Full Judgment Text
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PETITIONER:
THE PATIALA CENTRAL COOPERATIVE BANK LTD.
Vs.
RESPONDENT:
THE PATIALA CENTRAL COOPERATIVEBANK EMPLOYEE UNION & ANR.
DATE OF JUDGMENT: 16/09/1996
BENCH:
SEN, S.C. (J)
BENCH:
SEN, S.C. (J)
JEEVAN REDDY, B.P. (J)
MAJMUDAR S.B. (J)
ACT:
HEADNOTE:
JUDGMENT:
[With Civil Appeal No.4074 of 1988 and Civil Appeal
Nos.4075-4076 of 1988]
J U D G E M E N T
SEN, J.
The Patiala Central Cooperative Bank Ltd., the
appellant herein, is a cooperative Bank registered under the
provisions of Punjab Cooperative Societies Act, 1961. The
Patiala Central Cooperative Bank Employees Union, the
respondent No.1 herein, is a Union of the employees of the
appellant-Bank working at various places in different
branches of the Bank. On 13.11.1972, the Union submitted a
charter of demands culminating in an agreement between the
Bank and the Union on 28.5.1973. This agreement was to be in
force upto 31st March, 1977.
The agreement reached on 28.5.1973 provided for a
number of things like fixation of pay-scales after
classifying the various categories of staff. It also
provided for Fixation Formula providing for pay rise in the
revised pay scales. There was also a provision for payment
of dearness allowance, house rent allowance, city
compensatory allowance and various other allowances, if any.
Provisions have been made for uniforms, provident fund,
gratuity, over time allowance and also fixation of strength
and rules providing quota for promotion to various posts in
the future. The agreement also provided for loans to be
given for purchase of scooter/motor cycle/cycle upto a
ceiling of Rs.15,000/- for Central Cooperative Banks and
Rs.30,000/- Apex Cooperative Bank per annum. The agreement
concluded with general Conditions which were as under:-
"GENERAL CONDITIONS
i) The existing facilities given to
employees on the Punjab State
Cooperative Bank may continue.
ii) This settlement will remain in
force for a period of four years,
i.e., upto 31.3.1977.
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iii) A copy of this settlement may
be sent to the Labour Commissioner,
Punjab for necessary confirmation.
iv) Anomalies, if any, shall be
discussed in the joint meeting of
the signatories."
In order to appreciate the argument advanced in this
case, it is necessary to set out the pay scales and the
provisions relating to dearness allowance as agreed upon in
the settlement:-
------------------------------------------------------------
Category of Present grades Revised Revised grades
Staff after merger Grades after merger
of grades DP
w.e.f. 1.2.1968
-----------------------------------------------------------
a. Subordinate Staff
Peons and Chowkidar 75-140 75-165 122-5-162-6
in all the C.Bs. 216-7-258
Daftri 95-160 100-170 147-6-195-7
230-8-270
Drivers 120-170 120-170 190-7-267-8
b.Clerical Staff
Jr.Clerks
A Class Banks 140-315 150-350 240-10-300-
425-15-470
B Class Banks 130-270 140-315 210-10-300-
400-15-430
C Class Banks 115-265 140-315
Senior Clerks
A Class Banks 170-360 190-385 280-12 1/2-
380-16-485-
20-505
B Class Banks 155-335} 170-360 260-10-280-
C Class Banks 140-315} 12 1/2-380-
15-485
c. Supervisory staff
Junior Accountant 245-480 245-510 365-15-490-20-
590-25-640
Junior Accountant 220-420} 245-480 365-12 1/2-
B Class Banks 190-380} 380-15-500
-20-620
Regarding the staff in the Common Cadre also, new
grades will be framed after merging D.P., in their
present pays. The new grades will be as under:-
Senior
Accountants 275-530 385-15-480-20-590-25-665
Assistant
Managers 375-690 485-20-525-25-725-30-815
Managers 475-930 595-30-745-35-955-40-1075
Fixation Formula
All employees may be given a pay rise of 5% of their
pay in the revised scales mentioned above and may be fixed
at the next higher stages after adding 5% to their present
basic pay including Dearness Pay. In the case of subordinate
staff, however, one additional increment may also be given
over and above the above mentioned benefits.
Dearness Allowance.
As mentioned above, the D.P. is to be merged in the
revised grades. The D.A. and interim relief which the
employees are getting at present will together form the D.A.
This D.A. may be linked with the All India Consumers Price
Index number (Base Year 1960 : 100) in such a way that any
further rise in the Index number may be reflected to D.A. to
the extent of 100% in the case of subordinate staff and 75%
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in case of the other Staff. No additional D.A. No additional
D.A. will be made unless the Index number increase by at
least four points (quarterly average).
