Holding

A settlement reached in conciliation proceedings is binding on all parties to the industrial dispute, including non‑signatory workmen, and its restriction on lay‑off compensation is enforceable under Section 25C.

Summary

The appellants, workmen of Lotus Mill, claimed full lay‑off compensation under Section 25C of the Industrial Disputes Act, arguing that a settlement reached during conciliation on 5 May 1980 – which limited compensation to 67% of the statutory amount and was signed by only four of five unions – could not bind them because their union did not sign it. The High Court held that a settlement arrived at in conciliation proceedings is binding on all parties to the industrial dispute, including workmen whose unions did not sign, and dismissed the workmen’s application under Section 33C(2). On appeal, the Supreme Court affirmed that a written settlement under Section 12(3) has the same effect as an award and is binding on all workmen under Section 18(3), irrespective of union affiliation, and that Section 25J does not override this effect. Consequently, the restriction on lay‑off compensation in the settlement is enforceable and the appeal is dismissed.

Issues considered

Whether a settlement arrived at during conciliation proceedings under Section 12(3) of the Industrial Disputes Act binds workmen whose union did not sign the settlement.
Whether such a settlement can curtail the statutory lay‑off compensation right under the first proviso of Section 25C.
Whether Section 25J of the Act overrides the binding effect of a settlement under Section 18(3).
Whether an individual workman may claim lay‑off compensation under Section 33C(2) when a settlement restricting compensation exists.

Legislation cited

Industrial Disputes Act, 1947s. 10(2), s. 12(3), s. 18(3), s. 25C, s. 25J, s. 2A, s. 2(p), s. 33C(2), s. 36

Subjects

lay‑off compensationsettlementconciliationIndustrial Disputes ActSection 25CSection 12(3)Section 18(3)collective bargainingbinding settlementnon‑signatory union

Judgment

P. VIRUDHACHALAM AND ORS. A
v.
THE MANAGEMENT OF LOTUS MILLS
AND ANR.

DECEMBER 9, 1997
B
[S.B. MAJMUDAR ANO M. JAGANNADHA RAO, JJ.)

Labour Law:

I11dust1ial Disputes Act 1947 :
c
Sections 12(3) and 18(3)--Gosure of mill-Payme11t of lay-off com-
pe11sation-lndustrial dispute-Settlement during co11ciliation proceed-
i11g:s-Lay-off compensation resDicted to first folty-five days-Four out of five
u11io11s signing the settlement-Bindi11g nature of--Held-Bindi11g on all par-
ties to the dispute-Including all workmen, present and future--Bi11ds even D
the members of no11-signato1y union.

Section 25 C.......Proviso--S ettleme11t between management and
unions-Lay-off compensation-Resllicted to first forty-five days Settlemelll
during conciliation-Binding on workmen--Independrnt agreement between
individual workman and employe,...-.Not necessmy-Claim by workman under E
Section 33(c)(2)-Not maintainable.

Sections JO & 36--Collective bargainin~Act of union representing
workmen-Settlement dwing conciliation-Binds even its non-members.

Section 25(J)(l)-fllte1pretation of-Provisions of Chapter VA-Not F
intended to override other provision of the Industrial Disputes Act itself

Words and Phrase:s-'Settlement; 'Agreement'-Meaning of-Section
25(C) of the Industrial Disputes Act 1947.

At industrial dispute arose with regard to payment of lay-off com pen- G
sation, between the management of Lotus Mill and its workmen, for the
period during which the mill remained closed. In the course of conciliation
proceedings, a settle.neut was arrived at between the management and five
unions representing all the workmen, in terms of which lay-off compensation
was to be paid in instalments after three years. The workers demanded im-
mediate payment and the matter was again referred to conciliation, in the H
263
264 SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.
A course of which, a fresh settlement was reached which was signed by four out
of the five unions. The settlement restricted the payment of lay-off compen-
sation to the workmen to 67% of the permissible statutory lay-off compensa-
tion payable.

The appellant-workmen filed an application under Section 33(c)(2)
B before the Labour Court for computation oflay-off compensation payable to
them under Section 25C, on the ground that their union had not signed the
settlement. The Labour Court proceeded to compute the amounts on the
basis that the appellants had not individually entered into any agreement
with the management, and directed the respondent No.1 to pay the same.

c The respondent No.1 challenged the order of the Labour Court byway
of a writ petition. The High Court held that the settlement arrived at during
conciliation proceedings was binding on all workmen who were parties to the
industrial dispute and allowed the petition, but granted a certificate under
Article 133(1) of the Constitution of India for leave to prefer the present
D appeal.

The appellants contended that the right to receive statutory lay-off
compensation cannot be diluted by any settlement during conciliation in the
absence of an independent agreement between the employer and individual
workmen. It was further contended that Chapter VA of the Industrial Dis-
E pute Act is a complete code in itself and overrides any inconsistent
provisions in any other law including those in any other part of the Act as
well.

