Full Judgment Text
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PETITIONER:
BARAUNI REFINERY PRAGATISHEEL SHRAMIKPARISHAD AND OTHERS
Vs.
RESPONDENT:
INDIAN OIL CORPORATION LIMITED AND OTHERS
DATE OF JUDGMENT12/07/1990
BENCH:
AHMADI, A.M. (J)
BENCH:
AHMADI, A.M. (J)
RAMASWAMY, K.
CITATION:
1990 AIR 1801 1990 SCR (3) 282
1990 SCC (1) 4 JT 1990 (3) 123
1990 SCALE (2)14
ACT:
Industrial Employment (Standing Orders) Act, 1948:
Sections 5 and 7 and Clause 20 of the Standing
Orders--Modification of Standing Order providing for upward
revision of age of superannuation-Whether valid.
Industrial Disputes Act, 1947: Sections 9A, 12 and
18---’Settlement’--Arrived at in conciliation
proceedings--Binding nature of.
HEADNOTE:
The appellants are two different trade unions of Barauni
Refinery of the respondent, Indian Oil Corporation Limited
(IOCL). The IOCL is comprised essentially of two divisions:
(1) Marketing Division, and (2) Refinery and Pipe Lines
Division. The age of superannuation of the staff in the
Marketing Division was 60 years whereas for the Refinery and
Pipe Lines Division it was fixed at 58 years under Clause 20
of the Standing Orders concerning Barauni Refinery.
In December 1981, 14 recognised Unions representing the
employees of the IOCL working in different refineries and
pipe lines divisions submitted a charter of demands. By
clause 18 of this charter the superannuation age was sought
to be enhanced to 60 years. A similar charter of demands was
separately submitted by the Barauni Telshodhak Mazdoor
Union.
As a result of discussions a general settlement was
mutually arrived at by and between the parties on May 24,
1983. Subsequently, a separate Memorandum of Settlement
dated 4th August, 1983 concerning Barauni Refinery was
signed by the parties under sections 12(3) and 18(3) of the
Industrial Disputes Act, 1947 in conciliation proceedings.
Both the general settlement and the special settlement
concerning Barauni Refinery were to remain in force till
30th April, 1986. Despite the specific demand made in the
two charters of demand for the upward revision of the age of
superannuation, no specific provision was made in that
behalf either in the general settlement or in the special
settlement. On the contrary, clause 19 of both the settle-
ments provided that the
283
terms and conditions of service which were not changed under
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the settlements shah remain unchanged and operative during
the period of settlement, further, clause 21 did not permit
raising of any demand throwing an additional burden on the
corporation during that period.
Later, the Petroleum and Chemical Mazdoor Union served
notice on the Regional Labour Commissioner (Central) under
section 10(2) of the Industrial Employment (Standing Orders)
Act, 1948 for modification of clause 20 of the Certified
Standing Orders of Barauni Refinery for raising the age of
superannuation from 58 years to 60 years. This demand was
based on the averment that the nature of work performed by
the workmen in the Refinery and Pipe Lines Division and
their payscales were identical to the staff members of the
Marketing Division.
The Regional Labour Commissioner allowed the application
for modification of clause 20 of the Certified Standing
Orders. The Appellate Authority dismissed the appeal of the
Corporation, but at the same time directed a slight modifi-
cation in clause 20 of the Standing Orders.
The IOCL preferred a writ petition in the High Court for
quashing the orders of the Regional Labour Commissioner as
well as the Appellate Authority. On the other hand, the
Union, feeling aggrieved by the order of the Appellate
Authority, preferred a writ petition against that order.
The High Court inter alia held that the settlement
arrived at in the conciliation proceedings was binding on
the workmen, and as clause 19 of the settlement kept the
service conditions which were not changed in tact and clause
21 of the settlement did not permit raising of any demand
throwing an additional burden on the Corporation, it was not
permissible to modify the certified Standing Orders by an
amendment, as that would alter the service conditions and
increase the financial burden on the management.
