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Karnataka High Court · body

2010 DIGILAW 1198 (KAR)

Kennametal India Ltd. , Rep. by its Vice President Manufacturing & Factory Manager Sri. D. Sarathy v. Kennametal India Employees Association Rep. by its President Sri Gangabhairaiah

2010-11-19

V.JAGANNATHAN

body2010
Judgment :- 1. The application filed seeking amendment of clause 22 of the Certified Standing orders enhancing the age of retirement from 58 years to 60 years, was allowed by the second respondent certifying officer under the Industrial Employment Standing orders Act and age of retirement was fixed as 60 years. Appeal preferred by the third respondent was unsuccessful as the appellant authority confirmed orders passed by the second respondent. Aggrieved by the aforesaid orders passed by the second and third respondents this petition is presented by the company M/S Kennermental India Limited praying for setting aside the orders which are at Annexures ‘F’ and ‘K’ to this writ petition. 2. The facts which fall in narrow compass are that clause 22 of the standing orders of the petitioner’s company provided for the age of retirement at 58 years but giving the company the discretion to extend the service of a particular employee beyond the aforesaid age limit, subject to the employee being found medically fit by the medical officer, by such terms and conditions a company may prescribe in this behalf. It is this clause 22 of the certifying standing orders that was sought to be amended by way of an application presented by the first respondent association. 3. In the application filed by the first respondent among other things it was stated that as there is a provision for increasing age of retirement beyond 58 years though discretion was vested in this regard with the management, there can be no impediment to allow the amendment sought. 4. The petitioner company on the other hand contended before the Certified Officer that as the settlement entered between the petitioner company and the first respondent association had clearly fixed the age of retirement 58 years as the association also had agreed not to rise any dispute which would have financial implications, the questions of permitting the amendment sought does not arise. Certifying Officer accepted and the appellant authority also confirmed the said order. 5. Certifying Officer accepted and the appellant authority also confirmed the said order. 5. Learned senior counsel Sri S N Murthy for the petitioner referring to clause 22 of the certifying standing orders of the company and to the settlement entered into between the parties on 5.12.2007 (as per Annexure A) argued that when the association on behalf of the workmen had agreed not to raise any demand involving financial burden on the management during the operation of the settlement, the Certifying Officer could not have allowed the amendment application. More so, when the settlement was to remain in force till 30.6.11. Therefore, the order passed by the authorities concerned, namely, second and third respondent are contrary to the law laid down by the Apex court in the case of (i) Barauni Refineries Pragatisheel Sharmik Parishad and Indian Oil Corporation Ltd., Vs. Indian Oil Corporation Ltd and others (ii) General Secretary, Barauni Telshodhak Mazdoor Union and Jt. Chief Labour Commissioner (Central) and others ( 1991 (1) LLJ 46 ). Therefore the orders impugned be set aside. 6. On the other hand K.S. Subrahmanya, learned counsel appearing for the first respondent support the impugned orders passed by second and third respondents and contended that when the clause in the standing orders namely clause 22 itself gives a liberate to the management to extend the date of retirement beyond 58 years though under certain conditions, the order passed by the certifying officer which was confirmed by the appellate authority therefore is in accordance with the aforesaid clause 22 of the standing orders. It is thus submitted by him that as between the standing orders and the settlement, the standing order will have to prevail over the settlement, and for this reason also the impugned orders call for no interference. 7. The next submission made is that having regard to the law laid down by the Apex Court in Western India Match Company Ltd., Vs. Workmen, Hindustan Antibiotics Ltd., Versus Their workmen, the order passed by the Certifying Officer is in accordance with the law laid down in the aforesaid decisions. 7. The next submission made is that having regard to the law laid down by the Apex Court in Western India Match Company Ltd., Vs. Workmen, Hindustan Antibiotics Ltd., Versus Their workmen, the order passed by the Certifying Officer is in accordance with the law laid down in the aforesaid decisions. More over, if the management is given the discretion to permit a workman to work beyond 58 years though on certain conditions, it would be possible for the management to adopt the policy of pick and choose from among the workmen and this would also be an indication of the element of victimization coming into play and such contingency should not be permitted to take place. It is also argued by the learned counsel for the first respondent that the age of retirement is 60 years in most of the companies as well as even in Government services. Therefore no error is committed by the certifying officer in allowing the amendment application. 