2001(3) ALL MR 221


M/S. Christine Hoden (I) Pvt. Ltd. Vs. State Of Goa & Ors.

Writ Petition No. 403 of 2000

21st December, 2000

Petitioner Counsel: Mr.D.P. BHISE

(A) Industrial Disputes Act (1947), Ss.9-A and 19(2) - Settlement arrived at between labour union and management - Terms of settlement cannot be amended by notice under S.9-A - Hence allowance payable to workman under settlement cannot be frozen by such notice.

There is no provision in law in force which allows an amendment to the terms of a previous settlement by a notice under S.9-A of the Act. In the absence of any amendment to the settlement or unless another settlement on revised terms is signed, no such facility which was there could be withheld. Therefore, the company, in the instant case could not freeze the variable Dearness Allowance (VDA) payable to the worker under the earlier settlement. [Para 10]

(B) Industrial Disputes Act (1947), S.33-C - Payment to employees - Dues of workmen crystalised - Proceeding under S.33-C are maintainable - Proceedings are in nature of execution proceedings and a mere arithmetical calculation. (Para 10)

Cases Cited:
Life Insurance Corporation of India vs. D.J. Bahadur, (1981) 1 SCC 315 [Para 6,10]
Indian Oil Corporation Ltd. vs. Workmen, [1976] 1 SCC 63 [Para 8]
Md. Qasim Larry vs. Md. Samsuddin, [1964] 7 SCR 419 [Para 10]
South Indian Bank Ltd. vs. A.R. Chacko, [1964] 5 SCR 625 [Para 10]
Maruti Mahipati Mullick vs. M/s. Polson Ltd., AIR 1971 Bom.L.R. 655 [Para 10]
Yamuna Mills Co. Ltd. vs. Majdoor Mahajan Mandal, AIR 1950 Bom. 74 [Para 10]
Fabril Gasosa vs. Labour Commissioner & ors., [1997] 3 SCC 150 [Para 10]


JUDGMENT :- Rule. Rule returnable forthwith and taken up for final hearing by consent.

2. This Writ Petition is filed by the Petitioner Company M/s. Christine Hoden (I) Pvt. Ltd., being aggrieved by the Order dated 31st October 2000 passed by the Commissioner of Labour, Government of Goa. By the impugned Order the Labour Commissioner directed that the amount of Rs. 1,69,786/-, which was deposited by the petitioner company with the High Court as per its Order should not be withheld and be distributed among the workmen as per their entitlement. This Order was passed by the High Court while disposing of Writ Petition No. 115 of 1996 filed by the petitioner company against the State of Goa and others, challenging recovery certificate dated 12th January 1996.

3. Few facts which are required to be stated are as follows:- The petitioner is a private limited company registered under the Companies Act, 1956. The workmen of the petitioner company claim to be members of respondent no.3 Union. The petitioner company was engaged in the manufacture of personal sanitary products for women under the brand name 'Comfit'. As per the petitioner company on account of heavy competition with the entry of multinationals, the petitioner company suffered heavy financial loss. The petitioner company, therefore, issued a notice of change under Section 9-A of the Industrial Disputes Act proposing to freeze the Variable Dearness Allowance (V.D.A.) payable to the workmen. By this notice of change under Section 9-A of the Industrial Disputes Act, the petitioner company sought to freeze the V.D.A. at the rate on which the same was paid in October 1989. In response to the notice of change issued by the petitioner company, the respondent no.3 Union approached respondent no. 1 for conciliation. However, there was no fruitful outcome. The Union then approached respondent no. 2 for a certificate under Sub-Section (1) of Section 33-C of the Industrial Disputes Act, 1947 for recovery of V.D.A. payable but for freezing on the ground that the enhanced V.D.A. was payable in accordance with the terms of settlement. On the basis of the said application of the respondent no. 3 Union, the Commissioner of Labour respondent no. 2 issued a recovery certificate for recovery of Rs. 1,15,668/-. This recovery certificate was challenged by the petitioner company before this Court by filing Writ Petition No.115 of 1996. This Court was pleased to hear the same and set aside the recovery certificate and directed the Labour Commissioner respondent no. 2 to pass appropriate Order in accordance with law after hearing the parties. Accordingly, parties were heard. Thereafter the Labour Commissioner respondent no. 2 passed Order dated 13th October 2000, which is impugned in the present petition.

