Holding

No wages are payable for an illegal strike or a lock‑out, the Rs 25 ad‑hoc allowance is not adjustable, and the direction to discontinue CCA for ITI employees is erroneous.

Summary

The case concerned five public‑sector undertakings whose workmen had gone on an illegal but justified strike demanding wage parity with BHEL, followed by a lock‑out declared by management. The National Industrial Tribunal awarded the workers 35% of their wages for the strike and lock‑out periods, disallowed set‑off of a Rs 25 per‑month ad‑hoc allowance, and discontinued the city compensatory allowance (CCA) for ITI employees. On appeal, the Supreme Court held that because the strike was illegal, no wages could be awarded for either the strike or the lock‑out, even if the strike was justified. The Court also ruled that the Rs 25 ad‑hoc allowance under the 9‑June‑1981 settlement could not be adjusted against the minimum‑wage award, and that the Tribunal’s direction to cease CCA for ITI workers was erroneous. Consequently, the award of 35% wages for the strike and lock‑out was set aside, the Rs 25 allowance was upheld without adjustment, and CCA was to continue for ITI employees. The appeals were disposed of, with each party bearing its own costs.

Issues considered

Whether workers are entitled to 35% of wages for the period of an illegal but justified strike
Whether workers are entitled to wages for the period of a lock‑out declared after the strike
Whether the Rs 25 per‑month ad‑hoc allowance under the 9‑June‑1981 settlement can be set‑off against the minimum‑wage award
Whether the city compensatory allowance (CCA) to ITI employees should be discontinued

Legislation cited

Constitution of Indias. 14, s. 16
Industrial Disputes Act, 1947s. 10, s. 12(3), s. 18(3), s. 19(2), s. 22(1)(d), s. 23, s. 23(a), s. 23(c), s. 24(3)

Subjects

industrial disputestrikelock‑outillegal strikewagesminimum wagesparity with BHELcity compensatory allowancesettlementconciliationIndustrial Disputes Act

Judgment

H.M.T. LTD. A
v.
H.M.T. HEAD OFFICE EMPLOYEES' ASSOCIATION AND ORS.

OCTOBER 29, 1996

[J.S. VERMA AND B.N. KIRPAL, JJ.] B

Labour Law:

Industrial Disputes Act, 1947: Sections 22(1) (d), 23(a) & (c), 23,
24 (3) and JO
c
Strike Illegal butjustified-Wagesfor such strikeperiod-Entitlement-
National Industrial Tribunalfound strike to be illegal, though justified, being
in contravention ofSs. 22 (I) (d) or 23 (a) or (c) ofID Act and awarded wages
for such strike period-Held: Wages/or strike period, not payable-Even if
strike was justified, no wages for strike period could have been awarded.
D
Lock out--Legality of-Illegal strike officially called offbut workmen,
though reported/or duty, continued their agitational, disruptive and violent
activities from within the factory premises-Lock out declared without
complying with the provisions of S.22-Wages for such lock out period-
Entitlement-Held: In the circumstances of the case, although there was E
non-compliance with S.22 the lock out is legal by virtue o/S.24(3)-Hence,
wages for such lock out period, not payable.

Section 2(p)-Minimum wages-Settlement--Terms-Jnterpretation
of-1978 settlement between management and unions of BEL, BEML, !TI,
HAL and HMT-Term No. I provided unions' acceptance ofpay and DA p
offered by management without prejudice to unions' right to take up with
Government of India the issue of revision of minimum wages and rate of
neutralisation of DA beyond the specified point-Management, in case the
Government accepted an improvement therein, agreed to revise the minimum
wages and rate of neutralisation of DA in consultation with the unions-
Held: Such a term does not give to the workmen any vested right of G
enhancement of wages or pay scales in case ofrevision in any other public
undertaking.

Minimum wages-Settlement-Interpretation of-1978 settlement
between management and unions of BEL, BEML, IT!, HAL and HMT
provided modification of relevant clauses of minimum wages if minimum H
69
70 SUPREME COURT REPORTS (1996] SUPP. 8 S.C.R.

· A wages in any other Engineering Central Public Sector Undertaking such
as BHEL were increased-BHEL revised its minimum wages to Rs. 500
p.111. w.e.f 1-9-1978-Therefore, the unions sought parity therewith and
demanded addition of Rs. 30 to the existing pay sea/es-Consequently, a
settlement dated 9-6-1981 was arrived at which (i) extended period of
operation of 1978 settlement to 31-12-1982 (ii) workmen were entitled to
B a lump sum ofRs. 700 and (iii) workmen were entitled to an adhoc allowance
ofRs. 25 p.m. w.e.f 1-1-1981-Held: Demand ofparity of minimum wages
with BHEL stood concluded by the 1981 settlement-Demand of addition
ofRs. 30 p.m. stood settled by the adhoc allowance of Rs. 25 p.m. provided
for in 1981 settlement which is binding on the parties as it was reached in
conciliation proceedings-Therefore, National Industrial Tribunal erred in
C further enhancing the minimum wages to Rs. 500 p.m. on the ground that
the 1981 settlement did not preclude the workmen from seeking revision of
minimum wages consequent to the settlement in case of BHEL-But as
leave under Art. 136 has not been granted to the management on this
point, the increase granted by the Tribunal left unaltered-Further, the
1981 settlement does not contemplate adjustment of the ad hoc allowance
D of Rs. 25 p.m. towards the increase granted by the Tribunal.

Settlement-Preamble-Expression "without prejudice to the
contentions of either parry::..Ejfect of-Held : The said expression has to
be read as a whole in the background ofthe demand raised by the unions-
E Thus the said expression can refer only to such matters not specifically
covered by the terms of the 1981 settlement.

Allowances-City Compensato~y Allowance-CCA was being paid
only to employees of IT! since their DA was linked with All India Consumer
Price Index which was lower than the Local Consumer Price Index with
F which the DA of the employees of other public sector undertakings was
linked-CCA was, therefore, paid to employees of IT! to remove this
disparity-National Industrial Tribunal discontinued CCA to employees
of IT! on the ground that the same was not being paid to employees of
other public sector undertakings-Validity of-Held: In the circumstances
G of the case, the direction of the Tribunal dispensing with the payment of
CCA to IT! employees, uncalled for-Constitution of India, 1950, Arts. 14
.and 16.

