Holding

The 1993 settlement did not expressly cover the claim for wages for the lock‑out period; therefore, the reference is maintainable, the lock‑out was unjustified, and the workers are entitled to the claimed wages.

Issues considered

Whether the reference to the industrial dispute concerning the lock‑out is maintainable despite the 1993 settlement.
Whether the 1993 settlement expressly covered the claim for wages for the lock‑out period.
Whether Sections 91 and 92 of the Indian Evidence Act are applicable to the interpretation of the settlement.

Legislation cited

Indian Evidence Act, 1872s. 91, s. 92
Industrial Disputes Act, 1947s. 12(2), s. 12(3)
Payment of Bonus Act, 1965

Subjects

industrial disputesettlement interpretationlock‑outwagesmaintainabilityevidence actindustrial peacecontract construction

Judgment

M.D., MIS. HINDUSTAN FASTENERS PVT. LTD. A
1~

NASHIK WORKERS UNION

OCTOBER 19, 2006

[S.B. SINHA AND DAL VEER BHANDARI, JJ.] B

labour laws:

Reference of industrial dispute after settlement-Maintainability of-
Held, maintainable, since the dispute raised was not the subject matter of C
settlement-Evidence Act, 1872-Sections 91 and 92.

Pursuant to a settlement between the management and workers of
Appellant-company in 1990, the workmen went on strike and raised several
demands. Consequently a second settlement was arrived at in 1993. However, D
thereafter the workers raised an industrial dispute claiming that the lock-
out effected by the Company in 1992 was unjustified and that they were entitled
for wages for the lock-out period. The dispute was referred to for adjudication
by the Industrial Court. Company challenged the maintainability of the
reference by taking the stand that the disputed issue was covered by the
settlement of 1993. E
Tribunal held that the settlement of 1993 nowhere made any reference
regarding the wages to be paid to workers for the lock-out period and that if
the issue regarding the payment of lock-out period would have been discussed
between the parties, then, certainly the said issue could have been mentioned
in the settlement. Further finding that no witness was examined on behalf of F
the Company to justify the lock-out declared by it, the Tribunal held that the
said lock-out was unjustified and the workers were entitled to wages for lock-
out period. High Court affirmed the decision of the Tribunal. Hence the present
appeal

Dismissing the appeal, the Court, G

HELD: I. The purport and object of a settlement arrived at by and
between the management and the workmen is undisputedly required to be
construed keeping in view its salutary effect. It is aimed at maintenance of
553 H
554 SUPREME COURT REPORTS 12006] SCl'P. 7 S.C.R.

A industrial peace and harmony. A settlement, therefore, although is required
to be read for upholding the validity thereof like any other agreement, it should
be read in its entirety so as to ascertain the intention of the parties behind
the same. It is true that in the said settlement, not only the Charter of
Demands served on the management was referred to, the exchange of letters
B between the parties had also been referred to, but the intention of the parties
is to be gathered having regard to the circumstances attending thereto.
1560-G-H; 561-AI

2. Had the intention of the parties been to settle their disputes also in
relation to legality or otherwise of the lock-out declared by the management,
C it was expected to have been stated so explicitly therein. It was also expected
that the parties would file the said settlement before the Industrial Tribunal
so that an award could be passed in terms thereof. Clause 20 of the said
settlement provides for a package deal vis-a-vis all the demands raised by the
Union. The package deal was in relation to the Charter of Demands dated
1.01.1993 and any other document including the letters exchanged between
D the parties pursuant thereto or in furtherance thereof. The subject matter of
settlement was 'all demands of whatever nature' in terms whereof the workmen
might not have been able to make any other demand, but, on a bare perusal of
the said settlement, it is apparent that the expression which has repeatedly
been used was the 'Charter of Demands'. 1561-E, Fl

E 3. In furtherance of the said Charter of Demands, the parties entered
into several other correspondences. In terms of the settlement, the parties
settled their disputes in relation to the demands raised. The wages to be paid
to the workmen which they had claimed as of right was not and could not have
been the subject matter of any payment or settlement. Whereas the concept
F of a demand must be held to be relating to a right higher than the existing
right, the workmen were entitled to raise a claim in relation to their existing
right and in that. view of the matter financial implication therefor cannot be a
ground for refusal thereof. If a claim is to be withdrawn by reason of a
settlement, the same must find a specific mention therein. 1562-B, Cl