Dismissing the appeal, this Court

F HELD : 1. A written settlement arrived at in the course of conciliation
proceedings is binding not only on the signatories thereto but on all parties
to the industrial dispute. [272-C-DJ

Barauni Reft11e1y Pragatisheel Shramik Pwishad v. l11dia11 Oil C01pora-
G tion Ltd. and On·., AIR (1990) SC 1801, relied on.

2. All settlements, whether arrived at outside or during conciliation
proceedings, are based on written agreements. Thus all settlements are
necessarily based on written agreements but all agreements are not
'settlements' until the relevant prescribed procedures are followed.
H [2730G-H; 274-A)
P. VIRUDHACHALAM v. MANAGEMENT OF LOTUS MILLS 265

3. A 'settlement' between an employer and employees is placed on a A ·.
· higher pedestal than an award passed after adjudication. [270-B]

-- Herbe1tsons Ltd. v. The workmen of Herbensons Ltd. and 01~·., AIR
(1977) SC 322, relied on.

4. A settlement arrived at during conciliation between the manage- B
ment and onions, is binding not only on the members of the unions but also
>.- on non-members, who are parties to the dispute. Such settlement binds all
workmen even though they may not have individually signed any agreement
with the management. [273-B-C]

5. A settlement restricting payment of lay-off compensation to first C
forty-five days, arrived at during conciliation proceedings, is binding on the
employer and all workmen concerned, as the proviso to Section 25C is at-
tracted in the case of such settlement. [278-B-C]

6. The provisions of Chapter VA relating to retrenchment and lay-off D
have been given an overriding effect to provide uniformity and were not
intended to override any provisions of the Industrial Disputes Act itself.
[279-B-H]
:~ Krishna District Co-operative Marketing Society Ltd. v. N. V Pur-
nachandra Rao and Ors., [1987] 4 SCC 99, applied.
E
7. The principles of collective bargaining are the mainstay of resolu-
tion of industrial disputes and maintenance ofindustrial peace by means of
nego!iations outside or during conciliation proceedings. During such
negotiations the reins of bargaining are handed over to the unions and in-
dividual workmen necessarily recede into the background. [273-D-F] ·F

7.1. Settlements are live wires under the Act for ensuring industrial
peace and prosperity. A settlement arrived at by a union with the manage-
ment binds its members; and if arrived at during conciliation proceedings it
binds even its non-members. [273-F-G]
,.
Workmen of Firestone Tyre & Rubbe'?Co. of India (P) Ltd., Etc. v. 171e G
Firestone Tyre & Rubber Co. etc., (1976) 1 LW 493; R.B. Bansilal Abirchand
Mills Co. Ltd. v. The Labour Cowt, Nagpur & Ors., [1972] 1 SCC 154;
Workmen of Dewan Tea Estate & Ors. v. 171e Management, [1964] 5 SCR 548;
Cachar Chait Sramik Union, Silcha1; Assam v. Ihe Management of the Tea
Estate of Cachar, Assam, [1966] 2 SCR344, held not applicable. H
266 SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.

A CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4852 of
1989.

From the Judgment and Order dated 11.8.89 of the Madras High
Conrt in W.P. No. 2962 of 1982.

B Ms. Chandan Ramamurthi for the Appellant.

The Judgment of the Court was delivered by j ..

S.B. MAJMUDAR, J. A short but an interesting question arises for
consideration in this appeal by certificate granted by the High Conrt of
C Judicatnre at Madras under. Article 133(1) of the Constitution of India. It
reads as under :

"Whether an individual workman governed by the Industrial Dis-
putes Act, 1947 (hereinafter referred to as 'the Act') can claim lay-off
-compensation under Section 25C of the Act despite a settlement arrived
D at during conciliation proceedings under Section 12(3) of the Act by a
union of which he is not a member and· when such settlement seeks to
restrict the right of lay-off compensation payable to such workman as per
the first proviso to Section 25C of the Act."

E A few relevant facts leading to these proceedings require to be stated
at the outset :

BACKGROUND FACTS :

The five appellants before us were employed at the relevant time
under Respondent No. 1 in various departments. Respondent No. 1 was
F running a textile mill wherein the appellants were employed. The said
textile mill remained closed due to financial crisis from 8.8.1976 to
31.1.1978. The workmen of the mill raised a dispute pertaining to lay-off
dnring the aforesaid period and claimed appropriate wages for the said
period. In the conciliation proceedings a settlement was-arrived at between
G the parties on 28.12.1977. Five J.:lnions representing all the workmen took
part in the conciliation proceedings. A settlement was arrived at in these
proceedings between the management on the one hand and the unions on
the other. In clause 6 of the settlement, it was provided that lay-off
compensation would be paid for the days during which the mill did not
function and marked as "no work". It was also agreed that the compensa-
H tion would be paid after January 1981 in instalments and the question as