Words and Phrases :

H "Without prejudice to the contentions of either party"-Meaning of
H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. 71

The minimum wages of the lowest category of workmen of five A
public sector undertakings, namely, Bharat Electronics Ltd. (BEL),
Bharat Earth Movers Ltd. (BEML), Indian Telephone Industries Ltd.
{IT!), Hindustan Aeronautics Ltd. (HAL) and Hindustan Machine
Tools Ltd. (HM'F) were the same. While fixing the minimum wages
and Dearness Allowance (DA) of the lowest category of workmen, IT!
linked the DA with the All India Consumer Price Index (AICPI) B
whereas the other industries linked the DA with Local Consumer
Price Index (LCPI). LCPI being higher than AICPI workmen of !Tl
were granted city compensatory allowance (CCA) in order to remove
this disparity. In Bharat Heavy Engineering Limited (BHEL), with
whom parity of minimum wages was being claimed by the workmen
of these five industries, a settlement was arrived at in the year 1980 C
whereby BHEL revised its minimum wages at Rs. 500 p.m. w.e.f 1-1-
1978. Therefore, the workmen of these five industries while seeking
parity with the minimum wages of BHEL raised an additional demand
of Rs. 30 p.m. to the existing scales of pay. Accordingly, a settlement
was arrived at in 1978 whereby Term No. I postulated the union' D
acceptance of the pay and DA offered by ·the management without
prejudice to the union' right to take up with the Government of
India the issue of revision of minimum wages and rate of neutralisation
of DA beyond the specified point and the management, in case ihe
Government accepted an improvement therein, agreed to revise the
minimum wages and the rate of neutralisation of DA in consultation E
with unions.

The aforesaid demands received no response from the
management whereupon the workmen went on strike. Later on the
strike was withdrawn. However, the management of a11 the five units F
declared a lock out on the ground that the workers continued
the strike and they also carried out violent activities inside the factories.
Therefore, conciliation proceedings were commenced, the lock out
was lifted and a settlement was arrived at between the management
and the unions. The terms of the settlement were as follows:
G
(i) The period of operation of the 1978 settlement was
extended up to 31-12-1982.

(ii) The workmen were entitled to a lump sum of Rs. 700
p.m. H
72 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A (iii) The Workmen were entitled to an ad hoc allowance of
Rs. 25 p.m. w.e.f 1-1-1981.

Even after the aforesaid settlement dated 9-6-1981, the workmen
continued to press for wage parity of the minimum wages With BUEL
w.e.f 1-1-1978. On writ petitions being filed by the unions the High
B Court directed the State Government to make a reference of the
industrial dispute to the appropriate tribunal under Section 10 of
the Industrial Disputes Act, 1947. This reference was accordingly made
to the State Industrial Tribunal. As similar references were made in
three States, the Central Government made a reference to the National
Industrial Tribunal. The terms of reference were in respect of parity
C with the employees of BUEL and about the illegality of strike and the
lock out.

The conclusions arrived at by the Tribunal were as follows:

(a) The settlement dated 9-6-1981, although signed in the
D course of conciliation proceedings under Section 12(3) of
the Industrial Disputes Act, 1947, was without prejudice
to the right of the workmen to ask for parity of wages
with BUEL.

(b) The workmen were entitled to a minimum wage of Rs.
E
500 p.m.

(c) Although the strike commenced by the workmen was
illegal being in contravention of Section S 22 (1) (d) or
23(a) or (c) but it was justified.
F
(d) The lock out declared by the management was justified.

(e) The employees were to be paid 35% of the wages for the
strike and lock out periods.
G
(f) Adjustment of ad hoc allowance of Rs. 25 p.m. was not
allo .ved to be set off.

(g) Discontinuance of City Compensatory Allowance to the
employees of ITI on the ground that the same was not
H being paid to the employees of other public sector
H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. 73

undertakings. A
The management of the five public sector undertakings and the
unions challenged before this Court the aforesaid award of the
Tribunal. Special Leave was granted by this Court limited to the
following questions :
B
(a) Payment of 35% wages for the period of strike and lock
out.

(b) Set off of Rs. 25 p.m. claimed by the management, which
was disallowed by the Tribunal.
c
(c) Discontinuance of CCA with regard to the employees of
!TI.

Disposing of the appeal, this Court
D
HELD : I. The National Industrial Tribunal has held that the
strike, although justified, was illegal being in contravention of Section
22(a) of the Industrial Disputes Act, 1947. Therefore, when the strike
was illegal but justified no wages for the strike period could have
been awarded in favour of the workers. [86-D-EJ
E
Syndicate Bank v. Umesh Nayak, [1994) 5 SCC 572, followed.

2. Although the illegal strike was officially called off the Tribunal
held that the workmen reporting for duty continued their agitational,
disruptive and violent activities from within the factory premises. In F
such circumstances, declaring a lock out by the management without
complying with Section 22 of the Act is legal by virtue of Section
24(3) of the Act. Hence, the workmen would not be entitled to any
wages in respect of the period of such lock out. [82-F-G)

Syndicate Bank v. K. Umesh Nayak, [1994) 5 SCC 577, followed.
G

3. Term No. I in the 1978 agreement does not postulate revision
of pay scales in the event of higher wages being paid to the employees
of BHEL or employees of any other public sector undertaking. This
clause gives to union only a right to take up the issue regarding the H
74 SUPREME COURT REPORTS (1996] SUPP. 8 S.C.R.