The rate of D.A. being paid at present will be
converted into percentage rates mentioned below for various
categories of staff. This percentage has been worked out on
the basis of the current D,A. Plus relief, rates, rounded
off in such a way that the rate can be divided by four in
the case of others:
Categoryof Staff Percentage rate
Peons and Chowkidars 56.
Drivers 40
Daftry 44
Clerk 33
Senior Clerk-I 27
Senior Clerk-II 30
Junior Accountants and
Senior Accountants 24 24
Assistant Managers and
Managers 18
It is certified that any increase/decrease in the Index
number after 31.3.1973 shall be added/reduced in the
percentage rate mentioned above at the rate of 100/ in the
case of subordinate staff and 75% in the cast of others.
T.A. and D.A.
T.A and D.A. rules as applicable at present to common
cadre employees be applied to all the employees.
This was a comprehensive agreement reached between the
Employees’ Union and the management. It is not an agreement
relating to payment of Dearness Allowance only. The
agreement was valid for a period of four years and case to
an end on 31st March, 1977. After the agreement case to an
end, disputes and differences cropped up between the
employees and the management inter alia about the payment of
Dearness Allowance in tears of the aforesaid agreement. The
case of the employees is that the agreement cannot be
repudiated unilaterally even though the period of four years
mentioned in the agreement expired on 31st March, 1977. It
has been contended that the agreement will continue to be
binding even after the expiry of the period mentioned in the
agreement expired on 31st March, 1977, by virtue of the
provisions of sub-section (2) of Section 19 of the
Industrial Disputes Act, 1947. Section 19 lays down that a
settlement shall come in to operation on such date as is
agreed upon by the parties to the dispute, and if no date is
agreed upon, on the date which the memorandum of the
settlement is signed by the parties to the dispute. Sub-
section has been reached between the workers and the
management, that shall be binding not only for the agreed
period, but also shall continue to be binding on the parties
after the expiry of the period mentioned in the agreement
"until the expiry of two months form 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.".
The case of the employees is that no such notice was
given and, therefore, the agreement continues to be in force
and binding upon the management. The duty to pay Dearness
Allowance at the rate specified in the agreement cannot be
avoided by the management by any device.
It has been further contended that Section 84-B, which
was introduced in the Punjab Cooperative Societies Act, 1961
by which it was laid down that "no employee of a cooperative
society shall be paid dearness allowance at a rate higher
than that admissible to the employees of the Government
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drawing pay at the same rate", cannot in any way abrogate an
agreement protected by the provisions of the Industrial
Disputes Act.
On behalf of the employees, a writ petition was filed
in the High Court under Article 226 challenging the validity
of Section 84-B. The case of the employees is that by
virtue of Section 19 of the Industrial Disputes Act, the
agreement between management and the employees cannot be
altered except in the manner laid down in the Act. Such
agreement have ban given statutory force and they cannot be
altered by the management on its own without following the
procedure of law. Similarly, the State Government cannot
give any direction as to the manner of working out of the
agreement or abridge or modify the contents of the agreement
to any manner whatever. Industrial Disputes Act being a
special Act relating to industrial disputes and, in
particular, about the relationship between the management
and the employees, the agreement reached under that Act
cannot be varied or abrogated by the management
unilaterally. It was further contended that the Punjab
Cooperative Societies Act, 1961 is a general Act relating to
Cooperative Societies and it cannot curtail or control the
specific provisions of Industrial Disputes Act which is a
special Act, in any manner whatever.
It was held the Division Bench of the Punjab High Court
that Section 84-B of the Punjab Cooperative Societies Act,
1961, which was introduced by the Amending Act of 1981,
could not take away the effect of the settlement dated 28th
May, 1973 which was subsisting and binding on the date the
Amending Act came in to force. Section 84-B of the Punjab
Cooperative Societies Act was violative of the provisions of
Section 19 of the Industrial Disputes Act, 1947. It was
further held by the High Court that change in condition of
service of the employees could not be made in respect of any
of the matters mentioned in the Fourth Schedule, without
giving a prior notice in the manner prescribed by Section
19(2) of the Act. It was held that unilateral withdrawal of
the city compensatory allowance by the employer of the
workmen affected their conditions of services and attracted
mandatory provisions of Section 9-A. ON the same analogy,
unilateral withdrawal of dearness pay from the workmen
affected the conditions of service of Class III and Class IV
employees of the CO-operative Banks. Since the provisions
of Section 9-A of the Industrial Disputes Act, 1947 had not
been compiled with, the changes brought about in the service
conditions of the employees were of no consequence. It was,
therefore held that the respondent would continue to be
benefited by the tears of the settlement dated 28th May,
1973 as before. Section 84-B of the Punjab Cooperative
Societies Act, 1961 was held to be ultra vires of the State
Legislature of Punjab and quashed. It was further held that
the settlement dated 28th May, 1973 would continue to be
valid and binding between the parties and Class III and
Class IV employees of the Cooperative Banks were held
entitled to claim dearness pay in terms of the aforesaid
settlement.
