Full Judgment Text
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PETITIONER:
M/S. AGENCIA E. SEQUEIRA M/S. FABRIL GASOSA
Vs.
RESPONDENT:
LABOUR COMMISSIONER & OTHERS
DATE OF JUDGMENT: 31/01/1997
BENCH:
A.S. ANAND, S.B. MAJMUDAR
ACT:
HEADNOTE:
JUDGMENT:
WITH
CIVIL APPEAL NO. 565 OF 1997
(Arising out of SLP (C) NO. 23763 OF 1995)
J U D G M E N T
DR. ANAND, J.
Leave granted in both special leave petitions.
The appellants are sister concerns. Their Letters
Patent Appeals were disposed of by a common judgment and
order dated 19.6.1995 upholding the judgment and order
passed by the learned Single Judge on 18.7.1994 dismissing
the Writ Petitions filled by the appellants. These appeals
are directed against the common judgment and order dated
19.6.1995.
On 9th of December, 1986 a settlement was arrived at
between the appellants and the employees union relating to
service conditions of the workmen for the period 1.1.86 to
30.6.88. The settlement inter alia provided that VDA
(variable dearness allowance) shall be paid at Rs. 2/- per
point of rise per month beyond AICPI 450 and the wages of
the employees were linked with the VDA. The employees union
issued a notice of its intention to terminate the settlement
with a view to submit a fresh charter of demands on 1.7.88.
A fresh charter of demands was submitted by the employees
union demanding an increase in the salary etc. on 17.7.88
but it was mentioned therein that the service conditions in
force would continue to remain unchanged unless specifically
agreed to otherwise. The employees union did not seek any
change in the charter of demands in so far as the rate of
VDA was concerned. No fresh settlement appears to have been
arrived at between the parties but the appellants relying
upon the notice of termination and the new charter of
demands, unilaterlly freezed VDA with effect from 4.8.88.
Negotiations between the employees union and the appellant,
did not, however, produce any fresh settlement. The
employees union (respondent No. 3) issued a demand notice to
the employer on 21.1.91 demanding VDA with effect from
1.7.88. It was claimed that the unilateral freezing of the
VDA was illegal and that the obligations in the settlement
dated 9.12.1986 were in force and binding on the parties.
The employees union, it appears apart from filling an
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application before the authorities under the payment of
Wages Act alleging illegal deduction from wages, also
approached the State Government for issuance of the recovery
certificate for the arrears of VDA. The Labour Commissioner,
on behalf of the State Government, issued a notice to the
appellants on the application filed by the employees union
with regard to the payment of VDA on 14.5.91. The appellants
were required by the Labour Commissioner to reply to the
claims of the respondent union. The appellants were required
by the Labour Commissioner to reply to the claims of the
respondent union. The appellants took the stand in their
reply that the settlement of 1986 stood terminated and
referred to the letter of the employees union dated 1.7.88
conveying their intention to terminate the settlement and
the fresh charter of demands. The appellants further
resisted the claim of the union inter-alia by taking the
plea that there was an oral agreement arrived at between the
parties to freeze the VDA at June, 1988 point and therefore
the claim of the employees union was untenable. The
appellants, however, produced no evidence in support of its
plea of oral agreement. The Labour Commissioner found that
no oral agreement had been proved and that obligation of the
employer to pay the VDA under the 1986 continued to be in
force and with a view to ensure implementation of the
settlement, a notice of demand was issued to the appellants
by the Labour Commissioner for payment to the VDA to the
workmen for the period 1.7.88 to 28.2.91. An order for
payment of Rs. 2,14,990.30 P. towards the VDA for the period
1.3.91 to 30.9.91 was also issued. Coercive process for
recovery of Rs. 5,29,720/- as arrears of VDA between 1.7.88
and 28.2.91 was initiated.
The appellant filed writ petitions No. 37 and 38 of
1994 in the High Court of Bombay challenging the notices
dated 13.9.91 and 27.12.91 and certain other notices and
proceedings taken by the Labour Commissioner in connection
with the claim of the workmen regarding payment of VDA. The
main Plea raised by the appellants in the writ petitions was
that the settlement dated 9.12.86 was time bound till 30th
June, 1988 and since it was sought to be terminated by the
Union through their notice dated 1.7.88, the employees union
could not maintain any application 33C (1) of the Act.