•
P. VIRUDHACHALAM v. MANAGEMENT OF LOTUS MILLS IS.B. MAJMUDAR. J.] 267

to the number of instalments would be decided by both parties on mutual A
discussion in January 1980. Though it was agreed under that settlement in
January 1980, the workers insisted upon immediate payment of compensa-
tion and raised another dispute. Consequently, the earlier settlement lost
its efficacy. Again the matter was referred to the conciliation officer who
held negotiations. Different unions representing various categories of
workmen took part in the negotiations. The union representing the present - B
appellants also took part in the said negotiations. Ultimately a fresh
settlement was arrived at during conciliation proceedings as per Section
12(3) of the Act on 5.5.1980. Out of five unions representing the workmen
of Respondent No. 1-Textile Mill, four unions signed the said settlement
but the union representing the appellants did not think it fit to sign the C
same. The relevant terms of the aforesaid settlement under Section 12(3)
of the Act in connection with the payment of lay-off compensation read as
under:

"TERMS OF SETTLEMENT:

l. It is agreed that this settlement shall be applicable to all D
permanent employees of the Mills except

(a) Watchmen
·.•
(b) Electrical Department workers
E
(c) Staff

in respect of whom a separate settlement has been signed.

2. It is agreed that in respect of the period 8.8.1976 to 7.8.1977, all
workers who were laid off during that period shall be paid lay-off F
compensation for the first forty-five days oi lay-off and that no
compensation shall be payable in respect of the days of lay-off after
the expiry of the first forty-five days.

3. It is further agreed that in respect of the period 9.8.1977 to
31.1.1978, all workmen who were laid-off during that period shall G
be paid lay-off compensation for the first forty- five days of lay-off
and that no compensation shall be payable in respect of the days
of lay-off after the expiry of the first forty five days.

4. In addition to the lay-off compensation payable under clauses
(2) and (3) above each permanent workman shall be paid an H
268 SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A ex-gratia sum which shall be calculated as follows :

"The total of the compensation amount payable to each per-
manent worker under clauses (2) and (3) above and the ex gratia
amount shall be equal to 67% of the total lay- off compensation
payable for him in respect of all the days of lay-off during the
B period 8.8.1976 to 3 l.1. 1978."

It is not in dispute that the present appellants were permanent
employees of the mill and did not belong to any of the excluded categories
mentioned in paragraph-I of the settlement, meaning thereby they were
C covered by the said settlement. The question is as to whether they would
be bound by the settlement and 'the terms regarding the payment of
retrenched lay-off compensation, when their union <lid not sign the said
settlement. The appellants on the ground that their union had not signed
the settlement, filed application under Section 33C(2) of the Act for
D computing the appropriate lay-off compensation payable to them as per
Section 25C of the Act. The Labour Court after hearing the parties allowed
the said application on the ground that the appellants individually had not
entered into any agreement with the management and consequently the
J ..
proviso to Section 25C of the Act would not come in their way and,
therefore, they were entitled to be paid 50% lay-off compensation for the
E entire period during which they were laid-off i.e. from 8.8.1976 to 31.1.1978
and the term of the settlement under Section 12(3) arrived at during
conciliation proceedings restricting the payment of compensation to 67%
of the permissible statutory lay-off compensation would not be binding on
the appellants. Accordingly, the amounts payable to the appellants were
F computed by the Labour Court and were directed to be paid by Respon-
dent No. 1 by its Order dated 30.1.1982. Respondent No. 1 carried the
matter in Writ Petition being No. 2962 of 1982 in the Madras High Court.
The High Court by its impugned judgment dated 11.8.1989 held that the
settlement arrived at <luring conciliation proceedings under Section 12(3)
was binding to all the workmen being parties to industrial dispute as per
G Section 18(3) of the Act and consequently the said settlement could be
treated as an agreement arrived at between all the workmen as per the first
proviso to Section 25C and, therefore, the appellants could not claim
anything more than what was permissible and payable to them as per the
binding terms of the settlement dated 5.5.1980. The writ petition of
H Respondent No. 1 was, therefore, allowed and the claim petition under
P. VIRUDHACHALAM•·. MANAGEMENTOFLOTUSMILLS fS.B. MAJMUDARJ.] 269
·section 33C(2) as moved by the appellants was dismissed. However, while A
·dismissing the same, the High Court granted a certificate under Article
..... 133(1) of the Constitution for leave to appeal to this Court and that is how
this appeal was filed in this Court and has reached the final hearing before
us.

CONTENTIONS ON BEHALF OF THE APPELLANTS : B

Learned counsel for the appellants vehemently contended that Sec-
tion 25C is in Chapter VA of the Act and it represents a complete code
in itself. That the statutory right given to the workmen under Section 25C
of Chapter VA cannot be whittled down, save and except by an agreement C
entered into between the workmen concerned and the employer as
provided by the first proviso to Section 25C of the Act. But before the
provisions of the said proviso are attracted, it should be shown that the
workman who has a statutory right under Section 25C has willingly agreed
to give up his right by entering into such an agreement with the employer. D
That such an agreement was independent of any settlement contemplated
under Section 12(3) of the Act which could have any binding effect under
Section 18(3) of the Act. It was submitted that on a conjoint reading of
Sections 25C and 25.J, it has to be held that any inconsistent provision found
in any other law including in any other part of the Act itself would not
whittle down the right to receive lay-off compensation as guaranteed to the E
workman under Section 25C of the Act and consequently the settlement
arrived at under Section 12(3) of the Act would not have any adverse effect
on the right of the appellants who admittedly had not entered into any
independent agreement with the management curtailing their right under
Section 25C of the Act to receive 5U% statutory compensation during the F
entire lay-off .period. The contesting Respondent No. 1 being served has
not thought it fit to appear in these proceedings.

