Devarajan.N
1

Former Supreme Court Judge has passed a judgement on Wage negotiation principles. If anybody of our forum can explain about that. High Regards N.Devarajan
From India, Madras
welcomeumesh
141

Hi,

please read the above case here

regards,

Umesh Chaudhary

(welcomeumesh@yahoo.com)

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CASE NO.:

Appeal (civil) 7378 of 2003

PETITIONER:

Transmission Corpn., A.P. Ltd. & Ors.

RESPONDENT:

P. Ramachandra Rao & Anr

DATE OF JUDGMENT: 17/04/2006

BENCH:

ARIJIT PASAYAT & TARUN CHATTERJEE

JUDGMENT:

J U D G M E N T

ARIJIT PASAYAT, J.

Challenge in this appeal is to the judgment rendered by a

Division Bench of the Andhra Pradesh High Court dismissing

the writ appeal filed under Clause 15 of the Letters Patent.

Order of learned Single Judge allowing writ petition filed by

the respondents was affirmed.

Background facts in a nutshell are as follows:

Respondents retired from the services of the Andhra

Pradesh State Electricity Board (in short the 'Board") on

30.4.1990 after attaining the age of superannuation. The

Transmission Corporation of Andhra Pradesh Ltd. (in short the

'Corporation'), is the successor company of the Board which

came into existence with effect from 1.2.1990 by virtue of the

Andhra Pradesh State Electricity Reforms Act, 1998 (in short

the 'Reforms Act'). The pay scales of the employees were

revised with effect from 1.7.1990 by which time the

respondents herein were drawing maximum pay in the

concerned scale. The rational of fixing the date with effect from

1.7.1990 was that employees who retired prior to 1.7.1990 are

entitled to D.A. at the rate of 38% on the pension whereas the

D.A. payable to pensioners retired on or after 1.7.1990 is

12.4%, but not before the date of issue of the order. The

revised pay scales permitted grant of three annual increments

beyond the time scale in regard to those who had reached or

crossed the maximum pay as on 1.7.1986. However, in respect

of the respondents herein the additional amount was shown

as personal pay and the stagnation increments were adjusted

towards the said additional amount.

Questioning correctness of the action of the Corporation

and its functionaries the respondents herein filed writ a

petition. Prayer was to direct the appellants herein to fix their

pension and other terminal benefits at par with other UDCs.

retired on or after 1.7.1990 and to pay all the arrears of

pensions and other terminal benefits. Learned Single judge

having regard to the intended purpose of the scheme held that

the respondents have been discriminated while calculating the

pension on the ground that they had retired prior to the

introduction of the scheme. Stand of the employer in essence

was that the Board's proceedings Ms No 481 dated 4.2.1991

had application only to those who were on its rolls as on

1.7.1990. In view of the fact that the respondents retired on

30.4.1990 the said scheme has no application to them. In any

event the scheme was introduced keeping in view the

settlement dated 29.1.1991 entered into between the Wage

Negotiation Committee and the Board before the Joint

Commissioner of Labour and State Conciliation Officer in

terms of Section 12(3) of the Industrial Disputes Act, 1947 (in

short the 'Act') and the same cannot be the subject matter of

interpretation in the writ petition. In the Appeal its stand

before learned Single Judge was reiterated before the Division

Bench. Stand of the writ petitioners was that the learned

Single Judge was justified in its conclusion.

The Division Bench upheld the view taken by the learned

Single Judge. Placing reliance on the decision of this Court in

D.S. Nakara & Others V. Union of India (1983 (1) SCC 305) it

was held that the cut off date fixed was discriminatory.

In support of the appeal learned counsel for the appellant

highlighted that the learned Single Judge and the Division

Bench had not considered the issues in their proper

perspective. D.S. Nakara's case (supra) has no application to

the facts of the present case. There was no challenge to the

settlement and the only challenge relating to rational of fixing

the cut off date with effect from 1.7.1990. The conclusion that

the respondents were entitled to the stagnation increment

deducting the same from the personal pay is clearly tenable.

Learned counsel for the respondents on the other hand

supported the judgment of learned Single Judge as affirmed by

the Division Bench.

A brief reference to the factual position would be

necessary. Relevant portion of the Board's proceedings dated

4.2.1991 are as follows:

"The scales of pay of Office Staff, O& M

Staff, Construction Staff, Medical Staff, Fire

Fighting Staff, Security Staff and Teaching Staff

etc. were revised with effect from 1.7.86 in the

B.P. first read above as subsequently amended,

as per the negotiated settlements with the

employees Unions. The said settlements expired

on 30.6.90."

