parties that even in the
subsequent referendum, the respondent Federation/Union secured 61.07% of votes
polled at the Corporation level and the Corporation by its Office Memorandum
dated 16th July, 1992 continued recognition to the Union as sole bargaining
agent subject to the conditions stipulated in the earlier Notification dated
3rd Dec. 1991.
It is
therefore, not in dispute between the parties that till 16th, 1996 respondent
Federation/Union can not challenge the Govt. Order dated 10th Sept. 1993 and the Consequent Notification
issued by the Corporation on 21st Sept. 1993.
On both these occasions the respondent Union
was admittedly a recognised Union of the
employees and had got the benefit of Pay Roll Check-off Facility under the
settlement of 28th July
1988. It is also
interesting to note that before the learned Single Judge only three questions
were posed for consideration in the light of the contentions of rival parties.
They
were as under :
"(i)
Whether this petition under Article 226 of the Constitution of India is not
maintainable in view of the question in controversy relates to the breach of
the Settlement? (ii) Whether the Govt. has lawful authority to interfere with
the Settlement validly made between the petitioner and the Corporation by
issuing direction under Sec.34 of the Act? (iii) Whether Annexure-A is a
direction under Sec.34 of the Act? The question of locus standi of the writ
petitioner the respondent Union, was not
even brought in issue. But even that apart, in appeals filed by the State and
the Corporation before the Division Bench which came to be decided by the
impugned common judgment dated 10th June, 1997,
no such contention appears to have been canvassed. It is also pertinent to note
that it is not the case of the Corporation that by any fresh referendum the
respondent Federation has lost its recognition as a sole bargaining agent on
account of its membership getting depleted and any other rival Union has emerged as a recognised Union having mustered sufficiently larger membership.
Consequently, the first point for determination as canvassed for our
consideration by the learned counsel for the appellants in found to be totally
devoid of any substance and stands rejected. To say the least, such objection
appears to have been waived by both the appellants before the learned Single
Judge as well as before the Division Bench and, therefore, also cannot be
countenanced. This point for determination, therefore, is answered in
affirmative in favour of the respondent Union
and against the appellants.
Point
No. 2:
That
takes us to point no. 2. So far as this point is concerned, it has to be kept
in view that the Pay Roll Check-off Facility was made available to the
respondent-Union by a binding settlement between the parties dated 28th July, 1988. This settlement was current when
the Memorandum of Understanding dated 10th May. 1993 came to be entered into
between the respondent Union and the Corporation. The said
Memorandum of Understanding dealt with various demands including revision of
pay scales. They are listed at item Nos. 1 to 23. In none of these demands,
there is any whisper about the then existing Pay Roll Check-off Facility
covered by the settelment of 28th July. 1988.
Paragraph
24 of the Memorandum on which strong reliance was palced by learned senior
counsel Shri Sanghi for Corporation, deserves to be noted in extenso. It is
therefore extracted as under ;
"24
SAVINGS:
Benefits
already granted under earlier Settlements excepting those covered under this
Settlement, facilities continuing by way of conventions and or practice to be
continued in respect of the employees who are in the services of the
Corporation as on the date of signing of this Settlement.
An
understanding has been reached on the above mentioned points in anticipation of
approval of the Board of Directors and the State Government. However, the issue
regarding free duty facility to R.Federation/R.Unions is left to the decision
of the State Govt.
The
caption of paragraph 24 clearly indicates that it provides a saving clause.
Meaning thereby, it seeks to continue the benefits and facilities which might
have been available to the workmen and their Union under the earlier settlements.
It is obvious that the demands for which Memorandum of Understanding was
reached between the parties were pertaining to the workmen for whom they were
raised by their Union and the benefits of the understanding about these demands
were to be made available to the workmen concerned. It has to be kept in view
that the earlier settlement of 1988 between the parties regarding facility of
Pay Roll Check-off was not a benefit to the workmen but was a facility given to
the Union to directly get its membership contribution from the member-workers'
wages by their consent. This facility imposed no additional burden on the
workmen nor gave any additional benefit to them but grant of this facility only
resulted into an easy method made available to the Union to collect its
subscription from its members through the intervention of the Corporation. To
illustrate the point, if a member-employee was to get hundred rupees by way of
monthly wages and if he agreed with the Corporation that out of hundred rupees
payable to him, five rupees may be deducted at source and paid over to his
Union for discharging his obligation to pay monthly membership fee, the
Corporation would not suffer any additional financial burden thereby as it had
the obligation to pay full hundred rupees by way of wages to the workmen having
taken work from him for the month. Similarly, the workmen also would not get
any benefit thereby as he had earned rupees hundred in full and on his own
request five rupees were to go directly to the Union by way of membership fee
which otherwise he would have been required to pay prom his wages after
receiving Rs. 100/-. Therefore, the scheme of pay Roll Check-off Facts
conferred a facility to the Union of workmen without conferring any extra
benefit to the workmen or imposing any greater financial burden on the
Corporation. In the light of the aforesaid scheme, the Pay Roll Check-off
Facility was made available to the respondent Union pursuant to the binding
settlement of 28th July, 1988 by way of a tripartite agreement amongst the
Union worker Member concerned and the Corporation. We have to see as to what is
the scope and iambic of aforesaid clause 24 of the Memorandum of Understanding
dated 10th May, 1993 vis-a-vis this scheme. The first part of clause 24 deals
with benefits already granted under earlier settlements but excepting those
covered by the settlement at hand namely the Memorandum of Understanding. These
benefits were to be continued for the employees who were in the service of the
Corporation on the date of signing of the settlement. They were obviously
benefits already made available to the workmen under any earlier settlements.
