Holding

The 1988 settlement remained binding; the State order was ultra vires and the corporation’s withdrawal of the Pay Roll Check‑Off facility was illegal, so the appeals were dismissed.

Summary

The Karnataka State Road Transport Corporation entered into a 1988 settlement with the KSRTC Staff and Workers Federation granting a Pay Roll Check‑Off facility for union subscriptions. Although the union’s recognition expired in July 1996, no fresh referendum was held. In May 1993 a Memorandum of Understanding was signed, and the State Government, on 10 September 1993, issued an order directing the corporation to stop collecting subscriptions, leading the corporation to withdraw the facility on 21 September 1993. The union challenged both orders; the Karnataka High Court set them aside and the Division Bench affirmed that decision. The Supreme Court held that the State’s order was ultra vires and uncalled for, and the corporation’s withdrawal violated Section 19(2) of the Industrial Disputes Act, as the 1988 settlement remained binding until a new settlement replaced it. Consequently, the appeals were dismissed.

Issues considered

Whether the union had locus standi to file the writ petition and the present appeals.
Whether the State Government order dated 10 September 1993 was lawful and within the powers conferred by Section 34 of the Road Transport Corporation Act.
Whether the corporation’s notification dated 21 September 1993 withdrawing the Pay Roll Check‑Off facility was valid under Section 19(2) of the Industrial Disputes Act.
Whether the 1988 settlement continued to bind the parties despite the expiry of the union’s recognition and whether any subsequent settlements superseded it.

Legislation cited

Industrial Disputes Act, 1947s. 18(1), s. 19(2), s. 29, s. 2(p)
Road Transport Corporation Act, 1950s. 3, s. 34, s. 45(2)(c)

Subjects

industrial disputesettlementpay roll check‑offunion recognitionSection 19(2)Section 34ultra viresbinding settlementKarnataka

Judgment

~
MANAGEMENT OF KARNATAKA STATE ROAD A
TRANSPORT CORPORATION ETC.
v.
KSRTC STAFF AND WORKERS' FEDERATION
AND ANR. ETC.
B
FEBRUARY 18, 1999
~

[S.B. MAJMUDAR AND U.C. BANERJEE, JJ.)

Labour Laws-Industrial Disputes Act 1947, ss. 2(p), 18(I), 19(2)--
Road Transport Corporation Act 1950, ss. 3, 34 and, 45(2)(C)-Respondent c
Federation elected as recognised union and sole baTgaining agenHn a set-
tlement with Federation Appellant Corporation agreeing to deduct subscription
of members of unions affiliated to Federation from their wages-System
known as Pay Roll Check Off Facility-Settlement coterminus with 1:ecognition
accorded to Federation-Recognition expiring in July 1996 but no fresh D
referendum held-Meanwhile for a different set of demands concerning service
conditions of employees Memorandum of Understanding (MOU) entered into
between Corporation and Federation-State Government while approving
MOU by memo of September 10, 1993 subject to condition that Corporation
withdraw the Pay Roll Check Off facility-Accordingly, Corporation by
separate order withdrawing facility-High Court allowing petition of Federa- E
tion challenging both orders-Held, Government memo was ultra vires and
uncalled for; MOU had nothing to do with Pay Roll Check Offfacility already
made available by binding settlement holding the field-Further held, earlier
settlement continued till fresh settlement was arrived at; Corporation's order
'
was violative of S. 19(2) of the ID Act. F
~

The appellant Corporation, formed under s. 3 of the Road Transp~
Corporation Act, 1950 entered into a Memorandum of Settlement on July
28, 1988 with the respondent Federation, which was duly elected as the
recognised union of the workers and their sole bargaining agenL Under
the settlement it was agreed that the Corporation shall deduct the sub· G
scription of the members of the unions affiliated to the respondent federa·
tion from their wages on obtaining individual authorisations. This was
known as the Pay Roll Check Off facility. The settlement was agreed to be
followed till the recognition accorded to the Federation lasted or until both
parties terminated the terms by mutual consent earlier. H
733
734 SUPREME COURT REPORTS [1999] 1 S.C.R.

A The respondent Federation continued to be the recognised Union till
July 16, 1996 but no referendum was held thereafter. Meanwhile on May "
10, 1993 consequent upon a charter of demands concerning the service
conditions of the employees, a Memorandum of Understanding (MOU)
was reached between the Corporation and the Federation. By its memo
dated September 10, 1993, the state government accorded its approval to
B the MOU subject to the condition that the Corporation should not take
the responsibility of collecting monthly subscriptions from employees on
behalf of the Federation. Accordingly on September 21, 1993 the Corpora- ~

ti on by a notification withdrew the Pay Roll Check off facility.

c The respondent Federation challenged both the orders by a writ
petition which was allowed by a Single Judge of the Karnataka High Court.
A Division Bench of the High Court dismissed the Corporation's appeal.

Before this Court it was contended on behalf of the appellant Cor-
poration that with the recognition of the Federation having expired in 1996,
D the settlement of 1988 could not survive thereafter; that on account of later
settlements and the State Government directing the withdrawal of the Pay
Roll Check OIT facility, the earlier right following from the settlement of
1988 did not survive. For the Federation, it was pointed out that till the
agreement of 1988 was legally terminated as required by s. 19(2) of the
E Industrial Disputes Act, 1947 (ID Act) it remained binding on the Cor-
poration. Moreover, till a fresh settlement on the topic was entered into,
the binding effect of the 1988 settlement would not come to an end.

Dismissing the appeals, this Court

F HELD : 1.1. The Government order dated September 10, 1993 was
neither legal nor valid and was totally uncalled for. The Memorandum of
Understanding dated May 10, 1993 had nothing to do with the Pay Roll
..
Check Off facility already made available to the Union and was holding
the field by the time of the Government Order. [750-D]

G '
1.2. The unilateral termination of the settlement by the Corporation
was ultra vires the powers of the Corporation under s. 19(2) ID Act. The
recognition accorded to the respondent Federation continued all
~·
throughout and by the time of the notification dated September 21, 1993
the period had never ended. Similarly, there was no earlier termination of
H the settlement by mutual consent. Till either of thes~ eventualities oc·
MANAGEMENT OF KSRTC v. KSRTCSTAFF & WORKERS FEDERATION [S.B. MAJMUDAR. J.) 735

1 curred, there was no occasion for the Corporation to terminate the settle- A
ment under s. 19(2) ID Act. [752-F; 753-A-B]

1.3. The Corporation's notification of September 21, 1993 was viola-
tive of the mandatory req•1irement of s.19(2) ID Act. Till any new settle-
ment on the question of grant of Pay Roll Check-off facility was substituted
by parties, the legally binding effect of the earlier settlement of 1988 would B
continue to operate and the Corporation would be bound to confer the
facility to the Union. [754-E-F]

The Life Insurance Co1poration of India v. D.J. Bahadur, [1981) 1 SCR
1083, relied upon.
c
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 928-29
of 1999 Etc.

From the Judgment and Order dated 10.6.97 of the Kamataka High
Court in W.A. Nos. 8635 and 8491 of 1996.
D
.>
G.L. Sanghi, K.R. Nagaraja, K.K. Tyagi, (S. Vijay Shankar) Adv.
General, K. Kiran, N. Ganpathy, M.C. Narshiman, Sanjay Parikh and
Abinash Kr. Misra for the appearing parties.

