Holding

The settlement is to be interpreted broadly; it covers workmen appointed after the cut‑off date, and upon successful completion of probation they become permanent and are entitled to all benefits under the settlement.

Summary

The case arose from the merger of Murphy India Ltd. with CEAT Ltd., after which 45 workmen were appointed on a temporary basis on 1‑Feb‑1991 and placed on probation. A Memorandum of Settlement dated 29‑Apr‑1991 provided benefits to "permanent workmen" on the rolls as of 31‑Dec‑1990. The workmen claimed that, upon successful completion of their probation, they became permanent and were entitled to the settlement benefits, while the appellant argued the settlement applied only to those already permanent on the cut‑off date and that the Model Standing Orders under the 1946 Act were inapplicable because the establishment had fewer than 50 workers. The Industrial Court held the workmen became permanent after probation and were entitled to the settlement benefits; the High Court affirmed this. The Supreme Court upheld that the settlement must be given a wide meaning, covering workmen appointed after the cut‑off date, and that the Certified Standing Orders formed part of the settlement, rendering the Model Standing Orders’ applicability irrelevant. The appeal was dismissed and the interest rate was modified to 9% per annum.

Issues considered

Whether the Memorandum of Settlement applies to workmen appointed on temporary basis/probation after 31‑Dec‑1990, thereby making them permanent and entitled to its benefits.
Whether the provisions of the Industrial Employment (Standing Orders) Act, 1946 (Model Standing Orders) apply when the establishment employs fewer than fifty workers under the Bombay Shops and Commercial Establishments Act, 1948.
Whether the length of the probation period (three months vs six months) affects the entitlement to permanent status and settlement benefits.
Whether the interest rate awarded by the High Court (12% p.a.) should be altered.

Legislation cited

Subjects

settlement interpretationpermanent workmenprobationstanding ordersunfair labour practiceinterest rateindustrial disputemergertemporary appointment

Judgment

CEATLTD. A
v.
MURPHY INDIA EMPLOYEES UNION

APRIL 25, 2006

[S.B. SINHA AND P.K. BALASUBRAMANY AN, JJ.] B

Industrial Disputes Act,~ 1947-Section 18-Settlement conferring
benefits on workmen who were permanent on a specific date-Workmen
appointed thereafter on temporary basis put on probation by an order given
retrospective effect from date of appointment-Applicability of settlement to
c
such workmen-Held: Settlement had provisions for appointment of
apprentices, payment of stipend, probation, confirmation and fitment of
employees which were indicative that it covered not only those who were
permanent workmen as on the date specified in the settlement and had
ceased to be workmen but also those who were to be appointed at a later D
date-Settlement given wider meaning keeping in view its purpose, source
of dispute and context in which it was made-On successful completion of
period of probation, impugned workmen acquired status of permanent
workmen and were entitled to all benefits and privileges of the settlement.

Bombay Shops and Commercial Establishment Act 1948-Section 38- E
B-App/icability of Industrial Employment (Standing Orders) Act, 1946-
Number ofworkmen in establishment being lower than 50 which was minimum
stipulated in Section 38-B-Held: This was insignificant since Certified
Standing Orders framed under Act of 1946 formed part of a settlement
between workers and management. p
Appellant merged with a company which employed the respondent-
workmen, and consequent thereto issued fresh appointment letters to
respondents on 1-2-1991. Although the appointments were on temporary basis,
respondents were put on probation by an order dated 1-5-1991 with effect
from 1-2-1991. However, on 29-4-1991, a Memorandum of Settlement had G
been entered into between the appellant and the respondents for resolution
of disputes arising out of a Charter of Demands of latter. Respondents filed
a complaint about violation of the terms of the said settlement alleging unfair
labour practices against appellant. A prayer for payment of same wages as

295 H
296 SUPREME COURT REPORTS [2006) SUPP. I S.C.R.

A were paid to the permanent workmen of the company as also a declaration
that the said workmen had become permanent workmen of the company from
their respective dates of joining or with effect from 1-2-1991, was also made.
Appellant contested the complaint. Industrial Court adjudicating the dispute
in its award held that in terms of the settlement respondent became permanent
workmen on the expiry of the period of probation of three months, and were
B thus entitled to the other benefits envisaged thereunder. High Court rejected
the challenge to the legality of the said award. Hence the present appeal.