STATUTORY SCHEME:

In order to appreciate the aforesaid contentions canvassed by coun- G
sel for the appellants, it will be necessary to have a look at the statutory
scheme of the Act. The Act is enacted for resolving industrial disputes
between workmen and employer which would have pernicious effect on
industrial peace and industrial production and which would in their turn
adversely affect the economy of the Nation as a whole. The Act is enacted · H
270 SUPREME COURT REPORTS [1997) SUPP. 6 S.C.R.

A to w.ake provisions for the investigation and settlement of industrial dis-
putes and for certain other purposes mentioned in the Act. Under the Act,
the principal techniques of settlement of disputes are - (1) Collective
- bargaining, (2) Mediation and conciliation, (3) Investigation, ( 4) Arbitra-
tion, and (5) Adjudication. The scheme of the Act shows that adjudication
B is to be resorted to as the last alternative. Before any matter is referred
for adjudication under Section 10 of the Act, there should be an attempt
for conciliation. As laid down by this Court in He1be1tsom Ltd. v. The
W01kme11 of Herbetsons Ltd. & 01:1·., AIR (1977) SC 322, any settleme.nt
between the employer and the employees is placed on a higher pedestal
than an award passed after ad.indication. It is easy to visualise that in-
c dividual workmen have by themselves scant bargaining power. Therefore,
their disputes have to be highlighted by their bargaining agents, namely,
their unions representing the body of workmen so that the bargaining
power of industrial workmen can get strengthened. As per Section 36 of
the Act, a workman who is a party to a dispute shall be entitled to be
D represented in any proceeding under this Act by any member of the
executive or other office bearer of a registered trade union of which he is
a member. The machinery of the Act envisages resolution of industrial
disputes and conflicts at the grassroot level by conciliation by which
settlement can be arrived at between the employer and the workmen and
E industrial peace can be achieved and industrial strife can be put to an end.
The Act envisages two types of settlements between the warring groups of
employer and employees. As defined by Section 2(p) of the Act. "settle-
ment" means a settlement arrived at in the course of conciliation proceed-
ings and includes. a written agreement between the employer and workmen
arrived at otherwise than in the course of conciliation proceedings wher':
F such agreement has been signed by the parties thereto in such manner as
may be prescribed and a copy thereof has been sent to an officer
authorised in this behalf by the appropriate Government and the concilia-
tion officer. Thus a settlement which is based on a written agreement
between the parties can be arrived at either in conciliation proceedings or
G even outside conciliation proceedings between the representatives _of the
workmen on the one hand and the management on the other. But even if
such written agreement signed by the parties is 11rrived at outside concilia- ~
tion proceedings. It would become a settlement, once the prescribed
procedure as envisaged by Section 2(p) is followed. So far as settlements
H arrived at in the course of conciliation proceedings are concerned, Section
P. VIRUDHACHALAMv. MANAGEMENT OF LOTUS MILLS [S.B. MAJMUDAR,J.] 271

12 of the Act deals with such settlements, As laid down by Section 12(1) A
where any industrial dispute exists or is apprehended, the conciliation
officer may, or where the dispute relates to a public utility service and a
notice under Section 22 has been given shall, hold conciliation proceedings
in the prescribed manner. Sub-section (2) of Section 12 enjoins upon him
for the purpose of bringing about a settlement of the dispute, without delay . B
to investigate the dispute and all matters affecting the merits and the right
settlement thereof and to all efforts as he thinks fit for the purpose of
inducing the parties to come to a fair and amicable settlement of the
dispute. Then follows sub-section (3) of Section 12 under which settlement
in the present case saw the light of lhe day. It reads as under :
c
"12(3). If a settlement of the dispute or of any of the matters in
dispute is arrived at in the course of the conciliation proceedings,
the conciliation officer shall send a report thereof to the ap-
propriate Government or an officer authorised in this behalf by
the appropriate Government together with a memorandum of the D
settlement signed by the parties to the dispute".

Sub-sections (4) and (5) of Section 12 lay down that if no settlement
is arrived at, the conciliation officer shall submit a full report to the
appropriate Government which if satisfied that there is a case for reference
of the dispute to a Board, Labour Court, Tribunal or National Tribunal, E
as the case may be, may make such a reference and shall record arid
communicate to the parties concerned its reasons therefor. So far as the
settlement arrived at outside the conciliation proceedings is concerned.
Section 18(1) deals with such settlement and lays down that a settlement
arrived at by agreement between the employer <md workman otherwise than
in the course of conciliation proceeding.~ shall be binding on the parties to the F
agreement. Sub-section (3) of Section 18, however, deals with settlement
arrived at during conciliation proceedings and lays down that settlement
arrived at in the course of conciliation proceedings under this Act, or an
arbitration award in a case where a notification has been issued under
sub-section (3A) of Section lOA or an award of a Labour Court, Tribunal or G
National Tribunal which has become enforceable shall be binding on -