The Judgment of the Court was delivered by
E
S.B. MAJMUDAR, J. Leave granted in these special leave petitions
being S.L.P. (c) Nos. 19982-19983of1997 and S.L.P. (C) Nos. 22370-22371
of 1997. By consent of learned counsel of the contesting parties, the appeals
were heard finally and are being disposed of by this. common judgment.
The Management of Kamataka State Road Transport Corporation has F
filed the first two appeals arising out of Special Leave Petition Nos. 19982
and 19983 of 1997 being aggrieved by the common judgment & order
rendered by the Division Bench of the High Court of Karnataka in Writ
Appeal Nos. 8635 and 8491 of 1996, while the other two appeals arising
out of Special Leave Petition Nos. 22370 and 22371 of 1997 are filed by the
State of Kamataka, also aggrieved by the aforesaid common judgment & G
order in the very same two writ appeals. The appellants have the common

... cause of complaint against the impugned judgment of the Division Bench,
while the respondent KSRTC Staff and Workers' Federation, which is the
common respondent in all these appeals, is the only contesting respondent,
being the originat writ petitioner whose writ petition was allowed by the H
736 SUPREME COURT REPORTS [1999] 1 S.C.R.

A learned Single Judge of the High Court and which judgment came to be ,
· confirmed by the impugned judgment of the Division Bench. We shall refer
I -
· to the appellant - Management of Karnataka State Road Transport Cor-
poration, the original Respondent No. 1 in the writ petition, as the
'Corporation', the appellant State of Karnataka in other two appeals, being
B original Respondent No. 2 in the writ petition as the 'State', while the
contesting Union, Respondent No.1 in these appeals in writ petition as the
'Union' for the sake of convenience in the latter part of this judgment. The
qu\!stion involved in these appeals in as to whether the order passed by the
State on 10th September, 1993 and the consequential order passed by the
Corporation on 21st September, 1993 were legal and valid. Both these
C orders came to be set aside by the learned Single Judge in the writ petition
filed by the l,Jnion, and as noted above, the said order of the learned Single
Judge came to be confirmed by the Division Bench in the impugned
common judgment. The order dated 10th September 1993 of the State
instructing the Corporation to withdraw the Pay Roll Check-off Facility
D given to the Union and the consequential order dated 21st September, 1993
issued by the Corporation withdrawing this facility came to be challenged
on various grounds in the writ petition which, as noted above, succeeded
in the hierarchy of proceedings before the Karnataka High Court. The
short question therefore which falls for our consideration is whether the
impugned orders of the State and the consequential order issued by the
E Corporation could be sustained in Jaw?

In order to appreciate the rival contentions centering round the
aforesaid controversy between the parties, it is necessary to note a few
relevant facts leading. to these proceedings. .
F
INTRODUCTORY FACTS:

The Corporation is formed under Section 3 of the Road Transport
Corporation Act, 1950 (for short the 'Corporation Act'), for providing
efficient, economical and properly co-ordinated transport services to the
G travelling public and the KSRTC has framed Service Regulations by deriv-
ing powers under Section 45(2) (c) of the Corporation Act. At the relevant
time the Union was the sole bargaining agent for the employees of the
Corporation. On 11th December, 1987 a referendum was held to choose
the collective bargaining agent on behalf of the employees of the Corpora-
H tion. The Union was elected as the recognised agent with 53% of the votes
MANAGEMENT OF KSRTC '· KSRTC STAFF & WORKERS FEDERATION [S.B. MAJMUDAR J.] 737

polled by way of official memorandum dated 24th December, 1987. The A
Corporation thus granted recognition to the Union as sole bargaining
agent. Consequent on choosing the Union as the collective bargaining
agent, a Memorandum of Settlement under Section 18(1) read with Section
2(p) of the Industrial Disputes Act, 1947 (hereinafter referred to as the~!D
Act') was entered into by the Corporation and the Union on 28th July,
1988. Under this settlement it was agreed between the parties that the
B
Corporation shall deduct the subscription of the members of the Unions
affiliated to the respondent Federation from their wages on obtaining
individual authorisations. The said settlement was agreed to be followed
till the recognition accorded to the Federation lasted or until both the
parties terminated the terms by mutual consent earlier. This system was c
popularly known as Pay Roll Check off Facility. A Memoradum of Settle-
ment regarding the wages payable to the employees was also entered into
on 1st January, 1988 between the Corporation and the Union. The settle-
ment was for a period of four years commencing from 1st January, 1988
till 31st December, 1991. As the recognition given to the Federation had D
come to an end, election had to be conducted again to choose the sole
bargaining agent by way of referendum. The Union emerged successful as
the sole bargaining agent and was chosen as such. The Corporation by its
order dated 16th July, 1992 accorded recognition to the Union as the sole
bargaining agent as per the Memorandum. It is not in dispute between the
parties that as four years' period expired with effect from 16th July, 1996 E
a fresh referendum had to be held for finding out as to whether the Union
still commanded majority membership of workmen so as to be re-desig-
nated as a recognised Union. But the said referendum has still not been held
because of writ petitions pending in the High Court and the Stay granted
therein, with which we are not concerned in the present proceedings.
F
>
During the time, admittedly, the Union was functioning as a recog-
nised Union, it submitted a charter of demands on various disputed items
concerning service conditions of the employees. Consequently, negotiations
were held between the Corporation and the Union and on 10th May, 1993
a Memorandum of Understanding was reached. The same was subject to G
approval by the Board of Directors and the State Government. The Board
of Directors of the Corporation accepted the Memorandum and thereafter
it was submitted to the Government for its approval. The State by its order
dated 10th September 1993, accorded approval to the Memorandum of
Understanding suggesting certain alterations to the service conditions sub- H
+
738 SUPREME COURT REPORTS [1999] 1 S.C.R.
A ject to other terms and conditions. One of such conditions was that the
Management of the Corporation would not take up the responsibility of
collecting donations or monthly subscriptiom from the employees on be-
half of the recognised Federation or Union of employees. It was pursuant
to the aforesaid Government Order that the. Corporation issued a Notifica-
B tion dated 21st September 1993 withdrawing the Pay Roll Check off
Facility. As noted earlier, the aforesaid G.O. issued by the State and the
consequent Notification issued by the Corporation were brought in chal-
lenge in the writ petition by the Union. The said writ petition was filed on -+
21st September 1993. The learned Single Judge, who heard the writ petition
having considered the rival contentions of the parties took the view that
C there was no occasion for the Government to issue such a direction under
Section 34 of the Corporation Act on 10th September 1993. Hence, the
consequential Notification issued by the Corporation could not survive. It
was also held that the said Notification of the Corporation was violative of
the provisions of Section 19(2) of the ID Act. By his order dated 25th July,
D 1996 the learned Single Judge held that the settlement dated 28th July, 1988
occupied the field as authoritative settlement under Section 18(1) of the
ID Act and was binding on the parties. It was also held that the exercise
of power by the State under Section 34 was not proper. Consequently, the
order of the State dated 10th September 1993 and the subsequent Notifica-
tion by the Corporation withdrawing Pay Roll Check off Facility on 21st
E September 1993 were held to be invalid. The writ petition was accordingly
allowed. As noted earlier, the aforesaid order of the learned Single Judge
was made the subject matter of two separate appeals, one by the State and
another by the Corporation and both these appeals were dismissed by the
Division Bench by the impugned judgment and order and that is how the
F Corporation and the State are before us in these appeals on grant of
Special Leave to appeal under Article 136 of the Constitution of India.