Appellant contended that (i) the benefits of the settlement were given
only to the permanent workmen who were appointed on 1-2-1991, and these
C could not be extended to those who were appointed on a temporary basis and/
or on probation on that date; (ii) the number of workmen having fallen to less
than 50, the provisions of Model Standing Orders framed nnder the Industrial
Employment (Standing Orders) Act 1946 were not applicable.

Respondents contended that (i) the settlement must be read in its entirety
D and so read it would also apply to workmen who joined the services on 1-2-
1991; (ii) applicability of the provisions of the Model Standing Orders framed
under the 1946 Act having been made a part of the settlement, it was
immaterial as to whether status of the permanent workmen was to be given to
the respondents from expiry of three months or six months from the date of
their joining service.
E
Dismissing the appeal, the Court

HELD 1.1. The settlement covers all terms and conditions of service of
various categories of permanent workmen; and was to apply to all permanent
workmen who were on the rolls of the company as on 31-12-1990.1307-E, Fl
F
1.2. The settlement not only provides for appointment of apprentices,
who would be governed by the provisions of Apprentices Act, 1961 but also
for the eligibility criteria therefor in terms whereof the first preference was
to be given to the sons and daughters of the employees and ex-employees of
G the company, who had either retired from service or accepted Voluntary
Retirement Scheme, or expired during service. The eligibility criteria also
provides that the applicant should complete 18 years of age as on the date of
application. Indisputably, in terms of the provisions of Apprentice Act, no
apprentice would have a right of a job or promotion. The Memorandum of
Settlement, however, provides for their absorption on successful completion
H
· CEAT LTD. v. MURPHY INDIA EMPLOYEES UNION 291
of three years ship apprenticeship. It provides for seniority and furthermore· /{
la!s ~?wn cri~eria for determination thereof. (308-C, D, E)

t.3. lftbe said settlement' was only to apply to the permanent workmen,.·
who were oil the rolis of the company as on 31-12-1990, evidently it would .
riot liave contained any provision for appointment ofapprentices, paymeittOf"
stipend imd prlibiltion or confrrmation or their fitinent. (307"Gl ; ·· B

1.4. Evidently, thus, the said settlement not.only covers those who were
permanent workmen as on the said date and had ceased to be workmen but
also those who were to be appointed at a later date. (308-G)

· 2.1. A Memorandum of Settlement must be read in the context in which C
the same was made. (307-G)

2.2. If the said settlement is given a narrow meaning, it would defeat
the purpose thereof. It may be true that by reason of a settlement, a cut off
date may be provided or the benefits be given only to a class of employees but
with a view to give a proper meaning to the terms of the settiement, the court D
would be entitled to notice the source of the dispute. (308-A-B)

2.3. The workmen of Norwest were not on the rolls of the company;
they became its employee only with effect from 1-2-1991. Their terms and
conditions were already governed by the Certified Standing Orders. A Code E'
of Conducts was required to be evolved only as regard the workmen who came
on the rolls of the company after 31-12-1990. The said Code of Conduct was
evolved to repress the hardships which had already been confronted by the
use of the Standing Orders of the company. It was to operate concurrently
with the Certified Standing Orders. Some of the provisions in the Code·of
Conduct expected of the employees evidently were not governed by the F
Certified Standing Orders. (308-B, CJ

3, Whether the period of probation was three months or six months is
not of much significance, as the workmen had been kept on probation by an
order dated 1-5-1991 with retrospective effect from 1-2-1991. Evidently, they
were thus entitled to the status.of a permanent workmen on completion of G
six months period if not three months. They were kept on probation till 1996 ·
and; thus they had admittedly completed the period of six month5' Once they

I had successfully completed the period of probation they were entitled to the
status of permanent workmen, the consequences whereof would be that they
became entitled to all the benefits and privileges in terms of the settlement H
298 SUPREME COURT REPORTS (2006] SUPP. I S.C.R.