Dismissing the appeals by the two trade unions this Court,
HELD: (1) The Industrial Employment (Standing Orders)
Act, 1948 was enacted to define with sufficient precision
the conditions of employment for workers employed in indus-
trial establishments and to make the same known to them.
[289B]
(2) According to sub-sections (1) and (3) of section 18
of the Industrial Disputes Act, settlements are divided into
two categories, namely, (i) those arrived at outside the
conciliation proceedings and (ii)
284
those arrived at in the course of conciliation proceedings.
A settlement which belongs to the first category has limited
application in that it merely binds the parties to the
agreement but the settlement belonging to the second catego-
ry has extended application since it is binding on all
parties to the industrial dispute. [292A-B]
(3) A settlement arrived in the course of conciliation
proceedings with a recognised majority union 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.
[292C]
(4) The object is to uphold the sanctity of settlement
reached with the active assistance of the Conciliation
Officer and to discourage an individual employee or a minor-
ity union from scuttling the settlement. There is an under-
lying 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 others. The High Court was, therefore, right in
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coming to the conclusion that the settlement dated 4th
August, 1983 was binding on all the workmen of the Barauni
Refinery including the members of Petroleum and Chemical
Mazdoor Union. [292D-E]
(5) The age of retirement prescribed by clause 20 of the
Certified Standing Orders was undoubtedly a condition of
service which was kept in tact by clause 19 of the settle-
ment. [292G]
(6) During the operation of the settlement it was not
open to the workmen to demand a change in clause 20 of the
certified Standing Orders because any upward revision of the
age of superannuation would come in conflict with clauses 19
and 21 of the settlement. [293E-F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 93031 of
1990.
From the Judgment and Order dated 15.9.1989 of the Delhi
High Court in C.W.P. No. 1770 of 1987.
Hardev Singh, Ms. Madhu Moolchandani and Jitender Sharma
for the Appellant.
V.N. Koura and Ashok Grover for the Respondents.
285
The Judgment of the Court was delivered by
AHMADI, J. These two appeals by two different Trade
Unions of Barauni Refinery are directed against the decision
of the High Court of Delhi which set aside the modification
of Clause 20 of the Standing Orders certified under Section
5 of the Industrial Employment (Standing Orders) Act, 1946
(hereinafter called ’the Standing Orders Act’). The brief
facts giving rise to these two appeals are as under:
Two companies, namely, the Indian Refinery, Limited and
Indian Oil Company, Limited amalgamated in 1964 and a new
Company known as Indian Oil Corporation, Limited (IOCL) was
incorporated. This newly formed company comprised essential-
ly of two divisions, namely, (1) Marketing Division, repre-
senting the staff, assets and business of Indian Oil Compa-
ny, Limited and (2) Refinery and Pipe Lines Division, repre-
senting the staff, assets and oil refinery manufacturing of
petroleum products of Indian Refinery, Limited. The age of
superannuation of the staff in the Marketing Division was 60
years whereas the age of superannuation for the Refinery and
Pipe Lines Division was fixed at 58 years under Clause 20 of
the Standing Orders concerning Barauni Refinery. The IOCL
has refineries in different parts of the country including
one at Barauni. The Standing Orders concerning the Barauni
Refinery came into force on 5th December, 1964 as provided
by Section 7 of the Standing Orders Act and apply to all
workmen employed in the said industrial establishment.
Clause 20 of the Standing Orders reads as under:
"Every employee shall retire from service on completing the
age of 58 years. Extension for a maximum period of 5 years
but not for more than one year at a time may be given at the
discretion of the company provided the employee is certified
to be fit by the Company’s Medical Officer and provided
further that the employee concerned also consents to such
extension."
By a Joint letter dated 15th December, 1981, 14 recognised
Unions representing the employees of the IOCL working in
different refineries and pipe lines divisions submitted a
charter of demands in terms of clause 2.1.3 of the long term
settlement dated 3rd December, 1979. By clause 18 of this
charter of demands the superannuation age was sought to be
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enhanced to 60 years. A similar charter of demands was’
forwarded by the Barauni Telshodhak Mazdoor Union to the
General
286
Manager, IOCL, Barauni Refinery, on 23rd December, 1981.