RIVAL CONTENTIONS :

Shri G .L.Sanghi, learned senior counsel appearing for the Corpora-
G tion, vehemently contended that the settlement of 28th July, 1988 could not
survive after 16th July, 1996 when the Union ceased to be a recognised
Union of employees and till a new bargaining agent emerged by way of
recognition, the respondent Union could not rely upon the terms of the
earlier settlement of 28th July, 1988. It was next contended that in any case
H the said settlement had ceased to operate and was validly terminated by
+
740 SUPREME COURT REPORTS [1999] 1 S.C.R.

A hand, submitted that once there is a binding settlement regarding the Pay
Roll Check off Facility holding the field between the parties from 28th July
;
1988, till the said settlement was legally terminated as required by Section
19(2) of the ID Act, it remains binding on the Corporation. That whether
the Corporation subsequently got trifurcated or not becomes irrelevant as
even to the successors of the Corporation the s~ttlement would be binding.
B It was next submitted that the Notification of the Corporation dated 21st
September 1993 cannot be treated to be a notice as contemplated by
Section 19(2) of the ID Act. Even assuming that it was such a notice, the +
binding effect of the settlement of 1988 would not come to an end auto-
matically till a fresh settlement on the topic is substituted by negotiations
between the parties, as was clearly laid down in the decision of three Judge
c Bench of this Court in The Life Insurance Corporation of India v. D.J.
Bahadur & Ors., [1981) 1 SCR 1083. It' was then submitted that the
Memorandum of Understanding dated 10th May, 1993 was in connection
with entirely different demands put forward by the Union for consideration
of the Corpqr~ion. That it had nothing to do with the Pay Roll Check off
D Facility which was already governed by a binding Settlement of 28th July,
1988. Consequently, there was no occasion for the State to pass the ,,
impugned order dated 10th Sept. 1993 in contlection with withdrawal of
the said facility by the Corporation. It was also contended that in any case
the said order could not be covered by Section 34 of the Corporation Act.
That the State had no power to direct the Corporation to commit breach
E of statutory provisions of Section. 19(2) of the ID Act. Nor could it issue
any general directions under Section. 34 in connection with those industrial
matters which were already covered by binding settlements or awards
under the ID Act. That such general directions, if any, could be issued by
the State for consideration of the Corporation only on industrial matters
which were not covered by any such binding agreements or awards under
F the ID Act and when the field was open for negotiations between the
employees' Union and the Corporation wherein the parties could take ~

independent decisions in the first instance without violating any of the
provisions of the ID Act. It was, therefore, contended that both the
Government Order dated 10th September 1993 and Notification dated 21st
G September 1993 were rightly set aside by the learned Single Judge and that
decision was rightly confirmed by the Division Bench of the High Court.
It was also submitted that the Union had not ceased to be the sole
bargaining agent, as up to 16th July 1996, it was already operating as a
Union recognised by the Corporation itself and thereafter it was not the
case of the Corporation that at any time by fresh referendum it had lost
H the majority of the membership of the workers of the Corporation nor was
MANAGEMENT OF KSRTC '· KSRTC STAFF & WORKERS FEDERATION [S.B. MAJ MUDAR, l. J 741

it replaced by any other recognised Union. That the question of locus. A
standi of the Union to maintain the proceedings was neither raised before
the learned Single Judge when he passed the impugned judgment nor
before the Division Bench which confirmed the decision of the learned
Single Judge.

In the light of the aforesaid rival contentions the following points B
arise for our determination:

1. Whether the Union has locus standi to maintain the writ petition
as well as the present proceedings on behalf of the workmen;

2. If it has, whether the Government Order dated 10th September C
1993 was legal and valid and/or was uncalled for;

3. Whether the impugned Notification issued by the Corporation on
21st September 1993 was legal and vali.d; and

4. What final order?
D

We shall deal with these points seriatim.

Point No.l:
E
So far as the locus standi of the Union in the present proceedings is
concerned, it must be kept in view that the Corporation itself by its order
dated 24th December, 1987 granted recognition to the Union as the sole
bargaining agent for its members. It was noted by office memorandum of
the Corporation dated 24th December 1987 that the Federation having
secured 53.04% of the votes polled at the Corporation level in the referen- F
dum held on 11th December 1987, the Corporation was pleased to accord
recognition to the respondent Federation as sole bargaining agent at the
Corporation level. However, this was subject to the conditions stipulated
under Notification dated 30th April, 1987 which prescribed four years'
period from the date of such confirment of right of collective bargaining G
with the employer by the Union concerned. It is also not in dispute between
the parties that even in the subsequent referendum, the respondent
Federation/Union secured 61.07% of votes polled at the Corporation level
and the Corporation by its Office Memorandum dated 16th July, 1992
continued recognition t(l the Union as sole bargaining agent subject to the H
742 SUPREME COURT REPORTS [1999] 1 S.C.R.

A conditions stipulated in the earlier Notification dated 3rd December 1991.
It is therefore, not in dispute between the parties that till 16th July, 1996
respondent Federation/Union remained a recognised Union. We fai.l to
appreciate how the said Union can not challenge the Government Order
dated 10th September 1993 and the Consequent Notification issued by the
B Corporation on 21st September 1993. On both these occasions the respon-
dent Union was admittedly a recognised Union of the employees and had
got the benefit of Pay Roll Check-cff Facility under the settlement of 28th
July 1988. It is also interesting to note that before the learned Single Judge +
only three questions were posed for consideration in the light of the
C contentions of rival parties. They were as under :

"(i) Whether this petition under Article 226 of the Constitution
of India is not maintainable in view of the question in con-
troversy relates to the breach of the Settlement?

(ii) Whether the Government has lawful authority to interfere
D
with the Settlement validly made between the petitioner and
the Corporation by issuing directions under Section 34 of the
Act?

(iii) Whether Annexure-A is a direction under Section 34 of the
E Act?

The question of locus standi of the writ petitioner - the respondent
Union, was not even brought in issue. But even that apart, in appeals filed by
the State and the Corporation before the Division Bench which came to be
decided by the impugned common judgment dated 10th June, 1997, no such
F contention appears to have been canvassed. It is also pertinent to note that
it is not the case of the Corporation that by any fresh referendum the
respondent Federation has lost its recognition as a sole bargaining agent on
account of its membership getting depleted and any other rival Union has
emerged as a recognised Union having mustered sufficiently larger mem-
G bership. Consequently, the first point for determination as canvassed for our
consideration by the learned counsel for the appellants is found to be totally
devoid of any substance and stands rejected. To say the least, such objection
appears to have been waived by both the appellants before the learned
Single Judge as well as before the Division Bench and, therefore, also cannot
be countenanced. This point for determination, therefore, is answered in
H affirmafr1e in favour of the respondent Union and against the appellants.
MANAGEMENT OF KSRfC '· KSRTC STAFF & WORKERS FEDERATION (S.B. MAJMUDAR, J.] 743

.. Point No. 2: A
That takes us to point no. 2. So far as this point is concerned, it has
to be kept in view that the Pay Roll Check-off Facility was made available
to the respondent-Union by a binding settlement between the parties dated
28th July, 1988. This settlement was current when the Memorandum of
Understanding dated 10th May, 1993 came to be entered into between the B

' +
respondent Union and the Corporation. The said Memorandum of Under-
standing dealt with various demands including revision of pay scales. They
are listed at item Nos. 1 to 23. In none of these demands, there is any
whisper about the then existing Pay Roll Check-offFacility covered by the
settlement of 28th July. 1988. Paragraph 24 of the Memorandum on which
strong reliance was placed by learned senior counsel Shri Sanghi for Corpora-
c
tion, deserves to be noted in extenso. It is, therefore, extracted as under ;

"24. SAVINGS:
..
Benefits already granted under earlier Settlements excepting
those covered under this Settlement, facilities continuing by way
D
of conve.ntions and or practice to be continued in respect of the
. ).
employees who are in the services of the Corporation as on the
date of signing of this Settlement.