A minimum wages and enhancement of rate of neutralisation of DA
with the Government of India if the Government agreed to the
improvement in the minimum wages or the DA neutralisation rate.
At best, this clause only gives a right to the union to make a reference
to the Government of India for revision of minimum wages but does
not give any vested right of enhancement of wages or pay scales in the
B event of there being a revision in any other public sector undertaking.
187-GH 88-AJ

4.1. The demand of parity of minimum wages with BHEL stood
concluped by the settlement dated 9-6-1981. The additional demand
of Rs. 30 p.m. to the existing scales of pay is more or less conceded
C ina3much as Rs. 25 p.m. were agreed to be paid w.e.f 1-1-1981. The
~ettlement of 1981 was arrived at during the conciliation proceedings
and, therefore, was binding on the parties under Section 18(3) read
with Section 19(2) of the Act. Therefore, the Tribunal erred in further
increasing the minimum wages to Rs. 500 p.m. on the ground that the
1981 settlement did not preclude the workmen from asking for a
D revision in the minimum wage consequent on the settlement having
been arrived at in the case of BHEL. However, as leave under Article
136 has not been granted to the management on this point, the decision
of the Tribunal reviewing the minimum wages at Rs. 500 p.m. cannot
be altered. Bui the payment of Rs. 25 p.m. as contemplated by the
settlement, is payable to all the workers in different scales of pay and
E the settlement does not contemplate the said amount being adjusted
in any manner. [90-C-G)

4.2 The expression "without prejudice to the contentions of either
party" which is used in the preamble of the 1981 settlement has to be
read as a whole in the background of the demand which was raised by
F the unions. The use of these words can refer to only such other points
or aspects which were not specifically covered by the terms of settlement
which were arrived at on 9-6-1981. [90-A-B[

5. It is an indisputable fact that city compensatory allowance
(CCA) is being paid only to the employees of !TI because their DA
G was linked with the all India Consumer Price Index which was lower
than the Local Consumer Price Index with which the DA of the
employees of other public sector undertakings was linked. Therefore,
CCA was paid to employees of IT! to remove this disparity. The
Tribunal while directing that CCA will not be paid to the !Tl employees
because it is not paid to the employees of other public sector
H undertakings overlooked the fact that the local consumer price index
H.M.T.LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL,J.] 75

was admittedly always higher than the All India Consumer Price Index. A
Therefore, the direction of the Tribunal dispensing with the payment
of CCA to ITI employees was uncalled for. [91-C-E]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 122 of
1990 Etc. Etc.
B
From the Judgment and Order dated I 0.11.89 of the National
Industrial Tribunal at Bombay in R.No. NTB-1 of 1984

N.B. Shetye, (Hardev Singh) Jitender Sharma Tripurari Ray, Vineet
Kumar, Ms. Madhu Moolchandari, M.C. Narsimhan, Ms. Gunwant Dara,
B.K. Pal, K.C. Gupta and Ms. Sheela Goel for the appearing parties. C
The Judgment of the Court was delivered by

KIRP AL, J. Leave granted.

D
The award of the National Industrial Tribunal Bombay (hereinafter
referred to as 'the Tribunal') adjudicating on the demands of the unions
of five Bangalore based public sector undertakings for parity in minimum
wage with the minimum wage payabie to the employees of another public
sector undertaking namely; Bharat Heavy Electricals Limited (hereinafter
referred to as 'BHEL ') is challenged by the managements as well as the E
workmen in these appeals.

The minimum wage of the lowest cagetory of workmen of five
Bangalore based public sector undertakings namely; Bharat Electronics
Limited (hereinafter referred to as·'B.E.L.'), Bharat Earth Movers Limited
(hereinafter referred to as 'B.E.M.L. '), Indian Telephone Industries F
Limited (hereinafter referred to as 'LT.I.'}, Hindustan Aeronautics Limited
(hereinafter referred to as 'H.A.L.') and Hindustan Machine Tools Limited
(hereinafter referred to as 'H.M.T.') was the same in all these public sector
undertakings. By settlements entered into on various dates in 1974 between
the managements and the workmen of these five undertakings except LT.I., G
the minimum wage of the lowest category of workmen was fixed at Rs.
300 consisting of basic pay of Rs. 200 + Dearness Allowance of Rs 100
which was linked with Local consumer Price Index. The minimum wage
in LT.I. was also fixed at Rs. 300 As dearness allowance was linked with
All India Consumer Price Index, on the basis of the Index prevailing as on
1.12.1973, the Dearness Allowance payable on the baisc wage of Rs. 200 H
76 SUPREME COURT REPORTS [l 996] SUPP. 8 S.C.R.

A came to Rs. 91 and, hence in order to bring uniformity in the minimum
wage, the employees of the LT.I. were paid city Compensatory Allowance
(hereinafter referred to as 'C.C.A.') of Rs. 9/- at 4 1/2% of the basic pay.
The settlements in these five undertakings were to be in force till
31.12.1976.

B In BHEL, with whom parity was being claimed by the workmen of
these five industries, an agreement dated 17/18.9.73 had been entered into
whereby the minimum wage was fixed at Rs. 258. 70 comprising of basic
pay of Rs. 200/- and Dearness Allowance of Rs. 58 at the All India
Consumer Price Index of 200 points for industrial workers with 1960
base. A revision was effected by agreement dated 17/18.1.1974 and the
C minimum wage of the workers of BHEL was fixed at. Rs. 300/- This
minimum wage, and the wage structure constructed on this basis, came
into force with effect from J.9.1973 and was to be in force for a period of
four years. This agreement expired at the end of August 1977 and
negotiations for the review and revision of the same w.e.f. 1.9.1977 were
commenced between the management and the workers in March, 1978. A
D final agreement between the management and the workers was reached on
8/9.1.1980. By this agreement, the wages as on 1.1.1978 for an unskilled
employee in BHEL at the lowest level was fixed at Rs. 500/- per month at
· all India Consumer Price Index of 327 points. This agreement Was to be
effective from 1.1.1978 and was implemented in April, 1980.
E
The 1974 settlements between the managements of B.E.L. l.T.I.,
H.A.L., and B.E.M.L. expired on 31.12.1976 and hence the workmen
unions submitted charters of demands in early part of 1977. Conciliation
proceedings were held between the managements of five public sector
undertakings and their workmen and amicable settlements were arrived at
F between the parties on 25.5.1978. Term number I of these settlements
was uniform and is as follows:

"The Union agrees to accept the offer of the management with
regard to pay scales, quantum ofDeamess Allowance and Fitment
benefits and method of fixation of pay in the revised pay scales
G
as detailed in Annexure-1. This, however, is without prejudice
to th~ Union's right to take up the issues ofrevision of minimum
wages and the enhancement of the rate of neutralisation of •
Dearness Allowance beyond Rs. 1.30 per point with the
Government of India and if the Government of India agrees to
H the improvement in the minimum wages or the Dearness
H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, J.] 77

Allowance neutralisation rate the management agrees to make A
necessary modification to the minimum wages and Dearness
Allowance neutralisation rate and consequential adjustment in
the wage structure in consultation with the unions."