A as permanent employees. (309-D, Ef
4. The fact that the number of workmen in the establishment of appellant
was less than 50 as is provided for in Section 38-B of Bombay Shops and
Commercial Establishment Act 1948 is not of much significance inasmuch
as in the instant case, the Certified Standing Order form part of the settlement
B itself. The Certified Standing Orders therefore govern the terms and
conditions of the service of the workmen apart from those which were
specifically mentioned in the Settlement. 1309-F; 310-AI

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2249 of2006.

C From the Final Judgment & Order dated I 1.1.2005 of the High Court of
Judicature at Bombay in W.P. No. 1785/200 I.

T.R. Andhyarujina, A.B. Chowdhury, R.N. Karanjawala, Ruby Singh
Ahuja and Manik Karanjawala for the Appellant.

D Ms. Jane Cox, Aparna Bhat and P. Ramesh Kumar for the Respondent.

The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted.

E INTRODUCTION
Interpretation of a settlement arrived at by and between the parties
herein is in question in this appeal which arises out of a judgment and order
dated 11.01.2005 passed by a learned Single Judge of the High Court of
Judicature at Bombay in Writ Petition No.1785 of 200 I.
F
ADMITTED FACTS

Murphy India Ltd. (Murphy) was a manufacturer of Radio and Television
sets. Norwest Electronics Ltd. (for short, 'Norwest'), which was running a
G servicing centre, was a sister concern of Murphy India Ltd. It had been
carrying out maintenance and repair works of the products of Murphy at its
Thane factory. It was an establishment within the meaning of the provisions
of the Industrial Employment (Standing Orders) Act, 1946, (1946 Act). The
concerned workmen were on the rolls of Norwest. The Provident Fund and
E.S.l.C. Code Number of both the companies were the same. Some workmen
H working in the said Norwest were its permanent employees. Murphy became
CEAT LTD. v. MURPHY INDIA EMPLOYEES UNION [SINHA. J.] 299

a sick company. It was referred to the Board of Industrial and Financial A
Reconstruction (BIFR). Pursuant to a scheme made by it on or about 31.08.1990
Murphy merged with the appellant-company. It undertook the maintenance
and repair works carried out at the factory of Murphy situated at Pare I. Some
of the workmen ofNorwest, who were represented by the Union herein, had
been assured that they would be provided with employment on permanent
basis by the appellant herein. 45 workmen had applied for employment with B
its Electronics Division. They were issued fresh appointment letters with
effect from 01.02.1991. They were initially appointed on temporary basis at
Parel Unit of the appellant, wherein sales and service of the Radios and
Televisions used to be carried out. Indisputably, the said establishment was
registered under the Bombay Shops and Commercial Establishment Act, 1948 C
(for short, 'the 1948 Act').

Although initially existence of the Certified Standing Orders was denied
by the appellant, a copy thereof was produced before the High Court, in terms
whereof~ the employees appointed on probation were to get the permanent
status on the expiry of six months from the date of joining the service; D
whereas in terms of the Model Standing Orders, such permanent status was
to be confened on the workmen on the expiry of three months of their being
placed on probation.

After Murphy was referred to the BIFR and its consequent merger with
the appellant, appointments had been given to 45 workmen on and from E
0 I .02. I991. Although they had been appointed on temporary basis, they were
put on probation by an order dated 01.05.1991 with effect from 1.2.1991. They
had been kept on probation till 1996 and their services had been terminated
thereafter. Termination of the services of the said workmen had given rise to
another industrial dispute and it is stated at the bar that an award has been p
pass~d in favour of the workmen. The said matter, however, is pending
adjudication before the Bombay High Court and the execution of the award
has been stayed.

PROCEEDINGS:
G
On or about 29.04.1991, a Memorandum of Settlement was entered into
between the Electronics Division of the appellant herein and the respondent
Union, which was recognized in terms of the Maharashtra Recognition of
Trade Unions and Prevention of Unfair Labour Practices Act, I971 (for short,
'the 1971 Act') for resolution of the disputes arising out a Charter of Demands H
300 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A made on 27. J.Q.19&9 in respect of the workmen working in the shop floor and
office of the company situated at Thane and Pare!.