Pay Roll Check-off facility, as noted earlier, cannot be considered to be a
benefit available to the workmen. At the most, it will be a facility to the
Union to get an ensured method of securing membership fees from its members on
regular basis. The first part of paragraph 24 states that facilities continuing
by way of conventions and or practice will be continued. It is obvious that
such facilities may include any of the then available facilities to the Union
or even to workmen.
However
facility given to the Union of getting benefit of the scheme of Pay Roll
Check-off is obviously not a facility available to workmen. It is available
only to the Union, that too under a binding settlement and not by way of
convention or practice. Such a facility will not be covered by latter part of
first paragraph of clause 24 as the facilities contemplated therein refer to
only those which were continuing by way of conventions and or practice.
Hence,
this facility was not contemplated even by the first part of paragraph 24 of
the Memorandum of Understanding. If that is so, the second part of paragraph 24
also would be out of picture so far as Pay Roll Check-off facility available to
respondent Union under the agreement of 28th July, 1988 was concerned. The
second part of paragraph 24 provides for an understanding which had been
reached on the earlier mentioned points in anticipation of approval of the Board
of Directors or the State Govt. It is difficult to appreciate how it could be
said that any understanding was reached on Pay Roll Check-off Facility covered
by any of the points mentioned in the Memorandum of Understanding.
Understanding
reached on the points mentioned in second part of paragraph 24 naturally
referred to the points mentioned from paragraphs 1 to 23 of the Memorandum of
Understanding.
It
cannot refer to the saving clause mentioned in the very same paragraph 24. We,
therefore, cannot accept the contention of learned senior counsel Shri Sanghi
that the phrase "the above mentioned points" as referred to in second
part of paragraph 24 of the Memorandum of Understanding would also cover the
first part of paragraph 24. But even that apart, assuming that what Shri Sanghi
contends is right, even then the first part of paragraph 24 does not cover any
understanding regarding the Pay Roll Check-off facility given to the Union by settlement as seen earlier.
Thus,
neither first part of paragraph 24 nor its second part can apply to the
question of Pay Roll Check-off Facility.
for
all these reasons, therefore, reliance placed on paragraph 24 of the Memorandum
of Understanding dated 10th
May 1993 by Shri Sanghi,
learned senior counsel for the Corporation, for subjecting the earlier granted
Pay Roll Check-off facility to the future approval of the State is not of any
avail.
We,
accordingly hold that paragraph 24 of the Memorandum of Understanding did not
touch or cover in its sweep the Pay Roll Check-off Facility available to the
respondent Union as per the binding settlement of 28th July, 1988. If that is so, there was no
occasion for the State in the light of the aforesaid Memorandum of
Understanding to pass the impugned Government Order dated 10th Sept., 1993, on
a wrong assumption that it was called upon to make any observations or convey
its decision whether it approved or did not approve the grant of Pay Roll
Check-off Facility to the respondent Union. The proceedings of the Govt. of
Karnataka which are at page 110 of Vol. 1 of the paper book clearly mentioned
as its subject, List of demands submitted by KSRTC Staff & Workers
Federation and also referred to the D.O.Letter dated 13th July, 1993 from the Chairman & Managing
Director of the Corporation. The Preamble of the impugned G.O. issued by State
recites that the Memorandum of Understanding arrived at between the Chairman
& Managing Director of the Corporation, and the Management of Corporation
and KSRTC Staff & Workers Federation had been signed on 10th May, 1993 in anticipation of approval of the
Board of Directors of the Corporation and the Govt. It is in that light that
the scope of the Govt. Order dated 10th Sept. 1993 is to be appreciated. It states
that after examining in detail the proposal of the Corporation, the Govt. had
accorded approval to the understanding between the parties with modifications
and subject to the conditions mentioned in the said order. It becomes at once
clear that even the State of Karnataka
thought that it was called upon to consider whether to approve or not to
approve the settlement on various demands as proposed in the Memorandum of
Understanding dated 10th
May, 1993. Twenty two
such items are listed in the Govt. Order dated 10th Sept. 1993.