The said settlements dated 25.5.1978 did not settle all the demands
of the workmen. Conciliation proceedings continued which, therefore, B
resulted in different memorandum of settlements which were
entered into in case of H.A.L on 30.8.1978, in B.E.M.L. on
31.8.1978, in LT.I. on 1.9.1978, in H.M.T. on 2.9.1978 and in B.E.L. on
3.9.1978.

These settlements contained different, though somewhat similar, terms C
with regard to revision of wages. In the settlement of B.E.L., term Nos.
1.0 and I. I. were as follows:

"1.0 This agreement is without prejudice to the Union's right to
take up the issues of revision of minimum wages and the D
enhancement of the rate of neutralisation of Dearness Allowance
at Rs. 1.30 per point rise/fall in the local CPI, with the
Government and if the Government of India agrees to improve
the minimum wage or the neutralisation rate beyond Rs. 1.30
per point, the Management agrees to make necessary
modifications to the minimum wage, D.A. neutralisation rate E
and consequential adjustments in the wage structure in
consultation with the Unions.

1.1 If the minimum wages, comprising of pay and Dearness
Allowance, or ifthe rate ofneutralisation of Dearness Allowance
is altered to a higher rate than agreed to in this settlement in any F
other Engineering Central Public Sector Undertaking such as
BHEL, H.M.T. etc., the Management agrees to make necessary
modifications in the relevant clauses and consequential
adjustments, in consultation with the Unions."
G
Similar terms were incorporated in the settlements in the cases of
B.E.M.L. and H.A.L. in the cases of LT.I. and H.M.T., however, there
was no term similar to 1.0 or I. I of the B.E.L. settlement but the above
mentioned term 1 of the settlement dated 25.5.78 was reiterated in the
preamble of their settlements. At the time when these settlements took
place in 1978, negotiations were taking place between the managements H
78 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A and the workers of BHEL which had not resulted in a final settlement. It
is for this reason that in the aforesaid clause I. I reference was made to the
settlement which mighttake place between the management and the workers
of BHEL and which could result in certain modifications being made in
the relevant clauses of the settlement.

B After the settlement was arrived at between the management and the
workers of BHEL on 819.1.80 which had resulted in the revision of wage
at the lowest level of an unskilled employee to Rs. 5001- p.m. w.e.f. I .9. 78,
the unions representing the workmen in the five Bangalore based public
sector undertakings raised the question of revision of minimum wage in
these industries as per the minimum wage as settled in BHEL. A joint
C action forum (hereinafter referred to as 'JAF') of the unions of five public
sector undertakings at Bangalore and Kolar Gold Fields (which was a unit
of BHEL) was formed. On 12.9.1980, this JAF formulated a common
proposal for submission to the management and accordingly, the negotiating
unions submitted common demands to the respective undertakings in the
matter of revision of wages. These demands primarily related to the claim
D for addition of Rs. 30 to the existing scales of pay.

The aforesaid demands received no response whereupon the
negotiating unions gave notices to the respective managements of their
decision to go on indefinite strike any day after I0.12.1980. Conciliation
E proceedings between the managements and the unions then commenced
and the strike was postponed to 26.12.1980 on which date the workmen of
all the five undertakings struck work after they rejected an offer which
had been made by the managements just before the commencement of the
strike. After the commencement of the strike conciliation proceedings again
started on 27.12.1980. On 5.2.1981, when no agreement could be arrived
F at, the conciliation officer submitted his failure report.

The strike in the H.M.T. watch factory was called off on 6.3.1981
and thereafter, the J.A.F. took a general decision on 12.3.1981 to withdraw
the strike. The strike was, accordingly, withdrawn on 14/15116.3.1981
G and the workers resumed work on subsequent dates. No negotiations for
settlement of the demands commenced and thereupon, a decision was taken
by J.A.F. to launch an indefinite hunger strike which commenced on
29.4.1981 and continued till 10.5.1981. The Managements of B.E.L.,
B.E.M.L., LT.I. and H.A.L. declared a lock out in all their units located
at Bangalore w.e.f 6.5.1981 on the ground that the strike had in fact not
H been withdrawn and that the workers continued the strike and they also
H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, l.] 79

carried out violent activities inside the factory. Lock out was also declared A
at Kolar Gold Fields for the same reason w.e.f. 8.5.1981. Thereafter, fresh
conciliation proceedings were commenced and the lock out was lifted
w.e.f. 2/3.6.81 and a settlement dated 9.6.1981 was arrived at between the
managements and the unions. The terms of settlement in the cases of all
the five Bangalore based public sector undertakings were identically worded
and these terms of settlement were as under : B

"(i) The wage settlements dated 3rd and 4th September, 1978
which are to expire on 30.6.1981 are extended upto 3 l.l 2.1982.

(ii) The workmen on the rolls of the company as on the date of
this settlement will be paid a lump sum of Rs. 700 (Rupees C

- Seven Hundred only).

(iii) With effect from 1.1.1981, for the period they are entitled
to wages, they would also be paid an ad hoc allowance of Rs. 25
per month. This amount will count as a pay for all purposes D
except for pay fixation.

(iv) All other terms and conditions relating to pay, allowances
and other monetary benefits in terms of the settlements dated
3rd September and 4th September, 1978 will continue for the
extended period of the settlement. E

(v) The Union assures the Management that they will assist in
the maintenance of discipline, improving productivity and
ensuring smooth production in the factory."