Pursuant to the presentation of this charter of demands,
meetings were held between the Management of IOCL (R & P
Division) and the recognised Unions of the said Division
from time to time. As a result of discussions held at the
said meetings as settlement was mutually arrived at by and
between the parties on May 24, 1983. Clauses 19 and 21 of
this general settlement concerning all the Refineries and
Pipe Lines Divisions, inter alia provided as under:
"19. The Corporation agrees that such terms and conditions
of service as well as amenities and allowances as are not
changed under this settlement shall remain unchanged and
operative during the period of the settlement."
"21. The Unions agree that during the period of operation of
this settlement, they shall not raise any demand having
financial burden on the Corporation other than bonus provid-
ed that this Clause shall not affect the rights and obliga-
tions of the parties in regard to matters covered under
Section 9A of the Industrial Disputes Act, 1947."
This general settlement was to remain in force from 1st May,
1982 to 30th April, 1986. After this general settlement was
signed by the Management and the Union representatives a
separate Memorandum of Settlement dated 4th August, 1983 was
signed between the IOCL (R & P Division), Barauni Refinery,
and their workmen represented by Barauni Telshodhak Mazdoor
Union, Barauni Refinery, under sections 12(3) and 18(3) of
the Industrial Disputes Act, 1947, in conciliation proceed-
ings initiated by the Assistant Labour Commissioner and
Conciliation Officer, Begusarai. This settlement too was to
remain in force from 1st May, 1982 to 30th April, 1986.
Clauses 19 and 21 of this settlement were verbatim reproduc-
tion of those in the general settlement dated 24th May, 1983
extracted hereinabove. It may here be mentioned that despite
the specific demand made in the charter of demands for the
upward revision of the age of superannuation, no specific
provision was made in that behalf either in the general
settlement or in the special settlement concerning Barauni
Refinery. On the contrary clause 19 of both the settlements
provides that the terms and conditions of service which are
not changed under the Settlement shall remain unchanged and
operative during the period of settlement.
The Petroleum and Chemical Mazdoor Union through its
General Secretary, Ram Vinod Singh, served notice on the
Regional
287
Labour Commissioner (Central) under Section 10(2) of the
Standing Orders Act for modification of clause 20 of the
certified Standing Orders of Barauni Refinery for raising
the age of superannuation from 58 years to 60 years mainly
on the ground that the staff members working in the Market-
ing Division superannuated on completing the age of 60
years. It was also contended by the said Union that the
demand for the upward revision of the age of superannuation
could not be pressed at the time of the settlement arrived
at pursuant to the charter of demands because the age of
retirement was fixed at 58 years under the relevant certi-
fied Standing Orders. It was, therefore, felt necessary that
clause 20 of the certified Standing Orders applicable to
Barauni Refinery of the IOCL should be got suitably modified
to raise the age of retirement to 60 years. This demand was
based on the averment that the nature of work performed by
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the workmen in the Refinery and Pipe Lines Division was
identical to that performed by the staff members of the
Marketing Division. The pay-scales of the employees of the
Refinery Division and Marketing Division were also identi-
cal. It was, therefore, contended that there was no valid
reason for fixing different ages for retirement for the
staff members working in the said two Divisions of IOCL.
The Regional Labour Commissioner after heating the rival
parties allowed the application for modification of clause
20 of the certified Standing Orders. By his order he direct-
ed that clause 20 should be modified as under:
"Normally the age of retirement of workman of the Corpora-
tion is fixed at 60 years. No notice is required to be given
by a workman of his intention to retire on superannuation or
by the Management to the workman that he is due to reach the
age of superannuation on certain date. The workman should
not, however, leave his place of duty without being re-
lieved."