Nowhere
we find a whisper about the Pay Roll Check-off Facility which was already made
available to the respondent Union by the
binding settlement of 28th
July, 1988.
However,
when we come to conditions mentioned in the impugned Govt. Order dated 10th
Sept. 1993 we find Condition No.2 to the effect that the general directions
under Section 34 of the Corporation Act. The decision of the learned Single
Judge as confirmed by the Division Bench can be sustained on the short ground
that the Govt. Order dated 10th Sept. 1993 laying down the aforesaid impugned
Condition No. 2 in connection with Pay Roll Check-off Facility was ex-facie
uncalled for and, therefore, the said Govt. Memorandum in so far as it referred
to Condition No.2 was not required to be acted upon by the Corporation. We keep
the wider question about the applicability of Sec. 34 open for consideration in
an appropriate case. We hold that it was not necessary for the learned Single
Judge to go into this wider question for voiding the Govt. Memorandum dated
10th Sept. 1993 by interpreting sec. 34 of the Corporation Act. Bofore parting
with the discussion on this point, we may briefly refer to written submissions
filed on behalf of the State of Karnataka and the Corporation.
We may
consider in the first instance the written submissions filed on behalf of the
State of Karnataka along with the Management shall not take the responsibility
of collecting donations or monthly subscriptions from the employees on behalf
of the recognised. Federation or Unions. Condition No.2 as mentioned in the
impugned Govt. Order dated 10th Sept. 1993, to say the least, was clearly
uncalled for and dehors the very scheme and ambit of the Memorandum, as noted
earlier, had nothing to do with the Pay Roll Check-off Facility already made
available to the Union by a binding settlement between the Corporation and the
Union and it was holding the field at least by the time the order dated 10th
Sept. 1993 saw the light of the day. It must, therefore, be held that Condition
No.2 as imposed in the impugned Govt. Memo dated 10th Sept. 1993 was totally
ultra vires and uncalled for and that the State had no occasion to lay down
such a condition in connection with existing binding Pay Roll Check-off
Facility. Once this conclusion is reached, it becomes obvious that the aforesaid
condition contained in the impugned Memo must be held to be null and void and
inoperative at law. Consequently, it is not necessary for us to examine the
wider question canvassed by learned Advocate General for the State of Karnataka
whether the State could issue such Cabinet Note in connection with the charter
of demands submitted by KSRTC Staff and Workers Federation. So far as Pay Roll
Check-off Facility is concerned, it has to be kept in view that Free Duty
Check-off facility was substituted by a scheme of direct deduction from the employees'wages
the amount of subscription for direct payment to their union, which became Pay
Roll Check-off Facility in place of duty free facility.
It is
this Pay Roll Check-off Facility in place of duty free facility. It is this Pay
Roll Check-off Facility which remains binding as a settlement under the ID Act
between the parties. As admitted in paragraph 7 of the written submissions, the
said facility which became a part of the statutory settlement of July 1989 was
approved by the State Govt. However, it is not correct to submit as mentioned
in paragraph 9 of the written submissions, that the Memorandum of Understanding
dated 10th May, 1993, specially paragraph 24 dealing with Free Duty Facility
covered Check-off Facility which was an off shoot of Free Duty Facility. Free
Duty facility had ceased to have any connection with the subsequent Pay Roll
Check-off Facility as per the aforesaid settlement. Subsequently, paragraph 24
of the Memorandum of Understanding referred to different type of facility
wherein Union's office bearers were to be given Free Duty Off for conducting
their Union's activities which has nothing to do with Pay Roll Check-off
Facility. Consequently, the rest of the contentions in the written submissions
regarding the question of Pay Roll Check-off Facility being placed for
consideration of the Govt. would not survive. As noted earlier, the
Federation's agreement to discuss demands including Check-off Facility at the
Govt. level would not amount to substitution of the already binding settlement
regarding Pay Roll Check-off Facility. Consequently, it cannot be said as tried
to be submitted on behalf of the State of Karnataka in the written submissions, that the Cabinet Note imposing Condition
no. 2 regarding not undertaking the responsibility of collecting the monthly
subscription from employees on behalf of the recognised Federation or Union by the Corporation amounted to substitution of the
earlier binding settlement. At the highest it remained in the realm of a mere
suggestion for future guidance of the Corporation. It must be held to be beyond
the scope of the demands put forward under the Memorandum of Settlement for
approval of the State Govt. It has to be noted that Duty Free Facility covered
by Item No.24 of the Memorandum of Settlement pertained to giving duty free
work for trade union's activities as clearly mentioned by Condition No.3
referred to in Cabinet Note itself.