Even after the aforesaid settlement dated 9.6.1981, the workmen F

- continued to press for wage parity of the minimum wage with BHEL
w.e.f 1.l.1978 on the ground that the settlement of9.6.1981 did not settle
the demands made by the unions on 12.9.1980. On writ Petitions being
filed by the unions against B.E.L., LT.I., B.A.L and B.E.M.L., the
Karnataka High Court vide its decision dated 9.8. I 982 directed the G
Government of Karnataka to make a reference of the industrial dispute to
the appropriate tribunal under Section l 0 of the Industrial Disputes Act,
1947 (hereinafter referred to as 'the Act'). This reference was accordingly,
·made to the State Industrial Tribunal by order dated 23.4.1983. Two
questions were referred to the said Tribunal; one was in respect of parity
with employees of the BHEL and the second was about the illegality of H
80 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A strike and the lock out. It appears that the Governments of West Bengal
and Maharashtra had also made similar references to the respective State
Tribunals. Faced with this situation, where references had been made to
....
the tribunals in three different states, the managements approached the
Central Government and thereupon reference was made to the National
Industrial Tribunal by the Central Government on 10/30.5.1984. To this
B reference the unions of five Bangalore based public sector undertakings,
which were situated outside Bangalore, were not made parties and a writ
petition was filed in the Karnataka High Court, which by order dated
20.2.1985, directed the Central Government to consider the question of
including the State unions in the said reference. Accordingly, by order
dated 3.5.1985 reference in respect of all the units, all regional and sales
C offices of five undertakings was made. The terms of the reference were as
follows :

"Are the workmen justified in demanding revision of wages
bringing their wages on par with BHEL in view of the relevant
clauses in the 1978 settlement?
D
2. If so, what should be the quantum and the period for which
such quantum is to be paid in view of the BHEL settlement
subsisting till the end of August, 1982?

3. Are the workmen of Hindustan Machine Tools Ltd.,
E Bangalore, (ii) Bharat Earth Movers Ltd., Bangalore and Kolar
Gold Fields, (iii) Indian Telephone Industries, Banglore (iv)
Bharat Electronic Ltd., Bangalore and (v) Hindustan Aeronautics
Ltd., Bangalore justified in going on strike w.e.f. 26.12.1980?
If so, to what relief are the workmen entitled?
F
4. Are the managements of (i) Hindustan Machine Tools Ltd.,
Banglore; (ii) Bharat Earth Movers Ltd., Banglore and Kolar
Gold Fields, (iii) Indian Telephone Industries Banglore, (iv)
Bharat Electronic Ltd., Bangalore and (v) Hindustan Aeronautics
Ltd., Bangalore justified in declaring lock outs of their
G establishments with effect from 8/9.5.81 to 4.6.1981 at Kolar
Gold Fields and 7.5.1981to2/3.6.1981 at Bangalore? If not,
are the workmen entitled to wages for the lock out period or to
any other relief?"

H In the common statement of claim filed by the unions, it was
H.M.T. LTD. v. H.M. T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, J.] 81

contended that the workmen were justified in demanding that wages and A
wage structure be revised so as to bring the minimum wages on par with
that obtaining in BHEL. It was a contention of the unions that the relevant
clause in 1978 settlement gave liberty to the workmen to raise the question
of wage revision as and when there was a final settlement in BHEL or as
and when the Government of India communicated a change of attitude in
the matter of wage fixation. The unions contended that in view of the B
settlement dated 8/9.1.1980 in BHEL, the relative difference in the
minimum wage of the unskilled workmen in BHEL and the workmen in
the units of H.A.L., B.E.L., B.E.M.L. and at Kolar Gold Fields was as
follows:

BHEL BEL BEML HAL c
- Basic wage

Dearness Allowances
Rs. 335.00

Rs. 165.00
Rs. 305.00

Rs. 125.00

House Rent
D
Allowance Rs. 39.00 Rs. 35.00

City Compensatory
Allowance Rs. 15.60 Rs.-
E
Rs. 554.60 Rs. 465.00

In addition in BHEL settlement there was provision for giving one
more increment in revised scale to all workmen on the roll of the company
on the date of the settlement.
F
With regard to quantum of increase of wages, the unions' claim was
as follows:

"!. The existing scale of pay should be restructured by adding
Rs. 30.00 at the minimum and at all stages in each scales. G

2. (a) The irreducible minimum D.A. For KGF as on 1.9.1978
should be revised to Rs. 133 as against Rs. 128.

(b) For the purpose of computation of variable D.A. All India H
82 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A Consumer Price Index figures should be adopted instead of local
consumer price index.

3. For the existing employees, basic pay should be fixed in the
following manner:

B (a) Add Rs. 30.00

(b) Add one increament.

(c) Add one more increament in lieu of 'next higher Stage' (to
avoid anomalies) and to provide for consequential adjustments
c benefits.

4. City compensatory Allowance should be paid at the rate of
6% of the basic wages.

5. The fitment benefit which is not extented to the employees
D joining after the date ofagreement should be extended to them."

The managements in their reply refuted the said demands. The main
contention; in this regard, was that when the demand had been raised for
revision of pay after the settlement in BHEL had been arrived at, then the
E disputes had been settled with the payment of ad-hoc amount of Rs.700
and an additional ad-hoc payment of Rs 25 p.m. from 1. l.l 981 and,
therefore, the question of wage parity with BHEL did not survive any
longer. It was also contended that the strike of the workmen was unjstified
and illegal and, therefore, the workmen were not entitled to any wages
during the strike period. The further contention on behalf of the
F managements was that even after the strike had been called off, the workers
had resorted to various acts of intimidation, go-slow, beating up of the
willing workers who had attended factory during the strike period and the
workmen also resorted to other forms of indiscipline including destroying
of company property thereby making it impossible to run the factory under
G normal conditions. In substance the strike conditions were continued from
inside the factory which culminated in very serious violent activities which
led to the declaration of lock-out. The said lock out, it was submitted, was
justified and legal and, therefore, the workers were not entitled to wages
for the period during which the lock-out subsisted.

H The Tribunal gave its award on 10.11.1989. While it did not
H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, J.] 83

separately deal with the issues which had been framed, it considered the A

- contentions of the rival parties. In brief, the conclusions arrived at by the
Tribunal were as follows:

(a) The scope of reference in respect of parity with BHEL was
only with regard to minimum wage payable to the unskilled
workmen of the lowest category and, there was no reference for B
revising the pay-scales during the operation of the earlier
settlements.

(b) The relevant clause of the settlement of 1978 had given a
right to the employees to ask for parity with BHEL in respect
of minimum wage for the lowest category and, therefore, there c
was no reason why there should not be any parity during the
period covered by the settlement of 1978.