G 4. Subject, of course, to the parties acting on the settlement, the
workmen had promised that they would not go for 'work stoppage' or 'go slow'
but then in terms of Clause 23 of the said settlement, it had categorically
been reiterated that the expression "wages" shall be given the same meaning
as obtaining in the statute. The right to enforce the claim for wages both in
H the first settlement as also the second settlement was, therefore, not given
M.D., HINDUSTAN FASTENERS PVT LTD. 1·. NASlllK WORKERS UNION [S.13. SINHA. J.] 555

up. It was further stated that no additional claims would be made for increase A
of benefits. Clause 23 of the said settlement also refers to existing rights
and obligations subject, of course, to the modification made therein. By reason
of the said settlement, the workmen surrendered their rights of bonus. The
management, although questioned the legality and/ or validity of the reference,
but at the same time also welcomed the same stating that thereby they had
got an opportunity to establish that the lock-out declared by them was not B
illegal. But, then no witness was examined to prove the said fact. 1562-D-FI

5. The parties, therefore, made it clear that the claim of wages raised
on behalf of the workmen on the premise that the lock-out was illegal was not
the subjecf matter of the settlement. The Tribunal is right in arriving at the C
finding that the intention of the parties must be gathered from the attending
circumstances; one of them being that although the parties were aware that
the industrial dispute was pending but no reference thereto was made in the
settlement 1562-G I

6. It is difficult to accept the contention of the Appellant that in the facts D
and circumstances of this case, provisions of Section 92 of the Evidence Act
would have any role to play. Construction of a document so as to ascertain the
intention of the parties is in no way controlled by the provisions of Section 91
or 92 of the Evidence Act The document has to be interpreted applying the
known principles of construction and/ or canons. Applying the principles of
interpretation of a document and having regard to the circumstances attending E
thereto, the findings of the Tribunal and the High Court cannot be faulted
with. 1562-H; 563-B, E, Fl

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4553 of2006.

From the Judgment and final Order dated 29.9.2004 of the High Court F
of Judicature at Bombay in LP.A. No. 196/2002 in Writ Petition No. 5153/2001.

Shekhar Naphade, Nitin S. Tambwekar, B.Sai. and K. Rajeev for the
Appellant.

Collin Gonsalves, Vipin M. Bentamin and Jyoti Mendiratta for the G
Respondent.

The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted.
H
556 SUPREME COURT REPORTS [2006] SUPP. 7 S.C.R.

A Interpretation of a settlement arrived at by and between the parties
hereto falls for consideration in this appeal which arises out of a judgment
and order dated 8.12.2000 passed by the High Court of Judicature at Bombay
in First Appeal No. 521 of 1992.

Appellant herein is engaged in engineering activities. Respondent No.
B is a trade union registered under the Trade Unions Act. Appellant. was a
sick unit as envisaged under the Sick Industrial Company (Special Provision)
Act, 1985. A settlement was arrived at on 11.5.1990 by and between the
parties hereto in regard to the demands raised on behalf of the workmen. The
period covered by the settlement was 1.01.1989 to 30.12.1992. The workmen
C thereafter went on strike. Several demands were also raised. A second
settlement was arrived on 24.5.1993. In the preamble of the said settlement,
it was stated:

" .... The company has enforced lockout of its employees on and from
14.1.93 for the reasons mentioned in the company's lock out notice
D dated 28.12.90 and the said lockout is still continuing. In view of the
long duration of the lockout and protracted court proceedings in the
Industrial Court, Nashik and elsewhere the parties to the settlement
felt a need to find out long term solution to the problems faced by
them. The parties also sought the assistance of the Deputy
Commissioner of Labour, Nashik and in view of the discussions
E between the parties the acceptable solution have been found by them
and they have settled the entire disputes between them over the
clauses of the lock-out i.e. still continuing and the Charter of Demands
of the Union served on behalf of the workmen"

Clause 20 of the said settlement reads as under:
F
"That this settlement is in package deal viz-a-viz full demands raised
by the Union under its charter of demands dated Ist January, 1993 and
as well as elsewhere. It is expressly understood that this settlement
is in full and final settlement of all the said demands and settles all
demands of the Union/ Workmen made till date of whatsoever nature.
G Such as of the demands as set out in the charter of demands and
elsewhere, referred to hereinabove but not specifically dealt within
this settlement are hereby treated as having been withdrawn and/ or
not pressed by the Union and the workmen and settled the same
accordingly. It is further agreed that during the currency of th is
H
M.D, HINDUSTAN FASTENERS PVT LTD.,.. NASHIK WORKERS UNION [S.B. SINHA,l] 557

settlement, the Union and the workmen shall not raise any fresh A
demand whatsoever, whether covered by this settlement or otherwise
and whether involving financial burden or not. No other demands of
whatsoever nature shall be made by the Union or the workmen either
directly or indirectly. Any demand made shall have the effect of
nullifying this settlement."
B
Paragraphs 11, 12 and 13 of Clause 23 and Clauses 27 and 28 of the said
settlement read as under:

"11. The settlement shall encompass this settlement as well previous
settlement dated 11.5.90 and shall constitute a whole contract between
the parties. These settlements have rendered substantial benefits on C
the workmen and in view of the same, it is agreed between the partiers
that there will be no work stoppage/ go slow during the pendency of
this settlement. Any breach of this settlement shall render the above
mentioned settlements as null and void.

12. The parties expressly agree that the definition of "wages" in D
various statutes in the industrial field will be followed by them for the
purpose of their application, enforcement and implementation in any
event. Payments under the terms of their settlement agreed to be
made and accepted by the parties will not be affected and no further
and additional claims will be made or canvassed by the workmen E
under these laws for increase in benefits and if made shall deem as
covered and adjusted by this settlement or under the terms of this
settlement.

13. Except to the extent expressly modified in this settlement, all other
existing rights, and obligations and conditions of previous settlements F
shall continue with full force and effect during the operation of this
settlement.

Clause No. 27: Bonus

Bonus for the year 1990-91, 1991-92 will be 8.33%. No bonus is G
due and payable for the year 1992-93 and as the workmen did not work
during this period. Bonus for the year 1993-94 will be 9%. Bonus for
the years 1994-95 and 1995-96 will be I0% and for the year 1997-98
will be 12%. Further, it is provided that the management on its own
shall review the balance sheet and decide about the quantum of
bonus payable to the workmen and in the event of any upward H
558 SUPREME COURT REPORTS l2006) SUPP. 7 S.C.R.

A revision is necessitated under the provisions of Payment of Bonus
Act. 1965 excess amount minus agreed bonus shall be paid to the
employee. In any circumstances the workmen will not raise any
dispute about the quantum of bonus. The management decision shall
be final. In case the company balance sheet shows accumulated
losses in the above years, the amount paid in excess of statutory min.
B will be by the way of ex-gratia for the purpose of industrial peace,
productivity and shop floor discipline. Bonus for the year 1990-91 will
be paid in August and for the year 1991-92 will be paid in October,
1993.

Clause No. 28
c
That the various clauses of the agreement/ settlement form one
package agreement/ settlement and none of the clauses in this
agreement/ settlement in separable from the remaining clauses of the
agreement/ settlement."
D However, an industrial dispute was raised in the following terms:

"Whether the lock out effected by the management w.e.f. 14.1.1992 is
justified? If Mt, what relief the workers are entitled for?

The said industrial dispute was referred to for adjudication by the
E appropriate government before the Industrial Court, Nashik. Appellant herein
in its written statement inter alia raised the question as regards maintainability
of the said reference on relying or on the basis of the said settlement dated
24.5.1993 stating:

"2. The reference is not tenable and maintainable as there was no
F dispute in existence after the settlement dated 24.5.1993 arrived between
Nashik Workers Union and the Company, Hindustan Fasteners Pvt.
Ltd., hence the reference is immature in the eyes of law .....

4. The reference is also not maintainable in view of the settlement
dated 24.5.1993 as per the Clause No. 20 of the said settlement. It was
G full and final settlement and all the demands were settled. It was also
made clear that all other demands and claims were relinquished by the
workmen and the Union and as such the reference is to be rejected"

It was furi:her stated:

H "39. The Employer Company welcome any investigation that the
M.D .. llINDUSTAN FASTENERS PVT. LTD. v. NASHIK WORKERS UNION [S.B. SINHA. J.] 559

Hon'ble Tribunal may undertake, since it would definitely conclude A
that the lockout was justified and its prolongation was due to the
illegal tactics of the Nashik Workers Union."

A dispute. thus, existed between the parties as regards applicability of
the said settlement to the reference.
B
The Tribunal made an award in the said reference on 19. l .200 I stating:

"19. I have gone through the said settlement but the said settlement
nowhere makes any reference regarding the wages to be paid to the
workers for lock out period. But the said settlement is regarding other
demands. If the issue regarding the payment of lock out period would C
have been discussed between the parties then, certainly the said issue
could have been mentioned in the settlement. It is further the
contention of the company that in view of the Clause 20 of the
settlement all the demands between the parties were settled."