Hence,
the written submissions filed on behalf of the State of Karnataka do not advance its case any
further. It is also easy to visualise that in exercise of powers conferred
under Section 34 of the Corporation Act, the State of Karnataka could not have
directed the Corporation to commit breach of any binding settlement operative
between the parties under Section 18(1) of the ID Act or to make the
Corporation liable for criminal action in this connection.
It has
to be noted that under Section 29 of the ID Act, any party who commits breach
of a binding settlement would be liable to be prosecuted and the punishment may
extend even to six months' imprisonment. It is also not possible to agree with
the contention canvassed in the written submissions that because by way of an
interim order of this Court the parties were directed to arrive at some
amicable settlement of the dispute and which did not fructify, it can be said
that the said order of the Govt. declining to restore the Check-off facility
had put an end to the entire controversy in the present case. If the Govt. had
approved a modified settlement in this connection and if that had resulted into
a fresh agreement between the parties regarding Pay Roll Check-off Facility
then it could have become a new binding settlement between the parties. But
that eventually had never occurred. Hence, the efficacy ad binding nature of
the earlier settlement did not get whittled down in the least. It must,
therefore, be held that the Govt. Order dated 10th Sept. 1993 was neither legal
nor was it called for in the facts and circumstances of the case.
So far
as the written submissions filed on behalf of the Corporation are concerned,
they seek to reiterate what was submitted earlier and which has been considered
and rejected in the earlier part of this judgment. Reliance placed on the
settlement dated 27.12.1995 for replacing the earlier binding settlement of
1988 cannot be countenanced for the simple reason that all that was agreed to
between the parties in the said settlement of December 1995 was to the effect
that the Federation was to discuss the demand relating to Check-off Facility at
the Govt. level. Thus, it was merely an agreement to discuss but it had not
culminated into any fresh settlement so as to supersede the earlier settlement.
The submission that after 15th July, 1996, recognition of Respondent No.1 came
to an end cannot be countenanced for the simple reason that it is not the case
of the Corporation that in a fresh referendum any other Union had emerged as
the majority Union and got recognition.
It has
also to be kept in view that even assuming that settlement of 1988 had thereby
come to an end, its binding effect as contractual obligation continued till it
was replaced by other settlement as ruled by this Court in The Life Insurance
Corporation of India vs. D.J.Bahadur & Ors. (supra). It is also difficult
to appreciate how the case of check-off Facility is not termed as condition of
service as by the said facility the Management had agreed to deduct from the
wages of the employees the requisite amount to be paid to the Union by was of
subscription of the employees. Such permissible deduction from the wages cannot
but be treated as condition of service. The contention that from 21st Sept.,
1993 Check-off Facility has been given up by the Corporation cannot be of any
assistance to the Corporation for the simple reason that it would amount to
violation of a binding settlement by the Corporation which as per Section 29 of
the ID Act would be penal. NO.advantage in law, therefore, can be taken by the
Corporation from its unilateral withdrawal of binding Check-off Facility as per
settlement of 1988. It is also not possible to countenance the submission that
thought the Check-off Facility may continue to exist de jure it would cease to
exist de facto. Such unilateral withdrawal of Check-off Facility by one of the
parties cannot be treated to be an act which is legal and valid. Minutes of the
meeting held between the representatives of the Corporation and Respondent NO.1
Union held on 18th October, 1995 also cannot amount to substitution of a fresh
settlement on the Pay Roll Check-off Facility. To reiterate, the Federation's
only agreement was to discuss demands relating to check off and trade union
facilities at the Govt. Level. So long as the said discussion had not
culminated into any other binding settlement on the topic the earlier
settlement cannot be said to have been replaced or substituted by any other
validly binding settlement. Consequently, the aforesaid written submissions do
not advance the case of the appellant.
We, thereforem
answer point No.2 by holding that the Govt. Order dated 10th Sept., 1993 in
connection with the impugned Pay Roll Check-off Facility was neither legal nor
valid and was totally uncalled for. This point is, therefore, answered against
the appellants and in favour of the respondent Union subject to the
clarification that the submission canvassed by the learned Advocate General for
the State of Karnataka about the correct interpretation of Section 34 of the
Corporation Act in support of the Govt. appeals is not required to be answered.
Question of law on this aspect is kept open for consideration in an appropriate
case as and when the occasion arises.