On or about 06. I0.1992, a complaint was filed by the respondent-Union
about the violation of the terms of the said settlement, alleging unfair labour
practices as contained in Item Nos. l(a) and 4(g) of the Second Schedule and
B Item Nos.6 and 9 of the Fourth Schedule appended to the said Act. A prayer
for payment of the same wages as are. paid to the permanent workmen of the
company as also a declaration that the said workmen had become the permanent
workmen of the company from their respective dates of joining or with effect
from 01.02.1991, was also made. The appellant denied and disputed that it had
C committed any unfair labour practice.

In view of the rival contentions raised before the Industrial Tribunal, the
following issues were framed :

"(i) Does the Complainant prove that they are permanent employees
since joining Norwest Electronics Ltd. and/or Ceat Ltd. and they are
D
entitled to full back wages and continuity of service w.e.f. O1.02.1991?

(ii) Whether the Respondent has committed Unfair Labour Practice
under Items I (a), 4(a) of Schedule II and Item 3, 6 and 9 of Schedule
IV of the MRTU & PULP Act?"
E Before the Industrial Court, reliance was placed by the respondent on
the said settlement dated 29 .04.1991.

By reason of an award dated 29.03.2001, the Industrial Court held that
the benefits under the said settlement must be held to have been rendered
F to the concerned workmen, in terms whereof they became entitled to the
status of permanent workmen on the expiry of the period of probation of three
months, and were, thus, also entitled to the other benefits envisaged thereunder.
Monetary benefits were directed to be paid to the workmen with compound
interest @ 12% p.a.

G The legality or otherwise of the said award came to be questioned by
the appellant by filing a writ petition before the Bombay High Court. The said
writ petition has been dismissed by reason of the impugned judgment.

SUBMISSIONS :

H Mr. T.R. Andhyarujina, the learned Senior Counsel appearing on behalf
CEAT LTD. v: MURPHY INDIA EMPLOYEES UNION (SINHA, J.] 301
of the appellant, would submit that the Industrial Court as also the High Court A
overlooked the fact that in terms of Section .i 8(3)(c) ofthe Industrfai Disputes
Ad, I947'(for short, 'the 1947 Act"), the ben~'fits o(the said settlement dated
29.04.1?91 having been given pnly to the permanent .workmep who were
appointed with eff~ct from. 01.02. 1991, be~efits th~reof could, not .have been
directep_ to pe given to the concerned workmen who joined th~ es(<\blishment R
on.a te111porary basis and/qr.on probation only with effect from. OJ .. Q2.1991.
. ''·"' . ', .. . • '. . . . ' ; . - . • : '·~ .. . . 'i .':

''
It was submitted that the High, Court foll into an er~or.in holding that
• : I • ' O. • • ' • : ' ' '• • ) '

despite the fact th~t the number of work111en had fall~n. to l,ess than_ 50, the
provisions of Model Sianding Orders frarrieci under the 1946 Act would not
apply ,hl the cas~· of the CO?cerned work~~~ .... ·. . . . , . ' .

Ms. Jane Cox, the learned counsel appearing on behalf of'the respondent-
Union, on the other hand, submitted. that .the said settlement dated 29.04.1991
must be read in its entirety and so read it would be evident that the same
would also apply to such workmen who joined the services of the appellant's
establishment on and from 01.02.1991. It was further submitted that applicability D
of the· provisions of the Model Standing Orders or the Certified Standing
Orders framed under the 1946 Act having been made a part of the settlement,
it matters little as to whether the status of the permanent workmen was to be
given to the concerned workmen on the expiry of three moths:·or six months
from the date of their joining service.