(c) The workmen were entitled to the minimum wage of Rs.
500 p.m. w.e.f. 1.9.1978.
D
(d) The settlement dated 15.6.1981 did not operate at par to the
present reference on the question of parity with BHEL because
the settlement dated 15.6.1981, although signed in the course
of conciliation proceedings under Section 12 (3) of the Industrial
Disputes Act, 1947, was without prejudice to the contentions of
the employees to give parity in respect of minimum wage for
E
the lowest category of BHEL. By the settlement of 15.6.1981,
only an interim arrangement had been arrived at and the
payments were thereunder described by the Tribunal as ad-hoc
payments, could not be adjusted towards the minimum wage of
Rs. 500 p.m. F
(e) Although the strike commenced by the employees in all the
five Bangalore Based public sector undertakings were illegal
but the Tribunal held that this strike was justified as the Union
of India did not agree to the demand of the employees with
G
parity in respect of minimum wage of lowest category with
:::::iiV' BHEL.

(£)The lock out declared by the managements of the companies,
except in the case of HMT where no lock was declared, was
justified. H
84 SUPREME COURT REPORTS (1996] SUPP. 8 S.C.R.

A (g) The employees of the companies at Bangalore should be
paid 35% of the wages for the strike and lock out periods.

The aforesaid Award of the Tribunal has been challenged by the
managements of the five undertakings and the unions. The undertakings
filed special leave petitions impugning that part of the decision of the
B Tribunal which had awarded a minimum wage of Rs. 500 p.m. and had
also not allowed the adjustment of Rs. 25 p.m. even though the minimum
wage was fixed at Rs. 500 p.m. Further more, the challenge was also to
the award of 35% of the wages to the workmen during the strike and lock
out periods.

C Special Leave was granted by this Court on 2.4 .. 1990 limited to the
three questions which were:

I. Payment of 35% wages for the period of strike;

2. Payment for the period of lock out; and
D
3. Set-off of Rs. 25 p.m. claimed by the management, which
was disallowed by the Tribunal.

The grievance of the workmen, which led to the filing of these appeals
E by special leave, was on three counts:

(i) That there had been inadequate increase of wages at higher
grades;

(ii) The Tribunal had ordered discontinuance of C.C.A. with
F regard to the employees of Indian Telephone Industry;

(iii) 100% wages for strike and lock out period should have been
awarded.

G It was contended by Mr. Narayan B. Shetye, learned counsel on
behalf of the managements, that the Tribunal having come to the conclusion
that the strike was illegal, could not have awarded any wages in respect of
the strike period. Similarly, as the Tribunal had held that the lock out was
justified, if then could not have awarded 35% of the wages for this period
to the workmen. Mr. Jitendra Sharma, learned counsel for respondents,
H however contended that the strike was not illegal and in any event, as the
H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KIRPAL, J.] 85

said strike had been called off, no lock out could have been declared. In A
..... the alternative, it was submitted that for the period of lock out, which
should have been declared to be illegal, the workmen were entitled to full
wages.

On the basis of the evidence which was led before the Tribunal it
held, as already noted, that the lockout was justified because the demand B
of the workmen, which had been raised in terms of the settlement of 1978,
had not been agreed to by the Government. The strike was, however held
to be illegal because J.T.I, H.A.L. and H.M.T. were declared to be public
utility services and no notice as contemplated by Section 22 (a) of the Act
had been given. After taking note of the fact that conciliation proceedings
between the managements and the workmen were going on when the strike
commenced, the Tribunal concluded as follows:
c
"The strike in the public utility services and in other undertakings
was illegal because it was commenced during the pendency of
the conciliation proceedings before the Conciliation Officer. As
mentioned above, at about the same time when the strike notices D
were given conciliation proceedings in respect of the demands
of the workmen were commenced and had not come to an end
.when the strike was actually commenced on 26.12.1980.,
Admittedly, by that time the conciliation officer had not rhade
any failure report. The strike in the public utility services viz.
!Tl, HAL and HMT Hyderabad was thus in contravention of E
clause (d) of sub-section ( l) of Section 22, while the strike in
the other undertakings contravened sub-section (a) of Section
23 of the Industrial Disputes Act, 1947. There is also substance
in the contention urged on behalf of the managements that the
strike was illegal also because it was in contravention of sub-
section (c) of Section 23. The strike was not only for breach F
and non-implementation of some of the clauses in the l 978
settlements but it was in respect of all the demands made by the
workmen by the notice dated 12.9.1980 and some of these
demands were in respect of matters covered by the 1978
settlements which were in force."
G
~ ... Mr. Jitendra Sharma, learned counsel for the workmen, has not been
able to persuade us to hold that the aforesaid conclusion arrived at by the
Tribunal with regard to illegality of the strike is in any way incorrect. It is
quite obvious from the facts on record that the workmen had resorted to
illegal strike. Without going into the question as to whether the strike was H
86 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A justified or not, and even assuming that the Tribunal was right in coming
to the conclusion that the workmen were justified in going on strike, the
question as to whether the workmen would be entitled to get any wages
during the period of illegal strike is no longer res integra.

A Constitution Bench of this Court in Syndicate Bank v. K. Umesh
B Nayak, [ 1994] 5 sec 572 has held that the workmen would be entitled to
wages for the strike period if the strike was both legal and justified. In
other words, if the strike was only legal and not justified or if the strike
was illegal and justified, the workers were not entitled to wages for the
strike period. It was observed that "Whether the strike was legal or illegal
and justified or unjustified, were issues which fell for decision within the
C exclusive domain of the industrial adjudicator under the Act and it was not
primarily for the High Court to give its findings on the said issues. The
said issues had to be decided by taking the necessary evidence on the
subject."

D In view of the aforesaid decision and inasmuch as the strike in the
present case in all the five undertakins at Bangalore has been held to be
illegal, therefore, no wages for the strike period could have been awarded
in favour of the workers.

As regards lock out is concerned, even if it is assumed that there was
E non-compliance with the provisions of Section 22 of the Act at the time
when the lock out was declared, the conclusion of the Tribunal that the
lock out, in the instant case, was legal is not incorrect. From the facts
which have been stated hereinabove, and as found by the Tribunal, it is
clear that the provisions of Section 24 (3) of the Act are attracted to the
F present case. The workmen had gone on illegal strike and even when the
strike was officially called off, they continued to disrupt the working of
the factories while being within the factory premises.