Point
No.3:
So far
as this point is concerned, it is obvious that the impugned Notification dated
21st Sept. 1993 issued by the Corporation was based solely on the State of
Karnataka's order dated 10th Sept. 1993. Once that order is held by us to be
uncalled for and inoperative in law, the consequential Notification dated 21st
Sept., 1993 issued by the Corporation must fall through as a logical corollary
of our aforesaid decision. Therefore, no fault can be found with the ultimate
decision rendered by learned Single Judge voiding not only Govt. Order dated
10th Sept. 1993 but also the consequential Notification of Corporation dated
21st Sept. 1993.
But
even that apart, the said Notification is liable to be set aside also on a
different ground. It has to be kept in view that Pay Roll Check-off Facility
was made available to the respondent Union
dated 28th July, 1988. It is true that in para 7 of the
said settlement it was mentioned that the settlement was valid till the
recognition accorded to the Federation existed or would continue to be in force
until both the parties terminated the terms by mutual consent earlier. It is not
in dispute between the parties that the settlement of 28th July, 1988remained
in force as the recognition granted to the respondent Union continued at least till 16th July 1996. It is also pertinent to note that there is no evidence
that the Union lost such recognition subsequently
by any further referendum. Be that as it may, the date on which the impugned
Notification dated 21st
Sept., 1993 was issued
by the Corporation, the said Settlement was fully operative and binding between
the parties. In order to salvage the situation for the Corporation, Mr.Sanghi,
learned senior counsel submitted in the alternative that as per para 7 of the
said settlement it had to continue until both the parties terminated the
settlement by mutual consent earlier. Mr.Sanghi submitted that the impugned
Notification issued by the Corporation on 21st Sept. 1993 itself resulted into
termination of the said submission is to be stated to be rejected. The
contingency contemplated by second part of para 7 of the settlement dated 28th
July, 1988 could apply only when both the parties namely, the Corporation as
well as the respondent Union by mutual consent, terminated the said settlement
earlier i.e.during the time the Union remained a recognised Union.
It
obviously could not be submitted by Shri sanghi for the Corporation that the
unilateral Notification dated 21st Sept. 1993
issued by the Corporation brought about the termination of the settlement of 28th July, 1988 by mutual consent of Corporation
and the respondent Union.
Consequently,
the second part of para 7 of the said settlement could never have applied to
the facts of the present case. Having realised this difficulty, Mr.Sanghi,
learned senior counsel for the Corporation, submitted that, in any case, the
impugned order dated 21st
Sept. 1993 of the
Corporation can be treated to be a Noitce under Section 19(2) of the ID Act. In
this connection, it is necessary to refer to Section 19 sub-sections (1) &
(2) of the ID Act.
They
read as under :
"19.
Period of operation of Settlements and awards.
1. A settlemtn
shall come into operation on such date as is agreed upon by the parties to the
dispute, and if no date is agreed upon on the date on which the memorandum of
the Settlement is signed by the parties to the dispute.
2.
Such Settlement shall be binding for such period as is agreed upon by the
parties, and if no such period is agreed upon, for a period of six months [from
the date on which the memorandum of Settlement is signed by the parties to the
dispute], and shall continue to be binding on the parties after the expiry of
the period aforesaid, until the expiry of two months from the date on which a
notice in writing of an intention to terminate the Settlement is given by one
of the parties to the other party or parties to the Settlement.
It
cannot be disputed that the settlemtn in question came into force on 28th July, 1988 when it was signed by both the
parties. A question arises as to how far the binding effect of that settlemtn
may continue between the parties. As seen earlier, Section 19 (2) clearly
provides that such settlemtn shall be binding for such period as is agreed upon
by the parties. Para 7 of the said settlement as seen earlier, lays down the
period for the currency of the settlement as it clearly provides that the settlement
would be valid till the recognition accorded to the Federation existed. As we
have seen earlier, the recognition to the respondent Federation continued all
throughout and as on date even it is not shown that its recognition has stood
superseded by any recognition given to any rival and competing recognised
Union. In any case, by the time of the impugned Notification dated 21st Sept.
1993 that period had never ended. Similarly, there was no earlier termination
of settlement by mutual consent. Till either of these eventualities occurred,
there was no occasion for the Corporation to terminate the settlement under
Section 19 sub-section (2) by any notice as it is clearly laid down therein
that the settlement shall be binding between the parties for the agreed periond
and shall also continue to be binding even after the expiry of the period until
the expiry of two months from the date on which a notice in writing of an
intention to terminate the settlement is given by one of the partiws to the orther
party. So even assuming that the Corporation could have unilaterally terminated
such settlement it could not have done so during the time the settlement was
operative on its own terms, meaning thereby, till the recognition accorded to
the Union continued or till any earlier termination by mutual consent. As seen
earlier, by 21st Sept. 1993 none of these contingencies had occurred.