4. I have heard Mr. Bhise, the learned advocate appearing for the petitioner company, Mrs. Shanti Fonseca, the learned advocate appearing for respondent no. 3 Union and Mr. A.N.S. Nadkarni, the Advocate General appearing for the respondents 1 and 2. I have also gone through the impugned Order dated 31st October 2000 passed by the Labour Commissioner and, in my opinion, there is no reason to interfere with the said Order.

5. Admittedly, notice of change was given by the Management in terms of the settlement mentioning that the relevant clause of the settlement should be substituted in such a manner that V.D.A. rise was to be withheld. On this the Labour Commissioner observed that there was no provision of any law in force which allowed the amendment to the terms of settlement by such notice under Section 9-A of the Industrial Disputes Act and that in the absence of any amendment to the settlement or unless any settlement on revised terms was signed, no such facility could be withheld. The Labour Commissioner further observed that the money due under the settlement could be recovered under Section 33-C(1) and that this amount was on account of such recovery only. He, therefore, found no reason as to why the amount should be withheld which the petitioner company was directed to deposit with the High Court while granting leave to the petitioner company to withdraw the earlier petition filed by them. He, therefore, directed that the said amount, which had yielded interest and was now Rs.1,69,786/-, was to be proportionately distributed among the workmen of the petitioner company.

6. The questions whether the settlement or the award continues to operate even after service of notice and lapse of two months subsequent thereto contemplated under Section 19(2) or notice proposing change in the conditions of service under Section 9-A and whether it is terminated only when it is replaced by another settlement or award were precisely before the Supreme Court in Life Insurance Corporation of India v. D.J. Bahadur and others ([1981] 1 S.C.C. 315 and this is what the Supreme Court held :-

"The settlement or award under the ID Act does not cease to be operative merely because of the notice issued under Section 19(2). The notice merely intimates the intention to terminate the settlement or award and even if it ceases to be operative qua settlement or award, it continues qua contract. It replaces the earlier contract of service and is given plenary effect as between the parties. Once the earlier contract is extinguished and fresh conditions of service are created by the award or the settlement, the inevitable consequence is that even though the period of operation and the span of binding force expire, on the notice to terminate the contract being given, the said contract continues to govern the relations between the parties until a new agreement by way of settlement or statutory contract by the force of an award takes its place. If notice had not been given the door for raising an industrial dispute and fresh conditions of service would not have been legally open. With action under Section 9-A, Section 19(2) or (6), the door is ajar for disputes being raised and resolved."

7. Justice Krishna Iyer, who wrote the majority Judgment in the Life insurance Corporation case (supra) also discussed the role of Section 19 as a 'key role' in the life and death of awards and settlements. He also discussed as to how law abhors a vacuum and how even on a notice of termination under Section 19(2) and (6) there is a continuation of the earlier terms with the liberty to both sides to raise disputes and negotiate settlements. This is what His Lordship observed:-

"........ There are three stages or phases with different legal effects in the life of an award or settlement. There is a specific period contractually or statutorily fixed as the period of operation. Thereafter, the award or settlement does not become non est but continues to be binding. This is the second chapter of legal efficacy but qualitatively different as we will presently show. Then comes the last phase. If notice of intention to terminate is given under Section 19(2) or 19(6) then the third stage opens where the award or the settlement does survive and is in force between the parties as a contract which has superseded the earlier contract and subsists until a new award or negotiated settlement takes its place. Like Nature, Law abhors a vacuum and even on the notice of termination under Section 19(2) or (6) the sequence and consequence cannot be just void but a continuance of the earlier terms, but with liberty to both sides to raise disputes, negotiate settlements or seek a reference and award. Until such a new contract or award replaces the previous one, the former settlement or award will regulate the relations between the parties. Such is the understanding of industrial law at least for 30 years as precedents of the High Courts and of this Court bear testimony. To hold to the contrary is to invite industrial chaos by an interpretation of the ID Act whose primary purpose is to obviate such a situation and to provide for industrial peace. To distil from the provisions of Section 19 a conclusion diametrically opposite of the objective, intendment and effect of the section is an interpretative stultification of the statutory ethos and purpose. Industrial law frowns upon a lawless void and under general law the contract of service created by an award or settlement lives so long as a new lawful contract is brought into being. To argue otherwise is to frustrate the rule of law. If law is a means to an end - order in society - can it commit functional hara-kiri by leaving a conflict situation to lawless void?"