On behalf of the appellant, it has been contended that
an important factual aspect has been totally ignored by the
High Court in this case. It was contended on behalf of the
appellant before the High Court that a notice under Section
19(2) of the Industrial Disputes Act (P.4 of the writ
Petition) was duly issued by the appellant and served upon
the employees. The High Court has failed to deal with this
aspect of the case altogether. It has been stated in
paragraph 2 of the Special Leave Petition that it was
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specifically stipulated in that the agreement was valid for
a period of four years and would cease to be effected after
the expiry of 31st March, 1977. As there was no Board of
Directors and administration was being run by the
Administrator, as per provisions of Section 27 of the Punjab
Cooperative Societies Act, the Administrator issued a notice
under Section 19(2) if the Industrial Disputes Act for
terminating the agreement dated 28.5.1973 which had expired
on 31.3.1977. The notice was issued on 25.2.1978. It has
been alleged after this, the Board of Directors of the Bank
had rectified the notice by Resolution No.7 at its meeting
held on 9.4.1978.
In the counter affidavit filed on behalf of the
Employees; Union, affirmed by Malinderjit Singh, General
Secretary of the Employees’ Union, it has been stated that
since the facts of the case as pleaded in the Special Leave
Petition are not disputed and the whole matter relates to
pure question of law for decision, it is not necessary for
the deponent to answer parawise the petition. In view of
the submissions made above and the two decisions of this
Hon’ble Court referred to in the affidavit, the appeals may
be dismissed with costs.
In other word, the fact that notice was given on
25.2.1978 terminating the agreement dated 28.5.1973 is not
in dispute.
However, the case need not be decided on the
technically of the pleadings only, After expiration of the
term of the agreement dated 28.5.1973 on 31.3.1977, the
agreement has not ben continued unaltered. If the legal
contention on behalf of the petition is upheld and if it be
held that the agreement dated 28.5.1973 is still continuing
by virtue of the provisions of sub-section (2) of Section
19, then the entire agreement including the clause relating
to the Dearness Allowance will have to be treated as still
in force. The pay scales and other terms and conditions
relating to employment have been drastically revised upwards
after the expiration of the agreement dated 28.5.1973. From
the chart of salaries, furnished by the appellants, it
appears that the pay scales upward in the following manner-
------------------------------------------------------------
Category Position Position Position
of post as on as on as on
4.6.81 1.10.81 1.1.86
------------------------------------------------------------
Rs. Rs. Rs.
PEON 525.32 605.84 1144.60
JR.CLERK 820.95 917.30 1838.34
SR.CLERK 943.68 1109.32 2117.69
------------------------------------------------------------
Note: No minimum benefit and Interim Relief has been
included while fixing pay as on 1.10.1981 and 1.1.1986.
There is some dispute as to the exact quantum of the
enhancement but there is no dispute that the salaries
payable under the agreement dated 28.5.1973 have been
drastically revised upwards at all levels thereafter.
Another point that has been on behalf of the appellant
which is of substance is that in fixing pay of the Bank
employees consequent upon the revision of pay scales, the
same formula which was applied for fixation of pay scales of
Punjab Government employees has been adopted. The bank
employees have been given the benefits of proficiency step-
up, master scales, stepping of pay of senior equivalent to
the junior as allowed by the Punjab Government to its
employees. All these changes have brought about substantial
benefits to the employees of the Bank. In the background of
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these facts, the employees cannot claim dearness allowance
in terms of the agreement dated 28.5.1973. That agreement
has been given up for much better terms and conditions and
also subsequent revision of pay. The employees cannot be
heard to say that they will enjoy all the subsequent
benefits given by the revision of pay scales. but dearness
allowance must be given in accordance with the formula
contained in the agreement dated 28.5.1973. It is not the
case of the employees that the agreement dated 28.5.1973
will have to be enforced in full.
There is some dispute as to the exact amount of the
benefit considered by the various revisions in pay scales
but there is no dispute that the pay scales and other
benefits now given are much better and higher than what was
given by the agreement dated 28.5.1973. No one wants to go
back to that agreement so far as the pay scales are
concerned. I fail to see how in the context of these facts,
the employees can urge that Dearness Allowance formula of
that agreement must remain in tact at the same time the
drastic changes in every other part of the agreement dated
28.5.1973 will continue in force for the benefit of the
employees.