Consequently, the so called unilateral termination of the settlement by the
Notification of Corporation dated 21st Sept. 1993 must be held to be completely
ultra vires toe powers of the Corporation under Section 19 sub-section (2). But
even that apart, it has to be observed that the Corporation had not given two
month's notice in any case as contemplated by Section 19 sub-section (2) for
terminating the said binding settlement, though such an occasion had still not
arisen for the Corporation as the binding effect of the settlement during the
period provided therein as per clause 7 had not come to an end by then.
Even
on that ground the notification dated 21st Sept. 1993 fell foul on the
touchstone of Section 19(2) of the ID Act, having not complied with the said
provision.
But
even on an assumption that the aforesaid notification satisfied the
requirements of Section 19 sub-section (2) for terminating the settlement dated
28th July, 1988, even then till a new settlement laying down fresh terms of
settlement on the question of Pay Roll Check-off facility saw the light of the
day, the binding effect of the 1988 settlement has to continue to bind the
parties by way of contractual obligations. This aspect is well-settled by a
three Judge Bench decision of this Court Ors. (supra) Krishna Iyer, J.,
speaking for the Supreme Court at page 1114 of the Report, has made the
following pertinent observations:
"The
core question that first falls for consideration is as to whether the
Settlements of 1974 are still in force.
There
are three stages or phases with different legal effects in the life of an award
or Settlement. There is a specific period contractually or statutorily fixed as
the period of operation. Thereafter, the award or Settlement does not become
non est but continues to be binding. This is the second chapter of legal
efficacy but qualitatively different as we will presently show. Then comes the
last phase. If notice of intention to terminate is given under S.19(2) or 19(6)
then the third stage opens where the award or the Settlement does survive and
is in force between the parties as a contract which has superseded the earlier
contract and subsists until a new award or negotiated Settlement takes its
place. Like Nature, Law abhors a vacuum and even on the notice of termination
under S.19(2) or (6) the sequence and consequence cannot be just void but a
continuance of the earlier terms, but with liberty to both sides to raise
disputes negotiate Settlements or seek a reference and award. Until such a new
contract or award replaces the previous one, the former Settlement or award
will regulate the relations between the parties. Such is the understanding of
industrial law at least for 30 years as precedents of the High Courts and of
this court bear testimony. To hold to the contrary is to invite industrial
chaos by an interpretation of the ID Act whose primary purpose is to obviate
such a situation and to provide for industrial peace. To distil from the
provisions of S.19 a conclusion diametrically opposite of the objective,
intendment and effect of the Section is an interpretative stultification of the
statutory ethos and purpose. Industrial law frowns upon a lawless void and
under general law the contract of service created by an award or settlement
lives so long as a new lawful contract is brought into being. To argue
otherwise is to frustrate the rule of law. If law is a means to an end - order in
society can in commit functional harakiri by leaving a conflict situation to
lawless void?" In view of the aforesaid settled legal position, therefore,
if any unilateral notice to terminate the binding settlement of 28th July 1988
was issued by the Corporation which on the facts of the present case, is found
not to have been issued even then till any new settlement on the question of
grant of Pay Roll Check-off Facility was substituted by parties, the legally
binding effects of the earlier settlement of 1988 would continue to operate and
the Corporation will then be contractually bound to confer pay roll check-off
facility to the Union. Consequently, there was no occasion for the Corporation
to issue the impugned Notification dated 21st Sept. 1993 even on this ground as
it was clearly violative of the mandatory requirement of Section 19 sub-section
(2) and was contrary to the settled legal position as aforesaid.
It
wad, therefore, a still born Notification and rightly set aside by the learned
Single Judge on that ground and also by the Division Bench of the High Court.
We may
now refer to one last ditch effort made by Shri Sanghi, learned senior counsel
for the Corporation. He submitted that at least by latter settlements dated 8th
Sept. 1994, 5th Dec. 1994, 16th Feb., 1995, 10th Oct., 1995 and 27th Dec. 1995,
the earlier settlement of 28th July 1988 was given a complete go by so far as
the Pay Roll Check-off facility was concerned and even on that ground the
earlier settlement should be taken to have become non est.
In our
view, this valiant attempt on the part of learned senior counsel Shri sanghi,
is completely futile. When we turn to these latter settlements, it becomes at
once clear that the impugned Notification of 21st Sept. 1993 which is found to
have directly conflicted with Section 19(2) of the ID Act therefore, was a
still born one could not get life because of any subsequent settlements as the
subsequent settlement in terms had not provided for a new scheme of Pay Roll
Check-off Facility to be binding between the parties.
Let us
try to see what these other settlements had done.