An understanding has been reached on the above mentioned
E
points in anticipation of approval of the Board of Directors and
the State Government. However, the issue regarding free duty
facility to R. Federation/R. Unions is left to the decision of the
State Govnment."

The caption of paragraph 24 clearly indicates that it provides a saving F
~
clause. Meaning thereby, it seeks to continue the benefits and facilities
f which might have been available to the workmen and their Union under
the earlier settlements. It is obvious that the demands for which Memoran-
dum of Understanding was reached between the parties were pertaining to
the workmen for whom they were raised by their Union and the benefits
of the understanding about these demands were to be made available to G
the workmen concerned. It has to be kept in view that the earlier settlement
:=:
.. of 1988 between the parties regarding facility of Pay Roll Check-off was
not a benefit to the workmen but was a facility given to the Union to
directly get its membership contribution from the member-workers' wages
by their consent. This facility imposed no additional burden on the H

~

-,
+
744 SUPREME COURT REPORTS [1999] 1 S.C.R.
I
A workmen nor gave any additional benefit to them but grant of this facility i...
only resulted into an easy method made available to the Union to collect •
its subscription from its members through the intervention of the Corpora-
tion. To illustrate the point, if a member-employee was to get hundred
rupees by way of monthly wages and if he agreed with the Corporation that
out of hundred rupees payable to him, five rupees may be deducted at
B
source and paid over to his Union for discharging his obligation to pay
monthly membership fee, the Corporation would not suffer any additional r-
financial burden thereby as it had the obligation to pay full hundred rupees
by way of wages to the workmen having !ii.ken work from him for the -+
month. Similarly, the wc.rkmen also would not get any benefit thereby as
c he had earned rupees hundred in full and on his own request five rupees
were to go directly to the Union by way of membership fee which otherwise
he would have been required to pay from his wages after receiving Rs.
100/-. Therefore, the scheme of pay Roll Check-off Facility conferred a
facility to the Union of workmen without conferring any extra benefit to
D the workmen or imposing any greater financial burden on the Corporation.
In the light of the aforesaid scheme, the Pay Roll Check-off Facility was
made available to the respondent Union pursuant to the binding settlement
of 28th July, 1988 by way of a tripartite agreement amongst the Union, " ,..
worker Member concerned and the Corporation. We have to see as to what
E is the scope and ambit of aforesaid clause 24 of the Memorandum of
Understanding dated 10th May, 1993 vis-a-vis this scheme. The first part
of clause 24 deals with benefits already granted under earlier settlements
but excepting those covered by the settlement at hand namely, the
Memorandum of Understanding. These benefits wete to be continued for
the employees who were in the service of the Corporation on the date of
F signing of the settlement. They were obviously benefits already made
available to the workmen under any earlier settlements. Pay Roll Check-off
facility, as noted earlier, cannot be considered to be a benefit available to ~ "
the workmen. At the most, it will be a facility to the Union to get an
ensured method of securing mem~ership fees from its members on regular
G basis. The first part of paragraph 24 states that facilities continuing by way ,.
of conventions and or practice will be continued. It is obvious that such
facilities may include any of the then available facilities to the Union or
even to workmen. However, facility given to the Union of getting benefit
.>
of the scheme of Pay Roll Check-off is obviously not a facility available to •
H workmen. It is available only to the Union, that too under a binding
+ MANAGEMENT OF KSRTC '· KSRTC STAFF & WORKERS FEDERATION [S.B. MAJMUDAR. J.] 745

settlement and not by way of convention or practice. Such a facility will not A
be covered by latter part of first paragraph of clause 24 as the facilities
contemplated therein refer to only those which were continuing by way of
conventions and or practice. Hence, this facility was not contemplated even
by the first part of paragraph 24 of the Memorandum of Understanding.
If that is so, the second part of paragraph 24 also would be out of picture
so far as Pay Roll Check-off facility available to respondent Union under
B
the agreement of 28th July, 1988 was concerned. The second part of
paragraph 24 provides for an understanding which had been reached on
the earlier mentioned points in anticipation of approval of the Board of
Directors or the State Government. It is difficult to appreciate how it could
be said that any understanding was reached on Pay Roll Check-off Facility c
covered by any of the points mentioned in the Memorandum of Under-
standing. Understanding reached on the points mentioned in second part
of paragraph 24 naturally referred to the points mentioned from para-
graphs 1 to 23 of the Memorandum of Understanding. It cannot refer to
the saving clause mentioned in the very same paragraph 24. We, therefore, D
cannot accept the contention of learned senior counsel Shri Sanghi that the
phrase "the above mentioned points" as referred to in second part of
paragraph 24 of the Memorandum of Understanding would also cover the
first part of paragraph 24. But even that apart, assuming that what Shri Sanghi
contends is right, even then the first part of paragraph 24 does not cover any
understanding regarding the Pay Roll Check-off Facility given to the Union E
by settlement as seen earlier. Thus, neither first part of paragraph 24 nor its
second part can apply to the question of Pay Roll Check-off Facility. For all
these reasons, therefore, reliance placed on paragraph 24 of the Memorandum
of Understanding dated 10th May, 1993 by Shri Sanghi, learned senior counsel
for the Corporation, for subjecting the earlier granted Pay Roll Check-off
F
facility to the future approval of the State is not of any avail.

We, accordingly hold that paragraph 24 of the Memorandum of
Understanding did not touch or cover in its sweep the Pay Roll Check-off
Facility available to the respondent Union as per the binding settlement of
28th July, 1988. If that is so, there was no occasion for the State in the light G
of the aforesaid Memorandum of Understanding to pass the impugned
Government Order dated 10th September, 1993, on a wrong assumption
that it was called upon to make any observations or convey its decision
whether it approved or did not approve the grant of Pay Roll Check-off
Facility to the respondent Union. The proceedings of the Government of H
+
746 SUPREME COURT REPORTS (1999) 1 S.C.R.