8. One other contention put forward by the learned counsel for the first respondent is that discretion is vested with the Certifying Officer to consider the facts and circumstances of the case and relying on the decision referred to in 1973 (2) LLJ 403 inviting the attention of the Court to paragraph No.10 at page 406 it is argued that though formerly there were tow parties at the negotiation table namely the employer and the workmen, now the State is also in the picture to represent the interest of the society and therefore the Certifying Officer will have to adjudicate upon the matter with fairness and reasonableness and should consider the social interest. Under these circumstances, the decision of the second respondent to permit the amendment of clause 22 of the standing orders by increasing the age of retirement from 58 to 60 years is in accordance with the aforesaid principles laid down by the Apex Court. Last of the submission made is that though clause 22 of the standing orders gives a discretion to the management to permit the workman to work beyond the age of 58 years, in the settlement upon which the petitioner has banked heavily, no such discretion is indicated extending the age of retirement beyond 58 years. 9. Last of the submission made is that though clause 22 of the standing orders gives a discretion to the management to permit the workman to work beyond the age of 58 years, in the settlement upon which the petitioner has banked heavily, no such discretion is indicated extending the age of retirement beyond 58 years. 9. In the light of the aforesaid submissions and relying on the decisions reported in 1967 (2) LLJ 114, 1973 (2) LLJ 403 , 1964 (2) LLJ 644 , learned counsel for the first respondent argued that the orders under challenge require to be confirmed by dismissing the writ petition. 10. Learned Government Advocate for the respondent Nos.2 and 3 adopted the arguments of the learned counsel for the first respondent and argued that the impugned orders call for no interference. 11. In the light of the aforesaid arguments put forward by the learned counsel for the parties, the point for consideration is whether the impugned orders passed by R-2 and R-3 can be held to be sustainable in law. 12. As the focal point in the case pertains to Clause-22 of the Certified Standing Orders of the petitioner-company, the said clause will have to be mentioned at first and it is as under: “22. Retirement Employees shall retire from the services of the Company on completing the age of 58 years but the Company may in its discretion extend the services of a particular employee beyond the aforesaid limit subject to his being found medically fit by the Medical Officer and upon such terms and conditions as the Company may in this behalf prescribe.” 13. What is clear from the aforesaid Clause is that the age of retirement is fixed as 58 years but, with the discretion vested in the company to extend the services of a particular employee beyond the aforesaid age limit subject to conditions mentioned above. It is also not in dispute that the petitioner-company and R-1 Association entered into a memorandum of settlement on 5.12.2007 and among other things, two of the terms of settlement that are required to be taken note of are Clause-26.7 and 28 and they read as under: “26.7 Retirement Age The present procedure of a workman getting retired from the services of the Company upon completion of 58 years shall continue. He shall be relieved from the close of his shift hours on the last working day of the month in which the workman completes the Superannuation age of 58 years. Xxxx xxxxx xxxxxxx 28. Other demands and Grievances The workmen and the KIEA hereby agree: a) To drop all other demands made by KIEA vide its character of demands dated 22nd December, 2006 which are not covered by this settlement. b) Not to raise or pursue during the operation of this settlement any demands involving directly or indirectly any financial burden/commitments on the part of the Management and/or affecting the terms and conditions of employment.” 14. As the enhancement of age of retirement from 58 years to 60 years involves financial burden on the Management, in view of the workmen agreeing not to raise any demand involving directly or indirectly any financial burden during the operation of the settlement, it goes without saying that the employees are bound by the terms of settlement entered into between the parties. In this connection, it will be useful to refer to the decision of the Apex Court in the case of Barauni Refineries Pragtisheel Shramik Parishad Vs. Indian Oil Corporation Ltd., reported in 1991 (1) LLJ 46 , which was referred to by learned senior counsel Shri S.N.Murthy for the petitioner. 15. In Barauni’s case, supra, the court was seized of a case where modification of Clause-20 of the Standing Orders of the Company so as to raise the age of superannuation from 58 to 60 years was in issue and the application filed by the General Secretary of the Petroleum and Chemical Mazdoor Union was allowed by the Regional Layout Commissioner and the appellate authority dismissed the appeal filed by the Management. The Apex Court took note of Clause-20 of the Standing Orders read as under: “Every employee shall retire from service on completing the age of 58 years. Extension for a maximum period of 5 years but not for more than one year at a time may be given at the discretion of the Company provided the employee is certified to be fit by the Company’s Medical Officer and provided further that the employee concerned also consents to such extension.” Settlement Clauses-19 and 21 were the following: “19. Extension for a maximum period of 5 years but not for more than one year at a time may be given at the discretion of the Company provided the employee is certified to be fit by the Company’s Medical Officer and provided further that the employee concerned also consents to such extension.” Settlement Clauses-19 and 21 were the following: “19. The Corporation agrees that such terms and conditions of service as well as amentias and allowances as are not changed under this settlement shall remain unchanged and operative during the period of the settlement. 