SEITLEMENT:

. It is alsii not 'in dispute that a Memorandum of Settlement within the
meaning of Sectfon 2(p), read with Section I 8(1) of th~ I947 Act_ and Rule 62
of the Iridu~trial Disputes (Bombay) Rules, had been arrived at.between the
patties _on c;ir ~bout 29.04.1991, the relevant clauses whereof are as under: F

"Whereas the President, MAHARASHTRA SHRAMIC SENA, a
recogniz~d Union under the Prov_isions of the MRTU & PULP Act,
1971 (hereinafter referred to asthe Union) representing the workmen
.·of Mis CpAT LIMITED, ELETRONICS DIVISION (hereinaft~r ~ferred G .
to as the Co111pany) served the Charter of Demands o,n 27th February,
1989 011 the Company in resp~ct of the workme~ working on_ the Shop
floor and the office of the company situat_ed at _Thane ~nd Pare.I under
cover of their letter dated 27th February, 1989 relating to wage Scale,
. Classifications, Dearness Allowance, Leave. Facilities, Leave Travel
Allowance, Transports etc. and have also forwarded supplementary ·H ·
302 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A demands in relation to Lunch Allowance, Five days week working, etc.
as contained in their supplementary Charter dated 9th March, 1989.

And whereas the negotiations were held between the
representatives of the Company and the representatives of the Union
from time to time on the said set of Charter of Demands parties have
B reached a package settlement covering the service conditions and
terms of employment applicable to the workmen at Thane and Head
Office establishment. Parties therefore have agreed to sign the
settlement in full and final satisfaction of all the demands in accordance
with Section 2(p) read with Section 18(1) of the Industrial Disputes
c Act, 1947 and under the Rules 62 of the Industrial Disputes (Bombay)
Rules, 1957.

NOW THIS SETILEMENT WITNESS AS FOLLOWS

This settlement shall cover all terms and conditions of service of
various categories of permanent workmen and shall apply to all
D
permanent workmen (hereinafter referred to as "workmen") who are on
the rolls of the Company as on 3 lst December, 1990 at the Company's
Head Office and other Factories, establishments situated at Bombay
and Thane.

"Year" means from 1st of January to 3 lst December of any year."
E
Under the heading 'Code of Conduct', it provided that the Code of
Conduct shall operate concurrently with the Company's Standing Orders and
not in derogation thereof. The said Code of Conduct was evolved to repress
the hardship arising out of the implementation of the Standing Orders.
F
Clause 4 of the said settlement provides for period of apprenticeship,
inter alia, stating :

" ... Upon successful completion of three years apprenticeship subject
to the availability of vacancies having due regard to suitability to the
G post the apprentices will be offered employment and will be absorbed
with due regard to seniority in regular employment under such terms
and conditions prevailing for regular employees and shall be issued
regular appointment letters."

Provision has been made to pay stipend to the apprentices and other
H benefits and facilities arising therefor. Probation of the employees was to be
CEAT LTD. v. MURPHY INDIA EMPLOYEES UNION [SINHA, J.] 303
governed by the Standing Orders. The matter relating to confirmation of A
employees has been provided for in clause 8 of the settlement stating that the
same would be as per the Standing Orders. Clause 11 provides for fitment in
the regular grades after successful completion of three years period.

STATUTORY PROVISIONS
B
Section 18(1) of the 194 7 Act provides as under :

"18. Persons on whom settlement and awards are binding.- (I) A
settlement arrived at by agreement between the employer and workman
otherwise than in the course of conciliation proceeding shall be binding
on the parties to the agreement." C
The State of Maharashtra indisputably has made an amendment in sub-
section (1) of Section 18 of the 1947 Act, in terms whereof, the following
proviso was added :

"Provided that, where there is a recognized union for any D
undertaking under any law for the time being in force, then such
agreement (not being an agreement in respect of dismissal, discharge,
removal, retrenchment, termination of service, or suspension of an
employee) shall be arrived at between the employer, and the recognized
union only; and such agreement shall be binding on all persons referred E
to in clause (c) and clause (d) of sub-section (3) of this section."

Section 18(3) of the 1947 Act reads as under :

"18(3). A settlement arrived at in the course of conciliation proceedings
under this Act or an arbitration award in a case where a notification
has been issued under sub-section (3A) of Section JOA or an award F
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 panies summoned to appear in the proceedings as parties G
to the dispute, unless the Board, arbitrator, Labour Court, Tribunal
or National Tribunal, as the case may be, records the opinion
th2t 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 H
304 SUPREME COURT REPORTS [2006) SUPP. l S.C.R.

A 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
B subsequently become employed in that establishment or part."