The Tribunal in its award further stated: D
"20. After perusal of the Clause 20 referred above it makes clear the
demand should be raised which will directly involve financial burden
on the company, but it is permanent to note here that no such demand
is raised by the Union, on the contrary, the present reference is
referred by the Government in view of P.A.M.S. proceeding pending E
before the Dy. Commissioner of Labour prior to signing the said
settlement. The company as well as the Second Party workers both
were aware about P.A.M.S. proceedings pending before the Dy,
Commissioner of Labour regarding the lock out. Therefore, they
ought to have been mentioned the same in the present settlement so p
as to resolve the dispute. But, as the said issue is not taken into the
present settlement referred above by stretch of imagination could not
be said that the said issue was settled finally in view of settlement
dated 24.5.1993 signed between the parties. Therefore, the contention
of First Party Company that present reference is not maintainable
could not be accepted. Hence, I answer the issue in the negative." G

It was further found that although Appellant sought to justify the lock-
out declared by it but in support of the said plea, no witness was examined
on its behalf. In the aforementioned premise, by reason of the said award,
the Industrial Tribunal directed:
H
560 SUPREME COURT REPORTS [2006] SUPP. 7 S.C.R.

A "2. The lock out declared by the Company w.e.f. 14.1. 1992 is unjustified.

3. The workers are entitled for the wages for lock out for period from
14.1.1992 to 2.6.1993.

4. The First Party Company is directed to pay the wages to the
B concerned workers in the period of 14.1.1992 to 2.6. l 993 within two
months from the date of the publication of the Award."

A writ petition was filed thereagainst. A learned Single Judge of the
High Court in its judgment dated 23.04.2002 noticed the contentions of
Appellant herein that when the settlement was arrived at, reference had
C already been made by the appropriate authority. However, it was opined that
the said settlement did not contain any provision as to whether the workmen
had given up their rights of wages during the period the factory was under
Jock-out. The writ petition was dismissed. An intra-court appeal filed
thereagainst by Appellant was also dismissed by reason of the impugned
judgment stating that under the aforementioned settlement the workmen had
D not given up their rights of wages.

Mr. Shekhar Naphade, learned senior counsel appearing on behalf of
Appellant, raised a short contention in support of this appeal. It was urged
that the settlement was to be read in its entirety. So read, the learned counsel
E would contend, it would be apparent that all disputes and differences between
the parties and all demands raised by reason of the Charter of Demands dated
1.01.1993 and all other demands having been resolved, the question of directing
payment of any wages during the period for which the factory was under
lock-out did not and could not arise.

F Mr. Colin Gonsalves, learned senior counsel appearing on behalf of
Respondent, on the other hand, would submit that the Charter of Demands
was in relation to the specific issues as, for example, bonus, festival allowance,
pay scale, etc.

The purport and object of a settlement arrived at by and between the
G management and the workmen is undisputedly required to be construed
keeping in view its salutary effect. It is aimed at maintenance of industrial
peace and harmony. A settlement, therefore, although is required to be read
for upholding the validity thereof like any other agreement, it should be read
in its entirety so as to ascertain the intention of the parties behind the same.
H It is true that in the said settlement, not only the Charter of Demands served
on the management on or about l .0 l. l 993 was referred to, but the exchange
M.D., HINDUSTAN FASTENERS PVT. LTD. r. NASHIK WORKERS UNION [S.B. SINHA, J.J 56 J

of letters between the parties had also been referred to, but the intention of A
the parties is to be gathered having regard to the circumstances attending
thereto.

There had been a lock-out and a protracted court proceeding. A long
term solution was to be found out. The settlement was in relation to the
purported causes of the lock-out. It was still continuing. A Charter of B
Demands of the Un ion was served on behalf of the workmen. It did not relate
to wages of the workmen during the period of lock-out. Clause 20 of the said
settlement must, therefore, be read keeping in view the aforementioned backdrop
of events. But, before we embark upon the said question, we may notice the
Charter of Demands dated 1.01.1993. The demands of workmen referred to C
pay scale, classification, dearness allowance, leave, various allowances
including travelling allowance, washing allowance and various other allowances
as specified therein e.g., uniform, festival advance, etc.

Correspondences entered into by and between the parties were in
relation to the aforementioned demands. It did not speak of the claim of D
wages, although when the settlement was arrived at, the industrial dispute
was pending.