A Karnataka which are at page 110 of Vol. 1 of the paper book clearly
mentioned as its subject, List of demands submitted by KSRTC Staff &
Workers Federation and also referred to the D.O. Letter dated 13th July,
1993 from the Chairman & Managing Director of the Corporation. The
Preamble of the impugned G.O. issued by State recites that the Memoran-
dum of Understanding arrived at between the Chairman 8{. Managing
B Director of the Corporation, and the Management of Corporation and
KSRTC Staff & Workers Federation had been signed on 10th May, 1993
in anticipation of approval of the Board of Directors of the Corporation
and the Government. It is in that light that the scope of the Government
Order. dated 10th September 1993 is to be appreciated. It states that after
C examining in detail the proposal of the Corporation, the Government had
accorded approval to the understanding between the parties with modifica-
tions and subject to the conditions mentioned in the said order. It becomes
at once clear that even the State of Karnataka thought that it was called
. upon to consider whether to approve or not to approve the settlement on
D various demands as proposed in the Memorandum of Understanding dated
10th May, 1993. Twenty two such items are listed in the Government Order
dated 10th Sept. 1993. Nowhere we find a whisper about the Pay Roll
Check-off Facility which was already made available to the respondent
Union by the binding settlement of 28th July, 1988. However, when we
come to conditions mentioned in the impugned Government Order dated
E 10th September 1993 we find Condition No.2 to the effect that the Manage-
ment shall not take the responsibility of collecting donations or monthly
subscriptions from the employees on behalf of the recognised Federation
or Unions. Condition No.2 as mentioned in the impugned Govt. Order
dated 10th Sept. 1993, to say the least, was clearly uncalled for and dehors
F the very scheme and ambit of the Memorandum, as noted earlier, had
nothing to do with the Pay Roll Check-off Facility already made available
to the Union by a binding settlement between the Corporation and the
Union and it was holding the field at least by the time the order dated 10th
Sept. 1993 saw the light of the day. It must, therefore, be held that
Condition No.2 as imposed in the impugned Govt. Memo dated 10th Sept.
G 1993 was totally ultra vires and uncalled for and that the State had no
occasion to lay down such a condition in connection with existing binding
Pay Roll Check- off Facility. Onee this conclusion is reached, it becomes
obvious that the aforesaid condition contained in the impugned Memo ...
must be held to be null and void knd inoperative at law. Consequently, it
H
MANAGEMENT OF KSRTC '· KSRTC STAFF & WORKERS FEDERATION [S.B. MAJMUDAR, J.) 747
is not necessary for us to examine the wider question canvassed by learned A
Advocate General for the State of Karnataka whether the State could issue
such general directions under Section 34 of the Corporation Act. The
decision of the learned Single Judge as confirmed by the Division Bench
can be sustained on the short ground that the Goverment Order dated 10th
September 1993 laying down the aforesaid impugned Condition No. 2 in
B
connection with Pay Roll Check-off Facility was ex-facie uncalled for and,
therefore, the said Government Memorandum in so far as it referred to
Condition No. 2 was not required to be acted upon by the Corporation.
We keep the wider question about the applicability of Section 34 open for
consideration in an appropriate case. We hold that it was not necessary for
the learned Single Judge to go into this wider question for voiding the c
Government Memorandum dated 10th September 1993 by interpreting
section 34 of the Corporation Act.

Before parting with the discussion on this point, we may briefly refer
to written submissions filed on behalf of the State of Karnataka and the D
Corporation.

We may consider in the first instance the written submissions filed
on behalf of the State of Karnataka along with the Cabinet Note in
connection with the charter of demands submitted by KSRTC Staff and
Workers Federation. So far as Pay Roll Check-off Facility is concerned, it E
has to be kept in view that Free Duty Check-off Facility remained in force
till 1989 as stated in paragraph 4 of the written submissions. Thereafter,
admittedly Free Duty check-off Facility was substituted by settlement dated
28th July, 1988 where-under the then existing Free Duty Check-off Facility
was substituted by a scheme of direct deduction from the employees' wages F
the amount of subscription for direct payment to their union, which became
Pay Roll Check-off Facility in place of duty free facility. It is this Pay Roll
Check-off Facility which remains binding as a settlement under the ID Act
between the parties. As admitted in paragraph 7 of the written submissions,
:
the said facility which became a part of the statutory settlement of July G
1989 was approved by the State Government However, it is not correct to
submit as mentioned in paragraph 9 of the written submissions, that the
Memorandum of Understanding dated 10th May, 1993, specially paragraph
.. 24 dealing with Free Duty Facility covered Check-off Facility which was an
off shoot of Free Duty Facility. Free Duty facility had ceased to have any
connection with the subsequent Pay Roll Check-off Facility as per the H
748 SUPREME COURT REPORTS [1999] 1 S.C.R.

A aforesaid settlement. Subsequently, paragraph 24 of the Memorandum of
Understanding referred to different type of facility wherein Union's office
bearers were to be given Free Duty Off for conducting their Union's
activities which has nothing to do with Pay Roll Check-off Facility. Conse-
quently, the rest of the contentions in the written submissions regarding
B the question of Pay Roll Check-off Facility being placed for consideration
of the Government would not survive. As noted earlier, the Federation's
agreement to discuss demands including Check-off Facility at the Govern-
ment level would not amount to substitution of the already binding settle-
ment regarding Pay Roll Check-off Facility. Consequently, it cannot be
said, as tried to be submitted on behalf of the State of Karnataka in the
C written submissions, that the Cabinet Note imposing Condition no. 2
regarding not undertaking the responsibility of collecting the monthly
subscription from employees on behalf of the recognised Federation or
Union by the Corporation amounted to substitution of the earlier binding
settlement. At the highest it remained in the realm of a mere suggestion
D for future guidance of the Corporation. It must be held to be beyond the
scope of the demands put forward under the Memorandum of Settlement
for approval of the State Government. It has to be noted that Duty Free
Facility covered by Item No. 24 of the Memorandum of Settlement per-
tained to giving duty free work for trade union's activities as clearly
E mentioned by Condition No.3 referred to in Cabinet Note itself. Hence,
the written submissions filed on behalf of the State of Karnataka do not
advance its case any further. It is also easy to visualise that in exercise of
powers conferred under Section 34 of the Corporation Act, the State of
Karnataka could not have directed the Corporation to commit breach of
F any binding settlement operative between the parties under Section 18(1)
of the ID Act or to make the Corporation liable for criminal action in this
connection. It has to be noted that under Section 29 of the ID Act, any
party who commits breach of a binding settlement would be liable to be
prosecuted and the punishment may extend even to six months' imprison-
ment. It is also not possible to agree with the contention canvassed in the
G written submissions that because by way of an interim order of this Court
the parties were directed to arrive at some amicable settlement of the dispute
and which did not fructify, it can be said that the said order of the Government
declining to restore the Check-off facility had put an end to the entire
controversy in the present case. If the Government had approved a modified
H settlement in this connection and if that had resulted into a fresh agreement
, MANAGEMENT OF KSRTC v. KSRTC STAFF & WORKERS FEDERATION (S.B. MAJMUDAR, J.] 749
/
between the parties regarding Pay Roll Check-off Facility then it could A
have become a new binding settlement between the parties. But that
eventually had never occ~rred. Hence, the efficacy and binding nature of
the earlier settlement did not get whittled down in the least. It must,
therefore, be held that in the Government Order dated 10th September,
1993 was neither legal nor was it called for in the facts and circumstances
B
of the case.

So far as the written submissions filed on behalf of the Corporation
are concerned, they seek to reiterate what was submitted earlier and which
has been considered and rejected in the earlier part of this judgment.
Reliance placed on the settlement dated 27.12.1995 for replacing the C
earlier binding settlement of 1988 cannot be countenanced for the simple
reason that all that was agreed Io between the parties in the said settlement
of December, 1995 was to the effect that the Federation was to discuss the
demand relating to Check-off Facility at the Government level. Thus, it was
merely an agreement to discuss but it had not culminated into any fresh D
settlement so as to supersede the earlier settlement. The submission that
after 15th July, 1996, recognition of Respondent No.1 came to an end
cannot be countenanced for the simple reason that it is not the case of the
Corporation that in a fresh referendum any other Union h;c,d emerged as
the majority Union and got recognition.
E
It has also to be kept in view that even assuming that settlement of
1988 had thereby come to an end, its binding effect as contractual obliga-
tion continued till it was replaced by other settlement as ruled by this Court
in The Life Insurance Corporation of India v. DJ. Bahadur & Ors., (supra).
It is also difficult to appreciate how the case of Check-off Facility is not p
termed as condition of service as by the said facility the Management had
agieed to deduct from the wages of the employees the requisite amount to
be paid to the Union by way of subscription of the employees. Such
permissible deduction from the wages cannot but be treated as condition
of service. The contention that from 21st September., 1993 Check-off
Facility has been given up by the Corporation cannot be of any assistance G
to the Corporation for the simple reason that it would amount to violation
of a binding settlement by the Corporatiop. which as per Section 29 of the
ID Act would be penal. No advantage in law, therefore, can be taken by
the Corporation from its unilateral withdrawal of binding Check-off Facility
as per setl!~ment pf 1988. It is also not possible to countenance the H
750 SUPREME COURT REPORTS [1999] 1 S.C.R.