As result the earlier settlement expired on 30.6.1990 the

paras 5 & 6 are also relevant and they read as follows :

"The A.P.S.E. Board also directs that the

amount of stagnation increments not released

earlier in 1986 pay scales but adjusted against

P.P. shall now be released on 30.6.1990 but

effect shall be given from 1.7.1990 or from the

date of going over to the revised scales, as the

case may be, this amount will be taken into

account for the purpose of fixation of pay in

the revised pay scales.

The date of option for the revised pay scales

shall be 1.7.1990 or the date on which an

employee earns his next increment in the

existing scale of pay."

The notification issued on 4.2.1991 is in exercise of

powers conferred under Section 79(C) of the Electricity Supply

Act, 1948, which notified Boards' regulations. It is stated at

Para 1(ii) that the regulations shall be deemed to have come

into force with effect from 1.7.1990. In Clause 2(iv) it is stated

that 'Pensioner" means an employee who retired on or after

1.7.1990 but before the date of issue of the order. Grievance

of the writ petitioners basically was that the persons who

retired from service after 1.7.1990 were drawing more pension

than the writ petitioners. Learned Single judge referred to the

Memorandum of Settlement but did not attach much

importance to it. The Memorandum of Settlement clearly

shows that the period of settlement was from 1.7.1990 to

30.6.1994. Claim of the writ petitioners was that the employer

and its functionaries were liable to fix the pension and other

terminal benefits of the writ petitioners at par with the other

UDCs retired on or after 1.7.1990. As noted above, the

grievance was that the said category of persons was drawing

more pensions. It was pointed out that the revision of pay

scale in BPMs. No. 878 dated 5.10.1981 effective from

1.4.1981 was only for a period of 4 years and the same was

required to be revised after expiry of the period i.e. with effect

from 1.4.1985. The Board instead of revising the pay scales

with effect from 1.4.1985 revised the same with effect from

1.7.1986. It was, therefore, submitted that the classification

as done was violative of Article 14 of the Constitution of India,

1950 (in short the 'Constitution').

Learned Single Judge and the Division Bench clearly

overlooked the fact that there was no challenge to the

settlement. Undisputedly, the three stagnation increments

deducted from personal pay have been added to the basic pay.

There was no challenge to the settlement made under

Section 12(3) of the Act. No finding has been recorded by

either learned Single Judge or the Division Bench that the

modality adopted is wrong. It has to be noted that in terms of

the Fifth Schedule to the Act under Section 2(ra) as per Sr. No.

13 consequences flow for failure to implement the award,

settlement or agreement. There is no dispute that the Board's

decision is prospective. There is also no challenge to the

legality of the Board's decision on the ground that there is no

rational for fixing the date, except saying that it should have

been done from an earlier date i.e. 1985 and not from

1.7.1986 as done earlier. There was no challenge at the stage

it was done. The line of enquiry whether settlement was

unfair and unjust has been examined by this Court in several

decisions.

In Herbertsons Ltd. v. Workmen (1976) 4 SCC 736) this

Court called for a finding on the point whether the settlement

was fair and just and it is in the light of the findings of the

Tribunal that the appeal was disposed of. Goswami, J.

speaking for the three-Judge Bench made it clear that the

settlement cannot be judged on the touchstone of the

principles which are relevant for adjudication of an industrial

dispute. It was observed that the Tribunal fell into an error in

invoking the principles that should govern the adjudication of

a dispute regarding dearness allowance in judging whether the

settlement was just and fair. The rationale of this principle

was explained thus :

"25. There may be several factors that may

influence parties to come to a settlement as a

phased endeavour in the course of collective

bargaining. Once cordiality is established

between the employer and labour in arriving at

a settlement which operates well for the period

that is in force, there is always a likelihood of

further advances in the shape of improved

emoluments by voluntary settlement avoiding

friction and unhealthy litigation. This is the

quintessence of settlement which courts and

tribunals should endeavour to encourage. It is

in that spirit the settlement has to be judged

and not by the yardstick adopted in

scrutinizing an award in adjudication."

The line of enquiry whether settlement was unfair and

unjust in K.C.P. Ltd. v. Presiding Officer (1996) 10 SCC 446)

was adopted by a three-Judge Bench of this Court speaking

through Majumdar, J. It was observed at SCC p. 451,

paragraph 21 that:

"Under these circumstances, Respondents 3 to

14 also would be ordinarily bound by this

settlement entered into by their representative

Union with the Company unless it is shown

that the said settlement was ex facie, unfair,

unjust or mala fide."