Against this order of 11th October, 1984, the IOCL preferred
an appeal to the Appellate Authority under Section 6 read
with Section 10(3) of the Standing Orders Act. The Appellate
Authority while dismissing the appeal directed a slight
modification in clause 20 of the Standing Orders. Clause 20
as modified by the Appellate Authority was worded as under:
"Every workman shall generally retire on attaining the age
of 58 years. Between the 57th and 58th year Company’s
288
Medical Officer would conduct the medical test and if the
workman is found to be medically fit he shall be retained in
service for a period of two more years beyond the age of 58
years i.e. upto 60 years."
Feeling aggrieved by this order of the Appellate Authority
the IOCL preferred a writ petition No. CWP No. 1717/87 in
the High Court at Delhi for quashing the impugned order of
the Certifying Officer dated 11th October, 1984 and the
impugned order of the Appellate Authority dated 4th May,
1987. The Union which had initiated the proceedings for
modification of Clause 20 of the certified Standing Orders
also felt aggrieved by the said order of the Appellate
Authority and preferred a writ petition No. CWP 3417/87 in
the High Court of Delhi. Both these writ petitions were
heard by a Division Bench and were disposed of by a common
Judgment. The writ petition filed by the IOCL was allowed
while the other writ petition was dismissed.
While hearing these two writ petitions the High Court
formulated two points for consideration, namely, (i) "Wheth-
er the Certifying Authority under the Standing Orders Act
has the jurisdiction to entertain an application for amend-
ment of a Standing Order which fixes the age of retirement
of the workmen as 58 years which is in consonance with the
model Standing Order and enhances the age of retirement to
60 years without first giving any finding whether it is
practicable to give effect to the model Standing Order" and
(ii) "Whether the settlement arrived at under Section 18(3)
and Section 19(2) of the Industrial Disputes Act, 1947,
between the petitioner and the workmen represented by their
recognised majority union and which settlement was in force
when impugned orders were made, had put any bar on the
rights of the workmen to approach the authorities under the
said Act for seeking modification of the Standing Orders
with regard to the fixation of the age of superannuation of
the workmen". The High Court answered the first question in
the affirmative holding that it was open to the Certifying
Authority to entertain an application for modification of
the clause fixing the date of superannuation, the provisions
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in the model Standing Orders, notwithstanding. On the second
point the High Court came to the conclusion that the settle-
ment arrived at in conciliation proceedings was binding on
the workmen and as clause 19 of the settlement kept the
service conditions which were not changed in-tact and clause
21 of the settlement did not permit raising of any demand
throwing an additional financial burden. on the IOCL, it was
not permissible to modify the certified Standing Orders by
an amendment as that would alter the service condition and
289
increase the financial burden on the Management. In this
view that the High Court took it quashed the orders passed
by the two authorities below and made the rule in CWP No.
1717/87 absolute while dismissing CWP No. 3417/87 with no
order as to costs. It is against this order that the Trade
Unions have approached this Court.
The Standing Orders Act was enacted to define with
sufficient precision the conditions of employment for work-
ers employed in industrial establishments and to make the
same known to them. The object of the Act was to have uni-
form Standing Orders in respect of the matters enumerated in
the schedule to the Act regardless of the time of their
appointment. With this in view the Act was enacted to apply
to all industrial establishments wherein 100 or more workmen
were employed on any date of-the preceding 12 months. Within
six months from the date on which this enactment becomes
applicable to an industrial establishment, the employer is
obliged by Section 3 to submit to the Certifying Officer
draft Standing Orders proposed by him for adoption in his
industrial establishment. Sub-section (2) of Section 3 lays
down that in such draft Standing Orders provision shall be
made for every matter set out in the schedule which may be
applicable to the industrial establishment and where model
Standing Orders have been prescribed shall be, so far as
practicable, in conformity with such model. Section 4 pro-
vides that the Standing Orders shall be certifiable if (a)
provision is made therein for every matter set out in the
schedule which is applicable to the industrial establishment
and (b) the Standing Orders are otherwise in conformity with
the provisions of the Act. It further casts a duty on the
Certifying Officer or Appellate Authority to adjudicate upon
the fairness and reasonableness of the provisions of any
Standing Orders. On receipt of the draft Standing Orders,
section 5 requires the Certifying Officer to forward a copy
thereof to the trade union, if any, of the workmen, or where
there is no such trade union, to the workmen in such manner
as may be prescribed, together with a notice in the pre-