A submission that though the Check-off Facility may continue to exist de jure
it would cease to exist de facto. Such unilateral withdrawal of Check-off
Facility by one of the parties cannot be treated to be an act which is legal
and valid. Minutes of the meeting held between the representatives of the
Corporation and Respondent No. 1 Union held on 18th October, 1995 also
cannot amount to substitution of a fresh settlement on the Pay Roll
B Check-off Facility. To reiterate, the Federation's only agreement was to
discuss demands relating to check off and trade union facilities at the
Government level. So long as the said discussion had not culminated into
any other binding settlement on the topic, the earlier settlement cannot be
said to have been replaced or substituted by any other validly binding
C settlement. Consequently, the aforesaid written submissions do not advance
the case of the appellant.

We, therefore answer point No.2 by holding that the Government
Order dated 10th Sept., 1993 in connection with the impugned Pay Roll
Check-off Facility was neither legal nor valid and was totally uncalled for.
D This point is, therefore, answered against the appellants and in favour of
the respondent Union subject to the clarification that the submission •
canvassed by the learned Advocate General for the State of Karnataka
about the correct interpretation of Section 34 of the Corporation Act in
support of the Government appeals is not required to be answered. Ques-
E tion of law on this aspect is kept open for consideration in an appropriate
case as and when the occasion arises.

Point No.3:

So far as this point is concerned, it is obvious that the impugned
F Notification dated 21st September, 1993 issued by the Corporation was
based solely on the St.ate of Karnataka's order dated 10th Sepember, 1993. ..
Once that order is held by us to be uncalled for and inoperative in law, the
consequential Notification dated 21st September, 1993 issued by the Cor-
poration must fall through as a logical corollary of our aforesaid decision.
G Therefore, no fault can be found with the ultimate decision rendered by
learned Single Judge voiding not only Government Order dated 10th
September, 1993 but also the consequential Notification of Corporation
dated 21st Sepember, 1993. "'

But even that apart, the said Notification is liable to be set aside also
H on ·a different ground. It has to be kept in view that Pay Roll Check-off
MANAGEMENT OF KSRTC '· KSRTC STAFF & WORKERS FEDERATION (S.B. MAJMUDAR l.J 751
Facility was made available to the respondent Union by a binding settle- A
ment between the Corporation and the Union dated 28th July, 1988. It is
true that in para 7 of the said settlement it was mentioned that the
settlement was valid till the recognition accorded to the Federation existed
or would continue to be in force until both the parties terminated the terms
by mutual consent earlier. It is not in dispute between the parties that the
settlement of 28th July, 1988 remained in force as the recognition granted B
to the respondent Union continued at least till 16th July 1996. It is also,
pertinent to note that there is no evidence that the Union lost such
recognition subsequently by any further referendum. Be that as it may, the
date on which the impugned Notification dated 21st September, 1993 was
Issued by the Corporation, the said Settlement was fully operative and
binding between the parties. In order to salvage the situation for the
c
Corporation, Mr. Sanghi, learned senior counsel submitted in the alterna-
tive that as per para 7 of the said settlement it had to continue until both
the parties terminated the settlement by mutual consent earlier. Mr. Sanghi
submitted that the impugned Notification issued by the Corporation on 21st
September, 1993 itself resulted into termination of the said settlement as D
contemplated by second part of para 7. The said submission is to be stated
to be rejected. The contingency contemplated by second part of para 7 of
the settlement dated 28th July, 1988 could apply only when both the parties,
namely, the Corporation as well as the respondent Union by mutual
consent, terminated the said settlement earlier i.e. during the time the
Union remained a recognised Union. It obviously could not be sub- E
mitted by Shri Sanghi for the Corporation that the unilateral Notifica-
tion dated 21st September, 1993 issued by the Corporation brought
about the termination of the settlement of 28th July, 1988 by mutual
consent of Corporation and the respondent Union. Consequently, the
second part of para 7 of the said settlement could never have applied
F
to the facts of the present case. Having realised this difficulty, Mr.
Sanghi, learned senior counsel for the Corporation, submitted that, in
any case, the impugned order dated 21st September, 1993 of the Cor-
poration can be treated to be a Noitce under Section 19(2) of the ID
Act. In this connection, it is necessary to refer to Section 19 sub-sections
(1) & (2) of the ID Act. They read as under : G

.. "19. Pen"od of operation of Settlements and awards. -

( 1) A Settlement shall come into operation on such date as is
agreed upon by the parties to the dispute, and if no date is H
752 SUPREME COURT REPORTS [1999) l S.C.R.

A agreed upon, on the date on which the memorandum of the
Settlement is signed by the parties to the dispute.

(2) Such Settlement shall be binding for such period as is agreed
upon by the parties, and if no such period is agreed upon,
for a period of six months [from the date on which the
B memorandum of Settlement is signed by the parties to the
dispute], and shall continue to be binding on the parties after
the expiry of the period aforesaid, until the expiry of two
months from the date on which a notice in writing of an
intention to terminate the Settlement is given by one of the
c parties to the other party or parties to the Settlement.

xxx xxx xxx xxx"

It cannot be disputed that the settlement in question came into force on
28th July, 1988 when it was signed by both the parties. A question arises
D
as to how far the binding effect of that settlement may continue between
the parties. As seen earlier, Section 19 (2) clearly provides that such
settlement shall be binding for such period as is agreed upon by the parties.
Para 7 of the said settlement, as seen earlier, lays down the period for the
currency of the settlement as it clearly provides that the settlement would
E be v~lid till the recognition accorded to the Federation existed. As we have
seen earlier, the recognition to the respondent Federation continued all
throughout and as on date even it is not shown that its recognition has
stood superseded by any recognition given to any rival and competing
recognised Union. In any case, by the time of the impugned Notification
F dated 21st September, 1993 that period had never ended. Similarly, there
was no earlier termination of' settlement by mutual consent. Till either of
these eventualities occurred, there was no occasion for the Corporation to
terminate the settlement under Section 19 sub-section (2) by any notice as
it is clearly laid down therein that the settlement shall be binding between
the parties for the agreed period and shall also continue to be binding even
G after the expiry of the period until the expiry of two months from the date
on which a notice in writing of an intention to terminate the settlement is
given by one of the parties to the other party. So even assuming that the
Corporation could have unilaterally terminated such settlement it could not
have done so during the time the settlement was operative on its own terms,
H meaning thereby, till the recognition accorded to the Union continued or
* MANAGEMENT OF KSRTC v. KSRTCSTAFF & WORKERS FEDERATION (S.B. MAJMUDAR,J.]

till any earlier termination by mutual consent. As seen earlier, by 21st A
753

September, 1993 none of these contingencies had occurred. Consequently,
the so called unilateral termination of the settlement by the Notification of,
Corporation dated 21st September, 1993 must be held to be completely
ultra vires the powers of the Corporation under Section 19 sub-section (2).
But even that apart, it has to be observed that the Corporation had not
given two months' notice in any case as contemplated by Section 19
B
sub-section (2) for terminating the said binding settlement, though such an
~
occasion had still not arisen for the Corporation as the binding effect of
the settlement during the period provided therein as per clause 7 had not
come to an end by then. Even on that ground the notification dated 21st
September, 1993 fell foul on the touchstone of Section 19(2) of the ID Act, c
having not complied with the said provision.