(a) all parties to the Industrial dispute;

(b) all other parties summoned to appear m the proceedings as
parties to che dispute, unless the Board, arbitrator, Labour Court, Tribunal H
272 SUPREME COURT REPORTS (1997) SUPP. 6 S.C.R.
A or National Tribunal, as the case may be, records the opinion that they
were so summoned without proper cause;

(e) where a party referred to in clause (a) or clause (b) is an
employer, his heirs, successors or assigns in respect of the establishment
to which the dispute relates;
B
(d) where a party referred to in clause (a) or clause (b) is composed
of workmen, all persons who were employed in the establishment or part
of the establishment, as the case may be, to which the dispute relates on
the date of the dispute and all persons who subsequently become employed
C in that establishment or part.

DISCUSSION ON THE POINT FOR CONSIDERATION:

The aforesaid relevant provisions of the Act, therefore, leave no
room for doubt that once a written settlement is arrived at during the
D c~nciliation proceedings such settlement under Section 12(3) has a binding
effect not only on the signatories to the settlement but also on all parties
to the industrial dispute which would cover the entire body of workmen,
not only existing workmen but also future workmen. Such settlement during
conciliation proceedings has the same legal effect as an award of Labour
Court, or Tribunal or National Tribunal or an Arbitration award. They all
E stand on par. It is easy to visualise that settlement contemplated by Section
12(3) necessarily means a written settlement which would be based on a
written agreement where signatories lo such settlement sign the agreement.
Therefore, settlement. under Section 12(3) during conciliation proceedings
and all other settlements contemplated by Section 2(p) outside conciliation
F proceedings must be based on written agreements. Written agreements
would become settlement contemplated by Sections 2(p) read with Section
12(3) of the Act when arrived at during conciliation proceedings or even
outside conciliation proceedings. Thus, written agreements would become
settlements after relevant procedural provisions for arriving at such settle-
ments are followed. Thus, all settlements necessarily are based on written
G agreements between the parties. It is impossible to accept the submission
of learned counsel for the appellants that selllements between the parties
are different from agreements between the parties. It is trite to observe
that all settlements must be based on written agreements and such written
agreements get embeded in settlements. But all agreements may not neces-
H sarily be settlements till the aforesaid procedure giving them status of such
P. VIRUDHACHALAMv. MANAGEMENT OF LOTUS MILLS (S.B. MAJMUDAR,J.) 273

- settlements gets followed. In other words, under the scheme of the Act, all A
settlements are necessarily to be treated as binding agreements between
the parties but all agreements may not be settlements so as to have binding
effect as provided under Section 18(1) or (3) if the necessary procedure
for giving them such status is not followed in given cases. On the aforesaid
scheme of the Act, therefore, it must be held that the settlement arrived B
at during conciliation proceedings on 5.5.1980 between Respondent No.
1-Management on the one hand and the four out of 5 unions of workmen
on the other, had a binding effect under Section 18(3) of the Act not only
on the members of the signatory unions but also on the remaining workmen
who were represented by the fifth union which, though having taken part
in conciliation proceedings, refused to sign the settlement. It is axiomatic C
that if such settlement arrived at during the conciliation proceedings is
binding to even future workmen as laid down by Section 18(3)( d), it would
ipso facto bind all the existing workmen who are all parties to the industrial
dispute and who may not be members of un.ions that are signatories to such
settlement under Section 12(3) of the Act. D
It has to be kept in view that the Act is based on the principle of
collective bargaining for resolving industrial disputes and for maintaining
industrial peace. Thus principle of industrial democracy is the bed-rock of
the Act. The employer or a class of employers on the one hand and the
accredited representatives of the workmen on the other are expected to E
resolve the industrial dispute amicably as far as possible by entering into
the settlement outside the conciliation proceedings or if no settlement is
reached and the dispute reaches conciliator even during conciliation
proceedings. In all these negotiations based on collective bargaining
individual workman necessarily recedes in background. The reins of F
bargaining on his behalf is handed over to the union representing such
workman. The unions espouse the common cause on behalf of all their
members. Consequently, settlement arrived at by them with management
would bind at least their members and if such settlement is arrived at
during conciliation proceedings, it would bind even non-members. Thus, G
settlements are the live wires under the Act for ensuring industrial peace
and prosperity. Section 10(2) of the Act highlights this position by
providing that where the parties to an industrial dispute apply in the
prescribed manner, whether jointly or separately, for a reference of the
dispute to a Board, Court, Labour Court, Tribunal or National Tribunal, H
274 SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.