scribed form requiring objections, if any, which the workmen
desire to make to the draft Standing Orders. Thereafter the
Certifying Officer must hear the concerned authorities and
decide whether or not any modification of or addition to the
draft submitted by the employers is necessary to render the
draft Standing Orders certifiable under the Act. He is then
expected to certify the draft Standing Orders with modifica-
tions, if any, and send authenticated copies thereof in the
prescribed manner to the employer, to the trade union or
other prescribed representatives of the workmen within 7
days. Section 6 provides for an appeal against the order of
the Certifying Officer. The Appellate Authority has to com-
290
municate its decision to the Certifying Officer, to the
employer and the trade union or other prescribed representa-
tive of the workmen within 7 days from the date of its
order. Section 7 provides that the Standing Orders shall,
unless an appeal is preferred, come into operation on the
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expiry of 30 days from the date on which authenticated
copies thereof are sent under section 5(3) or where an
appeal is preferred, on the expiry of 7 days from the date
on which copies of the orders of the Appellate Authority are
sent under section 6(2). Standing Orders duly certified as
above for the Barauni Refinery came into operation on 5th
December, 1964 as provided by section 7. We then come to
Section 10 which provides for modification of certified
Standing Orders. Subsection (1) thereof states that the
Standing Orders finally certified shall not, except on
agreement between the employer and the workmen or a trade
union or other representative body of the workmen be liable
to modification until the expiry of six months from the date
on which the Standing Orders or the last modification there-
of came into operation. Sub-section (2) of Section 10 reads
as under:
"Subject to the provisions of sub-section (1), an employer
or workman or a trade union or other representative body of
the workman may apply to the Certifying Officer to have the
standing orders modified, and such application shall be
accompanied by five copies of the modifications proposed to
be made, and where such modifications are proposed to be
made by agreement between the employer and the workmen or a
trade union or other representative body of the workmen, a
certified copy of that agreement shall be filed along with
the application."
It was under this provision that clause 20 of the certified
Standing Orders was sought to be modified.
Since the High Court has answered the first point in the
affirmative i.e. in favour of the workmen, we do not consid-
er it necessary to deal with that aspect of the matter and
would confine ourselves to the second aspect which concerns
the binding character of the settlement. Section 2(p) of the
Industrial Disputes Act, 1947 defines a settlement as a
settlement arrived at in the course of conciliation proceed-
ings 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 the officer authorised
in this behalf by the appropriate
291
Government and the Conciliation Officer. Section 4 provides
for the appointment of Conciliation Officers by the appro-
priate Government. Section 12(1) says that where any indus-
trial dispute exists or is apprehended the Conciliation
Officer may, or where the dispute relates to a public utili-
ty service and a notice under Section 22 has been given,
shall, hold conciliation proceedings in the prescribed
manner. Sub-section (2) of Section 12 casts a duty on the
Conciliation Officer to investigate the dispute and all
matters connected therewith with a view to inducing the
parties to arrive at a fair and amicable settlement of the
dispute. If such a settlement is arrived at in the course of
conciliation proceedings, sub-section (3) requires the
Conciliation Officer to send a report thereof to the appro-
priate Government together with the memorandum of settlement
signed by the parties to the dispute. Section 18(1) says
that a settlement arrived at by agreement between the em-
ployer and the workmen otherwise than in the course of the
conciliation proceedings shall be binding on the parties to
the agreement. Sub-section (3) of Section 18 next provides
as under:
"A settlement arrived at in the course of conciliation
proceedings under this Act or an arbitration award in a case
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where a notification has been issued under sub-section (3-A)
of Section 10-A or award of a Labour Court, Tribunal or
National Tribunal which has become enforceable shall be
binding on--
(a) all parties to the industrial dispute:
(b) all other parties summoned to appear in the proceedings
as parties to the dispute, unless the Board, arbitrator,
Labour Court, Tribunal or National Tribunal, as the case may
be, records the opinion that they were so summoned without
proper cause:
(c) where a party referred to in clause (a) or clause (b) is
an employer, his heirs, successors or assigns in respect of
the establishment to which the dispute relates:
(d) where a party referred to in clause (a) or clause (b) is
composed of workmen, all persons who were employed in the
establishment or part of the establishment as the case may
be, to which the dispute relates on the date of the dispute
and all persons who subsequently become employed in that
establishment or part."