But even on an assumption that the aforesaid notification satisfied
the requirements of Section 19 sub-section (2) for terminating the settle-
ment dated 28th July, 1988, even then till a new settlement laying down
fresh terms of settlement on the question of Pay Roll Check-off facility saw
D
_..
the light of the day, the binding effect of the 1988 settlement has to
~
continue to bind the parties by way of contractual obligations. This aspect
is well-settled by a three Judge Bench decision of this Court in The Life
Insurance Corporation of India v. DJ. Bahadur& Ors., (supra) Krishna Iyer,
J., speaking for the Supreme Court at page 1114 of the Report, has made E
the following pertinent observations:

"The core question that fust falls for consideration is as to whether
the Settlements of 1974 are still in force. There are three stages or
phases with different legal effects in the life of an award or F
> Settlement. There is a specific period contractually or statutorily
fixed as the period of operation. Thereafter, the award or Settle-
men! does not become 11011 est but continues to be binding. This
is the second chapter of legal efficacy but qualitatively different as
we will presently show. Then comes the last phase. If notice of
intention to terminate is given under S.19(2) or 19(6) then the third G
stage opens where the award or the Settlement does survive and
... is in force between the parties as a contract which has superseded
the earlier contract and subsists until a new award or negotiated
Settlement takes i1~. place. Like Nature, Law abhors a vacuum and
even on the notice of termination under S.19(2) or (6) the sequence H
754 SUPREME COURT.REPORTS [1999] 1 S.C.R.

A and consequence cannot be just void but a continuance of the
.earlier terms, but with liberty to both sides to raise disputes
negotiate Settlements or seek a reference and award. Until such a
new contract or a,ward replaces the previous one, the former
Settlement or award will regulate the relations between the parties.
Such is the understanding of industrial law at least for 30 years as
B precedents of the High Courts arid of this court bear testimony.
To hold to the contrary is to invite industrial chaos by an inter-
pretation of the ID Act whose primary purpose is to obviate such
a situation and to provide for industrial peace. To distil from the
provisions of S.19 a conclusion diametrically opposite of the ob-
c jective, intendment and effect of the Section is an interpretative
stultification of the statutory ethos and purpose. Industrial law
frowns upon a lawless void and under general law the contract of
service created by an award or settlement lives so long as a new
lawful contract is brought into being:To argue otherwise is to
frustrate the rule of law. If law is a means to an end - order in
D
society - can it commit functional harakiri by leaving a conflict
situation to lawless void?" c:

In view of the aforesaid settled legal pos1hon, therefore, if any
unilateral notice to terminate the binding settlement of 28th July 1988 was
E issued by the Corporation which, on the facts of the present case, is found
not to have been issued, even then till any new settlement on the question
of grant of Pay Roll Check-off Facility was substituted by parties, the legally
binding effects of the earlier settlement of 1988 would continue to operate
and the Corporation will then be contractually bound to confer Pay Roll
F Check-off Facility to the Union. Consequently, there was no occasion for
the Corporation to issue the impugned Notification dated 21st September,
1993 even on this ground as it was clearly violative of the mandatory
requirement of Section 19 sub-section (2) and was contrary to the settled
legal position as aforesaid. It was, therefore, a still born Notification and
was rightly set aside by the learned Single Judge on that ground and also
G by the Division Bench of the High Court.

We may now refer to one last ditch effort made by Shri Sanghi,
learned senior counsel for the Corporation. He submitted that at least by
latter settlements dated 8th September, 1994, 5th December, 1994, 16th
H February, 1995, 10th October, 1995 and 27th December, 1995, the earlier
MANAGEMENT OF KSRTC v. KSRTC STAFF & WORKERS FEDERATION [S.B. MAJMUDAR, J.J 755

-t settlement of 28th July, 1988 was given a complete go by so far as the Pay A
Roll Check-off Facility was concerned and even on that ground the earlier
settlement should be taken to have become non est. In our view, this valiant
attempt on the part of learned senior counsel Shri Sanghi, is completely
futile. When we turn to these latter settlements, it becomes at once clear
that the impugned Notification of 21st September, 1993 which is found to
B
have directly conflicted with Section 19(2) of the ID Act and, therefore,
was a still born one could not get life because of any subsequent settle-
ments as the subsequent settlements in terms had not provided for a new
scheme of Pay Roll Check-off Facility to be binding between the parties.
Let us try to see what these other settlements had done. Settlement of 8th
September, 1994 under Section 2(p) of the ID Act between the respondent c
Union and the Corporation recites the various demands annexed to the
strikt notice given by the respondent Union on 29th August, 1994. Out of
the listed demands are demand Nos. 4 & 5. So far as demand No. 4 is
concerned, it deals with "Collection of donations to the recognised Unions
in terms of the Memorandum of settlement dated 17th July, 1989". We are D
not concerned with this demand in the present case. Demand No.5 deals
with "Collection of Union subscription through check-off facility in terms
of the Settlement dated 28th July, 1988". This demand clearly shows that
despite there being a settlement of 28th July, 1988, the Corporation,
because of its impugned stand reflected by its Notification dated 21st E
September, 1993, had withdrawn the check- off facility. Therefore, it was
the contention of the respondent Union that the said withdrawal was
contrary to the settlement dated 28th July, 1988. This demand, therefore,
in respect of giving a go hy to the settlement dated 28th July, 1988
regarding collection of subscription through the check-off facility tried to
reiterate the said binding terms of the settlem~nt and only grievance was
F
that these binding terms of settlement were being violated by the Corpora-
tion and hence the demand was to recall such withdrawal. The Federation
in para 2 of the said settlement clearly mentioned that, out of the nine
demands made by the Federation, for the demands at Nos. 1 to 5, the
Federation would reserve its right to pursue with the Government of G
Karnataka. Meaning thereby, the Federation agreed with the Corporation
to take up the matter with the Government of Karnataka and to persuade
it to call upon the Corporation to withdraw its impugned order dated 21st
September, 1993 and to restore the facility available under binding terms
of settlement dated 28th July, 1988. To say the least, this agreement H
756 SUPREME COURT REPORTS [1999] 1 S.C.R.