The Tribunal held that :

G "The managements have placed on record sufficient evidence
to substantiate their contentions that even though the strike was
formally withdrawn and the workmen reported for duty, the
workmen continued their agitational disruptive and violent
activities from within and thus in fact continued their illegal
H strike."
H.M.T. LTD. v. H.M.T. HEAD OFFICE EMPLOYEES' ASSN. [KlRPAL, J.] 87

The view of this, the Tribunal rightly held that the declaration of A
lock out must, therefore, be regarded as being in consequence of illegal
strike and, therefore, the lock out would not be deemed to be illegal even
if the provisions of Section 22 of the Act were not complied with by the
managements. This being so and applying the ratio of the Constitution
Bench decision in SYNDICATE BANK (Supra), the workmen would not
be entitled to any wages in respect of the period of lock out. The award of B
the Tribunal to this extent is, therefore, liable to be set-aside.

It was submitted by Mr. Shetye that the Tribunal having increased
the minimum wage to Rs. 500/- it ought not to have directed that the
payment of Rs. 25/- p.m. may not be set-off. It was contended that by
increasing the wages to Rs. 500/- p.m. and also allowing the workmen to C
retain Rs. 25/- p.m. w.e.f 1.9.1978, the effect would be that the wages of
these workmen would be more than the wages of the lowest rank of
workmen in BHEL. As this conteution relates to the construction and
effect of the settlement dated 9.6.1981, it would be appropriate, at this
stage, to also consider the contention of Mr. Sharma on behalf of the
workmen to the effect that the Tribunal ought to have revised the lowest D
scale and bring it at par with BHEL's scale of pay and thereafter, if should
have revised the higher scales as well. This submission was based on the
premise that the settlement of 1978 allowed the workmen·to ask for revision
of pay scale consequent on a settlement taking place in the case of any
other public sector undertaking such as BHEL. When the settlement in E
BHEL had taken place in January, 1980, the workmen of these five public
sector undertakings were entitled to contend and demand that their pay-
structure should be revised so as to bring them at par with the revised
scales of pay which were in existence in BHEL and that the settlement
dated 9.6.1981 was without prejudice to this right and could not preclude
the workers from demanding the said parity. F

In the case of HMT and lll, the clause relating to revision of pay
was the one which was incorporated in the settlement dated 25.5.1978.
Term no. 1 in the agreement dated 25.5.1978 does not postulate revision
of pay scales in the even of higher wages being paid to the employees of G
· _,, BHEL or employees of any other public sector undertaking. This clause
gives to union only a right to take up the issue regarding the minimum
wages and enhancement of rate of neutralisation of dearness allowance
with the Government oflndia ifthe Government agrees to the improvement
in the minimum wages or the dearness allowance neutralisation rate. At
best, this clause only gives a right to the union to make a reference to the H
88 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A Government of India for revision of minimum wages but does not give
any vested right of enhancement of wages or pay scales in the event of
there being a revision in any other public sector undertakings. In the case
of three other public sector undertakings namely; BEL, BEML and HAL
and additional clause in the settlement was inserted. In BAL The clause
was I. I in BEML, the clause was as follows :
B
"If any comparable engineering industry in the Central Public
Sector Such.as BHEL etc., revises the minimum pay and D.A.
as well as the D.A. neutralisation rate beyond what is agreed to
in this settlement, the issues will be negotiated bilaterally and
consequential adjustment made in the wage structure."
c
In the case of HAL the clause was as follows:

"If a higher minimum wage or higher rate of neutralisation of
CPI is agreed to in any comparable engineering industry such
as BHEL in the Central Public Sector, the management agrees
D to review the corresponding provisions in this settlement and
make consequent adjustment in the wage structure in consultation
with the Union."

The clause in BEML contemplated bilateral negotiations in case of
revision taking place in the minimum pay of BHEL. In clause I. I of
E BEL, the management agreed to make necessary modifications in
consultation with the union and in the case of HAL the management agreed
to review the provisions of the settlement consequent on a higher rate
being paid in BHEL. The latter three settlements no doubt make a reference
to a revision of pay scales in case of revision of pay in BHEL but no such
F reference is contained in the settlements of HMT and !Tl. The unions of
these five public sector understaings were taking a joint action. They raised
the demand for the revision of wages after the settlement of BHEL had
arrived at injune, 1980. The demands were raised by the joint action front
on 12.9.1980 and the same were in the following terms:

"I. The existing scales of pay should be restructured by adding
G
Rs. 30 at the minimum and at all stage in each case.

2. The irreducible minimum D.A. for Banglore as on 1.9.1978
should be revised to Rs. 130 as against Rs. 125.

H 3. For the existing employees, basic pay should be refixed in
H.M.T. LTD. v. H.M.T. HEADOFFICEEMPLOYEES' ASSN. [KIRPAL,J.] 89

the following manner : A
(a) Add Rs. 30/-

{b) Add one increment.

{c) Add' one more increment in lieu of next higher stage (to B
avoid anomalies) and to provide for consequential adjustment
benefits.

4. City Compensatory Allowance should be paid at the rate of
6% (in all places).
c
5. The _Fitment Benefit which is not extended to the employees
joining after the date of agreement should be extended to them.

6. The arrears on account of the above should be worked and
paid with effect from 1.1.1979."
D
The settlement of 9.6.1981 specifically dealt with the claim of the
revision of scale demanded by the workers. The demand was for a revision
at the rate of Rs. 30 p.m. w.e.f 1.9.1978. In view of this, in the settlement
dated 9.6.1981. it was agreed between the workmen and the managements
that all the workers on the pay rolls of the companies as on 9.6.1981
would be paid a lump sum of Rs. 700. This clause contained a benefit E
which was more than what the unions were asking for. The demand of the
unions was for payment at the rate of Rs. 30 w.e.f. 1.1.1979 which would
have meant that the employees who had worked for a longer period would
have got more than those who had joined the service later. Clause (ii) of
the settlement dated 9.6.1981 gave a lump sum payment of Rs. 700 to all
the employees irrespective of length of the service who were on the rolls F
of the Companies as on 9 .6.1981. Calculated at the rate ofRs. 25 p.m.,
this sum of Rs.700 would amount to payment in respect of 28 months i.e.
w.e.f 1.9.1978 to 31.12.1980. From 1.1.1981, the workmen were given
an ad-hoc allowance of Rs. 25 p.m. it is thus evident that the claim which
was raised by the unions in their letter of demand dated 12.9.1980 relating G
to revision of pay scale stood concluded by the settlement of 9.6.1981.
The demand of the union was more or less conceded inasmuch as
Rs. 25 p.m. were agreed to be paid w.e.f 1.1.1981 instead of an additional
Rs. 30 p.m.