The 1971 Act was enacted, inter alia, to provide for recognition of
trade unions inter alia for facilitating collective bargaining for certain
undertakings. Section 4 thereof provides for constitution of the Industrial
Court. Chapter Ill provides for recognition of Unions. Chapter IV provides
C for obligations and rights of recognized Unions, other Unions and certain
employees. Sub-section (2) of Section 20 of the 1971 Act reads as under :

"(2) Where there is a recognized union for any undertaking, -
(a) that union alone shall have the right to appoint its nominees to
represent workmen on the Works Committee constituted under
D
sec.lion 3 of the Central Act;
(b) no employee shall be allowed to appear or act or be allowed to
be represented in any proceedings under the Central Act (not
being a proceeding in which the legality or propriety of an order
or dismissal, discharge, removal, retrenchment, termination of
E
service, or suspension of an employee is under consideration),
except through recognized union and the decision arrived at, or
order made, in such proceeding shall be binding on all the
employees in such undertaking;

and accordingly, the provisions of the Central Act, that is to say, the
F
Industrial Disputes Act, 1947, XIV of 1947, shall stand amended in
the manner and to the extent specified in Schedule I."

Section 21 of the 1971 Act provides that no employee in an undertaking
to which the provisions of the Central Act for the time being apply, shall be
G allowed to appear or act or allowed to be represented in any proceeding
relating to unfair labour practices specified in items 2 and 6 of Schedule IV
of this Act except through the recognized union.

UNFAIR LABOUR PRACTICE:

H Chapter VT ofthe 1971 Act deals with Unfair Labour Practices, which
CEA TLTD. v. MURPHY INDIA EMPLOYEES UNI ON [SINHA, J.) ~05

term has been defined in Section 26 thereof to mean any of the ,practices :A
listed in Schedules II, Ill and IV of the Act, unless the cont~xt otherwise
feq.Uir6S'. · ··"

Item Nos. I (a), 4(a) of Schedule JI, and Item Nos.3,6·and9 of Schedule
.
IV, which
. are
. relevant for the purpose
. . ,
of the . case, read
'
as under : ,

"L To interfere with, restrain or coerce· employees in the· exercise of
their rightto btgariize;form, join or assist a trade urrion and to engage
in concerted activities for: the purposes of collective bargaining or
other mutual aid'or protection;· that' is to say ~' · " ''

.· (a) · threatening employees with discharge or disrriissa~, if they join a C
· · · ,. ·union;\" "
'·;,4'.. To, encou;ag~ or" disc~~nig~ 'n.iember~hip in any union by
.( <liscri~i~atlng agai~st' a~y employee, that 'is to say _· .. .
·.'1

.. . ' . (a) "discharging or punishing an e~ploye~ b~ca~se he urged other D
. e~pfoyees to joino; orga~ize ~ union;" . . ; .
. I' " • - ;;,,, .. ' ,''

' .. "3. 'fo.transfer ·an einpl'oyee·mala fide .from.one ·place to another,
• under the guise of following management policy."

"6. To employ employees ~s "/;Jadlis'', casual.s .or temporaries and to
continue them as such for years, ~ith the object of depriving them of E
. the status and privileges of permanent employees."
• < - ,• • ' ••• • •• • t • '
.... "9, Failure to in.tplement award,. settlem,crnt or. agreemi:qt."

Section 28 of the J97 I Act provides for procedure for dealing with
complaints relating to unfair labour practices, in the following terms : F
"28. Procedur~ for dealing with complaints ~elating to unfair labour
practices. - (I) .Where ~ny person has engaged in is engaging in or
any unfair 'I~bour practice, then ariy 'uniort or 'any employee or any
employer. or any lnyestigating Officer may, ~ithin ninety days of the
qccurrence of.such unfair labour practice,, file.a complaint before the .G
Court competent to deal. with such .complaint either under ,section 5,
or as the case may be, under section 7, of this Court.

Provided that,.tlw Court.may entertai.n a comph1int.aft~r the period
of ninety days from the date of the alleged occurrence, if good and H
sufficient reasons are shown by the complainant for the late filing of
306 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A the complaint.

(2) The Court shall take a decision on every such complaint as far
as possible within a period of six months from the date of receipt of
the complaint.