Besides, an oral agreement between the parties which had
varied the terms of the settlement particularly to freeze
the VDA after the expiry of the time bound settlement dated
9.12.86 was also pleaded and it was canvassed that the
employees union could take recourse to seeking a reference
under Section 10(1) of the Act or to file an application
Sec.(2) of the Act ut not to the provisions of Section 33C
(1) of the Act. It was asserted that a settlement arrived at
under the provisions of the Industrial Disputes Act ceased
to be a settlement as defined under the Act, on its
termination and turns itself into a mere contract between
the parties and, therefore, on termination of such
settlement, the rights recognised by the settlement cannot
be enforced in the manner prescribed under Section 33C(1) of
the Act but only as contractual obligations. The learned
Single Judge rejected the plea that there had been an oral
agreement between the parties which had in turn varied the
terms of the settlement of 1986 were subsisting between the
parties inspite of the time bound settlement and as such no
fault could be found with the exercise of jurisdiction by
the Labour Commissioner under Section 33C (1) of the Act.
The Learned Single Judge also rejected the argument that in
the facts and circumstances of the case, the employees union
could only prefer a claim either under Section 33C (2) of
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the Act or seek a reference under Section 10(1) of the Act
for recovery of the arrears of VDA. It was held that the
application filed by the employees union under Section
33C(1) was maintainable and the obligations flowing from the
settlement regarding payment of VDA could be enforced under
the provisions of Section 33C (1) of the Act and that those
obligations flowing from the 1986 settlement were not
contractual in nature. The writ petitions were accordingly
dismissed on 18.7.1994. The Letter Patent Appeals also
failed since the Division Bench also found that there had
been no oral agreement varying the terms of the 1986
settlement and that with the expiry of the period of time
bound settlement, the obligations under the settlement did
not cease and went on to opine that with the expiry of the
period of settlement, only a stage was set for fresh
negotiations to take place and till the settlement of 1986
was superseded by a fresh settlement, the obligations
flowing from the settlement of 1986 were binding on the
parties and were enforceable under Section 33C (1) of the
Act.
In these appeals by special leave, learned counsel for
the appellants has once again canvassed the same grounds
which had been unsuccessfully raised before the learned
single Judge and the Division Bench. Learned counsel in
support of the assertions that the terms of the settlement
stood varied by an oral agreement and could not be enforced
as terms of the settlement but only as a contract, laid
emphasis on the fact that for over two years the workmen had
not demanded payment of the VDA after it was freezed with
effect from 1.7.88 and their silence went to establish the
existence of an oral agreement as alleged by the appellants.
Plea regarding the non-maintainability of the petition under
Section 33C (1) of the Act was also reiterated on the same
grounds which were canvassed in the High Court.
Learned counsel for the respondents on the other hand
countered these submission by urging that on facts no oral
settlement at all had been arrived at between the parties
and that the Labour Commissioner as well as the High Court
had rightly found that there was no oral settlement, which
had superseded the terms of the earlier settlement. With
regard to the maintainability of the application under
Section 33C (1) of the Act, learned counsel for the
respondents submitted that verification of the claim of
money which stood determined under the 1986 settlement
squarely falls within the scope of Section 33C (1) of the
Act and therefore it was not obligatory on the part of the
employees union to file any proceedings either under Section
10(1) or Section 33C (2) of the Act.
For what follows, we have not been persuaded to take a
view different than the one taken by the Labour Commissioner
and the High Court.
The Labour Commissioner, on the basis of the material
on the record found that there had been no oral
understanding or agreement superseding the 1986 settlement
and therefore the obligations under the old settlement, even
after the expiry of the period of its operation, would
continue in force till fresh negotiations take place and a
new settlement is arrived at. The learned Single Judge
agreed with the Labour Commissioner and observed:-
" In the facts and circumstances of
the case I am inclined to hold that
the so called oral understanding
whereby the workmen are purported
to have given up or deferred their
right to be paid VDA in exchange
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for some extra benefits till the
finalisation of another settlement
in place of the terminated one is
ex-facie bad and apparently without
any authority of law which nowhere
provides for this type of oral
agreements as valid and legally
sufficient to modify the terms and
conditions of a contract which is
deemed to operate and subsist
consequent upon the termination of
the old settlement."