Settlement
of 8th Sept. 1994 under Section 2(q) of the ID Act between the respondent Union
and the Corporation recites the various demands annexed to the strike notice
given by the respondent Union on 29th Aug. 1994. Out of the listed demands are
demand Nos. 4 & 5. So far as demand No. 4 is concerned, it deals with
"Collection of donations to the recognised Union in terms of the
Memorandum of settlement dated 17th July, 1989". We are not concerned with
this demand in the present case. Demand No.5 deals with "Collection of
Union subscription through check-off facility in terms of the Settlement dated
28th July, 1988". This demand clearly shows that despite there being a
settlement of 28th July, 1988, the Corporation, because of its impugned stand
reflected by its Notification dated 21st Sept. 1993 had withdrawn the check-off
facility. Therefore, it was the contention of the respondent Union that the
said withdrawal was contrary to the settlement dated 28th July, 1988. This
demand therefore, in respect of giving a go by to the settlement dated 28th
July, 1988 regarding collection of subscription through the check-off facility
tried to reiterate the said binding terms of the settlement and only grievance
was that these binding terms of settlement were being violated by the
Corporation and hence the demand was to recall such withdrawal. The Federation
in para 2 of the said settlement clearly mentioned that, out of the nine
demands made by the Federation, for the demands at Nos. 1 to 5, the Federation
would reserve its right to pursue with the Govt. of Karnataka. Meaning thereby
the Federation agreed with the Corporation to take up the matter with the Govt.
of Karnataka and to persuade it to call upon the Corporation to withdraw its
impugned order dated 21st Sept., 1993 and to restore the facility available
under binding terms of settlement dated 28th July., 1988. To say the least,
this agreement between the parties as per the settlement of 8th Sept., 1994
cannot be said to have whittled down the settlement dated 28th July, 1988 nor
can it neb said to have substituted it by any fresh scheme of check-off
facility. All that the Union can be said to have agreed with the Corporation
was to pursue the matter with the Govt. for enforcement of the terms of the
earlier Settlement of 1988 and for doing the needful in this connection.
Consequently, the said Settlement of 8th Sept. 1994 does not touch the core
question, namely, whether there was any subsequent binding Settlement between
the parties giving a go by to or modifying the settled terms of Pay Roll
Check-off facility as emanating from the binding Settlement of 28th July, 1988.
Shri sanghi, learned senior counsel, then took us to the second settlement
dated 5th Dec. 1994.
It
appears that the said settlement was also in connection with the same demands
which were mentioned in the earlier strike notice referred to in the Section
2(p) settlement dated 8th Sept., 1994 and on these demands also no fresh
settlement had been arrived at between the parties. Thus, the parties appear to
have been trying to arrive at an amicable settlement in connection with the
grievances of the Union. That the check-off facility was wrongly withdrawn
though they were available in terms of settlement dated 28th July., 1988. In
fact, it appears that the said demand of the Union which resulted into the aforesaid two settlements dated 8th Sept., 1994 & 5th Dec., 1994 centered round the question enforcement of the terms of
settlement dated 28th
July, 1988 against the
Corporations rather than giving a go by to them. that demand had nothing to do
with any modification of the terms of settlement dated 28th July, 1998. The grievance of the Union was against non-implementation of the terms of the
settlement and not for their modification. Even at Annexure-A to the said
settlement of 5th Dec.,
1994 was the very same
settlement that was arrived at on 8th Sept. 1994. Our observations in connection with settlement of 8th Sept., 1994. Our observation in connection with
settlement of 8th
Sept., 1994 would,
therefore, ipso facto apply to the terms of settlement dated 5th Dec. 1994. In short, none of these two
settlements ever whispered about any agreed settlement between the parties for
modifying any of the terms of the settlement dated 28th July, 1988 pertaining to the Pay Roll Check-off facility made
available to the Union by the Corporation as per the said
settlement. It is therefore, not possible to agree with Shri Sanghi, learned
senior counsel for the Corporation that by these latter two settlements, the
earlier settlement of 28th
July, 1988 was given a
go by consent of parties. On the contrary, as we have seen earlier, instead of
giving a go by to the terms of the settlement, the Union was insisting upon complying with the terms of the
said settlement. It was not the case of substituting the terms of the said
settlement but it was a case of reiterating those terms so far as the Union was concerned. We then turn to settlement dated 16th Feb., 1995. A mere look at the said settlement
shows that it has nothing to do with the Pay Roll Check-off Facility made
available to the respondent Union by the settlement of 28th July, 1988.
Therefore, this settlement is miles away from the terms settled on 28th July, 1988 between the parties regarding Pay
Roll Check-off Facility. It is totally irrelevant for deciding the question as
tried to be raised by Shri Sanghi regarding substitution of the terms of
settlement of 1988 by the settlement of 16th Feb., 1995.
