A Section 18(1) settlement and consequent Lok Adalat award bind represented union members.

Bharat Technologies Auto Components Ltd. (“BTACL”) operated an automobile-components unit at Hosur. Following the takeover of the unit by another company without the employees, BTACL terminated 37 workmen and transferred 12 other workmen to its Maraimalai Nagar unit; the services of those 12 workmen were subsequently terminated/non-employment was alleged from 6 October 2005.

The Hosur Bharat Technologies Auto Components Employees Union represented the workmen before the Principal Labour Court in I.D. Nos. 279 of 2009 and 9 of 2007.

By a common award dated 27 June 2013, the Labour Court directed reinstatement of all 49 workmen with back wages, continuity of service and attendant benefits.

While BTACL’s writ petitions challenging that award were pending, BTACL and the registered Union entered into a settlement under Section 18(1) of the Industrial Disputes Act, 1947, on 11 June 2015, providing compensation of ₹3 lakhs to each workman in full and final settlement.

The settlement was placed before Lok Adalat-II, which passed an award on 17 June 2015 under Section 21 of the Legal Services Authorities Act, 1987, recording the settlement and substituting the Labour Court award.

Twenty workmen subsequently contended that they had neither consented to nor accepted the settlement and sought to reopen the original industrial disputes and claim petitions.

Their writ petitions were dismissed by the learned Single Judge on 23 October 2019.

During the pendency of the writ appeals, 15 of the 20 workmen accepted ₹8 lakhs each in full and final settlement and withdrew their appeals; the present five appeals remained.

The appellants argued that the Union office-bearers lacked authority because their tenure had expired and that the settlement was not binding on them.

1. Whether the Section 18(1) settlement dated 11 June 2015 and the consequential Lok Adalat award dated 17 June 2015 were valid and binding on the five appellants?

2. If the settlement and Lok Adalat award were not binding, what relief were the appellants entitled to, including whether the original industrial disputes and claim petitions should be restored?

The Court applied Section 2(p) of the Industrial Disputes Act, 1947, defining a “settlement,” and Section 18(1), under which a settlement arrived at otherwise than in conciliation is binding on the parties to the agreement.

It relied on the principle of collective bargaining and held that a registered trade union, as a juristic entity under the Trade Unions Act, 1926, may represent its members and enter into settlements concerning their industrial disputes.

Section 21 of the Legal Services Authorities Act, 1987 was applied to hold that a Lok Adalat award is deemed to be a decree or order of a court, is final and binding on the parties, and is not subject to appeal.

Relying on P.T. Thomas v. Thomas Job, (2005) 6 SCC 478, the Court held that a Lok Adalat award is equivalent to a compromise decree and cannot ordinarily be challenged through regular remedies, including Article 226 proceedings.

The Court also applied Herbertsons Ltd. v. Workmen of Herbertsons Ltd., (1976) 4 SCC 736, particularly the rule that individual workers ordinarily do not need to separately approve a settlement negotiated by a recognised union, absent fraud, mala fides or similar vitiating circumstances.

J.K. Jute Mill Mazdoor Morcha v. Juggilal Kamlapat Jute Mills Co. Ltd., (2019) 11 SCC 332 was relied upon for the legal capacity of a registered trade union to act on behalf of its members.

Sections 17 and 18 of the Trade Unions Act, 1926 were considered in relation to possible proceedings against individual office-bearers and the statutory protection available to the Union.

The Court found that the registered Union had consistently represented the appellants before the Labour Court, in the Section 18(1) settlement and before the Lok Adalat, and that the workmen had accepted such representation without objection during the earlier proceedings.

This conduct established the Union’s authority and the appellants’ knowledge and consent to its representation.

The Court rejected the contention that the alleged expiry of the office-bearers’ tenure invalidated the settlement, observing that the Union itself was the registered representative body and had acted throughout the dispute.

Since the parties and their counsel signed the compromise placed before the Lok Adalat, the resulting award acquired finality under Section 21 of the Legal Services Authorities Act and could not be reopened merely because some workmen later considered the settlement financially inadequate.

The authorities cited by the appellants concerning settlements affecting non-signatory unions or minority workmen were distinguished because the present case involved a single registered Union that had continuously represented the concerned workmen.

The Court further held that any alleged irregularity by former office-bearers could be pursued separately against them, but could not invalidate the settlement or impose liability on the Union in the circumstances of the case.

It also noted that, even if the award had been set aside, the appropriate consequence would have involved reopening the Management’s pending writ petitions challenging the Labour Court award, rather than automatically restoring the industrial disputes as sought by the appellants.

The challenge to the award and the request to restore I.D. Nos. 9 of 2007 and 279 of 2009 and C.P. Nos. 445 and 446 of 2013 were therefore rejected.

All five writ appeals were dismissed as devoid of merit, with no order as to costs.

The Court merely suggested that BTACL could consider paying the appellants ₹8 lakhs each, as had been paid to 15 other workmen, but clarified that this was only a suggestion and not a binding direction.