The learned Single Judge also examined the effect of
the letter of the employees union dated 1.7.88 and held that
the terms and conditions of the settlement of 1986 were
subsisting and the right of the workmen to receive VDA was
not effected in any manner. Dealing with the submission of
the appellants, that the silence of the workmen to claim VDA
till 1991, was indicative of the fact that the parties had
agreed to the freezing of the VDA with effect from 4.8.88.
the learned Single Judge observed:
" Therefore if the terms and
conditions of the settlement of
1986 are to be held as subsisting
inspite of its valid termination,
obviously the right of the workmen
to claim the overdue VDA could not
have been disputed by the
petitioner, bearing in mind that
this was one of the items agreed
and inserted in the earlier
settlement which could not have
been thus disturbed even after it
ceased to operate unless replaced
by any other one or by a contract
with the same force and authority
of fresh settlement. Similarly the
fact of the workmen having
abstained from demanding its
payment fro all this period of more
than two years following the
cessation of the settlement
ostensibly during the period of
negotiations of anew agreement need
not be also construed as a waiver
of their right to press for its
demand or as an indication of the
existence of a fresh concluded
agreement whereby the terminated
settlement stood modified with
regard to the terms and conditions
of the pre-existing contract deemed
to operate after the termination of
the settlement of 1986.
and dismissed the writ petitions filed by the
appellants.
The Division Bench while deciding the Letter Patent
Appeals agreed with the dindings recorded by the learned
Single Judge and observed:
"The employers contend that there
was an oral understanding between
the parties whereby the workmen
agreed to freeze the dearness
allowance calculated as on the Ist
July, 1988 and had agreed not to
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claim VDA in accordance with the
formula set out in the settlement
dated 9th December, 1986. The
learned Single Judge has rightly
rejected the contention of the
employers on this aspect of the
unnecessary controversy raised on
behalf of the petitioners. The
alleged oral understanding has not
been proved in law. There could not
be any oral understanding in law so
as to modify a written settlement."
Thus, we find that on facts, it has been found by the
Labour Commissioner and the High Court and in our opinin
rightly, that there was no oral understanding or agreement
as pleaded by the employer to give up or defer the payment
of VDA by the employees union. The findings are based on
proper appreciation of material on the record. Even
otherwise, no oral agreement could be pleaded to vary,
modify or supersede a written settlement.
Section 2(p) of the Industrial Disputes Act, 1947 reads
as under :
"Settlement" means a settlement
arrived at in the course of
conciliation proceeding and
includes a written agreement
between the employer and workmen
arrived at otherwise than in the
course of conciliation proceeding
where such agreement has been
signed by the parties thereto in
such manner as may be prescribed
and a copy thereof has been sent to
an officer authorised in this
behalf by the appropriate
Government and the conciliation
officer."
(Emphasis Supplied)
A bare reading of the above definition of ‘settlement’
shows that the settlement contemplated by the above
provision excludes any oral understanding or agreement to
supersede an earlier written agreement or settlement. In
this connection a reference to Rule 58 of the Industrial
Disputes (Central) Rules, 1957 would also be relevant. That
Rule to the extent relevant reads :
58. Memorandum of settlement :- (1)
A settlement arrived at in the
course of conciliation proceedings
or otherwise, shall be in Form ‘H’.
(2) The settlement shall be signed
by -
(a) in the case of an employer, by
the employer himself, or by his
authorised agent, or when the
employer is an incorporated company
or other body corporate, by the
agent, manager or other principal
officer of the corporation:
(b) in the case of the workmen, by
any officer of a trade union of the
workmen duly authorised in this
behalf at a meeting of the workmen
held for the purpose:
(c) in the case of the workman in
an industrial dispute under Section
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2-A of the Act, by the workman
concerned.
..................
(3) Where a settlement is arrived
at in the course of conciliation
proceeding the conciliation Officer
shall send a report thereof to the
Central Government together with a
copy of the memorandum of
settlement signed by the parties to
the dispute.
(4) Where a settlement is arrived
at between an employer an his
workmen otherwise than in the
course of conciliation proceeding
before a Board or a Conciliation
Officer, the parties to the
settlement shall jointly send a
copy thereof to the Central
Government, the Chief Labour
Commissioner (Central), New Delhi,
and the Regional Labour
Commissioner (Central) concerned."
