Vaigai Thread Processors Ltd. v. J.T.M. Labour Union (W.A. No. 963 of 2004)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.BALAKRISHNAN NAIR & THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN TUESDAY, THE 16TH MARCH 2010 / 25TH PHALGUNA 1931 WA.No. 963 of 2004() -------------------AGAINST THE JUDGEMENT IN OP.20109/2002 Dated 06/04/2004 .................... APPELLANT(S): 1ST RESPONDENT: ----------------------------- M/S. VAIGAI THREAD PROCESSORS LTD., REPRESENTED BY ITS MANAGING DIRECTOR, KORATTY, THRISSUR-680 308. BY ADV. SRI.ANIL.D.NAIR SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR RESPONDENT(S): --------------- 1. J.T.M. LABOUR UNION, REPRESENTED BY ITS SECRETARY, MARKKOOMPILLY BUILDINGS, KORATTY. 2. LABOUR COMMISSIONER, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. 3. ADDITIONAL LABOUR COMMISSIONER, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. 4. MADURA COATS WORKERS UNION, REPRESENTED BY ITS SECRETARY, KORATTY, THRISSUR-680 308. 5. MADURA COATS EMPLOYEES UNION, REPRESENTED BY ITS SECRETARY, KORATTY, THRISSUR-680 308. 6. J & P COATS STAFF ASSOCIATION, KORATTY, REPRESENTED BY ITS SECRETARY, KORATTY, THRISSUR-680 308. WA.No. 963 of 2004 2 7. STATE OF KERALA, REPRESENTED BY ITS - SECRETARY, LABOUR AND REHABILITATION DEPARTMENT, THIRUVANANTHAPURAM. 8. MINISTER FOR LABOUR, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. ADV. SRI.G.JANARDHANA KURUP, SENIOR ADVOCATE FOR R1 SR. GOVERNMENT PLEADER SRI.BENNY GERVASIS FOR R2,R3,R7 & R8 SRI.V.V.NANDAGOPAL NAMBIAR FOR R4 TO R6 THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 16/03/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **K.BALAKRISHNAN NAIR & P.N.RAVINDRAN, JJ.** ---------------------------------------W.A.No.963 of 2004 ---------------------------------------Dated 16[th] March, 2010 ## **JUDGMENT** ## _**Balakrishnan Nair, J.**_ The first respondent in the Writ Petition is the appellant. The first respondent herein was the writ petitioner. The brief facts of the case are the following. The first respondent is one of the trade unions of the workmen working under the factory of the appellant at Koratty. Respondents 4 to 6 are also registered trade unions of the workmen of the industrial establishment. The terms of employment of the workmen are governed by settlements signed between the management and the workmen from time to time. Ext.P1 was the settlement concluded on 15.2.1996. The next settlement was Ext.P4 dated 6.4.2002. It was a conciliation settlement. In the conciliation proceedings, the management and all the trade unions participated. But, at the time of concluding the settlement, the first respondent herein declined to sign it on the ground that its representatives do not have the mandate of its general body. Other unions signed the settlement. The Conciliation Officer also signed the settlement, taking the view that its terms are just and fair and the unions who were parties to the settlement represent the majority of the workers in the establishment. W.A.No.963/2004 2 2. Challenging Ext.P4, the first respondent herein filed the Writ Petition. Various contentions were raised to attack the settlement. The appellant and some of the trade unions filed separate counter affidavits supporting the settlement. The learned Single Judge after hearing both sides declared that Clauses 2 and 9 of Ext.P4 settlement have no existence, as according to the learned Judge, those clauses were unconscionable and shocking to judicial conscience. Feeling aggrieved by the said judgment, the management preferred this Writ Appeal. According to them, a conciliation settlement cannot be challenged under Article 226 of the Constitution of India. The only remedy is to raise another dispute concerning its validity. Other contentions are also raised. 3. We heard the learned counsel on both sides. The learned counsel for the appellant relied on the decision of the Apex Court in _**National Engineering Industries Ltd.**_ v. _**State of Rajasthan**_ (2000 (1) LLJ 247) in support of his submission. The learned counsel for the respondents on the other hand submitted that the agreement was not in fact signed by the unions. According to him, no discussion was held regarding the work norms mentioned in Clause 2. Further, there was no annexure to Ext.P4. If Clause 9 is allowed to stand, an agreement cannot be given retrospective effect and it will W.A.No.963/2004 3 operate only prospectively. In view of the above position, the learned Single Judge rightly interfered with those clauses, it is submitted. 