B (3) On receipt of a complaint under sub-section (I), the Court
may, if it so considers necessary, first cause an investigation into the
said complaint to be made by the Investigating Otlicer. and direct
that a report in the matter may be submitted by him to the Court,
within the period specified in this direction.

C (4) While investigating into any such complaint, the Investigating
Officer may visit the undertaking, where the practice alleged 1s 5aid
to have occurred, and make such enquiries as he considers neres~ary.
He may also make efforts to promote settlement of the complaint.

(5) The Investigating Officer shail, after invc~tigating into the
D complaint under sub-section (4) submit his report to the Court, within
the time specified by it, setting uut the full facts and circumstances
of the case, and the efforts made by him in settling the complaint.
The Court shall, on demand and on payment of such fre as may be
prescribed by rules, supply a copy of the report to the complaint and
the person complained against.
E )

(6) I( on receipt of the report of the Investigating Officer, the
Court finds that the complaint has not been settled satisfactorily, and
that facts and circumstances of the case require, that the matter be
fu11her considered by it, the Court, shall proceed to consider it, and
F give its decision.

(7) The decision of the Court, which shall be in writing, shall be
in the form of an order. The order of the Court shall be final and shall
not be called in question in any civil or criminal court.

(8) The Court shall cause its order to be published in such manner
G as may be pn:scribed. The order of the Coun shall become enforceable
from the date specified in the order.

(9) The Court shall forward a copy of its order to the State
Government and such officers of the State Government as may be

H prescribed." ..
CEAT LTD. v. MURPHY INDIA EMPLOYEES UNION (SINHA, J.] 307
We have noticed hereinbefore that the establishment in question is A
governed by the provisions of the 1948 Act, Section 38-B whereof reads as
under :

"38-B. Application of Industrial Employment (Standing Orders) Act
to establishments. - The provisions of the Industrial Employment
(Standing Orders) Act, 1946, in its application to the State of B
Maharashtra (hereinafter in this section referred to as "the said Act"),
and the rules and standing orders (including model standing orders)
made thereunder from time to time, shall mutatis mutandis, apply to
all establishment wherein fifty or more employees are employed and
to which this Act applies, as if they were industrial establishment C
within the meaning of the said Act."

It is, however, not in dispute that the establishment had its own certified
standing orders.

INTERPRETATION OF TERMS OF SETTLEMENT: D
The preamble of the settlement refers to the Charter of Demands served
upon the appellant on 27.02.1989 in respect of the shop floor and office of
the company situated at Thane and Pare! relating to wage scale, classification,
dearness allowance, leave facilities, leave travel allowance, transports etc.
Supplementary demands were also raised. The parties reached a package E
settlement covering the service conditions and terms of employment applicable
to the workmen at Thane and Head Office. The said settlement was to cover
all terms and conditions of service of various categories of permanent
workmen; and was to apply to all permanent workmen who were on the rolls
of the company as on 31.12.1990. The said Memorandum of Settlement,
indisputably, was entered into on 29.04.1991. F
Does it apply only to those workmen who were on the rolls of the
company as on 31.12.1990 is the question.

If the said settlement was only to apply to the permanent workmen,
who were on the rolls of the company as on 31.12.1990, evidently it would G
not have contained any provision for appointment of apprentices, payment of
stipend and probation or confirmation or their fitment.

A Memorandum of Settlement must be read in the context in which the
same was made.
H
308 SUPREME COURT REPORTS [20061 SUPP. I S.C.R.

A If the said settlement is given a narrow meaning, as has been contended
by Mr. Andhyarujina, the same would defeat the purpose thereof. It may be
true that by reason of a settlement, a cut-off date may be provided or the
benefits be given only to a class of employees but with a view to give a
proper meaning to the terms of the settlement, the court would be entitled to
B notice the source of the dispute. The workmen of Norwest were not on the
rolls of the company; they became its employees only with effect from
01.02.1991. Their terms and conditions were already governed by the Certified
Standing Orders. A Code of Conduct was required to be evolved only as
regard the workmen who came on the rolls of the company after 31.12.1990.