Same
is the position regarding the settlement of 10th Oct., 1995 on which reliance was placed by Shri sanghi. The said
settlement also does not deal with the question of Pay Roll Check-off Facility.
That takes us to the last settlement dated 27th Dec. 1995 strongly pressed in service by Shri
Sanghi for the Corporation. It is true that in the short recital of the case as
found in the settlement dated 27th Dec., 1995, it has been mentioned that the
Federation reserves its right to pursue with the Govt. in respect of these
demands, one of which was regarding restoration of Pay Roll Check-off Facility,
collection of donations to the recognised Unions in terms of Memorandum of
Settlement dated 17th July, 1989 and earlier settlements. But that only shows
that the grievance of respondent Federation that despite the earlier settlement
the Pay Roll Check-off Facility was withdrawn by the Corporation and was
required to be restored. Meaning thereby, the binding effect of the earlier
settlement was sought to be reinforced. Coming to the express terms of the
settlement as mentioned in the said settlement dated 27th Dec., 1995, we find
in para 5 a recital that Federation agreed to discuss about the said facility
at the Govt. level. We fail to appreciate how this agreement to discuss the
demands amounts to any express or implied substitution of the terms of binding
settlement dated 28th July, 1988 in connection with already granted Pay Roll
Check-off Facility to the respondent Union. It appears clear that on account of
the issuance of the impugned Govt.
Order
dated 10th Sept., 1993 and the consequential Notification
dated 21st Sept., 1993 by the Corporation the Corporation
had unilaterally withdrawn the Pay Roll Check-off Facility granted to the Union and that too without following the due procedure of
Section 19 sub-section (2) of the ID Act. On account of such illegal act on the
part of the Corporation, strike notices were given by the Respondent Union and
the Union had shown agreement to discuss the
matter across the table. This agreement clearly showed that the respondent Union was amenable to an amicable settlement of the
dispute so that a fresh settlement could be entered into in substitution of the
settlement dated 28th
July, 1988. But that
eventuality never occurred. Result was that the earlier settlement dated 28th
July, 1988 never got substituted by a fresh settlement on the topic and the
binding effect of the earlier settlement dated 28th July, 1988 in regard to Pay
Roll Check-off Facility continued to operate all through-out. Consequently, it
must be held that none of the latter settlements on which strong reliance was
placed by Shri Sanghi, learned senior counsel for the Corporation, to cull out
any express or even implied substitution of the earlier settlement dated 28th
July, 1988 or for exhibiting any conduct on the part of the respondent Union of
giving a go by to the terms of the earlier settlement which gave it the said
facility of pay roll check off can be of any avail to Shri Sanghi. It must be
held that the settlement of 28th July, 1988 granting pay roll check-off
facility to the respondent Union has continued to operate all throughout
without in any way being substituted by any fresh settlement between the
parties in this connection.
The
submission made by Shri Sanghi, learned senior counsel for the Corporation,
that the Corporation has now undergone trifurcation into three Corporations
also cannot be of any avail to him for the simple reason that such a contention
was not canvassed either before the learned Single Judge or before the Division
Bench. It is also bot brought out on the record as to how this trifurcation has
taken place and whether the subsequent successors-in-interest of the
Corporation have undertaken the liability of earlier existing settlements
entered into by their predecessor Corporation with the erstwhile Union.
All
these vised questions of fact cannot be permitted to be raised for the first
time in these present proceedings before us. Hence, the contention canvassed by
learned senior counsel for the Corporation on this additional ground also is
found to be devoid of any substance and cannot be entertained and is,
therefore, rejected. The third point, accordingly, is answered in negative
against the against the appellant and in favour of the respondents.
Before
parting with these proceedings, we may mention that an attempt was made by us
during the pendency of these proceedings at the SLP stage to enable the parties
to find some amicable solution of the problem with a view to ensuring industrial
peace and therefore, by interim order dated 27th Feb., 1998 it was suggested
that the State Govt. may have a fresh discussion with the respondent Union as
well as the Corporation in connection with the disputed item of check-off
facility. But unfortunately, no concrete result ensured and the parties could
not come to any amicable solution of the problem by arriving at a fresh
settlement on the question. Consequently, the appeals were heard on merits and
are being disposed of by this judgment. Point No. 4 As a result of our findings
on the aforesaid three points, the inevitable result is that these appeals fail
and are dismissed subject to the limited clarification that the question of
applicability of Sec. 34 of the Corporation Act to the impugned Govt. Order of
10th Sept., 1993 is kept open. There will be no order as to costs in the facts
and circumstances of the case.
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