The Court came to the conclusion that the settlement

cannot be characterised to be unfair or unjust. It was further

observed that "once this conclusion is reached it is obvious

that the entire industrial dispute should have been disposed of

in the light of this settlement". It was reiterated in the case of

Tata Engg. and Locomotive Co. Ltd. v. Workmen ((1981) 4 SCC

627) that :

"A settlement cannot be weighed in any golden

scales and the question whether it is just and

fair has to be answered on the basis of

principles different from those which come into

play when an industrial dispute is under

adjudication."

Earlier, it was observed :

"If the settlement had been arrived at by a vast

majority of the concerned workers with their

eyes open and was also accepted by them in its

totality, it must be presumed to be just and

fair and not liable to be ignored while deciding

the reference merely because a small number

of workers (in this case 71 i.e. 11.18 per cent)

were not parties to it or refused to accept it, or

because the Tribunal was of the opinion that

the workers deserved marginally higher

emoluments than they themselves thought

they did."

These aspects were highlighted in ITC Ltd. Workers'

Welfare Association and Anr v. Management of ITC Ltd. and

Another (2002(3) SCC 411.)

Exclusion of workmen retiring before the date fixed is no

good ground to characterize settlement as unjust or unfair. In

fact in the instant case there is no challenge to the legality of

the settlement.

As the settlement entered into in the course of

conciliation proceedings assumes crucial importance in the

present case, it is necessary for us to recapitulate the fairly

well-settled legal position and principles concerning the

binding effect of the settlement and the grounds on which the

settlement is vulnerable to attack in an industrial

adjudication. Analysing the relative scope of various clauses of

Section 18, this Court in the case of Barauni Refinery

Pragatisheel Shramik Parishad v. Indian Oil Corpn. Ltd. (1991)

1 SCC 4) succinctly summarized the position thus:

"Settlements are divided into two categories,

namely, (i) those arrived at outside the

conciliation proceedings [Section 18(i)] and (ii)

those arrived at in the course of conciliation

proceedings [Section 18(3)]. A settlement which

belongs to the first category has limited

application in that it merely binds the parties

to the agreement. But a settlement arrived at

in the course of conciliation proceedings with a

recognised majority union has extended

application as it will be binding on all

workmen of the establishment, even those who

belong to the minority union which had

objected to the same. To that extent it departs

from the ordinary law of contract. The object

obviously is to uphold the sanctity of

settlements reached with the active assistance

of the Conciliation Officer and to discourage an

individual employee or a minority union from

scuttling the settlement. There is an

underlying assumption that a settlement

reached with the help of the Conciliation

Officer must be fair and reasonable and can,

therefore, safely be made binding not only on

the workmen belonging to the union signing

the settlement but also on the others. That is

why a settlement arrived at in the course of

conciliation proceedings is put on par with an

award made by an adjudicatory authority."

As observed by this Court in Tata Engineering's case

(supra) a settlement cannot weigh in any golden scales and the

question whether it is just and fair has to be answered on the

basis of principles different from those which comes into play

when an industrial dispute is under adjudication. If the

settlement had been arrived at by a vast majority of concerned

workers with their eyes open and was also accepted by them

in its totality, it must be presumed to be just and fair and not

liable to be ignored while deciding the reference made under

the Act merely because a small number of workers were not

parties to it or refused to accept it or because the Tribunal was

on the opinion that the workers deserved marginally higher

emoluments than they themselves thought they did. The

decision in Herbertsons Ltd.'s case (supra) was followed.

As noted above there was no challenge to the settlement

which was the foundation for the Board's decision. A copy of

the Memorandum of Settlement under Section 12(3) of the Act

before the Joint Commissioner and Labour and State

Conciliation officer, Government of Andhra Pradesh,

Hyderabad was placed on record. On the basis of the

settlement, the Board's decision was taken. Paragraph 2 of

the proceedings is very significance and read as follows:

"A Wage Negotiation Committee was

therefore constituted by the Board in the B.P.

sixth read above. The committee held detailed

discussions with the representatives of the

unions and finally reached a negotiated

settlement with the recognized union under

the code of discipline on 29.1.1991 before the

Joint Commissioner of Labour and State

Conciliation Officer under Section 12(3) of I.D.

Act."

Above being the position the judgment of the learned

Single judge and that of the Division bench affirming the same

cannot be maintained and are, therefore, set aside. The

appeal is allowed but in the circumstances no order as to

costs.

From India, Delhi
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