In view of the aforesaid, it is unnecessary to go into
other questions raised in the case. But since the question
of validity and scope of Section 84-B of the Punjab
Cooperative Societies Act, 1961 has been raised that
question will have to be examined. Section 84-B was inserted
by Amendment Act 26 of 1981. The section is as under:
"84-B. Dearness Allowance.-
Notwithstanding anything in this
Act or any other law for the time
being in force, or any agreement,
settlement or award, no employee of
a Cooperative Society shall be paid
dearness allowance at a rate higher
than that admissible to the
employees of the Government drawing
pay at the same rate."
This section places a bar on payment of Dearness
Allowance at a rate higher than the rate admissible to the
employees of the Government drawing the same pay. This
provision will apply to all the employees of all the
Cooperative Societies in the State of Punjab. This provision
has been specifically made applicable notwithstanding, inter
alia any other law for the time being in force or any
agreement, settlement or award.
Prima facie, there is no reason to hold that this
provision will not apply to the agreement dated 28.5.1973
assuming that agreement was still in force on the date
Section 4-B was introduced in the statute. It has been
contended that Industrial Disputes Act is a complete Code
relating to industrial disputes and, therefore, by the
general provisions of the Punjab Cooperative Societies Act,
1961, the applicability and scope of the provisions of
Industrial Disputes Act cannot be whittled down.
I am unable to uphold this contention because sub-
section (2) of Section 19 of the Industrial Disputes Act
merely provides that even if the period of the agreement has
expired, the terms of the agreement will continue to be in
force unless determined in the manner laid down in sub-
section (2) of Section 19. It does not have the effect of
invalidating any legislation altering the terms of the
agreement after the period of agreement comes to an end. The
agreement provided for payment of Dearness Allowance higher
than what was provided by the Government to its employees.
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Section 84-B specifically stated that in spite of any
statutory provision to the contrary, or any agreement,
Dearness Allowance can only be paid upto the rate fixed by
the Government for corresponding pay of the Government
Servants.
There is nothing in the wording of Section 19 of the
Industrial Disputes Act which supports this contention of
the employees. Section 19 reads as under:-
"19. Period of operating of
settlements and awards:-
(1) A settlement 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
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 thee 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."
’Settlement’ has been defined in Section 2(p) as
under:-
"2(p). ’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."
A written agreement between the employer and workmen
may constitute a settlement in the circumstances mentioned
in Section 2(p). But Section 19 lays down that such
agreement shall come into operation on the agreed date
between the parties to the settlement or if the date is not
agreed upon, on the date on which the settlement is signed
by the parties. That is the starting point. Sub-section (2)
provides for the period during which the settlement will be
in force. It shall be binding during the period agreed upon
the parties. If no such period is agreed upon, then the
settlement will be valid for a period of six months from the
date on which the settlement was signed by the parties and
shall continue to be binding after the expiry of the
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aforesaid period. The settlement can be brought to an end by
serving a notice in writing by one of the parties to the
other party of its intention to terminate the settlement. If
such a notice is given, the settlement will remain in force
for two months from the date on which the notice of
termination is given.
The provisions of Section 19(2) make an agreement
between the employers and the employees binding. It also
lays down the period during which it shall be binding. It
also provides the manner in which the agreement can be
terminated inter partes. It does not follow from this
provision that a competent legislature cannot legislate on
any matter which forms part of the agreement. Not does
Section 19 have the effect of validating any infirmity in
the agreement. If the agreement is contrary to any law or if
the agreement cannot be implemented without violating any
provision of law, then the agreement cannot be enforced at
all. There is nothing in sub-section (2) of Section 19 to
suggest that even such an agreement will continue to be
binding upon the employers and the employees and enforceable
against express provision of law. If after the agreement has
been entered into, any law is passed and the agreement
cannot be enforced without violating that law, then clearly
the agreement cannot be enforced. The law will prevail.
Sub-section (2) of Section 19 merely extends the period
during which the agreement will be enforced, but it does not
provide that the agreement will be valid and binding
notwithstanding any law to the contrary.
For all these reasons, this appeal is allowed. The
order under appeal is set aside. There will be no order as
to costs.
CIVIL APPEAL NO. 4074 OF 1988
AND
CIVIL APPEAL NOS. 4076 OF 1988
In view of the judgment in Civil Appeal No.4390 of
1988, the above appeals are also allowed. There will be no
order as to costs.