The Bombay High Court has clarified that the legislative policy behind Section 18(3) Industrial Disputes Act, 1947 (ID Act) is to confer an extended operation of the settlement to those who are not actual signatories to a settlement agreement, if the settlement agreement, is arrived during the course of conciliation proceedings on the principles of parity and fairness.
In such event, the Court ruled that, the fact that a workman was not a member of the Union is immaterial and does not affect the binding force of the settlement on employees. Essentially, when an industrial dispute is raised and is resolved by settlement or by an award, the same would accordingly stand governed by the provisions of Section 18 of the ID Act.
The High Court clarified that settlement agreement that expressly refers to conciliation proceedings and bears the signature of the Conciliation Officer is legally characterized as a settlement ‘arrived at in the course of conciliation proceedings’ under the Industrial Disputes Act, 1947. Thus, such a settlement has an extended binding effect under Section 18(3)(d) of the ID Act on all persons employed in the establishment, irrespective of their membership in the signatory union.
The non-implementation of a subsisting and binding settlement gives rise to a continuing cause of action, and a complaint for its enforcement is not barred by limitation as long as the failure to implement continues, added the Court.
The Division Bench comprising Justice G. S. Kulkarni and Justice Aarti Sathe observed that that the settlement agreement itself contained recitals referring to the conciliation proceedings. Crucially, the Conciliation Officer had accorded his imprimatur to the settlement by endorsing his signature on it. This established the legal character of the settlement as one arrived at “in the course of conciliation proceedings”.
The Bench distinguished between a settlement under Section 18(1) and one under Section 18(3). A settlement under Section 18(1), made otherwise than in conciliation, is binding only on the parties to the agreement. In contrast, a settlement under Section 18(3), arrived at during conciliation, has an “extended operation” and is binding on all workmen in the establishment, including those who are not members of the signatory union and even those who subsequently become employed.
As far as the issue of limitation is concerned, the Bench observed that the complaints were filed in January/February 2008, while the decision by KDMC to implement the 5th Pay Commission recommendations was only taken in September 2008. Thus, until the settlement was implemented, a “continuing cause of action” existed, which entitled the workmen to seek its enforcement. Therefore, the complaints were held to be within the prescribed period of limitation.
Briefly, a settlement agreement was entered into following strike notices from the unions, as per which KDMC would revise the pay structure of its workers based on the recommendations of the 5th Pay Commission. The settlement was reached during conciliation proceedings and was signed by the Municipal Commissioner, union representatives, and the Assistant Labour Commissioner and Conciliation Officer.
Since the respondent-workmen were employees of KDMC but were not members of the unions that were signatories to the settlement agreement, the KDMC opposed the complaints, alleging that the settlement was binding only on the parties to the agreement (inter se) as per Section 18(1) of the ID Act, and not on the complainants who were not members of the signatory unions. Further, the complaints, filed in 2008, were barred by limitation as they were filed 12 years after the settlement was made in 1996.
The Industrial Court, however, allowed the complaints, directing KDMC to implement the settlement.
Appearances:
Senior Advocate Sudhir Talsania and Advocate A. S. Rao, for the Appellant
Advocate Yogendra M. Pendse, for the Respondent