4. We considered the submissions made at the Bar and also perused the materials on records. An agreement between two parties may be nullified by a Civil Court if its terms are unconscionable or against public policy in the light of Section 23 of the Contract Act. But, under writ jurisdiction, the High Court cannot set aside an agreement or terms thereof on the ground that its terms are unconscionable or against public policy. Normally, an agreement between parties binds only them. But, a conciliation settlement concluded under section 12(3) of the Industrial Disputes Act will have extended binding effect in view of the provisions of section 18 of the said Act. Such a provision is enacted to ensure industrial peace and obedience to a settlement, which is signed in the presence of a Conciliation Officer with his involvement, on the presumption that its terms will be just and fair and therefore, it can be made applicable to all workers in the establishment whether their unions have signed the settlement or not. So, if a Conciliation Officer signs a settlement arbitrarily, even though the terms of the settlement concerned are highly arbitrary or illegal, then his action in this regard may be challenged before this Court and a declaration can be obtained that the W.A.No.963/2004 4 action of the said officer is ultra vires. The consequence will be that the terms of such a settlement will only have the effect of a bipartite settlement and not of a conciliation settlement and therefore, it only binds the parties thereof who have actually signed it. So, the contention of the management that a conciliation settlement cannot be challenged may be broadly correct. But, that principle does not stand in the way of the affected person attacking the endorsement made in that settlement by a Conciliation Officer, who is a statutory authority. 5. In view of the above legal position, the validity of quashing of two clauses of the settlement have to be examined. The clauses quashed by the learned Single Judge read as follows: - _“2. All individual worker will give production norms in annexure._ _9. When a long term settlement is made it will be for a period of prospective 3 years.”_ The parties are free to arrive at any settlement. Sitting under Article 226 of the Constitution of India, the learned Single Judge could not have interfered with them and declared that they are unconscionable. Clause 2 provides that the worker will have to conform to the production norms in the annexure. According to the learned counsel for the appellant, there was no annexure to the settlement. But, we notice that the learned Single Judge did not interfere with the said W.A.No.963/2004 5 clause for the reason that there was no annexure to the settlement. But, the learned Judge noticed that there was an annexure and it provides for wage cut whenever the worker concerned did not attain the production target. When production norms are agreed to by the majority of the workmen, the same cannot be described as unjust or unfair. Therefore, interference of the learned Single Judge with the said condition is unsupportable. We, in this context, notice the submission of the learned counsel for the first respondent that all the unions did not sign the settlement. But, we find that in the Writ Petition, other unions do not have such a case. They support the management and oppose the challenge against Ext.P4 made by the first respondent. Therefore, that contention also could not be accepted. 6. Clause 9 of Ext.P4 deals with the period of the settlement. Now, it is a practice in the industrial area to give effect to a settlement for three years or five years prospectively. But, at the same time, the settlement will take effect notionally, from the date of expiry of the last settlement. Clause 9 only states about prospectivity of a settlement. The same does not stand in the way of giving retrospectivity to the settlement. On that point, Clause 9 is silent. Therefore, we find that there is no arbitrariness or irrationality in that W.A.No.963/2004 6 clause. Further, it being a clause of the present settlement, it can be modified in the next settlement. Therefore, approval of the Conciliation Officer for that clause also cannot be contended as ultra vires. In the result, the judgment under appeal is reversed. The Writ Petition is dismissed. The Writ Appeal is allowed as above. **K.BALAKRISHNAN NAIR Judge** **P.N.RAVINDRAN Judge** TKS