292
It may be seen on a plain reading of sub-sections (1) and
(3) of section 18 that settlements are divided into two
categories, namely, (i) those arrived at outside the concil-
iation proceedings and (ii) those arrived at in the course
or’ conciliation proceedings. A settlement which belongs to
the first category has limited application in that it merely
binds the parties to the agreement but the settlement be-
longing to the second category has extended application
since it is binding on all parties to the industrial dis-
pute, to all others who were summoned to appear in the
conciliation proceedings and to all persons employed in the
establishment or part of the establishment, as the case may
be, to which the dispute related on the date of the dispute
and to all others who joined the establishment thereafter.
Therefore, a settlement arrived at in the course of concili-
ation proceedings with a recognised majority union 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 settle-
ments reached with the active assistance of the Conciliation
Officer and to discourage an individual employee or a minor-
ity union from scuttling the settlement. There is an under-
lying 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 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. The High Court was,
therefore, right in coming to the conclusion that the set-
tlement dated 4th August, 1983 was binding on all the work-
men of the Barauni Refinery including the members of Petro-
leum and Chemical Mazdoor Union.
The settlement does not make any specific mention about
the age of retirement. Clause 19 of the settlement, however,
provides that such terms and conditions of service as are
not changed under this settlement shall remain unchanged and
operative for the period of the settlement. The age of
retirement prescribed by clause 20 of the certified Standing
Orders was undoubtedly a condition of service which was kept
intact by clause 19 of the settlement. The provisions of the
Standing Orders Act to which we have adverted earlier clear-
ly show that the purpose of the certified Standing Orders is
to define with sufficient precision the conditions of em-
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ployment of workman and to acquaint them with the same. The
charter of demands contained several matters touching the
conditions of service including the one concerning the
upward revision of the age of retirement. After deli-
293
beration certain conditions were altered while in respect of
others no change was considered necessary. In the case of
the latter clause 19 was introduced making it clear that the
conditions of service which have not changed shall remain
unchanged i.e. they will continue as they are. That means
that the demand in respect of revision of the age of retire-
ment was not acceded to.
By clause 21 of the settlement extracted earlier the
Union agreed that during the period of the operation of the
settlement they shall not raise any demand which would throw
an additional financial burden on the management, other than
bonus. Of course the proviso to that clause exempted matters
covered under section 9A of the Industrial Disputes Act from
the application of the said clause. However, section 9A is
not attracted in the present case. The High Court was,
therefore, right,in observing: "when the settlement had been
arrived at between the workmen and the company and which is
still in force, the parties are to remain bound by the terms
of the said settlement. It is only after the settlement is
terminated that the parties can raise any dispute for fresh
adjudication". The argument that the upward revision of the
age of superannuation will not entail any financial burden
cannot be accepted. The High Court rightly points out:
"workmen who remain in service for a longer period have to
be paid a larger amount by way of salary, bonus and gratuity
than workmen who may newly join in place of retiring men".
The High Court was, therefore, right in concluding that the
upward revision of the age of superannuation would throw an
additional financial burden on the management in violation
of clause 21 of the settlement. Therefore, during the opera-
tion of the settlement it was not open to the workmen to
demand a change in clause 20 of the certified Standing
Orders because any upward revision of the age of superannua-
tion would come in conflict with clause 19 and 21 of the
settlement. We are, therefore, of the opinion that the
conclusion reached by the High Court is unassailable.
In view of the above we see no merit in these appeals
and dismiss them with no order as to costs.
Interim orders in each appeal will stand dissolved.
R.S.S. Appeals dismissed.
294