C The said Code of Conduct was evolved to repress the hardships which
had already been confronted by the use of the Standing Orders of the company.
It was to operate concurrently with the Certified Standing Orders. Some of
the provisions in the Code of Conduct expected of the employees evidently
were not governed by the Certified Standing Orders. The settlement not only
provides for appointment of apprentices, who would be governed by the
D provisions of the Apprentices Act, 1961 but also for the eligibility criteria
therefor in te;-ms whereof the first preference was to be given to the sons and
daughters of the employees and the ex-employees of the company, had either
retired from service or accepted Voluntary Retirement Scheme, or expired
during service. The eligibility criteria also provides that the applicant should
E complete 18 years of age as on the date of application. Indisputably, in terms
of the provisions of the Apprentices Act, no apprentice would have a right
of a job or promotion. The Memorandum of Settlement, however, provides
for their absorption on successful completion of three years' apprenticeship.
It provides for seniority and furthermore lays down criteria for determination
thereof.
F
The provisions relating to probation and confirmation of the workmen
would not fit in with the concept of applicability of the settlement only to
those who were on the permanent rolls of the company as on 31.12.1990.
Evidently, thus, the said settlement not only covers those who were permanent
workmen as on the said date and had ceased to be workmen but also those
G who were to be appointed at a later date.

CERTIFIED STANDING ORDERS :

Applicability of the provisions of the 1948 Act is not in question. The
only contention raised is the applicability of the Model Standing Orders. The
H
CEAT LTD. v. MURPHY INDIA EMPLOYEES UNION [SINHA, J.) 309
fact that the company had its Certified Standing Orders is not in dispute. The A
same finds reference in the Memorandum of Settlement itself.

The period of probation as also confirmation in the services were to be
in terms of the Standing Orders. It has not been disputed before us that
whereas the Model Standing Orders provided for a successful period of
probation of three months; under the Certified Standing Orders, the period B
thereof was to be six months.

We have noticed hereinbefore that the appellant at one stage denied
and disputed the applicability of the Model Standing Orders and only at a
latter stage, in a proceeding before the High Court, they produced a xeroxed C
copy of the Certified Standing Orders, evidently with a view to show that the
successful period of probation was not three months as per the Model Standing
Orders but in fact was six months.

In this case, whether the period of probation was three months or six
months is not of much significance; as the workmen had been kept on probation D
by an order dated 01.05.1991 with retrospective effect from 01.02.1991.
Evidently they were, thus, entitled to the status of permanent workmen on
completion of six months' period if not three months. They were kept on
probation till 1996 and, thus, they had admittedly completed the period of six
months. Once they had successfully completed the period of probation, they
were entitled to the status of permanent workmen, the consequences whereof E
would be that they became entitled to all the benefits and privileges in terms
of the settlement as permanent employees.

APPLICABILITY OF 1948 ACT

Mr. Andhyarujina's submission that having regard to the fact that the F
number of workmen in the said establishment was less than 50 as is provided
for in Section 38-B of 1948 Act, is again of not much significance.

It may be true that provisions of the Payment of Gratuity Act, 1972 and
the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 G
specifically provide that in the event an establishment becomes liable
thereunder, it would continue to be so despite the fact that the number of
workmen goes below the prescribed limit, but in this case, we are not beset
with such a question.

We need not enter into the controversy as to whether such a contingency H
310 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A would ensue even in respect of the employees governed by the 1948 Act;
inasmuch as in the instant case, the Certified Standing Orders forms part of
the settlement itself. The Certified Standing Orders, therefore, govern the
terms and conditions of the service of the workmen apart from those which
were specifically mentioned in the Settlement.

B We, thus, do not find any force in the said submission.

INTEREST:

Mr. Andhyarujina would submit that the rate of interest awarded by the
High Court being 12% p.a. is on a high side. We, in the peculiar facts and
C circumstances of the case and having regard to the current rate of interest
prevailing in the market, direct that the rate of interest would be 9% p.a.

Subject to the modification aforementioned, this appeal is dismissed.
The appellant shall pay and bear the costs of the respondent in this appeal.
D Counsel fee assessed at Rs. 5,000/-.

v.s. Appeal dismissed.