A between the parties as per the settlement of 8th September, 1994 cannot
be said to: have whittled down the settlement dated 28th July, 1988 nor can
it be said to have substituted it by any fresh scheme of check-off facility.
All that the Union can be said to have agreed with the Corporation was to
pursue the matter with the Government for enforcement of the terms of
B the earlier Settlement of 1988 and for doing the needful in this connection.
Consequently, the said Settlement of 8th September, 1994 does not touch
the core question, namely, whether there was any subsequent binding
Settlement between the parties giving a go by to or modifying the settled
terms of Pay Roll Check-off facility as emanating from the binding Settle-
ment of 28th July, 1988. Shri Sanghi, learned senior counsel, then took us
C to the second settlement dated 5th December, 1994. It appears that the
said settlement was also in connection with the same demands which were
mentioned in the earlier strike notice referred to in the Section 2(p)
settlement dated 8th September, 1994 and on these demands also_no fresh
settlement had been arrived at between the parties. Thus, the parties
D appear to have been trying to arrive at an amicable settlement in connec-
tion with the grievances of the Union. That the check-off facility was
wrongly withdrawn though they were available in terms of settlement dated
28th July, 1988. In fact, it appears that the said demand of the Union which
resulted into the aforesaid two settlements dated 8th September, 1994 &
E 5th December, 1994 centered round the question of enforcement of
the terms of settlement dated 28th July, 1988 against the Cor-
poration rather than giving a go by to them. That demand had nothing
to do with any modification of the terms of settlement dated 28th
July, 1988. The grievance of the Union was against non-implementa-
F tion of the terms of the settlement and not· for their modification.
Even at Annexure-A to the said settlement of 5th December, 1994 was
the very same settlement that was arrived at on 8th Sepember, 1994.
Our observations in connection with settlement of 8th September,
1994 would, therefore, ipso facto apply to the terms of settlement dated
5th December, 1994. In short, none, of these two settlements ever
G whispered about any agreed settlement between the parties for modify-
ing any of the terms of the settlement dated 28th July, 1988 pertaining
to the Pay Roll Check-off facility made available to the Union by the
Corporation as per the said settlement. It is, therefore, not possible to
agree with Shri Sanghi, learned senior counsel for the Corporation that
H by these latter two settlements, the earlier settlement of 28th July, 1988 was
MANAGEMENT OF KSRTC "KSRTC STAFF & WORKERS FEDERATION [S.B. MAJMUDAR, J.] 757

given a go by consent of parties. On the contrary, as we have seen earlier, A
-t
instead of giving a go by to the terms of the settlement, the Union was
insisting upon complying with the terms of the said settlement. It was not
the case of substituting the terms of the said settlement but it was a case
of reiterating those terms so far as the Union was concerned. We then
turn to settlement dated 16th February, 1995. A mere look at the said
B
settlement shows that it has nothing to do with the Pay Roll Check-off
Facility made available to the respondent Union by the settlement of 28th
July, 1988. Therefore, this settlement is miles away from the terms settled
on 28th July, 1988 between the parties regarding Pay Roll Check-off
Facility. It is totally irrelevant for deciding the question as tried to be
raised by Shri Sanghi regarding substitution of the terms of settlement of c
1988 by the settlement of 16th February, 1995. Same is the position
regarding the settlement of 10th October, 1995 on which reliance was
placed by Shri Sanghi. The said settlement also does not deal with the
question of Pay Roll Check-off Facility. That takes us to the last settlement
dated 27th December, 1995 strongly pressed in service by Shri Sanghi for
D
the Corporation. It is true that in the short recital of the case as found in
,.. the settlement dated 27th December, 1995, it has been mentioned that the
~ Federation reserves its right to pursue with the Government in respect of
these demands, one of which was regarding restoration of Pay Roll Check-
off Facility, collection of donations to the recognised Unions in terms of
Memorandum of Settlement dated 17th July, 1989 and earlier settlements. E
But that only shows that the grievance of respondent Federation that
despite the earlier settlement the Pay Roll Check-off Facility was
withdr<:.wn by the Corporation and was required to be restored. Meaning
thereby, the binding effect of the earlier settlement was sought to be
reinforced. Coming to the express terms of the settlement as mentioned F
in the said settlement dated 27th December, 1995, we find in para 5 a
f recital that Federation agreed to discuss about the said facility at the
Government level. We fail to appreciate how this agreement to discuss the
demands amounts to any express or implied substitution of the terms of
binding settlement dated 28th July, 1988 in connection with already
granted Pay Roll Check-off Facility to the respondent Union. It appears G
clear that on account of the issuance of the impugned Government Order
dated 10th September, 1993 and the consequential Notification dated 21st
September, 1993 by the Corpo~ation, the Corporation had unilaterally
withdrawn the Pay Roll Check-off Facility granted to the Union and that
too without following the due procdure of Section 19 sub-section (2) of H
758 SUPREME COURT REPORTS [1999] 1 S.C.R.

A the ID Act. On account of such illegal act on the part of the Corporation,
strike notices were given by the Respondent Union and the Union had
shown agreement to discuss the matter across the table. This agreement clearly
showed that the respondent Union was amenable to an amicable settlement of
the dispute so that a fresh settlement could be entered into in substitution of the
B settlement dated 28th July, 1988. But that eventuality never occurred. Result was
that the earlier settlement dated 28th July, 1988 never got substituted by a fresh
settlement on the topic and the binding effect of the earlier settlement dated
28th July, 1988 in regard to Pay Roll Check-off Facility continued to operate all
through-out. Consequently, it must be held that none of the latter settlements on
•
which strong reliance was placed by Shri Sanghi, learned senior counsel for the
C Corporation, to cull out any express or even implied substitution of the earlier
settlement dated 28th July, 1988 or for exhibiting any conduct cin the part of the
respondent Union of giving a go by to the t~ of the earlier settlement which
gave it the said facility of pay roll check off can be of any avail to Shri Sanghi.
It must be held that the settlement of 28th July, 1988 granting pay roll check-off
D facility to the respondent Union has continued to operate all throughout without
in any way being substituted by any fresh settlement between the parties in this
connection.

The submission made by Shri Sanghi, 'learned senior counsel for the
Corporation, that the Corporation has now undergone trifurcation. into
E three Corporations also cannot be of any avail to him for the simple reason
that such a conteniion was not canvassed either before the learned Single
Judge or before the Division Bench. It is also not brought out on the record
as to .how this trifurcation has taken place and whether the subsequent
successors-in-interest of the Corporation have undertaken the liability of
p earlier existing settlements entered into by their predecessor Corporation
with the erstwhile Union. All these vexed questions of fact cannot be
permitted to be raised for the first time in these present proceedings before
us. Hence, the contention canvassed by learned senior counsel for the
Corporation on this additional ground also is found to be devoid of any
substance and cannot be entertained and is, therefore, rejected. The third
G point, accordingly, is answered in negative against the appellant and in
favour of the respondents.

Before parting with these proceedings, we may mention that an
attempt was made by us during the pendency of these proceedings at the
H SLP stage to enable the parties to find some amicable solution of the
MANAGEMENTOFKSRTC v. KSRTCSTAFF & WORKERS FEDERATION [S.B. MAJMUDAR, J.] 759
problem with a view to ensuring industrial peace and, therefore, by interim A
order dated 27th February, 1998 it was suggested that the State Govern-
ment may have a fresh discussion with the respondent Union as well as the
Corporation in connection with the disputed item of che5k-off facility. But
unfortunately, no concrete result ensued and the part~s could not come
to any amicable solution of the problem by arriving at a fresh settlement
on the question. Consequently, the appeals were heard on merits and are B
being disposed of by this judgment.

Point No. 4

As a result of our findings on the aforesaid three poffi,ts, the in-
evitable result is that these appeals faii and are dismissed subject to the C
limited clarification that the question of applicability of Secion 34 of the
Corporation Act to the impugned Government Order of 10th September,
1993 is kept open. There will be no order as to costs in the facts and
circumstances of the case.

S.M. Appeals dismissed.