21. The Unions agree that during the period of operation of this settlement, they shall not raise any demand having financial burden of the Corporation other than bonus provided that this Clause shall not affect the rights and obligations of the parties in regard to matters covered under Section 9A of the Industrial Disputes Act, 1947.” The Apex Court, after taking note of the aforesaid facts and circumstances, ultimately considered the question as to whether a Clause in the Standing Order of the Company could be modified when there is a settlement in operation and held thus: “A settlement arrived at in the course of conciliation proceedings with a recognized majority union will be binding on all workmen of the monitory union which had objected to the same. To that extent, it departs from the ordinary law of contract. The object obviously is to uphold the sancity of settlement reached with the active assistance of the conciliation officer and to discourage and individual employee or a minority union from scuttling the settlement. There is an underlying assumption that a settlement reached with help of the conciliation officer must be fair and reasonable and can, therefore, safely be made binding not only on the workmen belonging to the union signing the settlement but also on others. That is why a settlement arrived at in the course of conciliation proceedings is put on par with an award made by an adjudicatory authority. The High Court was, therefore, right in coming to the conclusion that the settlement dated 4th August 1983 was binding on all the workmen, including the Barauni Petroleum and Chemical Mazdoor Union.” As regards the financial implication that would fall on the company consequent to the age of retirement being enhanced, the Apex Court went on to make the following observations at paragraph-11: “11. By clause 21 of the settlement extracted earlier the Union agreed that during the period of the operation of the settlement they shall not raise any demand which would throw an additional financial burden on the management, other than bonus. Of course the proviso to that clause exempted matters covered under Section 9A of the Industrial Disputes Act from the application of the said clause. However, Section 9A is not attracted in the present case. The High Court was, therefore right in observing: “when the settlement had been arrived at between the workmen and the company and which is still in force, the parties are to remain bound by the terms of the said settlement. It is only after the settlement is terminated that the parties can raise any dispute for fresh adjudication”. The argument that the upward revision of the age of superannuation will not entail any financial burden cannot be accepted. The High Court rightly points out: “workmen who remain in service for a longer period have to be paid a larger amount by way of salary bonus and gratuity than workmen who may newly join in place of retiring men”. The High Court was, therefore, right in concluding that the upward revision of the age of superannuation would throw an additional financial burden on the management in violation of clause 21 of the settlement. Therefore, during the operation of the settlement it was not open to the workmen to demand a change in clause 20 of the certified Standing Orders because any upward revision of the age of superannuation would come in conflict with clauses 19 and 21 of the settlement. We are, therefore, of the opinion that the conclusion reached by the High Court is unassailable.” 16. The case on hand is more or less akin to the aforesaid decision of the Apex Court. Notwithstanding the fact that the company had the discretion to grant extension of a maximum of a five years period as is to be found in Clause-20 of the Standing Order, yet, the Apex Court rules that when settlement is in force between the parties and when the union had agreed that it will not raise any demand which will have financial burden on the Management, the authorities were not justified in enhancing the age of retirement from 58 to 60 years. 17. 17. In the case on hand, the settlement entered into between the parties on 5.12.2007 (Annexure-A) makes it clear in Clause-30 that the settlement shall be effective from 1.7.2007 and shall remain in force until 30.6.2011. The application for amendment was filed by R-1 Association on 29.7.2009 and the impugned orders were passed by R-2 and R-3 on 30.11.2009 and 28.5.2010 and all these dates fall within the period during which the settlement has been agreed to be in force i.e., until 30.6.2011. Under these circumstances, the question of ignoring the settlement terms during the period when the settlement will be in force, therefore, cannot arise. 18. As far as the reference made by learned counsel Shri K.S. Subramanya for R-1 to Clause-27 of the settlement is concerned, all that the said clause mentioned is that, in respect of those terms and conditions of service which have not been specifically mentioned in or varied or discontinued, they shall continue to remain in force. By this clause, it is further made clear that though, as per the Settlement Clauses-26 and 27, the age of retirement is fixed at 58 years, at the same time, Clause-22 of the Standing Orders, which gives the company discretion to extend the services beyond 58 years, continues to remain. Therefore, there is no contradiction between the terms of settlement vis-à-vis Clause-22 of the Standing Orders. 