Had, thus, the intention of the parties been to settle their disputes also
in relation to legality or otherwise of the lock-out declared by the management,
it was expected to have been stated so explicitly therein. It was also expected E
that the parties would file the said settlement before the Industrial Tribunal
so that an award could be passed in terms thereof. Clause 20 of the said
settlement provides for a package deal vis-a-vis all the demands raised by the
Union. The package deal was in relation to the Charter of Demands dated
1.01.1993 and any other document including the letters exchanged between F
the parties pursuant thereto or in furtherance thereof. The subject matter of
settlement was 'all demands of whatever nature' in terms whereof the workmen
might not have been able to make any other demand, but, on a bare perusal
of the said settlement, it is apparent that the expression which has repeatedly
been used was the 'Charter of Demands'.
G
While keeping the industrial dispute pending, Respondents had not
raised any fresh demand.

Clause 21 refers to the previous settlement also. The rights of the
workmen under the existing settlement were not adversely affected. If they
have worked, they would be entitled to wages. If they have reported for H
562 SUPREME COURT REPORTS [2006) SUPP. 7 S.C.R.

A duties during the period of lock-out which was illegal, they were entitled to
the wages for the said period.

In furtherance of the said Charter of Demands, the parties entered into
several other correspondences. In terms of the settlement, the parties settled
their disputes in relation to the demands raised. The wages to be paid to the
B workmen which they had claimed as of right was not and could not have been
the subject matter of any payment or settlement. Whereas the concept of a
demand must be held to be relating to a right higher than the existing right,
the workmen were entitled to raise a claim in relation to their existing right and
in that view of the matter financial implication therefor cannot be a ground
C for refusal thereof. If a claim is to be withdrawn by reason of a settlement,
the same must find a specific mention therein.

Subject, of course, to the parties acting on the settlement, the workmen .,.
had promised that they would not go for 'work stoppage' or 'go slow' but
then in terms of Paragraph 12 of Clause 23 of the said settlement, it had
D categorically been reiterated that the expression "wages" shall be given the
same meaning as obtaining in the statute. The right to enforce the claim for
wages both in the first settlement as also the second settlement was, therefore,
not given up. It was further stated that no additional claims would be made
for increase of benefits. Paragraph 13 of Clause 23 of the said settlement also
refers to existing rights and obligations subject, of course, to the modification
E made therein. By reason of the said settlement, the workmen surrendered
their rights of bonus. We have noticed hereinbefore that the management,
although questioned the legality and/ or validity of the reference, but at the
same time also welcomed the same stating that thereby they had got an
opportunity to establish that the lock-out declared by them was not illegal.
p But, then no witness was examined to prove the said fact.

The parties, therefore, made it clear that the claim of wages raised on
behalf of the workmen on the premise that the lock-out was illegal was not
the subject matter of the settlement. The Tribunal, in our opinion, is right in
arriving at the finding that the intention of the parties must be gathered from
G the.attending circumstances; one of them being that although the parties were
aware that the industrial dispute was pending but no reference thereto was
made in the settlement.

It is difficult to accept the contention of Mr. Naphade that in the facts
and circumstances of this case, provisions of Section 92 of the Evidence Act
H would have any role to play. It is not the contention of Respondents that
M.D., HINDUSTAN FASTENERS rvr LTD. 1'. NASHIK WORKERS UNION [S.B. SINHA, J] 563

the settlement was not to be read as a full or final settlement between the A
parties but the same must be read as meaning that the settlement was only
in respect of the Charter of Demands and other demands made by the Union
from time to time in its various letters.

Construction of a document so as to ascertain the intention of the
parties is in no way controlled by the provisions of Section 91 or 92 of the B
Evidence Act. The document has to be interpreted applying the known
principles of construction and/ or canons.

In fact, in the special leave petition, Appellant itself has contended:

"(VI) That because the Hon'ble High Court should have appreciated C
the fact that at the time of reference the contesting parties were
negotiating the Settlement. So in view thereof it was the duty of the
Conciliation Officer under Section 12(2) and 12(3) of the Industrial
Disputes Act for bringing about a settlement of the dispute without
delay and investigate the dispute and all such matters affecting the D
merits and the settlement thereof. Further, it is pertinent to state that
the Conciliation Officer has enough powers to investigate the cause
of dispute and enforce a settlement."

If that was the stand of Appellant before the Conciliation Officer, they
could have asked him to close the conciliation proceedings. They did not E
do so.

Applying the principles of interpretation of a document and having
regard to the circumstances attending thereto, we are of the opinion that the
findings of the tribunal and the High Court cannot be faulted with.
F
For the reasons aforementioned, we do not find any merit in this appeal
which is dismissed accordingly with costs. Counsel's fees assessed at
Rs.10,000/-.

B.B.B. Appeal dismissed.