8. The Apex Court in Life Insurance Corporation case (supra), after referring to Indian Oil Corporation Ltd. v. Workmen ([1976] 1 S.C.C. 63) reiterated the same principle in the context of Section 9-A of the Industrial Disputes Act. In the Indian Oil Corporation case the question turned on the management seeking to effect changes in the service conditions of the workmen. The Court made observations which have pertinence to the non-extinguishment of the contract of service until a negotiated or adjudicated substitution comes into being. This is what Fazal Ali, J., speaking for the Bench observed:-

"In the circumstances, therefore, Section 9-A of the Act was clearly applicable and the non-compliance with the provisions of this section would undoubtedly raise a serious dispute between the parties so as to give jurisdiction to the tribunal to give the award. If the appellant wanted to withdraw the Assam compensatory allowance it should have given notice to the workmen, negotiated the matter with them and arrived at some settlement instead of withdrawing the compensatory allowance overnight."

9. Thus referring to the Indian Oil Corporation case (supra) the Apex Court in Life Insurance Corporation case (supra) reiterated that unilateral variation by the management is an exercise in futility and an award or settlement must take the place of the contract sought to be varied. It also observed that the ruling in Indian Oil Corporation was a helpful guide with respect to the notice under Section 9-A. It also observed how the difference between an award and a settlement was no more than between Tweedledum and Tweedledee. It also observed that:-

"The law is lucid and the justice manifest on termination notice or notice of change the award or settlement does not perish but survives to bind until reincarnation, in any modified form, in a fresh regulation of conditions of service by a settlement or award. ............... An aching void, an abhorrent vacuum, a legicidal situation of industrial clash cannot be a judicial bonus when the constitutional command is social justice."

10. The principle laid down by the Supreme Court in catena of cases like Life Insurance Corporation of India v. D.J. Bahadur and others (supra), Indian Oil Corporation Ltd. v. Workmen (supra), Md. Qasim Larry v. Md. Samsuddin ([1964] 7 S.C.R. 419), South Indian Bank Ltd. v. A.R. Chacko ([1964] 5 S.C.R. 625), so also by our High Court in Maruti Mahipati Mullick v. M/s. Polson Ltd. A.I.R. 1971 Bom.L.R. 655 and Yamuna Mills Co. Ltd. v. Majdoor Mahajan Mandal, A.I.R. 1950 Bom. 74 squarely applies to the facts of the present case also. Notice of change given by the petitioner company, in view of the principle thus laid down consistently, whereby the petitioner company sought to freeze the V.D.A. payable to workmen, which was payable to them as per the terms of the previous settlement, though it had come to an end, was certainly void. The Labour Commissioner was, therefore, correct when he observed that there was no provision in law in force which allowed the amendment to the terms of the settlement by such a notice under Section 9-A of the Industrial Disputes Act and that in the absence of any amendment to the settlement or unless another settlement on revised terms was signed, no such facility which was already there could be withheld. The Supreme Court in the case of Fabril Gasosa v. Labour Commissioner and others, ([1997] 3 S.C.C. 150 has also observed that when a settlement is a time-bound settlement, it does operate after the expiry of the postulated period in the absence of a fresh settlement and that obligations arising from such a settlement continue unless replaced by a fresh settlement. The learned Advocate General has strongly relied upon Fabril Gasosa case (supra) and vehemently argued that once the dues of the workmen are crystalized, proceedings under Section 33-C, which are in the nature of execution proceedings is a mere arithmetical calculation. I am in agreement with this argument advanced by the learned Advocate General.

11. In view of the above discussion, the Writ Petition is devoid of any merits and no fault can be found with the impugned Order passed by the lower Court. Hence, the following Order: The Writ Petition is dismissed.

Petition dismissed.