A the appropriate Government, if satisfied that the persons applying
represent the majority of each party, shall make the reference accordingly.
Individual workman comes into the picture only in connection with a
limited class of industrial disputes as indicated by Section 2A of the Act
dealing with discharges, dismissals, retrenchments or otherwise termination
B of services of an individual wmkman. Save and except the aforesaid class
of disputes, which an individual workman can raise, rest of the industrial
disputes including disputes pertaining to illegal lock out, lay-off and lay-off
compensation have to be filtered through the process of collective
bargaining and they are disputes of general nature or class disputes
C wherein individual workman by himself has no say. In this connection, it is
profitable to keep in view a decision of three-member Bench of this Court
in the case of Ram Prasad Vishwakanna v. Chainnan Indust1ial T1ibunal,
Patna & Ors., AIR (1961.) SC 857 wherein Das Gupta, J ., speaking for this
Court made the following pertinent observations on the scheme of the Act,
at the time when Section 2A was not on the statute book :
D
"It is now well settled that a dispute between an individual
workman .and an employer cannot be an industrial dispute as
defined in Section 2(k) of the Industrial Disputes Act unless it is
taken up by a Union of the workmen or by a considerable number
E of workmen. In Central Provinces Tramport Se1vice Ltd. v.
Raghwtath Gopa4 [1956] SCR 956: (S) AIR (1957) SC 104, Mr.
Justice Venkatarama Ayyar Speaking for the Court pointed out
after considering numerous decisions in this matter that the
preponderance of judicial opinion was clearly in favour of the view
that a dispute between an employe~ and a single employee cannot
F
per se be an industrial dispute but it may become one if it is taken
up by a Union or a number of workmen.

"Notwithstanding that the language of Section 2(k) is wide
enough to cover disputes between an employer and a single
G employee", observed the learned Judge, "the scheme of the In-
dustrial Disputes Act does appear to contemplate that the
machinery provided therein should be set in motion to settle only
disputes which involve the rights of workmen as a class and that a
dispute touching the individual rights of a workman was not in-
H tended to be the subject of adjudication under the Act, when the

r
P. VJRUDHACHALAM v. MANAGEMENT OF LOTUS MILLS [S.B. MAJMUDAR.J.] 275

same had not been taken up by the Union or a number of A
workmen".

This view which has been re-affirmed by the. Court in several
later decisions recognises the great importarn;;e .' in modern in-
dustrial life of collective bargaining between the workmen and the
employers. It is well known how before the days of collective B
bargaining labour was at a great disadvantage in obtaining
reasonable terms for contracts of service from' his employer. As
trade unions developed in the country and collective bargaining
became the rule the employers found it necessary and convenient
to deal with the representatives of workmen, instead of individual c
workman, not only for the making or modification of contracts but
in the matter of taking disciplinary action against one or more
workmen and as regards all other disputes.

The necessary corollary to this is that the individual workman
is at no stage a party lo the industrial dispute independently of the D
Union. The Union or those workmen who have by their sponsoring
turned the individual dispute into an industrial dispute, can there-
fore claim to have a say in the conduct of the proceedings before
the Tribunal.
E
It is not unreasonable to think that Section 36 of the Industrial
Disputes Act recognises this position, by providing that the
workman who is a party to a dispute shall be entitled to be
represented by an officer of a registered trade union of which he
is a member ..... "
F
Consequently, the provisions contained in the first proviso to Section
25C of the Act would also necessarily require an agreement to be entered
into on behalf of the affected class of workmen by their accredited repre-
sentatives being office bearers of their union. It is easy to visualise that
when lay-off has been imposed by the management in an establishment or G
in any department thereon, the entire body of workmen working therein
would be affected by lay-off. Therefore, their grievance in connection with
lay-off compensation pertaining to the period of lay-off would not be
necessarily an individual grievance but would be grievance of the class of
workmen as a whole affected by such lay-off. If there is a binding settlement
embodying an agreement on behalf of a class of workmen through their H
276 SUPREME COURT REPORTS (1997) SUPP. 6 S.C.R.

A union in connection with lay-off compensation it would obviously be bind-
ing on all the members of the union and if such settlement based on
agreement is arrived at during conciliation proceedir.gs it would be binding
to the entire class of workmen covered by the industrial dispute regarding
lay-off compensation. The individual workmen can raise his grievance
under Section 25C only if his statutory right of lay-off under Section 25C
B
is not hedged in by any binding effect of an agreement entered into by its
own union with the management, whether in or outside conciliation
proceedings or even by other unions that may arrive such settlement during
the course of conciliation proceedings. Then only individual workman can
have full play under Section 25C for vindicating his right of lay-off com-
C pensation.

In Barauni Refine1y Pragatisheel Shramik Pmishad v. Indian Oil Cor-
poration Ltd. & Ors., AIR (1990) SC 1801. Ahmadi, J. as he then was,
speaking for a Bench of two learned .Judges of this Court had an occasion
D to consider the binding effect of such a settlement arrived at during
conciliation proceedings in the light of Section 18 of the Act. The following
pertinent observations, in this connection, were made :

"A settlement arrived at in the course of conciliation proceedings
with a recognised majority union will be binding on all workmen
E of the establishment, even those who belong to the minority union
which had objected to the same. To that extent it departs from the
ordinary law of contract. The object obviously is to up-hold the
sanctity of settlements reached with the active assistance of the
Conciliation Officer and to discourage an individual employee or
F a minority union from scuttling the settlement. There is an under-
lying assumption that a settlement reached with the help of the
Conciliation Officer must be fair and reasonable and can, there-
fore, safely be made binding not only on the workmen belonging
to the union signing the settlement but also on others. That is why
G a settlement arrived at in the course of conciliation proceedings is
put on par with an award made by an adjudicatory authority."