19. As far as the argument of the learned counsel for R-1 that if the Standing Orders are pitted against the settlement, the Standing Orders will have to prevail is concerned, that argument was made by him on the basis of the observations of the Apex Court in the case of Western India Match Company Ltd. Vs. Workmen, reported in 1973 (2) LLJ 403 . Workmen, reported in 1973 (2) LLJ 403 . Having carefully gone through the said decision, it has to be mentioned that, in the said case, on facts, it was found that the Standing Orders had provided for a period of two months as the maximum period for completion of probation and in the special agreement entered into between the parties therein, the said period was extended upto six months and, therefore, there was conflict between the condition in the Standing Orders and the one in the special agreement and it was under the said circumstances, the Apex Court held that the two cannot co-exist and the special agreement, being inconsistent with the Standing Orders, therefore, has to give way to the Standing Orders and, therefore, the Apex Court, at paragraph-8 of the said decision observed that a prior agreement inconsistent with the standing orders will not survive and an agreement posterior to and inconsistent with the standing orders should also not prevail. 20. What we have before us is a different cup of tea in the sense, the settlement terms in no way conflict with Clause-22 of the Standing Orders. 21. As far as the submission of learned counsel Shri K.S. Subramanya for R-1 that the age of retirement is being enhanced to 60 years in most of the companies and other organizations is concerned, no doubt, he is right in submitting that there is an upward trend insofar as fixing the age of superannuation as concerned. But, that itself cannot be taken note of to ignore the settlement terms arrived at between the parties more so when the settlement is to last till 30.6.2011. 22. As rightly submitted by the learned counsel for the petitioner, R-1 Association is always at liberty to negotiate with the Management as regards the need for enhancing the age of retirement. But, that does not in any way permit the parties to ignore the settlement terms which binds both the parties and when the Association, on behalf of the workmen, has promised that it will not raise any dispute or make any demand which would have financial implication or push the Management under financial burden, the said settlement terms have to be given effect till the expiry of the settlement i.e., till 30.6.2011. 23. 23. For the aforesaid reasons, the impugned orders passed by R-2 and R-3 respectively cannot be sustained in law as the said orders are passed ignoring the settlement terms between the parties and the orders are also against the principles laid down by the Apex Court in the case of Barauni Refineries, supra. 24. In the result, I pass the following order: The writ petition is allowed and the impugned orders passed by R-2 and R-3 at Annexures-F and K respectively are quashed. ORDER IN ‘FOR BEING SPOKEN TO’ VJJ: 23.11.2010 Heard both sides in respect of the order passed on 19.11.2010. 2. The submission of Sri K.S. Subramanya, learned counsel appearing for the caveator/respondent No.1 Association is that though this Court had set aside the order passed by the Certifying authority as well as the Appellate Authority on the ground that during the period of settlement, the authorities could not raise the age of superannuation from 58 to 60 years. However, now the submission made is that atleast after expiry of the settlement period of 30.6.2011, the order of the Certifying Officer be given effect to prospectively from the said date because, after the settlement comes to an end, it is not known as to when the agreement would be signed between the parties and how long it would take for the employees’ to get the benefit of enhancement of age of superannuation and may of the employees would retire by the end of June 2011. Therefore, notwithstanding the quashing of the orders of the authorities concerned, effect be given to the said orders atleast prospectively from the date of expiry of the settlement. 3. Sri S.N. Murthy, learned counsel appearing for the petitioner on the other hand submitted that when once this court had quashed the orders of the authorities in question, no relief be given by making the said orders with prospective effect from the date of the settlement coming into an end. 4. Having heard both sides and though learned counsel Sri. K.S. Subramanya, made submission keeping in view all the benefits that would fall on many of the workmen it is rather unfortunate that the Association had committed itself by agreeing not to raise any demand during the operation of the settlement, which would put the management under financial burden. 5. 4. Having heard both sides and though learned counsel Sri. K.S. Subramanya, made submission keeping in view all the benefits that would fall on many of the workmen it is rather unfortunate that the Association had committed itself by agreeing not to raise any demand during the operation of the settlement, which would put the management under financial burden. 5. It has to be mentioned that though this Court had set aside the orders of the authorities in question at the same time, the Court also did make an observation to the effect that it is always open to the Association to negotiate with the management as regards the enhancement of the age of superannuation and that can be done only after the settlement i.e. in force as of now, ends on 30.6.2011. For the above reasons, the question of giving effect to the orders of the authorities even prospectively from the date of coming to the end of settlement does not arise.