It was submitted by Shri Sharma that the terms of the settlement H
90 SUPREMECOURTREPORTS [1996] SUPP. 8 S.C.R.

A dated 9.6.1981 specifically mentioned that this was "without prejudice to
the contention of either party" an expression which is used in the preamble
of the said settlement. This settlement dated 9.6.1981 in our opinion has
to be read as a whole. It has to be read in the background of the demand
which was raised by the unions in their letter dated 12.9.1980. The main
claim of additional amount of Rs. 30 p.m. at the minimum and at all
B stages in each case, as demanded by the workmen clearly stood settled
with a lump sum payment of Rs. 700 and ad-hoc allowance of Rs. 25 w.e.f
1.1.1981 as agreed to in the settlement of 9.6.1981. The use of words
"without prejudice to the contentions of either party" can refer to only
such other points or aspects which were not specifically covered by the
terms of settlement which were arrived at on 9.6.1981.
c
The settlement of 1978 was with regard to pay scales, allowance and
other monetary benefits. The settlement of9.6. l 98 i brought about a change
whereby a sum of Rs. 25 was given w.e.f 1.1.1981 in addition to lump
sum payment of Rs. 700 Clause (iv) of the settlement dated 9 .6.1981
stated in no uncertain terms that all other conditions relating to pay
D allowances and other monetary benefits were to "continue for the extended
period of the settlement" i.e. up to 31.12.1982. This would clearly show
that the original settlement of 1978 with regard to pay- scales as well as
. allowances and other monetary benefits were to continue upto 3.1.12.1982
subject to the increase of Rs. 25 p.m. plus lump sum payment of Rs. 700
This settlement of 9.6.1981 was arrived at during the conciliation
E proceedings and, therefore, was binding on the parties under Section 18
(3) read with Section 19(2) of the Act. The term of settlement dated
9.6.1981 did not contemplate thatthe payment of Rs. 25 p.m. w.e.f 1.1.1981
was liable to be adjusted in any manner. It is no doubt true that the Tribunal
by the impugned award has increased the minimum wage to Rs. 500 p.m.
because the tribunal came to the conclusion that the settlement dated
F 9.6.1981 did not preclude the workmen from asking for a revision in the
minimum wage consequent on the settlement having been arrived at in the
case of BHEL. This conclusion of the Tribunal, in our opinion, was
incorrect but as leave had not been granted to the management on this
point, the decision of the Tribunal reviewing the minimum wage at the
G lowest rank of Rs. 500 p.m. cannot be altered. However the payment of
Rs. 25 p.m. as contemplated by the settlement, is payable to all the workers
in different scales of pay and the settlement does not contemplate the said
amount being adjusted in any manner. This being so the contention of
Mr. Shetye for adjustment of this amount cannot be accepted.

H The last question which remains for consideration is with regard to
H.M.T. LTD. v. H.M.T.HEADOFFICEEMPLOYEES' ASSN. [KIRPAL,J.] 91

city compensatory allowance to the workmen of LT.I.. It is not in dispute A
that prior to the impugned award, C.C.A. @ 4% was being paid to the
workmen of LT.I. By the impugned award the Tribunal increased the
minimum wage to Rs. 500 p.m. in respect of BEL, BEML, H.A.L. and
H.M. T. The break up of this amount was basic pay of Rs. 335/- irreducible
D.A. of Rs. 129.90+ variable D.A. of Rs. 35.10. It was stated in the
Award that in respect of these four companies, the variable D.A. shall be B
at the local consumer price index prevailing as on 1.19.1978 at different
units, with quarterly adjustments at the rate of 1.30 per point or rise or fall
in the local indices. It is not disputed that in the existing wage structure,
city compensatory allowance was not being paid to the workmen of above-
mentioned four companies because the local consumer price index used to
be higher than the All India Consumer Price Index. In view of this difference C
in the price indices, C.C.A. was being paid to the employees of LT.I.
whose rise and fall in dearness allowance was controlled by the All India
Consumer Price Index. The Tribunal while directing that city compensartory
allowance will not be paid to the LT.I. employees because it is not paid to
the employees of other public sector undertakings at Bangalore, overlooked
the fact that the local consumer price index was admittedly always higher D
than All India Consumer Price Index. It is for this reason that the city
compensatory allowance was being paid to the employees of LT.I. Mr.
Shetye frankly conceded that if city compensatory allowance is not paid
to the employees of LT.I. then over a period of time, the salary of workmen
of LT.I. would be less than the salary of the workmen ofother companies
because the variable dearness allowance of employees ofB.E.L., B.E.M.L. E
and H.M.T. will increase at a higher rate than the variable dearness allowance
of LT.I. employees which is linked with the rise or fall in All India
Consumer Price Index. In our opinion, therefore, the direction of the
Tribunal dispensing with the payment of city compensatory allowance to
LT.I. employees was uncalled for.
F
From the aforesaid discussion, we conclude that the workmen would
not be entitled to receive any wages during the period of illegal strike and
lock out; the payment of Rs. 25/- as a result of settlement dated 9.6.1981
is not adjustable and the direction of the Tribunal not to allow demand of
city compensatory allowance to the workmen of LT.I. was not correct.
The award of the Tribunal directing payment of 35% of the wages during G
the period of illegal strike and lock out and the decision with regard to
non-payment of city compensatory allowance to LT.I. is accordingly,
modified to that extent. The appeals are disposed of in the aforesaid terms.
Parties to bear their own costs.

V.S.S. Appeals disposed of. H