A conjoint reading of Section 2(p) of the Act and Rule
58(supra) unmistakably shows that the settlement
contemplated by the said provisions is a written settlement
and not an oral settlement. It is not in dispute that the
1986 settlement was a written settlement arrived at between
the parties. It could not, therefore, be varied or modified
except by a written settlement or by a written memorandum
duly signed by the parties incorporating the terms of the so
called understanding. Section 92 of the Evidence Act, 1872
also lays down that when the terms of any contract, grant or
settlement, as are required by law to be reduced to the form
of a document, have been proved as per the provisions of
Section 91 of the Evidence Act, no evidence of any oral
agreement or settlement shall be admitted as between the
parties to any such instrument or their representatives in
interest for the purpose of contradicting varying adding to
or subtracting from its items. Thus, both on facts of the
instant case as well as on the interpretation of law, the
conclusion arrived at by the High Court that there was no
oral understanding between the parties and that the so
called oral agreement pleaded by the appellants could not in
any case vary the terms of the 1986 settlement is
unexceptionable.
Coming now to the second submission of the learned
counsel for the appellants regarding the maintainability of
the application under Section 33C(1) of the Act. According
to the learned counsel for the appellants, the obligations
which flow the 1986 settlement, after the expiry of the
period of settlement, could be examined only through a
reference under Section 10(1) of the Act or by the labour
court under Section 33C(2) of the Act and recourse to the
provisions of Section 33C (1) of the Act was not
permissible. According to the learned counsel for the
respondent on the other hand, the claim for money due, which
only was required to be calculated and not determined, could
be made under Section 33C (1) of the Act and the workmen
were not obliged to take recourse to either Section 10(1) or
Section 33C (2) of the Act.
To appreciate the submission of the learned counsel for
the parties, it would be advantageous at this stage to
notice Sections 33C (1) and (2) of the Act to the extent
relevant. Those provisions read thus :
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33C. Recovery of money due from an
employer - (1) Where any money is
due to a workman from an employer
under a settlement or an award or
under the provisions of Chapter V-A
or Chapter V-B the workman himself
or any other person authorised by
him in writing in this behalf, or,
in the case of the death of the
workman, his assignee or heirs may,
without prejudice application to
the appropriate Government for the
recovery of the money due to him,
and if the appropriate Government
for is satisfied that any money is
so due, it shall issue a
certificate for that amount to the
Collector who shall proceed to
recover the same in the manner as
an arrear of land revenue :
...........................
...........................
(2) Where any workman is entitled
to receive from the employer any
money or any benefit which is
capable of being computed in terms
of money and if any question arises
as to the amount of a money due or
as to the amount at which such
benefit should be computed, then
the question may, subject to any
rules that may be made under this
Act, be decided by such Labour
Court as may be specified in this
behalf by the appropriate
Government within a period not
exceding three months :
............................
(3) ........................
(4) ........................
(5) ........................
In the instant case the period of earlier settlement of
1986 had expired but the expiry of that period would not
affect the enforcement of the binding obligations flowing
from the earlier settlement till substituted by a fresh
settlement. The obligations arising from the earlier
settlement would continue to remain in force, though as a
contract and not as a binding settlement, but that would
make no difference to the maintainability of a claim
petition under Section 33C (1) of the Act so long as the
requirements of that sub-section are satisfied and the
obligations sought to be enforced flow from an earlier
settlement or an award or under chapter VA or VB of the Act.
That the rate of VDA had been agreed to and provided
for in the 1986 settlement is not in dispute. It is also not
in dispute that the claim petition filed by the employees
union under section 33C (1) of the Act was for the recovery
of the VDA at the rate agreed to between the parties as per
the terms of the 1986 settlement for the period for which
the same had ben withheld by the employer. Thus, both the
rate of VDA and the period for which it was payable were not
in dispute could the employees union, therefore, not
maintain an application under Section 33C (1) of the Act for
the recovery of the VDA arrears?