In this light we have now to examine the relevant provisions of the
Act dealing with lay-off and compensation ,to be paid to workmen for
H lay-off. Section 25C is found in Chapter VA of the Act which deals with
P. VIRUDHACHALAMv. MANAGEMENT OF LOTUS MILLS (S.B. MAJMUDAR,J.I 277
lay-off and retrenchment. We are concerned with lay-off in the present A
case. Section 25C deals with statutory right of the workmen laid-off for
compensation. Sub-section (1) of Section 25C with the first proviso
reads as under :

"25C. Rig/it of workmen laid-off for compensation. - (1) Whenever B
a workman (other than a badli workman or a casual workman)
whose name is borne on the muster-rolls of an industrial estab-
lishment and who has completed not less than one year of con-
tinuous service under an employer is laid off, whether continuously
or intermittently, he shall be paid by the employer for all days
during which he is so laid-off, except for such weekly holidays as C
may intervene, compensation which shall be equal to fifty per cent
of the total of the basic wages and dearness allowance that would .
have been payable to him had he not been so laid-off :

Provided that if during any period of twelve months, a workman D
is so laid-off for more than forty-five days, no such compensation
shall be payable in respect of any period of the lay-off after the
expiry of the first forty-five days, if there is an agreement to that
effect between the workman and the employer."

It is of course true that sub-section (1) of Section 25C lays down that E
if there is a legal lay-off imposed by the employer, the permanent workman
covered by sweep of sub-section (1) of Section 25C would be entitled to
be paid by way of lay-off compensation 50% of the total wages and
dearness allowance during the relevant period of lay-off. However, because
of the first proviso to the said section, the right of the workman to be paid F
50% lay-off compensation during the relevant period of lay-off would be
curtailed and restricted to 45 days only if there is an agreement to that
effect between the workman and the employer. The question is whether
there was such an agreement between the appellants and the employer.
Learned counsel for the appellants submitted that for attracting the first G
proviso to Section 25C(l), there should be independent agreement between
the workman and the employer to that effect agreeing not to demand
lay-off compensation beyond 45 days of the starting of the lay-off period.
It is difficult to appreciate this contention. An agreement restricting the
claim of lay-off compensation beyond the available period of.45 days can
be said to be arrived at between the workman on the one hand and the H
278 SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A employer on the other as there is such an agreement embedded in a
binding settlement which has a legal effect of binding all the workmen in
the institution as per Section 18(3) of the Act. Such binding effect of the
embedded agreement in the written settlement arrived at during the con-
ciliation proceedings would get telescoped into the first proviso to Section
25C(l) and bind all workmen even though individually they might not have
B signed the agreement with management or their union might not have
signed such agreement with the management on behalf of its member-
workmen. The first proviso to Section 25C(l) clearly lays down that if there
is an agreement for not paying any more lay-off compensation beyond 45
days between the workman and the employer, such an agreement has
C binding effect both on the employer and the workman concerned. ·such
binding force gets clearly attracted in the case of the appellants by virtue
of operation of Section 12(3) read with Section 18 of the Act emanating
from the Settlement arrived at during the conciliation proceedings as
aforesaid. Learned counsel, however, strongly relied upon Section 25J of
D the Act for isolating the effect of Section 18(3) in the present case. Section
251 reads as under :

"251. Effect of laws inco11sistel!t with this Chapter. - (1) The provision
of this Chapter shall have effect notwithstanding anything incon-
sistent therewith contained in any other law (including standing
E orders made under the Industrial Employment (Standing Orders)
Act, 1946 (20 of 1946) :

Provided that where under the provisions of any other Act or
rules, orders or notifications issued thereunder or under any stand-
F ing orders or under any award, contract of service or otherwise, a
workman is entitled to benefits in respect of any matter which are
more favourable to him than those to which he would be entitled
under this Act; the workman shall continue to be entitled to the
more favourable benefits in respect of that matter, notwithstanding
that he receives benefits in respect of other matters under this Act.
G
(2) For the removal of doubts, it is hereby declared that nothing
contained in this Chapter shall be deemed to affect the provisions
of any other law for the time being in force in any State in so far
as that law provides for the settlement of industrial disputes, but
H the rights and liabilities of employers and workmen in so far as
P. VIRUDHACHALAMv. MANAGEMENT OF LOTUS MILLS (S.B. MAJMUDAR,J.( 279

they relate to lay-off and retrenchment shall be determined in A
accordance with the provisions of this Chapter."

It is difficult to appreciate how the said proviso can be of any
assistance to the appellants. All that is stated is that anything inconsistent
with the provisions of Chapter VA found to have been laid down by any B
other law including standing orders etc. will have no effect. Even sub-sec-
tion (2) of Section 25J is to the same effect. Therefore, Section 25J
overrides any inconsistent provision of any other law or otherwise binding
rule of conduct and makes the provisions of Chapter VA operative of their
own. The submission of learned counsel for the appellants in this connec-
tion was to the effect that "any other law" as provided in Section 25.J(l) C
would include even the Industrial Disputes Act, specially the provisions
contained in Section 18 thereof. It is difficult to agree. Section nowhere
provides that the provisions of Chapter VA shall have effect notwithstand-
ing anything inconsistent contained in any other chapter of the Industrial
Disputes Act as well as in any other Jaw. Such a provision is conspicuously D
absent in Section 25J(l). If submission of learned counsel for the appellants
is accepted, Section 25.T(l) will have to be re-written by introducing the addi-
tional words therein "in any other part of thi~ Act or" before the words "any other
law" as mentioned therein. On the express language of the said provision,
therefore, such an exercise is contra-indicated and is totally impermissible.
E
In fact, this Court in Klis/ma Dist1ict Co-operative Marketing Society
Ltd. v. N.V Pwnachandra Rao & Ors., 11987) 4 SCC 99 (at 111) pointed
out that the purpose of Section 25J(2) in Chapter V of the Industrial
Disputes Act, 1947 was to give overriding effect to the provisions of
retrenchment and lay- off in Chapter VA over cognate provisions of State p
·Jaws dealing with retrenchment and lay-off. In the above case
Venkataramiah, J., (as he then was) observed :

"By enacting Section 25J(2), Parliament, perhaps intended that the
rights and liabilities arising out of lay- off and reh·enchment should
be unif01111 throughout India where the Central Act was in force G
and did not wish that the States should have their own laws
inconsistent with the Central law."

~ The above passage also shows that Chapter V was not intended to override
any provisions of the Industrial Disputes Act, 1947 itself. H
280 SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A Once Section 25J(l) is out of picture, Section 25C(l) will have to be
read with the proviso and once settlement is arrived at between the parties
during conciliation proceedings as laid down by Section 18(3) the binding
effect of such settlement gets visited on all the workmen, as seen earlier.
Consequently the appellants would remain bound by the settlement which
would be treated as an agreement binding on them as contemplated by the
B
said proviso. Once that conclusion is reached no fault can found with the
High Court taking the view on the scheme of the Act that additional
benefits which the appellants claimed under the settlement arrived at under
Section 12(3) read with Section 18 of the Act could not be computed under
Section 33C(2) of the Act and such application was, therefore, rightly held
C incompetent.

It is now time for us to refer to some decisions of this Court to which
our attention was invited.

This Court speaking through Untwalia, J. held in Workmen of Fires-
D tone Tyre and Rubber Co. of India (P) Ltd. Etc. v. T71e Firestone Tyre and
Rubber Co. Etc., ( 1976) 1 L.L.J. 493 that Chapter VA of the Act was a
complete code and if the workmen are found to have been laid-off, the
benefit of the said provision can be attracted. It is difficult to appreciate
how this decision can be of any assistance to the counsel for the appellants
E as in the aforesaid case there was no question of any binding settlement
between the parties which had tried to whittle down the statutory right of
lay-off compensation as per the first proviso to Section 25C of the Act.

In R.B. Bansilal Abirchand Mills Co. Ltd. v. T71e Labour Cowt,
Nagpur & Ors., [1972) 1 SCC 154 this Court was concerned with a question
F whether application under Section 33C(2) could be filed by co-employees
who claimed benefit under Section 25C of the Act for lay-off compensation
even though those workmen had not filed such application earlier. Even in
that case there was no question of any binding effect of any settlement
under Section 12(3) read with Section 18(3) of the Act.
G In Workmen of Dewan Tea Estate & Ors. v. T71e Management, 11964]
5 SCR 548 this Court was concerned with the question whether lay-off
compensation could be claimed by the workmen under Section 25C even
though such claim was not covered by the standing orders. It was held that
the lay-off compensation would be permissible only where one or the other
H of the factors mentioned by Section 2(kkk) is present, and for such a
P. VIRUDHACHALAM v. MANAGEMENT OF LOTUS MILLS [S.B. MAJMUDAR,J.] 281

lay-off, compensation could be awarded under Section 25C. Even in this A
case the question of binding effect of a settlement arrived at during
conciliation proceedings and curtailment of right of workmen laid-off for
compensation under Section 25C of the Act was not on the anvil of
scrutiny.

- In 11ie Cachar Chah Sramik Union Silchw; Assam v. 17ie Manage- B
ment of the Tea Estate of Cachar, Assam, (1966] 2 SCR 344 it was held that
even though the management might have given ex-gratia compensation to
the workmen laid-off they were entitled to claim lay-off compensation as
per the Act and as per the relevant Standing Orders. The aforesaid
decision cannot advance the case of the appellants as there was no question C
of any binding effect of any settlement arrived at between the parties which
would govern the claim of all the workmen even though their union might
not have been signatory to such settlement during conciliation proceedings.

In the result this appeal fails and is dismissed. In the facts and
circumstances of the· case, there will be no order as to costs. D

- R.C. Appeal dismissed.