Section 33C is in the nature of execution proceedings
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designed to recover the dues to the workmen. Vide Section
83C (1) and (2), the legislature has provided a speedy
remedy to the workmen to have the benefits of a settlement
or award which are due to them and are capable of being
computed in terms of money, be recovered through the
proceedings under those sub-sections. The distinction
between sub-section (1) and sub-section (2) of Section 33C
lies mainly in the procedural aspect and not with any
substantive rights of workmen as conferred by these two sub-
sections. Sub-section (1) comes into play when on the
application of a workman himself or any other person
assignee or heirs in case of his death, the appropriate
Government is satisfied that the amounts so claimed are due
and payable to that workman. On that satisfaction being
arrived at, the Government can initiate action under this
sub-section for recovery of the amount provided the amount
is a determined one and requires no ‘adjudication’. The
appropriate Government does not have the power to determine
the amount due to any workman under sub-section (1) and that
determination can only be done by the Labour Court under
sub-section (2) or in a reference under Section 10(1) of the
Act. Even after the determination is made by the Labour
Court under sub-Section (2) the amount so determined by the
Labour Court, can be recovered through the summary and
speedy procedure provided by sub-section (1). Sub-section
(1) does not control or affect the ambit and operation of
sub-section (2) which is wider in scope than sub-section
(1). Besides the rights conferred under Section 33C (2)
exist in addition to any other mode of recovery which the
workman has under the law. an analysis of the scheme of
Sections 33C (1) and 33C (2) shows that the difference
between the two sub-sections is quite obvious. While the
former sub-section deals with cases where money is due to a
workman from an employer under a settlement or an award or
under the provisions of Chapter V-A or V-B, sub-section (2)
deals with cases where a workman is entitled to receive from
the employer any money or any benefit which is capable of
being computed in terms of money. Thus, where the amount due
to the workmen, flowing from the obligations under a
settlement, is per-determined and ascertained or can be
arrived at by any arithmetical calculation or simplicitor
verification and the only inquiry that is required to be
made is whether it is due to the workman or not, recourse to
the summary proceedings under Section 33C (1) of the Act is
not only appropriate but also desirable to prevent
harassment to the workmen. Sub-section (1) of section 33C
entitles the workmen to apply to the appropriate Government
for issuance of a certificate of recovery for any money due
to them under an award or a settlement or under the
provisions of chapter-VA and the Government. If satisfied,
that a specific sum is due to the workmen, is obliged to
issue a certificate for the recovery of the amount due.
After the requisite certificate is issued by the Government
to the collector, the collector is under a statutory duty to
recover the amounts due under the certificate issued to him.
The procedure is aimed at providing a speedy, cheap and
summary manner of recovery of the amount due, which the
employer has wrongfully withheld. It, therefore, follows
that where money due is on the basis of some amount
predetermined like the VDA, the rate of which stands
determined in terms of the settlement an award stands
determined in terms of the settlement an award or under
Chapter V-A or V-B, and the period for which the arrears are
claimed is also known, the case would be covered by sub-
section (1) as only a calculation of the amount is required
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to be made.
A Constitution Bench of this Court in Kays Construction
Co. (P) Ltd. vs. State of Uttar Pradesh and Others [ (1965)
2 SCR, 276 ] while considering the scope of Section 6-H (1)
and (2) of the U.P. Industrial Disputes Act, 1947, which
provisions are in pari materia to Section 33C (1) and (2)
opined :
" The contrast in the two sub-
sections between "money-due" under
the first sub-section and the
necessity of reckoning the benefit
in terms of money before the
benefit becomes "money due" under
the second sub-section shows that
mere arithmetical calculations of
the amount due are not required to
be with under the elaborate
procedure of the second sub-
section. The appellant no doubt
conjured up a number of
obstructions in the way of this
simple calculation. These
objections dealt with the "amount
due" and they are being
investigated because State
Government must first satisfy
itself that the amount claimed is
in fact due. But the antithesis
between "money due" and a "benefit
which must be computed in terms of
money" still remains, for the
inquiry being made is not of the
kind contemplated by the second
sub-section but is one for the
satisfaction of the State
Government under the first sub-
section. It is verification of the
claim to money within the first
sub-section and not determination
in terms of money of the value of a
benefit."
The law laid down by the Constitution Bench applies
with full force to facts of the instant case and in view of
the stablished facts and circumstances of this case,
recourse to the proceedings under Section 33C (1) of the Act
by the union was just and proper.
The Division Bench of the Bombay High Court was
therefore, right in holding that the recovery certificates
issued by the Labour Commissioner for recovery of the mounts
claimed by the workmen in the proceedings under section 33C
(1) of the Act were perfectly valid, legally sound and
suffered from no infirmity whatsoever. We do not find any
merit in these appeals and consequently dismiss the same
with costs. One of fee only in two appeals.
Before parting with the judgment, we would, however,
like to clarify that the application which has been filed by
the employees union before the Labour Court under Section
33C (2) of the Act for recovery of benefits/amounts, other
than those claimed in their application under Section 33C
(1) of the Act shall be decided by the Labour Court on its
own merits and the findings recorded by us hereinabove shall
be considered as confined only to the recovery certificates
issued by the Labour Commissioner under Section 33C (1) of
the Act, which are the subject matter of the appeals hereby
disposed of by us.
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